To The Members
Your Directors have pleasure in presenting the Eleventh Annual Report on the businessand operations of the Company together with the Audited Financial Statements for thefinancial year ended on 31st March 2019.
1. FINANCIAL RESULTS:
Highlights of the Financial Results for year are as under:
| || || |
(र in Lakhs)
|Particulars || |
| ||2018-19 ||2017-18 ||2018-19 ||2017-18 |
|Total Revenue ||25006.90 ||14216.01 ||26434.81 ||20224.07 |
|Profit before Finance costs Depreciation and Amortisation & Tax ||7916.57 ||5068.99 ||7024.08 ||6495.41 |
|Less: Finance Costs ||2013.56 ||1465.22 ||2126.36 ||1539.29 |
|Less : Depreciation and Amortisation ||87.57 ||85.25 ||115.21 ||109.39 |
|Profit before share in profit/(loss) of Joint ventures & Tax ||5815.44 ||3518.52 ||4782.51 ||4846.73 |
|Share of Profit/(Loss) from Joint ventures ||- ||- ||(3.52) || |
|Profit before tax ||5815.44 ||3518.52 ||4778.99 ||4833.99 |
|Less : Current Tax ||- ||536.17 ||- ||1679.47 |
|Less : Deferred Tax ||1212.23 ||4.33 ||1661.11 ||10.44 |
|Profit for the year ||4603.21 ||2978.02 ||3117.88 ||3144.08 |
|Other comprehensive income (net of tax) ||(2.85) ||(6.45) ||(2.85) || |
|Total comprehensive income for the year ||4600.36 ||2971.57 ||3115.03 ||3137.63 |
|Profit/(Loss) attributable to : || || || || |
|Equity holders of the parent ||- ||- ||3064.15 ||3011.05 |
|Non-controlling interest ||- ||- ||50.88 ||126.58 |
The standalone total revenue of the Company has increased to र250007 lacs in the FY2018-19 against र14216 lacs in FY 2017-18 an increase of 76%.
The consolidated total revenue of the Company has increased to र26435 lacs in the FY2018-19 against र20224 lacs in FY 2017-18 an increase of 31%.
A detailed analysis of the financial results is given in the Management Discussion andAnalysis Report which forms part of this report.
Your Directors have recommended a dividend of 15% i.e. र1.50 per equity share ofर10 each for the year ended on 31st March 2019. The dividend if approved bythe members would involve a cash outflow of र636.11 lacs (inclusive of tax ondividend).
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 2018-19 the Company has allotted 3000000 equity shares of र10/-each to the warrant holders being promoter and promoter group entities pursuant toexercise of option of conversion of warrants by them under the Preferential issue made inJanuary 2018 and 366000 equity shares of र10/- each to the eligible employee/spursuant to the exercise of stock options granted to them under Employees Stock OptionScheme-2013 (AIL ESOP 2013). Consequently the paid up equity share capital of the Companyas at 31st March 2019 stood at र352335500/- consisting of 35233550equity shares of र10/- 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) as well as ArvindInfrastructure Limited-Employees Stock Option Plan-2016 (AIL ESOP-2016) to grant equitybased incentives to certain eligible employees directors of the Company and itsSubsidiary Companies. During the year under review the Company has granted 370000 stockoptions to its Managing Director & CEO under AIL ESOP-2016.
Details of grant made /equity shares issued upon exercise of stock options by theeligible employee/s under AIL ESOP-2013 and AIL ESOP 2016 and disclosure in compliancewith Section 62 of the Companies Act 2013 read with Rule 12 of Companies (Share Capitaland Debentures) Rules 2014 and the Securities and Exchange Board of India (Share basedEmployee 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.
During the year the Company has made fresh borrowings of र936.67 lacs for itsworking capital requirements. Total Debt of the Company stands at र17098.26 lacs as on31st March 2019.
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 2019.
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. 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.
12. 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 and NLRDF have been active in improving the quality of life ofthe urban poor & rural poor respectively.
As a part of initiatives under CSR the Company has continued to support initiatives ofsocial renewal around the areas of its operations in Nasmed and Adhana villages in Tal.Kalol Dist. Gandhinagar Gujarat where your Company's signature real estate project"Arvind Uplands" is located. The brief details of Corporate SocialResponsibility Policy and the amount spent during the financial year 2018-19 on the saidactivity is enclosed as Annexure-B.
13. 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.
14. RISK MANAGEMENT:
The Real Estate market is inherently a cyclical market and is affected by macroeconomicconditions changes in governmental schemes changes in supply and demand for productsavailability of consumer finance and liquidity. These factors can affect the demand forboth our forthcoming and ongoing projects.
The Company has developed and implemented Risk Management Policy. The policy identifiesthe threat of adverse events which may affect shareholder's value ability of Company toachieve objectives or implement business strategies. Further such risk are categorizedinto Strategic Risks Operating Risks and Regulatory Risks.
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 Management continuously assess the identified Risks the Audit Committeereviews the identified Risks and its mitigation measures annually.
15. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:
The Company has an Internal Control System commensurate with the size scale andcomplexity of its operations. Moreover the Company's Internal Audit department hasadequate experience and expertise in internal controls operating system and procedures.In discharging 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.
16. VIGIL MECHANISM/WHISTLE BLOWER POLICY:
The Board of Directors of the Company vide its circular resolution dated 30thMarch 2019 has revised its existing Whistle Blower Policy named as vigil mechanism inline with SEBI (Prohibition of Insider Trading) (Amendment) Regulation 2018 to dealwith instances of fraud and mismanagement if any. The details of the revised WhistleBlower Policy are explained in the Corporate Governance Report and also posted on thewebsite of the Company at https://arvindsmartspaces.com/wp-content/uploads/ 2019/04/Whistleblower-Policv.pdf
17. SUBSIDIARIES ASSOCIATES AND JOINT VENTURE COMPANIES:
As on 31st March 2019 the Company has 10 subsidiaries including 1 whollyowned subsidiary and 2 Joint venture Companies. Further during the financial year theCompany became subsidiary of Aura Securities Private Limited.
Pursuant to the provisions of Section 129(3) of the Companies Act 2013 read withCompanies (Accounts) Rules 2014 a statement containing salient features of financialstatements of subsidiaries associates and joint venture Companies in Form AOC-1 isattached to the Financial Statements. The separate audited financial statements in respectof each of the subsidiary shall be kept open for inspection at the Registered Office ofthe Company. The Company will also make available these documents upon request by anyMember of the Company interested in obtaining the same.
The Company has framed a policy for determining material subsidiaries which has beenposted on company's website at https://arvindsmartspaces.com/wp-content/uploads/2018/05/AIL-Policy-on-Material-Subsidiaries.pdf
18. DIRECTORS AND KEY MANAGERIAL PERSONNEL:
As on 31st March 2019 the Board of Directors consist of 7 Directors out ofwhich 1 is Executive Director 2 are NonExecutive Non-Independent Directors and 4 areNon-Executive Independent Directors including a Woman Director. The composition is incompliance with the Companies Act 2013 and SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015.
As per the provisions of Section 152(6) of the Companies Act 2013 and the Company'sArticles of Association Mr. Kulin S. Lalbhai (DIN 05206878) shall retire by rotation atthe ensuing Annual General Meeting and being eligible has offered himself forre-appointment as the Director of the Company.
Dr. Indira J. Parikh an Independent Director has resigned from the Board of Directorsof your Company effective from closing business hours of 31st March 2019 dueto age criterion prescribed under Regulation 17(1A) of the SEBI (Listing Obligations andDisclosure requirements) Regulation 2015. The Board of Directors places on record itsdeep sense of appreciation for the valuable guidance and counsel provided by Dr. Indira J.Parikh during her tenure as an Independent Director of your 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.
As per the provisions of Section 203 of the Companies Act 2013 Mr. KamalSingal-Managing Director & CEO Mr. Mehul Shah-Chief Financial Officer and Mr. PrakashMakwana-Company Secretary are the key managerial personnel of the Company.
19. 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 evaluation of independent directors which includes the performance of directorsfulfilment of criteria of independence specified in these regulations and theirindependence from the Management its own performances as well as evaluation of working ofits Committees on the basis of criteria formulated by the Nomination and RemunerationCommittee which are broadly in compliance with the Guidance Note on Board Evaluationissued by SEBI vide its Circular dated 5th January 2018. The manner in whichthe evaluation has been carried out has been explained in the Corporate Governance Report.
20. APPOINTMENT AND REMUNERATION POLICY:
The Board has on the recommendation of the Nomination and Remuneration Committeeframed a policy for selection and appointment of Directors Key Managerial Personnel andSenior Management and their remuneration. The same is posted on Company's website athttps://arvindsmartspaces.com/wp- content/uploads/2019/06/Nomination-and-Remuneration-Policy.pdf
21. 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 same is also posted on the website of the Company at https://arvindsmartspaces.com/wp-content/uploads/2018/05/Familiarisation Programee for IDs.pdf
22. 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 4 meetings of the Board of Directors 4 meetings of AuditCommittee 2 meetings of Nomination and Remuneration Committee 4 meetings ofStakeholders' Relationship Committee 2 meetings of Corporate Social ResponsibilityCommittee and 15 meetings of Management Committee of Board of Directors were convened andheld the details of which are provided in the Corporate Governance Report forming part ofthis Report.
23. 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 2019 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.
24. 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 havepotential conflict with the interest of the Company at large or which warrants theapproval of the shareholders. Accordingly no transactions are being reported in FormAOC-2 in terms of Section 134 of the Companies Act 2013 read with Companies (Accounts)Rules 2014. However the details of the transactions with Related Party are provided inthe 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-Partv-Transaction-Policv.pdf
25. 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:
M/s. S R B C & Co LLP Chartered Accountants (ICAI Firm Registration No.324982E/E300003) were appointed as Statutory Auditors of the Company for a period of fiveconsecutive years at the Annual General Meeting ("AGM") of the Members held on14th September 2017 on a remuneration mutually agreed upon by the Board ofDirectors and the Statutory Auditors. Their appointment was subject to ratification by theMembers at every subsequent AGM held after the AGM held on 14th September2017. Pursuant to the amendments made to Section 139 of the Companies Act 2013 by theCompanies (Amendment) Act 2017 effective from 7th May 2018 the requirementof seeking ratification of the Members for the appointment of the Statutory Auditors hasbeen withdrawn from the Statute.
In view of the above ratification by the Members for continuance of their appointmentat this AGM is not being sought. The Statutory Auditors M/s. S R B C & Co LLP havegiven a confirmation to the effect that they are eligible to continue with theirappointment and that they have not been disqualified in any manner from continuing asStatutory Auditors. The remuneration payable to the Statutory Auditors shall be determinedby the Board of Directors based on the recommendation of the Audit Committee.
Further the Report given by M/s. S R B C & Co LLP Chartered Accountants on thefinancial statements along with the notes to the financial statements of the Company forthe financial year 2018-2019 is forming part of the Annual Report. There has been noqualification reservation or adverse remark or disclaimer in their Report. During theyear under review the Auditors had not reported any matter under Section 143(12) of theAct therefore no detail is required to be disclosed under Section 134(3)(ca) of theCompanies 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 2019-20 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 is required to be ratified by the Membersin a general meeting. Accordingly a Resolution seeking Members' ratification for theremuneration payable to M/s Kiran J. Mehta & Co. Cost Auditors is included at ItemNo. 4 of the notice convening the Annual General Meeting.
(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 2018-19.Report of the Secretarial Audit in Form MR-3 for the financial year 2018-19 is enclosed asAnnexure-C. The said Report does not have any qualification reservation or adverseremark or disclaimer.
27. 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.
28. 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.
29. 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 andtechnology absorption are not given as the Company has not undertaken any manufacturingactivity. There were no foreign Exchange Earnings or Outgo during the period under reviewexcept on foreign travelling.
30. ANNUAL RETURN:
The details forming part of the extract of the Annual Return in form MGT-9 is annexedherewith as Annexure-D.
31. 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.
Disclosures pertaining to remuneration and other details as required under Section197(12) of the Companies Act 2013 read with Rule 5(1) of the (Appointment andRemuneration of Managerial Personnel) Rules 2014 as amended are given in Annexure-E tothis report.
32. 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 2018-19 the Company has not received any complaints on sexualharassment and hence no complaints remain pending as of 31st March 2019.
Your Directors take this opportunity to express its sincere thanks to all theemployees customers suppliers business associates bankers investors lendersregulatory and government authorities and stock exchanges for their support.
| ||By Order of the Board |
|Date: 2nd May 2019 ||Sanjay S. Lalbhai |
|Place: Ahmedabad ||Chairman |