Sarthak Metals Ltd Directors Report.

To

The Members,

Your Directors have pleasure in presenting the 24th Annual Report of SARTHAK METALS LIMITED along with the Audited Financial Statements for the year ended 31st March 2019.

FINANCIAL SUMMARY/HIGHLIGHTS

Our Companys financial performance for the year under review has been encouraging and is summarized below:

(Rs in Lacs)

Particulars Current Year as on 31.03.2019 Previous Year as on 31.03.2018
Total Income 190,82.67 172,90.17
Less: Expenditure & Depreciation 182,71.69 165,75.70
Profit before Tax (PBT) 805.34 702.88
Less: Tax (including deferred tax) 229.00 227.29
Profit After Tax (PAT) 576.34 475.58

PERFORMANCE REVIEW

Iron & Steel sector has seen positive results in the past financial year after many years of poor performance. This is mainly due to two reasons, first being higher budget allocation by Central Government on infrastructure expenditure and measures to stop cheap steel imports from China. Overall it has been a good year for your company. Our revenues have increased by 10.37% and EBIDTA increased by 13.47%. Earnings per share have also increased by 21.20%. The growth has been steady despite many other players entering the market. We have been able to show good performance due to our clients trust in our product and their readiness to pay a premium for the same.

DIVIDEND

The Board consider that the profits of the company are attributed to the trust of the shareholders in the management of the Company. Accordingly, the board proposed to declare a dividend of 5% per equity share and the same has been placed for approval of shareholders of the company in the forthcoming Annual General Meeting (AGM).During the year under review, the Board in its meeting held on 21st May 2019 has recommended an amount of Rs. 68,44,875 as proposed dividend. The above proposal has been recommended by the Board of Directors of the Company which needs to be approved by the shareholders at ensuing Annual General Meeting.

RESERVES

The Company has not transferred any amount to the Reserves during the financial year.

SHARE CAPITAL

The Paid-up Equity share capital of the Company as on 1st April, 2018 was Rs. 13,68,97,500 divided into 1,36,89,750 Equity Shares of Rs 10/- each. No change was made during the year. The equity share capital thus, as on 31/03/2019 was Rs. 13,68,97,500.

EXTRACT OF THE ANNUAL RETURN

The extract of the annual return in Form No. MGT - 9 is attached in Annexure C appended to the Directors Report. The same is also placed on the website of the Company www.sarthakmetals.com

CHANGES IN DIRECTORS AND KEY MANAGERIAL PERSONNEL

The composition of the Board is as per the Listing Regulations and provisions of the Companies Act, 2013. There was no change in the composition of the Board during the year under review.

Presently, the composition of the Board is six Directors, led by Chairman and Managing Director with two Whole- Time Director, two Non- Executive Independent Director and one Non- Executive Non- Independent Director.

MANAGEMENT DISCUSSION AND ANALYSIS:

As required by Regulation 34 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 a Management Discussion & Analysis Report forms part of the Annual Report.

REPORT ON CORPORATE GOVERNANCE:

Sarthak Metals Limited is listed on SME Exchange of BSE, the requirement of Corporate Governance as notified in Regulation 15 (2) of the SEBI (Listing Obligation and Disclosure Requirement) Regulation, 2015 not applicable; therefore it is not required to maintain Corporate Governance Report.

DECLARATION BY INDEPENDENT DIRECTORS:

The Company has received declarations from all the Independent Directors of the Company under Section 149 (7) of Companies Act, 2013 confirming that they meet with the criteria of independence as prescribed both under sub-section (6) of Section 149 of the Companies Act, 2013 and under Regulation 16 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015.

PERFORMANCE EVALUATION OF BOARD, COMMITTEES & INDIVIDUAL DIRECTOR

A formal evaluation of the performance of the Board, its Committees, the Chairman and the individual Directors was led by Nomination & Remuneration Committee, the evaluation was done using individual interviews covering amongst other vision, strategy and role clarity of the Board. Board dynamic and processes, contribution towards development of the strategy, risk management, budgetary controls, receipt of regular inputs and information, functioning, performance & structure of Board Committees, ethics & values, skill set, knowledge & expertise of Directors, leadership etc.

As part of the evaluation process the performance of non- independent Directors, the Chairman and the Board was done by the Independent Directors. The performance evaluation of the respective Committees and that of independent and nonindependent Directors was done by the Board excluding the Director being evaluated. The Directors expressed satisfaction with the evaluation process.

FAMILIARISATION PROGRAMMES FOR BOARD MEMBERS:

The Board members are provided with brochures, reports and internal policies to enable them to familiarize with the Companys procedures and practices. The Chairman and Managing Director had one to one discussion with newly appointed Directors to familiarize them with the Companys operations. Periodic presentations are made at the Board and Board Committee Meetings, on business and performance updates of the Company, global business environment, business strategy and risks involved. Quarterly updates on relevant statutory and regulatory changes are circulated to the Directors. Site visits to various plant locations are organized for the Directors to enable them to understand the operations of the Company.

NUMBER OF MEETINGS OF THE BOARD OF DIRECTORS

The Board of Directors duly met 4(Four) times in financial year 31st March, 2019 and as per section 173 of the Companies Act the time gap between anytwo Meetings has not been more than one hundred and twenty days. The dates on which the

Board Meetings were held are 29thMay, 2018, 1st August, 2018, 13th November, 2018 and 16th March, 2019.

The name and category of Directors on the Board, their attendance at the Board Meetings held during the year and also at the Annual General Meeting, the member of Directorships and Committee Memberships and Chairpersonships held by them in other companies as on 31stMarch, 2019 are given below.

Name of Directors Category

No. of Board Meeting held and attend during the year

No. of Directorship in other Public Company

No. of Committees positions held in other Public Companies*

Attendance at last AGM held on 14/09/2018
Held Attend Chairman Member
Mr. Anoop Kumar Bansal Chairman & Managing Director 4 4 0 0 0 Yes
Mr. Kishore Kumar Bansal Non- ExecutiveNon- Independent Director 4 4 0 0 0 Yes
Ms. Rama KohliA Non Executive Independent Director 4 4 0 0 0 Yes
Mr. Sanjay Shah Whole Time Director 4 4 0 0 0 Yes
Mr. Mayur Bhatt Whole Time Director 4 4 0 0 0 Yes
Mr. Chetan Kumar Non Executive Independent Director 4 2 0 0 0 Yes

^Represents Memberships/Chairpersonships of Audit Committee & Stakeholders Relationship Committee of public companies only.

"Designates as a Woman Director on Board.

As per the disclosure received, none of the Directors of your Company hold memberships/Chairmanships more than the prescribed limits across all companies in which he/she is a Director.

MEETINGS OF INDEPENDENT DIRECTORS:

The Companys Independent Directors shall meet at least once in every financial year without the presence of Executive Directors or management personnel. Such meetings are conducted informally to enable Independent Directors to discuss matters pertaining to (i) review the performance of Non-Independent Directors and the Board as a whole, (ii) review the

performance of the Chairperson of the Company, taking into account the views of Executive Directors and Non-Executive Directors; and (iii) to assess the quality, quantity and timeliness of flow of information between the Company Management and the Board.

COMMITTEES OF THE BOARD OF DIRECTORS

In compliance with the requirement of applicable laws and as part of the best governance practice, the Board has constituted various Committees of its members. These Committees hold meetings at such frequencies as is deemed necessary by them to effectively undertake and deliver upon the responsibilities and tasks assigned to them. Minutes of the meetings of each of these Committees are tabled regularly at the Board Meetings.

Your Company currently has 4 (Four) Committees viz:

(a) AUDIT COMMITTEE

The Company has formed a qualified and Independent Audit Committee which acts as a link between the Statutory and Internal Auditors and the Board of Directors. The terms of reference of the Audit Committee cover the matters specified for Audit Committee in the SEBI Listing Regulations and Section 177 of the Companies Act, 2013

As on 31st March, 2019, the Audit Committee comprises of the following members-

1. Mr. Chetan Kumar Chairman
2. Ms. Rama Kohli Member
3. Mr. Kishore Kumar Bansal Member

The Committee met 2 times during the year on 29th May, 2018 and 13th November 2018 and the attendance of Members at the Meetings.

Name of Member Nature of Membership No. of Meeting(s) attended/held
Mr. Chetan Kumar Chairman 2/2
Mrs. Rama Kohli Member 2/2
Mr. Kishore Kumar Bansal Member 2/2

The Company Secretary of the Company is the Secretary of the Committee.

The Chairman of the Audit Committee of the Company was present at the last Annual General Meeting of the Company held on 14th September, 2019.

(b) NOMINATION & REMUNERATION COMMITTEE

In compliance with Section 178 of the Companies Act, 2013 and SEBI Listing Regulations, a Nomination & Remuneration Committee of the Company has been constituted.

As on 31stMarch, 2019, the Nomination and Remuneration Committee comprises of the following members-

1. Mr. Chetan Kumar Chairman
2. Ms. Rama Kohli Member
3. Mr. Kishore Kumar Bansal Member

The Committee met 1 time during the year on 13th November, 2018 and the attendance of Members at the Meetings is as follows:

Name of Member Nature of Membership No. of Meeting(s) attended/held
Mr. Chetan Kumar Chairman 1/1
Mrs. Rama Kohli Member 1/1
Mr. Kishore Kumar Bansal Member 1/1

(c) STAKEHOLDERS RELATIONSHIP COMMITTEE

The Stakeholders Relationship Committee is constituted according to Section 178 of the Companies Act, 2013 and SEBI Listing Regulations. The Committee ensures cordial investor relations and overseas the mechanism for redressal of investor grievances. The Committee specifically looks into redressing shareholders and investor complaints/ grievances pertaining to share transfers, non- receipts of annual reports, non- receipt of dividend and other allied complaints.

As on 31st March, 2019, the Stakeholders Relationship Committee comprises of the following members-

1. Mr. Chetan Kumar Chairman
2. Ms. Rama Kohli Member
3. Mr. Kishore Kumar Bansal Member

During the period under review, Company has not received any complaint from shareholders. There is no outstanding complaint as on 31st March, 2019.

The Company Secretary of the Company also acts as Compliance Officer of the Company.

(d) CORPORATE SOCIAL RESPONSIBILITY COMMITTEE

In compliance with provision of the Companies Act, 2013 and SEBI Listing Regulations, a Corporate Social Responsibility Committee of the Company has been constituted.

As on 31st March, 2019, the Corporate Social Responsibility Committee comprises of the following members-

1. Mr. Chetan Kumar Chairman
2. Ms. Rama Kohli Member
3. Mr. Kishore Kumar Bansal Member

The Committee met 2 times during the year on 29th May, 2018 and 13th November, 2018 and the attendance of Members at the Meetings is as follows:

Name of Member Nature of Membership No. of Meeting(s) attended/held
Mr. Chetan Kumar Chairman 2/2
Mrs. Rama Kohli Member 2/2
Mr. Kishore Kumar Bansal Member 2/2

NOMINATION & REMUNERATION POLICY OF THE COMPANY:

The Board has, on the recommendation of the Nomination & Remuneration Committee framed a policy for selection and appointment of Directors, Senior Management and their remuneration.

The Companys remuneration policy is directed towards rewarding performance based on review of achievements periodically. The remuneration policy is in consonance with the existing industry practice. Extract of Remuneration Policy from Nomination and Remuneration policy is attached as Annexure-A

ANALYSIS OF REMUNERATION

The details of remuneration paid to Directors and Key Managerial Personnel is given in extract of Annual return attached with this report.

Disclosure/details pursuant to provisions of Section 197 (12) of the Companies Act 2013 read with the Companies (Appointment and Remuneration of managerial personnel) Rules, 2014 are given as follows:

Names and Positions [A] Ratio of Directors Remuneration to the median Remuneration of Employees [B] Percentage (%) increase in Remuneration
MR. CHETAN KUMAR (INDEPENDENT DIRECTOR & CHAIRPERSON NIL Not Applicable
MS. RAMA KOHLI (INDEPENDENT DIRECTOR) NIL Not Applicable
MR. ANOOP KUMAR BANSAL (MANAGING DIRECTOR 32.51 Times No Change
MR. MAYUR BHATT (WHOLE TIME DIRECTOR) 10.43 Times No Change
MR. KISHORE KUMAR BANSAL (DIRECTOR) NIL No Change
MR. SANJAY SHAH (WHOLE TIME DIRECTOR) 32.51 Times No Change
MR. ANIRUDH SINGHAL (CHIEF FINANCIAL OFFICER) 7.36 Times No Change
MRS. ITIKA SINGHAL (COMPANY SECRETARY) 4.05Times Increase by 10%

The median remuneration of employees of the Company during the financial year was Rs. 81,523.50 p.a. Please note that only those persons who were employees as on 31st March 2019 have been considered for the calculation of the median salary. Further, no bonus payments have been considered for these calculations.

[C] Percentage increase in the median Remuneration of Employees Decline of 26.62%
[D] Number of permanent Employees on the rolls of Company 212 as on 31st March 2019
[E] Explanation on the relationship between average increase in Remuneration and Company performance Sales Increase - 10.37% EBITDA Increase - 13.47% PBT Increase - 14.58% PAT Increase - 21.20% EPS Increase - 21.20% Median Salary Decline - (26.62%)
[F] Comparison of the Remuneration of the Key Managerial Personnel against the performance of the Company The Remuneration of the Key Managerial personnel has remain unchanged and the companys turnover has increased by 10.37%. Further, the companys EPS has also increased by 21.20%.
[G] Variations in the Market Capitalization of the Company as at 31stMarch, 2019 as compared to 31st March, 2018 Decrease in market capitalization amounted to 30.49% from 31st March 2018 to 31st March 2019.
[H] Price Earning Ratio as at 31stMarch, 2019 as compared to 31st March, 2018 Increase of 21.20%
[I] Percentage increase or decrease in the market quotations of the shares of the company in comparison to the rate at which the company came out with the last public offer The company was listed as on 27th March 2017 at Rs 30 per equity share. The price per equity share on 31st March 2019 at closing bell was Rs 28.5 per share. The percentage decrease is 5%.
(J) Average percentile increase already made in the salaries of employees other than the managerial personal in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof Median Salary of non managerial staff has declined by 26.62% and the average salary of managerial staff has no change.

(K) Comparison of the each KMPs Remuneration vis-a-vis the performance of the Company

Name of KMP Remuneration of KMP (Rs in Lacs) Net Profit of Company after tax (Rs in Lacs)
Mr. Anoop Kumar Bansal (Managing Director) 26.50 576.34
Mr. Anirudh Singhal (Chief Financial Officer) 6.50
Mr. Mayur Bhatt (Whole Time Director) 8.50
Mr. Sanjay Shah (Whole Time Director) 26.50
Ms. Itika Singhal (Company Secretary) 3.30
(L) The key parameters for any variable component of remuneration availed by the directors

No

(M) The ratio of the remuneration of the highest paid Director to that of the Employees who are not Directors but receive remuneration in excess of the highest paid Director during the year Highest paid Directors

Remuneration

(I) Rs 26,50,000

Remuneration of Ratio Employee receiving remuneration in excess of (I) 1.13

PARTICULARS OF EMPLOYEES

None of the employees of the Company is drawing remuneration, requiring disclosure of information under section 134 of the Companies Act, 2013 read with Rule 5(2) of the Companies (Appointment & Remuneration of Managerial Personnel) Rules, 2014

REGULATORY ORDERS

During the year there was no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and Companys operations in future.

WHISTLE BLOWER POLICY:

Pursuant to the Section 177(9) and (10) of the Companies Act, 2013 and Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company has formulated Whistle Blower Policy for vigil mechanism for Directors and Employees to report the management about the unethical behavior, fraud, improper practice or violation of the Companys Code of Conduct or complaints regarding accounting, auditing, internal controls or disclosure practices of the Company. It gives a platform to the whistle blower to report any unethical or improper practice (not necessarily violation of law) and to define processes for receiving and investigating complaints. The mechanism provides adequate safeguards against victimization of employees and directors who use such mechanism and makes provision for direct access to the Chairman of the Audit Committee in exceptional cases.

STATUTORY AUDITORS

In accordance with the provisions of Section 139 & 142 of the Companies Act, 2013 read with the Companies (Audit and Auditors) Rules, 2014, as amended from time to time and such other applicable provisions, M/s Begani & Begani, (FRN- 010779C), Statutory Audit Firm were appointed as Auditors of the Company to hold office from the conclusion of 22nd Annual General Meeting (AGM) till the conclusion of the 27th AGM to 2022, at such remuneration including applicable taxes, as may be mutually agreed between the Board of Directors of the Company and the Auditors.

AUDITORS REPORT

The Board has duly reviewed the Statutory Auditors Report on the Accounts. The observations comments and notes of Auditor are self-explanatory and do not call for any further explanation/clarification

COST AUDITOR- NOT APPLICABLE

SECRETARIAL AUDITORS

Pursuant to the provisions of Section 204 of Companies Act, 2013 and the rules made thereunder, the Company has appointed M/s NILESH A. PRADHAN & CO. LLP, Company Secretaries (COP. No. 3659) to undertake the Secretarial Audit of the Company for the 31st, March, 2019.

The Secretarial Audit Report for the financial year ended 31st March 2019 is included as Annexure MR-3 and forms an integral part of this report.

Responses of your Directors on the observations made by the Secretarial Auditor are as follows:

Response to point No.1

The Company inadvertently could not file form MGT-14 for registration of resolution passed in the board meeting for boards report approval, the Company already applied for condonation of delay by filing Form CG-1 to make the Compliance in proper order.

DETAILS OF SUBSIDIARY/JOINT VENTURES/ASSOCIATE COMPANIES

The Company does not have any Subsidiary Company or Joint Venture Company or Associate Company.

CORPORATE SOCIAL RESPONSIBILITY

The details of the Corporate Social Responsibility Policy framed and activities carried out thereunder are required to be disclosed in the format prescribed under Companies (Corporate Social Responsibility Policy) Rules, 2014 is given as Annexure-B.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186

There are no Loans, Investments or Guarantees/Security given by the Company during the year under section 186 of the Companies Act, 2013; hence no particulars are required to be given.

REPORTING OF FRAUDS:

There was no instance of fraud during the year under review,which required the Statutory Auditors to report to the Audit Committee and / or Board under Section 143(12) of the Actand the rules made thereunder.

DISCLOSURE ON COMPLIANCE WITH SECRETARIAL STANDARDS

Your Directors confirm that the mandatory Secretarial Standards (SS-1 & SS-2) issued by the Institute of Company Secretaries of India, have been complied with.

RISK MANAGEMENT POLICY:

During the year the Company reviewed and strengthened its risk management policy and the risk management framework which ensures that the Company is able to carry out identification therein of elements of risk, if any, which in the opinion of the Board may threaten the existence of the Company.

PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES:

All transactions entered into with the Related Parties as defined under the Companies Act, 2013 and ordinary course of business and on an arms length pricing basis. There were no materially significant transactions with related parties during the financial year which were in conflict with the interest of the Company.

Kindly note that the format for disclosures of transactions with related party are mentioned in Annexure- E(AOC-2).

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

Management does not perceive any material changes occurred subsequent to the close of the financial year as on 31st March, 2019 before the date of report dated 26th July 2019, affecting the financial position of the Company in any substantial manner.

ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO:

(A) Particulars relating to conservation of energy and technology absorption stipulated in the Companies (Accounts) Rules, 2014 are not applicable. The Company is not energy intensive. Further, the Companys technology is indigenously developed and being constantly upgraded based on earnings of the promoters and employees.

(B) Foreign exchange earnings and Outgo:

Particulars As on 01.04.2018 (In Rs.) As on 31.03.2019 (In Rs.)
Foreign exchange earnings 24,21,80,995 43,00,17,221.20
Foreign Exchange Outgo 56,13,34,105 63,16,67,291.91

PUBLIC DEPOSITS

Your Company has not accepted, invited and/or received any deposits from public within the meaning of section 73 & 76 of the Companies Act, 2013 and the Companies (Acceptance of Deposit) Rules, 2014, as amended from time to time during the year under review.

ISSUE OF EQUITY SHARES WITH DIFFERENTIAL VOTING RIGHTS/SWEAT EQUITY SHARES/ EMPLOYEE STOCK OPTION SCHEME

At the beginning of the year, there were no Equity shares with differential voting rights or sweat equity shares or employee stock option scheme outstanding.

During the year, the Company has not issued any equity shares with differential voting rights or sweat equity shares or shares under employee stock option scheme. Hence, disclosures regarding the same are not required to be given.

DISCLOSURE ON COST RECORDS MAINTENANANCE

The provisions with respect to maintenance of cost records as specified by the Central Government under sub-section (1) of section 148 of the Companies Act, 2013, is not applicable to the Company.

INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY

The Company has proper and adequate system of internal controls to ensure that all the assets are safeguarded and protected against losses from unauthorized use or disposition and that transactions are authorized, recorded and reported correctly. The Company has an effective system in place for achieving efficiency in operations, optimum and effective utilization of resources, monitoring thereof and compliance with applicable laws. The auditors have also expressed their satisfaction on the adequacy of the internal control systems incorporated by your company.

DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PR OHIBITION 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 requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. The Company has complied with setting up of an Internal Complaints Committee (ICC) to redress complaints received regarding sexual harassment. The policy has set guidelines on the redressal and enquiry process that is to be followed by complainants and the ICC, whilst dealing with issues related to sexual harassment at the work place. All women employees (permanent, temporary, contractual and trainees) are covered under this policy. The Company has not received any complaints during the year.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to the requirements under Section 134(5) of the Companies Act, 2013, with respect to the Directors Responsibilities Statement, the Directors state and hereby confirm that:

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

(b) the directors 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) The directors 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) The directors have prepared the annual accounts on a going concern basis; and

(e) the directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

ACKNOWLEDGMENTS:

The Board of Directors wish to place on record its appreciation for the commitment, dedication and hard work done by the employees of the Company and the cooperation extended by Banks, Government Authorities, Customers, Shareholders and looks forward to a continued mutual support and co-operation.

FOR SARTHAK METALS LIMITED

Sd/-

(ANOOP KUMAR BANSAL)

(DIN No. 01661844)

Chairman & Managing Director

Place: Bhilai, Chhattisgarh Date: 26.07.2019