Vijay Shanthi Builders Ltd.
|BSE: 523724||Sector: Infrastructure|
|NSE: VIJSHAN||ISIN Code: INE806F01011|
|BSE 00:00 | 22 Oct||Vijay Shanthi Builders Ltd|
|NSE 05:30 | 01 Jan||Vijay Shanthi Builders Ltd|
|BSE: 523724||Sector: Infrastructure|
|NSE: VIJSHAN||ISIN Code: INE806F01011|
|BSE 00:00 | 22 Oct||Vijay Shanthi Builders Ltd|
|NSE 05:30 | 01 Jan||Vijay Shanthi Builders Ltd|
To the Members
Your Directors take pleasure in presenting the 28th Annual Report on thebusiness and operations of your Company for the year ended 31st March 2019.
1. FINANCIAL HIGHLIGHTS:
On Standalone basis:-
During the Financial Year 2018-19 revenue from operations was Rs.2655.36 Lakhs ascompared to Rs. 8526.13 Lakhs during the previous year. The net loss after tax is at1065.53 Lakhs as compared to a profit of 2.33 Lakhs recorded for the previous year
On Consolidated basis:-
During the Financial Year 2018-19 the subsidiary company M/S VahicInc Canada whichwas incorporated in the year 2017-18 did not commence its commercial activity. Consideringthe same the investment made by the company amounting to 100 common shares of 1 canadiandollar each totaling to 100 canadiandollars(Amounting to Rs.5200) in the subsidiary waswritten off and hence the consolidated financial statement has not been furnished.
Owning to inadequacy or absence of profits the Company has not declared dividend forthe financial year 2018 19.
3. EVENTS SUBSEQUENT TO THE DATE OF FINANCIAL STATEMENTS:
There are no material changes and commitments affecting the financial position of theCompany between 31s tMarch 2019 and the date of Board s Report 14th June2019.
4. CHANGE IN THE NATURE OF BUSINESS IF ANY:
There are no changes in the nature of business of the Company during the financial yearunder review.
5. MANAGEMENT DISCUSSION AND ANALYSIS REPORT:
i. Industry Structure And Development
A recovery in the real estate sector where project stalling rates have spiked may beas prolonged as the slowdown without a significant price correction. The global financialcrash of 2008 led to a global credit freeze and real estate projects across the world weregutted as lenders did their best to avoid this setor. India was no exception to this trendthough credit flow to the sector did not dry up as dramatically as in the West. As fundflows dried up project stalling rates spiked. The shock of demonetization followed bytwo new regulatory changes the goods and services tax (GST) and the Real Estate(Regulation and Development) Act only served to bring in more uncertainty and ensuredthat the slump in the sector continued. As bank credit to the sector slowed and bankdeposits soared post demonetization banks outsourced lending to non-banking financialcompanies (NBFCs) which in turn stepped in to fund real estate developers. However theNBFC crisis last year squeezed that channel of finance as well. Unsurprisingly the lackof funds continues to be one of the major reasons behind stalled projects even today. Thetwo big reasons cited by investors for stalled projects is the delay in land acquisitionand lack of funds. It s a challenging situation Every stakeholder should be prepared totake a hit or make compromises. Banks and financial institutions have to take a haircut inthe loans given developers and owners have to forgo profit/ surplus cash flows and evenhomebuyers should be prepared to pay more if required for the completion of projects.Ultimately a lot rides on where house prices head. Despite the slump in the sector mostlocalities haven t seen much of a correction in house prices. A significant correction canpave the ground for a V-shaped recovery in the sector. In the absence of that therecovery in real estate is likely to be as prolonged as the slowdown.
ii. Business Outlook
The real estate sector is one of the most globally recognized sectors. Real estatesector comprises four sub sectors - housing retail hospitality and commercial. Thegrowth of this sector is well complemented by the growth of the corporate environment andthe demand for office space as well as urban and semi-urban accommodations. Theconstruction industry ranks third among the 14 major sectors in terms of direct indirectand induced effects in all sectors of the economy.
It is also expected that this sector will incur more non-resident Indian (NRI)investments in both the short term and the long term.
Real estate sector in India is expected to reach a market size of US$ 1 trillion by2030 from US$ 120 billion in 2017 and contribute 13 per cent of the country s GDP by 2025.Retail hospitality and commercial real estate are also growing significantly providingthe much-needed infrastructure for India s growing needs.
iii. Future Outlook
The Securities and Exchange Board of India (SEBI) has given its approval for the RealEstate Investment Trust (REIT) platform which will help in allowing all kinds of investorsto invest in the Indian real estate market. It would create an opportunity worth Rs 1.25trillion (US$ 19.65 billion) in the Indian market over the years. Responding to anincreasingly well-informed consumer base and bearing in mind the aspect of globalisationIndian real estate developers have shifted gears and accepted fresh challenges. The mostmarked change has been the shift from family owned businesses to that of professionallymanaged ones. Real estate developers in meeting the growing need for managing multipleprojects across cities are also investing in centralised processes to source material andorganise manpower and hiring qualified professionals in areas like project managementarchitecture and engineering.
The growing flow of FDI into Indian real estate is encouraging increased transparency.Developers in order to attract funding have revamped their accounting and managementsystems to meet due diligence standards.
iv. Operational Overview
The following are the details of the ongoing and future projects of the Company.
v. Opportunities and Threats
The Government of India along with the governments of the respective states has takenseveral initiatives to encourage the development in the sector. The Government of India sHousing for all initiative is sure to bring in huge investment especially in the RealEstate Residential Sector.The Smart City Project where there is a plan to build 100 smartcities is a prime opportunity for the real estate companies.
Property prices have fallen slightly in most major Indian cities in past one year.Slack demand huge inventories and stringent regulations have kept home prices low acrossmajor Indian cities. The number of Launches in were few and sales were tardy in the pastone year in Chennai but prices came down leading to a big fall in the inventory. Thedrinking water crisis facing the city may bring down prices further.
vi. Segment wise Performance:
The Company has only one segment that is developing and promoting of residentialapartments. Hence there is no requirement of segment wise reporting.
vii. Risks and Concerns
1. Market risk- Market risk is mainly caused by the demand uncertainty.
2. Completion risks- Completion risks refer to technical risks during and after thecompletion of a project.
3. Institutional risks- Institutional risks are related to the political uncertaintiesin a specific situation.
viii. Risk Management Policy
The Board has established a Risk Management Policy which formalizes the Company sapproach to overview and manage business risks. The policy is implemented throughidentifying assessing monitoring and managing key risks across the Company.
The Audit Committee is entrusted with the task of monitoring and reviewing the riskmanagement plan and procedures of the Company. The risk management function iscomplimentary to the internal control mechanism of the Company and supplements the auditfunction.
ix. Internal Financial Control
There are adequate internal financial controls in place with reference to the financialstatements. During the year under review these controls were evaluated and no significantweakness was identified either in the design or operation of the controls.
x. Discussion of Financial Performance
A detailed report about financial performance forms part of Directors Report to theshareholders.
xi. Human Resource Development
The Company considers its human resource as an asset of the Company. The Company pridesin having well-oiled human resource machinery which has been one of the pillars for thegrowth of the Company over the years. We have also developed an appropriate blend ofprofessionals constantly thinking and executing innovative and cost effective solutionsto every client s requirements. Thanks to its unique professionalism that embodies a codeof ethics a committed and farsighted management team Vijay Shanthi has registeredconsistent growth over the years ever since its inception.
6. DIRECTORS RESPONSIBILITY STATEMENT
In accordance with the provisions of Section 134(5) of the Companies Act 2013 withrespect to Director s Responsibility Statement it is hereby stated
I. that in the preparation of annual accounts for the financial year ended 31stMarch2019 the applicable Accounting Standards had been followed and that there were nomaterial departures;
II. that the Directors had selected such accounting policies and applied themconsistently and made judgments and estimates that were 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 Loss of the Company for the year under review;
III. that the Directors had 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. that the Directors had prepared the accounts for the financial year ended 31stMarch2019 on a going concern basis ;
V. that 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.
7. FINANCIAL PERFORMANCE & POSITION OF SUBSIDIARY AND ASSOCIATE COMPANIES
The Company has made an investment of Rs.5198/- in Vahi INC a Company having itsregistered office at 31 Roker Crescent Toronto Ontario Canada M1S 1P5 and isclassified as 100% subsidiary under section 2(87)(ii) of Companies Act 2013.
The investment has been made during the Financial Year 2017 2018 and the company didnot commence its commercial activity during the year 2018 19 and hence the said subsidiarywas written off during the year and hence no consolidated financials were prepared.
8. DIRECTORS AND KEY MANAGERIAL PERSONNEL
i. Independent Directors
Mr.Siva Subramaniam (DIN: 00763122) who was appointed as the Independent Director ofthe Company for a period of 3 years upto 28th September 2017 in the 23rdAnnual General meeting of the Company held on 29th September 2014 has now beenreappointed for a second term for a period of 5 years upto 28th September 2022in the Annual General Meeting of the Company held on 27th September 2017.
Mr. V. Parthasarathy was appointed as the Independent Director of the Company for aperiod of 5 years upto 30th September 2021 in the 25th Annual General Meetingof the Company held on 30th September 2016.Mr. V Parthasarathy(DIN:07594302)resigned from the Board with effect from 23rd August 2018 citing personalreasons and same has been accepted by the Board. The Board wishes to place on record thevaluable services received by the company from the Director during her tenure in theBoard.
Ms Shaily Ramesh Rathore was appointed as the Independent Women Director of the Companyin the Board Meeting held on 28th February 2019. All Independent Directors havedeclared that they met all the criteria of independence as provided under Section 149(6)of the Companies Act 2013.
Retirement of Directors by Rotation
In terms of the provisions of sub-section (6) read with explanation to Section 152 ofthe Companies Act 2013 two-thirds of the total number of directors i.e. excluding IDsare liable to retire by rotation and out of which one-third are liable to retire byrotation at every annual general meeting.
Mr. Chandan Kumar Jain (DIN: 00262521) Managing Director who is liable to retire byrotation at the AGM and being eligible offers himself for re-appointment.
ii. Executive Directors
Mr. Chandan Kumar (DIN: 00262521) was re-appointed as the Managing Director of theCompany for another period of three years commencing from 1st January 2019andhis term shall end with 31st December 2022 in the Board Meeting held on 14thFebruary 2019. The reappointment has been approved by the Nomination and RemunerationCommittee of the Board and the same is subject to approval by the Shareholders.
Hence a special resolution seeking members consent for the above said reappointment hasbeen proposed and same forms part of the notice to this ensuing AGM
Whole Time Director (WTD)
Mr. DVB Prasad (DIN:02001256) was re-appointed as the Whole Time Director of theCompanyin the Board Meeting held on 14th February 2018 for another period ofthree years commencing from 1stMarch 2018 and his term shall end with 28thFebruary 2021.
Key Managerial Personnel
As per Companies Act 2013 the persons holding the post of Managing Director Whole TimeDirector Chief Financial Officer and Company Secretary are the Key Managerial Personnelof the Company.
Mr Prem Prasad Babu who was appointed as the Company Secretary of the Company witheffect from 14th September 2017 in the Board Meeting held on 14thSeptember 2017resigned from the position of Company Secretary with effect from 31stAugust 2018 and the same was taken on record in the Board meeting held on3rdOctober 2018.
Mr .Chandan Kumar -Managing Director Mr. DVB Prasad -Whole Time Director Mrs. SaralaViswanathan Chief Financial Officer are the Key Managerial Personnel of the Company atthe end of the year under review.
Nomination and Remuneration Policy
The Nomination and Remuneration Committee of Directors (NRC) reviews the composition ofthe Board to ensure that there is an appropriate mix of abilities experience anddiversity to serve the interests of all shareholders and the Company.
In accordance with the requirements under Section 178 of theCompanies Act 2013 andRegulation 19 of Securities and Exchange Board of India (Listing Obligations andDisclosure Requirements) Regulations 2015 the NRC has formulated a Nomination andRemuneration Policy to govern the terms of nomination / appointment and remuneration of(i) Directors (ii) Key Managerial Personnel (KMPs) of the Company.
The NRC will review the profile of persons and the most suitable person is eitherrecommended for appointment by the Board or is recommended to shareholders for theirelection.
NRC will ensure that any person(s) who is / are appointed or continues in theemployment of the Company as its Executive Chairman Managing Director Whole-TimeDirector shall comply with the conditions as laid out under Part I of Schedule V to theCompanies Act 2013. NRC will ensure that any appointment of a person as an independentDirector of the Company will be made in accordance with the provisions of Section 149 readwith Schedule IV of the Companies Act 2013 along with any other applicable provisions andRegulation 25 of Securities and Exchange Board of India (Listing Obligations andDisclosure Requirements) Regulations 2015.
Criteria for performance evaluation disclosures on the remuneration to executivedirectors have been disclosed as part of Corporate Governance Report attached herewith.
iii. Evaluation of the Board Committee and Directors
During the year as recommended by the Nomination and Remuneration Committee anevaluation framework was adopted by the Board. Pursuant to the provisions of the CompaniesAct 2013 and Regulation 25 of Securities and Exchange Board of India (Listing Obligationsand Disclosure Requirements) Regulations 2015 the Board carried out an annualperformance evaluation of its own performance the Directors individually as well as theworking of its various Committees. Structured questionnaires were prepared after takinginto consideration the feedback of the Directors. The overall Board evaluation coveredvarious aspects of the Board s functioning in terms of structure governance and dynamicsof functioning besides the financial reporting process internal controls and riskmanagement.
The performance evaluation of the Independent Directors was carried out by the entireBoard. The performance evaluation of the Non-Independent Directors was carried out by theIndependent Directors at their separate meeting.
iv. Number of Board Meeting held
The number of Board meetings held during the financial year 2017-18was 06 (Six) andmore details including attendance particulars of directors are provided as part ofCorporate Governance Report prepared in terms of Regulation 17 of Securities and ExchangeBoard of India (Listing Obligations and Disclosure Requirements) Regulations 2015.
M/s. Sanjay Shah & Associates Chartered Accountants Chennai (Firm RegistrationNo: 003572S) were appointed as the statutory auditors of the Company for a period fiveyears from the conclusion of the 26th Annual General Meeting till theconclusion of 31st Annual General Meeting to be held in the year 2022.
Reply to Qualification / Observations made in the Statutory Audit Report:
i. As regards the statement regarding deviation in the guidelines issued by ICAIregarding revenue recognition of accounting for real estate transaction in respect ofcertain project the Audit Committee and the Board is of the considered opinion that theCompany has not violated the guidelines issued by ICAI. The said project being High EndApartments is not fully complete as the completion is based on delivery of individualcustomized requirements of each of the prospective buyer. Hence the Board is of theopinion that sales can be accounted for only after completion of such pending works whichmay vary depending on prospective customer needs and cannot be generalized. Further theamount to be spent on this project towards completion is substantial.
ii. In respect of the said bank accounts the Company had approached banks forconfirmations and same is awaited. However these are mainly inoperative accounts and thebalances held in the accounts are not material.
As required under Section 204 of the Companies Act 2013 and the Companies (Appointmentand Remuneration of Managerial Personnel) Rules 2014 the Company is required to appoint aSecretarial Auditor for auditing secretarial and related records of the Company.
Accordingly Mr. R Muthukrishnan Practising Company Secretary Chennai was appointedas Secretarial Auditors for carrying out the secretarial audit for the financial year2018-19.
As required by Section 204 of the Companies Act 2013 the Secretarial Audit Report forthe year 2018-19 given by Mr. R Muthukrishnan Practising Company Secretary Chennai forauditing the secretarial and related records is attached to this report.
Reply to Point 1 List of Observations
1. As regards late filing / non filing of certain forms with ROC / stock exchangesduring 2018-19 there was certain dislocation in the administrative work due to changes inemployees. However the Company shall ensure that such delays are avoided in future.
Reply to Point 2 List of Observations
2. As far as loans in the nature of project advances to certain entities covered inSection 189 to the Companies Act 2013 the said amounts are purely in the nature ofproject advances extended for the purpose of execution of certain joint venture projectsentered by the company with such entities on an arms lengths basis and as per agreementsentered in to by the company with such entities. Hence given this background the Boardis of the opinion that the said project advances are as per standard market practice ofconstruction companies is a commercial advance and hence such amounts are not in natureof any pure loans.
Reply to Point 345 List of Observations
3. As regards to qualification regarding composition of Audit Committee and Nominationand Remuneration Committee due to resignation of an Independent Director during August2018 the Company is in the process of identifying a suitable person to bring them onBoard to meet with the requirements of the SEBI LODR Regulations. The Board has filled innecessary vacancy arising due to resignation of independent director as well as womandirector by appointing an Independent Women Director on 28th February 2019.
Reply to Point 6 List of Observations
4. As regards to qualification regarding appointment of Company Secretary the Companyis in the process of identifying a suitable candidate to appoint as the Company Secretaryof the Company.
Reply to Point 7 8 9 List of Observations
5. As regard to qualification with Regard to the delay in the submission of publicationof financial results and submission of Annual Reports Submission of Investor ComplaintsReport the Company shall ensure to comply with the stipulations as laid down under SEBILODR Regulations and shall avoid such delays in the future.
Reply to Point 10 List of Observations
6. The Company shall ensure to transfer the funds to Investor Education and ProtectionFund. The Company shall also ensure that such delay does not arise in the future.
Reply to Point 11 List of Observations
7. The Company is taking steps to make the necessary payments to the Stock Exchangesand would be complying with the requirement at the earliest.
8. CORPORATE GOVERNANCE
A separate section on Corporate Governance and a certificate from the statutoryauditors of the Company regarding compliance of conditions of Corporate Governance asstipulated under Regulation 27 of Securities and Exchange Board of India (ListingObligations and Disclosure Requirements) Regulations 2015 with the Stock Exchange(s) formpart of this Annual Report.
9. WHISTLE BLOWER POLICY
The Board at its meeting held on 16th October 2014 adopted a Whistle BlowerPolicy in accordance with the provisions of the Companies Act 2013 and as per Securitiesand Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations2015.
The Policy is disclosed on the Company s website with the following linkwww.vijayshanthibuilders.com.
10. PUBLIC DEPOSITS
The Company has not accepted any deposit from the public within the meaning of ChapterV of the Companies Act 2013 for the year ended 31st March 2019.
Information on conservation of energy technology absorption foreign exchange etc
Information on conservation of energy technology absorption and foreign exchangeearnings and outgo are given inAnnexure I to this report in terms of therequirements of Section 134(3)(m) of the Companies Act 2013 read with the Companies(Accounts) Rules 2014;
Extract of Annual Return in the prescribed form is given as Annexure II to thisreport in terms of the requirement of Section 134(3)(a) of Companies Act 2013 read withthe Companies (Accounts) Rules 2014.
Employee s Remuneration
The Company does not have any employees receiving the remuneration in excess of thelimits prescribed under Section 197 of the Companies Act 2013 read with Rule 5(2) of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014.
Comparative analysis of remuneration paid
A comparative analysis of remuneration paid to Directors and employees with the Companys performance is given as Annexure III to this report.
Details of related party transactions
All arrangements / transactions entered by the Company with its related parties duringthe year were in ordinary course of business and on an arm s length basis. During theyear the Company had not entered into any arrangement / transaction with related partieswhich could be considered material in accordance with the Company s Policy on RelatedParty Transactions and accordingly the disclosure of Related Party Transactions in FormAOC 2 is not applicable. However names of Related Parties and details of transactionswith them have been included in Note no. 28.4 to the financial statements provided in theAnnual Report.
Details of loans / guarantees / investments made
The Company has not extended any loans / guarantee/ or provided any security inconnection with a loan to any other body corporate or person during the year under reviewexcept certain advances in the nature of project advances already detailed elsewhere inthis annual report.
Significant & Material Orders Passed by the Regulators:
During the year 2018 - 19 no significant and material orders were passed by the Courtsor Tribunals. However BSE Limited and National Stock Exchange of India Limited hadsuspended the trading in securities of the Company in both the platforms with effect from9th April 2019 for the default in the Compliance of Regulation 17 andRegulation 18 of the SEBI Listing Regulations.
12. CORPORATE SOCIAL RESPONSIBILTY POLICY: (CSR)
As per Regulation 3(2) of Companies (Corporate Social Responsibility)Rules 2014 thecompany is not meeting criteria as specified in Section 135(1) of the Companies Act 2013for a period of three consecutive financial years and hence the CSR requirements do notapply to your company.
However the Company continues to believe in operating and growing its business in asocially responsible way. This belief forms the core of the CSR policy of the Company thatdrives it to focus on holistic development of its host community and immediate social andenvironmental surroundings qualitatively. Hence although the provisions of Section 135 ofthe Companies Act 2013 do not apply to the company the Company has constituted aCorporate Social Responsibility Committee (CSR Committee) Voluntarily. The CorporateSocial Responsibility Committee of the Board of Directors of the Company are as follows:
Mr.Chandan Kumar Managing Director (Member)
Mr. DVB Prasad Whole Time Director (Member) (Resigned 28th February 2019)
As the Company is not covered under CSR requirements as aforesaid the necessarydisclosures under Rule 8 of the Companies (Corporate Social Responsibility Policy) Rules2014 has not been furnished.
13. SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITION AND REDRESSAL)ACT 2013
The Company has necessary system in place to attend the grievances of women employee asrequired under Sexual Harassment of Women at Workplace (Prevention Prohibition andRedressal) Act 2013. No complaints have been received during the year under review fromany woman employee of the Company. Hence no complaint is outstanding in this regard.
The Directors thank the bankers investing institutions customers dealers vendorsand sub-contractors for their valuable support and assistance.
The Directors wish to place on record their appreciation of the very good work done byall the employees of the Company during the year under review. The Directors also thankthe investors for their continued faith in the Company.