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H P Cotton Textile Mills Ltd.

BSE: 502873 Sector: Industrials
NSE: N.A. ISIN Code: INE950C01014
BSE 00:00 | 27 May 130.95 1.05
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NSE 05:30 | 01 Jan H P Cotton Textile Mills Ltd
OPEN 130.00
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VOLUME 2182
52-Week high 206.00
52-Week low 48.35
P/E 7.19
Mkt Cap.(Rs cr) 51
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Sell Price 0.00
Sell Qty 0.00
OPEN 130.00
CLOSE 129.90
VOLUME 2182
52-Week high 206.00
52-Week low 48.35
P/E 7.19
Mkt Cap.(Rs cr) 51
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

H P Cotton Textile Mills Ltd. (HPCOTTONTEX) - Director Report

Company director report

Dear Members

Your Directors are pleased to present the Fortieth (40th) Annual Reporttogether with the Company's audited financial statements and the auditors' report thereonfor the financial year ended March 31 2021.

FINANCIAL HIGHLIGHTS

A summary of the Company's financial performance in FY ended March 31 2021 is asfollows:

(Rs in Lakhs)

Particulars March 31 2021 March 31 2020
Revenue from operations (net) 9657.08 8175.13
Add: Other Income 131.61 187.96
Total Income 9788.69 8363.09
Profit/(Loss) before Finance Cost Depreciation & Amortisation Exceptional items & Tax Expense 1068.58 632.08
Less: Finance Cost 248.86 333.61
Less: Depreciation and Amortisation Expense 271.21 260.31
Profit before exceptional items & tax Expense 548.51 38.16
Less: Exceptional items - -
Profit/(Loss) before Tax Expense 548.51 38.16
Less: Taxation Expense 188.75 4.23
Profit/(Loss) for the year 359.76 33.93
Other Comprehensive Income/(Loss) (15.65) 30.35
Total Comprehensive Income/(Loss) for the year 344.11 64.28
Earnings per Share (Rs)
-Basic 9.46 0.90
-Diluted 9.46 0.90

PRODUCTION AND SALES PERFORMANCE

• Sewing Threads

The production of Sewing Threads was increased by 21.63% over previous year taking to1272954 kg as compared to the previous year level of 1046554 kg. Further the productturnover was also increased by 27.60% over previous year taking to Rs 9047.05 Lakhs ascompared to the previous year level of Rs 7089.84 Lakhs.

• Hosiery Yarn

The production of Hosiery Yarn was decreased by 98.71% over previous year taking to4674 kg as compared to the previous year level of 362590 kg. Further the productturnover was also decreased by 93.73% over previous year taking to Rs 39.90 Lakhs ascompared to the previous year level of Rs 637.21 Lakhs.

During the year your Company has achieved a total turnover of Rs 9657.08 Lakhs asagainst Rs 8175.12 Lakhs during the corresponding previous financial year. The exports ofthe Company grew by 38.07 % over previous year taking total exports to Rs 8465.87 Lakhsfrom Rs 6131.18 Lakhs.

PROFITABILITY

The Company earned a profit before interest depreciation and tax for the year underreview was Rs 1068.06 Lakhs as compared to Rs 632.07 Lakhs in previous year. Afterproviding for depreciation of Rs 271.21 Lakhs (Previous Year Rs 260.31 Lakhs) financecost of Rs 248.87 Lakhs (Previous Year Rs 333.61 Lakhs) tax expense of Rs 188.75 Lakhs(Previous Year Rs 4.23 Lakhs) the net profit from operations after comprehensive incomeworked out to Rs 344.58 Lakhs as compared to Rs 64.28 Lakhs in the previous year.

IMPACT OF COVID-19 ON COMPANY'S PERFORMANCE

The Company had temporarily closed its manufacturing operations at Hisar in the Stateof Haryana and offices located at different places in India in the end of FY20. Thetemporarily suspension of manufacturing operations of the Company at Hisar resulted in thedecline of the production and revenue in Q4FY20. The Company was able to seek specialpermission from the concerned authorities to re-start its operations partially in April2020 and to normal levels by mid-May after fulfilment of imposed conditions as per thepermission received from the Concerned Authorities to restart the operations.

The Company has made significant efforts to boost the production and revenue. As aconsequence of this the Company's manufacturing plant at Hisar in the month of June 2020was operating at pre-lockdown capacity as it was operating in March 2020 before thelockdown restrictions for COVID-19 emergency came into force keeping the safety andwell-being of our employees as top priority and operating as per a strict SOP in linewith the directions/guidelines issued by the Central/State Governments.

Now the Company has already achieved pre-COVID levels of production and has recordedbetter performance despite COVID-19 restrictions and production loss compared to previousfinancial year.

Presently the management does not foresee any material/significant impact on theCompany's operations. The Company is continuously monitoring the situation and impact ofCOVID-19 pandemic on the Company.

RESOURCE UTILISATION

1. Fixed Assets:

The Net Block as at March 31 2021 was Rs 2079.97 Lakhs as compared to Rs 2001 Lakhsin the previous year.

2. Current Assets:

The current assets as at March 31 2021 were Rs 5576.75 Lakhs as against Rs 3596.45Lakhs in the previous year. RESERVES

Total reserves and surplus of the Company has been increased to Rs 1853.08 Lakhs onMarch 31 2021 as against Rs 1519.13 Lakhs on March 31 2020.

DIVIDEND

The Board has not recommended any Dividend for the current financial year in view ofinadequate profits for the Financial Year ended on March 31 2021.

SHARE CAPITAL

The Authorised Share Capital of the Company as on March 31 2021 remains unchanged atRs 42500000 divided into 4250000 Equity Shares of Rs 10 each and Paid up ShareCapital of '38100000 divided into 3810000 Equity Shares of Rs 10 each.

MANAGEMENT DISCUSSION & ANALYSIS REPORT

The Management Discussion and Analysis Report for the year under review in terms ofRegulation 34 of the Listing Regulations is presented in a separate Section formingintegral part of the Annual Report.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

Directors

On the recommendation of Nomination and Remuneration Committee and with due consent ofMrs. Ritu Bansal the Board of Directors at its meeting held on September 01 2020changed the designation of Mrs. Ritu Bansal (DIN: 03619069) from Independent Director toAdditional Director (Non-Executive) w.e.f. September 02 2020. Further in terms ofSection 152 of the Act read with the Companies (Appointment and Qualification ofDirectors) Rules 2014 the Board has on the recommendation of the Nomination andRemuneration Committee proposed to the Shareholders for the appointment of Mrs. RituBansal as a Non-Executive Director of the Company liable to retire by rotation.Thereafter the members of the Company had duly approved the appointment of Mrs. RituBansal (DIN: 03619069) as a Non-Executive Director in the 39th Annual GeneralMeeting held on September 29 2020 liable to retire by rotation.

Key Managerial Personnel (KMP)

In compliance with provisions of Section 203 of the Companies Act 2013 following arethe KMPs of the Company as on March 31 2021:

S. No. Name Designation
1. Kailash Kumar Agarwal Chairman and Managing Director
2. RaghavKumar Agarwal Whole-Time Director Chief Executive Officer & CFO
3. Shubham Jain Company Secretary

Retire by Rotation

In accordance with the provisions of Section 152 of the Act and Articles of Associationof the Company Mr. Ritu Bansal (DIN 03619069) Non-Executive Director of the Companyretires by rotation at the conclusion of the forthcoming Annual General Meeting and beingeligible offers herself for reappointment. The Board recommends her appointment for theconsideration of the members of the Company at the ensuing Annual General Meeting.

A brief profile expertise of Director and other details as required under the ActSecretarial Standard-2 and Listing Regulations relating to the director proposed to bere-appointed is annexed to the notice convening the AGM.

Declaration by Independent directors under section 149(7)

Your Company has received declarations from all the Independent Directors of theCompany confirming that they meet with the criteria of independence provided in Section149(6) of the Act and there has been no change in the circumstances which may affect theirstatus as Independent Director during the year under review.

The terms and conditions of appointment of Independent Directors are as per Schedule IVof the Act.

In terms of Section 150 of the Companies Act 2013 read with Rule 6 of the Companies(Appointment and Qualification of Directors) Rules 2014 Independent Directors of theCompany have confirmed that they have registered themselves with the databank maintainedby the Indian Institute of Corporate Affairs Manesar (‘IICA'). The IndependentDirectors are also required to undertake online proficiency self-assessment test conductedby the IICA within a period of 2 (Two) years from the date of inclusion of their names inthe data bank unless they meet the criteria specified for exemption.

Mr. Parshottam Dass Agarwal and Mr. Mohan Lal Jain Independent Directors of theCompany meets the criteria specified for exemption and hence both the IndependentDirectors are not required to undergo the online proficiency self-assessment test asconducted by IICA.

In the opinion of the Board the independent directors possess the requisite integrityexperience expertise and proficiency required under all applicable laws and the policiesof the Company.

BOARD MEETINGS

During the year under review six (6) Board Meetings were held on July 06 2020September 01 2020 September 12 2020 November 04 2020 February 13 2021 and March 252021. The intervening gap between two Board Meetings was less than the maximum periodprescribed under the Act and Listing Regulations.

The details of composition of the Board and the attendance record of the Directors atthe Board Meetings and AGM held during the financial year ended on March 31 2021 is asunder:

Name Designation Category No. of meetings held during tenure No. of Meetings Attended Last AGM Attended
Kailash Kumar Agarwal Chairman and Managing Director Executive Director 6 6 Yes
Parshotam Dass Agarwal Director Non-Executive Independent Director 6 6 Yes
Mohan Lal Jain Director Non-Executive Independent Director 6 6 No
Ritu Bansal Director Non-Executive Director 6 6 Yes
RaghavKumar Agarwal Whole-Time Director CEO & CFO Executive Director 6 6 Yes

AUDIT COMMITTEE

The Audit Committee (‘AC') of the Company had been constituted and functions inaccordance with provisions of Section 177 of the Act and Listing Regulations. The CompanySecretary is acting as the Secretary to the Audit Committee. All the recommendations madeby the Audit Committee were accepted by the Board of Directors of the Company.

Some of the key functions and responsibilities of the AC is enumerated as below:

• Reviewing the procedures of financial reporting

• Reviewing the quarterly half yearly annual financial results of the Company

• Review the adequacy of internal audit function coverage and frequency ofinternal audit appointment removal performance and terms of remuneration of theInternal Auditor.

• Discuss with the internal auditor and senior management significant internalaudit findings and follow-up thereon.

In order to have optimum composition of the Board the Management had requested Mrs.Ritu Bansal (DIN: 03619069) to consider change her capacity and designation fromIndependent Director to Non - Executive Director of the Company. With her due consent theBoard of Directors at its meeting held on September 01 2020 changed her designation fromIndependent Director to Additional Director (Non-Executive) w.e.f. September 02 2020.

In accordance with Section 177 of the Companies Act 2013 Audit Committee shallconsist of a minimum of three directors with independent directors forming a majority.Therefore to comply with the provisions of the Companies Act 2013 Mrs. Bansal has beenrelieved/ceased from the membership of Audit Committee w.e.f. September 022020

During the year under review six (6) AC Meetings were held on July 06 2020 September01 2020 September 12 2020 November 04 2020 February 13 2021 and March 25 2021.

The details of composition of the Committee and the attendance record of the Directorsat the AC Meetings held during the financial year ended on March 31 2021 is as under:

Name Designation in Committee Category No. of meetings held during tenure No. of Meetings Attended
Parshotam Dass Agarwal Chairman Non-Executive Independent Director 6 6
Kailash Kumar Agarwal Member Executive Director 6 6
Mohan Lal Jain Member Non-Executive Independent Director 6 6
Ritu Bansal* Member Non-Executive Director 2 2

*Ceased to be a Member w.e.f. September 02 2020

NOMINATION AND REMUNERATION COMMITTEE

The Nomination and Remuneration Committee (‘NRC') of the Company had beenconstituted and functions in accordance with provisions of Section 178 of the Act andListing Regulations. The Company Secretary is acting as the Secretary to the Nominationand Remuneration Committee.

Some of the key functions and responsibilities of the NRC is enumerated as below:

• Formulate criteria for determining qualifications positive attributes andindependence of a director and recommend to the Board a Policy relating to theremuneration for the directors key managerial personnel (KMPs) and other employees;

• Formulation of criteria for evaluation of performance of independent directorsand the board of directors;

• Identifying persons who are qualified to become directors and who may beappointed in senior management in accordance with the criteria laid down and recommend tothe Board of Directors their appointment and removal.

• Recommending to the Board whether to extend or continue the term of appointmentof appointment of the independent director on the basis of report of performanceevaluation of independent directors.

During the year under review two (2) NRC Meetings were held on July 06 2020 andSeptember 01 2020.

The details of composition of the Committee and the attendance record of the Directorsat the Nomination & Remuneration Committee Meetings held during the financial yearended on March 31 2021 is as under:

Name Designation in Committee Category No. of meetings held during tenure No. of Meetings Attended
Parshotam Dass Agarwal Chairman Non-Executive Independent Director 2 2
Kailash Kumar Agarwal Member Executive Director 2 2
Mohan Lal Jain Member Non-Executive Independent Director 2 2
Ritu Bansal Member Non-Executive Director 2 2

Company's Policy relating to Directors appointment payment of remuneration anddischarge of their duties

The Nomination & Remuneration Committee of the Company has formulated theNomination & Remuneration Policy on Director's appointment and remuneration whichincludes the criteria for determining qualifications positive attributes independence ofa director and process of appointment and removal as well as components of remuneration ofDirector(s)

Key Managerial Personnel (‘KMP') and Senior Management of the Company and othermatters as provided under Section 178(3) of the Companies Act 2013. During the yearthere were no changes made in the Nomination & Remuneration Policy of Directors KeyManagerial Personnel (‘KMP') and Senior Management of the Company. The Policy may beaccessed on the Company's website at the Weblink:http://hpthreads.com/corporate-information.php.

PERFORMANCE EVALUATION AND ITS CRITERIA

In terms of the provisions of the Section 178(2) of the Act the Board has adopted aformal mechanism for evaluating its performance as well as that of its Committees andindividual directors including the Chairman of the Board. A structured questionnaire wasprepared and circulated to the Directors for each of the evaluation.

Performance of the Board was evaluated by each Director on the parameters such asComposition of Board Vision and Strategy Adequate representation of IndependentDirectors Board Participation Treasury Monitoring Review of Business Risks andFrequency of Board Meetings Compliances etc.

Board Committees were evaluated on the parameters such as Structure and Composition ofCommittees Business Risks Financial Reporting Process effectiveness of Committeeseffectiveness of communication by the Committee with the Board Senior Management and KeyManagerial Personnel etc.

Performance of the Chairman was evaluated on the parameters such as engagement inmeetings Conducting of Meetings Leadership Skills guiding on strategic issuesimplementation of Board approved decisions accessibility and informal contact with BoardMembers etc.

Directors were also evaluated individually by all other Directors (except the Directorhimself) on the parameters such as engagement in meetings Knowledge of businesscommunication with other Board Members participation in meetings etc.

Meeting of Independent Directors without the attendance of Non-Independent Directorsand members of the management of the Company was held on March 21 2021. The IndependentDirectors inter-alia evaluated performance of NonIndependent Directors the Chairman ofthe Company and the Board as a whole for FY 2021. They also assessed the quality contentand timeliness of flow of information between the Management and the Board that isnecessary for the Board to effectively and reasonably perform its duties.

Outcome of the evaluation was submitted to the Chairman of the Company. The Directorsdiscussed and expressed their satisfaction with the entire evaluation process.

CORPORATE SOCIAL RESPONSIBILITY

During the financial year 2020-21 the provisions of Section 135 of the Act and rulesmade thereunder regarding Corporate Social Responsibility(‘CSR') are not attractedto the Company as the Company does not fall under the threshold limit of net worth of Rs500 crore or turnover of Rs 1000 crores or a net profit of Rs 5 Crore during thefinancial year.

Subsequent to the approval of audited financial statements by the Board of Directors intheir meeting held on June 09 2021 the provisions of CSR shall be applicable on theCompany for the financial year 2021-22 as the Company falls under the threshold limit ofnet worth of Rs 500 crore or turnover of Rs 1000 crores or a net profit of Rs 5 Croreduring the financial year. In view of this the Board of Directors has constituted a CSRCommittee as per Section 135 and schedule VII of the Companies Act 2013 (‘the Act')read with the Companies (Corporate Social Responsibility Policy) Rules 2014and defined theterms and reference of the Committee in its Board Meeting held on August 03 2021.

The details of composition of the Corporate Social Responsibility Committee is asunder:

Name Designation in Committee Category
Mr. Kailash Kumar Agarwal Chairman Executive Director
Mr. RaghavKumar Agarwal Member Executive Director
Mr. Mohan Lal Jain Member Non-Executive Independent Director

INTERNAL FINANCIAL CONTROLS

A well-established independent multi-disciplinary Internal Audit team operates inline with governance best practices. It reviews and reports to management and the AuditCommittee about compliance with internal controls and the efficiency and effectiveness ofoperations as well as the key process risks.

The Company has in place adequate internal financial controls with reference toFinancial Statements and such controls were operating effectively as at March 31 2021.These controls have been designed to provide a reasonable assurance with regard tomaintaining of proper accounting controls for ensuring reliability of financial reportingmonitoring of operations. During the year such controls were tested and no reportableweaknesses in the design or operations were observed.

WEBLINK OF ANNUAL RETURN

Pursuant to sub-section 3(a) of section 134 and sub-section (3) of section 92 of theCompanies Act 2013 read with rule 12 of the Companies (Management and Administration)Rules 2014 as amended vide MCA notification dated August 28 2020 a copy of the AnnualReturn in Form MGT-7 is available on the linkhttps://www.hpthreads.com/corporate-information.php.

PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES

Disclosures pertaining to remuneration and other details as required under Section197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 is annexed herewith as Annexure I formingintegral part of this report.

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 2014during the year under review none of the employee drawing remuneration in excess of thelimits set out in the said Rules.

LOANS GUARANTEES AND INVESTMENTS

Particulars of loans guarantees and investments made under the provisions of Section186 of the Act have been disclosed in Note No. 4 to the Financial Statements formingintegral part of the Annual Report.

RELATED PARTY TRANSACTIONS

All Related Party Transactions are placed before the Audit Committee for review andapproval. Wherever applicable prior approval is obtained for related party transactionson a quarterly basis for transactions which are of repetitive nature and / or entered inthe ordinary course of business and are at arm's length basis.

The Company had entered into certain related party transactions which were entered intoat an arm's length basis however the same is not in the ordinary course of business andthe Company has complied with all the applicable provisions of the Companies Act 2013 andrules framed thereunder in respect of such transactions. Further your Company has notentered into any arrangement / transaction with related parties which could be consideredmaterial in accordance with the Listing Regulations and accordingly the disclosure ofRelated Party Transactions in Form AOC - 2 is not Applicable. However names of RelatedParties and details of transactions with them have been included in Notes to the financialstatements provided in the Annual Report under Indian Accounting Standards 18.

AUDITORS AND AUDITOR'S REPORT

Statutory Auditor

M/s Walker Chandiok & Co LLP Chartered Accountants (ICAI Firm Registration Number001076N/N500013) were appointed as the Statutory Auditors of the Company to hold ofuce fora term of 5 years from the conclusion of the 37th Annual General Meeting (AGM)held on 22nd September 2018 until the conclusion of the 42nd AGM ofthe Company.

As required under the provisions of Section 139(1) and 141 of the Act read with theCompanies (Accounts and Auditors) Rules 2014 the Company has received a written consentand certificate from the auditors to the effect that they are eligible to continue asStatutory Auditor of the Company.

The Auditors' Report read together with Annexure referred to in the Auditors' Report donot contain any qualification reservation adverse remark or disclaimers.

Cost Auditors

As per the provisions with the Rule 4(2) of the Companies (Cost Records and Audit)Rules 2014 as amended thereto textile companies shall get its Cost record audited inaccordance with these rules if the overall annual turnover of the company from all itsproducts and services during the immediately preceding financial year is Rs 100 Crore ormore and the aggregate turnover of the individual product or products or service orservices for which cost record required to be maintained under Rule 3 is Rs 35 Crore ormore.

However in accordance with the provisions with the Rule 4(3) of the Companies (CostRecords and Audit) Rules 2014 as amended thereto the requirement for Cost Audit underthe Rules shall not apply to a company whose revenue from export in foreign exchangeexceeds 75% of its total revenue or which is operating from a SEZ or which is engaged ingeneration of electricity for captive consumption through Captive Generating PIant."

Your company's turnover is below Rs100 crore during the year under review and more than75% of the Company's turnover is earned from exports in foreign exchange by the Company.Therefore the Company is exempt from the said requirement of cost audit.

Therefore Company has not appointed any Cost Auditor for auditing the cost records ofthe Company.

Secretarial Auditor

M/s Tarun Jain & Associates Company Secretaries were appointed as SecretarialAuditors of the Company by the Board of Directors of the Company in its meeting held onSeptember 01 2020 for the financial year 2020-21.

The Secretarial Audit Report for the financial year ended March 31 2021 received fromM/s Tarun Jain & Associates Company Secretaries Secretarial Auditors of the Companyis annexed herewith as Annexure II forming integral part of this report.

The said report is self-explanatory and does not contain any qualificationreservation adverse remark or disclaimers.

SUBSIDIARIES ASSOCIATES AND JOINT VENTURES

Your Company does not have any Subsidiaries Associates and Joint Ventures.

MATERIAL CHANGES AFFECTING THE COMPANY

Except as disclosed elsewhere in the Annual Report there have been no material changesand commitments which can affect the financial position of the Company between the end ofthe financial year and the date of report.

ENERGY CONSERVATION TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGO

The information required under Section 134(3)(m) of the Act read with the Companies(Accounts) Rules 2014 is provided as follows and forms part of this report.

A) Conservation of Energy:

i. Energy conservation is an ongoing process in our organisation. Continuousmonitoring planning development and modifications for energy conservation are done atthe plant. The Company continued efforts for improving energy efficiency throughinnovative measures to reduce wastage and optimize consumption.

ii. As the impact of measures taken for conservation and optimum utilization of energyare not quantitative its impact on cost cannot be stated accurately.

iii. The Company has not incurred major capital investment on energy conservationequipments but focused on optimum utilisation of available resources.

B) Technology Absorption:

The Company is focused on developing in-house technology to develop new productsbesides striving to continually improve and absorb latest technology suitable to itsproduct mix with an objective to achieve lower cost of production. Therefore notechnology absorption is required. The Company also constantly strives for maintenance andimprovement in its equipment quality of its products and Research & Developmentactivities are directed to achieve the aforesaid goal.

C) Foreign Exchange Earning and Out-Go:

(Rs in Lakhs)

Particulars 2020-21 2019-20
Foreign Exchange earned (FOB value of exports) 8465.87 6131.18
Foreign Exchange used (CIF value of imports and expenditure in foreign currency) 238.09 55.80

Environment and pollution Control

The Company is conscious of the importance of environmentally clean and safeoperations. The Company's policy is to conduct all operations in a manner to ensure safetyof all concerned compliance of statutory and industrial requirements for environmentprotection and conservation of natural resources to the extent possible. The Company hastaken drastic steps and measures in procuring and consuming eco-friendly sustainable dyesand chemicals for promoting eco-logically sustainable technologies and promoting recyclingand re-use and the Company has reputed certification including OEKOTEX and GOTS to itscredentials.

The Company has effectively come out with implementation of Zero Liquid DischargeProject ("ZLD") for effluent water management as per the guidelines issued byHaryana state pollution Control Board. It is used to eliminate the hard fluids and topurify the water slowly and steadily. This process is used to make the water drinkablereusable or to recycle.

Quality Management System

The Company continues to lay emphasis on excellence in quality and services andcertified ISO 9001:2008 QMS certification and is also committed to total customersatisfaction. The high quality of the Company products is reflected in the Company abilityto export its product in quality conscious world markets. The company continues to be on amission to provide customers with products that can match with international standards andwill surpass their expectations.

DIRECTORS' RESPONSIBILITY STATEMENT

The Directors hereby confirm:

a) that in the preparation of the annual accounts the applicable accounting standardshad been followed along with proper explanation relating to material departures;

b) that they have selected such accounting policies as mentioned in the Notes to thefinancial statements have been applied consistently and judgments and estimates that arereasonable and prudent have been made so as to give a true and fair view of the state ofaffairs of the Company at the end of the financial year and of the profit of the Companyfor that period;

c) that proper and sufficient care has been taken for the maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;

d) that the annual accounts have been prepared on a going concern basis;

e) that proper internal financial controls were followed by the Company and that suchinternal financial controls are adequate and were operating effectively; and

f) that proper systems to ensure compliance with the provisions of all applicable lawswere in place and that such systems were adequate and operating effectively.

RISK MANAGEMENT

Risk mitigation continues to be a key area of concern for the Company which hasregularly invested in insuring itself against unforeseen risks. The Company's stocks andinsurable assets like building plant & machinery computer equipment officeequipment furniture & fixtures lease hold improvements and upcoming projects havebeen adequately insured against major risks.

Pursuant to Section 134(3)(n) of Act and Listing Regulations the Company hasconstituted a Risk Management Committee. The Board of Directors of the Company has alsoformulated Risk Management Policy in accordance with the Act and Listing Regulations. Theaim of risk management policy is to maximize opportunities in all activities and tominimize adversity. The policy includes identifying types of risks and its assessmentrisk handling monitoring and reporting which in the opinion of the Board may threatenthe existence of the Company.

The Risk Management policy may be accessed on the Company's website at the Weblink:http://hpthreads.com/corporate-information.php.

VIGIL MECHANISM

Your Company has adopted a Vigil Mechanism with a view to provide its employees anavenue to raise any sensitive concerns regarding any unethical behavior or wrongfulconduct and to provide adequate safeguard for protection from any victimization.

In accordance with the provisions of Section 177(9) of the Act every listed companyshall establish a vigil mechanism for directors and employees to report genuine concernsof unethical behavior actual or suspected fraud or violation of the codes of conduct.

Accordingly the Company has framed the policy to align the same with the provisions ofSection 177(9) of the Act read with Rule 7 of the Companies (Meetings of Board and itsPowers) Rules 2014 and Regulation 22 of SEBI (LODR) Regulations and may be accessed onthe Company's website at the Weblink: http://hpthreads.com/corporate-information.php.

This Policy inter-alia provides a direct access to the Chairman of the Audit Committeeand affirms that no Director/employee have been denied access to the Chairman of the AuditCommittee and that no complaints were received during the year.

PREVENTION OF SEXUAL HARASSMENT

The Company has adopted a policy on sexual harassment at workplace in line with therequirements of the Sexual Harassment of Women at Workplace (Prevention Prohibition andRedressal) Act 2013 ("POSH"). All the employees (permanent contractualtemporary trainees) are covered under this policy.

During the year under review there was no complaints filed or registered pursuant tothis Act.

The Company has complied with the provisions relating to the constitution of InternalCommittee (IC) under the POSH to redress complaints received regarding sexual harassment.

CORPORATE GOVERNANCE

In terms of provision of regulation 15(2) of SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 compliance with the Corporate Governance provisions asspecified under regulations 17 to 27 and clause (b) to (i) of subregulation (2) ofregulation 46 and para C D and E of Schedule V is not applicable to the Company aspaid-up share capital of the Company is less than Rs. 10 crore and net-worth of theCompany is less than Rs. 25 crores as on the financial year ended on March 31 2021.Hence Corporate Governance report does not form part of this Annual Report.

CODE OF CONDUCT

The Board of Directors has approved a Code of Conduct which is applicable to theMembers of the Board and all employees in the course of day to day business operations ofthe Company. The Company believes in "Zero Tolerance" against briberycorruption and unethical dealings / behaviors of any form and the Board has laid down thedirectives to counter such acts.

The code lays down the standard procedure of business conduct which is expected to befollowed by the Directors and the designated employees in their business dealings and inparticular on matters relating to integrity in the work place in the business practicesand in dealing with stakeholders.

The code also lays down that Board Members and Senior Managers of the Company shallensure compliance with SEBI (Prohibition of Insider Trading) regulations 2015 as alsoother regulations as may be applicable to them from time to time.

The Code may be accessed on the Company's website at the Weblink:http://hpthreads.com/corporate-information.php.

All the Boards Members and the Senior Management personnel have confirmed compliancewith the Code for the Financial Year ended March 31 2021. The declaration to this effectsigned by CEO and Managing Director is annexed herewith as Annexure III formingintegral part of this report.

OTHER STATUTORY DISCLOSURES

During the year under review:

1. No significant and material orders were passed by the Regulators/ Courts/ Tribunalswhich impact the going concern status and Company's operations in future.

2. No equity shares were issued with differential rights as to dividend voting orotherwise.

3. No Sweat Equity shares were issued.

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

5. No deposits have been accepted by the Company from the public. The Company had nooutstanding unpaid or unclaimed public deposits at the beginning and end of FY 2020-21.

6. Neither the Managing Director nor the Whole-time Directors of the Company receiveany remuneration or commission from any of its subsidiaries as your company don't haveany subsidiary company.

7. Maintenance of cost records under sub-section (1) of Section 148 of the Act is notapplicable to the Company.

8. No Change in nature of Business of Company.

9. No fraud has been reported by the Statutory Auditors and Secretarial Auditors to theAudit Committee or the Board.

10. No Corporate Insolvency Resolution Process initiated under the Insolvency andBankruptcy Code 2016.

The Company has complied with the applicable Secretarial Standards on Meetings of theBoard of Directors and on General Meetings issued by the Institute of Company Secretariesof India.

CAUTIONARY STATEMENT

Certain statements in the Directors' Report describing the Company's objectivesprojections estimates expectations or predictions may be forward-looking statementswithin the meaning of applicable securities laws and regulations. Actual results coulddiffer from those expressed or implied. Important factors that could make a difference tothe Company's operations include labour and material availability and prices cyclicaldemand and pricing in the Company's principal markets changes in government regulationstax regimes economic development within India and other incidental factors.

ACKNOWLEDGEMENTS

The Directors thank the Company's customers vendors investors and academic partnersfor their continuous support.

The Directors also thank the Government of India Governments of various states inIndia Governments of various countries and concerned Government departments and agenciesfor their co-operation.

The Directors regret the loss of life due to COVID-19 pandemic and are deeply gratefuland have immense respect for every person who risked their life and safety to fight thispandemic.

The Directors appreciate and value the contribution made by all our employees and theirfamilies and the contribution made by every other member of the HP Cotton family formaking the Company what it is.

For and on behalf of the Board
Kailash Kumar Agarwal
Chairman and Managing Director
DIN: 00063470
New Delhi
August 03 2021

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