Sat Industries Ltd Directors Report.

To The Members of

SAT INDUSTRIES LIMITED

Directors’ Report

The Directors of your Company have pleasure in presenting the Thirty-fourth (34th) Annual Report together with the Audited accounts of the Company for the year ended March 31, 2019.

FINANCIAL RESULTS

Your Company’s performance during the year as compared with the previous year is summarised below:

Standalone

(Rs. in lakhs)

Particulars 2018-2019 2017-2018
Total Revenue 3,435.89 5,189.92
Profit before Tax, Interest, Depreciation and Exceptional Items 502.82 589.34
Interest 27.76 22.61
Depreciation 28.43 14.01
Profit-before Tax and exceptional Items 446.63 552.72
Less: Tax Expense 113.37 103.69
Profit after Tax 333.26 449.03
Net Profit/(Loss) for the year 333.26 449.03

Consolidated

(Rs. in lakhs)

Particulars 2018-2019 2017-2018
Total Revenue 23,012.86 10,183.53
Profit before Tax and after exceptional items 1,529.39 809.85
Less: Tax Expense (27.34) 109.22
Profit after Tax 1,556.73 700.63
Net Profit for the year after Shares of Profit/(Loss) of Associates and Minority Interest 1,431.65 698.37

STATE OF COMPANY’S AFFAIRS:

The Company is engaged in the business of general trading of merchandise, leasing of assets and financing. The total standalone revenue of your Company for the year under review amounted to Rs. 3,435.89 lakhs against Rs. 5,189.92 lakhs in corresponding previous year and earned a net profit of Rs. 333.26 lakh (pr.yr. 449.03 Lakh) after providing for depreciation and tax.

On a consolidated basis, the total revenues stood at Rs. 23,012.86 Lakh, an increase of 126% over the previous year.

MATERIAL CHANGES AND COMMITMENTS:

There is no material changes and commitments affecting 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.

TRANSFER TO RESERVES

There is no amount proposed to be transferred to General Reserves during the year under review.

DIVIDEND:

The Directors are pleased to recommend a dividend of Re. 0.10 (5%) per equity share of Rs. 2/- each for the Financial Year 2018-19 subject to approval of the same by the members at the ensuing Annual General Meeting Together with the Dividend Distribution Tax, the total outflow on account of dividend will be appx. 129.22 Lakh.

CHANGE IN NATURE OF BUSINESS:

During the year, there was no change in the nature of business of the Company.

LISTING OF SHARES:

The Equity Shares of the Company are listed on BSE Limited, Phiroze Jeejeebhoy Towers, Dalal Street, Mumbai-400 001 and the listing fee for the Financial Year 2019-2020, has been paid.

SHARE CAPITAL:

During the year under report, there was no change in the issued, subscribed and paid up capital of the Company.

SUBSIDIARIES AND ASSOCIATES:

The Company has six subsidiaries (five Indian and one foreign subsidiary) and one Associate Company as on March 31, 2019 namely:

Sr. No. Name of Company Subsidiary/ Associate
1 Sah Polymers Limited Subsidiary
2 Aeroflex Industries Limited Subsidiary
3 Aeroflex Finance Private Limited Subsidiary
4 Aeroflex International Limited Subsidiary
5 Italica Furniture Private Limited Subsidiary
6 Italica Global FZC, UAE Subsidiary
7 Genext Students Private Limited Associate

A Statement containing the salient features of the financial statement of the subsidiaries and associate, in the prescribed Form AOC-1 pursuant to Section 129 of the Companies Act, 2013 read with the Rule 5 of the Companies (Accounts) Rules, 2014 is forming part of this Report.

PARTICULARS OF PERSONNEL AND RELATED DISCLOSURES:

During the year under review, no employee of the Company was in receipt of remuneration in excess of the limits prescribed under rule 5(2) of the Companies (Appointment And Remuneration of Managerial Personnel) Rules, 2014. Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are attached to this report vide Annexure – "A"

PUBLIC DEPOSITS:

The Company has not accepted any deposit within the meaning of Section 73 of the Companies Act, 2013 and rules made there under as such, no amount of principal or interest was outstanding as of the Balance Sheet date, nor is there any deposit in non-compliance of Chapter V of the Companies Act, 2013.

DETAILS OF DIRECTORS AND KEY MANAGERIAL PERSONNEL:

DIRECTORS:

Pursuant to the provisions of Section 152(5) of the Companies Act, 2013 and in terms of the Articles of Association of the Company Mr. Goree Shankar Shrimali (DIN: 08198667) was appointed as an Independent Director on the Board of Directors of the Company w.e.f. September 28, 2018. Pursuant to the provisions of Section 168 of the Companies Act, 2013 and in terms of the Articles of Association of the Company Mr. Sunil Mithalal Jain (DIN: 03398788), who served as an Independent Director on the Board of Directors of the Company resigned w.e.f. 19th November, 2018 due to his pre-occupation with other matters.

Pursuant to the provisions of Section 152 of the Companies Act, 2013 and in terms of the Articles of Association of the Company, Mr. Asad Daud, Director (DIN: 02491539), retires by rotation at the 34th Annual General Meeting, and being eligible, offers himself for re-appointment.

KEY MANAGERIAL PERSONNEL:

During the year there was no change in the Company’s Key Managerial Personnel.

None of the Directors and Key Managerial Personnel is in any way related to each other, except Mrs. Shehnaz D. Ali and Mr. Asad Daud who are related to each other by way of mother-son relationship.

STATEMENT ON DECLARATION GIVEN BY THE INDEPENDENT DIRECTOR U/S 149(6) OF THE COMPANIES ACT, 2013:

The Company has received declaration from all the Independent Directors of the Company, confirming that they meet the criteria of independence as prescribed both under the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

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

The Company continues to adopt and use the latest technologies to improve the quality of its

Services.

Earning and outgo in foreign exchange:

Particulars 2018-19 2017-18
(Rs. In lakhs) (Rs. In lakhs)
Earnings - -
Outgo 153.18 34.04

DIRECTORS’ RESPONSIBILITY STATEMENT:

Pursuant to clause (c) of sub-section 3 of section 134 of the Companies Act, 2013 It is stated that:

• in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

• the directors had 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;

• the directors had 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;

• the directors had prepared the annual accounts on a going concern basis;

• the directors had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively; and

• the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

AUDITORS:

M/S. Sampatilal Bohara & Co., Chartered Accountants, (FRN: ICAI FRN: 003324C) were appointed as Statutory Auditors of the Company for a period of five consecutive years commencing from the conclusion of Thirty-Second Annual General meeting of the Company up to the conclusion of Thirty-Seventh Annual General Meeting of the Company.

In view of the deletion of proviso to section 139 of the Companies Act, 2013, effected by the Companies (Amendments), 2017, their appointment does not require ratification at every annual general meeting. In view of this the same has not be included in the Notice to Annual General Meeting.

Further, they have confirmed that they are not disqualified from continuing as Auditors of the Company.

FRAUDS AGAINST THE COMPANY:

The auditors have not reported frauds under sub-section (12) of section 143 of the Companies Act, 2013.

QUALIFICATION IN THE AUDITORS’ REPORT - BOARD’S COMMENTS OR EXPLANATIONON:

The Auditors’ Report does not contain any qualification, reservation or adverse remark or disclaimer.

EXTRACT OF ANNUAL RETURN:

Extract of Annual Return as provided under sub-section (3) of section 92 of the Companies Act, 2013 is attached herewith (Annexure-"B").

CORPROATE GOVERNANCE:

The report on Corporate Governance as stipulated under Regulation 34(3) read with Para C of Schedule V of the Listing Regulations is presented in separate section forming part of this Report as Corporate Governance Report.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT:

Management Discussion and Analysis Report for the year under review as stipulated under Regulation 34(2)(e) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulations) is presented in a separate section forming part of this Report as Annexure- "C"

CEO/CFO CERTIFICATE:

Chief executive officer and Chief financial officer compliance certificate as stipulated under Regulation 17(8) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulations) is presented in a separate section forming part of this Report as Annexure- "D"

WEB-LINK OF ANNUAL RETURN:

Annual Return of the Company can be viewed at: http:// satgroup.in/wp-content/uploads/2019/06/Extract-of-Annual-Return.pdf

NUMBER OF MEETINGS OF THE BOARD:

During the year, seven (7) Board Meetings were held, details of which are given in the Corporate Governance Report.

PARTICULARS OF LOANS GIVEN, INVESTMENT MADE AND GUARANTEES GIVEN AND SECURITIES PROVIDED COVERED UNDER SECTION 186(4) OF THE COMPANIES ACT, 2013:

Loans, guarantees and investments covered under Section 186 of the Companies Act, 2013 form part of the Notes to the financial statements provided in this Annual Report.

PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES:

The Company has not entered into any contract or arrangement with any person including persons covered under sub – Section (1) of section 188 of the Companies Act, 2013. The policy on Related Party Transactions as approved by the Board of Directors has been uploaded on the Company’s Website: www.satgroup.in

POLICY ON APPOINTMENT AND REMUNERATION FOR DIRECTORS, KEY MANAGERIAL PERSONNEL AND SENIOR MANAGEMENT EMPLOYEES:

The Nomination and Remuneration Committee of the Board has devised a policy for selection and appointment of Directors, Key Managerial Personnel and Senior Management Employees and their Remuneration. The Committee has formulated the criteria for determining qualifications, positive attributes and independence of a Director, which has been placed on the Company’s website, www.satgroup. in . The policy on the above is attached as Annexure –"E" & Annexure –"F".

INDEPENDENT DIRECTORS TRAINING/ MEETING:

During the year under review a separate meeting of the Independent Directors of the Company was held on March 23, 2019, without the presence of other Directors and members of Management. The Independent Directors reviewed the performance of Non-Independent Directors and the Board as a whole, performance of Chairperson of the Company and assessed the quality, quantity and timelines of flow of information between the Company management and the Board.

EVALUATION OF THE PERFORMANCE OF THE BOARD MEMBERS:

The Company has devised a policy for performance evaluation of the individual directors, Board and its Committees, which includes criteria for performance evaluation. Pursuant to the provisions of the Act and Regulation 17(10) of Listing Regulations, the Board has carried out an annual performance evaluation of its own performance, the individual directors as well as the evaluation of working of the Committees of the Board. The Board performance was evaluated based on inputs received from all the Directors after considering criteria such as Board composition and structure, effectiveness of processes and information provided to the Board etc. A separate meeting of the Independent Directors was also held during the year for evaluation of the performance of non-independent Directors, performance of the Board as a whole and that of the Chairman. The Nomination and Remuneration Committee has also reviewed the performance of the individual directors based on their knowledge, level of preparation and effective participation in Meetings, understanding of their roles as directors etc.

SECRETARIAL AUDIT:

Pursuant to the provisions of Section 204 of the Act and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board of Directors had appointed Mrs. Nancy Jain, Proprietor of Nancy Jain & Associates, Company Secretaries in Practice to undertake the Secretarial Audit of the Company. There is no qualification, reservation or adverse remark made in their Secretarial Audit Report submitted to the Company. The Secretarial Audit Report is attached herewith as Annexure "G".

NAMES OF COMPANIES WHICH HAVE BECOME OR CEASED TO BE ITS SUBSIDIARIES, JOINT VENTURE OR ASSOCIATE COMPANIES DURING THE YEAR:

Aeroflex Industries Limited (AIL) became a subsidiary of the Company with effect from April 2, 2018. Besides no other Company became or ceased to be its subsidiary, joint venture or associate Company during the year.

CONSOLIDATION OF ACCOUNTS:

Your Directors have pleasure in attaching the Consolidated Financial Statements pursuant to Section 129(3) of the Companies Act, 2013 and Regulation 34 of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 and prepared in accordance with the applicable Accounting Standards in this regard.

The Auditors’ report to the shareholders does not contain any qualification, observation or adverse comment.

COST AUDITORS

Pursuant to Section 148 of the Companies Act, 2013 read with Companies (Cost Records and Audit) Amendment Rules, 2014, appointment of cost auditor is not applicable to the company.

RISK MANAGEMENT:

The Company has a robust Risk Management framework to identify, evaluate business risks and opportunities. This framework seeks to create transparency, minimize adverse impact on the business objectives and enhance the Company’s competitive advantage. The business risk framework defines the risk identification and its management approach across the enterprise at various levels including documentation and reporting. The framework helps in identifying risks trend, exposure and potential impact analysis on a Company’s business.

INTERNAL FINANCIAL CONTROLS:

The Company has an internal control system, commensurate with the size, scale and complexity of its operations. The Internal Audit Department monitors and evaluates the efficacy and adequacy of internal control system in the Company, its compliance with operating systems, accounting procedures and policies of the Company. Based on the report of internal audit function, the Company undertakes corrective action in their respective areas and thereby strengthen the controls.

Significant audit observations and recommendations along with corrective actions thereon are presented to the Audit Committee of the Board.

CORPORATE SOCIAL RESPONSIBILITY:

The brief outline of the Corporate Social Responsibility (CSR) Policy of your company along with the initiative taken by it are set out in Annexure "H" of this report in the format prescribed in the Companies (Corporate Social Responsibility Policy) Rules, 2014. The policy is available on the website of the company, http://satgroup.in/corporate-social-responsibility-policy/

VIGIL MECHANISIM/WHISTLEBLOWER:

Your Company has established a robust Vigil Mechanism for reporting of concerns through the Whistle Blower Policy of the Company, which is in compliance of the provisions of Section 177 of the Act, read with Rule 7 of the Companies (Meetings of Board and its Powers) Rules, 2014, and SEBI (LODR). The Policy provides for framework and process whereby concerns can be raised by its employees against any kind of discrimination, harassment, victimisation or any other unfair practice being adopted against them. Adequate safeguards are provided against victimisation to those who avail of the mechanism, and access to the Chairman of the Audit Committee in exceptional cases is provided to them. The details of the Whistle Blower Policy have been uploaded on the website of the Company, www.satgroup.in

DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT THE WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013:

The Company has in place an Anti-Sexual harassment Policy in line with the requirements of the Sexual harassment of women at the workplace (Prevention, Prohibition and Redressal) Act, 2013 and rules made thereunder. An Internal Complaints Committee (ICC) is in place as per the requirements of the said Act to redress complaints received regarding sexual harassment. All employees (Permanent, contractual, temporary, trainees) are covered under this policy. No case has been reported during the year under review.

COMPLIANCE WITH SECRETARIAL STANDARDS ON BOARD AND ANNUAL GENERAL MEETINGS:

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

ANNUAL PERFORMANCE EVALUATION

During the year under review, pursuant to the provisions of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 the Board has carried out an Annual Performance evaluation of its own performance, the Directors individually as well as the evaluation of the working of its various Committees. A separate meeting was carried out to evaluate the performance of individual Directors, who were evaluated on parameters such as level of engagement and contribution, independence of judgement, safeguarding the interest of the Company and its minority shareholders etc. The performance evaluation of the Independent Directors was carried out by the entire Board at its meeting following the meeting of Independent Directors.

GENERAL:

Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions on these items during the year under review:

Issue of equity shares with differential rights as to dividend, voting or otherwise.

Issue of shares (including sweat equity shares) to employees of the Company under any scheme.

None of the Whole-time Directors of the Company receive any remuneration or commission from any of its subsidiaries.

No significant and material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and Company’s operations in future.

ACKNOWLEDGEMENT:

Your Directors would like to express their grateful appreciation for the assistance and co-operation received from the shareholders, banks, Central and State Government Authorities etc. during the year under review. Your Directors wish to place on record their deep sense of appreciation for the devoted services of the executives, staff and workers of the Company for its success.

For and on behalf of Board of Directors of
SAT INDUSTRIES LIMITED
Shehnaz D. Ali H.K. Turgalia
Whole-time Director Whole-time Director
DIN:00185452 DIN: 00049544
Date: 29-05-2019
Place: Mumbai