BOARD’S REPORT

The Directors have pleasure in presenting the 32^nd Annual Report on the business and operations of the Company and the Audited Accounts for the Financial Year ended 31^st March 2018.

1. FINANCIAL RESULTS:

TRANSFER TO RESERVES:

No amount is transferred to the reserves by the Company.

2. DIVIDEND:

Your Directors have recommended a dividend of Rs.2/- per share (i.e.20%) on Company’s paid up equity share capital comprising of 38,13,400 equity shares of Rs. 10/- each.

Thus, the total dividend outgo for the current fiscal will amount to Rs.7,626,800/- plus dividend distribution tax of Rs.1,552,664/-.

3. OPERATIONAL HIGHLIGHTS AND PROSPECTS/ STATEMENT OF AFFAIRS:

The Company earned operational income of Rs.8800.50 lacs compared to Rs. 11,459.22 lacs for the previous year. The other income is Rs.115.04 lacs compared to Rs.341.40 lacs in the previous year.

The total revenue for the year is Rs. 8,915.53 lacs against Rs. 11,800.62 lacs in the previous year. Profit after tax is Rs.586.57 lacs as compared to previous year figure of Rs. 1,228.59 lacs.

During the period under review, your company was able to export transformers valuing Rs.13.86 crores as compared to previous year Rs.44.36 crores.

The results were not comparable with previous year. This is mainly due to implementation of GST which has impacted on costs and rates. The government had earlier exempted excise duty in case of solar transformers; benefit of such exemption is not available in GST regime. The Government has not reviewed its policy timely in this direction.

The Company has not received any order for windmill transformers since beginning of the financial year, mainly due to Government policies. This has largely impacted on turnover of the Company as compared with previous year.

The Company has concentrated on catering needs of renewable energy sector including solar and wind energy in local market wherein the Company has been enjoying commendable position being one of the top companies in India supplying transformers for renewable energy.

There is no change in nature of business of the Company during the financial year.

The Company has prepared the Financial Statements for the Financial Year 2017-2018 in accordance with Indian Accounting Standards.

PROSPECTS:

The current economic scenario shows positive signal of growth in power production sector, cement sector, construction, service sectors etc. The Company also looks forward new business from local private sectors but it largely depends on how the new power projects will take place under the initiatives taken by the Central Government.

EXPANSION OF CAPACITY AT NEW FACTORY:-

The Company is investing heavily on new production facility located on Padra - Jambusar highway. The new facility will be state-of-the-art with modern equipments and material handling system. Company is investing approximately Rs.36 crores in this facility which will increase revenue by three folds once utilized 100%. The commencement of production at new facility will start from beginning of financial year 2018-2019.

INSURANCE:

All the properties of the Company including buildings, plant & machinery and stocks have been insured.

4. ACCREDITATION:

Your Company has taken BIS approval for many ratings during the year.

The Company is also holding ISO 9001:2000 Certificate since September, 2004 for quality systems in relation to its factory located at village Bil, District Vadodara in the State of Gujarat.

5. CREDIT FACILITIES

To fund expansion at new factory and for working operations, the Company has availed working capital loan and Foreign Currency Term loan from Standard Chartered Bank. Further, the Company has been optimally utilizing its fund based and non fund based working capital requirements as tied up with Bank of Baroda. During the year under review, the Company was comfortable in meeting its financial requirements. Effective financial measures have been continued to reduce cost of interest and bank charges.

6. TRANSFER OF UNCLAIMED DIVIDEND TO INVESTOR EDUCTION AND PROTECTION FUND

In terms of Section 125 of the Companies Act, 2013, any unclaimed or unpaid Dividend relating to the financial year ended on 31/03/2010 was due for remittance on or before 28-07-2017 to the Investor Education and Protection Fund established by the Central Government. Pursuant to the provisions of Section 125 of the Companies Act, 2013, the Company transferred 15,400 shares to IEPF Account of Central Government for which dividend has remain unclaimed/unpaid for consecutive 7 years.

7. SHARE CAPITAL

The paid up Equity Share Capital as on March 31, 2018 was Rs. 3,81,34,000/-. During the year under review the company has not issued any shares or any convertible instruments.

8. MATERIAL CHANGES

No material changes and commitments affecting the financial position of the Company occurred between the ends of the financial year to which this financial statement relate on the date of this report.

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

The information pertaining to conservation of energy, technology absorption, Foreign exchange Earnings and outgo as required under Section 134 (3)(m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014 is furnished in Annexure I and is attached to this report.

10. RISK MANAGEMENT

The Company has framed a sound Risk Management Policy to identify and evaluate business risks and opportunities and the same has become integral part of Company’s day to day operations. The key business risks identified by the Company are as follows viz. Industry Risk, Management and Operations Risk, Market Risk, Government Policy risk, Liquidity risk, and Systems risk. The Company has in place adequate mitigation plans for the aforesaid risks.

11. CORPORATE SOCIAL RESPONSIBILITY INITIATIVES

As per the provisions of Companies Act, 2013 regarding Corporate Social Responsibility, Company have spent CSR expenditure as per Annexure- II attached.

12. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS MADE UNDER SECTION 186 OF THE COMPANIES ACT, 2013

There were no loans, guarantees made by the Company under Section 186 of the Companies Act, 2013 during the year under review and hence the furnishing above information is not applicable. Particulars of Investments are mentioned in Schedule 8 of the Financial Statements.

13. RELATED PARTY TRANSACTIONS

Related party transactions that were entered during the financial year were on an arm’s length basis and were in the ordinary course of business. There were no materially significant related party transactions with the Company’s Promoters, Directors, Management or their relatives, which could have had a potential conflict with the interests of the Company. Transactions with related parties entered by the Company in the normal course of business are periodically placed before the Audit Committee for its omnibus approval and the particulars of contracts entered during the year as per Form AOC-2 is enclosed as Annexure-III.

The Board of Directors of the Company has, on the recommendation of the Audit Committee, adopted a policy to regulate transactions between the Company and its Related Parties, in compliance with the applicable provisions of the Companies Act 2013, the Rules thereunder and the Listing Agreement. This Policy was considered and approved by the Board has been uploaded on the website of the Company at www.shilchargroup.com under investors/ policy documents/Related Party Policy link.

14. DIRECTORS

In accordance with the provisions of the Companies Act, 2013 and in terms of the Memorandum and Articles of Association of the Company, Mr. Alay Shah, Managing Director shall retire by rotation and he is eligible for re-appointment. There is no change in constitution of the Board during the year under review.

The term of Mr. Om Prakash Khanna and Mr. Mukesh Patel as Independent Directors will expire on 31.03.2019 and are eligible for re-appointment for further term. Accordingly, it has been proposed to make their re-appointment at this Annual General Meeting through Special Resolution for further term of five consecutive years from April 01, 2019 up to March 31, 2024.

14.1 BOARD EVALUATION

Pursuant to the provisions of the Companies Act, 2013 and Regulation 17(10) of 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. The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report.

14.2 REMUNERATION POLICY

The Board has, on the recommendation of the Nomination & Remuneration Committee framed a policy for selection and appointment of Directors, Independent Directors, Senior Management and their remuneration. The Remuneration Policy is stated in the Corporate Governance Report, attached herewith.

14.3 MEETINGS

A calendar of Meetings is prepared and circulated in advance to the Directors.

During the year four Board Meetings and four Audit Committee Meetings were convened and held. The details of which are given in the Corporate Governance Report. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013.

The required particulars of various Committees are stated in the Corporate Governance Report, attached herewith.

14.4 DECLARATION OF INDEPENDENT DIRECTORS

The Independent Directors have submitted their disclosures to the Board that they fulfill all the requirements as stipulated in Section 149(6) of the Companies Act, 2013 so as to qualify themselves to be appointed as Independent Directors under the provisions of the Companies Act, 2013 and the relevant rules.

15. AUDIT COMMITTEE AND VIGIL MECHANISM

The composition and other particulars of Audit Committee are provided in the Corporate Governance Report, attached herewith.

In pursuant to the provisions of section 177(9) & (10) of the Companies Act, 2013, a Vigil Mechanism for directors and employees to report genuine concerns has been established. The Vigil Mechanism Policy has been uploaded on the website of the Company at www.shilchargroup.com under investors/policy documents/Vigil Mechanism Policy link.

16. DIRECTORS RESPONSIBILITY STATEMENT

In accordance with the provisions of Section 134(5) of the Companies Act, 2013 the Board hereby submits its responsibility Statement:—

(a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

(b) the directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the

(c) financial year and of the profit and loss of the company for that period;

(d) the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

(e) the directors had prepared the annual accounts on a going concern basis; and

(f) the directors, had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively.

(g) the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

17. ANNUAL RETURN

The extracts of Annual Return pursuant to the provisions of Section 92 read with Rule 12 of the Companies (Management and administration) Rules, 2014 is furnished in Annexure-IV and the same is attached to this Report.

18. SUBSIDIARIES, JOINT VENTURES AND ASSOCIATE COMPANIES

The Company does not have any Subsidiary, Joint venture or Associate Company.

19. DEPOSITS

The Company has neither accepted nor renewed any deposits during the year under review.

No Unsecured loan availed from Directors during the year.

20. AUDITORS

20.1 STATUTORY AUDITORS

The Company at 31 Annual General Meeting held on 11.08.2017 made an appointment of M/s. CNK & Associates LLP, Chartered Accountants, Vadodara as Statutory Auditors to hold the office for term of 5 years until the conclusion of the 36th Annual General Meeting. The auditors have also confirmed that they hold a valid certificate issued by the Peer Review Board of the Institute of Chartered Accountants of India and have conveyed their eligibility to continue to hold the office for remaining term.

20.2 SECRETARIAL AUDIT

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. Kashyap Shah & Co., a Practicing Company Secretaries to undertake the Secretarial Audit of the Company. The Report of the Secretarial Audit Report is annexed herewith as “Annexure-V ‘’.

20.3 INTERNAL AUDITORS

M/s. C G Pradhan & Co, Chartered Accountants performs the duties of internal auditors of the Company and their report is reviewed by the audit committee from time to time.

21. OBSERVATION OF AUDITORS

There are no qualifications, reservations or adverse remarks made by the Auditors. Observations of auditors are self explanatory and do not call for further information.

22. INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY

The Company has adequate system of internal control/ Internal Finance Control to safeguard and protect from loss, unauthorized use or disposition of its assets. All the transactions are properly authorized, recorded and reported to the Management. The Company is following all the applicable Accounting Standards for properly maintaining the books of accounts and reporting financial statements. The internal auditor of the company checks and verifies the internal control and monitors them in accordance with policy adopted by the company.

The Company continues to ensure proper and adequate systems and procedures commensurate with its size and nature of its business.

23. SHARES

a. BUY BACK OF SECURITIES

The Company has not bought back any of its securities during the year under review.

b. SWEAT EQUITY

The Company has not issued any Sweat Equity Shares during the year under review.

c. BONUS SHARES

No Bonus Shares were issued during the year under review.

d. EMPLOYEES STOCK OPTION PLAN

The Company has not provided any Stock Option Scheme to the employees.

24. CORPORATE GOVERNANCE:

As per Regulation 34(3) and Schedule V of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a separate Section on Corporate Governance on corporate governance practices followed by the Company, together with a certificate from the Company’s Auditors confirming compliance forms an integral part of this Report.

25. MANAGEMENT DISCUSSION AND ANALYSIS:

The Management Discussion and Analysis Report is appended as Annexure-VI to this Report.

26. PARTICULARS OF EMPLOYEES:

Disclosure under the provisions of Section 197 of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 with reference to remuneration of employees in excess of the limits prescribed are hereunder:

The information 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 as amended, has been furnished herein below.

The percentage increase in remuneration of each Director, Chief Financial Officer and Company Secretary during the financial year 2017-18, ratio of the remuneration of each Director to the median remuneration of the employees of the Company for the financial year 2017-18 and the comparison of remuneration of each Key Managerial Personnel (KMP) against the performance of the Company are as under:

Note: Independent Directors are paid only sitting fees and hence not included in the above table.

ii) The median remuneration of employees of the Company during the financial year was Rs 2.24 lacs.

iii) In the financial year, there was increase of 33.33 % in the median remuneration of employees;

iv) There were 105 permanent employees on the rolls of Company as on March 31, 2018

v) Average percentage increase made in the salaries of employees other than the managerial personnel in the last financial year i.e. 2017-18 was 9% whereas the decrease in the managerial remuneration for the same financial year was 37.91%.

vi) Remuneration paid is as per the Remuneration Policy for Directors, Key Managerial Personnel and other Employees. None of the Directors of the Company are in receipt of any commission from the Company.

27. COST AUDIT

Pursuant to Section 148 of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Amendment Rules, 2014 dated 31/12/2014, the activity of your Company falls under Non-regulated sectors and hence, maintenance of cost records as well as the cost audit, as the case may be has been applicable to the Company for the Financial Year 2017-18.

28. HUMAN RESOURCES:

During the period under review, the personal and industrial relations with the employees remained cordial in all respects. The management has always carried out systematic appraisal of performance and imparted training at periodic intervals. The Company recognizes talent and has judiciously followed the principle of rewarding performance.

29. DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013.

The Company has zero tolerance for sexual harassment at its workplace. The Company has adopted an Anti-harassment Policy in line with the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. Internal Complaint Committee are set up to redress complaints received regularly and are monitored by women line supervisors who directly report to the Chairman & Managing Director. All female employees are covered under the policy. There was no complaint received from any employee during the financial year 2017- 18 and hence, no complaint is outstanding as on March 31, 2018 for redressal.

30. SIGNIFICANT AND MATERIAL ORDER PASSED BY THE REGULATORS/ COURTS

During the year, no significant and material order was passed by the Regulators or courts.

31. STATEMENT OF COMPLIANES OF APPLICABLE SECRETARIAL STANDARDS

The Company has complied with the provisions of Secretarial Standards (I & II) issued by the Institute of Company Secretaries of India and approved by the Central Government under section 118(10) of the Companies Act, 2013.

32. ACKNOWLEDGEMENTS

Your Directors place on record their sincere thanks to bankers, business associates, consultants, and various Government Authorities for their continued support extended to your Companies activities during the year under review. Your Directors also acknowledges gratefully the shareholders for their support and confidence reposed on your Company.

For and on behalf of the Board of Directors

For SHILCHAR TECHNOLOGIES LIMITED

Place: Bil, District Vadodara JITENDRA SHAH

Date: 28.05.2018 CHAIRMAN

(DIN- 00257348)