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Arex Industries Ltd.

BSE: 526851 Sector: Industrials
NSE: N.A. ISIN Code: INE480H01011
BSE LIVE 15:40 | 12 Dec 99.25 -1.95
(-1.93%)
OPEN

96.25

HIGH

101.00

LOW

96.15

NSE 05:30 | 01 Jan Stock Is Not Traded.
OPEN 96.25
PREVIOUS CLOSE 101.20
VOLUME 6026
52-Week high 120.00
52-Week low 64.10
P/E 12.45
Mkt Cap.(Rs cr) 39
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 96.25
CLOSE 101.20
VOLUME 6026
52-Week high 120.00
52-Week low 64.10
P/E 12.45
Mkt Cap.(Rs cr) 39
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Arex Industries Ltd. (AREXINDS) - Director Report

Company director report

DIRECTORS' REPORT

The Members

Your Directors are pleased to present this Twenty Seventh Annual Report together withthe Audited Statement of Accounts of the Company for the year ended on 31stMarch 2016.

FINANCIAL RESULTS

(Amount in Rupees)

31.03.2016 31.03.2015
Revenue from Operations (Net of Excise Duty) 321553204 330365500
Profit before Depreciation & Amortisation Expenses and Finance Cost 77686528 78932669
Less: Finance Cost 7183316 7653810
Depreciation & Amortisation Expenses 25389633 31343450
Profit before Tax 45113579 39935409
Tax Expenses- Current Taxation 15900000 16200000
Deferred Tax 530000 (3270000)
Add/(Less): MAT Credit Entitlement (Excess)/Short Provision of tax of earlier years 29192 133850
Profit for the year 28654387 26871559
Surplus brought forward from previous year 12452843 101931974
Profit available for Appropriation 153182730 128803533
Proposed Dividend 11876100 3562830
Tax on Proposed Dividend 2417695 712360
Balance Carried to Balance Sheet 138888935 124528343

OPERATION

The year under review was a challenging business environment. The performance of theCompany continued to be satisfactory despite adverse market conditions. The Companycontinued to explore overseas market opportunities and received good response. The exportsamounted to Rs.19316394/ - i.e. increase of 48% over the previous year's exports. Therewas heavy fluctuation in foreign exchange rates resulting into a loss of Rs.93855/-. Theraw material prices fuel charges and other overheads were also increased during the year.However the Company has earned profit of Rs.45113579/- i.e. increase of about 13% overthe previous year's profit before taxes.

The Company's expansion project with modern upgraded high tech machineries and othersupporting systems is under implementation and likely to be completed during the currentyear. The Company also proposes to explore opportunities under 'Make in India' projectsand Amended Technology Upgradation Schemes (ATUFS). The Company is also planning forfurther strategic expansion with a total outlay of Rs.30 Crore.

DIVIDEND

Your Directors are pleased to recommend dividend at 30% (i.e. Re.3/- per share) out ofthe current profits / surplus in the profit and loss Account subject to approval of themembers in their ensuing Annual General Meeting. The final dividend if declared willabsorb an outflow of Rs.11876100/- towards dividend amount and Rs.241769E/- towardsdividend distribution tax. The requisite provision for dividend has been made in theaccounts for the year ended 31st March 2016. Further your Directors do notpropose any amount to carry to the general reserves.

FINANCE

The Company continued to avail financial assistance to finance its present and proposedexpansions.

PUBLIC DEPOSITS

The Company has not accepted any deposit within the meaning of the provisions ofSection 2(31) and 73 to 76 of the Companies Act 2013 read with the Companies (Acceptanceof Deposits) Rules 2014. There is no deposit outstanding as on the commencement of thesaid Act.

INSURANCE

All the assets of the Company including buildings plant and machineries and stocks areadequately insured.

INDEPENDENT DIRECTORS

As per the provisions of Section 149 of the Companies Act 2013 the IndependentDirectors have confirmed and declared that they are not disqualified to act as independentdirectors and the Board is also of the opinion that the Independent Directors fulfill allthe conditions specified in the Companies Act 2013 making them eligible to act asIndependent Directors. One separate meeting of the Independent Directors was held on18.5.2015.

MATERIAL CHANGES AND COMMITMENTS IF ANY AFFECTING THE FINANCIAL POSITION OF THECOMPANY

No material changes and commitments affecting the financial position of the Companyoccurred between the end of the financial year to which the financial statements relateand the date of this Report.

BOARD EVALUATION

Pursuant to the provisions of Section 134 of the Companies Act 2013 a structuredquestionnaire was prepared after taking into account various aspects like- companyperformance contribution of individual directors composition of Board and committeesperformance of duties culture obligations risk management etc. for evaluation process.The Board noted that all directors have understood the opportunities and risks to theCompany's strategy with good balance between the core values of the Company and theinterest of the stakeholders. The Board also evaluated performance of the variouscommittees and concluded with satisfaction. The Board expressed their satisfaction for theabove evaluation process.

CHANGES IN NATURE OF BUSINESS

There is no change in the nature of business of the Company.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to the requirements of Section 134(3)(c) of the Companies Act 2013 theDirectors hereby state that:

i) in the preparation of annual accounts for the financial year ended March 31 2016the applicable accounting standards have been followed along with proper explanationrelating to material departures;

ii) the directors have selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company at the 315t March 2016 and ofthe profits of the Company for the year ended on that date;

iii) the directors have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities;

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

v) the directors had laid down internal controls to be followed and such internalcontrols are adequate and were operating effectively.

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

ORDERS BY REGULATORS COURTS OR TRIBUNALS

No significant and/or material orders were passed by any Regulator Court or Tribunalimpacting the going concern status and the Company's operations in future.

COMPANY'S POLICIES Code of Conduct

All Directors Key Managerial Personnel and Senior Management of the Company haveconfirmed compliance with the code of conduct applicable to the Directors and employees ofthe Company. The Directors have confirmed compliance with the provisions of Section 164 ofthe Companies Act 2013.

Risk Management Policy

The Company has formulated risk management policy so as to identify evaluate monitorand minimize identifiable business risks in the organization.

Vigil Mechanism/Whistle Blower Policy

The Company adopted Whistle Blower Policy to deal with matters pertaining to fraudmismanagement etc.

Other Policies

Company's Policies on Remuneration Materiality of Related Party Transactions Boarddiversity Preservation of documents Corporate Social Responsibility (CSR) are finalizedin accordance with applicable laws.

Donation

The Company has voluntarily donated Rs.450000/- to Shri Hombuja Jain Math KarnakataRs.200000/- to Hare Krishna Movement Ahmedabad (Charitable Trust) and Rs.21500/- formiscellaneous charitable activities.

INTERNAL FINANCIAL CONTROLS

The Company has a proper and adequate internal control system to ensure that all assetsare safeguarded and protected against loss from unauthorized use or disposition and thosetransactions are authorized recorded and reported correctly.

CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION ADAPTATION AND INNOVATION

The Company has been taking steps for optimum utilisation of power and fuel. Theinformation as required under Section 134(3)(m) of the Companies Act

2013 read with the Companies (Accounts) Rules 2014 is given by way of Annexure 'A'forming part of this Report.

MANAGEMENT DISCUSSION AND ANALYSIS (MD&A) & CORPORATE GOVERNANCE

Good Governance underpins the success and integrity of the organization institutionsand markets. The Company's philosophy is based on trusteeship transparency andaccountability. Our business fosters a culture of ethical behaviour and disclosures whichbuild a trust of our stakeholders. The Code of Conduct ethics and Code of Conduct forPrevention of Insider Trading are an extension of our values and reflect our commitment toethical business practices integrity and compliances of both voluntary and statutoryrequirements. The Company has complied with conditions of Corporate Governance in linewith the Clause 49 of the Listing Agreement entered into with BSE Ltd Mumbai and alsoapplicable regulations of the new Listing Regulations

entered into with the BSE Ltd Mumbai under SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 (LODR) effective from December 2015. CorporateGovernance provisions as specified in Regulations 17 to 27 Clauses (b) to (i) ofsub-regulation (2) of Regulation 46 and para C D and E of Schedule V of the aforesaidLODR are not applicable at present. However a detailed note on Management Discussion andAnalysis is given as an Annexure 'C to this Report.

EXTRACT OF ANNUAL RETURN

As required under the provisions of Section 92 (3) of the Companies Act 2013 anextract of Annual Return in Form MGT-9 is given by way of an Annexure 'D' forming part ofthis Report.

PARTICULARS OF EMPLOYEES

There was no employee covered under the purview of Section 134(3)(q) of the CompaniesAct 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel)Rules 2014.

Information required under the provisions of Section 197(12) of the Companies Act 2013read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014is given by way of an Annexure 'E' to this Report.

BOARD OF DIRECTORS

a. Composition

The Board consists of nine Directors of whom four are Executive Directors two arenon-executive non-independent Directors and three are independent Directors including oneWoman Director having no material pecuniary relationship or transactions with the Company.None of the Directors on the Board is a member of more than ten committees and Chairman ofmore than five committees across all Companies in which they are directors.

Shri Chirag D Bilgi (DIN:02094970) and Shri Laxman C Tilani (DIN:00532516) are due toretire by rotation as Directors at the ensuing Annual General Meeting and are eligible forre-appointments. They have also offered themselves for re-appointments.

b. Independent Directors

The Non Executive Independent Directors fulfills the conditions of the independencespecified in Section 149(6) of the Companies Act 2013 and the Rules made thereunder.Separate meeting of the Independent Directors was held on 18.5.2015 whereat all the IDswere present.

c. Board Procedure

Notice for the Meeting of the Board of Directors are served to all the Directors alongwith agendas and brief notes for their consideration and deliberations at the meeting. TheBoard usually meets once every quarter to reviewing and taking on record of the quarterlyperformance of the financial results of the Company along with limited review reportsubmitted by the Auditors of the Company. The Board of Directors met five times on19.5.2015 24.6.2015 10.8.2015 7.11.2015 and 12.2.2016. The gap between any two meetingsdid not exceed 120 days.

d. Code of Conduct

The Board Members and Senior Management team of the Company follow the Code of Conductformulated and implemented by the Company. The code of conduct emphasizes the Company'scommitment to compliances with the highest standards of legal and ethical behaviour.

e. Conflict of interest

Each Director informs the Company on an annual basis about the Board and Committeeposition he occupies in other Companies and also notifies changes therein during the year.Members of the Board while discharging their duties avoid conflict of interest in thedecision making process and also restricts themselves from discussion or voting intransactions in which they have concern or interest.

f. Insider Trading Code

The Company has adopted a Code of Conduct for Prevention of Insider Trading inaccordance with the requirements of Securities and Exchange Board of India (Prohibition ofInsider Trading) Regulations 2015.

COMMITTEES OF THE BOARD

a. Audit Committee

The Audit Committee reviews and recommends or suggests appropriate actions financialresults related party transactions appointment of auditors internal controls etc fromtime to time. The Audit Committee comprised of (1) Shri Balkrishna I Makwana (2) ShriDinesh H Pande (3) Shri Laxman C Tilani and (4) Smt Harsha H Parikh. The Committee wasreconstituted with effect from 12th February 2016 which comprises (1) ShriBalkrishna I Makwana (2) Shri Dinesh H Pande and (3) Shri Laxman C Tilani. Shri BalkrishnaI Makwana is the Chairman of the Committee. The Committee met 4 times on 19.5.201510.8.2015 7.11.2015 and 12.2.2016 during the year.

b. Nomination and Remuneration Committee

The Nomination and Remuneration Committee has been constituted and entrusted with thepowers of determining remuneration packages of the Directors and Senior Executives of theCompany keeping in mind the qualifications experience expertise and industry trends.(1) Shri Balkrishna I Makwana (2) Shri Dinesh H Pande and (3) Shri Vasant R Shah are themembers of the Nomination and Remuneration Committee. Shri Balkrishna Makwana is theChairman of the Committee. The Committee meets as and when required.

REMUNERATION POLICY

1. Remuneration to Non Executive Directors:

The Non Executive Directors are paid remuneration by way of sitting fees for eachmeeting of the Board or Committee of Directors attended by them. The total amount ofsitting fees paid during the year was Rs. 1.50 Lacs during the FY 2015-16. Non executiveIndependent Directors do not have material pecuniary relationship or transactions with theCompany.

2. Remuneration to Executive Directors:

The appointment and remuneration of Executive Directors including Managing Directorsand Whole Time Directors is governed by the recommendation of the Remuneration andNomination Committee and resolutions passed by the Board of Directors and Shareholders ofthe Company. Payment of remuneration to Executive Directors is governed by the respectiveagreements executed between them and the Company. The remuneration package of ManagingDirectors and Whole Time Director comprises of salary perquisites allowancesincentives bonus contribution to provident fund and other retirement benefits asapproved by the shareholders at the general meeting. The details of remuneration toDirectors are given in the Annual Accounts for the year ended on 31st March2016.

3. Performance Evaluation

The Board has carried out annual performance evaluation of its own performance theDirectors individually as well as the evaluation of the working of Committees of theBoard. A structured questionnaire was prepared after circulating the draft forms coveringvarious aspects of the Board's functions such as adequacy of composition of the Board andits committees Board culture execution and performance of specific duties obligationsand governance. The performance evaluation of the Managing Director and Non- IndependentDirectors was carried out by the Independent Directors. The Directors express theirsatisfaction with the evaluation process.

c. Stakeholders Grievance Committee

The Stakeholders Grievance Committee comprises of (1) Shri Dinesh H Pande (2) ShriBalkrishna I Makwana (3) Shri Laxman C Tiiani and (4) Smt Harsha H Parikh for addressingthe grievances of the investors. The Committee was reconstituted comprising (1) ShriDinesh H Pande (2) Shri Dinesh A Bilgi and (3) Shri Chirag D Bilgi wef 12thFebruary 2016. Shri Dinesh H Pande is the Chairman of the Committee. The Committee meetsas and when required and looks after shareholders complaints and matters relating totransfer of shares transmission non-receipt of annual report non-receipt of dividendcredit of shares to demat account etc. During the year under review the Company hadreceived 2 complaints from . the shareholders which were resolved The Complaints arenormally resolved within the stipulated period under the Listing Regulations. The requestsfor revalidation of dividend warrants and issue of duplicate share certificates orduplicate dividend warrants etc are normally attended after completion of necessaryformalities and procedure. Smt Kairavi Bilgi has been appointed as the Compliance Officerof the Company. The Committee meets as and when required. During the year the Company (1)received: 2 complaints (2) resolved: 2 Complaints and there is no compliant pending as on31st March 2016.

d. Corporate Social Responsibility Committee

The Company has constituted Corporate Social Responsibility Committee (CSR) whichcomprises (1) Smt Harsha H Parikh (2) Shri Dinesh H Pande and (3) Shri Balkrishna IMakwana. Smt Harsha Parikh is the Chairman of the CSR Committee. The CSR Policy has beenformulated but the committee has concluded that the provisions relating to CSR activitiesdo not apply to the Company at present.

LISTING WITH BSE LTD

The Equity Shares of the Company are listed at the BSE Ltd Mumbai under Stock Code No.526851 and ISIN No. is INE480H01011. The Company has entered into freshagreement with BSE Ltd under the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 effective from December 2015.

However the Company continues to raise objections to the BSE Ltd for the exorbitanthikes i.e increase of 1233% in annual listing fees over the fees paid for 2013-14 andincrease of the same every year since 2014-15 (i.e. Rs.15000 to Rs.l lac in 2014-15 andfrom Rs.l lac to Rs.2 lacs in 2015-16). Therefore the Annual Listing Fees for the year2015-16 and year 2016-17 to the BSE Ltd Mumbai are yet not paid. The Company has paidcustodial charges to National Securities Depository Ltd and Central Depository Services(India) Ltd for the year 2016-17.

CHANGE OF REGISTRAR AND SHARE TRANSFER AGENT (RTA)

The Securities and Exchange Board of India has issued ex-parte interim order bearingNo. WTM/RKS/MIRSD2/41/2016 dtd 22/3/2016 against the Company's then existing RTA i.e.Sharepro Services (India) Pvt Ltd Mumbai refraining from its RTA activities and directingthe concerned Companies to change their RTA. Therefore the Company has entered intonecessary agreements and appointed M/s Link Intime India Pvt Ltd Mumbai as its new RTAwith effect from 16th August 2016 to carry out the share transferstransmission dividend and other related activities.

RELATED PARTY TRANSACTIONS

All the transactions entered with related party during the year under review were onarm's length basis and in the ordinary course of business and approved by the AuditCommittee. Hence these transactions are outside the purview of the provisions of Section188 of the Companies Act 2013. However details of such transactions i.e. purchaseslease services etc. are given in the Notes to the Financial Statements for the yearended on 31st March 2016 and therefore details in Form AOC-2 are not given.

LOANS GUARANTEES AND INVESTMENT

The Company has not granted any inter-corporate loan given guarantee or provided anysecurity for availing loan by other Company. However the Company has made investments inother Companies/MF aggregating to Rs.10260700/- as per the Note No.10 to the FinancialStatement for the year ended on 31st March 2016.

ENVIRONMENT AND SAFETY

The Company considers clean and safe mode of operations in all respects. Further asrequired under the provisions of Sexual Harassment (Prevention Prohibition and Redressal)Act 2013 the Company has formulated and implemented a policy on prevention of sexualharassment at workplace. There was no such complaint lodged during the year.

SECRETARIAL AUDIT

Pursuant to the provisions of Section 204 of the Companies Act 2013 and the Rules madethereunder a Secretarial Audit Report is given by way of an Annexure' B' forming part ofthis Report. The Auditors observations are self-explanatory.

AUDITORS

M/s C R Sharedalal & Co. Chartered Accountants Ahmedabad retires as the StatutoryAuditors at the conclusion of the ensuing Annual General Meeting and are eligiblefor re-appointment to conduct audit for the financial year 2016-17 and have also indicatedtheir willingness to act as Auditors if appointed. The Company has obtained writtenconsent and certificate as required under the provisions of Section 139 of the CompaniesAct 2013. You are requested to consider their re-appointment.

The Auditors observations read with the notes to the Accounts are self-explanatory.

ACKNOWLEDGEMENTS

The Board of Directors of the Company appreciates continuous & comprehensivesupport and cooperation by the Company's bankers shareholders customers suppliers andother business associates.

Your Directors place on record their deep appreciation for contribution and devotedservices of the employees at all levels.

For and on behalf of the Board
Regd Office:
612 GIDC Estate
ChahtralTal: Kalol Neel D Bilgi Dinesh A Bilgi
Dist : Gandhinagar-382 729 Mg Director Mg Director/CFO
Date: 12th August 2016 DIN:00096180 DIN:00096099