Today's Top Gainer
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To, The Members,
Your Directors have pleasure in presenting the Eleventh Annual Report on the business and operations of the Company together with the Audited Financial Statements for the financial year ended on 31st March, 2019.
1. FINANCIAL RESULTS:
Highlights of the Financial Results for year are as under:
(र in Lakhs)
|Profit before Finance costs, Depreciation and Amortisation & Tax||7,916.57||5,068.99||7,024.08||6,495.41|
|Less: Finance Costs||2,013.56||1,465.22||2,126.36||1,539.29|
|Less : Depreciation and Amortisation||87.57||85.25||115.21||109.39|
|Profit before share in profit/(loss) of Joint ventures & Tax||5,815.44||3,518.52||4,782.51||4,846.73|
|Share of Profit/(Loss) from Joint ventures||-||-||(3.52)||
|Profit before tax||5,815.44||3,518.52||4,778.99||4,833.99|
|Less : Current Tax||-||536.17||-||1,679.47|
|Less : Deferred Tax||1,212.23||4.33||1,661.11||10.44|
|Profit for the year||4,603.21||2,978.02||3,117.88||3,144.08|
|Other comprehensive income (net of tax)||(2.85)||(6.45)||(2.85)||
|Total comprehensive income for the year||4,600.36||2,971.57||3,115.03||3,137.63|
|Profit/(Loss) attributable to :|
|Equity holders of the parent||-||-||3,064.15||3,011.05|
The standalone total revenue of the Company has increased to र2,50,007 lacs in the FY 2018-19 against र14,216 lacs in FY 2017-18, an increase of 76%.
The consolidated total revenue of the Company has increased to र26,435 lacs in the FY 2018-19 against र20,224 lacs in FY 2017-18, an increase of 31%.
A detailed analysis of the financial results is given in the Management Discussion and Analysis Report which forms part of this report.
Your Directors have recommended a dividend of 15% i.e. र1.50 per equity share of र10 each for the year ended on 31st March, 2019. The dividend, if approved by the members, would involve a cash outflow of र636.11 lacs (inclusive of tax on dividend).
4. TRANSFER TO RESERVES:
During the year under review, no amount is appropriated from Profit and Loss Account and transferred to any Reserve Account.
5. SHARE CAPITAL:
During the year 2018-19, the Company has allotted 30,00,000 equity shares of र10/- each to the warrant holders being promoter and promoter group entities pursuant to exercise of option of conversion of warrants by them under the Preferential issue made in January, 2018 and 3,66,000 equity shares of र10/- each to the eligible employee/s pursuant to the exercise of stock options granted to them under Employees Stock Option Scheme-2013 (AIL ESOP 2013). Consequently, the paid up equity share capital of the Company as at 31st March, 2019 stood at र35,23,35,500/- consisting of 3,52,33,550 equity shares of र10/- each.
During the year under review, the Company has neither issued shares with differential voting rights nor sweat equity shares.
6. EMPLOYEE STOCK OPTION SCHEME:
The Company has instituted the Arvind Infrastructure Limited (now Arvind SmartSpaces Limited)-Employees Stock Option Scheme-2013 (AIL ESOP-2013) as well as Arvind Infrastructure Limited-Employees Stock Option Plan-2016 (AIL ESOP-2016) to grant equity based incentives to certain eligible employees, directors of the Company and its Subsidiary Companies. During the year under review, the Company has granted 3,70,000 stock options to its Managing Director & CEO under AIL ESOP-2016.
Details of grant made /equity shares issued upon exercise of stock options by the eligible employee/s under AIL ESOP-2013 and AIL ESOP 2016 and disclosure in compliance with Section 62 of the Companies Act, 2013 read with Rule 12 of Companies (Share Capital and Debentures) Rules, 2014 and the Securities and Exchange Board of India (Share based Employee Benefits) Regulations, 2014 are set out in Annexure-A to this report.
7. DISCLOSURE UNDER SECTION 67 (3) (C) OF THE COMPANIES ACT, 2013:
No disclosure is required under section 67 (3) (c) of the Companies Act, 2013 read with Rule 16(4) of Companies (Share Capital and Debentures) Rules, 2014, in respect of voting rights not exercised directly by the employees of the Company as the provisions of the said section are not applicable.
During the year, the Company has made fresh borrowings of र936.67 lacs for its working capital requirements. Total Debt of the Company stands at र17,098.26 lacs as on 31st March, 2019.
The Company has not accepted or renewed any deposits in terms of Chapter V of the Companies Act, 2013 read with the Companies (Acceptance of Deposit) Rules, 2014 and hence furnishing the details of deposit in terms of Chapter V of the Companies Act, 2013 is not applicable to the Company. Further there are no outstanding deposits as at 31st March, 2019.
10. PARTICULARS OF LOANS, GUARANTEES, OR INVESTMENTS UNDER SECTION 186:
Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the notes to the Financial Statements.
11. CONSOLIDATED FINANCIAL STATEMENTS:
The Consolidated Financial Statements of the Company are prepared in accordance with relevant Indian Accounting Standards issued by the Institute of Chartered Accountants of India and form part of this Annual Report.
12. CORPORATE SOCIAL RESPONSIBILITY INITIATIVES:
Arvind SmartSpaces Limited undertakes "Corporate Social Responsibility" (CSR) initiatives through Strategic Help Alliance for Relief to Distressed Area ("SHARDA") Trust and Narottam Lalbhai Rural Development Fund ("NLRDF"). SHARDA and NLRDF have been active in improving the quality of life of the urban poor & rural poor respectively.
As a part of initiatives under CSR, the Company has continued to support initiatives of social renewal around the areas of its operations in Nasmed and Adhana villages in Tal. Kalol, Dist. Gandhinagar, Gujarat where your Companys signature real estate project "Arvind Uplands" is located. The brief details of Corporate Social Responsibility Policy and the amount spent during the financial year 2018-19 on the said activity is enclosed as Annexure-B.
13. HUMAN RESOURCES:
The Company believes that Human Resources will play a significant role in its future growth. With an unswerving focus on nurturing and retaining talent, the Company provides avenues for learning and development through functional, behavioural and leadership training programs, knowledge exchange conferences, communication channels for information sharing to name a few. The Company provides various opportunities to the employees to develop and hone their skills to take up higher responsibilities in the organization.
A well-defined competency framework outlines the leadership behaviours expected from employees to be successful in Arvind Group. The Company also uses various communication channels to seek employees feedback about the overall working environment and the necessary tools and resources they need to perform at their best potential.
Diverse employee engagement initiatives are launched to ensure employees of various age and background continue to be effective in their roles and build meaningful career at Arvind.
The Groups Corporate Human Resources plays a critical role in companys talent management process.
14. RISK MANAGEMENT:
The Real Estate market is inherently a cyclical market and is affected by macroeconomic conditions, changes in governmental schemes, changes in supply and demand for products, availability of consumer finance and liquidity. These factors can affect the demand for both our forthcoming and ongoing projects.
The Company has developed and implemented Risk Management Policy. The policy identifies the threat of adverse events which may affect shareholders value, ability of Company to achieve objectives or implement business strategies. Further, such risk are categorized into Strategic Risks, Operating Risks and Regulatory Risks.
Under the framework, the Company has laid down a Risk Management Policy which defines the process for identification of risks, its assessment, mitigation measures, monitoring and reporting. While the Company, through its employees and
Executive Management, continuously assess the identified Risks, the Audit Committee reviews the identified Risks and its mitigation measures annually.
15. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:
The Company has an Internal Control System, commensurate with the size, scale and complexity of its operations. Moreover, the Companys Internal Audit department has adequate experience and expertise in internal controls, operating system and procedures. In discharging their role and responsibilities, the department is supported by an external audit firm.
The system is supported by documented policies, guidelines and procedures to monitor business and operational performance which are aimed at ensuring business integrity and promoting operational efficiency.
The Internal Audit Department reviews the adequacy of internal control system in the Company, its compliance with operating systems and laid down policies and procedures. Based on the report of internal audit function, process owners undertake corrective action in their respective areas and thereby strengthen the controls. Significant audit observations and corrective actions thereon are presented to the Audit Committee of the Board of Directors from time to time.
16. VIGIL MECHANISM/WHISTLE BLOWER POLICY:
The Board of Directors of the Company vide its circular resolution dated 30th March, 2019 has revised its existing Whistle Blower Policy named as vigil mechanism in line with SEBI (Prohibition of Insider Trading) (Amendment), Regulation, 2018, to deal with instances of fraud and mismanagement, if any. The details of the revised Whistle Blower Policy are explained in the Corporate Governance Report and also posted on the website of the Company at https://arvindsmartspaces.com/wp-content/uploads/ 2019/04/Whistleblower-Policv.pdf
17. SUBSIDIARIES, ASSOCIATES AND JOINT VENTURE COMPANIES:
As on 31st March, 2019, the Company has 10 subsidiaries including 1 wholly owned subsidiary and 2 Joint venture Companies. Further, during the financial year, the Company became subsidiary of Aura Securities Private Limited.
Pursuant to the provisions of Section 129(3) of the Companies Act, 2013 read with Companies (Accounts) Rules, 2014 a statement containing salient features of financial statements of subsidiaries, associates and joint venture Companies in Form AOC-1 is attached to the Financial Statements. The separate audited financial statements in respect of each of the subsidiary shall be kept open for inspection at the Registered Office of the Company. The Company will also make available these documents upon request by any Member of the Company interested in obtaining the same.
The Company has framed a policy for determining material subsidiaries, which has been posted on companys website at https://arvindsmartspaces.com/wp-content/uploads/2018/05/AIL- Policy-on-Material-Subsidiaries.pdf
18. DIRECTORS AND KEY MANAGERIAL PERSONNEL:
As on 31st March, 2019 the Board of Directors consist of 7 Directors out of which 1 is Executive Director, 2 are NonExecutive Non-Independent Directors and 4 are Non-Executive Independent Directors including a Woman Director. The composition is in compliance with the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
As per the provisions of Section 152(6) of the Companies Act, 2013 and the Companys Articles of Association, Mr. Kulin S. Lalbhai (DIN 05206878) shall retire by rotation at the ensuing Annual General Meeting and being eligible, has offered himself for re-appointment as the Director of the Company.
Dr. Indira J. Parikh, an Independent Director has resigned from the Board of Directors of your Company effective from closing business hours of 31st March, 2019, due to age criterion prescribed under Regulation 17(1A) of the SEBI (Listing Obligations and Disclosure requirements) Regulation, 2015. The Board of Directors places on record its deep sense of appreciation for the valuable guidance and counsel provided by Dr. Indira J. Parikh during her tenure as an Independent Director of your Company.
The Independent Directors hold office for a fixed period of five years from the date of their appointment at the Annual General Meeting and are not liable to retire by rotation. In accordance with Section 149(7) of the Companies Act 2013, each Independent Director has given a written declaration to the Company confirming that he/she meets the criteria of independence as mentioned under Section 149(6) of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
None of the Directors are disqualified from being appointed as Directors as specified in section 164 of the Companies Act, 2013.
As per the provisions of Section 203 of the Companies Act, 2013, Mr. Kamal Singal-Managing Director & CEO, Mr. Mehul Shah-Chief Financial Officer and Mr. Prakash Makwana-Company Secretary are the key managerial personnel of the Company.
19. FORMAL ANNUAL EVALUATION:
Pursuant to the provisions of the Companies Act, 2013 and Regulation 17(10) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Board has carried out an evaluation of independent directors which includes the performance of directors, fulfilment of criteria of independence specified in these regulations and their independence from the Management, its own performances as well as evaluation of working of its Committees on the basis of criteria formulated by the Nomination and Remuneration Committee which are broadly in compliance with the Guidance Note on Board Evaluation issued by SEBI vide its Circular dated 5th January, 2018. The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report.
20. APPOINTMENT AND REMUNERATION POLICY:
The Board has, on the recommendation of the Nomination and Remuneration Committee, framed a policy for selection and appointment of Directors, Key Managerial Personnel and Senior Management and their remuneration. The same is posted on Companys website at https://arvindsmartspaces.com/wp- content/uploads/2019/06/Nomination-and-Remuneration- Policy.pdf
21. FAMILIARIZATION PROGRAMME FOR THE INDEPENDENT DIRECTORS:
In compliance with the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company has put in place a familiarization programme for the Independent Directors to familiarize them with their role, rights and responsibility as Directors, the working of the Company, nature of the industry in which the Company operates, business model etc. The same is also posted on the website of the Company at https://arvindsmartspaces.com/wp-content/uploads/2018/05/ Familiarisation Programee for IDs.pdf
22. NUMBER OF MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES:
A calendar of Board and Committee Meetings is prepared and circulated in advance to the Directors.
During the year under review, 4 meetings of the Board of Directors, 4 meetings of Audit Committee, 2 meetings of Nomination and Remuneration Committee, 4 meetings of Stakeholders Relationship Committee, 2 meetings of Corporate Social Responsibility Committee and 15 meetings of Management Committee of Board of Directors were convened and held, the details of which are provided in the Corporate Governance Report forming part of this Report.
23. DIRECTORS RESPONSIBILITY STATEMENT:
Pursuant to Section 134(5) of the Companies Act, 2013, the Board of Directors, to the best of their knowledge and ability, confirm that:
(a) in the preparation of the annual accounts for the year ended on 31st March, 2019, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;
(b) they have selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit and loss of the Company for that period;
(c) they have taken proper and sufficient care towards 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) they have prepared annual accounts on a going concern basis;
(e) they have laid down proper internal financial controls, which are adequate and are operating effectively;
(f) they have devised proper systems to ensure compliance with the provisions of all applicable laws and such systems are adequate and operating effectively.
24. RELATED PARTY TRANSACTIONS:
All transactions with Related Parties are placed before the Audit Committee and the Board for their approval. Prior omnibus approval of the Audit Committee and the Board is obtained for the transactions which are of a foreseen and repetitive nature. The transactions entered into pursuant to the omnibus approval so granted are audited and a statement giving details of all the related party transaction specifying the nature, value and terms and conditions of the transactions is placed before the Audit Committee and the Board of Directors for their approval on a quarterly basis.
All the related party transactions are entered into on arms length basis, in the ordinary course of business and are in compliance with the applicable provisions of the Companies Act, 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. There are no materially significant related party transactions made by the Company with Promoters, Directors or Key Managerial Personnel etc. which may have potential conflict with the interest of the Company at large or which warrants the approval of the shareholders. Accordingly, no transactions are being reported in Form AOC-2 in terms of Section 134 of the Companies Act, 2013 read with Companies (Accounts) Rules, 2014. However, the details of the transactions with Related Party are provided in the Companys financial statements in accordance with the IND AS-24.
The Policy on Related Party Transactions as approved by the Board is posted on Companys website at https://arvindsmartspaces.com/wp-content/uploads/2018/05/AIL- Related-Partv-Transaction-Policv.pdf
25. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS/COURTS/TRIBUNALS:
There are no significant material orders passed by the Regulators/Courts which would impact the going concern status of the Company and its future operations.
(a) Statutory Auditor:
M/s. S R B C & Co LLP, Chartered Accountants, (ICAI Firm Registration No. 324982E/E300003) were appointed as Statutory Auditors of the Company for a period of five consecutive years at the Annual General Meeting ("AGM") of the Members held on 14th September, 2017 on a remuneration mutually agreed upon by the Board of Directors and the Statutory Auditors. Their appointment was subject to ratification by the Members at every subsequent AGM held after the AGM held on 14th September, 2017. Pursuant to the amendments made to Section 139 of the Companies Act, 2013 by the Companies (Amendment) Act, 2017 effective from 7th May, 2018, the requirement of seeking ratification of the Members for the appointment of the Statutory Auditors has been withdrawn from the Statute.
In view of the above, ratification by the Members for continuance of their appointment at this AGM is not being sought. The Statutory Auditors M/s. S R B C & Co LLP, 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 Statutory Auditors. The remuneration payable to the Statutory Auditors shall be determined by the Board of Directors based on the recommendation of the Audit Committee.
Further, the Report given by M/s. S R B C & Co LLP, Chartered Accountants on the financial statements along with the notes to the financial statements of the Company for the financial year 2018-2019 is forming part of the Annual Report. There has been no qualification, reservation or adverse remark or disclaimer in their Report. During the year under review, the Auditors had not reported any matter under Section 143(12) of the Act, therefore no detail is required to be disclosed under Section 134(3)(ca) of the Companies Act.
(b) Cost Auditors:
On the recommendation of the Audit Committee, the Board of Directors appointed M/s Kiran J. Mehta & Co., Cost Accountants, Ahmedabad (Firm Registration No. 000025), as Cost Auditors of the Company for the year 2019-20 under Section 148 of the Companies Act, 2013 read with The Companies (Cost Records and Audit) Amendment Rules, 2014. M/s Kiran J. Mehta & Co. have confirmed that they are free from disqualification specified under Section 141(3) and proviso to Section 148(3) read with Section 141(4) of the Companies Act, 2013 and that their appointment meets the requirements of Section 141(3)(g) of the Companies Act, 2013. They have further confirmed their independent status and an arms length relationship with the Company.
The remuneration payable to the Cost Auditors is required to be ratified by the Members in a general meeting. Accordingly, a Resolution seeking Members ratification for the remuneration payable to M/s Kiran J. Mehta & Co., Cost Auditors is included at Item No. 4 of the notice convening the Annual General Meeting.
(c) 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, the Company has appointed M/s N. V. Kathiria & Associates, a firm of Company Secretaries in Practice to conduct the Secretarial Audit of the Company for the financial year 2018-19. Report of the Secretarial Audit in Form MR-3 for the financial year 2018-19 is enclosed as Annexure-C. The said Report does not have any qualification, reservation or adverse remark or disclaimer.
27. ENHANCING SHAREHOLDERS VALUE:
Your Company believes that its Members are among its most important stakeholders. Accordingly, your Companys operations are committed to the pursuit of achieving high levels of operating performance and cost competitiveness, consolidating and building for growth, enhancing the productive asset and resource base and nurturing overall corporate reputation. Your Company is also committed to creating value for its other stakeholders by ensuring that its corporate actions positively impact the socio-economic and environmental dimensions and contribute to sustainable growth and development.
28. CORPORATE GOVERNANCE REPORT AND MANAGEMENT DISCUSSION & ANALYSIS:
The Corporate Governance Report and Management Discussion & Analysis, which form part of this Report, is set out as separate Annexure, together with the Certificate from the Practicing Company Secretary regarding compliance of conditions of Corporate Governance as stipulated in Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
29. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO:
Information in accordance with the provisions of Section 134(3)(m) of the Companies Act, 2013 read with Companies (Accounts) Rules, 2014 regarding conservation of energy and technology absorption are not given as the Company has not undertaken any manufacturing activity. There were no foreign Exchange Earnings or Outgo during the period under review except on foreign travelling.
30. ANNUAL RETURN:
The details forming part of the extract of the Annual Return in form MGT-9 is annexed herewith as Annexure-D.
31. PARTICULARS OF EMPLOYEES:
The information required pursuant to Section 197(12) of the Companies Act, 2013 read with Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company, will be provided upon request. In terms of Section 136(1) of the Companies Act, 2013, the Report and Accounts are being sent to the Members and others entitled thereto, excluding the information on employees particulars which is available for inspection by the Members at the Registered Office of the Company during business hours on working days of the Company up to the date of the ensuing Annual General Meeting. If any Member is interested in obtaining a copy thereof, such Member may write to the Company Secretary in this regard.
Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Companies Act, 2013 read with Rule 5(1) of the (Appointment and Remuneration of Managerial Personnel) Rules, 2014 as amended, are given in Annexure-E to this report.
32. DISCLOSURE AS PER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013:
The Company has zero tolerance for Sexual Harassment at Workplace and has adopted a policy against sexual harassment in line with the provisions of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the rules framed thereunder.
Arvind Real Estate Internal Complaints Committee ("AREICC") is formed by the Company which is working under purview of group level Committee i.e. Arvind Internal Complaints Committee ("AICC"), the details of which are declared across the organization. All the members of AREICC are trained by the subject experts on handling the investigations and proceedings as defined in the policy.
During the financial year 2018-19 the Company has not received any complaints on sexual harassment and hence no complaints remain pending as of 31st March, 2019.
Your Directors take this opportunity to express its sincere thanks to all the employees, customers, suppliers, business associates bankers, investors, lenders, regulatory and government authorities and stock exchanges for their support.
|By Order of the Board|
|Date: 2nd May, 2019||Sanjay S. Lalbhai|