Deepak Spinners Ltd Directors Report.

Dear Shareholders,

The Board of Directors are pleased to present their Report of the business and operations of your Company together with the Audited Financial Statements for the year ended 31* March 2020.

1. Financial Results

(Rs. in Lakhs)

Profit before Depreciation & Tax 2849.79
Less: Depreciation 1608.60
Tax Expense
-Current year 453.00
-Deferred Tax (700.32)
Add; Other Comprehensive Income 3.74
Total Comprehensive Income for the vear 1492.25
Transfers and appropriations:
Dividend for 2018-19 paid during the vear (including dividend tax) 130.01
Interim Dividend 2019-20 paid during the vear (including dividend tax) 130.01
Balance carried forward to Reserves and Surplus 1232.23

The above figures are extracted from the audited financial statements as per Indian Accounting Standards (Ind AS). There has been no change in the nature of business activities of the Company during the year.

2. Dividend

For financial year 2019-20, based on the Companys performance, the Directors had declared interim dividend of 15%, that is, Rs. 1.50 (Rupee one and paise fifty) per equity share of the face value of Rs. 10/- each, aggregating to total dividend payout of Rs. 107.84 Lacs. The Directors, after considering the relevant circumstances, have decided that it would be prudent not to recommend any final dividend.

3. General Review

Modernisation and technological up gradations of our assets are undertaken each year to maintain competitiveness and quality. During the year, the Company has spent about Rs. 6 crores on modernization and up gradation at both the units of the Company. The approval for setting up of upgraded electricity supply from 11 KV to 66 KV at the Baddi Unit of the Company has been obtained. Work is in progress for installing the same.

In the last month of financial year 2019-20, the COVID 19 pandemic developed into a global crisis, forcing governments to enforce lock downs of all economic activity. Accordingly, the factories of the Company located at Baddi, Guna and offices, respectively had closed its operations with effect from 23" March 2020. Flowever, the Company has since partially resumed its operations and is currently in the process of scaling up its operations. Full capacity utilization will take some more time given the various constraints continuing due to COVID 19.

In view of the outbreak of the pandemic, the Company undertook timely and essential measures to ensure the safety and well being of all its employees at its plants and offices. The Company is taking all necessary measures in terms of mitigating the impact of the challenges posed due to Covid 19. The key priorities of the Company would be to closely monitor costs, optimize the use of its financial resources while continuing to invest in some of the growth areas.

Currently, the pandemic has brought about slowdown in the business of the Company, due to shortage of labour, less demand, crisis in receipt of payment, etc. Flowever, we expect revival in the second half of the year.

4. Credit Rating

During the year 2019-20, the Company has got the following credit rating from M/s. India Ratings & Research Private Limited.

Facility Sanctioned Limit (million) Rating/Outlook
Fund Based Limits INK 600 INDBBB/Stable
Fund Based Limits INK 50 INDA3+
Non Fund Based Limits INK 60 INDA3+
bng Term Loans INK 340 INDBBB/Stable
COVID-19 Emergency Credit Line (Term ban) INK 60 INDBBB/Stable

5. Internal Financial Control Systems

The Company has in place proper policies and procedures for ensuring orderly and efficient conduct of its business. Internal Financial Control System commensurate with the size, scale and nature of its operations. The internal financial control systems of the Company are appropriate for the safeguarding of its assets, prevention and detection of frauds and errors, the accuracy and completeness of the accounting records and timely preparation of reliable financial information. During the year under review, the Company has not come across any incidence of fraud. The Company has adopted accounting policies, which are in line with the applicable accounting standards and the Companies Act, 2013.

Internal Audit is conducted by independent Chartered Accountants, on quarterly basis. The Internal Auditors monitor and evaluate the efficacy and adequacy of internal control systems in the Company. Based on the reports of the Internal Auditors, the respective departments undertake corrective actions in their respective areas and thereby strengthen the controls. Significant audit observations and corrective actions thereon are presented to the Audit Committee of the Board of Directors.

6. Statutory Auditors

Pursuant to Section 139 of the Companies Act, 2013, read with the Companies (Audit and Auditors) Rules, 2014, the members of the Company in its 35" Annual General Meeting held on 3r* August 2017 approved appointment of M/s. J K V S & Co., Chartered Accountants (formerly Jitendra K Agarwal & Associates) (ICAI Registration no. 318086E) as the Statutory Auditors of the Company for an initial term of 5 consecutive years from the conclusion of SS*" Annual General Meeting till the conclusion of AO*" Annual General Meeting of the Company.

7. Auditors Report

The Auditors Report to the Shareholders does not contain any reservation, qualification or adverse remark. During the year under review, the Auditors have not reported any matter under Section 143(12) of the Companies Act, 2013, therefore, no detail is required to be disclosed under Section 134(3)(ca) of the Act.

8. Secretarial Audit

Pursuant to Section 204 of the Companies Act 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Secretarial Audit was carried out by M/s. A. Arora & Co., Company Secretaries (PCS Registration no. 993) for the financial year 201920. The Secretarial Audit Report is annexed as Annexure -1, to this Report.

There has been no qualification, reservation or adverse remark or disclaimer in the reports. During the year under review, the Auditors have not reported any matter under Section 143(12) of the Companies Act, 2013, therefore, no detail is required to be disclosed under Section 134(3) (ca) of the Act.

9. Cost Audit

Pursuant to Section 148 of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Amendment Rules, 2014, the cost records maintained by the Company in respect of its manufacturing activities, are required to be audited.

The Board of Directors have, on the recommendation of the Audit Committee, appointed, M/s Shakti K. 8i Associates, Cost Accountants (ICWAI Registration no. 11338), as Cost Auditors of the Company, to carry out cost audit of the products manufactured by the Company for the year 2020-21.

The remuneration of the Cost Auditor has been approved by the Board of Directors on the recommendation of Audit Committee. As required under the Companies Act, 2013, In terms of the provisions of Section 148(3) of the Companies Act, 2013 read with Rule 14(a) (ii) of the Companies (Audit and Auditors) Rules, 2014, the remuneration payable to the Cost Auditor is required to be placed before the members in a general meeting for their ratification. Accordingly, necessary resolution is proposed for ratification for the remuneration payable to M/s. Shakti K. 8i Associates, Cost Auditors in the Notice convening the SR*" Annual General Meeting.

10. Directors and Key Managerial Personnel

a) i) Pursuant to Section 152 of Companies Act, 2013 and Articles of Association of the Company, Shri Yashwant Kumar Daga (DIN 00040632), retires by rotation at the forthcoming Annual General Meeting and being eligible, offers himself for re-appointment. The Board recommends his re-appointment. The brief resume and other detaiis as required under the SEBI (Listing Obligations and Disciosure Requirements) Reguiations, 2015 (Listing Reguiations) read with the Secretariai Standard 2 are provided in the Notice of the 38" Annuai Generai Meeting.

(ii) The tenure of Shri Pradip Kumar Daga (DIN 00040692) as Managing Director expires on IS*" April 2021. In accordance with the provisions of the Companies Act, 2013 and Articles of Association of the Company, pursuant to recommendation of the Nomination and Remuneration Committee and approval of the Audit Committee, the Board recommends re-appointment of Shri Daga as Managing Director for a period of three years with effect from 16" April 2021 till IS" April 2024 to the members of the Company at the ensuing Annual General Meeting.

II) There were no other changes in Key Managerial Personnel of the Company.

(b) Statement on declarations given by Independent Directors

Declarations have been received from all Independent Directors confirming that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act 2013 and Regulation 16 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulations).

All the Independent Directors are compliant of Rule 6 of the Companies (Appointment and Qualifications of Directors) Rules, 2014

(c) Meetings of Board of Directors

During the year, five Board Meetings were convened and held, the details of which are given in the Corporate Governance Report. The intervening gap between any two consecutive meetings did not exceed the gap prescribed by the Companies Act, 2013 and the Listing Regulations.

(d) Committees of the Board

As on 31st March 2020, the Board had four Committees - the Audit Committee, the Corporate Social Responsibility Committee, the Nomination and Remuneration Committee and the Stakeholders Relationship Committee. During the year, all recommendations made by the Committees were approved and accepted by the Board.

A detailed note on the composition of the Board and its Committees is provided in the Corporate Governance Report.

(e) Board Evaluation

Pursuant to the provisions of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 the Board has carried out an annual evaluation of its own performance, the Directors individually, as well as of the working of its various Committees. The Board on the recommendations of the Nomination and Remuneration Committee lays down the evaluation criteria for evaluation. All the relevant factors that are material for evaluating the performance of the Committees and of the Board were discussed in detail by the Board of Directors.

A structured questionnaire for evaluation of the Board and its various Committees and individual Directors was prepared and recommended to the Board by the Nomination & Remuneration Committee for doing the required evaluation, after taking into consideration the inputs received from the Directors, covering various aspects of the Boards functioning.

A separate exercise was carried out to evaluate the performance of individual Directors who were evaluated on parameters such as level of engagement and contribution, independence of judgment, safeguarding the interest of the

Company and its minority sharehoiders, etc. The performance evaiuation of the Independent Directors was carried out by the entire Board excluding the Director being evaluated. The performance evaluation of the Chairman and nonindependent Directors was carried out by the Independent Directors. The Directors expressed their satisfaction with the evaluation process.

11. Directors Responsibility Statement

In terms of the provisions of Section 134(5) of the Companies Act, 2013, your Directors confirm as under-

a) That in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

b) That the Directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit and loss of the Company for that period;

c) That the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d) That the Directors had prepared the annual accounts on a going concern basis; and

e) That the Directors, had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively.

f) That the Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

12. Corporate Social Responsibility

In accordance with the requirements of Section 135 of the Companies Act, 2013, the Company has a Corporate Social Responsibility Committee, the terms of reference and other details of which are provided in the Corporate Governance Report. The CSR Policy has been framed and posted on the website of the Company, www. dsl-india.com.

As required by Section 134(3)(o) of the Companies Act, 2013 and Rule 9 of the Companies (Corporate Social Responsibility) Rules, 2014, Annual Report on CSR activities is annexed as Annexure - M to form part of this report.

13. Vigil Mechanism

Pursuant to Section 177(9) of the Companies Act, 2013 and Regulation 22 of listing Regulations, The Company has in place a Vigil Mechanism for Directors and employees of the Company to report genuine concerns of any wrongful conduct with respect to the Company or its business or affairs. The policy covers malpractices, fraud, violation of Companys policies or rules, misappropriation of monies and other matters on account of which the interest of the Company is affected or is likely to be affected. The policy of Vigil Mechanism is an internal policy, to make protected disclosures on a confidential basis, in good faith and to raise concerns to be appropriately dealt with. The policy provides that all protected disclosures can be addressed to the Vigil Officer or the Chairman, Audit Committee in certain cases

It also provides for adequate safeguards against the victimization of employees who avail of the mechanism. Complaints received by Vigil Officer are investigated by the Vigil Officer and a report thereon is submitted to the Audit Committee. It is affirmed that no person was denied access to the Vigil Officer and the Audit Committee; and no complaints were received during the financial year 201920.

The Policy on Vigil Mechanism is also posted on the Companys website www.dsl-india . com.

DEEPAK SPINNERS LIMITED

(weblink: httD://www.dsl-india.com/

 

WD-content/uDloads/2019/05/DSL Vigil Mechanism.pdfl

14. Risk Management Policy

Several factors such as advancements in technology, prevalent geo-political environment, stringent regulatory and environmental requirements have consequential Impacts across the value chain of a business. The Company has an efficient Risk Management framework to Identify and evaluate business risks and opportunities. The Audit Committee has been delegated the responsibility for monitoring and reviewing risk management, assessment and minimization procedures. On the recommendations of Audit Committee, Board of Directors has formulated a Risk Management Policy for dealing with different kinds of risks which It faces In day to day operations of the Company. The risk management procedures are reviewed by the Audit Committee and the Board of Directors on a quarterly basis at the time of review of the quarterly financial results of the Company.

15. Nomination and Remuneration Poiicy

The Board has on the recommendations of the Nomination and Remuneration Committee adopted a policy for selection and appointment of Directors, KMP and Senior Management and their remuneration. During the year, there have been no changes to the Policy. The details of Companys Remuneration Policy are attached as Annexure-lir and forms part of this report of the Board of Directors.

16. Related Party Transactions

All related party transactions that were entered Into during the financial year were on an arms length pricing basis and were In the ordinary course of business and do not attract the provisions of Section 188 of the Companies Act, 2013.

There were no materially significant transactions with related parties during the financial year which were in conflict with the interest of the Company and hence, enclosing of Form AOC 2 Is not required. Suitable disclosures as required by the Accounting Standard (Ind AS - 24) has been made In the notes to the Financial Statements.

All related party transactions are placed before the Audit Committee and also before the Board for approval. Prior omnibus approval of the Audit Committee Is obtained on yearly basis for transactions which could be foreseen and are of repetitive nature for a period of one year. The transactions entered Into pursuant to the omnibus approval so granted for review are placed before the Audit Committee on a quarterly basis.

The Policy on Related Party Transactions, as approved by the Board Is uploaded on the Companys website. None of the Directors has any pecuniary relationship or transaction vls-a- vis the Company.

17. Disclosures regarding Employees

a) The Statement of Details of Remuneration as required under Section 197 and Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 Is attached as Annexure - IV and forms a part of this Boards Report.

b) The Information required under Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 and forming part of this report Is given In separate annexure to this Report.

The said annexure Is not being sent along with this Report to the Members of the Company In line with the provisions of Section 136 of the Companies Act, 2013. Any member Interested In obtaining a copy of the said statement may write to the Company Secretary at the Registered Office of the Company. The aforesaid annexure Is also available for Inspection by the Members at the Registered office of the Company, twenty one days before the 38th Annual General Meeting and up to the date of the said Annual General Meeting during the business hours on working days.

c) No employee, other than the Chairman and Managing Director by himself or along with his spouse and dependent children holds 2% or more of the equity shares of the Company.

d) The Company has not received any complaint under The Sexual Harassment of Women at Workplace (Prohibition, Prevention and Redressal) Act, 2013, during the year.

18. Public Deposits

During the year, the Company has neither accepted nor renewed any deposits from the public and as such, there are no outstanding deposits in terms of the Chapter V of the Companies Act, 2013 and the Companies (Acceptance of Deposits) Rules, 2014.

19. Loans, Guarantees and Investments

The Company has not given loans, directly or indirectly to any person or other body corporate or given guarantee or provided any security in connection with a loan to any other body corporate or person. The Company has also not made any investments as per the provisions of Section 186 of the Companies Act, 2013.

20. Management Discussion and Analysis Report

A report for the year under review as required under Regulation 34 and as stipulated under Part B of Schedule V of Listing Regulations, is annexed herewith and forms part of this report.

21. Corporate Governance:

A report on Corporate Governance as required under Regulation 34 and as stipulated in Part C of Schedule V of Listing Regulations is annexed herewith and forms part of this report. Compliance Certificate issued by Statutory Auditors of the Company, regarding compliance of Corporate Governance is also annexed.

22. Extract of Annual Return

Companies Act 2013 and Rule 12 of the Companies (Management and Administration) Rules, 2014 is annexed with this report as Annexure-V.

23. Energy Conservation, Technology Absorption and Foreign Exchange Earnings and Outgo.

As required by Section 134(3)(m) of the Companies Act, 2013 and Rule 8(3) of the Companies (Accounts) Rules, 2014, information with regard to Conservation of energy, technology absorption and foreign exchange earnings and outgo are annexed as Annexure - VI to form part of this report.

24. Significant and Material Orders Passed by the Regulators or Courts

There are no significant material orders passed by the regulators / courts which would impact the going concern status of the Company and its future operations.

25. Compliance with Secretarial Standards

The Company has complied with applicable Secretarial Standards issued by the Institute of Company Secretaries of India.

26. Acknowledgement

We express our sincere appreciation and thank our valued stakeholders of the Company, viz., shareholders, customers. Bankers, stakeholders and business associates for support received from them during the year. We thank Central and State Governments and district level authorities for their continued support and encouragement to the Company.

We are pleased to record our appreciation of the loyal services and continued contribution rendered by each and every employee and workmen of the Company at all levels.

P. K. Daga Yashwant Kumar Daga P. K. Drolia
Chairman and Managing Director Director Director
(DIN 00040692) (DIN 00040632) (DIN 00291966)
Nilu Agrawal Binod Kumar Agrawal
Place: Kolkata Director Director
Date ; 30.06.2020 (DIN 03107052) (DIN 00515967)