AFFLUENCE

DIRECTORS' REPORT

TO,

THE MEMBERS,

Patels Airtemp (India) Ltd.,  Ahmedabad

Your Directors have pleasure in presenting herewith the 24th Annual Report together with the Audited Statement of Accounts for the year ended on 31st March, 2016.

STATE OF COMPANY'S AFFAIRS:

The Company has earned revenue from operations (net) of Rs. 12664.72 lakhs during the year ended on 31st March, 2016 as against Rs. 11274.64 lakhs earned during the previous year ended on 31st March, 2015, giving a rise of 12.33 % as compared to previous year. Out of the revenue from operations of Rs. 12664.72 lakhs earned by the Company during the year under review, Rs. 11867.51 lakhs represents sale of products (Domestic & Export), Rs. 410.37 lakhs represents sale of Services (Processing Charges) and Rs. 386.84 lakhs represents other operating revenues. The Company has also earned other income of Rs. 45.78 lakhs during the year under review as against Rs. 42.20 lakhs earned during the previous year.

The Company has earned the Profit before Tax of Rs. 1108.73 lakhs during the year ended on 31st March, 2016 as compared to Rs. 961.96 lakhs earned during the previous year ended on 31st March, 2015, showing a rise of 15.26 %.

The Company has earned Net Profit of Rs. 714.82 lakhs for the year ended on 31st March, 2016 after making Provision for Tax Expenses of Rs. 393.91 lakhs and other adjustments, as compared to Net Profit of Rs. 620.24 lakhs earned by the Company during the previous year ended on 31st March, 2015, a rise of 15.25 %.

After adding the Surplus in the Statement of Profit & Loss of Rs. 4095.79 lakhs brought forward from the previous year to the profit of Rs. 714.82 lakhs earned by the Company during the year under review, the total amount of Rs. 4810.61 lakhs is available for appropriation.

DIVIDEND :

The Directors have recommended dividend of Rs. 2.20 per share (@ 22 %) on 50,70,240 Equity Shares of Rs. 10/- each of the Company for the Financial Year ended on 31st March, 2016, as compared to Dividend of Rs. 2.20 per share (@ 22.00%) declared for the previous Financial Year ended on 31st March, 2015. This will absorb Rs. 111.54 lakhs as against Rs..111.54 lakhs absorbed in the previous year. The corporate dividend tax payable by the Company on the said dividend will be Rs. 22.71 lakhs as against Rs. 22.71 lakhs in the previous year.

TRANSFER TO RESERVE :

After making appropriation for Dividend and Dividend Tax and other adjustments, the Company proposes to transfer Rs. 90.00 lakhs to General Reserve and amount of X 4586.36 lakhs is proposed to be retained as the Surplus in the Statement of Profit and Loss.

EXTRACT OF ANNUAL RETURN:

Extract of Annual Return of the Company as required under Section 92(3) read with Section 134(3)(a) of the Act and Rule 12 of the Companies (Management and Administration) Rules, 2014, in the prescribed Form MGT-9, is annexed herewith as Annexure - A, to this Report.

MANAGEMENT DISCUSSION AND ANALYSIS:

In terms of provisions of Regulation 34 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Management Discussion and Analysis Report has been enclosed herewith as per Annexure - B and forming part of the Directors' Report.

RECOGNITION OR AWARDS:

The Company's products has ASME "U"/ "U2"/ "S" Stamp authorization. It is expected to improve profitability of the company in the future. For updating Heat Transfer Technology, Company has become member of HTRI (Heat Transfer Research, Inc, U.S.A.).

FINANCE:

During the year under review, the Relatives of the Promoters of the Company/Promoters Group brought in unsecured loan/deposits by way of contribution to bring additional long term funds as a part of conditions imposed by Bank of Baroda on the Promoters, while sanctioning additional working capital facilities to the Company vide its letter under Ref. No. NAVRAN:2014-15 dated 3rd April, 2015 and Letter No. NGZ/ACR/SME/JMJ/10 dated 7th July, 2015, which are exempted deposits under Rule 2(1)(c)(xiii) of Companies (Acceptance of Deposits) Rules, 2014.

During the year under review, the Company has also accepted deposits from the Directors of the Company which are exempted deposits under Rule 2(1)(c)(viii) of Companies (Acceptance of Deposits) Rules, 2014, subject to compliance of the said Rules.

During the year under review, the Company has availed additional working capital facilities from Bank of Baroda, Navrangpura Branch, Ahmadabad, against the hypothecation and mortgage of movable and immovable properties of the Company. The Company has made regular repayment of Loan & interest and there is no any overdue payment to the said Bank.

In terms of the provisions of Investor Education and Protection Fund Rules, 2001 (IEPF), during the year under review, the Company has transferred the amount of unclaimed Dividend of Rs. 2,11,138/- for the year 2007-2008 (final dividend) to IEPF established by the Central Government under Section 124 of the Companies Act, 2013 and Rules made there under.

ACCEPTANCE OF DEPOSITS:

During the year under review, the Company has not accepted any deposits from the Public and Shareholders of the Company. As such, no amount of principal or interest was outstanding as of the Balance Sheet date.

SUBSIDIARY, ASSOCIATE OR JOINT VENTURE COMPANY:

The Company does not have any subsidiary, joint venture or associate companies within the meaning of Section 2(6) and 2(87) of the Companies Act, 2013. As such, a report in the prescribed Form AOC-1 as per first proviso to sub-section (3) of Section 129 of the Companies Act, 2013 and Rules made there under is not required to be attached and a Policy for determining material subsidiaries is not required to be framed by the Company.

CONSOLIDATED FINANCIAL STATEMENTS:

Since the Company does not have any subsidiary, joint venture or associate companies, Consolidated Financial Statements are not required to be prepared and attached with the financial statement of the Company pursuant to the requirements of Section 129 read with Schedule III of the Companies Act, 2013 and Rules made there under and Listing Regulations and applicable Accounting Standards.

CORPORATE GOVERNANCE:

Being a Listed Company, the Company has taken necessary measures to comply with the provisions of Listing Regulations regarding Corporate Governance and provisions of Clause 49 of erstwhile Listing Agreement with the Stock Exchange as amended from time to time. A separate report on Corporate Governance for the year ended on 31st March, 2016 is attached herewith as a part of this Annual Report viz Annexure - C. A certificate from Statutory Auditors of the Company regarding compliance of the aforesaid provisions of Corporate Governance is obtained by the Company and annexed to the Corporate Governance Report. The Auditors' Certificate for the financial year 2015­2016 does not contain any qualification, reservation or adverse remark.

DIRECTORS' RESPONSIBILITY STATEMENT:

To the best of their knowledge and belief and according to the confirmation and explanations obtained by them, your Directors make the following statement in terms of Section 134(3)(C) and 134(5) of the Companies Act, 2013 and confirm that :

(a) in the preparation of the annual accounts for the year ended 31st March, 2016, 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 the year under review;

(c) the Directors had 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;

(d) the Directors had prepared the annual accounts for the financial year ended on 31st March, 2016 on a going concern basis;

(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; and

(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.

PARTICULARS OF LOANS GIVEN, INVESTMENTS MADE, GUARANTEES GIVEN AND SECURITIES PROVIDED:

Particulars of loans given, investments made, guarantees given and securities provided by the Company under Section 186 of the Companies Act, 2013 are not provided, as during the year under review, the Company has not given any loan nor made any investment nor given any guarantee nor provided any security to any person.

RELATED PARTY TRANSACTIONS:

Information on transaction with related party referred to under sub-section (1) of Section 188 of the Companies Act, 2013 in the prescribed Form AOC-2 is attached herewith viz Annexure - D and forming  part of the Directors' Report pursuant to Section 134(3)(h) of the Act read with Rule 8(2) of the Companies (Accounts) Rules, 2014.

Transaction with related parties pursuant to the provisions of Listing Regulations and erstwhile Listing Agreement are disclosed in Note No. 28 of the Notes to the Financial Statements for the year ended on 31st March, 2016, in the Annual Report as required by the Accounting Standard (AS) 18 issued by ICAI.

However, there are no materially significant related party transactions made/entered into by the Company with its related parties including promoters, directors or the management etc. that may have potential conflict with the interests of the Company at large.

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 viz. www.patelsairtemp.com.

DIRECTORS AND KEY MANAGERIAL PERSONNEL:

During the year under review, Mr. Girish N. Desai has resigned from the office of the Director of the Company with effect from 21st December, 2015. He was an Independent Director of the Company. He was also a member of Audit Committee of the Directors of the Company. The Directors placed on record the valuable services and guidance provided by Mr. Girish N. Desai during his tenure as an Independent Director of the Company and also as a member of the Audit Committee.

During the year under review, Mr. Devidas C. Narumalani ceased to be Whole-time Director of the Company w.e.f. 14th July, 2015 and continue as Non-executive & Non-independent Director of the Company.

Pursuant to the provisions of Section 149 and 152 1of the Companies Act, 2013 and Rules made thereunder and Listing Regulations and on the recommendation of the Nomination and Remuneration Committee, the Company proposes to appoint Mr. Himanshu N. Rawal (DIN: 06631728), who was appointed as Additional Director at the Board Meeting held on 13th February, 2016, as Independent Director of the Company, not liable to retire by rotation. The Company has received requisite notice in writing from a Member proposing his candidature for appointment as a Director of the Company. The aforesaid Independent Director, if appointed, shall hold office for a term of 2 consecutive years up to the conclusion of the 26th Annual General Meeting of the Company in the calendar year 2018.

Pursuant to the provisions of Section 152 of the Companies Act, 2013 and Rules made thereunder, Mr. Narayanbhai G. Patel (DIN: 00023107), Chairman & Whole-time Director of the Company, shall retire by rotation at this Annual General Meeting and being eligible, offer himself for re-appointment, for which necessary resolution has been incorporated in the notice of the meeting. The Board of Directors recommends re-appointment of Mr. Narayanbhai G. Patel as a Director of the Company.

Pursuant to the provisions of Section 152 of the Companies Act, 2013 and Rules made thereunder, Mr. Devidas C. Narumalani (DIN: 00097592), Non-executive & Non-independent Director of the Company, shall retire by rotation at this Annual General Meeting and being eligible, offer himself for re-appointment, for which necessary resolution has been incorporated in the notice of the meeting. The Board of Directors does not recommend re-appointment of Mr. Devidas C. Narumalani as a Director of the Company.

Mr. Narendra G. Patel (DIN: 00023205) has been re-appointed as Whole-time Director of the Company for further period of 3 years w.e.f. 2nd August, 2016 with payment of remuneration. Necessary resolution has been incorporated in the Notice of the Meeting seeking Members approval for the same.

The remuneration payable to (i) Mr. Narayanbhai G. Patel, Chairman & Whole-time Director, (2) Mr. Narendra G. Patel, Whole-time Director, (iii) Mr. Prakash N. Patel, Managing Director and (iv) Mr. Sanjiv N. Patel, Managing Director of the Company, has been increased from X 1,80,000/- per month to X 2,50,000/- per month with perquisites and allowances, subject to the approval of the shareholders, for which, necessary resolutions have been incorporated in the Notice of the Meeting seeking Members approval for the same.

The brief resume/details relating to the said Directors, who are to be re-appointed/appointed are furnished in the Notes to the Notice of the Annual General Meeting.

The Company has received declarations from all the Independent Directors of the Company in terms of Section 149(7) of the Act, confirming that they meet the criteria of independence as prescribed under Section 149(6) of the Act and Regulation 25 of SEBI Listing Regulations, 2015.

During the year under review, the designation of Mr. Karansingh I. Karki (ACS: 30021) changed from Company Secretary, being KMP to "Asst. Company Secretary" of the Company w.e.f. 13th February,

2016 and Mr. Nikhil M. Patel was appointed as Sr. Company Secretary, being Key Managerial Personnel (KMP) and Compliance Officer of the Company w.e.f. 13th February, 2016, as recommended by Nomination & Remuneration Committee of the Company.

BOARD EVALUATION :

The Board of Directors has carried out an annual evaluation of its own performance and that of its Committees and Directors pursuant to the provisions of Section 134(3)(p) of the Companies Act, 2013 and SEBI (Listing Obligation & Disclosure Requirement) Regulation, 2015. The performance of the Board and committees were evaluated by the Board on the basis of the criteria such as the Board composition and structure, effectiveness of board processes, information and functioning, etc. None of the independent directors are due for re-appointment.

In a separate meeting of independent Directors, performance of non-independent directors, performance of the Board as a whole and performance of the Chairman was evaluated, taking into account the views of executive directors and non-executive directors and assessed the quality, quantity and timeliness of flow of information between the company management and the Board that is necessary for the Board to effectively and reasonably perform their duties.

COMMITTEES OF DIRECTORS :

The details of various Committees of Directors constituted by the Board of Directors under various provisions of Companies Act, 2013 and Rules made thereunder and Listing Regulations, Meetings & Attendance, terms of reference and other details are provided in the Corporate Governance Report annexed with the Directors' Report.

The composition of various Committees and their terms of references may be accessed on the Company's website viz. www.patelsairtemp.com.

POLICY ON DIRECTORS' APPOINTMENT AND REMUNERATION:

The Policy on appointment and remuneration of Directors, KMP and other employees and other matters as required under Section 178(3) of the Companies Act, 2013 is available on the web-site of the Company viz. www.patelsairtemp.com.

NUMBER OF BOARD MEETINGS :

During the financial year 2015-2016, 5 (Five) Board Meetings were held on 20/05/2015, 14/08/2015, 07/11/2015, 12/12/2015, & 13/02/2016. The gap between two Board Meetings did not exceed 120 days as prescribed in the Companies Act, 2013.

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

As required under Section 134(3)(m) of the Companies Act, 2013 and Rules made thereunder, details relating to Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo are given in the Annexure - E attached herewith and forming part of the Directors' Report.

RISK MANAGEMENT:

Business risk evaluation and management, covering the business operations of the Company, is an ongoing process within the Company and the management reviewed frequently risk assessment and to minimize them. The ultimate goal of risk management is the preservation of physical and human assets of the organization for successful continuation of its operations.

CORPORATE SOCIAL RESPONSIBILITY:

In terms of provisions of Section 135 of the Companies Act, 2013 and Rules made thereunder, a Committee of the Directors of the Company has been constituted as Corporate Social Responsibility (CSR) Committee. CSR Committee has formulated a policy on the Corporate Social Responsibility measures to be undertaken by the Company as specified in Schedule VII to the Companies Act, 2013.

The Company has duly spent the required amount during the financial year ended on 31st March, 2016 towards CSR activities. The Annual Report on CSR activities is annexed herewith marked as Annexure - F.

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.

STATUTORY AUDITORS:

Section 139(2) of the Companies Act, 2013 (effective 1st April, 2014), mandates that a listed company or such other prescribed class of companies shall not appoint or re-appoint an audit firm as Statutory Auditors for more than two terms of five consecutive years each.

Further, the companies as aforesaid, whose Statutory Auditors has held office for a period of ten years or more are required to comply with these provisions, within three years from the date of commencement of these provisions i.e. 1st April, 2014. For this purpose, the term of the audit firm before the commencement of these provisions shall be taken into account for calculating the period of ten consecutive years.

Our auditors, M/s. Parikh & Majmudar, Chartered Accountants, Ahmadabad are holding the office as Statutory Auditors for more than ten years. Hence, they can only be re-appointed for a period up to three years i.e. up to Financial Year- 2016-2017.

The Audit Committee and the Board of Directors recommend the re-appointment of M/s. Parikh & Majmudar, Chartered Accountants, Ahmadabad as Statutory Auditors of the Company for the Financial year 2016-2017 to hold office from the conclusion of this Annual General Meeting till the conclusion of the next Annual General Meeting of the Company.

The Company has received a certificate from the said Auditors under Section 139 of the Companies Act, 2013 to the effect that their appointment, if made, would be within the prescribed limits under Section 139 of the Act and they are not disqualified under the Act. The Members are requested to consider their appointment as Statutory Auditors of the Company to hold office from the conclusion of this Annual General Meeting till the conclusion of the next Annual General Meeting of the Company.

The Auditors' Report for the financial year 2015-2016 does not contain any qualification, reservation or adverse remark.

SECRETARIAL AUDITOR:

Section 204 of the Companies Act, 2013 and Rules made there under inter alia requires every listed companies to annex with its Board Report a Secretarial Audit Report given by a Company Secretary in practice in the prescribed form. The Board has appointed Mr. Punit Lath, Practicing Company Secretary, Ahmadabad to conduct Secretarial Audit for the financial year 2015-16. The Secretarial Audit Report for the financial year ended March 31, 2016 is annexed herewith marked as Annexure -G to this Report.

The Secretarial Audit Report for the financial year 2015-2016 does not contain any qualification, reservation or adverse remark.

COST AUDIT:

Pursuant to the provisions of Section 148 of the Companies Act, 2013 and the Companies (Audit and Auditors) Rules, 2014 and the Companies (Cost Records and Audit) Rules, 2014 and as recommended by Audit Committee, the Board of Directors appointed M/s. Rajendra Patel & Associates, Cost Accountant, Ahmadabad, having Membership No. 29021 as the Cost Auditor of the Company to conduct audit of cost accounting records maintained by the Company for the current financial year 2016-2017 ending on 31st March, 2017. Further, the remuneration payable to M/s. Rajendra Patel & Associates for conducting the audit of cost records for the year ended 31st March, 2016 (2015-2016) and ending 31st March, 2017 (2016-2017) is required to be ratified by the Shareholders of the Company and resolution for the said ratification is placed for approval of the members at the ensuing AGM.

INSURANCE:

All insurable interests of the Company including buildings, plant and machinery, furniture & fixtures and other insurable interest are adequately insured.

LISTING AGREEMENT WITH STOCK EXCHANGES:

Pursuant to the provisions of Listing Regulations, the Company declares that the Equity Shares of the Company are listed on the BSE Limited (BSE). The Company has entered into new Listing Agreement with BSE Ltd. in terms of provisions of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 within the prescribed time limit

PARTICULARS OF EMPLOYEES:

The 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 enclosed with this report as Annexure - H.

The Statement of particulars of employees under Section 197(12) read with Rule 5 (2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel), Rules, 2014 is not provided with as, during the financial year under review, no employee of the Company including Whole-time Directors and Managing Directors were in receipt of remuneration in excess of the limits set out in the said rules.

WHISTLE BLOWER POLICY / VIGIL MECHANISM:

The Company has a Vigil mechanism and Whistle blower policy under which the employees are free to report any act of serious misconduct or wrongful activity being occurred or suspected to occur within the organization, to his immediate HOD or the HR Head or directly to the concern Whole-time Directors or Managing Directors of the Company, as he may desire. No employee of the Company is denied access to the Audit Committee. The vigil mechanism/whisle blower policy is also available on the web­site of the Company viz. www.patelsairtemp.com.

GENERAL:

> During the year under review, there was no change in the nature of business of the Company and there is no material change and/or commitments, affecting the financial position of the Company, during the period from 31st March, 2016 till the date of this report.

> During the year under review, there was no significant and/or material order passed by any regulators or courts or tribunals impacting the going concern status and company's operations in future.

> The Company does not provide any loan or other financial arrangement to its employees or Directors or Key Managerial Personnel for purchase of its own shares and hence, the disclosure under Section 67(3)(c) of the Companies Act, 2013 does not require.

> The disclosure in terms of Rule 4 of Companies (Share Capital and Debenture) Rules, 2014 is not provided, as the Company does not have any equity shares with differential voting rights.

> The Company has zero tolerance towards sexual harassment at the workplace and has adopted a policy on prevention, prohibition and redressal of sexual harassment at workplace in line with the provisions of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules made there under.

ACKNOWLEDGEMENT:

The Directors place on record the appreciation and gratitude for the co-operation and assistance extended by various departments of the Union Government, State Government, Bankers and Financial Institutions.

The Directors also place on record their appreciation of dedicated and sincere services of the employees of the Company at all levels.

The Company will make every effort to meet the aspirations of its Shareholders and wish to sincerely thank them for their whole hearted co-operation and support at all times.

By order of the Board of Directors

NARAYANBHAI G. PATEL

Chairman & Whole-time Director

Date : 28th May, 2016

Place : Ahmadabad