The Members of
Shardul Securities Ltd.
Your Directors are pleased to present the Thirty-Second Annual Reportand the Audited Accounts for the year ended March 31 2017.
|1. Financial Results: - || ||(Rs. in lakh) |
| ||2016-2017 ||2015-2016 |
|Profit/(Loss) before Depreciation ||67.71 ||545.86 |
|Less: Depreciation ||32.24 ||41.57 |
|Profit/(Loss) before Taxation ||35.47 ||504.29 |
|Less: Tax Expenses || || |
|Provision for tax ||2.25 ||17.00 |
|Current tax expense relating to prior years ||(6.74) ||0.75 |
|Deferred Tax Liability/(Asset) ||18.09 ||1.81 |
|Profit / (Loss) after Taxation ||21.87 ||484.73 |
|Surplus/(Deficit) brought forward from previous years ||4178.90 ||3917.47 |
| ||4200.77 ||4402.20 |
|Appropriations: || || |
|Statutory Reserve Fund as per RBI Guidelines ||4.37 ||96.94 |
|Interim/ Proposed Dividend (including dividend tax) on Equity Shares ||126.36 ||126.36 |
|Balance carried to Balance Sheet ||4070.04 ||4178.90 |
| ||4200.77 ||4402.20 |
Your Directors recommend a dividend of Re. 0.60 per Equity Share on17498433 equity shares of Rs.10 each aggregating to Rs. 126.36 lakh (including dividendtax) for the financial year ended 31st March 2017 which if approved at the ensuing AnnualGeneral Meeting will be paid to (i) all those Equity Shareholders whose names appear inthe Register of Members as on 23rd September 2017 and (ii) to those whose names asbeneficial owners are furnished by the National Securities Depositories Ltd. and CentralDepositories Service (India) Ltd.
3. Transfer to Reserves:-
As per requirement of RBI regulations the Company has transferred theStatutory Reserve an amount of Rs. 4.37 Lakh in Financial Year ended March 31 2017.
4. Management Discussions and Analysis Report:-
(i) Financial Performance:
Your Company has posted a net profit of Rs 21.87lakhsasagainstanetprofitof Rs.484.73 lakhs during the previous year. The dividend incomeduring the last year contributed to increased levels of profit during the last .
(ii) Industry Structure and developments:
The continued drought conditions that prevailed during the year underreport had an adverse effect on the agricultural output and added to that a general downtrend arising out of the demonetization measures initiated by the Government of India alsoaffected the growth in many sectors of the economy leading to lower GDP numbers. Thecontinued sluggish economic activities in Europe and Middle East on account of fall in theoil prices did not help either in improving the trading and manufacturing activitiesacross the Globe. The change of guard in the administration of the US also brought aboutuncertainty in the I.T.Sector for India in particular. We also witnessed a lower growth inthe Chinese economy that further weakened the overall outlook for global growth factors.The capital markets witnessed huge volatility initially on a positive note in view ofprospects of faster economic reforms foreign direct investments and anticipated fasterGDP growth etc. Later during the middle of the year the demonetization measures caused avirtual reversal of the trend leading to a depressed capital market. The scenario againstarted changing during the later part of the year after restoration of money supply. Thewild swings in the capital market as a result of such changes caused lots of uncertaintyand a negative outlook for investments.
Notwithstanding the negatives there were some positives also. Certaincorrective measures by the RBI like stabilization of interest rates changes in theforeign investment policies and better monetary control enabled the inflation rate peggedbelow 5% for the year under report. This enabled the foreign exchange reserves moving toabout 365 Billion Dollars besides bringing about stability of the Indian currency.
(iii) Business Review:
In view of the extreme volatility and other negative factors stated asabove your Company could not achieve the desired levels of growth and profitabilityduring the year under report. The Company however looks forward for a better performanceduring the ensuing year in view of better monsoon conditions and a more positive outlookdue to certain positive measures taken by the Government.
(iv) Opportunities and Threats:
The GDP growth at a less than 7% during the current year is expected toimprove with a number of changes contemplated by the Government of India. The introductionof GST is not only expected to improve the indirect tax collection but also provide aboost to trade and commerce in view of an equitable distribution of tax. The Governmenthas launched on to improve the power production in the country more support formanufacturing sector under the Make In India" policy reforms in the bankingsector disinvestment in public sector industries and privatization of Defence production.These measures are bound to improve the overall growth supported by a reduced fiscaldeficit and better agricultural output thanks to a normal monsoon forecast for the year.
(v) Segment-wise Product-wise reporting:
Your company is mainly engaged in the business of investment andbroking activities and all other activities revolve around the same and as such there areno separate reportable segments.
With anticipated positive developments your company expects thecapital market conditions to improve the signs of which are already seen during the firstquarter of the year. If this situation is sustained over the next two quarters yourcompany could achieve better results for the coming year.
(vii) Risks Concerns and its Management:
Your company's activities which are essentially in the capitalmarket segments and the Risk perception of our activity could be discerned as under:Market Risk: Your Company's major investments are mostly in Capital marketInstruments like Shares Mutual funds and Bonds and any volatility could erode the capitalvalue of the investments. No doubt your Company would keep a close vigil on movement ofprices and take appropriate steps to minimize this risk.
Interest risk: The changes in interest rates by RBI and Banks couldresult in fluctuations in prices and consequently the income of various investments andborrowings by the company may vary. Your company has put in measures to hedge this riskbut this cannot be eliminated totally.
Operation Risk: The stock market operations are fraught with certainrisks associated with market judgments by operational executives and their decision makingprocess based on certain perceptions prevailing at any given time and these could changesuddenly resulting in unexpected adverse positions. As the operations are human dependentthe error factor is always inbuilt in this activity. Some of the risks could be wrong datainput deviations from the rules of SEBI or Exchange due to oversight lack ofcoordination amongst the dealing and back office administrative delays in adhering toschedules etc. This is not exhaustive and your company strives to minimize this type ofrisk through adequate training and motivation periodically.
(viii) Internal Financial Control Systems and their Adequacy:
Your company has in place adequate interest control measures. There iscontinuous monitoring of all the activities and necessary creative measures are takenperiodically to manage any unforeseen risk factors.
(ix) Human Resources:
Your company has adequate trained professionals to manage the affairsof the company in the most prudent manner.
Shriyam Broking Intermediary Limited a wholly owned subsidiary of thecompany has started its operations again and will be achieving full scale operationsduring the current year. In view of the earlier cooling period the activities of thebroking company was at a low level and hence the results were not comparable to theprevious years.
Shriyam Broking (IFSC) Private Limited a wholly owned subsidiary ofShriyam Broking Intermediary Limited was incorporated on 15th December 2016.However the company has not yet started any business activities.
6. Names of Companies which have become or ceased to be itssubsidiaries joint ventures or associate companies during the year:- During the yearunder review no company has ceased to be its subsidiaries joint ventures or associatecompanies.
Shriyam Broking Intermediary Limited had formed a wholly ownedsubsidiary named Shriyam Broking (IFSC) Private Limited on 15th December2016.
In accordance with Articles 155 of the Articles of Association of theCompany and the provisions of the Companies Act 2013 Ms. Monika Agarwal (DIN:07100711) director is liable to retire by rotation at the ensuing AGM and is eligible forreappointment.
Necessary resolutions for the appointment /re-appointment of theaforesaid directors have been included in the notice convening the ensuing AGM and detailsof the proposal for appointment / re-appointment are mentioned in the explanatorystatement of the notice. Your directors recommend her appointment / re-appointment.
Brief resume of the Directors proposed to be appointed/ reappointednature of their experience in specific functions and area and number of companies in whichshe hold membership/chairmanship of Board Committees as stipulated regulation 36(3) ofSEBI
(Listing Obligations and Disclosure Requirements) Regulations 2015 areprovided in the Report of Corporate Governance forming part of the Annual Report.
At the 31st Annual General Meeting of the company held on 14thSeptember 2016 confirmation of appointment of Mr. Devesh Vasavada (holding DIN:000273128) who was appointed as an Additional Director was done as an IndependentNon-Executive Director of the Company for a period of five years with effect from 5thFebruary 2016 and Mr. Yogendra Chaturvedi (DIN: 00013613) who was appointed as anAdditional Executive Director was re-appointed as a Whole Time Director designated asExecutive Director and Chief Executive Officer (CEO) with effect from 5th February 2016.
All independent directors have given declaration that they meet thecriteria of independence as laid under section 149(6) of the Companies Act 2013 andregulation 25 of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015.
8. Appointments/Resignations of the Key Managerial Personnel:-
Mr. Prashant Chaturvedi was appointed as the Chief Financial Officer(CFO) of the Company with effect from 11 th February 2017 in place of Mr. SaurabhChaturvedi who has resigned as the CFO of the Company.
9. Board Evaluation:-
Pursuant to the provisions of the Companies Act 2013 and SEBI (ListingObligations and Disclosure Requirement) Regulations 2015 the Board has carried out anevaluation of its own performance the directors individually as well as the evaluation ofthe working of its Audit Nomination & Remuneration Committees. The manner in whichthe evaluation has been carried out has been explained in the Corporate Governance Report.
10. Remuneration Policy:-
The Board has on the recommendation of the Nomination &Remuneration Committee framed a policy for selection and appointment of Directors SeniorManagement and their remuneration. The Remuneration Policy is stated in the CorporateGovernance Report.
11. Number of Meetings of the Board:-
Four Meetings of the Board of Directors were held during the year andthe details of such meetings forms part of the Corporate Governance Report.
12. Audit Committee:-
The Audit Committee as on 31st March 2017 comprises of IndependentDirectors namely Mr. Devesh Vasavada (Chairman) Mr. Kantilal Shah Mr. Charul Abuwala andMr. Yogendra Chaturvedi (Executive Director) as other members. All the recommendationsmade by the Audit Committee were accepted by the Board.
13. Extract of Annual Return:-
The details forming part of the extract of the Annual Return in formMGT-9 as required under section 92 of the Companies Act 2013 is included in this Reportas Annexure I and forms as integral part of this Report.
In opinion of Directors the provision for Income Tax is made as perthe provisions of the Income Tax Act 1961.
15. Cash flow:-
As required by SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 a Cash Flow Statement is appended with this report.
16. Directors' Responsibility Statement:-
To the best of their knowledge and belief and according to theinformation and explanations obtained by them your Directors make the followingstatements in terms of Section 134(3)(c) of the Companies Act 2013: a) that in thepreparation of the annual financial statements for the year ended March 31 2017 theapplicable accounting standards have been followed along with proper explanation relatingto material departures if any; b) that such accounting policies as mentioned in Notes tothe Financial Statements have been selected and applied consistently and judgments andestimates have been made that are reasonable and prudent so as to give a true and fairview of the state of affairs of the Company as at March 31 2017 and of the profit of theCompany for the year ended on that date; c) that proper and sufficient care has been takenfor the maintenance of adequate accounting records in accordance with the provisions ofthe Companies Act 2013 for safeguarding the assets of the Company and for preventing anddetecting fraud and other irregularities; d) that the annual financial statements havebeen prepared on a going concern basis; e) that proper internal financial controls were inplace and that the financial f) that systems to ensure compliance with the provisions ofall applicable laws were in place and were adequate and operating effectively.
17. Statutory Auditors and Auditors' Report:-
The Company's Auditors M/s Rajen Damani & AssociatesChartered Accountants hold office up to the conclusion of the ensuing Annual GeneralMeeting.
M/s Khimji Kunverji & Co. Chartered Accountants (Firm Registrationno 105146W) have confirmed their eligibility to the effect that their appointment if madewould be within the prescribed limits under the Act and that they are not disqualified forre-appointment. The notes to the Financial Statement referred to in the Auditors'Report are self-explanatory and therefore do not call for any further comments.
18. Secretarial Audit:-
Pursuant to the provisions of Section 204 of the Companies Act2013 and rules made there under the Company has appointed M/s Dhirendra Maurya &Associates Company Secretary in Practice to undertake Secretarial Audit of the Company.The Secretarial Audit Report is included in Annexure II and forms an integral part of thisReport.
There is no secretarial audit qualification for the year under review.
19. Internal Audit:-
The Company's internal control system is commensurate with itssize scale and complexities of the operations. The internal audit is entrusted to M/sSandeep R. Maheshwari and Co. Chartered Accountants. The Audit Committee of the Board ofDirectors and Statutory Auditors are periodically apprised of the internal audit findingsand corrective actions taken
20. Significant and material orders passed by the regulators orcourts:-
There are no significant material orders passed by the Regulators /Courts which would impact the going concern status of the
Company and its future operations.
21. Corporate Governance:-
Report on Corporate Governance stipulated under Regulation 34(3) andRegulation 53(f) read with Schedule V of SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 with Stock Exchange form part of this annual report. Acertificate from the auditors of the Company M/s Rajen Damani & Associates CharteredAccountants confirming compliance of conditions of Corporate Governance as stipulatedunder aforesaid regulation is annexed to and forms part of this Report.
22. Consolidated Accounts:-
In accordance with the requirements of SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 and the Accounting Standard -21 prescribed bythe Institute of Chartered Accountants of India Company had made additional disclosure inrespect of Consolidated Financial Statements and Accounting Standard-18 for Related Partytransactions.
23. Particulars of loans guarantees or investments by the Company:
Details of Loans guarantees or investments covered under theprovisions of Section 186 of the Companies Act 2013 are given in the notes to FinancialStatements.
24. Related Party Transactions:-
There were no materially significant related party transactions whichcould have had a potential conflict with the interests of the
As required under Regulation 23 of SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 the Company has formulated policy on dealingwith Related Party Transactions. The Policy is available on the website of the Company.
Weblink of the same is:http://www.shardulsecurities.com/related%20party%20transaction%20policy.pdf
25. Whistle blower policy and vigil mechanism:-
The Company has established a whistle blower policy and vigil mechanismfor directors and employees to report concerns about unethical behavior actual orsuspected fraud or violation of the company's code of conduct policy. The mechanismprovides for adequate safeguards against victimization of directors and employees. None ofthe personnel have been denied access to the Audit Committee of the Board. The details ofWhistle Blower Policy are available on the website of the Companywww.shardulsecurities.com
26. Corporate Social Responsibility Committee:-
In compliance with Section 135 of the Companies Act 2013 read with theCompanies (Corporate Social Responsibility Policy) Rules 2014 the Company has establishedCorporate Social Responsibility (CSR) Committee and statutory disclosures with respect tothe CSR Committee and an Annual Report on CSR Activities forms part of this Report asAnnexure III.
27. Disclosure under the Sexual Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013:-
The Company has in place a requisite policy in line with therequirements of the Sexual Harassment of Women at Workplace (Prevention Prohibition andRedressal) Act 2013. All employees (permanent temporary trainees) are covered under thepolicy. There was nocompliantreceivedfromanyemployeeduringthefinancialyear 2016-17 andhence no complaint is outstanding as on 31.03.2017 for redressal.
28. Change in registered office address of the Registrar &Share Transfer Agent
During the year under review M/s Link Intime India Private Limited theRegistrar & Share Transfer Agent of the Company shifted their registered office fromC-13 Pannalal Silk Mills Compound LBS Marg Bhandup (West) Mumbai 400 078 to their ownpremises at C
101 247 Park LBS Marg Vikhroli (West) Mumbai 400 083 with effect from24th February 2017.
29. Other Statutory information:-
a. Particulars of Employees:
The information required pursuant to Section 197 read with rule 5 ofthe Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 inrespect of employees of the Company will be provided upon request. In terms of Section136 of the Act the reports and accounts are being sent to the members and others entitledthereto excluding the information on employees' particulars which is available forinspection by the members at the Registered office of the company during business hours onworking days of the company up to the date of ensuing Annual General Meeting. If anymember is interested in inspecting the same such member may write to the companysecretary and the same will be furnished on request.
b. Conservation of Energy Technology Absorption and foreign Exchangeearnings and outgo:
(i) Provisions pertaining to conservation of Energy and TechnologyAbsorption are not applicable or not relevant to the working of Company. The Directorskeep themselves acquainted with ongoing seminars and research papers.
(ii) The Company has neither earned nor spent any amount by way ofForeign Exchange.
c. Deposits: i) There are no deposits covered under Chapter V ofthe Act which has remained unclaimed or claimed but not paid for which information isrequired to be given in this report. The Company does neither hold any Public Deposits noris accepting any deposits. ii) The Company has complied with various requirements in termsof the capital adequacy under the guidelines issued by the Reserve Bank of India for theNon-Banking Financial Companies.
30. CEO/CFO Certification:-
The Chief Executive Officer andChiefFinancialOfficerhaveissued certificatepursuantto the provisions SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 certifying that the financialstatements do not contain any untrue statement and thesestatements represent a trueandfairviewoftheCompany'saffairs.Thesaidcertificateisannexed and forms part of the Annual
Your Directors appreciate the co-operation and support extended by theShareholders Employees Financial Institutions and Banks.
| ||For and on behalf of Board || |
| ||R Sundaresan ||Monika Agarwal |
| ||Executive Director ||Executive Director and Company Secretary |
|Place : Mumbai || || |
|Dated : 26th May 2017 || || |
|Regd. Office: || || |
|G-12 Tulsiani Chambers || || |
|212 Nariman Point || || |
|Mumbai - 400 021 || || |