Salzer Electronics Ltd Directors Report.

To

Dear Shareholders,

We have pleasure in presenting the Thirty Fifth Annual Report, together with the audited financial statements of the Company for the Financial Yearended March 31, 2020.

1. FINANCIAL SUMMARY OF THE COMPANY

(Rs. in Lakhs)
Particulars

Standalone

Consolidated
For the year ended March 31, 2020 For the year ended March 31, 2019 For the year ended March 31, 2020
I Revenue from operations 56,694.56 55,976.62 58,435.34
II Other Income 88.75 70.70 128.82
III Total Revenue (I + II) 56,783.31 56,047.32 58,564.16
IV Expenses
a Cost of materials consumed 43,019.54 41,933.48 43,691.44
b Purchase of stock in trade - - -
c Changes in inventories of finished goods, work-in-progress and stock-in-trade -1,038.47 -52.18 -921.99
d Employee benefit expenses 2,639.87 2,489.37 2,984.54
e Finance Cost 2,116.68 1,988.47 2,122.14
f Depreciation and amortisation expense 1,443.96 1,215.96 1,475.51
a Other expenses 5,554.68 5,241.39 6,003.28
h Total Expenses 53,736.26 52,816.49 55,354.92
V Profit before exceptional and extraordinary items and tax (lll-IV) 3,047.05 3,230.83 3,209.24
VI Exceptional Items - - -19.46
VII Profit before tax (V-VI) S. extraordinary items 3,047.05 3,230.83 3,189.78
VIII Extraordinary items - - -
IX Profit before tax (VII-VIII) 3,047.05 3,230.83 3,189.78
X Tax expense: 408.39 835.10 448.46
XI Profit for the period - After Tax (IX-X) 2,638.66 2,395.73 2,741.32
XIII Earnings per equity share:
(1) Basic (in Rs.) 16.51 15.21 16.96
(2) Diluted (in Rs.) 16.51 15.10 16.96
XIV Reserves and Surplus 29,339.70 27,101.18 29,405.44

** The consolidated figures of the company could not be compared with corresponding previous years as that of the M/s. Kaycee Industries Ltd has became the subsidiary of the company effective from 11.07.2019 only.

FINANCIAL SUMMARY OF THE SUBSIDIARY COMPANY

Particulars 31st March 2020 31st March 2019
1 Revenue from operations 2,342.68 2,501.81
2 Operating Expenses
a Cost of materials consumed 1,137.81 1,338.56
b Cost of traded goods sold 31.58 76.04
c Changes in inventories of finished goods, work-in-progress (79.67) 28.39
d Employee Benefit Expenses 466.30 443.41
e Other Expenses 540.02 521.71
3 Total Operating Expenses (a + b+c + d+e) 2,096.04 2,408.11
4 Operating Profit (1-3) 246.64 93.70
5 Other Income 17.65 153.66
B Finance cost 6.75 15.60
7 Depreciation and Amortisation Expenses 41.99 38.06
8 Profit before Tax (4+5-6-7) 215.56 193.70
9 Provision - Covid 19 for Inventory and Receivable 19.46 -
10 Tax Expenses 54.38 58.51
11 Profit after Tax (8-9) 141.72 135.19
12 Other Comprehensive Income (11.851 (5.70)
13 Total Comprehensive Income (10+ 11) 129.87 129.49
14 Share Capital 63.47 63.47
15 Reserves and Surplus 1,356.44 1,234.49
16 Net Worth of the Company 1,419.91 1,297.96
17 Book Value of the shares 2,237.14 2,045.01
18 Earnings per share 223.29 212.99

2. ANALYSIS OF PERFORMANCE

Your Company has registered a marginal growth in its performance with net revenues over that of corresponding year by around 1% year on year during the financial year, in spite of the lock-down announced by government during the last week of March 2020. Besides, the marginal growth is attributable to the slowdown in the economic activities not only in the domestic market, but also in the global market during the fiscal FY20 in addition to close down of the factory during last about 10 days due to lock down on the outburst of the COVID-19 pandemic throughout the globe.

In the concluded financial year 2019-20, Net Revenue of the Company increased from Rs.559.80 Crs to Rs.588.95 crore with marginal growth of 1% in the otherwise subdued market conditions for the electrical and electronics industry. This growth was driven by all three key businesses of Industrial Switch Gears, Building segment and Wires & cables. Similarly, EBITDA (Earnings Before Interest, Taxation, Depreciation and Amortization) and Profitability of the Company went up by 4% and 13% respectively on account of better operational efficiency and availability of the deferred Tax Credit. The contribution from domestic sales at 87% was mainly driven by increase in demand and good traction for products in almost all the business divisions.

During the year, the legacy products of your Company such as rotary switches and toroidal transformers have shown growth and uptick in demand along with other products like three phase dry type transformers and wire harnesses.

Yours Companys focus will always remain on adding new high margin products, reach out different markets with customized product and solutions in order to add newer clients and grow our business, and constantly looking for new opportunities for technical associations to strengthen our base of product offerings.

Your Company would continue to focus on adding new high margin products under its product portfolio, reach out to new geographies and offer total customer solutions to its customers besides strengthening the revenue drivers, improving ROCE, working capital cycle as well as constantly looking for new opportunities for technical associations to strengthen the base of product offerings which are part of its core strategy.

Industrial switch gear Division

The industrial switch gear division is one of the largest contributors to overall revenues of your Company. This division comprises Cam Operated Rotary Switches; Toraidal Transformers, Relays, Load Break Switches, Wire Harness, Three Phase ?ry Type Transformers etc.,. This division posted a growth of 1.3% on year on year and made 45% contribution to the total revenue of the Company mainly driven by products - three phase dry type transformers and wire harness.

Wire and cable Division

Wire and cable division consisting of copper wires and cables is the second major business of your Company. On a yearly basis, wire and cable business contributed 47% with a year on year growth of 1.9% mainly on account of consolidation of Salzer Magnet Wires and increase of new product offerings. From the start of this financial year, your Company has started to manufacture and sell wires and cables under the Salzer brand, which is seeing good demand and also a growing opportunity in the market. This is apart from our regular brand labelling business that we are doing for Larsen & Toubro, Crompton and a few other large brands

In order to strengthen the revenues of this division, your Company has acquired the whole of the business undertaking from Salzer Magnet Wires Limited on slump basis as a going concern in pursuance of the business transfer Agreement effective March 08, 2019 for a total value of Rs.2029.10 Lakhs for consideration other than cash. The acquired undertaking has been facilitating well growth support forthis division.

Building Product Division

This is the only division where your Company has been operating on a B2C basis. The Portfolio under this division involves Distribution Boards, Modular Switches & Speciality Switches, Movement Sensors, Remote Switches, Single Phase Motors Switches, House Wires etc.,.The building division contributed around 6% of your Companys revenues in 2019-20 with a downtrend of 16% on account of slowdown in economy during 2019-20 and also clubbed with lockdown as announced by government to combat the COVID-19, during last week of March 2020. Your Company is confident of increasing contribution from this division in the coming two to three years to around 10% of its total revenue levels as it has opened up new opportunities in real estate sector where Unit has got some annual rate contracts with major builders and more focus on retail segment.

Energy management Division

The fourth is the Energy Management division and an order driven business. This is a new technology oriented business which was developed by your Companys in-house RS.D team. This product division has given a benefit of being the largest ESCO, with highest CRISIL rating -Grade A in the country for your Company. Energy management division, during the full year FY2020, has contributed only 2% to the total net revenues of the Company.

Going forward your Companys focus remains to achieve profitable growth by adding newer products which are customized and value added in nature, exploring newer geographies which can yield better margins. With a very competent team in place, your Company is quite confident of achieving the milestone which it has set for itself.

3. DIVIDEND

The Board of Directors at their meeting held on June 18, 2020 considered the proposal of Dividend for the financial year ended March 31,2020 taking into account the companys performance during the period under review as well as the dividend track record for the last more than two decades, the dividend payout ratio at an average rate of 18%, the global economic slowdown including in domestic market during the year under review, the lockdown announced by the government to contain the spread of COVID-19 crept in December 2019 in China and aggressively spread all over the world impacting the economic activities and the standard of living of the society at large, the continuation of the lockdown announced by government with uncertainty on lifting the same due to continuous spread of the COVID-19 resulting in heavy human loss and bringing the economic activities to a state of standstill globally.

Hence, your Board of Directors thought it prudent to conserve the resources to meet not only the eventuality arising out of the COVID-19 but also the future requirements of the company to ensure the sustainability of the business for value addition and mutual benefit to all the stakeholders, in the long run. The Board of Directors has decided to plough back the profit into the business. However, your Board of Directors are continuously monitoring the situation not only to sustain the business but also to improve the performance of the company under this strenuous environment and the interest of the stakeholders would be considered accordingly depending upon the business growth exigencies in the periods ahead.

4. SHARE CAPITAL AND OTHER RELATED

SECURITIES

Amendment to the Memorandum and Articles of Association

During the year under review, your Company has not amended any Provisions in the Memorandum and Articles of Association.

5. CORPORATE GOVERNANCE

As required under Schedule V of SEBI (Listing Obligations and Disclosure Requirements) Regulations, a separate section on corporate governance practices followed by the Company, together with a certificate from the Companys Auditors confirming compliance attached with this report Annexure: 1

6. RESERVES

Your Board of Directors, as a prudent policy in the absence specific provisions in the Companies Act 2013 and Rules made there-under, has transferred Rs.45,00 Lakhs to the General Reserve Account. Accordingly, your Company has general reserve of Rs.1958.48 Lakhs as at March 31,2020.

7. LIQUIDITY

Inspite of the prevailing environment your company has ensured to have adequate cash and cash equivalents in its Books, and taking care of all such current liabilities comfortably.

Moreover, the government has announced various concessions and reformative measures to ensure the liquidity in the market by permitting the banks to give moratorium by way of repayment of its term liabilities as well as payment of interest both on term liability and working capital for a period of three months initially from March 2020 and subsequently extended the same by another three months till 31.08.2020. In order to felicitate the MSME and corporate to have the sufficient liquidity during this COVID-19 period and your company as a conservative measure has been availing the facilities so extended by the government to combat the economical slowdown during COVID-19 period. This would also support the liquidity position of your company with adequate cash and cash equivalents to combat the eventualities during this period.

8. CHANGE IN THE NATURE OF BUSINESS, IF ANY

During the year, the nature of the business of your Company - Manufacturing of Electrical

Installation Products- has not been changed.

9. MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY WHICH HAVE OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR OF THE COMPANY TO WHICH THE FINANCIAL STATEMENTS RELATE AND THE DATE OF THE REPORT

a. There are no material changes which could have been affected the financial positions of the company between the end of the financial year and the date of this report except M/s. Kaycee Industries Ltd have become the subsidiary of the company consequent to the acquisition of controlling interests to the extent of 74.92% both from the erstwhile promoters of the Kaycee Industries Ltd and also acquisition of shares from the public in compliance with the relevant SEBI regulations in force.

b. Impact of COVID-19 :- The outbreak of COVID-19 pandemic and the resulting lockdown enforced from 24th March 2020 have affected the Companys regular operations. Accordingly, the Company has considered the possible effects that may result from the pandemic on the carrying amounts of property, plant and equipment, investments, inventories, receivables and other current assets. In developing the assumptions relating to the possible future uncertainties in the global economic conditions because of this pandemic, the Company, as at the date of approval of these financial results has used internal and external information, which are relevant in determining the expected future performance of the Company. The Company has evaluated its liquidity position, recoverability of such assets, and based on current estimates expects the carrying amount of these assets will be recovered. The impact of COVID-19 on the Companys financial results may differ from that estimated as at the date of approval of these financial results. Moreover, the Company has a practice of providing requisite provisions in the Financial Statements in line with the Accounting Standards for the expected credit loss on the carrying cost of both fixed and current assets taking care of all possible loss arising out of any uncertainties.

The Management believes that it has taken into account all the possible impact of events arising from COVID 19 pandemic in the preparation of the standalone financial results including the ability of the Company to continue as going concern. However, the impact assessment of COVID 19 is a continuing process given the uncertainties associated with its nature and duration. The Company will continue to monitor any material changes to future economic conditions.

10. DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANYS OPERATIONS IN FUTURE

No orders passed by any Court in India or by any Regulator or by Tribunals affecting the going concern status and Companys operations in future.

11. DETAILS IN RESPECT OF ADEQUACY OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THE FINANCIAL STATEMENTS.

The Company has put in place adequate internal financial controls over financial reporting. These are reviewed periodically and made part of work instructions or processes in the Company. The Company continuously tries to automate these controls to increase its reliability.

The Company has adopted accounting policies which are in line with the Indian Accounting Standards notified under Section 133 of the Companies Act, 2013 read together with the Companies (Indian Accounting Standards) Rules, 2015. Changes in policies, if any, are approved by the Audit Committee in consultation with the Statutory Auditors.

The Company has identified inherent reporting risks for each major element in the financial statements and put in place controls to mitigate the same. These risks and the mitigation controls are reviewed periodically in the light of changes in business, IT systems, regulations and internal policies. Corporate accounts function is involved in designing large process changes as well as validating changes to IT systems that have a bearing on the books of account.

The Company periodically conducts physical verification of inventory, fixed assets and cash on hand and matches them with the books of account and dealt with appropriately. No Discrepancies were found during the year under review.

The Company, in preparing its financial statements makes judgements and estimates based on sound policies and uses external agencies to verify/validate them as and when appropriate. The basis of such judgements and estimates are also approved by the Audit Committee of the Board of Directors of the Company in consultation with the Statutory Auditors of the Company.

The Company has a Code of Conduct applicable to all its employees as well as Board of Directors along with a Whistle Blower Policy which requires employees to update accounting information accurately and in a timely manner.

12. DETAILS OF SUBSIDIARY / JOINT VENTURES / ASSOCIATE COMPANIES

As stated supra M/s. Kaycee Industries Ltd is subsidiary of your company with effect from 11.07.2019, which is also in the synergical line of manufacture of electrical installation products having its registered office and factory at Mumbai in the state of Maharastra.

13. DEPOSITS

During the Financial year under the review, your Company has not accepted any deposits within the meaning of Section 73 of the Companies Act 2013 read with Companies (Acceptance of Deposits) Rules, 2014. As such there was no deposit as at March 31,2020.

14. STATUTORY AUDITORS

In terms of Proviso to Section 139 (1) of the Companies Act 2013, and with the approval of the shareholders at their meeting held on 10.08.2019 M/s. JDS Associates, Chartered Accountant, has been appointed as the Statutory Auditors of the Company, as consented and confirmed vide its letter dated 08.05.2019 on their eligibility to be so appointed, for a term of Five years immediately after conclusion of the 34" Annual General Meeting till the conclusion of the 39" Annual General Meeting for the financial year 2023-24, consequent to the demission of office by the statutory auditor M/s.Swamy & Ravi, in compliance with the regulations of appointment of statutory auditors.

15. INVESTMENTSMADEBYTHECOMPANY

The company has investments in quoted equities and unquoted equities and the company has adequate measures to review the significant impact by way of changes in fair value of the equity shares and accordingly they are dealt with in the financial statements. The company has quoted equity investment in the subsidiary during the financial year under reporting as detailed elsewhere in the directors report and the carrying value of the investment is at cost considering the future growth rate, experts opinion, market capacity and the brand value.

16. AUDITORSREPORT

The Independent Audit Report along with the Annexure as prescribed under Companies (Auditors Report) Order 2015 as issued by the Auditors are appended in this Annual Report, wherein the Auditors have not made any qualification / adverse remarks based on the auditing.

17. EXTRACT OF THE ANNUAL RETURN

The extract of the annual return in form No. MGT - 9 forms part of the Boards report given as Annexure: 2 herewith in compliance with Rule 12(1) of the Companies (Management and Administration) Rules, 2014.

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

The details of conservation of energy, technology absorption, foreign exchange earnings and outgo given as Annexure: 3 herewith separately.

19. CORPORATE SOCIAL RESPONSIBILITY (CSR)

In terms of the provisions of section 135 of the Companies Act, 2013, read with Companies (Corporate Social Responsibility Policy) Rules, 2014, the Board of Directors of your Company has constituted a Corporate Social Responsibility ("CSR") Committee. The composition and terms of reference of the CSR Committee is provided in the Corporate Governance report, which forms part of this report. Your Company has also in place a CSR Policy and the same is available on your Companys website www.salzergroup.net /investor.

The Company, for the past many years, has been fulfilling the objectives of social nature in the area of education, health and other social causes in and around Periyanaickenpalayam Region, Coimbatore District. The Company primarily through its Trust, has been promoting education, healthcare etc.,. The Company is at the service of the Society in general for up-liftment of literacy and health care.

Accordingly, the Company was required to spend Rs.58.59 Lakhs during the year towards CSR activities and against which, spent Rs.14.41 Lakhs in respect of various specified activities enshrined in Schedule VII of the Companies Act, 2013 and also in Salzers Corporate Social Responsibility Policy. The Annual Report on the CSR Activities has been attached with this report as Annexure:4

20. DIRECTORS:

A) Changes in Directors and Key Managerial Personnel

During the year under review, one of the Directors Mr. R.Dhamodaraswamy, Non-Independent and Non Executive Director passed away on 27.11.2019. On the date of this report, Dr. Otto Eggimann vacated his office as an Independent Director on 24.05.2020

Mr.Vishnu Rangaswamy, Son of Mr.R.Doraiswamy, Managing Director and brother of Mr.D.Rajeshkumar, Joint Managing Director and Chief Financial Office of the company, was appointed on the Board as an additional director, designated as Non Executive and Non Independent Director and who shall hold office till the conclusion of forthcoming 35" Annual General Meeting for the financial year 2019-20.

Based on the nomination for the appointment of Mr.Vishnu Rangaswamy as a Director on the Board of Director on a regular basis received by the company, necessary proposal for his appointment as a Director designated as Non Executive and Non Independent Director is placed for approval of the share holders at this meeting with a tenure of office subject to retirement by rotation. Based on the recommendation of Nomination and Remuneration Committee, your Board of Directors considered this appointment and recommended for your approval as required by relevant regulations.

Bl Retirement by Rotations

Dr.Thilagam Rajesh and Mr.S.Baskarasubramanian, Directors of the company, who are the retiring Directors in the ensuing 35th Annual General Meeting, offered themselves to get re-appointed in pursuance of Section 152 of the Companies Act 2013 read with Article 178 of the Articles of Association of the Company.

Cl Declaration by the Independent Directors

All Independent Directors have given declarations that they meet the criteria of independence as laid down under Section 149(B) of the Companies Act, 2013 and Regulation 25 of SEBI (Listing Obligations and Disclosure Requirements) Regulation 2015. The Board has optimum composition of the Independent and Non Independent Directors.

Dl Formal Annual Evaluation

SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, mandates that the Board shall monitor and review the Board evaluation framework. The framework includes the evaluation of directors on various parameters such as: -

• Board dynamics and relationships

• Information flows

• Decision-making.

• Relationship with stakeholders

• Company performance and strategy

• Tracking Board and committees effectiveness

Peer evaluation

The Companies Act, 2013 states that a formal annual evaluation needs to be made by the Board of its own performance and that of its committees and individual directors. Schedule IV of the Companies Act, 2013 states that the performance evaluation of independent directors shall be done by the entire Board of Directors, excluding the director being evaluated. The evaluation of all the directors and the Board as a whole was conducted based on the criteria and framework adopted by the Board. The evaluation process has been explained in the corporate governance report.

E) Committees of the Board.

Currently, the Board has five committees: the Audit Committee, the Nomination and Remuneration Committee, the Corporate Social Responsibility Committee, Stakeholders Relationship Committee, and the Risk Management Committee. A detailed note on the composition of the Board and its committees is provided in the Corporate governance report section of this Annual Report.

21. LISTING REGULATIONS

Your Company has duly complied with various Regulations as prescribed under SEBI (Listing obligations and Disclosures) Regulations 2015.

22. MEETINGS

The details in respect of the Meeting of the Board of Directors, Audit Committee and all other sub Committee are given in the Corporate Governance Report.

23. VIGIL MECHANISM

A vigil Mechanism has been in place providing opportunity to Directors/Employees

> To access in good faith, to the Audit Committee in case they observe unethical and improper practices or any other wrongful conduct in the Company,

> to prohibit managerial personnel from taking any adverse personal action against those employees and

> to provide necessary safeguards for protection of employees from reprisals or victimization

This policy applies to all directors and employees of the Company to report concerns about unethical behaviour, actual or suspected fraud or violation of the companys code of conduct or ethics policy

To report such incidents, practices etc., the concerned Employees / Directors can contact/report to Office of the Audit Committee (Compliance Officer)

E-Mail: baskarasubramanian@salzergroup.com

Contact No. 0422 4233614

Office of the Managing Director

E-Mail: rd@salzergroup.com

Contact No.0422-4233612

Office of Joint Managing Director and Chief Financial Officer

E-Mail: rajesh@salzergroup.com

Contact No.0422-4233610

During the year under review no complaints were received by the above officers under Vigil Mechanism with respect to the performance of the company and other related matters thereof.

24. PREVENTION OF SEXUAL HARASSMENT AT THE WORK PLACE

The Company has constituted an Internal Committee CIC) in all the Units to consider and resolve all sexual harassment complaints reported by women. The constitution of the IC is as per the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. Investigation is being conducted and decisions made by the IC at the respective Units and a senior woman employee is the presiding officer over every case. All employees (permanent, contractual, temporary, trainees) are covered under this policy.

During the year under review, the Committee has not received any such complaint.

25. NOMINATION AND REMUNERATION COMMITTEE

The purpose of the committee is to screen and to review individuals qualified to serve as executive directors, non-executive directors and independent directors, consistent with policies approved by the Board, and to recommend, for approval by the Board, nominees forelection at the AGM.

The committee also makes recommendations to the Board on candidates for

(i) nomination for election or re-election by the shareholders; and

(ii) any Board vacancies that are to be filled.

It also reviews and discusses all matters pertaining to candidates and evaluates the candidates. The nomination and remuneration committee coordinates and oversees the annual selfevaluation of the Board and of individual directors.

The nomination and remuneration committee charterand policy are available on our website.

26. POLICY ON THE DIRECTORS APPOINTMENT AND REMUNERATION

In accordance with the Regulation 17 of SEBI (Listing Obligations and Disclosures Requirements) Regulation 2015 read with Salzers Policy for Nomination and Remuneration, the Board is having an optimum combination of the executive, non-executive and independent directors. As of March 31,2020, the Board had thirteen members, four of whom are Executive Directors; two are NonExecutive and Non-Independent members and seven Independent Directors. One non-executive and non-independent member of the Board is woman. The policy of the Company on directors appointment and remuneration, including the criteria for determining qualifications, positive attributes, independence of a director and other matters, as required under sub-section (3) of Section 178 of the Companies Act, 2013, is available on our website.

We affirm that the remuneration paid to the directors is as per the terms laid out in the Nomination and Remuneration Policy of the Company and also pursuant to the Regulations in force.

27. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

During the year under review:

• The Company has not granted/taken any unsecured loans from or to Companies, firms or other parties, listed in the Register maintained under section 189 of the Companies Act, 2013 (the Act), the terms and conditions are not prima facie prejudicial to the interest of the Company during the course of its business and

• The investments in other bodies corporate are well within the limit as prescribed under Section 186 of the Companies 2013.

28. RELATED PARTY TRANSACTIONS

All related party transactions that were entered into during the financial year under review were on an arms length basis and were in the ordinary course of business. During the year, the Company had material related party transaction with the related parties with due compliance of the approval accorded by the shareholders under Relevant Regulation.

All Related Party Transactions are placed before the Audit Committee as also the Board for approval. Prior omnibus approval of the Audit Committee is obtained on an annual basis for the transactions which are of a foreseen and repetitive nature in compliance with Regulation 23 of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015. The transactions entered into pursuant to the omnibus approval so granted are audited and a statement giving details of all related party transactions is placed before the Audit Committee and the Board of Directors for their approval on a quarterly basis. None of the Directors has any pecuniary relationships with respect to the transactions vis-a-vis the Company.

In response to Rule 8(2) of Companies (Accounts) Rules, 2014, particulars of contracts or arrangements with related parties during the year under review given in the Form AOC-2, annexed herewith as Annexure: 5.

29. INSIDER TRADING

The Board of Directors has adopted the Insider Trading Policy in accordance with the requirements of the SEBI (Prohibition of Insider Trading) Regulation, 2015. The Insider Trading Policy of the Company lays down guidelines and procedures to be followed, and disclosures to be made while dealing with shares of the Company, as well as the consequences of violation. The policy has been formulated to regulate, monitor and ensure reporting of deals by employees and to maintain the highest ethical standards of dealing in Company securities. The Insider Trading Policy of the Company covering code of practices and procedures for fair disclosure of unpublished price sensitive information and code of conduct for the prevention of insider trading, is available on our website www.salzergroup.net.

30. MANAGERIAL REMUNERATION

A) The Company has not employed any individual whose remuneration falls within the purview of the limits prescribed under the provisions of Section 197 of the Companies Act, 2013, read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 i.e

> No employee of the Company throughout the Financial year was in receipt of remuneration for that year which, in the aggregate, for Rupees one Crore and two Lakhs rupees and

> No employee of the Company for a part of the Financial year was in receipt of remuneration for any part of year which, in the aggregate, for Rupees Eight Lakhs and Fifty Thousand per month

B) The Company does not have such director who is in receipt of any commission from the company and who is a Managing Director or Whole-time Director of the Company receiving any remuneration or commission from any Holding Company or Subsidiary Company of such Company.

Details pursuant to section 197(12) of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 form part of this Report and are annexed herewith as Annexure - B.

31. SECRETARIAL AUDIT REPORT

In terms of Section 204 of the Companies Act, 2013, the Board of Directors of the Company at their meeting held on 24th May 2019 has appointed Mr. G Vasudevan, B.Com, LLB & FCS, M/s. G V Associates, Company Secretaries (Certificate of Practice No. 6522), as the Secretarial Auditor to conduct an audit of the secretarial records, for the financial year 2019-20.

The Company has received consent from Mr. G Vasudevan, B.Com, LLB & FCS, M/s. G V Associates, Company Secretaries to act as the Secretarial Auditor for conducting audit of the Secretarial records for the financial year ending 31st March, 2020 in terms of Section 204 of the Companies Act, 2013 read with Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

The Secretarial Audit Report for the financial year ended 31st March, 2020 is set out in the Annexure-7 to this report. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark.

32. COMPLIANCE ON SECRETARIAL STANDARDS

The Company complies with all applicable mandatory secretarial standards issued by the Institute of Company Secretaries of India.

33. TRANSFER OF UNCLAIMED DIVIDEND TO INVESTOR EDUCATION AND PROTECTION FUND

Pursuant to the applicable provisions of the Companies Act, 2013, read with the IEPF Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 ("the IEPF Rules"), all unpaid or unclaimed dividends are required to be transferred by the Company to the IEPF, established by the Government of India, after the completion of seven years. Further, according to the Rules, the shares on which dividend has not been paid or claimed by the shareholders for seven consecutive years or more shall also be transferred to the demat account of the IEPF Authority. During the year, the Company has transferred the unclaimed and unpaid dividends of Rs.3,78,732/-. Further, 9763 corresponding shares on which dividends were unclaimed for seven consecutive years were transferred as per the requirements of the IEPF rules. The details are available on our website at www.salzergroup.net

34. RISK MANAGEMENT POLICY

Risk management is attempting to identify and then manage threats that could severely impact or bring down the organization. Generally, this involves reviewing operations of the organization, identifying potential threats to the firm and the likelihood of their occurrence, and then taking appropriate actions to address the most likely threats. In order to tackle such risks emanating during the course of business operation, the Board of Directors, constituted Risk Management Committee with an objective of identifying the potential threats that are likely to impact the growth of the organization and evolve suitable measure strategically to mitigate such identified Risks.

Accordingly, the operating management review the risk profile which has got impact on the performance of the company in accordance with the policy of the company on Risk Management and also in compliance with the relevant regulations thereof on a periodical basis. Further, the Risk Management Committee last met on 06.02.2020 and reviewed the risk profile and accordingly, the remedial actions have been initiated wherever necessary.

35. MANAGEMENTS DISCUSSION AND ANALYSIS REPORT

In terms of the provisions of Regulation 34 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Managements discussion and analysis is set out in this Annual Report as Annexure :8.

36. COST AUDITOR

Pursuant to Section 148 of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Amendment Rules, 2014, the Directors, on the recommendation of the Audit Committee and subject to the approval of the Members, have appointed CMA Mr. A.R. Ramasubramania Raja, Practicing Cost and Management Accountant, as the Cost Auditor of the Company for the Financial Year 2020-21 to conduct the audit on the Maintenance of Cost Records of the Company and submit the report to the Central Government with the due approval of the Board of Directors within the stipulated time.

37. POLICIES OF THE COMPANY

The Company is committed to good corporate governance and has consistently maintained its organizational culture as a remarkable confluence of high standards of professionalism and building shareholder equity with principles of fairness, integrity and ethics.

The Board of Directors of the Company have from time to time framed and approved various Policies as required by the Companies Act, 2013 read with the Rules issued thereunder and the Listing Regulations. These Policies and Codes are reviewed by the Board and are updated, if required.

Some of the key policies adopted by the Company are as follows:

a) Policy on Materiality of Related Party Transactions

b) Corporate Social Responsibility Policy

c) InsiderTrading Policy

d) Nomination and Remuneration Policy

e) Policy on Related Party Transactions

f) Risk Management Policy

g) Policy on prevention of sexual harassment at workplace

h) Whistle Blower Policy

I) Policy on payment of remuneration to Non

Executive Directors

j) Policy on Familiarization Program for the Non Executive Directors

k) Policy on Determination of materiality of events/ information

l) Policy for Preservation of Records

m) Code of Practices and Procedures for Fair Disclosure of Unpublished Price Sensitive Information

n) Policy on Subsidiary & Material Subsidiary Company

38. DIRECTORS RESPONSIBILITY STATEMENT

In terms of Section 134(5) of the Companies Act, 2013, your Directors make the following statements:

> that in the preparation of the annual financial statements for the year ended March 31, 2020, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

> that such accounting policies have been selected and applied consistentlyandjudgments and estimates have beenmade that are reasonable and prudent so as to give a true and fair view of the state of affairsof the Company as at March 31, 2020 and of the profit and loss of the company for that period;

> that proper and sufficient care has been taken 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;

> that the annual financial statements have been prepared on a going concern basis;

The Management and the Board believe that it has taken into account all the possible impact of events arising from COVID 19 pandemic in the preparation of the financial statements including the ability of the Company to continue as a going concern. However, the impact assessment of COVID 19 is a continuing process given the uncertainties associated with its nature and duration. The Company will continue to monitor any material changes to future economic conditions

> that internal financial controls are being followed by the company and that such internal financial controls are adequate and are operating effectively.

> that systems to ensure compliance with the provisions of all applicable laws are in place and are adequate and operating effectively

39. CREDIT RATINGS

During the year under review, the credit ratings have reaffirmed as CRISIL A/Stable for long term borrowing and CRISIL A1 for short term borrowings.

40. INDUSTRIAL RELATIONS

During the year under review, industrial relations at the Companys Units continued to remain cordial and peaceful.

41. CAUTIONARY STATEMENT

Statements in the Annual Report, particularly those which relate to Management Discussion and Analysis, describing the Companys objectives, projections, estimates and expectations, may constitute forward looking statements within the meaning of applicable laws and regulations. Although the expectations are based on reasonable assumptions, the actual results might differ.

42. ACKNOWLEDGEMENTS

Your Directors place on record their deep sense of appreciation and gratitude to the Shareholders, various Government Agencies, Canara Bank, Union Bank of India, ICICI Bank, Citi Bank NA, M/s. Axis Bank, M/s. HDFC Bank, M/s. Larsen & Toubro Limited - Marketing Associates, CRISIL, M/s. GNSA Infotech Private Ltd, (Registrar & Share Transfer agent) for their continued support and cooperation. Your Directors also wish to record their appreciation for the dedicated services being rendered by the employees at all levels.

For and on behalf of the Board
N RANGACHARY
Place : Bangaluru CHAIRMAN
Date : June 18, 2020 DIN : 00054437