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MMP Industries Ltd.

BSE: 535071 Sector: Metals & Mining
NSE: MMP ISIN Code: INE511Y01018
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MMP Industries Ltd. (MMP) - Director Report

Company director report

To

The Shareholders (Members) of MMP Industries Limited

The Board of Directors of the Company hereby present the Forty-Fifth (45 ) AnnualReport together with the Audited Financial Statements (Standalone and Consolidated) of theCompany for the year 2017-2018 ended 31 March 2018.

1. INITIAL PUBLIC OFFER (IPO)

The Company pursuant to the provisions of Section 26 and 32 of the Companies Act 2013read with rules made thereunder including the SEBI (ICDR) Regulations 2009 (as amended)and in terms of Prospectus Dated 5 April 2018 offered 4500000 (Forty-five lakh) equityshares of face value of Rs.10/- each at a premium of Rs.178/- per equity share in thecapital of the Company through Book Building process in the Initial Public Offer (IPO).

The IPO Bid / Issue opened on Wednesday the 28 March 2018 and closed on Wednesday the4 April 2018 except for Anchor Investors the Bidding date was Tuesday the 27 March2018.

The issue and allotment of equity shares in the capital of the Company was made onTuesday the 10 April 2018. The designated Stock Exchange National Stock Exchange of IndiaLimited has approved the listing and trading of equity shares in the capital of theCompany on its SME Platform namely NSE EMERGE effective Thursday the 12 April 2018.

2. OVERALL AFFAIRS / PERFORMANCE / FINANCIAL RESULTS

During the financial year 2017-2018 under review the Company has recorded the higherstandalone gross revenue of Rs. 24924.39 lakh up by 10.01% over the revenue of Rs.22655.71 lakh of FY 2016-2017. There is an excellent growth in operating profit (41.97%)and profit before tax and exceptional item (56.43%) as compared to growth in revenue(10.01%) over the corresponding figures pertaining to previous FY 2016-2017. Howeverthere is nominal growth of 6.06% in net profits from 1449.32 lakh to 1537.17 lakh mainlydue to an exceptional item of Rs. 464.54 lakh (surplus on account of transfer (assignment)of leasehold rights in respect of Plot No. K-61 Butibori MIDC Area Nagpur) pertaining toFY 2016-2017.

During the financial year 2017-2018 under review the share of profits from AssociateCompanies of Rs. 366.44 lakh of FY 2017-2018 as compared to Rs. 271.87 lakh pertaining toFY 2016-2017 has been added to make a consolidated net profits of 1903.61 lakh FY2017-2018 as compared to Rs.1721.20 lakh pertaining to FY 2016-2017 of the Company.

The summarized financial results (standalone and consolidated) of the Company are asfollows :-

Standalone

Consolidated

Particulars
FY 2017-2018 FY 2016-2017 FY 2017-2018 FY 2016-2017

(Rupees in Lakh Except for EPS)

Revenue from Operations (Gross) 24924.39 22655.71 24924.39 22655.71
(Less) Excise Duty 650.82 2333.75 650.82 2333.75
Revenue from Operations (Net) 24273.57 20321.96 24273.57 20321.96
(Add) Other Income 69.79 51.23 69.79 51.23
Total Revenue (Income) 24343.36 20373.19 24343.36 20373.19
(Less) Total Expenditure (Excluding Interest and Depreciation) 21319.46 18243.25 21319.46 18243.25
Profit before Interest Tax and Depreciation 3023.90 2129.94 3023.90 2129.94
(Less) Interest (Finance Cost) 384.79 390.12 384.79 390.12
(Less) Depreciation 201.75 181.73 201.75 181.73
Profit before Tax Exceptional and Extra-ordinary Item/s 2437.36 1558.09 2437.36 1558.09
(Add) Exceptional and Extra-ordinary Item/s 0.00 464.54 0.00 464.54

 

Standalone

Consolidated
Particulars
FY 2017-2018 FY 2016-2017

FY 2017-2018 FY 2016-2017

(Rupees in Lakh Except for EPS)

Profit Before Tax (PBT) 2437.36 2022.63 2437.36 2022.63
Current Tax 820.45 500.00 820.45 500.00
Deferred Tax 39.60 54.44 39.60 54.44
Income Tax related to earlier years 40.14 18.86 40.14 18.86
Profit After Tax (PAT) 1537.17 1449.33 1537.17 1449.33
Share of Profit from Associate Company - - 366.44 271.87
Basic & Diluted Earnings Per Share (Rupees) 12.36 11.66 15.31 13.84

3. SHARE CAPITAL

During the financial year 2017-2018 ended 31 March 2018 under review:-

l the nominal (authorised) share capital of the Company was increased from Rs.85000000 to Rs. 200000000 vide special resolution passed at the Extra-ordinarygeneral meeting held on 18 August 2017;

l the Company has issued 4145025 equity shares as bonus shares to the existingshareholders in the ratio of 1 (one) equity share for every 2 (two) equity shares held ason record date i. e. 13 September 2017 by capitalizing Rs. 41450250 out of the GeneralReserves of the Company vide Shareholders' special resolution passed at the Extra-ordinary general meeting dated 18 August 2017 and Board resolution dated 13 September2017;

l the issued subscribed and paid-up share capital of the Company was increased fromRs. 82900500 to Rs. 124350750 by issuing bonus shares in proportion of 1 (one) Bonusequity share for every 2 (two) existing fully paid-up equity shares of the Company;

l the changes in the issued subscribed and paid-up share capital reserves andsurplus accounting of IPO proceeds and utilisation thereof due to IPO shall reflect inthe financial statements pertaining to the financial year 2018-2019 ending 31 March 2019.

4. DIVIDEND

The objects of the IPO is setting up of a new facility for manufacturing of AtomisedAluminium Powder Pyro and Flake Aluminium Powder and Aluminium Foils at Umred MIDC Area.For implementation of all these projects the Company is required to infuse its internalaccruals in addition to IPO proceeds. As such the Board of Directors does not recommendany dividend on the equity shares for the financial year 2017-2018 ended 31 March 2018.

5. TRANSFER TO RESERVES (BALANCE SHEET)

The sum/s transferred to reserves and surplus (balance sheet) account/s viz. CapitalReserve (Special Capital Incentives)

Revaluation Reserve General Reserve Profit & Loss and closing balance/s thereofas at 31 March 2018 (FY 2017 2018) [Previous Year ended 31 March 2017 (FY 2016-2017)] isas follows :-

Particulars FY 2017-2018 FY 2016-2017

Amount in Rupees (Lakhs)

1. Capital Reserve
a. Opening Balance 58.21 40.32
b. (Add) Additions during the year 0.00 17.89
c. (Less) Transferred during the year 17.89 0.00
Closing Balance 40.32 58.21

 

Particulars FY 2017-2018 FY 2016-2017

Amount in Rupees (Lakhs)

2. Revaluation Reserve
a. Opening Balance 6.08 6.08
b. (Add) Transfer from Statement of Profit & Loss 0.00 0.00
Closing Balance 6.08 6.08
3. General Reserve
a. Opening Balance 407.13 407.13
b. (Add) Transfer from Statement of Profit & Loss 0.00 0.00
c. (Less) Amount utilised for issuance of Bonus Shares 407.13 0.00
Closing Balance 0.00 407.13
4. Profit & Loss Account
a. Opening Balance 3346.82 1897.49
b. (Add) Net Profit for the year 1537.17 1449.33
c. (Less) Amount utilised for issuance of Bonus Shares 7.37 0.00
d. (Less) Adjustments in respect of provisions of Gratuity &
188.13 0.00
Leave Encashment [Net of Taxes]
Closing Balance 4688.48 3346.82
Total Reserve and Surplus 4734.87 3818.23

6. NATURE OF BUSINESS ACTIVITIES AND CHANGES THEREOF

During the financial year 2017-2018 under review the Board of Directors thoughexploring addition to existing business and commercial activities had neither beenexplored any change in nature of business and commercial activities for the Company northere is a change in nature of business and commercial activities of the Company. As suchno specific details regarding change in nature of business activities are required to begiven or provided.

7. STATE OF COMPANY'S AFFAIRS

Your Company has registered a consistent and strong revenue growth both in termsrevenue and earnings in the financial year 2017-2018 ended 31 March 2018 under review. Theconsolidated net revenue from operations of Rs. 24273.57 Lakh in FY 2017-2018 is up by19.45% as compared to Rs. 20321.96 Lakh in FY 2016-2017. The operating profit (EBIDTA) atRs. 3023.90 Lakh in FY 2017-2018 is 41.97% higher than Rs. 2129.94 Lakh in FY 2016-2017.The Net profit after tax for the FY 2017-2018 has increased from Rs. 1449.32 Lakh(Including exceptional item of Rs. 464.53 Lakh) to Rs. 1537.16 Lakh. The overallperformance of the respective division/s of the Company during the financial year2017-2018 ended 31 March 2018 are provided hereunder :-

ALUMINIUM POWDER AND PASTE DIVISION

The total revenue of this division is Rs. 17680.09 Lakh up by 26.43% as compared tothe revenue of Rs. 13984.35 Lakh of FY 2016-2017. The segment result is at Rs. 2655.44Lakh which is higher by 59.17% compared to Rs. 1668.26 Lakh of FY 2016-2017.

ALUMINIUM CONDUCTORS DIVISION

The total revenue of this division at Rs. 5762.73 Lakh up by 1.98% as compared to therevenue of Rs. 5651.02 Lakh of FY 2016-2017 The segment result is at Rs. 545.62 Lakh whichis up by 5% compared to Rs. 519.62 Lakh of FY 2016- 2017.

FUTURE PROSPECTS

NEW MANUFACTURING FACILITIES AT UMRED - MIDC AREA NAGPUR

The implementation/s of setting up of a new facility for manufacturing of AtomisedAluminium Powder Pyro and Flake Aluminium Powder and Aluminium Foils at Umred MIDC Areaare as per schedule and plan/s as provided in the Objects of the Offer Document(Prospectus) of the Company.

After completion of allotment of industrial land at Umred MIDC Area close to Nagpurcity in the State of Maharashtra the land development work (cutting filling andcompaction) is in full swing. The electricity (temporary) connection from MSEDCL requiredfor construction activities has been charged and temporary office and allied facilitiesfor site management have been set up. The contract for site development civil work roadsand water drains has been released.

The orders for major machineries (2 nos. furnaces for atomized powders and 6 nos. ofball mills for pyro and flake powders) have been released by the Company.

The application for consent to establish has been made to the Maharashtra PollutionControl Board (MPCB). The civil and structural designs of various factory buildings havebeen finalized and the Request for Quotation (RFQ's) for the Pre-engineered Buildings havebeen released.

ALUMINIUM POWDERS

The growth of low cost and urban housing is expected to be above the GDP growth withthe Government's objective of housing for all by 2022. As such the Aluminium powder usagein AAC blocks is likely to be strong and grow at 12 to 15% with more and more factoriesstarting production and stabilizing operations. Your Company is making efforts to exportthis product in South East and it is expected that after the initial customer resistancea breakthrough is possible in this vast market potential. With this in view an additionalcapacity is planned to be added in the next 12 to 15 months for Aluminium powders for AACat the new manufacturing facilities at Umred - MIDC Area.

In line with the mining growth of 10 to 12% the usage of Aluminium powders for theslurry explosives will continue to grow and your Company's strong market share will befurther consolidated. Aluminium powders usage in other user segments like pesticidesdefence applications and exothermic applications are continuing to grow well.

The sale of Atomized powder to the Associate Company (TMI) will be ramped upspecifically with your Company setting up an additional capacity for Atomized Powders atthe new manufacturing facilities in Umred - MIDC Area.

FUTURE PLANS FOR ALUMINIUM POWDERS

Recently your Company has been listed on the NSE Emerge and a significant part of theIPO proceeds will be utilized in enhancing the capacity of Atomized powders as well asPyro & Flake powders. For that purpose your Company has allotted MIDC land at Umred(60 KM from Nagpur) and plant design building and civil infrastructure at this greenfieldsite is now under process. Subject to receipt of approval/s from the Government as per ourestimates we expect partial capacities to be operational for trials during the FourthQuarter (Q-4) of the FY 2018-2019.

ALUMINUM PASTE

With the transfer of production capacity to TMI for Aluminium pastes your Company willlargely focus on promotion of leafing powders for the ink and plastic industries. This hasa decent export potential and a growing domestic market. The Aluminium paste capacity willalso act as an additional capacity support to TMI in times of heavy demand.

ALUMINIUM CONDUCTORS

Your Company has plans to meet the requirements of Power Grid Corporation of India inthe FY 2018-2019 and open up a new potential for its Aluminium conductors. The presentlocal demand with private contractors is satisfactory but growth is hindered because ofdelay in payments by the electrical distribution companies to the private contractors.However the Government rates and payment terms with private contractors are expected tobe resolved and the second half of the FY 2018-2019 will see demand uptick. It is expectedthat Aluminium conductor revenue will rise by 20 to 25% over the FY 2017-2018.

8. HOLDING SUBSIDIARY ASSOCIATE AND JOINT VENTURE COMPANY

During the financial year 2017-2018 ended 31 March 2018 under review the Company isneither a Holding Company nor a Subsidiary Associates or Joint Venture Company of anyother Company or Companies pursuant to the provisions of the Companies Act 2013 read withrelevant rules made thereof.

However Star Circlips & Engineering Limited [CIN - U24110MH1974PLC017301] andToyal MMP India Private Limited [CIN - U36990MH2016FTC281521] were continued to be theAssociate Companies of the Company during the financial year 2017-2018 ended 31 March2018.

STAR CIRCLIPS AND ENGINEERING LIMITED ('Star Circlips')

Star Circlips is the engineering and specialized fastener manufacturing Company. TheCompany's products are extensively used in the automobile sector comprising of 2 and 3wheelers passenger cars commercial vehicles and tractors. The Company's growth is fueleddirectly by the ever increasing demand in India Europe and USA in the auto sector. As theautomobile assemblies in transmission boxes clutches steering columns and brakes arecontinuously upgraded by international auto companies Star Circlips is required tocontinuously develop and produce new specialized parts.

With ongoing investments in new equipment/s to enhance productivity and reduce inputcosts Star Circlips is expected to maintain a healthy growth in the coming years. Ourcost effective pricing strong customer confidence and continuous technical exchange withour partner Seeger Orbis Germany has been instrumental in Star Circlips being recognizedas a reliable brand in the fastener industry.

During the financial year 2017-2018 ended 31 March 2018 under review the total revenueof Star Circlips at Rs. 10725.38 lakh is up by 24.51% compared to Rs. 8614.09 lakh of theFY 2016-2017. The EBIDTA at Rs. 3110.15 lakh is up by 44.64% as compared to Rs. 2150.34lakh and PAT at Rs. 1551.69 lakh is up by 49.85% compared to Rs. 1035.52

lakh of the FY 2016-2017. The Company continued to hold 26.06% shareholding in StarCirclips during the FY 2017- 2018 ended 31 March 2018 and by virtue of shareholding theshare of profit of Rs. 378.73 lakh is considered in the

consolidated financial statements of the Company.

TOYAL MMP INDIA PRIVATE LIMITED (TMI)

TMI is the Aluminium Paste making Company of which the commercial production commencedin February 2018. The trading business of high value paste from Toyo Group Companies inJapan USA and France completed its first full year of operations and has been ofadvantage to major paint companies like Kansai Asian PPG and KCC. The approvals formanufactured grades with domestic paint companies after validation in Japan is a timeconsuming activity and TMI expects to introduce its non-leafing grades in the marketduring the second half of the FY 2018-2019 whereas the transfer of leafing grades fromMMPIL is continuing. TMI also has plans to produce some medium grade pastes (currentlyimported from China) and have these validated with domestic paint companies during the FY2018-2019.

During the financial year 2017-2018 ended 31 March 2018 under review the total revenueof TMI at Rs. 1965.25 lakh is up by 1266.28% compared to Rs. 143.84 lakh of the FY2016-2017. The EBIDTA at Rs. 35.76 lakh is up by 195.78% as compared to Rs. 12.09 lakh andPAT at (Rs. 47.24 lakh) decreased by 709.09% compared to Rs. 7.76 lakh of the FY2016-2017. The Company continued to hold 26.00% shareholding in TMI during the FY2017-2018 ended 31 March 2018 and by virtue of shareholding the share of loss of Rs.12.28 lakh is considered in the consolidated financial statements of the Company.

All the requisite information (details) have been provided in the prescribed Form No.AOC-1 attached as an Annex - A which forms part and parcel of the Board's Report.

9. PUBLIC DEPOSITS

During the financial year 2017-2018 ended 31 March 2018 under review the Company hasneither invited nor accepted any public deposits within the meaning of Section 73 and 74of the Companies Act 2013 read with the Companies (Acceptance of Deposits) Rules 2014(as amended).

As such no specific details prescribed in Rule 8(1) of the Companies (Accounts) Rules2014 (as amended) are required to be given or provided.

10. DIRECTORS AND KEY MANAGERAIL PERSONNEL

The changes amongst the Director/s including Executive Director/s and Key ManagerialPersonnel during the period are as follows :-

I. CHANGES AMONGST THE PROMOTER DIRECTOR/S

Mr. Arun Raghuveer Raj Bhandari (DIN 00008901) was re-appointed as the ManagingDirector (Category Promoter & Executive) designated Key Managerial Personnel of theCompany for a further period of Five (5) years effective 1 February 2018.

II CHANGES AMONGST THE EXECUTIVE DIRECTOR/S

(a) Mr. Bhinvkaran Dhularam Jangid (DIN - 08021867) was appointed as an AdditionalDirector [Category

Non-Promoter Non-Independent & Executive] of the Company effective 14 December2017 and also the Whole-time Director designated Key Managerial Personnel of theCompany for a period of Five (5) years effective 14 December 2017.

(b) Mr. Madanmohan Chandulal Agrawal (DIN 02281318) Whole-time Director [CategoryNon-Promoter Non-Independent & Executive] ceased to be a Director and also theWhole-time Director of the Company due to resignation effective 14 December 2017. TheBoard places on records its appreciation for his wide contributions in the overallperformance of the Company.

III. CHANGES AMONGST KEY MANAGERIAL PERSONNEL (KMP)

Apart from change/s referred to in (I) and (II) above there is no other change/s inthe Key Managerial Personnel (KMP) of the Company and accordingly Mr. Arun Raghuvir RajBhandari (DIN - 00008901) Managing Director [Category Promoter & Executive] Mr.Lalit Ranjeet Raj Bhandari (DIN - 00010934) Whole-time Director [Category Promoter& Executive] Mr. Bhinvkaran Dhularam Jangid (DIN - 08021867) Whole-time Director[Category Non-Promoter & Executive] CA Sharad Mohanlal Khandelwal [ICAI MembershipNo. FCA 047999 IT PAN ADCPK2636D] Chief Financial Officer and CS Chandrakant ShivshankarNimje [ICSI Membership No. ACS 48717 IT PAN ATWPN0626J] Company Secretary and ComplianceOfficer of the Company continued to act as the Key Managerial Personnel (KMP) of theCompany pursuant to the provisions of Section 203 of the Companies Act 2013 read withthe Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 (asamended).

IV. CHANGES AMONSGT THE INDEPENDENT DIRECTOR/S

Mr. Vijay Singh Bapna (DIN - 02599024) and Mr. Sunil Khanna (DIN - 00907147) wereappointed as an Additional Director [Category Non-executive Independent] of the Companyby the Board of Directors effective 7 May 2018 in terms of provisions of Section 161 ofthe Companies Act 2013 read with the rules made there under and who holds such office upto the conclusion of this Forty-fifth (45 ) Annual General Meeting of the Company.

V. DIRECTOR RETIREMENT BY ROTATION

Pursuant to Section 152 of Companies Act 2013 read with the Companies (Appointment andQualification of Directors) Rules 2014 (as amended) Mr. Bhinvkaran Dhularam Jangid (DIN- 08021867) [Category Non- Promoter & Executive] of the Company retires by rotationand being eligible offers himself for re-appointment. The Board recommends hisre-appointment as a Director [Category Non-Promoter & Executive] of the Company inthe interest of the Company.

VI. PROPOSED CHANGES AMONGST DIRECTOR/S PLACED BEFORE THE MEMBERS FOR THEIR APPROVAL

(a) The Board of Directors at its meeting held on 1 February 2018 based on therecommendations vide resolution passed by the Nomination and Remuneration Committee at itsmeeting held on 1 February 2018 has re-appointed Mr. Arun Raghuveer Raj Bhandari (DIN00008901) as the Managing Director [Category Promoter & Executive] designated KeyManagerial Personnel of the Company for a further period of Five

(5) years effective 1 February 2018 subject to approval of the Shareholders (Members)of the Company at the ensuing Forty-fifth (45 ) Annual General Meeting of the Company. TheBoard recommends his appointment as the Managing Director [Category Promoter &Executive] designated Key Managerial Personnel of the Company for a further period ofFive (5) years effective 1 February 2018 in the interest of the Company.

(b) The term of Mr. Bhinvkaran Dhularam Jangid (DIN- 08021867) as an AdditionalDirector [Category Non Promoter & Executive] of the Company expiring at theconclusion of the ensuing Forty-fifth (45 ) Annual General Meeting of the Company. TheBoard recommends his appointment as a Director [Category Non Promoter & Executive]liable to retire by rotation of the Company in the interest of the Company.

(c) The Board of Directors at its meeting held on 14 December 2017 based on therecommendations vide resolution passed by the Nomination and Remuneration Committee at itsmeeting held on 13 December 2017 has appointed Mr. Bhinvkaran Dhularam Jangid (DIN -08021867) as the Whole-time Director [Category Non-Promoter Non-Independent &Executive] designated Key Managerial Personnel of the Company for a period of five (5)years effective 14 December 2017 subject to approval of the Shareholders (Members) ofthe Company at the ensuing Forty-fifth (45 ) Annual General Meeting of the Company. TheBoard recommends his appointment as the Whole-time Director [Category Non-PromoterNon-Independent & Executive] designated Key Managerial Personnel of the Company fora period of Five (5) years effective 14 December 2017 in the interest of the Company.

(d) The term of Mr. Vijay Singh Bapna (DIN - 02599024) as an Additional Director[Category Non-executive Independent] of the Company expiring at the conclusion of theensuing Forty-fifth (45 ) Annual General Meeting of the Company. The Board recommends hisappointment as a Director [Category Non-executive Independent]. to hold the office for afixed first term of three (3) consecutive years i.e. from the conclusion of Forty-fifth(45 ) Annual General Meeting to be held for the financial year 2017-2018 ended 31 March2018 up to the conclusion of Forty-eighth (48 ) Annual General Meeting of the Company tobe held for the financial year 2020-2021 of the Company in the interest of the Company.

(e) The term of Mr. Sunil Khanna (DIN - 00907147) as an Additional Director [CategoryNon executive Independent] of the Company expiring at the conclusion of the ensuingForty-fifth (45 ) Annual General Meeting of the Company. The Board recommends hisappointment as a Director [Category Non executive Independent]. to hold the office for afixed first term of three (3) consecutive years i.e. from the conclusion of Forty-fifth(45 ) Annual General Meeting to be held for the financial year 2017-2018 ended 31 March2018 up to the conclusion of Forty-eighth (48 ) Annual General Meeting of the Company tobe held for the financial year 2020-2021 of the Company in the interest of the Company.

The Company has received a Notice in writing under Section 160 of the Companies Ac2013 from a member proposing the candidature/s of Mr. Bhinvkaran Dhularam Jangid Mr.Vijay Singh Bapna and Mr. Sunil Khanna for the office of the Director/s of the Company.Moreover Mr. Vijay Singh Bapna and Mr. Sunil Khanna Independent Director/s havesubmitted a declaration that they meets the criteria of independence as provided under theAct.

Except the above there is no change in the composition of the Board of Directorsduring the period under review and accordingly the other Director/s namely Mr. AjaySadashiv Gokhale (DIN - 00550452) Mr. Karan Yudhishtir Varma (DIN - 06923525) and Mrs.Sudha Sukesh Gandhi (DIN - 06611145) are continued as the Director/s [CategoryNon-executive Independent] of the Company. [The information (details) of Director/s ofseeking appointment / re-appointment at the Forty-fifth (45 ) Annual General Meeting ofthe Company pursuant to Regulation 26(4) and 36(6) of the Listing Regulations andSecretarial Standards on General Meetings (SS-2) is annexed to the Notice convening theForty-fifth (45 ) Annual General Meeting of the Company].

11. DECLARATION BY INDEPENDENT DIRECTOR/S

The Company has duly complied with the definition of ‘Independence' according tothe provisions of Section 149(6) of read with Schedule IV - Code of Independent Directorsto the Companies Act 2013. All the Independent Director/s have submitted a declarationthat he/she meets the criteria of independence and submits the declaration regarding thestatus of holding other directorship and membership as provided under law.

12. DIRECTORS' RESPONSIBILITY STATEMENT

The Board of Directors confirms:-

(i) That in the preparation of the Annual Accounts (Financial Statements) theapplicable Accounting Standards had been followed along with proper explanation relatingto material departures;

(ii) That the Directors had selected such accounting policies and applied themconsistently and made judgments and estimates that are 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 and of the profits of the Company for that financial year;

(iii) That the Directors had taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of this Act for safeguardingthe assets of the Company and for preventing and detecting fraud and other irregularities;

(iv) That the Directors had prepared the Annual Accounts (Financial Statements) ongoing concern basis;

(v) That the Directors had laid down internal financial controls to be followed by theCompany and that such internal financial controls were adequate and operating effectively;and

(vi) That the Directors had devised proper system to ensure compliance with theprovisions of all applicable laws and regulations and that such systems were adequate andoperating effectively.

13. NUMBER OF MEETINGS OF THE BOARD

Nine (9) meeting/s of the Board of Directors of the Company were held during thefinancial year 2017-2018 ended 31 March 2018 under review on (1) 11.04.2017 (2)15.05.2017 (3) 05.08.2017 (4) 18.08.2017 (5) 13.09.2017 (6) 16.10.2017 (7) 03.11.2017 (8)14.12.2017 and (9) 01.02.2018

14. COMMITTEE(S) OF THE BOARD

The Company has constituted all the requisite Committee(s) of the Board namely AuditCommittee Nomination and Remuneration Committee Stakeholders' Relationship CommitteeCorporate Social Responsibility (CSR) Committee Share Transfer Committee Risk ManagementCommittee and Project Monitoring Committee pursuant to the provisions of the CompaniesAct 2013 read with the rules made there under and Listing Regulations. The details of itsconstitution objective or terms of reference and other related information has beenprovided under the Corporate Governance Report which forms part and parcel of the Board'sReport.

15. AUDITORS

I. STATUTORY AUDITORS AND THEIR REPORT

The Shareholders (Members) of the Company based on the approval and recommendations ofthe Board of Directors based on the approval and recommendations of the Audit Committeeof the Company at their Forty- fourth (44 ) Annual General Meeting held on 30 September2017 has approved the appointment of Messers Manish N. Jain & Co. CharteredAccountants Nagpur [ICAI Firm Registration No. 138430W Peer Review Certificate No.010231] as the Statutory Auditors of the Company to hold office from the conclusion ofForty-fourth (44 ) Annual General Meeting held for the financial year 2016-2017 ended 31March 2017 till the conclusion of Forty-ninth (49 ) Annual General Meeting of the Companyto be held for the financial year 2021-2022 ending 31 March 2022 subject to ratificationby Shareholders (Members) at every subsequent Annual General Meeting of the Company.However the Company is not required to place the matter relating to appointment includingre-appointment of the Statutory Auditors of the Company for ratification by theShareholders (Members) at every subsequent Annual General Meeting of the Company in termsof deletion of First Proviso to Section 139(1) ofCompanies Act 2013 vide the Companies(Amendment) Act 2017 effective 7 May 2018.

The Statutory Auditors have furnished a Certificate of their consent qualification andeligibility for ratification as well as appointment including re-appointment under Section139 and 141 of the Companies Act 2013 read with the rules and regulations madethereunder.

The Shareholders (Members) of the Company are requested to consider ratify andapprove the appointment including re-appointment of Messers Manish N. Jain & Co.Chartered Accountants Nagpur [ICAI Firm Registration No. 138430W Peer ReviewCertificate No. 010231] as the Statutory Auditors of the Company to hold office from theconclusion of Forty-fifth (45 ) Annual General Meeting held for the financial year2017-2018 ended 31 March 2018 till the conclusion of the Forty-ninth (49 ) Annual GeneralMeeting of the Company to be held forthe financial year 2021-2022 ending 31 March 2022 atsuch remuneration as fixed by the Board of Directors and/or Audit Committee of the Companyfrom time to time.

The Auditors' Report submitted by Messers Manish N. Jain & Co. CharteredAccountants Nagpur [ICAI Firm Registration No. 138430W Peer Review Certificate No.010231] the Statutory Auditors of the Company to the Shareholders (Members) for thefinancial year 2017-2018 ended 31 March 2018 do not contain any qualification. Theobservations made by the Statutory Auditors in their report are self-explanatory and havealso been further amplified in the Notes to the financial statements and as such do notcall for any explanations.

During the financial year 2017-2018 ended 31 March 2018 under review:-

(a) there is no fraud occurred noticed and/or reported by the Statutory Auditors underSection 143(12) of the Companies Act 2013 read with the Companies (Audit and Auditors)Rules 2014 (as amended);

(b) the observations made by the Statutory Auditors on the financial statementsincluding the affairs of the Company are self-explanatory and do not contain anyqualification reservation adverse remarks or disclaimer thereof.

As such no specific information details or explanations required to be given orprovided by the Board of Directors of the Company.

II. COST AUDITORS AND THEIR REPORT

Pursuant to Section 148 of the Companies Act 2013 the Board of Directors on therecommendations of the Audit Committee of the Company has appointed Messers KhanujaPatra & Associates Cost Accountants Nagpur [Firm

Registration No. 00214] as the Cost Auditors of the Company for the financial year2018-2019 ending 31 March 2019 and has also recommended their remuneration to theShareholders (Members) for their ratification at the ensuing Forty-fifth (45 ) AnnualGeneral Meeting of the Company.

The said Cost Auditors have furnished a Certificate of their eligibility forappointment pursuant to Section 141(3)(g) and 148(5) of the Companies Act 2013 read withthe rules made there under Certificate for independence and arms' length relationshipwith the Company and have confirmed about their not being disqualified for suchappointment including re-appointment within the meaning of Section 141(3) of the CompaniesAct 2013.

III. SECRETARIAL AUDITORS AND THEIR REPORT

The Board of Directors on the recommendations of the Audit Committee of the Companyhas appointed Messers Mukesh Parakh & Associates Company Secretaries Nagpur [ICSIMembership No. FCS-4343 & Certificate of Practice No. 13693] as the SecretarialAuditors of the Company for the financial year 2017-2018 ended 31 March 2018.

The Secretarial Audit Report in Form No. MR-3 submitted by the said SecretarialAuditors do not contain any adverse remarks and qualifications is self-explanatory anddo not call for any further explanation/s by the Company. The Secretarial Audit Report inForm No. MR-3 submitted by the said Secretarial Auditors for the financial year 2017-2018ended 31 March 2018 is attached herewith as an Annex B and forms part and parcelof the Board's Report.

IV. INTERNAL AUDITORS

Pursuant to Section 138 of the Companies Act 2013 read with the Companies (Accounts)Rules 2014 (as amended) the Board of Directors on the recommendations of the AuditCommittee of the Company has appointed (through re-designation) CA Priyesh RajeshJobanputra [ICAI Membership No. ACA 164429] presently designated as the Assistant Manager(Finance) of the Company as the Internal Auditors of the Company for the financial year2017- 2018 ended 31 March 2018 and also for the financial year 2018-2019 ending 31 March2019.

The Internal Audit Finding/s and Report/s submitted by the said Internal Auditors fromtime to time during the financial year 2017-2018 ended 31 March 2018 to the AuditCommittee and Board of Directors of the Company do not contain any adverse remarks andqualifications is self-explanatory and do not call for any further explanation/s by theCompany.

16. PERSONNEL / PARTICULARS OF EMPLOYEES

The information required under Section 197 of the Act read with Rule 5(1) of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 are givenbelow:

(a) The ratio of the remuneration of each Executive Director to the median remunerationof the employees of the Company for the financial year :

Executive Directors Ratio to Median remuneration
Mr. Arun Raghuveer Raj Bhandari Managing Director 22.73 : 1
Mr. Lalit Ranjeet Raj Bhandari Whole-time Director 6.25 : 1

(b) The percentage increase in remuneration of each Director/s Chief ExecutiveOfficer Chief Financial Officer Company Secretary in the financial year 2017-2018 ended31 March 2018 :

Director/s Chief Executive Officer Chief Financial Officer and Company Secretary % increase in remuneration in the financial year
Mr. Arun Raghuveer Raj Bhandari Managing Director 66.67%
Mr. Lalit Ranjeet Raj Bhandari Whole-time Director 22.22%
Mr. Bhinvkaran Dhularam Jangid Whole-time Director Not Applicable
CA Sharad Mohanlal Khandelwal - Chief Financial Officer Not Applicable
CS Chandrakant Shivshankar Nimje - Company Secretary Not Applicable

(c) The percentage increase in the median remuneration of employees in the financialyear : 13.30%

(d) The number of permanent employees on the rolls of Company as on 31 March 2018 : 347

(e) 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:

l The average annual increase was about 10%. During the financial year the totalincrease is approximately 13.30% after accounting for promotions and other event basedcompensation revisions.

l Increase in the managerial remuneration for the financial year was around 59.70%other than commission based on net profit as per the terms of their appointment.

(f) Affirmation: Remuneration paid to Director/s Key Managerial Personnel andEmployees of the Company is as per

the remuneration policy of the Company.

(g) Information as per Section 197 of the Companies Act 2013 ("the Act") andRule 5(2) of the Companies (Appointment & Remuneration of Managerial Personnel) Rules2014 (as amended) forms part of this report. However in terms of Section 136(1) of theAct the Report and Financial Statements are being sent to all the shareholders and othersentitled to receive the same excluding the statement of particulars of employees. Thestatement is available for inspection by the Shareholders (Members) at the RegisteredOffice of the Company during business hours on any working day up to the date of theensuing Forty-fifth (45 ) Annual General Meeting. If any Shareholder (Member) isinterested in obtaining a copy thereof such Shareholder (Member) may write to the CompanySecretary whereupon a copy would be sent to the concerned Shareholder (Member) of theCompany.

17. ENERGY CONSERVATION TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS

AND OUTGO

The particulars relating to energy conservation technology absorption foreignexchange earnings and outgo for the financial year 2017-2018 ended 31 March 2018 asrequired to be disclosed under Section 134(3)(m) of the Companies Act 2013 read with Rule8(3) of the Companies (Accounts) Rules 2014 are given in the Annex C to thisreport.

18. PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS UNDER SECTION 186 OF THE COMPANIESACT 2013

During the financial year 2017-2018 ended 31 March 2018 under review the Company hasneither granted loan/s (secured or unsecured) provided guarantees or securities inconnection with any loan/s availed by others nor made any investments pursuant to theprovisions of Section 185 and 186 the Companies Act 2013 read with the Companies(Meetings of Board and its Powers) Rules 2014 (as amended). As such no specific detailsare required to be given or provided.

19. PARTICULARS OF CONTRACTS OR ARRANGEMENTS OR TRANSACTIONS WITH RELATED PARTIES UNDERSECTION 188 OF THE COMPANIES ACT 2013

The details of contracts or arrangements or transactions not at arm's length basisand/or the details of contracts or arrangements or transactions at arm's length basis inForm No. AOC 2 pursuant to clause (h) of sub-section (3) of Section 134 of the CompaniesAct 2013 read with Rule 8(2) of the Companies (Accounts) Rules 2014 (as amended) aregiven in the Annex - D which forms part and parcel of the Board's Report.

20. LISTING OF SHARES AND PAYMENT OF FEES

The designated Stock Exchange National Stock Exchange of India Limited has approvedthe listing and trading of equity shares in the capital of the Company on its SMEPlatform namely NSE EMERGE effective Thursday the 12 April 2018 and continued to beactively listed and traded as on date. The Company has paid in advance the requisiteInitial and Annual Listing Fees for the financial year 2018-2019 ending 31 March 2019 tothe National Stock Exchange of India Limited.

21. DEMATERIALISATION OF SHARES

As on 31 March 2018 all 12435075 equity shares dematerialised through depositoriesviz. National Securities Depository Limited and Central Depository Services (India)Limited which represents whole 100% of the total issued subscribed and paid-up capitalof the Company as on that date.

As on 23 July 2018 all 16935075 equity shares dematerialised through depositories viz.National Securities Depository Limited and Central Depository Services (India) Limitedwhich represents whole 100% of the total issued subscribed and paid-up capital of theCompany as on that date.

22. EXTRACT OF THE ANNUAL RETURN

The extract of the Annual Return as on 31 March 2018 pursuant to the provisions ofSection 92(3) of the Companies Act 2013 read with Rule 12 of the Companies (Managementand Administration) Rules 2014 (as amended) is furnished in the Annex E attachedto this report which forms an integral part of this report.

23. TRANSFER OF UNCLAIMED DIVIDEND TO INVESTOR EDUCATION AND PROTECTION FUND

During the financial year 2017-2018 ended 31 March 2018 under review there were noamount/s which is required to be transferred to the Investor Education and Protection Fundby the Company. As such no specific details are required to be given or provided.

24. CORPORATE GOVERNANCE

The Company is committed to maintain the highest standards of corporate governance andadhere to the corporate governance requirements set out by the SEBI through the ListingRegulations executed with the Stock Exchange. The Company has also implemented severalbest corporate governance practices as prevalent globally on voluntary basis.

Your Directors are pleased to report that almost all the provisions of the CompaniesAct 2013 read with the rules made there under and the SEBI Regulation/s including butnot limited to SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015(as amended) ['Listing Regulation'] is made applicable to the Company effective the dateof listing and commencement of trading i. e. 12 April 2018.

Your Directors are pleased to report that your Company has complied with the SEBIGuidelines on Corporate Governance as of 31 March 2018 relating to the ListingRegulations on voluntary basis. A Certificate from Messers Mukesh Parakh &Associates Company Secretaries Nagpur [ICSI Membership No. FCS-4343 Certificate ofPractice No. 13693) confirming voluntary compliance with conditions as stipulated underListing Regulations is annexed to the Corporate Governance Report of the Company.

25. CORPORATE SOCIAL RESPONSIBILITY (CSR)

The Company believes in the Corporate Social Responsibility as an integral part of itsbusiness. Education specifically Education for Girls Women Poor Under-privileged orDisabled (Divyang) Skill Development and Training Environment Health Drinking WaterRural Development are some of the most critical problems that our country has been facingfor years. One of the most effective direct and indirect solutions to solve these is aneducation but a great number of peoples cannot afford to get them self-educated.

Keeping this in mind the Board of Directors through its CSR Committee has implementedcertain CSR projects either directly or through implementing agency nominated by the CSRCommittee of the Company. All the activities and programme/s covered under CSR are beingmonitored and implemented by the CSR Committee of the Company. The Company do confirmsthat the Company is in due compliance of the provisions of Section 135 of the CompaniesAct 2013 read with the Companies (Corporate Social Responsibility Policy) Rules 2014.The CSR project/s of the Company are in accordance with the provisions of Section 135 ofSchedule VII to the Companies Act 2013 read with the Companies (Corporate SocialResponsibility Policy) Rules 2014 and the Company's CSR Policy. The Annual Report on theCSR Activities for the financial year 2017-2018 ended 31 March 2018 is given in the Annex- F which forms part and parcel of the Board's Report.

26. CODES OF CONDUCT OF BUSINESS PRINCIPLES & ETHICS AND PREVENTION OF INSIDERTRADING AND OTHER CODES/ POLICIES

Your Directors are pleased to report that your Company has complied with the:-

(i) Code of Conduct of Business Principles and Conduct;

(ii) Code of Prevention of Insider Trading in MMP securities by the designated persons(insider) (as amended from time to time);

(iii) Code for Vigil Mechanism - Whistle Blower Policy; (iv) Code for IndependentDirectors; (v) Corporate Social Responsibility (CSR) Policy; (vi) Risk Management Policy;

(vii) Policy on Document Preservations (Regulation 9 of the SEBI (LODR) Regulations2015);

(viii) Policy for determining of 'material' Subsidiary (Regulation 16 of the SEBI(LODR) Regulations 2015);

(ix) Policy on materiality of related party transaction/s and on dealing with relatedparty transactions (Regulation 23 of the SEBI (LODR) Regulations 2015); and

(x) Policy for determination of materiality based on specified criteria andaccordingly grant authorisation for determination of materiality of events (Regulation 30of the SEBI (LODR) Regulations 2015).

The aforesaid code(s) and policy(ies) are available on the Company's website www.mmpil.com.

27. MATERIAL DEVELOPMENT IN HUMAN RESOURCES

During the financial year under review industrial relations remained cordial.Employees' competencies and skills were enhanced by exposing them to several internal andexternal training programme/s. Various measures were taken to improve motivation level ofemployees. Additional efforts are continued to be implemented with a view to obtaincommitment and loyalty towards the organisation.

28. INDUSTRIAL RELATIONS HEALTH AND SAFETY

Departmental safety coordinators are identified for monitoring & training onsafety related matter at shop-floor. Safety Committee and Apex Committee are available forperiodical review on safety health & environment of all departments. Regular Trainingon Safety is being organised for New Joinee regular employees & contract labour.Mock-drills are conducted for practical exposure to meet emergency need on quarterlybasis. Hand book on safety awareness are distributed to all employees.

29. SEXUAL HARASSMENT OF WOMEN AT THE WORKPLACE

MMP Industries Limited ("the Company") has in place an Anti-SexualHarassment Policy in line with the requirements of the Sexual Harassment of Women at theWorkplace (Prevention Prohibition & Redressal) Act 2013 and Internal ComplaintsCommittee (ICC) has been set up to redress complaints received regarding sexualharassment. All employees (permanent contractual temporary trainees etc.) are coveredunder this Policy. The Certificate by the Managing Director and Whole-time Director of theCompany to that effect is enclosed herewith as an Annex - G and forms part of thisreport.

30. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has in place adequate internal control systems and procedures commensuratewith the size and nature of business. These procedures are designed to ensure:-

(a) that all assets and resources are used efficiently and are adequately protected;

(b) that all the internal policies and statutory guidelines are complied with; and

(c) the accuracy and timing of financial reports and management information ismaintained.

31. MATERIAL CHANGES AND COMMITMENTS IF ANY AFFECTING THE FINANCIAL POSITION OF THECOMPANY

As mentioned under the head "Initial Public Offer (IPO)" at Sr. No. 1 theCompany has issued and allotted 4500000 (Forty-five lakh) equity shares of face value ofRs.10/- each at a premium of Rs.178/- per equity share in the capital of the Companythrough Book Building process in the Initial Public Offer (IPO). The issue and allotmentof equity shares in the capital of the Company was made on Tuesday the 10 April 2018. Thedesignated Stock Exchange National Stock Exchange of India Limited has approved thelisting and trading of equity shares in the capital of the Company on its SME Platformnamely NSE EMERGE effective Thursday the 12 April 2018.

Accordingly a sum of Rs. 300160800 received against Bidding by Anchor Investors wasshown as Share Application Money Pending Allotment as on 31 March 2018. Whereas thechanges in the Issued Subscribed and Paid-up Share Capital Reserves and SurplusAccounting of IPO Proceeds and Utilisation thereof due to IPO shall reflect in thefinancial statements pertaining to the financial year 2018-2019 ending 31 March 2019.

Except the aforesaid during the financial year 2017-2018 ended 31 March 2018 underreview there are no material changes and commitments affecting the financial position ofthe Company which have occurred between the end of the financial year of the Company towhich the financial statements relates and the date of this report. As such no specificdetails are required to be given or provided.

32. DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS ORTRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANY'S OPERATIONS IN FUTURE

During the financial year 2017-2018 ended 31 March 2018 under review no significantand material order is passed by any of the Regulators or Courts or Tribunals impacting thegoing concern status and Company's operations in future. As such no specific details arerequired to be given or provided.

33. OTHER DISCLOSURES

The details regarding Board and its Committee meetings Evaluation of Boardperformance Declaration by Independent Director/s Remuneration policy for Director/s andKMP's Induction training and familiarisation programmes for Director/s includingIndependent Director/s and such other related information has been provided under theCorporate Governance Report which forms part and parcel of the Board's Report.

34. COMPLIANCE OF THE SECRETARIAL STANDARDS [SS-1 AND SS-2]

The Board of Directors confirms that the Company has duly complied and is incompliance with the applicable Secretarial Standard/s namely Secretarial Standard-1('SS-1') on Meetings of the Board of Directors and Secretarial

Standard -2 ('SS-2') on General Meetings during the financial year 2017-2018 ended 31March 2018.

35. ENCLOSURES

(a) Annex A: Form No. AOC-1 Information (Details) about the Associate Companies of theCompany;

(b) Annex B: Secretarial Audit Report in Form No. MR-3;

(c) Annex C: Report on Energy Conservation Technology Absorption and Foreign ExchangeEarnings and Outgo;

(d) Annex D: Form No. AOC-2 Information (Details) of contracts or arrangements ortransactions not at arm's length basis and/or the details of contracts or arrangements ortransactions at arm's length basis;

(e) Annex E: Extract of Annual Return as of 31 March 2018 in the prescribed Form No.MGT-9;

(f) Annex F: Annual Report on Corporate Social Responsibility (CSR) activities togetherwith expenditure details; and

(g) Annex G: Certificate on Sexual Harassment of Women at the Workplace and itsPrevention Prohibition & Redressal.

36. ACKNOWLEDGEMENT

The Board of Directors acknowledges with gratitude for the co-operation and assistancereceived from National Stock Exchange of India Limited (NSE) Securities Exchange Board ofIndia (SEBI) Merchant Banker Lead Manager Underwriter and Market Maker AuditorsAdvisors & Consultants other Intermediary service provider/s Anchor and otherInvestor/s for successful accomplishment of the Company's maiden IPO.

The Board of Directors also take this opportunity to extend its sincere thanks forco-operation and assistance received by the Company from the Central State LocalGovernment and other regulatory authorities Bankers Members Customers Suppliers

The Directors also record their appreciation of the dedication of all the employees atall levels for their support and commitment to ensure that the Company continues to grow.

For and on behalf of the Board
Arun Raghuveer Raj Bhandari Lalit Ranjeet Raj Bhandari
Managing Director Whole Time Director
DIN - 00008901 DIN - 00010934

Place : Nagpur

Date : July 23 2018