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Your Directors present their 35th Annual Report on the business and operations of the Company together with the Audited Financial Statements of Arco Leasing Limited ("the Company") for the financial year ended 31st March, 2019.
1. FINANCIAL RESULTS
The Companys financial performance for the year ended 31st March, 2019 is summarized below:
|(र in Lakhs|
|Particulars||Financial Results 31st March, 2019||For the year ended as at 31st March, 2018|
|Profit/(Loss) Before Tax||3.82||(20.58)|
|Tax Expense (Net)||3.58||0|
|Profit /(Loss) After Tax||0.24||(20.58)|
|Earnings Per Share (र)||0.10||(8.57)|
2. PERFORMANCE OF THE COMPANY
The total revenue for the financial year under review was र 13.20 Lakhs as against र 1.34 Lakhs in the previous financial year, registering an increase of र 11.86 Lakhs. It is mainly due to income from other sources namely interest earned on deposits with Banks.
As compared to previous years losses, it was observed that these was profit before tax of र3.82 Lakhs.
The Profit After Tax for f.y. 2018-19 was र 0.24 Lakhs as against the losses of र20.58 Lakhs in the previous year.
There were no material changes and commitments affecting the financial position of the Company, between the end of the financial year and the date of the report.
To conserve the resources for future, your Directors do not recommend any dividend for the financial year under review.
4. TRANSFER TO RESERVES
The Directors do not propose to transfer any amount to the Reserves.
5. SHARE CAPITAL
The Authorized Share Capital of the Company was enhanced from र25,00,000/- (Rupees Twenty Five Lakhs) to र 6,00,00,000/- (Rupees Six Crores) divided into 30,00,000 (Thirty Lakhs) equity shares of र 10/- (Rupees Ten only) each and 3,00,000 (Three Lakhs) Cumulative Redeemable Preference Shares of र100/- (Rupees One Hundred) each.
The Paid-up Equity Share Capital is र24,00,700/- (Rupees Twenty Four Lakhs Seven Hundred) divided into 2,40,070 (Two Lakh Forty Thousand and Seventy) equity shares of र10/- (Rupees Ten) each as on March 31, 2019.
During the year under review, the Company has not issued shares or convertible securities or shares with differential voting rights nor has granted any stock options or sweat equity or warrants as on March 31, 2019. However, the Company has issued 2,00,000 Cumulative Redeemable Preference Shares of र100/- each on July 12, 2018 on private placement basis to Edwell Infrastructure Hazira Limited, a Mumbai based Company. The said shares were not listed on any Stock Exchange.
The Company has not accepted any deposits in terms of Chapter V of the Companies Act, 2013 and Rules framed thereunder from public, during the year under review.
7. MANAGEMENT DISCUSSION AND ANALYSIS
The Management Discussion and Analysis as required under the Listing Regulations forms an integral part of this report and is presented separately.
8. DIRECTORS AND KEY MANAGERIAL PERSONNEL
Mr. Rajendra Mahavirprasad Ruia (DIN 01300823) Director of the company, is liable to retire by rotation at the forthcoming Annual General Meeting and, being eligible, offers himself for re-appointment pursuant to Section 152 of the Act. Your Board of Directors recommend his re-appointment.
Further, during the year under review, the non-executive director of the company had no transactions with the company.
Mr. Kaushik Shah (DIN 01396342) and Mr. Jayesh Joshi (DIN 08036558) have submitted a declaration that each of them meet the criteria for independence as laid down under Section 149(6) of the Act read with Rules framed thereunder and Regulation 16 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015.
9. CONSTITUTION OF COMMITTEES
The Audit Committee assists the Board in its responsibility of overseeing the quality and integrity of the accounting, auditing and reporting practices of the Company and its compliance with the legal and regulatory requirements. The terms of reference of Audit Committee cover the areas mentioned under Section 177 of the Companies Act, 2013.
The details of composition, meetings and attendance of the Meetings of the Audit Committee are as under:-.
No. of Meetings
|1||Mr. Narendra Ruia||Member||4||4|
|2||Mr. Kaushik Shah||Member from May 30, 2018||4||4|
|3||Mr. Jayesh Joshi||Chairman and Member from May 30, 2018||4||4|
There has been no instance where the Board of Directors had not accepted any recommendation of the Audit Committee.
NOMINATION & REMUNARATION COMMITTEE
The Committee formulates the criteria for evaluation of the performance of Independent Directors & the Board of Directors; identifying the persons who are qualified to become directors, and who may be appointed in senior management and recommend to the Board their appointment and removal. The terms of the reference of Nomination and Remuneration Committee covers the areas mentioned under section 178 of the Companies Act, 2013
The details of composition, of the Nomination and Remuneration Committee are as under:
No of Meetings
|1||Mr. Rajendra Ruia||Member||2||2|
|2||Mr. Kaushik Shah||Member from May 30, 2018||2||2|
|3||Mr. Jayesh Joshi||Chairman and Member from May 30, 2018||2||2|
10. DIRECTORS RESPONSIBILITY STATEMENT
The Financial Statements are prepared in accordance with Indian Accounting Standards (Ind AS) under the historical cost convention on accrual basis except for certain financial instruments, which are measured at fair values, the provisions of the Act (to the extent notified) and guidelines issued by the Securities and Exchange Board of India (SEBI). The Ind AS are prescribed under Section 133 of the Companies Act, 2013 (the Act), read with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 and Companies (Indian Accounting Standards) Amendment Rules, 2016. The Company has adopted all Ind AS Standards and the adoption was carried out in accordance with applicable transition guidance. Accounting policies have been consistently applied except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use.
As required under clause (c) of sub-section (3) of Section 134 of Companies Act, 2013, Directors, to the best of their knowledge and belief, state that:-
(i) in the preparation of the annual accounts, the applicable Accounting Standards had been followed along with proper explanation relating to material departures;
(ii) the directors had 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 of the Company for the year ended on that period;
(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;
(iv) the directors had prepared the annual accounts on a going concern basis;
(v) the directors had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and
(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.
11. REPORTING OF FRAUDS
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 rules framed thereunder.
12. MATERIAL SUBSIDUARY
There is no material subsidiary of the Company as of March 31, 2019. However, the Company has acquired 100% equity shares of Ansu Trade & Fiscals Private Limited and thereby it became the wholly owned subsidiary of Arco Leasing Limited w.e.f. July 31, 2019.
13. DISCLOSURE ON COMPLIANCE WITH SECRETARIAL STANDARDS
During the financial year 2018-19, your Company has complied with the applicable Secretarial Standards issued by the Institute of Company Secretaries of India.
14. ACCOUNTING STANDARDS
The Company has prepared the Financial Statements for the year ended 31st March, 2019 as per Section 133 of the Companies Act, 2013, read with rule 7 of Companies (Accounts) Rules, 2014.
15. PERFORMANCE EVALUATION OF THE DIRECTORS
Pursuant to the provisions of the Companies Act, 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Board has carried out an annual performance evaluation of the Directors individually. The manner in which the evaluation has been carried out is given below:-
The key areas of evaluation of individual directors, including Independent Directors are Knowledge of business, Diligence and preparedness, Effective interaction with others, Constructive contribution to discussion, Concern for stakeholders, attentive to the internal controls mechanism and ethical conduct issues.
16. FAMILIARIZTION/ ORIENTATION PROGRAMME FOR INDEPENDENT DIRECTORS
The Independent Directors attend a Familiarization/Orientation Program as being inducted by the Board. The Company had devised the detailed framework for the Familiarization Program and also approved the format of the formal letter of appointment as required to be given to the Independent Directors, outlining their role, function, duties and responsibilities.
17. REMUNERATION POLICY
The Board has on the recommendation of the Nomination and Remuneration Committee framed a policy for selection, appointment and remuneration of Directors and KMPs.
Policy for Remuneration to Directors/Key Managerial Personnel
i. Remuneration to Managing Director/Whole-time Directors:
(a) The Remuneration/Commission etc. to be paid to Managing Director/Wholetime Directors, etc. shall be governed as per provisions of the Companies Act, 2013 and rules made there under or any other enactment for the time being in force and the approvals obtained from the Members of the Company.
(b) The Nomination & Remuneration Committee shall make such recommendations to the Board of Directors, as it may consider appropriate with regard to remuneration to Managing Director/Whole-time Directors.
ii. Remuneration to Non-Executive/Independent Directors:
(a) The Non-Executive/Independent Directors may receive sitting fees and such other remuneration as permissible under the provisions of the Companies Act, 2013.
(b) All remuneration of the Non-Executive/Independent Directors (excluding remuneration for attending meetings as prescribed under Section 197(5) of the Companies Act, 2013) shall be subject to ceiling/limits as provided under the Companies Act, 2013 and rules made there under or any other enactment for the time being in force. The amount of such remuneration shall be such as may be recommended by the Nomination and Remuneration Committee and approved by the Board of Directors or shareholders, as the case may be.
(c) An Independent Director shall not be eligible to get Stock Options and shall also not be eligible to participate in any share based payment schemes of the Company.
(d) Any remuneration paid to Non-Executive/ Independent Directors for services rendered which are of professional nature shall not be considered as part of the remuneration for the purposes of clause (b) above if the following conditions are satisfied:
The Services are rendered by such Director in his capacity as the professional; and
In the opinion of the Committee, the Director possesses the requisite qualification for the practice of that profession.
iii. Remuneration to Key Managerial Personnel:
(a) The remuneration to Key Managerial Personnel shall consist of fixed pay, in compliance with the provisions of the Companies Act, 2013 and in accordance with the Companys Policy.
(b) The Fixed pay shall include monthly remuneration, employers contribution to Provident Fund, contribution to pension fund, pension schemes, etc. as decided from time to time in accordance with the Companys Policy.
Remuneration paid to Non-Executive Directors and Executive Directors:
No sitting fees were paid to non-executive non-independent Directors or independent Directors as they have waived their entitlement for the same.
Non-executive Directors of a companys Board of Directors add substantial value to the Company through their contribution to the Management of the Company. In addition they also play an appropriate control role. Even considering the valuable role of the Independent Directors of the Company, your company is in the process to finalized the sitting fees structure and shall update the members at large subject to regulatory approval and compliance(s) if any.
18. EXTRACT OF ANNUAL RETURN
The extract of annual return as on March 31, 2019 as provided under sub-section (3) of Section 92 of the Companies Act, 2013, in the prescribed Form MGT-9 is annexed to this Report.
19. NUMBER OF MEETINGS OF THE BOARD
There were 5 (Five) meetings of the Board held during the year. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013.
|Date of Board Meeting||Number of Directors attended the meeting|
|April 20, 2018||3|
|May 30, 2018||3|
|August 14, 2018||5|
|November 14, 2018||5|
|February 14, 2019||5|
20. AUDIT COMMITTEE RECOMMENDATIONS
All the recommendations made by the Audit Committee were accepted by the Board.
21. CORPORATE GOVERNANCE
Corporate Governance stipulated in SEBI (LODR) Regulations, 2015 is not applicable to the Company as paid up Equity Share Capital of the Company is not exceeding rupees ten crore and net worth of the Company is not exceeding rupees twenty-five crore, as on the last date of the previous financial year.
In accordance with the provisions of Section 139 of Companies Act, 2013, M/s. N K R & Co., Chartered Accountants, Mumbai (ICA Registration No.127820W) were appointed as Statutory Auditors on September 29, 2018, for a period of 5 years commencing from conclusion of 34th Annual General Meeting till the Conclusion of 39th Annual General Meeting to be held in the year 2023.
The appointment of statutory auditors was earlier subject to ratification by Members at every AGM. However, the requirement to place the matter relating to appointment of auditors for ratification by Members at every AGM has been done away by the Companies (Amendment) Act, 2017 with effect from May 7, 2018. Accordingly, no resolution is being proposed for ratification of appointment of statutory auditors at the 35th AGM.
There is no audit qualification, reservation or adverse remark for the year under review.
Pursuant to the provisions of Section 204 of the Companies Act, 2013 and Rules made thereunder the Company has appointed Mr. Bhadresh Shah, of M/s. Bhadresh Shah and Associates, Practicing Company Secretaries bearing CP No. 15957 as secretarial auditor for the Company. The secretarial audit report for the Financial Year ended 31st March, 2019 is annexed.
The secretarial audit report contained few observations, remarks pursuant to the provisions of section 149, 203 and also with the certain regulations of SEBI (Listing Obligations and Disclosure Requirement) Regulations, 2015 w.r.t. filling of certain documents/reports and compliances thereon. The Company has noted the same and is in the process of complying with these statutory requirements.
23. PREVENTION OF SEXUAL HARASSMENT OF WOMEN AT WORKPLACE:
Provisions of Section 22 of the Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013 read with Rules made thereunder are not applicable to the Company since there are no employees and hence the Policy on prevention of Sexual Harassment of Women at workplace is not formulated.
24. RISK MANAGEMENT POLICY
Business Risk Evaluation and Management is an ongoing process within the Organization. The Company has a robust risk management framework to identify, monitor and minimize risks as also identify business opportunities. The Audit Committee and the Board periodically review the risks and suggest steps to be taken to manage/ mitigate the risk through a properly defined framework.
During the year, no major risks were noticed, which may threaten the existence of the Company.
25. CORPORATE SOCIAL RESPONSIBILITY
The Company does not meet the criteria of Section 135 of Companies Act, 2013 read with the Companies (Corporate Social Responsibility Policy) Rules, 2014. Hence, there was no requirement to constitute Corporate Social Responsibility Committee in the Company.
26. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS
There is no information regarding loans and guarantees as required under the provisions of Section 186 of the Companies Act, 2013 as the Company has not given any loans or provided any guarantees or securities during the year under review.
The members at their Extraordinary General Meeting held on May 15, 2018, had given approval under section 186 of the Companies Act, 2013 for purchase of equity shares of Ansu Trade & Fiscals Private Limited, a non-banking financial company (NBFC), in one or more tranches. Accordingly, the Company has submitted an application with Reserve Bank of India (RBI) for getting an approval for purchase of an NBFC. The Company has received the approval from RBI vide letter DNBS.RO.Kol.No.3052/08.02.400/2018-19 dated February 8, 2019.
However, the said purchase transaction was completed in the month of July 2019 thereby the Company has acquired 18,59,630 equity shares of र 10/- each of Ansu Trade & Fiscals Private Limited from the shareholders.
In view of the above, Ansu Trade & Fiscals Private Limited has become the wholly owned subsidiary of Arco Leasing Limited w.e.f. July 31, 2019.
27. RELATED PARTY TRANSACTIONS
There is no transaction with Related Party which requires disclosure under Section 134(3) (h) of the Companies Act, 2013 and Rule 8(2) of the Companies (Accounts) Rules, 2014. Related Party Disclosures under Accounting Standards mentioned in Note-33 to the Financial Statements.
28. CODE OF CONDUCT
The Board of Directors has approved a Code of Conduct which is applicable to the Members of the Board and specified employees in the course of day to day business operations of the Company.
All the Board Members have confirmed compliance with the Code. A declaration to this effect signed by the Director of the Company appears elsewhere in this Annual Report.
29. PARTICULARS OF EMPLOYEES
The Company does not have any employee. Therefore, the information required pursuant to Section 197 of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company, is not furnished.
30. VIGIL MECHANISM/WHISTLE BLOWER POLICY
The Company promotes ethical behaviour in all its business activities. It has established a system through which Directors, employees and business associates may report unethical behavior, malpractices, wrongful conduct, fraud, violation of Companys code of conduct without fear of reprisal.
The Policy on Vigil Mechanism/Whistle Blower Mechanism may be accessed through website of the Company viz. www.arcoleasing.com.
31. PERFORMANCE OF JOINT VENTURE/CONSORTIUM
There are no Companies/LLPs which are Associates/Consortium of the Company.
32. STATUTORY DISCLOSURES
There are no associate companies as of March 31, 2019, hence the prescribed Form AOC-1 is not required to be attached to this Report. A Cash Flow Statement for the Financial Year 2018-19 is attached to the Balance Sheet.
33. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO
In view of the nature of activities that are being carried on by your Company, the particulars required under Section 134 of the Companies Act, 2013 and Rules made thereunder regarding conservation of energy and technology absorption are not applicable to your Company.
The Company had no foreign exchange earnings or outgo during the year under review.
34. ADEQUACY OF INTERNAL FINANCIAL CONTROLS
The Board has adopted the policies and procedures for ensuring the orderly and efficient conduct of its business, including adherence to the Companys 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 disclosures.
35. SIGNIFICANT AND MATERIAL ORDER PASSED BY REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND OPERATIONS OF THE COMPANY
During the year under review there are no significant or material orders passed by any Regulator, Court or Tribunal against the Company, which could impact its going concern status or operations.
Your Directors wish to thank all Shareholders, Clients, Government and Regulatory authorities and Stock Exchanges, financial authorities, customers, dealers, agents, suppliers, investors and bankers for their continued support and faith reposed in the Company.
Your Directors also thank the Ministry of Corporate Affairs, stakeholders, advocates, solicitors and business associates for their continuous support.
|BY AND ON BEHALF OF THE BOARD OF DIRECTORS|
|FOR ARCO LEASING LIMITED|
|RAJENDRA RUIA||NARENDRA RUIA|
|Date: August 30, 2019|