To

The Members,

Mafatlal Industries Limited

Your Directors present the 107^th Annual Report together with the Audited Statement of Accounts for the year ended 31^st March 2021.

1. Financial Results

The Financial Results of the Company are as under:

in Lakhs

Particulars	Current Year	Previous Year
	2020-21	2019-20
Revenue from Operations	60,219.49	1,00,535.45
Other Income	3,564.71	5,676.86
Total Income / Revenues	63,784.20	1,06,212.31
EBIDTA	(1,112.32)	4,984.52
Depreciation	1,705.06	1,717.98
Finance Costs	2,210.27	3,143.29
Profit / (Loss) before Exceptional Items and Tax (write off / provisions / impairment losses)	(5,027.65)	123.25
Exceptional Items (Net)	(4,083.38)	(1,459.18)
Loss before Taxes	(9,111.03)	(1,335.93)
Tax (Expense) / Benefits	(264.39)	(34.87)
Loss after Taxes	(9,375.42)	(1,370.80)

2. Overview, State of Company Affairs and Year in Retrospect

The financial year 2020-21 was one of the most challenging year for the Indian textile industry as well as for your Company. While the

Industry was on its path of recovery from a stressed working capital situation due to negative credit outlook across Industry, the widespread and substantive economic disruption caused by the COVID-19 pandemic, significantly impacted the Industry wide performance globally as well as in India.

During the year under review, the focus of your Company has been on curtailing the losses caused by the pandemic and maintaining the market share by quickly getting on its feet once the nationwide lockdown was withdrawn. Besides, it took actions for, aggressively cutting costs, improving working capital turns and introducing new products. All these efforts are visible in the improvement in the performance fixed in second half of the Financial Year 2020-21.

In the context of the huge emerging demand for health-care products, the Company leveraged its distribution channels and contacts with health-care institutions. It repurposed part of its supply chain to manufacture and source critical products like PPE Suits, face-masks, temperature guns, and sanitizers to cater to the surge in demand for these products.

However, due to the impact of lockdown and conservatism in consumption expenditure in the light of the widespread economic uncertainty, the demand for traditional textiles remained subdued throughout the year.

During the year under review, the Company reported Total Income of 63,784.20 Lakhs and EBIDTA (Earnings before Interest, Depreciation, Tax & Amortisation) loss of 1,112.32 Lakhs with a Net Loss for the year of 9,375.42 Lakhs (including 4,083.38 Lakhs as Exceptional Loss).

Accordingly, it is proposed not to carry any amount to Reserves of the Company.

During the year, the Company faced the extreme necessity to reduce its fixed cost to reduce the losses, maintain liquidity and to sustain longer term viability. It started working towards the implementation of a strategic initiative of opting for an "asset light" business model for its manufacturing operations. As a parallel strategic step in that direction, the Company entered into a Memorandum of Understanding with Worker’s Union at its Manufacturing Unit situated at Nadiad to reduce its permanent workforce by launching a Voluntary Retirement Scheme (VRS). During the year 2020-21, Company agreed to pay 2,264.27 Lakhs as being the compensation to those workers who opted for voluntary retirement under the VRS. This amount has been recognised as an Exceptional Item in the Profit & Loss Account for this year.

Further, the Company carried out an assessment for the impact of COVID-19 on its liquidity, recoverability and carrying value of assets during the year. Based on such an assessment, the Company also recognised an impairment loss of 1,819.11 Lakhs as an Exceptional Item in the Profit & Loss Account for this year.

During the year under review, the Company undertook a series of strategic initiatives for reduction in fixed costs including manpower costs, developing business synergies across product portfolios and expanding its range of Health & Hygiene products. Also, during the year, the wholly owned subsidiary Vrata Tech Solutions Private Limited kicked-off its business activities in the Information Technology space.

As reported in last year’s Directors’ Report, the Company after scaling down of Denim operations, has closed its Denim manufacturing operations, as they could not be revived despite having taken several steps. The Company has paid-off all workers and other liabilities from the funds mobilised from the sale of certain assets including machinery, equipment, and other non-core assets. All the workers liabilities are already settled. Presently there is no manufacturing operations at Navsari plants. During FY 2020-21, the Company has incurred huge losses as its business has been severely impacted on account of all-round business disruptions caused by COVID-19 pandemic in Indian as well as in the world markets. As of today, the Company has creditors and other liabilities including bankers’ liabilities to pay. In order to raise the funds to meet with these liabilities, it is thought fit to consider sell /lease/ transfer or otherwise dispose-off in one or more tranches, land & building/s, and remaining machinery, equipment, furniture, fixtures & fittings and other assets situated at Company’s Undertakings at

Navsari. Accordingly, the Board of Directors of the Company has, subject to the approval of the shareholders of the Company to be obtained at the ensuing Annual General Meeting by way of a Special Resolution, granted in-principal approval to sell /lease/ transfer or otherwise dispose-off in one or more tranches, land & building/s, and remaining machinery, equipment, furniture, fixtures & fittings and other assets situated at Company’s Undertakings at Navsari.

The Company will consider disposing-off the said assets with the one or more parties who will not be a "Related Party" (as defined under the

Companies Act, 2013 read with SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 i.e. not related in any way with the Company’s Promoters or Directors or Key Managerial Persons) at such price as may be negotiated and on such terms and conditions as deemed fit by the Board subject to the requisite approvals.

The sale of the land & buildings and other assets as mentioned hereinabove, will tantamount to selling, leasing, or disposing-off the whole or substantially the whole of the Undertakings at Navsari as envisaged under the provisions of Section 180 of the Companies Act, 2013. Accordingly, as required under the provisions of Section 180(1)(a) and other applicable provisions of the Companies Act, 2013, Rules made thereunder and SEBI (LODR) Regulations, 2015 and other applicable provisions, as amended, the special resolution will be proposed for the approval of the shareholders at the ensuing Annual General Meeting.

The requisite disclosures on COVID-19 under Regulation 30 of SEBI Listing Obligations & Disclosure Requirements (LODR) has already been given as Notes to the Accounts & Management Discussions & Analysis. These details are also available on the Company’s website at www.mafatlals.com under "Financials & Disclosures" section.

While the disruption in economic activities arising from the COVID-19 pandemic continues to adversely affect the current economic outlook, but with the availability of vaccines, the aggressive push by the health authorities across the country to drive vaccinations and the greater level of preparedness within the health infrastructure for dealing with subsequent waves of the pandemic, the overall business environment in the new fiscal looks better compared to financial year gone by. The Directors of the Company are of the view that while the short-term outlook is unfortunately not encouraging, the medium to long term outlook for the economy looks far better. This positive view is also reflected in the assessments of the International economic community as well as many Indian economists.

A more detailed analysis of the financial results of the Company is given in the Management Discussion and Analysis Report which forms part of this report.

3. Borrowings, Loans, Guarantees and Investments

During the year under review, despite the liquidity crunch, the Company has repaid its long term borrowings amounting to 4,562.87 Lakhs, consistent with the specified repayment schedules. The Company also raised loan funds of 5,000.00 Lakhs to part finance its working capital requirments as well as operating liabilities arising from payments made under VRS and related liabilities.

In accordance with the guidelines of Reserve Bank of India, financial institutions provided relief to borrowers from the adverse effects of the complete lockdown, for the period from April 2020 to August 2020 in the wake of the COVID-19 pandemic. The Company opted for the relief available and availed a moratorium of 253.72 Lakhs, inclusive of principal and interest liabilities, as agreed with Banks.

The Company expresses gratitude to all the Banks and Financial Institutions for their continuing support and faith in the Company. The Company has not granted any loan, given any guarantee or made any investments as referred to in Section 186 of the Companies Act, 2013. During the year under review, the Company has subscribed to 2,00,000 equity shares of 10/- each, at par of Vrata Tech Solutions Private Limited as initial subscription. The Company further subscribed to 2,50,000 equity shares of 10/- each, at par. Accordingly, the Company’s investment in the said wholly owned subsidiary stands at 4,50,000 equity shares, valued at 10/- for each share.

Besides, in compliance of the terms of borrowings made during the year under review, the Company has invested and subscribed to a further 20,000 equity shares of 100/- each at par in the share capital of the Janata Sahakari Bank Ltd. (JSB)

4. Credit Rating/s

During the year, Acuite Rating & Research Limited has vide letter dated 31^st March, 2021 assigned the credit rating "ACUITE BBB-" with Stable Outlook for the long term facilities having tenure of more than one year and "ACUITE BBB-" /"ACUITE A3" for short term facilities having tenure up to one year.

In the same period, Credit Analysis & Research Limited (CARE) has vide letter dated 6^th October, 2020 assigned the credit rating "CARE BB+" with Stable Outlook for the long term facilities having tenure of more than one year and "CARE BB+" /"CARE A4+" for short term facilities having tenure up to one year.

Both the Credit Rating letters with justification of ratings are posted on and available on the Company’s Website at www.mafatlals.com under "Financial & Disclosures" section.

5. Dividend

In view of the Losses for the financial year ended 31^st March, 2021, continuing since previous years, the Board of Directors regret their inability to recommend any dividend for the year 2020-21 and hence, have not recommended/proposed the declaration of any dividend.

6. Restructuring of Promoters Shareholding & reclassification of Promoters holding;

As approved by the shareholders in the 106^th Annual General Meeting held on 10^th September, 2020 and subsequently approval by the BSE Limited, where the Company’s shares are listed, Vishad P Mafatlal Public Charitable Trust No.1 which was a part of the promoters group, was re-classified as non-promoters/public category during the year under review. The said shareholder has, thereafter, disposed-off their holdings in open market.

7. Details of changes of Directors and Key Managerial Personnel ;

During the year under review, Mr. Priyavrata H Mafatlal, a Whole Time Director of the Company was re-designated and appointed as Managing Director & Chief Executive Officer of the Company w.e.f. 1^st July, 2020 for his remaining term of current appointment which is valid till 31^st October, 2021.

Further, as recommended by the Nomination and Remuneration Committee (NRC), the Board has, subject to the approval of the members of the Company at the ensuing Annul General Meeting (AGM), re-appointed Mr. Hrishikesh A Mafatlal as Executive Chairman and Mr. Priyavrata H Mafatlal as Managing Director & Chief Executive Officer of the company for a further period of five 1^st November, 2021 till 31^st October, 2026. The requisite resolutions are proposed for their re-appointment in the Notice convening the 107^th AGM of the Company.

Pursuant to the provisions of Section 152 of the Companies Act, 2013, Mr. Hrishikesh A Mafatlal, Executive Chairman, is liable to retire by rotation and being eligible, offers himself for re-appointment and the same is proposed for approval at the ensuing 107 ^th AGM of the Company.

8. Employee Stock Option Scheme, 2017 and the changes in capital;

The shareholders of the Company at 103^rd Annual General Meeting held on 2^nd August, 2017, consented for creation of 6,95,000 employee stock option pool under Mafatlal Employee Stock Option Plan, 2017 by way of Special Resolution. The Board of Directors of the Company has, as per the recommendation of the NRC, approved "Mafatlal Employees Stock Option Plan 2017". Thereafter, NRC has at their meeting held on 10^th November, 2017 approved the grant of 1,38,000 options to certain senior management employees. Further, NRC had made a second grant on 1^st August, 2019 to certain executives aggregating to 3,18,000 options. The exercise price under the first grant is 322.70/- per option and 78.65/- per option under the second grant. There have been no further grants subsequently.

As at 31^st March, 2021, 48,000 options remained outstanding out of the firstgrant and 2,04,500 options remained outstanding from the second grant of 3,18,000 options. During thefinancialyear ended March 31, 2021, 1,26,000 options lapsed due to resignations of the grantees (employees) (corresponding number of options lapsed as on March 2019 and March 2018 were 56,000 options and 10,000 options respectively) and thus stand forfeited. These options were cumulated back into the Option Pool, and are therefore available for further grants in future.

Two of the option grantees (employees) have exercised a total of 11,500 options vested to them under second grant. Accordingly, the Company has, on 10^th February, 2021 allotted 11,500 equity shares of 10 each at an exercise price of 78.65/- per option. There has been no exercise of vested options as of date other than stated above.

Pursuant to the aforesaid exercise of options and allotment of 11,500 equity shares, the subscribed and paid-up equity shares capital of the Company has changed from 1,391.22 lakhs to 1,392.37 lakhs consisting of 1,39,12,886 equity shares of 10/- each to 1,39,24,386 equity shares of 10/- each and the share premium account was credited with the share premium of 10.93 lakhs. The detailed information on capital and reserves are provided in the attached audited accounts of the Company.

The further disclosures, as required under SEBI Employee Share Based Benefits Regulations, 2016 and other applicable provisions, are provided in Annexure III to this report along with other disclosures.

9. Subsidiaries, Associates and Joint Ventures :

The financial position of the subsidiary companies are given in the Notes to Consolidated Financial Statements. The Company does not have any material subsidiary. The Policy on Material Subsidiary framed by the Board of Directors of the Company is available on https://www. mafatlals.com/wp-content/uploads/2017/08/policy_on_materiality_of_subsidiary.pdf.

The audited accounts of Vrata Tech Solutions Private Limited, a wholly owned subsidiary (WOS) and Mafatlal Services Limited, a subsidiary of the Company, for the year ended 31^st March, 2021 are placed on the Company’s website www.mafatlals.com and is also open for inspection by any member at the Registered Office of the Company on all working days (Monday-Friday) during working hours and the

Company will make available these documents upon request by any member of the Company who may be interested in obtaining the same. During the year under review, the Company has surbscribed to the paid-up share capital of Vrata Tech Solutions Private Limited (WOS) and the investment in the said WOS stands at 4,50,00 equity shares of 10/- each at an issue price of 10/- each.

As reported earlier, Al Fahim Mafatlal Textiles LLC (UAE) remained non-operational and since there was no foreseeable beneficial future, the Board of Directors of the Company and the JV Partner decided for voluntary winding-up/closure of that entity. The Company had also written to the Ministry of Commerce, Department of Economic Development, Dubai that there was no operation of the said JV Company from 2016. Accordingly we have not applied for renewal of license to continue to operate the business there. The audited accounts of that JV Company are not available and the same are not consolidated with the Accounts of the Company from the FY 2018-19 and onwards.

10. Deposits

The Company does not have "Deposits" as contemplated under Chapter V of the Companies Act, 2013. Further, the Company has not invited or accepted any such deposits during the year ended 31^st March, 2021.

11. Internal Financial Controls

The existing internal financial controls are adequate and commensurate with the nature, size, complexity of the Business and the Business Processes followed by the Company. The Company has a well laid down framework for ensuring adequate internal controls over financial reporting. Such Internal Financial Controls have been reviewed by Independent Experts to ensure its effectiveness and they have confirmed that such controls are adequate and operating effectively.

12. Directors’ Responsibility Statement

As required under the provisions of Section 134 (5) of the Companies Act, 2013, your Directors state that:

(i) In the preparation of the annual accounts, the applicable accounting standards have been followed and proper explanations relating to material departures, if any, have been given; (ii) The directors have selected such accounting policies and applied them consistently and made judgements 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 loss of the Company for the period under review;

(iii) The directors have taken proper and sufficient care for the maintenance of adequate provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(iv) The directors have prepared the annual accounts on a ‘going concern’ basis;

(v) The directors have laid down internal financial controls to be followed financialcontrols are by the Company and that such internal adequate and operating effectively.

(vi) The directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

13. Industrial Relations

The relations between the employees and the Management have remained cordial and harmonious during the year under review. There were 998 (1753 in previous year) permanent employees on the payroll of the Company as on 31^st March, 2021.

During the year Company faced the extreme necessity to reduce its permanent fixed cost to reduce the losses. As a strategic step towards this direction, Company entered into a Memorandum of Understanding with Worker’s Union at its manufacturing unit situated at Nadiad, to reduce its permanent workforce by adopting Voluntary Retirement Scheme (VRS).

During the year the Company also re-aligned the Organization Structure as a strategic step to bring synergy across functions, implement principles of lean management and also reduce fixed costs. For long term future of the company, the Company has always believed that people are the key enablers to bring the turnaround, and secure growth with profitability. It continues to believe so and reflects that belief in its human resources management policies and practices.

14. Insurance

The properties and insurable interests of your Company like buildings, plant and machinery, stocks etc. are adequately insured by the Company. Further disclosures on Risk Management in the Company have been made under the Corporate Governance Report which forms part of this report.

15. Corporate Social Responsibility (CSR):

Mafatlal Industries Ltd., a part of Arvind Mafatlal Group, has been fulfilling its corporate social responsibilities for over 50 years, much before

CSR has been prescribed statutorily. Our work in this domain has been focused on poverty alleviation, health care, education for young children and women’s upliftment in rural India. In conformity with the provisions of Section 135 of the Companies Act, 2013 read with the Companies (Corporate Social Responsibility Policy) Rules, 2014, the Company has a CSR Committee, which presently comprises of Mr. Hrishikesh A. Mafatlal, who is the Chairman of the said Committee, Mr. Atul Kumar Srivastava and Mr. Sujal Shah, both are Independent Directors.

Based on the recommendations of the CSR Committee, the Board of Directors have formulated a CSR Policy encompassing the Group’s and the Company’s philosophy underlying its CSR activities and laid down the guidelines and mechanisms for undertaking socially relevant programs, in conformity with the statutory provisions. This policy is posted on the website of the Company and available on web link https:// www.mafatlals.com/wp-content/uploads/2017/08/corporate_social_responsibility_policy.pdf.

As per the provisions of Section 135 read with the Section 198 of the Companies Act, 2013, due to losses incurred by the Company over the years, there is no CSR obligation for the year 2020-21. Accordingly, there were no meetings of the CSR Committee held during the year. The statutory disclosures with respect to CSR is annexed hereto, forming part of this report.

During COVID-19 pandemic time, the Company has made contributions of aggregating to 21.00 Lakhs to PM Care Fund, CM Relief Funds of Gujarat & Maharashtra ( 7.00 Lakhs each).

16. Related Party Transactions

There are no materially significant related party transactions undertaken by the Company during the year. The Company’s policy for Related

Party Transactions is posted on the website of the company and is available at https://www.mafatlals.com/wp-content/uploads/2017/08/ related_party_policy.pdf.

The details of all the transactions with the related parties are disclosed in Notes forming part of financial statements, annexed to the financial statements for the year 2020-21 and further annexed as part of this report in AOC 2.

All the Related Party Transactions entered into by the Company are in the ordinary course of business and on an arm’s length basis, for which requisite prior approvals from the Audit Committee and the Board of Directors were obtained. None of the related party transactions required approval from shareholders.

17. Management Discussion and Analysis Report and Corporate Governance Report

As required under Schedule V (B) and (C) of the SEBI (LODR) Regulations, 2015, "Management Discussion and Analysis Report" as well as "Corporate Governance Report", are attached herewith and marked as Annexure I & II respectively and the same form part of this Directors’ Report.

Further, during the year under review, the Company has complied with all the mandatory requirements of the Corporate Governance. A certificate from the statutory auditors of the Company regarding compliance of conditions of Corporate Governance as stipulated under SEBI (LODR) Regulations, 2015 as amended, is annexed to the Report on Corporate Governance.

18. Other Statutory Disclosures

The Company has complied with the provisions relating to the constitution of Internal Complaints Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. During the year under review no complaint has been received in respect of sexual harassment. The Company makes requisite disclosures in compliance of the applicable provisions of the said Act and Rules made thereunder.

There has been no occurrence of any fraud/s in the Company nor any fraud/s reported by the auditors of the Company during the year. Besides, it is pertinent to note here that there has been no change in nature of business during the year under review and no Order has been passed by any Regulator or Court or Tribunal, which can impact the going concern status of the Company and its Operations in the future.

Further, there has been no issue of equity shares with differential rights as to dividend, voting or otherwise, and there were no buy back of shares.

The other statutory disclosures pursuant to Sections 134, 135, 188, 197 and other applicable provisions of the Companies Act, 2013 read with related Rules are attached herewith and marked as Annexure III.

19. Statutory Auditors & Audit Report

Pursuant to the provisions of Section 139 and other applicable provisions, if any, of the Companies Act, 2013 and the Rules made thereunder, M/s. Price Waterhouse Chartered Accountants LLP (Firm registration No.012754N/N500016) were appointed as statutory auditors of the Company for a period of five years by the members of the Company at 103rd Annual General Meeting (AGM) officefrom the to hold conclusion of 103^rd AGM till the conclusion of 108^th AGM. Thereafter at 104^th AGM the members have approved the continuation of their appointment for balance term till the conclusion of 108^th AGM. It may be noted that pursuant to the amended provisions of Section 139 (as amended by the Companies Amendment Act,2017), ratification of statutory auditors appointment is not required at every Annual General Meeting. Accordingly, resolution for yearly ratification of appointment has not been proposed/required.

The specific notes forming part of the Accounts referred to in the Auditor’s Report read with the notes to financial statements as referred to therein, are self-explanatory and give complete information and addresses the observations, if any. The Auditor’s Report does not have any qualification or reservations or adverse comments. Further the observation/s made therein read with concerned Notes to financial statements, provide sufficient information and need no clarification. So no further report with respect thereto.

20 Secretarial Auditor and Secretarial Audit Report

The Board of Directors of the Company has, in compliance with the provisions of Section 304(1) of the Companies Act, 2013 and Rules made in this behalf, appointed Mr. Umesh Ved, Company Secretary in practice, to carry out Secretarial Audit of the Company for the financial

2020-21. The Report of the Secretarial Auditor is annexed to this Report as Annexure IV. The Audit report does not have any qualification or reservations. The Company filed some forms/intimations with some delay due to technical & other issues inadvertently with additional fees as applicable and accordingly complied with the requisite requirements. Besides this, the report provides clarification, so no further explanations or comments are required/given in this report with respect thereto.

21 Cost Audit

Pursuant to the provisions of Section 148 of the Companies Act, 2013 read with relevant rules made thereunder, maintenance of cost records for Company’s "Textiles" products is required and accordingly such accounts and records are made and maintained by the Company. The cost audit for the year 2019-20 was carried out in time, and the Cost Audit Report with requisite data in the prescribed form CRA-4, has already been filed with Ministry of Corporate Affairs (MCA) within the permissible time, last year.

Further, in accordance with the said applicable provisions, the audit of the cost records of the Company for the year 2020-21 relating to the "Textiles" products manufactured and traded by the Company is being carried out by Cost Auditor Mr Bhalchandra C. Desai, Cost the due date with the Ministry of Corporate Affairs Accountant.TheCostAuditReportwillbefiled in due course of time after the same is approved by the Board of Directors of the Company within the permissible timeline.

22. Internal Auditor

M/s. Aneja Associates, a reputed firm of Chartered Accountants, are the Internal Auditors of the Company. The Audit Committee of the Board of Directors in consultation with the Internal Auditors, formulate the scope, functioning, periodicity, and methodology for conducting the internal audit.

23. Appreciation

The Directors wish to place on record their appreciation of the devoted services of the workers, staff and the officersand for their continued contribution to your Company. The Directors also express its appreciation to Company’s customers, business associates, service providers and suppliers, and other stakeholders for standing by the Company during these challenging times.

For and on behalf of the Board,

HRISHIKESH A. MAFATLAL

Chairman

(DIN: 00009872)

Place: Mumbai

Date: 26^th May, 2021 and amended on10^th June, 2021

Regd. Office:

Mafatlal Industries Limited (CIN L17110GJ1913PLC000035) 301-302, Heritage Horizon, 3^rd Floor, Off: C G Road, Navrangpura, Ahmedabad 380009.Tel: 079 – 26444404-06 Fax: 079 26444403, Email: ahmedabad@mafatlals.com Website: www.mafatlals.com