Your Directors are pleased to present to the valued stakeholders the 26th AnnualReport of DCM Financial Services Limited along with the Audited Financial Statements ofthe Company for the Year ended March 31st 2017.
FINANCIAL HIGHLIGHTS- AT A GLANCE Overall Performance of your Company
The Financial Year 2016-17 had been a little tumultuous for the Company as yourCompany has shown a conventional performance during the year under review. The net Profitsof your Company had gone down from Rs. 20918498/- in 2015-16 to Rs. 17231740/- in2016-17.
The financial summary performance highlights operations/state of affair of yourCompany for the year are summarized below:
(Amount in Rupees)
|PARTICULARS || |
| ||2016-17 ||2015-16 ||2016-17 ||2015-16 |
|Income from Business ||- ||- ||- ||- |
|Operations || || || || |
|Other Income ||36742754.00 ||39322922.00 ||36747613.00 ||39576361.00 |
|Total Income ||36742754.00 ||39322922.00 ||36747613.00 ||39576361.00 |
|Less: Expenditure except Depreciation ||12054256.84 ||9936283.84 ||12166535.50 ||10053972.85 |
|Profit/Loss before Interest Depreciation and Tax ||24688497.16 ||29386638.16 ||24581077.50 ||29522388.15 |
|Less: Interest and other Financial Charge(s) ||- ||36314.00 ||- ||36314.00 |
|Profit/Loss before Depreciation and Tax ||24688497.16 ||29350324.16 ||24581077.50 ||29686074.15 |
|Less: Depreciation ||3056757.00 ||3071873.00 ||3168931.00 ||3154605.00 |
|Profit/Loss before Tax ||21631740.16 ||26278451.16 ||21412146.50 ||26331469.15 |
|Less: Tax Expense ||4400000.00 ||5359953.00 ||4400000.00 ||5359953.00 |
|Add: Deferred Tax Asset ||- ||- ||- ||- |
|Net Profit/Loss after Tax ||17231740.16 ||20918498.16 ||17012146.50 ||20971516.15 |
|Less: Minority Interest ||- ||- ||(19459.00) ||5302.00 |
|Net Profit/Loss for the period ||17231740.16 ||20918498.16 ||17031605.50 ||20966214.15 |
|Earnings per share: (Basic and Diluted) ||0.78 ||0.95 ||0.77 ||0.95 |
With a view of augmenting financial resources for generating stable growth in futurethe Board of Directors of the company have decided to carry forward entire profit andhence do not propose to recommend any dividend for the financial year on equity shares.
The Board proposes to transfer no amount to the reserves and an amount of Rs.17231740/- is proposed to be retained in Surplus
MANAGEMENT DISCUSSION & ANALYSIS REPORT
Management Discussion and Analysis Report for the year under review as stipulatedunder Regulation 34 of SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 is presented in a separate section of this Annual Report
TRANSFER OF UNCLAIMED DIVIDEND TO INVESTOR EDUCATION AND PROTECTION FUND
Since there was no unpaid/unclaimed Dividend declared or paid by the Company theprovisions of Section 125 of the Companies Act 2013 do not apply.
CHANGE IN NATURE OF BUSINESS
During the year under review there was no change in nature of business of the Company.
The paid up equity share capital outstanding as on 31st March 2017 was Rs.221250540/-.
As on 31st March 2017 none of the Directors of the Company has held shares of theCompany.
Issue of equity shares with differential voting rights
No equity shares with differential voting rights have been issued by the company duringthe financial year 2016-17.
Issue of Sweat Equity Shares
The Company has not issued any sweat equity shares during the year under review.
Issue of Employee Stock Options
The Company has not issued any shares under employees stock options scheme duringthe year under review.
Buy Back of Securities
The Company has not bought back any of its securities pursuant to the provisions ofSection 67 and Section 68 of the Companies Act 2013 during the year under review.
Voting Rights of Employees
During the year under review the company has not given any loan to any employee forpurchase of its own shares as per section 67 (3) (c) of the Companies Act 2013. Thereforethe company is not required to make any disclosure as per rule 6 (4) of the Companies(Share Capital and Debentures) Rules 2014.
CONSOLIDATED FINANCIAL STATEMENTS
The Consolidated Financial Statements prepared in accordance with the Companies Act2013 and Accounting Standards-21 are attached with the Annual Report..
During the year under review the Company has not invited any fixed Deposits. As on31st March 2017 there were 50928 fixed deposits aggregating to Rs. 5637.28 Lacs whichremained unpaid as the scheme of repayment to fixed depositors is pending approval beforethe Honble High Court of Delhi and out of these deposits Rs 3.51 Cr ( 3639depositors) have not submitted fixed deposit receipts and can be considered as unclaimed.However since while making the repayments in terms of sanction of the scheme by theHonble Court all deposits will be verified as recommended by the One Man Committeeof Retd Justice Anil Kumar. The duplicate or invalid deposits once discovered might bereversed.
SUBSIDIARY / ASSOCIATE/ JOINT VENTURES COMPANIES OF THE COMPANY
The details about the Companys subsidiary Global IT Options Limitedare mentioned in the Form AOC-1marked as "Annexure B".
CHANGE IN DIRECTORS /KEY MANAGERIAL PERSONNEL DURING THE YEAR
The details about the changes in Directors or Key Managerial Personnel by way ofAppointment Re - designation Resignation variation made or withdrawn etc. are asfollows:
|S. No. ||Name ||Designation ||Nature of Change ||With Effect From |
|1. ||Richa Kalra ||Additional Independent Director ||Appointment ||06.10.2016 |
|2. ||Om Prakash Gupta ||Independent Director ||Resignation ||06.10.2016 |
|3. ||Richa Kalra ||Independent Director ||Re-designation ||30.11.2016 |
|4. ||Medini Jaiswal ||Additional Independent Director ||Appointment ||22.05.2017 |
|5. ||Srishti Singh ||Company Secretary ||Appointment ||22.05.2017 |
|6. ||Mr. Sehdev Shori ||Independent Director ||Resignation ||11.08.2017 |
|7. ||Ms. Daman Preet Kaur ||Additional Independent Director ||Appointment ||11.08.2017 |
During the year under review the Board of Directors appointed Ms. Richa Kalra (DIN:07632571) as the Additional Independent Director w.e.f. from 6th October 2016 in placeof Mr. Om Prakash Gupta (DIN: 00024646) who has resigned with effect from the same datedue to his personal preoccupation.
Further Ms. Richa Kalra who was appointed as the Additional Independent Director on6th October 2016 was re-appointed as Independent Director on 30th November 2016.
RELATIONSHIP BETWEEN DIRECTORS INTERSE
None of the Directors are related to each other within the meaning of term"relative" as per Section 2(77) of the Companies Act 2013
STATEMENT ON DECLARATION GIVEN BY INDEPENDENT DIRECTORS UNDER SECTION 149(6) OFCOMPANIES ACT 2013
All Independent Directors have given declarations under section 149(7)that they meetthe criteria of Independence as laid down under section 149(6) of the Companies Act 2013and Rules made thereunder to be read with SEBI (Listing Obligation & DisclosureRequirement) Regulation 2015.
DISCLOSURE OF CHANGE IN ACCOUNTING TREATMENT IN FINANCIAL STATEMENTS
During the period under review there were no changes in the Accounting treatment inthe Financial Statements for the financial year 2016-17 different from that as prescribedin Accounting Standards prescribed by the Institute of Chartered Accountants of India(ICAI).
EXTRACT OF ANNUAL RETURN
The details forming part of extract of Annual Return under sub section 3 of Section 92of the Companies Act 2013 in Form MGT-9 is annexed herewith as "Annexure A."
NUMBER OF MEETINGS OF THE BOARD AND COMMITTEES
During the year under review 6 Board Meetings4 Audit Committee Meetings 2 Nomination& Remuneration Committee Meetings 4 Stakeholders Relationship CommitteeMeetings were convened and held. All the Meetings including Committee Meetings were dulyheld and convened and the intervening gap between two consecutive meetings was within theperiod prescribed under the Companies Act 2013 to be read with the SEBI(ListingObligations & Disclosure Requirements) Regulations 2015.
The Audit Committee of the Company is constituted in line with the provisions ofsection 177 of the Companies Act 2013 to be read with Regulation 18 of the SEBI (ListingObligation & Disclosure Requirement) Regulation 2015.
NOMINATION & REMUNERATION COMMITTEE
The Nomination & Remuneration Committee of the Company is constituted in line withthe provisions of section 178 of the Companies Act 2013 to be read with Regulation 19 ofthe SEBI (Listing Obligation & Disclosure Requirement) Regulation 2015.
STAKEHOLDERS RELATIONSHIP COMMITTEE
The Stakeholders Relationship Committee of the Company is constituted in linewith the provisions of section 178 of the Companies Act 2013 to be read with Regulation20 of the SEBI (Listing Obligation & Disclosure Requirement) Regulation 2015.
BOARD ANNUAL EVALUATION
The provisions of section 134(3)(p) of the Companies Act 2013 read with SEBI (ListingObligations & Disclosure Requirements) Regulations 2015 mandate that a Formal AnnualEvaluation is to be made by Board of its own performance and that of its Committee andindividual Directors. Schedule IV of the Companies Act 2013 states that performanceevaluation of the Independent Director shall be done by Directors excluding the Directorbeing evaluated. The Board carried out a formal annual performance evaluation as per thecriteria/framework laid down by the Nomination & Remuneration Committee of the companyand adopted by the Board. The evaluation was carried out through a structured evaluationprocess to judge the performance of individual Directors including the Chairman of theBoard. They were evaluated on parameters such as their education knowledge experienceexpertise skills behavior leadership qualities level of engagement & contributionindependence of judgment decision making ability for safeguarding the interest of theCompany stakeholders and its shareholders.
The performance evaluation of the Independent Directors was carried out by the entireBoard except the participation of concerned Independent Director whose evaluation was tobe done. The performance evaluation of the Chairman and the Independent Directors was alsocarried out by the Independent Directors. The Board was satisfied with the evaluationprocess and approved the evaluation results thereof.
REMUNERATION POLICY OF DIRECTORS AND KEY MANAGERIAL PERSONNEL
The Board on the recommendation of Nomination & Remuneration Committee framed apolicy for selection and appointment of Directors Senior Management Personnel andfixation of their remuneration thereof. The Policy contains inter-alia directorsappointment and remuneration including criteria for determining qualifications positiveattributes independence of a Director etc.
Pursuant to the provisions of Regulation 25(7) of Listing Regulations 2015 the Boardhas framed a policy to familiarize Independent Directors about the Company.
STATUTORY AUDITOR AND SECRETARIAL AUDITOR WITH THEIR QUALIFICATION RESERVATIONORADVERSE REMARKS ALONG WITH THE EXPLANATION OR COMMENTS BY THE DIRECTORS
A. STATUTORY AUDIT AND AUDITOR
The members at the Annual General Meeting held on 30th Nov 2015 appointed M/s V. SahaiTripathi & Co Chartered Accountants (Registration No. 00262N) as Statutory Auditorsof the Company for a period of two years to hold office till the conclusion of 26th AnnualGeneral Meeting of the Company subject to ratification at every AGM. Their period ofoffice will expire at the ensuing Annual General Meeting. Therefore the Board recommendsthe appointment of M/s Mukesh Aggarwal & Co. Chartered Accountants as StatutoryAuditor of the Company for a term of five years subject to approval of members in ensuingAnnual General Meeting of the Company.
Qualification(s) and Directors comments on the report of Statutory Auditor:
I. The accounts and financials of the Company have been prepared on going concernon the assumption and premises made by the management of the Company that (a) The freshrestmcturing scheme would be approved by the Honble Delhi High Court in totalitywhich is still pending for approval & acceptance (b) adequate finances andopportunities would be available in the foreseeable future to enable the company to startoperating on a profitable basis and
(c) injection of Rs. 1950.00 Lacs as promoters quota which has already been infused bythe management group. The same has been explained in Note 27.
Directors Comment: Going Concern Basis- Para (i) and Note 27-In accordance withsection 134 (5) (d) of the Companies Act 2013 the Financial Statements are required tobe made on going concern basis. In light of the fresh Scheme of Restructuring pendingbefore the Honble Delhi High Court the Company has plans for future business andincome generation. Accordingly it is not only prudent but also imperative to drawFinancial Statement based on such
Going Concern basis. The scheme seeks to restructure relying on debt equity swaps andprofits earned by engaging service oriented fee based business leading to progressivereduction in the debt of the equity. The scheme arrangement' would not only enablethe company to wipe out its debt but will also enable it to reduce carry forward losses tobe a profitable entity.
II. No provision of Rs. 817.81Lacs (Rs. 16465.30 Lacs towards accumulated Interestas at 31st March 2017)(Previous Year - Rs. 15647.48 Lacs) which is simple interestcalculated @10% per annum towards Interest on Debentures Fixed Deposits and InterCorporate Deposits have been provided in the financial statements on the outstandingamount of Debentures Fixed Deposits and Inter Corporate Deposits. Fresh RestructuringScheme filed before Honble Delhi High Court does not envisage and seek payment ofany interest as the interest has been considered waived off in the proposed scheme. Theorder of Company Law Board (CLB) which was issued in 1998 in the context of FixedDeposits stipulated payment of Interest of 10% per annum to Fixed Depositors. The order ofCompany Law Board (CLB) applies to Fixed Deposits only however considering the principlesof prudence it is deemed prudent to provide Interest @10% per annum since inception orrenewal on outstanding amount of Debentures and Inter Corporate Deposits also.
Had interest @10% per annum been provided for in the financial statements onoutstanding amount of Debentures Fixed Deposits and Inter Corporate Deposits the NetProfit before tax would have been lowered by Rs 817.81 Lacs and Net Profit after tax wouldhave been lowered by Rs 651.07 Lacs as at 31st March 2017. The cumulative net loss aswell as Current / NonCurrent Liabilities as at 31st March 2017 would have been higher byRs 16298.55 Lacs. The tax effect will be consequential. The same has been explained in Note3.1.f Note 3.4(g) and Note 3.6.
Directors Comment: Provision of Interest on Certain Liabilities- Para(ii) and Note 3.1.g
and 3.4 (b) (c) (g): In accordance with the Scheme of restructuring filed by theCompany before the Hon'ble Delhi High Court which provides for waiver and cancellation ofinterest and the same is pending before the Hon'ble Court.
III. For redemption of B series debentures of Rs. 2544.36 Lacsdebenture redemption reserve is required to be created. Debenture redemption reserve ofRs. 2544.36 Lacs has not been created due to insufficient profits. The same has beenexplained in Note 2.2.
Directors' Comment: Creation Debenture Redemption Reserve- Para (iii) and Note 2.2:Noncreation of debenture redemption reserve is self-explanatory and cannot be created dueto insufficient profits.
IV. The value of assets charged as security in favor of banks debenture-holders& financial institutions have been depleted over a period of time. The depletion hasnot yet been ascertained by the Company. To the extent of shortfall if any the liabilityis unsecured whereas the same has been shown as secured. The same has been explained in Note3.1.d and Note
3.2.b & 3.3.1.
Directors Comment: Depletion in the value of Assets charged toBanks/Institution and Debentures-Para (iv) and Notes 3.1.d 3.2.b& 3.3.1: It relatesto ascertainment of Security against Debentures and Bank Loan which could not beascertained since the Company is in litigation with various Lease and Hire Purchasecustomers and the matters are sub-judice hence confirmations and acknowledgments are notfeasible.
V. Balance confirmation of bills receivable and payable advances recoverable incash or in kind receivables and payables relating to lease and hire purchase leasesecurity deposit of which party wise details are not available. Balance confirmation ofinter-corporate deposits balance of ex-employees margin against L/C loans frominstitutions banks and other receivables and payables have not been received from theparties/persons concerned. In the absence of balance confirmation the closing balances asper books of accounts have been incorporated in the final accounts and have been shownunless otherwise stated by the management about its recoverability in the financialsincluding considering the NPA Provisions are good for recovery/ payment. Time barreddebts under the Limitations Act have not been separately ascertained and written off orprovided for. In the absence of such confirmation & corresponding reconciliation itis not feasible for us to determine financial impact on the financials and the amountreferred as payable in the financials can differ. Please refer Note No-28
Directors Comment: Balance Confirmation of Bills Receivable and Payableadvances recoverable in cash or in kind receivables and payables relating to lease andhire purchase and
lease security deposit-Para (v) and Note 28-In view of litigation with creditorsmentioned in the para v it's not possible to obtain the balance confirmations.
VI. The subsidiary company namely Global IT Options Limited has till 31st March2017 incurred expenditure of Rs 22.84 Lacs for & on behalf of its Holding Company(i.e. DCM Financial Services Limited). It comes under the category of short term fundingwhich is in-fact InterCorporate Deposit. In case of Inter-Corporate Deposit Section 186of Companies Act 2013 stipulates to charge interest at a rate not less than the bankdeclared by Reserve Bank of India. No Interest has not been provided on outstandingbalance of Rs 22.84 Lacs by Company to its subsidiary - Global IT Options Limited witheffect from 1-june-2014.
Had interest @12% per annum which comes to Rs. 2.74 Lacs been provided for in thefinancial statements on outstanding amount of Inter Corporate Depositthe net profitbefore tax would have been lowered by Rs. 2.74 Lacs and net profit after tax would havebeen lowered by Rs. 2.18 Lacs towards Interest expense for the year ended 31st March2017. The cumulative net loss as well as Current / Non-Current Liabilities / Provision asat 31st March 2017 would have been higher by Rs. 5.16 Lacs on account of cumulativeinterest with effect from 01-June-2014. The tax effect will be consequential. It is noncompliance of Section 186 of the Companies Act 2013 which could attract penalties.
Directors Comment: Short-Term Funding by Global IT Options Limited- Para(vi): In view of restriction imposed by the Hon'ble High Court of Delhi on the operationsof bank accounts since 2006 assistance of Rs. 22.84 lacs has been taken to meet theessential expenses and obligations from Global IT Options Limited. The Company being sickand as the scheme of arrangement pending before the Court does not provide payment of anyinterest to creditors the subsidiary company has given this amount without interest andelement of interest and its payment will be decided once the scheme is approved andliquidity position improves.
VII. Pursuant to sub-section 5 of section 203 Companies Act 2013 read with Rule 8of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 everylisted company is required to appoint a Whole Time Company Secretary non compliance ofwhich the company shall be punishable with fine which shall not be less than one lakhrupees but which may extend to five lakh rupees. During the year ended March 31st 2017the Company was in contravention of the aforesaid provision. As explained to usthe management has made various attempts to appoint a Whole Time Company Secretaryhowever was unable to appoint Whole Time Company Secretary in the absence of suitablecandidate. The Company has made relevant disclosures in the Board of Directors meetingregarding this issue. It is non compliance of Section 203 of Companies Act 2013 whichcould attract penalties. Presently it is not feasible to determine the financial impact onthe financial.
Directors Comment: Appointment of Whole-Time Company Secretary- Para(vii): The Company has appointed Whole Time Company Secretary Ms. Srishti Singh on 22ndMay 2017 pursuant to the provisions of Section 203 (1) (ii) of the Companies Act 2013read with Rule 8A of Companies (Appointment and Remuneration of Managerial Personnel)Rules 2014. Thus it has already complied with the requirements.
VIII. Pursuant to section 149 of Companies Act 2013 read with rule 3 of Companies(Appointment and Qualification of Directors) Rules 2014 every listed company is requiredto appoint at least one Woman Director. During the year ended March 31st 2016 theCompany was in contravention of the aforesaid provision as no woman director hasbeen appointed. It is non compliance of Section 149 of Companies Act 2013. PresentlySection 149(1) of the Companies Act 2013 is silent on the component of penalty. SEBIguidelines prescribed penalties for the non compliance which are Rs. 50000 from1-April-2015 to 30th June2015 and thereafter Rs. 1000 per day for next 01-July-2015 to30-Sep-2015 and thereafter from 01-Oct-2015 onwards Rs. 5000 per day. With effect from6-October 2016 woman director has been appointed by the Company. Total estimatedpenalty/fine comes to Rs. 16.85 Lacs (P.Y RS.10.50 Lacs) till date of appointment of womendirector (i.e. 5th October 2016). Had provision been provided for in the financialstatements the net profit before tax for the year ended 31st March 2017 would have beenlower by Rs 6.35 Lacs and net profit after tax would have been lowered by Rs. 5.05 Lacs.The cumulative net loss as well as Current/Non Current Liability/Provisions as at 31stMarch 2017 would have been higher by Rs.15.55Lacs. The tax effect would be consequential.
Directors Comment: Appointment of Woman Director- Para (viii): TheCompany had appointed Ms. Richa Kalra (DIN: 07632571) on 6th October 2016 as NonExecutive Independent Director pursuant to the provisions of Section 149 (4) of CompaniesAct 2013 read with Rule
3 of Companies (Appointment and Qualification of Directors) Rules 2014. Thus it hasalready complied with the requirements.
IX. As per the Guidance Note on Accounting for credit available in respect ofMinimum Alternative Tax MAT Credit is an asset to be recognized in the FinancialStatement when it is Probable that the future economic benefits associatedwith it will flow to the enterprise and asset has a cost or value that can be measuredreliably. In the previous periods the company has already recorded MAT Credit Entitlementof Rs 28.52 Lacs in the books of accounts. Considering that the matter is underjurisdiction of Delhi High Court for many years and the company as described in point no(i) of Basis of Qualification and Company is not allowed to carry on its operations exceptthe realization of old debts and permitted payments there is no virtual certainty thatfuture economic benefit would flow to company. Considering this we are of opinion thatsuch MAT Credit Entitlement of Rs 28.52 Lacs needs to be derecognized.
Had MAT Credit of Rs 28.52 Lacs had been reversed in financial statements in year endedMarch 2017 the net profit after tax would have been lower by Rs 28.52 Lacs and netprofit after tax would have been lowered by Rs. 22.70 Lacs and consequently the netcumulative loss would have been higher by Rs 22.70 Lacs. In addition to non-current loansand advances would have been lowered by Rs 22.70 Lacs after considering the tax effects.
Directors Comment: MAT Credit Entitlement-Para (ix): The FreshRestructuring Scheme filed by the Company would be approved by the Hon'ble Delhi HighCourt Adequate finances and opportunities would be available in the foreseeable future toenable the Company to start operating on a profitable basis. Therefore Company can availMAT Credit in near future when it will become profitable.
X. Contingent liabilities and Other Commitments
i. Mr. Dhruv Prakash had lodged a claim of Rs 6.50 Lacs and winding up petitionagainst the company. The contingent liability arising out of this suit amounts to Rs. 6.50Lacs. There are also other cases filed in consumer civil & criminal courts and othercourts against the company for which the company is contingently liable but for which theamount is not quantifiable. Refer Note No. 22(a)
Directors Comment: Para (ix(a)) - The Company is contesting claims lodgedagainst it not acknowledged as debts including claims of Mr. Dhruv Prakash and on accountof securitization transaction and underwriting obligations. Rest of the contingentliabilities are being addressed through the Scheme.
ii. As per the Fresh Restructuring Scheme the total amount payable to PSB remainsquantified at Rs. 901.80 Lacs as on 30th June 2004 (after providing interest @10% p.acompounded quarterly from 30th September 1999 till 31st March 2000 on the principal debtas on 30.09.1997). The company has till date paid/adjusted Rs. 98.40 Lacs and the balanceof Rs. 803.40 Lacs as on 30th June 2008 is payable as per the Fresh Restructuring Schemepending before the Honble Delhi High Court. Out of Rs. 803.40 Lacs i.e. Rs. 442.68Lacs shall be payable in 6 equal yearly installments after one year from the date ofapproval of the scheme or 1st April 2006 whichever is earlier. The balance of Rs. 360.72Lacs shall be converted in equity shares at any time within 3 years of the effective dateof approval of Fresh Restructuring Scheme by Honble Delhi High Court in accordancewith applicable SEBI Guidelines for issuance of preferential allotment of the effectivedate or 1st April 2006 whichever is earlier
Prior to filing of Fresh Restructuring Scheme by company before Honble Delhi HighCourt Punjab & Sind Bank had filed a recovery suit before the Debt Recovery Tribunal(DRT) for recovery of Rs. 1217.52 Lacs against which the amount payable to them as perbooks is Rs. 803.40 Lacs. After taking effect of interim payments made to Punjab &Sind Bank till date of Rs 98.40 Lacs the claim suite of Rs 1217.52 Lacs is also reducedto Rs. 1119.12 Lacs. Since fresh restructuring scheme was not approved and madeeffective by 1st April 2006 the claim of Rs. 1119.12 Lacs filed before the Debt RecoveryTribunal could be adjudicated by Debt Recovery Tribunal. No communication has beenreceived from Punjab & Sind Bank or Debt Recovery Tribunal (DRT) regarding anyadjudication of claim.
The company contends that the dues of the Bank will be settled as per the FreshRestructuring Scheme and consequently no provision for the difference of Rs. 315.72 Lacshas been made. The company contends that in the event of default in the payment ofinterest and principal or default as per Fresh Restructuring Scheme or Fresh Restructuring
Scheme is rejected the concessions made by Punjab & Sind bank shall standwithdrawn and their claim before the Debt Recovery Tribunal of Rs. 1119.12 Lacs (aftertaking effect of payment of Rs 98.40 Lacs) will become payable upon adjudication by DebtRecovery Tribunal. Refer Note No 3.3.2 and 22(b)
The amount payable to IndusInd Bank after calculating interest up to March 312000 hadbeen quantified at Rs. 651.49 Lacs as on 30-June-2004 in accordance with the "FreshRestructuring Scheme Under Review". Out of which Fixed Deposit of Rs 74.49 Lacs hasbeen adjusted by IndusInd Bank. The balance amount of Rs. 577.00 Lacs shall be payable asper Fresh Restructuring Scheme.
Prior to filing of Fresh Restructuring Scheme by company before Honble Delhi HighCourt IndusInd Bank has filed a recovery suit before the Debt Recovery Tribunal (DRT) ofRs.
1042.42 Lacs against which the amount payable to them as per books is Rs. 577.00 Lacs.After taking effect of interim payments made to Punjab & Sind Bank till date of Rs74.49 Lacs the claim suite is also correspondingly reduced to Rs 96793133 from Rs.1042.42 Lacs. The company contends that the dues of the Bank will be settled as per theFresh Restructuring Scheme and consequently no provision for the difference of Rs. 390.93Lacs has been made. In the event that the company fails to pay the interest or principalor company default as per Fresh Restructuring Scheme or Fresh Restructuring Scheme isrejected the concessions made by IndusInd Bank will be withdrawn and the amount claimedin the Debt Recovery Tribunal amounting to Rs 967.93 Lacs (after taking effect of paymentof Rs 74.49 Lacs) would become payable upon adjudication by Debt Recovery Tribunal. ReferNote No3.3.3 and 22(c)
Directors Comment: Para (ix(b)) &(ix(c)): it is submitted that thescheme of restructuring pending before the Hon'ble Delhi High Court and repayment issueto these banks is being addressed in the scheme of arrangement with creditors . Furtherthe Hon'ble Court has stayed the suits filed in DRT by PSB &IndusInd Bank.
iii. During the year 1999 the company had received Rs. 100.00 Lacs from one of itsdebtors
i.e. Pure Drinks New Delhi Ltd. where the winding up petition proceedings was alreadyinitiated. Upon receipt of payment the Company reduced the recoverable amountaccordingly. Subsequently the Honble Punjab and Haryana Court deemed that paymentis out of turn/preferential payment made by Pure Drinks New Delhi Ltd where winding uppetition proceedings was already initiated and asked the company to deposit backthe said amount with Honble Punjab and Haryana Court. The company had filed a SLPwith the Honble Supreme Court of India which has been dismissed by them. Thereforethe company is liable to deposit the amount mentioned above which is yet to be deposited.And in view of restrictions imposed on operations of Bank A/cs by Honble DelhiHigh Court the company has filed an application to release this money for depositing thesame with Punjab & Haryana High Court which still pending to be addressed. ReferNote No. 22(d)
Directors Comment: Para (ix(d)): the Company has filed an applicationwith Hon'ble High Court of Delhi for the release of amount to be deposited in the Punjab& Haryana High Court and the same is pending.
iv. During the year ended 30th June 2011 the companys tenant had filed a claimof Rs.100.00 Lacs against the company due to damages suffered by the tenant which is stillpending under arbitration proceedings as on 31st March 2017. Refer Note No. 22(e)
Directors Comment: Para (ix (e)): There are certain disputes with thetenant and the claim of tenant is contested .
v. There is a demand of Rs. 34.59 Lacs raised by Income Tax Department for theAssessment Year 2006-07 for payment of income tax under the Income Tax Act 1961 which isdisputed by the company and pending before the appropriate authorities. Refer Note No.22(f)
Directors Comment: Para viii (ix (f)): the Company has filed necessaryapplication for the rectification application for the deletion of said demand however thesame is pending.
vi. There is an award passed by the arbitrator against the company in the matter of MSShoes East Limited on May 28 2012 for Rs. 51.28 Lacs i.e. the claim amount along withRs. 306.80 Lacs towards interest cost for an underwriting given by the company in the year1995 for the public issue of M/s MS Shoes East Ltd. Furthermore an incidental cost
which includes arbitration venue rent record keeping cost administrative cost andstamp paper charges amounting to Rs. 5.49 Lacs had been awarded to the company. The totalfinancial impact comes to Rs. 363.58 Lacs which has been contested by Company beforeHonble Delhi High Court. Refer Note No. 22(g)
Directors Comment: Para viii (ix(g)): Company has preferred anappeal/objections before Hon'ble High Court of Delhi in the MS Shoes East Limited matteragainst the arbitration order and the same pending adjudication.
vii. Due to dispute with the builder namely M/s NBCC Ltd. from which the company hadpurchased an office premises in the year 1995 regarding a claim of Rs. 288.30 Lacs onaccount of increase in super area and certain other expenditure which the builder i.e. M/sNBCC Ltd. had incurred and the same is pending in arbitration. Breakup of the amount of Rs288.30 Lacs mentioned supra is as follows Refer Note No. 22(h):-
|S. No. ||Description ||Amount (In Lacs) |
|1. ||Difference in super area Vs. provisional area ||229.28/- |
|2. ||Claim of property tax ||3.19/- |
|3. ||Claim of ground rent ||21.67/- |
|4. ||Allied charges ||7.83/- |
|5. ||Augmentation of Electric sub station ||1.33/- |
|6. ||Loss of profit ||20.00/- |
|7. ||Arbitration cost ||5.00/- |
|TOTAL || ||288.30/- |
Directors Comment: Para (ix (h)): Company is contesting the claim ofNBCC which is pending before arbitration under the Indian Arbitration Act.
viii. SIDBI had filed a petition for winding-up on alleged non-payment of Rs. 54.40Lacs which consist of interest overdue interest and other charges before theHonble Delhi High Court. Out of which the company has recorded Rs. 36.30 Lacs in thebooks of account. Provision for Rs. 18.10 Lacs liability on account of interest overdueinterest and other charges claimed and claimable by SIDBI has not been ascertained andprovided in the books due to waiver of interest sought under the proposed "FreshRestructuring Scheme" filed with Honble Delhi High Court. Refer Note No.22(i)
Directors Comment: Para (ix(i)): it is submitted that the scheme ofrestructuring pending before the Hon'ble Delhi High Court and repayment issue to SIDBI isbeing addressed in the scheme of arrangement with creditors.
All the other notes are self-explanatory.
B. SECRETARIAL AUDITOR
Pursuant to provision of section 204 of the Companies act 2013 read with theCompanies (Appointment and Remuneration of Managerial Personnel) Rule 2014 the Companyhas appointed M/s Latika Chawla & Associates Company Secretaries to undertakeSecretarial Audit of the Company.
The Secretarial Audit was conducted by Ms. Latika Chawla Practicing Company Secretaryand the report thereon is annexed herewith as "Annexure- D".
Qualification(s) and Directors comments on the report of Secretarial Auditor:
Observations in the report are on the basis of facts and self explanatory.
The Company had appointed M/s SVTG & Co. Chartered Accountants as InternalAuditor to carry out the Internal Audit functions. The Internal Auditor submits a"Quarterly Report" to the Audit Committee.
DETAILS IN RESPECT OF FRAUDS REPORTED BY AUDITOR
There were no instances of fraud those have been observed by the Statutory Auditorduring audit of the financial statements for the financial year 2016-17 which arerequired to be disclosed by the company in its Board Report under Section 143 (12) of theCompanies Act 2013.
PARTICULAR OF LOANS GUARANTEES OR INVESTMENTS UNDER SECTION 186 OF THE COMPANIES ACT2013
The details of loans guarantees or investments made by the company if any pursuant tothe provisions of section 186 of the Companies Act 2013can be found in the balance sheet
PARTICULAR OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES UNDER SECTION 188 OF THECOMPAIES ACT 2013
During the period under review the Company had not entered into any contract/arrangement/ transaction with any related parties which could be considered material inaccordance with the policy of the Company on materiality of related party transactions.Form AOC-2 is also enclosed as Annexure-E.
The Policy on materiality of related party transactions and dealing with related partytransactions as provided by the Board may be accesses on the Companys website www.dfslonline.com under Investor Information.
Your Directors draw attention of the members to Note 29 to the financial statementwhich sets out related party disclosures.
MATERIAL CHANGES AND COMMITMENTS IF ANY
There are no material changes or commitments noticed by the Board between the end ofFinancial Year of the company as on 31st March 2017 and the date of this Report.
DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY REGULATORS OR COURTS OR TRIBUNALSIMPACTING THE GOING CONCERN STATUS AND COMPANYS OPERATIONS IN FUTURE
The Honble High Court of Delhi in a winding up petition filed by the ReserveBank of India in the year 2006 has restricted the Company to operate its bank accounts.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION & FOREIGN EXCHANGE EARNINGS ANDOUT-GO
The provisions of Section 134(3)(m) of the Companies Act 2013 are not applicable toyour Company since your Company being engaged in financing business does not have anyactivity relating to conservation of energy neither does it undertake any Research andDevelopment Activity or derive any benefit out of it. No effort made towards technologyabsorption. There was no foreign exchange inflow or outflow during the year under review.
The provisions of SEBI Regulations for formation of Risk Management Committee are notapplicable to the Company. However as per section 134 (3) (n) of Companies Act 2013 thecompany regularly maintains a proper check in normal course of its business regarding riskmanagement. Currently the company does not identify any element of risk which maythreaten the existence of the company.
CORPORATE SOCIAL RESPONSIBILITY INITIATIVES
The company does not fall under the criteria of net worth turnover or profit forapplicability of Corporate Social Responsibility (CSR) provisions as per Section 135 ofthe Companies Act 2013 hence the same are not applicable to the company for the periodunder review.
VIGIL MECHANISM / WHISTLE BLOWER POLICY
As per Regulation 22 of the SEBI Regulations 2015 in order to ensure that theactivities of the Company & its employees are conducted in a fair & transparentmanner by adoption of highest standards of professionalism honesty integrity and ethicalbehavior the company has adopted a vigil mechanism policy. This policy is explained in"Corporate Governance Report" and is also posted on website of the company.
PREVENTION OF SEXUAL HARASSMENT AT WORKPLACE
As per the requirement of "The Sexual Harassment of Women at Workplace(Prevention Prohibition &Redressal) Act 2013" and Rules made thereunder yourCompany has constituted Internal Complaints Committee (ICC) at its workplaces.
CORPORATE GOVERNANCE REPORT
As per Reg. 34 of SEBI Regulation 2015 to be read with Part A of Schedule V of thesaid regulations a separate section on corporate governance practices followed by thecompany together with the certificate from the Practicing Company Secretary confirmingcompliance forms an integral part of this Report.
The relationship with employees continues to be harmonious. The company alwaysconsiders its human resource as its most valuable asset. Imparting adequate andspecialized training to its employees is ongoing exercise in the company.
INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
The Company has a robust and comprehensive Internal Financial Control systemcommensurate with the size scale and complexity of its operation. The system encompassesthe major processes to ensure reliability of financial reporting compliance withpolicies procedures laws and regulations safeguarding of assets and economical andefficient use of resources.
The Company has performed an evaluation and made an assessment of the adequacy and theeffectiveness of the Companys Internal Financial Control System. The StatutoryAuditors of the Company have also reviewed the Internal Financial Control systemimplemented by the Company on the financial reporting and in their opinion the Companyhas in all material respects adequate Internal Financial Control system over FinancialReporting and such Controls over Financial Reporting were operating effectively as on31stMarch 2017 based on the internal control over financial reporting criteriaestablished by the Company.
The policies and procedures adopted by the Company ensures the orderly and efficientconduct of its business and adherence to the companys policies prevention anddetection of frauds and errors accuracy & completeness of the records and the timelypreparation of reliable financial information.
The Internal auditors continuously monitor the efficacy of internal controls with theobjective of providing to the Audit Committee and the Board an independent objective andreasonable assurance on the adequacy and effectiveness of the organizations riskmanagement with regard to the internal control framework.
Audit committee meets regularly to review reports submitted by the Internal Auditors.The Audit Committee also meet the Companys Statutory Auditors to ascertain theirviews on the financial statements including the financial reporting system and complianceto accounting policies and procedures followed by the Company.
The shares of the Company are presently listed at BSE Limited National Stock Exchangeof India Limited and The Calcutta Stock Exchange Limited.
All statutory dues including Annual Listing Fees for the Financial Year 2017-18 havebeen paid by the Company except the fees of The Calcutta Stock Exchange Limited.
Your Directors hereby place on record their appreciation for the services rendered byexecutives staff and other workers of the Company for their hard work dedication andcommitment. During the year under review relations between the Employees and theManagement continued to remain cordial.
CODE OF CONDUCT
The Board of Directors has laid down the code of conduct for all Board Members andmembers of the Senior Management of the Company. Additionally all Independent Directorsof the company shall be bound by duties of Independent Directors as set out in CompaniesAct 2013 to be read with SEBI Listing Regulations 2015.
All Board Members Key Managerial Personnel and Senior Management Personnel haveaffirmed compliance with the Code of Conduct.
PARTICULARS OF EMPLOYEES
The company has one Executive Director and remuneration paid to him is disclosed inMGT-9.
None of the employees of your Company is in receipt of remuneration requiringdisclosure pursuant to the provisions of Section 197 read with the Companies (Appointmentand Remuneration of Managerial Personnel) Rules 2014;
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 of ManagerialPersonnel) Rules 2014 is annexed as Annexure - C and forms an integral part of thisReport.
Further no sitting fee has been paid to any director during the year.
The particulars of the employees who are covered by the provisions contained in Rule5(2) and rule 5(3) of Companies (Appointment and Remuneration of Managerial Personnel)Rules 2014 are:
a) Employed throughout the year As per Annexure-C
a) Employed for part of the year As per Annexure-C
DIRECTORS RESPONSIBILITY STATEMENT
In terms of Section 134(3) of the Companies Act 2013 the Directors would like tostate as follows:
(a) In the preparation of the Annual Accounts the applicable accounting standards havebeen followed along with proper explanation relating to material departures;
(b) the Directors had selected such accounting policies and applied them consistentlyand made judgments & estimates that are reasonable and prudent so as to give a true& fair view of the state of affairs of the company at the end of the financial yearand of the profit & loss of the Company for that period ;
(c) The Directors had taken proper & sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of this act for safeguardingthe assets of the company and for preventing & detecting fraud & 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 such controls are adequate and are operating effectively;
(f) The Directors had devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.
Your Directors would like to express their sincere appreciation for assistance andco-operation received from the various stake holders including Financial InstitutionsBanks Governmental authorities and other business associates who have extended theirvaluable support and encouragement during the year under review.
Your Directors take the opportunity to place on record their deep appreciation of thecommitted services rendered by the employees at all levels of the Company who havecontributed significantly towards Companys performance and for enhancing itsinherent strength. Your Directors also acknowledge with gratitude the encouragement andsupport extended by our valued stakeholders.
| ||By Order of the Board of Directors |
| ||For DCM Financial Services Limited |
| || || |
| ||Surender Kumar ||Richa Kalra |
|Date: 25.10.2017 ||(DIN: 02188166) ||(DIN: 07632571) |
|Place: Delhi ||Whole Time Director ||Director |