Harish Textile Engineers Ltd

To The Members,

Harish Textile Engineers Limited

Your Directors are pleased to present the 14^th Annual Report on the business and operations of Harish Textile Engineers Limited ("the Company") along with the Audited Financial Statements of your Company for the financial year ended 31^st March, 2024.

1. FINANCIAL HIGHLIGHTS:

The financial statements of the Company have been prepared in accordance with the Indian Accounting Standards (Ind AS) notified under Section 133 of the Companies Act, 2013 ("the Act") read with The Companies (Accounts) Rules, 2014. The financial statements for the financial year ended 31^st March, 2024 as well as comparative figures for the year ended 31^st March, 2024 are Ind AS compliant.

The financial highlights of your Company for the year ended 31^st March, 2024 are summarized as follows:

(Rs. In Lakhs)

2. DIVIDEND:

Your Directors have not recommended any dividend for the year under review due to loss incurred by the Company for the year ended 31^st March, 2024.

3. MANAGEMENT DISCUSSIONS AND ANALYSIS:

Pursuant to Regulation 34 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements), Regulation 2015 ("Listing Regulations"), the Management Discussion and Analysis Report for the year under review, is present in separate section as Annexure I, forming part of Annual Report.

4. TRANSFER TO RESERVES:

The entire balance in Retained Earning is proposed to be carried forward.

5. TRANSFER OF UNCLAIMED DIVIDEND TO INVESTOR EDUCATION AND PROTECTION FUND:

The Provisions of Sec.125 (2) of the Companies Act, 2013 do not apply as there was no dividend declared and paid last year.

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

There were no material changes and commitments, affecting the financial position of the Company which has occurred except one legal intimation received between the end of the financial year of the Company and the date of the Directors' report for case filed by one of the supplier before Hon'ble Micro Small Enterprise Facilitation Council, Ahmedabad, Gujarat alleging that the Company has to pay an amount of Rs. 61,47,306/- which includes Principal amount of Rs. 25,50,385/- (already disclosed in the Books of Accounts) and Interest of Rs. 35,96,921.

1. With reference to our earlier disclosure regarding Petition No. 128 of 2022 filed by the petitioner Mr. Nikhil H. Gandhi & two Ors. (Mrs. Chhaya Nikhil Gandhi and Mrs. Kumudben Himatlal Gandhi) against Pacific Harish Industries Ltd. & eight Ors. (Mr. Sandeep K. Gandhi, Mr. Hitendra C. Desai, Mr. Manish K. Vagadia, Mrs. Shaila S. Gandhi, Harish Textile Engineers Limited, Kasha Textile Private Limited, Mr. Kirtikumar S. Gandhi and M/s. K. M. Swadia & Co.), Harish Textile Engineers Limited is respondent no. six, and Mr. Sandeep Gandhi is respondent no. two. The Hon'ble NCLT (National Company Law Tribunal), Mumbai had passed the order dated 14^th June, 2023 has stayed the further proceedings till the pendency of the Hon. High Court order.

2. The Company had received Arbitral Award through e-mail from legal representative of Claimant of M/s. Ramdev Resins Private Limited ("Creditor") on 06^th November, 2023 in the case of M/s. Ramdev Resins Private Limited, Gandhinagar Versus M/s. Harish Textile Engineers Limited, Mumbai (Formerly Known as Harish Textiles Engineers Private Limited) being DP No. 2662 (MSME-D/MSEFC/DP-2662/5275/23) by The Hon'ble Micro Small Enterprise Facilitation Council, Gandhinagar, Gujarat. As per the said Award, the Company is liable to make a total payment of Rs. 28,20,230/-, which includes Principal amount of Rs. 11,79,330/- and an Interest amount of Rs. 16,40,900/-, which are provided in the Books of Account.

3. The Company had received Arbitral Award through e-mail from legal representative of Claimant of M/s. Jagjiwan Enchem Udhyog Ltd. ("Creditor") on 06^th November, 2023 in the case of M/s. Jagjiwan Enchem Udhyog Ltd., Ahmedabad Versus M/s. Harish Textile Engineers Limited, Mumbai being DP No. 2045 by The Hon'ble Micro Small Enterprise Facilitation Council, Gujarat. As per the said Award, the Company is liable to make a total payment of Rs. 52,74,703/- which includes Principal amount of Rs. 25,26,846/- and an Interest amount of Rs. 27,47,857/-, which are provided in the Books of Account.

8. DETAILS OF HOLDING / SUBSIDIARY / JOINT VENTURES / ASSOCIATE COMPANIES:

The Company does not have any Holding/Subsidiary/Joint Ventures/Associate Companies.

9. DECLARATION BY INDEPENDENT DIRECTORS:

The Independent Directors have submitted their disclosures to the Board indicating that they comply with all the requirements that are stipulated in Section 149(6) of the Companies Act, 2013 and Regulation 16(1 )(b) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 so as to qualify themselves to act as Independent Directors in the Company. Further, they have also declared that they are not aware of any circumstance or situation, which exists or may be reasonably anticipated, that could impair or impact their ability to discharge their duties with an objective independent judgment and without any external influence.

The Independent Directors of the Company have complied with the requirements of the provisions in relation to the Independent Directors Databank as stated in the Companies (Creation and Maintenance of databank of Independent Directors) Rules, 2019 and the Companies (Appointment and Qualification of Directors) Rules, 2014 as amended from time to time.

10. EXTRACT OF ANNUAL RETURN:

As required pursuant to Section 92(3) of the Companies Act, 2013 and Rule 12(1) of the Companies (Management and Administration) Rules, 2014, an extract of annual return in MGT- 9 as a part of this Annual Report annexed as Annexure-ll. The same is also available on the website of the Company and can be accessed on the Company's website at the link https://www.harishtextile.com/investors/annual-return.

11. DIRECTORS AND KEY MANAGERIAL PERSONNEL:

As on 31^st March, 2024, the Company has five Directors comprising of two Executive Directors and three Non-Executive Directors out of which all three are Independent Directors. There is one Women Director.

Independent Directors:

Pursuant to the provisions of Section 149 of the Companies Act, 2013 ("the Act"), the independent directors have submitted declarations that each of them meets the criteria of independence as provided in Section 149(6) of the Act along with Rules framed thereunder and Regulation 16(1 )(b) of the SEBI Listing Regulations. There has been no change in the circumstances affecting their status as independent directors of the Company.

During the year under review, the non-executive directors of the Company had no pecuniary relationship or transactions with the Company, other than sitting fees, commission, if any and reimbursement of expenses incurred by them for the purpose of attending meetings of the Board / Committee of the Company.

Change in Directors and Key Managerial Personnel:

During the year under review there are following changes in the Board of Directors of the Company.

a) Ms. Sushmita Swarup Lunkad (DIN: 09044848) was appointed as a Non-Executive, Independent Women Director of the Company w.e.f. 04^th September, 2023.

b) Mrs. Meena Ramesh Mistry (DIN: 07142544) has resigned from the post of Non-Executive, Independent Director of the Company w.e.f. 11^th December, 2023.

Key Managerial Personnel:

Pursuant to the provisions of Sections 2(51) and 203 of the Act read with The Companies (Appointment and Remuneration of Managerial Personnel), Rules 2014, the following are the Key Managerial Personnel of the Company as on 31^st March, 2024:

Statutory Auditor:

M/s K. M. Swadia & Co., Chartered Accountants, (FRN:110740W) were appointed as Statutory Auditors of the Company from the financial year 2019-2020 at the Annual General Meeting ("AGM") held during 2019 for a term of five financial years commencing from 2019-2020 and until 2023-2024. Considering the performance and experience of M/s K.M. Swadia & Co, a resolution for re-appointing M/s. K. M. Swadia & Co., Chartered Accountants, as Statutory Auditors for a second term of five financial years commencing from 2024-2025 and until 20282029 has been proposed by the Board of Directors on the recommendation of the Audit Committee and the said appointment is subject to approval of the Shareholders at the ensuing Annual General Meeting.

Cost Auditor:

During the year under review, in accordance with Section 148(1) of the Act, the Company has maintained the accounts and cost records, as specified by the Central Government. The Board of Directors had appointed M/s. Y S Thakar & Associates, (Membership No. 9688 & Firm Registration No.: 000318), as Cost Auditors of the Company, for conducting the audit of cost records for the financial year ended 31^st March, 2024. The audit is in progress and the report will be filed with the Ministry of Corporate Affairs within the prescribed period.

Pursuant to Section 148 of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Rules, 2014 (as amended), the Board of Directors, on the recommendation of the Audit Committee have appointed M/s. Y S Thakar & Associates, (Membership No. 9688 & Firm

Registration No. 000318), Practicing Cost Accountant, Vadodara, as the Cost Auditor of the Company for the Financial Year 2024-25.

The remuneration payable to the Cost Auditor is subject to ratification of Shareholders at the ensuing Annual General Meeting.

Secretarial Auditor:

Pursuant to the provisions of Section 204 of the Act, read with Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board, at its meeting held on November 09, 2023 approved the appointment of M/s. D N Vora & Associates (ACS No.: 46989, CP No. 21254), Company Secretary in Practice, Mumbai to conduct the Secretarial Audit of the Company for the financial year ended 31^st March, 2024.

The Secretarial Audit report for the financial year ended 31^st March, 2024 is attached as Annexure III to this Report.

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board of Directors have appointed M/s. D N Vora & Associates (ACS No.: 46989, CP No. 21254), Company Secretaries in Practice to undertake the Secretarial Audit of the Company for the financial year 2024-25.

13. STATUTORY AUDITORS' REPORT:

The Auditors' Report contains two Qualification:

1. "Gratuity liability of employees is not provided for as required by Ind AS 19 on "Employee Benefits". The impact of the same is not quantified in the absence of actuarial valuation/ management estimate."

Management Response:

The Company is in the process of getting the liability ascertained on actuarial basis and in the current year hopes to provide for the same. Notes to Accounts and Auditors remarks in their report are self-explanatory and do not call for any further comments.

2. "The Company has recently ascertained the particulars of dues to Micro, Small and Medium enterprises, under MSMED Act, 2006. The interest liability arising out of delayed payment to undertakings registered under the MSMED Act, has not been quantified and provided for."

Management Response:

The Company has recently ascertained particulars of registration from vendors covered under by the provisions of MSME Act. With respect to provision of interest under MSME Act, there are several issues that required clarification from legal interpretation point of view. The Company will seek legal advice to address the issues. Until, the issues are addressed, it would not be possible for the Company to correctly compute the interest liability arising out of delayed payment to vendors under the MSME Act. Hence, no provision pertaining to interest liability for the vendors registered under the MSME Act has been provided for

pertaining to the Financial Year 2023-24 and prior period except for the cases for which company has received order under Micro Small Enterprise Facilitation Council.

3. In connection with the observation made in the Auditor's Report, though not in the nature of qualification, the Company uses the accounting software that has a feature of recording audit trail (edit log) facility and is in the process of enabling this facility for all relevant transactions in the accounting software used for maintaining books of account for the Company.

14. CORPORATE GOVERNANCE:

Non-applicability of Corporate Governance provisions of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015:

Pursuant to the provisions of Regulation 15(2) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, compliance with the provisions of Regulations 17,18,19,20,21,22,23,24,25,26,27, and clauses (b) to (i) of sub-regulation 2 of Regulation 46 and para C, D & E of Schedule V of the Securities and Exchange Board of India (Listing Obligations and Disclosures Requirements) Regulations, 2015, are not applicable to the Companies having paid up equity share capital not exceeding Rs. 10 Crore and Net Worth not exceeding Rs. 25 Crore, as on the last day of previous financial year.

In view of above, as per the latest Audited Financial Statement of the Company as at 31^st March, 2024, the paid-up Equity Share Capital and the Net Worth of the Company does not exceed the respective threshold limit of Rs. 10 Crore and Rs. 25 Crore, as aforesaid; hence corporate governance report has not been enclosed to directors since the same is not applicable to the Company.

15. COMPLIANCE WITH SECRETARIAL STANDARDS:

The Directors have devised proper systems to ensure compliance with the provisions of all applicable Secretarial Standards issued by the Institute of Company Secretaries of India and that such systems are adequate and is operating effectively.

16. CODE OF CONDUCT FOR DIRECTORS AND SENIOR MANAGEMENT:

The Directors and members of Senior Management have affirmed compliance with the Code of Conduct for Directors and Senior Management of the Company. The copies of Code of Conduct as applicable to the Executive Directors (including Senior Management of the Company) and Non-Executive Directors are uploaded on the website of the Company.

17. FAMILIARIZATION PROGRAM FOR INDEPENDENT DIRECTORS:

The Independent directors of Harish Textile Engineers Limited are eminent personalities having wide experience in the field of business, finance, education, industry, commerce and administration. Their presence on the Board has been advantageous and fruitful in taking business decisions.

The Company has practice of conducting familiarization program of the Independent directors. Independent Directors are appointed as per policy of the Company, with management expertise and wide range of experience. The Directors appointed by the Board are given induction and orientation with respect to the Company's vision, strategic direction, core values, including ethics, corporate governance practices, financial matters and business operations by having one-to-one meetings.

The new Board members are also requested to access the necessary documents / brochures, Annual Reports and internal policies available at our website www.harishtextile.com, enable them to familiarize with the Company's procedures and practices.

Updates on relevant statutory changes encompassing important laws are regularly intimated to the Independent Directors. Their presence on the Board has been advantageous and fruitful in taking Business decisions.

Pursuant to Regulation 25(7) of the Listing Regulations, the Company has put in place a system to familiarize its Independent Directors about the Company, its financial products, the industry and business model of the Company and its subsidiary (if any). Pursuant to Regulation 46 of Listing Regulations the details of Familiarization Programme is uploaded on the Company's website at https://www.harishtextile.com/investors/policies.

18. DOCUMENTS PLACED ON THE WEBSITE OF THE COMPANY:

The following documents have been placed on the website in compliance with the Act:

• Financial statements of the Company along with relevant documents as per third proviso to Section 136(1)

• Details of Vigil mechanism for directors and employees to report genuine concerns as per proviso to Section 177(10)

• Latest Announcements

• Annual Reports

• Annual Return

• Shareholding Pattern

• Code of Conduct

• Policies

• Nomination and Remuneration Policy

• Materiality Policy under Regulation 30 of SEBI (LODR) Regulations, 2015

19. HUMAN RESOURCE MANAGEMENT (MATERIAL DEVELOPMENTS IN HUMAN RESOURCES / INDUSTRIAL RELATIONS FRONT, INCLUDING NUMBER OF PEOPLE EMPLOYED):

The Company offers a growth environment along with monetary benefits in line with industry standards. The Company has a number of employee initiatives to attract, retain and develop talent in the organization. The industrial relations during the year were cordial on all the fronts. The number of people employed in the year of report were 239.

20. SECRETARIAL AUDIT REPORT:

Pursuant to Section 204 of the Companies Act, 2013, the Company had appointed, M/s D N Vora & Associates, Practicing Company Secretary as its Secretarial Auditor to conduct the Secretarial Audit of the Company for the F.Y 2023-2024. The Company has provided all the assistance and facilities to the Secretarial Auditor for conducting their audit. Report of Secretarial Auditors for the F.Y 2023-2024 in Form MR-3 is annexed to this report as Annexure-lll.

The Secretarial Audit report contains one qualification, reservation, adverse remark or disclaimer as follows:

Management Response:

The Company has recently ascertained particulars of registration from vendors covered under by the provisions of MSME Act. With respect to provision of interest under MSME Act, there are several issues that required clarification from legal interpretation point of view. The Company will seek legal advice to address the issues. Until, the issues are addressed, it would not be possible for the Company to correctly compute the interest liability arising out of delayed payment to vendors under the MSME Act. Hence, no provision pertaining to interest liability for the vendors registered under the MSME Act has been provided for pertaining to the Financial Year 2023-24 and prior period except for the cases for which company has received order under Micro Small Enterprise Facilitation Council.

Management Response:

The Company is in the process of getting the liability ascertained on actuarial basis and in the current year hopes to provide for the same. Notes to Accounts and Auditors remarks in their report are self-explanatory and do not call for any further comments.

2. "The Company has recently ascertained the particulars of dues to Micro, Small and Medium enterprises, under MSMED Act, 2006. The interest liability arising out of delayed payment to undertakings registered under the MSMED Act, has not been quantified and provided for."

Management Response:

The Company has recently ascertained particulars of registration from vendors covered under by the provisions of MSME Act. With respect to provision of interest under MSME Act, there are several issues that required clarification from legal interpretation point of view. The Company will seek legal advice to address the issues. Until, the issues are addressed, it would not be possible for the Company to correctly compute the interest liability arising out of delayed payment to vendors under the MSME Act. Hence, no provision pertaining to interest liability for the vendors registered under the MSME Act has been provided for pertaining to the Financial Year 2023-24 and prior period except for the cases for which company has received order under Micro Small Enterprise Facilitation Council.

Management Response:

The Company has recently ascertained particulars of registration from vendors covered under by the provisions of MSME Act. With respect to provision of interest under MSME Act, there are several issues that required clarification from legal interpretation point of view. The Company will seek legal advice to address the issues. Until, the issues are addressed, it would not be possible for the Company to correctly compute the interest liability arising out of delayed payment to vendors under the MSME Act. Hence, no provision pertaining to interest liability for the vendors registered under the MSME Act has been provided for pertaining to the Financial Year 2023-24 and prior period except for the cases for which company has received order under Micro Small Enterprise Facilitation Council.

Authorized Share Capital:

The Authorized Share Capital as on 31^st March, 2024 was Rs. 10,00,00,000 divided into 1,00,00,000 Equity Shares of Rs. 10 each, which is same as at the previous year end.

Issued, Subscribed and Paid-up Share Capital:

The Paid up Equity Share Capital as on 31^st March, 2024 was Rs. 3,33,60,000 divided into 33,36,000 Equity shares of Rs. 10 each, which is same as at the previous year end.

23. SHARES/ DEBENTURES:

• Buyback of Securities: The Company has not bought back any of the securities during the year under review.

• Sweat Equity: The Company has not issued any sweat equity shares during the year under review.

• Employee Stock Option Plan: The Company has not provided any stock options to the employees.

• Non-Convertible Debentures: The Company has not issued and redeem any Debentures/ Non-Convertible Debentures during the year under review.

The Company had issued and allotted 4,23,209 7% (non-cumulative) Unlisted, Secured, Unrated Redeemable, Non-Convertible Debentures of the face value of Rs.100/- each, aggregating to Rs. 4,23,20,900 (Rupees Four Crore Twenty Three Lakh Twenty Thousand and Nine Hundred Only) on 21^st September, 2022 for tenure of three (3) years. The said NCDs were divided into four (4) different series having different maturity dates.

24. CREDIT RATING:

The Company does not have any debt instrument or a fixed deposit program or any scheme or proposal involving mobilisation of funds either in India or abroad that requires Credit Rating.

25. PROCEEDING PENDING UNDER THE INSOLVENCY AND BANKRUPTCY CODE, 2016:

During the year under review, no application has been made nor any proceeding are pending under the Insolvency and Bankruptcy Code, 2016 against the Company.

26. ONE-TIME SETTLEMENT AND VALUATION:

During the year under report, there was no one time Settlement with any of the banks or lenders.

27. COMPLIANCE WITH SECRETARIAL STANDARDS:

Your Company is in compliance with the applicable Secretarial Standards issued by the Institute of Company Secretaries of India and approved by the Central Government under Section 118(10) of the Companies Act, 2013.

28. REPORTING OF FRAUDS BY AUDITORS:

During the year under review, neither the statutory auditors nor the secretarial auditor has reported to the audit committee, under Section 143 (12) of the Companies Act, 2013, any instances of fraud committed against your Company by its officers or employees, the details of which would need to be mentioned in the Director's report.

29. DEPOSITS FROM PUBLIC:

The Company has not accepted any deposits from public and as such, no amount on account of principal or interest on deposits from public was outstanding as on the date of the balance sheet.

30. DIRECTORS RESPONSIBILITY STATEMENT :

Pursuant to the provisions of clause (c) of sub-section (3) of Section 134 of the Companies Act, 2013, the Directors confirm that, to the best of their knowledge and belief:

a) In the preparation of the annual accounts, the applicable accounting standards had been followed along with no material departures;

b) They have 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 have taken proper and sufficient care, to the best of their knowledge and ability, 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 have prepared the annual accounts on a going concern basis;

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

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

31. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, RESEARCH & DEVELOPMENT AND FOREIGN EXCHANGE EARNINGS AND OUTGO:

Information pursuant to Section 134(3)(m) of the Companies Act 2013 read with Rule 8(3) the Companies (Accounts) Rules, 2014 forming part of Directors' Report for the year ended 31^st March, 2024 is as under:

Conservation of Energy: The Company's operations involve low energy consumption. However efforts to conserve and optimize the use of energy through improved operational methods and other means will continue.

Technology Absorption: The Technology available and utilized is continuously being upgraded to improve overall performance and productivity.

Research & Development: Your Company believes that research & development is a continuous process for sustained corporate excellence. Our research & development activities help us in product and service improvement, effective time management and are focused to provide unique benefits to our customers. Such methods do not involve any specific cost burden to the Company.

Foreign Exchange Earnings: Rs. 1,52,54,919/- (previous year Rs. 93,73,547/-)

Foreign Exchange Outgo: Rs. 1,68,75,788/- (previous year Rs. 88,17,386/-)

32. BOARD EVALUATION:

Pursuant to the provisions of the Companies Act, 2013, 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, Nomination & Remuneration Committee.

Criteria for Performance Evaluation of Independent Directors includes:

• Attendance and Participation.

• Maintaining confidentiality.

• Acting in good faith and in the interest of the Company as a whole.

• Exercising duties with due diligence and reasonable care.

• Complying with legislations and regulations in letter and spirit.

• Openness to ideas, perspectives and opinions and ability to challenge old practices and throwing up new ideas for discussion.

• Capacity to effectively examine financial and other information on operations of the Company and the ability to make positive contribution thereon.

The performance of the Board was evaluated by the Board after seeking inputs from all the directors on the basis of criteria such as the board composition and structure, effectiveness of board processes, information and functioning, etc.

The performance of the committees was evaluated by the board after seeking inputs from the committee members on the basis of criteria such as the composition of committees, effectiveness of committee meetings, etc.

The above criteria are broadly based on the Guidance Note on Board Evaluation issued by the Securities and Exchange Board of India on January 5, 2017.

In a separate meeting of independent directors, performance of non-independent directors, the Board as a whole and the Chairman of the Company was evaluated, taking into account the views of executive directors and non-executive directors.

The Board expressed its satisfaction on the performance of all the directors, Board and its committees which reflected the overall engagement of the directors, the Board and its committees with the Company.

33. LISTING OF SHARES:

The Shares of the Company is listed on BSE Limited. Applicable listing fees have been paid up to date. The Shares of the Company have not been suspended from trading at any time during the year by the concerned Stock Exchanges.

34. NUMBER OF MEETINGS OF THE BOARD:

During the year, 20 Board Meetings were held.

The dates on which the Board Meetings were held along-with attendance are as follows:

#Ms. Sushmita Swarup Lunkad (DIN: 09044848) was appointed as a Non-Executive, Independent Women Director of the Company w.e.f. 04^th September, 2023.

*Mrs. Meena Ramesh Mistry (DIN: 07142544) has resigned from the post of Non-Executive, Independent Director of the Company w.e.f. 11^th December, 2023.

35. INTERNAL FINANCIAL CONTROL SYSTEM:

The details in respect of internal financial control and their adequacy are included in the Management Discussion and Analysis (Annexure I), which is a part of this report.

36. COMPOSITION OF AUDIT COMMITTEE:

The composition of the Audit Committee is as under and it is in compliance with the provisions of Section 177 of the Companies Act, 2013 read with the rules thereunder and Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulation, 2015 ("SEBI Listing Regulations").

The Audit Committee acts as a link between the statutory and internal auditors and the Board of Directors. Its purpose is to assist the Board in fulfilling its oversight responsibilities of monitoring financial reporting processes, reviewing the Company's established systems and processes for internal financial controls, governance and reviewing the Company's statutory and internal audit activities.

The Company has an Internal Auditor, who is responsible for conducting independent Internal Audit. The Internal Auditor reports directly to the Audit Committee of the Board.

Committee invites such of the executives as it considers appropriate, representatives of the statutory auditors and internal auditors, to be present at its meetings. The Company Secretary acts as the Secretary to the Audit Committee. Reports are sent to the members of the Committee on matters relating to the Insider Trading Code.

During the year, 13 Audit Committee Meetings were held.

The dates on which the Audit Committee Meetings were held along-with attendance are as follows:

The members of the Audit Committee and their attendance at committee meetings are as under:

#Ms. Sushmita Swarup Lunkad (DIN: 09044848) was appointed as a Non-Executive, Independent Director of the Company w.e.f. 04^th September, 2023.

*Mrs. Meena Ramesh Mistry (DIN: 07142544) has resigned from the post of Non-Executive, Independent Director of the Company w.e.f. 11^th December, 2023.

The Committee in particular looks into:

• Oversight of the Company's financial reporting process and the disclosure of its financial information to ensure that the financial statement is correct, sufficient and credible.

• Recommending the appointment, re-appointment and removal of statutory auditor, fixation of audit fees and also approval of payment of any other services.

• To ensure proper disclosure in the Quarterly, Half yearly and Annual Financial Statements.

• To review the functioning of the Whistle Blower Mechanism.

• Reviewing with management the quarterly / annual financial statements before submission to the Board focusing primarily on the following:

- Matters required to be included in the Director's Responsibility Statement.

- Any change in accounting policies and practices.

- Major accounting entries based on exercise of judgment by management.

- Significant adjustment arising out of audit.

- Compliance with accounting standards.

- Compliance with listing and other legal requirements relating to financial statements.

- Qualification in draft audit report.

• Any related party transaction, i.e., transaction of the management, their subsidiaries or relatives, etc., that may have potential conflict with the interest of Company at large. Approval or any subsequent modification of transactions of the Company with related parties and granting omnibus approval to related party transactions which are in the ordinary course of business and on an arm's length basis and to review and approve such transactions.

• Reviewing with the management, statutory and internal auditors and the adequacy of internal control systems and reviewing the adequacy of internal audit function, including the structure of the internal audit department, staffing and seniority of the official heading the department, reporting structure coverage and frequency of internal audit.

• Discussion with internal auditors any significant findings and follow up thereon.

• Reviewing the finding of any internal investigations by the internal auditors into matters where there is suspected fraud or irregularity of a failure of internal control systems of a material nature and reporting the matter to the Board.

• Discussion with statutory auditors before the audit commences, nature and scope of audit as well as have post audit discussion to ascertain any area of concern.

• Reviewing the Company's financial and risk management policies (if any).

• Scrutiny of inter-corporate loans and investments.

• Valuation of undertakings or assets of the Company, wherever it is necessary.

• Evaluation of internal financial controls and risk management systems.

• Approval of appointment of CFO (i.e., the Whole Time Finance Director or any other person heading the finance function or discharging that function) after assessing the qualifications, experience & background etc. of the candidate.

• Review and monitor the Auditor's independence, performance and effectiveness of audit process.

• Approve policies in relation to the implementation of the Insider Trading Code and to supervise implementation of the same.

37. NOMINATION REMUNERATION COMMITTEE:

The Board has, on the recommendation of the Nomination & Remuneration Committee framed a policy for selection and appointment of Directors, Senior Management and their remuneration.

Nomination remuneration and compensation committee policy (NRC Committee):

The NRC Committee of the Company shall be formed by the Board of Directors of the Company out of its Board members. The NRC Committee shall consist of minimum three non-executive directors out of which two shall be independent directors. The chairperson of the Company may be appointed as a member of the NRC Committee but shall not chair the NRC Committee. The Chairman of the NRC Committee shall be an independent director. No member of the NRC Committee shall have a relationship that may interfere with his independence from management and the Company or with the exercise of his duties as a NRC committee member. The NRC Committee may invite such of the executives of the Company, as it considers appropriate (and particularly the Managing Director) to be present at the meetings of the NRC committee, but on occasions it may also meet without the presence of any executives of the Company. The Company Secretary shall act as the Secretary to the NRC Committee.

The Nomination and Remuneration Policy is available on the Company's website at: https://www.harishtextile.com/investors/policies

Remuneration Policy:

The Remuneration policy of your Company is a comprehensive policy which is competitive, in consonance with the industry practices and rewards good performance of the employees of the Company. The policy ensures equality, fairness and consistency in rewarding the employees on the basis of performance against set objectives. Remuneration of employees largely consists of basic remuneration and performance incentives. The Company while deciding the remuneration package takes into consideration the employment scenario, remuneration package of the industry and the remuneration package of other Industries.

The Remuneration of the Executive Directors is decided by the Nomination and Remuneration Committee based on criteria such as industry benchmarks, the Company's performance vis-avis the industry performance, track record of the Executive Directors.

The Nomination and Remuneration committee met six time during the year dated 18^th May, 2023, 06^th July, 2023, 04^th September, 2023, 09^th November, 2023, 11^th December, 2023, and 07^th March, 2024. Company Secretary of the Company acted as the Secretary to the Committee.

The members of the Nomination and Remuneration Committee and their attendance at committee meetings are as under:

#Ms. Sushmita Swarup Lunkad (DIN: 09044848) was appointed as a Non-Executive, Independent Director of the Company w.e.f. 04^th September, 2023.

*Mrs. Meena Ramesh Mistry (DIN: 07142544) has resigned from the post of Non-Executive, Independent Director of the Company w.e.f. 11^th December, 2023.

The Company has not issued any Stock options to the Directors. Independent Directors of the Company have disclosed that they do not hold any Equity Shares of the Company. There has been no pecuniary relationship or transactions of the Non-Executive Directors vis-a-vis the Company during the year under review.

The Committee in particular looks into:

The nomination and remuneration committee of the Company is constituted in line with the provisions of Regulation 19 with Part D of the Schedule II of SEBI Listing Regulations, read with Section 178 of the Act.

• Recommend to the Board the setup and composition of the Board and its Committees.

• To approve the annual Remuneration of the Directors and Employees of the Company.

• To review the performance of the Chairman and Managing Director and the Whole-time Directors after considering the company's performance.

• To review overall compensation policy, service agreements, performance incentive and other employment conditions of Executive Director(s).

• Recommend to the Board the appointment/re-appointment of Directors and Key Managerial Personnel.

• Recommend to the Board the Remuneration Policy for Directors, executive team or Key Managerial Personnel as well as the rest of employees.

• Support the Board and Independent Directors in evaluation of the performance of the Board, its Committees and individual Directors.

• Oversee familiarization programs for Directors.

38. STAKEHOLDERS RELATIONSHIP COMMITTEE:

The Stakeholders' Relationship Committee is constituted in line with the provisions of Regulation 20 of SEBI Listing Regulations read with Section 178 of the Companies Act, 2013.

Terms of reference:

The Committee is responsible for assisting the Board of Directors in the Board's overall responsibilities relating to attending and redressal of the grievances of the security holders of the Company.

Functions:

The Members of the stakeholders' relationship committee met four during the financial year under review dated 27^th July, 2023, 04^th September, 2023, 11^th December, 2023 and 07^th March, 2024. Company Secretary of the Company acted as the Secretary to the Committee.

The Composition of the Shareholders Relationship Committee constituted and details of the meetings attended by the Directors are given below.

The members of the stakeholders' relationship committee and their attendance at committee meetings are as under:

#Ms. Sushmita Swarup Lunkad (DIN: 09044848) was appointed as a Non-Executive, Independent Director of the Company w.e.f. 04^th September, 2023.

*Mrs. Meena Ramesh Mistry (DIN: 07142544) has resigned from the post of Non-Executive, Independent Director of the Company w.e.f. 11^th December, 2023.

The committee meets at frequent intervals, to approve inter-alia, transfer/ transmission of Equity shares, non-receipt of annual Report, attending to complaints of investors routed by SEBI/Stock Exchanges and reviews the status of investors' grievances and redressed mechanism and recommend measures to improve the level of investor services. Details of share transfer / transmission approved by the committee are placed at the Board meetings from time to time. Company Secretary of the Company acted as the Secretary to the Stakeholders Relationship Grievance Committee.

The Committee in particular looks into:

• To oversee and review redressal of shareholder and investor grievances, on matters relating to issue, transfer, transmission of securities, non-receipt of annual report, non-receipt of dividends/interests.

• To issue duplicate share/debenture certificate(s) reported lost, defaced or destroyed as per the laid down procedure and to resolve the grievances of security holders of the Company, if any.

• Attending to complaints of security holders routed by SEBI (SCORES)/Stock Exchanges/RBI or any other Regulatory Authorities.

• Taking decision on waiver of requirement of obtaining the Succession Certificate/Probate of Will on case to case basis within the parameters set out by the Board of Directors.

• To monitor transfer of the amounts/shares transferable to Investor Education and Protection Fund.

• To list the securities of the Company on Stock Exchanges.

• Any other matters that can facilitate better investor services and relations.

• Review activities with regard to the Health Safety and Sustainability initiatives of the Company.

• Review of the various measures and initiatives taken by the listed entity for reducing the quantum of unclaimed dividends and ensuring timely receipt of dividend warrants / annual reports / statutory notices by the shareholder of the Company.

During the year under review, few queries/complaints were received from shareholders/investors and all of them got resolved on time. Hence, no complaint / query is remaining unresolved & pending as on 31^st March 2024. The number of pending share transfers as on 31^st March 2024 were Nil.

39. INDEPENDENT DIRECTORS' MEETING:

During the year under review, as required under Schedule IV to the Companies Act, 2013 and the provisions of SEBI Listing Regulations, 2015, the Independent Directors met on 07^th March, 2024, without the presence of Executive Directors or members of management, inter alia, to discuss:

• Evaluation of performance of Non-Independent Directors and the Board of Directors as a whole

• Evaluation of performance of the Chairman of the Company, taking into account the views of the Executive and Non-Executive Directors

• Evaluation of the quality, content and timelines of flow of information between the Management and the Board that is necessary for the Board to effectively and reasonably perform its duties.

40. VIGIL MECHANISM (WHISTLE BLOWER POLICY):

The Company's Whistle Blower Policy provides a mechanism under which an employee/director of the Company may report unethical behaviour, suspected or actual fraud, violation of code of conduct and personnel policies of the Company. The Vigil Mechanism ensures standards of professionalism, honesty, integrity and ethical behaviour. The Whistle Blower Policy/Vigil Mechanism is uploaded on the Company's website at https ://www. harishtextile.com/investors/Dolicies

During the year under review, there were no complaints received under this mechanism.

41. RISK MANAGEMENT POLICY:

As per Regulation 21 of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulation, 2015 the top 1000 listed entities need to adopt Risk Management Policy. Therefore, the Company is not required to adopt Risk Management Policy.

42. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES:

The particulars of every contract or arrangements entered into by the Company with related parties referred to in sub-section (1) of Section 188 of the Companies Act, 2013 including certain arm's length transactions under third proviso thereto have been disclosed in Form No. AOC-2 as Annexure-IV.

43. CORPORATE SOCIAL RESPONSIBILITY:

The Company is not required to constitute a Corporate Social Responsibility Committee as it does not fall within the purview of Section 135(1) of the Companies Act, 2013 and hence it is not required to formulate policy on Corporate Social Responsibility.

44. PARTICULARS OF EMPLOYEE:

None of the employees of the Company is drawing remuneration in excess of the limits described under rule (5) (2) chapter XIII as provided under section 197 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. The information required under section 197 of the act read with rule (5)(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are mentioned in the Annexure V.

45. VARIOUS POLICIES OF THE COMPANY:

In accordance with the provisions of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and the Companies Act, 2013 the Company has formulated, implemented and amended (as per the Companies (amendments) Act, 2017, SEBI (Prohibition of Insider Trading) (Amendment) Regulations, 2019) and SEBI (Listing Obligations and Disclosure Requirements) (Amendment) Regulations, 2018 and other applicable provisions, Company has formulated various policies and the Amended copy of all such Policies are available on Company's website (www.harishtextile.com). The Policies are reviewed periodically by the Board and updated based on need and requirements.

46. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS:

Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the notes to the Financial Statements.

47. POLICY FOR PROHIBITION OF INSIDER TRADING:

Vide notification no. EBI/LAD-NRO/GN/2018/59 Securities and Exchange Board of India (SEBI) has notified SEBI (Prohibition of Insider Trading) (Amendment) Regulations, 2018. The Company has accordingly amended its Prohibition of Insider Trading Code and Code of Practices and Procedures for Fair Disclosure of Unpublished Price Sensitive Information. The Code also provides for pre-clearance of transactions by designated persons, whenever required.

The Company follows closure of trading window for the end of every quarter till 48 hours after the declaration of financial results. The Company has been advising the designated persons covered by the said Code not to trade in Company's securities during the closure of trading window period.

48. PREVENTION OF SEXUAL HARASSMENT AT WORKPLACE:

As per the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013 ("POSH Act") and Rules made thereunder, the Company has formed an Internal Committee to address complaints pertaining to sexual harassment in the workplace. The Company policy mandates prevention of sexual harassment and to ensure a free and fair enquiry process with clear timelines for resolution. During the year under review, there were no cases filed under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

The Prevention of Sexual Harassment (POSH) of Women at Workplace Policy is available on the Company's website at: https://www.harishtextile.com/investors/policies.

49. INTERNAL AUDITORS:

Subsequent to the close of the year, as recommended by the Audit Committee, M/s Ravi H. Dasija & Co., Chartered Accountants have been re-appointed as an Internal Auditors of the Company for the three financial year with effect from FY 2022-2023 to 2024-2025.

50. REMUNERATION TO DIRECTOR AND EMPLOYEES:

Details/Disclosures of ratio of remuneration to each Director to median employee's remuneration as required pursuant to Section 197(12) of the Companies Act 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 and details of remuneration paid to Employees vide Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is given as Annexure- V.

51. ACKNOWLEDGEMENTS:

Your Directors would like to express their sincere appreciation for the assistance and cooperation received from various stakeholders including financial institutions and banks, government authorities and other business associates who have extended their valuable support and encouragement during the year under review.

Your Directors take this opportunity to place on record their appreciation for the committed services rendered by the employees of the Company at all levels, who have contributed significantly towards the Company's performance and for enhancing its inherent strength.

Your Directors also acknowledge with gratitude the encouragement and support extended by our valued shareholders.