Action Financial Services (India) Limited
The Directors have pleasure in presenting the 23rd Annual Report togetherwith the Audited Financial Statement for the year ended on 31st March 2016.
| ||Year ended 31.3.2016 (Rs.) ||Year ended 31.3.2015 (Rs.) |
|Revenue from operations & other Income ||36539226 ||36954021 |
|Profit (Loss) before Interest & Depreciation ||6583208 ||12459113 |
|Less: Finance Cost ||5229689 ||5091381 |
|Less: Depreciation ||4425577 ||4401980 |
|Profit (Loss) After Depreciation & before Tax ||(3072058) ||(2730982) |
|Exceptional Item || ||5696734 |
|Profit before Tax ||(3072058) ||2965752 |
| Taxation Current Year || ||100000 |
| Deferred Tax ||(3031825) ||653188 |
|Profit /(Loss) after tax ||(40233) ||2212564 |
STATEMENT OF AFFAIRS & FUTURE OUTLOOK & EXPANSION PLAN:
Revenue has declined during the year due to clients shifting to our new InnovativeScheme. We expect to have higher revenue during the current year with increase in clientbase. The company is also in the process to add some latest technology in KYC processwhich can bring down the time for opening an account. The company is focused on building along term stable business with emphasis on retail business brokerage that does not rely onhighly leveraged trading clients.
The actions of the government will have a significant bearing on the pace of policyreforms improvement in investment climate and on the public market sentiments. Stabilityin global markets and sustained demand from the industrialized nations are also imperativefor the growth playing out along expected lines.
With the launch of our most innovative product '1 Paise brokerage per executed order'in capital market which is practically a ZERO cost to our clients your Company hascommenced its journey to create wonders in conducting business and change the overallviews of broking industry.
To make this a super success and break the myth of how stock brokers operate we wantto go few steps ahead. Our roadmap is ready with lot of ideas and we are all set toachieve our goals. We have set of targets to be achieved & to accelerate the growthCompany is looking out of fresh Investments.
Our subsidiary Company Action Commodities Limited became one of the first Company allover India to get the approval from Insurance Regulatory Development Authority (IRDA) toopen eIR account for Insurance policyholders & dematerialise all insurance policies ofall policy holders including individuals firms and corporate. This will give all type ofCapital Market Service under one roof to our clients create additional client base forthe Company and will also help generate additional revenue for the Company.
Due to our Innovative launch of one paisa brokerage scheme which brought down ourbrokerage income to great extent as many of the active clients moved into this scheme sothere is a fall in the brokerage income. We were expecting a good number of clients tojoin the Innovative Scheme but due to initial teething problems in software & laterMarketing delay we could not achieve the good number as per our target.
The primordial focus of the Company has been on raising fresh funds for up gradationin Software & Technology Marketing & Working Capital.
With the stable government and optimistic sentiments of FII and retail investors thereare lots of opportunities in the market to build wealth and expand. However being abroking company its opportunities and threat would be more specific to the ones whichapply to the companies operating in the capital market as brokers. But as it is known ahealthy competition is always good for the industry we expect various new sources ofrevenues in coming future from financial and capital markets.
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 has completed 19 years as a Depository Participant. Company is holdingapproximately Rs 1829.49 Crores worth stock on behalf of clients as on 31st March 2016.Company is registered with NSDL for Internet based IDeAS facility for the convenience ofthe Investor to enable them to view latest holding with valuation as well as transactions.
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.
The Company does not recommend any dividend on Cumulative Redeemable Preference Sharesand Equity Shares for the year ended 31st March 2016.
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 2016 was Rs.133325000. During the year under review the Company has not issued shares withdifferential voting rights nor granted stock options nor sweat equity.
REPORT ON PERFORMANCE OF SUBSIDIARIES ASSOCIATES COMPANIES AND JOINT VENTURES:
As on March 31 2016 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
Since there was no unpaid/unclaimed Dividend declared and paid last year theprovisions of Section 125 of the Companies Act 2013 do not apply.
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 theListing Agreement the Accounting Standard 21 (AS-21) on Consolidated Financial Statementsand Accounting Standard 23 - (AS- 23) on Accounting for Investments in Associates inConsolidated Financial Statements based on Audited Financial Results for the year ended31st March 2016.
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 and Axis Bank Ltd. Theperformance of the last three years has led to significance liquidity pressure in the longterm 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 amendedduring the year under review.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
During the current financial year the following changes have occurred in theconstitution of directors and KMP of the company:
|Name ||Designation ||Date of appointment / Re-appointment ||Date of cessation ||Mode of Cessation / Changes |
|1. ||Mr Milan R. Parekh ||Managing Director ||01.10.2015 ||- ||Re |
|2. ||Mr Bakul R. Parekh ||Jt. Managing Director ||01.10.2015 ||- ||Re |
|3. ||Mrs. Parul Doshi ||Independent Woman Director ||29.09.2015 ||- ||Confirmed as Director in Last AGM |
Further In accordance with the requirements of the Companies Act 2013 Mr. Bakul R.Parekh (DIN: 00108609) 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 the Directorsand on evaluation of the relationships disclosed the following Non-Executive Directorsare Independent in terms of Regulation 25 of the SEBI (LODR) Regulations 2015 and Section149(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.
DIRECTORS RESPONSIBILITY STATEMENT
The Directors' Responsibility Statement referred to in clause (c) of sub 4 section (3)shall 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 a week 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 2015-2016 and the maximum interval betweenany two meetings did not exceed 120 days as follows:
|1st Quarter ||2nd Quarter ||3rd Quarter ||4th Quarter |
|29.05.2015 ||13.08.2015 ||13.11.2015 ||12.02.2016 |
| ||29.09.2015 || || |
Further in terms of Schedule IV of the Companies Act 2013 the Separate meeting ofthe Independent Directors was held on February 12 2016 and all Independent Directors werepresented 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 Regulation 18 of theSEBI (LODR) Regulations 2015 entered into with Stock Exchanges and in terms of Section177 of the Companies Act 2013.
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 30th May 2016.
A copy of the certificate on the financial statements for the financial year endedMarch 31 2016 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 Ford Rhodes Parks & Co. (Firm Registration No.102860W) CharteredAccountants Mumbai was appointed as Statutory Auditors for a period of 3 years in theAnnual General Meeting held on 25th September 2014. This is last term of theirappointment which is to be ratified up to conclusion of next Annual General meeting inensuing General Meeting thereafter their term will be expired.
Their payment of remuneration is to be confirmed and approved in the ensuing AnnualGeneral 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 Act2013 and that they are not disqualified from appointment.
There are no qualifications or adverse remarks in the Auditors' Report which requireany clarification/ explanation. The Notes on financial statements are selfexplanatory andneeds no further explanation.
Further the Auditors' Report for the financial year ended 31st March 2016is annexed herewith for your kind perusal and information.
DECLARATION BY INDEPENDENT DIRECTOR:
The declaration as required to affirm u/s 149(6) of the Companies Act 2013 has beenobtain 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 CS. Monali Patel PracticingCompany Secretary to conduct the Secretarial Audit and his 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.
None of Directors and employees was in receipt remuneration more than the limitspecified in Rule 5(2) of Companies (Appointment and Remuneration of Managerial Personnel)Rules 2014.
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.Annexure D.
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.
None of the transactions with related parties falls under the scope of section 188(1)of the Act. 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 FormAOC-2 and the same forms part of this report as Annexure E.
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. These arediscussed at the meetings of the Risk Management Committee and the Board of Directors ofthe Company.
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.
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.
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 Company has not developed and implemented any Corporate Social Responsibilityinitiatives as the provisions of Section 135 of the Companies Act 2013 are not applicable
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.
MATERIAL CHANGES AND COMMITMENTS
There have been no material changes and commitments affecting the financial positionof the Company which have occurred between the end of the financial year of the Company towhich the financial statements relate and the date of the report.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE AUTHORITIES
During the year under review our case in SAT has to be withdrawn & company has toaccept the SEBI adjudicating order for the penalty. The same has to be paid in the comingyear. Other than this there are no significant material orders passed by the Regulators /Courts which would impact the going concern status of the Company.
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
Place: Mumbai Date: 30th May 2016
Milan R. Parekh
Chairman & Managing Director