DIRECTORS' REPORT TO THE MEMBERS Your Directors present before you the Twenty-Eighth Annual Report and the Audited Accounts for the year ended 31st March, 2015 REVIEW OF OPERATIONS Economic conditions during the past year were surprisingly weaker compared to expectations. Despite that, the company was able to squeeze out better performance in its margins. Although turnover has fallen, due to fewer trading opportunities, the operating profits did not drop as much. In fact, profits would have been lower only by 16% had it not been for the provisions for bad loans. We continue to be optimistic for the future, pinning our hopes for economic recovery on the new Central Government. A wave of reforms will bring with it significant business opportunities, of which the financial services sector will be a major beneficiary. TRANSFER TO GENERAL RESERVES There was no transfer to General Reserves. The accumulated profit has been retained in the Profit and Loss Account, which forms a part of the total Reserves and Surplus. MATERIAL CHANGES AND COMMITMENTS AFTER THE END OF FINANCIAL YEAR There have been no material changes and commitments, if any, affecting the financial position of the Company, which have occurred between the end of the financial year and date of the report. DIVIDEND With a view to conserve resources and to be prepared for financial opportunities, your Directors do not recommend any dividend for the Financial Year 2014-15. INFORMATION IN ACCORDANCE WITH SECTION 134 (3) OF THE ACT READ WITH COMPANIES (ACCOUNTS) RULES, 2014: In view of the nature of activities of the Company, the particulars regarding conservation of energy and technology absorption are not given. There was no foreign exchange earnings and outgo during the year under report. NUMBER OF MEETINGS OF BOARD OF DIRECTORS: The Board meets at regular intervals to discuss and decide on business policy and strategy apart from other board business. During the year, eleven Board meetings were convened and held. The maximum interval between the meetings did not exceed the period prescribed under the Companies Act, 2013 and Listing Agreement. DIRECTORS AND KEY MANAGERIAL PERSONNEL: Mr. Anil Kumar Bagri (DIN No. 00014338), Director of the company retires by rotation at the ensuing Annual General Meeting and is eligible for re-appointment. Ms. Smita Naresh Pachisia (DIN 07141023) has been appointed as an Additional Director with effect from 31st March, 2015 by the Board of Directors of the Company and Independent Director in compliance with Section 149 of the Companies Act, 2013. By virtue of Section 161(1) of the Companies Act, 2013 she would hold office upto the date of the ensuing Annual General Meeting. Necessary resolution seeking approval of members for her appointment has been incorporated in the Notice of the ensuing Annual General Meeting of the company along with brief details about her. The Company has received notice under Section 160 of the Act along with the requisite deposit proposing her appointment. Mr. Naresh Pachisia (DIN: 00015207), ceased to be the Director of the Company with effect from 31st March, 2015. The Board placed on record the sincere appreciation of the valuable advice rendered by him during his tenure as Director of the company. Pursuant to the provisions of Section 203 of the Act, 2013, the Company appointed the following persons as Key Managerial Personnel effective from 15th December, 2014: Mr. Indra Kumar Bagri - Chief Executive Officer Mr. Narendra Kumar Thanvi - Chief Financial Officer Ms. Kirti Mool Chand Jain - Company Secretary DECLARATION FROM INDEPENDENT DIRECTORS Mr. Vimal Damani (DIN: 00014486) and Mrs. Smita Naresh Pachisia (DIN 07141023) who are independent directors, have submitted a declaration that each of them meets the criteria of independence as provided in sub Section (6) of Section 149 of the Act and there has been no change in the circumstances which may affect their status as independent director during the year. In the opinion of the Board, the independent directors possess appropriate balance of skills, experience and knowledge, as required. COMMITTEES OF THE BOARD During the year, in accordance with the Companies Act, 2013, the Board has constituted/ reconstituted Committees. Currently the Board has the following Committees: Audit Committee Nomination & Remuneration Committee Share Transfer & Grievance Committee AUDIT COMMITTEE OF BOARD OF DIRECTORS The Audit committee of the Board of directors of the Company consists of Mr. Vimal Damani, Ms. Smita Pachisia and Mr. Anil Kumar Bagri as members. NOMINATION AND REMUNERATION POLICY The Board of Directors has framed a policy for appointment and remuneration of Directors, Key Managerial Personnel and Senior Management of the Company in compliance with Section 178 of the Companies Act, 2013. As per the policy, the Nomination and Remuneration Committee recommend to the Board appointment, re-appointment of Directors, and Key Managerial Personnel and determination, fixation and revision of their remuneration and is approved by the Board of Directors, subject to the approval of shareholders, wherever necessary. The objective and broad framework of the Company's Remuneration Policy is to consider and determine the remuneration, based on the performance and growth of the company, the current trends in the industry, the experience of the appointee, their past performances and other relevant factors. VIGIL MECHANISM The Company has formulated and published a Whistle Blower Policy to provide a mechanism ("Vigil Mechanism") for employees including directors of the Company to report genuine concerns. The provisions of this policy are in line with the provisions of the Section 177 (9) of the Act. POLICY ON DIRECTORS' APPOINTMENT AND REMUNERATION AND CRITERIA FOR INDEPENDENT DIRECTORS The Remuneration Policy for directors and senior management and the Criteria for selection of candidates for appointment as directors, independent directors, senior management as adopted by the Board of Directors are placed on the website of the Company and are annexed as Annexure I & II to this report. 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. DIRECTORS RESPONSIBILTY STATEMENT To the best of their knowledge and belief and according to the information and explanation obtained, 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 financial statements for year ended 31st March, 2015, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any; ii. such accounting policies have been selected 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 on 31st March, 2015 and of the profit of the Company for the year ended on that date; iii. that proper and sufficient care have 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; iv. that the annual financial statements have been prepared on a 'going concern' basis; v. that proper internal financial controls were in place and that such internal financial controls are adequate and were operating effectively; vi. that systems to ensure compliance with the provisions of all applicable laws were in place and that such systems were adequate and operating effectively. ADEQUACY OF INTERNAL FINANCIAL CONTROLS The Company has proper and adequate system of internal financial controls commensurate with its nature and size of business and meets the following objectives: • Providing assurance regarding the effectiveness and efficiency of operations • Efficient use and safeguarding of resources • Compliance with policies, procedures and applicable laws and regulations and • Transactions being accurately reported and recorded timely The Company has budgetary control system to monitor expenditures and operations against budgets on an ongoing basis. The internal auditor also regularly reviews the adequacy of internal financial control system. Associate Company: During the year under report, Azure Capital Advisors Pvt. Ltd., Bengaluru has become the Associate Company by virtue of Section 2(6) of the Companies Act, 2013.There has been no change in the nature of the business of the associate company. It is the business of managing real estate funds since November 2010. Its performance for the last year is given below: Azure Capital Advisors Pvt. Ltd. Turnover witnessed a sharp drop from Rs. 173 lakhs to Rs. 104 lakhs. The extensive cost-cutting measures, however, paid off, and along with a sharp drop in finance costs, resulted in the company swinging from a loss of Rs. 36 lakhs in the previous year to a profit of Rs. 19 lakhs in the last financial year. The average AUM of Azure increased to Rs. 43 crores from Rs. 41 crores in the previous financial year. The life of the fund is till October 2016, with an option to extend it further by one year. Extract of Annual Return As provided under sub Section (3) of Section 92 of the Act, the extract of annual return is enclosed, which forms part of the directors' report as Annexure III. Auditors M/s Aalok Mehta & Co, Chartered Accountants, the Auditors of the company who would retire at the ensuing Annual General Meeting offer themselves for re-appointment. M/s Aalok Mehta & Co, Chartered Accountants, the existing auditors have furnished a certificate, confirming that if reappointed for the financial year 2015-2016 their reappointment will be in accordance with Section 139 read with section 141 of the Companies Act, 2013. Secretarial Audit Pursuant to the provisions of Section 204 and other applicable provisions, if any, of the Companies Act, 2013, M/s. Shalini Hegde & Associates, Practising Company Secretaries were appointed as the Secretarial Auditor for auditing the secretarial records of the Company for the financial year 2014-2015. The Secretarial Auditors' Report is annexed as Annexure IV. AUDITOR'S REPORT AND SECRETARIAL AUDITOR'S REPORT The auditor's report and secretarial auditor's report does not contain any qualifications, reservations or adverse remarks. As regards remarks of the secretarial auditors, the company has filed with the Registrar of Companies the Form MGT-14 in respect of resolution passed by the Board on 17.03.2015 for borrowing. INFORMATION IN ACCORDANCE WITH SECTION 134(3) OF THE ACT READ WITH COMPANIES (ACCOUNTS) RULES, 2014: In view of the nature of activities of the Company, the particulars regarding conservation of energy and technology absorption are not given. There was no foreign exchange earnings and outgo during the year under report. PARTICULARS OF EMPLOYEES The company does not have any employee whose information is required to be given under Section 197 of the Act read with rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. DEPOSITS FROM PUBLIC The Company has not accepted any deposits from public and as such, no amount on account of principal or interest on deposits from public was outstanding as on the date of the balance sheet. SIGNIFICANT & MATERIAL ORDERS PASSED BY THE REGULATORY/ JUDICIAL AUTHORITY There are no significant or material orders passed by any regulator or court that would impact the going concern status of the Company and its future operations. SAFETY, ENVIRONMENT AND HEALTH: The Company considers safety, environment and health as the management responsibility. Regular employee training programmes are carried out in the manufacturing facilities on safety and environment. PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS The Company has not given any loans or guarantees or made investments in contravention of the provisions of the Section 186 of the Companies Act, 2013. RISK MANAGEMENT POLICY The Board of Directors of the Company has framed a risk management policy and is responsible for reviewing the risk management plan and ensuring its effectiveness. The audit committee has additional oversight in the area of financial risks and controls. Major risks identified by the businesses and functions are systematically addressed through mitigating actions on a continuing basis. RELATED PARTY TRANSACTIONS Particulars of transactions with related parties pursuant to Section 134(3)(h) of the Act read with rule 8(2) of the Companies (Accounts) Rules, 2014 are given in Form AOC-2 and the same forms part of this report as Annexure V. CORPORATE GOVERNANCE REPORT As per SEBI's circular no. CIR/CFD/POLICYCELL/7/2014 dated September 15, 2014, the revised clause 49 is not mandatory to the Company. ACKNOWLEDGEMENT The directors thank the Company's employees, customers, vendors, investors and academic institutions for their continuous support. The directors also thank the government of various countries, government of India, the governments of various states in India and concerned government departments/agencies for their co-operation. The directors appreciate and value the contributions made by every member of the OSL family. For and on behalf of the Board Indra Kumar Bagri Chairman & CEO Place: Mumbai Date: May 29, 2015 |