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Sanathnagar Enterprises Ltd.

BSE: 509423 Sector: Infrastructure
NSE: BAKELHYLAM ISIN Code: INE367E01017
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Sanathnagar Enterprises Ltd. (BAKELHYLAM) - Director Report

Company director report

Dear Members

The Directors have pleasure in presenting the 69th Annual Report along withthe Audited Financial Statements of the Company for the financial year ended 31stMarch 2016.

1. FINANCIAL RESULTS & OVERVIEW

(Rs. in lakhs)
Particulars For the financial year ended March 31 2016 For the financial year ended March 31 2015
Total Income 12569.71 2489.01
Total Expenses 9348.95 2446.18
Profit before tax 3220.76 42.83
Less: Tax Expenses 1132.33 15.06
Less: Other prior period tax adjustments - 0.07
Net Profit for the year 2088.43 27.84

Results of operations and the state of the Company’s affairs

During the financial year 2015-16 total income increased by 405% to Rs. 12569.71lakhs from Rs. 2489.01 lakhs for the financial year 2014-15. Total expenses increased by282.18% to Rs. 9348.95 lakhs for the financial year 2015-16 from Rs. 2446.18 lakhs forthe financial year 2014-15.

The net profit after tax for the financial year 2015-16 has increased to Rs. 2088.43lakhs as compared to a net profit of Rs. 27.84 lakhs during the financial year 2014-15.

2. RESERVES

The Board does not recommend any amount to be transferred to the reserves for thefinancial year ended March 31 2016.

3. DIVIDEND

With a view toof conserving resources the Board does not recommend any dividend forthe financial year ended March 31 2016.

4. BUSINESS & SECTOR REVIEW

Indian Economy

India has emerged as the fastest growing major economy in the world as per the CentralStatistics Organisation (CSO) and International Monetary Fund (IMF). According to theEconomic Survey 2015-16 the Indian economy will continue to grow more than 7 per cent in2016-17. The improvement in India’s economic fundamentals has accelerated in the year2015 with the combined impact of strong government reforms RBI’s inflation focussupported by benign global commodity prices. India was ranked the highest globally interms of consumer confidence during October-December quarter of 2015 continuing itsearlier trend of being ranked the highest during first three quarters of 2015 as per theglobal consumer confidence index created by Nielsen.

According to IMF World Economic Outlook Update (January 2016) Indian economy isexpected to grow at 7-7.75 per cent during FY 2016-17 despite the uncertainties in theglobal market. The Economic Survey 2015-16 had forecasted that the Indian economy willgrowing by more than seven per cent for the third successive year 2016-17 and can startgrowing at eight per cent or more in next two years. Foreign direct investment (FDI) inIndia has increased by 29 per cent during October 2014-December 2015 period post thelaunch of Make in India campaign compared to the 15-month period before the launch.

Source http://www.ibef.org/economy/indian-economy-overview

Industry review

The Indian real estate sector has witnessed high growth in recent times with the risein demand for office as well as residential spaces. According to data released byDepartment of Industrial Policy and Promotion (DIPP) the construction development sectorin India has received Foreign Direct Investment (FDI) equity inflows to the tune of US$24.156 billion in the period April 2000-September 2015. Real estate is currently thefourth-largest sector in the country in terms of Foreign Direct Investment (FDI) inflows.

The Indian real estate market is expected to touch US$ 180 billion by 2020. The housingsector alone contributes 5-6 % to the country’s Gross Domestic Product (GDP). In theperiod FY08-20 the market size of this sector is expected to increase at a CompoundAnnual Growth Rate (CAGR) of 11.2 %. Retail hospitality and commercial real estate arealso growing significantly providing the much-needed infrastructure for India’sgrowing needs.

Source http://www.ibef.org/economy/indian-economy-overview

Hyderabad real estate

Hyderabad residential real estate is driven by a mix of both investors and end users.There has been a marked preference for apartments in multi-storeyed buildings in a varietyof price ranges depending on the purchasing power of the buyer. Many areas on the west ofHyderabad like Gachibowli HITEC City Kukatpally Madhapur and Chandanagar have witnessedincreased demand due to their proximity to the IT hub along with other factors such asexcellent connectivity developed infrastructure and availability of good residentialdevelopment in Hyderabad at affordable prices in these locations.

Source ICICI property services Hyderabad Real estate overview 2016

Government Initiatives

The Government of India along with the governments of the respective states has takenseveral initiatives to encourage the development in the sector. The Smart City Projectwhere there is a plan to build 100 smart cities is a prime opportunity for the realestate companies. Below are some of the other major Government Initiatives:

• Prime Minister Mr. Narendra Modi approved the launch of Housing for All by 2022.Under the Sardar Patel Urban Housing Mission 30 million houses will be built in India by2022 mostly for the economically weaker sections and low-income groups throughpublic-private-partnership (PPP) and interest subsidy.

• The Government of India has relaxed the norms to allow Foreign Direct Investment(FDI) in the construction development sector. FDI limits for townships and settlementdevelopment projects have been raised to 100%. Real estate projects within the SpecialEconomic Zone are also permitted 100 per cent FDI. This move should boost affordablehousing projects and smart cities across the country.

• The Securities and Exchange Board of India has notified final regulations thatwill govern real estate investment trusts (REITs) and infrastructure investment trusts.This move will enable easier access to funds for cash-strapped developers and create a newinvestment avenue for institutions and high net worth individuals and eventually ordinaryinvestors.

• The Government of Maharashtra announced a series of measures to bringtransparency and increase the ease of doing business in the real estate sector.

• The Real Estate (Regulation & Development) Act 2016 which seeks to protecthome-buyers as well as help boost investments in the real estate industry was enacted inMay 2016.

Opportunities and challenges: Opportunities

As India awaits policy reforms to pick up speed your Company firmly believes that thedemand for Real Estate in a country like India should remain strong in the medium to longterm. Your company is ideally placed to further strengthen its development potential byacquiring new land parcels.

Challenges

While the management is confident of creating and exploiting the opportunities it alsofinds the following challenges:

• Unanticipated delays in project approvals

• Availability of accomplished and trained labour force

• Increased cost of manpower

• Rising cost of construction

• Growth in auxiliary infrastructure

• Over-regulated environment

Risks and concerns

Market price fluctuation

The performance of your Company may be affected by the sales realizations of itsprojects. These prices are driven by prevailing market conditions the nature and locationof the projects and other factors such as brand and reputation and the design of theprojects. Your company follows a prudent business model and tries to ensure steady cashflow even during adverse pricing scenario.

Sales volume

The volume of bookings depends on the ability to design projects that will meetcustomer preferences getting various approvals in time general market factors projectlaunch and customer trust in entering into sale agreements well in advance of receivingpossession of the projects. Your Company sells its projects in phases from the time itlaunches the project based on the type and scale of the project and depending on marketconditions

Outlook

FY2016 outlook would be governed by the implementation of REIT Regulations theproposed New Real Estate Bill and the New Development Plan for Mumbai. We expect FY2016 tobe the start of growth year for the Indian economy as a whole in view of various measuresbeing taken by the new government to boost manufacturing and infrastructure development inthe country. Economists expect India’s GDP growth in the range of 7.0-8.0% forFY2016. Your company will target to ensure steady operations and deliver high qualityprojects for its customers.

Business Overview

The Company’s Casa Paradiso project is a large mid income residential developmentwith supersized 3 room residences in at Sanathnagar in Central Hyderabad. The targetprofile of this project is the middle / upper middle income segment of the market. Theproject has been designed by Hafeez Contractor one of the India’s largest and mostreputed architectural firms.

5. EXTRACT OF ANNUAL RETURN

Pursuant to the provisions of Section 92(3) of the Companies Act 2013 (‘theAct’) and Rule 12(1) of the Companies (Management and Administration) Rules 2014extract of the Annual Return is annexed as Annexure-I.

6. CHANGES IN SHARE CAPITAL

During the financial year 2015-16 there has been no change in the equity share capitalof the Company.

7. DIRECTORS AND KEY MANAGERIAL PERSONNEL

Appointment

Mr. Umashankar Hegde and Mr. Bhushan Shah were appointed as Additional Directors (bothIndependent) on the Board of the Company on 05th November 2015 and 07thJuly 2016 respectively and hold office upto the date of the ensuing Annual GeneralMeeting. Your Company has received notices from shareholders along with requisite depositsproposing their candidatures for appointment as Independent Directors for period of 5years at the ensuing Annual General Meeting.

Mr. Vishal Ghadigaonkar was appointed as Chief Financial Officer and Mr. ManinderChhabra was appointed as Manager with effect from 13th October 2015 and 05thFebruary 2016 respectively.

Re-appointment

As per the provisions of the Companies Act 2013 Ms. Purnima Pavle will retire at theensuing Annual General Meeting and being eligible offers herself for reappointment.

Resignation

Mr. Sagar Gawde and Mr. Deependra Gupta and Santoshkumar Ojha resigned as IndependentDirectors of the Company with effect from 03rd August 2015 and 05thNovember 2015 (close of business hours) and 08 April 2016 respectively.

Mr. Santosh Kumar Ojha resigned as an Independent Director of the Company w.e.f. 8thApril 2016 (he was appointed as an Additional Director (in the category of IndependentDirector w.e.f. 5th November 2015).

Further Mr. Deepak Chitnis resigned as Manager of the Company with effect from 05thFebruary 2016.

Mr. Babusingh Rajguru and Mr. Sharatkumar Shetty continued to be a Director and CompanySecretary of the Company respectively during the year under review.

8. BOARD MEETINGS

During the financial year 2015-16 8 (Eight) Board Meetings were held on 30thApril 201515th May 2015 10th June 2015 22nd July2015 12th August 2015 13th October 2015 05thNovember 2015 and 05th February 2016 in accordance with the provisions of theCompanies Act 2013 and rules made thereunder. The intervening gap between two meetingswas within the period specified in the Companies Act 2013 the Secretarial Standards andthe Listing Regulations. Details of meetings attended by the Directors during the yearended March 31 2016 are as below:

Sr. No. Name of Director(s) Category Number of Meetings which director was entitled to attend Total no. of board meetings attended
1. Purnima Pavle Non-Executive Director & Chairperson 8 8
2. Babusingh Rajguru Non-Executive Director 8 8
3. Sagar Gawde1 Independent Director 4 4
4. Deependra Gupta2 Independent Director 7 7
5. Umashanker Hegde3 Independent Director 2 2
6. Santosh Kumar Ojha4 Independent Director 2 2

1 Mr. Sagar Gawde resigned from the Board w.e.f. 03rd August 2015.

2 Mr. Deependra Gupta resigned from the Board w.e.f. 05th November 2015(close of business hours).

3 Mr. Umashankar Hegde appointed as Independent Director of the Company w.e.f. 05thNovember 2015

4 Mr. Santosh Kumar Ojha appointed as Independent Director of the Company w.e.f. 05thNovember 2015.

9. COMMITTEES OF BOARD

The details of composition of the Committees of the Board of Directors are as under:-

a. AUDIT COMMITTEE:

The Audit Committee has been constituted by the Board of Directors of the Company inaccordance with the provisions of Section 177 of the Companies Act 2013. The AuditCommittee met five times during the year i.e. on 30th April 2015 12thAugust 2015 13th October 2015 05th November 2015 and 05thFebruary 2016. The intervening gap between two meetings was within the period specifiedin the Companies Act 2013 and the Secretarial Standards and the Listing Regulations. Thecomposition meetings and attendance of the Audit Committee as on 31st March 2016 isgiven as under:

Sr. No. Name of Members Category Total no. of meetings attended
1. Umashankar Hegde 1 Chairman 1
2. Purnima Pavle Member 5
3. Sagar Gawde 2 Chairman 1
4. Deependra Gupta 3 Member 4
5. Santosh Kumar Ojha 4 Member 1

1 Mr. Umashankar Hegde was appointed as Chairman of the Committee w.e.f. 05thNovember 2015

2 Mr. Sagar Gawde resigned as a Chairman of the Committee w.e.f. 03rdAugust 2015.

3 Mr. Deependra Gupta resigned as a member of the Committee w.e.f. 05thNovember 2015.

4 Mr. Santosh Kumar Ojha appointed as member of the Committee w.e.f. 05thNovember 2015.

b. NOMINATION & REMUNERATION COMMITTEE:

In accordance with the provisions of Section 178 of the Companies Act 2013 the Boardhas constituted a Nomination and Remuneration Committee (NRC). The Nomination &Remuneration Committee met four times during the year i.e. on 22nd July 201513th October 2015 05th November 2015 and 05thFebruary 2016. The composition meetings and attendance of the Nomination andRemuneration Committee (NRC) as on 31st March 2016 are given as under:

Sr. No. Name of Members Category Total no. of meetings attended
1. Umashankar Hegde 1 Chairman 1
2. Babusingh Rajguru 4 Member 4
3. Sagar Gawde 1 Member 1
4. Deependra Gupta 3 Member 3
5. Santosh Kumar Ojha 1 Member 1

1 Mr. Umashankar Hegde was appointed as Chairman of the Committee w.e.f. 05thNovember 2015

2 Mr. Sagar Gawde resigned as a member of the Committee w.e.f. 03rd August2015.

3 Mr. Deependra Gupta resigned as a Chairman of the Committee w.e.f. 05thNovember 2015 (close of business hours).

4 Mr. Santosh Kumar Ojha appointed as member of the Committee w.e.f. 05thNovember 2015.

The policy on Directors appointment and remuneration for Directors Key ManagerialPersonnel Senior Management Personnel including policy for performance evaluation ofIndependent Directors Board Committees and other individual Directors is attached as AnnexureII.

c. CORPORATE SOCIAL RESPONSIBILITY COMMITTEE:

The Board of Directors of your Company has constituted a Corporate SocialResponsibility Committee ("CSR") and also approved its terms of reference inline with the provisions of Section 135 of the Companies Act 2013 read together with theRules made thereunder. The CSR Committee met twice during the year i.e. on 30thApril 2015 and 05th February 2016. The composition meetings and attendanceof the CSR Committee as on 31st March 2016 is given as under:

Sr. No. Name of Members Category Total no. of meetings attended
1. Babusingh Rajguru Chairman 2
2. Umashankar Hegde 1 Member 1
3. Sagar Gawde 2 Member 1
4. Deependra Gupta 3 Member 1
5. Santosh Kumar Ojha 4 Member 1

1 Mr. Umashankar Hegde appointed as member of the Committee w.e.f. 05thNovember 2015

2 Mr. Sagar Gawde resigned as a member of the Committee w.e.f. 03rd August2015.

3 Mr. Deependra Gupta resigned as a member of the Committee w.e.f. 05thNovember 2015 (close of business hours).

4 Mr. Santosh Kumar Ojha appointed as member of the Committee w.e.f. 05thNovember 2015.

The details required under the Companies (Corporate Social Responsibility Policy)Rules 2014 are given in CSR Report appended as Annexure II to this Report. The CSRPolicy of the Company is also annexed to this Report as Annexure III of thisReport.

d. STAKEHOLDERS RELATIONSHIP COMMITTEE:

The Board has changed the nomenclature of the Shareholders’/ Investors GrievanceCommittee has been changed toalready constituted Stakeholders Relationship Committee inaccordance with Section 178 of the Companies Act 2013. The Stakeholders RelationshipCommittee met four times during the year i.e. on 30th April 2015 12thAugust 2015 05th November 2015 and 05th February 2016. Thecomposition meetings and attendance of the Stakeholders Relationship Committee as on 31stMarch 2016 is given as under:

Sr. No. Name of Members Category Total no. of meetings attended
1. Umashankar Hegde 1 Chairman 1
2. Babusingh Rajguru Member 4
3. Sagar Gawde 2 Member 1
4. Deependra Gupta 3 Member 3
5. Santosh Kumar Ojha 4 Member 1

1 Mr. Umashankar Hegde appointed as Chairman of the Committee w.e.f. 05thNovember 2015

2 Mr. Sagar Gawde resigned as a member of the Committee w.e.f. 03rd August2015.

3 Mr. Deependra Gupta resigned as a Chairman of the Committee w.e.f. 05thNovember 2015 (close of business hours).

4 Mr. Santosh Kumar Ojha appointed as member of the Committee w.e.f. 05thNovember 2015.

10. DECLARATION BY INDEPENDENT DIRECTORS

The Company has received declarations from the Independent Directors confirming thatthey meet the criteria of independence laid down in Section 149(6) of the Companies Act2013.

11. BOARD EVALUATION

In terms of the requirements of the Act the Board carried out the annual performanceevaluation of the Board as a whole Board Committees and the Directors. During the yearunder review in terms of the requirements of the Companies Act 2013 the BoardEvaluation cycle was completed by the Company internally which included the evaluation ofthe Board as a whole Board Committees and Directors. The evaluation process focused onvarious aspects of the functioning of the Board and Committees such as composition of theBoard and Committees experience and competencies performance of specific duties andobligations etc. A separate exercise was carried out to evaluate the performance ofindividual Directors on parameters such as attendance contribution and independentjudgement. The results of the evaluation were shared with the Board Chairman ofrespective Committees and individual Directors. Based on the outcome of the Evaluationthe Board and Committees have agreed on an action to further improve the effectiveness andfunctioning of the Board and Committees.

The policy on Directors appointment and remuneration for Directors Key ManagerialPersonnel Senior Management Personnel including policy for performance evaluation ofIndependent Directors Board Committees and other individual Directors is attached as AnnexureIV.

12. AUDIT & AUDITORS a. Report on Statutory Audit

The Report given by the Auditors on the financial statements of the Company is part ofthe Annual Report. There is no qualification reservation adverse remark or disclaimergiven by the Auditors in their Report

. b. Statutory Auditors

M/s. Shanker and Kapani Chartered Accountants were appointed as Statutory Auditors atthe 67th Annual General Meeting for the period of 5 years subject toratification of members at every Annual General Meeting. However pursuant to theirresignation letter received from M/s Shanker and Kapani Chartered Accountants on 03rdSeptember 2016 M/s Shanker and Kapani Chartered Accountants expressed expressingtheir inability to continue as Auditors of the Company due to their pre-occupation.

The Board of Directors of the Company at its Meeting held on 3rd September2016 appointed M/s MZSK & Associates Chartered Accountants as the Statutory Auditorsof the Company to fill the casual vacancy. The new auditors would who hold the office tillthe conclusion of the 69th Annual General Meeting.

FurtherIn view of the above the Board proposes M/s. MZSK & Associates CharteredAccountants to be appointed as Statutory Auditors of the Company for period of five yearsfrom the conclusion of the 69th th Annual General Meeting till the conclusionof the 74th th Annual General Meeting of the Company to be held in the year2021 (subject to ratification of the appointment by the Members at every Annual GeneralMeeting held after the 69th Annual General Meeting).

A proposal seeking their appointment has been incorporated in the Notice of the AnnualGeneral Meeting

c. Internal Audit

Pursuant to Section 138 of the Companies Act 2013 and as per the recommendation of theAudit Committee the Board of Directors appointed Mr. Parag Parekh Chartered Accountantas an Internal Auditor of the Company during the year 2014-15. The audit carried out byhim is on half yearly basis. Further the report issued by an Internal Auditor is reviewedon an on-going basis in the Meetings of the Audit Committee and of the Board andappropriate actions are taken as per the directions of the Audit Committee by the Board.

d. Secretarial Audit

M/s. Shravan A. Gupta and Associates (Membership No. A27484 CP No. 9990) PracticingCompany Secretary has been appointed as the Secretarial Auditor of the Company in place ofMs. Jinal Dawda (Membership No. A20255 CP No. 9830) Practicing Company Secretary tocarry out the Secretarial Audit for the financial year 2015-16. The Secretarial AuditReport issued by M/s Shravan A. Gupta and Associates in form MR-3 for the financial year2015-16 forms part of this report and is annexed as Annexure VII. The said reportdoes not contain any observation or qualification requiring explanation or comments fromthe Board except as disclosed herein under the Section 134(3) of the Companies Act 2013.

13. LOANS GUARANTEES SECURITY & INVESTMENT

The Company is engaged in the business of a company providing "infrastructuralfacilities" as defined in Schedule VI of the Companies Act 2013 and therefore theprovisions of Section 186 are not applicable to any loans and guarantee given or securityprovided by the Company in terms of exemption provided u/s 186(11) (a). The Company hasnot made any investments during the financial year ended 31st March 2016.

14. RELATED PARTY TRANSACTIONS

The transactions/contracts/arrangements falling within the purview of provisions ofSection 188(1) of the Companies Act 2013 entered by the Company with related parties asdefined under the provisions of Section 2(76) of the Companies Act 2013 during thefinancial year under review were in the ordinary course of business and have beentransacted at arm’s length basis.

Further there are no transactions/contracts/arrangements entered by the Company withrelated party(ies) as defined under the provisions of Section 2(76) of the Companies Act2013 during the financial year 2015-16 that are required to be reported in Form AOC-2and as such does not form part of the Report.

15. HOLDING COMPANY SUBSIDIARIES JOINT VENTURE AND ASSOCIATES

The Company continues to be a subsidiary of Siddhnath Residential Paradise PrivateLimited which in turn is the subsidiary of Lodha Developers Private Limited. The ultimateholding Company of the Company is Sambhavnath Infrabuild and Farms Private Limited.

During the year under review the Company did not have any subsidiary joint venturesor associate companies.

16. RISK MANAGEMENT

Your Company has adopted a Risk Management policy which is based on three pillars:Business Risk Assessment Operational Controls Assessment and Policy Compliance processes.Major risks identified by the businesses and functions are systematically addressedthrough mitigating actions on a continuing basis. The key risks and mitigating actions arealso placed before the Board of Directors of the Company.

17. INTERNAL FINANCIAL CONTROLS

Internal Financial Controls with reference to financial statements as designed andimplemented by the Company are adequate. During the year under review no material orserious observation has been received from the Statutory Auditors and the InternalAuditors of the Company on the inefficiency or inadequacy of such controls.

18. INTERNAL CONTROL SYSTEMS

The Company’s internal control systems are commensurate with the nature of itsbusiness and the size and complexity of operations. These systems are routinely tested andcertified by Statutory as well as Internal Auditor and cover all offices sites and keybusiness areas. Significant audit observations and follow up actions thereon are reportedto the Board/ Audit Committee. The Board / Audit Committee reviews adequacy andeffectiveness of the Company’s internal control environment and monitors theimplementation of audit recommendations including those relating to strengthening of theCompany’s risk management policies and systems. These systems provide a reasonableassurance in respect of financial and operational information complying with applicablestatutes safeguarding of assets of the Company prevention & detection of fraudsaccuracy & completeness of accounting records and ensuring compliance with corporatepolicies.

19. VIGIL MECHANISM

The Company has established a vigil mechanism process by adopting a Vigil Mechanism /Whistle Blower Policy Transparency & Ethics Policy for directors and employees. Thispolicy outlines the procedures for reporting handling investigating and deciding on thecourse of action to be taken in case inappropriate conduct / behaviour is/are noticedreported or suspected. The Policy provides for adequate safeguards against victimizationof persons who use the mechanism and has a process for providing direct access to theOmbudsman in appropriate or exceptional cases. The employees of the Company have the rightto report their concern or grievance to the Chairman of the Audit Committee. The Companyis committed to adhere to the highest standards of ethical moral and legal conduct ofbusiness operations. The Vigil Mechanism / Whistle Blower Policy is Transparency andEthics Policy is posted on the Company’s website www.sanathnagar.in.

20. MINIMUM PUBLIC SHAREHOLDING AS PER SECURITIES CONTRACT (REGULATION) (AMENDMENT)RULES 2010

The Company is in the process of complying with the requirement of Rule 19(2)(b) ofSecurities Contract (Regulation) (Amendment) Rules 2010 with regard to achieving publicshareholding to the prescribed minimum level of 25% of the total equity shares issued bythe Company.

21. DISCLOSURE UNDER SECTION 197(12) OF THE COMPANIES ACT 2013 AND OTHER DISCLOSURESAS PER RULE 5 OF COMPANIES (APPOINTMENT & REMUNERATION) RULES 2014

In terms of the provisions of Section 197(12) of the Act read with Rules 5(2) and 5(3)of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014athere are no statement showing the names and other particulars of the employees drawingremuneration in excess of the limits set out in the said rRules is provided in the AnnualReport.

Disclosures pertaining to remuneration and other details as required under Section197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 are provided in Annexure VI of the Annual Report.

22. HUMAN RESOURCES

The objective of the human resources department at your Company is to attract the besttalent build employee capability and nurture the right culture to deliver on the businessgoals. We believe that an inspired involved and invigorated workforce makes all thedifference to being what we are today. Our vision values and Associate Value Propositionare the foundational blocks that drive our associates to make their work meaningful. Thisyear the focus largely remained on strategic hiring laterally and from Premier campusescapability building through developmental programs and sharpening our people focus byputting in place a comprehensive Talent Management program. The objective is to provideour talent with an environment that fosters continuous learning recognition innovationleadership development and employee well-being. The human resources function is the primecustodian of the culture at your Company.

23. DETAILS OF CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGSAND OUTGO

The particulars as required under the provisions of Section 134(3)(m) of the CompaniesAct 2013 read with Rule 8 of the Companies (Accounts) Rules 2014 in respect ofconservation of energy technology absorption foreign exchange earnings and outgo etc.are furnished in below:

(A) Conservation of energy
(a) Energy conservation measures taken • Installation of solar powered street lights at its township projects
• Use of variable frequency drives for all its elevators and air-conditioning equipment.
• Occupation censor controlled lighting and air-conditioning through home automation in its projects.
• Extensive use of materials like fly ash GGBS etc. at all its projects resulting in saving of cement thus indirectly saving energy consumed in manufacturing of cement.
• At all its major projects electrical designs have been fine tuned to contain the voltage drop to less than 5%.
• Use of low voltage PL lamps.
(b) Capital Investment on Energy Conservations Equipment • Variable frequency drives for all its elevators and air-conditioning equipment.
• Censor controlled lighting and air-conditioning through home automation
(c) Steps taken for utilizing alternate source of energy • solar water heaters and solar powered street lights Same as Above
(d) Impact of measures for reduction of energy consumption • Reduction in overall maximum demand for the electricity in all its projects and consequent energy saving benefits to the residents.
• Measures to achieve eco balance have been taken at the major sites of large developments by providing extensive green cover and creating water bodies by treating waste water and rain harvesting.
• Waste water equipment plants are installed at all major projects for treating waste water and utilising it for air-conditioning watering of green spaces and flushing.
• Providing dust control systems for the concrete batching plant across its projects.
• Complete ban on use of mud bricks in construction and using light weight blocks which helps soil conservation and utilization of material like fly ash which otherwise would cause air pollution.
• Minimise use of paper in its offices across all sites.Regulated water and power supply to labour camps across all sites.
• Plantation of large number of trees and providing extensive green cover creating water bodies to enhance the ecology and environment.
• Use of fly ash and other minerals in the construction to reduce cement consumption thus indirectly saving the energy used for manufacture of cement.
• State of the art electronic parking management system installed to accommodate and control the movement of large number of vehicles thus helping de-congestion of the roads in the area resulting in smooth and faster passing of traffic thereby reducing fuel consumption and pollution caused due to carbon monoxide by idle running of vehicles.
• Use of crushed sand in the construction instead of natural sand thus helping environmental degradation as natural sand is normally dredged from the river beds.
• Crushing stones obtained from excavation at the construction site itself thus saving the transportation for disposal of stones as well as import of crush aggregate saving both ways transportation and thus saving fuel.
(B) Technology absorption
(a) Efforts in brief made towards technology Nil absorption adaptation and innovation
(b) Benefits derived as result of above efforts Nil e.g. product improvement cost reduction product development import substitution etc
(c) In case of imported technology (imported Nil during the last three years reckoned from the beginning of the financial year) following information may be furnished
a) Technology imported
b) Year of import
c) Has technology been fully absorbed?
d) If not fully absorbed areas where this has not taken place reasons thereof
(d) The expenditure incurred on Nil Research and Development

(C) Foreign Exchange Earnings & Outgo

During the financial year 2015-16 the Company neither earned any foreign exchange interms of actual inflows nor is there any foreign exchange outgo in terms of actualoutflows.

24. GENERAL

Your Directors state that for the financial year ended March 31 2016 no disclosure isrequired in respect of the following items and accordingly confirm as under:

a. The Company has neither revised the financial statements nor the report of Board ofDirectors.

b. No cases were filed pursuant to the Sexual Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013.

c. There are no material changes or commitments affecting the financial position of theCompany between March 31 2016 and the date of this report

d. The Company has not accepted any deposits during financial year 2015-16.

e. No instance of fraud has been reported to Board of Directors of the Company by theAuditors or any other person.

f. There are no significant or material for which orders were passed by theRegulators/Courts/Tribunals which impact the going concern status and Company’soperations in future.

g. During the financial year 2015-16 there is no change in the nature of the businessof the Company.

h. There has been no Issue of equity shares with differential rights as to dividendvoting or otherwise during the financial year 2015-16

i. The Company has not issued any shares (including sweat equity shares) to employeesof the Company under any scheme during the financial year 2015-16.

25. DIRECTORS’ RESPONSIBILITY STATEMENT

Pursuant to the requirement clause (c) of sub-section (3) of Section 134 of theCompanies Act 2013 your Directors confirm that:

a. in the preparation of the annual accounts for the year ended March 31 2016 readwith the requirements set out under Schedule III to the Act have been followed and therehas been no material departures;

b. the directors had selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the company at the end of the financial year and ofthe loss of the company for that period;

c. the directors had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of this Act for safeguarding theassets 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;

e. the directors had laid down internal financial controls to be followed by thecompany and that such internal financial control are adequate and were operatingeffectively; and

f. the Directors had devised proper systems to ensure compliance with the provisions ofall applicable laws and that such systems were adequate and operating effectively.

ACKNOWLEDGEMENT

Your Directors place on record their appreciation for stakeholders at all levels whohave contributed to the growth and performance of your Company.

For and on behalf of the Board
Sanathnagar Enterprises Limited
Date : 03rd September 2016 Purnima Pavle Babusingh Rajguru
Place : Mumbai (Director) (Director)
Registered Office: DIN: 06705133 DIN: 02696937
412 Floor-4 17G Vardhaman Chamber
Cawasji Patel Road Horniman Circle
Fort Mumbai-400001
Telephone No.: +9122-23024400
Fax No.: +9122-23024550
CIN No.: L99999MH1947PLC252768 /
E-mail: investors.sel@lodhagroup.com

Annexure II [Pursuant to Section 135 of the Act & Rules made thereunder]

Sr. No. Particulars Details
1. A brief outline of the Company’s CSR policy including overview of projects or programs proposed to be undertaken and a reference to the web- link to the CSR policy and projects and programs The Policy emphasizes initiatives in specific areas of social development that would include primary and secondary education skills development vocational training health and hygiene preventive health care and sanitation women empowerment environment and ecological protection character building by providing training opportunities in sports and cultural activities etc.
2. Composition of the CSR Committee as on 31st March 2016 a. Mr. Babusingh Rajguru - Chairman of the Committee b. Mr. Umashankar Hegde– Member of the Committee c. Mr. Santosh Kumar Ojha– Member of the Committee The Company has framed its CSR Policy in compliance with the provisions of the Companies Act 2013 and the same is available on the Company’s website at the web link http://www.sanathnagar.in/Policies.html
3. Average Net Profit of the Company for last three financial years Rs. 852.76 lakhs
4. Prescribed CSR Expenditure (two percent of the amount as per item 3 above) Rs. 17.06 lakhs (2%)
5. Details of CSR spent during the financial year;
a. Total amount spent for the financial year Nil
b. Amount unspent if any Rs. 17.06 lacs
c. Manner in which the amount spent during the financial year is detailed below: N.A
6. In In case the Company has failed to spend the two percent of the average net profit of the last three financial years or any part thereof the Company shall provide the reasons for not spending the amount in its Board Report. The real estate market was going through a sluggish phase due to the uncertain economic conditions prevalent in the country for the last few years. The Company has one land parcel wherein the construction of projects is in the completion stage and it might explore new areas for real estate development for which it requires funds. The Company understands its responsibility and will contribute towards CSR initiatives in the coming years as per the policy adopted by the Company.

The implementation and monitoring of CSR policy is in compliance with CSR objectivesand policy of the Company.

For and on behalf of the Board
Sanathnagar Enterprises Limited
Date : 03rd September 2016 Babusingh Rajguru Umashankar Hegde
Place : Mumbai (Chairman of CSR Committee) (Director)
DIN: 06705133 DIN: 06797098

Annexure-IIII Corporate Social Responsibility Policy A. Preamble :

Sanathnagar Enterprises Limited ("the Company") has adopted a Policyon Corporate Social Responsibility (CSR). The Company shall strive to be a sociallyresponsible company and strongly believes in development which is beneficial for thesociety at large. The Company shall carry out the CSR activities where it has its majorbusiness presence.

B. Policy Objective :

The objective of this Policy is to set guiding principles for carrying out CorporateSocial Responsibility (CSR) activities and also to set up process of implementation andmonitoring of the CSR activities to be undertaken by the Company.

C. Scope and Implementation of CSR :

The Company shall implement the CSR activities / programs as a combined effort betweenitself and its subsidiaries in such a manner that their individual CSR Committees willbe in a position to report separately on CSR activities / programs in accordance withSection 135 of Companies Act 2013 and notified rules.

All CSR projects/activities will be over and above the normal course of theCompany’s business.

The Company may decide to do CSR activities through a registered trust or registeredsociety or a Section 8 Company either singly or along with its holding or subsidiary orassociate company or along with any other company or holding or subsidiary or associatecompany of such company or otherwise.

If such trust society or section 8 companies are not established by the Company oraforementioned companies – then they should have an established track record of 3years in undertaking similar projects or programs.

The Company shall engage / co-ordinate with these Implementing Agencies and seekrequisite documents / papers so as to ensure that they have an established track record inundertaking CSR activities.

The Company shall specify the project or programs to be undertaken by these entitiesthe modalities of utilization of funds on such projects and programs and the monitoringand reporting mechanism.

The Company may also collaborate with other companies for undertaking CSR activities– provided they are able to report separately such activities.

D. Composition and Quorum of CSR Committee :

Pursuant to the provisions of Section 135 of the Act the Members of CSR Committeeshall be appointed by the Board of Directors of the Company. Members of the CSR Committeeshall meet at mutually decided time as and when required by sending notice or e-mails inorder to perform decide and monitor the implementation of this CSR Policy. The quorum ofCSR Committee shall be two members or one third of the total strength whichever is higher.

E. Scope of CSR Committee is as under:

1. Formulate and recommend to the Board a Corporate Social Responsibility Policy;

2. Finalise and approve the amount of expenditure to be incurred on the activities tobe undertaken for Corporate Social Responsibility and for this purpose approve the annualplans and budgets;

3. Ensure that the company spends towards Corporate Social Responsibility in everyfinancial year amount as may be recommended by the CSR Committee;

4. Ensure that the activities as are included in Corporate Social Responsibility Policyof the company are undertaken by the company;

5. Monitor the Corporate Social Responsibility Policy of the Company from time to time.

Any other matter as the CSR Committee may deem appropriate after the approval of theBoard of Directors or as may be directed by the Board from time to time.

F. Areas of CSR activities:

The Company may undertake the below activities under the ambit of CSR:

1. Eradicating hunger poverty and malnutrition promoting health care includingpreventive health care and sanitation and making available safe drinking water;

2. Promoting education hosting events performances in pure arts including specialeducation and employment enhancing vocational skills especially among children women andthe differently abled and livelihood enhancement projects;

3. Promoting gender equality empowering women setting up homes and hostels for womenand orphans; day care centers and such other facilities and measures for reducinginequalities faced by socially and economically backward groups;

4. Ensuring environmental sustainability ecological balance protection of flora andfauna and conservation of natural resources;

5. Protection of national heritage art and culture; setting up public libraries;promotion and development of traditional arts and handicrafts;

6. Contributions to the Prime Minister’s National Relief Fund or any other fundset up by the Central Government for socio-economic development and relief and welfare ofthe Scheduled Castes the Scheduled Tribes other backward classes minorities and women;

7. Contributions or funds provided to technology incubators located within academicinstitutions which are approved by the Central Government;

8. Rural development projects;

9. Slum area development;

10. Contribution to Prime Minister’s National Relief Fund etc.;

11. Contributions or funds provided to technology incubators located within academicinstitutions which are approved by Central Government; 12. Contribution to corpus of atrust / society / section 8 company would also qualify as CSR expenditure as long as theyare created exclusively for undertaking CSR activities or where the corpus is createdexclusively for the purpose directly relatable to a subject covered in Schedule VII of theAct; The Company may contribute to other areas of interest as permitted under Schedule VIIof the Act & update the above list as per Section 135 and Schedule VII of the Act asamended from time to time.

G. Budget

A specific budget will be allocated for CSR activities alongwith the projected plan onan annual basis. The amount & the projected plan will be approved by the Board on therecommendation of the CSR Committee. Any surplus arising and/ or additional revenuegenerated out of CSR Activities undertaken by the Company shall not form part of thebusiness profit of the Company and same shall be spent for undertaking any CSR Activitiesonly.

H. Dissemination of information of CSR activities :

The Company’s involvement in the CSR projects and/or activities and details ofwork executed and progress made will be communicated through its annual reports and othermodes as may be required from time to time.

I. Monitoring :

The Company will set up a monitoring process for implementation of the CSRprojects/activities and reporting to the CSR Committee in compliance with the requirementsof Section 135 of the Companies Act 2013.

J. Reporting Framework

The Company shall lay down a reporting framework for each and every program / projectbeing undertaken towards CSR activities laying down specifically the sector / location inwhich the activity has been undertaken the description of the activities beingundertaken the amount allocated towards the same the amount spent towards the CSRactivities and such other particulars as may be required from time to time depending uponthe nature of the CSR activity.

Any or all provisions of the CSR Policy would be subject to revision/amendment as maybe required / deemed fit by the Company from time to time.

ANNEXURE IV

POLICY ON DIRECTORS’APPOINTMENT AND REMUNERATION FOR DIRECTORS KEY MANAGERIALPERSONNEL SENIOR MANAGEMENT PERSONNEL AND OTHER EMPLOYEES

Background & Objectives:

Clause 49 of the Listing Agreement and Section 178 of the Companies Act 2013(‘the Act’) requires the Nomination and Remuneration Committee to identifypersons who are qualified to become Directors and who may be appointed in SeniorManagement and to formulate a Policy relating to the remuneration for the Directors KeyManagerial Personnel (KMP) Senior Management and other employees of the Company andrecommend the same for approval of the Board. Further Section 134 of the Act stipulatesthat the Board Report shall include a statement on Company’s Policy onDirectors’ appointment and remuneration including criteria for determiningqualifications positive attributes independence of Director and remuneration for KeyManagerial Personnel and other employees.

This Policy shall act as a guideline for determining inter-alia qualificationspositive attributes and independence of a Director matters relating to the remunerationappointment removal and evaluation of performance of the Directors Key ManagerialPersonnel Senior Management and other employees.

Objective and Role of Committee:

• To attract recruit and retain good and exceptional talent.

• To identify persons who are qualified to become Directors and who may beappointment in Senior Management in accordance with the criteria laid down in this Policy.

• To guide the Board in relation to appointment and removal of Directors.

• To evaluate the performance of the Members of the Board including IndependentDirectors. Formulation of criteria for evaluation of Independent Director and the Board.

• To determine criteria for payment of remuneration to Directors Key ManagerialPersonnel Senior Management and Employees.

• To recommend to the Board on remuneration payable to the Directors including KeyManagerial Personnel Senior Management and Employees if required.

• To ensure that level and composition of remuneration is reasonable andsufficient relationship of remuneration to performance is clear and meets appropriateperformance benchmarks.

• To devise a Policy on Board diversity.

• To carry out any other function as is mandated by the Board from time to timeand/or enforced by any statutory notification amendment or modification as may beapplicable.

To perform such other functions as may be necessary or appropriate for the performanceof its duties.

Definitions:

"Act" means the Companies Act 2013 and rules thereunder.

"Board of Directors" or "Board" means the Board ofDirectors of Sanathnagar Enterprises Limited as constituted from time to time.

"Company" means Sanathnagar Enterprises Limited.

"Committee" means Nomination and Remuneration Committee of the Company asconstituted or reconstituted by the Board.

"Director" means a director appointed to the Board of a Company.

"Independent Director" means an independent director referred to insub-section (5) of Section 149 of the Companies Act 2013.

"Policy" means Nomination and Remuneration Policy.

"Key Managerial Personnel" (KMP) means: a. Chief Executive Officer or theManaging Director or the Manager

b. Whole-time Director c. Chief Financial Officer d. Company Secretary e. Such otherofficer as may be prescribed

"Senior Management Personnel" for this purpose shall mean personnel ofthe Company who are members of its core management team excluding Board of Directorscomprising all members of management one level below the executive Director(s) includingthe functional/vertical heads.

Unless the context otherwise requires words and expressions used in this Policy andnot defined herein but defined in the Companies Act 2013 as may be amended from time totime shall have the meaning respectively assigned to them therein.

Composition

The Committee shall comprise at least three (3) Directors all of whom shall benon-executive Directors and at least half shall be independent.

The Board shall reconstitute the Committee as and when required to comply with theprovisions of the Companies Act 2013 and applicable statutory requirement.

Minimum two (2) members shall constitute a quorum for Committee meeting. Membership ofthe Committee shall be disclosed in the Annual Report. Chairman of the Committee shall bean Independent Director.

Chairperson of the Company may be appointed as a member of the Committee but shall notChair the Committee

Frequency of Meetings:

The meeting of the Committee shall be held at such regular intervals as may berequired.

Committee Member’s Interest:

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

The Committee may invite such executives as it considers appropriate to be presentat the meetings of the Committee.

Voting:

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

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

Appointment– Criteria Identification

The Committee shall identify and ascertain the integrity professional qualificationexpertise and experience of the person who is proposed to be appointed as a Director KMPor at a Senior Management level and appropriate recommendation shall be made to the Boardwith respect to his/her appointment. However the Committee while identifying person whois proposed to be appointed as a Director KMP or at a Senior Management level mayidentify and appoint the employees of the group companies.

A person should possess adequate qualification expertise and experience for theposition he/she is considered for appointment as KMP Senior Management Personnel of theCompany. The Committee on the recommendation of Human Resource Department (HRDepartment) if required shall have the discretion to decide whether qualificationexpertise and experience possessed by a person is sufficient / satisfactory for theconcerned position.

Appointment of Independent Directors shall be subject to the provisions of Section 149of the Act read with schedule IV and rules made thereunder. Before appointment asIndependent Director the Committee shall satisfy itself that the proposed personsatisfies the criteria of independence as stipulated under Section 149(6) of the Act.

Appointment of Directors on the Board of a Company shall be subject to therecommendation made by the Committee.

However the decision of the Board with respect to appointment of a Director shall befinal.

Appointment of Managing Director and Whole-time Director shall be subject to provisionsof Sections 196 197 198 and 203 of the Act read with Schedule V and rules made thereunder. The Committee shall ensure that a person shall not occupy position as a ManagingDirector/Whole-time Director beyond the age of seventy years unless his appointment isapproved by a special resolution passed by the Company in general meeting. Nore-appointment shall be made earlier than one year before the expiry of term.

No person shall be eligible to be appointed as a Director if he/she is subject to anydisqualifications as stipulated under the Companies Act 2013 or any other law(s) for thetime being in force.

Removal:

Due to reasons for any disqualification mentioned in the Act or under any otherapplicable Act rules and regulations there under the Committee may recommend to theBoard with reasons recorded in writing removal of a Director KMP or Senior ManagementPersonnel subject to the provisions and compliance of the said Act rules andregulations.

Retirement:

The Director KMP or Senior Management Personnel shall retire as per the applicableprovisions of the Act and the prevailing Policy of the Company if any. The Board willhave the discretion to retain the Director in the same position/ remuneration orotherwise even after attaining the retirement age for the benefit of the Company.

Evaluation:

A) Independent Directors/Non-Executive Directors

The Committee shall carry out evaluation of performance of IndependentDirectors/Non-Executive Directors every year ending 31st March. In case if aDirector is a member of the Committee he/she shall abstain himself/herself fromparticipation when he/she is being evaluated.

As a part of evaluation the Committee shall determine the following criteria:

• Membership & attendance - Committee and Board Meetings

• Contribution during such meetings

• Willingness to spend time and effort learning about the Company and its business

• Active participation in strategic decision making

• Inputs to executive management on matters of strategic importance

• Individual Performance and Contribution

• Such other matters as the Committee/Board may determine from time to time.

B) Executive Directors

The Committee shall carry out evaluation of performance of Executive Directors everyyear ending 31st March. In case if a Director is a member of the Committeehe/she shall abstain himself/herself from participation when he/she is being evaluated.The evaluation shall be on the basis of Key Performance Indicators (KPI) which would beidentified based on a) their commitment to achieve Company’s goals and alignment withthe strategic direction b) their decision making ability and c) their ability andactions to safeguard the interest of shareholders of the Company and weights assigned foreach measure of performance keeping in view the distinct roles of each Executive Director.The identified KPI for Executive Directors shall be approved by the Board pursuant torecommendation of the Committee if required.

C) Key Managerial Personnel /Senior Management/ Employees

The HR Department shall assign the responsibility of carrying out the evaluation of theaforementioned persons every year ending March 31st to the concerneddepartment heads. KPI are identified well in advance at the commencement of the financialyear. Performance benchmarks shall be set and evaluation of employees would be done by therespective reporting manager(s)/Management to determine whether the performance benchmarksare achieved. The payment of remuneration/annual increment to the aforementioned personsshall be determined after the satisfactory completion of Evaluation process.

The objective of carrying out the evaluation by the Company is to identify and rewardthose with exceptional performances during any financial year. Additional Training andDevelopment Orientation programs on need basis shall be provided to employees whoseperformance during any financial year do not meet the benchmark criteria.

Further the performance of the Committees formed by the Board will be evaluated basedon the terms of reference assigned to the respective Committees.

Matters relating to remuneration perquisites for Directors KMP/Senior ManagementPersonnel & Employees:

Clause 49 of the Listing Agreement and Section 178 of the Act emphatically specifythat the Committee while formulating the Policy shall ensure the following: the level andcomposition of remuneration is reasonable and sufficient to attract retain and motivateDirectors of the quality required to run the Company successfully; relationship ofremuneration to performance is clear and meets appropriate performance benchmarks; andremuneration to Directors Key Managerial Personnel and senior management involves abalance between fixed and incentive pay reflecting short and long-term performanceobjectives appropriate to the working of the Company and its goals.

In the Company the remuneration structure for Executive Directors/Senior Management& Employees comprises of :

a) A fixed base salary set at a level aimed at attracting and retainingexecutives with professional and personal competences required to drive the Company’sperformance.

b) Performance Bonus based on achieving the minimum KPI predefined at thecommencement of the financial year.

c) Retirement benefits including PF gratuity etc.

d) Such other emolument(s) as the HR department may after consultation with theManagement determine from time to time.

Criteria for Remuneration:

1) KMP/Senior Management/other employees

Upon the satisfactory completion of Evaluation process and after taking intoconsideration the performance appraisal of the concerned employee(s) and also taking intoconsideration the profitability/performance of the Company salary increments/performancebonus would be decided by the concerned Department Head(s)/Management as the case may be.The increments/ performance bonus declared shall be solely as per Company Policy.

Determination of remuneration/performance bonus for KMP /Senior Management/otheremployees so far as there are no regulatory requirements need not berecommended/approved by the Committee/Board. The concerned Department Head(s)/Managementon the recommendation of the HR department shall have the discretion to determine thequantum of remuneration to be payable to KMP/Senior Management and other employees as thecase may be. Regulatory compliance if any needs to be complied appropriately beforedetermining/approving remuneration.

2) Executive Director(s) (EDs)

The remuneration/compensation etc. to Executive Directors (EDs) of the Company duringany financial year shall be determined on the basis of they achieving the Key PerformanceIndicators (KPIs) as is set on them at the commencement of every financial year. Theremuneration/compensation shall be determined by the Committee after considering the KPIachieved by EDs. The Committee may consider the recommendation of HR department whiledetermining the remuneration to be paid to EDs.

The remuneration payable to EDs and Whole-time Directors shall be subject to theprovisions of Section 197 and 198 of the Companies Act 2013 or which may be mutuallyagreed.

3) Non-Executive Director/Independent Director

The Non-executive / Independent Directors (NEDs) of the Company may be paid sittingfees as per the applicable Regulations. Any revision in the quantum of sitting fees shallbe subject to approval of Board of Directors of the Company. Further the travellingboarding and lodging expenses if any shall be reimbursed to the Directors based out ofMumbai.

The profit-linked Commission may be paid within the monetary limit approved by theshareholders of the Company and subject to compliance with the provisions of CompaniesAct 2013 if any. The aforesaid Commission shall be paid subject to NEDs satisfying thecriteria approved by the Board for receiving remuneration.

Pursuant to the provisions of the Act an Independent Director shall not be entitled toany stock option (ESOPs) of the Company.

Where any insurance is taken by the Company on behalf of its KMP and any otheremployees for indemnifying them against any liability the premium paid on such insuranceshall not be treated as part of the remuneration payable to any such personnel. Providedthat if such person is proved to be guilty the premium paid on such insurance shall betreated as part of the remuneration.

Amendments to the Policy:

The Board of Directors on its own and / or as per the recommendations of Nomination andRemuneration Committee can amend this Policy as and when deemed fit.

In case of any amendment(s) clarification(s) circular(s) etc. issued by the relevantauthorities not being consistent with the provisions laid down under this Policy thensuch amendment(s) clarification(s) circular(s) etc. shall prevail upon the provisionshereunder and this Policy shall stand amended accordingly from the effective date as laiddown under such amendment(s) clarification(s) circular(s) etc.

Annexure V

Form No. MR-3

SECRETARIAL AUDIT REPORT

FOR THE FINANCIAL YEAR ENDED 31st March 2016

[Pursuant to section 204(1) of the Companies Act 2013 and rule

No.9 of the Companies (Appointment and Remuneration Personnel) Rules 2014]

To

The Members

M/s. SANATHNAGAR ENTERPRISES LIMITED

CIN: L99999MH1947PLC252768

412 Floor 4 17 G Vardhaman Chamber

Cawasji Patel Road Horniman Circle Fort Mumbai 400001

We have conducted the secretarial audit of the compliance of applicable statutoryprovisions and the adherence to good corporate practices by M/s. SANATHNAGARENTERPRISES LIMITED (hereinafter called the "company"). Secretarial Auditwas conducted in a manner that provided us a reasonable basis for evaluating the corporateconducts/statutory compliances and expressing our opinion thereon.

Based on our verification of the Company’s books papers minute books forms andreturns filed and other records maintained by the company and also the informationprovided by the Company its officers agents and authorized representatives during theconduct of secretarial audit we hereby report that in our opinion the company hasduring the audit period covering the financial year ended on 31st March 2016 compliedwith the statutory provisions listed hereunder and also that the Company has properBoard-processes and compliance-mechanism in place to the extent in the manner and subjectto the reporting made hereinafter: We have examined the books papers minute books formsand returns filed and other records maintained by Company for the financial year ended on31st March 2016 according to the provisions of:

(i) The Companies Act 2013 and the Rules made thereunder ;

(ii) The Depositories Act 1996 and the Regulations and Bye-laws framed there under;

(iii) The Securities Contracts (Regulation) Act 1956 (‘SCRA’) and the Rulesmade there under; (iv) Foreign Exchange Management Act 1999 and the applicable rules andregulations made there under; Not Applicable

(v) The following Regulations and Guidelines prescribed under the Securitiesand Exchange Board of India Act 1992 (‘SEBI Act’);

(a) The Securities and Exchange Board of India (Substantial Acquisition of Sharesand Takeovers) Regulations 2011; Not Applicable during the period under Review

(b) The Securities and Exchange Board of India (Prohibition of Insider TradingRegulations) 2015;

(c) The Securities and Exchange Board of India (Issue of Capital and DisclosureRequirements) Regulations 2009;

Not Applicable during the period under Review

(d) The Securities and Exchange Board of India (Employee Stock Option Scheme andEmployee Stock Purchase Scheme) Guidelines 1999; Not Applicable during the periodunder Review

(e) The Securities and Exchange Board of India (Listing Obligations and DisclosureRequirements) Regulations 2015; (f) The Securities and Exchange Board of India(Registrars to an Issue and Share Transfer Agents) Regulations 1993 regarding theCompanies Act and dealing with client; (g) The Securities and Exchange Board of India(Delisting of Equity Shares) Regulations 2009; Not Applicable during the periodunder Review

(h) The Securities and Exchange Board of India (Buyback of Securities) Regulations1998; Not Applicable during the period under Review

(vi) The other laws as are applicable specifically to the Company.

We have also examined compliance with the applicable clauses of the following:

(i) Secretarial Standards issued by The Institute of Company Secretaries of India *(ii)The Listing Agreements entered into by the Company with BSE Listed

*Note: The Company is in the process of complying with the requirement of Rule 19(2)(b)of Securities Contract (Regulation) (Amendment) Rules 2010 with regard to achievingpublic shareholding to the prescribed minimum level of 25% of the total equity sharesissued by the Company.

During the period under review the Company has complied with the provisions of the ActRules Regulations Guidelines Standards etc. mentioned above:

We further report that during the year under review:

The status of the Company during the financial year has been that of an Equity ListedPublic Company.

The Board of Directors of the Company is duly constituted with proper balance ofNon-Executive Directors and Independent Directors. The changes in the composition of theBoard of Directors that took place during the period under review were carried out incompliance with the provisions of the Companies Act 2013.

Adequate notice is given to all directors to schedule the Board Meetings agenda anddetailed notes on agenda are sent at least seven days in advance a system exists forseeking and obtaining further information and clarifications on the agenda items beforethe meeting and for meaningful participation at the meeting. Majority decision is carriedthrough while the dissenting members’ views are captured and recorded as part of theminutes.

Majority decision is carried through while the dissenting members’ views arecaptured and recorded as part of the minutes.

We further report that there are adequate systems and processes in the companycommensurate with the size and operations of the company to monitor and ensure compliancewith applicable laws rules regulations and guidelines.

We further report that the Company has complied with the provisions of the Act andRules made under that Act in carrying out the following changes: (a) Appointment andResignation of Directors and Key Managerial Personnel during the period under review.

Shravan A. Gupta & Associates
Practicing Company Secretary
Place: Mumbai Shravan A. Gupta
Date: 03rd September 2016 ACS: 27484 CP: 9990

Annexure VI

DETAILS PERTAINING TO REMUNERATION AS REQUIRED UNDER SECTION 197(12) OF THE COMPANIESACT 2013 READ WITH RULE 5(1) OF THE COMPANIES (APPOINTMENT AND REMUNERATION OF MANAGERIALPERSONNEL) RULES 2014

1. The percentage increase in remuneration of each Director Chief Financial Officerand Company Secretary during the financial year 2015-16 ratio of the remuneration of eachDirector to the median remuneration of the employees of the Company for the financial year2014-15 are as under:

Sr. No Name of Director / KMP and Designation Period Remuneration of Director / KMP for financial year 2015-16 (Amount in Rs.) % increase in remuneration in the financial year 2015-16 Ratio of remuneration of each Director to the median remuneration of employees#
1. *$Vishal Ghadigaonkar Chief Financial Officer 13th October 2015 till 31st March 2016 938131 N.A. N.A.
2. *$Sharatkumar Shetty Company Secretary 01 April 2015 till 31st March 2016 755410 N.A. N.A.

* Mr. Vishal Ghadigaonkar and Mr. Sharatkumar Shetty are not on the rolls of theCompany and are deputed by Lodha Developers Private Limited Holding Company and NabhirajaSoftware Design India Private Limited Group Company. Their remuneration is beingreimbursed by the Company to the said Holding Company and Group Company.

$ The percentage increase for remuneration cannot be derived during the financial year2015-16 for Mr. Vishal Ghadigaonkar as he was appointed as Chief Financial Officer on 13thOctober 2015 and Mr. Sharatkumar Shetty who was appointed as Company Secretary on 31stMarch 2015.

# The Company has not paid any remuneration to the Directors during the financial year2015-16 and hence the criteria for ratio of remuneration of each Director to the medianremuneration of employees is not applicable.

2. The percentage increase in the median remuneration of employees as compared to thelast financial year 2014-15: Since the Company had 48 employees in the financial year2014-15 which has been reduced to 17 in the financial year 2015-16 the percentageincrease in the median remuneration of employees as compared to the last financial yearcannot be derived.

7. Since the Company has not paid any remuneration to any of its managerial personneleither in any of the current financial years i.e. 2014-15 and 2015-16 the pointpertaining to average percentile increase / decrease in the salaries of employees otherthan the managerial personnel is not applicable.

8. It is hereby confirmed that the remuneration / reimbursement paid is as per theRemuneration Policy for Directors Key managerial Personnel and other employees.

9. The details of top ten permanent employees in the Company pursuant to Rule (5)(2) ofthe Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 is givenbelow:

Name & Designation Remuneration Received [Rs.] Nature of Employment Qualification Expe- rience in years Date of commen- cement Age in years Last employment held by such employee % of equity shares held by the Employeee Whether Such employee is a relative of any director/ manager
Puneet Kumar - General Manager – Sales 2705572 Permanent M.B.A. / M.M.S. 11.8 27-06-2014 37 Yrs Reliance Broadcast Network Ltd Nil No
Suryakanth Jadhav - Manager - Sales 1586068 Permanent P.G. Diploma – Others 10.6 04-03-2014 33 Yrs Cholamandalam Distribution Services Ltd Nil No
David Raju - Manager - Construction 1315337 Permanent M.B.A. / M.M.S. 19.9 12-11-2010 41 Yrs K Raheja Corp. Nil No
Management Nagendra Prasad - Manager - Sales 1361803 Permanent M.B.A. / M.M.S. 10.6 05-08-2010 32 Yrs IIPM/Planning Consulting Nil No
Srinivasa Dumpala - Manager - Construction Management 1219844 Permanent B.E. / B.Tech. 10.12 02-03-2011 33 Yrs Lodha Bellezza Nil No
Sriram Sripada - Dy. Manager - Handover & Facilities Management 976570 Permanent Bachelors Course - Others 8.8 26-05-2014 36 Yrs Causeway Technologies India Pvt Ltd Nil No
Nadiminti Kumar - Associate Manager - Construction Management 939399 Permanent M.E. / M.Tech. 13.2 02-09-2011 33 Yrs MyHome Construction.ltd. Nil No
Satish Kumar D. - Associate Manager - Quality Enhancement (Structure) 760840 Permanent TECHNICAL ENGINEERING (CIVIL) 10.6 10-09-2009 31 Yrs ACC Concrete Limited Nil No
Ramesh G - Dy. Executive - Civic Relations 691109 Permanent B.A. 7.6 01-10-2008 45 Yrs Not available Nil No
Siva Prasad Kintala - Associate Manager - Handover & Facilities Management 714547 Permanent B.E. / B.Tech. 7.5 20-02-2014 30 Yrs L&T ECC Nil No

 

For and on behalf of the Board
Sanathnagar Enterprises Limited
Date : 03rd September 2016 Purnima Pavle Babusingh Rajguru
Place : Mumbai (Director) (Director)
Registered Office: DIN: 06705133 DIN: 02696937
412 Floor-4 17G Vardhaman Chamber
Cawasji Patel Road Horniman Circle
Fort Mumbai-400001
Telephone No.: +9122-23024400
Fax No.: +9122-23024550
CIN No.: L99999MH1947PLC252768 / E-mail: investors.sel@lodhagroup.com