pbm polytex ltd share price Directors report


To,

The Members,

Your Directors have pleasure in presenting the Hundred and Third Annual Report of the Company together with the Audited Standalone and Consolidated Statements of Accounts for the financial year ended 31st March, 2022.

1. FINANCIAL PERFORMANCE

(Rs. in Lakhs)

Particulars 2021-22 2020-21
Earnings Before Interest, Depreciation and Tax (EBIDITA) 3508.11 846.69
Less:- Interest and Financial Charges 91.78 60.47
Gross Profit 3416.33 786.22
Less:- Depreciation 328.54 352.97
Profit Before Tax 3087.79 433.25
Less:- Provision for Taxation (Net) 814.36 146.74
2273.43 286.51
Add:- Deferred Tax Assets 26.14 27.80
Profit After Tax (PAT) 2299.57 314.31
Add:- Other Comprehensive Income 40.09 22.46
Total Comprehensive Income for the year 2339.65 336.77
Add:- Surplus brought forward (net after Buy back of shares) 2701.16 2564.39
Amount available for Appropriation 5040.81 2901.16
Less :- Appropriation:-
General Reserve 3200.00 200.00
Dividend 103.19 -
Total Appropriation 3303.19 -
Balance carried to Balance Sheet* 1737.62 2701.16

• Dividend Declared and paid in FY 2021-22 for FY 2020-21

2. DIVIDEND

Your directors have pleasure to recommend dividend @ of 40% (i.e. Rupee four) per equity share for the Financial Year 2021-22 on this account Rs. 275.16 Lacs will be appropriated from Reserves and Surplus. Payment of dividend shall be subject to Income tax deduction at source wherever applicable.

3. TRANSFER TO RESERVES

Your directors have decided to transfer Rs. 32,00,00,000/- ( Rs. Thirty Two Crores only) to General Reserve from profits.

4. CHANGE IN THE NATURE OF BUSINESS

There was no change in the nature of business of the Company during the financial year 2021-22.

5. BUSINESS OPERATIONS / STATE OF COMPANYS AFFAIRS

During the financial year 2021-22, overall our Company has performed well. There has been continuous steep increase in raw cotton prices and simultaneous increase in yarn prices as well. With timely and accurate information, the Company has been able to cover the raw material on time, which has substantially benefited the Company, resulting in substantial increase in Companys profitability. Fortunately, during this financial year, Pandemic Covid-19 has not affected much in the operation of the Company, as the Pandemic was well in control.

The Companys Borgaon units machine utilization has been exceptionally good. However, at Petlad Unit, because of shortage of workers and heavy absenteeism, machine utilization has not been satisfactory. The Companys HR Department, is making all-out effort to recruit new apprentices and train them to cover the shortage of workers. Also, HR Department is vigorously counselling our workers to be more punctual. We are optimistic, during the current year, we are able to fight absenteeism and shortage of workers. During the financial year 2022-23, as a word of caution, it appears that cotton prices have gone beyond expectable limits. Over the year, the price increase is almost more than 100%. This has affected the whole textile chain both locally as well as internationally. During the coming year, the Company will have to fight the situation which is absolutely abnormal.

During the current financial year, the capital expenditure for changing of comber at the Borgaon Unit has been successfully completed as per schedule. Because of global chip shortage and non-delivery of machinery from LMW, the modernization in Carding Department has got delayed. We envisage to get this completed in this financial year. In the last quarter of this financial year, we are expecting delivery of 2 Murata auto coner and we are hopeful to get the commissioned by March, 2023.

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

In accordance with the provisions of Section 152 of the Companies Act, 2013 and Articles of Association of the Company, Shri Hari Prasad Siotia (DIN: 00015103) and Shri Mohan Kumar Patodia (DIN: 00035381) Directors of the Company are liable to retire by rotation at the ensuing Annual General Meeting ("AGM") of the Company and being eligible, offer themselves for re-appointment.

Subject to the approval of members at the ensuing AGM, the Board of Directors at its meeting held on 12th August, 2022, on recommendations of the Nomination and Remuneration Committee, has proposed to reappoint Shri Ashok Pandit (DIN: 08132980) as Independent Director of the Company w.e.f. 18th May, 2023 for a further period of 5 years by way of special resolution.

The Board on recommendation of Nomination and Remuneration Committee and subject to the approval of the shareholders by way of a Special Resolution proposed to appoint Ms. Amishal Modi (DIN : 09661312), as Independent Director with effect from 12th August, 2022 for a period of 5 (Five) years.

The details in respect of qualification, area of expertise etc. of all the above appointee directors are provided in annexure to the notice. You are therefore in the interest of the company requested to accord your consent to these resolutions.

Neither of these Directors are disqualified under Section 164(2) of the Act.

Smt. Vinita Devi Modi, Independent Director has submitted her resignation vide letter dated 14.07.2022, from the office of the Director due to her other commitments and priority as a result, she could not spare time to contribute and continue as director w.e.f. 14.07.2022. She was appointed as an Independent Director on the Board of Directors of the Company w.e.f. 20th September, 2014 for the period of five consecutive years i.e. upto 19th September, 2019 and was re-appointed as an Independent Women Director on 30th September 2019 for the second the term of five consecutive years i.e. upto 19th September 2024. Board appreciated her valuable services rendered to the company during her tenure as director.

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. Ms. Swati Sharda : Company Secretary cum Compliance Officer

9. FORMAL ANNUAL EVALUATION

Pursuant to the provisions of Section 134(3)(p) of 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 Board of Directors have met six times during the financial year 2021-22.

The details of Board Meetings held are disclosed in Corporate Governance Report appended to Directors Report.

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

There was no change in the authorized/issued or paid up share capital of the company during the year.

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

The Company has given inter corporate loan to M/s. Eurotex Industries & Exports Limited i.e. its Associate Company, of Rs. 3,00,00,000/-, (Rupees Three Crores) at 7% rate of interest, by way of mortgage of land of the borrower company, by executing loan agreement and equitable mortgage. Investments in mutual funds made during the year have all been encashed. Short Term deposits with banks have, however, been made- the details of which are given under Note pertaining to Cash and Bank Balances. All these investments including long term investments are within the limits prescribed under Section 186 of the Act. The Company is holding 46,00,000 Preference Shares of Rs. 10/- each aggregating to Rs. 4.60 Crores in M/s. Eurotex Industries & Exports Limited. The said Company since last more than four years due to inadequate profit/loss has not declared Dividend on Preference Shares.

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 p.a. or 8.50 Lakhs p.m. as described 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 the fact that our Company holds 25.5087% equity share of that Associate Company.

In pursuance of section 129 of the Act, Consolidation of Financial Statements of our Company and the associate 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 accounted and exhibited under the head "Reserves and Surplus" as Capital Reserves, and the results from the F.Y. 2014-15 to 2021-22 have been incorporated in Consolidated Statement of Profit and Loss (of relevant years). The corresponding effect of the above has been given in the value of shares of the Associate Company held by us and has been shown under Note No. 4 of Balance Sheet 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 huge losses. The loans and dues of Banks and financial institutions have been fully paid. The portion of our companys share in profit/losses of the associate company has been shown in Form AOC-1 as required under the Act.

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 approved by the Audit Committee, as well as, the Board of Directors.

The summary of such transactions is given in Note No. 41 of Notes forming part of Accounts.

The Policy on Related Party Transactions has been uploaded on the Companys Website, web-link of which is https://pbmpolytex.com/upload/investor lodr reg/8-policy-of-related-party-transactions-final.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 thereunder, a draft Annual Return of the Company for the financial year 2021-22 is available on the website of the Company, web-link of which is https://pbmpolytex.com/upload/investorjodr_reg/sodapdf-merged-mergmg- result.pdf

21. CORPORATE SOCIAL RESPONSIBILITY ("CSR") POLICY

The Board of directors has amended the applicable Policies to bring them in accordance with the SEBI regulation and keeping in view better corporate governance.

The CSR Policy has been placed on the Companys website www.pbmpolytex.com.The details in respect of CSR activities and expenditure forming part of the Directors Report is attached as Annexure "C". Pursuant to MCA Notification dated 22.01.2021 the CSR Committee is no longer required.

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 178 of 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

https://pbmpolytex.com/upload/investorJodr_reg/7-nommation- and-remuneration-policy-final.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.

During 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. Rinkesh Shah & Co., Chartered Accountants (FRN: 129690W), Ahmedabad, were appointed as Statutory Auditors of the Company at the 101st AGM for the term of five years i.e. up to conclusion of 106th Annual General Meeting of the Company to be held in the year 2025-26. However, M/s. Rinkesh Shah & Co., vide its letter dated 09.08.2022 have tendered resignation as the Statutory Auditors of the Company with effect from the conclusion of 103rd Annual General Meeting due to medium sized CA firm and facing staff constraints. Accordingly they will cease to be the Statutory Auditors of the Company upon conclusion of 103rd Annual General Meeting.

Based on the recommendations of the Audit Committee, the Board of Directors, at its meeting held on 12.08.2022 noted and accepted the resignation of M/s. Rinkesh Shah & Co. The Board also placed on record its appreciation to outgoing Auditors for their valuable contribution to the Company with their audit process and standards of auditing.

Pursuance to the Provisions of Section 139(1) of the Companies Act, 2013, the Directors of the Company to fill such casual vacancy at their meeting dated 12.08.2022, as per the recommendation of the Audit Committee and subject to the approval of members, appointed M/s. Mahendra N. Shah & Co., Chartered Accountants (FRN: 105775W ), Ahmedabad, as Statutory Auditors of the Company for a period of 5 (five) years with effect from the conclusion of 103rd Annual General Meeting as such remuneration plus out of pocket expenses and applicable taxes, as may be mutually agreed between the board of directors of the Company and the auditors.

M/s. Mahendra N. Shah & Co., Chartered Accountants (FRN: 105775W), is a well-known firm of Chartered Accountants having their office at Ahmedabad. The firm also holds a Peer Review Certificate No.013057 dated 29.04.2021 issued by the Peer Review Board of the Institute of Chartered Accountants of India valid till dated 30.04.2024.

Appropriate resolution seeking Members approval for the appointment of M/s. Mahendra N. Shah & Co., as Statutory Auditors of the Company is appearing in the Notice of the meeting. The Audit for FY 2021-22 was conducted by M/s. Rinkesh Shah & Co., and there are no qualifications, reservations, adverse remarks, or disclaimers made by the statutory auditor in their Audit Report.

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, (CP 2863) a firm of Practicing Company Secretaries, Vadodara, as Secretarial Auditors for the financial year 2022-23 to undertake Secretarial Audit of the Company. The Secretarial Audit Report for the financial year 2021-22 is annexed herewith as Annexure "D".

C. Cost Auditor

M/s. Y. S Thakar & Co., has been appointed as Cost Auditor for audit of cost records and statements for the financial year 2022-23 also. The 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

Shri. Yegasubramaniam Iyer, (Membership No-045781), Chartered Accountants, Vadodara and M/s. Shah Baheti Chandak & Co, (FRN: 109513W), Chartered Accountants, Nagpur, have been appointed as Internal Auditors for conducting internal audit of Petlad and Borgaon Units of the Company respectively for the financial year 2022-23.

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 46 of 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 "E" 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. However, looking to the need of the time it has been decided to widen the scope of internal audit and accordingly 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 remained 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 in separate bank accounts named "PBM POLYTEX LIMITED UNPAID DIVIDEND ACCOUNT" upto the financial year 2013-14 on the Companys website (www.pbmpolytex.com) and also on the Ministry of Corporate Affairs website: www.mca.gov.in.

The dividend for the years mentioned below, if remain unclaimed for consecutive seven years, will be transferred by the Company to IEPF:-

Financial Year Date of Declaration of Dividend Unclaimed Dividend as on 31.03.2022 (Rs.)
2014-15 24.09.2015 1356108.00
2015-16 24.09.2016 710817.00
2016-17 25.09.2017 758172.00
2017-18 18.09.2018 587482.00
2018-19 30.09.2019 100558.20
2019-20 No dividend declared 0.00
2020-21 30.09.2021 233912.00
TOTAL 3747049.20

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, have to be transferred in the name of IEPF Authority.

Accordingly 106840 equity shares against 71 folios corresponding to the dividend for the financial year ended 31st March, 2014 which remained unclaimed for seven consecutive years have been transferred to the IEPF Authority after giving individual notices to the concerned shareholders and advertisement in Newspapers.

In aggregate 257769 equity shares against 1069 folios have been transferred to IEPF Authority against the dividend unpaid/unclaimed upto the Financial Year 2013-14.

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.

The shareholders or their legal successors can claim back the dividend and all equity shares so transferred, from MCA after following the procedure laid down by MCA.

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 Independent Director
Date: 12.08.2022 (DIN: 00014247) (DIN: 08690998)