DIRECTORS REPORT To, The Members of Dhanuka Commercial Limited, 1. Your Directors have pleasure in presenting their 22nd Annual Report and Audited Accounts of the Company for the year ended March 31, 2016. 2. BUSINESS PERFORMANCE The Company has not divisions therefore division wise working details are not applicable. The company has mainly engaged in the business of providing unsecured loans and dealing in securities market. The company has earned a net profit of Rs 2061133.97/- as compared to last year's loss of Rs. 769757.02/-. The efforts of directors and employees of the company can clearly be seen from the performance of the company. 3. SHARE CAPITAL The paid up equity capital as on March 31, 2016 was Rs.167, 434,590. During the year under review, the Company has not issued bonus shares nor issued shares with differential voting rights nor granted stock options nor sweat equity and nor buy back its own securities. 4. RBI GUIDELINES Your Company has complied with all the applicable rules, regulations & guidelines as prescribed by the Reserve Bank of India from time to time and as are applicable to Non-deposit accepting, Non-Systematically Important NBFC's . 5. NON ACCEPTANCE OF PUBLIC DEPOSITS Your Company has not accepted public deposits during the year under review in terms of chapter-V of the Companies Act, 2013 and hence there are no defaults in repayments of amount of principle or interest as on date of Balance Sheet. 6. DIVIDEND: With a view to strengthening the financial position of the company, Your Board of Director's have not recommended any dividend for the financial year 2015-16. 7. RESERVES AND PROVISIONS The amounts, which the Board carries to any reserves/provisions, are given below:- As Per RBI Guidelines Statutory Reserve Fund (SRF) @ 20% of Net Profit under Section 45-IC of the RBI Act 1934: - Rs. 412227/- created towards Statutory Reserve Fund @20% of the Net Profit during the year. Net amount in SRF=Rs. 1077706/- Provision for Standard Assets (PSA) @ 0.25% on Standard Assets: - Created Rs. 6425.99/- towards PSA. Net amount in PSA=Rs. 422473.00/- 8. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186 Since, the company's main business activities are providing of loans and trading of securities of other companies and the company is registered with RBI as a Non-Banking Finance company hence the provisions of section 186 except sub section 1 of section 186 of the companies Act, 2013 read with Rule 11 & 13 of the Companies (Meetings of Board and its power) Rules, 2014 are not applicable to the company. 9. NON ACCEPTANCE OF PUBLIC DEPOSITS Your Company has not accepted public deposits during the year under review in terms of chapter-V of the Companies Act, 2013 and hence there are no defaults in repayments of amount of principle or interest as on date of Balance Sheet. 10. DETAILS OF SUBSIDIARY/JOINT VENTURES/ASSOCIATE COMPANIES The company has not any subsidiary companies or joint venture companies or associate companies during the year under review. Also, there was no company which have become or ceased to become the subsidiaries/joint ventures/associate company (ies) during the year. 11. NUMBER OF MEETINGS OF THE BOARD OF DIRECTORS The Board has met 6 times during the year on 15-04-2015, 25-05-2015, 03-07-2015, 30-10-2015, 01-022016 and 19-03-2016 of which meetings proper notices has been given. 12. AUDITORS AND AUDITORS'REPORT The appointment of Statutory Auditors of the Company, M/s DSP & Associates, Chartered Accountants, (Firm Registration No. 006791N), who were initially appointed as Statutory Auditors by the members for four years in the 20th AGM, would be ratified in the ensuing Annual General Meeting. The observations of the Auditors if any, and the relevant notes on the accounts are self-explanatory and therefore do not call for any further comments. 13. INTERNAL FINANCIAL CONTROL SYSTEM (IFCS) AND ITS ADEQUACY: The Company has satisfactory internal control system. According to Section 134(5)(e) of the Companies Act, 2013 the term Internal Financial Control (IFC) means the policies and procedures adopted by the company for ensuring the orderly and efficient conduct of its business, including adherence to company's policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information. The Company has a well-placed, proper and adequate internal financial control system which ensures that all assets are safeguarded and protected and that the transactions are authorized recorded and reported correctly. The Company's internal financial control system also comprises due compliances with Company's policies and Standard Operating Procedures (SOPs) and audit and compliance by in-house Internal Audit Division, supplemented by internal audit checks from Independent Internal Auditors of the Company. The Companies Act, 2013 re-emphasizes the need for an effective Internal Financial Control system in the Company. The system should be designed and operated effectively. Rule 8(5)(viii) of Companies (Accounts) Rules, 2014 requires the information regarding adequacy of Internal Financial Controls with reference to the financial statements to be disclosed in the Board's report. To ensure effective Internal Financial Controls the Company has laid down the following measures: • The Company also has a robust Management Information System which is an integral part of the control mechanism. • All key operations are executed through Standard Operating Procedures (SOPs) in all functional activities for which key manuals have been put in place. The manuals are updated and validated periodically. • All legal and statutory compliances are ensured on a monthly basis through a various compliance tools and framework. Non-compliance, if any, is seriously taken by the management and corrective actions are taken immediately. Any amendment is regularly updated by internal as well as external agencies in the system. • The Company has developed various comprehensive compliance processes and framework which are modified according to requirement and which prescribed the role and responsibility of various persons who is responsible for compliance. • The Internal Auditors independently evaluate the adequacy of internal controls and concurrently audit the majority of the transactions in value terms. Independence of the audit and compliance is ensured by direct reporting of Internal Audit Division and Internal Auditors to the Audit Committee of the Board. • The audit reports for the above audits are compiled and submitted to Audit Committee for review and necessary action. • The Company has a comprehensive risk management framework. • The Company has a system of Internal Business Reviews. All departmental heads discuss their business issues and future plans in monthly review meetings. They review their achievements in quarterly review meetings. • The Company has in place a well-defined Whistle Blower Policy/ Vigil Mechanism. • The Compliance of secretarial functions is ensured by way of secretarial audit. • The control system is improved and modified on continuous basis to meet the changes in business, statutory and accounting requirements. • The Audit Committee of the Board and Statutory Auditors periodically reviews the internal audit findings and corrective actions are taken. • The Company has Mechanism in place for handling the grievances related to the customers. The NON GRO grievances are directly handled by the customer care department and others are handled by GRO itself. 14. PREVENTION OF INSIDER TRADING: The Company has adopted a Code of Conduct for Prevention of Insider Trading with a view to regulate trading in securities by the Directors and designated employees of the Company. The Code requires pre-clearance for dealing in the Company's shares and prohibits the purchase or sale of Company shares by the Directors and the designated employees while in possession of unpublished price sensitive information in relation to the Company and during the period when the Trading Window is closed. The Board is responsible for implementation of the Code. All Board of Directors and the designated employees have confirmed compliance with the Code. 15. THE DETAILS OF CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO ARE AS FOLLOWS: A) Conservation of energy: (i) The steps taken or impact on conservation of energy; Nil (ii) The steps taken by the company for utilizing alternate sources of energy; Nil (iii) The capital investment on energy conservation equipments; Nil Note: - The Company has not any manufacturing activities which require heavy consumption of energy. The company uses latest technology low energy consumption products in its office. B) Technology absorption: i. The efforts made towards technology absorption;-Nil ii. The benefits derived like product improvement, cost reduction, product development or import substitution; -Nil iii. In case of imported technology (imported during the last three years reckoned from the beginning of the financial year) - Nil a) The details of technology imported;-Nil b) The year of import; Nil c) Whether the technology been fully absorbed; Nil (a) If not fully absorbed, areas where absorption has not taken place, and the reasons thereof; Nil and iv. The expenditure incurred on Research and Development. Nil Note: - In respect of the Nature of the Business of the company there was no requirement of any technology. C) Foreign exchange earnings and Outgo: The Foreign Exchange earned in terms of actual inflows during the year and the Foreign Exchange outgo during the year in terms of actual outflows. -No Foreign Exchange is earned or spent by the company during the year under review. 16. CORPORATE SOCIAL RESPONSIBILITY (CSR) The CSR provisions were not applicable on the company during the year under review. 17. DIRECTORS: A) Changes in Directors and Key Managerial Personnel Mr. Sanjeev Mittal appointed as a Non-executive Director/Chairman in the EGM held on 17/02/2014 being longest in tenure, was retired by rotation in last AGM and being eligible, has been re-appointed as a Non-Executive Director/Chairman, liable to retire by rotation as per the provisions of Companies Act, 2013. Mr. Mukesh Bansal appointed as an independent director in the EGM held on 17/02/2014 as per the provisions of companies Act 1956 and liable to retire by rotation in last AGM but due to the provisions of the Companies Act, 2013 (being an independent director) was no longer liable to retire by rotation and who was required to be appointed as an independent director under the provisions of Companies Act, 2013 and being eligible, has been reappointed as an independent director for 5 consecutive years as per provisions of Companies Act, 2013 in the last AGM. Except as above, there was no other changes has been taken place in the positions of directors and KMP's held by them. Mr. Gopal Krishan Bansal appointed as an Executive Director in the EGM held on 17/02/2014 being longest in tenure, is retiring by rotation in this AGM and being eligible, offered himself for reappointment as an Executive Director, has been reappointed subject to the approval of the shareholders in AGM, and liable to retire by rotation as per the provisions of Companies Act, 2013. B) Declaration by Independent Director(s) and re- appointment, if any All the independent directors have given declaration regarding their compliance of conditions of subsection 6 of section 149 of the Companies Act, 2013 in the first board meeting of the FY 2016-17 as per the provisions of sub-section 7 of section 149 of the said Act. No independent director has been reappointed for second term on passing of a special resolution by the Company. C) Formal Annual Evaluation The Nomination & Remuneration Committee (hereinafter known as 'N & R Committee') had formulated a policy (approved by the board) on performance evaluation of the whole board, its committees, individual directors and KMP's. As per the Policy, performance evaluation of > independent directors has been done by the whole board excluding the director being evaluated and submit its report to N & R Committee; > whole board and non-independent directors including chairman has been done by independent directors and submit its report to N & R Committee; > Committees of the board and KMP's have been done by the board of directors and submit its report to N & R Committee. Specific questioner sheet has been set-up for performance evaluation of each category of persons mentioned above in the policy. N & R Committee reviews the reports of the Independent Directors and Board and accordingly, recommends the appointment/re-appointment/continuation of Directors to the Board. Based on the recommendation of N & R Committee, Board will take the appropriate action. 18. LISTING WITH STOCK EXCHANGES: The Company is listed on SME Platform of Bombay Stock Exchange Ltd. and confirms that it has paid the Annual Listing Fees for the financial year 2016-2017 to BSE Ltd. where the Company's Shares are listed. 19. RELATED PARTY TRANSACTIONS: The particulars of every 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 including certain arm's length transactions under third proviso thereto is disclosed in Form No. AOC -2 annexed as Annexure-A with this report. 20. MANAGERIAL REMUNERATION AND PARTICULARS OF EMPLOYEES Details of Managerial remuneration required pursuant to Section 197 and Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed as Annexure-B. 21. EXTRACT OF THE ANNUAL RETURN The details forming part of the extract of the Annual Return in form MGT-9 is annexed herewith as "Annexure C". 22. SECRETARIAL AUDIT REPORT The Board had appointed M/s Kumar Arun & Associates, Practicing Company Secretaries, Delhi as Secretarial Auditor pursuant to the provisions of Section 204 of the Companies Act, 2013. The Report of the Secretarial Auditor is annexed to the Report as per Annexure 'D'. 23. DISCLOSURE UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013 Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment. There were no complaints received from any employee during the financial year 2015- 2016 and hence no complaint is outstanding as on 31.03.2016 for redressal. 24. BUSINESS RISK MANAGEMENT: Business risk evaluation and management is an ongoing process within the Company as per the risk management policy established by the board. During the year under review, a detailed exercise on 'Risk Assessment and Management' was carried out covering the entire gamut of business operations and the Board was informed of the same. In view of the activities of the company the board has opinion that the company has two major inherent risks which may threaten the existence of the company are "default in payment of loans by the customers" and "risks associated in the equity market". However, the company has followed the principal of assessing the risk and accordingly managing the business. 25. VIGIL MECHANISM / WHISTLE BLOWER POLICY: The Company has established vigil mechanism for directors and employees to report genuine concerns of fraud & misconduct in the company and the vigil policy is uploaded on the website of the company www.dhanukacommercial.com . Further, the company has not received any protected disclosures as per the vigil policy framed by the board. 26. CORPORATE GOVERNANCE AND MANAGEMENT DISCUSSION & ANALYSIS REPORTS Your company practices a culture that is built on core values and ethical governance practices and is committed to transparency in all its dealings. A Report on Corporate Governance along with a certificate from Secretarial Auditors M/s Kumar Arun & Associates, Practicing Company Secretaries regarding compliance of conditions of corporate governance as stipulated in Clause 52 of the SME Listing Agreement entered by the company with the BSE Ltd. & SEBI (LODR) Regulations, 2015 is annexed to this report and forms part of this report. Note: - Members' please note that SEBI vide its Notification dated September 02, 2015 makes the regulations known as "SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015" which shall be effective from 01st December, 2015 thereby replacing the "Listing Agreement" entered by the company with BSE Ltd. Hence, the company was required to follow the said regulations instead of "Listing Agreement" requirements from 01st December, 2015 and according to the said regulations the company (being Listed on a SME Platform of BSE Ltd) is exempted from the corporate Governance Requirements provided under regulations 17 to 27 and clauses (b) to (i) of sub-regulation (2) of regulation 46 and Para C, D and E of Schedule V. A detailed analysis of the Company's performance is discussed in the Management Discussion and Analysis Report, annexed to this report and forms part of this Report. 27. OTHER DETAILS - No Change in the nature of the business of the company during the year; - No change of the name of the company during the year; - No material changes has been occurred subsequent to the close of the financial year of the company to which the balance sheet relates and the date of the report like settlement of tax liabilities, operation of patent rights, depression in market value of investments, institution of cases by or against the company, sale/purchase of capital assets or destruction of any assets etc; - No significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and company's operations in future; - Refer Corporate Governance Report for details of Audit Committee; - Refer Corporate Governance Report for details of Nomination & Remuneration Committee; and - Refer Corporate Governance Report for details of Remuneration Policy. 28. DIRECTORS' RESPONSIBILITY STATEMENT As required under the provisions contained in clause (c) of sub-section (3) of Section 134 of the Companies Act, 2013, your Directors hereby 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) the directors had 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) the directors had 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 directors had prepared the annual accounts on a going concern basis; (e) the directors, in the case of a listed company, had 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) the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively. 29. ACKNOWLEDGEMENTS Your Directors take this opportunity to thanks Regulatory and Government Authorities, the Company's shareholders, investors, customers, bankers, and other stakeholders for their continued support to the company. Your 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 of Directors Dhanuka Commercial Ltd -Sd- Chairman Sanjeev Mittal Date: 30-05-2016 Place: Delhi |