Smruthi Organics Ltd Directors Report.

Dear Members,

Your Directors are pleased to present the 33 rd Annual Report and the Audited Financial Statements for the financial year ended 31st March, 2022.

1. Financial Highlights

A summary of the Companys financial results for the year ended 31st March, 2022 vis-a-vis financial results for the previous year ended 31st March, 2021, is as under:

(Rs. in lacs)
Financial Year 2022-21 Financial Year 2020-21
Revenue From Operations 13337.15 12650.08
Other Income 58.32 56.12
Total Income 13395.47 12706.20
Expenditure 11494.31 9796.81
Depreciation and Amortisation Expense 425.63 394.59
Total Expense 11919.94 10191.36
Profit before Finance Costs and Tax 1475.53 2514.80
Finance Costs 98.35 109.33
Profit before Tax (PBT) 1377.18 2405.47
Tax Expense 339.00 694.73
Profit for the Year 1038.18 1710.74
Other Comprehensive Income (Net of Tax) -- --
Total Comprehensive Income for the year 1038.18 1710.74

2. Operational Performance and State of Companys Affairs

During the year under review, Net Sales & Other Income of the Company was Rs.13395.47 lacs as compared to Rs.12706.20 lacs in the previous year registering nominal increase of 5.43 % over the previous year.

However, the Profit for the year is Rs.1038.18 lacs compared to Rs.1710.74 lacs in the previous year registering a decrease of 39.31% over the previous year. Decrease in profitability was mainly due to increase in expenditure (mainly selling and marketing overheads) and raw material consumption by 23.7% and 13.78% respectively . A detailed overview has been provided under Management Discussion and Analysis Report.

3. Dividend

Based on the Companys Performance, your Directors recommend a Dividend of Rs.3 /- per equity share (30%) on equity share capital of 1,14,46,290 equity shares of Rs.10/- each for the year ended 31st March, 2022. Outgo on account of dividend shall be Rs.343.38 lacs.

4. Transfer to Reserves

During the year under review, the Company has not transferred any amount to the General Reserve.

5. Material changes and commitments, if any, affecting the financial position of the company, having occurred since the end of the Year and till the date of the Report

There have been no material changes and commitments 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 this Report

6. Share Capital

The paid up Equity Share Capital as at 31March, 2022 stood at Rs.11.45 crores. During the year under review, the Company did not issue any Equity Shares. Further, the Company has not issued any convertible securities or shares with differential voting rights nor has granted any stock options or sweat equity or warrants. There has been no change in the capital structure of the Company during the year.

7. Human Resource Development (HRD) & Industrial Relations

The Company continues to focus on the development of its human resources to improve its performance and skills. The Company has approximately 550 employees and it is their precious contribution that has primarily resulted in our Companys position in the industry.

The Company aims to create an environment where employees feel valued and appreciated. In addition to training, various employee engagement activities like yoga sessions, motivational lectures, personality development programs and cricket league matches have been organised to inculcate a sense of belonging among employees across all plants.

The Company has adopted a safety first theme across all plants in FY 2021 - 22. Visible controls and fool proof systems are being provided to ensure prevention of accidents. Regular communication, periodic reviews of practices and training has also been conducted on a continuous basis to maintain world class safety standards.

The relationship with the workmen and staff remained cordial and harmonious during the year and management received full cooperation from employees at all the units and locations.

8. Management Discussion and Analysis

Please refer to the detailed Management Discussion and Analysis on page

9. Internal Control Systems

The Company has adequate internal control procedures commensurate with the size of the company and the nature of its business with regard to purchases of inventory, fixed assets and with regard to the sale of goods

10. Key Financial Ratios: Refer Note No 29 to the Notes to Standalone Financial Statement as on 31.03.2022

11. Cautionary Statement

Statements in this Management Discussion and Analysis section of this report describing the Companys objectives, estimates and expectations may be "forward looking statements" within the meaning of the applicable laws and regulations. Actual results might differ materially from those either expressed or implied.

12. Directors Responsibility Statement

As stipulated under the provisions contained in Section 134(3) (c) read with Section 134(5) of the Companies Act, 2013 ("Act"), the Board of Directors, to the best of its knowledge and belief and according to the information and explanations obtained by it, hereby states that:

i. in the preparation of the annual accounts, the applicable accounting standards have been followed and there are no material departures;

ii. 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 for that period;

iii. 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;

iv. the directors have prepared the annual accounts of the Company on a going concern basis;

v. 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 effectively; and

vi. 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.

13. Directors and Key Managerial Personnel

The Board of Directors is chaired by Executive Promoter Chairman and has an optimum combination of Executive, Non- Executive and Independent Directors.

Ms. E Swapnil (DIN: 01241535) is retiring by rotation and being eligible offers himself for reappointment. You are requested to appoint him.

Mrs. E. Vaishnavi, Non Executive Non Independent and founder Director of the company ceased to hold the position with effect from 12th February 2022. Directors place on record sincere appreciation of the whole hearted support and co-operation rendered during her long tenure.

Ms. E. Smruthi was appointed as a Non-Executive, Non- Independent Director of the Company with effect from 12th February 2022.

Based on the recommendation of Nomination and Remuneration Committee the Board of Directors at its meeting held on 28th May, 2022 has re-appointed Mr E. Purushotham (DIN No: 00033583) as Managing Director of the Company, for a period of three (3) years w.e.f 01st April, 2022 on revised terms and conditions and Mr Swapnil Eaga (DIN No: 01241535) promoted as Joint Managing Director & CFO of the Company, for a period of three (3) years w.e.f 01st June, 2022 on revised terms and conditions.

None of the Directors are disqualified from being appointed as Directors, as specified in Section 164 of the Companies Act, 2013.

Being in the interest of the company, you are requested to consider appointment of Mr E Purushotham and Mr Swapnil Eaga.

The composition of the Board, meetings of the Board held during the year and the attendance of the Directors thereat have been mentioned in the Report on Corporate Governance in the Annual Report.

The Company has Code of Conduct for Directors and senior management personnel. All the Directors and senior management personnel have confirmed compliance with the said code.

14. Declaration of Independence

Your Company has received declarations from all the Independent Directors confirming that they meet the criteria of independence as prescribed under the provisions of the Companies Act, 2013 read with the Schedules and Rules issued thereunder as well as Regulation 16(1) (b) of Listing Regulations (including any statutory modification(s) or re- enactment(s) for the time being in force).

15. Board Evaluation

In terms of the applicable provisions of the Act, the SEBI Listing Regulations, Nomination and Remuneration Committee and the Board of Directors have approved a framework, which lays down a structured approach, guidelines and processes to be adopted for carrying out an evaluation of the performance of all the Directors, the Board as a whole and its Committees. The evaluation process has been separately explained in this Annual Report, as a part of the Report on Corporate Governance.

For the year under review, the Board carried out the evaluation of its own performance and that of its Committees and the individual Directors and the evaluation results, as collated and presented, were noted by the Board.

16. Meetings of the Board

The Board met 4 (Four) times during the financial year. The meeting details are provided in the Report on Corporate Governance that forms part of this Annual Report.

The maximum interval between any two meetings did not exceed 120 days, as prescribed in the Act and the SEBI Listing Regulations.

17. Internal Financial Control systems and their adequacy

The details in respect of internal financial control and their adequacy are included in the Management Discussion and Analysis, which is a part of this report.

19. Auditors

The term of present Statutory Auditors N. R. Waghchaure & Associates, Chartered Accountants, Solapur (Firm Registration No. 114999W) will expire at the ensuing 33rd Annual General Meeting ("AGM").

The Audit Committee and the Board have placed on record their appreciation for the professional services rendered by him and his long association with the Company as its auditors.

The Board of Directors of the Company at their meeting held on May 28, 2022, based on the recommendation of the Audit Committee, recommended for the approval of the members, the appointment of M/s. Gokhale & Sathe, Chartered Accountants, Mumbai (Firm Registration No 103264W) as the Auditors of the Company for a period of five years from the conclusion of this AGM till the conclusion of the 38th AGM. M/s Gokhale & Sathe is a reputed firm from Mumbai having long experience of auditing companies of varied size including listed companies.

M/s. Gokhale & Sathe have given their consent and declaration that they are not disqualified to act as Auditors of the Company under the provisions of the Act.

Members are requested to consider appointment of M/s. Gokhale & Sathe., Chartered Accountants, Mumbai as the Statutory Auditors of the Company from the conclusion of the ensuing Annual General Meeting till the conclusion of 38th Annual General Meeting.

20. Auditors report and Secretarial audit report

The Statutory Auditors report and the Secretarial Audit report do not contain any qualifications, reservations, or adverse remarks or disclaimer. The Secretarial Audit Report submitted by the Secretarial Auditor Mr. H. R. Thakur, Practicing Company Secretary, Mumbai, in the prescribed form MR-3 is attached as "Annexure - I" and forms part of this report. Observations and suggestions of the Secretarial Auditor have been considered by the management of the company.

Further the Company has also obtained the Annual Secretarial Compliance Report for the financial year ended 31st March, 2022, thereby confirming compliance of the applicable SEBI Regulations and circulars / guidelines issued thereunder, on behalf of the Company.

21. Cost Audit

For Financial Year 2022-2023, the Company has re-appointed M/s. Shrinivas Diddi and Associates, Cost Accountants, Solapur for conducting cost audit of its cost records pertaining to the products falling under the product categories - Drugs and pharmaceuticals. M/s. Shrinivas Diddi and Associates are appointed on a remuneration of Rs.55,000 plus GST and out of pocket expenses.

The Company is seeking the ratification of the Shareholders for the remuneration to be paid to the cost auditors vide Resolution No. 7 of the Notice of the ensuing Annual General Meeting.

22. Conservation of Energy, Technology Absorption & Foreign Exchange

The statement giving the particulars relating to conservation of energy, technology absorption and foreign exchange earnings and outgo, as required in terms of Section134(3)(m) of the Act read with Rule 8(3) of the Companies (Accounts) Rules, 2014, is annexed to this Report as "Annexure II".

23. General Shareholder Information

General Shareholder Information is given as Item No. 9 of the Report on Corporate Governance forming part of this Annual Report.

24. Particular regarding Employees Remuneration

Disclosure comprising particulars with respect to the remuneration of directors and employees, as required to be disclosed in terms of the provisions of Section197(12) of the Act and Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is annexed to this Report as "Annexure III".

25. Particulars of Loans, Guarantees or Investments

Company did not give any loans, guarantees and make any Investment covered under the provisions of Section 186 of the Companies Act, 2013.

26. Related Party Transactions

Related Party Transactions entered into during the year under review were approved by the Audit Committee and the Board of Directors, from time to time and the same are disclosed in the Financial Statements of the Company for the year under review. Further, pursuant to the provisions of the Act and the SEBI Listing Regulations, the Board of Directors has, on recommendation of its Audit Committee, adopted a Policy on Related Party Transactions and the said policy is available on the website of the Company i.e.www.smruthiorganics.com.

In terms of the provisions of Section 188(1) of the Act read with the Companies (Meetings of Board and its Powers) Rules, 2014 and Regulation 23 of the SEBI Listing Regulations, all contracts/ arrangements/ transactions entered into by the Company with its related parties, during the year under review, were in the ordinary course of business of the Company and on an arms length basis.

There were no material Related Party transactions during the year.

27. Corporate Governance

The Company is in full compliance with the requirements and disclosures that have to be made in terms of the requirements of Corporate Governance specified in SEBI Listing Regulations.

Corporate Governance Report is enclosed as a part of the Annual Report along with the certificate from the Statutory Auditors, M/s. N. R. Waghchaure & Associates, Chartered Accountants, Solapur confirming compliance of the code of Corporate Governance as stipulated Para E of Schedule V of the Securities and Exchange Board of India (Listing obligations and Disclosure requirements) Regulations, 2015.

28. Audit Committee

The Company has an Audit Committee in place in terms of the provisions of Regulation 18 of SEBI Listing Regulations read with Section 177 of the Companies Act, 2013.

The recommendations made by the Audit Committee to the Board, from time to time during the year under review, have accepted by the Board. Other details with respect to the Audit Committee such as its terms of reference, the meetings of the Audit Committee and attendance thereat of the members of the Committee, are separately provided in this Annual Report, as a part of the Report on Corporate Governance.

Further, detailed information with respect to the other Committees of the Board is also provided in this Annual Report, as a part of the Report on Corporate Governance.

29. Remuneration Policy

The policy on remuneration and other matters provided in Section 178(3) of the Act has been disclosed in the Corporate

Governance Report, which is a part of this report and is also available on website of the company www.smruthiorganics.com

30. Vigil Mechanism - Whistle Blower Policy

The Company has a Whistle Blower Policy to report genuine concerns and grievances. The policy provides adequate safeguards against victimisation of persons who use the Whistle Blower mechanism. Details with respect to implementation of the Whistle Blower Policy are separately disclosed in this Annual Report, as a part of the Report on Corporate Governance. The same is also available on the website of the Company at www.smruthiorganics.com.

31. Risk Management Policy:

The Company is aware of the risks associated with the business. It regularly analyses and takes corrective actions for managing / mitigating the same. The requirements of Regulation 21 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, with regard to the constitution of a Risk Management Committee are not applicable to our Company.

32. Corporate Social Responsibility (CSR)

The Board of Directors has constituted a Corporate Social Responsibility ("CSR") Committee in terms of the provisions of Section 135 of the Act

The Annual Report on CSR activities as required under Companies (Corporate Social Responsibility) Rules, 2014, including a brief outline of the Companys CSR Policy, is annexed to this Report as "Annexure IV". For other details regarding the CSR Committee, please refer to the Corporate Governance Report, which is a part of this report. The CSR policy is available on the website of the company www. smruthiorganics.com.

There was one meeting of the CSR Committee held on 13th November, 2021, which was attended by all members of the Committee

As regards observations of the Auditor on unspent CSR amount of Rs.4.43 lacs in earlier years, your Directors wish to clarify that the company had complied with then applicable provisions of the Act in respect thereof.

33. Annual Return

Pursuant to Section 92(3) read with Section 134(3)(a) of the Act, the Annual Return as on March 31, 2022 is available on the Companys website on https://smruthiorganics.com/ investor-relation/

34. Investor Education and Protection Fund (lEPF)

The Company was not required to transfer any amount to the Investor Education and Protection Fund established by the Central Government (IEPF) during the financial year 2021-22.

35. Compliance with Secretarial Standards

The Company has complied with the applicable Secretarial Standards issued by the Institute of Company Secretaries of India.

36. Acknowledgements

Your Directors wish to express their grateful appreciation for the co-operation and continued support received from customers, parent company, collaborators, vendors, investors, shareholders, financial institutions, banks, regulatory authorities and the society at large during the year. We also place on record our appreciation for the contribution made by our employees at all levels and for their commitment, hard work and support in driving the growth of the Company.

For & on behalf of the Board
E. Purushotham
Chairman & Managing Director
Solapur, 28th May, 2022 DIN:00033583