Your Directors have pleasure in presenting their Twenty Third Annual Report and theAudited Statements of Accounts for the financial year ended March 31 2017.
|Particulars ||Year Ended March 31 2017 ||Year Ended March 31 2016 |
| ||(`) ||(`) |
|Gross Income for the year ||20949050 ||17975343 |
|Total Expenditure before Depreciation and Tax ||27596316 ||29000785 |
|Profit /(Loss) before Depreciation and Tax ||(6647266) ||(11024442) |
|Less: Depreciation ||331729 ||428107 |
|Profit /(Loss) after Depreciation and Tax ||(6978995) ||(11453549) |
|Balance brought forward from previous year ||(40872798) ||(29419249) |
|Profit /(Loss) available for Appropriation ||(47851793) ||(40872798) |
|Balance carried to Balance Sheet ||(47851793) ||(40872798) |
In the absence of profits your Directors do not recommend payment of any dividend forthe Financial Year 2016-2017.
State of Company's Affairs:
Your Company has managed to bring down the loss during the financial year 2016-17primarily by cutting down on its expenditures and taking effective measures to raise itsincome as compared to the last financial year.
Some highlights of your Company's performance during the year under review are:
The gross loss (before depreciation and tax) for the year was ` 6647266 as against `11024442 during the last year.
Net loss after taxation for the year was ` 6978995 as against ` 11453549 in thelast year.
The total asset under management was ` 41.14 Crore as against ` 38.06 Crore in the lastyear.
Your Company has complied with all the prescribed norms and regulations with respect toits fund management activities risk management customer service employees' trainingetc. The Company has laid down guidelines to be adhered by employees to ensure complianceswith all applicable laws and regulations. On the administrative controls side yourCompany has a proper reporting structure defined roles and responsibilities at all levelsand rigorous. The Company has an Internal Financial Control System commensurate with thenature of its business and the size and complexity of its operations. The maiden schememanaged by your Company has delivered a return of 11.651% (at the end of March 2017) CAGRsince inception accompanied by lower levels of volatility. The fund portfolio has beenre-aligned to include stocks from sectors which hold promise in the current scenario. As aresult the fund has generated 10.8% return in the first quarter of CY2017 compared withbenchmark return of 8.54%. Mutual fund industry witnessed strong inflow of funds fromdomestic investors during FY17. Mutual fund investment in equities during FY17 stood at `55000 crores in the backdrop of SIPs gaining popularity. Better penetration into smallertowns and falling interest rate in bank FDs attracted more investors to mutual funds. As aresult average AUMs of mutual funds increased a whopping 35% y/y to ` 18.29 lakh croresfor the quarter January-March 2017.
In view of the strong potential of Indian equities and considering the prevailingmarket scenario your Company intends to take significant steps by augmenting the capital.This will include launching of new schemes that will have a complementary objective to ourexisting offering and address the need of lower risk adjusted stable returns from the idlefunds of investors without compromising liquidity.
Nature of Business:
There was no change in the nature of the business.
The total paid up Share Capital as on March 31 2017 was ` 20 Crores comprising of 60Lakhs Equity Shares of ` 10/- each and 14 Lakhs Redeemable Non-Convertible PreferenceShares of ` 100/- each.
Material Changes and Commitments:
No material changes or commitments affecting the financial position of the Company havetaken place from March 31 2017 till the date of this report.
Particulars of Loans Guarantees or Investments:
Company has not given any guarantees or loans covered under the provisions of Section186 of the Companies Act 2013 (Act). As regards the details of the Investments coveredunder the provisions of Section 186 of the Act the same are given in the notes to thefinancial statements.
Cash Flow Statement:
The Cash Flow statement for the year 2016-17 is attached to the Balance Sheet.
The Board of Directors had appointed Mr. Kshiti Ranjan Das as an Additional Director ofthe Company w.e.f. March 06 2017 and Mr. Kalyanaraman Chandrachoodan and Mrs. ChandraIyengar as Additional Directors of the Company (in the category of Independent Director)with effect from March 31 2017. Pursuant to Section 161 of the Act they will hold theoffice only up to the date of the ensuing Annual General Meeting (AGM) of the Company. TheCompany has received a notice in writing from a member under Section 160 of the Actproposing the candidature of Mr. Das Mr. Chandrachoodan and Mrs. Iyengar for the officeof Director. Suitable resolutions for appointment of Mr. Das as an Independent Directorfor period up to March 05 2022 and Mr. Chandrachoodan and Mrs. Iyengar as IndependentDirectors for period up to March 30 2022 are being proposed for adoption by the Membersat this Annual General Meeting.
In accordance with the provisions of the Act and in terms of the Memorandum andArticles of Association of the Company Mr. R. Sundara Rajan retires by rotation at theensuing AGM and being eligible offers himself for reappointment. Necessary proposals forappointment/ reappointment of the aforesaid Directors have been included in the noticeconvening the AGM and the respective Resolutions are recommended for your approval.
Requirement of Regulation 21 (1) (d) of the Securities and Exchange Board of India(Mutual Funds) Regulations 1996 relating to composition of the Board in respect ofIndependent Directors has been complied with.
All the Independent Directors have given declarations that they meet the criteria ofindependence as laid down under Section 149(6) of the Act and Regulation 16 (1) (b) of theSecurities and Exchange Board of India (Listing Obligations and Disclosure Requirements)Regulations 2015 hereinafter referred to as Listing Regulations'.
Profile of the Directors as required under Regulation 36 of the Listing Regulationsare given in the Notice of the 23rd Annual General Meeting.
During the year under report your Company has not accepted any fixed deposits.
Pursuant to the provisions of the Companies Act 2013 and the Listing Regulations theBoard has carried out an annual performance evaluation of its own performance theDirectors individually as well as the evaluation of the working of its Committees. Themanner in which the evaluation has been carried out has been explained in the CorporateGovernance Report.
Policy on Directors' Appointment and Remuneration:
The Board has framed a policy which lays down a framework in relation to remunerationof Directors Key Managerial Personnel and Senior Management of the Company.
The key features of the policy are as follows:
1. Criteria for appointment and removal of Director Key Managerial Personnel andSenior Management.
2. Criteria for performance evaluation.
3. Criteria for fixing the remuneration of Director Key Managerial Personnel andSenior Management.
The details of this policy are explained in the Corporate Governance Report.
During the year 4 Board Meetings and 4 Audit Committee Meetings were convened and held.The details of the meetings are given in the Corporate Governance Report. The gap betweenthe Meetings was within the period prescribed under the Act and as per Regulation 17(2)and 18 (2) of the Listing Regulations respectively.
Pursuant to the requirement of Regulation 21 of the Listing Regulations the Companyhas constituted Risk Management Committee. The Company has in place a Risk ManagementPolicy commensurate with its size of operations which lays down a process foridentification and mitigation of risks that could materially impact its performance.
Corporate Social Responsibility:
The Company has not developed and implemented any Corporate Social Responsibilityinitiatives as the said provisions are not applicable.
Directors' Responsibility Statement:
Pursuant to the provisions of Section 134 (3) (c) of the Act the Directors confirm andbelief: a) In the preparation of Annual Accounts and Financial Statements for the yearended March 31 2017 the applicable Accounting Standards have been followed along withproper explanations relating to material departures if any; b) That such accountingpolicies as mentioned in Notes to the Financial Statements have been selected and appliedconsistently and judgments and estimates have been made that are reasonable and prudentso as to give a true and fair view of the state of affairs of the Company as at March 312017 and of the Loss of the Company for the year ended on that date; c) That proper andsufficient care has been taken for the maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding the assets of the Company andfor preventing and detecting fraud and other irregularities; d) The Annual Accounts havebeen prepared on an ongoing concern basis; e) That they have laid down internal financialcontrols commensurate with the size of the Company and that such financial controls wereadequate and were operating effectively; f) That systems to ensure compliance with theprovisions of all applicable laws were in place and were adequate and operatingeffectively.
Related Party Transactions:
During the year the Company has not entered into any fresh related party agreements.All the previous related party transactions of the Company were at arm's length basis andwere in the ordinary course of business. The particulars of contracts or arrangements withrelated parties in Form AOC -2 are annexed herewith as
Significant and Material Orders Passed by the Regulators or Courts or Tribunals:
During the year under report there were no significant material orders passed by theRegulators/ Courts/ Tribunals impacting the going concern status and Company's operationsin future.
Internal Financial Controls and their adequacy:
The Company has put in place adequate internal financial controls with reference to theFinancial Statements commensurate with the size of the Company.
Disclosures: Audit Committee:
The Audit Committee comprises of Mr. Prabhakar Karandikar (Independent Director) asChairman Mr. Arindom Mukherjee (Independent Director) as Member Mrs. Jayashree Mahesh(Non- Independent Director) as Member Mr. Kshiti Ranjan Das (Independent Director)as Member and Mr. Kalyanaraman Chandrachoodan (Independent Director) as Member. All therecommendations made by the Audit Committee were accepted by the Board.
Vigil Mechanism / Whistle Blower Policy:
The Company has established a Vigil Mechanism to deal with instance of fraud andmismanagement if any. The detail of the Vigil Mechanism is posted on the website of theCompany i.e. www.shriramamc.com.
Establishment of Internal Complaints Committee:
The Company has in place an Anti Sexual Harassment Policy in line with the requirementsof the Sexual Harassment of Women at Workplace (Prevention Prohibition and Redressal)Act 2013. Internal Complaints Committee has been set up to redress complaints receivedregarding sexual harassment. All employees (permanent contractual temporary trainees)are covered under this policy. No complaints of sexual harassment were received during theyear.
Auditors and Auditor's Report:
As per the provisions of Section 139 of the Act and the Companies (Audit and Auditors)Rules 2014 an audit firm functioning as auditor of the Company for ten years or moreafter the commencement of provisions of Section 139 of the Act may be appointed in thesame Company for further period of three years from April 01 2014. As the maximumstatutory tenure of M/s. K.S. Aiyar and Co. (Firm Registration No. 100186W) is about toend they have requested not to be considered for re-appointment at the conclusion oftheir present term of appointment at this Annual General Meeting of the Company. TheBoard of Directors on recommendation of the Audit Committee has appointed M/s. G. D. Apteand Co. Chartered Accountants Mumbai (Registration No. 100515W) as the StatutoryAuditors of the Company subject to the approval of the members of the Company at thisAnnual General Meeting. M/s. G. D. Apte and Co. being eligible have indicated theirwillingness to serve as Statutory Auditors of the Company if appointed at this meeting.Their appointment as Statutory Auditors if approved by the members of the Company willtake effect from the conclusion of 23rd Annual General Meeting (subject to ratification bythe Members every year in the Annual General Meeting) until the conclusion of 28th AnnualGeneral Meeting of the Company to be held in the year 2022. A certificate from them hasbeen received to the effect that their appointment as Statutory Auditors of the Companyif made would be according to the terms and conditions prescribed under Sections 139 and141 of the Act. Members are requested to consider their appointment.
The Notes on financial statement referred to in the Auditor's Report areself-explanatory and do not call for any further comments. The Auditor's Report does notcontain any qualification reservation or adverse remark.
Pursuant to the provisions of Section 204 of the Act and the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 the Company has appointed Mr. Suhas S.Ganpule Practising Company Secretary Proprietor of M/s. SG & Associates toundertake the Secretarial Audit of the Company. The Secretarial Audit Report is annexedherewith as Annexure B'. The Secretarial Audit Report does not contain anyqualification reservation or adverse remark.
Subsidiaries Joint Ventures or Associate Companies:
During the year under report there was no change in the associate company. The Companydoes not have any subsidiary or joint venture.
The Report on Corporate Governance forms part of the Directors' Report and is annexedherewith.
As required by the Listing Regulations Auditor's Report on Corporate Governance and adeclaration by the Managing Director with regards to Code of Conduct are attached to thesaid Report. The Management Discussion and Analysis is given as a separate statementforming part of the Annual Report. As required under Listing Regulations a detailedreport on Corporate Governance along with the Certificate from the Company Auditor'sconfirming compliance forms an integral part of this Report and certificate duly signed bythe on the Financial Statements of the Company for the year endedManagingDirectorandChiefFinancialOfficer March 31 2017 was submitted to the Board ofDirectors at their Meeting held on May 02 2017. These certificates are attached to theReport on Corporate Governance.
Energy Conservation Technology Absorption and Foreign Exchange Earnings and Outgo:
1. Conservation of Energy
The Company has no activity involving Conservation of Energy.
2. Technology Absorption
The Company has no activity involving Technology Absorption.
3. Foreign Exchange earnings and outgo
The Company did not have any foreign exchange earnings or outgo during the year underreview.
Extract of Annual Return:
The details forming part of the extract of the Annual Return in Form MGT 9 is annexedherewith as Annexure C'. Particulars of Employees:
During the year under report your Company has not employed any person who was inreceipt of remuneration in excess of the limits specified under Section 197 of the Actread with the Companies (Appointment and Remuneration of Managerial Personnel) Rules2014. The details required as per Rule 5 (1) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 is annexed herewith as AnnexureD'. As per the provisions of Section 136(1) of the Companies Act 2013 the Annualreport excluding the information required as per Rule 5 (2) of the Companies (Appointmentand Remuneration of Managerial Personnel) Rules 2014 on employee's particulars is beingsent to the members which is however available for inspection at the Registered officeof the Company during working hours of the Company up to the date of the ensuing AnnualGeneral Meeting. If any Member is interested in obtaining such information may write tothe Company Secretary in this regard.
The Board of Directors take this opportunity to express their sincere appreciation forthe excellent support and cooperation received from the Securities and Exchange Board ofIndia Association of Mutual Funds of India Stock Exchange Authorities AuditorsBankers Distributors other Service providers and Board of Trustees of Shriram MutualFund.
The Directors wish to place on record the continued enthusiasm total commitmentdedication and efforts of the employees of the Company at all levels.
We are also deeply grateful to the Shareholders of the Company and also to the largebody of investors of scheme of Shriram Mutual Fund for the continued confidence and thefaith reposed in the Fund and look forward to their continued patronage.
By Order of the Board
For Shriram Asset Management Company Limited
Date: May 02 2017
Annexure A' to Directors' Report
FORM NO. AOC-2
(Pursuant to clause (h) of sub-section (3) of Section 134 of the Act and Rule 8(2) ofthe Companies (Accounts) Rules 2014)
Form for disclosure of particulars of contracts/arrangements entered into by theCompany with related parties referred to in sub-section (1) of Section 188 of theCompanies Act 2013 including certain arms length transactions under third proviso thereto
1. Details of contracts or arrangements or transactions not at arm's lengthbasis: Not Applicable
2. Details of material contracts or arrangement or transactions at arm's lengthbasis:
(a) Name(s) of the related party and nature of relationship:
(1) Shriram Credit Company Limited (SCCL) - Holding Company
(2) Shriram Insight Share Brokers Limited (SISBL) - Fellow Subsidiary
(b) Nature of contracts/arrangements/transactions:
(1) SCCL - Infrastructure Sharing (2) SISBL - (i) Rental Agreement
(ii) Infrastructure Sharing
(c) Duration of the contracts / arrangements/transactions:
(1) SCCL - 3 years and 2 months
(2) SISBL- (i) Rental Agreement- Two premises have been sub-leased to the Company bySISBL for which two separate agreements have been executed. Duration of the two ofthe agreements is 38 months and 44 months respectively.
(ii) Infrastructure Sharing - 4 years
(d) Salient terms of the contracts or arrangements or transactions including the valueif any:
(1) SCCL- Sharing of infrastructure such as office equipment furniture and fixturesmanpower and administrative support- Reimbursement made on actual basis.
(2) SISBL- (i) Rental Agreement- The monthly rent for the two premises has been fixedat ` 38433/- and
` 9100/- respectively. Further in respective of aforementioned rented properties theCompany has agreed to increase the monthly rent from such date and at such rate asmay be increased by the original landlord.
(ii) Infrastructure Sharing- Reimbursement made on actual basis. (e) Date(s) ofapproval by the Board if any : April 29 2015 (f) Amount paid as advances if any : Nil
By Order of the Board
For Shriram Asset Management Company Limited
Date: May 02 2017