Your Directors have the pleasure in presenting the 32nd Annual Report ofyour Company (Aarvi Encon Limited/AARVI) on business and operations of the Company alongwith the Audited Standalone and Consolidated Financial Statements and the Auditor's Reportfor the year ended March 31 2020. Consolidated performances of the Company and itssubsidiaries have been referred to wherever it's required.
The Company was incorporated in 1987 and has been creating value for clients in Indiaand abroad by delivering world-class Engineering and Technical Manpower OutsourcingServices. The Company's dynamic approach to problem solving enable them to deliver qualityservices on time with consistent performance to the clients across the globe. Aarvi haslong standing with clients and working with most of them for over decades. In the year2017 the Company got listed on the SME platform of National Stock Exchange of IndiaLimited after its successful Initial Public Offer (IPO) and it got listed on Main Board ofNSE Ltd on June 24 2020. It has corporate headquarters at Mumbai and branch offices atvarious locations in India and abroad.
1. FINANCIAL HIGHLIGHTS/PERFORMANCE OF THE COMPANY
The financial results for the year ended on 31st March 2020 and the correspondingfigures for the previous year are as under;
| || |
Consolidated (Rs.in crores)
Standalone (Rs.in crores)
|Particulars ||Year ended 31st March 2020 ||Year ended 31st March 2019 ||Year ended 31st March 2020 ||Year ended 31st March 2019 |
|Net Revenue from Operations ||218.05 ||206.03 ||191.21 ||191.93 |
|Other Income ||0.60 ||1.21 ||0.62 ||1.21 |
|Total Income ||218.64 ||207.25 ||191.83 ||193.14 |
|Total Expenditure ||211.69 ||197.12 ||188.27 ||185.74 |
|Profit before tax ||6.95 ||10.12 ||3.56 ||7.40 |
|Current Tax ||0.64 ||1.22 ||0.64 ||1.22 |
|Short/Excess Provision for Tax ||(0.37) ||0.08 ||(0.37) ||0.08 |
|Deferred Tax ||(0.49) ||0.20 ||(0.49) ||0.22 |
|Profit after taxes ||7.17 ||8.63 ||3.78 ||5.89 |
STANDALONE AND CONSOLIDATED FINANCIAL STATEMENTS
As mandated by the Ministry of Corporate Affairs the financial statements for the yearended on March 312020 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 31 2020. The Notes to the FinancialStatements adequately cover the standalone and consolidated Audited Statements and form anintegral part of this Report.
The Company has reported stable performance in revenue during FY 201 9-20. Revenue fromoperations at Rs. 191.83 Crs as against Rs. 193.14 Crs of previous year decreased by 0.68%year on year reflecting satisfactorily results in key markets and segments. Operatingprofit at Rs. 3.56 Crs. as against Rs. 7.40 Crs of previous year. The profit has gone downdue to the stiff competition in the market and increase in the fixed cost of the Company.
Your Company has reported growth in revenue for the year ended on 31st March 2020.Revenue from operations at Rs. 218.64 Cr. as against Rs. 207.25 Cr. of previous yearreflecting stable growth than the previous year performance in key markets and segments.Operating profit at Rs. 6.95 Cr. as against Rs. 10.12 Cr. of previous year. The Operatingprofit has declined due to unhealthy competition in the market during the FY 2019-20.
Your Directors express their satisfaction on the overall financial performance and theprogress made on different areas by the Company during the year under review.
2. SHARE CAPITAL
The Total Paid-up Capital of the Company as on March 31 2020 is Rs. 147840000divided into 14784000 equity shares of Rs.10/- each. There has not been any new issueof share during the year under review.
The Board of Directors of the Company has recommended a dividend 10% i.e Re. 1 perfully paid- up Equity Share of the face value of Rs.10/- each of the Company subject tothe approval of the Members at the ensuing Annual General Meeting for the financial year2019 - 20.
The Balance in Reserves & Surplus stands at Rs. 61.54 Cr. in comparison with theprevious year balance of Rs. 55.40 Cr.
5. SUBSIDIARIES COMPANIES
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 website https://www.aarviencon. com/home/policies ofthe company
The Company has three subsidiary Companies as on March 312020.
1. Aarvi Encon FZE located at United Arab Emirates (UAE).
2. Aarvi Engineering and Consultants Private Limited (India).
3. Aarvi Encon Resources Limited located at United Kingdom (UK).
During the year under review Aarvi Encon FZE a wholly owned Subsidiary Company in UAEbecame a material subsidiary of the Company as it contributes the revenue of more than 10%to the total revenue of the Company.
Aarvi Encon FZE is a Free Zone Establishment at SAIF Zone Sharjah UAE incorporated onOctober 13 2015. A Wholly owned Subsidiary of the Company had partnered with Bon AccordEmplyement Services a proprietary Company at UAE in the year
2018 to develop the business of providing manpower or consultancy services in UAE.
The Company has successfully executed the valuable projects alongwith the Bon Accord inAbu Dhabi and it expects more projects in the upcoming year also. There were some hurdlesin receiving the payments from clients on time due to lockdown and cashflow issues of theclients. Once the situation will improve after global lockdown oil price stabilize theclients have promised to restart the work efficiently in the upcoming FY 2020-21. Theaccounts of the Aarvi Encon FZE are also consolidated with the Company.
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 applicationAccounting 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 yet to start its operation.The accounts of the AERL are also consolidated with the Company.
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 theCompany as Annexure - I.
Further pursuant to the provisions of Section 136 of the Act the audited financialstatements of the Company consolidated financial statements along with relevant documentsand audited financial statements in respect of subsidiaries are available on the websiteof the Company https://www.aarviencon. com/home/financial reporting.
The Company does not have any associate and /or joint venture company.
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 2019-20 is presented in seperate section forming partof this Annual Report.
Your Company did not accept/ hold/ any deposits from public within the ambit of Section73 of the Companies Act 201 3 and the Companies (Acceptance of Deposits) Rules 2014during the year under review.
9. PARTICULARS OF LOAN GUARANTEE AND INVESTMENTS
The Company has not given any loan or guarantee covered under provision of Section 186of the Companies Act 2013. The particulars of investments made have been duly disclosedin the financial statements.
10. RELATED PARTY TRANSACTIONS
All transactions entered with Related Parties for the year under review were on arm'slength basis and thus a disclosure in Form AOC-2 in terms of Section 134 of the CompaniesAct 2013 is not required. Further there are no material related party transactionsduring the year under review with the Promoters Directors or Key Managerial Personnel(s)(KMP(s)). All related party transactions are mentioned in the notes to the accounts. TheCompany has formulated a Policy on Materiality of Related Party Transactionswhich are in line with the provisions of Section 188 of the Companies Act 2013 andRegulation 23 of SEBI LODR Regulations 2015.
The same is also available on the web-link: https://www.aarviencon.com/home/policies_of_the_ company.
Prior omnibus approval from the Audit Committee is obtained for transactions which arerepetitive and also normal in nature. During the year under review there were no materialrelated party transactions under Regulation 23 (4) of SEBI LODR Regulations 2015 enteredinto by the Company which necessitates approval of Shareholders.
11. 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 312020 comprisesof one Executive Director and one Managing Director and Three Independent Directorsincluding Two Women Directors and the same is disclosed in the Report on CorporateGovernance as set out separately in this annual report..
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.
B. Committees of the Board
As required under the Companies Act 2013 and SEBI LODR Regulations 2015 the Boardhas formed five Committees viz.
Nomination and Remuneration Committee
Corporate Social Responsibility Committee
Stakeholders' Relationship 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.
Pursuant to Section 177(8) of the Companies Act 2013 the composition of the AuditCommittee is disclosed as under:
|Name of the Member ||Designation |
|1. Mr. Devendra Shrimanker ||Chairperson (Independent Director) |
|2. Mrs. Sonal Doshi ||Member (Independent Director) |
|3. Dr. (Mrs.) Padma V. Devarajan ||Member (Independent Director) |
|4. Mr. Jaydev Sanghavi ||Member (Executive Director and CFO) |
The details of the all the Committees along with their composition number of meetingsand attendance at the meeting as set out 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.
C. Key Managerial Personnel
Pursuant to the provisions of Section 203 of the Companies Act 2013 no Key ManagerialPersonnel (KMP) were appointed and/or resigned during the year. Details of KMP of theCompany are as under;
|Name of the KMP ||Designation |
|1. Mr. Virendra D. Sanghavi ||Managing Director |
|2. Mr. Jaydev V. Sanghavi ||Executive Director and CFO |
|3. Mr. Jay H. Shah ||Company Secretary |
D. Details of Directors and Key Managerial Personnel who were appointed or resigned ;
Mrs. Niranjana V. Sanghavi Non-Executive Director resigned from the Board on August30 2019 due to her health issues. Mrs. Niranjana V. Sanghavi joined Aarvi Encon in theyear 1990. The Board appreciated the efforts and value brought by her in this long stintin the Company.
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 will retire 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. Sharad Sanghi was appointed as an Additional Independent Director of the Companywith effect from June 03 2020.
E. Receipt of any commission by MD / WTD from Company or from its holding or subsidiaryCompany
The Company has paid Commission @0.5% of the total turnover of the Company to the wholetime Directors i.e Mr. Virendra D. Sanghavi Managing Director and Mr. Jaydev V. SanghaviExecutive
Director during the year as a part of remuneration subject to the maximum limit of Rs.1.68 Crs. Further Mr. Virendra and Mr. Jaydev did not draw any remuneration and /orcommission from its subsidiaries.
12. Declaration by Independent Directors
All the Independent Directors of the Company have given declarations that they meet thecriteria of independence as laid down under Section 149(6) of the Companies Act 2013 andRegulation 16(1) (b) of the SEBI LODR Regulations 2015. In the opinion of the Board theIndependent Directors fulfill the conditions of independence specified in Section 149(6)of the Companies Act 2013 and Regulation 16(1) (b) of the SEBI LODR Regulations 2015.
In the opinion of the Board the Independent director appointed during the yearpossesses the requisite expertise and experience and are persons of high integrity.
13. Board Evaluation
Pursuant to the provisions of the Companies Act 2013 and Regulation 19 of SEBI LODRRegulations 2015 read with SEBI LODR Amendment Regulations the Board has carried out theAnnual Performance Evaluation of its own performance the Directors individually as wellas the evaluation of the working of its various committees.
In line with the Corporate Governance Guidelines of the Company Annual PerformanceEvaluation was conducted for all Board Members as well as on the functioning of the Boardand its Committees. This evaluation was led by the Chairman of the Nomination andRemuneration Committee with specific focus on the performance and effective functioning ofthe Board. The Board evaluation framework has been designed in compliance with therequirements under the Companies Act 2013 and SEBI LODR Regulations 2015 and inconsonance with Guidance Note on Board Evaluation issued by SEBI in January 2017. TheBoard and the committee evaluation was conducted through questionnaire having qualitativeparameters and feedback based on ratings.
The performance evaluation of non-independent director and the Board as a whole wasalso carried on by the Independent Directors of the Company through a separate meeting onFebruary 10th 2020.
Performance evaluation of Independent directors was done by entire Board excluding theIndependent Director being evaluated.
14. 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 during the financial year 2019-20 met 4 (four) times. 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
In accordance with the provisions of Section 139 of the Companies Act 2013 and theCompanies (Audit and Auditors) Rules 2014 at the 29th AGM of the Company held on 15thJuly 2017 the Members approved the appointment of M/s. Arvind H. Shah & Co.Chartered Accountants having registration number (ICAI Firm Registration No. 100577W) asStatutory auditors of the Company for a term of five years to hold the office from theconclusion of that AGM till the conclusion of 34th Annual General Meeting.
The Auditor's Report on the Financial Statements of the Company for the year endingMarch 312020 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.
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 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 &
Associates Company Secretaries LLP Mumbai as the Secretarial Auditor to conduct theSecretarial Audit of the Company for financial year 2019-20 and his Report is annexed tothis Board Report as Annexure - III.
The Board has appointed Bhatt & Associates Company Secretaries LLP as SecretarialAuditor for the FY 2020-21 to conduct the Secretarial Audit of the Company.
D. Secretarial Compliance Report of Aarvi Encon Limited for the year ended March312020
As per Regulation 24A of SEBI LODR Amendment Regulations 2018 read with SEBI Circulardated February 08 2019; the listed entities in addition to the Secretarial Audit Reportas required under section 204 of the Companies Act 2013 is also required to annex 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/home/announcements
E. Explanation or Comments on Qualifications Reservations or Adverse Remarks orDisclaimers made by the statutory Auditors and the Practicing Company Secretary in theirrespective Reports
In connection with the Statutory Audit of the financial statements for the year underreview there was no qualification reservation or adverse remark in the report by theStatutory Auditor save and except disclaimer made by them in discharge of theirprofessional obligation. No frauds are reported by the Statutory Auditor under sub section(12) of Section 143 of the Companies Act 2013 and rules made thereunder.
In connection with the Secretarial Audit of the Company for the year under reviewthere was no qualification reservation or adverse remark in the report by the StatutoryAuditor save and except disclaimer made by them in discharge of their professionalobligation.
16. INTERNAL FINANCIAL CONTROL
As per the provision of Section 138 of the Companies Act 2013 the Company has deviseda proper system to check the internal controls and functioning of the activities andrecommend ways of improvement. Internal Audit is carried out timely. The internalfinancial controls with reference to financial statements as designed and implemented bythe Company. During the year under review no material or serious observation is receivedfrom the Internal Auditor of the Company for inefficiency and inadequacy of such controls.
17. 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
Variation in the object clause of the prospectus dated September 14 2017 forutilization of issue proceeds.
Pursuant to the board resolution dated July 17 2017 and the special resolution passedpursuant to Section 62(1)(C) of the Companies Act 2013 in the Extra-Ordinary GeneralMeeting (EGM) by the shareholders of the Company held on July 24 2017 theCompany had raised Rs. 2124.36 Lakhs from the public via IPO of its equity shares (theIssue'). The net proceeds from the Issue were Rs. 1885.40 Lakhs (hereinafterreferred to as IPO Proceeds).
The Company had in terms of Prospectus dated September 14 2017 proposed to utilizethe IPO Proceeds towards i) Working Capital Requirements ii) Acquisition and otherstrategic initiatives iii) General Corporate Purpose iv) Issue Expense.
The Board had passed a resolution on October 25 2019 for variation in the objectclause of the prospectus dated September 14 2017 for utilization of issue proceeds of Rs.4 Crores parked for Acquisition and other strategic initiatives can be used for itsworking capital requirements. The Shareholders of the Company had also granted theirapproval for the same via postal ballot on November 29 2019.
The Company has utilized the aforesaid amount for its working capital requirement andthe report on the utilization of issue proceeds have been duly submitted on a quarterlybasis to the exchange for dissemination on their platform.
Apart from disclosure as made aforesaid there are no events which may lead to materialchanges and commitments and which would affect financial position of the Company from theend of the financial year and the date of the report.
18. 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 : NA
3. The Capital Investment on Energy Conservation Equipment.
The Company has not made any capital investment on energy conservation equipment.
B) Technology Absorption:-
New Softwares are being adopted to improve efficiency of working staff in AccountsRecruitment and Operations. Training is being imparted at all levels to improveproductivity.
C) Foreign Exchange Earnings and Outgo:
|Particulars ||2019 - 20 ||2018 - 19 |
|Foreign Exchange Earnings in terms of actual inflows ||Rs. 144660/- ||Rs. 390550/- |
|Foreign Exchange outgo in terms of actual outflow ||Rs. 1287013/- ||Rs. 1387919/- |
19. 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 and web link to access the same is https://www.aarviencon. com/home/vigilmechanism.
20. 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 and other connectedemployees from trading in the securities of the Company at the time when there is accessto Unpublished Price Sensitive Information (UPSI).
21. POLICY ON DIRECTORS APPOINTMENT AND REMUNERATION AND OTHER DETAILS
The Company's policy on directors' appointment and remuneration and other mattersprovided in Section 178(3) of the Act is available on the Company's website and web linkto access the same is https:// www.aarviencon.com/home/policies of the company
22. CORPORATE SOCIAL RESPONSIBILITY
As per Section 135 of the Companies Act 2013 the Company has formulated a CorporateSocial Responsibility (CSR) Committee and recommended to the Board a CSR Policy indicatingthe activities to be undertaken by the Company and the same was duly approved by theBoard. The CSR Policy can be accessed on the Company's website and web link thereto ishttps://www.aarviencon.com/home/ policies of the company
During the year the Company has spent Rs. 1345215/- on CSR Activities. The Report onthe CSR Activities is annexed herewith to the Boards Report as Annexure IV.
23. ANNUAL RETURN:
Pursuant to Section 92(3) of the Companies Act 2013 read with Rule 12(1) of theCompanies (Management and Administration) Rules 2014 an extract of annual return in formMGT-9 for the financial year 2019-20 shall be available on the Company's website at thegiven link https://www. aarviencon.com/home/Announcements.
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. STATEMENT OF DEVIATION AND/ OR VARIATION IN UTILIZATION OF PUBLIC ISSUE PROCEEDSPURSUANT TO REGULATION 32 OF SEBI (LISTING OBLIGATION AND DISCLOSURE REQUIREMENTS)REGULATION 2015
As per Regulation 32 of SEBI (Listing Obligation and Disclosure Requirements)Regulation 2015 the listed entity have submitted to the stock exchange the statementindicating deviation if any in the use of proceeds from the objects stated in the offerdocument indicating category wise variation (capital expenditure sales and marketingworking capital etc.) between projected utilization of funds made by it in its offerdocument as applicable and the actual utilization of funds. The report on the utilizationof issue proceeds attached to the Board's Report as Annexure V.
26. DIRECTORS' RESPONSIBILITY STATEMENT
The Directors' Responsibility Statement referred to in clause (c) of sub-section (3) ofSection 134 of the Companies Act 2013 your director's hereby for the financial year2019-20 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 system to ensure compliance with the provisions of allapplicable laws and that such systems were adequate and operating effectively.
27. 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.
28. 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's operation in future.
29. 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 jay.shah@aarviencon. com and the same will be furnished on request.
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 2019 - 20 :
|Name of the Directors ||Designation ||% Increase in the Remuneration (a) ||Ratio of Remuneration of each Director/to median remuneration of employees. (b) |
|Mr. Virendra D Sanghavi ||Managing Director ||- || |
|Mr. Jaydev V Sanghavi ||Executive Director & CFO ||- |
|Mrs. Niranjana V. Sanghavi # ||Non-Executive Director ||- ||0.06 |
|Mr. Devendra J. Shrimanker* ||Independent Director ||- ||0.29 |
|Mrs. Sonal N. Doshi* ||Independent Director ||- ||0.23 |
|Dr. (Mrs.) Padma V. Devarajan* ||Independent Director ||- ||0.24 |
|Mr. Jay H. Shah ||Company Secretary ||10 ||N.A |
* Entitled for Sitting fees of 10000 for attending each Board and Audit Committee and5000 for attending all other Committee Meetings.
# Mrs. Niranjana V. Sanghavi ceased as Non-Executive Director w.e.f August 30 2019.
(b) Percentage increase in the median remuneration of employees in the financial year2019-20:
Core Employees - 9.16%
(c) Number of permanent employees on the rolls of Company: 4087
(d) 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:
(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:
No employees drew remuneration as per the limits specified under rule 5(2) and rule5(3) of the 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 wholetime 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
30. DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTIONPROHIBITION AND REDRESSAL) ACT 2013
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 off during the year 2019-20.
No. of Complaints received: NIL
No. of Complaints Disposed off: NIL
The Annual Report under the aforesaid Act has been filed with the Labour CommissionerMumbai.
31. SECRETARIAL STANDARD
The Directors declared that applicable Secretarial Standard have been duly followed.
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 BY THE COMPANY ANDACCORDINGLY 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. HUMAN RESOURCES
Your Company treats its human resources as one of its most importantassets. Your Company continuously invest 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 : 4087
Total Addition in Employees during the F.Y 2019-20 : 186
No. of Women Employees during the F.Y 2019-20 : 165
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 SEBI Prohibition of Insider Trading Regulations1992 Whistle Blower Policy etc and all the Policies/Codes have been uploaded in theWebsite of the Company and web link to access the same is https://www.aarviencon.com/home/policies_of_the_company.
34. 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 VI.
35. 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 2019-20 as set out separately in this annual report.
36. QUALITY INITIATIVES
In F.Y. 2020 the Company successfully completed the annual ISO surveillance audit andOHSAS Safety Audit and retained the enterprise-wide ISO certification for ISO 9001:2015and ISO 45001:2018.
37. ANNUAL LISTING FEES TO THE STOCK EXCHANGES
Aarvi Encon Limited listed its equity shares on NSE Emerge Platform and it also gotlisted on the Main Board of NSE in June 2020. The listing fees duly paid to the exchangeand annual custodial fees has been paid to CDSL and NSDL for the F.Y. 2020 -21.
38. DEPOSITORY SYSTEM
Your Company's equity shares are in demat form only. The Company has appointed NationalSecurities Depository Limited and Central Depository Services India Limited asdepositories 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.
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 & CFO |
|DIN:00759176 ||DIN:- 00759042 |
|Date: 30/06/2020 || |
|Place: Mumbai || |