And Management Discussion & Analysis
TO THE MEMBERS
The Directors have pleasure in presenting the 72nd Annual Report togetherwith the Audited Financial Statements of the Company for the year ended 31stMarch 2019.
SCHEME OF ARRANGEMENT
The Scheme of Arrangement between Florence Investech Limited (Florence') BMFInvestments Limited (BMF) J.K. Fenner (India) Limited (FIL) and Bengal & AssamCompany Limited ("the Transferee Company") and their respective Shareholders for(a) Amalgamation of Florence and BMF with the Transferee Company and (b) Exchange ofshares of FIL for shares of the Transferee Company at the option of shareholders of FIL(other than the Transferee Company itself) sanctioned by the Hon'ble Benches of NationalCompany Law Tribunal Kolkata and Chennai vide their respective Orders dated 5thNovember 2018 and 3rd May 2019 has become effective on 24thMay 2019 upon filing of the certified copies of the said orders by the said companieswith the respective Registrar of Companies on the said date. The Scheme is operative from1st April 2017 the Appointed Date of the said Scheme (hereinafter referred toas the "Scheme").
In terms of the Scheme:
i) Florence and BMF stand amalgamated with the Transferee Company with effect from 1stApril 2017 and all the assets and liabilities and the entire business of Florence and BMFstand transferred to and vested in the Transferee Company and Florence and BMF standdissolved;
ii) the Authorised Share Capital of the Transferee Company has increased to Rs. 374.55Crores from Rs. 369.25 Crores.
iii) Shares held by Florence in the Transferee Company stand cancelled;
iv) In consideration of the amalgamation of Florence and BMF with the TransfereeCompany the Transferee Company will issue and allot to the Shareholders of Florence andFIL (other than the Transferee Company itself) as on a Record Date to be fixed for thepurpose Equity Shares as under:
(a) 89 Equity Shares of Rs. 10/- each in the Transferee Company shall be credited asfully paid up for every 100 Equity Shares of Rs. 10/- each fully paid-up held by theEquity Shareholders of Florence in the capital of Florence; and
(b) 101 Equity Shares of Rs. 10/- each in the Transferee Company shall be credited asfully paid up for every 100 Equity Shares of Rs. 10/- each fully paid-up held by theEquity Shareholders of FIL in the capital of FIL.
v) Further upon exercise of the exchange option given to the shareholders of FIL(other than the Transferee Company itself) the Transferee Company will issue and allot tosuch shareholders additional equity shares in the Transferee Company in the ratio of 51equity shares of Rs. 10/- each in the Transferee Company credited as fully paid up inexchange of every 100 equity shares of Rs. 10/- each held by such shareholders of FIL inFIL.
vi) All profits accruing to the Transferor Companies (including taxes paid thereon) orlosses arising the Transferor Companies for the period falling on and after the AppointedDate to the Effective date are treated for all purposes as the profits (including taxespaid) or losses as the case may be of the Transferee Company
Pursuant to the aforesaid Scheme the size of the investments of the Company hasincreased substantially with potential increase in income.
CORE INVESTMENT COMPANY
The Company is a Core Investment Company-Non Deposit Taking-Systemically Important(CIC-ND-SI) registered with the Reserve Bank of India (RBI) and has been complying withall the conditions prescribed by RBI.
OPERATIONS & OUTLOOK
The Company achieved a Profit after Tax of Rs. 3879.08 lacs for the year as againstRs. 2855.62 lacs in the previous year. The Company (being a core investment company)holds significant investments in group companies which are engaged in diversifiedindustrial segments. With a stable government in place Indian Economy is expected to growover 7.75%. This should have positive impact on the working of the investee companies witha buoyancy in the capital market which would lead to better valuations.
Your Directors are pleased to recommend a dividend of Rs. 10/- per share (100%) for thefinancial year ended 31st March 2019. The total dividend outgo would be Rs.1129.62 Crores.
The amount available for appropriation including surplus from previous year is Rs.17788.72 lacs. The Directors propose this to be appropriated as under:
|Transfer to Reserves (As per RBI guidelines) ||Rs. 1005.97 Lacs |
|Surplus carried to Balance Sheet ||Rs. 16782.75 Lacs |
|Total ||Rs. 17788.72 Lacs |
EXTRACT OF ANNUAL RETURN
An extract of the Annual Return as on 31st March 2019 in the prescribedform MGT-9 is attached as Annexure-1 to this Report and forms part of it.
PARTICULARS OF LOANS GUARANTEES AND INVESTMENTS
The Company being a Core Investment Company registered with the Reserve Bank of IndiaSection 186 of the Companies Act 2013 is not applicable to it. The particulars of loansguarantees and investments are given in the financial statements.
RELATED PARTY TRANSACTIONS
During the financial year ended 31st March 2019 all the contracts orarrangements or transactions entered into by the Company with the Related Parties were inthe ordinary course of business and on arms' length basis and were in compliance with theapplicable provisions of the Companies Act 2013 and the SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015.
Further the Company has not entered into any contract or arrangement or transactionwith the related parties which could be considered material in accordance with the policyof the Company on materiality of the Related Party Transactions. In view of the abovedisclosure in Form AOC-2 is not applicable.
The Related Party Transactions Policy as approved by the Board is available on thewebsite of the Company.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
Shri Bharat Hari Singhania Director and Chairman retires by rotation and beingeligible offers himself for re-appointment at the ensuing AGM.
Shri Shailendra Swarup Independent Director is being re-appointed for the second termof 5 years w.e.f. 2nd September 2019. Requisite Resolution regardinghis re-appointment is included in the Notice of ensuing Annual General Meeting forapproval by the Members.
CONSOLIDATED FINANCIAL STATEMENTS
The Consolidated Financial Statements have been prepared by the Company in accordancewith the applicable Accounting Standards. The Audited Consolidated Financial Statementstogether with Auditors' Report form part of the Annual Report.
A report on the performance and financial position of each of the subsidiaries andassociates included in the Consolidated Financial Statements is presented in a separatesection in this Annual Report. Please refer AOC-1 annexed to the Financial Statements inthe Annual Report.
Pursuant to the provisions of Section 136 of the Act the financial statements of theCompany Consolidated Financial Statements alongwith relevant documents and separateaudited accounts in respect of subsidiaries are available on the website of the Company.
As is known J.K. Fenner (India) Ltd. Southern Spinners and Processors Ltd. ModernCotton Yarn Spinners Ltd. Acorn Engineering Ltd. BMF Investments Ltd. DivyashreeCompany Pvt. Ltd. Panchmahal Properties Ltd. and LVP Foods Pvt. Ltd. are/weresubsidiaries of the Company. Further pursuant to the Scheme of Arrangement as statedaforesaid JK Tyre & Industries Ltd. JK Agri Genetics Ltd. Umang Dairies Ltd.Global Strategic Technologies Ltd. J.K. Risk Managers & Insurance Brokers Ltd.CliniRx Research Private Ltd. and Deepti Electronics & Electro-Optics Pvt. Ltd.have also become the subsidiaries of the Company. BMF Investments Ltd. since amalgamatedwith the Company ceased to be subsidiary of the Company during the year. In terms ofprovisions of the Companies Act 2013 JK Lakshmi Cement Ltd. JK Paper Ltd. PranavInvestment (M.P.) Company Ltd. Dwarkesh Energy Ltd. and PSV Energy Pvt. Ltd. continuesto be associates of the Company. The Company does not have any Joint Venture.
The Company is a registered Non-Banking Finance Company and does not accept publicdeposits and as required by the Reserve Bank of India (RBI) the Board of Directors havealso passed necessary resolution not to accept public deposits during the financial year2019-20 without prior approval of RBI.
(a) Statutory Auditors and their Report
As per the provisions of Section 139 of the Companies Act 2013 the term of office ofM/s. Lodha & Co. Chartered Accountants as Statutory Auditors of the Company willconclude from the close of the forthcoming Annual General Meeting of the Company. TheBoard of Directors places on record its appreciation for the services rendered by M/s.Lodha & Co. as the Statutory Auditors of the Company.
Subject to the approval of the Members the Board of Directors of the Company hasrecommended the appointment of M/s. Singhi & Co. Chartered Accountants as theStatutory Auditors of the Company for a period of 3 years commencing from the conclusionof 72nd Annual General Meeting till the conclusion of 75th AnnualGeneral Meeting pursuant to Section 139 of the Companies Act 2013. Requisite Resolutionregarding their appointment is included in the Notice of ensuing Annual General Meetingfor approval by the Members.
(b) Secretarial Auditor and Secretarial Audit Report
Pursuant to the provisions of Section 204 of the Companies Act 2013 the Board ofDirectors appointed Shri Namo Narain Agarwal Company Secretary in Practice as SecretarialAuditor to carry out Secretarial Audit of the Company for the financial year 2018-19. TheReport given by him for the said financial year in the prescribed format is annexed tothis Report as Annexure 2. The Secretarial Audit Report does not contain anyqualification reservation or adverse remark.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS
During the financial year under review there were no significant or Courts orTribunals which would impact the going concern status of the Company and its futureoperations.
MATERIAL CHANGES AND COMMITMENTS
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 Companyexcept sanction of the Scheme of Arrangement by the Hon'ble Benches of National CompanyLaw Tribunal Kolkata and Chennai as mentioned in this Report under the Head "Schemeof Arrangement".
CHANGE IN THE NATURE OF BUSINESS
During the financial year under review there was no change in the nature of business.
PARTICULARS OF REMUNERATION
Disclosure of the ratio of the remuneration of each Director to the median employee'sremuneration and other requisite details pursuant to section 197 (12) of the CompaniesAct 2013 ("Act") read with Rule 5 (1) of Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 as amended is annexed to this Report asAnnexure-3.
Further particulars of Employees pursuant to Rule 5(2) & (3) of the above Rulesforms part of this Report. However as per the provisions of Section 136 of the said Actthe Report and Accounts are being sent to all the Members of the Company and othersentitled thereto excluding the aforesaid information. Any Member interested in obtainingsuch particulars may write to the Company Secretary at the Registered Office of theCompany. The said information is available for inspection at the Registered Office of theCompany during working hours
INTERNAL FINANCIAL CONTROLS
The Company has in place adequateinternalfinancialcontrols with reference to financialstatements and no material reportable weakness was observed in the system. Further theCompany has in place adequate internal financial controls commensurate with the size andnature of its operations. The Company also has robust Budgetary Control System andManagement Information System (MIS) which is the backbone of the Company for ensuring thatyour Company's assets and interests are safeguarded.
Maintenance of cost records as specified by the Central Government under sub-section(1) of Section 148 of the Companies Act 2013 is not applicable to the Company.
DIRECTORS' RESPONSIBILITY STATEMENT
As required under Section 134(3)(c) of the Companies Act 2013 your Directors statethat:-
(a) in the preparation of the annual accounts the applicable accounting standards havebeen followed along with proper explanation relating to material departures if any;
(b) the accounting policies have been selected and applied consistently and judgmentsand estimates made are reasonable and prudent so as to give a true and fair view of thestate of affairs of the Company at the end of the financial year and of the profit andloss of the Company for that
(c) proper and sufficientcare has been taken for the maintenance of adequate accountingrecords in accordance with the provisions of the said Act for safeguarding the assets ofthe Company and for preventing and detecting fraud and other irregularities;
(d) the annual accounts have been prepared on a going concern basis;
(e) the internal financial controls to be followed by the Company have been laid downand that such internal financial controls are adequate and were operating effectively; and
(f) the proper systems to ensure compliance with the provisions of all applicable lawshave been devised and that such systems were adequate and operating effectively.
CORPORATE GOVERNANCE - including details pertaining to Board Meetings Nominationand Remuneration Policy Performance Evaluation Risk Management Audit Committee andVigil Mechanism.
Your Company re-affirmsits commitment to the highest standards of corporate governancepractices. Pursuant to SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 a Management Discussion and Analysis Corporate Governance Report and Auditors'Certificate regarding compliance of conditions of Corporate Governance are made a part ofthis Report.
The Corporate Governance Report which forms part of this Report also covers thefollowing:
(a) Particulars of the five Board Meetings held during the financial year under review.
(b) Policy on Nomination and Remuneration of Directors Key Managerial Personnel andSenior Management including inter alia the criteria for performance evaluation ofDirectors.
(c) The manner in which formal annual evaluation has been made by the Board of its ownperformance and that of its Committees and individual Directors.
(d) The details with respect to composition of Audit Committee and establishment ofVigil Mechanism.
(e) Details regarding Risk Management.
RISK AND CONCERNS
The Company is mainly exposed to capital market risks in the form of change in value ofits investments. The Company is also exposed to the fluctuations of economy and industrycycles.
The statement in this Management Discussion and Analysis Report describing theCompany's outlook projections estimates expectations may be "Forward-lookingStatements" within the meaning of applicable securities laws or regulations. Actualresults could differ materially from those expressed or implied.
CORPORATE SOCIAL RESPONSIBILITY
The requirement of Corporate Social Responsibility (CSR) in terms of Section 135 of theCompanies Act 2013 and the rules made thereunder is not applicable to the Company sincethe Company's main source of income is dividend from CSR compliant companies.
During the financial year under review the Company has complied with the applicableSecretarial Standards for Board and General Meetings.
CONSERVATION OF ENERGY ETC.
As required under Section 134(3)(m) read with the Companies (Accounts) Rules 2014 therequirement of furnishing particulars of energy conservation technology absorption etc.is not applicable to the Company. Further particulars of Foreign Exchange Earning andOutgo are as under:-
|i) Foreign Exchange earned ||: NIL |
|ii) Foreign Exchange Outgo ||: Rs. 20.30 Lacs |
Your Directors wish to place on record and acknowledge their appreciation for thecontinued support and co-operation received from the various GovernmentAuthorities Lending Institutions and the esteemed shareholders of the Company. TheDirectors also record their appreciation for the total dedication of the employees.
| ||On behalf of the Board |
| ||Bharat Hari Singhania |
|New Delhi ||Chairman |
|Date: 30th May 2019 ||DIN: 00041156 |