STANROSE MAFATLAL INVESTMENTS AND FINANCE LIMITED
Your Directors have pleasure in presenting the Thirty- Seventh Annual Report togetherwith the Audited Statements of Account of the Company for the financial year ended 31stMarch 2017.
| || || |
(Rupees in Lacs)
| ||Current Year || |
| ||Rupees || |
|Total Income ||942.37 ||1095.07 |
|Gross Profit ||581.42 || |
|Less: Depreciation ||40.66 || |
|Profit before Tax ||540.76 || |
|Less: Provision for Taxation ||93.18 || |
|Short Provision for taxation in respect of earlier years (Net) ||12.95 || |
|Profit after Tax ||434.63 || |
|Add: Profit brought forward from Previous Year ||1404.61 || |
|Balance Available for Appropriations ||1839.24 || |
|Less: Transfer to Reserve u/s. 45 IC of RBI Act 1934 ||87.00 || |
|Transfer to General Reserve- ||I 10.00 || |
|Transfer to General Reserve-ll || || |
|Proposed Dividend* || || |
|Tax on Dividend || || |
|Balance carried forward ||1742.24 || |
* As per amended Accounting Standard-4
Your Directors recommend a Dividend of Rs.6/- per share (Previous Year Rs.6/-) on3967920 Equity Shares of Rs.10 each aggregating to Rs.286.54 Lacs (inclusive of dividendtax) for the financial year ended on 31st March 2017. If approved by the Shareholders atthe forthcoming Annual General Meeting to be held on 4th August 2017 the said dividendwill be paid on 17th August 2017 or thereafter to (i) those shareholders whose namesappear on the Register of Members of the Company on 28th July 2017 and (ii) those whosenames as beneficial owners are furnished by National Securities Depository Limited andCentral Depository Services (India) Limited for the purpose.
MANAGEMENT DISCUSSION AND ANALYSIS (MD&A)
The total income for the year was Rs.942.37 Lacs as compared to Rs.1095.07 Lacs in theprevious year. Depreciation was Rs.40.66 Lacs (Previous Year Rs.32.44 Lacs). The increasein depreciation is mainly on account of change in charging provisions under the CompaniesAct 2013 based on useful life of asset instead of fixed percentage under the CompaniesAct 1956. The Provision for Taxation: (i) for the year under report was Rs. 93.18 Lacs(ii) Short Provision in respect of earlier years (net) was Rs.12.95 Lacs. Profit after taxwas Rs. 434.63 Lacs. The total income and the profit for the year is low mainly onaccount of lower booking of profit on sale of non-current investments by Rs. 163.10 Lacs.
An amount of Rs.87.00 Lacs was transferred to Statutory Reserve Fund pursuant toSection 45 IC of RBI Act 1934 an amount of Rs.10.00 Lacs was transferred to GeneralReserve I during the year under review.
The Net Worth of the Company as at 31st March 2017 stood at Rs. 5747.01 Lacs asagainst Rs. 5312.38 Lacs on 31st March 2016.
The NBFC (Non-Banking Finance Company) sector has evolved considerably in terms of itssize operations technological sophistication and entry into newer areas of financialservices and products. NBFCs are now deeply interconnected with the entities in thefinancial sector on both sides of their balance sheets.
Being financial entities they are exposed to risks arising out of counterpartyfailures funding and asset concentration interest rate movement and risks pertaining toliquidity and solvency as any other financial sector player.
The Company's operations continue to be mainly focused in the areas of Inter- corporateInvestments Capital Market activities and Financing. Segment-wise brief outline offinancial and operational performance during the year under report is as under:
The Company's investment portfolio is reviewed from time to time to buy securities toadd to the Portfolio or to sell in order to make Capital gains. Details of the Company'sinvestments are given under Note No. 7 to Financial Statements of the Company for the yearended as on 31st March 2017. The total worth of Company's Quoted and Unquoted Investmentsin Shares and Securities (Including Stock-in-trade) as at 31st March 2017 is Rs.4718.40Lacs (Previous Year Rs.4741.47 Lacs) which is 70.22 % (Previous Year 98.08%) higher thanrelated Book Value. The decrease in Book Value from 98.08% to 70.22% is mainly on accountof decrease in the market value of some of the shares purchase of new shares atcurrent-higher rates and sale of old-low cost shares from Non-current Investmentportfolio.
During the year under report the Company:
(a) has made disinvestment of Rs.191.27 Lacs from its Non-current Quoted EquityInvestments as against Rs.66.74 Lacs in the Previous Year.
(b) Booked a net profit of Rs.682.95 Lacs on sale of Non-Current investments as againstRs. 846.05 Lacs in the previous year.
(c) earned income by way of Dividend of Rs.108.02 Lacs against Rs.116.63 Lacs in theprevious year which inter alia includes Rs.93.03 Lacs (Previous year Rs.93.03 Lacs)received from Standard Industries Ltd.
After the close of the Financial Year ended on March 31 2017 the Company has bookedNet Capital Gain of Rs. 329.17 Lacs on sale of certain Non-Current Investments in sharesof the aggregate book value of Rs. 67.66 Lacs.
Interest on Inter-corporate Deposit:
During the year under report the Company earned interest income on Inter CorporateDeposits of Rs.141.26 Lacs as against Rs.131.31 Lacs in the previous year.
Opportunities and Threats
As various factors are posing constant threats and high volatility in the CapitalMarkets it appears beneficial to diversify the portfolio to reduce the risk and insulatefrom the vagaries of stock-market. Mutual Funds help to reduce risk throughdiversification and professional management and therefore the Company invests its surplusfunds in debt/equity oriented Mutual Funds. One of the biggest advantages of Mutual Fundinvestment is Liquidity. Open-end funds provide option to redeem on demand which isbeneficial during rising or falling markets. The management is exploring other avenues ofbusiness.
The Company intends to continue focusing on capital market activities including tradingin securities and emerging products in derivatives.
Risk and Concern
The Company is exposed to specific risks that are particular to its business and theenvironment within which it operates including interest rate volatility economic cyclecredit and market risks. The Company has quoted investments which are exposed tofluctuations in stock prices. These investments represent a material portion of theCompany's business and are vulnerable to fluctuations in the stock markets. Any decline inprices of the Company's quoted investments may affect its financial position and theresults of its operations. It continuously monitors its market exposure and tries tomanage these risks by following prudent business and risk management practices.
Adequacy of Internal Control
The Company has a proper and adequate system of internal control in all spheres of itsactivities to ensure that all its assets are safeguarded and protected against loss fromunauthorized use or disposition and that the transactions are authorized recorded andreported diligently. The Internal control is supplemented by an effective internal auditbeing carried out by an external firm of Chartered Accountants.
The Company ensures adherence to all internal control policies and procedures as wellas compliances with all regulatory guidelines.
The Audit Committee of the Board of Directors reviews the adequacy of internalcontrols.
Relations remained cordial with employees at all levels during the year.
The Company has complied with applicable provisions of Corporate Governance as providedunder SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015. A separatereport on Corporate Governance compliance is included as a part of the Annual Report alongwith the Auditors' Certificate.
Your Company has not accepted any public deposits during the year under review.
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to the requirements of Section 134(5) of the Companies Act 2013 with respectto Directors' Responsibility Statement the Directors confirm that:
1. In the preparation of the annual accounts for the financial year ended 31st March2017 the applicable accounting standards have been followed and that there are nomaterial departures from the same;
2. Accounting policies selected were applied consistently. Reasonable and prudentjudgments and estimates were made so as to give a true and fair view of the state ofaffairs of the Company as at 31st March 2017 and of the profit for the year ended on thatdate;
3. Proper and sufficient care has been taken for the maintenance of adequate accountingrecords in accordance with the provisions of the Companies Act 2013 for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;
4. The annual Accounts for the Financial Year ended 31st March 2017 have been preparedon a 'going concern' basis.
5. Proper internal financial controls were in place and that the financial controlswere adequate and were operating effectively.
6. Proper systems devised to ensure compliance with the provisions of all applicablelaws were in place and were adequate and operating effectively.
The Company's wholly owned subsidiary Stan Plaza Limited is a Non-Listed Companyhaving its Registered Office at Mumbai. As on March 31 2017 in accordance with SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 it will be termed asa Non-Material Subsidiary of the Company.
Stanrose Mafatlal Lubechem Limited - In Liquidation a substantially owned subsidiaryof the Company was ordered to wind-up by the High Court of Mumbai vide its Order datedJune 10 2011 and appointed the Official Liquidator to take charge of its Assets BankAccounts Books of Accounts Affairs Business and Properties with all powers under thethen provisions of the Companies Act 1956.
In compliance with the requirements of the provisions of Section 129(3) read with Rule5 of Companies (Accounts) Rules 2014 a Statement in Form AOC-1 containing the salientfeatures of financial statements in respect of Stan Plaza Limited a wholly ownedsubsidiary of the Company has been included as a part of this Annual Report. StanroseMafatlal Lubechem Limited being inoperative its details are not disclosed in Form AOC-1.
The Company has framed a 'Policy for Determining Material Subsidiaries' for identifyingmaterial subsidiaries and to provide governance framework for such material subsidiaries.The policy is available on the website of the Company www.stanrosefinvest.com .
CONSOLIDATED FINANCIAL STATEMENTS
The Consolidated Financial Statements (CFS) of the Company and its wholly ownedsubsidiary Company viz. Stan Plaza Limited (SPL) are prepared in accordance with theprovisions of Schedule III of the Companies Act 2013 and relevant Accounting Standardsissued by the Institute of Chartered Accountants of India as applicable to the Companyand form part of this Annual Report. These Statements have been prepared on the basis ofaudited financial statements received from SPL as approved by its Board. Stanrose MafatlalLubechem Ltd. a substantially owned subsidiary Company being inoperative its financialstatements are not considered in preparation of CFS.
In terms of Section 152 of the Companies Act 2013 Shri Madhusudan J. Mehta aNon-Independent Non-Executive Director of the Company is retiring by rotation and beingeligible offers himself for re-appointment. Brief resume of Shri Mehta as required underRegulation 36 of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015is covered in the notes of the Notice of the 37th AGM of the Company.
Shri Arun P. Patel and Shri Rajesh Jaykrishna are due for retirement from their firstterm as Independent Directors under the Companies Act 2013. Based on their skillsexperience knowledge performance evaluation and recommendation of Nomination andRemuneration Committee it is proposed to re-appoint them for three consecutive years upto the conclusion of the Annual General Meeting that may be held for the financial yearending March 31 2020. Their brief resumes as required under Regulation 36 of SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 are covered underAnnexure to the Notice for 37th AGM of the Company.
Shri Framroz M. Pardiwalla has resigned from the Directorship of the Company witheffect from 17th November 2016 on health grounds. Your Directors place on record theirappreciation of the valuable services rendered by Shri Pardiwalla during his tenure as adirector.
Your Directors regret to inform about the demise of Shri Russi Jal Taraporevala on 7thJanuary 2017 who was associated with the Company as a Director since August 1981. Theinvaluable services and guidance rendered by him to the Company will be greatly missed.
To fill the vacancy of an Independent Director caused due to resignation of Shri F. M.Pardiwalla and demise of Shri Russi Jal Taraporevala the Board has appointed Shri KersiJ. Pardiwalla an existing Non-Independent Director as an Independent Director for threeconsecutive years upto the conclusion of AGM that may be held for the Financial Year 2020.Accordingly a resolution proposing his appointment alongwith his brief resume is providedunder Notice of 37th AGM.
All Independent Directors have given their declarations that they meet the criteria ofindependence as laid down under Section 149(6) of the Companies Act 2013.
None of the Directors of the Company is disqualified from being appointed orre-appointed as a Director as specified under Section 164 of the Companies Act 2013.
KEY MANAGERIAL PERSONNEL
The Company had appointed three Key Managerial Personnel viz. Shri Bharat N. DaveChief Executive Officer Shri Harshad V. Mehta Chief Financial Officer and Shri Soham A.Dave as Company Secretary to inter alia shoulder the responsibilities in theirrespective fields as envisaged under the provisions of the Companies Act 2013.
Shri Bharat N. Dave has resigned from the post of Chief Executive Officer of theCompany with effect from 24th April 2017 on the grounds of old age. Shri Dave has beenretained for advising and assisting the Company in its business of fund managementmanagement of its equity and mutual fund portfolios trading in securities etc. Thecompany will fill in the vacancy for the post of CEO in due course and within the timeprescribed under the Companies Act 2013.
FAMILIARIZATION PROGRAMME FOR THE INDEPENDENT DIRECTORS
The Board of Directors has adopted a Familiarization Programme for IndependentDirectors of the Company and posted the same on the website of the Company viz.www.stanrosefinvest.com . The Programme aims to provide insights into the Company toenable the Independent Directors to understand and significantly contribute to itsbusiness.
Under the Companies Act 2013 M/s. C. C. Chokshi & Co. Chartered Accountants wereappointed as the Statutory Auditors of the Company for three consecutive years to holdoffice upto the conclusion of the 37th AGM. The Act requires the Company to mandatoryrotate the Auditors within or after three years if they are associated as StatutoryAuditors with the Company for ten or more years.
Accordingly the Company recommends M/s. Manubhai & Shah Chartered Accountants(Firm Regn. No. 106041W/ W100136) Ahmedabad as the Statutory Auditors of the Company inplace of the retiring auditors M/s C. C. Chokshi & Co. Chartered Accountants tohold office from the conclusion of the 37th AGM to the conclusion of the 42nd AGM (subjectto ratification of the appointment by the members at every AGM held after this AGMj.TheCompany has received a letter from them to the effect that their appointment if madewould be within the prescribed limits under Section 139 of the Companies Act 2013 andthat they are not disqualified for such appointment within the meaning of Section 141 ofthe Companies Act 2013.
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 Messrs Manoj Hurkat and Associates a firm of Company Secretaries in Practice toundertake the Secretarial Audit of the Company. The Secretarial Audit Report is annexedherewith as "Annexure A".
The Report confirms that the Company has complied with all the applicable provisions ofthe Companies Act 2013 Reserve Bank of India Act 1934 Equity Listing Agreement/ SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 Depositories Act1996 Securities Contracts (Regulation) Act 1956 SEBI (Prohibition of Insider Trading)Regulations 1992/2015 SEBI (Substantial Acquisition of Shares and Takeovers)Regulations 2011 and various Regulations and Guidelines as applicable to the Company.
CORPORATE SOCIAL RESPONSIBILITY
In accordance with the provisions of Section 135 of the Companies Act 2013 and therules made thereunder the Company has constituted a Corporate Social ResponsibilityCommittee of Directors. The role of the Committee is to review the CSR activities of theCompany periodically and recommend the Board the amount of expenditure to be incurred onthe CSR activities annually.
Annual Report on CSR activities carried out by the Company during F.Y. 2016-17 isenclosed as "Annexure-B" to this report.
NOMINATION AND REMUNERATION COMMITTEE
The Nomination and Remuneration Committee comprises of Shri Kersi J. PardiwallaChairman Shri Arun P. Patel and Shri Rajesh Jaykrishna members. The role andresponsibilities Company's policy on directors' appointment and remuneration includingthe criteria for determining the qualifications positive attributes independence of adirector and other related matters are in conformity with the requirements of theCompanies Act 2013 and SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015.
The information relating to the composition of the Committee scope & term ofreference no. of meetings held and attendance etc. during the year under report areprovided in the Corporate Governance Report.
EVALUATION OF BOARD COMMITTEES AND DIRECTORS
A detailed exercise for evaluation of the performance of the Board its variousCommittees viz. Audit Committee Nomination and Remuneration Committee Corporate SocialResponsibility Committee Stakeholders' Relationship Committee and Share TransferCommittee as also the performance of individual Directors was carried out by the Board.The performance of the Board and that of its Committees was evaluated on the basis ofvarious parameters like adequacy of its Composition Board Culture Execution andPerformance of Specific Duties Obligations and Governance etc. The evaluation ofindividual Directors and that of the Chairman of the Board was on the basis of variousfactors like their attendance level of their engagement and contribution independency ofjudgment their contribution in safeguarding the interest of the Company etc. The Boardrecorded its satisfaction over the performance of its various Committees its directorsindividually as well as the collective efforts put in by the Board in enhancing andsafeguarding the interest of the Company as a whole.
DISCLOSURE OF RATIO OF REMUNERATION OF EACH DIRECTOR TO THE MEDIAN EMPLOYEES'REMUNERATION ETC.
The particulars of ratio of remuneration of each director to median remuneration of theemployees of the Company for the financial year under report percentage increase inremuneration of each Director and KMP etc. more particularly described under Section197(12) of the Companies Act 2013 and Rule 5 of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 are given in "AnnexureC" to this Report.
PARTICULARS OF LOANS AND INVESTMENTS
The Company being a Non-Banking Financial Company registered with Reserve Bank of Indiawith the principal business inter alia of Inter-Corporate Financing the provisions ofSection 186 except sub-section (1) are not applicable to It. Hence no particulars thereofas envisaged under Section 134(3)(g) are covered in this Report.
RELATED PARTY TRANSACTIONS
The particulars of contracts or arrangements entered by the Company with relatedparties which are subsisting during the year under Report are provided under "AnnexureD" in Form AOC - 2. The Company has framed a 'Policy on Related PartyTransactions' for determining related parties transactions on arm's length basis andprocedures to be followed for obtaining various approvals etc.The policy is available onthe website of the company www.stanrosefinvest.com . As regards the justification forentering into related party transactions it may be noted that the same are entered intodue to business exigencies and are in the best interest of the Company.
ENERGY TECHNOLOGY AND FOREIGN EXCHANGE
Pursuant to the requirement under Section 134(3) of the Companies Act 2013 read withRule 8 of Companies (Accounts) Rules 2014:
(a) The Company has no activity involving conservation of energy or technologyabsorption.
(b) The Company does not have any Foreign Exchange Earnings.
(c) Outgo under Foreign Exchange - Rs.14.88 Lacs.
Entire staff in the Company is working in a most congenial manner and there is nooccurrences of any incidents of sexual harassment during the year.
VIGIL MECHANISM/WHISTLE BLOWER POLICY
The Board has approved and adopted "Vigil Mechanism/ Whistle Blower Policy"in the Company. The Brief details of establishment of this Policy are provided in theCorporate Governance Report.
RISK MANAGEMENT POLICY
The Company has formalized risk management system by formulating and adopting RiskManagement Policy to identify evaluate monitor and minimize the identifiable businessrisks in the Organisation.
EXTRACT OF ANNUAL RETURN
The extract of the Annual Return in Form MGT-9 is provided in "Annexure E'to this Report.
PARTICULARS OF EMPLOYEES
The Company has not employed any individual whose remuneration falls within the purviewof the limits prescribed under the provisions of Section 197 of the Companies Act 2013read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel)Rules 2014.
Your Directors sincerely express their deep appreciation to employees at all levelsbankers customers and shareholders for their sustained support and co-operation and hopethat the same will continue in future.
| ||For and on behalf of the Board |
| ||Pradeep R. Mafatlal |
| ||Chairman |
|Place: Mumbai || |
|Dated: April 24 2017. || |