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HB Portfolio Ltd.

BSE: 532333 Sector: Financials
NSE: N.A. ISIN Code: INE638B01017
BSE LIVE 09:56 | 21 Aug 23.75 -1.25
(-5.00%)
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23.75

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NSE 05:30 | 01 Jan Stock Is Not Traded.
OPEN 23.75
PREVIOUS CLOSE 25.00
VOLUME 25
52-Week high 31.50
52-Week low 12.21
P/E 47.50
Mkt Cap.(Rs cr) 28
Buy Price 23.75
Buy Qty 175.00
Sell Price 25.00
Sell Qty 200.00
OPEN 23.75
CLOSE 25.00
VOLUME 25
52-Week high 31.50
52-Week low 12.21
P/E 47.50
Mkt Cap.(Rs cr) 28
Buy Price 23.75
Buy Qty 175.00
Sell Price 25.00
Sell Qty 200.00

HB Portfolio Ltd. (HBPORTFOLIO) - Director Report

Company director report

To the Members

Your Directors are pleased to present the 21st Annual Report together with the AuditedStatements of Accounts for the year ended 31st March 2016.

FINANCIAL RESULTS

The summarized financial results of the Company during the year under review are asunder:

(Rs. in Lacs)

PARTICULARS Year Ended 31.03.2016 Year Ended 31.03.2015
Total Turnover 183.47 281.11
Gross Profit/(Loss) 25.59 146.22
Less :
(a) Depreciation 3.31 3.84
(b) Finance Cost 2.40 27.14
(c) Provision for Income Tax 13.77 34.67
Net Profit /(Loss) 6.11 80.57
Appropriations
Statutory Reserve Fund 1.22 16.11
General Reserve NIL NIL
Proposed Dividend 59.96 59.96
Tax on Dividend 12.21 12.27
Balance Brought Forward 1093.61 1101.38
Accumulated Profits 1026.33 1093.61

DIVIDEND

The Company has not earned adequate profits during the financial year ended 31stMarch 2016. However your Directors are pleased to recommend a Final Dividend @ Rs 0.50per Equity Share (5%) out of the accumulated profits earned by the Company in previousyears. Payment of Dividend is subject to the approval of the Shareholders at the ensuingAnnual General Meeting.

PERFORMANCE REVIEW & OUTLOOK

The year was marked by high volatility in the Stock Market. As a result the Divestment/ Investment activity of the Company was curtailed during the year and the Company posteda Gross Profit of ' 25.59 Lacs as compared to ' 146.22 Lacs in the previous year. Netprofit after tax for the year under review was ' 6.11 Lacs as compared to ' 80.57 Lacs inthe previous year.

The improvement in India’s economic fundamentals has accelerated in the year 2015with the combined impact of strong government reforms RBI’s inflation focussupported by benign global commodity prices. According to IMF World Economic OutlookUpdate Indian economy is expected to grow at 7.00-7.75 per cent during FY 2016-17despite the uncertainties in the global market. Notwithstanding unexpected delays inenacting some economic reform the prospects for continued rapid growth are undiminished.

Numerous foreign companies are setting up their facilities in India on account ofvarious government initiatives like Make in India and Digital India with an aim to boostthe manufacturing sector of Indian economy. This initiative is expected to increase thepurchasing power of an average Indian consumer which would further boost demand andhence spur development in addition to benefiting investors.

Industry trends and its future prospects have been summed up in the ManagementDiscussion and Analysis Report which forms part of this report.

SCHEME OF ARRANGEMENT

The Board of Directors in their meeting held on 10th February 2016 have approved aComposite Scheme of Arrangement (‘the Scheme’) between HB Portfolio Limited(‘the Company’) HB Stockholding Limited and HB Estate Developers Limited andtheir respective members and creditors under Sections 391 to 394 read with Sections 100 to104 of the Companies Act 1956 or any corresponding provisions of the Companies Act 2013subject to various approvals as may be required. The Appointed Date(s) in the Scheme are01st April 2015 to 03rd April 2015.

The Company has filed the Draft Scheme along with required documents / information withthe Bombay Stock Exchange Limited (BSE) Pursuant to Regulation 37 of the SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 read with SEBI Circular No. -CIR/CFD/CMD/16/2015 dated November 30 2015. Upon receipt of necessary observation letterfrom BSE the Company shall file the said Scheme with the Hon’ble High Court ofPunjab & Haryana at Chandigarh / National Company Law Tribunal (NCLT) or such otherforum or authority as may be designated. The Draft Scheme and other documents have beenuploaded on the website of the Bombay Stock Exchange (BSE) www.bseindia.com and also on the Company’swebsite www.hbportfoiio.com having followingweb link www.hbportfoiio.com/ InvestorInformation/Scheme of Arrangement

NBFC REGISTRATION WITH THE RESERVE BANK OF INDIA

The Reserve Bank of India (RBI) vide its letter dated 19th January 2016 informed thatRBI has decided to process Company’s application afresh and advised the Company toapply again on the basis of Audited Balance Sheet as on 31st March 2015 along with allthe requisite documents / information.

The Company has filed fresh application for registration on 08th March 2016 based onthe Audited Financials of the Company for the Financial Year ended 31st March 2015. Theinformation / clarifications sought thereafter by RBI have also been submitted by theCompany on 28th April 2016.

STATUTORY STATEMENTS

(i) Share Capital

The Paid up Equity Share Capital as on 31st March 2016 stood at ' 119923290comprising of 11992329 Equity Shares of ' 10/- each. During the year under review theCompany has neither issued any Shares with differential voting rights nor granted stockoptions nor sweat equity.

The Shareholding of Directors of the Company (including Promoter Director) is given inthe Corporate Governance Report forming part of this report.

(ii) Number of meeting(s) of the Board

During the year under review four Board Meetings were convened and held. The detailsof such meeting(s) are given in the Corporate Governance Report. The intervening gapbetween the meetings was within the period prescribed under the Companies Act 2013.

(iii) Public Deposits

The Company has not accepted any Deposits from the Public under Section 73 of theCompanies Act 2013 read with the Companies (Acceptance of Deposits) Rules 2014.

(iv) Significant and other material orders passed by the regulators or courts

There are no significant material orders passed by the Regulators or Courts or Tribunalduring the year under review which has an impact on the Going Concern status andCompany’s operations in future.

(v) Particulars of Loans Guarantees or Investments

The principal business activity of the Company is to undertake financial servicesinvesting and dealing in various kinds of securities. Details of Loans Guarantees andInvestments made by the Company in the ordinary course of its business are given in thenotes to the Financial Statements.

(vi) Conservation of Energy Technology Absorption Foreign Exchange Earnings and Outgo

The particulars required under Section 134(3)(m) of the Companies Act 2013 read withRules 8 of the Companies (Accounts) Rules 2014 in respect of conservation of energy andtechnology absorption are not applicable to your Company.

The total foreign exchange earnings during the year under review and previous period isNIL and total foreign exchange out go during the year under review and the previous periodis NIL.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to sub-section (3)(c) & (5) of Section 134 of the Companies Act 2013 itis hereby stated that:

a) in the preparation of the Annual Accounts the applicable Accounting Standards havebeen followed along with proper explanation relating to material departures;

b) 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 at the end of the Financial Year and ofthe Profit or Loss of the Company for that period;

c) the Directors have 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;

e) 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

f) the Directors have devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.

SUBSIDIARIES JOINT VENTURES AND ASSOCIATE COMPANIES

(i) Subsidiaries

HB Corporate Services Limited and HB Securities Limited are the Wholly OwnedSubsidiaries of the Company. A separate statement containing the salient features of theFinancial Statement of the Company’s Subsidiaries is being provided in Form AOC-1 alongwith Financial Statements in terms of Section 129(3) of the Companies Act 2013. TheFinancial Statements of the Subsidiary Companies will be made available upon request byany Member of the Company interested in obtaining the same. The Financial Statements ofthe Subsidiary Companies will also be kept for inspection by any Member of the Company atits Registered Office. No Company has become or ceased to be Company’s Subsidiaryduring the year under review.

The Board of Directors has approved a Policy for Determining Material Subsidiaries incompliance with the provisions of Regulation 16 of the SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015. The said Policy has been uploaded on thewebsite of the Company www.hbportfolio.comhaving following web link www.hbportfoiio.com/InvestorInformation/Corporate Governance

(ii) Joint Ventures

The Company is not having any Joint Venture business and no Company has become itsJoint Venture during the year under review.

(iii) Associate Companies

In terms of Sec 2(6) of the Companies Act 2013 Taurus Asset Management Co. LimitedTaurus Investment Trust Co. Limited HB Insurance Advisors Limited and MerwanjeeSecurities Limited are the Associate Companies. A separate statement containing thesalient features of the Financial Statement of the Company’s Associates is beingprovided in Form AOC-1 along with Financial Statements in terms of Section 129(3)of the Companies Act 2013.

MANAGEMENT DISCUSSION AND ANALYSIS AND CORPORATE GOVERNANCE REPORT

As required under Regulation 34(3) read with Schedule V of the SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 the Management Discussion& Analysis Report and a Report on the Corporate Governance together with theCompliance Certificate from the Company’s Statutory Auditor’s confirmingcompliance(s) forms an integral part of this report.

WHISTLE BLOWER POLICY - VIGIL MECHANISM

In terms of the provisions of Sec 177(9) & (10) of the Companies Act 2013 andpursuant to the provisions of Regulation 22 of the SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 a Vigil Mechanism for Stakeholders Employeesand Directors of the Company has been established. The Whistle Blower Policy duly approvedby the Board of Directors has been uploaded on the website of the Company www.hbportfolio.com having following web link www.hbportfolio.com/lnvestorInformation/Corporate Governance.

RELATED PARTY TRANSACTIONS

The Related Party Transactions that were entered during the financial year under reviewwere on arm’s length basis and were in the ordinary course of business. There were nomaterially significant Related Party Transactions entered into by the Company during theyear under review. Accordingly the disclosure of Related Party Transactions as requiredunder Section 134(3)(h) of the Companies Act 2013 in Form AOC-2 is not applicable. Noneof the Directors has any pecuniary relationships or transactions vis-a-vis the Company.

The Board of Directors on the recommendation of the Audit Committee has approved aPolicy to regulate transactions between the Company and its Related Parties in compliancewith the applicable provisions of the Companies Act 2013 the Rules made there under andRegulation 23 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations2015. The Policy on Related Party Transactions has been uploaded on the website of theCompany www.hbportfolio.com having followingweb link www.hbportfolio.com/lnvestorlnformation/ Corporate Governance.

CODE OF CONDUCT FOR PREVENTION OF INSIDER TRADING

The Company endeavors to preserve the confidentiality of un-published price sensitiveinformation and to prevent misuse of such information. The Company is committed totransparency and fairness in dealing with all Stakeholders and in ensuring adherence toall laws and regulation in force.

The Board of Directors has adopted the Code of Conduct for regulating monitoring andreporting of trading by insiders and other connected persons in compliance withRegulation 9 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations2015. The Code of Conduct lays down guidelines and procedures to be followed anddisclosures to be made while dealing with the Shares of the Company as well as theconsequences of violation. The Code of Conduct has been formulated for prevention ofInsider Trading and to maintain the highest standards of dealing in Company Securities.

PRESERVATION OF DOCUMENTS & ARCHIVAL POLICY

In terms of Regulation 9 of the Securities and Exchange Board of India (ListingObligations and Disclosure Requirements) Regulations 2015 the Board of Directors intheir meeting held on 10th February 2016 has adopted a Policy for Preservationof Documents & Archival thereof classifying them in two categories as follows:

(a) documents whose preservation shall be permanent in nature;

(b) documents with preservation period of not less than eight years after completion ofthe relevant transactions.

The said Policy has been uploaded on the website of the Company www.hbportfolio.com having following web link www.hbportfolio.com/lnvestorlnformation/Corporate Governance.

DEVELOPMENT AND IMPLEMENTATION OF A RISK MANAGEMENT POLICY

The Board of Directors has adopted the Risk Management Policy which sets out theframework for the management of risks faced by the Company in the conduct of its businessto ensure that all business risks are identified managed and monitored. The contents ofRisk Management Policy have been included in Management Discussion and Analysis formingpart of this report.

PREVENTION OF SEXUAL HARRASSMENT OF WOMEN AT WORKPLACE

The Company has zero tolerance for sexual harassment at workplace. The Board ofDirectors in their meeting held on 08lh August 2014 constituted the InternalComplaint Committee and adopted a Policy on prevention prohibition and redressal ofsexual harassment at workplace in line with the provisions of the Sexual Harassment ofWomen at Workplace (Prevention Prohibition and Redressal) Act 2013 and the rules framedthereunder. The Internal Complaint Committee comprises of following members:

(i) Mrs. Banmala Jha Presiding Officer (Sr. V.P Legal - HB Stockholding Ltd.)

(ii) Mrs. Madhu Suri Member (Working in the Delhi Legal Services Authority as aCounsellor)

(iii) Mr. Anil Goyal Member (Managing Director)

(iv) Mr. Dinesh Kapoor Member (Company Secretary)

There are no Women employees in the Company and the Company has not received anycomplaints on sexual harassment during the year under review.

INTERNAL CONTROLS SYSTEMS AND THEIR ADEQUACY

The Company has proper and adequate system of Internal Controls. The information aboutInternal Controls is set out in the Management Discussion and Analysis forming part ofthis report.

INTERNAL FINANCIAL CONTROLS

The Company has established Internal Financial Control System for ensuring the orderlyand efficient conduct of the business including adherence to Company’s Policies thesafeguarding of assets the prevention and detection of frauds and errors the accuracyand completeness of the accounting records and the timely preparation of reliableFinancial Statements.

AUDITORS

(i) Statutory Auditors

M/s. P. Bholusaria & Co. Chartered Accountants New Delhi (Firm Registration No.:000468N) the Statutory Auditors of the Company shall hold office till the conclusion ofthe ensuing Annual General Meeting and being eligible offers themselves for reappointment.The Company has received a letter from them to the effect that their reappointment ifmade would be within the prescribed limits under Section 141(3)(g) of the Companies Act2013 and they are not disqualified for re-appointment. Observations of the StatutoryAuditors are explained wherever necessary by way of Notes to the Financial Statements.

(ii) Internal Auditors

M/s. M.K. Choudhary & Co. Chartered Accountants New Delhi performs the duties ofthe Internal Auditors of the Company and their report is reviewed by the Audit Committeeon quarterly basis.

(iii) Secretarial Auditors

Pursuant to the provisions of Section 204 of the Companies Act 2013 and the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Company hasappointed Mr. A.N. Kukreja Proprietor M/s. A.N Kukreja & Co. Company Secretary inPractice to undertake the Secretarial Audit of the Company. The Secretarial Audit Reportis enclosed as a part of this report as "ANNEXURE - I".

The Secretarial Auditors have made following observations in their Secretarial AuditReport:

(a) The Company did not have a Chief Financial Officer (CFO) as required under Section203 of the Companies Act 2013.

Director’s Comment: The management is making all suitable efforts forsearching right candidate for the post of the Chief Financial Officer (CFO) being the KeyManagerial Personnel (KMP) of the Company as required under Sec 203 of the Companies Act2013.

(b) The Company was required to spend '9.82 Lacs on Corporate Social Responsibility(CSR) activities during the year under review. The Company has spent'4.66 Lacs on CSRactivities as at 31st March 2016. Further a sum of'6.50 Lacs has been spent subsequentto the year end.

Director’s Comment: The Company has made total contribution of ' 11.16 Lacs asagainst ' 9.82 Lacs towards CSR activities by providing financial assistance towardspreventive health care services and provision of safe drinking water. However ' 6.50 Lacshas been spent subsequent to year end due to slight delay in required documentation andother formalities.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

The Board of Directors has constituted a Corporate Social Responsibility Committee (CSRCommittee) pursuant to the provisions of Section 135 of the Companies Act 2013. Thecomposition of the CSR Committee has been mentioned in the Corporate Governance Reportforming part of this report. The Board of Directors on the recommendation of the CSRCommittee has approved the Corporate Social Responsibility Policy (CSR Policy) of theCompany and disclosed its contents in "ANNEXURE - II" forming part ofthis report. The CSR Policy has also been uploaded on the website of the Company www.hbportfolio.com having following web link www.hbportfolio.com/lnvestorlnformation/CSR.

As a part of the CSR initiatives your Company during the financial year 2015-2016 hasundertaken CSR activities in the areas of preventive health care and provision of safedrinking water. These projects are in accordance with Schedule VII of the Companies Act2013. The report on CSR activities is attached as "ANNEXURE - IIA" formingpart of this report.

DIRECTORS AND KEY MANAGERIAL PERSONNEL (KMP)

(a) Appointment / Re-appointment / Resignation of Directors and KMP

As per the provisions of Section 152 of the Companies Act 2013 Mr. Jagmohan Lal SuriDirector shall retire by rotation at the ensuing Annual General Meeting and beingeligible offers himself for re-appointment. The Board of Directors recommends hisreappointment.

The Company has also received declarations from all the Independent Director(s)confirming that they meet with the criteria of Independence as prescribed both underSection 149(6) of the Companies Act 2013 and under Regulation 16(1)(b) 25(1) of the SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015.

(b) Nomination and Remuneration Policy

The Board of Directors on the recommendation of the Nomination & RemunerationCommittee has approved a Policy for selection appointment & remuneration includingcriteria for determining qualifications positive attributes of Directors Key ManagerialPersonnel (KMP) and Senior Management employees of the Company. The said policy isenclosed as a part of this report as "ANNEXURE - III".

(c) Board Diversity

The Company recognizes the importance and benefits of having the diverse Board toenhance quality of its performance.

The Company believes that a diverse Board will enhance the quality of the decisionsmade by the Board by utilizing the different skills qualification professionalexperience gender knowledge etc. of the members of the Board necessary for achievingsustainable and balanced growth of the Company. The Board of Directors on therecommendations of the Nomination and Remuneration Committee has adopted a Policy onDiversity of Board of Directors in terms of Regulation 19 of the SEBI (Listing Obligationsand Disclosure Requirements) Regulations 2015.

(d) Board Evaluation

Pursuant to the provisions of the Companies Act 2013 and applicable provisions of theSEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 the Board hascarried out an Annual performance evaluation of its own performance and of all theDirectors individually as well as the evaluation of the working of Audit Nomination &Remuneration and other Compliance Committees. The manner in which the evaluation has beencarried out is explained in the Corporate Governance Report.

(e) Remuneration of the Directors / Key Managerial Personnel (KMP) and Particulars ofEmployees

The provisions of Rule 5(2) & 5(3) of the Companies (Appointment and Remunerationof Managerial Personnel) Rules 2014 are not applicable as there are no such employee whowere drawing / in receipt of remuneration of prescribed amount during the period underreview.

The information required pursuant to Section 197(12) of the Companies Act 2013 readwith Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules2014 in respect of Directors / Key Managerial Personnel (KMP) and Employees of the Companyis furnished hereunder:

(i) the ratio of the remuneration of each Director to the median remuneration ofthe employees of the Company for the financial year &

(ii) the percentage increase in remuneration of each Director Chief FinancialOfficer Chief Executive Officer Company Secretary or Manager if any in the financialyear.

Name Category Ratio/Times per Median of employee remuneration % Increase in remuneration
1. Mr. Anil Goyal Managing Director (Executive) 7.05 NIL
2. Mr. Lalit Bhasin Director (Non-Executive) NIL NIL
3. Mr. Jagmohan Lal Suri Director (Non-Executive) NIL NIL
4. Mr. Raj Kumar Bhargava Director (Non-Executive) NIL NIL
5. Mr. Ramesh Chandra Sharma Director (Non-Executive) NIL NIL
6. Mr. Bhuneshwar Lal Chadha Director (Non-Executive) NIL NIL
7. Mrs. Anita Jain Director (Non-Executive) NIL NIL
8. Mr. Dinesh Kapoo r (Company Secretar y) 26.50%

The Non-Executive Directors are paid only sitting fees for attending meeting of theBoard of Directors and the Committees constituted by the Board.

(iii) the number of permanent employees on the rolls of Company.

There are three permanent employees on the rolls of the Company as on 31st March 2016.

(iv) the explanation on the relationship between average increase in remunerationand Company performance.

Not Applicable

(v) comparison of the remuneration of the Key Managerial Personnel against theperformance of the Company.

Particulars (Rs. Lacs)
Remuneration of Key Managerial Personnel (KMP) (aggregated) 65.64
Total Revenue 183.47
Remuneration (as % of revenue) 35.78
Profit Before Tax (PBT) 19.88
Remuneration (as % of PBT) 330.18

(vi) variations in the market capitalisation of the Company price earnings ratioas at the closing date of the current financial year and previous financial year andpercentage increase over decrease in the market quotations of the shares of the Company incomparison to the rate at which the Company came out with the last public offer in case oflisted companies and in case of unlisted companies the variations in the net worth ofthe Company as at the close of the current financial year and previous financial year.

Particulars As at 31st March 2016 As at 31st March 2015 Variation
Closing rate of Share (BSE) 0 11.91 20.50 (41.90)%
EPS (Consolidated) (?) 5.28 (3.69) (243.09)%
Market Capitalization (?/Lacs) 1428.29 2458.43 (41.90)%
Price Earning ratio 2.26 5.56 (59.35)%

(vii) average percentile increase already made in the salaries of employees otherthan the managerial personnel in the last financial year and its comparison with thepercentile increase in the managerial remuneration and justification thereof and point outif there are any exceptional circumstances for increase in the managerial remuneration.

Nil

(viii) Comparison of each remuneration of the Key Managerial Personnel against theperformance of the Company.

Particulars Managing Director Company Secretary
Remuneration 51.22 14.42
Revenue 183.47 183.47
Remuneration (as % of revenue) 27.92 7.86
Profit Before Tax (PBT) 19.88 19.88
Remuneration (as % of PBT) 257.65 72.54

(ix) the key parameters for any variable component of remuneration availed by thedirectors. Nil

(x) the ratio of the remuneration of the highest paid director to that of theemployees who are not directors but receive remuneration in excess of the highest paiddirector during the year.

None

(xi) The remuneration paid to the Directors / Key Managerial Personnel (KMP) is inaccordance with the remuneration policy of the Company.

EXTRACT OF ANNUAL RETURN

The extract of Annual Return as provided under sub-section (3) of Section 92 in FormMGT-9 is enclosed as a part of this report as "ANNEXURE - IV" .

ACKNOWLEDGMENTS

Your Directors wish to thank and acknowledge the co-operation assistance and supportextended by the Banks Company’s Shareholders and Employees.

FOR AND ON BEHALF OF THE BOARD

Sd/-
LALIT BHASIN
Place : Gurgaon (Chairman)
Date : 26th May 2016 DIN: 00002114