AFFLUENCE

DIRECTORS REPORT

The Members

Sandhar Technologies Limited

We are delighted to present the report on our business and operations with Audited Statement of Accounts for the year ended the 31st March, 2016.

1.     Operations - Financials

The Financials, on a Standalone basis for the current year, along with those of the previous year, are summarized hereunder:

 (Rs. in Crores)

In the year under review, which witnessed, in line generally with the global trend, an overall sluggish and subdued  sentiment albeit slowdown in the auto sector, with contemporaneous effect on the auto components segment of the economy, continued with underlying rigor.  Following it, the financials of enterprises in the sector,exceptions apart had the overall situations as such ofdiminutive effect, accentuated by none too corresponding decrease in input costs, especially materials; energy and labour, withcombination of phenomenon of a mitigated degree of inflation, governing primary and secondary costs, regression in volume and sales value, arising from the OEM’s own business situation, accentuated by persisting sensitivity of lending interest rates.

In the case of the Company, however, the Gross Revenue & Other Income from operations remained steady at Rs. 1421.43Crores vis-a-vis Rs. 1383.07Crores in the previous year, following continuing rigorous efforts at business promotion and controls aimed at cost economies, as much of refurbishment of products / components with un-mitigating thrust on penetration of market, resulting from effective managerial inputs. Turning the whole part into a meaningful reality, besides the turnover level as aforesaid, EBITDA also remained steady at the previous year’s level, alongwith other operating parameters.

While the Profit before Depreciation, Exceptional Items and Tax was marginallylower at Rs. 94.87Crores in the fiscal year under review, as against Rs. 96.10 Crores in the last fiscal year; so do the Profit before tax, after depreciation and exceptional items was lower by Rs. 9.82Crores on account of higher depreciation,following observance of the provision(s) of useful life of assets in compliance with the provisions of the Companies Act, 2013 (Schedule II).

The consolidated revenue from operations of the Company including its subsidiaries and joint ventures, for the year ended March 31st, 2016 stood at Rs. 1648.83 Crores as against Rs. 1611.46 Crores in the previous financial year ended the 31st March, 2015.

However, the crucial aspect of cash flow has been managed, observing due diligence, combined with conservation strategies, which kept the Company on its feet throughout the year. Looking ahead, the challenges are one of business growth and that too with reasonable margins: the overall outlook for real march forward in the current year still appears, despite predictably better monsoons to be a mixed one; shrinking margins, so too, the cash flow management are perceived areas of care and diligent management.All possible steps are afoot to meet ‘on the ground’ challenges with focus on Research & Development, holding over deferrable capital expenditure, cutting down on operational expenses without sacrificing effectiveness and deliverable capability and, of all, ensuring efficacious management of cash flow.  In short, corporate strategies are planned to focus on creating value on the one hand and managing risk and shaping up enterprise performance on the other, hoping, at the same time, that the turnaround for theSector is not far too distant.

Dividend

The Board of Directors have paid during the year an interim dividend of Rs. 1.50/- per share (i.e. 15%) on the Paid up Equity Shares of Rs. 10/- (Rupees Ten only) each of the Company.

The Board of Directors have recommended to the Members, final dividend at Rs. 0.50 per share (i.e.5%) on the paid up equity shares of Rs. 10/- (Rupees Ten only) each of the Company.

The total amount of Dividend thus paid and/or declared to be paid aggregates Rs.10.23 Crores, the payout ratio being 38 %.

Share Capital

i)        Increase in Authorised Share Capital

During the year under review the Company increased the Authorised Share Capital from Rs. 30,15,00,000/- (Rupees Thirty Cores Fifteen Lakhs only) divided and classified into 14,07,50,000 (Fourteen Crores Seven Lacs Fifty Thousand only) Equity shares of Rs. 2/- (Rupees Two only) each and 2,00,000 (Two Lakhs only) Preference shares of Rs. 100/- (Rupees Hundred only) each to Rs. 70,00,00,000/- (Rupees Seventy Crores only) divided and classified into 34,00,00,000 (Thirty Four Crores only) Equity Shares of Rs. 2/- (Rupees Two only) each and 2,00,000 (Two Lakhs only) Preference shares of Rs. 100/- (Rupees Hundred only) each.

ii)      Issuance of Bonus Shares

During the year under review, the Companyissued  204,618,256 (Twenty Crores Forty Six Lacs Eighteen Thousand Two Hundred and Fifty Six only) Equity Shares of face value Rs.2/- eachas Bonus Shares to the existing Equity shareholders of the Company in the ratio of 4:1, by capitalization of Rs. 89,45,164/- ( Rupees Eighty Nine Lacs Forty Five Thousand One Hundred and Sixty Four only) standing to the credit of the Capital Redemption Reserve Account and by part capitalisation of Rs. 40,02,91,348/- (Rupees Forty Crores Two Lacs Ninety One Thousand Three Hundred and Forty Eight only) out of the balance standing to the credit of Securities Premium Account of the Company as at 31st March’ 2015, thereby increasing the paid up share capital of the Company from Rs. 10.23 Crores to Rs. 51.15 Crores. No equity shares were issued with differential voting rights nor did the Company grant stock options or sweat equity shares.

iii)    Reorganisation of Share Capital

During the year under review the Company reorganized the Share Capital of the Company by increasing the face value of the Equity shares from Rs.2/- (Rupees Two only) each to Rs.10/- (Rupees Ten only) each so that every 5 Equity shares with face value of Rs.2/- (Rupees Two only) each held by a member were consolidated and redesigned into 1 (one) Equity share with face value of Rs.10/-(Rupees Ten only), thereby placing the Authorised Share Capital of the Company at Rs. 70,00,00,000/- (Rupees Seventy Crores only) divided and classified into 6,80,00,000 (Six Crores Eighty Lacs only) Equity shares of Rs. 10/- (Rupees Ten only) each and 2,00,000 (Two Lacs only) Preference Shares of Rs. 100/- (Rupees Hundred only).

Finance

Cash and Cash Equivalents as at 31st March, 2016 was Rs. 1.81 Crores. The Company has been making use of need based credit from its bankers and is sparing no effort towards optimizing self-generated resources, making sure that all commitments to the bankers / financing agencies are met regularly.

Financial resources to meet requirements as they emerge will continue to be raised in the current year through appropriate strategies and instruments at cost effective rates.  A part of resources, as in the past, would consist of the self-generated surplus ploughed back for productive purposes.

Preparations are afoot to enter the capital market through the Initial Public Offering mechanism, hopefully in the current year.

a)      Fixed Deposits

The Company has not accepted any deposits, thus far, within the meaning of Section 73 of the Companies Act, 2013and the Companies (Acceptance of Deposits) Rules, 2014.

b)      Particulars of Loans, Guarantees and Investments

Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the Notes to the Financial Statements.

Related Party Transaction

Following the provisions of Section 188(1) of the Companies Act, 2013, all Related Party contracts / arrangements / transactions entered by the Company during the financial year had been  in the ordinary course of business and an arm’s length basis, with Audit Committee having a domain role: the Board of Directors brought into picture, wherever necessary and/or obligatory.

Pertinent, in this context,is to say that, during the year, the Company has not entered into any contract / arrangement / transaction with related parties, which could be considered material in accordance with the policy of the Company on materiality of related party transactions.

The Policy on materiality of related party transactions and dealing with related party transactions, as approved by the Board, may be accessed on the Company’s website.

Material Changes and Commitments

There have been no significant or material changes in the operations, commitments and governance aspects,following the provisions of Companies Act ‘2013 and Rules made thereunder.

NOTABLE INITIATIVES DURING THE YEAR

(i) Technical Collaborations / Joint Ventures:

The Company had signed (on the 22nd February ‘2013) a Technical Collaboration Agreement with globally oriented enterprise Jing Young Electro Machines Ltd., South Korea for the manufacture and sale of power relays and relay starters, generally regarded as high potential items, the production whereof, following all preparatory work, has started in the current year (2015-16): the momentum in the manufacturing activity would be built over time.

The Company had also signed on the 27th May ‘2013 a Technical Collaboration Agreement for the manufacture / assembly of fuel sensors, gauges and instrument clusters with Lyssen Enterprises Co. Ltd., a reputed Taiwanese industrial enterprise.  The items principally meet the needs of two wheelers, tractors, vehicles off highway commercial vehicles: the programme expectedly may commence in the first half of the current year (2015-16).

The Company has, as well, entered into a Joint Venture Agreement on the 5th February, 2014 with Hang Sung IMP of South Korea for the manufacture of insert moulded parts, contacts and intricate sheet metal parts,  for various applications: the parts are for applications like sensors, connectors, switches, roof lamp, relays, wind shield wipers etc.  The manufacture and supply is in two phases – first, two wheelers for relays, motors and other electrical products and pressed parts and the second, for 4 - wheeler OEMs where such parts are required.  The operations have commenced and may take rightful momentum over a period.

Diversification in product range and continuing product development would add strength and vibrancy, on its way forward, to the Company’s operations.

(ii) In-house R & D Division:

Added to the aforesaid, is the real-time emphasis on Research and Development, wherefor a dedicated organizational wing, with requisite Government approvals in place, is in operation. The programmes for innovations, as chartered out and time lines set therefor, are closely monitoredfor their proceeding apace.

(iii) New and/or Extended Manufacturing Units:

The Haridwar unit (Uttaranchal) for online supply of components to Hero Motocorp’s plant based there, has been in full swing and made an handsome contribution to the revenue stream.

Construction work at Pathredi (Rajasthan) site has nearly been completed and a State of the ArtPaint Shop set up, following which, relative business of Honda Car Division is being shifted from Dhumaspur (Gurgaon). So also, the production has picked up to the right level at the latterly formed Bawal unit (Haryana), as an extension of Manesar Plant, for the manufacture of plastic components and accessories.

Production at Pune’s Plastic Injection Unit principally for LG Electronics Limited at Company’s owned premises in Sanaswadi (Pune) has been catching up latterly.

Also, Sandhar Automotives, Pune, which manufactures handles and mirrors is now operating from the Company’s owned premises in Chakan, Pune.

During the later part of the last year, the Company hasacquired from Arkay Fabsteel Systems Limited on a “Slump Sale Basis” the operational assets, excluding land & buildings at Ambethan Plant (Pune), manufacturing Cabins for Tractors and off highway Vehicles.  The plant, has complementarity with a part of the manufacturing milieu of Sandhar Mag Engineering outfit in Bangalore and caters to prominent customers like JCB, Leyland Deere, Mahindra Tractors, Atlas Copco and Manitowoc. 

Efforts to add product lines based on contemporary and/or futuristic technologies through technology tie-ups and/or acquisitions in India and/or abroad, remain under consideration so that the Company is placed in an unenviable position on an ongoing basis.

(iv) Overseas operations:

Effective from the 1st September ‘2012, Sandhar Technologies Poland was started in Czestochowa.  This plant being a finishing, assembling and logistic hub for parts required for manufacturing items in Europe, catalysis as a supply chain subsidiary of Sandhar Technologies Barcelona (Spain); the supervisional aspect, accordingly, vests in the latter. 

As a second tier subsidiary company to Sandhar Technologies Barcelona (Spain), another initiative taken by setting up a unit in Mexico, which commenced operations in February ‘2015,  the items of manufacture being aluminum pressure die casting components and, over time, extend the range in a format found appropriate.

Overall, the Company is seeking to power a culture of continuing enterprise building and innovation imbued with rightful level of responsibility, transparency and accountability; besides giving a strategic push to those activities in hand towards reaching a stage of rightful fruition.

Consolidated Financial Statement

In accordance with the Companies Act, 2013 ( the “Act”) and Accounting Standard (AS)- 21 on Consolidated Financial Statements read with AS-23 on Accounting for Investment in Associates and AS-27 on Financial Reporting of Interests in Joint Ventures, the audited consolidated financial statements are provided as a part of the Consolidated Financial Statement.

Subsidiariesand Joint Ventures

A report on the performance and financial position of each of the Subsidiaries and Joint Venture Companies as per the Companies Act, 2013 is provided as Annexure A to the Consolidated Financial Statement and hence not repeated here for the sake of brevity. The Company’s Joint Venture with Sandhar Caama Components (P) Ltd., ceased to be a Joint Venture Company, consequent upon divestment of stake by the Company; the Company has forsaken its relationship completely with the said entity. The Policy for determining Material Subsidiaries, as approved by the Board, is available on the website of the Company.A statement containing the salient features of the financials statements of all the Joint Ventures/ Subsidiaries in form AOC-1 is annexed hereto as Annexure-I.

Future Outlook & Prospects

The persisting somber uncertainties, in parts of Asia and Europe and also economic scene of uneven inflationary cost pressures accompanied with tough growth conditions, so too of the automobile industry and, in tandem, the auto component sector, the situation in India continues to cause unabating anxiety. Two wheeler segment with whom your Company is intimately associated since inception, despite the said background, has witnessed reasonably satisfactory increase in volume of sales and accompanying bottom-line parameters.The trend, might be expected to continue, hoping that policy and perception, so too events, might turn better during the year. Remission in inflationary pressures and softening of availability of finance at affordable cost, could further turn a shade better the pervading cost – price and market environment, the forecast of good monsoon this year might give a spurt to faster growth in general andrural growthin particular,rise in disposable incomes and demographics to a reasonably satisfactory long term outlook for the auto sector in the aggregate, with two wheeler sub-sector as much holding its own.

Export Potential

The environment for direct export both to Europe and USA on the Company’s part is still to take wholesome shape, though the Company’s subsidiary: Sandhar Technologies, Barcelona, Spain has been operating on a sustainable basis, with some job work being handled by its subsidiary in Poland: Sandhar Technologies – Poland: the other subsidiary in Mexico might as well, given some more time, take on its role in a meaningful manner.  It is hoped that against odds even, these enterprises shall remain on their feet.

Information Technology

The Company continues to take full advantage of Information Technology, leveraging it as a source of competitive advantage. As in earlier years, the enterprise wide Oracle ERP platform forms the backbone of IT and encompasses all core business processes in the Company and also provides a comprehensive data warehouse with analytics capability that helps in better and speedier decisions.

The Company continues to lay stress on IT infrastructure to support business applications and has made use of India’s expanded telecom footprint to provide high bandwidth terrestrial links to alloperating units. The Company also uses software as a service to provide agile, cost effective IT capabilities in select areas. As the IT systems and related processes get embedded into the ways of working of the organization, there is a continuous focus on IT security and reliable disaster recovery management processes to ensure all critical systems are always available. These are periodically reviewed and tested for efficacy and adequacy.

2.     Corporate Governance

Corporate governance is an ethically driven business process that is committed to values and aimed at enhancing an organisation’s brand and reputation. This is ensured by taking ethical business decisions and conducting business with firm commitment to values. At Sandhar, it is ensured that Company’s affairs are managed in a fair and transparent manner. This is vital to continue to gain and retain the trust of its stakeholders.

Directors & Key Managerial Personnel

The Company’s policy is to maintain an optimum combination of Executive and Non-executive Directors on the Board. The composition of the Board is as follows:

All the Non – executive Independent Directors are not disqualified to be appointed as such under the relevant provisions of the Companies Act, 2013 and the rules made thereunder and shall not be subject for determination by retirement of Directors by rotation.shall under the provisions of Section 149, 150, 152, 160 of the Companies Act ‘2013 be not liable, having been appointed for 5 years, to determination by retirement of Directors by rotation.

During the year Shri Jayant Davar, the Managing Director of the Company was re-appointed as Managing Director for a period of 5 (Five) years w.e.f. the 1st January’ 2016 to 31st December’2020.

Shri D. N. Davar, Shri Gaurav Dalmia, Smt. Monica Davar and Shri Arvind Joshi being not Independent Directors shall be liable to retirement by rotation under the provisions of Companies Act ‘2013 and the rules made thereunder, being eligible, are proposed to be re-appointed accordingly. Shri Arjun Sharma’s appointment shall be brought up at the Annual General Meeting scheduled on Monday, the 11th July ‘2016.

Meetings of the Board

During the year under review, seven Board Meetings (besides an adjourned one) were convened and held and the interim gap between the meetings was as per the period prescribed under the Companies Act, 2013.

Policy on Director’s appointment and remuneration

The current policy is to have an appropriate mix of executive and Independent Directors to maintain the independence of the Board, and separate its functions of governance and management. As on March 31’ 2016, the Board consists of eleven members, two of whom are Executive or Whole – time Directors, two are Non- executive Directors including one woman Director, one Nominee Director and Six are Independent Directors. The Board periodically evaluates the need for change in its composition and size.

The Policy of the Company on Director’s appointment and remuneration including criteria for determining qualifications, positive attributes, independence of Directors and other matters provided under Section 178 (3) of the Companies Act, 2013 is adopted by the Board. The remuneration paid to the Directors is as per the provisions of Companies Act, 2013 and the rules thereunder.Annexure-IIA, Policy for Selection of Directors and determining Director’s Independence and Annexure – IIB, Appointment and Remuneration Policies are annexed herein as.

Declaration by Independent Directors

The Company has received necessary declaration from each Independent Director as per the provisions of Section 149(7) of the Companies Act, 2013, that he meets the criteria of Independence as laid down in Section 149(6) of the Companies Act, 2013.

Board Evaluation

The Company has devised a Policy for performance evaluation of Independent Directors, Board, Committees and other individual Directors, which includes criteria for performance evaluation of the Non-executive Directors and Executive Directors. On the basis of the laid out Policy, a process of evaluation was followed by the Board for its own performance and that of its Committees and individual Directors including Chairman.

The Company is committed to benchmark itself with best practices and standards in all areas including Corporate Governance.  To this end, the Board has the analytical and functional support of Committee of Directors, Audit Committee, Nomination & Remuneration Committee & Corporate Social Responsibility Committee.  The system brings insight & effectiveness in to the designated areas of Corporate Governance.

Committees of the Board

Currently, the Board has FourCommittees, the Audit Committee, Nomination and Remuneration Committee, Corporate Social Responsibility Committee, Stakeholders Relationship Committee. The composition of the Committees and compliance, as per the applicable provisions of the Companies Act, 2013 and rules made thereunder.

Corporate Social Responsibility (CSR) Committee

Pursuant to the provisions of Section 135 of the Companies Act, 2013 read with the Companies (Corporate Social Responsibility Policy) Rules, 2014, the Company has a CSR Committee comprising four Directors out of which two Directors are Non- Executive Independent Director of the Company. The Committee has been duly constituted in consonance with the provisions of the Act. The Committee has met at a regular intervals.  The following are the members of the CSR Committee of the Company:

The Committee has shaped up the CSR Policy and objectives of the Company. The Committee has undertaken projects which are in line with the activities mentioned in Schedule VII of the Companies Act, 2013.

Audit Committee

Pursuant to the provisions of Section 177 of the Companies Act, 2013, read with Rule 6 of the Companies (Meeting of Board and its Powers) Rules, 2014, the Company has an Audit Committee comprising four Directors all of whom are Non-Executive.  The Chairman of the Committee is an eminent Independent Director.  The Committee regularly interacts with the Statutory Auditors, Internal Auditors and Auditees in dealing with matters falling within its terms of reference.  The Committee, amongst others, addresses itself to evaluation of internal financial controls, systems and procedures and does make a report to the Board of Directors. The composition of the Audit Committee of the Company is as follows:

Nomination and Remuneration Committee

Pursuant to the provisions of Section 178 of the Companies Act, 2013 read with Rule 6 of the Companies (Meeting of Board and its Powers) Rules, 2014, the Company has a Nomination and Remuneration Committee comprising three members all of whom are Non –Executive Independent Directors. The Chairman of the Committee is an eminent Independent Director. The Committee has met and evaluated the performance of the Board at regular intervals. The composition of the Committee is as follows:

Stakeholders Relationship Committee

Pursuant to the provisions of Section 178 of the Companies Act, 2013 read with Rule 6 of the Companies (Meeting of Board and its Powers) Rules, 2014, the Company has a Stakeholders Relationship Committee comprising of three members, the Chairman of the Committee is a Non –Executive Director. The composition of the Committee is as follows:

Business Risk Management

Pursuant to Section 134 (3) (n) of the Companies Act, 2013 the Company may constitute a Business Risk Management Committee which shall be entrusted with the responsibility to assist the Board in:

a)      formulating and implementing Risk Management Policy;

b)      Overseeing and approving the Company’s enterprise wide risk management framework; and

c)      Overseeing that all the risks that the Company faces such as strategic, financial, credit, market, liquidity, property, IT, legal, regulatory, reputational, employee and other risks have been identified and assessed and there is an adequate risk management infrastructure in place capable of addressing those risks.

At present the Company has not identified any element of risk which may perceptibly threaten the existence of the Company.

Vigil Mechanism / Whistle Blower Policy

The Vigil Mechanism of the Company, which also incorporates a Whistle Blower Policy is in place. There has been no case to report for the year. The Policy on Vigil Mechanism and Whistle Blower Policy may be accessed on the Company’s website.

Disclosure under Sexual Harassment of Women at Work place (Prevention, Prohibition & Redressal) Act, 2013

There has been no case during the year requiring to be reported during the year under review.

Directors’ Responsibility Statement

Pursuant to the provisions of Section 134(5) your Directors state that:

(i)         In the preparation of annual accounts for the year ended March 31’ 2016, the applicable accounting standards read with requirements set out under Schedule III to the Act, have been followed alongwith proper explanation relating to material departures;

(ii)        the Directors have selected such accounting policies and applied them consistently and made  judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31’ 2016 and of the Profit of the Company for the year ended on that date;

(iii)       the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities, and

(iv)       the Directors have prepared the annual accounts on a going concern basis.

(v)        the Directors have laid down Internal Financial Controls to be followed by the Company have been laid down and that such internal financial controls are adequate and operating effectively.

(vi)       the Directors have devised proper systems to ensure compliance with the provisions of all the applicable laws and that such Systems are adequate and operating effectively.

3.     Auditors

Auditors & Auditor’s Report

M/s. S. R. Batliboi & Co. LLP, Chartered Accountants, Auditors of the Company  having been appointed as such for a period of two years, shall be continued, being eligible, for the year 2016-17, subject to ratification by the shareholders at each Annual General Meeting.

The Auditors’ Reports, including the one on Internal Financial Controls, does not carry any observation or infirmity in the Company’s affairs.

Secretarial Audit

Pursuant to the provisions of the Companies Act, 2013 M/s. S. S. Gupta, a firm of Company Secretaries in Practice had been appointed to undertake the Secretarial Audit, whose Audit Report is annexed vide Annexure -III. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark.

Cost Audit

The Board has appointed M/s. A.N. Satija & Co, Cost Auditors for conducting the audit of cost records of the Company for its business for the financial year 2015-16.

Internal Control Systems and Adequacy thereof

The Company’s internal control systems as laid down are commensurate with the nature of its business, the size and the complexity of its operations. These are tested and certified by Statutory as well as Internal Auditors and cover all factories and key areas of business. Significant audit observations and follow up action thereon are reported to the Audit Committee. The Audit Committee, as aforesaid, reviews adequacy and effectiveness of the Company’s internal control environment including in-house Commercial Audit headed by a senior professional and monitors the implementation of audit recommendations, including those relating to strengthening and adequacy of the Company’s Risk Management policies and systems.

Extract of Annual Return

Extract of Annual Return of the Company is annexed herewith as Annexure- IV to this Report.

Particulars of Employees and related disclosures

A Statement containing Particulars of Employees as required under Section 197(12) read with Rule 5(1) of the Companies (Appointment & Remuneration of Managerial Personnel) Rules, 2014 is annexed in Annexure-V

General

Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions on these items during the year under review: Neither the Managing Director nor the Whole-time Director of the Company receive any remuneration or commission from any of its subsidiaries. No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and Company’s operations, in future.

Corporate Social Responsibility

The Company has already been engaged in various forms of activities comprising the segment of education, health care, sports, adoption of village etc.  It has a Committee for the purpose, headed by the Co-Chairman and Managing Director to give impetus to the Mission and areas comprising the same.

The focus has been on identifying the projects in line with the CSR policy of the Company. Therefore, the Company spent only Rs. 4,373,660 on CSR activities, the balance amount of Rs.  3,794,622shall be spent during the next Financial Year 2015-16 along with the amount to be allocated for the Financial Year 2016-17. The Annual Report on CSR activities of the Company is annexed asAnnexure VIto this report. Further, the details of the projects undertaken are as follows:

Ø   Sandhar Foundation

The Sandhar Foundation was established in 2010, as a not for profit trust to conduct social welfare activities. Over the years, the Foundation has initiated, guided and conducted several programs in the field of education, healthcare and rural development.

Sandhar Foundation has established medical dispensary in the village Begumpur-Khatola, Gurgaon for providing quality healthcare services including emergency healthcare services to the residents of the said village and the villages nearby.

Sandhar Foundation has initiated a programme “Sandhar ki Beti” wherein the school fees of 12 girl students are funded by the foundation.

Ø   SPARSH – Center for Pediatric Dialysis

The Company has contributed to a social initiative “Southend SPARSH”, under the auspices of Rotary Club of Delhi Southend, a premiere Rotary Club of Rotary International District 3010. The aim of this project is to save the lives of at least 100 children every year by providing this service of world class Pediatric Dialysis free of charge to children who would otherwise not be able to afford this treatment due to lack of finance and availability of this specialist process.

Ø   Lala Bhan Chand Memorial Satya Kiran Education & Health Society

The Company has contributed towards the corpus fund for construction of building for Para-Medical College.

Further initiatives as promote the designated socially acclaimed sector(s) are being mooted to be adopted over time.

Conservation of Energy, Technology Absorption, Foreign Exchange Inflow and Outflow

The information pertaining to conservation of Energy, Technology Absorption and Foreign Exchange Inflow and Outflow pursuant to Section 134(3) (m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014 given in Annexure VII which forms a part of this Report.

Personnel & Industrial Relations

Cordial atmosphere across functional verticals / units contributed, as before, to the overall satisfactory performance of the Company.  Your Directors place on record their deep appreciation of the inspiring and motivating leadership provided by the Co-Chairman & Managing Director,  ably supported by Whole-time Director, Chief Financial Officer & Company Secretary and the commendable team work done by the executives,  staff and workers at all levels in various units at different locations.

Acknowledgement

Your Directors are grateful for the co-operation and guidance received from HSIIDC, RIICO, State Bank of India, Citibank NA, IndusInd Bank, Yes Bank, DBS Bank, GE Money Financial Services Ltd and ICICI Bank Ltd., HDFC Bank Limited, TATA Capital Financial Services Limited The Board specially wishes to place on record their sincerest gratitude for the patronage it received from Hero MotoCorp Limited, Honda Cars India Limited, Honda Motorcycle and Scooters Limited, TVS Motor Company Limited, Eicher Motors and Tata Motors Limited.

For and on behalf of the Board of Directors

Sandhar Technologies Limited

                                                            D. N. Davar

               Chairman

DIN: 0002008

Dated the 24th May, 2016

Place: Gurgaon

ANNEXURE- IIA

Policy for Selection of Directors and determining Director’s Independence

BACKGROUND

Sandhar Technologies Ltd.{including its subsidiaries}(hereinafter referred as the ‘Company’ ) believes in the conduct of its affairs in a fair and transparent manner by adopting highest standards of professionalism, honesty, integrity and ethical in complete compliance of laws.

AUTHORITY FOR LAYING DOWN THE CRITERIA FOR PERFORMANCE EVALUATION OF BOARD & INDEPENDENT DIRECTORS

The Nomination & Remuneration Committee of the Company shall lay out the criteria for performance evaluation of the Board & Independent Directors, which shall be approved by the Board. The evaluation shall be done by the entire Board (excluding the director being evaluated).The criteria shall be reviewed by the Nomination & Remuneration Committee and the Board from time to time.

BRIEF OVERVIEW OF THE PROVISIONS OF COMPANIES ACT, 2013In the Board’s Report a statement has to be given indicating the manner in which formal annual evaluation has been made by the Board of its own performance and that of its committees and individual directors [Section 134& Companies {Accounts} Rules 2014}]. The Nomination and Remuneration Committee shall identify persons who are qualified to become directors and who may be appointed in senior management in accordance with the criteria laid down, recommend to the Board their appointment and removal and shall carry out evaluation of every director’s performance { Section 178 & Companies [Meetings of Board and its Powers] Rules 2014}} The performance evaluation of independent directors {as defined in these provisions} shall be done by the entire Board of Directors, excluding the director being evaluated. On the basis of the report of performance evaluation, it shall be determined whether to extend or continue the term of appointment of the independent director {Section 149 – Schedule IV & Companies [Appointment and Qualification of Directors] Rules 2014} Code for Independent Directors has been laid down. {Section 149 – Schedule IV}

The Company is not a listed Company. However, Company intends to list its shares in near future and therefore, considers its important to pursue best practices governing listed companies and follow the same as much as is practicable and useful.

INDIVIDUAL DIRECTOR EVALUATION & OVERALL BOARD EVALUATION PROCESS

The criteria are based for assessment of peer directors and assessment of the overall performance of the Board.

Ø  EACH DIRECTOR has to complete a evaluation sheet by giving the appropriate rating number related to each of the criteria mentioned below that most closely reflects:-

ü  performance of individual peer directors, and

ü  overall performance of the Board.

Ø  For each of the criteria, rating number ranges between 1 and 5 as follows:-

Ø  01-indicatingminimum positive.

Ø  05-indicatingmaximum positive.

Ø  00- indicating where the particular criterion is not applicable or Director does not have enough knowledge or information.

Ø  Separate sheet would be provided to each director for evaluation.

Ø  The ratings will be compiled and placed before the Board for discussions and evaluation.

Ø  The evaluation exercise is to be completed within a time frame.

RATING CRITERIA {Ratings from 1-5}

INDIVIDUAL PEER REVIEW {By all directors}

a)      Whether the Directors uphold ethical standards of honesty and virtue?

b)      Whether the Directors have appropriate qualifications to meet the objectives of the Company?

c)      Whether they have financial/accounting or business literacy/skills?

d)     Whether they have automotive industry knowledge?

e)      How actively and successfully do they refresh their knowledge and skill & are they up-to-date with the latest developments in areas such as the corporate governance framework and financial reporting and in the automotive industry and market conditions?

f)       How well prepared and well informed are they for Board/Committee meetings?

g)      Do they show willingness to spend time and effort learning about the Company and its business?

h)      Is the attendance of Directors at Board /Committee meetings satisfactory?

i)        Do they actively participate in the Board /Committee meetings?

j)        Can they present their views convincingly, yet diplomatically?

k)      Do they listen to the views of others?

l)        How cordial are their relationships with other Board/Committee members and Senior Management?

m)    What have been the quality and value of Director’s contributions at Board/Committee meetings?

n)      What has been their contribution to the development of strategy and risk management and how successfully they have brought their knowledge and experience to bear in the consideration of these areas?

o)      Where necessary, how resolute are they in holding to   their views and resisting pressure from others?

p)      How effectively have they followed up matters about which they have expressed concern?

q)      How well do they communicate with other Board/Committee members, senior management and others?

BOARD/COMMITTEEE VALUATION {By all directors}:-

i)              Whether Board / Committee have diversity of experiences, backgrounds& appropriate composition?

ii)          Whether Board / Committee monitor compliance with corporate governance, laws, regulations and guidelines?

iii)          Whether Board / Committee demonstrate integrity, credibility,   trustworthiness, an ability to handle conflict constructively, and the willingness to address issues proactively?

iv)          Whether Board / Committee dedicate appropriate time and resources needed to execute their responsibilities?

v)            Whether Agenda and related information are circulated in advance of Board / Committee meetings to allow Directors sufficient time to study and understand the information?

vi)        Whether written materials provided to Board / Committee members are relevant and concise?

vii)        Whether the Chairman encourages inputs on agenda of Board / Committee meetings from their members, management, the internal auditors, and the independent auditor?

viii)      Whether meetings of Board / Committee are conducted effectively, with sufficient time spent on significant matters?

ix)          How well does management respond to request from the Board/ Committee for clarification or additional information?

x)          Whether proper minutes are maintained of each meeting of Board / Committee?

xi)        Whether Board / Committee meetings are held with enough frequency to fulfil the Board’s /Committee’s duties?

xii)      Whether Board / Committee {as required} consider the quality and appropriateness of financial/ accounting and reporting, including the transparency of disclosures?

xiii)    Whether Board / Committee consider the statutory audit plan and provide recommendations?

xiv)    Whether Board / Committee ensure that management takes action to achieve resolution when there are repeat comments from statutory auditors?

xv)      Whether adjustments to the financial statements that resulted from the statutory audit are reviewed by the Audit Committee, regardless of whether they were recorded by management?

xvi)    Whether Board / Committee oversee the role of the statutory auditors and have an effective process to evaluate the auditor’s qualifications and performance?

xvii)  Whether Board / Committee review the audit fees paid to the statutory auditors?

xviii)Whether Board/ Committee consider internal audit reports, management’s responses, and steps toward improvement?

xix)    Whether Board/ Committee oversee the process and are notified of communications received from governmental or regulatory agencies related to alleged violations or areas of non-compliance?

xx)      Whether the contributions of the Board/ Committee to ensuring robust and effective risk management are adequate?

EVALUATION CRITERIA FOR INDEPENDENT DIRECTORS

Each Independent director shall be evaluated by all other Directors of the Board BUT not by the Independent Director themselves.

Rating Criteria for PEER REVIEW {by all Directors} as stated hereinabove shall also apply to Independent directors to the extent there is no overlapping with the Rating Criteria of Independent Directors as stated hereinafter.

Whether Independent director/s {ID}follow/professional Conduct, carry out their Roles and Functions and Duties as required in section 149 and Schedule IV of the Companies Act 2013& given herein below?

Evaluation based on professional conductWhether ID upholds ethical standards of integrity and probity? Whether ID acts objectively and constructively while exercising their duties? Whether ID exercises his/her responsibilities in a bona fide manner in the interest of the Company? Whether ID devotes sufficient time and attention to his/her professional obligations for informed and balanced decision making? Whether  ID not allow any extraneous considerations that will vitiate his/her exercise of objective independent judgment in the paramount interest of the Company as a whole, while concurring in or dissenting from the collective judgment of the Board in its decision making? Whether ID does not abuse his/her positions to the detriment of the Company or its shareholders or for the purpose of gaining direct or indirect personal advantage or advantage for any associated person? Whether ID refrains from any action that would lead to loss of his/her independence?

·         Where circumstances arise which make an independent director lose his/her independence, whether the independent director has immediately informed the Board accordingly?

·         Whether ID assists the Company in implementing the best corporate governance practices?

Evaluation based on Role and functions

·         Whether ID helps in bringing an independent judgment to bear on the Board’s deliberations especially on issues of strategy, performance, risk management, resources, key appointments and standards of conduct?

·         Whether ID brings an objective view in the evaluation of the performance of Board and management?

·         Whether ID rganizatio the performance of management in meeting agreed goals and objectives and monitor the reporting of performance?

·         Whether ID satisfies himself/herself on the integrity of financial information and that financial control and the systems of risk management are robust and defensible?

·         Whether ID has taken actions to safeguard the interests of all stakeholders, particularly the minority shareholders?

·         Whether IDs balances the conflicting interest of the stakeholders?

·         Whether ID during the Board/ Committee meetings along with other members determines appropriate levels of remuneration of executive directors, key managerial personnel and senior management and has a prime role in appointing and where necessary recommend removal of executive directors, key managerial personnel and senior management?

·         Whether ID moderates and arbitrates in the interest of the Company as a whole, in situations of conflict between management and shareholder’s interest?

Evaluation based on Duties

·         Whether ID undertakes appropriate induction and regularly update and refresh his/her skills, knowledge and familiarity with the Company?

·         Whether ID seeks appropriate clarification or amplification of information and, where necessary, take and follow appropriate professional advice and opinion of outside experts?

·         Whether IDs strive to attend all meetings of the Board of Directors and of the Committees of which he/she is a member?

·         Whether ID participates constructively and actively in the Committees of the Board in which he/she is chairperson or member?

·         Whether ID strives to attend the general meetings of the Company?

·         Where ID has concerns about the running of the Company or a proposed action, whether he/she ensures that these are addressed by the Board and, to the extent that they are not resolved, insist that their concerns are recorded in the minutes of the Board meeting?

·         Whether ID does not unfairly obstruct the functioning of an otherwise proper Board or Committee of the Board?

·         Whether ID gives sufficient attention and ensure that adequate deliberations are held before approving related party transactions and assure himself/herself that the same are in the interest of the Company?

·         Whether ID ascertains and ensures that the Company has an adequate and functional vigil mechanism and also ensures that the interests of a person who uses such mechanism are not prejudicially affected on account of such use?

·         Whether ID reports concerns about unethical rganiza, actual or suspected fraud or violation of the Company’s Code of Conduct?

·         Whether ID acts within his/her authority, assist in protecting the legitimate interests of the Company, shareholders and its employees?

·         Whether ID does not disclose confidential information, including commercial secrets, technologies, advertising and sales promotion plans, unpublished price sensitive information, unless such disclosure is expressly approved by the Board or required by law?

COMPLIANCESAll evaluation shall be done annually. Criteria and Evaluation shall be disclosed in the Annual Report of the Company.

·        On the basis of the report of performance evaluation, it shall be determined by the Nomination & Remuneration Committee & Board whether to extend or continue the term of appointment of the independent director subject to all other applicable compliances.

ANNEXURE- IIB

Remuneration Policy for Directors, Key Managerial Personnel and other Employees

BACKGROUND

Sandhar Technologies Ltd. {including its subsidiaries} (hereinafter referred as the ‘Company’ ) believes in the conduct of its affairs in a fair and transparent manner by adopting highest standards of professionalism, honesty, integrity and ethical rganiza and in complete compliance of laws.

BRIEF OVERVIEW OF PROVISIONS UNDER COMPANIES ACT, 2013

{Section 178& Companies [Meetings of Board and its Powers]Rules, 2014} provides for:Constituting the Nomination and Remuneration Committee consisting of three or more non-executive directors out of which not less thanone-half shall be independent directors. The Nomination and Remuneration Committee shall identify persons who are qualified to become directors and who may be appointed in senior management in accordance with the criteria laid down, recommend to the Board their appointment and removal and shall carry out evaluation of every director’s performance. The Nomination and Remuneration Committee shall formulate the criteria for determining qualifications, positive attributes and independence of a director and recommend to the Board a policy, relating to the remuneration for the directors, key managerial personnel and other employees. The Nomination and Remuneration Committee shall, while formulating the policy ensure that:—

ü  the level and composition of remuneration is reasonable and sufficient to attract, retain and motivate directors of the quality required to run the company successfully;

ü  relationship of remuneration to performance is clear and meets appropriate performance benchmarks; and

ü  remuneration to directors, key managerial personnel and senior management involves a balance between fixed and incentive pay reflecting short and long-term performance objectives appropriate to the working of the company and its goals.Such policy shall be disclosed in the Board’s report.

The Company is not a listed Company. However, Company intends to list its shares in near future and therefore, considers its important to pursue best practices governing listed companies and follow the same as much as is practicable and useful.

PRESENT POSITION OF DIRECTORS & KMP OF THE COMPANYThere exists a Nomination and Remuneration Committee of the Board of Directors {Board}. At present there are total12(Twelve) directorsas members of theBoard of Directors of the Company {Board} out of which there are 10 (Ten) Non-Executive Directors. Of the 10 (Ten) Non-Executive Directors 7 (Seven) are also independent and the remaining 3 (Three) are Executive Directors who are not independent. The Key Managerial Personnel {KMP} consists of Managing Director and employee Whole Time Director who also is the Chief Financial Officer and Company Secretary.  

TERMS OF REFERENCE OF NOMINATION AND REMUNERATION COMMITTEE

·         Formulate the criteria for determining qualifications, positive attributes and independence of a director and recommend to the Board a policy, relating to the remuneration for the directors, key managerial personnel and other employees.

·         Identifypersonswhoarequalifiedtobecomedirectorsandwhomare tobe appointedinsenior managementinaccordancewiththecriterialaiddownand recommendtotheBoardtheirappointment andremoval.

·         Removal should be strictly in terms of the applicable law/s and in compliance of principles of natural justice. 

·         Formulation ofcriteriafor evaluation ofIndependentDirectors andthe Board.

·         Defining policyonBoard diversity.

·         Recommend to the Board, remuneration including salary, perquisite and commission to be paid to the Company’s Managing Director, Joint Managing Directors & Whole Time Director on an annual basis as well on their re-appointment, wherever applicable.

·         Recommend to the Board, the Sitting Fee (including any change) payable to the Non-Executive Directors for attending the meetings of the Board / Committee thereof, and, any other benefits such as Commission, if any, payable to the Non- Executive Directors. 

·         Setting the overall Remuneration Policy and other terms of employment of Directors, wherever required.

·         TheCompanyshall disclose the Remuneration Policy  and the  evaluation criteria in  its Annual Report

CRITERIA FORDETERMINING THE FOLLOWING:-

Qualifications for appointment of Directors {including Independent Directors}:-

·         No specific qualification/s forDirectors

·         Persons of eminence,standing and knowledge with significant achievements in business, professions and/or public service.

·         Their financialor business literacy/skills.

·         Their automotive / allied industry experience.

·         Appropriate other qualification/experience to meet the objectives ofthe Company.

·         Applicable provisions of Companies Act 2013, its Rules and new Clause 49 of Listing Agreement.  

The above qualifications, {other than the statutory requirements which are mandatory},  are preferable and desirable with absolute discretion to the Nomination and Remuneration Committee to consider and keep in view any other criteria or norms for selection of the most suitable candidate/s.

Positiveattributes of Directors {including Independent Directors}:-

·         Directors are to demonstrate integrity, credibility, trustworthiness, ability to handle conflict constructively, and the willingness to address issues proactively.

·  They are to actively refresh their knowledge and skill with the latest developments in the automotive and allied industry, market conditions and applicable legal provisions.

i)        They are to show willingness to devote sufficient time and attention forthe Company and its businessand execute their responsibilities

ii)      They are toassist in bringing independent judgments to bear on the Board’s deliberations especially on issues of strategy, performance, risk management, resources, key appointments and standards of conduct.

iii)    They are able to develop a good working relationship with other Board members and contribute to the Board’s working relationship with the senior management of the Company.

iv)    They are to act within their authority, assist in protecting the legitimate interests of the Company, its shareholders and  employees

Conditions of Independence of Directors:-

·         In compliance of terms of the Companies Act 2013 and its Rules { Section 149 – Schedule IV- Code for Independent Directors &Companies [Appointment and Qualification of Directors] Rules 2014 } and new Clause 49 of the Listing Agreement, as amended from time to time.

Criteria for appointment in Senior Management including KMP:-

·         Their required qualifications, experience, skills& expertiseto effectively meet their areas of work, duties and responsibilities.

·         Their automotive/ allied industry experience.

·         Their ability to assume the responsibilities and duties of their posts effectually.

·         Appropriate other qualification/experience to meet the objectives of the Company.

POLICY RELATING TO REMUNERATION OF DIRECTORS, KMP & OTHER EMPLOYEES {ON APPOINTMENT/ SUBSEQUENT INCREASES

i)        The Company shall ensure that the level and composition of remuneration is reasonable and sufficient to attract, retain and motivate Directors, KMP and other employees of the quality required to run the Company successfully.

ii)      It should be ensured that no Director/KMP/ other employee are involved in deciding his or her own remuneration.

iii)    The market rates/ quantum and structures of remuneration as applicable to the comparable organisations in the similar business spheres should be given due consideration.  

iv)    It is to be ensured that relationship of remuneration to the performance is clear&meets appropriate performance benchmarks.

v)      Performance benchmarks are laid down.

vi)    Increase in remuneration should provide rewards for improved performance.

vii)  Remuneration packages should strike a balance betweenfixed and incentive pay, where applicable, reflecting short and long term performance objectives appropriate to the Company’s working and goals.

viii)                        Following criteria are also to be considered:-

Ø  Responsibilities and duties;

Ø  Time & efforts devoted;

Ø  Value addition;

Ø  Profitability of the Company & growth of its business;

Ø  Analyzing each and every position and skills for fixing the remuneration yardstick;

Ø  Standards for certain functions/Departments like Die Casting, Plastic Injection Moulding production, Manufacturing Engineering, Quality Assurance, Maintenance& Business Development, where there is a huge scarcity of qualified resources.

Ø  Ensuring tax efficient remuneration structures.

Ø  Ensuring that remuneration structure is simple and that the Cost to the Company {CTC}is not shown inflated and, in comparison, the effective take home remuneration is not low.

Ø  Any other criteria as may be applicable.

ix)    Consistent treatment of remuneration parameters across the rganization.      

x)      Provisions of law with regard making payment of remuneration, as may be applicable, are complied.

Whenever, there is any deviation from the Policy, the justification/reasons should also be indicated/disclosed adequately.

ANNEXURE –III

SECRETARIALAUDITREPORT  

FORTHEFINANCIALYEARENDED2016

[Pursuanttosection204(1)oftheCompaniesAct,2013andruleNo.9oftheCompanies

(AppointmentandRemunerationofManagerialPersonnel)Rules,2014]

To,

The Members,

Sandhar Technologies Limited,

C-101A, Ansal Plaza,

HUDCO Place, Khelgaon Marg,

New Delhi- 110049

IhaveconductedthesecretarialauditofthecomplianceofapplicablestatutoryprovisionsandtheadherencetogoodcorporatepracticesbySandhar Technologies Limited(hereinaftercalledtheCompany).SecretarialAuditwasconductedinamannerthatprovidedmeareasonablebasisforevaluating thecorporateconducts/statutorycompliancesandexpressingmyopinionthereon.

BasedonmyverificationoftheSandhar Technologies Limited’s books,papers,minutebooks,formsandreturnsfiledandotherrecordsmaintainedbytheCompanyandalsotheinformationprovidedbytheCompany,itsofficers,agentsandauthorizedrepresentativesduringtheconductofSecretarialAudit,Iherebyreportthatinmyopinion,theCompanyhas,duringtheauditperiodcoveringtheFinancialYearendedon31st March,2016compliedwiththestatutoryprovisionslistedhereunderandalsothattheCompanyhasproperBoard-processesandcompliance-mechanisminplacetotheextent,inthemannerandsubjecttothereportingmadehereinafter:

Ihave examinedthe books,papers,minute books,formsand returnsfiledand otherrecordsmaintainedbySandhar Technologies LimitedfortheFinancialYearendedthe31stMarch’2016,accordingtotheprovisionsof:

(i)                       TheCompaniesAct,2013(theAct)andtherulesmadethereunder;

(ii)                     The Securities Contracts (Regulation) Act, 1956 (‘SCRA’) and the rules made thereunder, the provisions of this act are not applicable as the company is not a Listed Company;

(iii)                   The Depositories Act, 1996 and the Regulations and Bye-laws framed thereunder are applicable to the extent that the company has voluntarily held its Equity Shares in Demat Form with National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL);

(iv)                   Foreign ExchangeManagement Act,1999and therulesand regulations made thereunder tothe extent of ForeignDirectInvestment (F.D.I) and Overseas DirectInvestment (O.D.I);

(v)                     The Provisions of Regulations and Guidelines prescribed under the Securities and Exchange Board of India Act, 1992 (‘SEBI Act’), are not applicable to the company, since the company is not a Listed Company ;

(vi)                      TheCompetitionAct,2002;

(vii)                    TheIndustries(DevelopmentandRegulation)Act,1951andrules/regulationsframedthereunder;

(viii)                   TheCentralExciseAct,1944,rulesframedthereunderandnotificationissuedbytheGovernmentofIndia fromtimetotime;

(ix)                      TheServiceTax;

(x)                       Value Added Tax Act, 2005

(xi)                      The Central Sales Tax Act, 1956

(xii)                    TheWater(PreventionandControlofPollution)Act,1974andrules/regulationsframedthereunder;

(xiii)                   Bio Medical Waste (Management and Handling) Rules, 1988;

(xiv)                    Noise Pollution (Regulation and Control) Rules, 2000;

(xv)                    Public Liability Insurance Act, 1991;

(xvi)                   The Manufacturing, Storage & Import of Hazardous Chemical Rules, 1989 (“MSIHC Rules”);

(xvii)                 TheContractLabour(Regulation&Abolition)Act,1970;

(xviii)                TheMinimumWagesAct,1948;

(xix)                   ThePaymentofGratuityAct,1972;

(xx)                    TheIndustrialEmploymentStandingOrdersAct,1946;

(xxi)                   TheEqualRemunerationAct,1976;

(xxii)                 The Maternity Benefit Act; 1961;

(xxiii)                Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013;

(xxiv)                State (Shop & Establishment) Act,

(xxv)                 Industrial Dispute Act, 1947

(xxvi)                National & Festival Holidays Act, 1963

(xxvii)              ThePaymentofBonusAct,1965;

(xxviii)             ThePaymentofWagesAct,1936;

(xxix)                TheEmployees’CompensationAct,1923;

(xxx)                 TheEmployeesStateInsuranceAct,1948;

(xxxi)                TheEmployees’ProvidentFund&MiscellaneousProvisionsAct,1952;

(xxxii)              TheEmploymentExchanges(CompulsoryNotificationofVacancies)Act,1959;

(xxxiii)             TheHazardousWaste(Management,Handling&TransboundryMovement)Rules,2008;

(xxxiv)             The State Labour WelfarefundAct;

(xxxv)              TheFactoriesAct,1948;

(xxxvi)             TheEnvironmentProtectionAct,1986andrules/regulationframedthereunder;

(xxxvii)           The Trade Union Act, 1926;

(xxxviii) The Trade Marks Act, 1999;

(xxxix)             The Patents Act, 1970

(xl)                      Thelocallandpoliciesandguidelines of StateIndustrialandInfrastructureCorporationLimited.

I also hereby Certify that:

Ihavealsoexaminedcompliancewiththeapplicableclausesofthefollowing:

(i)              Secretarial Standards issued by The Institute of Company Secretaries of India.

(ii)            The Company has not entered any Listing Agreements  with any Stock Exchange;

DuringtheperiodunderreviewtheCompanyhascompliedwiththeprovisionsoftheAct,Rules,Regulations,Guidelines,Standards,etc.mentionedabove.

Ifurtherreportthat

TheBoardofDirectorsoftheCompanyisdulyconstitutedwithproperbalanceofExecutiveDirectors,Non-ExecutiveDirectors,IndependentDirectors and Women Director.Thechanges(cessassion, re-appointmentorotherwise)inthe compositionofthe BoardofDirectors thattookplaceduring the periodunderreviewwerecarriedoutincompliancewiththeprovisionsoftheAct.

Adequate notice were given to all Directors to schedule the Board Meetings, agenda and detailed notes on agenda were sent at least seven days in advance and a system exists for seeking and obtaining further information and clarifications on the agenda items before the meeting and for meaningful participation at the meeting.

Majoritydecisioniscarriedthroughwhilethedissentingmembers’viewsarecapturedandrecordedaspartoftheminutes of the meeting.

Ifurtherreportthat

thereareadequatesystemsandprocessesinthecompanycommensuratewiththesize andoperationsofthe companytomonitor andensurecompliancewithapplicablelaws,rules,regulationsandguidelines.

Ifurtherreportthat

duringtheauditperiodthecompanyhas following specific events/ actions that having a major bearing on the company’s affairs in pursuance of the above referred laws, rules, regulations, guidelines, standards, etc.

(a)    Alteration of object clause of Memorandum of Association of the Company as per provision of Companies Act, 2013;

(b)   Adoption of New Set of Articles of Association of the Company as per provision of Companies Act, 2013;

(c)    Increase in Authorised Share Capital from Rs 30.15 Cr to Rs. 70 Cr.

(d)   Issue of fully paid Bonus Shares in the proportion of four equity shares for every one equity share held by the existing Shareholders.

(e)    Reorganisation and Consolidation of Authorised, Issued, Subscribed and Paid-up Equity Share from Rs. 2/- (Rupees Two only) each to Rs. 10/- (Rupees Ten only) each so that every 5 Equity Shares with face value of Rs. 2/- (Rupees Two only) each held by a member are Consolidated and Re-designed into 1(one) Equity Share with face value of Rs. 10/- (Rupees Ten only).

(f)    Alteration of Capital clause of Memorandum of Association of the Company as per provision of Companies Act, 2013;

(g)   Company proposed an Initial Public Offering (IPO) consisting of a fresh issue of such number of Equity Share by the company aggregating to Rs. 300 million for which the Company has filed Draft Red Herring Prospectus (DRHP) with SEBI on 29th September’ 2015 with Securities and Exchange Board of India (SEBI). The SEBI has issued an approval letter No. NRO/CFD/SKS/EK/1456/2015 dated December 21’ 2015 for the DRHP filed with SEBI. The above mentioned letter stated that the Company may open its Issue for subscription within a period of 12-Months from the date of issuance of that Letter.

For S.S. Gupta, Practicing Company Secretaries

S.S. GUPTA

[Proprietor]

Place-NewDelhi                                                                                                          FCS No. 936

Date-  21.04.2016                                                                                                       CPNo. 4907

ANNEXURE – V TO THE DIRECTORS REPORT 2015-16

Statement of particulars of employees pursuant to the provisions of Section 197 read with Sub Rule – 1 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 as amended forming part of Directors Report for the financial year ended 31.03.2016.

* inclusive of Commission payable and provided for amounting to Rs.14,001,700/-

**inclusive of Commission payable and provided for amounting to Rs.2,268,700 /-

NOTES:

1.                  Information has been furnished on the basis of employees employed throughout the year, who were in receipt of remuneration for the year which in the aggregate was not less than Rs. 60,00,000/- and those employed for part of the year, were in receipt of remuneration for any part of the year at a rate which in aggregate was not less than Rs. 5,00,000/- per month.

2.                  Remuneration includes salary, other allowances/payments and expenditure incurred on perquisites and the Company’s contribution to provident fund.

3.                  All appointments are non-contractual, except of the Co-Chairman and Managing Director, Shri Jayant Davar and the Wholetime Director Shri Arvind Joshi.

4.                  Shri Jayant Davar, Co-Chairman and Managing Director is related to Smt: Monica Davar and Shri D. N. Davar.

***********

ANNEXURE-VI

Annual Report on Corporate Social Responsibility (CSR) activities for the FY 2015-16

[Pursuant to clause (o) of sub-section (3) of section 134 of the Act and Rule 9 of the Companies (Corporate Social Responsibility) Rules, 2014]

1.      A brief outline of the Company’s CSR policy, including overview of projects or programs proposed to be undertaken and a reference to the web-link to the CSR policy and projects or programs.

The Company’s CSR policy is focused on comprehensive development of the society preferably the communities located in rural and remote areas around the manufacturing units of the Company. The company believes in giving back to the society what it has taken from the society by making contribution to the social needs such as education and health care.

Sandhar Technologies Limited is making efforts towards building economic, social and environmental capital and enhancing social sustainability by contributing in the following areas:

i)        Education;

ii)      Health Care;

iii)    Environment protection;

iv)    Promoting gender equality and empowerment of women;

v)      Promoting rural sports; and

vi)    Others

The detailed description is given in the CSR Policy of the Company.

The CSR Committee of the Company has constituted on 14th Day of March, 2013 and the composition of the Committee is as follows:

(c ) Manner in which the amount spent during the financial year is detailed below:

2.      Responsibility Statement of the CSR Committee

We hereby declares that the CSR policies of the Company are in consonance of the provision of Section 135 of the Companies Act, 2013 read with  Rule Companies (Corporate Social Responsibility Policy ) Rules, 2014 and Schedule VII of the Act along with the amendments or modifications therein. Further the implementation and monitoring is in compliance with CSR objectives and Policy of the Company.

       Shri Jayant Davar                                                                      Shri Arvind Joshi

(Chairman CSR Committee)                                                     (Whole time Director,

Chief Financial Officer &

Company Secretary)

ANNEXURE - VII TO THE DIRECTORS REPORT 2015– 16

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

[Section 143(3) (m) of The Companies Act, 2013 read with Rule 8(3) of the Companies (Account) Rules, 2014]

A.        CONSERVATION OF ENERGY

a)     Energy conservation measures taken:

i)              The Company is maintaining a high power factor by installing power capacitors bank.

ii)            The Company has installed quality machinery at various units and locations, which consume regulated energy and entails minimum energy losses.

iii)          The Company has installed static energy metering system for total load management based on predetermined operational parameters.

iv)          Electrical installations and distribution boards are positioned to have minimum line loss.

v)            CFL Lamps are being installed in shop floor space in place of High Pressure Sodium Vapour Lamps.

vi)          Time of Day (TOD Meters have been installed in some Units to get the maximum benefits from BESCOM, when the machines are used during non-peak hours.

vii)        Interlocking of Flash Butt welding machines which optimize power demand when all machines are run.

b)     Additional investment and proposals, if any being implemented for reduction of consumption of energy.

i)        Installation of Heater on Melting Furnace to convert into melting cum Holding Furnace at the Aluminum De Casting Plant, involving an outlay of Rs.7.35 Lacs.

ii)      Installation of UPS/Solar Energy for In-line Sputtering Machine, involving an outlay total outlay of Rs. 61,263,000. The details of which are as follows:

c)                  Impact of measures (a) and (b) on reduction of energy consumption and consequent impact on cost of production of goods.

i)           Saving of energy

ii)         There is uninterrupted power on lighting, computer systems and other office equipment.

iii)       There is no or minimum maintenance.

iv)       Trouble free service is available to the Units of the Company.

d)                 Total energy consumption and energy consumption per unit of production as per prescribed Form A.

Not given, as the Company is not covered under the list of specified industries.

B.        TECHNOLOGY ABSORPTION

            The Company has fully absorbed the technology for Automobile Locks as per designs and drawings procured by it from Honda Lock Mfg. Co. of Japan.  Further improvement and adaptations in the products are being continuously made to meet customers specifications and quality standards.

So also, the technology for Honda Car components manufacturing has been absorbed fully and adaptations assimilated and the products meet high quality recognized standards.

Further absorption plans for new technology, whenever procured, are set in motion side by side.

C.                 FOREIGN EXCHANGE EARNING AND OUTFLOW

The details of Foreign Exchange inflow and outflow are as under:

                                                          (Rs. in Lacs)

Inflow

-           Sales (FOB)                                        :           Rs. 18.99

-           Sales against tools & dies                   :           Rs. NIL

            Total                                                   :           Rs. 18.99

Outflow

-                      On Capital Equipment                                    :           Rs.1781.58

-                      On Know-how                                                :           Rs.   31.04

-          Others:

Raw Materials                                           :           Rs.9468.19

Consumables & Spares                             :           Rs. 207.13

Tour & Travel                                            :           Rs.28.77

      Interest on Foreign Loan                          :           Rs.23.65

Dividend                                                   :           Rs.312.70

Royalty                                                     :           Rs. 68.72

Other                                                         :           Rs. 32.24

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The Members Sandhar Technologies Limited   We are delighted to present the report on our business and operations with Audited Statement of Accounts for the year ended the 31st March, 2016.   1.     Operations - Financials   The Financials, on a Standalone basis for the current year, along with those of the previous year, are summarized hereunder:  (Rs. in Crores) Corresponding figures for the previous year have been regrouped / recast wherever necessary to correspond  to current year / year Classification   Current Year Previous Year 2015-16 2014-15 Gross Sales and other Income 1421.43 1,383.07 Net cash inflow from operating activities but before tax outflow 159.01 87.10 Normalized Profit before One off expenses/R & D expenses, Financial Expenses, Depreciation and Tax (EBITDA) 138.88 134.66 Less:One off expenses 0.64 - Less: Forex Gain/ Loss 2.65 0.26 Less: Bank Charges 0.38 0.54 Less: R & D Expenditure 3.36 2.77 EBITDA as per financial statement 131.85 131.09 Less: Financial Expenses 36.98 34.99 Profit before Exceptional Items, Depreciation & Tax 94.87 96.10 Less: Depreciation 46.57 42.74 Profit Before Exceptional Items and Tax Provisions 48.30 53.36 Less: Exceptional Items 10.25 5.50 Less: Tax Provisions 11.10 13.03 Net Profit After Tax Provisions 26.95 34.83 Less: Appropriations:   Transferred to General Reserve Interim Dividend - 7.67 3.48 - Proposed Dividend 2.56 10.23 Corporate Tax on Dividend Distribution 2.08 2.53     In the year under review, which witnessed, in line generally with the global trend, an overall sluggish and subdued  sentiment albeit slowdown in the auto sector, with contemporaneous effect on the auto components segment of the economy, continued with underlying rigor.  Following it, the financials of enterprises in the sector,exceptions apart had the overall situations as such ofdiminutive effect, accentuated by none too corresponding decrease in input costs, especially materials; energy and labour, withcombination of phenomenon of a mitigated degree of inflation, governing primary and secondary costs, regression in volume and sales value, arising from the OEM’s own business situation, accentuated by persisting sensitivity of lending interest rates.   In the case of the Company, however, the Gross Revenue & Other Income from operations remained steady at Rs. 1421.43Crores vis-a-vis Rs. 1383.07Crores in the previous year, following continuing rigorous efforts at business promotion and controls aimed at cost economies, as much of refurbishment of products / components with un-mitigating thrust on penetration of market, resulting from effective managerial inputs. Turning the whole part into a meaningful reality, besides the turnover level as aforesaid, EBITDA also remained steady at the previous year’s level, alongwith other operating parameters.   While the Profit before Depreciation, Exceptional Items and Tax was marginallylower at Rs. 94.87Crores in the fiscal year under review, as against Rs. 96.10 Crores in the last fiscal year; so do the Profit before tax, after depreciation and exceptional items was lower by Rs. 9.82Crores on account of higher depreciation,following observance of the provision(s) of useful life of assets in compliance with the provisions of the Companies Act, 2013 (Schedule II).   The consolidated revenue from operations of the Company including its subsidiaries and joint ventures, for the year ended March 31st, 2016 stood at Rs. 1648.83 Crores as against Rs. 1611.46 Crores in the previous financial year ended the 31st March, 2015.   However, the crucial aspect of cash flow has been managed, observing due diligence, combined with conservation strategies, which kept the Company on its feet throughout the year. Looking ahead, the challenges are one of business growth and that too with reasonable margins: the overall outlook for real march forward in the current year still appears, despite predictably better monsoons to be a mixed one; shrinking margins, so too, the cash flow management are perceived areas of care and diligent management.All possible steps are afoot to meet ‘on the ground’ challenges with focus on Research & Development, holding over deferrable capital expenditure, cutting down on operational expenses without sacrificing effectiveness and deliverable capability and, of all, ensuring efficacious management of cash flow.  In short, corporate strategies are planned to focus on creating value on the one hand and managing risk and shaping up enterprise performance on the other, hoping, at the same time, that the turnaround for theSector is not far too distant.

onservation of Energy, Technology Absorption, Foreign Exchange Inflow and Outflow   The information pertaining to conservation of Energy, Technology Absorption and Foreign Exchange Inflow and Outflow pursuant to Section 134(3) (m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014 given in Annexure VII which forms a part of this Report.   CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO   [Section 143(3) (m) of The Companies Act, 2013 read with Rule 8(3) of the Companies (Account) Rules, 2014]     A.        CONSERVATION OF ENERGY   a)     Energy conservation measures taken:   i)              The Company is maintaining a high power factor by installing power capacitors bank.   ii)            The Company has installed quality machinery at various units and locations, which consume regulated energy and entails minimum energy losses.   iii)          The Company has installed static energy metering system for total load management based on predetermined operational parameters.   iv)          Electrical installations and distribution boards are positioned to have minimum line loss.   v)            CFL Lamps are being installed in shop floor space in place of High Pressure Sodium Vapour Lamps.   vi)          Time of Day (TOD Meters have been installed in some Units to get the maximum benefits from BESCOM, when the machines are used during non-peak hours.   vii)        Interlocking of Flash Butt welding machines which optimize power demand when all machines are run.   b)     Additional investment and proposals, if any being implemented for reduction of consumption of energy.   i)        Installation of Heater on Melting Furnace to convert into melting cum Holding Furnace at the Aluminum De Casting Plant, involving an outlay of Rs.7.35 Lacs.   ii)      Installation of UPS/Solar Energy for In-line Sputtering Machine, involving an outlay total outlay of Rs. 61,263,000. The details of which are as follows:   S. No. Name Power Amount Status as on 31st March, 2016 1 SMN, Nalagarh 6 KW 372,000 Under Process 2 Sandhar Automach, Haridwar 250 KW 15,500,000 Under Process 3 SHP, Pathredi 400 KW 24,800,000 Under Process 4 SMM, Manesar 150 KW 9,300,000 Completed 5 SAG, Gurgaon 78 KW 4,836,000 Completed 6 SCR, Bawal 50 KW 3,107,000 Completed   c)                  Impact of measures (a) and (b) on reduction of energy consumption and consequent impact on cost of production of goods.   i)           Saving of energy ii)         There is uninterrupted power on lighting, computer systems and other office equipment. iii)       There is no or minimum maintenance. iv)       Trouble free service is available to the Units of the Company.   d)                 Total energy consumption and energy consumption per unit of production as per prescribed Form A.   Not given, as the Company is not covered under the list of specified industries.  

B.        TECHNOLOGY ABSORPTION               The Company has fully absorbed the technology for Automobile Locks as per designs and drawings procured by it from Honda Lock Mfg. Co. of Japan.  Further improvement and adaptations in the products are being continuously made to meet customers specifications and quality standards.   So also, the technology for Honda Car components manufacturing has been absorbed fully and adaptations assimilated and the products meet high quality recognized standards.   Further absorption plans for new technology, whenever procured, are set in motion side by side.

C.                 FOREIGN EXCHANGE EARNING AND OUTFLOW   The details of Foreign Exchange inflow and outflow are as under:                                                             (Rs. in Lacs) Inflow -           Sales (FOB)                                        :           Rs. 18.99 -           Sales against tools & dies                   :           Rs. NIL             Total                                                   :           Rs. 18.99 Outflow -                      On Capital Equipment                                    :           Rs.1781.58 -                      On Know-how                                                :           Rs.   31.04     -          Others:   Raw Materials                                           :           Rs.9468.19 Consumables & Spares                             :           Rs. 207.13 Tour & Travel                                            :           Rs.28.77       Interest on Foreign Loan                          :           Rs.23.65 Dividend                                                   :           Rs.312.70 Royalty                                                     :           Rs. 68.72 Other                                                         :           Rs. 32.24                                                                                       ***************

Directors’ Responsibility Statement   Pursuant to the provisions of Section 134(5) your Directors state that: (i)         In the preparation of annual accounts for the year ended March 31’ 2016, the applicable accounting standards read with requirements set out under Schedule III to the Act, have been followed alongwith proper explanation relating to material departures; (ii)        the Directors have selected such accounting policies and applied them consistently and made  judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31’ 2016 and of the Profit of the Company for the year ended on that date; (iii)       the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities, and (iv)       the Directors have prepared the annual accounts on a going concern basis. (v)        the Directors have laid down Internal Financial Controls to be followed by the Company have been laid down and that such internal financial controls are adequate and operating effectively. (vi)       the Directors have devised proper systems to ensure compliance with the provisions of all the applicable laws and that such Systems are adequate and operating effectively.

No equity shares were issued with differential voting rights nor did the Company grant stock options or sweat equity shares.