Your Directors present the Eleventh Annual Report of 5paisa Capital Limited (yourCompany') together with the Audited Financial Statements for the financial year endedMarch 31 2018.
1. FINANCIAL RESULTS
A summary of the consolidated and Standalone financial performance of your Company forthe financial year ended March 31 2018 is as under:
( Rs. in Millions)
|Particulars ||Consolidated Financial Results ||Standalone Financial Results |
| ||2017_18 ||2016-17 ||2017_18 ||2016-17 |
|Gross total income ||196.52 ||74.67 ||196.52 ||74.67 |
|Profit/(Loss) before interest depreciation and taxation ||(317.48) ||(148.52) ||(317.48) ||(148.52) |
|Interest and financial charges ||7.95 ||12.51 ||7.95 ||12.51 |
|Depreciation ||6.67 ||2.77 ||6.67 ||2.77 |
|Profit/(Loss) before tax ||(332.10) ||(163.81) ||(332.10) ||(163.81) |
|Taxation - Current ||Nil ||Nil ||Nil ||Nil |
|- Deferred ||(79.12) ||(46.55) ||(79.12) ||(46.55) |
|- Short or excess provision for income tax ||Nil ||(0.35) ||Nil ||(0.35) |
|Net profit/ (Loss) for the year ||(252.99) ||(116.90) ||(252.99) ||(116.90) |
|Less: Appropriations ||Nil ||Nil ||Nil ||Nil |
|Add: Balance brought forward from the previous year ||(116.08) ||0.82 ||(116.08) ||0.82 |
|Balance to be carried forward ||(369.07) ||(116.08) ||(369.07) ||(116.08) |
* Previous periods figures have been regrouped / rearranged wherever necessary
2. REVIEW OF BUSINESS AND OPERATIONS AND STATE OF YOUR COMPANY'S AFFAIRS
Financial Year 2017-18 has been a good year for your Company. On a Macro level digitalpenetration in the country is expanding rapidly. Low cost smart phones cheaper data andmassive roll out of 4G services have led to millions of new internet users who areexploring various services digitally including Financial Services. Your Company'spositioning of a Low Cost Digital Provider fits perfectly in the evolving DigitalEcosystem. Our approach of keeping Lowest Cost of Service ( Rs. 10/Order) CompletePaperless Trading Experience Multi Product offering under One Umbrella Usage of AdvancedAnalytics for personalised financial planning and world class Research & Advisory ledto more than 5X growth in our Customer Acquisition. Our Customer acceptability was so goodthat in no time your company became one of the fastest growing Broking Company in thecountry.
Mobile has become the preferred platform of transaction for millions of Indians. YourCompany is no different. We therefore take utmost interest in making our Mobile platformone of the best in the industry. We are happy to share that 5paisa mobile app is thefastest growing Mobile App in terms of Downloads and have also reached a Milestone of 1Million Downloads with a Rating of 4 which only 3 other brokers have achieved till date.
During the year the total income of your Company was up from of Rs. 74.67 million toRs. 196.52 million The increase in income is on the back of aggressive expansion of retailOperations. The Company acquired more than 50000 Customers on the back of value added andunparalleled product offering which helped in growth on Q-0-Q. Your company also investedheavily in Online Marketing Branding and IT as a result expenses increased from Rs.238.47 million to Rs. 528.62 million
During the year your company got listed on BSE and NSE on November 16 2017 postsuccessful completion of Demerger process from erstwhile Parent Company i.e. IIFL HoldingsLtd. The demerger process was initiated post capital infusion of Rs. 100 Cr. by parentCompany in September 2016. In consideration of demerger of 5paisa Digital Undertaking theexisting shareholders of IIFL Holdings Limited on the record date i.e. October 18 2017received shares of the Company in the ratio of 1 equity share of the Company for every 25equity shares of IIFL Holdings Limited held by them.
3. MACRO_ECONOMIC OVERVIEW
Global economy is looking up after a gap of seven years as economic activity remainsbuoyant across developed and emerging market economies. In its latest world economicoutlook edition of April 2018 IMF has revised up GDP growth forecasts of most largeeconomies for CY18 and CY19. It now expects World GDP growth to improve to 3.9% YoY inCY18 and CY19 from 3.8% YoY last year. Unemployment in US has fallen to historic lows andas a result wage growth has accelerated over the last few months. Outlook for Euro areaalso remains positive on the back of falling unemployment and improving consumerconfidence. Also global trade volume has registered strong growth in the past few months.
The outlook for Indian economy also remains optimistic as the economy seems to befinally recovering from the twin shocks of demonetisation and implementation of GST. Mosthigh frequency indicators are suggesting acceleration in growth even as headlineinflation remains benign. Strong growth in domestic air traffic personal vehicle salesand rise in personal credit growth suggest that urban consumption is on a strong footing.Also drivers for capex cycle recovery are falling in place and we should see gradualincrease in private sector capex over the coming quarters. PAT growth one of the keyfactors for private sector capex decisions has seen a sharp improvement over last coupleof quarters and this growth is likely to sustain. Recent improvement in capacityutilisation is also a positive for capex cycle. Also the overhang of unproductive assetsis receding as share of capital work in progress in total assets has come off over lastcouple of years.
That said the economy faces multiple risks especially on macro-economic stability thatwe have achieved in last few years. Rising commodity prices especially of crude couldwiden current account deficit and for the first time in four years foreign directinvestments would not be able to cover the deficit. Dependency on the more volatileforeign portfolio flows to cover the current account deficit would exert pressure on INR.While the decision to hike MSPs to 1.5 times the cost could provide support to ruralconsumption it could also lead to acceleration in inflation and derail urban consumption.Also we have elections due in many large states during the course of the year followed bygeneral elections in early next year. The uncertainty around election outcomes could makeinvestors jittery. Investors prefer status quo and any change of government post electionscould hurt investor sentiment at least in the short run.
4. INDUSTRY OVERVIEW
Capital markets have been buoyant and both primary and secondary markets have seenhealthy growth in activity over last one year. Corporates raised a record Rs. 2 trillionfrom primary markets via IPOs QIP rights issue etc. in CY17. The domestic investors arenow a dominant player in equity markets even as foreign portfolio flows have decelerated.Investments in mutual funds via Systematic Investment Plan' or SIPs have gainedsignificant traction and collections via SIPs have more than doubled in last two years.Driven by rise in domestic investments and optimistic outlook for earnings growth Indianequity indices hit all-time highs in early 2018.
Buoyant markets have accelerated trading volumes. Average daily cash trading volumeswent up ~38% YoY to Rs. 338 billion/day in FY18 from Rs. 244 billion/day in FY17.Also the share of institutions (FII + DII) edged up to 31.9% in FY18 from 29.7% in theprevious year. However rise in transaction volumes has been offset by steadily fallingyields. Yields have been declining over the past few years due to multiple factorsincluding i) Rise of passive investment ii) Rising participation of domestic funds thathave lower yields and iii) the European and UK regulators have introduced Markets inFinancial Instruments Directive or Mifid II norms from January 2018 and under these normsinvestors need to separately account for execution and research instead of the bundledcost model followed so far.
5. SCHEME OF ARRANGEMENT _DEMERGER OF 5PAISA DIGITAL UNDERTAKING_
During the year under review the Hon'ble National Company Law Tribunal Mumbai benchhad vide order dated September 06 2017 sanctioned the Scheme of Arrangement between IIFLHoldings Limited (Demerged Company') and 5paisa Capital Limited the(Resulting Company') and their respective Shareholders ("the Scheme"). TheScheme inter alia provided for Demerger of 5paisa digital undertaking business from IIFLHoldings Limited to 5paisa Capital Limited. The effective date of the demerger was October01 2016.
Upon the Scheme coming into effect and in consideration of the transfer and vesting ofthe 5paisa digital Undertaking into the Company 17716500 Equity Shares of Rs. 10 eachheld by IIFL Holdings Limited in the Company were extinguished and cancelled and in lieuof the same the equity shareholders of IIFL Holdings Limited whose name appeared in theRegister of Members on October 18 2017 were allotted one (1) equity share in 5paisaCapital Limited of Rs. 10/- each credited as fully paid-up for every Twenty Five (25)equity share of Rs. 2/- each fully paid-up held by such equity shareholders in IIFLHoldings Limited. Accordingly 12739022 equity shares of Rs. 10/- each of the Companywere issued and allotted to the Eligible Shareholders of IIFL Holdings Limited on October20 2017. The equity shares of the Company so issued pursuant to the Scheme were listedand admitted for trading on BSE Limited ("BSE") and National Stock Exchange ofIndia Limited ("NSE") with effect from November 16 2017.
As per the Scheme the Company transferred the assets and liabilities pertaining todemerged undertaking (5paisa digital Undertaking) at the respective carrying values asappearing in the books of accounts of IIFL Holdings Limited on October 01 2016. Thedifference between the value of the assets and liabilities pertaining to demergedundertaking amounting to Rs. 47709974 (after adjusting for the amount to the sharecapital) has been recognised as Capital Reserve in the books of accounts of the Company ason Appointed Date.
6. AWARDS AND RECOGNITIONS
The Company won "Best Digital Start-up of the Year
Award" by World Digital Marketing Congress.
Your Company stood among Top 10 Brokers in terms of New Active Client and in 2ndposition in Discount Broking.
In view of accumulated losses your Directors have not recommended any dividend onEquity Shares for the year under review.
8. SHARE CAPITAL
During the year under review and in terms of aforesaid Scheme of Arrangement17716500 Equity Shares of Rs. 10 each held by IIFL Holdings Limited in the Company wereextinguished and cancelled and in lieu of the same the Company allotted fresh 12739022equity shares of Rs. 10 each to the eligible shareholders whose name appeared in theRegister of Members on October 18 2017. The paid up equity share capital of the Companyas on March 31 2018 was Rs. 127390220/- (12739022 equity shares of Rs. 10/- each).
9. EMPLOYEES STOCK OPTION SCHEMES _ESOS_
During the year under review the shareholders of the Company have approved two (2)Esop scheme(s) having a pool size of 600000 options each under i.e. 5paisa CapitalLimited Employee Stock Option Scheme 2017 and 5paisa Capital Limited Employee Stock OptionTrust Scheme 2017. The Nomination and Remuneration Committee granted 220000 options onJanuary 29 2018 to the eligible employees of the Company under 5paisa Capital LimitedEmployee Stock Options Scheme 2017.
There is no material change in Employees' Stock Option Scheme during the year underreview and the Scheme is in line with the SEBI (Share Based Employee Benefits)Regulations 2014 ("SBEB Regulations"). The Company has received a certificatefrom the Auditors of the Company that the Scheme has been implemented in accordance withthe SBEB Regulations and the resolution passed by the members. The certificate would beplaced at the Annual General Meeting for inspection by members. The disclosures relatingto ESOPs required to be made under the provisions of the Companies Act 2013 and the rulesmade thereunder and the SEBI (Share Based Employee Benefits) Regulations 2014 areprovided on the website of the Company www.5paisa.com and the same is available forinspection by the members at the Registered Office of the Company during the businesshours on working days except on Saturdays Sundays and Public Holidays up to the date ofthe Meeting. If any member is interested in obtaining a copy thereof such member maywrite to the Company Secretary whereupon a copy would be sent.
10. PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS
Loans Guarantees and Investments covered under the provisions of the Section 186 ofthe Companies Act 2013 forms part of the notes to the financial statements provided inthis Annual Report.
11. SUBSIDIARY COMPANY
During the year under review the Company incorporated a wholly owned subsidiarynamely 5paisa P2P Limited on December 07 2017. The 5paisa P2P Limited has filed theapplication with the Reserve Bank of India for obtaining the registration for Peer to PeerLending and the approval is awaited.
As per the provisions of section 134 and 136 of the Companies Act 2013 read withapplicable Rules Regulation 33 of SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 and applicable Accounting Standards the Board of Directors had at theirmeeting held on April 17 2018 approved the consolidated financials of the Company alongwith the Standalone financial statements. Copies of the Balance Sheet Statement of Profitand Loss Account Report of the Board of Directors and Report of the Auditors of thesubsidiary Company are not attached to the accounts of the Company for the financial year2017-18. The Company will make these documents/details available upon request by anymember of the Company. These documents/details will also be available for inspection byany member of the Company at its registered office and at the registered offices of theconcerned subsidiary during the business hours on working days i.e. except on SaturdaysSundays and Public Holidays. If any member is interested in obtaining a copy thereof suchmember may write to the Company Secretary whereupon a copy would be sent. The AnnualReport of subsidiary will be uploaded on the website of the Company. As required by theCompanies Act 2013 and Accounting Standard - 21 (AS 21) issued by the Institute ofChartered Accountants of India the Company's consolidated financial statements includedin this Annual Report incorporate the accounts of its subsidiary. A report on theperformance and financial position of the subsidiaries is provided in the prescribed formAOC-1 as "Annexure I" which forms part of this Report.
The policy on determining the material subsidiary is available on the website of theCompany at www.5paisa.com.
12. MANAGEMENT DISCUSSION AND ANALYSIS REPORT
In accordance with Regulation 34 of SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 the Management Discussion and Analysis Report forms partof this report.
13. DIRECTORS AND KEY MANAGERIAL PERSONNEL a. Directors:
The Board comprises of Mr. Prakarsh Gagdani and Mr. Santosh Jayaram as the ExecutiveDirectors Dr. Archana Niranjan Hingorani and Ms. Nirali Sanghi as the IndependentDirectors of the Company.
Mr. Santosh Jayaram was appointed as Additional Director and was further designated asWhole Time Director for the period of 3 years subject to approval of the Shareholdersw.e.f. January 11 2018. Ms. Nirali Sanghi was appointed as an additional Director and wasdesignated as an Independent Director subject to approval of the Shareholders w.e.f.January 11 2018. She holds office as per her tenure of appointment mentioned in theNotice of the ensuing Annual General Meeting of the Company.
I. Mr. Krishna Iyer was confirmed as the Independent Director by the Shareholders ofthe Company in the 10th Annual General Meeting held on July 19 2017 for a period of fiveyears w.e.f. March 31 2017.
II. Dr. Archana Niranjan Hingorani was confirmed as the Independent Director by theShareholders of the Company in the 10th Annual General Meeting held on July 19 2017 for aperiod of five years w.e.f. June 07 2017.
Mr. Mohan Radhakrishnan and Mr. Narendra Jain the Non-Executive Directors and Mr.Krishna Iyer the Independent Director resigned w.e.f. January 11 2018 due to their preoccupation.
Declaration by Independent Directors
The terms and conditions of appointment of Independent Directors are as per Schedule IVof the Act. The Company has received declarations from all the Independent Directors ofthe Company confirming that they meet with the criteria of independence as prescribedunder sub-section (6) of Section 149 of the Companies Act 2013 as well as under the SEBI
(Listing Obligations and Disclosure Requirements) Regulations 2015 ("SEBI ListingRegulations") and there has been no change in the circumstances which may affecttheir status as independent director during the year.
Retirement by Rotation
In accordance with Section 152 of the Companies Act 2013 ("Act") read withArticle 157 of the Articles of Association of the Company Mr. Prakarsh Gagdani is liableto retire by rotation at the ensuing Annual General Meeting and being eligible has offeredhimself for reappointment. The Board recommends the same for shareholders' approval.
Re-appointment of Whole Time Director
The tenure of Mr. Prakarsh Gagdani as the Whole Time Director ends on December 21 2018and the Board recommends his re-appointment to Shareholders in the ensuing Annual GeneralMeeting. The terms and conditions of the re-appointment are mentioned in the Notice of theensuing Annual General Meeting of the Company.
b. Key Managerial Personnel:
As on March 31 2018 Mr. Prakarsh Gagdani - Whole Time Director & Chief ExecutiveOfficer Mr. Santosh Jayaram - Whole Time Director Mr. Roshan Dave
Company Secretary & Compliance Officer and Ms. Ankita Lakhotia -Chief Financial Officer are the Key Managerial Personnel as per the provisions of theCompanies Act 2013 and rules made thereunder.
During the year under review
Mr. Prakarsh Gagdani Whole Time Director was also designated as Chief Executiveofficer of the Company w.e.f. January 11 2018 and Mr. Santosh Jayaram was appointed asAdditional Director and further designated as Whole Time Director subject to approval ofthe Shareholders w.e.f. January 11 2018.
Mr. Harshit Choudhary was appointed as a Company Secretary and Compliance Officer inplace of Mr. Jayesh Sharma w.e.f. October 13 2017. Mr. Harshit Choudhary CompanySecretary & Compliance Officer resigned w.e.f. January 31 2018 and in his place Mr.Roshan Dave was appointed as the Company Secretary & Compliance Officer of the Companyw.e.f. February 01 2018. These changes in the Key Managerial Personnel were due tointernal re-structuring.
The Remuneration and other details of the Key Managerial Personnel for the year endedMarch 31
2018 are mentioned in the Extract to the Annual Return in Form MGT-9 which is attachedas "Annexure II" and forms a part of this report of the Directors.
14. MEETING OF DIRECTORS & COMMITTEE/BOARD EFFECTIVENESS
?? Meetings of the Board of Directors
The Board met Five (5) times during the year to discuss and approve various mattersincluding financials appointment of auditor review of audit reports and other boardbusinesses. For further details please refer to the report on Corporate Governance.
Committees of the Board
In accordance with the applicable provisions of the Companies Act 2013 and SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 the Board constitutedthe following Committees:
Nomination and Remuneration Committee
Stakeholders Relationship Committee
During the year the Audit Committee met Five (5) times. In compliance with theprovisions of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 andCompanies Act 2013 during the year the Company has re-constituted the Audit Committeeand details thereof have been provided in Corporate Governance Report. At present theCommittee comprises of Dr. Archana Niranjan Hingorani as the Chairman Ms. Nirali Sanghiand Mr. Prakash Gagdani as the Members of the Audit Committee.
The role terms of reference and powers of the Audit Committee are in conformity withthe requirements of the Companies Act 2013 and SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015. The Committee met during the year under review anddiscussed on various matters including financials audit reports and appointment ofauditors. During the period under review the Board of Directors of the Company acceptedall the recommendations of the Audit Committee.
The terms of reference of Audit Committee and details of Committee meeting are providedin the Corporate Governance Report.
Nomination and Remuneration Committee During the year the Nomination and RemunerationCommittee met Four (4) times. The Company reconstituted the Nomination and RemunerationCommittee and details thereof have been provided in Corporate Governance Report. Atpresent the Committee comprises of Ms. Nirali Sanghi as the Chairman and Dr. ArchanaNiranjan Hingorani and Mr. Prakarsh Gagdani as members of the Committee. Pursuant to theprovisions of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 andCompanies Act 2013 the Company is in process of appointing one more Non-ExecutiveDirector/ Independent Director who will also be nominated to Nomination RemunerationCommittee.
The role terms of reference and powers of the Nomination and Remuneration Committeeare in conformity with the requirements of the Companies Act 2013 and SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 and the same has been providedin the Corporate Governance Report.
The Board has on the recommendation of the Nomination & Remuneration Committeeframed a Nomination and Remuneration policy in compliance with the aforesaid provisionsfor selection and appointment of Directors KMP senior management personnel of theCompany. The said policy is stated in the Corporate Governance Report of the Company. Thedetails of Committee meeting are provided in the Corporate Governance Report.
Stakeholders Relationship Committee
During the year the Stakeholders Relationship Committee met One (1) time. Incompliance with the provisions of SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 and Companies Act 2013 the Company has re-constituted a StakeholdersRelationship Committee and details thereof have been provided in Corporate GovernanceReport. The Committee comprises of Ms. Nirali Sanghi as the Chairman Dr. Archana NiranjanHingorani and Mr. Prakarsh Gagdani as the members of the Committee.
The role terms of reference of the Stakeholders Relationship Committee are inconformity with the requirements of the Companies Act 2013 and Regulation 20 of SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 and the same has beenprovided in the Corporate Governance Report.
No complaints has been received from SEBI scores portal during the Financial Year2017-18. The details of the Meeting are given in the Corporate Governance Report.
?? Board Effectiveness
Familiarisation Program for the Independent
In compliance with the requirements of SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 the Company has put in place a Familiarisation Programmefor Independent Directors to familiarise them with the working of the Company theirroles rights and responsibilities vis--vis the Company the industry in which theCompany operates business model etc. Details of the Familiarisation Programme areexplained in the Corporate Governance Report and are also available on the Company'swebsite at http://www.5paisa.com.
Pursuant to the provisions of the Companies Act 2013 and SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 and SEBI Circular noSEBI/CFD/CMD/CIR/P/2017/004 dated January 05 2017 the Board of Directors has carried outan annual performance evaluation of its own performance the Directors individuallyincluding Independent Directors based out of the criteria and framework adopted by theBoard. The Board approved the evaluation results as collated by Nomination andRemuneration Committee ("NRC"). The evaluation process manner and performancecriteria for independent directors in which the evaluation has been carried out by isexplained in the Corporate Governance Report.
The Board considered and discussed the inputs received from the Directors. Also theIndependent Directors at their meeting held on March 29 2018 reviewed the following:
Performance of Non-Independent Directors and the Board as a whole
Performance of the Chairperson of the Company.
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.
The Independent Directors expressed their satisfaction with overall functioning andimplementations of their suggestions.
The evaluation process endorsed the Board Members' confidence in the ethical standardsof the Company the cohesiveness that exists amongst the Board Members the two-way candidcommunication between the Board and the Management and the openness of the Management insharing strategic information to enable Board Members to discharge their responsibilities.
15. DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to the requirement under Section 134(5) of the Companies Act 2013 it ishereby confirmed that:
a) in the preparation of the annual accounts the applicable accounting standards hadbeen followed along with proper explanation relating to material departures;
b) the directors had selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company at the end of the financial year and ofthe profit of the Company for that period;
c) the directors had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities;
d) the directors had prepared the annual accounts on a going concern basis;
e) the Directors had laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and are operatingeffectively; and
f) the Directors had devised proper systems to ensure compliance with the provisions ofall applicable laws and that such systems are adequate and operating effectively.
16. INTERNAL FINANCIAL CONTROLS
The Company has in place adequate internal controls with reference to financialstatements and operations and the same are operating effectively. The Internal Auditorstested the design and effectiveness of the key controls and no material weaknesses wereobserved in their examination. Further Statutory Auditors verified the systems andprocesses and confirmed that the Internal Financial Controls system over financialreporting are adequate and such controls are operating effectively.
17. CONTRACTS AND ARRANGEMENTS WITH RELATED PARTIES
The Company has put in place a policy for Related Party Transactions (RPT Policy)which has been approved by the Board of Directors. The policy provides for identificationof RPTs necessary approvals by the Audit Committee/Board/ Shareholders reporting anddisclosure requirements in compliance with Companies Act 2013 and provisions of SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015.
All contracts executed by the Company during the financial year with related partieswere on arm's length basis and in the ordinary course of business. All such Related PartyTransactions were placed before the Audit Committee/ Board for approval whereverapplicable.
During the year the Company has entered into any contract / arrangement / transactionwith related parties which considered as material in accordance with Regulation 23 ofSEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 and the same wasalso approved by the shareholders via postal ballot on January 25 2018. The policy fordetermining material' subsidiaries and the policy on materiality of Related PartyTransactions and dealing with Related Party Transactions as approved by the Board may beaccessed on the Company's website www.5paisa. com. You may refer to Note no. 26 to thefinancial statement which contains related party disclosures.
The Company had not entered into any material contracts or arrangements or transactionsunder sub-section (1) of section 188 of the Act. Hence Form AOC-2 disclosure is notrequired to be provided.
18. EXTRACT OF ANNUAL RETURN
The details forming part of the extract of the Annual Return of the Company in form MGT 9 is annexed herewith as
"Annexure - II".
19. MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY
There have been no material changes and commitments affecting the financial position ofthe Company which have occurred between the end of the financial year of the Company towhich the financial statements relate and the date of this annual report.
20. SECRETARIAL AUDIT
The Board had appointed M/s. Nilesh Shah & Associates Practicing CompanySecretaries to conduct Secretarial Audit of the Company for the year 2017-18. The Auditorhad conducted the audit and their report thereon was placed before the Board. The Auditorin their report stated that the Nomination and Remuneration Committee consist of 3 membersi.e. 2 Independent Director and 1 Executive Director w.e.f. January 11 2018. As informedby the management the Company is in process of appointing one more Non-ExecutiveDirector/Independent Director who will also be nominated to Nomination and RemunerationCommittee. The said noting is self-explanatory. The report of the Secretarial Auditor isannexed herewith as "Annexure - III".
21. ENERGY CONSERVATION TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
The additional information on energy conservation technology absorption and foreignexchange earnings and outgo stipulated under Section 134(3) (m) of the Companies Act 2013read with Rule 8 of the Companies (Accounts) Rules 2014 is appended as "AnnexureIV" to and forms part of this Report.
22. RISK MANAGEMENT
Your directors on a regular basis (a) oversee and approve the Company's enterprisewide risk management framework; and (b) oversee that all the risks that the organisationfaces such as strategic financial credit market liquidity security property ITlegal regulatory reputational and other risks have been identified and assessed andthere is an adequate risk management infrastructure in place capable of addressing thoserisks. Your Company has in place various policies and procedures covering the businessoperations employees finance & accounting customer services which are approved bythe Board.
Your Company has in place specialised internal audits on Broking and DepositoryParticipant business as per the SEBI
/ Exchanges/ Depositories norms. The findings on Audit Reports are reviewed by theAudit Committee / Board at their periodical meetings and the reports are submitted to theExchanges /Depositories.
Your Company's management monitors and reports on the principal risks and uncertaintiesthat can impact its ability to achieve its strategic objectives.
The Company's management systems organisational structures processes standards andcode of conduct together form the risk management governance system of the Company andmanagement of associated risks.
23. WHISTLE BLOWER POLICY/ VIGIL MECHANISM
In compliance of the Companies Act 2013 and Regulation 22 of SEBI (Listing Obligationsand Disclosure Requirements)
Regulations 2015 the Company has adopted a Whistle Blower Policy and has establishedthe necessary vigil mechanism for Directors Employees and Stakeholders to report genuineconcerns about unethical behaviour actual or suspected fraud or violation of theCompany's code of conduct or ethics policy. The Company has disclosed the policy at thewebsite at https://www.5paisa.com.
24. PREVENTION OF SEXUAL HARASSMENT
Your Company recognises its responsibility and continues to provide a safe workingenvironment for women free from sexual harassment and discrimination. In Compliance withthe Sexual Harassment of Women at Workplace (Prevention Prohibition and Redressal) Act2013 the Company has put in place a Policy on prevention of Sexual Harassment of Women atworkplace.
Your Directors further state that the during the fiscal year 2017-18 there were nocomplaints pending pursuant to the Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013. The following is reported pursuant to Section 22 ofthe Sexual Harassment of Women at Workplace (Prevention Prohibition and Redressal) Act2013:
a) Number of complaints received in the year : 1 b) Number of complaints disposed offduring the year : 1 c) Number of cases pending more than ninety days: Nil
d) Number of workshops or awareness programme against sexual harassment carried out:
The Company has conducted an online training for creating awareness against the sexualharassment against the women at work place.
e) Nature of action taken by the employer or district officer: The Company has takenthe appropriate action on the said matter.
25. PARTICULARS OF EMPLOYEES
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
Further a statement showing the names and other particulars of employees drawingremuneration in excess of the limits as set out in the Rules 5(2) and 5(3) of theaforesaid Rules forms part of this report. However in terms of first proviso to Section136(1) of the Act the Annual Report and Accounts are being sent to the members and othersentitled thereto excluding the aforesaid information. The said information is availablefor inspection by any member of the Company at its registered office and at the registeredoffices of the subsidiary during the business hours on working days except on SaturdaysSundays and Public Holidays. If any member is interested in obtaining a copy thereof suchmember may write to the Company Secretary whereupon a copy would be sent.
26. STATUTORY AUDITORS
Pursuant to the provisions of Section 139(2) of the Companies Act 2013("Act") and the rules made thereunder the members at their 10th Annual GeneralMeeting ("AGM") held on July 19 2017 had appointed M/s. V Sankar Aiyar& Co. Chartered Accountants Mumbai (Firm Registration Number: 109208W) as StatutoryAuditor for a period of five years i.e. from the conclusion of 10th AGM till theconclusion of 15th AGM of the Company to be held in the year 2022 subject to ratificationof their appointment at every AGM. Accordingly the appointment of M/s. V Sankar Aiyar& Co. Chartered Accountants as Statutory Auditors of the Company is placed forratification by the Members in the forthcoming AGM.
In this regard the Company has received a certificate from the Statutory Auditors tothe effect that ratification of their appointment if made would be in accordance withthe provisions of Section 141 of the Act. They have also confirmed that they hold a validPeer Review Certificate issued to them by the Institute of Chartered Accountants of India("ICAI").
27. REPORTING OF FRAUDS BY AUDITORS
During the year under review the Statutory Auditors and the Secretarial Auditor havenot reported any instances of frauds committed in the Company by its Officers or Employeesto the Audit Committee under section 143(12) of the Companies Act 2013 details of whichneeds to be mentioned in this Report.
28. CORPORATE GOVERNANCE
The Company is committed to maintain the highest standards of Corporate Governance andadhere to the Corporate Governance requirements set out by SEBI. The report on CorporateGovernance as stipulated under the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 forms an integral part of this Report. The requisite certificate fromthe Auditors of the Company confirming compliance with the conditions of CorporateGovernance is attached to the report on Corporate Governance.
Your Directors state that during the financial year 2017-18:
1. The Company did not accept/renew any deposits within the meaning of Section 73 ofthe Companies Act 2013 and the rules made there under and as such no amount of principalor interest was outstanding as on the balance-sheet date.
2. The Company has not issued equity shares with differential rights as to dividendvoting or otherwise.
3. The Company has not issued any sweat equity shares during the year.
4. There are no significant and material orders passed against the Company by theRegulators or Courts or Tribunals which would impact the going concern status of theCompany and its future operations.
Your Directors place on record their sincere appreciation for the assistance andguidance provided by the Government Regulators Stock Exchanges Depositories otherstatutory bodies and Company's Bankers for the assistance cooperation and encouragementextended to the Company.
Your Directors also gratefully acknowledge all stakeholders of the Company viz.customers members dealers vendors banks and other business partners for the excellentsupport received from them during the year. Our employees are instrumental in the Companyto scale new heights year after year. Their commitment and contribution is deeplyacknowledged. Your involvement as shareholders is also greatly valued. Your Directors lookforward to your continuing support.
|For and on behalf of the Board || |
|Prakarsh Gagdani ||Santosh Jayaram |
|Whole Time Director & CEO ||Whole Time Director |
|(DIN: 07376258) ||(DIN: 07955607) |
|Date: April 17 2018 || |
|Place: Mumbai || |