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Shah Construction Company Ltd.

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Shah Construction Company Ltd. (SHAHCONSTRUCTN) - Director Report

Company director report

TO THE MEMBERS OF SHAH CONSTRUCTION COMPANY LIMITED

Your directors are pleased to present the Annual Report and the Company’s AuditedFinancial Statement for the financial year ended March 31 2015.

FINANCIAL RESULTS

The Company’s financial performance for the year ended March 31 2015 issummarized below:

Financial Results :

2014-15 2013-14
( Rupees in Lacs) (Rupees in Lacs)
Total income 78.30 115.35
Profit/ (Loss) before finance costs and Depreciation 7.72 62.17
Less: Finance costs 112.46 56.33
Depreciation 13.99 10.51
Profit/(Loss) after finance cost and depreciation Carried to balance sheet (118.73) (4.67)

RESULTS OF OPERATIONS AND STATE OF AFFAIRS OF THE COMPANY

* Total income decreased by 32% to Rs. 78.30Lacs from Rs.115.35 Lacs in the previousyear.

* Loss after finance cost and depreciation increased to Rs. 118.73 Lacs for the yearended 31st March 2015 compared to previous year Rs. 4.67.

There are no material changes and commitments have occurred after the close of thefinancial year till the date of this report which affect the financial position of theCompany.

DIVIDEND AND TRANSFER TO RESERVE

In view of the loss the Directors are unable to recommend any dividend and no amount istransferred to Reserves & Surplus for the financial year 2014-15.

DIRECTORS’ RESPONSIBILITY STATEMENT

Your Directors state that:

a) in the preparation of the annual accounts for the year ended March 31 2015 theapplicable accounting standards read with requirements set out under Schedule III to theAct have been followed and there are no material departures from the same;

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 as at March 31 2015 and of the loss ofthe Company for the year ended on that date;

c) the Directors have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the 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 are operatingeffectively.

f) the Directors had devised proper systems to ensure compliance with the provisions ofall applicable laws and that such system were adequate and operating effectively.

CONTRACTS AND ARRANGEMENTS WITH RELATED PARTIES

All contracts/arrangements/transactions entered by the Company during the financialyear with related parties wherein ordinary course of business and on arms length basis andthat the provisions of Section 188 of the Companies Act 2013 are not attracted. Thusdisclosure in Form AOC-2 is not required.

Your Directors draw attention of the members to Note 27 to the financial statementwhich sets out related party disclosures.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

The provisions relating to Corporate Social Responsibility (CSR) are not applicable tothis Company.

RISK MANAGEMENT

During the year your Directors have constituted a Risk Management Committee which hasbeen entrusted with the responsibility to assist the Board in (a) Overseeing and approvingthe Company’s enterprise wide risk management framework (b) Overseeing that all therisks that the organization faces such as strategic financial credit market liquiditysecurity property IT legal regulatory reputational and other risks have beenidentified and assessed and there is an adequate risk management infrastructure in placecapable in addressing those risks. Risk Management Policy was reviewed and approved by theCommittee.

The Company manages control monitors and reports on the principal risk anduncertainties that can impact its ability to achieve its strategic objectives

INTERNAL FINANCIAL CONTROLS

The Company has in place adequate internal financial controls with reference to thefinancial statements. During the year such controls were tested and no reportable materialweakness in the design or operation was observed.

DIRECTORS AND KEY MANAGERIAL PERSONNEL AND COMMITTEES

In accordance with the provisions of the act and Articles of Association of the CompanyMr. Damji Lalji Shah and Mr. Mehul J Shah retire by rotation and being eligible offerthemselves for re-appointment at the ensuing annual general meeting.

Mr. Mehul J Shah has been appointed as Managing Director with effect from15thJanuary2015 for a period of 5 year without remuneration. The necessary resolution forapproval members is proposed at the ensuing annual general meeting.

Ms. Jaywanti Jadavji Shah (DIN 03327810) woman director has been appointed as anadditional Director of the Company with effect from 26th March 2015 in termsof the provisions Section 149 and other applicable provisions of the Companies Act 2013read with Rule 3 of Companies (Appointment and Qualification of Directors) Rules. Sheholds the office as such till the ensuing annual general meeting and being eligible offerherself for the appointment as director liable to retire. The necessary resolution isproposed for her appointment as director of the Company Mr. Keshardeo Sawarmal Poddarresigned as director of the Company effective 31/3/2015. Mr. Sanjay P Shah Mr. SachikumarN. Adalja and Mr. Yogesh J Shah are Independent Directors in terms section 149 of theCompanies Act2013 and the Rules framed thereunder .The necessary resolutions for theirappointments are proposed for their appointments as independent directors 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 the CompaniesAct 2013.

The Company has devised a policy for performance in relation of Independent DirectorsBoard and Committees which includes criteria for performance evaluation of theNon-Executive and Executive Directors.

The detailed programs for familiarization of Independent Directors with the Companytheir roles rights and responsibilities in the Company nature of the industry in whichthe Company operates business model of the Company are put in place.

Audit Committee

The Company has constituted the Audit Committee which comprises of IndependentDirectors viz. Mr. Sachi N Adalja Chairman and Mr. Sanjay P. Shah and Mr. Dinesh Poddaras other members. All the recommendations made by the Audit Committee were accepted by theBoard.

Nomination & Remuneration Committee:

The Company has constituted the Nomination & Remuneration Committee of the Board isconstituted to formulate and recommend to the Board from time to time a compensationstructure for Managing Directors/Whole-time Directors and Managerial Personnel of theCompany.

The nomination and Remuneration Committee comprises Independent Directors viz. Mr.Sachi N Adalja Chairman and Mr. Sanjay P shah and Mr. Dinesh Poddar as other members.

Stakeholders Relationship Committee

The Company has constituted stakeholders Committee comprises of three Directors namelyMr. Sachi N Adalja Chairman and Mr. Sanjay P shah and Mr. Dinesh Poddar as other members.

REMUNERATION AND NOMINATION POLICY

The Board of Directors has framed a policy which lays down a framework in relation toremuneration of Directors Key Managerial Personnel and Senior Management of the Company.This policy also lays down criteria for selection and appointment of Board Members.

AUDITORS AND AUDITORS REPORT

Statutory Auditors’

M/s. N. B. Purohit & Co. Chartered Accountants Statutory Auditors of the Companyhold the office till the conclusion of ensuing Annual General Meeting and are eligible forre-appointment. The Company has received a letter from M/s. N. B. Purohit & Co to theeffect that their re-appointment if made would be within the prescribed limits underSection 141 (3)(g) of the Companies Act 2013 and they are not disqualified forre-appointment.

The observations made in the Auditors’ report read together with the relevantnotes thereon are self- explanatory and hence do not call for any comments under section134 of the Companies Act 2013.

Secretarial Auditor

The Board has appointed D.Kothari & Associates Practicing Company Secretary toconduct the Secretarial Audit for the financial year ended 2014-15. The Secretarial Auditreport for the financial year ended March 31 2015 is annexed herewith and marked asAnnexure I to this report. Regarding the observations in the Secretarial Audit Reportdirectors wish to clarify that due to financial constraints economic reasons andadministrative difficulties Equity Shares of the Company have not been demated andconsequently the Company is not able to conduct e voting the quarterly results are notpublished in the newspapers however the same are sent to Bombay Stock Exchange Ltdimmediately after the same are approved besides the share are not traded as also thefloating stock of the public holding is very meager. The management has taken steps tocomply the required compliances within the constraints mentioned herein as soon aspossible.

DISCLOSURES

Vigil Mechanism

The Vigil Mechanism of the Company which also includes Whistle Blower Policy in termsof the Listing Agreement includes an ethics and compliance task force comprising seniorexecutives of the Company. Protected disclosures can be made by Whistle Blower through anemail or letter to the Chairman of the Audit Committee.

Meetings of the Board

Seven meetings of the Board of Directors were held during the year on the followingdates namely 30/5/2014 14/8/2014 14/11/2014 15/11/2014 8/12/2014 14/02/2015 and26/03/2015.

Particulars of loans given investments made Guarantees given and Securities provided

The Company has not given any loans or made any investments u/s 186 of the CompaniesAct 2013.

Conservation of Energy technology absorption and foreign exchange earning and outgo.

A) The Company is not engaged in manufacturing activity however wherever possiblemeasures have been taken to conserve the energy.

B) The Company has neither purchased any technology domestically nor imported anytechnology hence the question of furnishing the information regarding technologyabsorption does not arise.

C) Foreign Exchange earnings and Outgo

a) Foreign Exchange earned : Nil
b) Foreign Exchange used : Nil

Extract of Annual Return

Extract of Annual Return of the Company is annexed herewith as Annexure II to thisreport.

Particulars of employees and related disclosures

The total number of permanent employees as on 31/3/2015 were 3.

The Company has not paid any remuneration to Managing director/ directors hence thequestion of furnishing information regarding ratio of remuneration of each director to themedian remuneration of the employees of the Company percentage increase in remunerationof each director comparison of remuneration of the Key Managerial remuneration againstcompany performance and percentile increase key parameters for variable components notapplicable.

Market Capitalization as on 31/3/2014 Rs.84.66 Lacs

Market Capitalization as on 31/3/2015 Rs. 84.66 Lacs

There is no change in market capitalization

PE ratio as on 31/3/2014 (Rs.18.10)

PE ratio as on 31/3/2015 (Rs. 0.71)

The Company does not have any employee whose particulars are required to be disclosedin terms of the provisions of Section 197(12) of the act read with Rule 5(2) and 5(3) ofthe Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 hencefurnishing of the same does not arise.

General

Your Directors take that no disclosure or reporting required in respect of thefollowing items as there were no transactions on these items during the year under review.

1) Details relating to deposits covered under Chapter V of the act.

2) Issue of Equity Shares to differential rights has to dividend voting or otherwise.

3) Issue of shares (including sweat equity shares) to employees of the Company

4) The Company does not have any subsidiaries hence the question of receivingremuneration or commission by the Managing Directors or Whole Time Directors from thesubsidiaries of the Company does not arise.

5) No significant or material orders were passed by the Regulators or Courts orTribunals which impact the going concern status and Company’s operation in thefuture.

Your Directors further state that during the year under review there were no casesfiled pursuant to the Sexual Harassment of Women at Workplace (Prevention Prohibition andRedressal) Act 2013.

ACKNOWLEDGEMENT

Your Directors would like to access the sincere appreciation for the assistance andcooperation received from Shareholders Bank Government Authorities and other Businessconstituents during the year under review.

On behalf of the Board of Directors
Mehul J shah
Managing Director
DIN 00933528
Keshardeo S Poddar
Director
DIN 00158601
Place : Mumbai
Date : 2nd September 2015

ANNEXURE I TO THE DIRECTORS REPORT

Form No. MR-3

SECRETARIAL AUDIT REPORT

FOR THE FINANCIAL YEAR ENDED 31ST MARCH 2015

[Pursuant to section 204(1) of the Companies Act 2013 and rule No.9 of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014]

To

The Members

SHAH CONSTRUCTION CO. LIMITED

11 New Link Road Shah Industrial Estate

Opp. Anna temple Andheri (W)

Mumbai-400053

We have conducted the secretarial audit of the compliance of applicable statutoryprovisions and the adherence to good corporate practices by SHAH CONSTRUCTION CO.LIMITED (hereinafter called the company). Secretarial Audit was conducted in a mannerthat provided us a reasonable basis for evaluating the corporate conducts/statutorycompliances and expressing our opinion thereon.

Based on our verification of the Company’s books papers minute books forms andreturns filed and other records maintained by the company and also the informationprovided by the Company its officers agents and authorized representatives during theconduct of secretarial audit We hereby report that in our opinion the company hasduring the audit period covering the financial year ended on 31st March 2015complied with the statutory provisions listed hereunder and also that the Company hasproper Board-processes and compliance-mechanism in place to the extent in the manner andsubject to the reporting made hereinafter: we have examined the books papers minutebooks forms and returns filed and other records maintained by the Company for thefinancial year ended on 31st March 2015 according to the provisions of:

(i) The Companies Act 2013 (the Act) and the rules made thereunder;

(ii) The Securities Contracts (Regulation) Act 1956 (‘SCRA’) and the rulesmade thereunder;

(iii) The Depositories Act 1996 and the Regulations and Bye-laws framed thereunder;

(iv) Foreign Exchange Management Act 1999 and the rules and regulations madethereunder to the extent of Foreign Direct Investment Overseas Direct Investment andExternal Commercial Borrowings;

(v) The following Regulations and Guidelines prescribed under the Securities andExchange Board of India Act 1992 (‘SEBI Act’):-

(a) The Securities and Exchange Board of India (Substantial Acquisition of Shares andTakeovers) Regulations 2011;

(b) The Securities and Exchange Board of India (Prohibition of Insider Trading)Regulations 1992;

We have also examined compliance with the applicable clauses of the following:

(i) Secretarial Standards issued by The Institute of Company Secretaries of India (Notapplicable to the Company during the audit period).

(ii) The Listing Agreement entered into by the Company with BSE Limited.

To the best of our understanding we are of the view that during the period underreview the Company has complied with the provisions of the Acts Rules RegulationsGuidelines Standards etc. mentioned above except to the extent as mentioned below:

1. The Company has not opted for dematerialization of its shares.

2. the company did not provide e-voting facility to its shareholders in respect of allshareholders' resolutions to be passed at General Meeting.

3. The Company has not published in the news papers the audited and unaudited financialre sults and as per the requirement of clause 41 of the Listing Agreement.

4. The Company has not published in the news paper the notice of meetings as per therequirement of section 91 of the Companies Act 2013.

5. The Company has complied with the provision of appointment of Independent Directorsappointment of CFO appointment of internal auditor but the necessary forms were notfiled with the concerned Registrar of Companies Maharashtra at Mumbai within the periodof review. However the Company has filed all the required forms since than

6. The Company has not appointed a whole time Company Secretary.

7. The Company has yet to comply with the minimum public shareholding requirement underthe Securities Contracts Regulations (Rules) 1957 ("SCRR").

We further report that

having regard to the compliance system prevailing in the Company and on examination ofthe relevant documents and records in pursuance thereof on test-check basis the Companyhas complied with the following laws to the extent applicable specifically to theCompany as per the representations made by the Company:

1. Indian Contract Act 1872

2. Indian Electricity Act 1910

3. Water (Prevention and Control of Pollution) Act 1974

4. Water (Prevention and Control of Pollution) Cess Act 1977

5. Sexual Harassment of Women at Workplace (Prevention Prohibition and Redressal) Act2013;

6. Information Technology Act 2000; and

We further report that

The Board of Directors of the Company is duly constituted with proper balance ofExecutive Directors Non-Executive Directors and Independent Directors. The changes in thecomposition of the Board of Directors that took place during the period under review werecarried out in compliance with the provisions of the Act.

• Adequate notice is given to all the Directors to schedule the Board Meetingsagenda and detailed notes on agenda are sent at least seven days in advance and a systemexists for seeking and obtaining further information and clarifications on the agendaitems before the meeting and for meaningful participation at the meeting.

• Majority decisions are carried through while the dissenting members’ viewsif any are captured and recorded as part of the minutes.

We further report that

a. the Company has generally complied with the requirements under the Equity ListingAgreements entered into with Bombay Stock Exchange Ltd. Mumbai except few events asmentioned above.

b. the Company has complied with the provisions of the Securities and Exchange Board ofIndia (Substantial Acquisition of Shares and Takeovers) Regulations 2011 including theprovisions with regard to disclosures and maintenance of records required under the saidRegulations;

c. the Company has complied with the provisions of the Securities and Exchange Board ofIndia (Prohibition of Insider Trading) Regulations 1992 including the provisions withregard to disclosures and maintenance of records required under the said Regulations;

We further report that:

There are adequate systems and processes in the Company commensurate with the size andoperations of the Company to monitor and ensure compliance with applicable laws rulesregulations and guidelines.

This report is to be read with our letter of even date which is annexed as Annexure andforms integral part of this report.

For D.Kothari And Associates

Company Secretaries

Dhanraj Kothari

Proprietor

FCS No. : 4930

CP No. : 4675

Place: Mumbai

Date: 2nd September 2015

ANNEXURE

To

The Members

SHAH CONSTRUCTION CO. LIMITED

11 New Link Road Shah Industrial Estate

Opp. Anna temple Andheri W

Mumbai-400053

Our report of even date is to be read along with this letter.

1. Maintenance of secretarial record is the responsibility of the management of thecompany. Our responsibility is to express an opinion on these secretarial records based onour audit.

2. We have followed the audit practices and processes as were appropriate to obtainreasonable assurance about the correctness of the contents of the Secretarial records. Theverification was done on test basis to ensure that correct facts are reflected insecretarial records. We believe that the processes and practices we followed provide areasonable basis for our opinion.

3. We have not verified the correctness and appropriateness of financial records andBooks of Accounts of the company.

4. Where ever required we have obtained the Management representation about thecompliance of laws rules and regulations and happening of events etc.

5. The compliance of the provisions of Corporate and other applicable laws rulesregulations standards is the responsibility of management. Our examination was limited tothe verification of procedures on test basis.

6. The Secretarial Audit report is neither an assurance as to the future viability ofthe company nor of the efficacy or effectiveness with which the management has conductedthe affairs of the company.

For D.KothariAnd Associates

Company Secretaries

Dhanraj Kothari

Proprietor

FCS No. : 4930

CP No. : 4675

Place: Mumbai

Date: 2nd September 2015