Geojit Financial Services Ltd.
|BSE: 532285||Sector: Financials|
|NSE: GEOJITFSL||ISIN Code: INE007B01023|
|BSE LIVE 11:16 | 26 Sep||115.45||
|NSE 10:59 | 26 Sep||116.20||
|Mkt Cap.(Rs cr)||2,738|
|Mkt Cap.(Rs cr)||2738.47|
Geojit Financial Services Ltd. (GEOJITFSL) - Director Report
Company director report
Your Directors have pleasure in presenting their 22nd Annual Report of the Company forthe financial year ended 31st March 2016. FINANCIAL HIGHLIGHTS (' in crore)
REVIEW OF PERFORMANCE
On a standalone basis your Company has recorded a total income of ' 236.37 crores forthe financial year ended 31st March 2016 a decrease of 18% compared to last yearsfigure of ' 289.27 crores. The profit before tax is ' 54.53 crores and the net profitafter tax is ' 35.60 crores. Basic earnings per share work out to ' 1.53 compared to '2.94 in the previous year.
On a consolidated basis your company earned a total income of ' 271.96 crore for thefinancial year a decrease of 17% over the previous years figures of ' 326.38 croreand profit before tax of ' 62.16 crores and a net profit of ' 37.61 crore.
A detailed analysis of the performance is given in the Management Discussion andAnalysis Report appended hereto.
During the year your Company has declared an Interim Dividend of ' 1.00 per equityshare of face value of ' 1/- (100%). The total outgo on payment of Interim Dividend was '23.49 crores.
INCREASE IN SHARE CAPITAL
During the year under review the paid up share capital of the Company increased from '231383195/- divided into 231383195 equity shares of ' 1/- each to ' 234898476/-divided into 234898476 equity shares of ' 1/- each consequent to the issue of3515281 equity shares to employees upon exercise of stock options under Employee StockOption Plans of the Company.
CONSOLIDATED FINANCIAL STATEMENT
The Consolidated Financial Statements of the Company are prepared in accordance withSection 129 of the Companies Act 2013 read with relevant Accounting Standards issued bythe Institute of Chartered Accountants of India and forms part of this Annual Report.
SUBSIDIARIES JOINT VENTURES AND ASSOCIATE COMPANIES
As on 31st March 2016 following are the subsidiaries/associate/joint ventures of theCompany:
i. Geojit Credits Private Limited
ii. Geojit Investment Services Limited
iii. Geojit Financial Management Services Private Limited
iv. Qurum Business Group Geojit Securities LLC
v. Geojit Technologies Private Limited
vi. Geojit Financial Distribution Private Limited Joint Ventures :
i. Barjeel Geojit Securities L.L.C
ii. Aloula Geojit Capital Company Associates :
i. BBK Geojit Securities Co. K.S.C.C.
Considering the insignificant activity and for operational convenience the Board ofDirectors of the two wholly owned subsidiary companies viz. Geojit Financial ManagementServices Private Limited and Geojit Financial Distribution Private Limited proposed ascheme of merger with Geojit Investment Services Limited (another wholly owned subsidiary)pursuant to the provisions of Sections 391 to 394 and other applicable provisions if anyof the Companies Act 1956 (pending notification of the corresponding provisions of theCompanies Act 2013).
Meetings of the shareholders for approval of the scheme of merger were held on 10March 2016 after giving due notice and publication in accordance with the directions ofthe High Court. The Honorable High Court appointed a learned Counsel as the Chairman forthe said meetings. The shareholders of the aforementioned companies approved the Scheme ofArrangement. A Petition has been filed seeking sanction of the Scheme of Amalgamationbetween the said companies.
In accordance with Section 136 of the Companies Act 2013 the audited financialstatements including the consolidated financial statements and related information of theCompany and audited accounts of each subsidiaries are available on our websitewww.geojitbnpparibas.com. These documents will also be available for inspection duringbusiness hours at the Registered Office of the Company. In accordance with Section 129(3)of the Companies Act 2013 the salient features of the financial statement of thesubsidiaries is set out in the prescribed form AOC-1 which forms part of this AnnualReport.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
Dr. M Beena Nominee Director of Kerala State Industrial Development CorporationLimited (KSIDC) a public financial institution ceased to be a director of the Company on13th January 2016 and was re-appointed as director of the Company on 5th February 2016.
II. RETIREMENT BY RoTATioN
In accordance with Article 80 of the Articles of Association of the Company Mr. RakeshJhunjhunwala NonExecutive Director (DIN 00777064) will retire by rotation at the ensuingAnnual General Meeting of the company and being eligible offers himself forre-appointment. The Board recommends his re-appointment.
ANNUAL EVALUATION OF THE BOARD ITS COMMITTEE AND INDIVIDUAL DIRECTORS
Pursuant to the provisions of Companies Act 2013 and the Listing Regulations theBoard of Directors has carried out an annual evaluation of its own performance itsCommittee and individual Directors. A structured questionnaire was prepared after takinginto consideration inputs received from the Directors covering various aspects such ascomposition of the Board and its Committees Board culture overall growth of theorganisation etc.
Further the Independent Directors at their meetings held during the year reviewed theperformance of the Board the non Independent Directors and the Chairman.
familiarization programme for independent directors
The Independent Directors of the Company are persons of integrity possessing richexperience and expertise in the field of corporate management finance capital marketeconomic and business information. The company has issued appointment letter to theIndependent Directors setting out in detail the terms of appointment duties roles &responsibilities and expectations of the Independent Director. The Board of Directors hascomplete access to the information within the Company. Presentations are regularly made tothe Board of Directors / Audit Committee / Nomination & Remuneration Committee /Corporate Social Responsibility Committee / Stakeholders Relationship Committee on variousrelated matters where Directors have interactive sessions with the Management.
The details on the Company's familiarisation programme for Independent Directors can beaccessed at http://www.geojitbnpparibas.com/pdfs/FAMILIARIZATIONPROGRAMMEFORINDEPENDENTDIRECTORS.pdf.
The company follows a policy on remuneration of Directors Key Managerial Personnel(KMP) Senior Management Personnel (SMP) and other employees of the Company. The policywas approved by the Nomination & Remuneration Committee of the Company.
The Non-Executive Directors of the Company shall be entitled to receive remuneration byway of sitting fees for attending meeting of the Board and Committees thereof.
The remuneration to KMP's and SMPs and employees shall include directremuneration and indirect remuneration primarily and strategic remuneration which can bePerformance Linked and/ or Profit linked incentive.
Remuneration Policy of the Company is given as Annexure VIII to the Directors Report.
RE-STATEMENT OF SHAREHOLDERS AGREEMENT
The Board of Directors of the Company approved a Restated Shareholders Agreementwith BNP Paribas S.A its affiliate namely BNP Paribas India Holding Private Limited(collectively
"BNPP") and the initial promoters of the Company namely Mr. C.J. George andMrs. Shiny George which would replace the existing shareholders agreement dated March 132007 on the date BNPP acquires control of Sharekhan Limited ("Effective Date").Pursuant to the Restated Shareholders Agreement while BNP Paribas continue to retain itspresent shareholding in the Company in brief rights of BNPP to nominate directors on theBoard of the Company affirmative voting / consent rights of BNPP at the Board level andshareholders level and information rights of BNPP would terminate on the Effective Date.The Company also entered into an agreement for phasing out use of BNPPs brands nameand associated intellectual property from the business of the Company within 6 months fromthe Effective Date.
RISK MANAGEMENT POLICY
Risks are an integral part of business and it is imperative to manage these risks atacceptable levels in order to achieve business objectives. The risks to which the Companyis exposed are both external and internal. Your company has formulated a Risk ManagementPolicy to provide an integrated and standardized approach in managing all aspects of riskto which your Company is exposed. An Internal Risk Management Committee monitors theEnterprise risk management policy with participation from officers responsible for riskmanagement and to take appropriate steps to ensure that these risks are at acceptablelevels.
WHISTLE BLOWER POLICY & VIGIL MECHANISM
Your Company has laid down a Vigil Mechanism and formulated a Whistle Blower Policy inorder to provide a framework for responsible and secure whistle blowing mechanism. ThePolicy aims to provide an avenue for Employees and Directors to raise their concerns aboutunethical behavior actual or suspected fraud or violation of the company's code ofconduct and it also empowers the Audit Committee of the Board of Directors to investigatethe concerns raised by the employees.
All Directors and Employees of the Company are eligible to make protected disclosuresunder the Policy addressed to the Vigilance Officer of the Company in relation to mattersconcerning the Company. We further affirm that no employee of the Company was deniedaccess to the Audit Committee.
The details on the Company's Whistle Blower Policy and Vigil Mechanism can be accessedat http://www.geojitbnpparibas.com/pdfs/Vigil_Mechanism_Whistle_blower_policy.pdf
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS
Loans guarantees and investments covered under Section 186 of the Companies Act 2013forms part of the notes to the financial statements provided in this Annual Report.
INTERNAL CONTROL SYSTEM
The Company has put in place an adequate system of internal control commensurate withits size and nature of business. These systems provide a reasonable assurance in respectof providing financial and operational information complying with applicable statutessafeguarding of assets of the Company and ensuring compliance with corporate policies.
The scope and authority of the Internal Audit activity are well defined in the InternalAudit Charter approved by the Audit Committee. The Company has a dedicated Internal Auditteam with skills commensurate with the size nature & complexity of operations of theCompany. Internal Audit reports functionally to the Audit Committee of Board which reviewsand approves risk based annual internal audit plan. Audit Committee periodically reviewsthe performance of internal audit function. During the year the Audit Committee metregularly to review reports submitted by the Internal Audit department. All significantaudit observations and follow-up actions there on were reported to the Audit Committee.
The Companys Board & audit committee reviews adherence to internal controlsystems internal audit reports and legal compliances. The Audit Committee reviews allquarterly and yearly financial results of the Company and recommends the same to Board forits approval.
TRANSFER OF UNPAID AND UNCLAIMED AMOUNTS TO IEPF
Pursuant to the provisions of Section 124 of the Companies Act 2013 money transferredto the Unpaid Dividend Account of the Company and which has remained unpaid or unclaimedfor a period of seven years from the date of transfer has been transferred by the Companyto the Investor Education and Protection Fund ("IEPF') established by the CentralGovernment pursuant to Section 125 of the said Act.
MANAGEMENT'S DISCUSSION & ANALYSIS
The Management's Discussion and Analysis is given separately and forms part of thisAnnual Report.
INSIDER TRADING REGULATIONS
Based on the requirements under SEBI (Prohibition of Insider Trading) Regulations2015 as amended from time to time the Company has adopted a Code of Conduct forPrevention of Insider Trading and Code of Corporate Disclosures which is applicable to allDirectors and the Designated Employees of the Company. The Code lays down the guidelineswhich advices on the procedures to be followed and disclosures to be made while dealing inshares of the Company and indicate the consequences of non-compliance. A copy of the Codehas been put on the Companys website.
CODE OF CONDUCT FOR DIRECTORS & SENIOR OFFICERS
The Board has adopted a Code of Conduct for Directors & Senior Management inaccordance with the provisions of the Companies Act 2013 and Regulation 17(5) of SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015. The Code alsoincorporates the duties of Independent Directors. All the Board Members and SeniorManagement Personnel have confirmed compliance with the Code. A declaration to that effectsigned by the Managing Director forms part of the Corporate Governance Report. A copy ofthe Code has been put on the Companys website.
As a service Company the Companys operations are heavily dependent on qualifiedand competent personnel. As on 31st March 2016 the Company had 2198 employees. YourCompany takes significant effort in training all employees at various levels.
EMPLOYEE STOCK OPTION PLAN (ESOP)
During the year some employees of the Company have exercised part of their stockoptions granted under the Employees Stock Option Plan 2010 (ESOP 2010) and Employees StockOption Plan 2007 for Key Employees (ESOP 2007 Key Employees). The Board of Directors ofthe Company has allotted total 1955344 equity shares of Re.1/- each under ESOP 2010Scheme and 1559937 equity shares of Re.1/- each under ESOP 2007 Scheme to its employeeswho exercised the stock options on various dates at various exercise prices in accordancewith the terms and conditions of ESOP.
The aforesaid ESOP Schemes are in compliance with SEBI (Share Based Employees BenefitsScheme) Regulations 2014 and the details are attached as Annexure - I to this report andalso available on our website and can be accessed at http://www.geojitbnpparibas.com/pdfs/ESOSDisclosure.pdf.
Approval and implementation of Employee Stock Option Scheme - ESOS 2016 through directroute.
The Company has formulated an Employee Stock Option Scheme (ESOS 2016) in accordancewith Securities and Exchange Board of India (Share Based Employee Benefits) Regulations2014.
The Board of Directors of the Company approved the proposal to issue 9400000 (NinetyFour Lakh) new stock options under Employee Stock Option Scheme 2016 (ESOS 2016).Necessary resolution along with Explanatory Statement in this regard is included in thenotice of AGM for approval of members.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
The Corporate Social Responsibility Committee has formulated and recommended to theBoard a Corporate Social Responsibility Policy (CSR Policy) indicating activities to beundertaken by the Company which has been approved by the Board. The Company established acharitable trust namely Geojit Foundation and intends to carry the CSR activities of thecompany through the foundation.
The Company has identified Education and Health as key focus areas of engagement forCSR activities. The Company would also undertake other initiatives in compliance with theSchedule VII of the Companies Act 2013. The Annual Report on CSR activities is annexedherewith and marked as Annexure IV to this report.
PARTICULARS OF EMPLOYEES
Particulars of employees covered by the provisions of Section 197 of the Companies Act2013 read with Companies (Appointment and Remuneration of Managerial Personnel) Rules2014is given as Annexure III to this Report.
DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to requirement of Section 134(3)(c) and Section 134(5) of the Companies Act2013 and based on the representations received from the Management your Directors statethat :
i. in the preparation of the annual accounts for the financial year ended 31st March2016 the applicable accounting standards have been followed and there are no materialdepartures from the same;
ii. the Directors have 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 as at 31st March 2016 and of the profitof the company for the year ended on that date;
iii. the Directors have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of the Companies Act 2013for safeguarding the assets of the company and for preventing and detecting fraud andother irregularities;
iv. the Directors have prepared the annual accounts on a going concern basis;
v. the Directors have laid down internal financial controls to be followed by thecompany and that such internal financial controls are adequate and were operatingeffectively; and
vi. the Directors have devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGO
The Company has nothing to report in respect of information on conservation of energyand technology absorption as required under Section 134 of the Companies Act 2013 readwith Companies (Accounts) Rules 2014 since the Company is not engaged in manufacturing orprocessing business. The details regarding foreign exchange earnings and outgo are givenas Annexure II to this Report.
Your Company has complied with the Corporate Governance requirements under CompaniesAct2013 and as stipulated under the provisions of the SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015. A detailed Report on Corporate Governance isgiven as Annexure V to this Report. A certificate of Statutory Auditor confirmingcompliance of the Corporate Governance requirements by the Company is attached to theReport on Corporate Governance.
SECRETARIAL AUDIT REPORT
In accordance with the provisions of Section 204 of the Companies Act 2013 the Boardhas appointed M/s. Satheesh & Remesh - Company Secretaries in Whole Time PracticeKochi as the Secretarial Auditor for the financial year 2015-16. The report of theSecretarial Auditor is annexed to this report as Annexure VI.
M/s. Deloitte Haskins & Sells Chartered Accountants Kochi were the StatutoryAuditors of the Company since 2000. It is mandated as per the Companies Act 2013 toappoint a new Auditor if the current auditor holds office more than a continuous period often years. Hence the Board proposed the name of M/s. B S R & Associates LLPChartered Accountants (ICAI Registration No. 116231W/ W-100024) to be appointed asStatutory Auditor of the company for a period of five years pursuant to the provisions ofSection 139 of the Companies Act 2013
M/s. B S R & Associates LLP have expressed their willingness to get appointed asthe Statutory Auditors of the company and has furnished a certificate of their eligibilityand consent under Section 141 of the Companies Act 2013 and the rules framed thereunder. In terms of the SEBI (LODR) Regulations 2015 the Auditors have confirmed thatthey hold a valid certificate issued by the Peer Review Board of the ICAI.
The Auditors Report to the Shareholders for the year under review does notcontain any qualification.
EXTRACT OF ANNUAL RETURN
The extract of the Annual return in Form MGT - 9 is given as Annexure VII to thisReport.
NUMBER OF BOARD MEETINGS
The Board of Directors met 6 (six) times in the financial year 2015-16. The details ofthe board meetings and the attendance of the Directors are provided in the CorporateGovernance Report.
COMPOSITION OF AUDIT COMMITTEE
The Board has constituted the Audit Committee which comprises of Mr. R. Bupathy as theChairman and Mr. A.P. Kurian Mr. Mahesh Vyas and Mr. Jean Christophe Gougeon as themembers. More details on the committee are given in the Corporate Governance Report.
RELATED PARTY TRANSACTIONS
All contracts/arrangements/transactions entered by the Company during the financialyear with the related parties were in the ordinary course of business and on an armslength basis. During the year the company had not entered into any contract/ arrangement/transaction with related party which could be considered material in accordance with thepolicy of the company on materiality of related party transactions.
The Policy on materiality of related party transaction and dealing with related partytransactions as approved by the Board may be accessed on the Companys website.
Your Directors draw attention of the members to Note 37 to the financial statementwhich sets out related party disclosures.
POLICY RELATING TO DIRECTORS APPOINTMENT
The Company with the approval of Nomination & Remuneration Committee has adopted apolicy on Board diversity and the recommendation of candidature for Board appointment willbe based on merit that complements and expands the skills experience and expertise of theBoard as a whole taking into account gender age professional experience andqualifications cultural and educational background and any other factors that the Boardmight consider relevant and applicable from time to time towards achieving a diverseBoard.
DECLARATION BY INDEPENDENT DIRECTORS
The Company has received necessary declaration from each Independent Director underSection 149(7) of the Companies Act 2013 that he meets the criteria of Independence laiddown in Section 149(6) of the Companies Act 2013.
DISCLOSURE AS PER SEXUAL HARRASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITION ANDREDRESSAL) ACT 2013.
The Company has zero tolerance for sexual harassment at work place and has adopted apolicy on prevention prohibition and redressal of sexual harassment at workplace in linewith the provision of Sexual Harassment of Women at Workplace (Prevention Prohibition andRedressal) Act 2013 and the rules framed thereunder. As required under the Law aninternal complaints committee has been constituted for reporting and conducting inquiryinto the complaints made by the victim on the harassments at the work place.
Your Directors further state that during the year under review there were no casesfiled pursuant to the Sexual Harassment of Women at Workplace (Prevention Prohibition andRedressal) Act 2013.
Your Directors state that no disclosure or reporting is required in respect of thefollowing items as there were no transactions on these items during the year under review.
a. Details relating to deposits covered under Chapter V of the Companies Act 2013.
b. Issue of equity shares with differential right as to dividend voting or otherwise
c. Issue of shares (including sweat equity shares) to employees of the company underany scheme save and except ESOP referred to in this report.
d. No significant or material orders were passed by the regulators or Courts ortribunals which impact the going concern status and Companys operation in future.
Your Directors wish to acknowledge the valuable guidance and assistance received fromSecurities and Exchange Board of India Stock Exchanges & other RegulatoryAuthorities BNP Paribas KSIDC our clients and business partners. We look forward toreceiving their continued support and encouragement. The Board of Directors wishes toextend their thanks and appreciation and express their gratitude for the continuingcommitment and dedication of employees at all levels. The Directors are thankful to theesteemed shareholders for their support and the confidence reposed in the Company.
ANNEXURE-I TO DIRECTORS REPORT
[Details of the Employee Stock Option Scheme (ESOS) as of March 31 2016 pursuant tothe requirements under Regulation
14 of the Securities and exchange Board of India (Share Based employee Benefits)Regulations 2014]
The Company has two ESOS viz. ESOP 2007 for key Employees and ESOP 2010.
During the year under review the Company has not amended the terms of stockoptions granted under ESOP 2007 for key Employees and ESOP 2010.
The following details have been disclosed on the Companys website athttp://www.geojitbnpparibas.com
A. Relevant disclosures in terms of the Guidance note on accounting for employeeshare-based payments issued by ICAI or any other relevant accounting standards asprescribed from time to time.
The disclosures are provided in the Note 38 to the financial statements of the Companyfor the year ended 31st March 2016.
B. Diluted EPS on issue of shares pursuant to all the schemes covered under theregulations in accordance with Accounting Standard 20 - Earnings Per Shareissued by ICAI or any other relevant accounting standards as prescribed from time to time.
Details related to ESoS:
(i) The Company had in existence two ESOS during the year viz. ESOP 2007 for keyEmployees and ESOP 2010. The stock options under ESOP 2010 were granted in four tranches.The general terms and conditions of the same as given below: