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KHFM Hospitality & Facility Mgt. Services Ltd.

BSE: 535159 Sector: Services
NSE: KHFM ISIN Code: INE00UG01014
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KHFM Hospitality & Facility Mgt. Services Ltd. (KHFM) - Director Report

Company director report

To

The Members

KHFM HOSPITALITY AND FACILITY MANAGEMENT SERVICES LIMITED

Dear Members

Your Directors are pleased to present this Thirteenth (13th)Annual Report of your company along with Audited Financial Statements (Standalone) forthe Financial Year ended on March 31 2019.

FINANCIAL HIGHLIGHTS

PARTICULARS Financial Year 2018-19 Financial Year 2017-18
Turnover 780011978 456835461
Other Income 2049075 945047
Profit Before Depreciation Interest 89428233 70664043
and Tax (PBDIT)
Finance Cost 49708898 36953192
Depreciation and amortization 3179641 2421600
expense
Exceptional Items - 425405
Profit Before Tax 36539704 30863846
Tax Expenses:
Current Tax 10197007 8524236
Reversal of Provision of Income 1129460 50000
Tax
Deferred Tax (1741685) (86549)
Profit after Tax 26954922 22203061
Profit / (Loss) for the Year 26954922 22203061

1. COMPANY'S PERFORMANCE REVIEW:

The Company continues to see a growth in its overall performance in thefinancial year 2018-19.

?During the Financial Year ended March 31 2019 the Company'stotal Revenue from operations is Rs. 780011978 /- as against Rs. 456835461 /- in thecorresponding previous Financial Year ended March 31 2018.

?The Profit after tax (PAT) for the Financial Year ended March 31 2019is Rs. 26954922 /- as against Profit of Rs. 22203061/- in the corresponding previousFinancial Year ended March 31 2018.

2. DIVIDEND

The Board of Directors at its meeting held on 30.05.2019 recommended afinal dividend at the rate of 5% i.e. Rs. 0.50 / - per share to its shareholders.

3. RESERVES

The Company has closing balance of Rs. 143238184 /- (Rupees FourteenCrore Thirty Two Lakhs Thirty Eight Thousand One Hundred and Eighty Four) as Reserve andSurplus as on March 31 2019. The Closing Balance of Reserve and Surplus is bifurcated asfollows:

Sr. No. Particulars Amount
1. Balance at the beginning of the Financial Year 116283262
2. Profit during the year transferred 26954922
TOTAL 320269661

4. CHANGES IN NATURE OF THE BUSINESS IF ANY

The Company Continued to carry Business of Integrated Hospitality andFacility Management and hence there was no change in the nature of business or operationsof the Company which impacted the financial position of the Company during the year underreview.

5. MATERIAL CHANGES AND COMMITMENTS AFFECTING FINANCIAL POSITIONOF THE COMPANY

INITIAL PUBLIC OFFER

The Company has successfully completed initial public offering (IPO) inthe current year pursuant to applicable SEBI Rules and Regulations. The IPO of the companyreceived an overwhelming response from the investors and the public issue wasoversubscribed thereby making this IPO a successful one. Shares have been listed with theNSE Emerge (SME Platform of NSE) with effect from April 12 2019. Consequently theCompany's paid up capital increased from Rs. 67500000/- to Rs.96990000 /-. Theequity shares of Rs.10/- each were issued at a price of Rs.36/- per share.

6. SHARE CAPITAL

During the year under review there is no change in the AuthorizedIssued Subscribed and Paid-up Share Capital of the Company.

As at March 31 2019 the Authorized Share Capital of the Company isRs. 120000000/- divided into 12000000/- equity shares of Rs. 10/- each.

Further Issued Subscribed and Paid-up Share Capital of the Company asat March 31 2019 is Rs. 67500000/- divided into 6750000/- equity shares of Rs. 10/-each.

7. DEPOSITS

During the year under review the Company has not accepted or renewedany deposits from public falling within the purview of provisions of Section 73 and 76 ofthe Companies Act 2013 ("the Act") and Rules framed thereunder.

8. PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS UNDER SECTION186 OF THE COMPANIES ACT 2013

The particulars of Loan Guarantees and Investments covered undersection 186 of the Companies have been disclosed in Notes to the Financial Statement.

9. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

All the related party transactions/contracts/arrangements that wereentered into by the Company during the year under review were on an arm's lengthbasis and were in compliance with the applicable provisions of the Act and the ListingRegulations. There are no material significant related party transactions entered into bythe Company with its Promoters Directors KMP or Senior Management Personnel which mayhave a potential conflict with the interest of the Company at large. All related partytransaction as required under AS-18 are reported in the notes to financial statement ofthe Company. Form AOC - 2 forming part of this Directors Report is attachedherewith as Annexure I.

All related party transactions were placed before the Audit Committeefor its approval and noting on quarterly basis. Prior omnibus approval of the AuditCommittee is obtained for the transactions which are foreseen and of a repetitive nature.

10. SUBSIDIARY COMPANY / ASSOCIATE COMPANY / JOINT VENTURE

As on 31st March 2019 the Company does not have anysubsidiary or joint venture and associate company.

11. DIRECTORS AND KEY MANAGERIAL PERSONNEL

i. The Directors and Key Managerial personnel of the Company as on 31stMarch 2019 are as below:

Sr. No. Name Designation DIN/PAN
1. Ravindra Malinga Hegde Managing Director 0001821002
2. Sujata Ravindra Hegde Executive Director 0001829352
3. Ravi Vimal Nevatia Independent Director 0007200190
4. Brahm Pal Singh Independent Director 0008045923
5. Saurav Hegde Non-Executive 0008116567
Director
6. Abhibrat Shanker Kumar Das Independent Director 0008205814
7. Naveen Alias Carvallo Chief Financial AEPPC7684B
Officer
8. Anubhav Shrivastava Company Secretary DLCPS4841F
& Compliance Officer

ii. During the Financial year 2018 19:

The Board of Directors at its meeting held on August 24 2018

• Appointed Mr. Ravindra Malinga Hegde as Managing Director of thecompany.

• Appointed Mr. Ravi Vimal Nevatia Mr. Brahm Pal Singh and Mr.Abhibrat Shanker Kumar Das as Non Executive Independent Director of the company.

• Regularized the appointment of Mr. Saurav Hegde as Non ExecutiveDirector of the company.

• Appointed Mr. Naveen Alias Carvallo as the Chief FinancialOfficer and Mr. Anubhav Shrivastava as Company Secretary & Compliance Officer of thecompany.

iii. Declaration under Section 149(6) of the Companies Act 2013 andSEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 from IndependentDirectors:

The Company has duly complied with the definition of 'Independence'according to the provisions of Section 149(6) of read with Schedule IV - Code ofIndependent Directors to the Companies Act 2013 and Regulation 16 (1) (b) and Regulation25 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 (asamended). All the Independent Director/s have submitted a declaration that he/she meetsthe criteria of independence and submits the declaration regarding the status of holdingother directorship and membership as provided under law. The Independent Directors havealso confirmed that they have complied with the Company's code of conduct for Board andSenior Management as per Regulation 26(3) of SEBI (Listing Obligations & DisclosureRequirements) Regulations 2015. The Independent Directors affirmed that none of them wereaware of any circumstance or situation which could impair their ability to discharge theirduties in an independent manner.

iv. Disqualification of Directors:

During the financial year 2018-2019 under review the Company hasreceived Form DIR-8 from all Directors as required under the provisions of Section 164(2)of the Companies Act 2013 read with Companies (Appointment and Qualification ofDirectors) Rules 2014. The Board noted the same.

12. COMMITTEES OF THE BOARD

As on March 31 2019 the Board has constituted Three (3) Committeesviz; Audit Committee Nomination and Remuneration Committee and Stakeholder RelationshipCommittee.

i. AUDIT COMMITTEE:

Your Company has constituted an Audit Committee ("AuditCommittee") as per section 177 of the

Companies Act 2013 and regulation 18 of SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 vide resolution passed at the meeting of theBoard of Directors held on September 06 2018.

The composition of the Audit committee as follows:-

Name of the Director/Member Designation Nature of Directorship
Mr. Ravi Vimal Nevatia Chairman Independent & Non Executive Director
Mr. Brahm Pal Singh Member Independent & Non Executive Director
Mr. Ravindra Malinga Hegde Member Managing Director

All members of the Audit Committee have the requisite qualification forappointment on the Committee and possess sound knowledge of finance accounting practicesand internal controls. All the recommendations made by the Audit Committee were acceptedby the Board. The Company Secretary acts as a secretary to the Committee. ii.NOMINATION AND REMUNERATION COMMITTEE

The Board of Directors in their Meeting held on September 06 2018 hasconstituted a Nomination and Remuneration Committee. The constitution of the Nominationand Remuneration Committee is in compliance with the provisions of Section 178 of theCompanies Act 2013 and Regulation 19 of SEBI (Listing Obligation and DisclosureRequirements) Regulations 2015. The Composition of the Nomination and RemunerationCommittee are as under:

The Board has in accordance with the provisions of sub-section (3) ofSection 178 of the Companies Act 2013 formulated the policy setting out the criteria fordetermining qualifications positive attributes independence of a Director and policyrelating to remuneration for Directors Key Managerial Personnel and other employees.

Name of the Director/Member Designation Nature of Directorship
Mr. Brahm Pal Singh Chairperson Independent & Non- Executive Director
Mr. Ravi Vimal Nevatia Member Independent & Non- Executive Director
Mr. Abhibrat Shanker Kumar Das Member Independent & Non- Executive Director

iii. STAKEHOLDER RELATIONSHIP COMMITTEE

The Board of Directors in their Meeting held on September 06 2018 hasconstituted a stakeholder relationship committee to redress the complaints/grievances ofits shareholders/investors related to non-receipt of annual report dividend paymentissue of duplicate share certificates transmission of shares and other relatedcomplaints. The stakeholder relationship committee was constituted as per the provisionsof Section 178(5) of the Companies Act 2013 and Regulation 20 of SEBI (Listing Obligationand Disclosure Requirements) Regulations 2015.

The composition of the Stakeholders' Relationship Committee are asunder:

Name of the Director/Member Designation Nature of Directorship
Mr. Abhibrat Shanker Kumar Das Chairman Independent & Non Executive Director
Mr. Brahm Pal Singh Member Independent & Non Executive Director
Mrs. Sujata Ravindra Hegde
Member Executive Director

SEBI Complaints Redress System (SCORES)

The investor complaints are processed in a centralized web basedcomplaints redress system. The salient features of this system are centralized database ofall complaints online upload of Action Taken Reports (ATRs) by the concerned companiesand online viewing by investors of actions taken on the complaint and its current status.Your Company has been registered on SCORES and makes every effort to resolve all investorcomplaints received through SCORES or otherwise within the statutory time limit from thereceipt of the complaint. The Company has not received any complaint on the SCORES duringfinancial year 2018-19.

13. BOARD MEETINGS

?Number Of Board Meetings

During the year under review the Board of Directors met 20 (Twenty)times on April 23 2018 May

14 2018 May 29 2018 June 05 2018 August 10 2018 August 14 2018August 24 2018 September 06 2018 September 11 2018 October 31 2018 November 22 2018December 20 2018 December 28 2018 January 10 2018 February 04 2018 February 13 2018February 21 2018 March 05 2018 March 11 2018 and March 28 2018. The interval betweenthe two meetings was well within the maximum period mentioned under Section 173 of theCompanies Act 2013 and Regulation 17 of SEBI (Listing Obligation and DisclosureRequirement) Regulations 2015.

Sr. No. Name of the Director

No. of Board Meeting

Held Attended
1. Ravindra Malinga Hegde 20 20
2. Sujata Ravindra Hegde 20 20
3. Ravi Vimal Nevatia 20 13
4. Brahm Pal Singh 20 13
5. Saurav Hegde 20 13
6. Abhibrat Shanker Kumar Das 20 13

14. DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to Section 134 (3) (C) of the Companies Act 2013 theDirectors confirm that:

(a) In the preparation of the annual accounts the applicableaccounting standards had been followed along with proper explanation relating to materialdepartures;

(b) They have selected such accounting policies and applied themconsistently and made judgments and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of the Company at the end of thefinancial year and of the profit of the Company for that period;

(c) They have taken proper and sufficient care for the maintenanceof adequate accounting records in accordance with the provisions of this Act forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities;

(d) The annual accounts have been prepared on a going concernbasis;

(e) They have laid down Internal financial controls for ensuringthe orderly and efficient conduct of its business including adherence to Company'spolicies the safeguarding of its assets the prevention and detection of frauds anderrors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information and; ]

(f) They have devised proper systems to ensure compliance with theprovisions of all applicable laws and that such systems were adequate and operatingeffectively.

15. EXTRACT OF THE ANNUAL RETURN

As per the requirements of section 92 (3) of the Companies Act 2013and Rules framed thereunder the extract of the Annual Return for the Financial Year endedMarch 31 2019 is given in Annexure II in the prescribed Form MGT-9 whichforms part of this Report.

16. CORPORATE GOVERNANCE

Since the Company's securities are listed on SME Emerge Platformof National Stock Exchange

(NSE) by virtue of Regulation 15 of SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 The compliance with the corporate governanceprovisions as specified in regulations 17 to 27 and clause (b) to (i) of sub-regulation(2) of regulation 46 and para C D and E of schedule V are not applicable to the Company.Hence Corporate Governance does not form part of this Board's Report.

17. COMPLIANCES OF SECRETARIAL STANDARDS

The Company is in compliance with all the applicable standards issuedby the Institute of Company Secretaries of India.

18. INTERNAL FINANCIAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has its internal financial control systems commensuratewith the size and complexity of its operations to ensure proper recording of financialsand monitoring of operational effectiveness and compliance of various regulatory andstatutory requirements. The management regularly monitors the safeguarding of its assetsprevention and detection of frauds and errors accuracy and completeness of the accountingrecords including timely preparation of reliable financial information.

19. PARTICULARS OF EMPLOYEES

The Company has no employee who is in receipt of remuneration of Rs850000/- per month or Rs 10200000/- per annum and hence the Company is not requiredto give information under sub rule 2 and 3 of rule 5 of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014. Further the following details formingpart of Annexure III to the Board Report.

?Pursuant to Rule 5(2) of the Companies (Appointment and remunerationof managerial personnel) Rules 2014 statement containing the names and other particularsof Top Ten employees in terms of remuneration drawn by them

?Disclosure Rule 5 of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014.

20. MANAGEMENT DISCUSSION AND ANALYSIS

Management Discussion and Analysis Report as required under Regulation34 and Schedule V of SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 is furnished as an

Annexure IV.

21. AUDITORS

(a) Statutory Auditor

M/s. G.R. Shetty & Co. Chartered Accountants (Firm RegistrationNumber: 110093W) resigned as the statutory auditor of the company with effect from August14 2018 and consequently M/s Bhushan Khot & Co. Chartered Accountants (FirmRegistration Number: 116888W) were appointed as Statutory Auditor of the company in the 12thAnnual General Meeting of the company held on August 22 2018.

(b) Secretarial Auditor

As required under provisions of Section 204 of the Companies Act 2013and Rules framed thereunder the Board has appointed the Secretarial Auditors of theCompany M/s Mishra & Associate Practicing Company Secretaries for conducting theSecretarial Audit for the FY 2019-20.

(c) Internal Auditor

Company in their Meeting of Board of Directors on August 30 2019 hasappointed M/s. G.R. Shetty & Co. as Internal Auditor of the Company for the FinancialYear 2019-20.

22. DETAILS OF SIGNIFICANT AND MATERIAL ORDER PASSED BY THE REGULATOR

OR COURT OR TRIBUNAL

There were no significant and material orders issued against theCompany by an regulating authority or court or tribunal that could affect the goingconcern status and company's operation in future.

23. VIGIL MECHANISM

The Company has established a vigil mechanism through a Whistle BlowerPolicy where Directors and employees can voice their genuine concerns or grievances aboutany unethical or unacceptable business practice. A whistle-blowing mechanism not onlyhelps the Company in detection of fraud but is also used as a corporate governance toolleading to prevention and deterrence of misconduct.

It provides direct access to the employees of the Company to approachthe Compliance Officer or the Chairman of the Audit Committee where necessary. TheCompany ensures that genuine whistle blowers are accorded complete protection from anykind of unfair treatment or victimization.

The said policy is also available on the website of the Company atwww.khfm.in under the head investor section.

24. FRAUD REPORTING

There were no frauds disclosed during the Financial Year.

25. CODE OF CONDUCT

The Board has laid down a specific code of Conduct for all BoardMembers and Senior Management of the Company. All the Board Members and Senior ManagementPersonnel have affirmed compliance with the Code on annual basis.

26. INSIDER TRADING

The Board has in consultation with the Stakeholder's RelationshipCommittee laid down the policy to regulate and monitor the Insider Trading in the Company.The Committee regularly analyses the transactions and monitors them to prevent InsiderTrading. The Company has also adopted a Prohibition of Insider Trading Policy.

During the year under review in compliance with the amendments to theSEBI Insider Regulations the Company adopted the following effective 1 April 2019:

? Code of Practices and Procedures for Fair Disclosure of UnpublishedPrice Sensitive Information. ? Code of Conduct to Regulate Monitor and Report Trading byDesignated Persons and their Immediate Relatives

27. MEANS OF COMMUNICATION

The Board believes that effective communication of information is anessential component of Corporate Governance. The Company regularly interacts with itsshareholders through multiple channels of communication such as Company's Website andstipulated communications to Stock Exchange where the Company's shares are listed forannouncement of Financial Results Annual Report Notices Outcome of MeetingsCompany's Policies etc.

28. HUMAN RESOURCES

Your Company treats its "Human Resources" as one of its mostimportant assets. Your Company continuously invests in attraction retention anddevelopment of talent on ongoing basis. Numbers of programs that provide focused peopleattention are currently underway. Your Company thrust is on the promotion of talentinternally through job rotation and job enlargement.

29. WEBSITE

The Company has a website addressed as www.khfm.in. Website containsthe basic information about the Company - details of its Business Financial InformationShareholding Pattern Contact Information of the Designated Official of the Company who isresponsible for assisting and handling investors grievances and such other details as maybe required under sub regulation (2) of Regulation 46 of the Listing Regulations 2015.The Company ensures that the contents of this website are periodically updated.

30. POLICY ON DIRECTORS' APPOINTMENT AND REMUNERATION AND OTHER

DETAILS

The Company's policy on Directors' appointment includingcriteria for determining qualifications positive attributes and independence of aDirector as well as policy relating to Remuneration of Key Managerial Personnel and otheremployees and other matters as provided in Section 178(3) of the Act is appended as an AnnexureV to this Report.

31. ACKNOWLEDGEMENT

Your Directors wish to express their gratitude to the BankersFinancial Institutions Government Authorities Customers Vendors Consultants Advisorsand Members for their direct and indirect co-operation and look forward to their continuedsupport in the future.

Your Directors acknowledge the support and co-operation received fromemployees and all those who have helped in day to day management of the Company.

For and on behalf of the Board
FOR KHFM HOSPITALITY AND FACILITY
MANAGEMENT SERVICES LIMITED
RAVINDRA MALINGA HEGDE
PLACE: MUMBAI MANAGING DIRECTOR
DATE: 30th AUGUST 2019 DIN: 01821002