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Suprajit Engineering Ltd.

BSE: 532509 Sector: Auto
NSE: SUPRAJIT ISIN Code: INE399C01030
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OPEN 249.35
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VOLUME 11122
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P/E 29.12
Mkt Cap.(Rs cr) 3,398
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OPEN 249.35
CLOSE 255.10
VOLUME 11122
52-Week high 310.00
52-Week low 107.10
P/E 29.12
Mkt Cap.(Rs cr) 3,398
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Suprajit Engineering Ltd. (SUPRAJIT) - Director Report

Company director report

Your Directors have pleasure in presenting their Thirty Fifth (35th) AnnualReport and the Audited Financial Statements for the financial year ended March 31 2020together with the Independent Auditor's Report.

STANDALONE AND CONSOLIDATED FINANCIAL RESULTS:

Standalone

Consolidated

Particulars

2019-20

2018-19

2019-20

2018-19

Total Income

10962.30

10891.66

15852.16

16278.95

Profit before exceptional items and tax expense

1757.88

1738.90

1603.01

2052.21

Less: Exceptional items

(259.92)

-

(274.38)

-

Profit before tax expense

1497.96

1738.90

1328.63

2052.21

Less: Provision for taxation

(337.51)

(603.91)

(362.33)

(733.20)

Profit after tax before prior period adjustment

1160.45

1134.99

966.30

1319.01

Add: Reversal of Current Tax inrelation to prior year

72.87

13.24

73.35

18.93

Profit after tax

1233.32

1148.23

1039.65

1337.94

Add: Surplus from last year

1748.75

1598.96

1897.30

1723.59

Add: Other Comprehensive income

(2.90)

(7.77)

(2.47)

(8.85)

Add: Net change in fair value of Hedging instrument

-

-

(6.13)

(2.44)

Profit available for appropriation after adjustments prior period taxes

2979.17

2739.42

2928.35

3050.24

APPROPRIATIONS:
1. Final dividend [March 31 2019: Rs. 0.85

118.89

111.90

118.89

111.90

(March 31 2018 : Rs. 0.80) per Share]
2. First Interim dividend [Rs. 0.75 (March 31 2019 Rs. 0.70) per share]

104.90

97.91

104.90

97.91

3. Second Interim dividend

139.87

-

139.87

-

[Rs. 1.00 (March 31 2019 - Rs. Nil) per share]
4. Tax on Dividend

62.48

30.86

74.75

43.13

5. Transfer to General Reserve

750.00

750.00

750.00

900.00

6. Balance carried to Balance Sheet

1803.03

1748.75

1739.94

1897.30

TRANSFER TO RESERVES

During the financial year the Company has transferred an amount of Rs. 750 Million toGeneral Reserves.

DIVIDEND:

Two Interim Dividends were declared and paid during the financial year under report.The first interim dividend of Rs. 0.75 per Share of

Rs. 1/- each (75%) was paid on February 18 2020 and the second interim dividend of Rs.1.00 per Share (100%) was paid on March 18 2020. After careful review your Directorshave confirmed the two interim dividends as the final for the year. The total outgoconsidering the two interim dividends including taxation will be Rs. 288.95 Millionagainst Rs. 255.23 Million last year an increase of 13.21%.

PARTICULARS OF DIRECTORS AND KEY MANAGERIAL PERSONNEL APPOINTED / RESIGNED (RETIRED)DURING THE FINACIAL YEAR ENDED MARCH 31 2020:

During the financial year Mr. Suresh Shetty and Mr. Ian Williamson IndependentDirectors of the Company whose first term as

Independent Directors of the Company had completed on February 02 2020 have beenre-appointed as Independent Directors of the Company for a second term up to March 312023. Mr. B.S Patil Independent Director of the Company has retired from the Directorshipupon completion of his term of appointment of Five (5) years on February 02 2020.

The composition of the Board of Directors of the Company as on March 31 2020 is asbelow:

1 Mr. Kula Ajith Kumar Rai - Executive Chairman

2 Mr. Mohan N.S - Managing Director

3 Mr. Ian Williamson - Independent Director

4 Mr. Suresh Shetty - Independent Director

5 Mrs. Supriya Ajith Rai - Non Executive Director

6 Mr. M. Lakshminarayan - Independent Director

7 Mrs. Bharati Rao - Independent Director

The Board of Directors of the Company at its meeting held on June 12 2020 hasappointed Mr. Akhilesh Rai and Mr. Harish Hassan Visweswara as Additional Directors of theCompany. The Notice convening the AGM sets out the details of their appointment.

SHARE CAPITAL:

During the financial year there were no changes in the Authorized Share Capital andPaid up Share Capital of the Company.

As on March 31 2020 the Authorized Share Capital of the Company was Rs. 850000000/-(Rupees Eight fty Million) and the Paid up Share Capital was Rs. 139872473/- (Rupees OneThirty Nine Million Eight Hundred Seventy Two Thousand Four Hundred Seventy Three Only).

DISCLOSURE REGARDING ISSUE OF EQUITY SHARES WITH DIFFERENTIAL VOTING RIGHTS AND / ORISSUE OF SWEAT EQUITY SHARES

During the financial year under review the Company has not issued any Shares with Dierential voting Rights and / or any Sweat Equity Shares.

CHANGE IN NATURE OF BUSINESS:

The Company is engaged in the business of manufacturing and selling of automotive andother components and that are considered as single segment. There were no changes in thenature of business during the financial year.

OPERATIONS - MANAGEMENT DISCUSSION AND ANALYSIS:

The Indian Automotive industry recorded a negative growth of 14.83% during the year.Your Company on a standalone basis recorded an operational income of Rs. 10709.46Million during the financial year 2019-20 as against Rs. 10584.94 Million during thefinancial year 2018-19. The Profit for the year was Rs. 1233.32 Million during thefinancial year 2019-20 as against the Profit of Rs. 1148.23 Million during the financialyear 2018-19. The consolidated group operational income was

Rs. 15628.32 Million for the financial year 2019-20 as against

Rs. 15899 Million for the financial year 2018-19. The consolidated Profit for the yearwas Rs. 1039.65 Million during the financial year 2019-20 as against Rs. 1337.94 Millionduring the financial year 2018-19. During the year the Company has critically reviewedits investments in subsidiaries and the investments are restated as a prudent measure.

The year saw a significant drop in the sales in all the segments of automotiveindustry. The outbreak of COVID-19 during the last quarter of the year further acceleratedthe slowdown in sales. Unavailability of credit in the market and uncertainty of changeover from BS-IV to BS-VI have also added in the deceleration of automotive business.During the year the group's cable capacity was enhanced from 250 Million to 300 Millioncables / year.

DOMESTIC CABLE DIVISION (DCD):

Your Company's new Greenfield plant at Narsapura started commercial production in Q2 of2019-20. The overall operational performance of the division was much ahead of Industrywith good performance in both OEM and aftermarket despite difficult market conditions.

PHOENIX LAMPS DIVISION (PLD):

PLD had a muted year largely due to reduced exports to the subsidiaries and de-growthin domestic business.

Your Company concluded the acquisition of India Halogen Assets of Osram with a buybackagreement from Messrs Osram India Private Limited on 4th October 2019. ThisKarnai plant (erstwhile owned by Osram) is now part of Phoenix Lamps Division. Thetransfer was completed smoothly and the plant has started delivering in line with thebuyback agreement with Osram and it will supply to other customers.

With this acquisition Suprajit's Halogen Bulb's annual capacity has increased from 87Million to about 110 million.

WHOLLY OWNED SUBSIDIARIES:

The consolidated sales of all the subsidiaries were Rs. 4918.86 Million against Rs.5314.06 Million previous financial year. The EBIDTA was

Rs. 259.67 Million against Rs. 614.35 Million previous financial year. TheProfit/(Loss) Before Tax was Rs. (154.87) Million against Rs. 313.31 Million previousfinancial year. The Profit/(Loss) After Tax was

Rs. (193.67) Million against Rs. 189.71 Million previous financial year.

Suprajit Automotive Private Limited (SAL) and Suprajit Europe (SEU):

The sales were Rs. 1677.30 Million against Rs. 1760.17 Million previous year. TheEBIDTA was Rs. 333.24 Million against Rs. 496.23 Million previous year. The Profit BeforeTax was Rs. 228.80 Million against Rs. 455.09 Million previous year. The Profit After Taxwas

Rs. 178.56 Million against Rs. 333.46 Million previous year.

Suprajit Automotive Private Limited (SAL) and Suprajit Europe (SEU) the wholly ownedsubsidiaries of your Company are focused on automotive business. The performance duringthe year has been satisfactory. The new plant at the Doddaballapur Industrial Area hasstarted commercial production in December 2019.

During the year Suprajit Europe has set up an additional owned warehouse at KoperSlovenia to serve the Mainland European customers better and to derisk any negativefallout of Brexit. This warehouse is now fully functional.

Suprajit USA Inc (Wescon Controls LLC):

Suprajit USA Inc (Wescon Controls LLC) 100% owned subsidiary of your Company continuesits focus on non-automotive business. The sales were Rs. 2654.05 Million against Rs.2862.69 Million previous year. The EBIDTA was Rs. 139.87 Million against Rs. 256.30Million previous year. The Profit/(Loss) Before Tax was Rs. (334.58) Million against

Rs. 8.47 Million previous year. The Profit/(Loss) After Tax was

Rs. (310.81) Million against Rs. 6.65 Million previous year. Certain one-time cost hasbeen accounted during the year leading to lower profits.

Wescon has taken new initiatives to drive the costs down increase the productivity andget additional business in the non-automotive market. The SENA strategy has been refocusedby the new CEO in close interaction with group management. This is expected to yieldbetter results in the coming years.

Trifa and Luxlite:

Trifa and Luxlite the100% owned subsidiaries of PLD too had a challenging year. Thecombined sales to Rs. 1480.36 Million

(€ 18.29 Million) against Rs. 1198.69 Million (€15.21 Million) previousfinancial year. The EBIDTA was Rs. (41.41) Million (€ (0.51) Million) against Rs.(125.74) Million (€ (1.60) Million) previous financial year.

To improve the performance of these subsidiaries a restructuring exercise wasundertaken during the year. Instead of two separate warehouses a single large warehousein Luxlite has been created. Trifa's operations at Annweiler has been scaled downsignificantly to just a sales office with both operations managed by a single CEO.Additionally certain onetime costs relating to inventories manpower reductionrelocation etc. have been accounted during the year leading to higher losses. Theseinternal strategic changes along with the focus on additional customers are expected toyield satisfactory results in the coming years.

The performance of these subsidiaries combined with PLD will give a true picture asthey are only marketing arms which has been reasonable under the circumstances.

CURRENT YEAR OUTLOOK AND COVID-19 IMPACT:

With the outbreak of COVID-19 the entire global scenario and business outlook haschanged since the last quarter of last year. COVID pandemic has created huge economicrecession across the world. Many countries have declared lockdowns leading to cessationof economic activities. India started lockdown from March 24 2020 and it continues withcertain relaxation. This has led to significant breakdown of economic activities in Indiaas well. With no cure insight the threat for longer term continued economic weakness canbe expected. Resurgence of virus can also be expected till such time a vaccine is foundwhich will add to the uncertainty of economic recovery.

Such breakdown in economy and disruption of lives of billions of people is unseen andunheard in our lifetimes.

Under these circumstances it is difficult to assess the economic activity for the nearterm. The automotive industry's prospects are equally uncertain. The year is expected tobe a very challenging and most difficult period faced by your Company. It is essential topreserve cash and be frugal in all our activities with minimized capital expenditure. YourCompany is taking every step to minimize the negative impact of COVID-19. With anexcellent team in place clearly focused on optimizing costs and improving performanceyour Company is confident of facing these uncertainties and emerge as a stronger Company.Added to this the cash in hand will ensure continued longer term sustenance of theCompany.

SALIENT FEATURE OF FINANCIAL STATEMENT OF SUBSIDIARIES

A separate statement in Form AOC-1 is given as Annexure-1 which contains thesalient features of the financial statement of subsidiaries. The Annual Accounts andrelated documents of the Subsidiary Companies will be kept open for inspection at theRegistered Office of the Company. The aforesaid documents will also be made available tothe Members of the Company upon receipt of written request from them.

CREDIT RATING:

The Company's financial discipline and prudence are reflected in the strong creditratings ascribed by rating agencies as exhibited below:

Instrument Rating Agency Rating Outlook
Long Term Debt CRISIL AA Stable
Long Term Debt ICRA AA Stable
Long Term Debt India Ratings & AA Stable
Research
Short Term CRISIL A1+ Stable
Short Term ICRA A1+ Stable
Short Term India Ratings & A1+ Stable
Research

FRAUD REPORTED BY THE AUDITORS DURING THE FINANCIAL YEAR:

Not applicable as there were no such instances during the year.

DEPOSITS:

Your Company has not invited / accepted / renewed any deposits from public as definedunder the provisions of the Companies Act 2013 read with the Companies (Acceptance ofDeposits) Rules 2014. Accordingly the Company had no deposits as on March 31 2020.

MATERIAL CHANGES & COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANYBETWEEN THE END OF THE FINANCIAL YEAR AND THE DATE OF THE REPORT:

There were no material changes and commitments between the end of the financial yearand the date of the Report which affect the financial position of the Company.

EXTRACT OF THE ANNUAL RETURN:

The extract of the annual return in Form MGT-9 is enclosed as a part of this report incompliance with Section 134 (3) of the Companies Act 2013 as Annexure - 2.

PARTICULARS OF LOANS INVESTMENTS GUARANTEES GIVEN OR SECURITY PROVIDED BY THECOMPANY:

During the financial year the Company has not provided any loan / guarantee / securitywhich fall under the provisions of Section 186 of the Companies Act 2013.

PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES REFERRED TO IN SECTION188(1) OF THE COMPANIES ACT 2013:

All related party transactions which were entered into during the financial year wereon at arm's length basis and were in the ordinary course of business and with the omnibusapproval of the Audit Committee. There are no materially significant related partytransactions made by the Company with Promoters Directors Key Managerial Personnel orother designated persons which may have a potential conflict with the interest of theCompany at large.

All related party transactions wherever applicable are placed before the AuditCommittee. The quarterly disclosures of transactions with related parties are made to theAudit Committee. In compliance with the provisions of Section 134(3) of the Companies Act2013 particulars of contracts or arrangements with related parties referred to in theprovisions of Section 188(1) of the Companies Act 2013 are enclosed in the Form AOC-2as part of this report as "Annexure- 3".

NUMBER OF MEETINGS OF THE BOARD OF DIRECTORS:

Meetings of the Board are held at regular intervals with a time gap of not more than120 days between two consecutive Meetings. During the financial year 5 (Five) Meetingswere held on May 27 2019 August 10 2019 November 11 2019 February 01 2020 and March03 2020.

DIRECTORS' RESPONSIBILITY STATEMENT:

In pursuance of Section 134(3)(c) of the Companies Act 2013 the Board of Directors ofthe Company confirms and submits that:

i. in the preparation of the annual accounts the applicable Accounting Standards havebeen followed and there have been no material departure;

ii. the selected accounting policies were applied consistently and the judgments andestimates made are reasonable and prudent so as to give a true and fair view of the stateof affairs of the Company as at March 31 2020 and of the profits of the Company for theyear ended on that date;

iii. proper and sufficient care has been taken 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;

iv. the annual accounts have been prepared on a ‘going concern' basis;

v. adequate system of internal financial controls has been laid down and the saidsystem is operating effectively; and

vi. proper systems to ensure compliance with the provisions of all applicable laws havebeen devised and such systems were adequate and are operating effectively.

CORPORATE GOVERNANCE AND BUSINESS RESPONSIBILITY REPORT:

Being a Listed Company necessary measures are taken to comply with SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 (LODR) as amended from time totime. A report on Corporate Governance along with a certificate of compliance from aPractising Company Secretary forms part of this report.

The Business Responsibility Report as required to be annexed to this report is annexedas Annexure-4.

DIVIDEND DISTRIBUTION POLICY:

The Company has a Dividend Distribution Policy in place which is available on thewebsite of the Company at www.suprajit.com(http://www.suprajit.com/investors/compliance/policies-codes/) and also annexed as Annexure-5.

RISK MANAGEMENT POLICY:

The Company has Risk Management Policy in place. With effect from April 01 2019 theCompany has constituted Risk Management Committee to oversee in the area of financialrisks and controls. Major risks identified by the businesses and functions aresystematically addressed through mitigating actions on a continuing basis.

The development and implementation of Risk Management Policy has been covered in themanagement discussion and analysis which forms part of this report. The Company has takenDirectors' and Officers' Liability Insurance Policy.

CORPORATE SOCIAL RESPONSIBILITY (CSR) / SUPRAJIT FOUNDATION:

In line with Section 135 read with Schedule VII of the Companies Act 2013 the Boardhas constituted a Corporate Social Responsibility (CSR) Committee and adopted a CSR Policywhich is based on the philosophy "Giving Back to Society".

During the year the Company has paid Rs. 29.13 Million and Suprajit Automotive haspaid Rs. 4.89 Million to Suprajit Foundation towards the various projects undertaken bySuprajit Foundation. The detailed activities of Suprajit Foundation have been provided in Annexure-6to this report. The copy of the CSR Policy is available on the website of the Companyat www.suprajit.com ( http://suprajit.com/investors/compliance/policies-codes/ ).

The Company has been active in CSR activities through Suprajit Foundation and hasundertaken various projects in the areas of Education Healthcare and Rural Developmentsince 2011.

Your Directors take this opportunity to thank the honorary Trustees of the Foundationwho continue to devote their valuable time and energy in planning directing monitoringand reviewing its activities.

DETAILS OF EMPLOYEES STOCK BENEFIT SCHEMES:

The Shareholders of the Company have approved ‘SEL Employee Stock AppreciationRights Plan 2017' ("ESAR 2017") at the 32nd Annual General Meeting ofthe Company held on November 11 2017. The Company through Nomination and RemunerationCommittee has taken necessary steps to implement the same during the year. Disclosurepursuant to Regulation 14 of Securities and Exchange Board of India (SEBI) (Share BasedEmployee Benefits) Regulations 2014 is enclosed as Annexure -7.

CONSERVATION OF ENERGY:

Conservation of energy is one of the highest priority measures directly supervised bythe senior management of the Company. As and when new plants are getting added by theCompany the management ensures that various measures like rainwater harvesting STPwater usage control planting of trees discarding of old gen-sets and minimum usage oflighting power during day time are well adopted from day one.

In addition the following new initiatives have been undertaken during the financialyear at various plants:

a) The Company has installed 100 kWp solar capacity as the first pilot project in theyear 2016 to assess the use of solar energy for the operational requirements of theCompany. The Company will monitor the performance of this project and based on thesuccess will consider deploying such projects at various units.

b) Various plants have started using LED lamp to reduce power consumption.

c) Additional facilities have been fitted with Automatic Water Level Controllers alongwith the water pumps which are used for pumping water to the storage tanks.

d) Electrical systems in all the new plants have been provided with individual controlsso that the user can select particular fan light etc. depending upon requirement at thatparticular point of time. This avoids indiscriminate bulk selection of electrical systems.

e) Additional facilities Shop floors having roo ng sheets with thermal vents on top ofthe roo ng sheets (circulating fans operating with wind) in order to reduce the heateffect in summer and also to reduce usage of electrically operated fans in the shop floor.

f) Rain water harvesting has been modified to properly channelize the rain water intoearth in manner bore well gets adequate water for its re-generation.

g) E orts made to improve power factors by installing additional active capacitors

h) Continuous efforts in reduction of power load by replacing DC drive to AC drive.

i) Compressor room temperature reduction for reducing maintenance cost.

RESEARCH AND DEVELOPMENT TECHNOLOGY ABSORPTION ADAPTATION & INNOVATION: a) Researchand Development (R&D):

1. The Company has set up a centralized Suprajit Tech Centre (STC) at Bengaluru. STChas Engineers for R&D testing and validation teams to products as per customers'requirements. The Group also has tech centers at Tamworth U.K (Suprajit Europe Limited)and Wichita USA (Wescon).

2. The Company has product & process patents which are deployed commercially. TheCompany's R&D has developed many specialized cables lamps and other products forCustomers as per the end user requirements. This is being successfully deployed by thecustomer with significant cost savings.

3. Development cells in respective units have been upgraded with more Engineers andlatest equipment.

4. The Company has developed many types of equipment and automation specialized forcable and lamps with significant energy savings and increased productivity.

5. "Product Life Cycle Management"-software has been implemented to enhancestandardization of new product launch and change management.

6. Launch of RGL and C program to enhance robustness geometry tolerances and life ofthe halogen bulbs has led to significant improvements in quality cost and productivityat Phoenix Lamps Division.

b) Expenditure on Research and Development:

Particulars

2019-20

2018-19

Salaries Wages & Bonus

24.59

18.53

Cost of materials consumed

2.43

2.72

Other expenses

4.62

2.64

Total

31.64

23.89

c) Technology Absorption Adaptation Innovation and particulars of importedtechnology:

1) The Company has not imported any technology during the financial year.

2) The Company has developed innovative and path-breaking products and processes forboth lamps and Cables for which patents are pending.

3) The Company has successfully adopted customer's designs for new types of cableshalogen lamps and also other products.

GREEN INITIATIVES:

The Company has initiated a sustainability initiative with the aim of going green andminimizing our impact on the environment. Like the previous years this year too theCompany is publishing only the statutory disclosures in the print version of the AnnualReport.

FOREIGN EXCHANGE EARNINGS AND OUTFLOW:

The Company earned Rs. 1469.60 Million and expended Rs. 1303.48 Million during thefinancial year under review.

INDUSTRIAL RELATIONS:

Industrial relations have been cordial and constructive which have helped your Companyto achieve production targets.

DECLARATION BY THE INDEPENDENT DIRECTORS:

The Company has received necessary declarations from each Independent Directorspursuant to the provisions of Section 149(7) of the Companies Act 2013 that he / shemeets the criteria of Independence laid down in the provisions of Section 149(6) of theCompanies Act 2013.

Further the Board hereby confirms that all the Independent Directors of the Companyfulfill the conditions as specified in SEBI (Listing Obligations and DisclosureRequirements) Regulation 2015 and all the Independent Directors are independent of themanagement.

BOARD EVALUATION:

Pursuant to the provisions of the Companies Act 2013 and SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 (as amended from time to time) the Board hascarried out an annual performance evaluation of Independent Directors. The IndependentDirectors have carried out evaluation of Non Independent Directors Chairman and the allthe Committees of the Board.

FAMILIARISATION PROGRAMMES OF INDEPENDENT DIRECTORS:

To familiarize the new inductees with the strategy operations and functions of theCompany the Executive Directors / Senior Managerial Personnel make presentations to theinductees about the Company's strategy operations product and service offeringsmarkets organization structure finance human resources technology quality facilitiesand risk management at the Board Meetings. The copy of Familiarization Programme ofIndependent Directors is available on the website of the Company at www.suprajit.com(http://www.suprajit.com/investors/ compliance/policies-codes/).

NOMINATION AND REMUNERATION POLICY:

Your Company has adopted a Nomination and Remuneration Policy on Directors' Appointmentand Remuneration including criteria for determining qualifications positive attributesindependence of a Director and other matters as provided under the provisions of Section178(3) of the Companies Act 2013. The Policy is available at the website of the Companyat www.suprajit. com (http://suprajit.com/investors/compliance/policies-codes/).

COMPOSITION OF AUDIT COMMITTEE:

The Company has complied with the requirements of Section 177 of the Companies Act2013 and Regulation 18 of SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 relating to the composition of the Audit Committee. During thefinancial year the composition of the Audit Committee was as follows: Mr. Suresh Shetty -Chairman Mr. Ian Williamson - Member Mr. K.Ajith Kumar Rai - Member

VIGIL MECHANISM / WHISTLE BLOWER POLICY:

Your Company has formulated the Whistle Blower Policy with a view to provide amechanism for Employees and Directors of the Company to approach the Compliance Officers /the Chairman of the Audit Committee of the Company in compliance with Section 177(9) ofthe Companies Act 2013 and SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015. Details of the Whistle Blower Policy are explained in the Report onCorporate Governance and Whistle Blower Policy of the Company is available on the websiteof the Company at www.suprajit.com (http://suprajit.com/investors/compliance/policies-codes/ ).

AUDITORS: i. Statutory Auditors:

The Members of the Company at the 32nd (Thirty Second) Annual GeneralMeeting of the Company held on November 11 2017 have appointed Messrs S. R. Batliboi& Associates LLP Chartered Accountants (Firm Registration No. 101049W/ E300004) asStatutory Auditors of the Company for a period of 5 (Five) years. They will continue to beStatutory Auditors of the Company till the conclusion of 37th (Thirty Seventh)Annual General Meeting to be held in the year 2022.

As per the Companies (Amendment) Act 2017 and rules made there under with effect fromMay 7 2018 the Central Government notified the omission of the requirement related torati cation of appointment of Statutory Auditors by Members at every Annual GeneralMeeting. Accordingly the Resolution for rati cation has not been placed before theMembers.

ii. Cost Auditors:

Messrs G N V Associates Cost Accountants Bengaluru had been appointed as the CostAuditors of your Company for the financial year 2019-20.

iii. Secretarial Auditor:

The Board has appointed Mr. Parameshwar G. Bhat a Practising Company Secretary(Membership No.FCS-8860) Bengaluru as the Secretarial Auditor as per the provisions ofSection 204 of the Companies Act 2013 for the financial year 2019-20. The SecretarialAudit Report issued by him is enclosed as "Annexure-8" to this Report.

QUALIFICATIONS RESERVATIONS OR ADVERSE REMARKS OR DISCLAIMERS MADE BY THE STATUTORYAUDITORS

There are no qualifications or adverse remarks in the Statutory Auditors' Report whichrequire any explanation from the Board of Directors. The Statutory Auditors have expressedan unmodified opinion in the audit reports in respect of the Audited standalone andconsolidated Financial Statements for the financial year ended March 31 2020.

Further there are also no qualifications reservations or adverse remarks ordisclaimers made by Secretarial Auditor in his Secretarial Audit Report.

REGULATORY / COURT ORDERS:

There were no significant and material orders passed by the Regulators or Courts orTribunals impacting the going concern status of the Company and its future operations.

HEALTH SAFETY AND ENVIRONMENTAL PROTECTION (HSE):

The Company's efforts towards reinforcing a positive safety culture have resulted inreduction of total lost time due to Injuries this year. Similarly the lost Time InjuryFrequency Rate reduced from a year ago.

Further during the financial year no occupational illness case was reported. Due tocontinued efforts to conserve water and energy specific water and energy consumption alsogot reduced.

The company has demonstrated its commitment to HSE by Establishing HSE Policy same wascommunicated across the plants Employees and interested parties (made available throughwebsite). And all the new manufacturing plants have been certified for EnvironmentalManagement System (ISO 14001:2015) during the year.

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

The Company has in place a Sexual Harassment Policy in line with the requirements ofthe Sexual Harassment of Women at the Workplace (Prevention Prohibition & Redressal)Act 2013. Internal Complaints Committee (ICC) has been set up to redress complaintsreceived regarding sexual harassment. All employees (permanent contractual temporarytrainees) are covered under this Policy.

Summary of sexual harassment complaints received and disposed off during the financialyear 2019-20:

No. of complaints received: NIL No. of complaints disposed off: NA

PARTICULARS OF EMPLOYEES:

The information required pursuant to Section 197 read with Rule 5 of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 in respect of employeesof the Company will be provided upon request. In terms of Section 136 of the Act theReport and Accounts are being sent to the Members and others entitled thereto excludingthe information on employees' particulars which is available for inspection by theMembers at the Registered Office of the Company during business hours on working days ofthe Company up to the date of the ensuing Annual General Meeting. If any Member isinterested in obtaining a copy thereof such member may write to the Company Secretary inthis regard.

The ratio of the remuneration of each Director to the median employee's remunerationand other details in terms of Section 197(12) of the Companies Act 2013 read with Rule5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014are forming part of this report as

"Annexure -9".

SECRETARIAL STANDARDS

The Company complies with all applicable mandatory secretarial standards issued by theInstitute of Company Secretaries of India.

CAUTIONARY NOTE:

Management Discussion and Analysis forming part of this Report is in compliance withCorporate Governance Standards SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 with Stock Exchanges and such statements may be "forwardlooking" within the meaning of applicable securities laws and regulations. Actualresults could differ materially from those expressed or implied. Important factors thatcould make a difference to the Company's operations include economic conditions affectingdemand / supply and price conditions in the domestic and overseas markets / currencyfluctuations in which the Company operates changes in the Government regulations taxlaws and other statutes and other incidental factors.

ACKNOWLEDGEMENT:

The Directors place on record their appreciation for valuable contribution made byemployees at all levels active support and encouragement received from variousGovernmental agencies Company's Bankers Customers vendors distributors BusinessAssociates and other Acquaintances.

Your Directors recognize the continued support extended by all the Shareholders andgratefully acknowledge with a firm belief that the support and trust will continue in thefuture.

For and on behalf of the Board

K Ajith Kumar Rai
Chairman
(DIN: 01160327)
Place

:

Bengaluru
Date

:

June 12 2020

.