DIRECTORS' REPORT TO THE MEMBERS OF SAT INDUSTRIES LIMTED DIRECTORS' REPORT The Directors of your Company have pleasure in presenting their Thirtieth Annual Report and the Audited Accounts of the Company for the year ended 31.3.2015 The Company is engaged in the business of general trading etc. During the year the Company clocked a turnover of Rs. 893.28 lakhs as against Rs. 1430.38 lakhs in corresponding previous year registering a decrease by 37.55%. During the year the Company incurred a loss of Rs. 1376.45 lakhs as against Rs. 148.20 lakhs in the corresponding previous year registering an increase by 828.78%. 03. MATERIAL CHANGES AND COMMITMENTS : There are no material changes and commitments affecting the financial position of the company which have occurred between the end of the financial year of the Company to which the financial statement relate and the date of report. 04. DIVIDEND : In view of the loss, the Directors are unable to recommend any dividend for the year 2014-2015. 05. CHANGE IN NATURE OF BUSINESS: There is no change in nature of business. 06. LISTING OF SHARES : The Equity Shares of your Company are listed on the BSE Limited, Phiroze Jeejeebhoy Towers, Dalal Street, Mumbai-400 001 and the listing fees for the year 2015-2016, has been paid. 07. SHARE CAPITAL : During the year under report the Issued, subscribed and paid up capital of the Company increased to Rs. 92,000,000/- from Rs. 78,150,000/- with the allotment of 6,925,000 equity shares of Rs. 2/- each at a premium of Rs. 0.10 per Equity Share consequent upon issue of 6,925,000 equity shares on preferential basis to the existing shareholders of the Company. The equity shares have since been listed on BSE Limited. 08. PARTICULARS OF PERSONNEL AND RELATED DISCLOSURES : During the year under review, no employee of the Company was in receipt of remuneration in excess of the limits prescribed under rule 5(2) of the Companies (Appointment And Remuneration of Managerial Personnel) Rules, 2014. Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are attached to this report vide Annexure -"A" 09. DEPOSITS: The Company has not accepted any Deposit within the meaning of Section 73 of the Companies Act, 2013 and rules made there under as such, no amount of principal or interest was outstanding as of the Balance Sheet date, nor is there any deposit in non-compliance of Chapter V of of the Companies Act, 2013. 10. DETAILS OF DIRECTORS AND KEY MANAGERIAL PERSONNEL : (a) DIRECTORS : During the year Mr. Asad Daud was appointed as a director on the Board of Directors of the Company with effect from 19-07-2014. Mr. Nikhil Raut, Mr. Ramesh Chandra Soni and Mr. Sunil Jain were appointed as Indepenednt Directors with effect from 01-10-2014 on the Board of Dirctors of the Company in accordance with the provisions of the Companies Act, 2013 and the Listing Agreement. Mr. Virendra Maurya resigned from the Board of Directors of the company w.e.f. 12-11-2014 due to his personal reason. The Board places on record its appreciation for the services renedered by him during his office as director of the Company In terms of the Articles of Association of the Company, Mr. Asad Daud Director retires by rotation at the ensuing Annual General Meeting. Mr. Asad Daud being eligible has offered himself for re-appointment. Your Directors recommend the above re-appointment. (b) KEY MANAGERIAL PERSONNEL : During the year Mr. Nirav Patel was appointed as a Company Secretary in accordance with the provisions of the section 203(1)(ii) of the Companies Act, 2013. Mr. Nirav Patel is an associate Member of the Institute of Company Secrertary of India and has one year post qualification experience. Pursuant to section 203(1)(iii) of the Companies Act, 2013 Mr. Harikant Turgalia was appointed as Chief Financial Officer. Mr. Harikant Turgalia is a commerce graduate with the 30 years experience in finance and accounts. 11. STATEMENT ON DECLARATION GIVEN BY THE INDEPENDENT DIRECTOR U/S 149(6) OF THE COMPANIES ACT, 2013 It is stated pursuant to provisions 134(3)(d) of the Companies Act, 2013 that the declaration given by Mr Ramesh Chandra Soni, Mr. Sunil Jain and Mr. Nikhil Raut who are independent director meets the criteria of independence as mentioned in the Schedule IV of the Companies Act, 2013 and under Clause 49 of the Listing Agreement with the Stock Exchanges. 12. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS & OUTGO : Pursuant to rule 8(3) of the Companies (Accounts) Rules, 2014, it is stated that the Company has no particulars to be furnished under the head Energy Conservation and Technology Absorption because it has carried on no manufacturing activity during the year under review. The operation of the Company are not power intensive. The Company is, however, taking every possible steps to conserve the energy wherever possible. It has imported no technology. The Company is making continuous efforts to explore new foreign markets and to enlarge its market of exports. The earning in foreign exchange of UAE Branch was Rs. 8,93,28,089/- (prev.yr. Rs. 14,30,38,043/-). Outgo in foreign exchange on accrual basis was Rs. 10,84,39,085/- (prev. yr. Rs. 16,25,41,676/-). 13. DIRECTORS' RESPONSIBILITY STATEMENT : Pursuant to clause (c) of sub-section 3 of section 134 of the Companies Act, 2013 It is stated that : (a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures; (b) the directors had 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 at the end of the financial year and of the profit and loss of the company for that period; (c) the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities; (d) the directors had prepared the annual accounts on a going concern basis; and (e) the directors had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively. (f) the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively. 14. AUDITORS : The Board of Directors of the Company have on the recommendation of the Audit Committee proposed that M/s R. Kabra & Co (ICAI FRN : 104502W)., Chartered Accountants, Mumbai be re-appointed as the Statutory Auditors of the Company and to hold the office from the conclusion of this meeting till the conclusion of the next Annual General Meeting of the Company. M/s R.Kabra & Co., Chartered Accountants, Mumbai have forwarded their letter to the Company stating that their re-appointment, if made, would be within the prescribed limits under Section 141(3)(g) of the Companies Act, 2013 and that they are not disqualified for re-appointment. Your Directors request you to appoint the auditors and fix their remuneration. 15. QUALIFIACTION IN THE AUDITORS' REPORT - BOARD'S COMMENTS OR EXPLANATIONON (a) note no. 14 regarding the advance given for purchase of shares amounting to Rs. 1,84,00,000/-. Management response : No shares have yet been transferred in the name of the Company. The amount given is only a part of the total consideration which is subject to fulfillment of certain conditions by the seller. Necessary adjustments in the accounts will be made on receipt of shares and completion of other formalities if any in this regard. 16. EXTRACT OF ANNUAL RETURN : Extract of Annual Return as provided under sub-section (3) of section 92 of the Companies Act, 2013 is attached herewith (Annexure B). 17. CLAUSE 49 OF THE LISTING AGREEMENT - CORPROATE GOVERNANCE Clause 49 of the Equity Listing Agreement executed with the BSE Limited is not applicable to the Company pursuant to the circular no.: CIR/CFD/POLICY CELL/7/2014 dated Septemebr 15, 2014 issued by the Securities and Exchange Board of India and circular no. : DCS/COMP/10/2014-15 September 16, 2014, issued by the BSE Limited. 18. NUMBER OF MEETINGS OF THE BOARD : Number of meetings of the Board during the year were 11 (i.e. eleven) on 22-04-2014, 30-05-2014, 19-06-2014, 0207-2014, 19-07-2014, 21-07-2014, 19-08-2014, 12-11-2014, 09-02-2015, 11-03-2015 and 27-03-2015. 19. PARTICULARS OF LOANS GIVEN, INVESTMENT MADE AND GUARANTEES GIVEN AND SECURITIES PROVIDED COVERED UNDER SECTION 186(4) OF THE COMPANIES ACT, 2013 : Particulars of loans given, investments made, guarantees given and securities provided along with the purpose for which the loan or guarantee or security is proposed to be utilized by the recipient are provided in the standalone financial statement (Please refer to Note 9,11 and 14 to the standalone financial statement). 20. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES : The Company has not entered into any contract or arrangement with any person including persons covered under sub - section(1) of section 188 of the Companies Act, 2013. The policy on Related Party Transactions as approved by the Board of Directors has been uploaded on the Company's Website: www.satgroup.in 21. AUDIT COMMITTEE : The Audit committee of the Company was reconstituted on 12-11-2014 and comprises of the following persons : Composition Audit Committee of the Board of directors ("Audit Committee") is entrusted with the Responsibility to supervise the company's Internal Controls and Financial reporting process.The Composition ,quorum, powers ,role and scope are in accordance with section 177 of the Companies act,2013 and the Provisions of Clause 49 of the listing Agreeement. All members of the Audit Committee are financially literate and being in expertise in the fields of Finance, taxation, Economics, Risk and international Finance. Mr.Ramesh Chandra Soni, Non-Executive, Independent Director is the Chairman of the Audit Committee. The other members of the Audit Committee include Mr. Harikant Turgalia and Mr. Nikhil Raut. Meetings and Attendance The Audit committee met six time during the financial Year 2014-15. The Company is in full Compliance with the provisions of Clause 49 of the listing Agreement on gaps between any two Audit Committee meetings. The Committee met on 22-04-2015, 30-05-2014, 19-06-2014, 21-07-2014, 12-11-2014 and 09-02-2015 during the financial Year 2014-15.The Necessary quorum was present for all meetings. The Chairman of the Audit Committee was present at the last Annual General Meeting of the company. The table below provided Attendence of the Audit Committee members. Terms of Reference The Audit Committee inter alia perfoms the function of approving Annual Internal Audit plan, review of financial reporting system,Internal controls system,discussion on quarterly,half-yearly and annual financial results, interaction with statutory and internal Auditors,one-on-one meetings with statutory and internal Auditors, recommendation for the appointment of statutory and cost Auditors and their remuneration, recommendation for the appointment and remuneration of internal auditors,review of Business Management plan, review of internal audit reports significant related party transactions.The Board has framed the Audit Committee Charter for the purpose of effective compliance of provisions of section 177 of the Companies Act,2013 and Clause 49 of the Listing Agreement in fulfilling the above role,the Audit Committee has powers to investigate any activity within its terms of reference, to seek information from employees and to obtain outside legal and professional advice. Functions of Audit Committee : The Audit Committee, while reviewing the Annual Financial Statements also review the applicability of various Accounting Standards(AS) referred to in Section 133 of the Companies Act,2013. Compliance of the Accounting standards as applicable to the Company has been ensured in the prepration of the Financial Statements for the year ended March 31,2015. The Audit Committee bridges the gap between the Internal Auditors and the Statutory Auditors. The Statutory Auditors are responsible for performing independent audit of the Company's financial Statements in accordance with the generally accepted auditing practices and issuing reports based on such audits ,while the Internal Auditors are responsible for the internal risk controls. Besides the above, Whole-time Director ,Chief Financial Officer, the representatives of the Statutory Auditors and the internal Auditors are permanent invitees to the Audit Committee Meettings. The Company Secretary acts as a Secretary to the Committee as required by Clause 49(III)(A) (6) of the Listing Agreement of Stock Exchanges. The Company follows best practices in financial reporting. The Company has been reporting on quarterly basis the un-audited Standalone Financial Results as Required by the Clause 41 of the Listing Agreement entered with Stock Exchanges. The Company's quarterly un-audited Standalone Financial Results are made available on the website www. satgroup.in and are also sent to the BSE Limited where the Company's Equity Shares are listed for display at their website. The Audit Committee also oversees and review the functioning of a vigil mechanism (implemented in the Company as a Fraud Risk Management Poilcy and Whistle Blower Policy) and reviews the finding of investigation into cases of material nature and the actions taken in respect thereof. 22. DETAILS OF ESTABLISHMENT OF VIGIL MECHANISM : In line with the best Corporate Governance practices, Company has put in place a system through which the Directors and Employees may report concerns about unethetical behaviour, actual or suspected fraud or violation of the Company's Code of Conduct & Ethics without fear of reprisal. The Employees and Directors may report to the Compliance Officer and have direct access to the Chairman of the Audit Committee. The Whistle Blower Policy is placed on the website of the Company. 23. NOMINATION AND REMUNERATION COMMITTEE : The Nomination and Remuneration Committee comprises of Three Directors, Mr. Ramesh Chandra Soni Non-executive Independent Director is the Chairman of the Committee. The other members of the Nomination and Remuneration Committee include Mr.Sunil Jain and Mr. Nikhil Raut.The Composition of Nomination and Remuneration Committee are in accordance with the provisions of section 178 of the Companies act, 2013 and Clause 49 of the listing Agreeement. Meeting and Attendance The Nomination and Remuneration Committee met four time during the financial Year 2014-15. The necessary quorum was present for all Meetings. The Chairman of the Nomination and Remuneration Committee was present at the last Annual General Meeting of the company. The table Below provided Attendence of the Nomination and Remuneration Committee members Terms of Reference • The Board has framed the Nomination and Remuneration Committee Charter which ensures effective Compliance of Section 178 of the Companies Act, 2013 and Clause 49 of the Listing Agreement. The Board has clearly defined terms of reference for the Nomination and Remuneration Committee, which are as follows: • Reviewing the overall compensation policy, service agreements and other employment conditions of Managing/whole time Director(s) and Senior Management (one level below the Board); • To help in determining the appropriate size, diversify and composition of the Board. • To recommend to the Board appointment/re-appointment and removal of Directors; • To frame criteria for determining qualifications, positive attributes and independence of Directors; • Fixing the remuneration to executive Directors (the restrictions contained in the Companies Act,2013 is to be considered); • To create an evaluation framework for Independent Directors and the Board; • To provide necessary reports to the chairman after the evaluation process is completed by the Directors; • To assist in developing a succession plan for the Board; • To assist the Board in fulfilling responsibilities entrusted from time to time; • Delegation of any of its powers to any Member of the Committee of the Compliance Officer. The following policies of the Company are attached herewith a) Policy for selection of Directors and Determining Directors independence Annexure "C"; and b) Remuneration Policy for Directors, Key Managerial Personnel and other employees - Annexue -"D". 24.Stakeholder Relationship Committee Composition and Attendance This Committee comprises of Three Directors. Mr.Ramesh Chandra Soni Non -Executive Independent Director is the Chairman of this Committee. The Table below highlights the composition and attendance of the Members of the Committee. The necessary quorum was present for all Meetings. Terms of Reference The Board has clearly defined the terms of reference for this Committee,which generally meets once in a quarter. The Committee looks into the matters of Shareholder/Investors grievances along with other matter listed below: • Approval of transfer of shares/debentures and issue of duplicate /spilt/consolidation/sub-division of share/ debenture certificates. • opening /modification of operation and closing of bank accounts; • grant of special /general Power of Attorney in favour of employees of the Company from time to time in connection with the conduct of the business of the Company particularly with Government and Quasi-Government Institutions. • to fix record date/book closure of share /debenture transfer book of the Company from time to time; • to appoint representatives to attend the General Meeting of other companies in which the Company is holding shares; • to change the signatories for availment of various facility from Banks /Financial Institutions; • to grant authority to execute and sign foreign exchange contracts and derivative transactions; • to carry out any other duties that may be delegated to the Committee by the Board of Directors from time to time. The Secretarial Department of the Company and the Register and Share Transfer Agent Link Intime India Pvt. Ltd. attend to all grievances of the shareholders received directly or through SEBI, Stock Exchanges, Ministry of Corporate Affairs, Registrar of Companies ,etc. The Minutes of the Stakeholders Relationship Committee Meetings are circulated to the Board and noted by the Board of Directors at the Board Meetings. Continuous efforts are made to ensure that grievances are more expeditiously redressed to the complete satisfaction of the Investors. INDPENDENT DIRECTORS : The Non-Executive Independent Directors fulfil the conditions of Independence specified in section 149(6) of Companies Act, 2013 and Rules maded there under and meet with requirement of clause 49 of Listing Agreement entered into with the stock exchanges. A formal letter of appointment to Independent Director as provided in Companies Act, 2013 and the Listing Agreement has been issued and disclosed on the website of the Company at the link: www.satgroup.in The Company has put in place a system to familiarize the Independent Directors about the Company, its business and the on-going events relating to the Company. 25. EVALUATION OF THE PERFORMANCE OF THE BOARD MEMBERS ETC. Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of Listing Agreement, the Board has carried out an Annual Performance evaluation of its own performance, the Directors individually as well as the evaluation of the working of its various Committees. A separate exercise was carried out to evaluate the performance of individual Directors including the Chairman of the Board, who were evaluated on parameters such as level of engagement and contribution, independence of judgement, safeguarding the interest of the Company and its minority shareholders etc. The performance evaluation of the Independent Directors was carried out by the entire Board at their separate meeting. 26. SECRETARIAL AUDIT REPORT : The Board has appointed M/S S.K. Jain & Co., Company Secretaries wholetime in practice to carry out secretarial audit under the provisions of section 204 (1) of the Companies Act, 2013. The Secretarial Audit is attached to this report vide Annexure -"E" The observations made by the Secretarial Auditors are self explanatory and require no further comment of the Board of Directors. 27. SUBSIDIARY COMPANY : The Company as of March 31, 2015 had only one wholly owned subsidiary viz. Sat Middleeast Limited FZC, UAE. 28. CONSOLIDATION OF ACCOUNTS : Pursuant to section 129(3) of the Companies Act, 2013 read with Rule 6 of the Companies( Accounts) Rules, 2014 and also required under clause 32 of the Listing Agreements with the BSE Limited, audited consolidated financial statements form part of the Annual Report. 29. 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: (a) Issue of equity shares with differential rights as to dividend, voting or otherwise. (b) Issue of shares (including sweat equity shares) to employees of the Company under any scheme. (c) Name of Comapnies which have become or ceased to be its subsidiaries, joint ventures or associates companies during the year. (d) None of the Whole-time Directors of the Company receive any remuneration or commission from any of its subsidiaries. (e) 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. Your Directors further state that during the year under review, there were no cases filed pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. 30. RISK MANAGEMENT : The Company has laid down the procedures to inform to the Board about the Risk assessment and minimization procedures and the Board has Formualted Risk management policy to ensure that the Board, its Audit Committee and its Executive Management Should collectively identify the risks impacting the Company's business and document their process of risk identification, risk Minimization, risk optimization as a part of a risk management policy/strategy. The common risks inter alia are : Regulations, Credit Risk ,Foreign Exchange and Interest Risk,Competition, Business Risk, Technology Obsolescence ,Investments, Retention of Talent and Expansion of Facilities etc. Business risk, inter-alia further includes financial risk, political risk, legal risk etc. The Board reviews the risk trend, exposure and potential impact analysis and prepares risk mitigation plans, if necessary. Further, in accordance with Clause 49 of the Listing Agreement ,a Risk Management Committee has also been formed which also oversees the Risk Management of the Company. 31. INTERNAL FINANCIAL CONTROLS : The Company has in place adequate internal financial controls with reference to financial statements. During the year, such controls were tested and no reportable material weakness in the design or operation were observed. 32. ACKNOWLEDGEMENT : Your Directors would like to express their grateful appreciation for the assistance and co-operation received from the banks, Central and State Government Authorities etc. during the year under review. Your Directors wish to place on record their deep sense of appreciation for the devoted services of the executives, Staff and Workers of the Company for its success. for and on behalf of the Board of Directors H.K. Turgalia Wholetime Director DIN : 00049544 Shehnaz D. Ali Wholetime Director DIN:00185452 Dated : 29.05.2015 Place : Mumbai |