Mold-Tek Packaging Ltd Directors Report.

Dear Members,

Your Directors have pleasure in presenting their report on the business and operations of the Company for the year ended 31st March, 2019.

FINANCIAL RESULTS Rs Lakhs

STANDALONE CONSOLIDATED2018-19 2017-18 2018-19 2017-18

STANDALONE

CONSOLIDATED

2018-19 2017-18 2018-19 2017-18
Revenue from operations 39408 33946 40572 34684
Other income 134 105 113 96
Total income 39542 34051 40685 34780
Profit before Finance cost, depreciation & Tax 7328 6452 7145 6262
Finance cost 709 411 757 475
Depreciation 1473 1184 1610 1315
Profit before exceptional items and tax 5146 4857 4778 4472
Provision for current tax 1303 1393 1303 1393
Provision for deferred tax 283 295 283 295
Exceptional items 1150 - - -
Net profit (After Tax) 2410 3169 3192 2784
Other comprehensive income (net of tax ) (30) (7) (30) (7)
Profit brought forward from previous years 6523 4333 5866 4061
Amount available for appropriation 8903 7495 9028 6838
Less: Appropriation
Transferred to general reserve - 405 - 405
Dividend on equity shares (excluding tax) 1107 443 1107 443
Tax on dividends 228 90 228 90
Other adjustments - 34 - 34
Closing Balance of retained earnings 7568 6523 7693 5866

PERFORMANCE REVIEW

Your Company has shown a healthy performance at consolidated level in terms of revenue, EBIDTA & PAT. Your Company has achieved a total revenue of 40572 lakhs from 34684 lakhs in the previous year with a growth rate of 16.98%. The operating profit (EBIDTA) increased by 14%, from 6262 lakhs to 7145 lakhs, overall resulting into a reasonable increase in net profits by 14.66% amounting

to 3192 lakhs as against the profit of 2784 lakhs for financial year 2017-18. The EPS on weighted average equity has increased from 10.05 in the financial year 2017-18 to 11.53 in the financial year 2018-19, leading to an increase of 14.66%.

NEW PLANTS

Your Companys new manufacturing facilities at Mysore and Vizag (Pudi) have just started their commercial operations in the month of March, 2019 for Mysore and in the month of May, 2019 for Vizag. Mainly these two plants are cater to the plastic packaging containers requirement of Asian Paints Limited and other clients in the South and East. Initial production capacity of each plant is 3000 Mts per annum and it may reach to 7000 Mts per annum by 2022-23. At present peak capacity, these plants can add 120 crores to the top line. Your Companys initial investment is around 45 crores for both plants. Both plants have equipped with world class Injection Molding Machines and Robotic IML decoration apart from HTL and screen printing equipment.

Your Company has invested a huge amount of 80.87 crores in 2018-19; including previous 2 years investments, the overall assets have gone up by more than 100% from 131.96 crores in 2015-16 to 260.44 crores in 2018-19. These new capacities are becoming productive and expected to add growth in volumes from the financial year 2019-20 onwards.

DIVIDEND

Your Company has recommended a final dividend of 2 per equity share i.e. @40% of face value of 5 each, in addition to interim dividend of 2 (40%) per equity share hitherto declared, making a total of 4 (80%) per equity share (previous year: 4 per equity share @80% of face value of 5 each) for the financial year ended 31st March, 2019. The final dividend, if approved, will be paid to those Members whose names appear in Register of Members as on 20th September, 2019. In respect of shares held in dematerialized form, it will be paid to Members whose names are furnished by National Securities Depository Limited and Central Depository Services (India) Limited as beneficial owners as on that date.

This will entail an outflow of 667.66 lakhs (Inclusive of dividend tax).

The dividend payout for the year under review has been formulated keeping in view your Companys need for capital and rewarding shareholders.

Equity shares that may be allotted on or before the Book Closure will rank pari passu with the existing shares and will be entitled to receive the dividend.

AUTHORIZED SHARE CAPITAL

The Authorized Share Capital of the Company as on 31st March, 2019 stands at 14,50,00,000 (Rupees Fourteen crore fifty lakhs only) divided into 2,90,00,000 (Two crore ninety lakhs) equity shares of 5 (Rupees Five only) each. During the year, there has been no change in the authorized share capital of the Company.

PAID UP SHARE CAPITAL

There has been no change in share capital during the financial year. The paid up share capital of the Company was Rs13,84,55,260 divided into 2,76,91,052 shares of Rs 5 each as on 31st March, 2019.

CREDIT RATING

Your Company has received credit rating from two agencies D&B Rating and ICRA.

D&B Rating

The credit rating is 5A1 and condition is stated as Good.

D&B Indicative Risk Rating of 5A1 implies that the Company has a tangible net worth of 89,859 lakhs and above as per the latest available financial statements. Composite Appraisal 2 indicates that the overall status of the Company is strong.

ICRA

The outlook on the long-term rating from ICRA has also been upgraded from stable to positive. The rating details are as follows:

Instrument Rating
Term loan [ICRA] A- (Stable)
Long-term loans fund based [ICRA] A-
Short-term non- fund based [ICRA]A2+
Long-term/short- term proposed [ICRA]A-

CHANGE IN THE NATURE OF BUSINESS, IF ANY

No change in the nature of Business

MATERIAL CHANGES AND COMMITMENTS, IF ANY, AFFECTING THE FINANCIAL POSITION OF THE COMPANY

No material changes and commitments affecting the financial position of the Company have occurred between the end of the financial year to which the financial statements relate and the date of this Directors Report.

SUBSIDIARY

Your Company has decided to substantially wind down the operations of the wholly owned subsidiary "Mold- Tek Packaging FZE, UAE" in view of the reduced viability.

The Company is not expecting to realize the investment made and accordingly the investment of 1003.20 lakhs is impaired and fully provided for. Further, a provision of 146.83 lakhs is also made towards expected loss on the realization of the trade receivables.

The consolidated financial statements of the Company prepared in accordance with applicable Accounting Standards as specified in the Companies (Accounts) Rules, 2014, form part of the annual report. Pursuant to the provisions of Section 129(3) of the Companies Act, 2013 (the Act), a statement containing salient features of financial statements of subsidiary in Form AOC 1 forms part of Boards Report.

Separate audited financial statements in respect of the subsidiary company shall be kept open for inspection at the Registered Office of the Company during working hours for a period of 21days before the date of the Annual General Meeting. Your Company will also make available these documents upon request by any Member of the Company interested in obtaining the same. The separate audited financial statements in respect of the subsidiary company is also available on the website of your Company at: http:// www.moldtekgroup.com .

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

Loans, guarantees and investments covered under Section 186 of the Act form part of the notes to the financial statements provided in this Annual Report.

DEPOSITS

The Company has neither accepted nor renewed any deposits from public within the meaning of Section 73 of the Act read with Companies (Acceptance of Deposits) Rules, 2014 during the year under review.

INTERNAL CONTROLS SYSTEMS AND ADEQUACY

The Companys internal audit systems are geared towards ensuring adequate internal controls commensurate with the size and needs of the business, with the objective of efficient conduct of operations through adherence to the Companys policies, identifying areas of improvement, evaluating the reliability of financial statements, ensuring compliances with applicable laws and regulations and safeguarding of assets from unauthorized use.

Details of the internal controls system are given in the Management Discussion and Analysis Report, which forms part of the Boards Report.

DETAILS OF DIRECTORS/KEY MANAGERIAL PERSONNEL

All the Independent Directors have given declarations that they meet the criteria of independence as laid down under Section 149(6) of the Act and Regulation 16 of Securities

and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015. In the opinion of the Board, they fulfill the conditions of independence as specified in the Act and the Rules made thereunder and are independent of the management.

Based on the confirmations received, none of the Directors are disqualified for being appointed/re-appointed as directors in terms of Section 164 of the Companies Act, 2013.

In accordance with the provisions of Section 152 of the Act, Mr. P. Venkateshwara Rao, Deputy Managing Director (DIN: 01254851) of the Company, is liable to retire by rotation and is eligible for re-appointment.

On the recommendations of the Nomination and Remuneration Committee, the Board proposed to reappoint Mr. Talupunuri Venkateswara Rao and Mr. Venkata Neeladri Varma Nadimpalli as Independent Directors for a second term.

Mr. Vasu Prakash Chitturi, Non-Executive Independent Director has resigned from the post of Independent Director of the company w.e.f. 24th August, 2019 and the Board accepted the resignation of Mr. Vasu Prakash Chitturi in the Board meeting held on 31st August, 2019.The Board has placed its sincere appreciation for the services rendered by him during his tenure.

Pursuant to the provisions of regulation 36 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and Secretarial Standard 2 on General Meetings issued by ICSI, brief particulars of the directors proposed to be appointed/ re-appointed are provided as an annexure to the notice convening the AGM.

EMPLOYEE STOCK OPTION SCHEME

The Company has in operation Mold-Tek Packaging Employees Stock Option Scheme-2016 for granting stock options to the employees of the Company, in accordance with the Securities Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 and Securities Exchange Board of India (Share Based employee benefits) Regulations, 2014.

The Company has granted the options under this scheme in the Board meeting held on 20th July, 2018 in the financial year 2018-19.

There have been no changes in the Scheme.

Disclosures pursuant to Regulation 14 of the Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 are enclosed as Annexure-A to this report.

The Annexure-A is also available on website of the Company at www.moldtekgroup.com

GOVERNANCE GUIDELINES

The Company has adopted Governance Guidelines or code of conduct on Board, Independent Director, Key Managerial Personnel and senior managerial personnel. The Governance Guidelines or code of conduct cover aspects relating to Board diversity, definition of independence and duties of independent directors, Code of Conduct, moral, ethics and principles to be followed.

STATEMENT ON COMPLIANCE WITH APPLICABLE SECRETARIAL STANDARDS

It is hereby stated that the Company has duly complied with applicable Secretarial Standards for the year 2018-19.

NOMINATION, REMUNERATION AND PERFORMANCE EVALUATION POLICY

The requisite details as required by Section 134(3),Section 178(3) & (4) of the Act and Regulation 34(2) of Securities and Exchange Board of India(Listing Obligations and Disclosure Requirements) Regulations, 2015 is provided in the Report on Corporate Governance.

TRANSACTIONS WITH RELATED PARTIES

The requisite details as required by Sections 134 & 188 of the Act and Regulation 23, 34(3) of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 is provided in the Report on Corporate Governance and financial statements.

BOARD AND COMMITTEE MEETINGS

Details of the composition of the Board and its Committees and of the Meetings held and attendance of the Directors at such Meetings, are provided in the Corporate Governance Report. The intervening gap between the Meetings was within the period prescribed under the Section 173(1) of the Act and Regulation 17(2) of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015.

DIRECTORS RESPONSIBILITY STATEMENT

Based on the framework of internal financial controls and compliance systems established and maintained by the Company, work performed by the internal, statutory, cost and secretarial auditors and the reviews performed by management and the relevant Board Committees, including the Audit Committee, the Board is of the opinion that the Companys internal financial controls were adequate and effective during the financial year 2018-19.

Accordingly, pursuant to Section 134(3)(c) and 134(5) of the Act, the Board of Directors, to the best of their knowledge and ability, confirm that:

i. in the preparation of the annual accounts, the applicable accounting standards have been followed and that there are no material departures;

ii. they 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 that period;

iii. they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

iv. they have prepared the annual accounts on a going concern basis;

iv. they have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively;

v. they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

Pursuant to the provisions of Section 135 of the Companies Act 2013 read with the Companies (Corporate Social Responsibility Policy) Rules 2014, the Company has constituted a CSR Committee. The Corporate Social Responsibility Committee comprises of 3 Executive Directors and one independent Director, chaired by J. Lakshmana Rao. The composition of the Corporate Social Responsibility Committee meets the requirements of Section 135 of the Act. The Board of Directors, based on the recommendations of the Committee, formulated a CSR Policy. The requisite details on CSR activities pursuant to Section 135 of the Act and as per Annexure attached to the Companies (Corporate Social Responsibility Policy) Rules, 2014 are annexed as Annexure-B to this Report.

POLICY ON PREVENTION, PROHIBITION AND REDRESSAL OF SEXUAL HARASSMENT AT WORKPLACE

The Company has zero tolerance for sexual harassment at workplace and has adopteda Policy onPrevention,Prohibition and Redressal of Sexual Harassment at the Workplace, in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules there under. The policy aims to provide protection to employees at the workplace and prevent and redress complaints of sexual harassment and for matters connected or incidental thereto, with the objective of providing a safe working environment, where employees feel secure. The Company has also constituted an Internal Complaints Committee, known as the Prevention of Sexual Harassment (POSH) Committee, to inquire into complaints

of sexual harassment and recommend appropriate action. In the financial year 2018-19, the Company has not received any complaint which falls within the scope of this policy. The policy is available on website of the Company at: http:// moldtekpackaging.com/pdf/corporate-governance/MPL- Policy-of-SH.pdf

VIGIL MECHANISM/WHISTLE BLOWER POLICY

The requisite details as required by Section 177 of the Act and Regulation 22 & 34(3) of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 is provided in the Report on Corporate Governance.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS

No significant material orders have been passed by the regulators or courts or tribunals which would impact the going concern status of the Company and its future operations.

AUDITORS

a. Statutory Auditors

M/s. Anandam & Co., Chartered Accountants (Firm Registration Number 000125S) were appointed as the Statutory Auditors by the Members of the Company at the 20th Annual General Meeting (AGM) to hold office from the conclusion of the 20th AGM until the conclusion of the 25th AGM of the Company (subject to ratification by the Members at every subsequent AGM), in accordance with the provisions of the Act.

The first year of audit was of the financial statements for the year ending 31st March, 2018, which included the Audit of the quarterly financial statements for the year. Accordingly, the appointment of M/s. Anandam & Co., Chartered Accountants is being placed before the shareholders for ratification till the conclusion of the 25th AGM i.e., up to the financial year ending as on 31st March, 2022.

b. Secretarial Auditors

Pursuant to the provisions of Section 204 of the Act and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board of Directors of the Company had appointed Mr. Ashish Kumar Gaggar, Practicing Company Secretary in to undertake the Secretarial Audit of the Company for the year ended 31st March, 2019. The Secretarial Audit Report is annexed as Annexure-C. The Auditors Report and the Secretarial Audit Report for the financial year ended 31st March, 2019 do not contain any qualification, reservation, adverse remark or disclaimer.

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

The information on conservation of energy, technology absorption and foreign exchange earnings and outgo stipulated under Section 134 (3) (m) of the Act read with Rule 8 of the Companies (Accounts) Rules, 2014, is annexed as Annexure-D.

PARTICULARS OF REMUNERATION

The information required under Section 197 (12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is annexed as Annexure-E.

The information required under Rule 5(2) and (3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is provided in the Annexure forming part of the Report.

EXTRACT OF ANNUAL RETURN

Pursuant to Section 92(3) of the Act and Rule 12(1) of the Companies (Management and Administration) Rules, 2014, the extract of Annual Return in form MGT-9 is annexed as Annexure-F.

MANAGEMENT DISCUSSION AND ANALYSIS AND CORPORATE GOVERNANCE

The Management Discussion and Analysis Report and the Report on Corporate Governance, as required under Regulation 34(2) of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 forms part of the Annual Report.

Your Company is committed to the tenets of good corporate governance and has taken adequate steps to ensure that the principles of corporate governance as required under Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 are complied with.

A Company Secretary in Practice has certified that conditions of Corporate Governance as stipulated under Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 have been complied with by your Company and his certificate is annexed to the Report on Corporate Governance.

A declaration of Code of Conduct from J. Lakshmana Rao, Chairman & Managing Director forms part of the Corporate Governance Report.

CEO/CFO CERTIFICATION

J. Lakshmana Rao, Chairman & Managing Director and A. Seshu Kumari, Financial Controller & Chief Financial Officer of the Company have given a certificate to the Board as contemplated in Regulation17(8) of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015.

RISK MANAGEMENT

All assets of your Company and other potential risks have been adequately insured.

EMPLOYEE RELATIONS

The relationship with the workmen and staff remained cordial and harmonious during the year and the management received full co-operation from the employees.

FRAUD REPORTING

In the terms of provision of Section 134 (3) (ca) of the Companies Act 2013, during the year under review, there was no case of offense of fraud detected by the Auditors under sub section (12) of section 143.

MAINTENANCE OF COST RECORDS

The Central Government has not prescribed the maintenance of cost records under sub section (1) of section 148 of the Companies Act, 2013 for the products/services of the company.

ACKNOWLEDGEMENTS

Your Directors wish to place on record their appreciation and gratitude for all the assistance and support received from Citibank, Yes Bank, HSBC, ICICI Bank and officials of concerned government departments for their co-operation and continued support extended to the Company. They also thank the Members for the confidence they have reposed in the Company and its management.

J. LAKSHMANA RAO
Place: Hyderabad Chairman & Managing Director
Date : 31st August, 2019 DIN:00649702