DIRECTORS' REPORT AND MANAGEMENT DISCUSSION AND ANALYSIS
The Board of Directors are pleased to present herewith the Twenty-second Annual Reportof your Company together with the Audited Financial Statements for the financial yearended 31st March 2017. The Management Discussion and Analysis has also been incorporatedinto this report.
1. FINANCIAL RESULTS
| || ||(Rs. In Lakhs) |
|Particulars ||Year Ended 31st March 2017 ||Year Ended 31st March 2016 |
|Gross Total Income ||2682.25 ||2187.66 |
|Expenditure ||1832.33 ||1811.35 |
|Finance Cost ||43.62 ||62.06 |
|Gross Profit (Loss) ||806.30 ||314.25 |
|Depreciation ||12.57 ||19.79 |
|Profit / (Loss) Before Tax ||793.73 ||294.46 |
|Provision for Taxation || || |
|Current ||257.00 ||90.25 |
|Deferred ||-1.82 ||-1.84 |
|Provision for Earlier Year ||-0.09 ||6.36 |
|Net Profit (Loss) after Tax ||538.64 ||199.69 |
|Balance B/f from last Year ||3240.67 ||3140.90 |
|Appropriations: || || |
|Proposed Dividend ||103.77 ||83.02 |
|Tax on Equity Dividend ||21.13 ||16.90 |
|Balance c/f to the Balance Sheet ||3654.41 ||3240.67 |
2. OVERVIEW OF FINANCIAL PERFORMANCE
The Company has a Trading-cum-Clearing Membership of BSE Ltd and National StockExchange of India Ltd in their Cash and Derivative segment and Trading Member ofMetropolitan Stock Exchange Ltd in Currency Derivatives and providing Capital Marketservices through the network of branches and sub-brokers/authorised persons.
The Company is also a Depository Participant of Central Depository Services (I) Ltd andproviding the depository services to the Clients.
Total Income for the year increased to Rs. 2682.25 lakhs as compared to Rs.2187.66lakhs last year. Total profit before tax for the year 793.37 lakhs as against Rs. 294.46lakhs last year and the net profit after tax was Rs.538.64 lakhs as against Rs. 199.69lakhs last year.
M/s. Joindre Commodities Ltd. a subsidiary of the Company is providing services fortrading in commodity futures as a members of National Commodity & Derivatives ExchangeLimited and Multi Commodity Exchange of India Ltd.
Your Directors are pleased to recommend a dividend of Rs.0.75/- per Equity Share of Rs.10/- each (previous year Rs. 0.60). The total outgo for the current year amounts toRs.124.90 lakhs including dividend distribution tax of Rs.21.13 lakhs (previous year Rs.99.92 lakhs including dividend distribution tax of Rs. 16.90 lakhs)
4. SHARE CAPITAL
The paid up Equity Share Capital as on 31st March 2017 was Rs. 1383.64 Lakhs. Duringthe year under review the Company has not issued any shares with differential votingrights nor granted stock options nor sweat equity. As on 31st March 2017 the Directorsof the Company hold the Equity Shares of the Company as follows:
|Name of the Director || ||Number of Shares ||% of Total Capital |
|Mr. Anil Mutha ||Whole Time Director ||1771000 ||12.80 |
|Mr. Dinesh Khandelwal ||Whole Time Director ||771600 ||5.58 |
|Mr. Paras Bathia ||Whole Time Director ||1266850 ||9.16 |
|Mr. Subhash Agarwal ||Whole Time Director ||565450 ||4.09 |
|Mr. Sunil Jain ||Whole Time Director ||470160 ||3.40 |
|Mr. Haresh Mehta ||Independent Director ||Nil ||NA |
|Mr. Ramavtar Badaya ||Independent Director ||Nil ||NA |
|Mr. Ravi Jain ||Independent Director ||Nil ||NA |
|Mrs. Sonali Chaudhary ||Independent Director ||Nil ||NA |
|Mr. Veepin Thokal ||Independent Director ||1000 ||0.00 |
Cash and cash equivalent as at 31st March 2017 was Rs. 2428.39 lakhs. The Companycontinues to focus on judicious management of its Working Capital. ReceivablesInventories and other Working Capital parameters were kept under strict check throughcontinuous monitoring.
The Company has not accepted deposit falling within the ambit of Section 73 of theCompanies Act 2013 and the Companies (Acceptance of Deposits) Rules 2014.
5.2 PARTICULARS OF LOANS GUARANTEES
Details of Loans Guarantees and Investments covered under the provisions of Section186 of the Companies Act 2013 are given in the notes to the Financial Statements.
5.3 TRANSFER TO RESERVES
The Board do not propose to transfer any amount to General Reserve or any otherReserves.
6. CORPORATE SOCIAL RESPONSIBILITY INITIATIVES
The criteria prescribed for the applicability of Corporate Social Responsibility underSection 135 of the Companies Act 2013 is not applicable to the Company.
7. BUSINESS RISK MANAGEMENT
The main activities of the Company is retail stock broking through the network ofbranches and sub-brokers authorised persons. The Compliance Department ensures thatvarious existing policies regarding registration of clients risks relating to clientlevel dealing in penny stocks exposure limit brokerage rates suspending/ closure ofclient's account etc. are in place in compliance with the Exchange Rules and Regulationsso that business risk is minimised and there are no penal action by the RegulatoryAuthorities. The Company has taken adequate measures to secure interest of the clients.The Trader Terminal provided to the client offer on line real time data such as ledgerbalance of stock and funds position etc. Company transfers clients' funds and securitiesto their designated bank and demat account and all receipt and payment from/to clients arethrough account payee cheque only and no cash payment/acceptance is permitted. YourCompany's risk management system comprises of prudential norms timely reporting andstringent controls. The various policies of the company internal control systems ensuresoperational efficiency and mitigate risk. Technology is an integral part of the Company'sbusiness operations and hence to mitigate the risk to technology failure your company hastaken up steps like use of sophisticated firewalls to protect the IT infrastructure fromhacking/data leakage and security breaches multiple options for internet bandwidth andinternet connectivity. The Client level risk in broking operations is managed throughsystem.
Risks Management committee: Though under Regulation 21 of SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 it is not mandatory for the Company toconstitute Risks Management Committee however the Company has formed the RisksManagement Committee. In the board meeting there is a formal discussion on identifyingrisk to the business and how to mitigate the same. The Board periodically reviews thecompany's financial and risk management policies systems and framework and ensures thatrisk is minimised.
8. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
The Company has an Internal Control System commensurate with the nature of businesssize scale of its operations. The Company monitors and evaluates the efficacy andadequacy of internal control system its compliance with operating systems accountingprocedures and other policies of the Company. Based on the report of Statutory Auditors aswell as periodic internal audit function carried out by a firm of Chartered Accountantcorrective action in the respective areas is taken thereby strengthen the controls. Thesignificant audit observations and corrective actions thereon are presented to the AuditCommittee and the Board periodically. Also there is a full fledged Compliance Departmentheaded by the qualified professional to ensure statutory compliances.
9. VIGIL MECHANISM/WHISTLE BLOWER POLICY
The Company has a vigil mechanism through a Whistle Blower Policy for Employees to dealwith instance of fraud and mismanagement if any. The details of the Whistle Blower Policyis explained in the Corporate Governance Report.
10. SUBSIDIARY COMPANY
The Company has one Wholly Owned Subsidiary Company M/s. Joindre Commodities Ltd(JCL). The salient features of financial statement of the Subsidiary pursuant to thefirst proviso to sub-section 3 of section 129 read with rule 5 of the Companies (Accounts)Rule 2014 in the Form AOC-1 is given below:
| || ||(Rs in Lakhs) |
|Sr.No ||Particulars ||Joindre Commodities Ltd |
|1 ||Reporting Period ||April 2016 to March 2017 |
|2 ||Reporting Currency ||Rupees |
|3 ||Country ||India |
|4 ||Exchange Rate ||NA. |
|5 ||Share Capital ||75.00 |
|6 ||Reserves and Surplus ||49.12 |
|7 ||Total Assets ||143.94 |
|8 ||Total Liabilities ||143.94 |
|9 ||Investment other than || |
| ||Investment in subsidiary ||0 |
|10 ||Turnover ||9.90 |
|11 ||Profit before taxation ||0.83 |
|12 ||Provision for Taxation ||0.25 |
|13 ||Profit after taxation ||0.58 |
|14 ||Proposed Dividend ||Nil |
11. DIRECTORS/KEY MANAGERIAL PERSONS:
Mr. Subhash Agarwal (DIN No. 00022127) and Mr. Dinesh Khandelwal (DIN No. 00052077)Whole Time Directors of the Company retire by rotation at the ensuing Annual GeneralMeeting and being eligible offer themselves for re-appointment.
Mr. Ramavtar Badaya was appointed as additional Director by the Board at its meetingheld on 30-5-2016 and was appointed as an Independent Director of the Company for a termof 5 (five) consecutive years at the 21st Annual General Meeting held on 27-8-2016
11.1 PERFORMANCE EVALUATION OF BOARD
AND ITS' COMMITTEES
Pursuant to the provisions of the Companies Act 2013 and the SEBI (Listing Obligationsand Disclosure Requirements) Regulations 2015 the Board has carried out an annualperformance evaluation of its own performance the directors individually as well as theevaluation of the working of its Audit Committee Nomination and Remuneration Committee.The manner in which the evaluation has been carried out has been explained in theCorporate Governance Report.
11.2 REMUNERATION POLICY
The Board has on the recommendation of the Nomination & Remuneration Committeeframed a policy for selection and appointment of Directors Senior Management and theirremuneration. The Remuneration Policy is stated in the Corporate Governance Report.
A calendar of Meetings is prepared and circulated in advance to the Directors.
During the year five Board Meetings and four Audit Committee Meetings were convened andheld. The details of Board Meetings and various Committee Meetings are given in theCorporate Governance Report. The intervening gap between the Meetings was within theperiod prescribed under the Companies Act 2013/SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015.
11.4 FAMILIARISATION PROGRAMME FOR
The Company keeps its Directors informed of the activities of the Company itsmanagement and provides overall capital market perspective and the issues faced by themarket. The details of familiarization programme is explained in the Corporate GovernanceReport and are also available on the Company's website under the head Investor Relations
12. DIRECTORS' RESPONSIBILITY STATEMENT
To the best of their knowledge and belief and according to the information andexplanations obtained by them your Directors make the following statements in terms ofSection 134(3)(c) of the Companies Act 2013:
a) that in the preparation of the annual financial statements for the year ended 31stMarch 2017 the applicable accounting standards have been followed along with properexplanation relating to material departures if any;
b) that such accounting policies have been selected and applied consistently andjudgment and estimates have been made that are reasonable and prudent so as to give a trueand fair view of the state of affairs of the Company as at 31st March 2017 and of theprofit of the Company for the year ended on that date;
c) that proper and sufficient care has been taken for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities;
d) that the annual financial statements have been prepared on a going concern basis;
e) that proper internal financial controls were in place and that the financialcontrols were adequate and were operating effectively.
f) that systems to ensure compliance with the provisions of all applicable laws were inplace and were adequate and operating effectively.
13. RELATED PARTY TRANSACTIONS
All related party transactions that were entered into during the financial year were onan arm's length basis and in the ordinary course of business. There are no materiallysignificant related party transactions i.e. transactions exceeding ten per cent of annualconsolidated turnover as per the last audited financial statements were entered by theCompany with Promoters Directors Key Managerial Personnel or other designated personswhich may have a potential conflict with the interest of the Company at large. Accordinglythe disclosure of related party transactions as required under Section 134(3) (h) of theCompanies Act 2013 in form AOC-2 is not applicable.
All Related Party Transactions are placed before the Audit Committee as also the Boardfor approval. Prior omnibus approval of the Audit Committee is obtained on yearly basisfor the transactions which are of a foreseen and repetitive nature. The transactionsentered into pursuant to the omnibus approval so granted are at arms length and astatement giving details of all related party transactions is placed before the AuditCommittee and the Board of Directors for their approval on a quarterly basis. The policyon Related Party Transactions as approved by the Board is uploaded on the Company'swebsite. The policy ensures that proper reporting approval and disclosure process are inplace for all transactions between the Company and the related parties.
14. SIGNIFICANT AND MATERIAL ORDERS PASSED
BY THE REGULATORS OR COURTS
There are no significant material orders passed by the Regulators/Courts which wouldimpact the going concern status of the Company and its future operations.
15.1 STATUTORY AUDITORS
Pursuant to Section 139 of the Companies Act 2013 read with the Rules framedthereunder the term of office of M/s. Banshi Jain Associates Chartered AccountantsMumbai as the Statutory Auditors of the Company will conclude at the conclusion of theforthcoming Annual General Meeting of the Company.
The Board placed on record its appreciation for the services rendered by M/s. BanshiJain Associates as the Statutory Auditors. Subject to the approval of the Members theBoard of Directors of the Company has recommended the appointment of M/s Jigna ShethAssociates Chartered Accountants (Firm Registration No.134922W) as the Statutory Auditorsof the Company pursuant to section 139 of the Companies Act 2013. The resolution isincluded at item No 5 of the notice convening the Annual General Meeting.
The notes on the financial statement referred to in the Auditors Report are selfexplanatory and do not call for any further comments. The Auditors Report does not containany qualification reservations or adverse remark.
15.2 SECRETARIAL AUDIT
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 M/s. .P. P. Shah & Co. Practicing Company Secretaries to undertake theSecretarial Audit of the Company. The Secretarial Audit Report is annexed herewith as"Annexure A" The Secretarial Audit Report does not contain any qualificationreservations or adverse remark.
16. CORPORATE GOVERNANCE
The Corporate governance practices followed by the Company together with a certificatefrom the Company's Auditors confirming compliance of the same forms an integral part ofthis Report.
17. ENERGY CONSERVATION TECHNOLOGY
ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
The Company has been taking all the possible measures to conserve the energy and useand adopt best technology available in the market.
I) Energy Conservation:
In order to conserve the energy the Company has taken the following steps: a)replacement of old computers and office equipments with power savings devices as and whenrequired. b) Switching of lights when not required. c) Minimizing usage of Airconditioners
II) Technology absorption:
The Company has full-fledged IT Department which keeps abreast of technologicaladvancement and try and adopt the same for day to day operations. The Company offers userfriendly trading terminals and trading platforms to its clients. The Company has in placeWide Area Networking high breed lease lines use of Vsats in remote areas RiskManagement software etc.
III) There is no Foreign Exchange earnings and outgo during the year
18. EXTRACT OF ANNUAL RETURN
The details forming part of the extract of the Annual Return in form MGT-9 is annexedherewith as "Annexure B".
19. PARTICULARS OF EMPLOYEES AND RELATED
The information relating to remuneration and other details as required under Section197(12) of the Companies Act 2013 read with Rule 5(1) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 is annexed herewith as Annexure"C"
The information required pursuant to Section 197 read with Rule 5 of The Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 in respect of employeesof the Company are not applicable to the Company as no Employee of the Company is inreceipt of remuneration of Rs. 6000000/- p.a. or Rs. 500000/- p.m.
20. CONSOLIDATED FINANCIAL STATEMENTS
The Consolidated Financial Statements of the Company prepared in accordance withrelevant Accounting Standards issued by the Institute of Chartered Accountants of Indiaform part of this Annual Report.
21. LISTING OF SHARES
The Company's shares are listed on BSE Ltd. Mumbai and the Company has paid theListing Fees for the same.
22. CAUTIONARY STATEMENT
Statements in the Board of Directors Report and the Management Discussion &Analysis describing the Company's objectives expectations or forecasts may beforward-looking within the meaning of applicable securities laws and regulations. Actualresults may differ materially from those expressed in the statement. Important factorsthat could influence the Company's operations include global economy governmentregulations tax laws economic developments within the country and market sentiment.
23. INDUSTRY STRUCTURE AND DEVELOPMENTS
The main activity of the Company is retail broking through network of branchessub-broker and authorized persons. The internet based trading facilities offered by thecompany is popular and widely used by the clients and viewers. The Company offers ResearchReport and financial updates to Individual Clients. The Company is also renderingDepository Services to its clients.
24. OPPORTUNITIES AND THREATS
On account of stabilized oil prices strong rupee against Dollar proposedimplementation of GST and timely good monsoon the Market is likely to sustain momentum .
25. SEGMENT-WISE OR PRODUCT-WISE
The Company is engaged in broking business and the revenues generated from brokingactivities in the Cash and Derivatives Segments of both the Exchanges BSE and NSE andhence there is no separate segment reporting.
During the year under review the benchmark Sensex at 30000 which was a record highresulting in Foreign investors domestic mutual fund flow at record high. Indian Economycurrently stands on a strong footing with interest rate rolling downward fiscal deficitmostly under control. Due to demonetization we expect tepid economic activity to continuefor next few months but positive impact in long term due to higher taxbase proposedimplementation of GST. and simplified tax laws. The second consecutive year of normalrainfall coupled with Govertnment's continued push for reforms and ease of doing businesswill be a major boost for the economy and for the Capital Market. This will in turn helpthe company in terms of volume and profitability.
27 HUMAN RESOURCES
Your company has been able to employ and retain qualified professionals by offering thechallenging work environment and compensation. The Company provides in house training toits employees. There were 73 employees as at 31-3-2017.
28. FORWARD LOOKING STATEMENT
The Statements made in this report describe the Company's objectives and projectionsthat may be forward looking statements which are based on certain assumptions andexpectations of future events. The Company's actual results may differ materially fromthose projected in any such forward looking statements depending on economic conditionsgovernment policies and decisions which are beyond the control of the Company.
29. SEXUAL HARASSMENT OF WOMEN AT WORK
As required under the provisions of Sexual Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013 the Company has formed a Committee andalso adopted policy on prevention and redressal of grievance relating to sexual harassmentof women at work place. There were nil complaints pending/received on sexual harassmentduring the year under review.
The Board wishes to place on records its appreciation to all its ShareholdersCustomers Bankers Stock Exchange Authorities and Employees for the cooperation andcontributions made by them at all levels.
| ||By Order of the Board |
|Sunil Jain ||Subhash Agarwal |
|(Whole Time Director) ||(Whole Time Director) |
|Place : Mumbai || |
|Date : May 30 2017 || |
32 Raja Bahadur Mansion
Opp. Bank of Maharashtra
Mumbai Samachar Marg
Fort Mumbai - 400 023.