Mohit Industries Ltd Directors Report.

To

The Members

MOHIT INDUSTRIES LIMITED

Your Directors have pleasure in presenting the 30th Annual Report of the Company together with the Audited Financial Statements for the year ended 31st March, 2020.

FINANCIAL RESULT AND PERFORMANCE:

(Rs. in Lakhs except EPS)

PARTICULARS STANDALONE CONSOLIDATED
31/03/2020 31/03/2019 31/03/2020 31/03/2019
Sales (net excise duty) 17501.02 19,147.00 17,501.02 19,147.00
Other income 308.73 395.91 308.73 395.91
Profit Before Interest & Depreciation 997.76 1300.73 997.76 1300.73
(-)Finance Cost 673.26 856.80 673.26 856.80
(-) Depreciation 311.46 383.36 311.46 383.36
Net Profit before tax & Exceptional items 13.05 60.57 13.04 60.57
(+)Exceptional Items (1.939) - -- 0.41
Net Profit Before prior period item & tax 11.11 60.57 13.04 60.99
(+) Prior period item - - - -
(-) Tax Expense (12.25) (7.83) (12.25) (7.83)
Share in Profit of Associates & Minority Interest - - (30.16) 1.38
Net Profit for the year after tax 23.36 68.40 (4.86) 70.19
Total Comprehensive Income for period 22.53 38.16 (187.27) (3257.43)
Earnings per share (Basic & Diluted) (In Rs.) 0.16 0.48 (0.03) 0.50

1. COVID-19

In the last month of FY 2020, the COVID-19 pandemic developed rapidly into a global crisis, forcing governments to enforce lock-downs of all economic activity resulting temporary closure of our manufacturing operations. The Company had resumed its operations in a gradual manner putting in place the mandatory protocols for all our employees as per the guidelines stipulated by the Ministry of Home Affairs of the Government of India. The policies revolve around safety, for self, Safety at Home, Safety for family, Safety in Transit, Safety of Colleagues, Safety at Workplace and Safety for Community. There had been a temporary halt in the supply chain of the Company due to the lockdown regulations, however the supply chain now is slowly coming back to its normal phase; the problem of shortage of drivers for both inbound and outbound transport is being faced by the business at this time.

2. DIVIDEND

With a view to conserve the resources for the Companys Business operations, your directors have deemed it prudent to not to recommend any dividend for the year ended 31st March, 2020. During the year under review, no amount from profit was transferred to General Reserve.

3. SHARE CAPITAL

The Paid up equity share capital as on March 31, 2020 was Rs. 1415.76 lakhs divided into 14,157,575 equity shares of Rs. 10 each. During the year under review, the Company has neither issued any shares/convertible warrant nor has granted any stock options and nor sweat equity.

4. STATE OF THE COMPANYS AFFAIRS

During the year under review, your Company has recorded its net revenue from operations as Rs. 17501.02 lakhs against revenue recorded of Rs. 19,147.00 lakhs in the previous year. The EBIDT recorded at Rs. 997.76 lakhs against last years figure of Rs. 1300.73 lakhs. Net profit after tax is recorded at Rs. 23.36 lakhs against previous year net profit of Rs. 68.40 lakhs. Your company has 16 Texturising Machines, 150 High Speed Shuttle-less water jet Looms with a capacity to manufacture 18,000 tonnes of Draw Texturised Yarn (DTY) per annum and 14 Million meters Grey fabrics per annum respectively.

5. EXPORT

The Company has exported DTY Yarn with a Premium and in its Brand Name to South Korea, Thailand, Czech Republic, Guatemala, Bulgaria, Indonesia, Japan, Vietnam, Malaysia, Mexico, Colombia and many more Countries. The Company is having star export house status. During the year under review, your company has recorded export turnover of Rs. 8,782.51 lakhs, against last years figure of Rs. 10,062.95 lakhs. Your company also holds Certificate of Oeko-Tex Standard 100.

6. EXTRACT OF ANNUAL RETURN

In accordance with Section 134(3) (a) of the Companies Act read with Rule 12(1) of the Companies (Management and Administration) Rules, 2014, an extract of the annual return in the prescribed format is annexed as Annexure- 1 to the Directors Report.

The web link for the Annual Return placed on the Companys website is www.mohitindustries.com/downloads/annual-report/2019-2020.

7. CONSOLIDATED FINANCIAL STATEMENTS

The Consolidated Financial Statements of Mohit Industries Limited, its subsidiaries and its associates is prepared in accordance with Ind AS- 110 on Consolidated Financial statements and Equity method of accounting given in Ind AS - 28 on "Accounting of Investments in Associates in Consolidated Financial statements". The details of such subsidiary and associates are as follows:-

Name of company Nature of relation
2. Mohit Overseas Limited Associates
3. Mohit Yarns Limited Associates

8. BUSINESS GROWTH

Your Company has a dedicated team of Management and Operating Personnel who have been instrumental in the growth of the business over the years. Your Directors believe that the Company has the potential to further scale up its business volumes and profitability and are in the process of identifying new avenues of growth and effective utilization of its existing resources.

9. PERFORMANCE AND FINANCIAL POSITION OF EACH OF THE SUBSIDIARIES, ASSOCIATES AND JOINT VENTURE COMPANIES

There are two associate companies within the meaning of Section 2(6) of the Companies Act, 2013 ("Act") as on 31st March, 2020. Pursuant to provisions of Section 129(3) of the Companies Act, 2013 read with Rule 5 of the Companies (Accounts) Rules, 2014, a statement containing salient features of the financial statements of the Companys subsidiaries/ Associate Companies and Joint Ventures is given in Form AOC-1 and forms an integral part of this Annual Report.

10. CORPORATE GOVERNANCE & MANAGEMENT DISCUSSION & ANALYSIS REPORT

As per Regulation 34 (3) read with Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a separate section on corporate governance practices followed by the Company, together with a certificate from Mr. Dhiren Dave, Company Secretary in practice, confirming compliance and Management Discussion Analysis Report forms an integral part of this Annual Report.

11. FIXED DEPOSITS

During the year under review the company has not accepted any deposits within the meaning of section 73 of the Companies Act, 2013 and the rules made there under.

12. DIRECTORS

In accordance with the provisions of Section 152 of the Companies Act, 2013 and the Companys Articles of Association, Mr. Manish Saboo, Director (DIN: 01576187) will retire by rotation at the ensuing Annual General Meeting and, being eligible, has offered himself for re-appointment. The details of the aforesaid Directors, his expertise in various functional areas as required to be disclosed under Regulation 36 (3) of the Listing Regulations, form part of the Notice of the ensuing Annual General Meeting. The Board of Directors s at their meeting held on 28th August, 2020 had decided to re-appoint Mr. Narayan Saboo as managing Director for a term of 5 years with effect from 01st October, 2020, subject to approval of Members in the ensuing Annual General meeting.

During the financial year, other than as stated above no changes have been occurred in the Directors of the Company. The details of the aforesaid directors, his/her expertise in various functional areas as required to be disclosed under Regulation 36 (3) of the Listing Regulations, form part of the Notice of the ensuing Annual General Meeting.

13. DECLARATION FROM INDEPENDENT DIRECTORS

The Independent Directors have submitted their declaration to the Board that they fulfill all the requirements as stipulated in Section 149(6) of the Companies Act, 2013 read with rules framed thereunder.

14. BOARD EVALUATION

Pursuant to the provisions of the Companies Act, 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Board has carried out the annual performance evaluation of its own performance, the Directors individually as well as the evaluation of Committees. The performance of the Board / Committee was evaluated after seeking inputs from all the Directors / Committee members on the basis of the defined criteria including composition and structure, effectiveness of meetings, information and functioning. Performance evaluation of Independent Directors was done by the entire Board, excluding the Independent Director being evaluated, on the basis of relevant knowledge, expertise, experience, devotion of time and attention to companys long term strategic issues and understanding of duties, roles and function as Independent Director. The Directors expressed their satisfaction with the evaluation process.

15. NUMBER OF MEETINGS HELD

The Board met Eight times during the financial year, the details of which are given in the Corporate Governance Report that forms part of this Annual Report. The intervening gap between any two meetings was within the period prescribed by the Companies Act, 2013 and the Listing Regulations.

16. POLICY ON DIRECTORS APPOINTMENT, REMUNERATION INCLUDING CRITERIA FOR DETERMINING QUALIFICATIONS, POSITIVE ATTRIBUTES, INDEPENDENCE OF A DIRECTOR AND OTHER MATTERS

The Board has, on the recommendation of the Nomination & Remuneration Committee framed a policy for selection and appointment of Directors, Senior Management and their remuneration including criteria for determining qualifications, positive attributes and other matters provided under sub section (3) of section 178 of the Companies Act 2013. The Companys Remuneration Policy for Directors, Key Managerial Personnel and other employees is annexed as Annexure- 2 to the Directors Report and also available on Companys website www.mohitindustries.com.

17. VIGIL MECHANISM / WHISTLE BLOWER POLICY

In order to ensure that the activities of the Company and its employees are conducted in a fair and transparent manner by adoption of highest standards of professionalism, honesty, integrity and ethical behavior, the Company has adopted a Vigil mechanism/ Whistle Blower Policy. This policy is also posted on the Companys website www.mohitindustries.com.

18. FAMILIARISATION PROGRAMME FOR INDEPENDENT DIRECTORS

The Company has formulated a familiarization program for the Independent Directors to provide insights into the Company to enable the Independent Directors to understand its business in depth and contribute significantly to the Company. The details of such program are available on the Companys website www.mohitindustries.com.

19. COMPOSITION OF KEY MANAGERIAL PERSONNEL (KMP)

The Company has the following KMP;

>
Name of KMP Designation Date of Appointment in current Designation Date of Resignation
Mr. Narayan Saboo Managing Director 28/09/2015 N.A
Mr. Manish Saboo Director & CFO 30/05/2014 N.A
Miss. Nikita Pediwal Company Secretary 15/04/2019 N.A

20. COMPOSITION OF AUDIT AND NOMINATION & REMUNERATION COMMITTEE

The Audit Committee comprises of Mr. Sachin Jain (Chairman), Mr. Jayesh Gandhi (Member) and Mr. Narayan Saboo (Member). The Nomination and Remuneration Committee comprises of Mr. Sachin Jain (Chairman), Mr. Jayesh Gandhi (Member) and Mrs. Pragya Memani (Member). Brief details on the committee are given in the Corporate Governance Report. All the recommendations of the audit committee are accepted by the Board.

21. DIRECTORS RESPONSIBILITY STATEMENT

To the best of knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statement in terms of Section 134(3) (c) of the Companies Act, 2013 that:

a) in the preparation of the annual accounts for the financial year ended 31st March, 2020, the applicable accounting standards have been followed along with proper explanation relating to material departures; the annual accounts have been prepared in compliance with the provisions of the Companies Act, 2013;

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 affairs of the Company at the end of the financial year and of the profit of the Company for year ended on that date;

c) the directors have 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) the directors have prepared the annual accounts on a going concern basis; and

e) the directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively;

f) 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.

22. STATUTORY AUDITORS

M/s. Rajendra Sharma & Associates, Chartered Accountants (FRN: 108390W) were appointed as the Statutory Auditors of the Company at the 27th Annual General Meeting of the Company held on 07th August, 2018 for a term of five consecutive years commencing from financial year 2017-18 up to Financial Year 2021-22, from conclusion of the 27th Annual General Meeting of the Company till the conclusion of the 32nd Annual General Meeting of the Company and their appointment would be placed for ratification by the members at every Annual General Meeting during the said term. In view of the above, ratification by the Members for continuance of their appointment at this AGM is not being sought. The Statutory Auditors have given a confirmation to the effect that they are eligible to continue with their appointment and that they have not been disqualified in any manner from continuing as Statutory Auditors. The remuneration payable to the Statutory Auditors shall be determined by the Board of Directors based on the recommendation of the Audit Committee.

AUDITORS REPORT

Members attention is invited to the observation made by the Auditors under "Qualified Opinion" appearing in Auditors Reports.: The Company has not provided for Post-Employment Benefits and other long-term employee benefits under Defined Benefit Plans on accrual basis but provides the same as and when they become due for payment. This method of accounting of Post-Employment Benefits and other long-term employee benefits under Defined Benefit Plans is in deviation with Ind AS – 19 on Employee Benefits. As there is no actuarial report or basis of calculation available with the management of such Post-Employment Benefits and other long-term employee benefits, the quantum of deviation cannot be ascertained. If the company had followed the method accounting as per Ind AS – 19, then employee benefit expense would have increased and correspondingly Profit for the period would have reduced.

"The Board is of the opinion that the Provision for the Long term Employees are determined on the basis of actuarial Valuation Method & technique prescribed in the Accounting Standard. The Consulting fees by actuaries for determining the Provision for long term benefit Plan is even higher than the Annual Liability of the company for Long term benefits. The company has decided to pay the Long term benefits as and when it becomes due as the amount is negligible and it is not going to make any impact on the financial Position of the company. Considering the size of the company and negligible liability, the company has not made provisions for Long term employee benefits & Defined benefits plan"

23. COST AUDITOR

The Board of Directors, on the recommendation of Audit Committee, has appointed M/s. Nainesh Kantliwala & CO, Cost Accountants, (Firm Registration Number 001303) as Cost Auditor to conduct the audit of companys cost records for the financial year 2020-21 at a remuneration of _ 50,000/- (Rupees Fifty Thousands only) plus applicable service tax and reimbursement of out of pocket expenses. As required under the Companies Act, 2013, the remuneration of Cost Auditors as approved by the Board of Directors is subject to ratification by the shareholders at the ensuing Annual General Meeting and in this connection resolution seeking members approval forms part of the Notice convening the 30th Annual General Meeting.

24. SECRETARIAL AUDIT

Mr. Dhiren R Dave, Surat, Practising Company Secretaries were appointed to conduct the secretarial audit of the Company for the financial year 2019-20, as required under Section 204 of the Companies Act, 2013 read with rules framed there under. The Secretarial Audit Report for F.Y 2019-20 is annexed as Annexure-3 to the Directors Report. There is no secretarial audit qualification for the year under review.

25. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS MADE

Loans, Guarantees and Investments covered under Section 186 of the Companies Act, 2013 form part of the notes to the financial statements provided in this Annual Report.

26. CONTRACTS AND ARRANGEMENTS WITH RELATED PARTIES

All transactions entered with Related Parties for the year under review were on arms length basis and in the ordinary course of business and that the provisions of Section 188 of the Companies Act, 2013 and the Rules made thereunder are not attracted. Thus, disclosure in form AOC-2 in terms of Section 134 of the Companies Act, 2013 is not required. Further, there are no material related party transactions during the year under review with the Promoters, Directors or Key Managerial Personnel. The transactions with related parties as per requirements of Indian Accounting Standard (IND AS-24)– ‘Related Party Disclosures are disclosed in Note No. 36 of Notes to Accounts. All Related Party Transactions are placed before the Audit Committee as also to the Board for approval. Omnibus approval was obtained for transactions which are of repetitive nature. The policy on materiality of Related Party Transactions as approved by the Board of Directors has been uploaded on the website of the Company. The web-link of the same has been provided in the Corporate Governance Report. None of the Directors/KMP has any pecuniary relationship or transactions vis--vis the Company.

27. DEVELOPMENT AND IMPLEMENTATION OF A RISK MANAGEMENT POLICY

Pursuant to the provisions of the Companies Act, 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Board formally adopted steps for framing, implementing and monitoring the risk management plan for the Company by way of Risk Management Policy. The main objective of this policy is to ensure sustainable business growth with stability and to promote a pro-active approach in reporting, evaluating and mitigating risks associated with the business. The policy establishes a structured and disciplined approach to Risk Management, in order to guide decisions on risk related issues. In todays challenging and competitive environment, strategies for mitigating inherent risks associated with business and for accomplishing the growth plans of the Company, are imperative. The common risks inter alia are risks emanating from; Regulations, Competition, Business, Technology obsolescence, Investments, retention of talent, finance, politics and fidelity. As a matter of policy, these risks are assessed and steps as appropriate are taken to mitigate the same. The Risk Management Policy is also hosted on the Companys website www.mohitindustries.com.

28. MATERIAL CHANGES AND COMMITMENTS, IF ANY AFFECTING THE FINANCIAL POSITION OF THE COMPANY OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR TO WHICH THESE FINANCIAL STATEMENTS RELATE AND THE DATE OF THE REPORT

There are no material changes or commitments affecting the financial position of the Company which have occurred between the end of the financial year and the date of this Report.

29. INTERNAL FINANCIAL CONTROLS

The Company has in place adequate internal financial controls with reference to financial statements. The Companys internal control system is commensurate with its size, scale and complexities of its operations. During the year, such controls were tested and no reportable material weaknesses in the design or operation were observed.

30. INSURANCE

The Companys building, plant and machineries, Stocks and other properties wherever necessary and to the extent required have been adequately insured.

31. LISTING OF SHARES AND LISTING FEES

The Equity Shares of your Company are listed and actively traded on the BSE Limited and the National Stock Exchange of India Limited. The Company has paid annual listing fees to the both stock exchanges for the financial year 2020-21. Pursuant to the approval of the Board of Directors of the Company at its meeting held on July 27, 2020, your Company had filed an application to BSE Limited ("BSE") for voluntary delisting of its equity shares from the BSE on July 29, 2020 in terms of regulation 6 and 7 of the Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2009 ("SEBI Delisting Regulations").

32. REMUNERATION AND PARTICULARS OF EMPLOYEES

The information required under Section 197 of the Companies Act, 2013 read with Rule 5(1) and Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is annexed as Annexure -4 to the Directors Report.

33. INDUSTRIAL RELATIONS

The Company maintained healthy, cordial and harmonious industrial relations at all levels.

34. TRANSFER OF UNCLAIMED AMOUNTS TO IEPF

During the period under review, the Company has transferred the unclaimed dividend amount of Rs. 299,914.5/-, pertaining to Financial Year 2011-12 (Final Dividend) to the IEPF pursuant to provision of Section 125 of the Companies Act, 2013. The Company has also transferred 5,265 Equity Shares of Rs. 10/- each to the IEPF Account on which the dividends had remained unpaid or unclaimed for seven consecutive years or more after following the prescribed procedure.

35. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

As required under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014 the particulars relating to conservation of energy, technology absorption and foreign exchange earnings and outgo is annexed as Annexure- 5 to the Directors Report.

36. DISCLOSURE UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL), ACT, 2013

The Company has complied with provisions relating to the constitution of Internal Complaints Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. All employees (permanent, contractual, temporary, trainees) are covered under this policy. Your Directors further state that during the year under review, No compliant was received from any employee during F.Y 2019-20 and hence no complaint is outstanding as on 31st March, 2020 for redressal.

37. DETAILS OF SIGNIFICANT OR MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS

During the year under review, there are not any significant or material orders passed by the Regulators or Courts or tribunals impacting the going concern status and your Companys operations in future.

38. GREEN INITIATIVES

In commitment to keep in line with the Green Initiative and going beyond it to create new green initiatives, electronic copy of the Notice of 30th Annual General Meeting of the Company are sent to all Members whose email addresses are registered with the Company/Depository Participant(s).

39. ACKNOWLEDGMENT

The Board of Directors wishes to place on record its appreciation for the commitment, dedication and hard work done by the employees in the Company and the cooperation extended by Banks, Government authorities, customers and shareholders of the Company and looks forward to a continued mutual support and co-operation. The Directors regret the loss of life due to COVID-19 pandemic and are deeply grateful and have immense respect for every person who risked their life and safety to fight this pandemic. The Directors appreciate and value the contribution made by every member of the MIL family.

For and on behalf of the Board of Directors
For Mohit Industries Limited For Mohit Industries Limited
Sd/- Sd/-
Date : 28th August, 2020 (Narayan Saboo) (Manish Saboo)
Place : Surat Managing Director Director & CFO