Dear Members,

The Directors are pleased to submit their 31^st Annual Report of the business operations together with the Audited financial statements of the Company for the year ended 31^stMarch 2018:

1. OVERVIEW OF FINANCIARESULTS

(Rs. in Lakhs)

2 ADOPTION OF INDIAN ACCOUNTING STANDARDS (IND AS)

Beginning 1^st April, 2017, the Company has, for the first time, adopted Indian Accounting Standard (Ind AS) with a transition date of 1^st April, 2016. Accordingly, the financial statements have been prepared in compliance with Ind AS as notified by the Ministry of Corporate Affairs and prescribed under Section 133 of the Companies Act, 2013 (hereinafter referred to as "the Act") read with relevant rules made thereunder and other accounting pronouncements generally accepted in India. Accordingly, the figures for the corresponding year ended 31^st March, 2017 have also been presented after incorporating the applicable Ind AS adjustments.

3. DIVIDEND

In view of carried forward losses, the Board of Directors does not recommend any dividend for the year ended 31^st March 2018.

4. SHARE CAPITAL

The paid up Equity Share Capital as on 31^st March, 2018 was Rs. 7.35 Crores. During the year under review, the Company has not issued new shares.

5. MANAGEMENT'S DISCUSSION AND ANALYSIS : F.Y. 2017-2018

I. Industry Structure & Development :-

The Chemical Industry is a key enabler for other industries. As chemicals are consumed in varying proportion by every industry (rightly from electronics to paints, from pharmaceuticals to cosmetics), without chemicals sustainable development of other sectors is not possible.

The Chemical Industry is a crucial constituent of the growing Indian Economy, providing the key material for several industries. The Company is operating only in one Segment, namely 'Specialty Chemicals'. Specialty Chemicals are particular chemical products which provide a wide variety of effects on which many other industry sectors rely.

Specialty chemicals, which comprise of low volume, high value chemicals with specific applications, constitute a significant part of the Indian chemical industry and are targeted towards specific end-use applications.

Specialty chemicals are produced by a complex, interlinked industry. In the strictest sense, specialty chemicals are chemical products that are sold on the basis of their performance or function, rather than their composition. Products and services in the specialty chemicals industry require intensive knowledge and ongoing innovation.

The Company manufactures a wide range of specially formulated and customized products for various Industrial applications. Company's customers are well recognized and located not only in India but all over the World especially in America, Europe, and Far- East.

Our customers represent a wide range of Industries such as Wire Insulation Enamel, PVC stabilizers, Inks, Colours, Coatings, Textiles, Agro Chemicals, Polymers, Plastics, Rubber, Latex, Tyre and Tubes, Conveyor belts, Lubricants, Additives, Home care, Cosmetic, Soaps detergents, Fertilizers and many more.

Our customers are always seeking innovative products formulations for their current process needs, which are fulfilled by Company's Production Development, application knowledge & experience. Solvay Group which represents this worldwide, in specialty chemicals supports the Sunshield team.

Company's main products belong to:

a. Specialty Surfactant applications, which are predominantly Ethylene Oxide (EO) based products. The technologies developed involve surfactants, Esters, Amides, and other complementary processes.

b. Specialty Anti-Oxidants for Lubricants, Polymers, Rubber, Tyre & Latex and other Industries involving Aminic & Phenolic technologies and

c. Other Non-EO technologies & customized blends for various applications.

II. Operating and Financial Performance of the Company

(Rs. in Lakhs)

During the year, Sales by Volume went up by 3%, whereas the sales in Value terms went up by 6%.

Export Sales went down by 3 % from Rs. 8,182 Lakhs to Rs. 7,953 Lakhs and domestic Sales went up by 13% from Rs. 9,300 Lakhs in 2016-17 to Rs. 10,547 Lakhs in 2017-2018.

Major change is in sales of Theic where volume has gone down but on a higher price realization. Sale of Ethoxylates, Propoxylates and Antioxidants products in terms of value and volume has gone up as compared to last year. The improvement is mainly due to change in product mix and increase in the demand of products.

Profits are mainly on account of improved margin on sales, positive forex fluctuations gains.

III. Outlook

The growth for specialty chemicals is driven by both domestic consumption and exports. Specialty chemicals finding applications across consumer, industrial and infrastructure segments are driven by the overall growth of the Indian economy. The segment has immense potential for growth, driven by growing end user industry. Technology & Innovation will play a major role in growth.

The Company's products continue to be well received by World's leading users of specialty chemicals for a diverse range of industrial applications. The Company has been recognized as a reputable and dependable supplier to many Indian and global consumers of specialty products developed in-house.

Company remains optimistic on its future out look however, there is need to watch out for volatility of raw material prices, increased competition from abroad, ability of the Company to develop new business in new business segments.

IV Risks and Concerns

The Present and future risks are reviewed by the management of the Company at regular intervals. Adequate risk management is a key success factor, to mitigate risks associated with the solutions we provide. Major risks identified by the business and functions are systematically addressed through by taking corrective actions on continuous basis. These are discussed at Audit Committee and Board of Directors Meetings.

Major Risk arises from main raw material viz., Ethylene Oxide (EO). EO is currently and consistently available from only one manufacturer in the country. Besides some of the major raw materials are hazardous and inflammable. The Company has ensured that Safety equipment's and infrastructure are in place as per statutes and global safety standards.

V. Internal Financials Controls and its , adequacy

Internal Checks and Controls covering operations of the Company are in place and are constantly being improved upon. The Company had laid down internal financial controls to be followed by the Company and such policies and procedures adopted by the Company are 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.

During the year, the internal auditors of the Company have reviewed the effectiveness and efficiency of these controls and procedures. As per the said assessment Board is of the view the Internal Financial Controls operate effectively and no material weaknesses exist.

VI. Human Resources

Employee relationships at all levels continued to be satisfactory. The management would like to record its appreciation of dedicated and strong support provided to your Company, by its employees at all levels. The number of the employees on the rolls as on 31^st March 2018 is 95.

(The statement in this report including Management's Discussions & Analysis Report reflects Company's projections, estimates, expectations or predictions. These may be forward looking statements within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied, since your Company's operations are influenced by many external and internal factors beyond the control of the Company.)

6. BOARD OF DIRECTORS COMPOSITION

The composition of the Board of Directors of the Company is in complete conformity with the requirements of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and Companies Act 2013. The composition of the Board represents an optimal mix of professionalism, knowledge and experience which enables the Board to discharge its responsibilities and provide effective leadership to the business. None of the Directors of the Company is related inter-se. The details of the Board of Directors, as on date of this report are as under:

* Mr. Chidananda Bhagwat is Director upto 23^rd July 2018.

^ Mr. Srivatsa M K was appointed as Director with effect from 19^th July 2018

# Mr. Boon Tong Goh was appointed as Director with effect from 28^th May 2018.

@ Mr. YockJeng Koh was appointed as Director with effect from 28^th May 2018.

! Mr. Guo Lin was appointed as Alternate Director to Mr. YockJeng Koh with effect from 28^th May 2018.

7. BOARD MEETINGS

The Board meets at regular intervals to discuss and decide on Company / business policy and strategy apart from other Board business.

The Board met four times in the financial year 2017-18 i.e on 26^th May 2017, 12^th September 2017, 13^th December 2017 and 13^th February 2018.

8. BOARD COMMITTEES

There are currently six Committees of the Board, which are given below:

- Audit Committee

Audit Committee includes Five Directors viz., Mr. Ajit Shah (Chairman/Independent Director), Mrs. Aruna Soman (Independent Director), Mr. Ranjal Laxmana Shenoy (Independent Director), Mr. Manoj Khullar (Managing Director) and Mr. Satish Kelkar (Non-Executive Director).

The role includes amongst others, oversight of Company's financial reporting process and disclosure of financial information to ensure that the financial statements are correct, sufficient and credible; recommending the appointment, re-appointment, remuneration and terms of appointment of auditors and approval of payment for any other services rendered by statutory auditors; reviewing with the management quarterly results and annual financial statements before submission to the Board for approval; approval or any subsequent modification of any transactions of the Company with related parties; review and monitor the auditor's independence and performance and effectiveness of audit process; scrutiny of inter corporate loans and investments, if any; evaluation of internal financial controls and risk management system; and reviewing the functioning of the whistle blower mechanism, reviewing the findings of any internal investigation involving suspected fraud or irregularity. The Audit Committee also reviews before submission to the Board for approval of financial statements, the Directors Responsibility statement, changes in accounting policies, if any, with reasons for the same, Management Discussions and Analysis on Company's operations.

Audit committee met 4 times on 26^th May 2017, 12^th September 2017, 13^th December 2017 and 13^th February 2018.

- Nomination and Remuneration Committee

The Board has constituted Nomination and Remuneration Committee which comprises of Independent Directors viz. Mr. Ranjal Laxmana Shenoy, Mr. Ajit Shah, and Mrs. Aruna Soman.

The role of the committee include the 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; formulation of criteria for evaluation of Independent Directors and the Board; devising a policy on Board diversity; and 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.

- Stakeholders' Relationship Committee

Stakeholders Relationship Committee comprises of Mr. Ajit Shah (Independent Director) Mrs. Aruna Soman (Independent Director), and Mr. Manoj Khullar (Managing Director).

The Committee focuses primarily on monitoring and ensuring that all shareholder and investor services operate in an efficient manner and that shareholder and investor grievances / complaints including those of all other stakeholders are addressed promptly with the result that all issues are resolved rapidly and efficiently.

Corporate Social Responsibility (CSR) Committee

The Board has constituted Corporate Social Responsibility Committee comprising of Mr. Ajit Shah (Independent Director), Mr. Chidananda Bhagwat (Director) (till 19^th July . 2018) Mr. Srivata M.K. (from 20^th July 2018) and Mr. Manoj Khullar (Managing Director).

The Committee focuses on formulation and Review of CSR policy indicating activities to be und ertaken by the Co mp any; recommendation of the amount of expenditure to be incurred on CSR activities and monitoring and implementing this policy from time to time.

During the year under review, the Company was not required to spend on CSR activities on account of the losses incurred by the Company in the three preceding financial years. However as a part of societal responsibility, the Company has spent on CSR activities during the year under review.

The CSR policy of the Company and Annual Report on CSR activities is annexed herewith as Annexure A.

- Risk Management Committee

The Board has constituted Risk Management Committee comprising of Mr. Manoj Khullar (Managing Director), Mr. Chidananda Bhagwat, (Director) (till 19^th July 2018) Srivata M.K. (from 20^th July 2018)and Mr. Shekhar Pattekar (Manager Factory).

The role of Risk Management Committee includes reviewing and approving the risk management policies of the Company; assessment and monitoring of all risks associated with the operations of the Co mp an y and development an d implementation of internal compliance and control systems and procedures to manage risk.

- Committee for Issue of Duplicate Share Certificates

The Board has constituted a Committee for the purpose of issuance of duplicate share certificates. The Committee comprises of viz Mr. Satish Kelkar (Non-executive director), Mr. Chidananda Bhagwat (Director (till 19^th July 2018) Mr. Srivata M.K. (from 20^th July 2018) and Mr. Manoj Khullar (Managing Director).

9. DIRECTORS' RESPONSIBILITY STATEMENT

In pursuance of section 134 (3) (c) of the Companies Act, 2013, the Directors here by confirm that:

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

(b) the directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit and loss of the company for that period;

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

(d) the directors have prepared the annual accounts on a going concern basis; and

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

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

10. SECRETARIAL STANDARDS

The Directors state that all applicable Secretarial Standards issued by the Institute of Company Secretaries of India relating to meetings of Board of Directors and General Meetings have been duly followed by the Company.

11. FRAUD REPORTING BY AUDITORS

As required under Section 134(3) (ca) of the Companies Act, 2013, there are no instances of Fraud being reported by the Auditors.

12. DECLARATION FROM INDEPENDENT DIRECTORS ON ANNUAL BASIS

The Company has received necessary declaration from each Independent Director of the Company under Section 149 (7) of the Companies Act, 2013 that the Independent Directors of the Company meet with the criteria of their Independence laid down in Section 149(6).

13. DIRECTORS AND KEY MANANGERIAL PERSONNEL

In accordance with the provision of the Companies Act, 2013 Mr. Ian Brown, Director of the Company, retire by rotation and being eligible, offer himself, for re-appointment. The profiles of the Director seeking re-appointment form part of the Annexure to the Notice.

Mr. Arun Roy and Mr. Sanjeev Mukerjee resigned as Directors with effect from 31^st May 2017. Ms. Sze Wee Ong and Ms. Valdirene Licht, resigned as Directors with effect from 9^th January 2018 and 16^th January 2018 respectively. Your Directors place on record their sincere appreciation of the valuable contribution made by them during their tenure as Directors of the Company.

The Board of Directors appointed Mr. Boon Tong Koh and Mr. YockJeng Goh as an Additional Director to hold office as Director of the Company with effect from 28^th May 2018 Mr. Koh and Mr. Goh shall hold office as Director upto the date of the forthcoming Annual general meeting of the Company.

During the year, Mr. Guo Lin ceased to be Alternate Director to Ms. Sze Wee Ong with effect from 9^th January 2018. He was appointed as an Alternate Director to Mr. YockJeng Goh under the Companies Act, 2013 with effect 28^th May 2018.

The Board of Directors of the Company on the recommendation of Nomination and Remuneration Committee at their meeting held on 28^th May 2018 and 19^th July 2018 have, sought to reappoint Mr. Manoj Khullar as Managing Director, for a further period of 3 (Three) years, effective 1^st July 2018 and appoint Mr. Srivatsa M K as an additional Director and also as Executive Director for a period of 3 (Three) years, effective 19^th July 2018. The Board seeks members' approval for appointment of Mr. Manoj Khullar as Managing Director and Mr. Srivatsa M K as Executive Director of the Company.

Details of the proposal of Directors seeking appointment/reappointment are mentioned in the Explanatory Statement under Section 102 of the Companies Act, 2013 of the Notice of the 31^st Annual General Meeting.

None of the Directors is disqualified from being appointed as Directors as specified in Section 164(2) of the Companies Act, 2013.

The Company has recognized pursuant to Sections 2 (51) and 203 of the Companies Act 2013, Mr. Manoj Khullar, Managing Director, Mr. Chidananda Bhagwat, Director, Mr. Srivatsa M K, Director, Mr. Rajeev Gupte, Chief Financial Officer and Mr. Amit Kumashi Company Secretary of the Company as Key Managerial Personnel of the Company.

14. ANNUAL EVALUATION

Pursuant to the provisions of the Companies Act, 2013 the Board has carried out an annual performance evaluation of its own performance, of the Directors individually, as well as the evaluation of the working of its Committees. The Independent Directors have evaluated the performance of the non-independent Directors and the Board as a whole. They also assessed the quality, quantity and flow of information between Company's management and the Board which is essential for the Board to effectively and reasonably perform their duties.

Based on the evaluation, Company expects the Board and other Directors evaluated to continue to play a constructive and meaningful role in creating value for all the stakeholders in the ensuing years.

15. COMPANY'S POLICY ON DIRECTORS APPOINTMENT AND REMUNERATION

The Company has in place Policy on Directors Appointment and Remuneration. The Policy has been published on the Company's website https://www.solvayindia.in/en/solvay-in/Sunshield-Policies.html.

Prior to the induction of the director on the Board, the Managing Director briefs the incoming director about the Company, its line of business, and the composition of the present board organization chart etc. The appointment letter issued to the independent directors also sets out detailed terms of employment including their roles, function, responsibilities and their fiduciary duties, code of conduct, performance evaluation process etc. as a director of the Company.

Independent directors have a right to access information and documents for enabling them to have a good understanding of the Company and its various operations.

16.RISK MANAGEMENT POLICY AND INTERNAL CONTROL ADEQUACY

The Company has in place a mechanism to identify, assess, monitor and mitigate various risks to key business objectives. Major risks identified by the businesses and functions are systematically addressed through mitigating actions on a continuing basis. These are discussed at the meetings of the Audit Committee and the Board of Directors of the Company.

The Company's internal control systems are commensurate with the nature of its business and the size and complexity of its operations. These are routinely tested and certified by Statutory as well as Internal Auditors. Significant audit observations and follow up actions thereon are reported to the Audit Committee.

17. VIGIL MECHANISM

The Company has established a vigil mechanism named as Whistle Blower Policy within the Company. The policy of such mechanism has been circulated to all employees within the Company, which provides a framework to the employees for guided & proper utilization of the mechanism. The Whistle Blower Policy has been placed on the Company's website http://www.solvayindia.in/en/solvay-in/sunshield-chemical-limited

18. SIGNIFICANT AND MATERIALS ORDERS PASSED BY THE REGULATORS/ COURTS/ TRIBUNALS

No significant or material orders were passed by the Regulators or Courts or Tribunals which impacts the going concern status and Company's operation s in future. There have been no instances of any personnel seeking access to the Audit Committee.

19. AUDITORS

Statutory Auditors

The Statutory Auditors, M/s. Deloitte Haskins & Sells LLP, Chartered Accountants, continue to hold office for the remaining term of their appointment till 2019. In accordance with the Companies Amendment Act, 2017, Section 139 as amended was enforced from 7^th May, 2018 by the Ministry of Corporate Affairs. As per the said amendment, appointment of auditors is not required to be ratified at every Annual General Meeting.

The necessary certificate section 139 of the Companies Act, 2013 inter alia indicating the fulfillment of the criteria provided under Section 141 of the Companies Act, 2013 has been issued by the Statutory Auditors.

Cost Auditors

Pursuant to Section 148 of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Rules, 2014, on the recommendations of the Audit Committee, the Board the Company had appointed M/s. Kishore Bhatia & Associates, Cost Accountant as the Cost Auditor of the Company for the financial year 2017-18. The ratification of the fee payable to the Cost auditors is sought from the Members in the ensuing Annual General Meeting. The cost audit report will be filed within the period stipulated under the Act.

Secretarial Auditors

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. Alwyn D'Souza & Co., Company Secretaries to undertake the Secretarial Audit of the Company. The Report of the Secretarial Audit is annexed herewith as Annexure B. The Report does not contain any qualification, reservation or adverse remark.

Internal Auditors

M/s. Nikhil Narkar & Associates, Chartered Accountants has been appointed as Internal Auditor of the Company.

20. COMMENTS ON AUDITORS' REPORT

There are no qualifications, reservations or adverse remarks or disclaimers made by Deloitte Haskins & Sells LLP, Statutory Auditors, in their report and by Mr. Alwyn D'souza, Company Secretary in Practice, in his secretarial audit report.

21. EXTRACT OF ANNUAL RETURN:

The details forming part of the extract of the Annual Return in form MGT 9 is annexed herewith as Annexure C.

22. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186

The Company has not provided any loans, Guarantees or made investments under Section 186 of the Companies Act, 2013

23. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES REFERRED TO IN SECTION 188(1)

All Related Party Transaction (RPT) entered into by the Company during the year under review were in the ordinary course of business and on arms' length basis.

All RPT are placed before the Audit Committee for its review and approval. Prior omnibus approval of the Audit Committee is obtained for transactions which are of repetitive nature. Pursuant to the provisions of the Listing Regulations 2015 as well as the Rule 6A of the Companies (Meetings of Board and its Power) Rules 2014, Audit Committee had granted omnibus approval for the proposed RTP to be entered into during the year under review. Since there are no material RTP and also all the transactions with related parties are at arms' length and are in ordinary course of business, no transactions need to be reported in AOC-2. Note No.38 in the note to accounts provide the details on the related party transactions.

24. FIXED DEPOSITS

The Company has not accepted any fixed deposits during the year There are no deposits which are outstanding as on 31^st March, 2018.

25. SUBSIDIARY. ASSOCIATES AND TOINT VENTURES

The Company does not have any subsidiary or associates or joint ventures as on the date of this report. Therefore separate section for report on the performance and financial position of Subsidiaries, Associates and Joint Venture Companies is not required.

26.TRANSFER OF SHARE TO IEPF DEMAT ACCOUNT

Since the Company has not declared the provision pertaining to transfer of shares on which dividend was unclaimed/unpaid for seven years to Investor Education and Protection Fund (IEPF) Authority is not applicable to the Company.

27. MATERIAL CHANGES AND COMMITMENTS . AFFECTING THE FINANCIAL POSITION OF . THE COMPANY

Implementation of Voluntary Retirement Scheme

After end of Financial Year but before the date of Report, the Company has announced a Voluntary Retirement Scheme (VRS) for all its permanent Executives and Workers as per the scheme. The financial impact of VRS will be incorporated in financials of 2018-19.

28. 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, is annexed herewith as Annexure D.

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

The Company has in place Prevention of Sexual Harassment Policy in line with the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition, Redressal) Act, 2013.

The internal committee is set up to redress complaints received regarding sexual harassment. All employees are covered under this Policy. The following is the summary of sexual harassment complaints received and disposed off during the Financial Year 2017-18:

30. CONSERVATION OF ENERGY. TECHNOLOGY . ABSORPTION AND FOREIGN EXCHANGE . EARNINGS AND OUTGO

As required by Section 134 (3) (m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014, relevant data pertaining to Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo, is annexed herewith as Annexure E to this Report.

31. CORPORATE GOVERNANCE REPORT

Regulation 15 (2) of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 with respect to Corporate Governance report and certain regulations are not applicable to Sunshield Chemicals Limited ("Company"), since Company's paid-up Capital is less than Rs. 10 crores and net worth is less than Rs. 25 crores.

32. ENVIRONMENT. HEALTH AND SAFETY

Your Company recognizes importance of Health and Safety of its employees and its neighborhood. Regular Safety Audits are being conducted. Your Company has adopted a Health, Safety and Environment (HSE) Policy, which applies to all employees and activities.

33. APPRECIATION

Your Directors place on record their sincere appreciation of the wholehearted support extended by the Company's bankers, business associates, employees' union, shareholders, auditors and various statutory authorities, both, central and state Government.

For and on behalf of the Board of Directors

R L Shenoy

Chairman

Mumbai, 1 9^th July 2018 ^{DIN Na 0074761}

Phoenix House,

'A' Wing, 4^th Floor,

462 Senapati Bapat Marg,

Lower Parel (West), Mumbai-400013