DIRECTOR'S REPORT To, The Members Your Directors have pleasure in presenting the 27th Annual Report of the Company together with the Audited Financial Statements for the year ended on 31st March, 2015. 2014-2015 IN RETROSPECTS: During the year under review profitability of the Company was better than previous year. The macro economic factors having positive impact on the business is witnessed, its entire effect and potential is expected to be realize in coming years. Your company is pursuing its way to success through consolidation of its business activities in its area of domain expertise. Manpower Cost: The manpower cost of the Company is reduced due to certain projects completion and is in the line with the established trends. Administrative, Selling & Other Expenses: Administrative, selling and other expenses have established and are in line with the previous years trends after establishment of new projects. Project Expenses: The project expense observed on civil contract expenses and mining contract expenses incurred by the subsidiary are for ongoing road and mining contracts. Interest & Other Financial Charges: Interest and other financial charges have been reduced due to reduction in debt on repayments. The company is looking of opportunities to further reduce interest and financial cost by substitution of low cost debts wherever feasible. Depreciation: Depreciation decrease due to the block of Building (Leasehold renovation) of the holding company is compensated by increase due to addition in fixed assets, hence is almost at the same level for the year. BUSINESS OUTLOOK: The Business Outlook on Domestic demand for the services is very optimistic due to large plans, outlays and reforms to expedite massive infrastructure development push to propel double digit growth rate of economy. Several opportunities are likely to emerge from related sectors like Railways, Airports, Ports, Smart Cities and Housing besides Roadways. A mix of long term strategies and agile responses for short term expansion of market is planned. Your Company shall strive to expand its footprints intensify operations in domestic geographies and widen its client base. Your Company is effectively targeting specific opportunities to maximize stakeholder's wealth. During the year under review, your company was awarded with the following project Independent Engineer Services for four laning of Kashipur-Sitarganj section of NH-74 from Km 175.000 to Km 252.200 in the states of Uttarakhand and Uttar Pradesh under NHDP Phase IV on Design, Build, Finance, Operate and Transfer (DBFOT) Toll Basis. CAPITAL EXPENDITURE: During the year the company has incurred capital expenditure of Rs.16.07 Lacs. The addition is mainly due to Furniture and fixtures and computer and computer softwares. DIVIDEND: In order to conserve the resources for future growth of the Company, your Directors do not recommend dividend for the year under review. PUBLIC DEPOSITS: During the year under review, your Company has not accepted any deposits within the meaning of Section 73 and 76 of the Companies Act, 2013 read with Companies (Acceptance of Deposits) Rules, 2014. SHARE CAPITAL: There was no change in share capital of the Company during the year 2014-15. DIRECTORS AND KEY MANAGERIAL PERSONNEL: In accordance with the provisions of Section 152 of the Companies Act, 2013 read with Companies (Management & Administration) Rules, 2014 and Articles of Association of the Company, Mr. Siddharth P. Shah, Whole-Time Director of the Company retires by rotation at the ensuing Annual General Meeting and being eligible, has offered himself for re-appointment. Ms. Ankita Shah was appointed as an Additional (Non-Executive) Director of the Company w.e.f 28th March, 2015 subject to approval of the shareholders of the Company. The Company has received a notice along with requisite deposit from a member of the Company under Section 160 of Companies Act, 2013 proposing her candidature for the office of Director of the Company. Your Board recommends their appointment/ re-appointment. Mr. Girish Dhabalia resigned from the directorship of the Company w.e.f 23rd May, 2014. Brief resume of the Directors proposed to be appointed/re-appointed as stipulated under Clause 49 of the Listing Agreement entered into with BSE Limited are given in the Notice convening the 27th Annual General Meeting of the Company. The Company has received declaration from all the Independent Directors of the Company confirming that they meet the criteria of independence as prescribed under sub-section (6) of Section 149 of the Companies Act, 2013 and Clause 49 of the Listing Agreement entered with the Stock Exchange. In accordance with the provisions of Section 203 of the Companies Act, 2013 read with Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, Mr. Nileshkumar Jain was appointed as a Chief Financial Officer of the Company w.e.f. 29th May, 2014. During the year under review, Mr. Lucky Popli resigned from the post of Company Secretary of the Company w.e.f. 13thAugust, 2014 and Ms. Shilpa A. Bhargava was appointed as Company Secretary w.e.f. 13th August, 2014. MEETINGS OF THE BOARD: The Board meets at regular intervals to discuss and decide on Company's / business policy and strategy apart from other business of the Board. A tentative annual calendar of the Board and Committee Meetings is informed to the Directors in advance to facilitate them to plan their schedule and to ensure meaningful participation in the meetings. The notice of Board meeting is given well in advance to all the Directors of the Company. Usually, meetings of the Board are held in the registered office of the Company. The agenda of the Board / Committee meetings is circulated 7 days prior to the date of the meeting. The Board met 6 (Six) times during the year as per details given in the Report on Corporate Governance. The intervening gap between the two consecutive meetings was within the period prescribed under the Companies Act, 2013. NUAL EVALUATION OF PERFORMANCE BY THE BOARD: Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the evaluation of the Board and its performance, the directors individually and the working of its Audit, Nomination & Remuneration Committee and Stakeholder's Relationship Committee of the Company was carried out by the Board. A questionnaire to evaluate the performances of each of executive and non-executive and Independent Directors is devised and the directors are evaluated on the basis of this questionnaire. Such questions are prepared considering the business of the Company and the expectations that the Board have from each of the Directors. The evaluation framework for assessing the performance of Directors comprises of the following key areas: i. Attendance of Board Meetings and Board Committee Meetings; ii. Quality of contribution to Board deliberations; iii. Strategic perspectives or inputs regarding future growth of Company and its performance; iv. Providing perspectives and feedback going beyond information provided by the management. COMMITTEES OF THE BOA There are currently following Committees of the Board: 1. Audit Committee 2. Stakeholders' Relationship Committee 3. Nomination and Remuneration Committee 4. Ad-hoc Committee In addition to the aforesaid Committees, the Company also has following Committees: 1. Borrowing Committee 2. Management Committee Details of all the Committees along with their charters, composition and meetings held during the year, are provided in the Report on Corporate Governance. AUDIT COMMITTEE AND ITS COMPOSITION The Audit Committee is duly constituted as per the provisions of Section 177 of the Companies Act, 2013 and Clause 49 of the Listing Agreement. The composition of the Audit Committee is provided in Report on Corporate Governance. APPOINTMENT AND REMUNERATION POLICY: The Board has, on the recommendation of the Nomination & Remuneration Committee framed a policy for selection and appointment of Directors, Senior Management and their remuneration. The details of Remuneration Policy are stated in the Report on Corporate Governance. VIGIL MECHANISM / WHISTLE BLOWER POLICY: The Company has a devised Vigil Mechanism (Whistle Blower) Policy to deal with instance of fraud, mismanagement and unethical behavior, if any. The details of Vigil Mechanism (Whistle Blower) Policy is explained in the Report on Corporate Governance and also posted on the website of the Company. We affirm that during the financial year 2014-15, no employee or director was denied access to the Audit Committee. DIRECTORS' RESPONSIBILITY STATEMENT: In accordance with the provisions of Section 134(3)(c) of the Companies Act, 2013, your directors state and confirm that: a. in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any; b. the directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit of the company for that period; c. the directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets 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 the company and that such internal financial controls are adequate and were operating effectively; and f. the directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively. RISKS AND AREAS OF CONCERN: The Company has laid down a well-defined Risk Management Policy covering the risk mapping, trend analysis, risk exposure, potential impact and risk mitigation process. A detailed exercise is being carried out to identify, evaluate, manage and monitoring of both business and non-business risk. The Board periodically reviews the risks and suggests steps to be taken to control and mitigate the same through a properly defined framework. EXTRACT OF ANNUAL RETURN: An extract of Annual Return in Form MGT-9 is appended to this Report as Annexure - I. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENT The details of loans, guarantee or investment under Section 186 of the Companies Act, 2013 is given under Notes to Accounts of financial statements. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES: All the Related Party Transactions that were entered into during the Financial Year were on Arm's Length Basis and were in Ordinary course of business. Pursuant to Section 134 (3) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014, there are no transactions to be reported under Section 188 (1) of the Companies Act, 2013 and hence Form AOC-2 is not applicable. However, there are certain transactions which are material in nature as per the amended Clause 49 of the Listing Agreement and Company seeks approval of the shareholders for the same. In accordance with the provisions of Clause 49 of the Listing Agreement, the Company has formulated the Related Party Transactions Policy (the Policy) and the same is uploaded on the Company's website i.e. www.artefactprojects.com PARTICULARS OF REMUNERATION: Pursuant to Section 197 of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, details of remuneration paid to all the Directors/Employees and the details of the ratio of remuneration of each Director to the median employee's remuneration is provided in Annexure- II. During the year under review, no employee was in receipt of remuneration exceeding the limits as prescribed under provisions of Section 197 of the Companies Act, 2013 and Rule 5(2) and 5(3) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. PARTICULARS OF CONSERVATION OF ENERGY, TECHONOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO: Information in terms of requirement of clause (m) of Sub-Section (3) of Section 134 of the Companies Act, 2013 regarding Conservation of Energy, Technology Absorption and Foreign Exchange Earning and Outgo, read along with Rule 8 of the Companies (Accounts) Rules, 2014 is as follows: A) Conservation of energy: i. Installation of energy efficient LED lights in site offices instead of HPSV lights. Energy saving devices like Infra-Red motion detectors, light sensors avoid wastage of energy by switching off based upon activity in the area. ii. Use of Solar Energy for consumption at Head office instead of water heater thereby reducing thermal energy usage and conserving energy. B) Technology Absorption and benefits: With the advent of new infrastructure, the IT Systems and software's used by the Company are installed as per international standards. The major technological base includes the following:- • Installation of the contemporary IT Hardware and Infrastructure including GPS System, VPN Connectivity, Professional Audio System, SQL Server Database, Life-Size Video Conferencing, etc. • Use of Internet Based communication and advanced technology has reduced paper communication wherever possible and has resulted in a quicker and transparent information sharing system. • The benefits derived from Technology absorption are higher efficiency, better reliability and availability, reduced maintenance, environment friendly atmosphere and reduction in printing cost. DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANY'S OPERATIONS IN FUTURE: There was no significant or material order was passed by any regulator or court or tribunal, which impacts the going concern status of the Company or will have bearing on company's operations in future. STATUTORY AUDITORS: M/s. Chaturvedi & Shah, Chartered Accountants, Mumbai (FRN: 101720W) and M/s. Naresh Patadia & Co. Chartered Accountants, Nagpur (FRN: 106936W) are appointed as Joint Statutory Auditors in the 26th Annual General Meeting (AGM) to hold office from the conclusion of 26th AGM till the conclusion of 29th AGM to be held for financial year ending 31st March, 2017. Your Directors recommend the ratification of appointment of M/s. Chaturvedi & Shah, Chartered Accountants, Mumbai (FRN: 101720W) and M/s. Naresh Patadia & Co. Chartered Accountants, Nagpur (FRN: 106936W) as Joint Statutory Auditors of the Company and to fix the remuneration for the Financial Year ending 31st March, 2016. AUDITOR'S REPORT: INTERNAL AUDIT: The Company has appointed M/s. Nitin Alshi & Associates, Chartered Accountants, Nagpur (FRN : 116875W) as its Internal Auditor. The Internal Auditor has given his reports on quarterly basis to the Audit Committee. Based on the report of internal audit, management undertakes corrective action in the respective areas and strengthens the levels of Internal Financial and other operational controls. REPLIES TO THE OBSERVATIONS MADE IN THE STATUTORY AUDITORS REPORT: 1. Auditors' comments in their standalone Independent Auditors' Report under Basis for Qualified Opinion and in consolidated Independent Auditors' Report under Basis for Qualified Opinion, read along with note no.16 to the Standalone Financial Statements and note no.17 to the Consolidated Financial Statements respectively, are self-explanatory and do not call for any further comments, however to explain, that the Trade Receivables outstanding are mostly from the Government Authorities including NHAI, MMRDA, etc. who do not have a practice of issuing balance confirmation generally. Further, with the continuous involvement of the management with the customers, the Board of Directors is of the view that the amounts due from such Government Authorities are good for recovery and hence no provision for doubtful debt is required. 2. In reference to note to accounts no. 9.01 to the Standalone Financial Statements the Company has not received any intimation or confirmation of SME status of any Trade Payable. Most of the Trade Payables are due to Individuals, professionals or Traders and as such most of them may not be registered as SME itself. INTERNAL FINANCIAL CONTROL: The Company does not have formal policy, however the Audit Committee evaluates the efficacy and adequacy of financial control system in the Company, its compliance with operating systems, accounting procedures and policies at all locations of the Company and strives to maintain the Standard in Internal Financial Control. SECRETARIAL AUDIT REPORT: Pursuant to the provisions of Section 204 of the Companies Act, 2013, the Secretarial Audit Report received from M/s. Manish Ghia & Associates, Practising Company Secretaries, Mumbai is appended as Annexure – III and forms part of this report. REPORT ON CORPORATE GOVERNANCE: Pursuant to Clause 49 of the Listing Agreement entered into with the BSE Limited, the following have been made a part of the Annual Report and are attached to this report: • Management Discussion and Analysis • Report on Corporate Governance • Certificate regarding compliance with conditions of Corporate Governance SUBSIDIARIES AND ASSOCIATE COMPANIES: A statement on the performance and financial position of the subsidiary and associates of the Company in the prescribed format AOC-1 is enclosed as Annexure - IV at the end of Consolidated Financial Statements of the Company. In accordance with Section 136 of the Companies Act, 2013, the audited financial statements, including the consolidated Financial Statements and related information of the Company are available on our website www.artefactprojects.com . These documents will also be available for inspection at the registered office of the Company and of the subsidiary companies during business hours on all working days and during the Annual General Meeting. INFORMATION UNDER THE SEXUAL HARRASSMENT OF WOMEN WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013: The Company has zero tolerance for sexual harassment at workplace and adopted a Policy on prevention, prohibition and redressal of sexual harassment at workplace in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules thereunder. There was no complaint on sexual harassment during the year under review. QUALITY ASSURANCE: Your company is an ISO 9001:2008 certified and complying Company. The company's focus has been continuing to provide consistent quality services to our clients. We are constantly upgrading the quality systems to improve our services. ENVIRONMENT, SAFETY & HEALTH (ESH): The Company is conscious of its strong corporate reputation and the positive role it can play by focusing on ESH issues. Towards this, the Company has set very exacting standards in ESH management. The Company recognizes the importance of ESH issues in its operations and has established indicators to track performance in these areas. The Company values the safety of its employees and constantly enhances the same for ensuring a safe work place. CONTINGENT LIABILITIES: The Contingent Liabilities of the Company mainly include Bank Guarantees to client as Performance Securities, Corporate Guarantees to Bank as part of loan stipulation. No cash outflow thereof is expected. As a risk mitigation measure and to safeguard your Company's Financial Liability of Bank Guarantees, in case of any remote unlikely possibility of any professional liability, the performance of the Company's services is also fully covered by a comprehensive Professional Liability Insurance Policy. Clarification on Notes to Accounts: In reference to note to accounts no. 4.05 of Standalone Financial Statement the auditors have stated overdue amount on the basis of initial repayment schedule of Term Loans. Thereafter, the Company had applied for renewal and sanction of revised credit facilities which was sanctioned by the Bank in June 2015. The bank had vide its Certificate dated 4th April, 2015 certified an amount of Rs. 40.67 Lacs as Overdue amount of Term Loan due as on 31st March, 2015 vis a vis the amount stated by the auditors. The entire overdue amount and the Balance outstanding against the term loans account were repaid and the term loans accounts were fully extinguished on 29th June 2015. The Company has no overdues in the loans account till date and the Company loans are totally regular for repayment of its obligations till date. Hence no further clarification for the said note of auditors is called for. ACKNOWLEDGEMENT: Your Directors would like to place on record their gratitude for all the guidance and co-operation received from the shareholders, banks and other government and regulatory agencies. Your Directors would also like to take this opportunity to express their appreciation for the hard work and dedicated efforts put in by the employees and look forward to their continued contribution and support. For and on behalf of the Board of Directors Sd/- Manoj B. Shah Chairman & Managing Director Place: Nagpur Date: 14th August, 2015 |