Samrat Pharmachem Ltd Directors Report.

To,

The Members

Samrat Pharmachem Limited

The Directors are pleased to present the 28th Annual Report on the business and operations of the company and the financial accounts for the year ended 31 March 2020

FINANCIAL PERFORMANCE

Particulars 31 March 2020 Rs. 31 March 2019 Rs.
Revenue from Operations 1,374,524,757 1,111,363,933
Other Income 5,721,509 4,567,158
Total Revenue 1,380,246,267 1,115,931,092
Earnings before Interest, Tax, Depreciation & Amortisation (EBITDA) 72,015,964.62 36,337,452.91
Interest and Finance Charges 9,783,320.92 10,583,640.50
Profit / (Loss) before Depreciation and Tax 62,232,644 25,753,812
Depreciation 4,262,541 4,176,556
Profit/ (Loss) before Tax (PBT) 57,970,102 21,577,256
Provision for Tax / Tax expense 15,482,386 6,221,485
Profit/(Loss) after Tax (PAT) 42,487,716 15,355,771

Covid-19 Pandemic

Towards the end of the financial year 2019-20, the operations of the company were stopped due to the nationwide lockdown imposed by the government due to the Covid-19 pandemic. We focussed primarily on ensuring the safety, health and well-being of our employees. During this time, the company took measures to enable many of its employees from the finance, sales and admin departments to work from home remotely and securely.

The Company aimed at ensuring the safety, which include work from home, social distancing in the office premises, sanitization of our office premises; plant locations and company vehicles, thermal screening and use of pulse oximeters for employees working at sites, providing sanitizers, masks, gloves etc. to employees following all protocols and guidelines issued by global health organizations like WHO for Covid-19 towards safety of our employees.

The factory operations of the company in Ankleshwar reopened in mid of April, 2020 at a reasonable capacity utilization after obtaining requisite permissions from the local authorities. Safety and sanitation protocols have been put in place including wearing PPEs, frequent handwashing, physical distancing, thermal screening of all employees and contractors and regular cleaning/ sanitising of the work place.

National Directives and all guidelines for Covid-19 Management issued in this regard are being strictly followed. The corporate office of the company in Mumbai reopened in June, 2020 with 10 percent of employee strenght as per the MCGM guidelines and the rest of the employees have been asked to work from home.

The operations in Ankleshwar and Mumbai were impacted and delayed because of reduced availability of workforce. The Company has focussed in digitilazing its operations to cater the customers online and minimize the impact of breakdown. COVID 19 has had a significant impact on the companys operations as well as those of its customers. However, the Company is confident of addressing the challenges imposed in this business environment with an optimum and effective utilisation of its various resources.

OPERATIONS

Your company has performed extremely well during the year. In a highly competitive business environment. Your Company achieved a turnover of Rs. 13745 Lakhs as against Rs. 11114 Lakhs achieved last year - an increase of around 23.68%.

DIVIDEND

In order to conserve the resources, your Directors do not recommend payment of Dividend for the financial year ended 31st March, 2020.

Transfer of amounts to Investor Education & Protection Fund

Your Company did not have any funds Iying unpaid or unclaimed for a period of seven years. Therefore, there were no funds which were required to be transferred to Investor Education & Protection Fund.

EXPORTS

During the year 2019-20 your companys export division registered FOB sales of Rs. 693 Lacs from Rs. 1853 Lacs achieved last year. Your Company has initiated several export promotion measures to increase exports. The products of your Company have been well accepted in the international market and the Company expects better export turnover in the coming years.

DEMATERIALISATION

The equity shares of the Company have been dematerialized by joining the depositories viz. National Securities Depository Limited (NSDL) & Central Depository Services (India) Limited (CDSL). The ISIN (International Securities Identification Number) No. allotted to the Company is INE103E01016.

LISTING OF SHARES

The Companys shares are listed on the BSE Ltd. It has paid the listing fees of the said exchange for the period upto 31st March, 2020. Your Company has not been delisted on this exchange for non-payment of listing fees. Payment of Listing Fees for FY 2020-21 will be made upon intimation received from BSE Ltd.

INSURANCE

The assets of the company have been adequately insured against all possible risks with ICICI Lombard General Insurance Co Ltd & Bharati Axa General Insurance Co Ltd

WEBSITE

Your companys website address is www.samratpharmachem.com. The performance of the Company is regularly updated and made available on this website. The website provides other vital information about the Company.

SAFETY, HEALTH & ENVIRONMENT (SHE) POLICY

As a responsible corporate citizen, the Company is fully aware of its responsibilities for protection of the environment and to provide its employees a safe and hazard free work place. The Company has adopted a Safety, Health & Environment Policy that applies to all employees and activities. The work culture encourages total involvement and commitment of the employees to the SHE Policy.

Some of the activities carried out during the year are as follows.

Safety:

Providing necessary equipments and apparatus required for the safe operation of the manufacturing activities

• Observing the rules and regulations with regard to safety & precaution

• Consulting emergency control management team to monitor the safety of the plant

• Conducting regular safety audit

• Encouraging the workforce to use protective equipments and maintain cleanliness

• Conducting seminars to impart knowledge to employees on safe operations

• Organising safety week to create safety awareness Health:

• Conducting medical health check up for all the employees of the Company periodically Conducting lecture meetings for providing guidance and counselling on matters of health, diet and exercise

• Conducting seminars to impart knowledge on meditation, yoga and anti-stress therapy Environment:

Ensuring smooth functioning of the effluent treatment plant with respect to air, water and solid waste.

• Updating the ETP plant to make it more nature friendly

• Proper monitoring of the pollution levels in and around the plants

• Planting trees in and around the factory

• Complying with the prescribed norms of pollution control

PERSONNEL

As on 31st March 2020, the total number of employees on the payroll of the company were 29. Industrial relations with employees at various levels continue to be cordial.

DIRECTORS & KEY MANAGERIAL PERSONNEL

In pursuance to the provisions of the Companies Act, 2013, and Articles of Association of the company Mr. Megh Mehta, Director retires by rotation and being eligible has offered himself for re-appointment.

During the year Mr. Lalit Mehta, Mr. Rajesh Mehta and Mr. Megh Mehta were re-appointed as Executive Directors for a period of 3 years from 1st April, 2020 to 31st March, 2023 subject to approval of members at the ensuing Annual General Meeting of the Company.

The company has received declaration from all the independent directors confirming that they meet the criteria of independence as prescribed under section 149(6) of the Companies Act, 2013.

Ms. Renu Dharod, Non Executive Independent Director is completing her 5 years tenure on September 25, 2020 will be eligible for second term of 5 years effective from September 26, 2020 till September 25, 2025. The members are requested to consider re-appointment of Ms. Renu Dharod as Non-Executive Independent Directot for a further period of 5 years.

The company has devised a policy for the performance evaluation of independent directors, Board committees and other individual directors which include criteria for performance evaluation of non-executive directors and executive directors. The manner in which the evaluation is carried out has been explained in the Corporate Governance Report.

SUBSIDIARIES, JOINT VENTURES OR ASSOCIATE COMPANIES

Your company has no subsidiaries, joint ventures or any associate companies during the year.

MEETING OF THE BOARD

During the year under review five (5) Board Meetings were held. The intervening gap between the meetings was within the period prescribed under the Companies Act, 2013. For further details please refer to the Corporate Governance Report attached to this Annual Report.

AUDIT COMMITTEE

The Audit Committee comprises of the 3 Directors namely, Mr. Mahendra Pipalia (Chairman) and Mr. Samir Kothary and Ms. Renu Dharod as other members of the committee.

This committee recommends and reviews the unaudited & audit financial results. it also recommends the appointment/reappointment of Statutory Auditor, Tax Auditor & GST Auditor. It also oversees whistle blower policy and make recommendation to the Board from time to time. The committe also guides the Board for improving MIS systems, digitalising business operations and making all operations online & law compliant. The Board has accepted all recommendations made by the audit committee during the year.

NOMINATION AND REMUNERATION COMMITTEE

The Nomination and Remuneration Committee comprises of the 3 Directors namely, Mr. Samir Kothary (Chairman), and Mr. Mahendra Pipalia and Ms. Renu Dharod as other members of the committee.

This committee recommends and reviews the appointment and remuneration of Directors. It has adopted a policy which deals with the appointment and remuneration of directors and key managerial personnel. The adopted policy decides about the manner of selection of executive directors, key managerial personnel, and independent directors. The policy also decides about the criteria to be followed for recommending the remuneration of directors and key managerial personnel.

STAKEHOLDERS RELATIONSHIP COMMITTEE

The Stakeholders Relationship Committee comprises of the 3 Directors namely, Ms. Renu Dharod (Chairman) and Mr. Mahendra Pipalia and Mr. Samir Kothary as other members of the committee.

The committee reviews investor services, reviews work done by the share transfer agent including adherence to the service standards & resolve investor grievance.The committee also advises the company on various shareholders related matters.

RISK MANAGEMENT COMMITTEE

The Risk Management Committee comprises of the 3 Directors namely, Ms. Renu Dharod (Chairman) and Mr. Mahendra Pipalia and Mr. Samir Kothary as other members of the committee.

The risk management committee of the board oversees and reviews the risk management framework as well as the assessment of risks, their management and mitigation procedures. They also discuss with senior management regarding enterprise risk management (ERM) and management of cyber security risks. They also assess business risk, credit risk, disaster management and proper coverage of insurance of the fixed assets of the Company including their safety and security.

CONSTITUTION OF CSR COMMITTEE

The Company has constituted CSR Committee which comprises of 6 Directors namely, Mr. Lalit Mehta, Mr. Rajesh Mehta, Mr. Megh Mehta, Mr. Mahendra Pipalia, Mr. Samir Kothary & Ms. Renu Dharod. The Chairperson of the Committee is Ms. Renu Dharod.

The Committee will formulate, review and recommend to the board, a CSR policy indicating the activities to be undertaken by the Company as specified in schedule VII of the Companies Act, 2013;

The salient features/ terms of reference along with details of composition of Corporate Social Responsibility Committee have been provided under Corporate Governance Report which forms part of this Annual Report and shown as Annexure IV. The content of the CSR Policy of the Company as approved by the Board on the recommendation of the CSR Committee is available on the website of the Company at www.samratpharmachem.com

BOARD EVALUATION

The Board of Directors have carried out an annual evaluation of its own performance, Board Committees and individual directors pursuant to the provision of Act and the Corporate Governance requirement as prescribed by Securities and Exchange Board of India (SEBI) (Listing Obligations and Disclosure Requirements), Regulations 2015 ("SEBI Listing Regulations"). The performance of Board was evaluated by the Board of Directors after seeking inputs from all directors on the basis of criteria such as Board Composition & Structure, Effectiveness of Board Process, Information and functioning, etc.

In separate meeting of Independent directors performance of Non-Independent Directors, performance of the Board as whole and performance of Chairman was evaluated, taking into account the views of executive directors and non-executive directors.

POLICIES

We seek to promote and follow the highest level of ethical standards in all our business transactions guided by our value system. The SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 mandated the formulation of certain policies for all listed companies. All our corporate governance policies are available on our website (www.samratpharmachem.com). These policies are reviewed periodically by the Board and updated based on need and new compliance requirement.

Policies adopted by the Company:

Name of the policy Web link
Archival Policy http://www.samratpharmachem.com/archival-policy/
Appointment of Independent Directors Policy http://www.samratpharmachem.com/independent-director- terms-and-conditions-of-appointment/
Related Party Transactions & its Materiality Policy http://www.samratpharmachem.com/policy-on-related- party-transactions-and-its-materiality/
Whistle-blower Policy http://www.samratpharmachem.com/whistleblower-policy/
Materiality of Events Policy http://www.samratpharmachem.com/policies/materiality- of-events-policy/
Preservation of Documents Policy http://www.samratpharmachem.com/policy-on- preservation-of-documents/
Insider Trading Policy http://www.samratpharmachem.com/insider-trading- policy/
Privacy Policy http://www.samratpharmachem.com/policies/privacy- policy/
Quality Policy http://www.samratpharmachem.com/quality-policy-2/
SHE Policy http://www.samratpharmachem.com/policies/she-policy/
Corporate Social Responsibility Policy http://www.samratpharmachem.com/policies/corporate- social-policy/

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

The information required under Section 197 of the Act read with rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are given below:

Sr. No. Name & Designation Remunera tion Paid FY 2019-20 Remuneration Paid FY 2018-19 Increase in remuneration from previous year Ratio/Times per Median of employee remuneration
1 Mr. Lalit Mehta, CMD 1,800,000 1,800,000 0 9.90
2 Mr. Rajesh Mehta, ED 1,740,000 1,740,000 0 9.57
3 Mr. Megh Mehta, ED 900,000 900,000 0 4.95

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to Section 134(5) of the Companies Act, 2013, the Board of Directors report that: -

1. That the preparation of accounts for the Financial Year ended 31st March 2020, the applicable accounting standards read with requirements set out under Schedule III of the Act, have been followed along-with proper explanation relating to material departures;

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 true and fair view of the state of affairs of the Company at the end of the Financial Year and the Profit or Loss of the Company for the year 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 2020 on a going concern basis.

5. That the Directors have laid down internal financial control to be followed by the company and that such internal financial controls are adequate and are operating effectively; and

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

Based on the framework of internal financial controls and compliance systems established and maintained by the Company, work performed by the internal, statutory and secretarial auditors and external consultants and the reviews performed by the management and the relevant board committees, including the audit committee the board is of the opinion that the companys internal financial controls were adequate and effective during the financial year 2019-20.

MANAGEMENT DISCUSSION & ANALYSIS REPORT

As required under regulation 34 of SEBI (Listing Obligations and Disclosures Requirements) Regulations, 2015, the Management Discussion and Analysis Report is enclosed as a part of this report.

CORPORATE GOVERNANCE & SHAREHOLDERS INFORMATION

Pursuant to Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("SEBI Listing Regulations") the Company has executed fresh Listing Agreement with the Stock Exchanges. Though the regulation nos. 17 to 27 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 are not applicable to the Company due to its paid up capital & net worth remain below threshold limit, yet the Company has provided corporate governance report voluntarily as a good corporate practice.

SEXUAL HARASSMENT OF WOMEN AT WORK PLACE

During the year under review, there were no cases reported pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

The Company has complied with the applicable provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules made thereunder, including constitution of the Sexual Harassment Committee i.e. Internal Complaints Committee.:

No. of complaints filed during Financial Year 2019-20: Nil
No. of complaints disposed off during Financial Year 2019-20: NA
No. of complaints pending as on 31st March, 2020: NA

AUDITORS

M/s. Shah & Savla LLP, Chartered Accountants, (FRN : 109364W / W100143) were appointed as Statutory Auditors of the Company for the period of 5 consecutive years at 24th AGM of the Company to hold office till the conclusion of 29th AGM to be held in the Calendar Year 2021.

AUDITORS REPORT

The report of Statutory Auditors alongwith notes to schedules is a part of the Annual Report. There has been no qualification, reservation, adverse remark or disclaimer given by the Auditors in their report. Further there is no incident of fraud requiring reporting by Auditors under section 143(12) of the Companies Act, 2013.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:

The Company has in place adequate internal financial control procedures commensurate with its size and the nature of business. The Company has appointed an Internal Auditor who periodically conducts audit of the adequacy and effectiveness of the internal controls laid down by the management and suggest improvements. During the year under review, no material or serious observation has been received from the Statutory Auditors of the Company for inefficiency or inadequacy of such controls. The Audit Committee of the Board of Directors approves the annual internal audit plan and periodically reviews the progress of audits as per approved audit plans.

SECRETARIAL AUDITOR

Pursuant to provisions of Section 204 of the Companies Act, 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 the company has appointed M/s. A. A. Mulla & Associates a firm of company Secretaries in practice to undertake the Secretarial Audit of the Company for the financial year 2020-21. The Secretarial Audit Report submitted by the Secretarial Auditor is enclosed herewith as a part of this report and shown as Annexure I. The Secretarial Audit Report contains qualification, reservation or adverse remark pertaining to non-compliance under SEBI (LODR) Regulations, 2015 which has been complied with & penalty imposed by BSE has been paid.

SECRETARIAL STANDARDS

The Company has complied with all the applicable provisions of Secretarial Standard-1 and Secretarial Standard-2 as issued by the Institute of Company Secretaries of India.

SIGNIFICANT/MATERIAL ORDERS PASSED BY THE REGULATORS

There are no significant/material orders passed by the Regulators or Courts or Tribunals impacting the going concern status of the Company and its operations in future.

RELATED PARTY TRANSACTION / DISCLOSURE

There are no related party transactions made by the company during the year. AOC-2 report is attached to this report as Annexure II.

EXTRACT OF ANNUAL RETURN

As provided under Section 92(3) of the Act, the extract of annual report is given in the Annexure III in the prescribed Form MGT-9, which forms part of this report.

LOANS, GUARANTEES AND INVESTMENTS

Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the notes to the Financial Statements.

PARTICULARS OF EMPLOYEES

Under the provision of Section 197(12) of the Companies Act, 2013 read with Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel), 1956 read with Companies (Particulars of Employees) Rules, 2014, the particulars of the employees as required to be mentioned in the Annual Report is not applicable to the company.

SHARES ISSUED UNDER EMPLOYEE STOCK OPTION SCHEME (ESOS)

No shares have been issued to the employees under Employee Stock Option Scheme (ESOS) during the year.

PUBLIC DEPOSITS

The Company has not invited and accepted deposits from the public during the financial year ended 31st March 2020.

DISCLOSURE OF PARTICULARS RELATING TO CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION & FOREIGN EXCHANGE EARNING & OUTGO

The particulars relating to conservation of energy, technology absorption, foreign exchange earnings and outgo, as required to be disclosed pursuant to the provisions of Section 134 of the Act read with Rule 8 of the Companies (Accounts Rules), 2014, is given hereunder.

CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTION

Your Company continues to explore & implement measures that will help in conservation and saving of energy. Measures taken & benefits derived are as follows:

• Hot water coming from steam traps is recycled & used as boiler feed water.

• Using economiser effectively to pre-heat boiler feed water.

• Timely & routine preventive maintenance of boiler.

• Improvement in unit operations leading to reduction in processing time in reactor, centrifuge, drier & other equipments to minimize use of electricity.

• Hot water coming from steam traps is recycled & used as boiler feed water.

TECHNOLOGY ABSORPTION

The management has focused on productivity and quality improvement in order to optimize manufacturing costs. This has helped in achieving optimum manufacturing costs, improved quality of products and consequently enhanced customer satisfaction. The company uses indigenous technology.

FOREIGN EXCHANGE EARNINGS AND OUTGO

Foreign exchange earned F.O.B. Value of export of finished goods (Previous year Rs. 183,945,613) Rs. 69,278,295
Foreign exchange used Import of raw materials (Previous year Rs. 844,021,975) Rs. 1,115,437,893

ACKNOWLEDGEMENTS

The Directors wish to place on record their appreciation towards all associates including customers, suppliers, financial institutions, bankers, employees, consultants, shareholders and to all those who have extended their committed support to the progress of the Company.

Place : Mumbai By order of the Board of Directors For Samrat Pharmachem Limited
Date : 31 July 2020 Lalit Mehta Chairman & Managing Director
DIN : 00216681