DIRECTORS' REPORT AND MANAGEMENT DISCUSSION AND ANALYSIS Dear Shareholders, Your Directors have pleasure in presenting their Report together with audited accounts for the year ended March 31, 2010. DIVIDEND With a view to conserve the resources, your Directors have not recommended any dividend for the year under review. FINANCIAL PERFORMANCE During the financial year 2009-2010, the Total Income and Profit before Depreciation, Exceptional items and Tax were Rs. 679.36 lacs and Rs.455.54 lacs respectively as against Rs. 110.46 lacs and Rs.94.74 lacs in the previous year. FINANCIAL RESTRUCTURING During the year under review, the Company had successfully implemented the Scheme of Arrangement (the Scheme) between Summit Securities Limited (erstwhile Summit), Brabourne Enterprises Limited (Brabourne), Octav Investments Limited (Octav), CHI Investments Limited (CHI) and the Company and Instant Holdings Limited (Instant) and KEC Holdings Limited (KEC) and the respective shareholders. The Scheme was sanctioned by the High Court of Judicature at Bombay (The Court) on December 18, 2009 and the Court order along with the sanctioned scheme were filed with the Registrar of Companies, Maharashtra (ROC) by the respective companies on December 23, 2009. The Scheme, hence became effective on December 23, 2009. Pursuant to the Scheme:- a) Erstwhile Summit, Brabourne, Octav and CHI have amalgamated with the Company with effect from March 31, 2009, the appointed date on a going concern basis. b) Instant has amalgamated with KEC with effect from March 31, 2009, the appointed date on a going concern basis. c) The Company has allotted 59,22,981 Equity Shares of Rs. 10/- each fully paid-up to the shareholders of erstwhile Summit, Brabourne, Octav and CHI as per the share swap ratio. After the allotment of the said 59,22,981 Equity Shares of Rs.10/-each, the issued share capital of the Company has increased to Rs. 109,017,810/- (Rupees Ten Crore Ninety Lakh Seventeen Thousand Eight Hundred and Ten rupees only) consisting of 10,901,781 (One crore Nine Lakh One Thousand Seven Hundred and Eighty One) equity shares of Rs. 10/- each. The Company has applied for listing of its shares on Bombay Stock Exchange Limited and National Stock Exchange of India Limited on April 5, 2010 and the Company expects to recieve listing approval from the Stock Exchanges shortly. CHANGES IN MEMORANDUM OF ASSOCIATION Registered Office With the approval of the Company Law Board, the registered office of the Company was shifted from New Delhi to Mumbai w.e.f August 3, 2009. This has resulted in economical and efficient management of affairs of the Company and will also help in attaining long term strategic business objectives. Objects Clause The Objects Clause of the Company was altered by inserting a new clause relating to carrying on the business of an investment company. Authorized Share Capital The Company was incorporated with an Authorized Share Capital of Rs. 30,00,00,000 (Rupees Thirty crores) consisting of 3,00,00,000 (Three crore) equity shares of Rs. 10/- each. Pursuant to the Scheme, the Authorized Share Capital of the Company has increased to Rs. 182,00,00,000 (Rupees One Hundred and Eighty Two crores) consisting of 14,20,00,000 (Fourteen crores and Twenty Lakh) equity shares of Rs. 10/-each, 1,50,00,000 (One crore Fifty Lakh) preference shares of Rs. 10/- each and 25,00,000 (Twenty Five Lakh) preference shares of Rs. 100/- each. Name Change The Company was incorporated under the name RPG Itochu Finance Limited on January 30, 1997. Pursuant to the Scheme and as approved by the shareholders in the Extraordinary General Meeting held on March 29, 2010, the name of the Company was changed to Summit Securities Limited w.e.f March 31, 2010 on receipt of fresh certificate of incorporation consequent to change of name from Ministry of Corporate Affairs. INDUSTRY OVERVIEW AND FUTURE OUTLOOK The Indian economy has demonstrated a noteworthy growth despite the global economic crisis and the GDP is expected to grow at more than 9.0% during the current fiscal. The economic reforms are expected to stimulate foreign investment thereby driving the advancement of capital markets. The improvements in equity market infrastructure, governance and financial integration has generated better liquidity in the capital markets. OPPORTUNITIES AND THREATS The equity market of the country is sizable, fast growing and offers huge potential. The economic performance of the country has further given a thrust to the growth of the capital market. However, Indian stock exchanges have experienced significant fluctuations and volatility in the prices of the listed securities recently. Investments being a risky proposition, the inherent risk of fall in the prices and the valuation of the investments on account of external factors is always present. RISKS AND CONCERNS The Company's assets are prone to general risks associated with global and domestic economic conditions, change in Government regulations, tax regimes, other statutes, financial risks and capital market fluctuations in respect of investments held by the company. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY The Company maintains a system of strict internal control, including suitable monitoring procedures. Significant issues are brought to the attention of the Audit Committee of the Directors. The internal controls existing in the company are considered to be adequate vis-a-vis the business requirements. HUMAN RESOURCES The Company is in the process of formulation of the organization structure in line with its amended objects clause. It is also putting in place the various human resource policies and assigning personnel for the same. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO Due to the nature of business, this provision is not applicable to the Company. SUBSIDIARY The Company has obtained necessary exemption from attaching the annual report and accounts of its subsidiary companies, Instant Holdings Limited and Sudarshan Electronics & T. V. Limited. The annual report and accounts of the subsidiary companies are kept at the registered office of the Company and the shareholders desirous of obtaining a copy of annual report and accounts may request the company in writing. However, a statement pursuant to Section 212(8) has been annexed to the annual accounts published in this balance sheet. DIRECTORS During the year under review, Mr. Paras. K. Chowdhary, Mr. Suresh Mathew and Mr. H. N. Singh Rajpoot were appointed as Additional Directors of the Company on February 11, 2010 and they would continue to hold office upto the date of the Annual General Meeting. However, Notice has been received from members proposing the name of Mr. Chowdhary, Mr. Mathew and Mr. Rajpoot as Directors retiring by rotation. Mr. R. C. Agarwala, Mr. A. V. Nerurkar and Mr. Kishore Shete resigned as the Directors of the Company during the year under review. In accordance with the Companies Act, 1956 and the Articles of Association of the Company, Mr. Ramesh D Chandak retires by rotation and being eligible offers himself for re-appointment. EMPLOYEE STATEMENT During the period under review, no employee was in receipt of remuneration which in aggregate was equal or more than that specified under Section 217(2A) of the Companies Act, 1956. CORPORATE GOVERNANCE A report on corporate governance, along with a certificate from the auditors of the Company, regarding the compliance of conditions of corporate governance, as stipulated under Clause 49 of the Listing Agreement, is annexed to this report. DIRECTORS' RESPONSIBILITY STATEMENT Pursuant to Section 217 (2AA) of the Companies Act, 1956, your Directors, to the best of their knowledge and belief confirm that: i) the applicable Accounting Standards have been followed in the preparation of the annual accounts. ii) such accounting policies have been selected and applied consistently and such judgements and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company in the Balance Sheet as at March 31, 2010 and of the Profit and Loss Account for the said financial year viz April 1, 2009 to March 31, 2010. iii) proper and sufficient care has been taken 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. iv) the annual accounts have been prepared on a going concern basis. AUDITORS Messrs N. M. Raiji & Co., statutory auditors of the Company, retire at the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment. ACKNOWLEDGEMENT The Board of Directors wishes to place on record its gratitude for the faith reposed in the company and the co-operation extended by government authorities, shareholders and employees of the company. For and on behalf of the Board of Directors H. N. Singh Director Rajpoot Suresh Mathew Director Mumbai, Date: August 6, 2010. |