To the Members,

The directors have pleasure in presenting the Twenty-Ninth Annual Report on the business and operations of Company and the financial accounts for the year ended 31st March 2018.

FINANCIAL HIGHLIGHTS:

The financial highlights of your Company, for the year ended 31st March, 2018 are summarized below:

(Rs. in Lakhs)

COMPANY'S PERFORMANCE AND OPERATIONS:

The Company mainly manufactures automobile parts for heavy commercial vehicles as well as passenger vehicles. The Company's endeavour is to leverage its technology to meet the needs of the market and strengthen its position in its area of business. The Company has recorded another steady year of growth, despite performing in a highly competitive environment. The company achieved net revenue from operations of Rs.24,208.73 Lakhs as compare to Rs.18,973.07 Lakhs in the previous year. The Profit after Tax was Rs.320.14 Lakhs for the year under review as against Rs. 245.52 Lakhs in the previous year registering a growth of 30.39%.

INDIAN ACCOUNTING STANDARDS:

The Ministry of Corporate Affairs (MCA), vide its notification dated February 16, 2015, notified the Indian Accounting Standards (Ind AS) applicable to certain classes of companies. Ind AS has replaced the existing Indian GAAP prescribed under Section 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014.

Being applicable, the Company has adopted Ind AS from 1st April, 2017 and accordingly, the transition was carried out, from the Accounting Principles generally accepted in India as specified under Section 133 of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014 (previous GAAP) to Ind AS 101 "First time adoption of Indian Accounting Standards". The impact of transition has been recorded in opening reserves as at 1st April, 2016 and the periods presented have been restated / reclassified.

The reconciliation and descriptions of the effect of the transition from Indian GAAP to Ind AS have been provided in Note 4 in the notes to accounts in the standalone and consolidated financial statements.

DIVIDEND:

The Board of Directors have recommended a dividend of 11% i.e. Rs. 0.55/- per share on 1,07,88,010 equity shares of Rs.5/- each for the year 2017-18, subject to the approval of the Shareholders at the Annual General Meeting of the Company to be held on 28th September, 2018.

FINANCIAL STATEMENTS:

Full version of the Annual Report 2017-18 containing complete Balance Sheet, Statement of Profit & Loss, other statements and notes thereto, prepared as per the requirements of Schedule III to the Companies Act, 2013, Directors' Report (including Management Discussion and Analysis, Corporate Governance Report) are being sent via email to all shareholders who have provided their email address(es).

Full version of Annual Report 2017-18 is also available for inspection at the registered office of the Company during working hours upto the date of ensuing Annual General Meeting (AGM). It is also available at the Company's website at www.akartoolsltd.com.

SHARE CAPITAL:

The paid up equity share capital as on 31st March, 2018 was Rs. 5,39,40,050/- divided into 1,07,88,010 equity shares of face value of Rs. 5/- each. There was no public issue, rights issue, bonus issue or preferential issue, etc. during the year. The Company has not issued shares with differential voting rights, sweat equity shares, nor has it granted any stock options.

The shares of the Company has been sub-divided from the face value of Rs. 10/- per share to the face value of Rs. 5/- per share with effect from 1st December, 2017.

COMPANY NAME CHANGE:

The name of the Company has been changed from 'Akar Tools Limited' to 'Akar Auto Industries Limited' with effect from 23rd October, 2017.

TRANSFER TO RESERVES:

(Rs. in Lakhs)

INVESTOR EDUCATION AND PROTECTION FUND:

Dividend which was declared by the Company for the year ended 31st March, 2011 at the Annual General Meeting held on 26th November, 2011 and remain unclaimed will be transferred to the Investor Education and Protection Fund of the Central Government pursuant to the provisions of Companies Act, 2013. The last date for claiming the dividend is 25th September, 2018. Thereafter no claim shall lie on dividend for the year ended March, 2011 from the shareholders.

MCA has notified the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 (IEPF Rules). Pursuant Section 124(6) of the Companies Act, 2013 read with IEPF Rules as amended, all shares in respect of which dividend has not been paid or claimed for seven consecutive years or more, shall be transferred by the Company to the IEPF.

Accordingly, the Company has sent notice to the respective shareholders who have not claimed dividend for seven consecutive years or more and the newspaper advertisement stating the same has been published in the newspapers. The list of equity shareholders whose shares are liable to be transferred to IEPF can be accessed on the website of the Company www.akatoolsltd.com under the tab 'Investors'.

SUBSIDIARIES:

The Company does not have any subsidiary within the meaning of the Companies Act, 2013.

CREDIT RATING:

The rating committee of Brickwork has assigned a long term credit rating of BWR BBB- (pronounced as BWR Triple B Minus) and a short term credit rating of BWR A3 (pronounced as BWR A Three) to the line of credit facility enjoyed by the Company. The outlook on the long term and short term rating is stable.

PARTICULARS OF REMUNERATION OF DIRECTORS / KMP / EMPLOYEES:

Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Companies Act, 2013 read with Rules 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is attached to this Report as ANNEXURE I.

THE CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTION, FOREIGN EARNINGS AND OUTGO:

Information in accordance with the provisions of Section 134 (3) (m) of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014 is given in ANNEXURE II which forms part of this Report.

STATUTORY AUDITORS:

M/s Jaju & Kabra, Chartered Accountants, Aurangabad were appointed as the statutory auditors of the Company, for the period of five (5) years at the 28th Annual General Meeting of the Company held on 22nd September, 2017. They have confirmed that they are not disqualified from continuing as Statutory Auditors of the Company. The Independent Auditors Report for the financial year ended 31st March, 2018 does not contain any adverse remark or reservation and therefore, do not call for any further explanation or comments from the Board under Section 134(3) of the Companies Act, 2013.

SECRETARIAL AUDITORS:

As per the provisions of Section 204 of the Companies Act, 2013 and Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board of Directors of the Company appointed M/s Nitin S.Sharma & Associates (CP No. 9761), Practising Company Secretaries, Aurangabad to undertake the Secretarial Audit of the Company for the Financial Year 2017-18. The Secretarial Audit Report in Form No MR-3 for the Financial Year 2017-18 is annexed herewith as ANNEXURE III and forms a part of this report. The Secretarial Auditors in their report, have made an observation stating that Mr. Sanjay Jhawar was appointed as the Chief Financial Officer (i.e. Key Managerial Personnel) on 8th November, 2017, resulting into filling up of the vacancy for the office of whole time key managerial personnel after a period of six months. This was so because the Company was looking out for the candidate with right skills and calibre for the position of Chief Financial Officer since there was a vacancy for this position. The board after screening various candidates, decided to appoint Mr. Sanjay Jhawar as the Chief Financial Officer.

COST AUDITORS:

As per the provisions of Section 148 (3) of the Companies Act, 2013, the Board of Directors of the Company had appointed M/s B R Chandak & Co. (Registration No. 21959), as Cost Auditors of the Company, for conducting the audit of cost records for the financial year ended 31st March 2018. The Cost Auditor has submitted its report for the financial year 2017-18 to the Board of Directors. A proposal for ratification of remuneration of the Cost Auditors for the financial year 2018-19 is placed before the shareholders for ratification / approval.

ADEQUACY OF INTERNAL FINANCIAL CONTROL SYSTEM:

According to Section 134(5)(e) of the Companies Act, 2013, the term Internal Financial Control (IFC) means the policies and procedures adopted by the company 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.

Rule 8(5)(viii) of Companies (Accounts) Rules, 2014 requires the information regarding adequacy of Internal Financial Controls with reference to the financial statements to be disclosed in the Board's report. The Company has a well placed, proper and adequate IFC system which ensures that all assets are safeguarded and protected and that the transactions are authorised, recorded and reported correctly. The Internal Auditors are an integral part of the internal control system of the Company. To maintain its objective and independence, the Internal Auditors report to the Audit Committee of the Board. The Internal Auditors monitor and evaluate the efficacy and adequacy of internal control systems in the Company.

DIRECTORS:

Director retiring by rotation:

Mr. N. K. Gupta (holding DIN 00062268) retires by rotation under Section 152 of the Companies Act, 2013 and being eligible, offers himself for re-appointment.

The brief resume of Mr. N. K. Gupta, the nature of his expertise in specific functional areas, names of the companies in which he has held directorships, committee memberships / chairmanships, his shareholding etc. are furnished in the explanatory statement to the notice of the ensuing AGM.

Appointment of Directors:

Mr. Bhimsen Raghavendra Galgali was appointed as Additional Director (Independent) with effect from 1st March, 2018 on the recommendation of Nomination & Remuneration Committee.

Mrs. Bhavana vijay Saboo was appointed as Independent Director with effect from 14th August, 2018 to fill the casual vacancy caused due to the resignation of Mrs. Shilpa Sharma as an Independent Director of the Company.

Declaration by Independent Directors:

Your Company has received declarations from Mr. V. K. Chopra, Mr. S. N. Shukla, Mr. Bhimsen Galgali, and Mrs. Bhavana Saboo, Independent Directors, under provisions of Section 149(7) of the Companies Act, 2013, stating that they meet the criteria of independence as provided under sub-section (6) of Section 149 of the Companies Act, 2013.

KEY MANAGERIAL PERSONNEL:

The Key Managerial Personnel (KMP) of the Company as per Section 2(51) and 203 of the Companies Act, 2013 are as follows:

Mr. Sanjay Jhawar, has resigned as the Chief Financial Officer of the Company with effect from 6th July, 2018.

EXTRACT OF THE ANNUAL RETURN:

In accordance with requirements under Section 134(3)(a) and Section 92(3) of the Companies Act, 2013, the details forming part of the extract of the Annual Return in form MGT 9 is given in ANNEXURE IV which forms part of this report.

CORPORATE GOVERNANCE:

All the requirements of the Corporate Governance are adhered to both in letter and spirit. All the committees of the Board of Directors meets at regular intervals as required in terms of SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015. Board of Directors have taken all necessary steps to ensure compliance with all statutory requirements. The Directors and Key Managerial Personnel of your Company have complied with the approved 'Code of Conduct for Board of Directors and Senior Executives of the Company'.

The report on Corporate Governance as required under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 forms part of this report and is annexed as ANNEXURE V

NUMBER OF MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEE MEETINGS:

The details regarding the number of meetings of the Board of Directors and Committee meetings during the period under review is given in the Corporate Governance Report.

PERFORMANCE EVALUATION OF THE BOARD, ITS COMMITTEES AND INDIVIDUAL DIRECTORS:

Pursuant to applicable provisions of the Companies Act, 2013 and the Listing Regulations 2015, the Board, in consultation with its Nomination & Remuneration Committee, has formulated a framework containing, inter-alia, the criteria for performance evaluation of the entire Board of the Company, its Committees and Individual Directors, including Independent Directors. The detailed information in this regard has been given in the Corporate Governance Report.

MANAGEMENT DISCUSSION AND ANALYSIS:

A detailed report on the Management Discussion and analysis is annexed as ANNEXURE VI and forms part of this report.

VIGIL MECHANISM FOR DIRECTORS AND EMPLOYEES:

Pursuant to the provisions of Section 177(9) and (10) of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014, the Company has in place a vigil mechanism for Directors and employees of the Company.

NOMINATION AND REMUNERATION POLICY:

Pursuant to the requirement under Section 134(3) (e) and Section 178(3) of the Companies Act, 2013, the Nomination and Remuneration Committee of the Board of Directors has in place a policy which deals with the manner of selection of Board of Directors and Managing Director and their remuneration. The objectives and key features of this policy are:

(a) Formulation of the criteria for determining qualifications, positive attributes of directors, Key Managerial Personnel (KMP) and senior management personnel and also independence of Independent Directors;

(b) Aligning the remuneration of Directors, KMPs and senior management personnel with the Company's financial position, remuneration paid by its industry peers etc.;

(c) Performance evaluation of the Board, its committees and Directors including Independent Directors;

(d) Ensuring Board diversity;

(e) Identifying persons who are qualified to become Directors and who may be appointed in senior management in accordance with the criteria laid down; and

(f) Directors' induction and continued training.

The Nomination and Remuneration policy of the Company is available on Company's website www.akartoolsltd.com.

RELATED PARTY TRANSACTIONS:

All related party transactions those were entered during the financial year were in the ordinary course of business and on arm's length basis. All related party transactions are placed before the Audit Committee for review and approval. Prior omnibus approval is also obtained from the Audit Committee for the related party transactions which are of repetitive nature and which can be foreseen and accordingly the required disclosures are made to the Audit Committee on quarterly basis in terms of the omnibus approval of the Committee.

Since all the related party transactions entered into by the Company were in ordinary course of business and were on an amr's length basis during the period under review, therefore Section 188 (1) of Companies Act, 2013 is not applicable to the said related party transactions. Thus the Company is not required to prepare Form AOC-2.

The policy on materiality of related party transactions and also on dealing with related party transactions as approved by the Audit Committee and the Board of Directors is uploaded on the web-site of the Company "www.akartoolsltd.com".

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186 OF THE COMPANIES ACT, 2013:

There is no loan given or guarantee provided or investment made by the Company during the financial year 2017-18 as per Section 186 of the Companies Act, 2013.

DEMATERIALISATION OF SHARES:

The shares of your Company are being traded in electronic form and the Company has established connectivity with both the depositories i.e. National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL). In view of the numerous advantages offered by the Depository system, Members are requested to avail the facility of dematerialization of shares with either of the Depositories as aforesaid. As on 31st March, 2018, 98.00% of the share capital stands dematerialized.

CORPORATE SOCIAL RESPONSIBILITY (CSR):

The Company does not exceed the threshold limits mentioned in Section 135 (1) of the Companies Act, 2013. Therefore the provisions pertaining to Corporate Social Responsibility are not applicable to the Company.

DISCLOSURE ON AUDIT COMMITTEE:

The Audit Committee as on March 31, 2018 comprises of the following Directors:

i. Mr. V. K. Chopra (Chairman)

ii. Mr. S. N. Shukla (Member)

iii. Mr. Sunil Todi (Member)

All the recommendations of the Audit Committee were accepted by the Board of Directors.

RISK ASSESSMENT AND MANAGEMENT:

Your company is exposed to various business risks. These risks are driven through external factors like economic environment, competition, regulations etc. The Company has laid down a well defined risk management mechanism covering the risk mapping and trend analysis, risk exposure, potential impact and risk mitigation process. A detailed exercise is being carried out to identify, evaluate, manage and monitor business and non-business risks. The Audit Committee and Board periodically review the risks and suggest steps to be taken to manage/mitigate the same through a properly defined framework.

During the year, a risk analysis and assessment was conducted and no major risks were noticed, which may threaten the existence of the Company.

DIRECTORS' RESPONSIBILITY STATEMENT:

Pursuant to the requirements under Section 134 (3) (c) of the Companies Act, 2013, with respect to Directors Responsibility Statement, it is hereby confirmed that:

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

(b) the Directors have, in consultation with Statutory Auditors, selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give true and fair view of the state of affairs of the Company at the end of the financial year and of the net profit of the Company for the financial year ended 31st March 2018;

(c) the Directors have taken proper and sufficient care to maintain adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and 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;

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

(e) the Directors have laid down adequate internal financial controls to be followed by the Company and such internal financial controls were operating effectively during the financial year ended 31st March 2018; and

(f) the Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and such systems were adequate and operating effectively throughout the financial year ended 31st March 2018.

DETAILS IN RESPECT OF FRAUDS REPORTED BY AUDITORS UNDER SECTION 143 (12) OF COMPANIES ACT, 2013:

During the financial year ended 31st March 2018, there were no frauds reported by the auditors to the Audit Committee or the Board under Section 143 (12) of the Companies Act, 2013.

DEPOSITS:

Your Company has not accepted any deposits under Section 73 of the Companies Act, 2013 during the period under review.

MATERIAL CHANGES AFFECTING THE FINANCIAL POSITION OF THE COMPANY:

No material changes have occurred and commitments made, affecting the financial position of the Company, between the end of the financial year of the Company and date of this report.

There is no order passed by any regulator or court or tribunal against the Company, impacting the going concern concept or future operations of the Company.

CONTINGENT LIABILITIES:

The details of contingent liabilities are given in Note No. 31 of the Notes to Financial Statements.

NATURE OF BUSINESS:

There has been no change in the nature of business of the Company.

HUMAN RESOURCES:

Your Company believes in engaging human resources as they are the key differentiator for the success of the Company. Keeping the employees engaged and committed can go a long way in attainment of objectives and ensuring sustained business performance. In line with this, your Company has initiated several interventions that will enhance the engagement of the employees. Being a people centric organisation, your Company recognises the significance of building next generation leadership by developing internal talent to meet the organisational objectives. Through this, the human resources function continues to align its strategic interventions and processes, while simultaneously addressing the needs of multiple stakeholders and maintaining a competitive employee cost. Your Company continues to have cordial and harmonious industrial relations across all the manufacturing units. The total number of employees of the Company as on 31st March, 2018 stood at 322.

OCCUPATIONAL HEALTH, SAFETY, ENVIRONMENT AND INDUSTRIAL RELATIONS:

Your Company has effectively deployed policies on Safety, Occupational Health & Environment at all locations. It continually focuses on improving the effectiveness of system processes, through globally accepted standards. Your Company develop and manufacture products that are safe, eco-friendly and economical. Your Company reviews its processes and its behaviour on a regular basis and measures its effect on people's health and on the nature.

During the year the Company had cordial relations with workers, staff and officers. The shop floor management is done through personal touch, using various motivational tools and meeting their training needs requirements. The Company has taken initiative for safety of employees and implemented regular safety, imparted machine safety training, wearing protective equipment etc.

LISTING:

Your Company's shares continue to be listed on BSE Limited and are actively traded. The listing fee to BSE Limited for the year 2018-19 has been paid by your Company.

POLICY AGAINST SEXUAL HARASSMENT AT WORKPLACE:

Pursuant to the provisions of Section 4(1) of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, the Company has in place an Internal Complaints' Committee. The following is a summary of sexual harassment complaints received and disposed off during the year

No. of complaints received : Nil

No. of complaints disposed off : NA

CODE OF CONDUCT:

Directors, Key Managerial Personnel and Senior Management of the Company have confirmed compliance with the Code of Conduct applicable to the Directors and employees of the Company. The Code of Conduct is available on the Company's Website www.akartoolsltd.com.

POLICY FOR PRESERVATION OF DOCUMENTS AND ARCHIVAL POLICY:

In compliance with Regulation 9 of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended from time to time, the Company has in place the policy for preservation of document and archival policy.

ACKNOWLEDGEMENTS:

Your Directors are pleased to express their gratitude for all the co-operation and assistance received from bankers, members, customers, vendors, various Government authorities and employees for their support and faith in the Company.

For and on Behalf of Board

Sd/-

Date: 14th August 2018 R.L.Gupta

Place: Aurangabad (Chairman)

DIN:00061861