HB Portfolio Ltd.
|BSE: 532333||Sector: Financials|
|NSE: N.A.||ISIN Code: INE638B01017|
|BSE 00:00 | 09 Mar||HB Portfolio Ltd|
|NSE 05:30 | 01 Jan||HB Portfolio Ltd|
HB Portfolio Ltd. (HBPORTFOLIO) - Director Report
Company director report
To the Members
Your Directors are pleased to present the 22nd Annual Report together with the AuditedFinancial Statement for the Financial Year ended 31st March 2017.
The summarized financial results of the Company during the year under review are asunder:-
(Rs. In Lacs)
The Directors regret their inability to recommend any Dividend for the Financial Year2016-2017.
PERFORMANCE REVIEW & OUTLOOK
The Company posted a Gross Profit of Rs. 76.48 Lacs as compared to Rs. 25.59 Lacs inthe previous year. Net profit after tax for the year under review was Rs. 63.85 Lacs ascompared to Rs. 6.11 Lacs in the previous year.
The Indian Economy has continued to consolidate the gains achieved in restoringmacroeconomic stability. Real GDP growth in the first half of the year was 7.2 percent onthe weaker side of the 7.0-7.75 per cent projection in the Economic Survey 2015-16 andsomewhat lower than the 7.6 percent rate recorded in the second half of 2015-16. The mainproblem was fixed investment which declined sharply as stressed balance sheets in thecorporate sector continued to take a toll on firms Rs. spending plans.
An economy recovering from demonetisation will need policy support. On the assumptionthat the equilibrium cash-GDP ratio will be lower than before demonetisation the bankingsystem will benefit from a higher level of deposits. Thus market interest ratesdeposits lending and yields on ten years government securities should be lower in2017-18 than 2016-17. This will provide a boost to the economy.
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 had approved aComposite Scheme of Arrangement (the Scheme') between HB Portfolio Limited(the Company') HB Stockholding Limited and HB Estate Developers Limited and theirrespective members and creditors under Sections 391 to 394 read with Sections 100 to 104of 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 02nd April 2015 and 03rd April 2015as particularly defined in the Scheme of Arrangement.
The Company received NIL Observation Letter / No Objection Certificate dated 23rd June2016 from the Bombay Stock Exchange (BSE Limited) in terms of Regulation 37 of SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015.
In terms of the order dated 16th September 2016 passed by the Hon'ble HighCourt of Punjab & Haryana at Chandigarh the Court Convened Meeting (CCM) of theEquity Shareholders of the Company was held on 03rd December 2016 at 02.30 P.M. TheEquity Shareholders of the Company accorded their necessary approval to the Scheme withthe requisite majority. The Company has also received requisite approval to the Schemefrom its Public Equity Shareholders by way of Postal Ballot including e-voting result ofwhich was declared on 05th December 2016 pursuant to SEBI Circular bearing No.CIR/CFD/CMD/16/2015 dated November 30 2015.
The Company Petition has been duly transferred from the Hon'ble High Court of Punjaband Haryana Chandigarh to the National Company Law Tribunal Chandigarh Bench atChandigarh as per the provisions of Sec 230 to 233 of the Companies Act 2013 read withthe Companies (Compromises Arrangements and Amalgamations) Rules 2016 and the Companies(Transfer of Pending Proceedings) Rules 2016 notified by the Ministry of CorporateAffairs vide its Notification Dated 07th December 2016 which came into forcewith effect from 15th December 2016.
The matter came up for hearing on 11th May 2017 before the National Company LawTribunal (NCLT) Chandigarh Bench at Chandigarh. The Hon'ble Bench of NCLT admitted theSecond Motion Application filed by the Company and passed an order for issuing Noticealong with copy of Petition and Scheme to various authorities. The next date of hearinghas been fixed for 20th July 2017.
The Copy of Scheme of Arrangement along with all other documents are available on thewebsite of the Bombay Stock Exchange (BSE Limited) http://www.bseindia.comand also on the Company's website having following web link http://www.hbportfolio.com/Scheme_of_Arrangement.html
NBFC REGISTRATION WITH THE RESERVE BANK OF INDIA
The Company had filed fresh application for registration on 08th March 2016 with theReserve Bank of India. The information / clarifications sought thereafter by RBI from timeto time have been duly submitted by the Company. The matter has also been taken up withthe General Manager RBI Central Office Mumbai for the inordinate delay in granting theCertificate of Registration to the Company.
(i) Share Capital
The Paid up Equity Share Capital as on 31st March 2017 stood at Rs. 119923290comprising of 11992329 Equity Shares of Rs. 10/- each. During the year under reviewthe Company has neither issued any Shares with differential voting rights nor grantedstock options 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 maximum intervalbetween any two meeting(s) did not exceed 120 days as prescribed in the Companies Act2013.
(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 and Company'soperations 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
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 Subsidiary duringthe 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 is available on the website ofthe Company having following web link http://www.hbportfolio.com/PdfFiles/PDMS.pdf
(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 CompanyLimited Taurus Investment Trust Company Limited HB Insurance Advisors Limited andMerwanjee Securities Limited are the Associate Companies. A separate statement containingthe salient 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 theCompanies Act 2013.
MANAGEMENT DISCUSSION & 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; a Report on the Corporate Governance together with the ComplianceCertificate from the Company's Statutory Auditor's confirming compliance(s) forms anintegral 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 is available on the website of the Company having following weblink http://www.hbportfolio.com/PdfFiles/WBP.pdf
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. The AuditCommittee has accorded its omnibus approval for the said transactions. The Company has notentered into any materially significant Related Party Transaction under Sec 188 of theCompanies Act 2013. 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--vis the Company.
In terms of Regulation 23 of SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 read with Company's Policy on Related Party Transactions consent of themembers is sought in this Annual General Meeting for the material related partytransaction entered into by the Company with Taurus Asset Management Company Limited formaking investment through subscribing Equity Shares of Taurus Asset Management CompanyLimited issued on Rights basis to the Company aggregating to Rs. 49852754/- (RupeesFour Crore Ninety Eight Lakhs Fifty Two Thousand Seven Hundred Fifty Four Only).
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 is available on the website of the Companyhaving following web link http://www.hbportfolio.com/PdfFiles/RPT.pdf
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 is available on the website of the Company having following web linkhttp://www.hbportfolio.com/PdfFiles/PDAP.pdf
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 08th 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)
The Company has not received any complaints on sexual harassment during the year underreview. The women employees were made aware about the provisions of the Sexual Harassmentof Women at Workplace (Prevention Prohibition and Redressal) Act 2013 and rules madethere under and the provisions of Internal Complaint Policy of the Company.
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.
(i) Statutory Auditors
The term of M/s. P. Bholusaria & Co. Chartered Accountants New Delhi (FirmRegistration No.: 000468N) existing Statutory Auditors of the Company shall expire at theensuing Annual General Meeting as per the provisions of Section 139 of the Companies Act2013.
On the recommendations of the Audit Committee the Board of Directors in their meetingheld on 29th May 2017 considered and recommended for the appointment of M/sG.C. Agarwal & Associates Chartered Accountants (FRN: 017851N) as the new StatutoryAuditors of the Company for a term of five (5) consecutive years subject to the approvalof the Members to hold office from the conclusion of 22nd Annual GeneralMeeting until the conclusion of 27th Annual General Meeting of the Company. TheCompany has received a letter from them to the effect that their appointment if madewould be within the prescribed limits under Section 141(3)(g) of the Companies Act 2013and they are not disqualified for appointment.
M/s G.C. Agarwal & Associates Chartered Accountants Delhi (FRN 017851N) has beenassociated with the CA profession since last Thirty Three (33) years. The Firm is engagedin the Audit of Private and Public Limited Companies Societies and various otherentities. These audits include Statutory & Tax Audits Internal and Management andSystem Audits Stock Audits and other Special Assignments. The Firm is holding a PeerReview Certificate issued by The Institute of Chartered Accountants of India New Delhi.
Observations of the Statutory Auditors are explained wherever necessary by way ofNotes to the Financial Statements.
(ii) Internal Auditors
M/s. Marv & Associates LLP (Formerly M.K. Choudhary & Co.) CharteredAccountants New Delhi performs the duties of the Internal Auditors of the Company andtheir report is reviewed by the Audit Committee on 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.c
Director's Comment: The management is making all suitable efforts for searching rightcandidate for the post of the Chief Financial Officer (CFO) being the Key ManagerialPersonnel (KMP) of the Company as required under Sec 203 of the Companies Act 2013.
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 of thisreport. The CSR Policy is available on the website of the Company having following weblink http://www.hbportfolio.com/CSR/PdfFiles/CSR.pdf
As a part of the CSR initiatives your Company during the financial year 2016-2017 hasundertaken CSR activities in the areas of preventive health care in accordance withSchedule VII of the Companies Act 2013. The report on CSR activities is attached as"ANNEXURE - IIA" forming part 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. Lalit BhasinDirector shall retire by rotation at the ensuing Annual General Meeting and beingeligible offers himself for re-appointment. The Board of Directors recommends hisre-appointment.
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 of theemployees of the Company for the financial year;
(ii) the percentage increase in remuneration of each Director Chief Financial OfficerChief Executive Officer Company Secretary or Manager if any in the financial year.
The Non-Executive Directors are paid only sitting fees for attending meeting of theBoard of Directors and the Committees constituted by the Board.
(iii) There is no increase in the median remuneration of employees in the financialyear.
(iv) There are five permanent employees on the rolls of the Company as on 31st March2017.
(v) average percentile increase already made in the salaries of employees other thanthe managerial personnel in the last financial year and its comparison with the percentileincrease in the managerial remuneration and justification thereof and point out if thereare any exceptional circumstances for increase in the managerial remuneration: Nil
(vi) the key parameters for any variable component of remuneration availed by thedirectors: Not Applicable
(vii) 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".
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
Place : Gurugram
Date : 29th May 2017