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Somany Ceramics Ltd.

BSE: 531548 Sector: Consumer
NSE: SOMANYCERA ISIN Code: INE355A01028
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OPEN 813.05
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VOLUME 3269
52-Week high 864.05
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P/E 37.91
Mkt Cap.(Rs cr) 3,437
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OPEN 813.05
CLOSE 807.20
VOLUME 3269
52-Week high 864.05
52-Week low 199.60
P/E 37.91
Mkt Cap.(Rs cr) 3,437
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Somany Ceramics Ltd. (SOMANYCERA) - Director Report

Company director report

Dear Members

Yours Directors have pleasure in presenting the 53rd Annual Report togetherwith the Annual Audited Financial Statements of the Company for the year ended March 312021.

FINANCIAL SUMMARY (H in Lakhs)

Standalone

Consolidated

Particulars Year ended March 31 2021 Year ended March 31 2020 Year ended March 31 2021 Year ended March 31 2020
Revenue 163014.93 159525.06 165045.21 161007.10
Profit Before Depreciation Interest and Taxes 15358.38 9160.13 20353.28 14412.30
Profit before Tax (after Exceptional item) 7648.94 117.02 8364.53 958.03
Tax Expenses 2060.08 (1209.20) 2237.57 (992.25)
Profit After Tax 5588.86 1326.22 6126.96 1950.28
Non-controlling Interests - 356.66 450.03
Profit After Tax (attributable to controlling interest) 5588.86 1326.22 5770.03 1500.25
Transferred to General Reserve - - - -

FINANCIAL REVIEW

(The financial discussion is based on Standalone Financial Statements) The year underreview (FY21) was challenging year for your Company because of the overall economicslowdown and the impact due to the outbreak of the novel coronavirus (COVID-19) in March2020. This resulted in a significant impact on the financial performance of your Companyin general and the first quarter of FY21 in particular. However the succeeding quarterswere positive which resulted in a small growth for your company in the financial yearended March 31 2021.

Our revenue increased by 2.2% to H 163014.93 Lakhs in FY21 from H 159525.06 Lakhsin FY20 despite passing through an adverse economic scenario due to the pandemic. TheEarnings before Interest Depreciation and Tax (EBIDTA) Profit before Tax (PBT) excludingExceptional items and Profit after Tax (PAT) for the year under review were H 15358.38Lakhs H 9493.67 Lakhs and H 5588.86 Lakhs respectively. Improved performance aided byconscious cost control measures resulted in increase in profitability and net profit grewto more than 4x in FY21.

On the Balance Sheet front your Company’s Net Worth increased to H 63081.43Lakhs in FY21 as compared to H 58374.76 Lakhs in FY20. The Company’s total debtreduced to H 21415.73 Lakhs in FY21 as compared to H 28051.63 Lakhs during FY20. The Netblock (including capital work-in-progress) of your Company decreased to H 43101.64 Lakhsduring FY21 as compared to H 44137.22 Lakhs during FY20 primarily due to thedepreciation for the period. The long-term investment increased to H 6769.01 Lakhs inFY21 from H 6468.01 Lakhs in FY20 due to additional investment in a subsidiary aswell as fresh investment in a subsidiary. The Company’s net current assets decreasedmarginally to H 38803.14 Lakhs during FY21 from H 39301.88 Lakhs during FY20 mainly dueto a further decrease in total receivables. Substantial improvement in overall workingcapital during FY21 resulted in accumulation of surplus fund of more than H 20000 Lakhs.

GLOBAL HEALTH PANDEMIC FROM COVID-19

In view of the Novel Coronavirus pandemic (COVID-19) social distancing was enforcedas a result of which our factories offices and showrooms operated with minimal staff. Inkeeping with its employee-safety first approach the Company instituted measures to traceall employees and assure them of their well-being. Our HR and IT teams reacted with speedand efficiency and leveraged technology to shift the workforce to an entirely new‘work-from-home’ model wherever practicable. Proactive preparations were done inour work locations during this transition to ensure that our factories offices andshowrooms remained safe.

Policy changes related to working from home and IT infrastructure support were rolledout to help our employees shift to this new work paradigm. Continuous communication on thelatest updates played a key role in enabling our employees to stay on top of the evolvingsituation.

Several initiatives were rolled out to make teams and managers effective while workingfrom different locations. Our HR launched a series of initiatives related to COVID-19awareness and a new remote way of working with a focus on the health and wellness ofemployees. The Company has been implementing phased and safe return-to-work place as perthe relaxations during the lockdown. As a responsible member of the communities that itoperates in the Company contributed to various COVID-19 relief and monitoring programs.

There was a significant impact because of demand destruction in the short term.However the management believes that there may not be a significant impact of COVID-_pandemic on the financial position and performance of the Company in the long term.Further the Company’s focus on liquidity and acceleration in cost optimizationinitiatives has helped in navigating through near-term challenges in the demandenvironment.

CORPORATE HIGHLIGHTS

Access to Capacity

During the year under review your Company had access to ~63 million square meters(msm) of tiles mainly through its own plants (26.28 msm) through subsidiaries/associates(26.39 msm) and through other outsourced partners (~10 msm). In the Bathware segment yourCompany had manufacturing capacity of 1.15 million pieces per annum of sanitaryware and0.65 million pieces per annum of bath fitting items in its subsidiaries.

Capital Expenditure

Your Company continued to invest in expanding and upgrading its plant and machinery andinfrastructure. During the year under review one old line at Kadi plat was revampedcompletely resulting in a conversion of existing low value-added capacity intovalue-added. Gross block increased by H 3834.62 Lakhs (previous year H 10109.50 Lakhs) onaccount of addition in fixed assets.

Branding and Distribution

The Financial Year 2020-21 was not a simple year it was a year with challenges newlearning and fresh approach towards business and made us realise how things can changevery quickly. This made us to remodel the planning the system and adopt the various newthings in the marketing domain. Digital media became our main focus and variousinitiatives in digital were taken so that the consumers and stakeholders remain connectedwith the Company.

To reach out to the public at large we carried out a 5-week TV Campaign in News Genretargeting channels in HSM (Hindi Speaking markets) TN and Kerala markets. The campaignstarted from November 27 2020 and was aired across leading News channels – AajtakABP News News 18 India Zee News and regional news channels Asianet News Polimer NewsMathrubhumi News and many more. TV Campaign was also done on regional news channels likeZee Bihar Jharkhand News18 UP/UK etc.

To further boost our presence we also took associate sponsorship of Bigg Boss Season14 on Colors Channel. As a part of this engagement we got a brand integration in the formof Somany task organised in the Bigg Boss House along with a branding in the garden area.We also got promo tags brand Astons during the show to further reach out to the audience.

The new Germ Shield TVC was launched on social media to create awareness around theefficacy of these tiles and newspaper print campaign was carried out in order to generatedealership queries in many cities. About 30 print advertisement were carried out duringthis campaign.

Further Somany won the accolade of being the most admired brand in the year 2020 andMr. Abhishek Somany Managing Director of the Company was awarded in the 8thWhite Page Leadership Conclave – 2020 for the distinction of being inspirationalbusiness leaders.

As a new initiative and looking at the changing business scenario the tile catalogueswere digitalised and made WhatsApp friendly for employees channel partners andinfluencers like architects interior designers etc. In line with changing consumerbehavior Somany maintained Somany app and website. The customers were connected throughpush notifications and added new drag & drop features in the tile visualiser. Furtherthe company engaged with consumers on digital platforms through various campaign bannerads on high tra_c websites like YouTube Zee News and NDTV etc. Along with thissponsored ads were run on search and display networks (campaign based brand-based andproduct-based). Webinars with stakeholders and Stay Home & Stay Safe Campaign duringpandemic lockdown on Social Media which brought engagement and awareness among theaudience w.r.t The New Normal how life has changed due to COVID-19. Through Social MediaConsumers were communicated tips to work from home effectively and also carried out a 21days challenge to encourage users to take up a new hobby to keep them engaged duringlockdown and through email marketing we kept the channel partners engaged during thelockdown.

Moving ahead in strengthening the distribution network and expanding yourCompany’s footprint we now have 364 franchise outlets. Our Company also has 17Company Owned Outlet (COCO) all over India.

For brand visibility the company covered approximately 3000 dealers and more than 8000sub dealer’s counters with ZSJ (Zamin se Judey) campaign Branding & POSM (Pointof Sale Material). As the year was unusual and keeping in mind the safety and security ofour trade partners Covid Safety Kits Somany ZSJ Branded Counter Shield (Covid protection)& Sanitiser Dispensers were distributed. A Grand Virtual & Physical new productlaunch of Emboss collection with the dealers across locations was appreciated. To capturecustomers and create top-of-mind recall new sites at the major Airports and Outdoor/Dealer Hoardings were installed pan India of ZSJ Campaign.

A very positive response from the channel partners across Pan India on launch of SomanyDigital Water Heater was received. These Digital Water Heater comes with an LED displaywhich shows the temperature of the water inside the tank. During the year under review theCompany launched Disinfectant and Cleaners which includes the Surface Toilet and Faucetdisinfectants. The bathware branding were placed at more than 600 stores across the nationand also covered more than 300 stores with In-shop branding. We also created "Shop inShop" zones in more than 80 stores across the nation to give an exclusive displayzone for bathware products. We also did 50 Virtual Meets with plumbers with an average of8 plumbers per meeting. Due to such initiatives we now have a base of more than 5000+Plumbers and increasing.

INDIAN ECONOMY & INDUSTRY SCENARIO AND OUTLOOK

Economy

During FY21 overall economic growth remained under pressure which was aggravated dueto the outbreak of COVID-19. The Indian economy slowed to a contraction of 7.3% during theyear as compared to growth of 4.2% in FY 20. The Indian government initiated structuralreforms in agriculture labor laws and medium-small enterprise segments. The labor reformswere intended to empower MSMEs increase employment enhance labor productivity and wages.India extended the Partial Credit Guarantee Scheme by relaxing the criteria and allowingstate-owned lenders more time to purchase liabilities of shadow banks. Under the H45000-crore partial credit guarantee scheme announced as a part of the AtmanirbharBharat package three additional months were given to banks to purchase the portfolio ofnon-banking financial companies. The government approved amendments to the EssentialCommodities Act and brought an ordinance to allow farmers to sell their crop to anyone;the changes to the Essential Commodities Act 1955 were intended to‘deregulate’ agricultural commodities (cereals pulses oilseeds edible oilsonions and potatoes from stock limits). The government approved the Farming Produce Tradeand Commerce (Promotion and Facilitation) Ordinance 2020 to ensure barrier-free trade inagriculture produce.

The Government relaxed foreign direct investment (FDI) norms for sectors like defensecoal mining contract manufacturing and single-brand retail trading.

Going forward the economic scenario likely to be impacted in short term even thoughthe government has taken various steps in terms of stimulus and economic reforms to boostthe economy against the COVID-19 effect including the ambitious mission of self-reliantIndia (Atmanirbhar Bharat).

Industry

In FY21 Tile Sanitary ware and Bath Fittings industry have been facing continuous achallenge due to sluggish demand and high input costs due to hardening of gas prices andincrease in brass rate. With the implementation of e-invoicing compliance to GST hasimproved which can be observed through the high GST collection month on month. Although inthe short-term the outlook seems to be under pressure your company is optimistic on themedium to long term prospects in view of several government initiatives for encouraginginfrastructure development and favorable demographics including increasing urbanizationexpected to drive the ofitake in the tiles sanitary ware and bathroom fittings industry.

DIVIDEND

During the year based on the Company’s performance your Board of Directorsdeclared and paid interim dividend of 120% i.e. H 2.40 per equity share on March 17 2021.The Board recommend the interim dividend so paid as final dividend for the Financial Year2020-21.

DIVIDEND DISTRIBUTION POLICY

Pursuant to Regulation 43A of SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 the dividend declared by the Company is as per the dividenddistribution policy adopted by the Company in the year 2016-17 which is as follows: TheCompany was incorporated on January 20 1968 and started its commercial production in1972. The company has been paying dividend continuously since 1974 except for the year2002-03 to 2006-07.

Dividend pay-out is decided on the basis of macro-economic factors expected futurecash flows and future capital needs for expansion of production capacities of the companyfrom time to time and keeping in view contingencies for meeting unforeseen financialobligation of the Company.

The dividends declared/recommended during the year are in accordance with the saidPolicy.

The Dividend Distribution policy is also available on the website of the Company at theweb link: https://www.somanyceramics.com/pub/media/investorrelation/d/i/dividend_distribution_policy_ scl.pdf

UTILISATION OF PROCEEDS ON ISSUE OF SHARES

Out of H 11999.97 Lakhs raised through qualified institutions placement of equityshares in December 2015 the Company has so far utilised H 8770.66 Lakhs (includingissue expenses of H 307.34 Lakhs) for the purpose the funds were so raised and balance H3229.31 Lakhs has been temporarily invested mainly in debt instruments/funds.

PUBLIC DEPOSITS

Your Company has not accepted any deposits within the meaning of Section 73 of theCompanies Act 2013 read with the Companies (Acceptance of Deposits) Rules 2014.

SCHEME OF AMALGAMATION

The Board at its meeting held on August 22 2019 approved scheme of amalgamation ofSchablona India Limited with the company from the appointed date i.e. April 1 2019. TheSEBI has approved the said scheme and the first motion application was filed with theHon’ble National Company Law Tribunal (NCLT) Principal Bench New Delhi by SchablonaIndia Limited and NCLT had passed an order dated November 5 2020 read with order datedOctober 14 2020 for convening the meetings of equity shareholders secured creditors andunsecured creditors on December 28 2020. The equity shareholders secured creditors andunsecured creditors approved the scheme of amalgamation of Schablona India Limited withthe company on December 28 2020 and second motion application was filed with Hon’bleNational Company Law Tribunal (NCLT) Principal Bench New Delhi on January 6 2021. Thehearing is fixed in this matter for consideration of NCLT on August 6 2021.

The first motion application was filed with the Hon’ble National

Company Law Tribunal (NCLT) Kolkata Bench Kolkata by Somany Ceramics India Limitedand NCLT had passed an order dated February 2 2021 for convening the meetings of equityshareholders secured creditors and unsecured creditors on March 31 2021. The equityshareholders secured creditors and unsecured creditors approved the scheme ofamalgamation of Schablona India Limited with the company on March 31 2021 and secondmotion application was filed with Hon’ble National Company Law Tribunal (NCLT)Kolkata Bench Kolkata on April 14 2021. The hearing is fixed in this matter forconsideration of NCLT on June 30 2021.

SUBSIDIARY / ASSOCIATE / JOINT VENTURE COMPANIES

During the year the Board of Directors reviewed the affairs of its subsidiaries andassociate companies. In accordance with Section 129(3) of the Companies Act 2013 we haveprepared consolidated financial statements of the Company incorporating financials of allits subsidiaries and associate companies which forms part of this Annual Report.

In accordance with Section 136 of the Companies Act 2013 the audited financialstatements including the consolidated financial statements and related information of theCompany and audited accounts of each of its subsidiaries are available on Company’swebsite https://www.somanyceramics.com. These documents will also be available forinspection at our registered office at 2 Red Cross Place Kolkata - 700001 India between3:00 p.m. and 5:00 p.m. in working days till the date of ensuing AGM.

The statement required under Section 134 of the Companies Act 2013 in respect of thesubsidiary companies associates and joint venture is provided at Annexure – 1 tothis report which comprises performance and financial position of each of subsidiariesassociates and joint venture.

PARTICULARS OF CONTRACTS OR ARRANGEMENTS MADE WITH RELATED PARTIES

All transactions entered with Related Parties during the financial year were onarm’s length basis and were in the ordinary course of business. Further there are nomaterially significant related party transactions during the year under review made by theCompany with Promoters Directors Key Managerial Personnel or other designated personswhich may have potential conflict with the interest of the Company at large. Accordinglythe disclosure of related party transactions as required under Section 134(3) (h) of theCompanies Act 2013 in Form AOC-2 is not required. Your directors draw attention of theshareholders to the financial statements which set out related party disclosures.

Related Party Transactions Policy as approved by the Board has been uploaded on theCompany’s website https:// www.somanyceramics.com at the web link: https://www.somanyceramics.com/pub/media/investorrelation/p/o/policy_ related_partyfirevised_2019.pdf

PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS

Loans guarantees and investments covered under Section 186 of the Companies Act 2013are given in the notes to Financial Statements (Standalone) forming a part of this annualreport.

RISK MANAGEMENT

TheCompanyhasRiskManagementSystemsinplaceinaccordance to Section 134(3)(n) of theCompanies Act 2013. Risk Management Policy of the Company is also in place and necessarysteps have been taken from time to time to strengthen it further. The Risk Managementprocess is followed to identify assess and prioritise risks that need to be minimisedmonitored and mitigated is quite elaborate. These measures help in reducing andcontrolling the impact of adverse events and maximise the realisation of opportunities.Major risks are identified systematically and mitigated on a continuous basis. A few ofthe identified risks pertain to competitive intensity and cost volatility.

INVESTOR EDUCATION & PROTECTION FUND (IEPF)

The Company is required to transfer dividends which remained unpaid/ unclaimed for aperiod of seven years to the IEPF established by the Central Government. The unpaid/unclaimed dividend for the year ended March 31 2014 is due for transfer to IEPF on orafter October 9 2021.

During the period under review the Company transferred 8797 Equity shares of H 2/-each dividends of which remained unclaimed for a consecutive seven years i.e. from2012-13 to 2019-20 to Investor Education and Protection Fund (IEPF) pursuant to Section124 (6) of the Companies Act 2013 within the scheduled time.

STATEMENT ON COMPLIANCES OF APPLICABLE SECRETARIAL STANDARDS

In requirement of para 9 of revised Secretarial Standards on Board Meeting i.e. SS-1your Directors states that they have devised proper systems to ensure compliance with theprovisions of all applicable Secretarial Standards and that such systems are adequate andoperating effectively.

AUDITORS’ REPORT

All the items on which the Auditors’ have commented in their report areself-explanatory and suitably explained in the Notes to the Accounts. The Auditors’Report to the Shareholders for the year under review does not contain any qualificationsreservation or adverse remark or disclaimer.

DIRECTORS’ RESPONSIBILITY STATEMENT

To the best of the knowledge and belief of the Directors of the Company and accordingto the information and explanations obtained by them your Directors make the followingstatement in terms of Section 134(3) (c) of the Companies Act 2013:

a) In the preparation of the annual accounts for the year ended March 31 2021 theapplicable accounting standards read with requirements set out under Schedule III to theAct had been followed with proper explanation and there are no material departures fromthe same;

b) The Directors’ had selected such accounting policies applied them consistentlyand made judgments and estimates that were reasonable and prudent so as to give a true andfair view of the state of affairs of the Company as at March 31 2021 and of the profit ofthe Company for the year ended on that date.

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 on a going concern basis.

e) The Directors have laid down internal financial controls to be followed by theCompany and that such internal financial controls were adequate and are operatingeffectively; and

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

CONSOLIDATED FINANCIAL RESULTS

As required by Regulation 33 of SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 the consolidated financial statements have been prepared in accordancewith applicable Accounting Standards. The audited consolidated financial statementstogether with Auditors’ Report forms part of this Annual Report.

The consolidated net profit of your Company was H 5770.03 Lakhs in the year underreview compared to H 1500.25 Lakhs in the corresponding previous year.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

Mr. Tuljaram Maheshwari Non- Executive Non Independent Director and Mrs. AnjanaSomany Whole Time Director of the Company resigned from the Directorship of the Companyw.e.f. June 9 2020 and June 16 2021 respectively. The Board places on recordcontribution made during their tenure of Directorship in the Company.

Mr. Abhishek Somany Managing Director of the Company retires by rotation at theensuing Annual General Meeting and being eligible has offered himself for re-appointment.

Mr. Ghanshyam Girdharbhai Trivedi Non Executive Non Independent Director of theCompany will be completing 75 years of his age on September 18 2021 and as per theRegulation 17(1A) of SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 the continuation of Mr. Ghanshyam Girdharbhai Trivedi as Director of the Companywould require to be approved by the shareholders by passing a special resolution asrecommended by the Board.

DELCARATION OF INDEPENDENCE

The Company has received declarations from all the Independent Directors of the Companyconfirming that they meet the criteria of independence as prescribed both undersub-section (6) of Section 149 of the Companies Act 2013 and Regulation 16(1) (b) of SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 and also a declarationRule 6 of the Companies (Appointment and Qualifications of Directors) Rules 2014 amendedas on date. The Independent Director of the company have complied with the Code forIndependent Directors prescribed in Schedule IV to the Act.

Further as required under Section 150(1) of the Companies Act 2013 they haveregistered themselves as Independent Directors in the independent director data bank. Theyshall pass the proficiency self-assessment test in due course in terms of Companies(Appointment and Qualifications of Directors) Rules 2014 (as amended).

BOARD EVALUATION

Pursuant to the provisions of the Companies Act 2013 evaluation is carried out by theBoard Nomination Remuneration Committee (NRC) and by the Independent Directors. The Boardhas carried out an annual performance evaluation of its own individual Directorsincluding Independent Directors (excluding the director being evaluated) and itsCommittees.

Board evaluation was carried out on the basis of questionnaire prepared afterconsidering various inputs received from the Directors covering various aspects revealingthe efficiency of the Board’s functioning such as Development of suitable strategiesand business plans size structure and expertise of the Board and their efforts to learnabout the Company and its business obligations and governance.

Performance evaluation of every Director was carried out by Board and Nomination &Remuneration Committee on parameters such as appropriateness of qualification knowledgeskills and experience time devoted to Board deliberations and participation in Boardfunctioning extent of diversity in the knowledge and related industry expertiseattendance and participations in the meetings and workings thereof and initiative tomaintain high level of integrity & ethics.

Independent Directors had carried out performance evaluation of Non-IndependentDirectors in their separate meeting the Board as a whole and performance evaluation ofChairman was carried out taking into account the views of Executive and Non-ExecutiveDirectors.

The quality quantity and timeliness of flow of information between the CompanyManagement and the Board which is necessary for the Board to effectively and reasonablyperform their duties were also evaluated in the said meeting.

The performance of Committees was evaluated on parameters such as whether theCommittees of the Board are appropriately constituted Committees has an appropriatenumber of meetings each year to accomplish all of its responsibilities Committeesmaintain the confidentiality of its discussions and decisions Committee conducts aself-evaluation at least annually Committee makes periodically reporting to the Boardalong with its suggestions and recommendations.

Independent Director’s performance evaluation was carried out on parameters suchas Director upholds ethical standards of integrity the ability of the director toexercise objective and independent judgment in the best interest of Company the level ofconfidentiality maintained. The Directors expressed their satisfaction with the evaluationprocess.

The Board founded the evaluation satisfactory and no observations were raised duringthe said evaluation in current year as well as in previous year.

NOMINATION AND REMUNERATION POLICY

Your Company has formulated the nomination and remuneration policy for its DirectorsKey Managerial Personnel and other Employees of the Company. This Policy sets out theguiding principles for Nomination and Remuneration Committee of the Company forrecommending to the Board the remuneration of the directors key managerial personnelSenior Management and other employees of the Company.

The Nomination and Remuneration Committee identify and ascertain the integrityqualification positive attributes expertise and experience of the person for appointmentas Director KMP or at Senior Management level and recommend to the Board theirappointment based upon the need of the Company.

Nomination and Remuneration policy covered the Nomination/ appointment of DirectorsKey Managerial Personnel and Senior Management and other employees of the CompanyRemuneration to Directors and Key Managerial Personnel Remuneration to ExecutiveDirectors and Key Managerial Personnel of the Company Remuneration to Non-ExecutiveDirectors and Remuneration to

Senior Management and other employees of the Company. The Nomination and Remunerationpolicy is available for the stakeholders at the website of the Company https://www.somanyceramics.com/pub/media/investorrelation/n/o/nomination_andfiremuneration_policyfirevised.pdf

MEETINGS OF THE BOARD

Five (5) meetings of the Board of Directors One (1) meeting of Nomination andRemuneration Committee Four (4) meetings of Stakeholders Relationship Committee and Five(5) meetings of Audit Committee were held during the year under review the details ofwhich are given in the Corporate Governance Report forming part of this Annual Report.

AUDIT COMMITTEE

The constitution of the Audit Committee is Mr. Rameshwar Singh Thakur Chairman of theCommittee and Mr. Salil Singhal Mr. Vineet Agarwal and Mr. Ghanshyam Girdharbhai Trivediare other members of the Audit Committee.

All the recommendations made by the Audit Committee were accepted by the Board.

AUDITORS

M/s. Singhi & Co. Chartered Accountants having Firm Registration No.302049E wereappointed as Statutory Auditors of the Company for a period of 5 (Five) consecutive yearsat the 49th Annual General Meeting (AGM) held on August 25 2017 to holdoffice till the conclusion of the 54th AGM of the Company subject toratification of their appointment at every AGM in terms of first proviso to Section 139of the Companies Act 2013 read with Rule 3(7) of the Companies (Audit and Auditors)Rules 2014.

Further the members of the Company ratified the appointment of the Statutory Auditorfor their remaining term of 4 consecutive years i.e. from the conclusion of the 50thAnnual General Meeting till the conclusion of the 54th Annual General Meetingof the Company without any further ratification by the Members in terms of the provisionsof the Companies Act 2013 at the 50th Annual General Meeting of the Company.

There are no qualifications reservations or adverse remarks made by the StatutoryAuditors in their report for the financial year ended March 31 2021.

Pursuant to provisions of the Section 143(12) of the Companies Act 2013 neither theStatutory Auditors nor the Secretarial Auditor has reported any incident of fraud duringthe year under review.

SECRETARIAL AUDITOR AND THEIR REPORT

The Board had appointed M/s Pinchaa & Co. Company Secretaries having registrationnumber P2016RJ051800 to conduct Secretarial Audit under the provisions of Section 204 ofthe Companies Act 2013 for the financial year 2020-21. The Secretarial Audit Report forthe financial year ended March 31 2021 is annexed and marked as Annexure – 2 to thisReport. The Secretarial Audit Report does not contain any qualification reservation oradverse remark.

ANNUAL RETURN

Pursuant to Section 92(3) and Section 134(3)(a) of the Companies Act 2013 the Companyhas placed a copy of the Annual Return as at March 31 2021 on its website athttps://www.somanyceramics. com at web link: https://www.somanyceramics.com/pub/media/investorrelation/f/_/f_annualfireturn_2020-21_2_.pdf By virtue of amendment to Section92(3) of the Companies Act 2013 the Company is not required to provide extract of AnnualReturn (Form MGT-9) as part of the Board’s report.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

The Company implemented Corporate Social Responsibility Policy in accordance with theprovisions of Section 135 of the Companies Act 2013 read with The Companies (CorporateSocial Responsibility Policy) Rules 2014 on recommendation of Corporate SocialResponsibility Committee (CSR Committee) and approval of the Board of Directors of theCompany.

CSR Committee undertakes CSR activities in accordance with its Corporate SocialResponsibility Policy (CSR Policy) uploaded on the Company’s website atwww.somanyceramics.com at the web link: https://www.somanyceramics.com/pub/media/investorrelation/c/o/corporate_socialfiresponsibility_policy_ revised_16-06-2021.pdf TheCSR Committee comprises of four members namely Mr. Abhishek Somany Managing Director isChairman of the Committee and Mr. Salil Singhal Mr. Siddharath Bindra and Mr. RavinderNath Independent Directors of the Company are other members of the Committee.

The Company works primarily through H.L Somany Foundation to support projects in theareas of protecting / conserving national heritage restoration of historical sitespromotion of art and culture animal welfare destitute care and rehabilitationenvironmental sustainability and ecological balance promoting education enhancingvocational skills and promoting healthcare including preventive health care.

In fiscal 2021 the Company’s CSR efforts included COVID-19 relief also. The 2% ofthe average net profit of the Company made during the three immediately precedingfinancial years comes out to be H 117.21 Lakhs. A report on CSR activities is provided inAnnexure – 3 to this report.

INTERNAL CONTROL SYSTEMS

The Company has an effective Internal Control System in place considering the sizescale and complexity of operations.

The internal control is supplemented by the detailed internal audit programme reviewedby management and by the Audit Committee and documented Policies SOPs Guidelines andProcedures.

The Internal Audit monitors and evaluates the efficacy and adequacy of internal controlsystem in the company its compliance with operating systems accounting procedures andpolicies at all locations of the company.

INTERNAL FINANCIAL CONTROL

The Company has an adequate Internal Financial Control System in accordance with theSection 134(5)(e) of the Companies Act 2013 for ensuring the orderly and efficient conductof its business including adherence to company polices safeguarding of its assetsprevention & deduction of frauds and errors accuracy & completeness of accountingrecords and timely preparation of reliable financial information.

The standard controls defined in the IFC framework are reviewed by the Internalauditors and management concurrently to strengthen the existing processes and activitiesof the company by way of formulating new guidelines and incorporating necessary changes inthe SOP.

HUMAN RESOURCE (HR)

Right from the start of pandemic it was important for the HR to be proactive promptand integrated when it came to implementation of COVID 19 safety norms creating awarenessabout necessary standards/ guidelines/ directives and engaging our employees to passthrough this unexpected transformation. Our in-house expert faculty helped deliverimportant processes and updates through various training modules and webinars. Importantinformation and communications were regularly dissipated across organization throughfrequent webinars and instructor-led sessions.

To engage employees and to equip them with new-age professional skills specialisedfunctional and wellness training sessions were organised through our web-based learningportal and other technology based tools. During the entire period we inspired peoplethrough active learning opportunities and also encouraged employees to take up courseswhich they felt were relevant to them.

People Engagement & connect initiatives:

Considering people engagement as the key driver of our team effectiveness and businessperformance we strengthened our engagement strategy to cope with new work norms afterCOVID-19. Although it was very tough and complex to engage people scattered across nationbut it was even more important to take care of them and keep their spirits high throughpandemic. Disposing our pre-set structures we created a purely new engagement plan fromscratch which can fit in to requirement of time and address newly emerged challenges facedby people. We categorised our engagement initiatives under two themes: Employee Well Being& Employee Connect.

Employee Well-being:

Continuous updates on the Pandemic – We keep our employees informed throughcommunications and trainings about COVID-19 and what to expect before during and aftersomeone contracted the virus; what were the steps to be taken and how they could maintaina healthy lifestyle to prevent the disease. Doctor-on-Call – The facility of doctorwas made available to all staff members to avoid them going out to hospitals fordiagnosis. All general health issues were encouraged to be taken up with our Doctor-Oncall facility. Health & Fitness tips – Daily health and fitness tips were sharedwith employees throughout the lockdown with various yoga aasans exercises immunitybooster tips etc. We did this regularly throughout lockdown to encourage employees to keepthemselves fit even withing their own premises. We even held mental health workshops whichwere spearheaded by an established Psychologist.

For workers at the plants – Regular COVID-19 awareness sessions by expert doctorswere organised. Regular health check-ups were done and they were trained and updated onthe various uses and procedures for PPE kits. Vaccination Drive – We have organised avaccination drive at the Kadi and Kassar Plants where we are inoculating staff workersand their families at no cost. This is to ensure that more concentrated locations are wellguarded against the current situation.

#EldersFirst – To help our employees during these difficult times we collaboratedwith EMOHA to provide the right and prompt medical care and emergency coordination for theelders (> 55 years) in their families. This facility allows them to get round the clockassistance and support for all the medical needs of the elderly.

Employee Connect:

Employee-HR Connect –Keeping in touch with employees to ensure they and theirfamilies are safe and encouraging them to get vaccinated. Employee counselling: HR teamspoke to employees and counselled them on how to manage their emotions and life duringpandemic.

Quick contact helpline: Employees were also provided contact details for HR SPOCS whowere available for any kind of help or guidance when needed by the employee. Co_ee with HR

– Since we were all locked in our homes we found an engaging way to connectemployees with our virtual Co_ee with HR sessions. The HR Head management team membersand selected employees would get together to enjoy a cup of co_ee and talk as colleagues.Employees were encouraged to share their experiences of working from home and would shareideas and suggestions of how to cope with it. Mood-O-Meter

– By mid-lockdown we innovated a mood-o-meter tool to catch up moods of allemployees at once and know their prominent feelings during and post-lockdown their viewson the rise of cases in COVID-19 etc. The idea behind this was to know where they standand what more we can do to make them feel engaged happy and involved. Virtual BirthdayCelebrations

– We kept our birthday celebrations ongoing even with more warmth and zealthrough virtual platforms. Thanks to technology and our innovative minds that We wouldhost a birthday celebration each month for all employees with birthdays in that month.With lockdown this wasn’t possible so we chose the next best thing

– a virtual party. Birthday celebrations were conducted through virtual meetingsbut ensured to make them feel as special as when we were with them.

Employee and family indoor engagement suite: Somany Stay Indoors Challenges Workingfrom home did not need to be all work and no play. Living completely indoors with smallchildren was a new but challenging experience. We decided to encourage our employees tospend lots of time with their families doing fun crazy stu_. That is when the#SomanyStayIndoors Challenge concept was innovated and implemented across Indiabeautifully. There were challenges like Tea time Snack challenge Family Painting togetherchallenge DIY Face mask challenge and Rangoli competition that got brilliantparticipation and smiles on our employees faces. Each challenge was unique and wasrequired to be done as a family and the Rangoli competition was opened to use any kind ofmaterials found in their homes. It was fun to see the various items used for Rangoli likeutensils toys and even our very own business cards. To showcase this talent we made ourown Web-based platform called HUNAR where talent shines. Hunar has now become a way toaccess memories for all major employee engagement activities and events.

WHISTLE BLOWER POLICY/ VIGIL MECHANISM

The Company has a continuous Vigil Mechanism/ Whistle Blower Policy in line withRegulation 22 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 and in terms of Section 177(9) of the Companies Act 2013. The policy enables thestakeholders (including Directors and employees) to report unethical behaviour actual orsuspected fraud or violation of the Company’s Code of Conduct.

The Policy provides adequate safeguards against victimization of Director(s)/employee(s) and enable direct access to the Chairman of the Audit Committee in exceptionalcases. The protected disclosures if any reported under this Policy are appropriately andexpeditiously investigated by the Chairman. The details of the Whistle Blower Policy isalso explained in the Corporate Governance Report and is also available on the website ofthe Company at the weblink: https://www.somanyceramics.com/pub/media/investorrelation/v/i/vigil_mechanism_whistle_blower_policyfirevised_16-06-2021.pdf

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Management Discussion and Analysis Report forms integral part of this Annual Report.

CONSERVATION OF ENERGY RESEARCH AND DEVELOPMENT TECHNOLOGY ABSORPTION FOREIGNEXCHANGE EARNINGS AND OUTGO

The information on conservation of energy R&D technology absorption foreignexchange earnings and outgo as required under Section 134 of the Companies Act 2013 readwith the Companies (Accounts) Rules 2014 forming part of this Report as Annexure –4.

PARTICULARS OF EMPLOYEES

Disclosures pertaining to remuneration and other details as required under Section197(12) of the Companies Act 2013 read with Rule 5(1) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 are provided at Annexure – 5.

In terms of the provisions of Section 197(12) of the Companies Act 2013 read withRules 5(2) and 5(3) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 a statement showing the names of employees and other particularsof the top ten employees and employees drawing remuneration in excess of the limits asprovided in the said rules are set out in the Board’s Report as an addendum thereto.However in terms of provisions of the first proviso to Section 136(1) of the CompaniesAct 2013 the Annual Report is being sent to the members of the Company excluding theaforesaid information. The said information is available for inspection at the RegisteredOffice of the Company during working hours and any member interested in obtaining suchinformation may write to the Company Secretary and the same will be furnished on request.

CORPORATE GOVERNANCE

Your Company has been following the principles and practices of good CorporateGovernance. A separate report on Corporate Governance and a certificate from the StatutoryAuditors confirming compliance with the Corporate Governance requirements forms part ofthis Report as Annexure – 6.

DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITIONAND REDRESSAL) ACT 2013

Your Company continue to follow robust policy on Prevention Prohibition and Redressalof Sexual Harassment of Women at Workplace.

The Company has a Policy on Prevention Prohibition and Redressal of Sexual Harassmentof Women at Workplace and matters connected therewith or incidental thereto covering allthe aspects as contained under "The Sexual Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013". The company has complied with theprovision relating to the constitution of Internal Complaints Committee under the SexualHarassment of Women at the Workplace (Prevention Prohibition and Redressal) Act 2013.

During the period under review the Company has not received any complaint under thisPolicy.

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