DIRECTORS' REPORT To, The Members, The Directors of Arrow Coated Products Limited present the 23rdAnnual Report on the operations of the Company, together with the Audited Accounts for the year ended 31st March, 2015. Operations: The total income from operations including other income for the financial year under review amounted to Rs.2105.53Lacs as compared to Rs. 1895.59Lacs in the previous year. The Company has incurred net profit of Rs. 655.05Lacs under review after providing for depreciation of Rs. 84.28Lacs and taxation of Rs. 284.68Lacs. After adjustment of brought forward balance of Rs. 346.83Lacs from previous year and after providing for the tax adjustment,Rs. 648.66Lacs has been carried to the Balance Sheet. Transfer to Reserves The Board of Directors has not recommended transfer of any amount of profit to reserves during the year under review. Hence, the entire amount of profit for the year under review has been carried to the Profit and Loss account. Listing of Equity Shares of the Company:- Your Directors are pleased to inform you that Equity Shares of the Company had listed on the National Stock Exchange of India Limited (NSE) on May 21, 2015 under Scrip Code ARROWCOAT. Now the equity shares of the Company are listed on The Bombay Stock Exchange Limited (BSE) and National Stock Exchange of India Limited (NSE). Business outlook and future prospects: Business outlook and future prospects of the Company is discussed in detail in Management Discussion and Analysis Report attached herewith. Dividend Your Directors have recommended a dividend of 25% on Equity Shares of the Company for the year ended 31st March, 2015. Public Deposits Your Company has not accepted any deposits within the meaning of Section 73 of the Companies Act, 2013 and the Companies (Acceptance of Deposits) Rules, 2014. Particulars of Loans, Guarantees or Investments: The company has not given any loans or guarantees covered under the provisions of section 186 of the Companies Act,2013. The details of the investments made by company is given in the notes to the financial statements Internal control systems and their adequacy: 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 defined in the Internal Audit Manual. To maintain its objectivity and independence, the Internal Audit function reports to the Chairman of the Audit Committee of the Board & to the Chairman & Managing Director. 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 action in their respective areas and thereby strengthen the controls. Significant audit observations and recommendations along with corrective actions thereon are presented to the Audit Committee of the Board. Internal Financial Controls The Company has in place adequate internal financial controls with reference to financial statements. During the year, such controls were tested and no reportable material weakness in the design or operation were observed. Corporate Social Responsibility Initiatives The Corporate Social Responsibility Committee (CSR Committee) has formulated and recommended to the Board, a Corporate Social Responsibility Policy (CSR Policy) indicating the activities to be undertaken by the Company, which has been approved by the Board. The CSR Policy may be accessed on the Company's website. No Annual Report on CSR activities is prepared as it is not applicable for the Company for the FY 2014-15. Industrial Relations: During the year under review, your Company enjoyed cordial relationship with workers and employees at all levels. Directors Mr. Neil Patel, Whole Time Director of the Company retire by rotation at the ensuring Annual General Meeting and being eligible, offer himself for re-appointment. Pursuant to Sections 149 , 150 & 152 of the Act, read with Companies (Appointment and qualification of Director) Rules, 2014 along with Schedule IV or re-enactment thereof for the time being in force), the Independent Directors can hold office for a term of Five consecutive years on the Board of your Company. Accordingly, it is proposed to appoint Mr. Haresh Mehta, existing Director as Independent Director for five consecutive years and shall not be liable to retire by rotation. The Company has received requisite notice alongwith requisite deposit from a member proposing his candidature for appointment as an Independent Director and has also received declaration from the aforesaid Independent Director confirming that he meets the criteria of Independence as prescribed under provisions of Section 149(6) of the Companies Act, 2013 and Clause 49 of the Listing Agreement with the Stock Exchanges. Board Evaluation Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Board has carriedout an evaluation of its own performance, the directors individually as well as the evaluation of the working of its Audit, Appointment & Remuneration Committees. The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report. Meetings During the year six Board Meetings and four Audit Committee Meetings were convened and held. The details of which are given in the Corporate Governance Report. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013. Further, a separate Meeting of the Independent Directors of the Company was also held on 30th March, 2015, whereat the prescribed items enumerated under Schedule IV to the Companies Act, 2013 and clause 49 of the Listing Agreement were discussed. Audit Committee The Audit Committee comprises Independent Directors namely of Mr. Harish Mishra and Ms. Suneeta Thakur and Executive Director Mr. Neil Patel . The Chairman of the Committee is Mr. Harish Mishra. All the recommendations made by the Audit Committee were accepted by the Board. Directors' Responsibility Statement In terms of Section 134 (5) of the Companies Act, 2013, the directors would like to state that: i) in the preparation of the annual accounts, the applicable Accounting Standards(except AS-24 regarding discontinuance of operations)had been followed along with proper explanation relating to material departures; ii) the directors had selected such accounting policies and applied them consistently and made judgments and estimates that are responsible and prudent so as to give a true and fair view of the state of affairs of the Company for the financial year ended on 31st March, 2015 and of the profit/loss of the Company for the period under review; iii) the directors had taken proper and sufficient care of 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; iv) the directors had prepared the accounts on a going concern basis. v) 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. vi) The directors had devised proper system to ensure compliance with the provisions of all applicable laws and that such system were adequate and operating effectively. Declaration by Independent Director(s) and Re-appointment, if any All the Independent Directors have submitted their disclosures to the Board that they fulfill all the requirements as stipulated in Section 149(6) of the Companies Act, 2013 so as to qualify themselves to be appointed as Independent Directors under the provisions of the Companies Act, 2013 and the relevant rules. Particulars of Employees and related disclosures The information required pursuant to Section 197 read with Rule 5 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 of the Act, the Report and Financial Statement 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. Related Party Transactions: All related party transactions that were entered into during the financial year were on arm's length basis and were in the ordinary course of the business. There are no materially significant related party transactions made by the company with Promoters, Key Managerial Personnel or other designated persons which may have potential conflict with interest of the company at large. Vigil Mechanism / Whistle Blower Policy: The Vigil Mechanism of the Company, which also in corporates a whistle blower policy in terms of the Listing Agreement, includes an Ethics & Compliance Task Force comprising senior executives of the Company. Protected disclosures can be made by a whistle blower through an e-mail, or dedicated telephone line or a letter to the Task Force or to the Chairman of the Audit Committee. The Policy on vigil mechanism and whistle blower policy may be accessed on the Company's website at the link:<http://arrowcoated.com/Whistle-Blower->Policy.pdf Auditors and Auditors' Report Statutory Auditors M/s. J. A. Rajani & Co., the Statutory Auditors of the Company will hold office till the ensuing Annual General Meeting. As per provisions of Section 139 of the Companies Act, 2013 read with Companies (Audit and Auditors)Rules, 2014, an audit firm can be appointed as Statutory Auditors of the Company only for two terms each term consisting of five consecutive years. Further, the audit firm which has been occupying the office of auditors of the Company for more than seven years prior to implementation of the Companies Act, 2013, are eligible to hold office for additional three years only. /s. J. A. Rajani & Co., the Statutory Auditors of the Company who has already served as auditors of the Company for more than seven years are eligible to hold office of auditors for three years as per provisions of Section 139 of the Companies Act, 2013. Accordingly, M/s. J. A. Rajani & Co, Statutory Auditors of the Company who hold office until the conclusion of the ensuing Annual General Meeting, is proposed to be re-appointed as Statutory Auditors of the Company for the financial year 2015-16. The said Auditor have given a written consent and also issued Certificate pursuant to Section 139 of the Companies Act, 2013. Auditors' Report In respect to observations made by the Auditors in their report, your Directors would like to state as under: 1) The Company has discontinued trading activities in Digital Printing Machine and Digital Signage Cutting Machine and the Management of the Company is of opinion that all the assets related Machine Division will be realised at a value at which they appear in the books of account in aggregate. 2) Regarding over due debts aggregating Rs. 3987.876('000) Lacs, the Company is hopeful of total realisation and hence no provision for the same is made. 3) Regarding payment of undisputed statutory due, we state that the company is in process of payment of the same with appropriate authorites Secretarial Audit: The Board has appointed M/s Rajendra & Co., Practising Company Secretary, to conduct Secretarial Audit for the financial year 201415. The Secretarial Audit Report for the financial year ended March 31, 2015 is annexed herewith marked as ANNEXURE I to this Report. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark. Extract of Annual Return: The details forming part of the extract of the Annual Return in form MGT-9 is annexed herewith as " ANNEXURE II". Corporate Governance Management Discussion and Analysis Report and Report on Corporate Governance along with a certificate from the Auditors of the Company regarding compliance of conditions of Corporate Governance, as stipulated under clause 49 of the Listing Agreement with the Stock Exchange, are attached and form part of this Annual Report. Conservation of Energy, Technology absorption and Foreign Exchange earnings and outgo: (a) Conservation of Energy and Technology Absorption (i) The Company has paid special attention to the conservation of energy as a matter of principal and policy. This has been reflected in the selection of equipment at the project stage.The cost of power has kept to the minimum by optimum operation. Regular preventive maintenance has helped to operate unit efficiently. (ii) Additional investment and proposals, if any, are being implemented for reduction of Conservation of Energy. (iii) Impact of the measures at (i) and (ii) above for reduction of energy consumption and consequent impact on the cost of production of goods is not ascertainable. (b) Foreign Exchange earning and outgo Foreign Exchange earnings - Rs. 1463.41Lacs (previous year Rs. 1511.12Lacs) Foreign Exchange outgo - Rs. 41.41Lacs (previous year Rs. 63.56Lacs) Nomination and Remuneration Policy of Directors, Key Managerial Personnel and Other Employees In adherence of section 178(1) of the Companies Act, 2013, the Board of Directors of the Company in its Meeting held on 11th November, 2014, approved a policy on directors' appointment and remuneration including criteria for determining qualifications, positive attributes, independence of a director and other matters provided u/s 178(3), based on the recommendations of the Nomination and Remuneration Committee. The broad parameters covered under the Policy are - Company Philosophy, Guiding Principles, Nomination of Directors, Remuneration of Directors, Nomination and Remuneration of the Key Managerial Personnel (other than Managing/ Whole-time Directors), Key-Executives and Senior Management and the Remuneration of Other Employees. Subsidiary Companies and Consolidated Financial Statements: The Ministry of Corporate Affairs (MCA) vide General Circular No. 2/2011 No.51/12/2007-CL-III dated 8th February 2011read with General Circular No.3/2011 No. 5/12/2007-CL-III dated 21stFebruary 2011 has granted a general exemption from attaching the Balance Sheet of Subsidiary Companies with holding Company's Balance Sheet, if the holding Company presents in its Annual Report the Consolidated Financial Statements duly audited by its Statutory Auditors. The Company is publishing Consolidated Financial Statements in the Annual Report and accordingly, the Company is not attaching the Balance Sheets of the subsidiary Companies. Further as required under the said circular,a statement of financial information of the Subsidiary Companies viz., Arrow Coated Products (UK) Ltd. and Arrow Secure Technology Pvt. Ltd. and step down subsidiary companies viz,. Advance IP Technologies Ltd. and Arrow Realty Ltd.(subsidiary ofArrow Coated Products (UK) Ltd.) is attached in Form No. AOC-1 in ANNEXURE III to this report. The annual accounts of the above referred subsidiaries and step down subsidiary company shall be made available to the share holders of the company on request and will also be kept open for inspection at the Registered Office of the Company during the office hours on all working days and during the Annual General Meeting and also on the Company's website i.e. www.arrowcoated.com . General Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions on these items during the year under review: 1. No material changes and commitments affecting the financial position of the Company occurred between the end of the financial year to which this financial statements relate on the date of this report. 2. The Company does not have any Risk Management Policy as the elements of risk threatening the Company's existence is very minimal. 3. No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and Company's operations in future. 4. Your Directors further state that during the year under review, there were no cases filed pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. Acknowledgements: Your Directors would like to express their grateful appreciation for the assistance and co-operation received from the Financial Institution, Banks, Government Authorities, Vendors and Shareholders and all organizations connected with its business during the year under review. Your Directors also wish to place a record their deep sense of appreciation for the committed services of Executives, Staff and Workers of the Company. For and on behalf of the Board of Directors Shilpan P. Patel Chairman & Managing Director DIN:00341068 Place: Mumbai Date: 29th May 2015 |