To The Members
Your Directors have pleasure in presenting the Tenth Annual Report on the business andoperations of the Company together with the Audited Financial Statements of the Companyfor the financial year ended on 31st March 2018.
1. FINANCIAL RESULTS :
|Highlights of the Financial Results for year are as under: || || || ||[Rs. in lacs] |
|Particulars || |
| ||2017-18 ||2016-17 ||2017-18 ||2016-17 |
|Total Revenue ||14216.01 ||9484.30 ||20224.07 ||15874.13 |
|Profit before Finance costs Depreciation and Amortisation & Tax ||5068.99 ||3234.66 ||6495.41 ||4421.25 |
|Less: Finance Costs ||1465.22 ||1158.03 ||1539.29 ||1158.03 |
|Less : Depreciation and Amortisation ||85.25 ||82.17 ||109.39 ||103.34 |
|Profit before share in profit/(loss) of Joint ventures & Tax ||3518.52 ||1994.46 ||4846.73 ||3159.88 |
|Share of Profit/(Loss) from Joint ventures ||- ||- ||(12.74) ||69.79 |
|Profit before tax ||3518.52 ||1994.46 ||4833.99 ||3229.67 |
|Less : Current Tax ||536.16 ||(37.74) ||1679.47 ||1095.99 |
|Less : Deferred Tax ||4.33 ||(26.75) ||10.44 ||(31.34) |
|Profit for the year ||2978.02 ||2058.95 ||3144.08 ||2165.02 |
|Other comprehensive income (net of tax) ||(6.45) ||(1.49) ||(6.45) ||(1.49) |
|Total comprehensive income for the year ||2971.57 ||2057.46 ||3137.63 ||2163.53 |
|Profit/(Loss) attributable to : || || || || |
|Equity holders of the parent ||- ||- ||3011.05 ||2026.57 |
|Non-controlling interest ||- ||- ||126.58 ||136.96 |
2. OPERATIONS :
The standalone total revenue of the company stood at ` 14216.01 lacs comparedto ` 9484.30 lacs in the previous year showing an increase of 50%. Totalcomprehensive income stood at ` 2971.57 lacs as compared to ` 2057.46 lacsin the previous fiscal showing an increase of 44%. The consolidated total revenue of thecompany stood at ` 20224.07 lacs compared to ` 15874.13 lacs in theprevious fiscal showing an increase of 27%. Total comprehensive income stood at ` 3137.63lacs as compared to ` 2163.53 lacs in the previous fiscal showing an increase of45%. A detailed analysis of the financial results is given in the Management Discussionand Analysis Report which forms part of this report.
Keeping in mind the need to conserve the resources for the future development of theCompany your Directors do not recommended any dividend on Equity Shares for the yearunder review.
4. TRANSFER TO RESERVES:
During the year under review no amount is appropriated from Profit and Loss Accountand transferred to any Reserve Account.
5. SHARE CAPITAL:
During the year with the approval of the members at the Extraordinary General Meetingheld on 25th January 2018 the authorised share capital of the Company wasincreased to ` 500000000 by creation of additional 15000000 (One Crore Fiftylacs) equity shares of ` 10/-(Rupees Ten).
During the year 2017-18 the Company has allotted 283243 equity shares of ` 10/-each to the eligible employee/s pursuant to the exercise of stock options granted to themunder Employees Stock Option Scheme - 2013 (AIL ESOP 2013) and 3175000 equity shares of `10/- each to the warrant holders being promoter and promoter group entities pursuantto exercise of option of conversion of warrants by them under
Tranche II of the Preferential issue made in April 2016. Consequently the paid upequity share capital of the Company as at 31st March 2018 stood at ` 318675500/-consisting of 31867550 equity shares of ` 10/- each.
During the year under review the Company has neither issued shares with differentialvoting rights nor sweat equity shares.
6. EMPLOYEE STOCK OPTION SCHEME:
The Company has instituted the Arvind Infrastructure Limited (now Arvind SmartSpacesLimited) - Employees Stock Option Scheme - 2013 (AIL ESOP 2013) to grant equity basedincentives to certain eligible employees directors of the Company and its SubsidiaryCompanies. During the year under review the Company has not granted any stock options.
Details of equity shares issued upon exercise of stock options by the eligibleemployee/s under AIL ESOP 2013 and disclosure in compliance with Section 62 of theCompanies Act 2013 read with Rule 12 of Companies (Share Capital and Debentures) Rules2014 and the Securities and Exchange Board of India (Share based Employee Benefits)Regulations 2014 are set out in Annexure - A to this report.
7. DISCLOSURE UNDER SECTION 67(3)(C) OF THE COMPANIES ACT 2013:
No disclosure is required under section 67 (3) (c) of the Companies Act 2013 read withRule 16(4) of Companies (Share Capital and Debentures) Rules 2014 in respect of votingrights not exercised directly by the employees of the Company as the provisions of thesaid section are not applicable.
8. FINANCE :
During the year the Company has made fresh borrowings of ` 6668.73 lacs forits working capital requirements. Total Debt of the Company stands at ` 16072.55lacs as on 31st March 2018.
The Company has not accepted or renewed any deposits in terms of Chapter V of theCompanies Act 2013 read with the Companies (Acceptance of Deposit) Rules 2014 and hencefurnishing the details of deposit in terms of Chapter V of the Companies Act 2013 is notapplicable to the Company. Further there are no outstanding deposits as at 31stMarch 2018.
10. PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS UNDER SECTION 186:
Details of Loans Guarantees and Investments covered under the provisions of Section186 of the Companies Act 2013 are given in the notes to the Financial Statements.
11. INDIAN ACCOUNTING STANDARDS (IND AS):
In terms of Section 133 of Companies Act 2013 read with Companies (Indian AccountingStandards) Rules 2015 the Company its subsidiaries joint venture and associatescompanies have adopted IND AS w.e.f. 1st April 2017 and these financialresults alongwith the comparatives have been prepared accordingly.
12. CONSOLIDATED FINANCIAL STATEMENTS:
The Consolidated Financial Statements of the Company are prepared in accordance withrelevant Indian Accounting Standards issued by the Institute of Chartered Accountants ofIndia and form part of this Annual Report.
13. CORPORATE SOCIAL RESPONSIBILITY INITIATIVES:
Arvind SmartSpaces Limited undertakes "Corporate Social Responsibility'' (CSR)initiatives through Strategic Help Alliance for Relief to Distressed Area ("SHARDA")Trust and Narottam Lalbhai Rural Development Fund ("NLRDF"). SHARDA &NLRDF have been active in improving the quality of life of the urban poor & rural poorrespectively.
As a part of initiatives under CSR the Company has undertaken Rural DevelopmentProgramme at its project sites at Nasmed and Adhana villages at Kalol GandhinagarGujarat which activities is included in Schedule VII of the Companies Act 2013. The briefdetails of Corporate Social Responsibility Policy and the amount spent during thefinancial year 2017-18 on the said activity is enclosed as Annexure - B.
14. HUMAN RESOURCES:
The Company believes that Human Resources will play a significant role in its futuregrowth. With an unswerving focus on nurturing and retaining talent the Company providesavenues for learning and development through functional behavioural and leadershiptraining programs knowledge exchange conferences communication channels for informationsharing to name a few. The Company provides various opportunities to the employees todevelop and hone their skills to take up higher responsibilities in the organization.
A well - defined competency framework outlines the leadership behaviours expected fromemployees to be successful in Arvind Group. The Company also uses various communicationchannels to seek employees' feedback about the overall working environment and thenecessary tools and resources they need to perform at their best potential.
Diverse employee engagement initiatives are launched to ensure employees of various ageand background continue to be effective in their roles and build meaningful career atArvind.
The Group's Corporate Human Resources plays a critical role in company's talentmanagement process.
15. RISK MANAGEMENT:
The Real Estate market is inherently a cyclical market and is affected bymacroeconomics conditions changes in governmental schemes changes in supply and demandfor products availability of consumer finance and liquidity. These factors can affect thedemand for both our forthcoming and ongoing projects.
The Company has developed and implemented Risk Management Policy. The policy identifiesthe threat of such events which if occurred will adversely affect either/or value toshareholders ability of Company to achieve objectives ability to implement businessstrategies the manner in which the Company operates and reputation as "Risks".Further such risk are categorized into Strategic Risks Operating Risks and RegulatoryRisks.
Under the framework the Company has laid down a Risk Management Policy which definesthe process for identification of risks its assessment mitigation measures monitoringand reporting. While the Company through its employees and Executive Managementcontinuously assess the identified Risks the Audit Committee reviews the identified Risksand its mitigation measures annually.
16. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:
The Company has an Internal Control System commensurate with the size scale andcomplexity of its operations. The Company has an Internal Audit department with adequateexperience and expertise in internal controls operating system and procedures. Indischarging their role and responsibilities the department is supported by an externalaudit firm.
The system is supported by documented policies guidelines and procedures to monitorbusiness and operational performance which are aimed at ensuring business integrity andpromoting operational efficiency.
The Internal Audit Department reviews the adequacy of internal control system in theCompany its compliance with operating systems and laid down policies and procedures.Based on the report of internal audit function process owners undertake corrective actionin their respective areas and thereby strengthen the controls. Significant auditobservations and corrective actions thereon are presented to the Audit Committee of theBoard of Directors from time to time.
17. VIGIL MECHANISM / WHISTLE BLOWER POLICY:
The Company has a vigil mechanism named Whistle Blower Policy to deal with theinstances of fraud or mismanagement if any. The details of the Whistle Blower Policy areexplained in the Corporate Governance Report and also posted on the website of the companyat https://arvindsmartspaces.com/wp-content/uploads/2018/05/ whistleblower-Policy_AIL.pdfIn order to achieve the purpose of the whistle blower policy of the Company i.e. toconduct the business of the Company in fair and transparent manner by adopting higheststandards of professionalism honesty integrity and ethical behavior and by developing aculture where it is safe for all its stakeholders to report concerns about anyunethical/improper practices and events of misconduct the Company has organised workshopsfor its vendors contractors and employees in Ahmedabad and Bangalore where the Companyhas its various projects to spread awarness of this platform.
18. SUBSIDIARIES ASSOCIATES AND JOINT VENTURE COMPANIES:
As on 31st March 2018 the Company has 9 subsidiaries including one whollyowned subsidiary and 2 Joint venture Companies. Pursuant to the provisions of Section129(3) of the Companies Act 2013 read with Companies (Accounts) Rules 2014 a statementcontaining salient features of financial statements of subsidiaries associates and jointventure Companies in Form AOC-1 is attached to the Financial Statements. The separateaudited financial statements in respect of each of the subsidiary shall be kept open forinspection at the Registered Office of the Company. The Company will also make availablethese documents upon request by any Member of the Company interested in obtaining thesame. The Company has framed a policy for determining material subsidiaries which hasbeen posted on company's website at www.arvindsmartspaces.com.
19. DIRECTORS AND KEY MANAGERIAL PERSONNEL:
The Board of Directors consist of 7 Directors out of which 1 is Executive Director 2are Non-Executive Non-Independent Directors and 4 are Non-Executive Independent Directorsincluding Woman Director which is in compliance with the Companies Act 2013 and SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015.
As per the provisions of Section 152(6) of the Companies Act 2013 and the Company'sArticle of Association Mr. Sanjay S. Lalbhai (DIN 00008329) shall retire by rotation atthe ensuing Annual General Meeting and being eligible has offered himself forre-appointment as the Director of the Company.
The Independent Directors hold office for a fixed period of five years from the date oftheir appointment at the Annual General Meeting and are not liable to retire by rotation.In accordance with Section 149(7) of the Companies Act 2013 each Independent Director hasgiven a written declaration to the Company confirming that he/she meets the criteria ofindependence as mentioned under Section 149(6) of the Companies Act 2013 and SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015.
None of the Directors are disqualified from being appointed as Directors as specifiedin section 164 of the Companies Act 2013. The profile of Directors forms part of theCorporate Governance Report.
As per the provisions of Section 203 of the Companies Act 2013 Mr. Kamal Singal Managing Director & CEO Mr. Mehul Shah - Chief Financial Officer and Mr.Prakash Makwana - Company Secretary are the key managerial personnel of the Company.
20. FORMAL ANNUAL EVALUATION:
Pursuant to the provisions of the Companies Act 2013 and Regulation 17(10) of the SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 the Board has carriedout an annual performance evaluation of its own performance the directors individually aswell as the evaluation of the working of its Committees on the basis of criteriaformulated by the Nomination and Remuneration Committee which are broadly in compliancewith the Guidance Note on Board Evaluation issued by SEBI vide its Circular dated 5thJanuary 2018. The manner in which the evaluation has been carried out has been explainedin the Corporate Governance Report.
21. REMUNERATION POLICY :
The Board has on the recommendation of the Nomination & Remuneration Committeeframed a policy for selection and appointment of Directors Key Managerial Personnel andSenior Management and their remuneration. The Remuneration Policy is explained in theCorporate Governance Report forming part of this Report.
22. FAMILIARIZATION PROGRAMME FOR THE INDEPENDENT DIRECTORS:
In compliance with the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 the Company has put in place a familiarization programme for theIndependent Directors to familiarize them with their role rights and responsibility asDirectors the working of the Company nature of the industry in which the Companyoperates business model etc. The details of the familiarization programme are explainedin the Corporate Governance Report. The same is also posted on the website of the Companyat https://arvindsmartspaces.com/wp-content/uploads/2018/05/Familiarisation_Programee_for_IDs.pdf
23. NUMBER OF MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES:
A calendar of Board and Committee Meetings is prepared and circulated in advance to theDirectors.
During the year under review 5 meetings of the Board of Directors 4 meetings of AuditCommittee 1 meeting of Nomination and Remuneration Committee 4 meetings of Stakeholders'Relationship Committee 2 meetings of Corporate Social Responsibility Committee and 16meetings of Management Committee of Board of Directors were convened and held the detailsof which are provided in the Corporate Governance Report forming part of this Report.
24. DIRECTOR'S RESPONSIBILITY STATEMENT:
Pursuant to Section 134(5) of the Companies Act 2013 the Board of Directors to thebest of their knowledge and ability confirm that:
(a) in the preparation of the annual accounts for the year ended on 31stMarch 2018 the applicable accounting standards have been followed along with properexplanation relating to material departures if any;
(b) they have selected such accounting policies and applied them consistently and madejudgements and estimates that are reasonable and prudent so as to give a true and fairview of the state of affairs of the Company at the end of the financial year and of theprofit and loss of the Company for that period;
(c) they have taken proper and sufficient care towards 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 annual accounts on a going concern basis;
(e) they have laid down proper internal financial controls which are adequate and areoperating effectively;
(f) they have devised proper systems to ensure compliance with the provisions of allapplicable laws and such systems are adequate and operating effectively.
25. RELATED PARTY TRANSACTIONS:
All transactions with Related Parties are placed before the Audit Committee and theBoard for their approval. Prior omnibus approval of the Audit Committee and the Board isobtained for the transactions which are of a foreseen and repetitive nature. Thetransactions entered into pursuant to the omnibus approval so granted are audited and astatement giving details of all the related party transaction specifying the nature valueand terms and conditions of the transactions is placed before the Audit Committee and theBoard of Directors for their approval on a quarterly basis.
All the related party transactions are entered into on arm's length basis in theordinary course of business and are in compliance with the applicable provisions of theCompanies Act 2013 and the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015. There are no materially significant related party transactions made bythe Company with Promoters Directors or Key Managerial
Personnel etc. which may have potential conflict with the interest of the Company atlarge or which warrants the approval of the shareholders. Accordingly no transactions arebeing reported in Form AOC-2 in terms of Section 134 of the Companies Act 2013 read withCompanies (Accounts) Rules 2014. However the details of the transactions with RelatedParty are provided in the Company's financial statements in accordance with the IND AS -24. The Policy on Related Party Transactions as approved by the Board is posted onCompany's website at https://arvindsmartspaces.com/wp-content/uploads/2018/05/AIL-Related-Party-Transaction-Policy.pdf
26. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS/COURTS/TRIBUNALS :
There are no significant material orders passed by the Regulators / Courts which wouldimpact the going concern status of the Company and its future operations.
(a) Statutory Auditor:
In terms of Section 139 of the Companies Act read with the Companies (Audit andAuditors) Rules 2014 the Members of the Company at its 9th Annual GeneralMeeting held on 14th September 2017 approved the appointment of M/s. S R B C& Co LLP Chartered Accountants having Firm Registration No. 324982E/E300003 as theStatutory Auditors of the Company for the term of 5 years commencing from the 9thAnnual General Meeting of the Company till the conclusion of the 14th AnnualGeneral Meeting of the Company subject to ratification of their appointment by the Membersat every intervening Annual General Meeting.
M/s. S R B C & Co LLP Statutory Auditors of the Company has furnished acertificate of their eligibility and consent under Section 141 of the Companies Act 2013and the rules framed there under. In terms of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 the Auditors have confirmed that they hold a validcertificate issued by the Peer Review Board of the ICAI. The Board based on therecommendation of the Audit Committee recommends the ratification of appointment of M/s.S R B C & Co LLP as the Statutory Auditors of the Company.
The members are requested to ratify the appointment of M/s. S R B C & Co LLPChartered Accountants and a Resolution seeking Members' ratification for the appointmentof M/s. S R B C & Co LLP Chartered Accountants as Statutory Auditors is included atitem No. 3 of the notice convening the Annual General Meeting. Further the Report givenby M/s. S R B C & Co LLP Chartered Accountants on the financial statements along withthe notes to the financial statements of the Company for the financial year 2017-2018 isforming part of the Annual Report. There has been no qualification reservation or adverseremark or disclaimer in their Report. During the year under review the Auditors had notreported any matter under Section 143(12) of the Act therefore no detail is required tobe disclosed under Section 134 (3)(ca) of the Companies Act.
(b) Cost Auditors:
On the recommendation of the Audit Committee the Board of Directors appointed M/sKiran J. Mehta & Co. Cost Accountants Ahmedabad (Firm Registration No. 000025) asCost Auditors of the Company for the year 2018-19 under Section 148 of the Companies Act2013 read with The Companies (Cost Records and Audit) Amendment Rules 2014. M/s Kiran J.Mehta & Co. have confirmed that they are free from disqualification specified underSection 141 (3) and proviso to Section 148 (3) read with Section 141 (4) of the CompaniesAct 2013 and that their appointment meets the requirements of Section 141(3)(g) of theCompanies Act 2013. They have further confirmed their independent status and an arm'slength relationship with the Company. The remuneration payable to the Cost Auditors isrequired to be ratified by the Members in a general meeting. Accordingly a Resolutionseeking Members' ratification for the remuneration payable to M/s Kiran J. Mehta &Co. Cost Auditors is included at item No. 4 of the notice convening the Annual GeneralMeeting.
(c) Secretarial Auditors:
Pursuant to the provisions of Section 204 of the Companies Act 2013 read withCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 the Companyhas appointed M/s N. V. Kathiria & Associates a firm of Company Secretaries inPractice to conduct the Secretarial Audit of the Company for the financial year 2017-18.Report of the Secretarial Audit in Form MR-3 for the financial year 2017-18 is enclosed asAnnexure C. The said Report does not any qualification reservation oradverse remark or disclaimer.
28. ENHANCING SHAREHOLDERS VALUE:
Your Company believes that its Members are among its most important stakeholders.Accordingly your Company's operations are committed to the pursuit of achieving highlevels of operating performance and cost competitiveness consolidating and building forgrowth enhancing the productive asset and resource base and nurturing overall corporatereputation. Your Company is also committed to creating value for its other stakeholders byensuring that its corporate actions positively impact the socio-economic and environmentaldimensions and contribute to sustainable growth and development.
29. CORPORATE GOVERNANCE REPORT AND MANAGEMENT DISCUSSION & ANALYSIS:
The Corporate Governance Report and Management Discussion & Analysis which formpart of this Report is set out as separate Annexure together with the Certificate fromthe Practicing Company Secretary regarding compliance of conditions of CorporateGovernance as stipulated in Schedule V of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015.
30. CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS ANDOUTGO:
Information in accordance with the provisions of Section 134(3)(m) of the CompaniesAct 2013 read with Companies (Accounts) Rules
2014 regarding conservation of energy and technology absorption are not given as theCompany has not undertaken any manufacturing activity. There were no foreign ExchangeEarnings or Outgo during the period under review except on foreign travelling.
31. EXTRACT OF ANNUAL RETURN IN FORM MGT - 9 :
The details forming part of the extract of Annual Return in form MGT-9 is attached as Annexure- D.
32. PARTICULARS OF EMPLOYEES:
The information required pursuant to Section 197(12) of the Companies Act 2013 readwith Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 in respect of employees of the Company will be provided uponrequest. In terms of Section 136(1) of the Companies Act 2013 the Report and Accountsare being sent to the Members and others entitled thereto excluding the information onemployees' particulars which is available for inspection by the Members at the RegisteredOffice of the Company during business hours on working days of the Company up to the dateof the ensuing Annual General Meeting. If any Member is interested in obtaining a copythereof such Member may write to the Company Secretary in this regard. Disclosurespertaining to remuneration and other details as required under Section 197(12) of theCompanies Act 2013 read with Rule 5(1) of the (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 as amended are given in Annexure - E to this report.
33. DISCLOSURE AS PER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITIONAND REDRESSAL) ACT 2013:
The Company has zero tolerance for Sexual Harassment at Workplace and has adopted apolicy against sexual harassment in line with the provisions of Sexual Harassment of Womenat Workplace (Prevention Prohibition and Redressal) Act 2013 and the rules framedthereunder.
Arvind Real Estate Internal Complaints Committee ("AREICC") is formed by theCompany which is working under purview of group level Committee i.e. Arvind InternalComplaints Committee ("AICC") the details of which are declared across theorganization. All the members of AREICC are trained by the subject experts on handling theinvestigations and proceedings as defined in the policy. During the financial year 2017-18the Company has not received any complaints on sexual harassment and hence no complaintsremain pending as of 31st March 2018.
Your Directors take this opportunity to express its sincere thanks to all theemployees customers suppliers bankers investors lenders regulatory and governmentauthorities and stock exchanges for their support.
| ||By Order of the Board |
|Date: 1st May 2018 ||Sanjay S. Lalbhai |
|Place: Ahmedabad ||Chairman |