Directors' Report Dear Members, 1. Your Directors have pleasure in presenting their 23rd Annual Report on the Businesses and Operations of the Company together with Audited Accounts for the financial year ending on March 31, 2015. 2.State of Company's Affair Your Company's performance during the financial year under report has increased in terms of production, sales quantity as well as turnover. During the financial year under report, the Company achieved a gross turnover of Rs. 28,028.69 Lacs compared to Rs. 21,319.43 Lacs during the previous financial year. The profit before depreciation and tax increased from Rs. 443.62 Lacs to Rs. 780.75 Lacs. Net profit after tax increased from Rs. 264.51 Lacs to Rs. 467.13 Lacs. In view of infrastructural development of growing Indian economy, your Directors are hopeful of even more increase in demand for Company's products resulting into satisfactory top & bottom line growth of the Company in near future. Detailed analysis as to review of Company's operational and financial performance is given in Management Discussion & Analysis Report. 3. Dividend Your Directors are pleased to recommend a dividend of Rs. 1/- (10%) per equity share on 30,18,300 equity shares of the Company of Rs. 10/- each for the financial year 2014-15. Total amount of dividend shall be Rs. 30,18,300/- and dividend distribution tax would be Rs. 6,03,482/-. 4. Listing With Regional Stock Exchanges The equity shares of the Company are listed with the Ahmedabad Stock Exchange Limited and the Calcutta Stock Exchange Limited and the listing fees has been duly and timely paid to both the Stock Exchanges for the financial year 2014-15 & 2015-16 as well. With Bombay Stock Exchange 30,18,300 equity shares of the Company having face value of Rs. 10/- each got listed with the Bombay Stock Exchange ("BSE") w.e.f. May 28, 2015 under the "Direct Listing Route." Initial as well as Annual Listing fees have been duly and timely paid by the Company to BSE. 5. Details in Respect of Adequacy of Internal Financial Control with Reference to the Financial Statements The Company has an Internal Control System,commensurate with the size, scale and complexity of its operations. The scope and authority of the internal audit function is well defined. To maintain its objectivity and independence, the internal audit function reports to the Chairman of the Audit Committee of the Board. The Internal Audit Department monitors and evaluates the efficacy and adequacy of internal control system in the Company, its compliance with operating systems, accounting procedures and policies at all locations of the Company. Based on the report of internal audit function, process owners undertake corrective actions in their respective areas and thereby strengthen the controls. Significant audit observations and corrective actions thereon are presented to the Audit Committee of the Board. 6. Details of Subsidiary / Joint Venture / Associate Companies The Company doesn't have any Subsidiary, Joint Venture or Associate Company. Group Companies to the Arfin India Limited includes M/s. Mahendra Aluminium Company Limited & M/s. Krish Ferro Industries Private Limited (Formerly known as Arfin Capital Limited). 7. Material Changes and Commitment, if any, Affecting the Financial Position of the Company No material changes and commitments affecting the financial position of the Company occurred between the end of the financial year to which these Financial Statements relate and on the date of this report. Further, during the financial year under report, no significant or material orders have been passed by any of the regulators or courts or tribunals impacting the going concern status and operations of the Company in future. 8. Deposits The details relating to deposits covered under Chapter V of the Companies Act, 2013: (a) accepted and repaid during the year: NIL (b) remained unpaid or unclaimed as at end of the year: NIL (c) whether there has been any default in repayment of deposits or payment of interest thereon during the year and if so, number of such cases and the total amount involved: No (i) at the beginning of the year: Not Applicable (ii) maximum during the year: Not Applicable (iii) at the end of the year: Not Applicable The details of deposits which are not in compliance with the requirements of Chapter V of the Act: NIL. 9. Statutory Auditors M/s. Raman M. Jain & Co., Statutory Auditors of the Company were re-appointed at the 22nd Annual General Meeting of the Company for a period of three years (including transitional period). In accordance with the provisions of Section 139 of the Companies Act, 2013 & Rules framed there under, the Board recommends the members to ratify their appointment up to the conclusion of next Annual General Meeting. 10. Secretarial Auditor Mr. Kamlesh M. Shah, Proprietor of M/s. Kamlesh M. Shah & Co., Practicing Company Secretary, Ahmedabad has been appointed by the Board of Directors as Secretarial Auditor of your Company for the financial year ended on March 31, 2015 & March 31, 2016. 11. Statutory and Secretarial Audit Report The Statutory Auditor's Report is enclosed herewith, which is self explanatory and no comment from the Board of Directors of the Company is required as no qualification, reservation or adverse remark or disclaimer is given by the Statutory Auditor. Further, the Board wishes to explain for the observations / comments given by the Secretarial Auditor in his report that the Company has passed various necessary resolutions for borrowings and the same have been properly recorded in the minutes books. However, difficulty in interpretation of provisions of new Companies Act, 2013, absence of appointment of Company Secretary and Compliance Officer on the Management of the Company for a part of financial year under report and lack of proper secretarial guidance led to some non compliances, for which the Company is in process of taking corrective measures. 12. Cost Auditors M/s. C. B. Modh & Co., Cost Accountants, Ahmedabad has been appointed as Cost Auditors by the Board of Directors for auditing the cost accounts of your Company for the financial year ended on March 31, 2015 & March 31, 2016. 13. Share Capital During the financial year 2014-15, the Company reissued 1,55,000 equity shares at Rs. 40/- per share which includes Rs. 10/- per share for face value & Rs. 30/-per share being securities premium amount. These equity shares were originally forfeited on October 21, 2013. During the financial year under report, the Company didn't make any issue of equity shares with differential voting rights, sweat equity shares or under employee stock options scheme. Further, the Company didn't make any provision of money for purchase of its own shares by employees or by trustees for the benefit of employees. 14. Directors & Key Managerial Personnel I. Cessation As a part of restructuring of the Board of Group Companies of M/s. Arfin India Limited, Mrs. Pushpaben M. Shah (DIN: 00182754), resigned as the Director of the Company w.e.f. November 22, 2014. Mrs. Pushpaben M. Shah joined the Board in April, 2000 as a Director of the Company. The Board places on record its sincere appreciation for the valuable services rendered by Mrs. Pushpaben M. Shah during her tenure. II. Retirement by Rotation In accordance with the provisions of Section 152(6) of the Companies Act, 2013 and Article 125 & 126 of the existing Articles of Association of the Company, Mr. Jatin M. Shah, (DIN: 00182683) will retire by rotation at the ensuing Annual General Meeting of the Company and being eligible, offers himself for re-appoi ntment. The Board recommends his appointment. In this connection, it is clarified that as per the present Articles of Association of the Company, the Managing Director and Whole Time Director are not liable to retire by rotation. However, there are only 3 Non Independent Directors out of which one is Managing Director and another is Whole Time Director. Thus, to comply with the provisions of Section 152(6) of the said Act, both the Executive Directors who are otherwise Non Rotational Directors, have consented to be liable to retire by rotation and Mr. Jatin M. Shah being longest in office would retire by rotation. III. Appointment Mr. Mahendra R. Shah as an Executive Chairman and Whole Time Director During the financial year under report, Mr. Mahendra R. Shah (DIN: 00182746), has been designated as an Executive Chairman and Whole Time Director of the Company w.e.f. October 1, 2014 for a period of five years ending on March 31, 2019. Mr. Jatin M. Shah as a Managing Director During the financial year under report, Mr. Jatin M. Shah (DIN: 00182683), has been designated as the Managing Director of the Company w.e.f. October 1, 2014 for a period of five years ending on March 31, 2019. Company Secretary and Compliance Officer During the financial year under report, Ms. Riddhi N. Shah was appointed as Company Secretary and was designated as Compliance Officer of the Company w.e.f. November 26, 2014. Due to some personal reasons, she has resigned and thus ceases to be Company Secretary of the Company w.e.f. July 20, 2015. Mr. Durgesh D. Soni, a member of the Institute of Company Secretaries of India (ICSI) was appointed in her place as Company Secretary and Compliance Officer of the Company at the meeting of Board of Directors held on July 20, 2015. IV. Appointment of Independent Directors With coming into force of the Companies Act, 2013, the Board appointed Mr. Ramesh Babulal Shah (DIN: 00955337), Mr. Dilip Kumar Daga (DIN: 02918995) & Ms. Mona Chhapia (DIN: 07035947) as Independent Directors of the Company with effect from August 25, 2014, August 25, 2014 & December 6, 2014 respectively. The shareholders are requested to approve their appointment at this ensuing Annual General Meeting. The Independent Directors have submitted the declaration of independence, as required pursuant to Section 149(7) of the Companies Act, 2013, stating that they meet the criteria of Independence as provided under Section 149(6). The profile of the Independent Directors forms part of the Corporate Governance Report. Further, a separate meeting of Independent Directors of the Company was held on March 27, 2015 in accordance with the provisions of Clause VII of the Schedule IV of the Companies Act, 2013. V. Evaluation of the Board's Performance During the financial year under report, exercise of evaluation was carried out through a structured evaluation process covering various aspects of the Boards' functioning such as composition of the Board & Committee(s), experience & competencies, performance of specific duties & obligations, governance issues etc. Separate exercise was carried out to evaluate the performance of individual Directors including the Board's Chairman who were evaluated on parameters such as attendance, contribution at the meetings and otherwise, independent judgments, safeguarding of minority shareholders' interest etc. The evaluation of the Independent Directors was carried out by the entire Board excluding Independent Directors and that of the Chairman and the Non-Independent Directors was carried out by the Independent Directors. The Directors were satisfied with the evaluation results, which reflected the overall engagement of the Board and its Committees with the Company. This may be considered as a statement under provisions of Section 134(3)(p) of the Companies Act, 2013 and Rule 8(4) of the Companies (Accounts) Rules, 2014. Thus, the Board of your Company comprises of a proper mixture of Executive and Non Executive Directors. VI. Remuneration Policy The Company follows a policy on remuneration of Directors and Senior Management Employees. The policy has been approved by the Nomination & Remuneration Committee and the Board. More details on the same are given in the Corporate Governance Report. The policy on Remuneration of Directors, Key Managerial Personnel and Senior Employees can be accessed on website of the Company at following web link: <http://www.arfin.co.in/pdf/policies/remuneration-of->directors-key-managerial-personnel-and-senior-employees-policy.pdf VII. Woman Director In terms of the provisions of Section 149 of the Companies Act, 2013 and revised Clause 49 of the Listing Agreement, your Company has appointed Ms. Mona Chhapia as Woman Director on the Board of the Company during the financial year under report. She is also the Independent Director of the Company. 15. Number of Meetings of Board of Directors The Board of Directors met 23 times during the financial year 2014-15. The details of the Board meetings and the attendance of the Directors are provided in the Corporate Governance Report. 16. Composition of Audit Committee The Board has constituted an Audit Committee which comprises of Mr. Dilip Kumar Daga as the Chairman and Mr. Rameshkumar Babulal Shah & Mr. Mahendra R. Shah as members. Further, all the recommendations were accepted by the Board of Directors during the period under report. More details on the committee are given in the Corporate Governance Report. 17. Related Party Transactions All the related party transactions are entered on arm's length basis, in ordinary course of business and in compliance with the applicable provisions of the Companies Act, 2013 and the Listing Agreement. There were no materially significant related party transactions made by the Company with Promoters, Directors or Key Managerial Personnel etc. which may have potential conflict with the interest of the Company at large. All the related party transactions are presented to the Audit Committee and the Board. Omnibus approval is obtained from Audit Committee & Board of Directors for the transactions which are foreseen and repetitive in nature. Particulars of contracts or arrangements with related parties referred in Section 188(1) of the Companies Act, 2013 & Rules framed there under in Form AOC-2 is enclosed herewith this Board's Report as Annexure - 3. The Policy on Related Party Transactions as approved by the Board has been uploaded on the Company's website at the web link: <http://www.arfin.co.in/pdf/policies/related-party->transactions-policy.pdf 18. Establishment of Vigil Mechanism / Whistle Blower Policy for Directors and Employees The Company promotes ethical behavior in all its business activities and has put in place at the Board meeting held on May 22, 2015, a mechanism wherein the employees are free to report illegal or unethical behavior, actual or suspected fraud or violation of the Company's Codes of Conduct or Corporate Governance Policies or any improper activity to the Chairman of the Audit Committee of the Company or Chairman of the Board. The Whistle Blower Policy has been appropriately communicated within the Company. Under the Whistle Blower Policy, the confidentiality of those reporting violation(s) is protected and they are not subject to any discriminatory practices. No personnel have been denied access to the Audit Committee. The said Vigil Mechanism / Whistle Blower Policy has been uploaded on website of the Company and can be accessed at following web link: <http://www.arfin.co.in/pdf/policies/vigil-mechanism->or-whistle-blower-policy.pdf 19. Nomination and Remuneration Committee The Board has constituted a Nomination and Remuneration Committee which comprises of Mr. Rameshkumar Babulal Shah as the Chairman and Mr. Dilip Kumar Daga & Mr. Shantilal Mehta as members. The policy, required to be formulated by the Nomination and Remuneration Committee, under Section 178(3) of the Companies Act, 2013 is uploaded on the Company's website at the web link: <http://www.arfin.co.in/pdf/policies/remuneration-of->directors-key-managerial-personnel-and-senior-employees-policy.pdf More details on the Committee are given in the Corporate Governance Report. 20. Stakeholder Relationship Committee The Board has constituted a Stakeholder Relationship Committee which comprises of Mr. Shantilal Mehta as the Chairman and Mr. Mahendra R. Shah & Mr. Durgesh D. Soni as members. The above Committee has been reconstituted and Mr. Durgesh D. Soni has taken place as a member of the Committee with effect from July 20, 2015, as approved by the Board at its meeting held on that day. More details on the Committee are given in the Corporate Governance Report. 21. Internal Complaints Committee (ICC) At the Board meeting held on May 22, 2015, the Company has constituted a committee named "Internal Complaints Committee" at its Registered / Corporate Office. The said committee has been formulated both to comply with provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and Rules framed there under and to provide the employees safety against harassment, if any. A policy adopted by the Company for Prevention of Sexual Harassment is available on its website at following web link. <http://www.arfin.co.in/pdf/policies/prevention-of->sexual-harassment-policy.pdf During the financial year ended on March 31, 2015 the Company did not receive any complaints pertaining to sexual harassment. 22. Loans, Guarantees or Investments under Section 186 of the Companies Act, 2013 The Company did not grant / make any Loan or Investment under provisions of Section 186 of the Companies Act, 2013 and Rules framed there under during the financial year under report. 23. Managerial Remuneration The Company follows a policy on remuneration of Directors, KMP and Senior Management Employees. The Company has paid remuneration to the Executive as well as Non Executive Directors during the financial year under report. More details on Managerial Remuneration are given in the Corporate Governance Report. 24. Management Discussion & Analysis Report A detailed analysis of the Company's performance is made in the Management Discussion and Analysis Report, which forms part of this Annual Report. 25. Corporate Governance Report Your Company practices a culture that is built on core values and ethical governance practices and is committed to transparency in all its dealings. A Report on Corporate Governance along with a Certificate from Statutory Auditors of the Company regarding compliance of conditions of Corporate Governance as stipulated under revised Clause 49 of the Listing Agreement is annexed to this Report. 26. Code of Conduct The Board has laid down a Code of Conduct ("Code") for Board Members, Managerial Personnel and for Senior Management Employees of the Company. This Code has been posted on the Company's website at <http://arfin.co.in/code->conduct.html. All the Board Members and Senior Management Personnel have affirmed compliance with this Code. A declaration signed by the Managing Director to this effect forms part of the Corporate Governance Report. The Board has also laid down a Code of Conduct for Independent Directors pursuant to Section 149(8) and Schedule IV to the Companies Act, 2013 via terms an d conditions for ap pointment of Independent Directors, which is a guide to professional conduct for Independent Directors and has been uploaded on the website of the Company at following web link:<http://arfin.co.in/pdf/disclosures/terms-and-conditions-of-appointment-of-independent-directors.pdf>-of-appointment-of-independent-directors.pdf 27. Risk Management Policy The Board of Directors has developed and implemented Risk Management Policy for the Company. It has identified and assessed internal and external risks, with potential impact and likelihood that may impact the Company in achieving its strategic objectives or may threaten its existence. The Policy lays down procedures for risk identification, description, evaluation, estimation, reporting and development of action plan. The policy includes identification of elements of risks which mainly covers Strategic Risk, Operational Risk, Financial Risk and Hazardous Risks. The same can be accessed from the website of the Company at following web link: <http://www.arfin.co.in/pdf/policies/risk-management-policy.pdf>-policy.pdf More details on the risk and concern factors are given in the Management Discussion & Analysis Report. 28. Corporate Social Responsibility During the financial year under report, the Company did not attract any criteria required for Corporate Social Responsibility. Accordingly, the provisions of Section 135 of the Companies Act, 2013 including Rules framed there under relating to Corporate Social Responsibility including but not limited to constitution of Committee therein and implementation of Policy on Corporate Social Responsibility are not applicable to the Company. 29. Directors' Responsibility Statement Pursuant to the provisions of Section 134(3)(c) of the Companies Act, 2013, your Directors, based on the representations received from the head of the various departments, and after due enquiry, confirm that: (a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures; (b) the Directors had 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 for the financial year ending on March 31, 2015 and of the profit and loss of the Company for that period; (c) the Directors had 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 had prepared the annual accounts on a going concern basis; (e) the Directors, had 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 had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively. 30. Disclosure u/s 164(2) of the Companies Act, 2013 The Company has received the disclosure in Form DIR - 8 from its Directors being appointed or re-appointed and has noted that none of the Directors are disqualified under Section 164(2) of the Companies Act, 2013 read with Rule 14(1) of Companies (Appointment and Qualification of Directors) Rules, 2014. 31. Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo The particulars as to conservation of energy, technology absorption and foreign exchange earnings and outgo required to be disclosed in terms of Section 134 of the Companies Act, 2013 & Rule 8 of the Companies (Accounts) Rules, 2014 are given separately as Annexure - 1. 32. Extract of Annual Return The Extract of Annual Return in the Form MGT-9 is enclosed herewith as Annexure - 2. 33. Form AOC-2 Form for disclosure of particulars of contracts / arrangements entered into by the Company with related parties referred in Section 188(1) of the Companies Act, 2013 is enclosed herewith as Annexure - 3. 34. Disclosure as per Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 The details as per Rule 5(1) of the aforesaid Rule are enclosed herewith as Annexure - 4. Further, there is no employee falling under the criteria of Rule 5(2) of the Companies (Appointment & Remuneration of Managerial Personnel) Rules, 2014 for receipt of remuneration stated therein and thus the statement under the said Sub-rule is not required to be given. 35. Secretarial Audit Report The Secretarial Audit Report given by Mr. Kamlesh M. Shah, Proprietor of M/s. Kamlesh M. Shah & Co., Practicing Company Secretary (C.P No.: 2072) is enclosed herewith as Annexure - 5. 36. Disclaimer Though, the applicability of adherence of provisions of revised Clause 49 of the Listing Agreement being not mandated, for the time being, for the Companies falling under the criteria of having Paid up Equity Share Capital not exceeding Rs. 10 Crore and Net Worth not exceeding Rs. 25 Crore as on the last date of previous financial year, as stated under the circular CIR/CFD/POLICY CELL/7/2014 dated September 15, 2014 issued by the Securities and Exchange Board of India, the Board of Directors of your Company has still made sufficient efforts to provide the information in the Directors' Report and in the entire Annual Report, to the extent possible as a matter of prudence and good governance and to disclose as maximum possible information as the Company should / can. 37. Acknowledgments Your Directors express their deep sense of gratitude to the Bankers, Central and State Governments and their departments and the local authorities for their continued guidance and support. We would also like to place on record our sincere appreciation for the dedication, commitment and hard work put in by every member of the Arfin family. The Board further expresses that the credit of the success of Arfin goes to each & every member of Arfin family equally. The Management is deeply grateful for the confidence and faith that the shareholders & all other stakeholders have always reposed in them. For and on Behalf of the Board of Directors Mahendra R. Shah (Chairman) (DIN: 00182746) Place: Ahmedabad Date: July 20, 2015 |