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Macpower CNC Machines Ltd.

BSE: 535057 Sector: Engineering
NSE: MACPOWER ISIN Code: INE155Z01011
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Macpower CNC Machines Ltd. (MACPOWER) - Director Report

Company director report

To

The Members

of Manpower CNC Machines Limited

Your Directors have pleasure in presenting their 17th Annual Report onbusiness and operation of your company together with the Financial Statements for the yearended on March 31 2020.

FINANCIAL RESULT

[INR in Lakh except EPS]

Particulars Current Financial Year (2020) Previous Financial Year (2019)
Revenue from Operations 8148.10 14024.86
Other Income 104.87 292.03
Total Income 8252.97 14316.89
Profit/Loss before depreciation Finance Costs Exceptional items and Tax Expense 459.75 1950.04
Less: Depreciation/Amortization/ Impairment 98.56 118.20
Profit/(Loss) before Finance Costs Exceptional terms and Tax Expense 361.19 1831.84
Less: Finance Costs 29.06 23.61
Profit/ (Loss) before Exceptional items and Tax expense 332.13 1808.23
Add/(less): Exceptional items 245.36 -
Profit/(Loss) before Tax Expense 577.49 1808.23
Less: Tax Expense [Current & Deferred]
Current Income Tax 27.39 530.14
Deferred Tax Liability/ (Asset) 138.01 13.62
Profit/(Loss) for the year 412.09 1264.47

OVERVIEW OF OPERATIONS

During the Financial Year total revenue of your company stood at INR 82.52 Cr againstINR 143.16 Cr during previous financial year representing decline in Y-o-Y growth rate by42.36%. The EBITDA of the Company fall by 76.46% from the last year and reached to INR4.59 Cr from INR 19.50 Cr. This year your company's PAT comes to INR 4.12 Cr as last yearit was INR 12.64 Cr representing Y-o-Y growth rate decline by of 67.40%. Reduction inthese due to overall resection in the market.

With regards to company's estimation of future impact of COVID-19 pandemic on itsoperation there may be material impact on company's performance i.e. reduction inturnover and profitability due to lockdown in major part of India almost each and everyindustry is distress recession and no one can escape from this except some industrieslike Pharmaceutical Healthcare FMCG etc. considering the need and opportunity ourcompany has taken immediate steps to develop and manufacture such products that could becompensate the negative impact as above. We believe that we could able to recover the losscaused due to lockdown. However Company is making its best to cope with the situation andto improve the performance of the Company.

For more details please refer Management Discussion Analysis Report in Annexure - 7.

CHANGE IN NATURE OF BUSINESS

There has been no change in the Nature of Business during the year.

TRANSFER TO RESERVE

The Board of Directors of your company has decided not to transfer any amount to the

Reserves for the year under review.

DIVIDEND

The Board of Directors of your company after considering holistically the relevantcircumstances and present financial situation Board has decided that it would be prudentto plough back profit and not to recommend any Dividend for the year under review forbetter future and growth and development of the Company.

MAJOR EVENTS OCCURRED DURING THE YEAR

During the year under review following events occurred in your company whichmanagement believes that having an impact on the affairs of your company;

• This year under review your company awarded with NSIC CRISIL Rating: MSE 1 byCRISIL [well known credit rating agency] that indicates ‘HIGHEST creditworthinessin relation to other Micro & Small Enterprises in August 2019

Project Completion Update:

In the year of 2018 your company listed on NSE Emerge platform with the objectsutilize funds of IPO for setting up backward integration facilities which includes up inhouse machining and civil construction at the Manufacturing facility inter-alia includespurchase of machinery equipment's and tooling's for the machines

During the year your company able to complete its objectives and as of today companyhas In-house spindle manufacturing capability which has been made operationalcommissioning high end multi-axes grinding machine separate sheet metal unit powdercoating unit and also purchased state of the art mother machineries measuring instrumentsand high end software to eliminate rejection and rework machining and increaseproductivity and quality.

Your company has prepared video and detail presentation on the subject tiled"Project

Completion" which is available over company's website at www.macpowercnc.com

• During the year your company has dispatched total 404 machines to various whichinclude :

1. Defence sector

2. Education sector

3. Research sector

• During the year your company has exported machine to Nigeria

Delivered All New 5th Generation 2020 Machine Series:

Because of the backward integration facility your company able to deliver all new 5thgeneration machine series during this year.

MATERIAL CHANGES AND COMMITMENTS/KEY DEVLOPMENTS

The material change which has occurred between the end of financial year of the companyand

the date of this report is as under:

Manufacture of New Machine:

During this challenging time of COVID 19 pandemic there is a continuous need ofhelping out to the society in one way or other in order to manage the situation well. Inthis regard in the month of May 2020 Company has launched HOT AIR SEAM SEALINGMACHINE for PPE suit.

Hot Air Seam Sealing is a process of sealing of holes made during sewing process usingSpecialized Tape which is applied on PPE Suit based on hot air principle to make ittotally water and air proof to resist viruses.

Increase in Authorized Share Capital

Board of Directors of the Company has recommended to increase the Authorized ShareCapital of the Company from Rs.100000000 (Rupees Ten Crores only) divided into10000000 (One Crore) Equity Shares of face value of Rs.10/- each (Rupees Ten only) toRs. 100050000 (Rupees Ten Crores and Fifty Thousand only) divided into 10005000 (OneCrore and Five Thousand) Equity Shares of Rs.10/- each (Rupees Ten Only) by creation ofadditional 5000 (Five Thousand)Equity Shares of Rs.10/- each (Rupees Ten Only) rankingpari-passu in all respect with the existing Equity Shares of the Company and shareholdershave accord their approval by way of postal ballot voting on 25th June 2020 and afterthat Company's Authorized Share Capital is increased to Rs. 100050000 (Rupees TenCrores and Fifty Thousand only) divided into 10005000 (One Crore and Five Thousand)Equity Shares of Rs.10/- each.

Bonus Shares Allotment

Board of directors of the company has issued 196160 bonus shares in the proportion of2 (Two) equity shares for every 100 (One Hundred) existing equity shares by way of passingresolution on 22nd May 2020 and shareholders have also accord their approval by way ofpostal ballot voting on 25th June 2020.

Company has filed an application with NSE for obtaining in-principle approval for issueand allotment of 196160 Equity shares of Rs.10/- on June 8 2020 and the in-principleapproval was received from NSE on June 29 2020.

On July 4 2020 the Board of Directors approved the allotment of Bonus Shares to theexisting equity shareholders of the Company whose names appear in the register of members/ list of beneficiary owners as on record date by passing resolution by circulation.

Board of directors has allotted 196160 Equity bonus shares of Rs.10/ in their meetingheld on 4th July 2020.The said bonus shares gets listed on NSE emerge platform as on 17thJuly 2020 vide final listing approval from NSE dated 16th July 2020.By this allotment ofBonus Shares Paid-up Capital of the Company increased to Rs. 100041600 (Rupees TenCrores and Forty one Thousand Six Hundred only) divided into 10004160 (One Crore andFour Thousand One Hundred and Sixty) Equity Shares of Rs.10/- each.

Migration to Main Board

As a path ahead Board of directors in their meeting held on 22nd May2020has passed the resolution for migration of Company from the NSE emerge platform to NSEMain board and shareholders accorded their approval through postal ballot voting on 25thJune2020.

Company has filed an application with NSE for obtaining in-principle approval forMigration of company from NSE Emerge platform to NSE Main board on 29th July2020 and gets approval from NSE on August 10 2020.

On August 11 2020 Company has filed an application with NSE for obtaining finalapproval for migration of company from NSE Emerge platform to NSE Main board and getsapproval From NSE ON 17th August 2020.

From 19th August 2020 Company's shares are listed on NSE Main board with10004160 equity shares.

OVERVIEW OF INDUSTRY.

Machine tool sector is a basic capital good industry. It is a sub-sector of theengineering industry included under the category heavy engineering units. Machine toolsegment produces mother machines therefore plays a vital role in the technologicalupgradation quality control and cost in the engineering & manufacturing sector.

The Indian machine tool industry is expected to grow at a CAGR of 12.6% by 2020 and isexpected to reach USD 2588 million. With emphasis on Make in India and manufacturingIndia is set become a key player in the global machine tools industry and is expected tosee significant growth in high-end machine tool manufacturing.

There are currently about 1000 units in production of machine toolsaccessories/attachments subsystems and parts. Of these around 25 in the large scalesector accounts for 70% of the turnover and the rest are in the MSME sector of theindustry. The large organized players caters to India's heavy and medium industrieswhereas the small scale sector meets the demand of ancillary and other units.

Post COVID-19 the global machine tool market size is projected to reach USD 68.9billion by 2021 from an estimated USD 65.6 billion in 2020 at a CAGR of 5.0%. Theprojections were based on the ongoing automotive industry production drop which is thebiggest consumer of machine tools and additionally the supply chain disruptions causedby the COVID-19 pandemic in the manufacturing industry.

 

Disclaimer: This information has been collected through secondary research and Companyis

not responsible for any errors in the same.

CAPITAL AND DEBT STRUCTURE

There is no change in capital structure of your company during the year under review.However after financial year ended on 31st March 2020 Company has increasedits Authorized Share Capital and Paid-up Share Capital as stated above.

Your company does not have Debt securities.

CREDIT RATING OF SECURITIES

Your company only has Equity shares and Credit rating is not applicable to equitysecurities. So during the year no credit rating certificate related securities is takenas it is not applicable.

INVESTOR EDUCATION AND PROTECTION FUND [IEPF]

During the year under review Company was not required to transfer any amount ofdividend

or any shares to Investor Education and Protection Fund.

But in the financial year of 2017-2018 and 2018-2019 your Company has declareddividend and the details of Unpaid/Unclaimed Dividend account of Members of the Company isgiven on the website of the Company

https://www.macpowercnc.com/investor/unpaid-or-unclaimed-dividend-details/.

MANAGEMENT

i. Director and Key Managerial Personnel Directors

Following are the Promoter Directors of the Company as on 31st March 2020and during the year under review there has been no change in the Board of Directors ofthe Company:

Names of Directors Designation DIN
1. Mr. Rupesh J. Mehta Managing Director 01474523
2. Mr. Nikesh J. Mehta Whole-Time Director 01603779
3. Mrs. Riya R. Mehta Non-Executive & Woman Director 01603726

Director retiring by rotation

Mrs. Riya R. Mehta Non-Executive & Woman Director of the Company retires at thisensuing Annual General Meeting pursuant to provision of section 152(6) of the CompaniesAct 2013 and being eligible offer herself for re-appointment. Brief profile of Directorseeking re-appointment is disclosed in Annexure - 1 to Board's Report.

Key Managerial Personnel (KMP)

Pursuant to the provisions of Section 203 of the Companies Act2013 following are theKey Managerial Personnel of the Company as on March 31 2020:

Names of KMP Designation DIN
1. Mr. Rupesh J. Mehta Managing Director 01474523
2. Mr. Nikesh J. Mehta* Whole-Time Director(WTD) and Chief Executive Officer(CEO) 01603779
3. Mr. Rajnikant Raja CFO -
4. Mr. Sagar Rajyaguru CS -

*Mr. Nikesh Mehta Whole time director of the company has been appointed and designatedas Chief Executive Officer(CEO) of the company in the board meeting held on August 252020

Change in KMP during the year

During the year under review following changes took place in the KMP of the Company:

CS Sagar Rajyaguru has been appointed as Company Secretary and Compliance officer ofthe Company w.e.f 19th March 2020 and

Ms. Ekta Shukla has resigned as Company Secretary and Compliance officer of the Companyw.e.f.12th February 2020.

ii. Independent Directors

Following are the Independent Directors of the Company and during the year under reviewthere has been no change in the Independent Directors of the Company:

1) Mr. Maulik R. Mokariya [DIN: 05310868]

2) Mr. Rajubhai R. Bhanderi [DIN: 07986563] and

3) Mr. Deven J. Doshi [DIN: 07994505]

They have been appointed as Independent Directors for a period of five (5) years fromNovember 17 2017 to November 162022.

In terms of the Rule 6 of the Companies (Appointment and Qualification of Directors)Rules 2014 all Independent Directors of the Company have enrolled themselves on theIndependent Directors Databank and will undergo the online proficiency self-assessmenttest within the specified timeline unless exempted under the aforesaid Rules.

iii. Declaration by Independent Directors

Pursuant to the provisions of Section 149 of the Act the independent directors havesubmitted declarations that each of them meets the criteria of independence as provided inSection 149(6) of the Act along with Rules framed there under and as per Regulation16(1)(b) of the Securities and Exchange Board of India (Listing Obligations and DisclosureRequirements) Regulations 2015 ("SEBI Listing Regulations") at the firstmeeting of the Board of financial year. In Furtherance Company has also receivedconfirmation that that they are not aware of any circumstance or situation which exist ormay be reasonably anticipated that could impair or impact their ability to dischargetheir duties with an objective independent judgment and without any external influence andthat they are independent of the management. There has been no change in the circumstancesaffecting their status as independent directors of the Company.

During the year under review the non-executive director and Independent Directors ofthe Company had no pecuniary relationship or transactions with the Company.

None of the Directors are disqualified to be continued to act as Director of the

Company.

iv. Board Meeting

Seven meetings of the Board of Directors were held during the year under review and thegap between two meetings did not exceed one hundred and twenty days. For details ofmeetings of the Board please refer below table:

Name of Directors Designation as on 31-03-2020 Rupesh J. Mehta Nikesh J. Mehta Riya R. Mehta Maulik R. Mokariya Rajubhai R. Bhanderi Deven J. Doshi
Date of Board Meeting Managing Director Whole Time Directorr Non- Executive & Woman Director Independent Director Independent Director Independent Director
20/05/2019 Y Y Y Y Y Y
19/08/2019 Y Y Y Y Y Y
28/09/2019 Y Y Y Y Y Y
14/11/2019 Y Y Y Y Y Y
26/12/2019 Y Y Y Y Y Y
12/02/2020 Y Y Y Y Y Y
19/03/2020 Y Y Y Y Y Y

During FY 2019-2020 meetings of the Independent Directors were held on 14/11/2019. TheIndependent Directors inter-alia reviewed the performance of Chairman of the Company andBoard of Directors.

v. Committees of the Board

There are 4 Board Committees as on March 31 2020 that have been formed consideringthe needs of the Company details of which are as follows;

Name of the Committee Category and Composition Date of Presence
Name Category Role in Committee Committee meetings
Mr. Rajubhai R. Bhanderi Independent Director Chairperson (1) 30/04/2019 (2) 20/05/2019 All the Members have attended the said meeting. Ms Ekta Shukla CS Acts as the Secretary to the Committee Meetings &Mr. Rajnikant M. Raja CFO has also attended the Meeting.
Audit Committee Mr. Deven J. Doshi Independent Director Member (3) 16/08/2019 (4) 25/10/2019 (5) 14/11/2019 (6) 10/02/2020
Mr. Rupesh J. Mehta Managing Director Member
Stakeholders' Relationship Mrs. Riya R. Mehta NonExecutive & Woman Director Chairperson (1) 18/05/2019 All the Members have attended the said meeting. Ms Ekta Shukla
Committee (SRC) Mr. Nikesh J. Mehta Whole-Time Director Member (2) 26/11/2019 CS Acts as the Secretary to the Committee Meetings &Mr.
Mr. Rupesh J. Mehta Managing Director Member (3)20/01/2020 Rajnikant M. Raja CFO has also attended the Meeting.
Nomination Remun eration Commitee (NRC) Mr. Rajubhai R. Bhanderi Independent Director Chairperson All the Members have attended the said meeting. Ms Ekta Shukla
Mr. Deven J. Doshi Independent Director Member (1) 18/05/2019 (2) 10/02/2020 CS Acts as the Secretary to the Committee Meetings &Mr.
Mrs. Riya R. Mehta NonExecutive and Woman Director Member Rajnikant M. Raja CFO has also attended the Meeting.
Mr. Rajubhai R. Bhanderi Independent Director Chairperson (1) 20/05/2019 All the Members have attended the said meeting.
Corporate Social Responsibility Committee Mr. Rupesh J. Mehta Managing Director Member (2) 10/02/2020 Ms Ekta Shukla CS Acts as the Secretary to the
Mr. Nikesh J. Mehta Whole-Time Director Member Committee Meetings &Mr. Rajnikant M. Raja CFO has also attended the Meeting.

Stakeholders Relationship Committee Other Details

a. w.e.f. 22nd May 2020 Stakeholder Relationship Committee isreshuffled and following is the reshuffled Composition of Stakeholder RelationshipCommittee:

Name Category Role in Committee
1. Mr. Rajubhai R. Bhanderi Independent Director Chairperson
2. Mr. Nikesh J. Mehta Whole-Time Director Member
3. Mr. Rupesh J. Mehta Managing Director Member

b. Name Designation and Address of Compliance Officer as on 31st March2020

*Sagar Rajyaguru
Company Secretary
Macpower CNC Machines Limited
Plot No. 2234 Near Kranti Gate
GIDC Metoda 360 021 Talu Lodhika
Dist Rajkot Gujarat India
Telephone: +91 2827 287930

*Pursuant to Resignation of Miss Ekta Shukla w.e.f 12th February 2020Mr.SagarRajyaguru appointed as company secretary and compliance officer of the companyw.e.f. 19th March 2020

c. Details of investor complaints received and redressed during F.Y.2019-2020 areas follows;

At the Beginning of the year Received during the year Resolved during the year At the end of the year
0 0 0 0

vi. Company's Policy /Terms of Reference of committees

Silent features of Terms of Reference of Committees;

Name of Committee Terms of Reference
Committee is constituted in line with the provisions of
Audit Committee Regulation 18 of SEBI Listing (LODR) Regulations2015 and Section 177 of the Act.
• Oversight of the listed entity's financial reporting process and the disclosure of its financial information to ensure that the financial statement is correct sufficient and credible;
• Recommendation for appointment remuneration and terms of appointment of auditors of the listed entity;
• Approval of payment to statutory auditors for any other services rendered by the statutory auditors;
• Reviewing with the management the annual financial statements and auditor's report thereon before submission to the board for approval;
• Reviewing with the management the half yearly financial statements before submission to the board for approval with particular reference to;
• matters required to be included in the director's responsibility statement to be included in the board's report in terms of clause (c) of sub-section (3) of Section 134 of the Companies Act 2013;
• changes if any in accounting policies and practices and reasons for the same;
• major accounting entries involving estimates based on the exercise of judgment by management;
• significant adjustments made in the financial statements arising out of audit findings;
• compliance with listing and other legal requirements relating to financial statements;
• disclosure of any related party transactions;
• modified opinion(s) in the draft audit report
• Reviewing with the management the statement of uses/ application of funds raised through an issue (public issue rights issue preferential issue etc.) the statement of funds utilized for purposes other than those stated in the offer document / prospectus / notice and the report submitted by the monitoring agency monitoring the utilization of proceeds of a public or rights issue and making appropriate recommendations to the board to take up steps in this matter;
• Reviewing and monitoring the auditor's independence and performance and effectiveness of audit process;
• Approval or any subsequent modification of transactions of the listed entity with related parties;
• Scrutiny of inter-corporate loans and investments;
• Valuation of undertakings or assets of the listed entity wherever it is necessary;
• Evaluation of internal financial controls and risk management systems;
• Reviewing with the management performance of statutory and internal auditors adequacy of the internal control systems;
• Reviewing the adequacy of internal audit function if any including the structure of the internal audit department staffing and seniority of the official heading the department reporting structure coverage and frequency of internal audit;
• Discussion with internal auditors of any significant findings and follow up there on;
• The Audit Committee may call for the comments of the auditors about internal control systems the scope of audit including the observations of the auditors and review of financial statement before their submission to the Board and may also discuss any related issues with the internal and statutory auditors and the management of the company.
• Discussing with the statutory auditors before the audit commences about the nature and scope of audit as well as post-audit discussion to ascertain any area of concern;
• The Audit Committee shall have authority to investigate into any matter in relation to the items specified in section 177(4) of Companies Act 2013 or referred to it by the Board.
• To look into the reasons for substantial defaults in the payment to the depositors debenture holders shareholders (in case of non-payment of declared dividends) and creditors;
• To review the functioning of the whistle blower/Vigil mechanism;
• Approving the appointment of the Chief Financial Officer (i.e. the whole time finance director or any other person heading the finance function) after assessing the qualifications experience and background etc. of the candidate; and;
• Audit committee shall oversee the vigil mechanism.
• Audit Committee will facilitate KMP/auditor(s) of the Company to be heard in its meetings.
• Carrying out any other function as is mentioned in the terms of reference of the audit committee or containing into SEBI Listing Regulations 2015.
Further the Audit Committee shall mandatorily review the following:
a) Management discussion and analysis of financial condition and results of operations;
b) Statement of significant related party transactions (as defined by the audit committee)submitted by management;
c) Management letters / letters of internal control weaknesses issued by the statutory auditors;
d) Internal audit reports relating to internal control weaknesses; and
e) The appointment removal and terms of remuneration of the chief internal auditor shall be subject to review by the audit committee.
f) Statement of deviation
t Nomination and Remuneration Committee Committee is constituted in line with the provisions of Regulation 19 of SEBI (LODR) Regulations2015 and Section 178 of the Act.
1. Formulation of the criteria for determining qualifications positive attributes and independence of a director and recommend to the Board a policy relating to the level and composition of remuneration of the directors key managerial personnel and other employees;
2. Formulation of criteria for evaluation of independent directors and the Board;
3. To ensure that the relationship of remuneration to performance is clear and meets appropriate performance benchmarks;
4. Devising a policy on Board diversity; and
5. Identifying persons who are qualified to become directors and who may be appointed in senior management in accordance with the criteria laid down and recommend to the Board their appointment and removal.
6. Other matters as may be prescribed from time to time to be deal with or handled by the Audit Committee pursuant to provisions of the Companies Act 2013 the Rules there under SEBI (LODR) Regulations 2015 and any other functions as may be assigned to the committee by the Board from time to time.
Stakeholders' Relationship Committee Committee is constituted in line with the provisions of Regulation 20 of SEBI (LODR) Regulations 2015 and Section 178 of the Act.
1. Efficient transfer of shares; including review of cases for refusal of transfer / transmission of shares and debentures;
2. Redressal of security holder's / investor's complaints Efficient transfer of shares; including review of cases for refusal of transfer / transmission of shares and debentures;
3. Reviewing on a periodic basis the approval/refusal of transfer or transmission of shares debentures or any other securities;
4. Issue of duplicate certificates and new certificates on split/consolidation/renewal;
5. Allotment and listing of shares;
6. Reference to statutory and regulatory authorities regarding investor grievances;
7. To otherwise ensure proper and timely attendance and redressal of investor queries and grievances;
8. Any other power specifically assigned by the Board of Directors of the Company Committee is constituted in line with the provisions of Section 135 of the Act.
Corporate Social Responsibility ("CSR") Committee 1. Formulate and recommend to the Board a CSR Policy indicating the activities to be undertaken by the Company as specified in Schedule VII of the Act.
2. Recommend the amount of expenditure to be incurred on the activities mentioned in the CSR Policy.
3. Monitor the CSR Policy.

vii. Company's Policy on Directors' Appointment and Remuneration

Remuneration policy of the Company is designed to create a high-performance culture. Itenables the Company to attract retain and motivate employees to achieve results. Ourbusiness model promotes customer centricity and requires employee mobility to addressproject needs. The remuneration policy supports such mobility through pay models that arecompliant to local regulations.

The Company pays remuneration by way of salary benefits perquisites and allowancesetc. to its Managing Director & the Executive Directors. Annual increments arerecommended by the Nomination and Remuneration Committee within the salary scale approvedby the Board and Members.

The Board of Directors on the recommendation of the Nomination and RemunerationCommittee decides the commission payable to the Managing Director and the ExecutiveDirectors out of the profits for the financial year and within the ceilings prescribedunder the Act based on the Board evaluation process considering the criteria such as theperformance of the Company as well as that of the Directors. The said commission isdecided each year by the Board of Directors on the recommendation of the Nomination andRemuneration Committee and distributed amongst the Non-Executive Directors based on theBoard evaluation process considering criteria such as their attendance and contributionat the Board and Committee meetings as well as the time spent on operational mattersother than at meetings. The Company may reimburse the out-of-pocket expenses incurred bythe Directors for attending the meetings.

Nomination and Remuneration policy is placed on the website of the Company athttps://www.macpowercnc.com/investor/policies/.

viii. Board Evaluation

The Board of Directors has carried out an annual evaluation of its own performanceboard committees and individual directors pursuant to the provisions of the Act and SEBI(LODR) Regulations 2015.

In a separate meeting of independent directors performance of non-independentdirectors the board as a whole and the Chairman of the Company were evaluated takinginto account the views of executive directors and non-executive directors.

The Board and the Nomination and Remuneration Committee reviewed the performance ofindividual directors on the basis of criteria such as the contribution of the individualdirector to the board and committee meetings like preparedness on the issues to bediscussed meaningful and constructive contribution and inputs in meetings etc.

Performance evaluation of independent directors was done by the entire board excludingthe independent director being evaluated.

As per Companies Act 2013 Board has made annual evaluation of its own performance andalso of its committees and Individual Directors. The evaluation of all the directors andthe Board as a whole was conducted based on the criteria and framework adopted by theBoard. Board of Directors is actively taking an action for evaluation.

Observations of board evaluation carried out for the year NIL
Previous year's observations and actions taken NIL
Proposed actions based on current year observations NOT REQUIRED

ix. Remuneration of Directors and Employees

Details of Remuneration of Executive Directors for the year ended on March 31 2020:

Name of Director Designation Amount of Remuneration
Mr. Rupesh J. Mehta Managing Director INR 3600000/-
Mr. Nikesh J. Mehta Whole-Time Director INR 720000/-

The Company has not paid any remuneration/commission/sitting fees to Non-Executivedirector and Independent Directors.

Particulars of employees:

Disclosure pertaining to remuneration and other details as required under the Act readwith Rule 5 of the Companies [Appointment and Remuneration of Managerial Personnel] Rules2014 and amendments thereof are provided in the Annual Report. Particulars of Employees interms of the provisions of Section 197(12) of the Act read with Rule 5 is attached withthis report as Annexure - 3.

x. Directors' Responsibility Statement

Pursuant to the provisions of Section 134(3)(C) and 134(5) of the Companies Act

2013 Your directors confirm to the best of their knowledge and belief:

(a) In the preparation of the annual accounts the applicable accounting standards hadbeen followed along with proper explanation relating to material departures;

(b) 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 at the end of the year and the profit andloss of the company for that period;

(c) The Directors had taken proper and sufficient care 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) The Directors had prepared the annual accounts on a going concern basis;

(e) The Directors had devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems are adequate and operating effectively;

(f) The Directors had laid down internal financial controls to be followed by thecompany and that such internal financial controls are adequate and operating effectively.

Internal financial controls" means the policies and procedures adopted by thecompany for ensuring the orderly and efficient conduct of its business includingadherence to company's policies the safeguarding of its assets the prevention anddetection of frauds and errors the accuracy and completeness of the accounting recordsand the timely preparation of reliable financial information.

Based on the framework of internal financial controls and compliance systemsestablished and maintained by the Company the work performed by the internal statutoryand secretarial auditors and external consultants including the audit of internalfinancial controls over financial reporting by the statutory auditors and the reviewsperformed by management and the relevant board committees including the audit committeethe Board is of the opinion that the Company's internal financial controls were adequateand effective during FY 2019-20.

xi. Internal Financial Controls and Internal Audit

During the year 2019-20 Pursuant to resignation of Mr. VishalPandya your Company hasappointed Mr. Pratik Siroya as on 20th May 2019 to oversee and carry outinternal audit of its activities. The audit is based on an internal audit plan which isreviewed each year in consultation with the statutory auditors and approved by the auditcommittee. In line with international practice the conduct of internal audit is orientedtowards the review of internal controls and risks in the Company's operations.

Based on its evaluation [as defined in section 177 of Companies Act 2013 and Clause 18of SEBI Regulations 2015] our audit committee has concluded that as of March 31 2020our internal financial controls were adequate and operating effectively.

DISCLOSURES RELATING TO SUBSIDIARIES ASSOCIATES AND JOINT VENTURES

Your company has no holding/subsidiary/associate company. So disclosure in AOC-1required under section 129 of the Act is not applicable to your company.

DETAILS OF DEPOSITS

Your company has not accepted any deposits and as such no amount of Principal orInterest was outstanding as of the Balance Sheet.

PARTICULARS OF LOANS GUARANTEES AND INVESTMENTS

Your Company has not made any transaction that was falling under the ambit ofsection-186 of the Companies Act 2013.

PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

Your Company has entered into transaction with Related Parties at Arm's Length Basis.Particulars of contracts or arrangements with related parties referred to section 188(1)of the Companies Act 2013 in the prescribed Form AOC-2 is appended as Annexure - 2to the Board's Report.

CORPORATE SOCIAL RESPONSIBILITIES

Your Company is falling under the ambit of Section 135 of the Companies Act 2013 i.e.Corporate Social Responsibility. During the year 2019-20 Company was required to spentamount of Rs. 1983308 as CSR Expenditure. However Company has not found proper avenuesin which Company can spent such amount which could suffice the exact motto behind the CSRExpenditure and Company assures that it will spend the amount of CSR Expense which will bebeneficial to the Society.

The brief outline of the Corporate Social Responsibilities [CSR] policy of the Companyand the initiatives undertaken by your company on CSR activity during the year underreview are set out in Annexure 8 of this report in the format prescribed in theCompanies [Corporate Social Responsibility Policy] Rules 2014. The CSR policy isavailable on https://www.macpowercnc.com/investor/policies/.

CONSERVATION OF ENERGY RESEARCH AND DEVELOPMENT TECHNOLOGY ABSORPTION FOREIGNEXCHANGE EARNINGS AND OUTGO

The information pertaining to conservation of energy technology absorption Foreignexchange Earnings and outgo as required under Section 134 (3)(m) of the Companies Act2013 read with Rule 8(3) of the Companies (Accounts) Rules 2015 is furnished in Annexure- 6 attached to this report.

RISK MANAGEMENT

The Audit Committee is responsible for monitoring and reviewing the risk managementplan and ensuring its effectiveness. The Audit committee has additional overview in areaof financial risks and controls.

VIGIL MECHANISM/WHISTLE BLOWER POLICY

The Company has a Whistle Blower Policy and has established the necessary vigilmechanism for directors and employees to report concerns about unethical behavior and toreport instances of leak of unpublished price sensitive information. No person has beendenied access to the Chairman of the Audit Committee. The said policy has been uploaded onthe website of the Company at https://www.macpowercnc.com/investor/policies/.

The Audit Committee is continuously verifying the Whistle Blower policy (vigilmechanism) which provides a format mechanism for all stakeholders employees and directorsof the Company to approach the Chairman of the Audit Committee of the Company and makeprotective disclosures about the unethical behavior towards stakeholder/employee of thecompany leak of UPSI actual or suspected fraud or violation of the Company's Code ofConduct.

MATERIAL ORDERS OF JUDICIAL BODIES /REGULATORS

During the year under reviewthere are no significant or material orders passed by theRegulators/Courts/Tribunals that could impact the going concern status of the company andits future operations.

AUDITORS

The Details of the Auditors of the Company are as stated below:

Name of Auditor Type of Auditor Term of Appointment Changes during the year
M/s. S. C. Makhecha & Associates (FRN: Statutory Auditor Rajkot Appointed in 15th AGM [i.e. AGM for 2017-18] for consecutive term of 5 years from 15th Annual General Meeting till the Conclusion of 20th AGM (i.e. F.Y2022-23.) No change during the year
M/s. K. P. Rachchh & Co. FCS: 5156 Secretarial Auditor Appointed to conduct audit for FY 2019-20. No change during the year
M/s. Borad Sanjay B & Associates Cost Auditor Appointed to conduct cost audit for FY 2019-20. No change during the year
CA Pratik Siroya Internal Auditor Appointed to conduct Internal Audit w.e.f. 22.05.2019 for the year 2019-20. Change in Internal Auditor due to resignation by earlier appointed auditor Mr. Vishal Pandya.

AUDITOR'S REPORT AND SECRETARIAL AUDIT REPORT

The Notes on financial statements referred to in the Auditors' Report areself-explanatory and do not call for any further comments. The Auditors' Report does notcontain any qualification reservation adverse remark or disclaimer.

No fraud has been reported by the Auditors under section 143(12) of the Companies Act2013 requiring disclosure in the Board's Report.

The secretarial audit report does not contain any qualifications reservations oradverse remarks or disclaimer. The Secretarial Audit Report for the financial year endedMarch 31 2020 is annexed herewith to this Report. Secretarial Auditors' Report in theprescribed format i.e. MR-3 is attached in this report as Annexure - 4.

ANNUAL SECRETARIAL COMPLIANCE REPORT REGULATION 24A OF SEBI [LODR]

Being listed on SME platform of Stock Exchange i.e. NSE as on 31st March2020 Regulation 24A of LODR with reference to SEBI's Circular dated February 08 2019 isnot applicable as the same been exempted in Regulation 15(2) of SEBI [LODR].

COMPLIANCE WITH SECRETARIAL STANDARDS

We the Directors of the Company hereby state the Company has complied all applicable

Secretarial Standards to the applicable extend.

EXTRACT OF ANNUAL RETURN

As per the requirements of Section 92(3) of the Act and Rules framed thereunder theextract of the annual return for FY 2019-2020 is given in Annexure 5 in theprescribed Form No. MGT-9 which is a part of this report. The same is availablehttps://www.macpowercnc.com/investor/annual-report/.

COST AUDITORS

The Board has appointed M/s. Borad Sanjay B & Associates Cost Accountants forconducting the audit of cost records of the Company for single segment for the financialyear 2019-20 as recommended by the Audit Committee. In furtherance Company hasreappointed M/s. Borad Sanjay B & Associates Cost Accountants for the year 2020-21 ata remuneration of Rs. 35000/- and As required under Section-148 and Rule 14 of theCompanies [Audit and Auditors] Rules 2014 a resolution is being placed at the ensuingAnnual General Meeting for ratification of remuneration payable to said Cost Auditors.

ADDITIONAL DISCLOSURES UNDER LISTING REGULATIONS

i. STATEMENT OF DEVIATION OR VARIATION

Your Company got listed at Emerge platform of NSE on March 22 2018 and allotted2615000 Equity Shares of face value of Rs. 10/- each at an issue price of Rs.140/-[including of security premium of Rs. 130/-each] with intended to utilize for SettingUp Backward Integration and General Corporate Purpose.

In terms of Regulation 32 of SEBI [Listing Obligations and Disclosure Requirements]Regulations 2015 there is no deviation/variation in issue proceeds of public issue fromstated in the Prospectus of the Company.

As on 31st March 2020 the company has fully utilized IPO funds and therelevant details are mentioned under the table given below:

As on March 31 2020

Statement of Deviation and variation
Name of the listed entity MACPOWER CNC MACHINES LIMITED
Mode of Fund Raising Public Issues / Rights Issues / Preferential Issues / QIP / Others (Pre- IPO Placement)
Date of Raising Funds Pre-IPO Private - 27/02/2018 Placement Initial Public Offer(IPO) - 20/03/2018
Amount Raised Through Pre-IPO Placement:-53550000 Initial Public Offer(IPO) :- 366100000
TOTAL 419650000
Report filed for Quarter ended March 2020
Monitoring Agency Applicable / Not Applicable
Monitoring Agency Name if applicable Not Applicable
Is there a Deviation / Variation in use of funds raised YES/NO
If yes whether the same is pursuant to change in terms of a contract or objects which was approved by the shareholders Not Applicable
If Yes Date of shareholder Approval Not Applicable
Explanation for the Deviation / Variation Not Applicable
Comments of the Audit Committee after review NIL
Comments of the auditors if any NIL
Objects for which funds have been raised and where there has been a deviation in the following table
Original Object Modifie d Object if any Original Allocation Modified allocation if any Funds Utilized Amount of Deviation/Variat ion for the quarter according to applicable object Remarks if any
1. Setting Up Backward Integration Facility 2. General Corporate Purpose NA 419650000 NIL 446404222 NIL Excess Fund Utilization of Rs. 26754222 are made from the Interest amount Accrued on the Fixed deposits of IPO Proceeds

ii. MANAGEMENT DISCUSSION AND ANALYSIS REPORT (MDAR)

Management Discussion and Analysis report is presented herewith as Annexure 7.

iii. CORPORATE GOVERNANCE REPORT

As on 31st March 2020 the Company being SME Listed Company CorporateGovernance Report is not applicable and hence the same is not presented here.

DISCLOSURES PERTAINING TO THE SEXUAL HARASSMENT OF WOMEN AT THE WORKPLACE (PREVENTIONPROHIBITION AND REDRESSAL) ACT 2013

The Company has adopted a policy on prevention prohibition and Redressal of Sexualharassment at workplace and has duly constituted an Internal Complaints Committee in linewith the provisions of the Sexual Harassment of Women at Workplace [PreventionProhibition and Redressal] Act 2013 and the Rules there under. The policy is placed atthe website of the Company at https://www.macpowercnc.com/investor/policies/. There havebeen no complains related sexual harassment reported during the year under review.

INSURANCE

The assets of the company including buildings plant & machinery stocks etc.wherever necessary and to the extent required have been adequately insured against variousrisks.

SEGMENT REPORTING

The Company is engaged in the business of manufacturing of CNC Turning CentersVertical Machining Centers [VMC] Horizontal Machining Centers [HMC] Cylindrical GrinderVertical Turret Lathe [VTL] Turn Mill Centers Drill Tap Center [DTC] Twin SpindleTurning & VMC along with robotic automation solutions. Considering the nature of theBusiness and Financial Reporting of the Company the segment reporting is not applicableto company as your company's business in single segment.

HUMAN RESOURCE DEVELOPMENT

Your Company continued to focus on attracting new talent while investing in organictalent development to help employees acquire new skills explore new roles and realizetheir potential.

The Company's relation with human resource continued to be cordial during the yearunder review. The Board wishes to take place on record its appreciation for the valuableservices rendered by its entire workforce. During the year there was no instance ofStrike Lock out or another issues related to Human Resources. However as per Government'sorder of Lock Down due to outbreak of covid19 the Company's operations were closed w.e.f25th March 2020 and restarted its partial operations w.e.f 21stApril 2020 in accordance with the guidelines provided by the government and in accordancewith requisite approvals of appropriate authorities.

ACKNOWLEDGMENTS

The Directors thank the Company's employees customers vendors investors and academicpartners for 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 appreciate and value the contribution made by every member of the workfamily.

Stakeholders support is also acknowledged by the Management of the Company.

Place: Metoda Rajkot For and on behalf of the Board of
Date: August 25 2020 MACPOWER CNC MACHINES LIMITED
[Rupesh J. Mehta]
Chairman & Managing Director
DIN: 01474523