Your Directors have pleasure in presenting the 26 Annual Report on the Businesses andOperations of the Company together with Audited Accounts for the financial year ended onMarch 31 2018.
1. Financial Summary Rs. in Lakhs
|Particulars ||2017-18 ||2016-17 |
|Revenue from Operations ||47738.53 ||38677.84 |
|Other Income ||85.95 ||57.18 |
|Total Income ||47824.48 ||38735.02 |
|Total Expenses ||44457.51 ||36709.28 |
|Profit / (Loss) Before Tax ||3366.97 ||2025.74 |
|Provisions for Income Tax including Deferred Tax ||1196.91 ||724.81 |
|Profit / (Loss) After Tax ||2170.06 ||1300.93 |
|Other Comprehensive Income ||17.12 ||2.40 |
|Total Comprehensive Income for the Period ||2187.18 ||1303.33 |
|Earnings per Equity Share || || |
|Basic ||29.98 ||40.06 |
|Diluted ||29.98 ||38.84 |
|Proposed Dividend ||264.87 ||81.02 |
|Transfer to General Reserves ||100.00 ||100.00 |
|Profit carried to Balance Sheet ||2170.06 ||1300.93 |
|Accumulated Balance of Profit ||3853.00 ||2690.69 |
* Figures for the financial year 2017-18 are post amalgamation of Mahendra AluminiumCompany Limited with Arfin India Limited. Hence not comparable with previous yearnumbers.
2. Financial Highlights and State of Company's Affair
After merging the figures of Mahendra Aluminium Company Limited (transferor company)the revenue from operations stood at Rs. 47738.53 lakhs for the year 2017-18 in compareto Rs. 38677.84 lakhs for the financial year 2016-17. Total net profit for the year stoodat Rs. 2170.06 in compare to Rs. 1300.93 for the previous year 2016-17. It is furtherstated that the above figures for financial year 2016-17 are standalone figures of ArfinIndia Limited and thus figures for both the years are strictly not comparable.
Further the company has started commercial production and sales from the conductor andcables plant during the quarter ended December 31 2017. Master and ferro alloys plantalso performed well which was started during the last quarter of FY17. The company is inprocess to set up second plant of ferro titanium (master alloys) to meet the increasedcustomer demand. The company is also in process of set up of aluminium alloy wire rodplant and production of the same shall be captively consumed for manufacturing ofconductor plant production which will result in improved margins in the business. Thecompany also expects to start commercial production from aluminium alloy wire rod plantfrom second quarter of FY19.
Considering the profit growth and future prospects of the company the directors haverecommended a final dividend of Rs. 2/- per equity share (Rs. 2/- per equity share for theprevious financial year) on equity shares of Rs. 10/- each for the financial year ended onMarch 31 2018.
Considering equity share capital as on March 31 2018 the dividend distribution wouldresult in a cash outgo of Rs. 318.80 lakhs (including tax on dividend distribution of Rs.53.93 lakhs) compared to Rs. 97.52 lakhs (including tax on dividend distribution of Rs.16.49 lakhs) paid for the financial year ended on March 31 2017.
4. Approval of Scheme of Amalgamation
The Hon'ble National Company Law Tribunal Ahmedabad Bench Ahmedabad has approvedscheme of amalgamation of Mahendra Aluminum Company Limited (transferor company / MALCO)a group company of Arfin India Limited with Arfin India Limited (transferee company /ARFIN) vide its order dated February 22 2018.
The restructuring plan of Arfin group in the form of amalgamation of MALCO with Arfinbenefits the group as well as its stakeholders in the following manner:
i The amalgamation has consolidated the business activities and leads to greaterefficiency in the overall business and achieving integration of the business operations aswell as synergy benefits through combined operations of both the entities.
ii. Products of both the companies are similar in nature and thus the contemplatedmerger leads to economies of scale which in turn promotes cost efficiency by means ofreduction in administrative overheads reduction in multiplicity of legal and regulatorycompliances and help running the business more effectively and economically resultingbetter utilization of resources.
iii. This amalgamation created enhanced value for shareholders and allows a focusedstrategy in operations which would be in the best interest of all its shareholderscreditors and all persons connected with the Companies.
Further taking note of appointed date April 01
2017 the closing books of accounts of MALCO i.e. books of accounts as on March 312018 have been merged into the closing books of Arfin India Limited.
Allotment of equity shares pursuant to the scheme of amalgamation
Pursuant to the aforesaid scheme of amalgamation the board of directors of the companyin its meeting held on March 28 2018 allotted 1090200 equity shares to theshareholders of transferor company i.e. Mahendra Aluminium Company Limited in the ratio of92 new equity shares of Rs. 10/- each of Arfin India Limited against each 100 existingequity shares of Rs. 10/- each held by such respective shareholders in Mahendra AluminiumCompany Limited.
5. Listing on Stock Exchanges
As on March 31 2018 the equity shares of the company were listed on BSE Limited andthe Calcutta Stock Exchange Limited. The company has paid the annual listing fees for thefinancial year ending on March 31 2019 within time.
Further the application made by the company during the financial year 2016-17 with theCalcutta Stock Exchange for delisting of its equity shares is pending with the CalcuttaStock Exchange Limited for its approval. Delisting from such regional stock exchange hasbeen considered by the board as after listing of equity shares of the company on the BSELimited listing on such regional stock exchange was not providing any tangible advantageto the company or its investors.
6. Details in Respect of Adequacy of Internal Financial Control with Referenceto the Financial Statements
The company has in place adequate internal control systems commensurate with the sizeof its operations. The internal control systems comprising of policies and procedures aredesigned to ensure sound management of your company's operations safe keeping of itsassets optimal utilization of resources reliability of its financial information andcompliances. Clearly defined roles and responsibilities have been institutionalized withinthe organization. Systems and procedures are periodically reviewed to keep pace with thegrowing size and complexity of your company's operations.
7. Details of Subsidiary / Joint Venture / Associate Companies
The company doesn't have any subsidiary joint venture or associate company. GroupCompany to the Arfin India Limited includes Krish Ferro Industries Private Limited.Mahendra Aluminium Company Limited an erstwhile group company to the Arfin group has beenamalgamated into the Arfin India Limited during the financial year under report.
8. Material Changes and Commitment if any affecting the Financial Position ofthe Company
No material changes and commitments affecting the financial position of the Companyoccurred between the end of the financial year to which these Financial Statements relateand on the date of this report. Further during the financial year under report nosignificant or material orders have been passed by any of the regulators or courts ortribunals impacting the going concern status and operations of the company in futureexcept the order of the National Company Law Tribunal Ahmedabad for amalgamation ofMahendra Aluminium Company Limited into Arfin India Limited under a scheme ofamalgamation.
During the financial year under report your Company has not accepted any depositswithin the meaning of Sections 73 and 74 of the Companies Act 2013 nor it had any amountof deposits carried forward from the previous financial year.
10. Statutory Auditors
M/s. Mukesh Rajendra & Co. chartered accountants Ahmedabad (FRN: 143123W) wereappointed as statutory auditors of the company for a period of 5 years at the 25 annualgeneral meeting held on September 10 2017. Due to pre-occupation in other assignmentsthe auditors have expressed their unwillingness to continue as statutory auditors of thecompany by way of resignation. Therefore the board of directors of the company in itsmeeting held on Friday August 10 2018 appointed M/s. Sanjay Bajoria & Associateschartered accountants Ahmedabad (FRN: 117443W) as statutory auditors upto the conclusionof this annual general meeting of the company to fill the casual vacancy caused due toresignation of the existing auditors.
Pursuant to the provisions of section 139 of the Companies Act 2013 the appointmentof M/s. Sanjay Bajoria & Associates has been put forth before the members at thisensuing 26 annual general meeting for their appointment till the conclusion of the 31annual general meeting. M/s. Sanjay Bajoria & Associates chartered accountants havefurnished a certificate that their appointment if made will be within the limitsprescribed under the said section of the Act.
The auditors' report issued by M/s. Mukesh Rajendra & Co. for the financial yearended on March 31 2018 forms part of this annual report and the same does not contain anyqualification reservation or adverse remark.
11. Secretarial Auditors
In terms of section 204 of the Companies Act 2013 the board of directors of yourcompany has re-appointed M/s. Kamlesh M. Shah & Co. practicing company secretaryAhmedabad as secretarial auditors to conduct an audit of secretarial records andcompliances for the financial year ending on March 31 2019. The secretarial audit reportfor the financial year ended on March 31 2018 is annexed herewith as Annexure 5and the same does not contain any qualification reservation or adverse remarks.
12. Cost Auditors
The board of directors of your company has reappointed M/s. Ashish Bhavsar &Associates
(FRN: 000387) cost accountants Ahmedabad as cost auditors to conduct audit of costrecords for the financial year ending on March 31 2019.
13. Share Capital
During the financial year under report the company has allotted equity shares underthe bonus issue as well as to the shareholders of Mahendra Aluminium Company Limited underthe scheme of amalgamation. The detail of change in the capital structure of the companyis tabulated as below:
| || ||Authorised share capital ||Issued subscribed and paid-up share capital |
|Event date ||Particulars ||No. of equity shares ||Amount in Rs. ||No. of equity shares ||Amount in Rs. |
|April ||Share capital at the beginning of ||11000000 ||110000000 ||4051157 ||40511570 |
|01 2017 ||the financial year || || || || |
|October ||Addition of 19000000 equity ||19000000 ||190000000 ||0 ||0 |
|24 2017 ||shares of Rs. 10/- each into the || || || || |
| ||authorised share capital (pursuant || || || || |
| ||to the approval of members dated || || || || |
| ||October 24 2017 obtained vide || || || || |
| ||postal ballot notice dated || || || || |
| ||September 20 2017) || || || || |
|November ||Allotment of bonus shares in the ||0 ||0 ||8102314 ||81023140 |
|03 2017 ||ratio of 2:1 || || || || |
| ||Resultant share capital ||30000000 ||300000000 ||12153471 ||121534710 |
|February ||Merging of authorized share capital ||1500000 ||15000000 ||0 ||0 |
|22 2018 ||of Mahendra Aluminium Company || || || || |
| ||Limited into Arfin India Limited || || || || |
| ||pursuant to the scheme of || || || || |
| ||amalgamation || || || || |
|March ||Allotment of equity shares pursuant ||0 ||0 ||1090200 ||10902000 |
|28 2018 ||to the scheme of amalgamation || || || || |
|March ||Resultant share capital / capital ||31500000 ||315000000 ||13243671 ||132436710 |
|31 2018 ||at the end of the financial year || || || || |
14. Directors & Key Managerial Personnel
Based on the recommendations of the nomination & remuneration committee the boardof directors of the company has at its meetings held on September 20 2017 & November09 2017 appointed Mr. Dineshchandra Mangaldas Shah (DIN: 02479309) and Mr. MukeshShankerlal
Chowdhary (DIN: 00025877) as additional independent directors of the company to holdoffice for a period of five consecutive years from the date of their appointment at therespective board meetings. As additional directors both the proposed appointees hold theoffice of independent director from the date of their appointments till the date ofensuing annual general meeting or due date thereof.
The board recommends the resolutions in relation to appointment of Mr. DineshchandraMangaldas Shah and Mr. Mukesh Shankerlal Chowdhary as independent directors for theapproval by shareholders of the company.
Also appointment of Mr. Bherulal Lalchand Chopra (DIN: 01149396) made on December 272016 was approved by the shareholders of the company at their 25 annual general meetingheld on September 10 2017.
Further at the meeting held on November 09 2017 the board of directors of thecompany has appointed Ms. Kruti Sheth as company secretary and compliance officer of thecompany.
During the financial year under report Mr. Dilip Kumar Daga and Mr. Bherulal LalchandChopra resigned and thus ceased to be independent directors of the company w.e.f. June 232017 and November 03 2017 respectively. Mr. Purvesh Pandit resigned from the post ofcompany secretary and compliance officer of the company from the closure of working hoursof August 10 2017.
The board places on record its sincere appreciation for the valuable services renderedby the outgoing directors and the company secretary during their tenure.
III. Retirement by Rotation
In accordance with the provisions of section 152(6) of the Companies Act 2013 and thearticles of association of the company Mrs. Pushpa M. Shah (DIN: 00182754) will retire byrotation at this annual general meeting and being eligible she offers herself forreappointment. The board recommends her appointment.
IV. Evaluation of the Board's Performance
During the financial year under report exercise of evaluation was carried out througha structured process covering various aspects of the board's functioning such ascomposition of the board & committee(s) experience & competencies performance ofspecific duties & obligations governance issues etc.
Separate exercise was carried out to evaluate the performance of each individualdirector including the board's chairman who were evaluated on parameters such asattendance contribution at the meetings and otherwise independent judgmentssafeguarding of minority shareholders' interest etc.
The evaluation of the independent directors was carried out by the entire boardexcluding independent directors and that of the chairman and the non independent directorswas carried out by the independent directors. The directors were satisfied with theevaluation results which reflected the overall engagement of the board and its committeeswith the company. This may be considered as a statement under provisions of section134(3)(p) of the Companies Act 2013 and rule 8(4) of the Companies (Accounts) Rules2014. The board of your company is composed with proper number of executive and nonexecutive directors.
V. Remuneration Policy
The company follows a policy on remuneration of directors and senior managementemployees. The policy has been approved by the nomination & remuneration committee andthe board. More details on the same have been given in the corporate governance report.The policy on remuneration of directors key managerial personnel and senior employees canbe accessed on website of the company at the following web link: http://arfin.co.in/pdf/policies/remuneration-of-directors-key-managerial-personnel-and-senior-employees-policy.pdf
15. Number of Meetings of Board of Directors
The board of directors met 10 times during the financial year ended on March 31 2018.The details of the board meetings and the attendance of the directors are provided in thecorporate governance report.
16. Audit Committee
The audit committee of the company is constituted with Mr. Dineshchandra Mangaldas Shahas chairman and Mr. Mukesh Shankerlal Chowdhary and Mr. Mahendra R. Shah as members of thecommittee. All the recommendations if any made by the audit committee were accepted bythe board of directors during the period under report. More details on the audit committeehave been provided in the corporate governance report.
17. Nomination and Remuneration Committee
The nomination and remuneration committee of the company is constituted unanimously bythe non-executive directors of the company. Mr. Mukesh Shankerlal Chowdhary holds positionof chairman of the committee and Mr. Dineshchandra Mangaldas Shah and Mr. Shantilal Mehtaare members of the committee.
The policy required to be formulated by the nomination and remuneration committeeunder section 178(3) of the Companies Act 2013 is uploaded on the company's website atthe following web link: http://arfin.co.in/pdf/policies/remuneration-of-directors-key-managerial-personnel-and-senior-employees-policy.pdf
More details on the committee have been provided in the corporate governance report.
18. Stakeholder Relationship Committee
In order to redress the grievances of stakeholders timely and in efficient manner andas statutorily required the company has formulated a committee named stakeholderrelationship committee which is headed by Mr. Shantilal Mehta as chairman and is furtherconstituted with Mr. Mahendra R. Shah and Ms. Kruti Sheth as members of the committee.
More details on the committee have been provided in the corporate governance report.
19. Internal Complaints Committee (ICC)
The board of directors of the company has constituted a committee named internalcomplaints committee at its registered / corporate office. The said committee has beenformed to comply with the provisions of the Sexual Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013 and rules framed thereunder and toprovide the employees safety against harassment if any. A policy adopted by the companyfor prevention of sexual harassment at workplace is available on its website at thefollowing web link: http://arfin.co.in/pdf/policies/prevention-of-sexual-harassment-policy.pdf
During the financial year ended on March 31 2018 the company did not receive anycomplaint pertaining to sexual harassment.
20. Related Party Transactions
All the related party transactions are being entered on arm's length basis in ordinarycourse of business and in compliance with the applicable provisions of the Companies Act2013 and relevant regulations of the SEBI
(Listing Obligations and Disclosure Requirements) Regulations 2015.
There were no materially significant related party transactions made by the companywith promoters directors or key managerial personnel etc. which may have potentialconflict with the interest of the company at large.
All the related party transactions are presented to the audit committee and to theboard. Omnibus approval has been obtained from audit committee board of directors andmembers of the company for the transactions with the related parties.
The policy on related party transactions as approved by the board has been uploaded onthe company's website at the following weblink:http://arfin.co.in/pdf/policies/related-party-transactions-policy.pdf
21. Establishment of Vigil Mechanism / Whistle Blower Policy for Directors andEmployees
The company promotes ethical behavior in all its business activities and has put inplace a mechanism wherein the employees are free to report illegal or unethical behavioractual or suspected fraud or violation of the company's codes of conduct or corporategovernance policies or any improper activity to the chairman of the audit committee of thecompany or to the chairman of the board. The whistle blower policy has been dulycommunicated within the company.
Under the whistle blower policy the confidentiality of those reporting violation(s) isprotected and they are not subject to any discriminatory practices. No personnel have beendenied access to the audit committee in this regard.
The said vigil mechanism / whistle blower policy has been uploaded on website of thecompany and can be accessed at the following web link:http://arfin.co.in/pdf/policies/vigil-mechanism-or-whistle-blower-policy.pdf
22. Loans Guarantees or Investments under Section 186 of the Companies Act 2013
The company did not provide any guarantee in respect of loans availed by others underthe provisions of section 186 of the Companies Act 2013 and rules framed thereunderduring the financial year under report. Details of loans and investments covered under theprovisions of section 186 are given in the notes forming part of the financial statementsthat form part of this annual report.
23. Managerial Remuneration
The company follows a policy on remuneration of directors KMP and senior managementemployees. The company has paid remuneration to the executive as well as sitting fees tothe non-executive directors during the financial year under report. More details on themanagerial remuneration have been given in the extract of annual return and in thecorporate governance report.
24. Management Discussion & Analysis Report
A detailed analysis of the company's performance is made in the management discussionand analysis report which forms part of this annual report.
25. Corporate Governance Report
Your company practices a culture that is built on core values and ethical governancepractices and is committed to transparency in all its dealings. A report on corporategovernance as per the provisions of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 forms part of this annual report.
26. Code of Conduct
The board has laid down a code of conduct ("code") for the board membersmanagerial personnel and for senior management employees of the company. This code hasbeen posted on the company's website at http://arfin.co.in/code-conduct.html
All the board members and senior management personnel have affirmed compliance withthis code. A declaration signed by the managing director to this effect forms part of thecorporate governance report. The board has also laid down a code of conduct for theindependent directors pursuant to the provisions of section 149(8) and schedule IV to theCompanies Act 2013 via terms and conditions for appointment of independent directorswhich is a guide to the professional conduct for independent directors and has beenuploaded on the website of the company at the following weblink:http://arfin.co.in/pdf/disclosures/terms-and-conditions-of-appointment-of-independent-directors.pdf
27. Risk Management Policy
The board of directors has developed and implemented a risk management policy for thecompany. It has identified and assessed internal and external risks with potential impactand likelihood that may impact the company in achieving its strategic objectives or maythreaten its existence. The policy lays down the procedures for risk identificationdescription evaluation estimation reporting and development of action plan. The policyincludes identification of elements of risks which mainly covers strategic riskoperational risk financial risk and hazardous risks. The same can be accessed from thewebsite of the company at the following web link: http://arfin.co.in/pdf/policies/risk-management-policy.pdf
More details on the risk and concern factors have been given in the managementdiscussion and analysis report.
28. Corporate Social Responsibility
Pursuant to the provisions of section 135 of the Companies Act 2013 including rulesframed thereunder the company attracts the criteria for applicability of corporate socialresponsibility. Accordingly it has constituted a corporate social responsibilitycommittee which comprises of:
|Sr. No. ||Name of the Member ||Nature of Membership |
|1 ||Mr. Mahendra R. Shah ||Chairman |
|2 ||Mr. Shantilal Mehta ||Member |
|3 ||Mrs. Pushpa M. Shah ||Member |
In compliance with the requirements of section 135 of the Companies Act 2013 thecompany has also laid down a CSR policy which can be accessed from the website of thecompany at the following web link: http://arfin.co.in/pdf/policies/corporate-social-responsibility-policy.pdf
The contributions in this regard have been made to Shri Swaminarayan Gurukul PatdiGujarat Karnavati Lions Club Ahmedabad and All India Social Education Charitable TrustAhmedabad.
The report of CSR activities for the financial year 2017-18 as per the provisions ofsection 135 of the Companies Act 2013 has been given separately as Annexure 7.
29. Directors' Responsibility Statement
In accordance with the provisions of section 134(5) of the Companies Act 2013 withrespect to the director's responsibility statement it is hereby stated:
a. that in the preparation of the annual financial statements for the year ended onMarch 31 2018 the applicable accounting standards have been followed along with properexplanation relating to material departures if any;
b. that such accounting policies as mentioned in notes to the financial statements havebeen selected and applied consistently and judgment and estimates have been made that arereasonable and prudent so as to give a true and fair view of the state of affairs of thecompany as on March 31 2018 and of the profit of the company for the year ended on thatdate;
c. that proper and sufficient care has been taken for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the company and for preventing and detecting fraud and otherirregularities;
d. that the annual financial statements for the year ended on March 31 2018 have beenprepared on a going concern basis;
e. that proper internal financial controls were in place and that the financialcontrols were adequate and were operating effectively; and
f. that the system to ensure the compliances with the provisions of all applicable lawswas in place and were adequate and operating effectively.
30. Disclosure u/s 164 (2) of the Companies Act 2013
The company has received the disclosure in Form DIR-8 from its directors beingappointed or reappointed and has noted that none of the directors are disqualified undersection 164(2) of the Companies Act 2013 read with rule 14(1) of the Companies(Appointment and Qualification of Directors) Rules 2014.
31. Transfer of Amount(s) and Shares to the Investor Education and Protection Fund
Section 124 of the Companies Act 2013 mandates that companies shall transferdividend(s) that remain unpaid or unclaimed for a period of seven years from the unpaiddividend account to the investor education and protection fund. In this respect thestakeholders are requested to take note that company has not completed seven years fromits first dividend paying financial year and thus there remains no unpaid dividend amountor equity shares corresponding thereto to be transferred to the investor education andprotection fund.
32. Conservation of Energy Technology Absorption and Foreign Exchange Earnings andOutgo
The particulars as to conservation of energy technology absorption and foreignexchange earnings and outgo required to be disclosed in terms of section 134 of theCompanies Act 2013 & rule 8 of the Companies (Accounts) Rules 2014 have been givenseparately as Annexure 1.
33. Extract of Annual Return
The Extract of Annual Return in the Form MGT-9 is enclosed herewith as Annexure2.
34. Form AOC-2
Form AOC - 2 pursuant to clause (h) of sub section (3) of section 134 of the CompaniesAct 2013 and rule 8(2) of the Companies (Accounts) Rules 2014 for disclosure ofparticulars of contracts / arrangements if any entered into by the company with therelated parties as referred in section 188(1) of the Companies Act 2013 is enclosedherewith as Annexure 3.
35. Particulars of Employees and Remuneration
As required by the provisions of section 197 of the Companies Act 2013 read with rule5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 asamended from time to time the particulars are set out in Annexure 4.
36. Secretarial Audit Report
The secretarial audit report given by Mr. Kamlesh M. Shah proprietor of M/s. KamleshM. Shah & Co. practicing company secretary Ahmedabad for the financial year endedon March 31 2018 is enclosed herewith as
37. Auditors Certificate on Corporate Governance
A certificate from statutory auditors of the company regarding compliance of conditionsof corporate governance as stipulated under the provisions of the SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 is annexed herewith as Annexure6.
Your directors express their deep sense of gratitude to the bankers central &state governments their departments the local authorities other regulators and thestock exchanges for their continued guidance and support. We would also like to place onrecord our sincere appreciation for the dedication commitment and hard work put in byevery member of the Arfin family. The board further expresses that the credit of thesuccess of Arfin goes to each & every member of Arfin family equally. The managementis deeply grateful for the confidence and faith that all the stakeholders have alwaysreposed in them.
For and on Behalf of the Board of Directors
| ||Mahendra R. Shah |
|Place: Ahmedabad ||(Chairman) |
|Date: August 10 2018 ||(DIN: 00182746) |