Aaron Industries Ltd Directors Report.

To,

The Members,

Your Directors are pleased to present the 7th Annual Report of your Company together with the Audited Financial statements and Auditors Report for the year ended on 31st March, 2020.

1. FINANCIAL PERFORMANCE:-

The financial performance of the Company is summarized below:

(Amount in Rs.)
Particulars 2019-20 2018-19
Revenue from Operations 21,39,91,936.83 17,55,32,426.16
Other Income 10,95,422.68 3,44,018.40
Net Income 21,50,87,359.51 17,58,76,444.56
Profit/(Loss) Before Tax & Exceptional/Extraordinary 2,01,36,356.16 1,57,32,051.00
Items
Less:
Exceptional/Extraordinary items 0.00 0.00
Profit/(Loss) Before Tax 2,01,36,356.16 1,57,32,051.00
Less: Tax Expense :
- Current Tax 33,61,160.00 32,38,725.00
- Deferred Tax Charge/ (Credit) 25,32,179.08 19,04,257.58
Net Profit/(Loss) After Tax 1,42,43,017.08 1,05,89,068.42

2. REVIEW OF OPERATIONS:-

The Net Income of your Company for the current year was increased to Rs. 21,50,87,359.51/- as against Rs. 17,58,76,444.56/- of the previous year. Accordingly, the Companys Net Profit After Tax has been increased to Rs. 1,42,43,017.08/- for the current year as against the Net Profit After Tax of Rs. 1,05,89,068.42/- of the previous year.

3. BUSINESS GROWTH:-

Your Company has a dedicated team of Management and Operating Personnel who have been instrumental in the growth of the business over the years. Your Directors believe that the Company has the potential to further scale up its business volumes and profitability and are in the process of identifying new avenues of growth and effective utilization of its existing resources.

4. COVID-19:-

In the last month of FY 2019-20, the COVID-19 pandemic developed rapidly into a global crisis, forcing governments to enforce lock-downs of all economic activity. For the Company, the focus immediately shifted to ensuring the health and well-being of all employees, and on minimizing disruption to services for all our customers.

5. TRANSFER TO RESERVES:-

During the year under review, your Directors have not proposed to transfer any amount to Reserves.

6. DIVIDEND:-

The Board of Directors in their meeting held on 30th June, 2020 have recommended a Dividend of Rs. 0.60/- per share on face value of Rs. 10/- each for the Financial Year ended 31st March, 2020 which shall be paid/dispatched within 30 days of conclusion of the AGM, subject to the approval of the members at the ensuing AGM of the Company. The Total Dividend outgo amounts to Rs. 31.69/- Lakh.

7. SHARE CAPITAL:-

During the year under review, your Companys Authorized Share Capital has been increased from Rs. 5.00 Cr., divided into 50,00,000 (Fifty Lakh) equity shares of Rs. 10/- each to Rs. 6.00 Cr., divided into 60,00,000 (Sixty Lakh) equity shares of Rs. 10/- each.

During the year under review, your Companys issued, subscribed & paid up Equity Share Capital has been increased from Rs. 4,78,28,380/- (Rupees Four Crore Seventy Eight Lakh Twenty Eight Thousand Three Hundred Eighty) consisting of 47,82,838 (Forty Seven Lakh Eighty Two Thousand Eight Hundred Thirty Eight) equity shares of Rs. 10/- each to Rs. 5,26,11,140/- (Rupees Five Crore Twenty Six Lakh Eleven Thousand One Hundred and Forty) consisting of 52,61,114 (Fifty Two Lakh Sixty One Thousand One Hundred and Fourteen) equity shares of Rs. 10/- each by way of issue of Bonus shares in the proportion of 1:10.

8. DEPOSITS:-

During the year under review, your Company has neither invited nor accepted any Public Deposits within the meaning of Section 73 of the Companies Act, 2013 read with Companies (Acceptance of Deposit) Rules, 2014.

9. BOARD OF DIRECTORS AND KEY MANAGERIAL PERSONNEL:-

Mr. Amar Doshi, Mr. Karan Doshi, Mr. Monish Doshi, Mr. Pradeep Choksi, Mr. Hetal Mehta and Mrs. Shrungi Desai were the Directors on the Board at the beginning of financial year.

There was no change in the Board during the year.

As per the provisions of the Companies act, 2013, Mr. Monish Doshi, Director of the Company retires by rotation at the ensuing Annual General Meeting and being eligible, seeks re-appointment.

Pursuant to the Section 2(51) and provisions of Section 203 of the Companies Act, 2013 read with Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed Key Managerial Personnel (KMP) and there was no change in the KMP during the year.

10. DECLARATION FROM INDEPENDENT DIRECTORS :-

The Company has received necessary declaration from each Independent Directors under Section 149(7) of the Companies Act, 2013, that he/she meets the criteria of independence as laid down in Section 149(6) of the Companies Act, 2013 and Regulation 25 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The Board relies on their declaration of independence.

11. DIRECTORS RESPONSIBILITY STATEMENT:-

Pursuant to the provisions of Section 134(5) of the Companies Act, 2013, the Directors confirm that I. in the preparation of the Annual Accounts for the year ended 31st March, 2020, the applicable accounting standards have been followed and no material departures have been made for the same; II. appropriate accounting policies have been selected and applied and such judgments and estimates have been made 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 31st March, 2020 and of the profit of the Company for that period; III. proper and sufficient care have been taken for 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 annual accounts have been prepared on a “going concern” basis; V. the proper internal financial controls are laid down and are adequate and operating effectively; VI. the proper systems to ensure compliance with the provisions of all applicable laws have been devised and such systems were adequate and operating effectively.

12. EXTRACT OF ANNUAL RETURN:-

As provided under Section 92(3) of the Companies Act, 2013 read with Companies (Management and Administration) Rules, 2014, the extract of the Annual Return in form MGT-9 is attached to this report as Annexure - 1.

13. DETAILS OF SUBSIDIARY, JOINT VENTURE OR ASSOCIATES:-

As on 31st March, 2020, your Company does not have any Joint Ventures, Subsidiaries and Associates Company.

14. PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS:-

The Company has not given any loan or provided any guarantee or made any investment under provision of Section 186 of the Companies Act, 2013.

15. CORPORATE SOCIAL RESPONSIBILITY [CSR]:-

The provisions of the CSR expenditure and Composition of Committee as provided in the Section 135 of the Companies Act, 2013 is not applicable to the Company.

16. CHANGE IN THE NATURE OF BUSINESS:-

During the year, there was no change in nature of Business of the Company.

17. RELATED PARTY TRANSACTIONS:-

All related party transactions that were entered during the financial year were on the arms length basis and were in the ordinary course of business. Details of the related party transactions made during the year are attached as Annexure - 2 in form AOC-2 for your kind perusal and information in terms of Section 134 of the Companies Act, 2013.

A policy on the related party Transitions was framed approved by the Board and posted on the Companys website www.aaronindustries.net.

18. MEETINGS OF BOARD OF DIRECTORS & COMMITTEE:-

During the year, 7 (Seven) Board Meetings were held. The intervening gap between the Meetings did not exceed the period prescribed under the Companies Act, 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The details of which are provided in Annexure - 3.

The details pertaining to the constitution and composition of the Audit Committee, Nomination & Remuneration Committee and Stakeholders Relationship Committee and meetings held during the year are provided in Annexure - 3.

19. MEETINGS OF MEMBERS:-

During the year under review, 1 (One) Extra Ordinary General Meeting was held on 18th April, 2019 and 6th Annual General Meeting of the Company was held on 24th August, 2019.

20. AUDITORS:-

a) STATUTORY AUDITOR:

The members at the 6th Annual General Meeting of the Company had appointed M/s. P. J. Desai & Co., Chartered Accountants (FRN 102330W) as the Statutory Auditors of the Company to hold office from the conclusion of the said Annual General Meeting until the conclusion of 10th the Annual General Meeting to be held in the year 2023. The Ministry of Corporate Affairs vide its Notification dated 7th May, 2018, has dispensed with the requirement of ratification of Auditors appointment by the shareholders, every year. Hence, the resolution relating to ratification of Auditors appointment is not included in the Notice of the ensuing Annual General Meeting. The Company has received a certificate from M/s. P. J. Desai & Co., confirming that they are not disqualified from continuing as Statutory Auditors of the Company.

The Auditors Reports for the Financial Year 2019-20 do not contain any qualification, reservation, adverse remark or disclaimer. Notes to Accounts and Auditors remarks in their report are self-explanatory and do not call for any further comments. b) INTERNAL AUDITORS:

The Board of the Company has appointed M/s. VCAS & Co. Chartered Accountant, Surat as Internal Auditors of the Company.

c) COST AUDITORS:

Provisions related to Cost Auditor is not applicable to the Company.

21. BOARD EVALUATION:-

The Board of Directors has carried out an annual evaluation of its own performance, Board Committees and Individual Directors pursuant to the provisions of the Companies Act, 2013 and the Corporate Governance requirements as prescribed by the SEBI Regulations.

The performance of the Board was evaluated by the Board after seeking inputs from all the Directors on the basis of the criteria such as the Board composition and structure, effectiveness of Board processes, information and functioning, etc.

The performance of the Committees was evaluated by the Board after seeking inputs from the Committee members on the basis of the criteria such as the composition of Committees, effectiveness of Committee meetings, etc.

The Board and the Nomination and Remuneration Committee reviewed the performance of the Individual Directors on the basis of the criteria such as the contribution of the Individual Director to the Board and Committee meetings like preparedness on the issues to be discussed, meaningful and constructive contribution and inputs in meetings, etc. In addition, the Chairman was also evaluated on the key aspects of his role.

In a separate meeting of Independent Directors, performance of Non-Independent Directors, performance of the Board as a whole and performance of the Chairman was evaluated, taking into account the views of Executive Directors and Non-Executive Directors. 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.

22. PARTICULARS OF CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO:-

The information on Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo stipulated under Section 134 (3)(m) of the Act read with Rule 8(3) of the Companies (Accounts) Rules, 2014 is annexed as Annexure - 4 and forms part of this Report.

23. PARTICULARS OF EMPLOYEES:-

None of the employee has received remuneration exceeding the limit as stated in rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

24. INTERNAL FINANCIAL CONTROL SYSTEM:-

The Company has its internal financial control systems commensurate with the size and complexity of its operations, to ensure proper recording of financials and monitoring of operational effectiveness and compliance of various regulatory and statutory requirements. The management regularly monitors the safeguarding of its assets, prevention and detection of frauds and errors, accuracy and completeness of the accounting records including timely preparation of reliable financial information. The internal auditor consults and reviews the effectiveness and efficiency of the internal financial control systems and procedure to ensure that all the assets are protected against loss and that the financial and operational information is accurate and complete in all respects. During the year no reportable material weakness in the design or operation were observed.

25. VIGIL MECHANISM/WHISTLE BLOWER POLICY:-

The Company has adopted a Whistle Blower Policy to provide a formal mechanism to the Directors and employees to report their concerns about unethical behavior, actual or suspected fraud or violation of the Companys Code of Conduct or Ethics Policy. It aims to provide an avenue for employees through this policy to raise their concerns on any violation of legal or regulatory requirements, suspicious fraud, misfeasance, misrepresentation of any financial statements and reports. It also provides for direct access to the Chairman of the Audit Committee. The Vigil Mechanism/Whistle Blower Policy is being made available on the Companys website www.aaronindustries.net.

26. REMUNERATION POLICY:-

Pursuant to provision of Section 178(3) of the Companies Act, 2013, The Board has framed a Policy for selection, appointment and remuneration of Directors and Key Managerial Personnel including criteria for determining qualifications, positive attributes and independence of Directors. The Remuneration Policy has been uploaded on the Companys website www.aaronindustries.net.

27. LISTING AGREEMENT:-

The Securities and Exchange Board of India (SEBI), on 2nd September, 2015, issued the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 with the aim to consolidate and streamline the provisions of the Listing Agreement for different segments of capital markets to ensure better enforceability. All listed entities are required to enter into the Listing Agreement and accordingly the Company entered into Listing Agreement with the NSE on 30th August, 2018.

The Company has paid Annual listing fee for the year 2019-20 to National Stock Exchange of India Limited. The Company has also paid Annual custodian charges of Depository to NSDL and CDSL.

28. REGISTRAR AND SHARE TRANSFER AGENT:-

Your Company has appointed M/s. Bigshare Services Private Limited as its Registrar and Share Transfer Agent and executed post IPO agreement between Company and M/s. Bigshare Services Private Limited on 3rd September, 2018.

29. HUMAN RESOURCES:-

The manpower strength of the Company as on 31st March, 2020 was 85 permanent employees including all Management Staff across different locations.

Your Company firmly believes that its human resources are the key enablers for the growth of the Company and important asset. Your Company continuously invests in attraction, retention and development of talent on an ongoing basis.

During the year, the Company has undertaken initiatives to reinforce a progressive work environment. The Company has held various session of Learning & Development for different employees groups.

30. RATIO OF DIRECTORS REMUNERATION TO MEDIAN EMPLOYEES REMUNERATION AND OTHER DISCLOSURES:-

The table containing the names and other particulars of ratio of Directors Remuneration to Median Employees Remuneration in accordance with the provisions of 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 attached to this report as

Annexure - 5.

31. MANAGEMENTS DISCUSSION AND ANALYSIS REPORT:-

Managements Discussion and Analysis Report for the year under review, as stipulated under Regulation 34 read with Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is presented in a separate section forming part of this Annual Report. It provides details about the overall industry structure, economic scenarios, developments in business operations/ performance of the Companys businesses, Product Portfolio, Distribution and Marketing Activities, internal controls and their adequacy, Human Resource Development and Industrial Relations and other material developments during the financial year 2019-20.

32. SECRETARIAL AUDITOR & SECRETARIAL AUDIT REPORT:-

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Audit Committee recommended and the Board of Directors has appointed Mr. Dhiren R. Dave, Company Secretary in Practice to conduct Secretarial Audit for the Financial Year 2020-21. The Report of the Secretarial Auditors is attached as Annexure - 6 in Form MR-3 to this Report. The Observation made in the Secretarial Audit Report call for comment under Section 134(3)(f) of the Companies Act, 2013 regarding “Gap between two Audit Committee meetings 12.07.2019 and 12.11.2019 is exceeding 120 days.”

The Board clarifies the same as under:

“Due to non-availability of committee members, time gap of 120 was exceeded by only 1 (One) day of two Audit Committee meetings held on 12.07.2019 and 12.11.2019.”

33. REPORTING OF FRAUDS PARTICULARS:

There was no instance of fraud during the year under review, which required the Statutory Auditors to report to the Audit committee and / or Board under Section 143(12) of the Act and the rules made thereunder.

34. CORPORATE GOVERNANCE:-

The Company has been exempted from reporting on Corporate Governance as per Regulation 15 of the SEBI (Listing Obligation and Disclosure requirements) Regulations, 2015. Therefore, Corporate Governance Report is not provided.

35. AUDITORS CERTIFICATE ON CORPORATE GOVERNANCE:-

As per Regulation 15 of the SEBI (Listing Obligation And Disclosure Requirement) Regulations, 2015, the compliance with the Corporate Governance provisions shall not apply in respect of (a) listed entity having paid up equity share capital not exceeding ten crore and net worth not exceeding rupees twenty five crore as on the last day of previous year (b) the listed entity which has listed its specified securities on the SME Exchange. Hence, Auditors Certificate on Corporate Governance is not provided.

36. CHIEF FINANCIAL OFFICER (CFO) CERTIFICATION:-

In compliance with Regulation 17(8) of the Listing Regulations, a declaration by CFO was placed before the Board, certifying the accuracy of Financial Statements and the adequacy of internal controls pertaining to Financial Reporting for the year ended 31st March, 2020 is attached herewith as per Annexure - 7.

37. CODE OF CONDUCT:-

The Board has laid down a specific code of Conduct for all Board Members and Senior Management of the Company. All the Board Members and Senior Management Personnel have affirmed compliance with the Code on annual basis. In this regard certificate from Managing Directors as required under Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 has been received by the Board and the same is attached herewith as per Annexure - 8.

Code of Conduct form Board of Directors and Senior Management Personnel is available on the Companys website www.aaronindustries.net.

38. MATERIAL CHANGES BETWEEN THE DATE OF THE BOARD REPORT AND END OF FINANCIAL YEAR:-

There have been no material changes and commitments affecting the financial position of the Company which have occurred between the end of the financial year of the Company to which the financial statements relate and the date of the report.

39. DISCLOSURES UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE

(PREVENTION, PROHIBITION & REDRESSAL) ACT, 2013:-

In accordance with Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules framed thereunder, the Company has formed an Internal Complaints Committee and also framed and adopted the policy for Prevention of Sexual Harassment at Workplace.

During the year under review, no complaints were received by the Company relating to sexual harassment at workplace.

40. RISK MANAGEMENT POLICY:-

The Company has been exempt under regulation 21 of the SEBI (Listing Obligation and Disclosure requirements) Regulations, 2015 from reporting of risk management.

A well-defined risk management mechanism covering the risk mapping and trend analysis, risk exposure, potential impact and risk mitigation process is in place. The board is fully aware of Risk Factor and is taking preventive measures wherever required.

41. INSURANCE:-

Your Company has taken the required insurance coverage for its assets against the possible risks like fire, flood, burglary etc.

42. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS:-

There are no significant or material orders were passed by the Regulators or Courts or Tribunals which would impact the going concern status of the Company and its operations in future.

43. GREEN INITIATIVES:-

In commitment to keep in line with the Green Initiative and going beyond it to create new green initiatives, electronic copy of the Notice of 7th Annual General Meeting of the Company are sent to all Members whose email addresses are registered with the Company/Depository Participant(s). For members who have not registered their e-mail addresses, physical copies are sent through the permitted mode.

44. APPRECIATION:-

Your Directors take this opportunity to thank the financial institutions, Government Authorities, customers, vendors, investors of the Company and the communities in which the Company operates, for their co-operation and valuable support extended to the Company during the year. Your Directors also wish to place on record their deep sense of appreciation for the committed services by the Companys executives, staff and workers.

For and on behalf of the Board
Date: 20/07/2020 Amar Doshi
Place: Surat Chairman & Managing Director
DIN: 00856635