DIRECTORS’ REPORT

To The Members of

Sumeet Industries Limited

Your Directors have pleasure in presenting the 30^th Annual Report and Audited Statement of Accounts for the year ended 31st March, 2018.

Your Company has delivered satisfactory performance despite considerable headwinds like GST implication, inflation etc. The Company has registered consolidated revenue of Rs. 1228.83 Crores with Net Loss of Rs.2.62 Crores.We, remained resolute and relentless in our quest for strengthening our cost-competiveness, better management of working capital and operational excellence across all businesses.

FINACIAL RESULTS

( Rs. In Lacs ) ;

OPERATIONS

Despite challenging business environment the company has posted mixed performance for the year under review. The company has produced 92607.345 Tons of Pet Chips / Polyester and Texturized Yarn and | dispatched 93259.47 Tons of Pet Chips / Polyester and Texturized yarns.

IIncome from operation (Consolidated) of the company has marginally decreased from Rs. 1509.60 Crores to Rs. 1228.83 Crores and EBIDTA has been decreased marginally from Rs. 128.03 Crores to Rs. 97.88 Crores i in comparison to last year. The company has adopted the method of charging depreciation on fixed assets from SLM Method to WDV (except vehicle) method during the year under review, resulting an excess of total amount of Rs.34.54 Crores was effected in depreciation amount. The Company has incurred net loss of Rs.2.62 Crores.

The Company is enhancing its capacity on producing specialty and value added yarns and focusing on expanding market reach both in domestically and internationally, cost optimization and elevating people potential. With rising demand in the domestic and international markets, we are hopeful that we will be able to grow more value added products in future.

A detailed analysis of the operations of your Company during the year under report is included in the Management Discussion and Analysis Report, forming part of this Annual Report.

DIVIDEND

The Board of directors do not recommended dividend for the year under review due to loss incurred by the company. No amount is being transferred to the General Reserves.

EXPANSION & MODERNISATION

The Company is cautiously watching development in synthetic yarn industries and also evaluating various options which could be available to it for its growth strategy. Over the years, we have been investing consistently in shoring our manufacturing capacities by way of expansion cum modification in its existing capacities. Presently no expansion program of the company has been envisaged by the Board.

RIGHT ISSSUE

During the year under review the company has made Right Issue of 2,48,74,173 nos. of Equity shares with a i face value of Rs. 10/- each at a price of Rs. 24/- per equity shares aggregated to Rs. 5969.80 Lacs in the ratio of 3 fully paid up Right Equity Share(s) for every 7 Fully Paid up Equity Share(s). Finally, the company has allotted 2,48,74,173 nos. of equity shares and aggregated Rs.59,69,80,152.00 . The proceeds of the Right Issues was utilized for incremental working capital and adjustment of unsecured loans given by the promoters | as declared in objects of the issue.

Category wise variation between projected utilization of funds made in offer document and the actual utilization of funds are as follow:

(Rs. in Lakh)

CHANGE IN THE NATURE OF BUSINESS

There were no change in the nature of the business of the Company, during the financial year under review.

MATERIAL CHANGES AND COMMITMENTS

There have not been any material changes and commitments affecting the financial position of the Company between the end of the financial year as on 31st March, 2018 and the date of this report, i. e., 22^nd June ,2018.

OVERSEAS SUBSIDIARY COMPANY

The company has a wholly owned subsidiary company named “Sumeet Global Pte Limited” in Singapore i registered with Registrar of Companies and Business, Singapore. Pursuant to Accounting Standard AS- 21 issued by the Institute of Chartered Accountants of India and the provisions of the Listing Agreement with Stock Exchanges, the company has prepared Consolidated Financial Statements of the Company and its subsidiaries are included in the Annual Report.

Pursuant to the provision of section 136 of the Act, the financial statements of the company, consolidated i financial statements along with the relevant documents and separate audited accounts in respect of Sumeet Global Pte Limited are available on the website of the company.

EXPORTS

The company has been exploring all the possibilities for exporting its products. During the year under review, i your company has exported products worth of Rs. 93.38 Crores.

At present company is exporting to Egypt, Saudi Arabia, China, Argentina, Poland, Vietnam, Philippines, Portugal, Morocco, Columbia, Bangladesh, Russia, Ethiopia, Mexico, Nepal, Brazil, Peru, Algeria, Thailand, j U.S.A, Singapore and Turkey etc. The company is weighing possibilities to export its value added newly | developed Carpet Yarns, Micro filament yarns, Dope dyed Yarns, Texturised Yarns etc. Exploring export markets has been a key area of focus for the company. Your Company expects more growth in the overall export sales in the current year also.

DEPOSITORY SYSTEM

As members are aware, the company’s shares are compulsorily tradable in the electronic form. As on March 31, 2018 almost 96.38% of the Company’s total paid-up capital representing 8,29,13,911 shares were in dematerialized form. In view of the numerous advantages offered by the Depository system, members holding shares in physical mode are advised to avail of the facility of dematerialization on either of the Depositories.

CREDIT RATING

The Company’s financial discipline and prudence is reflected in the strong credit ratings ascribed by Brickwork Ratings India Limited as below :

Long Term Borrowing : BWR BBB, Outlook : Stable Short Term Borrowing : BWR A3 Outlook : Stable FIXED DEPOSITS

The Company has invited deposits from public in accordance with the Section 73 and 74 of the Companies Act, 2013 (corresponding Section 58 A of the Companies Act, 1956) to the tune of Rs. 396.14 Lacs during the financial year 2013-14. No fresh deposits have been invited and nor any deposits have been renewed in the financial year 2017-18. Total outstanding deposits after repaying on maturity as on 31.03.2018 has been remained Rs. 4,48,000/-. There were no deposits, which were claimed but not paid by the Company as on date.

DIRECTORS

Mr. Sumeet Kumar Somani (DIN No. 00318156), Executive Director of the Company, retire by rotation at the ensuing Annual General Meeting and being eligible, offer himself for re-appointment.

AUDITORS

a) Statutory Auditors

In compliance with the Companies (Audit and Auditors) Rules, 2014, the Members, at the Extra Ordinary General Meeting of the Company held on November 10, 2017 has appointed M/s. S.R. Somani & Co., Chartered Accountants (ICAI Registration no. 110367W) as Statutory Auditors of the Company to hold the office until the conclusion of the next Annual General Meeting of the Company. Later , M/s. S.R. Somani & Co. , Chartered Accountants has resigned w.e.f 01.04.2018 due to their other pre-occupied work assigned. M/s. Pamita Doshi & Co. Chartered Accountants, (ICAI Registration no.:141976W) has been appointed as Statutory Auditors of the company for the financial year 2017-18 to fill the casual vacancy up to the conclusion of the next Annual General meeting of the company in the Extra Ordinary General meeting held on 30.04.2018. Members are requested to re-appoint them at the Annual General Meeting.

b) Cost Auditors

The Company has been maintaining cost accounting records in respect of manufacture of polyester yarns pursuant to directives of the Central Government. The company has appointed M/s. V.M. PATEL & ASSOCIATES, (Firm Registration No. 10519) as Cost Auditors, for conducting the audit of cost records for the financial year 2018-19 and approval of the members is being sought for ratification of their appointment and remuneration.

c) Internal Auditors

The Board has appointed M/s. RRA & Co., Chartered Accountants (ICAI Registration Number 112115W) as Internal Auditors of your company for the financial year 2018-19. The report prepared by the Internal Auditors is to be reviewed by the Statutory Auditors & Audit Committee of the company.

d) Secretarial Auditors

Dhiren R. Dave, Practicing Company Secretaries (CP No. 2496, Membership No. 4889) were appointed as Secretarial Auditor, to conduct secretarial audit of the company for the financial year 2017-18. The Secretarial Audit Report for the financial year ended 31 March 2018 is annexed herewith and forms part of the Annual Report as Annexure-1. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark.

The Board has re-appointed Dhiren R. Dave, Practising Company Secretaries, as secretarial auditors of the Company for the financial year 2018-19.

MANAGEMENT DISCUSSION AND ANALYSIS

In terms of Regulations 34 of the Listing regulations, a separate section on Management Discussion and Analysis and Corporate Governance Report together with a certificate from the Company’s Statutory Auditors confirming compliance with regulations relating to Corporate Governance of the Listing regulations are set out and forms part of this Annual report.

CONSOLIDATED FINANCIAL STATEMENTS

In accordance with provisions of sub-section (3) of Section 129 of the Act and the Listing Regulations, the consolidated Financial Statements of the company, including the financial details of the subsidiary company forms part of this Annual report. The Consolidated Financial Statements have been prepared in accordance j with the Accounting Standard s prescribed under Section 133 of the Act.

PERSONNEL AND RELATD DISCLOSURES

The Board of Directors wishes to express their appreciation to all the employees for their outstanding contribution to the operations of the company. Pursuant to the provisions of the Companies (Appointment & Remuneration of managerial personnel) rules 2014, no employee is drawing remuneration in excess of the prescribed limits. Your company also appreciates that revenue and profit growth cannot take place without the right equality of people. To that effect, your company has undertaken a series of measures that ensures the most appropriate people are recruited in to the organization.

Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are provided in Annexure-2 forming part of the Annual Report.

INTERNAL CONTROL SYSTEM

Your Company has a well-established Internal Control system to ensure an effective internal control environment that provides assurance on the efficiency of conducting business, including adherence to the Company’s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial disclosures. The Internal Auditor certifies on the assurance of adequacy of Internal Control System on quarterly basis which are regularly reviewed by the Audit Committee. Independence of the audit is ensured by the direct reporting of | internal audit function to the Audit Committee of the Board.

CORPORATE SOCIAL RESPONSIBILITY

Corporate Social Responsibility is an integral part of the Company’s ethos and policy and it has been pursuing on a sustained basis. The Company assists schools situated at nearby villages by distributing dresses & books among poor students and computers nearby situated primary schools etc. Technical education and training are imparted to the employees through Industrial Training and Workshops. Emphasis was laid on | creation of awareness amongst the villagers about the need to protect the environment. CSR activities carried | out by the Company have strengthened the relationship with local people. The main focus areas taken in the i policy are Education, Health Care, Environment safety, contribution to any relief fund set up by Government, Semi-Governments etc.

The brief outline of the Corporate Social Responsibility (CSR) Policy of the company and the initiatives j undertaken by the company on CSR activities during the year are set out in Annexure of this Report i in the format prescribed in the Companies (Corporate Social Responsibility Policy) Rules 2014. (Annexure - 3). The Policy is available on the website of the Company.

HUMAN RESOURCES & INDUSTRIAL RELATIONS

The Company understands that employees are vital and valuable assets. The Company recognizes people as the primary source of its competitiveness and continues its focus on people development by leveraging technology and developing a continuously learning human resource base to unlease their potential and fulfill their aspirations.

The Company continued to maintain harmonious and cordial relations with its workers in all its businesses during the year under report. Your company firmly believes that a dedicated work force constitute the primary source of sustainable competitive advantage.

PREVENTION OF SEXUAL HARASSMENT POLICY

The Company has in place Prevention of Sexual Harassment Policy in line with the requirements of The Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act; 2013. All employees (permanent, contractual, temporary, trainees) are covered under this policy.

Your Directors state that during the year under review, there were no cases filed pursuant to The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

RISK MANAGEMENT

Risk Management is the systematic process of understanding, measuring, controlling and communicating organization’s risk exposures while achieving its objectives. Risk Management is an important business aspect | in the current economic environment and its objective is to identify, monitor and take mitigation measures on a timely basis in respect of the events that may pose risks for the business. The Company’s risk-management strategy is to identify, assess and mitigate any significant risks. We have established processes and guidelines, along with a strong overview and monitoring framework at the Board and Senior Management levels.

The Board of Directors regularly review risks and threats and takes suitable steps to safeguard its interest and that there is no element of risk identified that may threaten the existence of the Company. The focus shifts from one area to another area depending upon the prevailing situation. The Risk Management Policy has j been reviewed and found adequate to the requirements of the Company by independent firms of Chartered Accountants and approved by the Board. A detailed report on significant risks and mitigation is forming part of Management’s Discussion and Analysis.

INSURANCE

All the properties of the Company including buildings, plant and machineries and stocks have been adequately i insured.

LOANS, GUARANTEES OR INVESTMENT MADE UNDER SECTION 186 OF THE COMPANIES ACT, 2013

The loans given, investments made and guarantees given & securities provided during the year under review, are in compliance with the provisions of the Act and rules made thereunder and details thereof are given in the notes to the Standalone Financial Statements.

MATERIAL CHANGES AND COMMITMENTS, IF ANY AFFECTING THE FINANCIAL POSITION OF THE COMPANY OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR TO WHICH THESE FINANCIAL | STATEMENTS RELATE AND THE DATE OF THE REPORT.

No material changes and commitments affecting the financial position of the Company occurred from the end of the financial year 2017-18 till the date of this report. Further there was no change in the nature of business i of the Company.

DETAILS IN RESPECT OF FRAUDS REPORTED BY AUDITORS UNDER SUB-SECTION (12) OF SECTION i 143 OTHER THAN THOSE WHICH ARE REPORTABLE TO THE CENTRAL GOVERNMENT.

During the year under consideration, there were no such instances.

EMPLOYEE STOCK OPTION

The company has not issued any Employee Stock Option.

FOREIGN EXCHANGE TRANSACTIONS

In order to hedge the company’s exposure to foreign exchange and interest rate, the company enters into forward contracts. The volatility witnessed in the global markets has reiterated the need for robust forex management systems and prudent investment practices. All forex exposures are hedged upon the occurrence of an exposure. In case of liabilities in respect of foreign currency loans obtained for acquisition of fixed assets, the variation in the liabilities arising out of exchange rates at the year-end have been capitalized during the year as per Companies (Accounting Standard) Amendment Rules, 2009.

ENERGY, TECHNOLOGY AND FOREIGN EXCHANGE

Information in accordance with the provisions of Section 134 (3) (m) of the Companies Act, 2013 regarding j conservation of energy, technology absorption and foreign exchange earnings and outgo is given in the Annexure-4 forming part of this report.

RESEARCH & DEVELOPMENT

The Company is giving great emphasis to innovation in product and process technology and operational ; efficiencies. The company has set up a separate fully equipped well designed lab for testing of MEG and PTA and developing better quality of Pet chips and Yarns with different deniers and filaments. It has institutionalized a multiple-stage quality control system at the material handling, operations and finished goods stage. Efforts are made to explore and develop more valued added category of yarns. The enhanced quality so developed has been performing well in the domestic as well as in international market. Successful efforts are being made to re-engineer the products & process to reduce cost and optimize material consumption. The product lines of the plant are designed and re-engineered to change product with minimum changeover losses and thus meet customer requirement even for small quantities.

CONTRACTS AND ARRANGEMENT WITH RELATED PARTY

All transactions entered with Related Parties for the year under review were on arm’s length basis and in the ordinary course of business and that the provisions of Section 188 of the Companies Act, 2013 and the Rules made thereunder are not attracted. Thus, disclosure in form AOC-2 in terms of Section 134 of the Companies j Act, 2013 is not required. Further, there are no material related party transactions during the year under review ; with the Promoters, Directors or Key Managerial Personnel.

All Related Party Transactions are placed before the Audit Committee as also to the Board for approval. j Omnibus approval was obtained on a quarterly basis for transactions which are of repetitive nature. Transactions ; entered into pursuant to omnibus approval are audited by the Risk Assurance Department and a statement i giving details of all Related Party Transactions are placed before the Audit Committee and the Board for review and approval on a quarterly basis.

The policy on Related Party Transactions as approved by the Board of Directors has been uploaded on the website of the Company. The web-link of the same has been provided in the Corporate Governance Report. None of the Directors has any pecuniary relationship or transactions vis-a-vis the Company.

CORPORATE GOVERNANCE

The Company is committed to maintain the highest standards of corporate governance and adhere to the corporate governance requirements set out by Securities and Exchange Board of India (‘SEBI’). A separate | report on Corporate Governance along with Certificate from M/s. Pamita Doshi & Co., Chartered Accountants i on compliance with the conditions of Corporate Governance as stipulated under SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 is provided as part of this Annual Report.

EXTRACT OF ANNUAL RETURN

The extract of Annual Return pursuant to the provisions of Section 92 read with Rule 12 of the Companies (Management and administration) Rules, 2014 in prescribed Form MGT-9 (Annexure-5) is forming part of the Annual Report.

DIRECTORS’ RESPONSIBILITY STATEMENT

In accordance with the provisions of Section 134(5) of the Companies Act, 2013, the Board hereby submits its responsibility Statement :

(a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

(b) the directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit and loss of the Company for that period; \

(c) the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing i and detecting fraud and other irregularities;

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

(e) the directors had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively;

(f) the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

CODE OF CONDUCT

As prescribed under the provisions of Section 149 of the Companies Act, 2013 read with Schedule IV thereto \ and Regulation 26 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 for its Board of Directors and Senior management and employees, the Company has formulated a comprehensive Code of Conduct (the Code). The Code is applicable to Directors and Senior management and employees to such extent as may be applicable to them depending upon their roles and responsibilities. The Code gives guidance and support needed for ethical conduct of business and compliance of law. The Code reflects the values of the Company viz. Customer Value, Integrity, one team and Excellence.

A copy of the Code has been uploaded on the Company’s website www.sumeetindustries.com. The Code has been circulated to all the Directors and Management Personnel and its compliance is affirmed by them annually.

A declaration signed by the Company’s Managing Director for the compliance of this requirements is published in this Report.

DECLARATION OF INDEPENDENCE BY THE INDEPENDENT DIRECTORS

Pursuant to Section 149(6) of the Companies Act, 2013, Independent Directors of the Company have made a declaration confirming the compliance of the conditions of the independence stipulated in the aforesaid section.

WHISTLE BLOWER MECHANISM

In order to ensure that the activities of the Company and its directors , employees and Vendors are conducted in a fair and transparent manner by adoption of highest standards of professionalism, honesty, integrity and ethical behavior, the Company has adopted a Vigil mechanism/Whistle Blower Policy. This policy is explained in Corporate Governance Report and also uploaded on the website of the company i.e. www.sumeetindustries. com.

DISCLOSURE RELATED TO BAORD, COMMITTEES AND POLICIES

A) BOARD MEETINGS :

The Board of Directors met 15 times during the financial year ended 31^st March, 2018 in accordance with ; the provisions of the Companies Act, 2013 and rules made there under. The details thereof are given in i the Corporate Governance Report forming part of the Annual report.

B) COMMITTEE MEETINGS :

AUDIT COMMITTEE

The Audit Committee of the Board comprises of Mr. Dinesh Sharan Khare (Chairman), Mr. Sumeet Kumar Somani, Member, Mr. Dipesh Dasadia, Member and Mr. Abhishek Desai, Member.

All recommendations made by the Audit Committee were accepted by the Board during the year 2017-18. ; The brief details of the Audit Committee are given in Corporate Governance Report forming part of the Annual Report.

NOMINATION AND REMUNERATION COMMITTEE

The Nomination and Remuneration Committee of the Board comprises of Mr. Dinesh Sharan Khare (Chairman), j Mr. Atma Ram Sarda, Member, Mr. Dipesh Dasadia, Member and Mr. Abhishek Desai, Member.

The Nomination and Remuneration Committee and this Policy shall be in compliance with Section 178 of the Companies Act, 2013 read along with the applicable rules thereto and Listing Regulations (as may be j amended from time to time). Emphasis is given to persons from diverse fields or professionals.

The Nomination and remuneration Committee has framed the “ NOMINATION & REMUNERATION AND EVALUATION POLICY” (Annexure-6(i)) and “POLICY ON BOARD DIVERSITY” (Annexure-6(ii)) forming j part of the Annual Report.

STAKEHOLDERS RELATIONSHIP COMMITTEE

The Committee review and ensures redressal of investor grievances. The Stakeholders Relationship Committee of the Board comprises of Mr. Dinesh Sharan Khare (Chairman), Mr. Sumeet Kumar Somani, Member, Mr. Dipesh Dasadia, Member and Mr. Abhishek Desai, Member.

The brief details of the Stakeholders Relationship Committee are given in Corporate Governance Report forming part of the Annual report.

CORPORATE SOCIAL RESPONSIBILITY COMMITTEE

The Board has laid down the Company’s policy on Corporate Social Responsibility (CSR) and the CSR activities of the company are carried out as per the instructions of the Committee.

The CSR committee of the Board comprises of Mrs. Gangadevi Somani, Chairman, Mr. Sumeet Kumar | Somani, Member and Mr. Dinesh Sharan Khare, Member.

BOARD EVALUATION

Pursuant to the provisions of the Companies Act, 2013 and Listing Regulations, the Board has carried out an annual performance evaluation of its own performance, the Directors individually as well as the evaluation of the working of its Audit Committee, Nomination and Remuneration Committee. ;

The evaluation process covered the aspects which included Board structure and composition, frequency of Board meetings, participation in the long term strategic planning, contribution to and monitoring of corporate governance practices and the fulfillment of Directors’ obligation and fiduciary responsibilities, including but not limited to, active participation at the Board and committee meetings.

This evaluation is led by the Chairman of the Board Governance, Nomination and Remuneration Committee with specific focus on the performance and effective functioning of the Board.

The result of the evaluation is satisfactory and adequate and meets the requirement of the Company.

FAMILIAZATION PROGRAMME FOR INDEPENDENT DIRECTORS

A policy on familiarization program for Independent Directors has also been adopted by the Company and are put up on the website of the company www.sumeetindustries.com. All new Independent Directors (IDs) i inducted in to the Board are presented with an overview of the Company’s business operations, products, organization structures and about the Board Constitutions and its procedures.

KEY MANAGERIAL PERSON

Pursuant to the provisions of section 203 of the Companies Act , 2013 read with rules framed thereunder the i following persons are the Key Managerial Personnel of the company.

1) Mr. Sumeet Kumar Somani, Managing Director

2) Mr. Anil Kumar Jain, Company Secretary

3) Mr. Abhishek Prasad, Chief Financial Officer

SECRETARIAL STANDARDS

The Directors state that applicable Secretarial Standards, i.e., SS-1 and SS-2, relating to Meetings of the Board of Directors and General Meetings, respectively, have been duly followed by the Company.

ACKNOWLEDGEMENT

Your Directors would like to express their grateful appreciation for the assistance and co-operation received from the Financial Institutions, Banks, Government Authorities and Shareholders during the year under review. Your Directors wish to place on record their deep sense of appreciation for devoted services of the Executives, Staff and workers of the Company for its success.

On behalf of the Board of Directors

Sd/-

Place : Surat Shankarlal Somani

Date : 22^nd June, 2018 Chairman