PBM Polytex Ltd Directors Report.

To,

The Members,

Your Directors have pleasure in presenting the Hundred and First Annual Report of the Company together with the Audited Standalone and Consolidated Statements of Accounts for the financial year ended 31st March, 2020.

1. FINANCIAL HIGHLIGHTS:

(Rs. in Lakhs)

Particulars 2019 20 2018 19
Earnings Before Interest, Depreciation and Tax (EBIDITA) 262.49 1147.92
Less:- Interest and Financial Charges 65.30 99.03
Gross Profit 197.19 1048.89
Less:- Depreciation 356.48 340.74
Profit Before Tax (159.29) 708.15
Less:- Provision for Taxation (Net) 41.02 315.02
(200.31) 393.13
Add:- Deferred Tax Assets 173.65 63.74
Profit After Tax (PAT) (26.66) 456.87
Add:- Other Comprehensive Income 46.97 37.66
Total Comprehensive Income for the year 20.31 494.53
Add:- Surplus brought forward (net after Buy back of shares) 2593.85 2592.32
Amount available for Appropriation 2614.16 3086.85
Less :- Appropriation:-
General Reserve -- 150.00
Dividend& Dividend Tax 49.76 343.00
Total Appropriation 49.76 493.00
Balance carried to Balance Sheet 2564.37 2593.85

2. DIVIDEND

Your Directors have decided not to declare any dividend for the Financial Year 2019 -20

3. TRANSFER TO RESERVES

Your Directors have decided not to transfer any amount to General Reserve.

4. CHANGE IN THE NATURE OF BUSINESS

There was no change in the nature of business of the Company during the financial year 2019-20.

5. BUSINESS OPERATIONS / STATE OF COMPANYS AFFAIRS

The Company has faced many unavoidable problems during the Financial Year 2019-20. The Government increased the Minimum Support Price of Cotton, the main raw material of both the units of the Company by about 28 % resulting in cost of production going very high. The Cotton yarn exports also fell down steeply. The higher Cotton prices led to lower demand of yarn and reduction in exports further attributed to poor market and mounting of stocks of cotton yarn within the country. This situation made many spinning Units either to cut their production or even to close down. Our Company had also to cut down its production to some extent. All these factors have reflected in discouraging financial Results of the Company during the period under review.

In March 2020, the WHO declared the COVID-19 outbreak as a pandemic which spread and continuous now also across the world. On 25th March, 2020 the Government of India has declared this pandemic a health emergency and ordered temporary closure of all non-essential business, imposed restrictions on movement of goods/material and travel etc. this restrictions led to suspension of operations for 32 to 40 days in March and April 2020 in both the units of the Company. Because of uncertainty of this Pandemic the financial impact on Companys profits remain uncertain.

6. INDEPENDENT DIRECTORS DECLARATION

All the Independent Directors of the Company have given their declarations that they meet the criteria of Independence as prescribed under section 149 (6) of the Companies Act, 2013 ("the Act").

7. DIRECTORS

During the year, Shri Makhanlal Bagaria (DIN: 01213323) has resigned from the Board w.e.f. 1st October, 2019 on health grounds the Board of Directors takes on record his valuable services and guidance to the Company during his tenure.

In accordance with the provisions of Section 152 of the Act and Articles of Association of the Company, Shri Hari Prasad Siotia and Shri Mohan Kumar Patodia, retire by rotation at the ensuing Annual General Meeting ("AGM") of the Company and being eligible, offer themselves for reappointment.

The Board has appointed Shri Chirayush Patel (DIN : 08690998), as an Additional Director on 14th February, 2020 in the category of Independent Director on our Board who holds office upto the conclusion of the 101stAGM of the Company. He meets the criteria of Independent Director and therefore the Board recommends to the shareholders for his appointment as such at the ensuing AGM for a consecutive period of five years with effect from14th February, 2020.

Subject to the approval of members at the ensuing AGM by way of special Resolution, on recommendations of the Nomination and Remuneration Committee ("NRC") the Board of Directors at its meeting held on 31st July, 2020,has proposed to re-appoint Shri Gopal Patodia (DIN : 00014247) and Shri Mohan Patodia (DIN : 00035381) as Managing Directors of the Company w.e.f. 01.04.2021 for a further period of 3 consecutive years and to approve their Remuneration as recommended and Board hereby obtains the consent of Shareholders as required under Section 196 of the Act. Since both of them have attained the age of 70 years since they are quite healthy and able to discharge their duties very efficiently.

None of these Directors are disqualified under Section 164(2) of the Act. Your directors recommend their appointment /re-appointments at the ensuing AGM.

8. KEY MANAGERIAL PERSONNEL

Pursuant to the provisions of Sections 2(51) and 203 of the Act read with Rule 8 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the following persons are acting as Key Managerial Personnel of the Company:-

i. Shri Gopal Patodia Managing Director
ii. Shri Mohan Kumar Patodia Managing Director cum Chief Financial Officer
iii. Shri Amit Patodia Senior President cum Chief Executive Officer
iv. Smt. Ishita Kapure Company Secretary& Compliance Officer

9. FORMAL ANNUAL EVALUATION

Pursuant to the provisions of Section 134(3)(p) the Act and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Board has carried out an annual performance evaluation of its own performance, Boards Committees, as well as, Directors individually including performance of Independent Directors, after seeking inputs from all the Directors/Committee members and finds it satisfactory.

10. BOARD MEETINGS

The details of Board Meetings are disclosed in Corporate Governance Report appended to Directors Report. The Board of Directors have met seven times during the financial year 2019 20.

11. DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to the Provisions of Section 134(3)(c) of the Act, your Directors confirm that

1. in the preparation of annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures; 2. the accounting policies adopted are consistently applied 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 the said period; 3. proper and sufficient care has been taken 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 & detecting errors &frauds and other irregularities; 4. annual accounts have been prepared on a going concern basis; 5. internal financial controls (as required by explanation to section 134(5)(e) of the Act) is being followed by the Company and that such internal financial controls are adequate and were operating effectively;

6. Proper systems have been devised to ensure compliance with all other applicable laws and that such systems are adequate and operating effectively.

12. SHARE CAPITAL / BUY BACK OF SHARES

Pursuant to the approval of the SEBI, the Company has bought back its 12,50,000 equity shares of Rs. 10 each @ Rs. 80 per share at an aggregate value of Rs. 10,00,00,000/- in May 2019 which represents 8.96% and 9.99% of the total paid-up equity share capital and free reserves (including securities premium account) as per the audited standalone financial statements of the Company as on March 31, 2018 respectively. The shares so bought back were extinguished on 14th May, 2019 reducing the Paid up Share Capital of the Company to Rs. 6,87,90,200/- (i.e. 68,79,020 shares of Rs. 10 each)

13. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186 OF THE ACT

The Company has not given any loans or guarantees to any party. Investments of Rs. 1011.78 lakhs have been made in different Mutual Funds. All the details of the investments are exhibited in Note Nos. 4 and 9 of Balance Sheets and the same are within the limits prescribed under section 186 of the Act.

14. INDUSTRIAL RELATIONS

During the year under review, the Industrial relations remained cordial at both the Petlad and Borgaon Units of the Company.

15. DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE

(PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

The Company has in place an Anti-Sexual Harassment Policy in line with the requirements of The Sexual Harassment of Women at the Workplace (Prevention, Prohibition and Redressal) Act, 2013. Internal Complaints Committee ("Committee") has been set up to redress the complaints received regarding sexual harassment. During the year, no complaints of this nature were received by the Committee.

16. PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES

The information required pursuant to section 197 (12) of the Act read with Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of the employees of the Company is given in Annexure "A".

There is no Employee in the company who was / is drawing remuneration more than managerial personnel nor there is any employee who has drawn remuneration more than Rs. 102.00 Lakhs or 8.50 Lakhs p.m. as required under Rules Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014

17. SUBSIDIARY AND ASSOCIATE COMPANIES

The Company does not have any Subsidiary Company. However, the Company holds 22,31,980 Equity Shares of Rs. 10/- per share and also 46,00,000 6% Non-Cumulative Non-Convertible Redeemable Preference Shares of Rs. 10/- per share of M/s Eurotex Industries and Exports Limited (CIN : L70200MH1987PLC042598) having its registered office at 809 Raheja Chambers, 8th Floor, 213 Nariman Point, Mumbai and Spinning Unit at Kolhapur. Form AOC 1 as required under section 129(3) of the Act is attached as Annexure "A (1)".

Accordingly, the said M/s.Eurotex Industries and Exports Limited is an Associate Company of our Company as defined under section 2(6) of the Act by virtue of our Companys holding equity share equal to 25.5087% in that company.

In pursuance of section 129 of the Act, Consolidation of Financial Statements of the Company has been done and accordingly, the share of our Company in Reserves and Surplus of the Associate Company upto the period 31.03.2014 has been exhibited under the head "Reserves and Surplus" as Capital Reserves, and the financial results for the financial years 2018-19 and 2019 20have been incorporated in Consolidated Statement of Profit and Loss. The corresponding effect of the above has been given in the value of shares of the Associate Company held by us and as shown under Note No. 4 of the Consolidated Balance Sheet under Investments (Non Current).The working of the Mill of the said Company is at grinding halt due to the continuous illegal strike by the workers since long and the company is suffering losses.

18. RELATED PARTY TRANSACTIONS

All Related Party Transactions as entered into during the financial year were at Arms Length basis and were in ordinary course of business. No materially significant related party transactions were done by the Company with Promoters, Directors, Key Managerial Personnel, other designated persons or other related parties, which may have potential conflict with the interest of the Company at large.

All related party transactions were placed before the Audit Committee and approved by the said Committee and the Board also accorded its consent thereto.

The Policy on Related Party Transactions has been uploaded on the Companys Website, web-link of which is http://pbmpolytex.com/wp-content/uploads/2015/12/Policy-on-Related-Party-Transactions.pdf. Form AOC 2 as required under section 134 (3) (h) of the Act read with rule 8(2) of the Companies (Accounts) Rules, 2014 is attached as Annexure "A(2)".

19. DISCLOSURE ON CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

In terms of Sub-section 3(m) of Section 134 of the Act read with Rule 12(1) of the Companies (Management and Administration) Rules, 2014, particulars relating to conservation of energy, technology absorption, foreign exchange earnings and outgo are given in Annexure "B" forming part of this report.

20. ANNUAL RETURN AND EXTRACT OF ANNUAL RETURN

As per provisions of Section 92 of the Companies Act, 2013 read with Rules made there under, a draft Annual Return of the Company for the financial year 2019-20 in the Form MGT-7 is available on the website of the Company, web-link of which is http://pbmpolytex.com/wp-content/uploads/2020/09/Draft-Form_MGT-7-1.pdf and the Extract of Annual Return in the Form MGT-9 has been annexed to this Report as Annexure "C".

21. CORPORATE SOCIAL RESPONSIBILITY ("CSR") POLICY

The details in respect of CSR Committee and separate report on CSR activities, forming part of the Directors Report, is attached as Annexure "D". The CSR Policy has been placed on the Companys website: www.pbmpolytex.com.

22. VIGIL MECHANISM / WHISTLE BLOWER POLICY

Your Company has a well-defined Whistle Blower Policy and has established Vigil Mechanism which provides adequate safeguards against victimisation of Reporting persons who follow such mechanism and also make provisions for direct access to the Chairman of Audit Committee in appropriate cases. The Vigil Mechanism / Whistle Blower Policy has been placed on the Companys website:www.pbmpolytex.com.

23. POLICY ON NOMINATION AND REMUNERATION

In compliance with the requirements of Section 178of the Companies Act, 2013 and Regulation 19 of the SEBI (Listing Obligations and Disclosure Requirements)Regulations, 2015, the Company has laid down a Nomination and Remuneration policy which has been uploaded on the Companys website.

The web-link for Nomination & Remuneration Policy is http://pbmpolytex.com/wp-content/uploads/2018/05/Nomination-and-Remuneration-Policy.pdf

The salient features of the NRC Policy are as under:-

a.) Setting out the objectives of the Policy

b.) Definitions for the purposes of the Policy

c.) Policy for appointment and removal of Director, KMP and Senior Management

d.) Policy relating to the Remuneration for the Managerial Personnel, KMP, Senior Management Personnel & other employees

D ring the year, the Company has made changes in the policy to bring them in line with the amendments in the SEBI Listing Regulations, 2015.

24. RISK MANAGEMENT POLICY

The Company has a structured Risk Management Policy. The Risk Management Process is designed to safeguard the organization from various risks through adequate and timely actions. It is designed to anticipate, evaluate and mitigate risks in order to minimize its impact on the business. The potential risks are inventoried and integrated with the management process so that they receive the necessary consideration during decision making. It is dealt with in greater details in the management discussion and analysis section.

25. COMMITTEES OF THE BOARD

The Company has already formed the following committees to ensure timely compliances and better corporate governance of all the applicable rules and regulations:

1) Audit Committee,

2) Nomination & Remuneration Committee and

3) Stakeholders Relationship Committee. The details about these committees are given in the Corporate Governance Report.

26. INSURANCE

All the properties of the Company including plant and machinery, stocks etc. have been adequately insured. The Company has also taken adequate insurance cover for loss of profit and Standing Charges.

27. AUDITORS

A. Statutory Auditors

M/s. Chandulal M. Shah & Co., Chartered Accountants (FRN: 101698W), Ahmedabad, who were appointed as Statutory Auditors of the Company at the 98thAnnual General Meeting ("AGM") of the Company for a term of Five years have tendered their resignation as such. Accordingly they will cease to be the Statutory Auditors of the Company.

The Directors of the Company hereby recommend M/s. Rinkesh Shah & Co., Chartered Accountants (FRN: 129690W), Ahmedabad, to be appointed as the Statutory Auditors of the Company w.e.f. the effective date of the resignation of M/s. Chandulal M. Shah & Co. for a term of Five years i.e. upto the Conclusion of 106th Annual General Meeting ("AGM") of the Company.

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 Company has appointed M/s. Samdani Shah and Kabra, a firm of Practicing Company Secretaries, Vadodara, as Secretarial Auditors for the financial year 2020 21 to undertake Secretarial Audit of the Company. The Secretarial Audit Report for the financial year 2019 20 is annexed herewith as Annexure "E".

C. Cost Auditor

Shri B. C. Desai, the Cost Accountant (Membership No. M-1077), Ahmedabad has been appointed as Cost Auditor to audit cost records and statements of the Company for the financial year 2020 21. His proposed remuneration for the said financial year, as stated in the notice of the ensuing Annual General Meeting, is to be confirmed by the shareholders as required under section 148 of the Act.

Further the company has made and maintained proper Cost Records as specified by the Central Government under Section 148 (1) of the Companies Act, 2013 for its business activities carried out during the year.

D. Internal Auditors

M/s. Madanlal Sharma & Co. Chartered Accountants and M/s. Shah Baheti Chandak & Co., Chartered Accountants have been appointed as Internal Auditors for conducting internal audit of Petlad and Borgaon Units of the Company respectively for the financial year 2020 21.

Explanation or Comments on disqualifications, reservations, adverse remarks or disclaimers in the Auditors Reports; No disqualifications, reservations, adverse remarks or disclaimers have been reported in the Auditors Reports, requiring any explanation or comments by the Board of Directors of the Company.

28. REPORT ON CORPORATE GOVERNANCE AND MANAGEMENT DISCUSSIONS

&ANALYSIS REPORT

The Company has complied with all the applicable requirements of Corporate Governance as stipulated in Regulations 17 to 27 and clauses (b) to (i) of Sub-Regulation (2) of Regulation 46of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. A Separate Report on Corporate Governance and a Certificate obtained from M/s. Samdani Shah & Kabra, Practicing Company Secretaries, regarding compliance with the conditions of Corporate Governance and Management Discussions &Analysis Report are annexed herewith with as Annexure "F" which forms part of this Report.

29. 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 during the financial year and upto the date of this Report.

30. DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANYS OPERATIONS IN FUTURE

No significant and/or material orders were passed by any Regulator or Court or Tribunal impacting the going concern status and the Companys operations in future.

31. INTERNAL CONTROL SYSTEMS

The Company has adequate internal control systems, commensurate with the size and scale of the Company. Internal Auditors have been appointed for Petlad, as well as, Borgaon units of the Company who submit their periodical reports to the Board and their advices are adopted and needful is done, if required for better control.

32. UNCLAIMED EQUITY SHARES AND DIVIDEND

Pursuant to the provisions of Section 124 of the Companies Act, 2013 ("the said Act"), the declared dividends which remain unpaid or unclaimed for a period of seven years have been duly transferred by the Company to the Investor Education and Protection Fund ("IEPF") established by the Central Government under Section 125 of the said Act.

The Company has uploaded the details of unpaid and unclaimed amounts lying with the Company as on 30thSeptebmer, 2019 (date of the last Annual General Meeting) on the Companys website (www.pbmpolytex.com) and also on the Ministry of Corporate Affairs website: www.mca.gov.in.

The dividend for the undernoted years, if unclaimed for seven years, will be transferred by the Company to IEPF:-

Financial Year Date of Declaration of Dividend Unclaimed Dividend as on 31.03.2020 (Rs.)
2012-13 27.07.2013 4,17,394.00
2013-14 21.08.2014 5,56,972.50
2014-15 24.09.2015 13,62,810.00
2015-16 24.09.2016 7,13,058.00
2016-17 25.09.2017 7,58,772.00
2017-18 18.09.2018 5,88,182.00
2018-19 30.09.2019 1,01,838.60

Pursuant to the provision of Section 124 (6) read with Rule 6 of Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 (the "IEPF Rules") as amended, all the shares in respect of which dividend has/have remained unpaid or unclaimed for consecutive seven years, the corresponding shares shall be transferred in the name of IEPF Authority.

14318 equity shares against 59 folios corresponding to the dividend for the financial year ended 31st March, 2012 which remained unclaimed for seven consecutive years have been transferred to the IEPF Authority after giving individual notice to concerned shareholders and advertisement in Newspapers.

The Company has uploaded the details of all shares transferred to the IEPF Authority on the Companys website (www.pbmpolytex.com) and also on the Ministry of Corporate Affairs website: www.mca.gov.in.

33. SECRETARIAL STANDARDS

All the applicable Secretarial Standards are being followed by the Company.

34. DEPOSITS

The Company has not accepted or continued any public deposits as contemplated under section 73 of the Act and the Companies (Acceptance of Deposits) Rules, 2014.

35. ACKNOWLEDGEMENTS

The bankers and financial institutions have extended their full cooperation, support and valuable assistance to the Company. Your Directors place on record their appreciation for the same.

For PBM POLYTEX LIMITED For PBM POLYTEX LIMITED
GOPAL PATODIA CHIRAYUSH PATEL
Place: Vadodara Managing Director Additional Director
Date: 31.07.2020 (DIN: 00014247) (DIN: 08690998)