The Directors have pleasure in presenting the 57^th Annual Report together with the Audited Accounts of the Company for the financial year ended March 31, 2018.

FINANCIAL PERFORMANCE:

DIVIDEND

The Board in its meeting held on 30^th May, 2018 has recommended a dividend on Equity Shares @ 10% i.e. Re. 1/- per Equity Share of the face value of 10/- each. The proposal is subject to the approval of shareholders at the ensuing Annual General Meeting (AGM) to be held on 28^th September, 2018.

The Dividend, if approved at the ensuing AGM, would be paid to those Members whose name appears in the Register of Members/ Beneficial Owners as stated in Notice of the ensuing AGM.

OPERATIONAL REVIEW

During the year under review, the Company recorded profit after tax of Rs. 1,896.52 Lakhs for the year ended 31^st March, 2018 as compared to Rs. 1,804.44 Lakhs for the previous year.

The total assets of the Company stood at Rs. 35,803.94 Lakhs as against Rs. 33,457.94 Lakhs in the last year.

APPROPRIATIONS

The Company proposes to transfer of Rs. 383 Lakhs (previous year Rs. 363 lakhs) to Special Reserve created u/s 45-IC of the Reserve Bank of India Act, 1934.

DEPOSITS

The Company being a Non Deposit Accepting NBFC, has not accepted any deposit from the public during the year under review and shall not accept any deposits from the public without obtaining prior approval of the Reserve Bank of India.

CONSOLIDATED FINANCIAL STATEMENTS

The Consolidated Financial Statement of the Company and its Associate Companies are prepared in accordance with the provisions of the Companies Act, 2013 (the Act) and applicable accounting standards along with all the relevant documents and the Auditors' Report thereon forms the part of this Annual Report. The Consolidated Financial Statement of the Company includes the Financial Statement of its Associate Companies also.

INDIAN ACCOUNTING STANDARDS (IND AS)

Your Company has not adopted Indian Accounting Standards ("Ind AS") for the financial period 201718 as it is not applicable for the Company; since NBFC Companies are specifically exempted vide MCA notification dated 16/02/2015.

MATERIAL CHANGES AND COMMITMENTS

"LISTING OF EQUITY SHARES OF THE COMPANY ON NATIONWIDE TRADING PLATFORM- BSE LIMITED:

During the Financial Year 2017- 2018, the Company received the final listing and trading approval from the BSE Limited vide their letter reference no. DCS/DL/SK/TP/971/2017-2018 dated January 18, 2018 for the enlistment of entire equity and paid-up share capital of 4814575 equity shares of face value of Rs. 10/- each of the Company on BSE Limited under Direct Listing mechanism and accordingly, the equity shares of the Company are listed with the BSE Limited and The Calcutta Stock Exchange Limited.

SHARE CAPITAL

During the year under review, there is no change in the share capital of the Company.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has adequate internal control procedures commensurate with its size and nature of business. The objective of these procedures is to ensure efficient use and protection of the Company's resources, accuracy in financial reporting and due compliance of statutes and corporate policies and procedures.

Internal Audit is conducted periodically by the Internal Auditor who verifies and reports on the efficiency and effectiveness of internal controls. The adequacy of internal control systems are reviewed by the Audit Committee of the Board in its periodical meetings.

INTERNAL FINANCIAL CONTROL SYSTEM

The Company has a comprehensive Internal Financial Control system commensurate with the size, scale and complexity of its operations. The system encompasses the major processes to ensure reliability of financial reporting, compliances with policies, procedures, laws, regulations, safeguarding of assets and efficient use of resources.

The policies and procedures adopted by the company ensures the orderly and efficient conduct of its business and adherence to the Company's policies, prevention and detection of frauds and errors, accuracy and completeness of records and the timely preparation of reliable financial information.

The Internal Auditor continuously monitors the efficiency of Internal Financial Control system with the objective of providing to the Audit Committee and the Board of Directors, an independent, objective and reasonable assurance on the adequacy and effectiveness of the organization's risk management with regard to the Internal Financial Control system.

The Audit Committee meets regularly to review reports submitted by the Internal Auditor. The Audit Committee also consults with the Company's Statutory Auditors to ascertain their views on the financial statements, including the financial reporting system and compliance to accounting policies and procedures followed by the Company.

SUBSIDIARIES, JOINT VENTURES AND ASSOCIATES COMPANIES

As on 31^st March, 2018, the company has 3 (three) associate companies. Neither the Company has any subsidiaries nor has it entered in any joint venture with other companies during the financial year 2017-18. Details of such Associate Companies are given in A0G4 (as Annexure A).

EXTRACT OF ANNUAL RETURN

The details forming part of the extract of the Annual Return in Form MGT-9 as required under section 92 of the Companies Act, 2013 is marked as (Annexure B) which is annexed hereto and forms part of the Directors' Report.

AUDITOR & AUDITORS' REPORT

Statutory Auditor:

The members of the Company at the last Annual General Meeting (AGM) had appointed Bahety & Goenka, Chartered Accountants (Firm Registration No.31711E) as Statutory Auditors of the Company to hold office from the conclusion of 56th AGM until the conclusion of the 61th AGM of the Company to be held in the year 2022, subject to ratification by the Members at every AGM till the 56th Annual General Meeting. Accordingly, ratification of appointment of Statutory Auditors is being sought from the Members of the Company at the ensuing AGM.

The requirement to place the matter relating to appointment of Auditors for ratification by members at every Annual General Meeting is done away with vide notification dated May 7, 2018 issued by the Ministry of Corporate Affairs, New Delhi. Accordingly, no resolution is proposed for ratification of appointment of Auditors, who were appointed in the Annual General Meeting, held on 18th September, 2017.

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 J. Patnaik & Associates, Practicing Company Secretaries (Certificate of Practice No.3102), Kolkata as Secretarial Auditor to conduct the Secretarial Audit for the financial year ended 31^st March, 2018. The Secretarial Audit Report for the financial ended 31^st March, 2018 is appended to this Report as Annexure C. The Secretarial Audit Report does not contain any material qualification, reservation or adverse remark.

INFORMATION PURSUANT TO SEC. 134(3)(m) OF THE COMPANIES ACT, 2013

Being an Investment Company these provisions are not applicable to the company.

COMMENTS ON FOREIGN EXCHANGE EARNING AND OUTGO

There was no foreign exchange earnings and outgo during the year.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

In view of the provisions of Section 203 of the Companies Act, 2013, Sri Surendra Kumar Dugar, Managing Director, Sri Rishabh Dugar, Chief Financial Officer and Smt Jyoti Bhartia, Company Secretary were identified and appointed as Key Managerial Personnel of the Company.

As per the provisions of the Companies Act, 2013, Mr. Tulsi Kumar Dugar retires by rotation at the ensuing AGM and being eligible offers himself/herself for re- appointment. The Board recommends his re-appointment.

As required under Section 149(3) of the Companies Act, 2013,

1. Smt. Madhu Dugar has been appointed as women Director in 56th Annual General Meeting ["AGM"] for five years w.e.f 18/09/2017.

2.Sri Ajit Kumar Bachhawat has been reappointed in 56th AGM for five years w.ef. 01/04/2017.

3. Sri Surendra Kumar Dugar has been reappointed in the 56th AGM as the Managing Director for five years w.e.f. 22/09/2017.

DECLARATION BY INDEPENDENT DIRECTORS

The Company has received necessary declaration from each independent director under Section 149(7) of the Companies Act, 2013 that he/she meets the criteria of independence laid down in Section 149(6) of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015.

BOARD EVALUATION

According to Regulation 25(3) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and Schedule IV of the Companies Act, 2013, a meeting of the Independent Directors was held to review the performance of the Non-Independent Directors and the Board as a whole. Accordingly, a meeting of Independent Directors was held on 15^th January, 2018 wherein the performance of the Non-Independent Directors and the Board as a whole was evaluated.

Further the same was discussed in the Board meeting that followed the meeting of the Independent Directors, at which the performance of the Board, its committees and individual Directors was also discussed. Performance evaluation of Independent Directors was done by the entire Board, excluding the Independent Director being evaluated.

For the purpose of proper evaluation, the Directors of the Company have been divided into 2 (two) categories i.e. Independent and Board consisting of Non-Independent & Non- Executive and Executive Directors.

- The criteria for evaluation includes factors such as engagement, strategic planning and vision, team spirit and consensus building, effective leadership, domain knowledge, management qualities, teamwork abilities, result/achievements, understanding and awareness, motivation/commitment/ diligence, integrity/ethics/values and openness/receptivity.

NUMBER OF MEETINGS OF THE BOARD

The details of the number of meetings of the Board held during the financial year 2017-18 forms part of the Corporate Governance Report.

The Board has adopted the revised Secretarial Standard-1 & 2 due to its applicability from 01.10.2017 as specified by the Institute of Company Secretaries of India and applicable provisions of Companies Act, 2013.

VIGIL MECHANISM / WHISTLE BLOWER POLICY

The Vigil Mechanism as envisaged in the Companies Act, 2013, the Rules prescribed there under and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is implemented through the Company's Whistle Blower Policy to enable the Directors, employees and all Stakeholders of the Company to report genuine concerns, to provide for adequate safeguards against victimization of persons who use such mechanism and make provision for direct access to the Chairman of the Audit Committee. The Vigil Mechanism/Whistle Blower Policy has also been uploaded on the website of the Company and may be accessed at the link http://www.santoshindustrieslimited.in.

SEXUAL HARRASSMENT OF WOMEN AT WORKPLACE

The Company has zero tolerance towards sexual harassment at the workplace and has adopted a 'Policy for Prevention of Sexual Harassment' to prohibit, prevent or deter any acts of sexual harassment at workplace and to provide the procedure for the redressal of complaints pertaining to sexual harassment, thereby providing a safe and healthy work environment, in line with the provisions of Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013 and the rules there under. During the year under review, no case of sexual harassment was reported.

The Company Pursuant to the provisions of Section 178 of the Companies Act, 2013 and under SEBI (Listing Obligations and Requirements) Regulations, 2015, the Board of Directors of the Company based on the recommendation of the Nomination and Remuneration Committee has formulated a Nomination & Remuneration Policy.

The Nomination & Remuneration Policy of the Company inter alia includes the objectives, principles of remuneration, guidelines for remuneration to Executive Directors and KMPs and Non- Executive Directors, criteria for identification, selection and appointment of Board and KMPs and the terms of reference and role of the Nomination & Remuneration Committee.

The criteria for identification of the Board members including that for determining qualification, positive attributes, independence etc. are summarily given hereunder:

-The Board member shall possess appropriate skills, qualification, characteristics and experience. The object is to have a Board with diverse background and experience in business, government, academics, technology, social responsibilities, finance, law etc. and in such other areas as may be considered relevant or desirable to conduct the Company's business in a holistic manner.

- Independent Director shall be person of integrity and possess expertise and experience and/or someone who the Committee/Board believes could contribute to the growth/philosophy/strategy of the Company.

- In evaluating the suitability of individual Board Members, the Committee take into account many factors, including general understanding of the Company's business dynamics, social perspective, educational and professional background and personal achievements.

- Director should possess high level of personal and professional ethics, integrity and values and he must be willing to devote sufficient time and energy in carrying out their duties and responsibilities effectively. He must have the aptitude to critically evaluate management's working as part of a team in an environment of collegiality and trust.

- The Committee evaluates each individual with the objective of having a group that best enables the success of the Company's business and achieves its objectives.

RELATED PARTY TRANSACTIONS

All transactions entered with Related Parties during the year under review were on an arm's length basis and in the ordinary course of business and the provisions of Section 188 of the Companies Act, 2013 are not attracted. Thus disclosure in Form AOC-2 is not required.

Further, there are no materially significant related party transactions during the year under review 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.

The Board of Directors of the Company has, on the recommendation of the Audit Committee, adopted a policy to regulate the transactions between the Company and its Related Parties, in compliance with the applicable provisions of the Companies Act, 2013, the Rules there under and the Listing Agreement. This policy was considered and approved by the Board and has been uploaded on the Company's website and may be accessed at the link http://www.santoshindustrieslimited.in

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186

Pursuant to Section 186(11) of the Companies Act, 2013 loans made, guarantees given or securities provided or acquisition of securities in the ordinary course of its business by non-banking financial companies are exempted. Therefore no such disclosure in this regard is required to be given in the Annual Report.

PARTICULARS OF EMPLOYEES:

There were no employees within the purview of Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 during the year ended 31^st March 2018. None of the employees of the Company was in receipt of remuneration for that year/part of the year which was not less than Rs. 8.5 lakhs per month.

DETAILS RELATING TO REMUNERATION OF DIRECTORS, KEY MANAGERIAL PERSONNEL AND EMPLOYEES

Disclosure pertaining to remuneration and other details 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 is marked as Annexure D which is annexed hereto and forms part of the Director' Report.

RISK MANAGEMENT

Risk Management is the process of identification, assessment, and prioritization of risks followed by co-ordinated efforts to minimize, monitor and mitigate/control the probability and/or impact of unfortunate events or to maximize the realization of opportunities. Since your Company is a NBFC Company, the Risk Management Process is also focused towards better management of the affairs of the Company and to bring about transparency in the transaction and to ensure that there is no bad Investment in securities and loans.

In this regard a Risk Management Committee has been constituted by the Board of Directors of the Company consisting of three members, two of whom are independent directors.

The Risk Management Committee conducts quarterly review of all Loan & Investment proposals and make recommendations to the Board. The guidelines in respect of Risk Management have been laid down by the Risk Management Committee in respect of Loans & Investments.

The Risk Management Policy has been uploaded on the Company's website and may be accessed at the link http:// www.santoshindustrieslimited.in

DIRECTORS' RESPONSIBILITY STATEMENT:

In compliance with Section 134(3)(c) of the Companies Act, 2013 the Board of Directors of your Company confirm that:

i) in the preparation of the annual accounts for the year ended March 31, 2018, the applicable accounting standards have been followed along with proper explanation relating to material departures;

ii) the directors had selected such accounting policies and applied them consistently and make judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affair of the company at the end of the financial year ended 31^st March 2018 and of the profit and loss of the company for that period;

iii) 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;

iv) the directors had prepared annual accounts for the year ended 31^st March, 2018 on a going concern basis;

v) the directors had laid down internal financial controls to be followed by the Company and such internal financial controls were adequate and were operating effectively; and

vi) the directors had devised proper systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively.

CORPORATE SOCIAL RESPONSIBILITY

Corporate Social Responsibility (CSR) forms an integral part of your Company's business activities. Your Company is a responsible corporate citizen, supporting activities related to the benefit of the Society as a whole.

In compliance with section 135 of the Companies Act, 2013 read with Companies (Corporate Social Responsibility policy) Rules, 2014, the company has adopted a CSR policy which is available at http:// www.santoshindustrieslimited.in

The Annual Report on CSR expenditures for the financial year 2017-18 is annexed herewith and forms part of this report (Annexure E).

CORPORATE GOVERNANCE

Your Company complies with the provisions laid down in Corporate Governance laws. It believes in and practices good corporate governance. The Company maintains transparency and also enhances corporate accountability. A report on Corporate Governance along with a Certificate from the Auditors of the Company regarding the compliance with the conditions of Corporate Governance as stipulated under regulation 34 read with Schedule V of the SEBI (Listing Obligations and Disclosure Requirements), Regulations, 2015 forms part of this Annual Report.

ACKNOWLEDGEMENT

Your Directors wish to place records their sincere appreciation to the Bankers of the Company, Company's customers, vendors and investors for their continued support during the year.

The directors also wish to place their appreciation for the dedication and contribution made by employees at all levels and look forward to their support in future as well.

FOR AND ON BEHALF OF THE BOARD

Registered Office:

Suite No 3A, 3^rd Floor, UMANG LODHA

3A, Auckland Place CHAIRMAN

Kolkata - 700 017. DIN: 06646876

Dated: 30th May, 2018