We are forging our way - Bombay Stock Exchange€¦ · a closed-die forging company. We have slowly and steadily paved our way into the league of value-add and customised, heavy open-die

We are forging our way to victoryAnnual Report 2016»17

Sanghvi Forging and Engineering Ltd.W

e are forging our way to victory Annual Report 2016»17

Welcome to our2017 Annual ReportCorporate Overview02 About the Company Operations, Vision and Values

04 Financial Highlights

06 Chairman’s Message

08 We are Proud

10 We are Confident

12 We are Determined

14 Management Discussion & Analysis

Statutory Reports24 Board’s Report

46 Report on Corporate Governance

Financial Statements62 Standalone Financial Statements

92 Consolidated Financial Statements

We are forging our way to victory“I have miles to go before I sleep” - Robert Frost

We at Sanghvi look our journey through the prism of these beautiful lines.

We at Sanghvi look our journey through the prism of these beautiful lines. We have since our inception strived to become one of India’s coveted forging company. We are marching strongly with our expertise which we have built through years of hard work and passion. We have remained steadfast and held on to our mission even in the times of distress, which has honed our capabilities and strengthened our endurance. We believe that the future of forging industry is promising and bright filled with exciting opportunities and growth prospects. We are confident of fulfilling the future demand of the industry with our strong foundation, domain expertise and innovation capabilities.

We foresee ourselves as partners in the nation building process by becoming a part of the next wave of economic and industrial growth.

About the CompanySanghvi Forging & Engineering Ltd is India’s promising and fast-growing manufacturers

of forging products for industrial applications.

It has come a long way since its inception in 1989 as a small 300 MTPA close die forging company to now being one of India’s largest and coveted open-die forging company

with an installed capacity of 18600 MTPA.

The Company has over the years developed par excellence forging capabilities by developing critical components.

We are now a leading forging supplier for core sectors like Oil & Gas, Defence, and Power.

Oil & Gas Chemical, Fertiliser

SECTOR

PRODUCTS

KEY CLIENTS

Power Hydro, Wind,

Thermal, Nuclear

Defence Aerospace, Ordnance

Flanges, Valve bodies, Casing spool, BOP, Fluid ends, Nozzles, Drill Collar, Tube sheet, Shell, Reactor Internals

HP, Bharat Petroleum, ONGC, Indian Oil, Kuwait Refinery, Technimont, Samsung, GSFC, GNFC, Reliance

Rotor shaft, Coupling, Thrust block, Pelton runner, Generator shaft, Fly Wheel

Voith, Andritz, Weg, NPCIL, IGCAR, TDPS, BHEL, Toshiba

Landing gear, Nozzle, Armour plate, Gun barrel, Shaft, Drive shaft, Propeller, Rudder, Pipe Fittings, Canisters etc.

DCNS France, Mazagaon Dock Ltd., DRDO, DMRL, ISRO, TBRL, BARC, Ordnance Factories

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Our Vision

To be a pioneer and leading supplier in Forging Industry by providing one-stop solution for forged products and be the preferred product development

partner with our customers.

To be focused on high quality through quest for perfection and innovative

approach to maintain leadership position in business.

Our Values

We must constantly strive to achieve the highest possible standards in day-to-day work

and in the quality of goods we provide.

We must work cohesively with our colleagues across the company and are honest and straight

forward to all stakeholders.

We accept personal accountability to meet our business needs, improve our systems and help

others improve their effectiveness.

We believe that people work best when there is a foundation of trust.

We have a compelling desire to lead the change and win in the market place.

Financial Statements

Statutory ReportsSanghvi Forging & Engineering Ltd. Annual Report 2016-17

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Financial Highlights Standalone

Revenue (` in Mn)

460.9

542.6

555.3

692.9

873.7

EBITDA (` in Mn)

73.4

66.1

30.6

146.5

162.6

EBITDA Margins (%)

15.9

12.19

5.5

21.1

18.7

PAT (` in Mn)

FY 17

FY 17

FY 17

FY 13

FY 13

FY 13PAT Margins (%)

3.0

(14.3)

(40.56)

(14.41)

(9.1)

FY 16

FY 16

FY 16

FY 15

FY 15

FY 15

FY 14

FY 14

FY 17

FY 13

FY 16

FY 15

FY 14

FY 17

FY 13

FY 16

FY 15

FY 14

FY 14

13.7

(77.8)

(225.2)

(99.9)

(79.5)

4

EPS (`)

1.1

(6.1)

(15.1)

(7.1)

(5.9)

Exports(` in Mn)

77.2

102.5

143.2

199.3

154.1

Net Worth(` in Mn)

608.1

558.4

214.7

439.9

506.0

Cash Flow from Operations (` in Mn)

460.1

113.9

152.46

205.21

(387.8)

FY 17

FY 17

FY 13

FY 13

FY 16

FY 16

FY 15

FY 15

FY 14

FY 14

FY 17

FY 13

FY 16

FY 15

FY 14

FY 17

FY 13

FY 16

FY 15

FY 14



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Chairman’s MessageDear Shareholders,The year gone by was a melange of various propitious domestic reforms initiated by the Government along with a few tough policy decisions.

Two major events dominated India’s economic landscape namely the passing of long impending Goods and Services Tax (GST) bill and the demonetisation of high currency notes. The GST will help create common Indian market, improve tax compliance & governance and boost investment & growth. It is also a bold new experiment in the governance of India’s cooperative federalism. Demonetisation has had short-term costs but it holds the potential for long term benefits.

Global economic activity is picking up with a long awaited cyclical recovery in investment, manufacturing and trade. World growth is expected to rise from 3.1% in 2016 to 3.5% in 2017 and 3.6% in 2018 according to World Economic Outlook forecast by IMF. Stronger activity and expectations of more robust global demand, coupled with agreed restrictions on oil supply have helped commodity prices recover from their troughs in early 2016.

Opportunities and ThreatsThe pace of economic recovery continued to be stable with the Government’s renewed thrust on manufacturing sector through Make in India and Skill India initiatives. These have managed to create a positive business environment whereby many Global OEMs and Tier 1 players are planning to set up purchasing offices in India and looking at procuring high standard quality products. With business sentiments having improved in India, we expect to see improved business activity which will push the domestic demand for forging products as well as exports in the coming years.

The Indian forging industry is gearing up to expand its operational spectrum by evolving and innovating itself to move beyond conventional forging to high–end customised forging solutions like providing finished and ready to assemble parts, rather than supply of finished forgings.

One of the key challenges faced by Indian forging industry is the price disparity of raw materials as compared with Chinese and European markets. Prices of major input materials like steel scrap, coke and iron ore have dropped by more than 30% globally while Indian steel prices have not been reduced to that extent. This had made manufacturing and export of forging products to global destinations unviable for Indian companies. Overall, the industry is expected to maintain a modest growth rate this year, but we foresee positive indications in the long-term, which will put the industry back on the growth track.

Financial ReviewOur Company reported annual turnover of 5̀55.3 mn in FY 2017, which was down by 19.8% as compared to 6̀92.2 mn in FY 2016 on a standalone basis. EBITDA stood at

3̀0.6 mn in FY 2017 as compared to 1̀46.6 mn in FY 2016. The Company has reported a net loss of 2̀25.2 mn in FY 2017 as compared to a net loss of 9̀9.9 mn in FY 2016. Export income stood at 1̀43.2 mn in FY 2017 as compared to 1̀99.3 mn in FY 2016.

Due to non-availability of raw material, the Company was not able to process the orders in hand leading to a decline in revenues. Lower capacity utilisation (below 25%), higher fixed costs and interest burden were the main reasons for the net loss, resulting in acute cash deficit. This led to default in servicing various interest, installments and LC commitments. The Company faced liquidity constraints rendering its account as NPA in November 2016.

Our Company has also initiated a process of financial restructuring with its banks, which is subject to approval. This will help ease our interest costs, improve our working capital gap and help in achieving higher operational efficiencies in the coming years.

Business StrategyWe have come a long way in our journey which started as a closed-die forging company. We have slowly and steadily paved our way into the league of value-add and customised, heavy open-die forging in non-automotive segment. Our diversified product portfolio in critical sectors like oil & gas, defence and power has helped us build a kitty of marquee clients both in the domestic and international markets.

The Indian forging industry is gearing up to expand its operational spectrum by evolving and innovating itself to move beyond the conventional forging to the high–end customised forging solutions.

Our diversified product portfolio in critical sectors like oil & gas, defence and power has helped us build a kitty of marquee clients both in the domestic and international markets.

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Our singular focus has been on fostering innovation in our capabilities and competencies, which we believe is the only way to build a sustainable business. We have over the years become a preferred choice among our clients who are looking for high quality and specialised forgings from a minimum of 1 kg. to a maximum of 40 MT – a range which gives us a distinct competitive advantage over our peers. Our competitive advantage is a result of years of relentless effort and dedication by our passionate team, whose collective capabilities have helped us sail through times of uncertainty and firmed up our presence as a trusted name in the forging sector.

We are constantly striving to strengthen and grow our business keeping in mind the market scenario and client needs. Forging is a highly specialised area which requires constant innovation. We have gradually augmented our capacities and invested resources in scale, quality and technology.

Scale New capacities to the tune of 15,000 MTPA added in the open die segment, taking the total capacity to 18,600 MTPA.

Quality Our plants and manufacturing sites have received international quality approvals and certifications

Technology We have invested more than 1̀50 crores in the last five years in state-of-the-art technology with machineries from Germany and Italy.

OutlookWe are continuously working towards building a long term sustainable business to attain leadership position in the fast-growing non-auto segment. With our diversification in highly lucrative sectors like Défence and Power along with some major approvals from large customers, we foresee immense revenue potential for next three to five years. Higher capacity utilisations in our new plant along with export focus will help us boost our margins in the coming years.

I would like the end the note with this thought by Ralph h. Blum “Nothing is predestined. The obstacles of your past

World growth is expected to rise from 3.1 percent in 2016 to 3.5 percent in 2017 and 3.6 percent in 2018.

can become the gateways that lead to new beginnings”, which reflects the ethos of our philosophy and work culture.

On behalf of my colleagues on the Board of Directors, I take pleasure in applauding the untiring effort of the entire team of Sanghvi Forging for their performance in the last financial year. I would also like to express our gratitude to the regulators, bankers, our shareholders and customers for their continued support in enabling us to build one of India’s leading forging companies.

Yours truly,Mr. Babulal S. Sanghvi

We have gradually augmented our capacities and invested resources in scale, quality and technology.



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We have achieved many milestones in the highly competitive and ever changing forging market.

Slowly and steadily we have expanded our capabilities, acquired new technologies and diversified into new sectors.

We are

Proud

Strong FoundationWe obtained our first major approval in 1996 from the Technical Development Committee of India, which was followed by two small expansions in 2005 and 2006 with further augmentation of closed die forging installed capacity up to 1,200 MTPA and establishment of new open die forging plant with an installed capacity of 2,400 MTPA respectively.

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We took a big leap in year 2011 with our IPO to raise capital for our ambitious plan of foraying into the highly lucrative customised heavy forging segment.

In 2013, we commenced our new heavy forging division with the total installed capacity of 15,000 MTPA, which placed us at par with our competitors in non-auto forging segment. In our most recent development, our R&D team has developed Nickel Alloy forgings for strategic sectors application for indigenous projects.

The big leap towards heavy forging

International presence Not only have we established ourselves as a formidable player in heavy forging, but we have also strengthened our presence internationally in more than 20 countries across North America, Europe, Middle East and Asia. We generate 30% of our revenues from exports.

Our Competitive Edge

World class equipmentIn our long journey, the role of research and technology has been vital which has enabled us to optimize cost of production and increase revenue. The Company has invested more than 1̀50 crores in last five years in state-of-the-art technology imported from Germany and Italy. Our plants are certified for ISO 9001:2008, ISO 14001: 2004 and OHSAS 18001:2007. Our products are also certified by TUV, Germany for pressure equipment directive

Client approvals for productsOur strength lies in understanding the exact requirement of the customer for their critical components. We have received over 80+ product approvals from marquee clients in core sectors. These approvals are vital for long term order book visibility as the approval process ranges from 6 months to 2 years depending upon product complexity and client.

Customised forging capabilitiesOpen die forging is a highly specialised segment which requires high level of precision and customisation. Sanghvi Forging has over the period of time developed high-end and complex critical forging capabilities. Our operational excellence extends towards producing products from a minimum of 1 kg. to a maximum of 40 MT – a range which gives us a unique competitive advantage over our peers.

Countries we export to



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We are

ConfidentWe are well poised to capitalize on the fast-growing

industrial forging segment with major approvals from marquee clients across core sectors.

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The Company fundamentals are improving with favourable macro market conditions and significant success in securing customer approvals. Order book is slowly and steadily building up with our foray into new sectors like defence and power and strengthening of our position in Oil & Gas sector.

Order Book Capacity Utilisation

Order Book and Capacity Utilisation

Approvals by Sector

Market demand looking up Market conditions remained challenging till FY 2014 as both Indian and global manufacturing sector were sluggish, which created an unfavourable environment for forging companies. Additionally, weak oil prices caused a slowdown in oil & gas sector which formed a significant chunk of our order book. Since then, there has been a revival in demand in our core sectors due to government initiatives like Make in India and uptick in commodity prices. Furthermore, there has been a conscious effort to diversify across several sectors by gaining product approvals.

Plant utilisation all set to rise The utilisation levels at open die forging plant has been low at around 20% leading to a dip in profit margins. This has been due to weak order inflow in some years coupled with longer lead times in securing client approvals. Due to specialised nature of our products, it requires rigorous plant audits and approvals by customers in order to receive orders. The approval and audit process of our new plant is now complete by most of our current and prospective clients, and we have received over 80 product approvals of which 35 for heavy forging since 2014.

Financial restructuring provides operational flexibility The slow rate of order intake in the past and consequent low utilisation levels have led to financial difficulties for the Company. Higher than expected projects costs due to currency depreciation and low profitability caused inability to make timely interest payments. Furthermore, temporary mismatch of high debtor days and low creditors days created a working capital problem thereby leading to delayed execution of our orders

We are working out a financial restructuring plan in association with our bankers who have reaffirmed and placed their faith in our organisation and its operations. This financial restructuring once approved by our banks ,will provide interest moratorium during transition period and help solve our working capital problem, thereby significantly enhancing our capacity to take large orders.

250

450

350

300

FY 17FY 16FY 15FY 14

%

Defence 21 Oil & Gas 16 EPC 16 Power 16 Chemicals & fertilisers 10 Shipbuilding 5 Others 17



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We are

DeterminedWe have always followed the path of

perseverance and determination which has helped us to manage the highs and lows in

our business.

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Increased R&D focus which will lead to higher product innovation

Our singular focus is on strengthening the core of our business through

New market development in both domestic as well as export markets

Playing a niche in open-die heavy forging segment by developing value added forged products and supplying critical components for Oil & Gas, Defence and Power sectors.Sanghvi Forging has strategically positioned itself as a supplier of highly specialised forging products in the steadily growing industrial forging segment. The Company has over the years developed capabilities in the heavy forging (4 MT to 40MT) specialised segment, which is a high margin and requires track record and expertise for securing product approvals. In this segment, import substitution in strategic sectors is an untapped opportunity given 10%-12% import duty and long-lead times of 6 to 8 months.

Increasing scale by capitalizing on growing end-markets and Make in India initiativeIndian Government’s renewed thrust on manufacturing sector with initiatives like ‘Make in India’ and ‘Skill India’ has definitely created positive economic sentiments amongst the Indian as well as global business communities. This will be a major fillip to the non-automotive forging markets like Defence, Oil & Gas, Railways, Power Ship-building, etc. With the automotive sector maturing, it is expected that non-automotive sectors will mostly contribute to the growth of the global forging market in the coming years.

Sanghvi Forging has been a preferred supplier of critical components with its clients in Power, Oil & Gas and Defence sector.Make in India initiative will position India as a global manufacturing hub by encouraging multiple new initiatives, promoting foreign direct investment and implementing intellectual property rights.

Improving long term fundamentals by building a healthy order book and increasing capacity utilisationWith 35 major approvals in and outside India, the Company is in a comfortable position of winning large orders particularly in the power and defence segments. All approvals are evenly spread across key end markets. The order book currently stands at 4̀0 crore. The healthy growth in order book will lead to higher plant capacity utilisation over the coming years. The Company is building a well-balanced portfolio with project-based and repeat, short-lead time orders spread across sectors to gradually improve its utilisation to 60%-70% over the next few years.

With its world class equipment and state of art technology coupled with an improving global scenario, Sanghvi Forging is poised to attain a strong position in the global forging market.

Sanghvi Forging has identified three key business strategies for achieving its long-term goals.



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ManagementDiscussion & Analysis

Global Economic ReviewGlobal economic growth remained sluggish in 2016, owing to some major factors like feeble pace of global investment, dwindling world trade growth, flagging productivity growth and high levels of debt. Structural adjustments in many countries, efforts to reduce overcapacity, recurring natural disasters, geopolitical events—such as Brexit, a coup d’état in Turkey and the ongoing civil war in Syria, also had an impact on the macro sentiments across the globe.

A moderate recovery is expected for 2017 and 2018 with receding obstacles to activity in commodities market. There has been a stronger than expected pickup in growth in advanced economies, mostly due to a reduced drag from inventories coupled with recovery in manufacturing output. Among advanced economies, activity rebounded strongly in the United States after a weak first half of 2016 and the economy is approaching full employment. Output remains below potential in many other advanced economies, particularly in the Euro area.

Advanced economies are now projected to grow by 1.9% in 2017 and 2.0% in 2018. EMDE (emerging market and developing economies) growth is currently estimated at 4.1% in 2016, and is projected to reach 4.5% for 2017. A further pickup in growth to 4.8% is projected for 2018 up.

The growth rate in China was a bit stronger than expected, aided by continued policy stimulus. But activity was weaker than expected in some Latin American countries currently in recession, such as Argentina and Brazil. Russia fared better than expected, in part

14

reflecting firmer oil prices. In the Middle East, growth in Saudi Arabia is expected to be weaker than previously forecast for 2017 as oil production is cut back in line with the recent OPEC agreement, while civil strife continues to take a heavy toll on many other countries.

World gross product is forecast to expand by 3.4% in 2017 and 3.6% in 2018.This modest recovery is more an indication of economic stabilisation rather than a signal of a robust and sustained revival of global demand.

Global Growth Projections (%)2016 (E) 2017(P) 2018(P)

World Output 3.1 3.4 3.6Advanced Economies 1.6 1.9 2.0Emerging Market and Developing Economies

4.1 4.5 4.8

Source: International Monetary Fund (IMF)

India Economic ReviewIndia has firmly established itself as one of the most dynamic and fastest emerging economy among the largest countries and is expected to retain the status backed by robust private consumption and significant domestic reforms gradually being implemented by the government. As per the Economic Survey 2016-17, the Indian economy is expected to grow between 6.75% and 7.5% in FY 2017-18. The uptick in India’s economic fundamentals has accelerated in the year 2015 with the combined impact of strong government reforms and Reserve Bank of India’s inflation focused policies which was further supported by benign global commodity prices.

India’s consumer confidence index stood at 136 in the fourth quarter of 2016, topping the global list of countries on the same parameter on strong consumer sentiment, according to Nielsen, a leading market research agency.

India’s economic landscape witnessed two landmark initiatives in fiscal 2017, first; passing of long impending Goods and Services Tax (GST) bill, second and the most unexpected; demonetisation of high currency notes.

The GST will create a common Indian market, improve tax compliance and governance, and boost investment and growth. It is also a bold new experiment in the governance of India’s cooperative federalism. Demonetisation has had short-term costs but it holds the potential for long term benefits

Numerous foreign companies are setting up their facilities in India under the umbrella of various government initiatives like Make in India and Digital India to boost the manufacturing sector of Indian economy. The Government of India, under the Make in India initiative, is trying to

give boost to the contribution made by the manufacturing sector and aims to take it up to 25 per cent of the GDP from the current 17 per cent. GDP from manufacturing in India reached an all-time high of 5̀,010 billion in the second quarter of 2016–17. This happened due to an enormous push by the government to open the economy. The foreign direct investment limit has been increased in 15 sectors and a push to increase ease of doing business, along with a rapidly growing consumer base, has boosted investor confidence. Since forging sector is closely allied to the manufacturing sector, with the increase in the manufacturing activity, the demand for forging is also expected to improve and strengthen over the coming years.

India continues to be a bright spot in the world economy. The manufacturing industry in India has shown resilience and is confident about its growth prospects amidst challenges such as unavailability of adequate raw material, pressure for increased wages and muted demand. Companies are looking to increase their competitiveness by focusing on innovation—by launching new product and service offerings, boosting R&D spend and investing in newer technologies

Industry OverviewGlobal Forging IndustryAccording to a research report by Technavio on global forging industry, the market will exhibit a healthy CAGR of around 8% and expected to reach at USD 111.1 billion by 2020. But with the automotive industry reaching a mature stage in the forging market, it is expected that other non-automotive sectors will mostly contribute to the growth of the global forging market until 2020. The introduction of hybrid forging techniques will drive the growth prospects for the global forging market in the forthcoming years. Hybrid forgings is basically using the advantages of open die forging combined with the near-net shape capability of closed die forging, wherein the forging process can be tailored to optimize time and cost savings. Also, with the growing use of computer-aided designing (CAD) and innovations, the costs as well as the time is optimised, which further increases the demand for hybrid forging techniques in the market.

In terms of geography, APAC (Asia Pacific) accounts for the maximum market share in 2016 and will continue to

Since forging sector is closely allied to the manufacturing sector, with the increase in the manufacturing activity, the demand for forging is also expected to improve and strengthen over the coming years.



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dominate the market for the next few years. One of the major factors responsible for the market’s growth in the region is the increasing outsourcing of forging activities to developing countries, which results in the low cost of labour and raw materials.

The global forging market is fragmented and dominated by large international players. The small vendors find it difficult to compete against international vendors in terms of quality, features, functionalities and services. The global forging industry is oscillating between low cost manufacturing and differentiated solution manufacturing.

Indian Forging IndustryThe Indian forging industry is one of the key contributors to the manufacturing sector of the Indian economy. It is of strategic importance in the growth of the Indian automobile industry as well as other industries such as general engineering, construction equipment, oil & gas and power. With an installed capacity of 37.7 lacs MT, Indian forging industry has a capability to forge variety of raw materials like Carbon steel, Alloy steel, Stainless steel, Super Alloy, Titanium, Aluminium, etc. Automotive industry is the main user segment which commands the share of 60% of total production while the remaining 40% is the diversified non-auto segment.

The Government’s impetus on manufacturing sector with initiatives like ‘Make in India’ and ‘Skill India’ has generated strong long-term positive economic sentiments amongst the business community. Many global OEMs and Tier-I players are setting up purchasing offices in India

Projected CAGR of 9.5% from FY 2014-18

vs Global CAGR of 8%

Make in India campaign will provide

fillip to forging demand

Average labor cost differential of 25% vs

western producers

World-class technical capabilities

Management Discussion & Analysis (contd)

Indian Forging AdvantagesGlobal Forging Scenario

China has low cost manufacturing with huge spare capacities and capability to do reverse engineering. Japan competes on total quality and productivity. On the other hand, Germany and the USA are changing the part configuration all together so that manufacturing of those components will require a specific technology which may not be affordable by low cost countries. Indian forging industry is tactically positioned with lost cost and high technical capabilities

and looking at procuring high standard quality products, which will open many avenues to the Forging Industry. Indian forging industry was initially labour intensive but is rapidly adapting itself to the changes in requirement of the end user industries. It has invested in capital intensive manufacturing technologies, consequent to which quality standards in the industry have improved significantly and the sector is now well known globally for its high quality.

Today the industry is a source of employment to large number of people at around one lac in the country. It has made rapid strides and currently meets almost all the domestic demand and emerged as a large exporter of forgings. The Indian forging industry is projected to grow at CAGR of 9.5% by 2018, vs the global CAGR of 8% and expected to reach at 2.97 mn MT in FY 2017-18 from 2.25 mn MT during FY 2014-15. according to Association of Indian Forging Industry (AIFI). The overall capacity utilisation of industry is also improved and stood at around 65% in FY 2015-16.

China & Eastern Europe not preferred suppliers due to lack of high quality products

Indian Forging Advantages

China (low cost, reverse

engineering)

Germany & US (customised solutions)

Japan (total quality &

productivity)

Source: Spark Capital AIFI

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Steadily Growing End Markets Indian Government’s renewed thrust on manufacturing sector with initiatives like ‘Make in India’ and ‘Skill India’ has definitely created positive economic sentiments amongst the Indian as well as global business community, which will be a major fillip to the non-automotive forging markets like Defence, Oil & Gas, Railways, Power Ship-building, etc. With the automotive industry reaching a mature stage in the forging market, it is expected that other non-automotive sectors will mostly contribute to the growth of the global forging market in the coming years. Sanghvi Forging has been a preferred supplier of critical components with its clients in Power, Oil & Gas and Defence sector.

Industry by Capacity Production (MMT)

Improved Capacity Utilisation (%)Industry by Customer Segments

%

Small & very small 87 (5,000 - 12,500 MT)

Large 13 (30,000 - 75,000 MT)

%

Auto 59 Non-auto 41

2.11

64.9

2.15

55.9

2.64

64.9

2.45

61.0

2.30

57

FY 17

FY 17

FY 13

FY 13

FY 16

FY 16

FY 15

FY 15

FY 14

FY 14

Source: AIFI



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Defence• Contractual offset obligations

worth approximately $4.5 billion • 60% of defence related equipment

are met by imports which offer a huge opportunity for import substitution

• Defence allocation in the Union budget is approx $35 billion , 1/3rd of which would be spent on capital acquisitions.

Oil & Gas• 60% of the prognosticated

reserves of 28,000 MMT are yet to be harnessed

• Investment opportunities are in upstream , gas pipeline , City Gas Distribution Network, LNG Terminal , Petrochemical and Refinery

• Completion of national gas grid by construction of another 15,000 km of gas pipeline network.

• Euro IV to Euro VI conversion

Power• Indian Govt. has a target of

adding 175 GW of renewable energy by 2022

• Small Hydro has installed capacity of 8.062 GW with potential of 22.5 GW

• Govt. of India has taken initiatives to set up Ultra Mega Power Projects of 4000 MW capacity

• 10 new nuclear reactors have been sanctioned


PowerIndian power sector is undergoing a significant change that has redefined the industry outlook over the long term. Sustained economic growth continues to drive electricity demand in India. The Government of India’s focus on attaining ‘Power for all’ has accelerated capacity addition in the country. The Ministry of Power has set an ambitious target of 1,229.4 billion units (BU) of electricity to be generated in the financial year 2017-18, which is 50 BU’s higher than the target for 2016-17.

Around 293 global and domestic companies will generate 266 GW of solar, wind, hydel and biomass-based power in India over the next 10 years. Share of renewable in India’s electricity demand to rise from 4% currently to 13% by 2022. India is expected to double its nuclear power generation capacity to more than 10,000 MW over the next five years. Nuclear Power Plant and Advanced Ultra Super Critical Power Projects will require Large number of critical forgings.

Coal/Lignite Based Installed Capacity (GW)

Wind Based Installed Capacity (GW)

Nuclear and Small Hydro Installed Capacity

FY 22E

8

5.5

FY 14

5

3.8

FY 15

6

4.1

FY 16

6

4.3

FY 17E

7

4.5

FY 18E

7

4.7

FY 19E

8

4.9

FY 20E

8

5.1

FY 21E

8

5.3

Source: (BNP Paribas)

Nuclear based installed capacity (GW) Small hydro based installed capacity (GW)

Government of India’s focus on attaining ‘Power for all’ has accelerated capacity addition in the country.

74.4

21.1FY 14FY 14

FY 15FY 15

FY 16FY 16

FY 17EFY 17E

FY 18EFY 18E

FY 19EFY 19E

FY 20EFY 20E

FY 21EFY 21E

FY 22EFY 22E

23.4

26.4

34.4

42.4

50.4

68.4

66.4

271

145

165

180

195

213

231

249

260

18

DefenceIndia has been rapidly augmenting its spending on defence year on year. India stands as the third largest defence spender in the world after US and China. Equipment spending by Ministry of Defence has increased 15-20% over the last five years and is projected grow at a much higher pace in the future. With importing nearly USD 5.5 billion worth of military hardware, India has emerged as the largest arms importer in the globe accounting nearly 15% of such imports internationally. This has created an urgent need to achieve self-reliance to sustain the needs of Indian defence sector for strategic and economic reasons.

The government has been assiduously working upon building the defence manufacturing capabilities over the years. “Make in India” has triggered the positive sentiments for making India to stand at par with its global counterparts with respect to its in house defence manufacturing competencies. The licensing for most of the components and raw materials used in defence production has been scrapped which means such components or raw materials required in castings, forgings, production machinery, testing equipment have been taken out of the purview of industrial licensing. The Indian private sector has also been allowed to receive maintenance transfer of technology in ‘Buy (Global)’ cases. Overseas defence companies are required to discharge offsets of at least a minimum of 30% of the total value of the defence

54

60

69

80

78

89

95

86

86

87

95

113

125

134

152

163

India Defence Budget(Thousand INR Crores)

FY 17

FY 10

FY 11

FY 12

FY 13

FY 14

FY 15

FY 16

Capital Revenue

With higher participation of domestic players in the defence space, the share of imports is projected to drip down by 20-25% in next four to five 4-5 years.

contract. These obligations can be fulfilled either through transfer of technology, direct purchase of components and systems from the defence industry, or by creating specific manufacturing facilities and investing in skill development and training.

At present, about 50% of the defence manufacturing in India is dominated by the international players (via imports). With higher participation of domestic players in the defence space, the share of imports is projected to drip down by 20-25% in next four to five 4-5 years.



19

Corporate O

verview

Oil & GasThe Oil & Gas sector is among the six core industries in India. The Government of India has adopted several policies to fulfil the increasing demand for oil and gas. It has allowed 100 per cent Foreign Direct Investment in many segments of the sector, including natural gas, petroleum products, and refineries, among others. The Government of India plans to merge state oil companies to create an integrated oil major that could compete globally, and utilise the synergy between various state entities for achieving efficiency and cost competitiveness to create more value for all shareholders. It also plans to unveil a new policy for renewing and extending the lease of 28 oil and gas blocks in the country, with a view to attract more investments into these fields.

The country’s gas production is expected to touch 90 Billion Cubic Metres (BCM) in 2040 from 23.09 BCM in FY 2016-17 (till December 2016). Gas pipeline infrastructure in the country stood at 15,808 km in December 2015 and another 15,000 km at expected to be added. 22% of the country’s sedimentary basins have been explored, series of large deep water blocks untouched. Government has awarded 247 total blocks over the last 13 years, only 16 of the blocks have been developed. New projects are also expected in Middle East region. State-owned Oil and Natural Gas Corporation’s upstream Investments in India’s Oil & Gas sector will likely touch 2̀.5-3 trillion

ChallengesOne of the key challenges faced by the Indian forging industry is price disparity of raw materials as compared with Chinese and European markets. Prices of major input materials like steel scrap, coke and iron ore have dropped by more than 30% globally over a year. Internationally, prices for plain carbon steel used for the forging industry has come down to new lows after which, steel mills across the globe have adjusted their selling prices. It is not only China that is offering competitive prices but also South Korea, Japan followed by others. While on the other hand, the Indian steel prices have not been reduced to that extent which is making the manufacturing of forging and export to global destinations unviable for companies.

The other major challenge is inadequate supply of power and increasing power price. Since forging is power intensive, the availability of good quality power consistently at competitive tariff is paramount for competitive operations and global competitiveness of the sector and for supporting manufacturing.


Source: BNP Paribas * Includes figures for Reliance Jio, Estimates for major Indian upstream companies

OutlookThe future of the Indian forging industry looks promising and optimistic, driven primarily by the lucrative export prospects and backed by a unique mix of cost arbitrage offered by India’s lower labour costs and its technical capabilities. Forging is becoming increasingly uneconomical and unviable in the West because of imposition of prohibitive labour and environmental compliances which has led to sharp rise in costs, characterised by slowing capacity additions. India has a significant cost edge whereby average labour costs in India are ~25% of the labour costs in the West and countries like Korea, enabling Indian companies to gain a strong cost arbitrage and also excellent engineering skills.

There lies a significant opportunity for domestic forging companies, who have taken far sighted decision of bringing on-stream additional capacities, through significant investment in capex over give years through FY 2016; the commissioning of which is expected to coincide with the revival in demand in key domestic and overseas markets. While execution will remain a crucial success factor, higher capacity presses would improve product mix, value add potential and new customer acquisitions.

Oil and Gas Capex estimates(‘000 INR Crores)

191,706

136,528

121,925

120,862

FY 16

FY 19

FY 18

FY 17

The Government of India has adopted several policies to fulfil the increasing demand for oil and gas by creating opportunities for investments

(US$ 37.5-45 billion) over the next few years, which will help raise the share of gas in the country’s primary energy mix to 15 per cent by 2030, as per British multinational oil and gas company BP Group.

20

Operational OverviewUnutilised plant capacities and low order book are two major stumbling blocks in achieving our true potential and the Company is unabatedly working towards on improving the capacity utilisations at its new plant through timely and successful execution of orders. It is also trying to augment and diversify order book across different sectors, which will further improve and optimise the plant operations. The upsurge in the manufacturing activity will accentuate forging activities and therefore the Company is focusing on strengthening the core of its business through innovation, market development and operational excellence.

Discussion on Financial Performance with respect to Operational PerformanceThe Company has achieved net revenue income of 5̀55.3 mn, which is a reduction in sales revenue of 19.8% as compared to last year. Due to non-availability of raw material, the Company was not able to process the orders in hand

Net loss was 2̀25.2.mn in FY 2017. Lower capacity utilisation (below 25%), higher fixed costs and interest burden were the main reasons for the loss. Low capacity utilisations at the new plant adversely impacted operations and the resulting lower sales led to acute cash deficit. This resulted in default in servicing various interest, installments and LC commitments. The Company faced liquidity constraints rendering its account as NPA in November 2016.

Sanghvi Forging is quite confident of a turnaround in the long run, and has submitted a restructuring proposal to banks in January 2017. The Company is also pro-actively managing its cash flow to the optimum level.

Sanghvi Forging is taking various steps to reduce cost of production. Few major steps taken are as follows. a) Reduction in total contract demand for electricity from 3000 KVA to 2000 KVA b) New GAS contract with Gail with lower prices. c) Optimisation of production process to improve the yields.

The Company’s old plant is working efficiently with higher capacity utilisations while the new unit is running at low capacity utilisation. The facilities created therein are world class and with steadily improving market conditions, higher demand along with above mentioned initiatives taken by the Company will improve productivity of the new unit. This will contribute to significant improvement in its EBITDA margins in coming period.

Financial Performance (Standalone)` Mn 2016-17 2015-16Revenue 555.3 692.86EBITDA 30.59 146.48PAT -225.2 -99.87EPS -15.12 -7.1

Revenue Break-up (Operational)2016-17 2015-16

Domestic 412.1 493.6Exports 143.2 199.3



21

Corporate O

verview

Human Resource CapitalHuman Capital is the most crucial asset of any company. A organisation cannot sustain without wholehearted participation of its people. The Company has continued to invest in developing its teams to enhance their efficiency and with strong focus on developing skills and capabilities of its employees. Employee motivation is one of the Company’s key HR focus areas, where regular workshops and training sessions are conducted for the overall holistic development of its employees.

The Company’s headcount stood at 238 as on March 31, 2017 and the average age of employees was 30 indicating a young and dynamic pool capable of adapting itself in the ever-changing environment. The Company is focused on creating a competitive but cordial working environment for the development of a talented and loyal workforce

Risk and MitigationThe Company’s risk management policies are dynamic and proactive and are designed in such a manner that the Company can respond swiftly to the risks and implement necessary mitigation activities. A prudent risk management framework has been developed, which helps us identify and analyse internal and external risks and minimize its impact on operations and financials. The Board of Director has formulated Risk Management policy, which puts in place Risk Management structures with a clear definition of roles and responsibilities, as well as risk portfolio involving a continuous process of Risk identification, risk assessment, control assessment and risk monitoring, review and communication. The following are key risks in business

Industry and Market RiskForging activities are ancillary to manufacturing industry and any downturn in the manufacturing activity directly affects the demand in the forging industry. Any downturn in the industry thus affects our order book position and leads to unutilised plant capacities and shutdownsMitigation Strategy: The Company is trying to diversify our product portfolio across different sectors in the manufacturing sector to derisk. Product approvals are presently well diversified across various sectors.

Raw Material Price Volatility RiskIt is the risk associated with regards to the volatility in the price of raw material costs steel, energy and freight, which has direct impact on its production costs and profitability.Mitigation Strategy: The Company books the raw material only after it receives the order from customer with the forward delivery to minimise risk to profit margin.

Technological RiskForging is a complex process which relies heavily on technology heavy industry. Forging of critical components in key sectors requires massive investment in new technologies, which is sourced from international markets at significant costs. Use of obsolete technologies can lead to compromise in the quality of products and loss of productivityMitigation Strategy: The Company gas invested more than

1̀50 crores in last five years in setting up and modernising its technology and its new open-die plant is state of the art.

Internal Control Systems and their Adequacy“The Company has, since inception, laid down a system of internal control which is commensurate with the size and nature of the business. Adequate and effective checks are in place to ensure that financial data is accurate and reliable. The internal control systems also ensures that the assets and interest of the Company are well protected. The internal audit is carried out throughout the year based on a systematic procedure covering all functions and aspects of the business. The internal audit reports are reviewed by the senior management and are placed before the audit committee of the Board of Directors along with actions taken. The audit committee undertakes a detailed review of the audit observations and actions to ensure that the internal audit system is effectively functioning. The recommended actions by audit are monitored and improvements are implemented which are regularly reviewed by the senior management. The IT system of the Company is based on a robust ERP system SAP ECC 6.00 which was implemented in 2008 for ensuring seamless connectivity of plants, sales offices and head office for better control facilitating faster and more reliable processing of transactions as well as generating accurate reports for faster decision-making. The Company also has a strong control system and management reporting system which serve as the backbone of the monitoring system of operations to ensure that business results are achieved and continuous improvement projects are undertaken”.


22

Statutory ReportsBoard’s Report 24Annexure-A to Board’s Report 30Annexure-B to Board’s Report 33Annexure-C to Board’s Report 42Annexure-D to Board’s Report 44

Corporate Governance Report 46

45

Board’s Report

To, The members of Sanghvi Forging & Engineering Limited

Your Directors take pleasure in presenting the 29th Annual Report of the Company along with the Audited financial statements for the year ended March 31, 2017, for your perusal, consideration and adoption.

Financial HighlightsThe financial performance for the fiscal year 2017 is summarized in the following table:

(` in lacs)Particulars Standalone

2016-17 2015-16Income from Operations 5376.59 6686.23Other Operating Income 165.01 149.07Other Income 11.44 93.30Total Income 5553.04 6928.60Operating & Administrative Expenses

5247.12 5463.79

Operating Profit before Interest, Depreciation and Tax

305.92 1464.81

Interest and Financial Charges

1660.94. 1616.44

Depreciation and Amortization

897.02 842.02

Profit Before Tax (2252.04) (993.65)Tax Expenses NIL 5.05Short Provisions for Taxes NIL -Profit After Tax (2252.04) (998.70)

24

Financial and Operational PerformanceYour Company has achieved a turnover of `5541.59 lacs and incurred a net loss of `2252.04 lacs for the financial year ended March 31, 2017 as against a turnover `6835.30 lacs and net loss of `998.70 lacs respectively during the previous year. Depreciation and amortization charge was increased from 842.02 lacs to 897.02 lacs during the financial year 2016-17.Interest charges were increased from `1616.44 lacs to `1660.94 lacs during the financial year 2016-17.

Employee benefit expenses have increase from `638.66 lacs making an increase of 0.03%. It signifies that the Company has been constantly making efforts to boost up its human resources and invested in bringing experienced professionals in the organization .

OutlookThe Company has taken a number of steps to sustain its leadership position in the market and has been strengthening its relationships with its customers. In addition it is also making constant efforts to add new customers and widen its customer base.The combination of additional capacity of our new plant i.e. 15000 MTPA and integration has had a positive impact on the Company’s operating margins. Your Company believes to strengthen its topline and margins in the coming years. We have received majority approvals from different customers that validate our product quality.

The Company continued its focus on strengthening local manufacturing capabilities. However, it also analyzed the trends in the steel industry and adapted to rapid development occurring in the world of steel. The Company has adopted strategic measures to minimize the adverse macro-economic implications.

Share CapitalNo new Share Capital has been issued by the Company in the Fiscal Year 2016 -17.

Credit RatingYour company has managed to affirm the CARE D rating for its long-term and short-term-bank facilities. There was no further revision in the ratings signifies that company is somehow managing things even if delay and cost overruns in the new project. The Company expects to improve its ratings in the coming year through capacity utilization with substantial marketing efforts.

Investors’ Relations and GrievancesAll the shareholders’/investors’ complaints/grievances received during the financial year have been resolved and there were no investor grievances pending, as on March 31, 2017. A confirmation to this effect has been obtained

from the Company’s Registrar and Share Transfer Agent and authentication of the same can be verified from the SCORES website at http://scores.gov.in. The details regarding investor complaints received and resolved during the year are mentioned in the report on Corporate Governance annexed to this report.

Management Discussion and Analysis ReportA detailed review of operations, performance and future outlook of the Company is covered under a separate Annexure to this report as Management’s Discussion & Analysis.

DirectorsIn accordance with the provisions of Section 152 of the Companies Act, 2013, Shri Babulal Sagarmal Sanghvi, Director of the Company will retire by rotation at the ensuing Annual General Meeting and is eligible for re-appointment. Necessary resolution is being proposed for his appointment as Director at the ensuing Annual General Meeting of the Company. A brief resume and particulars relating to him are given separately under the report on Corporate Governance.

Key Managerial Personnel Shri Jayantilal B Sanghvi, Managing Director, Shri Vikram B. Sanghvi, Whole Time Director & CFO and *Mr. Keval Thakkar, Company Secretary are Key Managerial Personnel of the Company.

Meeting of the BoardDuring the year from April 2016 to March 2017, 4 Board Meetings were convened and held. The details of the Board Meeting with regards to the Dates and attendance of each Director thereat have been provided in the Corporate Governance Report. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013.

Amount Transferred to ReservesThe Board of Directors has not recommended transfer of any amount of profit to reserve.

* Mr. Keval Thakkar resigned from the same w.e.f. from May 29, 2017.


Sanghvi Forging & Engineering Ltd. Annual Report 2016-17C

orporate Overview

25

Statutory Reports

45

Board’s Report (contd)

Declaration Given by Independent Directors The Independent Directors of the Company have given the declarations to the Company that they meet the criteria of independence as provided in Section 149(6) of the Companies Act, 2013.

Board EvaluationPursuant to the provisions of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, 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 Audit, Nomination & Remuneration and Compliance Committees.

Evaluation Criteria: a. For Independent Directors :- • Professionalconduct • Duties,Role,integrityandfunctions • KnowledgeandSkills

b. For Executive Directors :- • ProfessionalConductandIntegrity • SharingofInformationwiththeBoard • KeyPerformanceinachievementofGoalsThe Directors expressed their satisfaction with the evaluation process.

Composition of Audit Committee Pursuant to the provision of Section 177 (8) of the Companies Act, 2013, Audit Committee consists of All Independent Directors as mentioned in below table. The Committee inter alia reviews the Internal Control System, Reports of Internal Auditors and Compliance of various regulations. The Committee also reviews at length the financial statements before they are placed before the Board.

Composition of the Committee is as below:

Name Designation CategoryShri Ram S Kaushal

Chairman Non-Executive and Independent

Shri Baba Pai Member Non-Executive and Independent

Shri Vikram B Sanghvi

Member Executive and Non-Independent

Shri Shantaram Yarlagadda

Member Non-Executive and Independent

Vigil Mechanism / Whistle BlowerIn staying true to our values of Strength, Performance and Passion and in line with our vision of being one of the most respected companies in India, the Company is committed to the high standards of Corporate Governance and stakeholder responsibility.

Pursuant to the provisions of Section 177(9) & (10) of the Companies Act, 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a Vigil Mechanism or ‘Whistle Blower Policy’ for directors, employees and other stakeholders to report genuine concerns has been established. The same is also uploaded on the website of the Company i.e. http://www.sanghviforge.com/pdf/whisler_blower_policy.pdf

Internal Financial ControlThe Company’s internal control procedure which includes internal financial controls, ensure compliance with various policies, practices and statutes and keeping in view the organization’s pace of growth and increasing complexity of operations. The internal auditors team carries out extensive audits throughout the year across all locations and across all functional areas and submits its reports to the Audit Committee of the Board of Directors.

Corporate Social ResponsibilityThe Company, having regard to its size and scope, is generally compliant with relevant guidelines on Corporate Social Responsibility (CSR), even though not presently applicable to the Company. The Board has also constituted a committee at their Board Meeting held on May 26, 2014 in accordance with Section 135 of the Companies Act 2013 to mentor and monitor CSR activities.

The call of fulfilling our CSR activities has sincerely been taken by us and we accord as much significance to CSR as any business project and the results are there for everyone to see. Dedicated need-based interventions have been initiated in areas where we operate. Enabling local people by fostering self-reliance is the motive behind our community development efforts.

Therefore, our interventions are structured around promoting education as well as informal education of Tribal Children, generating livelihood, empowering women and overall, social mobility.

Your Company is also constantly making efforts to maintain a greener planet and reduce its carbon footprint as much as possible. Through financial contributions and active participation of employees, your Company provides support to non-profit organisation that addresses community sustainability. Your Company contributed through donations, rain water harvesting sponsorship and by participating in various activities.

26

Policy on Nomination and RemunerationThe contents of Nomination and Remuneration Policy of the Company prepared in accordance with the provisions of Section178 of the Companies Act, 2013 and Regulation 19 of the SEBI(Listing Obligations and Disclosure Requirements) Regulations, 2015 are provided in the Corporate Governance Report.

Related Party TransactionsAll related party transactions that were entered into during the financial year were on an arm’s length basis and were in the ordinary course of business. There are no materially significant related party transactions made by the Company with Promoters, Directors, Key Managerial Personnel or other designated persons which may have a potential conflict with the interest of the Company at large.

All Related Party Transactions are placed before the Audit Committee as also the Board for approval. Prior omnibus approval of the Audit Committee is obtained during the year for the transactions which are of a foreseen and repetitive nature. The transactions entered into pursuant to the omnibus approval so granted are audited and a statement giving details of all related party transactions is placed before the Audit Committee and the Board of Directors for their approval. The Company has developed a Related Party Transactions policy for purpose of identification and monitoring of such transactions.

The policy on Related Party Transactions as approved by the Board is uploaded on the Company’s website i.e. http://www.sanghviforge.com/pdf/related_party_transaction.pdf

Report on Corporate GovernanceA separate Section on Corporate Governance is forming part of the Annual Report and the Certificate from M/s Samdani Shah& Kabra, Company Secretaries, Vadodara, the Company’s Secretarial Auditors confirming the compliance of conditions on Corporate Governance as stipulated under Schedule V of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is attached to the report on corporate governance.

Fixed DepositsYour Directors report that the Company has not accepted any deposits during the current financial year.

InsuranceYour Directors confirm that all the properties and insurable interests of the Company, including buildings, plant and machinery and stocks have been adequately insured.

Loan, Guarantee or InvestmentDetails 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.

Listing of Shares The Equity Shares of the Company are listed on the BSE Limited (BSE)with scrip code No. 533411 and on the National Stock Exchange of India Limited (NSE) with scrip code of SANGHVIFOR. The Company confirms that the annual listing fees to both the stock exchanges for the financial year 2016-17 have been paid.

Subsidiary CompanyCompany has its Wholly Owned Subsidiary Company in Netherlands in the name of “Sanghvi Europe BV”.

Statement containing salient features of the financial statement of subsidiaries/associate companies / joint ventures is attached in Form AOC-I in Separate Section of this Annual Report.

Familiarisation Programme for Independent DirectorsThe details of programmes for familiarization of Independent Directors and training with the Company, their roles, rights, responsibilities in the Company, nature of the industry in which the Company operates, business model of the Company and related matters are put up on the website of the Company i.e. http://www.sanghviforge.com/pdf/familiarisation_program.pdf

AuditorsStatutory AuditorM/s Shah & Bhandari, Chartered Accountants, the existing Statutory Auditors of the Company were reappointed at the 27th Annual General Meeting (AGM) held on September 26, 2014 to hold office till the conclusion of forthcoming 29th AGM. Accordingly, they will retire at this AGM. In accordance with the provision of Section 139 and other applicable provisions, if any, of the Companies Act, 2013 and the relevant Rules framed thereunder, the Board of Directors have proposed to appoint M/s. V.K. Shastri & Co., Chartered Accountants, as Statutory Auditors of the Company for a term of five consecutive years at the ensuing 29th AGM till the conclusion of 34th AGM subject to ratification at every annual general meeting, in place of retiring Auditors M/s. Shah & Bhandari., Chartered Accountants.



orporate Overview

27

Statutory Reports

Secretarial AuditorPursuant to the provisions of Section 204 of the Companies Act, 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/s Samdani Shah &Kabra, Practicing Company Secretary, Vadodara,to undertake the Secretarial Audit of the Company for the FY 2017-18. The Report of the Secretarial Audit Report is annexed herewith as “Annexure A” for the year ended on March 31, 2017. There is no qualification in the Secretarial Report submitted by M/s. Samdani Shah & Kabra to the Company.

Internal AuditorThe Board of Directors has appointed M/s Parikh Mehta & Associates, Chartered Accountants as Internal Auditors of the Company for the FY 2017-18 Pursuant to the provisions of Section 138 of the Companies Act, 2013 and The Companies (Accounts) Rules, 2014.There is no qualification, reservation, adverse remark or disclaimer by the Statutory Auditors in their report or by the Secretarial Auditor in their Secretarial Audit Report and hence no explanation or comments of the Board is required in this matter.

Directors’ Responsibility StatementTo the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statements in terms of Section 134(3)(c) of the Companies Act, 2013:

(a) that in the preparation of the annual financial statement for the year ended March 31, 2017, the applicable accounting standards had been followed along with proper explanation relating to material departures, if any

(b) that the accounting policies to the financial statement have been selected 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, 2017 and of the profit and loss of the company on that date;

(c) that proper and sufficient care has been taken 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) that the annual financial statement on a going concern basis; and

(e) that the proper internal financial controls were in place and that the internal financial controls were adequate and were operating effectively.

(f) that systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively.

Human ResourcesMany initiatives have been taken to support business through organizational efficiency, process change support and various employee engagement programmes which has helped the Organization achieve higher productivity levels. A significant effort has also been undertaken to develop leadership as well as technical/ functional capabilities in order to meet future talent requirement.

The Company’s HR processes such as hiring and on-boarding, fair transparent online performance evaluation and talent management process, state-of-the-art workmen development process, and market aligned policies have been seen as benchmark practices in the Industry.

Pursuant to The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 notified on December 9, 2013, the Company has set up a Committee to look into complaints under the said Act. The Company has not received any complaints relating to sexual harassment at work place from any woman employee during the year.

Disclosure by Senior Management Personnel i.e. One Level Below the Board Including all HODsNone of the senior management personnel have undertaken financial and commercial transactions with the Company, where they have personal interest that would have a potential conflict with the interest of the Company at large.

DisclosureYour 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:

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.

Material Changes and CommitmentsYour Directors are of the opinion that there are no material changes and commitments affecting financial position of the Company which have occurred between end of financial year of the Company and the date of this report.

Extract of Annual ReturnThe details forming part of the extract of the Annual Return in form MGT 9 is annexed herewith as “Annexure B”.

Board’s Report (contd)

28

On the behalf of the Board of Directors

Place: Vadodara Babulal S Sanghvi Date: August 11, 2017 Chairman

Conservation of EnergyThe Company has taken several steps towards conserving energy through its ‘Sustainability’ initiatives, disclosed separately in the Annual Report. The information on Conservation of Energy as required under Section 134(3) (m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014 is provided in “Annexure D” of this Annual Report.

Safety, Health and EnvironmentThe Company has continuously exercised effective safety, health and environment policies. Water and air pollution control measures are successfully operated and industrial trade effluents are used for gardening. The tree plantation at the factory site is maintained properly and the same shall be duly taken care of at our new plant.

Ratio of Remuneration of DirectorThe information required pursuant to Section 197 read with Rule, 5 of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company, will be provided upon request. In terms of Section 136 of the Act, the

Report and Accounts are being sent to the Members and others entitled thereto, excluding the information on employees’ particulars which is available for inspection by the Members at the Registered Office of the Company during business hours on working days of the Company up to the date of the ensuing Annual General Meeting. If any Member is interested in obtaining a copy thereof, such Member may write to the Company Secretary in this regard.

Risk ManagementThe Constitution of Risk Management Committee is not applicable the company however the company has voluntarily constituted Risk management Committee to monitor the risk and to take actions on deviations.

AcknowledgementYour Directors express their sincere appreciation for the wholehearted and continued support assistance and cooperation extended by the shareholders banks, suppliers, customers, employees, and all concerned towards the Company during the year under review.



orporate Overview

29

Statutory Reports

Annexure-A to Board’s Report

To, The members,

Sanghvi Forging & Engineering Limited244/6,7, GIDC Industrial Estate, Waghodia,Vadodara - 391760,Gujarat.

We have conducted the Secretarial Audit of the compliance of applicable statutory provisions and the adherence to good corporate practices by Sanghvi Forging and Engineering Limited (hereinafter referred to as ‘the company’). Secretarial Audit was conducted in a manner that provided us a reasonable basis for evaluating the corporate conducts/statutory compliances and expressing our opinion thereon.

Based on our verification of the Company’s Books, Papers, Minute Books, Forms and Returns filed and other records maintained by the company and also the information provided by the company, its officers, agents and authorized representatives during the conduct of Secretarial Audit, we hereby report that in our opinion, the company has, during the audit period covering the Financial Year ended on March 31, 2017, complied with the statutory provisions listed hereunder and also that the company has proper Board-Processes and Compliance-Mechanism in place to the extent, in the manner and subject to the reporting made hereinafter:

We have examined the Books, Papers, Minutes Books, Forms and Returns filed and other records maintained by the Company for the Financial Year ended on March 31, 2017, according to the provisions of:

i. The Companies Act, 2013 (the Act) and the rules made thereunder;

ii. The Securities Contracts (Regulation) Act, 1956 (SCRA) and the rules made thereunder;

iii. The Depositories Act, 1996 and the Regulations and Bye-laws framed thereunder;

iv. Foreign Exchange Management Act,1999 and the rules and regulations made thereunder to the extent of Foreign Direct Investment, Overseas Direct Investment and External Commercial Borrowings;

v. The following Regulations and Guidelines prescribed under the Securities and Exchange Board of India Act, 1992 (SEBI Act):-

(a) The Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations,2011;

(b) The Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations,1992 and The Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015;

(c) The Securities and Exchange Board of India (Registrars to an Issue and Share Transfer Agents) Regulation, 1993 regarding the Companies Act and dealing with client.

We further report that, there were no actions/events in pursuance of the following regulations requiring compliance thereof by the company during the period of this report:-

(a) The Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008;

(b) The Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2009;

(c) The Securities and Exchange Board of India (Buyback of Securities) Regulations, 1998;

(d) The Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009;

(e) The Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014;

Form MR-3Secretarial Audit Report for the Financial Year ended March 31, 2017

[Pursuant to section 204(1) of the Companies Act, 2013 and rule 9 of the Companies (Appointment and Remuneration of

Managerial Personnel) Rules,2014]

30

We have also examined compliance with the applicable clauses/regulations of the following:

(i) The company has generally complied with the Secretarial Standards issued by The Institute of Company Secretaries of India.

(ii) The Listing Agreement entered into by the Company with BSE Limited and/or Securities Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015;

During the period under review the Company has complied with the provisions of the Act, Rules, Regulations, Guidelines, Standards, etc. mentioned above.

We further report that the Board of directors of the company is duly constituted with proper balance of executive directors, non-executive directors and independent directors. The changes in the composition of the Board of Directors that took place during the period under review were carried out in compliance with the provisions of the Act.

Adequate notice is given to all the 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 clarification on the Agenda items before the meeting and for meaningful participation at the meeting.

As per the minutes of the meetings duly recorded and signed by the Chairman, the decisions of the Board were unanimous and no dissenting views have been recorded.

We further report that there are adequate systems and processes in the company commensurate with the size and operations of the company to monitor and ensure compliance with all the applicable laws, rules, regulations and guidelines.

We further report that during the audit period there were no specific instances in pursuance of the above referred laws, rules, regulations, guidelines, etc., having a major bearing on the Company’s affairs.

Place: Vadodara Suresh Kumar Kabra Date: August 01, 2017 Partner

Samdani Shah & Kabra(Erstwhile Samdani Shah & Asso.)

Company Secretaries

Mem No: #9711, CP #9927

This Report is to be read with our letter of even date which is annexed as Appendix A and forms an integral part of this report.



orporate Overview

31

Statutory Reports

Appendix A

To, The members,

Sanghvi Forging & Engineering Limited244/6,7, GIDC Industrial Estate, Waghodia,Vadodara - 391760,Gujarat.

Our report of event date is to be read along with this letter.

1. Maintenance of Secretarial records is the responsibility of the management of the company. Our responsibility is to express an opinion on these secretarial records based on our audit.

2. We have followed the audit practices and processes as were appropriate to obtain reasonable assurance about the correctness of the contents of secretarial records. The verification was done on test basis to ensure that correct facts are reflected in secretarial records. We believe that the processes and practices we followed, provide a reasonable basis for our opinion.

3. Wherever required, we have obtained the management representation about the compliance of laws, rules and regulations and happening of events etc.

4. The compliance of the provisions of Corporate and other applicable laws, rules, regulations, standards is the responsibility of the management. Our examination was limited to the verification of procedures on test basis.

5. The Secretarial Audit report is neither an assurance as to the future viability of the company nor the efficacy or effectiveness with which the management has conducted the affairs of the company.

6. The Secretarial Audit report is neither an assurance as to the future viability of the company nor the efficacy or effectiveness with which the management has conducted the affairs of the company.



Company Secretaries

Mem No: #9711, CP #9927

32

Annexure-B to Board’s Report

FORM NO. MGT 9 EXTRACT OF ANNUAL RETURN as on financial year ended on 31.03.2017 Pursuant to Section 92 (3) of the Companies Act, 2013 and rule 12(1) of the

Company (Management & Administration) Rules, 2014.

I Registration & Other Details:i CIN L28910GJ1989PLC012015

ii Registration Date 16.03.1989

iii Name of the Company Sanghvi Forging and Engineering Limited

iv Category/Sub-category of the Company Company Limited by Shares

v "Address of the Registered office & contact details"

244/6 & 7 GIDC Estate, Waghodia, 391760, Dist: Vadodara. Contact No. :-02668-673100

vi Whether listed company Yes /No Yes

vii Name, Address & contact details of the Registrar & Transfer Agent, if any.

Bigshare Services Private Ltd. , 1st Floor, Bharat Tin Works Building, Opp. Vasant Oasis Apartments (next to Keys hotel), Marol Maroshi Road, Andheri (East), Mumbai 400059 Contact N0: 022 – 62638200

II Principal Business Activities of the Company: All the business activities contributing 10% or more of the total turnover of the company shall be stated

Sl. No

Name & Description of main products/services "NIC code of the product /service"

"% to total turnover of the company"

1 Forging, pressing, stamping and roll-forming of metal; powder metallurgy

3440 99%

III Particulars of Holding, Subsidiary & Associate Companies:Sl No

Name & Address of the Company

CIN/GLN Holding/ subsidiary/ associate

% of shares held

Applicable section

1 Sanghvi Europe B.V. 8712423033771 Subsidiary 100 2 (87)Lage Dijk 31-F, 5705 Bx Helmond, The Netherlands.

IV. Shareholding Pattern (Equity Share Capital Break Up as % to Total Equity) (i) Category-wise ShareholdingCategory of Shareholders No. of shares held at the end of the year as on

31.03.2016No. of shares held at the end of the year as on

31.03.2017% change during the

yearDemat Physical Total % of Total Shares

Demat Physical Total % of Total Shares

A. Promoters

(1) Indiana) Individual/HUF 9088157 1000000 10088157 67.74 10083872 0 10083872 67.71 (0.03)b) Central Govt. or

State Govt.0 0 0 0 0 0 0 0 0

c) Bodies Corporates 0 0 0 0 0 0 0 0 0



orporate Overview

33

Statutory Reports

d) Bank/FI 0 0 0 0 0 0 0 0 0e) Any other 0 0 0 0 0 0 0 0 0

SUB TOTAL: (A) (1) 9088157 0 10088157 67.74 10083872 0 10083872 67.71 (0.03)

(2) Foreigna) NRI- Individuals 0 0 0 0 0 0 0 0 0b) Other Individuals 0 0 0 0 0 0 0 0 0c) Bodies Corp. 0 0 0 0 0 0 0 0 0d) Banks/FI 0 0 0 0 0 0 0 0 0e) Any other… 0 0 0 0 0 0 0 0 0

SUB TOTAL (A) (2) 0 0 0 0 0 0 0 0 0

Total Shareholding of Promoter (A) = (A)(1)+(A)(2)

9088157 1000000 10088157 67.74 10083872 0 10083872 67.71 (0.03)

B. Public Shareholding

(1) Institutionsa) Mutual Funds 0 0 0 0 0 0 0 0 0b) Banks/FI 0 0 0 0 0 0 0 0 0c) Central govt 0 0 0 0 0 0 0 0 0d) State Govt. 0 0 0 0 0 0 0 0 0e) Venture Capital Fund 0 0 0 0 0 0 0 0 0f) Insurance Companies 0 0 0 0 0 0 0 0 0g) FIIS 0 0 0 0 0 0 0 0 0h) Foreign Venture

Capital Funds0 0 0 0 0 0 0 0 0

i) Others (specify) 0 0 0 0 0 0 0 0 0

SUB TOTAL (B)(1): 0 0 0 0 0 0 0 0 0

(2) Non Institutionsa) Bodies corporatesi) Indian 369071 0 369071 2.48 288063 0 288063 1.93 (0.54)ii) Overseas 0 0 0 0 0 0b) Individuals 0 0i) Individual shareholders

holding nominal share capital upto `2 lacs

1910991 3 1910994 12.83 1979121 3 1979124 13.29 0.46

ii) Individuals shareholders holding nominal share capital in excess of `2 lacs

1780832 0 1780832 11.96 1787123 0 1787123 12.00 0.04

c) Others (specify) 0 0 0i) Clearing Members 13147 0 13147 0.09 11437 0 11437 0.08 (0.01)ii) Non Residents

Individuals30085 0 30085 0.20 42402 0 42402 0.28 0.09

iii) Overseas Body Corporate

0 699981 699981 4.70 0 699981 699981 4.70 0.00

4104126 0 0 0.00 265 0 265 0.00 0.00 SUB TOTAL (B)(2): 4104126 699984 4804110 32.26 4108411 699984 4808130 32.29 0.03

Total Public Shareholding (B) = (B)(1)+(B)(2)

4104126 699984 4804110 32.26 4108411 699984 4808130 32.29 0.03

C. Shares held by Custodian for GDRs & ADRs

0 0 0 0 0 0 0 0 0

Grand Total (A+B+C) 13192283 1699984 14892267 100.00 14192283 699984 14892267 100.00 0

Annexure-B to Board’s Report (contd)

34

(ii) Share Holding of PromotersSl No.

Shareholder's name Shareholding at the end of the year as on 31.03.2016

Shareholding at the end of the year as on 31.03.2017

% change in share holding during

the year

No. of shares

% of total shares of the

company

% of shares

pledged/ encum-

bered to total shares

No. of shares

% of total shares of the

company

% of shares

pledged/ encum-

bered to total shares

1 Jayantilal Babulal Sanghvi 1675591 0.11 0.00 1925591 0.13 0.00 0.01682 Naresh Babulal Sanghvi 1556931 0.10 0.00 1806931 0.12 0.00 0.01683 Babulal Sagarmal Sanghvi 1464283 0.10 0.00 1714283 0.12 0.00 0.01684 Vikram Babulal Sanghvi 1255682 0.08 0.00 1505682 0.10 0.00 0.01685 Sanghvi Bhamridevi Babulal 662451 0.04 0.00 662451 0.04 0.00 0.00006 Sanghvi Meena Jayantilal 623300 0.04 0.00 623300 0.04 0.00 0.00007 Sanghvi Kiran Naresh 576000 0.04 0.00 572407 0.04 0.00 -0.00028 Sanghvi Sheetal Vikram 280526 0.02 0.00 280526 0.02 0.00 0.00009 Sanghvi Babulal Sagarmal 262857 0.02 0.00 262857 0.02 0.00 0.000010 Mahesh Babulal Sanghvi 253894 0.02 0.00 253894 0.02 0.00 0.000011 Jayantilal Babulal Sanghvi 250000 0.02 0.00 0 0.00 0.00 -0.016812 Naresh Babulal Sanghvi 250000 0.02 0.00 0 0.00 0.00 -0.016813 Babulal Sagarmal Sanghvi 250000 0.02 0.00 0 0.00 0.00 -0.016814 Vikram Babulal Sanghvi 250000 0.02 0.00 0 0.00 0.00 -0.016815 Sanghvi Naresh Babulal 112000 0.01 0.00 112000 0.01 0.00 0.000016 Sanghvi Jayantilal Babulal 112000 0.01 0.00 112000 0.01 0.00 0.000017 Vikram Babulal Sanghvi 83394 0.01 0.00 83394 0.01 0.00 0.000018 Babitadevi Laxmichand Mehta 29930 0.00 0.00 30488 0.00 0.00 0.000019 Naresh Babulal Sanghvi 26000 0.00 0.00 26000 0.00 0.00 0.000020 Bhamridevi Babulal Sanghvi 24183 0.00 0.00 24183 0.00 0.00 0.000021 Jitendra Jugalkishor Munot 24032 0.00 0.00 24032 0.00 0.00 0.000022 Anila Jugalkishor Munot 20984 0.00 0.00 20984 0.00 0.00 0.000023 Vikram Laxmichand Mehta 17136 0.00 0.00 17136 0.00 0.00 0.000024 Piyush Laxmichand Mehta 11100 0.00 0.00 11100 0.00 0.00 0.000025 Meena Jayantilal Sanghvi 6000 0.00 0.00 6000 0.00 0.00 0.000026 Lalitkumar M Bhansali 4328 0.00 0.00 4328 0.00 0.00 0.000027 Mahendra Mafatlal Jain 2012 0.00 0.00 2012 0.00 0.00 0.000028 Kiran Naresh Sanghvi 1250 0.00 0.00 0 0.00 0.00 -0.000129 Pukhraj Hanzarimal Bhansali 823 0.00 0.00 823 0.00 0.00 0.000030 Shantilal Hiralal Bhansali 772 0.00 0.00 772 0.00 0.00 0.000031 Lalitkumar M Bhansali 698 0.00 0.00 698 0.00 0.00 0.0000

Total 10088157 0.68 0.00 10083872 0.68 0.00 -0.0003



orporate Overview

35

Statutory Reports

(iii) Change in Promoters’ Shareholding (Specify If There is no Change)Sl No.

Name of promoters Shareholding Date Increase/decrease in

shareholding

Reason Cumulative shareholding during

the yearNo. of shares at

the beginning (01.04.2016) /

end of the year (31.03.2017)

% of total shares of

the company

No. of shares


the company

1 Jayantilal Babulal Sanghvi 1675591 11.25 01.04.2016 NA NA 1675591 11.2508.04.2016 250000 Allotment 1925591 12.93

1925591 12.932 Naresh Babulal Sanghvi 1556931 10.45 01.04.2016 NA NA 1556931 10.45

08.04.2016 250000 Allotment 1806931 12.131806931 12.13

3 Babulal Sagarmal Sanghvi 1464283 9.83 01.04.2016 NA NA 1464283 9.8308.04.2016 250000 Allotment 1714283 11.51

1714283 11.514 Vikram Babulal Sanghvi 1255682 8.43 01.04.2016 NA NA 1255682 8.43

08.04.2016 250000 Allotment 1505682 10.111505682 10.11

5 Sanghvi Kiran Naresh 576000 3.87 01.04.2016 NA NA 576000 3.8706.05.2016 1250 Buy 577250 3.8813.01.2017 4843 Sell 572407 3.84

572407 3.84

6 Kiran Naresh Sanghvi 1250 0.01 01.04.2016 NA NA 1250 0.0129.04.2016 1250 Sell 0 0.00

0 0.007 Babitadevi Laxmichand

Mehta29930 0.20 01.04.2016 NA NA 29930 0.20

25.11.2016 558 Buy 30488 0.2030488 0.20

* Decrease in the % of total shares of the Company is due to Preferential Allotment


36

(iv) Shareholding Pattern of top ten Shareholders (other than Directors, Promoters & Holders of GDRs & ADRs)

Sl No.

For each of the top 10 shareholders

Shareholding Date Increase/decrease in

shareholding

Reason Cumulative shareholding during

the yearNo. of shares at




the company

No. of shares


the company

1 Dango & Dienthal GMBH & Co. Ltd.

359029 2.70 01.04.2016 0 No movement

359029 2.41 31.03.2017 0 No movement

699981 4.70

2 Dango & Dienthal GMBH & Co. Ltd.

340952 2.57 01.04.2016 0 No movement

340952 2.29 31.03.2017 340952 2.293 Sanghvi Tinadevi Mahesh 177169 1.19 01.04.2016 177169 1.19

177169 1.19 0 No movement

177169 1.19 31.03.2017 177169 1.194 Sanghvi Pyaridevi Mohanlal 170798 1.15 01.04.2016 0 No

movement170798 1.15

13.01.2017 3700.00 Market Sale

167098 1.12

10.02.2017 5627.00 Market Sale

161471 1.08

24.02.2017 873.00 Market Sale

160598 1.08

03/03/2017 7000.00 Market Sale

153598 1.03

17/03/2017 887.00 Market Sale

152711 1.03

5 Mahesh B. Sanghvi 100000 0.67 01.04.2016 0 No movement

100000 0.67

100000 0.67 100000 0.676 Amit Simrathmal Jain 55232 0.37 01.04.2016 55232 0.37

0.00 No movement

55232 0.37 31.03.2017 55232.00 0.377 Trustline Holdings Pvt Ltd 83885 0.56 01.04.2016

0 No movement

83885 0.56 31.03.2017 83885 0.568 Snehal Bhupendra Shah 155000 1.04 01.04.2016 0.00 No

movement155000.00 1.04

155000 1.049 Praneet Multi Pack India

Pvt Ltd 57500 0.39 01.04.2016 0 0 57500 0.39

03.06.2016 55000 Sell 2500 0.0224.02.2017 2500 Sell 0 0.00

0 0.00 0 0.0010 Surabhi Shah 0 0.00 07.08.2015 40000 Market

Purchase40000 0.29



orporate Overview

37

Statutory Reports

14.08.2015 4000 Market Purchase

44000 0.32


119959 0.86


120000 0.86

11.03.2015 -25000 Market Sale

95000 0.64

11 Raajratna Stockholding 49231 0.33 01.04.2016 0 0 49231 0.3303.06.2016 2406 Buy 51637 0.3510.06.2017 1600 Buy 53237 0.3624.06.2017 400 Buy 53637 0.3630.06.2016 1350 Buy 54987 0.3708.07.2016 800 Buy 55787 0.3715.07.2017 200 Buy 55987 0.38

55987 0.38* Decrease in the % of total shares of the Company is due to Preferential Allotment

(v) Shareholding of Directors & Key Managerial Personnel:Sl No.

Name of Promoters Shareholding Date Increase/decrease in

shareholding

Reason Cumulative shareholding

during the yearNo. of shares at




the company

No. of shares


the company

1 Shri Jayantilal Babulal Sanghvi - Managing Director

1675591 11.25 01.04.2016 NA NA 1675591 11.25

08.04.2016 250000 Allotment 1925591 12.931925591 12.93

2 Shri Naresh Babulal Sanghvi - Wholetime Director

1556931 10.45 01.04.2016 NA NA 1556931 10.45

08.04.2016 250000 Allotment 1806931 12.131806931 12.13

3 Shri Babulal Sagarmal Sanghvi - Wholetime Director

1464283 9.83 01.04.2016 NA NA 1464283 9.83

08.04.2016 250000 Allotment 1714283 11.511714283 11.51

4 Shri Vikram Babulal Sanghvi - Wholetime Director& CFO

1255682 8.43 01.04.2016 NA NA 1255682 8.43

08.04.2016 250000 Allotment 1505682 10.111505682 10.11

5 Shri Ram Chandra Prasad - Independent Director

- - - - - - -


38

6 Shri Y Shantaram - Independent Director

- - - - - - -

7 Shri Baba Pai - Independent Director

- - - - - - -

8 Shri Ram Swaroop Kaushal - Independent Director

- - - - - - -

9 Mrs. Aruna Khasgiwala - Independent Director

- - - - - - -

10 Mr. Keval Thakkar - Company Secretary

V. Indebtedness(Amount in ` lacs)

Indebtedness of the company including interest outstanding/accrued but not due for payment

Secured loans excluding

deposits

Unsecured loans

Deposits Total indebtedness

Indebtedness at the beginning of the financial yeari) Principal Amount 9268.84 1072.56 10341.40ii) Interest due but not paid 251.00 251.00iii) Interest accrued but not due -

Total (i+ii+iii) 9519.84 1072.56 - 10592.40Change in Indebtedness during the financial yearAdditions 1,070.32 527.47 - 1,597.79 Reduction (1111.38) (228.48) - (1339.86)Net Change (41.06) 298.99 - 257.93 Indebtedness at the end of the financial year

i) Principal Amount 8770.42 1348.98 - 10119.40 ii) Interest due but not paid 708.36 22.57 - 730.93 iii) Interest accrued but not due -

Total (i+ii+iii) 9478.78 1371.55 - 10850.33



orporate Overview

39

Statutory Reports

VI. Remuneration of Directors and Key Managerial PersonnelA. Remuneration to Managing Director, Whole time director and/or Manager:

(Amount in ` lacs)Sl. No

Particulars of remuneration Name of the MD/WTD/Manager Total amount

1 Gross salary Mr. Babulal Sanghvi - WTD

Mr. Jayanti B. Sanghvi - MD

Mr. Naresh B. Sanghvi - WTD

Mr. Vikram B. Sanghvi - WTD

(a) Salary as per provisions contained in section 17(1) of the Income Tax. 1961.

24.23 22.76 22.76 22.76 92.51

(b) Value of perquisites u/s 17(2) of the Income tax Act, 1961

1.80 0.40 0.40 0.40 3.00

(c) Profits in lieu of salary under section 17(3) of the Income Tax Act, 1961

-

2 Stock option - 3 Sweat Equity - 4 Commission

as % of profit - Others (specify) -

5 Others, please specify - Total (A) 26.03 23.16 23.16 23.16 95.51Ceiling as per the Act -

B. Remuneration to other directors:(Amount in ` lacs)

Sl. No

Particulars of remuneration Name of the Directors Total amount

1 Independent Directors Mr. R.S. Kaushal

Mr. Baba Pai

Mr. Y Shantaram

Mr. R.C. Prasad

Mrs. Aruna Khasgiwala

(a) Fee for attending Board /Committee meetings

1.00 0.75 0.50 1.00 0.50 3.75

(b) Commission(c) Others, please specifyTotal (1) 1.00 0.75 0.50 1.00 0.50 3.75

2 Other Non Executive Directors"(a) Fee for attending board committee meetings"(b) Commission(c) Others, please specify.Total (2)Total (B)=(1+2) 1.00 0.75 0.50 1.00 0.50 3.75Total Managerial RemunerationOverall Cieling as per the Act


40

C. Remuneration To Key Managerial Personnel Other Than MD/Manager/WTD(Amount in ` lacs)

Sl. No.

Particulars of Remuneration Mr. Keval Thakkar - Company Secretary

(From December 01, 2015)

Total

1 Gross Salary(a) Salary as per provisions contained in section 17(1) of the Income Tax Act, 1961.

3.00 3.00

(b) Value of perquisites u/s 17(2) of the Income Tax Act, 1961

0.00 0.00

(c) Profits in lieu of salary under section 17(3) of the Income Tax Act, 1961

0.00 0.00

2 Stock Option 0 0.003 Sweat Equity 0 0.004 Commission 0 0.00

-as % of profit 0 0.00-others, specify 0 0.00

5 Others, please specify 0Medical reimbursement 0 0.00Total 3.00 3.00

VII. Penalties/Punishment/Compounding of OffencesType Section of the

companies actBrief description Details of penalty/

punishment/compounding fees imposed

Authority (RD/NCLT/Court)

Appeal made if any (give details)

A. CompanyPenalty

NoPunishmentCompoundingB. DirectorsPenalty

NoPunishmentCompoundingC. Other Officers in DefaultPenalty

NoPunishmentCompounding



orporate Overview

41

Statutory Reports

Annexure-C to Board’s Report

Details pertaining to remuneration as required under Section 197(12) of the Companies Act, 2013 read with rule 5(1) of the

Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

i) The ratio of remuneration of each Director to the median remuneration of the employee of the Company for the financial year 2016-17. The percentage increase in remuneration of each Director, Chief Financial Officer and Company Secretary during the financial year 2016-17 is as under:

Sr. No.

Name of Director/KMP and designation Remuneration of Director/KMP for financial year 2016-2017 (` in lacs)

Ratio of remuneration of each Director/to median remuneration of employee

% increase in remuneration in the financial year

1 Shri. Babulal S. Sanghvi – Wholetime Director

26.03 16:1 6%

2 Shri. Jayanti B. Sanghvi – Managing Director

23.16 15:1 12%

3 Shri. Naresh B. Sanghvi - Wholetime Director

23.16 15:1 13%

4 Shri. Vikram B. Sanghvi - Wholetime Director and CFO

23.16 15:1 13%

5 Mr. Keval Thakkar- Company secretary 3.00 - -

Note: No other Director other than Whole-time Director and Managing Director received any remuneration

ii) The median remuneration of employee of the Company during the financial year was `1.54 lacs

iii) In the financial year, there was an increase of percentage % in the median remuneration of employees. - NA

iv) There were 238 permanent employees on the rolls of the Company as on March 31, 2017.

v) Relationship between average increase in remuneration and company performance:

There is no direct relationship with Company performance in view of the loss incurred. Routine increments, cost of living and employee retention are as per policy of the Company.

vi) Comparison of remuneration of the Key Managerial Personnel against the performance of the Company:

The Company reported a loss during the year. Remuneration of Key Managerial Personnel has been detailed in MGT-9: Extract of Annual Return.

vii) Variation in the market capitalization of the Company, price earnings ratio as at the closing date of the current financial year and previous financial year and percentage increase over decrease in market quotations of the shares of the Company in comparison to the rate at which the Company come out with last public offer :

Closing market price per share (`)

Percentage change

Price earnings ratio Market capitalisation (` in lacs)

March 31, 2016 March 31, 2017 March 31, 2016 March 31, 2017 March 31, 2016 March 31, 2017

BSE 41.1 40.35 (1.86)% - - 6120.73 6009.03

NSE 41.35 41.55 0.48% - - 6157.95 6187.74

The Company’s shares are listed on BSE Limited and National Stock Exchange of India Limited.* PE ratio not computed as EPS is negative.

42

viii) Average percentage increase made in the salaries of employees other than the managerial personnel in the financial year 2016-2017 was NA

ix) The key parameters for the variable component of remuneration availed by the directors and considered by the Board of Directors based on the recommendation of the Nomination and Remuneration Committee as per Remuneration Policy for Directors and Senior Management.

x) The ratio of the remuneration of the highest paid director to that of the employee who are not directors but receive remuneration in excess of the highest paid director during the year: The Wholetime Director, Mr. Babulal Sanghvi is the highest paid Director. No employee received remuneration higher than Mr. Babulal Sanghvi.

xi) It is hereby affirmed that the remuneration paid during the year ended March 2017 is as per Remuneration policy of the Company.

For Sanghvi Forging and Engineering Limited




orporate Overview

43

Statutory Reports

Annexure-D to Board’s Report

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO[Section 134(3)(m) of The Companies Act, 2013 read with Rule 8(3) of The Companies (Accounts) Rules, 2014]

A. CONSERVATION OF ENERGY(i) Steps taken or impact on conservation of energy; Energy saving in terms of electricity consumption

is our prime concern. The Company utilizes several systems to conserve energy. Well planned preventive maintenance measures improved our operational efficiency.

(ii) Steps taken by the company for utilizing alternate sources of energy;

Water and air pollution control measures are in place and industrial trade effluents are used for gardening after adjusting the PH. The Tree plantation at the factory site is maintained properly.

(iii) Capital investment on energy conservation equipments;

During the year company has not invested in energy conservation equipments.

B. TECHNOLOGY ABSORPTION (i) Efforts made towards technology absorption; • Continuousemphasisonsignificantupgrading

of manufacturing facility to improve product quality.

(ii) Benefits derived like product improvement, cost reduction, product development or import substitution;

• Overallannualproductionincreasedthroughmaximum utilization of production capacity.

(iii) In case of imported technology (imported during the last three years reckoned from beginning of the financial year)-

(a) the details of technology imported;

Not

Applicable

(b) the year of import;

(c) whether the technology been fully absorbed;

(d) if not fully absorbed, areas where absorption has not taken place, and the reasons thereof; and

(iv) Expenditure incurred on Research and Development. • TheCompanyhasundertakennoR&D

activities

C. FOREIGN EXCHANGE EARNINGS AND OUTGO

The Foreign Exchange earned in terms of actual inflows during the year and the Foreign Exchange outgo during the year in terms of actual outflows.

• Earningsinforeigncurrency(onreceiptbasis)

(` in lacs)

Particulars Amount 2016-17

Amount 2015-16

F.O.B. value of export 1605.20 1788.45

TOTAL 1605.20 1788.45

• Earningsinforeigncurrency(onpaymentbasis)(` in lacs)

Particulars Amount 2016-17

Amount 2015-16

CIF value of import 363.57 140.65

Other miscellaneous 98.19 102.32

TOTAL 461.76 242.97



44

Form AOC-I(Pursuant to first proviso to sub-section (3) of section 129 read with rule 5 of Companies (Accounts) Rules, 2014)

Statement containing salient features of the financial statement of subsidiaries/ associate companies/ joint ventures

Part “A”: Subsidiaries(Information in respect of each subsidiary to be presented with amounts in `)

Sr. No.

Name of Director/KMP and Designation Details

1 Sl. No. 1

2 Name of the subsidiary Sanghvi Europe B.V.

3 Date since when subsidiary was acquired May 27, 2014

4 Reporting period for the subsidiary concerned, if different from the holding company’s reporting period

January to December 2016

5 Reporting currency and Exchange rate as on the last date of the relevant Financial year in the case of foreign subsidiaries

Currency : EURO

Exchange rate: 69.24766 Share capital EURO 100

7 Reserves & surplus (949384.60)

8 Total assets 41409164.58

9 Total Liabilities 41409164.58

10 Investments 0.00

11 Turnover 45821237.90

12 Profit before taxation (1811010.73)

13 Provision for taxation 0.00

14 Profit after taxation (1811010.73)

15 Proposed Dividend -

16 % of shareholding 100 %

Notes: The following information shall be furnished at the end of the statement:1. Names of subsidiaries which are yet to commence operations: NA

2. Names of subsidiaries which have been liquidated or sold during the year. : NA

Part “B”: Associates and Joint VenturesStatement pursuant to Section 129 (3) of the Companies Act, 2013 related to Associate Companies and Joint Ventures: - NA





orporate Overview

45

Statutory Reports

Corporate Governance Report

The Directors present the Company’s Report on Corporate Governance for the year ended March 31, 2017.

COMPANY’S PHILOSOPHY ON CORPORATE GOVERNANCESFEL’s philosophy on Corporate Governance is embedded in the rich legacy of ethical governance practices, most of which were implemented before they were mandatorily prescribed. Integrity, transparency, accountability and compliance with laws which are the columns of good governance are cemented in the Company’s robust business practices to ensure ethical and responsible leadership both at the Board and at the Management level. The Company’s Code of Business Conduct and its well-structured internal control systems which are subjected to regular assessment for its effectiveness, reinforces integrity of Management and fairness in dealing with the Company’s stakeholders. This, together with meaningful CSR activities and sustainable development policies followed by the Company has enabled your Company to earn the trust and goodwill of its investors, business partners, employees and the communities in which it operates. Your Company has complied with the requirements of Corporate Governance as laid down SEBI (Listing Obligations and Disclosure Requirements) regulations, 2015.

GOVERNANCE STRUCTURESFEL’s Governance structure broadly comprises the Board of Directors and the Committees of the Board at the apex level and the Management structure at the operational level. This layered structure brings about a harmonious blend in governance as the Board sets the overall corporate objectives and gives direction and freedom to the Management to achieve these corporate objectives within a given framework, thereby bringing about an enabling environment for value creation through sustainable profitable growth.

Board of Directors {A} Composition of the Board(i) The management of your Company is entrusted to

the Managing Director, who is assisted by a core management team and senior executives having rich experience and expertise in their respective fields.

(ii) None of the Directors on the Board is a member of more than 10 committees or a chairman of more than 5 committees as specified in Regulation 26 of SEBI (Listing Obligations and Disclosure Requirements) regulations, 2015, across all the Indian Public Companies, in which he is a Director. The necessary disclosure regarding the committee position has been made by the Directors.

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(iii) The names and categories of the Directors of the Board, their attendance at Board Meetings held during the year and the number of directorships and committee chairmanship/ membership held by them in Indian Public Companies are given herein below. Directorships do not include alternate directorship, directorships of private limited companies, Section 8 companies under Companies Act, 2013 (Section 25 under Companies Act, 1956) and of companies incorporated outside India. For reckoning the maximum number of chairmanships/memberships, only two committees viz, Audit Committee and Shareholders’/Investors’ Grievance Committee of the Board are considered.

Sr. No.

Name of the Directors Category No. of directorship in other public limited company

Number of committee positions held in other

public limited company

No. of board meetings

The last AGM attended: ‘Yes’ or ‘No’

Member Chairman Held Attended

1 Shri Babulal S Sanghvi, Chairman

Promoter Executive

Nil Nil Nil 4 4 Yes

2 Shri Jayanti B Sanghvi, Managing Director

Promoter Executive

Nil Nil Nil 4 4 Yes

3 Shri Naresh B Sanghvi, Wholetime Director

Promoter Executive

Nil Nil Nil 4 3 No

4 Shri Vikram B Sanghvi, Wholetime Director

Promoter Executive

Nil Nil Nil 4 4 Yes

5 Shri Shantaram Yarlagadda, Director

Non-Executive and Independent

Nil Nil Nil 4 2 No

6 Shri Ram C Prasad, Director


Nil Nil Nil 4 4 Yes

7 Shri Baba Pai, Director Non-Executive and Independent

Nil Nil Nil 4 2 Yes

8 Shri Ram S Kaushal, Director


Nil Nil Nil 4 4 Yes

9 Mrs. Aruna S Khasgiwala appointed on 29.05.2015 & regularized in AGM dated September 29, 2015)


Nil Nil Nil 4 2 Yes

The Company did not have any material pecuniary relationship or transactions with the Independent Non-Executives Directors during the year 2016-17.

Disclosure of relationship between directors inter-se Shri Babulal Sanghvi, Chairman is father of Shri Jayantilal Sanghvi, Managing Director, Shri Naresh Sanghvi, Wholetime Director and Shri Vikram Sanghvi, Wholetime Director of the Company. None of the other Directors are related to each other.

There were 4 Board meetings held during the financial year April 1, 2016 to March 31, 2017. These were on May 25, 2016, August 12, 2016, November 11, 2016 and February 13, 2017.

Details of the Directors being appointed/ reappointedDirector Retires by RotationIn terms of Sections 149, 152 and any other applicable provisions of the Companies Act, 2013 effective from April 1, 2014, Independent Directors shall not be counted for the purpose of determining the directors liable to retire by rotation. Shri Babulal S Sanghvi accordingly retires at the ensuing Annual General Meeting and being eligible offers himself for re-appointment.



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47

Statutory Reports

Shri Babulal Sagarmal Sanghvi, aged 66, he has more than 36 years of experience in the forging industry. He is responsible for implementing the overall business strategy of the Company. He holds 17,14,283 (11.51%) Equity Shares of `10/- each in the Company. He is the Chairman of the Board of the Board of Directors.

The brief resume of Directors with regard to appointment/re-appointment at 29th Annual General Meeting is annexed to the Notice convening the 29th Annual General Meeting, which forms the integral part of this Annual Report.

Except for the appointee, Shri Babulal S. Sanghvi and his relative i.e. Shri Vikram B. Sanghvi, Shri Jayanti B. Sanghvi and Shri Naresh B. Sanghvi, none of the other Directors and Key Managerial Personnel of the Company and their relatives is concerned or interested in the aforesaid Resolution.

Board of Director’s ProfileShri Vikram Babulal Sanghvi, aged 35, he is a gold medalist from Sardar Patel University in Bachelor of Business Administration and has completed his Master degree in Business Administration from the ICFAI University. He has completed a course of Chartered Financial Analyst from ICFAI University. He has over 11 years of experience in the field of forging industry. He is looking after overall supervision of the operations and administration activities in the Company. He holds 15, 05,682 (10.11%) Equity Shares of `10/- each in the Company. He is Member of Audit Committee and Share Transfer Committee of the Company.

Shri Jayanti Babulal Sanghvi, aged 41, he is a gold medalist from Sardar Patel University in Bachelor of Business Administration. He has over 17 years of experience in manufacturing and retailing of flanges and other forging items and has been instrumental in driving the growth of our business. He leads the domestic marketing, finance and sales functions of the Company. He holds 19,25,591 (12.93%) Equity Shares of `10/- each in the Company. He hold Chairmanship in Management Committee, Allotment Committee, Share Transfer Committee and Corporate Social Responsibility Committee of the Company.

Shri Naresh B. Sanghvi, aged 40 years, he has more than 16 years of experience in forging industry. He is responsible for all export related activities of our Company and identification of growth potentials in various overseas markets. He holds 18,32,931 (12.13%) Equity Shares of `10/- each in the Company. He does not hold any Chairmanship or any Membership in the Company.

Shri Shantaram Surya Prakasarao Yarlagadda, aged 78, he holds degree in mathematics and mechanical engineering. He has worked as scientific officer at the Department of

Atomic Energy, Government of India. He has worked in various capacities at the Rajasthan Atomic Power Project, Madras Atomic Power Project, Kakrapar Atomic Power Project, Kaiga Atomic Power Project and Tarapur Atomic Power Project. He finally retired as a Director after 40 years of service in the Department of Atomic Energy Government of India. He is also a member emeritus of the India Nuclear Society. He is member of Audit Committee and Nomination and Remuneration Committee of the Company. He does not hold any Directorship and Membership in any other company. Shri Yarlagadda does not hold any Shares in the Company.

Dr. Ram Chandra Prasad, aged 68, he holds a doctorate in metallurgical engineering from the Indian Institute of Science, Bangalore. He has worked as assistant professor at the National Institute of Foundry and Forge Technology, Ranchi and as professor at the Indian Institute of Technology, Bombay since 1986. He has been honoured with the Distinguish Alumnus Award at BIT Sindri in the year 2002. He was chairman of IIM Mumbai chapter during the period from 1999 and 2000. He is member of Nomination and Remuneration Committee and Stakeholders Relationship Committee of the Company. He does not hold any Directorship and Membership in any other company. Dr. Prasad does not hold any Shares in the Company.

Dr. Baba Karnire Pai, aged 63, he holds a doctorate in metallurgical engineering from the Indian Institute of Technology Bombay. He was Professor and the Head of Metallurgical and Materials Engineering faculty of Technology and Engineering at MS University Kalabhavan, Vadodara. He is currently Director of Institute of Technology & Management University, Vadodara. He is Chairman in Nomination and Remuneration Committee and member of Audit Committee, Stakeholders Relationship Committee, Allotment Committee, Management Committee and Corporate Social Responsibility Committee of the Company. He does not hold any Directorship and Membership in any other company. Dr. Pai does not hold any Shares in the Company.

Shri Ram Swaroop Kaushal, aged 70, he is a banker by profession and holds a Master’s degree in Arts. He was previously employed with State bank of India. He has vast years of experience in the Banking sector. He is a certified Associate of the Indian Institute of Bankers. He is presently working as an Advisor (Learning & Development) with SBI Mutual Fund. He is Chairman of Audit Committee and Stakeholders Relationship Committee and Member of Allotment Committee, Management Committee and Corporate Social Responsibility Committee of the Company. He does not hold any Directorship and Membership in any other company. Shri Kaushal does not hold any Shares in the Company.

Corporate Governance Report (contd)

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Dr. Aruna Khasgiwala aged, 66, she is Retd. professor, former DEAN (2003-2010), former head (2003-2008) faculty of Social Work in the M. S. University of Baroda. She holds degree of M.A. (Social Work) specialization, Medical & Psychiatric Social Work, Delhi University, Ph.d. (Social Work) M.S. University of Baroda, she has over 41 years of experience in teaching and field. She does not hold any Chairmanship and Membership of the Company or any other Company. Dr. Aruna Khasgiwala does not hold shares in the Company.

Board ProcedureThe annual calendar of meeting is agreed upon at the beginning of each year. Board Meetings are held at least once in every quarter. In addition to this, Board Meetings are convened to transact special businesses, as and when necessary. The meetings are governed by a detailed agenda. All major issues included in the agenda are backed up by comprehensive background information to enable the Board to take informed decisions.

The agenda papers, containing detailed notes on various agenda items and other information, which would enable the Board to discharge its responsibilities effectively, are circulated in advance to the Directors. The Board is briefed on all the matters of the Company at its meeting.

The Board has complete access to all the information of the Company.

The following information is provided to the Board as and when occasion arises:

1. Annual operating plans and budgets and any updates.

2. Capital budgets and any updates.

3. Quarterly results for the company and its operating divisions or business segments.

4. Minutes of meetings of audit committee and other committees of the board.

5. The information on recruitment and remuneration of senior officers just below the board level, including appointment or removal of Chief Financial Officer and the Company Secretary.

6. Show cause, demand, prosecution notices and penalty notices which are materially important.

7. Fatal or serious accidents, dangerous occurrences, any material effluent or pollution problems.

8. Any material default in financial obligations to and by the company, or substantial nonpayment for goods sold by the company.

9. Any issue, which involves possible public or product liability claims of substantial nature, including any judgment or order which, may have passed strictures on the conduct of the company or taken an adverse view regarding another enterprise that can have negative implications on the company.

10. Details of any joint venture or collaboration agreement.

11. Transactions that involve substantial payment towards goodwill, brand equity, or intellectual property.

12. Significant labour problems and their proposed solutions. Any significant development in Human Resources/ Industrial Relations front like signing of wage agreement, implementation of Voluntary Retirement Scheme etc.

13. Sale of material nature, of investments, subsidiaries, assets, which is not in normal course of business.

14. Quarterly details of foreign exchange exposures and the steps taken by management to limit the risks of adverse exchange rate movement, if material.

15. Non-compliance of any regulatory, statutory or listing requirements and shareholders service such as non-payment of dividend, delay in share transfer etc.

Board Training and InductionAt the time of appointing a Director, a formal letter of appointment is given to him, which inter alia explains the role, function, duties and responsibilities expected of him as a Director of the Company. The Director is also explained in detail the compliances required from him under the Companies Act, Listing Regulations and other related regulations and his affirmation taken with respect to the same.

Committees of Board of DirectorsThe Company has formed an Audit Committee, Nomination and Remuneration Committee,Stakeholders’ Relationship Committee, Corporate Social Responsibility Committee, Share Transfer Committee, Allotment Committee, Management Committee and Risk Management Committee. The details of these committee meetings are mentioned here in below:



orporate Overview

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Statutory Reports

A. Audit CommitteeAudit Committee comprises of experts specialized in accounting/financial management. The Chairman of the Audit Committee is a Non-Executive and Independent Director. Details of the meetings of the Audit Committee held during the FY 2016-17 are as under:

Name Designation Category AttendanceMay 25, 2016

August 12, 2016

November 11, 2016

February 13, 2017

Shri Ram S Kaushal Chairman Non-Executive and Independent

Yes Yes Yes Yes

Shri Baba Pai Member Non-Executive and Independent

Yes Yes No Yes

Shri Vikram B Sanghvi Member Executive and Non-Independent

Yes Yes Yes Yes

Shri Shantaram Yarlagadda Member Non-Executive and Independent

No No Yes Yes

The Company Secretary acts as the Secretary to the Committee. The Managing Director, Whole time Director and the Statutory Auditors are permanent invitees to the Meetings. The terms of reference of the Audit Committee are in accordance with the Section 177 of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure requirements) Regulations, 2015.

The Audit Committee assists the Board in its responsibility for overseeing the quality and integrity of the accounting, auditing and reporting practices of the Company and its compliance with legal and regulatory requirements. The Committee’s purpose is to oversee the accounting and financial reporting process of the Company, the audits of the Company’s financial statements, the appointment, independence, performance and remuneration of the statutory auditors including the Cost auditors, the performance of internal auditors and the Company’s risk management policies. The Chairman of the Audit Committee was present at the Annual General Meeting to answer the shareholders queries.

Terms of reference: The terms of reference of the Audit Committee are as under:

a) Power of Audit Committee

1. To investigate any activity within its terms of reference.

2. To seek information from any employee.

3. To obtain outside legal or other professional advice.

4. To secure attendance of outsiders with relevant expertise, if it considers necessary.

b) The Role of Audit Committee includes

1. Oversight of the company’s financial reporting process and the disclosure of its financial information to

ensure that the financial statement is correct, sufficient and credible;

2. Recommendation for appointment, remuneration and terms of appointment of auditors of the company;

3. Approval of payment to statutory auditors for any other services rendered by the statutory auditors;

4. Reviewing, with the management, the annual financial statements and auditor’s report thereon before submission to the board for approval, with particular reference to:

a. Matters required to be included in the Director’s Responsibility Statement to be included in the Board’s report in terms of clause (c) of sub-section 3 of section 134 of the Companies Act, 2013

b. Changes, if any, in accounting policies and practices and reasons for the same

c. Major accounting entries involving estimates based on the exercise of judgment by management

d. Significant adjustments made in the financial statements arising out of audit findings

e. Compliance with listing and other legal requirements relating to financial statements

f. Disclosure of any related party transactions

g. Qualifications in the draft audit report

5. Reviewing, with the management, the quarterly financial statements before submission to the board for approval;

6. Reviewing, with the management, the statement of uses / application of funds raised through an issue (public issue, rights issue, preferential issue, etc.), the statement of funds utilized for purposes other than those stated in the offer document / prospectus


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/ notice and the report submitted by the monitoring agency monitoring the utilization of proceeds of a public or rights issue, and making appropriate recommendations to the Board to take up steps in this matter;

7. Review and monitor the auditor’s independence and performance, and effectiveness of audit process;

8. Approval or any subsequent modification of transactions of the company with related parties;

9. Scrutiny of inter-corporate loans and investments;

10. Valuation of undertakings or assets of the company, wherever it is necessary;

11. Evaluation of internal financial controls and risk management systems;

12. Reviewing, with the management, performance of statutory and internal auditors, adequacy of the internal control systems;

13. Reviewing the adequacy of internal audit function, if any, including the structure of the internal audit department, staffing and seniority of the official heading the department, reporting structure coverage and frequency of internal audit;

14. Discussion with internal auditors of any significant findings and follow up there on;

15. Reviewing the findings of any internal investigations by the internal auditors into matters where there is suspected fraud or irregularity or a failure of internal control systems of a material nature and reporting the matter to the board;

16. Discussion with statutory auditors before the audit commences, about the nature and scope of audit as well as post-audit discussion to ascertain any area of concern;

17. To look into the reasons for substantial defaults in the payment to the depositors, debenture holders, shareholders (in case of non-payment of declared dividends) and creditors;

18. To review the functioning of the Whistle Blower mechanism;

19. Approval of appointment of CFO (i.e., the whole-time Finance Director or any other person heading the finance function or discharging that function) after assessing the qualifications, experience and background, etc. of the candidate;

20. Carrying out any other function as is mentioned in the terms of reference of the Audit Committee.

B. Nomination and Remuneration and CommitteeNomination and Remuneration Committee pursuant to Section 178 of the Companies Act, 2013 has been constituted to recommend the remuneration package of the Managing Director and Whole time Directors based on the performance and defined criteria.

Role of the Nomination and Remuneration Committee are as under:

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

2. Formulation of criteria for evaluation of Independent Directors and the Board;

3. Devising a policy on Board diversity;

4. Identifying persons who are qualified to become directors and who may be appointed in senior management in accordance with the criteria laid down, and recommend to the Board their appointment and removal. The company shall disclose the remuneration policy and the evaluation criteria in its Annual Report.

Composition of Nomination and Remuneration Committee and its meeting are as under:

Name Designation CategoryShri Baba Pai Chairman Non-Executive and

IndependentShri Ram C Prasad


Shri Shantaram Yarlagadda


No meeting of Nomination & Remuneration Committee was held in FY 2016-17

Performance Evaluation Criteria for Independent DirectorsThe performance evaluation criteria’s for Independent Directors are disclosed in the Board’s Report.



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Statutory Reports

Remuneration to Directorsa. Non-Executive and Independent Directors.The Non-Executive and Independent Directors do not draw remuneration other than sitting fees. The Company pays the sitting fees to all the Non-Executive Directors at the rate of `15,000 for attending each Meeting of the Board and `10,000 for every other Committee meeting attended by him. The sitting fees paid to Non-Executive cum Independent Directors for attending Board and Committee Meetings during the FY 2016-17 is as follows:

Name (Directors) Sitting fees (` in lacs)Shri Ram C Prasad 1.00Shri Yarlagadda Shantaram 0.50Shri Ram S Kaushal 1.00Shri Baba Pai 0.75Mrs. Aruna S Khasgiwala 0.50

b. Executive Directors.The remuneration payable to the Managing Director, Wholetime Directors as recommended by the Remuneration Committee and was approved by the Board of Directors in its Meeting when all the Directors were present. The salary paid during the year to the Managing Director is within the ceiling prescribed by provisions of the Companies Act,2013.

The following remuneration paid to the Directors during the year ended March 31, 2017.

Name of Director Designation Salary and perquisites (` in lacs)

Variable Performance Bonus

Commission Total

Shri Babulal S Sanghvi Chairman 26.03 - 0 26.03Shri Jayanti B Sanghvi Managing Director 23.16 - 0

23.16 Shri Naresh B Sanghvi Wholetime Director 23.16 - 0

23.16 Shri Vikram B Sanghvi Wholetime Director 23.16 - 0 23.16

Policy for selection and appointment of Directors and their Remuneration The Nomination and Remuneration (N&R) Committee has adopted a Policy which, inter alia, deals with the manner of selection of Board of Directors, Managing Director and their remuneration. Particulars of the Policy is accordingly as under:

1. Criteria of selection of Non-Executive Directorsa. The Non-Executive Directors shall be of high integrity

with relevant expertise and experience so as to have a diverse Board with Directors having expertise in the fields of manufacturing, marketing, finance, taxation, law, governance and general management.

b. In case of appointment of Independent Directors, the N&R Committee shall satisfy itself with regard to the independent nature of the Directors vis-à-vis the Company so as to enable the Board to discharge its function and duties effectively.

c. The N&R Committee shall ensure that the candidate identified for appointment as a Director is not disqualified for appointment under Section 164 of the Companies Act, 2013.

d. The N&R Committee shall consider the following attributes / criteria, whilst recommending to the Board the candidature for appointment as Director.

i. Qualification, expertise and experience of the Directors in their respective fields;

ii. Personal, Professional or business standing;

iii. Diversity of the Board.

e. In case of re-appointment of Non-Executive Directors, the Board shall take into consideration the performance evaluation of the Director and his engagement level.

2. RemunerationThe Non-Executive Directors shall be entitled to receive remuneration by way of sitting fees, reimbursement of expenses for participation in the Board / Committee meetings.

Non-Executive Director shall be entitled to receive sitting fees for each meeting of the Board or Committee of the Board attended by him, of such sum as may be approved by the Board of Directors within the overall limits prescribed


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under the Companies Act, 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014;

3. Managing Director/Whole Time Directors - Criteria for selection / appointment

For the purpose of selection of the MD/WTD, the N&R Committee shall identify persons of integrity who possess relevant expertise, experience and leadership qualities required for the position and shall take into consideration recommendation, if any, received from any member of the Board.

The Committee will also ensure that the incumbent fulfills such other criteria with regard to age and other qualifications as laid down under the Companies Act, 2013 or other applicable laws.

4. Remuneration for the Managing Director/Whole Time Directors

i. At the time of appointment or re-appointment, Managing Director/ Whole Time Directors shall be paid such remuneration as may be mutually agreed between the Company (which includes the N&R Committee and the Board of Directors) and the Managing Director/ Whole Time Directors within the overall limits prescribed under the Companies Act, 2013.

ii. The remuneration shall be subject to the approval of the Members of the Company in General Meeting.

C. Stakeholders Relationship CommitteeThe Stakeholders’ Relationship Committee comprises of 3 Directors viz. Shri R S Kaushal, Shri. R C Prasad and Shri. Baba Pai, Shri R S Kaushal, Independent Non-Executive Director is Chairman of the Stakeholders’ Relationship Committee. Shri R S Kaushal was present at the last Annual General Meeting held on September 27, 2016.

Mr. Keval Thakkar Company Secretary and Compliance Officer of the Company acts as a Secretary of the Committee.

The Primary Objective of the Stake holders Relationship Committee is to oversee all matters concerned with the securities and to look in to shareholders complaints relating to transfer of shares, Non receipt of Annual Report, Non receipt of Dividend etc.

The terms of reference committee are in line with the requirement of Companies Act and SEBI Listing Regulations.

During the year the Company has not received any complaints from any shareholders.

In addition to the above committees, the Board has constituted the following committees:

D. Corporate Social Responsibility CommitteeComposition of Corporate Social Responsibility Committee is as under:

Name DesignationShri Jayanti B. Sanghvi ChairmanShri Ram S Kaushal MemberShri Baba Pai Member

E. Allotment CommitteeComposition of Allotment Committee is as under:

Name DesignationShri Jayanti B. Sanghvi ChairmanShri Baba Pai MemberShri Ram S Kaushal Member

F. Management CommitteeComposition of Management Committee is as under:Name DesignationShri Jayanti B. Sanghvi ChairmanShri Baba Pai MemberShri Ram S Kaushal Member

G. Risk Management CommitteeRisk Evaluation and Management is an ongoing process within the Organization. The Company has a robust risk management framework to identify, monitor and minimize risks as also identify business opportunities.

Risk Management Committee is not applicable to the Company however the company has voluntarily constituted Risk Management Committee.

Composition of Risk Management Committee is as under:

Name DesignationShri Jayanti B. Sanghvi ChairmanShri Baba Pai MemberShri Ram S Kaushal Member



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53

Statutory Reports

INDEPENDENT DIRECTORS’ MEETING:During the year, the Independent Directors met on February 13, 2017, inter alia, to discuss:

• EvaluationofthePerformanceofNonIndependentDirectors and the Board of Directors as a whole;

• EvaluationofthePerformanceofChairmanoftheCompany, taking into accounts the views of the Executive and Non-Executive Directors.

• Evaluationofthequality,contentandtimelinesofflow of information between the Management and the Board that is necessary for the Board to effectively and reasonably perform its duties.

All the Independent Directors were present at the Meeting

CODE OF CONDUCT i) For prevention of Insider TradingThe Company has a comprehensive Code of Conduct bid down for its employees and Directors for the prevention of insider trading. The Code lays down guidelines and procedures to be followed and disclosures to be made while dealing with the shares of the Company and cautioning

them on the consequence of non-compliances. The Company Secretary has been appointed as a Compliance Officer and is responsible for adherence to Code for Prevention of Insider Trading.

ii) For Board of Directors and EmployeesThe Board of Directors of the Company has laid down a Code of Conduct for all Board Members and employees of the Company. The Code of Conduct is posted on the website of the Company, www.sanghviforge.com. The Board members and employees have affirmed compliance with the ’Code of Conduct’ for the year ended March 31, 2017.

WEBSITEIn accordance with requirement of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 information about the Company is stored on the Company’s website i.e. www.sanghviforge.com in a separate dedicated section titled Investor Relations and is updated regularly.

GENERAL BODY MEETINGThe details of the last three AGM/EOGM of the Company:

Year AGM/EOGM Location Date Time No. of special resolutions

2015-2016 AGM 244/6, G.I.D.C Ind. Estate, Waghodia-39176

September 27, 2016 5 p.m. 1





2013-2014 EOGM NIDRA HOTELS, Opp. Seven Seas Mall, Fatehgunj, Vadodara

August 14, 2014 5 p.m. 2

SPECIAL RESOLUTIONS WERE APPROVED AT THE AGM/EOGM.

AGM/EOGM Dated ParticularsAGM September 27, 2016 Approval to invite/ accept/ renew from time to time unsecured/secured

deposits from members of the Company upto permissible limits as prescribed under Companies (Acceptance of Deposits) Rules, 2014.

AGM September 29, 2015 Re-appointment of MD, WTD for Five yearsAGM September 26, 2014 Approval of Related Party transaction with Company U/s 188 of the

Companies Act, 2013EOGM August 14, 2014 Issue and allot 10,00,000 Warrants to the Promoters U/s. 62 (1)(c), of the

Companies Act, 2013 under Preferential issue.Borrowing Powers of Board of Directors U/s. 180 (1) (c) of the Companies Act, 2013


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POSTAL BALLOTNo Special Resolution was put through postal ballot during the period and there is no item in the notice for the forthcoming Annual General Meeting requiring postal ballot.

DISCLOSURES a. Related Party Transactions, comprising of contracts

or arrangements with the related parties/entities in which Directors are interested, are entered in the Register of Contracts as per section 189 of the Act. None of the transactions with any of the related parties were in conflict with interest of Company as per requirements of Accounting Standard 18, they have been disclosed in notes to accounts annexed to the financial statements.

b. None of the Non-Executive Directors has any material pecuniary relationship or transaction with the Company.

c. The Independent Directors have confirmed that they meet the criteria of independence as stipulated under Section 149(6) of the Act, and SEBI (Listing Obligations and Disclosures Requirements) Regulations, 2015.

d. There were no instances of non-compliance and no restrictions and penalties have been imposed on

the Company by Stock Exchanges or SEBI or any Statutory Authorities, on any matter related to capital market, during last three years.

e. The Company has policy on Whistle Blower/ Vigil Mechanism which is also posted on the website of the Company no personnel has been denied to access the Audit Committee.

f. There is no amount pending for transfer to the Investor Education and Protection Fund under Section 125 of the Act.

g. Website Linkage for Policies:

1) Familiarisation Programme of Independent Directors: http://www.sanghviforge.com/code_of_conduct.php

2) Related Party Transaction Policy : http://www.sanghviforge.com/code_of_conduct.php

3) Whistler Blower Policy/Whistler Blower Policy: http://www.sanghviforge.com/code_of_conduct.php

MANDATORY REQUIREMENTS The Company has complied with the Mandatory Requirement of SEBI (Listing Obligations and Disclosures Requirements) Regulations, 2015.

NON MANDATORY REQUIREMENTSThe Company has not complied with Non Mandatory Requirements as specifically provided in Schedule II of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

Disclosure of the compliance with corporate governance requirements specified in Regulation 17 to 27 and Clauses(b) to (i) of sub-regulation (2) of Regulation 46 of the SEBI (Listing Obligations and Disclosure Requirements), 2015:

Regulation No. Particulars Compliance status (Yes/No)17 Board of Directors Yes 18 Audit Committee Yes 19 Nomination and Remuneration Committee Yes 20 Stakeholders Relationship Committee Yes 21 Risk Management Committee NA22 Vigil Mechanism Yes 23 Related Party Transactions Yes 24 Corporate Governance requirements with respect to subsidiary of the

CompanyYes

25 Obligations with respect to Independent Directors Yes 26 Obligations with respect to Directors and Senior Management Yes 27 Other Corporate Governance requirements Yes 46 (2) Website as applicable Yes

MEANS OF COMMUNICATIONThe Annual and Quarterly Results are regularly published in Financial Express (Both in English and Gujarati), The News Paper as per requirement of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and are also been displayed on our website viz. www.sanghviforge.com.



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Statutory Reports

SHAREHOLDER INFORMATION SHAREHOLDER INFORMATION

A. Annual General MeetingDay and date of AGM : Thursday, September 28, 2017

Venue : At the Registered office of the Company - 244/6-7, G.I.D.C. Industrial Estate, Waghodia - 391760, Dist. Vadodara

B. Registered office : 244/6-7, G.I.D.C. Industrial Estate, Waghodia - 391760, Dist. Vadodara

C. Book closure date : September 21, 2017 to September 28, 2017

D. Listing of Equity Shares : 1) National Stock Exchange of India Limited Exchange Plaza, Bandra-Kurla Complex, Bandra (East), Mumbai - 400 051

2) BSE Limited Phiroze Jeejeebhoy Towers, Dalal Street, Mumbai - 400 001

E. Stock Code : NSE :- SANGHVIFOR

BSE :- 533411

F. ISIN of NSDL and CDSL : INE263L01013

G. Present Financial Year : April to March

H. Share transfer agent : Bigshare Services Private Ltd. 1st Floor, Bharat Tin Works Building, Opp. Vasant Oasis Apartments (next to keys hotel), Marol Maroshi Road, Andheri (East), Mumbai 400059 Phone No:022 – 62638200 Email: [email protected]

I. Dematerlisation of shares : As on March 31, 2017, 14192283 shares were in dematerialized form representing 95.30% of total shares

J. Outstanding GDRs/ADRs/Warrants or any Convertible Instruments, conversion date and likely impact on equity

: NA

K. Performance of equity shares during the FY 2016-17

Monthly share price movement during the FY 2016-17 at BSE and NSE.

Months BSE NSEHigh Price (`) Low Price (` )̀ Close Price

(`)High Price (``)

Low Price (` )̀ Close Price (` )̀

April-16 47.90 40.55 45.50 42.45 40.45 42.05May-16 47.70 40.10 43.00 46.00 44.60 45.55June-16 44.50 35.00 41.45 43.55 42.05 42.90July-16 44.05 38.50 40.80 41.95 40.05 40.60August-16 44.10 38.60 41.10 43.70 39.10 43.25September-16 43.75 34.20 36.90 41.20 39.65 41.10October-16 44.50 35.90 39.85 39.60 36.05 37.30November-16 44.75 33.00 37.00 43.45 39.00 42.40December-16 53.40 35.10 42.50 38.45 36.25 36.50January-17 48.75 40.00 44.25 43.50 41.45 41.45February-17 50.00 42.00 43.55 45.00 42.60 43.65March-17 48.65 39.35 42.00 44.70 43.25 44.00


56

L. COMPANY vs SENSEX

May

-40%

-20%

0%

20%

Jul Sep Nov 2017 Mar

May-60%

-40%

-20%

0%

20%

Jul Sep Nov 2017 MarMar

M. COMPANY vs NIFTY

N. Shareholding pattern as on March 31, 2017

Monthly share price movement during the FY 2016-17 at BSE and NSE.

Category No. of shareholders No. of sharesTotal shareholders % of shareholder Total shares %

Clearing member 22 0.45 16990 0.1141Corporate bodies 119 2.4577 321484 2.1587Non-Resident Indians 52 1.0739 46588 0.3128Overseas corporate bodies 2 0.0413 699981 4.7003Promoters 25 0.5163 10083474 67.7095Public 4621 95.4358 3723185 25.0008Total 4842 100 14892267 100

% Clearing member 0.1141 Corporate bodies 2.1587 Non-resident Indians 0.3128 Overseas corporate bodies 4.7003 Promoters 67.7095 Public 25.0008

Sanghvi share price at BSE BSE S&P Sensex

Sanghvi share price at NSE NSE Nifty 50 Financial Statements


orporate Overview

57

Statutory Reports

O. Shareholding pattern as on March 31, 2017

P. Distribution of shareholding as on March 31, 2017

Category No. of shareholders % No. of shares %1 500 3953 81.9105 551141 3.7009

501 1000 387 8.0191 317781 2.13391001 2000 183 3.7920 281908 1.89302001 3000 87 1.8027 223545 1.50113001 4000 32 0.6631 112438 0.75504001 5000 41 0.8496 191413 1.28535001 10000 67 1.3883 502826 3.3764

10001 and above 76 1.5748 12711215 85.3545Total 4826 14892267 100.0000

Q. Plant Location: Plant # 1 244/6-7, G.I.D.C. Industrial Estate, Waghodia, Dist: Vadodara-391760

Plant# 2 1401, 1402, 1403, G.I.D.C. Industrial Estate, Waghodia, Dist: Vadodara-391760

R. Address for Correspondence: The shareholders may address their communications/ suggestions/grievance/queries to: Shri Harish Punwani Company Secretary Sanghvi Forging and Engineering Limited 244/6-7, G.I.D.C. Industrial Estate, Waghodia, Vadodara-391760 Email: [email protected] Phone: 91-2668-264100 Fax: 91-2668-263411


58

CERTIFICATETo the Members of Sanghvi Forging and Engineering Limited

We have examined the compliance of the conditions of Corporate Governance by Sanghvi Forging and Engineering Limited for the year ended March 31, 2017 as per the relevant provisions of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulations).

The Compliance of conditions of Corporate Governance is the responsibility of the Company’s Management. Our examination was limited to the procedures and implementation thereof, adopted by the Company for ensuring the compliance of the conditions of Governance. It is neither an audit nor an expression of an opinion on the financial statement of the Company.

In our opinion and to the best of our information and according to the explanations given to us, we certify that the Company has complied with the conditions of Corporate Governance as stipulated in the above mentioned Listing Regulations.

We state that in respect of investor grievances received during the year ended March 31, 2017, no investor grievance is pending against the Company, as per the records maintained by the Company and presented to the Stakeholders Relationship Committee.

We further state that such compliance is neither an assurance as to the future viability of the Company nor the efficiency or effectiveness with which the Management has conducted the affairs of the Company.

Declaration on Compliance with the Code of ConductI, Babulal S Sanghvi, Chairman of Sanghvi Forging & Engineering Ltd hereby declare that all the Board members and Senior managerial personnel have affirmed for the year ended March 31, 2017 compliance with the code of Conduct laid down for them.





Company Secretaries

Mem No: #9711, CP #9927



orporate Overview

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Statutory Reports

CEO AND CFO CERTIFICATIONWe Jayanti B Sanghvi, Managing Director and Vikram B Sanghvi, Executive Director and CFO, responsible for the finance function, certify that:

A. We have reviewed financial statements and the cash flow statement for the year ended March 31, 2017 and that to the best of their knowledge and belief:

1. These statements do not contain any materially untrue statement or omit any material fact or contain statements that might be misleading;

2. These statements together present a true and fair view of the company’s affairs and are in compliance with existing accounting standards, applicable laws and regulations.

B. There are, to the best of their knowledge and belief, no transactions entered into by the company during the year ended March 31, 2017 which was fraudulent, illegal or violative of the company’s code of conduct.

C. We accept responsibility for establishing and maintaining internal controls for financial reporting and that they have evaluated the effectiveness of internal control systems of the company pertaining to financial reporting and we have disclosed to the auditors and the Audit Committee, deficiencies in the design or operation of which such internal controls, if any, of which we are aware and the steps we have taken or propose to take to rectify these deficiencies.

D. We have indicated to the auditors and the Audit committee:

1. Significant changes in internal control over financial reporting during the year ended March 31, 2017;

2. Significant changes in accounting policies during the year ended March 31, 2017 and that the same have been disclosed in the notes to the financial statements; and

3. Instances of significant fraud of which we have become aware and the involvement therein, if any, of the management or an employee having a significant role in the company’s internal control system over financial reporting.



Place: Vadodara Jayanti B Sanghvi Vikram B Sanghvi Date: August 11, 2017 Managing Director Whole Time Director & CFO

60

Financial StatementsStandalone Financial StatementsIndependent Auditors’ Report 62Annexure A to the Auditor’s Report 64Annexure B to the Auditor’s Report 66Balance Sheet 68Statement of Profit and Loss 69Cash Flow Statement 70Notes Annexed to and Forming part of the Financial Statements 72

Consolidated Financial StatementsIndependent Auditors’ Report 92Balance Sheet 94Statement of Profit and Loss 95Cash Flow Statement 96Notes Annexed to and Forming part of the Financial Statements 98

To the Members of SANGHVI FORGING & ENGINEERING LIMITED

Report on the Standalone Financial Statements We have audited the accompanying standalone financial statements of SANGHVI FORGING & ENGINEERING LIMITED (“the Company”)which comprise the Balance sheet as at March 31, 2017 and the Statement of Profit and Loss, the Cash flow Statement for the year the ended and a summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the standalone Financial Statements The Company’s Board of Directors is responsible for the matters stated in section 134(5) of the companies Act, 2013(“the Act”) with respect to the preparation and presentation of these standalone financial statements of Company that give a true and fair view of the financial position and financial performance and cash flows of the company in accordance with the Accounting principles generally accepted in India, including accounting Standards specified u/s 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. This responsibility includes maintenance of adequate accounting records in accordance with the provision of the Act for safeguarding the assets of the company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility Our responsibility is to express an opinion on these standalone financial statements based on our audit.

We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the act and the rules made there under.

We conducted our audit in accordance with the Standards on Auditing specified u/s 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the standalone financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the company’s preparation of the financial statements that give true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on whether the Company has in place an adequate internal financial controls system over financial reporting and the operating effectiveness of such controls. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the standalone financial statements.

OpinionIn our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the company as at March 31, 2017, and its statement of loss and its cash flows for the year ended on that date.

Report on Other Legal and Regulatory Requirements1. As required by the Companies (Auditor’s Report)

Order, 2016 (“the Order”) issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act, we give in the “Annexure A” a statement on the matters specified in paragraphs 3 and 4 of the Order.

2. As required by section 143(3) of the Act, we report that: a. We have obtained all the information and

explanations which to the best of our knowledge and belief were necessary for the purpose of our audit;

b. In our opinion, proper books of account as required by law have been kept by the company so far as appears from our examination of those books;

c. The Balance Sheet,Statement of Profit and Loss and cash flow statement dealt with by this Report are in agreement with the books of account;

Independent Auditor’s Report

62

d. In our opinion, the aforesaid standalone financial statements comply with the Accounting Standards referred to in Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014 (as amended);

e. On the basis of written representations received from the directors as on March 31, 2017, and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2017, from being appointed as a director in terms of section 164(2) of the Act.

f. With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate report in “Annexure B”; and

g. With respect to the matter to be included in the Auditor’s report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules,2014, in our opinion and to the best of our information and according to the explanations given to us:

i. The Company has disclosed the impact of pending litigations on its financial position

in Note 2.25(1A) of the standalone financial statements.

ii. The Company did not have any long-term contracts, including derivative contracts, for which there were any material foreseeable losses;

iii. There is no such amount which is required to be transfer to the Investor education and protection fund by the Company.

iv. The Company has provided requisite disclosures in the standalone financial statements as to holding as well as dealings in Specified Bank Notes during the period from November 8, 2016 to December 30, 2016, on the basis of information available with the Company. Based on audit procedures, and relying on management’s representation, we report that disclosures are in accordance with the books of accounts maintained by the Company and as produced to us by the Management. – Refer Note 2.25(16).

For SHAH & BHANDARI Chartered Accountants

FRN No.: 118852W

(Yogesh Bhandari) Place: Vadodara Partner Date: May 29, 2017 M.No.046255



orporate Overview

63

Statutory Reports

i. (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of its fixed assets.

(b) As explained to us, fixed assets are physically verified by the management at the year-end, which in our opinion, is reasonable, looking to the size of the company and its nature of business, and no material discrepancies were noticed on such verification.

(c) According to the information and explanations given to us and on the basis of our examination of the records of the Company, the company have lease hold rights of factory land and building thereon in terms of Lease Deeds.

ii. (a) Inventories have been physically verified by management at reasonable intervals during the year. The discrepancies noticed on such verification were not material and have been adjusted in the books of account of the Company.

iii. The Company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under section 189 of the Act. Hence clause 3(iii) of the Order is not applicable to the company.

iv. In our opinion and according to the information and explanation given to us, and based on the legal opinion obtained by the Company, the Company has not granted any loans, or provided any guarantees or security to the parties covered under Section 185 & 186 of the Act.

v. The Company has not accepted any deposits during the year from the public within the meaning of sections 73 & 74 of the Act and the rules framed there under to the extent notified.

vi. We have broadly reviewed the cost records maintained by the Company pursuant to Rules prescribed by the Central Government under Section 148(1) of the Act and are of the opinion that, prima-facie, the prescribed cost records have been maintained and are being made up. We have, however, not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

vii. (a) The company is generally regular in depositing undisputed statutory dues including provident fund, employees’ state insurance, sales-tax, service tax, duty of customs, duty of excise, value added tax or cess dues with the appropriate authorities except TDS which is deposited after few months. There are no undisputed amounts payable as at 31.03.2017 for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us, dues of income-tax, sales tax, service tax, excise duty, customs duty which have not been deposited on account of any dispute are as follows:

Name of Statue Nature of Dues Amount (`000) Period to which it relates (FY)

Forum where the dispute is pending

Income Tax Act, 1961 Income Tax 5282.61 2010-11

2011-12

ITAT, Ahmedabad

Central Excise Act, 1944 Service Tax 1955.60 2007-08 to 2011-12 CESTAT AhmedabadCentral Excise Act, 1944 Service Tax 7653.06 2007-08 to 2013-14 Asst. Commissioner

of Central Excise, Custom & Service Tax Vadodara

Central Excise Act, 1944 Excise 2979.31 2011-12 to 2014-15 Additional Commissioner of Central Excise , Custom & Service Tax Vadodara

Central Sales Tax Act, 1956 Sales Tax 7104.84 2010-11 to 2011-12 Asst. CCT (Appeal)

“Annexure A” To The Auditor’s Report

64

viii. Based on our audit procedures and on the information and explanation given to us by management, the company has defaulted in repayment of its loan and interest to the banks. Estimated instalments and interest due but not paid to banks as at March 31, 2017 aggregated to `9,64,91,596/- & interest thereon `9,23,67,396/- since JULY 2016 (P.Y. `2,82,96,000 & Interest thereon of `2,51,00,000/- since January 2016).

ix. According to the information and explanations given to us , the term loan was applied for the purpose for which they were obtained.

x. During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanations given to us, we have neither come across any instance of material fraud by the Company or on the Company by its officers or employees, noticed or reported during the year, nor have we been informed of any such case by the Management.

xi. In our opinion and according to the information and explanations given to us, the managerial remuneration has been paid or provided in accordance with the requisite approvals mandated by the provisions of Section 197 read with Schedule V to the Act.

xii. In our opinion and according to the information and explanations given to us, the Company is not of a nidhi company. Accordingly, paragraph 3(xii) of the Order is not applicable.

xiii. In our opinion and according to the information and explanations given to us, all transactions with the related parties are in compliance with Section 188 and 177 of Companies Act, 2013 and are disclosed in the financial statement as required by relevant Accounting Standards

xiv. According to the information and explanations given to us, The Company does not have made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year. Accordingly, paragraph 3(xiv) of the Order is not applicable.

xv. According to the information and explanations given to us and based on our examination of the records of the Company, the Company has not entered into non-cash transactions with directors or persons connected with him. Accordingly, paragraph 3(xv) of the Order is not applicable.

xvi. The Company is not required to be registered under section 45-IA of the Reserve Bank of India Act 1934. Accordingly, the provisions of Clause 3(xvi) of the Order are not applicable to the Company.


FRN No.: 118852W

(Yogesh Bhandari) Place: Vadodara Partner Date: May 29, 2017 M. No. 046255



orporate Overview

65

Statutory Reports

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 (“the Act”)

We have audited the internal financial controls over financial reporting of SANGHVI FORGING & ENGINEERING LIMITED as of March 31, 2017 in conjunction with our audit of the financial statements of the Company for the year ended on that date.

Management’s Responsibility for Internal Financial ControlsThe Company’s management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India (‘ICAI’). These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to company’s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013.

Auditors’ ResponsibilityOur responsibility is to express an opinion on the internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls over Financial Reporting (the “Guidance Note”) and the Standards on Auditing, issued by ICAI and deemed to be prescribed under section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls, both applicable to an audit of Internal Financial Controls and, both issued by the Institute of Chartered Accountants of India. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of

internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the internal financial controls system over financial reporting.

Meaning of Internal Financial Controls over Financial ReportingA company’s internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal financial control over financial reporting includes those policies and procedures that

(1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorisations of management and directors of the company; and

(3) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

“Annexure B” To The Auditor’s Report

66


FRN No.: 118852W


Inherent Limitations of Internal Financial Controls Over Financial ReportingBecause of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

OpinionIn our opinion, the Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at March 31, 2017, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India.



orporate Overview

67

Statutory Reports

Balance SheetAs at March 31, 2017

As per our report of even dateFor Shah & Bhandari Chartered Accountants FRN No 118852W

For and on behalf of Board of Directors

Yogesh Bhandari Partner Membership No - 046255

Babulal Sanghvi Chairman

Jayantilal Sanghvi Managing Director

Vadodara, dated May 29, 2017

Vikram Sanghvi Whole Time Director & Chief Financial Officer

Keval Thakkar Company Secretary

(` in ‘000)Sr. Particulars Note No. As at

March 31, 2017As at

March 31, 2016I. Equity And Liabilities(1) Shareholders' Funds :(a) Share Capital 2.1 148,922.67 148,922.67 (b) Reserves and Surplus 2.2 65,784.86 290,988.95 (2) Non-Current Liabilities:(a) Long-Term Borrowings 2.3 788,111.54 879,403.68 (b) Long Term Provisions 2.4 549.09 - (3) Current Liabilities:(a) Short - Term Borrowings 2.5 353,312.41 265,737.51 (b) Trade Payables 2.6

- Trade Payables for Goods & Services 196,278.39 164,376.64 - Trade Payables for Micro, Small and Medium Enterprises 488.13 2,849.23

(c) Other Current Liabilities 2.7 378,212.70 230,744.98 (d) Short - Term Provisions 2.8 23,844.22 18,628.92

TOTAL 1,955,504.01 2,001,652.58 II. Assets (1) Non - Current Assets:(a) Fixed Assets 2.9(i) Tangible Assets 1,476,566.59 1,560,889.42 (ii) Intangible Assets 2,040.69 2,984.16 (iii) Capital Work-in-Progress 3,554.85 4,457.76 (b) Non - Current Investment 2.10 6.75 6.75 (c) Deferred Tax Assets (Net) 2.11 - - (d) Long Term Loans and Advances 2.12 22,200.22 17,057.99 (2) Current Assets:(a) Inventories 2.13 205,292.45 219,574.64 (b) Trade Receivables 2.14 209,918.47 141,011.57 (c) Cash and Bank Balances 2.15 8,925.41 10,963.42 (d) Short - Term Loan and Advances 2.16 20,780.03 39,914.08 (e) Other Current Assets 2.17 6,218.55 4,792.79

TOTAL 1,955,504.01 2,001,652.58 SIGNIFICANT ACCOUNTING POLICIES 1The accompanying Notes are integral Part of Financial Statements

2.25

Standalone Financial Statements

68

Statement of Profit and LossFor the year ended March 31, 2017









(` in ‘000)Sr. Particulars Note No. For the year ended

March 31, 2017For the year ended

March 31, 2016I. Income :(a) Revenue from Operations (Gross) 2.18 597,150.84 728,002.17

Less : Excise Duty (42,990.43) (44,472.30)Net Revenue from Operations 554,160.41 683,529.87

(b) Other Income 2.19 1,143.63 9,329.80 Total Revenue 555,304.04 692,859.68

II. Expenses(a) Cost of Material Consumed 2.20 296,726.91 329,040.72 (b) Changes in Inventory of Finished Goods and Work in

Progress2.21 5,707.60 (35,716.87)

(c) Employee Benefits Expense 2.22 63,885.25 63,866.26 (d) Finance Costs 2.23 166,094.33 161,644.30 (e) Depreciation and Amortization Expense 2.9 89,702.04 84,202.39 (f) Other Expenses 2.24 158,392.00 189,188.52

780,508 .13 792,225.32 III. Loss Before Tax (225,204.09) (99,365.64)

TAX EXPENSES - - Current Tax - - Deferred Tax - - - (Excess) / Short Provision for tax relating to prior years - 504.50

504.50

IV. Loss For The Year (225,204.09) (99,870.14)Basic Earning Per Share(Face Value of `10 Per Share) (15.12) (7.10)Diluted Earning Per Share(Face Value of `10 Per Share) (15.12) (6.71)[Refer to Note No. 2.25 (8)]

SIGNIFICANT ACCOUNTING POLICIES 1The accompanying Notes are integral Part of Financial Statements

2.25



orporate Overview

69

Statutory Reports

Cash Flow StatementFor the year ended March 31, 2017

(` in ‘000)Particulars For the year ended


March 31, 2016A. Cash Flow From Operating Activities:

Net Profit Before Tax and Extra ordinary Items (225204.09) (99365.64)Adjustment for:

Depreciation /Amortization /Impairment 89702.04 84202.39 Interest Expense / Finance Cost 147940.53 143505.02 Interest Income (692.01) (1538.08)Loss/ (Profit) on sale of Fixed Assets - 28.78 Bad debts/ advance written off 1226.25

Operating Profit Before Working Capital Changes 12972.72 126832.47 Adjustment for (increase)/decrease in Operating assets:Inventories 14282.19 (21507.06)Trade Receivables (70133.15) 115889.26 Short Term Loan & Advances 19134.05 3112.17 Other Current Assets (1425.76) (1201.24)Long Term Loan & Advances (5142.23) (3309.68)

(43284.91) 92983.45 Adjustment for (increase)/decrease in Operating liabilities:Trade Payable 29540.64 (14845.42)Non-Current Liabilities 549.09 - Other Current Liabilities 147467.72 (5264.41)Short Term Provisions 5215.30 6010.39

182772.76 (14099.45)Cash Generated From Operation 152460.57 205716.46 Income Tax Expense - 504.50 Net Cash Generated From Operating Activities 152460.57 205211.96

B. Cash Flow From Investing ActivitiesAcquisition of Fixed Assets (8952.38) (45355.95)Sales / Devaluation of Assets 5419.56 Proceed from Sale of Fixed Assets - 383.00 Change in Bank Margin Money / FD Originally Matured in more than three months

2244.55 13235.18

Interest Received 692.01 1538.08 Net Cash Used in Investing Activities (596.26) (30199.69)

C. Cash Flow From Financing Activities


70

Cash Flow StatementFor the year ended March 31, 2017



March 31, 2016Increase in Share Capital - 10000.00 Security Premium - 23750.00 Non - Current Investment - - Long Term Loan from Bank (91292.13) (61486.42)(Repayments)/ Short Term Borrowing from Bank 87574.90 (4199.15)Finance Cost (Interest & Bank Charges) (147940.53) (143505.02)

Net Cash used in Financing Activities (151657.77) (175440.59)Net Increase /(Decrease)in Cash and Bank Balance ( A+B+C) 206.54 (428.32)Opening Balance of Cash & Cash Equivalent 919.66 1347.99 Closing Balance Cash & Cash Equivalent # 1126.20 919.66 # Comprises of,

Cash on Hand 746.51 773.85 Balance with Bank -Current Accounts 379.69 145.81

1126.20 919.66






Vadodara, dated May 29, 2017 Vikram Sanghvi Whole Time Director & Chief Financial Officer




orporate Overview

71

Statutory Reports

Notes Annexed to and forming part of the Financial Statements As on March 31, 2017

Corporate Information:Sanghvi Forging & Engineering Limited (SFEL) is an ISO 9001:2008 Certified Indian Company engaged in the manufacturer of open and closed die forging products for the oil & gas, defense, ship building, power & other sectors. It also exports products to various foreign countries over the last two decades.

The Company is having capacity of 18600 MTPA which includes 15000 MTPA Heavy Forging Division (with single piece forging up to 40 MT) to manufacture proof machined products viz. stepped shafts, bars & hollows, blocks, flanged shafts, gear blanks, shells, tube sheets, forging items etc.

1. Significant Accounting Policies To Financial Statements

I. Basis for preparation of financial accounting

The accompanying financial statements have been prepared under the historical cost convention on accrual basis, in accordance with Generally Accepted Accounting Principles in India. The Company has prepared these Financial Statements to comply in all material respects with the Accounting Standards specified under the Companies (Accounting Standards) Rules, 2006, and the relevant provisions of the Companies Act, 2013. The accounting policies adopted in the preparation of the financial statements are consistent with those of previous year.

II. Use of Estimates The presentation of financial statements

in conformity with Indian GAAP, which requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities on the date of financial statements and the reported amount of revenues and expenses during the year. Difference between the actual result and estimates are recognised in the period in which reason are known / materialized.

III. Fixed Assets and Depreciation /Amortization

A. Tangible Assets Tangible Fixed Assets are stated at historical

cost including borrowing costs expenditure directly attributable to the acquisition of the asset and fluctuation arising from exchange rate variations attributable to the assets less accumulated depreciation there on and impairment losses if any. Leasehold land having lease of 99 years or more are treated as free hold land only and other leases are amortized over the period of lease.

Subsequent expenditure related to an item of tangible assets are added to its book value only if they increase the future benefits from the existing assets beyond its previously assessed standard of performance.

B. Intangible Assets Intangible assets are stated at acquisition

cost, net of accumulated amortization and accumulated impairment losses, if any. Intangible assets are amortised on a straight line basis over their estimated useful lives.

C. Capital Work in Progress Cost of fixed assets not ready for use before

the balance sheet date is disclosed as capital work in progress.

D. Depreciation: The depreciation during the year has been

provided on straight line basis as per Schedule II of the Companies Act 2013 since the acquisition of respective fixed assets considering the useful life and residual value of respective fixed asset except in case of leasehold land which is amortised over the period of lease term and certain Plant & machinery which are depreciated over its useful life assessed by Independent/ Internal Technical Personnel after taking into consideration past experience of the company.


72

Notes Annexed to and forming part of the Financial Statements As on March 31, 2017 IV. Inventories Cost of Inventories have been computed

to include all cost of Purchases, Cost of Conversion and other costs incurred in bringing the inventories to their present location and condition.

Inventories are valued at lower of cost or net realizable value using the First in First out (FIFO) basis.

V. Revenue Recognition 1. Sales of products and services are

recognised when risk and rewards of ownership at of the products are passed on to the customers, which is generally on dispatch of goods. Sales are inclusive of Excise Duty but excluding sales tax / Value Added Tax and export incentives. Interest incomes are recognised on time proportion basis.

2. Revenue from sale of power is recognised when delivered and measured based on rates as per bilateral contractual agreements with buyers / at rate arrived at based on the principles laid down under the relevant Tariff Regulations as notified by the regulatory bodies, as applicable.

3. Export incentives are accounted on accrual basis. Revenue from job charges is recognised on completion of job work.

VI. Cash flow statement Cash flows are reported using the indirect

method whereby profit before tax is adjusted for the effects of the transactions of a non cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from regular revenue generating; financing and investing activities of the company are segregated.

VII. Leases Rentals applicable to operating leases where

substantially all of the benefits and risks of ownership remain with the lessor are charged against profits on straight line basis over the lease period.

VIII. Foreign Currency Transactions (a) Transactions denominated in foreign

currencies are recorded at the rate prevailing on date of transaction

(b) In respect of monetary items denominated in foreign currency at the year-end are translated at the year-end rates.

(c) Any income or expenses on account of exchange differences either on settlement or on transactions are recognised in the Profit and Loss Account.

(d) Exchange difference relating to long term foreign currency monetary item to the extent they are used for financing the acquisition of fixed assets are adjusted from the cost of such fixed assets.

(e) Financial statements of foreign operations are treated as integral operations and translated for Assets and liabilities at rates prevailing at the end of the year and Net revenues at the average rate for the year.

(f) Exchange differences arising on such translation are recognised as income or expense of the period in which they arise.

(g) Forward contracts, other than those entered into to hedge foreign currency risk on unexecuted firm commitments or highly probable forecast transactions, are treated as foreign currency transactions and accounted accordingly as per Accounting Standard (AS) 11 The Effects of Changes in Foreign Exchange Rates. Exchange differences arising on such contracts are recognised in the period in which they arise.



orporate Overview

73

Statutory Reports

IX. Taxes on Income Provision for taxation comprises of Current

Tax and Deferred Tax .Current tax provision has been made after considering reliefs and deduction available under Income Tax Act, 1961. Deferred tax resulting from “timing differences” between taxable and accounting income is accounted for using the tax rates and laws that are enacted or substantively enacted as on the balance sheet date. The deferred tax assets is recognised and carried forward only to the extent the assets can be realized in future. However, where there is unabsorbed depreciation or carry forward losses under taxation laws, deferred tax assets are recognised only if there is virtual certainty of realization of such assets. Deferred tax assets are reviewed as at each Balance sheet date.

Minimum Alternate Tax (MAT) Credit: MAT credit is recognised, as an Asset only when and to the extent there is convincing evidence that the Company will pay normal income tax during the specified year. In the year in which the Minimum Alternative tax (MAT) credit becomes eligible to be recognised as an asset in accordance with the recommendation contained in Guidance Note issued by the Institute of Chartered Accountants of India, the said asset is created by way of a credit to the statement of profit and loss and shown as MAT Credit Entitlement. The Company reviews the same at each balance sheet date and writes down the carrying amount of MAT Credit Entitlement to the extent there is no longer convincing evidence to the effect that Company will pay normal Income Tax during the specified period.

X. Employee Benefits (a) The Company’s contribution in respect

of provident fund is charged to Profit and Loss Account each year on accrual basis.

(b) Short term compensated absences are provided based on past experience.

(c) With respect to gratuity liability, Company contributes to Life Insurance

Corporation of India (LIC) under LIC’s Group Gratuity policy. Gratuity liability as determined on actuarial basis by the independent valuer. Actuarial gain/loss is charged to Profit and Loss Account.

XI. Borrowing Costs (a) Borrowing Cost attributable to

acquisition and construction of qualifying assets are capitalized as part of the cost of such assets up to the date when such assets are ready for intended use.

(b) Other borrowing cost is charged to Profit and Loss Account.

XII. Provisions, Contingent Liabilities and Contingent Assets

Provision is recognised only when there is a present obligation as a result of past events and when reliable estimates of the amount of the obligation can be made. Contingent liability is disclosed for:-

(a) Possible Obligations which will be confirmed only by future events not wholly within the control of the company or

(b) Present obligations arising from past events where it is not probable that an outflow of resources will be required to settle the obligation or reliable estimates of the amount of the obligation cannot be made. Contingent Assets are not recognised in the financial statements since this may result in the recognition of income that may never be realized.

XIII. Impairment of Assets The Company assesses at each Balance

Sheet date whether there is any indication that an asset may be impaired. If any such indication exists, the Company estimates the recoverable amount of the asset. If such recoverable amount of the asset or the recoverable amount of the cash generating unit to which the asset belongs is less than



74

its carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognised in the Profit and Loss Account. If at the Balance Sheet date there is an indication that if a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount.

XIV. Application of Securities Premium Account

Share issue expenses are charged first against available balance in Securities Premium Account.

XVI. Earning Per Share The Company reports basic and diluted

earnings per share in accordance with the Accounting Standard – 20-‘Earning per Share’ prescribed by the Companies (Accounting Standard) Rules 2006. Basic Earning per Share is computed by dividing the net profit or loss for the year by the weighted average number of Equity Share outstanding during the year. Diluted earning per share is computed by dividing the net profit or loss for the year by the weighted number of equity shares outstanding during the year as adjusted for the effects of all dilutive potential equity share.

XVII. Investments Current Investments are carried at lower

of cost and Market Value. Non Current (Long Term) investments are stated at cost. Provision for diminution in the value of Non Current investments is made only if such a decline is other than temporary.

XVIII. Government Grant: Grant from the Government are recognized

when there is reasonable assurance that;

I. The Company will comply with the conditions attached to them and

II. The grant will be received.

Government grants related to revenue are recognized on systematic basis in the statement of profit and loss over the periods necessary to match them with the related costs which they are intended to compensate. Such grants are deducted in reporting the related expenses.

When company receives non-monetary grants, the asset is accounted for on the basis of its acquisition cost. In case non-monetary asset is given free of cost it is recognized at a nominal value.




orporate Overview

75

Statutory Reports


Notes : 2.1 - Share Capital(` in ‘000)

Sr. Particulars As at March 31, 2017

As at March 31, 2016

(a) AUTHORISED :20,000,000 No. of Equity Shares of `10 each 200,000.00 200,000.00

(b) Issued , Subscribed & Paid up Share Capital :1,48,92,267 No. of Equity Shares of `10 Each (P.Y. 1,48,92,267 No. of Equity Shares of `10 Each)

148,922.67 148,922.67

TOTAL 148,922.67 148,922.67

(a) Right to vote , dividend and restriction attached to each class of issued capital to be disclosed. All the Shareholders whose name is entered in the Registered of Members of the Company shall enjoy the same voting

rights and be subject to the same liabilities as all other shareholder of the same class.

(b) Reconciliation of shares outstanding at the beginning and at the end of the yearParticulars As at March 31, 2017 As at March 31, 2016

Nos. (` in 000) Nos. (` in 000)Equity SharesAt the beginning of the year 14892267.00 148922.67 13892267 138922.67Issued during the year(a) Preferential Issue by conversion of warrant 1000000 10000.00Outstanding at the end of the year 14892267.00 148922.67 14892267 148922.67

(c) Details of shares held by shareholders holding more than 5% of the aggregate shares in the company (Equity Shares of `10 each fully paid)Sr. Name of the shareholder As on March 31, 2017 As on March 31, 2016

Number of shares

% holding Number of shares

% holding

1 Shri Jayanti B. Sanghvi 1,925,591 12.93 1,925,591 12.932 Shri Babulal S. Sanghvi 1,714,283 11.51 1,714,283 11.513 Shri Naresh B. Sanghvi 1,832,931 12.31 1,832,931 12.314 Shri Vikram B. Sanghvi 1,505,682 10.11 1,505,682 10.11

TOTAL 6978487 46.86 6978487 46.86


76

Notes : 2.2 - Reserves & Surplus(` in ‘000)



(a) General Reserve 3,987.14 3,987.14 (At Commencement & At End)

(b) Securities PremiumAs per last balance sheet 404,967.97 369,967.97 Add : Premium of Shares Issued during the year - 35,000.00 Closing Balance 404,967.97 404,967.97

(b) Profit & Loss AccountAs per last balance sheet (117,966.16) (18,096.02)Add : Loss for the Year (225,204.09) (99,870.14)Closing Balance (343,170.25) (117,966.16)TOTAL 65,784.86 290,988.95

Notes : 2.3 - Long Term Borrowings(` in ‘000)



(a) Secured Loans (i) Term Loan from Banks 650,956.63 772,147.86 - Secured against all fixed assets (existing & proposed) and

Equitable Mortgage over Leasehold Land & Personal Guarantees of Directors including pledge of their shares

- Personal Guarantees of Directors including pledge of their shares [Refer Note 2.25(13)]

(b) Unsecured Loans (i) Loans & Advances from Related Parties 112965.82 86555.82(ii) From Inter Corporate Deposits [Refer Note 2.25(14)] 24189.10 20700.00TOTAL 788,111.54 879,403.68

Notes : 2.4 - Long Term Provisions(` in ‘000)



(a) GRATUITY PAYABLE-Long Term 549.09 - TOTAL 549.09 -




orporate Overview

77

Statutory Reports

Notes : 2.5 - Short Term Borrowings(` in ‘000)



(a) Secured Loans(i) Working Capital Loan from Banks 353,312.41 265,737.51 (Against Hypothecation of Entire Current Assets - Stock of Raw

Material, Work-in-Progress, Finished Goods, Stores & Spares, Trade Receivables, etc.) (Rate of Interest is 12.20% to 13.25%).

TOTAL 353,312.41 265,737.51

Notes : 2.6 - Trade Payables(` in ‘000)



(a) Trade Payable - For Goods & Services 196,278.39 164,376.64 (b) Trade Payable - For Micro, Small & Medium Enterprises 488.13 2,849.23

TOTAL 196,766.52 167,225.87

Notes : 2.7 - Other Current Liabilities(` in ‘000)



(a) Current Maturity of long term Loan (Secured against all fixed assets (existing & proposed) and Equitable Mortgage over Leasehold Land. Personal Guarantees of Directors including pledge of their shares) [Terms of Loan : Refer Notes 2.25 (13)]

125,115.75 126,440.00

(b) Term Loan Installment due remain unpaid 96,491.60 28,296.00 (c) Interest Accrued and Due on Borrowing- [Refer Notes 2.25 (13)] 92,367.40 25,100.00 (d) Advance from Customers 44,206.24 8,792.37 (e) Duties & Taxes Payable 2,529.14 2,185.30 (f) Payable - For Capital Goods 17,480.58 39,854.31 (g) Other Outstanding Liabilities 22.00 77.00

TOTAL 378,212.70 230,744.98

Notes : 2.8 - Short Term Provisions(` in ‘000)



(a) For Employee Benefit Expenses 1,607.65 1,455.00 (b) For Other Expenses 22236.57 17173.92

TOTAL 23,844.22 18,628.92



78

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orporate Overview

79

Statutory Reports

Notes : 2.10 - Non-current Investments(` in ‘000)

Particulars As at March 31, 2017


Investment in Subsidiary (Unquoted Investment)In shares of Sanghvi Europe B V (Having 100 Shares of Face Value of Euro 1 each fully paid)

6.75 6.75

TOTAL 6.75 6.75

Notes : 2.11 - Deferred Tax Assets (Net)(` in ‘000)



(a) Deferred Tax Liability :On account of timing difference of- Depreciation (168,596.31) (148,121.20)

(b) Deferred Tax Assets :On account of timing difference of-Unabsorbed Depreciation-On account of Expenses Allowable on Payment Basis 31,249.68 481.02 -Unabsorbed Business Loss & Depreciation (In view of absence of virtual certainty of Profit in Future years, Deferred tax asset is not recognized.)

137,346.63 147,640.18

TOTAL - -

Notes : 2.12 - Long Term Loans & Advances(` in ‘000)



Unsecured, Considered Good(a) Advances for Capital Goods - 4,609.46 (b) Security Deposits 2,477.82 1,271.43 (c) Balance with Revenue Authorities 19,722.40 11,103.48 (d) Other Loans & Advances # - 73.62

TOTAL 22,200.22 17,057.99

# Includes primarily Gratuity Payable (Dr. Bal) etc.



80

Notes : 2.13 - Inventories(` in ‘000)



(a) Raw Materials 40,356.12 49,593.20 (b) Work-in-Progress 149,146.41 150,249.94 (c) Stores & Spare Parts 9,119.84 8,521.71 (d) Packing Materials 123.55 59.18 (e) Scrap

(For mode of valuation of inventories, refer note no. 1(IV ) 6,546.54 11,150.61

TOTAL 205,292.45 219,574.64

Notes : 2.14 - Trade Receivables(` in ‘000)



(a) Trade receivables outstanding for a period exceeding six months from the date they are due for payment(i) Unsecured, considered good 43705.17 26955.14(ii) Doubtful - -

(b) Trade receivables outstanding for a period less than six months from the date they are due for payment

166,213.30 114,056.43

(i) Unsecured, considered goodTOTAL 209,918.47 141,011.57

Notes : 2.15 - Cash & Bank Balance(` in ‘000)



CASH & CASH EQUIVALENT(a) Cash on Hand 746.51 773.85 (b) Balance with Banks :

In Current Accounts 379.69 145.81 OTHER BANK BALANCE(a) Other Balance with Bank - Fixed deposit as Margin Money under bank

lien (Balance with banks to the extent held as Margin Money having maturity less than 12 month)

7,799.22 10,043.76

TOTAL 8,925.41 10,963.42




orporate Overview

81

Statutory Reports

Notes : 2.16 - Short Term Loan & Advance(` in ‘000)



Unsecured Considered Good(a) Balance with Revenue Authorities 16,458.57 34,156.04 (b) Pre - Paid Expense 1,185.25 838.30 (c) Advance to Suppliers 3,136.22 4,919.75

TOTAL 20,780.03 39,914.08

Notes : 2.17 - Other Current Assets(` in ‘000)



(a) Export Incentive Receivables 5,970.65 4,340.86 (b) Accrued Interest on Deposits 247.91 276.22 (c) Other Receivables - 175.71

TOTAL 6218.55 4792.79

Notes : 2.18 - Revenue From Operations(` in ‘000)



(a) Sale of Flanges, Fittings, Forged Bars & Scrap(i) Finished Goods Sales - Domestic 377,038.37 455,559.11 Sales - Export 143,162.42 199,291.43 Total 520,200.79 654,850.54 (ii) Manufacturing Scrap 60,448.44 58,244.76

580,649.23 713,095.29 (b) Other Operating Revenues

Duty Draw Back & Other Export Incentive 6,962.37 5,961.57 Power Generation 2,294.47 2,689.05 Other Operating Revenues 7,244.77 6,256.26

16,501.61 14,906.88 GROSS REVENUE FROM OPERATIONS 597,150.84 728,002.17 Less : Excise Duty (42,990.43) (44,472.30)NET REVENUE FROM OPERATIONS 554,160.41 683,529.87



82

Notes : 2.19 - Other Income(` in ‘000)



Interest From Bank & Other 692.01 1,538.08 Exchange Fluctuation gain/(loss)(Net) 430.07 2,537.71 Misc. Income 21.55 5,254.01 TOTAL 1,143.63 9,329.80

Notes : 2.20 - Cost ofMaterial Consumed(` in ‘000)



Steel ConsumedOpening Balance 49,593.20 65,038.18 Add : Purchase 287,489.82 313,595.74

337,083.02 378,633.92 Less : Closing Stock 40,356.12 49,593.20 Raw Material Consumed 296,726.91 329,040.72 INFORMATION RELATING TO CONSUMPTION OF MATERIALConsumption of Imported & Indigenous MaterialsImported Items 16,151.44 7,181.46

5.44% 2.18%Indigenous Items 280,575.46 321,859.26

94.56% 97.82%TOTAL 296,726.91 329,040.72

Notes : 2.21 - Changes in Stock of Scrap and Work in Progress(` in ‘000)



(Increase) / Decrease inClosing Stock

- Work - in - Progress 149,146.41 150,249.94 - Scrap 6,546.54 11,150.61

Opening Stock 155,692.95 161,400.55 - Work - in - Progress- Scrap 150,249.94 114,136.76

Consumption of Imported & Indigenous Materials 11,150.61 11,546.92 Imported Items 161,400.55 125,683.68 (Increase) / Decrease in Stock 5,707.60 (35,716.87)




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Statutory Reports

Notes : 2.22 - Employees Benefit Expense(` in ‘000)



Salary & Wages & Bonus 60094.33 58971.42Contribution to Provident & Other Funds 3092.20 3140.02Staff Welfare Expense 698.72 1754.82TOTAL 63885.25 63866.26

Notes : 2.23 - Finance Cost(` in ‘000)



Interest Expense 147,940.53 143,505.02 Bank Charges 18,153.81 18,327.22 Applicable loss on foreign currency transactions and translation - (187.94)TOTAL 166,094.34 161,644.30

Notes : 2.24 - Other Expenses(` in ‘000)



(a) Manufacturing Expense :Power Consumed 23,605.44 30,586.93 Fuel Consumed 37,150.68 51,455.40 Stores Consumed 14,757.57 23,629.03 Wages - Job Work Charges 17,400.16 19,510.49 Repairs and Maintenance - Buildings 595.01 442.32 Repairs and Maintenance - Plant & Machinery 2,546.59 2,605.52 TOTAL (a) 96,055.45 128,229.68

(b) Administrative & Other Expense :Payment to Auditors

- Audit Fees 325.00 325.00 - Certification and Other matters 175.00 50.00

Director Sitting Fees 375.00 495.00 Insurance Expense 327.13 971.34 Professional Fees 5,967.79 6,134.91 Rates & Taxes 4,748.21 6,390.10 Rent Expense 619.61 590.68 Repairs and maintenance - Others 1,789.88 2,189.41 Loss on sale of fixed assets - 42.98 Donations and Contributions - 1.00 Bad debts 1,226.25 - Miscellaneous Expense 46,782.68 43,768.41 TOTAL (b) 62,336.55 60,958.83 TOTAL (a+b) 158,392.00 189,188.51



84

2.25 Notes Forming Part of Financial Statements1. Contingent Liabilities A. Disputed Liabilities - In Appeal

(` in ‘000)Particulars As at

March 31, 2017As at

March 31, 2016- Income Tax on Accounts of Disallowance 5282.69 5282.69- Service Tax on Account of Cenvat Credit 12192.05 9608.67- Excise on Account of Cenvat Credit 2979.31 2979.31- Central Sales Tax Demand on Account of ‘C’ Form 10830.83 7104.84

The future cash flows in respect of the above, if any, is determinable only on receipt of judgments/decisions pending with relevant authorities. The company does not expect the outcome of matters stated above to have a material adverse effect on the Company’s financial conditions, result of operation or Cash Flow.

B. Guarantee Given By Bankers on Behalf of Company(` in ‘000)



- Bank Guarantee 30400.76 38599.70

2. Estimated Amount of Contracts-Capital Accounts(` in ‘000)



Estimated Amount of Contracts remaining to be executed on Capital Accounts and not provided for, net of advances

2500.00 6789.00

3. C.I.F. value of Imports(` in ‘000)

Particulars For the year ended March 31, 2017

For the year ended March 31, 2016

Capital Goods 1832.28 3172.60Raw Material 24543.80 10892.88

4. (a) Expenditure in Foreign Currency(` in ‘000)



Commission on Export Sales 4314.62 571.33Finance Cost 6031.84 7583.46Exhibitions & Sales Promotion 430.21 283.42Foreign Travel Expenses 1388.89 1793.68




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Statutory Reports

(b) Earnings in Foreign Currency(` in ‘000)



F.O.B. value of exports 145175.24 178844.48

5. Exchange difference Gain/(Loss) on account of fluctuations in foreign currency rates(` in ‘000)



Relating to Exports during the year as part of Sales (1380.60) 2173.57

(a) Recognized in Profit and Loss Account(` in ‘000)



On settlement / revaluation of current assets 1300.61 2291.49On settlement / revaluation of current liabilities (350.08) (1738.66)

6. Details of amount Capitalised during the year to Fixed Assets(` in ‘000)



Interest & Other Finance Charges 149.88 1911.11Foreign Exchange (Gain) / Loss (Net) 5419.56 16026.94TOTAL 5569.44 17938.05

7. The Company has amounts due to suppliers under The Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act) as at March 31, 2017. The disclosure pursuant to the said Act is as under


March 31, 2017As at

March 31, 2016Principal Amount due and remaining unpaid to any suppliers under MSMED Act, 2006,

451.02 2879.23

Principal Amount due and remaining unpaid to any suppliers under MSMED Act, 2006, beyond the appointed day

448.22 2235.16

Interest accrued and due to suppliers under MSMED Act, on the above amount during the year

18.05 29.99

Interest paid to suppliers under MSMED Act (Section 16) 10.93 7.59Interest accrued and remaining unpaid at the end of the year to suppliers under MSMED Act

37.11 29.99



86

8. Computation of Earnings per Share (EPS)(` in ‘000)



Profit used as Numerator for calculating Earnings per Share (225204.09) (99870.14)Weighted Average Number of Share used in computing Basic EPS 14892267 14075829Number of Share used in computing Diluted EPS 14892267 14892267Nominal Value per Share (in `) 10 10Basic Earnings per Share (in `) (15.12) (7.10)Diluted Earnings per Share (in `) (15.12) (6.71)

9. Related Party Details (a) Related Party Disclosure

Key Management Personnel Mr. Babulal S. SanghviMr. Jayanti B. SanghviMr. Naresh B. SanghviMr. Vikram B. Sanghvi

Relative of Key Management Personnel Smt. Bhamridevi B. Sanghvi Smt. Meena J. Sanghvi Smt. Kiran N. Sanghvi Smt. Sheetal V. Sanghvi Mr. Mahesh B Sanghvi

Enterprises under Significant Influence of Key Management Personnel or their Relatives

Babulal Sanghvi (HUF)Jayanti Sanghvi (HUF)Naresh Sanghvi (HUF)Vikram Sanghvi (HUF)Babulal Sanghvi (HUF))Gautam Stainless Pvt. Ltd.

Subsidiary Company Sanghvi Europe B V

(b) Related Party Transaction(` in ‘000)

Particulars Subsidiary Company Key Management Personnel

Relative of Key Management Personnel

Enterprises under Significant Influence of Key management Personnel or

their Relatives

TOTAL

March, 31 2017

March, 31 2016

March, 31 2017

March, 31 2016

March, 31 2017

March, 31 2016

March, 31 2017

March, 31 2016

March, 31 2017

March, 31 2016

Purchase of Goods/DEPB - - - - - - 308.78 4,424.64 308.78 4,424.64 Gautam Stainless Pvt. Ltd. - - - - - - 308.78 4,424.64 308.78 4,424.64 Purchase of Tangible Assets

773.70 773.70 -

Sanghvi Europe B.V. 773.70 773.70 - Receiving of Services - - - - - - 86.31 25.54 86.31 25.54 Gautam Stainless Pvt. Ltd. - - - - - - 86.31 25.54 86.31 25.54 Sale of Goods 19,795.76 30,187.41 - - - - 1,576.66 86.29 21,372.42 30,273.70 Gautam Stainless Pvt. Ltd. - - - - - - 1,576.66 86.29 1,576.66 86.29 Sanghvi Europe B.V. 19,795.76 30,187.41 19,795.76 30,187.41 Interest paid - - - - - - 1,308.00 190.75 1,308.00 190.75 Gautam Stainless Pvt. Ltd. - - - - - - 1,308.00 190.75 1,308.00 190.75 Loans - Given - 397.09 - - - - - - - 397.09 Sanghvi Europe B.V. - 397.09 - 397.09 Loans - Repaid / Converted - - 11,300.00 37,775.00 6,580.00 4,523.94 9,918.10 3,539.08 27,798.10 45,838.02 Babulal S. Sanghvi - - - 9,137.50 - - - - - 9,137.50




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Statutory Reports

(` in ‘000)Particulars Subsidiary Company Key Management

PersonnelRelative of Key

Management PersonnelEnterprises under

Significant Influence of Key management Personnel or

their Relatives

TOTAL

March, 31 2017

March, 31 2016

March, 31 2017

March, 31 2016

March, 31 2017

March, 31 2016

March, 31 2017

March, 31 2016

March, 31 2017

March, 31 2016

Jayantilal B. Sanghvi - - 6,000.00 11,317.50 - - - - 6,000.00 11,317.50 Naresh B. Sanghvi - - 3,300.00 8,537.50 - - - - 3,300.00 8,537.50 Vikram B. Sanghvi - - 2,000.00 8,782.50 2,000.00 8,782.50 Meena J. Sanghvi - - - - - 4,163.94 - - - 4,163.94 Kiran N. Sanghvi - - - - 530.00 360.00 - - 530.00 360.00 Sheetal V. Sanghvi - - - - - - - - Teena M. Sanghvi - - - - 6,050.00 - - - 6,050.00 - Babulal Sanghvi (HUF) - - - - - - 100.00 - 100.00 - Jayantilal B. Sanghvi (HUF) - - - - - - - - - - Naresh B. Sanghvi (HUF) - - - - - - - 35.00 - 35.00 Vikram Sanghvi (HUF) - - - - - - 1,100.00 35.00 1,100.00 35.00 Gautam Stainless Pvt. Ltd. - - - - 8,718.10 3,469.08 8,718.10 3,469.08 Loans - Received / Taken - 481.81 29,200.00 39,371.00 10,050.00 6,675.00 18,467.20 39,615.75 57,717.20 86,143.56 Babulal Sanghvi - - 2,600.00 9,930.00 - - - - 2,600.00 9,930.00 Jayantilal B. Sanghvi - - 7,730.00 11,640.00 - - - - 7,730.00 11,640.00 Naresh B. Sanghvi - - 15,970.00 4,551.00 - - - - 15,970.00 4,551.00 Vikram B. Sanghvi - - 2,900.00 13,250.00 - - - - 2,900.00 13,250.00 Bhamridevi B. Sanghvi - - - - - 500.00 - - - 500.00 Meena J. Sanghvi - - - - - 500.00 - - - 500.00 Kiran N. Sanghvi - - - - - 4,275.00 - - - 4,275.00 Sheetal V. Sanghvi - - - - 4,000.00 1,400.00 - - 4,000.00 1,400.00 Teena M. Sanghvi - - - - 6,050.00 - - - 6,050.00 - Babulal Sanghvi (HUF) - - - - - - 3,300.00 1,825.00 3,300.00 1,825.00 Jayantilal Sanghvi (HUF) - - - - - - 2,470.00 9,400.00 2,470.00 9,400.00 Naresh Sanghvi (HUF) - - - - - - - 10,800.00 - 10,800.00 Vikram Sanghvi (HUF) - - - - 470.00 6,250.00 470.00 6,250.00 Gautam Stainless Pvt. Ltd. - - - - - - 12,227.20 11,340.75 12,227.20 11,340.75 Sanghvi Europe B.V. - 481.81 - - - 481.81 Investment 6.75 6.75 - - - - - - 6.75 6.75 Sanghvi Europe B.V. 6.75 6.75 - - - - 6.75 6.75 Interest Expenses - - - - - - - - - - Rental Paid - - 36.00 36.00 180.00 180.00 - - 216.00 216.00 Bhamridevi B. Sanghvi - - - - 180.00 180.00 - - 180.00 180.00 Jayantilal B. Sanghvi - - 36.00 36.00 - - - - 36.00 36.00 Director's Remuneration - - 9,252.41 8,304.66 - - - - 9,252.41 8,304.66 Balance Outstanding - (Receivables)/Payables (Net) Loans & Advances - - 56,290.21 38,390.21 14,098.17 10,628.17 53,786.54 45,237.44 124,174.92 94,255.82 Babulal S. Sanghvi - - 4,557.10 1,957.10 - - - - 4,557.10 1,957.10 Jayantilal B. Sanghvi - - 15,392.32 13,662.32 - - - - 15,392.32 13,662.32 Naresh B. Sanghvi - - 19,322.09 6,652.09 - - - - 19,322.09 6,652.09 Vikram B. Sanghvi - - 17,018.70 16,118.70 - - - - 17,018.70 16,118.70 Bhamridevi B. Sanghvi - - - - 2,622.30 2,622.30 - - 2,622.30 2,622.30 Meena J Sanghvi - - - - 500.00 500.00 - - 500.00 500.00 Kiran N Sanghvi - - - - 4,759.74 5,289.74 - - 4,759.74 5,289.74 Sheetal V Sanghvi - - - - 6,216.14 2,216.14 - - 6,216.14 2,216.14 Babulal Sanghvi (HUF) - - - - - - 5,025.00 1,825.00 5,025.00 1,825.00 Jayantilal Sanghvi (HUF) - - - - - - 15,202.51 12,732.51 15,202.51 12,732.51 Naresh Sanghvi (HUF) - - - - - - 14,211.77 14,211.77 14,211.77 14,211.77 Vikram Sanghvi (HUF) - - - - - - 8,138.16 8,768.16 8,138.16 8,768.16 Sanghvi Europe B.V. - - - - - - - - - - Gautam Stainless Pvt. Ltd. - - - - - - 11,209.10 7,700.00 11,209.10 7,700.00 Trade Payable / Receivable 24,449.83 23,366.34 - - - - 3,046.20 3,431.81 27,496.03 26,798.15 Gautam Stainless Pvt. Ltd. (Service Vendor)

- - - - - - 111.85 25.54 111.85 25.54

Gautam Stainless Pvt. Ltd. (Material Vendor)

- - - - - - 1,278.41 3,324.64 1,278.41 3,324.64

Gautam Stainless Pvt. Ltd. (Customer )

- - - - - - 1,655.94 81.63 1,655.94 81.63

Sanghvi Europe B.V. (Customer)

23,709.16 23,366.34 23,709.16 23,366.34

Sanghvi Europe B.V. (Vendor)

740.67 - - - - - - - 740.67 -

Personal Guarantee Given to Bank against Working capital & Term loan outstanding Amount.



88

10. Contributions are made to Recognized Provident Fund/ Government Provident Fund which covers all employees. While both the employees and the Company make predetermined contributions to the Provident Fund .The contributions are normally based on a certain proportion of the employee’s salary. Amount recognized as expense in respect of these defined contribution plans.


March 31, 2017As at

March 31, 2016Contribution to Provident Fund 2579.17 2593.55

In respect of Gratuity, Contributions are made to LIC’s Recognized Group Gratuity Fund Scheme based on amount demanded by LIC of India. Provision for Gratuity is based on actuarial valuation carried by independent actuary as at the year end. Major drivers in actuarial assumptions, typically, are years of service and employee compensation. After the issuance of the Accounting Standard 15 on ‘Employee Benefits’, commitments are actuarially determined using the ‘Projected Unit Credit’ method. Gains and losses on changes in actuarial assumptions are accounted for in the Profit and Loss account.

Category of Plan Assets: The Company’s Plan Assets in respect of Gratuity are funded through the Group Scheme of the LIC of India

(` in ‘000)In respect of gratuity (funded): As at

March 31, 2017As at

March 31, 2016Reconciliation of liability recognized in the Balance Sheet Present value of commitments (as per Actuarial Valuation) (1834.68) (1304.60)Fair value of plan assets 1083.00 1378.22Net (liability) / asset in the Balance sheet (751.68) 73.22Movement in net liability recognized in the Balance sheet Net liability as at the beginning of the year (296.61) 161.32Net expense recognized in the Profit and Loss account (455.06) (457.93)Contribution during the year - 370.23Net (liability) / asset in the Balance sheet (751.68) 73.62Expense recognized in the Profit and Loss account Current Service cost 548.39 530.19Interest cost 96.54 64.57Expected return on plan assets (76.10) (92.74)Actuarial (gains)/ losses (113.77) (44.08)Expense charged to the Profit and Loss account 455.06 457.94Return on plan assetsExpected return on plan assets 76.10 92.74Actuarial gains/ (losses) (1.09) (33.22)Actual return on plan assets 75.01 59.52Reconciliation of defined-benefit commitmentsCommitments as at the beginning of the year 1304.60 838.56Current service cost 548.39 530.19Interest cost 96.54 64.57Paid benefits - (51.42)Actuarial (gains)/ losses (114.85) (77.30)Commitments as at the year end 1834.68 1304.60




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Statutory Reports

Reconciliation of plan assetsPlan assets as at the beginning of the year 1007.99 999.88Expected return on plan assets 76.10 92.74Contributions during the year - 370.23Paid benefits - (51.42)Actuarial gains/ (losses) (1.09) (33.22)Plan assets as at the year end 1083.00 1378.21The actuarial calculations used to estimate commitments and expenses in respect of gratuity and compensated absences are based on the following assumptions which if changed, would affect the commitment’s size, funding requirements and expenseDiscount rate 7.40% 7.70%Expected return on plan Assets 7.55% 8.00%Expected rate of salary increase 8.00% 8.00%

11. The Company has entered into lease agreements for certain properties including director’s accommodation which are cancellable at the option of the Company or as per agreed terms. The total rent charged to the Statement of Profit and Loss for the year towards such leases amount to `606.36 thousands (P.Y. `584.70 thousands).

12. Segment disclosures:

(a) Business Segment: The company has only one reportable business segment of Forging & Fitting as the primary reportable Business

segment for disclosure. The business segments are business of Forging & Fitting and wind energy business.

(b) Geographical Segment: The company has exported during the year and it does require disclosure as a separate reportable segment of

Domestic Sales and Export Sale

(` in ‘000)Particulars Domestic Export TotalSegment Revenue (Net) For the Year ended March 31, 2017

394496.38 143162.42 537658.80

Segment Revenue (Net) For the Year ended March 31, 2016

469331.57 199291.42 668622.99

13. Terms and Conditions of Loans From Bank:- [Refer Notes 2.3 (a)(i) ](` in ‘000)

Sr. Rate of Interest Repayment TermsI Term Loan I - INR 2.90 % above BR i.e 12.20% p.a. 84 structured monthly installment from August

2015. (Default in Installment and interest as on 31/03/2017 amounting to `39587 (P.Y. `16569) and `48459 (P.Y. `24797 ) respectively)

ii WCTL- INR 2.90 % above BR i.e 12.20% p.a 84 structured monthly installment from August 2015. . (Default in Installment and interest as on 31/03/2017 amounting to `12263 (P.Y. `3806) and `16867 (P.Y. `5843) respectively)



90

iii. Term Loan – ECB / USD 324 bps over LIBOR 26 quarterly installments from August 2012. (Default in Installment and interest as on 31/03/2017 amounting to `41819 (P.Y. `10786) and `4478 (P.Y. ` Nil ) respectively)

iv. Term Loan II - INR 2.90 % above BR i.e 12.20% p.a. 26 quarterly installments from August 2012. (Default in Installment and interest as on 31/03/2017 amounting to `2823 (P.Y. `941) and `1032 (P.Y. `304) respectively)

14. Terms and Conditions of Unsecured Loan: Repayment terms – Repayable after 3 years and Interest at 0 to 12 %.

15. Previous financial year’s figures have been regrouped wherever necessary to make them comparable with those of the current year.

16. Pursuant to requirement of Notification No-G.S.R. 307(E) & G.S.R. 308(E) issued by MCA on March 30, 2017 regarding disclosure of details of Specified Bank Notes (SBN) held and transacted during the period from November 8, 2016 to December 30, 2016 , the same is provided in the Table below:

The details of Specified Bank Notes (SBN) held and transacted during the period from November 8, 2016 to December 30, 2016 is provided in the Table below :—

SBNs Other denomination notes

Total Amount (`)

Closing cash in hand as on 08.11.2016 1968500 389368 2357868(+) Permitted receipts 740000 740000(-) Permitted payments 617110 617110(-) Amount deposited in Banks 1968500 1968500Closing cash in hand as on 30.12.2016 Nil 512258 512258

* For the purpose of this clause, the term ‘Specific Bank Notes’ shall have the same meaning provided in the notification of the Government of India, in the Ministry of Finance, Department of Economic Affairs number S.O. 3407 (E), dated the November 8, 2016.












orporate Overview

91

Statutory Reports

To the Members of SANGHVI FORGING & ENGINEERING LIMITED

Report on the Consolidated Financial StatementsWe have audited the accompanying consolidated financial statements of SANGHVI FORGING &ENGINEERING LIMITED (‘’the Holding company’’) and its subsidiary (the Holding company and its subsidiary constitute ’’the group”) comprising of the Consolidated Balance Sheet as at March 31, 2017, the Consolidated Statement of Profit and Loss, the Consolidated Cash Flow Statement for the year then ended, and a summary of the significant accounting policies and other explanatory information (hereinafter referred to as “the consolidated financial statements”).

Management’s Responsibility for the Financial Statements The Holding Company’s Board of Directors is responsible for the preparation of these consolidated financial statements in terms of the requirements of the Companies Act, 2013 (hereinafter referred to as “the Act”)that give a true and fair view of the consolidated financial position, consolidated financial performance and consolidated cash flows of the Group in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. The respective Board of Directors of the companies included in the Group are responsible for maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Group and for preventing and detecting frauds and other irregularities; the selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and the design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error, which have been used for the purpose of preparation of the consolidated financial statements by the Directors of the Holding Company, as aforesaid.

Auditor’s ResponsibilityOur responsibility is to express an opinion on these consolidated financial statements based on our audit. While conducting the audit, we have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made thereunder.

We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the consolidated financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Holding Company’s preparation of the consolidated financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances but not for the purpose of expressing an opinion on whether the Company has an adequate internal financial controls system over financial reporting in place and the operating effectiveness of such controls.

An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Holding Company’s Board of Directors, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that the audit evidence obtained by us and the audit evidence obtained by the other auditors in terms of their reports referred to in sub-paragraph of the Other Matters paragraph below, is sufficient and appropriate to provide a basis for our audit opinion on the consolidated financial statements.

OpinionIn our opinion and to the best of our information and according to the explanations given to us, the aforesaid consolidated financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the consolidated state of affairs of the Group, as at March 31, 2017, and their consolidated loss and their consolidated cash flows for the year ended on that date.

Other MatterThe consolidated financial statements include unaudited financial statements of subsidiary, whose financial statements reflect total assets of `41409.17 in (‘000) as at March 31, 2017, total revenue of `45821.24 in (‘000) and net cash flows amounting to `2982.42 in (‘000)for the year ended as considered in the consolidated financial statements. Financial statements of the subsidiary have not been audited

Independent Auditor’s Report

Consolidated Financial Statements

92

by us. These financial statements are unaudited and have been furnished to us by management and our opinion, in so far as it relates to the amounts included in respect of this subsidiary is based solely on such unaudited financial statements. In our opinion and according to the information and explanations given to us by the Management, this financial statement is not material to the Group.

Our opinion on the consolidated financial statements, and our report on Other Legal and Regulatory Requirements below, is not modified in respect of the above matters with respect to the financial statements certified by the Management.

Report on Other Legal and Regulatory Requirements1. Further, As required by section 143(3) of the Act, we report that:

a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit of the aforesaid consolidated financial statements.

b) in our opinion proper books of account as required by law relating to preparation of the aforesaid consolidated financial statements have been made so far as appears from our examination of those books;

c) The Consolidated Balance Sheet, the Consolidated Statement of Profit and Loss, and the Consolidated Cash Flow Statement dealt with by this Report are in agreement with the relevant books of account maintained for the purpose of preparation of the consolidated financial statements.

d) In our opinion, the aforesaid consolidated financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014( as amended).

e) On the basis of written representations received from the directors of the Holding company as on March 31, 2017, and taken on record by the Board of Directors of the Holding Company, none of the directors is disqualified as on March 31, 2017, from being appointed as a director in terms of section 164(2) of the Act.

f) With respect to the matter to be included in the Auditor’s report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules,2014( as amended), in our opinion and to the best of our information and according to the explanations given to us:

i. The group has disclosed the impact of pending litigations on its consolidated financial position in Note 2.25(1A) of the consolidated financial statements.

ii. The group did not have any long term contracts including derivatives contracts for which there were an material foreseeable losses;

iii. There is no such amount which is required to be transfer to the Investor education and protection fund by the holding company incorporated in India.

iv. The Holding Company has provided requisite disclosures in the consolidated financial statements as to holding as well as dealings in Specified Bank Notes during the period from November 8, 2016 to December 30, 2016, on the basis of information available with the holding Company. Based on audit procedures, and relying on management’s representation, we report that disclosures are in accordance with the books of accounts maintained by the holding Company and as produced to us by the Management. – Refer Note 2.25(18).


FRN No.: 118852W




orporate Overview

93

Statutory Reports

Consolidated Balance SheetAs at March 31, 2017









(` in ‘000)Sr. Particulars Note No. As at

March 31, 2017As at

March 31, 2016I. Equity and Liabilities(1) Shareholders' Funds :(a) Share Capital 2.1 148,922.67 148,922.67 (b) Reserves and Surplus 2.2 59,540.03 287,113.58 (2) Non-Current Liabilities:(a) Long-Term Borrowings 2.3 788,111.54 879,403.68 (b) Long Term Provisions 2.4 549.09 - (3) Current Liabilities:(a) Short - Term Borrowings 2.5 353,733.02 265,737.51 (b) Trade Payables 2.6

- Trade Payables for Goods & Services 218,324.69 167,558.43 - Trade Payables for Micro, Small and Medium Enterprises 488.13 2,849.23

(c) Other Current Liabilities 2.7 378,212.70 231,534.61 (d) Short - Term Provisions 2.8 24,192.40 18,718.51

TOTAL 1,972,074.27 2,001,838.22 II. Assets (1) Non - Current Assets:(a) Fixed Assets 2.9(i) Tangible Assets 1,476,566.59 1,560,889.42 (ii) Intangible Assets 2,040.69 2,984.16 (iii) Capital Work-in-Progress 3,554.85 4,457.76 (b) Deferred Tax Assets (Net) 2.10 - - (c) Long Term Loans and Advances 2.11 22,200.22 17,057.99 (2) Current Assets:(a) Inventories 2.12 228,429.87 236,202.13 (b) Trade Receivables 2.13 200,375.61 123,838.42 (c) Cash and Bank Balances 2.14 11,907.84 11,701.46 (d) Short - Term Loan and Advances 2.15 20,780.04 39,914.09 (e) Other Current Assets 2.16 6,218.56 4,792.79

TOTAL 1,972,074.27 2,001,838.22 SIGNIFICANT ACCOUNTING POLICIES 1The accompanying Notes are integral Part of Financial Statements

2.25


94









Consolidated Statement of Profit and LossFor the year ended March 31, 2017

(` in ‘000)Sr. Particulars Note No. For the year ended


March 31, 2016I. Income :(a) Revenue from Operations 2.17 623,225.13 760,960.85

Less : Excise Duty (42,990.43) (44,472.30)Net Revenue from Operations 580,234.70 716,488.55

(b) Other Income 2.18 2,321.72 9,329.80 Total Revenue 582,556.42 725,818.35

II. Expenses(a) Cost of Material Consumed 2.19 296,726.90 364,798.34 (b) Purchase of Stock in Trade 2.20 25,146.00 - (c) Changes in Inventory of Finished Goods and Work in

Progress2.21 (801.43) (41,636.66)

(d) Employee Benefits Expense 2.22 67,497.97 63,866.25 (e) Finance Costs 2.23 166,098.73 161,644.30 (f) Depreciation and Amortization Expense 2.9 89,702.05 84,202.39 (g) Other Expenses 2.24 165,807.16 196,387.63

810,177.38 829,262.25 III. Loss Before Tax (227,620.96) (103,443.90)

TAX EXPENSES - - Current Tax - - Deferred Tax - - (Excess) / Short Provision for tax relating to prior years - 584.38

- 584.38 IV. Profit/(Loss) For The Year (227,620.96) (104,028.28)

Basic Earning Per Share(Face Value of `10 Per Share) (15.28) (7.39)Diluted Earning Per Share(Face Value of `10 Per Share) (15.28) (6.99)[Refer to Note No. 2.25 (9)]

SIGNIFICANT ACCOUNTING POLICIES 1The accompanying Notes are integral Part of Financial Statements

2.25



orporate Overview

95

Statutory Reports

Consolidated Cash Flow StatementFor the year ended March 31, 2017



March 31, 2016A. Cash Flow From Operating Activities:

Net Profit Before Tax and Extra ordinary Items (227620.96) (103443.90)Adjustment for:

Depreciation /Amortization /Impairment 89702.05 84202.39 Interest Expense / Finance Cost 147944.92 143505.02 Interest Income (692.01) (1538.08)Loss/ (Profit) on sale of Fixed Assets 0.00 28.78 Unrealised Profit on Inventory 0.00 2236.60 Effect of Foreign Exchange rate variations during the year 47.41 0.00

Operating Profit Before Working Capital Changes 9381.41 124990.81 Adjustment for (increase)/decrease in Operating assets:Inventories 7772.27 (27427.56)Trade Receivables (76537.19) 120823.41 Short Term Loan & Advances 19134.05 3112.16 Other Current Assets (1425.77) (1201.24)Long Term Loan & Advances (5142.23) (3394.41)

(56198.87) 91912.36 Adjustment for (increase)/decrease in Operating liabilities:Trade Payable 48405.15 (11663.63)Non-Current Liabilities 549.09 (114.00)Other Current Liabilities 146678.09 (4474.79)Short Term Provisions 5473.88 5877.97

201106.21 (10374.45)Cash Generated From Operation 154288.75 206528.72

Income Tax Expense 0.00 584.38 Net Cash Generated From Operating Activities 154288.75 205944.34

B. Cash Flow From Investing ActivitiesAcquisition of Fixed Assets (8952.39) (45355.29)Sales / Devaluation of Assets 5419.56 Proceed from Sale of Fixed Assets 0.00 383.00 Change in Bank Margin Money / FD Originally Matured in more than three months

2244.55 13235.18

Interest Received 692.01 1538.08 Net Cash Used in Investing Activities (596.27) (30199.03)


96

Consolidated Cash Flow StatementFor the year ended March 31, 2017



March 31, 2016C. Cash Flow From Financing Activities

Increase in Share Capital 0.00 10000.00 Security Premium 0.00 23750.00 Non - Current Investment 0.00 0.00 Long Term Loan from Bank (91292.13) (61486.42)(Repayments)/ Short Term Borrowing from Bank 87995.51 (4199.15)Finance Cost (Interest & Bank Charges) (147944.92) (143505.02)

Net Cash used in Financing Activities (151241.55) (175440.59)

Net Increase /(Decrease)in Cash and Bank Balance ( A+B+C) 2450.92 304.71 Opening Balance of Cash & Cash Equivalent 1657.70 1352.99 Closing Balance Cash & Cash Equivalent # 4108.62 1657.70 # Comprises of,

Cash on Hand 746.51 773.85 Balance with Bank -Current Accounts 3362.11 883.85

4108.62 1657.70











orporate Overview

97

Statutory Reports

Notes Annexed to and forming part of the Consolidated Financial Statements as on March 31, 2017

Corporate Information:Sanghvi Forging & Engineering Limited (SFEL) is an ISO 9001:2008 Certified Indian Company engaged in the manufacturer of open and closed die forging products for the oil & gas, defense, ship building, power & other sectors. It also exports products to various foreign countries over the last two decades.

The Company is having capacity of 18600 MTPA which includes 15000 MTPA Heavy Forging Division (with single piece forging up to 40 MT) to manufacture proof machined products viz. stepped shafts, bars & hollows, blocks, flanged shafts, gear blanks, shells, tube sheets, forging items etc.

1. Significant Accounting Policies To Financial Statements

I. Basis for preparation of financial accounting

The accompanying financial statements have been prepared under the historical cost convention on accrual basis, in accordance with Generally Accepted Accounting Principles in India. The Company has prepared these Financial Statements to comply in all material respects with the Accounting Standards specified under the Companies (Accounting Standards) Rules, 2006, and the relevant provisions of the Companies Act, 2013. The accounting policies adopted in the preparation of the financial statements are consistent with those of previous year.

II. Use of Estimates The presentation of financial statements

in conformity with Indian GAAP, which requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities on the date of financial statements and the reported amount of revenues and expenses during the year. Difference between the actual result and estimates are recognised in the period in which reason are known / materialized.

III. Principle of Consolidation The consolidated financial statements of the

group for the year ended March 31, 2017 are prepared in accordance with generally accepted accounting principles applicable in India, and the Accounting Standard 21 (AS-21) on ‘Consolidation of Financial Statements’, notified by Companies

(Accounting Standards) Rules, 2006, (as amended) (“Accounting Standards”) by and to the extent possible in the same format as that adopted by the group for its separate financial statements.

The financial statements of the group have been combined on line by line basis by adding together the book values of like items of assets and liabilities, income and expenses after eliminating intra group balances and intra group transactions except where cost cannot be recovered. The unrealized profits or losses resulting from the intra group transactions and balances have been eliminated.

The consolidated financial statements are prepared using uniform accounting policies for like transactions and other events in similar circumstances and necessary adjustments required for deviations, if any, are made in the consolidated financial statements. The consolidated financial statements are presented in the same manner as the Company’s unconsolidated financial statements. The financial statements of the subsidiary companies used in the consolidation are drawn up to the same reporting date as of the Company.

The subsidiary company considered in consolidated financial statements is as follows:

Name of the subsidiary

Ownership Percentage as at 31/03/17

Country of incorporation

Consolidated as

Sanghvi Europe B.V.

100% Netherland Subsidiary

IV. Fixed Assets and Depreciation /Amortization

A. Tangible Assets Tangible Fixed Assets are stated at

historical cost including borrowing costs expenditure directly attributable to the acquisition of the asset and fluctuation arising from exchange rate variations attributable to the assets less accumulated depreciation there on and impairment losses if any. Leasehold land having lease of 99 years or more are treated as free hold land only and other leases are amortized over the period of lease.


98

Notes Annexed to and forming part of the Consolidated Financial Statements as on March 31, 2017 Subsequent expenditure related to an item

of tangible assets are added to its book value only if they increase the future benefits from the existing assets beyond its previously assessed standard of performance.

B. Intangible Assets Intangible assets are stated at acquisition

cost, net of accumulated amortization and accumulated impairment losses, if any. Intangible assets are amortised on a straight line basis over their estimated useful lives

C. Capital Work in Progress Cost of fixed assets not ready for use before

the balance sheet date is disclosed as capital work in progress.

D. Depreciation: The depreciation during the year has been

provided on straight line basis as per Schedule II of the Companies Act 2013 since the acquisition of respective fixed assets considering the useful life and residual value of respective fixed asset except in case of leasehold land which is amortised over the period of lease term and certain Plant & machinery which are depreciated over its useful life assessed by Independent/ Internal Technical Personnel after taking into consideration past experience of the company.

IV. Inventories Cost of Inventories have been computed

to include all cost of Purchases, Cost of Conversion and other costs incurred in bringing the inventories to their present location and condition.

Inventories are valued at lower of cost or net realizable value using the First in First out (FIFO) basis.

V. Revenue Recognition 1. Sales of products and services are

recognised when risk and rewards of ownership at of the products are passed on to the customers, which is generally on dispatch of goods. Sales are inclusive of Excise Duty but excluding sales tax / Value Added Tax and export incentives. Interest incomes are recognised on time proportion basis.

2. Revenue from sale of power is recognised when delivered and measured based on rates as per bilateral contractual agreements with buyers / at rate arrived at based on the principles laid down under the relevant Tariff Regulations as notified by the regulatory bodies, as applicable.

3. Export incentives are accounted on accrual basis. Revenue from job charges is recognised on completion of job work.

VI. Cash flow statement Cash flows are reported using the indirect

method whereby profit before tax is adjusted for the effects of the transactions of a non cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from regular revenue generating; financing and investing activities of the company are segregated.

VII. Leases Rentals applicable to operating leases where

substantially all of the benefits and risks of ownership remain with the lessor are charged against profits on straight line basis over the lease period.

VIII. Foreign Currency Transactions (a) Transactions denominated in foreign

currencies are recorded at the rate prevailing on date of transaction

(b) In respect of monetary items denominated in foreign currency at the year-end are translated at the year-end rates.

(c) Any income or expenses on account of exchange differences either on settlement or on transactions are recognised in the Profit and Loss Account.

(d) Exchange difference relating to long term foreign currency monetary item to the extent they are used for financing the acquisition of fixed assets are adjusted from the cost of such fixed assets.

(e) Financial statements of foreign operations are treated as integral operations and translated for Assets and liabilities at rates prevailing at the end of the year and Net revenues at the average rate for the year.



orporate Overview

99

Statutory Reports

(f) Exchange differences arising on such translation are recognised as income or expense of the period in which they arise.

(g) Forward contracts, other than those entered into to hedge foreign currency risk on unexecuted firm commitments or highly probable forecast transactions, are treated as foreign currency transactions and accounted accordingly as per Accounting Standard (AS) 11 The Effects of Changes in Foreign Exchange Rates. Exchange differences arising on such contracts are recognised in the period in which they arise.

IX. Taxes on Income Provision for taxation comprises of Current

Tax and Deferred Tax .Current tax provision has been made after considering reliefs and deduction available under Income Tax Act, 1961. Deferred tax resulting from “timing differences” between taxable and accounting income is accounted for using the tax rates and laws that are enacted or substantively enacted as on the balance sheet date. The deferred tax assets is recognised and carried forward only to the extent the assets can be realized in future. However, where there is unabsorbed depreciation or carry forward losses under taxation laws, deferred tax assets are recognised only if there is virtual certainty of realization of such assets. Deferred tax assets are reviewed as at each Balance sheet date.

Minimum Alternate Tax (MAT) Credit: MAT credit is recognised, as an Asset only when and to the extent there is convincing evidence that the Company will pay normal income tax during the specified year. In the year in which the Minimum Alternative tax (MAT) credit becomes eligible to be recognised as an asset in accordance with the recommendation contained in Guidance Note issued by the Institute of Chartered Accountants of India, the said asset is created by way of a credit to the statement of profit and loss and shown as MAT Credit Entitlement. The Company reviews the same at each balance sheet date and writes down the carrying amount of MAT

Credit Entitlement to the extent there is no longer convincing evidence to the effect that Company will pay normal Income Tax during the specified period.

X. Employee Benefits (a) The Company’s contribution in respect

of provident fund is charged to Profit and Loss Account each year on accrual basis.

(b) Short term compensated absences are provided based on past experience.

(c) With respect to gratuity liability, Company contributes to Life Insurance Corporation of India (LIC) under LIC’s Group Gratuity policy. Gratuity liability as determined on actuarial basis by the independent valuer. Actuarial gain/loss is charged to Profit and Loss Account.

XI. Borrowing Costs (a) Borrowing Cost attributable to

acquisition and construction of qualifying assets are capitalized as part of the cost of such assets up to the date when such assets are ready for intended use.

(b) Other borrowing cost is charged to Profit and Loss Account.

XII. Provisions, Contingent Liabilities and Contingent Assets

Provision is recognised only when there is a present obligation as a result of past events and when reliable estimates of the amount of the obligation can be made. Contingent liability is disclosed for:-

(a) Possible Obligations which will be confirmed only by future events not wholly within the control of the company or

(b) Present obligations arising from past events where it is not probable that an outflow of resources will be required to settle the obligation or reliable estimates of the amount of the obligation cannot



100

be made. Contingent Assets are not recognised in the financial statements since this may result in the recognition of income that may never be realized.

XIII. Impairment of Assets The Company assesses at each Balance

Sheet date whether there is any indication that an asset may be impaired. If any such indication exists, the Company estimates the recoverable amount of the asset. If such recoverable amount of the asset or the recoverable amount of the cash generating unit to which the asset belongs is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognised in the Profit and Loss Account. If at the Balance Sheet date there is an indication that if a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount.

XIV. Application of Securities Premium Account

Share issue expenses are charged first against available balance in Securities Premium Account.

XVI. Earning Per Share The Company reports basic and diluted

earnings per share in accordance with the Accounting Standard – 20-‘Earning per Share’ prescribed by the Companies (Accounting Standard) Rules 2006. Basic

Earning per Share is computed by dividing the net profit or loss for the year by the weighted average number of Equity Share outstanding during the year. Diluted earning per share is computed by dividing the net profit or loss for the year by the weighted number of equity shares outstanding during the year as adjusted for the effects of all dilutive potential equity share.

XVII. Investments Current Investments are carried at lower

of cost and Market Value. Non Current (Long Term) investments are stated at cost. Provision for diminution in the value of Non Current investments is made only if such a decline is other than temporary.

XVIII. Government Grant: Grant from the government are recognized

when there is reasonable assurance that;

I. The Company will comply with the conditions attached to them and

II. The grant will be received.

Government grants related to revenue are recognized on systematic basis in the statement of profit and loss over the periods necessary to match them with the related costs which they are intended to compensate. Such grants are deducted in reporting the related expenses.

When company receives non-monetary grants, the asset is accounted for on the basis of its acquisition cost. In case non-monetary asset is given free of cost it is recognized at a nominal value.




orporate Overview

101

Statutory Reports

Notes : 2.1 - Share Capital(` in ‘000)



(a) AUTHORISED :20,000,000 No. of Equity Shares of `10 each 200,000.00 200,000.00

(b) Issued , Subscribed & Paid up Share Capital :1,48,92,267 No. of Equity Shares of `10 Each (P.Y. 1,48,92,267 No. of Equity Shares of `10 Each)

148,922.67 148,922.67

TOTAL 148,922.67 148,922.67

(a) Right to vote , dividend and restriction attached to each class of issued capital to be disclosed. All the Shareholders whose name is entered in the Registered of Members of the Company shall enjoy the same voting

rights and be subject to the same liabilities as all other shareholder of the same class.

(b) Reconciliation of shares outstanding at the beginning and at the end of the yearParticulars As at March 31, 2017 As at March 31, 2016

Nos. (` in 000) Nos. (` in 000)Equity SharesAt the beginning of the year 14892267 148922.67 13892267 138922.67Issued during the year(a) Preferential Issue by conversion of warrant - - 1000000 10000Outstanding at the end of the year 14892267 148922.67 14892267 148922.67

(c) Details of shares held by shareholders holding more than 5% of the aggregate shares in the company (Equity Shares of `10 each fully paid)Sr. Name of the shareholder As on March 31, 2017 As on March 31, 2016

Number of shares

% holding Number of shares

% holding

1 Shri Jayanti B. Sanghvi 1,925,591 12.93 1,925,591 12.932 Shri Babulal S. Sanghvi 1,714,283 11.51 1,714,283 11.513 Shri Naresh B. Sanghvi 1,832,931 12.31 1,832,931 12.314 Shri Vikram B. Sanghvi 1,505,682 10.11 1,505,682 10.11

TOTAL 6978487 46.86 6978487 46.86



102

Notes : 2.2 - Reserves & Surplus(` in ‘000)



(a) General Reserve Opening Balance 4,251.48 3,987.14 Add : Transfer from Profit & Loss Account 549.32 264.34 Closing Balance 4,800.80 4,251.48

(b) Securities PremiumAs per last balance sheet 404,967.97 369,967.97 Add : Premium of Shares Issued during the year - 35,000.00 Closing Balance 404,967.97 404,967.97

(b) Profit & Loss AccountAs per last balance sheet (122,105.87) (20,050.61)Effect of Foreign Exchange rate variations during the year (47.41) (0.76)

Add : Profit/(Loss) for the Year (227,620.96) (104,028.28)

Less: Transfer to General Reserve 549.32 264.34

Add : Unrealised Profit on Inventory - 2,236.60 Closing Balance (350,228.74) (122,105.87)TOTAL 59,540.03 287,113.58

Notes : 2.3 - Long Term Borrowings(` in ‘000)



(a) Secured Loans Term Loan from Banks 650,956.63 772,147.86 - Secured against all fixed assets (existing & proposed) and

Equitable Mortgage over Leasehold Land & Personal Guarantees of Directors including pledge of their shares

- Personal Guarantees of Directors including pledge of their shares [Refer Note 2.25(13)]

(b) Unsecured Loans (i) Loans & Advances from Related Parties 112,965.81 86,555.82 (ii) From Inter Corporate Deposits [Refer Note 2.25(14)] 24,189.10 20,700.00 TOTAL 788,111.54 879,403.68

Notes : 2.4 - Long Term Provisions(` in ‘000)



(a) GRATUITY PAYABLE-Long Term 549.09 - TOTAL 549.09 -




orporate Overview

103

Statutory Reports

Notes : 2.5 - Short Term Borrowings(` in ‘000)



(a) Secured Loans(i) Working Capital Loan from Banks 353,733.02 265,737.51 (Secured against Hypothecation of Entire Inventories, Trade

Receivables and entire Fixed Assets and Personal Guarantees of Directors) (Rate of Interest is 12.20% to 13.25%).

TOTAL 353,733.02 265,737.51

Notes : 2.6 - Trade Payables(` in ‘000)



(a) Trade Payable - For Goods & Services 218,324.69 167,558.43 (b) Trade Payable - For Micro, Small & Medium Enterprises 488.13 2,849.23

TOTAL 218,812.82 170,407.66

Notes : 2.7 - Other Current Liabilities(` in ‘000)



(a) Current Maturity of long term Loan (Secured against all fixed assets (existing & proposed) and Equitable Mortgage over Leasehold Land. Personal Guarantees of Directors including pledge of their shares) [Terms of Loan : Refer Notes 2.25 (14)]

125,115.75 126,440.00

(b) Term Loan Installment due (unpaid) 96,491.60 28,296.00 (c) Interest Accrued and Due on Borrowing 92,367.40 25,100.00 (d) Advance from Customers 44,206.24 8,792.37 (e) Duties & Taxes Payable 2,529.14 2,974.93 (f) Payable - For Capital Goods 17,480.58 39,854.31 (g) Other Outstanding Liabilities 22.00 77.00

TOTAL 378,212.70 231,534.61

Notes : 2.8 - Short Term Provisions(` in ‘000)



(a) For Taxation (Net ofAdvance Tax) 82.27 - (b) For Employee Benefit Expenses 1,607.65 1,455.00 (c) For Other Expenses 22,502.48 17,263.51

TOTAL 24,192.40 18,718.51



104

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orporate Overview

105

Statutory Reports

Notes : 2.10 - Deferred Tax Assets (Net)(` in ‘000)



(a) Deferred Tax Liability :On account of timing difference of- Depreciation (168,596.31) (148,121.20)

(b) Deferred Tax Assets :On account of timing difference of- Unabsorbed Depreciation - - On account of Expenses Allowable on Payment Basis 31,249.68 481.02 - Unabsorbed Business Loss & Depreciation

(In view of absence of virtual certainty of Profit in Future years, Deferred tax asset is not recognized.)

137,346.63 147,640.18

TOTAL - -

Notes : 2.11 - Long Term Loans & Advances(` in ‘000)



Unsecured, Considered Good(a) Advances for Capital Goods - 4,609.46 (b) Security Deposits 2,477.82 1,271.43 (c) Balance with Revenue Authorities 19,722.40 11,103.48 (d) Other Loans & Advances # - 73.62

TOTAL 22,200.22 17,057.99

# Includes primarily Gratuity Payable (Dr. Bal) etc.

Notes : 2.12 - Inventories(` in ‘000)



(a) Finished Goods 23,136.93 16,627.60 (b) Raw Materials 40,356.12 49,593.20 (c) Work-in-Progress 149,146.41 150,249.85 (d) Stores & Spare Parts 9,120.07 8,521.70 (e) Packing Materials 123.80 59.17 (f) Scrap 6,546.54 11,150.61

TOTAL 228,429.87 236,202.13

(For mode of valuation of inventories, refer note no. 1(IV )



106

Notes : 2.13 - Trade Receivables(` in ‘000)



(a) Trade receivables outstanding for a period exceeding six months from the date they are due for payment

43,705.17 26,955.14

(b) Trade receivables outstanding for a period less than six months from the date they are due for payment

156,670.44 96,883.28

TOTAL 200,375.61 123,838.42

Notes : 2.14 - Cash & Bank Balance(` in ‘000)



CASH & CASH EQUIVALENT(a) Cash on Hand 746.51 773.85 (b) Balance with Banks :

In Current Accounts 3,362.11 883.85 OTHER BANK BALANCE(a) Other Balance with Bank - Fixed deposit as Margin Money under bank

lien (Balance with banks to the extent held as Margin Money having maturity less than 12 month)

7,799.22 10,043.76

TOTAL 11,907.84 11,701.46

Notes : 2.15 - Short Term Loan & Advance(` in ‘000)



Unsecured Considered Good(a) Balance with Revenue Authorities 16,458.57 34,156.04 (b) Pre - Paid Expense 1,185.25 838.30 (c) Advance to Suppliers 3,136.22 4,919.75

TOTAL 20,780.04 39,914.09

Notes : 2.16 - Other Current Assets(` in ‘000)



(a) Export Incentive Receivables 5,970.65 4,340.86 (b) Accrued Interest on Deposits 247.91 276.22 (c) Other Receivables - 175.71

TOTAL 6218.56 4792.79




orporate Overview

107

Statutory Reports

Notes : 2.17 - Revenue From Operations(` in ‘000)

Sr. Particulars For the year ended March 31, 2017


(a) Sale of Flanges, Fittings, Forged Bars & Scrap(i) Finished Goods Sales - Domestic 377,038.37 488,517.79 Sales - Export 169,236.71 199,291.42 Total 546,275.08 687,809.21 (ii) Manufacturing Scrap 60,448.44 58,244.76

606,723.52 746,053.97 (b) Other Operating Revenues

Duty Draw Back & Other Export Incentive 6,962.37 5,961.57 Power Generation 2,294.47 2,689.05 Other Operating Revenues 7,244.77 6,256.26

16,501.61 14,906.88 GROSS REVENUE FROM OPERATIONS 623,225.13 760,960.85 Less : Excise Duty (42,990.43) (44,472.30)NET REVENUE FROM OPERATIONS 580,234.70 716,488.55

Notes : 2.18- Other Income(` in ‘000)



Interest From Bank & Other 692.01 1,538.08 Exchange Fluctuation gain/(loss)(Net) 430.07 2,537.71 Misc. Income 1,199.64 5,254.01 TOTAL 2,321.72 9,329.80

Notes : 2.19 - Cost of Material Consumed(` in ‘000)



Steel ConsumedOpening Balance 49,593.20 65,038.18 Add : Purchase 287,489.82 349,353.36

337,083.02 414,391.54 Less : Closing Stock 40,356.12 49,593.20 Raw Material Consumed 296,726.90 364,798.34 INFORMATION RELATING TO CONSUMPTION OF MATERIALConsumption of Imported & Indigenous MaterialsImported Items 16,151.44 7,181.46

5.44% 1.97%Indigenous Items 280,575.46 357,616.88

94.56% 98.03%TOTAL 296,726.90 364,798.34



108

Notes : 2.20 - Purchase of Stock in Trade(` in ‘000)



Purchase of Stock in Trade 25,146.00 - TOTAL 25,146.00 -

Notes : 2.21Changes in Stock of Scrap And Work in Progress


March 31, 2017As at

March 31, 2016(Increase) / Decrease inClosing Stock

- Finished Goods 23,136.93 16,627.90 - Work - in - Progress 149,146.41 150,249.94 - Scrap 6,546.54 11,150.61

178,829.88 178,028.45 Opening Stock

- Finished Goods 16,627.90 10,708.11 - Work - in - Progress 150,249.94 114,136.76 - Scrap 11,150.61 11,546.92

178,028.45 136,391.79 (Increase) / Decrease in Stock (801.43) (41,636.66)

Notes : 2.22 - Employees Benefit Expense(` in ‘000)



Salary & Wages & Bonus 63,707.05 58971.41Contribution to Provident & Other Funds 3,092.20 3140.02Staff Welfare Expense 698.72 1754.82TOTAL 67497.97 63866.25

Notes : 2.23 - Finance Cost(` in ‘000)



Interest Expense 147,944.92 143505.02Bank Charges 18,153.81 18327.22Applicable loss on foreign currency transactions and translation - -187.94TOTAL 166,098.73 161,644.30




orporate Overview

109

Statutory Reports

Notes : 2.24 - Other Expenses(` in ‘000)



(a) Manufacturing Expense :Power Consumed 23,605.44 30,586.93 Fuel Consumed 37,150.68 51,455.40 Stores Consumed 14,757.57 23,629.03 Wages - Job Work Charges 17,400.16 19,510.49 Repairs and Maintenance - Buildings 595.01 442.32 Repairs and Maintenance - Plant & Machinery 2,546.59 2,605.52 TOTAL (a) 96,055.45 128,229.68

(b) Administrative & Other Expense :Payment to Auditors

- Audit Fees 325.00 325.00 - Certification and Other matters 175.00 50.00

Director Sitting Fees 375.00 495.00 Insurance Expense 327.13 971.34 Professional Fees 5,967.79 6,134.91 Rates & Taxes 4,748.21 6,390.10 Rent Expense 619.61 590.68 Repairs and maintenance - Others 1,789.88 2,189.41 Loss on sale of fixed assets - 42.98 Donations and Contributions - 1.00 Bad debts 1,226.25 - Miscellaneous Expense 54,197.84 50,967.53 TOTAL (b) 69,751.71 68,157.95 TOTAL (a+b) 165,807.16 196,387.63

Notes : 2.251. Contingent Liabilities A. Disputed Liabilities- In Appeal


March 31, 2017As at

March 31, 2016- Income Tax on Accounts of Disallowance 5282.69 5282.69- Service Tax on Account of Cenvat Credit 12192.05 9608.67- Excise on Account of Cenvat Credit 2979.31 2979.31- Central Sales Tax Demand on Account of ‘C’ Form 10830.83 7104.84

The future cash flows in respect of the above, if any, is determinable only on receipt of judgments/decisions pending with relevant authorities. The company does not expect the outcome of matters stated above to have a material adverse effect on the Company’s financial conditions, result of operation or Cash Flow.



110

B. Guarantee Given By Bankers on Behalf of Company


March 31, 2017As at

March 31, 2016- Bank Guarantee 30400.76 38599.70

2. Estimated Amount of Contracts-Capital Accounts(` in ‘000)



Estimated Amount of Contracts remaining to be executed on Capital Accounts and not provided for, net of advances

2500.00 6789.00

3. C.I.F. value of Imports(` in ‘000)



Capital Goods 818.76 3172.60Raw Material 24543.80 10892.88

4. (a) Expenditure in Foreign Currency(` in ‘000)



Commission on Export Sales 4314.62 571.33Finance Cost 6031.84 7583.46Exhibitions & Sales Promotion 430.21 283.42Foreign Travel Expenses 1388.89 1793.68

(b) Earnings in Foreign Currency(` in ‘000)



F.O.B. value of exports 126757.22 178844.48

5. Exchange difference Gain/(Loss) on account of fluctuations in foreign currency rates(` in ‘000)



Relating to Exports during the year as part of Sales (1380.60) 2173.57




orporate Overview

111

Statutory Reports

(a) Recognized in Profit and Loss Account



March 31, 2016On settlement / revaluation of current assets 1300.61 2291.49On settlement / revaluation of current liabilities (350.08) (1738.66)

6. Details of amount Capitalised during the year to Fixed Assets(` in ‘000)



Interest & Other Finance Charges 149.88 1911.11Foreign Exchange (Gain) / Loss (Net) 5419.56 16026.94TOTAL 5569.44 17938.05

7. The Company has amounts due to suppliers under The Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act) as at March 31, 2017. The disclosure pursuant to the said Act is as under


March 31, 2017As at

March 31, 2016Principal Amount due and remaining unpaid to any suppliers under MSMED Act, 2006,

451.02 2879.23

Principal Amount due and remaining unpaid to any suppliers under MSMED Act, 2006, beyond the appointed day

448.22 2235.16

Interest accrued and due to suppliers under MSMED Act, on the above amount during the year

18.05 29.99

Interest paid to suppliers under MSMED Act (Section 16) 10.93 7.59Interest accrued and remaining unpaid at the end of the year to suppliers under MSMED Act

37.11 29.99

8. Computation of Earnings per Share (EPS)(` in ‘000)



Profit used as Numerator for calculating Earnings per Share (227620.96) (104028.28)Weighted Average Number of Share used in computing Basic EPS 14892267 14075829Number of Share used in computing Diluted EPS 14892267 14892267Nominal Value per Share (in `) 10 10Basic Earnings per Share (in `) (15.28) (7.39)Diluted Earnings per Share (in `) (15.28) (6.99)



112

9. Related Party Details (a) Related Party Disclosure

Key Management Personnel Mr. Babulal S. SanghviMr. Jayanti B. SanghviMr. Naresh B. SanghviMr. Vikram B. Sanghvi

Relative of Key Management Personnel Smt. Bhamridevi B. Sanghvi Smt. Meena J. Sanghvi Smt. Kiran N. Sanghvi Smt. Sheetal V. Sanghvi Mr. Mahesh B Sanghvi

Enterprises under Significant Influence of Key Management Personnel or their Relatives

Babulal Sanghvi (HUF)Jayanti Sanghvi (HUF)Naresh Sanghvi (HUF)Vikram Sanghvi (HUF)Babulal Sanghvi (HUF))Gautam Stainless Pvt. Ltd.

(b) Related Party Transaction(` in ‘000)

Particulars Key Management Personnel

Relative of Key Management Personnel

Enterprises under Significant Influence of Key management Personnel or their Relatives

TOTAL

March 31, 2017

March 31, 2016

March 31, 2017

March 31, 2016

March 31, 2017

March 31, 2016

March 31, 2017

March 31, 2016

Purchase of Goods/DEPB - - - - 308.78 4,424.64 308.78 4,424.64 Gautam Stainless Pvt. Ltd. - - - - 308.78 4,424.64 308.78 4,424.64 Receiving of Services - - - - 86.31 25.54 86.31 25.54 Gautam Stainless Pvt. Ltd. - - - - 86.31 25.54 86.31 25.54 Sale of Goods - - - - 1,576.66 86.29 1,576.66 86.29 Gautam Stainless Pvt. Ltd. - - - - 1,576.66 86.29 1,576.66 86.29 Interest paid - - - - 1,308.00 190.75 1,308.00 190.75 Gautam Stainless Pvt. Ltd. - - - - 1,308.00 190.75 1,308.00 190.75 Loans - Repaid / Converted 11,300.00 37,775.00 6,580.00 4,523.94 9,918.10 3,539.08 27,798.10 45,838.02 Babulal S. Sanghvi - 9,137.50 - - - - - 9,137.50 Jayantilal B. Sanghvi 6,000.00 11,317.50 - - - - 6,000.00 11,317.50 Naresh B. Sanghvi 3,300.00 8,537.50 - - - - 3,300.00 8,537.50 Vikram B. Sanghvi 2,000.00 8,782.50 2,000.00 8,782.50 Meena J. Sanghvi - - - 4,163.94 - - - 4,163.94 Kiran N. Sanghvi - - 530.00 360.00 - - 530.00 360.00 Sheetal V. Sanghvi - - - - - - Teena M. Sanghvi - - 6,050.00 - - - 6,050.00 - Babulal Sanghvi (HUF) - - - - 100.00 - 100.00 - Jayantilal B. Sanghvi (HUF) - - - - - - - - Naresh B. Sanghvi (HUF) - - - - - 35.00 - 35.00 Vikram Sanghvi (HUF) - - - - 1,100.00 35.00 1,100.00 35.00 Gautam Stainless Pvt. Ltd. - - - - 8,718.10 3,469.08 8,718.10 3,469.08 Loans - Received / Taken 29,200.00 39,371.00 10,050.00 6,675.00 18,467.20 39,615.75 57,717.20 85,661.75 Babulal Sanghvi 2,600.00 9,930.00 - - - - 2,600.00 9,930.00 Jayantilal B. Sanghvi 7,730.00 11,640.00 - - - - 7,730.00 11,640.00 Naresh B. Sanghvi 15,970.00 4,551.00 - - - - 15,970.00 4,551.00 Vikram B. Sanghvi 2,900.00 13,250.00 - - - - 2,900.00 13,250.00 Bhamri Devi B. Sanghvi - - - 500.00 - - - 500.00 Meena J. Sanghvi - - - 500.00 - - - 500.00 Kiran N. Sanghvi - - - 4,275.00 - - - 4,275.00 Sheetal V. Sanghvi - - 4,000.00 1,400.00 - - 4,000.00 1,400.00 Teena M. Sanghvi - - 6,050.00 - - - 6,050.00 - Babulal Sanghvi (HUF) - - - - 3,300.00 1,825.00 3,300.00 1,825.00 Jayantilal Sanghvi (HUF) - - - - 2,470.00 9,400.00 2,470.00 9,400.00 Naresh Sanghvi (HUF) - - - - - 10,800.00 - 10,800.00 Vikram Sanghvi (HUF) - - - - 470.00 6,250.00 470.00 6,250.00 Gautam Stainless Pvt. Ltd. - - - - 12,227.20 11,340.75 12,227.20 11,340.75 Babulal Sanghvi (HUF) - - - - 3,300.00 1,825.00 3,300.00 1,825.00




orporate Overview

113

Statutory Reports

(` in ‘000)Particulars Key Management

PersonnelRelative of Key

Management PersonnelEnterprises under Significant Influence of Key

management Personnel or their RelativesTOTAL

March 31, 2017

March 31, 2016

March 31, 2017

March 31, 2016

March 31, 2017

March 31, 2016

March 31, 2017

March 31, 2016

Jayantilal Sanghvi (HUF) - - - - 2,470.00 9,400.00 2,470.00 9,400.00 Naresh Sanghvi (HUF) - - - - - 10,800.00 - 10,800.00 Vikram Sanghvi (HUF) - - - - 470.00 6,250.00 470.00 6,250.00 Gautam Stainless Pvt. Ltd. - - - - 12,227.20 11,340.75 12,227.20 11,340.75 Interest Expenses - - - - - - - - Rental Paid 36.00 36.00 180.00 180.00 - - 216.00 216.00 Bhamridevi B. Sanghvi - - 180.00 180.00 - - 180.00 180.00 Jayantilal B. Sanghvi 36.00 36.00 - - - - 36.00 36.00 Director's Remuneration 9,252.41 8,304.66 - - - - 9,252.41 8,304.66 Balance Outstanding - (Receivables)/Payables (Net) Loans & Advances 56,290.21 38,390.21 14,098.17 10,628.17 53,786.54 45,237.44 124,174.92 94,255.82 Babulal S. Sanghvi 4,557.10 1,957.10 - - - - 4,557.10 1,957.10 Jayantilal B. Sanghvi 15,392.32 13,662.32 - - - - 15,392.32 13,662.32 Naresh B. Sanghvi 19,322.09 6,652.09 - - - - 19,322.09 6,652.09 Vikram B. Sanghvi 17,018.70 16,118.70 - - - - 17,018.70 16,118.70 Bhamridevi B. Sanghvi - - 2,622.30 2,622.30 - - 2,622.30 2,622.30 Meena J Sanghvi - - 500.00 500.00 - - 500.00 500.00 Kiran N Sanghvi - - 4,759.74 5,289.74 - - 4,759.74 5,289.74 Sheetal V Sanghvi - - 6,216.14 2,216.14 - - 6,216.14 2,216.14 Babulal Sanghvi (HUF) - - - - 5,025.00 1,825.00 5,025.00 1,825.00 Jayantilal Sanghvi (HUF) - - - - 15,202.51 12,732.51 15,202.51 12,732.51 Naresh Sanghvi (HUF) - - - - 14,211.77 14,211.77 14,211.77 14,211.77 Vikram Sanghvi (HUF) - - - - 8,138.16 8,768.16 8,138.16 8,768.16 Gautam Stainless Pvt. Ltd. - - - - 11,209.10 7,700.00 11,209.10 7,700.00 Trade Payable / Receivable - - - - 3,046.20 3,431.81 3,046.20 3,431.81 Gautam Stainless Pvt. Ltd. (Service Vendor)

- - - - 111.85 25.54 111.85 25.54

Gautam Stainless Pvt. Ltd. (Material Vendor)

- - - - 1,278.41 3,324.64 1,278.41 3,324.64

Gautam Stainless Pvt. Ltd. (Customer )

- - - - 1,655.94 81.63 1,655.94 81.63

Personal Guarantee Given to Bank against Working capital & Term loan outstanding Amount.

10. Contributions are made to Recognized Provident Fund/ Government Provident Fund which covers all employees. While both the employees and the Company make predetermined contributions to the Provident Fund .The contributions are normally based on a certain proportion of the employee’s salary. Amount recognized as expense in respect of these defined contribution plans.



March 31, 2016Contribution to Provident Fund 2579.17 2593.55

In respect of Gratuity, Contributions are made to LIC’s Recognized Group Gratuity Fund Scheme based on amount demanded by LIC of India. Provision for Gratuity is based on actuarial valuation carried by independent actuary as at the year end. Major drivers in actuarial assumptions, typically, are years of service and employee compensation. After the issuance of the Accounting Standard 15 on ‘Employee Benefits’, commitments are actuarially determined using the ‘Projected Unit Credit’ method. Gains and losses on changes in actuarial assumptions are accounted for in the Profit and Loss account.



114

Category of Plan Assets: The Company’s Plan Assets in respect of Gratuity are funded through the Group Scheme of the LIC of India

(` in ‘000)In respect of gratuity (funded): As at

March 31, 2017As at

March 31, 2016Reconciliation of liability recognized in the Balance Sheet Present value of commitments (as per Actuarial Valuation) (1834.68) (1304.60)Fair value of plan assets 1083.00 1378.22Net (liability) / asset in the Balance sheet (751.68) 73.22Movement in net liability recognized in the Balance sheet Net liability as at the beginning of the year (296.61) 161.32Net expense recognized in the Profit and Loss account (455.06) (457.93)Contribution during the year - 370.23Net (liability) / asset in the Balance sheet (751.68) 73.62Expense recognized in the Profit and Loss account Current Service cost 548.39 530.19Interest cost 96.54 64.57Expected return on plan assets (76.10) (92.74)Actuarial (gains)/ losses (113.77) (44.08)Expense charged to the Profit and Loss account 455.06 457.94Return on plan assetsExpected return on plan assets 76.10 92.74Actuarial gains/ (losses) (1.09) (33.22)Actual return on plan assets 75.01 59.52Reconciliation of defined-benefit commitmentsCommitments as at the beginning of the year 1304.60 838.56Current service cost 548.39 530.19Interest cost 96.54 64.57Paid benefits - (51.42)Actuarial (gains)/ losses (114.85) (77.30)Commitments as at the year end 1834.68 1304.60Reconciliation of plan assetsPlan assets as at the beginning of the year 1007.99 999.88Expected return on plan assets 76.10 92.74Contributions during the year - 370.23Paid benefits - (51.42)Actuarial gains/ (losses) (1.09) (33.22)Plan assets as at the year end 1083.00 1378.21The actuarial calculations used to estimate commitments and expenses in respect of gratuity and compensated absences are based on the following assumptions which if changed, would affect the commitment’s size, funding requirements and expenseDiscount rate 7.40% 7.70%Expected return on plan Assets 7.55% 8.00%Expected rate of salary increase 8.00% 8.00%

11. The Company has entered into lease agreements for certain properties including director’s accommodation which are cancellable at the option of the Company or as per agreed terms. The total rent charged to the Statement of Profit and Loss for the year towards such leases amount to ` 606.36 thousands (P.Y. ` 584.70 thousands).




orporate Overview

115

Statutory Reports

12. Segment disclosures:

(a) Business Segment: The company has only one reportable business segment of Forging & Fitting as the primary reportable Business

segment for disclosure. The business segments are business of Forging & Fitting and wind energy business.

(b) Geographical Segment: The company has exported during the year and it does require disclosure as a separate reportable segment of

Domestic Sales and Export Sale

(` in ‘000)Particulars Domestic Export TotalSegment Revenue (Net) For the Year ended March 31, 2017

394496.38 169236.71 563733.09

Segment Revenue (Net) For the Year ended March 31, 2016

502290.24 199291.42 701581.66

13. Terms and Conditions of Loans From Bank:- [Refer Notes 2.3 (a)(i)](` in ‘000)

Sr. Rate of Interest Repayment TermsI Term Loan I - INR 2.90 % above BR i.e 12.20% p.a. 84 structured monthly installment from August

2015. (Default in Installment and interest as on 31/03/2017 amounting to `39587 (P.Y. `16569) and `48459 (P.Y. `24797 ) respectively)

ii WCTL- INR 2.90 % above BR i.e 12.20% p.a 84 structured monthly installment from August 2015. . (Default in Installment and interest as on 31/03/2017 amounting to `12263 (P.Y. `3806) and `16867 (P.Y. `5843) respectively)

iii. Term Loan – ECB / USD 324 bps over LIBOR 26 quarterly installments from August 2012. (Default in Installment and interest as on 31/03/2017 amounting to `41819 (P.Y. `10786) and `4478 (P.Y. ` Nil ) respectively)

iv. Term Loan II - INR 2.90 % above BR i.e 12.20% p.a. 26 quarterly installments from August 2012. (Default in Installment and interest as on 31/03/2017 amounting to `2823 (P.Y. `941) and `1032 (P.Y. `304) respectively)

14. Terms and Conditions of Unsecured Loan: Repayment terms – Repayable after 3 years and Interest at 0 to 12% p.a.

15. Previous financial year’s figures have been regrouped wherever necessary to make them comparable with those of the current year.

16. The subsidiary company is incorporated in Netherland on 27th of May 2014. The financial of the subsidiary end on December 31 and the financial statements of the said subsidiary are not mandatorily required to be audited under Dutch law; hence un-audited financials are only consolidated. The said accounts are certified by management and relied upon by the auditors.



116

17. Disclosure in terms of Schedule III of the Companies Act, 2013(` in ‘000)

Net Assets (i.e. Total assets minus total liabilities) Share in profit/(loss)

As a % of consolidated net

assets

Amount As a % of consolidated profit/(loss)

Amount

1.Parent

SANGHVI FORGING AND ENGINEERING LIMITED

103.00 214707.53 98.94 (225204.09)

2. Subsidiary(Foreign)

SANGHVI EUROPE B.V. (0.45) (942.46) 0.80 (1811.01)Add/(Less)Inter- company Eliminations

(2.55) (5302.37) 0.26 (605.86)

TOTAL 100% 208462.70 100% (227620.96)

18. Pursuant to requirement of Notification No-G.S.R. 307(E) & G.S.R. 308(E) issued by MCA on March 30, 2017 regarding disclosure of details of Specified Bank Notes (SBN) held and transacted during the period from November 8, 2016 to December 30, 2016 , the same is provided in the Table below:

The details of Specified Bank Notes (SBN) held and transacted during the period from November 8, 2016 to December 30, 2016 is provided in the Table below :—

SBNs Other denomination

notes

Total Amount (`)

Closing cash in hand as on 08.11.2016 1968500 389368 2357868(+) Permitted receipts 740000 740000(-) Permitted payments 617110 617110(-) Amount deposited in Banks 1968500 1968500Closing cash in hand as on 30.12.2016 Nil 512258 512258

* For the purpose of this clause, the term ‘Specific Bank Notes’ shall have the same meaning provided in the notification of the Government of India, in the Ministry of Finance, Department of Economic Affairs number S.O. 3407 (E), dated the November 8, 2016.












orporate Overview

117

Statutory Reports

Board of Directors

Shri Babulal S. Sanghvi (Chairman & Wholetime Director)

Shri Jayantilal B. Sanghvi (Managing Director)

Shri Naresh B. Sanghvi (Wholetime Director)

Shri Vikram B. Sanghvi (Wholetime Director & Chief Financial Officer)

Shri Ram S. Kaushal (Independent Director)

Shri Shantaram S Yarlagadda (Independent Director)

Shri Ram C. Prasad (Independent Director)

Shri Baba K. Pai (Independent Director)

Mrs. Aruna S. Khasgiwala (Independent Director)

CorporateInformation

Company SecretaryMr. Keval Thakkar

Statutory AuditorM/s Shah & Bhandari, Chartered Accountants

Internal AuditorM/s Parikh Mehta & Associates, Chartered Accountants

Secreterial AuditorM/s Samdani Shah & Associates

Registered Office244/6-7, G.I.D.C Industrial Estate, Waghodia- 391760, Dist : Vadodara Gujarat, IndiaTel: 91-2668-673100 Fax: 91-2668-673135 Email : [email protected] : www.sanghviforge.comCIN : L28910GJ1989PLC012015

BankersState Bank of India Bank of Baroda

Company’s R&T AgentBigshare Services Private Ltd.1st Floor, Bharat Tin Works Building, Opp. Vasant Oasis Apartments (next to Keys hotel), Marol Maroshi Road, Andheri (East), Mumbai 400059Contact N0: 022 – 62638200

Corporate OfficeA-8, Parvati Chamber, Opposite Apsara Cinema, Pratapnagar Road, Vadodara-390004 Gujarat, IndiaPh: 0265-2580644/2581658 Fax: 0265-2581126

Works OfficeUnit 1: 244/6-7, G.I.D.C. Industrial Estate, Waghodia, Dist : Vadodara -391760, Gujarat, IndiaUnit 2: 1401, 1402, 1403, G.I.D.C. Industrial Estate, Waghodia, Dist : Vadodara -391760, Gujarat, India

118

DisclaimerIn this Annual Report, we have disclosed forward-looking information to enable investors to comprehend our prospects and take investment decisions. This report and other statements – written and oral – that we periodically make, contain forward looking statements that set out anticipated results based on the management’s plans and assumptions. We have tried wherever possible to identify such statements by using words such as ‘anticipate’, ‘estimate’, ‘expects’, ‘projects’, ‘intends’, ‘plans’, ‘believes’, and words of similar substance in connection with any discussion of future performance. We cannot guarantee that these forward-looking statements will be realized, although we believe we have been prudent in assumptions. The achievements of results are subject to risks, uncertainties and even inaccurate assumptions. Should known or unknown risks or uncertainties materialize, or should underlying assumptions prove inaccurate, actual results could vary materially from those anticipated, estimated, or projected. Readers should keep this in mind. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise,

244/6&7 GIDC Estate, Waghodia Waghodia Gujarat 391760 India T: 026 6867 3100www.sanghviforge.com

We are forging our w

ay to victory Annual Report 2016»17

NOTICENOTICE is hereby given that the Twenty-Ninth Annual General Meeting of the Members of the SANGHVI FORGING AND ENGINEERING LIMITED will be held on Thursday, September 28, 2017 at 4:00 p.m. at the Registered Office of the Company situated at 244/6-7, GIDC Industrial Estate, Waghodia, Dist. Vadodara – 391 760 to transact the following business :

ORDINARY BUSINESS:1. To receive, consider and adopt the Audited Standalone and Consolidated Financial Statements of the Company for

the financial year ended March 31, 2017, together with the Reports of the Board of Directors and the Auditors Report thereon.

“RESOLVED THAT the Audited Standalone and Consolidated Financial Statement of the Company for the financial year ended on March 31, 2017 and the report Board of Directors and Auditors thereon, be and is hereby considered and adopted.”

2. To appoint a Director in place of Shri Babulal Sagarmal Sanghvi (DIN: 00291745), who retires by rotation and being eligible, offers himself for reappointment.

“RESOLVED THAT pursuant to provisions of Section 152 of the Companies Act, 2013, Shri Babulal Sagarmal Sanghvi (DIN:00291745), who retires by rotation at this meeting and being eligible offered himself for re-appointment, be and is hereby re-appointed as a Director of the Company, liable to retire by rotation.”

3. To appoint the Statutory Auditors and to fix their remuneration and in this connection to consider and if thought fit, to pass, with or without modification, the following resolution as an Ordinary Resolution:

“RESOLVED THAT, pursuant to the provisions of section 139, 142 and other applicable provisions of the Companies Act, 2013 read with Companies (Audit and Auditors) Rules, 2014 and other applicable rules, if any, M/s V.K. Shastri & Co., Chartered Accountant, (Registration No. 113325W) be and are hereby appointed as Statutory Auditors of the Company, who shall hold office from the conclusion of this 29th Annual General Meeting (AGM) till the conclusion of 34thAGM of the Company, subject to ratification at every Annual General Meeting, in place M/s. Shah and Bhandari, Chartered Accountants, on such remuneration as may be determined by the Board of Directors based on the recommendation of Audit Committee.”

By Order of the Board of DirectorsFor Sanghvi Forging & Engineering Ltd.

Sd/-

Vadodara, Date August 11, 2017 Harish G PunwaniRegistered Office:244/6 & 7, GIDC Industrial Estate, Waghodia, Dist. Vadodara – 391 760

Company SecretaryICSI Membership No: A50950

email : [email protected] : L28910GJ1989PLC012015 Web :www.sanghviforge.com

Ph:02668-264100 Fax: 02668-263411

Head Office: A-8, Parvati Chamber, Opp. Apsara Cinema, Pratapnagar Road, Vadodara – 390004 Ph: 0265-2580644/2581658 Fax: 0265-2581126

Registered Office: 244/6-7, G.I.D.C. Industrial Estate, Waghodia – 391760 Dist. Vadodara, Ph: 02668-673100 Fax: 02668-673135

Email : [email protected] Web : www.sanghviforge.comCIN : L28910GJ1989PLC012015

1

NOTES1. A MEMBER ENTITLED TO ATTEND AND VOTE AT THE ANNUAL GENERAL MEETING (the “Meeting”) IS

ENTITLED TO APPOINT A PROXY TO ATTEND AND VOTE ON A POLL INSTEAD OF HIMSELF AND THE PROXY NEED NOT BE A MEMBER OF THE COMPANY.

The instrument appointing a proxy should, however, be deposited at the Company’s Registered Office at 244/6 & 7, GIDC Industrial Estate, Waghodia, Dist. Vadodara – 391 760 (Gujarat) not less than 48 hours before the commencement of the aforesaid meeting.

A person can act as a proxy on behalf of members not exceeding fifty and holding in the aggregate not more than ten percent of the total share capital of the Company carrying voting rights. A member holding more than ten percent of the total share capital of the Company carrying voting rights may appoint a single person as proxy and such person shall not act as a proxy for any other person or shareholder.

2. The Register of Members and the Share Transfer Books of the Company will remain closed from 21st day, September 2017 to 28th day, September 2017 (both days inclusive).

3. Members/ Proxies should bring the Attendance Slip sent herewith duly filled in for attending the Meeting.

4. Members desiring any information as regards the Accounts are requested to write to the Company Secretary at an early date so as to enable the Management to reply at the Meeting.

5. Members holding shares in physical form are requested to kindly notify the Company of any change in their addresses so as to enable the Company to address future communication to their correct addresses. Members holding shares in demat form are requested to notify their respective Depository Participant of any change in their addresses.

6. Members are requested to kindly bring their copies of the Annual Report to the Meeting.

7. Brief resume of Directors including those proposed to be appointed / re-appointed, nature of their expertise in specific functional areas, names of companies in which they hold directorships and memberships / chairmanships of Board Committees, shareholding and relationships between directors inter-se as stipulated under Regulation 36(3) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

Name of Director Shri Babulal Sagarmal SanghviAge 66 years Date of Appointment on the Board May 2, 2004Qualification He has completed his Metric Level Education from VadodaraExpertise and portfolio handled He has more than 36years of experience in the forging

industry. He is responsible for implementing the overall business strategy of the company.

Directorship in other companies as on March 31, 2017 He doesn’t hold directorship in any other Company.Chairman/Membership of other committees of Company as on March 31, 2017

He doesn’t hold any Chairman/Membership of other committees of Company as on March 31, 2017

Terms and conditions of Re-appointment As per the resolution passed by Shareholders at the Annual General Meeting to be held on September 28, 2017 in which Shri Babulal S Sanghvi will be re-appointed as a Director of the Company.

Remuneration last Drawn 26.03 LakhsRemuneration Proposed As per the Excising terms and conditions Shareholding as on March 31, 2017 17,14,283 Equity Shares Relationship with Directors Inter-se Relative of Shri Vikram B Sanghvi, Jayantilal B Sanghvi and

Naresh B. Sanghvi

2

8. The Securities and Exchange Board of India (SEBI) has mandated the submission of Permanent Account Number (PAN) by every participant in securities market. Members holding shares in electronic form are, therefore, requested to submit their PAN to their Depository Participants with whom they are maintaining their demat accounts. Members holding shares in physical form can submit their PAN to the Company.

9. Members who have not registered their e-mail addresses so far are requested to register their e-mail address for receiving all communication including Annual Report, Notices, Circulars, etc. from the Company electronically.

10. Electronic copy of the Annual Report for Financial Year 2016-17 is being sent to all the members whose email IDs are registered with the Company/Depository Participants(s) for communication purposes unless any member has requested for a hard copy of the same. For members who have not registered their email address, physical copies of the Annual Report for Financial Year 2016-17 is being sent in the permitted mode.

11. Members who have not registered their email address, physical copies of the Notice of the 29th Annual General Meeting of the Company inter alia indicating the process and manner of e-voting along with Attendance Slip and Proxy Form is being sent in the permitted mode.

12. Members may also note that the Notice of the 29th Annual General Meeting and the Annual Report for the F.Y. 2016-17. will also be available on the Company’s website www.sanghviforge.com for their download. The physical copies of the aforesaid documents will also be available at the Company’s Registered Office in Waghodia, Vadodara for inspection during normal business hours on working days. Even after registering for e-communication, members are entitled to receive such communication in physical form, upon making a request for the same, by post free of cost. For any communication, the shareholders may also send requests to the Company’s investor email id: [email protected].

13. Voting through electronic In compliance with provisions of Section 108 of the Companies Act, 2013 and Rule 20 of the Companies (Management

and Administration) Rules, 2014, the Company is pleased to provide Members holding shares either in physical form or in dematerialized form the facility to exercise their right to vote at the General Meeting by electronic means and the business may be transacted through e-voting services provided by Central Depository Services (India) Limited (CDSL). The instructions for e-voting are as under:

In case of members receiving e-mail:

E-voting Particulars

EVSN USER ID

(i) Log on to the e-voting website www.evotingindia.com

(ii) Click on “Shareholders” tab.

(iii) Now, select the “SANGHVI FORGING AND ENGINEERING LIMITED” from the drop down menu and click on “SUBMIT”

(iv) Now Enter your User ID

a. For CDSL: 16 digits beneficiary ID,

b. For NSDL: 8 Character DP ID followed by 8 Digits Client ID,

c. Members holding shares in Physical Form should enter Folio Number registered with the Company.

(v) Next enter the Image Verification as displayed and Click on Login.

(vi) If you are holding shares in demat form and had logged on to www.evotingindia.com and voted on an earlier voting of any company, then your existing password is to be used.

(vii) If you are a first time user follow the steps given below:

3

For Members holding shares in Demat Form and Physical FormPAN Enter your 10 digit alpha-numeric *PAN issued by Income Tax Department (Applicable for both demat

shareholders as well as physical shareholders)• MemberswhohavenotupdatedtheirPANwiththeCompany/DepositoryParticipantarerequested

to use the first two letters of their name and the 8 digits of the sequence number in the PAN field.• In case the sequencenumber is less than8digits enter the applicablenumberof 0’s before the

number after the first two characters of the name in CAPITAL letters. Eg. If your name is Ramesh Kumar with sequence number 1 then enter RA00000001 in the PAN field.

DOB Enter the Date of Birth as recorded in your demat account or in the company records for the said demat account or folio in dd/mm/yyyy format.

Dividend Bank Details

Enter the Dividend Bank Details as recorded in your demat account or in the company records for the said demat account or folio.• PleaseentertheDOBorDividendBankDetailsinordertologin.Ifthedetailsarenotrecordedwith

the depository or company please enter the member id / folio number in the Dividend Bank details field.

(viii) After entering these details appropriately, click on “SUBMIT” tab.

(ix) Members holding shares in physical form will then reach directly the Company selection screen. However, members holding shares in demat form will now reach ‘Password Creation’ menu wherein they are required to mandatorily enter their login password in the new password field. Kindly note that this password is to be also used by the demat holders for voting for resolutions of any other company on which they are eligible to vote, provided that company opts for e-voting through CDSL platform. It is strongly recommended not to share your password with any other person and take utmost care to keep your password confidential.

(x) For Members holding shares in physical form, the details can be used only for e-voting on the resolutions contained in this Notice.

(xi) Click on the EVSN for the relevant SANGHVI FORGING AND ENGINEERING LIMITED on which you choose to vote.

(xii) On the voting page, you will see “RESOLUTION DESCRIPTION” and against the same the option “YES/NO” for voting. Select the option YES or NO as desired. The option YES implies that you assent to the Resolution and option NO implies that you dissent to the Resolution.

(xiii) Click on the “RESOLUTIONS FILE LINK” if you wish to view the entire Resolution details.

(xiv) After selecting the resolution you have decided to vote on, click on “SUBMIT”. A confirmation box will be displayed. If you wish to confirm your vote, click on “OK”, else to change your vote, click on “CANCEL” and accordingly modify your vote.

(xv) Once you “CONFIRM” your vote on the resolution, you will not be allowed to modify your vote.

(xvi) You can also take out print of the voting done by you by clicking on “Click here to print” option on the Voting page.

(xvii) If Demat account holder has forgotten the changed password then Enter the User ID and the image verification code and click on Forgot Password & enter the details as prompted by the system.

(xviii) Note for Non – Individual Shareholders and Custodians• Non-Individual shareholders (i.e. other than Individuals, HUF, NRI etc.) and Custodian are required to log on to

www.evotingindia.com and register themselves as Corporates.• A scanned copy of the Registration Form bearing the stamp and sign of the entity should be emailed to

[email protected]• After receiving the login details a Compliance User should be created using the admin login and password. The

Compliance User would be able to link the account(s) for which they wish to vote on.• The list of accounts linked in the login should be mailed to [email protected] and on

approval of the accounts they would be able to cast their vote. • A scanned copy of the Board Resolution and Power of Attorney (POA) which they have issued in favour of the Custodian,

if any, should be uploaded in PDF format in the system for the scrutinizer to verify the same.

4

(xix) Shareholders can also cast their vote using CDSL’s mobile app m-Voting available for android based mobiles. The m-Voting app can be downloaded from Google Play Store. Apple and Windows phone users can download the app from the App Store and the Windows Phone Store respectively . Please follow the instructions as prompted by the mobile app while voting on your mobile.

In case of members receiving the physical copy:

(A) Please follow all steps from sl. no. (i) to sl. no. (xvii) above to cast vote.

(B) The remote e-voting period begins on September 25, 2017 (9:00 a.m.) and ends on September 27, 2017 (5:00 p.m.). During this period shareholders’ of the Company, holding shares either in physical form or in dematerialized form, as on the cut-off date (record date) of September 21, 2017, may cast their vote electronically. The e-voting module shall be disabled by CDSL for voting thereafter.

(C) In case you have any queries or issues regarding e-voting, you may refer the Frequently Asked Questions (“FAQs”) and e-voting manual available atwww.evotingindia.co.in under help section or write an email to [email protected].

1. Shri S. Samdani, Practicing Company Secretary failing him Shri SureshKumar Kabra, Practicing Company Secretary of Samdani Shah &Kabra has been appointed as the Scrutinizer to scrutinize the e-voting process in a fair and transparent manner.

The Scrutinizer shall within a period not exceeding three (3) working days from the conclusion of the general meeting unblock the votes in the presence of at least two (2) witnesses not in the employment of the Company and make a Consolidated Scrutinizer’s Report of the votes cast in favour or against, if any, forthwith to the Chairman of the Company.

2. The Results shall be declared at the AGM of the Company or thereafter. This Notice as well as the Results declared alongwith the Scrutinizer’s Report shall be placed on the Company’s website and on the website of CDSL and communicated to the NSE and BSE.

3. The facility for voting, either through electronic voting system or ballot or polling paper shall be available at the meeting and members attending the meeting who have not already cast their vote by remote e-voting shall be able to exercise their right at the meeting.

4. The members who have cast their vote by remote e-voting prior to the meeting may also attend the meeting but shall not be entitled to cast their vote again.

14. All documents referred to in the accompanying Notice and the Explanatory Statement shall be open for inspection at the Registered Office of the Company during normal business hours (9.00 am to 5.00 pm) on all working days up to and including the date of the Annual General Meeting of the Company.

By Order of the Board of DirectorsFor Sanghvi Forging & Engineering Ltd.

Sd/-

Vadodara, Date August 11, 2017 Harish G PunwaniRegistered Office:244/6 & 7, GIDC Industrial Estate, Waghodia, Dist. Vadodara – 391 760

Company SecretaryICSI Membership No: A50950

email : [email protected] : L28910GJ1989PLC012015 Web :www.sanghviforge.com

Ph:02668-264100 Fax: 02668-263411

5

ATTENDANCE SLIPAnnual General Meeting on Thursday, September 28, 2017 at 4:00 PM

I /We hereby record my presence at the Annual General Meeting of the Company at Registered Office of the Company situated at 244/6-7, G.I.D.C. Industrial Estate, Waghodia – 391760 Dist. Vadodara, Gujarat

Folio No./ DP ID & Client ID No. No. of Shares Held

Name of Member Signature

Name of Proxy holder Signature

IMPORTANT NOTE Members/Proxy holders are requested to bring the Attendance Slip with them when they come to the meeting and hand it over at the gate after affixing their signature on it.

MGT-11PROXY FORM

[Pursuant to section 105(6) of the Companies Act, 2013 and rule 19(3)of the Companies (Management and Administration) Rules, 2014]

Name of the member(s) :

Registered address :

E-mail Id :

Folio No/Client Id& DP ID :

I/We, being the member(s) of shares of the above named company, hereby appoint

1. Name :

Address :

E-mail Id :

Signature: , or failing him

2. Name :

Address :

E-mail Id :

Signature: , or failing him


Registered Office: 244/6-7, G.I.D.C. Industrial Estate, Waghodia-391760 Dist. Vadodara, Ph: 02668-673100 Fax: 02668-673135





6

3. Name :

Address :

E-mail Id :

Signature:

as my/our proxy to attend and vote (on a poll) for me/us and on my/our behalf at the Annual General Meeting of the company, to be held on Thursday September 28, 2017 at 4:00 p.m. at the Registered Office of the Company situated at 244/6-7, G.I.D.C. Industrial Estate, Waghodia – 391760 Dist. Vadodara, Gujarat and any adjournment thereof in respect of such resolutions as are indicated below:

Attention Members!Arrangements have been made for transport to and from the registered office of the Company so as to make it convenient for the Members to attend the 29th Annual General Meeting schedule to be held on Thursday, September 28, 2017 at 4:00 p.m.• Pick-uptimewillbe3:00p.m.onThursday,September28,2017andRouteforPick-upLocationwillstartfromPandya

Bridge to Fatehgunj Circle to Airport Circle to Sardar Estate to Waghodia Crossing to the Registered office of the Company.

• IncaseMemberswishtoavailthisfacility,theyarerequestedtoregistertheiravailabilityandabovementionedpickuplocations by calling on Ph No. 02668-673100 and e-mail at [email protected] during 10:00 a.m. to 5:00 p.m. before September 27, 2017.

• YourCooperationinthisregardishighlysolicitedasthiswillhelptoensurethattheCompanyisabletoeffectivelyservice from pick-up locations.

• Membersarerequestedtoarriveatthepick-uplocationwellinadvancesothattheycanreachattheRegisteredofficeof the Company prior to the meeting.

• CompanyPick-upVehicleavailableinthenameoftheCompany“SANGHVIFORGINGANDENGINEERINGLIMITED” to enable the Members to easily identify them.

• ThereturntransportfromtheregisteredofficeoftheCompanyshallfollowthesameroute.• Pleasebeinformedthatnoreimbursementshallbemadeforanyexpensesincurredtoattendthemeeting.

Resolution No.

Description

1 Adoption of Standalone and Consolidated Audited Financial Statements of the Company for the year ended March 31, 2017 including Audited Balance Sheet as at March 31, 2017 and the Statement of Profit & Loss for the year ended on that date and the reports of the Board of the Directors and Auditors thereon.

2 Appointment of a Director in place of Shri Babulal S Sanghvi (DIN No.00291745), who retires by rotation and being eligible, offers himself for reappointment.

3 Appointment of Statutory Auditor M/s V.K. Shastri & Co., Chartered Accountant, (Registration No. 113325W) , in place M/s. Shah and Bhandari, Chartered Accountants, on such remuneration as may be determined by the Board of Directors based on the recommendation of Audit Committee.

Signed this day of 2017.

Signature of shareholder Signature of Proxy holder(s)

Note:1. This form of proxy in order to be effective should be duly completed and deposited at the Registered Office of the

Company, not less than 48 hours before the commencement of the Meeting. 2. For the resolutions, Explanatory Statement and Notes please refer notice of the Annual General Meeting.

Affix a Revenue Stamp of ` 1/-

Form No. MGT – 12[Pursuant to section 109(5) of the Companies Act, 2013 and rule 21(1)(c) of the Companies

(Management and Administration Rules, 2014]

BALLOT PAPER

Sr. No. Particulars Details1. Name of the first Named Shareholder

(In block letters)2. Postal address

3. Registered folio No. / *Client ID No. (*Applicable to investors holding share in dematerialized form)

4. Class of Share

I hereby exercise my vote in respect of Ordinary / Special resolution enumerated below by recording my assent or dissent to the said resolution in the following manner:

Item No.

Description No. of Equity Shares held

by me

I Assent to the Resolution

(YES)

I Dissent from the Resolution

(NO)1 Adoption of Standalone and Consolidated Audited Financial

Statements of the Company for the year ended March 31, 2017 including Audited Balance Sheet as at March 31, 2017 and the Statement of Profit & Loss for the year ended on that date and the reports of the Board of the Directors and Auditors thereon.

2 Appointment of a Director in place of Shri Babulal S Sanghvi (DIN No.00291745), who retires by rotation and being eligible, offers himself for reappointment.

3 Appointment of Statutory Auditor M/s V.K. Shastri & Co., Chartered Accountant, (Registration No. 113325W) , in place M/s. Shah and Bhandari, Chartered Accountants, on such remuneration as may be determined by the Board of Directors based on the recommendation of Audit Committee.

Place:

Date: (Signature of the Shareholder)




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SanghviForging & Engineering

Limited

Route Map

Documents

We are forging our way - Bombay Stock Exchange€¦ · a closed-die forging company. We have slowly and steadily paved our way into the league of value-add and customised, heavy open-die