Your Directors are pleased to present the Directors' Report of your Company together with the Audited Financial Statements and the Auditors' Report for the period ended 31st March, 2016. The summarized financial results for the Financial Year are as under:

WORKING RESULTS:

FINANCIAL PERFORMANCE:

During the year under review, company has Revenue from operation of Rs. 7181.66 Lakhs (Previous Year: Rs. 6608.21 Lakhs) and Other Income of Rs.1183.20 Lakhs (Previous Year: Rs.733.77 Lakhs), and the Gross Profit/ loss of the Company amounted to Rs.(792.55) Lakhs (Previous Year: Rs.158.04 Lakhs). After providing for Interest & Finance charges, and Depreciation, the Profit/Loss after Tax is Rs.(521.63) Lakhs (Previous Year: Rs.128.85 Lakhs).

(Rs. In Lakhs

DIVIDEND

Your directors do not recommend any Dividend for the financial year ended 31st March 2016 as the company had incurred a loss during the current year. Hence, transfer to general reserves is not applicable.

DEPOSITS

During the year under review, the company didn't raise funds by way of fixed deposits from Public.

Subsidiaries & Joint Ventures/Associates

There are four subsidiaries, four joint ventures, one associate of your Company as on 31st March, 2016. M/s Arihant Griha Limited, Vaikunt Housing Limited, Varenya Constructions Limited and Transperent Heights Real Estate Limited are the wholly-owned subsidiaries of your Company. M/s. Arihant Unitech Realty Projects Limited, North Town Estates Private Limited, Mangalagiri Realty Private Limited (formerly known as Arihant Indo-African Infra Developers and Builders Private Limited) and Escapade Real Estate Private Limited are Joint Venture entities of your Company. M/s. Heirloom Real Estate Private Limited is an Associate Company with 25% stake. Your Company does not have any material non-listed Indian Subsidiary Company. No Company ceases to be Subsidiary and no Company has been made Subsidiary during the year under review. Details of financial statements of subsidiaries is given in AoC-1 as Annexure 1.

Performance, Plans and Prospects of your Company

Your Company's current year Projects:

During the year under review, the Company has executed and handed over 3 residential projects covering an area of 4.55 Lakh square feet. The Company's Project managers are guided by policy and principle in the successful implementation and completion of various projects.

ONGOING PROJECTS

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

Details of Loans, Guarantees and Investments made during the year are given in the notes to the Financial Statements.

DIRECTORS:

Your Directors have played a very important role in the improvement of the Company's Business Performance, Controls, Finances and Accounts, Compliances and Systems. Their active involvement and their critical and supportive monitoring have been of great value. They have brought in a breadth of experience and expertise coupled with commitment to the Company.

A) CHANGES IN DIRECTORS AND KEY MANAGERIAL PERSONNEL

During the period under review, the Board has appointed Mrs. Ann Amelia Gonsalvez as an independent woman Director of the Company In terms of section 149 read with section 152 of the Companies Act 2013, earlier in a meeting of the Board and later in the last AGM of the Company; being an Independent Director she is not liable to retire by rotation.

Mr.Harish Trivedi, Director of the Company resigned from the Board on 25.03.2015.

Mr.Ravikant Chaudry, Mr.Damodaran Arumugam and Mr.Karan Bhasin who were earlier Directors of the Company were appointed as independent directors for a period of 5 years from the date of last AGM pursuant to the provisions of Section 149 of the Companies Act, 2013.

In compliance of provisions of section 203 of the Companies Act, 2013 following persons have been designated as Key Managerial Personnel (KMP) of the company.

B) DECLARATION BY INDEPENDENT DIRECTORS

A declaration by the Independent Directors that they meet the criteria of independence as provided in subsection (6) of Section 149 of the Companies Act, 2013 was taken on record by the Board in their meeting held on January 7, 2015. The terms and conditions of appointment of the Independent Directors are placed on the website of the Company http://www. arihantfoundations.com/investors-details/code-of-conduct/

The Company has also disclosed the Directors' familiarization programme on its website http://www. arihantfoundations.com/investors-details/code-of-conduct/

The independent directors had met on 19.10.2015 and reviewed the performance of non-executive directors, chairman and executive directors and analyzed the flow of information to the Board. All the Independent directors were present at the meeting.

The Board also evaluated its own performance and that of its committees & Independent Directors.

NUMBER OF MEETINGS OF THE BOARD OF DIRECTORS:

During the year, 13(thirteen) Board Meetings and 5 (five) Audit Committee Meetings were convened and held. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013.

AUDIT COMMITTEE:

The Audit Committee had a number of meetings, both formal and internal interactions with the management team in reviewing Accounts, Finances, Compliances and Risks, and in ensuring improved internal reporting, analyses and financial performances. Given the increasing complexities presented by the new Companies Act and other Laws, the Audit Committee has also focused on Compliance and Governance to meet the needs of the present and the future. When necessary, external consultants have been brought in to support the Committee and the Management team.

We are happy to report to you that governance of your Company is of a high order as a result. Further improvements are being implemented.

Nomination and Remuneration Committee has been active in its role as stipulated in Section 178 of the Companies act 2013. The policy of remuneration of the Directors, KMPs and employees are stated elsewhere in the report.

FINANCE

All taxes and statutory dues have been paid. Payment of interest and installments to the Financial Institutions and Banks are being made as per schedule. Your Company had not collected any Fixed Deposits during the Financial Year.

CONSOLIDATED FINANCIAL STATEMENTS

In accordance with the Accounting Standard AS-21 on consolidated financial statements read with Accounting Standard AS-23 on investment in associates, AS-27 on financial reporting of interest in Joint Venture, Auditors Report on the consolidated financial statements are provided in the Annual Report.

REPORT ON CORPORATE GOVERNANCE

Your Company ensures good corporate governance by implementing and complying with the policies, standards set out by Securities and Exchange Board of India and other regulatory authorities. The requisite certificate issued by Mrs. G. Subhasree, Practicing Company Secretary, confirming compliance with the conditions of Corporate Governance as stipulated under Regulation 34(3) of the SEBI (Listing Obligations And Disclosure Requirements) Regulations, 2015, is attached to this Report as Annexure 2 .

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

The necessary details are furnished in Notes to Financial statements no. 34.

PARTICULARS OF EMPLOYEES:

Details of employees covered under Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are provided in Annexure 3 to this annual report. Employees at all levels have performed well.

DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

The Company has in place an Anti-Sexual Harassment Policy in line with the requirements of The Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013. An Internal Complaints Committee (ICC) has been set up by your Company to redress complaints received regarding sexual harassment. All employees (permanent, contractual, temporary, trainees) are covered under this policy. The number of complaints filed during the year was Nil.

RELATED PARTY TRANSACTIONS

All transactions entered into with Related Parties (as defined under the Companies Act, 2013) during the financial year were in the ordinary course of business and on an Arm's length pricing basis, and do not attract the provisions of Section 188 of the Companies Act, 2013 and within the ambit of Reg. 23 of the SEBI (Listing Obligations And Disclosure Requirements) Regulations, 2015. Approval of shareholders is being sought in the current AGM for material related party transactions. Suitable disclosure as required by the Accounting Standards (AS18) has been made in the notes to the Financial Statements.

The Board has approved a policy for related party transactions which has been uploaded on the Company's website. http://www.arihantfoundations. com/investors-details/code-of-conduct.

Details of transactions with related parties are given in Form AOC - 2 which is attached to this report as Annexure 4.

REMUNERATION POLICY OF THE COMPANY

The objective of the remuneration policy of the Company is to ensure that the level and composition of remuneration is reasonable and sufficient to attract, retain and motivate directors of the quality required to run the company successfully; relationship of remuneration to performance is clear and meets appropriate performance benchmarks; and remuneration to directors, key managerial personnel and senior management involves a balance between fixed and incentive pay reflecting short and long-term performance objectives appropriate to the working of the company and its goals.

DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS

There are no significant and material orders passed by the Regulators or Courts or Tribunals which would impact the going concern status of the Company.

DIRECTORS RESPONSIBILITY STATEMENT

To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statements in terms of Section 134(3)(c) of the Companies Act, 2013:

i) in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures.

ii) 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 true and fair view of the state of affairs of the company at the end of the financial year and of the profit or loss of the company for that period.

iii) the directors have taken proper and sufficient care to maintain 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 have prepared the annual accounts on a going concern basis.

v) that proper internal financial controls were in place and that the financial controls were adequate and were operating effectively.

vi) that systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively.

BUSINESS RISK MANAGEMENT

Business Risk Evaluation and Management is an ongoing process within the Organization. The Company has a robust risk management framework to identify, monitor and minimize risks. Pursuant to the requirement of Reg. 17(9) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company has constituted a Business Risk Management.

Committee and the details of the Committee are as under:

VIGIL MECHANISM / WHISTLE BLOWER MECHANISM

The Company has a vigil mechanism to deal with instance of fraud and mismanagement, if any. The details of the Policy are explained in the Corporate Governance Report and also posted on the website of the Company.

CORPORATE SOCIAL RESPONSIBILITY

Obligation to incur expenses Corporate Social Responsibility are not applicable to your Company for the current year. A CSR committee of the Board however has been constituted and a policy on Corporate Social Responsibility Policy has been uploaded on the Company's website http://www.arihantfoundations. com/investors-details/code-of-conduct/

STATEMENT PURSUANT TO LISTING AGREEMENT

Your Company's shares are listed with the National Stock Exchange of India Ltd and the BSE Ltd. We have paid the respective annual listing fees and there are no arrears.

REPORT ON CORPORATE GOVERNANCE

A Report on Corporate governance is annexed herewith as Annexure 5. An extract of Annual Return is attached as Annexure 6.

AUDITORS

The Company has appointed M/s B.P Jain & Co., Chartered Accountants (Firm Registration no. 050105S) in the 22nd Annual General Meeting held on 30th June, 2015 on such remuneration as may be fixed by the Board of Directors subject to ratification by the members every year. The ratification of the auditors is proposed during the current year taking into account the provisions of the Act read with Removal of difficulties Third Order dated 30th June 2016. The Auditors have confirmed their eligibility to the effect that their appointment, if made, would be within the prescribed limits under the Act and that they are not disqualified for appointment.

INTERNAL AUDITORS

The Internal Auditors M/s. Ernst & Young LLP have played an important role in strengthening the Systems and internal Controls within the Company.

SECRETARIAL AUDIT

The Board appointed Mrs. G.Subhasree, Practising Company Secretary, Chennai to conduct Secretarial Audit for the Financial Year 2015-16. The Secretarial Audit Report for the Financial Year ended March 31, 2016 is attached to this Report as Annexure 7.

PARTICULARS PURSUANT TO SECTION 197(12) AND THE RELEVANT RULES OF THE COMPANIES ACT, 2013:

a) The ratio of the remuneration of each Director to the median employee's remuneration for the financial year and such other details as prescribed is as given below:

b) The median remuneration for the period from January 2015 to March 2016 Rs. 6,59,168/

c) The percentage increase in remuneration of the Managing Director, Chief Financial Officer, Company Secretary or Manager, if any, in the financial year:

Mr. Kamal Lunawath - (Managing Director) : N.A. Mr. Vimal Lunawath - (Chief Financial Officer) : N.A.

Mrs. J.Meenakshi - (Company Secretary) : N.A.

d) The percentage increase in the median remuneration of employees in the financial year: Nil

e) The number of permanent employees on the rolls of company: 29

f) Average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and any exceptional circumstances for increase in the managerial remuneration:

Increase in remuneration is based on remuneration policy of the Company.

g) If remuneration is as per the remuneration policy of the company: Yes

PERSONNEL

The Board wishes to place on record its appreciation of all employees of the Company, for their wholehearted efforts and contribution to the performance and growth of the Company.

ACKNOWLEDGEMENTS

Your Directors place on record their gratitude for the support and co- operation received from CMDA, Corporation of Chennai, Banks and Financial Institutions, Customers, Suppliers and Shareholders and for their continued support. The Board also wish to place its sincere appreciation to the dedicated and committed team of employees.

For and on behalf of the Board of Directors

ARIHANT FOUNDATIONS & HOUSING LIMITED

Sd/- Sd/-

(KAMAL LUNAWATH) (VIMAL LUNAWATH)

Place: Chennai Managing Director Whole time Director

Date: 26.05.2016 DIN: 00087324 DIN: 00586269