Artefact Projects Ltd Directors Report.

To,

The Members

Your Directors present the 33rd Annual Report of the Company together with the Audited Financial Statements for the year ended on 31st March, 2021.

FINANCIAL HIGHLIGHTS:

(Rs. In Lacs)

Particulars For the year ended 31st March, 2021 For the year ended 31st March, 2020
Net Income from operations 3460.14 3352.05
Profit before Depreciation & Amortization expenses, Finance Cost and tax (EBIDTA) 844.13 817.31
Less: Depreciation and Amortization Expenses 82.51 101.52
Finance Cost 226.54 270.18
Profit/ (Loss) before tax 535.08 445.61
Less: Provision for tax 142.67 86.42
Profif/(Loss) after tax 392.41 359.19
Add: Other Comprehensive Income 5.80 14.81
Total Comprehensive Income 398.21 374.00

OVERVIEW OF FINANCIAL PERFORMANCE:

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 8.03 % as compared to last year. The Manpower Cost was 32% of Net receipts vs. 35 % of last year.

Administrative, Selling & Other Expenses: The Administrative, selling and other expenses during the year of 3.69 % of Net Receipts. There has seen a decrease of 48% of Net Receipts as compared to last financial year.

Project Expenses: Project expenses have during the year of 12.57% of Net Receipts. These have increased compared to 8.64% in previous year.

Interest & Other Financial Charges: Interest and other financial charges of Rs. 226.53 lacs for the year have decreased by Rs. 43.64 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.

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.

SHARE CAPITAL:

During the year under review, the Company had converted 14,75,000 share warrants into 14,75,000 Equity shares of Rs. 10/- each and allotted to Promoters & Non-Promoters at the issue price of Rs. 32/- including premium of Rs. 22/- per share, amounting to Rs. 4,72,00,000/- on Preferential issue basis in 4 tranches as follows:

Sr. No. of Shares No. Date of Allotment Face Value Share Premium (Rs. 22/-) Total Consideration
1 2,75,000 22.02.2021 10/- 60,50,000 88,00,000
2 2,00,000 24.02.2021 10/- 44,00,000 64,00,000
3 5,00,000 01.03.2021 10/- 1,10,00,000 1,60,00,000
4 5,00,000 02.03.2021 10/- 1,10,00,000 1,60,00,000
TOTAL 4,72,00,000

After conversion and allotment the Issued, Subscribed and Paid up equity share capital of your Company as on 31st March, 2021 stood at Rs. 7,27,50,000/- (Rupees Seven Crore Twenty seven lacs fifty thousand only) divided into 72,75,000 Equity shares of face value of Rs.10/- (Rupees Ten) each.

The Company has utilized the said funds to meet its Long Term working capital requirements and growth as approved at the EGM held on 26th August, 2019.

MANAGEMENTS DISCUSSION AND ANALYSIS REPORT:

Managements Discussion and Analysis Report for the year under review, as stipulated under the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, is presented in a separate Section, forming part of the Annual Report.

CORPORATE SOCIAL RESPONSIBILITY (CSR) AND SUSTAINABILITY:

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.

DISCLOSURES UNDER THE COMPANIES ACT, 2013 AND LISTING REGULATIONS:

Annual Return

As required under section 92(3) of the Companies Act, 2013 read with Rule 12(1) of the Companies (Management and Administration) Rules, 2014, copy of the Annual Return for the period under review has been uploaded on the website of the company www.artefactprojects.com.

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 5 (Five) 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.

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.

Composition of Audit Committee

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.

During the year under review, the recommendations made by the Audit Committee were accepted by the Board.

Related Party Transactions

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 Company. Ffence, 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 provisions 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%20Partv%20Transaction.pdf 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.

Policy on Sexual Harassment of Women at Workplace:

The Company has zero tolerance towards sexual harassment at the workplace and to this end, has adopted a policy in line with the provisions of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules thereunder. All employees are covered under the said Policy. An Internal Complaints Committee has also been set up to redress complaints received on sexual harassment. During the financial year under review, no complaint was received by the Committee on sexual harassments.

The Company is committed to providing a safe and conducive work environment to all its employees and associates.

CORPORATE GOVERNANCE:

The Company has complied with the corporate governance requirements under the Companies Act, 2013 and the Listing Regulations. A separate Section on corporate governance, along with a certificate from the statutory auditors confirming compliance is annexed and forms part of the Annual Report.

RISK MANAGEMENT:

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.

INTERNAL AUDITS AND CONTROLS:

The establishment of an effective corporate governance and internal control system is essential for sustainable growth and long-term improvements in corporate value, and accordingly the Company works to strengthen such structures. The Company believes that a strong internal control framework is an important pillar of Corporate Governance.

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.

MANAGING THE RISKS OF FRAUD, CORRUPTION AND UNETHICAL BUSINESS PRACTICES:

Vigil Mechanism/Whistle-Blower Policy:

Creating a fraud and corruption-free culture has always been at the Companys core. In view of the potential risk of fraud, corruption and unethical behaviour that could adversely impact the Companys business operations, performance and reputation, it has emphasised addressing these risks. To meet this objective, a comprehensive Whistle-Blower Policy has been laid down pursuant to the provisions of Section 177 of the Companies Act, 2013 and Regulation 22 of Listing Regulations.

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%20Policy.pdf

We affirm that during the financial year 2020-21, no employee or director or any other person was denied access to the Audit Committee.

Code of Conduct:

The Company has laid down a robust Code of Business Conduct and Ethics, which is based on the principles of ethics, integrity and transparency. More details about the Code is given in the Corporate Governance Report.

BOARD OF DIRECTORS AND KEY MANAGERIAL PERSONNEL:

Appointment

Mr. Kaustubh Paunikar (DIN: 08621592) who was appointed as an Additional (Independent) Director of the Company w.e.f. 26th November, 2019 was reappointed as Director (Independent)at the AGM held on 30th September, 2020 upto 25th November, 2025.

Cessation:

None of the Director ceased from Directorship during the financial year under review. Retirement by Rotation:

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, Ms. Ankita Shah (DIN: 06772621), Director of the Company retires by rotation at the ensuing Annual General Meeting (AGM) and being eligible, has offered herself 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).

Key Managerial Personnel:

There is no change in the Chief Financial Officer and Company Secretary & Compliance Officer during the year under review.

Independent Directors:

The Independent Directors have submitted the Declaration of Independence, stating that they continue to fulfil the criteria of independence as required pursuant to Section 149 of the Companies Act, 2013 and Regulations 16 of the Listing Regulations. This Section require companies to have at least one-third of the total number of Directors as Independent Director and the Company complies with this requirement. There has been no change in the circumstances affecting their status as Independent Directors of the Company. The profile of the Independent Directors forms part of the Corporate Governance Report. In the Boards opinion, the Independent Directors are persons of high repute, integrity and possess the relevant expertise and experience in their respective fields.

Evaluation of the Boards Performance:

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.

Appointment and Remuneration Policy:

Pursuant to provisions of Section 178 of the Companies Act, 2013 and Regulation 19 of Listing Regulations and on the recommendation 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.

DIRECTORS RESPONSIBILITY:

Pursuant to Section 134 of the Companies Act, 2013, the Board of Directors to the best of their knowledge and ability confirm that:

i) in the preparation of the annual accounts, the applicable accounting standards have been followed and that no material departures have been made from the same;

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

iii) 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;

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

v) 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

vi) 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 & AUDITORS REPORT:

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.

Maintenance of Cost Record Cost Auditor:

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.

Secretarial Auditor:

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 2020-21. The Secretarial Audit Report for the Financial Year under review is appended to this report as Annexure III.

Internal Auditor:

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 for the year under review. 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.

Reporting of Fraud:

The Auditors of the Company have not reported any fraud as specified under Section 143(12) of the Companies Act, 2013.

COMPLIANCE WITH SECRETARIAL STANDARDS ON BOARD AND ANNUAL GENERAL MEETINGS:

The Company has complied with the Secretarial Standards issued by the Institute of Company Secretaries of India on Board Meetings and Annual General Meetings.

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.

TRANSFER OF UNCLAIMED DIVIDEND AND UNCLAIMED SHARES:

The details relating to Unclaimed Dividend and Unclaimed Shares forms part of the Corporate Governance Report forming part of this Report.

ENERGY, TECHNOLOGY AND FOREIGN EXCHANGE:

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 BENEFITS:

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 up gradation 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 cost.

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

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

C. FOREIGN EXCHANGE EARNINGS AND OUTGO:

(Amount in Rs.)

Particulars For the year ended 31st March, 2021 For the year ended 31st March, 2020
Foreign exchange earned Nil Nil
Expenditure in foreign currency Nil Nil

PARTICULARS OF EMPLOYEES:

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-1.

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.

SUBSIDIARY/ASSOCIATE COMPANIES/JOINT VENTURES:

As on 31st March, 2021, 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.

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

• Meinhardt Singapore Pte. Ltd.-Artefact Projects. (Dissolved w.e.f. 31st March, 2021)

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.

OTHER DISCLOSURES:

No disclosure or reporting is made with respect to the following items, as there were no transactions during the year under review:

• Details relating to deposits that are covered under Sections 73 and 76 of the Companies Act, 2013 read with Companies (Acceptance of Deposits) Rules, 2014.

• The issue of equity shares with differential rights as to dividend, voting or otherwise.

• There was no change in the nature of business.

• There were no material changes and commitments affecting financial position of the Company between the end of the financial year and the date of this report.

• The Company has not transferred any amount to reserves during the year under review.

DISCLOSURE IN RESPECT OF STATUS OF APPLICATION OR PROCEEDING PENDING UNDER THE INSOLVENCY AND BANKRUPTCY CODE, 2016 AND DIFFERENCE BETWEEN AMOUNT OF THE VALUATION DONE AT THE TIME OF ONE TIME SETTLEMENT AND VALUATION DONE WHILE TAKING LOAN FROM BANK OR FINANCIAL INSTITUTIONS ALONG WITH THE REASONS THEREOF:

No application was made or any proceedings were pending under the Insolvency and Bankruptcy Code, 2016 during the period; further there have been no one-time settlement of any loan taken by the company from Banks/Financial Institutions during the period 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
Place: Nagpur Sd/- SIDDHARTH SHAH Sd/- SANDEEPBATTA
Date: 1st September, 2021 WHOLE-TIME DIRECTOR DIRECTOR
DIN: 05304116 DIN: 02220509