Pritika Auto Industries Ltd Directors Report.

Dear Shareholders,

The Directors have pleasure in presenting their 39th Annual Report on the business and operations together with the Audited Statement of Accounts of the Company for the year ended 31 March, 2019.

1. FINANCIAL RESULTS

The Financial results are briefly indicated below:

(Rs. In Lakhs)

Particulars

Standalone

Consolidated

2018-19 2017-18 2018-19 2017-18
Revenue from operations (net) 19515.93 17194.87 20971.20 17194.87
Other Income 194.53 61.48 165.36 61.48
Profit before Interest, Depreciation and Tax (PBIDT) 3032.65 2541.86 3182.51 2536.21
Interest 696.49 554.30 785.27 559.39
Profit before Depreciation and Tax (PBIT) 2336.16 1987.56 2397.24 1976.82
Depreciation 582.13 568.04 633.35 568.04
Profit before Tax Expenses 1754.03 1419.52 1763.89 1408.78
Tax Expenses 349.46 302.39 351.75 302.39
Profit after Tax 1404.57 1117.13 1412.14 1106.49
EPS- Basic 7.98 7.63 8.03 7.56
Diluted 7.97 7.63 8.01 7.56

The Standalone Revenue from the operations (net) for the Financial Year 2018-19 was Rs. 19515.93 lac (Previous Year Rs. 17194.87 lac). The company earned Net Profit of Rs. 1404.57 lac as against Rs. 1117.13 lac in the previous year.

The Consolidated Revenue from the operations (net) for the Financial Year 2018-19 was Rs. 20971.20 lac (Previous Year Rs. 17194.87 lac). The company earned Consolidated Net Profit Rs. 1412.14 lac as against Rs. 1106.49 lac during previous year. There was no change in the nature of business of the company during the year.

The Amalgamated Financial Statement of the company are prepared for the Financial Year 2018-19 after considering amalgamation of Pritika Autocast Ltd. and Nibber Castings Pvt. Ltd. (the wholly owned subsidiaries) with the company. The previous year figures have been restated, rearranged, regrouped and consolidated upon amalgamation of wholly owned subsidiaries, to enable comparability of the current year figures of amalgamated accounts with the relative previous years figures.

2. INDUSTRIAL SCENARIO

The Indian tractor industry witnessed a double digit growth for the third consecutive year in Financial Year 2018-2019, however, the pace was slowest in the last three years. In FY19 tractor sales grew by 10.24 per cent at 878,476 units as compared to 20.52 per cent and 15.74 per cent in FY 18 and FY117 respectively. On a yearly basis the growth rate was almost halved in FY19 over FY18.

The growth was marred due to weak sentiment in later part of the year as sales slipped into negative in February and March 2019 on year-on year (YOY). This ensued into the fourth quarter performance posting a year on year decline of 5.78 per cent. Lack of optimum financing, poor rabi crop sowing and weak crop prices have limited tractor sales. The growth rate is even lower than what the industry executives had pegged post the December quarter. The month of March was slow in the domestic market due to postponement of festive season to April and lower rabi sowing than expected.

The first long-range forecast for the south-west monsoon by the India Meteorological Department (IMD) signaled a positive market trend for FY19-2020 as it predicted near to normal monsoon for the current year. Despite this, analysts remain conservative as they predict a mere 5 percent growth in tractor sales for FY20. CRISIL Research expects domestic tractor sales volumes to continue its growth momentum, and increase by 6-8% in fiscal 2020, assuming normal monsoon.

Governments renewed thrust towards improving the rural economy, via measures such as doubling farm income by 2022, increasing spend towards irrigation, direct farmer income support through PM-KISAN scheme and improving crop productivity by distributing soil health cards is expected to drive growth in the long term. This will also be supported by other measures like the e-NAM (National Agriculture Market), expanding crop insurance, and gradual spread of Custom Hiring centers. With growth in rural wages also decelerating, and increasing mechanization on farm fields, this bodes well for structural tractor demand growth.

In fiscal 2020, capacity utilization levels are expected to improve marginally. While tractor demand is expected to improve moderately, capacity additions are also expected by players, offsetting the contribution by growth in tractor production.

3. AMALGAMATION OF SUBSIDIARY COMPANIES

The Honble National Company Law Tribunal, Chandigarh Bench at Chandigarh vide its order dated 6/2/2019 has approved Scheme for Amalgamation of Pritika Autocast Limited and Nibber Castings Private Limited (the Transferor Companies) WITH Pritika Auto Industries Limited (the Transferee Company) with the Appointed Dated 1/4/2017. Consequently, Pritika Autocast Limited and Nibber Castings Private Limited have amalgamated with the company. The company has prepared amalgamated financial statements for the year ended 31th March, 2019.

4. SHARE CAPITAL

During the year under review, the company has issued 175000 equity shares of Rs 10/- each at a premium of Rs 190/- per share, on preferential basis, to non-promoter (public) category. Consequently, as at March 31.2019, the total paid-up share capital of the company stood at Rs 1773.45 lacs divided into 17734500 equity shares of Rs 10/-each.

The company has also issued, on preferential basis to non-promoter (public) category, 575000 convertible warrants at Rs 200/- per warrant (paid-up Rs 50/-), each 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.

5. DIVIDEND

Based on the Companys performance, the Directors are pleased to recommend for approval of the members a final dividend of 50 paise per share for F Y19. The final dividend on equity shares, if approved by the members, would involve a cash outflow of Rs. 106.89 Lacs, including dividend distribution tax resulting in a payout of 7.61% of the standalone profits of the Company.

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 2019 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, The 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 164of the Companies Act, 2013.

-The policy can be viewed at companys website at https// 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

Pursuant to the Scheme of Amalgamation approved by NCLT, Chandigarh Bench, two of the wholly owned subsidiaries of your company, namely Pritika Autocast Limited and Nibber Castings Private Limited have been amalgamated with the company during the year. Now 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 2018-19.The Secretarial Audit Report forms part of the Annual Report.

The Copy of Secretarial Audit Report for the Financial Year 2018-19 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 2019 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

There is no significant and material order passed by the Regulators or Courts or Tribunals impacting the going concern status and Companys operations. However, the Honble National Company Law Tribunal, Bench Chandigarh, vide its order dated 6/2/2019 has approved the Scheme of Amalgamation of Pritika Autocast Ltd. and Nibber Castings Pvt. Ltd., (the Transferor companies) with Pritika Auto Industries Ltd. (the Transferee Company).

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)

For the financial year 2018-19, the provisions of Section 135 of the Companies Act 2013 read with Companies (Corporate Social Responsibility) Rules, 2014 were applicable on Pritika Autocast Limited, wholly owned subsidiary, which has been amalgamated with the company. 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 https//www.pritikaautoindustries.com/ investors.html

20. MEETINGS OF BOARD OF DIRECTORS

The Board met 7 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 2018-19

During the Financial Year 2018-19, the Company made several Corporate Actions the details of which are as below:

EXTRA-ORDINARY GENERAL MEETING

The Company held Extra-Ordinary General Meeting on 9th January, 2019 in order to seek the approval of the Shareholders for the following matters:

• Increase in the limit of investment by Foreign Institutional Investors (Fils) and Non Resident Individuals (NRIs) in the Companys Equity Share Capital, by Special Resolution

• Issue of Equity Shares on Preferential Allotment Basis to the Non Promoters (Public Category) for Cash, by Special Resolution

• Issue of Warrants convertible into Equity Shares, on Preferential Allotment Basis to the Non Promoters (Public Category) for Cash, by Special Resolution

• Approval of Material Related Party Transactions with Holding and other Subsidiary Companies, by Ordinary Resolution

All the above resolutions were passed with requisite majority.

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, 2019, by Special Resolution.

• Continuance of Mr. Raminder Singh Nibber as director and Chairman of the company not withstanding that he has attained the age of 75 years

• Appointment of Mr. Raminder Singh Nibber (DIN: 00239117) as whole time director and payment of remuneration for a period of three years w.e.f. 01.04.2019.

• Payment of remuneration to Mr. Harpreet Singh Nibber (DIN: 00239042) Managing Director of the company for a period of three years w.e.f. 01.04.2019

• Appointment of Mr. Ajay Kumar, director (DIN: 02929113) as whole time director of the company and payment of remuneration for a period of three years w.e.f. 01.04.2019

• Approval of loans, investments, guarantee or security under Section 185 of Companies Act, 2013 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 SEB1 (LODR) Regulations. The manner of evaluation is provided in the Corporate Governance Report.

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

Mr. Ajay Kumar (DIN: 02929113) 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 2018-19, Mrs. Neha was appointed as an Independent Director w.e.f. 24.04.2018.

Key Managerial Personnel

There was no change in Key Managerial Personnel during the FY 2018-19.

Mr. Ramesh Chander Saini, Chief Financial Officer on his retirement, resigned 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 31" March, 2019 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 31 st March, 2019 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, the Board of Directors on the recommendation of Audit Committee, has appointed 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 2019-20. 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 Mr. Gaurav Kumar, CM A (Cost Accountant), as Internal Auditor of the Company for financial year 2019-20.

29. COST RECORDS

As specified by the Central government under sub section (1) of section 148 of the Companies Act, 2013, cost records were maintained by Pritika Autocast Ltd. and Nibber Castings Pvt. Ltd., the wholly owned subsidiaries, amalgamated with the company.

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 intcrest/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

Date: 05/08/2019 Sd/- Sd/-
Place: Mohali Harpreet Singh Nibber Ajay Kumar
Managing Director Whole Time Director