The members of The Company

Your Directors take pleasure in presenting the 27th Annual Report of the Company along with the audited financial statements for the year ended March 31, 2015, for your perusal, consideration and adoption.


The financial performance for the fiscal 2015 is summarised in the following table

(Rs. in lacs)



2014-2015 2013-2014
Income from Operations 8,604.44 5,292.09
Other Operating Income 108.79 89.79
Other Income 24.38 43.65
Total Income 8,737.61 5,425.53
Operating & Administrative Expenses 7,112.27 4,764.00
Operating Profit before Interest, Depreciation and Tax 1,625.34 661.53
Interest and Financial Charges 1,584.94 941.33
Depreciation and Amortisation 835.24 714.51
Profit Before Tax (794.84) (994.31)
Tax Expenses (0.14) (215.84)
Short Provisions for Taxes -- --
Profit After Tax (794.70) (778.47)


Your Company has achieved a turnover of Rs. 8713.23 Lac and a net loss of Rs. 794.70 Lac for the financial year ended March 31, 2015 as against a turnover Rs. 5381.88 Lac and net loss of Rs. 778.47 respectively during the previous year, representing topline growth by 61.91%.

Depreciation and amortization charge was increased from Rs. 714.51 lac to Rs. 835.24 lac during the financial year 2014 -15.

Interest charge was increased from Rs. 941.33 lac to Rs. 1584.94 lac during the financial year 2014-15.

Employee benefit expenses have increase from Rs. 376.22 lac to Rs. 501.13 lac, making an increase of 33.21%. It signifies that the Company has boosted its human resources and invested in bringing experienced professionals in the organisation.

The performance of the Company during the fiscal 2014-15 have leading performances that have set the foundation for future growth.


The Company has taken a number of steps to sustain its leadership position in the market and has been strengthening its relationships with its customers. In addition it is also making constant efforts to add new customers and widen its customer base.

The combination of additional capacity of our new plant i.e. 15000 MTPA and integration has had a positive impact on the Companys operating margins. Your Company believes to strengthen its topline and margins in the coming years. We have received all approvals from different customers that validate our product quality.

The Company continued its focus on strengthening local manufacturing capabilities. However, it also analyzed the trends in the steel industry and adapted to rapid development occurring in the world of steel. The Company has adopted strategic measures to minimize the adverse macro economic implications.


The Company on October 10, 2014 allotted 600,000 Equity Shares of nominal value of Rs. 10/- each at a price of Rs. 37.50/- per equity share, including premium of Rs. 27.50/- per equity share to Promoters of the Company against an option attached to the Warrants to convert each warrant into fully paid up Equity Share, exercised by them with respect to balance 6,00,000 Warrants out of 1,200,000 Warrants allotted to them on May 28, 2013 on preferential basis in accordance with approval of shareholders under Section 81,81(1A) of the Companies Act, 1956 in the Extraordinary General Meeting held on April 2, 2013.

Further on October 10, 2014 your company allotted 10.00. 000 Warrants at a price of H45/- including premium of Rs. 35/- to Promoters of the Company on preferential basis in accordance with approval of shareholders under Section 62(1)(c) of the Companies Act, 2013 in the Extraordinary General Meeting held on August 14, 2014.


During the year the Company has converted balance 600,000 Warrants out of 1,200,000 Warrants allotted to Promoters into 600,000 Equity Shares under preferential allotment at Board meeting held on October 10, 2014. The Company has obtained In Principal approval for listing of the Shares from National Stock Exchange of India Limited on November 7, 2014 and BSE Limited on November 13, 2014. The Company has also completed necessary formalities from Central Depository Services (India) Limited and National Securities Depository Limited in these regard.

The Board of Directors of your company has its meeting held on July 14, 2014, inter alia has decided to issue 10.00. 000 convertible equity warrants of Rs. 45 each which are convertible into one Equity Share of the Company of Rs. 10 each per equity warrants at a price of Rs. 45 per Equity Share (i.e. premium of Rs. 35 per Equity Share) to the promoters and promoter group on preferential allotment basis. Subsequently Extra ordinary General Meeting held on August 14, 2014 for shareholders approval.


The credit rating of the Company has been revised from CARE BB- to CARE D for its long-term and short-term-bank facilities. The revision in the credit rating arises due to delay and cost overruns in the new project. The Company expects to improve its ratings in the coming year through capacity utilisation with substantial marketing efforts.


All the shareholders/investors complaints/grievances received during the financial year have been resolved and there were no investor grievances pending, as on March 31, 2015. A confirmation to this effect has been obtained from the Companys Registrar and Share Transfer Agent and authentication of the same can be verified from the SCORES website at The details regarding investor complaints received and resolved during the year are mentioned in the report on Corporate Governance annexed to this report.


A detailed review of operations, performance and future outlook of the Company is covered under a separate Annexure to this report as Managements Discussion & Analysis.


A separate Section on Corporate Governance is included in the Annual Report and the Certificate from M/s Samdani Kabra and Associates, Company Secretaries, Vadodara, the Companys Secretarial Auditors confirming the compliance of conditions on Corporate Governance as stipulated in Clause 49 of the Listing Agreement with Stock Exchanges is annexed thereto.


Your Directors report that the Company has not accepted any deposits during the current financial year.


Your Directors confirm that all the properties and insurable interests of the Company, including buildings, plant and machinery and stocks have been adequately insured.


In terms of Section 149, 152 and any other applicable provisions of the Companies Act, 2013, effective from April 01, 2014, Independent Directors are not to be included in the total number of directors of the Company for the purpose of determining the directors liable to retire by rotation. Accordingly, Shri Naresh B. Sanghvi retires at the forthcoming Annual General Meeting and being eligible offers herself for re-appointment.

Dr. Aruna Khasgiwala has appointed as additional director of the Company at Board Meeting held on May 29, 2015 pursuant to Sections 149, 150, 152,161 and other applicable provisions of the Companies Act, 2013.


Statutory Auditor

The comments of the Auditors in their report and the notes forming parts of the accounts are self-explanatory and need no comments.

M/s.Shah & Bhandari, Chartered Accountants, the Companys Statutory Auditors who retire at the conclusion of the ensuing Annual General Meeting and being eligible, offer themselves for reappointment. The Directors recommend the ratification and reappointment of M/s Shah & Bhandari and shall seek the approval of the members.

Internal Auditor

Pursuant to the provisions of Section 138 of the Companies Act, 2013 and The Companies (Accounts) Rules, 2014, the Company has appointed M/s Jain & Hindocha, Vadodara, Chartered Accountants as Internal Auditors of the Company for the FY 2014-15.

Secretarial Auditor

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/s Samdani Shah & Associate, Practicing Company Secretary, Vadodara to undertake the Secretarial Audit of the Company of the Company for the FY 2014-15. The Report of the Secretarial Audit Report is annexed herewith as "Annexure A".There is no qualification in the Secretarial Report submitted by M/s. Samdani Shah& Associates to the Company.


Many initiatives have been taken to support business through organizational efficiency, process change support and various employee engagement programmes which has helped the Organization achieve higher productivity levels. A significant effort has also been undertaken to develop leadership as well as technical/ functional capabilities in order to meet future talent requirement.

The Companys HR processes such as hiring and on- boarding, fair transparent online performance evaluation and talent management process, state-of-the-art workmen development process, and market aligned policies have been seen as benchmark practices in the Industry.

Pursuant to The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 notified on December 9, 2013, the Company has set up a Committee to look into complaints under the said Act. The Company has not received any complaints relating to sexual harassment at work place from any woman employee during the year.


None of the senior management personnel have undertaken financial and commercial transactions with the Company, where they have personal interest that would have a potential conflict with the interest of the Company at large.


Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions on these item during the year under review:

No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and Companys operations in future


The details forming part of the extract of the Annual Return in form MGT 9 is annexed herewith as "Annexure B".


All related party transactions that were entered into during the financial year were on an arms length basis and were in the ordinary course of business. There are no materially significant related party transactions made by the Company with Promoters, Directors, Key Managerial Personnel or other designated persons which may have a potential conflict with the interest of the Company at large.

All Related Party Transactions are placed before the Audit Committee as also the Board for approval. Prior omnibus approval of the Audit Committee is obtained during the year for the transactions which are of a foreseen and repetitive nature. The transactions entered into pursuant to the omnibus approval so granted are audited and a statement giving details of all related party transactions is placed before the Audit Committee and the Board of Directors for their approval. The Company has developed a Related Party Transactions policy for purpose of identification and monitoring of such transactions.

The policy on Related Party Transactions as approved by the Board is uploaded on the Companys website i.e. http://

All Related Party Transactions entered during the year were in Ordinary Course of the Business and on Arms Length basis. No Material Related Party Transactions were entered during the year by your Company. Accordingly, the disclosure of Related Party Transactions as required under Section 134(3) (h) of the Companies Act, 2013 in Form AOC 2 is not applicable.


During the year from April 2014 to March 2015, 6 Board Meetings and 4 Audit Committee Meetings were convened and held. The details of which are given in the Corporate Governance Report. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013.


To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statements in terms of Section 134(3)(c) of the Companies Act, 2013:

(a) that in the preparation of the annual financial statement for the year ended March 31, 2015, the applicable accounting standards had been followed along with proper explanation relating to material departures, if any

(b) that the accounting policies to the financial statement have been selected 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 as at March 31, 2015 and of the profit and loss of the company on that date;

(c) that proper and sufficient care has been taken 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) that the annual financial statement on a going concern basis; and

(e) that the proper internal financial controls were in place and that the internal financial controls were adequate and were operating effectively.

(f) that systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively.


All Independent Directors have given declarations that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 and Clause 49 of the Listing Agreement.


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. The Remuneration Policy is stated in the Corporate Governance Report.


Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed herewith as "Annexure C".

There were no employees coming within the purview of the provisions of Section 197(12) of the Act read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.


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.


Financial Status

Net Income from operations by 61.91% to Rs. 8713.23 Lacs.

Exports increase by 50.25 % to Rs. 1541.00 Lacs EBITDA increased by 61.10% to 18.40%

Approvals & Certifications

Approvals Certifications
Lloyds IBR ISO 9001-2008 TUV NORD
SGS ABS PED 97/23/EC TUV Rheinland

Material Changes and Commitments

Your Directors are of the opinion that there are no material changes and commitments affecting financial position of the Company which have occurred between end of financial year of the Company and the date of this report.


The Board of Directors has not recommended transfer of any amount of profit to reserve.


The Directors of your Company express their inability to recommend any dividend for the FY 2014-15 due to the current financial situation of the Company. However your Company is harbouring a positive outlook for the next fiscal with the commencement of commercial production and good returns in terms of revenue and profitability.


The Company has taken several steps towards conserving energy through its Sustainability initiatives, disclosed separately in the Annual Report. The information on Conservation of Energy as required under Section 134(3) (m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014 is provided in "Annexure D" of this Annual Report.


The Company has continuously exercised effective safety, health and environment policies. Water and air pollution control measures are successfully operated and industrial trade effluents are used for gardening. The tree plantation at the factory site is maintained properly and the same shall be duly taken care of at our new plant.


Pursuant to the requirement of Clause 49 of the Listing Agreement, the Company has constituted a Risk Management Committee. The details of Committee and its terms of reference are set out in the Corporate Governance Report forming part of the Boards Report.

The Company has a Risk Management framework to identify, evaluate business risks and opportunities. This framework seeks to create transparency, minimize adverse impact on the business objectives and enhance the Companys competitive advantage. The risk framework defines the risk management approach across the enterprise at various levels including documentation and reporting. The framework has different risk models which help in identifying risks trend, exposure and potential impact analysis at a Company level as also separately for business segments. Role and terms of reference of the Committee and Composition of Risk Management Committee are in Corporate Governance Report.

The following table lists some of the key risks which may be faced by the Company.

Key Risk Impact on the Company Mitigation Plan
Economic Environment and Market conditions Economic slowdowns or factors that affect the economic health of our customers countries and the said industries may increase risk to our revenue growth. Strategically, we seek to continuously expand the customer base to maximize the potential sales volumes and at the same time securing additional volumes from existing customers on the basis of our record of satisfactory performance in our earlier dealings.
Fluctuations in Foreign Exchange Substantial risk on account of adverse currency movements in global foreign exchange markets Implementing hedging strategies for foreign currency exposures, specification of transaction limits, monitoring and controlling such transactions.
Competition Competition will continue to intensify due to establishment of new capacities, expansion of existing capacities and consolidation of operations across the forging sector. We are strongly positioned in our designated market commanding a premium for our product
Environmental Risk Legal exposure in this regard is when polluting materials are discharged into the environment by causing danger to fragile environmental surrounding is a violation. For control of water pollution the Company has setup a sewage treatment plant at its Heavy Forging plant for the treatment of sewage/ effluent and it is further used for gardening and plantation and the industrial waste water generated from the plants is re-circulated into the process.
Cost Structure Cost of revenues consists primarily of raw materials including gas, power; etc., The cost of revenues has a very high degree of inflationary certainty. Controls costs through budgetary mechanism and its review against actual performance with the key objective of aligning them to the financial model.
Compliance Risk Increasing regulatory requirement may pose compliance related risk to the Company. Company have dedicated in house team of professionals to mitigate any compliance related risk. All process and check list, to comply with the statutory requirement are well documented and are regularly followed and reviewed to incorporate any changes.
Availability of desired Resources Non availability of resources with right skill at the right time may pose risk to the Company. Ability of the Company to attract and retain talent is critical. Focus on career inspiration for high performers and incentivize them with learning, growth and leadership opportunities.


The Company, having regard to its size and scope, is generally complied with relevant guidelines on Corporate Social Responsibility (CSR), even though not presently applicable to the Company. The Board has also constituted a committee at their Board Meeting held on May 26, 2014 in accordance with Section 135 of the Companies Act 2013 to mentor and monitor CSR activities.

The call of fulfilling our CSR activities has sincerely been taken by us and we accord as much significance to CSR as any business project and the results are there for everyone to see. Dedicated need-based interventions have been initiated in areas where we operate. Enabling local people by fostering self-reliance is the motive behind our community development efforts.

Therefore, our interventions are structured around promoting education as well as informal education of Tribal Children, generating livelihood, empowering women and overall, social mobility.

Your Company is also constantly making efforts to maintain a greener planet and reduce its carbon footprint as much as possible. Through financial contributions and active participation of employees, your Company provides support to non-profit organisation that address community sustainability. Your Company contributed through donations, rain water harvesting sponsorship and by participating in various activities.


Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, 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 and Compliance Committees. The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report.


During the year Company has formed its Wholly Owned Subsidiary Company in Netherlands in the name of "Sanghvi Europe BV".

Statement containing salient features of the financial statement of subsidiaries/associate companies / joint ventures is attached in Form AOC-I in Separate Section of this Annual Report.


Pursuant to the provision of Section 177 (8) of the Companies Act, 2013, Audit Committee comprises of experts specialised in accounting/financial management. The Chairman of the Audit Committee is a Non-Executive and Independent Director.

Composition of the Committee are as below:

Name Designation Category
Shri Ram S Chairman Non-Executive and
Kaushal Independent
Shri Baba Pai Member Non-Executive and Independent
Shri Vikram B Member Executive and
Sanghvi Non-Independent
Shri Shantaram Member Non-Executive and
Yarlagadda Independent


In staying true to our values of Strength, Performance and Passion and in line with our vision of being one of the most respected companies in India, the Company is committed to the high standards of Corporate Governance and stakeholder responsibility.

The Company has a vigil mechanism named Whistle Blower Policy to deal with instance of fraud and mismanagement, if any. The details of the Policy is posted on the website of the Company i.e. whisler_blower_policy.pdf


The details of programmes for familiarization of Independent Directors and training with the Company, their roles, rights, responsibilities in the Company, nature of the industry in which the Company operates, business model of the Company and related matters are put up on the website of the Company i.e.http://www.sanghviforge. com/pdf/familiarisation_program.pdf


During the year FY 2014-15, Mr. Vikram B. Sanghvi, appointed as CFO of the Company by the Board of Directors at meeting held on May 26, 2014 as per Section 203 of Companies Act, 2013.

Mrs. Jyoti V Menghani appointed by the Board of Directors as an Additional Director of the Company in the category of Independent Director with effect from August 13, 2014 in accordance with Section 161 of the Companies Act, 2013 and thereafter at the AGM of the Company held on September 26, 2014 by the members of the Company appointed as Independent Director for a period of five years. Mrs. Jyoti V. Menghani resigned from the post of Independent Director with effect from May 25, 2015 due to personal reason.

Mrs. Aruna S. Khasgiwala appointed by the Board of Directors as an Additional Director of the Company in the category of Independent Director with effect from May 29,2015 in accordance with Section 161 of the Companies Act, 2013 subject to approval of Members in this Annual General Meeting of the Company.


The Company has appropriate internal financial control systems and procedures in place with regard to effective utilisation of resources, efficiency in operation, financial reporting and compliance with various rules and regulations.


Your Directors express their sincere appreciation for the wholehearted and continued support assistance and cooperation extended by the shareholders, banks, suppliers, customers, employees, and all concerned towards the Company during the year under review.

On the behalf of the Board of Directors

Babulal S Sanghvi


Place: Vadodara

Date : May 29, 2015