Sumeet Industries Ltd Directors Report.

To The Members of Sumeet Industries Limited

Your Directors have pleasure in presenting the 30th Annual Report and Audited Statement of Accounts for the year ended 31st March, 2018.

Your Company has delivered satisfactory performance despite considerable headwinds like GST implication, inflation etc. The Company has registered consolidated revenue of Rs. 1228.83 Crores with Net Loss of Rs. 2.62 Crores.We, remained resolute and relentless in our quest for strengthening our cost-competiveness, better management of working capital and operational excellence across all businesses.

FINACIAL RESULTS

Particulars

Standalone

Consolidated

2017-18 2016-17 2017-18 2016-17
Sales & Income form operation 107081.71 130180.80 122883.11 150959.72
Other Income 952.60 729.50 953.65 948.76
Profit before Financial cost , Depreciation and Exceptional items & Tax (EBIDTA) 9479.80 12353.68 9787.81 12803.02
Interest 4917.79 4822.47 5147.08 5035.15
Depreciation 5259.57 2046.32 5259.57 2047.13
Profit/( Loss ) before Tax (697.56) 5484.89 (618.84) 5720.74
Provision for Taxation
Current tax (785.20) 1170.56 (795.82) 1189.79
Mat Credit - (1014.70) - (1014.70)
Deferred Tax 1171.89 1656.27 1171.89 1656.27
Profit after Tax (310.87) 3672.75 (242.77) 3889.38
Taxation for previous year (13.98) - (19.19) -
profit available for appropriation (324.86) 3672.75 (261.96) 3889.38
Dividend on Equity & Pref. Shares
Transfer to General Reserve (324.86) 3672.75 (261.96) 3889.38

OPERATIONS

Despite challenging business environment the company has posted mixed performance for the year under review. The company has produced 92607.345 Tons of Pet Chips / Polyester and Texturized Yarn and dispatched 93259.47 Tons of Pet Chips / Polyester and Texturized yarns.

Income from operation (Consolidated) of the company has marginally decreased from Rs. 1509.60 Crores to Rs. 1228.83 Crores and EBIDTA has been decreased marginally from Rs. 128.03 Crores to Rs. 97.88 Crores in comparison to last year. The company has adopted the method of charging depreciation on fixed assets from SLM Method to WDV (except vehicle) method during the year under review, resulting an excess of total amount of Rs.34.54 Crores was effected in depreciation amount. The Company has incurred net loss of Rs. 2.62 Crores.

The Company is enhancing its capacity on producing specialty and value added yarns and focusing on expanding market reach both in domestically and internationally, cost optimization and elevating people potential. With rising demand in the domestic and international markets, we are hopeful that we will be able to grow more value added products in future.

A detailed analysis of the operations of your Company during the year under report is included in the Management Discussion and Analysis Report, forming part of this Annual Report.

DIVIDEND

The Board of directors do not recommended dividend for the year under review due to loss incurred by the company. No amount is being transferred to the General Reserves.

EXPANSION & MODERNISATION

The Company is cautiously watching development in synthetic yarn industries and also evaluating various options which could be available to it for its growth strategy. Over the years, we have been investing consistently in shoring our manufacturing capacities by way of expansion cum modification in its existing capacities. Presently no expansion program of the company has been envisaged by the Board.

RIGHT ISSSUE

During the year under review the company has made Right Issue of 2,48,74,173 nos. of Equity shares with a face value of Rs. 10/- each at a price of Rs. 24/- per equity shares aggregated to Rs. 5969.80 Lacs in the ratio of 3 fully paid up Right Equity Share(s) for every 7 Fully Paid up Equity Share(s). Finally, the company has allotted 2,48,74,173 nos. of equity shares and aggregated Rs.59,69,80,152.00 . The proceeds of the Right Issues was utilized for incremental working capital and adjustment of unsecured loans given by the promoters as declared in objects of the issue.

Category wise variation between projected utilization of funds made in offer document and the actual utilization of funds are as follow:

Sr. No. Particulars Projected utilization of funds as per offer document Actual utilization of funds till 31st March, 2018
1. Working Capital Requirements 2300.00 2727.04
2. Adjustment of Unsecured Loans against the entitlement including additional subscription 2500.00 2500.00
3. General Corporate purpose 1030.00 615.00
4. Issue related expenses 170.00 127.76
Total 6000.00 5969.80

CHANGE IN THE NATURE OF BUSINESS

There were no change in the nature of the business of the Company, during the financial year under review. MATERIAL CHANGES AND COMMITMENTS

There have not been any material changes and commitments affecting the financial position of the Company between the end of the financial year as on 31st March, 2018 and the date of this report, i. e., 22nd June ,2018.

OVERSEAS SUBSIDIARY COMPANY

The company has a wholly owned subsidiary company named "Sumeet Global Pte Limited" in Singapore registered with Registrar of Companies and Business, Singapore. Pursuant to Accounting Standard AS- 21 issued by the Institute of Chartered Accountants of India and the provisions of the Listing Agreement with Stock Exchanges, the company has prepared Consolidated Financial Statements of the Company and its subsidiaries are included in the Annual Report.

Pursuant to the provision of section 136 of the Act, the financial statements of the company, consolidated financial statements along with the relevant documents and separate audited accounts in respect of Sumeet Global Pte Limited are available on the website of the company.

EXPORTS

The company has been exploring all the possibilities for exporting its products. During the year under review, your company has exported products worth of Rs. 93.38 Crores.

At present company is exporting to Egypt, Saudi Arabia, China, Argentina, Poland, Vietnam, Philippines, Portugal, Morocco, Columbia, Bangladesh, Russia, Ethiopia, Mexico, Nepal, Brazil, Peru, Algeria, Thailand, U.S.A, Singapore and Turkey etc. The company is weighing possibilities to export its value added newly developed Carpet Yarns, Micro filament yarns, Dope dyed Yarns, Texturised Yarns etc. Exploring export markets has been a key area of focus for the company. Your Company expects more growth in the overall export sales in the current year also.

DEPOSITORY SYSTEM

As members are aware, the companys shares are compulsorily tradable in the electronic form. As on March 31, 2018 almost 96.38% of the Companys total paid-up capital representing 8,29,13,911 shares were in dematerialized form. In view of the numerous advantages offered by the Depository system, members holding shares in physical mode are advised to avail of the facility of dematerialization on either of the Depositories.

CREDIT RATING

The Companys financial discipline and prudence is reflected in the strong credit ratings ascribed by Brickwork Ratings India Limited as below :

Long Term Borrowing : BWR BBB, Outlook : Stable Short Term Borrowing : BWR A3 + Outlook : Stable FIXED DEPOSITS

The Company has invited deposits from public in accordance with the Section 73 and 74 of the Companies Act, 2013 (corresponding Section 58 A of the Companies Act, 1956) to the tune of Rs. 396.14 Lacs during the financial year 2013-14. No fresh deposits have been invited and nor any deposits have been renewed in the financial year 2017-18. Total outstanding deposits after repaying on maturity as on 31.03.2018 has been remained Rs. 4,48,000/-. There were no deposits, which were claimed but not paid by the Company as on date.

DIRECTORS

Mr. Sumeet Kumar Somani (DIN No. 00318156), Executive Director of the Company, retire by rotation at the ensuing Annual General Meeting and being eligible, offer himself for re-appointment.

AUDITORS

a) Statutory Auditors

In compliance with the Companies (Audit and Auditors) Rules, 2014, the Members, at the Extra Ordinary General Meeting of the Company held on November 10, 2017 has appointed M/s. S.R. Somani & Co., Chartered Accountants (ICAI Registration no. 110367W) as Statutory Auditors of the Company to hold the office until the conclusion of the next Annual General Meeting of the Company. Later , M/s. S.R. Somani & Co. , Chartered Accountants has resigned w.e.f 01.04.2018 due to their other pre-occupied work assigned. M/s. Pamita Doshi & Co. Chartered Accountants, (ICAI Registration no.:141976W) has been appointed as Statutory Auditors of the company for the financial year 2017-18 to fill the casual vacancy up to the conclusion of the next Annual General meeting of the company in the Extra Ordinary General meeting held on 30.04.2018. Members are requested to re-appoint them at the Annual General Meeting.

b) Cost Auditors

The Company has been maintaining cost accounting records in respect of manufacture of polyester yarns pursuant to directives of the Central Government. The company has appointed M/s. V.M. PATEL & ASSOCIATES, (Firm Registration No. 10519) as Cost Auditors, for conducting the audit of cost records for the financial year 2018-19 and approval of the members is being sought for ratification of their appoinment and remuneration.

c) Internal Auditors

The Board has appointed M/s. RRA & Co., Chartered Accountants (ICAI Registration Number 112115W) as Internal Auditors of your company for the financial year 2018-19. The report prepared by the Internal Auditors is to be reviewed by the Statutory Auditors & Audit Committee of the company.

d) Secretarial Auditors

Dhiren R. Dave, Practising Company Secretaries (CP No. 2496, Membership No. 4889) were appointed as Secretarial Auditor, to conduct secretarial audit of the company for the financial year 2017-18. The Secretarial Audit Report for the financial year ended 31 March 2018 is annexed herewith and forms part of the Annual Report as Annexure-1. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark.

The Board has re-appointed Dhiren R. Dave, Practising Company Secretaries, as secretarial auditors of the Company for the financial year 2018-19.

MANAGEMENT DISCUSSION AND ANALYSIS

In terms of Regulations 34 of the Listing regulations, a separate section on Management Discussion and Analysis and Corporate Governance Report together with a certificate from the Companys Statutory Auditors confirming compliance with regulations relating to Corporate Governance of the Listing regulations are set out and forms part of this Annual report.

CONSOLIDATED FINANCIAL STATEMENTS

In accordance with provisions of sub-section (3) of Section 129 of the Act and the Listing Regulations, the consolidated Financial Statements of the company, including the financial details of the subsidiary company forms part of this Annual report. The Consolidated Financial Statements have been prepared in accordance with the Accounting Standard s prescribed under Section 133 of the Act.

PERSONNEL AND RELATD DISCLOSURES

The Board of Directors wishes to express their appreciation to all the employees for their outstanding contribution to the operations of the company. Pursuant to the provisions of the Companies (Appointment & Remuneration of managerial personnel) rules 2014, no employee is drawing remuneration in excess of the prescribed limits. Your company also appreciates that revenue and profit growth cannot take place without the right equality of people. To that effect, your company has undertaken a series of measures that ensures the most appropriate people are recruited in to the organization.

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 provided in Annexure-2 forming part of the Annual Report.

INTERNAL CONTROL SYSTEM

Your Company has a well established Internal Control system to ensure an effective internal control environment that provides assurance on the efficiency of conducting business, including adherence to the Companys policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial disclosures. The Internal Auditor certifies on the assurance of adequacy of Internal Control System on quarterly basis which are regularly reviewed by the Audit Committee. Independence of the audit is ensured by the direct reporting of internal audit function to the Audit Committee of the Board.

CORPORATE SOCIAL RESPONSIBILITY

Corporate Social Responsibility is an integral part of the Companys ethos and policy and it has been pursuing on a sustained basis. The Company assists schools situated at near by villages by distributing dresses & books among poor students and computers nearby situated primary schools etc. Technical education and training are imparted to the employees through Industrial Training and Workshops. Emphasis was laid on creation of awareness amongst the villagers about the need to protect the environment. CSR activities carried out by the Company have strengthened the relationship with local people. The main focus areas taken in the policy are Education, Health Care, Environment safety, contribution to any relief fund set up by Government, Semi-Governments etc.

The brief outline of the Corporate Social Responsibility (CSR) Policy of the company and the initiatives undertaken by the company on CSR activities during the year are set out in Annexure of this Report in the format prescribed in the Companies (Corporate Social Responsibility Policy) Rules 2014. (Annexure - 3). The Policy is available on the website of the Company.

HUMAN RESOURCES & INDUSTRIAL RELATIONS

The Company understands that employees are vital and valuable assets. The Company recognises people as the primary source of its competitiveness and continues its focus on people development by leveraging technology and developing a continuously learning human resource base to unlease their potential and fulfil their aspirations.

The Company continued to maintain harmonious and cordial relations with its workers in all its businesses during the year under report. Your company firmly believes that a dedicated work force constitute the primary source of sustainable competitive advantage.

PREVENTION OF SEXUAL HARASSMENT POLICY

The Company has in place Prevention of Sexual Harassment Policy in line with the requirements of The Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act; 2013. All employees (permanent, contractual, temporary, trainees) are covered under this policy.

Your Directors state that during the year under review, there were no cases filed pursuant to The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

RISK MANAGEMENT

Risk Management is the systematic process of understanding, measuring, controlling and communicating organizations risk exposures while achieving its objectives. Risk Management is an important business aspect in the current economic environment and its objective is to identify, monitor and take mitigation measures on a timely basis in respect of the events that may pose risks for the business. The Companys risk-management strategy is to identify, assess and mitigate any significant risks. We have established processes and guidelines,along with a strong overview and monitoring framework at the Board and Senior Management levels.

The Board of Directors regularly review risks and threats and takes suitable steps to safeguard its interest and that there is no element of risk identified that may threaten the existence of the Company. The focus shifts from one area to another area depending upon the prevailing situation. The Risk Management Policy has been reviewed and found adequate to the requirements of the Company by independent firms of Chartered Accountants and approved by the Board. A detailed report on significant risks and mitigation is forming part of Managements Discussion and Analysis.

INSURANCE

All the properties of the Company including buildings, plant and machineries and stocks have been adequately insured.

LOANS, GUARANTEES OR INVESTMENT MADE UNDER SECTION 186 OF THE COMPANIES ACT, 2013

The loans given, investments made and guarantees given & securities provided during the year under review, are in compliance with the provisions of the Act and rules made thereunder and details thereof are given in the notes to the Standalone Financial Statements.

MATERIAL CHANGES AND COMMITMENTS, IF ANY AFFECTING THE FINANCIAL POSITION OF THE COMPANY OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR TO WHICH THESE FINANCIAL STATEMENTS RELATE AND THE DATE OF THE REPORT.

No material changes and commitments affecting the financial position of the Company occurred from the end of the financial year 2017-18 till the date of this report. Further there was no change in the nature of business of the Company.

DETAILS IN RESPECT OF FRAUDS REPORTED BY AUDITORS UNDER SUB-SECTION (12) OF SECTION 143 OTHER THAN THOSE WHICH ARE REPORTABLE TO THE CENTRAL GOVERNMENT.

During the year under consideration, there were no such instances.

EMPLOYEE STOCK OPTION

The company has not issued any Employee Stock Option.

FOREIGN EXCHANGE TRANSACTIONS

In order to hedge the companys exposure to foreign exchange and interest rate, the company enters into forward contracts. The volatility witnessed in the global markets has reiterated the need for robust forex management systems and prudent investment practices. All forex exposures are hedged upon the occurrence of an exposure. In case of liabilities in respect of foreign currency loans obtained for acquisition of fixed assets, the variation in the liabilities arising out of exchange rates at the year end have been capitalized during the year as per Companies (Accounting Standard) Amendment Rules, 2009.

ENERGY, TECHNOLOGY AND FOREIGN EXCHANGE

Information in accordance with the provisions of Section 134 (3) (m) of the Companies Act, 2013 regarding conservation of energy, technology absorption and foreign exchange earnings and outgo is given in the Annexure-4 forming part of this report.

RESEARCH & DEVELOPMENT

The Company is giving great emphasis to innovation in product and process technology and operational efficiencies. The company has set up a separate fully equipped well designed lab for testing of MEG and PTA and developing better quality of Pet chips and Yarns with different deniers and filaments. It has institutionalized a multiple-stage quality control system at the material handling, operations and finished goods stage. Efforts are made to explore and develop more valued added category of yarns. The enhanced quality so developed has been performing well in the domestic as well as in international market. Successful efforts are being made to re-engineer the products & process to reduce cost and optimize material consumption. The product lines of the plant are designed and re-engineered to change product with minimum changeover losses and thus meet customer requirement even for small quantities.

CONTRACTS AND ARRANGEMENT WITH RELATED PARTY

All transactions entered with Related Parties for the year under review were on arms length basis and in the ordinary course of business and that the provisions of Section 188 of the Companies Act, 2013 and the Rules made thereunder are not attracted. Thus, disclosure in form AOC-2 in terms of Section 134 of the Companies Act, 2013 is not required. Further, there are no material related party transactions during the year under review with the Promoters, Directors or Key Managerial Personnel.

All Related Party Transactions are placed before the Audit Committee as also to the Board for approval. Omnibus approval was obtained on a quarterly basis for transactions which are of repetitive nature. Transactions entered into pursuant to omnibus approval are audited by the Risk Assurance Department and a statement giving details of all Related Party Transactions are placed before the Audit Committee and the Board for review and approval on a quarterly basis.

The policy on Related Party Transactions as approved by the Board of Directors has been uploaded on the website of the Company. The web-link of the same has been provided in the Corporate Governance Report. None of the Directors has any pecuniary relationship or transactions vis-a-vis the Company.

CORPORATE GOVERNANCE

The Company is committed to maintain the highest standards of corporate governance and adhere to the corporate governance requirements set out by Securities and Exchange Board of India (‘SEBI). A separate report on Corporate Governance along with Certificate from M/s. Pamita Doshi & Co., Chartered Accountants on compliance with the conditions of Corporate Governance as stipulated under SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 is provided as part of this Annual Report.

EXTRACT OF ANNUAL RETURN

The extract of Annual Return pursuant to the provisions of Section 92 read with Rule 12 of the Companies (Management and administration) Rules, 2014 in prescribed Form MGT-9 (Annexure-5) is forming part of the Annual Report.

DIRECTORS RESPONSIBILITY STATEMENT

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 judgements 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 this Act 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 had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively;

(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.

CODE OF CONDUCT

As prescribed under the provisions of Section 149 of the Companies Act, 2013 read with Schedule IV thereto and Regulation 26 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 for its Board of Directors and Senior management and employees, the Company has formulated a comprehensive Code of Conduct (the Code). The Code is applicable to Directors and Senior management and employees to such extent as may be applicable to them depending upon their roles and responsibilities. The Code gives guidance and support needed for ethical conduct of business and compliance of law. The Code reflects the values of the Company viz. Customer Value, Integrity, one team and Excellence.

A copy of the Code has been uploaded on the Companys website www.sumeetindustries.com. The Code has been circulated to all the Directors and Management Personnel and its compliance is affirmed by them annually.

A declaration signed by the Companys Managing Director for the compliance of this requirements is published in this Report.

DECLARATION OF INDEPENDENCE BY THE INDEPENDENT DIRECTORS

Pursuant to Section 149(6) of the Companies Act, 2013, Independent Directors of the Company have made a declaration confirming the compliance of the conditions of the independence stipulated in the aforesaid section.

WHISTLE BLOWER MECHANISM

In order to ensure that the activities of the Company and its directors , employees and Vendors are conducted in a fair and transparent manner by adoption of highest standards of professionalism, honesty, integrity and ethical behaviour, the Company has adopted a Vigil mechanism/Whistle Blower Policy. This policy is explained in Corporate Governance Report and also uploaded on the website of the company i.e. www.sumeetindustries. com.

DISCLOSURE RELATED TO BAORD, COMMITTEES AND POLICIES

A) BOARD MEETINGS :

The Board of Directors met 15 times during the financial year ended 31st March, 2018 in accordance with the provisions of the Companies Act, 2013 and rules made there under. The details thereof are given in the Corporate Governance Report forming part of the Annual report.

B) COMMITTEE MEETINGS :

AUDIT COMMITTEE

The Audit Committee of the Board comprises of Mr. Dinesh Sharan Khare (Chairman), Mr. Sumeet Kumar Somani, Member, Mr. Dipesh Dasadia, Member and Mr. Abhishek Desai, Member.

All recommendations made by the Audit Committee were accepted by the Board during the year 2017-18. The brief details of the Audit Committee are given in Corporate Governance Report forming part of the Annual Report.

NOMINATION AND REMUNERATION COMMITTEE

The Nomination and Remuneration Committee of the Board comprises of Mr. Dinesh Sharan Khare (Chairman), Mr. Atma Ram Sarda, Member, Mr. Dipesh Dasadia, Member and Mr. Abhishek Desai, Member.

The Nomination and Remuneration Committee and this Policy shall be in compliance with Section 178 of the Companies Act, 2013 read along with the applicable rules thereto and Listing Regulations (as may be amended from time to time). Emphasis is given to persons from diverse fields or professionals.

The Nomination and remuneration Committee has framed the " NOMINATION & REMUNERATION AND EVALUATION POLICY" (Annexure-6(i)) and "POLICY ON BOARD DIVERSITY" (Annexure-6(ii)) forming part of the Annual Report.

STAKEHOLDERS RELATIONSHIP COMMITTEE

The Committee review and ensures redressal of investor grievances. The Stakeholders Relationship Committee of the Board comprises of Mr. Dinesh Sharan Khare (Chairman), Mr. Sumeet Kumar Somani, Member, Mr. Dipesh Dasadia, Member and Mr. Abhishek Desai, Member.

The brief details of the Stakeholders Relationship Committee are given in Corporate Governance Report forming part of the Annual report.

CORPORATE SOCIAL RESPONSIBILITY COMMITTEE

The Board has laid down the Companys policy on Corporate Social Responsibility (CSR) and the CSR activities of the company are carried out as per the instructions of the Committee.

The CSR committee of the Board comprises of Mrs. Gangadevi Somani, Chairman, Mr. Sumeet Kumar Somani, Member and Mr. Dinesh Sharan Khare, Member.

BOARD EVALUATION

Pursuant to the provisions of the Companies Act, 2013 and Listing Regulations, 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 Audit Committee, Nomination and Remuneration Committee.

The evaluation process covered the aspects which included Board structure and composition, frequency of Board meetings, participation in the long term strategic planning, contribution to and monitoring of corporate governance practices and the fulfilment of Directors obligation and fiduciary responsibilities, including but not limited to, active participation at the Board and committee meetings.

This evaluation is led by the Chairman of the Board Governance, Nomination and Remuneration Committee with specific focus on the performance and effective functioning of the Board.

The result of the evaluation is satisfactory and adequate and meets the requirement of the Company.

FAMILIAZATION PROGRAMME FOR INDEPENDENT DIRECTORS

A policy on familiarization program for Independent Directors has also been adopted by the Company and are put up on the website of the company www.sumeetindustries.com. All new Independent Directors (IDs) inducted in to the Board are presented with an overview of the Companys business operations, products, organization structures and about the Board Constitutions and its procedures.

KEY MANAGERIAL PERSON

Pursuant to the provisions of section 203 of the Companies Act , 2013 read with rules framed thereunder the following persons are the Key Managerial Personnel of the company.

1) Mr. Sumeet Kumar Somani, Managing Director

2) Mr. Anil Kumar Jain, Company Secretary

3) Mr. Abhishek Prasad, Chief Financial Officer SECRETARIAL STANDARDS

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

ACKNOWLEDGEMENT

Your Directors would like to express their grateful appreciation for the assistance and co-operation received from the Financial Institutions, Banks, Government Authorities and Shareholders during the year under review. Your Directors wish to place on record their deep sense of appreciation for devoted services of the Executives, Staff and workers of the Company for its success.

On behalf of the Board of Directors
Sd/-
Place : Surat Shankarlal Somani
Date : 22nd June, 2018 Chairman

ANNEXURE TO DIRECTORS REPORT

ANNEXURE- 2

FORM AOC - 1

The information required under Section 197(12) o the Companies Act, 2013 read with Rule 5(1) of the i Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 for the year ended 31st March, 2018 are given below

1) The ratio of the remuneration of each director to the median remuneration of the employees of the

Company for the financial year ended March, 2018 : -

Name of the Director / KMP & Designation Remuneration % increase in Remuneration in F.Y. 2017-18 Ratio to median remuneration Comparison of the Remuneration of the KMP against the performance of the company
Shri Sumeet Kumar Somani * Managing Director 5.40 1.66

The company has incurred Loss of Rs. 261.96 Lacs during the year but EBIDTA (Consolidated) is Rs. 9787.81 Lacs

Anil Kumar Jain Company Secretary 10.60 40% 3.27
Abhishek Prasad ** 8.70 15% 2.68

* MR. Sumeet Kumar Somani has been appointed as Managing Director of the company w.e.f. 01.04.2017 and ceased to act as CFO of the company.

** MR. Abhishek Prasad has been appointed as CFO of the company w.e.f. 01.04.2017.

The Non-Executive Independent Directors of the Company are entitled for sitting fees, Commission and reimbursement of expenses as per the statutory provisions and are within the prescribed limits. The details of sitting fees and commission paid to independent directors are provided in the Corporate Governance Report forms a part of the Annual Report.

2) Percentage increase in the median remuneration of employees in the financial year : 7.65%

3) Number of permanent employees on the rolls of Company as on 31st March, 2018 : 701

4) The explanation on the relationship between average increase in remuneration and Company performance:

On an average, employees received an increase in remuneration of 7.25% to 8%. During the year company has incurred loss of Rs. 324.86 Lacs.

The increase in remuneration of employees is in line with the market trends and closely linked to corporate performance, business performance and individual performance.

5) Comparison of the remuneration of the Key Managerial Personnel against the performance of the Company :

Particulars of Remuneration

Key Managerial Personnel

Mg. Director C.F.O. Company Secretary
Remuneration (Rs. in Lacs) 5.40 8.70 10.60
Revenue (Rs. in Lacs) 122883.11 122883.11 122883.11
Remuneration (As a % of Revenue) 0.0044 0.0070 0.0086
Profit (Loss ) before Tax (PBT) (Rs. in Lacs) (618.84) (618.84) (618.84)
Remuneration (As a % of PBT) - - -

6) Variations in the market capitalisation of the Company, price earnings ratio as at the closing date of the current financial year and previous financial year and percentage increase over 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:

Date Closing Market Price per Share(Rs.) Earnings Per Share (Rs.) Price Earnings Ratio Market Capitalization (Rs. in Crores)
31.03.2017 33.30 6.81 4.89 193.27
31.03.2018 15.55 -0.15 - 128.93
% Change -205.79 -102.20 - -33.29

The Company made its Initial Public Offer (IPO) in 1993. An amount of Rs.1000 invested in the IPO towards 100 shares of Rs.10 each was worth Rs. 1555/- (100 shares of Rs. 15.55 each) as on 31st March, 2018, excluding dividend. After considering Rights shares offered and, Bonus issue of shares from time to time, 100 shares of Rs.10 each issued in 1993 have become 471 shares of Rs.10 each.

7) Average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstance for increase in managerial remuneration :

Average Percentile increase in Remuneration of employees other than Managerial Personnel was 7.65% and average increase in remuneration of Managerial Personnel was 15% to 40%.

8) Key parameters for any variable component of remuneration availed by the Directors :

Key result areas of the managerial personnel are broadly to achieve Companys growth and performance target, achieving the same against various adverse externalities globally, devising sustained strategy to combat global forces like competition, exchange rate etc, which, in turn, enhance shareholders value. There are no variable component of remuneration to the Directors during the financial year 2017-18 and 2016-17. Remuneration of the managerial personnel is based on the Remuneration Policy as recommended by the Nomination & Remuneration Committee and approved by the Board of Directors.

9) 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: NIL.

10) Affirmation that the remuneration is as per Remuneration policy :

The Company affirms that the remuneration paid is as per the Remuneration policy of the Company.

11) Pursuant to the provisions of the Companies (Appointment & Remuneration of managerial personnel ) rules 2014, no employee is drawing remuneration in excess of the prescribed limits.

ANNEXURE TO DIRECTORS REPORT

ANNEXURE- 4

PARTICULARS REQUIRED UNDER THE COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF BOARD OF DIRECTORS) RULES, 1988

A. Conservation of Energy :

Energy conservation is a high priority area for the Company. Our continued effort to reduce and optimize the use of energy consumption has shown positive results. The Company is continuously putting its efforts to improve Energy Management by way of monitoring energy related parameters on regular basis. The Company is committed to transform energy conservation into a strategic business goal fully along with the technological sustainable development of Energy Management System. It is putting best endeavour to reduce energy consumption in all its operations and activities.

a) Energy Conservation measures taken by the Company

1) Continuously monitoring the energy parameters such as maximum demand, power factor, load factor, TOD tariff utilization on regular basis.

2) Continuously replacing the inefficient equipments with latest energy efficient technology & up gradation of equipments continually.

3) Automated load management system to improve power factor with reduced contract demand

4) Installed of LT APFC 5950 KVAR with detune reactor to improve Power Factor up to unity for reducing line losses

5) Installed of MV APFC 1000 KVAR with detune reactor to improve Power Factor up to unity for reducing line losses

6) Installed VFD at Air compressor motors of 8 & 13 bar and its close monitoring to run at required sustainable parameters.

7) Installed EMS system in Air Compressors to monitor controlling of compressors to reduce unload running of compressors and thereby saving in power.

8) Utilized waste vapours of CP Plant in to chilling Plant VAM

9) Reduce pressure losses in air/liquid pipe lines to reduces load in connected equipments.

b) Impact of measures at (a) above for reduction of energy consumption and consequent impact on the cost of production of goods

1) Reduction in consumption of electricity and fuel oils with consequent reduction in cost of production.

2) Product improvement , product development and growth in business

c) Total energy consumption and energy consumption per unit of production as per prescribed Form - A given hereunder :-

FORM A

A. Power and Fuel Consumption:

2017-18 2016-17
1. Electricity
(a) Purchased
- Units 66685366 60599918
- Total Amount 500872636 394386178
- Rate/Unit(Rs.) 7.51 6.51
(b) Own generation
(i) Through diesel generator in Units (KWH) 3680 4960
Liters of HSD Consumed 1200 1689
Unit per Ltr. of Diesel 3.06 2.93
(ii) Through HFO/generator
Unit 20176012 29131213
Consumed 4614608 7376850
Unit per Ltr of FO 4.37 3.949
(iii) Gas (Generated by Gas based Gen Set)
Quantity (in units KWH) - 89000
Gas Consumed (in SM3) - 25535
Unit per KWH / SM3 - 3.48
2. Gas
Quantity (in units) -
Total amount -
Average rate -
3. Furnace oil
Quantity (in Ltrs.) 7418529 7654369
Total amount 170007873 166515492
Average rate 22.91 21.75

 

B. Consumption per unit of production (in tons)
Product: Polyester Pet Chips & Yarn
Electricity Standards (if any) 2017-18 2016-17
Purchases and Own Generation

(Own Generation Through F.O. based Gen Set)

- 928.71 1028.16

FORM B

(Forms for disclosure of particulars with respect to Technology Absorption)

I. Research and Development (R & D)

1. Specific areas in which R & D carried out by the company

a) Modification in polymerization to improve process cost optimization

b) Up-gradation and modification in yarn spinning lines

c) Value added yarns are developing.

d) Continuous monitoring of Equipments efficiency to reduce power consumption

e) Substitution of imported spares with indigenous spares by developing in local markets

2. Benefit derived as a result of the above R & D

a) Reduction in wastage and energy consumption.

b) Reduction in cost of power.

c) Strengthening value added product portfolio and improved contribution margin

d) Improvement in QUALITY Rationalization of manufacturing cost

e) Reduction in daily demand by even distribution of daily load

3. Future plan of action

a) Development of new properties in yarns for value addition .

b) Enhancement of productivity of spinning and take-up machines.

c) Energy optimization for process plants

d) Optimization of product process for value added product mix .

4. Expenditure on R & D / Product Development

Capital and recurring expenditure is incurred by the company regularly.

II. Technology absorption, adaptation and innovation

1. Efforts made towards technology absorption, adoption and innovation

a) Replacing local developed spares from costlier imported spares in various imported equipments.

b) Adopting modern tools & techniques in maintenance to reduce down time of machineries

2. Benefits derived as a result of above efforts

a) Improvement in operating performance and reduction in wastage

b) Reduction in cost of production

c) Reduction in energy cost

3. Information regarding technology imported during the last five years

Technology Imported Year of Import Status
POY and FDY Plant 2013 Absorbed

III. FOREIGN EXCHANGE EARNING AND OUTGO

I. Activities relating to exports, Initiatives taken to increase export markets for products and services and export plans

Newer markets are being explored and initiative taken to focus on increasing exports.

II. Total Foreign Exchange used and earned

(Rs. in Lacs)
2017-18 2016-17
[a] Foreign Exchange Earnings 7881.24 5437.51
[b] Foreign Exchange Outgo 19284.34 24631.37

ANNEXURE TO DIRECTORS REPORT ANNEXURE- 6 ( i)

Nomination & Remuneration and Evaluation Policy (Framed under Section178(3) of Companies Act, 2013 & the Listing Agreement)

This Nomination, Remuneration and Evaluation Policy (the "Policy") applies to the Board of Directors (the "Board"), Key Managerial Personnel (the "KMP") and the Senior Management Personnel of Sumeet Industries Limited (the "Company").

"Key Managerial Personnel (KMP) means—

(i) Managing Director;

(ii) Company Secretary,

(iii) Whole-time Director;

(iv) Chief Financial Officer; and

(v) Such other Officer as may be prescribed.

The term "Senior Management Personnel" means to include all members other than the Directors and KMPs of the Company, who are the functional heads of the departments/divisions/branches of the Company.

This Policy is in compliance with Section 178 of the Companies Act, 2013 read along with the applicable rules thereto and Clause 49 under the Listing Agreement.

1. PREAMBLE

1.1 Sub-section (3) of Section 178 of the Companies Act, 2013 states that the Nomination and Remuneration Committee shall formulate the criteria for determining qualifications, positive attributes and independence of a director and recommend to the Board a policy, relating to the remuneration for the directors, key managerial personnel and other employees.

1.2 Section 178 of the Companies Act, 2013 has been made effective from April 1, 2014 by the Central Government by notification no. S.O. 902(E) issued on March 26, 2014. Therefore this Nomination and Remuneration Policy ("the Policy") has been framed in compliance with the provisions of the Act and Rules made under the Act.

1.3 The Policy provides a framework for remuneration to the members of the Board of Directors ("Board"), Key Managerial Personnel ("KMP") and the Senior Management Personnel ("SMP") of the Company (collectively referred to as "Executives").

The expression ‘‘senior management" means employees of Company who are members of its core management team excluding directors comprising all members of management one level below the executive directors, including the functional heads.

1.4 The existing Remuneration Committee of the Board of Directors has been re-named as Nomination and Remuneration Committee ("the Committee or NRC") so as to comply with the provisions of Section 178(1) of the Act. The Members of the Committee shall be appointed by the Board and shall comprise three or more non-executive directors out of which not less than one-half shall be independent directors. Any fraction in the one-half shall be rounded off to one.

1.5 This Policy will be called " SIL Nomination & Remuneration Policy" and referred to as "the Policy".

1.6 The Policy will be reviewed at such intervals as the Nomination and Remuneration Committee will deem fit.

2. OBJECTIVES

2.1 The objectives of the Policy are as follows:

2.1.1 To set criteria for determining qualifications, positive attributes and independence of a director, and remuneration of the Executives.

2.1.2 To enable the Company to attract, retain and motivate highly qualified members for the Board and other executive level to run the Company successfully.

2.1.3 To enable the Company to provide a well-balanced and performance-related compensation package, taking into account shareholder interests, industry standards and relevant Indian corporate regulations.

2.1.4To ensure that the interests of Board members & senior executives are aligned with the business strategy and risk tolerance, objectives, values and long-term interests of the company and will be consistent with the "pay for performance" principle.

2.1.5To ensure that remuneration to directors, KMP and senior management employees of the Company involves a balance between fixed and incentive pay reflecting short and long term performance objectives appropriate to the working of the Company and its goals.

3. ACCOUNTABILITIES

3.1 The Board is ultimately responsible for the appointment of Directors and Key Managerial Personnel.

3.2 The Board has delegated responsibility for assessing and selecting the candidates for the role of Directors, Key Managerial Personnel and the Senior Management of the Company to the Nomination and Remuneration Committee which makes recommendations & nominations to the Board.

4. PRINCIPLES OF REMUNERATION

4.1 Support for Strategic Objectives: Remuneration and reward frameworks and decisions shall be developed in a manner that is consistent with, and supports and reinforces the achievement of the Companys vision and strategy.

4.2 Transparency: The process of remuneration management shall be transparent, conducted in good faith and in accordance with appropriate levels of confidentiality.

4.3 Internal equity: The Company shall remunerate the Executives in terms of their roles within the organisation. Positions shall be formally evaluated to determine their relative weight in relation to other positions within the Company.

4.4 External equity: The Company strives to pay an equitable remuneration, capable of attracting and retaining high quality personnel. Therefore the Company will remain logically mindful of the ongoing need to attract and retain high quality people, and the influence of external remuneration pressures. Reference to external market norms will be made using appropriate market sources, including relevant and comparative survey data, as determined to have meaning to the Companys remuneration practices at that time.

4.5 Flexibility: Remuneration and reward shall be sufficiently flexible to meet both the needs of individuals and those of the Company whilst complying with relevant tax and other laws.

4.6 Performance-Driven Remuneration: The Company shall establish a culture of performance-driven remuneration through the implementation of the Performance Incentive System.

4.7 Affordability and Sustainability: The Company shall ensure that remuneration is affordable on a sustainable basis.

5. NOMINATION AND REMUNERATION COMMITTEE

The Nomination and Remuneration Committee is responsible for:

5.1 reviewing the structure, size and composition (including the skills, knowledge and experience) of the Board at least annually and making recommendations on any proposed changes to the Board to complement the Companys corporate strategy, with the objective to diversify the Board;

5.2 identifying individuals suitably qualified to be appointed as the KMPs or in the senior management of the Company;

5.3 recommending to the Board on the selection of individuals nominated for directorship;

5.4 making recommendations to the Board on the remuneration payable to the Directors/ KMPs/Senior Officials so appointed/reappointed;

5.5 assessing the independence of independent directors;

5.6 such other key issues/matters as may be referred by the Board or as may be necessary in view of the Listing Agreement and provision of the Companies Act, 2013 and Rules thereunder.

5.7 to make recommendations to the Board concerning any matters relating to the continuation in office of any Director at any time including the suspension or termination of service of an Executive Director as an employee of the Company subject to the provision of the law and their service contract;

5.8 ensure that level and composition of remuneration is reasonable and sufficient, relationship of remuneration to performance is clear and meets appropriate performance benchmarks;

5.9 to devise a policy on Board diversity;

5.10 to develop a succession plan for the Board and to regularly review the plan;

The Nomination and Remuneration Committee comprises of the following:

a) The Committee shall consisting of minimum four members out of that there will be minimum three non-executive directors and majority of them being independent.

b) Minimum two (2) members shall constitute a quorum for the Committee meeting.

c) Membership of the Committee shall be disclosed in the Annual Report.

d) Term of the Committee shall be continued unless terminated by the Board of Directors.

CHAIRMAN

a) Chairman of the Committee shall be an Independent Director.

b) In the absence of the Chairman, the members of the Committee present at the meeting shall choose one amongst them to act as Chairman.

c) Chairman of the Nomination and Remuneration Committee meeting could be present at the Annual General Meeting or may nominate some other member to answer the shareholders queries.

COMMITTEE MEMBERS INTERESTS

a) A member of the Committee is not entitled to be present when his or her own remuneration is discussed at a meeting or when his or her performance is being evaluated.

b) The Committee may invite such executives, as it considers appropriate, to be present at the meetings of the Committee.

VOTING

a) Matters arising for determination at Committee meetings shall be decided by a majority of votes of Members present and voting and any such decision shall for all purposes be deemed a decision of the Committee.

b) In the case of equality of votes, the Chairman of the meeting will have a casting vote.

The Committee shall :-

i) review the ongoing appropriateness and relevance of the Policy;

ii) ensure that all provisions regarding disclosure of remuneration, including pensions, leave encashment, gratuity, etc. are fulfilled;

iii) obtain reliable, up-to-date information about remuneration in other companies;

iv) ensure that no director or executive is involved in any decisions as to their own remuneration.

6. PROCEDURE FOR SELECTION AND APPOINTMENT OF THE BOARD MEMBERS

6.1 Board membership criteria:

6.1.1The Committee, along with the Board, shall review on an annual basis, appropriate skills, characteristics and experience required of a Board Member. The objective is to have a Board with diverse background and experience in business, government, academics, technology and in areas that are relevant for the Companys global operations.

6.1.2 In evaluating the suitability of individual Board members, the Committee shall take into account many factors, including general understanding of the Companys business dynamics, global business and social perspective, educational and professional background and personal achievements. Directors must possess experience at policy-making and operational levels in large organizations with significant international activities that will indicate their ability to make meaningful contributions to the Boards discussion and decision-making in the array of complex issues facing the Company.

6.1.3 Director should possess the highest personal and professional ethics, integrity and values. They should be able to balance the legitimate interest and concerns of all the Companys stakeholders in arriving at decisions, rather than advancing the interests of a particular constituency.

7. PROCEDURE FOR SELECTION AND NOMINATION OF KMP AND SMPS

The C.F.O who is also a Member of the NRC, shall along with the Chairman of the committee and the Company Secretary / Vice President ( Plant ), identify and appoint suitable candidates for appointing them as KMPs (excluding Executive Directors) or SMPs of the Company on the basis of their academic, professional qualifications, relevant work experience, skill and other capabilities suitable to the position of concerning KMP or SMP.

Further, in case of KMP (excluding Executive Director) appointment, approval of the Board of Directors / concerned Committee shall be taken in accordance with provisions of relevant Act, statutes, regulations etc. Existing as on that date. The appointment and/or removal of KMPs shall be placed before the NRC and / or Board of Directors at regular intervals.

8. REMUNERATION OF DIRECTORS, KEY MANAGERIAL PERSONNEL AND SENIOR MANAGEMENT

The guiding principle is that the level and composition of remuneration shall be reasonable and sufficient to attract, retain and motivate Directors, Key Management Personnel and other senior officials.

The Directors, Key Management Personnel and other senior officials salary shall be based and determined on the individual persons responsibilities and performance and in accordance with the limits as prescribed statutorily, if any.

The Nominations & Remuneration Committee (NRC) determines individual remuneration packages for Directors, KMPs and Senior Officials of the Company taking into account factors it deems relevant, including but not limited to market, business performance and practices in comparable companies, having due regard to financial and commercial health of the Company as well as prevailing laws and government/ other guidelines. The Committee consults with the Chairman of the Board as it deems appropriate.

(i) REMUNERATION:

a) Base Compensation (fixed salaries):

Must be competitive and reflective of the individuals role, responsibility and experience in relation to performance of day-to-day activities, usually reviewed on an annual basis; (includes salary, allowances and other statutory/non-statutory benefits which are normal part of remuneration package in line with market practices).

b) Variable salary:

The NRC may in its discretion structure any portion of remuneration to link rewards to corporate

and individual performance, fulfilment of specified improvement targets or the attainment of certain financial or other objectives set by the Board. The amount payable is determined by the Committee, based on performance against pre-determined financial and non-financial metrics.

(ii) Statutory Requirements:

• Section 197(5) provides for remuneration by way of a fee to a director for attending meetings of the Board of Directors and Committee meetings or for any other purpose as may be decided by the Board.

• Section 197(1) of the Companies Act, 2013 provides for the total managerial remuneration payable by the Company to its directors, including managing director and whole time director, and its manager in respect of any financial year shall not exceed eleven percent of the net profits of the Company computed in the manner laid down in Section 198 in the manner as prescribed under the Act.

- The Company with the approval of the Shareholders and Central Government may authorise the payment of remuneration exceeding eleven percent of the net profits of the company, subject to the provisions of Schedule V.

- The Company may with the approval of the shareholders authorise the payment of remuneration upto five percent of the net profits of the Company to its any one Managing Director/Whole Time Director/Manager and ten percent in case of more than one such official.

- The Company may pay remuneration to its directors, other than Managing Director and Whole Time Director upto one percent of the net profits of the Company, if there is a managing director or whole time director or manager and three percent of the net profits in any other case.

- The net profits for the purpose of the above remuneration shall be computed in the manner referred to in Section 198 of the Companies Act, 2013.

8.1 The Independent Directors shall not be entitled to any stock option and may receive remuneration by way of fee for attending meetings of the Board or Committee thereof or for any other purpose as may be decided by the Board and profit related commission as may be approved by the members. The sitting fee to the Independent Directors shall not be less than the sitting fee payable to other directors.

8.2 The remuneration payable to the Directors shall be as per the Companys policy and shall be valued as per the Income Tax Rules.

8.3 The remuneration payable to the Key Managerial Personnel and the Senior Management shall be as may be decided by the Board having regard to their experience, leadership abilities, initiative taking abilities and knowledge base.

9. EVALUATION/ ASSESSMENT OF DIRECTORS/ KMPS/SENIOR OFFICIALS OF THE COMPANY

The evaluation/assessment of the Directors, KMPs and the senior officials of the Company is to be conducted on an annual basis and to satisfy the requirements of the Listing Agreement. The following criteria may assist in determining how effective the performances of the Directors/KMPs/Senior officials have been :

• Leadership & stewardship abilities

• contributing to clearly define corporate objectives & plans

• Communication of expectations & concerns clearly with subordinates

• obtain adequate, relevant & timely information from external sources.

• review & approval achievement of strategic and operational plans, objectives, budgets

• regular monitoring of corporate results against projections

• identify, monitor & mitigate significant corporate risks

• assess policies, structures & procedures

• direct, monitor & evaluate KMPs, senior officials

• review managements succession plan

• effective meetings

• assuring appropriate board size, composition, independence, structure

• clearly defining roles & monitoring activities of committees

• review of corporations ethical conduct

Evaluation on the aforesaid parameters will be conducted by the Independent Directors for each of the Executive/Non-Independent Directors in a separate meeting of the Independent Directors.

The Executive Director/Non-Independent Directors along with the Independent Directors will evaluate/ assess each of the Independent Directors on the aforesaid parameters. Only the Independent Director being evaluated will not participate in the said evaluation discussion.

10. APPROVAL AND PUBLICATION

10.1 This Policy as framed by the Committee shall be recommended to the Board of Directors for its approval.

10.2 The Policy shall form part of Directors Report as required under Section 178(4) of the Companies Act, 2013.

11. SUPPLEMENTARY PROVISIONS

11.1 This Policy shall formally be implemented from the date on which it is adopted by the Board of Directors.

11.2 Any matters not provided for in this Policy shall be handled in accordance with relevant laws and regulations, the Companys Articles of Association.

11.3 The right to interpret this Policy vests in the Board of Directors of the Company

On behalf of the Board of Directors
Sd/-
Place : Surat Shankarlal Somani
Date : 22nd June, 2018 Chairman

ANNEXURE - 6 (ii)

BOARD DIVERSITY POLICY

(Pursuant to Regulation 19(4) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 which have came into effect from 1st December, 2015)

This policy was originally framed pursuant to Clause 49 of the Listing agreement and is amended pursuant to Regulation 19(4) of the SEBI (Listing Obligations and Disclosure Requirements ) Regulations, 2015 which have came into effect from 1st December, 2015.

PURPOSE

The Board Diversity Policy (‘the Policy) sets out the approach to have diversity on the Board of Directors (‘Board) of Sumeet Industries Limited (the "company").

SCOPE OF APPLICATION

The Policy applies to the Board.

POLICY STATEMENT

The Company recognizes and embraces the benefits of having a diverse Board that possesses a balance of skills, experience, expertise and diversity of perspective appropriate to the requirements of the businesses of the Company. The Company sees increasing diversity at Board level as an essential element in maintaining a competitive advantage. A truly diverse Board will include and make good use of differences in the skills, regional and industry experience, background, race, gender and other distinctions between directors. The differences will be considered in determining the optimum composition of Board and when possible should be balanced appropriately.

The Company maintains that Board appointments should be based on merits that complements and expands the skills, experience and expertise of the Board as a whole taking into account knowledge, professional experience, and qualifications, gender, age, cultural and educational background, and any other factors that the board might consider relevant and applicable from time to time for it to function effectively.

These diversities will be considered in determining the optimum composition of the Board and when and wherever possible should be balanced appropriately. All Board appointments are made on merit, in the context of the skills, experience, independence and knowledge which the Board as a whole requires to be effective.

In the process of attaining a diverse Board based on the aforementioned criteria, the following criteria needs to be assessed:

OPTIMUM COMPOSITION

(a) The Board shall have an optimum combination of executives and non- executive directors and not less than fifty per cent of the Board of directors comprising non- executive directors.

(b) At least half of the Board should comprise of independent directors (where the chairman of the Board is executive or promoter) or at least one-third of the Board consisting of independent directors (where the chairman of the Board is non-executive).

I n any case, the Company should strive to ensure that the number of independent directors do not fall below 3(three) so as to enable the board to function smoothly and effectively.

(c) The Company shall have at least one women director on the Board to ensure that there is no gender inequality on the Board.

ROLE OF NOMINATION AND REMUNERATION COMMITTEE

The Nomination & Remuneration Committee (‘Committee) reviews and assesses Board composition on behalf of the Board and recommends the appointment of new Directors also considering the provisions of Companies Act, 2013 and rules framed there under. The Committee also oversees the conduct of the annual review of Board effectiveness.

In reviewing Board composition, the Committee will consider the benefits of all aspects of diversity including, but not limited to, those described above, in order to enable it to discharge its duties and responsibilities effectively.

In identifying suitable candidates for appointment to the Board, the Committee will consider candidates on merit against objective criteria and with due regard for the benefits of diversity on the Board.

REVIEW OF THE POLICY

The Committee will review the policy from time to time keeping in view the statutory requirement and need of the organization and recommend the same to the Board for their approval.

On behalf of the Board of Directors
Sd/-
Place : Surat Shankarlal Somani
Date : 22nd June, 2018 Chairman