Classic Filaments Ltd

To,

The Members,

Classic Filaments Limited

The Board of Directors of the Company takes pleasure in presenting the 34^th Annual Report along with the Audited Accounts for the Financial Year 2023-24.

1. FINANCIAL RESULTS:

The Financial performance of the Company for the Financial Year ended 31^st March, 2023, is summarized below:

2. OPERATION:

The year gone by continued to be impacted by the multi-dimensional economic hurdles. The strain on the global supply chain networks led to runaway inflation and the situation has only worsened with the on-going geo-political conflict further fracturing the supply chain stability. Through this uncertainty, what has stood out is the resilience of mankind, to look for opportunities in adversities, to innovate and address the challenges. Your Company is making every effort too to show the same resilience to overcome all the challenges and continues to forge ahead in its journey. Throughout its journey, your Company has relentlessly looked at innovation to provide newer and better value propositions for customers, to cater to their said and unsaid needs and thus increase our relevance to them. However, in past few years, the Company is facing the situation which will take some time to overcome and get back to its full.

It can also be noted that Company was successfully takenover through Open Offer under SEBI (Substantial Acquisition of Shares and takeovers) Regulations, 2011 and New Promoters are expected to bring positive changes in the Company which may lead to strong growth prospect for the Company.

During the period ended 31^st March, 2024, the loss suffered by the Company amounts to Rs. 9.98 lakhs as compared to loss suffered in the previous year 31^st March, 2023 which was Rs. 9.90 lakhs. As we can evaluate from the current situation, Company is facing a huge burden and continues to suffer the beating of the global slowdown and soaring inflation. New Management is taking all the possible steps to revive the Company and make it competitive in the global market. The phase which Company is going through is temporary and our new management is confidence to get back in the business soon.

3. DIVIDEND AND TRANSFER TO RESERVES:.

In view of losses incurred, no dividend was declared during the financial year under review and no amount was transferred to reserves during the year under review.

4. PUBLIC DEPOSITS:

The Company has not accepted or renewed any amount falling within the purview of provisions of Section 73 of the Companies Act 2013 ("the Act") read with the Companies (Acceptance of Deposit) Rules, 2014 during the year under review. Hence, the requirement for furnishing of details relating to deposits covered under Chapter V of the Act or the details of deposits which are not in compliance with the Chapter V of the Act is not applicable. The borrowing from a Director during the year was to the extent of Rs.13,50,000/-, Opening balance of Rs. 4,00,000/-, repaid during the year was Rs. 3,00,000/- and Outstanding balance at the end of the year stands at Rs. 14,50,000/-. Further, in respect of amount borrowed from Directors, the Company received a declaration that the said amount was not given by them out of borrowed funds.

5. REPORT ON THE PERFORMANCE OF THE SUBSIDIARIES, ASSOCIATES & JOINT VENTURE COMPANIES:

The Company does not have any Subsidiary, Joint Venture & Associate Company.

6. PARTICULARS OF EMPLOYEES:

During the Financial Year, the Company does not have any employee who was in receipt of remuneration exceeding Rupees One Crore and Two Lakh for the year or exceeding Rupees Eight Lakhs and Fifty Thousand per month or for any part of the year.

The Company is not required to give the ratio of the remuneration of each Director to the median remuneration of the employees of the Company and other details in terms of Sub-Section 12 of Section 197 of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as none of the Directors of the Company is receiving Remuneration from the Company.

7. DIRECTORS AND KEY MANAGERIAL PERSONNEL:

The Board consists of 5 Directors, out of which 2 are Independent Directors including a Woman Director. During the year under review, there was no Change in the Constitution of the Board except the following:

Mr. Subhash Patle (DIN: (DIN: 00369492), Independent Director of the Company tendered his resignation on 18^th August, 2023.

Based on the recommendations of the Nomination and Remuneration Committee, and in terms of the provisions of the Companies Act, 2013 Mr. Amit Patel (DIN: 00249262) was appointed as Additional Director (Non-independent and Non-executive). Further, based on the recommendations of the NRC and subject to the approval of the Members, the Board, in accordance with the provisions of Section 152 read with other applicable provisions and rules of the Companies Act, 2013 proposes to regularise his appointment as Non-Executive Director (Non-Independent) liable to retire by rotation. Further, no KMPs was appointed and none of the existing KMPs have resigned during the year under review.

As per the provisions of Section 152(6) of the Companies Act, 2013, Mr. Jayanti Gaudani ((DIN- 03571671)), retires by rotation at the ensuing Annual General Meeting and being eligible, has offered himself for reappointment as the Director of the Company.

8. COMMITTEES OF THE BOARD:

The Board has constituted Committees pursuant to provisions of Companies Act, 2013, and rules framed thereunder and as per the SEBI (LODR) Regulations, 2015.

The committees of the Board are Audit Committee, Stakeholders Relationship Committee and Nomination and Remuneration Committee.

Audit Committee Meeting:

The Constitution of Audit Committee is as per the requirements of the Companies Act, 2013 and the SEBI (LODR), Regulations, 2015.

Stakeholders Relationship Committee:

The Constitution of Stakeholder Relationship Committee is as per the requirements of the Companies Act, 2013 and the SEBI (LODR), Regulations, 2015.

Nomination and Remuneration Committee Meeting:

The Constitution of Nomination and Remuneration Committee is as per the requirements of the Companies Act, 2013 and the SEBI (LODR), Regulations, 2015.

9. NUMBER OF BOARD MEETINGS & ATTENDANCE OF DIRECTORS:

During the financial year under review, the Board of Directors met 5times.

Board Meetings:

In addition to the above and as required under Schedule IV to the Companies Act, 2013 1(One) Separate Meeting of Independent Directors was held on Monday, 5^th February, 2024.

10. EVALUATION OF BOARD:

Pursuant to the provisions of the Companies Act, 2013 and Securities and Exchange Board of India (SEBI) (Listing Obligations and Disclosure Requirements) Regulations, 2015 (LODR), the Board has carried out the annual performance evaluation of independent directors. A structured questionnaire was prepared after taking inputs received from the Directors, covering various aspects of the Board's functioning such as adequacy of the composition of the Board and its Committees, Board culture, execution and performance of specific duties, obligations and governance for the performance evaluation of Independent Directors. The Nomination and Remuneration Committee reviewed the results of the annual performance evaluation of Independent Directors and expressed overall satisfaction on the performance of the Independent Directors, Non-Independent Directors, Chairman and the Board as a whole (including its Committees).

11. DIRECTOR'S RESPONSIBILITY STATEMENT:

As required under Section 134 (3) (c) of the Companies Act, 2013, your Directors confirm that:

i. In the preparation of the Annual Accounts for the year ended on 31^st March, 2024, the applicable accounting standards have been followed along with proper explanation relating to material departures.

ii. The Directors 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 on 31^st March, 2024 and of the Loss of the Company for that period.

iii. The Directors have taken proper and sufficient care for the maintenances of adequate accounting records in accordance with the provision of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

iv. The Directors have prepared the Annual accounts on a going concern basis.

v. The Directors have laid down proper internal financial controls to be followed by the company and that such financial controls are adequate and are operating effectively.

vi. The Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

12. DECLARATIONS GIVEN BY INDEPENDENT DIRECTORS:

The Company has received declarations from all the Independent Directors that they meet the criteria of Independence as prescribed under the provisions of the Act, read with the Schedule and Rules issued thereunder, and the Listing Regulations. There has been no change in the circumstances affecting their status as Independent Directors of the Company and they have registered themselves with the Independent Director's Database maintained by the IICA.

None of the Directors of the Company are disqualified for being appointed as Directors as specified in Section 164(2) of the Act and Rule 14(1) of the Companies (Appointment and Qualification of Directors) Rules, 2014.

13. FAMILIARIZATION PROGRAM FOR INDEPENDENT DIRECTORS:

The familiarization program seeks to update the Directors on the roles, responsibilities, rights and duties under the Act and other statutes. The Company has framed a policy on familiarization program for Independent Directors.

14. AUDITORS:-

The Members at the 28^th Annual General Meeting (‘AGM') of the Company held on September 28, 2018, had approved appointment of M/s B. Chordia & Co., Chartered Accountants, Surat (Firm Registration No. 121083W), as the Statutory Auditors of the Company to hold office from the conclusion of the 28^th AGM till the conclusion of the 33^rd AGM of the Company..

After evaluating and considering various factors such as industry experience, competency of the audit, efficiency in conduct of audit, independence, etc., the Board of Directors of the Company (‘Board') has, reappointed M/s B. Chordia & Co, Chartered Accountants, as the Statutory Auditors of the Company, for the second consecutive term of five years from the conclusion of 33^rd AGM till the conclusion of 38^th AGM of the Company to be held in the year 2028, at a remuneration as may be mutually agreed between the Board and the Statutory Auditors.

15. AUDITORS REPORT:

The Statutory Auditors Report for the Financial Year ended 31^st March, 2024 does not contain any qualifications, reservations, adverse remarks or disclaimers.

16. DETAILS IN RESPECT OF FRAUDS REPORTED BY AUDITORS PURSUANT TO SECTION 143(12) OF THE COMPANIES ACT, 2013:

During the year under review, there were no incidences of fraud reported by Auditors

17. 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:

In terms of the information required under Clause (l) of Sub-section (3) of Section 134, it is to be noted that the soaring inflation and multiple goe-politic factors have significantly impacted the financial position and operating environment for the Company. Currently, the Company is trying to come out with ways under which operations of the Company can be restored.

18. CONSERVATION OF ENERGY & TECHNOLOGY ABSORBTION:

Since the Company is not a manufacturing unit, provisions of Section 134 (3)(m) of the Companies Act, 2013, read with the Companies (Accounts) Rules, 2014, regarding conservation of energy, technology absorption, are not applicable to the Company.

19. FOREIGN EXCHANGE EARNINGS AND OUTGO:

During the period under review, there were no Foreign Exchange Earnings and Outgo.

20. WEBSITE LINK OF ANNUAL RETURN:

Pursuant to Section 92(3) read with Section 134(3)(a) of the Companies Act, 2013 the Annual Return is available on Company's website on https://classicfilamentsltd.com/investor-relation/annual-return/

21. SECRETARIAL AUDIT REPORT:

Pursuant to provisions of Section 204 of the Companies Act, 2013 and Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company had appointed Mr. Sonesh Jain (Membership No.: F9627 and CP No.: 11865), Proprietor of M/s Jain Sonesh & Associates, Company Secretary in Practice, Howrah as Secretarial Auditors of the Company for the Financial Year ended 31^st March, 2024 and 31^st March, 2025. The Company has obtained Secretarial Audit Report which is annexed as "Annexure 1" to this Report.

Explanation on Remark Made by Secretarial Auditor in his Report:

1. Mr. Ruchir Mittal, Outgoing Promoter was named as Wilful Defaulter from 22^nd March, 2019 by the Bank of Baroda Wilful Defaulter List. As per the explanation given by the Company regarding this, it was stated by the Management that Mr. Ruchir Mittal has never communicated regarding his status as willful defaulter and it has come to the notice on 17^th October, 2023 i.e. during the process of Open Offer to Takeover the Company under SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011.

22. ANNUAL SECRETARIAL COMPLIANCE REPORT:

As per BSE Circular LIST/COMP/12/2019-20 issued on 14^th May, 2019, it was clarified that the Regulation 24A of SEBI (Listing Obligation and Disclosure Requirements) Regulations, 2015 is not applicable to those Companies who have claimed exemption under Regulation 15(2) of SEBI (LODR) Regulations, 2015 and are not required to get the Annual Secretarial Compliance Report.

23. COMPANY'S POLICY ON DIRECTORS' APPOINTMENT AND REMUNERATION:

As per the recommendation of the Nomination & Remuneration Committee, the Board has framed a policy for selection and appointment of Directors and Senior Management Personnel including criteria for determining qualifications, positive attributes, independence etc., of a Director. As required by Section 178 of the Companies Act, 2013 read with Rule 5 of Companies (Appointment and Remuneration of

Managerial Personnel) Rules, 2014, the prescribed details w.r.t. Policy of Directors' Appointment is annexed as "Annexure 2"to this report. However, presently, the Company is not paying remuneration or sitting fees (if applicable) to any of the Directors, Key managerial Personnel and Senior Managerial Personnel of the Company except to Mrs. Ankita Shroff, Company Secretary and Compliance Officer of the

Company. The Policy w.r.t. the same is available on Company's website i.e. www.classicfilamentsltd.com

24. INTERNAL AUDITORS:

According to the recommendation of the Audit Committee, the Board had appointed Mr. Pritin D. Patel, Chartered Accountants, Surat, (Firm Registration No. 150778W & Membership No. 189378), as an Internal Auditors of the Company for the Financial Year 2023-24. The Internal Auditors were required to report to the Audit Committee of the Board after conducting comprehensive audit of operations of the Company.

25. CHANGE OF REGISTRAR AND SHARE TRANSFER AGENT:

The Board of Directors at its meeting held on 26^th April, 2023 has resolved to change its Registrar and

Share Transfer Agent (‘RTA') from M/s Satellite Corporate Services Private Limited having its Registered Office at A 106& 107, Dattani Plaza, East west Compound, Andheri Kurla Road, Safed Pool, Sakinaka, Mumbai-400072 to M/s Skyline Financial Services Private Limited having its Registered Office at D-153A, 1^st Floor, Okhla Industrial Area, Phase-I, New Delhi-110020.

26. DISCLOSURE OF ORDERS PASSED BY REGULATORS OR COURTS OR TRIBUNAL:

No orders have been passed by any Regulator or Court or Tribunal which can have impact on the going concern status and the Company's operations in future. However the Company had received a Demand Notice on 29-01-2021 from the Asst. Commissioner of State Tax imposing a penalty for wrongful availment of Input Tax Credit ascertained from July, 2017 to March, 2020 and to pay sum of Rs. 20,57,352/-.

The Company has received Show Cause Notice from GST Department regarding cancellation of GST Registration Number. Company received the said notice after the time schedule prescribed in the said notice and hence was unable to represent itself. As a consequence to this, the GST Department has passed Ex Parte Order against the Company cancelling GST Registration. Company is under process of taking appropriate steps in order to revoke the suspension of the said order and to restore the GST Registration

The Company is defending the matter before the authority. Further, as the matter is unascertained, the accurate information pertaining to the same cannot be provided at this stage. The same will materialise only on the final conclusion of the matter.

27. PARTICULARS OF LOAN, GUARANTEES OR INVESTMENT:

The particulars of loans, guarantees and investments as per section 186 of the Act by the Company, have been disclosed in the financial statements.

28. CORPORATE GOVERNANCE REPORT:

Pursuant to Regulation 15(2) of the SEBI (LODR) Regulations, 2015, the provisions of Regulation 17 to 27 and clauses (b) to (i) of Regulation 46(2) and Para C, D and E of Schedule V, are not applicable to the Company, as the paid up Share Capital of the Company is less than Rs. 10 Crores and Net worth being less than Rs. 25 Crores. Further, the Company is not required to obtain Certificate for Non-disqualification of Directors.

29. CORPORATE SOCIAL RESPONSIBILITY:

The Company has not developed and implemented any Corporate Social Responsibility Policy pursuant to the provisions of Section 135 of the Companies Act 2013 and relevant Rules framed thereunder as the said provisions were not applicable to the Company as the Company had incurred losses during the relevant period.

30. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES:

None of the transactions with related parties fall under the scope of section 188 of the Act. Accordingly, the disclosure of related party transactions as required under Section 134(3)(h) of the Act in Form AOC-2 is not applicable to the Company for the FY 2023-24 and hence does not form part of the Report. The policy on

Related Party Transactions is available on the Company's website ‘www.classicfilamentsltd.com'.

31. INTERNAL FINANCIAL CONTROLS:

The Board hereby reports that the Internal Financial Controls were reviewed by the Audit Committee and there were adequate Internal Financial Controls existed in the Company with respect to the Financial Statements for year ended on 31^stMarch, 2024 and the Internal Financial Controls are operating effectively.

32. RISK MANAGEMENT POLICY:

The Company has in place a mechanism to identify, assess, monitor and mitigate various risks to key business objectives. Major risks identified by the businesses and functions are systematically addressed and also discussed at the meetings of the Audit Committee and the Board of Directors of the Company. The

Company's internal control systems are commensurate with the nature of its business and the size and complexity of its operations.

33. CAUTIONARY STATEMENT:

Statement in the Board's report describing the Company's objectives, expectations or forecasts may be forward-looking within the meaning of applicable securities laws and regulations. Actual results may differ materially from those expressed in the statement. Important factors that could influence the

Company's operations include global and domestic demand and supply conditions affecting selling prices of finished goods, input availability and prices, changes in government regulations, tax laws, economic developments within the country and other factors such as litigation and industrial relations.

34. VIGIL MECHANISM/WHISTLE BLOWER:

The Board of Directors have set up the Whistle Blower Policy i.e. Vigil Mechanism for Directors and Employees of the Company to report concerns about unethical behaviour, actual or suspected fraud, or violations of Company's Code of Conduct or Ethics Policy. It also provides for adequate safeguards against victimization of persons who use this mechanism and direct access to the Chairperson of the Audit Committee in exceptional cases. The detailed Vigil Mechanism Policy is available at Company's website ‘www.classicfilamentsltd.com'.

35. PREVENTION OF SEXUAL HARASSMENT:

The Company has zero tolerance for sexual harassment at workplace and has adopted a policy on prevention, prohibition and redressal of sexual harassment at workplace in line with the provisions of the Sexual harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and Rules framed there under. No complaints were received during the year under the said policy. Further, necessary steps are being taken by the Board for complying with provisions of the said Act.

36. MAINTENANCE OF COST RECORDS:

Maintenance of cost records as specified by the Central Government under sub-section (1) of section 148 of the Companies Act, 2013, is not required by the Company and accordingly such accounts and records are not required to be made and maintained.

37. SECRETARIAL STANDARD:

The Company has complied with the provisions of all the applicable Secretarial Standard issued by the Institute of Company Secretaries of India (‘ICSI') and that such systems are adequate and operating effectively.

38. DETAILS OF APPLICATION MADE OR ANY PROCEEDING PENDING UNDER THE INSOLVENCY AND BANKRUPTCY CODE, 2016:

During the year under review there was no application made or pending proceeding under the Insolvency and Bankruptcy Code, 2016.

AND VALUATION WHILE AVAILING LOAN FROM THE BANKS OR FINANCIAL INSTITUTIONSTION (FI):

During the year under review the company has neither made any one time settlement nor have taken any loan from the Bank or FI.

FORWARD-LOOKING STATEMENTS

This report contains forward-looking statements based on certain assumptions and expectations of future events. The Company, therefore, cannot guarantee that these assumptions and expectations are accurate or will be realized. The Company's actual results, performance or achievements can thus differ materially from those projected in any such forward-looking statements. The Company assumes no responsibility to publicly amend, modify or revise any forward looking statements, on the basis of any subsequent developments, information or events.

INDUSTRY

Textile Industry in general is passing through a challenging phase due to multiplicity of reasons beyond its control and trying to cope up with challenges under the grave market condition. However, this phase is likely get over in couple of years and Company will again gain its momentum in the time to come. Further, Company is taking the futuristic view of the business and is under constant endeavour to improve the current condition in order to perform better.

BUSINESS OVERVIEW

The Company has reported Nil Turnover during the year 2023-24. Such a sharp negative condition was attributable to inflation, economic conditions, geo-political disturbance and the global inflationary condition. However, the condition is temporary and positive growth is expected in the years to come.

MARKETING

The Company is planning marketing strategy in line with changing situation to increase the bottom line as well as turnover.

SWOT

Our strength is our determination, weakness is the low equity base, opportunities are multiples and threats are posed by the current and unprecedented economic conditions. Current situation posed by global inflation and geo-political disturbance has changed the equations of business conduct and operations. It has become very difficult to operate in the current market which is facing drastic set back. However, we are dedicated towards the Company and presently working on the model suitable to the existing situation.

INTERNAL CONTROL AND THEIR ADEQUACY

The Company has an internal control system, commensurate with the size of its operation. Adequate records and documents were maintained as required by laws. The Company's audit Committee reviewed the internal control system. All efforts are being made to make the internal control systems more effective.

SEGMENT WISE REPORTING

The company has business activity within a single primary business segment viz "Textiles" and is a single geographical segment.

RISKS AND CONCERNS

In any business, risks and prospects are inseparable. As a responsible management, the Company's principal endeavor is to maximize returns. The Company continues to take all steps necessary to minimize losses through detailed studies and interaction with experts.

MATERIAL DEVELOPMENTS IN HUMAN RESOURCES / INDUSTRIAL RELATIONS FRONT

The industrial relations continued to be harmonious and cordial providing an atmosphere conducive to sustenance of growth and enhancement of value for shareholders.

DETAILS OF SIGNIFICANT CHANGES (I.E. CHANGE OF 25% OR MORE AS COMPARED TO THE IMMEDIATELY PREVIOUS FINANCIAL YEAR) IN KEY FINANCIAL RATIOS

The said details are mentioned in the Notes to the financial statements for the year ended 31^st March, 2024.

SIGNIFICANT CHANGE IN RATIO OF RETURN ON NET WORTH AS COMPARED TO THE IMMEDIATELY PREVIOUS FINANCIAL YEAR:

Due to losses incurred during the current Financial Year, there has been negative return in Net Worth from (1.68%) during the previous year to (1.73%) during the current year.

CAUTIONARY STATEMENT

Statement in this Management's Discussion and Analysis detailing the Company's objectives, projections, estimates, expectations or predictions are "forward-looking statements" within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Company's operations include global and Indian demand-supply conditions, finished goods prices, stock availability and prices, cyclical demand and pricing in the Company's principal markets, changes in Government regulations, tax regimes, economic developments within India and the countries within which the Company conducts business and other factors such as litigations and labour negotiations.

41. ACKNOWLEDGEMENT:

The Board expresses its sincere thanks to all the employees, customers, suppliers, investors, lenders, regulatory and government authorities for their co-operation and support and look forward to their continued support in future.