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Arfin India Ltd.

BSE: 539151 Sector: Metals & Mining
NSE: N.A. ISIN Code: INE784R01015
BSE LIVE 15:40 | 23 Nov 379.35 0.40
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OPEN 360.05
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VOLUME 900
52-Week high 509.80
52-Week low 117.00
P/E 31.59
Mkt Cap.(Rs cr) 461
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 360.05
CLOSE 378.95
VOLUME 900
52-Week high 509.80
52-Week low 117.00
P/E 31.59
Mkt Cap.(Rs cr) 461
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Arfin India Ltd. (ARFININDIA) - Director Report

Company director report

Dear Members

Your Directors have pleasure in presenting the 25 Annual Report on the Businesses andOperations of the

Company together with Audited Accounts for the financial year ended on March 31 2017.

1. Financial Summary

Particulars 2016-17 2015-16
Revenue From Operations 38677.84 30688.92
Less: Central Excise Duty 4298.30 3401.36
Net Revenue From Operations 34379.54 27287.56
Profit / (Loss) Before Tax 2052.58 1000.66
Provisions for Income Tax including Deferred Tax 750.81 339.68
Profit / (Loss) After Tax 1301.77 660.98
Proposed Dividend 81.02 45.27
Transfer to General Reserves 100.00 75.00
Profit Carried to Balance Sheet 1301.77 660.98
Accumulated Balance of Profit 2594.10 1489.85

2. Financial Highlights and State of Company's Affair

Company's revenue from the operation was Rs. 38677.84 lacs for the Financial Yearended

on March 31 2017 which was higher by 26.03% in compare to previous year. Profit beforeDepreciation & Amortization Interest and Tax (PBDIT) has been increased by 77.70% incompare to previous years' PBDIT. The Company has reported EBIDTA Margins of 8.12% of NetSales which is higher by 236 bps as compared to previous financial year ended on March 312016. Further the Company has reported year on year increase in Profit after Tax of96.94%. Significant increase in PBDIT & Net Profit is mainly on account of increasedvolume increase in gross margins and improved operational efficiencies. In view ofinfrastructural development of growing Indian economy the Directors are hopeful of evenmore increase in demand for Company's products resulting into satisfactory top &bottom line growth of the Company in coming years. Detailed analysis as to review of theCompany's operational and financial performance is given in the Management Discussion& Analysis Report.

3. Dividend

Considering the profit growth and future prospects of the Company the Directors haverecommended a final dividend of Rs. 2.00 per Equity Share (Rs. 1.50 Per Equity Share inthe previous financial year) on 4051157 equity shares of Rs. 10/- each for the financialyear ended on March 31 2017.

The dividend distribution would result in a cash outgo of Rs. 97.52 Lacs (including taxon dividend distribution of Rs. 16.49 Lacs) compared to Rs. 54.49 Lacs (including tax ondividend distribution of Rs. 9.22 Lacs) paid for the Financial Year ended on March 312016.

4. Listing on Stock Exchanges

As on March 31 2017 the Equity Shares of the Company were listed on BSE Limited andthe Calcutta Stock Exchange Limited. The Company has paid the annual listing fees for thefinancial year ending on March 31 2018 within time.

During the financial year under report the equity shares of the Company have beendelisted from the Ahmedabad Stock Exchange Limited w.e.f. November 10 2016. Further theapplication made by the Company during the financial year under report with the CalcuttaStock Exchange for delisting of its equity shares is pending with the Calcutta StockExchange Limited for its approval. Delisting from these regional stock exchanges have beenconsidered by the Board as after listing of equity shares of the Company on the BSELimited listing on these regional stock exchanges was not providing any tangibleadvantage to the Company or its Investors.

5. Details in Respect of Adequacy of Internal Financial Control with Referenceto the Financial Statements

The Company has in place adequate internal control systems commensurate with the sizeof its operations. The internal control systems comprising of policies and procedures aredesigned to ensure sound Management of your Company's operations safe keeping of itsassets optimal utilization of resources reliability of its financial information andcompliances. Clearly defined roles and responsibilities have been institutionalized withinthe organization. Systems and procedures are periodically reviewed to keep pace with thegrowing size and complexity of your Company's operations.

6. Details of Subsidiary / Joint Venture / Associate Companies

The Company doesn't have any Subsidiary Joint Venture or Associate Company.

Group Companies to the Arfin India Limited includes Mahendra Aluminium Company Limited& Krish Ferro Industries Private Limited.

In this matter it is pertinent to note that the proposal of Arrangement in nature ofAmalgamation of Mahendra Aluminium Company Limited with Arfin India Limited and theirrespective shareholders and creditors under Section 230-232 of the Companies Act 2013 wasapproved by the Board of Directors of both the Companies at their respective meetings heldon May 20 2017. The scheme of amalgamation has been submitted with BSE Limited on June 62017.

7. Material Changes and Commitment if any affecting the Financial Position ofthe Company

No material changes and commitments affecting the financial position of the Companyoccurred between the end of the financial year to which these Financial Statements relateand on the date of this report. Further during the financial year under report nosignificant or material orders have been passed by any of the regulators or courts ortribunals impacting the going concern status and operations of the Company in future.

8. Deposits

During the financial year under report your Company has not accepted any depositswithin the meaning of Sections 73 and 74 of the Companies Act 2013 nor it had any amountof deposits carried forward from the previous financial year.

9. Statutory Auditors

The members of the Company at their 22 Annual General Meeting approved appointment ofM/s. Raman M. Jain & Co. (Firm Registration No.: 113290W) as the Statutory Auditors ofthe Company to hold office for a period of three consecutive financial years.

Accordingly M/s. Raman M. Jain & Co. will complete their tenure as StatutoryAuditors of the Company as stipulated under Section 139 of the Companies Act 2013 at theconclusion of ensuing Annual General Meeting. The Board of Directors appreciates theservices provided by M/s. Raman M. Jain & Co. Chartered Accountants during theirtenure as Statutory Auditors of the Company.

The Auditors' Report for the financial year ended on March 31 2017 forms part of thisAnnual Report and the same does not contain any qualification reservation or adverseremark.

Further based on the recommendation of the Audit Committee the Board has proposedappointment of M/s. Mukesh Rajendra & Co. (Firm Registration No.: 143123W) CharteredAccountants Ahmedabad as Statutory Auditors of the Company for a period of 5 consecutivefinancial years commencing from the conclusion of the ensuing Annual General

Meeting till the conclusion of 30 Annual General Meeting of the Company.

M/s. Mukesh Rajendra & Co. have consented the appointment and confirmed that theirappointment if made would be within the limits mentioned under Section 141 of theCompanies Act 2013 and the Companies (Audit & Auditors) Rules 2014. The members arerequested to grant their approval for the same.

10. Secretarial Auditors

In terms of Section 204 of the Companies Act 2013 the Board of Directors of yourCompany has appointed M/s. Kamlesh M. Shah & Co. Practicing Company SecretaryAhmedabad as Secretarial Auditors to conduct an Audit of secretarial records andcompliances for the financial year ending on March 31 2018.

The Secretarial Audit Report for the financial year ended on March 31 2017 is annexedherewith as Annexure-5 and the same does not contain any qualification reservationor adverse remarks.

11. Cost Auditors

The Board of Directors of your Company has appointed M/s. Ashish Bhavsar &Associates Cost Accountants Ahmedabad as Cost Auditors to conduct Audit of cost recordsfor financial year ending on March 31 2018.

12. Share Capital

During the financial year under report pursuant to the approval of members of theCompany and as per the applicable provisions of the Companies Act 2013 and the SEBI(Issue of Capital and Disclosure Requirements) Regulations 2009 the Company has issuedand allotted 1032857 warrants (convertible into equivalent number of Equity Shares ofRs. 10/- each within 18 months from the date of allotment in one or more tranches) atthe issue price of Rs. 175/- per warrant (including Rs. 165/- as security premium) topromoters & persons other than promoters.

The purpose of the funds availed by this preferential issue is to make expansion oflong term capital and general corporate purpose as explained in the postal ballot noticesent to the members for their approval.

The conversion of the warrants so issued & allotment of equity shares took place in3 tranches as per the following:

Date of Conversion No. of Securities
547857 Equity
1 January 5 2017
Shares of Rs. 10/- each
435000 Equity
2 January 11 2017
Shares of Rs. 10/- each
50000 Equity
3 February 24 2017
Shares of Rs. 10/- each

Accordingly consequent upon the conversion the paid-up equity share capital of theCompany stands at Rs. 40511570/- (Rupees Four Crores Five Lacs Eleven Thousand FiveHundred and Seventy Only) divided into 4051157 (Forty Lacs Fifty One Thousand OneHundred and Fifty Seven Only) equity shares of Rs. 10/- each.

13. Directors & Key Managerial Personnel

I. Cessation of Directors

During the financial year under report Mr. Rameshkumar B. Shah has resigned from thepost of Independent Director of the Company w.e.f. October 6 2016 and thus ceased to beIndependent Director of the Company. Further Mr. Dilip Kumar Daga has resigned from thepost of Independent Director of the Company w.e.f. June 23 2017 and thus ceased to beIndependent Director of the Company.

The Board places on record its sincere appreciation for the valuable services renderedby the outgoing Directors Mr. Rameshkumar B. Shah and Mr. Dilip Kumar Daga during theirtenure.

II. Retirement by Rotation

In accordance with the provisions of Section 152(6) of the Companies Act 2013 and theArticles of Association of the Company Mr. Jatin M. Shah (DIN: 00182683) will retire byrotation at this Annual General Meeting of the Company and being eligible he offershimself for reappointment. The Board recommends his appointment.

In this connection it is clarified that as per the Articles of Association of theCompany the Managing Director and Whole Time Director are not liable to retire byrotation unless otherwise decided by the Board. Since there are only 3 Non IndependentDirectors out of whom one is Whole Time Director and another is Managing Director tocomply with the provisions of Section 152(6) of the said Act both the aforesaid Directorswho are otherwise Non Rotational Directors have consented to be liable to retire byrotation and the Board has decided that Mr. Jatin M. Shah being longest in office wouldretire by rotation.

III. Appointment

a. Independent Director

During the financial year under report Mr. Bherulal Lalchand Chopra (DIN: 01149396)has been appointed as an Additional Independent Director of the Company w.e.f. December27 2016. The confirmation / regularization for his appointment as an Independent Directorhas been proposed for the approval of the members.

All the Independent Directors have submitted the declaration of independence asrequired pursuant to the provisions of Section 149(7) of the Companies Act 2013 statingthat they meet the criteria of Independence as provided under Section 149(6).

b. Company Secretary and Compliance Officer

During the financial year under report Mr. Durgesh D. Soni resigned from the post ofCompany Secretary & Compliance Officer and thus ceased to be Company Secretary &Compliance Officer of the Company w.e.f. May 6 2016. The Board places on record itssincere appreciation for the services provided by Mr. Durgesh D. Soni during his tenure.

Further Mr. Purvesh Pandit a member of the Institute of Company Secretaries of Indiahas been appointed as Company Secretary and Compliance Officer of the Company at themeeting of Board of Director held on May 21 2016.

c. Chief Financial Officer

During the financial year under report Mr. Vijay Lathi resigned from the post of ChiefFinancial Officer (CFO) of the Company w.e.f. December 13 2016. He continued serving theorganization in non KMP capacity until he was again appointed as CFO w.e.f. February 112017.

IV. Evaluation of the Board's Performance

During the financial year under report exercise of evaluation was carried out througha structured process covering various aspects of the Board's functioning such ascomposition of the Board & Committee(s) experience & competencies performance ofspecific duties & obligations governance issues etc.

Separate exercise was carried out to evaluate the performance of each individualDirector including the Board's Chairman who were evaluated on parameters such asattendance contribution at the meetings and otherwise independent judgmentssafeguarding of minority shareholders' interest etc.

The evaluation of the Independent Directors was carried out by the entire Boardexcluding Independent Directors and that of the Chairman and the Non Independent Directorswas carried out by the Independent Directors. The Directors were satisfied with theevaluation results which reflected the overall engagement of the Board and its Committeeswith the Company. This may be considered as a statement under provisions of Section134(3)(p) of the Companies Act 2013 and Rule 8(4) of the Companies (Accounts) Rules2014. The Board of your Company is composed with proper number of Executive and Non -Executive Directors.

V. Remuneration Policy

The Company follows a policy on remuneration of Directors and Senior ManagementEmployees. The policy has been approved by the Nomination & Remuneration Committee andthe Board. More details on the same has been given in the Corporate Governance Report.

The policy on Remuneration of Directors Key Managerial Personnel and Senior Employeescan be accessed on website of the Company at the following web link:

http://www.arfin.co.in/pdf/policies/remuneration-of-directors-key-managerial-personnel-and-senior-employees-policy.pdf

14. Number of Meetings of Board of Directors

The Board of Directors met 13 times during the financial year ended on March 31 2017.The details of the Board meetings and the attendance of the Directors are provided in theCorporate Governance Report.

15. Composition of Audit Committee

The composition of the Audit Committee of the Board of Directors of the Company as onMarch 31 2017 is as per following:

Name of the Member Nature of Membership
1 Mr. Dilip Kumar Daga Chairman
2 Mr. Bherulal Lalchand Chopra Member
3 Mr. Mahendra R. Shah Member

1Resigned w.e.f. June 23 2017

2Appointed w.e.f. December 27 2016

Further all the recommendations were accepted by the Board of Directors during theperiod under report. More details on the Audit Committee have been provided in theCorporate Governance Report.

16. Nomination and Remuneration Committee

The composition of the Nomination and Remuneration Committee of the Board of Directorsof the Company as on March 31 2017 is as per following:

Name of the Member Nature of Membership
1 Mr. Bherulal Lalchand Chopra Chairman
2 Mr. Dilip Kumar Daga Member
3 Mr. Shantilal Mehta Member

1Appointed w.e.f. December 27 2016

2Resigned w.e.f. June 23 2017

The policy required to be formulated by the Nomination and Remuneration Committeeunder Section 178(3) of the Companies Act 2013 is uploaded on the Company's website atthe following web link:

http://www.arfin.co.in/pdf/policies/remunerationof-directors-key-managerial-personnel-andsenior-employees-policy.pdf

More detail on the Committee have been provided in the Corporate Governance Report.

17. Stakeholder Relationship Committee

The Board has constituted a Stakeholder Relationship Committee which comprises of:

Name of the Member Nature of Membership
1 Mr. Shantilal Mehta Chairman
2 Mr. Mahendra R. Shah Member
3 Mr. Purvesh Pandit Member

1Appointed w.e.f. May 21 2016

More details on the Committee have been provided in the Corporate Governance Report.

18. Internal Complaints Committee

The Board of Directors of the Company has constituted a committee named "InternalComplaints Committee" at its Registered / Corporate Office. The said committee hasbeen formed to comply with the provisions of the Sexual Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013 and Rules framed there under and toprovide the employees safety against harassment if any.

A policy adopted by the Company for Prevention of Sexual Harassment is available on itswebsite at the following web link:

http://www.arfin.co.in/pdf/policies/prevention-of-sexual-harassment-policy.pdf

During the financial year ended on March 31 2017 the Company did not receive anycomplaint pertaining to sexual harassment.

19. Related Party Transactions

All the related party transactions are being entered on arm's length basis in ordinarycourse of business and in compliance with the applicable provisions of the Companies Act2013 and relevant Regulations of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015.

There were no materially significant related party transactions made by the Companywith Promoters Directors or Key Managerial Personnel etc. which may have potentialconflict with the interest of the Company at large.

All the related party transactions are presented to the Audit Committee and to theBoard. Omnibus approval has been obtained from Audit Committee Board of Directors andmembers of the Company for the transactions with the related parties.

The Policy on Related Party Transactions as approved by the Board has been uploaded onthe Company's website at the following web link:http://www.arfin.co.in/pdf/policies/related-partytransactions-policy.pdf

20. Establishment of Vigil Mechanism / Whistle Blower Policy for Directors andEmployees

The Company promotes ethical behavior in all its business activities and has put inplace a mechanism wherein the employees are free to report illegal or unethical behavioractual or suspected fraud or violation of the Company's Codes of Conduct or CorporateGovernance Policies or any improper activity to the Chairman of the Audit Committee of theCompany or to the Chairman of the Board. The Whistle Blower Policy has been dulycommunicated within the Company.

Under the Whistle Blower Policy the confidentiality of those reporting violation(s) isprotected and they are not subject to any discriminatory practices. No personnel have beendenied access to the Audit Committee in this regard.

The said Vigil Mechanism / Whistle Blower Policy has been uploaded on website of theCompany and can be accessed at the following web link :

http://www.arfin.co.in/pdf/policies/vigil-mechanism-or-whistle-blower-policy.pdf

21. Loans Guarantees or Investments under Section 186 of the Companies Act 2013

The Company did not grant / make any Loan / Investment and provide Guarantees inrespect of loans availed by others under the provisions of Section 186 of the CompaniesAct 2013 and Rules framed there under during the financial year under report.

22. Managerial Remuneration

The Company follows a policy on remuneration of Directors KMP and Senior

Management Employees. The Company has paid remuneration to the Executive as well assitting fees to the Non-Executive Directors during the financial year under report. Moredetails on the Managerial Remuneration has been given in the extract of Annual Return andin the Corporate Governance Report.

23. Management Discussion & Analysis Report

A detailed analysis of the Company's performance is made in the Management Discussionand Analysis Report which forms part of this Annual Report.

24. Corporate Governance Report

Your Company practices a culture that is built on core values and ethical governancepractices and is committed to transparency in all its dealings. A Report on CorporateGovernance as per the provisions of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 forms part of this Annual Report.

25. Code of Conduct

The Board has laid down a Code of Conduct ("Code") for the Board MembersManagerial Personnel and for Senior Management Employees of the Company. This Code hasbeen posted on the Company's website at http://arfin.co.in/code-conduct.html . All theBoard Members and Senior Management Personnel have affirmed compliance with this Code. Adeclaration signed by the Managing Director to this effect forms part of the CorporateGovernance Report.

The Board has also laid down a Code of Conduct for the Independent Directors pursuantto the provisions of Section 149(8) and Schedule IV to the Companies Act 2013 via termsand conditions for appointment of

Independent Directors which is a guide to the professional conduct for IndependentDirectors and has been uploaded on the website of the Company at the following web link:

http://www.arfin.co.in/pdf/disclosures/terms-andconditions-of-appointment-of-independentdirectors.pdf

26. Risk Management Policy

The Board of Directors has developed and implemented a Risk Management Policy for theCompany. It has identified and assessed internal and external risks with potential impactand likelihood that may impact the Company in achieving its strategic objectives or maythreaten its existence.

The Policy lays down the procedures for risk identification description evaluationestimation reporting and development of action plan. The policy includes identificationof elements of risks which mainly covers Strategic Risk Operational Risk Financial Riskand Hazardous Risks. The same can be accessed from the website of the Company at thefollowing web link:

http://www.arfin.co.in/pdf/policies/risk-management-policy.pdf

More details on the risk and concern factors have been given in the ManagementDiscussion & Analysis Report.

27. Corporate Social Responsibility

Pursuant to the provisions of Section 135 of the Companies Act 2013 including Rulesframed thereunder the Company has for the financial year ended on March 31 2016attracted criteria for Corporate Social Responsibility (CSR) by crossing net profit amountof Rs. 5 Crores. Accordingly the Board of Directors of the Company at their meeting heldon May 21 2016 constituted a Corporate Social Responsibility Committee.

The Corporate Social Responsibility Committee comprises of :

Name of the Member Nature of Membership
1. Mr. Mahendra R. Shah Chairman
2. Mr. Shantilal Mehta Member
3. Mrs. Pushpa M. Shah Member

In compliance with the requirements of Section 135 of the Companies Act 2013 theCompany has laid down a CSR policy. The same can be accessed from website of the Companyat the following web link:

http://arfin.co.in/pdf/policies/corporate-social-responsibility-policy.pdf

The contributions in this regard have been made to Swaminarayan Vivith Seva NiketanTrust Shrimati Ratandevi Bansidhar Agarwal Trust and Lions Club of Karnavati Foundation.

The report of CSR Activities for the Financial Year 2016-17 as per Section 135 of theCompanies Act 2013 has been given separately as Annexure 7.

28. Directors' Responsibility Statement

In accordance with the provisions of Section 134(5) of the Companies Act 2013 withrespect to the Director's Responsibility Statement it is hereby stated:

a. that in the preparation of the annual Financial Statements for the year ended onMarch 31 2017 the applicable Accounting Standards have been followed along with properexplanation relating to material departures if any;

b. that such accounting policies as mentioned in Notes to the Financial Statements havebeen selected and applied consistently and judgment and estimates have been made that arereasonable and prudent so as to give a true and fair view of the state of affairs of theCompany as on March 31 2017 and of the profit of the Company for the year ended on thatdate;

c. that proper and sufficient care has been taken for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities;

d. that the annual Financial Statements for the year ended on March 31 2017 have beenprepared on a going concern basis;

e. that proper internal financial controls were in place and that the financialcontrols were adequate and were operating effectively; and

f. that the system to ensure the compliances with the provisions of all applicable lawswas in place and were adequate and operating effectively.

29. Disclosure u/s 164(2) of the Companies Act 2013

The Company has received the disclosure in Form DIR-8 from its Directors beingappointed or reappointed and has noted that none of the Directors are disqualified underSection 164(2) of the Companies Act 2013 read with Rule 14(1) of the Companies(Appointment and Qualification of Directors) Rules 2014.

30. Conservation of Energy Technology Absorption and Foreign Exchange Earnings andOutgo

The particulars as to conservation of energy technology absorption and foreignexchange earnings and outgo required to be disclosed in terms of Section 134 of theCompanies Act 2013 & Rule 8 of the Companies (Accounts) Rules 2014 have been givenseparately as

Annexure 1.

31. Extract of Annual Return

The Extract of Annual Return in the Form

MGT-9 is enclosed herewith as Annexure 2.

32. Form AOC - 2

Form AOC - 2 pursuant to clause (h) of subsection (3) of Section 134 of the CompaniesAct 2013 and Rule 8(2) of the Companies (Accounts) Rules 2014 for disclosure ofparticulars of contracts / arrangements entered into by the Company with the relatedparties as referred in Section 188(1) of the Companies Act 2013 is enclosed herewith as

Annexure 3.

33. Particulars of Employees and

Remuneration

As required by the provisions of Section 197 of the Companies Act 2013 read with Rule5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 asamended from time to time the particulars are set out in Annexure 4.

34. Secretarial Audit Report

The Secretarial Audit Report given by Mr.

Kamlesh M. Shah Proprietor of M/s. Kamlesh M. Shah & Co. Practicing CompanySecretary Ahmedabad is enclosed herewith as Annexure 5.

35. Auditors Certificate on Corporate Governance

A Certificate from Statutory Auditors of the Company regarding compliance of conditionsof Corporate Governance as stipulated under the provisions of the SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 is annexed herewith as Annexure6.

36. Acknowledgments

Your Directors express their deep sense of gratitude to the Bankers Central &State Governments their departments the local authorities other Regulators and theStock Exchanges for their continued guidance and support.

We would also like to place on record our sincere appreciation for the dedicationcommitment and hard work put in by every member of the Arfin family. The Board furtherexpresses that the credit of the success of Arfin goes to each & every member of Arfinfamily equally. The Management is deeply grateful for the confidence and faith that allthe stakeholders have always reposed in them.

For and on Behalf of the Board of Directors
Mahendra R. Shah
Place: Ahmedabad (Chairman)
Date: August 8 2017 (DIN: 00182746)