Polyspin Exports Ltd Directors Report.

To the Members,

Your Directors have pleasure in presenting the Thirty Fifth Annual Report on the working of the company and Audited Accounts for the year ended 31st March, 2020.

Year ended 31.03.2020 Year ended 31.03.2019
Financial Results Rs. Rs.
Sales and other Income 172,26,93,365 214,88,07,539
Operating Profit
(Profit Before interest, Depreciation and Tax) 15,51,63,547 18,54,16,416
Less : Interest 4,61,62,374 4,66,65,218
Profit before Depreciation and Tax 10,90,01,173 13,87,51,198
Less : Depreciation 3,51,65,199 3,03,15,380
Profit before Tax 7,38,35,974 10,84,35,818
Add : Other comprehensive income 20,33,439 23,09,484
7,58,69,413 11,07,45,302
Less : Provision for Taxation - Current 1,57,00,000 3,19,00,000
Less : Provision for Taxation - Deferred 54,57,000 34,60,000
5,47,12,413 7,53,85,302


Your Directors are pleased to recommend the payment of Dividend at Re.0.60 (Paise Sixty only) per share on the face value of Rs.10/- per share.


Quantity of Production and Sale of the Companys products i.e., FIBC bags and OE Spinning yarn for the year ended 31.03.2019 and 31.03.2020 are as follows:

Year ended 31.03.2020 Year ended 31.03.2019
1. Production Quantity (Kgs.) Quantity (Kas.)
1) FIBC Bags & PP Woven Bags 85,39,448 96,50,950
2) PP Woven Fabrics 1,08,252 1,44,204
3) PP Yarn 4,96,873 2,29,549
4) Multifilament Yarn** 3,09,171
5) Paper Bags 47,495 35,552
6) Cotton Yarn 17,72,804 21,52,534
2. Sales
1) FIBC Bags & PP Woven Bags 84,96,043 95,98,414
2) PP Woven Fabrics 1,08,252 1,44,204
3) PP Yarn 4,96,873 2,29,549
4) Multifilament Yarn** 62,137
5) Paper Bags 35,836 35,552
6) Cotton Yarn 17,01,589 21,69,774

Multifilament Yarn**

Out of 3,09,171 Kgs. of Multifilament Yarn production, we have captively consumed 2,47,034 Kgs. Multifilament Yarn for FIBC bags Production.

Current Trend and Future Prospects FIBC Bags Division:

Flexible Intermediate Bulk Container (FIBC) bags are available in a wide varieties and are suitable for numerous applications in the chemical, pharmaceutical and food industries. The FIBC market is characterized by innovative offerings and customizations according to customer specifications.

A study projects that over the next three years, FIBC (Flexible Intermediate Bulk Container) will register a 5 % CAGR in terms of revenue and reach USD 9200 million (Rs. 69,400 Crores) by 2023.

Due to spread of Novel Corona Virus (COVID-19) pandemic our manufacturing units were totally closed for about 22 days following nationwide lockdown and we resumed our production at our units (both FIBC - 100% EOU and Textiles mill) on 16th April, 2020, partially with 50% of employee strength. All safety protocol norms (Standard Operating Procedures) as prescribed by the Government of India, of temperature sensing, wearing of Safety gears (masks, goggles, face shields), social distancing, sanitizing and washing hands are being adhered to very stringently in all the work places of the company.

COVID - 19 pandemic is the worst global crisis, since the Second World War, indeed, the drop in man hours worked already outpaces that of the 2008 - 2009 financial crisis. Worryingly COVID - 19 is now also impacting the developing world, where capacities and resources are already in constrain. With China facing a global backlash on account of COVID - 19, India is hoping to cash in on the anti - China sentiment to replace it as the worlds global factory.

To be sure, India does have its set of strengths. These include a mixture of highly skilled and semi-skilled labour that is relatively cheap compared to China (even though Chinese labour scores higher on productivity) and the potential to sell to a huge market. Our company is engaging skilled workforce who are residing in the nearby villages for our production and we are not dependent on migrant workers, compared to other peer industries who are partially dependent on them.

We are getting export orders from our existing overseas buyers for about 3200 MTS for 3 - 4 months delivery period, from USA, Italy, France and New Caledonia. We are expecting more orders for FIBC Bags from new buyers and our existing buyers also. We are working continuously to meet the export orders and keep up the deliveries in time in spite of the low employees attendance due to COVID -19.

Open End Spinning Division:

The textile Industry is now facing a tough time in view of COVID -19 and closure of many Yarn Markets in India. Yarn mills are caught in a web of weakening demand and high raw material prices. A substantial drop of about 35% year-on-year in exports from India which account for nearly one-third of the yarn it produces, has direct impact on the spinning mills. The domestic market was not encouraging either. According to rating agency ICRA, several factors explain the fall in Indias cotton yarn exports. This includes high price of cotton and yarn from Indian mills, duty-free access provided by China to Pakistan for import of yarn, continued competitive pressures from nations, such as Vietnam and higher raw cotton fibre imports by China. The problem the spinning mills are facing is due to high cotton prices even though the international cotton price has plunged about 25% in the past one year, in contrast, the domestic cotton prices have been firm during the period.

Since we are manufacturing high quality yarn with the imported automatic OE Machines, our product always fetches better price in the market. The growth trend is stagnant for the near future.

We are planning for production of viscose blended yarn in our OE spinning unit and also intend to carry on production of viscose blended yarn on job work basis and market the same in the existing domestic market.

Proposed Paper Bags Division:-

We would like to inform you that we are planning to engage paper bags manufacturing units for supply of multilayer paper bags for cement packing on job work basis and market them to leading cement manufacturers in India. These paper bags are an eco-friendly product and we anticipate better demand for the product in near future. Initially we intend to buy the raw materials i.e., Semi extensible sack Kraft Paper from the overseas suppliers and produce paper bags as per buyers specifications and requirement on job work basis.

We will supply Paper bags to the leading Cement manufacturers in India and also for export markets and we will supply Paper bags to other manufacturing units for packing of chemicals, granules, other food products, etc.

Going forward, we expect the revenue growth to be driven by the proposed business i.e., paper bags and the operating margin to be improved by better product mix. We anticipate that our new business will contribute to the top line growth of 30 % in the total revenue from the current financial year.

We are into the production in three types of verticals namely, FIBC bags, Textile OE yarn and Paper bags catering to Exports and domestic markets.


Sri. S.V. Ravi and Sri. P. Vaidyanathan, Directors retire by rotation at the forth coming Annual General Meeting and being eligible offer themselves for reappointment. Your Directors recommend for the reappointment of Sri. S.V. Ravi and Sri. P. Vaidyanathan as directors liable to retire by rotation.

Appointment of Independent Directors:-

The three Independent Directors viz., Sri. K. Lakshminarayanan, Sri. A. Thiruppathy Raja and Sri. S. Sankar have relinquished their office on 31st August, 2019 due to the completion of their term of office. The Board place on record the valuable services rendered by the Independent Directors during their tenure. Their valuable services, advices provided and their

participation have helped the company to achieve better results.

The following three Independent Directors were appointed with effect from 1st September, 2019 at the last year Annual General Meeting held on 12th August, 2019.

1. Sri. S. R. Venkatanarayana Raja

2. Sri. V. S. Jagdish

3. Sri. R. Sundaram.

Further Sri. Rajesh Devarajan (DIN : 01153112) and Sri.Kottimukkalu Subramania Raja Pradeep (DIN : 00852462) were also appointed as Independent Directors by the Board as Additional Directors with effect from 20th September, 2019 and they holds office till conclusion of this Annual General Meeting. Your board recommend for the appointment of the above two directors as Independent Directors and seek the approval of the members in the forthcoming Annual General Meeting. The profile of the above two Independent Directors are given in the explanatory statement attached to the Notice.

Both Independent Directors are well experienced in their respective fields and your directors are hopeful that their contribution and advice will be of very immense help for the development of the company.

Declaration by Independent Directors:- The Independent Directors of the company have declared that they meet the criteria of Independence in terms of Section 149(6) of the Companies Act, 2013 and that there is no change in their status of Independence.

Policy of Directors Appointment and remuneration: -

In accordance with Section 178(3) of the Companies Act, 2013 and based upon the recommendation of the Nomination and Remuneration Committee, the Board of Directors have approved a policy relating to appointment and remuneration of Directors, Key Managerial Personnel and Other Employees. The objective of the Nomination and Remuneration Policy is to ensure that the level and composition of remuneration is reasonable, the relationship of remuneration to performance is clear and appropriate to the long term goals of the Company. The policy also envisages and takes into account the total involvement with dedication and human touch.

None of the Director is disqualified under Section 164 of the Companies Act, 2013.


Pursuant to Section 134(3) (p) of the Companies Act, 2013, and Regulation 25(4) of SEBI (LODR) Regulation, Independent Directors have evaluated the quality, quantity and timeliness of the flow of information between the Management and the Board, Performance of the Board as a whole and its Members and other required matters. Pursuant to Schedule II Part D of SEBI (LODR) Regulation, the Nomination and Remuneration Committee has laid down evaluation criteria for performance evaluation of Independent Directors, which will be based on attendance, expertise and contribution brought in by the Independent Directors at the Board Meeting, which shall be taken into account at the time of re-appointment of Independent Director.


The Board intends to alter the existing Memorandum of Association of the Company in order to align it with the requirements Table A of Schedule I of the Companies Act, 2013. Pursuant to the provisions of the Companies Act, 2013 and the rules made thereunder, as applicable, any amendment in the Memorandum of Association requires approval of the members of the company by way of special resolution. The Board recommends the resolution for approval of the members of the Company.


The Equity shares of the Company are listed on BSE Limited. In order to facilitate the benefit of more liquidity and board basing of small investors, the Board of Directors of the Company, in its meeting held on 25th June, 2020 have approved the sub-division of the nominal value of Equity shares of the Company of Rs.10/- (Rupees Ten Only) each into smaller denomination of Rs. 5/- (Rupees Five Only) each, subject to the approval of Members. Accordingly, each Equity share of the Company of the nominal value Rs.10/-(Rupees Ten Only) each existing on the Record Date shall stand sub-divided into 2 Equity shares of the nominal value of Rs. 5/- (Rupees Five Only) each. Article 58 (a) (4) of the Articles of Association of the Company permits for sub-division of shares subject to the approval of members by Ordinary Resolution.

Consequent to the approval of sub-division of shares of the company, the Clause V of the Memorandum of Association of the company is proposed to be amended accordingly subject to the approval of members of the company.

The Board is of the opinion that the aforesaid amendment of Clause V of the Memorandum of Association of the company and sub-division of equity shares are in the best interest of the Company and its shareholders. Therefore the board recommends for passing of Ordinary resolutions set out in the Notice for the approval of the members.


The equity shares of your Company are listed on the BSE in the year 1995 and the company shares are actively traded. With a view to reward the shareholders of the company in the 25th Years after Listing of the company on the stock exchange and to increase the liquidity of the equity shares of the Company ,Considering the growth in the business over the recent years and strong financial positions, the Board in its meeting held on June 25, 2020, considered, approved and recommended issue of bonus shares in the proportion of 1 (one) new equity share of Rs.5/- each for every 4 (four) existing equity shares of Rs.5/- each held by the Members on the Record Date to be determined by the Board by capitalizing a part of free reserves of the Company and the paid up capital of the company is increased from Rs.4,00,00,000/- to Rs.5,00,00,000/- after the issue of bonus shares.


Pursuant to Section 188 of the Companies Act, 2013, read with the Companies (Meetings of Board and its Powers) Rules, 2014 (Rules), the Company is required to obtain consent of the Board of Directors and prior approval of the members by way of ordinary resolution, in case certain transactions with related parties which exceeds such sum as is specified in the Rules. The aforesaid provisions are not applicable in respect of transactions which are in the ordinary course of business and an arms length basis. All the Related Party Transactions entered into by the Company are at arms length basis and in the ordinary course of business and approval of the Audit Committee and Board is obtained, wherever required. However, the estimated transaction value with any of the related parties may likely to exceed 10% of the Annual Turnover of the Company as per the last audited financial statements of the Company. The Board recommend for the approval of the related party transactions by the members of the company as set out in the Notice.


Keeping in view the existing and future financial requirements to support its business operations, the Company may need additional funds which may exceed the aggregate of the paidup capital and free reserves of the Company. Hence it is proposed to increase the maximum borrowing limits of the Board of Directors from Rs. 100 Crores to Rs. 150 Crores. Hence Special Resolution is being proposed, since the same m ay exceed the limits provided under Section 180(1)(a) & 180(1)(c) of the Act. The Directors recommend the Special Resolution as set out at the accompanying Notice, for members approval.


During the year Four Board Meetings were held. The details of the Meetings of the Board and its various Committees are given in the Corporate Governance Report.


As required under clause 9 of secretarial standards, the Board of Directors of the company confirm that the company has complied with the applicable secretarial standards.


Pursuant to Rule 8(5) (vii) of Companies (Accounts) Rules, 2014, it is reported that, no significant and material orders have been passed by the Regulators or Courts or Tribunals, which would impact the going concern status of the company.


The Company has implemented and evaluated the Internal Financial Controls which provide a reasonable assurance in respect of providing financial and operational information, complying with applicable statutes and policies, safeguarding of assets, prevention and detection of frauds, accuracy and completeness of accounting records. The Directors and Management confirm that the Internal Financial Controls (IFC) are adequate with respect to the operations of the Company.


Sri. P. Ramadoss FCA (MRN 201506) the Internal Auditor, submits his Internal Audit Reports to the audit committee which are reviewed periodically by Audit Committee as well as by the Board. Further, the Board annually reviews the effectiveness of the Companys internal control and audit system.


Pursuant to Section 186(4) of the Companies Act, 2013, it is reported that the Company has not given any loans, guarantees and no investments has been made in bodies corporate or firm during the financial year.


The Company has complied with the requirements of Corporate Governance as stipulated in SEBI Listing obligations and Disclosure Requirements. A report on Corporate Governance is annexed herewith and it forms part of the Directors Report as per Annexure - I as required under Schedule V (C) of LODR Regulations. A certificate from the Secretarial Auditor confirming compliance is also attached as Annexure - II, as required under Schedule V (E) of LODR. The code of conduct as approved by the board is provided in the above annexure and website.

The board observed that Practicing Company Secretary in his report stated that the BSE has imposed a fine of Rs. 4,55,000/- plus GST for non-compliance of Regulation 17(1) of SEBI

(LODR) Regulations. This was due to the misinterpretation of the above regulation and the company had remitted the fine and complied with the requirements.


Company has taken corporate social responsibility initiatives. The Committee comprising one Independent Director and two directors has been constituted as CSR Committee to develop CSR policy and implement the CSR initiatives whenever it is applicable to the Company.

The company has purchased land measuring 3.75 cents required for the construction of a Medical Centre Project under the corporate social responsibility Programme in the nearby Village. The company had spent Rs. 2,23,948/- towards health care and education projects during the financial year. There are certain other projects which have been identified and depending upon their implementation and fulfillment, balance contribution will be made in due course of time. The material disclosure is made in Annexure - III.


M/S. SRITHAR AND ASSOCIATES (Firm Registration No. 015896S), Chartered Accountants, Chennai, who have been appointed as Statutory Auditors of the Company at the 33rd Annual General Meeting till the conclusion of 37th Annual General Meeting. Accordingly seeking ratification for the appointment of Statutory Auditors at every Annual General Meeting is dispensed with.


As per provisions of Section 148 of the Companies Act, 2013 and the Companies (Cost Records and Audit) Rules, 2014, the Government has not notified the products of our company to which the Cost Audit would be applicable. Hence, the Cost Audit was not conducted for your company for the financial year 2019 - 20.


Pursuant to Provisions of Section 204 of the Companies Act, 2013 read with Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014, Your Company has appointed Mr. B. Subramanian, Company Secretary in Practice, Chennai to conduct the Secretarial Audit of the Company for the financial year ended 31st March, 2020.

The Secretarial Audit Report (in Form MR - 3) is attached as Annexure - IV to this report.

The board observed that practicing Company Secretary in his Secretarial Audit Report (MR-3) stated that the BSE has imposed a fine of Rs. 4,55,000/- plus GST for non-compliance of Regulation 17(1) of SEBI (LODR) Regulations. This was due to the misinterpretation of the above regulation and the company had remitted the fine and complied with the requirements.


The information required under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014, regarding Conservation of Energy, Technology Absorption, Foreign Exchange earnings and outgo are given in Annexure - V to this report.


The Annual Return for the financial year ended 31st March, 2020 in Form No: MGT-9 pursuant to Section 92 of Companies Act, 2013 and Rule 12 (2) of the Companies (Management and Administration) Rules, 2014, is annexed herewith as Annexure - VI.


There are no Subsidiaries or Joint Ventures and there is an associate company viz., M/s. Lankaspin Private Limited, Srilanka. The particulars of the Associate Company are given in Form AOC 1 as per Annexure VII.


The company has constituted an Anti-Sexual Harassment Policy in line with the requirements of the sexual harassment of Women at the work place (Prevention, Prohibition and Redressal) Act, 2013. Internal complaints committee (ICC) has been set up to redress complaints received regarding sexual harassment. During the year, the company has not received any complaints of harassment.


The company has not accepted any fixed deposit from the public during the year under section 73 of the Act.


In accordance with Section 177(9) and (10) of the Companies Act, 2013 and Regulations, 22 of the LODR, the Company has established a Vigil Mechanism and has a Whistle Blower Policy. The policy is available at the Companys website.

A forum to enable the concerned personnel of the Company to report any deviation or other acts which are against the general code of conduct of personnel, business and other activities has been created.


Company has developed and implemented a risk management policy, as required under Regulation 17(9) of LODR and Pursuant to Section 134(3)(n) of the Companies Act, 2013. A committee of the Board named as Risk Management Committee has been formed by the Board to address and evaluate various risks impacting the Company, in practice with reference to the forex and interest rate. At present the board has not identified any element of risk

which may threaten the existence and development of the company.

The Company has laid down a Risk Management Policy and Procedure to inform the Board Members about the Risk assessment and minimization process, which is a vigorous and active process for identification and mitigation of risks. Necessary inputs are provided to the Audit Committee on a monthly basis. The production and sales are monitored and any deviation from the projected is identified, solution found and necessary rectifications are done periodically.

Audit Committee as well as the Board of Directors has adopted the Risk Management Policy and the Audit Committee reviews the risk management and mitigation plan from time to time.


As reported in the earlier annual report, there was a fire accident in the PP Fabrics and PP Slings storage premises on Monday, 4th June, 2018. Fire tenders were called immediately and the fire was extinguished and brought to control at about 1.30 P.M.

The cost of loss of stocks and book value of Buildings and Machinery was estimated at about Rs. 621.21 Lakhs. The book value of loss was absorbed in the profit and loss account for the financial year ended 31st March, 2019.

After a long pursuance and continuous follow up, the National Insurance company Limited has finally settled our claim at Rs.2,50,00,890/- (Rupees two crores fifty lakhs eight hundred and ninety only) on 23rd October, 2019 and the same was credited to the Profit and Loss Account in the financial year ended 31st March, 2020.


No Material changes and commitments, affecting the financial position of the Company has occurred between the end of the financial year 2019-20 and till the date of this report.


The information required pursuant to Section 197 (12) of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company and Directors are annexed as Annexure - VIII and forms part of this Report.


There were no materially significant related party transactions which could have potential conflict with the interests of the Company. Transactions with related parties are in the ordinary course of business an arms length basis and are periodically placed before the Audit Committee and Board for its approvals and Form AOC-2 is enclosed as Annexure- IX.


Your company treats its “human resources” as one of its most important assets. Your company enjoys a very cordial relationship with workers and employees at all levels.

Your company continuously invests in attraction, retention and development of talent on an ongoing basis. A number of programs that provide focused attention are currently underway. Your Companys thrust is on the promotion of talent internally, through job rotation and job enlargement.


Pursuant to the provisions of the Investor Education Protection Fund (uploading of information regarding unpaid and unclaimed amounts lying with companies) Rules, 2012, the company has already filed the necessary form and uploaded the details of unpaid and unclaimed amounts lying with the company, as on the date of last AGM 12th August, 2019 with the Ministry of Corporate Affairs. An amount of Rs. 3,70,066/- unclaimed dividend pertaining to the year 2013 will be transferred to the IEPF before 21.10.2020.


The Board has laid down the code of conduct for Directors of the company and senior management personnel.

The Directors shall follow in letter and spirit the provisions as contained in section 166 of the Companies Act, 2013. They shall also follow general principles of pillars of character. The same with certain variation involving their nature of work applies to the senior management personnel. All the directors of the board and senior management personnel have confirmed the compliance with the code.


The company has formulated and implemented the code of conduct for prevention of insider trading with regard to the securities by directors and designated person of the company as per SEBI (Prohibition of Insider Trading) Regulations, 2015 and the Code of Conduct is posted on the website of the company.


Pursuant to Section 134(5) of the Companies Act, 2013, the Directors confirm that

(a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

(b) they had selected such accounting policies and applied them consistently and made judgements 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 and loss of the company for that period;

(c) they had 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) they had prepared the annual accounts on a going concern basis;

(e) they had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively; and

(f) they had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively


Your Directors wish to take this opportunity to place on record their gratitude and sincere appreciation for the timely and valuable assistance and support received from Bankers - City Union Bank, Share Transfer Agents, Customers, Suppliers, Share Holders and Regulatory Authorities.

The Board also expresses and records its appreciation for the hard and dedicated efforts of the employees as a team at all levels.

On Behalf of the Board,


Place : Rajapalayam Director Managing Director & CEO
Date : 25.06.2020 (DIN : 00121742) (DIN : 00109393)