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Sharat Industries Ltd.

BSE: 519397 Sector: Others
NSE: SHARTSEFOD ISIN Code: N.A.
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Sharat Industries Ltd. (SHARTSEFOD) - Director Report

Company director report

Dear Members of Sharat Industries Limited

Your Directors have pleasure in presenting the Twenty Sixth Annual Report of theCompany together with Audited Accounts for the year ended 31st March 2017

1. FINANCIAL HIGHLIGHTS

Particulars Year ending 31.03.2017 Year ending 31.03.2016
(Rs.in lakhs) (Rs.in lakhs)
Total Turnover 16542.49 14985.68
Profit before Depreciation and Interest 1009.66 1138.92
Less: Interest - finance cost 470.26 385.52
Depreciation 268.31 434.49
Profit Before Exceptional items and Tax 271.09 318.91
Exceptional items - -
Provision for Tax 88.30 109.57
Profit after Tax 182.79 209.34
Profit brought forward from the previous year 1110.27 900.93
Profit carried over to Balance Sheet 1293.06 1110.27

2. SUMMARY OF OPERATIONS & STATE OF COMPANY AFFAIRS :

The turnover of the company for the year ended 31st March 2017 was Rs.15766.48 lakhsagainst Rs.14779.01 lakhs in the previous year. During the year the company made sales ofRs. Rs. 14917.37 lakhs against Rs.14040.48 lakhs in the previous year Job work receiptsof Rs. 57.71 lakhs against Rs. 245.00 lakhs in the previous year and during the year thecompany has made an operating profit before tax of Rs.271.10 lakhs against Rs. 318.91lakhs in the previous year.

During the year the company's shrimp sales increased by 46.94% and domestic feedssales come down by 36.20% as compared to the previous financial year Your directors areconfident that the performance of the company will improve in the years to come.

3. FUTURE OUTLOOK :

Our product is well received in the international market as well as domestic market. Weare hopeful of achieving much better results in the years to come. The outlook and futureplans of the Company have been mentioned in detail under the "Management Discussionand Analysis" section that forms part of this report.

4. SHARE CAPITAL:

As on 31st March 2017 the issued subscribed and paid up capital of your company stoodat Rs.220125000/- comprising of 22012500 equity shares of Rs.10/-each.

5. DIVIDEND: In order to retain the profits to strengthen the capital base nodividend has been recommended by the Board for the year under review.

6. RESERVES IF ANY

The Company has not transferred any amount to reserves during the financial year.

7. LISTING OF SHARES :

The equity shares of the Company have been listed on the Bombay Stock Exchange atMumbai. The company has to pay Annual Listing Fees due to the Bombay Stock Exchange forthe year 2017-2018.

The Bombay Stock exchange suspended the trading of Company's Shares and the company ismaking efforts to revoke the suspension of trading and awaiting for the approval from theBSE. Your Company could not establish connectivity with both National SecuritiesDepository Limited (NSDL) and Central Depository Services (India) Limited (CDSL) and thecompany is in the process to establish connectivity and dematerialize the shares.

8. CHANGE IN NATURE OF BUSINESS :

The company continues to be an integrated Aqua Culture company with Hatchery Cultureand Feed and Shrimp Processing & Exports business and during the year the company hasnot changed its business.

9. MATERIAL CHANGES AND COMMITMENTS :

No material changes and commitments affecting the financial position of the companyhave occurred between the end of the financial year of the company to which the financialstatements relate and the date of the report.

10. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY :

The company has in placed adequate financial controls commensurate with size andoperations.

11. ADEQUACY OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THE FINANCIALSTATEMENTS :

The company has Internal Audit and the Audit Committee is in place to take care of thesame.

12. EXTRACT OF ANNUAL RETURN:

As required pursuant to section 92(3) of the Companies Act 2013 and rule 12(1) of thecompanies (Management and Administration) Rules 2014 an extract of annual return in MGT9 as a part of this Annual Report as ANNEXURE II.

13. DETAILS OF SUBSIDIARY/JOINT VENTURES/ASSOCIATE COMPANIES :

There are no Subsidiary/ Joint venture/ Associate companies

14. PERFORMANCE AND FINANCIAL POSITION OF EACH OF THE SUBSIDIARIES ASSOCIATES ANDJOINT VENTURE COMPANIES INCLUDED IN THE CONSOLIDATED FINANCIAL STATEMENT

Not applicable as there are no Subsidiary/ Joint venture/ Associate companies

15. STATUTORY AUDITORS

The term of present Auditors M/s P.A. Reddy & Co. Chartered Accountants isexpired and in their place M/s A R Krishnan & Associates Chartered AccountantsChennai (Firm Registration No: 009805S) are to be appointed by Share holders in theAnnual General Meeting for a period of 5 years from the conclusion of 27th Annual generalMeeting to the conclusion of 32nd Annual General Meeting. The resolution relating toappointment is put to members in the ensuing Annual General Meeting.

16. AUDITORS' REPORTOBSERVATIONS AND REPLIES

The Auditors' Report was qualified and Notes to Accounts and some of the Auditorsremarks in their report are self-explanatory and do not call for any further comments.However with specific reference to Para IV of the said report items wise it is clarifiedas under In respect of Post Retirement Benefits viz. Gratuity as per AccountingStandard-15 issued by the Institute of Chartered Accountants of India the Company shouldmake provision on actuarial basis every year towards liability for future payment ofgratuity.

However during the year provision for gratuity has been made on adhoc basis. Suchcreation of provision is not in accordance with the Accounting Standard referred above. Inthe absence of details we are unable to comment on the effect of such provision on theprofits for the year gratuity liability and net worth of the Company The report of theInsurance Company on actuarial liability for gratuity is awaited. We shall make therequisite provision in the current year. We are taking steps to cover all the employeesunder ESI Scheme in the current year.

In respect of a few creditors and advances recoverable there are neither confirmationsof the year-end balances nor reconciliation of the accounts. In the absence of suchconfirmations / reconciliations we are unable to comment on the effect of such accountson the profit of the Company for the year year-end balances of trade creditors andadvances recoverable and on the net worth of the Company.

Confirmation of balances from some of the creditors who are illiterate farmers couldnot be obtained. However we are following up the matter to obtain the confirmations. We donot foresee any discrepancies in the balances and hence there will not be any effect onthe Accounts.

17. DIRECTORS AND KEY MANAGERIAL PERSONNEL

Mr. S Sharat Reddy Director retire by rotation at the forthcoming Annual GeneralMeeting and being eligible offers himself for reappointment.

18. DECLARATION FROM INDEPENDENT DIRECTORS

The Company has received necessary declaration from each Independent Director undersection 149(7) of the Act that they meet with the criteria of their independence laid downin Section 149(6) of the Act.

19. DIRECTORS' RESPONSIBILITY STATEMENT

The Directors' Responsibility Statement referred to in clause (c) of sub-section (3) ofSection 134 & 134 (5) of the Companies Act 2013 shall state that-

a. in the preparation of the annual accounts the applicable accounting standards hadbeen followed along with proper explanation relating to 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 profit and 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; and e. Thedirectors had laid down internal financial controls to be followed by the company and thatsuch internal financial controls are adequate and were operating effectively.

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.

20. MEETINGS: A calendar of Meetings is prepared and circulated in advance tothe Directors. During the year 7 (Seven) Board Meetings and 5 (Five) Audit CommitteeMeetings 11 (Eleven) Share holders' grievances and Share transfer committee meetings and1(One) Nomination & Remuneration committee meeting were convened and held. The detailsof which are given in the Corporate Governance Report. The intervening gap between theMeetings was within the period prescribed under the Companies Act 2013.

21. AUDIT COMMITTEE :

The Audit Committee of the Board consists of Independent Directors namely Mrs. DurgaThota Chairman Mr. Veerraju Manda and Mr. M.B.R. Prasad as members. During the year allthe recommendations made by the Audit Committee were accepted by the Board.

22. VIGIL MECHANISM :

In pursuant to the provisions of section 177(9) & (10) of the Companies Act 2013a Vigil Mechanism for directors and employees to report genuine concerns has beenestablished. The Vigil Mechanism Policy has been uploaded on the website of the Company atwww.sharatindustires.com.

23. RISK MANAGEMENT:

The Company has policy for identifying risk and established controls to effectivelymanage the risk. Further the Company has laid down various steps to mitigate theidentified risk.

24. CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS ANDOUTGO

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

a) Conservation of energy

The steps taken or impact on conservation of energy The suggestions made by consultants regarding the energy systems are under implementation PF Correction capacitors
The steps taken by the company for utilizing alternate sources of energy Installed to stabilize power factor in the Electricity Supply. The management is taking steps to install solar lights wherever possible.
The capital investment on energy conservation equipment's place and the reasons thereof -

b) Technology absorption

The efforts made towards technology absorption -
The benefits derived like product improvement cost reduction product development or import substitution -
In case of imported technology (imported during the last three years reckoned from the beginning of the financial year) -
(a) the details of technology imported -
(b) the year of import; -
(c) whether the technology been fully absorbed -
(d) if not fully absorbed areas where absorption has not taken place and the reasons thereof the expenditure incurred on Research and Development -

(c) FOREIGN EXCHANGE EARNINGS AND OUTGO

During the year the total foreign exchange used was Rs. 14327048/- and the totalforeign exchange earned was Rs. 1018930781/-.

25. CORPORATE SOCIAL RESPONSIBILITY (CSR)

The Company is not required to constitute a Corporate Social Responsibility Committeeas it does not fall within purview of Section 135(1) of the Companies Act 2013 and henceit is not required to formulate policy on corporate social responsibility.

26. CORPORATE GOVERNANCE

In accordance with SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 (Listing Regulations) a Compliance report on Corporate Governance as per Schedule Vof the Listing Regulations along with a Certificate of Compliance from the PracticingCompany Secretary forms part of this report. ANNEXURE-VII

27. DEPOSITS

The Company has neither accepted nor renewed any deposits from the shareholders orpublic during the year under review.

28. PARTICULARS OF EMPLOYEES :

Statement showing the details of employees who are in receipt of remuneration of Rs. 500000/- or more per month are given in the annexure - IV forming part of this report.

29. MANAGERIAL REMUNERATION

Details of the ratio of the remuneration of each director to the median employee'sremuneration and other details as required pursuant to Rule 5(1) of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 (ANNEXURE V) 30. PARTICULARSOF LOANS GUARANTEES OR INVESTMENTS UNDER SECTION 186 DETAILS OF LOANS:

Date of making loan Details of Borro- wer Amo- unt Purpose for which the loan is to be utilized by the recipient Time period for which it is given Date of BR Date of SR (if reqd) Rate of Interest Security
**NIL**

29. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES :

The particulars of every contract or arrangements entered into by the Company withrelated parties referred to in sub-section (1) of section 188 of the Companies Act 2013including certain arm's length transactions under third proviso thereto shall be disclosedin Form No. AOC-2 as ANNEXURE III.

30. SECRETARIAL AUDIT REPORT

Pursuant to the provisions of Section 204 of the Act and the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 the Board of Directors had appointedSri. D.S. Venkata Narasimhan Company secretaries and report given by them is annexed withthe report as Annexure -I. With reference to the observations made we state that Theunintended delays in filings were due to over sight and Technical reasons. The CompanySecretary (CS) was appointed from 15.07.2016. The company proposes to initiate the processfor dematerialization during the year. The company has approached BSE for revocation ofsuspension of trading and awaiting for their response

31. INTERNAL AUDIT

In terms of sec 138 of the companies' act 2013 and the relevant rules the companyappointed M/s Rao & Sharma Chartered Accountants as the internal auditors of thecompany. The internal auditor directly reports to the audit committee.

32. MANAGEMENT DISCUSSION AND ANALYSIS REPORT

The Directors comments on Management Discussion and Analysis which forms a part ofthis report are restricted to the areas which are relevant to the current scenario of theCompany and outlook is annexed hereto ANNEXURE - VI

33. NO SIGNIFICANT AND MATERIAL ORDERS WERE PASSED BY THE REGULATORS OR COURTS ORTRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANY'S OPERATIONS IN FUTURE

34. OBLIGATION OF COMPANY UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE(PREVENTION PROHIBITION AND REDRESSAL) ACT 2013

To prevent sexual harassment of women at work place a new act the Sexual Harassment ofWomen at Workplace (Prevention Prohibition and Redressal) Act 2013 has been notified on9th December 2013 and every company is required to set up an Internal ComplaintsCommittee to look into complaints relating to sexual harassment at work place of any womenemployee.

Your Company has adopted a policy for prevention of Sexual Harassment of Women atworkplace and has set up Committee for implementation of said policy. During the yearCompany has not received any complaint of harassment.

35. MECHANISM FOR BOARD EVALUATION

Regulation 17(10) of SEBI(LODR) Regulations 2015 states that the board shall monitorand review the board evaluation framework. The Companies Act 2013 states that a formalannual evaluation needs to be made by the Board of its own performance andthat of itscommittees and individual directors.

Schedule IV of the Companies Act 2013 states that the performance evaluation of theindependent directors shall be done by the entire Board of Directors excluding thedirector being evaluated.

The Directors evaluation was broadly based on the parameters such as understanding ofthe Company's vision and objective skills knowledge and experience participation andattendance in Board/Committee meetings; governance and contribution to strategy;interpersonal skills etc.

The Board has carried out the annual performance evaluation of its own performance theDirectors individually as well as evaluation of the working of its Board Committees. Astructured questionnaire was prepared covering various aspects of the Board's functioningsuch as adequacy of the composition of the Board and its Committees Board Cultureexecution and performance of specific duties obligations and governance.

A meeting of the Independent Directors was also held which reviewed the performance ofNon-Independent Directors Chairman and the quality quantity and timelines of flow ofinformation between the Company management and Board.

36. PERSONNEL:

The relations between the management and the staff were very cordial throughout theyear. Your Directors take this opportunity to record their appreciation for theco-operation and loyal services rendered by the employees.

37. ACKNOWLEDGEMENTS:

Your Directors gratefully acknowledge with thanks the constructive guidance andco-operation extended by MPEDA FEDERAL BANK LIMITED and other Government Agencies.

FOR AND ON BEHALF OF THE BOARD
PLACE: VENKANNAPALEM S.SHARAT REDDY S.PRASAD REDDY
DATE: 14th August 2017 DIRECTOR MANAGING DIRECTOR
DIN: 02929724 DIN:00069094