Innoventive Industries Ltd Directors Report

To

The Members

Innoventive Industries Limited

Pune

We are delighted to present the report on our business and operations for the year ended 31^st March, 2016. Following are the financial highlights of the year under review:

1. FINANCIAL HIGHLIGHTS:

Particulars	Year Ended March 31, 2016 (Rs in Lacs except per share data)	Year Ended March 31, 2015 (Rs in Lacs except per share data)
Turnover / Income (Gross)	36,863.43	37,162.23
Turnover / Income (Net)	33,521.52	34,196.96
Other Income	388.29	370.64
Total Expenditures (Including Interest & Depreciation)	51,402.75	57,084.52
Profit Before Tax	(17,492.94)	(22,516.94)
Provision for Tax
Current
Deferred
MAT (Credit)	-	(455.54)
Tax for Earlier Period	4.23	(713.11)
Profit After Tax	(17,497.17)	(21,348.29)
Balance Brought forward from last year	(49,122.04)	(27,773.78)
Profit Available for Appropriation	-	-
Reversal	-	-
Proposed Dividend on Equity Shares	-	-
Dividend Distribution Tax	-	-
Surplus Carried over to Balance sheet	(66,619.26)	(49,122.04)
EPS (Face value - 10/- per equity share)	(29.34)	(35.79)

Note: Figures of previous year have been regrouped wherever necessary.

2. SUBSIDIARY COMPANIES:

In accordance with the Companies Act, 2013, Accounting Standards AS-21 on Consolidated Financial Statements and AS-27 on Financial Reporting of Interests in Joint Ventures and as prescribed by Regulation 33 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 the Audited Consolidated Financial Statements are provided in this Annual Report.

In accordance with section 129(3) of the Companies Act, 2013, a statement containing salient features of the financial statements of the each of subsidiary and joint venture in Form AOC1 is provided as Annexure "A" to this report. The financial statements of the subsidiaries are kept for inspection by the shareholders at the Registered Office of the Company.

In accordance with third proviso to section 136(1) of the Companies Act, 2013, the annual report and financial statements of each of the subsidiary companies have also been placed on the website of the Company ww.innoventive.in.

3. SUBSIDIARIES AND STEP-DOWN SUBSIDIARIES

The business of your Company is spread across various engineering sectors through its subsidiaries as detailed below:

• Sankalp Engineering & Services Private Limited

• Sankalp Americas, INC. (Closed w.e.f. 28^th December 2015)

• Sankalp Middle East, FZE

• Innovative Technomics Private Limited

• Saicon Steels Private Limited

• Seven Star Electrodes Private Limited

• Arihant Steel and Metal Wires Private Limited

• Arihant Auto Components Private Limited

• Innoventive Americas, INC

• Salem Steel NA, LLC

4. OPERATIONS

In spite of challenging year with respect to demand and financial position of company, the company was able to maintain its operational levels and achieved Gross Sales of Rs. 368.63 Cr. against Rs. 371.62. in the previous year.

During FY 2015-16, we worked towards optimum operational efficiencies of our processes. We reduced our production costs and focused more on the manufacture of value added products. There is improvement in operational efficiencies and benefits delivered from cost reduction enable the company to achieve better results. Total expenditure after providing for depreciation for the year was Rs. 514.02 Cr. as against Rs. 570.84 Cr. in previous year. Profit Before taxation stood at Rs. (174.92) Cr. as compared to the last year Rs. (225.16) Cr. After providing for taxation the net profit of the Company for the year under review was placed at Rs. (174.97) Cr. as against Rs. (213.48) Cr. in the previous year.

Due to favorable market conditions and on account of better realization, company’s Loss after tax during the year under review had decreased due to moderate levels of Raw Material prices throughout the year and also due to better realization value for the company’s products.

5. DIVIDEND & RESERVES

In view of the Losses and your company being in CDR process it is necessary to optimize use of resources to improve the situation of company. Your Directors have not recommended any dividend for financial year ended 31st March, 2016.

During the year under review, no transfer is proposed to the General reserve.

6. MANAGEMENT DISCUSSION AND ANALYSIS

Discussion on the state of Company’s affairs is forming part of the Management Discussion and analysis Report (MD&A). MD&A for the year under review, as stipulated under SEBI Listing Regulations, is presented in a separate section forming part of this Annual Report.

7. FIXED DEPOSITS

Your Company has not accepted any public deposits during the year under review.

8. PARTICULARS OF LOANS, GUARANTEES & INVESTMENTS

Particulars of Loans, Guarantees & Investments made during the year as required under the provisions of Section 186 of the Companies Act, 2013 (Hereinafter "The Act") are given in the notes of Standalone Financial Statements.

Also, pursuant to Schedule V of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirement) Regulations, 2015, particulars of Loans/Advances given to Subsidiaries have been disclosed in the notes to the Standalone Financial Statements.

9. CORPORATE SOCIAL RESPONCIBILITY (CSR)

Your Company is committed to improve the quality of life of the work force and their families and also the community. Further, the Company believes that undertaking activities in such a manner that help overall development of the society.

With the enactment of Companies Act, 20 13 the Corporate Social Responsibility Policy. The net average Loss for the Last three years i.e. (12-13/ 13-14/ 14-15) is 274.36 Cr. and the details of CSR activities undertaken by the company are given in Annexure "B". The CSR Policy is available on Companies website www.innoventive.in.

10. CORPORATE GOVERNANCE

The Company is committed to maintain the highest standards of Corporate Governance and adheres to the Corporate Governance requirements as stipulated by Securities and Exchange Board of India(SEBI).

The report on Corporate Governance as prescribed in Schedule V (C) of the SEBI Listing Regulations forms an integral part of this Annual Report.

The requisite certificate from the Secretarial Auditors of the Company, P.C.Dhamane & Associates, Company Secretaries, Pune confirming compliance with the conditions of Corporate Governance alongwith a declaration signed by the Chairman & Managing Director stating that the members of the Board of Directors and Senior Management personnel have affirmed compliance with the respective codes of conduct of the Board of Directors and Senior Management, is attached to the report on Corporate Governance.

1. DIRECTORS

Confirmation of Appointment:

Mr. Ravindra Katre (DIN 00035125) retires by rotation at the forthcoming Annual General Meeting and being eligible, offer himself for reappointment in terms of the Articles of Association of the Company.

Appointment of Independent Directors:

During the year, Mr. Rajendra Gaikwad (DIN 06791356) was appointed as additional Director, on the Board of Directors of the Company in the category of Non-executive Director with effect from 8th February, 2016.

The Company has received a notice pursuant to Section 160 of the Companies Act, 2013, in writing, proposing his candidature for the office of the Director of the Company at the forthcoming Annual General Meeting.

Brief Profile of Directors seeking appointment has been given in the Explanatory Statement to the Notice of the ensuing Annual General Meeting. The Company has received Form DIR-8 from all Directors pursuant to Section 164(2) and Rule 14(1) of Companies (Appointment and Qualification of Directors) Rules, 2014.

The Independent Directors of the Company have furnished necessary declarations to the Company under Section 149(7) of the Act, confirming that they meet with the criteria of Independence as prescribed for Independent Directors under Section 149(6) of the Act and Regulation 16(b) of the SEBI Listing Regulations.

Following directors stepped down from the Board of the Company:

Mr. Ravindra Katre step down from the Board as Whole Time Director of the Company with effect from 9^th October 2015 and continued to be Director of the company. The Board placed on record its appreciation for the valuable services rendered and contribution made by Mr. Ravindra Katre during his tenure as Whole Time Director of the Company.

Mr. Pradeep Tupe steps down from the Board as Nonexecutive Independent Director of the Company with effect from 1^st April 2016. The Board placed on record its appreciation for the valuable services rendered and contribution made by Mr. Pradeep Tupe during his tenure as Director of the Company.

Formal Annual Evaluation:

The Board evaluates the performance of the Board, its Committees and all individual Directors including Independent Directors every year. All the Non-executive and Independent Directors on the Board of the Company are eminent personalities having wide experience in the field of business, industry and administration. Their presence on the Board is advantageous and fruitful in taking business decisions.

Familiarization Programme:

Whenever new Non-executive and Independent Directors are inducted in the Board they are introduced to our Companys culture through appropriate orientation session and they are also introduced to our organization structure, our business, constitution, board procedures, our major risks and management strategy.

The details regarding familiarization program have been uploaded on the website of the Company at www.innoventive.in

At present, your Company has 2 (Two) Non-Executive Directors who are Independent Directors pursuant to the provisions of the ‘SEBI Listing Regulations’. Pursuant to Section 149 of the Companies Act, 2013, every listed company shall have at least one-third of its total strength of the Board of Directors as Independent Directors. Based on the present composition of the Board of Directors and the number of Independent Directors, the Company complies with this requirement.

1. BOARD COMMITTEES

The Board of Directors of your Company had already constituted various committees in compliance with the provisions of Companies Act, 2013 and Listing Agreement (applicable till November 30, 2015)/ SEBI Listing Regulations (applicable from December 1, 2015) viz. Audit committee, Nomination and Remuneration Committee, Stake holders Relationship Committee and CSR Committee.

Under review, in compliance with the provisions of ‘SEBI Listing Regulations’, the Board had also constituted the risk management committee.

All the decisions pertaining to the Constitution of committees, appointment of members and fixing of terms of reference, role of the committees are taken by the Board of Directors.

Details of the role and composition of these committees, including the number of meetings held during the financial year and attendance at meetings, are provided in the Corporate Governance Section of Annual Report.

2. MEETINGS

A calendar of Board Meetings, Annual General Meetings and Committee Meetings is prepared and circulated in advance to the Directors of your Company.

The Board of Directors of the Company duly met 10 times during the financial year 2015-16. The dates of such meetings were 23rd May 2015, 12th June 2015, 02nd July 2015, 20th July 2015, 14th August 2015, 07th September 2015, 09th October 2015, 02nd November 2015, 14th November 2015, 08th February 2016. The maximum time gap between any two consecutive meetings did not exceed one hundred and twenty days.

3. FAMILIARISATION PROGRAMME OF INDEPENDENT DIRETORS

In compliance with the requirements of SEBI listing regulations, the Company has put in place a familiarization program for Independent Directors to familiarize them with their role, rights and responsibility as Directors, the operations of the Company, business overview etc. The details of the familiarization program are explained in the Corporate Governance Report and the same is also available on the website of the Company.

4. PERFORMANCE EVALUATION

Pursuant to provisions of Section 134(3)(p),149(8) and Schedule IV of the Companies Act, 2013 and Regulation 17 of the SEBI Listing Regulations, Annual Evaluation of performance of Directors as well as that of the Audit Committee, Nomination and Remuneration Committee and Stakeholders Relationship Committee has been carried out.

Annual Evaluation of performance of Independent Directors was carried out by the entire Board and Evaluation of performance of Non-Independent Directors was carried out by the Independent Directors.

5. INDEPENDENT DIRECTORS MEETING

During the year under review, the Independent Directors of the Company met on February 08, 2016, inter-alia, to discuss:

1. Evaluation of performance of Non-Independent Directors and the Board of Directors of the Company as a whole.

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

3. 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.

6. REMUNERATION POLICY FOR DIRECTORS, KEY MANAGERIAL PERSONNEL AND SENIOR MANAGEMENT EMPLOYEES

The Nomination and Remuneration Committee has laid down the policy for remuneration of Directors, Key managerial personnel and Senior Management in the nomination and remuneration policy recommended by it and approved by the Board of Directors.

7. RELATED PARTY TRANSACTIONS:

All related party transactions entered during the year were in the ordinary course of business and on an arm’s length basis.

The related party transactions attracting compliance under Section 177 of the Companies Act, 2013 and / or erstwhile Clause 49 of the Listing Agreement / Regulation 23 of the SEBI Listing Regulations were placed before the Audit Committee for approval.

There are no transactions to be reported in Form AOC- 2, , which is attached to the Board’s Report as Annexure"C" in terms of Section 134 of the Act read with Rule 8 of the Companies (Accounts) Rules, 2014. There were no related party transactions which were placed for prior omnibus approval of the Audit Committee.

A statement of all related party transactions entered was presented before the Audit Committee on a quarterly basis, specifying the nature, value and any other related terms and conditions of the transactions.

Further the details of the transactions with related parties are provided in the Company’s financial statements in accordance with the Accounting Standards.

The related party transactions policy approved by the Board of Directors of the Company has been uploaded on the website of the Company.

8. DIRECTORS’ RESPONCIBILITY STATEMENT:

Pursuant to the requirement under section 134(5) of the Companies Act 2013, with respect to the Directors’ Responsibility Statement, it is hereby confirmed that:

1. in the preparation of the annual financial statements for the financial year ended on 31st March, 2015, the applicable accounting standards have been followed along with proper explanation relating to material departures; if any

2. that the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that were 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 as at 31st March 2016 and of the Loss of the Company for the year ended on that date;

3. that the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

4. that the Directors have prepared the accounts for the financial year ended 31st March, 2016 on a Going Concern basis’.

5. that the Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively. However, in view of the uncertainties involved, your Auditors have given a qualified opinion in their report in this regard, without quantifying the impact. Other than this, your Auditors have opined that the Company has in, all material respects, maintained adequate internal financial controls over financial reporting and that they were operating effectively.

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

9. PARTICULARS OF EMPLOYEES AND OTHER ADDITIONAL INFORMATION:

Disclosures with respect to the remuneration of Directors and employees as required under Section 197 of Companies Act, 2013 and Rule 5 (1) Companies (Appointment and Remuneration of Managerial Personnel rules, 2014)has been appended as Annexure "D" to this Report.

The information as required under Rule 5 (2) of the Companies (Appointment and Remuneration of Managerial Personnel rules, 2014) will be provided upon request by any member of the Company. In terms of Section 136 (1) of the Companies Act, 2013, the Report and the Accounts are being sent to the members excluding the said Annexure. Any member interested in obtaining copy of the same may write to the Company Secretary at the Registered Office of the Company.

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

The information relating to the Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo stipulated under section 134(3)(m) of the Companies Act, 2013 read with and as required to be disclosed under the Companies (Accounts) Rules, 2014, is given in Annexure "E" forming part of this Report.

11. AUDITORS

At the 23^rd Annual General Meeting held on 15^th July 2015, Bharat J. Rughani & Co., Chartered Accountants, Mumbai were appointed as Auditors of the Company, to hold office for the period of five years i.e. from the conclusion of 23^rd Annual General Meeting till the conclusion of 28^th Annual General Meeting and Rule 3(7) of Companies (Audit and Auditors) Rules, 2014, states that appointment of the Auditor shall be subject to ratification by member at every Annual General Meeting till the expiry of the term of the Auditor.

At the 24^th AGM held on 23^rd November 2015 the shareholders had ratified the appointment of M/s Bharat J. Rughani, Chartered Accountants, Mumbai for the period covering their second year of appointment viz., from the conclusion of last AGM held on 23^rd November 2015 until the conclusion of Annual General Meeting to be in the in the financial year 2016-17.

The said appointment of M/s Bharat J. Rughani, Chartered Accountants, Mumbai covering their third year of appointment viz, from the conclusion of the ensuing AGM in financial year 2016-17 until the conclusion of the next Annual General Meeting to the held in the financial year 2017-18, has to be ratified by Members at the forthcoming AGM and accordingly the said proposal is being placed for members’ ratification.

As required under Section 139 of the Companies Act, 2013, the Company has obtained a written consent from the Auditors to such continued appointment and also a certificate from them to the effect that their appointment, if ratified, would be in accordance with the conditions prescribed under the Companies Act, 2013 and the Rules made thereunder, as may be applicable.

The Directors recommend ratification of their appointment from the conclusion of ensuing Annual General Meeting till the conclusion of next Annual General Meeting.

12. BOARD’S RESPONSES TO OBSERVATIONS, QUALIFICATIONS AND ADVERSE REMARKS IN AUDITORS REPORT

The Statutory Auditors (Auditors) have qualified their opinion in relation to the following matters appearing in the Financial Statements for the year ended March 31, 2016. The Board’s responses to the qualifications and other observations or adverse remarks made by the Auditors in their Report on the Standalone Financial Statements for the year ended March 31,2016, Consolidated Financial Statements for the year ended March 31,2016 and in their CARO Report on these Financial Statements are given below.

The Statutory Auditors have qualified their opinion in relation to the matters specified in Notes of the financial statements for the year ended March 31, 2016 (Financial Statements). The Board’s responses to the qualifications and other observations or adverse remarks are as follows.

Auditor’s observations ‘Qualified Opinion’ of the Auditor’s report to the standalone financial statements:

A. The Company has not made following provisions:

I. Stock of slow and/non -moving of stores, raw materials, semi-finished and finished goods valued at 1,900 lacs approximately;

II. Debts and loans/advances due from subsidiary amounting to 3,494.81 lacs and 1,420.50 respectively

III. Debts and Loans /advances due from other parties amounting to 1,437.44 lacs and 4,749.57 lacs

B. The company has investments in subsidiaries whose net worth has been substantially eroded or is negative which has casted material uncertainty in the continuance of the business of these subsidiaries. However, the diminution in the value of investment in these subsidiaries aggregating to 1979 lacs is not provided for.

C. There are unreconciled net bank balances aggregating 492.47 lacs for a period exceeding one year which will impact the financial position. We are unable to comment on the ultimate loss which may realize on reconciliation of these balances.

We are unable to comment on ultimate loss which may arise on realization of these balances. Had the above amounts been fully provided for in the year ended March 31, 2016, the loss would have been higher by 15,473.79 Lacs with consequent impact on net worth as on that date.

Board’s Response (Pointwise) to audit qualifications on standalone financial statements:

A. The company is making various products for export and domestic market. The Company has to maintain delivery on time and hence sometimes it results into longer cycles. Being a auto component Supplier, we are under obligation to keep stock as spare parts for a longer time. We are fairly compensated in price and customers are taking entire responsibility of buying the products. Accordingly the Company is of the view that no provision for slow / Non-moving stock is required.

The Company is making full efforts for recovery of debts and loans & advances. We have received commitments to get the money back or equivalent value materials from them over a period of time. We are also having postdated cheques of some of the parties. Based on the efforts and steps taken by the company, we are of the view that the said debts and loans & advances fully recoverable and no provision is required in respect thereof.

B. The management believes the diminution in the value of investment, if any that exists is only temporary and that sufficient efforts are being undertaken to revive the subsidiaries in the forceable future so as to recover the carrying value.

C. The company entered into Master Restructuring Agreement dated 28th September, 2014 with banks under the

Corporate Debt Restructuring Scheme ("CDR") pursuant to which certain funds were to be released to the company. However, the said scheme hadn’t been implemented by certain bankers resulting in un-reconciled balances. Accordingly, the balances pertaining to fund, non-fund based and term loans of certain banks are subject to reconciliation of such pending items. The company and the Lead Bank has appointed a special auditor to reconcile the balances of the said banks.

Auditor’s observations ‘Qualified Opinion’ of the Auditor’s report to the consolidated financial statements:

A. The group has not made following provisions

I. Stock of slow and/non -moving of stores, raw materials, semi-finished and finished goods valued at 1,900 lacs approximately;

II. Debts and Loans /advances due from parties amounting to 1,437.44 lacs and 4,749.57 lacs

III. Loans and Advances lacs made to various parties by the following subsidiaries :

Particulars	Amount (Rs in Lacs)
Sevenstar Electrodes Private Limited	983.03
Innovative Technomics Private Limited	160.00
Arihant Steel & Metal Wire Private Limited	48.13
Total	1191.16

B. There are unreconciled net bank balances aggregating 492.47 lacs for a period exceeding one year which will impact the financial position. We are unable to comment on the ultimate loss which may realize on reconciliation of these balances.

C. In respect of the subsidiaries of the Holding Company, the other auditor(s) who audited the financial statements / financial information of the subsidiaries has reported for non-provisioning of loans and advances. The details whereof are as follows:

Name of Subsidiary	Amount (Rs in Lacs)
Arihant Auto Components Private Limited	164.80
Arihant Steel & Metal Wire Private Limited	75.70
Total	240.5

We are unable to comment on ultimate loss which may arise on realization of these balances. Had the above amounts been fully provided for in the year ended March 31, 2016, the loss would have been higher by 10,011.14 lacs with consequent impact on net worth as on that date.

D. In respect of Innovative Technomics Private Limited, subsidiary of the Holding Company, the other auditor(s) who audited the financial statements / financial information of the subsidiaries has reported that the Company has not carried out an independent evaluation and has not accounted for any potential liability on account of gratuity payable, which constitutes a departure from the Accounting Standard 15 "Employee Benefits", referred to in section 133 of the Act, read together with rule 7 of the Companies (Accounts) Rules 2014. Since no actuarial valuation is carried out, the potential impact on the financial statements cannot be quantified

E. In respect of Arihant Auto Components Private Limited, Arihant Steel & Metal Wire Private Limited, Saicon Steels Private Limited, Seven Star Electrodes Private Limited and Sankalp Engineering and Services Private Limited, the auditors who audited the financial statements have reported that the Company’s net worth has been fully/substantially eroded and the conditions indicate as existence of material uncertainty that may cast a doubt about company’s ability to continue as a going concern. However, the financial statements have been prepared on a going concern basis.

Above qualification is also contained in the audit report issued on the consolidated financial statement.

Board’s Response (Pointwise) to audit qualification on consolidated financial statements:

A. The company is making various products for export and domestic market. The Company has to maintain delivery on time and hence sometimes it results into longer cycles. Being a auto component Supplier, we are under obligation to keep stock as spare parts for a longer time. We are fairly compensated in price and customers are taking entire responsibility of buying the products. Accordingly the Company is of the view that no provision for slow / Non-moving stock is required.

The Company is making full efforts for recovery of debts and loans & advances. We have received commitments to get the money back or equivalent value materials from them over a period of time. We are also having postdated cheques of some of the parties. Based on the efforts and steps taken by the company, we are of the view that the said debts and loans & advances fully recoverable and no provision is required in respect thereof.

B. The company entered into Master Restructuring Agreement dated 28th September, 2014 with banks under the Corporate Debt Restructuring Scheme ("CDR") pursuant to which certain funds were to be released to the company. However, the said scheme hadn’t been implemented by certain bankers resulting in un-reconciled balances. Accordingly, the balances pertaining to fund, non-fund based and term loans of certain banks are subject to reconciliation of such pending items. The company and the Lead Bank has appointed a special auditor to reconcile the balances of the said banks.

C. The Company is making full efforts for recovery of debts and loans & advances. We have received commitments to get the money back or equivalent value materials from them over a period of time.

D. The necessary provision for gratuity payable has been made in the financial statement; however the independent evaluation shall be carried out in the current financial statement.

E. The Companies are implementing various long-term measures to improve their product offering and enhancing customer base. The Companies have undertaken a comprehensive review of its current network to maximize profitability and improve efficiency in their operations.

In view of the above, the Company’s financial statements have been prepared on a going concern basis

13. COST AUDIT

Pursuant to section 148 of Companies Act, 2013 read with The Companies (Cost Records and Audit) Amendment Rules, 2014, the cost audit records maintained by the Company is required to be audited. Your Directors had, on the recommendation of Audit Committee; appointed Mr. A. J. Paranjape, Cost Accountants, Pune for conducting the cost audit of the Company for Financial Year 2016-17 on the remuneration of Rs. 3,00,000/- plus service tax at the applicable rates and reimbursement of out of pocket expenses.

As required under the Companies Act 2013, the remuneration payable to the cost Auditors is required to be ratified by the members of the company. Accordingly, resolution seeking members ratification for remuneration to be paid to cost Auditors is included in the notice convening Annual General Meeting.

14. SECRETARIAL AUDIT REPORT

Pursuant to provisions of section 204, of the Companies Act, 2013, the Board had appointed P. C. Dhamane & Associates, Company secretaries, Pune, to undertake Secretarial Audit of the Company for the Financial Year 2015-16. The Secretarial Audit Report is annexed herewith as Annexure "F". The Secretarial Audit Report does not contain any qualification, reservation, adverse remark or disclaimer.

15. RISK MANAGEMENT

Pursuant to the requirement of section 134(3)(n) of Companies Act, 2013_the Company has already in place a Risk Management Policy.

The business 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.

Pursuant to requirement of Clause 49 of the Listing Agreement, the Company has voluntarily constituted a Risk Management Committee and implemented a risk management policy for the company. The Board has been addressing various risks impacting the Company including identification therein of elements of risk, if any, which in the opinion of the Board may threaten the existence of the company. The Board and the Audit Committee of the Company periodically review and evaluate the risk management system of the Company so that the management controls the risks through properly defined network.

16. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has Internal Control Systems, commensurate with the size, scale and complexity of its operations. The Internal Auditors appointed by Company, monitors and evaluates the efficacy and adequacy of internal control systems in the Company, its compliance with operating systems, accounting procedures and policies within the Company.

Based on the report of internal audit function, process owners undertake corrective action in their respective areas and thereby strengthen the controls. Significant observations and corrective actions thereon are presented to the Audit Committee from time to time.

17. INTERNAL FINANCIAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has in place adequate internal financial controls commensurate with the size, scale and complexity of its operations. The Company has policies and procedures in place for ensuring proper and efficient conduct of its business, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records and the timely preparation of reliable financial information. The Company has adopted accounting policies, which are in line with the Accounting Standards and the Companies Act 2013.

18. VIGIL MECHANISM

In pursuant to the provisions of section 177(9) & (10) of the Companies Act, 2013 and provisions of Listing Agreement, a Vigil Mechanism for directors and employees to report genuine concerns has been established. The Vigil Mechanism Policy has been uploaded on the website of the Company at www.innoventive.in

19. OBLIGATIIOS OF COMPANY UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHOBITION AND REDRESSAL) ACT, 2013

In terms of provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, the Company has formulated a Policy to prevent Sexual Harassment of Women at Workplace. During the year under review, there were no cases filed pursuant to the Sexual Harassment of women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

20. REPORTING OF FRAUDS

There have been no instances of fraud reported by the Statutory Auditors under Section 143(12) of the Act and Rules framed thereunder either to the Company or to the Central Government.

21. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS/COURTS, IF ANY

There are no significant or material orders passed by the Regulators or Courts or Tribunals which would impact the going concern status of your Company and its future operations.

22. MATERIAL CHANGES AND COMMITMENTS/ EVENTS SUBSEQUENT TO THE DATE OF THE FINANCIAL STATEMENTS:

There have been no material changes and commitments except following, 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 this Report.

a. The debt restructuring scheme of Company was approved by CDR-EG in 2014. As per the restructuring scheme various reliefs on debt servicing were granted including sanction of additional debt of Rs 60 Crore which was subject to compliance of various conditions by the company/promoter.

However, as part of this the Company was expected to get additional working capital and recoveries from bank for the operations, which Company has failed to get the same from some of the Banks and Company was not able to introduce investors for strategic and financial investment in. However So far decision from CDR-EG is pending regarding the failure of CDR Scheme.

b. Company has incorporated a Wholly Owned Subsidiary namely Innoventive Americas, Inc ("IAI") in the United States of America for the acquisition of Salem Steel NA LLC in 2012. IIL has already acquired 85% stake in Salem Steel NA LLC through IAI (Wholly Owned Subsidiary of IIL) and is in the process of acquisition of Balance stake. For the said Balance acquisition total agreed amount of consideration paid by IIL through IAI is as per the amended agreement is USD 5,31,230.

23. EXTRACT OF ANNUAL RETURN

An extract of the Annual return as on 31st March, 2016, pursuant to the Section 92(3) of the Companies Act, 2013 in Form MGT-9 is annexed hereto as Annexure "G".

24. PERSONNEL / INDUSTRIAL RELATIONS

The Company maintained cordial and harmonious relations at all levels at the offices and plants of the Company and its subsidiaries throughout the year under review.

25. PARTICULARS OF REMUNERATION RATIO OF THE DIRECTORS / KEY MANAGERIAL PERSONNEL (KMP) / EMPLOYEES

The prescribed particulars of Employees required under Section 134(3)(q) and Section 197 read with Rule 5 of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed herewith as Annexure "E" and forms part of this report.

26. CAUTIONARY STATEMENT

Your Company has taken due caution while preparing this Annual Report (‘the Report’). The Report may contain futuristic or forward looking statements, which the management believes to be true to the best of their knowledge. However, actual results may differ from those mentioned in the Report.

27. ACKNOWLEDGEMENT

Your Directors express their grateful thanks and appreciation for the assistance and co-operation received from the, bankers, government authorities, Financial Institutions, and business associates during the year under review. Your Directors also wish to place on record their appreciation for the excellent performance and contribution of the employees to the Company’s progress during the year under review.

The Directors also take this opportunity to express its deep gratitude for the continued co-operation and support received from its valued shareholders.

	For and on behalf of the Board of Directors
	Innoventive Industries Limited
Place: Pune	Chandu Chavan
Date:13th August 2016	Chairman & Managing Director
	DIN00035213