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Directors Report of Artefact Projects Ltd.

Mar 31, 2015

Dear Members

The 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.

FINANCIAL RESULTS:

(Rs.in Lacs)

STANDALONE PARTICULARS 2014-2015 2013-2014

Net Income from operation and other income 2102.38 2060.27

Profit before Depreciation& Amortization 533.46 497.47

expenses, Finance Cost and tax

Less: Depreciation and Amortisation Expenses 84.89 86.69

Finance Cost 307.94 336.97

Profit before tax 140.63 73.80

Less: Provision for tax 50.48 64.15

Profit after tax 90.15 9.66

Less: Minority Interest in Income - -

Add: Share in Profits/Loss of Associates - -

Balance of Surplus as per last Balance Sheet 1294.29 1284.63

Balance available for appropriation 1420.61 1294.29

Proposed Rate of dividend - 7.5%

Proposed dividend - 41.44

Previous years' dividend Reversed 41.44** 41.44*

Tax on dividend - 7.04

Tax on Dividend Reversed 7.04** 7.04*

Transfer to General Reserve - -

Balance of profit carried to Balance Sheet 1420.61 1294.29

(Rs.in Lacs)

CONSOLIDATED PARTICULARS 2014-2015 2013-2014

Net Income from operation and other income 4836.05 3794.87

Profit before Depreciation& Amortization 796.12 785.82

expenses, Finance Cost and tax

Less: Depreciation and Amortisation Expenses 96.29 97.26

Finance Cost 407.79 434.90

Profit before tax 292.02 253.66

Less: Provision for tax 102.10 134.10

Profit after tax 189.92 119.56

Less: Minority Interest in Income 0.34 0.22

Add: Share in Profits/Loss of Associates (2.34) (21.66)

Balance of Surplus as per last Balance Sheet 1691.79 1594.13

Balance available for appropriation 1697.15 1691.79

Proposed Rate of dividend - 7.5%

Proposed dividend - 41.44

Previous years' dividend Reversed 41.44** 41.44*

Tax on dividend - 7.04

Tax on Dividend Reversed 7.04** 7.04*

Transfer to General Reserve

Balance of profit carried to Balance Sheet 1697.15 1691.80

* The dividend proposed for the year ended 31st March, 2013 was not approved by the shareholders in Annual General Meeting held on 27th September, 2013; hence provisions provided in the year 2012-13 is reversed in the year 2013-14.

**The dividend proposed for the year ended 31st March, 2014 was not approved by the shareholders in Annual General Meeting held on 29th September, 2014; hence provisions provided in the year 2013-14 is reversed during the year.

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.

ANNUAL 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 BOARD:

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 INVESTMENTS

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.artefactproiects.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.

C) Foreign Exchange Earnings and outgo:

Amount in Rs.

Particulars For the year ended For the year ended 31st March, 2015 31st March, 2014

Foreign exchange earned Nil Nil

Expenditure in foreign currency Nil Nil

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 AT 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 ' 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/- Place: Nagpur Manoj B. Shah Date: 14th August, 2015 Chairman & Managing Director


Mar 31, 2013

To. The Members

The Directors are pleased to present the 25th Annual Report of the Company together with the Audited Financial Statements for the year ended on 31st March, 2013

(in Rs.Lacs) PARTICULARS STANDALONE CONSOLIDATED 2012-2013 2011-2012'' 2012-2013 2011-2012*

Income from operation and other income 1412.54 1758.20 3878.02 3024.10

Profit before Depreciation & Amortisation expenses, Finance 494.50 648.03 720.83 673-89 Cost and tax

Less: Depreciation and Amortisation Expenses 103-93 109.68 113.56 116.16

Finance Cost 322.88 290.51 340.16 299.62

Prof it before tax 67-69 247-84 267-09 258.11

Less: Provision for tax 23.3 71.27 84.53 74-77

Profit after tax 44-39 176.57 182.56 183.34

Add: Pre-Acquisition Loss Transfer to Goodwill 176.82

Less: Minority Interest in Income 0.41

Add: Previous year Minority Interest Transferred to reserve 7.75

Add: Share in Profitsof Associates

Balance of profit as per last Balance Sheet 1288.72 1184-30 1486.00 1190.65

Balance available for appropriation 1333-11 136.87 1641.03 1558.15

Proposed Rate of dividend 7.5% 7.5% 7-5% 7-5%

Add: Deferred Revenue Exp W/off 1.58

Proposed dividend 41-44 41.43 41-44 41-43

Tax on dividend 7.04 6.72 7.04 6.72

Transfer to General Reserve 24-00 24-00

Balance of profit carried to Balance Sheet 1284.63 1288.72 1594-13 1486.00

* Previous year''s figures have been regrouped/rearranged/reclassified wherever necessary.

Your Company has heen able to sustain its profitability even in highly challenging competitive environment. Even though the economic factors have been affecting the business environment globally, your company is pursuing its way to success through various diversifications in its business activities.

Manpower Cost: There is reduction in Manpower Cost [including Consultancy and Retainer ship fees], because a number of projects achieved completion of construction and COD was issued resulting in reduction of manpower as per contract agreement with clients.

Administrative, Selling & Other Expenses) Decrease in administrative expenses is observed mainly due to decrease in Amenities & license fees for the period.

Project Expenses: Increase in project expense is observed mainly due to civil contract expense and mining expenses incurred by the subsidiary for ongoing road and mining projects.

Interest &0ther Financial Charges; Interest and other financial charges have been increased on account of additional term loan of Rs.500 Lacs by the company.

Depreciation: Depreciation has been decreased due to block of computers of the holding company becomes nil. However depreciation has been increased, due to addition in fixed assets, as compared to previous financial year''s depreciation except on computers. The net effect of increase decrease in total depreciation is reduced byRs.2.6o Lacs.

Your Company is striving to secure long term contracts, so as to increase the focus on business where its domain knowledge and experience shall be leveraged to the maximum and improve the operating margins. Company is consciously making efforts to win new project assignments to protect its margins and mitigate the impact of slowdown. The Company is committed to new challenges by strengthened business model. Your Company is poised enough for leveraging opportunities, while adhering to esteemed mission, vision and values.

We are focusing our energies to develop business for sustained long term yields. In addition, there are continuous efforts at improvising efficiencies and delivering excellence in project execution. Our existing position coupled with thrust given by Governments to the infrastructure sector augurs well for the Company. In this challenging environment and capital intensive growth, the company endeavors to increase its order book size and sustained business.

During the year, your company was awarded the following new major projects for consultancy, from NHAI, Independent Engineer services for:

Four laning of Sotapur-Maharashtra/Karanatka border section of NH-9 from km KM 249.00 TO KM 348.800 under NHDP Phase-Ill in the state of Maharashtra on BOT HOLD basis [Package No. NHAI/MH/11019/1/2011) Concessionaire: Coastal Projects Ltd.

Four Laning of Mulbagal-AP/KNT Border section of NH-4 from km 216.912 to km 239.100 in the State of Karnataka to be executed as BOT (Tolt) on DBFOT pattern underNHDP-Phase-lll [Package No. Kar/Phase-lll/IC-s/2012-13) Concessionaire: JSR Constructions

Four Lnnhg Rs.* imrava i-Jnlrpor Section of NH-6 from km 166.725 to km 441-950 [length 275.225 kms) to be exscutad on DRFOT [Toll] pattern under NHDP Pnase-iV in the state of Maharashtra |PkgNo.NHAI/Tech//iioi9/Amt-Gmh/20ii) Concessionaire: L&T Infrastructure Devp. Projects.

Four Laning of Jalgaon-Maharashtra/Gujarat Border Section of NH-6 from km 441-950 to km 650.794 [length 208.844 kms] to be executed on DBFOTITotl] pattern under NHDP Phase-IV in the state of Maharashtra [Package No. NHAl/Tech/11019/Amt-Gmh/Pkg- 11/2011) Concessionaire: L&T Infrastructure Devp, Projects.

Four Laning of Walayar-Vadakkancherry from existing Km. 182.250 to Km. 240.000 (Design Length = 54.00 Km.1 in the State of Kerala under NHDP-Phase-ll to be executed on BOT [Toll) on DBFOT Basis [Package No. Ns-2/B0T/KL-2/Phase - II) Concessionaire: KNR Construction Pvt. Ltd.

Four laning of UP/Haryana border-Yamunanagar-Saha-Barwala-Panchkula Section from km 71.640 to km 179-249 of NH-73 in the State of Haryana on BOTIToll] on DBFOT basis under NHDP II

During the year the company has incurred capital expenditure of f 45-23 Lacs, the addition is mainly due to Buildings Rs.20.54Lacs, Plants & Equipments Rs.14.81 Lacs, & Others Rs.5.63 Lacs.

Keeping in mind the capital requirement for future growth of the Company and to conserve higher resources for operations of the Company, your Directors recommend for approval of Members a dividend of Rs. G.75 (7-5%) per share [previous year Rs.0.75/- (7-5%) per share] on the Companys share capital for the financial year 2012-13. The dividend on the Equity share, if declared as above, would involve total cash outflow ofRs. 41,43 lacs [previous year Rs.41.43 Lacs] and Corporate Dividend Distribution Tax of Rs.7.04 lacs [previous yearRs.6.72lacs).

Your Company has not accepted any deposits within the meaning of Section 58A & 58AA of the Companies Act, 1956 and rules made there under during t he year ended 31" March, 2013. In accordance with the provisions of section 256 of the Companies Act, 1956 and the Articles of Association of the Company, Mr. Ashok Mehta and Mr. Girish DhabaLia, Directors of the Company retires by rotation at the ensuing Annual General Meeting and being eligible, have offered themselves for re-appointment. Your Board recommends for their re-appointment.

The Board of Directors has re-designated Mr. Mohandas S. Adige as an Independent Director of the Company w.e.f. 28''" May, 2013. Mr. Siddharth P. Shah was appointed as an Additional (Executive) Director of the Company for a period of three years with effect from 6''" July, 2013. Pursuant to the provisions of section 26a of the Companies Act, 1956 he holds office upto the ensuing Annual General Meeting of the Company. The Company has received a notice pursuant to Section 257 of the Companies Act, 1956 in writing along with necessary deposits, proposing his candidature for the office of Director of the Company. Your Board recommends for his appointment at the ensuing Annual General Meeting.

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 Annual General Meeting of the Company,

M/s. Chaturvedi & Shah, Chartered Accountants, Mumbai and M/s. Naresh Patadia & Co. Chartered Accountants, Nagpur, Joint Statutory Auditors of your Company hold such office upto the conclusion of the ensuing Annual General Meeting and are eligible for re-appointment. The Company has received letters; from them to the effect that they are willing to continue as Joint Statutory Auditors and if re-appointed, their re-appointment would be within the prescribed limits under section 224 MB] of the Companies Act, 1956.

Your Directors recommend the re-appointment of M/s. Chaturvedi & Shah, Chartered Accountants, Mumbai and M/s. Naresh Patadia & Co., Chartered Accountants, Nagpur, as Joint Statutory Auditors of the Company to hold office from the conclusion of the ensuing Annual General Meeting upto the conclusion of next Annual General Meeting of the Company and to audit financial accounts for the financial year ending on 31" March, 2 OH.

The Company has on 30''" June, 2012 acquired additional 6% Equity Shares of Artefact Infrastructure Limited (AIL) and accordingly AIL has become Wholly Owned Subsidiary of the Company.

The Ministry of Corporate Affairs vide its General Circular No: 2/2011 No. 51/12/2007-CL-lll dated 8''" February 20n read with General Circular No.3/2011 No. 5/12/2007-CL-lll dated 21s'' February 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 company with its Balance Sheet. Further, as required under the said circular, a statement of financial information of the subsidiary company, i.e. ''Artefact Infrastructure Limited'' (AIL) is forming part of this report. The annual accounts of the subsidiary company and the related detailed information will be made available upon request to any member of the Company interested in obtaining the same and are also available for inspection during business hours at the Registered Office of the Company and that of the subsidiary company. The Consolidated Financial Statements presented by the Company include Financial Results of its subsidiary company and are prepared in strict compliance with applicable Accounting Standards

The Contingent liabilities of the Company mainly include Bank Guarantees provided under contract/ legal obligation to clients. No cash outflow is expected.

Asa risk mitigation measure and to safeguard your Company''s Financial Liability far Bank Guarantees, in case o1 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.

The Management Discussion and Analysis Report for the year under review, as stipulated under Clause 49 of the Listing Agreement is presented in a separate section and forms part of this Report.

No employees were in receipt of remuneration exceeding the limits as prescribed under the provisions of Section 217(2A] of the Companies Act, 1956 read with Companies [Particulars of Employees) Rules, 1975, as amended and hence no such particulars are furnished.

PARTICULARS OF CONSERVATION OF ENERGY, TECHONOLOGY ABSORPTION ANO FOREIGN EXCHANGE EARNINGS AND OUTGO:

Al Conservation of energy

In view of the nature of business activities currently being carried out by the Company, your Directors have nothing to report as required under the Companies [Disclosure of Particulars in the Report of Board of Directors] Rules, 1988 with respect to Conservation of Energy.

8] Technology Absorption, Research and Development:

With the advent of new infrastructure, the IT Systems and software''s used by the Company are installed as per international standards. The majortechnological up gradations during the year including the following:-

InstaUation of the contemporary IT Hardware and Infrastructure including GPS System, VPN Connectivity, Professional Audio System, SQLServer Database, Life-Size Video Conferencing, etc.

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 of our services as a matter of routine operating procedure.

The Company is conscious of its strong corporate reputation and the positive roLe it can play by focusing on E5H issues. Towards this, the Company has set very exacting standards in ESH management. The Company recognizes the importance of E5H 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.

None of the Directors of the Company are disqualified to be appointed as Director under the provisions of section 274(1 )[g) of the Companies Act, 1956. The Directors have made necessary disclosures, as required under the various provisions of the Act.

Pursuant to Clause 49 of the Listing Agreement entered with the B5E Limited, a detailed Report on Corporate Governance duly certified by the Statutory Auditors is attached hereto and forms part of this Report.

In accordance with the provisions of Section 217(2AA) of the Companies Act, 1956, with regard to the Directors'' Responsibility Statement, your Directors hereby state and confirm that:

(a) in the preparation of the annual accounts, the applicable Accounting Standards have been followed;

(b) they 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 as at 31s'' March, 2013 and of the prof it of the Company for the year ended on that date;

(c) they have taken proper and sufficient caro for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(d) They have prepared the Annual Accounts on a ''Going Concern'' basis.

The observations made in the Auditors''Report are self-explanatory and therefore, do not catl for any further comments under section 217(3) of the Companies Ac!, 1956. However we wish to explain as follows:

(i) Referring to Opinion of Auditors Report [Standalone] and Para 5 of Auditors'' Report (Consolidated), the outstanding mainly consist of Trade Receivables and Trade Payables which are subject to confirmation. These mostly include Government Authorities including NHAI, who do not have a practice of issuing BaLance Confirmation generally.

i2) Referring to Para 3(ix) (a) of Annexure to Auditors''Report [Standalone], the statutory dues towards TDS and Service Tax were ou tstanding fort he finatization of actual liability towards the respective heads. However the amount towards the ESIC and TDS was then subsequently paid.

(3) Referring to Para 3(ix)(b) of Annexure to Auditors''Report (Standalone), the statutory dues towards income tax were pending before the Commissioner of Income Tax (Appeals).

Your Directors place on record their appreciation of the contribution made by employees at all levels to the continued growth and prosperity of your Company. Your Directors also wish to place on record their appreciation to the shareholders, government agencies, banks and otherfinancial institutions for their continued support. For and on behalf of the Board of Directors

Place: Nagpur Sd/-

Date: 13th August, 2013 Manoj B.Shah

Chairman & Managing Director


Mar 31, 2010

The Directors have pleasure in presenting the Twenty Second Annual Report of the Company together with the Audited statement of Accountforthe year ended 31st March 2010.

FINANCIAL RESULTS: (Rs. Lacs)

PARTICULARS 2008-2009 2009-2010

Gross Receipts 2984.32 2407.51

Non Gash Charges 38.59 35.26

Profit Before Tax 366.37 374.52

Provision for Taxation 151.42 129.05

Net Profit for the Year 214.95 245.47

(Including excess/short tax written back/off)

Accumulated Profit for Appropriations 980.18 1165.27

Proposed Dividend 30.58 30.58

Tax applicable on Proposed Dividend 5.20 5.08



* Previous years figures have been regrouped/ rearranged/ reclassified wherever necessary.

2009 - 2010 IN RETROSPECTS:

The revenue from consultancy (after Service Tax) of the Company has came down to Rs. 21.53 crore i.e. net reduction by 18.50% compared to last year. The major reason being the completion of construction of projects like Chhattisgarh Rural Roads development project, 6 Laning of Vadodra Bharuch (NH 8) in Gujarat, Krishnagiri toThopurghat (NH-7)inTamilnaduandKumarpalayam to Chengapalli(NH-47)in Tamilnadu. At the same time, there was lack of new project awards during the year 2009-10 as very few new project tendered by NHAI and other road development authorities.

The Company managed to increase its profitability and the Profit after Tax (PAT) has increased by about 14.20% owing to following reasons:-

> Reduction in Manpower Cost (including Consultancy and Retainership fees) by 17.20%.This mainly counts on reduction in strength of site staff on project completion.

> Interest and financial expenses also came down by about 14% from Rs. 119.51 lakh to Rs. .102.61 lakh. This is due to complete repayment of mobilization advance received from client by first half of the financial year and interest capitalition for term loan capital work in progress.

CAPITAL EXPENDITURE:

Artefacfs prestigious project at Nagpur "Global Design, Research and Training Centre" is completed and occupied. It is one of the best built commercial infrastructure in city in terms of architecture and availability of facilities.

Your Company has incurred total capital expenditure on the above project to the extent of Rs. 672.98 Lacs during the year which has now taken the cost of project to Rs. 2660.22 Lacs. The company remains committed to its aim at continuous increase in its technological strengths to cater to the ever growing needs.

The debt drawn for the project of Global Design Research and Training Centre was Rs. . 1080.58 Lacs as on 31st March,2010.

DIVIDEND:

The Board subject to the approval of the Members at the ensuing Annual General Meeting, recommended dividend at the stipulated rate of 7.5 % per Share on the 49,77,600, including the 9,00,000 Equity shares allotted on 27th April, 2010 of Rs. 10 each, which would amount to a cash outlay of about Rs. . 43.53 Lacs (including Dividend Distribution Tax thereon).

DIRECTORS:

Mr. Ashok Mehta retires at the ensuing AGM and being eligible offers himself for reappointment.

NOTE ON CONTINGENT LIABILITIES:

The Contingent liabilities of the Company mainly include Bank Guarantees provided under contract/ legal obligation to client. No cash outflow is expected.

The total Bank Guarantee issued till 31s March, 2010 amounted to Rs. 558.34 Lacs with varying maturit schedule. The Maturity schedule of the Bank Guarantee coincides with contract completion duration concluding entirely by 31sl March, 2011.

As a risk mitigation measure and to safeguard your Companys Financial Liability of Bank guarantees, also in the case of any remote unlikely possibility of any professional liability, the performance of the companys services is also fully covered by Professional Liability Insurance Policy.

Besides, your Company has outstanding capital commitments of Rs. .41.63 Lacs as on 31st March, 2010 towards ongoing capital expenditure, being a part of committed capital expenditure.

CORPORATE DEVELOPMENTS:

The year was full of positive developments as the Company successfully underwent Preferential Allotment exercise. The Board of Directors in its meeting dated 27th April, 2010 issued and allotted 9,00,000 Equity Shares and 10,22,400 Equity Convertible Warrants of the Face Value of Rs. 10 each at an issue price ofRs. .101/-each.

In the Extra Ordinary General dated 23rd February 2010, the Shareholders of the Company passed the special resolution authorizing the Board to issue and allot 9,00,000 Equity Shares and 10,22,400 Equity Convertible warrants to the proposed allottees. Subsequently BSE gave its in-principle approval to the issue on 16th April 2010 and in the Board Meeting dated 27th April 2010, the said Equity Shares and Warrants were allotted to the proposed allottees. The Equity Shares have been listed on the BSE vide its approval dated 18,hMay 2010.

The issue was made at an issue price of Rs. 101/- per share/warrant inclusive of Securities Premium of Rs. 91/- each.

Total funds inflow was as under:-

Sr. No. Details Amount (Rs.)

1. Share Application:-

Equity Shares 90,00,000 (9,00,000 Eq. Sh. @ Rs. 10/- each)

2. Securities Premium:-

9,00,000 Eq. Sh. @ Rs. 91/- each 8,19,00,000

inflow on Share Issue 9,09,00,000

3. Equity Convertible Warrants 2,58,15,600 (25% of the 10,22,400 Warrants @ Rs. 101 each)*

Grand Total 11,67,15,600



* Only 25% of the total issue price is payable at the time of issuance of Warrants.

AUDITORS:

M/s Chaturvedi & Shah, Chartered Accountants, Joint Statutory Auditor for the company shall hold office till the conclusion of the ensuing Annual General Meeting and is recommended for re-appointment. Company has received letter from them, to the effect that their re-appointment, if made would be within the prescribed limits under section 224 (l-B) of the Companies Act, 1956.

M/s. Naresh Patadia & Co. Chartered Accountants, Joint statutory auditor for the company shall hold office till the conclusion of the ensuing Annual General Meeting and is recommended for re-appointment. Company has received letter from them, to the effect that their reappointment, if made would be within the prescribed limits under section 224 (l-B) of the Companies Act, 1956.

The resolutions for their appointments will be placed before the shareholders in the ensuing Annual General Meeting for their consideration and approval.

PERSONNEL:

The company has not paid any remuneration exceeding the limits under Section 217(2A) of the Companies Act, 1956.

ENERGY CONSERVATION, TECHONOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO:

Information in accordance with the provisions of Section 217:-

A) Conservation of energy

The operations of the Company do not involve any motive Power. However, even within the present consumption, adequate measures have been taken to conserve and reduce the energy usage, in fact, "Global Design and Research Centre" (also known as Artefact Towers) is a green building norms compliant infrastructure.

B) TechnologyAbsorption:

Your company is continuously marching ahead in the innovative usage of Information Technology for enabling speedy decision making, improving operations efficiency and effective knowledge management. Information technology in the area of project management, cost management and resource management has been one of the key thrust.

Your company has set up a new networking 1 GBPS data as well as increase in network security, speed, efficiency in its new infrastructure. The measures include:-

- Installation of seven numbers of HP Blade servers, storage Racks and UPS

- Installation of Cisco managed switches (Layer2& 3 Switches)

- Cyberrom to asa Cisco firewall

- Layer 3 Cisco Router

- 1 GBPS Cat 6 Exchanged cabling l/o Sockets and Panels for life time warranty.

Apart from the above the company has been continuously upgrading its technology, up-gradation of servers set up of SAN storage for centralized data storage and for increase in data processing speed and enterprise wide solutions.

C) Foreign Exchange Earnings:

The company has not earned any Foreign Exchange during the year.

DEPOSITS:

The company has not accepted any deposits within the meaning of Section 58A& 58AA of the Companies Act, 1956 and / or Rules framed there under.

QUALITYASSURANCE:

Your Company is an ISO 9001:2008 Company. The Company firmly believes in the pursuits of excellence in this ever growing infrastructure sector. Our focus has been on providing consistently quality services to our clients.

ENVIRONMENT, SAFETY & HEALTH (ESH):

Your Company continues to fulfill all its ESH responsibilities at its work places. Relevant and applicable pollution control systems are operational. Continuous efforts to nurture and preserve the environment are vigorously pursued. Regular training program on safety and environment are conducted to increase awareness and commitment for safety and the environment.

STATUTORY DISCLOSURES:

None of the Directors of the Company are disqualified to be appointed as Director under the provisions of section 274 (1) (g) of the Companies Act, 1956. The Directors have made necessary disclosures, as required under the various provisions of the Act and Clause 49 of the Listing Agreement with the Bombay Stock Exchange.

CORPORATE GOVERNANCE:

The Company has been practicing the principles of good corporate governance over the years and it is an ongoing process. Adetailed report on corporate governance is part of this Annual Report. Certificate of the statutory auditors of the Company regarding compliance with the provisions of corporate governance as stipulated in clause 49 of the Listing Agreement is also provided in the corporate governance report.

DIRECTORS" RESPONSIBILITY STATEMENT:

In accordance with the provisions of Section 217(2AA) of the Companies Act, 1956, with regard to the Directors Responsibility Statement, your Directors confirm that:

(a) in the preparation of the annual accounts, the applicable Accounting Standards have been followed;

(b) they 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 ended 31sl March 2010 of the profit of the Company for that year;

(c) they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(d) They have prepared the annual accounts on a going concern basis.

EMPLOYEE RELATIONS:

Artefacts mainstays are its employees and the human resource. Artefact continued to lay stress on organizational development skills. Artefact has created a global level work environment that encourages innovation and is nurturing talents in their area of operation. The Company consists of an able team and experienced professionals. Artefact believes that it will manage to achieve substantial growth with a lean organizational structure.

WELFARE:

The Company while giving paramount importance to Welfare measures makes constant and conscious efforts to improve the welfare of employees and their families.

The Company continues to provide numerous facility and recreational facilities at its Head Office and major project site offices such as library and cultural program etc.

ACKNOWLEDGEMENT:

Your Directors would like to express their grateful appreciation for assistance and co-operation received from the Government, shareholders, Investors, Bankers, other Business constituents and Members during the year under review. Your Directors take this opportunity to recognize and place on record their deep sense of appreciation for the commitment and contribution made by all the employees and look forward to receive the same in future.

For and on behalf of the Board of Directors

Place: Nagpur Sd/-

Date: 14th August, 2010 Manoj B Shah

Managing Director



 
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