Your Directors have pleasure in presenting the 27th Annual Report of the Companytogether with the Audited Financial Statements for the year ended on 31st March 2015.
|PARTICULARS ||STANDALONE ||CONSOLIDATED |
| ||2014-2015 ||2013-2014 ||2014-2015 ||2013-2014 |
|Net Income from operation and other income ||2102.38 ||2060.27 ||4836.05 ||3794.87 |
|Profit before Depreciation & Amortization expenses Finance Cost and tax ||533.46 ||497.47 ||796.12 ||785.82 |
|Less: Depreciation and Amortisation Expenses ||84.89 ||86.69 ||96.29 ||97.26 |
|Finance Cost ||307.94 ||336.97 ||407.79 ||434.90 |
|Profit before tax ||140.63 ||73.80 ||292.02 ||253.66 |
|Less: Provision for tax ||50.48 ||64.15 ||102.10 ||134.10 |
|Profit after tax ||90.15 ||9.66 ||189.92 ||119.56 |
|Less: Minority Interest in Income ||- ||- ||0.34 ||0.22 |
|Add: Share in Profits/Loss of Associates ||- ||- ||(2.34) ||(21.66) |
|Balance of Surplus as per last Balance Sheet ||1294.29 ||1284.63 ||1691.79 ||1594.13 |
|Balance available for appropriation ||1420.61 ||1294.29 ||1697.15 ||1691.79 |
|Proposed Rate of dividend ||- ||7.5% ||- ||7.5% |
|Proposed dividend ||- ||41.44 ||- ||41.44 |
|Previous years dividend Reversed ||41.44** ||41.44* ||41.44** ||41.44* |
|Tax on dividend ||- ||7.04 ||- ||7.04 |
|Tax on Dividend Reversed ||7.04** ||7.04* ||7.04** ||7.04* |
|Transfer to General Reserve ||- ||- || || |
|Balance of profit carried to Balance Sheet ||1420.61 ||1294.29 ||1697.15 ||1691.80 |
* The dividend proposed for the year ended 31st March 2013 was not approved by theshareholders in Annual General Meeting held on 27th September 2013; hence provisionsprovided in the year 2012-13 is reversed in the year 2013-14.
**The dividend proposed for the year ended 31st March 2014 was not approved by theshareholders in Annual General Meeting held on 29th September 2014; hence provisionsprovided in the year 2013-14 is reversed during the year.
2014-2015 IN RETROSPECTS:
During the year under review profitability of the Company was better than previousyear. The macro economic factors having positive impact on the business is witnessed itsentire effect and potential is expected to be realize in coming years. Your company ispursuing its way to success through consolidation of its business activities in its areaof domain expertise.
Manpower Cost: The manpower cost of the Company is reduced due to certain projectscompletion and is in the line with the established trends.
Administrative Selling & Other Expenses: Administrative selling and otherexpenses have established and are in line with the previous years trends afterestablishment of new projects.
Project Expenses: The project expense observed on civil contract expenses andmining contract expenses incurred by the subsidiary are for ongoing road and miningcontracts.
Interest & Other Financial Charges: Interest and other financial charges havebeen reduced due to reduction in debt on repayments. The company is looking ofopportunities to further reduce interest and financial cost by substitution of low costdebts wherever feasible.
Depreciation: Depreciation decrease due to the block of Building (Leaseholdrenovation) of the holding company is compensated by increase due to addition in fixedassets hence is almost at the same level for the year.
The Business Outlook on Domestic demand for the services is very optimistic due tolarge plans outlays and reforms to expedite massive infrastructure development push topropel double digit growth rate of economy. Several opportunities are likely to emergefrom related sectors like Railways Airports Ports Smart Cities and Housing besidesRoadways. A mix of long term strategies and agile responses for short term expansion ofmarket is planned. Your Company shall strive to expand its footprints intensify operationsin domestic geographies and widen its client base. Your Company is effectively targetingspecific opportunities to maximize stakeholders wealth.
During the year under review your company was awarded with the following project
Independent Engineer Services for four laning of Kashipur-Sitarganj section of NH-74from Km 175.000 to Km 252.200 in the states of Uttarakhand and Uttar Pradesh under NHDPPhase IV on Design Build Finance Operate and Transfer (DBFOT) Toll Basis.
During the year the company has incurred capital expenditure of Rs.16.07 Lacs. Theaddition is mainly due to Furniture and fixtures and computer and computer softwares.
In order to conserve the resources for future growth of the Company your Directors donot recommend dividend for the year under review.
During the year under review your Company has not accepted any deposits within themeaning of Section 73 and 76 of the Companies Act 2013 read with Companies (Acceptance ofDeposits) Rules 2014.
There was no change in share capital of the Company during the year 2014-15.
DIRECTORS AND KEY MANAGERIAL PERSONNEL:
In accordance with the provisions of Section 152 of the Companies Act 2013 read withCompanies (Management & Administration) Rules 2014 and Articles of Association of theCompany Mr. Siddharth P. Shah Whole-Time Director of the Company retires by rotation atthe ensuing Annual General Meeting and being eligible has offered himself forreappointment.
Ms. Ankita Shah was appointed as an Additional (Non-Executive) Director of the Companyw.e.f 28th March 2015 subject to approval of the shareholders of the Company. The Companyhas received a notice along with requisite deposit from a member of the Company underSection 160 of Companies Act 2013 proposing her candidature for the office of Director ofthe Company.
Your Board recommends their appointment/ re-appointment.
Mr. Girish Dhabalia resigned from the directorship of the Company w.e.f 23rd May 2014.
Brief resume of the Directors proposed to be appointed/re-appointed as stipulated underClause 49 of the Listing Agreement entered into with BSE Limited are given in the Noticeconvening the 27th Annual General Meeting of the Company.
The Company has received declaration from all the Independent Directors of the Companyconfirming that they meet the criteria of independence as prescribed under sub-section (6)of Section 149 of the Companies Act 2013 and Clause 49 of the Listing Agreement enteredwith the Stock Exchange.
In accordance with the provisions of Section 203 of the Companies Act 2013 read withCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 Mr.Nileshkumar Jain was appointed as a Chief Financial Officer of the Company w.e.f. 29thMay 2014.
During the year under review Mr. Lucky Popli resigned from the post of CompanySecretary of the Company w.e.f. 13thAugust 2014 and Ms. Shilpa A. Bhargava was appointedas Company Secretary w.e.f. 13th August 2014.
MEETINGS OF THE BOARD:
The Board meets at regular intervals to discuss and decide on Companys / businesspolicy and strategy apart from other business of the Board. A tentative annual calendar ofthe Board and Committee Meetings is informed to the Directors in advance to facilitatethem to plan their schedule and to ensure meaningful participation in the meetings.
The notice of Board meeting is given well in advance to all the Directors of theCompany. Usually meetings of the Board are held in the registered office of the Company.The agenda of the Board / Committee meetings is circulated 7 days prior to the date of themeeting.
The Board met 6 (Six) times during the year as per details given in the Report onCorporate Governance. The intervening gap between the two consecutive meetings was withinthe period prescribed under the Companies Act 2013.
ANNUAL EVALUATION OF PERFORMANCE BY THE BOARD:
Pursuant to the provisions of the Companies Act 2013 and Clause 49 of the ListingAgreement the evaluation of the Board and its performance the directors individually andthe working of its Audit Nomination & Remuneration Committee and StakeholdersRelationship Committee of the Company was carried out by the Board. A questionnaire toevaluate the performances of each of executive and non-executive and Independent Directorsis devised and the directors are evaluated on the basis of this questionnaire. Suchquestions are prepared considering the business of the Company and the expectations thatthe Board have from each of the Directors. The evaluation framework for assessing theperformance of Directors comprises of the following key areas:
i. Attendance of Board Meetings and Board Committee Meetings;
ii. Quality of contribution to Board deliberations;
iii. Strategic perspectives or inputs regarding future growth of Company and itsperformance;
iv. Providing perspectives and feedback going beyond information provided by themanagement.
COMMITTEES OF THE BOARD:
There are currently following Committees of the Board:
1. Audit Committee
2. Stakeholders Relationship Committee
3. Nomination and Remuneration Committee
4. Ad-hoc Committee
In addition to the aforesaid Committees the Company also has following Committees:
1. Borrowing Committee
2. Management Committee
Details of all the Committees along with their charters composition and meetings heldduring the year are provided in the Report on Corporate Governance.
AUDIT COMMITTEE AND ITS COMPOSITION:
The Audit Committee is duly constituted as per the provisions of Section 177 of theCompanies Act 2013 and Clause 49 of the Listing Agreement. The composition of the AuditCommittee is provided in Report on Corporate Governance.
APPOINTMENT AND REMUNERATION POLICY:
The Board has on the recommendation of the Nomination & Remuneration Committeeframed a policy for selection and appointment of Directors Senior Management and theirremuneration. The details of Remuneration Policy are stated in the Report on CorporateGovernance.
VIGIL MECHANISM / WHISTLE BLOWER POLICY:
The Company has a devised Vigil Mechanism (Whistle Blower) Policy to deal with instanceof fraud mismanagement and unethical behavior if any. The details of Vigil Mechanism(Whistle Blower) Policy is explained in the Report on Corporate Governance and also postedon the website of the Company. We affirm that during the financial year 2014-15 noemployee or director was denied access to the Audit Committee.
DIRECTORS RESPONSIBILITY STATEMENT:
In accordance with the provisions of Section 134(3)(c) of the Companies Act 2013 yourdirectors state and confirm that:
a. in the preparation of the annual accounts the applicable accounting standards havebeen followed along with proper explanation relating to material departures if any;
b. 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 end of the financial year and ofthe profit of the company for that period;
c. the directors have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of this Act for safeguarding theassets of the company and for preventing and detecting fraud and other irregularities;
d. the directors have prepared the annual accounts on a going concern basis;
e. the directors have laid down internal financial controls to be followed by thecompany and that such internal financial controls are adequate and were operatingeffectively; and
f. the directors have devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.
RISKS AND AREAS OF CONCERN:
The Company has laid down a well-defined Risk Management Policy covering the riskmapping trend analysis risk exposure potential impact and risk mitigation process. Adetailed exercise is being carried out to identify evaluate manage and monitoring ofboth business and non-business risk. The Board periodically reviews the risks and suggestssteps to be taken to control and mitigate the same through a properly defined framework.
EXTRACT OF ANNUAL RETURN:
An extract of Annual Return in Form MGT-9 is appended to this Report as Annexure - I.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS:
The details of loans guarantee or investment under Section 186 of the Companies Act2013 is given under Notes to Accounts of financial statements.
PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES:
All the Related Party Transactions that were entered into during the Financial Yearwere on Arms Length Basis and were in Ordinary course of business. Pursuant toSection 134 (3) of the Companies Act 2013 read with Rule 8 of the Companies (Accounts)Rules 2014 there are no transactions to be reported under Section 188 (1) of theCompanies Act 2013 and hence Form AOC-2 is not applicable. However there are certaintransactions which are material in nature as per the amended Clause 49 of the ListingAgreement and Company seeks approval of the shareholders for the same.
In accordance with the provisions of Clause 49 of the Listing Agreement the Companyhas formulated the Related Party Transactions Policy (the Policy) and the same is uploadedon the Company's website i.e. www.artefactprojects.com.
PARTICULARS OF REMUNERATION:
Pursuant to Section 197 of the Companies Act 2013 read with Rule 5(1) of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 details ofremuneration paid to all the Directors/Employees and the details of the ratio ofremuneration of each Director to the median employees remuneration is provided in Annexure-II.
During the year under review no employee was in receipt of remuneration exceeding thelimits as prescribed under provisions of Section 197 of the Companies Act 2013 and Rule5(2) and 5(3) of Companies (Appointment and Remuneration of Managerial Personnel) Rules2014.
PARTICULARS OF CONSERVATION OF ENERGY TECHONOLOGY ABSORPTION AND FOREIGN EXCHANGEEARNINGS AND OUTGO:
Information in terms of requirement of clause (m) of Sub-Section (3) of Section 134 ofthe Companies Act 2013 regarding Conservation of Energy Technology Absorption andForeign Exchange Earning and Outgo read along with Rule 8 of the Companies (Accounts)Rules 2014 is as follows:
A) Conservation of energy:
i. Installation of energy efficient LED lights in site offices instead of HPSV lights.Energy saving devices like Infra-Red motion detectors light sensors avoid wastage ofenergy by switching off based upon activity in the area.
ii. Use of Solar Energy for consumption at Head office instead of water heater therebyreducing thermal energy usage and conserving energy.
B) Technology Absorption and benefits:
With the advent of new infrastructure the IT Systems and softwares used by theCompany are installed as per international standards. The major technological baseincludes the following:-
Installation of the contemporary IT Hardware and Infrastructure including GPSSystem VPN Connectivity Professional Audio System SQL Server Database Life-Size VideoConferencing etc.
Use of Internet Based communication and advanced technology has reduced papercommunication wherever possible and has resulted in a quicker and transparent informationsharing system.
The benefits derived from Technology absorption are higher efficiency betterreliability and availability reduced maintenance environment friendly atmosphere andreduction in printing cost.
C) Foreign Exchange Earnings and outgo:
| || ||Amount in Rs. |
|Particulars ||For the year ended 31st March 2015 ||For the year ended 31st March 2014 |
|Foreign exchange earned ||Nil ||Nil |
|Expenditure in foreign currency ||Nil ||Nil |
DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS ORTRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANY'S OPERATIONS IN FUTURE:
There was no significant or material order was passed by any regulator or court ortribunal which impacts the going concern status of the Company or will have bearing oncompany's operations in future.
M/s. Chaturvedi & Shah Chartered Accountants Mumbai (FRN: 101720W) and M/s.Naresh Patadia & Co. Chartered Accountants Nagpur (FRN: 106936W) are appointed asJoint Statutory Auditors in the 26th Annual General Meeting (AGM) to hold office from theconclusion of 26th AGM till the conclusion of 29th AGM to be held for financial yearending 31st March 2017.
Your Directors recommend the ratification of appointment of M/s. Chaturvedi & ShahChartered Accountants Mumbai (FRN: 101720W) and M/s. Naresh Patadia & Co. CharteredAccountants Nagpur (FRN: 106936W) as Joint Statutory Auditors of the Company and to fixthe remuneration for the Financial Year ending 31st March 2016.
The Company has appointed M/s. Nitin Alshi & Associates Chartered AccountantsNagpur (FRN: 116875W) as its Internal Auditor. The Internal Auditor has given his reportson quarterly basis to the Audit Committee.
Based on the report of internal audit management undertakes corrective action in therespective areas and strengthens the levels of Internal Financial and other operationalcontrols.
REPLIES TO THE OBSERVATIONS MADE IN THE STATUTORY AUDITORS REPORT:
1. Auditors comments in their standalone Independent Auditors Report underBasis for Qualified Opinion and in consolidated Independent Auditors Report underBasis for Qualified Opinion read along with note no.16 to the Standalone FinancialStatements and note no.17 to the Consolidated Financial Statements respectively areself-explanatory and do not call for any further comments however to explain that theTrade Receivables outstanding are mostly from the Government Authorities including NHAIMMRDA etc. who do not have a practice of issuing balance confirmation generally.
Further with the continuous involvement of the management with the customers theBoard of Directors is of the view that the amounts due from such Government Authoritiesare good for recovery and hence no provision for doubtful debt is required.
2. In reference to note to accounts no. 9.01 to the Standalone Financial Statements theCompany has not received any intimation or confirmation of SME status of any TradePayable. Most of the Trade Payables are due to Individuals professionals or Traders andas such most of them may not be registered as SME itself.
INTERNAL FINANCIAL CONTROL:
The Company does not have formal policy however the Audit Committee evaluates theefficacy and adequacy of financial control system in the Company its compliance withoperating systems accounting procedures and policies at all locations of the Company andstrives to maintain the Standard in Internal Financial Control.
SECRETARIAL AUDIT REPORT:
Pursuant to the provisions of Section 204 of the Companies Act 2013 the SecretarialAudit Report received from M/s. Manish Ghia & Associates Practising CompanySecretaries Mumbai is appended as Annexure III and forms part of thisreport.
REPORT ON CORPORATE GOVERNANCE:
Pursuant to Clause 49 of the Listing Agreement entered into with the BSE Limited thefollowing have been made a part of the Annual Report and are attached to this report:
Management Discussion and Analysis
Report on Corporate Governance
Certificate regarding compliance with conditions of Corporate Governance
SUBSIDIARIES AND ASSOCIATE COMPANIES:
A statement on the performance and financial position of the subsidiary and associatesof the Company in the prescribed format AOC-1 is enclosed as Annexure IV at the endof Consolidated Financial Statements of the Company.
In accordance with Section 136 of the Companies Act 2013 the audited financialstatements including the consolidated Financial Statements and related information of theCompany are available on our website www.artefactprojects.com. These documents will alsobe available for inspection at the registered office of the Company and of the subsidiarycompanies during business hours on all working days and during the Annual General Meeting.
INFORMATION UNDER THE SEXUAL HARRASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITIONAND REDRESSAL) ACT 2013:
The Company has zero tolerance for sexual harassment at workplace and adopted a Policyon prevention prohibition and redressal of sexual harassment at workplace in line withthe provisions of the Sexual Harassment of Women at Workplace (Prevention Prohibition andRedressal) Act 2013 and the Rules thereunder. There was no complaint on sexual harassmentduring the year under review.
Your company is an ISO 9001:2008 certified and complying Company. The companysfocus has been continuing to provide consistent quality services to our clients. We areconstantly upgrading the quality systems to improve our services.
ENVIRONMENT SAFETY & HEALTH (ESH):
The Company is conscious of its strong corporate reputation and the positive role itcan play by focusing on ESH issues. Towards this the Company has set very exactingstandards in ESH management. The Company recognizes the importance of ESH issues in itsoperations and has established indicators to track performance in these areas. The Companyvalues the safety of its employees and constantly enhances the same for ensuring a safework place.
The Contingent Liabilities of the Company mainly include Bank Guarantees to client asPerformance Securities Corporate Guarantees to Bank as part of loan stipulation. No cashoutflow thereof is expected.
As a risk mitigation measure and to safeguard your Companys Financial Liabilityof Bank Guarantees in case of any remote unlikely possibility of any professionalliability the performance of the Companys services is also fully covered by acomprehensive Professional Liability Insurance Policy.
Clarification on Notes to Accounts:
In reference to note to accounts no. 4.05 of Standalone Financial Statement theauditors have stated overdue amount on the basis of initial repayment schedule of TermLoans. Thereafter the Company had applied for renewal and sanction of revised creditfacilities which was sanctioned by the Bank in June 2015. The bank had vide itsCertificate dated 4th April 2015 certified an amount of Rs. 40.67 Lacs as Overdue amountof Term Loan due as on 31st March 2015 vis a vis the amount stated by the auditors. Theentire overdue amount and the Balance outstanding against the term loans account wererepaid and the term loans accounts were fully extinguished on 29th June 2015. The Companyhas no overdues in the loans account till date and the Company loans are totally regularfor repayment of its obligations till date. Hence no further clarification for the saidnote of auditors is called for.
Your Directors would like to place on record their gratitude for all the guidance andco-operation received from the shareholders banks and other government and regulatoryagencies. Your Directors would also like to take this opportunity to express theirappreciation for the hard work and dedicated efforts put in by the employees and lookforward to their continued contribution and support.
| ||For and on behalf of the Board of Directors |
| ||Sd/- |
|Place: Nagpur ||Manoj B. Shah |
|Date: 14th August 2015 ||Chairman & Managing Director |