EXPLANATORY STATEMENT

The following Explanatory Statement, pursuant to Section 102 of the Companies Act, 2013, set out the material facts relating to the business mentioned in the accompanying notice dated 7^th July, 2018

DIRECTORS' REPORT TOTHEMEMBERS

The Directors present the 27^thAnnual Report together with the Audited Statement of Accounts of the Company for the financial year ended 31^st March, 2018.

FINANCIAL RESULTS: (Rs. in Lacs)

The Ministry of Corporate Affairs ('MCA') has notified the mandatory adoption of Indian Accounting Standards (Ind-AS) by all companies other than Insurance Companies, Banking companies and Nonbanking Finance companies.

PROJECT:

Company's Plant under construction has been under shut down since September, 2000 and with the passage of time and in the absence of any operation since then, the corrosion is taking place in the Plant due to climatic and cyclonic conditions in the area. During the year, provision of Ind AS became applicable to the Company and thus the Company has decided to adopt for fair valuation of Property Plant & Equipment’s as at 01.04.2016. On the basis of valuation from reputed valuer the plant and equipment’s under construction of the Company were fair valued and a loss of Rs. 688.07 crore was provided on transition to Ind AS .

Further during the year the Company has approached various agencies for advice to utilize the plant under construction for alternative uses however Technical Advisor has given health assessment report of the plant and has categorically stated that if the Company tries to repair the equipment after some inspections, it will not be possible to guarantee overall safety & reliability of high pressure equipment for hazardous plant operation. He stated that it is not considered safe to operate the equipment in Company's plants & offsite facilities at this stage and concluded that Company's plant and equipment’s under construction are not considered fit for operation and hence should be discarded.

Based on above advice the Company has provided Impairment losses of Rs. 113.43 crore in line with provisions of Ind AS 36 Impairment of Assets and thus considering the scrap value of the plant under construction being realizable value for the asset. Company has appointed largest plant disposal & management consultant to auction the disposal of plant & equipment’s under construction by scraping subject to necessary approval from lenders. The impairment loss has been accounted in reserves of the company under other comprehensive income (Refer Nore No. 21). The Capital work in progress after impairment is transferred to respective heads of tangible fixed assets on 31.03.2018 and therefore no depreciation has been provided on the same. As on - 31.03.2018 the Company has received an advance of Rs. 401 lacs from one of the party interested in purchase of plant & equipment’s under construction by auction process.

DIVIDEND:

Your Directors have not recommended any dividend on equity shares for the year as there is no profit in the year.

STATE OF COMPANY'S AFFAIRS:

The Strategic Investor of the Company has received a proposal for setting up of Mega Food Park as provided under the Mega Food Park Scheme Guidelines issued by Ministry of Food Processing Industries, Government of India. Strategic Investor of the Company has received “In-principal” approval of the competent Authority for establishment of Mega Food Park at Village Bhadawal, Chhatta, Chatta-Barsana Road, District Mathura, Uttar Pradesh. The primary object these guidelines is to provide modern infrastructure facilities for the food processing along the value chain from the farm to the market. It will include creation of the processing infrastructure near the farm, transportation, logistic and centralized processing centers. This scheme aims to facilitate the establishment of a strong food processing industry backed by an efficient supply chain, which include collection centers, primary processing centers and cold chain infrastructure. The food processing units, under the scheme, would be located at a Central Processing Centre with need based common infrastructure required for processing, packaging, environmental protection systems, quality control labs, etc.

For the purpose of entering into new venture of Mega Food Park, the Company has taken approval of the shareholders vide postal ballot on 22nd February, 2018 to sale, lease, transfer its PTA plant, as it has not been in operation since Sept' 2000 due to various reasons beyond its control and has also changed its object clause vide postal ballot on 22nd February, 2018. Company is in the process of utilizing its infrastructure for some new Industry as advised by international consultants EY

The Company has leased 57.42 acres of land for 75 years to its 100 % subsidiary for food park or other industry. The Company shall get Equity shares or any other consideration for the value of assets lease out. The Company shall sell the infrastructure built or constructed on the above leased land including administrative buildings, warehouses, weigh bridge, ETP, STP, Internal roads, Boundary wall, SWD, Underground water storage, Fire and Raw Water Sump, Etc. to SPV.

CHANGE OF NAME OF THE COMPANY

With the consent of the Members through Special Resolution passed at the 26^th Annual General Meeting held on 1^st July, 2017, the name of the Company was changed from SVC Superchem Limited to SVC Industries Limited in order to emphasis focus of various activities apart from manufacturing of chemicals, which is the main line of Company's business.

A fresh Certificate of Incorporation consequent to change of name was given by Registrar of Companies, Mumbai on 13^th August, 2017.

ORDER RECEIVED FROM BSE

The Company has received letter from SEBI dated 7th August,

2017, SEBI vide its letter bearing no. SEBI / HO / ISD / OW / P/ 2017/ 18183 as forwarded a list of 331 shell companies as identified by Ministry of Corporate Affairs and has directed the Exchanges to identify the companies listed on their trading platform and to initiate some measures. Where trading in all such listed securities shall be placed in Stage VI of the Graded Surveillance Measure (GSM) with immediate effect. Therefore, as per the provisions of GSM framework, the securities were not be available for trading from 9th August, 2017. Trading in these securities are permitted only on first Monday of the month. The Company replied to SEBI through its letter dated 10th August, 2017.

Thereafter, the company received letter from BSE under SEBI directions w.r.t. Listed Shell Companies to submit required documents. The company filled respective documents to BSE.

The Company has again made the representation vide its letter dated 12th April, 2018 & 22nd May, 2018 to BSE Limited & SEBI requesting them to reconsider the decision narrating the flow of the events since the date of issue of notice by BSE Limited dated 10th August, 2017. BSE is yet to revert back.

DETAILS OF SIGNIFICATION AND MATERIAL ORDERS PASSED BY THE REGULATORS / COURTS / TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND THE COMPANY'S OPERATIONS IN FUTURE:

In the year under review no material order has been passed by above said authorities impacting the going concerned status.

SALE OR DISPOSAL OF THE PLANT

Company's PTA plant has been closed since September, 2000 and with the passage of time, in spite of time to time maintenance by the Company and in the absence of any operation since, then, the corrosion is taking place in the plant due to climatic and cyclonic conditions in the area. Now because the capacity of our plant has economically reduced and technologically obsolete, the Company wants to utilize its infrastructure for some new Industry as advice by international consultant.

The Company has leased the available land for short term and /or long term period to its subsidiary and other unit for Food Park and other industry. The Company shall sell the infrastructure built or constructed on the above leased land including administrative buildings, warehouses, weigh bridge, ETP, STP, Internal roads, Boundary wall, SWD, Underground water storage, Fire and Raw Water Sump, Etc. to SPV at a fair valuation.

INTERNAL FINANCIAL CONTROL (IFC):

Your Company has a Management Assurance and Audit Department, which provides comprehensive audit coverage of functional areas and operations of the Company to examine the adequacy of and compliance with policies, procedures, statutory and regulatory requirements. Significant audit observations and follow up actions thereon are reported to the Audit Committee.

The Audit Committee reviews and evaluates adequacy and effectiveness of the Company's internal control environment and monitors the implementation of audit recommendations. Management Assurance and Audit is an independent and objective assurance and consulting activity designed to add value and improve the Company's operations. Management Assurance and Audit function is accountable to the Board of Directors through the Chairman of the Audit Committee. Management Assurance and audit also assist the management in identifying operational opportunities for revenue leakage, cost -savings and revenue enhancements; ensures working within their nugatory and statutory framework and facilitate early detection and prevention of frauds.

The Company has internal control system commensurate with the size, scale and complexity of its operation. The Company has appointed Mr. S.K. Khandelwal, Chartered Accountants as the Internal Auditor at a remuneration of Rs. 60,000/- p.a. in compliance with section 138 of the Companies Act, 2013. The scope of audit and the outcome of the audit are reviewed by Audit Committee at regular intervals.

FIXED DEPOSITS:

We have not accepted any fixed deposit and as such no amount of principal or interest was outstanding as on the date of balance sheet.

STATURORY AUDITORS:

M/s. Chaturvedi SK & Fellow, Chartered Accountants were appointed as Statutory Auditors of your Company at the Annual General Meeting held on 1^st July, 2017, for a term of five consecutive years i.e up to the date of Annual General Meeting in 2021-22.

In accordance with the Companies Amendment Act, 2017, enforced on 7th May, 2018 by the Ministry of Corporate Affairs, the appointment of Statutory Auditors is not required to be ratified at every Annual General Meeting.

AUDITOR'S REPORT:

The observations by the Auditors in their report are self-explanatory and, in the opinion of the Board, do not require any further explanation.

SHARE CAPITAL:

At present we have only one class of shares i.e. equity shares of Rs. 10 each. Our authorized share capital is Rs. 170 Crores divided into 17 Crores equity shares of Rs. 10 each. The issued, subscribed and paid-up capital of the Company is Rs. 161.86 Crores as on March 31, 2018.

EXTRACT OF THE ANNUAL RETURN:

The details forming part of the extract of the Annual Return in Form MGT-9 is annexed herewith as Annexure - “A”

CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTION:

Your Company shall take sufficient care in the technical design of food park to optimize the energy consumption to the maximum. However the company makes all efforts towards conservation of energy, protection of environment & ensuring safety.

FO REI G N EXCHANGE EARNINGS & OUTGO:

The Company has not utilized any foreign exchange and has not earn ed any foreign exchange during the financial year ended 31^st March, 2018.

CORPORATE SOCIAL RESPONSIBILTY:

The Provision with respect to Corporate Social Responsibility is not attracted to the Company as the company never commenced the production & has not earned any profit / income.

DIRECTORS:

In accordance with the provisions of the Companies Act, 2013 and the Articles of Association of the Company, Ms. Abha Ravi, Director of the company retires by rotation at the ensuing Annual General Meeting and being eligible, offer herself for re-appointment. Details about Ms. Abha Ravi is given in the Notice of the ensuring Annual General Meeting sent to the shareholders along with the Annual Report.

DECLARATION BY AN INDEPENDENT DIRECTOR(S) AND REAPPOINTMENT, IF ANY:

A declaration by an Independent Directors have been received stating that they meet the criteria of independence as provided in sub-section (6) of section 149 of the Companies Act, 2013. An independent director shall hold office for a maximum term upto five consecutive years on the Board of a Company.

NUMBER OF MEETINGS OF THE BOARD OF DIRECTORS:

During the year 6 Board Meetings and 4 Audit Committee Meetings were 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.

MEETING OF INDEPENDENT DIRECTOR:

During the year 2017-18, a separate meeting of the Independent Directors was held on 9th August, 2017 without the presence of the non-Independent Directors, in accordance with the provisions of the Companies Act, 2013and Regulation 25 of the SEBI (Listing Obligations and Disclosure Requirement) Regulations 2015.

AUDIT COMMITTEE:

The Audit Committee acts as a link between the statutory and internal auditors and the Board of Directors. Its purpose is to assist the Board in fulfilling its oversight responsibilities of monitoring financial reporting processes, reviewing the Company's established systems and processes for internal financial controls, governance and reviewing the Company's statutory and internal audit activities. The Committee is governed by a Charter which is in line with the regulatory requirements mandated by the Companies Act, 2013 and Regulation 18 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

STAKEHOLDER RELATIONSHIP COMMITTEE:

Your Company believes that its members are amongst its most important stakeholder. The Stakeholder Relationship Committee of the Company consists of Mr. Suresh V. Chaturvedi as Chairman, Mr. Jaffar Imam and Mr. G.S. Dahotre members.During the year, the Stakeholders Relationship Committee met for 27times.

NOMINATION AND REMUNERATION COMMITTEE:

The Board has, on the recommendation of the Nomination and Remuneration Committee framed a policy for selection and appointment of Directors, Key Managerial Personal and their remuneration. The Nomination and Remuneration Committee consist of Mr. G.S. Dahotre as chairman, Mr. Jaffar -

Imam and Mr. I.G. Mehrotra as members. This Committee has been constituted as per terms or provision of the Companies Act and under regulation of SEBI (Listing Obligations and Disclosure Requirements) Regulations,2015. During the year the Committee met once to appoint Company Secretary of the Company.

VIGIL MECHANISM / WHISTLE BLOWER POLICY:

The Company has implemented a Whistle Blower Policy pursuant to which Whistle Blower can raise concerns relating to Reportable Matters (as defined in the policy) such as breach of Code of Conduct, fraud, bribery, corruption, employee misconduct, illegality, health and& safety, environmental issues and wastage/ misappropriation of bank funds/assets, etc. Further, the mechanism adopted by the Company encourages the Whistle Blower to report genuine concerns or grievances and provides for adequate safe guards against victimization of Whistle Blower, who can avail such mechanism and has direct access to the Chairman of the Audit Committee, in exceptional cases.

The functioning of the Vigil Mechanism is reviewed by the Audit Committee from time to time. None of the Whistle Blower has been denied access to the Audit Committee of the Board. The details of the Whistle Blower Policy are available on the website of the Company i.e. www.svcIndustriesltd.com

CONTRACT / ARRANGEMENT WITH RELATED PARTIES:

All related party transactions that were entered during the financial year were in ordinary course of the business of the company and were on arm's length basis. 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 potential conflict with the interest of the Company. The policy on materiality of Related Party Transactions is uploaded on the website of the company.

RISK MANAGEMENT:

Your Company has an elaborate Risk Management Framework, which is designed to enable risks to be identified, assessed and mitigated appropriately. The Board is entrusted with the responsibility to assist in (a) Overseeing and approving the Company's enterprise wide risk management framework; and (b) Overseeing that all the risks that the organization faces such as financial, credit, market, liquidity, security, property, IT, legal, regulatory, reputational and other risks have been identified and assessed and there is an adequate risk management infrastructure in place, capable of addressing those risks.

INTERNAL FINANCIAL CONTROLS:

The Company has in place adequate internal financial controls, with reference to financial statement. It has established an integrated framework for managing risks and internal controls. The internal financial controls have been documented and embedded in the business processes. Such controls have been assessed during the year under review and were operating effectively.

MANAGERIAL REMUNERATION:

In order to control expenses as advised by the shareholders in the earlier Annual General Meeting, the Company did not appoint any M managing D i rector / Who le-time Director or manager as required under section 197 of the Companies Act, 2013.

There is no employee covered pursuant to section 197 read with rule 5(2) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. Hence no particulars are given.

SECRETARIAL AUDIT REPORT:

Pursuant to provisions of section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed Ranjeet Kumar Sharma & Associates, a practicing Company Secretaries to undertake the Secretarial Audit of the Company. The report of the Secretarial Audit is annexed herewith as “Annexure B”.

MANAGEMENT, DISCUSSION AND ANALYSIS:

Separate section on Management, discussion and analysis forming part of the Directors' report is annexure as Annexure “C”.

FRAUD REPORTING:

During the year under review the Company has not reported fraud of any nature to the Audit Committee or Board.

DIRECTORS' RESPONSIBILITY STATEMENT:

As required u/s 134 (5) of the Companies Act, 2013, the Directors confirm that.

I. In the preparation of the annual accounts for the year ended 31^st March 2018, the applicable accounting standards have been followed along with explanation relating to material departures;

II. They have selected such accounting policies and applied them consistently except for the non-provision of interest on all secured loans as mentioned in Note No. 12 forming part of the Balance Sheet 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 on 31^st March 2018;

III. The Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

IV. The Directors have prepared the annual accounts for the financial year ended 31^st March, 2018 on a going concern basis.

V. They have laid down 'internal financial controls' to be followed by the Company and that such internal financial control are adequate and were operating effectively.

VI. 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.

TRANSFER OF AMOUNTS TO INVESTOR EDUCATION AND PROTECTION FUND:

Your Company did not have any funds lying unpaid or unclaimed for a period of seven years. Therefore, there were no funds which were required to be transferred to Investor Education and Protection Fund (IEPF).

CORPORATE GOVERNANCE:

The Company has taken adequate steps to ensure that all mandatory provisions of Corporate Governance, in terms of Regulation 34 of the Securities Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 are complied with. A separate report on Corporate Governance is being incorporated as a part of the Annual Report along with a certificate from the Auditors of the Company regarding Compliance of the conditions of Corporate Governance which is annexed to the Directors' Report.

RECONCILIATION OF SHARE CAPITAL AUDIT REPORT:

As directed by the Securities and Exchange Board of India (Depositories and participants) Regulations,1996, Reconciliation of Share Capital is being carried out at the specified periodicity by the practicing Company Secretary. The findings of the Reconciliation of Share Capital Audit are regularly taken at the Board Meeting, besides submitting it to the BSE Limited.

CODE OF CONDUCT:

The Board has adopted, the Code of Ethics and Business for the Non-Executive Directors as also for the employees and other members of Senior Management. The said code has been communicated to all the Directors and Members of the Senior Management. Board members and senior management personnel have affirmed compliance with the Code for the financial year 2017 18.

CEO / CFO CERTIFICATION:

As there is no CEO in the Company, CFO of the Company has certified to the Board of Directors, inter alia, the accuracy of financial statements and adequacy of internal controls for the financial reporting as required under Regulation 17(8) of the Listing Regulations for the year ended 31 ^stMarch, 2018.

INSIDER TRADING:

The Company has adopted a Code of Conduct for Prevention of Insider Trading in accordance with the requirements of SEBI (Prohibition of Insider Trading) Regulations, 2015 and Companies Act, 2013 with a view to regulate trading in securities by the Directors and designated employees of the Company. The Code requires pre-clearance for dealing in the Company's shares beyond threshold limits. Further, it prohibits the purchase or sale of Company shares by the Directors and the designated employees while in possession of unpublished price sensitive information in relation to the Company and during the period when the Trading Window is closed.

The disclosures obtained under the code are submitted to the BSE Limited, from time to time. The Company regularly follows the system of Share Trading Window mechanism as per the Insider Regulation.

DEMATERIALISATION OF SHARES:

As part of its efforts to provide better investor services, your Company has admitted its equity in the Depository System of the National Securities Depositories Ltd. (NSDL) and Central Depository Services (India) Ltd. (CDSL) since 07.03.2000 and 23.03.2000 respectively and has offered investors the facility to hold the shares in electronic form and enter into script less trades.

Your Company has always paid utmost attention to improve investor's relationship. As on 31^st March, 2018 approximately 87.38 % of the total shares of the Company has already been dematerialized.

ACKNOWLEDGEMENT:

Your Directors would like to place on record their sincere thanks for the co-operation and support received from various agencies of the Central and State Governments, all Shareholders and Creditors.

Your Directors also take this opportunity to place on record their appreciation of the dedication and sense of commitment shown by the officers and employees of the Company at all levels.

For and on behalf of the Board

Suresh V. Chaturvedi Director

Place: Mumbai.

Date: 7^th July, 2018