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Modern India Ltd.

BSE: 503015 Sector: Others
NSE: N.A. ISIN Code: INE251D01023
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Mkt Cap.(Rs cr) 236
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OPEN 62.80
CLOSE 62.80
VOLUME 50
52-Week high 89.30
52-Week low 32.30
P/E
Mkt Cap.(Rs cr) 236
Buy Price 0.00
Buy Qty 0.00
Sell Price 62.80
Sell Qty 220.00

Modern India Ltd. (MODERNINDIA) - Director Report

Company director report

Dear Members

Your Directors are pleased to present the Eighty Third Annual Report along with AuditedStatement of Accounts for the Financial Year ended 31st March 2017.

FINANCIAL RESULTS

(Rs in lakhs)
Financial year 2016-17 Financial year 2015-16
Gross Profit/(Loss) before Depreciation (386.70) 412.75
Less: Depreciation / Amortization 318.47 396.30
Profit /(Loss) before tax (705.17) 16.45
Less : Exceptional Expenditure - -
Prior Period Expenses - -
Provision for Current Tax - -
Deferred Tax (269.71) 2.71
Tax adjusted of prior year(Net) (0.21) -
Profit/(Loss) after Tax (435.25) 13.74
Add: Balance brought forward 3281.23 3403.05
Balance available for appropriation 2845.98 3416.79
LESS : APPROPRIATION*
Proposed Dividend - 112.63
Tax on distributed profit - 22.92
Transferred to General Reserve - -
- 135.55
Balance carried to Balance Sheet 2845.98 3281.23

* Please refer to note on Dividend & Reserve

GENERAL INFORMATION ABOUT THE COMPANY

The Company has various business verticals inter alia Real Estate and InfrastructureDevelopment Power Generation

Background Verification Commodities Trading International procurement solutionsamongst others.

PERFORMANCE

India’s business environment has been tremendously shaken up by the recentdemonetization of the higher currency notes by the current government. The real estatesector definitely got affected by the demonetization exercise Poor sales has led toalmost flat prices heavy liquidity challenges and high unsold inventory have all colludedto keep real estate sector away from fulfilling its potential and provide necessaryresidential stability to average citizens. Even the luxury and high-end segments ofresidential real estate have seen a major impact from this exercise. The demonetizationmove has resulted in luxury property prices dipping by as much as 25-30% as sellersstruggle to offload properties to generate liquidity.

Over the long term the Indian real estate sector will emerge stronger healthier andcapable of long periods of sustained growth. As of now there is no reason for developersand investors who have conducted their dealings transparently and legally to panic. Itwill essentially be business as usual for them.

In the past one year there have been a few positive and potentially long-lastingchanges in the Indian real estate sector. The passing of RERA (Real Estate Regulation andDevelopment Act 2016) and its implementation in Maharashtra from 1st May 2017the Benami Transactions Act and the demonetization move will ensure that going forwardthe sector will become more transparent.

India seems to have braved the effects of demonetisation with the Finance Ministryassuring a growth of 7% during the year which will grow over a period of time. Indiacontinues to remain the fastest growing developing economy while retaining its GDP growthprojection of 7.2% for 2017-18. In our Company’s context the performance of theCompany was average due to various reasons. As informed earlier the Company didn’trenew any of the leave and license agreements as the Company contemplates development ofits properties which has led to loss of rental income furthermore and with the NSELcrises trading in commodities was stopped. The total turnover during the year underreview is Rs .5694.29 lakhs against Rs 8053.36 lakhs in the year 2015-16. Due tothe above factors the Company has suffered a loss of Rs . 435.25 lakhs after taxcompared to a meagre profit of Rs . 13.73 Lakhs in the corresponding previous year. Asinformed earlier the Company had planned to setup a 5MW Solar Power Plant at Satara ofwhich 3 MW Solar Power Plant has been commissioned in April 2015 and has started supplyingpower the remaining 2 MW plant will be commissioned and operational soon. The delay isdue to the shake up and ever fluid scenario in the renewable energy sector.

The Company has suffered losses due to the NSEL crisis which had shaken the faith ofthe investors in the commodity markets. Our Company along with three others had instituteda Representative Suit in the Bombay High Court inter alia against 63 Moons TechnologiesLimited (erstwhile Financial Technologies (India) Limited(FTIL)) National Spot ExchangeLimited(NSEL) and 36 others for recovery of its dues as an investor for the tradesexecuted on the NSEL. The said suit is now clubbed with other suits filed against 63 MoonsTechnologies Limited NSEL and others. The suit is in advanced stages of hearing and theManagement is of the view that the Company will be in a position to recover its debts. TheGovernment has also ordered the merger of 63 Moons Technologies Limited and NSEL which hasbeen challenged in Hon’ble High Court at Mumbai the hearing for which is in progess.

The Company is regularly following up on the matter and keeps the Board Members updatedabout any development in the said matter. All possible steps are being taken to recoverthe amount receivable Rs .1359.51 Lakhs is outstanding as on 31st March2017.

EVENTS SUBSEQUENT TO THE DATE OF FINANCIAL STATEMENTS

The Company is in process of executing an agreement for sale with K Raheja Corp Pvt Ltdof Plot D-1 bearing C.S. No. 7/ 1895 of Byculla Division situate at Keshavrao Khadye Marg(Clerk Road) Mahalaxmi Mumbai -400011 .

CHANGE IN THE NATURE OF BUSINESS IF ANY

There are no changes in the nature of Business during the year under review.

DIVIDEND AND RESERVES

Despite the lacklustre performance your directors are recommending dividend of Rs 0.30per share i.e 15% per equity share of Rs 2/-each. The dividend for the year amounts to Rs135.56 including the dividend distribution tax. This proposed dividend is subject to theapproval of share holders in the ensuing annual general meeting. Pursuant to amendment inAccounting standard (AS)-4 Contingencies and events occuring after the Balance sheetDate Declaration of dividends to shareholders after the balance sheet date is notrequired to be recognized as a liability as at the Balance sheet date.

The Company has free reserves of Rs 3163.58 lakhs as on 31st March 2017.

BOARD MEETINGS AND ATTENDANCE

Details of the Directors their meetings attendance etc have been given in theCorporate Governance Report which forms a part of this Annual Report.

DIRECTORS AND KEY MANANGERIAL PERSONNEL

Shri Pradip Kumar Bubna (00135014) Director of the Company retires by rotation andbeing eligible offers himself for re-appointment.

The Management recommends his re-appointment.

The Companies Act 2013 requires that the Independent Directors of the Company meet atleast once a year without the presence of Executive Directors the Non Executive Directoror the Management or the Promoters of the Company.

The Independent Directors of our Company have met once during the year on 23.03.2017

The Nomination and Remuneration Committee and the Board of Directors have carried outthe annual performance evaluation of all the Directors and the Board as a whole.

DECLARATION FROM INDEPENDENT DIRECTORS ON ANNUAL BASIS

The Company has received necessary declaration from each Independent Directors of theCompany under Section 149(7) of the Companies Act 2013 stating that the IndependentDirectors of the Company meet with the criteria of their Independence as laid down underSection 149(6) of the Companies Act 2013.

COMMITTEES OF THE BOARD

The Companies Act 2013 provides for the formation and duties of various committees ofthe Board the Company in compliance with the Act already has the following Committees inexistence as on 31st March 2017 and all the committees have specific rolesduties and responsibilities.

The following are the various Committees of the Board viz.

Audit Committee Nomination and Remuneration Committee Stakeholders RelationshipCommittee Corporate Social Responsibility Committee and Risk Management Committee.Details of the meetings held and attendance at the various committee meetings are given inthe Corporate Governance Report which forms a part of this Annual Report.

AUDIT COMMITTEE

The Audit Committee was constituted in January 2001 and has been reconstituted fromtime to time. The current strength of the Audit Committee is four members. All the membersof the Audit Committee are Non-Executive Directors. Two-thirds of the members of theCommittee are Independent Directors. All the members of Audit Committee are financiallyliterate and possess accounting and related financial management expertise.

The Audit Committee consists of:

Shri. Anand Didwania Chairman
Shri. Rajas Doshi Member
Shri. Pradip Kumar Bubna Member
Shri. S. D. Israni Member

The Chairman & Managing Director of the Company is a permanent Invitee of the AuditCommittee. At the invitation of the Committee representatives from various divisions ofthe Company Internal auditors Statutory auditors and Chief Financial Officer also attendthe Audit Committee meetings to respond to queries raised at the Committee meetings. Shri.Parind Badshah Vice President and Company Secretary acts as the Secretary to the AuditCommittee.

NOMINATION AND REMUNERATION COMMITTEE

The Nomination and Remuneration Committee was constituted in April 2002 and has beenreconstituted from time to time. The Committee currently comprises of four directors wheremajority are Independent Directors. The Nomination and Remuneration Committee comprises:

Shri. Rajas R Doshi Chairman
Shri. Vijay Kumar Jatia Member
Shri. Anand Didwania Member
Dr. S D Israni. Member

The terms of reference of the Nomination and Remuneration Committee include reviewingand recommending the terms of remuneration payable to the Executive Director the KeyManagerial Personnel (KMPs) based on the evaluation of their performance and seniormanagement personnel including executives holding office of profit. The Committee alsoevaluates the performance of the Board of Directors.

The Company has adopted a Nomination and Remuneration Policy for Directors KMP andother employee formulated by the Committee for determining Qualification PositiveAttributes and Independence of a Director and others.

Shri. Parind Badshah Vice President and Company Secretary acts as the Secretary to theNomination and Remuneration Committee.

STAKHOLDERS RELATIONSHIP COMMITTEE

According to the provisions of section 178(5) of the Companies Act 2013 and theCompanies (Meetings of Board and its Powers) Rules 2014 every company having more than1000 shareholders/ debenture holders/ deposit holders and any other security holders isrequired to have a "Stakeholders Relationship Committee". The StakeholdersRelationship Committee considers and resolves the grievances of security holders of theCompany. The Committee consists of the following directors:

• Shri. Rajas R Doshi Chairman
• Shri. Vijay Kumar Jatia Member
• Shri. Pradip Kumar Bubna Member

CORPORATE SOCIAL RESPONSIBILITY COMMITTEE

As per the Provision of Section 135 of the Companies Act 2013 and the Companies(Corporate Social Responsibility Policy) Rules 2014 the Company has formed a"Corporate Social Responsibility Committee" of the Board consisting of thefollowing Directors:

• Shri. Vijay Kumar Jatia Chairman
• Smt. Gauri Jatia Member
• Shri. Kaiwan Kalyaniwalla Member
• Shri. Pradip Kumar Bubna Member

The Committee is authorized to do all such acts deeds and things which may benecessary for performing the duties and responsibilities defined under section 135 of theCompanies Act 2013 and the Companies (Corporate Social Responsibility Policy) Rules2014. They plan and execute the various CSR activities to be undertaken by the Company.

RISK MANAGEMENT COMMITTEE

The Company has formed a risk management committee(though not mandated) to evaluate thevarious risk factors faced by the organization and how the same can be mitigated. TheCommittee comprises of the following directors:

• Dr. S.D. Israni Chairman
• Shri. Vijay Kumar Jatia Member
• Shri. Kaiwan Kalyaniwalla Member

VIGIL MECHANISM

The Companies Act 2013 envisages a Vigilance Mechanism and accordingly keeping in viewthe above a Whistle Blower Policy ("the Policy") has been formulated with a viewto provide a mechanism for employees of the Company to approach and report the Violationto :-

(i) immediate supervisor;

(ii) Chairman of Audit Committee

(iii) anonymously by sending an e-mail to: vigilance@modernindia.co.in

All complaints / reports under this Policy will be promptly and appropriatelyinvestigated and all information disclosed during the course of the investigation willremain confidential except as necessary to conduct the investigation and take anyremedial action in accordance with applicable law.

During the year the Company had received no complaints

DIRECTORS’ RESPONSIBILITY STATEMENT

In pursuance of section 134 (5) of the Companies Act 2013 the Directors hereby statethat:

i) in the preparation of the annual accounts the applicable accounting standards havebeen followed along with proper explanation relating to material departure.

ii) appropriate accounting policies have been selected and applied them consistentlyand the judgments and estimates made are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company as at 31st March 2017 and ofits profit for the year ended as on that date;

iii) proper and sufficient care has been taken for the maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;

iv) the annual accounts have been prepared on a going concern basis.

v) Internal Financial Control have been followed by the Company and that such InternalFinancial Controls are adequate and are operating effectively.

vi) Directors have devised proper system to ensure Compliance with the provisions ofall applicable laws and that such system are adequate and operating effectively.

INTERNAL FINANCIAL CONTROL

Detailed note on Internal Financial Control is given in the Management DiscussionAnalysis which forms a part of this report. It must be noted that the Management hadappointed Statutory Auditors M/s. K. S. Aiyar Chartered Accountants to also carry out theAudit of Internal Financial Controls over Financial Reporting as required under the Actand the Auditors have given their report to the Board and based on which the Directorshave stated in their Directors Responsibility Statement that the Internal FinancialControl have been followed by the Company and that such Internal Financial Controls areadequate and are operating effectively.

REPLY TO AUDITORS QUALIFICATION

With reference to the amount of Rs 13.59 Crores receivables outstanding in respect ofcommodity trading transactions on

NSEL the management considers the same as good for recovery and a representative suithas been filed in the Hon’ble High Court at Bombay and the same is currently beingheard details of which have been given under performance of the Company.

SUBSIDIARY COMPANIES

MODERN INTERNATIONAL (ASIA) LIMITED HONG KONG (MIAL)

Modern International (Asia) Limited [MIAL] is actively involved in the B2B segmentBusiness. MIAL sources products viz Textile Machinery furniture luggage building/construction material gift articles etc primarily from China and other countries andexports it to its clientele in other countries. The year 2016-17 was affected by thedownturn in the Chinese market and global meltdown however the Company managed to increaseits sales MIAL has registered a turnover of US $ 24.27 million for the year2016-17 as against US$ 10.82 million for the year 2015-16 and it has recorded a profit of US$ 192392 (previous year US $87402) a growth of 120%. Efforts are being taken tofurther increase the turnover in the coming year.

MODERN INDIA PROPERTY DEVELOPERS LIMITED (MIPDL):

Company deploys its surplus funds in real estate activities viz. Bookings of underconstruction residential and / or commercial space. Funds committed towards booking ofunder construction spaces and to be paid over a period of time are placed with corporateentities fetching interest in the intervening period.

The Company has consciously invested into under construction spaces which falls intoaffordable category wherein demand is reasonable and offers better exit opportunities. TheCompany has also undertaken construction and development activity in Bikaner along with areputed builder.

During the financial year 2016-17 Company has earned profit before tax of Rs .21.64 Lakhs as compared to a profit of Rs 47.78 lakhs in the year 2015-16 a reductionof 54.71% due to the impact of demonetization and impending RERA implication.

MODERN INDIA FREE TRADE WAREHOUSING PRIVATE LIMITED (MIFTWPL)

The Company was set up with the aim of setting up free trade warehousing facilities inthis regards the Company has in its taken possession land at village Sai District Raigad.The said land area has potential and will offer good opportunities over a period of time.

VERIFACTS SERVICES PRIVATE LIMITED

Verifacts Services Private Limited is a human resources consulting company providingbackground/ antecedents verification services. The Company has started various otheressential services like online chat facility to interact with existing and prospectiveclients. Moreover the Company is under negotiations with some of the giant corporateentities for extending their services.

During the year Verifacts has achieved a turnover of Rs 2144.11 lakhs as againstRs 1853.41 lakhs in the corresponding previous year a growth of 15.68%. This business hasimmense potential to flourish in future. The Company has entered into agreements withNSDL E-KYC NSDL - PAN Verification and the Company is in process of executing agreementswith UIDAI and NSDL Database Management Ltd for providing better and more efficientverification services. The Company has also executed an agreement with Transunion CIBIL toprovide credit scores of candidates whose background verification is being carried out onbehalf of clients.

The Company has earned a profit Rs 7662274 as compared to Rs 11374894 in thecorresponding previous year a reduction of 32.63%.

ASSOCIATE COMPANIES

The Company does not have any associate companies nor does it have any existing jointventure as on 31st March 2017.

Details of the Companies which have become / ceased to be its Subsidiary/ JV/ AssociateCompany.

During the year no other company became / ceased to be the subsidiary / JV / AssociateCompany.

INFORMATION AS PER SECTION 134 READ WITH COMPANIES (ACCOUNTS) RULES 2014 AND FORMINGPART OF THE

DIRECTORS' REPORT FOR THE YEAR ENDED 31ST MARCH 2017

1. CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND RESEARCH & DEVELOPMENT:

As the Company has no manufacturing activities the provisions of Companies (Accounts)Rule 2014 relating to Conservation

of Energy Technology Absorption and Research & Development do not apply to yourcompany.

2. FOREIGN EXCHANGE EARNINGS AND OUTGO:

(a) Activities relating to exports The Company exported books from IIJ during the period under review.
Initiatives taken to increase exports Continuous efforts to identify new markets for existing and new products are being made by the Company.
Development of new markets for products & services & Export plans Efforts are being made to develop market for various products in the USA South East Asia & Middle East. The Company does not have any definite export plan.
(b) Total Foreign Exchange:
(i) Earnings Rs 61952 /-
(ii) Outgoing Rs 1279355/-