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Supreme Engineering Ltd.

BSE: 535105 Sector: Metals & Mining
NSE: SUPREMEENG ISIN Code: INE319Z01013
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Supreme Engineering Ltd. (SUPREMEENG) - Director Report

Company director report

SUPREME ENGINEERING LIMITED

(Formerly Known as: Supreme Engineering Private Limited

Supreme Heatreaters Private Limited)

REGD. OFFICE: R-223 MIDC Complex Thane Belapur Road Rabale

Navi Mumbai 400 701 Maharashtra (Wire Division)

Supreme Special Steels (Special Steels Division)

R.P.Chowdhri Marg Village Vihari Opp Khopoli Railway Station

Khopoli Tal. Khalapur District Raigad Maharashtra 410203

Contact No.: 022-27648700 FAX: 022-27690341

EMAIL: cs@supremesteels.com

WEBSITE: www.supremesteels.com

CIN: U99999MH1987PLC043205

To The Members of

SUPREME ENGINEERING LIMITED R-223 MIDC Complex Thane Belapur Rabale Navi Mumbai 400701

Your Directors are pleased to present their Thirty First Board's Report together withthe Audited Financial statements for the year ended 31st March 2018.

1. EXTRACT OF ANNUAL RETURN {SECTION 92(3)} In Form MGT-9 enclosed as Annexure I. 2.NUMBER OF BOARD MEETINGS

The Board of Directors duly meet 20 times on 10.05.17 17.07.17 18.08.1724.08.1701.09.17 19.09.17 26.09.17 27.09.17 16.10.17 27.11.17 15.12.17 08.18.18 18.01.1829.01.18 01.02.18 08.02.18 19.02.18 12.03.18 29.03.18 30.03.18.

3. DIRECTOR RESPONSIBILITY STATEMENT

Pursuant to the requirement of section 134(5) of the Companies Act 2013 theDirector's here by confirm that:

I. In the preparation of the annual accounts the applicable accounting standards hadbeen followed along with proper explanation relating to material departure.

II. The Directors had selected such accounting policies and applied them consistentlyand made judgments and estimates that are responsible and prudent so as to give a true andfair view of the state of affairs of the Company at the end of financial year and of theprofit and loss of the Company for that period.

III. The Directors had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of this act for safeguarding theassets of the Company and for preventing and detecting the fraud and irregularities.

IV. The Directors had prepared the annual accounts on a going concern basis.

V. The Directors in 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.

VI. The Directors had devised the proper system to ensure the compliance with theprovisions of all applicable laws and that such systems were adequate and operatingeffectively.

4. STATEMENT OF DECLARATION BY INDEPENDENT DIRECTOR: (Section 134)

The Independent Directors of the Company have given the declaration to the Company thatthey meet the criteria of independence as provided in section 149(6) as well as underregulation 25 of (LODR) Regulation 2015. There has been no change in the circumstanceswhich may affect their status as Independent Director during the year.

5. COMPANY'S POLICY ON DIRECTORS APPOINTMENT AND REMUNERATION AND OTHER DETAILS:

The Nomination and Remuneration Committee has laid down the criteria for DirectorsAppointment and Remuneration including criteria for determining qualification positiveattributes and Independence of Director. The following attribute/criteria for selectionhave been laid by the board on the recommendation of committee:

The candidate should possess the positive attributes such as leadershipentrepreneurship or such other attributes which in the opinion of the committee are in theinterest of the Company. The candidate should be free from any disqualification asprovided under sections 164 and 167 of Companies Act 2013 The candidate should meet theconditions of being independent as stipulated under the companies act 2013 Theappointment or re- appointment of a Director is made pursuant to an established procedurewhich includes assessment of managerial skills professional behavior technical skillsand other requirements as may be required by the post. The Executive and Whole-timeDirectors of the Company are paid remuneration as per their terms and conditions which areapproved by the Board after taking into consideration the recommendations made byNomination and Remuneration Committee.

6. AUDITORS Statutory Auditor:

Bajaj & Goyanka Chartered Accountants bearing FRN 019291C resigned from the postof Statutory Auditor vide Resignation letter 20th March 2018. To fill thecasual vacancy H.L. Saini & Co. Chartered Accountants bearing FRN- 136961W wereappointed as Statutory Auditor vide Extra-ordinary General Meeting (“EGM”) dated24th April 2018 to hold the office from conclusion of EGM till the conclusionof this 31st Annual general Meeting to conduct Statutory Audit for the F.Y.2017-18. As the Statutory Auditor H.L Saini & Co. are going to retire pursuant torecommendation of Audit Committee the Board proposed to appoint R.T. Jain & Co. LLPChartered Accountants bearing FRN: 103961W/W100182 whose consent and eligibilitycertificate was placed before the board subject to approval of members in this AnnualGeneral Meeting.

The Notes on financial statement referred to in the Auditors' Report areself-explanatory and do not call for any further comments. The qualification reservationand adverse remarks are mentioned in the Auditor's Report.

Cost Auditors:

Pursuant to section 148 (3) of the Companies Act 2013 and Rule 6(2) of the Companies(Cost records and Audit Rules) 2014 Dinesh Jain & Company Cost Accountants(Registration No. 100583) are appointed as the Cost Auditors of the Company to conductaudit of cost records made and maintained by the Company for Financial year commencing on1st April 2018 and ending on 31st March 2019 at a remuneration of Rs. 50000 (RupeesFifty Thousand only) p.a. plus Service Tax & re-imbursement of out of pocket expensesthat may be incurred subject to ratification by the members of the Company at the ensuingGeneral Meeting of the Company.

7. LOAN GUARANTEE AND INVESTMENT BY COMPANY: (SECTION 186)

The Company has not given any Loan or Guarantee or security or made any investmentduring the financial year.

8. RELATED PARTIES TRANSACTION

During the year under review all the related party transactions were in the ordinarycourse of the business and on arm's length basis. Those transactions were placed beforethe Audit committee of Directors for prior approval in the form of omnibus approval.Related party transactions under Accounting Standard 18 are disclosed in the notes to thefinancial statement and also mentioned in Annexure Form AOC-2 pursuant to clause (h) ofsubsection (3) of Section 134 read with Rule 8(2) of Companies (Accounts) rules 2014attached as ANNEXURE-II to this report.

9. FINANCIAL RESULTS:

Amt. in lacs
Particulars Current F.Y. 17-18 Previous F.Y. 16-17
Revenue from operation 15174.47 12039.83
Other Income 55.07 47.65
Total Revenue 1522.95 1208.75
Profit before Finance Cost Depreciation 1782.57 1220.77
Extraordinary items & Taxes
Less: Finance Cost 910.57 768.09
Less: Depreciation & Amortization Expenses 151.11 195.94
Profit/ Loss Before Prior Period Items and 0.00 0.00
Taxes
Exceptional and Extra Ordinary Items 0.00 0.00
Profit/ Loss Before Tax (PBT) 720.89 256.74
Less: Provision for Tax 215.81 35.85
Less: Deferred Tax 4.54 -21.38
Profit/ Loss After Tax 500.53 242.27
Profit available for appropriation 500.53 242.27
Balance Carried to Balance Sheet 500.53 242.27

10. RESERVES:

The Company proposes to carry Rs. 500.53 Lakhs to the Reserves from Net Profits of Rs.500.53. All the requirement as laid down in Companies Act 2013 and rules made their underare complied with.

11. DIVIDEND:

In view of the need to conserve the resources of the Company the Directors do notrecommend dividend for this year.

12. MATERIAL CHANGES AND COMMITMENTS IF ANY AFFECTING THE FINANCIAL POSITION OF THE

COMPANY AS ON DATE OF BALANCESHEET:

1. The Shareholders approved the following resolutions in Extra- ordinary generalMeetings dated 15th September 2018:

Sub division of shares of Face value of Rs. 100/- into 10/- each in the authorizedissued subscribed and paid-up capital of the Company. Alteration of Capital clause ofMemorandum of Association of the Company. Increase in Authorized Capital from existing Rs.30000000 to Rs. 251000000 of the Company. Alteration of Capital clause of Memorandumof Association of the Company.

2. The Shareholders approved the following resolutions in Extra- ordinary generalMeetings dated 18th September 2018:

Reclassification of the existing Authorized Share Capital of the Company of Rs.251000000 divided into 24100000 Equity Shares of Rs. 10 each & 1000000Preference shares of Rs. 10 each into Rs. 251000000 divided into 25100000 EquityShares of Rs. 10/- each. Issue of shares arising on conversion of preference shares intoequity shares amounting to Rs. 10000000/- (Rupees One Crore only) at a rate of Rs. 10/-(Rupees Ten only) and allot 1000000 (Ten Lakhs) equity shares.

3. The Board approved the following resolutions in Board Meeting dated 19thSeptember 2018:

Allotment of 1000000 equity shares pursuant to conversion of preference shares intoequity shares resulting in increase in paid up capital from existing Rs. 20000000 toRs. 30000000 and the issued preference capital of the Company be reduced from existingRs. 10000000 to Nil.

4. The Shareholders approved the following resolutions in Extra- ordinary generalMeetings dated 25th September 2018:

Issuance of bonus shares in the proportion of 3 (Three) Bonus Share of Rs. 10/- (RupeesTen only) each for every existing 1 (One) fully paid-up Ordinary Shares of Rs. 10/-(Rupees Ten only) a sum not exceeding 9 crores.

5. The Board approved the following resolutions in Board Meeting dated 26thSeptember 2018:

Allotment of 9000000 equity shares pursuant to issuance of bonus shares resulting inincrease in paid up capital from existing Rs. 30000000 to Rs. 120000000. Allotmentof 6000000 equity shares pursuant to issuance of right shares resulting in increase inpaid up capital from existing Rs. 120000000 to Rs. 180000000.

6. The Board approved the following resolutions in Board Meeting dated 01stFebruary 2018:

Allotment of 219000 Equity Shares of Rs. 39 each On Preferential Basis on Conversionof Unsecured Loans Into Equity Shares (including premium of Rs. 29 each) resulting inincrease in paid up capital from existing Rs. 180000000 to Rs. 182190000.

Allotment of 200000 Equity Shares of Rs. 39 each On Preferential Basis (includingpremium of Rs. 29 each) resulting in increase in paid up capital from existing Rs.182190000 to Rs. 184190000.

The Board approved public Issue offer and allotment of Equity Shares not exceeding6555000 equity shares subject to the approval of the members of the Company to the issueat such price as may be determined in any mode whether fixed or through Book-Buildingmechanism.

7. The Shareholders approved the following resolutions in Extra- ordinary generalMeetings dated 05th February 2018:

The Shareholders approved public Issue offer and allotment of Equity Shares notexceeding 6555000 of Rs. 10 each to the issue at such price as may be determined in anymode whether fixed or through Book-Building mechanism.

8. The Board approved the following resolution in Board meeting dated 19thFebruary 2018:

Draft Red Herring Prospectus offering 6579000 equity shares was filed on 19thFebruary 2018 with NSE Emerge for which NSE In principle approval was received videletter dated 16th March 2018 which was withdrawn. As per SEBI (ICDR) Regulations 2009the audited financials should not be more than six months old from the issue opening dateso we had to re file the Draft Red Herring Prospectus (“DRHP”) with StockExchange (“NSE”) with the Audited Financials for the year ended on 31st March2018.

9. The Board approved the following resolution in Board Meeting dated 30thMarch 2018:

The Board of Directors passed and approved resolution dated March 30 2018 for publicissue of up to 6579000 equity shares of the Company subject to shareholders' approval.

13. MATERIAL CHANGES AND COMMITMENTS IF ANY AFFECTING THE FINANCIAL POSITION OF THECOMPANY WHICH HAVE OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR OF THE COMPANY TO WHICHTHE FINANCIAL STATEMENTS RELATE AND THE DATE OF THE REPORT;

1. The Shareholders approved the following resolutions in Extra- ordinary generalMeetings dated 24th April 2018:

The Shareholders' approved resolution for public issue of up to 6579000 equity sharesof Rs. 10 each of the Company. To fill the casual vacancy caused by Bajaj & GoyankaChartered Accountants H.L. Saini & Co. Chartered Accountants were appointed asStatutory Auditors of the Company to conduct Audit for the Financial Year 2017-18.

2. The Board approved the following resolution in Board Meeting dated 04thMay 2018:

Appointment of Mr. Gopal Mishra as Chief Financial Officer of the Company.

3. The Board approved the following resolution in Board Meeting dated 31stMay 2018:

As Draft Red Herring Prospectus dated 19th February 2018 filed with NSEEmerge for which NSE In principle approval was received vide letter dated 16thMarch 2018 was withdrawn due to change in Audited Financials. As per SEBI (ICDR)Regulations 2009 the audited financials should not be more than six months old from theissue opening date so the

Board re-filed the Draft Red Herring Prospectus (“DRHP”) dated 31stMay 2018 offering 6579000 equity shares with Stock Exchange (“NSE”) with theAudited Financials for the year ended on 31st March 2018.

The Draft Red Herring Prospectus (“DRHP”) dated 31st May 2018 wasapproved by the Stock Exchange (“NSE”) by in-principle approval letter datedJuly 13 2018. Further the Company then filed the Red Herring Prospectus(“RHP”) dated July 16 2018 filed with the Registrar of Companies MumbaiMaharashtra along with all other material documents and contracts whose receipt wasacknowledged and taken on record by the Registrar of Companies Mumbai Maharashtra onJuly 18 2018.

4. The Board approved the resolution in Board Meeting dated 01st August2018 and the Company approved the resolution in Extra-ordinary General Meeting dated 06thAugust 2018 as follows:

Due to the revision in the issue structure the Board of Directors of the Company onthe recommendation of NSE and in consultation with the Book Running Lead Manager (“BRLM”) the Board passed and approved Initial public offering through a fresh issueof equity shares not exceeding 6580000 and an offer for sale upto 8000 Equity sharesby existing shareholder through book built issue subject to approval of Members.

The Shareholders approved Initial public offering through a fresh issue of equityshares not exceeding 6580000 and an offer for sale upto 8000 Equity shares byexisting shareholder through book built issue.

5. The Board approved the following resolution in Board Meeting dated 07thAugust 2018:

In supersession to all previous passed resolutions in respect to Draft Red HerringProspectus subject to the approval of the Stock Exchange the Draft Red HerringProspectus (DRHP) dated 07th August 2018 offering fresh issue of 6576000equity shares and offer for sale of 8000 equity shares by existing shareholder wasapproved and filed by Board with the Stock Exchange (“NSE Emerge”).

The Draft Red Herring Prospectus (“DRHP”) dated 07th August 2018was approved by the Stock Exchange (“NSE”) by in-principle approval letter datedAugust 10 2018. Further the Red Herring Prospectus (“RHP”) dated August 112018 was filed with the Registrar of Companies Mumbai Maharashtra along with all othermaterial documents and contracts whose receipt was acknowledged and taken on record bythe Registrar of Companies Mumbai Maharashtra on August 14 2018.

6. The Board approved the following resolution in Board Meeting dated 30thAugust 2018:

The Final Prospectus dated 30th August 2018 offering fresh issue of6576000 equity shares and offer for sale of 8000 equity shares by existing shareholderat cash at price of Rs. 27 was filed with the Registrar of Companies Mumbai Maharashtraalong with all other supporting documents.

Appointment of Cost Auditor for the Financial Year 2018-19.

Appointment of Statutory Auditor R.T. Jain & Co. LLP Chartered Accountants of theCompany.

14.CONSERVATION OF ENERGY TECHNOLOGICAL ABSORPTION FOREIGN EXCHANGE EARNINGS

AND OUTGO:

(A) Conservation of energy:

Steps taken/ impact on Conservation of energy with special reference to the following:

(i) Steps taken by the Company for utilizing alternate sources of energy includingwaste generated The Special Steels division at Khopoli has taken steps to installInduction heating furnace to replace part production done by Gas fired furnace. Theadvantages are as follows:

1. Lower pollution as electric/induction heating causes no pollution

2. Higher efficiency as the electric furnace uses only the power required to heat therequired job whereas the gas furnace requires the full furnace to be fired therebycausing waste of fuel 3. Lower cost

(ii) Capital Investment on energy conversion equipment's N.A.

(B) Technology Absorption:

1. Efforts in brief made towards technology absorption Technology installed -Additional electro-slag re-melting furnace

2. Benefits derived as a result of the above efforts for e.g. products improvementcost reduction product development import substitution etc Increase of productioncapacity for critical alloys

3. No technology was imported during the last 3 years N.A.

4. Expenditure incurred on Research and Development N.A.

(c) Foreign exchange Earnings and Outgo:

PARTICULARS AMOUNT (Rs. In lacs)
Foreign Exchange earned in terms of actual Inflows during the year 399.00
Foreign Exchange outgo during the year in terms of actual Outflows 82.76

15. RISK MANAGEMENT POLICY:

The Management has put in place adequate and effective system and man power for thepurpose of Risk Management. In the opinion of the Board there are no risks which wouldthreaten the existence of the Company.

16. CORPORATE SOCIAL RESPONSIBILITY (CSR):

As the Profit after Tax for the F.Y. 2017-18 is more than 5 Crores the Provisions ofSection 135 Corporate Social Responsibility and Companies (Corporate Social ResponsibilityPolicy) Rules 2014 is applicable to the Company w.e.f F.Y. 2018-2019.

The Company has formulated Corporate Social Responsibility (CSR) Policy and theinitiatives to be undertaken by the Company on CSR activities in the coming Financial Year18-19 are yet to be decided. It is in the process of identifying suitable areas forspending expenditure pertaining to Corporate Social Responsibility.

17. FORMAL ANNUAL EVALUATION:

The formal annual evaluation of Directors is made depending upon Companies EvaluationPolicy.

18. DISCLOSURE IN RESPECT OF SCHEME FORMULATED UNDER SECTION 67(3) OF THE COMPANIES

ACT 2013

Since the Company has not formulated any scheme in terms of Section 67(3) of theCompanies Act 2013 no disclosures are required to be made.

19. REVISION OF FINANCIAL STATEMENTS OR BOARD'S REPORT {SECTION 131(1) S}

The Company has not made any modification or alteration in its Financial Statement /Board Report in respect of last Four Years.

20. DIRECTOR AND KEY MANAGERIAL PERSONNEL:

In accordance with the requirements of Companies Act 2013 Mr. Abhinav ChowdhriExecutive Director of the Company will retire by rotation at the ensuing Annual Generalmeeting and being eligible offers himself for re-appointment. The Directors recommendedhis appointment.

During the year following were the changes in Directors and Key Managerial Personnel(KMPs):

Sr. Name of Designation Date of Change Reason
No. Directors/KMPs
1. Mr. Pranav Chowdhri CEO December 1 st 2017 Appointment
2. Mr. Prakash Deshmukh Independent Director December 7 th 2018 Appointment
3. Mr. Vikas Agarwal CFO December 1st 2017 Appointment
4. Mrs. Lalita Chowdhri Non- Executive Director December 1st 2017 Re- designation
5. Mr. Abhinav Chowdhri Executive Director December 1st 2017 Appointment
6. Mrs. Krupali Thakkar Company Secretary and Compliance Officer January 8th 2018 Appointment
7. Mr. Jayaraman Kannan Independent Director January 17th 2018 Appointment
8. Mr. Vikas Agarwal CFO March 27 2018 Resignation
9. Mr. Gopal Mishra CFO May 04th 2018 Appointment

21. DETAILS OF COMMITTEES:

The Board has formulated following committees for compliance with corporate governancerequirements:

1. Audit Committee

2. Nomination and Remuneration Committee

3. Stakeholders Relationship Committee

4. Corporate Social Responsibility Committee

22. DISCLOSURE PURSUANT TO SECTION 197(14) OF THE COMPANIES ACT 2013

No Managing Director or Whole- Time Director of the Company was in receipt of anyremuneration or commission from the Company's Holding or Subsidiary companies during thefinancial year.

23. PERFORMANCE AND FIANANCIAL POSITION OF EACH OF THE SUBSIDIARIES ASSOCIATES AND

JOINT VENTURE COMPANIES:

There are no Subsidiaries Associates and Joint Venture of the Company.

24. DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTIONPROHIBITION AND REDRESSAL) ACT 2013:

The Company has in place an anti-harassment policy in line with the requirements of theSexual Harassment of women at workplace (Prevention Prohibition And Redressal) Act 2013.Internal Complaint Committee has been set up to redress complaints received regularly andare monitored by women line supervisors who directly report to the chairman of thecommittee.

27 . PARTICULAR OF EMPLOYEES

There are no employees during the year under review whose particulars are required tobe given pursuant to section 197 of Companies Act 2013 read with Rule 5 (2) (i) (ii) and(iii) of Companies (Appointment and Remuneration of Managerial Personnel Rules 2014).

28. NUMBER OF MEETINGS OF BOARD OF DIRECTORS:

The Board of Directors met Twenty Times (20) in the Board Meeting held during the F.Y.2017-18

Name of Director Category / Designation of Number of
Director Meeting Attended
Mr. Sanjay Chowdhri Managing Director 20/20
Mrs. Lalita Chowdhri Chairperson and Non-Executive 20/20
Independent Director
Mr. Abhinav Chowdhri Executive Director 9/20
Mr. Prakash Deshmukh Non-Executive Director Independent 2/20
Mr. Jayaraman Kannan Non-Executive Director Independent 4/20

29. AUDIT COMMITTEE:

The Audit Committee comprises of three directors out of which majority directors areIndependent Directors namely Mr. Prakash Deshmukh Chairman Mrs. Lalita Chowdhri Memberand Mr. Jayaraman Kannan Member. The Audit Committee was formed on 01stFebruary 2018.

30. NOMINATION AND REMUNERATION COMMITTEE:

The Nomination and Remuneration Committee comprises of three directors all of whom areNon-Executive Independent Directors namely Jayaraman Kannan Chairman Mrs. LalitaChowdhri Member and Mr. Prakash Deshmukh Member. The Nomination and RemunerationCommittee was formed on 01st February 2018.

31. STAKEHOLDERS RELATIONSHIP COMMITTEE:

The Stakeholders Relationship Committee comprises of three directors majority of whomare Non-Executive Independent Directors namely Mrs. Lalita Chowdhri ChairpersonJayaraman Kannan Member and Mr. Prakash Deshmukh Member. The Stakeholders RelationshipCommittee was formed on 01st February 2018.

32. CORPORATE SOCIAL RESPONSIBILITY COMMITTEE:

The Corporate Social Responsibility Committee was constituted by our Directors pursuantto Section 135 of Companies Act 2013 of the Companies Act Read with Companies (CorporateSocial Responsibility) Rules 2014 (including any amendment thereto or re-enactmentthereof) by a board resolution dated April 26 2018. The Corporate Social ResponsibilityCommittee comprises of Mr. Abhinav Chowdhri Chairman Mr. Sanjay Chowdhri Member and Mr.Prakash Deshmukh Member.

33. ANNUAL GENERAL MEETINGS:

Details of last three AGM of Company's are as under:

Sr. AGM No. Date Place
No.
1. Twenty Eight 29th 2015 September Registered Office: Rabale Navi Mumbai
2. Twenty Ninth 30th 2016 September Registered Office: Rabale Navi Mumbai
3. Thirtieth 30th 2017 September Registered Office: Rabale Navi Mumbai

34. ACKNOWLEDGEMENT:

The Board of Directors gratefully acknowledges the assistance and co-operation receivedfrom the Bank of India and all other statutory and non-statutory agencies for theirco-operation. The Board of Directors also wish to place on record their gratitude andappreciation to the members for their trust and confidence shown in the Company. The Boardof Directors would like to especially thank all the employees of the Company for theirdedication and loyalty.

By order of the Board
For Supreme Engineering Limited
Sd/- Sd/-
Sanjay Chowdhri Abhinav Chowdhri
Managing Director Executive Director
00095990 07121484
Place: Navi Mumbai
Date: 30th August 2018