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Summit Securities Ltd.

BSE: 533306 Sector: Financials
NSE: SUMMITSEC ISIN Code: INE519C01017
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OPEN 561.00
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VOLUME 2231
52-Week high 799.70
52-Week low 346.05
P/E 119.63
Mkt Cap.(Rs cr) 604
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 561.00
CLOSE 579.45
VOLUME 2231
52-Week high 799.70
52-Week low 346.05
P/E 119.63
Mkt Cap.(Rs cr) 604
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Summit Securities Ltd. (SUMMITSEC) - Director Report

Company director report

DIRECTORS’ REPORT AND MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Dear Members

Your Directors are pleased to present their Nineteenth Report together with AuditedFinancial Statements for the year ended March 31 2016:

FINANCIAL HIGHLIGHTS:

The Summary of financial performance of the Company for the year under review is asgiven below:

(Rs. in lakhs)

Standalone Consolidated
For the Year ended March 31 2016 For the year ended March 31 2015 For the Year ended March 31 2016 For the Year ended March 31 2015
Total Income 1713.99 916.24 5342.20 2627.43
Profit before Depreciation & Tax 1579.33 792.85 5066.63 2473.49
(-) Depreciation 1.07 1.36 1.07 1.88
Profit/(Loss) before Tax 1578.26 791.49 5065.56 2471.61
Add: Excess/(Short) Provision of tax of earlier years 8.49 (6.06) 45.82 (15.69)
(-) Tax for Current Year 0.02 10.50 13.04 22.31
(-) Deferred Tax - - - -
Profit/(Loss) after Tax 1569.75 787.05 5006.70 2464.99
Appropriation:
Less: Transfer to Statutory Reserve 313.95 157.41 1001.34 491.05
Add: Balance brought forward 2849.42 2219.78 5910.70 3936.76
Balance Profit/(Loss) transferred to Balance Sheet 4105.22 2849.42 9916.06 5910.70

FINANCIAL PERFORMANCE:

Revenue:

The total revenue for FY 2015-16 at Rs. 1713.99 lacs increased by over 87.07% ascompared to revenue of Rs. 916.24 lacs of the previous year. The increase in revenue isdue to increase in dividend and interest income. Expenses: The total expenses for FY2015-16 at Rs. 135.73 lacs increased by over 8.80% as compared to expenses of Rs. 124.75lacs of the previous year mainly on account of marginal increase in the amount ofemployee benefit expense and other expenses and loss occurred on sale of investment.

Profit After Tax:

Profit after Tax (PAT) for FY 2015-16 was Rs. 1569.75 lacs as compared to PAT of Rs.787.05 lacs pertaining to previous year. This was mainly on account of interim dividendreceived from investee companies.

Amounts proposed to be carried to any reserves:

An amount of Rs. 313.95 lacs has been transferred to Statutory Reserve as per thestatutory requirement.

DIVIDEND:

With a view to conserve resources your Directors consider it prudent not to recommendany dividend for the year under review.

MANAGEMENT DISCUSSION AND ANALYSIS:

a. Industry Structure & Developments Opportunities and Future Outlook:

The world economy stumbled in 2015 amid weak aggregate demand falling commodityprices and increasing financial market volatility in major economies. These developmentshave tightened financial conditions reduced risk appetite raised credit risks andstymied balance sheet repair. The moderate pace of global growth in an environment ofweak investment growth has failed to create a sufficient number of jobs to close the gapin the employment rate (employment-to-population ratio) that opened up during the globalfinancial crisis. The global recovery has been at an ever-slowing and increasingly fragilepace.

During the global stock market rout witnessed in the mid 2015 India had also witnesseda sharp fall in stock markets and the rupee weakened. It was repeated again in January2016. The risk of further global slowdown and turbulence continues.

India achieved moderate growth amidst unfavourable global conditions and twoconsecutive years of shortfall in monsoon by 13%.

Several initiatives of the Government of India and key policy reforms with emphasis onease of doing business coal mining auctions infrastructure project approvals increaseof FDI inflows in India deregulation of prices of Natural Gas Kerosene DieselFertilisers etc. Entry of private sector entities in sectors like defence manufacturingOne Nation- One Market - the turning point for agriculture across India introduced by thegovernment apart sustained spending on infrastructural reforms will be key factors to lookout for that give a boost to the Indian Economy. As a move to improve liquidity in themarket RBI has under its Liquidity Adjustment facility cut the Repo rate from 7.25% to6.50% and enhanced the Reverse Repo rate from 5.75% to 6.00%. Driven by these initiativesFY 2016-17 is expected to witness better growth around as compared with the previous year.Markets are expected to reform on expectation of good monsoon and better interest rates.

The Company being a Non-Banking Financial Company (NBFC) registered with RBI derivesmajor revenue from its investments. Sectoral policy changes by the Government thereforehave direct impact on the profitability of the Company as the value of the stocks sharesand bonds depends on the prevailing capital markets scenario. The future success of theCompany would therefore depend on its ability to anticipate the volatility of the StockMarkets minimising risks and increasing returns through prudent investment decisions.

The investments of the Company are typically long term in nature and predominantly inthe equities market. All investments decisions are reviewed by the Board of Directors on aquarterly basis.

b. Risks Threats and Concerns:

Risk management can be construed as the identification assessment and prioritizationof risks followed by co-ordinated and economical application of resources to minimizemonitor and control the probability and/or impact of unfortunate events or to maximizethe realization of opportunities.

The Risk Management Committee (RMC) of the Board of Directors manages and monitors theCompany’s risks as detailed herein below under the heading "Risk ManagementProcess".

c. Internal control systems and their adequacy:

The Company has an adequate internal audit and control system commensurate with itssize and nature of business to ensure operational efficiency accuracy and promptness infinancial reporting and compliance of various laws and regulations. The Audit Committee ofthe Board of Directors reviews the Internal Audit Report and the adequacy andeffectiveness of internal controls periodically.

d. Human Resources:

Employee relations continued to remain cordial during the year under review. As onMarch 31 2016 there were six (6) employees including Key Managerial Personnel of theCompany.

CAUTIONARY STATEMENT:

Statements in the Management Discussion and Analysis describing the Company’sobjectives projections estimates and expectations may constitute "forward lookingstatements’’ within the meaning of applicable laws and regulations. Actualresults might differ materially from those either expressed or implied.

MATERIAL CHANGES AND COMMITMENTS:

There are no material changes and commitments affecting the financial position of theCompany which have occurred between the end of the financial year on March 31 2016 towhich the financial statements relate and the date of this report.

CONSOLIDATED FINANCIAL STATEMENTS:

In accordance with Section 129(3) of the Companies Act 2013 (‘the Act’) andRegulation 34 of the Securities and Exchange Board of India (Listing Obligations andDisclosure Requirements) Regulations 2015 (‘the Listing Regulations’) theConsolidated Financial Statements of the Company and its subsidiaries including thestatement containing salient features of the financial statements of all the subsidiarycompanies of the Company as set out in prescribed Form AOC-1 forms part of this AnnualReport 2015-16.

The Consolidated Financial Statements have been prepared in accordance with theAccounting Standards issued by the Institute of Chartered Accountants of India.

SUBSIDIARY COMPANIES:

There was no change in the subsidiaries joint ventures or associates during the yearunder review. As at March 31 2016 the Company had one wholly owned subsidiary viz.Instant Holdings Limited and one step down subsidiary viz. Sudarshan Electronics and T.V.Limited.

Further the Annual Accounts of these subsidiaries are uploaded on the website of theCompany in accordance with Section 136 of the Act. The Annual Accounts of thesesubsidiaries and the other related information will be made available to any Member of theCompany seeking such information and also available for inspection at the RegisteredOffice of the Company.

As required under Regulation 16(1)(c) of the Listing Regulations read with [Clause49(III)(V)(D) of the erstwhile Listing Agreement] the Company has formulated the Policyon Materiality of Subsidiaries and the same is published on the Company’s websitewww.summitsecurities.netatthelinkhttp://summitsecurities.net/PolicyonMaterialSubsidiary.pdf

RISK MANAGEMENT PROCESS:

Risk Management Committee of the Board of Directors (Risk Management Committee) was setup in terms of the Guidelines on Corporate Governance issued by the Reserve Bank of Indiain the year 2010. Though the requirements of constitution of the Risk ManagementCommittee contained in Regulation 21 of the Listing Regulations is not yet applicable tothe Company its terms of reference had however been widened considering the provisionsof the Listing Regulations (Clause 49 of the erstwhile Listing Agreement) read withapplicable provisions under the Companies Act 2013 and Rules made thereunder.

Risk Management Policy has been formulated by the Risk Management Committee of theBoard of Directors in accordance with its terms of reference. This policy defines aprocess for adoption so that a structured disciplined and consistent risk strategyproviding guidance for risk activity within the Company by embedding Enterprise RiskManagement within the culture of the business is in place.

One of the element in the risk management process as defined in the Risk ManagementPolicy is identification and assessment of risks. Some of the identified risks pertainingto the nature of business carried out by the Company comprise of Business Risks FinanceRisks Regulatory Risks Environment Risks etc. risk mitigation measures are alsoreviewed alongside the identified risks. A report on risk evaluation and mitigationcovering the elements of risks impact and likelihood mitigation measures and riskassessment is periodically presented before the Committee for review and also placedbefore the Board of Directors for information.

RELATED PARTY TRANSACTIONS:

The Company has formulated a Policy on Related Party Transactions for purpose ofidentification and monitoring of Related Party Transactions. The Policy on Related PartyTransactions as approved by the Board is uploaded on the Company’s websitewww.summitsecurities.net at the linkhttp://summitsecurities.net/RelatedPartyTransactionPolicy. pdf

The Company has not entered into any transaction with related parties during the yearunder review which requires reporting in Form AOC-2 in terms of the Section 134(3) and188(1) of the Companies Act 2013 read with Rule 8(1) Companies (Accounts) Rules 2014.

None of the Directors or Key Managerial Personnel had any pecuniary relationships ortransactions vis a vis the Company except the sitting fees paid to Directors andremuneration paid to KMPs.

EXTRACT OF THE ANNUAL RETURN:

An extract of the Annual Return pursuant to section 92(3) of the Companies Act 2013read with Rule 12 of the Companies (Management and Administration) Rules 2014 in FormMGT-9 is appended with this report as

Annexure A.

PARTICULARS OF LOANS GUARANTEES AND INVESTMENTS:

The Company registered as non-banking financial company not accepting public depositswith the Reserve Bank of India and having its principal business of making investments isexempted from the provisions of sub-section(1) of Section 186 of the Act.

PUBLIC DEPOSITS:

The Company has not accepted any deposits within the meaning of sub-section (31) ofSection 2 and Section 73 of the Act and the Rules framed thereunder.

DIRECTORS AND KEY MANAGERIAL PERSONNEL:

a. Directors:

Mr. S. K. Tamhane Independent Director resigned from the directorship w.e.f. November1 2015. The Board records its appreciation for the services rendered by Mr. Tamhaneduring his tenure as Director.

Mr. Abhay V. Nerurkar was appointed as an Additional Director (Independent) of theCompany by the Board of Directors at its meeting held on October 29 2015.

Pursuant to Section 161 of the Act Mr. Abhay Nerurkar holds office upto the date ofthe ensuing Annual General Meeting of the Company (AGM) and is eligible for appointment asDirector. Mr. Nerurkar qualifies to be an Independent Director pursuant to Section 149 (6)of the Act.

Accordingly it is proposed to appoint Mr. Nerurkar as Independent Director for a termof 5 (five) consecutive years with effect from October 29 2015 and he shall not be liableto retire by rotation.

In accordance with the provisions of the Act and Articles of Association Mr. RameshD. Chandak is liable to retire by rotation and being eligible has offered himself forre-appointment.

b. Key Managerial Personnel:

Ms. Shruti Joshi was re-appointed as the Manager of the Company w.e.f. April 3 2016for a period of three years. However she has tendered her resignation as the Manager ofthe Company effective August 4 2016. The Board of Directors have approved the appointmentof Mr. Rohin Bomanji as the Manager in her place with effect from August 5 2016 for aperiod of three years and the necessary resolution for the approval of share holders hasbeen proposed in the Notice of the ensuing Nineteenth Annual General Meeting.

Ms. Shruti Joshi who was also the Company Secretary of the Company resigned with effectfrom June 01 2015 and Ms. Jiya Gangwani was appointed as the Company Secretary of theCompany w.e.f. June 1 2015.

c. Declarations from Independent Directors:

The Company has received declarations as required under Section 149(7) of the Act fromall the Independent Directors stating that they meet the criteria of independence pursuantto Section 149(6) of the Act.

d. Training and Familiarisation Programme for Independent Directors:

Pursuant to the Code of Conduct for Independent Directors specified under the Act andRegulation 25(7) of the Listing Regulations (Clause 49(II) (B)(7) of the erstwhileListing Agreement entered into with the Stock Exchanges) the Company familiarised itsIndependent Directors on their roles rights responsibilities in the Company nature ofthe industry in which company operates business model of the Company etc. The note onthis familiarization program is also posted on the Company’s website under the linkhttp://summitsecurities.net/ DetailsofFamiliarisationProg.pdf

MEETINGS OF THE BOARD OF DIRECTORS:

The Board of the Company has met four times during the year ended March 31 2016 thedetails of the meetings of the Board of Directors held during the year are mentioned underthe Corporate Governance Report which forms part of this Annual Report.

BOARD COMMITTEES:

Detailed Composition of the Board Committees comprising of mandatory and non-mandatorycommittees viz. Audit Committee Nomination and Remuneration Committee StakeholdersRelationship Committee Risk Management Committee and Asset Liability ManagementCommittee number of meetings held during the year and other related details are set outin the Corporate Governance Report which forms part of this Report.

As on March 31 2016 the Audit Committee comprised of 4 members namely Mr. H. N.Singh Rajpoot (Non-Independent Director) Mr. H.C. Dalal (Independent Director) Ms. SnehaKarmarkar (Independent Director) and Mr. Abhay V. Nerurkar (Independent Director). Mr.Abhay Nerurkar is the Chairman of the Audit Committee.

There have been no situations where the Board has not accepted any recommendations ofthe Audit Committee.

ANNUAL PERFORMANCE EVALUATION OF BOARD AND ITS COMMITTEES:

The Annual Evaluation as required under the Companies Act 2013 read with relevantrules made thereunder and Regulation 17(10) and other applicable regulations of theListing Regulations (Clause 49 of the erstwhile Listing Agreement) has been carried out bythe Board of its own performance the of each individual Director and its Committees. Forthis purpose an Evaluation Questionnaire was circulated to all the Directors and theirresponses were received in a sealed envelope addressed to the Chairman of the Board ofDirectors and results thereof were then discussed in the next meeting of the Board ofDirectors.

The said questionnaire was prepared considering the criteria for evaluation was inaccordance with the Company’s Policy on AppointmentTraining Evaluation andRemuneration approved by the Board on recommendation of the Nomination and RemunerationCommittee interalia comprising of:

(a) attendance at meetings of the Board and Committees thereof

(b) participation in meetings of the Board or Committee thereof

(c) contribution to strategic decision making

(d) review of risk assessment and risk mitigation

(e) review of financial statements and business performance

(f) contribution to the enhancement of brand image of the Company.

REMUNERATION POLICY:

The Board of Directors has on the recommendation of the Nomination and RemunerationCommittee formulated a policy on "Appointment Training Evaluation and Remunerationof Directors Key Managerial Personnel and Senior Management Personnel". This policyinteralia covers the requirements specified under Section 178(3) of the Act comprising ofcriteria for determining qualifications positive attributes and independence of adirector etc.

The Policy provisions covering the requirements under Section 178 of the Act is givenas Annexure B to this report.

DIRECTORS RESPONSIBILITY STATEMENT:

Pursuant to Section 134(3)(c) of the Act your Directors to the best of their knowledgeand belief confirm that:

(a) in the preparation of the annual accounts the applicable accounting standards hadbeen followed alongwith proper explanations relating to material departures if any;

(b) such accounting policies have been selected and applied consistently and suchjudgements and estimates have been made that are reasonable and prudent to give a true andfair view of the state of affairs of the Company in the Balance Sheet as at March 31 2016and the Statement of Profit and Loss for the said financial year ended March 31 2016;

(c) proper and sufficient care has been taken for the maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;

(d) the annual accounts have been prepared on a going concern basis;

(e) the proper internal financial controls were in place and that such internalfinancial controls were adequate and were operating effectively;

(f) the systems to ensure compliance with the provisions of all applicable laws were inplace and that such systems were adequate and operating effectively.

WHISTLE BLOWER POLICY:

The Company has a vigil mechanism named Whistle Blower Policy (‘WBP’) fordirectors and employees to report concerns about unethical behavior actual or suspectedfraud or violation of the Company’s code of conduct or ethics policy. The WBP is alsoposted in the Company’s website namely www.summitsecurities.net at the weblink:http://www.summitsecurities.net/WhistleBlowerPolicy.pdf

PARTICULARS OF EMPLOYEES:

a. During the year under review no employee was in receipt of remuneration which inaggregate was equal or more than the limit specified under Rule 5(2) of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014.

b. Statement containing the Disclosures pursuant to Section 197(12) of the Act and Rule5 of The Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 isattached as Annexure C to this Report.

CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION RESEARCH AND DEVELOPMENT FOREIGNEXCHANGE EARNINGS AND OUTGO:

The Company is a Non-Banking Financial Company and engaged in investments and financialactivities and as such its operations do not account for substantial energy consumption.However the Company is taking all possible measures to conserve energy and severalenvironment friendly measures are adopted by the Company. The management ensures strictcompliance of the measures adopted.

The provisions relating to research and development and technology absorption are notapplicable to the Company. During the year under review there have been no transactionsin the Company relating to foreign exchange earnings and outgo.

CORPORATE SOCIAL RESPONSIBILITY:

The provisions of Section 135 of the Act are not applicable to the Company as theCompany does not fall into the criteria specified in sub-section (1) of Section 135 of theAct.

SECRETARIAL AUDITORS:

M/s. Parikh Parekh & Associates Company Secretaries were appointed as theSecretarial Auditors for conducting the Secretarial Audit in accordance with Section 204of the Act for the year ended March 31 2016. The Secretarial Audit Report requiredpursuant to sub-section (3) of Section 134 and Section 204(1) of the Act in prescribedForm MR-3 furnished by M/s. Parikh Parekh & Associates Company Secretaries isattached as Annexure D to this Report.

CORPORATE GOVERNANCE:

A report on Corporate Governance along with a certificate from the Auditors of theCompany stipulated pursuant to Regulation 34 of the Listing Regulations are annexed as AnnexureE to this Report.

STATUTORY AUDITORS:

Messrs Chaturvedi & Shah Chartered Accountants were appointed as the StatutoryAuditors of the Company at the Seventeenth AGM of the Company held on September 27 2014to hold office for a period of 4 (four) consecutive years from the conclusion of theSeventeenth AGM till the conclusion of the Twenty First AGM subject to ratification by themembers at every AGM of the Company.

Messrs Chaturvedi & Shah Chartered Accountants have confirmed that they areeligible to act as Statutory Auditors

if appointed in accordance with Sections 139 and 141 of the Companies Act 2013 andRules made thereunder.

The Board of Directors after considering the recommendation by the Audit Committeerecommends the ratification of appointment of Messrs Chaturvedi & Shah CharteredAccountants as the Statutory Auditors of the Company to hold office from the conclusion ofthe ensuing Nineteenth AGM till the conclusion of the next AGM.

EXPLANATION AND COMMENTS ON AUDITORS’ REPORT AND SECRETARIAL AUDIT REPORT:

There are no qualification reservations or adverse remark or disclaimer made either bythe Statutory Auditor in Auditors Report or by the Company Secretary in practice(Secretarial Auditor) in his Secretarial Audit Report.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALSIMPACTING THE GOING CONCERN STATUS:

There are no significant and material orders passed by the regulators or courts ortribunals impacting the going concern status and Company’s operations in future.

CHANGE IN THE NATURE OF BUSINESS:

During the year under review there was no change in the nature of business.

INTERNAL FINANCIAL CONTROL:

Details in respect of adequacy on internal financial controls with reference to thefinancial statements are stated in the Management Discussion and Analysis section of thisReport.

DISCLOSURE UNDER SEXUAL HARASSMENT OF WOMEN AT WORK PLACE (PREVENTION PROHIBITION ANDREDRESSAL) ACT 2013:

The Company has in place a policy on Prevention of Sexual Harassment at Workplace inaccordance with the provisions of the Sexual Harassment of Women at the Workplace(Prevention Prohibition and Redressal) Act 2013. Internal Complaints Committee (ICC) hadbeen set up to redress complaints. ICC has not received any complaints during the yearunder review.

ACKNOWLEDEMENTS:

The Board of Directors wishes to place on record its gratitude for the continuedsupport and co-operation extended by the Government authorities banks members andemployees of the Company.

On behalf of the Board of Directors
Ramesh D. Chandak
Place: Mumbai Chairman
Date: August 2 2016 DIN: 00026581