Your Directors present the 31st Annual Report of the Company together withthe Audited Financial Statements for the year ended on 31" March 2019.
(Rs. In Lacs)
|Particulars ||For the year ended 31st March 2019 ||For the year ended 31st March 2018 |
|Net Income from operation and other income ||2388.15 ||2409.94 |
|Profit before Depreciation & Amortization expenses Finance Cost and tax (EBIDTA) ||528.96 ||240.77 |
|Less: Depreciation and Amortization Expenses ||84.33 ||81.62 |
|Finance Cost ||363.64 ||445.02 |
|Profit/(Loss) before tax ||80.99 ||(285.87) |
|Less: Provision for tax ||(51.27) ||24.48 |
|Profit/(Loss) after tax ||132.26 ||(310.35) |
|Add: Other Comprehensive Income ||(0.67) ||(1.03) |
|Total Comprehensive Income ||131.59 ||(309.32) |
|Balance of Surplus as per last Balance Sheet ||1131.78 ||1441.11 |
|Balance available for appropriation ||1263.37 ||1131.78 |
|Balance of profit carried to Balance Sheet ||1263.37 ||1131.78 |
2018-2019 IN RETROSPECT:
During the year the Company recorded almost similar turnover as in the previous yearmainly on account of design projects receipts being rear ended and dependent onEnvironment Clearances Forest Clearances and land acquisitions which take time resultinginto reduction of billable revenue. The award of certain additional DPR Consultancy workorders under pipeline are expected to generate additional revenue during FY2019-20.
Manpower Cost: The manpower cost of the Company has decreased as compared to lastyear. The ratio of Manpower Cost is decreased by 10.85% as compared to last year.
Administrative Selling & Other Expenses: The Administrative selling and otherexpenses has seen minor decrease as compared to last financial year.
Project Expenses: Project expenses have decreased in line with previous year onaccount of conclusion of Projects.
Interest & Other Financial Charges: Interest and other financial charges havedecreased on account of repayment of Term Loan reduction of interest thereon.
Depreciation: There is Marginal increase in Depreciation calculated as per statute.
USINESS OUTLOOK/ STATE OF THE COMPANY'S AFFAIRS:
Infrastructure is the backbone of any nation's development and quality of life.
Going with the momentum created over the last five years a mammoth budgetary supportof approximately Rs 4.56 crore was made under the union budget for the infrastructuresector for financial year 2019-20. This includes roadways railways shipping andaviation. Despite highways seeing the maximum projects being taken up under the infracategory during the last four years the roadways was given a relatively smaller incrementamong the various infra-based sectors of Rs 83015.97 crore.
During the financial year 2018-19 your Company was awarded new projects assignments:
The Company has also been awarded the contracts for Highway Assignments as Consultantfor Detailed Engineering Construction Supervision Supervision of Operation &Maintenance and Project Management from National Highways Authority of India and otherstate Govt. Authority with contracted fees of Rs. 3.48 Crores.
During the year the Company has incurred capital expenditure of Rs. 17.62 Lacs mainlyon addition of Equipment Furniture Vehicles Computers and Software.
In order to conserve the resources for future growth of the Company your Directors donot recommend dividend for the year under review.
CHANGE IN THE NATURE OF BUSINESS:
There has been no change in the nature of business during the year under review.
FRANSFER TO RESERVE:
During the year under review no amount was transferred to Reserve
During the year under review your Company has not accepted any deposits within themeaning of Sections 73 and 76 of the Companies Act 2013 read with Companies (Acceptanceof Deposits) Rules 2014.
There was no change in share capital of the Company during the Financial Year 2018-19.The paid up equity share capital of your Company as on 31st March 2019 is Rs.55250000/- (Rupees Five Crore Fifty Two Lacs Fifty Thousand only) divided into5525000 Equity shares of face value of Rs. 10/- (Rupee Ten) each.
EXTRACT OF ANNUAL RETURN:
An extract of Annual Return pursuant to the provisions of Section 92 of the CompaniesAct 2013 in Form MGT-9 is appended to this Report as "Annexure -1".
Further pursuant to the provisions of Section 134(3)(a) the same is also being madeavailable on the website of the Company viz. www.artefactprojects.com.
DIRECTORS AND KEY MANAGERIAL PERSONNEL (KMP):
In accordance with the provisions of Section 152 of the Companies Act 2013 read withCompanies (Management & Administration) Rules 2014 and Articles of Association of theCompany Mrs. Ankita Shah (DIN: 06772621) Director of the Company retires by rotation atthe ensuing Annual General Meeting ('AGM') and being eligible has offered herself forreappointment. The Notice convening the forthcoming AGM includes the proposal forreappointment of aforesaid Director alongwith brief resume and other details as requiredunder the Listing Regulations and Secretarial Standard on General Meetings (SS-2) issuedby the Institute of Company Secretaries of India (ICSI).
Mr. Pankaj Shah (DIN: 00010504) and Mr. Sudhir Kumar Gupta (DIN: 07780511) resigned asDirectors of the Company on 4th May 2019 and 19th June 2019respectively. The Board expresses its appreciation for their valuable guidance duringtheir association with the Company.
Mr. SiddharthP. Shah (DIN: 05304116) was re-appointed as an Whole-time Director of theCompany for a further period 3 (three) w.e.f. 6h July 2019 subject to theapproval ofmembers.
Mrs. Meena Gupta (DIN: 02065061) was appointed as an Independent Director of theCompany for a term of 2 (two) years w.e.f. 24th July 2019 upto 23rdJuly 2021 subject to the approval of members.
The Company has received declaration from all the Independent Directors of the Companyconfirming that they meet the criteria of independence as prescribed under Section 149(6)of the Companies Act 2013 and Regulation 16(l)(b) of Listing Regulations.
MEETINGS OF THE BOARD:
The Board meets at regular intervals to discuss and decide on Company's business policyand strategy apart from other business of the Board. A tentative annual calendar of theBoard and Committee Meetings is informed to the Directors in advance to facilitate them toplan their schedule and to ensure meaningful participation in the meetings.
The notice of Board Meeting is given well in advance to all the Directors of theCompany. Usually meetings of the Board are held at the registered office of the Company.The agenda of the Board / Committee meetings is circulated seven days prior to the date ofthe meeting. In case of any business exigencies meetings are called and convened atShorter Notice or the resolutions are passed by Circulation and later placed in theensuing Board Meeting.
During the year under review the Board met 4 (Four) times as per details given in theReport on Corporate Governance. The intervening gap between the two consecutive meetingswas within the period prescribed under the Companies Act 2013.
ANNUAL EVALUATION OF PERFORMANCE BY THE BOARD ITS COMMITTEES AND OF INDIVIDUALDIRECTORS:
In terms of applicable provisions read with Schedule IV of the Companies Act 2013 andrules framed thereunder and Regulation 17 of Listing Regulations read with Part D ofSchedule II of the Listing Regulations the Board of Directors has put in place a processto formally evaluate the effectiveness of the Board along with performance evaluation ofeach Director to be carried out on an annual basis.
Pursuant to the provisions of the Companies Act 2013 and Listing Regulations theevaluation of the Board and its own performance the directors individually and theworking of its Audit Nomination & Remuneration and Stakeholders' RelationshipCommittee of the Company was carried out by the Board. A questionnaire to evaluate theperformances of each of executive and non-executive and Independent Directors is devisedand the directors are evaluated on the basis of this questionnaire. Such questions areprepared considering the business of the Company and the expectations that the Board havefrom each of the Directors. The evaluation framework for assessing the performance ofDirectors comprises of the following key areas:
I. Attendance of Board Meetings and Board Committee Meetings.
ii. Quality of contribution to Board deliberations.
iii. Strategic perspectives or inputs regarding future growth of Company and it'sperformance.
iv. Providing perspectives and feedback going beyond information provided by themanagement.
v. Ability to contribute to and monitor our corporate governance practices.
During the year under review the Nomination and Remuneration Committee reviewed theperformance of all the executive and non-executive directors.
A separate meeting of the Independent Directors was held for evaluation of performanceof non-independent Directors performance of the Board as a whole and performance of theChairman.
COMMITTEES OF THE BOARD:
There are currently following Committees of the Board:
1. Audit Committee
2. Stakeholders' Relationship Committee
3. Nomination and Remuneration Committee
In addition to the aforesaid Committees the Company also has the following Committees:
1. Borrowing Committee
2. Management Committee
3. Ad-hoc Committee
Details of all the Committees with respect to their terms of reference meetings andattendance at the meetings held during the year are provided in the Report on CorporateGovernance forming part of this Annual Report.
AUDIT COMMITTEE AND ITS COMPOSITION:
The Audit Committee is duly constituted as per the provisions of Section 177 of theCompanies Act 2013 and Regulation 18 of Listing Regulations. The composition of the AuditCommittee is provided in Report on Corporate Governance.
VIGIL MECHANISM/WHISTLE BLOWER POLICY:
Pursuant to the provisions of Section 177 of the Companies Act 2013 and Regulation 22of Listing Regulations the Company has devised a Vigil Mechanism/Whistle Blower Policy todeal with instance of fraud mismanagement and unethical behavior if any. The mechanismprovides for adequate safeguards against victimization of employees who avail of themechanism and also provides for direct access to the Chairman of the Audit Committee inthe exceptional cases. The details of Vigil Mechanism/ Whistle Blower Policy is explainedin the Report on Corporate Governance and also posted on the website of the Company athttp://www.artefactprojects.com/Revised%20Whistle%20Blower%20Policy.pdf
We affirm that dining the financial year 2018-19 no employee or director or any otherperson was denied access to the Audit Committee.
APPOINTMENT AND REMUNERATION POLICY:
Pursuant to provisions of Section 178 of the Companies Act 2013 and Regulation 19 ofListing Regulations and on the recommendation of the Nomination & RemunerationCommittee the Board has adopted a policy for selection appointment and remuneration ofDirectors and Key Managerial Personnel. The salient features of Remuneration Policy arestated in the Report on Corporate Governance.
RISKS AND AREAS OF CONCERN:
The Company has laid down a well-defined Risk Management Policy covering the riskmapping trend analysis risk exposure potential impact and risk mitigation process. Adetailed exercise is being carried out to identify evaluate manage and monitoring ofboth business and non-business risk. The Board periodically reviews the risks and suggestssteps to be taken to control and mitigate the same through a properly defined framework.
DIRECTORS' RESPONSIBILITY STATEMENT:
Pursuant to the provisions of Section 134(3)(c) of the Companies Act 2013 yourdirectors state and confirm that:
a. in the preparation of the annual accounts the applicable accounting standards havebeen followed along with proper explanation relating to material departures if any;
b. the directors have selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the company at the end of the financial year and ofthe profit of the company for that period;
c. the directors 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. the directors have prepared the annual accounts on a going concern basis;
e. the directors have laid down internal financial controls to be followed by thecompany and that such internal financial controls are adequate and were operatingeffectively; and
f. the directors have devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.
ETAILS IN RESPECT OF FRAUD REPORTED BY AUDITORS:
Pursuant to Section 143(12) of the Companies Act 2013 there were no frauds reported bythe Auditors of the Company during the year under review to the Audit Committee or theBoard of Directors as such there is nothing to report under Section 134(3)(ca) of theCompanies Act 2013.
PARTICULARS OFLOANS GUARANTEES OR INVESTMENTS:
The details of loans guarantee or investment under Section 186 of the Companies Act2013 are given under Notes to Financial Statements.
PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES:
All the Related Party Transactions that were entered into during the Financial Yearwere in Ordinary course of business and on Arm's Length Basis and are reported in theNotes to Financial Statements.
No material related party transactions were entered during the year under review byyour Company. Hence accordingly disclosure as required under Section 134(3) of theCompanies Act 2013 in Form AOC-2 is not applicable to the company.
In accordance with the provisions of Regulation 23 of Listing Regulations the Companyhas formulated the Policy on Related Party Transactions and the same is uploaded on thewebsite of the Company i.e.http://www.artefactprojects.com/Policy%20on%20Related%20Party%20Transaction.pdf
PARTICULARS OF EMPLOYEES AND REMUNERATION:
Pursuant to provisions of Section 197 of the Companies Act 2013 read with Rule 5(1) ofthe Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 detailsof remuneration paid to all the Directors/Employees and the details of the ratio ofremuneration of each Director to the median employee's remuneration is provided in Annexure-HI-A.
Further the information as required as per the provisions of Section 197 of theCompanies Act 2013 read with Rule 5(2) and Rule 5(3) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 is appended to this report as AnnexureIII-B.
PARTICULARS OF CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGEEARNINGS AND OUTGO:
Information in terms of requirement of clause (m) of Sub-Section (3) of Section 134 ofthe Companies Act 2013 regarding Conservation of Energy Technology Absorption andForeign Exchange Earnings and Outgo read along with Rule 8 of the Companies (Accounts)Rules 2014 is as follows:
A. CONSERVATION OF ENERGY:
i. Installation of Energy saving devices LED's and others to avoid wastage of energy.
ii. Improved monitoring of energy consumption through building management systems.
iii. Creating awareness among employees to conserve energy and follow its protocols.
iv. While procurement of equipment focus is on energy efficient systems for greenerfuture.
v. Use of Solar Energy for hot water consumption thereby reducing thermal energy usageand conserving energy.
vi. Extensive use of LED lights and bulbs for energy saving.
B. TECHONOLOGY ABSORPTION AND BENEFITS:
With the advent of new infrastructure the IT Systems and software's used by theCompany are installed as per international standards. The major technological baseincludes the following:-
i. Installation of contemporary IT Hardware and Infrastructure to save time and costs.
ii. Use of Internet based communication systems to reduce paper communication andquicker and transparent information sharing system.
iii. The benefits derived from Technology absorption are higher efficiency betterreliability and availability reduced maintenance environment friendly atmosphere andreduction in printing cost.
iv. The Company's operations do not require significant import of technology.
C. FOREIGN EXCHANGE EARNINGS AND OUTGO: (Amounting
|Particulars ||For the year ended 31st March 2019 ||For the year ended 31st March 2018 |
|Foreign exchange earned ||Nil ||Nil |
|Expenditure in foreign currency ||Nil ||Nil |
DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS ORTRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANY'S OPERATIONS IN FUTURE:
There were no significant or material orders passed by any regulator or court ortribunal which can impact the going concern status of the Company or will have bearing onCompany's operations in future.
M/s. Banthia Damani & Associates Chartered Accountants Nagpur (FRN: 126132W) wereappointed as the Statutory Auditors of the Company for a period of 5 years in the 29thAnnual General Meeting ('AGM') of the Company held on 3 0* June 2017 to hold office fromthe conclusion of 29* AGM till the conclusion of 34* AGM on terms and conditions as maybe decided by the Board.
The Statutory Auditors have given a confirmation to the effect that they are eligibleto continue with their appointment and that they have not been disqualified in any mannerfrom continuing as the Statutory Auditors of the Company.
REPLIES TO THE OBSERVATIONS MADE IN THE STATUTORY AUDITORS' REPORT:
1. Auditor's comments in their Independent Auditors Report under Point No.(i) forQualified Opinion read along with the note No.9.01 are self-explanatory. The tradereceivables amounting to Rs. 686.02 lacs of completed projects are entirely fromGovernment Authorities whose single entry accounting system does not enable issue of anybalance confirmation of unpaid Bills. The company has on record Receipted Bills andcontractual compliances as per express provisions of agreement. The fact is supported byClause No.6.4 (C) and Clause No.6.4 (d) of the Consultancy Contract executed with client.The debtors of completed contracts are Final Bills due and pending procedural compliances.
Hence the said debtors are considered recoverable in the normal course of business.Management is reasonably assured of its recovery.
2. Auditor's comments in the Independent Auditors Report at point No.(ii) under Basisfor Qualified Opinion read along with Note No. 12.02 where Auditors have expressedinability to comment on the recoverability of the amount advanced to party of Rs.72.72Lacs. Management had paid sponsorship cost for higher studies at abroad for Engineeringand Sponsored Engineer is yet to render services of 2 years after completion of studies asper contract. The Management is taking Legal steps for its recovery during the ensuingfinancial year. Any provision required therefor shall be made by management on assessmentof the progress of legal recovery.
3. Auditors comments in the Independent Auditors Report at Point No.(iii) under thebasis for Qualified Opinion read alongwith Note No. 6.01. The Management of company feelsthat the investment in financial instruments being (CCDs) Compulsory ConvertibleDebentures and interest accrued there on amounting to Rs. 5.98 Crores shall be realized tothe extent of investment. The investment is made as a long term strategic investment inmining assets assets of much higher value.
Pursuant to the provisions of Section 204 of the Companies Act 2013 read withCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 Mr. JigarGorsia Practising Company Secretary is appointed as the Secretarial Auditor of theCompany for the Financial Year 2018-19. The Secretarial Audit Report for the FinancialYear under review is appended to this report as Annexure IV.
REPLY TO THE OBSERVATIONS MADE IN THE SECRETARIALAUDITOR'S REPORT:
a. The Secretarial Auditors reported that the vacancy in the office of Independentdirector which is to be filled-up by the Board at the earliest but not later thanimmediate next Board meeting or three months from the date of such vacancy whichever islater; is yet to be filled up.
Dining the period of such vacancy the Company received certain profiles for the saidposition of Independent Director and after due evaluation & identification byNomination & Remuneration Committee the Board shall select the most suitablecandidate for the said position.
Pursuant to provisions of Section 138 of the Companies Act 2013 read with Companies(Accounts) Rules 2014 on recommendation of Audit Committee M/s. P.T. Chhabria &Co. Chartered Accountants Nagpur (FRN:-101790W) are appointed as the Internal Auditorsof the Company. The Internal Auditor submits his reports on quarterly basis to the AuditCommittee. Based on the report of internal audit management undertakes corrective actionin the respective areas and strengthens the levels of Internal Financial and otheroperational controls.
INTERNAL FINANCIAL CONTROL:
The Company has in place adequate systems for ensuring the orderly and efficientconduct of its business.
The Audit Committee evaluates the efficacy and adequacy of financial control system inthe Company its compliance with operating systems accounting procedures and policies atall locations of the Company and strives to maintain the Standard in Internal FinancialControls.
REPORT ON CORPORATE GOVERNANCE:
Pursuant to Regulation 34(3) read with Schedule V of Listing Regulations the followinghave been made a part of the Annual Report and are attached to this report:
Management Discussion and Analysis
* Report on Corporate Governance
Declaration affirming Compliance with Code of Conduct of Board of Directors andSenior Management
. Auditor's Certificate regarding compliance with conditions of Corporate Governance
SUBSIDIARY /ASSOCIATE COMPANIES/ JOINT VENTURES:
As on 31" March 2019 the Company does not have any subsidiary or associatecompanies hence preparation of Consolidated Financial Statements is not applicable to theCompany. However the Company has 3 Joint Ventures namely:-
Zaidun Leeng Sdn. Bhd.-Artefact Projects.
Meinhardt Singapore Pte. Ltd.-Artefact Projects.
. SheladiaAssociates Inc.-ArtefactProjects- ZaidunLeeng Sdn. Bhd.
The salient features of Joint Ventures in Form AOC-1 as per the provisions of Section129 of the Companies Act 2013 is provided in Annexure V which is appearing after theFinancial Statements.
In accordance with Section 136 of the Companies Act 2013 the Audited FinancialStatements and related information of the Company are available on our websiteatwww.artefactprojects.com.
PERFORMANCE OF SUBSIDIARY ASSOCIATE OR JOINT VENTURE COMPANIES:
The Joint Ventures have incurred Losses during the Current Financial year under reviewdue to sluggish market conditions.
MAINTAINENCE OF COST RECORDS:
The provisions of Rule 8(5)(ix) of Companies (Accounts) Rules 2014 of Section 134(3)of Companies Act 2013 regarding maintenance of cost records are not applicable to theCompany.
CORPORATE SOCIAL RESPONSIBILITY:
The provisions of Section 135 of the Companies Act 2013 on Corporate SocialResponsibility are not applicable to the Company. Therefore the Company has not developedor implemented any policy on Corporate Social Responsibility initiatives.
INFORMATION UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITIONAND REDRESS AL) ACT 2013:
The Company adopted a Policy on prevention prohibition and redressal of sexualharassment at workplace in line with the provisions of the Sexual Harassment of Women atWorkplace (Prevention Prohibition and Redressal) Act 2013. The Company has constitutedan Internal Complaint Committee under Section 4 of the Sexual Harassment of Women atWorkplace (Prevention Prohibition and Redressal) Act 2013. There was no complaintreceived by the Committee on sexual harassment during the year under review.
The Company is determined in providing consistent quality services to our clients. Weare constantly upgrading the quality systems to improve our services.
ENVIRONMENT SAFETY & HEALTH (ESH):
The Company is conscious of its strong corporate reputation and the positive role itcan play by focusing on Environment Safety & Health (ESH) issues. Towards this theCompany has set very exacting standards in ESH management. The Company recognizes theimportance of ESH issues in its operations and has established indicators to trackperformance in these areas.
The Company values the safety of its employees and constantly enhances the same forensuring a safe work place.
MATERIAL CHANGES AND COMMITMENT IF ANY AFFECTING THE FINANCIAL POSITION OF THE COMPANYOCCURRED BETWEEN THE END OF THE FINANCIAL YEAR TO WHICH THIS FINANCIAL STATEMENT RELATESAND THE DATE OF THE REPORT:
No material changes and commitments affecting the financial position of the companyoccurred between the end of the financial year 2018-19 to which this financial statementrelates and the date of this report.
The Contingent Liabilities of the Company mainly include Bank Guarantees to client asPerformance Securities. Hence no cash outflow is expected.
As a risk mitigation measure and to safeguard your Company's Financial Liability ofBank Guarantees in case of any remote unlikely possibility of any professional liabilitythe performance of the Company's services is also entirely covered by a comprehensiveProfessional Liability Insurance Policy. Besides this the cases filed against the Companyare also reported.
COMPLIANCE WITH SECRETARIAL STANDARDS:
The Company has devised proper systems to ensure compliance with the applicableSecretarial Standards issued by the Institute of Company Secretaries of India and theCompany complies with all the applicable provisions of the same during the year underreview.
CHANGE IN THE ADDRESS OF REGISTERED OF THE COMPANY:
Change in Registered office address to the company from Block No. 1074liFloor "Artefact Towers" 54/3 Chhatrapati Square Wardha Road Nagpur - 440015 to Block No. 1063"1 Floor "Artefact Towers" 54/3Chhatrapati Square Wardha Road Nagpur - 440 015 within local limits of the city w.e.f.November 2018
Your Directors would like to place on record their gratitude for all the guidance andco-operation received from the shareholders banks and other government and regulatoryagencies. Your Directors would also like to take this opportunity to express theirappreciation for the hard work and dedicated efforts put in by the employees and lookforward to their continued contribution and support.
| ||For and on behalf of the Board of Directors || |
|Place: Nagpur ||Siddharth Shah ||Ankita Shah |
|Date: 1311 August 2019 ||Whole-time Director ||Director |
| ||DIN:05304116 ||DIN: 06772621 |