Captain Polyplast Ltd

Dear Shareholders,

It gives me immense pleasure to share with you that your company continued its growth journey in what was one of the most challenging years in the last decade from an economical perspective. We had a phenomenal financial performance in financial year 2019-20, our consolidated revenue grew 25% against the previous financial year to INR 1,862 Mn, the EBITDA grew by 58% to INR 282 Mn margin with EBITDA margins at record highs in our company's history of 15.15% and our Net Profit grew by 75% to INR 126 Mn with PAT margins at 6.77%.

We are indeed living through unprecedented and difficult times. The novel Coronavirus has caused multitude of challenges for countries across the globe and has also escalated an economic slump in business conditions. The government of India intervened by taking prompt and quick measures to contain the spread of the virus and later focus on boosting demand. At Captain, we responded to this extra ordinary situation by being well prepared through our strong core competencies and robust business model.

With our consistent and sustainable performance during the year, we stand confident even in such difficult times. Our company's strong brand recall, extensive distribution network, increasing domestic and international presence, state of the art technologies and high quality product range are the true strengths of our business performance.

As you know, over the last few years we expanded our reach from one state to fifteen more states, and also commercialised our second plant in Kurnool, Andhra Pradesh. With our right expansion strategies, we are well-poised to cater a larger customer base, optimise

logistic cost, explore potential opportunities in the country and eventually increase market share. Our world class manufacturing facilities produce superior quality products that are reliabile and durable, which has helped increase the customer loyalty and the Captain brand recall.

Our business has been well supported by the push from the government, and we whole-heartedly welcome the move of the government to set up a new ‘Jal Shakti Ministry' and their emphasis "Har Khet Ko Pani" initiative. Other programs and initiatives launched by the government including Pradhan Mantri Krishi Sinchai Yojana (PMKSY), and increased allocation towards agricultural and allied activities, namely, irrigation facilities, building agri-market infrastructure and the introduction of the Kisan credit card to farmers, has lead to a rise in demand for micro irrigation systems and other ancillary products.

At Captain, we have always focused on sustainability that would offer growth to our stakeholders. Going forward, the Company is well positioned to surge ahead with long term sustainable financial performance. We remain focused on achieving growth and delivering quality products. The underlying fundamentals of the business are undoubtedly robust.

In conclusion, I would like to express my appreciation to the entire team at Captain Polyplast for their commitment, passion and hard work, and I would also like to express my gratitude to our key stakeholders, customers, bankers and vendors for their continued support in our growth journey.

Yours sincerely Ramesh Khichadia

Global Economy Overview

The financial year 2020 started off with rising issues on trade between the world's two largest economies - US and China. US and China together account for 40% of the global GDP and the trade disputes between them had an adverse effect on the global economy and sentiment overall. This impact was not only seen in the commodities and financial markets (equities, bonds, currencies), but it also impacted the output and profitability of firms, leading to deterred investment decisions of businesses. The global economy was struggling to regain a broad-based recovery as a result of the lingering impact of growing trade protectionism, trade disputes among major trading partners, falling commodity and energy prices. Brexit was the other major event that took place in January 2020, after the public referendum in 2016 and years of negotiations. The impact of Brexit is expected to hurt the UK economy, primarily due to 2020 having the weakest export growth since 2009 and business investments contracting by 0.7%.

The year ended with outbreak of Covid-19 pandemic. Covid-19 effects came in as a supply side shock first with disruption in global supply chains but with time, the shutdown of manufacturing units across the world had put challenges on the demand side where the availability of goods and services was impacted. Advanced economies as a group are likely to experience an economic contraction in 2020 of about 7.8% of GDP, with the U.S. economy projected by the IMF to decline by 5.9%, about twice the rate of decline experienced in 2009 during the financial crisis. The rate of economic growth in the Euro area is projected to decline by 7.5% of GDP. The IMF also argues that recovery of the global economy could be weaker than projected as a result of: lingering uncertainty about possible contagion, lack of confidence, and permanent closure of businesses and shifts in the behaviour of firms and households. The global trade volumes are projected to decline between 13% and 32% in 2020 as a result of the economic impact of COVID-19.

In order to cushion the economy from unprecedented impact of coronavirus, United State House Democrats

passed a USD 3 trillion coronavirus relief bill on 15th April, 2020. The Federal Reserve lowered its key interest rate to near zero on March 15, 2020.ln other actions, the People's Bank of China cut its reserve requirements for Chinese banks, potentially easing borrowing costs for firms and adding $79 billion in funds to stimulate the Chinese economy. OPEC and Russia reportedly agreed to cut oil production by 10 million barrels per day. G-20 finance ministers and central bank governors announced their support for the proposed agreement by Saudi Arabia and Russia to reduce oil production.

Nevertheless, it has been a challenging time for governments and their citizens alike with fighting off against the spread of the virus and, passing huge stimulus packages to support people and businesses. Effective policies are essential to forestall the possibility of worse outcomes, and the necessary measures to reduce contagion and protect lives are an important investment in long-term human and economic health.

Source:

Seeking Alpha - Feb 2020, Asia Times - March 2020, Economic Times - Feb 2020, S&P Global - May 2019, CNBC - Sept 2019 and Youth Ki Awaaz - Nov 2019

Indian Economy Overview

The Indian economy started FY20 on a dull note owing to the ongoing liquidity crisis. In order to achieve the government's vision of making India a USD 5 trillion economy by 2025, the finance ministry slashed domestic corporate tax rates to 25.17% during midyear. Considering the conditions attached to this rate, few companies have taken the benefit of the lower rate.

The Current Account Deficit narrowed primarily on account of lower non-oil, non-gold imports and robust services exports supported by software, travel and financial services. India's crude oil import bill fell by 9% Y-o-Y to $102 billion in 2019-20 on account of price crash; though volumes remained fairly unchanged. Foreign fund outflows and the Fed's grim prognosis for the US economy further weighed on the rupee as it touched 77 against US dollar in April 2020. The CPI inflation stands at 5.84% YoYin March 2020 higherfrom 2.86%Y-o-Yin March 2019. As per ICRA, CPI inflation is expected to cool to around 4.0% with downside bias in FY2021 from 4.8% in FY2020 due to likely muted demand for non-essential items, weak pricing power for producers and favourable base effect for food items. According to the Indian Budget 2020, the real GDP growth was estimated at 5.0% in the financial year 2019-20 but due to the recent COVID-19 crisis has ensured that FY2021 will be a challenging one for India and the world. As per Fitch ratings, India's GDP growth is likely to slip to 0.8% for FY21 on account of expected fall in consumer spending to 0.3% from 5.5% a year ago and an expected contraction of 3.5% in fixed capital investments.

Outlook

The Indian economy was on a recovery path from the lower demand positions that were existing when the Covid-19 pandemic hit us in the last few days of the year and the related measures taken by the Govt, resulted in slowdown of demand. While on one hand the rate of growth of the pandemic was relatively contained, the lockdown impacted the distribution channels and the Sales for the year and also for the subsequent quarter. The pace and scale of lifting lockdown for India may depend on the availability of the crucial testing capabilities which is essential to get a better handle on the spread of the virus, granular data and technology to track and trace infections, and the build-up of healthcare facilities to treat patients. Government of India's announcements of a fiscal stimulus of Rs. 20 Lakh crores (—10% of GDP) aims at saving the lockdown battered economy by providing tax breaks, incentives for domestic manufacturing and credit guarantee for loans to MSMEs.

RBI announced slew of measures to address the liquidity concerns of financial institutions by means of targeted long-term repo operations to help ease liquidity of NBFCs, HFCs and MFIs. India's crude oil import bill is likely to shrink in the current fiscal year as domestic demand has sharply fallen due to nationwide lockdown. With IMD monsoon forecast coming at near normal levels, agricultural sector could turn out to be the lone bright spot as winter crop (Rabi) is being harvested and the impact of this pandemic is not seen

across the farmland areas of the country.

The uncertainty about further contagion of this pandemic and the vaccine development, establishment closures, structural shifts in firm and household behaviour which may lead to a longer lasting supply chain disruption and weakness in aggregate demand would potentially cause a major hurdle in growth of the fastest growing trillion-dollar economy going into FY21.

Sources:

Forbes India - March 2020, Live Mint - Feb 2020, ET BFSI.com - Dec 2019, IBEF - March 2020, Economic Times, India Budget 2020.

Global Micro-Irrigation Industry

The Global Micro-Irrigation Systems Market size surpassed USD 5 billion and is projected to register a CAGR of 13% from 2017 to 2024. Growing necessity for water conservation owing to rising population and decreasing water reserves will drive micro-irrigation systems market. Increasing concern pertaining to water becoming a threatened commodity, farmers and other stakeholders in agricultural sector have been seeking novel techniques for enhancing productivity from the limited amount of water. Ability of microirrigation systems to economize water in agriculture sector and bring more arable land under irrigation will support market expansion for the projected period.

Strong economic benefits of micro-irrigation systems will influence market growth over the forecast timeframe. Low pumping needs, automation, and flexibility will promulgate overall industry growth as it has positive impact on production costs. Additionally, ability of micro-irrigation system to support all types of land terrain is further anticipated to fuel market growth. Participation of the government regulatory bodies due to environmental concerns coupled with reduction in water and fertilizers usage is projected to drive this segments growth. Increase in the number of subsidies provided by government to the farmers will support product scope. High initial investment cost can be one of the factors that may create hinderance for market growth.

Micro Irrigation in India

In order to increase water use efficiency at farm level, Economic Survey 2019-20 advises further penetration of micro irrigation to ensure a sustainable agricultural practice. It says that there is good scope to use this technology in closely spaced crops like rice, wheat, onion and potato. In 2018-19, over 12 lakh hectare land is under microirrigation, according to government data.

Highlights of the Union Budget 2020-21

• The Budget 2020-21 has identified Agriculture Sector as one of the key drivers of the economy.

• As per the Union Budget 2020-21, government will work with State Governments to allow farmers to benefit from e-NAM.

• The government announced plans to launch Krishi Udaan on international and national routes.

• PM-KUSUM scheme expanded to support 20 lakh farmers for setting up stand-alone solar pumps and further help another 15 lakh farmers solarise their grid-connected pump sets.

• INR 1.34 lakh crore (US$ 19.23 billion) allocated for Ministry of Agriculture and Farmers' Welfare.

• Allocated Rs 8,363 crore (US$ 1.20 billion) to Department of Agricultural Research and Education.

Pradhan Mantri Krishi Sinchai Yojana (PMKSY)

• The Government of India has been implementing

Centrally Sponsored Scheme on Micro Irrigation with the objective to enhance water use efficiency in the agriculture sector. Under the scheme, technological interventions like drip & sprinkler irrigation systems are promoted to encourage the farmers to use them for conservation and saving of water & improved yield.

• The scheme ensures access to the means of irrigation to all agricultural farms in the country to produce ‘per drop more crop', thus bringing much desired rural prosperity.

• To increase agricultural production and productivity by increasing availability of water and its efficient use.

• PMKSY has been approved for implementation across the country with an outlay of Rs. 50,000 crore in five years.

(PM Kisan)

• Prime Minister of India, launched the Pradhan Mantri Kisan Samman Nidhi Yojana (PM-Kisan) and transferred Rs 2,021 crore (US$ 284.48 million)

to the bank accounts of more than 10 million beneficiaries on February 24,2019.

• After the budget announcement of Pradhan Mantri Samman Nidhi Yojana, eligible farmers will get Rs 6,000 (US$ 85.84) in three instalments.

(PM-AASHA)

• In September 2018, the Government of India announced Rs 15,053 crore (US$ 2.25 billion) procurement policy, under which states can decide the compensation scheme and can also partner with private agencies to ensure fair prices for farmers in the country.

Agricultural Export Policy, 2018

• Harness export potential of Indian agriculture, through suitable policy instruments, to make India global power in agriculture and raise farmers' income.

• The new policy aims to increase India's agricultural exports to US$ 60 billion by 2022 and US$ 100 billion in the next few years with a stable trade policy regime.

Micro Irrigation Fund

• A dedicated Micro Irrigation Fund created with NABARD has been approved with an initial corpus of Rs. 5000 crore (Rs. 2000 crore for 2018-19 & Rs. 3000 crore for 2019-20) for encouraging public and private investments in Micro irrigation.

• The main objective of the fund is to facilitate the States in mobilizing the resources for expanding coverage of Micro Irrigation. MIF would not only facilitate States in incentivizing and mobilizing resources for achieving the target envisaged under PMKSY-PDMC but also in bringing additional coverage through special and innovative initiatives by State Governments.

Atmanirbhar Bharat Package (Agriculture)

• Measures worth Rs 1.5 lakh crore focused on the agriculture and allied sectors including dairy, animal husbandry and fisheries as the government announced steps to strengthen the overall farm sector. Rs 1 lakh crore has been allocated to

agriculture infrastructure fund for farm-gate infrastructure including using it for setting up cold chains and post-harvest management infrastructure.

• Dismantling monopolies of age old APMC's, who were often blamed for unfair trading, and had become a barrier for farmers to get a fair price on their produce was another notable decision taken by the government.

• The proposed Central law to allow farmers to sell to anyone outside the APMC yard will bring greater competition amongst buyers, lower the mandi fee and the commission for Arhatiyas (commission agents) and reduce other cesses that many state governments have been imposing on APMC markets. India will have one common market for Agri-Produce.

• Contract farming - This reform announcement has received a lot of positive press. Prima facie, the assurance of a price to the farmers at the time of sowing will help them take cropping decisions based on forward prices. Usually, farmers refer to last year's prices and take sowing decisions. This system could minimise their market risks and offer better realization for their produce.