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Sikko Industries Ltd.

BSE: 538419 Sector: Agri and agri inputs
NSE: SIKKO ISIN Code: INE112X01017
BSE 05:30 | 01 Jan Sikko Industries Ltd
NSE 00:00 | 27 Mar 19.00
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Sikko Industries Ltd. (SIKKO) - Director Report

Company director report

Dear Members

The Board of Directors hereby submit the report of the business and operations of yourCompany along with the Audited Financial statements for the financial year ended March31 2019.

FINANCIAL HIGHLIGHTS (Amount in र)
Particulars F.Y. 2018-19 F.Y. 2017-18
Revenue from operations 268922743.10 256654121
Other income 5037717.28 6195017
Total Income 273960460.38 262849138
Less: Total Expenses before Depreciation Finance Cost and Tax 234531638.45 228657062.34
Operating Profits before Depreciation Finance Cost and Tax 39428821.93 34192075.66
Less: Finance cost 5669803.88 2067724.93
Less: Depreciation 8396164.90 7063454
Profit / (Loss) Before Tax 25362853.15 25060896.73
Less:- Provision for Income Tax (Current Year) - -
Less: Current Tax 8300000 7500000
Less: Deferred Tax Liabilities/ (Assets) (3013653) 5771814
Profit/ (Loss) after tax (PAT) 20076506.15 11789082.73

COMPANY'S PERFORMANCE

During the year under review the Company has earned total income of Rs. 2739.61 Lakhsas against the total income of Rs. 2628.49 Lakhs of previous year which states 4.23%increase in the profit as compared to previous year. The profit before tax in thefinancial year 2018-19 stood at Rs. 253.63 Lakhs as compared to profit of Rs. 250.60 Lakhsfor last year and net profit after tax stood at Rs. 200.77 Lakhs compared to profit ofRs.117.88 Lakhs for the previous year which state 70.30%increase in profit of the Company.

DIVIDEND

Your Directors wish to conserve resources for future expansion and growth of theCompany. Hence no Dividend has been declared by the Directors during the Financial Year2018-19.

AMOUNT TRANSFERRED TO RESERVES

Your Directors do not propose transfer of any amount to the General Reserves. Fullamount of net profit is carried to reserve& Surplus account of the Company.

CHANGE IN THE NATURE OF BUSINESS

During the year there was no change in the nature of business carried out by theCompany.

BOARD OF DIRECTORS AND KEY MANAGERIAL PERSONNEL

The Board of the Company comprises of five Directors out of which three are PromoterDirectors and two are Non-Promoter Independent Directors. As on the date of this reportthe Board comprises following Directors:

Name of Director DIN Designation
Mr. Ghanshyambhai Kumbhani 00587855 Chairman & Whole time Director
Mr. Jayantibhai Kumbhani 00587807 Managing Director
Mr. Pravinbhai Kumbhani 00587864 Non-Executive Director
Mrs. Mamtaben Thumbar 07732851 Non-Executive Independent Director
Mr. Hasmukhbhai Vavaiya 07807509 Non-Executive Independent Director

The composition of Board complies with the requirements of the Companies Act 2013("Act"). Further in pursuance of Regulation 15(2) of SEBI (Listing Obligationsand Disclosure Requirements) Regulations 2015 ("Listing Regulations") theCompany is exempted from requirement of having composition of Board as per Regulation 17of Listing Regulations.

None of the Directors of Board is a member of more than ten Committees or Chairman ofmore than five committees across all the Public companies in which they are Director. Thenecessary disclosures regarding Committee positions have been made by all the Directors.

None of the Director of the Company is serving as a Whole-Time Director or ManagingDirector in any Listed Company and is holding position of Independent Director in morethan 3 Listed Company and none of the Director of the Company is holding position asDirector in more than eight listed entities and none of the Director is serving asIndependent Director in more than 7 Listed Company.

None of the Directors of the Company is disqualified for being appointed as Director asspecified in Section 164 (2) of the Companies Act 2013.

BOARD MEETINGS

During the year under review the Board of Directors of the Company met 6 (Six) timesviz. on May 30 2018 June 12 2018 September 01 2018 November 14 2018 December 032018 and March 21 2019. The gap between two consecutive meetings was not more than onehundred and twenty days as provided under section 173 of the Act. The details ofattendance of each Director at the Board Meeting and Annual General Meeting are givenbelow:

Name of Director Mr. Ghanshyambha i Kumbhani Mr. Jayantibhai Kumbhani Mr. Pravinbhai Kumbhani Mr. Hasmukhbhai Vavaiya Mrs. Mamtaben Thumbar
No. of Board Meeting eligible to attend 6 6 6 6 6
No. of Board Meeting attended 6 6 6 6 6
Presence at the previous AGM Yes Yes Yes Yes No

INDEPENDENT DIRECTORS

In terms of Section 149 of the Companies Act 2013 and rules made there under theCompany has two Non-Promoter Non-Executive Independent Directors in line with the act. Aseparate meeting of Independent Directors was held on March 21 2019 to review theperformance of Non-Independent Directors and Board as whole and performance of Chairpersonof the Company including assessment of quality quantity and timeliness of flow ofinformation between Company management and Board.

The Company has received necessary declaration from each independent director underSection 149 (7) of the act that they meet the criteria of independence laid down inSection 149 (6) of the act.

INFORMATION ON DIRECTORATE

During the year under review there were no changes took place in the composition ofboard of directors of the Company.

In accordance with the provisions of the Articles of Association and Section 152 of theCompanies Act 2013 Mr. Pravinbhai Kumbhani Director (DIN: 005878064) retires byrotation at the ensuing annual general meeting. He being eligible has offered himselffor re-appointment as such and seeks re-appointment. The Board of Directors recommends hisre-appointment on the Board.

The relevant details as required under Regulation 36 (3) of SEBI (Listing Obligationsand Disclosure Requirements) Regulations 2015 ("SEBI Listing Regulations") ofthe person seeking re-appointment/ appointment as Director are also annexed to the Noticeconvening the annual general meeting.

KEY MANAGERIAL PERSONNEL

In accordance with Section 203 of the Companies Act 2013 the Company has on itsBoard Mr. Ghanshyambhai Kumbhani (DIN: 00587855) who is acting as Chairman & WholeTime Director Mr. Jayantibhai Kumbhani(DIN: 00587807) who is acting as a ManagingDirector Mr. Mukesh Shah who is acting as Chief Financial Officer. Ms. Maitry Doshi hadresigned from the position of Company Secretary and Compliance Officer w.e.f August 152018. Our Company appointed Ms. Lata Dharmani on December 03 2018 as the CompanySecretary and Compliance Officer of the Company.

PERFORMANCE EVALUATION

The Board of Directors has carried out an annual evaluation of its own performanceboard committees and individual directors pursuant to the provisions of the Act.

• The performance of the board was evaluated by the board after seeking inputsfrom all the directors on the basis of the criteria such as the board composition andstructure effectiveness of board processes information and functioning etc.

• The performance of the committees was evaluated by the board after seekinginputs from the committee members on the basis of the criteria such as the composition ofcommittees effectiveness of committee meetings etc.

• The board and the nomination and remuneration committee reviewed the performanceof the individual directors on the basis of the criteria such as the contribution of theindividual director to the board and committee meetings like preparedness on the issues tobe discussed meaningful and constructive contribution and inputs in meetings etc. Inaddition the chairman was also evaluated on the key aspects of his role.

Separate meeting of independent directors was held to evaluate the performance ofnon-independent directors performance of the board as a whole and performance of thechairman taking into account the views of executive directors and non-executivedirectors. The same was discussed in the board meeting that followed the meeting of theindependent directors at which the performance of the board its committees andindividual directors was also discussed. Performance evaluation of independent directorswas done by the entire board excluding the independent director being evaluated.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to section 134(5) of the Companies Act 2013 the board of directors to thebest of their knowledge and ability confirm that:

a. In preparation of annual accounts for the year ended March 31 2019 the applicableaccounting standards have been followed and that no material departures have been madefrom the same;

b. The Directors had selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company at the end of the financial year and ofthe profit or loss of the Company for that year;

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

d. The Directors had prepared the annual accounts for the year ended March 31 2019 ongoing concern basis.

e. The directors in the case of a listed company had laid down internal financialcontrols to be followed by the company and that such internal financial controls areadequate and were operating effectively.

f. The Directors had devised proper systems to ensure compliance with the provisions ofall applicable laws and that such systems were adequate and operating effectively.

COMMITTEES OF THE BOARD

The Board of Directors considering the the requirement of the act has formed variouscommittees details of which are given hereunder.

(a) Audit Committee:

Pursuant to Section 177 of the companies Act 2013 and Regulation 18 of the SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 the Audit committeeshall meet as and when required. The Audit Committee meeting is generally held for thepurpose of recommending the half yearly and yearly financial result. Additional meeting isheld for the purpose of reviewing the specific items included in terms of reference of theCommittee.

During the year under review Audit Committee met 3 (Three) times viz on May 30 2018September 01 2018 and November 14 2018. The composition of the Committee and thedetails of meetings attended by its members are given below:

Number of meetings during the financial year 2018-19

Name Designation Eligible to attend Attended
Mr. Hashmukbhai Vavaiya Chairman 3 3
Mrs. Mamtaben Thumbar Member 3 3
Mr. Jayantibhai Kumbhani Member 3 3

The Statutory Auditors of the Company are invited in the meeting of the Committeewhenever required. The Chief Financial Officer of the Company is a regular invitee at theMeeting.

Recommendations of Audit Committee wherever/whenever given have been accepted by theBoard.

VIGIL MECHANISM

The Company has established a vigil mechanism and accordingly framed a Whistle BlowerPolicy. The policy enables the employees to report to the management instances ofunethical behaviour actual or suspected fraud or violation of Company's Code of Conduct.Further the mechanism adopted by the Company encourages the Whistle Blower to reportgenuine concerns or grievances and provide for adequate safe guards against victimizationof the Whistle Blower who avails of such mechanism and also provides for direct access tothe Chairman of the Audit Committee in exceptional cases. The functioning of vigilmechanism is reviewed by the Audit Committee from time to time. None of the Whistleblowers has been denied access to the Audit Committee of the Board. The Whistle BlowerPolicy of the Company is available on the website of the Company at www.sikkoindia.com.

(b) Stakeholders Relationship Committee:

The Board of Directors of the Company has constituted Stakeholders' RelationshipCommittee in order to mainly focus on the redressal of Shareholders' Grievances if anylike Transfer / Transmission / Demat of

Shares; Loss of Share Certificates; Non-receipt of Annual Report; Dividend Warrants;etc. The Stakeholders Relationship Committee shall meet to report to the Board on aquarterly basis regarding the status of redressal of complaints received from theshareholders of the Company.

During the year under review the Stakeholder's Grievance & Relationship Committeemet 4 (Four) times viz on May 30 2018 September 01 2018 November 14 2018 and March21 2019. The composition of the Committee and the details of meetings attended by itsCommitteemembers are given below:

Number of meetings during the financial year 2018-19

Name Designation Eligible to attend Attended
Mrs. Mamtaben Thumbar Chairperson 4 4
Mr. Hashmukbhai Vavaiya Member 4 4
Mr. Pravinbhai M Kumbhani Member 4 4

During the year the Company had not received any complaints from the Shareholders.There was no complaint pending as on March 31 2019.

(c) Nomination and Remuneration Committee:

The Board of Directors of the Company has constituted Nomination and Remunerationcommittee in order to identify the persons who are qualified to become Directors and maybe appointed in senior management and recommending their appointments and removal. TheNomination and Remuneration Committee meetings are generally held for identifying thepersons who are qualified to become Directors and may be appointed in senior managementand recommending their appointments and removal. Further the committee shall also meet asand when the need arises for review of Managerial Remuneration.

During the year under review the Nomination and Remuneration Committee met 3 (Three)times viz on September 01 2018 December 03 2018 and March 21 2019. The composition ofthe Committee and the details of meetings attended by its members are given below:

Number of meetings during the financial year 2018-19

Name Designation Eligible to attend Attended
Mr. Hashmukbhai Vavaiya Chairman 3 3
Mrs. Mamtaben Thumbar Member 3 3
Mr. Pravinbhai M Kumbhani Member 3 3

Nomination and Remuneration Policy:

Nomination and Remuneration Policy in the Company is designed to create ahigh-performance culture. It enables the Company to attract motivated and retainedmanpower in competitive market and to harmonize the aspirations of human resourcesconsistent with the goals of the Company. The Company pays remuneration by way of salarybenefits perquisites and allowances to its Managing Director and the Executive Directors.

The Nomination and Remuneration Policy as adopted by the Board of Directors is placedon the website of the Company at www.sikkoindia.com.com and is annexed to this Report as AnnexureA.

Remuneration of Director:

The details of remuneration paid during the financial year 2018-19 to directors of theCompany is provided in Form MGT-9 which is the part of this report.

PUBLIC DEPOSITS

The company has not accepted any deposits from the public. Hence the directives issuedby the Reserve Bank of India & the Provision of Section 73 to 76 of the Company Act2013 or any other relevant provisions of the Act and the Rules there under are notapplicable.

SHARE CAPITAL

During the year under review there were no changes have taken place in the authorizedand paid-up share capital of the Company:

Authorized Capital

The Authorized Share Capital of the Company is र 60000000/- divided into 6000000Equity shares of र 10/- each.

Issued Subscribed & Paid-up Capital

The present Paid-up Capital of the Company is र 56000000/- divided into 5600000Equity Shares of र 10/- each.

PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS

Details of Loans Guarantees and Security covered under the provisions of Section 186of the Companies Act 2013 are given in the notes to the Financial Statement.

PARTICULARS OF CONTRACTS OR ARRANGEMENTS MADE WITH RELATED PARTIES

A particular of contracts or arrangements with related parties referred to in Section188(1) of the Companies Act 2013 in the prescribed Form AOC-2 is annexed to this Reportas "ANNEXURE B".

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS

During the Year under review no significant and material orders passed by anyregulators or courts or tribunals impacting the going concern status and company'soperation in future.

EXTRACT OF ANNUAL RETURN

In accordance with Section 134(3) (a) of the Companies Act 2013 an extract of theannual return in the prescribed format is appended as "ANNEXURE - C"tothe Board's report.

DISCLOSURE OF REMUNERATION

The ratio of the remuneration of each Executive Director to the median of employees'remuneration as per Section 197(12) of the Companies Act 2013 read with Rule 5(1) of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 is annexed tothis Report as "Annexure D". Refer to tables 3A (a) in "ANNEXURED".

There are no employees who are posted outside India and who are in receipt of aremuneration of Rupees 60.00 lakhs or more per annum or Rupees 5.00 lakhs or more a month.

MATERIAL CHANGES AND COMMITMENT

There are no material changes and commitments affecting the financial position of theCompany have occurred between the ends of financial year of the Company i.e. March 312019 to the date of this Report.

INFORMATION REQUIRED UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTIONPROHIBITION & REDRESSAL) ACT 2014 To foster a positive workplace environmentfree from harassment of any nature we have institutionalized the Anti-Sexual HarassmentInitiative (ASHI) framework through which we address complaints of sexual harassment atthe all workplaces of the Company. Our policy assures discretion and guaranteesnon-retaliation to complainants. We follow a gender-neutral approach in handlingcomplaints of sexual harassment and we are compliant with the law of the land where weoperate. During the year under review there were no incidences of sexual harassmentreported.

INTERNAL FINANCIAL CONTROL SYSTEMS AND THEIR ADEQUACY

Your Company has an effective internal control system which ensures that all theassets of the Company are safeguarded and protected against any loss from unauthorized useor disposition.

The Internal Auditor of the Company carries out review of the internal control systemsand procedures. The internal audit reports are reviewed by Audit Committee.

CORPORATE GOVERNANCE

Your Company strives to incorporate the appropriate standards for corporate governance.However pursuant to Regulation 15(2) of SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 the Company is not required to mandatorily comply with theprovisions of certain regulations of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 and therefore the Company has not provided a separatereport on Corporate Governance although few of the information are provided in thisreport under relevant heading.

RISK MANAGEMENT

A well-defined risk management mechanism covering the risk mapping and trend analysisrisk exposure potential impact and risk mitigation process is in place. The objective ofthe mechanism is to minimize the impact of risks identified and taking advance actions tomitigate it. The mechanism works on the principles of probability of occurrence andimpact if triggered. A detailed exercise is being carried out to identify evaluatemonitor and manage both business and non-business risks.

ENERGY CONSERVATION TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

Information with respect to conservation of energy technology absorption foreignexchange earnings and outgo pursuant to Section 134(3) (m) of the Act read with Companies(Accounts) Rules 2014 is prepared and is enclosed as "ANNEXURE - E".

STATUTORY AUDITOR AND THEIR REPORT:

M/s. G.K. Choksi & Co. Chartered Accountants Ahmedabad (FRN: 101895W) hadtendered their resignation. The Board of Directors has pursuant to receipt of consent andeligibility certificate under Section 139 read with Section 141 of the Companies Act 2013and on recommendation of the Audit Committee has recommended appointment of M/s. DoshiMaru & Associates Chartered Accountants Jamnagar (FRN: 0112187W) as StatutoryAuditor of the Company to fill up the casual vacancy caused in terms of Section 139(8) ofthe Companies Act 2013 due to resignation of M/s. G.K. Choksi & Co. CharteredAccountants Ahmedabad (FRN: 101895W). The Members of the Company in their Extra-ordinaryGeneral Meeting held on Monday May 26 2019 has approved the recommendation of the Boardof Directors and appointed M/s. Doshi Maru & Associates Chartered AccountantsJamnagar (FRN: 0112187W) as Statutory Auditor of the Company for a period up to theensuing Annual General Meeting (19th AGM) of the Company i.e. to audit thebooks of accounts of the Company for the financial year ended on March 31 2019.

The Notes to the financial statements referred in the Auditors Report areself-explanatory and therefore do not call for any comments under Section 134 of theCompanies Act 2013. The Auditors' Report does not contain any qualification reservationor adverse remark. The Auditors' Report is enclosed with the financial statements in thisAnnual Report. The Company has received consent letter and eligibility certificate underSections 139 and 141 of the Act from M/s. Doshi Maru & Associates CharteredAccountants Jamnagar (FRN: 0112187W). As required under Regulation 33 of SEBI ListingRegulations they have also confirmed that they hold a valid certificate issued by the PeerReview Board of the Institute of Chartered Accountants of India. The Board of Directorson the proposal of audit committee recommends their appointment as Statutory Auditor ofthe Company to hold office for a period of five consecutive years i.e. from the conclusionof the 19th(Nineteenth) Annual General Meeting of the Company till theconclusion of the 24th (Twenty Forth) Annual General Meeting to be held in thecalendar year 2024.

REPORTING OF FRAUD

The Auditors of the Company have not reported any fraud as specified under Section143(12) of the Companies Act 2013.

DETAILS OF SUBSIDIARIES/ ASSOCIATES/ JOINT VENTURES

The Company does not have any Subsidiary Joint venture or Associate Company.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

In terms of Regulation 34 and Schedule V of SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 a review of the performance of the Company for the yearunder review Management Discussion and Analysis Report is presented in a separatesection forming part of this Annual Report.

SECRETARIAL AUDITOR AND THIEIR REPORT

Pursuant to the provisions of Section 204 of the Act read with The Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 your Company hasappointed Mr. Anand Lavingia Practicing Company Secretary Ahmedabad to conduct theSecretarial Audit of the Company for the financial year 2018-19. The Secretarial AuditReport is annexed herewith as "ANNEXURE F" to this Report.

GENERAL DISCLOSURE

Your Directors state that the Company has made disclosures in this report for the itemsprescribed in section 134 (3) of the Act and Rule 8 of The Companies (Accounts) Rules2014 and other applicable provisions of the act and listing regulations to the extent thetransactions took place on those items during the year.

Your Directors further state that no disclosure or reporting is required in respect ofthe following items as there were no transactions on these items during the year underreview;

(i) Issue of Equity Shares with differential rights as to dividend voting orotherwise;

(ii) Issue of shares (including sweat equity shares) to employees of the Company underany scheme save and ESOS;

(iii) Annual Report and other compliances on Corporate Social Responsibility;

(iv) There is no revision in the Board Report or Financial Statement;

(v) No significant or material orders were passed by the Regulators or Courts orTribunals which impact the going concern status and Company's operations in future;

(vi) Information on subsidiary associate and joint venture companies.

ACKNOWLEDGMENT

Your Directors wish to place on record their sincere appreciation for significantcontributions made by the employees at all levels through their dedication hard work andcommitment enabling the Company to achieve good performance during the year under review.

Your Directors also take this opportunity to place on record the valuable co-operationand support extended by the banks government business associates and the shareholdersfor their continued confidence reposed in the Company and look forward to having the samesupport in all future endeavors.

By the Order of Board of Directors
Sikko Industries Limited
Ghanshyam M Kumbhani Jayantibhai kumbhani
Place: Ahmedabad Chairman and Whole-Time Director Managing director
Date: September 05 2019 DIN: 00587855 DIN: 00587807