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Texplast Industries Ltd.

BSE: 530635 Sector: Industrials
NSE: N.A. ISIN Code: INE544D01013
BSE 00:00 | 27 Jan Texplast Industries Ltd
NSE 05:30 | 01 Jan Texplast Industries Ltd
OPEN 17.05
PREVIOUS CLOSE 17.05
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P/E
Mkt Cap.(Rs cr) 9
Buy Price 0.00
Buy Qty 0.00
Sell Price 17.05
Sell Qty 530.00
OPEN 17.05
CLOSE 17.05
VOLUME 1000
52-Week high 17.05
52-Week low 0.00
P/E
Mkt Cap.(Rs cr) 9
Buy Price 0.00
Buy Qty 0.00
Sell Price 17.05
Sell Qty 530.00

Texplast Industries Ltd. (TEXPLASTINDS) - Director Report

Company director report

To

The Shareholders

TEXPLAST INDUSTRIES LTD

The Directors have pleasure in presenting their 46th Annual Report of the Companytogether with the Audited Statement of Accounts for the year ended 31st March 2017.

FINANCIAL RESULTS:

The Financial Results are stated as under:

Amount in Rupees
PARTICULARS Year Ended 31.03.2017 Year Ended 31.03.2016
Sales & Operating Income 3140813 23076197
Other Income 75459 82529
Total Income 3216272 23158726
Total Expenditure with Depreciation 27373989 256672234
Gross Income/ (Loss) before Taxation (24334400) (233513508)
Provision for Taxation NIL NIL
Net Profit/(Loss) (24334400) (233513508)

MANAGEMENT DISCUSSION AND ANALYSIS:

The Management Discussion and Analysis as required by the Listing Regulations isincorporated herein by reference and forms an integral part of this report as (Annexure1).

OPERATIONS:

The Company has incurred Loss of Rs. 24334400/- as on year ended 31.03.2017 asagainst the Loss of Rs. 233513508/- of previous financial year ended on 31.03.2016Loss is decreased by Rs. 209179108/- as compared with previous year. The Turnover ofthe Company decreased by Rs. 20035384/- in the current financial year as compared toprevious year ended on 31st March 2016.

ECONOMIC OUTLOOK:

The Global packaging industry was around $485 billion in 2004 with packaging ofcontainer for food and drink healthcare cosmetics packaging like woven sacks & FIBCand other consumer goods as well as a range of industrial sectors packaging has become anessential everyday item with its usage growing broadly in line with the global economyglobal packaging industry is poised to be $1500 billion by 2020 where world packaging isgrowing at 5% compared to India at 11% average.

The Indian Packaging Industry is expected to reach $75 billion by 2020 from present $44billion. Out of above FIBC Industry (our) will be $1 billion by 2020 & woven sacksindustry will be 2 Billion $.

The health of the packaging industry is linked to that of the world economy as a whole.However reliant upon upstream industries for their raw materials packaging convertershave to cope with fluctuations in raw material prices dependent upon levels of supply anddemand. In a climate of low overall inflation rising prices for raw materials(particularly plastic resin) have put something of a squeeze on converters. Downwardpressure on prices is being exerted by brand owners and retailers alike-exacerbated bymoves towards consolidation at all levels of the supply chain. In addition moves towardscentral purchasing by packaging buyers have also impacted upon packaging margins. Thegrowing use of ecommerce and reverse auctions has made the whole business of materialssourcing (especially in commodity areas) much simpler promoting cost efficiency for usersof consumables.

BUSINESS OVERVIEW DURING THE YEAR:

The financial year under reference was a year of struggle for the company as theCompanies performance has declined this year in comparison to last 3 financial year asthe company was Not-operating Business due to strike & due Lock-out in the factoryunit since 1st November 2013.

On the other hand the progression of packaging demand is influenced by a wide range offactors from year to year and also factors with a much longer-term influence. While theeconomy plays a central role in influencing the size and growth of the market there are anumber of other factors which can be seen as having a direct or at least indirectinfluence on packaging demand or at any rate the nature of this demand irrespective ofthe performance of the economy. These includes The ageing of the population The trendtowards smaller households The increasing requirement for convenience among consumersThe trend towards 'on-the-go' lifestyles among increasingly time- poor consumers Growingrequirements for brand enhancement/ differentiation in an increasingly competitiveenvironment and new packaging material development Increasing awareness of environmentalissues and the adoption of new regulatory requirements on packaging recycling Out of allthese factors health awareness was regarded as the single most important driver to growthin the packaging industry. The ageing of the populations throughout the world wasconsidered the least important driver to growth in the market although even in this casemore than half of all respondents considered this to be important to some degree.

Your Directors (Management of the Company) are continuously looking for restart of theCompany and once company start we can expect robust growth. Sustained efforts of theBoard would hopefully mitigate the accumulated losses of the Company as quickly aspossible.

EXTRACT OF ANNUAL RETURNS:

In accordance with Section 134(3)(a) of the Companies Act 2013 an extract of theannual return is annexed as (Annexure -III).

1. The Paid up capital of the Company is Rs. 51103000/-.

2. The Board of Directors of the company as on 31.03.2017 consists of 6 Directorsnamely Mr. Sukumar Nandlal Shah Managing Director Mr. Bharat Nautamlal Doshi IndependentDirector (Cessation dated 30-05-2017) Mr. Sunil Premshankar Tripathi IndependentDirector (resigned on dated 30-05-2017) Mr. Madan Milan Gupta Independent Director(resigned on dated 30-05-2017) Mr. Anupkumar Murarilal Jhunjhunwala Independent DirectorMr. Sundeep Kumar Sahu Independent Director.

3. The secured loan borrowed by the company is Rs. 315619699/-.

4. The Promoters holding is consists of 3235700 equity shares of Rs.10/- amounting to63.32% of total share capital of Rs. 51103000 consisting of 5110300 eq. Shares of Rs.10 each of the Company.

5. There was no un-paid dividend during the year.

DIVIDEND:

The board regrets its inability to declare any dividend for the year under review dueto loss in business.

SHARE CAPITAL:

During the year under review the Company's share capital remained unchanged. TheAuthorized Share Capital of the Company is Rs.55000000 (Five Crore Fifty Lakh only)divided into 5460000 (Fifty Four Lakhs Sixty Thousand) Equity Shares of Re. 10/- eachand 8% 800 (Eight Hundred) Non-Cumulative Redeemable Preference Shares of Rs.500 eachshare.

The Issued Subscribed & Paid-up Share Capital is Rs. 51103000/- (Rupees FiveCrore Eleven Lakh Three Thousand only) divided into 51 10300 (Fifty One Lakh TenThousand Three Hundred) Equity Shares of Re.10/- each.

TRANSFER TO RESERVES:

Y our Company has not transferred any amount to the Reserve & Surplus.

SUBSIDIARY ASSOCIATES AND JOINT VENTURE COMPANY:

Your Company does not have any subsidiaries joint ventures and associate companies ason March 31 2017 and therefore the requirements of sub Section (3) of Section 129 ofCompanies Act 2013 will not be applicable to the Company.

The Company has in accordance with Sub Section (2) of Section 129 of the Companies Act2013 prepared Standalone financial statements of the Company.

Further the report on the performance and financial position of the subsidiaryassociate and joint venture and salient features of the financial statements in theprescribed Form AOC-1 does not form part of the report.

DETAILS OF CONTRACTS /ARRANGEMENTS WITH RELATED PARTIES:

As required in terms of provisions of Section 188 of the Companies Act 2013 thedetails of certain contracts/arrangements with related parties are required to bedisclosed in form AOC-2 as a part of this report however during the year your Company hasnot entered into any such contract/arrangements with related parties hence AOC-2 is notpart of the report.

But the Company is having outstanding loan from related parties amounting Rs.51003828.15/- as on the date.

PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS UNDER SECTION 186 OF THE ACT:

Details of the loans made by the Company to other body corporate or entities are givenin notes to financial statements loans guarantee; Investments are under the prescribedlimited as per the Companies Act.

DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS ORTRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANY'S OPERATIONS IN FUTURE:

Company has borrowed money from Banks is being suspended from Trading on BSE from 26thAugust 2014 on account of penal provisions under listing agreement and that is because ofNon-operations of Business due to strike Lock-out in the factory unit since 1st Nov.2013and thus the Company has not complied with the conditions of Corporate Governance asstipulated in the above-mentioned Listing Agreement/Listing Regulations as applicable.

NOTE-4 Long Term Borrowings

Non-Current Portion

Current Portion

a) Secured. Borrowings-From Banks As at 31st Mar 2017 As at 31st March 2016 As at 31st Mar 2017 As at 31st March 2016
i) Term Loan In INR (From Indian Overseas Bank) Rupees Rupees Rupees Rupees
Term Loan-1 1598711 1598711
Term Loan-2 ii) Term Loan in Foreign Currency From Indian Overseas Bank 7493249 7493249
FCTL-981300001 10100198 10100198
FCTL-981300002 5889257 5889257
FCTL-981300003 11970776 11970776
iii) Cash Credit Facilities from Indian Overseas Bank 196753871
iv) Packing credit Loan from Indian Overseas Bank 81813637
b) Unsecured Borrowings
- From Related Parties
Sukumar NT Shah (Managing Director) 44172603
Dipak NT Shah
Smita Shah Rahul Shah 12381225 12381225
-Intercorporates Loans 4896225 4896225
c) Deferred Sales Tax Liability 21832798 32294431
The above amount includes 2669971 2669971
Amount Disclosed under the head "Other Current Liabilities" (Note- 9.1)
391126296 147132110 - -

Notes:

SECURED BORROWINGS:

i. Term Loan in INR from Indian Overseas Bank:

Term Loan-1 is repayable in sixty monthly instalments of Rs.55620/- fromDecember-2011 carry interest rate of 14.25% pa. The Loan is secured against Block assetsof the Company and personal guarantee by Managing Director.

The facility is classified as NON PERFORMING ASSETS as on 12/05/2014 and possession offactory has been taken by bank for recovery proceeding.

Term Loan-2 is repayable in sixty monthly instalments of Rs.166667/- eachstarting from six months after first disbursement carry interest rate of 14.25% pa.

-The facility is classified as NON PERFORMING ASSETS as on 12/05/2014 and possession offactory has been taken by bank for recovery proceeding.

ii. Foreign Currency Term Loan from Indian Overseas Bank:

Foreign Currency Term Loan from Indian Overseas Bank carries interest @ LIBOR + 7%.Theloan is secured against Block assets of the Company and personal guarantee of ManagingDirector. Monthly two instalments is overdue. The facility is classified as NON PERFORMINGASSETS as on 12/05/2014 and possession of factory has been taken by bank for recoveryproceeding.

iii. Foreign Currency Term Loan from Indian Overseas Bank:

Foreign Currency Term Loan from Indian Overseas Bank carries interest @ LIBOR + 7%.Theloan is secured against Block assets of the Company and personal guarantee of ManagingDirector. Monthly two instalment is over-due. The facility is classified as NON PERFORMINGASSETS as on 12/05/2014 and possession of factory has been taken by bank for recoveryproceeding.

iv. Packing credit is taken from Indian Overseas Bank which carries interest @ 8%p.a. up to 270 days & 16% p.a. beyond 270 days. It is secured against hypothecation ofstock of RM/WIP/FG and personal guarantee of managing director.3. Packing credit overduedue to non-submission of export bills. The facility is classified as NON PERFORMING ASSETSas on 12/05/2014 and possession of factory has been taken by bank for recovery proceeding.

V. Collateral Security for all loans from Indian Overseas Bank

a) Working Capital limits is collaterally secured by residual value of the fixedassets of the Company present and future.

b) Term loan is secured by residual value of fixed assets of the Company presentand future.

c) All loan from Indian Overseas Bank is secured by Equitable Mortage of theimmovable property of the Company.

Gut NO.39 Hissa No. paiki 2 acers Nehroli Village Wada Taluka and District Thane andHissa No. paiki 76.4 gunthas nehroli village wada taluka District Thane and GutNo.40 admeasuring 1 acers 6.5 gunthas nehroli Village Wada Taluka and District Thane.

d) Fixed Deposits of Rs.1.00 Cr. (under lien to Indian Overseas Bank)

Residual value of residential property at Flat No.1301 admeasuring 550 sq. ft built uparea on the 13th floor in the building known as "Surya Apartment Co-op HousingSociety Ltd" situated ated 53 Bhulabhai Desai Road Mumbai-400026. valued atRs.264.00 Lacs FMV and Rs.211.00 Lacs as FSV as per valuation report dated 09th November2009 of Shekhar Thite. This flat is already mortgaged for Housing Loan of Rs.152.50 Lacsfor Sukumar N Shah at Indian Overseas Bank Mahim Branch.

V. As on 12/05/2014 Indian Overseas Bank issued Demand Notice under Sub-Section (2) ofSection 13 of The Sarfaesi Act 2002 and classified all credit facilities from bank as NONPERFORMING ASSETS.Following are details of Credit facility Nature Limit & Dues as on12/05/2014-

Nature of Facilities Limit O/s as on 12/05/14
Cash Credit 10 crore 19.51 crore
Packing Credit 8.50 crore 8.18 crore
Term Loan 0.20 lacs 0.16 lacs
Term Loan 0.82 lacs 0.75 lacs
FCTL-1 1.36 crore 0.98 lacs
FCTL-2 0.67 lacs 0.57 lacs
FCTL-3 1.28 crore 1.16 lacs

DEPOSITS:

As on 31.03.2017 the company held no deposit in any form from anyone. There was nodeposit held by the company as on 31.03.2017 which was overdue or unclaimed by thedepositors. For the present the broad of directors have resolved not to accept anydeposits from public.

LISTING:

The equity shares of the Company are listed at the Bombay Stock Exchange Ltd.

LISTING AGREEMENT:

SEBI notified the Listing Regulations and the same were effective December 1 2015. TheListing Regulations aim to consolidate and streamline the provisions of the erstwhilelisting agreement for different segments of capital markets to ensure betterenforceability. In terms of the Listing Regulations all listed entities were required toenter into a new listing agreement with the stock exchanges.

In compliance with the requirement the Company has executed the listing agreement withthe BSE Limited.

PARTICULARS OF EMPLOYEES:

In terms of the provisions of Section 197 (12) of the Companies Act 2013 read with theRule 5(2) of the Companies (Appointment and Remuneration) Rules 2014 as amended fromtime to time the Company is required to disclose the ratio of the remuneration of eachdirector to the median employee's remuneration and such other details however the companyhas not paid any remuneration to its KMP and other Directors during the financial yearhence there are no such details for reporting but some details has mentions in Extract ofAnnual Return. .

CORPORATE GOVERNANCE:

In accordance with SEBI Circular CIR/CFD/POLICY CELL/7/2014 dated 15th September 2014and as per the Regulation 15 of the SEBI (Listing obligations and Disclosure Requirements)Regulations 2015 provisions of regulation 27 reporting on Corporate Governance shallnot apply to the listed entity having paid up share capital not exceeding Rs. 10 crore andthe Net Worth not exceeding Rs. 25 crore as on the last day of the previous financial yeari.e. March 31 2017 the Company even though being an listed entity since does not fallsunder the criteria attracting the obligations to adhere to the compliance with thecompliances of Clause 49 of Listing Agreement amended (under Regulation 27(2) ofSecurities and Exchange Board of India (Listing Obligations and Disclosure Requirements)Regulations 2015.

However the Board has decided to continue to comply with the requirements of for bestsecretarial practice of Corporate Governance as stipulated under Regulations of the EquityListing Regulations and accordingly the summary Report on Corporate Governance forms partof the Annual Report as (Annexure-IV).

The requisite Certificate from the Secretarial Auditors of Company M/s Vinesh K Shah& Associates Practicing Company Secretary Mumbai regarding compliance with theconditions of Corporate Governance as stipulated in regulation 27 of Equity ListingRegulations is annexed to this Report.

BOARD OF DIRECTORS:

During the year the Board of Company as on 31.03.2017 comprises of the following

Directors: Mr. Sukumar Nandlal Shah -Managing Director
Mr. Bharat N. Doshi - Independent Director
Mr. Sunil Premshankar Tripathi -Independent Director
Mr. Sandeep Kumar Sahu -Independent Director
Mr. Milan Madan Gupta - Independent Director
Mr. Anupkumar Jhunjhunwala - Independent Director

RE-APPOINTMENT (RETIRE BY ROTATION):

As per the provisions of sub section 6 of Section 152 of the Companies Act 2013 noneof the Directors are liable to be retire by rotation from the board of the Company.

APPOINTMENT AND CESSATION:

Two Directors (Mr. Anupkumar Jhunjhunwala and Mr. Milan Madan Gupta) was appointed andnone of Directors ceased from Directorship in the Board of the Company during the year.

BOARD MEETINGS:

The Company scheduling of meetings of Board with proper notices and agenda &calendar is prepared and circulated in advance. The Board met Four (5) times during theyear 2016-17 the details of which are given in the Corporate Governance Report. Theintervening gap between the meetings was within the period prescribed under the CompaniesAct 2013 and the Listing Regulations.

POLICY ON DIRECTORS' APPOINTMENT AND REMUNERATION:

The Nomination and Remuneration Committee (NRC) works with the Board to determine theappropriate characteristics skills and experience for the Board as a whole and itsindividual members with the objective of having a Board with diverse backgrounds andexperience in business education. Characteristics expected of all Directors includeindependence integrity high personal and professional ethics sound business judgmentability to participate constructively in deliberations and willingness to exerciseauthority in a collective manner.

The policy of the Company on directors' appointment and remuneration includingcriteria for determining qualifications positive attributes independence of a directorand other matters provided under Subsection (3) of Section 178 of the Companies Act 2013adopted by the Board are stated in this Board report. We affirm that the remunerationpaid to the directors is as per the terms laid out in the nomination and remunerationpolicy of the Company.

FAMILIARISATION AND TRAINING PROGRAMME FOR INDEPENDENT DIRECTORS:

Every new independent director of the Board attended an orientation program. Tofamiliarize the new inductees with the strategy operations and functions of our Companythe executive directors/senior managerial personnel make presentations to the inducteesabout the Company's strategy operations product and service offerings markets softwaredelivery organization structure finance human resources technology qualityfacilities and risk management.

The Company has organized the following workshops for the benefit of Directors andIndependent Directors:

(a) a program on how to review verify and study the financial reports;

(b) a program on Corporate Governance;

(c) Provisions under the Companies Act 2013; and

(d) SEBI Insider Trading Regulation 2015;

(e) SEBI (Listing Obligations and Disclosures Requirements) Regulations 2015

Further at the time of appointment of an independent director the Company issues aformal letter of appointment.

BOARD EVALUATION:

The Board evaluated the effectiveness of its functioning that of the Committees and ofindividual Directors. The Board through Nomination and Remuneration Committee sought thefeedback of Directors on various parameters such as:

• Degree of fulfilment of key responsibilities towards stakeholders;

• The structure composition and role clarity of the Board and Committees;

• Extent of co-ordination and cohesiveness between the Board and its Committees;

• Effectiveness of the deliberations and process management;

• Board/Committee culture and dynamics; and

• Quality of relationship between Board Members and the Management.

The Chairman of the Board had one-on-one meeting with the Independent Directors and theChairman of NRC had one-on- one meeting with the Executive and Non-Executive Directors.These meeting were intended to obtain Directors' inputs on effectiveness of theBoard/Committee processes.

The Board considered and discussed the inputs received from the Directors. Also theIndependent Directors at their meeting reviewed the performance of the Board Chairman ofthe Board and that of Non-Executive Directors.

COMMITTEES OF THE BOARD:

Currently the Board has three committees:

1. Audit Committee

2. Nomination and Remuneration Committee

3. Stake Holders Relationship Committee & Share Transfer Committee.

A detailed note on the Board and its committees is provided under the corporategovernance report section in this Annual Report.

COMPENSATION POLICY FOR THE BOARD AND SENIOR MANAGEMENT:

Based on the recommendations of NRC the Board has approved the Remuneration Policy forDirectors Key Managerial Personnel (KMP) and all other employees of the Company. As partof the policy the Company strive to ensure that the remuneration paid to the Boardmembers and Senior Management should be appropriate and under the limit of the act.

The Remuneration Policy for Directors KMP and other employees was adopted by the Boardduring the F.Y. 2014-15 during the year there have been no changes to the Policy.

INDEPENDENT DIRECTORS DECLARATIONS:

The Company has received necessary declaration from independent director under Section149(7) of the Companies Act 2013 that he meets the criteria of independence laid down inSection 149(6) of the Companies Act 2013 and the Listing Agreement.

In the opinion of the Board the independent directors are individually person ofintegrity and possess relevant expertise and experience.

The Independent Directors under section 149(6) of the Companies Act 2013 declaredthat:

1. They are not a promoter of the Company or its holding subsidiary or associatecompany;

2. They are not directors in the company its holding subsidiary or associate company.

3. The independent Directors have/had no pecuniary relationship with company itsholding subsidiary or associate company or their promoters or directors during the twoimmediately preceding financial years or during the current financial year;

4. None of the relatives of the Independent Directors have or had pecuniaryrelationship or transaction with the company its holding subsidiary or associatecompany or their promoters or directors amounting to two percent. or more of its grossturnover or total income or fifty lakh rupees or such higher amount as may be prescribedwhichever is lower during the two immediately preceding financial years or during thecurrent financial year;

5. Independent Director neither himself nor any of his relatives —

• holds or has held the position of a key managerial personnel or is or has beenemployee of the company or its holding subsidiary or associate company in any of thethree financial years immediately preceding the financial year in which he is proposed tobe appointed;

• is or has been an employee or proprietor or a partner in any of the threefinancial years immediately preceding the financial year in which he is proposed to beappointed of—

> a firm of auditors or company secretaries in practice or cost auditors of thecompany or its holding subsidiary or associate company; or

DIRECTORS' RESPONSIBILITY STATEMENT AS REQUIRED UNDER SECTION 134(3) (c) OF THECOMPANIES ACT 2013:

The financial statements are prepared in accordance with the Generally AcceptedAccounting Principles (GAAP) under the historical cost convention on accrual basis.

GAAP comprises mandatory accounting standards as prescribed under Section 133 of theCompanies Act 2013 ('the Act') read with Rule 7 of the Companies (Accounts) Rules 2014the provisions of the Act (to the extent notified) and guidelines issued by the Securitiesand Exchange Board of India (SEBI).

Based on the framework of internal financial controls established and maintained by theCompany work performed by the Internal Audit Team statutory Auditors and secretarialauditors including audit of internal financial controls over financial reporting by thestatutory auditors and the reviews performed by Management and the relevant BoardCommittees including the Audit Committee the Board is of the opinion that the Company'sinternal financial controls were adequate and effective during Financial Year 2015-16.

Accordingly pursuant to Section 134(5) of the Companies Act 2013 the Board ofDirectors to the best of their knowledge and ability confirm:

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

b) That we have selected such accounting policies and applied them consistently andmade judgments and estimates that are reasonable and prudent so as to give a true and fairview of the state of affairs of the Company at the end of the financial year and of theprofit and loss of the Company for that period;

c) That proper and sufficient care has been taken for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities;

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

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

f) That proper internal financial controls were laid down and that such internalfinancial controls are adequate and were operating effectively.

DISCLOSURES AS PER SECTION 134 (3) (M) OF THE COMPANIES ACT 2013:

i) CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION:

As there was Non-operations of Business due to strike Lock-out in the factory unitsince 1st Nov.2013 so there is no particulars available regarding conservation of energyand technology absorption prescribed by the rules.

ii) FOREIGN EXCHANGE EARNING:

The Company has made sale/export in foreign exchange and the export sales for the F.Y.2016-17 is Rs. 3911220/- inflow during the year under review.

CORPORATE SOCIAL RESPONSIBILITY (CSR):

Your Company does not met any of the criteria mentioned in Section 135 of CompaniesAct 2013 and therefore is not required to comply with the requirements mentioned therein.

AUDITORS:

STATUTORYAUDITORS:

Pursuant to Section 139 and other applicable provisions of the Companies Act 2013 andthe Rules made thereunder as amended from time to time M/s. P. C. RATHI & Co.Chartered Accountants Mumbai (FRN-111799W) as Statutory Auditors of the Company to holdoffice from the conclusion of this 45th Annual General Meeting (AGM) till the conclusionof the 47th Annual General Meeting be held in the year 2018 to examine and audit theaccounts of the Company for the Financial Year 2017-18 at such remuneration as may bemutually agreed between the Board of Directors and the Auditors.

AUDITOR'S REPORT:

Statutory Auditors has given Qualifications On the financial statement as on 31.03.2017of the Company as follows:

i) Balances of debtors creditors secured loans including interest payable thereon andloans and advances are subject to confirmation.

ii) Company has not made Provision for Interest on Working Capital Facility and TermLoan availed from Banks and Financial Institution pursuant to classification of itsaccount by the concerned Banks and Financial Institution as Nonperforming Assets (NPA).

iii) In absence of availability of net realizable value of items of inventories to thetune of 33.18 Lakh these have been valued at management estimate instead of lower of costand net realizable value. We are relying on value of closing stocks as certified andprovided by the management. The impact of valuation on loss and current assets is notascertainable.

iv) Excise records are not available for verification due to non-functioning of thefactory because of the strike undertaken by the workers and seizure of the factory by thebank under the SARFEASI Act 2002. We are unable to comment on excise records andliability.

v) As the Factory is not functional due to strike and seizer of Factory and Plant byBank as the Bank Loan became NPA as on 31.03.2014 w.e.f. 28.01.2014 thereafter thestrength of Employees labour and Workers has been reduced. As on date the employees ofthe company below 10 only hence there is no Long term Employees Benefits provisions madeby the Company AS 15 Employee Benefits (revised 2005) issued by ICAI.

vi) As we are unable to verify/check conditions of Fixed Assets to determine the lifeof Plant Machinery furniture and Fixture of the Company due to Seizer of possession bybank as the loans become NPA the Depreciation calculation done as per Income tax Actinstead of Companies Act 2013.

vii) The fact of Banks classifying the company as a NPA and seizure of factory by thebank for recovery proceedings has raised substantial doubt as to the Company's ability tocontinue as going concern and therefore the Company may not be able to realize its assetsand discharged its liabilities in the normal course of business. The financial statementdoes not include any adjustment relating to the recoverability and classification ofrecorded assets amount. Further the Financial statement which indicates that the Companyhas accumulated losses and its Net worth has been fully eroded the Company has incurredNet Loss of Rs.2.43 Crore during the current financial year (Previous Year Rs.23.35 Crore)and net cash Loss during the current year of Rs. 2.03Crore (Previous year net Cash Profitof Rs. 1.28 Crore) also the Company current liabilities exceeded its current assets as atthe balance sheet date. These conditions along with other matters set forth in Note No.28.11 also indicate the existence of a material uncertainty that cast significant doubtabout the Company's ability to continue as a going concern.

Management Clarification on the Auditors Qualification:

Management of the Company taken on record the Observations & Qualifications givenby Statutory Auditors on Financial Statements as on 31st March 2017 and clarification ofthe Board and Management is as follows:

In our opinion and to the best of our information and according to the explanationsgiven to us except for the effect of the matter described in Basis of Qualified Opinionthe aforesaid standalone financial statements give the information required by the Act inthe manner so required and give a true and fair view in conformity with the accountingprinciples general accepted in India of the state of affairs of the Company as at 31March 2017 and its profit and its cash flows for the year ended on that date.

Management Clarification on the Auditors Qualification:

Management of the Company take on record the Observations & Qualifications given byStatutory Auditors on Financial Statements as on 31.03.2017 and clarification of the Boardand Management is as follows:

i) Balances of debtors creditors secured loans including interest payable thereon andloans and advances are subject to confirmation.

ii) As the matter is pending with DRT Court for one time settlement of Loan Amounthence the Company has not made Provision for Interest on Working Capital Facility and TermLoan availed from Banks and Financial Institution pursuant to classification of itsaccount by the concerned Banks and Financial Institution as Non-performing Assets (NPA).

iii) As the Companies Plant & Registered office is sealed & locked by authoritydue to case pending with DRT Court therefore In absence of availability of net realizablevalue of items of inventories to the tune of 33.18 Lakh these have been valued atmanagement estimate instead of lower of cost and net realizable value. We are relying onvalue of closing stocks as certified and provided by the management. The impact ofvaluation on loss and current assets is not ascertainable.

iv) the company and its management is unable to excess the Excise Records due tonon-functioning of the factory because of the strike undertaken by the workers and seizureof the factory by the bank under the SARFEASI Act 2002 as the Bank loans became NPA.

v) In the F.Y. 2016-17 the total employee strength is below 10 since the CompaniesFactory/plant is non functionable due to strike and seizer of possession by Bank hencethe Long term Employees Benefits provisions not made.

vi) Since the possession of Assets taken by Bank assets are not in use and the Factoryis non-functional hence there is no possibility to physical verification of Fixed Assetstherefore Depreciation has accounted as per Income tax Act.

vii) AS the case is still pending and the company has not received any final orderhence company has not disclosed the fact of Banks classifying the company as a NPA andseizure of factory by the bank for recovery proceedings has raised substantial doubt as tothe Company's ability to continue as going concern and therefore the Company may not beable to realize its assets and discharged its liabilities in the normal course ofbusiness.

The management of the Company is putting its efforts for One Time Settlement with Bankfor outstanding dues related to Loans and Interest on loan and the management is in hopeif OTS with bank will finalize the same will be beneficial for

the revival of the Company to continue its business as going concern.

SECRETARIAL AUDITOR AND SECRETARIAL AUDIT REPORT:

Mr. Vinesh K. Shah Practicing Company Secretaries was appointed to conduct thesecretarial audit of the Company for the financial year 2016-17 as required under Section204 of the Companies Act 2013 and Rules thereunder.

Secretarial Auditors have made following qualification in secretarial audit Report.

The Company is being suspended from Trading on BSE from 26th August 2014 on account ofpenal provisions under listing agreement and that is because of Non-operations of Businessdue to strike Lock-out in the factory unit since 1st Nov.2013.

-The Company not completed its filings of Financial Statements with the Registrar ofCompanies for the financial year ended 31st March 2014 and 31st March 2015 and 31stMarch 2016 and there were delayed submissions with Registrar of Companies during the auditperiod.

-There has been no submissions to the BSE Limited at various instances under listingagreement during the audit period.

-There were no proper secretarial records maintained as required under the companiesact 2013 and rules made thereunder to our satisfaction.

-There is default of making repayment of Loans of banks and discussions are going onfor the settlement of said dues.

I further report that:

-The Board of Directors of the Company is not duly constituted with proper balance ofWoman Directors.

DIRECTORS EXPLANATION FOR THE OBSERVATIONS OF SECRETARIAL AUDITOR:

With respect to the observations of the Secretarial Auditor in their report theManagement has given following Explanations:

Management of the Company taken on record the Observations & Qualifications givenby Statutory Auditors on Financial Statements as on 31st March 2017 and clarification ofthe Board and Management is as follows:

- The Company is being suspended from Trading on BSE from 26th August 2014 on accountof penal provisions under listing agreement and that is because of Non-operations ofBusiness due to strike Lock-out in the factory unit since 1st Nov 2013 the Managementis putting its all efforts to comply all the Due Compliances as per Companies Act SEBI(LODR) Regulation 2015 (Listing Agreements) and all other applicable acts and laws on thecompany.

- As the plant of the company is non-operational due to strike by workers after 1stNovember 2013 therefore the properties of the company which is mortgaged with Banksagainst loan became NPA since the financial position of the Company was not good thereforecompany could not complete the filings of Financial Statements and Annual Returns with theRegistrar of Companies for the financial year ended 31st March 2014 and 31st March 2015as on date the Company is in the Process to Complete the Filing at the earliest.

due to strike by workers after 1st November 2013 therefore the properties of thecompany which is mortgaged with Banks against loan became NPA since the financial positionof the Company was not good and management of the company was concentrating on the revivalof the companies working hence cold not concentrate on the Compliance Parts of someapplicable compliances under Listing Agreements and other applicable laws.

- The Board of your Company ensure that the compliances will be complied with at theearliest

- In this regard Management is of the opinion that the companies matter related toBank Loan which is become NPA is lying with Debt Recovery Tribunal (DRT) and it will besettle at the earliest.

- In this regard Management is of the opinion that the company was in the process ofproper composition of board during the year 2016-17 but Management was appointed WomanDirector on 30th May 2017.

INTERNAL FINANCIAL CONTROLS SYSTEM WITH REFERENCE TO THE FINANCIAL STATEMENTS:

The Board of Directors of the Company is responsible for ensuring that InternalFinancial Controls have been laid down in the Company and that such controls are adequateand operating effectively. The foundation of Internal Financial Controls (IFC) lies in theCompanies Code of Conduct policies and procedures adopted by the Management corporatestrategies

annual management reviews management system certifications and the risk managementframework.

The Company has IFC framework commensurate with the size scale and complexity of itsoperations. The framework has been designed to provide reasonable assurance with respectto recording and providing reliable financial and operational information complying withapplicable laws.

The controls based on the prevailing business conditions and processes have beentested during the year and no reportable material weakness in the design or effectivenesswas observed. The framework on Internal Financial Controls over Financial Reporting hasbeen reviewed by the internal and external auditors.

The Company has its own Internal Audit system the scope and authority of the InternalAudit function is to maintain its objectivity and independence the Internal Auditfunction reports to the Chairman of the Audit Committee.

The Internal Audit team monitors and evaluates the efficacy and adequacy of internalcontrol systems in the Company accounting procedures and policies of the Company. Basedon the report of internal audit function process owners undertake corrective action(s) intheir respective area(s). Significant audit observations and corrective action(s) thereonare presented to the Audit Committee. The Audit Committee reviews the reports submitted bythe Internal Auditors annually.

CODE OF CONDUCT:

The Board of Directors has approved a Code of Conduct which is applicable to theMembers of the Board and all employees in the course of day to day business operations ofthe company. The Company believes in "Zero Tolerance" against briberycorruption and unethical dealings/behaviours of any form and the Board has laid down thedirectives to counter such acts. The Code has been posted on the Company's websitewww.texplast.com

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

The Code gives guidance through examples on the expected behaviour from an employee ina given situation and the reporting structure.

All the Board Members and the Senior Management personnel have confirmed compliancewith the Code. All Management Staff were given appropriate training in this regard.

DISCLOSURE AS PER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTIONPROHIBITIONAND REDRESSAL) ACT 2013:

The Company has zero tolerance towards sexual harassment at the workplace and hasadopted a policy on prevention prohibition and redressal of sexual harassment atworkplace in line with the provisions of the Sexual Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013 and the Rules there under. During theyear the Company has not received complaint of sexual harassment.

RISK MANAGEMENT:

As the year ending on 31st March 2017 the Company is having aggregate outstanding Loanof Rs. 391126296/- including loan amounting Rs. 51003828/- from related parties outof which 315619699/- is secured debt and on the other hand loan amounting Rs.75506597/- is unsecured loan.

The term loan and Working Capital limits is collaterally secured by residual value ofthe fixed assets of the Company present and future and all loan from Indian Overseas Bankis secured by Equitable Mortgage of the immovable property of the Company.

As on 12/05/2014 Indian Overseas Bank issued Demand Notice under Sub-Section (2) ofSection 13 of The SARFAESI Act 2002 and classified all credit facilities from bank as NONPERFORMING ASSETS.

VIGIL MECHANISM:

The Company has formulated the Whistle Blower Policy and adopted by board for Directors& Employees Whistle Blower Policy for Vendors and Whistle Blower Reward andRecognition Policy for Employees to deal with instance of fraud and mismanagement if anyin staying true to our values of Strength Performance and Passion and in line with ourvision of being one of the most respected companies in India.

The Whistle Blower Policy for Directors & employees is an extension of theCompanies Code of Conducts that requires every Director or employee to promptly report tothe Management any actual or possible violation of the CoC or any event wherein he or shebecomes aware of that which could affect the business or reputation of the Company.

The Whistle Blower Policy for Employees has been implemented in order to whistle on anymisconduct unfair trade practices or unethical activity taking place in the Company theCommittee reports to the Audit Committee and the Board.

PREVENTION OF INSIDER TRADING:

The Company has adopted a Code of Conduct for Prevention of Insider Trading with a viewto regulate trading in securities by the Directors and designated employees of theCompany. The Code requires pre-clearance for dealing in the Company's shares and prohibitsthe purchase or sale of Company shares by the Directors and the designated employees whilein possession of unpublished price sensitive information in relation to the Company andduring the period when the Trading Window is closed. The Board is responsible forimplementation of the Code.

All Board of Directors and the designated employees have confirmed compliance with theCode.

ACKNOWLEDGEMENTS:

We thank our investors/Members dealers customers business associates and bankers fortheir continued support during the year and we look forward to their continued support inthe future. We place on record our appreciation of the contribution made by employees atall levels.

Our resilience to meet challenges was made possible by their hard work team spiritco-operation and support.

By order of the Board

For TEXPLAST INDUSTRIES LIMITED

Place: Mumbai
Date: 14thAugust 2017 Sd/- Sd/-
Regd. Off.: Gut No 39/40 Sukumar Nandlal Shah Anupkumar Jhunjhunwala
Village Nehroli Taluka (Managing Director) (Director)
Wada Thane-421312 Din: 00202546 Din: 01914605

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