Artefact Projects Ltd Directors Report.

To,

The Members

Your Directors present the 32nd Annual Report of the Company together with the Audited Financial Statements for the year ended on 31st March, 2020.

FINANCIAL HIGHLIGHTS:

(In Lacs)

Particulars For the year ended 31st March, 2020 For the year ended 31st March, 2019
Net Income from operation and other income 3352.05 2388.15
Profit before Depreciation & Amortization expenses, Finance Cost and tax (EBIDTA) 817.31 528.96
Less: Depreciation and Amortization Expenses 101.52 84.33
Finance Cost 270.18 363.64
Profit/(Loss) before tax 445.61 80.99
Less: Provision for tax 86.42 (51.27)
Profit/(Loss) after tax 359.19 132.26
Add: Other Comprehensive Income 14.81 (0.67)
Total Comprehensive Income 374.00 131.59
Balance of Surplus as per last Balance Sheet 1263.14 1131.78
Balance available for appropriation 1637.14 1263.37
Balance of profit carried to Balance Sheet 1637.14 1263.14

2019-20 IN RETROSPECT:

During the year, there is increase in Net Income as compared to the previous year mainly on account of revenues from new projects awarded and from fees of DPR projects.

Manpower Cost: The manpower cost of the Company has decreased by 6.24 % as compared to last year. The Manpower Cost was 57.13 % of Net receipts vs 63.37 % of last year.

Administrative, Selling & Other Expenses: The Administrative, selling and other expenses during the year of 4.87 % of Net Receipts has seen a decrease of 2.86% of Net Receipts as compared to last financial year.

Project Expenses: Project expenses have during the year of 11.08 % of Net Receipts have decreased compared to 14.04 % in previous year.

Interest & Other Financial Charges: Interest and other financial charges of Rs. 270.18 lacs for the year have decreased by Rs. 93.46 lacs mainly on account of repayment of Term Loan and reduction of interest thereon for part of the year.

Depreciation: The Depreciation is calculated as per statute.

COVID 19 IMPACT ON BUSINESS OPERATIONS:

The outbreak of COVID-19 pandemic has significantly impacted businesses around the world. The Government of India ordered a nationwide lockdown, initially for 21 days which was extended till August, 2020 to prevent community spread of COVID-19 in India. This has resulted in significant reduction in economic activities.

The operations of the Company were not materially impacted.

The Company is serving government clients like NHAI, Ministry of Road Transport, State Government Road Development Corporations and local bodies. These agencies have awarded long term contracts to the company which are time based and not directly linked with project progress. Hence, there is no break in services in continuing contracts. The company could provide services for its projects even during the lock down period.

The Company also took this opportunity to revamp its operations as per New Norms of working. It switched to virtual meetings, reviews and Work from home during lockdown. The site visits were carried out with permission of the authorities being essential services.

The Company has also undertaken and adopted the preventive measures and guidelines being issued by the Central, State and Local authorities for the health and safety of all the employees, as per the prescribed standard operating Procedure prescribed by Ministry of Home Affairs and Ministry of Heath besides State Government and Local body guidelines.

CAPITAL EXPENDITURE:

During the year the Company has incurred a nominal capital expenditure of Rs.14.75 Lacs, mainly on addition of Equipment, Furniture, Computers and Software.

DIVIDEND:

In order to consolidate the financial position of the company to reduce debt and liabilities, for future growth of the Company, your Directors do not recommend dividend for the year under review.

CHANGE IN THE NATURE OF BUSINESS:

There has been no change in the nature of business during the year under review.

TRANSFER TO RESERVE:

During the year under review, no amount was transferred to Reserve.

PUBLIC DEPOSITS:

During the year under review, your Company has not accepted any deposits within the meaning of Sections 73 and 76 of the Companies Act, 2013 read with Companies (Acceptance of Deposits) Rules, 2014.

SHARE CAPITAL:

During the year under review, the Company had issued and allotted in aggregate 2,75,000 Equity Shares of Rs. 10/- each to Promoters at the issue price of Rs. 32/- including premium of Rs. 22/- per share, amounting to Rs. 88,00,000/- on Private placement basis .

The Company had also issued 14,75,000/- share warrants to Promoters (2,75,000 nos. of share warrants) and Non- Promoters (12,00,000 Nos. of Share warrants) at a issue price of Rs. 32/- including premium of Rs. 22/- per share, on receipt of initial share warrant subscription amount of Rs.118 Lacs equivalent to 25% of the warrant issue price as prescribed by the SEBI (ICDR) Regulations for allotment of the share warrants on preferential basis. The conversion option can be exercised by Warrantholder(s) at any time during the period of 18 (Eighteen) months from the date of all otment of equity warrants, in one or more tranches, as the case may be and on such other terms and conditions applicable.

After private allotment the paid up equity share capital of your Company as on 31st March, 2020 stood at Rs.5,80,00,000 /- (Rupees Five Crore and Eighty lakhs only) divided into 58,00,000 Equity shares of face value of Rs.10/- (Rupee Ten) each.

The increase in paid up share capital and premium proposed of total Rs 5.60 Crores will further augment its long term working capital resources .

EXTRACT OF ANNUAL RETURN:

An extract of Annual Return pursuant to the provisions of Section 92 of the Companies Act, 2013 in Form MGT-9 is appended to this Report as "Annexure -1".

Further, pursuant to the provisions of Section 134(3)(a), the same is also being made available on the website of the Company viz. www.artefactproiects.com.

DIRECTORS AND KEY MANAGERIAL PERSONNEL (KMP):

In accordance with the provisions of Section 152 of the Companies Act, 2013 read with Companies (Management & Administration) Rules, 2014 and Articles of Association of the Company, Mr. Siddharth Shah (DIN: 05304116), Director of the Company retires by rotation at the ensuing Annual General Meeting (‘AGM) and being eligible, has offered himself for re-appointment. The Notice convening the forthcoming AGM includes the proposal for reappointment of aforesaid Director alongwith brief resume and other details as required under the Listing Regulations and Secretarial Standard on General Meetings (SS-2) issued by the Institute of Company Secretaries of India (ICSI).

Mrs. Meena Gupta (DIN: 02065061) who was appointed as an Additional (Independent) Director of the Company w.e.f. 24th July, 2019 resigned from the post of Directorship on 8th November, 2019 due to her personal unavoidable reasons. The Board expresses its appreciation for her valuable guidance during her association with the Company.

Mr. Kaustubh Paunikar (DIN: 08621592) was appointed as an Additional (Independent) Director of the Company for a term of 1 (One) year w.e.f. 26th November, 2019.

The Company has received declaration from all the Independent Directors of the Company confirming that they meet the criteria of independence as prescribed under Section 149(6) of the Companies Act, 2013 and Regulation 16(1) (b) of Listing Regulations.

MEETINGS OF THE BOARD:

The Board meets at regular intervals to discuss and decide on Companys business policy and strategy apart from other business of the Board. A tentative annual calendar of the Board and Committee Meetings is informed to the Directors in advance to facilitate them to plan their schedule and to ensure meaningful participation in the meetings.

The notice of Board Meeting is given well in advance to all the Directors of the Company. Usually, meetings of the Board are held at the registered office of the Company. The agenda of the Board / Committee meetings is circulated seven days prior to the date of the meeting. In case of any business exigencies, meetings are called and convened at Shorter Notice or the resolutions are passed by Circulation and later placed in the ensuing Board Meeting.

During the year under review, the Board met 8 (Eight) times as per details given in the Report on Corporate Governance. The intervening gap between the two consecutive meetings was within the period prescribed under the Companies Act, 2013.

ANNUAL EVALUATION OF PERFORMANCE BY THE BOARD, ITS COMMITTEES AND OF INDIVIDUAL DIRECTORS:

The Nomination and Remuneration Committee of the Board of the Company has devised a policy for performance evaluation of the Directors, Board and its Committees, which includes criteria for performance evaluation.

Pursuant to the provisions of the Act and Regulation 17(10) of the Listing Regulations, the Board has carried out an annual performance evaluation of its own performance, the directors individually as well as the evaluation of the working of the committees of the Board. The Board performance was evaluated based on inputs received from all the Directors after considering the criteria such as Board Composition and structure, effectiveness of Board / Committee processes and information provided to the Board, etc.

COMMITTEES OF THE BOARD:

There are currently following Committees of the Board:

1. Audit Committee

2. Stakeholders Relationship Committee

3. Nomination and Remuneration Committee

In addition to the aforesaid Committees, the Company also has the following Committees:

1. Borrowing Committee

2. Management Committee

3. Ad-hoc Committee

Details of all the Committees with respect to their terms of reference, meetings and attendance at the meetings held during the year, are provided in the Report on Corporate Governance, forming part of this Annual Report.

AUDIT COMMITTEE AND ITS COMPOSITION:

The Audit Committee is duly constituted as per the provisions of Section 177 of the Companies Act, 2013 and Regulation 18 of Listing Regulations. The composition of the Audit Committee is provided in Report on Corporate Governance.

VIGIL MECHANISM / WHISTLE BLOWER POLICY:

Pursuant to the provisions of Section 177 of the Companies Act, 2013 and Regulation 22 of Listing Regulations, the Company has devised a Vigil Mechanism/Whistle Blower Policy to deal with instance of fraud, mismanagement and unethical behavior, if any. The mechanism provides for adequate safeguards against victimization of employees who avail of the mechanism and also provides for direct access to the Chairman of the Audit Committee, in the exceptional cases. The details of Vigil Mechanism/ Whistle Blower Policy is explained in the Report on Corporate Governance and also posted on the website of the Company at http://www.artefactproiects.com/Revised%20Whistle%20Blower%20Policv.pdf

We a ffirm that during the financial year 2019-20, no employee or director or any other person was denied access to the Audit Committee.

APPOINTMENT AND REMUNERATION POLICY :

Pursuant to provisions of Section 178 of the Companies Act, 2013 and Regulation 19 of Listing Regulations and on the recommendati on of the Nomination & Remuneration Committee, the Board has adopted a policy for selection, appointment and remuneration of Directors and Key Managerial Personnel. The salient features of Remuneration Policy are stated in the Report on Corporate Governance.

RISKS AND AREAS OF CONCERN:

The Company has laid down a well-defined Risk Management Policy covering the risk mapping, trend analysis, risk exposure, potential impact and risk mitigation process. A detailed exercise is being carried out to identify, evaluate, manage and monitoring of both business and non-business risk. The Board periodically reviews the risks and suggests steps to be taken to control and mitigate the same through a properly defined framework.

DIRECTORS RESPONSIBILITY STATEMENT:

Pursuant to the provisions of Section 134(3)(c) of the Companies Act, 2013, your directors state and confirm that:

a. in the prepar ation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

b. 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 end of the financial year and of the profit of the company for that period;

c. the directors have taken proper and sufficient care for the 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;

d. the directors have prepared the annual accounts on a going concern basis;

e. the directors have laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively; and

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.

DETAILS IN RESPECT OF FRAUD REPORTED BY AUDITORS:

Pursuant to Section 143(12) of the Companies Act, 2013 there were no frauds reported by the Auditors of the Company during the year under review, to the Audit Committee or the Board of Directors, as such there is nothing to report under Section 134(3)(ca) of the Companies Act, 2013.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS:

The Company has complied with provisions of Section 186 of the Act, to the extent applicable with respect to Loans, Guarantees or Investments during the year. The details of loans, guarantee or investment under Section 186 of the Companies Act, 2013 are given under Notes to Financial Statements.

PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES:

All the Related Party Transactions that were entered into during the Financial Year were in Ordinary course of business and on an arms Length Basis and are reported in the Notes to Financial Statements.

No material related party transactions were entered during the year under review by your Comp any. Hence, accordingly disclosure as required under Section 134(3) of the Companies Act, 2013 in Form AOC-2 is not applicable to the company.

In accordance with the prov isions of Regulation 23 of Listing Regulations, the Company has formulated the Policy on Related Party Transactions and the same is uploaded on the website of the Company i.e. http://www.artefactproiects.com/Policv%20on%20Related%20Party%20Transaction.pdf

PARTICULARS OF EMPLOYEES AND REMUNERATION:

Pursuant to provisions of Section 197 of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, details of remuneration paid to all the Directors/Employees and the details of the ratio of remuneration of each Director to the median employees remuneration is provided in Annexure II -A.

Further, the information as required as per the provisions of Section 197 of the Companies Act, 2013 read with Rule 5(2) and Rule 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is appended to this report as Annexure II-B.

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

Information in terms of requirement of clause (m) of Sub-Section (3) of Section 134 of the Companies Act, 2013 regarding Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo, read along with Rule 8 of the Companies (Accounts) Rules, 2014 is as follows:

A. CONSERVATION OF ENERGY:

i. Installation of Sensors and Energy saving devices, to avoid wastage of energy.

ii. Implementing practices among Employees to conserve energy and follow its protocols.

iii. Procurement of equipment with focus on energy efficient systems for greener energy.

iv. Use of Solar Energy for reducing thermal energy usage and conserving energy.

v. Extensive use of LED lights and bulbs for energy saving.

B. TECHONOLOGY ABSORPTION AND BEN EFITS:

With the advent of new infrastructure, the IT Systems and softwares used by the Company are installed as per international standards. The major technological base includes the following:-

i. Undertook upgradation to contemporary IT Hardware and Infrastructure to save time and costs.

ii. Use of Internet leased lines for communication systems for quicker and transparent information systems.

iii. The benefits derived from Technology absorption are higher efficiency, better reliability and availability, reduced maintenance, environment friendly atmosphere and reduction in printing c ost.

iv. The Companys operations do not require significant import of technology.

v. The company commenced implementation o f complete process automation and digitization to adopt to the new working norms.

C. FOREIGN EXCHANGE EARNINGS AND OUTGO :

Particulars For the year ended 31st For the year ended 31st
March, 2020 March, 2019
Foreign exchange earned Nil Nil
Expenditure in foreign Nil Nil
currency

DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANYS OPERATIONS IN FUTURE:

There were no significant or material orders passed by any regulator or court or tribunal, which can impact the going concern status of the Company or will have bearing on Companys operations in future.

STATUTORY AUDITORS:

M/s. Banthia Damani & Associates, Chartered Accountants, Nagpur (FRN: 126132W) were appointed as the Statutory Auditors of the Company for a period of 5 years in the 29th Annual General Meeting (‘AGM) of the Company held on 30th June, 2017 to hold office from the conclusion of 29th AGM till the conclusion of 34th AGM, on terms and conditions as may be decided by the Board.

The Statutory Auditors have given a confirmation to the effect that they are eligible to continue with their appointment and that they have not been disqualified in any manner from continuing as the Statutory Auditors of the Company.

SECRETARIAL AUDITORS:

Pursuant to the provisions of Section 204 of the Companies Act, 2013 read with Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, Mr. Jigar Gorsia, Practising Company Secretary is appointed as the Secretarial Auditor of the Company for the Financial Year 2019-20. The Secretarial Audit Report for the Financial Year under review is appended to this report as Annexure III.

INTERNAL AUDITORS:

Pursuant to provisions of Section 138 of the Companies Act, 2013 read with Companies (Accounts) Rules, 2014, on recommendation of Audit Committee, M/s. P.T. Chhabria & Co., Chartered Accountants, Nagpur (FRN:-101790W) are appointed as the Internal Auditors of the Company. The Internal Auditor submits his reports on quarterly basis to the Audit Committee. Based on the report of internal audit, management undertakes corrective action in the respective areas and strengthens the levels of Internal Financial and other operational controls.

INTERNAL FINANCIAL CONTROL:

The Company has in place adequate systems for ensuring the orderly and efficient conduct of its business.

The Audit Committee evaluates the efficacy and adequacy of financial control system in the Company, its compliance with operating systems, accounting procedures and policies at all locations of the Company and strives to maintain the Standard Internal Financial Controls.

REPORT ON CORPORATE GOVERNANCE:

Pursuant to Regulation 34(3) read with para C of Schedule V of Listing Regulations, the following have been made a part of the Annual Report and are attached to this report:

• Management Discussion and Analysis

• Report on Corporate Governance

• Declaration affirming Compliance with Code of Conduct of Board of Directors and Senior Management

• Auditors Certificate regarding compliance with conditions of Corporate Governance SUBSIDIARY /ASSOCIATE COMPANIES/ JOINT VENTURES:

As on 31st March, 2020, the Company does not have any subsidiary or associate companies hence preparation of Consolidated Financial Statements is not applicable to the Company. However, the Company has 3 Joint Ventures namely:-

• Zaidun Leeng Sdn. Bhd.-Artefact Projects.

• Meinhardt Singapore Pte. Ltd.-Artefact Projects.

• Sheladia Associates Inc.-Artefact Projects- Zaidun Leeng Sdn. Bhd.

The salient features of Joint Ventures in Form AOC-1 as per the provisions of Section 129 of the Companies Act, 2013 is provided in Annexure IV, which is appearing after the Financial Statements

In accordance with Section 136 of the Companies Act, 2013, the Audited Financial Statements and related information of the Company are available on our website at www.artefactproiects.com.

PERFORMANCE OF SUBSIDIARY, ASSOCIATE OR JOINT VENTURE COMPANIES:

The Joint Ventures have incurred Losses during the Current Financial year under review due lack of billing during the year.

MAINTAINENCE OF COST RECORDS:

The provisions of Rule 8(5)(ix) of Companies (Accounts) Rules, 2014 of Section 134(3) of Companies Act, 2013 regarding maintenance of cost records are not applicable to the Company.

CORPORATE SOCIAL RESPONSIBILITY:

The provisions of Section 135 of the Companies Act, 2013 on Corporate Social Responsibility are not applicable to the Company. Therefore, the Company has not developed or implemented any policy on Corporate Social Responsibility initiatives.

INFORMATION UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013:

The Company adopted a Policy on prevention, prohibition and redressal of sexual harassment at workplace in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. The Company has constituted an Internal Complaint Committee under Section 4 of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. There was no complaint received by the Committee on sexual harassment during the year under review.

QUALITY ASSURANCE:

The Company is determined in providing consistent quality services to our clients. We are constantly upgrading the quality systems to improve our services.

ENVIRONMENT, SAFETY & HEALTH (ESH):

The Company is conscious of its strong corporate reputation and the positive role it can play by focusing on Environment, Safety & Health (ESH) issues. Towards this, the Company has set very exacting standards in ESH management, including implementation of SOP for prevention of COVID19. The Company recognizes the importance of ESH issues in its operations and has established indicators to track performance in these areas.

The Company values the safety of its employees and constantly enhances the same for ensuring a safe work place.

MATERIAL CHANGES AND COMMITMENT, IF ANY AFFECTING THE FINANCIAL POSITION OF THE COMPANY OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR TO WHICH THIS FINANCIAL STATEMENT RELATES AND THE DATE OF THE REPORT:

No material changes and commitments affecting the financial position of the company occurred between the end of the financial year 2019-20 to which this financial statement relates and the date of this report.

COMP LIANCE WITH SECRETARIAL STANDARDS:

The Company has devised proper systems to ensure compliance with the applicable Secretarial Standards issued by the Institute of Company Secretaries of India and the Company complies with all the applicable provisions of the same during the year under review.

ACKNOWLEDGEMENT:

Your Directors would like to place on record their gratitude for all the guidance and co-operation received from the shareholders and other government and regulatory agencies. Your Directors would

also like to take this opportunity to express their appreciation for the hard work and dedicated efforts put in by the employees and look forward to their continued contribution and support.

For and on behalf of the Board of Directors of Artefact Projects Limited

Sd/- Sd/-
Place: Nagpur Siddharth Shah Ankita Shah
Date: 1st September, 2020 Whole-time Director Director
DIN:05304116 DIN:06772621