The Members of
Shardul Securities Ltd.
Your Directors are pleased to present the Thirty-First Annual Report and the AuditedAccounts for the year ended March 31 2016.
1. Financial Results: -
| ||2015-2016 ||2014-2015 |
|Profit/(Loss) before Depreciation ||545.85 ||1149.68 |
|Less: Depreciation ||41.57 ||48.16 |
|Profit/(Loss) before Taxation ||504.28 ||1101.52 |
|Less: Tax Expenses || || |
|Provision for tax ||17.00 ||195.00 |
|Current tax expense relating to prior years ||0.75 ||- |
|Deferred Tax Liability/(Asset) ||1.81 ||(11.03) |
|Profit / (Loss) after Taxation ||484.72 ||917.55 |
|Surplus/(Deficit) brought forward from previous years ||3917.47 ||3382.47 |
| ||4402.19 ||4300.02 |
|Appropriations: || || |
|Statutory Reserve Fund as per RBI Guidelines ||96.94 ||183.51 |
|Proposed Dividend (including dividend tax) on Equity Shares ||126.36 ||168.49 |
|Adjustment relating to Fixed Assets ||- ||30.55 |
|Balance carried to Balance Sheet ||4178.89 ||3917.47 |
| ||4402.19 ||4300.02 |
Your Directors had declared interim dividend of Rs. 0.60 per Equity Share on17498433 equity shares of Rs.10 each at their Board Meeting held on 11thMarch 2016 for year ending 31st March 2016 . With a view to conserve the financialresources of the company your Directors have not recommended any Final dividend for yearending 31st March 2016.
3. Transfer to Reserves:-
As per requirement of RBI regulations the Company has transferred the StatutoryReserve of Rs. 96.94 Lacs in Financial Year ended March 31 2016.
4. Management Discussions and Analysis Report:-
(i) Financial Performance:
Your Company has posted a net profit of Rs. 484.72 lakhs as against a net profit of Rs.917.55 lakhs during the previous year. An extraordinary income during the last yearcontributed to an increased levels of profit during the last year.
(ii) Industry Structure and developments:
The on-going global depression has continued to affect the economies all around theworld as a result of which India also has suffered economically in many sectors likeSteel Cement Consumer Goods and other services. Notwithstanding the efforts of theGovernment to gear up the economy the off take has been low resulting in lower turnoverand profits during the year under report. The huge losses provided for by the publicsector banks would be an indication of depleted economic activities in many sectors of oureconomy. The brighter side of the picture however is the increase in the foreign exchangereserves that has crossed 360 billion dollars and relative stability of the Indiancurrency.
The Stock Exchange markets witnessed lower volumes and high volatility with indexfalling considerably depriving trading opportunities and profitability.
The drought conditions that prevailed during the year under report also affected theagricultural income and the consequent output levels causing inflationary trends and as aresult the interest level in general was also not lowered by the Banks to the expectedlevels to give a boost to the industrial activities.
However during the ensuing year the monsoon is expected to be better economicactivities are likely to pick up and the global economy also might perform better whichprovides hopes for better performance.
(iii) Business Review:
Despite a general economic depression your Company did well to maintain the averagelevels of income and profitability. The company however looks forward for betterperformance during the current year for various reasons stated above.
(iv) Opportunities and Threats:
The GDP is expected to grow around 7.6% in the coming year. The Government has takenmany steps to hasten economic reforms especially in the telecommunication defense andagricultural sector besides launching an aggressive campaign on 'Make In India' programmeto encourage industrial activities on a larger scale. The foreign exchange reserves havealready exceeded 360 Billion Dollars and if the Government is able to bring about changesin the GST Act and also tax reforms it will boost more Foreign Direct Investments in manyof the sectors. These steps would help to improve the economic activities manifoldsresulting in a more vibrant capital market.
(v) Segment-wise - Product-wise reporting:
Your company is mainly engaged in the business of investment and broking activities andall other activities revolve around the same and as such there are no separate reportablesegments.
With positive developments stated as above your company anticipates the marketconditions to improve and achieve a better growth in the coming years. Your company alwayslooks for opportunities to exploit any advantages the market would offer to improve theshareholders' wealth.
(vii) Risks Concerns and its Management:
Your company's activities which are essentially in the capital market segments. TheRisk perception of our activity could be discerned as under:
Market Risk: Your Company's major investments are mostly in Capital market Instrumentslike Shares Mutual funds and Bonds and any volatility could erode the capital value ofthe investments. No doubt your Company would keep a close vigil on movement of prices andtake appropriate steps to minimize this risk.
Interest risk: The changes in interest rates by RBI and Banks could result influctuations in prices and consequently the income of various investments and borrowingsby the company. Your company has put in measures to hedge this risk but this cannot beeliminated totally.
Operation Risk: The stock market operations are fraught with certain risks associatedwith market judgments by operational executives and their decision making process based oncertain perceptions prevailing at any given time and these could change suddenly resultingin unexpected adverse positions. As the operations are human dependent the error factoris always inbuilt in this activity. Some of the risks could be wrong data inputdeviations from the rules of SEBI or Exchange due to oversight lack of coordinationamongst the dealing and back office administrative delays in adhering to schedules etc.This is not exhaustive and your company strives to minimize this type of risk throughadequate training and motivation periodically.
(viii) Internal Control Systems and their Adequacy:
Your company has in place adequate interest control measures. There is continuousmonitoring of all the activities and necessary creative measures are taken periodically tomanage any unforeseen risk factors.
(ix) Human Resources:
Your company has adequate trained professionals to manage the affairs of the company inthe most prudent manner.
Shriyam Broking Intermediary Limited a wholly owned subsidiary of the company hasstarted its operations again and will be achieving full scale operations during thecurrent year. In view of the earlier cooling period the activities of the broking companywas at a low level and hence the results were not comparable to the previous years.
6. Names of Companies which have become or ceased to be its subsidiaries jointventures or associate companies during the year:-
During the year under review no company has ceased to be its subsidiaries jointventures or associate companies.
In accordance with Articles 155 of the Articles of Association of the Company and theprovisions of the Companies Act 2013 Mr. R. Sundaresan (holding Din No. 00029840)director is liable to retire by rotation at the ensuing AGM and is eligible forreappointment.
At a board meeting held on 04.02.2016 the board had appointed Mr. Yogendra Chaturvedi(holding DIN: 00013613) as an Additional Executive Director and Mr. Devesh Vasavada(holding DIN: 00273128) as an Additional Independent Director and would vacate her officeat the ensuing Annual General Meeting of the Company and is eligible for re-appointment atthe ensuing Annual General Meeting of the Company
Necessary resolutions for the appointment /re-appointment of the aforesaid directorshave been included in the notice convening the ensuing AGM and details of the proposal forappointment / re-appointment are mentioned in the explanatory statement of the notice.
Your directors recommend their appointment / re-appointment.
Brief resume of the Directors proposed to be appointed/ reappointed nature of theirexperience in specific functions and area and number of companies in which they holdmembership/chairmanship of Board Committees as stipulated regulation 36(3) of SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 are provided in theReport of Corporate Governance forming part of the Annual Report.
At the 30th Annual General Meeting of the company held on 11thSeptember 2015 Mr. R. Sundaresan (holding Din: 00029840) was re-appointment as Whole-timeDirector of the Company for a period of three years with effect from 16th June2015 and Ms Monika Agarwal Company Secretary (Din: 07100711) who was appointed as anAdditional Executive Director was re-appointed as Executive Director.
Mr Devesh Chaturvedi and Mr Gyandeo Chaturvedi have resigned from Board of Directorsof the company with effect from February 05 2016. Mr Bhupendra Shroff and Mr NaveenChaturvedi also resigned from Board of Directors of the company with effect from May 262016. The Directors place on record their appreciation of the valuable advice and guidancegiven by them while they were Directors of the Company.
All independent directors have given declaration that they meet the criteria ofindependence as laid under section 149(6) of the Companies Act 2013 and regulation 25 ofSEBI (Listing Obligations and Disclosure Requirements) Regulations 2015.
8. Appointments/Resignations of the Key Managerial Personnel:-
Mr. Yogendra Chaturvedi was appointed as Executive Director and CEO of the Company witheffect from 5th February 2016 in place of Mr. R. Sundaresan who has resigned asCEO of the Company.
9. Board Evaluation:-
Pursuant to the provisions of the Companies Act 2013 and SEBI (Listing Obligations andDisclosure Requirement) Regulations 2015 the Board has carried out an evaluation of itsown performance the directors individually as well as the evaluation of the working ofits Audit Nomination & Remuneration Committees. The manner in which the evaluationhas been carried out has been explained in the Corporate Governance Report.
10. 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.
11. Number of Meetings of the Board:-
Five Meetings of the Board of Directors were held during the year and the details ofsuch meetings forms part of the Corporate Governance Report.
12. Audit Committee:-
The Audit Committee as on 31st March 2016 comprises of Independent Directorsnamely Mr. Devesh Vasavada (Chairman) Mr. Kantilal Shah Mr Bhupendra Shroff and Mr.Yogendra Chaturvedi (Executive Director) as other members. Due to Resignation of MrBhupendra Shroff w-e-f 26th May 2016 Mr Charul Abuwala independent directorwas appointed as Audit Committee member at the board meeting held on 27th May2016. All the recommendations made by the Audit Committee were accepted by the Board.
13. Corporate Social Responsibility Committee:-
Corporate Social Responsibility Committee on 31st March 2016 comprises ofMr. Devesh Vasavada (Chairman) Mr R Sundaresan and Mr Naveen Chaturvedi as other members.
Due to Resignation of Mr Naveen Chaturvedi w-e-f 26th May 2016 Mr YogendraChaturvedi Executive director was appointed as Corporate Social Responsibility Committeemember at the board meeting held on 27th May 2016.
14. Extract of Annual Return:-
The details forming part of the extract of the Annual Return in form MGT-9 as requiredunder section 92 of the Companies Act 2013 is included in this Report as Annexure -I andforms as integral part of this Report.
In opinion of Directors the provision for Income Tax is made as per the provisions ofthe Income Tax Act 1961.
16. Cash flow:-
As required by SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 a Cash Flow Statement is appended with this report
17. 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 March312016 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 judgments 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 2016 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.
f) that systems to ensure compliance with the provisions of all applicable laws were inplace and were adequate and operating effectively.
18. Statutory Auditors and Auditors' Report:-
The Company's Auditors M/s Rajen Damani & Associates Chartered Accountants holdoffice up to the conclusion of the ensuing Annual General Meeting and are eligible forre-appointment. They have confirmed their eligibility to the effect that theirre-appointment if made would be within the prescribed limits under the Act and that theyare not disqualified for re-appointment.
The notes to the Financial Statement referred to in the Auditors' Report areself-explanatory and therefore do not call for any further comments.
19. Secretarial Audit:-
Pursuant to the provisions of Section 204 of the Companies Act 2013 and rules madethere under the Company has appointed M/s Dhirendra Maurya & Associates CompanySecretary in Practice to undertake Secretarial Audit of the Company. The Secretarial AuditReport is included in Annexure -II and forms an integral part of this Report.
There is no secretarial audit qualification for the year under review.
20. Internal Audit:-
The Company internal control system is commensurate with its size scale andcomplexities of the operations. The internal audit is entrusted to M/s. Sandeep R.Maheshwari and Co. Chartered Accountants formerly known as R. Jaitlia & Co. The AuditCommittee of the Board of Directors and Statutory Auditors are periodically apprised ofthe internal audit findings and corrective actions taken.
21. 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.
22. Corporate Governance:-
Report on Corporate Governance stipulated under Regulation 34(3) and Regulation 53(f)read with Schedule V of SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 with Stock Exchange form part of this annual report. A certificate fromthe auditors of the Company M/s Rajen Damani & Associates Chartered Accountantsconfirming compliance of conditions of Corporate Governance as stipulated under aforesaidregulation is annexed to and forms part of this Report.
23. Consolidated Accounts:-
In accordance with the requirements of SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 and the Accounting Standard -21 prescribed by theInstitute of Chartered Accountants of India Company had made additional disclosure inrespect of Consolidated Financial Statements and Accounting Standard-18 for Related Partytransactions.
24. Particulars of loans guarantees or investments by the Company:-
Details of Loans guarantees or investments covered under the provisions of Section 186of the Companies Act 2013 are given in the notes to Financial Statements.
25. Related Party Transactions:-
There were no materially significant related party transactions which could have had apotential conflict with the interests of the Company.
As required under Regulation 23 of SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 the Company has formulated policy on dealing with RelatedParty Transactions. The Policy is available on the website of the Company and Weblink ofthe same is: http://www.shardulsecurities.com/related%20partv%20transaction%20policv.pdf
26. Whistle blower policy and vigil mechanism:-
The Company has established a whistle blower policy and vigil mechanism for directorsand employees to report concerns about unethical behavior actual or suspected fraud orviolation of the company's code of conduct policy. The mechanism provides for adequatesafeguards against victimization of directors and employees. None of the personnel havebeen denied access to the Audit Committee of the Board. The details of Whistle BlowerPolicy are available on the website of the Company www.shardulsecurities.com
27. Corporate Social Responsibility Committee:-
In compliance with Section 135 of the Companies Act 2013 read with the Companies(Corporate Social Responsibility Policy) Rules 2014 the Company has established CorporateSocial Responsibility (CSR) Committee and statutory disclosures with respect to the CSRCommittee and an Annual Report on CSR Activities forms part of this Report as AnnexureIII.
28. Disclosure under the Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013:-
The Company has in place a requisite policy in line with the requirements of the SexualHarassment of Women at Workplace (Prevention Prohibition and Redressal) Act 2013. Allemployees (permanent temporary trainees) are covered under the policy. There was nocompliant received from any employee during the financial year 2015-16 and hence nocomplaint is outstanding as on 31.03.2016 for redressal.
29. Other Statutory information:-
a. Particulars of Employees:
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 will be provided upon request. In terms of Section 136 of the Act thereports and accounts are being sent to the members and others entitled thereto excludingthe information on employees' particulars which is available for inspection by the membersat the Registered office of the company during business hours on working days of thecompany up to the date of ensuing Annual General Meeting. If any member is interested ininspecting the same such member may write to the company secretary and the same will befurnished on request
b. Conservation of Energy Technology Absorption and foreign Exchange earnings andoutgo:
(i) Provisions pertaining to conservation of Energy and Technology Absorption are notapplicable or not relevant to the working of Company. The Directors keep themselvesacquainted with ongoing seminars and research papers.
(ii) The Company has neither earned nor spent any amount by way of Foreign Exchange.
i) There are no deposits covered under Chapter V of the Act which has remainedunclaimed or claimed but not paid for which information is required to be given in thisreport. The Company does neither hold any Public Deposits nor is accepting any deposits.
ii) The Company has complied with various requirements in terms of the capital adequacyunder the guidelines issued by the Reserve Bank of India for the Non-Banking FinancialCompanies.
30. CEO/CFO Certification:-
The Chief Executive Officer and Chief Financial Officer have issued a certificatepursuant to the provisions SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 certifying that the financial statements do not contain any untruestatement and these statements represent a true and fair view of the Company's affairs.The said certificate is annexed and forms part of the Annual Report.
31. Acknowledgment: -
Your Directors appreciate the co-operation and support extended by the ShareholdersEmployees Financial Institutions and Banks.
| ||For and on behalf of Board |
|Place : Mumbai ||R Sundaresan ||Monika Agarwal |
|Dated : 22nd May 2015 ||Executive Director ||Executive Director & Company Secretary |
|Regd. Office: || || |
|G-12 Tulsiani Chambers || || |
|212 Nariman Point || || |
|Mumbai 400 021. || || |