Prag Bosimi Synthetics Ltd Directors Report.

To,

The Members,

Prag Bosimi Synthetics Limited (PBSL).

Your Directors have pleasure in presenting the 27th Annual Report together with audited accounts of the Company for the 12 months period ended on 31st March, 2019.

1) SUMMARISED FINANCIAL RESULTS:

The financial results of your Company for the period under review are summarized below:

(Rupees in Lakhs)

Particulars 12 month ended 31st March, 2019 12 months ended 31st March, 2018
Gross Turnover 5795.15 2320.36
Profit / (Loss) before Depreciation, Interest and Taxation (509.26) (1185.24)
(Add)/ Less: Interest 191.04 585.78
(Add)/ Less: Depreciation 427.51 355.20
Profit / (Loss) for the year (1127.81) (2126.21)
Add/ (Less) Loss brought for ward from the previous period (22336.94) (20210.73)
Total Loss carried for wardto next period/ year (23464.75) (22336.94)

2) COMPANY ACTIVITIES

During the year efforts were put to enhance the production of value added products. We could attain an average production of 160 tons /month

The production of higher value product like dyed yarn were instrumental in generating higher contribution which is evident from the facts that almost 50% reduction in losses before depreciation and taxation.

As commented in last year report our consistent yield has been reflected in the above result. We can say that above was possible because of active support of AIDC and Govt of Assam.

But from 13th May 2019 due to heavy storm, rainfall and flood our factory power lines have been disrupted and factory is fully on a standstill situation causing a substantial loss to the company’s production and revenue. For factory power we have got 2 Power lines one of 132KVA and other one 11KVA. 132 KVA is our main production line. Due to storm on 13th May 2019 there has been heavy damage in the 132 KVA line and power supply from this line has totally stopped resulting to production halt. Efforts are being made to restore the supply of power. Restoration has been delayed due to heavy rain in the factory region. However we expect that power supply will be restored by 1st week of September 2019.

3) DIVIDEND:

Due to losses your director have not recommended any dividend for the current period in respect of Equity Shares capital.

4) TRANSFER TO RESERVES

In view of loss incurred during the period under review, the Board of Directors has not recommended transfer of any amount to reserves.

5) SHARE CAPITAL:

The Authorised Share Capital of the Company is Rs 250/- Cr (Rupees Two Fifty Crore. The authorized capital is divided into 150 Lacs of Equity share capital and 100 Lacs of Preference shares Capital. The paid up Equity Share Capital of the Company as at March 31, 2019 stood at 90.153 Cr divided into 74382960 Equity Shares of Rs 10/- each, 15.77 Lacs redeemable Preference share of of Rs 100/- each. During the year under review, the Company has neither issued shares with differential voting rights nor granted any stock options or sweat equity. As on 31st March, 2019, Hemant B. Vyas (M.D.) is holding 5.14 lacs Redeemable Preference Shares of the Company.

As on March 31, 2019, none of the Directors and/or Key Managerial Person of the Company holds instruments convertible in to Equity Shares of the Company.

6) PUBLIC DEPOSITS:

The Company has not accepted any Public Deposits during the period under review.

7) DEBENTURES:

The Unsecured Optionally Cumulative Convertible Debentures (OCCD) issued by the Company stands at its original issue value of Rs. 54.37 Crores as on March 31, 2019. The said OCCD were issued on a private placement basis in October 2017 for a period of Twenty years. The payment of interest will be effective from 1st April 2019.

8) CHANGE IN NATURE OF BUSINESS, IF ANY.

There are no changes in the nature of business in the financial year 2018-19.

9) FINANCE AND ACCOUNTS

Your Company prepares its financial statements in compliance with the requirements the Companies Act, 2013 and the Generally Accepted Accounting Principles (GAAP) in India. The financial statements have been prepared on the new accounting Principle i.e IND AS. The estimates and judgments relating to the financial statements are made on a prudent basis, so as to reflect in a true and fair manner, the form and substance of transactions and reasonably present the Company’s state of affairs, profits/(loss) and cash flows for the year ended 31st March 2019.

The Company continues to focus on judicious management of its working capital, receivables, inventories and other working capital parameters were kept under strict check through continuous monitoring.

There is no audit qualification in the standalone financial statements by the statutory auditors for the year under review.

10) EXTRACT OF ANNUAL RETURN:

Pursuant to the provisions of Section 134(3)(a) of the Companies Act, 2013, Extract of the Annual Return for the financial period ended 31st March 2019 made under the provisions of Section 92(3) of the Act is attached as Annexure I which forms part of this Report.

11) LOANS, GUARANTEES, INVESTMENTS AND SECURITIES:

Details of Loans, Guarantees and Investments, if any, covered under the provisions of Section 186 of the Companies Act, 2013 are given in the notes to the Financial Statements.

12) SUBSIDIARIES & ASSOCIATES:

The Company has 2 subsidiary companies and One Associate Company. Pursuant to Section 129(3) of the Act read with Rule 5 of the Companies (Accounts) Rules, 2014, a statement containing salient features of the financial statements of Subsidiaries/ Associate Companies is given as Annexure II in Form AOC-1 which forms an integral part of this Report

Our associate Prag Jyoti Textile Park Pvt Ltd has been duly approved by Ministry of Textiles (MOT) (Govt of India) during Sept 2014. In financial terms the progress of the park can be seen from following facts

Total project cost is Rs. 47.25 Cr
Funds employed till date
Ministry of Textile - Rs. 10.00 Cr (25% of total grant)
SVP contribution - Rs. 3.63 Cr (50% of SVP contribution)

Application for release of Second Grant of Rs. 10.00 crores is already been placed before Ministry of Textile, Govt. of India during Feb 2019. We were informed that the funds shall be release only after the union budget 2019-20. We still await the response of Ministry of Textiles. Already 6 months have been passed without any activities in constructional work at site. This will adversely affect the completion of the textile park.

The Textile Park shall be operational by 2021.

Our subsidiaries namely Prag Bosimi Texurising Private Limited and Prag Bosimi Packaging Private Limited will also commence commercial operations shortly.

13) ONE TIME SETTLEMENT WITH BANKS AND FINANICAL INSTITUTIONS

We would like to inform that Optionally Cumulative Convertible debentures issued in the year 2012 pursuant to CDR settlement are in process of settlement, Out of Rs 57.52 Cr of OCCD’s, Rs 55.05 Cr OCCD has been settled and only Rs 2.47 Cr is pending. The pending OCCD are expected to be settled shortly.

14) CONTRACTS OR ARRANGEMENT WITH RELATED PARTIES

There are no transactions/contracts/arrangements entered by the Company with related party (ies) as defined under the provisions of Section 2(76) of the Companies Act, 2013, during the financial year under review.

Details of contracts and arrangements with related parties in form AOC-2 is annexed as ANNEXURE III to this report.

15) MANAGEMENT DISCUSSION AND ANALYSIS:

The Management Discussion and Analysis on the operations of the Company as prescribed under Part B of Schedule V read with regulation 34(3) of the Listing Regulations, 2015 is provided in a separate section and forms part of the Directors’ Report. It gives a reflection of the current state of business. It also deals with opportunities, challenges and the outlook of the Company.

16) DIRECTORS AND KEY MANAGERIAL PERSONS:

Pursuant to the provisions of Section 152 of the Companies Act, 2013, Mr. Devang Vyas (DIN 00086459) retires by rotation as Director at the ensuing Annual General Meeting and being eligible, offers herself for the re-appointment. The Board recommends his re-appointment.

DETAILS OF DIRECTORS / KMP APPOINTED AND RESIGNED DURING THE YEAR

Sr. No. Name Designation Date of Appointment Date of Resignation
1 Puru Gupta Chairman & Nominee Director 13.02.2019
2. K. K. Dwivedi Chairman & Nominee Director 04.06.2018 13.02.2019
3. Vinod Seshan Chairman & Nominee Director 04.06.2018

17) BOARD EVALUATION

Pursuant to the provisions of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, the Board has carried out an annual performance evaluation of its own performance, of the Directors individually, as well as the evaluation of the working of its Audit, Nomination & Remuneration and other Committees of the Board.

At the meeting of the Board, all the relevant factors that are material for evaluating the performance of individual Directors, the Board and its various Committees, were discussed in detail. A structured questionnaire each in line with circular issued by SEBI, for evaluation of the Board, its various Committees and individual Directors, was prepared and recommended to the Board by the Nomination & Remuneration Committee, for doing the required evaluation, after taking into consideration the inputs received from the Directors, covering various aspects of the Board’s functioning, such as adequacy of the composition of the Board and its Committees, execution and performance of specific duties, obligations and governance, etc.

A separate exercise was carried out to evaluate the performance of individual Directors, including the Chairman of the Board, who were evaluated on parameters such as level of engagement and contribution, independence of judgment, safeguarding the interest of the Company and its minority Shareholders, etc. The performance evaluation of the independent Directors was carried out by the entire Board excluding the Director being evaluated. The performance evaluation of the Chairman and non-independent Directors was also carried out by the Independent Directors at their separate meeting. The Directors expressed their satisfaction with the evaluation process.

18) BOARD MEETINGS:

The details of the Board Meetings and other Committee Meetings held during the financial year 2018-19 are given in the separate section of Corporate Governance Report.

19) BOARD COMMITTEES

All Committees of the Board of Directors are constituted in line with the provisions of the Companies Act, 2013 and applicable regulations of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

20) DECLARATIONS BY INDEPENDENT DIRECTORS:

The Company has received declarations form all the Independent Directors under Section 149(6) of the Companies Act, 2013 confirming their independence visa-vis the Company.

21) MATERIAL CHANGES AND COMMITMENTS

For factory power we have got 2 Power lines one of 132KVA and other one 11KVA. 132 KVA is our main production line. Due to storm on 13th May 2019 there has been heavy damage in the 132 KVA line and power supply from this line has totally stopped resulting to production halt. Efforts are being made to restore the supply of power. Restoration has been delayed due to heavy rain in the factory region. However we expect that power supply will be restored by 1st week of September 2019.

22) DIRECTORS’ RESPONSIBILTY STATEMENT:

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

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

b. such accounting policies have been selected and applied consistently and the Directors 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 as at 31st March, 2019 and of the loss of the Company for that period;

c. proper and sufficient care was 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 and detecting fraud and other irregularities;

d. the accounts of the Company have been prepared on a going concern basis;

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

f. proper systems have been devised to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively;

23) RISK MANAGEMENT POLICY:

The Board of Directors of the Company has designed Risk Management Policy and Guidelines to avoid events, situations or circumstances which may lead to negative consequences on the Company’s businesses, and define a structured approach to manage uncertainty and to make use of these in their decision making pertaining to all business divisions and corporate functions. Key business risks and their mitigation are considered in the annual/ strategic business plans and in periodic management reviews. However, provision of Regulation 21 of Listing Regulations for constitution of Risk Management Committee is not applicable to the Company.

24) VIGIL MECHANISM POLICY FOR THE DIRECTORS AND EMPLOYEES:

The Company has put in place a Whistle Blower Policy to deal with instances of fraud and mismanagement, if any. The detail of the policy is available on the Company’s website www.pragbosimi.com.

No complaint was received by the Company during the year ended 31st March, 2019.

25) DISCLOSURE OF ORDERS PASSED BY REGULATORS OR COURTS OR TRIBUNAL:

As shareholders are aware that due to various reasons company’s project was delayed substantially which had resulted into huge debt burden on the company. As this huge debts was not sustainable, IDBI the lead institution took our case for restructuring our debt under CDR mechanism. One of the consortium member erstwhile ICICI now ICICI Bank has sold its entire portfolio of Prag Bosimi to Standard Chartered Bank. According to CDR settlement entire interest converted CCP/RCCP were cancelled as interest was waived by CDR settlement. IFCI another consortium member who had been allotted RCCP/CCP along with ICICI Bank had converted their unpaid interest into CCP/RCCP. Rest of the lenders did not convert and shown as unpaid interest. Under CDR, all unpaid interest was waived. Lenders who had not converted the interest into instrument, their account books were shown as interest waived as per CDR decision. ICICI’s unpaid interest converted into instrument was supposed to cancel and return the instrument to company like IFCI who has converted the unpaid interest into instrument and same were cancelled and returned to company after the CDR decision. As per CDR settlement total amount of Rs.81.46 Cr worth various instruments of CCP/RCCP shares stand cancelled because it was the interest which was waived during CDR settlement. Finally as per CDR approval the company went for reduction of capital. Accordingly preference shares issued in favour of lenders stood cancelled and reduced in balance sheet. Company has duly complied with all the requirements of the Companies Act 1956 and got the order from the Honorable High Court of Guwahati on 18.12.2012 and ROC, Shillong dated 12.01.2013. The company proceeded with the instruction and wrote off the entire RCCP and CCP including Rs 30 Cr of ICICI bank in the financial year 2012-13 in the balance sheet.

One of the two lenders IFCI/ICICI who had converted the interest into CCP/RCCP, ICICI seemed to have sold this Rs.30 Cr CCP/RCCP to 3A Capital Services Ltd., for which company has not been notified by ICICI Bank. As per the CDR instruction these shares were to be cancelled and ICICI should have returned the original shares to the company as they were already cancelled and does not carry any value. It may not be out of place to mention here that IFCI who was also another consortium member who has been given the RCCP and CCP (for unpaid Interest) had cancelled and returned the above instruments to us. Similarly ICICI also should have cancelled and returned the shares to company.

As per the CDR settlement the company paid the settlement amount to all the lenders including Standard Chartered bank (whom ICICI sold its exposure) thus there was no amount due to ICICI bank. IDBI, the lead institution has also issued letter to us confirming that company has made all the payment as per CDR settlement and there were no dues after that to any lender.

It was surprising that the ICICI bank transferred these Rs.30 Cr shares without intimation to company to 3A Capital. When the company’s reduction of capital matter was at hearing stage in Guwahati High Court, 3A Capital (who was not a debtor/ creditor of Company) intervened in our reduction of capital petition, Guwahati High Court allowed them to intervene, heard their submission but did not agree with their submission and rejected their application objecting reduction of capital and allowed our application for reduction of capital (total RCCP and CCP amount) vide its order dated 18.12.2012. However Honorable High Court at Guwahati expressed their surprise and passed a remark against the deal of ICICI bank and 3A capital where 3A capital shown to have purchased Rs 30 Cr value of shares at just a payment of Rs 3.90Lacs. 3A Capital went to Supreme Court against the order of Guwahati High Court order where Supreme Court dismissed their plea and allowed Guwahati High Court order to continue.

However the 3A Capital did not stop here and continue to pursue with Kolkata CLB for instructing the company under section 111 of Companies Act 1956 for registration of shares in their favour. The Company had received an order from Company Law board Kolkata Bench on 27th May 2016 for transferring of Rs 30 Cr preference shares in the name of 3A Capital Services Limited despite of the facts that these shares were cancelled vide order of Honorable High Court order dated 18.12.2012. The Company have also filed a petition against 3A Capital in Bombay High Court as Appeal no. 1839/2018 on 1st August 2018

3A Capital has filed petition to NCLT for contempt of Kolkata CLB order for not registering the shares in the name of 3A Capital and the same was recognized by High court of Guwahati, company is contesting against it.

Further to mention that NCLT Guwahati have called for the personal appearance of all the Directors in the month of April 2019. Company’s Directors have complied with the order. The company have filed written statement clarifying the position. This matter is sub-judice as on date.

26) CORPORATE GOVERNANCE:

Your Company affirms its commitment to Corporate Governance and is fully compliant with the conditions of Corporate Governance stipulated in Regulation 27(2) of the Listing Agreement with Stock Exchanges. A separate section on compliance of Corporate Governance and a Certificate from the Auditor’s firm and practising Company Secretary dated 27th May, 2019 in this regard are annexed hereto and forms a part of the Report.

27) DISCLOSURE OF INTERNAL FINANCIAL CONTROLS

The Internal Financial Controls with reference to financial statements as designed and implemented by the Company are adequate. During the period under review, no material or serious observation has been received from the Internal Auditors of the Company for inefficiency or inadequacy of such controls.

28) CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNING AND OUTGO:

The particulars as required under the provisions of Section 134(3) (m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014 in respect of conservation of energy, technology absorption, foreign exchange earnings and outgo etc. are furnished in Annexure IV which forms part of this Report..

29) DISCLOSURES UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION & REDRESSAL) ACT 2013 READ WITH RULES

Pursuant to the requirements of Section 22 of Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act 2013 read with Rules thereunder, the Company has not received any complaint of sexual harassment during the year under review.

"Company has complied with provisions relating to the constitution of Internal Complaints Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013".

30) ANNUAL EVALUATION OF DIRECTORS, COMMITTEE AND BOARD:

Attendance at the meetings, Participation and contribution, Responsibility towards stakeholders, Contribution in Strategic Planning, Compliance and Governance, Participation, Performance Evaluation and Updation of Knowledge are the criteria’s for Performance Evaluation of Directors, Committee and Board.

31) PARTICULARS OF EMPLOYEES & DISCLOSURE UNDER SECTION 197(12) OF THE COMPANIES ACT, 2013 AND OTHER DISCLOSURES AS PER RULE 5 OF COMPANIES (APPOINTMENT & REMUNERATION) RULES, 2014:

None of the employees of the Company is in receipt of remuneration exceeding the limit prescribed under Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

Disclosure pursuant to Section 197(12) of Companies Act, 2013 and Rule 5(1) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed as ANNEXURE V to this report.

32) STATUTORY AUDITORS

M/s M. H Dalal & Associates, Chartered Accountants, Mumbai; and M/s. A M D & Associates, Chartered Accountants, Guwahati are Auditors of the Company.

The observations made by the Statutory Auditors in their report for the financial period ended 31st March 2019 read with the explanatory notes therein are self-explanatory and therefore, do not call for any further explanation or comments from the Board under Section 134(3) of the Companies Act, 2013.

33) SECRETARIAL AUDITOR

Pursuant to the provisions of Section 204 of the Companies Act,

2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, Mr. Amit Mundra & Associates, Practicing Company Secretary had been appointed to undertake the Secretarial Audit of the Company. Secretarial Audit Report issued by Mr. Amit Mundra, Company Secretary in Form MR-3 for the financial year 201819 forms part to this report annexed as ANNEXURE VI. The said report does not contain any observation or qualification requiring explanation or comments from the Board under Section 134(3) of the Companies Act, 2013.

34) INTERNAL AUDITOR:

M/s. Dhawan Pandey & Associates, Chartered Accountants, are re-appointed as Internal Auditors of the Company.

35) INTERNAL CONTROL SYSTEMS:

Adequate internal control systems commensurate with the nature of the Company’s business and size and complexity of its operations are in place has been operating satisfactorily. Internal control systems comprising of policies and procedures are designed to ensure reliability of financial reporting, timely feedback on achievement of operational and strategic goals, compliance with policies, procedure, applicable laws and regulations and that all assets and resources are acquired economically, used efficiently and adequately protected.

36) CORPORATE SUSTAINABILITY AND SOCIAL RESPONSIBILITY:

The provision of the Section 135 and Schedule VII of the Companies Act, 2013 as well as the provisions of the Companies (Corporate Social Responsibility Policy) Rules,

2014 effective from April 1,2014 relating to CSR Initiatives are not applicable to the Company.

37) GREEN INITIATIVES

In line with the ‘Green initiative’, the Company has affected electronic delivery of the Annual Report 2018-19, are sent to all members whose email addresses are registered with the Company/ Depository Participant(s). For members who have not registered their email addresses, physical copies are sent.

38) REPORTING OF FRAUDS

There was no instance of fraud during the year under reivew, which required the Statutory Auditors to report to the Audit Committee and / or Board under Section 143(12) of Act and Rules framed thereunder.

39) INDUSTRIAL RELATIONS/ HUMAN RESOURCES:

Your Company maintained healthy, cordial and harmonious industrial relations at all levels during the period under review. Your Company firmly believes that a dedicated workforce constitute the primary source of sustainable competitive advantage. Accordingly, human resource development continues to receive focused attention. Your Directors wish to place on record their appreciation for the dedicated and commendable services rendered by the staff and workforce of your Company.

40) CAUTIONARY STATEMENT

Statements in this Directors’ Report and Management Discussion and Analysis Report describing the Company’s objectives, projections, estimates, expectations or predictions may be "forward-looking statements" within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make difference to the Company’s operations include raw material availability and its prices, cyclical demand and pricing in the Company’s principal markets, changes in Government regulations, Tax regimes, economic developments within India and the countries in which the Company conducts business and other ancillary factor.

41) APPRECIATION:

Your Directors take this opportunity to offer their sincere thanks to the Government of India, State Government of Assam, AIDC, Investors, and Bankers for their continued support and co-operation, have helped in your Company’s progress. Also Your Directors wish to place on record their appreciation, and for the contribution made by the employees at all levels whose hard work, and support, without which Company’s achievements would not have been possible. Your Directors also wish to thank its customers, dealers, agents, suppliers, for their continued support and faith reposed in the Company.

By order of the Board of Directors
Date: 9th August, 2019 Hemant B. Vyas Devang Vyas
Place: MUMBAI Managing Director Non-Executive Director
Din no.: 00076289 Din No. 00076459