Directors' Report Dear Members, Your Directors have pleasure in presenting the 37th Annual Report and Audited Accounts of your Company for the Financial Year ended 30th June, 2015 Financial Performance and state of Company affairs. Information on the operational and financial performance of the Company is given in the Management Discussion and Analysis Report, which is annexed to the Report and is in accordance with Clause 49 of the Listing Agreement. Transfer to Reserves No transfers were made to the reserves in the current financial year. Change in Financial Year In compliance of section 2(41) of the New Companies Act 2013, the financial year of the Company shall be changed from 1st July to 30th June to 1st April to 31st March of every year. Accordingly the Board has decided the financial year 2015-2016 shall be for a period of 9 months beginning from 1st July 2015 and ending on 31st March 2016. Dividend With a view to conserve the resources your Directors do not recommend any dividend for the financial year 20142015. Material changes and Commitments There are no material changes and or commitments affecting the financial position of the Company, between the end of the financial year, i.e. 30th June, 2015 and the date of the report. Corporate Social Responsibility (CSR) Committee In accordance with the provisions of Section 135 of the Companies Act, 2013, the Board of Directors of the Company has constituted a Corporate Social Responsibility Committee (CSR Committee). As on 29th August 2015, this Committee comprises of following three Directors: Corporate Governance At Centrum, we ensure that we evolve and follow the corporate governance guidelines and best practices sincerely to not just boost long-term shareholder value, but to also respect minority rights. We consider it our inherent responsibility to disclose timely and accurate information regarding financials and performance, as well as leadership and governance of the Company Listing Fees At present the Company's Equity shares are listed on BSE Limited and the Company has paid listing fees upto the financial year 2015-16. Pursuant to Clause 49 of the Listing Agreement of the Stock Exchange, the Management Discussion & Analysis Report, the Corporate Governance Report and the Auditors' Certificate regarding compliance of condition of Corporate Governance are made a part of the Annual Report. Number of meetings of the Board During the year ended 30th June, 2015, the Board met five times. The details of the Board meetings and the attendance of the Directors at the meetings are provided in the Corporate Governance Report, which forms a part of this Annual Report Selection of New Directors and Board Membership Criteria. The Nomination and Remuneration Committee works with the Board to determine the appropriate characteristic skills, and experience for the Board as a whole, and its individual members with the objective of having a Board with a diverse background and experience in business. Characteristic expected of all Directors include independence, integrity, high personal and professional ethics, sound business judgment, ability to participate constructively in deliberation and willingness to exercise authority in a collective manner. The policies regarding it are provided in Annexure III to this report. Remuneration Policy The Company has framed a Remuneration Policy pursuant to Clause 49 of the Listing Agreement and Section 178 of the Companies Act, 2013. The Policy is provided in Annexure IV to this report. Familiarisation Programme for Independent Directors In terms of Clause 49 of the Listing Agreement, the Company is required to familiarize its Independent Directors with their roles, rights and responsibilities in the Company etc. through interactions and various programmes. The Independent Directors are also required to undertake appropriate induction and regularly update and refresh their skills, knowledge and familiarity with the Company in terms of Schedule IV of the Companies Act, 2013. The Policy on the Company's Familiarisation Programme for IDs can be accessed at <http://centrum.co.in/policies.php> Board evaluation The Board of Directors has carried out an annual evaluation of its own performance, Board committees and individual Directors pursuant to the provisions of the Act. The performance of the Board shall be evaluated by the Board after seeking inputs from all the Directors on the basis of the criteria such as the Board composition and structure, effectiveness of Board processes, information and functioning, etc. The performance of the committees shall be evaluated by the Board after seeking inputs from the committee members on the basis of the criteria such as the composition of committees, effectiveness of committee meetings, etc. The Board and the Nomination and Remuneration Committee ("NRC") will review the performance of the individual Directors on the basis of the criteria such as the contribution of the individual director to the Board and committee meetings like preparedness on the issues to be discussed, meaningful and constructive contribution and inputs in meetings, etc. In a separate meeting of independent Directors, performance of non-independent directors, performance of the Board as a whole and performance of the Chairman shall be evaluated, taking into account the views of executive directors and non-executive directors. The same shall be discussed in the Board meeting that followed the meeting of the independent Directors, at which the performance of the Board, its committees and individual directors shall also be discussed. Independent Directors Declaration The Company has received the necessary declaration from each Independent Director in accordance with Section 149(7) of the Companies Act, 2013, that he/she meets the criteria of independence as laid out in subsection (6) of Section 149 of the Companies Act, 2013 and Clause 49 of the Listing Agreement. Directors and Key Managerial Personnel Induction The Board of Directors of the Company has appointed Mr. Pankaj Thapar as an Additional Director with effect from 13th February 2015, Mr. Sanjiv Bhasin was appointed as additional director in the capacity of Managing Director & CEO with effect from 6th July 2015. Mr. Subhash Kutte was appointed as an Additional Director in the capacity of Independent Director with effect from 6th July 2015 and Mr. Manish Verma was appointed as an Additional Director, designated in the capacity of Independent Director with effect from 29th August 2015. The approval of members is being sought for appointment of Mr. Pankaj Thapar as a Non- Executive Director, Mr. Sanjiv Bhasin as a Managing Director & CEO and Mr. Subhash Kutte as an Independent Director through Postal ballot. The approval of members is being sought for the appointment of Mr. Manish Verma, as an Independent Director at the forthcoming Annual General Meeting. Resignation During the year, Mr. Dhanpal Jhaveri resigned from the Board with effect from 28th January, 2015, Mr. Rashid Kidwai resigned from the Board with effect from 13th February, 2015, Mr. Ameet Naik resigned from the Board with effect from 26th March, 2015 and Mr. P R Kalyanaraman, Managing Director of the Company resigned from the Board with effect from 6th July 2015. The Board of Directors place on record their deep appreciation for the enormous contribution made by Mr. Dhanpal Jhaveri, Mr. Rashid Kidwai, Mr. Ameet Naik and Mr. P R Kalyanaraman. The Company and the Board benefited immensely from their vast experience, knowledge and insights of the Industry and operation of the Company. Re-appointment As per the provision of the Companies Act 2013, Mr. Manmohan Shetty and Mr. Rishad Byramjee retire by rotation at the ensuing Annual General Meeting and, being eligible, offer themselves for re-appointment. A Brief profile of all the Directors seeking appointment and re-appointment at the ensuing Annual General Meeting, Nature of their expertise and names of the other Companies in which they hold Directorship and Committee Membership is provided as a part of the notice of the ensuing Annual General Meeting. Key Managerial Personnel Mr. Sanjiv Bhasin has been appointed as the Managing Director & CEO of the Company with effect from 06th July, 2015. Mr. Shailendra Apte was appointed as a Chief Financial Officer (CFO) with effect from 1st August 2015. Mr. Alpesh Shah is the Company Secretary of the Company. Directors' Responsibility Statement Based on the framework of internal financial controls established and maintained by the Company, work performed by the internal, statutory, secretarial auditors and external agencies, the reviews performed by Management and the relevant Board Committees, the Board, with the concurrence of the Audit Committee, is of the opinion that the Company's internal financial controls are adequate and effective. Accordingly, pursuant to Section 134(5) of the Companies Act, 2013, the Board of Directors, to the best of their knowledge and ability, confirm: i. that in the preparation of the annual accounts, the applicable accounting standards have been followed and there are no material departures; ii. that we had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that period. iii that proper and sufficient care had been taken for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; iv. that the annual accounts have been prepared on a going concern basis; v. that internal financial controls have been laid down and the same are adequate and are operating effectively; and vi. that proper systems to ensure compliance with the provisions of all applicable laws have been laid down and that such systems were adequate and operating effectively. Audit Committee The primary objective of the Audit Committee is to monitor and provide effective supervision of the Management's financial reporting process, to ensure accurate and timely disclosures with the highest levels of transparency, integrity and quality of financial reporting. The Committee met 4 (four) times during the year, the details of which are given in the Corporate Governance Report that forms part of this Annual Report. As of the date of this report, the Committee is comprised of: Related Party Transactions All related party transactions that were entered during the financial year were on arm's length basis and were in the ordinary course of business. There are no materially significant related party transactions made by the Company with Promoters, Directors, Key Managerial Personnel or other designated persons which may have a potential conflict with the interest of the Company at large. Accordingly, particulars of contracts or arrangements with related party referred to in section 188(1) along with the justification for entering into such contract or arrangement in form AOC-2 does not form part of the report. DISCLOSURE OF INTERNAL FINANCIAL CONTROLS The internal financial controls with reference to financial statements as designed and implemented by the Company are adequate. During the financial year under review, no material or serious observations have been received from the Internal Auditors of the Company for inefficiency or inadequacy of such controls. Risk Management Policy. The Board of Directors of the Company has approved the Risk Management Policy and Guidelines wherein all material risks faced by the Company are identified and assessed. With ups and downs, volatility and fluctuations in the financial business in which the Company operates, Company is exposed to various risks and uncertainties in the normal course of business. Since such variations can cause deviations in the results from operations and affect the financials of the company, the focus on risk management continues to be high. Centrum's risk management strategy has product neutrality, speed of trade execution, reliability of access and delivery of service at its core. Multiple products and diverse revenue streams enable the Company to ensure continued offering of customized solutions to suit clients needs at all times. Energy Conservation Measures, Technology Absorption and R & D Efforts and Foreign Exchange Earnings and Outgo In view of the nature of activities which are being carried out by the Company, the disclosure concerning energy conservation measures, technology absorption and R & D efforts are not applicable to the Company. Foreign Exchange Earnings and Outgo The details of foreign exchange earnings and outgo during the year under review are provided at Item No. 32(a) & 32(b)(Notes forming part of financial statements) of the Audited Accounts. The members are requested to refer to the said Note for details in this regard. SUBSIDIARIES, JOINT VENTURES AND ASSOCIATES During the period, The Company, for strategic reasons and to better align its various businesses, has reorganized the Centrum Group Structure by transferring its entire equity investments in its subsidiaries viz. Centrum Wealth Management Limited, Centrum Financial Services Limited and CentrumDirect Limited to a newly formed subsidiary viz. Centrum Retail Services Limited and has also incorporated two new subsidiaries namely Centrum Infrastructure Advisory Limited and Centrum Defence Systems Limited. The Company through the mix of primary and secondary issuance diluted 19.81% of its stake in Centrum Retail Services Limited. Company presently holds 80.19% in Centrum Retail Services Limited. Company has also divested its 100 % investment in Centrum Infrastructure and Realty Limited. Subsequent to balance sheet date, Centrum Wealth Management Limited which is a step down subsidiary has incorporated a subsidiary named Acorn Fund Consultants Private Limited and the Associate Company i.e BCB Finance Limited has become a subsidiary of CentrumDirect Limited (Step down subsidiary of Centrum capital Limited) with effect from 5th August 2015 as CentrumDirect Limited has acquired additional equity stake of 26.15% in the open offer of total capital of BCB Finance Limited. Company has Ten Subsidiaries (including step down Subsidiaries), one Joint Venture and three Associates as on 30th June 2015. During the Year under review, the Board of Directors (the Board) reviewed the affairs of material subsidiaries. Company has in accordance with section 129(3) of the Companies Act, 2013, prepared consolidated financial statements of Company and all its subsidiaries, which form part of the Annual Report. Further the Report on the performance and financial position of each of the subsidiary, associate and joint venture and salient features of the financial statements in the prescribed form AOC-1 is annexed to this report (Annexure VI) 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 and audited financial statements of each of the subsidiary will be available on our website www. centrum.co.in. These documents will also be available for inspection during business hours at the Registered Office and Corporate office of the Company. Auditors and Auditors Report i. Statutory Auditors The members of the Company at the 36th Annual General Meeting of the Company held on 31st December, 2014, had reappointed M/s Haribhakti & Co LLP, Chartered Accountants as a Statutory Auditor, till the conclusion of the 41st Annual General Meeting of the Company to be held in the year 2019, subject to ratification of their appointment at every Annual General Meeting. A resolution for the ratification of the appointment of M/s Haribhakti & Co LLP, Chartered Accountants as Auditors is being placed for the approval of the members at the forthcoming Annual General Meeting. With Regards the Emphasis of Matter in the Auditors' Report, we wish to submit as under: Based on the financial estimates and business rationale provided by the management for its exposure Centrum Capital Holdings LLC (CCH LLC) confirming fair valuation higher than the cost of Investments of Rs.194.28 Lakhs in CCH LLC the management believes that no impairment provision is required in respect of said Investments along with loans advanced amounting to Rs. 62.73 Lakhs to CCH LLC. b) Based on recent developments, as informed by the debtor & the status of ongoing lawsuit, the above amount in view of management is fully recoverable & accordingly the same need not be subject to provisioning. ii. Secretarial Audit: The Board had appointed Mr. Umesh P. Maskeri, Practicing Company Secretary, as the Secretarial Auditor, to conduct secretarial audit for the year ended 30th June, 2015. The report of the Secretarial Auditor is provided as Annexure II to this report. In connection with the auditor's observation in the Report, it is clarified as under: a. Mr. Shailendra Apte has been appointed as the Chief Financial Officer (CFO) of the Company w.e.f. 1st August, 2015. b. Mr. Subhash Kutte was appointed as an Independent Director of the Company w.e.f. 6th July, 2015. c. Mr. Manish Verma was appointed as an Independent Director of the Company w.e.f 29th August, 2015. d. Company is in the process of appointing Principal Officer and is initiating other necessary action under the PMLA. Vigil mechanism/ Whistle Blower Policy The Company has a Whistle Blower Policy/Vigil Mechanism for the employee to report genuine concerns/ grievances. The Policy is uploaded on the Company's website at the link: <http://www.centrum.co.in/policies>. php. The Policy provides for adequate safeguards against the victimisation of the employees who use the vigil mechanism. The vigil mechanism is overseen by the Audit Committee. Particulars of Employees and Remuneration 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 the employees of the Company, will be provided upon request. In terms of section 136 of the Act, the Report and Accounts are being sent to the Members and others entitled thereto, excluding the information on employees particulars which are available for inspection by the Members at the Registered Office and Corporate Office of the Company during business hours on working days of the Company upto 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. Extract of annual return As provided under Section 92(3) of the Act, the extract of annual return in Form MGT-9 is given in Annexure I. Particulars of loans, guarantees and investments Particulars of loans, guarantees given and investments made during the year in accordance with Section 186 of the Companies Act, 2013 is annexed to this report [Annexure V] General. Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transaction on these items during the year under review. 1. Details relating to Deposits covered under Chapter V of the Act. 2. Issue of equity shares with differential rights as to dividend, voting or otherwise. 3. Issue of equity shares (including sweat equity shares) and ESOS to employees of the Company under any scheme. 4. 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. 5. There were no instance of non-exercising of voting rights in respect of shares purchased directly by the employees under a scheme pursuant to section 67(3) of the Act read with Rule 16(4) of Companies (Share Capital and Debenture) Rules, 2014 and hence no information has been furnished. Your Director 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. Human Resource and Employee Relationship. There is an ongoing emphasis on building a progressive Human Resources culture within the organization. Structured initiatives that foster motivation, team work and result-orientation continue to be addressed. Cautionary Statement Statements in the Board's Report and the Management Discussion & Analysis describing the Company's objectives, expectations or forecasts may be forward-looking within the meaning of applicable securities laws and regulations. Actual results may differ materially from those expressed in the statement. Important factors that could influence the Company's operations include global and domestic demand and supply conditions, changes in government regulations, tax laws, economic developments within the country and such other factors that may affect the markets/industry in which the company operates. Acknowledgement: Your Directors would like to express their sincere appreciation of the co-operation and assistance received from Shareholders, Bankers, regulatory bodies and other business constituents during the year under review. Your Directors also wish to place on record their deep sense of appreciation for the commitment displayed by all executives, officers and staff, resulting in successful performance of the Company during the year. Your Directors look forward to the continued support of all stakeholders in the future. For and on behalf of the Board of Directors sd/- Sanjiv Bhasin Managing Director & CEO DIN : 00001575 sd/- Chandir Gidwani Non Executive Chairman DIN : 00011916 Place: Mumbai Date: 29th August, 2015 |