Directors' Report Dear Shareholders, Your Directors have pleasure in presenting their 26th Annual Report on the business and operations of the Company and the accounts for the Financial Year ended March 31, 2015. Dividend Keeping in view the growth plans and diversification of business of the Company, your directors do not recommend any dividend for the financial year 2014-15. Reserves During the Financial Year ended 31st March, 2015 the Company has transferred a sum of Rs. 21.04 lacs towards Reserve under Section 45-IC of the RBI Act, 1934. Operational Update The Company is a Non-banking Finance Company registered with the Reserve Bank of India. With substantial investments in its wholly owned subsidiary, the Company has acquired the status of a Core Investment Company (CIC). The Company has made application to Reserve Bank of India for voluntary de-registration as NBFC. A detailed note on the operation of the Company is elaborated in the section Management Discussion and Analysis Report. With an objective to create sustainable long term value for all stakeholders, your Company decided to fully focus on digital business. Your Company's digital business verticals are held and operated through the wholly-owned subsidiary companies. The present digital business vertical of the Company requires greater attention and full devotion. To devote greater attention and focus to the digital business vertical at present, your Company have filed an application with SEBI for withdrawal of application filed for registration as Mutual Funds as per SEBI (Mutual Funds) Regulations, 1996 and also withdraw the consent to act as a Corporate Promoter of the Small Finance Bank for which the application was filed by Microsec Resources Private Limited the wholly owned subsidiary Company, with the Reserve Bank of India. On a standalone basis, the revenue of your Company was Rs. 244.83 Lacs as against Rs. 275.82 Lacs during the previous year. EBIDT was Rs. 42.58 Lacs as compared to Rs. 60.24 Lacs during the previous financial year. The net profit for the year under review was Rs. 105.21 Lacs, as against Rs. 58.94 Lacs in the previous year . Deposits Your Company has not accepted any deposit from public covered under Chapter V of the Companies Act, 2013 and as such, no amount of principal or interest on deposit from public was outstanding as on the date of balance sheet. Share Capital The paid up Equity share capital of the Company as at 31st March, 2015 is Rs. 31.81 crores. During the year under review, the Company has not issued shares with differential voting rights nor has granted any stock options or sweat equity shares. As on 31st March, 2015, none of the Directors of the Company holds instrument convertible into equity shares of the Company. Your Company has not made any provision of money for purchase of its own Shares by employees or by trustees for the benefit of employees during the year under review. Loans, Guarantees and Investments Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the notes to the Financial Statements. Material changes and commitments No material changes and commitments affecting the financial position of your Company have occurred between the end of the financial year of the Company to which financial statements relates and on the date of this report. Going concern status There was no instance of any material order passed by any regulator/court/tribunal impacting the going concern status of the Company and its future operations. Internal Control systems and their adequacy The Company has an adequate Internal Control System, commensurate with the size, scale and complexity of its operations. The scope and authority of the Internal Audit function is defined in the Internal Audit Charter. To maintain its objectivity and independence, the Internal Auditor reports to the Chairman of the Audit Committee of the Board. The Internal Audit team monitors and evaluates the efficacy and adequacy of internal control system in the Company, its compliance with operating systems, accounting procedures and policies at all locations of the Company and its subsidiaries. Based on the report of internal audit, management undertakes corrective action in their respective areas and thereby strengthens the controls. Significant audit observations and corrective actions thereon are presented to the Audit Committee of the Board. Subsidiary/Joint Ventures/Associate Companies At the beginning of the year, the Company had fourteen subsidiaries (both direct and step down). As on 31st March, 2015 the Company has fifteen subsidiaries (both direct and step down). During the year, the Company had incorporated Microsec Tech Solutions Private Limited as its subsidiary on 19th February, 2015. In accordance with Section 129(3) of the Companies Act, 2013, the Company has prepared consolidated financial statements of the Company and all its subsidiaries forms part of the Annual Report. Further a statement containing the salient features of the financial statements of each of the subsidiaries, associates in the prescribed format Form AOC-1, forms a part of the Annual Report .The annual accounts of the subsidiary companies will be made available to the shareholders on request and will also be kept for inspection by the shareholders at the registered office of your Company. Further as per section 136 of the Companies Act, 2013, the audited financial statements, including the consolidated financial statements and related information of the Company are available at our website at www.microsec.in . A Policy has been formulated for determining the Material Subsidiaries of the Company pursuant to Clause 49 of the Listing Agreement with the Stock Exchanges. The said Policy has been posted on the Company's website at the weblink <http://> www.microsec.in/stadc/Pdf/Policy_of_Material_Subsidiary_Microsec.pdf The Company does not have any Joint Venture or Associate Company as per the Companies Act 2013. Board of Directors: a) Directors and Key Managerial Personnel At the 25th Annual General Meeting (AGM) of the Company held on 13th August, 2014, the Members had appointed the existing Independent Directors viz Mr. Parimal Kumar Chattaraj (DIN-00893963), Mr. Raj Narain Bhardwaj (DIN-01571764) and Mr. Deba Prasad Roy (DIN- 00049269) as Independent Directors under the Act each for a term of five years ending on 31st March, 2019. A formal letter setting out the terms and conditions of appointment has been issued to all the Independent Directors as per the provisions of Companies Act, 2013 and Clause 49(II)(B) of the Listing Agreement. The same has been hosted on the Company's website and is available at the weblink <http://www.microsec.in/staUc/Pdf/Appointment_letter_of_> ID_Microsec.pdf. During the year under review, the Board of Directors of the Company had appointed Mrs. Abha Mittal (DIN- 00519777) as an Additional Director (Women Director) w.e.f. 26th March, 2015. The term of Mr. Ravi Kant Sharma (DIN- 00364066), as Managing Director and CEO has ended on 5th August, 2014. However, Mr. Sharma continues to be a non-executive director on the Board of the Company. Pursuant to the provision of section 152 of the Companies Act, 2013 and in accordance with provisions of Articles of Association of the Company, Mr. Ravi Kant Sharma (DIN - 00364066), Director of the Company, is liable to retire by rotation and being eligible, offers himself for re-appointment. The tenure of Mr. Banwari Lal Mittal (DIN- 00365809) as Managing Director expires on 30th June, 2015. The Board of Director at their meeting held on 30th May, 2015, on the recommendation of Nomination and Remuneration Committee, had appointed Mr. Banwari Lal Mittal as Managing Director & CEO for a period of 3 years w.e.f. 1st July, 2015 subject to approval of the members at the forthcoming Annual General Meeting. A brief resume of the Directors seeking appointment/re-appointment at the ensuing AGM is incorporated in the notice calling the said meeting. In view of the provisions of Section 203 of the Companies Act, 2013 the Board took on record Mr. Banwari Lal Mittal, Managing Director, Mr. Giridhar Dhelia, Chief Financial Officer and Mr. Biplab Kumar Mani, Company Secretary as the whole time Key Managerial Personnel of the Company. b) Declaration by an Independent Director(s) In terms with Section 149(7) of the Companies Act, 2013, every Independent Director of the Company has submitted a declaration that they meet the criteria of Independence. c) Familiarization Programme undertaken for Independent Director A policy on the familiarization programme for Independent Director has been adopted by the Company and the said policy is posted on the Company's website at the weblink <http://www.microsec.in/stattc/Pdf/Familiarisatton_> program_for_ID_Microsec.pdf. The familiarization programme of Independent Director has been explained in the Corporate Governance Report. d) Board Evaluation Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the evaluation of all the Directors and the Board as a whole was conducted based on the criteria and framework adopted by the Board. The evaluation process has been explained in the corporate governance report section in this annual report. For annual evaluation of the Board as a whole, its Committee(s) and Individual Directors including the Chairman of the Board, the Company has formulated a questionnaire to assist in evaluation of the performance. The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report. e) Remuneration Policy The Board has on the recommendation of the Nomination & Remuneration Committee adopted the Remuneration Policy, which inter alia includes policy for selection and appointment of Directors, Key Managerial Personnel, Senior Management Personnel and their remuneration. The said Policy has been disclosed in the Corporate Governance Report, which forms part of this Annual Report. Meetings of the Board of Directors The Board meets at regular intervals to discuss and decide on business policy and strategy apart from other Board business. However, in case of special and urgent business need, the Board's approval is taken by passing resolutions through circulation, as permitted by law, which are confirmed in the subsequent Board meeting. During the year under review, four Board Meetings were convened and held on 19th May, 2014, 13th August, 2014, 11th November, 2014 and 29th January, 2015, the details of which are given in the Corporate Governance Report. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013 as well as the listing agreement. Audit Committee The composition and terms of reference of the Audit Committee has been furnished in the Corporate Governance Report forming a part of this Annual Report. There has been no instance where the Board has not accepted the recommendations of the Audit Committee. Nomination and Remuneration Committee The composition and terms of reference of the Nomination and Remuneration Committee has been furnished in the Corporate Governance Report forming a part of this Annual Report. Stakeholders Relationship and Shareholders Grievance Committee The composition and terms of reference of the Stakeholders Relationship and Shareholders Grievance Committee has been furnished in the Corporate Governance Report forming a part of this Annual Report. Auditors M/s S. R. Batliboi & Co. LLP (Firm Regn No. 301003E), Chartered Accountants, retire at the close of this Annual General Meeting and are eligible for re-appointment. The Board recommended the re-appointment of M/s S. R. Batliboi & Co. LLP (Firm Regn No. 301003E), Chartered Accountants as Statutory Auditor from the end of the 26th Annual General Meeting till the conclusion of the 27th Annual General Meeting to audit the accounts of the Company for the FY 2015-16. The Company has obtained written confirmation under Sections 139 and 141 of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014 from M/s S. R. Batliboi & Co. LLP (Firm Regn No. 301003E), Chartered Accountants about their eligibility and the limit specified in the said section. As required under Clause 41 of the Listing Agreement, the Auditors have also confirmed that they hold a valid certificate issued by the Peer Review Board of the Institute of Chartered Accountants of India. The Audit Committee and the Board of Directors have recommended the re-appointment of the Auditors for the financial year 2015-16. The necessary resolution is being placed before the shareholders for approval. Auditors' Report In relation to the matter dealt with by the Auditors under para "Basis for qualified opinion'' in their Consolidated Audit Report dated 30th May, 2015, we would like to state that as the items in inventory are large in numbers, the management is under process of strengthening the procedure of physical verification of inventory for Microsec Health Buddy Limited (a wholly owned subsidiary of the Company). Further, physical verification by the management has been completed by now and there is no material impact on the financial results for the year ended 31st March, 2015 for Microsec Health Buddy Limited. Secretarial Audit Report Pursuant to the provisions of section 204 of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 the Company has appointed Mr. Manoj Kumar Banthia of M/s MKB & Associates, a firm of Company Secretaries in Practice to undertake the Secretarial Audit of the Company. The Report of the Secretarial Audit is annexed herewith as Annexure -1. The Company is pleased to inform that there was no qualification/reservation/adverse remarks made by the Secretarial Auditor. Related Party Transaction The particulars of contract or arrangements entered into by the Company with related parties referred to in sub-section (1) of section 188 of the Companies Act, 2013 disclosed in Form No. AOC -2 is annexed herewith as Annexure - II. A policy on Materiality of Related Party Transactions and dealing with related party has been adopted by the Board of Directors and the said policy is posted at the Company's website at the weblink <http://www.microsec.in/stattc/Pdf/> Related_Party_Transactton_Policy_Microsec.pdf. Conservation of energy, technology absorption and foreign exchange earnings and outgo The information relating to conservation of energy, technology absorption, foreign exchange earnings and outgo as per section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014 is annexed herewith as Annexure - III. Extract of the annual return Pursuant to sub-section 3(a) of Section 134 and sub-section (3) of Section 92 of the Companies Act, 2013, read with Rule 12 of the Companies (Management and Administration) Rules, 2014 the extract of the annual return in Form No. MGT - 9 is included in this report as Annexure - IVand forms an integral part of this report. Particulars of Employees & Related Disclosures Your Company has no employee of the category as specified in Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. Disclosure pertaining to remuneration and other details as required under Section 197(12) of the Companies Act, 2013 read with Rules 5 (1) of the Companies (Appointment and Remunuration of Managerial Personnel) Rules,2014 are provided in Annexure - V. Vigil Mechanism/Whistle Blower Policy The Company has adopted a Whistle Blower Policy to provide a formal mechanism to the Directors and Employees to report their concern about unethical behavior, actual or suspected fraud or violation of the Company's Code of Conduct or eithcs policy. The policy provides for adequate safeguards against victimization of employees who avail of the mechanism and also provides for direct access to the Chairman of the Audit Committee. The details of the Whistle Blower Policy is explained in the Corporate Governance Report and also posted on the website of the Company at the webilink <http://> www.microsec.in/stattc/Pdf/Whistle_Blower_Policy_Microsec.pdf Fraud reporting Fraud reporting made in terms of RBI Guidelines are reviewed by the Audit Committee of the Board. The Statutory Auditors have not reported any incident of fraud to the Audit Committee of your Company during the year under review. Corporate Governance Report and Management Discussion Analysis Report The Company is committed to maintain the highest standards of corporate governance and adhere to the corporate governance requirements as set out by SEBI. The Company has also implemented several best corporate governance practices. The report on Corporate Governance and Management Discussion & Analysis Report as stipulated under Clause 49 of the listing agreement froms an integral part of this report. Corporate Governance Certificate The Report on Corporate Governance as stipulated under Clause 49 of the Listing Agreement forms part of the Annual Report. Certificate from the Statutory Auditors M/s S. R. Batliboi & Co. LLP, Chartered Accountants regarding compliance with the conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreement with Stock Exchanges is annexed to the report. Your Company has taken adequate steps for strict compliance with the Corporate Governance guidelines, as amended from time to time. Chief Executive Officer (CEO) / Chief Financial Officer (CFO) Certification As required under Clause 49 of the Listing Agreement, the CEO/CFO certification has been submitted to the Board and a copy thereof is contained elsewhere in this Annual Report. Risk management policy Pursuant to the requirement of Clause 49 of the Listing Agreement, the Company has constituted a Risk Management Committee. The details of Committee and its terms of reference are set out in the Corporate Governance Report forming part of the Board's Report. The Company has a Risk Management framework to identify, evaluate business risks and opportunities. This framework seeks to create transparency, minimize adverse impact on the business objectives and enhance the Company's competitive advantage. Directors' Responsibility Statement Pursuant to Section 134(3)(c) of the Companies Act, 2013, your Directors confirm that — (a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures; (b) they have 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 and loss of the company for that period; (c) they have taken proper and sufficient care for the maintenance of 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; (d) the annual accounts have been prepared on a going concern basis; (e) they have laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively; and (f) proper systems had been devised to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively. Green Initiatives in Corporate Governance Ministry of Corporate Affairs has permitted Companies to send copies of Annual report, Notices, etc., electronically to the email IDs of shareholders. Your Company has arranged to send the soft copies of these documents to the registered email IDs of the shareholders, wherever applicable. In case, any shareholder would like to receive physical copies of these documents, the same shall be forwarded upon receipt of written request in this respect. Human Resources Our employees are our core resource and the Company has continuously evolved policies to strengthen its employee value proposition. Your Company was able to attract and retain best talent in the market and the same can be felt in the past growth of Microsec Group. The Company is constantly working on providing the best working environment to its Human Resources with a view to inculcate leadership, autonomy and towards this objective, your company spends large efforts on training. Your Company shall always place all necessary emphasis on continuous development of its Human Resources. The belief "great people create great organization" has been at the core of the Company's approach to its people. Disclosures under Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013 Your Company has in place a formal policy for prevention of Sexual Harassment of its women employees in line with "the Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013". During the financial year ended 31st March, 2015 the Company has not received any complaints pertaining to Sexual Harassment. Acknowledgements Your Directors take this opportunity to thank the Regulatory and Government Authorities, Bankers, Business Associates, Shareholders and the Customers of the Company for their continued support to the Company. The Directors express their deep sense of appreciation towards all the employees and staff of the Company and wish the management all the best for achieving greater heights in the future. For and on behalf of the Board B. L. Mittal Chairman & Managing Director Place : Kolkata Date : 30th May, 2015 |