You are here » Home » Companies » Company Overview » Sadhana Nitro Chem Ltd

Sadhana Nitro Chem Ltd.

BSE: 506642 Sector: Industrials
NSE: N.A. ISIN Code: INE888C01040
BSE 00:00 | 04 Aug 32.90 1.30
(4.11%)
OPEN

31.70

HIGH

33.10

LOW

31.50

NSE 05:30 | 01 Jan Sadhana Nitro Chem Ltd
OPEN 31.70
PREVIOUS CLOSE 31.60
VOLUME 62069
52-Week high 49.88
52-Week low 19.50
P/E 13.06
Mkt Cap.(Rs cr) 307
Buy Price 32.90
Buy Qty 300.00
Sell Price 32.90
Sell Qty 50.00
OPEN 31.70
CLOSE 31.60
VOLUME 62069
52-Week high 49.88
52-Week low 19.50
P/E 13.06
Mkt Cap.(Rs cr) 307
Buy Price 32.90
Buy Qty 300.00
Sell Price 32.90
Sell Qty 50.00

Sadhana Nitro Chem Ltd. (SADHANANITRO) - Director Report

Company director report

To

The Members of

SADHANA NITRO CHEM LIMITED

Your Directors take pleasure In presenting the 46th Annual Report together with AuditedFinancial Statements for the Financial Year ended Sl" March2019.

1) FINANCE

I. FINANCIAL RESULTS

PARTICULARS

STANDALONE

CONSOLIDATED

2018 -19 2017-18 2018-19 2017-18
Revenue from operations (Net) 8i Other Income 26840 11115 26828 11464
Total Expense 16210 8287 16140 8664
Profit/(Loss) before exceptional item and taxation 10630 2828 10688 2800
Exceptional Items 10630 2828 10688 2800
Tax Expense (3099) 309 (3103) 309
Profit/(Loss) after tax 7531 3137 7585 3109
Other Comprehensive Income (8) (42) (8) (42)
Total Comprehensive Income 7523 3095 7577 3067

II. REVIEW OF OPERATIONS:

The total revenue of your company for the financial year ending 31st March2019 has been Rs. 26840/- Lakhs as compared to Rs. 11115 /- lakhs in the previous yearsregistering a significant growth of 140%.

Focus efforts have been placed on expanding the end applications of our product lineover the last several years which has helped in yield strong results this year offeringhealthy sustainability for the years to come. This diversification in end application hasalso simultaneously diversified clients and end destinations for Company's productsglobally de- risking our portfolio from any single customer application or market.

The level of operations has been steadily increased over the last year and has reachedsatisfactory levels. This has helped in economies of scale and made your companycompetitive on the global front.

Because of your company's product quality standards we have been able to maintainsteady relationships with our long standing customers along with building relationshipswith several new customers.

The result of all the above factors has led to our best year to date registering ourhighest ever turnover and the highest ever Profit After Tax (PAT) of Rs. 7531/- (P.Y.Rs. 3137/- lakhs) from normal operation registered in 140% growth.

Pursuant to the notification dated February 162015 issued by the Ministry of CorporateAffairs the Company has adopted the Indian Accounting Standards ("Ind AS")notified under the Companies (Indian Accounting Standards) Rules 2015 with effect fromApril 12017 As such the financial statements for the year ended as at March 312017 havebeen restated to conform to Ind AS.

The company has a very strong order book position and expected to maintain the same orhigher growth trend. The cost control at every stage of operations with the increase levelof operations resulted in product cost improvement.

This resulted in outstanding performance and best ever year the EBIDTA from normaloperation for 2018-19 was Rs. 12102 lakhs (PY EBIDTA of Rs. 3526 lakhs) which representsa growth of 71 %.

III. EXPANSIONS:

The company has resumed manufacture of Colour formers a performance chemical it usedto manufacture in the past. It is the key raw material for the coating of thermal paper apresently growing industry. Due to global demand and growth of thermal paper your Companyis expanding our production lines of colour former to capture the current globalrequirements.

There is increased demand of Meta Amino Phenol and Aniline 25 Disulphonic acidglobally two of your company's key products due to which your company is in the processof increasing its capacity by 33 % in both products.

The proposed expansion will put to use and operationalise its entire capital work-inprogress during the year. In addition to this the estimated project cost will be aroundRs. 60 Crores. The above expansions are being funded through internal accruals and arelikely to be completed by the end of this financial year. The additional positive effecton your company's results due to these expansions will take effect in the financial yearending March 2020.

IV. EXPORTS:

With the increase in competitiveness of your company on a global front it has stableexports to across Europe Japan Korea North and South America and with a significantquantity being sold to China.

While our local market is growing steadily Company's turnover is still focused on theexport market with this year's exports being a total of Rs. 19282 lakhs compared to lastyear's Rs. 8163 lakhs registering a growth of more than 136.21%.

Exports constituted about 75.027 % of the overall revenue from operation includingother income. Company's Exports are well diversified in terms of product range as well asthe Countries of Export.

V. OUTLOOK:

Your company has strong long term fundamentals. The company has practically reduced allits borrowings and has started the year debt free. It is looking towards leveraging itsunique product offering along with its competitive strengths towards a long term diversesales pipeline with sustainable cash flows for the foreseeable future. Your company islooking to utilize its cash flow towards expanding product lines as well as diversifyinginto downward derivatives of its existing products to create a maintainable longtermrevenue pipeline.

VI. Deposits:

The Company has not accepted or renewed any amount falling within the purview ofprovisions of Section 73 of the Companies Act 2013 ("the Act") read with theCompanies (Acceptance of Deposit) Rules 2014 during the year under review. Hence therequirement for furnishing of details relating to deposits covered under Chapter V of theAct or the details of deposits which are not in compliance with the Chapter V of the Actis not applicable.

VII. Particulars of Loans Guarantees or Investments:

Pursuant to the provisions of Section 186 of the Companies Act 2013 read with TheCompanies (Meetings of Board and its Powers) Rules 2014 as amended from time to time(including any amendment thereto or re-enactment thereof for the time being in force)Loans guarantees and investments covered under Section 186 of the Companies Act 2013form part of the

Notes No. 04 & 05 to the Audited Standalone Financial Statements provided in thisAnnual Report.

2) CONSOLIDATED FINANCIAL STATEMENTS:

The Consolidated Financial Statements of the Company prepared in accordance withrelevant Accounting Standards (AS) viz. AS 21 AS-23 and AS-27 issued by the Institute ofChartered Accountants of India form part of this Annual Report.

3) DIVIDEND:

Yours Directors are pleased to recommend Final Dividend of Rs. 0.75 per equity share ofRs. 05/- each for financial year 2018-19 which shall be paid subject to the approval ofshareholders of the Company in 46th Annual General Meeting of the Company.

The Board of Directors in its meeting held on April 222019 had approved payment ofinterim dividend of Rs. 1.25/- per Equity Share on face value of Rs. 05/- each fullypaid-up for the financial year 2018-2019. Interim dividend was paid to the shareholders aspertheir shareholding in the Company as on May 032019 (Record Date).

4) UNPAID DIVIDEND 8i IEPF:

The Company is not required to transfer any amount to the Investor Education &Protection Fund (IEPF) and does not have unclaimed dividend which remains to betransferred to Investor Education & Protection Fund (IEPF).

5) TRANSFER TO RESERVES:

The Board of Directors has not appropriated and transferred any amount to any Reserveand has decided to retain the entire amount in profit and Loss account.

6) REPORT ON PERFORMANCE OF SUBSIDIARIES ASSOCIATES ANDJOINTVENTURECOMPANIES:

The performance and financial position/ salient features of the Financial Statement ofeach of the subsidiaries associates and joint venture companies for the year ended31stMarch2019 is given in Form AOC-lwhich is annexed hereto and marked as Annexure-1 andforms part of this Report.

As on 31st March 2019 the Company has three wholly owned subsidiary viz. AnuchemB.V.B.A. Belgium - a Foreign Subsidiary Strix Wireless Systems Private Limited an IndianSubsidiary and Spidigo Net Private Limited an Indian Subsidiary Audited FinancialStatement of the said subsidiaries is considered for the purpose of preparing ConsolidatedFinancial statements.

During the year 2018-19 the Board in its meeting held on 01st August 2018 resolved toacquire 100% shares of Spidigo Net Private Limited by making it wholly owned subsidiary ofthe Company subject to approval of Members. Consequently the members of the Company bypassing ordinary resolution through postal ballot on 08th March 2019 approved acquisitionof 100% shares of Spidigo Net Private Limited by making it wholly owned subsidiary of theCompany.

7) RELATED PARTY TRANSACTIONS:

I) The particulars of contracts or arrangements with related parties:

Your Company has historically adopted the practice of undertaking related partytransactions only in the ordinary and normal

course of business and at arm's length as part of its philosophy of adhering to highestethical standards transparency and accountability. In line with the provisions of theCompanies Act 2013 and the Listing Regulations the Board has approved a policy onrelated party transactions. An abridged policy on related party transactions has beenplaced on the Company's website HYPERLINK"http://www.sncl.com/newpdf/policy/Policy%20on%20Related%20Party%20Transaction.pdf ".

Further Related Party Transactions are placed on a quarterly basis before the AuditCommittee and before the Board for approval. Prior omnibus approval of the Audit Committeeis obtained for the transactions which are of a foreseeable and repetitive nature.

The particulars of contracts orarrangements with related parties referred toinsubsection (1) of section 188 of the Companies Act 2013 in the prescribed Form AOC-2 isannexed hereto and marked asAnnexure-lland forms part of this Report.

II) Disclosure of Related Party Transaction with Person or Entity belonging to Promoter8l Promoter Group:

The Company has not made any transaction(s) with Manekchand Panachand TradingInvestment Co Private Limited (Being Holding Company) an Entity belonging to Promoter orPromoter Group that holds 10% or more shareholding of the Company:

III) Disclosure of Loans and advances in nature of Loan to Subsidiaries and Associateof the Company:

Particulars Subsidiaries & Associate Company(ies)
1. Loan and Advances as on 31st March 2018 84294647
2. Loan and Advances made during the Financial Year 2018-19 Nil
3. Loan and Advances outstanding as on 31st March 2019 Nil

8) INSURANCE:

The assets of your Company are adequately insured. Your Company has also taken outsuitable coverfor Public Liability.

9) INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:

The Company has anadequate Internal Control System commensurate with the size andnature of its business. The preparation designing and documentation of Policy on InternalFinancial Control are in place and implemented which reviewed periodically and modifiedsuitably to ensure controls.

The internal audit is carried out by a separate firm of Chartered Accountants. Theperiodical audit reports including significant audit observations and corrective actionsthere-on are presented to the Chairman of the Audit Committee.

10) Changes in Share Capital:

1) Redemption of 1% Non-convertible Non-Cumulative Redeemable Preference Shares;

During the year 2018-19 the Board of Directors of the Company through circularresolution passed on 20th June 2018 decided to redeem entire 9600000 -1%Non-Cumulative non-convertible Preference Shares ("Preference Shares") of Rs.10/- each at a premium of Rs. 8/-per share out of currentyear's profit forthe Year endedMarch 312019.

2) Sub-division of equity shares of Rs. 10/- each into 2 (two) fully paid Equity Sharesof Rs. 5/- each of the Company;

During the year 2018-19 The Board of Directors of the company in its meeting held on24th September 2019 decided to split the equity shares to improve affordability andliquidity of equity shares and recommended the proposal of sub-division of equity sharesof the Company to its members for approval through Postal Ballot.

The said sub-division along with alteration in memorandum of association wasconsequently approved by members through postal ballot passed on 20th December 2018.

After taking approval of members the company intimated to Bombay Stock Exchange('BSE') about Record Date vides its letter dated 27th December 2018 for sub-divisionwhich was approved by Bombay Stock Exchange vides its letter dated 28th December 2018.The said letter from BSE directed the Company to intimate New International SecuritiesIdentification Numberf/S/N'J at least two days before record date.

Pursuant to the above directions issued by BSE the Company applied to NationalSecurities Depository Limited ('NSDL') and Central Depository Services (India) Ltd('CDSL') for New ISIN. After submission of requisite documents NSDL and CDSL vide itsletter dated 22nd January

2019 had intimated to the Company about new ISIN number INE888C01032 that has beenactivated on NSDL and CDSL platform. The Company further intimated New ISIN was given toBSE on 25th January 2019.

The unused existing physical shares of Rs. 10/- each with existing members were treatedas cancelled. The new physical share certificates of the face value of Rs. 5/- each wereprinted issued and posted to the existing 1719 members after 31st January2019.

11) MATTERS RELATED TO INDEPENDENT DIRECTORS:

I. Declarations by Independent Directors:

All Independent Directors have given declarations that they meet the criteria ofindependence as laid down under Section 149(6)of the Companies Act 2013 and Regulation16(l)(b) of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015.

II. Evaluation by Independent Director:

In a separate meeting of Independent Directors held on 22ndJanuary 2019 performanceof non-independent directors performance of the Board as a whole and performance of theChairman was evaluated taking into account the views of executive Director.

12) MATTERS RELATING TO BOARD OF DIRECTORS:

I. Meeting of Board of Directors of the Company duringthe Financial Year 2018-19:

The Board met Seven times during the financial year ended 31st March 2019 inaccordance with the provisions of the Companies Act 2013 the details of which are givenin the Corporate Governance Report. The intervening gap between any two Meetings was within the period prescribed by the Companies Act 2013 and SEBI (Listing Obligations andDisclosure Requirements) Regulation 2015.

II. Annual evaluation of Directors Committee and Board:

The Board of Directors of the Company has carried out an annual performance evaluationof its own performance and of the directors individually as well as the evaluation ofall the committees i.e. Audit Nomination and Remuneration Stakeholders Relationship CSRCommittee and Internal Complaint Committee for Prevention and Prohibition of SexualHarassment of Women at Workplace.

The Board adopted a formal evaluation mechanism for evaluating its performance and aswell as that of its Committees and individual directors including the Chairman of theBoard the exercise was carried out by feedback survey from each directors covering Boardfunctioning such as composition of Board and its Committees experience and competenciesgovernance issues etc. Separate Exercise was carried out to evaluate the performance ofindividual directors including the Chairman of the Board who were evaluated on parameterssuch as attendance contribution atthe meeting etc.

13) APPOINTMENT REAPPOINTMENT AND RESIGNATION OF DIRECTORS AND KEY MANAGERIAL PERSONSDURING THE YEAR 2018-19:

I. With respect to Directors of the Company:

- Appointment:

Shri Amit M. Mehta (DIN: 00073907) was appointed as an Additional Independent Directorof the Company with effect from 30th April 2018. In Annual General Meeting ofthe Company held on 30th August 2018 members of the Company approved theappointment of ShriAmit M. Mehta as an Independent Director to hold the office for a termup to consecutive five years commencing from 30th April 2018.

-Reappointment:

- The existing agreement with ShriAsit D. Javeri Chairman &Managing Director Mrs.Seema A. Javeri Executive Director (Administration) and ShriAbhishek A. Javeri ExecutiveDirector & CFO of the Company was terminated on 30th April 2018 and theywere re-appointed by Board of Directors of the company in its meeting held on 30thApril 2018 with effect from 1" May 2018.

- Mr. Priyam Shantilal Jhaveri (DIN: 0045038) Mr. Arvind Raoji Doshi (DIN: 00015293)and Mr. Pradeep Nanasaheb Desai (DIN: 01602942) were appointed as Independent Directors ofthe Company by the members at the 41st AGM of the Company held on 12thSeptember 2014 for a period of five consecutive years expiring on 12"' September2019.

Pursuant to section 149 (10) of the Act an Independent Director shall hold office fora term of up to five consecutive years on the Board of a Company but shall be eligiblefor re-appointment on passing of a special resolution by the Company for another term ofup to five consecutive years on the Board of the Company.

In view of above provision and based on the recommendation of Nomination andRemuneration Committee the Board of Directors in its meeting held on 08thAugust 2019 proposed to members of the Company to re-appoint Mr. Priyam ShantilalJhaveri Mr. Arvind Raoji Doshi and Mr. Pradeep Nanasaheb Desai as Independent Directorsof the Company for second term of five consecutive years commencing from the date of endof preceding term of 5 Years through Postal Ballot by passing Special Resolution. Theresult of said Postal Ballot shall be declared on or before 13th September2019.

- Change in Designation:

On the recommendation of the Nomination & Remuneration Committee the Board in itsmeeting held on 24th July 2018 subject to the approval of members of theCompany re-designated existing position of Mr. Asit D Javeri as Executive Chairman fromChairman and Managing Director and Mr. Abhishek A Javeri as Managing Director and CFO fromExecutive Director and CFO.

The subsequent approval of the members by passing Special Resolution was taken inAnnual General Meeting of the Company held on 30th August 2019 for saidre-designation.

- Continuation of Appointment of Non-Executive Director:

Pursuant to the sub regulation (1A) of Regulation 17 of Securities and Exchange Boardof India (Listing Obligations and Disclosure Requirements) Regulations 2015 with effectfrom 1st April 2019 No listed entity shall appoint a person as a NonExecutive Directoror continue his/ her directorship as Non-Executive Director - who has attained the age of75 Years or more unless prior consent from the members of the company has been obtainedby way of Special Resolution.

Considering the fact that age of Mr. Arvind Raoji Doshi being the Independent Director/ Non-executive Director is more than 75 Years (79 Years) the Board in its meeting heldon 22ndJanuary 2019 discussed the above amendment with the view of the factand decided to continue his term as the Independent Director / Non-Executive Director byconsidering his knowledge of various aspects relating to the Company's affairs longbusiness experience and his immense contribution to the business of the Company.Thereafter the Board decided to recommend the same to the members for their approval byway of Special Resolution through Postal Ballot. The members through postal ballot by wayof Special Resolution passed on 08th March 2019 approved the continuation ofappointment of Mr. Arvind Raoji Doshi as Non-executive Director of the Company

Retirement by Rotation:

In accordance with the provisions of the Act none of the Independent Directors isliable to retire by rotation. As per the provisions of Section 152 of the Companies Act2013 Mr. Asit D. Javeri retires by rotation at the ensuing Annual General Meeting andbeing eligible offer himself for re-appointment.

II. With respect to Key Managerial Personnel of the Company:

-Re-appointment of Company Secretary:

The terms of appointment of Shri Nitin R. Jani Company Secretary who retire on13"' November 2018 was extended further by 3 (Three) years upto 13thNovember 2021.

-Resignation;

No Key Managerial Personnel of the Company has resigned during the financial yearending 31" March 2019.

14) COMMITTEES OF BOARD OF DIRECTORS OFTHE COMPANY:

Following are the Committees of Board of Directors of the Company. Composition of thefollowing Committees are also hosted on the website of the Company at

http://www.sncl.com/newpdf/policy/Composition%20of%20Committees%20-%20Board.pdf .

I. AUDIT COMMITTEE:

The Audit Committee of Directors was constituted pursuant to the provisions of Section177 of the Companies Act 2013. The composition of the Audit Committee is in conformitywith the provisions of the said section. The details of Composition and meetings AuditCommittee held has been mentioned in the Corporate Governance Report.

II. NOMINATION AND REMUNERATION COMMITTEE:

The Nomination and Remuneration Committee of Directors as constituted by the Board ofDirectors of the Company in accordance with the requirements of Section 178 of the Act.

The details of composition of the Committee and the number of meetings held by thecommittee are mentioned in the Corporate Governance Report.

The Board has in accordance with the provisions of sub-section (3) of Section 178 ofthe Companies Act 2013 formulated the policy setting out the criteria for determiningqualifications positive attributes independence of a Director and policy relating toremuneration for Directors Key Managerial Personnel and other employees.

Major criteria / gist are defined in the Remuneration policy framed for appointment ofand paymentof remuneration to the Directors of the Company. The remuneration policy is hasbeen paced on the website of the Company athttp://www.sncl.com/newpdf/policy/NRC%20Policy.pdf .

III. STAKE HOLDERS RELATIONSHIP COMMITTEE:

The Board of Directors of the company has constituted pursuant to Section 178 of theCompanies Act 2013; the Board of Directors of the Company has constituted theStakeholder's Relationship Committee.

The details of composition of the Committee and the number of meetings held by thecommittee are mentioned in the Corporate Governance Report.

IV. CORPORATE SOCIAL RESPONSIBILITY COMMITTEE:

As per the provisions of Section 135 of the Act read with Companies (Corporate SocialResponsibility Policy) Rules 2014 the Board of Directors has constituted a CorporateSocial Responsibility (CSR) Committee as under:

Mr. Asit Dhankumar Javeri Chairman

Mr. Arvind Raoji Doshi Member Mr. PriyamShantilal Jhaveri Member

The Board of Directors of the Company has approved CSR Policy based on therecommendation of the CSR Committee.

The CSR Policy of the Company is available on the Company's web-site at:http://www.sncl.com/financials.htm

The meeting of CSR Committee was held on 22nd January 2019. It wasdiscussed in the meeting that Being the first Financial Year for expenditure on CSR theCompany initiated the CSR activities but could not find possible avenues to make saidexpenditure during the financial year ended on 31st March 2018 as peractivities mentioned in Schedule VII of Companies Act 2013. The company is in search ofan organization where it can make donations. Thus the Company shall initiate the CSRprogramme in the current financial year 2019-2020.

The CSR Committee of the Company hereby confirms that the implementation and monitoringof the CSR Policy is in compliance with CSR objectives and Policy of the Company.

The composition dates of meeting held and attendance of the members of the Committeeat the meeting are given separately in the Corporate Governance report.

V. INTERNAL COMPLAIN COMMITTEE FOR PREVENTION AND PROHIBITION OF SEXUAL HARASSMENT OFWOMAN AT WORKPLACE:

During the Financial Year 2018-19 the Board of Directors by passing circularresolution constituted Internal Complain Committee for prevention and prohibition ofSexual Harassment of woman at workplace which consists of following members:

a. Mrs.Seema AsitJaveri Chairperson
b. Mrs. Phelomena Fernandes Member
c. Mrs. Jotsana Tushar Parab Member
d. Mrs. MamtaJatin Shah Member

The meeting of Internal Complain Committee for prevention and prohibition of SexualHarassment of woman at workplace was held on 30th March 2019. The Committeenoted the fact that the Company has received zero tolerance towards sexual harassment atthe workplace during the Financial Year 2018-19. The Company had also adopted a policy onprevention prohibition and redressal of sexual harassment at workplace in line with theprovisions of the Sexual Harassment of Women at Workplace (Prevention Prohibition andRedressal) Act 2013 and the Rules thereunder.

Further the Company has complied with provisions relating to constitution of InternalComplain Committee under Sexual Harassment of woman at workplace (prevention prohibitionand Redressal) Act 2013. During the year the Company has not received any casepertainingto Sexual Harassment of Woman.

The composition dates of meeting held and attendance of the members of the Committeeat the meeting are given separately in the Corporate Governance report.

15) VIGIL MECHANISM / WHISTLE BLOWER AND RISK MANAGEMENT POLICY:

Pursuant to the provisions of Section 177 (9) of the Companies Act 2013 read with Rule7 of the Companies (Meetings of Board and its Powers) Rules 2014 and Regulation 22 ofSEBI (LODR) Regulations 2015 the Company already has in place "Vigil MechanismPolicy" (Whistle Blower Policy) for Directors and employees of the Company to providea mechanism which ensures adequate safeguards to employees and Directors from anyfinancial statements and reports etc. The said policy is also hosted on the website ofthe Company at

http://www.sncl.com/newpdf/policy/Whistle%20Blower%20Policy.pdf .

The employees of the Company have the right/option to report their concern/grievance tothe Chairman of the Audit Committee. The Company is committed to adhere to the higheststandards of ethical moral and legal conduct of business operations. The Company alsoadopted Risk Assessment Procedure.

16) AUDITORS & REPORTS:

I. Statutory Auditors of the Company and their observations on accounts for the yearended 31" March 2019:

At the 44th Annual General Meeting held on August 22017 the Membersapproved appointment of M/s. Chandrashekar Iyer & Co. Chartered Accountants (Firmregistration No: 114260W) to hold office from the conclusion of the 44th AnnualGeneral Meeting until the conclusion of the 49th Annual General Meeting to beheld for the financial year 2022. However M/s. Chandrashekar Iyer & Co. CharteredAccountants (Firm registration No: 114260W) has tendered their resignation on 08th August2019 due to pre-occupation. Hence the Board recommends to the members for appointment ofM/s. Jayesh Dadia & Associates LLP (Firm registration No: 121142W / W100122) asStatutory Auditor of the Company for the period of consecutive 5 years from conclusion ofensuing Annual General Meeting till the conclusion of the Annual General Meeting to beheld in theyear 2024.

Necessary Resolution for appointment of said Statutory Auditors of the Company isincluded in the notice of AGM for seeking approval of members.

Further The observations / qualifications / disclaimers made by the M/s.Chandrashekarlyer& Co. Chartered Accountants (Firm registration No: 114260W) in theirreport for the financial year ended 31st March 2019 read with the explanatorynotes therein are self-explanatory and therefore do not call for any further explanationor comments from the Board under Section 134 (3) of the Companies Act 2013.

II. COST AUDITORS OFTHE COMPANY:

In terms of Section 148 of the Act the Company is required to have the audit of itscost records conducted by a Cost Accountant. In this connection on the recommendation ofthe Audit Committee the Board of Directors of the Company in its meeting held on 28thMay 2019 appointed M/s Vinay Mulay & Co. Cost Accountants (Reg No: M/8791) as thecost auditors to carry out auditing of cost accounting records of the Company forthe year2019-20.

In accordance with the provisions of Section 148(3) of the Act read with Rule 14 of theCompanies (Audit and Auditors) Rules 2014 the remuneration payable to the Cost Auditorsas recommended by the Audit Committee and approved by the Board has to be ratified by themembers of the Company. Accordingly appropriate resolution forms part of the Noticeconvening the AGM. We seek your support in approving the proposed remuneration of Rs.75000/- P.A. plus applicable taxes and out-ofpocket expenses payable to the Cost Auditorsforthe Financial Year ending March 312020.

M/s Vinay Mulay & Co. Cost Accountants (Registration No: M/8791) have vast andrich experience in the field of cost audit and have been conductingthe audit of the costrecords of the various Company forthe past several years.

III. Secretarial Auditors of the Company:

Section 204 of the Companies Act 2013 and the Companies (Appointment and Remunerationof Managerial Personnel) Rules 2014 inter-alia requires every listed company to annexwith its Board's report a Secretarial Audit Report given by a Company Secretary inpractice in the prescribed form. The Board appointed M/s. Makarand M. Joshi & Co.Company Secretaries in

Practice Mumbai as Secretarial Auditor to conduct Secretarial Audit of the Companyfor the Financial Year 2018-19 and their report is annexed hereto and marked as Annexure -IV. Observation made by Secretarial Auditor as per said report along with explanation madeby Board is given below:

Particulars of observation Explanation by Board
1. Separate bank account was not opened as required under section 123 (5) of the Act while paying dividend to Preference shareholder for the Financial Year 2017-18 Dividend was required to be paid single shareholder only hence Company did not open separate account while paying dividend to Preference shareholder. The Company had paid dividend within stipulated period of time. Hence in all respect in material compliance of Specified Provision.
2. FLA for year ending 31 st March 2018 falling due on 15 July 2018 was not filed by the company; further Annual Performance Report was filed with delay The filing of aforementioned return was inadvertently missed. However the Company is in process of taking necessary corrective action as on the date of approval of Board Report for Financial Year 2018 -19.
3. Under SEBI (Listing Obligation and Disclosure Requirements) Regulation 2015: In few instances Company has submitted the Outcome of Board Meeting in delay. In One Instance the Intimation to Stock Exchange was not as per required format. In one instance Company Published Notice of Board meeting in delay The Company has filled the Corporate Governance Report in delay for December 2018 On the account of technological constraints the said submissions were delayed. Further all material information was disclosed.
4. Under SEBI (Prohibition of Insider Trading) Regulations 2015: The Company has not disclosed trading by Designated Employee under Regulations 7(2). In few instances Designated Employees of the Company has made contra trade In one instance Designated Employee has traded during the period of Window Closure The Company is in process of taking necessary actions against respective Designated Person.

Regulation 24 (A) of SEBI (Listing Obligation and Disclosure Requirements) Regulations2015 inter-alia requires every listed company to annex with its Board's report aSecretarial Annual Compliance Report given by a Company Secretary in practice in theprescribed form. The Board appointed M/s. Makarand M. Joshi & Co. Company Secretariesin Practice Mumbai has provided Secretarial Annual Compliance Report and their report isannexed hereto and marked asAnnexure-IV.

17) REPORTING OF FRAUDS BY STATUTORY AUDITORS UNDER SECTION 143(12):

There were no incidences of reporting of frauds by Statutory Auditors of the Companyunder Section 143 (12) of the Act read with Companies (Accounts) Rules 2014.

18) CORPORATE GOVERNANCE AND MANAGEMENT DISCUSSION AND ANALYSIS REPORT:

Pursuant to Regulations 17 to 27 clauses (b) to (I) of Regulation 46(2) and Para C Dand E of Schedule V of SEBI(Listing Obligations and Disclosure Requirements) Regulations2015 the corporate governance report together with Auditor Certificate on compliance ofthe same is annexed hereto and marked as Annexure-V and the Management Discussion andAnalysis reportis annexed hereto and marked asAnnexure-VI.

19) CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS ANDOUTGO:

The information on conservation of energy technology absorption and foreign exchangeearnings and outgo stipulated under Section 134(3)(m) of the Companies Act 2013 read withRule 8 of The Companies (Accounts) Rules2014 is annexed hereto and marked asAnnexure-VII.

20) EXTRACTOF ANNUAL RETURN:

Pursuant to the provisions of Section 134(3)(a) of the Companies Act 2013 Extract ofthe Annual Return for the financial year ended 31" March 2019 made under theprovisions of Section 92(3) of the Act is attached as Annexure- VIII which forms part ofthis Report.

The extract of Annual Return and Annual Return shall also be placed on the website ofthe Company at: http://www.sncl.com/financials.htm

21) PARTICULARS OF EMPLOYEES:

Employees of the Company are drawing Remuneration in excess of the limits prescribed bythe Companies Act 2013. The information required pursuant to Section 197 read with Rule5 of The Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 isannexed hereto and marked as Annexure - IX.

22) MATERIAL CHANGES AND COMMITMENTS AFFECTING FINANCIAL POSITION BETWEEN THE ENDOFTHEFINANCIAL YEAR AND DATE OFTHE REPORT:

I) Interim Dividend for the Financial Year2018-19:

The Board of Directors in its meeting held on April 222019 had approved payment ofinterim dividend of Rs. 1.25/- per Equity Share on face value of Rs. 05/- each fullypaid-up for the financial year 2018-2019. Interim dividend was paid to the shareholders aspertheir shareholding in the Company as on May 032019 (Record Date).

23) OTHER DISCLOSURE:

I) SIGNIFICANT AND MATERIAL ORDERS PASSED BYTHE REGULATORS OR COURTS:

During the Year 2018-19 the Board in its meeting held on 08th August 2018approved the Scheme of merger of Strix Wireless System Private Limited the wholly ownedsubsidiary of the Company with Sadhana Nitro Chem Limited subject to the requisiteapproval of the shareholders / creditors of the Company and the sanction of the NationalCompany Law Tribunal Mumbai Bench (the NCLT) the stock exchanges where the shares of thecompany are listed and such other competent authority(ies) as may be applicable. TheCompany filed an application to the NCLT for the necessary directions to be issued by theNCLT for convening meeting of Strix Wireless System Private Limited. After conveningnecessary meeting pursuant to the order passed by the NCLT the Company filed petitionwith the NCLT for sanctioning of Scheme of Merger of Strix Wireless System PrivateLimited the wholly owned subsidiary of the Company with Sadhana Nitro Chem Limited. On 09thMarch2019 the NCLT sanctioned a scheme of Merger of Strix Wireless System Private Limited thewholly owned subsidiary of the Company with Sadhana Nitro Chem Limited.

II) DIRECTORS' RESPONSIBILITY STATEMENT:

In terms of Section 134(5)of the Companies Act 2013 in relation to the auditedfinancial statements of the company for the year ended 31st March 2019 theBoard of Directors hereby confirms that

(a) That in the preparation of the annual financial statements for the year ended 31stMarch 2019 the applicable accounting standards have been followed along with properexplanation relating to material departures if any;

(b) That such accounting policies as mentioned in the Notes to the Financial Statementshave been selected and applied consistently and judgment and estimates have been made thatare reasonable and prudent so as to give a true and fair view of the state of affairs ofthe Company as at 31st March 2019 and of the profit of the Company forthe year ended onthat date;

(c) That proper and sufficient care has been taken forthe maintenance of adequateaccounting records in accordance with the provisions of the Companies Act2013for safeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities;

(d) That the Audited Financial Statements have been prepared on a going concern basis;

(e) Those proper Internal Financial Controls were in place and that the financialcontrols were adequate and were operating effectively.

(f) Those systems to ensure compliance with the provisions of all applicable laws werein place and were adequate and operating effectively.

III) Issue of Sweat Equity Shares;

As per provisions of Section 54 of Companies Act 2013 read with Rule 8 (13) ofCompanies (Share Capital and Debenture) Rules 2014 the Company on December 13 2018 hadreceived Trading approval of 114319 Sweat Equity Shares of Rs. 10/- each (Currently228638 Sweat Equity Shares of Rs. 05/- each) issued to Mr. Abhishek A. Javeri ManagingDirector & Chief Financial Officer of the Company. Details of Sweat Equity Sharesissued by the Company are furnished in Annexure - III which forms part of this Report.

IV) Employee Stock Option Plan;

The Company has received in principle approval for issue of ESOP pursuant to Schemeapproved by Members of the Company in Extra-ordinary general Meeting held on 22ndMay 2017.

The Nomination and Remuneration Committee approved the Employee Stock Option Plan (ESOP2018) for the grant of stock options to the employees of the Company on 01" August2018. The Nomination and Remuneration Committee (Remuneration Committee) administers theESOP. The option under this grant would vest to the employees as percentage of total grantat the end of the first second and third year from the date of grant with exercise periodending one year from the end of last vesting. Details pertaining to Employee Stock OptionPlan (ESOP 2018) is annexed and marked hereto as Annexure-X.

V) Issue of Shares with Differential Voting Rights;

The Company has not issued any shares with differential rights and hence no informationas per provisions of Section 43 (a) (ii) of the Act read with Rule 4 (4) of the Companies(Share Capital and Debenture) Rules 2014 is furnished.

VI) Disclosure Under Section 67 (3) of the Companies Act 2013;

During the year under review there were no instances of non-exercising of votingrights in respect of shares purchased directly

by employees under a scheme pursuant to Section 67 (3) of the Act read with Rule 16 (4)of Companies (Share Capital and Debentures) Rules 2014 is furnished.

VII) HUMAN RESOURCE /INDUSTRIAL RELATIONS:

Human Resource programs and initiatives are aligned to meet the business needs. Yourcompany believes in investing in people to develop and expand their capability. TheCompany has been able to create a favorable work environment that motivates performance;customer focus and innovation in your company's strategies are based inter alia onprocesses of continuous learningand improvement.

24) ACKNOWLEDGEMENTS AND APPRECIATION:

Your Directors would like to express their appreciation for the assistance andcooperation received from the Bankers Central and State Government Departmentscustomers vendors and other business partners. The Directors also wish to place onrecord their appreciation to all the employees of the Company for their cooperation andcontinued contribution to the Company. Last but not least the Directors place on recordtheir gratitude to the Investors Clients and Shareholders of the Company fortheir supportand trust reposed.

For and On Behalf of the Board of Directors Sadhana Nitro Chem Limited

Sd/-
ASIT D. JAVERI EXECUTIVE CHAIRMAN
DIN:00268114

Address: Ratnagar Palace 37 Chowpatty Seaface

Mumbai 400007
Place: Mumbai
Date:08th August 2019