Sturdy Industries Ltd Directors Report.

To

The Members,

The Board of your Company is immensely delighted in presenting its 30th Annual Report. The Report is being presented along with the Audited Financial Statements for the Financial Year ended March 31, 2019.

FINANCIAL HIGHLIGHTS

PARTICULARS Year Ended March 31st 2019 Year Ended March 31st 2018
(Rs. In lacs) (Rs. In lacs)
Revenue from Operations 185,24.81 210,06.37
Other Income 1,021.84 22,12.41
Total Income 195,46.65 232,18.78
Less:Expenses 199,46.11 257,33.18
Profit (Loss) before tax (399.47) (2514.39)
Tax Expenses:
Less: Current Tax 0.00 0.00
Less: Deferred Ta x (199.07) (3,63.54)
Less: Net of Tax after comprehensive Income/Loss (6.82) (17.93)
Total Profit/(Loss) After Tax (18,32.97) (21,32.93)

REVIEW OF OPERATIONS AND BUSINESS PERFORMANCE

During the financial year under review, the company has achieved turnover including (income from other sources) of Rs. 19,546.65 Lakhs. However, the expenditure side of the Company has also been proportionally decreased to Rs. 19,946.11 lakhs. Your management is striving hard to improve the financial position of the Company by devising effective marketing plans and strategies.

CHANGE IN NATURE OF BUSINESS

During the year under review, there was no change in the nature of Business.

DIVIDEND

Taking into account loss incurred by the Company, Board of directors of the Company do not recommend any dividend for the year ended 31stMarch, 2019.

(ANNUAL REPORT 2018-19)

LISTING OF SHARES

Presently, The Equity Shares of the Company are listed on the BSE Limited (Bombay Stock Exchange Ltd.) and the Company has paid the Annual Listing Fees to BSE for the financial year 2019-20.

BORROWINGS

Total borrowings of the company both long term and short term as on31st March, 2019 are amounting Rs. 24963.96 Lakhs as compared to previous year ended 31st March2018 of amounting Rs. 25657.58 Lakhs(For details Refer Note No. 13, 14 and Note No. 18 of the Audited Financial Statement).

DETAILS OF SUBSIDIARY, JOINT VENTURE OR ASSOCIATES

The company has no subsidiaries, associates and joint venture companies.

EXTRACT OF ANNUAL RETURN

The extracts of Annual Return pursuant to the provisions of Section 92(3) and 134(3)(a) of the Act read with Rule 12(1) of the Companies (Management and administration) Rules, 2014 is furnished in Form MGT-9 and is attached as Annexure-1 to this Report.

BOARD AND COMMITTEE MEETINGS

The details of meetings of the Board and committee thereof held during the financial year 2018-19 is provided in the Report on Corporate Governance which forms the part of this report.

DIRECTORS RESPONSIBILTY STATEMENT AS REQUIRED UNDER SECTION 134 OF THE COMPANIES ACT,

2013:

In accordance with the provisions of Section 134(5) of the Companies Act, 2013 the Board hereby submits its responsibility Statement:

(a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures; (b) 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; (c) the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act,2013 for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities; (d) the directors had prepared the annual accounts on a going concern basis; and (e) The directors, in the case of a listed company, had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively.

(ANNUAL REPORT 2018-19)

(f) 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.

DECLARATION OF INDEPENDENCE

The Board has received declarations from all the Independent Directors of the Company confirming that they meet with the criteria of independence as prescribed under sub-section (6) of Section 149 of the Companies Act, 2013 and regulation 16(b) of Securities & Exchange Board of India (Listing Obligations and Disclosure Requirement) Regulations, 2015. In the opinion of the Board they fulfil the conditions specified in the Act and the Rules made thereunder and are Independent of the management.

MACHANISM FOR EVALUATION OF BOARD

Pursuant to the provisions of the Companies Act, 2013 and regulation 17(10) of SEBI (LODR) Regulation 2015, a structured procedure was adopted after taking into consideration of the various aspects of the Boards functioning composition of the Board and its committees, execution and performance of specific duties, obligations and governance.

The performance evaluation of the independent Directors was completed in time. The performance evaluation of the Chairman and the Non-independent Directors was carried out by the Independent Directors. The Board of Directors expresses their satisfaction with the evaluation process.

The performance of each committee has been evaluated by its members and found to be highly satisfactory.

On the basis of this exercise, the Board has decided that all Independent Directors should continue to be on the Board.

DETAILS OF DIRECTORS AND KEY MANAGERIAL PERSONNEL

In accordance with the provisions of Section 152 of the Act read with the Articles of Association of the Company, Mr. Ramesh Gupta (DIN 0161363), Whole- Time Director of the company, will retire by rotation at the AGM and being eligible, offers himself for re-appointment. Your Board has recommended his reappointment.

Ms. Pushpa Devi (DIN 08238587), Additional Director appointed as Independent Director of the Company subject to the approval of the shareholders in the ensuing Annual General Meeting for the term of 5 years as prescribed under section 149 of The Companies Act 2013 and rules made there-under.

Brief resume/details of the Directors, who are to be re-appointed as mentioned herein, have been furnished along with the Explanatory Statement (Note 9) to the Notice of the ensuing Annual General Meeting.

The detailed section on ‘Board of Directors is given in the separate section titled ‘Corporate Governance Report forming part of this Annual Report.

PARTICULARS OF LOAN, GUARANTEES AND INVESTMENTS UNDER SECTION 186

The company has not made any investment not any loan and gurantee. However the details of the Loans and investments made by the Company are in Note No.2 of the audited financial statements of the company. The Company has not made any loans to any persons within the meaning of Section 186 and has also not given any guarantees within the meaning of that section.

PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

During the year,Company has entered into certain transactions with related parties with related parties pursuant to the provisions of section 188 of the Companies Act, 2013 read with Rule 8(2) of the Companies (Accounts) Rules, 2014 and which could be considered ‘material as per Regulation 23 of the Securities

Exchange Board of India (Listing Obligations & Disclosure Requirements) Regulations, 2015. Such transactions are reported in form AOC-2 as Annexure 2.

The policy on Related Party Transactions as approved by the Board is uploaded on the Companys website atwww.sturdyindustries.comanddirectweblinktothepolicyisat http://www.sturdyindustries.com/pdf/financial/Related%20Party%20policy.pdf

TRANSFER TO RESERVES

During the year under review, company incurred Losses of 1,832.97 Cr. and the same has been transferred to the reserve of the Company.

TRANSFER OF UNPAID AND UNCLAIMED AMOUNTS TO INVESTOR EDUCATION AND PROTECTION FUND

No unclaimed or unpaid amount is lying in the Books of the company which is to be transferred to Investor Education & Protection Fund.

MATERIAL CHANGES AFFECTING THE FINANCIAL POSITION OF THE COMPANY

During the year under review, no material change took place which may effect the financial position of the company.

NOMINATION & REMUNERATION COMMITTEE POLICY

Your Board has framed a policy which lays down a framework in relation to remuneration of Directors, Key Managerial Personnel and Senior Management Personnel of the Company. This policy also lays down criteria for selection and appointment of Board Members. The detail of this policy is explained in the Report on Corporate Governance. The Nomination and remuneration Policy is available on the website of the company at www.sturdyindustries.com and direct web link to the policy is at http://www.sturdyindustries.com/pdf/financial/Nomination-Remuneration%20Policy.pdf

(ANNUAL REPORT 2018-19)

RISK MANAGEMENT POLICY

The risk management framework defines the risk management approach of the Company and includes periodic review of such risks and also documentation, mitigating controls and reporting mechanism of such risks. The provisions of risk management committee pursuant to the Companies Act 2013 are not applicable to Sturdy Industries Limited. Hence, any standard policy has not been drafted.

VIGIL MECHANISM/WHISTLE BLOWER POLICY

Pursuant to the provisions of Section 177(9) & 177(10) of the Companies Act 2013, the Company has in place a well formulated Vigil Mechanism/ Whistle Blower Policy to deal with instance of fraud and mismanagement, if any. The Purpose of vigil mechanism is to provide for adequate safeguards against victimization of persons who use such mechanism and allows direct access to the Chairperson of the audit committee in exceptional cases.The policy enables the employees, Directors and other stakeholders to raise their concern about unethical behavior, actual or suspected fraud or violation of Code of Conduct and Ethics.

There was no incident when the access to the Audit Committee was denied to any employees with respect to vigil mechanism. The policy is posted on the website of the Company at www.sturdyindustries.comand direct web link to the policy is at http://www.sturdyindustries.com/pdf/financial/Vigil%20Mechanism.pdf

CORPORATE SOCIAL RESPONSIBILITY

The Provisions relating to Section 135 of the Companies Act, 2013 are not applicable to the Company, since the company is incurring losses from past few years.

DEPOSITS

The following details of deposits, covered under Chapter V of the act:

a) Deposits Accepted during the year; NIL

b) Remained unpaid or unclaimed as at the endof the year;NIL

c) Whether there has been any default in repayment of deposits or payment of interest thereon during the year and if so, number of such cases and the total amount involved- NIL

d) The details of deposits which are not in compliance with the requirements of Chapter.

CHANGES IN SHARE CAPITAL, IF ANY

During the year, there was no change in the Authorized as well as paid up share capital of the company.

STATEMENT IN RESPECT OF ADEQUACY OF INTERNAL FINANCIAL CONTROL WITH REFERENCE TO THE FINANCIAL STATEMENTS

Your Company has an effective internal control and risk-mitigation system, which are constantly assessed and strengthened with new/revised standard operating procedures. The Companys internal control system is commensurate with its size, scale and complexities of its operations. The internal and operational audit is entrusted reputed firms of Chartered Accountants. The main trust of internal audit is to test and review controls, appraisal of risks and business processes, beside benchmarking controls with best practices in the Industry.

The Audit Committee of the Board of Directors actively reviews the adequacy and effectiveness of the internal control systems and suggests improvements to strengthen the same. The report on Internal Financial Control under Clause (i) of Sub- Section 3 of Section 143 of The Companies Act 2013, is enclosed in the Annexure-B to the Independent Auditors Report.

AUDITORS AND AUDITORS REPORT

STATUTORY AUDITOR

The members had at 29th AGM of the Company appointed M/s.K Singh & Associates (Firms Registration Number: 012458N) as Statutory Auditors of the company to hold the office from the close of the 29th AGM till the conclusion of the 34th AGM, subject to their appointment being ratified by the members in every AGM. The members of the Company approved deletion of the requirement of seeking ratification of appointment of Statutory Auditors at every AGM pursuant to amendment brought by the Companies Amendment Act, 2017.

The Notes to Accounts referred to in the Auditors Report on "Note No. 28" are self-explanatory and therefore do not call for any further comments.

Following are the reply in respect of the Auditor observations:-

Auditor Observation Reply
Attention is invited to Note No 2 of the financial statements in respect of Property, Plant and Machinery and Equipments and depreciation on assets thereon. The company has already booked depreciation amounting to Rs. 4.51 Crupto 31/12/2018. During the current quarter the company has re-accessed the life of plant and machinery through Chartered Engineer, as per his certificate dated 09/03/2019 the management of the company has taken the accessed useful life of plant and machinery to 35 Years against 25 Years as specified in part ‘C of ScheduleII of the companies Act 2013, as result of which depreciation for the current Quarter ending 31st March 2019 is Negative to the extent of Rs 1.26 Crs and as a result of this readjustment in useful life of plant and machinery, depreciation and Net Block has been adjusted accordingly which has resulted in increase in the net profit to the extent 1.26 Cr for the year. The company hasre-accessed the life of plant and machinery through Chartered Engineer, as per his certificate dated 09/03/2019 the management of the company has taken the accessed useful life of plant and machinery to 35 Years against 25 Years as specified in part ‘C of Schedule II of the companies Act 2013.
Attention is invited to Note No.9 of the financial statements in respect of Short Term Loan and Advances amounting to Rs. 1243.77 Lacs shown as recoverable in respect of Claims to be received on account of subsidy/incentives/other Govt. claims, out of which Rs. 1019.67 Lacs has been considered as income during the year (Refer note 22 of financial statements),although the same has not been acknowledged by the concerned departments and right to receive has not been established. Hence profit to that extent has been overstated in financial statements. As per polices of Government of Assam industrial department, the company has recognized the claims for interest subsidy and the documents for claims are submitted with the concerned department for release of incentives from time to time and being claimed since the inception of the Assam unit i.e F.Y 2012-13.

SECRETARIAL AUDITOR

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and rules made there under, the Company has appointed M/S Himanshu Sharma & Associates, Company Secretary in Practice (C.P. No. 11553) as Secretarial Auditor to undertake the Secretarial Audit of the Company. The Secretarial Audit Report in prescribed format MR-3 given by aforesaid Secretarial Auditors is annexed to this Board Report as Annexure 3and forms an integral part.

Following are the reply in respect of the Auditor observations:-

Auditor Observation Reply
Attention is invited to Note No 2 of the financial statements in respect of Property, Plant and Machinery and Equipments and depreciation on assets thereon. The company has already booked depreciation amounting to Rs. 4.51 Cr upto 31/12/2018. During the current quarter the company has re-accessed the life of plant and machinery through Chartered Engineer, as per his certificate dated 09/03/2019 the management of the company has taken the accessed useful life of plant and machinery to 35 Years against 25 Years as specified in part ‘C of Schedule II of the companies Act 2013, as result of which depreciation for the current Quarter ending 31st March 2019 is Negative to the extent of Rs 1.26 Crs and as a result of this readjustment in useful life of plant and machinery, depreciation and Net Block has been adjusted accordingly which has resulted in increase in the net profit to the extent 1.26 Cr for the year. The company hasre-accessed the life of plant and machinery through Chartered Engineer, as per his certificate dated 09/03/2019 the management of the company has taken the accessed useful life of plant and machinery to 35 Years against 25 Years as specified in part ‘C of Schedule II of the companies Act 2013.
Attention is invited to Note No.9 of the financial statements in respect of Short Term Loan and Advances amounting to Rs. 1243.77 Lacs shown as recoverable in respect of Claims to be received on account of subsidy/incentives/other Govt. claims, out of which Rs. 1019.67 Lacs has been considered as income during the year (Refer note 22 of financial statements), although the same has not been acknowledged by the concerned departments and right to receive has not been established. Hence profit to that extent has been overstated in financial statements. As per polices of Government of Assam industrial department, the company has recognized the claims for interest subsidy and the documents for claims are submitted with the concerned department for release of incentives from time to time and being claimed since the inception of the Assam 2012-13. unit i.e F.Y

COST AUDITORS

As per the requirements of Central Government and pursuant to the provisions of Section 148 of the Companies Act, 2013, M/sBalwinder& Associates, Cost Accountants (Firm Registration No. 000201),

(ANNUAL REPORT 2018-19)

Chandigarh were appointed as the Cost Auditors of the Company for FY 2018-19 to audit the cost accounts of the Company. They have been re-appointed as Cost Auditors for FY 2019-20.

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

The information required under section 134(3)(m) of the Companies Act, 2013 read with Companies (Accounts) Rules, 2014 relating to "Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo" is given in the Annexure - 4 forming an integral part of this Report.

MANAGERIAL REMUNERATION

Statistical Disclosures pursuant to Rule 5 of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is enclosed with this report as Annexure -5.

DISCLOSURES UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION & REDRESSAL) ACT, 2013

The Company has in place an Anti Harassment policy in line with the requirement of the Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013. There was no compliant received from any employee during the financial year 2017-18 and hence no complaint is outstanding as on 31.03.2019. The policy has been posted on the website of the company at www.sturdyindustries.com under head Investor.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Management Discussions and Analysis Report as required, pursuant to Schedule V of Securities & Exchange Board of India (Listing Obligations and Disclosure Requirement) Regulations, 2015 is annexed and forms part of this Report.

CORPORATE GOVERNANCE

The Company has complied with all the conditions of Corporate Governance as stipulated in SEBI (Listing Obligations and Disclosure Requirement) Regulations, 2015.

A separate section on Corporate Governance along with a certificate from the Auditors of the Company confirming the compliance is annexed and forms part of this Report. The Board has also evolved and adopted a Code of Conduct based on the principles of Good Corporate Governance and best management practices being followed globally.

CASH FLOW ANALYSIS

In conformity with the provisions of Clause 34(2) of SEBI (LODR) Regulations, 2015, the Cash Flow Statement for the year ended on 31stMarch, 2019 forms an integral part of the Financial Statements.

(ANNUAL REPORT 2018-19)

PERSONNEL

Your Directors place on record their appreciation for the significant contribution made by all the employees, who through their competence, hard work, solidarity and co-operation, have enabled the Company to withstand the impact of slowdown.

TRADE RELATIONS

The Board wishes to place on record its appreciation for the support and co-operation that the Company received from its suppliers, distributors, retailers and other associates. The Company has always looked upon them as partners in its progress and has happily shared with them rewards of growth. It will be

Companys endeavor to build and nurture strong links based on mutuality, respect and co-operation with each other and consistent with customer interest.

ACKNOWLEDGEMENT

Directors wish to convey their sincere appreciation for the co-operation and excellent assistance the Company has received from central/state government(s) and various ministries, departments of the central/state government(s), dealers and valued business associates without which it would not have been possible to achieve all round progress and growth of the Company.

The Board also places on record its appreciation to all investors, banks, regulatory and government authorities, for their continued support continued trust and support. The Board also places on record its appreciation for the continuous patronage of the customers of the Company.

For and On Behalf of THE BOARD

OF STURDY INDUSTRIES LIMITED

PLACE: Parwanoo
DATE : 03.09.2019
Sd/- Sd/-
(MOHAN LAL GUPTA) (RAMESH GUPTA)
(DIN NO. 00161184) (DIN NO. 00161363)
MANAGING DIRECTOR WHOLE TIME DIRECTOR