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Varun Mercantile Ltd.

BSE: 512511 Sector: Others
NSE: N.A. ISIN Code: INE442U01014
BSE 05:30 | 01 Jan Varun Mercantile Ltd
NSE 05:30 | 01 Jan Varun Mercantile Ltd

Varun Mercantile Ltd. (VARUNMERCAN) - Director Report

Company director report

Dear Members

Your Directors are pleased to present the Thirty-Sixth Annual Report and theCompany’s audited financial statements for the financial year ended March 312021.

Financial Results:

The Company’s financial performance for the year ended March 31 2021 issummarized below:

Particulars Current Year (Rs.) (2020-21) Previous Year (Rs.) (2019-20)
Income 2969524 3412552
Less: Expenses 1759953 1821008
Profit / (Loss) before Tax 1209571 1591544
Less: Tax Adjustments 747500 859154
Profit / (Loss) After Tax 462071 732390

Working and State of Company’s Affairs:

During the year under review your Company earned a net profit of Rs. 462071/- afterincurring necessary expenditure and providing for tax. Your Directors continue theirefforts to improve the working of the Company.

There has been no change in the nature of business of the company.

Dividend:

Your Directors have not recommended any dividend on Equity Shares for the year underreview.

Reserves:

In order to conserve the resources there is no transfer of profits to reserves duringthe year.

Net worth:

The net worth of the Company as on March 312021 was Rs. 50651729/- (Rs.50189658/- as on March 312020).

Material changes and commitments affecting the financial position of the company whichhave occurred between the end of the year and the date of the Report:

The company deals in single business segment and as such it did not face any materialimpact on its business due to COVID-19.

Management’s Discussion and Analysis Report:

Management’s Discussion and Analysis Report for the year under review asstipulated under the Securities and Exchange Board of India (Listing Obligations andDisclosure Requirements) Regulations 2015 ("Listing Regulations") is as under.

Industry Structure Developments Opportunities and Outlook:

With the Government undertaking structural reforms and measures to improveproductivity increased thrust on development of physical infrastructure coupled withlower interest rates and its "Make in India" initiative by creating a conducivebusiness environment it is expected that this will spur activity in the trading sector.

The Company will continue to keep its focus in the trading of general commodities.Segment-wise or product-wise performance:

The Company is involved only in trading of general commodities and does not havesegments. Challenges Risks and Concerns:

Some of the challenges that hinder progress of the general commodities sector are easyaccess to finance availability of materials and delays in logistics leading to cost andtime overruns. However the Government has undertaken some key reforms that includestronger co-operation between the private and public sectors enforcing of a unified legalframework creation of better dispute resolution mechanisms and removing bottlenecks. As apart of the overall risk management strategy the Company consistently insures its assetswherever necessary and generally follows a conservative financial profile by followingprudent business practices.

Internal Controls:

The Company has robust internal control systems and procedures commensurate with itsnature of business which meets the following objectives:

• providing assurance regarding the effectiveness and efficiency of operations;

• efficient use and safeguarding of resources;

• compliance with policies procedures and applicable laws and regulations; and

• transactions being accurately recorded and promptly reported.

The Company continues to have periodical internal audits conducted of all its functionsand activities to ensure that systems and processes are followed across all areas.

The Audit Committee of Directors of the Company regularly reviews the adequacy ofinternal control systems through such audits. The Internal Auditor reports directly to theAudit Committee.

Internal Financial Controls:

Internal Financial Controls are an integrated part of the risk management framework andprocess that address financial and financial reporting risks. The Company has in placeadequate internal financial controls with reference to financial statement.

Assurance on the effectiveness of internal financial controls is obtained throughmanagement reviews and self-assessment continuous control monitoring by functionalexperts as well as testing of the internal financial control systems by the StatutoryAuditors and Internal Auditors during the course of their audits.

The Company believes that these systems provide reasonable assurance that theCompany’s internal financial controls are adequate and are operating effectively asintended.

Risk Management:

The Company has in place a Risk Management Policy which provides for a robust riskmanagement framework to identify and assess risks such as safety health and environmentoperational strategic financial security property regulatory reputationaloperational and other risks and put in place an adequate risk management infrastructurecapable of addressing these risks.

There is an adequate risk management infrastructure in place capable of addressingthese risks.

Financial Performance and Operational Performance:

Employee benefit expenses and tax expenses of the Company have decreased in comparisonto the previous year. Due to decrease in other Income of the Company the profit after taxof the Company has decreased in comparison to previous year.

During the year the Board of Directors explored various avenues to increase itsgeneral trading activities and its operations.

Human Resource Development:

The Company does not have any employees on the pay roll of the Company.

Disclosure of Accounting Treatment:

In the preparation of financial statements no treatment different from that prescribedin an Accounting Standard has been followed.

Significant changes in key financial ratios along with detailed explanations: Thechanges in the key financial ratios are as indicated below:

Particulars Current Year (2020-21) Previous Year (2019-20) % Change
Debtors T urnover (Days) - - -
Inventory Turnover (Days) - - -
Interest Coverage Ratio - - -
Current Ratio 43.56 158.36 -72.49
Debt Equity Ratio (Gross) - - -
Debt Equity Ratio (Net) - - -
Operating Profit Margin (%) - - -
Net Profit Margin (%) - - -
Return on Net Worth (%) 0.91 1.46 -37.52

Subsidiary Associate and Joint Ventures:

The Company has no Subsidiary Associate and Joint Venture companies.

Report on the highlights of performance of Subsidiary Associates and Joint Venture

Companies and their contribution to overall performance of the Company:

The Company has no Subsidiary Associate and Joint Venture Companies and thereforereporton the highlights of performance of such companies and their contribution to overallperformance of the Company is not given.

Policy for determination of material subsidiaries:

The Company has formulated a policy for determining material subsidiaries.

Secretarial Standards:

The Company has followed applicable Secretarial Standards i.e. SS-1 and SS-2 relatingto ‘Meetings of the Board of Directors’ and ‘General Meetings’respectively.

Directors' Responsibility Statement:

Your Directors state that:

(a) in the preparation of the annual accounts for the year ended March 312021 theapplicable accounting standards read with requirements set out under Schedule III to theCompanies Act 2013 ("the Act") have been followed and there are no materialdepartures from the same;

(b) the Directors have selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company as at March 312021 and of the profit ofthe Company for the year ended on that date;

(c) the Directors have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;

(d) the Directors have prepared the annual accounts on a going concern basis;

(e) the Directors have laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and are operatingeffectively; and

(f) the Directors have devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems are adequate and operating effectively.

Contracts and arrangements with Related Parties:

Your Directors draw attention of the members to Note No. 19 to the financial statementwhich sets out related party disclosures pursuant to Ind AS 24. The transactions disclosedtherein are in the ordinary course of business and are at an arm's length basis. There areno related party transactions with any person or entity belonging to promoter/ promotergroup during the year under review. Hence they are not required to be reported in FormNo. AOC-2 in terms of section 134(3) (h) read with Section 188 of the Act and Rule 8(2) ofthe Companies (Accounts) Rules 2014.

Corporate Governance:

As per Regulation 15 of the Listing Regulations the listed companies having paid upequity share capital and net worth on the last day of the previous financial year notexceeding rupees ten crores and rupees twenty five crores respectively are exempted tocomply with provisions relating to Corporate Governance.

Since the paid up equity share capital and net worth of the Company as on the last dayof the financial year i.e. March 312021 does not exceed rupees ten crores and rupeestwenty five crores respectively the Company is exempted from compliance of provisionsrelating to Corporate Governance.

Directors and Key Managerial Personnel:

In accordance with the provisions of the Act and the Articles of Association of theCompany Shri Ambalal T. Jain (DIN: 01073113) Director of the Company retires byrotation at the ensuing Annual General Meeting. The Board of Directors on therecommendation of the Nomination and Remuneration Committee ("NRC") hasrecommended his appointment.

After the close of the financial year Shri Girish B. Shah Director resigned w.e.f.May 10 2021. The Board places on record its deep appreciation for the invaluablecontribution made by Shri Girish B. Shah during his association as a Director of theCompany.

The Board of Directors of the Company as per the recommendation of the NRC haveappointed Shri Sanjay T. More as an Additional Director of the Company place w.e.f. May10 2021. In terms of section 161(1) of the Act he shall hold office up to the date ofensuing Annual

General Meeting. The Company has received requisite notice in writing from a memberproposing his candidature for appointment as a Director liable to retire by rotation atthe ensuing Annual General Meeting.

The Company has received declarations from all the Independent Directors of the Companyconfirming that:

i. they meet the criteria of independence prescribed under the Act and the ListingRegulations; and

ii. they have registered their names in the Independent Directors’ Data bank.

The Company has devised inter alia the following Policies:

a. Policy for selection of Directors and determining Directors’ Independence; and

b. Remuneration Policy for Directors Key Managerial Personnel and other employees.

The aforesaid policies are available on the Company’s Website and can be accessedat http://www.vml.org.in.

The Policy for selection of Directors and determining Directors’ independence setsout the guiding principles for the NRC for identifying persons who are qualified to becomeDirectors and to determine the independence of Directors while considering theirappointment as independent Directors of the Company. The Policy also provides for thefactors in evaluating the suitability of individual Board members with diverse backgroundand experience that are relevant for the Company’s operations. There has been nochange in the aforesaid policy during the year under review.

The Remuneration Policy for Directors Key Managerial Personnel and other employeessets out the guiding principles for the NRC for recommending to the Board the remunerationof the Directors Key Managerial Personnel and other employees of the Company. There hasbeen no change in the policy during the year under review.

Performance Evaluation:

The Company has a Policy for performance evaluation of the Board Committees andindividual Directors (including Independent Directors) which includes criteria forperformance evaluation of Non-executive Directors.

In accordance with the manner of evaluation specified by the Nomination andRemuneration Committee (NRC) the Board carried out annual performance evaluation of theBoard and individual Directors. The NRC carried out performance evaluation of theCommittees of the Board based on the evaluation reports submitted by each Committee andthe report of such evaluation was presented to the Board. The Independent Directorscarried out annual performance evaluation of the Chairman non-independent directors andthe Board as a whole. A consolidated report was shared with the Board for review andgiving feedback to each Director.

Auditors and Auditors’ Report:

Statutory Auditors

M/s. Priti V. Mehta & Company Chartered Accountants were appointed as Auditors ofthe Company for a term of 5 (five) consecutive years at the Annual General Meeting heldon September 28 2018. The Auditors have confirmed that they are not disqualified fromcontinuing as Auditors of the Company.

The Auditors’ Report does not contain any qualification reservation adverseremark or disclaimer.

M aintenance of Cost Records:

The provisions of Section 148 of the Act relating to maintenance of cost records asspecified by the Central Government are not applicable to the Company.

Secretarial Auditor:

The Board has appointed Ms. Rakhi Jethlia a Practising Company Secretary to conductSecretarial Audit for the financial year 2020-21. The Secretarial Audit Report for thefinancial year ended March 312021 is annexed herewith and marked as Annexure T to thisReport. The Secretarial Audit Report does not contain any qualification reservationadverse remark or disclaimer.

Disclosures:

Meetings of the Board:

Six meetings of the Board of Directors were held during the year. The details of Boardmeetings held are given below:

Date Board Strength No. of Directors Present
June 252020 4 4
August 6 2020 4 4
September 4 2020 4 4
November 6 2020 4 4
February 8 2021 4 4
March 25 2021 4 4

Attendance of Directors at Board meetings last Annual General Meeting (AGM) and numberof other Directorship(s) of each Director in various companies:

Name of the Director

Attendance at meetings during 2020-21

No. of Other Directorship(s) as on March 31 2021
Board Meetings Last AGM (30/09/2020)
Lopamudra Dixit 6 Yes 1
Mehul R. Shah 6 Yes 0
Ambalal T. Jain 6 Yes 2
Girish B. Shah 6 Yes 13

Audit Committee:

As on the end of the financial year the Audit Committee comprised of Shri Mehul R.Shah (Chairman) Ms. Lopamudra Dixit as Independent Directors and Shri Girish B. ShahDirector.

After the close of the financial year the Audit Committee was reconstituted due tochange in Director. Shri Girish B. Shah resigned as a member of the Committee and ShriSanjay T. More was appointed as a member w.e.f May 10 2021

Five meetings of the Committee were held during the year on June 25 2020 August 62020 September 4 2020 November 6 2020 and February 8 2021.

Attendance of each Member at the Audit Committee meetings held during the year:

Name of the Committee Member No. of meetings attended
Lopamudra Dixit 5
Mehul R. Shah 5
Girish B. Shah 5

During the year all the recommendations made by the Audit Committee were accepted bythe Board.

Nomination and Remuneration Committee:

As on the end of the financial year the Nomination and Remuneration Committeecomprised of Ms. Lopamudra Dixit (Chairperson) Shri Mehul R. Shah as IndependentDirectors and Shri Girish B. Shah Director.

After the close of the financial year the Nomination and Remuneration Committee wasreconstituted due to change in Directors. Shri Girish B. Shah resigned as a member of theCommittee and Shri Sanjay T. More was appointed as a member w.e.f May 10 2021.

Two meetings of the Nomination and Remuneration Committee were held on June 17 2020and June 25 2020.

Attendance of each Member at the Nomination and Remuneration Committee meetings heldduring the year:

Name of the Committee Member No. of meetings attended
Lopamudra Dixit 2
Mehul R. Shah 2
Girish B. Shah 2

During the year all the recommendations made by the Nomination and RemunerationCommittee were accepted by the Board.

Corporate Social Responsibility:

The provisions of Section 135 of the Act are not applicable to the Company and hence nocommittee is constituted and the Company has not spent any amount on Corporate SocialResponsibility.

Vigil Mechanism:

The Company has established a robust Vigil Mechanism and a Whistle-blower Policy inaccordance with provisions of the Act and the Listing Regulations for Directors andemployees to report genuine concerns or grievances including unethical behaviour fraud orviolation of the Company's Code of Conduct. The authority for the implementation of thePolicy rests with the Board of Directors. The Vigil Mechanism and Whistle-blower policy isavailable on the Company’s website and can be accessed at www.vml.org.in.

During the year under review no protected disclosure concerning any reportable matterin accordance with the Vigil Mechanism and Whistle Blower Policy of the Company wasreceived by the Company.

Particulars of Loans given Investments made Guarantees given and Securities provided

The Company has not given any loans or guarantees or made any investments or providedany securities in terms of Section 186 of the Act during the year under review.

Energy Conservation Technology Absorption and Foreign Exchange Earnings and Outgo:

A. Conservation of Energy:

i) Energy conservation measures taken: Not Applicable.

ii) Steps taken by the Company for utilising alternate sources of energy: NotApplicable.

iii) Capital investment on energy conservation equipment’s: Not Applicable.

B. TechnologyAbsorption:

i) Major efforts made towards technology absorption: Not Applicable

ii) The benefits derived like product improvement cost reduction product developmentor import substitution: Not Applicable

iii) Information regarding imported technology (Imported during the last three years):Not Applicable

iv) Expenditure incurred on research and development: Nil

C. Foreign Exchange Earnings and Outgo:

i) Foreign exchange earned in terms of actual inflows- Nil

ii) Foreign exchange outgo in terms of actual outflows- Nil Annual Return:

As required under Section 134(3)(a) of the Act the Annual Return of the Company as onMarch 312021 is available on the Company’s website and can be accessed atwww.vml.org.in.

Particulars of Employees and related disclosures:

The Company has not paid any remuneration attracting the provisions of Section 197(12)of the Act read with Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 and amendments thereof. Hence no information isrequired to be appended to this report in this regard.

Further the disclosure in the Board Report under Rule 5(1) of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 is as per Annexure‘M’ and forms part of this Report.

Prevention of sexual harassment at workplace:

In accordance with the requirements of the Sexual Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013 ("POSH Act") and Rules madethereunder the Company has constituted Internal Complaints Committee to address andresolve any complaints pertaining to sexual harassment in accordance with POSH Act. Therewere no cases/ complaints filed during the year under the POSH Act.

General:

Your Directors state that no disclosure or reporting is required in respect of thefollowing matters as there were no transactions on these matters during the year underreview:

1. Details relating to deposits covered under Chapter V of the Act.

2. Issue of equity shares with differential rights as to dividend voting or otherwise.

3. Issue of shares (including sweat equity shares and ESOS) to the employees of theCompany under any scheme.

4. The Company has no holding company or subsidiary company hence the provisions ofSection 197(14) of the Act relating to receipt of remuneration or commission by the Wholetime Director from holding company or subsidiary company of the Company are not applicableto the Company.

5. No significant or material orders were passed by the Regulators or Courts orTribunals which impact the going concern status and the Company’s operations infuture.

6. No fraud has been reported by the Auditors to the Audit Committee or the Board ofDirectors of the Company.

7. The Company does not have any scheme of provision of money for the purchase of itsown shares by employees or by trustees for the benefit of employees.

8. Appointment of a Cost Auditor.

9. There is no application made or proceedings pending under the Insolvency andBankruptcy Code 2016.

10. There was no instance of one-time settlement with any Bank or FinancialInstitution.

Acknowledgement:

The Board of Directors would like to express their sincere appreciation for theassistance and co-operation received from the Government and regulatory authorities stockexchange banks other business constituents and members during the year under review.

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