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Arvind SmartSpaces Ltd.

BSE: 539301 | NSE: ARVSMART |

Represents Equity.Intra - day transactions are permissible and normal trading is done in this category
Series: EQ | ISIN: INE034S01021 | SECTOR: Infrastructure - General

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Annual Report

For Year :
2018 2016

Director’s Report

The Directors have pleasure in presenting the Tenth Annual Report on the business and operations of the Company together with the Audited Financial Statements of the Company for the financial year ended on 31st March, 2018.

1. FINANCIAL RESULTS :

Highlights of the Financial Results for year are as under: [Rs. in lacs]

Particulars

Standalone

Consolidated

2017-18

2016-17

2017-18

2016-17

Total Revenue

14,216.01

9,484.30

20,224.07

15,874.13

Profit before Finance costs, Depreciation and Amortisation & Tax

5,068.99

3,234.66

6,495.41

4,421.25

Less: Finance Costs

1,465.22

1,158.03

1,539.29

1,158.03

Less : Depreciation and Amortisation

85.25

82.17

109.39

103.34

Profit before share in profit/(loss) of Joint ventures & Tax

3,518.52

1,994.46

4,846.73

3,159.88

Share of Profit/(Loss) from Joint ventures

-

-

(12.74)

69.79

Profit before tax

3518.52

1,994.46

4,833 99

3,229.67

Less : Current Tax

536.16

(37.74)

1,679.47

1095.99

Less : Deferred Tax

4.33

(26.75)

10.44

(31.34)

Profit for the year

2,978.02

2,058.95

3,144.08

2,165.02

Other comprehensive income (net of tax)

(6.45)

(1.49)

(6.45)

(1.49)

Total comprehensive income for the year

2,971.57

2,057.46

3,137.63

2,163.53

Profit/(Loss) attributable to :

Equity holders of the parent

-

-

3,011.05

2,026.57

Non-controlling interest

-

-

126.58

136.96

2. OPERATIONS :

The standalone total revenue of the company stood at Rs.14,216.01 lacs compared to Rs.9,484.30 lacs in the previous year, showing an increase of 50%. Total comprehensive income stood at Rs.2,971.57 lacs as compared to Rs.2,057.46 lacs in the previous fiscal, showing an increase of 44%.

The consolidated total revenue of the company stood at Rs.20,224.07 lacs compared to Rs.15,874.13 lacs in the previous fiscal, showing an increase of 27%. Total comprehensive income stood at Rs.3,137.63 lacs as compared to Rs.2,163.53 lacs in the previous fiscal, showing an increase of 45%.

A detailed analysis of the financial results is given in the Management Discussion and Analysis Report which forms part of this report.

3. DIVIDEND:

Keeping in mind the need to conserve the resources for the future development of the Company, your Directors do not recommended any dividend on Equity Shares for the year under review.

4. TRANSFER TO RESERVES:

During the year under review, no amount is appropriated from Profit and Loss Account and transferred to any Reserve Account.

5. SHARE CAPITAL:

During the year, with the approval of the members at the Extraordinary General Meeting held on 25th January, 2018, the authorised share capital of the Company was increased to Rs.50,00,00,000 by creation of additional 1,50,00,000 (One Crore Fifty lacs) equity shares of Rs.10/-(Rupees Ten).

During the year 2017-18, the Company has allotted 2,83,243 equity shares of Rs.10/- each to the eligible employee/s pursuant to the exercise of stock options granted to them under Employees Stock Option Scheme - 2013 (AIL ESOP 2013) and 31,75,000 equity shares of Rs.10/- each to the warrant holders being promoter and promoter group entities pursuant to exercise of option of conversion of warrants by them under

Tranche II of the Preferential issue made in April 2016. Consequently, the paid up equity share capital of the Company as at 31st March, 2018 stood at Rs.31,86,75,500/- consisting of 3,18,67,550 equity shares of Rs.10/- each.

During the year under review, the Company has neither issued shares with differential voting rights nor sweat equity shares.

6. EMPLOYEE STOCK OPTION SCHEME:

The Company has instituted the Arvind Infrastructure Limited (now Arvind SmartSpaces Limited) - Employees Stock Option Scheme - 2013 (AIL ESOP 2013) to grant equity based incentives to certain eligible employees, directors of the Company and its Subsidiary Companies. During the year under review, the Company has not granted any stock options.

Details of equity shares issued upon exercise of stock options by the eligible employee/s under AIL ESOP 2013 and disclosure in compliance with Section 62 of the Companies Act, 2013 read with Rule 12 of Companies (Share Capital and Debentures) Rules, 2014 and the Securities and Exchange Board of India (Share based Employee Benefits) Regulations, 2014 are set out in Annexure - A to this report.

7. DISCLOSURE UNDER SECTION 67(3)(C) OF THE COMPANIES ACT, 2013:

No disclosure is required under section 67 (3) (c) of the Companies Act, 2013 read with Rule 16(4) of Companies (Share Capital and Debentures) Rules, 2014, in respect of voting rights not exercised directly by the employees of the Company as the provisions of the said section are not applicable.

8. FINANCE :

During the year, the Company has made fresh borrowings of Rs.6,668.73 lacs for its working capital requirements. Total Debt of the Company stands at Rs.16,072.55 lacs as on 31st March, 2018.

9. DEPOSITS:

The Company has not accepted or renewed any deposits in terms of Chapter V of the Companies Act, 2013 read with the Companies (Acceptance of Deposit) Rules, 2014 and hence furnishing the details of deposit in terms of Chapter V of the Companies Act, 2013 is not applicable to the Company. Further there are no outstanding deposits as at 31st March, 2018.

10. PARTICULARS OF LOANS, GUARANTEES, OR INVESTMENTS UNDER SECTION 186:

Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the notes to the Financial Statements.

11. INDIAN ACCOUNTING STANDARDS (IND AS):

In terms of Section 133 of Companies Act 2013 read with Companies (Indian Accounting Standards) Rules 2015, the Company, its subsidiaries, joint venture and associates companies have adopted IND AS w.e.f. 1st April, 2017 and these financial results alongwith the comparatives have been prepared accordingly.

12. CONSOLIDATED FINANCIAL STATEMENTS:

The Consolidated Financial Statements of the Company are prepared in accordance with relevant Indian Accounting Standards issued by the Institute of Chartered Accountants of India and form part of this Annual Report.

13. CORPORATE SOCIAL RESPONSIBILITY INITIATIVES:

Arvind SmartSpaces Limited undertakes “Corporate Social Responsibility'''' (CSR) initiatives through Strategic Help Alliance for Relief to Distressed Area (“SHARDA”) Trust and Narottam Lalbhai Rural Development Fund (“NLRDF”). SHARDA & NLRDF have been active in improving the quality of life of the urban poor & rural poor respectively.

As a part of initiatives under CSR, the Company has undertaken Rural Development Programme at its project sites at Nasmed and Adhana villages at Kalol, Gandhinagar, Gujarat which activities is included in Schedule VII of the Companies Act, 2013. The brief details of Corporate Social Responsibility Policy and the amount spent during the financial year 2017-18 on the said activity is enclosed as Annexure - B.

14. HUMAN RESOURCES:

The Company believes that Human Resources will play a significant role in its future growth. With an unswerving focus on nurturing and retaining talent, the Company provides avenues for learning and development through functional, behavioural and leadership training programs, knowledge exchange conferences, communication channels for information sharing to name a few. The Company provides various opportunities to the employees to develop and hone their skills to take up higher responsibilities in the organization.

A well - defined competency framework outlines the leadership behaviours expected from employees to be successful in Arvind Group. The Company also uses various communication channels to seek employees'' feedback about the overall working environment and the necessary tools and resources they need to perform at their best potential.

Diverse employee engagement initiatives are launched to ensure employees of various age and background continue to be effective in their roles and build meaningful career at Arvind.

The Group''s Corporate Human Resources plays a critical role in company''s talent management process.

15. RISK MANAGEMENT:

The Real Estate market is inherently a cyclical market and is affected by macroeconomics conditions, changes in governmental schemes, changes in supply and demand for products, availability of consumer finance and liquidity. These factors can affect the demand for both our forthcoming and ongoing projects.

The Company has developed and implemented Risk Management Policy. The policy identifies the threat of such events which if occurred will adversely affect either/or, value to shareholders, ability of Company to achieve objectives, ability to implement business strategies, the manner in which the Company operates and reputation as “Risks”. Further, such risk are categorized into Strategic Risks, Operating Risks and Regulatory Risks.

Under the framework, the Company has laid down a Risk Management Policy which defines the process for identification of risks, its assessment, mitigation measures, monitoring and reporting. While the Company, through its employees and Executive Management, continuously assess the identified Risks, the Audit Committee reviews the identified Risks and its mitigation measures annually.

16. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:

The Company has an Internal Control System, commensurate with the size, scale and complexity of its operations. The Company has an Internal Audit department with adequate experience and expertise in internal controls, operating system and procedures. In discharging their role and responsibilities, the department is supported by an external audit firm.

The system is supported by documented policies, guidelines and procedures to monitor business and operational performance which are aimed at ensuring business integrity and promoting operational efficiency.

The Internal Audit Department reviews the adequacy of internal control system in the Company, its compliance with operating systems and laid down policies and procedures. Based on the report of internal audit function, process owners undertake corrective action 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 of Directors from time to time.

17. VIGIL MECHANISM / WHISTLE BLOWER POLICY:

The Company has a vigil mechanism named Whistle Blower Policy to deal with the instances of fraud or mismanagement, if any. The details of the Whistle Blower Policy are explained in the Corporate Governance Report and also posted on the website of the company at https://arvindsmartspaces.com/wp-content/uploads/2018/05/ whistleblower-Policy_AIL.pdf

In order to achieve the purpose of the whistle blower policy of the Company i.e. to conduct the business of the Company in fair and transparent manner by adopting highest standards of professionalism, honesty, integrity and ethical behavior and by developing a culture where it is safe for all its stakeholders to report concerns about any unethical/improper practices and events of misconduct, the Company has organised workshops for its vendors, contractors and employees in Ahmedabad and Bangalore where the Company has its various projects to spread awarness of this platform.

18. SUBSIDIARIES, ASSOCIATES AND JOINT VENTURE COMPANIES:

As on 31st March, 2018, the Company has 9 subsidiaries including one wholly owned subsidiary and 2 Joint venture Companies.

Pursuant to the provisions of Section 129(3) of the Companies Act, 2013 read with Companies (Accounts) Rules, 2014 a statement containing salient features of financial statements of subsidiaries, associates and joint venture Companies in Form AOC-1 is attached to the Financial Statements. The separate audited financial statements in respect of each of the subsidiary shall be kept open for inspection at the Registered Office of the Company. The Company will also make available these documents upon request by any Member of the Company interested in obtaining the same.

The Company has framed a policy for determining material subsidiaries, which has been posted on company''s website at www.arvindsmartspaces.com.

19. DIRECTORS AND KEY MANAGERIAL PERSONNEL:

The Board of Directors consist of 7 Directors out of which 1 is Executive Director, 2 are Non-Executive Non-Independent Directors and 4 are Non-Executive Independent Directors including Woman Director which is in compliance with the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

As per the provisions of Section 152(6) of the Companies Act, 2013 and the Company''s Article of Association, Mr. Sanjay S. Lalbhai (DIN 00008329) shall retire by rotation at the ensuing Annual General Meeting and being eligible, has offered himself for re-appointment as the Director of the Company.

The Independent Directors hold office for a fixed period of five years from the date of their appointment at the Annual General Meeting and are not liable to retire by rotation. In accordance with Section 149(7) of the Companies Act 2013, each Independent Director has given a written declaration to the Company confirming that he/she meets the criteria of independence as mentioned under Section 149(6) of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

None of the Directors are disqualified from being appointed as Directors as specified in section 164 of the Companies Act, 2013. The profile of Directors forms part of the Corporate Governance Report.

As per the provisions of Section 203 of the Companies Act, 2013, Mr. Kamal Singal - Managing Director & CEO, Mr. Mehul Shah - Chief Financial Officer and Mr. Prakash Makwana - Company Secretary are the key managerial personnel of the Company.

20. FORMAL ANNUAL EVALUATION:

Pursuant to the provisions of the Companies Act, 2013 and Regulation 17(10) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Board has carried out an annual performance evaluation of its own performance, the directors individually as well as the evaluation of the working of its Committees on the basis of criteria formulated by the Nomination and Remuneration Committee which are broadly in compliance with the Guidance Note on Board Evaluation issued by SEBI vide its Circular dated 5th January, 2018. The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report.

21. REMUNERATION POLICY :

The Board has, on the recommendation of the Nomination & Remuneration Committee, framed a policy for selection and appointment of Directors, Key Managerial Personnel and Senior Management and their remuneration. The Remuneration Policy is explained in the Corporate Governance Report forming part of this Report.

22. FAMILIARIZATION PROGRAMME FOR THE INDEPENDENT DIRECTORS:

In compliance with the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company has put in place a familiarization programme for the Independent Directors to familiarize them with their role, rights and responsibility as Directors, the working of the Company, nature of the industry in which the Company operates, business model etc. The details of the familiarization programme are explained in the Corporate Governance Report. The same is also posted on the website of the Company at https://arvindsmartspaces.com/wp-content/uploads/ 2018/0s/Familiarisation_Proeramee_for_IDs.pdf

23. NUMBER OF MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES:

A calendar of Board and Committee Meetings is prepared and circulated in advance to the Directors.

During the year under review, 5 meetings of the Board of Directors, 4 meetings of Audit Committee, 1 meeting of Nomination and Remuneration Committee, 4 meetings of Stakeholders'' Relationship Committee, 2 meetings of Corporate Social Responsibility Committee and 16 meetings of Management Committee of Board of Directors were convened and held, the details of which are provided in the Corporate Governance Report forming part of this Report.

24. DIRECTOR’S RESPONSIBILITY STATEMENT:

Pursuant to Section 134(5) of the Companies Act, 2013, the Board of Directors, to the best of their knowledge and ability, confirm that:

(a) in the preparation of the annual accounts for the year ended on 31st March, 2018, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

(b) they have selected such accounting policies and applied them consistently and made judgements 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 and loss of the Company for that period;

(c) they have taken proper and sufficient care towards 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) they have prepared annual accounts on a going concern basis;

(e) they have laid down proper internal financial controls, which are adequate and are operating effectively;

(f) they have devised proper systems to ensure compliance with the provisions of all applicable laws and such systems are adequate and operating effectively.

25. RELATED PARTY TRANSACTIONS:

All transactions with Related Parties are placed before the Audit Committee and the Board for their approval. Prior omnibus approval of the Audit Committee and the Board is obtained for the transactions which are of a foreseen and repetitive nature. The transactions entered into pursuant to the omnibus approval so granted are audited and a statement giving details of all the related party transaction specifying the nature, value and terms and conditions of the transactions is placed before the Audit Committee and the Board of Directors for their approval on a quarterly basis.

All the related party transactions are entered into on arm''s length basis, in the ordinary course of business and are in compliance with the applicable provisions of the Companies Act, 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. There are 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 or which warrants the approval of the shareholders. Accordingly, no transactions are being reported in Form AOC-2 in terms of Section 134 of the Companies Act, 2013 read with Companies (Accounts) Rules, 2014. However, the details of the transactions with Related Party are provided in the Company''s financial statements in accordance with the IND AS - 24.

The Policy on Related Party Transactions as approved by the Board is posted on Company''s website at https://arvindsmartspaces.com/ wp-content/uploads/2018/05/AIL-Related-Partv-Transaction-Policy.pdf

26. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS/COURTS/TRIBUNALS :

There are no significant material orders passed by the Regulators / Courts which would impact the going concern status of the Company and its future operations.

27. AUDITORS:

(a) Statutory Auditor:

In terms of Section 139 of the Companies Act read with the Companies (Audit and Auditors) Rules, 2014, the Members of the Company at its 9th Annual General Meeting held on 14th September, 2017 approved the appointment of M/s. S R B C & Co LLP, Chartered Accountants, having Firm Registration No. 324982E/E300003, as the Statutory Auditors of the Company for the term of 5 years commencing from the 9th Annual General Meeting of the Company till the conclusion of the 14th Annual General Meeting of the Company subject to ratification of their appointment by the Members at every intervening Annual General Meeting.

M/s. S R B C & Co LLP, Statutory Auditors of the Company has furnished a certificate of their eligibility and consent under Section 141 of the Companies Act, 2013 and the rules framed there under. In terms of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Auditors have confirmed that they hold a valid certificate issued by the Peer Review Board of the ICAI. The Board, based on the recommendation of the Audit Committee, recommends the ratification of appointment of M/s. S R B C & Co LLP as the Statutory Auditors of the Company.

The members are requested to ratify the appointment of M/s. S R B C & Co LLP, Chartered Accountants and a Resolution seeking Members'' ratification for the appointment of M/s. S R B C & Co LLP, Chartered Accountants, as Statutory Auditors, is included at item No. 3 of the notice convening the Annual General Meeting.

Further, the Report given by M/s. S R B C & Co LLP, Chartered Accountants on the financial statements along with the notes to the financial statements of the Company for the financial year 2017-2018 is forming part of the Annual Report. There has been no qualification, reservation or adverse remark or disclaimer in their Report. During the year under review, the Auditors had not reported any matter under Section 143(12) of the Act, therefore no detail is required to be disclosed under Section 134 (3)(ca) of the Companies Act.

(b) Cost Auditors:

On the recommendation of the Audit Committee, the Board of Directors appointed M/s Kiran J. Mehta & Co., Cost Accountants, Ahmedabad (Firm Registration No. 000025), as Cost Auditors of the Company for the year 2018-19 under Section 148 of the Companies Act 2013 read with The Companies (Cost Records and Audit) Amendment Rules, 2014. M/s Kiran J. Mehta & Co. have confirmed that they are free from disqualification specified under Section 141 (3) and proviso to Section 148 (3) read with Section 141 (4) of the Companies Act, 2013 and that their appointment meets the requirements of Section 141(3)(g) of the Companies Act, 2013. They have further confirmed their independent status and an arm''s length relationship with the Company.

The remuneration payable to the Cost Auditors is required to be ratified by the Members in a general meeting. Accordingly, a Resolution seeking Members'' ratification for the remuneration payable to M/s Kiran J. Mehta & Co., Cost Auditors is included at item No. 4 of the notice convening the Annual General Meeting.

(c) Secretarial Auditors:

Pursuant to the provisions of Section 204 of the Companies Act, 2013 read with Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/s N. V. Kathiria & Associates, a firm of Company Secretaries in Practice to conduct the Secretarial Audit of the Company for the financial year 2017-18. Report of the Secretarial Audit in Form MR-3 for the financial year 2017-18 is enclosed as Annexure - C. The said Report does not any qualification, reservation or adverse remark or disclaimer.

28. ENHANCING SHAREHOLDERS VALUE:

Your Company believes that its Members are among its most important stakeholders. Accordingly, your Company''s operations are committed to the pursuit of achieving high levels of operating performance and cost competitiveness, consolidating and building for growth, enhancing the productive asset and resource base and nurturing overall corporate reputation. Your Company is also committed to creating value for its other stakeholders by ensuring that its corporate actions positively impact the socio-economic and environmental dimensions and contribute to sustainable growth and development.

29. CORPORATE GOVERNANCE REPORT AND MANAGEMENT DISCUSSION & ANALYSIS:

The Corporate Governance Report and Management Discussion & Analysis, which form part of this Report, is set out as separate Annexure, together with the Certificate from the Practicing Company Secretary regarding compliance of conditions of Corporate Governance as stipulated in Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

30. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO:

Information in accordance with the provisions of Section 134(3)(m) of the Companies Act, 2013 read with Companies (Accounts) Rules, 2014 regarding conservation of energy and technology absorption are not given as the Company has not undertaken any manufacturing activity. There were no foreign Exchange Earnings or Outgo during the period under review except on foreign travelling.

31. EXTRACT OF ANNUAL RETURN IN FORM MGT - 9 :

The details forming part of the extract of Annual Return in form MGT-9 is attached as Annexure - D.

32. PARTICULARS OF EMPLOYEES:

The information required pursuant to Section 197(12) of the Companies Act, 2013 read with Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company, will be provided upon request. In terms of Section 136(1) of the Companies Act, 2013, the Report and Accounts are being sent to the Members and others entitled thereto, excluding the information on employees'' particulars which is available for inspection by the Members at the Registered Office of the Company during business hours on working days of the Company up to the date of the ensuing Annual General Meeting. If any Member is interested in obtaining a copy thereof, such Member may write to the Company Secretary in this regard.

Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Companies Act, 2013 read with Rule 5(1) of the (Appointment and Remuneration of Managerial Personnel) Rules, 2014 as amended, are given in Annexure - E to this report.

33. DISCLOSURE AS PER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013:

The Company has zero tolerance for Sexual Harassment at Workplace and has adopted a policy against sexual harassment in line with the provisions of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the rules framed thereunder.

Arvind Real Estate Internal Complaints Committee (“AREICC”) is formed by the Company which is working under purview of group level Committee i.e. Arvind Internal Complaints Committee (“AICC”), the details of which are declared across the organization. All the members of AREICC are trained by the subject experts on handling the investigations and proceedings as defined in the policy.

During the financial year 2017-18 the Company has not received any complaints on sexual harassment and hence no complaints remain pending as of 31st March, 2018.

34. ACKNOWLEDGEMENTS:

Your Directors take this opportunity to express its sincere thanks to all the employees, customers, suppliers, bankers, investors, lenders, regulatory and government authorities and stock exchanges for their support.

By Order of the Board

Date: 1st May, 2018 Sanjay S. Lalbhai

Place: Ahmedabad Chairman

Director’s Report