Sugal & Damani Share Brokers Ltd.
|BSE: 511654||Sector: Financials|
|NSE: N.A.||ISIN Code: INE309D01011|
|BSE LIVE 15:14 | 18 Sep||10.17||
|NSE 05:30 | 01 Jan||Stock Is Not Traded.|
Sugal & Damani Share Brokers Ltd. (SUGALDAMANI) - Director Report
Company director report
Your Directors would like to present the Twenty-Third Annual Report together with theAudited Accounts for the year ended March 312016. The financial highlights of yourCompany for the year 2015-16 are as follows:
The Company's operations resulted only in a nominal profit for the year 2015-16. Due toworking capital requirements your Directors have not recommended any dividend on theEquity Capital of the Company for the year ended March 312016.
BRIEF DESCRIPTION OFTHE COMPANYS AFFAIRS
Gaining momentum Indian economy grew by 7.9 per cent in March quarter to consolidateIndia's position as the fastest growing major economy with a five-year high growth rate of7.6 per cent for the full fiscal year 2015-16.
The Company has been conducting the following operational activities during the year:
i. Buying selling and dealing in shares and other securities in Secondary Markets.
ii. Identifying investment avenues and advising on portfolio management of cash andassets.
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. Prasan Chand Jain (DIN - 00050081) Director retires by rotation and beingeligible offers 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 declarations from all the Independent Directors of the Companyconfirming that they meet with the criteria of independence as prescribed undersub-section (6) of Section 149 of the Companies Act 2013.
MEETINGS OF THE BOARD OF DIRECTORS
The Company had 5 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.
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 Clause 49 of the ListingAgreement the Board has carried out an annual performance evaluation of its ownperformance the directors individually as well as the evaluation of the working of itsAudit Nomination & Remuneration Committee and other committees.
In compliance with the provisions of the Companies Act2013 and revised Clause 49 ofthe Listing Agreement with theStock Exchanges the Independent Directors held a meeting onFebruary 2 2016 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 49 of the Listing Agreement the Company shall familiarize theIndependent Directors with the Company and their roles rights responsibilities in theCompany nature of industry in which the company operates business model of the Companyetc.
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.
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.
DETAILS OF SUBSIDIARY/JOINT VENTURES /ASSOCIATE COMPANIES
The company neither had any subsidiary nor any joint venture(s) during the year. M/s.Sugal Commodity Brokers P. Ltd. also ceased to be an associate of the Company during theyear.
Mr. R. Mugunthan Chartered Accountant Chennai is the retiring auditor and he iseligible for reappointment.
The Company has received letter from Mr. R. Mugunthan to the effect that hisre-appointment if made would be within the prescribed limits under Section 141(3)(g) ofthe Companies Act 2013 and that he is not disqualified for re-appointment.
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) and Rs. 4.24 Lacs (for Asst.Year 2012-13). The dues have not been deposited as the same is being contested by theCompany and the dispute is pending before the Commissioner of Income Tax (Appeals). Theobservation in the report of the Auditor and the Annexure appended thereto isself-explanatory and does not call for any further comments.
SECRETARIAL AUDIT REPORT
In terms of Section 204 of the Act and rules made there under M/s. Sneha Jain &Associates Company Secretaries has been appointed as Secretarial Auditor of the Company.The report of the Secretarial Auditor is given as Annexure B to this report.
The Secretarial Auditor in the audit report observed that there has been a generaldelay in filing the returns with the Registrar of Companies and a delay of 3 days insubmission of the Annual Report to the Bombay Stock Exchange under Clause 31 of theListing Agreement. It was noted by the Board that delays were inadvertent and withoutprejudice to the interests of the Shareholders of the Company and the general public.
It has also been pointed out that the Company has not appointed a Company Secretary asits Key Managerial Personnel under section 203 of the Companies Act 2013 and as itsCompliance Officer under clause 47(a) of the listing agreement. However the Company hasnot been able to appoint a suitable candidate in this connection and has placed multipleadvertisements in the English and regional newspapers.
Your Directors have now taken note of the qualifications and are making provisions forcomplying with the same. The Company has taken appropriate steps to avoid such instancesin future.
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 Auditor's 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.
In pursuant to the provisions of section 177(9) & (10) of the Companies Act 2013 aVigil 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 and Vigil 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 systemsorganizational 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 during the year under review.
NBFC STATUS OF THE COMPANY
The RBI permitted the Company to exit from the NBFC Business and RBI Certificate ofRegistrationNo. 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 Transactions rentered into during the year were on an arm's length basisand were in the ordinary course of business. Details of particulars of material contractsor arrangements or transactions entered into by the Company under section 188(1) of theCompanies Act 2013 with related parties in Form AOC-2 are provided in Annexure D tothis report.
MANAGEMENT DISCUSSION AND ANALYSIS
During FY2016 the new government launched several initiatives to drive growthinvestments and competitiveness despite internal and external challenges. Initiativeslike Make in India Digital India Smart Cities and Financial Inclusion would help improvethe access and affordability of products while giving a boost to domestic production. TheGDP growth for FY2017 is expected to be aided by the upstickin the manufacturing /infrastructure sectors apart from services.
(a) Industry Structure and Developments
Dips in the stock market were seen during almost all the quarters during the year.Pull-out of FII monies due to profit booking and migration towards safer geographiesreduction in emerging market exposure following the commodity slump and dip in investiblesurplus were some challenges that impacted the markets. Market valuations have movedupwards ever since the May 2014 elections and which continued till mid-FY2016. The gapbetween the large-cap and mid-cap P/Es had widened during FY2016 as compared to previousyears.
(b) Opportunities and threats
The broking companies have consolidated their network. The regulatory reforms would aidgreater participation by all class of investors. However the company does face increasedintensity of competition from local and global players.
(c) Segment-wise or Product-wise Performance
During the financial year ended March 312016 the Company operated only in one segmentof business viz Share Broking.
While Fils pulled out monies this year due to profit booking and migration towardssafer assets it was countered by strong inflows from Dlls which saw a surge of retailinterest into equity mutual funds. As reforms gain speed the capex cycle should gathermomentum and give a fillup to market activity.
(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 during the year was 27 and the employer-employeerelations have been 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. Thecontinuous diversification of our businesses is meant to guard against any precipitousdecline in income from broking. The company is also migrating towards providing state ofthe 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.
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 complaint 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 E.
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) of the 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 2016 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 filed an application under Regulation 40(1) of the Company Law BoardRegulations 1991 and Section 621A of the Companies Act 1956 for compounding of offencesu/s. 372A of the Companies Act 1956. The Company has also filed an application underRegulation 40(l)ofthe Company Law Board Regulations 1991 and Section 621A of theCompanies Act 1956 for compounding of offences u/s. 295 ofthe Companies Act 1956.
The said applications are pending for hearing before the Company Law Board.
LISTING WITH STOCK EXCHANGES
Shares of the Company are listed on Bombay Stock Exchange Limited Mumbai P. J.Towers Dalai Street Mumbai - 400 001 (Stock Code - 511654). Listing fee to the StockExchange has 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 May142015 providing the exit to Madras Stock Exchange Limited ("MSE").
Your Directors would like to sincerely thank the Company's banker's viz. Axis BankLtd. HDFC Bank Ltd. & Karur Vysya Bank Ltd. and the shareholders of the Company wealso thank the employees ofthe Company for their co-operation and support.