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Lagnam Spintex Ltd.

BSE: 535108 Sector: Industrials
NSE: LAGNAM ISIN Code: INE548Z01017
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Lagnam Spintex Ltd. (LAGNAM) - Director Report

Company director report

Dear Members

Your Directors have pleasure in presenting the 9th Annual Report together with theAudited Financial Statements of Accounts of the company for the year ended on 31st March2019:

1. FINANCIAL RESULTS

Particulars Year Ended 31.03.2019 Year Ended 31.03.2018
Turnover: a) Domestic 6386.96 6783.71
b) Export 1644.72 1606.90
Total 8031.68 8390.61
Profit before Interest Depreciation & Tax 1160.02 1118.61
Less: Financial expenses (Net) 254.71 284.52
Profit before Depreciation & Tax 905.31 834.09
Less: Depreciation 261.79 261.25
Profit before Tax 643.52 572.84
Less: Provision for
Current Tax (Net) 133.41 117.28
MAT Credit Entitlement (133.41) (117.28)
Deferred Tax 165.96 101.97
Tax of Earlier year - -
Profit after Tax 477.55 470.88
Add: Opening Balance 1399.30 942.32
Less: Utilization in Bonus Issue of Shares - (13.90)
Profit available for appropriation 1876.85 1399.30

2. OPERATIONAL PERFORMANCE:

Your Directors are pleased to inform the members that during the year under reviewyour company reported encouraging performance. Despite marginal decrease in revenue from '8390.61 Lakhs to ' 8031.68 Lakhs. The PBDT of the Company has gone up from ' 834.09 Lakhsto ' 905.31 Lakhs an increase of about 8.53%. Profit before tax has also gone up from '572.84 Lakhs to ' 643.52 Lakhs. However due to higher provision of tax from ' 101.97Lakhs to ' 165.96 Lakhs the profit after tax remained at ' 477.55 Lakhs as compared to '470.88 Lakhs during the previous year. This was all possible by taking pro-active steps bymanagement to neutralize the effect of higher demand for fine counts which has resultedinto lower production from 5942 MT to 5324 MT during the year under review. Operations andefficiency of the plant during the year has been at optimum level.

Your Directors are pleased to report further that interest cost during the year hasbeen marginally lower at ' 254.71 Lakhs against ' 284.52 Lakhs mainly due to betterworking capital management and eligibility of interest subsidy for the full year under the"Rajasthan Investment Promotion Scheme". Your Directors are taking necessarysteps to rationalize the rate of interest for working capital and term loan with ourvarious banks in order to contain the interest cost due to hardening of interest rates.This is a continuous process being followed by your company to remain competitive in themarket.

Your Directors are pleased to report that with consistency in quality and services toour customers company's export during the year under review has gone up marginally from '1606.90 lacs to ' 1644.72 lacs only. The lower growth in export was mainly due todisturbances with the neighboring countries. Your directors are exploring alternativemarket and with the commissioning of new ring spinning project the export during thecurrent year should improve substantially due to better product basket available with yourcompany.

3. UPDATE ON EXPANSION PLAN:

The expansion of 25536 ring spindles at a total cost of ' 12540 Lakhs to produce 100%cotton yarn is under implementation as per schedule. The company has started trialproduction ahead of schedule and spent ' 9881 Lakhs on the project by availing term loanof ' 7514 Lakhs and balance out of internal accruals and issue of equity Shares during theyear. The total term loan sanctioned by State Bank of India and Punjab National Bank wasamounting to ' 9400

Lakhs out of which ' 7514 Lakhs have already been disbursed by the banks representing80% of the total term loan sanctioned by them. The project Implementation is going onexpeditiously and in addition to catering the domestic market the company has startedgetting export orders from some of the European customers.

With trial runs going ahead of the schedule your company is confident to achieve CODbefore the scheduled date of 30th September 2019.

4. INITIAL PUBLIC OFFER (IPO):

The Company pursuant to the provisions of Section 26 and 32 of the Companies Act 2013read with rules made there under including the SEBI (ICDR) Regulations 2009 (asamended) and in terms of Prospectus Dated 18th August 2018 offered 6000000 (Sixtylakh) equity shares of face value of ' 10/- each at a premium of ' 31/- per equity sharethrough Fixed Price process in the Initial Public Offer (IPO) for setting up of itsexpansion project for manufacturing of Ring Spun Carded and Combed Yarn with installedcapacity of 25536 spindles.

The IPO Issue opened on Tuesday the 4th September 2018 and closed on Friday the 7thSeptember 2018.

The issue and allotment of equity shares in the capital of the Company was made onFriday the 14th September 2018. The designated Stock Exchange - National Stock Exchangeof India Limited has approved the listing and trading of equity shares in the capital ofthe Company on its SME Platform namely NSE EMERGE effective Tuesday the 18th September2018.

Your Directors place their sincere thanks to all the investors and the NSE SEBIMerchant Bankers and all the agencies for their guidance and support. The Company's equityshares are regularly being traded at the floor of the NSE EMERGE Platform.

5. TRANSFER TO RESERVES:

During the year under review the company has not transferred any amount to the generalreserves. However the Company has received security premium amount of ' 1860.00 Lakhs inthe public issue of 60.00 Lakhs equity shares of ' 10/- each at a premium of ' 31/- pershare allotted on 14th September 2018 and transferred the same to Securities PremiumReserves. Further that the Company has utilized the amount of Securities

Premium Reserves to the extent of 260.00 Lakhs for the purpose of writing off publicissue expenses.

6. DIVIDEND:

To strengthen the financial position and funding to the ongoing projects of theCompany no dividend is recommended by the Board for the Financial Year 2018-19. (Previousyear Nil)

7. CAPITAL STRUCTURE:

The Capital Structure of the Company as on 31.03.2019 are as follows: -

The Authorized Share Capital of the Company is ' 225000000 (Rupees Twenty-Two CroreFifty Lakh) divided into 22500000 (Two Crore Twenty-Five Lakh) Equity Shares of ' 10/-each.

The Issued subscribed and Paid up Share Capital of the Company is ' 176690000(Rupees Seventeen Crore Sixty-Six Lakh Ninety Thousand) divided into 17669000 (OneCrore Seventy-Six Lakh Sixty-Nine Thousand) Equity Shares of ' 10/- each.

During the year under review the Company has issued and allotted 6000000 fullypaid-up Equity Shares of face value of ' 10/- each at a premium of ' 31/- per equityshare to successful applicants under its Initial Public Offer as per Prospectus dated18th August 2018. The Company has not issued any shares with differential voting rightsor sweat equity or granted stock options.

8. CREDIT RATING:

The ICRA Limited in their recent review for total bank facilities of ' 151.59 Croresavailed by the Company vide their letter number 2018-19/AHM/368 dated 19 November 2018has revised the Credit Rating of the Company. The details of new Credit Rating assigned tothe Company vis-a-vis existing Credit Rating are given below: -

Existing Credit Rating (Total bank facilities of ' 57.59 Crores) Revised Credit Rating (Total bank facilities of ' 151.59 Crores)
Long-Term Rating ICRA BBB-/ Stable ICRA BBB- Stable
Short-Term Rating ICRA A3 ICRA A3

"The aforesaid ratings will be due for surveillance anytime by ICRA Ltd. beforeAugust 31 2019."

9. RECOGNITION:

USTER TECHONOLOGIES AG of Switzerland has renewed its authorization to use the "USTERIZED"trade mark to your company "A mark of quality & trust" which isa prestigious quality authorization granted to only about 70 textiles mill in the world.In the standalone Open-end spinning segment LAGNAM is the first to get this authorizationin the world.

10. MATERIAL CHANGES BETWEEN THE DATE OF THE BOARD REPORT AND END OF FINANCIAL YEAR:

There have been no material changes and commitments if any affecting the financialposition of the Company which have occurred between the end of the financial year of theCompany to which the financial statements relate and the date of the report.

11. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALSIMPACTING THE GOING CONCERN STATUS AND COMPANY'S OPERATIONS IN FUTURE:

During the year under review there has been no such significant and material orderspassed by the regulators or courts or tribunals impacting the going concern status andcompany's operations in future.

12. SUBSIDIARY ASSOCIATES AND JOINT VENTURE COMPANY:

The Company does not have any subsidiary associate or joint venture during thefinancial year 2018-19 as well as at the beginning or closing of the financial yeartherefore the financial statement is prepared on standalone basis and the requirement fordisclosure in the Form AOC-1 is not applicable. Further that the Company is an associateof Lagnam Infotech Solutions Pvt. Ltd. which is holding 4994000 equity sharesrepresenting 28.26% of total paid up equity share capital of the Company as on 31st March2019. Due to increase in the paid-up capital of the Company holding of Lagnam InfotechSolutions Pvt. Ltd reduced from 42.79% to 28.26%.

13. EXTRACT OF ANNUAL RETURN

The extract of the Annual Return in Form MGT-9 as required under section 92(3) of theCompanies Act 2013 read with the Companies (Management and

Administration Rules) 2014 is enclosed as "Annexure-I".

Kindly Take Note that the Annual Return is available on the Website of the Companyafter Conclusion of the AGM in below link: (Link: http://www.lagnamspintex.com/Annual-return.html)

14. CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGO:

The information on conservation of energy technology absorption and foreign exchangeearnings and outgo stipulated under Section 134(3)(m) of the Companies Act 2013 read withRule 8 of the Companies (Accounts) Rules 2014 is annexed herewith as "AnnexureII".

15. BOARD OF DIRECTORS THEIR MEETINGS & KMP(S):

I. Constitution of the Board

The Board of directors are comprising of total 6 (Six) Directors which includes 3(Three) Independent and 1 (One) Women director. The Chairman of the Board is Promoter andWholeTime Director. The Board members are highly qualified with the varied experience inthe relevant field of the business activities of the Company which plays significantroles for the business policy and decision-making process and provide guidance to theexecutive management to discharge their functions effectively.

II. Board Independence

Our definition of 'Independence' of Directors is derived from Regulation 16 of SEBI(LODR) Regulations 2015 and Section 149(6) of the Companies Act 2013. The Company ishaving following independent directors:

(i) Mr. Jagdish Chandra Laddha

(ii) Mr. Anil Shah

(iii) Ms. Dipali Mathur

As per provisions of the Companies Act 2013 Independent Directors were appointed fora term of 5 (five) consecutive years and shall not be liable to retire by rotation.

III. Declaration by the Independent Directors

All the Independent Directors have given their declaration of Independence stating thatthey meet the criteria of independence as prescribed under section 149(6) of the CompaniesAct 2013. Further that the Board is of the opinion that all the independent directorsfulfill the criteria as laid down under the Companies Act 2013 and the SEBI (LODR)Regulations 2015 during the year 2018-19.

IV. Directors liable to retire by rotation

In accordance with the provisions of the Companies Act 2013 and in terms of theArticles of Association of the Company Mr. Vijay Singh Bapna (DIN: 02599024)Non-executive Director of the Company is liable to retire by rotation at ensuing AnnualGeneral Meeting and being eligible offers himself for re-appointment.

V. Changes in Directors and Key Managerial Personnel

There was no change in the composition of Directors and Key Managerial Personnel duringthe Financial Year 2018-19 except:

Mr. Dwarka Prasad Mangal Whole time Director who is liable to retire by rotationreappointed at the meeting of the members held on 08.06.2018. Following are the Directorsand KMP(s) in the Company:

1. Mr. Dwarka Prasad Mangal (DIN: 01205208) Chairman cum Whole Time Director
2. Mr. Anand Mangal (DIN: 03113542) Managing Director
3. Mr. Vijay Singh Bapna (DIN: 02599024) Non-Executive Director
4. Mr. Jagdish Chandra Laddha (DIN: 00118527 Independent Director)
5. Mr. Anil Shah (DIN: 00145396) Independent Director
6. Ms. Dipali Mathur (DIN: 07732611) Independent Director
7. Mr. Devi Lal Mundra (PAN: AKUPM7207P) Chief Financial Officer
8. Mr. Rajeev Parashar (PAN: BLSPP2313P) Company Secretary & Compliance Officer

VI. Meetings and Attendance of the Board

The Board meets at regular intervals to discuss and decide on company/business policyand strategy apart from other Board business. The notice of Board meeting is given well inadvance to all the Directors. Meetings of the Board are held in Bhilwara at theRegistered Office. The Agenda of the Board meetings is circulated at least a week prior tothe date of the meeting. The Agenda for the Board and Committee meetings includes detailednotes on the items to be discussed at the meeting to enable the Directors to take aninformed decision.

The Board met 10 (Ten) times in the Financial Year 2018-19 viz. 23rd April 201816thMay 2018 23rd June 2018 12th July 201818th August 2018 8th September 2018 14thSeptember 2018 22nd October 2018 18th February 2019 and 11th March 2019.The maximuminterval between any two meetings did not exceed 120 days. Attendance of each director inboard meeting as follows:

Name of the Directors

Date of Meeting Mr. D.P. Mangal Mr. Anand Mangal Mr. Vijay Singh Bapna Mr. Jagdish Chandra Laddha Mr. Anil Shah Ms. Dipali Mathur
23.04.2018 YES YES YES YES YES NO
16.05.2018 YES YES NO YES NO NO
23.06.2018 YES YES YES YES YES YES
12.07.2018 YES YES NO YES YES NO
18.08.2018 YES YES NO YES NO NO
08.09.2018 YES YES NO YES NO NO
14.09.2018 YES YES NO YES NO NO
22.10.2018 YES YES YES YES YES YES
18.02.2019 YES YES YES YES YES NO
11.03.2019 YES YES NO YES YES NO

VII. Separate Meeting of Independent Directors:

As stipulated by the Code of Independent Directors under the Companies Act 2013 aseparate meeting of the Independent Directors of the Company was held on 18th February2019 to review the performance of NonIndependent Directors (including the Chairman) andthe entire Board. The Independent Directors also reviewed the quality content andtimeliness of the flow of information between the Management and the Board and itsCommittees which is necessary to effectively and reasonably perform and discharge theirduties.

VIII. Company's Policy on Directors' Appointment And Remuneration

The Policy of the Company on Directors' appointment and remuneration including criteriafor determining qualifications positive at tributes independence of a Director and othermatters provided under section 178(3) uploaded on company's website. (Link -http://www.lagnamspintex.com/ policies/ policies_pdf/Nomination_&_Remunaration_ Policy.pdf)

IX. Annual Evaluation by the Board:

Pursuant to the provisions of the Companies Act 2013 and Regulation 17 (10) of SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 the Nomination andRemuneration Committee has laid down the criteria for evaluation of the performance ofindividual Directors and the Board as a whole. Based on the criteria the exercise ofevaluation was carried out through a structured process covering various aspects of theBoard functioning such as composition of the Board and committees experience &expertise performance of specific duties & obligations attendance contribution atmeetings & Strategic perspectives or inputs regarding future growth of company etc.The performance evaluation of the Chairman and the Non-Independent Directors was carriedout by the Independent Director. The performance of the Independent Directors was carriedout by the entire Board (excluding the Director being evaluated). The Directors expressedtheir satisfaction with the evaluation process.

16. COMMITTEES OF THE BOARD:

The Company has following committees:

I. Audit Committee:

The Company has constituted Audit Committee

as per requirement of section 177 of the Companies Act 2013 and Regulation 18 of theSEBI (LODR) Regulations 2015. The terms of reference of Audit Committee are broadly inaccordance with the provisions of SEBI (LODR) Regulations 2015 and Companies Act 2013.The Audit Committee comprises of the following Directors of the Company:

Name of Director Nature of Directorship Designation in Committee
1 Mr. Jagdish Chandra Laddha Independent Director Chairman
2 Mr. Anil Shah Independent Director Member
3 Mr. D. P. Mangal Whole-time Director Member

II. Nomination and Remuneration Committee:

The Company has constituted a Nomination and Remuneration Committee in accordance withsection 178 of the Companies Act 2013 and the SEBI (LODR) Regulations 2015. TheNomination and Remuneration Committee comprises of the following Directors of the Company:

Name of Director Nature of Directorship Designation in Committee
1 Mr. Jagdish Chandra Laddha Independent Director Chairman
2 Mr. Anil Shah Independent Director Member
3 Mr. Vijay Singh Bapna Non-executive Director Member

III. Stakeholders' Relationship Committee:

The Company has constituted a Stakeholders' Relationship Committee in accordance withsection 178 of the Companies Act 2013 and the SEBI (LODR) Regulations 2015. TheCommittee considers and approves various requests regarding annual report and to redresscomplaints of the shareholders. The Stakeholders' Relationship Committee comprises thefollowing Directors:

Name of Director Nature of Directorship Designation in Committee
1 Mr. Vijay Singh Bapna Non-executive Director Chairman
2 Mr. D. P. Mangal Whole-time Director Member
3 Mr. Anand Mangal Managing Director Member

IV. Corporate Social Responsibility (CSR) Committee:

The Company has constituted a CSR Committee in accordance with the provisions ofsection 135 of the Companies Act 2013. The CSR Committee comprises the followingDirectors:

Name of Director Nature of Directorship Designation in Committee
1 Mr. Jagdish Chandra Laddha Independent Director Chairman
2 Mr. D. P. Mangal Whole-time Director Member
3 Mr. Vijay Singh Bapna Non-executive Director Member

17. CORPORATE SOCIAL RESPONSIBILITY:

In pursuant to Section 135 of the Companies Act 2013 read with rules framed thereunder a CSR Policy to ensure Social Responsibilities has been adopted. The CSR Policy hasbeen uploaded on the website of the Company at following link: (Link:http://www.lagnamspintex.com/policies/ policies_pdf/CSR_Policy.pdf)

In view of the profits and turnover of the company your Company was required toundertake CSR projects during the year 2018-19 under the provisions of section 135 of theCompanies Act 2013 and the rules made their under. As part of its initiatives under"Corporate Social Responsibility (CSR)" the Company has undertaken variousactivities which are in accordance with CSR Policy of the Company and Schedule VII of theCompanies Act 2013. The Annual Report on CSR activities is annexed herewith as "AnnexureIII".

18. STATUTORY AUDITOR & AUDIT REPORT:

M/s SSMS & Associates Chartered Accountants Bhilwara (Firm Registration No.019351C) Bhilwara retire at ensuing Annual General Meeting and showed their willingnessto accept their reappointment pursuant to sec 139 of the Companies Act 2013 to holdoffice from the conclusion of this Annual General Meeting (AGM) till the conclusion of theAGM of the Company to be held in the year 2024. Further they have confirmed theireligibility to the effect that their reappointment if made would be within the prescribedlimits under the Act and that they are not disqualified. The board has approved theproposed resolution and recommended to the share holder for approval of the same inensuing AGM.

As required under Regulation 33(d) of the SEBI (LODR) Regulation 2015 the auditor hasconfirmed that they hold a valid certificate issued by the Peer Review Board of theInstitute of Chartered Accountants of India.

Board is pleased to inform that there is no such observation made by the Auditors intheir report which needs any explanation by the Board.

19. SECRETARIAL AUDITORS:

The Board of Directors on the recommendations of the Audit Committee of the Companyhas appointed M/s Sanjay Somani & Associates Company Secretaries Bhilwara [ICSIMembership No. FCS- 6958 & Certificate of Practice No. 5270] as the SecretarialAuditors of the Company for the financial year 2018-2019.

The Secretarial Audit Report in Form No. MR-3 submitted by the said SecretarialAuditors do not contain any adverse remarks and qualifications hence do not call for anyfurther explanation/s by the Company. The Secretarial Audit Report in Form No. MR-3 submittedby the said Secretarial Auditors for the financial year 2018-2019 forms part of theAnnual Report as "Annexure IV" to the Board's report.

20. INTERNAL AUDITORS:

Pursuant to Section 138 of the Companies Act 2013 read with the Companies (Accounts)Rules 2014 (as amended) the Board of Directors on the recommendations of the AuditCommittee of the Company has appointed M/s A. L. Chechani & Co. CharteredAccountants Bhilwara [ICAI Firm Registration No.- 005341C] as the Internal Auditors ofthe Company for the financial year 2018-2019 ended 31 March 2019.

The Internal Audit Finding/s and Report/s submitted by the said Internal Auditorsduring the financial year to the Audit Committee and Board of Directors of the Companydo not contain any adverse remarks and qualifications hence do not call for any furtherexplanation/s by the Company.

21. COST AUDITORS:

As per the requirement of the Central Government and pursuant to section 148 of theCompanies Act 2013 read with Companies (Cost Records and Audit) Rules 2014 as amendedfrom time to time your company hereby confirms that the provisions of this section arenot applicable hence your company needs not required to appoint cost auditor for thefinancial year 2018-19.

However our Company is required to maintain the cost record as specified by theCentral Government under sub-section (1) of section 148 of the Companies Act 2013 and thecompany has made and maintained the cost record as prescribed.

22. DISCLOSURE FOR FRAUD AGAINST THE COMPANY:

In terms of provision of section 134(3)(ca) of the Companies Act 2013 There were noinstances of fraud which are reported by Auditors of the Company under section 143(12) ofthe Companies Act 2013 to the Audit Committee.

23. CODE OF CONDUCT:

Regulation 17(5) of the SEBI (LODR) Regulations 2015 requires listed companies to laydown a Code of Conduct for its directors and senior management incorporating duties ofdirectors as laid down in the Companies Act 2013. The Company has adopted a Code ofConduct for all Directors and Senior Management of the Company and same is hosted on thewebsite of the company at following link: (Link-http://www.lagnamspintex.com/policies/policies_pdf/Code_of_Conduct_for_Directors.pdf)

24. CORPORATE GOVERANANCE:

The Company being listed on the EMERGE Platform of National Stock Exchange of IndiaLimited therefore pursuant to Regulation 15(2)(b) of SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 Regulation 27 of SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 and Part C of Schedule V relating to complianceof Corporate Governance shall not applicable to the Company. Further The Company need notrequire complying with requirements as specified in Part E of Schedule II pursuant toRegulation 27(1) SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015and submitting Compliance Report on Corporate Governance on quarterly basis pursuant toRegulation 27(2) SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015.Hence no Corporate Governance Report is required to be disclosed with Annual Report. It ispertinent to mention that the Company follows majority of the provisions of the corporategovernance voluntarily as a part of Good Corporate Governance.

25. INDUSTRIAL RELATIONS:

During the year under review your Company enjoyed cordial relationship with workers andemployees at all levels.

26. CHANGE IN THE NATURE OF BUSINESS:

During the year under review there is no change in the nature of the business andcommercial activities of the company.

27. DEPOSITS:

During the financial year 2018-2019 ended 31 March 2019 under review the Company hasneither invited nor accepted any public deposits within the meaning of Section 73 and 74of the Companies Act 2013 read with the Companies (Acceptance of Deposits) Rules 2014(as amended).

As such no specific details prescribed in Rule 8(1) of the Companies (Accounts) Rules2014 (as amended) are required to be given or provided.

28. VIGIL MECHANISM / WHISTLE BLOWER POLICY:

Your Company is committed to highest standards of ethical moral and legal businessconduct. Accordingly the Board of Directors have formulated a Whistle Blower Policy whichis in compliance with the provisions of Section 177 (9) of the Companies Act 2013 and theregulation 22 of the SEBI (Listing Obligations & Disclosure Requirements) Regulations2015 The Company has adopted a Whistle-Blower Policy for Directors and employees toreport genuine concerns and to provide for adequate safeguards against victimization ofpersons who may use such mechanism. The details of the Vigil Mechanism Policy has postedon the website of the Company at following link:(Link:http://www.lagnamspintex.com/policies/policies_pdf/WHISTLE_BLOWER_POLICY_VIGIL_MECHANISM_OF_THE_COMPANY.pdf)

29. PREVENTION OF INSIDER TRADING:

In view of the SEBI (Prohibition of Insider Trading) Regulation 2015 the Company hasadopted a Code of Conduct for Prevention of Insider Trading with a view to regulatetrading in securities by the Directors and designated employees of the Company. Thedetails of the Insider Trading Policy has posted on the website of the Company atfollowing link: (Link: http://www.lagnamspintex.com/policies/policies_pdf/Insider_trading_POLICY.pdf)

The Code requires Trading Plan pre-clearance for dealing in the Company's shares andprohibits the purchase or sale of Company shares by the Directors and the designatedemployees while in possession of unpublished price sensitive information in relation tothe Company and during the period when the Trading Window is closed. However there wereno such instances in the Company during the year 201819.

30. RISK MANAGEMENT:

A well-defined risk management mechanism covering the risk mapping and trend analysisrisk exposure potential impact and risk mitigation process is in place. The objective ofthe mechanism is to minimize the impact of risks identified and taking advance actions tomitigate it. The mechanism works on the principles of probability of occurrence andimpact if triggered. A detailed exercise is being carried out to identify evaluatemonitor and manage both business and non-business risks.

The Board of Directors of the Company and the Audit Committee shall periodically reviewand evaluate the risk management system of the Company so that the management controls therisks through properly defined network. Head of Departments shall be responsible forimplementation of the risk management system as may be applicable to their respectiveareas of functioning and report to the Board and Audit Committee.

The Company has not made Risk Management Committee but the Board of Directors andAudit Committee is looking after the Risk Management of the Company.

31. MEETINGS OF THE MEMBERS:

During the year under review Annual General Meeting of the Company was held on08.06.2018 and no any other meeting of the members held during the year.

32. DIRECTORS' RESPONSIBILITY STATEMENT:

Pursuant to the requirement under section 134(3)(C) of the Companies Act 2013 withrespect to Directors' Responsibility Statement it is hereby confirmed that:

(i) In the preparation of the annual accounts for the financial year ended 31st March2019 the applicable accounting standards had been followed along with proper explanationrelating to material departures;

(ii) The directors had selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the company as at March 31 2019 and of the profitand loss of the company for that period;

(iii) The directors had taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of the Companies Act 2013for safeguarding the assets of the company and for preventing and detecting fraud andother irregularities;

(iv) The directors had prepared the annual accounts on a going concern basis; and

(v) The Directors had laid down Internal Financial Controls to be followed by thecompany and that such internal financial controls are adequate and were operatingeffectively; and

(vi) The directors had devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.

33. MANAGEMENT DISCUSSION AND ANALYSIS REPORTS:

As per Regulation 34 (e) read with schedule V of Securities and Exchange Board of India(Listing Obligations and Disclosure Requirements) Regulations 2015 ("ListingRegulations") the management Discussion and Analysis Report of the

Company for the year ended is set out in this Annual Report as "AnnexureV."

34. PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS MADE UNDER SECTION 186 OF THECOMPANIES ACT 2013:

During the financial year 2018-2019 ended 31 March 2019 under review the Company hasneither granted loan/s (secured or unsecured) provided guarantees or securities inconnection with any loan/s availed by others nor made any investments pursuant to theprovisions of Section186 the Companies Act 2013 read with the Companies (Meetings ofBoard and its Powers) Rules 2014 (as amended). As such no specific details are requiredto be given or provided.

35. INTERNAL CONTROL SYSTEMS:

The Company's internal control systems are adequate and commensurate with the natureand size of the Company and it ensures:

• Timely and accurate financial reporting in accordance with applicable accountingstandards.

• Optimum utilization efficient monitoring timely maintenance and safety of itsassets.

• Compliance with applicable laws regulations and management policies.

36. INTERNAL FINANCIAL CONTROL FOR FINANCIAL STATEMENTS

The Company has adequate system of internal controls commensuration with the size ofits operation and business to ensure that all assets are safeguarded and protectedagainst loss from unauthorized use or disposition and to ensure that all the businesstransactions are authorized recorded and reported correctly and adequately.

The Company has appointed Internal Auditors and the scope and authority of the InternalAudit (IA) function is defined in the procedure and appointment letter. To maintain itsobjectivity and independence the Internal Audit function reports to the Chairman of theAudit Committee of the Board. Based on the report of internal audit and process thecompany undertakes corrective action in their respective areas and thereby strengthens thecontrols. Significant audit observations and corrective actions thereon if any arepresented to the Audit Committee of the Board.

The Company works in a dynamic business environment and adopts the appropriate internalfinancial controls to establish reliability of financial reporting and the preparation offinancial statements for external purposes in accordance with the generally acceptedaccounting principles. It includes inducting and maintaining such business policies andprocedures as may be required to successfully conduct the business of the company andmaintain such records as to correctly record the business transaction assets andliabilities of the company in such a way that they help in prevention & detection offrauds & errors and timely completion of the financial statements.

37. HUMAN RESOURCES:

The Company treats its "Human Resources" as one of its most important assets.

Your Company continuously invests in attraction retention and development of talent onan ongoing basis. The Company thrust is on the promotion of talent internally through jobrotation and job enlargement.

38. RATIO OF THE REMUNERATION OF EACH DIRECTOR TO THE MEDIAN EMPLOYEE'S REMUNERATIONAND PARTICULARS OF EMPLOYEES:

Pursuant to provision of section 197 of Companies Act 2013 read with Rule 5(1) of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 the detailsof employees given in the "Annexure VI".

During the year none of the employees received remuneration in excess of Rs. One CroreTwo Lakhs or more per annum or Rs. Eight Lakhs Fifty Thousand per month for the part ofthe year in accordance with the provisions of Section 197 of the Companies Act 2013 readwith Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014.Therefore there is no information to disclose in terms of the provisions of the CompaniesAct 2013.

39. RELATED PARTY TRANSACTIONS:

All related party transactions that were entered during the financial year were on thearm's length basis and were in the ordinary course of business and do not attract theprovisions of section 188 of the Companies Act 2013. Thus disclosure in form AOC-2 isnot required.

All Related Party Transactions were placed before the Audit Committee for approval. Apolicy on the related party Transitions was framed & approved by the Board and postedon the Company's website at below link:

(Link: http://www.lagnamspintex.com/policies/ policies_pdf/POLICY_ON_RPT.pdf)

However you may refer to Related Party transactions as per the Accounting Standardsin the Notes forming part of financial statements.

40. INVESTORS EDUCATION AND PROTECTION FUND

During the financial year 2018-2019 ended 31 March 2019 under review there were noamount/s which is required to be transferred to the Investor Education and Protection Fundby the Company. As such no specific details are required to be given or provided.

41. DISCLOSURES UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITION& REDRESSAL) ACT 2013:

To prevent sexual harassment of women at work place The Sexual Harassment of Women atWorkplace (Prevention Prohibition and Redressal) Act 2013 has been notified on 9thDecember 2013. The Company has zero tolerance for sexual harassment at workplace in linewith provisions of the Sexual Harassment of Women at Workplace (Prevention Prohibitionand Redressal) Act 2013 and rules there under for prevention and redressal of complaintsof sexual harassment at workplace.

During the year under review no complaints were received by the Company relating tosexual harassment at workplace. The Management of the Company endeavors to provide safeenvironment for the female employees of the Company.

42. REGISTRAR AND SHARE TRANSFER AGENT:

The Company has appointed Bigshare Services Private Limited as its Registrar and ShareTransfer Agent. The Corporate Office of Bigshare Services Pvt. Ltd. situated at "1stFloor Bharat Tin Works Building Opp. Vasant Oasis Makwana Road Marol Andheri EastMumbai-400059 Maharashtra.

43. DEMATERIALISATION OF SECURITIES:

The Company's Equity Shares are admitted in the system of Dematerialization by both theDepositories namely NSDL and CDSL. As on 31 March 2019 all 17669000 equity sharesdematerialised through depositories viz. National Securities Depository Limited andCentral Depository Services (India) Limited which represents whole 100% of the totalissued subscribed and paid-up capital of the Company as on that date. The ISIN allottedto your Company is INE548Z01017.

44. COMPLIANCES OF SECRETARIAL STANDARDS:

The Board of Directors confirms that the Company has duly complied and is incompliance with the applicable Secretarial Standard/s namely Secretarial Standard-1('SS-1') on Meetings of the Board of Directors and Secretarial Standard -2 ('SS-2') onGeneral Meetings during the financial year 20182019 ended 31 March 2019.

45. ACKNOWLEDGEMENT:

The Board of Directors acknowledges with gratitude for the co-operation and assistancereceived from National Stock Exchange of India Limited (NSE) Securities Exchange Board ofIndia (SEBI) Merchant Banker Lead Manager Underwriter and Market Maker AuditorsAdvisors & Consultants other Intermediary service provider/s for successfulaccomplishment of the Company's maiden IPO. The Board of Directors also take thisopportunity to extend its sincere thanks for co-operation and assistance received by theCompany from the Central - State - Local Government and other regulatory authoritiesBankers Members Customers Suppliers.

The Directors also record their appreciation of the dedication of all the employees atall levels for their support and commitment to ensure that the Company continues to grow.

For and on Behalf of the Board of Directors

D.P. MANGAL
CHAIRMAN
[DIN: 01205208]
Place : Bhilwara
Date : 15.04.2019

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