arihant capital markets ltd share price Directors report


Dear Members,

Your Directors are pleased to present the 30th Annual Report on the business and operations of Arihant Capital Markets Limited together with the audited financial statements for the financial year ended 31st March, 2022.

Financial Highlights

The Boards Report is prepared based on the Standalone and Consolidated financial statements of the Company. The Companys financial performance for the year under review along with previous years figures are given hereunder:

(Rs.in Lacs)

Particulars Standalone Consolidated
2021-2022 2020-2021 2021-2022 2020-2021
Total Income 15,269.40 10,983.88 17,000.99 11,616.23
Profit Before Depreciation 6,007.56 4,531.73 6,609.12 4,455.39
Depreciation 112.46 116.90 118.72 126.56
Profit Before Tax 6,749.89 4,414.83 6,526.37 4,374.61
Provision for Taxation 1,343.01 939.42 1,490.27 907.14
Net Profit After Taxation 5,406.88 3,475.41 5,036.10 3,467.47
Total Comprehensive Income 5,408.35 3,469.94 5,041.55 3,458.58
Appropriations:
Transfer to General Reserve 6,000.00 2,000.00 6,050.00 2,025.00
Dividend 364.39 208.23 364.39 208.23
Balance Carried to Balance Sheet 1,614.80 2,570.85 1,268.03 2,657.33

Review of Operations

During the year under review, the company has posted total income of Rs. 15,269.40 Lacs (previous year Rs. 10,983.88 Lacs) on a Standalone basis and a net profit after tax, for the year 2021-22, of Rs. 5,406.88 Lacs compared to Rs. 3,475.41 Lacs in the previous year. On a consolidated basis during the year under review, the company has posted total income of Rs. 17,000.99 Lacs (previous year Rs. 11,616.23 Lacs ). The consolidated net profit during the same period stands at Rs. 5,036.10 Lacs as compared to Rs. 3,467.47 Lacs in the previous year.

A Brief note on the Companys operational and financial performance is given in Management Discussion and Analysis (MDA) Report which is annexed to the Directors Report. The MDA report has been prepared in compliance with the terms of Regulation 34(2) (e) of SEBI (LODR) Regulations, 2015 with the BSE Ltd and the National Stock Exchange of India Limited.

Change in the Nature of Business:

There was no change in the nature of the business of your Company during the financial year.

Transfer to General Reserves

The Company proposes to transfer Rs. 6,050.00 Lacs to the general reserves out of the amount available for appropriations.

Share Capital

There has been no increase / decrease in the Authorised Share Capital of your Company during the year under review.

To encourage wider participation of investors and improve the liquidity of the Equity Shares in the stock market, the Board of Directors at its meeting held on March 3rd, 2022 had considered and recommended the Sub-division / Stock split of 1 (One) Equity Share of the Company of face value of 5/- (Rupees Five Only) each into 5 (Five) Equity Shares of the Company of face value of 1/- (Rupee One only) each fully paid up subject to approval of the Members and other statutory and regulatory approvals, as applicable.

Subsequently, the Shareholders of the Company approved the Sub-division / Stock split of 1 (One) Equity Share of face value of 5/- (Rupees Five Only) each in to 5 (Five) Equity Shares of face value of 1/- (Rupee One only) each in the Extra-ordinary General Meeting held on 26th March, 2022. Old ISIN of the Company has been deactivated and in place new ISIN: INE420B01036 was activated by the depositories for the equity shares of the Company. Equity Shares have been successfully credited into the respective demat accounts of Shareholders holding shares as on record date (April 15th, 2022).

Alteration of Capital Clause of Memorandum of Association

Alteration of Capital Clause of Memorandum of Association Pursuant to the Sub- division / Stock split of face value of equity shares of your Company, as mentioned above, the Capital Clause of the Memorandum of Association of the Company was altered and substituted with a new Clause V to reflect the corresponding changes in the Authorised Share Capital. Members of the Company had approved such alteration in the Capital Clause of Memorandum of Association on 26th March, 2022.

Dividend

Your Directors are pleased to recommend the dividend Rs. 0.15 (15 % per share) on the Equity Shares of the Company for the financial year 2021-22. The dividend payout is subject to approval of member at the 30th Annual General Meeting.

The Board of Directors, have recommended a Dividend for the financial year ended on 31/03/2022 @ 15% (i.e. Rs. 0.15/-) per equity share (face value of Rs. 1/- per share) to the equity shareholders. The Dividend will be paid after the approval of shareholders at ensuing Annual General Meeting.

Based on the companys performance, The Board of Directors have declared Interim Dividend of Rs. 0.75 per Equity Share (Face value of Rs. 5/- per share) in its meeting held on March 03, 2022.

Dividend Distribution Policy

Pursuant to Regulation 43A of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, Top 1000 Listed Entities based on market capitalization are required to formulate a Dividend Distribution Policy. Your Company has adopted the Dividend Distribution Policy to determine the distribution of dividends in accordance with the provisions of applicable laws and has been uploaded on the website at www.arihantcapital.com.

Public Deposits

During the Financial Year 2021-22 under review the Company has neither invited nor accepted any public deposits within the meaning of section 73 & 74 of the Companies Act, 2013 read with Companies (Acceptance of Deposits) Rules 2014.

Subsidiaries

As on 31st March, 2022 Your Company have six wholly owned subsidiaries and one associate company. During the year, the Board of Directors reviewed the business operations and financial performance of the said Companies.

1. Arihant Futures and Commodities Limited 2. Arihant Financial Services Limited 3. Arihant Insurance Broking Services Limited

4. Arihant Institute of Financial Education Pvt. Ltd (Formerly Known as- Arihant Investment Advisers Pvt. Ltd.) 5. Ahinsa Lifespace Infraheight Limited.

6. Arihant Capital (IFSC) Limited. 7. Electrum Capital Private Limited.*

 

* Associate Company

During the Financial year 2021-2022 two wholly owned subsidiary companies ceased i.e.

1. Electrum Portfolio Managers Limited (Formerly known as Arihant Asset Management Ltd.)

2. Arihant Lifespace Infra Developers Limited

In accordance with the provisions of Section 136 of the Companies Act, 2013, the Audited Financial Statements, the Consolidated Financial Statements and the related information of the Company and the Audited Accounts of the Subsidiaries Companies, are available on our website i.e. www.arihantcapital.com. These documents shall also be available for inspection during the business hours, i.e. between 10.00 A.M. to 6.00 P.M. on all working days (except Saturday and Sunday) at the Registered Office of the Company. In accordance with the Accounting Standard AS-21, the consolidated financial statements are furnished herewith and form part of this Annual Report in "Annexure D".

Directors and KMP

The composition of the Board of Directors of the Company is in accordance with the provisions of Section 149 of the Act and Regulation 17 of the Listing Regulations, with an appropriate combination of Executive, Non-Executive and Independent Directors.

The Board of the Company has 9 (Nine) Directors comprising of 1 (One) Managing Director. 1 (One) Joint Managing Director, 1 (One) Whole-Time Director, 1 (One) Non-Executive Director and 5 (Five) Independent Directors. The complete list of Directors of the Company has been provided in the Report on Corporate Governance forming part of this Annual Report.

During the year under review, the Board of Directors of the Company appointed Mr. Jitendra Jain (DIN: 08377285) as an Independent Director of the Company w.e.f. 14th June, 2021 for a term of 5 years i.e. upto the conclusion of 34th Annual General Meeting and approved by the shareholders in the 29th Annual General Meeting held on 25th September, 2021.

Recently, the Board of Directors of the Company has appointed Ms. Swanubhuti Jain (DIN: 09006117) as an Additional Non-Executive Independent Director of the Company in their meeting held on 25th April, 2022 subject to approval of shareholders in their ensuing annual general meeting.

Particulars of the directors seeking appointment/re-appointment are provided in the notes forming part of the notice for the ensuing Annual General Meeting, as required under Regulation 36(3) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

The Company has received disclosures from all the directors and none of the directors has been disqualified as stipulated under Section 164 of the Companies Act, 2013 and rules made thereunder.

During the year, the Board of Directors met 7 (Seven) times. The details of the Board Meetings and the attendance of the Directors are provided in the Corporate Governance Report.

The following employees were designated as whole-time key managerial personnel as required under section 203 of the Companies Act, 2013 by the Board of Directors during the year under review:

(a) Mr. Ashok Kumar Jain, Managing Director; (b) Mr. Arpit Jain, Joint Managing Director; (c) Mrs. Anita Surendra Gandhi, Whole Time Director; (d) Mr. Tarun Goyal , Chief Financial Officer and (e) Mr. Mahesh Pancholi, Company Secretary.

Retirement by rotation

In terms of Section 152 of the Companies Act, 2013, Mr. Arpit Jain (DIN: 06544441) would retire by rotation at the ensuing Annual General Meeting (“AGM”) and being eligible for re-appointment has offered himself for re-appointment till the next Annual General Meeting. Your Directors have recommended his appointment for approval of the shareholders, in the ensuing Annual General Meeting of your Company

Independent Directors Declaration

Definition of Independence of Directors is derived from Regulation 16 of the SEBI Listing Regulations and Section 149(6) of the Companies Act, 2013. The Company has received necessary declarations under Section 149(7) of the Companies Act, 2013 and Regulation 25(8) of the SEBI Listing Regulations, from the Independent Directors stating that they meet the prescribed criteria for independence. All Independent Directors have affirmed compliance to the code of conduct for Independent Directors as prescribed in Schedule IV to the Companies Act, 2013. List of key skills, expertise and core competencies of the Board forms part of this Annual Report.

Based on the declarations received from the Independent Directors, your Board of Directors confirm the independence, integrity, expertise and experience (including the proficiency) of the Independent Directors of the Company.

As per regulatory requirements, all the Independent Directors have registered their names in the Independent Directors Databank, pursuant to provisions of the Companies Act, 2013 and rules made thereunder.

Familiarization program for independent directors

All independent directors inducted into the Board attend an orientation program. The details of the training and familiarization program are provided in the corporate governance report. Further, at the time of the appointment of an independent director, the Company issues a formal letter of appointment outlining his / her role, function, duties and responsibilities.

Remuneration and Nomination Policy

The Board of Directors has framed a policy which lays down a framework in relation to remuneration of Directors, Key Managerial Personnel and Senior Management of the Company. This policy also lays down criteria for selection and appointment of Board members. The details of this policy are explained in the Corporate Governance Report. There has been no change in the policy during the year.

Board and Committee Meetings

The details of the composition of the Board and its Committees and the number of meetings held and attendance of Directors at such meetings are provided in the Corporate Governance Report, which forms part of the Annual Report.

Particulars of Loans, Guarantees or Investments by Company

The Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the notes to Financial Statements forming part of Annual Report.

Whistle Blower Policy/ Vigil Mechanism

Pursuant to the provisions of Section 177 (9) & (10) of the Companies Act, 2013 read with Rule 7 of Companies (Meetings of Board and its Powers) Rules, 2014 and SEBI (LODR) Regulations, 2015, the Company has in place a Whistle Blower Policy, which provides for a vigil mechanism that encourages and supports its Directors and employees to report instances of illegal activities, unethical behavior, actual or suspected fraud or violation of the Companys Code of Conduct or Ethics Policy. It also provides for adequate safeguards against victimization of persons who use this mechanism and direct access to the Chairman of the Audit Committee in exceptional cases.

During the year under review, no protected disclosure concerning any reportable matter in accordance with the Vigil mechanism and Whistle Blower policy of the Company was received by the Company.

The Whistle Blower Policy has been posted on the website of the company www.arihantcapital.com.

Transfer of Amounts to Investor Education and Protection Fund

Pursuant to the Section 123 & 125 of the Companies Act, 2013, the relevant amounts which remained unpaid or unclaimed for a period of seven years from the date they become due for payment have been transferred by the Company to the Investor Education and Protection Fund.

Risk Management

Pursuant to the provisions of Regulation 21 of SEBI (LODR) Regulations, 2015, the Board of Directors of the Company has formed Risk Management Committee to frame, implement and monitor the risk management plan for the Company.

The Committee is responsible for monitoring and reviewing the risk management plan and ensuring its effectiveness. The Audit Committee has additional oversight in the area of financial risk and controls. The major risks identified by the businesses and functions are systematically addressed through mitigating actions on a continuing basis.

Transfer of Shares Pertaining To Unclaimed / Unpaid Dividend to Investor Education And Protection Fund

Pursuant to Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016, the shares of the shareholders in respect of whom the dividend is unpaid/unclaimed for seven consecutive years are required to be transferred to Investor Education and Protection Fund (“IEPF”) after giving an opportunity to shareholders to claim the said unpaid/unclaimed dividend.

Accordingly, the Company issued the reminder letters to such shareholders to claim the dividend accordingly informed them that in the event of failure to claim said divided, the unpaid/unclaimed dividend along with shares pertaining to unpaid/unclaimed dividend would be transferred to IEPF. The concerned shareholders are requested to claim the said shares by directly approaching to IEPF Authority.

Conservation Of Energy, Technology Absorption and Foreign Exchange Earnings/ Outgo

In view of the nature of activities which are being carried on by the Company, Rules 8(3)(A) and (B) of the Companies (Accounts) Rules, 2014 concerning conservation of energy and technology absorption respectively are not applicable to the Company. The company has been continuously using technology in its operations; however efforts are made to further reduce energy consumption.

A. Conservation of Energy

The steps taken or impact on conservation of energy:

I. The operations of your Company are not energy intensive. However, adequate measures have been initiated to reduce energy consumption.

II. The capital investment on energy conservation equipments : NIL

B. Technology Absorption:

I. The efforts made towards technology absorption: Not Applicable.

II. The benefits derived like product Improvement, cost reduction, product development or import substitution : Not Applicable III. In case of imported technology (imported during the last three years reckoned from the beginning of the Financial Year) : Not Applicable IV. Company has not incurred any expenditure on Research and Development during the year under review.

C. Foreign Exchange earning & outgo : Foreign exchange earned in terms of actual inflow Rs. 6.27 Lacs (previous Year Nil) and outflow Rs. 13.81 Lacs (previous Year Nil)

Secretarial Auditor

Pursuant to the provisions of Section 204 of the Act and the rules made there under, the Company had appointed M/s Ajit Jain & Co., Practicing Company Secretary, to undertake the Secretarial Audit of the Company for the year ended 31st March 2022.

The Auditors Report and the Secretarial Audit Report for the Financial Year ended March 31st, 2022, do not contain any qualification or reservation or adverse remarks or disclaimer.

The Company has complied with the Secretarial Standards issued by The Institute of Company Secretaries of India (ICSI)

The Secretarial Audit Report issued in this regard is annexed as “Annexure A”.

Corporate Social Responsibility

Your Company is committed to improve the quality of life of the communities in its focus areas through long term value creation for all its Stakeholders through its various Corporate Social Responsibility (CSR) initiatives.

Brief details on various focus areas of interventions are part of the Annual Report on CSR activities annexed to this report as “Annexure- B” in the format prescribed in the Companies (Corporate Social Responsibility Policy) Rules, 2014. The policy adopted by the Company can be viewed at website of the Company www.arihantcapital.com.

Information as Per Rule 5(2) Of the Chapter XIII of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014

Details Pursuant to Section 197(12) of the Companies Act, 2013 read with Rule 5(2) & 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 and forming part of the Board Report and are Annexed herewith as “Annexure-C”.

Risk Management & Internal Financial Control and Its Adequacy

The Company has an Internal risk management policy providing effective risk management framework for identifying, prioritizing and mitigating risks, which may impact attainment of short and long term business goals of our company. The main objective of the policy is to assess & evaluate significant risk exposures & assess managements actions to mitigate the exposures in a timely manner. The process aims to analyze internal and external environment and manage economic, financial, market, operational, compliance and sustainability risks and capitalizes opportunities of business success. The risk management framework, which is based on our holding Companys risk management process, is aligned with strategic planning, deployment and capital project evaluation process of the Company.

The Internal Financial control framework has been designed to provide reasonable assurance with respect to recording and providing reliable financial and operational information, complying with applicable laws, safeguarding assets from unauthorized use, executing transaction with proper authorization and ensuring compliances with corporate policies.

Performance Evaluation

The Board of Directors has carried out an annual evaluation of its own performance, board committees, and individual directors pursuant the provision of the act and the corporate governance requirement as prescribed by the Securities and Exchange Board of India (Listing Obligation and Disclosure Requirement) Regulation 2015 (SEBI Listing Regulation).

The performance of the board was evaluated by the board after seeking inputs from all the Directors on the basis of criteria such as board composition and structure, effectiveness of board processes, information and functioning, etc. as provided by the Guidance Note on Board Evaluation issued by the Securities and Exchange Board of India.

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

The Board and the Nomination and remuneration Committee reviewed the performance of individual director on the basis of criteria such as the contribution of the individual directors to the board and committee meeting like preparedness on the issues to be discussed, meaningful and constructive contribution and inputs in meeting, etc.

The Directors were satisfied with the evaluation results, which reflected the overall engagement and effectiveness of the Board and its Committees with the Company.

Listing of Shares

Shares of the company are listed on BSE Limited (BSE) and National Stock Exchange of India Limited (NSE w.e.f. 15/06/2021) which provides a wider participation to the investors nationwide.

Directors Responsibility Statement Pursuant to Section 134(5) of the Companies Act, 2013 the Board of Directors of your Company, to the best of their knowledge, belief and ability and explanations obtained by them, confirm that:

a) in the preparation of the annual accounts, the applicable accounting standards have been followed; and there are no material departures;

b) Your Company has selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent, so as to give a true and fair view of the state of affairs of your Company, at the end of the financial year; and of the profit and loss of your Company, for that period;

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

d) the annual financial statements have been prepared on a going concern basis;

e) the directors, have laid down internal financial controls to be followed by your Company and that such internal financial controls are adequate and were operating effectively;

f) the directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

Auditors and Auditors Report

Statutory Auditors

The Companys Auditors, M/s. Dinesh Ajmera & Associates, Chartered Accountants (Firm Registration Number 011970C) who have been appointed as the Statutory Auditors of the Company for the period up to the conclusion of the 30th Annual General Meeting, have given their consent for re-appointment as the Statutory Auditors for the second term of five years. They are holding a valid certificate issued by the Peer Review Board of the Institute of Chartered Accountants of India.

Members are requested to approve their appointment as the Auditors of the Company and to fix their remuneration as recommended by the Board, by passing an ordinary resolution under Section 139 of the Companies Act, 2013.

The Statutory Auditors have confirmed that they satisfy the criteria of independence, as required under the provisions of the Companies Act, 2013.

The Statutory Auditors of the Company have not reported any fraud to the Audit Committee or to the Board of Directors under Section 143(12) of the Companies Act, 2013 read with Rule 13 of the Companies (Audit and Auditors) Rules, 2014.

The Auditors observation, if any, read with Notes to Accounts are self-explanatory and therefore do not call for any comment.

Internal Auditor

M/s Agrawal & Singhal, Practicing Chartered Accountant, is appointed as Internal Auditor of the Company to conduct the internal audit of the Company for the Financial Year 2021-22, as required under Section 138 of the Companies Act, 2013 and the Companies (Accounts) Rules, 2014.

To maintain its objectivity and independence, the Internal Auditor reports to the Chairman of the Audit Committee of the Board. Based on the report of internal audit function, Company undertakes corrective action in their respective areas and thereby strengthens the controls. Recommendations along with corrective actions thereon are presented to the Audit Committee of the Board and accordingly implementation has been carried out by the Company.

There are no qualifications, reservations or adverse remarks made by Internal Auditors in their Report during the Financial Year 2021-22.

Management Discussion and Analysis Report

In terms of the provisions of Regulation 34 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Managements discussion and analysis is set out in this Annual Report.

Corporate Governance

Your Companys corporate governance practices are a reflection of our value system encompassing our culture, policies, and relationships with our stakeholders. Your Company is committed towards maintaining high standards of Governance, Integrity and transparency are key to our corporate governance practices to ensure that we gain and retain the trust of our stakeholders at all times. Corporate governance is about maximizing shareholder value legally, ethically and sustainably.

The Report on Corporate Governance as stipulated under Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. A Certificate from Practicing Company Secretary confirming compliance to the corporate governance requirements by the Company is attached to this report.

Annual Return

Pursuant to Section 134(3)(a) and Section 92(3) of the Companies Act, 2013 read with Rule 12(1) of the Companies (Management and Administration) Rules, 2014 as amended from time to time, the Annual Return of the Company for Financial Year ended March 31st, 2022 is available on the Company website at : www.arihantcapital.com

Cost Auditor

The provisions of Section 148 of the Companies Act, 2013 and the Companies (Cost Records and Audit) Rules, 2014 are not applicable to the Company. Hence, the maintenance of the cost records as specified by the Central Government under Section 148(1) of the Companies Act, 2013 is not required and accordingly, such accounts and records are not made and maintained.

Related Party Transactions

All related party transactions that were entered into during the financial year under review were on arms length basis and in the ordinary course of the business and that the provisions of Section 188 of the Companies Act, 2013 and the Rules made there under are not attracted. Thus, disclosures in Form AOC-2 in terms of Section 134 of the Companies Act, 2013 is not required. There were no materially significant Related Party Transactions made by the Company during the year that required shareholders approval under Regulation 23 of the Listing Regulations.

All Related Party Transactions are placed before the Audit Committee for prior approval. Prior omnibus approval of the Audit Committee is obtained for the transactions which are repetitive in nature or when the need for them cannot be foreseen in advance.

The Company has also formed Related Party Transactions Policy and has been uploaded on Companys Website at www.arihantcapital.com.

General

Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions on these items during the year under review:

· Neither the Managing Director nor Whole Time Director of the company received any remuneration or commission from any of its subsidiaries.

· No significant or material orders were passed by the regulators or courts or tribunals which impact the going concern status of companys operation in future.

· Material changes and/ or commitments that could affect the Companys financial position, which have occurred between the end of the financial year of the Company and the date of this Report.

· There have been no instances of fraud reported by the Auditors under Section 143(12) of the Companies Act, 2013 either to the Audit Committee, the Board of Directors or to the Central Government.

Disclosures under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

Your Company has zero tolerance towards sexual harassment at workplace. It has a well- defined policy in compliance with the requirements of the Sexual Harassment of women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the rules framed there under. An Internal Committee is in place to redress complaints received regarding sexual harassment. The Company has not received any complaint of sexual harassment during financial year 2021-22.

Acknowledgement

Your directors take this opportunity to thank the customers, shareholders, financial institutions, stock exchanges, SEBI, Reserve Bank of India, National Securities Depository Limited, Central Depository Services (India) Limited and other government and regulatory agencies for their consistent support and encouragement to the Company.

We also place on record our sincere appreciation to all the members of Arihant family including our employees and authorized persons for their hard work, support and commitment. Their dedication and competence has made these results achievable.

Your Board recognizes and appreciates the contributions made by all employees at all level that ensure sustained performance in a challenging environment.

For and on behalf of the Board of Directors

Ashok Kumar Jain

(Chairman)

Place: Indore

Dated: 25/04/2022