To,
The Members of
Sanghvi Forging & Engineering Limited
The 32nd Annual Report of the Company together with the Audited Financial
Statements (Standalone and Consolidated) for the Financial Year ended 31st March, 2020 is
hereby presented to the members of Company.
The Company is undergoing Corporate Insolvency Resolution Process (CIRP) under the
provisions of the
Insolvency and Bankruptcy Code, 2016 (IBC ) in terms of order dated August 30, 2019
passed by Hon'ble
National Company Law Tribunal (NCLT), Ahmedabad Bench. Pursuant to the initiation of
CIRP, vide aforesaid order, the adjudicating authority appointed Mr. Chandra Prakash Jain,
as Interim Resolution Professional (IRP) to carry the functions as mentioned under the
Code and later on Committee of Creditors (COC) appointed of Mr. Parthiv Parikh, the
Resolution Professional (RP) of the Company replacing the IRP . The Hon'ble NCLT,
Ahmedabad Bench vide order dated 26th May, 2020 approved the appointment of Mr. Parthiv
Parikh (having registration no. IBBI/IPA-002/IP-N00369/2017-2018/11063) as Resolution
Professional (RP) of Sanghvi Forging and Engineering Limited. As per terms of Section 20
of Insolvency Code, the management and operations of the Company are being managed by RP
on a Going Concern Basis.
FINANCIAL HIGHLIGHTS
The financial performance for the fiscal year 2020 is summarized in the following
table:
| Particulars |
Standalone |
Consolidated |
|
2019-20 |
2018-19 |
2019-20 |
2018-19 |
| Income from Operations |
5891.58 |
6029.56 |
5916.20 |
6279.93 |
| Other Operating Income |
64.79 |
88.60 |
64.79 |
88.60 |
| Other Income |
64.30 |
25.88 |
64.30 |
25.88 |
| Total Income |
6020.67 |
6144.04 |
6045.29 |
6394.41 |
| Operating & Administrative Expenses |
5435.87 |
5707.83 |
5476.89 |
5969.01 |
| Operating Profit before Interest, |
584.8 |
436.21 |
568.40 |
425.40 |
| Depreciation and Tax |
|
|
|
|
| Interest and Financial Charges |
249.06 |
1572.48 |
249.06 |
1572.48 |
| Depreciation and Amortization |
851.84 |
859.09 |
851.84 |
859.09 |
| Profit Before Tax |
(516.11) |
(1995.36) |
(532.50) |
(2006.17) |
| Tax Expenses |
NIL |
NIL |
NIL |
NIL |
| Short Provisions for Taxes |
NIL |
NIL |
NIL |
NIL |
| Profit After Tax |
(516.11) |
(1995.36) |
(532.50) |
(2006.17) |
FINANCIAL AND OPERATIONAL PERFORMANCE
Your Company has achieved consolidated turnover of Rs. 6045.29 Lakh and incurred net
loss of Rs. 532.50 lakh for the financial year ended March 31, 2020 as against a turnover
Rs. 6394.41 Lakh and net loss of Rs. 2006.17 Lakh during the previous year. Depreciation
and amortization charges during the year under review were Rs 851.84 lakhs compared to Rs.
859.04 lacs during the previous i financial year 2018-19. Interest charges were decreased
from Rs. 1572.48 lakh to Rs. 249.06 lakh during the financial year 2019-20.
OUTLOOK
The 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 second plant i.e. 15000 MTPA and integration has
had a positive impact on the Company's operating margins. The Company expects to
strengthen its topline and margins in the coming years. The Company received all 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. IMF expects global economy to grow and reach levels of 3.3% in 2020 and 3.4%
in 2021. Easing monetary policy, stronger cross-border cooperation and implementation of
supportive fiscal policies aimed at boosting demand could drive improvement in global
activity.
SHARE CAPITAL
No new Share Capital has been issued by the Company in the Financial Year 2019-20.
DIVIDEND
No Dividend has been declared for the financial year ended March 31, 2020.
CREDIT RATING
The Company has no Credit rating for its long-term and short-term-bank facilities.
INVESTORS' RELATIONS AND GRIEVANCES
All the shareholders'/investors' complaints/grievances received during the financial
year have been resolved and there were no investor grievances pending, as on March 31,
2020. 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 REPORT
A detailed review of operations, performance and future outlook of the Company is
covered under a separate report as Management's Discussion & Analysis.
DIRECTORS and KEY MANAGERIAL PERSONNEL (KMPs)
Pursuant to commencement of the CIRP, the powers of the Board of Directors stand
suspended and are exercised by the Resolution Professional. The terms of appointment of
Managerial personnel of the Company i.e Mr. Jayantilal Babulal Sanghvi, Mr. Naresh Babulal
Sanghvi & Mr. Vikram Babulal Sanghvi expired on 19th April, 2020. The Committee of
Creditors (CoC) have approved their appointment only as KMPs in compliance with the
applicable provisions of the Companies Act, 2013 on a remuneration as may be mutually
decided and agreed by CoC and KMPs. The details of KMPs are as under:
| Sr. No Name of KMPs |
Designation |
| 1 Mr. Jayantilal Babulal Sanghvi |
CEO |
| 2 Mr. Naresh Babulal Sanghvi |
COO |
| 3 Mr. Vikram Babulal Sanghvi |
CFO |
| 4. Ms. Deepika Agrawal |
CS |
commencement of the CIR process the evaluation of the independent directors of the
Company was not required to be carried out.
VIGIL MECHANISM / WHISTLE BLOWER
In 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.
The Company had, prior to the commencement of the CIR process, 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
The Company Secretary has represented that no Director / employee has been denied access
to the Chairman of the Audit Committee until August 30, 2019 and to the Resolution
Professional thereafter and that no complaints were received during the year.
INTERNAL FINANCIAL CONTROL
The 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
auditor's team carries out extensive audits throughout the year across all locations and
across all functional areas.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
The Company had, prior to the commencement of the CIR process, put in place a Board
approved Corporate Social Responsibility (CSR) Policy and the same is also available on
the website of the Company. The composition and the terms of reference of the Committee
are detailed in the enclosed Corporate Governance Report. During the CIR process and post
appointment of RP, powers of the Board has suspended and accordingly the CSR Committee
could not met during this period. The Company's Policy on Corporate Social Responsibility
is available on the website_
http://www.sanghviforge.com/investor_relations/code_of_conduct .
POLICY ON NOMINATION AND REMUNERATION
The Company had, prior to the commencement of the CIR process, had in place the
Nomination and Remuneration Policy with the provisions of Section 178 of the Companies
Act, 2013 and Regulation 19 of the SEBI (Listing Obligations and Disclosure Requirements)
Regulations, 2015. The particulars of the remuneration policy are stated in the enclosed
Corporate Governance Report and are also available on the
Company's website at http://www.sanghviforge.com/investor_relations/code_of_conduct .
RELATED PARTY TRANSACTIONS
All 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. Accordingly, since disclosure in form AOC- 2 is
required to be made only of the related party transactions or arrangements that were not
at arm's length basis or the material related party transactions that were at arm's length
basis in accordance with the Section 188 of the Companies Act, 2013, the disclosure in
form AOC-2 in terms of Section 134 of the Companies Act, 2013 is not required.
Before the commencement of CIRP, all Related Party Transactions were placed before the
Audit Committee and the Board for approval. Prior omnibus approval of the Audit Committee
had been 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 were audited and a statement giving details of all related party transactions had
been 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, prior to the
commencement of the CIR
Process has been uploaded on the Company's website i.e.
http://www.sanghviforge.com/investor_relations/code_of_conduct.
REPORT ON CORPORATE GOVERNANCE
A separate Section on Corporate Governance is forming part of the Annual Report and the
Certificate from
M/s. Samdani Shah and 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.
FINANCE AND ACCOUNTS:
During the year under review, No credit facilities has been availed throughout the year
as the Company was under CIRP. As mandated by the Ministry of Corporate Affairs, the
Financial Statements for the year ended 31.03.2020 have been prepared in accordance with
the Indian Accounting Standards (IND AS) notified under Section 133 of the Companies Act,
2013 read with the Companies (Accounts) Rules, 2014. The Chief Financial Officer has
represented that the estimates and judgments relating to the Financial Statements are made
on a prudent basis, so as to give a true and fair view of the state of affairs and profits
and cash flows of the Company for the year ended March 31, 2020.
FIXED DEPOSITS
The Company has not accepted any deposits during the current financial year.
INSURANCE
All the properties and insurable interests of the Company including buildings, plant
& machinery and stocks have been adequately insured.
LOAN, GUARANTEE OR INVESTMENT
Details of Loans, Guarantees and Investments covered under the provisions of Section
186 of the Companies Act, 2013 are given in the notes to the Financial Statements.
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. Due to liquidity crunch, the Company could not pay Listing fees of Stock
Exchanges.
SUBSIDIARY COMPANY
The Company has its Wholly Owned Subsidiary Company in Netherlands in the name of
"Sanghvi Europe BV". The Company had in place a policy for determining material
subsidiaries prior to the commencement of the CIR Process, which has been uploaded on
company's website at http://www.sanghviforge.com/investor_relations/code_of_conwduct. In
terms of the policy, the Company has taken on record that aforesaid company does not met
the criteria of being treated as a material subsidiary during the period.
CONSOLIDATED FINANCIAL STATEMENTS
The Consolidated Financial Statements of the Company have been prepared in accordance
with the relevant Indian Accounting Standards issued by the Institute of Chartered
Accountants of India and forms an integral part of this Report. Pursuant to Section 129(3)
of the Companies Act, 2013 read with Rule 5 of the Companies (Accounts) Rules, 2014,
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 DIRECTORS
The 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
MANAGEMENT OPINION ON THE QUALIFICATIONS/EMPHASIS OF MATTERS/NOTES GIVEN BY AUDITORS IN
THEIR STANDALONE AND CONSOLIDATED REPORTS:
Auditors' Qualification: i. The company has continued to incur losses resulting in
erosion of entire Net-worth, Current liabilities Exceed Current Assets, inability to pay
the statutory liabilities viz. TDS, PF, ESIC etc. and severe Liquidity Constraints; the
Banks have recalled their loans. ii. Inability to comply with the terms of loan agreements
and that Lenders have under section 13(2) of the Securitization and Reconstruction of
Financial Assets and Enforcement of Security Interest Act, 2002 ("SARFAESI Act")
given notices to the Company in the year 2019. iii. That the Company cannot be categorised
as a Going Concern in view of the accounting standards generally accepted in India.
Management opinion:
Considering the Ongoing Operations with improved business prospects, continue to
execute orders in hand, and obtaining new orders despite adversities and efforts to
control costs, the Management is positive about the viability of Company's operation.
AUDITORS Statutory Auditor
In compliance with the Companies (Audit and Auditors) Rules, 2014, the Company has
appointed M/s. V. K. Shastri & Co., Practicing Chartered Accountants, as Statutory
Auditors of the Company at the 29th Annual General Meeting held on September
28, 2017 to hold office till the conclusion of the 34th Annual General Meeting
of the Company.
Secretarial Auditor
Pursuant 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 Secretarial Audit of the Company for the Financial Year 2019-20. The report of
Secretarial Audit is annexed as "Annexure A".
We have complied all the observations and remarks provided by Secretarial Auditor
through the year.
There have been no other qualifications, reservations, adverse remarks or disclaimers
in the auditor's reports, requiring explanation or comments by the Board.
Internal Auditor
The exitsing Internal Auditors of the Company - M/s. Ambalal M Shah & Co, Chartered
Accountants, were re-appointed for the F.Y. 2020-21 pursuant to the provisions of Section
138 of the Companies Act, 2013 and The Companies (Accounts) Rules, 2014.
Report of Fraud by Auditors
During the year under review, the statutory Auditors, Internal Auditors and Secretarial
Auditors have not reported any instance of fraud committed under Section 143(12) of the
Companies Act, 2013 details of which needs to be reported.
DIRECTORS' RESPONSIBILITY STATEMENT
To the best of knowledge and belief and according to the information and explanations
obtained, CFO 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, 2020, 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,
2020 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 statements are prepared 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 RESOURCES
Many 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. The reports of particulars of employees and related disclosure annexed in
"Annexure B".
DISCLOSURE BY SENIOR MANAGEMENT PERSONNEL
None of the senior management personnel have undertaken any financial and commercial
transactions with the Company, in which they have personal interest that would have a
potential conflict with the interest of the Company at large.
Obligation of Company under the Sexual Harassment of Women at Workplace (Prevention,
Prohibition and Redressal) Act, 2013
The Company has in place a policy on prevention, prohibition and redressal of sexual
harassment at workplace in line with the provisions of the Sexual Harassment of Women at
Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules thereunder. All
women employees and workers
(permanent, temporary, contractual and trainees) as well as any women visiting the
Company's office premises or women service providers are covered under this Policy. During
the year, the Company reached out to female employees through awareness sessions for
creating greater awareness with respect to the
Company's' Policy on Sexual Harassment at workplace.
During the year under review, no complaints were received by the Committee constituted
under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal)
Act, 2013.
MATERIAL CHANGES AND COMMITMENTS
- 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.
ANNUAL RETURN AND EXTRACT OF ANNUAL RETURN
As per provisions of Section 92 of the Companies Act, 2013 read with Rules made there
under, a draft Annual Return of the Company for the financial year 2019-20 in the Form
MGT-7 is available on the website of the Company, web-link of which is
http://www.sanghviforge.com/investor_relations/code_of_conductand the Extract of Annual
Return in the FormMGT-9 has been annexed.
CONSERVATION OF ENERGY
The 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 C" of this Annual Report.
SAFETY, HEALTH AND ENVIRONMENT
The Company is continuously taking effective steps regarding exercised effective
safety, health and environment protection. Water and air pollution control measures were
successfully operated and industrial trade effluents were used for gardening. The tree
plantation at the factory site has been maintained properly and the same shall be duly
taken care of at our second plant.
DETAILS OF EMPLOYEES
The 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.
Compliance of Secretarial Standards
The Company has complied with Secretarial Standards issued by the Institute of Company
Secretaries of India on Meetings of the Board of Directors and General Meetings.
RISK MANAGEMENT
The Constitution of Risk Management Committee as per SEBI (LODR) Regulations, 2015 is
not applicable to the company. However, the Company, prior to the commencement of the
CIRP, has Constituted Risk Management Committee and framed Risk management Policy to
mitigate the risk and to take appropriate actions on its deviations. The Risk Management
Policy is also available on the Company's website at
No major pecuniary orders/ strictures have been passed by any Regulatory Authorities
including any Courts or the Tribunals.
ACKNOWLEDGEMENT
CEO & CFO of the Company express their sincere appreciation for the wholehearted
and continued support assistance and cooperation extended by the shareholders banks,
suppliers, customers, Government Authorities and all concerned towards the Company during
the year under review. The Company also wishes to place on record its deep sense of
appreciation for the committed services by the Company's executive, staff and workers.
| On the behalf of the Board of Directors |
|
| Place: Vadodara |
Jayantilal Babulal Sanghvi |
| Date: 10, November, 2020 |
Chief Executive Officer |
|
DIN: 00291657 |
|