Kolte Patil Developers Ltd Directors Report.

Your Directors have the pleasure in presenting 28th Annual Report on the business and operations of the Company and the accounts for the Financial Year ended 31 March 2019. Despite the regulatory and other hurdles faced witnessed by the real estate industry due to introduction of RERA and other changes, your Company has foreseen these issues and implemented strategies to ensure that the Company is able to maintain its growth.

1. Financial highlights

(Rs. in Lakhs)

Particulars Consolidated Standalone
2018-19 2017-18 2018-19 2017-18
Revenue from Operations 86,929 140,272 46,209 67,110
Other Income 1,107 1,447 5,427 4,027
Total Income 88,036 141,719 51,636 71,137
Operating Profit before interest, depreciation, amortization and taxes (EBITDA) 25,816 31,689 15,124 20,978
Depreciation and amortization 1,494 1,536 610 645
Interest and finance charges 9,199 9,870 3,759 4,781
Profit Before Tax (PBT) 15,123 20,283 10,755 15,552
Tax expenses 5,182 4,926 2,816 5,061
Profit After Tax (PAT) 9,941 15,357 7,939 10,491
Add: Other Comprehensive Income 32 39 11 16
Total Comprehensive Income before Non-Controlling 9,973 15,396 7,950 10,507
Interest
Less: Non-Controlling Interest 2,408 3,217 - -
Profit after other Comprehensive Income 7,565 12,179 7,950 10,507
Earnings Per share (in H) 9.95 16.03 10.47 13.84

2. Performance of the Company

The key highlights of the Companys performance is as under:

Financial Overview (Consolidated Performance)

Our revenues were decreased by 38.03% at Rs.86,929 lakhs during the year compared to Rs.140,272 lakhs in the previous year. Expenses (excluding Finance cost) decreased by 34.06% to Rs.115,346 lakhs from Rs.174,931 lakhs in the previous year. Earnings Before Interest Taxes and Depreciation was decreased by 18.53% at Rs.25,816 lakhs as compared to Rs.31,689 lakhs. EBITDA margins increased from 22.59% to 29.70% during the year. Total Comprehensive Income (post minority interest) decreased by 37.88% at Rs.7,565 lakhs compared to Rs.12,179 lakhs in the previous year. Earnings Per Share stood at Rs.9.95 as compared to Rs.16.03 last year. Dividend of Rs.1 per share, amounting to a payout of 10.02% of the years profits, has been recommended by the Board of Directors.

The Ministry of Corporate Affairs ("MCA") on 28 March 2018 notified Ind AS 115, revenue from contract with Customers with effect from 1 April 2018. The Company has applied the modified retrospective approach under Ind AS 115 to contracts that were not completed as at 1 April 2018 and the cumulative effect of applying this standard is recognised at the date of initial application i.e. 1 April 2018 in accordance with Ind AS 115 as an adjustment to opening balance of retained earnings. The transitional adjustment of Rs.21,214 lakhs (net of deferred tax) has been adjusted against opening balance of retained earnings in accordance with the requirements of Ind AS 115 based on performance obligation satisfied at a point in time. On account of the application of Ind AS 115 for the year ended 31 March 2019, revenue from operations, cost of services, construction and land, profit before tax and profit after tax are (lower)/higher by Rs.(32,546) lakhs, Rs.(27,112) lakhs, Rs.(5,434) lakhs, and Rs.(3,344) lakhs respectively as compared to the respective amounts that would have been reported if the replaced revenue recognition principles were applicable. Consequently, Earnings per share (basic and diluted) are reported (lower)/higher by Rs.(6.80) per share for the year ended 31 March 2019.Under modified retrospective approach, the comparatives for the previous year figures are not required to be restated and hence are not comparable.

Financial Overview (Standalone Performance)

Our revenues in 2018-19 decreased by 31.14% during the year at Rs.46,209 lakhs compared to Rs.67,110 lakhs in the previous year. Earnings Before Interest Taxes and Depreciation decreased by 27.91% at Rs.15,124 lakhs as compared to Rs.20,978 lakhs in the previous year. EBITDA margins increased from 31.26% to 32.73% during the year. Profit with comprehensive income after Tax was decreased by 24.34% at Rs.7,950 lakhs compared to Rs.10,507 lakhs in the previous year. Earnings per Share decreased during the year at Rs.10.47 as compared to Rs.13.84.

On account of application of Ind AS 115 as mentioned above, the transitional adjustment of Rs.15,786 lakhs [net of deferred tax] has been adjusted against opening balance of retained earnings in accordance with the requirements of Ind AS 115 based on performance obligation satisfied at a point in time.

On account of the application of Ind AS 115 for the year ended 31 March 2019 revenue from operations, cost of services construction and land, profit before tax, profit after tax are higher/(lower) by Rs.(25,263) lakhs, Rs.(18,702) lakhs, Rs.(6,561) lakhs, Rs.(4,269) lakhs respectively as compared to the respective amounts that would have been reported if the replaced revenue recognition principles were applicable.

Consequently, Earnings per share basic are reported higher/ (lower) by Rs.(5.63) per share for the year ended 31 March 2019 and Earnings per share diluted are reported higher/(lower) by Rs.(5.59) per share for the year ended 31 March 2019.

Under modified retrospective approach, the comparatives for the previous period figures are not required to be restated and hence are not comparable.

3. Dividend

The Company declared and paid an Interim Dividend for the financial year 2018-19 ofH 1.40 per equity share on 75,814,909 equity shares of Rs.10 each and the Board of Directors in their meeting held on 28 May 2019 recommended a Final Dividend of Rs.1 per equity share on 75,814,909 equity shares of Rs.10 each

4. Fixed Deposits

During the year under review, the Company has not accepted any fixed deposits under the provisions of the Companies Act, 2013.

5. Share Capital

The paid-up Equity Share Capital as on 31 March 2019 stood at Rs.7,581.49 Lakhs.

During the year under review, 16,500 Equity Shares have been issued under Employee Stock Option Scheme and the Company has not issued any shares with differential voting rights nor sweat equity.

During the year, the Company granted 379,000 stock options to senior employees of the Company. For details of stock options granted, refer Annexure VI of the Directors Report.

During the year under review, the Company reclassified its authorized share capital from Rs.149,45,00,000 (Rupees One Hundred Forty Nine Crores and Forty Five Lakhs) divided to 14,94,50,000 Equity Shares of Rs.10 each to Rs.149,45,00,000 (Rupees One Hundred Forty Nine Crores and Forty Five Lakhs) divided into 7,94,50,000 Equity Shares of Rs.10 each and 7,00,00,000 Redeemable Preference Shares of Rs.10 each and the approval of shareholders was obtained through postal ballot for the same.

Further, the Company increased its authorized share capital from Rs.149,45,00,000 (Rupees One Hundred Forty Nine Crores and Forty Five Lakhs) to Rs.190,00,00,000/- (Rupees One Hundred Ninety Crores) divided into 10,00,00,000 Equity Shares of Rs.10 each and 9,00,00,000 Redeemable Preference Shares of Rs.10 each and the approval of shareholders was obtained through postal ballot for the same.

6. Internal Financial Controls

The Company has adequate internal controls and processes in place with respect to its financial statements which provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements. These controls and processes are driven through various policies, procedures and certifications. The Management has periodically conducted the assessment of internal financial controls for determining operative effectiveness and the control were operating effectively. The internal financial controls were also reviewed by an Independent Auditor and found to be adequate and operating effectively for ensuring accuracy and completeness of the accounting records. No reportable material weaknesses were observed. The report of Independent Auditor is annexed to the Auditors Report on Financial Statements.

7. Details of Subsidiary/Joint Ventures/Associate Companies

The Statement containing salient features of the financial statement of subsidiaries/associate companies/joint ventures in Form AOC - 1 is annexed as Annexure I to the Directors report.

8. Directors and Key Managerial Personnel

Pursuant to Section 152 of the Companies Act, 2013 read with Article 167 of the Articles of Association of the Company, Mr. Naresh Patil – Vice Chairman (DIN: 00881077) will retire by rotation and being eligible, offered himself for re-appointment at this ensuing Annual General Meeting.

During the year under review, there is no change in Board of Director nor Key Managerial Personnel.

The Board of Directors in their meeting held on 28 May 2019 has considered and recommended the re-appointment of the following directors, subject to the approval of members in the ensuing Annual General Meeting :

i) Mr. Rajesh Patil as Chairman and Managing Director (DIN:00381866) for a period of 5 years from 15 April 2020

ii) Mr. Naresh Patil as Vice Chairman (DIN: 0088077) for a period of 5 years from 15 April 2020

iii) Mr. Milind Kolte (DIN: 00170760) as Executive Director for a period of 5 years from 15 April 2020

iv) Mr. Prakash Gurav as Independent Director (DIN: 02004317) for a period of 5 years from 13 September 2019

v) Mr. Jayant Pendse as Independent Director (DIN: 02434630) for a period of 5 years from 13 September 2019

vi) Mr. G L Vishwanath as Independent Director (DIN: 01758785) for a period of 5 years from 13 September 2019

vii) Mrs. Manasa Vishwanath as Independent Director (DIN: 05241229) for a period of 5 years from 13 September 2019

The Company has received declarations from all the Independent Directors of the Company confirming that they meet the criteria of independence as prescribed both under the Act and Regulation 16 (b) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

The Company has devised a Policy for performance evaluation of Independent Directors, Board, Committees and other individual Directors which includes criteria for performance evaluation of the non-executive directors and executive directors. The Board has carried out an annual evaluation of its own performance, various committees and individual directors.

The Board members are provided with necessary documents, reports and policies to enable them to familiarise with the Companys procedures and practices. Periodic presentations are made at the Board and Committee Meetings, on business and performance up. The details of such familiarization programmes for Independent Directors are posted on the website of the Company and can be accessed at http:// www.koltepatil.com/investors/corporate-governance.

The Policy for selection of Directors and determining Directors independence and Remuneration Policy for Directors, Key Managerial Personnel and other employees is annexed as Annexure II to this Report.

9. Meetings of the Board of Directors

Eight (8) Board Meetings were held during the year and the gap between two meetings did not exceed four months. The dates on which the board meeting were held as follows:

(1) 23 May 2018,

(2) 29 May 2018,

(3) 14 August 2018,

(4) 26 October 2018,

(5) 30 January 2019,

(6) 12 February 2019,

(7) 02 March 2019 and

(8) 31 March 2019.

10. Statutory Auditors

M/s. Deloitte Haskins & Sells LLP (LLP Registration No. AAB-8737, FRN – 117366W/ W-100018), Chartered Accountants, Pune, were appointed as statutory auditors till the Annual General Meeting (AGM) to be held in the year 2023.

11. Contracts or arrangements with related parties

During the year under review, all transactions/arrangements entered by the Company with related parties were in the ordinary course of business and on an arms length basis.

The Policy on materiality of related party transactions and dealing with related party transactions as approved by the Board may be accessed on the Companys website at the link: http://www.koltepatil.com/investors/corporate-governance.

The details of all transactions/arrangement with related party are given in the Note No.43 in Notes to Accounts forming part of the Audited Standalone Financial Statement.

12. Conservation of energy, technology absorption and foreign exchange earnings and outgo

As the Company is not engaged in the manufacturing activities, the information related to Conservation of energy, technology absorption has not be provided.

The details of Foreign Exchange outgo are as follows:

Particulars For Year ended 31 March 2019 For Year ended 31 March 2018
Salary - 13
Travelling Expenses 116 24
Professional Fees - 3
Advertising Expenses - 1
Purchase of sanitary wares - 36
Total 116 77

13. Particulars of loans, guarantees and investments

The particulars of loans, guarantees and investments are given in Note No. 5,9 and 32 in Notes to accounts forming part of the Audited Financial Statements.

14. Extract of the annual return

Pursuant to the provisions of Section 92 read with Rule 12 of the Companies (Management and administration) Rules, 2014, the extract of the annual return in Form No. MGT – 9 as provided in Annexure III form part of the Boards report.

15. Corporate Social Responsibility (CSR)

In compliance with Section 135 of the Companies Act, 2013 read with the Companies (Corporate Social Responsibility Policy) Rules 2014, the Company has established Corporate Social Responsibility (CSR) Committee and Report on CSR Activities forms part of this Report as Annexure IV.

16. Audit Committee

The Audit Committee of the Company comprises following members:

Name of the Member Designation Category
Mr. Prakash Gurav Chairman Independent Director
Mr. Jayant Pendse Member Independent Director
Mr. G L Vishwanath Member Independent Director
Mrs. Manasa Vishwanath Member Independent Director
Mr. Umesh Joshi Member Independent Director
Mr. Milind Kolte Member Executive Director

Mr. Vinod Patil, Company Secretary of the Company, acts as the secretary to the Audit Committee and the Managing Director and the Chief Financial Officer of the Company are permanent invitees to the Audit Committee Meetings.

The Board has accepted all the recommendations of the Audit Committee.

17. Vigil mechanism for directors and employees

The Vigil Mechanism of the Company, which also incorporates a whistle blower policy in Regulation 22 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, includes an Ethics & Compliance Task Force comprising senior executives of the Company. Protected disclosures can be made by a whistle blower through an e-mail, or dedicated telephone line or a letter to the Task Force or to the Chairman of the Audit Committee.

The Company is committed to adhere to the highest standards of ethical, moral and legal conduct of business operations. To maintain these standards, the Company encourages its employees who have concerns about suspected misconduct whether by the Directors, employees, vendors or customers and to come forward and express these concerns without fear of punishment or unfair treatment. The report received from employees will be reviewed by Audit Committee. The Directors and Management Personnel are obligated to maintain confidentiality of such reporting and ensure that the whistle blowers are not subjected to any discriminatory practices. No person has been denied access to the Audit Committee.

The said policy can be accessed at http://www.koltepatil. com/investors/corporate-governance.

18. Nomination and Remuneration Committee

The Nomination and Remuneration Committee of the Company comprises following members

Name of the Member Designation Category
Mr. Jayant Pendse Chairman Independent Director
Mr. Prakash Gurav Member Independent Director
Mr. G. L. Vishwanath Member Independent Director
Mrs. Manasa Vishwanath Member Independent Director
Mr. Umesh Joshi Member Independent Director
Mrs. Sunita Kolte Member Non-Executive Director

19. Managerial Remuneration

The Details required as per Rule 5(1) and (2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are given in Annexure V to the Directors report.

20. Employee Stock Option Scheme

The Nomination and Remuneration Committee of the Board of Directors of the Company, inter alia, administers and monitors the Employees Stock Option Scheme of the Company in accordance with the applicable SEBI Guidelines.

The applicable disclosures as stipulated under the SEBI Guidelines as on 31 March 2019 (cumulative position) with regard to the Employees Stock Option Scheme (ESOS) are provided in Annexure VI to this Report.

21. Secretarial Audit Report

Pursuant to Section 204 of the Companies Act 2013, the Company had appointed M/s. SVD & Associates, Company Secretaries, Pune as its Secretarial Auditors to conduct the secretarial audit of the Company for the Financial Year 2018-19. The Report of Secretarial Auditor for the Financial Year 2018-19 is annexed to this report as Annexure VII.

The comments of the Board on observations of the Secretarial Auditors are as follows :-

(1) There was inadvertently delay in submission of prior intimation of date of Board Meeting to the stock exchanges and the Company has paid fine to stock exchanges in this regards.

(2) Inadvertently, the link of the website of the company and stock exchanges was not given in the newspaper advertisement, in future the Company will adhere to comply with the same.

(3) The Company will file the amended Memorandum and Articles of Association in due course.

(4) There was inadvertently delay with respect to IEPF notice to shareholders, newspaper publication and filing corporate action with Depositories, the Company will ensure the timely compliance.

The Company does not have any material subsidiary, hence the secretarial audit report of material subsidiary is not applicable.

22. Secretarial Standards

The Institute of Company Secretaries of India had revised the Secretarial Standards on Meetings of the Board of Directors (SS-1) and Secretarial Standards on General Meetings (SS-2) with effect from 01 October 2017. The Company is in compliance with the revised secretarial standards.

23. Corporate Governance Certificate

Report on Corporate Governance for the Financial Year 2018-19, as stipulated under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is presented in a separate section forming part of the Annual Report.

The Company has obtained the Compliance certificate for the Financial Year 2018-19 from the Statutory Auditors i.e. M/s. Deloitte Haskins & Sells LLP for the compliance of conditions of corporate governance as stipulated in Regulation 34 (3) read with Part E of Schedule V of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

24. Risk management policy

The Company has constituted Risk Management Committee comprising 6 members, in which 3 members are Independent Directors. The Risk Management Committee has approved the Risk Management Policy. The Committee monitors the policy, ensures that the Company is acting appropriately to achieve prudent balance between the risk and reward and evaluates significant risk exposures and assesses the managements actions to mitigate the exposures.

25. Directors Responsibility Statement

Your Directors state that:

a) in the preparation of the annual accounts for the year ended 31 March 2019, the applicable accounting standards read with requirements set out under Schedule III to the Act, have been followed and there are no material departures from the same;

b) the Directors have selected such accounting policies and applied them consistently and made judgements 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 31 March 2019 and of the profit of the Company for the year ended on that date;

c) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d) the Directors have prepared the annual accounts on a ‘going concern basis;

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

f) 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.

26. Managements Discussion And Analysis Report

Managements Discussion and Analysis Report for the year under review, as stipulated in Regulation 34 (2) (e) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, is presented in a separate section forming part of the Annual Report.

27. Disclosure under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

The Company has adopted a policy on prevention and redressal of Sexual Harassment at workplace. Pursuant to the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, the Company has in place an Internal Complaints Committee for prevention and redressal of complaints of sexual harassment of women at the workplace.

Status of Complaints received during the year under review:

Received during the year Resolved Pending at the year end
2 2 0

28. Credit Rating

The Company has obtained credit rating as A+/Positive for the bank facilities of Rs.600 Crores from CRISIL.

29. Acknowledgements

Your Directors take this opportunity to thank customers, vendors, stakeholders, Central and State Governments, business associates and bankers for their consistent support and co-operation to the Company. Your Directors take this opportunity to thank all the employees who have helped for sustained excellence in performance of the Company.

Finally, the Directors would like to convey their gratitude to the members for reposing their confidence and faith in the Company and its management.

For and on behalf of the Board of Directors,
Rajesh Patil
Date: 28 May 2019 Chairman and Managing Director
Place: Pune DIN 00381866

Annexure I

Form AOC-1

(Pursuant to first proviso to sub-section (3) of section 129 read with rule 5 of Companies (Accounts) Rules, 2014)

Statement containing salient features of the Financial Statement of Subsidiaries/Associate Companies/Joint Ventures

PART A: Subsidiaries

(Rs. in Lakhs)

Sr. No. 1 2 3 4 5 6 7 8 9 10
Name of the subsidiary Kolte-Patil Real Estate Private Limited Bellflower Properties Private Limited Tuscan Real Estate Private Limited Snowflower Properties Private Limited Regenesis Facility Management Company Private Limited Sylvan Acres Realty Private Limited Kolte-Patil Redevelopment Private Limited (Formerly known as PNP Retail Private Limited) PNP Agrotech Private Limited Anisha Lifespaces Private Limited Kolte-Patil Global Private Limited
The date Since when subsidiary was acquired 28 March 2008 31 March 2009 31 December 2006 21 March 2011 02 February 2009 22 May 2006 18 February 2010 30 March 2012 04 January 2019 31 July 2018
Reporting period for the subsidiary concerned, if different from the holding companys reporting period 31 March 2019 31 March 2019 31 March 2019 31 March 2019 31 March 2019 31 March 2019 31 March 2019 31 March 2019 31 March 2019 31 March 2019
Share capital 1,374 100 100 5 2 375 1,968 933 1 202
Reserves & surplus 6,594 2,764 2,756 2,942 168 699 (1,828) (555) (1) -
Total assets 18,289 3,034 4,271 14,190 213 1,075 723 1,232 5 202
Total Liabilities (excluding Share capital and Reserves & Surplus) 10,320 169 1,416 11,243 43 1 583 854 5 -
Investments - - - - - - - - - -
Turnover 9,589 357 2,397 2,099 259 - 188 176 - -
Profit before taxation 3,587 (128) 645 (667) 61 (3) (159) (158) (1) -
Provision for taxation 1,044 43 60 (282) 15 0 (29) - - -
Profit after taxation before comprehensive Income 2,543 (171) 584 (385) 46 (3) (129) (158) (1) -
Profit after taxation after Comprehensive Income 2,548 (171) 588 (380) 46 (3) (129) (158) (1) -
Proposed Dividend - - - - - - - - - -
Extent of shareholding (in percentage) 100.00% 100.00% 51.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%

Part B: Associates and Joint Ventures

Statement pursuant to Section 129 (3) of the Companies Act, 2013 related to Associate Companies and Joint Ventures

(Rs. in Lakhs)
Name of associates/Joint Ventures Kolte-Patil I-Ven Townships (Pune) Limited $
1. Latest audited Balance Sheet Date 31 March 2019
2. Date on which the Associate or Joint Venture qas associated or acquired 15 February 2013
3. Shares of Associate/ Joint Ventures held by the company on the year end
No. of shares 45,00,000
Amount of Investment in Associates/Joint Venture 450.00
Extend of Holding (in percentage) 45%
4. Description of how there is significant influence As per the Joint Venture Agreement, there is significant influence.
5. Reason why the associate/joint venture is not consolidated N.A.
6. Net worth attributable to shareholding as per latest audited Balance Sheet (7,943)
7. Profit/Loss for the year 1,669
i. Considered in Consolidation* 751
ii. Not Considered in Consolidation -

$ Considered as a subsidiary in the Ind AS Financial Statements based on control assessment carried out under Ind AS.

* Represents our share of attributable Profit/Loss

ANNEXURE II

POLICY FOR SELECTION OF DIRECTORS AND DETERMINING DIRECTORS INDEPENDENCE AND REMUNERATION POLICY FOR DIRECTORS, KEY MANAGERIAL PERSONNEL AND OTHER EMPLOYEES

PREAMBLE

OVERVIEW UNDER COMPANIES ACT 2013

{Section 178 & Companies (Meetings of Board and its Powers) Rules 2014}

Constitution of the Nomination and Remuneration Committee consisting of three or more non-executive directors out of which not less than one-half shall be independent directors

The Nomination and Remuneration Committee shall identify persons who are qualified to become directors and recommend to the Board their appointment and removal and shall carry out evaluation of every directors performance.

The Nomination and Remuneration Committee shall formulate the criteria for determining qualification, attributes and independence of a director and recommend to the Board a policy, relating to the appointment of directors, remuneration for the directors, key managerial personnel and senior management personnel i.e. employees at one level below the Board including functional heads (the "Policy").

The Nomination and Remuneration Committee shall, while formulating the Policy ensure that:

• The level and composition of remuneration is reasonable and sufficient to attract, retain and motivate directors of the quality required to run the Company successfully;

• Relationship of remuneration to performance is clear and meets appropriate performance benchmark set out by the Company; and

• Remuneration to directors, key managerial personnel and senior management involves a balance between fixed and incentive pay reflecting short and long-term performance objectives appropriate to the working of the company and its goals.

• Such policy shall be disclosed in the Boards report.

OVERVIEW OF SEBI (LISTING OBLIGATIONS AND DISCLOSURE REQUIREMENT) REGULATIONS, 2015

The Company shall set up a Nomination and Remuneration committee which shall comprise at least three directors, all of whom shall be non-executive directors and at least half shall be independent. Chairman of the committee shall be an independent director.

The role of the committee shall, inter-alia, include the following:

Formulation of the criteria for determining qualifications, positive attributes and independence of a director and recommend to the Board a policy, relating to the remuneration of the directors, key managerial personnel and other employees;

Formulation of criteria for evaluation of Independent Directors and the Board;

Devising a policy on Board diversity;

Identifying persons who are qualified to become directors and who may be appointed in senior management in accordance with the criteria laid down, and recommend to the Board their appointment and removal. The company shall disclose the remuneration policy and the evaluation criteria in its Annual Report.

PRESENT POSITION OF DIRECTORS& KEY MANAGERIAL PERSONNEL OF THE COMPANY

The Company has constituted a Nomination and Remuneration Committee of the Board of Directors (Board).

At present, there are total ten directors on the Board of which three (3) are Executive Directors and two (2) are Non - Executive and non-Independent and five (5) are Non-Executive Independent.

Key Managerial Personnel (KMP) consists of Chairman and Managing Director, Vice Chairman, Executive Directors, Chief Executive Officer, Chief Financial Officer and Company Secretary.

COMPOSITION OF NOMINATION AND REMUNERATION COMMITTEE

Name of the Member Designation Category
Mr. Jayant Pendse Chairman Independent Director
Mr. Prakash Gurav Member Independent Director
Mr. G. L. Vishwanath Member Independent Director
Mr. Umesh Joshi Member Independent Director
Mrs. Manasa Vishwanath Member Independent Director
Mrs. Sunita Kolte Member Non-Executive Director

TERMS OF REFERENCE TO NOMINATION AND REMUNERATION COMMITTEE

• To recommend to the Board, the appointment, reappointment of Directors, Executive Directors and Key Managerial Personnel and determination, fixation of the remuneration and revision in the remuneration payable to the Executive Directors of the Company and removal of the director/Executive Director/Key Managerial Personnel;

• To formulate the criteria for determining qualifications, positive attributes and independence of the director;

• To recommend the Board the policy related to the remuneration of for Directors, Key Managerial Personnel and other employees;

• To carry out evaluation performance of every Director of the Company; and

• To formulate and recommend to the Board the policy relating to the stock options to the employees, grant the stock options to the eligible employees and review the management of stock option scheme.

CRITERIA FOR DETERMINING THE FOLLOWING:-

Qualifications for appointment of Directors (including Independent Directors):

• Person of eminence, standing and knowledge with significant achievements in business, professions and/ or public service.

• His / her financial or business literacy/skills.

• Appropriate other qualification/experience to meet the objectives of the Company.

• As per the applicable provisions of Companies Act 2013, Rules made thereunder and Regulations of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The Nomination and Remuneration Committee shall have discretion to consider and fix any other criteria or norms for selection of the most suitable candidate/s.

Attributes of Directors (including Independent Directors):

• Demonstrate integrity, credibility, trustworthiness, ability to handle conflict constructively, and the willingness to address issues proactively.

• Actively update their knowledge and skills with the latest developments in market conditions and applicable legal provisions.

• Willingness to devote sufficient time and attention to the Companys business and discharge their responsibilities

• Assist in bringing independent judgment to bear on the Boards deliberations especially on issues of strategy, performance, risk management, resources, key appointments and standards of conduct and ability to develop a good working relationship with other Board members and contribute to the Boards working relationship with the senior management of the Company.

• Act within their authority, assist in protecting the legitimate interests of the Company, its shareholders and employees

• Any other attributes as maybe required under the Companies Act, 2013 read with the Rules made there under along with the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended from time to time.

Criteria for appointment of KMP/Senior Management:

• Possess the required qualifications, experience, skills & expertise to effectively discharge their duties and responsibilities;

• Practice and encourage professionalism and transparent working environment;

• Build teams and carry the team members along for achieving the goals/objectives and corporate mission;

• Strictly adhere to the code of conduct and any other policies as maybe set out by the Company from time to time; and

• Act at all times in the interest of the Company while discharging their duty.

POLICY RELATING TO REMUNERATION OF DIRECTORS, KMP & SENIOR MANAGEMENT PERSONNEL:

• To ensure that the level and components of remuneration is reasonable and sufficient to attract, retain and motivate Directors, KMP and other employees of the quality required to run the Company successfully.

• No director/Key Managers of Personnel/ other employee shall be involved in deciding his or her own remuneration.

• The trend prevalent in the industry, nature and size of business is kept in view and given due weight age to arrive at a competitive quantum of remuneration.

• It is to be ensured that relationship of remuneration to the performance is clear and meets appropriate performance benchmarks which are unambiguously laid down and communicated from time to time.

• Improved performance should be rewarded by increase in remuneration and suitable authority for value addition in future.

• Remuneration packages should strike a balance between fixed and incentive pay, where applicable, reflecting short and long term performance objectives appropriate to the Companys working and goals.

• Other criteria are also to be considered such as responsibilities and duties; time & effort devoted; value addition; profitability of the Company & growth of its business; analyzing each and every position and skills for fixing the remuneration yardstick; standard for certain functions where there is a scarcity of qualified resources; ensuring tax efficient remuneration structures; ensuring that remuneration structure is simple and that the cost to the Company (CTC) is not shown inflated and the effective take home remuneration is not low.

• Consistent application of remuneration parameters across the organisation.

• Provisions of law with regard making payment of remuneration, as may be applicable, are complied.

REVIEW

The policy shall be reviewed by the Nomination & Remuneration Committee and the Board, from time to time as may be necessary.