Ashapura Minechem Ltd Directors Report.

To

The Members,

Your Directors are pleased to present the 38th Annual Report of the Company together with the Audited Financial Statements (Standalone & Consolidated) for the year ended 31st March, 2019.

1. FINANCIAL RESULTS AND PERFORMANCE:

(Rs. In Lakhs)

Ashapura Minechem Ltd.

Consolidated

2018-2019 2017-2018 2018-2019 2017-2018
Net Sales / Income from Operations 33,717.86 23,918.84 62,136.59 79,436.43
Less: Total Expenditure 37,253.08 27,872.10 64,897.42 80,920.07
Profit /(Loss) from Operations before Dep., Other Income and Exceptional Items (3,535.22) (3,953.26) (2,760.83) (1,483.64)
Less: Depreciation 2,274.98 2,405.89 3,251.73 3,850.57
Profit /(Loss) from Operations before Other Income and Exceptional Items (5,810.20) (6,359.15) (6,012.56) (5,334.21)
Add: Other Income 963.11 997.92 1,701.67 738.91
Profit/(Loss) before Exceptional Items, share of net profit of investments accounted for using the equity method and Tax (4,847.09) (5,361.23) (4,310.89) (4,595.29)
Share of net profit of Joint Ventures & associates accounted for using the equity method - - 1,213.97 2,788.30
Profit / (Loss) before exceptional items (4,847.09) (5,361.23) (3,096.92) (1,806.99)
Less: Exceptional Items (2,584.36) (1,512.20) 29,074.60 1,512.21
Profit /(Loss) before tax (7,431.45) (6,873.43) (32,171.52) (3,319.20)
Tax Expenses
Current Tax - - 730.00 1,660.50
Earlier Years Tax - - 4.49 (78.48)
Deferred Tax - - (216.47) (384.64)
Profit / (Loss) after tax (7,431.45) (6,873.43) (32,689.54) (4,516.58)
Profit attributable to non-controlling interest - - 412.45 0.18
Profit / (Loss) for the year (7,431.45) (6,873.43) (33,101.99) (4,516.39)

During the Financial Year ended 31st March 2019, the Company on a stand-alone basis achieved revenues of Rs. 33,717.86 Lakhs from operations as against Rs. 23,918.84 Lakhs in the previous year, the substantial increase in revenues was principally on account of higher domestic ore sales & Bentonite. The Company registered a loss before exceptional items of Rs. 4,847.09 Lakhs which was marginally lower than the loss before before exceptional items of Rs. 5,361.23 Lakhs incurred in the previous year.

On a consolidated basis the Company achieved revenues of Rs. 62,136.58 Lakhs during the Financial Year ended 31st March 2019. Whereas, the Loss before exceptional items was Rs. 3,096.93 lakhs as compared to Rs. 1,806.99 lakhs in the previous financial year. On account of the changes in the status of two subsidaries and one joint venture company in the third quarter of the Financial Year 2018-19, the consolidated financial results of the Financial Year ended 31st March 2019 are not comparable to those of the previous financial year.

2. SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR 2018-2019:

The Company, on 12th December, 2018 moved to the National Company Law Tribunal (NCLT), Mumbai Bench, under appropriate and relevant provisions of the Insolvency and Bankruptcy Code, 2016 (IBC). The said petition was admitted by the NCLT and by its order dated 15th March, 2019, Corporate Insolvency Resolution Process ("CIRP") was initiated for the Company with effect from 15th March, 2019. By the same Order, Shri Arun Chadha (Registration no. as IBBI/IPA-001/IP-P00165/2017-18/10334) was appointed as an Interim Resolution Professional (IRP) of the Company and pursuant to the provisions of Section 17 of IBC, the power of the Board of Directors of the Company stood suspended and such powers were to be exercised by the said IRP

Further, the Honble National Company Law Appellate Tribunal (NCLAT) had vide its order dated 8th April, 2019, stayed the above referred NCLT Order to the exception that the IRP may function and report to the office.

In furtherance, upon filing an application for withdrawal of insolvency proceedings from NCLT, Mumbai Bench, the Honble NCLAT, vide its order dated 30th September, 2019, set aside the said order of the NCLT, Mumbai Bench dated 15th March, 2019. The said order of NCLAT also ordered the closure of the insolvency proceedings at NCLT, Mumbai. Consequently, the appointment of Mr. Arun Chadha as an IRP stood cancelled and the Company was released from all the rigours of law and as such was allowed to function independently under the able guidance and authority of the Board of Directors w.e.f. 30th Septmeber 2019.

3. DIVIDEND:

Considering the net loss for the year and financial position of the Company, your Directors have not recommended any Dividend for the year ended 31st March, 2019.

4. TRANSFER TO RESERVES:

Duning the financial year under review, no amount has been transferd to the Genral Reserves .

5. DEPOSITS:

Your Company has not accepted any amount as deposits within the meaning of provisions of Chapter V - Acceptance of Deposits by Companies of the Companies Act, 2013 read with the Companies (Acceptance of Deposits) Rules, 2014.

6. SUBSIDIARIES AND JOINT VENTURES:

I. Business performance and overview of the principal subsidiaries and joint venture companies:

Subsidiaries:

a. Bombay Minerals Limited (BML)

The year under review was challenging for the Company on account of muted exports of Bauxite ore. High Government levies such as export duties have eroded the competitiveness of Indian Bauxite versus other global suppliers. Despite this, the Company made efforts to stay in line with the total revenue comparing with the previous year. In view of the timely measures taken by the management, the Company could lower down its loss for the period under review.

b. The other overseas subsidiaries and joint ventures of the Company in UAE, Oman exhibited modest increases in revenues and profits.

II. Companies which ceased to be subsidiary, associate and/or joint venture:

During the year under review, ASQ Connect Ltd., one of the creditors, with whom the Company had entered into a settlement agreement of US $ 45 million payable over 25 years and had entered a Pledge Agreement to secure the said settlement; terminated the said agreement and invoked pledge of shares of the Companys two Indian Subsidiaries and a joint venture Company on 19th September, 2018 and 4th October, 2018. Accordingly, 100% shares of a Wholly owned Subsidiary, Ashapura International Limited; 47.86% shares of a Subsidiary Company Bombay Minerals Limited; and Companys entire holding of 50% in a Joint venture Company, Ashapura Perfoclay Limited have been taken over by the said creditor on trigger of these pledged shares. The Company is suitably challenging the said invocation of pledge by the creditor.

Considering the above, as on date, Ashapura International Limited and Ashapura Perfoclay Limited cease to be the Wholly Owned Subsidiary and Joint Venture Company and that the Company now holds only 52.14% of Bombay Minerals Limiteds shares.

III. Material Subsidiaries:

As required under Regulations 16(1)(c) and 46 of the SEBI (Listing Obligations and Disclosure Requirement) Regulations, 2015 (Listing Regulations), the Board of Directors have approved the Policy for determining Material Subsidiaries. The details of the Policy are available on the Companys website at www.ashapura.com/investor-corner.php

7. CONSOLIDATED FINANCIAL STATEMENTS:

Pursuant to the provisions of Section 129(3) of the Companies Act, 2013, the Consolidated Financial Statements of the Company and its subsidiaries & associates, have been prepared in accordance with the Indian Accounting Standards, which forms part of this Annual Report. Further, pursuant to the provisions of the said section, a statement containing salient features of the financial statements of the Companys subsidiaries and associate companies (in Form AOC - 1) is given in this Annual Report.

In accordance with Section 136 of the Companies Act, 2013, the audited financial statements including consolidated financial statements, financial statements of subsidiaries and all other documents required to be attached to this Report have been uploaded on the website of the Company at www.ashapura.com/investor-corner.php

8. STATUS OF THE PENDING LITIGATIONS:

A. SHIPPING MATTERS:

The Contracts of Affreightment (COA) were entered into by the Company with Shipping Companies - viz. [1] Pacific Basin I.H.X. (UK) Ltd. (Pacific Basin) [2] Eitzen Bulk A/S [now known as Ultrabulk A/S] (Ultrabulk) and [3] Armada Singapore Pte Ltd. (Armada), (collectively referred to as COAs)

In pursuance to dispute with regards to termination of COAs, the above said shipping companies, obtained favourable foreign arbitration awards, which were subsequently declared enforceable by the Honble Bombay High Court.

In the matter of Pacific Basin and Ultrabulk, ASQ Connect Limited (ASQ), a Company incorporated under the laws of England and Wales, purchased the enforceable rights to recover the decreed amount by way of assignment deeds. Pursuant to these deed of assignment, ASQ entered into a settlement agreement with the Company wherein it will recover USD 45 million over a period of 25 years on terms and conditions as prescribed in the said settlement agreement. On account of alleged breach of settlement agreement, ASQ Connect Ltd. has filed two execution applications in Bombay High Court for recovery of their debt, your Company is suitably defending the same.

In the matter of Armada, the said shipping company has filed an execution application in Honble Bombay High Court for recovery of its claims granted by the awards dated 16th February, 2010. By virtue of a decree execution order passed by the Honble. Bombay High Court on 31st October, 2018, Armada, against its claims, has taken symbolic possession of certain unencumbered assets of the Company.

B. FOREX DERIVATIVES:

In case of Forex Derivatives Contract, the Company, based on legal opinion obtained, has taken a stand that these contracts are void and are not legally enforceable. It has been further advised by the counsels that the Company can take legal actions for challenging the validity of the said contracts.

The Company has approached the Bankers and has successfully settled the claims amicably with most of the bankers.

Proceedings filed by HDFC Bank Limited and J P Morgan are pending at various stages in the Tribunals and Court of Law and are being suitably dealt with. However an amicable settlement with HDFC Bank has been signed and is in process of being settled.

9. MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY WHICH HAVE OCCURRED BETWEEN 31st MARCH, 2019 AND 13th NOVEMBER, 2019 (DATE OF THE REPORT):

Other than as stated elsewhere in this report, there are no material changes and commitments affecting the financial position of the Company between the end of the current financial year and the date of this report.

10. SIGNIFICANT AND MATERIAL ORDERS BY THE REGULATIONS:

Other than as stated elsewhere in this report, during the year under review, the Company has not received any significant or material order passed by any regulatory authority, court or tribunals which shall affect the going concern status of the Company.

11. MEETINGS OF THE BOARD:

During the year under review, five (5) meetings of the Board of Directors were convened before Commencement of corporate Insolvency Resolution Process (CIRP). The dates of the meetings are provided in the Report on Corporate Governance which forms a part of this Annual Report.

12. DIRECTORS RESPONSIBILITY STATEMENT:

In pursuance of Section 134(5) of the Companies Act, 2013 read with the rules made there under, including any enactment or re-enactment thereon, (the Companies Act, 2013), the Directors hereby confirm that:

a. in the preparation of the annual accounts, the applicable Indian Accounting Standards had been followed along with proper explanation relating to material departures;

b. the directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the Loss of the Company for that period;

c. the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d. the directors had prepared the annual accounts on a going concern basis;

e. the directors had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively;

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

13. DIRECTORS AND KEY MANAGERIAL PERSONNEL:

A. Retire by Rotation:

In accordance with the provisions of Section 152 of the Companies Act, 2013 and the Articles of Association of your Company, Shri Chetan Shah, retires by rotation at the ensuing Annual General Meeting and being eligible has offered himself for re-appointment.

The details as required under the provisions of the Companies Act, 2013 and Listing Regulations are provided in the Notice convening the ensuing Annual General Meeting.

B. Re-designation of Shri Chetan Shah, as an Executive Chairman of the Company:

The Board of Directors at its meeting held on 24th October, 2019, considering the recommendations of Nomination & Remuneration committee as also considering dynamics of the mining business viz-a-viz the need and the turn of events, proposed that Shri Chetan Shah (DIN-00018960) should occupy the drivers seat and lead the Company by assuming the position as an Executive Chairman of the Company.

Accordingly, Shri Chetan Shah was re-designed as an Executive Chairman of the Company, for a period of three years with effect from 24th October, 2019, on the terms & conditions that forms part of the agreement, which is subject to the approval of the Shareholders of the Company. In terms of provisions of the Companies Act, 2013, from the date of appointment of Shri Chetan Shah as an Executive Chairman, he is forthwith considered as a Key Managerial Personnel (KMP) of the Company.

Accordingly, pursuant to provisions of the Companies Act, 2013, resolution seeking approval of the shareholders for his re-designation as an Executive Chairman of the Company forms part of Notice convening 38th Annual General Meeting.

C. Re-appointment of Non-Executive, Independent directors:

As stated earlier, the Company was under CIRP from 15th March, 2019 to 30th September, 2019 and during that time the tenure of Shri Harish Motiwalla (DIN-00029835) and Shri Abhilash Munsif (DIN-02773542) as Independent Directors had to be renewed for another term of five years w.e.f. 25th September, 2019. Accordingly, the Board of Directors at its meeting held on 24th October, 2019, on the basis of the performance evaluation; taking into account recommendation of Nomination & Remuneration committee and considering their experience, expertise & valuable contribution made by them during their tenure, decided to consent and confirm to have renewed the term of Shri. Harish Motiwalla and Shri. Abhilash Munsif as Non-Executive Independent Directors, for another term of five years w.e.f 25th September, 2019, subject to the approval of the Shareholders at the ensuing Annual General Meeting of the Company.

Further, Regulation 17(1A) of the Listing Regulations, effective from 1st April, 2019, also requires companies to obtain approval of shareholders by passing a special resolution for appointment or continuation from any Non-Executive Director who has attained the age of seventy-five (75) years.

The Company has received declarations from the said Directors confirming that they meet the criteria of independence as prescribed under Section 149 (6) of the Companies Act, 2013.

Accordingly, in terms of the provisions of Sections 149, 152 read with Schedule IV and any other applicable provisions, if any, of the Companies Act, 2013 and provisions of Listing Regulations, special resolution seeking approval of the shareholders for their re-appointment as NonExecutive, Independent Directors on the Board of Directors of the Company forms part of Notice convening 38th Annual General Meeting.

The relevant details of Shri Harish Motiwalla and Shri Abhilash Munsif as required pursuant to the provisions of the Companies Act, 2013 and the Listing Regulations are furnished in the Notice of the ensuing Annual General Meeting.

D. Resignation of Whole Time Director & Chief Executive Officer :

Shri Rajnikant Pajwani (DIN: 00086007) resigned from his position of Whole-Time Director & Chief Executive Officer (CEO) of the Company citing his personal commitment towards his family and was relieved from his services as such w.e.f. 151 June, 2019. Since, the Company was then under CIRP his resignation was submitted to the kind attention of Shri Arun Chadha, IRP which was subsequently taken on record and ratified by the Board of Directors at its meeting held on 24th October, 2019.

Your Directors take this opportunity to express their appreciation for the purposeful contribution made by him during his long association of 43 years at different levels and positions with Ashapura Group.

E. Declaration by Independent Directors:

The Company has received declarations from all the Independent Directors of the Company confirming that they meet the criteria of independence as prescribed under the provisions of Section 149(6) of the Companies Act, 2013 read with schedules & rules issued thereunder as well as Regulation 16 of the Listing Regulations (including any statutory modification(s) or re-enactment(s) thereof for the time being in force).

F. Appointment of Key Managerial Personnel (KMP):

a. In accordance with the provisions of Sections 2(51) and 203 of the Companies Act, 2013, Shri Sachin Polke, Company Secretary & Vice President (Group Affairs) is recognized as the KMP of the Company.

b. From the date of appointment of Shri Chetan Shah as an Executive Chairman w.e.f. 24th October, 2019, he is forthwith considered as a KMP of the Company.

c. During the time, when the Company was under CIRP the Interim Resolution Professional, as on 12 th June, 2019, in his capacity and to comply with the provisions of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulations), had nominated and appointed Shri Ajay Phalod as Chief Executive Officer (CEO) of the Company and Shri Ashish Desai as Chief Financial Officer (CFO) of the Company, to carry out the functions/duties as may be entrusted upon them in terms of provisions of the Companies Act, 2013, Listing Regulations and/or any other applicable legislations, till the time the Company would be under CIRP

Later, the Board of Directors at its meeting held on 24th October, 2019, considering the applicable provisions of law, decided to ratify the appointments of Shri Ajay Phalod as CEO and Shri Ashish Desai as CFO of the Company and that they continue to be considered as KMPs.

d. In addition, the following Executives of your Company have been recognized as whole-time Key Managerial Personnel to perform such duties/ functions as may be assigned to them under their prescribed designation and/or generally and specifically assigned to them by the Board of Directors and/or its Committee from time to time:

1. Smt. Surekha Sathe - Vice President - IT

2. Shri Akhilesh Sinha - Vice President - HR

14. PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES:

The information required under Section 197(12) of the Companies Act, 2013, read with rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is set out in "Annexure - A" to this Report.

Further, the statement containing particulars of employees in terms of section 197(12) of the Companies Act, 2013, read with rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is provided in a separate statement and that forms part of the annual report.

Considering the provisions to Section 136 of the Companies Act, 2013, the annual report, excluding the aforesaid statement, is being sent to the shareholders of the company and others entitled thereto. The said statement is available for inspection of members at the Registered Office of the Company during working hours upto the date of the Annual General Meeting and shall be made available to any shareholder on request.

15. PARTICULARS OF LOANS GIVEN, INVESTMENTS MADE, GUARANTEES GIVEN AND SECURITIES PROVIDED:

Particulars of loans given, investments made, guarantees given and securities provided in accordance with the provisions of Section 186 of the Companies Act, 2013, are given in the Notes to Financial Statements (Please refer to Note no. 5 & 6).

16. DISCLOSURES ON POLICIES ADOPTED BY THE COMPANY:

A. Nomination & Remuneration Policy:

Pursuant to the provisions of the Companies Act, 2013 and Listing Regulations, the Board of Directors, based on the recommendations of the Nomination & Remuneration Committee, adopted a Policy for selection and appointment of Directors, Key Managerial Personnel & Senior Management and for determining their remunerations, qualifications, positive attributes and independence of Directors. The policy also ensures that the relationship of remuneration to performance is clear so as to meet appropriate performance benchmark.

The Policy on Nomination & Remuneration is available on the website of the Company viz. www.ashapura.com/investor-corner.php. The details about the Nomination & Remuneration Committee and payment of remuneration to the Directors are provided in the Report on Corporate Governance which forms part of this Annual Report.

B. Performance Evaluation Policy and Annual Performance Evaluation:

The Board of Directors adopted the performance evaluation policy with an objective of evaluating the performance of each and every Director of the Board, Committees of the Board including the performance of the Board as a whole, which would contribute significantly to performance improvements at all the three levels i.e. the organizational, the board and the individual director level, which in turn would help in increased accountability, better decision making, enhanced communication and more efficient Board operations.

Accordingly, pursuant to the provisions of Companies Act, 2013, Listing Regulations and Performance Evaluation Policy of the Company, the Board of Directors, in consultation with the Nomination & Remuneration Committee and Independent Directors, carried out & analysed the annual performance evaluation of all the Directors, the Board as a whole and its Committees.

The annual performance evaluation was carried out based on detailed questionnaires drafted in accordance with the guidance note issued by SEBI. The performance of the individual Directors was evaluated after seeking inputs from all the Directors other than the one who is being evaluated. The evaluation was based on the criteria such as Directors knowledge and understanding of their role, Companys vision and mission, Directors Commitment, qualification, skill and experience, assertiveness in communication, etc.

The performance of the Board was evaluated on the basis of various criteria such as composition of the Board, information flow to the board, matters addressed in the meeting, strategic issues, roles and functions of the Board, relationship with the management, engagement with the Board and external stakeholders and other development areas.

The performance of the Committees was evaluated after seeking the inputs of committee members on the criteria such as understanding the terms of reference, Committee composition, Independence, contributions to Board decisions etc.

Further, the performance of Chairman & Executive Director were evaluated on certain additional parameters depending upon their roles and responsibilities such as leadership, relationship with stakeholders, execution of business plans, risk management, development of plans and policies in alignment with the vision and mission of the Company, etc.

Similarly, criteria for evaluation of Independent Directors include effective deployment of knowledge and expertise, willingness to devote time and efforts towards his/her role, high ethical standards, adherence to applicable codes and policies, effective participation, etc.

The Independent Directors had met separately on 11th March, 2019 and discussed, inter-alia, the performance of Non-Executive Chairman, Whole-Time Director & Chief Executive Officer of the Company and the Board as a whole. The Nomination and Remuneration Committee has also carried out evaluation of every Directors performance.

The Board evaluation report on performance of each individual Director and the Board as a whole was placed before the Board of Directors for appropriate analysis and confirmation.

Based on the annual performance evaluation, the Board expressed its satisfaction with the performance evaluation process.

C. Corporate Social Responsibility Policy:

The Company has adopted the Corporate Social Responsibility (CSR) Policy in accordance with the provisions of Section 135 and Schedule VII of the Companies Act, 2013. The CSR Policy lays down the guiding principles for social welfare programs/projects for the benefit of different segments of the society, especially the deprived, under-privileged and differently abled persons. The Policy is available on the website of the Company viz. www.ashapura.com/investor-corner.php. The Composition of the CSR Committee is given in the Report on Corporate Governance.

During the year under review, considering the continued reflection of negative Net Worth; taking into account the operational & financial performance, your Company has not specifically made provision for CSR activities for the Financial Year 2018-2019 as required under Section 135 of the Companies Act, 2013.

D. Vigil Mechanism - Whistle Blower Policy:

The Company has vigil mechanism named a Whistle Blower Policy, in compliance with the provisions of Section 177 of the Companies Act, 2013 and Listing Regulations, wherein the employees/directors can report the instances of unethical behavior, actual or suspected fraud, mismanagement or any violation of the Code of Conduct and/or laws applicable to the Company and seek redressal. This mechanism provides appropriate protection to a genuine Whistle.

The said Policy is available on the website of the Company viz. www.ashapura.com/investor-corner.php. During the year under review, no compliant has been received under the Whistle Blower Policy (Vigil Mechanism).

E. Risk Management Policy:

The Board of Directors of your Company has laid down a Risk Management Policy that identifies elements of risks involved in all the activities of the Company and the same are systematically addressed through mitigating actions on a continuing basis. The policy is reviewed by the Audit Committee on regular basis considering the industry & global risk associated with the business of the Company.

F. Prevention of Sexual Harassment at Workplace:

The Company has zero tolerance for sexual harassment of women at workplace and has adopted a Policy for prevention, prohibition and redressal of sexual harassment at workplace, in terms of provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the rules framed thereunder and constituted Internal Complaint Committee (ICC) for safe working environment where all employees treat each other with courtesy, dignity and respect, irrespective of their gender, race, caste, creed, religion, place of origin, sexual orientation, disability, economic status or position in the hierarchy.

The ICC which has been constituted as per the policy in this regards, provides a forum to employees to lodge Complaints, if any, therewith for appropriate redressal.

During the year, no complaint was lodged with the ICC nor any such instance was reported and the management is happy to take the same on record. The said Policy is available on the website of the Company viz. www.ashapura.com/investor-corner.php.

G. Related Party Transactions Policy:

Pursuant to the applicable provisions of the Companies Act and Listing Regulations, the Company has in place the Policy on Related Party Transactions and the same is uploaded on Companys website at www.ashapura.com/investor-corner.php. This policy deals with the review and approval of related party transactions.

All transactions with related parties are approved by the Audit Committee prior to entering into any kind of transactions. The Audit Committee has after obtaining approval of the Board of Directors, laid down the criteria for granting omnibus approval for transactions which are repetitive in nature and entered in the ordinary course of business and at an arms length basis which also forms part of the Policy. The said omnibus approval is granted for one financial year at a time. Moreover to monitor due compliance, all related party transactions are placed before the Audit Committee & the Board on a quarterly basis, specifying the nature, value and terms & conditions of the transactions for their review and confirmation.

During the year under review, all the transactions entered pursuant to the contracts and arrangements with related parties under Section 188 (1) of the Companies Act, 2013, were on arms length basis and in the ordinary course of business. Further, there were no material related party transactions entered into by the Company during the financial year under review and hence, 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 to your Company.

The details of related party transaction are disclosed in the notes to Financial Statements. (Note No. 38).

17. AUDIT COMMITTEE:

The Company has in place an Audit Committee in terms of the requirements of the Companies Act, 2013 read with the rules made thereunder and Regulation 18 of the Listing Regulations. Detailed information pertaining to the Audit Committee including its composition, meeting, etc. has been provided in the Corporate Governance Report, which forms part of this Annual Report.

18. AUDITORS AND AUDITORS REPORT

A. Statutory Auditors:

M/s. P A R K & Co., Chartered Accountants were appointed as the Statutory Auditors of the Company to hold office till the conclusion of the 41st Annual General Meeting to be held in the year 2022. M/s. P A R K & Co., have confirmed their eligibility and qualification required under Section 139, 141 and other applicable provisions of the Companies Act, 2013 and rules made thereunder (including any statutory modification(s) or reenactment^) thereof for the time being in force).

The Auditors Report for the financial year ended 31st March, 2019 on the financial statements (standalone & consolidated) of the Company forms part of this Annual Report.

Auditors Observations:

In reference to the observation made by Auditors in their Report, the Company, without prejudice to the other available options and having moved the Honble National Company Law Tribunal (NCLT), has been admitted by its Order dated 15th March, 2019 and the said order is sub-judice. The Company is now under Corporate Insolvency Resolution Process (CIRP) and is managed by Interim Resolution Professional (IRP).

However, upon filing an application for withdrawal of insolvency proceedings from NCLT, Mumbai Bench, the Honble National Company Law Appellate Tribunal (NCLAT), vide its order dated 30th September, 2019, set aside the said order of the NCLT, Mumbai Bench dated 15th March, 2019. The said order of NCLAT also ordered the closure of the insolvency proceedings at NCLT, Mumbai. Consequently, the appointment of Shri Arun Chadha as an IRP stood cancelled and the Company was released from all the rigours of law and was allowed to function independently under the able guidance and authority of the Board of Directors w.e.f. 30th September, 2019.

B. Branch Auditors:

In terms of provisions of Section 139, 143(8) and other applicable provisions, if any, of the Companies Act, 2013 and rules framed thereunder, M/s. Sri Sesha & Ravi, Chartered Accountants, Chennai, appointed as the Branch Auditors for carrying out the audit of the books of accounts of the Companys Branches at Chennai and Kodur and as such holds their office till the conclusion of the 41st Annual General Meeting to be held in the year 2022.

C. Cost Auditors:

Pursuant to the provisions of Section 148 of the Companies Act, 2013, M/s. S. K. Rajani & Co., Cost Accountants were appointed as the Cost Auditors of the Company to conduct audit of the Companys Cost Accounting Records in respect of the products of the Company for the financial year 2019-2020 at the remuneration of Rs. 1,91,250/- (Rupees One Lakh Ninety One Thousand Two Hundred Fifty only) per annum plus Goods & Service Tax.

Your Company has received consent from M/s. S. K. Rajani & Co., Cost Accountants, to act as the Cost Auditors of your Company for the financial year 2019-2020 along with a certificate confirming their independence. As per the provisions of the Companies Act, 2013, a resolution seeking approval of the Shareholders for the remuneration payable to the Cost Auditors forms part of the Notice convening Annual General Meeting.

The Cost Audit Report for the financial year 2017-2018 was filed with the Ministry of Corporate Affairs on 7th September, 2018.

D. Secretarial Auditors:

Pursuant to the provisions of Section 204 of the Companies Act, 2013 read with Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014, your Company had engaged the services of Shri Virendra G. Bhatt, Company Secretary in Practice, Mumbai to undertake the Secretarial Audit of the Company for the financial year ended 31st March, 2019.

The Secretarial Audit Report in Form No.: MR - 3 for the Financial Year ended 31st March, 2019 is annexed with this report as "Annexure - B". Secretarial Auditors Observations:

Your Directors would like to bring to the kind notice of the Members that considering the Companys Sick status, its financial condition and the pertinent CIRP status, the Company was finding it difficult to induct able and willing candidates who could hold fiduciary positions including that of the Chief Financial Officer i.e. Key Managerial Personnel as required under the provisions of the Companies Act, 2013.

However, to comply with the provisions of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulations), the Interim Resolution Professional, Shri Arun Chadha nominated and appointed Shri Ashish Desai as Chief Financial Officer (CFO) of the Company, with effect from 12th June, 2019, to carry out the functions / duties as may be entrusted upon them in terms of provisions of the Companies Act, 2013, Listing Regulations and/or any other applicable legislations, till the time the Company faced CIRP

Later, the Board of Directors at its meeting held on 24th October, 2019, decided to ratify the appointment of Shri Ashish Desai as Chief Financial Officer (CFO) of the Company and that he shall continue to be considered as the Key Managerial Personnel to be in compliance with the provisions of the Companys Act, 2013.

19. INTERNAL (FINANCIAL) CONTROL SYSTEM & THEIR ADEQUACY:

The Company has an adequate Internal Control System commensurate with the size, scale and nature of its operation. The Audit Committee reviews the adequacy and effectiveness of Internal Control System.

The Company appointed M/s. Atul HMV & Associates LLP Chartered Accountants as its Internal Auditors for Financial Year 2018-2019 which carries out the periodic audit as per the Scope of Work approved by the Audit Committee. The Audit Committee of the Board of Directors of the Company periodically reviews the Internal Audit Reports submitted by the Internal Auditors. Internal Audit observations and corrective action taken by the Management are presented to the Audit Committee. The status of implementation of the recommendations are reviewed by the Audit Committee on a regular basis and concerns, if any, are reported to the Board. The Company is taking due action to ensure that the Internal Control is strengthened in all the areas of operations!

Besides this, the Company has also implemented SAP Systems, an advanced IT business solution platform, to achieve standardized operations that ensures seamless data and information flow. This would further ensure ease in working environment & style and shall enable the Company to be in line with the best global practices.

20. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO:

The particulars relating to conservation of energy, technology absorption, foreign exchange earnings and outgo, as required to be disclosed under the Companies Act, 2013, are provided in "Annexure - C" to this Report.

21. EXTRACT OF ANNUAL RETURN :

The Extract of Annual Return of the Company in Form MGT-9 as provided under Section 92(3) of the Companies Act, 2013 is annexed herewith as "Annexure - D" to this Report.

Further, in accordance with the provisions of Section 92(3) of the Companies Act, 2013, the copy of Annual Return of the Company is available on its website at: www.ashapura.com/investor-corner.php

22. CORPORATE GOVERNANCE AND MANAGEMENT DISCUSSION AND ANALYSIS REPORT:

A report on Corporate Governance along with the Certificate from M/s. P A R K & Co., Chartered Accountants regarding its compliance and Management Discussion and Analysis Report as stipulated under Regulation 34 of the Listing Regulations are set out separately which forms part of this Report.

23. ACKNOWLEDGEMENT:

Your Directors wish to express their appreciation for the assistance and co-operation received from the financial institutions, banks, employees, investors, customers, members & shareholders and all other business associates for the continuous support given by them to the Company and their confidence in its management during the year under review and look forward for their contributed support in future.

For and on Behalf of the Board of Directors SD/-

CHETAN SHAH EXECUTIVE CHAIRMAN (DIN: 00018960)

Place : Mumbai

Date : 13th November, 2019