PBM Polytex Ltd Management Discussions.

INDUSTRIAL STRUCTURE AND DEVELOPMENTS:

The Company is having two Cotton Spinning units one at Petlad (Guj.) and another at Borgaon (M.P.). There are three Windmills in Jamnagar (Guj.) and one Windmill in Kutch (Guj.).

Substantial quantity of yarn is being exported by the Company to various countries. Textile Industry is the oldest and highest employment providing in India. Globally, India is one of the country having largest textile manufacturing capacity. The important factors which influences the Companys operations are demand and supply conditions, availability of raw material at reasonable rate, the export market condition, availability of workers of required skills, Government regulations, tax laws, economic developments etc.

OPPORTUNITIES, THREATS, RISKS AND CONCERNS:

The Companys main raw material is Cotton which is an agricultural crop. Its quality and available quantity at reasonable price depends on proper rains and government policies towards exports, as well as, on international market. The steep increase in Minimum Support Price of Cotton by the Government has resulted in higher cost of production. The exports of cotton yarn have also gone down because of much competition and lockdown of many industries worldwide because of COVID 19. How long this situation will continue, cannot be estimated. The present position of all the industries in the country is alarming and improvement at this stage is only hoped.

SEGMENT-WISE OR PRODUCT-WISE PERFORMANCE:

The Companys main product is Cotton Yarn which is about 95.42% of total sales. As stated above, there are four Windmills where the electricity generation depends upon weather conditions.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:

Internal Control Systems and procedures in the Company are commensurate with nature and size of its business and are regularly reviewed and updated by incorporating required changes in regulatory provisions to ensure that not only the assets of the Company are safeguarded and protected against any loss, but also all the transactions are properly accounted and that they meet the test of legal compliances.

Apart from regular review and monitoring Internal Control Systems by the Companys Internal Control Department, two independent Chartered Accountants firms have been appointed to conduct the internal audit for the Companys two manufacturing units. This provides reasonable assurance to the effectiveness of the internal control systems and procedures and reliability of financial reporting.

OUTLOOK:

The management has programme of installing new machineries gradually to improve the quality of production. The availability of labour of required skills, however, on regular basis, is a matter of concern.

The Exchange Rate Fluctuations, increase in Power Rate, volatility in Cotton and Yarn prices are the risks and the matters of concern which may affect profitability.

FINANCIAL AND OPERATIVE PERFORMANCE:

During the year 2019 20, the yarn market was sluggish on account of fall in exports and rise in cotton prices which substantially affected the financial results.

DEVELOPMENT IN HUMAN RESOURCES / INDUSTRIAL RELATIONS FRONT:

There are peaceful and amicable relations with workers. At Borgaon Unit of the Company, cordial industrial relation exits. However the travel restrictions and spread up of COVID 19 here and there discourages the workers to come on duty.

DETAILS OF SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS ALONGWITH DETAILED EXPLANATIONS THEREOF:

The following key financial ratios has witnessed a significant change i.e. a change of 25% or more as compared to the financial year 2018-19 and 2019-20 :-

Key Financial Ratios FY 2019-20 FY 2018-19 Change in % as compared to previous year Reason
1. Current Ratio 3.77 Times 2.21 Times 70.59% Lower utilization of Bank limits because less purchase of cotton
2. Net Profit Margin (%) 0.12% 2.36% 94.91% Higher cotton prices on account of increase in Minimum Support Price by Central Govt. and steep downfall in demand of cotton yarn both indigenous as well as exports sales
3. Return on Net Worth (%) 0.20% 4.40% 95.45% Very weak Market leading to forced reduction in production on account of (2) above
4. Debtors Turnover Ratio 14.33 Times 19.45 Times 26.32% Early realization of sale proceeds
5. Inventory Turnover Ratio 3.97 Times 4.68 Times 15.18% --
6. Interest Coverage 6.29 Times 4.61 Times 36.44% Very low operating profit as detailed at (3) above
7. Operating Profit Margin 1.38% 5.23% 73.67% Very low operating profit as detailed at (3) above
8. Debt Equity Ratio N.A. 0.01 -- No term loan outstanding

CAUTIONARY STATEMENT

Any changes in applicable laws, regulations and Government policies and the present epidemic leading to reduction / stoppage of production are beyond the control and anticipations of the management and may adversely affect the profitability of the Company.

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)

Compliance with Code of Business Conduct and Ethics

Pursuant to Part D of Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, I, hereby, confirm that the Company has received affirmations on compliance with the Companys Code of Business Conduct and Ethics for the financial year ended 31st March, 2020 from all the Board members and Senior Management Personnel.

CEO / CFO CERTIFICATION

We, the undersigned, in our respective capacities as Sr. President cum Chief Executive Officer and as Managing Director cum Chief Financial Officer of PBM Polytex Limited ("the Company"), to the best of our knowledge and belief, certify that:

a. We have reviewed the Financial Statements and Cash Flow Statement for the financial year ended 31st March, 2020 and that to the best of our knowledge and belief, we state that: i. these statements do not contain any materially untrue statement or omit any material fact or contain statements that might be misleading; ii. these statements together present a true and fair view of the Companys affairs and are in compliance with the existing accounting standards, applicable laws and regulations;

b. We further state that to the best of our knowledge and belief, no transactions which are entered into by the Company during the year, are fraudulent, illegal or violative of the Companys Code of Business Conduct and Ethics;

c. We are responsible for establishing and maintaining internal controls for financial reporting and that we have evaluated the effectiveness of the internal control systems of the Company and have disclosed to the Auditors and the Audit Committee, deficiencies in the design or operation of the internal control, if any, of which we are aware and the steps we have taken or proposed to take to rectify these deficiencies.

d. We have indicated to the Auditors and the Audit Committee that there are : i. no significant changes in internal controls over financial reporting during the year; ii. no significant changes in accounting policies during the year and that the same have been disclosed in the notes to the financial statements; and iii. no instances of significant fraud of which we have become aware and the involvement therein of the management or an employee having a significant role in the Companys internal control system over the financial reporting.

Corporate Governance Compliance Certificate

For the Financial Year ended March 31, 2020 [Pursuant to Schedule V Part E of

SEBI (Listing Obligations and Disclosure Requirements) Regulation, 2015]

The Members

PBM Polytex Limited

We have examined the compliance of the conditions of Corporate Governance by PBM Polytex Limited for the year ended March 31, 2020 as per the relevant provisions of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulations).

The compliance of the conditions of Corporate Governance is the responsibility of the Companys Management. Our examination was limited to the procedures and implementation thereof, adopted by the Company for ensuring the compliance of the conditions of governance. It is neither an audit nor an expression of an opinion on the Financial Statements of the Company.

In our opinion and to the best of our information and according to the explanations given to us, we hereby certify that the Company has complied with the conditions of Corporate Governance as stipulated in the above mentioned Listing Regulations.

We state that in respect of investor grievances received during the year ended March 31, 2020, no investor grievance is pending against the Company, as per the records maintained by the Company and presented to the Stakeholders Relationship Committee.

We further state that such compliance is neither an assurance as to the future viability of the Company nor the efficiency or effectiveness with which the Management has conducted the affairs of the Company.

Certificate of Non-Disqualification of Directors

[Pursuant to Regulation 34 (3) and Schedule V Part C Clause 10 (i) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015]

The Members PBM Polytex Limited

We have examined the Registers, Papers, Books, Records, Forms, Returns, Declarations, Disclosures and other related documents, of PBM Polytex Limited ("the Company"), having CIN: L17110GJ1919PLC000495, having its Registered Office at Opposite Railway Station, Petlad 388 450, Gujarat, India, as produced before us by the Company for the purpose of issuing this Certificate, in accordance with Regulation 34(3) read with Schedule V Para C Clause 10(i) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

In our opinion and to the best of our information and according to the verifications (including Directors Identification Number (DIN) status at the portal www.mca.gov.in) as considered necessary and explanations furnished to us by the Company, its officers and representatives, we hereby certify that none of the Directors on the Board of the Company, as stated below for the Financial Year ending on March 31, 2020, have been debarred or disqualified from being appointed or continuing as Director of the Company by the Securities and Exchange Board of India, Ministry of Corporate Affairs, or any such other Statutory Authority.

Name of the Director DIN Date of Appointment
1. Mr. Ashok Anandpriya Pandit 08132980 19-05-2018
2. Mr. Chirayush Indrajitbhai Patel 08690998 14-02-2020
3. Mr. Gopal Patodia 00014247 01-10-2010
4. Mr. Hari Prasad Siotia 00015103 09-08-1980
5. Mr. Jugalkishore Maneklal Todi 00598697 31-08-2006
6. Mr. Krishan Kumar Patodia 00027335 12-06-1979
7. Mr. Makhanlal Bagaria* 01213323 09-02-2015
8. Mr. Mohan Kumar Patodia 00035381 01-04-2012
9. Mr. Rakesh Laxmanprasad Todi 08476512 13-08-2019
10. Ms. Vinitadevi Surendrakumar Modi 06965473 20-09-2014

 

*Mr. Makhanlal Bagaria resigned w.e.f. October 01, 2019.

Ensuring the eligibility for the appointment / continuity of every Director on the Board is the responsibility of the Management of the Company. Our responsibility is to express an opinion on these, based on our verification. This certificate is neither an assurance as to the future viability of the Company nor of the efficiency or effectiveness with which the management has conducted the affairs of the Company.

S.Samdani Partner
Samdani Shah & Kabra
Company Secretaries
FCS No. 3677, CP No. 2863
UDIN: F003677B000532887
Vadodara, July 31, 2020