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Macpower CNC Machines Ltd.

BSE: 535057 Sector: Engineering
NSE: MACPOWER ISIN Code: INE155Z01011
BSE 05:30 | 01 Jan Macpower CNC Machines Ltd
NSE 00:00 | 14 Aug 51.75 1.40
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Macpower CNC Machines Ltd. (MACPOWER) - Director Report

Company director report

To

The Members

of Macpower CNC Machines Limited

Your Directors have pleasure in presenting their 16th Annual Report onbusiness and operation of your company together with the Financial Statements for the yearended on March 31 2019.

FINANCIAL RESULT

[INR in Lakh except EPS]
Particulars Current Financial Year (2019) Previous Financial Year (2018)
Revenue from Operations 14024.86 10694.26
Other Income 292.03 53.26
Profit/Loss before depreciation Finance Costs Exceptional items and Tax Expense 1950.04 1198.33
Less: Depreciation/Amortization/ Impairment 118.20 102.28
Profit/Loss before Finance Costs Exceptional items and Tax Expense 1831.84 1096.05
Less: Finance Costs 23.61 21.10
Profit/Loss before Exceptional items and Tax Expense 1808.23 1074.95
Add/(less): Exceptional items
Profit/Loss before Tax Expense 1808.23 1074.95
Less: Tax Expense [Current 8b Deferred]
Current Income Tax 530.14 394.56
Deferred Tax Liability/(Asset) 13.62 (23.79)
Profit/(Loss) for the year 1264.46 704.18

OVERVIEW OF OPERATIONS

During the Financial Year total revenue of your company stood at INR 143.16 Cr againstINR 107.47 Cr during previous financial year representing Y-o-Y growth of 33%. The EBITDAof the Company rose by 62% from the last year and reached to INR 19.50 Cr from INR 11.98Cr. This year your company's PAT comes to INR 12.64 Cr as last year it was INR 7.04 Crrepresenting Y-o-Y growth of 79%.

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

TRANSFER TO RESERVE

The Board of Directors of your company has decided not to transfer any amount to theReserves for the year under review.

DIVIDEND

The Board of Directors of your Company is pleased to recommend a dividend of INR 1/-per equity share of the face value of INR 10/- [@10%] payable to those Shareholders whosenames appear in the Register of the Members as on September 20 2019 [Record Date].*

*This Final Dividend is subject to the approval of Shareholders in the 16thAnnualGeneral Meeting. As per approval of Shareholders Dividend shall be paid to EquityShareholders except to those who intend to waiveentitlement of dividend. This is secondtime in a row that your company recommended dividend and if approved promoters andpromoter group member will waive their right to receivedividend.

An amount of INR 615219 [approx.]would be paid as dividend distribution tax [DDT] onthe dividend.

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: CRISILMSE i by CRISIL [well known credit rating agency] that indicates ‘HIGHEST'creditworthiness in relation to other Micro & Small Enterprises in August 2018.

• This year your company has opened new tech centers at Ahmedabad Jaipur andDelhi - NCR at the same place were company's branch office is situated.

Object of Tech centers: To give live demo of Macpower's CNC Machines To provide oneone-stop-solution for getting all the information required regarding machines toolingfixture options part development machine applications and training & Prove outs.These Centers are staffed with experienced personal aided by state-of-the-art facilities.The Tech Centers has a representative selection of CNC turning center Machining Centersfor customers to get hands on experience about these machines.

• Important part of Expansion plan for which your company has come into Capitalmarket with Initial Public Offering Sheet Metal Cutting shophas been started with Laserprofile cutting Machine purchased from IPO funds to in-house processing of sheet metalto cut sheets in shape for further fabrication and welding work. This in- house processhelping company in saving logistic cost and possible damages accrued during transportationfrom Vendor's place. Now due to this we can design form and cut any type of profileshape like radius taper odd angle shaping on latest equipment for better aesthetic looksand compactness of the machine. Latest equipment/advance software helps us to increase ourcapacity of machine enclosure due to higher speeds and automatic angular correctionfeatures. Latest nesting software can control the wastage of sheet during sheet metallaser cutting and interface very accurately with higher speeds with in few seconds.

• During the year your company dispatched total 797 machines and achieved growthin manufacturing and dispatching from 600 to 800 machines per year with ongoing expansionproject. This year your Company is been able to catered 14 Machines to the Department ofTraining and Employment - Karnataka [in single order] 6 Machines to Defense sector 2Machines to Aerospace and also catered to educational institute like IIT-Kharagpur.

• Import Substitute: Being a machine tools company you have to keep upgrade yourtechnology and working level and your company doing this without any overseas help. Thisyear your company designed manufactured and dispatched 3 big machines to company'svalued customer which were normally being imported normally by the customers.

• Expansion project update: As stated above sheet metal cutting has beencommenced operation with indigenous purchase of laser profile machine and Construction ofHeavy Machine shop and Powder Coating plant is under progress. By end of the year some ofimported machines from IPO project were delivered at Company's premises. One of Importedmachine and testing equipment details are as follows;

Double Column Machining Centre 4x2.5 Mt from Taiwan:

This imported machine is with universal head help us to machining in single set-up. Allfive sides machining is possible in single set-up with respect to resting side and alsoits help to improve machining quality reeducation in manufacturing cost and cycle timesaving with better accuracy.

Testing Equipment from Europe:

• Testing Equipment imported from UK for axis Laser measurement/calibrationsystem. The said equipment is CE certified. This equipment compensates the axis error andupgrade machine performance to select the precise machine for every job. This kit is helpsto plan and improve machine accuracy level by monitoring/compensating wear and extend thelife of machine by identifying its source of error. Auto compensation feature willcompensate machine instantly.

• Hardening Testing Equipment is imported from Switzerland. This application ofhardness testing enables evaluate a material's properties such as strength ductility andwear resistance and so helps determine whether a material or material treatment issuitable for the purpose of the requirement. A hardness test is typically performed bypressing a specifically dimensioned and loaded object [indenter] into the surface of thematerial testing. The hardness is determined by measuring the depth of indenterpenetration or by measuring the size of the impression left by an indenter.

MATERIAL CHANGES AND COMMITMENTS IF ANY AFFECTING THE FINANCIAL POSITION OF THECOMPANY HAVING OCCURRED SINCE THE END OF THE YEAR AND TILL THE DATE OF THE REPORT

There have been no material changes and commitments which affect the financialposition of the company which have occurred between the end of the financial year to whichthe financial statements relate and the date of this Report.

OVERVIEW OF INDUSTRY

Machine Tools have critical role in manufacturing industry and they are called the‘mother machines' because they make other machines possible. Indian Machine Toolindustry grows by 25% or for more two years constantly. As per the latest World MachineTool Production and Consumption Survey conducted by Gardner India's Global rank during2018 was 9th in Production and 7th in Consumption. It is estimatedthat the industry may grow around 20 - 25 per cent in 2019-2020. With “Make in India'moment the consumption increased in existing sectors and re-export market pick-upcontributes in market growth.

Disclaimer: This information has been collected through secondary research and Companyis not responsible for any errors in the same.

EXTERNAL ENVIRONMENT AND ECONOMIC OUTLOOK

The softening of global industrial activity since late-2018 has now become morebroad-based. While this had been driven by contractions in the eurozone Japan Korea andthe UK that weakness has now spread to the US. The impacts of the global trade slowdownheightened trade tensions and idiosyncratic factors like Brexit uncertainty have had amore pronounced impact upon Machine Tools.

GDP growth to slow down to 7.1% in 2019 and 7% in 2020. Despite looser monetary policythe transmission is likely to be weak amid continued fiscal slippage. Also creditavailability concerns are likely to cap fixed investment growth although the economy willbenefit from lower oil prices and a more stable currency. Metal products are forecast tobe the slowest growing sector due to in part to adverse base effects after a sudden fall.However there are some bright spots with precision & optical instruments andelectrical engineering expected to grow at a double-digit pace this year. Also stronggrowth in construction underpinned by supportive government policy and urbanizationtrends will support demand for Machine Tool consuming sectors like basic metals helpingto offset the impact of the section 232 tariffs. With strong fundamentals supportingfuture output it is expected that Machine Tool weighted production growth to pick up to6.6% in 2020.

Despite concerns surrounding credit conditions Machine Tool demand was considerablystronger than expected in 2018 up by 36%. Meanwhile capital spending by the machine toolconsuming sectors is forecast to increase by 7.9% in 2019 and 8% in 2020. Investment willbe supported by the “Make in India' initiative which will help to gradually movelocal machine tool production up the value chain. Overall it is expected that machinetool demand to expand by 8% in 2019 and 8.3% in 2020.

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 for the year under review.

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]

No amount of dividend or no shares is transferred to Investor Education and ProtectionFund.

But preceding year Your Company declared dividend and the details of Unpaid/UnclaimedDividend account is under as per the requirement of Secretarial Standard - 3 on dividend.

Sr. No. Date of declaration of Dividend Name of Shareholder and Address [available with RTA's records] DP ID + Client ID Amount [in INR]
1 22/09/2018 [for FY 2017-18] Name:IndraneelSarkar Address:B-202 Philips Towers Plot No-3 Sector-23 Dwarka New Delhi - 110075 IN30154938349506 1000
2 22/09/2018 [for FY 2017-18] Name:SheetalGoyal Address:Goel Hospital And Scan Centre RlyRoad Moga- 142001 IN30154932288311 1000
3 22/09/2018 [for FY 2017-18] Name: Pooja Vishal Chhabria Address: 31/B Sterling Appt 16thFloor Peddar Road Mumbai - 400026 1203410000277173 18000
Total 20000

Above list is also available at Company's website at https: //www.macpowercnc.com/investor/unpaid-or-unclaimed-dividend-details /.

MANAGEMENT

i. Director and Key Managerial Personnel

Mr. Rupesh J. Mehta [DIN: 01474523] Mr. Nikesh J. Mehta [DIN: 01603779] Mrs. Riya R.Mehta [DIN: 01603726] -are the Managing Director Whole-Time Director and Non- Executive& Woman Director of your company.

Mr. Nikesh J. Mehta Whole-Time Director of the Company retires at this ensuing AnnualGeneral Meeting pursuant to provision of section 152(6) of the Companies Act 2013 andbeing eligible for offer himself for re-appointment. Brief profile of Director seekingre-appointment is disclosed in Annexure - 1 to Board's Report.

Pursuant to the provisions of Section 203 of the Act the Key Managerial Personnel ofthe Company as on March 31 2019 are:Mr. Rupesh J. Mehta - Managing Director Mr.Rajnikant M. Raja - CFO and Ms. Ekta P. Shukla - CS for the year under review.

ii. Independent Directors

Mr. Maulik R. Mokariya [DIN: 05310868] Mr. Rajubhai R. Bhanderi [DIN: 07986563] andMr. Deven J. Doshi [DIN: 07994505] are the Independent Directors of the Company for aperiod of five (5) years from November 17 2017 to November 16 2022.

iii. Declaration by Independent Directors

Pursuant to the provisions of Section 149 of the Act the independent directors havesubmitted declarations that each of them meet the criteria of independence as provided inSection 149(6) of the Act along with Rules framed thereunder and Regulation 16(l)(b) ofthe Securities and Exchange Board of India (Listing Obligations and DisclosureRequirements) Regulations 2015 (“SEBI Listing Regulations”). There has been nochange in the circumstances affecting their status as independent directors of theCompany.

During the year under review the non-executive director and Independent Directors ofthe Company had no pecuniaiy relationship or transactions with the Company other thansitting fees commission and reimbursement of expenses if any incurred by them for thepurpose of attending meetings of the Board/Committee of the Company.

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

iv. Board Meeting

Six 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 31-03-2019 Rupesh J. Mehta Managing Director Nikesh J. Mehta Whole- Time Director Riya R. Mehta Non- Executive 86 Woman Director Maulik R. Mokariya Independent Director Rajubhai R. Bhanderi Independent Director Deven J. Doshi Independent Director
Date of Board Meeting
06/04/2018 Y Y Y Y Y Y
25/05/2018 Y Y Y Y Y Y
17/08/2018 Y Y Y Y Y Y
12/11/2018 Y Y Y Y Y Y
31/12/2018 Y Y Y Y Y Y
29/03/2019 Y Y Y Y Y Y

During FY 2018-2019 meetings of the Independent Directors were held on 12/11/2018. 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 2019 that have been formed consideringthe needs of the Company details of which are as follows;

Name of the Committee

Composition

Date of Committee meetings Presence
Category and Name Category Role in Committee
Audit Comm ittee Mr. Rajubhai R. Bhanderi Independent Director Chairperson 06/04/ 2018 25/05/ 2018 17/08/ 2018 31/10/ 2018 12/11/ 2018 07/3/ 2019 All the Members have attended the said meeting. Ms Ekta Shukla CS Acts as the Secretary to the Committee Meetings &Mr. Raj nikant M. Raja CFO has also attended the Meeting.
Mr. Deven J. Doshi Independent Director Member
Mr. Rupesh J. Mehta Managing Director Member
Stake holder s' Relati onship Comm ittee Mrs. Riya R. Mehta Non- Executive 85 Woman Director Chairperson 17/04/ 2018 10/07/ All the Members have attended the said meeting. Ms Ekta Shukla CS
Mr. Nikesh J. Mehta Whole-Time Director Member 2018 11/10/ 2018 Acts as the Secretary to the Committee Meetings
Mr. Rupesh J. Mehta Managing Director Member 15/01/ 2019 &Mr. Raj nikant M. Raja CFO has also attended the Meeting.
Nomin ation Remu nerati on Comm ittee Mr. Rajubhai R. Bhanderi Independent Director Chairperson 17/04/ 2018 02/08/ All the Members have attended the said meeting. Ms Ekta Shukla CS
Mr. Deven J. Doshi Independent Director Member 2018 11/02/ 2019 Acts as the Secretary to the Committee Meetings &Mr.
Mrs. Riya R. Mehta Non- Executive and Woman Director Member Raj nikant M. Raja CFO has also attended the Meeting.
Corpo rate Social Respo nsibili ty Comm ittee Mr. Rajubhai R. Bhanderi Independent Director Chairperson 02/08/ 2018 All the Members have attended the said meeting. Ms
Mr. Rupesh J. Mehta Managing Director Member 31/12/ 2018 Ekta Shukla CS Acts as the Secretary to the
Mr. Nikesh J. Mehta Whole-Time Director Member 04/03/ 2019 Committee Meetings 8&Mr. Raj nikant M. Raja CFO has also attended the Meeting.

Stakeholders Relationship Committee - Other Details

a. Name Designation and Address of Compliance Officer Ekta Shukla Company SecretaryMacpower CNC Machines Limited Plot No. 2234 Near Kranti Gate

GIDC Metoda - 360 021 Talu - Lodhika

Dist - Rajkot Gujarat India Telephone: +91 2827 287930

a. Details of investor complaints received and redressed during FY2019 are as follows;

Opening Balance Received during the year Resolved during the year Closing Balance
0 0 0 0

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

Silent features of policies;

Name of Committee Terms of Reference
Audit Committee Committee is constituted in line with the provisions of Regulation 18 of SEBI Listing Regulations and Section 177 of the Act.
• Overview of financial reporting process.
• Reviewing with the management the annual financial statements and auditors' report thereon before submission to the Board for approval.
• Evaluation of internal financial controls and risk management systems
• Recommendation for appointment remuneration and terms of appointment of auditors of the Company.
• Approve policies in relation to the implementation of the Insider Trading Code and to supervise implementation of the same.
Nomination and Remuneration Committee is constituted in line with the provisions of Regulation 19 of SEBI Listing Regulations and Section 178 of the Act.
Committee • Recommend to the Board the setup and composition of the Board and its committees.
• Recommend to the Board the appointment/re-appointment of Directors or Key Managerial Personnel or Senior Managerial Personnel.
• Support the Board and Independent Directors in evaluation of the performance of the Board its Committees and individual Directors.
• Recommend to the Board the Remuneration Policy for Directors or Key Managerial Personnel or Senior Managerial Personnel.
Stakeholders' Relationship Committee is constituted in line with the provisions of Regulation 20 of SEBI Listing Regulations and Section 178 of the Act.
Committee • Consider and resolve the grievances of security holders.
• Consider and approve issue of share certificates transfer and transmission of securities etc. if any.
Corporate Social Committee is constituted in line with the provisions of Section 135 of the Act.
Responsibility (“CSR”) Committee • 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.
• Recommend the amount of expenditure to be incurred on the activities mentioned in the CSR Policy.
• Monitor the CSR Policy.

Above stated policies is placed on the website of the Company at https: / /www.macpowercnc.com/investor/policies /.

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 also reimburses the out-of- pocket expenses incurredby the Directors for attending the meetings.

Nomination and Remuneration policy is placed on the website of the Company at https: // 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 SEBIListing Regulations.

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 Directors for the year ended on March 31 2019:

Name of Director Designation Amount of Remuneration
Mr. Rupesh J. Mehta Managing Director INR 3600000/-
Mr. Nikesh J. Mehta Whole-Time Director INR 720000/-
Ms. Riya R. Mehta Non-executive 85 Woman Director INR 200000/- [Since August BoDs decided to discontinue to pay remuneration to nonexecutive director!

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 2013Your 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 in case of a listed company had laid down internal financialcontrols to be followed by the company and that such internal financial controls areadequate and operating effectively.

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 2018-2019.

xi. Internal Financial Controls and Internal Audit

During the year 2018-19your Company has appointed Mr. Vishal Pandya to oversee andcarry out internal audit of its activities. The audit is based on an internal audit planwhich is reviewed each year in consultation with the statutory auditors and approved bythe audit committee. In line with international practice the conduct of internal audit isoriented towards 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 2019our 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 - 2 tothe 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. Accordingly the brief outline of the Corporate SocialResponsibilities [CSR] policy of the Company and the initiatives undertaken by yourcompany on CSR activity during the year under review are set out in Annexure -8 of thisreport in the format prescribed in the Companies [Corporate Social Responsibility Policy]Rules 2014. The CSR policy is available on https://wwwmacpowercnc.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. Noperson has been denied access to the Chairman of the Audit Committee. The said policy hasbeen uploaded on the website of the Company athttps://www.macpowercnc.com/investor/policies/.

MATERIAL ORDERS OF JUDICIAL BODIES /REGULATORS

There are no significant or material orders passed by the Regulators/Courts/Tribunalsthat could impact the going concern status of the company and its 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 Statutory Auditor 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 and from the financial year 2018-19 till the AGM of Financial year 2022-23. No change during the year
M/s. K. P. Rachchh& Co. Secretarial Auditor Appointed to conduct audit for FY 2018-19. No change during the year
M/s. Borad Sanjay B 85 Associates Cost Auditor Appointed to conduct cost audit for FY 2018-19 No change during the year
Mr. Vishal Pandya Internal Auditor Appointed to conduct Internal audit for FY 2018-19 No change during the year
CA Pratik Siroya Internal Auditor Appointed to conduct Internal Audit w.e.f. 22.05.2019 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 2019 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 Regulation - 24A of LODR withreference to SEBI's Circular dated February 08 2019 is not applicable as the same beenexempted in Regulation - 15(2) of SEBI [LODR].

COMPLIANCE WITH SECRETARIAL STANDARDS

We the Directors of the Company hereby state the Company has complied all applicableSecretarial 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 is given in Annexure - 5 in the prescribed FormNo. MGT-9 which is a part of this report. The same is available https: / /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. As required under Section-148 and Rule14 of the Companies [Audit and Auditors] Rules 2014 a resolution is being placed at theensuing Annual General Meeting for ratification of remuneration payable to said CostAuditors.

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 Setting UpBackward Integration and General Corporate Purpose.

In terms of Regulation 32 of SEBI [Listing Obligations and Disclosure Requirements]Regulations 2015 there is deviation/variation in issue proceed of public issue fromstated in the Prospectus of the Company. The issue expenses calculated on assumption basisand after closing company's accounts and after paying all obligations including stampduty company incurred less issue related expenses than stated in prospectus. Due to thiseffect company's issue proceeds change as following table:

As on March 31. 2019

Particulars Amount allotted as per prospectus Actual Utilization of Issue Proceeds till March 31 2019 Deviation /Variation
Pre IPO Placement 535.50
Gross Proceeds from the Issue 3661.00
Setting-up Backward Integration 3290.21 979.94*
General Corporate 647.98 738 (90.02)
Purpose Excess utilization of Rs. 90.02 funds for General Corporate Purpose which is for betterment of the Company and Investors.
(Less) Issue related 258.31 161.4440# 96.87
expenses Due to effort of the Management Company has incurred less IPO related expenses than stated in the Prospectus and the same utilized/will be utilized only for the betterment of the Company.
Net Proceeds 3938.19 1879.384

Notes:-

*Company came-up with IPO with aim of Setting-up of Backward Integration. So Balanceamount will be utilized as per the requirements. The utilized IPO proceeds from the issueare deployed in Fixed Deposit with Bank.

#GST has been considered as input tax credit. Hence not claim as expenses.

i. MANAGEMENT DISCUSSION AND ANALYSIS REPORT (MDAR)

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

ii. CORPORATE GOVERNANCE REPORT

Corporate Governance Report is not applicable to SME listed company and hence the sameis not presented here.

DISCLOSURES PERTAINING TO THE SEXUAL HARASSMENT OP 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 have been no complains related sexual harassment reported during the year underreview.

INSURANCE

The assets of the company including buildings plant 85 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.

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 the Board of
Date: August 19 2019 MACPOWER CNC MACHINES LIMITED
[Rupesh J. Mehta]
Chairman & Managing Director
DIN: 01474523