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Sandhar Technologies

BSE: 541163|NSE: SANDHAR|ISIN: INE278H01035|SECTOR: Auto Ancillaries
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Directors Report Year End : Mar '18   

DIRECTORS REPORT

Dear Shareholders,

The Directors of your Company take pleasure in presenting the 26th Annual Report on the business and operations of the Company together with financial statements for the financial year ended 31st March, 2018.

Operations - Financials

The summarised standalone and consolidated financial results of the Company for the financial year ended March 31, 2018 as compared to the previous year are as under:

(Rs, in Lakhs)

Standalone

Consolidated

Corresponding figures for the previous

Financial Year

Financial Year

year have been regrouped / recast wherever necessary to correspond to current year / year Classification

2017-18

2016-17

2017-18

2016-17

Revenue and other Income

172,584.04

150,988.79

198,886.15

175,523.06

EBITDA as per financial statement

19,092.39

13,211.99

21,303.29

15,428.99

Less: Financial Expenses

(3,811.87)

(3,557.03)

(4,317.43)

(4,262.17)

Profit before Exceptional Items,

15,280.52

9,654.96

16,985.86

11,166.82

Depreciation & Tax Less: Depreciation

(5,512.79)

(4,766.14)

(6,752.10)

(5,835.58)

Profit Before Exceptional Items and Tax

9,767.73

4,888.82

10,233.76

5,331.24

Provisions

Less: Share in loss of jointly controlled entity

(531.62)

(80.82)

Less: Exceptional Items

-

(155.11)

-

(43.63)

Less: Tax Provisions

(2,995.08)

(884.37)

(3,140.21)

(1,043.30)

Net Profit After Tax Provisions

6,772.65

3,849.34

6,561.93

4,163.49

Add: Other Comprehensive Income/

(57.57)

(93.45)

46.45

(242.87)

Expense

Less: Profit attributable to Non-controlling

-

-

(60.34)

(37.66)

interest

Less: Appropriations:

Dividend

(1,534.64)

(767.32)

(1,540.70)

(803.71)

Corporate Tax on Dividend Distribution

(309.98)

(141.57)

(309.98)

(141.57)

Balance carried forward in Balance Sheet

4,870.46

2,847.00

4,697.36

2,937.68

The automotive sector, including the auto components manufacturers, witnessed good tailwinds on account of macroeconomic factors as well as structural changes in consumer preference. The fiscal 2018 ended with hitherto unseen growth trajectory in the last 5 months of the fiscal 2018 seeing double digit growth consecutively. Sales of the two wheelers (2W) and commercial vehicles (CV) segments surged impressively by 15.44% and 15.93% respectively. The structural trend of customers preferring scooters in 2Ws and SUVs in 4Ws continued in the fiscal 2018 which yet again registered a growth of over 19.4% and 18.75% respectively. Passenger vehicles (PV) sales growth stood at 6% y-o-y. 2W volume growth can be attributed to positive rural sentiments and new launches by OEM''s (ahead of implementation of mandatory ABS/CBS norms from 1st April 2018). Additionally, the low base of last year aided strong volume growth. Robust growth in the CV segment was on account of improvement in rural-related sectors (FMCG and agriculture) and pick up in road construction and mining demand.

Also pre buying ahead of AIS140 standards (intelligent transport systems) in the passenger segment w.e.f from 1st April 2018 led to strong growth. The LCV segment reported strong growth of 19.5%, driven by good demand from e-commerce, FMCG and agro-sectors and increased demand for last mile connectivity post GST implementation. The MHCV segment also reported strong double-digit growth of 11% y-o-y on account of improved demand from the infrastructure segment. Moreover, stringent restrictions on overloading also aided volume growth.

In the case of the Company, the Consolidated Revenue from Operations & Other Income stood at RS,198,886.15 Lacs vis-a-vis RS,175,523.06 Lacs in the previous year, following continuing rigorous efforts at business promotion and controls aimed at cost economies, as much of refurbishment of products / components with un-mitigating thrust on penetration of market, resulting from effective managerial inputs. The aforesaid Revenue numbers of the fiscal under review, are not comparable with the previous year, as they are computed in accordance with IND-AS 18 which requires netting of the Goods & Service Tax whereas Excise Duty form part of the Expenses in the previous year and the fiscal under review upto 30th June, 2017 prior to the date of GST implementation. Turning the whole part into a meaningful reality, besides the turnover level as aforesaid, EBITDA also registered good growth of 38.07% at consolidated level clocking RS,21,303.29 Lacs vis-a-vis RS,15,428.99 Lacs in the previous year, along with other operating parameters. At standalone level, the growth registered was 44.51% as compared to previous year.

The Profit before Depreciation, Exceptional Items and Tax at Consolidated level was 52.11% higher at RS,16,985.86 Lacs in the fiscal year under review, as against RS,11,166.82 Lacs in the previous fiscal year; the Profit after tax was more profound and higher at RS,6,561.93 Lacs as against RS,4,163.49 Lacs in the previous fiscal, following nil exceptional items and lower finance costs, registering a growth of 57.61%. At the standalone level the Profit before Depreciation, Exceptional Items and Tax was 58.27% higher than the previous fiscal and stood at RS,15,280.52 Lacs vis-a-vis RS,9,654.96 Lacs. At the standalone level the Profit after tax for the fiscal under review stood at RS,6,772.65 Lacs vis-a-vis RS,3,849.34 Lacs, registering a remarkable growth of 75.94%. The lower percentage of growth at Consolidated level is on account of share in losses of jointly controlled entities which are at the startup stages.

However, the crucial aspect of cash flow has been managed, observing due diligence, combined with conservation strategies, which kept the Company on its feet throughout the year. Looking ahead, the challenges are one of business growth and that too with reasonable margins: the overall outlook for real march forward in the current year appears quite optimistic, with predictably better monsoons, demand growth driven by OEMs (including plans of localisation)/replacement market, growth driven by regulatory changes and technological advancement as well as consumer preferences, the only foreseeable dampener being rise in crude oil prices and political instability. All possible steps are afoot to meet ''on the ground'' challenges with focus on Research & Development, holding over deferrable capital expenditure, cutting down on operational expenses without sacrificing effectiveness and deliverable capability and, of all, ensuring efficacious management of cash flow. In short, corporate strategies are planned to focus on creating value on the one hand and managing risk and shaping up enterprise performance on the other, hoping, at the same time, that the turnaround for the Sector is not far too distant.

DIVIDEND

The Board of Directors have paid during the year interim dividends as per particulars below:

S.No

Date of Declaration

Rate of Dividend

Amount (in Lakhs)

(Excluding the Dividend distribution tax)

1

19th December, 2017 ( 1st interim)

10%

511.55

2

07th March, 2018 ( 2nd interim Dividend)

10%

511.55

The 1st & 2nd interim dividend put together aggregated to H2/-per equity share. The same being in line with the Company''s Dividend policy, the Board has recommended the 1st & 2nd interim dividend to be as final dividend and no additional dividend is being recommended for the financial year 2017-18.

CONSOLIDATED FINANCIAL STATEMENTS

As per Regulation 33 of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 (Listing Regulations), applicable provisions of the Companies Act, 2013 (Act) read with the rules issued thereunder and Indian Accounting Standard (AS)-110 on Consolidated Financial Statements, read with IND AS-28 Investments in Associates and Joint Ventures the Audited Consolidated Financial Statement for the FY ended March 31, 2018 is provided in this Annual Report.

During the year, the Board of Directors reviewed the affairs of the subsidiaries in accordance with Section 129(3) of the Act. Consolidated financial statements together with the auditor''s report form part of this annual report.

SHARE CAPITAL

The Authorised Share Capital of the Company is RS,70,00,00,000/- (Rupees Seventy Crores only) divided into 6,80,00,000 (Six Crores and Eighty Lakhs only) Equity Shares of RS,10/- (Rupees Ten only) each and 2,00,000 (Two Lakhs only) Preference shares of RS,100/- (Rupees Hundred only) each.

During the financial year under review, 9,036,144 equity shares of 10 each were allotted in Initial Public Offer (IPO) of the Company. Consequently, the issued and paid up capital of the Company as on March 31, 2018 was RS,60,19,07,080/- (Rupees Sixty Crores Nineteen Lakhs Seven Thousand Eighty only).

INITIAL PUBLIC OFFERING

During the year under review, the Company made offer of 1, 54, 36,144 Equity Shares of Face Value of Rs,10 Each (Equity Shares) for subscription by the public, by way of Initial Public Offer (IPO). The IPO was comprising a fresh issue of 9,036,144 equity shares aggregating Rs,3,000 million (fresh issue) and an offer for sale of 6,400,000 equity shares by GTI Capital Beta Pvt Ltd (the selling shareholder) aggregating Rs,2,124.80 million (offer for sale).The Equity Shares in the IPO were offered at a price of 332 per share. The Company listed its Equity Shares on BSE Limited and National Stock Exchange of India Limited on the 02nd April, 2018.

Post IPO, 29.86% of the shareholding is held by public and balance 70.14% is held by the Promoter and Promoter group.

UTILISATION OF IPO PROCEEDS:

The Company utilized the Net Proceeds from the Fresh Issue towards:

- Repayment or prepayment in full, or in part of certain loans availed by our Company; and

- General corporate purposes

SUBSIDIARIES AND JOINT VENTURES

During the year under review, there were no new subsidiaries incorporated nor any company ceased to be a subsidiary of the Company. However, two new joint ventures have been incorporated. As at 31st March, 2018, the Company had following subsidiaries and Joint Ventures:

Subsidiaries:

1. Sandhar Tooling Pvt. Ltd.

2. Sandhar Strategic Systems Pvt. Ltd.

3. Sandhar Technologies Barcelona S.L., including step down subsidiaries at Mexico, Poland & Breniar

Joint Ventures:

1. Sandhar Hansung Technologies Pvt. Ltd.

2. Indo Toolings Pvt. Ltd.

3. Sandhar ECCO Green Energy Pvt. Ltd.

4. Sandhar Daewha Automotive Systems Private Limited (incorporated on 20th June, 2017)

5. Sandhar Amkin Industries Private Limited (incorporated on 6th September, 2017)

6. Jinyoung Sandhar Mechatronics Private Limited (incorporated on (20th March, 2017)

A statement containing the salient features of the financials statements of all the Joint Ventures/ Subsidiaries in form AOC-1 is annexed hereto as Annexure-I and, hence, not repeated here for the sake of brevity.

A copy of the audited financial statements of each of the subsidiary companies and English translation thereof will be kept for inspection by any Member of the Company at its Corporate Office during business hours. These financial statements are also placed on the Company''s website www.sandhar.co.in. Copy of these financial statements shall be made available to any Member of the Company, on request.

Details of subsidiaries of the Company and their performance are covered in Management Discussion and Analysis Report forming part of the Annual Report.

FINANCE

Cash and Cash Equivalents at the Consolidated level as at 31st March, 2018 was H25,499.01 Lacs vis-a-vis H567.82 Lacs in the previous fiscal. The higher Cash & Cash Equivalents balance in the fiscal under review is primarily on account of the IPO Proceeds. The Company has been making use of need based credit from its bankers and is sparing no effort towards optimizing self-generated resources, making sure that all commitments to the bankers'' / financing agencies are met regularly. However, with the infusion of Equity by way of IPO, the Company''s long term debts stand repaid to the extent of H22500 Lacs in April, 2018.

Financial resources to meet requirements as they emerge will continue to be raised in the current year through appropriate strategies and instruments at cost effective rates. A part of resources, as in the past, would consist of the self-generated surplus ploughed back for productive purposes.

Fixed Deposits

The Company has not accepted any deposits, thus far, within the meaning of Section 73 of the Companies Act, 2013 and the Companies (Acceptance of Deposits) Rules, 2014.

Particulars of Loans, Guarantees and Investments

Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the Notes to the Financial Statements.

RELATED PARTY TRANSACTION

Following the provisions of Section 188(1) of the Companies Act, 2013, all Related Party contracts / arrangements / transactions entered by the Company during the financial year had been in the ordinary course of business and on arm''s length basis, with Audit Committee having a domain role: the Board of Directors brought into picture, wherever necessary and/or obligatory. Therefore the provision of Section 188 of the Companies Act, 2013 were not attracted. There are no materially significant Related Party Transaction during the year under review made by the Company with Promoters, Directors or other designated person which may have a potential conflict with the interest of the Company at large. Thus, disclosure in Form AOC-2 is not required. Pertinent, in this context, is to say that, during the year, the Company has not entered into any contract / arrangement / transaction with related parties, which could be considered material in accordance with the policy of the Company on materiality of related party transactions.

The Policy on materiality of related party transactions and dealing with related party transactions, as approved by the Board, may be accessed on the Company''s website at www.sandhar.co.in

Related party transactions were disclosed to the Board on regular basis. Details of related party transactions may be referred to in Note 32 of the Standalone Financial Statements.

MATERIAL CHANGES AND COMMITMENTS

There have been no significant or material changes in the operations, commitments and governance aspects, following the provisions of Companies Act ''2013 and Rules made thereunder.

NOTABLE INITIATIVES DURING THE YEAR

Technical Collaborations / Joint Ventures:

The Company had signed Joint Venture Agreements with foreign as well as Indian collaborators as below:

- Sandhar Daewha Automotive Systems Pvt Ltd. was incorporated under the Companies Act, 2013 on June 20, 2017 in Gurugram, Haryana. This company is a 50:50 joint venture between our Company and Daewha Fuel Pump Ind. Ltd., South Korea. This joint venture company would be primarily engaged in, inter alia, the business of manufacturing, selling and assembling fuel pumps, filters, starter motor and wiper blades in India, and such other products as mutually agreed.

- Sandhar Amkin Industries Pvt. Ltd. was incorporated under the Companies Act, 2013, on September 6, 2017 in Delhi. This company is a 50:50 joint venture between our Company and Amkin Group Pvt. Ltd., Delhi. This joint venture company would be primarily engaged in, inter alia, would be primarily involved in, inter alia, the business of designing, manufacturing, marketing, selling, helmet, helmet accessories and related parts, visors, safety headgear, riding protection accessories etc in India.

- Sandhar Daeshin Auto Systems Pvt. Ltd., has been incorporated on May 3, 2018. This company, which would be a 50:50 joint venture between our Company and Daeshin Machinery Ind., Co. Ltd., South Korea and is being set up for the manufacturing, assembly, and sale of gear shifters and parking breaks for the four-wheeler segment.

The Company had also signed notable Memorandum of Understanding (MOU) during the Financial Year 2017-18:

S.

Name of the Strategic

Country

Contract Products

Nature of

Date of

No.

Partner

Agreement

Agreement

1

Kwangsung Corporation Ltd.

South Korea

Sun Visors, Reservoir Tanks, Resonator, Glove Boxes

MOU

5th March, 2018

2

Whetron Electronics Co. Ltd.

Taiwan

Rear Parking Sensors, Door Alert System, Tyre Pressure Monitoring Systems, Rear Parking Cameras etc

MOU

9th May, 2018

Diversification in product range and continuing product development would add strength and vibrancy, on its way forward, to the Company''s operations.

In-house R & D Division:

Added to the aforesaid, is the real-time emphasis on Research and Development, wherefor a dedicated organizational wing, with requisite Government approvals in place, is in operation. The programs for innovations, as chartered out and time lines set therefor, are closely monitored for their proceeding apace.

New and/or Extended Manufacturing Units:

Sandhar Technologies Limited- CFD- Jaipur

JCB, the largest customer of the Company for the Cabins & Fabrication business, has awarded contract of fabrication and supply of skid steer loaders, backhoe loaders, wheel loaders, and the Load-alls etc. Since the supplies are to be made to JCB''s Jaipur plant, the Company has set up a new Unit at Jaipur, in close vicinity of JCB''s manufacturing units for ensuring easy and timely supplies to JCB. The plant has got commissioned in the month of February, 2018.

Sandhar Technologies Limited- Hosur

The Company has setup a new green field project at Hosur for one of its esteemed customer viz. TVS Motors for manufacturing of aluminium die casting components which has commenced operations with effect from March, 2018.

Overseas operations:

Effective from the 1st September ''2012, Sandhar Technologies Poland was started in Czestochowa. This plant being a finishing, assembling and logistic hub for parts required for manufacturing items in Europe, catalysis as a supply chain subsidiary of Sandhar Technologies Barcelona (Spain); the supervisional aspect, accordingly, vests in the latter.

As a second tier subsidiary company to Sandhar Technologies Barcelona (Spain), another initiative taken by setting up a unit in Mexico, which commenced operations in February ''2015, the items of manufacture being aluminium pressure die casting components and, over time, extend the range in a format found appropriate.

Overall, the Company is seeking to power a culture of continuing enterprise building and innovation imbued with rightful level of responsibility, transparency and accountability; besides giving a strategic push to those activities in hand towards reaching a stage of rightful fruition.

Future Outlook & Prospects

The global uncertainties, arising out of geo-political issues have dwindled to a large extent. This augurs well for the auto and automotive components sector, both in India as well as overseas. Coupled with this, the macro-economic conditions in India has drastically improved. The fiscal deficits are well under control, the inflationary pressures have subsided to a large extent and the interest rates are at an all-time low. With robust foreign exchange reserves, infrastructure push by the government, multiple demand drivers to pull the growth in the auto & auto component sector at play, we believe the Company is set to reap maximum benefits. Two wheeler segment with whom your Company is intimately associated since inception, has witnessed reasonably satisfactory increase in volume of sales and accompanying bottom-line parameters. The trend, might be expected to continue, hoping that policy and perception, so too events, would turn further better during the year.

Export Potential

The environment for direct export both to Europe and USA on the Company''s part is still to take wholesome shape, though the Company''s subsidiary: Sandhar Technologies, Barcelona, Spain has been operating on a sustainable basis, with some job work being handled by its subsidiary in Poland: Sandhar Technologies

Poland: the other subsidiary in Mexico might as well, given some more time, take on its role in a meaningful manner. It is hoped that against odds even, these enterprises shall remain on their feet.

INFORMATION TECHNOLOGY

The Company continues to take full advantage of Information Technology, leveraging it as a source of competitive advantage. As in earlier years, the enterprise wide Oracle ERP platform forms the backbone of IT and encompasses all core business processes in the Company and also provides a comprehensive data warehouse with analytics capability that helps in better and speedier decisions.

The Company continues to lay stress on IT infrastructure to support business applications and has made use of India''s expanded telecom footprint to provide high bandwidth terrestrial links to all operating units. The Company also uses software as a service to provide agile, cost effective IT capabilities in select areas. As the IT systems and related processes get embedded into the ways of working of the organization, there is a continuous focus on IT security and reliable disaster recovery management processes to ensure all critical systems are always available. These are periodically reviewed and tested for efficacy and adequacy.

CORPORATE GOVERNANCE

Corporate governance is an ethically driven business process that is committed to values and aimed at enhancing an organization''s brand and reputation. This is ensured by taking ethical business decisions and conducting business with firm commitment to values, while meeting stakeholders'' expectations. Further corporate governance is based on the principles of conducting the business with all integrity, fairness and being transparent with all the transactions, making the necessary disclosures and decisions, complying with the laws of the land, accountability and responsibility towards the stakeholders and commitment of conducting the business in an ethical manner. At Sandhar, it is ensured that Company''s affairs are managed in a fair and transparent manner. This is vital to continue to gain and retain the trust of its stakeholders.

A separate section on Corporate Governance standards followed by your Company and the relevant disclosures, as stipulated under the Listing Regulations, Companies Act, 2013 and Rules made thereunder, forms part of this Annual Report.

A Certificate from S.S. Gupta, Practising Company Secretary, confirming the compliance by the Company to the conditions of Corporate Governance as stipulated under the Listing

Regulations, is annexed to the Report on Corporate Governance, which forms part of this Annual Report.

DIRECTORS & KEY MANAGERIAL PERSONNEL

The Company''s policy is to maintain an optimum combination of Executive and Non-Executive Directors on the Board. The composition of the Board is as follows:

Managing Director-

Shri Jayant Davar

Non-Executive Directors

Shri Dharmendar Nath Davar

Smt. Monica Davar

Non-Executive Independent

Shri Arvind Kapur

Directors

Shri Ravinder Nagpal

Shri Krishan Lal Chugh

Shri Mohan Lal Bhagat

Shri Arjun Sharma

Executive Director

Shri Arvind Joshi

Nominee Director

Shri Gaurav Dalmia (since resigned

w.e.f. 20th April, 2018)

All the Non - executive Independent Directors are not disqualified to be appointed as such under the relevant provisions of the Companies Act, 2013 and the rules made thereunder and shall not be subject to determination by retirement of Directors by rotation. Under the provisions of Section 149, 150, 152, 160 of the Companies Act ''2013 be not liable, having been appointed for

5 years, to determination by retirement of Directors by rotation.

Resignation of Shri Gaurav Dalmia

During the year under review, Shri Gaurav Dalmia, resigned from directorship of the Company on the 20th April, 2018. Shri Dalmia was a nominee of GTI Capital Beta Pvt Ltd (GTI), and was appointed on the Board of the Company pursuant to the Shareholders'' Agreement dated the 31st March, 2012, executed between the Company, GTI and Company''s other shareholders, after GTI became a shareholder of the Company in 2012. His resignation was in terms of the said Shareholders'' Agreement, whereby the agreement terminated upon listing of the Company''s equity shares on the stock exchanges.

Resignation of Shri Chandra Mohan

During the year under review, Shri Chandra Mohan, resigned from directorship of the Company on the 29th November, 2017 due to health issues.

Resignation of Shri Arvind Pande

During the year under review, Shri Arvind Pande, resigned from directorship of the Company on the 16th February, 2018 due to some unavoidable circumstances.

Retirement of Directors by rotation

In terms of Section 152 of the Act, Shri Dharmendar Nath Davar, Chairman and Smt. Monica Davar, Non-Executive Director, shall retire by rotation at the ensuing AGM and being eligible, have offered themselves for re-appointment. Information as required under Regulation 36 (3) of the Listing Regulations is provided in the Notice of the 26th AGM.

Re-appointment of Shri Arvind Joshi, Whole-Time Director of the Company

Shri Arvind Joshi has been serving as the Whole Time Director of the Company since 1st June, 2013, in accordance with the provisions of the Companies Act, 2013, recommendation of the Nomination & Remuneration Committee and the Board of Directors and with the approval of the members. His current tenure as Whole Time Director of the Company is valid upto the 31st May, 2018. The Board of Directors at their meeting held on 26th May, 2018 based on the commendation of the Nomination & Remuneration Committee have decided to recommend the re-appointment of Shri Arvind Joshi as Whole Time Director with effect from 1st June, 2018 for a period of 5 (five) upto the 31st May, 2023, subject to the approval of members in the ensuing AGM.

Re-appointment of Shri Gaurav Dalmia, Additional NonExecutive and Independent Director of the Company

During the year under review, in terms of section 149, 150 & 152 of the Companies Act, 2013, the Board of Directors at its meeting held on the 26th May, 2018 appointed Shri Gaurav Dalmia as additional, Non-Executive, Independent Director to hold office from 26th May, 2018 till the ensuing Annual General Meeting of the Company based on the commendation of the Nomination & Remuneration Committee and to hold office for a period of 5 (five) consecutive years thereafter, subject to approval of the shareholders.

Brief Profile of Shri Gaurav Dalmia

Gaurav Dalmia is the Chairman of Dalmia Group Holdings, a holding company for business and financial assets. It invests in private equity, real estate, public markets, structured debt and fixed income.

He is an early investor in and a Board member of True North (formerly India Value Fund), a leading Indian private equity fund, which manages approximately .5billion. He is also the founder and Chairman of Landmark Holdings, a real estate investment firm, which has invested in more than 40 housing projects. He co-founded GTI, a long term investment vehicle for India focused investments.

He is a Board member of Brookings India. He was selected as a Global Leader for Tomorrow by the World Economic Forum in 2000. Gaurav Dalmia received an MBA with Beta Gamma Sigma honors from Columbia Business School.

Shri Dalmia has long time experience in variegated fields of activities, with focus on marketing and is very well spoken of as a professional of business acumen and result oriented approaches and action.

MEETINGS OF THE BOARD

Regular meetings of the Board are held to discuss and decide on various business policies, strategies, financial matters and other businesses. The schedule of the Board/Committee meetings to be held in the forthcoming quarter is circulated to the Directors in advance to enable them to plan their schedule for effective participation in the meetings. Due to business exigencies, the Board has also been approving some proposals by circulation from time to time.

During the year under review, six Board Meetings (besides an adjourned one) were convened and held and the interim gap between the meetings was as per the period prescribed under the Companies Act, 2013.

S.

No.

Date of Board Meeting

Board Strength

No. of Directors Present

1

25th May, 2017

12

11

2

29th August, 2017

12

10

3

18th November, 2017

12

9

4

19th December, 2017

11

10

5

07th March, 2018 (Original Meeting)

10

8

6

22nd March, 2018 (Adjourned Meeting)

10

8

7

29th March, 2018

10

9

Additionally, several Committee meetings were held during the year including Audit Committee. The detailed information on the meetings of the Committees are included in the Report on Corporate Governance, which forms part of this Annual Report.

Policy on Director’s appointment and remuneration

The current policy is to have an appropriate mix of executive and Independent Directors to maintain the independence of the Board, and separate its functions of governance and management. As on March 31'' 2018, the Board consists of ten members, two of whom are Executive or Whole-Time Director, two are Non-Executive Directors including one woman Director, one Nominee Director and five are Independent Directors. The Board periodically evaluates the need for change in its composition and size.

The Policy of the Company on Director''s appointment and remuneration including criteria for determining qualifications, positive attributes, independence of Directors and other matters provided under Section 178 (3) of the Companies Act, 2013 is adopted by the Board. The remuneration paid to the Directors is as per the provisions of Companies Act, 2013 and the rules thereunder. Annexure-IIA, Policy for Selection of Directors and determining Director''s Independence and Appointment and Remuneration Policies are annexed as Annexure - IIB.

Declaration by Independent Directors

The Company has received necessary declarations from each Independent Director under the provisions of Section 149 (7) of the Companies Act, 2013, that they meet the criteria of Independence as laid down in Section 149(6) of the Companies Act, 2013 and Regulation 16(1)(b) of the SEBI (Listing Regulations & Disclosure Requirements) Regulations, 2015 (the Listing Regulations).

Directors’ Remuneration Policy and Criteria for matters under Section 178

As stipulated under Section 178 of the Act and based on the commendation of the Nomination and Remuneration Committee, the Board has approved a Nomination and Remuneration Policy of the Company. The Policy documents the mechanism for appointment, cessation, evaluation and remuneration of the Directors, Key Managerial Personnel and Senior Management of the Company. Information on the Policy and details of the criteria for determining qualifications, positive attributes and other matters in terms of Section 178 of the Act are provided in the Corporate Governance Report.

Information on Board Meeting Procedure and attendance during the Financial Year 2017-18

The Board meetings of the Company are conducted as per the provisions of the Act, Listing Regulations and applicable Secretarial Standards. Information as mentioned in the Act and Schedule II to the Listing Regulations and all other material information, as may be decided by the management, is placed for consideration of the Board. Details on the matters to be discussed along with relevant supporting documents, data and other information is also furnished in the form of detailed agenda to the Board and the Committees concerned, to enable directors take critical decisions and accordingly advise the management.

Details regarding information furnished to the Board members, number of Committee and Board meetings held during the year along with attendance record of each director has been disclosed in the Corporate Governance Report of the Company.

Performance Evaluation of the Board

The Company has devised a Policy for performance evaluation of Independent Directors, Board, Committees and other individual Directors, which includes criteria for performance evaluation of the Non-Executive Directors and Executive Directors. On the basis of the laid out Policy, a process of evaluation was followed by the Board for its own performance and that of its Committees and individual Directors including Chairman.

The Company is committed to benchmark itself with best practices and standards in all areas including Corporate Governance. To this end, the Board has the analytical and functional support of Committee of Directors, Audit Committee, Nomination & Remuneration Committee & Corporate Social Responsibility Committee. The system brings insight & effectiveness in to the designated areas of Corporate Governance.

Committees of the Board

Currently, the Board has Six Committees which have been established in compliance with the requirements of the business and relevant provisions of the applicable laws and statutes. These are:

1. Audit Committee

2. Nomination & Remuneration Committee

3. Stakeholders Relationship Committee

4. Share Transfer & Allotment Committee

5. Corporate Social Responsibility Committee

6. IPO Committee

The details with respect to the composition, terms of reference, number of meetings held, etc of these Committees are given in the Report on Corporate Governance which forms part of this Annual Report.

Corporate Social Responsibility (CSR) Committee

In compliance with Section 135 of the Companies Act, 2013 read with the Companies (Corporate Social Responsibility Policy), Rules, 2014, the Company has established Corporate Social Responsibility Committee ( the CSR Committee) and statutory disclosures with respect to the CSR Committee and an annual report on CSR activities forms part of this Report as Annexure VI.

In this regard following the recommendation of the said Committee, the Board has approved the CSR policy, which is also available on the website of the Company i.e. www.sandhar.co.in.

The composition of the CSR Committee is covered under the Corporate Governance Report which forms the part of the Annual Report.

Insider Trading Policy for prevention of insider trading and fair disclosure of Unpublished Price Sensitive Information

In terms of the SEBI (Prohibition of Insider Trading) Regulations, 2015, the Company has adopted an Insider Trading Policy Further, the Company has also adopted a Corporate Policy on Investor Relations

The Insider Trading Policy and Corporate Policy on Investor Relations are drawn up on the principle that the Company''s directors and employees owe a fiduciary duty, amongst others, to the shareholders of the Company to place the interest of shareholders above their own and conduct their personal securities transactions in a manner that does not give rise to any conflict of interest. These codes lay down the mechanism for ensuring timely and adequate disclosure of Unpublished Price Sensitive Information (UPSI) to the investor community by the Company to enable them take informed investment decisions with regard to its securities.

The Insider Trading Policy prescribes the procedure for trading in securities of the Company and the disclosures to be made by persons covered under the Insider Trading Policy with respect to their shareholding in the Company, both direct and indirect.

Directors’ Responsibility Statement

Pursuant to the provisions of Section 134(5) your Directors state that:

(i) In the preparation of annual accounts for the year ended March 31'' 2018, the applicable accounting standards read with requirements set out under Schedule III to the Act, have been followed along with proper explanation relating to 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 as at March 31st 2018 and of the Profit of the Company for the year ended on that date;

(iii) The Directors have 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, and

(iv) The Directors have prepared the annual accounts 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 operating effectively.

(vi) The Directors have devised proper systems to ensure compliance with the provisions of all the applicable laws and that such Systems are adequate and operating effectively.

Policies of the Company

The Company is committed to high ethical standards in its business transactions guided by its value systems. The Listing Regulations mandate formulation of certain policies for listed companies. Accordingly, the Board of Directors have from time to time framed and approved policies as required by the Listing Regulations as well as under the Act. These policies are reviewed by the Board at periodic intervals

Some of the key policies that have been adopted are as follows:

S.No

Name of Policy

1

Code of Conduct Policy

2

Related Party Transactions

3

Remuneration Policy

4

Whistle Blower Policy

5

Independent Director Policy

6

Policy on Material Subsidiaries

7

Insider Trading Policy

8

CSR Policy

The Polices are available on the Company''s website on the link www.sandhar.co.in/investor-relations/corporate governance.

Business Risk Management

Pursuant to Section 134 (3) (n) of the Companies Act, 2013 the Company may constitute a Business Risk Management Committee which shall be entrusted with the responsibility to assist the Board in:

- Formulating and implementing Risk Management Policy;

- Overseeing and approving the Company''s enterprise wide risk management framework; and

- Overseeing that all the risks that the Company faces such as strategic, financial, credit, market, liquidity, property, IT, legal, regulatory, reputational, employee and other risks have been identified and assessed and there is an adequate risk management infrastructure in place capable of addressing those risks.

At present the Company has not identified any element of risk which may perceptibly threaten the existence of the Company.

Vigil Mechanism / Whistle Blower Policy

The Vigil Mechanism of the Company, which also incorporates a Whistle Blower Policy is in place. There has been no case to report for the year. The Policy on Vigil Mechanism and Whistle Blower Policy may be accessed on the Company''s website www. sandhar.co.in

Disclosure under Sexual Harassment of Women at Work place (Prevention, Prohibition & Redressal) Act, 2013

There has been no case during the year requiring to be reported during the year under review.

Auditors

M/s. BSR & Co. LLP, Chartered Accountants (Firm''s Registration No. 101248W/W-00022), hold office up to the conclusion of the 30th AGM.

M/s. BSR & Co. LLP were appointed as Statutory Auditors of the Company from the conclusion of 25th AGM i.e. from 29th July, 2017 and thereafter they have been re-appointed every year. In terms of Section 139 of the Act read with Rule 6 of the Companies (Audit and Auditors) Rules, 2014, pertaining to mandatory rotation of auditors, the term of appointment of M/s. BSR & Co. LLP as Statutory Auditors of the Company expires at the conclusion of the 30th AGM and they are not eligible for reappointment.

The Auditors'' Reports, including the one on Internal Financial Controls, does not carry any observation or infirmity in the Company''s affairs.

Secretarial Audit

Pursuant to the provisions of the Companies Act, 2013 M/s. S. S. Gupta, a firm of Company Secretaries in Practice had been appointed to undertake the Secretarial Audit, whose Audit Report is annexed vide Annexure - III. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark.

Cost Audit

The Board has appointed M/s. A.N. Satija & Co, Cost Auditors for conducting the audit of cost records of the Company for its business for the financial year 2018-19.

Internal Control Systems and Adequacy thereof

The Company''s internal control systems as laid down are commensurate with the nature of its business, the size and the complexity of its operations. These are tested and certified by Statutory as well as Internal Auditors and cover all factories and key areas of business. Significant audit observations and follow up action thereon are reported to the Audit Committee. The Audit Committee, as aforesaid, reviews adequacy and effectiveness of the Company''s internal control environment including in-house Commercial Audit headed by a senior professional and monitors the implementation of audit recommendations, including those relating to strengthening and adequacy of the Company''s Risk Management policies and systems.

Extract of Annual Return

Extract of Annual Return of the Company is annexed as Annexure- IV to this Report.

Particulars of Employees and related disclosures

A Statement containing Particulars of Employees as required under Section 197(12) read with Rule 5(1) of the Companies (Appointment & Remuneration of Managerial Personnel) Rules, 2014 is annexed in Annexure- V.

General

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

Neither the Managing Director nor the Whole-Time Director of the Company receive any remuneration or commission from any of its subsidiaries.

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

Conservation of Energy, Technology Absorption, Foreign Exchange Inflow and Outflow

The information pertaining to conservation of Energy, Technology Absorption and Foreign Exchange Inflow and Outflow pursuant to Section 134(3) (m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014 given in Annexure VII which forms a part of this Report.

Personnel & Industrial Relations

Cordial atmosphere across functional verticals / units contributed, as before, to the overall satisfactory performance of the Company. The Directors place on record their deep appreciation of the inspiring and motivating leadership provided by the CoChairman & Managing Director, ably supported by Whole-time Director, Chief Financial Officer & Company Secretary and the commendable team work done by the executives, staff and workers at all levels in various units at different locations.

Acknowledgement

Your Directors are grateful for the co-operation and guidance received from HSIIDC, RIICO, State Bank of India, Citibank NA, IndusInd Bank, Yes Bank, DBS Bank, GE Money Financial Services Ltd and ICICI Bank Ltd., HDFC Bank Limited, TATA Capital Financial Services Limited The Board specially wishes to place on record their sincerest gratitude for the patronage it received from Hero MotoCorp Limited, Honda Cars India Limited, Honda Motorcycle and Scooters Limited, TVS Motor Company Limited, Eicher Motors and Tata Motors Limited.

For and on behalf of the Board of Directors

Sandhar Technologies Limited

Jayant Davar D. N. Davar

Co-Chairman & Chairman

Managing Director DIN: 0002008

Dated the 26.05.2018 DIN: 00100801

Source : Dion Global Solutions Limited
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