Sanghvi Forging & Engineering Ltd Directors Report.


The Members of

Sanghvi Forging & Engineering Limited

The 32nd Annual Report of the Company together with the Audited Financial Statements (Standalone and Consolidated) for the Financial Year ended 31st March, 2020 is hereby presented to the members of Company.

The Company is undergoing Corporate Insolvency Resolution Process (CIRP) under the provisions of the

Insolvency and Bankruptcy Code, 2016 (IBC ) in terms of order dated August 30, 2019 passed by Honble

National Company Law Tribunal (NCLT), Ahmedabad Bench. Pursuant to the initiation of CIRP, vide aforesaid order, the adjudicating authority appointed Mr. Chandra Prakash Jain, as Interim Resolution Professional (IRP) to carry the functions as mentioned under the Code and later on Committee of Creditors (COC) appointed of Mr. Parthiv Parikh, the Resolution Professional (RP) of the Company replacing the IRP . The Honble NCLT, Ahmedabad Bench vide order dated 26th May, 2020 approved the appointment of Mr. Parthiv Parikh (having registration no. IBBI/IPA-002/IP-N00369/2017-2018/11063) as Resolution Professional (RP) of Sanghvi Forging and Engineering Limited. As per terms of Section 20 of Insolvency Code, the management and operations of the Company are being managed by RP on a Going Concern Basis.


The financial performance for the fiscal year 2020 is summarized in the following table:




2019-20 2018-19 2019-20 2018-19
Income from Operations 5891.58 6029.56 5916.20 6279.93
Other Operating Income 64.79 88.60 64.79 88.60
Other Income 64.30 25.88 64.30 25.88
Total Income 6020.67 6144.04 6045.29 6394.41
Operating & Administrative Expenses 5435.87 5707.83 5476.89 5969.01
Operating Profit before Interest, 584.8 436.21 568.40 425.40
Depreciation and Tax
Interest and Financial Charges 249.06 1572.48 249.06 1572.48
Depreciation and Amortization 851.84 859.09 851.84 859.09
Profit Before Tax (516.11) (1995.36) (532.50) (2006.17)
Tax Expenses NIL NIL NIL NIL
Short Provisions for Taxes NIL NIL NIL NIL
Profit After Tax (516.11) (1995.36) (532.50) (2006.17)


Your Company has achieved consolidated turnover of Rs. 6045.29 Lakh and incurred net loss of Rs. 532.50 lakh for the financial year ended March 31, 2020 as against a turnover Rs. 6394.41 Lakh and net loss of Rs. 2006.17 Lakh during the previous year. Depreciation and amortization charges during the year under review were Rs 851.84 lakhs compared to Rs. 859.04 lacs during the previous i financial year 2018-19. Interest charges were decreased from Rs. 1572.48 lakh to Rs. 249.06 lakh during the financial year 2019-20.


The Company has taken a number of steps to sustain its leadership position in the market and has been strengthening its relationships with its customers. In addition it is also making constant efforts to add new customers and widen its customer base. The combination of additional capacity of our second plant i.e. 15000 MTPA and integration has had a positive impact on the Companys operating margins. The Company expects to strengthen its topline and margins in the coming years. The Company received all approvals from different customers that validate our product quality. The Company continued its focus on strengthening local manufacturing capabilities. However, it also analyzed the trends in the steel industry and adapted to rapid development occurring in the world of steel. The Company has adopted strategic measures to minimize the adverse macro-economic implications. IMF expects global economy to grow and reach levels of 3.3% in 2020 and 3.4% in 2021. Easing monetary policy, stronger cross-border cooperation and implementation of supportive fiscal policies aimed at boosting demand could drive improvement in global activity.


No new Share Capital has been issued by the Company in the Financial Year 2019-20.


No Dividend has been declared for the financial year ended March 31, 2020.


The Company has no Credit rating for its long-term and short-term-bank facilities.


All the shareholders/investors complaints/grievances received during the financial year have been resolved and there were no investor grievances pending, as on March 31, 2020. A confirmation to this effect has been obtained from the Companys Registrar and Share Transfer Agent and authentication of the same can be verified from the SCORES website at The details regarding investor complaints received and resolved during the year are mentioned in the report on Corporate Governance annexed to this report.


A detailed review of operations, performance and future outlook of the Company is covered under a separate report as Managements Discussion & Analysis.


Pursuant to commencement of the CIRP, the powers of the Board of Directors stand suspended and are exercised by the Resolution Professional. The terms of appointment of Managerial personnel of the Company i.e Mr. Jayantilal Babulal Sanghvi, Mr. Naresh Babulal Sanghvi & Mr. Vikram Babulal Sanghvi expired on 19th April, 2020. The Committee of Creditors (CoC) have approved their appointment only as KMPs in compliance with the applicable provisions of the Companies Act, 2013 on a remuneration as may be mutually decided and agreed by CoC and KMPs. The details of KMPs are as under:

Sr. No Name of KMPs Designation
1 Mr. Jayantilal Babulal Sanghvi CEO
2 Mr. Naresh Babulal Sanghvi COO
3 Mr. Vikram Babulal Sanghvi CFO
4. Ms. Deepika Agrawal CS

commencement of the CIR process the evaluation of the independent directors of the Company was not required to be carried out.


In staying true to our values of Strength, Performance and Passion and in line with our vision of being one of the most respected companies in India, the Company is committed to the high standards of Corporate Governance and stakeholder responsibility.

The Company had, prior to the commencement of the CIR process, pursuant to the provisions of Section 177(9) & (10) of the Companies Act, 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a

Vigil Mechanism or ‘Whistle Blower Policy for directors, employees and other stakeholders to report genuine concerns has been established. The same is also uploaded on the website of the Company i.e. The Company Secretary has represented that no Director / employee has been denied access to the Chairman of the Audit Committee until August 30, 2019 and to the Resolution Professional thereafter and that no complaints were received during the year.


The Companys internal control procedure which includes internal financial controls, ensure compliance with various policies, practices and statutes and keeping in view the organizations pace of growth and increasing complexity of operations. The internal auditors team carries out extensive audits throughout the year across all locations and across all functional areas.


The Company had, prior to the commencement of the CIR process, put in place a Board approved Corporate Social Responsibility (CSR) Policy and the same is also available on the website of the Company. The composition and the terms of reference of the Committee are detailed in the enclosed Corporate Governance Report. During the CIR process and post appointment of RP, powers of the Board has suspended and accordingly the CSR Committee could not met during this period. The Companys Policy on Corporate Social Responsibility is available on the website_ .


The Company had, prior to the commencement of the CIR process, had in place the Nomination and Remuneration Policy with the provisions of Section 178 of the Companies Act, 2013 and Regulation 19 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The particulars of the remuneration policy are stated in the enclosed Corporate Governance Report and are also available on the

Companys website at .


All related party transactions that were entered into during the financial year were on an arms length basis and were in the ordinary course of business. There are no materially significant related party transactions made by the Company with Promoters, Directors, Key Managerial Personnel or other designated persons which may have a potential conflict with the interest of the Company at large. Accordingly, since disclosure in form AOC- 2 is required to be made only of the related party transactions or arrangements that were not at arms length basis or the material related party transactions that were at arms length basis in accordance with the Section 188 of the Companies Act, 2013, the disclosure in form AOC-2 in terms of Section 134 of the Companies Act, 2013 is not required.

Before the commencement of CIRP, all Related Party Transactions were placed before the Audit Committee and the Board for approval. Prior omnibus approval of the Audit Committee had been obtained during the year for the transactions which are of a foreseen and repetitive nature. The transactions entered into pursuant to the omnibus approval so granted were audited and a statement giving details of all related party transactions had been placed before the Audit Committee and the Board of Directors for their approval. The Company has developed a Related Party Transactions policy for purpose of identification and monitoring of such transactions.

The policy on Related Party Transactions as approved by the Board, prior to the commencement of the CIR

Process has been uploaded on the Companys website i.e.


A separate Section on Corporate Governance is forming part of the Annual Report and the Certificate from

M/s. Samdani Shah and Kabra, Company Secretaries, Vadodara, the Companys Secretarial Auditors confirming the compliance of conditions on Corporate Governance as stipulated under Schedule V of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is attached to the report on corporate governance.


During the year under review, No credit facilities has been availed throughout the year as the Company was under CIRP. As mandated by the Ministry of Corporate Affairs, the Financial Statements for the year ended 31.03.2020 have been prepared in accordance with the Indian Accounting Standards (IND AS) notified under Section 133 of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014. The Chief Financial Officer has represented that the estimates and judgments relating to the Financial Statements are made on a prudent basis, so as to give a true and fair view of the state of affairs and profits and cash flows of the Company for the year ended March 31, 2020.


The Company has not accepted any deposits during the current financial year.


All the properties and insurable interests of the Company including buildings, plant & machinery and stocks have been adequately insured.


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.


The Equity Shares of the Company are listed on the BSE Limited (BSE) with scrip code No. 533411 and on the National Stock Exchange of India Limited (NSE) with scrip code of SANGHVIFOR. Due to liquidity crunch, the Company could not pay Listing fees of Stock Exchanges.


The Company has its Wholly Owned Subsidiary Company in Netherlands in the name of "Sanghvi Europe BV". The Company had in place a policy for determining material subsidiaries prior to the commencement of the CIR Process, which has been uploaded on companys website at In terms of the policy, the Company has taken on record that aforesaid company does not met the criteria of being treated as a material subsidiary during the period.


The Consolidated Financial Statements of the Company have been prepared in accordance with the relevant Indian Accounting Standards issued by the Institute of Chartered Accountants of India and forms an integral part of this Report. Pursuant to Section 129(3) of the Companies Act, 2013 read with Rule 5 of the Companies (Accounts) Rules, 2014, Statement containing salient features of the financial statement of subsidiaries/associate companies / joint ventures is attached in Form AOC-I in Separate Section of this Annual Report.


The details of programmes for familiarization of Independent Directors and training with the Company, their roles, rights, responsibilities in the Company, nature of the industry in which the Company operates, business model of the Company and related matters are put up on the website of the Company i.e.


Auditors Qualification: i. The company has continued to incur losses resulting in erosion of entire Net-worth, Current liabilities Exceed Current Assets, inability to pay the statutory liabilities viz. TDS, PF, ESIC etc. and severe Liquidity Constraints; the Banks have recalled their loans. ii. Inability to comply with the terms of loan agreements and that Lenders have under section 13(2) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 ("SARFAESI Act") given notices to the Company in the year 2019. iii. That the Company cannot be categorised as a Going Concern in view of the accounting standards generally accepted in India.

Management opinion:

Considering the Ongoing Operations with improved business prospects, continue to execute orders in hand, and obtaining new orders despite adversities and efforts to control costs, the Management is positive about the viability of Companys operation.

AUDITORS Statutory Auditor

In compliance with the Companies (Audit and Auditors) Rules, 2014, the Company has appointed M/s. V. K. Shastri & Co., Practicing Chartered Accountants, as Statutory Auditors of the Company at the 29th Annual General Meeting held on September 28, 2017 to hold office till the conclusion of the 34th Annual General Meeting of the Company.

Secretarial Auditor

Pursuant to the 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. Samdani Shah & Kabra, Practicing Company Secretary, Vadodara, to undertake Secretarial Audit of the Company for the Financial Year 2019-20. The report of Secretarial Audit is annexed as "Annexure A".

We have complied all the observations and remarks provided by Secretarial Auditor through the year.

There have been no other qualifications, reservations, adverse remarks or disclaimers in the auditors reports, requiring explanation or comments by the Board.

Internal Auditor

The exitsing Internal Auditors of the Company - M/s. Ambalal M Shah & Co, Chartered Accountants, were re-appointed for the F.Y. 2020-21 pursuant to the provisions of Section 138 of the Companies Act, 2013 and The Companies (Accounts) Rules, 2014.

Report of Fraud by Auditors

During the year under review, the statutory Auditors, Internal Auditors and Secretarial Auditors have not reported any instance of fraud committed under Section 143(12) of the Companies Act, 2013 details of which needs to be reported.


To the best of knowledge and belief and according to the information and explanations obtained, CFO make the following statements in terms of Section 134(3)(c) of the Companies Act, 2013:

(a) that in the preparation of the annual financial statement for the year ended March 31, 2020, the applicable accounting standards had been followed along with proper explanation relating to material departures, if any

(b) that the accounting policies to the financial statement have been selected 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 as at March 31, 2020 and of the profit and loss of the company on that date;

(c) that proper and sufficient care has been taken 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) that the annual financial statements are prepared on a going concern basis; and

(e) that the proper internal financial controls were in place and that the internal financial controls were adequate and were operating effectively.

(f) that systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively.


Many initiatives have been taken to support business through organizational efficiency, process change support and various employee engagement programmes which has helped the Organization achieve higher productivity levels. A significant effort has also been undertaken to develop leadership as well as technical/ functional capabilities in order to meet future talent requirement.

The Companys HR processes such as hiring and on-boarding, fair transparent online performance evaluation and talent management process, state-of-the-art workmen development process, and market aligned policies have been seen as benchmark practices in the Industry. The reports of particulars of employees and related disclosure annexed in "Annexure B".


None of the senior management personnel have undertaken any financial and commercial transactions with the Company, in which they have personal interest that would have a potential conflict with the interest of the Company at large.

Obligation of Company under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

The Company has in place a policy on prevention, prohibition and redressal of sexual harassment at workplace in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules thereunder. All women employees and workers

(permanent, temporary, contractual and trainees) as well as any women visiting the Companys office premises or women service providers are covered under this Policy. During the year, the Company reached out to female employees through awareness sessions for creating greater awareness with respect to the

Companys Policy on Sexual Harassment at workplace.

During the year under review, no complaints were received by the Committee constituted under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.


- There are no material changes and commitments affecting financial position of the Company which have occurred between end of financial year of the Company and the date of this report.


As per provisions of Section 92 of the Companies Act, 2013 read with Rules made there under, a draft Annual Return of the Company for the financial year 2019-20 in the Form MGT-7 is available on the website of the Company, web-link of which is the Extract of Annual Return in the FormMGT-9 has been annexed.


The Company has taken several steps towards conserving energy through its ‘Sustainability initiatives, disclosed separately in the Annual Report. The information on Conservation of Energy as required under Section 134(3) (m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014 is provided in "Annexure C" of this Annual Report.


The Company is continuously taking effective steps regarding exercised effective safety, health and environment protection. Water and air pollution control measures were successfully operated and industrial trade effluents were used for gardening. The tree plantation at the factory site has been maintained properly and the same shall be duly taken care of at our second plant.


The information required pursuant to Section 197 read with Rule, 5 of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company, will be provided upon request. In terms of Section 136 of the Act, the Report and Accounts are being sent to the

Members and others entitled thereto, excluding the information on employees particulars which is available for inspection by the Members at the Registered Office of the Company during business hours on working days of the Company up to the date of the ensuing Annual General Meeting. If any Member is interested in obtaining a copy thereof, such Member may write to the Company Secretary in this regard.

Compliance of Secretarial Standards

The Company has complied with Secretarial Standards issued by the Institute of Company Secretaries of India on Meetings of the Board of Directors and General Meetings.


The Constitution of Risk Management Committee as per SEBI (LODR) Regulations, 2015 is not applicable to the company. However, the Company, prior to the commencement of the CIRP, has Constituted Risk Management Committee and framed Risk management Policy to mitigate the risk and to take appropriate actions on its deviations. The Risk Management Policy is also available on the Companys website at

No major pecuniary orders/ strictures have been passed by any Regulatory Authorities including any Courts or the Tribunals.


CEO & CFO of the Company express their sincere appreciation for the wholehearted and continued support assistance and cooperation extended by the shareholders banks, suppliers, customers, Government Authorities and all concerned towards the Company during the year under review. The Company also wishes to place on record its deep sense of appreciation for the committed services by the Companys executive, staff and workers.

On the behalf of the Board of Directors
Place: Vadodara Jayantilal Babulal Sanghvi
Date: 10, November, 2020 Chief Executive Officer
DIN: 00291657