To the Members of
CONART ENGINEERS LIMITED
Your Directors have pleasure in presenting forty second Annual Report of ConartEngineers Limited along with the Audited Financial Statements for the year ended March 312016.
1 FINANCIAL PERFORMANCE (STANDALONE)
The Financial Performance for fiscal 2015-2016 is summarized in the following table:
| || ||(Rs. In Lacs) |
|Particulars ||2015-2016 ||2014-15 |
|Revenue from Operations ||2075.16 ||1911.06 |
|Other Income ||49.17 ||111.95 |
|Profit Before Finance Cost and Depreciation and Amortization Exp ||216.53 ||173.86 |
|Finance Cost ||2.63 ||2.90 |
|Depreciation and Amortization Exp ||50.88 ||53.03 |
|Profit Before Tax ||163.02 ||117.90 |
|Provision for Taxation || || |
|- Current ||47.30 ||21.80 |
|- Deferred Tax ||4.21 ||(16.06) |
|Profit for the year ||111.51 ||112.16 |
|Transferred to General Reserve ||0.00 ||0.00 |
|Balance carried to Balance sheet ||111.51 ||112.16 |
|Earnings Per Share (Rs.) ||3.72 ||3.74 |
Companys Performance Overview
From cutting-edge building technologies to innovative construction methods and betterdecision-making systems projects are getting smarter. Given the rapid development ofemerging construction opportunities owners demand faster projects lower costs and betterbuildings. Despite adversities in Engineering and Construction (E&C) industryprevailing your Company has been able to maintain its profitability in the year underreview as well. The Company has incurred a profit of Rs. 111.51 lacs during the year ascompared to previous year profit of Rs. 112.16 lacs and has maintained an Earning perShares of Rs. 3.72 for the year under review. In addition to the fundamental economicstresses on the E&C sector your company also faces intensifying competition whichweighs on profit margins. To make up for it you company is offering commoditization inthe services and also expanding its horizon to new geographies and in new lines ofbusinesses. Your directors are pursuing various strategies to ensure a promising future intime to come.
The Board of Directors are of the opinion that the profit is to be ploughed back andhence do not recommend dividend this year.
3 MANAGEMENT DISCUSSION AND ANALYSIS A) Industry Overview and BusinessProspects:
We believe that construction demand will remain high for many years. The Government iscommitted to infrastructure programmes which will take decades to deliver. Still-improvingeconomic sentiment will continue to drive commercial demand. Housing pressure remainsacute and eventually some major supply-side intervention by Government seems inevitable.2016 is therefore the year for businesses in the construction sector to invest and buildthe capacity and capability to take advantage of this strong domestic market. Your Companycontinues to receive inquiries for new projects from existing customers as well as throughcustomer references. Weak profitability in the industry wont improve overnight butwe can expect to see steady growth in order books and gradually improving margins.
B) Opportunities & Threats:
A more stable construction industry will be able to take advantage of a strengtheningmarket. Recent months have seen output dip and forecasts have been revised downwards. Butit is clear that this is not reflective of underlying demand which remains strongparticularly in commercial and civil sector. That demand is being suppressed by risingwages which are causing clients to delay and re-scope schemes. However 2016 will be agood year for the construction industry.
C) Segments or Product-Wise Performance:
The Company is engaged in only single segment i.e. construction activity sosegment-wise reporting does not apply to it.
D) Performance Review
Your Company has maintained profitability levels and margins for the year under review.The increase in price of Materials and Labor continues to marginally affect the profits ofyour Company. Your Company is aggressively marketing to increase orders and increaseturnover. Your directors are pursuing various strategies to ensure a promising future.
E) Business Prospects
The construction industry is changing fast. More growth opportunities in emergingmarkets new funding mechanisms and evolving customer demands are driving theindustrys players to diversify both geographically and in terms of their offerings.Your Company has diversified more than most developing more efficient andcustomer-focused operating models for its customer base. To benefit from trends in theconstruction industry your company has adopted new construction industry strategies tobetter position themselves to manage the supply side and capture the increased demand.
F) HRD/Industrial Relations
a) An orientation has been given to the personnel policies with emphasis on theperformance. Right person on the right job has increased the productivity level. Also theteamwork and sense of involvement among the employees has increased the efficiency andeffectiveness. b) Disclosures are being made at the proper places where the management haspersonal interest that may have potential conflict with the interest of the Company atlarge.
G) New Standard Adopted
Your Company has successfully renewed its accreditation as on ISO-9001-2008 Companyfrom British Standards Institutions (BSI) based at London-UK a most widely recognizedstandard in the world. The standard sets out the requirements for a quality managementsystem and helps businesses and organizations to be more efficient and improve customersatisfaction.
H) Cautionary Statement
The Statements in the Annual Report particularly those which relate to ManagementDiscussion and Analysis describing the Companys objectives projections estimatesand expectations may constitute forward looking statements within the meaningof applicable laws and regulations. Although the expectations are based on reasonableassumptions the actual results might differ.
4 PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES
Disclosures with respect to the remuneration of Directors and employees as requiredunder Section 197(12) of Companies Act 2013 and read with Rule 5(1) and (2) of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 are formingpart of this Annual Report.
5 CORPORATE GOVERNANCE
A separate report on Corporate Governance pursuant to Clause 49 of the ListingAgreement and Regulation 34(3) and 53(f) of SEBI (LODR) Regulations 2015 along with acertificate from the Statutory Auditors of the Company regarding compliance of theconditions of the Corporate Governance are annexed to this report.
6 DIRECTORS AND OTHER KEY MANAGERIAL PERSONNEL
* Changes in the composition of the Board of Directors and other Key ManagerialPersonnel
Mr. Umed A Fifadra was appointed as an independent Director by the Board at the Boardmeeting held on March 28 2016. During the year Mr. Haresh V Patel has resigned from theDirectorship effective from March 28 2016. There was no other appointment or cessation ofappointment of key managerial personnel during the financial year under review.
* Independent Directors
The Board of the Company consists of 6 Directors out of which three are independentDirectors one women Director and two are whole time Directors. All the IndependentDirectors have given a declaration under sub-section(7) of
Section 149 of the Companies Act 2013 that they meet the criteria of independence aslaid down under Section 149(6) of the Act and Regulation 26(3) of SEBI (LODR) Regulations2015.
* Retirement by rotation
In accordance with the provision of Companies Act 2013 and the Articles of Associationof the Company Mr. Jimish Sura and Mrs. Pooja Sura retire by rotation and are eligiblefor the re-appointment. Necessary information for the appointment of Mr. Umed A Fifadra asDirector liable to retire by rotation has been included in the notice convening theensuing AGM and requisite details have been provided in the explanatory statement of thenotice. Your directors recommend their appointment.
Necessary information for proposing appointment of Mr. Chandrakant Patel Mr. Sunil CVakil and Mr. Umed a Fifadra for appointment as Independent Directors has been included inthe notice convening the ensuing AGM and requisite details have been provided in theexplanatory statement of the notice. Your directors recommend their appointment.
* Statutory Auditors
The Companys Auditors M/s. Govind Prasad & Co. Chartered Accountants (M. No.047948) who pursuant to Section 139 of the Companies Act 2013 retire at the ensuingAnnual General Meeting of the Company and are eligible for reappointment from theconclusion of the current AGM upto the conclusion of the following AGM. They haveconfirmed their eligibility under Section 141 of the Act and the Rules framed their underfor reappointment as Auditors of the Company. As required under Clause 49 of the ListingAgreement and Regulation 33.1(d)(ii) of SEBI (LODR) Regulations 2015 the auditors havealso confirmed that they hold a valid certificate issued by ICAI. The appointment isaccordingly proposed in the Notice of the Annual General Meeting for ratification byMembers.
* Secretarial Auditors
During the year Secretarial Audit was carried out by M/s. Sanjay Dholakia &Associates (M. No. 2655) a firm of Company Secretaries in Practice the SecretarialAuditor of the Company for the financial year 2015-16 pursuant to the provisions ofSection 204 of the Companies Act 2013 and the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014. There are no qualifications reservation or adverseremark or disclaimer made by the auditor in the report save and except disclaimer made bythem in discharge of their professional obligation. The detailed report on the SecretarialAudit is forming part of this Annual Report.
8 INFORMATION REQUIRED UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE(PREVENTION PROHIBITION & REDRESSAL) ACT 2013
The Company has been employing women employees in various cadres. There were noinstances taken place in the Company during the year which are required to be reportedunder Sexual Harassment of Women at Workplace (Prevention Prohibition and Redressal) Act2013.
9 COMPLIANCES UNDER COMPANIES ACT 2013
* Board Meetings held during the year
Five Board meetings were duly convened and held during the year and the details ofboard/committee meetings held are provided in the Corporate Governance Report. The gapbetween meetings was within the period prescribed under the Companies Act 2013.
* Share Capital
The Issued subscribed and Paid-up Equity Share Capital of Company has remainedunchanged during the year. During the year under review the Company has not issued anysecurities convertible Warrants/Bonds and/or other debt securities which has likelyimpact on the Equity of the Company.
* Extract of Annual Return
The extract of Annual Return pursuant to the provisions of Section 92 of the Act readwith Rule 12 of the Companies (Management and Administration) Rules 2014 is furnished inForm MGT - 9 is forming part of this Annual Report.
* Particulars of Loans Guarantees or Investments under Section 186 of theCompanies Act 2013
Details Loans guarantees and Investments covered under the provisions of Section 186of the Companies Act 2013 are given in the notes to financial statements.
Your Company has taken appropriate insurance for all assets against foreseeable perils.
* Remuneration Policy of the Company
The Remuneration policy of the Company comprising the appointment and remuneration ofthe Directors Key Managerial Personnel and Senior Executives of the Company includingcriteria for determining qualifications positive attributes independence of a Directorand other related matters has been provided in the Corporate Governance Report formingpart of this Annual Report.
* Related Party Transactions
The Company has formulated a policy on dealing with Related Party Transaction. Thepolicy is disclosed on the website of the Company. All the transactions entered into withRelated Parties as defined under the Companies Act 2013 erstwhile Clause 49 of theListing Agreement and Regulation 2(1)(zc) and Regulation 23 of SEBI (LODR) Regulations2015 during the financial year were in the ordinary course of business and on anarms length basis and do not attract the provisions of Section 188 of the CompaniesAct 2013. During the year the Company has not entered into any contract / arrangement /transactions with related parties which can be considered material in nature. The RelatedParty Transactions are disclosed in the notes of financial statements for the financialyear 2015-16.
* Risk Management Policy and Framework
The Companys risk management policy and framework is based on a clearunderstanding of various risks disciplined risk assessment and measurement procedures andcontinuous monitoring. The policies and procedures established for this purpose arecontinuously benchmarked with industry best practices. The Board of Directors hasoversight on all the risks assumed by the Company. The Board reviews the level anddirection of major risks pertaining to market liquidity operational compliance andcapital at risk as part of risk profile overview.
The Audit Committee of the Board provides direction to and monitors the quality of theinternal audit function and also monitors compliance with inspection and audit reports ofstatutory and internal auditors of the Company.
* Board Evaluation
Pursuant to the provisions of the Companies Act 2013 and revised Clause 49 of theListing Agreement and Regulation 17(10) of SEBI (LODR) Regulations 2015 the Board hascarried out an annual performance evaluation of its own performance and that its statutorycommittee and that of the individual directors. Independent Directors at their meetingwithout the participation of the Non-independent Directors and Managementconsidered/evaluated the Boards performance Performance of the Chairman and otherNon-independent Directors. The Board has undergone a formal review which comprised Boardeffectiveness and review of materials. The criteria for performance evaluation have beendetailed in the Corporate Governance Report forming part of this Annual Report.
* Nomination and Remuneration Policy
The Board has adopted on recommendation of the Nomination and Remuneration Committeea policy for selection and appointment of Directors Senior Management and theirremuneration. A brief detail of the policy is given in the Corporate Governance Report.
* Companys Code of Conduct for Prevention of Insider Trading
In accordance with the requirements of the Securities and Exchange Board of India(Prohibition of Insider Trading) Regulations 1992 the Company has also in place acomprehensive code of conduct for prevention of insider trading.
* Companys Code of Practices and Procedure for "Fair Disclosure ofUnpublished Price Sensitive lnformation."
With reference to Regulation 8.2 (Chapter - lV) of the SEBI (Prohibition of lnsiderTrading) Regulations 2015 the Board of Directors of Company has instituted a"Conart Engineers Limited Code of Practices and Procedure for Fair Disclosure ofUnpublished Price Sensitive lnformation".
* Code of Business Conduct and Ethics
The Code of Business Conduct and Ethics for Directors and employees of the CONART aimsat ensuring consistent standards of conduct and ethical business practices across theCompany. This Code is reviewed on an annual basis and is available on the website of theCompany. As provided under Regulation 17 of SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 with the Stock Exchanges a confirmation from theManaging Director & CEO regarding compliance with the Code by all the Directors andsenior management forms part of this Annual Report.
* Vigil Mechanism/ Whistle Blower Policy
Pursuant to Section 177(9) of the Companies Act 2013 read with Rule 7 of the Companies(Meetings of Board and its Powers) Rules 2014 the Company has in place a Policy on VigilMechanism/ Whistle Blower and the same has been hosted on the website of the Company. ThisPolicy inter-alia provides a direct access to the Chairman of the Audit Committee. Apolicy enables stakeholders (including Directors and employees) to report unethicalbehavior actual or suspected fraud or violation of the Companys Code of Conduct.
Your Company hereby affirms that no Director/employee has been denied access to theChairman of the Audit Committee and that no complaints were received during the year.Brief details about the policy are provided in the Corporate Governance Report.
* Quality Policy
Your Company strive for excellence by providing customized solutionsproducts & services that best satisfies the requirements of our Customers andcontinuously improve quality reliability & service with the help of an effectiveQuality Management System encompassing all statutory regulatory health safety &environment requirements at our work place.
* Familiarisation Programme for Independent Directors
Independent Directors are familiarised with their roles rights and responsibilities inthe Company as well as with the nature of industry and business model of the Companythrough induction programmes at the time of their appointment as Directors and throughpresentations on economy & industry overview key regulatory developments strategyand performance which are made to the Directors from time to time.
* Subsidiary Associate and Joint Venture Companies
Your Company does not have any material subsidiary associate or joint venture Companyas defined under the SEBI (LODR) Regulations 2015 as on March 31 2016.
During the year under review your Company did not accept any deposits within themeaning of provisions of Chapter V Acceptance of Deposits by Companies of theCompanies Act 2013 read with the Companies (Acceptance of Deposits) Rules 2014.
* Significant and Material Orders
There are no significant and material orders passed by the Regulators or Courts orTribunals which would impact the going concern status and the Companys operations infuture.
* Human Resource
Your Companys Human Resource agenda remained focused on reinforcing the keythrust areas building an inclusive culture and a strong talent pipelineinstitutionalising mission critical capabilities in the organisation driving greateremployee engagement and continuing to focus on progressive employee relation policies.
* Internal Control and Its Adequacy
The Company has adequate internal controls and processes in place with respect to itsfinancial statements which provide reasonable assurance regarding the reliability offinancial reporting and the preparation of financial statements. These controls andprocesses are driven through various policies procedures and certifications. Theprocesses and controls are reviewed periodically. The Company has a mechanism of testingthe controls at regular intervals for their operating effectiveness to ascertain thereliability and authenticity of financial information.
* Absorption Foreign Exchange Earnings and Outgo
The particulars prescribed under Section 134(3)(m) of the Companies Act 2013 read withRule 8(3) of the Companies (Accounts) Rules 2014 relating to Conservation of EnergyTechnology Absorption Foreign Exchange Earnings and Outgo the Company has taken therequired steps and has been consistently exercising necessary vigilance in the directionof Energy conservation which is of paramount importance. During the Financial year 15-16total Foreign Exchange earned was Nil.
The Company has used information technology extensively in its operation and iscontinuously upgrading in consonance with the latest technology as per industry standard.
* Material changes and commitments affecting the financial position of theCompany which have occurred between March 31 2016 and July 23 2016 (date of the Report)
There were no material changes and commitments affecting the financial position of theCompany between the end of financial year (March 31 2016) and the date of the Report(July 23 2016).
* Disclosure under Rule 5 of the Companies (Appointment & Remuneration)Rules 2014
Disclosure required under Section 197 of the Companies Act 2013 read with Rule 5 ofthe Companies (Appointment & Remuneration) Rules 2014 have been annexed to thisreport.
* Audit Committee
The Audit Committee of the Company comprises of 3 Independent Directors. Thecomposition of Committee and other details are provided in Corporate Governance Report ofthe Company forming part of this annual Report.
* Directors 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 annualfinancial statements for the year ended March 31 2016 the applicable AccountingStandards have been followed and there are no material departures. b) They have selectedsuch accounting policies and applied them consistently and made judgments and estimatesthat are reasonable and prudent so as to give a true and fair view of the state of affairsof the Company at the end of financial year and of the Profit and Loss of the Company forthat period. c) They have taken proper and sufficient care 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) The annual financial statements have been prepared on a going concernbasis. e) Proper internal financial controls were followed by the Company and that suchinternal financial controls are adequate and are operating effectively. f) Proper systemsto ensure compliance with the provisions of all applicable laws are in place and that suchsystems are adequate and operating effectively.
Based on the framework of internal financial control and compliance systems establishedby the Company work performed by internal statutory and Secretarial Auditors andexternal consultant(s) and reviews performed by Management and the relevant BoardCommittees including the Audit Committee the Board is of opinion that the Companysinternal financial controls were adequate and effective during the financial year 2015-16.
10 LISTING AGREEMENT
The Securities Exchange Board of India (SEBI) on 2 nd September 2015 issued SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 with the aim toconsolidate and streamline the provisions of the Listing Agreement for different segmentsof capital markets to ensure better enforceability. The said regulations were effectivefrom 1 st December 2015. Accordingly the Company has entered into a Listing Agreementwith BSE in compliance of the same in April 2016.
11 AUDITORS REPORT
The Report given by the Auditors on the financial statements of the Company is part ofthis Annual Report. There has been no qualification reservation adverse remark ordisclaimer given by the Statutory Auditors in their Report and by Company Secretary inpractice in his Secretarial Audit Report.
The Board wishes to place on record its gratitude to the Companys customersconsultants auditors and various Government authorities for their valuable support andguidance. The Board also places on record its sincere gratitude to all stakeholdersincluding shareholders valued clients architect consultant contractors suppliers andwell wishers for their goodwill patronage and wholehearted support. The Board alsorecords the concentrated efforts put in and the valuable contribution made by the staff atall levels of your Company and looks forward to their unwavering commitment and teamworkfor the all-round progress of the Company.
As part of the Companys Green Initiative the Company will send documents likeNotice convening the general meetings Financial Statements Directors Report etc.to the e-mail address provided by the members.
We therefore appeal to the members who have yet not registered themselves to be apart of the said Green Initiative and request the members to register theirname for receiving the said documents in electronic mode by sending an email giving theirRegistered Folio Number and/or DP ID/Client ID to the dedicated email address firstname.lastname@example.org and register their request.
Your Directors are thankful to the shareholders for actively participating in the GreenInitiative and seek your continued support for implementation of the green initiative.
| ||For and on behalf of the Board |
|Vadodara ||Jitendra S. Sura |
|July 23 2016 ||Chairman & Managing Director |