To The Members
Your Directors are pleased to present their Ninth Annual Report with the AuditedFinancial Statements of the Company for the period from 1st April 2016 to 31stMarch 2017.
1. FINANCIAL RESULTS :
Highlights of the Financial Results are as under:
[` in lacs]
|Particulars || |
| ||2016-17 ||2015-16 ||2016-17 ||2015-16 |
|Operating Revenue ||9001.89 ||11084.41 ||15983.93 ||11473.97 |
|Profit before Finance costs Depreciation and Amortisation ||3339.94 ||3629.52 ||4635.46 ||3657.14 |
|Expenses Extraordinary Items & Tax Expenses || || || || |
|Less: Finance Costs ||1158.03 ||839.29 ||1158.03 ||843.38 |
|Profit before Depreciation and Amortisation Expenses ||3257.77 ||3552.03 ||3477.43 ||2813.76 |
|Extraordinary Items & Tax Expenses || || || || |
|Less : Depreciation and Amortisation Expenses ||82.17 ||77.50 ||105.57 ||92.32 |
|Profit before Extraordinary Items & Tax Expenses ||2099.73 ||2712.73 ||3371.86 ||2721.44 |
|Less : Extraordinary Items ||0.00 ||0.00 ||0.00 ||0.00 |
|Profit before Tax ||2099.73 ||2712.73 ||3371.86 ||2721.44 |
|Less : Current Tax ||0.00 ||952.10 ||1170.31 ||1009.40 |
|Less : Deferred Tax ||9.68 ||30.02 ||5.42 ||33.29 |
|Add: Adjustment of tax pertaining to earlier years ||0.00 ||0.00 ||37.73 ||4.41 |
|Less : MAT Credit Entitlement ||37.73 ||0.00 ||0.00 ||0.00 |
|Profit before minority interest ||2127.78 ||1730.61 ||2233.86 ||1683.16 |
|Less: Share of Profit/(Loss) of minority interest ||0.00 ||0.00 ||136.96 ||(37.67) |
|Profit for the year ||2127.78 ||1730.61 ||2096.90 ||1720.83 |
|Balance of profit brought forward ||4360.47 ||2629.86 ||4312.85 ||2592.03 |
|Balance carried forward to Balance Sheet ||6488.26 ||4360.47 ||6409.75 ||4312.86 |
Note: Figures of the previous year have been regrouped whereever necesarry to confirmto current years presentation.
2. OPERATIONS :
The standalone revenue of the company stood at ` 9001.89 lacs compared to ` 11084.41lacs in the previous year. The operating cash flows were however better profit after taxstood at ` 2127.78 lacs as compared to ` 1730.61 lacs in the previous fiscal showing anincrease of 23%. The consolidated revenue of the company stood at ` 15983.93 lacscompared to ` 11473.97 lacs in the previous fiscal showing increase of 39%. The profitafter tax stood at ` 2096.90 lacs as compared to ` 1720.83 lacs in the previous fiscalshowing an increase of 22%.
A detailed analysis of the financial results is given in the Management Discussion andAnalysis Report which forms part of this report.
In order to conserve the resources for the future development of the Company yourDirectors do not recommended any dividend on Equity Shares for the year under review.
4. TRANSFER TO RESERVES:
During the year under review the Company has not transferred any amount to reserves.
5. CHANGE IN THE NAME OF THE COMPANY
The name of the Company was changed to "Arvind SmartSpaces Limited" from"Arvind Infrastructure Limited" with effect from 16th November 2016.There was no change in the nature of business of the Company on account of the change inname. The new name Arvind SmartSpaces reflect that we represent trust innovation andcustomer-centric thinking coming together to deliver a thoughtful realty experience thatis the benchmark for the sector to aspire to.
6. SHARE CAPITAL:
During the year under review the following changes were made in the capital structureof the Company: (a) The Company has allotted 10000 equity shares of ` 10/-each to theeligible employee/ies pursuant to the exercise of stock options granted under EmployeesStock Option Scheme-2013 (AIL ESOP 2013).
(b) The Company has allotted 2575000 equity shares of ` 10/-each to the warrantholders pursuant to exercise of option of conversion of warrants by the warrant holdersbeing promoter and promoter group entities on Preferential basis under Tranche-I.
Consequently the paid up Equity Share Capital of the Company stood at ` 2840.93 lacs.
During the year under review the Company has not issued shares with differentialvoting rights and sweat equity shares.
7. EMPLOYEE STOCK OPTION SCHEME:
The Company has instituted the Arvind Infrastructure Limited (now Arvind SmartSpacesLimited) - Employees Stock Option Scheme-2013 (AIL ESOP 2013) to grant equity basedincentives to certain eligible employees and directors of the Company and its SubsidiaryCompanies. During the year under review the Company has not granted any stock options.
Details of equity shares issued upon exercise of options by the eligible employee/sunder AIL ESOP 2013 and disclosure in compliance with Section 62 of the Companies Act2013 read with Rule 12 of Companies (Share Capital and Debentures) Rules 2014 and theSecurities and Exchange Board of India (Share based Employee Benefits) Regulations 2014are set out in Annexure - A to this report.
8. 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 withRule 16(4) of Companies (Share Capital and Debentures) Rules 2014 in respect of votingrights not exercised directly by the employees of the Company as the provisions of thesaid section are not applicable.
9. FINANCE :
During the year the Company has made fresh borrowings of
` 12850 lacs for its working capital requirements. Total Long Term Debt of the Companystands at ` 4531.56 lacs as on 31st March 2016.
10. FIXED DEPOSITS:
The Company has not accepted or renewed any deposits falling within the purview ofprovisions of Section 73 of the Companies Act 2013 read with Companies (Acceptance ofDeposits) Rules 2014 during the year under review. Hence the requirement for furnishingof details of deposits which are not in compliance with Chapter V of the Act is notapplicable.
11. PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS
UNDER SECTION 186:
Details of Loans Guarantees and Investments covered under the provisions of Section186 of the Companies Act 2013 are given in the notes to the Financial Statements.
12. INDIAN ACCOUNTING STANDARDS (IND AS):
Pursuant to the notification issued by the Ministry of Corporate Affairs dated 16thFebruary 2015 relating to the Companies (Indian Accounting Standard) Rules 2015 theCompany its Subsidiaries and Joint Venture Company will adopt "IND AS" witheffect from 1st April 2017.
13. CONSOLIDATED FINANCIAL STATEMENTS:
The Consolidated Financial Statements of the Company prepared in accordance with theapplicable Accounting Standards issued by the Institute of Chartered Accountants of Indiaform part of this Annual Report.
14. 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 &NLRDF have been active in improving the quality of life of the urban poor & rural poorrespectively.
As a part of initiatives under CSR the Company has undertaken Projects for setting upof primary health medical centre and for the development of underprivileged children forpromoting education which are largely in accordance with Schedule VII of the CompaniesAct 2013. The brief details of Corporate Social Responsibility Policy and the amountspent during the financial year 2016-17 on each activity is enclosed as Annexure - B.
15. HUMAN RESOURCES:
The Company believes that Human Resources will play a significant role in its futuregrowth. With an unswerving focus on nurturing and retaining talent the Company providesavenues for learning and development through functional behavioural and leadershiptraining programs knowledge exchange conferences communication channels for informationsharing to name a few. The Company provides various opportunities to the employees todevelop and hone their skills to take up higher responsibilities in the organization.
A well - defined competency framework outlines the leadership behaviours expected fromemployees to be successful in Arvind Group. The Company also uses various communicationchannels to seek employees' feedback about the overall working environment and thenecessary tools and resources they need to perform at their best potential.
Diverse employee engagement initiatives are launched to ensure employees of various ageand background continue to be effective in their roles and build meaningful career atArvind. The Group's Corporate Human Resources plays a critical role in company's talentmanagement process.
16. RISK MANAGEMENT:
The Real Estate market is inherently a cyclical market and is affected bymacroeconomics conditions changes in governmental schemes changes in supply and demandfor projects availability of consumer finance and liquidity. These factors can affect thedemand for both our forthcoming and ongoing projects. The Company follows certain policiessuch as leveraging of Balance sheet building projects in an asset light mode.
The Company has developed and implemented Risk Management Policy. The policy identifiesthe threat of such events which if occurred will adversely affect either/or value toshareholders ability of Company to achieve objectives ability to implement businessstrategies the manner in which the Company operates and reputation as "Risks".Further such risk are categorized into Strategic Risks Operating Risks and RegulatoryRisks.
Under the framework the Company has laid down a Risk Management Policy which definesthe process for identification of risks its assessment mitigation measures monitoringand reporting. While the Company through its employees and Executive Managementcontinuously assess the identified Risks the Audit Committee reviews the identified Risksand its mitigation measures annually.
17. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:
The Company has an Internal Control System commensurate with the size scale andcomplexity of its operations. The Company has an Internal Audit department with adequateexperience and expertise in internal controls operating system and procedures. Indischarging their role and responsibilities the department is supported by an externalaudit firm.
The system is supported by documented policies guidelines and procedures to monitorbusiness and operational performance which are aimed at ensuring business integrity andpromoting operational efficiency.
The Internal Audit Department reviews the adequacy of internal control system in theCompany its compliance with operating systems and laid down policies and procedures.Based on the report of internal audit function process owners undertake corrective actionin their respective areas and thereby strengthen the controls. Significant auditobservations and corrective actions thereon are presented to the Audit Committee of theBoard of Directors from time to time.
18. VIGIL MECHANISM / WHISTLE BLOWER POLICY:
The Company has a vigil mechanism named Whistle Blower Policy to deal with theinstances of fraud or mismanagement if any. The details of the Whistle Blower Policy areexplained in the Corporate Governance Report and also posted on the website of the companyat www.arvindsmartspaces.com.
19. SUBSIDIARIES ASSOCIATES AND JOINT VENTURE
As on 31st March 2017 the Company has 9 subsidiaries including one whollyowned subsidiary and 1 Joint venture Company. Pursuant to the provisions of Section 129(3)of the Companies Act 2013 read with Companies (Accounts) Rules 2014 a statementcontaining salient features of financial statements of subsidiaries associates and jointventure Companies in Form AOC-1 is attached to the Financial Statements. The separateaudited financial statements in respect of each of the subsidiary shall be kept open forinspection at the Registered Office of the Company. The Company will also make availablethese documents upon request by any Member of the Company interested in obtaining thesame. The Company has framed a policy for determining material subsidiaries which hasbeen posted on company's website at www.arvindsmartspaces.com.
20. DIRECTORS AND KEY MANAGERIAL PERSONNEL:
The Board of Directors consist of 6 Directors out of which 1 is Executive Director 2are Non-Executive Non-Independent Directors and 3 are Non-Executive Independent Directorsincluding Woman Director which is in compliance Companies Act 2013 and SEBI (ListingObligations and Disclosure Requirements) Regulations 2015.
As per the provisions of Section 152 (6) of the Companies Act 2013 and the Company'sArticle of Association Mr. Kulin S. Lalbhai (DIN 05206878) shall retire by rotation atthe ensuing Annual General Meeting and being eligible has offered himself forre-appointment as the Director of the Company.
The Independent Directors hold office for a fixed period of five years from the date oftheir 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 hasgiven a written declaration to the Company confirming that he/she meets the criteria ofindependence 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 specifiedin section 164 of the Companies Act 2013. The profile of Directors forms part of theCorporate Governance Report.
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.
21. 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 carriedout an annual performance evaluation of its own performance the directors individually aswell as the evaluation of the working of its Committees on the basis of criteriaformulated by the Nomination and Remuneration Committee. The manner in which theevaluation has been carried out has been explained in the Corporate Governance Report.
22. REMUNERATION POLICY :
The Board has on the recommendation of the Nomination & Remuneration Committeeframed a policy for selection and appointment of Directors Key Managerial Personnel andSenior Management and their remuneration. The Remuneration Policy is explained in theCorporate Governance Report forming part of this Report.
23. FAMILIARIZATION PROGRAMME FOR THE INDEPENDENT
In compliance with the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 the Company has put in place a familiarization programme for theIndependent Directors to familiarize them with their role rights and responsibility asDirectors the working of the Company nature of the industry in which the Companyoperates business model etc. The details of the familiarization programme are explainedin the Corporate Governance Report. The same is also posted on the website of the Companyat www.arvindsmartspaces.com.
24. NUMBER OF MEETINGS OF THE BOARD OF DIRECTORS
A calendar of 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 AuditCommittee 3 meetings of Nomination and Remuneration Committee 3 meetings ofStakeholders' Relationship Committee 2 meetings of Corporate Social ResponsibilityCommittee and 14 meetings of Management Committee of Board of Directors were convened andheld the details of which are provided in the Corporate Governance Report forming part ofthis Report.
25. DIRECTOR'S RESPONSIBILITY STATEMENT:
Pursuant to Section 134(5) of the Companies Act 2013 the Board of Directors to thebest of their knowledge and ability confirm that: (a) in the preparation of the annualaccounts for the year ended on 31st March 2017 the applicable accountingstandards have been followed along with proper explanation relating to materialdepartures if any; (b) they have selected such accounting policies and applied themconsistently and made judgements and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of the Company at the end of thefinancial year and of the profit and loss of the Company for that period; (c) that theyhave taken proper and sufficient care towards the maintenance of adequate accountingrecords in accordance with the provisions of this Act for safeguarding the assets of theCompany and for preventing and detecting fraud and other irregularities; (d) they haveprepared annual accounts on a going concern basis; (e) they have laid down proper internalfinancial controls which are adequate and are adequate and are operating effectively; (f)they have devised proper systems to ensure compliance with the provisions of allapplicable laws and such systems are adequate and operating effectively.
26. RELATED PARTY TRANSACTIONS:
All the related party transactions are entered on arm's length basis in the ordinarycourse of business and are in compliance with the applicable provisions of the CompaniesAct 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations2015. There are 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 or which warrants the approval of theshareholders. Accordingly no transactions are being reported in Form AOC-2 in terms ofSection 134 of the Companies Act 2013 read with Rule 8 of the Companies (Accounts) Rules2014. However the details of the transactions with Related Party are provided in theCompany's financial statements in accordance with the Accounting Standards.
All Related Party Transactions are presented to the Audit Committee and the Board.Omnibus approval is obtained for the transactions which are foreseen and repetitive innature. A statement of all related party transactions is presented before the AuditCommittee on a quarterly basis specifying the nature value and terms and conditions ofthe transactions.
The Policy on Related Party Transactions as approved by the Board is posted onCompany's website at www.arvindsmartspaces.com.
27. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE
There are no significant material orders passed by the Regulators
/ Courts which would impact the going concern status of the Company and its futureoperations.
(a) Statutory Auditor:
M/s. S R B C & Co LLP Chartered Accountants having Firm Registration No. 324982E/E300003 allotted by the Institute of Chartered Accountants of India (ICAI) the StatutoryAuditors of the Company will hold office until the conclusion of the ensuing AnnualGeneral Meeting and are eligible for appointment as per Section 139 of the Companies Act2013. M/s. S R B C & Co LLP have expressed their willingness to be appointed as theStatutory Auditors of the Company and has furnished a certificate of their eligibility andconsent under Section 141 of the Companies Act 2013 and the rules framed there under. Interms of the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 theAuditors have confirmed that they hold a valid certificate issued by the Peer Review Boardof the ICAI. The Board based on the recommendation of the Audit Committee recommends theappointment of M/s. S R B C & Co LLP as the Statutory Auditors of the Company.
The members are requested to appoint M/s. S R B C & Co LLP Chartered Accountantsas Auditors to hold office for a term of five years commencing from the 9thAnnual General Meeting of the Company till the conclusion of the 14th AnnualGeneral Meeting (subject to ratification of their appointment by the Members at everyintervening Annual General Meeting held after this Annual General Meeting) and toauthorise the Board to fix their remuneration.
Further the report of the Statutory Auditors along with notes to Financial Statementsis enclosed to this report. The observations made in the Auditors' Report areself-explanatory and therefore do not call for any further comments.
(b) Cost Auditors:
On the recommendation of the Audit Committee the Board of Directors appointed M/sKiran J. Mehta & Co. Cost Accountants Ahmedabad (Firm Registration No. 000025) asCost Auditors of the Company for the year 2017-18 under Section 148 of the Companies Act2013 read with the Companies (Cost Records and Audit) Amendment Rules
2014. M/s Kiran J. Mehta & Co. have confirmed that they are free fromdisqualification specified under Section 141(3) and proviso to Section 148(3) read withSection 141(4) of the Companies Act 2013 and that their appointment meets therequirements of Section 141(3)(g) of the Companies Act 2013. They have further confirmedtheir independent status and an arm's length relationship with the Company.
(c) Secretarial Auditors:
Pursuant to the provisions of Section 204 of the Companies Act 2013 read withCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 the Companyhas appointed M/s N. V. Kathiria & Associates a firm of Company Secretaries inPractice to conduct the Secretarial Audit of the Company for the Financial Year 2016-17.The Secretarial Audit Report does not contain any qualifications reservations or adverseremarks. The Secretarial Audit Report is enclosed herewith as
Annexure - C.
29. ENHANCING SHAREHOLDERS VALUE:
Your Company believes that its Members are among its most important stakeholders.Accordingly your Company's operations are committed to the pursuit of achieving highlevels of operating performance and cost competitiveness consolidating and building forgrowth enhancing the productive asset and resource base and nurturing overall corporatereputation. Your Company is also committed to creating value for its other stakeholders byensuring that its corporate actions positively impact the socio-economic and environmentaldimensions and contribute to sustainable growth and development.
30. CORPORATE GOVERNANCE REPORT AND MANAGEMENT
DISCUSSION & ANALYSIS:
The Corporate Governance Report and Management Discussion & Analysis which formpart of this Report are set out as separate Annexures together with the Certificate fromthe Practicing Company Secretary regarding compliance of conditions of CorporateGovernance as stipulated in Schedule V of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015.
31. CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION
AND FOREIGN EXCHANGE EARNINGS AND OUTGO:
Information in accordance with the provisions of Section 134(3)(m) of the CompaniesAct 2013 read with Companies (Accounts) Rules 2014 regarding conservation of energy andTechnology absorption are not given as the Company has not undertaken any manufacturingactivity. There were no foreign Exchange Earnings or Outgo during the period under reviewexcept on foreign travelling.
32. EXTRACT OF ANNUAL RETURN IN FORM MGT - 9 :
The details forming part of the extract of Annual Return in form MGT-9 is attached as Annexure- D.
33. PARTICULARS OF EMPLOYEES:
The information required pursuant to Section 197(12) of the Companies Act 2013 readwith Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 in respect of employees of the Company will be provided uponrequest. In terms of Section 136(1) of the Companies Act 2013 the Report and Accountsare being sent to the Members and others entitled thereto excluding the information onemployees' particulars which is available for inspection by the Members at the RegisteredOffice of the Company during business hours on working days of the Company up to the dateof the ensuing Annual General Meeting. If any Member is interested in obtaining a copythereof such Member may write to the Company Secretary in this regard.
Disclosures pertaining to remuneration and other details as required under Section197(12) of the Companies Act 2013 read with Rule 5(1) of the (Appointment andRemuneration of Managerial Personnel) Rules 2014 as amended are given in Annexure - Eto this report.
34. 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 apolicy against sexual harassment in line with the provisions of Sexual Harassment of Womenat Workplace (Prevention Prohibition and Redressal) Act 2013 and the rules framedthereunder.
Arvind Real Estate Internal Complaints Committee ("AREICC") is formed by theCompany which is working under purview of group level Committee i.e. Arvind InternalComplaints Committee ("AICC") the details of which are declared across theorganization. All the members of AREICC are trained by the subject experts on handling theinvestigations and proceedings as defined in the policy.
During the financial year 2016-17 the Company has not received any complaints on sexualharassment and hence no complaints remain pending as of 31st March 2017.
The Board expresses its sincere thanks to all the employees customers suppliersinvestors lenders regulatory and government authorities and stock exchanges for theirsupport.
| ||By Order of the Board |
|Date: 12th May 2017 ||Sanjay Lalbhai |
|Place: Ahmedabad ||Chairman |