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Sanghi Industries Ltd.

BSE: 526521 Sector: Industrials
NSE: SANGHIIND ISIN Code: INE999B01013
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VOLUME 72802
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Mkt Cap.(Rs cr) 2,682
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OPEN 123.65
CLOSE 123.60
VOLUME 72802
52-Week high 137.00
52-Week low 46.20
P/E 36.50
Mkt Cap.(Rs cr) 2,682
Buy Price 0.00
Buy Qty 0.00
Sell Price 121.90
Sell Qty 745.00

Sanghi Industries Ltd. (SANGHIIND) - Director Report

Company director report

To

The Members of

Sanghi Industries Limited

Your Directors take pleasure in presenting the 30th Annual Report togetherwith the audited financial statements for the year ended 31st March 2017.

Financial Results:

(Rs in Crore)
2016-2017 2015-2016
(Twelve Months) (Nine Months)
Total Income 1104.26 841.76
Profit before Interest Depreciation and Taxation 200.43 152.92
Interest 64.23 22.18
Operating Profit 136.20 130.74
Depreciation 73.06 53.98
Profit Before Tax (PBT) 63.14 76.76
Exceptional items – Net Expenses of Lenders Prepayment - 60.39
Profit Before Tax after exceptional items 63.14 16.38
(Add)/Less: Provision for Tax - 0.39
Profit After Tax (PAT) 63.14 15.98
Other Comprehensive Income (0.17) 0.44
Total Comprehensive Income 62.97 16.42

Dividend

In order to conserve the resources your Directors do not recommend any dividend forthe year under review.

Transfer to Reserves

During the year under review the Company has transferred Rs 13.21 crores to DebentureRedemption Reserve.

Operations and Performance of the Company

Since the current financial year (2016-17) is consisting of twelve months and previousyear (2015-16) is consisting of nine months the figures of current year are notcomparable with the previous year.

During the year ended 31st March 2017 the Total Revenue was Rs 1104.26crores against Rs 841.76 crores in the previous year. The Profit Before Tax andExceptional Items for the year has been Rs 63.14 crores against Rs 76.76 crores inprevious year. The Profit after Exceptional Items and Tax for the current year is Rs 63.14crores against to Rs 15.98 crores in previous year. The Total Comprehensive Income forthe current year is Rs 62.97 crores against Rs 16.42 crores in previous year.

The results are analysed at length in Management Discussion and Analysis Report.

Material Changes and commitments affecting the financial position of the Company

There were no material changes and commitments affecting the financial position of theCompany which have occurred between the end of the financial year of the Company and thedate of this report.

Management Discussion and Analysis

A report on Management Discussion and Analysis (MDA) which forms part of this Reportinter-alia deals adequately with the operations and also current and future outlook of theCompany.

Deposits

The Company has not accepted or renewed any deposits from public falling within thepurview of Section 73 of Companies Act 2013 and the Companies (Acceptance of Deposits)Rules 2014.

Subsidiary Company

The Company has incorporated a wholly-owned subsidiary company "Sange TestingService (Sanghai) Co. Ltd.' at Shanghai China. However the Company has not invested anyfunds in the said subsidiary company and the said subsidiary company has also not startedany operations hence the Company is not required to provide details of subsidiarycompany under prescribed Form AOC – 1.

Board of Directors

In accordance with the provisions of Section 152 of the Companies Act 2013 and theRules framed thereunder Shri Nirubha B. Gohil (holding DIN: 05149953) whole -timeDirector of the Company retires by rotation at the forthcoming Annual General Meeting andhe being eligible offers himself for re-appointment.

Shri Aditya Sanghi (holding DIN: 00033755) and Shri Alok Sanghi (holding DIN: 00033506)have been re-appointed as whole- time Directors of the Company for a period of five yearswith effect from 6th September 2017 subject to approval of the Members at theensuing Annual General Meeting. The resolutions proposing their re-appointment are set outin the Notice convening the Annual General Meeting. In accordance with the provisions ofSection 149 of the Companies Act 2013 read with Schedule IV and the Rules framedthereunder Shri Sadashiv Sawrikar (DIN: 02073022) Shri T.M. Jagan Mohan (DIN: 00423263)Shri Radha Krishna Pandey (DIN: 00190017) Shri Devidas Kashinath Kambale (DIN: 00020656)and Shri Dabbir Badri Narayana Rao (DIN 01180539) who were appointed as an IndependentDirectors for the periods of three consecutive years shall hold the office till theconclusion of forthcoming Annual General Meeting. The resolutions proposing theirre-appointment are set out in the Notice convening the Annual General Meeting. YourDirectors recommend their re-appointment.

During the year under review Shri Jayesh Desai ceased to be Nominee Director of thecompany with effect from 20th February 2017 due to withdrawal of nomination byIDBI Trusteeship Services Ltd. (the "Debenture Trustee").

Key Managerial Personnel

The Key Managerial Personnel (KMP) in the Company as per Section 2(51) and 203 of theCompanies Act 2013 are as follows:

1. Shri Ravi Sanghi Chairman and Managing Director

2. Smt. Bina Engineer Chief Financial Officer and Whole-time Director

3. Shri Anil Agrawal Company Secretary

Your Directors are pleased to inform that Smt. Bina Engineer has been conferred withthe prestigious award of Best CFO of the Year 2016 in the ‘Women' category by theInstitute of Chartered Accountants of India (ICAI) for her exceptional performance andachievements.

Corporate Governance Report

In terms of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 aReport on "Corporate Governance" is attached as Annexure I forming partof this Report.

Directors' Responsibility Statement

To the best of their knowledge and belief and according to the information andexplanations obtained by them and pursuant to the provisions of Section 134(5) of theCompanies Act 2013 with respect to the Directors' Responsibility Statement yourDirectors confirm that:

(a) in the preparation of the Annual Accounts the applicable Accounting Standards hadbeen followed along with proper explanations relating to material departures if any;

(b) they had selected such appropriate accounting policies and applied themconsistently and made judgments and estimates that were reasonable and prudent so as togive a true and fair view of the state of affairs of the Company at the end of thefinancial year on 31st March 2017 and of the profit of the Company for theyear under review;

(c) they had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities;

(d) they had prepared the accounts for the year ended 31st March 2017 on a‘going concern' basis;

(e) they had laid down Internal Financial Controls to be followed by the Company andthat such Internal Financial Controls are adequate and operating effectively; and

(f) they had devised proper systems to ensure compliance with the provisions of allapplicable laws and that such systems were adequate and operating effectively.

Risk Management Policy

Your company has developed and implemented a Risk Management Policy pursuant to Section134(3)(n) of the Companies Act 2013 read with Companies (Accounts) Rules 2014 whichincludes identification of elements of risk if any which in the opinion of the Boardmay threaten the existence of the Company.

The risk management process is designed to safeguard the organisation from variousrisks through adequate and timely action. It is designed to anticipate evaluate andmitigate risks in order to minimise its impact on the business. The risk managementframework of the Company is appropriate compared to the size of the Company and theenvironment under which the Company operates.

At present in the opinion of the Board there is no identification of Risk elementthat may threaten the existence of the Company.

Number of Board Meetings

During the year under review the Board of Directors duly met Four (4) times. Thedetails of the Board Meetings are provided in the Corporate Governance Report which isannexed to the Report.

Insurance

The properties and assets of the Company are adequately insured.

Declaration by Independent Directors

Pursuant to the provisions of Section 134 of the Companies Act 2013 with respect tothe declaration given by the Independent Directors of the Company under Section 149(6) ofthe Companies Act 2013 the Board hereby confirms that all the Independent Directors havegiven declarations and further confirms that they meet the criteria of Independence as perthe provisions of Section 149(6).

Performance Evaluation of the Board Committees and Independent Directors

Pursuant to the provisions of the Companies Act 2013 and Rules made thereunder readwith the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 theBoard has carried the evaluation of its own performance individual Directors itsCommittees including the Chairman of the Board on the basis of attendance contributionand various criteria as recommended by the Nomination and Remuneration Committee of theCompany. The evaluation of the working of the Board its Committees experience andexpertise performance of specific duties and obligations etc were carried out. TheDirectors expressed their satisfaction with the evaluation process and outcome.

The performance of each of the Non-Independent Directors (including the Chairman) wasalso evaluated by the Independent Directors at the separate meeting held of IndependentDirectors of the Company.

Policy on Directors' Appointment and Policy on Remuneration

Pursuant to the requirements of Section 134 and 178 of the Companies Act 2013 thepolicy on appointment of Board Members and policy on remuneration of the Directors KMPsand Senior Management is attached as Annexure II to this Report.

Secretarial Audit Report

M/s Parikh Dave & Associates Practicing Company Secretaries were appointed asSecretarial Auditors of the Company for the financial year 2016-17 pursuant to theprovisions of Section 204 of the Companies Act 2013. The Secretarial Audit Reportsubmitted by them in prescribed Form MR-3 is attached as Annexure III to thisReport.

Contracts or Agreements with Related Parties

During the year under review there were no Related Party Transactions entered by theCompany with related parties hence reporting in Form AOC – 2 as required underprovisions of Section 134 read with Section 188 of the Companies Act 2013 and Rule 8 (2)of the Companies (Accounts) Rules 2014 is not applicable to the Company.

Necessary related party disclosures are provided in Note 38 which is forming the partof the notes to financial statements. The policy on Related Party Transactions has beenuploaded on the website www.sanghicement.com/policies

Particulars of Employees

The information required under Section 197 of the Companies Act 2013 read with Rule5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014is attached as Annexure IV to this Report.

The statement containing particulars of employees as required under Section 197 of theCompanies Act 2013 read with Rule 5(2) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 will be provided upon request. In terms of Section 136of the Companies Act 2013 the Report and accounts are being sent to the members andothers entitled thereto excluding the information on employees particulars which isavailable for inspection by members at the Registered Office of the Company duringbusiness hours on working days of the Company. If any member is interested in obtaining acopy thereof such member may write to the Company Secretary in this regard.

Internal Financial Control and their adequacy

The Company has adopted Internal Control System considering the nature of its businessand the size and complexity of operations. The Board has adopted the policies andprocedures for ensuring the orderly and efficient conduct of its business includingadherence to the Company's policies the safeguarding of its assets the prevention anddetection of frauds and errors the accuracy and completeness of the accounting recordsand the timely preparation of reliable financial disclosures etc. Systems and proceduresare periodically reviewed to keep pace with the growing size and complexity of yourCompany's operations.

Particulars of Loans Guarantees or Investments under Section 186 of the Companies Act2013

The Company has not made any Loans or provided any Guarantee or made any Investmentsfalling under purview of Section 186 of the Companies Act 2013 during the financial year2016-17.

Statutory Auditors

Pursuant to the provisions of Section 139 (2) of the Companies Act 2013 the existingJoint Statutory Auditors M/s. Ankit & Co. Chartered Accountants Hyderabad and M/s.Haribhakti & Co. LLP Chartered Accountants Ahmedabad who have been acting asStatutory Auditors of the Company since more than ten years cannot be re-appointed as theStatutory Auditors for the year 2017-18.

In view of the said provisions of Companies Act 2013 the Company has approached M/s.Chaturvedi & Shah Chartered Accountants (Firm Registration Number: 101720W) and M/s.S. K. Mehta & Co. Chartered Accountants (Firm Registration Number: 000478N) fortheir appointment as Joint Statutory Auditors of the Company. They have consented to actas the Joint Statutory Auditors of the Company and have also given the confirmation to theeffect that their appointment if made by the Company would be within the limitsprescribed under Section 139 of the Companies Act 2013.

Accordingly a resolution seeking members' approval for their appointment as JointStatutory Auditors of the Company for the period of 5 consecutive years from theconclusion of this Annual General Meeting till the conclusion of Annual General Meeting tobe held in the financial year 2022 is proposed. The Board recommends passing of theproposed resolution.

Audit Committee

The Audit Committee of the Company as on 31st March 2017 consists offollowing Directors as its members:

1. Shri Sadashiv Sawrikar – Chairman

2. Shri R. K. Pandey– Member

3. Shri T. M. Jagan Mohan - Member

Vigil Mechanism

In accordance with the provisions of Section 177(9) of the Companies Act 2013 and theRules made thereunder read with the Regulation 22 of SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 your Company has established a Vigil Mechanismtermed as Whistle Blower Policy for Directors and employees to report the unethicalbehavior malpractices wrongful conduct frauds violations of the Company's code ofConduct which also provides for adequate safeguards against victimization ofdirector(s)/employees who avail of the mechanism and also provide for direct access to theWhistle Officer/ Chairman of the Audit Committee.

The Whistle Blower Policy is made available on the website of the Companywww.sanghicement.com/policies

Significant and Material Orders passed by the Regulators or Courts or Tribunals

During the year under review there was no significant or material order passed by anyregulatory authority court or tribunal which shall affect the going concern status of theCompany's operations in future.

Listing

The Company's securities are listed with the Stock Exchanges at National Stock Exchangeand Bombay Stock Exchange. The Company has paid the listing fees for the year 2017-18 toboth the Stock Exchanges.

Cost Audit

The Company has appointed M/s. N. D. Birla & Co. Cost Accountants Ahmedabad asCost Auditor of the Company for audit of cost accounting records for the year 2017-18. TheAudit Report of the cost accounts of the Company for the year ended 31st March2017 will be submitted to the Central Government in due course.

Corporate Social Responsibility

At Sanghi Industries Limited (SIL) the Corporate Social Responsibility (CSR) has beenan integral part of the way we have been doing our business since inception. SIL has 4.1million tonnes per annum capacity cement plant in the Abdasa taluka of Kutch district inGujarat. Right from the beginning SIL has focused on developing the social infrastructurein the surrounding area where most villages suffered from chronic ills like limitedlivelihood options acute scarcity of water poor or no healthcare facilities barren landand no set up for education.

SIL has always believed in transformation of socio-economic conditions of the region itoperates in. The Company is conscious about the responsibility towards society and hasproved itself as a responsible Corporate Citizen.

SIL enjoys the distinction of being one of the first cement companies in India to beawarded SA:8000:2008 i.e. Social Accountability Certificate for its plant for the lastseven years (earlier SA:8000:2001). Social Accounting is a process of ongoing monitoringevaluation and accountability which helps an organization to measure its performanceagainst social environmental and economic objectives and ensures that its working is inaccordance with its values.

This certification is a result of the sincere and untiring efforts put in by themanagement for fulfilling its Corporate Social Responsibility over the last decade for:

• Creating green revolution in the desert Kutch region by cultivating land forgrowing trees fruits vegetables and flowers;

• Providing educational facilities through a CBSE affiliated School;

• Providing hospitals and first aid facilities within few hundred kilometers; and

• Conducting social awareness programmes on various issues.

The Company has constituted the Corporate Social Responsibility Committee in compliancewith the provisions of Section 135 of the Companies Act 2013 read with the Companies(Corporate Social Responsibility Policy) Rules 2014. The Corporate Social ResponsibilityPolicy enumerating the CSR Activities to be undertaken by the Company in accordance withthe Schedule VII of the Companies Act 2013 approved and adopted by the Board of Directorsis also placed on the website of the Company www.sanghicement.com/policies The requisitedetails on CSR Activities pursuant to Section 135 of the Companies Act 2013 and Rulesframed thereunder are annexed as Annexure V to this Report.

The details relating to the composition of Committee and meetings convened of theCommittee etc. are furnished in the Corporate Governance Report which is forming the partof this Report.

Extract of the Annual Return

Extract of the Annual Return as on 31st March 2017 in the prescribed formMGT - 9 pursuant to provisions of Section 92(3) of the Companies Act 2013 and theCompanies (Management and Administration) Rules 2014 is annexed to this Report as

Annexure VI.

Environment and Pollution Control

Company's plant is certified for Environment Management System ISO:14001:2004.Stringent internal environmental measures are adopted adhered to and maintained to runthe plant operations in an eco-efficient manner.

Some of these measures include:

Conservation of Energy Technology Absorption and Foreign Exchange Earnings and Outgo:

(a) Conservation of Energy-
(i) The steps taken or impact on conservation of energy; Conducted Energy Audit and implemented the energy conservation action plan;
Continuous process optimization & reduction in false air ingress;
Up-gradation of main Raw Mill bag house to reduce pressure drop;
Installation of closed mines belt conveyor of 3 KM for limestone transportation from Mines to Clinker Plant;
Installation of Slip Power Recovery System (SPRS) in coal mills;
Segregate vital and non-vital compressed air application and re-route entire compressed air network for energy saving;
Adaption to best practices and processes of the sector;
Replacement of conventional lighting system with LED lighting system in
Plant & Colony; and
Higher usage of alternative fuel in Kiln.
(ii) The steps taken by the company for utilizing Installation of automated Alternative Fuel & Raw Material (AFR) system in Clinker plant alternate sources of energy for utilizing waste like used Oil Coal Tar Plastics Oily cotton waste ETP sludge Paint sludge etc generated by other industries as an alternative fuel in Kiln.
Started erection of 15 MW Waste Heat Recovery System (WHRS) for power generation. on energy ` 1824 Lac
(iii) The capital investment conservation equipments
(b) Technology absorption-
(i) The efforts made towards technology absorption: The MIS Cell and Energy Steering Committee is working on energy accounting and conservation program by handling issues associated with. SIL strive to implement latest technologies for energy efficiency alternative resources & minimize adverse impact on environment. The regular Energy Audit is carried out by the third party to identify the area for improvement. product improvement cost reduction product development & import substitution
(ii) The benefits derived like product improvement cost reduction product development or import substitution.
(iii) In case of imported technology (imported during the last three years reckoned from the beginning of the financial year: NA
the details of technology imported; NA
the year of import; NA
whether the technology been fully absorbed; and NA
if not fully absorbed areas where absorption has not taken place and the reasons thereof. NA
(c) Research and Development
Specific areas in which R&D carried out by the Company New Process Developed.
Improvement in existing production process(s).
Energy conservation.
Pollution control.
(i) Benefits derived as result of the above R&D Use of pond ash increment in kiln feed blended cement for raw material conservation.
Modification in raw mill commissioning of new cement grinding unit.
SPRS for all HT fans raw-mix optimization and efficiency in fuel blending.
Real time monitoring of SPM water sprinklers for fugitive emission compliance of environmental norms during operation.
(ii) Future Plan of Action Cooler up-gradation enhance AFR contribution.
Develop new product which is Eco-friendly up-gradation of coal mill classifier.
Kiln inlet seal modification reduce limestone consumption add conversion factor from raw mill to clinker.
Close loop on quality parameters find alternative material for cement strength.

 

(iii) Expenditure on R&D (Rs In Lacs)
2016-17 2015-16
Capital 128.48 3.85
Recurring 129.90 126.70
Total R& D Expenditure 258.38 130.55

Foreign Exchange Earnings and Outgo

The particulars with regard to foreign exchange earnings and outgo are set out in Note40 of Note to the Financial Statements.

International Accreditations

Your company is amongst the very few corporates in India and certainly one of the firstcement plants in India to receive the following 5 International accreditation.

• ISO 9001:2008 (Quality Management System Standard)

• ISO 14001:2004 (Environmental Management System Standard)

• OHSAS 18001:2007 (Occupational Health & Safety Management System Standard)

• SA 8000:2014 (Social Accountability System Certificate)

• ISO/IEC 17025:2005 (NABL accreditation for Chemical and Mechanical Testing)

Recognitions for best practices

Awards conferred to our various mines during celebration of "7thMetalliferous Mines Safety Week - 2016" under the aegis of Directorate General ofMines Safety Ahmedabad Region are as below:-

S. No. Awards conferred to Jadua Limestone Mines: Awarded
1 Overall Performance. First Prize
2 Publicity Propaganda & Fire Fighting First Prize
3 Health Safety Welfare & Occupational Health Check up facilities Second Prize
4 Raising by Explosives Storage & Transportation/Raising by Surface Miner Second Prize
5 Best Stall First Prize
Awards conferred to Motiber Silica Sand Mines:
1. Overall Performance First Prize
2. Quarry Working & General Safety First Prize
3. Appointment of Statutory Person & Maintenance of Records Second Prize

The Company has also won following award during celebration of "24thMines Environment & Mineral Conservation Week Celebrations – 2016-17" MEMCCouncil of Gujarat under the aegis of Indian Bureau of Mines Gandhinagar Region:-

S. No. Awards conferred to Jadua Limestone Mines: Awarded
1 Systematic & Scientific Development Second Prize

Cashless Township

Sanghipuram township is on the forefront of the Mission of Digital India and Less-CashIndia. The Hon'ble Prime Minister Shri Narendra Modi has recognized Sanghipuram as a"Cashless Township" at the function held under auspices of NITI Aayog at Nagpuron 14th April 2017.

Industrial Relations

The Company's Industrial relations with its employees continued to be cordialthroughout the year under review. Your Directors wish to place on record theirappreciation for the excellent team work with which the workers and officers of theCompany at all levels have contributed individually and collectively to the performance ofthe Company.

The Company has not received any complaint under The Sexual Harassment of Women atWorkplace (Prevention Prohibition and Redressal) Act 2013.

Appreciation/Acknowledgement

Your Directors wish to place on record their sincere appreciation for the excellentassistance and co-operation received from the Governmental authorities the consortium ofbanks and financial institutions customers vendors and investors for their continuedsupport during the year.

For and on behalf of the Board
Place: Ahmedabad Ravi Sanghi
Date: 24th May 2017 Chairman & Managing Director

Annexure II

POLICY ON DIRECTOR'S APPOINTMENT AND REMUNERATION

In terms of Section 178 of the Companies Act 2013 read with the applicable rulesthereunder and Regulation 19 of SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 Nomination and Remuneration Committee recommended the policy onnomination and remuneration of Directors Key Managerial Personnel and Senior Managementof the Company which was approved and adopted by the Board of Directors of the Company.

Objectives:

• To provide guidance to the Board for appointment and removal of Directors KMPand Senior Management;

• To formulate criteria for performance evaluation of Directors KMP and SeniorManagement and to provide necessary evaluation report to the Board; and

• To recommend to the Board remuneration payable to the Directors KMP and SeniorManagement.

Role of Nomination and Remuneration Committee:

The Committee shall perform the role for following matters:

Criteria for Appointment of Director:

• To determine the age qualifications qualities skills positive attributes andindependence of a director and other expertise required to be a Director.

Nomination of directors:

• Identifying screening and reviewing candidates qualified to be appointed asExecutive Directors Non-Executive Directors and Independent Directors.

• Recommending to the Board candidature for appointment or re-appointment ofDirectors; and

• 7KH_Nomination Committee may act on its own in identifying potential candidatesinside or outside the Company or may act upon proposals submitted by the Chairman of theBoard of Directors. The Committee will review and discuss all documents pertaining tocandidates and will conduct evaluation of candidates in accordance with a process that itdeem fit and appropriate passing on the recommendations for the nomination to the Board.

Evaluation of Director:

• Committee develops subject to approval by the Board a process for an annualevaluation of the performance of the Board the individual directors on the basis ofdetailed performance parameters set for directors at the beginning of the year.

• Committee may from time-to-time also evaluate the usefulness of suchperformance parameters and make necessary amendments.

Consultative role:

• Nomination Committee plays a consultative role for any appointment requiringBoard approval as stipulated by law or regulation for top management positions such asthat of the Manager Chief Financial Officer and Company Secretary. It provides its adviceand recommendations to the Board.

Evaluation of KMP and Senior Management:

• The committee shall annually review and approve for the KMP and SeniorManagement the corporate goals and objectives applicable to them evaluate at leastannually their performance in light of those goals and objectives and determine andapprove their (a) annual base salary (b) annual incentive bonus including the specificgoals and amount (c) any other benefits compensation or arrangements based on thisevaluation.

• The Committee may also make recommendations to the Board with respect toincentive compensation plans. The committee may review the Company's incentivecompensation arrangements to determine whether they encourage excessive risk-takingreview and discuss at least annually the relationship between risk management policies andpractices and compensation and evaluate compensation policies and practices that couldmitigate any such risk.

Duties of Nomination and Remuneration Committee:

A. The duties of the Committee in relation to nomination matters include:

• To ensure that appropriate induction and training programme are in place for newDirectors and members of Senior Management and to periodically review its effectiveness;

• To ensure that on appointment Non-Executive Directors receive a formal letterof appointment in accordance with the Guidelines provided under the Companies Act 2013;

• To determine the appropriate size diversity and composition of the Board;

• To identify and recommend names of Directors who are to retire by rotation;

• To set up a formal and transparent procedure for selecting Directors forappointment to the Board;

• To evaluate the performance of the Board members and Senior Management in thecontext of the Company's performance from business and compliance perspective;

• To develop a succession plan for the Board and Senior Management and toregularly review the plan;

• To recommend necessary changes in the Board;

• To delegate any of its powers to the members or the Secretary of the Committee;and

• To consider any other matters as may be requested by the Board.

B. The duties of the Committee in relation to remuneration matters include:

• To determine the Remuneration Policy and while designing the remunerationpackage it must consider that the level and composition of remuneration is reasonable andsufficient to attract retain and motivate directors of the quality required to run theCompany successfully;

• To ensure that the remuneration to Directors KMP and Senior Management of theCompany involves a balance between fixed and incentive pay reflecting short and long termperformance objectives appropriate to the working of the Company and its goals;

• To delegate any of its powers to the members or the Secretary of the Committee;and

• To consider any other matters as may be requested by the Board.

For and on behalf of the Board
Place: Ahmedabad Ravi Sanghi
Date: 24th May 2017 Chairman & Managing Director

ANNEXURE - A

To

The Members

SANGHI INDUSTRIES LIMITED CIN: L18209TG1985PLC005581

Sanghi Nagar P.O. Hayatnagar Mandal Ranga Reddy District Telangana – 501511.

Our report of even date is to be read along with this letter

1. Maintenance of secretarial records is the responsibility of the management of thecompany. Our responsibility is to express an opinion on these secretarial records based onour audit.

2. We have followed the audit practices and processes as were appropriate to obtainresponsible assurance about the correctness of the contents of secretarial records. Theverification was done on test basis to ensure that correct facts are reflected insecretarial records. We believe that the processes and practices followed by us provide areasonable basis for our opinion.

3. We have not verified the correctness and appropriateness of financial records andBooks of Accounts of the Company.

4. Wherever required We have obtained the management representation about thecompliance of laws rules and regulations and happening of events etc.

5. The compliance of the provision of Corporate and other applicable laws rulesregulations standards is the responsibility of management. Our examination was limited toverification of procedures on test basis.

6. The Secretarial Audit Report is neither an assurance as to the future viability ofthe Company nor the efficacy or effectiveness with which the management has conducted theaffairs of the Company.

For Parikh Dave & Associates
Company Secretaries
Umesh G. Parikh
Place: Ahmedabad Partner
Date: May 18 2017 FCS No. 4152 C P No. 2413

Annexure IV DISCLOSURE UNDER SECTION 197 (12) AND RULE 5 (1) OF THE COMPANIES(APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL) RULES 2014

(i) Ratio of the remuneration of each director to the median remuneration of theemployees of the Company for the financial year ended 31st March 2017;

Sl. No.. Director Remuneration Median Remuneration Ratio
(Rs in lacs P.A.) (Rs in lacs P.A.)
1. Shri Ravi Sanghi 207.18 5.57 37
2. Shri Aditya Sanghi 128.79 5.57 23
3. Shri Alok Sanghi 128.79 5.57 23
4. Smt. Bina Engineer 128.79 5.57 23
5. Shri N. B. Gohil 50.40 5.57 9

(ii) The percentage increase in remuneration of each director Chief Financial OfficerCompany Secretary in the financial year;

Sl. No.. Name Designation % Increase
1. Shri Ravi Sanghi Chairman and Managing Director Nil
2. Shri Aditya Sanghi Whole-time Director Nil
3. Shri Alok Sanghi Whole-time Director Nil
4. Smt. Bina Engineer Whole-time Director and Chief Financial Officer Nil
5. Shri N. B. Gohil Whole-time Director Nil
6. Shri Anil Agrawal Company Secretary __

The other Directors are Non Executive Directors and are receiving sitting fee of Rs4500 (Rupees Four Thousand Five Hundred Only) and incidental expenses of Rs 3000 (RupeesThree Thousand Only) from the Company for attending each meeting of the Board/AuditCommittee/Nomination and Remuneration Committee/Corporate Social ResponsibilityCommittee/Risk Management Committee of Directors and for attending the IndependentDirectors meeting. There is no increase in said sitting fees during the financial year2016-17.

(iii) The percentage increase in the median remuneration of employees in the financialyear: 2.59%

(iv) The number of permanent employees on the rolls of company:

774 Employees.

(v) Average percentile increase already made in the salaries of employees other thanthe managerial personnel in the last financial year and its comparison with the percentileincrease in the managerial remuneration and justification thereof and point out if thereare any exceptional circumstances for increase in the managerial remuneration:

The average increase in salaries of employees other than managerial personnel in2016-17 was 3.31% percentage increase in the managerial remuneration for the year was NIL.

(vi) Affirmation that the remuneration is as per the remuneration policy of theCompany:

It is affirmed that the remuneration paid is as per the remuneration policy of theCompany.

For and on behalf of the Board
Place: Ahmedabad Ravi Sanghi
Date: 24th May 2017 Chairman & Managing Director