Sanghvi Brands Ltd Directors Report.

Dear Members,

The Directors are please to present the 9th Directors Report of the Company, the affairs of the Company together with the Audited Financial Statements for the year ended on 31st March 2019.

FINANCIAL HIGHLIGHTS/PERFORMANCE OF THE COMPANY

The financial results for the year ended on 31st March 2019 and the corresponding figures for the previous year are as under;

Standalone Consolidated
Particulars Year ended 31st March 2019 Year ended 31st March 2018 Year ended 31st March 2019 Year ended 31st March 2018
Net Revenue from Operations 10,00,48,965 9,00,56,821 31,41,33,071 26,45,56,511
Other Income 83,19,493 67,11,789 1,06,38,954 91,48,106
Total Income 10,83,68,458 9,67,68,610 32,47,72,025 27,37,04,617
Total Expenditure 11,33,27,518 11,26,73,723 33,86,79,324 29,49,89,180
Profit before tax (49,59,059) (1,59,05,112) (1,39,07,300) (2,12,84,564)
Deferred Tax (Credit) - 5,56,017 - 12,40,565
Current Tax - - - 1,30,080
Profit after Taxes (49,59,059) (1,64,61,129) (1,39,07,300) (2,26,55,209)

1. HIGHLIGHTS

Your Company reported growth in revenue from operation of 11.09% over the previous year. At Standalone level, the Revenue from operations stood at Rs. 10,83,68,458 compared with Rs. 9,67,68,610 in the Previous Year. The Loss after taxes for the year stood at Rs. 49,59,059 against Rs. 1,64,61,129 reported in the Previous Year.

The Consolidated Revenue from operations for FY 2019 was 31,41,33,071 (Previous Year: Rs. 26,45,56,511), registering a growth of 18.73%. The Consolidated Loss after tax stood at Rs. 1,39,07,300 (Previous Year: Rs. 2,26,55,209).

2. DIVIDEND

To strengthen the financial position of the Company, your Directors are not recommending any dividend for the financial year under review.

3. RESERVES

The Balance in Reserves & Surplus stands at Rs. 141,839,192/- in comparison with the previous year balance of Rs. 146,798,252/-

4. SHARE CAPITAL

The Total Paid-up Capital of the Company as on March 31, 2019 is Rs. 10,41,58,800 divided into 1,04,15,880 equity shares of Rs.10/- each. There has not been any new issue of share during the year under review.

5. DEPOSITORY SYSTEM

Your Companys equity shares are in demat form only. The Company has appointed National Securities Depository Limited and Central Depository Services India Limited as depositories to the Company.

6. DIRECTORS AND KEY MANAGERIAL PERSONNEL

In accordance with the provisions of the Companies Act, 2013 and SEBI Listing Regulation, 2015 the Board has been constituted with proper balance of Executive Directors, Non-Executive Directors and Independent Directors. Ms. Disha Sanghvi Director retires by rotation at the forthcoming Annual General Meeting and, being eligible, offers herself for re-appointment. The Board recommends her re-appointment for the consideration of the Members of the Company at the ensuing Annual General Meeting. Brief profile of Ms. Disha Sanghvi has been given in the Notice convening the Annual General Meeting.

All the Independent Directors have given declarations that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 and Regulation 16(1)(b) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.There has been no change in the circumstances affecting their status as independent directors of the Company.

Pursuant to the provisions of Section 203 of the Act, the Key Managerial Personnel of the Company as on March 31, 2019 are: Mr. Darpan Sanghvi, Managing Director, Mr. Rameshwar Wadne, Chief Financial Officer (CFO) and Ms. Kruti Shah, Company Secretary.

7. BOARD COMMITTEES FORMED DURING THE YEAR

The Board of Directors has the following Committees:

a) Audit Committee

b) Nomination and Remuneration Committee

c) Stakeholder Relationships Committee

The details of all the Committees of the Board along with their composition and meetings held during the year are provided in the Report on Corporate Governance which forms part of this Annual Report.

8. NO. OF MEETINGS HELD

The details of the meeting of the Board along with their composition and meetings held during the year are provided in the Report on Corporate Governance which forms part of this Annual Report.

9. BOARD EVALUATION

The Companies Act, 2013 states that a formal annual performance evaluation needs to be made by the Board of its own performance, the directors individually as well as the evaluation of its Committees. As per Schedule IV of the Companies Act, 2013, the performance evaluation of independent directors, shall be done by the entire Board of Directors, excluding the director being evaluated. The evaluation of all directors and the Board was conducted based on the criteria and framework adopted by the Board.

10. RELATED PARTY TRANSACTIONS

All related party transactions have been entered by the Company during the financial year in the ordinary course of business and at the arms length price. During the financial year under consideration the Company has entered into contracts / arrangements / transactions with related parties, which could be considered as material in accordance with the provisions of the Act, have been given in "Annexure I" in Form No. AOC-2.”

11. STATUTORY AUDITOR

At the AGM of the Company held on 30th September 2016, M/s. B.K. Khare & Co., Chartered Accountants, having registration number (Firm Registration No. 105102W), were appointed as Statutory auditors of the Company for a term of five years i.e. till the conclusion of Annual General Meeting to be held in the year 2021 subject to the ratification at the annual general meeting in each of the subsequent years during the aforementioned term of their appointment.

The requirement to place the matter relating to appointment of auditors for ratification by Members at every AGM has been done away by the Companies (Amendment) Act, 2017 with effect from May 7, 2018. Accordingly, no resolution is being proposed for ratification of appointment of statutory auditors at the ensuing AGM.

12. AUDITORS REPORT

The report of the statutory auditors on Standalone Financial statements as well as Consolidated Financial Statements forms a part of the Annual Report. There were no adverse remarks/qualified remarks given by the Statutory Auditor on the financials of the Company.

13. SECRETARIAL AUDIT REPORT

In terms 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. M. Antarkar & Co., Practicing Company Secretaries, Pune (CP No. 3022) as a Secretarial Auditors of the Company. The report of the Secretarial Auditors is enclosed as Annexure II to this report. The report is self-explanatory and do not call for any further comments.

14. COST RECORDS AND AUDIT

As per the Companys (Cost Records and Audit) Rules 2014, the Companys services are not covered under Cost Audit and for the services for which the maintenance of cost record is required is not applicable on the Company.

15. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

As per the provision of Section 138 of the Companies Act, 2013, the Company has devised a proper system to check the internal controls and functioning of the activities and recommend ways of improvement. Internal Audit is carried out timely. The internal financial controls with reference to financial statements as designed and implemented by the Company. During the year under review, no material or serious observation is received from the Internal Auditor of the Company for inefficiency and inadequacy of such controls.

16. EXTRACT OF ANNUAL RETURN

As required pursuant to section 92(3) of the Companies Act,2013 and Rule 12(1) of the Companies (Management and Administration) Rules, 2014, an extract of annual return in MGT 9 as a part of this Annual Report as Annexure - III. The Extract of Annual Return in Form MGT - 9 is available on the website of the Company www.sanghvibrands.com

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

There is no material transaction occurred during the year.

18. COMPLIANCE WITH SECRETARIAL STANDARDS

Your Company has complied with the Secretarial Standards related to the Board Meetings and General Meeting issued by the Institute of Company Secretaries of India (ICSI).

19. CORPORATE SOCIAL RESPONSIBILITY

Provision of Schedule VII of the Companies Act, 2013 read with Companies (Corporate Social Responsibility Policy) Rules, 2014 are not applicable to the Company during the financial year under review.

20. VIGIL MECHANISM

Pursuant to the provision of Section 177(9) of the Companies Act, 2013 read with Rule 7 of the Companies (Meeting of Board and its Powers) Rules, 2014, a "Vigil Mechanism Policy" for Directors and Employees of the Company is in place, to report their genuine concern of any violation of legal or regulatory requirements, incorrect or misrepresentation of any financial statements and reports, unethical behaviour actual or suspected fraud or violation of the Companys code of conduct etc. during the year under review, no such complaints were received.

21. THE CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO, IN SUCH MANNER AS MAY BE PRESCRIBED

The information pertaining to Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and outgo as required under Section 134 (3) (m) of the Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014 are as stated below:

A) Conservation of Energy

1. The steps taken or impact on conservation of energy; The Company applied strict control system to monitor day to day power consumption. The Company ensures optimal use of energy with minimum extent of wastage as far as possible. The day to day consumption is monitored to save energy.

2. The Capital Investment on Energy Conservation Equipment. The Company has not made any capital investment on energy conservation equipment.

B) Technology Absorption: -

The Company has no activities relating to technology absorption.

C) Foreign Exchange Earnings and Outgo;

Particulars 2018-19 2017-18
Foreign Exchange Earnings in terms of actual inflows - -
Foreign Exchange outgo in terms of actual outflow 33,06,559 58,80,176

22. REVIEW OF SUBSIDIARY AND ASSOCIATE COMPANIES

As required under Companies Act, 2013, the audited consolidated financial statements of the Company incorporating all its subsidiary and associate companies prepared with applicable Accounting Standards are attached.

Sanghvi Brands US Holding, INC, a Wholly Owned Subsidiary of the Company generated USD 10,43,315.57 /- as revenue during the Financial Year under consideration.

During the financial under review the incorporated a Limited Liability Company (LLC) named as Sanghvi Brands Beauty and Spa L.L.C., in Abu Dhabi as a Joint Venture which generated an operating revenue of Rs. 1,54,62,876/-

The Company has entered into a Joint Venture Agreement dated 9th October 2018 with Kerala Ayurveda Limited to establish, manage and operate wellness resorts and wellness ayurvedic spas under the new brand name jointly agreed by the parties to develop Ayurvedagram Wellness Resorts and Ayurvedagram inspired Ayurvedic Spas across the world by way of forming a Joint Venture Company ("JV Company") as per the terms and conditions agreed under the said JV Agreement.

Salient features of subsidiary Companies are annexed as Annexure - V in form no.AOC-1.

23. SIGNIFICANT AND MATERIAL ORDERS PASSED BY REGULATORS OR COURTS OR TRIBUNALS IMPARTING THE GOING CONCERN STATUS ANDCOMPANY OPERATION IN FUTURE

There are no significant and material orders passed by regulators or courts or tribunals imparting the going concern status and Company operation in future.

24. DEPOSITS

Your Company did not accept/ hold/ any deposits from public/shareholders during the year under review.

25. PARTICULARS OF LOAN, GUARANTEE OR 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 Financial Statements.

26. OBLIGATION OF COMPANY UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

In accordance with Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the rules framed their under, the Company has formed an Internal Complaints Committee and framed and adopted the policy for Prevention of Sexual Harassment at Workplace. The following is the summary of Sexual Harassment complaints received and disposed off during the year 2018-19.

No. of Complaints received: NIL

No. of Complaints Disposed off: NIL

27. STATEMENT OF UTILIZATION OF PUBLIC ISSUE PROCEEDS PURSUANT TO REGULATION 32 OF SEBI (LISTING OBLIGATION AND DISCLOSURE REQUIREMENTS) REGULATION, 2015

As per Regulation 32 of SEBI (Listing Obligation and Disclosure Requirements) Regulation, 2015 the listed entity shall submit to the stock exchange the statement indicating deviation, if any in the use of proceeds from the objects stated in the offer document, indicating category wise variation between projected utilization of funds made by it in its offer document, as applicable and the actual utilization of funds. However, there was no deviation on the objects of the issue proceeds and as review by the Audit Committee the statement is as under;

Particulars Amount Funded from the Gross Proceeds Actual Utilization up to year ended 31st March 2019 Pending for utilization as on 31st March, 2019
Business Expansion
a. Expanding outlets/ distribution of current brand portfolio in India and overseas 77,170,000 13,845,352 25,239,591
b. Acquisitions and development of new brands 38,085,057
Marketing and sales promotion of the brands in our portfolio 50,000,000 8,114,905 41,885,095
Strategic Investments for business growth 10,000,000 2,541,531 7,458,469
General Corporate Purpose 28,442,000 20,113,164 8,328,837
*Issue Expenses 24,000,000 22,554,685 1,445,315
Total 189,612,000 105,254,693 84,357,307

28. HUMAN RESOURCES

Your Company treats its "human resources" as one of its most important assets. Your Company continuously invest in attraction, retention and development of talent on an ongoing basis. Your Company thrust is on the promotion of talent internally through job rotation and job enlargement.

29. PARTICULARS OF EMPLOYEES

The Company has no employee Companies, who is in receipt of remuneration of Rs. 8,50,000/- per month or Rs. 1,02,00,000 per annum and hence the Company is not required to give information under sub rule 2 and 3 of Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014

30. DIRECTORS RESPONSIBILITY STATEMENT

The Directors Responsibility Statement referred to in clause (c) of sub-section (3) of Section 134 of the Companies Act, 2013, shall state that:

(a) In the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

(b) they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit and loss of the Company for that period;

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

(d) They have prepared the annual accounts on a going concern basis;

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

(f) They have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

31. LISTING WITH STOCK EXCHANGES

Sanghvi Brands Limited listed its shares on the SME Platform of BSE Limited on November 22, 2017.The listing fees duly paid to the exchange and annual custodial fees has been paid to CDSL and NSDL for the F.Y. 2019-20.

32. ACKNOWLEDGEMENT

Your Directors takes this opportunity to thank all Government Authorities, Bankers, Shareholders, Registrar & Transfer Agents, Investors and other Stakeholders for their assistance and co-operation to the Company. Your Directors express their deep sense of appreciation and gratitude towards all employees and staff of the Company and wish the management.

For and on behalf of the Board

Sanghvi Brands Limited

(formerly known as Sanghvi Brands Private Limited)

Sd/-

Darpan Sanghvi

Managing Director

DIN: 02912102

Date: 26th August 2019

Place: Mumbai