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Sanco Industries Ltd.

BSE: 532120 Sector: Industrials
NSE: SANCO ISIN Code: INE782L01012
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Sanco Industries Ltd. (SANCO) - Director Report

Company director report

To The Members

On Behalf of the Board of Director of your Company it is our privilege to present the26th Annual Report on the business and operations of the company together with the auditedstatement of accounts for the financial year ended March 31 2016 and Auditor‘sReport thereon.

1. Financial Highlights

The Standalone Financial Performance of your company is as follows:

Particulars 2015-16 2014-15
(Rupees In Lacs) (Rupees In Lacs)
Turnover 14007.29 10570.87
Profit before finance charges Tax Depreciation/Amortization (PBITDA) 1030.27 829.91
Less: Finance Charges 596.06 477.88
Profit before Depreciation/Amortization (PBTDA) 434.21 352.03
Less: Depreciation 116.76 88.38
Add: Exceptional Items (4.50) 10.41
Less: Prior Period Items 10.03 -
Net Profit before Taxation (PBT) 302.92 274.06
Provision for taxation 110.8* 37.44
Profit/(Loss) after Taxation (PAT) 192.12 236.62
Provision for proposed Dividend - -
Dividend tax - -
Transfer to General Reserve (Profit for the year and depreciation written back) 192.12 369.81

*Subject to the provision of MAT adjustment.

On the basis of consolidated financial statements the performance of the Group appearsas follows:

Particulars 2015-16 2014-15
(Rupees in Lacs) (Rupees in Lacs)
Turnover 34309.17 20250.47
Profit before finance charges Tax Depreciation/Amortization (PBITDA) 1101.32 876.99
Less: Finance Charges 606.04 478.08
Profit before Depreciation/Amortization (PBTDA) 495.28 398.91
Less: Depreciation& Amortization of expenses 116.76 90.74
Add: Exceptional Items (4.50) 10.41
Less: Prior Period Items 10.03 -
Net Profit before Taxation (PBT) 363.99 318.58
Provision for taxation (113.28) 42.26
Profit/(Loss) after Taxation (PAT) 250.71 276.32
Share of profit transferred to minority interest 1.90 1.73
Profit for the year 248.80 274.59
Provision for proposed Dividend - -
Dividend tax - -
Transfer to General Reserve (Profit for the year and depreciation written back) 248.80 274.59

2. State of Company s affairs and future outlook

The Company began this year by achieving business growth and reduction of unnecessaryexpenses. The business increased marginally as the revenues earned for the current yearwere Rs. 1 3999.23 Lacs as compared to Rs. 10541.48 Lacs during the previous year.

The business performance and future outlook has been discussed elaborately in theManagement Discussion and Analysis Report.

3. Change(s) in the nature of business

During this period there is no change in business of the Company or in thesubsidiaries' business or in the nature of business carried on by them.

4. Dividend

Keeping in view the Company‘s need for capital and its growth plans the Directorsdo not recommend any dividend for the year ended March 31 2016. As the company isconsidering issuing bonus shares.

5. Transferto Reserves

The amount to be transferred to reserves during the year is Rs. 192.12 Lacs. (Rs.192.12 is on account of the profit during the year).

6. Changes in Share Capital

There is no change in the Share capital of the company during this financial year.

Details pertaining to shares in suspense account - N.A.

Details relating to material variations N.A

7. Directors and Key Managerial Personnel

Following are the directors and KMPs of the company as on date:

1) Mr. Sanjay Gupta (Managing Director)

Brief Description Promoter Graduation from DU MBA
Expertise Marketing and Finance
Name of other Companies where holds Superlink Polyfeb Ltd.
directorship Sanco Enterprises Pvt. Ltd.

2) Mr. Sidhant Gupta (Whole Time Director)

Brief Description Promoter B.B.A. from Dibrugarh University Commercial
Pilot from Eagle Flight Academy New Zealand
Expertise Strategic Planning & Business Development and Overseas Operations.
Superlink Polyfeb Ltd.
Name of other Companies where holds directorship Sanco Enterprises Pvt. Ltd.
Sanjita Polymet Lmited

3) Mrs. Rita Gupta (Whole Time Director)

Brief Description Promoter Post-Graduation from CCS University.
Expertise Fields of Business & Official Management
Name of other Companies where holds directorship N/A

4) Mr. Saurabh Gupta (Independent Director)

Brief Description Expertise B.Com CA DISA Audit and Taxation
Name of other Companies where holds directorship N/A

5) Mr. Sanjeev Kumar Jain (Independent Director)

Brief Description Graduation from DUCA
Expertise Audit Commerce and Taxation
Name of other Companies where holds directorship N/A

6) Mr. Deepak Gupta (Independent Director)

Brief Description B.A Graduate and LLB from CCS University
Expertise Advisory and Legal Matters
Name of other Companies where holds directorship NSUS Infotel Private Ltd.

7) Ms. Preeti Gupta (Company Secretary)

Brief Description Graduation from DU Member of ICSI
Expertise Corporate & Listing Compliances Matters.
Name of other Companies where holds directorship N/A

8) Mr. Vipul Singhal (Chief Finance Officer)

Brief Description B.Com from CCS University MBA Finance from UPTU University
Expertise Finance
Name of other Companies where holds directorship N/A

Mrs. Rita Gupta Director of the Company retiring by rotation at the forthcoming AnnualGeneral Meeting and being eligible offers herself for re-appointment. The Boardrecommends the appointment of the above Director.

8. Statement on declaration given by Independent Directors under sub- section(6) of Section 149

The Independent Directors have submitted their disclosures to the Board that theyfulfill all the requirements as stipulated in Section 149(6) of the Companies Act 2013 soas to qualify themselves to be appointed as Independent Directors under the provisions ofthe Companies Act 2013 and the relevant rules.

9. Number of meetings of Board of Directors

During the financial year 2015-16 10 meetings of the Board of Directors were held.

10. Statement indicating the manner in which formal annual evaluation has been made bythe Board of its own performance and that of its committees and individual directors

The performance of all the directors during the year was satisfactory and towards thegrowth prospects.

Personnel relations with all employees remained cordial and harmonious throughout theyear. Your Directors wish to place on record their sincere appreciation for the devotedservices of all employees of the Company.

11. Managerial Remuneration

• During the year there is no increase in remuneration of directors and KMP.

• The Board on the recommendation of the NR Committee shall also review andapprove the remuneration payable to the Key Managerial Personnel of the Company.

• The remuneration structure to the Executive Directors and Key ManagerialPersonnel shall include the following components:

• Basic Pay

• Perquisites and Allowances

• There are 114 permanent employees on the rolls of company: Work Place 100Corporate Office - 14

• Remuneration to Non-Executive Directors: The Board on the recommendation of theNR Committee shall review and approve the remuneration payable to the Non-ExecutiveDirectors of the Company within the overall limits approved by the shareholders.

Remuneration to other employees: Employees remuneration shall be determined within theappropriate qualifications and work experience and shall be based on various factors suchas job profile skill sets seniority experience and prevailing remuneration levels forequivalent jobs.

12. Details of Subsidiary

Your Company has two Subsidiaries M/s Sanjita Polymet Ltd. (Company Incorporated inHong Kong) and M/s Superlink Polyfeb Ltd. (India)

M/s Sanjita Polymet Ltd. (Wholly Owned Subsidiary)

M/s Sanjita Polymet Ltd. was incorporated in August 2013 in Hong Kong to promotetrading of PVC Raw Materials and Metal Products in International market. However theCompany has made investment of 10000 USD in the paid up share capital of M/s SanjitaPolymet Ltd. during the year.

M/s Superlink Polyfeb Ltd.

M/s Superlink Polyfeb Ltd. became subsidiary of the company during the year as companyinvested in the paid-up share capital of above mentioned company. The company owns 51% ofM/s Superlink Polyfeb Ltd.

M/s Superlink Polyfeb Ltd. is the material subsidiary of Sanco Industries Ltd as perthe SME listing agreement.

During the year the performance of M/s Sanjita Polymet Ltd. and M/s Superlink PolyfebLtd. was satisfactory.

13. Statutory Auditors

The Auditors of the Company M/s V J M & Associates Chartered Accountants Delhihold office until the conclusion of forthcoming Annual General Meeting and being eligibleoffer them for appointment. The Company has also received intimation to the effect thattheir reappointment if done would be within the limits laid down under Section 139(1) ofthe Companies Act 2013.

The Notes on financial statement referred to in the Auditors‘ Report areself-explanatory and do not call for any further comments. The Auditors‘ Report doesnot contain any qualification reservation or adverse remark.

14. Cost Auditors

Pursuant to Section 148 of the Companies Act 2013 read with Companies (Cost Recordsand Audit) Amendment Rules 2014Cost Audit has become applicable on your company for thefinancial year 2015-16 accordingly M/s Rahul Jain & Associates has been appointed asCost Auditors.

1 5 . Secretarial Audit Report

There were no qualifications reservations or adverse remarks or disclaimer given bythe company secretary in practice in the secretarial audit report.

16. Response to Auditor s Remarks

The Notes on financial statement referred to in the Auditors‘ Report areself-explanatory and do not call for any further comments. The Auditors‘ Report doesnot contain any qualification reservation or adverse remark.

17. Disclosure on Employee Stock Option/Purchase Scheme

The Company has not provided any Employee Stock Option Scheme or Purchase Scheme to theemployees.

18. Audit Committee

The Audit Committee of the company has been dealing with matters prescribed by theBoard of Directors on a case-to-case basis. In general the primary role/objective of theAudit Committee is to review the financial statements of the Company strengthen internalcontrols & look into all transactions having monetary implications on the functioningof the Company. The nomenclature constitution and terms of reference of the Committee areas per the provisions of the Section 177 of the Companies Act 2013 and Clause 52 of theListing Agreement of the Stock Exchange. The audit committee will also do the functionrequired for vigil mechanism of the company.

The Committee consists of three Directors. Out of that two Directors are Non-Executiveand Independent Directors in accordance with the prescribed guidelines. Mr. Saurabh Guptais the Chairman of the Committee. The other members are Mr. Deepak Gupta and Mr. SanjayGupta Managing Director of the Company. The members of the Committee have adequateknowledge in the field of finance accounting and law. The Scope of the functioning ofthe Audit Committee is to review from time to time the internal control procedures theaccounting policies of the Company and such other functions as may be recommended fromtime to time by SEBI Stock Exchanges and/or under the Companies Act 2013 whichinter-alia include review of:

i. The recommendation for appointment remuneration and terms of appointment ofauditors of the company.

ii. Review and monitor the auditor‘s independence and performance andeffectiveness of audit process.

iii. Examination of the financial statement and the auditor‘s report thereon;

iv. Approval or any subsequent modification of transactions of the company with relatedparties;

v. Scrutiny of inter-corporate loans and investments;

vi. Valuation of undertakings or assets of the company wherever it is necessary;

vii. Evaluation of internal financial controls and risk management systems;

viii. Monitoring the end use of funds raised through public offers and related matters.

ix. Reviewing with the management the quarterly financial statements before submissionto the Board for approval.

x. Reviewing with the management performance of statutory and internal auditors andadequacy of the internal control system.

xi. Reviewing the adequacy of internal audit function if any including the structureof the internal audit department staffing and seniority to the official heading thedepartment reporting structure coverage and frequency of internal audit.

xii. Discussion with internal auditors any significant findings and follow-up thereon.

xiii. Reviewing the findings of any internal investigations by the internal auditorsinto matter where there is suspected fraud or irregularity or a failure of internalcontrol systems of a material nature and reporting the matter to the Board.

xiv. Discussion with the statutory auditors before the audit commences about thenature and scope of audit as well as post audit discussion to ascertain any area ofconcern.

xv. To look into the reasons for substantial defaults in the payment to the depositorsdebenture holders shareholders (in case of non-payment of declared dividends) andcreditors.

xvi. To review the functioning of the Vigil Mechanism. The Chairperson of AuditCommittee will act as the chairperson of the vigil mechanism.

19. Vigil mechanism

As per the provisions of Companies Act 2013 there is a mandatory requirement toestablish a mechanism called Vigil Mechanism‘ for the directors and employees of theCompany to report concern about unethical behavior actual or suspected fraud or violationof the company‘s code of conduct or ethics policy.

The Vigil Mechanism (?the Policy) has been formulated with a view to provide amechanism for employees of the Company to approach the Ethics Counselor / Chairman of theAudit Committee of the Company.

20. Nomination and Remuneration Committee

The Committee has been constituted to recommend/review the remuneration package of theWhole Time Directors apart from deciding other matters. The remuneration policy isdirected towards rewarding performance based on review of achievements which are beingreviewed periodically which is in consonance with the existing industry practices.

Pursuant to the provisions of Section 178 of the Companies Act 2013 a Nomination andRemuneration Committee be constituted consisting of

Mr. Sanjeev Kr. Jain Non-Executive Independent Director
Mr. Deepak Gupta Non-Executive Independent Director
CA Saurabh Gupta Non-Executive Independent Director

As members to carry out such functions set out in Section 178 of the Companies Act2013 and that the quorum shall be any two Directors personally present including theChairman.

21. Stakeholders Relationship Committee

Pursuant to the provisions of Section 178(5) of the Companies Act 2013 a StakeholdersRelationship Committee be constituted consisting of

Mr. Deepak Gupta Non-Executive Independent Director
Mr. Sanjay Gupta Managing Director
Mr. Sanjeev Kr. Jain Non-Executive Independent Director

As members to consider and resolve complaints/ grievances of the security holders ofthe Company so as to ensure that timely relief is extended to stakeholders/investors inrespect of their complaints.

The terms of reference of the Stakeholders Relationship Committee include thefollowing:

i. It shall have the authority to investigate into any matter in relation to transferof securities or referred to it by the Board and for this purpose shall have full accessto information contained in the records of our Company and external professional adviceif necessary.

ii. To investigate any activity within its terms of reference.

iii. To seek any information from any employee.

iv. To seek information from share transfer agents.

v. To obtain outside legal or other professional advice.

vi. To secure attendance of outsiders with relevant expertise if it considernecessary.

vii. To approve issue of duplicate share certificates and to oversee and review allmatters connected with the transfer transmission and issue of securities.

viii. To approve share transfer/ transmission securities periodically whether bycircular resolution or otherwise.

ix. To look into redressing of shareholders‘ complaint like transfer of sharesnon-receipt of balance sheet non receipt of declared dividends etc.

x. To oversee the performance of the Registrar and transfer Agents and recommendedmeasures or overall improvement in the quality of investors services.

22. Risk Management Policy

The Company‘s internal control systems are commensurate with the nature of itsbusiness and the size and complexity of its operations. These are routinely tested andcertified by Statutory as well as Internal Auditors.

23. Extract of the annual return

The extract of annual return as on the financial year ended March31 2016 in Form No.MGT-9 is attached with this report.

24. M aterial changes and commitments if any affecting the financial position of theCompany which have occurred between the end of the financial year of the Company to whichthe financial statements relate and the date of the report.

There is no material changes occurred subsequent to the close of the financial yearended 31.03.2016 affecting the financial position of the Company.

25. Details of significant and material orders passed by the regulators/ courts/tribunals impacting the going concern status and the Company s operations in future

During the year there are no significant and material orders passed by the regulators/courts/tribunals impacting the going concern status and the Company‘s operations infuture.

26. Statement in respect of adequacy of internal financial controls with reference tothe Financial Statements

The Company has in place adequate internal financial controls with reference tofinancial statements.

During the year such controls were tested and no reportable material weakness in thedesign or operation was observed.

27. Deposits

The Company has not accepted any public deposits and as such no amount on account ofprincipal or interest on public deposits was outstanding as on the date of the balancesheet.

28. Particulars of loans guarantees or investments under section 186

• Details of loans guarantee/security provided:

There were no loans guarantees or security made by the Company under Section 186 ofthe Companies Act 2013 during the year under review.

• Details of investments:

SL No. Date of investment Name of investee Purpose for which the proceeds Equity Shares Amount
1 29/04/2015 Sanjita Polymet Ltd For Making investment in Wholly owned Subsidiary 115000USD 7274613.00
2 19/08/2015 Sanjita Polymet Ltd For Making investment in Wholly owned Subsidiary Company 30000USD 1957725.00

29. Particulars of contracts or arrangements with related parties

Date and No. Contract or Arrangement Name of Parties to Contract Particulars of Contract Name of Directors Interested
1st April 2015- 31st March 2016 Shakuntla Gupta Rent paid to Mrs. Shakuntla Gupta of Rs. 4.50 Lacs Shakuntla Gupta
1st April 2015- 31st March 2016 Rita Gupta Rent paid to Mrs. Rita Gupta of Rs. 4.50 Lacs Rita Gupta
29ThApril 2015 Sanco Industries Ltd & Sanjita Polymet Ltd Co. Invested in shares of M/s Sanjita Polymet Ltd for Rs.7274613.00 Sidhant Gupta
19ThAugust 2015 Sanco Industries Ltd & Sanjita Polymet Ltd Co. Invested in shares of M/s Sanjita Polymet Ltd for Rs.1957725.00 Sidhant Gupta
28ThJanuary 2016 Sanco Industries Ltd & Sanjita Polymet Ltd Co. Purchased Goods from M/s Sanjita Polymet Ltd for Rs.7089165.00 Sidhant Gupta
1st April 2015- 31st March 2016 Sanjay Gupta Reimbursement of corporate Expenses to Mr. Sanjay Gupta of Rs. 45.26 Lacs against the payment of credit card used for company expenditure. Sanjay Gupta

30. Corporate Governance

Your Company is committed to maintain the highest standards of Corporate Governance.The Company adheres to the requirements set out by the Securities and Exchange Board ofIndia‘s Corporate Governance practices and the requirements of the SME ListingAgreement and has implemented all the mandatory stipulations prescribed there under.Report on Corporate Governance for the year ended March 31 2016 in terms of Clause 52 ofthe SME Listing Agreements entered into with the Stock Exchanges in India forms part ofthe Annual Report. The requisite certificate from the SAS & Associates (Practicingcompany secretaries) confirming compliance with the conditions of corporate governance isattached to the report on Corporate Governance.

31. Management Discussion and Analysis Report

Management Discussion and Analysis Statement on the Company‘s performanceindustry trends and other material changes with respect to the Company is presented in aseparate section forming part of annual Report.

32. Fraud Reporting

During the year the company has reported no frauds.

33. Revision of financial statements or Board s Report

No revision of financial statements or Board‘s Report.

34. Details of debenture trustees

The provisions related to debenture trustees are not applicable for the company.

35. Disclosures under Sexual Harassment of Women at Workplace (Prevention Prohibition&Redressal) Act 2013

During the Period no cases has been reported under Sexual Harassment of Women atWorkplace

36. Details of unclaimed NCDs

The provisions related to unclaimed NCDs are not applicable for the company.

37. Details of Downstream Investment

The provisions related to downstream investment is not applicable for the company.

38. Details of Voluntary Delisting

The provisions related to voluntary delisting are not applicable for the company.

39. Conservation of energy technology absorption foreign exchange earnings and outgo

The details of conservation of energy technology absorption foreign exchange earningsand outgo are as follows:

A. CONSERVATION OF ENERGY

I. Energy conservation measures taken

Conservation of energy is given top priority by the Company. During the year theCompany has taken following measures towards energy conservation:

• Organizing the operating procedures in such a way that energy losses areminimized by eliminating idle running This has helped in reducing energy per unit.

• Optimization of electrical load by matching motor power capacity to the exactoperational requirements

II. Additional Investment and proposals if any being implied for reduction ofconsumption energy.

At present the company has no proposal for additional investment for reduction ofconsumption of energy.

III. Impact of measures at (I) (II) above for reduction of energy consumptionimpacting the cost of production of goods.

The measures adopted by the company for energy conservation have been instrumental inbringing down the cost of energy per unit of production in addition to improving quality.

B.TECHNOLOGY ABSORPTION

Effects made in technology absorption in prescribed form-B Research & Development(R & D) The company is carrying research & development in routine manufacturingactivities. There is no specific expenditure in research & development.

TECHNOLOGY ABSORPTION ADOPTION AND INNOVATION

The company has already absorbed technology fully

C. FOREIGN EXCHANGE EARNINGS & OUTGOES

(In Rs.)
Foreign Exchange Outgoes 246.04
Foreign Exchange earnings NIL

40. Corporate Social Responsibility (CSR) and its terms of reference

The Company has not developed and implemented any Corporate Social Responsibilityinitiatives as the said provisions are not applicable.

41. Directors Responsibility Statement

In terms of provisions of Section 134 (5) of the Companies Act 2013 your Directorsstate that:

i. In the preparation of the annual accounts the applicable accounting standards hadbeen followed along with proper explanation relating to material departures;

ii. The directors had selected such accounting policies applied them consistently andmade judgments and estimates that are reasonable and prudent so as to give a true and fairview of the state of affairs of the company at the end of the financial year and of theprofit and loss of the company for that period;

iii. 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;

iv. The directors had prepared the annual accounts on a going concern basis; and

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

vi. The directors in the case of a listed company had laid down internal financialcontrols to be followed by the company and that such internal financial controls areadequate and were operating effectively.

42. Acknowledgements

Your Directors would like to express their sincere appreciation for significantcontribution made by the Company‘s executives staff and workers through their deepsense of dedication hard work and commitment and the trust reposed on us by ourcustomers in the overall growth and prosperity of the Company.

We also acknowledge the support and wise counsel extended to us by the analystsfinancial institutions bankers Government authorities customers vendor shareholdersinvestors and members at large. We look forward to having the same support in our futureendeavors.

The Company will make every effort to meet the aspirations of its Shareholders and wishto sincerely thank them for their whole hearted co-operation and support at all times.

For and on behalf of the
Board of Directors
Sd/- Sd/-
Mr. Sanjay Gupta Mr. Sidhant Gupta
(Managing Director) (Director)
Place: Delhi
Date: 30th May 2016