TO THE MEMBERS
The Directors have pleasure in presenting the 71st Annual Report togetherwith the Audited Financial Statements of the Company for the year ended 31stMarch 2018.
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 Profit after Tax of Rs.2855.62 lacs for the year as againstRs.2303.69 lacs in the previous year. The Company (being a core investment company)holds significant investments in group companies which are engaged in diversifiedindustrial segments.
The transitory effects of Demonetization and Goods and Service Tax (GST) implementationresulted into lower GDP growth in 2017-2018. In the longer run the GST is expected toboost investment productivity and growth of
Indian Economy. India continues to remain one of the fastest growing economies in theworld.
With continued focus of the Central Government on rural economy healthcare educationInfrastructure and digitization the Indian Economy is expected to grow over 7.75% in thefinancial year 2018-19 leading to a modern strong and confident India. This should have apositive impact on the working of the investee companies and the capital market leading tobetter valuations.
Your Directors are pleased to recommend a dividend of Rs.10/- per share (100%) for thefinancial year ended 31st March 2018. The total dividend outgo would beRs.8.68 Crores.
The amount available for appropriation including surplus from previous year isRs.7049.07 lacs. The Directors propose this to be appropriated as under:
|Transfer to Reserves (As per RBI guidelines) ||571.12 Lacs |
|Surplus carried to Balance Sheet ||6477.95 Lacs |
|Total ||7049.07 Lacs |
SCHEME OF ARRANGEMENT
The Scheme of Arrangement between Florence Investech Limited ("Florence")BMF Investments Limited J.K. Fenner (India) Limited ("JK Fenner") and Bengal& Assam Company Limited ("The Transferee Company") and their respectiveshareholders approved by the Board of Directors and BSE Limited is pending for approvalof the Shareholders of the Transferee Company Florence JK Fenner and National CompanyLaw Tribunal Kolkata and Chennai. The Scheme inter alia provides for thefollowing:
(i) Amalgamation of Florence and BMF ("Transferor Companies") with theTransferee Company in consideration of issue and allotment of Equity Shares in theTransferee Company to the Equity Shareholders of Florence and Equity Shareholders of JKFenner other than the Transferee Company itself; and
(ii) Exchange of Equity Shares of JK Fenner for Equity Shares of the Transferee Companyat the option of Equity Shareholders of JK Fenner.
EXTRACT OF ANNUAL RETURN
An extract of the Annual Return as on 31st March 2018 in the prescribed form MGT-9 isattached 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 2018 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 J.R.C. Bhandari Independent Director of the Company had resigned from theDirectorship of the Company w.e.f. 1st September 2017 due to his ill health.Your Directors places on record their appreciation for the valuable services rendered andguidance provided by Shri Bhandari during his long tenure of office of over 8 years in thecapacity as an Independent Director of the Company.
Smt. Vinita Singhania retires by rotation and being eligible offers herself forre-appointment at the ensuing AGM.
Shri Sanjeev Kumar Jhunjhunwala was appointed as an Independent Director of the Companywith effect from 6th October 2017 for a term of five consecutive years subjectto approval of the members at the ensuing AGM.
Shri Jhunjhunwala has given declaration about his independence pursuant to Section 149of the Companies Act 2013. The Company has also received requisite Notice from a Memberof the Company proposing the name of Shri Sanjeev Kumar Jhunjhunwala forappointment as Director at the ensuing AGM. The Board of Directors recommends hisappointment as aforesaid.
Shri U.K. Gupta Manager and Chief Financial Officer of the Company was re-appointed asManager with the designation Manager and Chief Financial Officer of the Company for afurther period of 5 years w.e.f. 1st July 2018 subject to approval of theMembers at the ensuing AGM.
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.
During the financial year under review no company has become or ceased to be
In terms of provisions of the Companies Act 2013 JK Lakshmi Cement Ltd. JK Tyre &Industries Ltd. JK Paper Ltd. JK Agri Genetics Ltd. Umang Dairies Ltd. PranavInvestment (M.P.) Company Ltd. Dwarkesh Energy Ltd. Global Strategic Technologies Ltd.Deepti Electronics & Electro-Optics Pvt. Ltd. PSV Energy Pvt. Ltd. J.K. RiskManagers & Insurance Brokers Ltd. and CliniRx Research Private Ltd. continues to beassociates of the Company.
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 year2018-19 without prior approval of RBI.
(a) Statutory Auditors and their Report
M/s Lodha & Co. Chartered Accountants have been appointed as Statutory Auditorsof the Company by the Members at the 67th Annual General Meeting (AGM) held on2nd September 2014 for a term of 5 (five) consecutive years from theconclusion of the 67th AGM until the conclusion of the 72nd AGMsubject to ratification of the appointment by the Members at the respective Annual GeneralMeetings. However pursuant to the Companies (Amendment) Act 2017 the requirement ofratification of appointment of the Auditors on yearly basis has been dispensed with. Theobservations of the Auditors in their report on Accounts and the Financial Statementsread with the relevant notes are self explanatory.
(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 asSecretarial Auditor to carry out Secretarial Audit of the Company for the financial year2017-18. The Report given by him for the said financial year in the prescribed format isannexed to this 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.
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 ofinformation is available for inspection at the Registered Office of the Company duringworking hours.
INTERNAL FINANCIAL CONTROLS
The Company has in place adequate internal financial controls with reference tofinancial statements and no material reportable weakness was observed in the system.Further the Company has in place adequate internal financial controls commensurate withthe size and nature of its operations. The Company also has robust Budgetary ControlSystem and Management Information System (MIS) which is the backbone of the Company forensuring that your Company's assets and interests are safeguarded.
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 period;
(c) proper and sufficient care has been taken for the maintenance of adequateaccounting records in accordance with the provisions of the said 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 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 |
| ||Dr. Raghupati Singhania |
|New Delhi ||A.K. Kinra |
|Date: 19th May 2018 ||Directors |
With a view to avoid duplication between the Directors' Report and ManagementDiscussion and Analysis a Combined Report has been presented.
Disclosure pursuant to Section 197(12) of the Companies Act 2013 read with Rule 5(1)of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 forthe FY 2017-18 ended 31st March 2018.
1. The ratio of the remuneration of each Director to the median remuneration of theemployees of the Company:
(i) Shri Bharat Hari Singhania Chairman 1.89 (ii) Dr. Raghupati Singhania 1.49 (iii)Smt. Vinita Singhania-1.29 (iv) Shri Shailendra Swarup 1.03 (v) Shri Bakul Jain 1.15(vi) Shri S.K. Khaitan 1.35 (vii) Shri J.R.C. Bhandari 0.87. (viii) Shri S.K.Jhunjhunwala 0.82 and (ix) Shri A.K. Kinra 1.46 The Board of Directors of the Company donot draw any Remuneration form the Company except sitting fee and commission.
2. The percentage increase in remuneration of each Director Chief Financial Officerand Company Secretary in the financial year: (i) Shri Bharat Hari Singhania Chairman-64.76% (ii) Dr. Raghupati Singhania 21.28% (iii) Smt. Vinita Singhania 40.63% (iv) ShriShailendra Swarup 20% (v) Shri Bakul Jain 11.11% (vi) Shri S.K. Khaitan - 14.63%(vii) Shri J.R.C. Bhandari # (33.70%) (viii) Shri S.K. Jhunjhunwala * - N.A. (ix) ShriA.K. Kinra 41.67% (x) Shri Upendra Kumar Gupta Manager & Chief Financial Officer23.26% (x) Shri Dillip Kumar Swain Company Secretary 18.08%. The Board of Directors'remuneration represents sitting fees and commission.
# Resigned w.e.f. 1st September 2017. * Joined the Board w.e.f. 6thOctober 2017.
3. The percentage increase in the median remuneration of employees 13.82%. The numberof permanent employees on the rolls of Company 8.
4. Average percentile increase already made in the salaries of employees other than themanagerial personnel in the financial year ended 31st March 2018 was 16.09% and theincrease in managerial remuneration except sitting fee in the last financial year was29.80%.
5. The Company affirms that the remuneration is as per the remuneration policy of theCompany.
| ||On behalf of the Board |
| ||Dr. Raghupati Singhania |
|New Delhi ||A.K. Kinra |
|Date: 19th May 2018 ||Directors |