Arvee Laboratories (India) Ltd Directors Report.

To

The Members of,

ARVEE LABORATORIES ( INDIA ) LIMITED

( formerly known as Arvee Laboratories ( India ) Private Limited )

Ahmedabad

Your Directors have pleasure in presenting the 7th Annual Report and Audited Statement of Accounts for the year ended on 31st March 2018 with Auditors Report thereon.

Financial Highlights

( Rs. In Lacs )

Particulars 2017 - 2018 2016-17
Revenue from Operations 4614.68 3442.31
Other Income 22.94 51.37
Total Revenue 4637.62 3493.69
Profit before Depreciation and Financial Expenses and Taxation 739.93 640.67
Depreciation 215.48 206.88
Financial Expenses 332.86 347.76
Profit before Tax 191.58 86.02
Tax Expense -
Current Tax 22.66 16.39
Prior Period Taxes 0.23 -
Deferred Tax 59.76 (85.54)
Profit After Tax 108.91 155.17

Total Revenue has increased by 32.7%. Profit before tax has increased by 122% The Company is taking all the possible steps to increase the profitability.

Transfer to Reserves :

The Opening Balance of Reserves and Surplus is Rs. 15.38 Lacs. The whole of the Profit of Rs. 108.91 lacs is transferred to the Reserves and Surplus. Further there was addition of Rs. 744.60 lacs towards Securities Premium Account. The Closing Balance of Reserves & Surplus is of Rs. 868.90 lacs.

Dividend :

In order to conserve resources, your Directors do not recommended dividend for the year 2017-18 on Equity Shares of the Company.

Details regarding Energy Conservation :

Pursuant to Rule 8 ( 3 ) of Companies ( Accounts ) Rules, 2014, the Board of Directors hereby statge as under declare that.

A. CONSERVATION OF ENERGY:

B. CONSERVATION OF ENERGY:

Power & Fuel Consumption: Current Year
Electricity:
i) Purchased:
(a) Units 13,37,120 units
(b) Amount 95,56,809.00
(c) Units/per liter of Diesel Oil --
(d) Cost per unit () 7.15/Unit
ii) Own Generation:
(a) Units --
(b) Amount --
(c) Units/per liter of Diesel Oil --
(d) Cost per unit () --
iii) Windmill Turbine:
(a) Units --
(b) Amount --

Steps taken or impact on conservation of energy.

In line with the Companys commitment towards conservation of energy, all units continue with their efforts aimed at improving energy efficiency through innovative measures to reduce wastage and optimize consumption. Some of the measures taken by the Company in this direction at its units located at areas under:

a. We have made optimum use of electrical motors and day light resources at plant.

b. Installation of LEDs at several locations.

The steps taken by the company for utilising alternate sources of energy:

NIL

Details regarding Technology Absorption :

Pursuant to Rule 8 ( 3 ) of Companies ( Accounts ) Rules, 2014, the Board of Directors hereby declare that there are no particulars to report for Technology Absorption. However the Company takes help of the technical consultants from time to time.

Details regarding Foreign Exchange Earnings and Outgo :

The details regarding foreign exchange earnings and outgo are provided in the note no. 32 to the financial Statement. Members are requested to refer the same.

Disclosure of Directors Responsibility Statement :

As required u/s 134 (5) of the Companies Act, 2013 the Directors hereby state and confirm:

i. In the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any.

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 as on 31/03/2018 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 had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively.

vi. The directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

Listing:

The Equity Shares of your Company are listed on Emerge Platform of National Stock Exchange of India Limited. The Company has paid necessary listing fees for the year 2018 - 2019.

Details of Material Changes and Commitments, Occurred during the Period affecting financial position of the Company:

During the year under review there were no significant and material orders passed by any Regulators or Court or Tribunals which may have impact on the going concern status. No order has been passed by any Regulators or Court or Tribunals which may have impact on the Companys operation in future. Further there is no material changes and commitments occurred subsequent to the Balance sheet till date of report.

Particulars of Loans, Gurantees and Investments under Section 186 of the Companies Act, 2013:

The Company has not provided any guarantee or provided any Security to any Person for the loans availed by others. The details regarding the Loans and Advances, Investments, if any, are provided in the Balance Sheet.

Particulars of Contracts or Arrangements with Related Parties under Section 188 of the Companies Act, 2013 :

All contracts / arrangements / transactions, if any, entered by the Company during the financial year with related parties were in the ordinary course of business and on an arms length basis. During the year, the Company has entered into transactions with related parties which could be considered material in accordance with the policy of the Company on materiality of related party transactions.

No advance is paid to any related party ( other than loans and advances ) for entering any transaction. No Bad Debts of related parties.

The details of the related party transactions are disclosed in note 29 to the financial statement which sets out related party disclosures. The requisite details are also provided in form AOC - 2 which forms part of the report.

Disclosure of Companies covered under Section 178 ( 1 ) on Directors appointment and Remuneration including matters referred under Section 178 ( 3 ) of Companies Act, 2013 and Details of Statement indicating manner in which formal annual evaluation made by Board of its Performance and of its Committees and individual Directors:

The Company has devised a Policy for Directors; appointment and remuneration including criteria for determining qualifications, performance evaluation and other matters of Independent Directors, Board, Committees and other individual Directors which include criteria for performance evaluation of both non-executive directors and executive directors.

The Companys Nomination & Remuneration policy which includes the Directors appointment & remuneration and criteria for determining qualifications, positive attributes, independence of the Director & other matters is attached as Annexure- I to this Report and the same is also available on the website of the Company at the link www.arveelabs.com

Declaration by Independent Directors:

The Independent Directors of the Company namely Vishal Nitin Mehta, Chandrakala Ashok Bhatt and Amishkumar Maheshkumar Shah have confirmed to the Board that they meet the criteria of independence as specified under Section 149 ( 6 ) of the Companies Act, 2013 and they qualify to be independent directors. They have also confirmed that they meet the requirements of independent directors as specified in the SEBI ( Listing Obligations and Disclosure Requirements ) Regulations 2015.

Auditors and Audit Report:

Bharatiya & Malkani, Chartered Accountants, have resigned as Statutory auditors of the Company with effect from 23rd May, 2018. The Board of Directors have appointed KCJM & Associates, Chartered Accountants, Ahmedabad with effect from 23rd May, 2018 as Statutory auditors of the Company.

It is proposed to appoint KCJM & Associates, Chartered Accountants, [ FRN : 121324W ) as Statutory auditors of the Company at the ensuing annual general meeting of the Company.

The Company has received Consent letter from KCJM & Associates confirming their consent and eligibility to act as Statutory auditor.

There is no qualification or adverse remarks made by the auditors in their report.

Disclosure of Risk Management Policy :

The Company has a structured risk management policy. The Risk management process is designed to safeguard the organization from various risks through adequate and timely actions. It is designed to anticipate, evaluate and mitigate risks in order to minimize its impact on the business. The potential risks are inventorised and integrated with the management process such that they receive the necessary consideration during decision making.

SECRETARIAL AUDIT

During the Financial year 2016-17, the Company being a Private Limited Company was not required to appoint a secretarial auditor. Pursuant to the requirements of Section 204(1) of the Act and Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/s. Jalan Alkesh & Associates, Company Secretary in Practice to conduct the secretarial audit for the financial year 2017-18. Secretarial Audit is attached and marked as Annexure II.

Board Meetings:

During the year under review, 13 ( Thirteen ) Board meetings were held. The dates of Board meetings are 3rd May, 2017 10th June, 2017 5th August, 2017 6th September, 2017 20th September, 2017 22nd September, 2017 4th December, 2017 4th December, 2017 5th December, 2017 22nd December, 2017 5th February, 2018 17th February, 2018 19th February, 2018

Attendance by Directors:

Date of Board Meeting No. of Directors entitled to attend meeting No. of Directors attended
3rd May, 2017 3 3
10th June, 2017 3 3
5th August, 2017 3 3
6th September, 2017 3 3
20th September, 2017 3 3
22nd September, 2017 3 3
4th December, 2017 3 3
4th December, 2017 6 3
5th December, 2017 6 6
22nd December, 2017 6 6
5th February, 2018 6 6
17th February, 2018 6 6
19th February, 2018 6 6

In respect of the above board meetings adequate notice was given to all the Directors together with the agenda. The gap between two Board meetings does not exceed 120 days.

Corporate Governance:

Since the Company securities are listed on emerge platform of NSE, by virtue of Regulation 15 of SEBI ( Listing Obligations and Disclosure Requirements ) Regulations, 2015 the compliance of corporate governance provisions as specified in regulation 17 to 27 and clauses ( b ) to ( i ) of sub - regulation ( 2 ) of Regulation 46 and para C, D and E of Schedule V are not applicable to the Company. Hence Corporate Governance requirement do not apply.

Management Discussion and Analysis Report

Management Discussion and Analysis Report as required under Regulation 34 and Schedule V of the SEBI ( Listing Obligations and Disclosure Requirements ) Regulations, 2015 is attached herewith and marked as Annexure III.

Code Of Conduct

The Board of Directors has already adopted the Code of Ethics and Business Conduct for the Directors and Senior Management personnel. This code is a comprehensive code applicable to all Directors, Executive as well as Non - executive and members of the Senior Management. The Code has been circulated to all the members of the Board and Senior Management Personnel and compliance of the same has been affirmed by them.

A declaration given by the Managing Director and CEO is given below:

The Company has obtained from all the members of the Board and Senior Management Personnel of the Company, affirmation that they have complied with the Code of Ethics and Business Conduct framed for Directors and Senior Management Personnel in respect of the financial year 2017-18."

The company has adopted a Code of Conduct for Prevention of Insider Trading with a view to regulate trading in securities by the Directors and designated employees of the Company and can be accessed at www.arveelabs.com

Dematerialization of Shares:

100% Equity Shares of the Company are in demat form.

Committees:

a. Audit Committee:

Audit Committee as per the provisions of Section 177 of the Companies Act, 2013 and Regulation 18 of SEBI (Listing Obligation and Disclosure Requirements) Regulations, 2015 have been constituted with effect from 4th December, 2017.

Role of the audit committee

1. Overseeing the Companys financial reporting process and the disclosure of its financial information to ensure that the financial statements are correct, sufficient and credible.

2. Recommending to the Board, the appointment, re-appointment and, if required, the replacement or removal of the statutory auditor and the fixation of audit fees.

3. Approval of payment to statutory auditors for any other services rendered by the statutory auditors.

4. Reviewing, with the management, the annual financial statements before submission to the board for approval, with particular reference to:

a. Matters required to be included in the Directors Responsibility Statement to be included in the Boards report in terms of clause (c) of sub-section 3 of Section 134 of the Companies Act, 2013.

b. Changes, if any, in accounting policies and practices and reasons for the same.

c. Major accounting entries involving estimates based on the exercise of judgment by management.

d. Significant adjustments made in the financial statements arising out of audit findings.

e. Compliance with listing and other legal requirements relating to financial statements.

f. Disclosure of any related party transactions.

g. Modified opinion(s) in the draft audit report.

5. Reviewing, with the management, the half yearly and annual financial statements before submission to the board for approval.

6. Reviewing, with the management, the statement of uses / application of funds raised through an issue (public issue, rights issue, preferential issue, etc.), the statement of funds utilized for purposes other than those stated in the offer document/prospectus/notice and the report submitted by the monitoring agency monitoring the utilization of proceeds of a public or rights issue, and making appropriate recommendations to the Board to take up steps in this matter.

7. Reviewing and monitoring the auditors independence and performance and effectiveness of audit process.

8. Approval of any transactions of the Company with Related Parties, including any subsequent modification thereof.

9. Scrutiny of inter-corporate loans and investments.

10. Valuation of undertakings or assets of the Company, wherever it is necessary.

11. Evaluation of internal financial controls and risk management systems.

12. Reviewing, with the management, performance of statutory and internal auditors, adequacy of the internal control systems.

13. Reviewing the adequacy of internal audit function, if any, including the structure of the internal audit department, staffing and seniority of the official heading the department, reporting structure coverage and frequency of internal audit.

14. Discussion with internal auditors on any significant findings and follow up there on.

15. Reviewing the findings of any internal investigations by the internal auditors into matters where there is suspected fraud or irregularity or a failure of internal control systems of a material nature and reporting the matter to the board.

16. Discussion with statutory auditors before the audit commences, about the nature and scope of audit as well as post-audit discussion to ascertain any area of concern.

17. To look into the reasons for substantial defaults in the payment to the depositors, debenture holders, shareholders (in case of non-payment of declared dividends) and creditors.

18. To review the functioning of the Whistle Blower mechanism, in case the same exists.

19. Approval of appointment of Chief Financial Officer or any other person heading the finance function or discharging that function after assessing the qualifications, experience & background, etc. of the candidate.

20. To overview the Vigil Mechanism of the Company and took appropriate actions in case of repeated frivolous complaints against any Director or Employee.

21. Monitoring the end use of funds raised through public offers and related matters.

The Audit Committee shall mandatorily review the following information:

1. Management Discussion and Analysis of financial condition and results of operations.

2. Statement of significant related party transactions (as defined by the Audit Committee), submitted by management.

3. Management letters / letters of internal control weaknesses issued by the statutory auditors.

4. Internal audit reports relating to internal control weaknesses.

5. The appointment, removal and terms of remuneration of the chief internal auditor shall be subject to review by the audit committee.

6. Statement of deviations:

a) Half yearly statement of deviation(s) including report of monitoring agency, if applicable, submitted to stock exchange(s) in terms of Regulation 32(1).

b) Annual statement of funds utilized for purposes other than those stated in the offer document/prospectus/notice in terms of Regulation 32(7).

Powers of the Audit Committee

• Investigating any activity within its terms of reference;

• Seeking information from any employee;

• Obtaining outside legal or other professional advice; and

• Securing attendance of outsiders with relevant expertise, if it considers necessary.

The composition of audit committee is as under

Name of the Director Designation
Vishal Nitin Mehta Indpendent Director
Amishkumar Maheshkumar Shah Indpendent Director
Shalin Sudhakarbhai Patel Managing Director

Vishal Nitin Mehta acts as a Chairman of the Committee.

The Company Secretary of the Company acts as the Secretary to the Audit committee.

Stakeholders Committee:

The Stakeholders Relationship Committee was constituted as per the provisions of Section 178(5) of the Companies Act, 2013 and Regulation 20 of SEBI (Listing Obligation and Disclosure Requirements) Regulations, 2015 vide resolution passed at the meeting of the Board of Directors held December 04, 2017. The terms of reference of the Stakeholders Relationship Committee include the following:

1. Redressal of shareholders/investors complaints.

2. Reviewing on a periodic basis the approval of transfer or transmission of shares, debentures or any other securities made by the Registrar and Share Transfer Agent;

3. Issue of duplicate certificates and new certificates on split/consolidation/renewal.

4. Non-receipt of declared dividends, balance sheets of the Company.

5. Carrying out any other function as prescribed under the SEBI (Listing Obligation and Disclosure Requirements) Regulations, 2015.

The composition of Stakeholders Relationship Committee is as under :

Name of the Director

Status in Stakeholders Relationship

Committee
Mr. Amishkumar Maheshkumar Shah Chairman
Mr. Shalin Bharat Chokshi Member
Mr. Saumil Bharatbhai Chokshi Member

The Company Secretary acts as a secretary of the Committee.

Nomination and Remuneration Committee:

The constitution of the Nomination and Remuneration Committee as per the provisions of Section 178 of the Companies Act, 2013 and Regulation 19 of SEBI (Listing Obligation and Disclosure Requirements) Regulations, 2015 was approved by a Meeting of the Board of Directors held on December 04, 2017.

The role of Nomination and Remuneration Committee is as under :

1. Formulation of the criteria for determining qualifications, positive attributes and independence of a director and recommend to the Board of Directors a policy relating to, the remuneration of the directors, Key Managerial Personnel and other employees.

2. Formulation of criteria for evaluation of performance of Independent Directors and the Board of Directors.

3. Devising a policy on diversity of Board of Directors.

4. Identifying persons who are qualified to become directors and who may be appointed in senior management in accordance with the criteria laid down, and recommend to the Board of Directors their appointment and removal.

5. Whether to extend or continue the term of appointment of the Independent Director, on the basis of the report of performance evaluation of Independent Directors.

6. Such other matters as may from time to time be required by any statutory, contractual or other regulatory requirements to be attended to by such committee.

The composition of Nomination and Remuneration Committee is as under

Name of the Director Status in Stakeholders Relationship Committee
Chandrakala Ashok Bhatt Chairman
Mr. Vishal Nitin Mehta Member
Mr. Saumil Bharatbhai Chokshi Member

The Company Secretary acts as a secretary of the Committee.

No committee meetings were held during the year.

Corporate Social Responsibility :

The Company do not fall under the Criteria of Section 135 of the Companies Act, 2013.

Investor Education and Protection Fund:

No amount was required to be transferred to Investor Education and Protection Fund.

Disclosure under Rule 8 ( 5 ) of Companies Accounts Rules, 2014 :

a) Disclosure of financial Summary / Highlights :

Particulars 2017 - 2018 2016-17
Revenue from Operations 4614.68 3442.31
Other Income 22.94 51.37
Total Revenue 4637.62 3493.69
Profit before Depreciation and Financial Expenses and Taxation 739.93 640.67
Depreciation 215.48 206.88
Financial Expenses 332.86 347.76
Profit before Tax 191.58 86.02
Tax Expense -
Current Tax 22.66 16.39
Prior Period Taxes 0.23 -
Deferred Tax 59.76 (85.54)
Profit After Tax 108.91 155.17

Total Revenue has increased by 32.7%. Profit before tax has increased by 122%

The Company is taking all the possible steps to increase the profitability.

b) Disclosure of Change in Nature of Business :

There is no change in nature of Company Business.

c) Details of Directors / Key Managerial Personnel Appointed / Resigned:

During the year under the review, following Directors / Key Managerial Personnel were appointed.

a. Chandrakala Ashok Bhatt - Indpendent Director appointed with effect from 4th December, 2017

b. Vishal Nitin Mehta - Indpendent Director appointed with effect from 4th December, 2017

c. Amishkumar Maheshkumar Shah - Indpendent Director appointed with effect from 4th December, 2017

Shalin Sudhakarbhai Patel appointed as a Managing Director of the Company with effect from 4th December, 2017. Shalin Bharat Chokshi was appointed as a Whole Time Director of the Company with effect from 4th December, 2017.

During the year under review, Mr. Maulesh Raval was appointed as Chief Financial Officer of the Company with effect from 4th December, 2017.

Ms. Neelam Chhotrani was appointed as a Company Secretary of the Company with effect from 4th December, 2017.

During the year under the review, no Director / Key Managerial Personnel have resigned.

d) Details of Holding / Subsidiary Companies / Joint Ventures / Associate Companies:

During the year under review, the Company has no holding / subsidiary companies / joint ventures / associate companies.

e) Details regarding Deposit covered under Chapter V of the Companies Act, 2013.

The Company has not invited any deposit other than the exempted deposit as prescribed under the provision of the Companies Act, 2013 and the rules framed there under, as amended from time to time. Hence there are no particulars to report about the deposit falling under Rule 8 (5) (v) and (VI) of Companies (Accounts) Rules, 2014

f) Details of Deposit which are not in compliance with requirements of Chapter V of the Act.

Not Applicable

g) Details of Significant and Material Orders passed by Regulators or Courts or Tribunals.

There are no material changes and commitments, if any, affecting the financial position of the Company between the financial years end of the Company and date of the report.

h) Internal financial Controls.

The Company has identified and documented all key internal financial controls, which impact the financial statements. The financial controls are tested for operating effectiveness through ongoing monitoring and review process of the management and independently by the Internal Auditors. In our view the Internal Financial Controls, affecting the financial statements are adequate and are operating effectively.