Action Financial Services (India) Limited
The Directors have pleasure in presenting the 24th Board's Report of yourCompany together with the Audited Financial Statements of your company for the financialyear ended 31st March 2017.
|FINANCIAL RESULTS || || || ||(in Rs.) |
|Particulars ||Consolidated ||Standalone |
| ||Financial Year ||Previous Year ||Financial Year ||Previous Year |
| ||2016-17 ||2015-16 ||2016-17 ||2015-16 |
|Gross Income ||40799189 ||36424001 ||40796797 ||36539226 |
|Profit Before Interest || || || || |
|and Depreciation ||8839756 ||6945799 ||8596998 ||6583208 |
|Finance Charges ||6532897 ||5229689 ||6532897 ||5229689 |
|Gross Profit ||2306860 ||1716110 ||2064101 ||1353519 |
|Provision for Depreciation ||4022172 ||4433577 ||4014172 ||4425577 |
|Net Profit Before Tax ||(1715312) ||(2717467) ||(1950071) ||3072058 |
|Provision for Tax || || || || |
|- Deferred Tax ||(984710) ||(3160212) ||(1063653) ||(3031825) |
|- Current Tax ||20000 ||34000 ||- ||- |
|- Earlier Tax ||(22528) ||- ||- ||- |
|Net Profit After Tax ||(728074) ||408745 ||(886418) ||(40233) |
|Balance of Profit brought || || || || |
|forward ||- ||- ||- ||- |
|Balance available for || || || || |
|appropriation ||(728074) ||408745 ||(886418) ||(40233) |
|Proposed Dividend on || || || || |
|Equity Shares ||- ||- ||- ||- |
|Tax on proposed Dividend ||- ||- ||- ||- |
|Transfer to General Reserve ||- ||- ||- ||- |
|Surplus carried to Balance Sheet ||(728074) ||408745 ||(886418) ||(40233) |
STATEMENT OF AFFAIRS & FUTURE OUTLOOK & EXPANSION PLAN:
The company is focused on retail business targeting with the lowest brokerage proposalin the market.
Country seems to have got a political stability and overall actions of the governmentgive a sign of positive and investor friendly move. Market is cheering the movement and isclosing on record highs day by day. Investors are back in the market and retailparticipation is moving up very rapidly.
Company is working actively to tap the retail investors with its lucrative brokeragestructure. The company expects to achieve great growth in the coming period.
The cashless and digital India movement of the government is very positive for thebusiness structure like our company has as company is working on the fundamental oflowest human intervention in account opening and trading which helps in reducing theoverall cost of the company. Internet penetration is at all time high in India and thesame will benefit for the companies like ours.
The "One Paisa Brokerage Scheme" has helped in gaining the client base andoverall reduction in cost structure of the company. As this model is low revenue model andbreak even is dependent on the number of clients which could not be achieved during theyear which showed a negative outcome for the year. But we expect to reach to breakeven inthe coming year and expect to have a positive result for the coming quarters.
The primordial focus of the Company has been on raising fresh funds for up gradationin Software & Technology Marketing & Working Capital.
India is going through the most active financial phase under the current government.The biggest tax reform GST is announced and launched which is cheered by the financialmarket very positively further we are going to see a huge scope for all financialintermediaries. We expect to have a positive impact on broking industry as Bull Runinvites new investors and according to our competitive broking structure we expect to getgood numbers ahead.
REVIEW OF BUSINESS DIVISIONS:
Broking Division and Depository Division:
Our Services under the Broking Business comprising of Equity Currency &Derivatives Services we offer retail and Institutional broking services in Equity to alarge institutional and retail clientele in India and also offer retail broking servicesin currency segment.
Action offers personalized services and complete transaction support through ourwebsite to our client for investment in primary market through Mutual fund and IPO's.Action offers platform for trading in Equity Market in BSE NSE for cash Derivatives& currency segment of the Exchange.
The Company has launched One paisa brokerage scheme effects of which are alreadystarted showing in terms of increased number of clienteles. Further as the markets are ontheir lifetime highs there is huge opportunity for the company to gain the market shareas the investors are back in the market.
Company has established new sales partner and authorized person system all over thecountry. For the purpose of access to wide business opportunities this has resulted intoincrease in clientele base of the company.
Company also has its own website through which client can view their holdingtransaction and ledger balances. Company has introduced various tariff Schemes for clientsas per their requirement & convenience.
As a result of flexible working hours experienced staff timely information toclients regarding failure of instructions acceptance of last minute Pay-In instructionsless processing time Low cost etc. Clients of other Brokers also prefer to open theirDemat Accounts with us. Key areas of service are retail clientele clearing members andpromoters of various companies.
DP Division caters to 29 clearing Members Pool Account and maintains 38 PromotersAccounts.
In view of losses the Board has not recommended any dividend on Cumulative RedeemablePreference Shares and Equity Shares for the year ended 31st March 2017.
TRANSFER TO RESERVE
The Company did not transfer any amount to reserve this year.
The paid-up Capital of the Company as on 31st March 2017 was Rs.133325000/-. Duringthe year under review the Company has not issued shares with differential voting rightsnor granted stock options nor sweat equity.
REPORT ON PERFORMANCE OF SUBSIDIARIES ASSOCIATES COMPANIES AND JOINT VENTURES:
As on 31st March 2017 the Company had two Indian wholly owned non materialsubsidiaries. There has been no change in the number of subsidiaries or in the nature ofbusiness of the subsidiaries during the year under review. In accordance with Section129(3) of the Companies Act 2013 the Company has prepared a consolidated financialstatement of the Company and all its subsidiary companies which is forming part of theAnnual Report. The statement containing the salient feature of the financial statement ofa company's subsidiaries under the first proviso to sub-section (3) of section 129 set outas "Annexure A" in Form AOC-1.
There is neither new incorporation nor Cessation of any Company as a subsidiaryassociate company or joint venture during the year.
TRANSFER OF UNCLAIMED DIVIDEND TO INVESTOR EDUCATION AND PROTECTION FUND
The provisions of Section 125(2) of the Companies Act 2013 do not apply as there is nounclaimed dividend.
MATERIAL CHANGES AND COMMITMENTS
No material changes and commitments affecting the financial position of the Companyoccurred between the ends of the financial year to which these financial statements relateon the date of this report.
The Audited Standalone and consolidated Financial Statements of the Company along withits subsidiary companies are attached herewith and form part of this annual report. Thesehave been prepared in accordance with the provisions of the Companies Act 2013 the SEBI(Listing Obligations and Disclosures Requirement) Regulations 2015 the AccountingStandard 21 (AS-21) on Consolidated Financial Statements and Accounting Standard 23 -(AS-23) on Accounting for Investments in Associates in Consolidated Financial Statementsbased on Audited Financial Results for the year ended 31st March 2017.
As the Members are aware your Company's share are tradable compulsorily in electronicform and your Company has established connectivity with both the depositories i.e.National Securities Depository Limited and Central Depository Services (India) Limited. Inview of the numerous advantages offered by the Depository system members are requested toavail the facility of dematerialisation of the Company's shares on either of theDepositories as aforesaid.
The Company has availed credit facilities from Bank of India. The performance of thelast three years has led to significance liquidity pressure in the long term sources.
Your Company has not accepted any deposits in terms of the provisions of Section 73 ofthe Companies Act 2013 and The Companies (Acceptance of Deposits) Rules 2014 as amendedfrom time to time during the year under review.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
During the current financial year no changes have occurred in the constitution ofdirectors and KMP of the company.
Further In accordance with the requirements of the Companies Act 2013 Mr. Milan R.Parekh (DIN: 00108368) will retire by rotation being eligible has offered himself forre-appointment.
In terms of Section 149 of the Companies Act 2013 and Regulation 25 of the SEBI (LODR)Regulations 2015 and based on the confirmation / disclosures received from theIndependant Directors and on evaluation of the relationships disclosed the followingNon-Executive Directors are Independent in terms of Regulation 25 of the SEBI (LODR)Regulations 2015 and Section 149(6) of the Companies Act 2013 :-
a) Mr. Ketan Mehta
b) Mr. Harbhajan Singh Dhillon
c) Mrs. Parul Doshi
ANNUAL EVALUATION BY THE BOARD
The evaluation framework for assessing the performance of Directors comprises of thefollowing key areas:
i. Attendance of Board Meetings and Board Committee Meetings.
ii. Quality of contribution to Board deliberations.
iii. Strategic perspectives or inputs regarding future growth of Company and itsperformance.
iv. Providing perspectives and feedback going beyond information provided by themanagement.
v. Commitment to shareholder and other stakeholder interests.
The evaluation involves Self-Evaluation by the Board Member and subsequently assessmentby the Board of Directors. A member of the Board will not participate in the discussion ofhis / her.
DIRECTOR RESPONSIBILITY STATEMENT
Your Director's State that :
(a) in the preparation of the annual accounts the applicable accounting standards hadbeen followed along with proper explanation relating to material departures;
(b) the directors had selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the company at the end of the financial year and ofthe profit and loss of the company for that period;
(c) the directors had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of this Act for safeguarding theassets 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; and
(e) The directors in the case of a listed company had laid down internal financialcontrols to be followed by the company and that such internal financial controls areadequate and were operating effectively.
(f) The directors had devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.
NUMBER OF MEETING OF THE BOARD
The Board meets at regular intervals to discuss and decide on Company / business policyand strategy apart from other Board business. The notice of Board meeting is given well inadvance to all the Directors. Usually meetings of the Board are held in Mumbai. TheAgenda of the Board / Committee meetings is circulated at least 7 days prior to the dateof the meeting. The Agenda for the Board and Committee meetings includes detailed notes onthe items to be discussed at the meeting to enable the Directors to take an informeddecision.
The Board met five times in financial year 2016-2017 and the maximum interval betweenany two meetings did not exceed 120 days as follows;
|1st Quarter ||2nd Quarter ||3rd Quarter ||4th Quarter |
|30.05.2016 ||12.08.2016 ||14.11.2016 ||14.02.2017 |
| || || ||06.03.2017 |
Further in terms of Schedule IV of the Companies Act 2013 the Separate meeting ofthe Independent Directors was held on 14th February 2017 and all Independent Directorswere present without attendance of non-Independent Directors of the Company.
COMMITTEES OF THE BOARD
The Board of Directors constituted Four Committees of the Board as follows:
Nomination and Remuneration Committee
Stakeholders' Relationship Committee
Risk Management Committee
Details of all the Committees along with their charters composition and meetings heldduring the year are provided in the "Report on Corporate Governance" a part ofthis Annual Report.
The Board of Directors constituted an Audit Committee as per the Regulation18 of theSEBI (LODR) Regulations 2015 entered into with Stock Exchanges and in terms of Section177 of the Companies Act 2013.
Remuneration to Executive Directors:
The remuneration paid to Executive Directors is recommended by the Nomination andRemuneration Committee and approved by Board in Board meeting subject to the subsequentapproval of the shareholders at the General Meeting and such other authorities as may berequired. The remuneration is decided after considering various factors such asqualification experience performance responsibilities shouldered industry standards aswell as financial position of the Company.
Remuneration to Non Executive Directors:
The Non Executive Directors are paid remuneration by way of Sitting Fees. For eachmeeting of the Board and Committee of Directors attended by them.
The Corporate Governance is about maximizing shareholders value legally ethically andsustainably. The Company is committed to maintaining the highest standards of CorporateGovernance and adhering to the Corporate Governance requirements as set out by Securitiesand Exchange Board of India. The Report on Corporate Governance form part of this AnnualReport.
CEO & CFO CERTIFICATION
The Certificate from Mr. Milan Parekh Managing Director & CEO and Mr. BakulParekh Jt. Managing Director & Chief Financial Officer pursuant to Regulation 17(8)of the SEBI (LODR) Regulations 2015 for the year under review was placed before theBoard of Directors of the Company at its meeting held on 29thMay 2017.
A copy of the certificate on the financial statements for the financial year ended 31stMarch 2017 is annexed along with this Report.
MANAGEMENT'S DISCUSSION AND ANALYSIS REPORT
The Management's Discussion and Analysis Report for the year under review asstipulated under Regulation 34(2)(e) of the SEBI (LODR) Regulations 2015 is annexed tothis report.
M/s Ambavat Jain & Associates LLP (Firm Registration No. 109681W) the CharteredAccountants Mumbai to be appointed as the Auditors of the Company in ensuing AnnualGeneral Meeting in place of M/s Ford Rhodes Parks & Co. (Firm RegistrationNo.102860W) Chartered Accountants whose term as Auditor is expiring in the conclusion of24th Annual General Meeting to hold office for the period of five (5) years from theconclusion of ensuing Annual General Meeting until the conclusion of the 29th AnnualGeneral Meeting of the Company to be held in F.Y. 2022-23 subject to ratify by members inevery annual general meeting.
The Company has received letter from them to the effect that their appointment ifmade would be within the prescribed limits under Section 141(3)(g) of the
Companies Act 2013 and that they are not disqualified from appointment and are holdingcertificate of peer review.
There are no qualifications or adverse remarks in the Auditors' Report which requireany clarification/ explanation. The Notes on financial statements are self-explanatoryand needs no further explanation.
DECLARATION BY INDEPENDENT DIRECTOR:
The declaration as required to affirm u/s 149(6) of the Companies Act 2013 has beenobtained from all Independent Directors.
All the properties of your Company including Office Premises Furniture & FixturesOffice Equipments and Computer are adequately insured.
SECRETARIAL AUDIT REPORT
The Board of Directors of the Company has appointed M/s. Jagdish Patel & Co.Company Secretaries to conduct the Secretarial Audit and her Report on Company'sSecretarial Audit is appended to this Report as Annexure B.
PARTICULARS OF REMUNERATION
The ratio of remuneration of each director to the median of employees' remuneration asper Section 197(12) of the Companies Act 2013 read with Rule 5(1) of Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 are set out in the"Annexure C" to the Directors' Report.
The list of top 10 employees of the Company in terms of remuneration drawn specified inRule 5(2) of Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014attached herewith as "Annexure-D".
PARTICULARS REGARDING CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGNEXCHANGE EARNINGS AND OUTGO
The particulars regarding foreign exchange earnings and outgo appear as separate itemsin the notes to the Accounts. Since the Company does not own any manufacturing facilitythe other particulars relating to conservation of energy and technology absorptionstipulated in the Companies (Accounts) Rules 2014 are not applicable.
EXTRACT OF ANNUAL RETURN
The extract of Annual Return as required under Section 92(3) is attached in form
MGT-9 as Annexure E.
PARTICULAR OF LOAN GUARANTEES & INVESTMENT
Loans guarantees and Investments covered under the provisions of section 186 of theCompanies Act 2013 form part of the Notes to the Financial Statements.
DISCLOSURE OF RELATED PARTY TRANSACTION
All related party transactions that were entered into during the financial year were onarm's length basis and were in the ordinary course of the business. There are nomaterially significant related party transactions made by the company with Promoters KeyManagerial Personnel or other designated persons which may have potential conflict withinterest of the company at large. Information on transactions with related partiespursuant 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 F.
RISK MANAGEMENT POLICY:
The Company has in place a mechanism to identify assess monitor and mitigate variousrisks to key business objectives. Major risks identified by the businesses and functionsare systematically addressed through mitigating actions on a continuing basis.
INTERNAL CONTROL SYSTEM
The Company's internal control systems are commensurate with the nature of its businessand the size and complexity of its operations. These are routinely tested and certified byStatutory as well as Internal Auditors. Significant audit observations and follow upactions thereon are reported to the Audit Committee.
CODE OF CONDUCT:
The Board of Directors has approved a Code of Conduct which is applicable to theMembers of the Board and all employees in the course of day to day business operations ofthe company. The Code has been placed on the Company's website www.actionfin.com
The Code lays down the standard procedure of business conduct which is expected to befollowed by the Directors and the designated employees in their business dealings and inparticular on matters relating to integrity in the work place in business practices andin dealing with stakeholders.
All the Board Members and the Senior Management personnel have confirmed compliancewith the Code under 26(3) of the SEBI (Listing Obligations and DisclosureRequirements)Regulation 2015.
PREVENTION OF INSIDER TRADING
The Company has adopted a Code of Conduct for Prevention of Insider Trading with a viewto regulate trading in securities by the Directors and designated employees of theCompany. The Code requires pre-clearance for dealing in the Company's shares and prohibitsthe purchase or sale of Company shares by the Directors and the designated employees whilein possession of unpublished price sensitive information in relation to the Company andduring the period when the Trading Window is closed. The Board is responsible forimplementation of the Code.
All Board Directors and the designated employees have confirmed compliance with theCode under Regulation 9 of the SEBI (Prohibition of Insider Trading) Regulation 2015.
CHANGE IN THE NATURE OF BUSINESS
There is no change in the nature of business within the meaning of Sections 134 (3) ofthe Companies Act 2013 and sub rule 8(5) of the Companies (Accounts) Rules 2014. Thenature of the business of the Company continues to remain the same as previous year.
CORPORATE SOCIAL RESPONSIBILITY
The provisions of Section 135 of the Companies Act 2013 are not applicable to theCompany.
The Company has established a vigil mechanism for Directors and employees to reporttheir genuine concerns details of which have been given in the Corporate GovernanceReport annexed to this Report.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE AUTHORITIES
During the year under review there are no significant material orders passed by theRegulators / Courts which would impact the going concern status of the Company.
DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (Prevention Prohibitionand Redressal) Act 2013:
The Company has in place an Anti Sexual Harassment Policy in line with the requirementsof The Sexual Harassment of Women at the Workplace (Prevention Prohibition &Redressal) Act 2013.
Internal Complaints Committee (ICC) has been set up to redress complaints receivedregarding sexual harassment. All employees ( permanent contractual temporary trainees )are covered under this policy.
Your Directors would take this opportunity to express its deep appreciation for theco-operation and assistance received from the shareholders Company's clients suppliersbankers and other authorities during the year under review. Your Directors also wish toplace on record their appreciation for the services rendered by all the employees of yourCompany.
For and on Behalf of the Board
Date: 29th May 2017
Milan R. Parekh
Chairman & Managing Director