CDG Petchem Ltd Directors Report.

Dear Members,

The Board of Directors are pleased to present the Companys 9th Annual Report and the Companys audited financial statements (standalone and consolidated) for the financial year ended March 31, 2020.

???FINANCIAL RESULTS:

The Companys financial performance for the year ended March 31, 2020 is summarized below:

Standalone Consolidated
Particulars Year ended March 31, Year ended March 31, 2019

Year ended March 31,

Year ended March 31, 2019
2020 2020
Revenue from Operations 2013.45 302.11

8939.55

6706.68
Other Income 19.47 103.02

125.52

131.48
Total Income 2032.92 405.13

9065.07

6838.16
EBITDA 80.67 82,33

264.75

263.79
Less: Finance Costs 32.32 36.85

128.93

149.73
Less: Depreciation 25.48 28.45

29.56

22.50
Profit Before Tax, share of profit of joint
venture and associate 22.86 17.12

106.27

90.57
Share of profit in joint venture and associate,
net of tax -- -

--

-
Profit Before Tax 22.86 17.12

106.27

90.57
Less: Tax Expenses 2.5 0.42

25.02

20.61
Profit for the year 20.36 16.61

81.24

69.96
Add: Surplus Brought Forward from Previous
Year (60.02) (76.63)

59.66

(10.30)
Surplus Available (39.66) (60.02)

140.91

59.66
Appropriations made to Surplus: - -

-

-
Dividends including dividend tax - -

-

-
Transfer to General Reserve - -

-

-
Balance carried to Balance Sheet (39.66) (60.02)

140.91

59.66
Basic Earnings per share 0.66 0.54

2.64

2.27
Diluted Earnings per share 0.66 0.54

2.64

2.27

Note: The above figures are extracted from the standalone and consolidated financial statements

• OVERVIEW OF FINANCIAL AND BUSINESS OPERATIONS:

The Companys Standalone revenues from operations was Rs.2013.45 lakhs for the FY 2019-20 as compared to Rs. 302.11 lakhs for the previous FY 2018-19-. The Company has made Net Profit of Rs. 20.36 lakhs on standalone basis for the year under review as compared to Net Profit of Rs. 16.61 lakhs for the previous year.

• TRANSFER TO RESERVES

Rs. 20.36 lacs was transferred to the Reserves for the year ending 31.03.2020.

• DIVIDEND:

The Company does not recommend any dividend for the year under review.

• MATERIAL CHANGES AFFECTING THE COMPANY:

There have been no material changes and commitments affecting the financial position of the Company between the end of the financial year and date of this report.

• SHARE CAPITAL:

The Authorised Share Capital of the Company is Rs. 50,00,000/- equity shares of Rs. 10/- each. The Issued, Subscribed and Paid Up Share Capital of the Company is Rs. 30,77,500/- equity shares of Rs. 10/- each.

• TRANSFER TO THE INVESTOR EDUCATION & PROTECTION FUND (IEPF):

In terms of Section 124(5) of the Companies Act, 2013 read with Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016, there were no unclaimed dividends. The Company did not declare any dividend in its lifetime.

• MANAGEMENTS DISCUSSION AND ANALYSIS REPORT:

Managements Discussion and Analysis Report for the year under review, as stipulated under regulation 34(2) of the Listing Regulations, is presented in a separate section, forming part of the Annual Report.

• SUBSIDIARY COMPANY:

SUBSIDIARY COMPANIES AND THEIR PERFORMANCE AND DEVELOPMENTS

Morbido Merchandise Private Limited.

As per the provisions of section 129 of the Companies Act, 2013 read with Companies (Accounts) Rules, 2014, separate statement containing the salient features of the financial statements of the subsidiary Companies, Joint Ventures and Associates is prepared in Form AOC-1 and it forms part of the consolidated financial statements and attached as Annexure "1" to this report.

During the year under review, no company has become or ceased to be Companys subsidiary company.

• CONSOLIDATED FINANCIAL STATEMENTS:

The consolidated financial statements, in terms of Section 129 of the Companies Act, 2013 and regulation 34 of the Listing Regulations and prepared in accordance with Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015 as amended thereof forms a part of this annual report. The consolidated financial statements have been prepared on the basis of audited financial statements of your Company, its subsidiary as approved by the respective Board of Directors. As per the provisions of Section 136 of the Companies Act, 2013, the Company has placed separate audited accounts of its Subsidiary which forms a part of the Annual Report.

• STATEMENT ON DECLARATION GIVEN BY INDEPENDENT DIRECTORS UNDER SUB-SECTION (6) OF SECTION 149

The Independent Directors have submitted the Declaration of Independence, as required pursuant to Section 149(7) the Companies Act, 2013 stating that they meet the criteria of Independence as provided in sub-section (6).

• DISCLOSURES ABOUT RECEIPT OF ANY COMMISSION BY MD /WTD FROM COMPANY OR ANY COMMISSION/REMUNERATION FROM THE SUBSIDIARIES

The Managing Director of the Company, has received remuneration of Rs. 12.00 lacs from the subsidiary Morbido Merchandise Private Limited during the financial year 2019-20.

• SECRETARIAL STANDARDS:

The Directors state that applicable Secretarial Standards, i.e. SS-1 and SS-2, relating t ‘Meetings of the Board Directors and ‘General Meetings, respectively, have been duly followed by the Company.

• DIRECTORS RESPONSIBILITY STATEMENT:

Pursuant to the requirement of Section 134(5) of the Companies Act, 2013, with respect to the Directors Responsibility Statement, the Board of Directors of the Company hereby confirm that:

a) in the preparation of the annual accounts for the year ended March 31, 2020, the applicable accounting standards read with requirements set out under Schedule III to the Act, have been followed and there are no material departures from the same;

b) the Directors have selected such accounting policies and applied them consistently and 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 March 31, 2020 and of the profit of the Company for the year ended on that date;

c) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d) the Directors have prepared the annual accounts on a ‘going concern basis for the financial year ended March 31, 2020;

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

f) the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

• CORPORATE GOVERNANCE:

The Company is committed to maintain the highest standards of corporate governance and adhere to the corporate governance requirements set out by Securities and Exchange Board of India (SEBI). The report on Corporate Governance as stipulated under the Listing Regulations forms an integral part of this Report. The requisite certificate from the Auditors of the Company confirming compliance with the conditions of corporate governance is attached to the report on Corporate Governance as Annexure "2" to this report. .

• FAMILIARIZATION PROGRAMME FOR INDEPENDENT DIRECTORS

The company has formulated a familiarization programme for the Independent Directors to provide sights into the company to enable the Independent Directors to understand its business in depth and contribute significantly to the company.

• CONTRACTS AND ARRANGEMENTS WITH RELATED PARTIES:

All contracts / arrangements / transactions entered by the Company during the financial year with related parties were in the ordinary course of business and on an arms length basis. During the year, except with the wholly owned subsidiary, the Company had not entered into any contract / arrangement / transaction with related parties which could be considered material in accordance with the policy of the Company on materiality of related party transactions.

The Policy on materiality of related party transactions and dealing with related party transactions as approved by the Board may be accessed on the Companys website.

The particulars of contracts or arrangements with related parties referred to in section 188(1) are prepared in Form No. AOC-2 pursuant to clause (h) of sub-section (3) of section 134 of the Act and Rule 8(2) of the Companies (Accounts) Rules, 2014 and the same is enclosed as Annexure "3" to the Boards report.

• CORPORATE SOCIAL RESPONSIBILITY (CSR):

The Provisions of CSR are not applicable to the Company.

• NOMINATION AND REMUNERATION COMMITTEE:

The Companys Nomination and Remuneration committee consists of majority of Independent Directors which ensures transparency in determining the remuneration of Directors, KMPs and other employees of the Company. The Chairman of the committee is an Independent Director, thereby resulting in independent and unbiased decisions.

During the financial year 2019-20, the composition of Nomination and Remuneration Committee is provided below.

Name Category
Mr. Dilip Kumar Surana, Chairman Independent, Non-Executive
Mr. Arvind Surana Independent, Non-Executive
Mr. Naresh Kathotia Independent, Non-Executive

The Performance Evaluation and Remuneration Policy framed by the Committee and approved by the Board is directed towards rewarding performance of Executive and Non-Executive Directors, Key Managerial Personnel and Senior Management Personnel of the Company based on review of achievements periodically.

• RISK MANAGEMENT:

Risk Management Committee has been entrusted with the responsibility to assist the Board in (a) overseeing and approving the Companys enterprise wide risk management framework; and (b) overseeing that all the risks that the organization faces such as strategic, financial, credit, market, liquidity, security, property, IT, legal, regulatory, reputational and other risks have been identified and assessed and there is an adequate risk management infrastructure in place capable of addressing those risks. Your Company has proper process for Risk Management.

• INTERNAL FINANCIAL CONTROLS

Internal Financial Controls are an integrated part of the risk management process, addressing financial and financial reporting risks. The internal financial controls have been documented, digitized and embedded in the business processes. Assurance on the effectiveness of internal financial controls is obtained through management reviews, control self-assessment, continuous monitoring by functional experts as well as testing of the internal financial control systems by the internal auditors during the course of their audits. We believe that these systems provide reasonable assurance that our internal financial controls are designed effectively and are operating as intended.

• INTERNAL AUDIT & CONTROLS:

Your Company continues to engage M/s Affinity Global Services Private Limited as its Internal Auditors. During the year, your Company continued to implement their suggestions and recommendations to improve the internal controls. Their scope of work includes review of operational efficiency, effectiveness of systems & processes, compliances and assessing the internal control strengths in all areas. Internal Auditors findings are discussed and suitable corrective actions are taken as per the directions of Audit Committee on an on-going basis to improve efficiency in operations.

The Companys internal control systems are well established and commensurate with the nature of its business and the size and complexity of its operations. The Audit Committee reviews adequacy and effectiveness of the Companys internal control environment and monitors the implementation of audit recommendations. The recommendations/suggestions of the internal auditors are discussed in the Audit Committee meetings.

• DIRECTORS AND KEY MANAGERIAL PERSONNEL:

In accordance with the provisions of Section 152 of the Companies Act, 2013 and the Articles of Association of the Company, Mrs. Renu M Dugar , Non-Executive Director of the Company, retires by rotation at the 9th Annual General Meeting and being eligible offers himself for re-appointment.

The Company has received declarations from all the Independent Directors of the Company confirming that they meet with the criteria of independence as prescribed both under the Companies Act and the Listing Regulations.

The Company has devised a Policy for performance evaluation of Independent Directors, Board, Committees and other individual Directors which include criteria for performance evaluation of the Non-Executive Directors and Executive Directors. Pursuant to the provisions of the Companies Act, 2013 read with the Rules issued there under and the Listing

Regulations (including any statutory modification(s) or re–enactment(s) for the time being in force), the process for evaluation of the annual performance of the Directors/ Board/ Committees was carried out in accordance with the policies in force.

The Board of Directors has complete access to the information within the Company. Independent Directors have the freedom to interact with the Companys management. Interactions happen during Board / Committee meetings, management persons are asked to make presentations about performance of the Company. Apart from this, they also have independent interactions with the Statutory Auditors, the Internal Auditors and external advisors appointed from time to time. Further, they meet without the presence of any management personnel and their meetings are conducted informally to enable the Independent Directors to discuss matters pertaining to the Companys affairs and put forth their combined views to the Board of Directors of the Company.

Mr. Manoj Kumar Dugar, Chairman and Managing Director, Mrs. Renu Dugar, Executive Director, Mr. Rajesh C Dugar, Executive Director , Mr. Abhishek Kumar Sahal , Chief Financial Officer and Ms. Deepika Sureka, Company Secretary and Compliance Officer are Key Managerial Personnel of the Company during the year under review.

• AUDITORS & THEIR REPORT:

Statutory Auditors

M/s. Luharuka & Associates, Firm of Chartered Accountants, Hyderabad were appointed as Auditors of the Company, for a term of 5 (five) years, at the 8th Annual General Meeting held on September 30, 2019. The Auditors have confirmed that they are not disqualified from continuing as Auditors of the Company.

The Notes on financial statement referred to in the Auditors Report are self-explanatory and do not call for any further comments. The Auditors Report does not contain any qualification, reservation, adverse remark or disclaimer.

Secretarial Auditor

The Board had appointed M/s. Saurabh Poddar & Associates, Company Secretaries, to conduct Secretarial Audit for the financial year 2019-20. The Secretarial Audit Report for the financial year ended March 31, 2020 is annexed herewith marked as Annexure 4 to the Boards Report. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark.

• DISCLOSURES:

Meetings of the Board

Eight(8) meetings of the Board of Directors were held during the year. The particulars of meetings held and attended by each Director are detailed in the Corporate Governance Report, which forms part of this Report.

Audit Committee

The Audit Committee comprises majority Independent Directors namely Mr. Naresh Kathotia (Chairman), Mr. Dilip Kumar Surana and Mr. Manoj Kumar Dugar as other members. During the year all the recommendations made by the Audit Committee were accepted by the Board.

Vigil Mechanism

The Company has a Vigil mechanism and a Whistle - blower policy in accordance with provisions of the Act and Listing Regulations, under which the employees are free to report violations of applicable laws and regulations and the Code of Conduct. Protected disclosures can be made by a whistle blower through a dedicated e-mail, or a letter to the Chairman of the Audit Committee.

The Policy on vigil mechanism and whistle blower policy may be accessed on the Companys website.

Code of Conduct

A declaration regarding compliance with the code of conduct signed by the Companys Chairman and Managing Director is published in the Corporate Governance Report which forms part of the annual report.

Particulars of Loans given, Investments made, Guarantees given and Securities provided

Particulars of loans given, investments made, guarantees given and securities provided are provided in the standalone financial statement (Please refer to Note No. 6 & 7 to the standalone financial statement).

Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo

The particulars relating to conservation of energy, technology absorption, foreign exchange earnings and outgo, as required to be disclosed under the Act, are provided in Annexure 5 to the Boards Report.

Extract of Annual Return

Extract of Annual Return of the Company is annexed herewith as Annexure 6 to this Report.

Particulars of Employees and related disclosures

In terms of the provisions of Section 197(12) of the Act read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended thereof, none of the employees drawn remuneration in excess of the limits set out in the said rules.

Your Directors further state that, the remuneration paid to the Key managerial Personnel and others is as per the Remuneration Policy of the Company. Particulars of Employees information as per Rule 5(1) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed herewith as Annexure 7 to this Report.

DECLARATION ABOUT COMPLIANCE WITH CODE OF CONDUCT BY MEMBERS OF THE BOARD AND SENIOR MANAGEMENT PERSONNEL

The company has complied with the requirements about the Code of Conduct for Board members and Senior Management Personnel.

POLICY ON SEXUAL HARASSMENT

The Company has a Policy on "Prevention of Sexual Harassment of Women at Workplace" for the matters connected therewith or incidental thereto covering all the aspects as contained under the "The Sexual Harassment of Women at Workplace (Prohibition, Prevention and Redressal) Act, 2013".

During the year under review, the Company has not received any complaints pertaining to Sexual Harassment.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS

There are no material significant orders passed by the Regulators or Courts which would impact the going concern status of the company and its future operations.

HUMAN RESOURCE

Your company considers its Human Resources as the key to achieve its objectives. Keeping this in view, your company takes utmost care to attract and retain quality employees. The employees are sufficiently empowered and the work environment propels them to achieve higher levels of performance. The unflinching commitment of employees is the driving force behind the companys vision. Your company appreciates the dedication of its employees.

GENERAL

Your Directors state that no disclosure or reporting is required in respect of the following matters as there were no transactions on these items during the year under review:

Details relating to deposits covered under Chapter V of the Act.

Issue of equity shares with differential rights as to dividend, voting or otherwise.

Issue of shares (including sweat equity shares) to employees of the Company under any scheme save and except Employee Stock Option Scheme referred to in this Report.

The Company does not have any scheme of provision of money for the purchase of its own shares by employees or by trustees for the benefit of employees.

Cost Audit is not applicable for the financial year 2019-20.

No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and Companys operations in future.

No fraud has been reported by the Auditors to the Audit Committee or the Board.

• APPRECIATIONS AND ACKNOWLEDGEMENTS:

The Board of Directors would like to express their sincere appreciation for the assistance and co-operation received from the financial institutions, banks, Government authorities, customers, vendors and members during the year under review. The Board of Directors wishes hereby to place on record their appreciation for the committed services by the Companys executives, staff and workers.

behalf of the Board of Directors
Sd/-
Manoj Kumar Dugar
Chairman and Managing Director
DIN: O352733
Secunderabad, July 17, 2020