Your Directors would like to present the Twenty-Fourth Annual Report together with theAudited Accounts for the year ended March 312017. The financial highlights of yourCompany for the year 2016-17 are as follows:
| ||2016 - 2017 ||2015 - 2016 |
| ||(Rs. in Lakhs) ||(Rs. in Lakhs) |
|Gross Income ||585.25 ||551.08 |
|Profit before Interest Depreciation and Tax ||251.96 ||209.46 |
|Less: Interest ||48.96 ||45.68 |
|Less: Depreciation ||5.61 ||9.12 |
|Net Profit before Tax ||197.39 ||154.66 |
|Less: Tax and other prior period adjustment ||57.80 ||44.45 |
|Net Profit for the period after prior period adjustment ||139.59 ||110.21 |
|Less : Proposed Dividend & Tax ||- ||- |
|Less: Transitional Depreciation ||- ||- |
|Add: Profit brought forward || || |
|from the previous year ||308.74 ||198.53 |
|Profit carried forward ||448.33 ||308.74 |
|Earnings per Share || || |
|Basic ||2.23 ||1.76 |
|Diluted ||2.23 ||1.76 |
The Company's operations resulted in profit for the year 2016-17. Due to workingcapital requirements your Directors have not recommended any dividend on the EquityCapital of the Company for the year ended March 31 2017.
BRIEF DESCRIPTION OF THE COMPANY'S AFFAIRS
The Company has been conducting the operational activities during the year as mentionedbelow.
Buying Selling and dealing in shares and other Securities in Secondary Markets.
In the case of FPOs we take up underwriting and broking.
The Company has not transferred any amount to the Reserves.
MATERIAL CHANGES AND COMMITMENTS IF ANY AFFECTING THE FINANCIAL POSITION OF THECOMPANY
No material changes and commitments have occurred between the end of the financial yearof the company to which the financial statements relate and the date of the report thataffect the financial position of the company.
Mr. Mahesh Chandak (DIN - 00050149) Director retires by rotation and being eligibleoffers himself for re-appointment at the ensuing Annual General Meeting.
Mr. S. Vinodh Kumar (DIN - 00050095) Director retires by rotation and beingeligible offers himself for re-appointment at the ensuing Annual General Meeting.
DECLARATION OF INDEPENDENCE BY DIRECTORS
The Company has received the necessary declaration from each Independent Directors inaccordance with Section 149(7) of the Companies Act 2013 that he/she meets the criteriaof independence as laid out in sub-section (6) of Section 149 of the Companies Act 2013and relevant regulations of SEBI (LODR) Regulations 2015.
MEETINGS OF THE BOARD OF DIRECTORS
The Company had 4 Board meetings during the financial year under review. Theintervening gap between the Meetings was within the period prescribed under the CompaniesAct 2013. For further details please refer report on Corporate Governance of this AnnualReport.
APPOINTMENT OF COMPANY SECRETARY
During the year the Board appointed Ms. Padmavathi Varadharajan a Member of Instituteof Company Secretaries of India as the Company Secretary of the Company. The appointmentwas effective from August 18 2016.
EXTRACT OF THE ANNUAL RETURN
The extract of Annual Return pursuant to the provisions of Section 92 read with Rule 12of the Companies (Management and Administration) Rules 2014 is furnished in MGT-9 and isattached to this Report in Annexure A.
Pursuant to the provisions of the Companies Act 2013 and the SEBI (Listing Obligationsand Disclosure Requirements) Regulations 2015 the Board has carried out an AnnualPerformance Evaluation of its own performance the directors individually as well as theevaluation of the working of its Audit Nomination & Remuneration Committee and othercommittees.
In compliance with the provisions of the Companies Act2013 and SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 with the Stock Exchanges theIndependent Directors held a meeting on February 3 2017 and:
Reviewed the performance of non-independent directors and the Board as a whole.
Assessed the quality quantity and timeliness of flow of information between theCompany's management and the Board which is necessary for the Board to effectively andreasonably perform their duties.
FAMILIARIZATION PROGRAM FOR INDEPENDENT DIRECTORS
Pursuant to Clause 25(7) of SEBI (LODR) Regulations 2015 the Company shallfamiliarize the Independent Directors with the Company and their roles rightsresponsibilities in the Company nature of industry in which the company operatesbusiness model of the Company etc.
However the Independent Directors have been a part of the Board for a few years nowand so no separate sessions for familiarization have been conducted during the year.Further the Policy on the Company's Familarisation Programme for Independent Directors canbe accessed athttp://www.sugalshare.com/InvestorRelations/CompanyPolicies/FamilarisationProgrammeforIndependent Directors.
Your Board has a remuneration policy for selection and appointment of Directors SeniorManagement and their remuneration. The remuneration policy forms a part of the CorporateGovernance Report annexed to this report.
INVESTOR EDUCATION AND PROTECTION FUND(IEPF)
Pursuant to the applicable provisions of the Companies Act 2013 read with the IEPFAuthority (Accounting Audit Transfer and Refund) Rules 2016 ('the Rules') all unpaidor unclaimed dividends are required to be transferred by the Company to the IEPFestablished by the Central Government after the completion of seven years. Furtheraccording to the Rules the shares in respect of which dividend has not been paid orclaimed by the shareholders for seven consecutive years or more shall also be transferredto the demat account created by the IEPF Authority. Accordingly the Company shalltransfer the unclaimed and unpaid dividend for FY 2009-10 before September 2017. Furtherthe statement of unclaimed and unpaid dividend are provided on our website atwww.sugalshare.com / Investorrelations / Reporting / Statement of Unclaimed and UnpaidDividend
DETAILS OF SUBSIDIARY / JOINT VENTURES / ASSOCIATE COMPANIES
The company neither has any subsidiary nor any joint venture(s) during the year.
Mr. R. Mugunthan Chartered Accountant Chennai is liable to retire at the conclusionof ensuing Annual General Meeting. He is not eligible for re-appointment as in terms ofthe provisions of Section 139(2) of the Companies Act 2013 no listed Company shallappoint or re-appoint an Individual for more than one term of five consecutive years.
Hence your Directors recommend the appointment of M/s Chandarana & SanklechaChartered Accountants for a term of 5 years subject to the ratification by theshareholders at every Annual General Meeting in accordance with the provisions of thesaid section in place of the retiring auditor.
The Company has obtained a Certificate from them to the effect that their appointmentif made would be in accordance with the conditions prescribed in Section 141 of theCompanies Act 2013.
COMMENTS ON AUDITORS' REPORT
The Auditor in his report has made a reservation that the Company has not depositedIncome Tax Dues of Rs. 55.62 Lacs (for Asst. Year 2010-11) Rs. 4.24 Lacs (for Asst. Year2012-13) Rs. 5.14 Lacs (for Asst. year 2013 - 14) and Rs. 2.03 Lacs (for Asst. year 2014 -15). The dues have not been deposited as the same is being contested by the Company andthe dispute is pending before the Commissioner of Income Tax (Appeals). The observation inthe report of the Auditor and the Annexure appended thereto is self-explanatory and doesnot call for any further comments.
COMMENTS ON SECRETARIAL AUDIT REPORT
The Board of Directors of the Company appointed M/s. Sneha Jain & AssociatesCompany Secretaries to conduct the Secretarial Audit for the Financial Year 2016-17 interms of Section 2014 of the Companies Act 2013. The Secretarial Audit Report for theFinancial Year ended March 31 2017 is annexed as Annexure B of this report.
The Secretarial Auditor in the audit report observed that Show Cause Notice dated July22 2016 from the Securities Exchange Board of India under sections 15HB of the SEBI Actand section 23 H of the SCRA for the alleged violations of clause A (5) of the code ofconduct specified under schedule II read with regulation 9 of the Stock BrokersRegulations SEBI Circular No. SMD/SED/CIR/93/23321 dated November 18 1993 and rule8(3)(f) of the SCRR has been issued to the Company.
INTERNAL AUDIT & CONTROLS
The Company continues to engage Mr. Sudhir Jain Chartered Accountant as its InternalAuditor. His scope of work includes review of processes for safeguarding the assets of theCompany review of operational efficiency effectiveness of systems and processes andassessing the internal control strengths in all areas. Internal Auditors findings arediscussed with the process owners and suitable corrective actions taken as per thedirections of Audit Committee on an ongoing basis to improve efficiency in operations.
WHISTLE BOWLER POLICYAND VIGIL MECHANISM
In pursuant to the provisions of section 177(9) & (10) of the Companies Act 2013a Vigil Mechanism for directors and employees to report genuine concerns has beenestablished. The Vigil Mechanism Policy has been uploaded on the website of the Company atwww.sugalshare.com under Investor Relations > Company Policies > Whistle Blower andVigil Mechanism.
RISK MANAGEMENT POLICY
The company is primarily exposed to credit risk interest rate risk liquidity risk andoperational risks. The Board oversees and approves the Company's enterprise wide riskmanagement framework. It reviews credit and operational risks and policies in relation toinvestment strategy and other risks like interest rate risk and liquidity risk. TheCompany's management monitors and reports principal risks and uncertainties that canimpact its ability to achieve its strategic objectives. The company's management systemsorganisational structures processes standards and code of conduct together form the riskmanagement governance system of the company.
Your company has a robust Risk Management Methodology which has been implementedeffectively outlining the exposure given to the Clients of the Company and ensuring theintegrity of the company's accounting and financial reporting systems including theindependent audit and compliance with the law and relevant standards.
Your Company did not invite or accept any Deposit from public during the year underreview.
NBFC STATUS OF THE COMPANY
The RBI permitted the Company to exit from the NBFC Business and RBI Certificate ofRegistration No. B.07.00362 dt. 13.10.2003 stands cancelled as desired by the Company.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS UNDER SECTION 186
Details of loans guarantees or investments under section 186 of the Companies Act2013 are annexed to this report in Annexure C.
CONTRACTS AND ARRANGEMENTS WITH RELATED PARTIES
Related Party Transaction entered into during the year were on an arm's length basisand were in the ordinary course of business. There were no materially significant relatedparty transactions with the Company's Promoters Directors Management or their relativeswhich could have had a potential conflict with the interests of the Company.
MANAGEMENT DISCUSSION AND ANALYSIS
India's economic growth slowed for the fourth consecutive quarter in the three monthsended March mirroring the impact of demonetization on key sectors in Financial Servicessector. GDP growth slowed to 6.1 percent in the fiscal fourth quarter from 7 percent inthe third due to strong expansion in manufacturing and services sectors wherein financialservices still facing sloping downward. Growth prospects are likely to improve in thecurrent fiscal driven by the government's development initiatives and pick-up in businesscycle.
(a) Industry Structure and Developments
Indian equities are likely to continue its bullish run this year on the back ofimproved corporate earnings. The market trends will be determined by various domestic andinternational factors like global market movements strengthening of US dollar RBI'spolicy and visible improvement in corporate earnings of domestic firms.
Market Valuations have moved upwards during the year and continued till FY 2017. Thegap between the large cap and mid cap P/Es had widened during FY 2017 as compared toprevious years.
(b) Opportunities and threats
There are several exciting opportunities for the Company in the upcoming FY 2017-18which consists of India's Growth Rate Focus on Digital and Affluent Customer FinancialInclusion Utilize technology to provide solutions to customers Increase DistributionStrength.
In the same way there are threats for the Company which includes Volatile EnvironmentFiscal Deficit and Current Deficit Attracting and retaining talent and training them forthe right culture Inflation and economic slowdown competition.
(c) Segment-wise or Product-wise Performance
During the financial year ended March 312017 the Company operated only in one segmentof business viz Share Broking.
The secondary markets are expected to remain buoyant and the bull-run is expected tocontinue a pre-requisite for revival of the primary markets. Lot of Foreign DirectInvestment approval is expected with the much-awaited change of government reviving theinvestor sentiment.
(e) Internal Control Systems and their adequacy
In the opinion of your Directors Internal Control Systems in the Company are adequate.
(f) Financial Performance
The financial performance during the year under review is given above.
(g) Human Resources/Industrial Relations
The number of people employed has become 22 and the employer-employee relations havebeen cordial throughout the year.
(h) Risks and concerns
The stock market is witnessing heightened activities and is increasingly gainingimportance. The company is aware that it operates in an environment which is acutelyvulnerable to several kinds of risks. The financial sector is vulnerable to a range ofrisks from economic capital market and regulatory risks. Strategies policies and limitsare designed to ensure that risks are prudently diversified. Risk mitigating activitiesare reviewed periodically by senior management.
As far as external risks are concerned the company takes every precaution to ensurethat it is not caught exposed to sudden changes in its operating environment. The companyis also migrating towards providing state of the art trading platforms.
POLICY ON RISK MANAGEMENT
In accordance with the requirement of Corporate Governance the Board of Directors ofthe Company has adopted a policy on risk management for assessment and minimizationprocedure of risk for periodical review by the Board.
POLICY ON DETERMINATION OF MATERIALITY FOR DISCLOSURES
In terms of the Regulation 30 of the Securities and Exchange Board of India (ListingObligations and Disclosure Requirements) Regulations 2015 (hereinafter referred to as"Regulations") Sugal and Damani Share Brokers Limited (hereinafter referred toas "the Company") has framed a Policy for determination of materiality ofevents/ information. Further the detailed policy are provided on our website atwww.sugalshare.com/company policies/policy on determination of materiality fordisclosures.
POLICY ON PRESERVATION OF DOCUMENTS
In accordance with SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 ("Regulations") the company has formulated the policy on preservation ofdocuments with the objective of classifying various documents records and registers forthe purpose of maintenance and preservation. Further the detailed policy are provided onour website at www.sugalshare.com / company policies/policy on preservation of documents.
POLICY ON RELATED PARTY TRANSACTIONS
The policy regulates all transactions between the Company and its related parties inaccordance with Regulation 23 of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015. Further the detailed policy are provided on our websiteat www.sugalshare.com/company policies/policy on related party transactions.
OBLIGATION OF COMPANY UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTIONPROHIBITION AND REDRESSAL) ACT 2013
The Company has adopted a policy for Prevention of Sexual Harassment of Women atWorkplace and has set up Committee for implementation of said policy. During the yearCompany has not received any compliant of harassment.
PARTICULARS OF EMPLOYEES
There was no employee whose particulars as per the provisions of Section 197(12) of theAct read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 are to be reported.
Disclosures pertaining to remuneration and other details as required under section197(12) of the Act read with Rule 5 (1) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 are provided in this report in Annexure D.
INFORMATION REQUIRED UNDER SECTION 134(3)(M) OF THE COMPANIES ACT 2013
The consumption of electricity during the year was minimal. Management is takingconscious efforts to conserve energy. Your Company has no activity with regard totechnology absorption. Your Company does not have any foreign exchange earnings or outgoduring the year.
The Corporate Governance regulations as per the Listing Agreement have been fullycomplied with. The Report of your Directors on the practices of Corporate Governance formspart of this report in Annexure F. A Certificate from the Auditor of the Company regardingcompliance with the Code of Corporate Governance certification by CEO / CFO andDeclaration of Compliance with Code of Conduct form a part of the Corporate GovernanceReport.
DIRECTORS' RESPONSIBILITY STATEMENT
As required by Section 134(5) ofthe Companies Act 2013 your Directors confirm:
(a) that in the preparation of the Annual Accounts the applicable Accounting Standardshave been followed along with proper explanation relating to material departures;
(b) that the Directors have selected such accounting policies and applied themconsistently and made judgments and estimates that are 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 ended March 31 2017 and of the profit/loss of the Company for that year;
(c) 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;
(d) that the Directors have prepared the annual accounts on a going concern basis;
(e) the Directors have laid down internal financial controls to be followed by thecompany and that such internal financial controls are adequate and are operatingeffectively;
(f) the Directors have devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems are adequate and operating effectively.
APPLICATION FOR COMPOUNDING OF OFFENCES
The Company has received an Order from NCLT on September 22 2016 for the filedapplication under Regulation 40(1) of the Company Law Board Regulations 1991 and Section621A of the Companies Act 1956 for compounding of offences u/s. 372A of the CompaniesAct 1956 and the penalty of Rs.100000 (Rupees One Lakh Only) has been duly paid by theCompany.
LISTING WITH STOCK EXCHANGES
Shares of the Company are listed on Bombay Stock Exchange Limited Mumbai PJ. TowersDalal Street Mumbai - 400 001 (Stock Code - 511654). Listing fee to the Stock Exchangehas been paid up to date.
The Shares of the Company were also listed on Madras Stock Exchange ("MSE").However Securities Exchange Board of India ("SEBI") has passed an Order on May14 2015 providing the exit to Madras Stock Exchange Limited ("MSE").
Your Directors would like to sincerely thank the Company's banker's viz. Axis BankLtd. and HDFC Bank Ltd. and the shareholders of the Company. We also thank the employeesof the Company for their co-operation and support.
| ||By order of the Board |
| ||For SUGAL & DAMANI SHARE BROKERS LTD. |
| ||Sd/- ||Sd/- |
| ||Mahesh Chandak ||S. Kannadasan |
|Place: Chennai ||Executive Director ||Director |
|Date: May 30 2017 ||DIN - 00050149 ||DIN - 00050177 |