DIRECTORS' REPORT

To the Members,

The Directors have pleasure in presenting the Thirty Third Annual Report on the working of the company and Audited Accounts for the year ended 31^st March, 2018.

DIVIDEND

Your Directors are pleased to recommend the payment of Dividend at Re.1.20 per share on the face value of Rs.10/- per share.

This Dividend is not taxable in the hands of the Members. However, Tax on the Dividend amounting to Rs. 9.79 Lakhs would be paid by the Company.

MANAGEMENT DISCUSSION AND ANALYSIS REVIEW OF THE OPERATION, CURRENT TRENDS AND FUTURE PROSPECTS:

COMPANY PERFORMANCE

During the year under review the performance of your company was good. The turnover has increased from Rs.155.98 Crores to Rs. 181.44 Crores which is about 16.32% increase over the previous year's turnover. The table below shows comparative quantitative figures of production and sales of the company's products. There has been a marked improvement in the quantity wise production and sales over the previous year's figures.

PRODUCTION AND SALES

Quantity of Production and Sale of the Company's products i.e., FIBC bags and OE Spinning yarn for the year ended 31.03.2017 and 31.03.2018 are as follows:

CURRENT TREND AND FUTURE PROSPECTS:

As per the Report on the World Economic outlook by the International Monetary Fund, the Global economic activity continues to firm up and the Global output is estimated for 2018 and 2019 at 3.9 percent. The revision reflects increased global growth momentum and the expected impact of the recently approved U.S. tax policy changes.

The U.S. tax policy changes are expected to stimulate activity, with the short-term impact in the United States mostly driven by the investment response to the corporate income tax cuts. The effect on U.S. growth is estimated to be positive through 2020. The effects of the package on output in the United States and its trading partners contribute about half of the cumulative revision to global growth over 2018-19.

Further Market research analysts predict that the flexible intermediate bulk container (FIBC) market will grow steadily during the next four years and the constantly increasing demand from diverse sectors including food and horticulture due to the increase in production and trade of horticulture products and in the chemical and fertilizer sectors.

Since the company's products i.e., FIBC bags are mostly exported to U.S and Europe markets, the indications in the global growth forecast will strengthen the company's growth as well. Sustained growth will certainly result in a better profitability in the near future.

There was a remarkable increase in the production of FIBC bags during the financial year ended 31.03.2018 from 72,39,476 Kgs to 90,68,342 Kgs and the sales had increased from 74,76,099 Kgs., to 91,32,972 Kgs an increase of 22.16%.

The prospects for the current year is promising and your directors are hopeful of achieving better results barring any unforeseen circumstances.

BOARD OF DIRECTORS

SRI.S.R.SUBRAMANIAN, Director, retires by rotation at the forthcoming Annual General Meeting and being eligible offers himself for reappointment.

SRI.VAIDYANATHAN PANCHAPAGESAN was appointed as an additional director on 31st October, 2017 and holds office till conclusion of this Annual General Meeting and being eligible, your directors recommend for his appointment as a Director of the company subject to the approval of the members.

Declaration by Independent Directors:- The Independent Directors of the company have declared that they meet the criteria of Independence in terms of Section 149(6) of the Companies Act, 2013 and that there is no change in their status of Independence.

Policy of Directors Appointment and remuneration: - In accordance with Section 178(3) of the Companies Act, 2013 and based upon the recommendation of the Nomination and Remuneration Committee, the Board of Directors have approved a policy relating to appointment and remuneration of Directors, Key Managerial Personnel and Other Employees. The objective of the Nomination and Remuneration Policy is to ensure that the level and composition of remuneration is reasonable, the relationship of remuneration to performance is clear and appropriate to the long term goals of the Company. The policy also envisages and takes into account the total involvement with dedication and human touch.

None of the Director is disqualified under Section 164 of the Companies Act, 2013.

BOARD EVALUATION

Pursuant to Section 134(3) (p) of the Companies Act, 2013, and Regulation 25(4) of LODR, Independent Directors have evaluated the quality, quantity and timeliness of the flow of information between the Management and the Board, Performance of the Board as a whole and its Members and other required matters. Pursuant to Schedule II Part D of LODR, the Nomination and Remuneration Committee has laid down evaluation criteria for performance evaluation of Independent Directors, which will be based on attendance, expertise and contribution brought in by the Independent Directors at the Board Meeting, which shall be taken into account at the time of re-appointment of Independent Director.

MEETINGS

During the year Five Board Meetings were held. The details of the Meetings of the Board and its various Committees are given in the Corporate Governance Report.

ORDERS PASSED BY REGULATORS

Pursuant to Rule 8(5) (vii) of Companies (Accounts) Rules, 2014, it is reported that, no significant and material orders have been passed by the Regulators or Courts or Tribunals, which would impact the going concern status of the company.

INTERNAL FINANCIAL CONTROLS

The Company has implemented and evaluated the Internal Financial Controls which provide a reasonable assurance in respect of providing financial and operational information, complying with applicable statutes and policies, safeguarding of assets, prevention and detection of frauds, accuracy and completeness of accounting records. The Directors and Management confirm that the Internal Financial Controls (IFC) are adequate with respect to the operations of the Company.

INTERNAL AUDIT

Sri. P.S. Ramadoss ACA (F.No:201506) the Internal Auditor, submits Quarterly reports to the audit committee which are reviewed periodically by Audit Committee as well as by the Board. Further, the Board annually reviews the effectiveness of the Company's internal control and audit system.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

Pursuant to Section 186(4) of the Companies Act, 2013, it is reported that the Company has not given any loans, guarantees and no investments has been made in bodies corporate or firm during the financial year.

REPORT ON CORPORATE GOVERNANCE:

The Company has complied with the requirements of Corporate Governance as stipulated in Listing obligations and Disclosure Requirements. A report on Corporate Governance is annexed herewith and it forms part of the Directors Report as per Annexure - I as required under Schedule V (C) of LODR. A certificate from the Secretarial Auditor confirming compliance is also attached as Annexure -

II, as required under Schedule V (E) of LODR. The code of conduct as approved by the board is provided in the above annexure and website.

CORPORATE SOCIAL RESPONSIBILITY

Company has taken corporate social responsibility initiatives. The Committee comprising one Independent Director and two directors has been constituted as CSR Committee to develop CSR policy and implement the CSR initiatives whenever it is applicable to the Company.

The company has contributed Rs.1,32,512/- to health care and education projects during the financial year. There are certain other projects which have been identified and depending upon their implementation and fulfillment, balance contribution will be made in due course. The material disclosure is made in Annexure - III.

AUDITORS:

The board of directors recommend for the appointment of M/S. SRITHAR AND ASSOCIATES (Firm Registration No. 015896S), Chartered Accountants, Chennai, as Statutory Auditors of the Company from the conclusion of this Annual General Meeting till the conclusion of 37^th Annual General

Meeting for the balance period of first term of five years, subject to the approval of the share holders at the forthcoming 33^rd Annual General Meeting of the company.

COST AUDITORS:

As per provisions of Section 148 of the Companies Act, 2013 and the Companies (Cost Records and Audit) Rules, 2014, the Government has not notified the products of our company to which the Cost Audit would be applicable. Hence, the Cost Audit was not conducted for your company for the financial year 2017 - 18.

SECRETARIAL AUDITOR

Pursuant to Provisions of Section 204 of the Companies Act, 2013 read with Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014, Your Company has appointed Mr. B. Subramanian, Company Secretary in Practice, Chennai to conduct the Secretarial Audit of the Company for the financial year ended 31^st March, 2018.

The Secretarial Audit Report (in Form MR - 3) is attached as Annexure - IV to this report.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

The information required under Section 134(3) (m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014, regarding Conservation of Energy, Technology Absorption, Foreign Exchange earnings and outgo are given in Annexure - V to this report.

DETAILS OF SUBSIDIARY, JOINT VENTURE OR ASSOCIATES:

There are no Subsidiaries or Joint Ventures and there is an associate company viz., M/s. Lankaspin Private Limited, Srilanka. The particulars of the Associate Company are given in Form AOC 1 as per Annexure VI.

EXTRACT OF ANNUAL RETURN

The Annual Return for the financial year ended 31^st March, 2018 in Form No: MGT-7 pursuant to Section 92 of Companies Act, 2013 and Rule 12 (2) of the Companies (Management and Administration) Rules, 2014, is being placed on the website of the company www.polyspin.org.

WOMEN AT WORK PLACE

The company has constituted an Anti-Sexual Harassment Policy in line with the requirements of the sexual harassment of Women at the work place (Prevention, Prohibition and Redressal) Act, 2013. Internal complaints committee (ICC) has been set up to redress complaints received regarding sexual harassment. During the year, the company has not received any complaints of harassment.

PUBLIC DEPOSITS:-

The company has not accepted any fixed deposit from the public during the year under section 73 of the Act.

VIGIL MECHANISM / WHISTLE BLOWER POLICY

In accordance with Section 177(9) and (10) of the Companies Act, 2013 and Regulation 22 of the LODR, the Company has established a Vigil Mechanism and has a Whistle Blower Policy. The policy is available at the Company's website.

A forum to enable the concerned personnel of the Company to report any deviation or other acts which are against the general code of conduct of personnel, business and other activities has been created.

RISK MANAGEMENT POLICY

Company has developed and implemented a risk management policy, as required under Regulation 17(9) of LODR and Pursuant to Section 134(3)(n) of the Companies Act, 2013. A committee of the Board named as Risk Management Committee has been formed by the Board to address and evaluate various risks impacting the Company, in practice with reference to the forex and interest rate. At present the board has not identified any element of risk which may threaten the existence and development of the company.

The Company has laid down a Risk Management Policy and Procedure to inform the Board Members about the Risk assessment and minimization process, which is a vigorous and active process for identification and mitigation of risks. Necessary inputs are provided to the Audit Committee on a monthly basis. The production and sales are monitored and any deviation from the projected is identified, solution found and necessary rectifications are done periodically.

Audit Committee as well as the Board of Directors have adopted the Risk Management Policy and the Audit Committee reviews the risk management and mitigation plan from time to time.

MATERIAL CHANGES AND COMMITMENTS

No Material changes and commitments, affecting the financial position of the Company has occurred between the end of the financial year 2017-18 and till the date of this report.

PERSONNEL

The information required pursuant to Section 197 of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company and Directors are annexed as Annexure - VII and forms part of this Report.

RELATED PARTY TRANSACTIONS:

There were no materially significant related party transactions which could have potential conflict with the interests of the Company. Transactions with related parties are in the ordinary course of business on arm's length basis and are periodically placed before the Audit Committee and Board for its approvals and Form AOC-2 is enclosed as Annexure- VIII.

An omnibus approval by the Audit committee is granted with reference to each party and the ceiling amount. Since the transactions are at an arm's length basis, there is no significance.

The Board of Directors of the Company has, on the recommendation of the Audit Committee, adopted a policy to regulate transactions between the Company and its Related Parties, in compliance with the applicable provisions of the Companies Act 2013, the Rules thereunder and in compliance with the Regulations of LODR. This Policy was considered and approved by the Board, which has been uploaded on the website of the Company.

HUMAN RESOURCES

Your company treats its “human resources” as one of its most important assets. Your company enjoys a very cordial relationship with workers and employees at all levels.

Your company continuously invests in attraction, retention and development of talent on an ongoing basis. A number of programs that provide focused attention are currently underway. Your Company's thrust is on the promotion of talent internally, through job rotation and job enlargement.

TRANSFER OF AMOUNT TO INVESTOR EDUCATION AND PROTECTION FUND

Pursuant to the provisions of the Investor Education Protection Fund (uploading of information regarding unpaid and unclaimed amounts lying with companies) Rules, 2012, the company has already filed the necessary form and uploaded the details of unpaid and unclaimed amounts lying with the company, as on the date of last AGM 26^thSeptember, 2017 with the Ministry of Corporate Affairs. An amount of Rs. 3,34,294/- unclaimed dividend pertaining to the year 2011 will be transferred to the IEP Fund before 03.10.2018.

CODE OF CONDUCT

The Board has laid down the code of conduct for Directors of the company and senior management personnel.

The Directors shall follow in letter and spirit the provisions as contained in section 166 of the Companies Act, 2013. They shall also follow general principles of pillars of character. The same with certain variation involving their nature of work applies to the senior management personnel. All the directors of the board and senior management personnel have confirmed the compliance with the code.

INSIDER TRADING

The company has formulated and implemented the code of conduct for prevention of insider trading with regard to

the securities by directors and designated person of the company as per SEBI (Prohibition of Insider Trading) Regulations, 2015 and the Code of Conduct is posted on the web site of the company.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to Section 134(5) of the Companies Act, 2013, the Directors confirm that

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

(b) they 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) they 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 and detecting fraud and other irregularities;

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

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

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

ACKNOWLEDGEMENT

Your Directors wish to take this opportunity to place on record their gratitude and sincere appreciation for the timely and valuable assistance and support received from Bankers -City U n ion Ba nk, Share Transfer Agents, Customers, Suppliers, Share Holders and Regulatory Authorities.

The Board also expresses and records its appreciation for the hard and dedicated efforts of the employees as a team at all levels.

On Behalf of the Board,

For POLYSPIN EXPORTS LIMITED,

S.V. RAVI R.RAMJI

Place : Rajapalayam Director Managing Director & CEO

Date : 29.05.2018 (DIN : 00121742) (DIN : 00109393)