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Sarvamangal Mercantile Co. Ltd.

BSE: 506190 Sector: Financials
NSE: N.A. ISIN Code: INE978L01016
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Sarvamangal Mercantile Co. Ltd. (SARVAMANGALMERC) - Director Report

Company director report

To

The Members

Your Directors have pleasure in presenting the THIRTY THREE ANNUAL REPORT of theCompany together with the Audited Statement of Accounts for the year ended March 31 2016.

Financial Highlights

Rs. In Lacs
Current Year Previous Year
Gross Profit / (Loss) 7.97 567.93
Less: Interest 32.52 41.21
Depreciation 0.15 0.53
Provision for Income Tax -- --
Income tax for EarlierYear 0.77 1.04
Leaving a Balance (25.47) 525.16
Balance brought forward from previous year 911.06 387.45
Less: Depreciation on fixed assets 1.55
Balance transferred to General Reserve
Profit / (Loss) available for appropriation 885.58 911.06
Surplus carried to balance sheet 885.58 911.06

FINANCIAL PERFORMANCE

The Sales and other income for the year under review were Rs. 0.87 crores as against Rs6.77 crores in the previous financial year. The Net Profit for the year under review isRs. (0.25) crores as against Rs. 5.25 crores in the previous financial year.

DIVIDEND

Your Directors do not recommend any dividend for the year under review.

Since there was no dividend declared and paid during last year(s) the provisions ofSection 125 of the Companies Act 2013 i.e. Transfer of unpaid/ unclaimed dividend to theInvestor Education and Protection Fund Account are not applicable to the Company.

TRANSFERTO GENERAL RESERVE

During the year under review the Company does not propose to transfer any amount tothe General Reserves and the full amount is carried to Surplus Account.

FIXED DEPOSITS:

During the year under review the Company has not accepted any deposit from the public.

SUBSIDIARY COMPANIES

The Company does not have any Subsidiary Joint Venture or Associate Company.

SHARE CAPITAL

During the year under review:

a. the Company has not bought back any of its securities during the year.

b. the Company has not issued any Sweat Equity Shares during the year.

c. No Bonus Shares were issued during the year.

NO. OF BOARD MEETING

During the year ended 31st March 2016 five meetings of the Board were held on thefollowing dates:

(i) 29th May 2015

(ii) 14th August2015

(iii) 4th November2015

(iv) 24th November2015

(v) 12th February 2016

FORMATION OF AUDIT COMMITTEE

During the year pursuant to the provisions of Section 177 of the Companies Act 2013the Company has an Audit Committee of the Board of Directors of the Company.

The Audit Committee of the Company comprises of three Directors of which majority areIndependent Non-Executive Directors possessing knowledge of Corporate Finance AccountsAnd Company Law. The Chairman of the Committee is an Independent Non-Executive Director.

The Members of the Committee are:

1. Mr. B K Toshniwal Chairman
2. Mr. Sanjay Jain Member
3. Mr. Adarsh Somani Member

The Audit Committee has adequate powers and detailed terms of reference to play aneffective role as required under Section 177 of the Companies Act 2013 which inter-aliainclude overseeing financial reporting processes reviewing periodic financial resultsfinancial statements and adequacy of internal control systems with the Managementapproval of related party transactions recommendation and appointment of Auditors of theCompany and etc.

During the year ended March 31 2016 Four (4) Meetings of the Audit Committee wereheld on following dates:-

(i) 29th May 2015

(ii) 14th August2015

(iii) 4th November2015

(iv) 12th February 2016

FORMATION OF NOMINATION AND REMUNERATION COMMITTEE

During the year pursuant to the provisions of Section 178(1) of the Companies Act2013 Company has formulated Nomination and Remuneration Committee of the Board ofDirectors of the Company.

The Committee has three Non Executive Director of which majority are IndependentDirectors as its members.

The Members of the Committee are:

1. Mr. B K Toshniwal - Chairman

2. Mr. Sanjay Jain - Member

3. Mr. Adarsh Somani - Member

During the year ended March 31 2016 no Meeting of the Nomination and RemunerationCommittee was held.

The purpose of the Remuneration Committee of the Board of Directors shall be to reviewand to discharge the Board’s responsibilities related to remuneration of the ManagingDirector Key Managerial Personnel and Senior Management. The Committee has the overallresponsibility for formulation of criteria of evaluation of Independent Directoridentifying persons who are qualified to become a Director and appointment of SeniorManagement Personnel.

The Committee shall as and when needed will review and approve the remuneration payableto the Managing Director considering the profits of the Company.

Nomination & Remuneration Policy

a) The Committee shall identify and ascertain the integrity qualification expertiseand experience of the person for appointment as Director Key Managerial Personnel or atSenior Management level and recommend to the Board his / her appointment.

b) A person should possess adequate qualification expertise and experience for theposition he / she is considered for appointment. The Committee has discretion to decidewhether qualification expertise and experience possessed by a person is sufficient /satisfactory for the concerned position.

WHISTLE BLOWER POLICY

With rapid expansion in compliances under various Acts Laws and Regulations andliability of high penalty in default the Audit Committee is committed to ensure fraudfree work environment Audit Committee has laid down a Whistle Blower Policy for itsDirectors Employees and Business Associates to report the fraud abuse of authoritybreach of Company’s Code of Conduct employee misconduct illegality and otherreportable matters through any of the following manners:

• E-mail info@sarvamangalmercantile.com
• Phone No. 022-24964656-60
• Written Communication Chairman of Audit Committee C/o Sarvamangal Mercantile Co. Limited No. 2 Mohatta Bhavan Properties off Dr E Moses Road Worli Mumbai - 400018

This policy is applicable to all the Directors Employees and Business Associates ofthe Company. Adequate safeguards have been provided to prevent victimization of anyoneunder this policy by direct access to the Chairman of the Audit Committee in exceptionalcases.

The main objectives of the policy are as under:

• To provide guidance to the Employees Vendors and Business Associates onreporting any suspicious activity and handling critical information and evidence.

• To provide healthy and fraud- free work culture.

• To initiate disciplinary action against false allegations.

PROHIBITION OF INSIDERTRADING CODE:

As per SEBI (Prohibition of Insider Trading) Regulations 2015 the Company has adopteda Code of Practices and Procedures for Fair Disclosures of Unpublished Price SensitiveInformation and Code of

Conduct to Regulate Monitor and Report Trading by Insiders. All the DirectorsEmployees or Senior Management Personnel who could have access to the unpublished pricesensitive information of the Company are governed by this code. The trading window will beclosed during the time of declaration of results and occurrence of any material events asper the Code. The Company has appointed Mr. Adarsh Somani as the Compliance Officer of theCompany.

The Code of Practices and Procedures for Fair Disclosures of Unpublished PriceSensitive Information is also available on Company’s websitewww.sarvamangalmercantile.com.

DIRECTORS RESPONSIBILITY STATEMENT

The Board of Directors of the Company confirm:

(I) that in the preparation of the annual accounts for the year ended 31st March 2016the applicable Accounting Standards has been followed.

(II) that the Directors have selected such Accounting Policies and applied themconsistently and made judgments and estimates that were reasonable and prudent so as togive a true and fair view of the state of affairs of the Company at the end of thefinancial year and of the profit or loss of the Company for the year under review.

(III) that the Directors have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of the Companies Act 2013for safeguarding the assets of the Company and for preventing and detecting fraud andother irregularities;

(IV) that the Directors have prepared the annual accounts for the year ended 31stMarch 2016 on a ‘going concern’ basis.

(V) that the Directors have laid down internal financial control and that such internalfinancial control are adequate.

(IV) that the Directors have devised proper system to ensure compliance with theprovisions of all applicable laws.

RISK MANAGEMENT

Your Company has appropriate risk management system in place for identification ofrisks and assessment of risks measure to mitigate them and mechanism for their proper andtimely monitors and reports.

POLICY ON PREVENTION PROHIBITION AND REDRESSAL OF SEXUAL HARASSMENT AT WORKPLACE

Although the Company do not have large number of employees however to comply with thelegal requirement Company has in place adopted Policy on Prevention Prohibition andRedressal of Sexual Harassment. The policy aims to provide protection to employees at theworkplace and prevent and redress complaints of sexual harassment and for mattersconnected or incidental thereto.

The Company has not received any complaint of sexual harassment during the financialyear 2015-2016.

INTERNAL CONTROL SYSTEM AND COMPLIANCE FRAMEWORK

The Company has in place Internal Control System commensurate with size scale andcomplexity of its operations. The internal financial controls are adequate and areoperating effectively so as to ensure orderly and efficient conduct of businessoperations.

The Company has appointed Mr. Shashikant Sharma as Internal Auditors of the Company.The Audit Committee in consultation with the Internal Auditors formulates the scopefunctioning periodicity and methodology for conducting the internal audit. The InternalAuditor have expressed that the Internal Control System in the Company is effectivecommensurate with the size and it operations.

ANNUAL EVALUATION OF BOARD PERFORMANCE

Pursuant to the provisions of the Companies Act 2013 and SEBI (Listing Obligations andDisclosures Requirements) Regulations 2015 the performance evaluation of the Chairmanand the Non- Independent Directors was carried out by the Independent Directors in theirseparate meeting who also reviewed the performance of the Board as whole.

The Nomination and Remuneration Committee has defined the evaluation criteriaprocedure for the performance evaluation process for the Board of Directors. TheBoard’s functioning was evaluated on various aspects including inter alia degree offulfillment of key responsibilities Board Structure and composition effectiveness ofBoard process information and functioning.

Directors were evaluated on aspects such as attendance and contribution at Board /Committee Meeting and guidance / support to the management outside Board / CommitteeMeetings. In addition the Chairman was also evaluated on Key aspects of his roleincluding setting the strategic agenda of the Board encouraging active engagement of allBoard Members.

LOANS AND INVESTMENTS

The details of Loans Guarantees and Investment under Section 186 of the Companies Act2013 read with the Companies (Meeting of Board and its Powers) Rules 2014 are as follows:

A) Details of Investments made by the Company as on 31st March 2016 (includinginvestments made in previous years)

(i) Investment in Equity Shares

(Rs in lacs)

Name of Entity Amount as at 31st March 2016
Videocon Industries Limited 0.18
Oricon Enterprises limited 590.69
Kopran Limited 549.62
KDL Bio- tech Limited 0.01
Supreme Industries Limited 5.28
Supreme Pertochem Limited 0.05
Onward Technologies Limited 0.10
KJMC Financial Services Limited 0.02
KJMC Global Services Limited 0.03
NMDC Limited 1.88
Shree Vindhya Paper Mills Limited 0.40
Soma Paper Mills Limited 11.00
Hindustan Tin works Limited 0.03
IMP Powers Limited 1.55
Shree Venkatesh Karriers Pvt Ltd 8.34
Vishnu Vijay Packaging Ltd 0.37
Malvika Steel Ltd 1.46
Suraj Containers Ltd 0.05
Digvijay Investment Limited 0.02
Twenty One Trends Pvt Ltd 0.46
USL Auto Services Ltd 1.50
Total 1187.60

(ii) Investment in Preference Shares

(Rs in lacs)
Name of Entity Amount as at 31st March 2016
2% redeemable preference shares of Kempo Finvest Pvt Ltd 0.00
Convertible Preference shares of Twenty One Trends Pvt Ltd 14.54
Total 14.54

B. Details of Loans given by the Company are as follows:

(Rs in lacs)
Name of Entity Amount as at 31st March 2016
Balaji Crowns & Containers Pvt Ltd 0.25
Bottle Closure India Pvt Ltd 0.30
Ergon Laboratories Pvt Ltd 15.05
Kopran Lifestyle Ltd 50.00
Shinrai Auto Services Limited 49.86
Sevenhill Securities Limited 6.35
Shree Venkatesh Metal Packs Pvt Ltd 63.77
Suyash Holding & Estate Developers Pvt Ltd 7.00
Sanchay Holdings Pvt Ltd 15.00
Singhi Properties Pvt Ltd 25.00
Suraj Containers Limited 1.40
Total 233.99

C. Details of Guarantee given

(Rs. In lacs)
Name of Entity Amount as at 31st March 2016
Oricon Enterprises Limited 4560.00

RELATED PARTY DISCLOSURE

During the year under review no related party transactions are entered by the Company.There are no materially significant related party transactions made by the Company withPromoters Directors and Key Managerial Personnel etc. which may have potential conflictwith the interest of the Company at large.

The Form AOC-2 pursuant to Section 134 (3)(h) of the Companies Act 2013 read with Rule8(2) of the Companies (Accounts) Rules 2014 is set out as Annexure I to thisreport.

LISTING / TRADING OF SHARES:

Your Company Shares are listed with The Bombay Stock Exchange Limited P.J TowersDalal Street Mumbai 400001.

The Scrip Code of Shares of the Company is 506190.

The Listing fee for the current year 2016-2017 has been paid.

EXTRACT OF ANNUAL RETURN

The detail of forming part of the extract of the annual return for the financial year2015-2016 is enclosed in

Annexure II.

DECLARATION OF INDEPENDENT DIRECTORS

The Independent Directors have submitted their disclosures to the Board stating thatthey fulfil all the requirements as stipulated in Section 149(6) of the Companies Act2013 so as to qualify themselves to be appointed as Independent Directors under theprovisions of the Companies Act 2013 and the relevant rules.

DISCLOSURES RELATING TO REMUNERATION OF DIRECTORS KEY MANAGERIAL PERSONNEL ANDPARTICULARS OF EMPLOYEES

The information required under Section 197 of the Companies Act 2013 read withCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 in respect ofDirectors/ Employees of your Company is set out in Annexure III to this report.

DISCLOSURE OF PARTICULARS

Information’s as per the provisions of Section 134(3)(m) of the Companies Act2013 read with Rule 8(3) of the Companies (Accounts) Rules 2014 relating to Conservationof Energy Technology Absorption Foreign Exchange Earnings and Outgo are given in Annexure-IV forming part of this Report.

CASH FLOW STATEMENT:

In conformity with the provisions of Regulation 33 of the (Listing Obligation andDisclosure Requirements) Regulations 2015 the Cash Flow Statement for the year ended 31stMarch 2016 is included in this annual report.

DIRECTORS

Retirement by rotation

Mr. Adarsh Somani Directors of the Company retire by rotation at the forthcomingAnnual General Meeting and being eligible offer himself for reappointment as Directorliable to retire by rotation.

SECRETARIAL AUDITOR AND SECRETARIAL AUDIT REPORT

The Board had appointed M/s. GMJ & Associates Company Secretaries in Whole TimePractice to carry out Secretarial Audit under the provisions of Section 204 of theCompanies Act 2013 for the financial year ended 2015- 2016. The report of SecretarialAuditor is annexed to this report as AnnexureV.

As per the Secretarial Audit report the Company has not appointed Whole Time CompanySecretary of the Company during the financial year 2015-2016 and therefore not compliedwith the provisions of Section 203 of the Companies Act 2013.

The Company is in process to find suitable candidate for appointment as a CompanySecretary of the Company.

AUDITORS

At the Annual General Meeting of the Company held on 30th August 2014 M/s. S G Kabra& Co. Chartered Accountant (FRN No. 104507W) were re-appointed as the StatutoryAuditors of the Company for a period of 3 years which is subject to annual ratification bythe Members of the Company in terms of Section 139 of the Companies Act 2013 and rulesmade thereunder. The members ratify the appointment of M/s. S G Kabra & Co. CharteredAccountant (FRN No. 104507W) as the Statutory Auditors of the Company for the financialyear 2016-2017.

There are no qualifications or adverse remarks in the Statutory Auditors Report whichrequire any explanation from the Board of Directors.

SIGNIFICANT/ MATERIAL ORDERS PASSED BYTHE REGULATORS

There are no significant / material orders passed by the Regulators or Courts orTribunal impacting going concern status of your Company and its operations in future.

MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY

There is no material changes and commitments affecting the financial position of yourCompany which have occurred between the end of the financial year 2015-16 and the date ofthis report.

ACKNOWLEDGEMENT

The Board of Directors thanks the Financial Institutions Bankers and all theStakeholders for their continued co-operation and support to the Company.

Date : 25th May 2016 For & on behalf of the Board
Place: Mumbai Mrs. Nupur Somani
Managing Director
(DIN -00816788)
Mr. B K Toshniwal
Director
(DIN 00048019)
Mr. Sanjay Jain
Director
(DIN 00047973)