DIRECTORS REPORT To, The Members of Shardul Securities Ltd. 1. Your Directors are pleased to present the Thirtieth Annual Report and the Audited Accounts for the year ended March 31, 2015. 2. Dividend: Your Directors recommend a dividend of Rs. 0.80 per Equity Share on 1,74,98,433 equity shares of Rs.10 each aggregating to Rs. 168.49 Lacs (including dividend tax) for the financial year ended 31st March 2015 which if approved at the ensuing Annual General Meeting, will be paid to (i) all those Equity Shareholders whose names appear in the Register of Members as on 4th September 2015 and (ii) to those whose names as beneficial owners are furnished by the National Securities Depositories Ltd., and Central Depositories Service (India) Ltd. 3. Transfer to Reserves As per requirement of RBI regulations, the Company has transferred Statutory Reserve of Rs.183.51 Lacs during Financial Year ended March 31, 2015. 4. Management Discussions and Analysis Report: (i) Financial Performance: Your Company has posted a net profit of Rs.917.55 lakhs after tax as against net profit of Rs.367.99 lakhs after tax posted during the previous year. The steep increase in profit is due to favorable market conditions prevailed during the year. (ii) Industry Structure and developments: With the advent of the new Government at the Centre and the aggressive policies being pursued by the new Regime, there is a general feeling of optimism as far as the economic outlook is concerned. The Coal auctions and the telecom spectrum auctions have demonstrated the intent of the Government to push the economic growth at a faster pace. Though there are bottlenecks in Land Reforms measures and introduction of GST, the positive stance of the Government has augured well for the Industry and trade in general. The GDP growth is projected to cross 7% for the ensuing year and Foreign Exchange Reserves has crossed $335 billions again. The interest rates are expected to fall providing impetus for growth and the general declining trend in crude prices is likely to help in controlling the inflation. With the opening of the gold imports, there is concern for controlling of current account deficit that has seen the Rupee weakening to some extent, but all these measures are expected to provide a fillip to increase the exports as well,. The possibilities of Tax reforms that could provide the needed confidence amongst the foreign Investors would only augur well for the growth of Indian Capital market in the years to come. Overall, there is optimism in general and India appears to be on the threshold of economic upswing in the near future. As a result of the positive changes, the capital markets was buoyant and continues to show promise in the near future as well. Though the working results of Banking sector in particular was not encouraging, the revised outlook in economy is expected to bring cheers to the market in the next few years to come. (iii) Business Review: As a result of all round optimism, your company did well in coming out with higher growth levels in profits. Your Company has disinvested from its former associate company named Antique Finance Private Limited on 30.03.3015. The subsidiary company viz Shriyam Broking Intermediary Limited will resume their broking operations on full scale after the expiry of the cooling period in August 2015. (iv) Opportunities and Threats: With the GDP expected to grow over 7% in the coming years coupled with many economic reforms in the offing, the outlook in general is very encouraging for trade and Industry and also the Capital markets. The foreign Direct Investment is expected to go up manifolds in Infrastructure, Defense, Railways and telecommunication resulting in more employment opportunities apart from providing the necessary boost for economic growth. But the agricultural sector appears to be going through an uncertain phase and no evidence of major reforms is visible from the Government side that could result in upsurge in food prices. (v) Segment-wise - Product-wise reporting: Your company is mainly engaged in the business of investment activities and all other activities are revolving around the main activity and as such there are no separate reportable segments. (vi) Outlook: With positive developments as above, your company anticipates the overall market conditions to improve providing adequate opportunities to achieve higher levels of growth in the coming years. Your company will take advantage of the potential conditions to improve the shareholders wealth in the best possible manner. (vii) Risks, Concerns and its Management: Your company's activities which are essentially in the capital market segments. The Risk perception of our activity could be discerned as under. Market Risk: Your Company's major investments are mostly in Capital market Instruments like Shares, Mutual funds and Bonds and any volatility could erode the capital value of the investments. No doubt, your Company would keep a close vigil on movement of prices and take appropriate steps to minimize this risk. Interest rate risk: The changes in interest rates by RBI and Banks could result in fluctuations in prices and consequently the income of various investments and borrowings by the company. Your company has put in measures to hedge this risk but this cannot be eliminated totally. Operation Risk: The stock market operations are fraught with certain risks associated with market judgments by operational executives and their decision making process based on certain perceptions prevailing at any given time and these could change suddenly resulting in unexpected adverse positions. As the operations are human dependent, the error factor is always inbuilt in this activity. Some of the risks could be wrong data input, deviations from the rules of SEBI or Exchange due to oversight, lack of coordination amongst the dealing and back office, administrative delays in adhering to schedules etc. This is not exhaustive and your Company strives to minimize this type of risk through adequate training and motivation periodically. (viii) Internal Control Systems and their Adequacy: Your company has in place adequate interest control measures. The requisite Management Information System is already in place to take corrective measures when required. (ix) Human Resources: Your company has adequate trained professionals to manage the affairs of the company in the most prudent manner 5. Subsidiary: Shriyam Broking Intermediary Limited, a wholly owned subsidiary of the company posted improved results as compared to the previous year. If favorable market condition persists this year also then we are hopeful for even better performance in our subsidiary company. 6. Names of Companies which have become or ceased to be its subsidiaries, joint ventures or associate companies during the year During the year under review Antique Finance Private Limited has ceased to be an Associate Company on partial disinvestment of the holding from 30.03.2015 7. Directors: - In accordance with Articles 155 of the Articles of Association of the Company and the provisions of the Companies Act, 2013, Mr. Naveen Chaturvedi (holding Din No. 00004745), director is liable to retire by rotation at the ensuing AGM and is eligible for reappointment. The present term of office of Mr. R. Sundaresan (holding Din No. 00029840), Whole-time Director expires on 15th June 2015. Your Directors approved his re-appointment as Whole-time Director of the Company for a period of three years with effect from 16th June 2015, subject to the approval of shareholders of the Company at the Annual General Meeting At a board meeting held on 11.02.2015 the board had appointed Ms. Monika Agarwal, Company Secretary (holding Din No. 07100711) as an Additional Executive Women Director, who is liable to retire by rotation and would vacate her office at the ensuing Annual General Meeting of the Company and is eligible for re-appointment at the ensuing Annual General Meeting of the Company Necessary resolutions for the appointment /re-appointment of the aforesaid directors have been included in the notice convening the ensuing AGM and details of the proposal for appointment / re-appointment are mentioned in the explanatory statement of the notice. Your directors recommend their appointment / re-appointment. Brief resume of the Directors proposed to be appointed/ reappointed, nature of their experience in specific functions and area and number of companies in which they hold membership/chairmanship of Board Committees as stipulated under clause 49 of the Listing Agreement of Stock Exchange are provided in the Report of Corporate Governance forming part of the Annual Report At the 29th Annual General Meeting of the company held on 5th September, 2014 the company had the existing independent directors Mr. Kantilal Shah (holding DIN 00221939), Mr. Gyandeo Chaturvedi (holding DIN 00004831), Mr. Bhupendra Shroff_(holding DIN 00004596) and Mr. Charul Abuwala (holding DIN 00071142) appointed as a independent directors under the companies Act, 2013 for 5 consecutive years for a term upto the conclusion of the 34th Annual General Meeting. All independent directors have given declaration that they meet the criteria of independence as laid under section 149(6) of the Companies Act, 2013 and clause 49 of listing agreement. 8. Appointments/Resignations of the Key Managerial Personnel Mr. R. Sundaresan, Whole Time Director & CEO; Mr. Saurabh Chaturvedi, Chief Financial Officer and Ms. Monika Agarwal as Company Secretary of the Company are the Key Managerial Personnel as per the provisions of the Companies Act, 2013 and were already in office before the commencement of the Companies Act, 2013. None of the Key Managerial Personnel has resigned or appointed during the year under review except Ms. Monika Agarwal, Company Secretary who was also appointed as additional Executive Director. 9. Board Evaluation Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Board has carried out an evaluation of its own performance, the directors individually as well as the evaluation of the working of its Audit, Nomination & Remuneration Committees. The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report. 10. 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 Remuneration Policy is stated in the Corporate Governance Report. 11. Number of Meetings of the Board Four Meetings of the Board of Directors were held during the year. The details of such meetings forms part of the Corporate Governance Report. 12. Audit Committee The Audit Committee comprises of Independent Directors namely Mr Gyandeo Chaturvedi (Chairman), Mr. Kantilal Shah, Mr Bhupendra Shroff and Mr R Sundaresan (Executive Director) as other members. All the recommendation made by the Audit Committee were accepted by the Board. 13. Corporate Social Responsibility Committee Corporate Social Responsibility Committee comprises of Mr. Gyandeo Chaturvedi (Chairman), Mr R Sundaresan and Mr Naveen Chaturvedi as other members. 14. Extract of Annual Return The details forming part of the extract of the Annual Return in form MGT-9 as required under section 92 of the Companies Act 2013, is included in this Report as Annexure -I and forms as integral part of this Report 15. Taxation: - In opinion of Directors, the provision for Income Tax is made as per the provisions of Income Tax Act, 1961. 16. Cash flow :- As required by Clause 37 of the Listing Agreement, a Cash Flow Statement is appended with this report. 17. 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: a) that in the preparation of the annual financial statements for the year ended March 31, 2015, the applicable accounting standards been followed along with proper explanation relating to material departures, if any; b) that such accounting policies as mentioned in Notes to the Financial Statements have been selected and applied consistently and judgments 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 as at March 31, 2015 and of the profit of the Company for the year ended on that date; c) that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; d) that the annual financial statements have been prepared on a going concern basis; e) that proper internal financial controls were in place and that the financial controls were adequate and were operating effectively. f) that systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively. 18. Statutory Auditors and Auditors' Report: - The Company's Auditors, M/s Rajen Damani & Associates, Chartered Accountants, hold office upto the conclusion of the ensuing Annual General Meeting and eligible for re-appointment. They have confirmed their eligibility to the effect that their re-appointment, if made would be within the prescribed limits under the Act and that they are not disqualified for re-appointment. The notes to the Financial Statement referred to in the Auditors' Report are self-explanatory and, therefore, do not call for any further comments. 19. Secretarial Audit Pursuant to the provisions of Section 204 of the Companies Act, 2013 and rules made thereunder, the Company has appointed M/s Dhirendra Maurya & Associates, Company Secretary in Practice to undertake Secretarial Audit of the Company. The Secretarial Audit Report is included in Annexure -II and forms an integral part of this Report. There is no secretarial audit qualification for the year under review. 20. Internal Audit The Company internal control system is commensurate with its size, scale and complexities of the operations. The internal audit is entrusted to M/s R. Jaitlia & Co Chartered Accountants. The Audit Committee of the Board of Directors and Statutory Auditors are periodically apprised of the internal audit findings and corrective actions taken. 21. Significant and material orders passed by the regulators or courts There are no significant material orders passed by the Regulators / Courts which would impact the going concern status of the Company and its future operations. 22. Corporate Governance: - Report on Corporate Governance stipulated under Clause 49 of the Listing Agreement with Stock Exchange form part of this annual report. A certificate from the auditors of the Company M/s Rajen Damani & Associates, Chartered Accountants confirming compliance of conditions of Corporate Governance as stipulated under aforesaid clause 49 is annexed to and forms part of this Report. 23. Consolidated Accounts: - In accordance with the requirements of Listing Agreement and the Accounting Standard -21 prescribed by the Institute of Chartered Accountants of India, Company had made additional disclosure in respect of Consolidated Financial Statements and Accounting Standard-18 for Related Party transactions. 24. Particulars of loans, guarantees or investments by the Company - Details of Loans, guarantees or investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the notes to Financial Statements. 25. Related Party Transactions: There were no materially significant related party transactions, which could have had a potential conflict with the interests of the Company. Transactions with parties entered by the Company in the normal course of business are periodically placed before the Audit Committee for its omnibus approval and the particulars of contracts entered during the year as per Form AOC-2 is enclosed as Annexure-III. As required under Clause 49, the Company has formulated policy on dealing with Related Party Transactions. The Policy is available on the website of the Company and Weblink of same is: <http://www.shardulsecurities.com/related%20party%20transaction%20policy.pdf> 26. Whistle blower policy and vigil mechanism: The Company has established a whistle blower policy and vigil mechanism for directors and employees to report concerns about unethical behavior, actual or suspected fraud or violation of the company's code of conduct policy. The mechanism provides for adequate safeguards against victimization of directors and employees. None of the personnel have been denied access to the Audit Committee of the Board. The details of Whistle Blower Policy are available on the website of the Company www.shardulsecurities.com 27. Corporate Social Responsibility Committee In compliance with Section 135 of the Companies Act, 2013 read with the Companies (Corporate Social Responsibility Policy) Rules 2014, the Company has established Corporate Social Responsibility (CSR) Committee and statutory disclosures with respect to the CSR Committee and an Annual Report on CSR Activities forms part of this Report as Annexure IV. 28. Disclosure under the Sexual Harassment of Women at Workplace( Prevention, Prohibition and Redressal ) Act, 2013 The Company has in place a requisite policy in line with the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. All employees (permanent, temporary, trainees) are covered under the policy. There was no compliant received from any employee during the financial year 2014-15 and hence no complaint is outstanding as on 31.03.2015 for redressal. 29. Other Statutory information: - a. Particulars of Employees: - The information required pursuant to Section 197 read with rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company, will be provided upon request. In terms of Section 136 of the Act, the reports and accounts are being sent to the members and others entitled thereto, excluding the information on employees' particulars which is available for inspection by the members at the Registered office of the company during business hours on working days of the company up to the date of ensuing Annual General Meeting. If any member is interested in inspecting the same, such member may write to the company secretary and the same will be furnished on request b. Conservation of Energy, Technology Absorption and foreign Exchange earnings and outgo (i) Provisions pertaining to conservation of Energy and Technology Absorption are not applicable or not relevant to the working of Company. The Directors keep themselves acquainted with ongoing seminars and research papers. (ii) The Company has neither earned nor spent any amount by way of Foreign Exchange. c. Deposits: - i) There are no deposits covered under Chapter V of the Act, which has remained unclaimed or claimed but not paid for which information is required to be given in this report. The Company does neither hold any Public Deposits nor is accepting any deposits. ii) The Company has complied with various requirements in terms of the capital adequacy under the guidelines issued by the Reserve Bank of India for the Non-Banking Financial Companies. 30. CEO/CFO Certification:- The Chief Executive Officer and Chief Financial Officer have issued a certificate pursuant to the provisions of Clause 49 of the Listing Agreement certifying that the financial statements do not contain any untrue statement and these statements represent a true and fair view of the Company's affairs. The said certificate is annexed and forms part of the Annual Report. 31. Acknowledgment: - Your Directors appreciate the co-operation and support extended by the Shareholders, Employees, Financial Institutions and Banks. For and on behalf of Board R Sundaresan Executive Director Monika Agarwal Executive Director & Company Secretary Regd. Office: G-12, Tulsiani Chambers 212, Nariman Point Mumbai 400 021. Place : Mumbai Dated : 22nd May 2015 |