Shah Construction Company Ltd Directors Report.

Dear members,

The Board of Directors is pleased to present the Companys 72nd annual report and Companys Audited Financial Statements for the financial year ended March 31, 2020

1. FINANCIAL RESULTS

The Companys financial performance for the year ended March 31, 2020 is summarized below: Financial Results:

(Rupees in Lakhs)

2019-20 2018-19
Revenue from operations 437.33 547 .51
Other Income 268.98 22.42
Total Income 706.31 569.92
Project Expenses 45.87 49.98
Changes in inventories of Stock-in-Trade (45.87) (49.98)
Employee Benefits Expense 53.87 54.73
Finance Costs 269.33 242.79
Depreciation and Amortization Expense 27.59 24.09
0ther Expenses 1432.06 356.85
Total Expenses 1782.85 678.46
Profit/ (Loss) before tax (1076.54) (108.53)
Less Income tax for earlier years 02.30 0.29
Profit/ (Loss) after tax (1,078.84) (108.82)

2. RESULTS OF OPERATIONS AND STATE OF AFFAIRS OF THE COMPANY

The total income has increased to Rs.706.31 Lakhs from Rs.569.62 Lakhs in the previous year.

The loss before tax incurred to the company has increased to Rs. 1076.54 Lakhs for the year ended 31st March, 2020 compared to previous year Rs. 108.53 Lakhs.

3. MATERIAL CHANGES AFFECTING THE COMPANY

There have been no material changes and commitments affecting the financial position of the company between end of the financial year and date of this report. There has been no change in the nature of business of the company.

4. SECRETARIAL STANDARDS

The Directors state that the applicable Secretarial Standards i.e. SS-1 and SS-2 relating to the ‘Meetings of the Board of Directors and ‘General Meetings, respectively have been duly followed by the Company.

5. DIRECTORS RESPONSIBILITY STATEMENT

Your Directors state that:

a) in the preparation of the annual accounts for the year ended March 31, 2020, the applicable accounting standards read with requirements set out under Schedule III to the Act have been followed and there are no material departures from the same;

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 as at March 31, 2020 and of the profit and loss of the Company for the year ended on that date;

c) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the 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;

e) the Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating; and

f) the Directors have revised proper systems to ensure compliance with the provisions of all applicable laws were in place and that such systems are adequate and operating effectively.

6. CONTRACTS AND ARRANGEMENTS WITH RELATED PARTIES

All contracts/arrangements/transactions entered by the Company during the financial year with related parties were in ordinary course of business and on arms length basis and that the provisions of Section 188 of the Companies Act, 2013 are not attracted. Thus disclosure in Form AOC-2 is not required.

Members may refer to Note No 32 to the financial statement which sets out related party disclosures pursuant to IND AS.

7. CORPORATE SOCIAL RESPONSIBILITY (CSR)

The provisions relating to Corporate Social Responsibility (CSR) under section 135 of the Companies Act, 2013 are not applicable to the Company.

8. RISK MANAGEMENT

The Risk Management Policy has been framed, implemented and monitored. Major risk identified by the businesses and functions are systematically monitored through mitigating actions on continuing basis.

The development and implementation of Risk Management Policy has been covered in Management Discussion & Analysis which forms part of this report.

9. INTERNAL FINANCIAL CONTROLS

The Company has in place adequate internal financial controls with reference to the financial statements. During the year such controls were tested and no reportable material weakness in the design or operation was observed.

10. DIRECTORS AND KEY MANAGERIAL PERSONNEL

In accordance with the provisions of the Act and Articles of Association of the Company, Mr Dinesh K Poddar retires by rotation and being eligible offers themselves for re-appointment at the ensuing annual general meeting.

The Board of Directors on recommendation of Nomination & Remuneration Committee has recommended their re-appointment.

As per the provisions of the Companies Act, 2013, Independent Directors have been appointed for a period of 5 years and shall not be liable to retire by rotation. The Company has received declarations from all the Independent Directors of the Company confirming that they meet the criteria of independence prescribed under the act and the listing regulations.

The board comprises of the following directors and key managerial personnel of the company The Chairman and Managing Director of the company is Mehul Jadavji Shah. Mr Mehul Jadavji Shah is eligible for reappointment at this Annual General Meeting whose term expired on 14th January 2020 On recommendation of Nomination and Remuneration Committee and subject to the approval of members of the company the board at its meeting has approved the re-appointment of Mr Mehul Jadavji Shah as Managing Director of the Company for a further period of five consecutive years with effect from 15th January, 2020 to 15th January, 2025 .The Board has taken the decision of the said re-appointment based on the recommendation of Nomination and Remuneration Committee and subject to the approval of the members of the company. Independent Directors viz Mr Sanjay Premji Shah, Mr Yogesh Janakrai Shah and Mr Sachikumar Adalja. Based on the performance evaluation carried out by the Nomination and Remuneration Committee and on their recommendation and subject to the approval of members of the company Mr Sanjay Premji Shah, Mr Yogesh Janakrai Shah and Mr Sachikumar Adalja, the Independent Directors are proposed to be reappointed for second term as Independent Directors pursuant to the provisions of Companies Act 2013 and Listing Regulations. The Board of Directors recommends their re-appointment by the way of special resolution and attention of the members is invited to the relevant items in the Notice convening the 72nd AGM and the explanatory statement thereto.

Mr Sanjay Premji Shah, Mr Yogesh Janakrai Shah and Mr Sachikumar Adalja, the Independent Directors shall hold office for the second term for the period of five consecutive years with effect from 71st Annual General Meeting held for the financial year ended 31st March, 2019 up to the conclusion of the Annual General Meeting to be held for the financial year ended 31st March, 2024.

Non Independent Directors viz Mr Dinesh Poddar, Mr Sanjay Damji Shah and Mrs Jaywanti Jadavji Shah.

Mr Dinesh Poddar who retires by rotation at this meeting be and is hereby appointed as a Director of the company, liable to retire by rotation. Mr Mahendra Savaliya has been appointed as Chief Financial Officer of the Company with effect from 14th February 2019.

Ms Anita Vyas continues to be the Company Secretary of the Company with effect from 25th May 2018.

Declaration by Independent Directors:

All Independent Directors have given declarations to the effect that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 read with Regulation 16 of SEBI (Listing obligations and Disclosures Requirements), Regulations 2015. In the opinion of the Board, Independent Directors fulfil the conditions specified in the Act, Rules made there under and Listing Regulations.

Evaluation of Boards Performance:

The Company has devised a Policy for performance evaluation of the Board, Committees and other individual Directors (including Independent Directors) which include criteria for performance evaluation of Non-executive Directors and Executive Directors. The evaluation process inter alia considers attendance of Directors at Board and committee meetings, acquaintance with business, communicating inter se board members, effective participation, domain knowledge, compliance with code of conduct, vision and strategy.

The detailed programs for familiarization of Independent Directors with the Company, their roles, rights and responsibilities in the Company, nature of the industry in which the Company operates, business model of the Company are being discussed.

The Board carried out an annual performance evaluation of the Board, Committees, Individual Directors and the Chairman. The Chairman of the respective Committees shared the report on evaluation with the respective Committee members. The performance of each Committee was evaluated by the Board, based on report on evaluation received from respective Committees.

The report on performance evaluation of the Individual Directors was reviewed by the Chairman of the Board and feedback was given to Directors. Pursuant to the provisions of the Companies Act, 2013 read with the Rules issued there under and the Listing Regulations (including any statutory modification(s) or re–enactment(s)

for the time being in force), the process for evaluation of the annual performance of the Directors / Board / Committees was carried out.

In a separate meeting of Independent Directors, performance of non-independent directors, performance of the board as a whole and performance of the chairman was evaluated, taking into account the view of executive directors and non-executive directors. The same was discussed in the board meeting that followed the meeting of the independent directors at which the performance of the Board, its committees and individual directors was also discussed. Performance evaluation of independent directors was done by the entire board excluding the independent directors being evaluated.

11. AUDITORS AND AUDITORS REPORT

Statutory Auditors

M/s. A. C. Modi & Associates, Chartered Accountants were appointed as Statutory Auditors of your Company at the Annual General Meeting held on 29th September, 2017 for a term of five consecutive years. They have confirmed that they are not disqualified from continuing as Auditors of the Company.

As per the provisions of Section 139 of the Companies Act, 2013,the appointment of Auditors is required to be ratified by the members at every Annual General Meeting. In accordance with Companies Amendment Act, 2017 enforced on 7th May, 2018 by the Ministry of Corporate Affairs, the appointment of Statutory Auditors is not required to be ratified at every Annual General Meeting.

The Report given by the Auditors on the financial statement of the Company is part of this report. There has been no qualification, reservation, adverse remark or disclaimer given by the Auditors in their Report.

Secretarial Auditor

The Board has appointed M/s. D. Kothari & Associates, Practicing Company Secretary to conduct the Secretarial Audit for the financial year ended 2019-20. The Secretarial Audit report for the financial year ended March 31, 2020 is annexed herewith and marked as Annexure to this report. The said report does not contain any qualification, reservation, adverse remark or disclaimer.

DISCLOSURES

(a) Meetings of the Board:

Four meetings of the Board of Directors were held during the year on the following dates i.e. 15/5/2019, 13/08/2019, 12/11/2019 and 12/02/2020.

(b) Constitution of Committees: (1) Audit Committee:

The Company has constituted Audit Committee which comprises of following directors namely:

Mr. Yogesh Janakrai Shah , Chairman & Independent Director Mr. Sanjay Premji Shah, Independent Director Mr. Dinesh Poddar, Non Independent Director

All the recommendations made by the Audit Committee were accepted by the Board.

(2) Nomination & Remuneration Committee:

The Company has constituted the Nomination & Remuneration Committee of the Board is constituted to formulate and recommend to the Board from time to time, a compensation structure for Managing Directors / Whole-time Directors and Managerial Personnel of the Company.

The nomination and Remuneration Committee comprises following directors namely:

Mr. Yogesh Janakrai Shah , Chairman & Independent Director Mr. Sanjay Premji Shah, Independent Director Mr. Dinesh Poddar, Non Independent Director

(3) Stakeholders Relationship Committee:

The Company has constituted stakeholders Committee comprises of following directors namely:

Mr. Yogesh Janakrai Shah, Chairman & Independent Director Mr. Sanjay Premji Shah, Independent Director Mr. Dinesh Poddar, Non Independent Director

(c) Remuneration and Nomination Policy:

The Board of Directors has framed a policy which lays down a framework in relation to remuneration of Directors, Key Managerial Personnel and Senior Management of the Company.

The Policy broadly lays down the guiding principles, philosophy and the basis for payment of remuneration to Executive and Non-executive Directors Key Managerial Personnel, Senior Management and other employees. The policy also provides the criteria for determining qualifications, positive attributes and Independence of Director and criteria for appointment of Key Managerial Personnel / Senior Management and performance evaluation which are considered by the Nomination and Remuneration Committee and the Board of Directors while making selection of the Annual Report 2019-20 Directors Report candidates.

(d) Vigil Mechanism:

The Company has a robust Vigil Mechanism Policy of the Company, which also includes Whistle Blower Policy in accordance with provisions of the Act and Listing Regulations. The Vigil Mechanism is supervised by an Ethics and Compliance Task Force comprising senior executives of the Company. Protected disclosures can be made by a whistle-blower through an email, or dedicated telephone line or a letter to the Task Force or to the Chairman of the Audit Committee.

(e) Particulars of Loans given, Investments made, Guarantees given and Securities provided:

The full details of loans given, investments made, guarantees given have been provided in the notes to the financial statement for the year ended 31st March, 2020. The Company has not provided any security during the year.

(f) Conservation of Energy, technology absorption:

The Company is not engaged in manufacturing process. Wherever possible the Company has taken steps to conserve energy. The Company has not taken any technology domestically nor imported any technology and hence furnishing the details required doesnt arise.

(g) Foreign Exchange Earnings and Outgo

1) Foreign exchange earnings: NIL

2) Foreign exchange outgo : NIL

(h) Extract of Annual Return:

Pursuant to section 92(3) of the Companies Act, 2013 (‘the Act) and rule 12(1) of the Companies (Management and Administration) Rules, 2014, extract of annual return in prescribed Form No. MGT - 9 is annexed as Annexure III and forms part of this report. The Annual Return of the Company for the year ended 31st March, 2020 prepared in compliance with Section 92 of the Companies Act, 2013 and related Rules in prescribed Form No. MGT 7 is placed on the website of the Company and can be accessed at the web link: www.shah-construction.in.

(i) Particulars of employees and related disclosures:

The Company does not have any employee whose particulars are required to be disclosed in terms of the provisions of Section 197(12) of the act read with Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014, hence furnishing of the same does not arise, Having regard to the provisions of the first proviso to Section 136(1) of the act, the annual report excluding the information regarding the top ten employees is being sent to the members of the Company. The said information is available for inspection on all working days during the business hours at the registered office of the Company. Any member interested in obtaining such information, may write to the Company Secretary and the same shall be furnished on request.

(j) Significant and Material Orders Passed By The Regulators Or Courts:

No significant and material order has been passed by the regulators, courts, tribunals impacting the going concern status and Companys operations in future.

(k) 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 Act and Rules framed thereunder.

(l) Prevention of Sexual Harassment in the Company:

The Company values the dignity of individuals and strives to provide a safe and respectable work environment to all its employees. The Company is committed to providing an environment, which is free of discrimination, intimidation and abuse. All employees are covered under this policy. Your Directors state that during the year under review, there were no cases filed pursuant Shah Construction Company Limited Annual Report 2018 - 20 to the Sexual Harassment of Women at Workplace (Prohibition, Prevention and Redressal) Act, 2013.

(m) General:

Your Directors state that no disclosure or reporting is required in respect of the following items as the provisions were not applicable to the company or 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. - The Company does not have any scheme of provision of money for the purchase of its own shares by the employees or by trustees for the benefit of employees.

- The Company does not have any subsidiaries, hence, the question of receiving remuneration or commission by the Managing Directors or Whole Time Directors of the Company from subsidiary does not arise.

- The details of the top ten employees and employees who were drawing remuneration in excess of limits prescribed under Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 read with Section 197 of the Companies Act, 2013.

ACKNOWLEDGEMENT

The Board of Directors would like to express the sincere appreciation for the assistance and cooperation received from banks, government authorities and members during the year under review.

The Board of Directors also wish to place on record its deep sense of appreciation for the committed services by the Companys executives, staff and workers

Date: 19th August, 2020
Place: Mumbai For and on behalf of the Board of Directors
Mr Mehul Jadavji Shah Mr Dinesh Keshardeo Poddar
Managing Director Director
DIN:00933528 DIN: 00158597
Sanjay Damji Shah
Director
DIN:00292226