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Sadbhav Infrastructure Projects Ltd.

BSE: 539346 Sector: Infrastructure
NSE: SADBHIN ISIN Code: INE764L01010
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OPEN 87.00
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VOLUME 547
52-Week high 144.35
52-Week low 79.05
P/E 42.25
Mkt Cap.(Rs cr) 2,976
Buy Price 83.30
Buy Qty 100.00
Sell Price 84.50
Sell Qty 8.00
OPEN 87.00
CLOSE 84.50
VOLUME 547
52-Week high 144.35
52-Week low 79.05
P/E 42.25
Mkt Cap.(Rs cr) 2,976
Buy Price 83.30
Buy Qty 100.00
Sell Price 84.50
Sell Qty 8.00

Sadbhav Infrastructure Projects Ltd. (SADBHIN) - Director Report

Company director report

To

The Members

Your Directors have pleasure in submitting their 12 Annual Report of the Companytogether with the Audited Statements of

Accounts for the year ended 31 March 2018.

FINANCIAL RESULTS

The Group's financial performances for the year under review along with previous year'sfigures are given hereunder: (` in Million)

Particulars Standalone Consolidated
2017-18 2016-17 2017-18 2016-17
Revenue from Operations 3377.92 2854.45 22760.58 13480.09
Other Income 469.58 282.65 464.22 558.81
Total Revenue 3847.50 3137.10 2322480 14038.90
Profit Before Taxation 1046.11 525.88 (2972.22) (3524.95)
Tax Expense 368.71 114.31 407.51 76.04
Profit/(Loss) for the period after tax and minority interest 677.40 411.57 (3290.37) (3531.44)
Other comprehensive income (0.01) (0.37) 1.37 (8.45)
Total comprehensive income (after tax) 677.39 411.20 (3289.00) (3539.89)

DIVIDEND

Based on the Company's performance the Directors are pleased to recommend for approvalof the members a final dividend @ 3% i.e. ` 0.30 (Thirty Paise) per equity shares of `10/- for Financial year 2017-18 taking the total Dividend @ 5% i.e. ` 0.50 (Fifty paise)per Equity Share of ` 10/- each (including interim dividend @ 2% i.e. ` 0.20 per equityshare of ` 10/- each already declared by

Board of Directors of the Company on 17 November 2017) to shareholders of the Company.If the dividend as recommended

above is declared by the Members at the Annual General Meeting (‘AGM') the totaloutflow towards dividend on Equity Shares for the year would be ` 17.61 crores.

DIVIDEND DISTRIBUTION POLICY

Securities and Exchange Board of India (‘SEBI') by its notification dated 8 July2016 has amended the SEBI (Listing Obligations and

Disclosure Requirements) Regulations 2015 (‘Listing Regulations') introducingnew Regulation 43A mandating the top 500 listed entities based on market capitalizationcalculated as on 31 March of every financial year to formulate a Dividend Distribution

Policy and disclose the same in their Annual Reports and on their websites.

Accordingly the Board of the Company has adopted a Dividend Distribution Policy whichis uploaded on the Company's website at

the web link: http://www.sadbhavinfra.co.in/en/pdf/dividend-distribution-policy.pdf

RESERVES

Company has transferred ` 462.19 Million to Debenture Redemption Reserve Account.

SHARE CAPITAL

st

The paid up Equity Share Capital as at 31 March 2018 is ` 3522252160/-. During theyear under review the Company has not issued shares with differential voting rights norhas granted any stock options or sweat equity. The Company has no scheme of

provision of money for purchase of its own shares by employees or by trustees for thebenefit of employees. Hence the details

under rule 16 (4) of Companies (Share Capital and Debentures) Rules 2014 are notrequired to be disclosed.

REVIEW OF BUSINESS OPERATIONS AND FUTURE PROSPECTS

During the year under review your Company reported a top-line growth of 18.34% overthe previous year. At Standalone level the Revenue from Operations amounted to ` 3377.92Million as against ` 2854.45 Million in the previous year. The Net Profit before Taxamounted to ` 1046.11 as against ` 525.88 Million in the previous year. The Net Profitfor the year amounted to ` 677.40 Million against ` 411.57 Million reported in theprevious year and total comprehensive income for the year amounted to ` 677.39 Million asagainst ` 411.20 Million in the previous year.

The Consolidated Revenue from Operations amounted to ` 22760.58 Million as against `13480.09 Million in the previous year registering a growth of 68.85%. The ConsolidatedNet Loss before Tax amounted to ` 2972.22 Million as against ` 3524.95 Million in theprevious year. The Consolidated Net Loss after Tax amounted to ` 3379.73 Million asagainst ` 3600.99 Million in previous year and Total Comprehensive Loss for the yearamounted to ` 3378.47 Million against ` 3609.64 Million in previous year.

The performance and financial position of the subsidiary companies are included in theConsolidated Financial Statements forming

part of this Annual Report.

CORPORATE GOVERNANCE

The Company has complied with the corporate governance requirements under the CompaniesAct 2013 and as stipulated under the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015. A separate section on corporate governance under the SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 along with thecertificate from the Practicing Company Secretary confirming the compliance is annexedand forms part of this Annual Report.

CHANGE IN THE NATURE OF BUSINESS IF ANY

There are no material changes in the nature of business during the year.

MATERIAL CHANGES AND COMMITMENT IF ANY AFFECTING THE FINANCIAL POSITION OF THE COMPANY:

There are no material changes and commitment if any affecting the financial position ofthe company occurred between the ends of

the financial year to which this financial statements relate and the date of thereport.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS

No significant material orders have been passed by the Regulators or Courts orTribunals which would impact the going concern

status of the Company and its future operations.

RISK MANAGEMENT

Risk management comprises all the organizational rules and actions for earlyidentification of risks in the course of doing business

and the management of such risks.

Although not mandatory as a measure of good governance the Company has constituted aRisk Management Committee of the Board. The Committee reviews the Company's performanceagainst identified risks formulates strategies towards identifying new and emergent risksthat may materially affect the Company's overall risk exposure and reviews the RiskManagement Policy and structure.

This robust Risk Management framework seeks to create transparency minimize adverseimpact on business objectives and

enhance the Company's competitive advantage.

The Company has adopted a Risk Management Policy pursuant to Section 134 of the Act.

DETAILS IN RESPECT OF ADEQUACY OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THEFINANCIAL STATEMENTS

The Company has appropriate internal control systems for business processes with regardto its operations financial reporting and compliance with applicable laws andregulations. It has documented policies and procedures covering financial and operatingfunctions and processes. These policies and procedures are updated from time to time andcompliance is monitored by the internal audit function as per the audit plan. The Companycontinues its efforts to align all its processes and controls with best practices.

Details of the internal controls system are given in the Management Discussion andAnalysis Report which forms part of the Board's

Report.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

i) Changes in Directors and Key Managerial Personnel:

Pursuant to Section 152 of the Companies Act 2013 Mr. Shashin V. Patel (DIN:00048328) Chairman and Director of the

Company retires by rotation and being eligible offers himself for re-appointment atthe ensuing Annual General Meeting.

During the year Mr. Vasistha C. Patel was re-appointed as Managing Director of theCompany w.e.f. 1 January 2018 and

Mr. Varun Mehta was re-appointed as Chief Financial Officer of the Company.

There were no other changes in Key Managerial Personnel during the year.

ii) Declaration by an Independent Director(s):

All Independent Directors of the Company have given declarations that they meet thecriteria of independence as laid down under Section 149 (6) of the Act and Regulation 16(1) (b) of the Listing Regulations. In the opinion of the Board they fulfill theconditions of independence as specified in the Act and the Rules made there under and areindependent of the management.

iii)Procedure for Nomination and Appointment of Directors:

The Nomination and Remuneration Committee is responsible for developing competencyrequirements for the Board based on the industry and strategy of the Company. Boardcomposition analysis reflects in-depth understanding of the Company including itsstrategies environment operations financial condition and compliance requirements.

The Nomination and Remuneration Committee conducts a gap analysis to refresh the Boardon a periodic basis including each time a Director's appointment or re-appointment isrequired. The Committee is also responsible for reviewing and vetting the CVs of potentialcandidate's vis-a-vis the required competencies and meeting potential candidates prior tomaking recommendations of their nomination to the Board. At the time of appointmentspecific requirements for the position including expert knowledge expected iscommunicated to the appointee.

iv) Criteria for Determining Qualifications Positive Attributes and Independence of aDirector:

The Nomination and Remuneration Committee has formulated the criteria for determiningqualifications positive attributes and independence of Directors in terms of provisionsof Section 178 (3) of the Act and Regulation 19 read with Part D of Schedule II of theListing Regulations.

Independence: In accordance with the above criteria a Director will be consideredas an ‘Independent Director' if he/she meets with the criteria for ‘IndependentDirector' as laid down in the Act and Regulation 16 (1) (b) of the Listing Regulations.

Qualifications: A transparent Board nomination process is in place that encouragesdiversity of thought experience knowledge perspective age and gender. It is alsoensured that the Board has an appropriate blend of functional and industry expertise.While recommending the appointment of a Director the Nomination and RemunerationCommittee considers the manner in which the function and domain expertise of theindividual will contribute to the overall skill domain mix of the Board.

Positive Attributes: In addition to the duties as prescribed under the Act theDirectors on the Board of the Company are also expected to demonstrate high standards ofethical behavior strong interpersonal and communication skills and soundness of judgment.Independent Directors are also expected to abide by the ‘Code for IndependentDirectors' as outlined in Schedule IV to the Act.

v) Annual Evaluation of Board Performance and Performance of its Committees and ofDirectors:

Pursuant to the applicable provisions of the Act and the Listing Regulations the Boardhas carried out an annual evaluation of its own performance performance of the Directorsas well as the evaluation of the working of its Committees.

The Nomination and Remuneration Committee has defined the evaluation criteriaprocedure and time schedule for the Performance Evaluation process for the Board itsCommittees and Directors.

The Board's functioning was evaluated on various aspects including inter aliastructure of the Board including qualifications experience and competency of Directorsdiversity in Board and process of appointment; Meetings of the Board including regularityand frequency agenda discussion and dissent recording of minutes and dissemination ofinformation; functions of the Board including strategy and performance evaluationcorporate culture and values governance and compliance evaluation of risks grievanceredressal for investors stakeholder value and responsibility conflict of interestreview of Board evaluation and facilitating Independent Directors to perform their roleeffectively; evaluation of management's performance and feedback independence ofmanagement from the Board access of Board and management to each other succession planand professional development; degree of fulfillment of key responsibilities establishmentand delineation of responsibilities to Committees effectiveness of Board processesinformation and functioning and quality of relationship between the Board and management.

Directors were evaluated on aspects such as attendance and contribution atBoard/Committee Meetings and guidance/support to the management outside Board/CommitteeMeetings. In addition the Chairman was also evaluated on key aspects of his roleincluding setting the strategic agenda of the Board encouraging active engagement by allBoard members and motivating and providing guidance to the Managing Director.

Directors were evaluated on aspects such as professional qualifications priorexperience especially experience relevant to the Company knowledge and competencyfulfillment of functions ability to function as a team initiative availability andattendance commitment contribution integrity independence and guidance/support tomanagement outside Board/Committee Meetings. In addition the Chairman was also evaluatedon key aspects of his role including effectiveness of leadership and ability to steermeetings impartiality ability to keep shareholders' interests in mind and effectivenessas Chairman.

Areas on which the Committees of the Board were assessed included mandate andcomposition; effectiveness of the Committee; structure of the Committee; regularity andfrequency of meetings agenda discussion and dissent recording of minutes anddissemination of information; independence of the Committee from the Board; contributionto decisions of the Board; effectiveness of meetings and quality of relationship of theCommittee with the Board and management.

Independent Directors who also reviewed the performance of the Board as a whole. TheNRC also reviewed the performance of the Board its Committees and of the Directors.

The Chairman of the Board provided feedback to the Directors on an individual basis asappropriate. Significant highlights learning and action points with respect to theevaluation were presented to the Board.

NOMINATION AND REMUNERATION POLICY

The Company has adopted a Nomination and Remuneration Policy for the Directors KeyManagerial Personnel and other employees pursuant to the provisions of the Act and theListing Regulations. The philosophy for remuneration of Directors Key ManagerialPersonnel and all other employees of the Company is based on the commitment of fostering aculture of leadership with trust. The Remuneration Policy of the Company is aligned tothis philosophy.

The Nomination and Remuneration Committee has considered following factors whileformulating Policy:

(i) The level and composition of remuneration is reasonable and sufficient to attractretain and motivate Directors of the quality required to run the Company successfully;

(ii) Relationship of remuneration to performance is clear and meets appropriateperformance benchmarks; and

(iii) Remuneration to Directors Key Managerial Personnel and Senior Managementinvolves a balance between fixed and incentive pay reflecting short and long-termperformance objectives appropriate to the working of the Company and its goals.

It is affirmed that the remuneration paid to Directors Key Managerial Personnel andall other employees is as per the Remuneration Policy of the Company.

Details of the Remuneration Policy are given in the Corporate Governance Report.

DETAILS OF SUBSIDIARY/JOINT VENTURES/ASSOCIATE COMPANIES

The Consolidated Financial Statements of the Company and its subsidiaries prepared inaccordance with Indian Accounting Standards notified under the Companies (IndianAccounting Standards) Rules 2015 (‘Ind AS') form part of the Annual Report and arereflected in the Consolidated Financial Statements of the Company.

The annual financial statements of the subsidiaries and related detailed informationwill be kept at the Registered Office of the Company as also at the registered offices ofthe respective subsidiary companies and will be available to investors seeking informationat any time.

The Company has adopted a Policy for determining Material Subsidiaries in terms ofRegulation 16 (1) (c) of Listing Regulations. The Policy as approved by the Board isuploaded on the Company's website.

The consolidated financial results reflect the operations of the followingsubsidiaries.

Sr. No. Name of Company CIN/GLN Address of The Company Holding/ Subsidiary / Associate
1 Ahmedabad Ring Road U45203GJ2006PLC048981 "Sadbhav House" Opp. Law Garden Police Wholly owned
Infrastructure Limited Chowki Ellisbridge Ahmedabad 380006. Subsidiary Company
2 Aurangabad-Jalna Tollway U45203GJ2007PLC049814 "Sadbhav House" Opp. Law Garden Police Wholly owned
Limited Chowki Ellisbridge Ahmedabad 380006. Subsidiary Company
3 Bijapur-Hungund Tollway U45203GJ2010PTC059669 "Sadbhav House" Opp. Law Garden Police Subsidiary
Private Limited Chowki Ellisbridge Ahmedabad 380006. Company
4 Bhilwara-Rajsamand Tollway U45203GJ2012PTC072902 "Sadbhav House" Opp. Law Garden Police Wholly owned
Private Limited Chowki Ellisbridge Ahmedabad 380006. subsidiary Company
5 Dhule Palesner Tollway U45203MH2009PLC191222 7017th Floor "C" Wing Godrej Coliseum Wholly owned
Limited * B/h Everard Nagar Sion (East) Mumbai - subsidiary Company
400022
6 Hyderabad Yadgiri Tollway U45203GJ2010PTC059262 "Sadbhav House" Opp. Law Garden Police Wholly owned
Private Limited Chowki Ellisbridge Ahmedabad 380006. Subsidiary Company
7 Maharashtra Border Check U45201GJ2009PLC056327 "Sadbhav House" Opp. Law Garden Police Subsidiary Company
Post Network Limited** Chowki Ellisbridge Ahmedabad 380006.
8 Nagpur-Seoni Expressway U45203GJ2007PLC049963 "Sadbhav House" Opp. Law Garden Police Wholly owned
Limited Chowki Ellisbridge Ahmedabad 380006. subsidiary Company
9 Rohtak Hissar Tollway Private U45203GJ2013PTC074446 "Sadbhav House" Opp. Law Garden Police Wholly owned
Limited Chowki Ellisbridge Ahmedabad 380006. subsidiary Company
10 Rohtak Panipat Tollway Private U45202GJ2010PTC059322 "Sadbhav House" Opp. Law Garden Police Wholly owned
Limited Chowki Ellisbridge Ahmedabad 380006. subsidiary Company
11 Shreenathji-Udaipur Tollway U45201GJ2012PTC069676 "Sadbhav House" Opp. Law Garden Police Wholly owned
Private Limited Chowki Ellisbridge Ahmedabad 380006. subsidiary Company
12 Sadbhav Nainital Highway U45309GJ2016PTC091777 "Sadbhav House" Opp. Law Garden Police Wholly owned
Private Limited Chowki Ellisbridge Ahmedabad 380006. subsidiary Company
13 Sadbhav Rudrapur Highway U45203GJ2016PTC091774 "Sadbhav House" Opp. Law Garden Police Wholly owned
Private Limited Chowki Ellisbridge Ahmedabad 380006. subsidiary Company
14 Sadbhav Bhavnagar Highway U45309GJ2016PTC092557 "Sadbhav House" Opp. Law Garden Police Wholly owned
Private Limited Chowki Ellisbridge Ahmedabad 380006. subsidiary Company
15 Sadbhav Una Highway Private U45500GJ2016PTC092589 "Sadbhav House" Opp. Law Garden Police Wholly owned
Limited Chowki Ellisbridge Ahmedabad 380006. subsidiary Company
16 Sadbhav Bangalore Highway U45202GJ2016PTC094257 "Sadbhav House" Opp. Law Garden Police Wholly owned
Private Limited Chowki Ellisbridge Ahmedabad 380006. subsidiary Company
17 Sadbhav Vidarbha Highway U45500GJ2017PTC097040 "Sadbhav House" Opp. Law Garden Police Wholly owned
Private Limited Chowki Ellisbridge Ahmedabad 380006. subsidiary Company
18 Sadbhav Udaipur Highway U45309GJ2017PTC097508 "Sadbhav House" Opp. Law Garden Police Wholly owned
Private Limited Chowki Ellisbridge Ahmedabad 380006. subsidiary Company
19 Sadbhav Jodhpur Ring Road U45309GJ2018PTC100367 "Sadbhav House" Opp. Law Garden Police Wholly owned
Private Limited Chowki Ellisbridge Ahmedabad 380006. subsidiary Company
20 Sadbhav Tumkur Highway U45309GJ2018PTC101396 "Sadbhav House" Opp. Law Garden Police Wholly owned
Private Limited Chowki Ellisbridge Ahmedabad 380006. subsidiary Company

* Pursuant to acquisition of 100% stake in Dhule Palesner Tollway Limited fromSadbhav Engineering Limited Hindustan Construction Company Limited and John LaingInvestment Limited as at the date of this report 100 shares each of Sadbhav EngineeringLimited Hindustan Construction Company Limited and John Laing Investment Limited arepending for transfer due to pending approval from NHAI.

** In terms of Memorandum of Understanding (MOU) dated January 17 2017 betweenthe Company and Sadbhav Engineering Limited (‘SEL') SEL reduced its commitment tosell investment in MBCPNL to third party from 22% to 9% and resultantly transferred such13% ownership / beneficial ownership in MBCPNL to the Company raising Company's holdingto 91%. SEL reaffirms that consideration received by it aggregating to INR 280.13 Millionis towards transfer of entire ownership of 91% in MBCPNL and hence no further payment isrequired to be made by SIPL to SEL. The procedural formalities for transfer of equityshares were in progress as on the date of balance sheet. By virtue of MOU 2.63% shares ofMBCPNL are pending for transfer from SEL to SIPL.

# After end of the financial year 2017-18 and the date of this report Three newwholly owned subsidiary Companies i.e. Sadbhav Bhimasar Bhuj Highway Private LimitedSadbhav Kim Expressway Private Limited and Sadbhav Vizag Port Road Private Limited wereincorporated with an object to execute highway projects as per the concessions agreementssigned with NHAI and Sadbhav Hybrid Annuity Projects Limited was incorporated forproviding developing own maintain operate instruct execute carry out improveconstruct repair work administer manage control or acquire any infrastructurefacilities to undertake hybrid annuity mode projects.

PERFORMANCE AND FINANCIAL POSITION OF EACH OF THE SUBSIDIARIES ASSOCIATES AND JOINTVENTURE COMPANIES INCLUDED IN THE CONSOLIDATED FINANCIAL STATEMENT

Pursuant to the provisions of Section 129 134 and 136 of the Companies Act 2013 readwith rules made thereunder and pursuant to Regulation 33 of the SEBI (ListingObligationsand Disclosure Requirements) Regulations 2015 the Company had preparedconsolidated financial statements of the Company and its subsidiaries and a separatestatement containing the salient features of financial statement of subsidiaries jointventures and associates in Form AOC-1 attached as Annexure - 1 which forms part ofthis Report.

PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS UNDER SECTION 186

The provisions of Section 186 of the Companies Act 2013 with respect to a loanguarantee or security is not applicable to the Company as the Company is engaged inproviding infrastructural facilities which is exempted under Section 186 of the CompaniesAct 2013. The details of investment made during the year under review are disclosed inthe financial statements.

FIXED DEPOSITS

During the year under review your Company has not accepted any fixed deposits from thepublic falling under Section 73 of the Act read with the Companies (Acceptance ofDeposits) Rules 2014. Thus as on 31 March 2018 there were no deposits which wereunpaid or unclaimed and due for repayment.

INSURANCE

All properties and insurable interests of the company to the extent required have beenadequately insured.

PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

All related party transactions that were entered into during the financial year were atarm's length basis. A detailed report on material contracts and arrangements made duringthe year 2017-18 being arm's length transactions have been reported and annexed hereto inForm AOC-2 as Annexure - 2 and forms part of this report.

There are no materially significant related party transactions made by the company withpromoters key managerial personnel or other designated persons which may have potentialconflict with interest of the company at large. The Company has adopted a Related PartyTransactions Policy. The Policy as approved by the Board is uploaded on the Company'swebsite at the web link:http://www.sadbhavinfra.co.in/en/pdf/policy-on-related-party-transaction.pdf

NUMBER OF MEETINGS OF THE BOARD

During the year Five (5) board meetings were convened and held. Details of boardmeetings and committee meeting are given in the corporate governance report. Theintervening gap between the meetings was within the period prescribed under the CompaniesAct 2013.

COMMITTEES OF BOARD

The Board has constituted an Audit Committee with Mr. Sandip V. Patel as Chairman andMr. Arun S. Patel and Mr. Nitin R. Patel as Members. There have been no instances duringthe year when recommendations of the Audit Committee were not accepted by the Board.

Details of the composition of the Board and its Committees and of the Meetings held andattendance of the Directors at such Meetings are provided in the Corporate GovernanceReport. The intervening gap between the Meetings was within the period prescribed underthe Act and the Listing Regulations.

DIRECTORS RESPONSIBILITY STATEMENT

Based on the framework of internal financial controls and compliance systemsestablished and maintained by the Company work performed by the Internal Statutory Costand Secretarial Auditors including audit of the internal financial controls overfinancial reporting by the Statutory Auditors and the reviews performed by Management andthe relevant Board Committees including the Audit Committee the Board is of the opinionthat the Company's internal financial controls were adequate and effective during thefinancial year 2017-18.

Accordingly pursuant to Section 134 (3) (c) and 134 (5) of the Companies Act 2013the Board of Directors to the best of their knowledge and ability confirm that:

(i) in the preparation of the annual accounts the applicable accounting standards havebeen followed and that there are no material departures; (ii) they have selected suchaccounting policies and applied them consistently and made judgments and estimates thatare reasonable and prudent so as to give a true and fair view of the state of affairs ofthe Company at the end of the financial year and of the profit of the Company for thatperiod; (iii)they have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance withthe provisions of the Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;(iv)they have prepared the annual accounts on a going concern basis; (v) they have laiddown internal financial controls to be followed by the Company and that such internalfinancial controls are adequate and are operating effectively; (vi)they have devisedproper systems to ensure compliance with the provisions of all applicable laws and thatsuchsystems are adequate and operating effectively.

TRANSFER OF UNCLAIMED DIVIDEND TO INVESTOR EDUCATION AND PROTECTION FUND (IEPF).

The provisions of Section 125(2) of the Act do not apply as there was no unclaimed andunpaid dividend or any other amount which require to transfer to Investor Education andProtection Fund (IEPF).

CORPORATE SOCIAL RESPONSIBILITY

Corporate Social Responsibility (CSR) is a company's sense of responsibility towardsthe community and environment in which it operates. It is the continuing commitment bybusiness to behave ethically and contribute to economic development of the society atlarge and building capacity for sustainable livelihoods. The Company believes inconducting its business responsibly fairly and in utmost transparent manner. Itcontinually seeks ways to bring about an overall positive impact on the society andenvironment where it operates and as apart of its social objectives. This policy has beenformally formulated and adopted in terms of Section 135 of the Act and Rules framedthereunder to undertake CSR activities.

The Board has constituted a Corporate Social Responsibility Committee headed by Mr.Vasistha C. Patel as Chairman and Mr. Nitin R. Patel Mr. Sandip V. Patel and Mr. Atul N.Ruparel as Members of the Committee.

The responsibilities of the CSR Committee include:

i. Formulating and recommending to the Board of Directors the CSR Policy and indicatingactivities to be undertaken. ii. Recommending the amount of expenditure for the CSRactivities. iii. Monitoring CSR activities from time to time.

In view of the net average loss of ` 24.34 Million under review your Company was notrequired to spend any amount towards the CSR activities as per the applicable provisionsof Section 135 of the Act. Accordingly the details of the CSR activities during the yearunder review are not provided in this Report. The Report on CSR activities is attached as Annexure- 3.

BUSINESS RESPONSIBILITY REPORTING

As per Regulation 34 (2) (f) of the Listing Regulations listed companies shall submitas part of their Annual Reports Business Responsibility Reports describing theinitiatives taken by them from an environmental social and governance perspective in theprescribed format. This provision is applicable to top 500 listed companies based onmarket capitalization as on 31 March 2018. The Business Responsibility Report of theCompany for the financial year ended on March 31 2018 has been provided separately andforming part of the Annual Report.

POLICY ON PREVENTION PROHIBITION AND REDRESSAL OF SEXUAL HARASSMENT AT WORKPLACE

The Company has zero tolerance for sexual harassment at workplace and has adopted aPolicy on Prevention Prohibition and Redressal of Sexual Harassment at the Workplace inline with the provisions of the Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013 and the Rules there under. The Policy aims to provideprotection to employees at the workplace and prevent and redress complaints of sexualharassment and for matters connected or incidental thereto with the objective ofproviding a safe working environment where employees feel secure.

The Company has not received any complaint of sexual harassment during the financialyear 2017-18.

VIGIL MECHANISM / WHISTLE BLOWER POLICY

The Company has adopted a Whistle Blower Policy to provide a formal mechanism to theDirectors and employees to report their concerns about unethical behaviour actual orsuspected fraud or violation of the Company's Code of Conduct or ethics policy. The Policyprovides for adequate safeguards against victimization of employees who avail of themechanism and also provides for direct access to the Chairman of the Audit Committee. Itis affirmed that no personnel of the Company has been denied access to the AuditCommittee.

FAMILIARIZATION PROGRAMME FOR THE INDEPENDENT DIRECTORS

In compliance with the requirements of SEBI Regulations the Company has put in place afamiliarization programme for the Independent Directors to familiarize them with theirrole rights and responsibility as Directors the working of the Company nature of theindustry in which the Company operates business model etc. The details of thefamiliarization programme are explained in the Corporate Governance Report. The same isalso uploaded on the Company's website at the web link:http://www.sadbhavinfra.co.in/en/pdf/familiarization-programme-for-independent-directors-2017-18.pdf

AUDITORS

( i) Statutory Auditors

Pursuant to the provisions of Section 139 of the Companies Act 2013 and the rulesframed thereunder M/s. Manubhai & Shah LLP Chartered Accountants Ahmedabad havingFirm Registration No. 106041W/W100136 were appointed as Joint Statutory Auditors of theCompany from conclusion of the 8 Annual General Meeting (AGM) of the Company held on 5September 2014 till the conclusion of the 12 AGM to be held in the year 2018. The term ofM/s.Manubhai & Shah LLP has been expiring in the year 2018. In place of said JointStatutory Auditor Board has recommended to appoint M/s. S G D G & Associates LLPChartered Accountants Ahmedabad (S G D G) (Firm Registration No. W100188) from conclusionof the AGM to be held in the year 2018 till the conclusion of the 17 AGM to be held in2023.

S G D G have given their consent to act as Joint Statutory Auditors and have confirmedthat their appointment if made will be in accordance with Section 139 read with Section141 of the Act. Members are requested to approve the appointment of S G D G and authorizethe Board of Directors to fix their remuneration.

Pursuant to the provisions of Section 139 of the Act and the rules framed thereunderM/s. S R B C & Co. LLP Chartered Accountants having Firm Registration No. 324982E wasappointed as Joint Statutory Auditors of the Company from conclusion of the 8 AnnualGeneral Meeting (AGM) of the Company held on 5 September 2014 till the conclusion of the13 AGM to be held in the year 2019.

The Ministry of Corporate Affairs vide its Notification dated 7 May 2018 hasdispensed with the requirement of ratification of Auditor's appointment by theshareholders every year. Hence approval of the Members for the ratification of Auditor'sappointment is not being sought at the ensuing Annual General Meeting and M/s. S R B C& Co. LLP Chartered Accountants will continue to act as auditors of the Company tillfinancial year 2018-19.

The Auditors' Report does not contain any qualification reservation or adverse remark.

(ii) Cost Auditors

The company has received a letter from the cost auditors M/s. J B Mistri & Co.Cost Accountants in Practice having Firm Reg. No. 101067 to the effect that theirappointment if made would be within the prescribed limits under section 141(3) (g) ofthe Companies Act 2013 and that they are not disqualified for appointment.

The board of directors of the company has appointed M/s. J B Mistri & Co. &Associates Cost Accountants as the cost auditors of the Company to conduct the audit ofcost records maintained by the Company as required by the Companies (Cost Records andAudit) Rules 2014 as amended from time to time. The Cost Audit Report for the year 2016-17was filed with the Ministry of Corporate Affairs within stipulated time lines. The membersare requested to ratify the remuneration to be paid to the cost auditors of the company.

(iii) Secretarial Auditors

Pursuant to the provisions of Section 204 of the Act and The Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 the Board of Directors of the Companyhad appointed M/s. Ashish Shah & Associates Company Secretaries in Practice toundertake the Secretarial Audit of the Company for the year ended 31st March 2018. TheSecretarial Audit Report is annexed as Annexure - 4.

There are no qualifications reservations or adverse remarks made by SecretarialAuditor in his report.

SECRETARIAL STANDARDS OF ICSI

The Company is in compliance with the Secretarial Standards on Meetings of the Board ofDirectors (SS - 1) and General Meetings (SS - 2) issued by The Institute of CompanySecretaries of India and approved by the Central Government.

EXTRACT OF THE ANNUAL RETURN

Pursuant to Section 92 (3) of the Act and Rule 12 (1) of The Companies (Management andAdministration) Rules 2014 the extract of Annual Return in form MGT-9 is annexed as Annexure- 5.

CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

There was no earning in the foreign currency and no foreign exchange earning and out goduring the year.

Since the Company does not have any manufacturing activities the other particularsrequired to be provided in terms of Section 134(3)(m) of the Companies Act 2013 are notapplicable.

PARTICULARS OF EMPLOYEES

Disclosures with respect to the remuneration of Directors and employees as requiredunder Section 197 (12) of the Act and Rule 5(1) Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 are provided separately as Annexure - 6 to thisReport.

Details of employee remuneration as required under provisions of Section 197(12) of theAct and Rule 5(2) & 5(3) of Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 will be made available at the registered office of the Companyduring working hours pursuant to the provisions of the first proviso to Section 136(1) ofthe Act and any member interested in obtaining such information may write to the CompanySecretary and the same will be made available to any such member on request.

ACKNOWLEDGEMENTS

Your Directors thank the various Central and State Government DepartmentsOrganizations and Agencies for the continued help and co-operation extended by them. TheDirectors also gratefully acknowledge all stakeholders of the Company viz. customersmembers dealers vendors banks and other business partners for the excellent supportreceived from them during the year and look forward to their continued support in future.The Directors place on record their sincere appreciation to all employees of the Companyfor their unstinted commitment and continued contribution to the Company.

For and on behalf of the Board of Directors
Shashin V. Patel
th
Date: 8 August 2018 Chairman
Place: Ahmedabad DIN: 00048328