Your Director's take pleasure in presenting the 70th Annual Report togetherwith the Audited Financial Statements for the year ended on 31st March 2018.
| ||(Rs. in Lakh) |
|Total Revenue ||11453 |
|Profit before Depreciation ||4676 |
|Depreciation ||40 |
|Profit after Depreciation before tax ||4636 |
|Tax Expense (including earlier year) ||907 |
|Other Comprehensive Income ||43 |
|Profit after Tax ||3772 |
The company has adopted Indian Accounting Standards(Ind AS) with effect from 1stApril 2017 pursuant to Ministry of Corporate Affairs notification of the Companies (IndianAccounting Standard) Rules 2015 and the annual accounts for 2017-18 has been drawn interms of provisions of the Ind AS.
In view of the profit accrued during the current year and the consequent fulfillment ofthe conditions prescribed in section 123(3) of the Companies Act 2013 read with theCompanies (Declaration and Payment of Dividend) Rules 2014 the Board of Directors'announced an interim dividend @ Rs 5 per ordinary share of Rs 10 and Rs 12.50 per deferredshare of Rs 25 in January 2018. The interim dividend absorbed Rs 156.80 Lakh and Rs 31.92Lakh as tax on dividend. Another interim dividend at the rate of Rs 80 per ordinary shareand Rs 200 per deferred share was announced by the Directors after the close of financialyear in April 2018. This has absorbed Rs 2508.81 Lakh and Rs 515.69 Lakh as tax ondividend.
The construction activity of the Group Housing Project is progressing satisfactorilydespite facing State wide problems in supply of coarse sand in the preceding past. Theavailability of coarse sand became better after the 2nd quarter of currentfinancial year 2017-2018. The management is making all effort to complete its currentproject Tara Towers as per schedule and expects to offer the possession of flats tocustomers by the last quarter of 2018-2019. We have booked more than 75% of the flats andare very thankful for the trust and faith reposed by the customers in the company. At thesame time in the context of plots we have executed sale deeds in favour of customerscompleting their payments. The company is also constructing 120 LIG/EWS flats for theweaker sections of society as per guidelines of the Govt. in this matter.
The company is also finalising the plans for the next phase of Group Housing Project in'Shervani Legacy' and we expect that the proposal for the same would be submitted in nextone or two months.
MANAGEMENT DISCUSSION AND ANALYSIS
A. Business Overview Industry Structure and Development
Generally in a country like ours we take the gowth mode of the real estate businessfor granted. There is no stopping the rising demand due to combination of factors such asmigration of public in search of jobs better life and consequent increase in income andaspirations of the middle- income service group. But a few years ago urban housing pricesfell. And over the last few years the sector experienced a fall or correction in pricesloss of consumer confidence and continues to be sluggish. But the worst seems to be over.While speculators are out of the market and cautious prices have corrected and genuinebuyers are getting better options. The company feels that its reputation backed by qualityconstruction and value pricing will keep its performance ahead of competition.
The relaxation in banking regulations and interest rates has made a positive impact ondemand for flats by the middle-income group and the market for this sector is growing. Weexpect this trend to continue for some time because the middle income group is largest interms of quantity. Another factor that should have a positive influence on demand is theimplementation of RERA which should inspire renewed faith and trust in the public.
B. Outlook on Opportunities Threats Risks and Concern
As already explained the real estate industry is showing sign of recovery. However thereal estate industry is no exception to risks and threats of business. Among the majorareas of risk before the real estate industry is related to supply of raw materials. Thiscan sometimes stall projects and escalate costs wherein both buyers and sellers have tosuffer. The shortage of sand for instance is a case in point. Another area is theintroduction of RERA and its impact on the sector. This we will know only in the next fewyears as it is implemented understood and adopted. A third area of risk are macroeconomic factors related to money supply and so on.
We at 'Shervani Legacy' have been cognizant to minimize the risks and concern of thebuyers. We are working hard to win the trust of buyers by hiring respected professionalsfor guidance adopting high construction standards and maintaining our constructionschedule and commitments as far as possible. We are continuously working to employ themost efficient systems for procurement and tests of raw materials as well as to optimizethe operating efficiency of construction projects.
C. Subsidiary Company
M/s Farco Foods Pvt Limited the wholly owned subsidiary of your Company manufactured5052 MT as against the quantity of 5723 MT biscuits in previous year of Priyagold Brandon job work basis. The decrease in production is mainly because of adoption of newtechnical and efficiency methods which took 3 months to implement consequently lowerquantity was produced. However we are very hopeful that the plant will yield higherproductivity in coming months.
D. Internal Financial Controls
The Company has an adequate system of internal control to ensure compliance withpolicies and procedures commensurate with the size and scale of operations. The internalcontrols designed and adopted by the Company are in accordance with the guidelines issuedby the Institute of Chartered Accountants of India. The interest of Company and otherstake holders is well protected.
The internal audit work has been assigned to an independent firm of CharteredAccountant which evaluates the efficiency and adequacy of internal control systems. Theinternal audit reports and recommendations are reviewed by the Audit Committee of theBoard.
E. Development in Human Resource and Industrial Relations
The Company maintains a very cordial relationship with its employees. Theywhole-heartedly support the management in all its activities and endeavors.
F. Research and Development
In view of the nature of business activities of the Company there is little scope forresearch and development work. The company is making all efforts to reduce costs bymaintaining standards that benefit the consumers.
The Company is committed to maintain the highest standards of Corporate Governance andadheres to the Corporate Governance requirements which have been set out by SEBI. TheCompany has complied with all mandatory requirements of Corporate Governance. A separatereport on governance practices followed by the Company in compliance of SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 along with a Certificate ofCompliance from the Statutory Auditors is attached with the said separate report whichforms integral part of this Director's Report.
EXTRACT OF ANNUAL RETURN
Pursuant to section 92(3) of the Companies Act 2013 and Rule 12(1) of the Company(Management & Administration) Rules 2014 the extract of the Annual Return of theCompany in Form MGT-9 is annexed to this report as Annexure A.
The calendar of Meetings is prepared and circulated in advance to the Directors. Duringthe year four Board Meetings were convened and details of same are given in the CorporateGovernance Report.
DIRECTOR'S RESPONSIBILITY STATEMENT
Pursuant to the provisions of Section 134 (3) of the Companies Act 2013 the Directorsstate that;
(i) in the preparation of the Annual Accounts the applicable accounting standards havebeen followed;
(ii) 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 as at the end of the financial year andof the profit and loss of the Company for that period;
(iii) the Directors have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of the Companies Act 2013for safeguarding the assets of the Company and for preventing and detecting fraud andother irregularities;
(iv) the Directors had prepared the Annual Accounts on a going concern basis:
(v) the Directors had laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and were operatingeffectively; and
(vi) the Directors had devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.
BUY BACK OF EQUITY SHARES
In accordance with the provisions of section 68 69 and 70 of the Companies Act 2013read with the Companies (Share Capital and Debenture) Rules 2014 and the approval grantedby SEBI the company placed an offer before the shareholders to buy back the 247400Ordinary shares through' Tender Offer Route for Buy Back' mechanism for acquisition ofshares through Stock Exchange. Upon close of said buy back offer and the approval grantedby SEBI the Company extinguished 144232 nos of Ordinary shares on 27.11.2017.Consequently the Issued Subscribed and Paidup Equity Share Capital of the Company reducedfrom 3260250 to 3116018 shares.
DECLARATION BY INDEPENDENT DIRECTORS All Independent Directors have givendeclarations that they meet the criteria of independence as laid down under section 149(6)of the Companies Act 2013 and Regulation 16 of SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015.
A meeting of the independent Directors was held on 18th January 2018.
NOMINATION & REMUNERATION
The Board on the recommendation of the Nomination & Remuneration Committeeconsiders and approves the appointment of Directors senior management and decides upontheir remuneration. Key Management Personnel are appointed by the Board afterconsideration of their qualification and exposure to required fields. The details arestated in the Corporate Governance Report. There are no changes among the Board ofDirectors and Key Managerial Personnel of the Company during the year under review.
RELATED PARTY TRANSACTIONS
To provide transparency in management and ensure compliance with the provisions ofvarious laws the Audit Committee has provided guidelines to the Directors/Board. Theguidelines inter alia provide for identification manner of dealing conduct anddocumentation of such transactions as per the provisions of the Companies Act and otherapplicable rules and regulations.
There were no related party transactions between the Company and the Promoters KeyManagerial Personnel or other designated persons which may have a potential conflict withthe interest of Company. All related party transactions that were entered in to during thefinancial year were in the ordinary course of business and are disclosed at Note No. 34attached to the standalone balance sheet. None of the Director's has any pecuniaryrelationship or transaction vis-a-vis the Company.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGO
There is nothing to report about the conservation of energy and technology absorptionduring the year. Foreign exchange earning was Nil while outgo was Rs. 8.59 Lakh.
CORPORATE SOCIAL RESPONSIBILITY Pursuant to provisions of section 135 of theCompanies Act 2013 a committee of Board of Directors has been formed and the member ofthe Committee are:
|a. Mr. Mohammad Aslam Sayeed ||Chairman |
|b. Mr. Saleem Iqbal Shervani ||Member |
|c. Mr. Tahir Hasan ||Member |
During the year CSR committee meeting was held on 8 January 2018 18thJanuary 2018 and 20th March 2018 and as prescribed in section 135(5) of theCompanies Act 2013 a budget of Rs. 10 Lakh was allocated for purpose of CSR and a reporton the activities during the current year is attached as Annexure B to this Report.
The Board carries out annual evaluation of its own performance of the Directorsindividually as well of the working of its various Committees. The key areas forevaluation are the quality of deliberations and contribution towards performance andguidance to management. The Board of Directors expressed their satisfaction with theevaluation process.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
In accordance with the provisions of the section 152 of the Companies Act 2013 Mr.Tahir Hasan (DIN:00074282) and Mr. Saeed Mustafa Shervani (DIN:00024390) Directors retireby rotation at the ensuing Annual General Meeting and being eligible offer themselves forre-appointment. Brief resume of the Directors seeking re-appointment along with otherdetails as stipulated under SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 and in terms of Section 102(1) of the Companies Act 2013 are provided inthe Notice convening the Annual General Meeting.
There are no changes among the Board of Directors and Key Managerial Personnel of theCompany during the year under review except for directors re-appointed by rotation.
Pursuant to provisions of section 203 of the Companies Act 2013 the Key ManagerialPersonnel of the Company are Mr.
S. I. Shervani Managing Director Mr. T. Hasan Chief Financial Officer and Mr. B. K.Misra Company Secretary. The Directors recommend all the resolutions placed before theMembers relating to Directors for their approval.
In terms of provisions of section 139 and 142 and other applicable provisions if anyof the Companies Act 2013 read with The Companies (Audit and Auditors) Rules 2014 theshareholders in the 69th Annual General Meeting held on 28.09.2017 haveapproved the appointment of M/s Gupta Vaish & Co. Chartered Accountants Kanpur (FirmRegistration No. 005087C) as Statutory Auditors of the Company for a period of 5 yearsfrom the conclusion of said Annual General Meeting. However their appointment asStatutory Auditors of the Company shall be required to be ratified by the Members at theensuing Annual General Meeting. The Company has received a confirmation from the saidAuditors that they are not disqualified to act as the Auditors and are eligible to holdthe office as Auditors of the Company. Necessary resolution for ratification ofappointment of the said Auditors is included in the Notice of aGm for seeking approval ofmembers.
Pursuant to the provisions of Section 204 of the Companies Act 2013 and the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Company hasappointed M/s Siddiqui & Associates Company Secretaries in Practice to undertake theSecretarial Audit of the Company. The Report of Secretarial Audit for the year 2017-18 isannexed herewith as Annexure-C in Form MR-3 and forms integral part of this Report.
The Board of Directors on the recommendation of the Audit Committee appointed M/s P. L.Tandon & Co. Chartered Accountants to carry out the Internal Audit of the Company.
During the year under review the Company has not accepted or renewed any depositfalling within the ambit of Section 73 of the Companies Act 2013 and the Companies(Acceptance of Deposits) Rules 2014 hence no amount was outstanding as on the date ofBalance Sheet.
CONSOLIDATED FINANCIAL STATEMENT
In accordance with the section 129(3) of the Companies Act 2013 and the applicableaccounting standard on consolidated financial statement(s) read with accounting forinvestments in associates your Company has prepared the consolidated financial statementsand annexed to this report. A Statement in Form AOC-1 containing salient features of thefinancial statements of the subsidiary and associate companies are attached as Annexure-D.
The observations of the Statutory Auditors in their report are appropriately dealt within notes forming part of Financial Statement. No qualification or adverse remarks has beenmade by the Company Secretary in practice in his Secretarial Audit Report.
DISCLOSURE UNDER RULE 5 OF THE COMPANIES (APPOINTMENT & REMUNERATION) RULES 2014.
None of the employee of the Company was in receipt of total remuneration of Rs.6000000/- per annum or Rs. 500000/- per month during the financial year under review.
Disclosure required under section 197 of the Companies Act 2013 read with Rule 5 ofthe Companies (Appointment & Remuneration) Rules 2014 has been annexed as Annexure E.
DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORK PLACE (PREVENTION PROHIBITIONAND REDRESSAL) ACT 2013
The Company has in place an anti-sexual harassment policy in line with the requirementsof Sexual Harassment of Women at Work Place (Prevention Prohibition and Redressal) Act2013. Till date the company has not received any complaint thereunder.
Pursuant to provisions of section 124(5) of the Companies Act 2013 the company hastransferred the unpaid or unclaimed dividends for the financial year upto 2009-2010 fromtime to time on due dates to the Investor Education and Protection Fund (the IEPF)established by the Central Govt.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS
The details of loans guarantees and investments covered under the provisions ofsection 186 of the Companies Act 2013 are given in the notes to the financial statements.
The Company has an Audit Committee and details of constitution and terms of referenceare set out in the Corporate Governance Report.
Pursuant to the provisions of the section 177 of the Companies Act 2013 the Companyhas adopted Vigil Mechanism policy which also incorporates a whistle blower policy.Adequate safeguards are provided against victimization to those who avail the mechanismand access to the Chairman of the Audit Committee while reporting about unethicalpractices malpractice and non-compliance of policies.
LISTING WITH STOCK EXCHANGE
The Equity shares of the Company are listed on Bombay Stock Exchange Limited. Furtherdetails are set out in the Corporate Governance Report.
REPORTING OF FRAUD
The Auditors of the Company have not reported any fraud to Audit Committee asstipulated under second proviso of section 143(12) of the Companies Act 2013.
Industrial relations remained cordial during the period under review.
There were no significant material orders passed by the regulators or courts whichwould impact the going concern status of the Company and its future operations.
There was no change in the nature of business of the company during the year.
Your Directors wish to convey their deep sense of appreciation for the continuedsupport and co-operation extended by bankers Central and State Government and all otherstakeholders. The Directors also wish to place on record their sincere appreciation forthe commitment and enthusiasm of the employees for the Company.
|For and on behalf of the Board |
|Mohd. Aslam Sayeed ||Saleem I. Shervani |
|Director ||Managing Director |
|DIN :06652348 ||DIN :00023909 |
|Place : Allahabad || |
|Date : May 29 2018 || |