DIRECTORS' REPORT THE MEMBERS, Your Directors are pleased to present their Nineteenth Annual Report on the working of the Company together with the Audited Statements of Accounts for the year ended 31st March, 2015. Dividend Directors have not recommended any dividend. Directors' Responsibility Statement: Pursuant to Section 134(5) of the Companies Act, 2013, the Board of Directors, to be best of their knowledge, confirm that - a) in the preparation of the accounts the applicable accounting standards have been followed along with proper explanations relating to material departure; b) appropriate accounting policies have been selected and applied consistently and have 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; c) proper and sufficient care has 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; 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; f) they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively. MANAGEMENT DISCUSSION AND ANALYSIS FOR 2014-2015 To avoid duplication of certain information in Directors' Report and Management Discussion & Analysis, the Board of Directors of your Company has presented the composite summary of performance and functions of the Company. Industry Structure and Development Your Company is a Non-banking Finance Company mainly engaged in the stock financing and providing inter-corporate loans. NBFCs are strictly regulated by Reserve Bank of India by its guidelines and notifications. During the financial year 2014-15, the global economy remained sluggish. US economy did well in terms of growth compared to rest of the world. Overall macro-economic scenario make India a preferred investment destination in emerging markets. The key macro-economic factors that impacted the Indian economy during 2014-15 are - sharp decline in crude oil prices, moderation in inflation numbers, improvement in fiscal situation, improvement in current account deficit and shoring up of foreign exchange reserves. Mirroring the improvement in various macro-indicators and the euphoria of a newly elected reform oriented Central Government, equity market touched an all time high during the financial year 2014-15. The BSE and Nifty Sensex scaled to a peak of 30,000 and 9,000 respectively in March, 2015. Regulations The Capital Market is regulated by stringent rules and regulations of the Securities & Exchange Board of India (SEBI) and the Stock Exchanges. As also, the Company being registered with the Reserve Bank of India as Non-Banking Finance Company (NBFC), is also subjected to strict rules and guidelines notified by the Reserve Bank of India from time to time. This helps in reviving the trust of investors in Indian market in time of crisis. Performance of the Company Total revenue for the financial year ended 31st March, 2015 was Rs.478.75 lacs, 36.8% lower compared to the last year (Rs.757.61 lacs in the year 2013-14). Other income was Rs.41.36 lacs as against Rs.1.87 lacs in the previous years, shows a steep increase. Earning before interest, tax, depreciation and amortization (EBITDA) was Rs.264.95 lacs as against Rs.731.66 lacs a year ago. Pre-tax profit for the year was Rs.67.25 lacs as against Rs.101.12 lacs in the previous year, a fall of about 33%. After providing for tax and adjustment of deferred tax assets, the Company incurred a loss of Rs.7.98 lacs as against a profit of Rs.69.37. It is proposed to carry forward the loss of Rs.7.98 lacs in the Profit & Loss account. Loans, Guarantees and investments As your Company is a Non-Banking Finance Company registered with the Reserve Bank of India under Chapter IIIB of the RBI Act, 1934 and its principal business is of acquiring shares and securities and lending (stock financing), as provided under Section 186 (11) of the Companies Act, 2013 details of loans, guarantees and investments covered under Section 186 of the Act are not given. Opportunity and threats With the newly elected reform oriented Central Government, investment sentiments are positive. As stated above, the BSE Sensex had scaled to 30,000 and Nifty to 9,000 in March, 2015. Further, considering the Indian macro-economic factors are in much better shape compared to those two years ago, the capital market would remain buoyant in the years to come. The market regulators are also concerned in regaining the confidence of investors, which is adversely effected due to economic slowdown and scams. The worrying factors include the uncertainties regarding the monsoon as also the ability of scheduled commercial banks to extend credit against the backdrop of huge NPAs. Changing expectations around the US Federal Reserves, uncertainties in Euro zone and sharp movements in crude prices will also impact the Indian economy. Future Outlook Your Directors are of the opinion that new government's agenda of development and creating jobs for young generation will stimulate the growth. Considering the huge population and change in consumers' spending pattern, Indian economy is bound to grow in coming years. Conservation of Energy etc. Since the Company is not engaged in any manufacturing activity, information as required under the provisions of Section 134 (3) (m) of the Act is not furnished. During the year under consideration, there was no foreign exchange earning or outgo. Corporate Governance In line with the requirement of the Companies Act, 2013 as also Clause 52 of the Listing Agreement, the Board of Directors has constituted new committees. Details of these committees along with their terms of reference, composition and meetings held during the year, are provided in the Corporate Governance Report. During the year the Company has also amended the existing policies and adopted new policies such as Nomination & Remuneration Policy, Related Party Transaction Policy, Risk Management Policy and Whistle Blower Policy. A separate report on Corporate Governance is annexed, which forms part of this report. A certificate of CEO and CFO of the Company confirming the correctness of the financial and cash flow statements, adequacy of the internal control measures and reporting of matters to the Audit Committee is also annexed and forms part this Directors' Report. Transactions with related parties None of the transactions with related parties falls under the scope of Section 188(1) of the Companies Act, 2013. Information on 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 Annexure I in Form AOC-2 and the same forms part of this report. The Company does not have any subsidiary. Directors and key managerial personnel Pursuant to the provisions of Section 149 of the Companies Act, 2013, which came into effect from 1st April, 2014, the Directors had reviewed the composition of its Board and accordingly Mr. Hitesh Shah, Mrs. Ankita Shah and Mr. Priyesh Jhaveri were appointed as Independent Directors. Mr. Pramod P. Shah shall retire by rotation at the ensuing Annual General Meeting and being eligible has offered himself for re-appointment. During the year under review, none of the non-executive directors had any pecuniary relationship or transactions with the Company. Mr. Girish Jajoo is Managing Director of the Company. Mr. Subhash Yadav was appointed as Chief Finance Officer w.e.f. 1st April, 2015. Mrs. Pinal Rakesh Darji is appointed as Company Secretary. Number of meeting of the Board Eight meetings of the Board were held during the year under review. Corporate Governance Report, which forms part of this report, contains the details about the Board meeting as also meeting attended by each Directors of the Company. Board evaluation Pursuant to the provisions of the Act and Clause 52 of the Listing Agreement with the BSE Ltd., the Board of Directors had done the annual evaluation of its own performance, its committees and individual directors. The Nomination and Remuneration Committee reviewed the performance of the individual directors on the basis of criteria such as the contribution of the individual director to the Board and committee meetings. In a separate meeting of independent directors, performance of non-independent directors, performance of the Board as a whole was evaluated, taking into account the views of executive directors and non-executive directors. Policy on appointment of directors and remuneration as provided in Section 178(3) of the Companies Act, 2013 has been dealt with in the corporate governance report, which forms part of the Directors' Report. Audit Committee The details pertaining to composition of audit committee are included in the Corporate Governance Report, which forms part of this report. Internal Control System There are reasonable internal control systems at all levels in the Company. The Company has appointed Mrs. Bhavna Pandya, Chartered Accountant, as Internal Auditor, who reports to the Audit Committee. Risk Management The Company has Risk Management Committee. This committee is responsible for reviewing the risk management plan and its effectiveness. The audit committee also reviews the financial risk and its control. The management also continuously access the risk involved in the business and all out efforts are made to mitigate the risk with appropriate action. Employees: Information required under Section 197 of the Act read with rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are appended to this report as Annexure II and formspart of this report. None of the employees was in receipt of remuneration exceeding the prescribed limit. Hence, information pursuant to rule 5(2) is not furnished. Auditors: According to Directors, there is no adverse remarks made by Statutory Auditors in their report. Notes to the accounts are self explanatory to comments/observation made by the auditors in their report. Hence, no separate explanation is given. M/s. Kochar & Associates, Chartered Accountants, Statutory Auditors of your Company shall retire at the forthcoming Annual General Meeting. However, they are eligible for reappointment. Members are requested to appoint the Auditors and fix their remuneration. During the year, Secretarial Audit was carried out by Mr. Upendra C. Shukla, Practising Company Secretary for the financial year 2014-15. The report on the Secretarial Audit is appended as Annexure III to this report. According to the Board of Directors the report does not have any adverse remark. Extract of Annual Return An extract of Annual Return in Form MGT-9 in pursuance to the provisions of Section 92(3) of the Companies Act,2013 is annexed to this report as Annexure IV and forms part of this report. Corporate Social Responsibility (CSR): As the profitability of the Company was below the prescribed limit, the provisions of Section 135 of the Companies Act, 2013 pertaining to Corporate Social Responsibility (CSR) are not attracted. Cautionary Statement Statements in the Annual Report, particularly those which relate to Management Discussion and Analysis may constitute forward looking statements within the meaning of applicable laws and regulations. Although the expectations are based on the reasonable assumption, the actual results might differ. Acknowledgement: The Directors wish to place on record their deep sense of appreciation to the Company's Bankers and all the staff members for their unstinted support. Your directors also wish to thank the shareholders for confidence reposed in the management of the Company. For and on Behalf of the Board PRAMOD P. SHAH CHAIRMAN (DIN:00685016 ) Place: Mumbai Date: May 26, 2015 |