Arihant Capital Markets Ltd Directors Report.

Dear Members,

Your Directors are pleased to present the Twenty Eighth Annual Report on the business and operations of your Company and the Financial Statements for the year ended 31st March 2020.

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: (Amount in )

Particulars Standalone Consolidated
2019-2020 2018-2019 2019-2020 2018-2019
Total Income 79,25,89,922 79,76,45,301 90,87,63,915 94,29,73,241
Profit Before Depreciation 24,44,14,665 23,19,44,587 24,20,31,969 25,31,72,055
Depreciation 1,15,34,422 1,14,38,359 1,28,06,883 1,19,80,707
Profit Before Tax 23,28,80,243 22,05,06,228 22,92,25,086 24,11,91,348
Provision for Taxation 5,52,74,392 6,52,08,925 5,43,47,303 7,36,56,649
Net Profit After Taxation 17,76,05,850 15,52,97,304 17,48,77,783 16,75,34,699
Total Comprehensive Income 17,75,95,891 15,55,03,252 17,64,08,758 16,85,17,931
Appropriations:
Transfer to General Reserve 15,00,00,000 15,00,00,000 15,20,00,000 15,75,00,000
Dividend (inclusive of dividend tax) -1,73,85,093 -1,88,27,030 -2,59,44,520 -1,88,27,030
Balance Carried to Balance Sheet 13,09,13,184 12,07,02,386 14,29,72,169 15,56,80,807

Review of Operations

During the year under review, the company has posted total income of 7,925.89 lacs (previous year 7,976.45 lacs) on a Standalone basis and a net profit after tax, for the year 2019-20, of 1,776.05 lacs compared to 1,552.97 lacs in the previous year. On a consolidated basis during the year under review, the company has posted total income of 9,087.63 lacs (previous year 9,429.73 lacs). The consolidated net profit during the same period stands at 1,748.77 lacs as compared to 1,675.34 lacs in the previous year.

A detailed 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) 2015 with the BSE Ltd.

Transfer to General Reserves

The Company proposes to transfer 15 Cr to the general reserves out of the amount available for appropriations.

Share Capital

The paid up Equity Share Capital as at March 31, 2020 stood at 10.41 Crore. There has been no change in the capital structure of company during the year under review.

Dividend

Your Directors are pleased to recommend the dividend 1/- (20% per share) on the Equity Shares of the Company for the financial year 2019-20.The dividend payout is subject to approval of member at the ensuing 28th Annual General Meeting.

Public Deposits

During the Financial Year 2019-20 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 or Deposit) Rules 2014.

Subsidiaries

As on 31st March, 2020 Your Company had eight wholly owned subsidiaries. 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 Lifespace Infra Developers Limited

4. Arihant Insurance Broking Services Limited

5. Arihant Investment Advisers Pvt. Ltd (Formerly Known as- Arihant Financial Planners and Advisors Pvt. Ltd.)

6. Ahinsa Lifespace Infraheight Limited.

7. Arihant Asset Management Limited (Formerly Known as -Arihant Housing Finance Corporation Limited)

8. Arihant Capital (IFSC) Limited.

Pursuant to the provisions of Section 129(3) of the Companies Act, 2013, your Company has prepared Consolidated Financial Statements of your Company which is forming part of this Annual Report. Further, a Statement containing salient features of financial information of the Subsidiary Companies is disclosed in the prescribed format AOC-1, pursuant to Section 129(3) of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014, is annexed to this Report “Annexure-E”.The Statement also provides details of performance and financial position of each of the Companies. The Company will provide a copy of separate annual accounts in respect of each of its subsidiary to any shareholder of the Company who asks for it.

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 this Annual Report.

Directors

In accordance with the provisions of Section 152 of the Companies Act, 2013 and the Articles of Association of the Company, Mrs. Anita Surendra Gandhi who is due to retire by rotation at the forthcoming Annual General Meeting and, being eligible, offers herself for re-appointment. The Board recommends her re-appointment for the consideration of the members of the company at the ensuing Annual General Meeting.

Independent Directors

All Independent Directors have given declarations that they meet criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 and Regulation 16 (1) (b) of SEBI (Listing Obligations and Disclosures Requirements) Regulations, 2015.

As per requirement of Companies Act, 2013 and Regulation 25 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 separate meeting of the independent directors (“Annual Independent Directors Meeting”) was convened, which reviewed the performance of the Board (as a whole), the non-independent directors and the Chairman.

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.

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 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 Nil (previous Year 1386596)

Information as Per Rule 5(2) Of the Chapter Xiii, 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-D”

Risk Management & Internal Financial Control and Its Adequacy

Company has an effective risk management framework for identifying, prioritizing and mitigating risks which may impact attainment of short and long term business goals of your company. 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 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 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.

COVID-19 Impact

The COVID-19 pandemic continues to spread rapidly across the globe including India. The COVID-19 outbreak was declared a global pandemic by the World Health Organization and has caused social and economic disruption.

The Indian government had announced nationwide lockdown in India. In this nation-wide lock-down period, though all the services across the nation were suspended (except the specified essential services), some establishments including securities market intermediaries could operate and were exempted from the lock-down. Accordingly, your Company continued its operations through minimal staff working at office premises and rest all working from home.

Some of the measures taken by the Company are as follows:

Contribution of 21 Lacs to PM Cares Fund

Work from Home facility for employees was provided in advance before announcement of lockdown without compromising any commitments

No entry in OfficesR/_Branchesfor external visitors

The Company has taken variety of safety steps, such as maintenance of social distancing, sanitizing the office space and vehicle on regular basis, enforcing regular cleaning of hands and wearing of masks

Conducting Virtual Meetings

We have access to all information through our network connected with servers and there has been no hampering in accessing the database.

The Company has complied with all the applicable legal requirements, wherever possible, during the lockdown period.

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.

Directors Responsibility Statement

In pursuance of Section 134(3)(c) read with section 134(5) of the Companies Act, 2013, the Directors statement, as an averment of their responsibility, is as under:

(i) The Company has, in the preparation of the annual accounts for the year ended March 31, 2020, followed the applicable accounting standards along with proper explanations relating to material departures, if any.

(ii) They 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 as at 31st March 2020 and of the profit or loss of the Company for the year ended. (iii) They have taken proper and sufficient care to the best of their knowledge 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) They have prepared the annual accounts for the financial year ended 31st March 2020 on a going concern basis.

(v) They have laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and are operating effectively; and (vi) They had devised proper systems to ensure compliance with the provisions of all applicable laws and those systems are adequate and operating effectively.

Auditors and Auditors Report

The Members at the 25thAnnual General Meeting of the Company held on 09th September, 2017, had appointed M/s Dinesh Ajmera & Associates, Chartered Accountants (Firm Registration no. 011970C) as the Statutory Auditor of the Company to hold office for a term of five years i.e., from the conclusion of the said Annual General Meeting until the conclusion of 30th Annual General Meeting, subject to ratification of their appointment by the shareholders, every year. 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.

In terms of provisions of Section 139 of the Act, M/s Dinesh Ajmera & Associates have furnished a certificate that their appointment is within the limits prescribed.

There are no qualifications, reservations or adverse remarks made by Statutory Auditors in their Report.

Management Discussion and Analysis Report

The Management Discussion and Analysis Report covering the matters listed in Clause 34(2)(e) of the SEBI (LODR), 2015, for the year under review is given as a separate in the Annual Report.

Corporate Governance

Your Company is committed towards maintaining high standards of Governance. 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.

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- C” 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.

Extract of Annual Return

As provide under Section 92(3) of the act and Rule 12 (1) of the Companies (Management and Administration) Rules, 2014, the extract of the Annual return is given in “Annexure A” in the prescribed Form MGT-9, which is a part of this report.

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 2020. The Secretarial Audit Report issued in this regard is annexed as “Annexure B”

The secretarial audit report does contain any qualifications, reservations, adverse remarks or disclaimer.

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.

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 any companys operation in future.

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 2019-2020.

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 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.