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Polytex India Ltd.

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Polytex India Ltd. Accounting Policy

REPORT ON CORPORATE GOVERNANCE

Pursuant to Clause 49 to the Listing Agreement, a report on Corporate Governance, for the year ended 31st March, 2015, is given below:

1. Company's Philosophy on Code of Governance:

Your Company is committed to bring about good corporate governance practices. It strongly believes in attaining transparency, accountability and equity, in all its operations, and in its interactions with stakeholders including shareholders, customers, employees, the government and the lenders.

2. Board of Directors

(a) Composition of the Board

The Board of Directors is headed by an Executive Chairman, Mr. Paresh Kariya who is a promoter of the Company. The Board is comprised of committed and eminent persons with considerable professional experience in varied fields and comprises a majority of Non-Executive Directors. The composition of the Board of Directors meets the requirement of Clause. 49-II(A) of the Listing Agreement, as detailed in the table at item 2(c) below.

(b) Board Meetings and AGM/EGM

Seven Board Meetings were held during the year under review. The dates on which the meetings were held are 27.05.2014, 14.07.2014, 12.08.2014, 18.10.2014, 14.11.2014, 28.01.2015 and 31.03.2015. The Annual General Meeting and Extra- Ordinary General Meeting were held on 29.09.2014 and 26.02.2015 respectively.

(c) Details of Directors Seeking Re -Election

Mr. Arvind Mulji Kariya retires by rotation at the ensuing Annual General Meeting and being eligible offer themselves for re - election.

Pursuant the clause 49 VIII (E) of the listing agreement, the Additional information and experience relating to the Directors who are getting appointed / re-appointed is furnished in the Notice of the ensuing Annual General Meeting..

3. Board Committees:

(a) Audit Committee:

As on 31st March, 2015, the Audit Committee comprises of the following three Non-Executive Independent Directors:

Mr. Milind Maladkar - Chairman

Ms. Kranti Bhowad

Mr. Sachchidanand Rajaram Adam

The Audit Committee met five times i.e. on 27.05.2014, 12.08.2014, 18.10.2014, 14.11.2014 and 28.01.2015 during the year under review. Details of attendance of each member are as follows:

Terms of Reference:

The terms of reference, role and scope of the Audit Committee covers the matters specified under clause 49 of the Listing Agreement read with section 177 of the Companies Act, 2013 such as overseeing of the Company's financial reporting process, recommending the appointment/re-appointment of Statutory Auditors and fixation of their fees, reviewing quarterly, half yearly and annual financial statements, changes in accounting policies & practices, compliances with the accounting standards, major accounting entries involving estimates based on the exercise of judgment by management, compliance with listing and other legal requirements relating to financial statements, scrutiny of inter-corporate loans and investments, disclosures of related party transactions, if any, scrutiny of inter-corporate loans and investments, evaluation of internal financial controls, review of uses/application of funds raised through an issue i.e. public issue, rights issue, preferential issue, etc., before they are submitted to the Board of Directors. The Committee also reviews Management Discussion and Analysis of financial condition and results of operations and statement of significant related party transactions submitted by Management.

The Audit Committee's functions include reviewing the internal audit reports, adequacy of the internal audit functions, its structure, reporting process, audit coverage and frequency of internal audits. The responsibility of the Committee is to also review the findings of any internal investigation by the internal auditors in matters relating to suspected fraud or irregularity or failure of internal control systems of material nature, if any and report the same to theBoard.

(b) Nomination and Remuneration Committee: Composition:

As on 31st March, 2015, the Nomination and Remuneration Committee comprises of the following three Non-Executive and Independent Directors:

Mr. Milind Maladkar - Chairman

Ms. Kranti Bhowad

Mr. Sachchidanand Rajaram Adam

Terms of Reference:

The terms of reference of the Committee inter alia, include the following:

• Formulate Remuneration Policy and a policy on Board Diversity.

• To evaluate the performance of the Board and provide necessary report to the Board for further evaluation of the Board.

• Formulation of the criteria for determining qualifications, positive attributes and independence of a director and recommend to the Board a policy, relating to the remuneration of the directors, key managerial personnel and other employees;

• Formulation of criteria for evaluation of Independent Directors and the Board;

• Identifying persons who are qualified to become directors and who may be appointed in senior management in accordance with the criteria laid down, and recommend to the Board their appointment and removal.

Remuneration Policy:

The Board of Directors of the Company have approved Nomination & Remuneration Policy of the Company, which sets out the guiding principles for appointment & remuneration of Directors, Key Managerial Personnel and Senior Management of the Company.

I. Appointment and removal of Directors, Key Managerial Personnel (KMP) and Senior Management:

1. Appointment Criteria and Qualifications:

a) A person being appointed as director, KMP or in senior management should possess adequate qualification, expertise and experience for the position he / she is considered for appointment.

b) Independent Director:

I) Qualifications of Independent Director :

An Independent director shall possess appropriate skills, experience and knowledge in one or more fields of finance, law, management, sales, marketing,administration, research, corporate governance, operations or other disciplines related to the Company's business.

ii) Positive attributes of Independent Directors :

An independent director shall be a person of integrity, who possesses relevant expertise and experience and who shall uphold ethical standards of integrity and probity; act objectively and constructively; exercise his responsibilities in a bona-fide manner in the interest of the Company; devote sufficient time and attention to his professional obligations for informed and balanced decision making; and assist the Company in implementing the best corporate governance practices.

2. Removal:

Due to reasons for any disqualification mentioned in the Act or under any other applicable Act, rules and regulations there under, the Committee may recommend, to the Board with reasons recorded in writing, removal of a Director, KMP or Senior Management Personnel subject to the provisions and compliance of the said Act, rules and regulations.

3. Retirement:

The Director, KMP and Senior Management Personnel shall retire as per the applicable provisions of the Act and the prevailing policy of the Company. The Board will have the discretion to retain the Director, KMP, Senior Management Personnel in the same position/ remuneration or otherwise even after attaining the retirement age, for the benefit of the Company.

II. Remuneration:

A. Directors:

a) Executive Directors (Managing Director, Manager or Whole Time Director):

i) At the time of appointment or re-appointment, the Executive Directors shall be paid such remuneration as may be mutually agreed between the Company (which includes the Nomination and Remuneration (N&R) Committee and the Board of Directors) within the overall limits prescribed under the Companies Act, 2013.

ii) The remuneration shall be subject to the approval of the Members of the Company in General Meeting as per the requirement of the Companies Act, 2013.

iii) The remuneration of the Manager/ CEO/ Managing Director/ Whole Time Director is broadly divided into fixed and incentive pay reflecting short and long term performance objectives appropriate to the working of the Company. In determining the remuneration (including the fixed increment and performance bonus), the Committee shall consider the following:

• the relationship of remuneration and performance benchmark;

• balance between fixed and incentive pay reflecting short and long term performance objectives, appropriate to the working of the Company and its goals;

• responsibility required to be shouldered, the industry benchmarks and the current trends;

• The Company's performance vis-a-vis the annual budget achievement and individual performance.

b) Non-Executive Director:

• The Non-Executive Independent Director may receive fees for attending meeting of Board or Committee thereof. Provided that the amount of such fees shall not exceed Rupees One Lakh per meeting of the Board or Committee or such amount as may be prescribed by the Central Government from time to time.

• A Non-Executive Director may be paid commission on an annual basis, of such sum as may be approved by the Board on the recommendation of the Committee.

• The Committee may recommend to the Board, the payment of commission, to reinforce the principles of collective responsibility of the Board.

• In determining the quantum of commission payable to the Directors, the Committee shall make its recommendation after taking into consideration the overall performance of the Company and the onerous responsibilities required to be shouldered by the Director.

• The total commission payable to the Directors shall not exceed prescribed limits as specified under Companies Act, 2013.

• The commission shall be payable on pro-rata basis to those Directors who occupy office for part of the year.

B. KMP & Senior Managerial Personnel :

The remuneration to the KMP and Senior Management Personnel will be based on following guidelines:

• maintaining a balance between fixed and incentive pay reflecting short and long term performance objectives appropriate to the working of the Company;

• compensation should be reasonable and sufficient to attract retain and motivate KMP and senior management;

• Remuneration payable should comprise of a fixed component and a performance linked variable based on the extent of achievement of individual performance versus overall performance of the Company;

• Remuneration shall be also considered in form of long term incentive plans for key employees, based on their contribution, position and length of service, in the nature of ESOPS/ESPS.

III. Evaluation:

The Committee shall carry out evaluation of performance of every Director at regular interval (yearly). The Committee shall also formulate and provide criteria for evaluation of Independent Directors and the Board as a whole, if applicable.

Details of Remuneration / Compensation Paid to the Non- Executive / Independent Director During the Year Ended 31.03.2015:

The Non Executive Directors do not draw any remuneration from the Company. The Board of Directors of the Company has resolved to waive the Sitting Fees for attending all the meetings of the Board as well as committees and hence the Non Executive Directors have not drawn any sitting fees for attending the Board Meetings and Meeting of any Committees.

The Company did not have any pecuniary relationship or transactions with the Non-Executive Directors during 2014-2015.

(C) Stakeholders Relationship Committee:

As on 31st March, 2015, the Stakeholders Relationship Committee comprises of the following 3 Non-Executive -

Independent Directors:

Mr. Milind Maladkar - Chairman

Ms. Kranti Bhowad

Mr. Sachchidanand Rajaram Adam

The Chairman of the Committee, Mr. Milind Maladkar, is a Non-Executive Director.

During the year, the Committee met for 4 times in the year on 27.06.2014, 26.09.2014, 18.12.2014 and 26.03.2015.

Terms of Reference:

The constitution and terms of reference of the Shareholders'/ Investors' Grievance Committee are in agreement with the guidelines prescribed under Clause 49 of the Listing Agreement entered into with the Bombay Stock Exchange Ltd. The Committee specifically looks into the Share Transfer, redressal of shareholders' and investors' complaints like transfer of shares, non-receipt of balance sheet, non-receipt of declared dividends etc.

Name and designation of Compliance Officer :

Ms. Reshma Pujari, Company Secretary of the Company is performing the duties of Compliance Officer.

4. Familiarization Programme for Independent Directors:

The Independent Directors are familiarized, interalia, with the Company, their duties, roles and responsibilities, the nature of the industry, the business model of the Company. The details of the same can be viewed at http ://www.polytexindia.com  / corporategovernance.html

(b) Whether Special Resolutions were passed through postal ballot last year and details of voting pattern: Nil

(c) Person who conducted the postal ballot exercise: N.A.

(d) Whether any Special Resolution is proposed to be passed through postal ballot this year (2013-14):

During the current year, if Special Resolutions are proposed to be passed through postal ballot, those will be taken up at the appropriate time.

(e) Procedure for Postal Ballot:

The procedure for conducting the postal ballot exercise would be as per the Companies Act, 2013 read with the Rules framed thereunder.

5. Other Disclosures:

(a) Related Party Transactions

Disclosures on materially significant related party transactions i.e. transactions of the Company of material nature, with its promoters, the Directors or the management, their subsidiaries or relatives etc. that may have potential conflict with the interests of Company at large:

None of the transactions with any of the related parties were in conflict with the interest of the Company at large.

(b) Disclosure of Accounting Treatment

In the preparation of financial statements, the Company has followed the Accounting Standards issued by the Institute of Chartered Accountants of India to the extent applicable.

(c) Whistle Blower Policy

The Company has adopted Vigil Mechanism called Whistle Blower Policy for its Directors and Employees and no person has been denied access to the Audit Committee.

(d) The Company has generally complied with all the requirements of Listing Agreement entered into with the Stock Exchange(s) or Securities and Exchange Board of India or any Statutory Authority on matters related to capital markets, as applicable from time to time.

(e) No penalty was imposed or strictures passed against the Company by the Stock Exchanges or SEBI or any statutory authorities on any matter related to capital markets during last three years. None

CEO/ CFO Certification

A certificate from Executive Director, Mr. Paresh Kariya, on the financial statements, Cash Flow Statement and Internal Control System for Financial Reporting for the year ended March 31st, 2015, is provided in the Annual Report, as required by Clause 49(IX) of the Listing Agreement.

Means of Communication

(a) Quarterly Results: The audited and unaudited quarterly results are announced within 60 days and 45 days respectively from the end of the quarter as stipulated under the Listing Agreement with the Bombay Stock Exchange Limited.

(b) Newspapers: During the financial year 2014-15, financial results (Quarterly & Annual) were published in newspapers viz. The Financial Express (English edition) and Apla Mahanagar (Marathi) in the format prescribed under clause 41 of the Listing agreement with the Stock Exchange where the shares of the Company are listed.

(c) Website: The financial results are also posted on the Company's website www.polytexindia.com .

(d) Whether Website also displays official news releases : No

(e) Whether presentations made to institutional investors or to the analysts : No

(f) Annual Report: Annual Report is circulated to all the members within the required time frame, physically through post and via E-mail, wherever the E-mail ID is available in accordance with the "Green Initiative Circular" issued by MCA. The shareholders have been provided remote e-voting option for the resolutions passed at the general meeting to vote as per their convenience.

(g) Investor E-mail ID of the Registrar & Share Transfer Agents: All the share related requests / queries / correspondence, if any, are to be forwarded by the investors to the Registrar and Transfer Agents of the Company, System Support Services and/or e-mail them to sysss72@yahoo.com .

(h) BSE Corporate Compliance & Listing Centre: The Listing Centre is a web based application designed by BSE for Corporates. The Shareholding Pattern, Corporate Governance Report, Financial Results, Analyst Presentations, Press Release and other intimations are filed electronically on BSE's Listing Centre.

(i) SEBI Complaints Redress System (SCORES): the investor Complaints are processed in a centralised web-based complaints redress system. The salient features of this system are: Centralised database of all complaints, online upload of Action Taken Reports (ATRs) by concerned companies and online viewing by investors of actions taken on the complaint and its current status.

(j) The Management Discussion & Analysis Report forms part of the Annual Report.

(k) As required in terms of Clause 47(f) of the Listing Agreement, the Company has designated an e­mail ID exclusively for the purpose of registering complaints by investors. The e-mail ID is polytexindia@gmail.com  

8. General Shareholder Information

AGM: Date, Time and Venue

30th September, 2015 at 4.00 p.m. at 1st floor, Nisarg Apartment, Besant road, Vile Parle-West, Mumbai - 400056

Financial Year

The financial year under review covers the period 1st April, 2014 to 31st March, 2015.

Date of Book Closure

26th September, 2015 to 30th September, 2015 (both days inclusive)

Listing on Stock Exchanges

1. BSE Limited, Mumbai The Company has paid the listing fees for the period 1st April 2014 to 31st March 2015.

Stock Code

1. 512481 on BSE Ltd.

2. ISIN Number for NSDL & CDSL - INE012F01016

Registrar and Transfer Agents

System Support Services

209, Shivai Ind. Estate, Near Parke-Davis, 89, Andheri-Kurla

Road, Sakinaka, Andheri East, Mumbai - 400072.

Share Transfer System

The Company's shares are traded in the Stock Exchange compulsorily in demat mode. Shares sent for physical transfer or dematerialization requests are registered promptly within stipulated time from the date of receipt of completed and validly executed documents.

Dematerialisation of shares and liquidity

97.27% of the Paid-up Capital have been dematerialized as on 31.03.2015. The trading /liquidity details are given at Annexure 'A' below.

Outstanding GDRs/ADRs/ Warrants or any Convertible instruments conversion date and likely impact on equity

N.A

Plant Locations

N.A

Address for correspondence

Shareholders should address correspondence to:

System Support Services

209 Shivai Industrial Estate, Near Logitech Park, 89, Andheri Kurla Road, Sakinaka, Andheri East, Mumbai - 400 072 E mail : sysss72@yahoo.com <mailto:sysss72@yahoo.com>

9. Non Mandatory Requirements:

(a) Office of the Chairman of the Board:

The Company does not defray any secretarial expenses of the Chairman's Office.

(b) Shareholder Rights:

The Company's half-yearly results are furnished to the Stock Exchange and also published in the newspapers and therefore not sent to the shareholders.

(c) Audit Qualification:

The Auditor's Report to the Members on the Accounts of the Company for the financial year ended 31st March, 2015 does not contain any qualifications, reservations or adverse remarks.

Adoption of other non-mandatory requirements under Clause 49 of the Listing Agreement is being reviewed by the Board from time to time.

Declaration relating to Code of Conduct

All the Board Members and Senior Management Personnel have, for the year ended 31st March 2015, affirmed compliance with the Code of Conduct applicable to them as laid down by the Board of Directors in terms of clause 49(II)(E)(2) of the Listing Agreement entered into with the Stock Exchange BSE Limited.

For and on behalf of the Board of Directors

Paresh Kariya

Chairman & Whole Time Director

Mumbai, 12th August, 2015