Pritika Auto Industries Ltd Directors Report.

Dear Shareholders,

The Directors have pleasure in presenting their 40th Annual Report on the business and operations together with the Audited Statement of Accounts of the Company for the year ended 31st March, 2020.

1. FINANCIAL RESULTS

The Financial results are briefly indicated below:

(In Lakhs)

Particulars

Standalone

Consolidated

2019-20 2018-19 2019-20 2018-19
Revenue from operations (net) 14903.03 19515.93 16795.18 20971.20
Other Income 175.66 194.53 149.51 165.36
Profit before Interest, Depreciation and Tax (PBIDT) 2015.77 3032.65 2247.97 3182.51
Interest 587.74 696.49 726.61 785.27
Profit before Depreciation and Tax (PBIT) 1428.03 2336.16 1521.36 2397.24
Depreciation 677.24 582.13 755.42 633.35
Profit before Tax Expenses 750.79 1754.03 765.94 1763.89
Tax Expenses 206.72 349.46 208.09 351.75
Profit after Tax 544.07 1404.57 557.85 1412.14
Other Comprehensive Income 33.12 - 61.24 -
Total Comprehensive Income 577.19 1404.57 619.09 1412.14
EPS- Basic 3.07 7.98 3.15 8.03
Diluted 3.04 7.97 3.12 8.01

The Standalone Revenue from the operations (net) for the Financial Year 2019-20 was Rs. 14903.03 (Previous Year Rs.19515.93 lac). The company earned Net Profit of Rs. 544.07 lac (Previous Year Rs. 1404.57 lac).The Total Comprehensive Income for the year was Rs.577.19 lac.

The Consolidated Revenue from the operations (net) for the Financial Year 2019-20 was Rs. 16795.18 lac (Previous Year Rs. 20971.20 lac). The company earned Consolidated Net Profit Rs. 557.85 lac (Previous Year Rs.1412.14 lac). The Consolidated Total Comprehensive Income for the year was Rs. 619.09 lac.

There was no change in the nature of business of the company during the year.

The previous year figures have been restated, rearranged, regrouped and consolidated, to enable comparability of the current year figures of accounts with the relative previous years figures.

2. INDUSTRIAL SCENARIO

After forging ahead with strong double digit growth for three consecutive years, the domestic tractor industry suddenly lost steam in the financial year 2019-2020 due to sagging rural income, unpaid and discontinued subsidies and the simultaneous attack of corona virus. The Indian tractor market declined over 10 percent to about 709,002 units in the financial year 2019-2020, even lower than earlier expected drop of 5-7 percent.

In the month of March alone, the tractor sales volume in the domestic market plunged to 43 percent at 35,216 units against 62,315 units in the same month year ago. The last month was disrupted as business was hugely impacted by the lockdown just before the start of festive days in large parts of the country.

In the last month of FY 2020, the COVID-19 pandemic developed rapidly into a global crisis, forcing governments to enforce lock-downs of all economic activity. For the Company, the focus immediately shifted to ensuring the health and well-being of all employees, and on minimizing disruption to services for all our customers. As the nature of business performed by the Company fell under non-essential category, the administrative offices, manufacturing units and plants were closed temporarily and the switch to work from home for employees, as far as practicable, was carried out. The Company has since, after receiving applicable permissions, partially commenced

Due to the escalated corona virus cases and extended lockdown, the first quarter was a complete washout.

Several positive factors including a good rabi output, opening of procurement centers by the government, indication of good crop prices, reservoir levels etc., augur well for tractor demand. The relief packages announced by the government will help bring in momentum for tractor sales, after the lockdown ends. Moreover, the budgets emphasis on doubling farmers income by 2022, loan waivers and finance availability, as well as rising use of tractors in construction and other fields, would augur well for the production and sale of tractors going forward.

This year we are hoping for good monsoon weather and therefore expect the demand for tractors will see a spike whenever the situation settles in the second half year. The agriculture tractor market in India is expected to grow at a CAGR of 6.7% during 2019-2024.

3. SHARE CAPITAL

During the year under review, there was no change in the Share Capital of the company. As at March 31, 2020, the total paid-up share capital of the company stood at Rs 1773.45 lacs divided into 17734500 equity shares of Rs 10/- each.

During the previous year, the company had issued on preferential basis to non-promoter (public) category, 575000 convertible warrants at Rs 200/- per warrant (paid-up Rs 50/-), each warrant convertible into one equity share of Rs 10/- each to be issued at a price of Rs 200/- per share i.e. at a premium of Rs 190/- per share. The last date to exercise entitlement for conversion of warrant and to apply for allotment of equity shares was 20/7/2020. The Allottees failed to apply for allotment of equity shares on conversion and to make the payment of balance amount of Rs. 150/- towards the subscription of each equity share within prescribed period of 18 months. Hence, the entitlement of warrant holders to apply for equity shares of the company along with the rights attached thereto expired and the amount paid on such warrants stands forfeited, pursuant to the provisions of SEBI (ICDR) Regulations, 2018.

4. DIVIDEND

Considering the financial results and to plough back surplus of the Company, the Board did not recommend payment of any dividend for the year ended 31st March, 2020.

5. TRANSFER TO RESERVE

During the financial year, there was no amount proposed to be transferred to the Reserves.

6. AUDITORS & AUDITORS REPORT

M/s. Sunil Kumar Gupta & Co., Chartered Accountants, New Delhi were appointed as statutory auditors of the company for a period of five years in the 38th AGM i.e. till the conclusion of the 43rd Annual General Meeting to be held for the FY 2022-23.

The Auditors Report for the fiscal 2020 does not contain any qualification, reservation or adverse remark. Further, in terms of section 143 of the Companies Act, 2013 read with Companies (Audit & Auditors) Rules, 2014, as amended, no fraud has been reported by the Auditors of the Company where they have reasons to believe that an offence involving fraud is being or has been committed against the company by officers or employees of the company.

7. DEPOSITS

The Company has not accepted any deposits within the meaning of Section 73 of the Companies Act, 2013 and the Companies (Acceptance of Deposits) Rules, 2014. . Hence company need not to give details related to deposits. There is no non compliance of the provisions of Chapter V of the Companies Act 2013.

8. PARTICULARS OF EMPLOYEES

Disclosure pertaining to the remuneration and other details as required under the Companies Act, 2013 read with rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 and any amendments thereof, is attached as Annexure A.

9. POLICY ON DIRECTORS APPOINTMENT AND REMUNERATION

The Board has, on the recommendation of the Nomination & Remuneration Committee, adopted a policy for selection and appointment of Directors, Key Managerial Personnel, Senior Management and their remuneration.

-The Nomination & Remuneration Committee identifies and ascertains the integrity, qualification, expertise and experience of the person for appointment as Director and ensures that the candidate identified possesses adequate qualification, expertise and experience for the appointment as a Director.

-The Nomination & Remuneration Committee ensures that the candidate proposed for appointment as Director is compliant with the provisions of the Companies Act, 2013.

-The candidates appointment as recommended by the Nomination and Remuneration Committee requires the approval of the Board.

-In case of appointment of Independent Directors, the Nomination and Remuneration Committee satisfies itself with regard to the independent nature of the Directors vis- a-vis the Company so as to enable the Board to discharge its function and duties effectively.

-The Nomination and Remuneration Committee ensures that the candidate identified for appointment as a Director is not disqualified for appointment under Section 164 of the Companies Act, 2013.

-The policy can be viewed at companys website at http://www.pritikaautoindustries.com/investors.html

10. CORPORATE GOVERNANCE

Report on Corporate Governance and Certificate of the Secretarial Auditors of your Company regarding compliance of the conditions of Corporate Governance as stipulated in Schedule V read with Regulation 34(3), of the SEBI (LODR) Regulations, are provided in a separate section and forms part of this Report as Annexure B.

11. SUBSIDIARIES

There is one wholly owned subsidiary namely ‘Pritika Engineering Components Pvt. Limited.

In accordance with the provisions of Section 129(3) of the Act, read with the Companies (Accounts) Rules, 2014, a report on the performance and financial position of the subsidiary is attached as Annexure C to this Report.

12. STATEMENTS OF PARTICULARS OF CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE

Information in accordance with the provisions of Section 134 (3)(m) of the Act read with the Companies (Accounts) Rules, 2014 regarding Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo during the reporting period is attached herewith and marked as Annexure-D.

13. RELATED PARTY TRANSACTIONS

Information on transactions with related parties pursuant to Section 134(3)(h) of the Act read with rule 8(2) of the Companies (Accounts) Rules, 2014 are given in Form AOC-2 and forms part of this report as Annexure- E.

14. EXTRACT OF ANNUAL RETURN

The details forming part of the extract of the Annual Return in form MGT-9 is annexed herewith as Annexure F.

15. SECRETARIAL AUDIT REPORT

As required under section 204(1) of the Companies Act, 2013 and Rules made there under, the Company has appointed Mr. Sushil K Sikka, Prop. S K Sikka & Associates, Company Secretary as Secretarial Auditor of the Company for the Financial Year 2019-20.The Secretarial Audit Report forms part of the Annual Report.

The Copy of Secretarial Audit Report for the Financial Year 2019-20 issued by Mr. Sushil K Sikka, Company Secretary in Practice has been attached and marked as Annexure - G. The Secretarial Auditors Report for the fiscal 2020 does not contain any qualification, reservation or adverse remark.

16. MANAGEMENT DISCUSSION ANALYSIS REPORT

The details forming part of Management Discussion and Analysis Report is annexed herewith to the Board Report as Annexure H.

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

During the year under review, there is no significant and material order passed by the Regulators or Courts or Tribunals impacting the going concern status and Companys operations.

18. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

Details of loan, guarantee and investment covered under the provisions of Section 186 of the Act read with the Companies (Meetings of Board and its Powers) Rules, 2014 are given in the Notes to the financial statements.

19. CORPORATE SOCIAL RESPONSIBILITY (CSR)

The details about the policy developed and implemented by the company on CSR initiatives taken during the year is enclosed at Annexure I. The company has also developed a policy on Corporate Social Responsibility which can be viewed at the companys website at http://www.pritikaautoindustries.com/investors.html.

20. MEETINGS OF BOARD OF DIRECTORS

The Board met five times during the year, the details of which are given in the Corporate Governance Report. The intervening gap between the meetings was within the period prescribed under the Companies Act, 2013 and the Listing Regulations.

21. MATERIAL CHANGES AND COMMITMENT IF ANY AFFECTING THE FINANCIAL POSITION OF THE COMPANY OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR TO WHICH THIS FINANCIAL STATEMENTS RELATE AND THE DATE OF THE REPORT

No material changes and commitments affecting the financial position of the Company occurred between the end of the financial year to which this financial statements relate till the date of this report.

22. CORPORATE ACTIONS DURING THE YEAR 2019-20

During the Financial Year 2019-20, the Company made following Corporate Actions:

POSTAL BALLOT

The Company conducted Postal Ballot in order to seek the approval of the Shareholders for the following matters vide notice dated 12th February, 2020, by Ordinary Resolution.

• To approve material related party transactions to be entered into with Pritika Industries Ltd. during the year 2020-21 and 2021-22.

• To approve material related party transactions to be entered into with Pritika Engineering Components Pvt. Ltd. during the year 2020-21 and 2021-22.

All the above resolutions were passed with requisite majority.

23. COMPOSITION OF COMMITTEES

The Company has complied with the SEBI (LODR) Regulations along with the Companies Act, 2013 with respect to the Composition of the Committees as required therein and the details of which is given under Corporate Governance Report annexed to this Report.

24. BOARD EVALUATION

The Board of Directors have carried out an annual evaluation of its own performance, its various committees and individual directors pursuant to the provisions of the Act and the Corporate Governance requirements as prescribed under Regulation 17(10), 25(4) and other applicable provisions of the SEBI (LODR) Regulations. The manner of evaluation is provided in the Corporate Governance Report.

25. DIRECTORS AND KEY MANAGERIAL PERSONNEL Re-Appointment of Director

Mr. Raminder Singh Nibber (DIN: 00239117) retires by rotation at the ensuing Annual General Meeting, and being eligible offers himself for re-appointment.

Independent Directors

Independent Directors on your Companys Board have submitted declarations of independence to the effect that they meet the criteria of independence as provided in Section 149(6) of the Act and Regulation 16(1)(b) of the Listing Regulations.

Change in Composition of Board

During the Financial Year 2019-20 there was no change in the composition of Board of Directors.

The Board has appointed Mr. Subramaniyam Bala (DIN: 00461697) as Additional Director in the category of Independent Director w.e.f. August 29, 2020 for a period of 1 year, subject to the approval by the Members at the ensuing AGM.

Key Managerial Personnel

The following changes took place in Key Managerial Personnel during the FY 2019-20.

Mr. Ramesh Chander Saini, Chief Financial Officer retired from the post w.e.f 30.04.2019 & Mr. Narinder Kumar Tyagi was appointed as Chief Financial Officer w.e.f. 22.05.2019.

Mr. Vedant Bhatt, Company Secretary & Compliance Officer resigned w.e.f. 22.05.2019 and Mr. Chander Bhan Gupta was appointed as Company Secretary & Compliance Officer w.e.f. 22.05.2019.

26. DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to the requirement under Section 134 (5) of the Companies Act, 2013, with respect to Directors Responsibilities Statement, it is hereby confirmed that:

a. In the preparation of the annual accounts for the financial year ended 31st March, 2020 the applicable accounting standards had been followed along with proper explanation relating to material departures.

b. The Directors have selected such accounting policies and applied them consistently and made judgments and estimates that were 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 or loss of the Company for the year under review.

c. The Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

d. The Directors had prepared the accounts for the financial year ended 31st March, 2020 on a going concern basis.

e. The Directors had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively.

f. The Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

27. COST AUDITORS

As per requirement of the Regulation 148 of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Rules, 2014 as amended from time to time, M/s. Khushwinder Kumar & Co., Cost Accountants, (Firm Registration No. 100123) was appointed as Cost Auditor to audit the Cost Accounts of the company for the Financial Year 2019-20.

On the recommendation of Audit Committee, the Board has reappointed M/s. Khushwinder Kumar & Co., Cost Accountants, (Firm Registration No. 100123) as Cost Auditor to audit the Cost Accounts of the company for the Financial Year 2020-21.

As required under the Act, a resolution seeking members approval for remuneration payable to the Cost Auditor, forms part of the notice convening the Annual General Meeting for their ratification.

28. INTERNAL AUDITORS

The Company has appointed M/s. PVNS & Co., Chartered Accountants, Chandigarh as Internal Auditors of the Company for financial year 2020-21.

29. COST RECORDS

As specified by the Central government under sub section (1) of section 148 of the Companies Act, 2013, the company has been maintaining cost records.

30. INTERNAL FINANCIAL CONTROLS & RISK MANAGEMENT

Pursuant to the provisions of Section 177(4) & Section 134(3)(n) of the Companies Act, 2013, the Board has developed Internal Finance Control Policy to identify and mitigate risks. The provisions of Regulation 21 of SEBI Listing Regulations 2015 pertaining to Risk Management Committee are not applicable to the company.

31. WHISTLE BLOWER POLICY AND VIGIL MECHANISM

To create enduring value for all stakeholders and ensure the highest level of honesty, integrity and ethical behavior in all its operations, the Company has formulated Vigil Mechanism Policy. This policy aspires to encourage all employees to report suspected or actual occurrence of illegal, unethical or inappropriate events (behaviors or practices) that affect Companys interest/image.

32. DISCLOSURE AS PER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

The company has complied with the provisions of Internal Complaints Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. The details pertaining to complaints are mentioned in the Corporate Governance Report placed at Annexure B.

33. ACKNOWLEDGEMENTS

Your Directors wish to express their sincere appreciation to all the Employees for their contribution and thanks to our valued clients, Bankers and shareholders for their continued support.

For and on behalf of the Board of Directors
Sd/-
Date: 29/08/2020 Raminder Singh Nibber
Place: Mohali Chairman