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Aarvi Encon Ltd.

BSE: 535014 Sector: Others
NSE: AARVI ISIN Code: INE754X01016
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Aarvi Encon Ltd. (AARVI) - Director Report

Company director report

Dear Shareholders

Your Directors have the pleasure in presenting the 34th Annual Report of your Company(Aarvi Encon Limited/AARVI) on business and operations of the Company along with theAudited Standalone and Consolidated Financial Statements and the Auditor's Report for theyear ended March 31 2022. Consolidated performances of the Company and its subsidiarieshave been referred to wherever it's required.

Corporate Overview:-

The Company was incorporated in 1987 and has been creating value for clients in Indiaand abroad by delivering world- class Engineering and Manpower Outsourcing Services. TheCompany's dynamic approach to problem solving enable them to deliver quality services ontime with consistent performance to the clients across the globe. Aarvi has long standingwith clients and working with most of them for over decades. In the year 2017 the Companygot listed on the SME platform of National Stock Exchange of India Limited after itssuccessful Initial Public Offer (IPO). The Trading in the Equity Shares of the Company hasbeen migrated from SME EMERGE platform to Main Board of NSE w.e.f. June 24 2020. It hascorporate headquarters at Mumbai and branch offices at various locations in India andabroad.

1. FINANCIAL HIGHLIGHTS/PERFORMANCE OF THE COMPANY

The financial results for the year ended on 31st March 2022 and the correspondingfigures for the previous year are as under:

Particulars

Consolidated (Rs. in Crores)

Standalone (Rs. in Crores)

Year ended 31st March 2022 Year ended 31st March 2021 Year ended 31st March 2022 Year ended 31st March 2021
Net Revenue from Operations 288.54 201.78 274.51 189.65
Other Income 1.17 2.30 1.21 2.28
Total Income 289.72 204.08 275.72 191.93
Total Expenditure 277.57 193.77 263.33 183.42
Profit before tax 12.15 10.30 12.39 8.51
Current Tax 0.11 - 0.11 -
Short/Excess Provision for Tax - (0.97) - (0.97)
Deferred Tax (0.02) 0.82 (0.02) 0.83
Profit after taxes 12.06 10.46 12.30 8.65

STANDALONE AND CONSOLIDATED FINANCIAL STATEMENTS

As mandated by the Ministry of Corporate Affairs the financial statements for the yearended on March 312022 has been prepared in accordance with the Indian AccountingStandards (Ind AS) notified under Section 133 of the Companies Act 2013 (hereinafterreferred to as "The Act") read with the Companies (Accounts) Rules 2014 asamended from time to time. The estimates and judgments relating to the FinancialStatements are made on a prudent basis so as to reflect in a true and fair manner theform and substance of transactions and reasonably present the Company's state of affairsprofits and cash flows for the year ended March 312022. The

Notes to the Financial Statements adequately cover the standalone and consolidatedAudited Statements and form an integral part of this Report.

REVIEW OF BUSINESS OPERATIONS AND FUTURE PROSPECTS/STATE OF AFFAIRS:

Your Directors wish to present details of Business Operations done during the yearunder review:

STANDALONE PERFORMANCE

The Company has reported good performance in revenue during FY 2021-22. Revenue fromoperations at Rs. 274.51/- Cr. as against Rs.189.65/- Cr. of previous year which hasincreased drastically by 44% year on year reflecting an exceptional results in keymarkets and segments. Operating profit at Rs.12.30/- Cr. as against Rs. 8.65/- Cr. ofprevious year witnessing tremendous increase of 42% year on year.

CONSOLIDATED PERFORMANCE

Your Company has reported growth in revenue for the year ended on 31st March 2022.Revenue from operations at Rs.288.54/- Cr. as against Rs.201.78/- Cr. of previous yearreflecting the increase in the growth than the previous year performance in key marketsand segments. Operating profit at Rs. 12.06/- Cr. as against Rs. 10.46/- Cr. of previousyear shows the upward growth.

Your Directors express their happiness on the overall financial performance and theprogress made on different areas by the Company during the year under review.

In accordance with Section 129 of Companies Act 2013 and the IND AS-27 on Consolidatedand Separate Financial Statements the Audited Consolidated Financial Statements areprovided in the Annual Report.

2. SHARE CAPITAL

The Total Paid-up Capital of the Company as on March 31 2022 is Rs. 147840000/-divided into 14784000 equity shares of Rs.10/- each. There has not been any new issueof share during the year under review.

In order to enable the employees of the Company to participate in the future growth andsuccess of the Company the Board of Directors in their meeting held on May 26 2022adopted Employee Stock Option Plan Scheme 2022.

This ESOP Scheme is subject to Shareholders approval in the ensuing Annual GeneralMeeting of the Company.

3. DIVIDEND

During the year the Board of Directors of the Company has declared and distributed aninterim dividend at 5% i.e. Rs. 0.5/- per fully paid- up Equity Share of the face value ofRs. 10/- each and the same was distributed on December 1 2021.

The Board of Directors recommended a dividend 15% i.e. Re. 1.50/- per fully paid-upEquity Share of the face value of Rs. 10/- each for the year ended March 312022 based onthe parameters laid down under the Dividend Distribution Policy.

The dividend on Equity Shares is subject to the approval of Shareholders at the 34thAnnual General Meeting (‘AGM') scheduled to be held on Friday July 29 2022. Thedividend once approved by the Shareholders will be paid after July 29 2022.

The dividend on Equity Shares if approved by the Members would involve a cash outflowof Rs. 2.21 Crores and shall be paid out of profits of the Company for previous financialyears i.e. FY 2021-22 forming a part of retained earnings pursuant to Section 123 (1) ofthe Companies Act 2013 (‘the Act').

In view of the amendment to the Income Tax Act 1961 through the Finance Act 2020imposition of Dividend Distribution Tax has been abolished. The dividend if declared atthe ensuing AGM will be taxable in the hands of the shareholders of the Company.

DIVIDEND DISTRIBUTION POLICY

As mandated under regulation 43A of SEBI Listing Regulations the Board of Directors ofthe Company at its meeting held on June 3 2021 adopted a Dividend Distribution Policy forthe Company which sets out the parameters and circumstances that will be taken intoaccount by the Board in determining the distribution of dividend to its shareholders.

4. RESERVES

The Balance in Reserves & Surplus stands at Rs. 79.91/- Cr. in comparison with theprevious year balance of Rs. 70.29/- Cr.

5. SUBSIDIARY COMPANIES

The Company has three Subsidiary Companies and One Associate Company as on March312022.

1. Aarvi Encon FZE located at United Arab Emirates (UAE) Wholly Owned Subsidiary.

2. Aarvi Engineering and Consultants Private Limited Wholly Owned Subsidiary.

3. Aarvi Encon Resources Limited located at United Kingdom (UK) Wholly OwnedSubsidiary.

4. Aarvi Encon Staffing Services W.L.L. Located at Qatar Associate/ Joint VentureCompany.

Your Company has formulated a Policy for determining ‘Material' Subsidiariespursuant to the provisions of Regulation 16 of SEBI LODR Regulations 2015. The saidPolicy is available on the Company's websitehttps://www.aarviencon.com/policies-of-the-company

Aarvi Encon FZE a wholly owned Subsidiary Company continues to be a materialsubsidiary of the Company as its net worth stands more than 10% to the total net worth ofthe Company.

Aarvi Encon FZE is a Free Zone Establishment at SAIF Zone Sharjah UAEincorporated on October 13 2015. A Wholly owned Subsidiary of the Company had partneredwith Bon Accord Employment Services a proprietary Company at UAE in the year 2018 todevelop the business of providing manpower or consultancy services in UAE.

The Company has successfully executed the valuable projects along with the Bon Accordin Abu Dhabi and it expects more projects in the upcoming year also.

Aarvi Engineering & Consultants Private Limited

a Wholly Owned Subsidiary of the company engaged in Consultancy Services had nooperation during the year under review. The accounts of Aarvi Engineering &Consultants Private Limited are consolidated with the accounts of the company according tothe provisions of Companies Act 2013 Income Tax Act 1961 and read with application"Accounting Standard" issued by ICAI.

Aarvi Encon Resources Ltd (AERL) incorporated on March 07 2018 at United Kingdom(UK) which is a wholly owned Subsidiary of the Company. The Company is on final stage tostart its operation. The accounts of the AERL are also consolidated with the Company.

Internationally the Company has its presence via Aarvi Encon LLC Joint VentureCompany incorporated on January 15 2021 at Sultanate of Oman and PT Aarvi EnconServices a Joint Venture Company incorporated on June 10 2021 at Jakarta Indonesiaboth of the aforesaid Joint Ventures are the JV's of Aarvi Encon FZE Located in the UnitedArab Emirates.

Aarvi Encon staffing Services W.L.L. (Qatar) a

Joint Venture Company located at Qatar incorporated on January 24 2022.

The aforesaid Companies are yet to start its operations.

Pursuant to the provisions of Section 129(3) of the Act a statement containing thedetails of performance and salient features of financial statements of the Company'ssubsidiaries in Form AOC-1 is attached herewith to the financial statements of the Companyas Annexure -1.

Further pursuant to the provisions of Section 136 of the Act the audited financialstatements of the Company consolidated financial statements along with relevant documentsand separate audited financial statements in respect of subsidiaries are available on thewebsite of the Company https://www.aarviencon.com/financial-reporting.

6. MANAGEMENT DISCUSSION AND ANALYSIS (MD&A) REPORT

Pursuant to the provisions of Regulation 34 of the SEBI LODR Regulations 2015 theManagement Discussion and Analysis capturing your Company's performance industry trendsand other material changes with respect to your Companies and its subsidiaries whereverapplicable are set out separately in this Annual Report.

7. CORPORATE GOVERNANCE

Your Company is committed to maintain the highest standards of corporate governance. Webelieve sound corporate governance is critical to enhance and retain investor trust. Ourdisclosures seek to attain the best practices in corporate governance. We always strive toimplement several best corporate governance practices in the Company to enhance long-termshareholder value and respect minority rights in all our business decisions. CorporateGovernance Report for financial year 2021-22 is presented in separate section forming partof this Annual Report. A Certificate from Bhatt & Associates Company Secretaries LLPconfirming compliance to the conditions of Corporate Governance as stipulated under Para Eof Schedule V of the Listing Regulations is enclosed to this Report.

8. DEPOSITS

The Company has not accepted/ hold/ any deposits from public within the ambit ofSection 73 of the Companies Act 2013 and the Companies (Acceptance of Deposits) Rules2014 during the year under review. Hence the requirement for furnishing the detailsrelating to deposits covered under Chapter V of the Act or the details of deposits thatare not in compliance with the Chapter V of the Act is not applicable.

9. CHANGE IN THE NATURE OF BUSINESS

There has been no change in the nature of business of the Company during the year underreview.

10. PARTICULARS OF LOAN GUARANTEE OR INVESTMENTS

The particular of loans given guarantees provided and investments made have been dulydisclosed in the Financial Statements.

11. RELATED PARTY TRANSACTIONS

All transactions entered into by the Company with

Related Parties for the year under review were on arm's length basis and in ordinarycourse of business and hence not falling under the ambit of Section 188 of the CompaniesAct 2013. No Related Party Transactions (RPTs) were entered into by the Company duringthe financial year which attracted the provisions of section 188 of the Companies Act2013. There being no ‘material' related party transactions/contracts/arrangements asdefined under regulation 23 of the SEBI (LODR) Regulations 2015 there are no details tobe disclosed in Form AOC-2 (Annexure-2) in that regard.

All related party transactions are mentioned in the notes to the accounts which setsout related party disclosures.

The Company has formulated a Policy on "Materiality of Related PartyTransactions" which are in line with the provisions of Section 188 of the CompaniesAct 2013 and Regulation 23 of SEBI LODR Regulations 2015.

The same is also available on the Website of the Company athttps://www.aarviencon.com/policies- of-the-company of the Company.

During the year 2021-22 pursuant to section 177 of the Companies Act 2013 andregulation 23 of SEBI LODR Regulations 2015 all RPTs were placed before the AuditCommittee for its approval. Prior omnibus approval from the Audit Committee is obtainedfor transactions which are repetitive and also normal in nature. During the year underreview there were no material related party transactions under Regulation 23 (4) of SEBILODR Regulations 2015 entered into by the Company which necessitates approval ofShareholders.

12. BOARD OF DIRECTORS COMMITTEES OF BOARD AND KEY MANAGERIAL PERSONNEL

A. Board of Directors

Your Company's Board of Directors as on the financial year end March 312022 comprisesof Two Executive Directors out of which one is Managing Director and Four IndependentDirectors which includes Two Women Directors and the same is disclosed in the Report onCorporate Governance as set out separately in this annual report.

In compliance with Section 203 of the Act Ms. Leela Bisht was appointed as CompanySecretary & Compliance Officer and Whole Time Key Managerial Personnel of the Companyw.e.f. June 3 2021.

During the year under review the non-executive directors of the Company had nopecuniary relationship or transactions with the Company other than sitting fees orreimbursement of expenses if any incurred by them for the purpose of attending meetingsof the Board/Committee of the Company.

NUMBER OF BOARD MEETINGS DURING THE YEAR

During the year 5 meetings of the Board of Directors were held; details of the samehave been mentioned in Corporate Governance Report.

B. Committees of the Board

As required under the Companies Act 2013 and SEBI LODR Regulations 2015 the Boardhas formed five Committees viz.

• Audit Committee;

• Nomination and Remuneration Committee ;

• Stakeholders' Relationship Committee;

• Corporate Social Responsibility Committee And

• Finance and Management Committee.

Keeping in view the requirements of the Companies Act 2013 and SEBI LODR Regulations2015 the Board decides the terms of reference of these Committees and the assignment ofmembers to various Committees. The recommendations if any of these Committees aresubmitted to the Board for approval.

AUDIT COMMITTEE

Pursuant to Section 177(8) of the Companies Act 2013 the composition of the AuditCommittee is disclosed as under:

Sr. No. Name of the Member Designation
1. Mr. Devendra J. Shrimanker Chairperson (Independent Director)
2. Mrs. Sonal N. Doshi Member (Independent Director)
3. Mrs. Padma V. Devarajan Member (Independent Director)
4. Mr. Jaydev V. Sanghavi Member (Executive Director and CFO)

The details of all the Committees along with their composition number of meetings andattendance at the meeting is stated in Report on Corporate Governance as set outseparately in this annual report.

During the year all recommendations of the Audit

Committee were accepted by the Board.

NOMINATION AND REMUNERATION COMMITTEE

In accordance with the provisions of the Section 178 of the Companies Act 2013 readalong with the applicable Rules thereto and Regulation 19 of the SEBI LODR Regulations2015 the Company has constituted Nomination and Remuneration Committee and has formulated"Nomination and Remuneration Policy" containing criteria for determiningqualifications positive attributes independence of a director and other matters providedunder section 178(3) of Companies Act 2013 for selection of any Director Key ManagerialPersonnel and Senior Management Employees.

The said policy of the Company is directed towards rewarding performance based onreview of achievements on a periodic basis. The Board of Directors has approved Nominationand Remuneration policy and available at the Company's website under the web linkhttps://www.aarviencon. com/policies-of-the-company.

The details pertaining to composition of the Nomination and Remuneration Committee aredisclosed as under:

Sr. No. Name of the KMP Designation
1. Mr. Devendra J. Shrimanker Chairperson (Independent Director)
2. Mrs. Sonal N. Doshi Member (Independent Director)
3. Mrs. Padma V. Devarajan Member (Independent Director)
*4. Mr. Sharad S. Sanghi Member (Independent Director)

*Appointed as a Committee Member in the Board of Directors Meeting held on April 262022.

STAKEHOLDERS RELATIONSHIP COMMITTEE

As per the provisions of section 178 of Companies Act 2013 the composition of theStakeholders Relationship Committee is as under:

Sr. No. Name of the KMP Designation
1. Mrs. Sonal N. Doshi Chairperson (Independent Director)
2. Mr. Devendra J. Shrimanker Member (Independent Director)
3. Mr. Jaydev V. Sanghavi Member (Executive Director and CFO)

During the year under review the Company received no complaints from any of itsshareholders. The Company Secretary acts as the Secretary to the Committee.

CORPORATE SOCIAL RESPONSIBILITY

As per the provisions of section 135 of Companies Act 2013 the composition of the CSRCommittee is as under:

Sr. No. Name of the Member Designation
1. Mr. Virendra D. Sanghavi Chairperson - Managing Director
2. Mrs. Sonal N. Doshi Member (Independent Director)
3. Mrs. Padma V. Devarajan Member (Independent Director)
4. Mr. Sharad S. Sanghi Member (Independent Director)

The Company's CSR Policy provides guidelines to conduct CSR activities of the Companywhich can be accessed on the Company's website at https://www.aarviencon.com/policies-of-the-company. During the year the Company has spent Rs.933082/- on CSR Activities . In terms of the provisions of the Act read with amendedCompanies (Corporate Social Responsibility Policy) Rules 2014 the CSR Report for thefinancial year 2021-22 forms part of the Board's Report and is annexed as Annexure 3 tothis report.

FINANACE AND MANAGEMENT COMMITTEE

The Board constituted the Finance & Management Committee The Committee has beengiven the powers in order to have convenience in expediting day to day matters relating toCompany's affairs like finance management etc. The composition of the Committee as on31st March 2022 is as follows:

Sr. No. Name of the KMP Designation
1. Mr. Virendra D. Sanghavi Chairperson - Managing Director
3. Mr. Jaydev V. Sanghavi Member (Executive Director and CFO)

The decisions of the Finance & Management Committee are to be ratified in thesubsequent Board Meetings.

C. Key Managerial Personnel

Pursuant to the provisions of Section 203 of the Companies Act 2013 the KeyManagerial Personnel

(KMP) of the Company as under;

Sr. No. Name of the KMP Designation
1. Mr. Virendra D. Sanghavi Managing Director
2. Mr. Jaydev V. Sanghavi Executive Director and CFO
3. Ms. Leela S. Bisht Company Secretary

D. Details of Directors or Key Managerial Personnel who were appointed or have resignedduring the year:

In accordance with the provisions of Section 152 (6) of the Companies Act 2013 and interms of the Articles of Association of the Company Mr. Jaydev V. Sanghavi (DIN:00759042) Executive Director of the Company retires by rotation at the forthcomingAnnual General Meeting and being eligible offers himself for re-appointment. The detailsof Mr. Jaydev V. Sanghavi are furnished in the Notice of the Annual General Meeting. TheBoard recommends his reappointment for the consideration of the Members of the Company atthe forthcoming Annual General Meeting.

Mr. Devendra J. Shrimanker (DIN: 00385083) and Ms. Sonal N. Doshi (DIN: 06672497) willbe reappointed for the final term of 5 years as an Independent Director subject to theShareholder approval at 34th Annual General Meeting for the second term of 5 consecutiveyears commencing from June 3 2022 to June 2 2027.

The Board recommends re-appointment of Mr. Virendra D. Sanghavi Managing DirectorCompany for the period of Five years w.e.f. July 24 2022 Mr. Jaydev V. SanghaviExecutive Director & Chief Financial Officer for a period of 5 (Five) Years w.e.f.June 5 2022 for the consideration of the Members of the Company at the ensuing AnnualGeneral Meeting.

E. Receipt of any commission by MD/ED from Company or from its holding or subsidiaryCompany

The Company has paid Commission @0.5% of the total turnover of the Company to Directorsi.e. Mr. Virendra D. Sanghavi Managing Director and Mr. Jaydev V. Sanghavi ExecutiveDirector during the year.

Director during the year as a part of remuneration is subject to the maximum limit ofRs. 1.68 Crs.

Further Mr. Virendra D. Sanghavi and Mr. Jaydev

V. Sanghavi did not draw any remuneration and /or commission from its subsidiaries.

13. Declaration by Independent Directors

The Board took on record all declarations and confirmations submitted by IndependentDirectors that they meet the criteria of independence as laid down under Section 149(6) ofthe Companies Act 2013 and Regulation 16(1) (b) and 25 of the SEBI LODR Regulations 2015and there has been no change in the circumstances which may affect their status as anindependent director during the year.

During the year under review the non-executive directors of the Company had nopecuniary relationship or transactions with the Company other than sitting fees orreimbursement of expenses if any incurred by them for the purpose of attending meetingsof the Board/Committee of the Company.

In the opinion of the Board the Independent director re-appointed during the tenurepossesses the requisite expertise and experience (including proficiency) and are personsof high integrity. They fulfil the conditions specified in the Companies Act 2013 and therules made thereunder and independent of the management.

The Independent Directors have also confirmed compliance with the provisions of therule 6 of Companies (Appointment and Qualifications of Directors) Rules 2014 as amendedrelating to inclusion of their name in the databank of independent directors.

The details of programme for familiarization of Independent Directors with the Companynature of industry in which Company operates and related matters are put on website of theCompany at https:// www.aarviencon.com/policies-of-the-company

14. Annual Evaluation

Performance evaluation of Independent directors was done by the entire Board excludingthe Independent Director being evaluated.

The Nomination and Remuneration Committee (NRC) has approved a framework/policy forperformance evaluation of the Board Committees of the Board and the individual members ofthe Board (including the Chairperson) that includes criteria for performance evaluationwhich is reviewed annually by the Committee. A questionnaire for the evaluation of theBoard its Committees and the individual members of the Board (including the Chairperson)designed in accordance with the said framework and covering various aspects of theperformance of the Board and its Committees including composition and quality roles andresponsibilities processes and functioning adherence to Code of Conduct and Ethics andbest practices in Corporate Governance as mentioned in the Guidance Note on BoardEvaluation issued by the Securities and Exchange Board of India on January 5 2017 wascirculated to the Directors.

Pursuant to the provisions of the Act and SEBI LODR Regulations 2015 and based onpolicy devised by committee the board has carried out annual evaluation of its ownperformance its committees and individual directors. The board performance was evaluatedon inputs received from all the Directors after considering criteria as mentionedaforesaid.

The performance of the committees was evaluated by the Board of Directors on inputsreceived from all committee members after considering criteria as mentioned aforesaid.

Pursuant to SEBI LODR Regulations 2015 performance evaluation of independent directorwas done by the entire board excluding the independent director being evaluated.

The performance evaluation of non-independent directors and the board as a whole andChairman of the Board and also assessed the quality quantity and timeliness of the flowof information between the Management and the Board which is necessary for the Board toeffectively and reasonably perform its duties was also carried out by the IndependentDirectors of the Company through separate meeting on March 29 2022.

15. Meetings of the Board/Committees

The meetings of the Board are scheduled at regular intervals to decide and discuss onbusiness performance policies strategies and other matters of significance. Theschedules of the meetings are circulated in advance to ensure proper planning andeffective participation in meetings. In certain exigencies decisions of the Board arealso accorded through Circular Resolution.

The Board met 5 (five) times during the financial year 2021-22. The maximum intervalbetween any two meetings did not exceed 1 20 days as prescribed in the Companies Act2013. Detailed information regarding the meetings of the Board/Committee are included inthe report on Corporate Governance as set out separately in this Annual Report.

A. STATUTORY AUDITORS

At the 29th AGM held on July 15 2017 the Members approved the appointmentof M/s. Arvind H. Shah & Co. Chartered Accountants (Firm Registration No. 100577W) asthe Statutory Auditors of the Company to hold office for a period of five consecutiveyears from the conclusion of the 29th AGM till the conclusion of the 34thAGM.

The Board of Directors based on the recommendation of the Audit Committee approved theappointment of M/s. Jay Shah & Associates as the Statutory Auditors of the Company fora term of five consecutive years i.e. to hold office from the conclusion of the ensuing34th AGM till the conclusion of the 39th AGM of the Company toaudit and examine the books of accounts of the Company subject to approval of the Membersat the ensuing 34th AGM. The Company has received a confirmation from the saidAuditors that they are not disqualified and are eligible to hold the office as Auditors ofthe Company. The necessary resolution for the appointment of M/s. Jay Shah & Co. (FirmRegistration No. 135424W) forms a part of the Notice convening the ensuing AGM scheduledto be held on Friday July 29 2022.

AUDITOR'S REPORT

The Auditor's Report on the Financial Statements of the Company for the year endingMarch 312022 is unmodified i.e. it does not contain any qualification reservation oradverse remark. The Auditors' Report is enclosed with the Financial Statements formingpart of the Annual Report.

DETAILS OF FRAUD REPORTED BY AUDITORS

There were no frauds reported by the Statutory Auditors under provisions of Section143(12) of the Companies Act 2013 and rules made thereunder.

B. INTERNAL AUDITOR AND INTERNAL AUDIT SYSTEMS

Your Company has appointed Natwarlal Vepari & Co. Chartered Accountants to conductinternal audit across the organization. We have strengthened the in-house internal auditand compliance team to supplement and support the efforts of M/s. Natwarlal Vepari &Co.

C. SECRETARIAL AUDITOR

Section 204 of the Companies Act 2013 inter-alia requires every listed company toannex with its Board's Report a Secretarial Audit Report given by a Company Secretary inpractice in the prescribed form. The Board of Directors appointed Bhatt & AssociatesCompany Secretaries LLP Mumbai as Secretarial Auditor to conduct the Secretarial Auditof the Company for financial year 2021-22 and his Report is annexed to this Board Report(Annexure 4).

D. Secretarial Compliance Report of Aarvi Encon Limited for the year ended March 312022

As per Regulation 24A of SEBI LODR Regulations 2015 read with SEBI Circular datedFebruary 08 2019 the listed entities in addition to the Secretarial Audit Report asrequired under section 204 of the Companies Act 2013 is also required to submit aseparate report i.e. Annual Secretarial Compliance Report with the exchange within sixtydays of the end of the year for compliance of all the applicable SEBI Laws circulars orguidelines thereunder.

The Secretarial Compliance Certificate has been issued by the Bhatt & AssociatesCompany Secretaries LLP after independent verification of the records books papers anddocuments as maintained by the Company as per all the applicable SEBI laws Regulationsand circulars/ guidelines issued thereunder.

The same was submitted to the Stock Exchange(s) within the stipulated date and a copyof the same is hosted at our website at https://www.aarviencon. com/announcements.

The observations and comments given by the Secretarial Auditor in their Report areselfexplanatory and hence do not call for any further comments. Refer Annexure 5 for theSecretarial Compliance Report and Secretarial Audit Report.

17. INTERNAL FINANCE CONTROL

The Company has adequate internal financial control system commensurate with the sizescale and complexity of its operations. The Company has in place a mechanism to identifyassess monitor and mitigate various risks to key business objectives. Major risksidentified by the business and functions are systematically addressed through mitigationaction on continuing basis. These are routinely tested and certified by Statutory as wellas Internal Auditors. The audit observations on internal financial controls areperiodically reported to the Audit Committee.

18. MATERIAL CHANGES AND COMMITMENTS IF ANY AFFECTING THE FINANCIAL POSITION OF THECOMPANY WHICH HAVE OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR OF THE COMPANY TO WHICHTHE FINANCIAL STATEMENTS RELATE AND THE DATE OF THE REPORT

There have been no material changes and commitments affecting the financial positionof the Company which have occurred between the end of the financial year of the Company towhich the financial statements relate and till the date of this Report.

19. RISK MANAGEMENT

The Company has adopted a draft Risk Management Policy which lays down the framework todefine assess monitor and mitigate the business operational financial and other risksassociated with the business of the Company. The Risk Management Policy enables for growthof company by helping its business to identify risks assess evaluate and monitor riskscontinuously and undertake effective steps to manage these risks.

20. THE CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS ANDOUTGO IN SUCH MANNER AS MAY BE PRESCRIBED

The information pertaining to Conservation of Energy Technology Absorption ForeignExchange Earnings and outgo as required under Section 134 (3) (m) of the Companies Act2013 read with Rule 8(3) of the Companies (Accounts) Rules 2014 are as stated below:

A) Conservation of Energy

1. The steps taken or impact on conservation of energy:

The Company applied strict control system to monitor day to day power consumption. TheCompany ensures optimal use of energy with minimum extent of wastage as far as possible.The day to day consumption is monitored in an effort to save energy.

2. The steps taken by the company for utilizing alternate sources of energy: Companyhas taken preventive steps w.r.t. electricity consumption as we are into service sectorand consume only electricity to operate laptop and maintain server system.

3. The Capital Investment on Energy Conservation Equipment.

The Company has not made any capital investment on energy conservation equipment.

B) Technology Absorption

The Company has no activities relating to technology absorption.

C) Foreign Exchange Earnings and Outgo

(Amount in Rs.)

Particulars 2020 - 21 2021 - 22
Foreign Exchange Earnings in terms of actual inflows NIL 300139.00
Foreign Exchange outgo in terms of actual outflow 402881.00 680086.00

21. VIGIL MECHANISM

Pursuant to the Regulation 22 of SEBI Listing Regulation 2015 and the provision ofSection 177(9) of the Companies Act 2013 read with Rule 7 of the Companies (Meeting ofBoard and its Powers) Rules 2014 a "Vigil Mechanism Policy" for Directors andEmployees of the Company is in place to report their genuine concern of any violation oflegal or regulatory requirements incorrect or misrepresentation of any financialstatements and reports unethical behavior actual or suspected fraud or violation of theCompany's code of conduct etc. for adequate safeguard against victimization of person whouse such mechanism and provision for direct access to the chairperson of the AuditCommittee. During the year under review no such complaints were received.

The details of the "Vigil Mechanism Policy" are available on the website ofthe Company i.e. https:// www.aarviencon.com/policies-of-the-company.

22. INSIDER TRADING REGULATIONS

Based on the requirements under SEBI (Prohibition of Insider Trading) Regulations1992 as amended from time to time the Insider Trading Policy as approved by the Board isin force in the Company. The Company also adopts the concept of Trading Window Closure toprevent its Directors Officers designated employees their relatives other connectedemployees and other connected persons from trading in the securities of the Company at thetime when there is access to Unpublished Price Sensitive Information (UPSI).

23. ANNUAL RETURN:

As required under Section 134(3)(a) of the Act the Annual return once filed withRegistrar of Companies/ MCA shall be placed on the website of the Company and can beaccessed at www.aarviencon.com

24. CREDIT RATING

Your Company's Domestic Credit Rating is CRISIL SME Rating 1 for the long-term debt/facilities by CRISIL. CRISIL has reaffirmed its ratings i.e. BBB/ STABLE for long termborrowings and A3 + for short term borrowings. The Credit Rating derive strength from theoperational track record of the Company cost competitiveness flexibility derived fromdiversified services and the Company' s effort to reduce cost and to improve costefficiency.

25. DIRECTORS' RESPONSIBILITY STATEMENT

The Directors' Responsibility Statement referred to in clause (c) of sub-section (3) ofSection 134 of the Companies Act 2013 shall state that:

(a) In the preparation of the annual accounts the applicable accounting standards hadbeen followed along with proper explanation relating to material departures;

(b) They have selected such accounting policies and applied them consistently and madejudgments and estimates that are reasonable and prudent so as to give a true and fair viewof the state of affairs of the company at the end of the financial year and of the profitand loss of the company for that period;

(c) They 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) They have prepared the annual accounts on a going concern basis;

(e) They have laid down internal financial controls to be followed by the company andthat such internal financial controls are adequate and were operating effectively and

(f) They have devised proper systems to ensure compliance with the provisions of allapplicable laws and that such systems were adequate and operating effectively.

26. LISTING ON STOCK EXCHANGE

The Equity shares of the Company got listed on The National Stock Exchange of India Ltd(NSE) SME Emerge Platform in the year 2017 and it has migrated the trading of its equityshares to the Main Board of NSE Ltd. (Capital Market Segment) on June 24 2020.

27. SIGNIFICANT AND MATERIAL ORDERS PASSED BY REGULATORS OR COURTS OR TRIBUNALSIMPARTING THE GOING CONCERN STATUS AND COMPANY'S OPERATION IN FUTURE

There are no significant and material orders passed by regulators or courts ortribunals imparting the going concern status and Company' operation in future.

28. PARTICULARS OF EMPLOYEES

In terms of the provisions of Section 197(12) of the Act read with Rules 5(2) and 5(3)of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 astatement showing the names of top ten employees in terms of remuneration drawn in thesaid rules forms part of this report. Further there were no employees drawingremuneration in excess of the limits set out in the said rules and hence aforesaiddisclosure is not applicable.

Disclosures relating to remuneration and other details as required under Section197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 forms part of this Report.

Having regard to the provisions of the second proviso to Section 136(1) of the Act theAnnual Report excluding the aforesaid information is being sent to the members of theCompany. Any member interested in obtaining such information may write to the CompanySecretary on cs@aarviencon.com and the same will be furnished on request. The Company hasno employee who is in receipt of remuneration of Rs. 850000/- per month and/or Rs.10200000 per annum and hence the Company is not required to give information under subrule 2 and 3 of Rule 5 of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014. Further Company has not posted any of the Employees in a countryoutside India not being directors or their relatives drawing more than sixty lakh rupeesper financial year or five lakh rupees per month during the year.

Disclosures relating to remuneration and other details as required under Section197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 forms part of this Report. Rule 5(1) of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014:

(a) Ratio of the remuneration of each Director Chief Financial Officer and CompanySecretary of the Company and b) ratio of the remuneration of each director to the medianremuneration of the employees of the Company for the financial year 2021 - 22:

Name of the Directors Designation Remuneration of the Directors % Increase in the Remuneration Ratio of Remuneration of each Director/ to median remuneration of employees. Increase/ (Decrease) in Median Remuneration as compared to Previous Year
Mr. Virendra D. Sanghavi Managing Director 16800000 - 39.77 (6.81)
Mr. Jaydev V. Sanghavi Executive Director & CFO 16800000 - 39.77 (6.81)
Mr. Devendra J. Shrimanker* Independent Director - - Independent Director -
Mrs. Sonal N. Doshi* Independent Director - - Independent Director -
Dr. Padma V. Devarajan* Independent Director - - Independent Director -
Mr. Sharad S. Sanghi* Independent Director - - Independent Director -
Ms. Leela S. Bisht# Company Secretary 445000 - 1.05 -

* Entitled for Sitting fees of 20000 for attending each Board and Audit Committee and7500 for attending all other Committee Meetings.

# Ms. Leela S. Bisht appointed as Company Secretary & Compliance Officer on June 32021.

(b) Number of permanent employees on the rolls of Company: 5541

(c) Average percentile increase already made in the salaries of employees other thanthe managerial personnel in the last financial year and its comparison with the percentileincrease in the managerial remuneration and justification thereof and point out if thereare any exceptional circumstances for increase in the managerial remuneration: NIL

(e) It is affirmed that the remuneration paid to the Directors Key ManagerialPersonnel and other Employees is as per the remuneration policy of the Company.

(f) Names of top 10 employees of Company in terms of remuneration drawn and name andparticulars of the employees who were employed throughout the financial year and were inreceipt of remuneration for that year which in the aggregate was not less than One Croreand Two Lakh Rupees per financial year and name and particulars of employees who wereemployed for a part of the year and were in receipt of remuneration for that period whichin the aggregate was not less than Eight Lakh Fifty Thousand Rupees per month: Noemployees drew remuneration as per the limits specified under rule 5(2) and rule 5(3) ofthe Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014.

(g) Names of employees of Company who were employed throughout the financial year orpart thereof and were in receipt of remuneration in that year which in the aggregate oras the case may be at a rate which in the aggregate is in excess of that drawn by themanaging director or whole time director or manager if any and holds by himself or alongwith his spouse and dependent children not less than two percent of the equity shares ofthe Company: N.A

29. DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTIONPROHIBITION AND REDRESSAL) ACT 2013

The Company is committed and dedicated in providing a healthy and harassment free workenvironment to every individual of the Company a work environment that does not toleratesexual harassment. We highly respect dignity of everyone involved at our work placewhether they are employees suppliers or our customers. We require all employees tostrictly maintain mutual respect and positive attitude towards each other.

In accordance with Sexual Harassment of Women at Work place (Prevention Prohibitionand Redressal) Act 2013 and the rules framed their under the Company has formed anInternal Complaints Committee and also framed and adopted the policy for Prevention ofSexual Harassment at Workplace. The following is the summary of Sexual Harassmentcomplaints received and disposed of during the year 2021-22.

Number of complaints pending as on the beginning of the financial year : Nil

Number of complaints filed during the financial year : Nil

Number of complaints pending at the end of the financial year : Nil

The Annual Return under the aforesaid Act has been filed with the Labour CommissionerMumbai.

30. HUMAN RESOURCES

Your Company treats its "human resources" as one of its most importantassets. Your Company continuously invests in attraction retention and development oftalent on an ongoing basis. A number of programs that provide focused people attention arecurrently underway. Your Company thrust is on the promotion of talent internally throughjob rotation and job enlargement.

Total Employees and Consultant : 5541
Total Addition in Employees and Consultant during the F.Y 2021-22 : 1147
No. of Women Employees during the F.Y 2021-22 : 215

The Company has all the required policies under the Indian laws for the time being inforce and as required under the Companies Act 2013 and SEBI LODR Regulations 2015 toprotect and safeguard the interest of the employees. The policies pertaining the code ofconduct for employees senior management team and directors harassment free policy asrequired under the provisions of Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013. Policy on Insider Trading as required under SEBIProhibition of Insider Trading Regulations 1992 Whistle Blower Policy etc. and all thePolicies/Codes have been uploaded in the Website of the Company https://www.aarviencon.com/policies-of-the-company.

31. COMPLIANCE WITH THE PROVISIONS OF SECRETARIAL STANDARD-1 (SS-1) AND SECRETARIALSTANDARD - 2 (SS-2)

The Directors have devised proper systems to ensure compliance with the provisions ofall applicable

Secretarial Standards issued by the Institute of Company Secretaries of India and thatsuch systems are adequate and operating effectively. The company has complied with SS-1and SS-2.

32. DISCLOSURE AS TO WHETHER MAINTENANCE OF COST RECORDS AS SPECIFIED BY THE CENTRALGOVERNMENT UNDER SUB-SECTION (1) OF SECTION 148 OF THE COMPANIES ACT 2013 IS REQUIRED BYTHE COMPANY AND ACCORDINGLY SUCH ACCOUNTS AND RECORDS ARE MADE AND MAINTAINED :

The maintenance of Cost Records as specified by the Central Government undersub-section (1) of the Section 148 of the Companies Act 2013 are not applicable to theCompany.

33. STATUTORY DISCLOSURES

None of the Directors of your Company are disqualified as per the provisions of Section164(2) of the Companies Act 2013. Your Directors have made necessary disclosures asrequired under various provisions of the Companies Act 2013 and SEBI LODR Regulations2015. The Company has received a Certificate pursuant to Schedule V(10) (i) of SEBI LODRAmendment Regulations 2018 from Bhatt & Associates Company Secretaries LLP Mumbaihaving certificate of practice no. 7023 stating that none of the directors on the Board ofthe company have been debarred or disqualified from being appointed or continuing asdirectors of companies by the Board/Ministry of Corporate Affairs or any such statutoryauthority during the period under review.

The certificate is attached to this Director's Report as Annexure 6.

34. DECLARATION ON CODE OF CONDUCT

The Company has adopted the Code of Conduct for all its Senior Management Personnel andDirectors and the same is affirmed by all the Board Members and Senior ManagementPersonnel as required under Regulation 34 read with Part D of Schedule V of the SEBI LODRRegulations 2015. A declaration signed by Mr. Virendra D. Sanghavi Managing Director ofthe Company affirming the compliance with the Code of Conduct of the Company for thefinancial year 2021-22 as set separately in this annual report.

35. AWARDS

In F.Y. 2021-22 the Company received an award from Economic Times under the Categoryof "LEADER OF CHANGE" 2021 and CSR Journal Excellence Award - 2nd Runner upunder the category of Health & Sanitation.

36. INTERNATIONAL STANDARDS

The Company successfully completed the annual ISO surveillance audit and retained theenterprisewide ISO certification for ISO 9001:2015 and ISO 45001: 2018.

37. ANNUAL LISTING FEES TO THE STOCK EXCHANGES

Aarvi Encon Limited have listed its equity shares on the Main Board of NSE IndiaLimited. The listing fees have duly paid to the exchange and annual custodial fees hasbeen paid to CDSL and NSDL for the F.Y. 2021 -22.

38. DEPOSITORY SYSTEM

Your Company's equity shares are in demat form only. The Company has appointed NationalSecurities Depository Limited (NSDL) and Central Depository Services India Limited (CDSL)as depositories to the Company.

39. CAUTIONARY STATEMENT

The Statements in this Directors' Report and Management Discussion and Analysis Reportdescribing the Company's objectives projections estimates expectations or predictionsmay be "forward-looking statements" within the meaning of applicable securitieslaws and regulations. Actual results could differ materially from those expressed orimplied. Important factors that could make difference to the Company's operations includechanges in Government regulations Tax regimes economic developments within India andother ancillary factors.

40. ACKNOWLEDGEMENT

Your Directors takes this opportunity to thank all Government Authorities BankersShareholders Registrar & Transfer Agents Investors and other Stakeholders for theirassistance and co-operation to the Company. Your Directors express their deep sense ofappreciation and gratitude towards all employees and staff of the company and wish themanagement all the best for further growth and prosperity.

For and on behalf of the Board
Aarvi Encon Limited.
Sd/- Sd/-
Virendra D. Sanghavi Jaydev V. Sanghavi
Managing Director Executive Director
DIN:00759176 DIN: 00759042
Date: May 26 2022
Place: Mumbai

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