Himatsingka Seide Ltd Directors Report.

Your Directors are pleased to present the Thirty Sixth Annual Report on the operations and performance of your Company, together with Audited Financial Statements and Auditors Report for the year ended March 31, 2021.

3. FINANCIAL HIGHLIGHTS

The 3nancial highlights for the year under review are given below:

Particulars Standalone Consolidated
3 2020-21 2019-20 Change % 2020-21 2019-20 Change %
Revenue from Operations 168,191 160,076 5.07 225,832 235,793 (4.22)
Other Income 2,805 8,725 (67.85) 1,421 6,172 (76.98)
Total Revenue 170,996 168,801 1.3 227,253 241,965 (6.08)
EBITDA 33,412 47,264 (29.31) 30,317 47,931 (36.75)
EBITDA Margin (%) 19.87% 29.53% (32.71) 13.42% 20.33% (33.99)
EBIT 22,525 38,152 (40.96) 15,072 35,310 (57.32)
Pro3t before exceptional items 8,133 22,987 (64.62) (2,648) 15,838 (116.72)
Exceptional Item - 1,142 - 7,321
Pro3t before tax 8,133 21,845 (62.77) (2,648) 8,517 (131.09)
Tax Expense 2,757 7,181 (61.61) 2,686 7,192 (62.65)
Pro3t after tax 5,375 14,664 (63.35) (5,335) 1,325 (502.6)

3. BUSINESS HIGHLIGHTS

The Consolidated Total Revenue for Financial Year 2020-21 decreased by 6.08% and stood at Rs 227,252 lacs and the Consolidated EBITDA decreased by 36.75% and stood at Rs 30,317 lacs.

Some key highlights of FY 21 are as follows:

• The operations at all four manufacturing facilities of the Company were impacted during the 3rst half of the 3scal on account of the lockdowns imposed by the Central and State Governments owing to the Covid-19 pandemic. In addition, other disruptions including but not limited to workforce unavailability, supply chain congestion and logistical interruptions hampered our operations. This directly impacted both the Consolidated Revenues and Consolidated EBITDA for the Financial Year 20-21.

• During the 3scal, the Consolidated Total Revenue and Consolidated EBITDA were further impacted as the scheduled announcement by the Government of India on the proposed RoDTEP (Remission of Duties and Taxes on Export Products) Scheme that was to replace the RoSCTL (Rebate of State and Central Levies and Taxes) scheme e3ective 1st January 2021 was delayed and hence export incentives for Q4 FY21 were unable to be accounted for.

• Revenues from Brands during the FY 21 stood at Rs 179,829 lacs as compared to Rs 212,200 lacs in FY 20.

• The ramping up of capacity utilization at our new Terry towel plant located in Hassan Karnataka progressed well. The utilization levels increased from 35% in 3scal 2020 to 70% by end of 3scal 2021. This was achieved despite all the challenges that prevailed during the 3scal.

3. CHANGE IN THE NATURE OF BUSINESS

There was no change in the nature of business carried out by the Company during the period under review.

3. SHARE CAPITAL

The Company during the period under review has not issued and/or allotted any shares with/ without di3erential voting rights as per Section 43 of Companies Act, 2013 read with Rule 4(4) of the Companies (Share Capital and Debentures) Rules, 2014. The Authorized Share Capital of the Company is 3 67,00,00,000/- divided into 13,40,00,000 Equity Shares of 3 5 /- each and the Paid-up Capital of the Company is 3 49,22,85,800/- divided into 9,84,57,160 Equity Shares of 3 5/- each.

3. DIVIDEND

The Board has recommended a dividend of 10% (3 0.5 per equity share) for the 3nancial year ended March 31, 2021, subject to approval by the shareholders at the ensuing Annual General Meeting.

3. TRANSFER TO RESERVES

During the year the Company has not transferred any amount to Reserves.

3. SUBSIDIARY, JOINT VENTURES AND ASSOCIATE COMPANIES AND CHANGES THEREON

As on March 31, 2021, the Company had the following subsidiaries and Joint Ventures:

Subsidiaries:

• Himatsingka Wovens Private Limited, (wholly owned subsidiary)

• Himatsingka Holdings NA Inc., (wholly owned subsidiary)

• Himatsingka America Inc., (step down wholly owned subsidiary)

Joint Venture

• Twill & Oxford LLC*

*Twill & Oxford LLC ("T&O"), Joint Venture Company based out of Dubai has 3led for voluntary liquidation and is currently undergoing liquidation under the laws of Dubai.

In furtherance with the strike o3 application 3led with the local statutory authority in United Kingdom, Himatsingka Europe Limited has been, dissolved with e3ect from September 22, 2020.

Consolidated Financial Statements

As required under section 129(3), the Company has prepared consolidated 3nancial statements which form a part of the Annual Report. The consolidated 3nancial statements presented by the Company include the 3nancial results of its subsidiary companies. Further, a statement containing the salient features of the 3nancial statements of its subsidiaries in Form AOC-1 is annexed to this report as Annexure 1. Pursuant to section 136 of the Companies Act, 2013, the Annual Report of your Company containing inter alia 3nancial statements including consolidated 3nancial statements and 3nancial statements of the subsidiaries are available on the Companys website at www.himatsingka.com/investors/3nancial-reports

3. ANNUAL RETURN

As required under the Companies Act, 2013, the draft of Annual Return for the year 2021 is available on the website of the company - https://www.himatsingka.com/investors/3nancial-reports?tab=annual_report_tab

3. PUBLIC DEPOSITS

The Company has not accepted any deposits from the public during the year as per the provisions of the Companies Act, 2013.

33. BOARD OF DIRECTORS AND COMMITTEES

Composition of Board and changes thereto

As on March 31, 2021, the Board of the Company comprised of 8 (Eight) Directors of which 4 (Four) were Independent Directors, 1(One) was Nominee Director, 3(Three) Executive Directors of which 2(Two) were Promoter Executive Directors and 1 (One) was Non-Promoter Executive Director. Following were the changes in the Board of Directors between the end of 3nancial year and the date of this report:

• Exim Bank has withdrawn the candidature of Ms. Manjiri Bhalerao (DIN: 02300546) as Nominee Director with e3ect from April 30, 2021.

• The designation of Mr. V. Vasudevan (DIN: 07521742) was changed from Whole time Director to Non-Executive Director of the Company with e3ect from May 29, 2021. Mr. V. Vasudevan continues to be Non-Independent Director and the term of appointment is for a period of 2 years subject to approval of shareholders at the ensuing Annual General Meeting and he shall be liable to retire by rotation.

Mrs. Sangeeta Kulkarni (DIN: 01690333) was re-appointed as Independent Director for second term of 5 years with e3ect from May 21, 2021, subject to the approval of shareholders at the ensuing Annual General Meeting.

Board Meetings

The Board met 6 (Six) times during the year under review.

MCA through General Circular No. 11/2020 dated March 24, 2020 inter-alia granted one time relaxation to hold Board Meeting with a gap of 180 days instead of 120 days between two quarters. Correspondingly, the gap between the last Board Meeting of the Financial Year 2019-20 and the 3rst Board Meeting of this Financial Year was 146 days. The gap between all other Board Meetings did not exceed 120 days as prescribed under Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (‘Listing Regulations). The details of the meetings and attendance thereof are provided in the Corporate Governance Report forming part of the Annual Report.

Board Committees

The details pertaining to the composition of Board Committees are included in the Corporate Governance Report which is part of the Annual Report.

The details of the Composition of CSR Committee, the CSR Policy and the CSR spending have been elaborated in the Annexure-2 to this report.

Re-appointment of Director retiring by rotation

In accordance with the provisions of the Companies Act, 2013 and Articles of Association of the Company, Mr. D.K. Himatsingka, Executive Chairman, (DIN: 00139516), retires by rotation and being eligible, o3ers himself for re-appointment as a Director. His re-appointment will be considred at the ensuing Annual General Meeting for seeking approval of shareholders.

Declaration by Independent Directors

The Company has received from each of its Independent Directors, the declaration as stipulated under Section 149(7) of the Companies Act, 2013 and Regulation 25(8) of Listing Regulations, con3rming that the Director meets the criteria of independence as laid down under section 149(6) of the Companies Act, 2013 and Regulation 16(b) of Listing Regulations. The Independent Directors have also declared compliance with Rule 6(1) and Rule 6(2) of the Companies (Appointment and Quali3cation of Directors) Fifth Amendment Rules, 2019.

Directors Responsibility Statement

As required by the provisions of Section 134(3)(c) of the Companies Act, 2013, we the Directors of Himatsingka Seide Limited, con3rm the following:

a) in the preparation of the Annual Financial Statements for the year ended March 31, 2021, the applicable Accounting Standards have been followed along with proper explanation relating to material departures;

b) the Directors have 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 a3airs of the Company at the end of the Financial Year 2020-21 and of the pro3t of the Company for that period;

c) the Directors have taken proper and su3cient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d) the Annual Financial Statements have been prepared on a Going Concern basis;

e) the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating e3ectively; and

f) the Directors have laid down Internal Financial Controls to be followed by the Company and that such Internal Financial Controls are adequate and were operating e3ectively.

Key Managerial Personnel (KMP)

During the period under review, Mr. Sridhar Muthukrishnan was appointed as the Company Secretary and Compliance O3cer of the Company with e3ect from July 4, 2020. Mr. Ashok Sharma ceased to be the Company Secretary and Compliance O3cer of the Company with e3ect from July 4, 2020.

The designation of the Mr. V. Vasudevan (DIN: 07521742) was changed from Whole Time Director to Non-Executive Director of the Company with e3ect from May 29,2021 and consequently he ceased to be a KMP of the Company.

Board Performance Evaluation

The Company has, during the year, conducted an evaluation of the Board as a whole, its Committees and the individual Directors including the Independent Directors. The evaluation was carried out through di3erent evaluation forms which covered among others the evaluation of the Composition of the Board/committee, its e3ectiveness, activities, governance and with respect to the Chairman and the individual Directors, their participation, integrity, independence, knowledge, impact and in3uence on the Board. The Independent Directors of the Company also convened a separate meeting and evaluated the performance of the Board, the Non-Independent Directors and the Chairman.

33. AUDITORS AND AUDITORS REPORTS a) Statutory Auditors

The report of Statutory Auditors M/s BSR and Co., LLP, Chartered Accountants, for F.Y-2020-21 (appearing elsewhere in the Annual Report) does not have any quali3cation, reservation or adverse remarks. Pursuant to the provisions of section 139 of the Companies Act, 2013 and the rules framed thereafter, M/s BSR and Co., LLP, Chartered Accountants, were appointed as Statutory Auditors of the Company and are to hold o3ce until the conclusion of the 37th Annual General Meeting of the Company.

b) Secretarial Auditor

The Company has appointed Mr. Vivek Bhatt, Company Secretary in Practice, Bengaluru, to conduct the secretarial audit as required under section 204 of the Companies Act, 2013. The report appended as Annexure 3 to this report. The report does not have any quali3cation, reservation or adverse remarks.

c) Secretarial Compliance Report

The Company has appointed Mr. Vivek Bhatt, Company Secretary in Practice, Bengaluru, for issuing Annual Secretarial Compliance Report under Regulation 24A of Listing Regulations which is appended as Annexure 4 to the Boards Report.

d) Cost Auditors

Since the Companys export revenue, in foreign exchange, for the FY 2020-21 was greater than 75% (seventy 3ve percent) of the total revenue of the Company, the Company falls within the exemption speci3ed in Clause 4(3) of the Companies (Cost Records and Audit) Rules, 2014. In view of this, there is no requirement to furnish cost audit of cost records of the Company for its units at Hassan and Doddaballapur.

e) Internal Auditors

Pursuant to the provisions of section 138 of the Companies Act, 2013, the Board of Directors of the Company have reappointed Grant Thornton India LLP for carrying out the Internal Audit of the Company for the FY 2021-22. The Audit Committee of the Board of Directors in consultation with the Internal Auditor formulates the scope, functioning, periodicity and methodology for conducting the internal audit.

f) Internal Financial Controls (IFC)

The Board reviews the e3ectiveness of controls as part of IFC framework. There are regular scheduled reviews that cover controls, process level controls, fraud risk controls and Information Technology environment. Based on this evaluation, no signi3cant events have been noticed during the year that have materially a3ected, or are reasonably likely to materially a3ect, our IFC. The management has also come to a conclusion that the IFC and other 3nancial reporting was e3ective during the year and is adequate considering the business operations of the Company. The Statutory Auditors of the Company have audited the IFC over Financial Reporting and their Audit Report is annexed as Annexure A to the Independent Auditors Report under Standalone Financial Statements and Consolidated Financial Statements.

g) Fraud Reporting

There have been no instances of fraud reported by Auditors under section 143(12) of the Companies Act, 2013 and the Rules framed thereunder either to the Company or to the Central Government.

33. PARTICULARS OF LOANS, GUARANTEES, INVESTMENTS AND SECURITIES MADE

The particulars of loans made, guarantees given, investments made and securities provided as per the provisions of Section 186 of the Companies Act, 2013 and the relevant rules made thereunder are given in the notes to the standalone 3nancial statements.

33. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

All transactions entered into by the Company with its related parties are at arms length and in the ordinary course of business. However, the list of material related party transactions as per the Companys policy on related party transactions, as required under 3ule 8(2) of Companies (Accounts) Rules, 2014, is annexed to the Boards Report as Annexure 5.

33. SIGNIFICANT OR MATERIAL ORDERS PASSED BY REGULATORS/ COURTS

There are no signi3cant or material orders passed by Regulators/ Courts during the year under review.

33. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION & FOREIGN EXCHANGE

A statement containing the necessary information on Conservation of energy, Technology absorption and Foreign exchange earnings and outgo stipulated under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014 is annexed to this report as Annexure-6.

33. RISK MANAGEMENT

The Company has developed and implemented a comprehensive Risk Management Policy and framework to counter and mitigate the various risks encountered by the Company. In terms of the provisions of Section 134 of the Companies Act, 2013 a Risk Management Report is set out elsewhere in this Annual Report.

33. REMUNERATION OF DIRECTORS AND KEY MANAGERIAL PERSONNEL

The remuneration of Directors is given herein below:

Director DIN Sitting fees Salaries and Perquisites Pro3t linked Commission Total Ratio to Median remuneration of employees Percentage increase/decrease over previous year
Mr. D K Himatsingka 00139516 Nil 142.20 Nil 142.20 84.02:1 (83.21)
Mr. Shrikant Himatsingka 00122103 Nil 142.20 Nil 142.20 84.02:1 (83.21)
Mr. V. Vasudevan* 07521742 Nil 131.25 Nil 131.25 - (26.78)
Mr. Rajiv Khaitan 00071487 5.25 Nil 10.00 15.25 9.01:1 (45.54)
Mrs. Sangeeta Kulkarni 01690333 3.75 Nil 10.00 13.75 8.12:1 (40.22)
Mr. Pradeep Bhargava 00525234 5.63 Nil 10.00 15.63 9.24:1 (39.88)
Mr. Raja Venkataraman 00669376 4.88 Nil 10.00 14.88 8.79:1 56.63
Ms. Manjiri Bhalerao ** 02300546 3.75 Nil Nil 3.75 2.22:1 (31.82)

* Change in designation of Mr. V. Vasudevan and terms of appointment w.e.f. May 29, 2021.

** EXIM Bank withdrew the nomination of Ms Manjiri Bhalerao as Nominee Director w.e.f. April 30, 2021.

In the remuneration mentioned above, the sitting fees, salaries and perquisites form the 3xed component of the total remuneration and the commission is a variable component linked to the performance of the Company. b) Percentage Increase / Decrease in the Remuneration of the Key Managerial Personnel (other than Directors mentioned above)

Key Managerial Personnel Designation Percentage increase/decrease in the remuneration, if any
Mr. K.P. Rangaraj President - Finance and Group CFO (24.58% )
Mr. Ashok Sharma* SVP - Finance & CFO (Strategic Finance) & CS (76.86%)
Mr. Sridhar Muthukrishnan** Company Secretary & Compliance O3cer N.A.

* Ceased to be Company Secretary w.e.f. July 4, 2020. **Designated as Company Secretary w.e.f. July 4, 2020.

c) The percentage increase in median remuneration of the employees is 0.27%

d) The number of permanent employees in the rolls of the Company is 8,129

e) The average decrease in the salaries of managerial personnel during the year was 76.60% and the average decrease in the salaries of employees other than managerial personnel was 21.42%.

f) The variable component of remuneration were not availed by the Executive Directors during the year.

g) During the year, there were three employees (including KMP) whose remuneration was higher than that of the highest paid director. This was primarily due to reduction in remuneration of Executive Directors during the year 2020-21 owing to pandemic. The remuneration of Executive Directors has been reinstated with e3ect from April 1, 2021.

h) It is hereby a3rmed that the remuneration paid during the year is as per the Nomination and Remuneration Policy of the Company.

i) Information as per Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014: The Statement containing names of top ten employees in terms of remuneration drawn and particulars of employees as required under Section 197(12) of the Act read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. Shall be provided to the shareholders upon a request mode to the Company Secretary. Further, the Annual report is being sent by email to the members excluding the aforesaid Annexure in terms of Section 136 of the Act. Any shareholder interested in obtaining a copy of the same may write to the Company Secretary.

33. INVESTOR EDUCATION AND PROTECTION FUND 3IEPF3

Pursuant to the applicable provisions of the Companies Act, 2013 read with the IEPF Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 (‘the Rules), all unpaid or unclaimed dividends are required to be transferred by the Company to the IEPF established by the Government of India, after the completion of seven years. Further, according to the Rules, the shares on which dividend has not been paid or claimed by the shareholders for seven consecutive years or more shall also be transferred to the demat account of the IEPF Authority. During the year, the Company has transferred the unclaimed and unpaid dividends of 3 5,97,039. Further, 3,416 corresponding shares on which dividends were unclaimed for seven consecutive years were transferred as per the requirements of the IEPF Rules. Year-wise amounts of unpaid / unclaimed dividends lying in the unpaid account up to the year, and the corresponding shares, which are liable to be transferred are provided in the Shareholder Information section of Corporate Governance Report and are also available on our website - https://www.himatsingka.com/investors/shareholder-information?tab=dividend3tab

33. INSURANCE

The Companys assets are subject to risks/ peril and are adequately insured. The Company has also taken a Directors & O3cers Liability Policy to provide coverage against the liabilities arising on them. The Policy extends to all Directors and O3cers of the Company and its Subsidiaries.

33. POLICIES

a) Whistle Blower Mechanism

As a conscious and vigilant organization, Himatsingka Seide Limited believes in the conduct of the a3airs of its constituents in a fair and transparent manner, by adopting the highest standards of professionalism, transparency and ethics.

In its endeavour to provide its employees a secure working environment, the Company has established a "Whistle Blower Policy" as required under the Companies Act, 2013 and Listing Regulations and the same is also available on the Companys website - https://www.himatsingka.com/investors/corporate-governance

The Company Secretary of the Company, has been designated as the Chief Compliance O3cer under the policy and the employees can report any instance of unethical behaviour, fraud and/or violation of the Companys code of conduct or policy to the Chief Compliance O3cer. The Company has put in place adequate measures for visibility of the Whistle Blower Policy to employees and stakeholders at the workplace and the plants. In exceptional and appropriate cases, an employee can make direct appeal to the Audit Committee Chairman. The contact details of the Audit Committee Chairman are also available in the Whistle Blower Policy. During the year under review, no complaints were received under this mechanism.

b) Disclosure as required under Section 22 of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

The Company is committed to provide a safe and secure work environment to all its employees. All employees (permanent, contractual, temporary, trainees) are covered under this policy. Therefore, any discrimination and/or harassment in any form is unacceptable and the Company has in place a Prevention of Sexual Harassment Policy and an Internal Complaints Committee as per the requirements of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. During the year under review, no complaints were received.

c) Nomination and Remuneration Policy

The Company has formed a Nomination and Remuneration Committee as required under Section 178 of the Companies Act, 2013 and Regulation 19 of Listing Regulations. The Committee has formulated a policy as required under Section 178(3) of Companies Act, 2013 and Regulation 19 read with Schedule II to the Listing Regulations, stipulating the criteria for determining quali3cations, positive attributes and independence of a director and also the criteria relating to the remuneration of the directors, key managerial personnel, senior management personnel and other employees and their performance evaluation. Pursuant to the proviso of sub-section (4) of Section 178 of the Companies Act, 2013, the aforesaid policy is available on the Companys website - https://www.himatsingka.com/investors/ corporate-governance.

d) Dividend Distribution Policy

The Board of Directors of the Company have adopted a Dividend Distribution Policy as required under Regulation 43A of Listing Regulations. The Policy is available at the website of the company - https://www.himatsingka.com/investors/corporate-governance.

e) Policy for determining material subsidiaries

As required under Regulation 24 of Listing Regulations, the Company has adopted a policy for determining material subsidiaries. The policy has been disclosed on the Companys website - https://www.himatsingka.com/investors/corporate-governance.

f) Policy on Related Party Transactions

The Company has also formulated a policy on dealing with Related Party Transactions as required under Regulation 23 of Listing Regulations. The same is available on the Companys website - https://www.himatsingka.com/investors/corporate-governance.

g) Corporate Social Responsibility

Corporate Social Responsibility (CSR) is central to the operating philosophy of the Company and it is the Companys constant endeavour to ensure that its businesses uphold the highest standards of governance and compliance. It aims to deliver sustainable value to society at large as well as shareholders. In keeping with its philosophy, the Company has set up a CSR Committee that identi3es CSR projects and overlooks, supervises and provides guidance for the implementation of the projects. The CSR Committee explores various activities based on the thrust areas, 3lters and shortlists projects for CSR activities with the approval of Board of Directors. The companys CSR activities envisage initiatives primarily in the areas of health, education, environmental protection, community development and sanitation among others.

33. CORPORATE GOVERNANCE

The Company complies with the corporate governance code as prescribed by the stock exchanges and the Securities and Exchange Board of India (SEBI). The detailed report on corporate governance forms a part of the Annual Report and the Corporate Governance Report along with the Auditors Certi3cate on compliance with the mandatory recommendations on corporate governance is available in a separate section.

33. MANAGEMENT DISCUSSION AND ANALYSIS 3MDA3

In terms of Regulation 34 of SEBI Listing Regulations, the Management Discussion and Analysis Report (MDA) forms part of the Annual Report outlining the International and Domestic economic outlook, key developments in the International and Domestic Textile Industries etc.

33. BUSINESS RESPONSIBILITY REPORT 3BRR3

The Listing Regulations mandate the inclusion of the BRR as part of the Annual Report for the top 1,000 listed entities based on market capitalization. As per the market capitalization on March 31, 2021, the Company is within the purview of top 1000 listed companies. The Business Responsibility Report is in line with the key principles enunciated in the ‘National Voluntary Guidelines on Responsible Business Conduct framed by the Ministry of Corporate A3airs. It forms part of the Annual Report.

Acknowledgement

Your Directors wish to place on record their appreciation of the continuous e3orts made by all employees in ensuring excellent all-round operational performance. We also wish to thank our Customers, Vendors, Shareholders and Bankers for their continued support. Your Directors would like to express their grateful appreciation to the Central Government and Government of Karnataka for their continued co-operation and assistance.

For and on behalf of the Board
Place: Bengaluru D.K. Himatsingka
Date: 31 July, 2021 (Executive Chairman)