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Modern Shares & Stockbrokers Ltd.

BSE: 509760 Sector: Financials
NSE: N.A. ISIN Code: INE370A01019
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VOLUME 100
52-Week high 30.10
52-Week low 13.70
P/E 40.00
Mkt Cap.(Rs cr) 5
Buy Price 16.00
Buy Qty 100.00
Sell Price 0.00
Sell Qty 0.00
OPEN 16.00
CLOSE 16.00
VOLUME 100
52-Week high 30.10
52-Week low 13.70
P/E 40.00
Mkt Cap.(Rs cr) 5
Buy Price 16.00
Buy Qty 100.00
Sell Price 0.00
Sell Qty 0.00

Modern Shares & Stockbrokers Ltd. (MODERNSHARES) - Director Report

Company director report

TO THE MEMBERS OF MODERN SHARES AND

STOCKBROKERS LIMITED

(CIN: L45200MH1939PLC002958)

The Directors take pleasure in presenting the Seventy Eighth Annual Reporttogether with the audited financial statements for the year ended March 31 2017.

FINANCIAL RESULTS: 31/03/2017 31/03/2016
Rupees (Rs.) Rupees (Rs.)
GROSS PROFIT 2258898 2409233
Less: Depreciation (318749) (421261)
PROFIT / (LOSS) BEFORE TAXATION 1940149 1987972
PROVISION FOR TAXATION (net) (564268) (671907)
PROFIT / (LOSS) AFTER TAX 1375881 1316065
Add: Brought Forward Profit of Previous Year 56516886 56959422
AMOUNT AVAILABLE FOR
APPROPRIATION 57892767 58275487
Less: Proposed Dividend # 1465563
Less: Provision for Corporate tax on dividend # 293039
Less: Transfer to General Revenue NIL NIL
Balance carried to Balance Sheet 57892767 56516886

# The Proposed equity dividend and dividend distribution Tax are not accounted asliabilities in F Y ended March 31 2017 in accordance with revised As-4 ‘Contingencesand events occurring after the Balance Sheet Date.'

2. BUSINESS ACTIVITIES AND OPERATIONS

The Company's operations resulted in a gross profit of Rs. 22.59 lakhs asagainstRs.24.09 Lakhs in the previous year. After providing for depreciation of Rs. 3.19lakhs (previous year Rs. 4.21 Lakhs) and making net provision for taxation of Rs. 5.64Lakhs (Previous year Rs. 6.72 Lakhs) the Company has earned a net profit of Rs.13.76 asagainst net profit of Rs. 13.16 Lakhs in the previous year.

The past year has seen the company perform almost the same as the previous year. Thestock markets have seen a volatile year rallying in the first half of the year then asharp correction due to Demonetization and then followed by a spectacular rally. In thelast few months we have seen participation from all segments of the market be it RetailForeign Funds and Domestic Mutual Funds and Institutions. It will be fair to say most ofus miscalculated the impact of Demonetization. The general consensus was that marketswould be subdued for a minimum of two quarters and not just two months. The sentiment hasdrastically changed from negative to positive and overall India is being viewed as a goodInvestment destination for the next 5 years.

Our own Industry continues to face challenges from falling brokerage rates and theonline trading portals. While the markets are doing well and Domestic Mutual Funds areseeing record inflows we continue to try and increase the overall business via ourexisting clients and new ones too. We have been focusing on the retail side of thebusiness too in the past few months. In addition the company has also increased its ownproprietary trading and investment book.

The markets are clocking life highs on a regular basis. Overall fund inflows are robustand expected to continue in the next few quarters. We expect markets to remain positivebarring any unforeseen global event. In addition interest rates should stay at the lowerend of the curve for the next few months and Inflation is expected to drop once GST is inplace. The government on its part has been pro active on the reforms front; and withforecast for another good monsoon it overall bodes well both for the economy and the stockmarket

3. DIVIDEND

Your Directors recommend a Dividend of 5% (previous year 5%) for the year ended 31stMarch 2017. The dividend will absorb Rs. 1465563/- tax free in the hands ofshareholders. If approved such dividend will be paid to those shareholders whose namesappear in the Register of Members as July 28 2017.

4. DIRECTORS

The Board of Directors of the company is duly constituted and no appointment andresignation of directors have been made during the period under review.

In accordance with the Articles of Association of the Company Mrs. Roshan SalimPatheria and Mr. Narendra Hira Advani retire by rotation and being eligible forre-appointment; have indicated their willingness to serve if re-appointed.

All independent directors have given declaration that they meet the criteria ofindependence as laid down under section 149(6) of the Companies Act 2013 and Regulation25 of the Securities and Exchange Board of India (Listing Obligations and DisclosureRequirements) Regulations 2015.

5. BOARD EVALUATION

Pursuant to the provisions of the Companies Act 2013 and Regulation 25 (4) & 26 ofthe SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 the Boardhas carried out an annual performance evaluation of its own performance the directorsindividually as well as the evaluation of the working of its Audit Nomination &Remuneration and stakeholders and Committees. The manner in which the evaluation has beencarried out has been explained herein below:

The Board has carried out the annual performance evaluation of its own performance theDirectors individually as well as the evaluation of the working of its Audit Nominationand Remuneration and Stakeholders Committees. A structured questionnaire was preparedafter inputs received from the Directors covering various aspects of the Board'sfunctioning such as adequacy of the composition of the Board and its committees Boardculture execution and performance of specific duties obligation and governance.

A separate exercise was carried out to evaluate the performance of individual Directorsincluding the Chairman of the Board who were evaluated on parameters such as level ofengagement and contribution independence judgment safeguarding the interest of theCompany and its stakeholders etc. The performance evaluation of independent Directors wascarried out by the entire Board. The performance of the Chairman and non independentDirectors was carried out by the independent Directors who also reviewed the performanceof the compliance department. The Directors expressed their satisfaction with theevaluation process.

Number of Board Meetings held:

The Board of Directors duly met 4 (Four) times during the financial year from 1stApril 2016 to 31st March 2017. The dates on which the meetings were held as follows:

Dates on which Board Meetings held Strength of the Board No. of Directors Present
20thMay 2016 6 5
12thJuly 2016 6 5
27thOctober 2016 6 5
25thJanuary 2017 6 5

Relevant Details of Directors

Sr. No. Name of the Director Date of Appointment Category Number of Directorship held in other Indian Companies Committee(s) Position Member and Chairperson in all Companies
1 Mr. U. K. Mallik 20.11.1970 Chairperson & Non Executive Director/ Independent None 3 and 2
2 Mr. Anil S. Manghnani 25.10.2000 Whole Time Director 2 1
3 Mr. Narendra Hira Advani 30.05.2011 Non Executive Director 4 -
4 Mr. Ghansham Shewakramani 25.01.1995 Non Executive Director 25 2
5 Mrs. Roshan Salim Patheria 31.01.2007 Woman Non Executive Director - 1
6 Mr. Ashok Kukreja 18.02.2015 Non-executive Director/Independent 2 9 and 4

Attendance of Directors at Board Meetings and Annual General Meeting:

Name of the Director Attendance at the Board Meeting held on Attendance at the AGM held on 12/07/2016
20th May 2016 12th July 2016 27th October 2016 25th January 2017
Mr. Anil S. Manghnani Attended Attended Attended Attended Attended
Mr. Narendra H. Advani leave Attended Leave Leave Attended
Mr. Uday Kumar Mallik Attended Attended Attended Attended Attended
Ms. Roshan Patheria Attended Attended Attended Attended Attended
Mr. Ghansham Shewakramani Attended leave Attended Attended Attended
Mr.Ashok Tikamdas Kukreja Attended Attended Attended Attended Attended

? Audit Committee Member

Name of the Member 20.05.2016 12.07.2016 27.10.2016 25.1.2017
Mr. Ashok Tikamdas Kukreja (Chairperson) Attended Attended Attended Attended
Mr. Uday Kumar Mallik Attended Attended Attended Attended
Mr. Anil S. Manghnani Attended Attended Attended Attended

Stakeholder & Grievance Committee Member

Name of the Member 20.05.2016 12.07.2016 27.10.2016 25.1.2017
Mr. Uday Kumar Mallik (Chairperson) Attended Attended Attended Attended
Mr. Ghansham Shewakramani Attended Leave Attended Attended
Mr. Ashok Tikamdas Kukreja Attended Attended Attended Attended

Nomination & Remuneration Committee Member

Name of the Member 20.05.2016 12.07.2016 27.10.2016 25.1.2017
Mr. Uday Kumar Mallik (Chairperson) Attended Attended Attended Attended
Mr. Ashok Tikamdas Kukreja Attended Attended Attended Attended
Mrs. Roshan Salim Patheria Attended Attended Attended Attended

Independent Directors Meeting

Name of the Director 25.01.2017
Mr. Uday Kumar Mallik (Chairperson) Attended
Mr. Ashok Tikamdas Kukreja Attended

6. 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(5)(c) of the Companies Act 2013:

a) that in the preparation of the annual financial statements for the year ended March31 2017 the applicable accounting standards have been followed along with properexplanation relating to material departures if any;

b) that such accounting policies as mentioned in Notes to the Financial Statements havebeen selected and applied consistently and judgment and estimates have been made that arereasonable and prudent so as to give a true and fair view of the state of affairs of theCompany as at March 31 2017 and of the profit of the Company for the year ended on thatdate;

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 and

f) that systems to ensure compliance with the provisions of all applicable laws were inplace and were adequate and operating effectively.

7. BUSINESS RISK MANAGEMENT

Although the company has long been following the principle of risk minimization as isthe norm in every industry it has now become a compulsion. Therefore in accordance withRegulation 21 of the Securities and Exchange Board of India (Listing Obligations andDisclosure Requirements) Regulations 2015the Board members were informed about riskassessment and minimization procedures after which the Board formally adopted steps forframing implementing and monitoring the risk management plan for the company.

The main objective of this policy is to ensure sustainable business growth withstability and to promote a pro-active approach in reporting evaluating and resolvingrisks associated with the business. In order to achieve the key objective the policyestablishes a structured and disciplined approach to Risk Management in order to guidedecisions on risk related issues. In today's challenging and competitive environmentstrategies for mitigating inherent risks in accomplishing the growth plans of the Companyare imperative.

The common risks inter alia are: Regulations competition Business risk Technologyobsolescence Investments retention of talent and expansion of facilities. Business riskinter-alia further includes financial risk political risk fidelity risk legal risk.

As a matter of policy these risks are assessed and steps as appropriate are taken tomitigate the same.

8. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has an Internal Control System commensurate with the size scale andcomplexity of its operations. The scope and authority of the Internal Audit (IA) functionis to maintain its objectivity and independence the Internal Audit function reports tothe Chairperson of the Audit Committee of the Board.

The Internal Audit Department monitors and evaluates the efficacy and adequacy ofinternal control system in the Company its compliance with operating systems accountingprocedures and policies of the Company. Based on the report of internal audit functioneach department undertake corrective action in their respective areas and therebystrengthen the controls. Significant audit observations and corrective actions thereon arepresented to the Audit Committee of the Board.

In order to strengthen the system of Internal Control and provide board of directorswith an added ability to oversee internal controls Internal Financial Control (IFC)system was put in place in accordance with the requirements of Section 134(5) (e) ofCompanies Act 2013. Systems of Internal Control were implemented considering theframework suggested in Guidance Note on Audit of Internal Financial Controls over theFinancial Reporting issued by The Institute of Chartered Accountants of India to addressits operational and financial risk.

9. VIGIL MECHANISM / WHISTLE BLOWER POLICY

In pursuant to the provisions of section 177(9) & (10) of the Companies Act 2013a Whistle Blower Policy for directors and employees to report genuine concerns has beenestablished. The Policy has been uploaded on the website of the Company atwww.modernshares.com under investors/policy documents/Vigil Mechanism Policy link.

10. RELATED PARTY TRANSACTIONS

All related party transactions that were entered into during the financial year were onan arm's length basis and were in the ordinary course of business. An Omnibus Approval wastaken for 1 Year from Audit Committee and Board at their Meeting held on 20.05.2016 thereare no materially significant related party transactions made by the Company withPromoters Directors Key Managerial Personnel or other designated persons which may havea potential conflict with the interest of the Company.None of the Directors has anypecuniary relationships or transactions vis--vis the Company.

In compliance under the provisions of New Companies Act 2013 Transactions with relatedparties entered by the Company in the normal course of business are periodically placedbefore the Audit Committee for its omnibus approval and the particulars of contractsentered during the year as per Form AOC-2 is enclosed as Annexure- A to thisreport.

11. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS

There are no orders passed by the Regulators / Courts which would impact the goingconcern status of the Company and its future operations.

12. AUDITORS

12.1 STATUTORY AUDITORS

M/s. Baheti & Co. Chartered Accountants (Firm Reg. No. 006287C) have beenrecommended by your Board to be appointed as Statutory Auditors of the Company in place ofM/s BDG & Associates in compliance of Section 139(2) of the Companies Act 2013 readwith Rule 6 of Cos (Audit and Auditors) Rules 2014 at the ensuing Annual General Meetingfor a period of 5years subject to ratification by members at every consequent AnnualGeneral Meeting. Therefore approval of thier appointment as Statutory Auditor is beingsought from the members of the Company.

12.2 SECRETARIAL AUDITORS & EXPLANATION IN QUALIFICATION IN SECRETARIAL REPORT

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. Janak A. Pandya Company Secretary in Practice (CP No.: 5940 ACS: 10841)toundertake the Secretarial Audit of the Company for the financial year ended March 312018. The Secretarial Audit Report for the Financial Year ended March 31 2018 is annexedherewith as ‘Annexure B'.

Explanation to the Observations in Secretarial Audit report

The Company did not have Company Secretary in employment as its paid-up capital is Rs.2.93 crore only which was less than prescribed paid up capital of Rs. 5 Crore under theerstwhile Companies Act 1956. The New Companies Act 2013 requires every listed companyto have a Company Secretary in employment as KMP. The Secretarial department is beingheaded by CFO cum compliance officer having experience of almost 33 years in finance &law looking after compliances in the Company under all the laws including the CompaniesAct 2013 and the rules made thereunder with the help of a Practicing Company Secretary.

12.3 INTERNAL AUDITORS

M/S. Jayant & Associates Chartered Accountants performs the duties of internalauditors of the company and their report is reviewed by the audit committee from time totime.

13. FIXED ASSETS

The Fixed Assets of the Company as at the close of the year stood at Rs.13.80 Lakhs (Previous year Rs. 16.01 Lakhs). In compliance with Accounting Standard AS-28relating to "Impairment of Assets" the company has reviewed the carrying amountof its fixed assets as at the end of the year.

14. CORPORATE GOVERNANCE

As per Regulation 27 of the Securities and Exchange Board of India (Listing Obligationsand Disclosure Requirements) Regulations 2015 Corporate Governance is required if thepaid up capital of the Company is Rs.10 Crore and above or net worth is Rs.25 Crore ormore at any time in the history of the Company. Since the Company does not fall under thecriteria mentioned above in Regulation relating to Corporate Governance is not applicableto the Company.

15. EXTRACT OF ANNUAL RETURN

The details forming part of the extract of the Annual Return in form MGT-9 is annexedherewith as "Annexure C".

16. REMUNERATION RATIO OF THE DIRECTORS/ KEY MANAGERIAL PERSONS (KMP)/ EMPLOYEES

The information required pursuant to Section 197 read with Rule 5(1) of The Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 and Companies(Particulars of Employees) Rules 1975 in respect of employees of the Company andDirectors is furnished hereunder:

There were 19 permanent employees on the rolls of the company as on 31 March 2017.

Sr. No. Name Desig- nation Remu- neration paid FY 2016-17 (Rs. Lakhs) Remu- neration paid FY 2015-16 (Rs. Lakhs) Increase in Remu- neration from previous Year (Rs. Lakhs) Ratio/ Times per median of employee remunera- tion
1 Mr. Anil Manghnani Whole- time Director 10.34 10.34 Nil N.A.
2 Mr. R N Shenvi CFO 10.08 10.08 Nil N.A.

17. DISCLOSURE

The particulars of the conservation of energy technology and absorption foreignexchange earnings and outgo as required u/s. 134(3)(m) of the Companies Act 2013 and Rule8(3) of the Companies (Accounts) Rules 2014 the same are not applicable to the Company.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 is not given as none of the employees of the company exceeds the limit.

18. DEMATERIALISATION OF SHARES

96.47% of the Company's paid up equity share capital is in dematerialized form as on31st March 2017 and balance 3.53% is in physical form. The Company's Registrar and Sharetransfer agent is M/s Link Intime India Pvt. Ltd. Having Registered Office and MumbaiOperations at C/101 247 Park L.B. S Marg Vikhroli (west) Mumbai 400083.

19. ACKNOWELDGEMENTS

The Board of Directors takes this opportunity to thank the employees for theirdedicated service and contribution towards the growth of the Company our sincereappreciation to Institutional Retail Clients for their patronage to our Company and tothe Shareholders for their continuous support.

20. CAUTIONARY STATEMENT

The statements contained in the Board's Report contain certain statements relating tothe future and therefore are forward looking within the meaning of applicable securitieslaws and regulations. Various factors such as economic conditions changes in governmentregulations tax regime other statues market forces and other associated and incidentalfactors may however lead to variation in actual results.

By Order of the Board of Directors
For Modern Shares and Stockbrokers Limited
Sd/- Sd/-
Anil Sugno Manghnani Roshan Salim Patheria
Whole Time Director Director
(DIN-00012806) (DIN-00651144)
Mumbai dated 24th May 2017
Registered Office:
Wankhede Stadium
North Stand Staircase No. 13
D. Road Churchgate
Mumbai - 400020
CIN: L45200MH1939PLC002958
Website: www.modernshares.com