Arex Industries Ltd Directors Report.

Dear Members,

Your Directors are pleased to present this Thirty First Annual Report together with the Audited Statement of Accounts of the Company for the year ended on 31st March, 2020.

FINANCIAL RESULTS

As per the notification issued by the Ministry of Corporate Affairs dated 16th February, 2015 relating to the Companies (Indian Accounting Standards) Rules, 2015, the Company has adopted “Ind AS” with effect from 1st April, 2017. Accordingly, the Financial Statement for the year 2019-20 has been prepared in compliance with the Companies (Indian Accounting Standard) Rules, 2015.

Financial Performance
(Amount in Rupees in Lakhs)
31.03.2020 31.03.2019
Revenue from operations 4716.75 4071.93
Profit before Depreciation 1004.57 1004.57
Less: Finance Cost 312.84 254.31
Depreciation & Amortisation Expenses 485.08 401.90
Profit before Tax 144.54 348.36
Tax Expenses- Current Taxation 24.30 75.00
Deferred Tax 33.25 18.06
Add/(Less):
(Excess)/Short Provision of tax of earlier years 3.09
Profit for the year 86.99 252.21
Other comprehensive Income
Items that will not be reclassified to profit or loss
Gain/(Loss) on measurement of Equity Share instruments at fair value 0.00 (1.64)
Income tax impact on above 0.00 0.00
Other comprehensive Income for the year 0.00 (1.44)
Total comprehensive Income for the year 86.99 250.57

OPERATIONS

Your Company continued to report satisfactory performance during the year under review. The revenue from operations (net) stood at Rs.4716.75, i.e. an increase of 15.84% over the previous years revenue. The Company continued to explore overseas market opportunities and the exports amounted to Rs.333 lakhs, i.e. increase of 60% over the previous years exports. There was heavy fluctuation in foreign exchange rates resulting into a gain of Rs.4.20 lakhs. The profit on sale of assets amounted to 3.70 lakhs. The bad debts amounting to Rs.18.07 lakhs were written off during the year as against bad debts of Rs. Rs.4.17 lakhs written off during the previous year. The raw material prices, fuel charges, finance cost and other overheads were continued to increase during the year.

The Company has earned lower profit of Rs.144.54 lakhs as against profit of Rs.348.36 lakhs earned before taxes during the previous year. Your Directors hope better results in the years to come.

IMPACT OF COVID-19

The World Health Organization (WHO) declared COVID-19 a global pandemic. Consequent to this, Government of India declared nation-wide lockdown on March 24, 2020, which has impacted normal business operations of the Company. The Company has assessed the impact of this pandemic on its business operations and has considered all relevant internal and external information available up to the date of approval of these financial results, to determine the impact on the Companys revenue from operations for foreseeable future and the recoverability and carrying value of certain assets such as property, plant and equipment, investments, inventories, trade receivables and MAT credit. The impact of COVID-19 pandemic on the overall economic environment being uncertain may affect the underlying assumptions and estimates used to prepare Companys financial results, which may differ from that considered as at the date of approval of the financials results. As the situation is unprecedented, while the lockdown is gradually lifting, the Company is closely monitoring the situation as it evolves in the future. The Company has resumed its business activities in line with guideline issued by the Government authorities. The Company does not anticipate any challenges in its ability to continue as going concern or meeting its financial obligations.

DIVIDEND

Your Directors do not recommend dividend for the year under review in view of lower profits and financing activities on hand. Your Directors also do not propose any amount to carry to the general reserves.

FINANCE

Your Company continued to avail financial assistance amounting to finance its present and proposed projects on hand.

PUBLIC DEPOSITS

The Company has not accepted any deposit within the meaning of the provisions of Section 2(31) and 73 to 76 of the Companies Act, 2013, read with the Companies (Acceptance of Deposits) Rules, 2014.

INSURANCE

All the assets of the Company including buildings, plant and machineries and stocks are adequately insured.

DIRECTORS/REAPPOINTMENT OF KMPs

(1) Shri Neel Dinesh Bilgi (DIN00096180), Managing Director and (2) Shri Laxman Chetandas Tilani (DIN00532516), Directors of the Company are due to retire at the ensuing Annual General Meeting and being eligible, offer themselves for re-appointments. The Board hereby re-commends their reappointments.

Tenure of Key Managerial Personnel, namely (1) Shri Dinesh Apparao Bilgi (DIN00096099), Managing Director/CFO, (2) Shri Neel Dinesh Bilgi (DIN00096180), Managing Director and (3) Shri Chirag Dinesh Bilgi (DIN02094970), Managing Director of the Company expired on 31st July, 2020; and tenure of Shri Pragnesh Kantilal Shah (DIN00228233), Executive Director of the Company shall expire on 31st October, 2020. The Nomination & Remuneration Committee and the Board of Directors, in their meetings held on 26th June, 2020, considered the contribution and devotion of time with valuable and effective participation by all the key managerial personnel in their respective areas for the growth of the Company and; recommended/approved their re-appointments, respectively, subject however, to the approvals by the members of the Company in their ensuing Annual General Meeting. The Board hereby re-commends their re-appointments.

NOMINATION AND REMUNERATION COMMITTEE

The Nomination and Remuneration Committee of the Company review the composition of the Board, to ensure that there is an approximate mix of abilities, expertise, experience and diversity to serve the interest of the shareholders of the Company. The Policy ensures that (1) the level and composition of remuneration is reasonable and sufficient to attract, retain and motivate directors of the quality required to run the Company, (2) relationship of remuneration to performance is clear and meets appropriate performance benchmarks and (3) remuneration to directors, key managerial personnel and senior management involves a balance between fixed and incentive pay reflecting short and long term performance objectives appropriate to the working of the company.

INDEPENDENT DIRECTORS

As per the provisions of Section 149 of the Companies Act, 2013, the Independent Directors have confirmed and declared that they are not disqualified to act as independent directors and the Board is also of the opinion that the Independent Directors fulfill all the conditions specified in the Companies Act, 2013 making them eligible to act as Independent Directors.

Two separate meeting of the Independent Directors were held on 23.04.2019 and 13.03.2020. The Independent Directors actively participated and provided guidance to the Company. The Independent Directors reviewed the performance of the non-Independent Directors and the Board as a whole.

MATERIAL CHANGES AND COMMITMENTS, IF ANY, AFFECTING THE FINANCIAL POSITION OF THE COMPANY

No material changes and commitments affecting the financial position of the Company occurred between the end of the financial year to which the financial statements relate and the date of this Report, except impact of COVID-19 pandemic conditions followed by lockdowns even during the current year.

BOARD EVALUATION

Pursuant to the provisions of Section 134 of the Companies Act, 2013, a structured questionnaire was prepared after taking into account various aspects like- company performance, contribution of individual directors, composition of Board and committees, performance of duties, culture, obligations, corporate ethics, risk management etc. for evaluation process. The Board noted that all directors have understood the opportunities and risks to the Companys strategy with good balance between the core values of the Company and the interest of the stakeholders. The Board also evaluated performance of the various committees and concluded with satisfaction. The Board expressed their satisfaction for the above evaluation process.

PARTICULARS OF EMPLOYEES

There was no employee covered under the purview of Section 134(3)(q) of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

Information required under the provisions of Section 197(12) of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is given by way of an Annexure F to this Report.

CHANGES IN NATURE OF BUSINESS

There is no change in the nature of business of the Company.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to the requirements of Section 134(3)(c) of the Companies Act, 2013, the Directors hereby state that:

(i) in the preparation of annual accounts for the financial year ended 31st March, 2020, the applicable accounting standards have been followed along with proper explanation relating to material departures;

(ii) the directors have 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 31st March, 2020 and of the profits of the Company for the year ended on that date;

(iii) the directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(iv) the directors have prepared the annual accounts on a going concern basis.

(v) the directors had laid down internal controls to be followed and such internal controls 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.

ORDERS BY REGULATORS, COURTS OR TRIBUNALS

No significant and/or material orders were passed by any Regulator, Court or Tribunal impacting the going concern status and the Companys operations in future.

COMPANYS POLICIES

Code of Conduct

All 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 Directors have confirmed compliance with the provisions of Section 164 of the Companies Act, 2013.

Risk Management Policy

The Company has already formulated risk management policy so as to identify, evaluate, monitor and minimize identifiable business risks in the organization.

Vigil Mechanism/Whistle Blower Policy

The Company has already adopted Whistle Blower Policy to report genuine concerns or grievances and to safeguard victimization of persons while using this mechanization.

Other Policies

Companys Policies on Remuneration, Materiality of Related Party Transactions, Board diversity, Preservation of documents, Corporate Social Responsibility (CSR) are finalized in accordance with applicable laws.

DONATION

The Company has voluntarily donated Rs.1 Lakhs to Harekrishna Movement, Rs. 9 Lakhs to Shree Hombuja Padmavati Education Trust, Rs.0.20 Lakhs to Lions Club of Kalol, Rs.15 Lakhs to Gunayatan for charitable activities during the year.

INTERNAL FINANCIAL CONTROLS

The Company has a proper, adequate and effective internal control system to ensure that all the assets are safeguarded and protected against loss from unauthorized use or disposition and those transactions are authorized, recorded and reported correctly.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION

The Company has been taking steps for optimum utilisation of power and fuel. The information as required under Section 134(3)(m) of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014, is given by way of Annexure A forming part of this Report.

EXTRACT OF ANNUAL RETURN

As required under the provisions of Section 92(3) of the Companies Act, 2013, an extract of Annual Return in Form MGT-9 is given by way of an Annexure D forming part of this Report.

CEO/CFO CERTIFICATION

Shri Dinesh A Bilgi (DIN00096099), Managing Director and CFO has given necessary certificates/compliance reports to the Company.

SECRETARIAL AUDIT

As required under the provisions of Section 204 of the Companies Act, 2013 and the Rules made thereunder, a Secretarial Audit Report is given by way of an Annexure B, forming part of this Report. The Auditors observations are self explanatory.

STATUTORY AUDITORS

M/s Sweta Patel & Associates, Chartered Accountants of Ahmedabad having Firm Registration No.139165W were appointed as Statutory Auditors of the Company for a period of five years by the members of the Company in their 28th Annual General Meeting (AGM) held on 21st September, 2017. This appointment was subject to the ratification at every subsequent AGM held thereafter. However, in view of the amended provisions of Section 139, such ratification is not required with effect from 7th May, 2018. The said Auditors have submitted their willingness to continue to act as Statutory Auditors of the Company and certificate to the effect that they are eligible for such appointment and are not disqualified to act as such. The remuneration shall be determined by the Board of Directors upon recommendation by the Audit Committee and mutually agreed upon by the said Auditors.

The Auditors observations read with the notes to the Accounts for the year ended on 31st March, 2020 are self-explanatory.

MANAGEMENT DISCUSSION AND ANALYSIS (MD&A) & CORPORATE GOVERNANCE

The Companys philosophy is based on trusteeship, transparency and accountability. It fosters a culture of ethical behaviour and disclosures which build a trust of our stakeholders. The Code of Conduct, ethics and Code of Conduct for Prevention of Insider Trading are an extension of our values and reflect our commitment to ethical business practices, integrity, and compliances of both voluntary and statutory requirements. A detailed note on Management Discussion and Analysis is given as an Annexure C to this Report.

CORPORATE GOVERNANCE REPORT

As per Regulation 34(3) read with Schedule V of the Listing Regulations, a separate section with detailed note on corporate governance practices followed by the Company is given by way of an Annexure E forms an integral part of this Report.

LISTING WITH BSE LTD

The Equity Shares of the Company are listed at the BSE Ltd, Mumbai under Stock Code No. 526851 and ISIN No. is INE480H01011.

The Company has paid Annual Listing fees for the year 2020-21. The Company has also paid custodial charges to National Securities Depository Ltd and Central Depository Services (India) Ltd for the year 2020-21.

REGISTRAR AND SHARE TRANSFER AGENT (RTA)

M/s Link Intime India Pvt Ltd, Mumbai is the RTA of the Company to carry out the share transfers, transmission, dividend and other related activities.

RELATED PARTY TRANSACTIONS

All the transactions entered with related party during the year under review were on arms length basis and in the ordinary course of business and approved by the Audit Committee. Hence these transactions are outside the purview of the provisions of Section 188 of the Companies Act, 2013. However, details of such transactions i.e. purchases, lease, services, etc., are given in the Notes to the Financial Statements for the year ended on 31st March, 2020 and therefore details in Form AOC-2 are not given.

LOANS, GUARANTEES AND INVESTMENT

The Company has not granted any inter-corporate loan, given guarantee or provided any security for availing loan by other Company nor made any investments during the financial year under review.

ENVIRONMENT AND SAFETY

The Company considers clean and safe mode of operations in all respects. Further, as required under the provisions of Sexual Harassment (Prevention, Prohibition and Redressal) Act, 2013, the Company has formulated and implemented a policy on prevention of sexual harassment at workplace. There is no such complaint lodged during the year.

ACKNOWLEDGEMENTS

The Board of Directors of the Company appreciates continuous & comprehensive support and cooperation by the Companys bankers, shareholders, customers, suppliers and other business associates.

Your Directors place on record their deep appreciation for contribution and devoted services of the employees at all levels.