The Directors of your Company take pleasure in presenting this Twenty Fifth (25th)Annual Report along with the Audited Financial Statements for the financial year endedMarch 31st 2019.
The financial performance of the Company for the year ended March 31st 2019 issummarized below:
(Rs In Lakhs)
|Particulars ||2018-19 ||2017-18 |
|Gross Income ||597.24 ||1296.07 |
|Profit before Depreciation and Amortization ||456.46 ||1194.19 |
|Expenses Finance Costs and Tax Expenses || || |
|Finance Costs ||(13.56) ||(11.34) |
|Depreciation & Amortization expenses ||(35.54) ||(20.93) |
|Profit before exceptional and extra-ordinary items ||40736 ||1161.92 |
|Add: Extra-ordinary Items ||198.65 ||- |
|Profit before Tax ||606.01 ||1161.92 |
|Current Tax ||(178.31) ||(231.02) |
|MAT Credit ||- ||65.09 |
|Deferred Tax ||26.94 ||0.41 |
|Profit for the year ||454.64 ||996.40 |
|Add: Balance in Profit & Loss Account ||2381.99 ||2163.69 |
|Total ||2836.63 ||3160.09 |
|Less: Appropriation: || || |
|Buy Back of Shares ||- ||542.94 |
|Transferred to RBI Reserve ||90.93 ||199.28 |
|Proposed Dividend on equity shares ||29.64 ||29.64 |
|Proposed Dividend Tax ||6.09 ||6.09 |
|Contingency Provision against Standard Assets ||0.33 ||0.15 |
|Excess Provision made in the Previous Year ||(0.29) ||- |
|Closing Balance ||2710.01 ||2381.99 |
REVIEW OF OPERATIONS
During the year under review the capital market has not performed well specificallythe Mid Cap and Small Cap stocks. While the Nifty has grown by 13.83% and the Large CapStocks pack has done well in general there has been downfall in the Mid Cap and Small Capindex by 4.39% and 15.85% respectively.
During the year under review the major investments of the company were in mid-caps anddue to their underperformance the company could not get appropriate returns. During theyear under review the company has incurred a net Capital Loss of Rs. 12.23 lakhs asagainst Capital Gains of Rs. 860.65 Lakhs in the last year. However in comparison to thelast year there has been enhancement in the commission and brokerage income in the currentyear against previous year income. The same has increased from Rs. 309.52 lakhs to Rs.505.05 lakhs during the year under review.
STATE OF COMPANY AFFAIRS
During the year under review the Company operated in one geographical segment i.e.India & has identified three business segments i.e. Segment-1 which is ConsultancyCommission & Brokerage Segment-II Investments in Bonds Fixed deposits & Loan& Advances and Segment-Ill Renting and co-work
During the year under review due to general elections there has been an environmentof political uncertainties and turbulence in the country. However with a single partygetting majority we hope to see political stability in the country for the next fiveyears. Barring unforeseen circumstances we expect market to perform better in the comingyears.
Our mutual fund advisory business is stable and growing and we expect it to givereasonable growth in the coming years (mutual fund investments are dependent on marketconditions and hence the growth in Mutual Fund brokerage is also linked with the growthof the capital market to a large extent).
Although there has been global turbulence in terms of trade war between US and Chinaissues associated with BEXIT we expect market to perform well in coming years andaccordingly the company is expecting to do well in times to come. We anticipate that incoming times these issues will get amicably resolved. Hence barring unforeseencircumstances we expect market to perform well and accordingly the Company is expected todo better in its performance in coming years.
MATERIAL EVENTS OCCURING BETWEEN THE END OF FINANCIAL YEAR AND DATE OF REPORT
The Board of Directors at its Board Meeting held on 26th March 2019 has recommendedthe Buyback of 1890027 (Eighteen Lakhs Ninety thousand Twenty Seven) Equity Shareshaving Face Value of Rs. 5/- (Rupees Five) each. The Shareholders of the Company haveapproved the proposal of Buy Back of equity shares through Postal ballot that concluded onTuesday 7th May 2019.
The Board of Directors at its Board Meeting held on 24th May 2019 has discussed theintention of resignation of Mr. CA Mayank Agarwal (ICAI Membership No. 544992) from thepost of Chief Financial Officer of the Company. The Board deliberated on the matter anddecided that he may be relieved from his duties w.e.f 31st May 2019.
The Company has complied with the Regulations of the Reserve Bank of India as on 31stMarch 2019 as arc applicable to it as a Non-Banking Financial Company.
The Company has not accepted any public deposits during the year within the meaning ofSection 73 of the Companies Act 2013 read with Companies (Acceptance of Deposits) Rules2014 and Section 2 (i) (xii) of the Non-Banking Financial Companies Acceptance of PublicDeposits (Reserve Bank)Directions 1998.
There was no unclaimed deposit or overdue deposit with the Company as on 31.03.2019.
CHANGE IN NATURE OF BUSINESS
There is no change in the nature of business of the Company except that it has addedco-work activities as business during the current year under review.
As per section 45IC of RBI Act 1934 the Company has transferred Rs.90.93 Lakhs in RBIreserve fund i.e. aggregating of 20% of its net profit.
Considering profits during the current year the Board has recommended a final dividend@5 % i.e. Rs. 0.25 per Equity Share of Rs. 5/- (Rupees Five) each for the financial yearended 31 st March 2019.
LISTING OF EQUITY SHARES
The equity shares of the Company are listed on the Bombay Stock Exchange LimitedPhirozc Jeejeebhoy Towers Dalai Street Mumbai-400001. The Listing Fees for the financialyear under review has been paid by the Company.
The paid-up equity shares capital outstanding as on 31st March 2019 was Rs.59278460 divided into 11855692 (One Crore Eighteen Lakhs Fifty Five Thousand SixHundred Ninety Two) Equity Shares of Rs. 5/- (Five)each.
During the year under review the Company has neither issued Shares with differentialvoting rights nor granted stock option and Sweat Equity Shares.
Further also the Shareholders of the Company have approved the sub-division of eachequity share having Face Value of Rs. 10/- each into 2 Equity Shares having Face Value ofRs. 5/- each with effect from 24th October
2018 which has increased the number of shares.
BUY BACK OF SHARES
The Board of Directors at their Meeting held on Tuesday March 26th 2019 hasrecommended the Buy Back of 1890027 Equity Shares of Rs. 5/- (Five) eachfrom the eligible shareholders of the company offer price being Rs. 40/- (Rupees Forty)for an amount not exceeding Rs. 75601080/-. The Shareholders of the Company hasapproved the proposal of Buy Back of equity shares through Postal ballot that concluded onTuesday 7th May 2019.
In accordance of section 152 of companies act 2013 henceforth the term of office ofMs. Richa Arora shall be retire by rotation.
The Board of the Company is structured in accordance with the requirements of CompaniesAct 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations2015. There is an adequate number of Independent Directors on the Board of the Company.
The Details of Board Composition & its Meetings are given in the CorporateGovernance Report.
In accordance with the provisions of the Companies Act 2013 and the Articles ofAssociation of the Company Mr. Rakesh K. Jain Director having DIN: 00050524 of theCompany retires by rotation at the ensuing Annual General Meeting and being eligible hasoffered himself for re-appointment.
Further the Board at its meeting held on May 24th 2019 has recommended there-appointment of Mr. Arun K. Jain Mr. Atul K. Jain Mr. Baljit Singh Bedi and Dr.Charanjeet Singh Bedi as an Independent Director of the Company for the second term offive years subject to approval of Members in the ensuing Annual General Meeting.
Brief resume and other details of the Directors being re-appointed as required underthe Securities Exchange Board of India (Listing Obligations and Disclosures Requirement)Regulations 2015 and Secretarial Standard- 2 (SS-2) issued by The Institute of CompanySecretaries of India (ICSI) arc provided in the Explanatory Statement annexed to theNotice.
All the Independent Directors of the Company have given declaration confirming thatthey meet the criteria of Independence as prescribed both under the Act and Securities& Exchange Board of India (Listing Obligations and Disclosure Requirement)Regulations 2015
None of the Directors are related to each other within the meaning of the term"relative" as per Section 2(77) of the Act
During the year under review Nine (9) Meetings of the board were convened and helddetails of which are provided in the Report on Corporate Governance.
The Company has also received the Certificate from the Secretarial Auditor of theCompany that none of the Director of the Company arc disqualified under Section 164(2) ofthe Act.
KEY MANEGERIAL PERSONNEL
Mr. Mayank Agarwal Chartered Accountant was appointed as Chief Financial Officer ofthe Company on October 20th 2017. At the Board Meeting held on May 24th 2019 hisresignation was taken on record by the Company.
DECLARATION FROM INDEPENDENT DIRECTORS
The Company has received declaration from Dr. Charanjeet Singh Bedi Mr. Baljit SinghBedi Mr. Arun K. Jain and Mr. Atul K. Jain the Independent Directors of the Companyconfirming that they meet with the criteria of Independence as prescribed under theCompanies Act 2013 and the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015.
The Board at its meeting held on May 24th 2019 has recommended the re-appointment ofMr. Arun K. Jain Mr. Atul K. Jain Mr. Baljit Singh Bedi and Dr. Charanjeet Singh Bedi asan Independent Director of the Company for the second term of five years subject toapproval of Members in the ensuing Annual General Meeting.
POLICY ON APPOINTMENT & REMUNERATION
In respect of Nomination and Remuneration of Directors the Company has adopted thefollowing policies:
a) Policy for selection of Directors and determining Director's independence: and
b) Remuneration Policy for Directors Key Managerial Personnel and other employees.
The above mentioned policies of the Company are attached herewith marked as Annexure Iand Annexure II.
FAMILIARISATION PROGRAMME FOR INDEPENDENT DIRECTORS
The Company has put in place a familiarization program for the Independent Directorstheir roles rights responsibilities in the Company and related matters. Quarterlyupdates on relevant statutory matters arc also informed to Directors.
Details of familiarization program are available on the website of the Company at thelink http://fslindia.com/pdf/FAMILIARIZATION+PROGRAMMES.pdf.
Pursuant to the provisions of Companies Act 2013 and Securities Exchange Board ofIndia (Listing Obligations and Disclosure Requirements) Regulations 2015 the Board hascarried out annual performance evaluation of its own performance its committees and allthe Directors individually.
The evaluation of Non - Independent Directors Chairman and the Board as a whole wasdone at a separate meeting by the Independent Directors.
DIRECTORS RESPONSIBILITY STATEMENT
Your Directors makes the following statement in terms of Section 134(3) of CompaniesAct 2013:
a. In the preparation of the annual accounts for the year ended March 31 st 2019 theapplicable accounting standards read with requirements set out under Schedule III to theAct have been followed and there are no material departures from the same;
b. The Directors have selected such accounting policies and applied them consistentlyand made judgments and estimates that arc reasonable and prudent so as to give a true andfair view of the state of affairs of the Company as at March 31 st 2019 and of the profitof the Company for the year ended on that date;
c. The Directors have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;
d. The Directors have prepared the annual accounts on a 'going concern' basis;
e. The Directors have 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 have devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems arc adequate and operating effectively.
The Company's Internal Auditor have conducted periodic audit to provide reasonableassurance that the Company's established policies and procedure have been followed. TheAudit Committee constituted by the Board reviewed the Internal Controls and financialreporting issues with Internal Auditors and Statutory Auditors.
PARTICULARS OF LOANS GIVEN AND INVESTMENTS MADE
Being a NBFC (Non-Banking Financial Company) the Company is exempted under Section186(11) of the Companies Act 2013.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
A) Conservation of Energy & Technology Absorption
Particulars under Companies (Accounts) Rules 2014 on conservation of energyTechnology absorption are not applicable to your Company. Accordingly no disclosure hasbeen made in this regard.
B) Foreign Exchange Earnings and Outgo
The company has neither earned nor spent any foreign exchange during the year underreview.
RELATED PARTY TRANSACTIONS
All contracts / arrangements / transactions entered by the Company during the financialyear under review with related party(s) were in the ordinary course of business and on anarm's length basis. During the year the Company had not entered into any contract /arrangement / transaction with related parties which could be considered material inaccordance with the policy of the Company on materiality of related party transactions.The Policy on materiality of related party transactions and dealing with related partytransactions as approved by the Board may be accessed on the Company's website at thelink: http://fslindia.com/pdf/RPT.pdf
Particulars of contracts or arrangement with related parties during the year underreview are provided in AOC-2 as AnnexureIII.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
In terms of Section 135 and Schedule VII of the Companies Act 2013 the Company has aCorporate Social Responsibility (CSR) Committee which comprises total three members ofwhich two Members including Chairman of the Committee are Independent Directors. Detailsof Committee & its meeting are given in Report on Corporate Governance.
During the year under review the Company has made a contribution of Rs. 13.95 lakhs(2.04% of Average net profits of last 3 financial years) on CSR Activities.
The Annual report on CSR activities is annexed herewith as Annexure IV.
The CSR Policy may be accessed for the Company's website at the link: http://www.fslindia.com/pdf/csr%201 .pdf
AUDITORS AND AUDITORS' REPORT
1) Statutory Auditors:
There is no change in Statutory Auditors as M/s Walecha Inder & AssociatesChartered Accountants (FRN: 014205N) will continue as Statutory Auditor of the Company asappointed for a terra of five years in 23rd Annual General Meeting held on August 9th2017 till the conclusion of 28th Annual general Meeting to be held for the financial year2021 -22.
The statutory audition has specifically been asked to submit exception report in termsof para 72 of chapter XI of master direction DNBR.PD.008/03.10.119/2016-17 dated September01 2016.
The Report given by M/s Walecha Inder &Associates on the financial statements ofthe Company for the year 2018-19 is part of the Annual Report. There is no qualificationreservation or adverse remark or disclaimer in their report
The report of the Statutory Auditor on the financial statements including the relevantnotes on the account for the financial year ended 31 st March 2019 are self-explanatoryand do not call for any further comments. The Auditor's Report docs not contain anyqualification reservation and adverse remark.
During the year under Review the Auditor had not reported any matter under Section143(12) of the Companies Act 2013; therefore no detail is required to be disclosed underSection 134 (3) of the Companies Act 2013.
ii) Secretarial Audit:
The Board has re-appointed M/s Jain Aarti& Associates Practicing CompanySecretary to conduct Secretarial Audit for the financial year 2018-19. The SecretarialAudit Report for the financial year ended March 31 2019 is annexed herewith marked asAnnexure V to this Report. The Secretarial Audit Report does not contain anyqualification reservation or adverse remark.
iii) Internal Auditor:
The Board of Directors of your Company has appointed M/s VMG & Company CharteredAccountants (FRN: 024257N) as Internal Auditor pursuant to Section 138 of the Act for thefinancial year 2018-19
EXTRACT OF ANNUAL RETURN
Extract of Annual Return of the Company is annexed herewith in MGT-9 as Annexure VI tothis Report. It may also be accessed on the website of the Company athttp://www.fslindia.com/pdf/MGT_9%20new-1 -5.pdf
INTERNAL FINANCIAL CONTROLS
The Company has in place adequate internal financial controls with reference tofinancial statements. During the year such controls were tested and no reportablematerial weakness in the design or operations were observed.
VIGILMECHANISM & WHISTLE BLOWER POLICY
The Company believes in conducting its affairs in fair & transparent manner byadopting highest standards of professionalism honesty integrity & ethical behavior.The Company is committed to develop a culture where it is safe for all employees to raiseconcern about any wrongful conduct. For this the Company has established a Vigil Mechanismfor directors and employees to report genuine concerns.
As per the Company's policy any personnel can approach the Audit Committee. However nosuch instance has been reported during the year under review.
The Vigil Mechanism Policy may be accessed on the website of the Company athttp://www.fslindia.com/pdf/FSL_VIGIL%20MECHANISM%20AND%20whistle-blower-po licy.pdf
SIGNIFICANT AND MATERIAL ORDERS
There are no orders passed by the any regulatory authorities or courts or tribunalwhich would impact the going concern status of the Company and its operation in future.
The Board of Directors has constituted a Risk Management Committee for
a. evaluating the various risks impacting the Company; and
b. overseeing that all the risks that the organization faces such as strategicfinancial credit market liquidity security property IT legal regulatoryreputation and other risks have been identified and assessed and there is an adequate riskmanagement infrastructure in place capable of addressing those risks.
The risk management policy of the Company may be accessed on website of the Companyunder the http://www.fslindia.com/pdf/RISK%20MNGT.pdf link.
The Audit Committee comprises of four members of which all members including Chairmanof the committee are Independent Directors. During the year five meetings were convenedand held. Details of the same arc provided in Report on Corporate Governance.
The Company has taken adequate steps to ensure compliances with the provision ofcorporate governance as prescribed under SEBI (Listing Obligations and DisclosuresRequirements) Regulations 2015.
A separate report on Corporate Governance Practices followed by the Company along withCertificate from Company's Auditor & CFO confirming the compliance of CorporateGovernance forms an integral part of this Annual Report as Per Regulation 34 &Schedule V of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015.
SEXUAL HARASSMENT OF WOMEN AT WORKPLACE
The Company is an equal opportunity employer and consciously strives to build a workculture that promotes dignity of all employees. As required under the provisions of sexualharassment of Women at Workplace (Prevention Prohibition and Redressal) Act 2013 andRules framed there under the Company has implemented a policy on prevention prohibitionand redressal of sexual harassment at workplace. All women permanent temporary orcontractual including those of service provider are covered under this policy.
Internal Complaints Committee (ICC) has been set up to redress complaints receivedregarding sexual harassment. On 20th March 2019 meeting was held to review thecomplaints received from the employee and it was noted that No Complaints were receivedfrom any employee during the financial year 2018-19 and hence no complaint is outstandingas on 31.03.2019 for redressal.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
Management Discussion and Analysis comprising an overview of the financial resultsopcrations/performances and future aspects form part of this annual report
PARTICULARS OF EMPLOYEE
The information required under Section 197 of the Act read with rule 5 (l)of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 are givenbelow:
a. The ratio of the remuneration of each director to the median remuneration of theemployees of the Company for the financial year:
|Non-Executive Directors ||Ratio to median remuneration |
|No remuneration has been paid to Non-executive directors |
|Executive Directors ||Ratio to median remuneration |
|Gauri Shanker Pandey ||1.79 |
|Richa Arora ||1.42 |
b. The percentage increase in remuneration of each director chief executive officerchief financial officer company secretary in the Financial Year:
|Directors Chief Executive Officer Chief Financial Officer and Company Secretary ||% increase in remuneration in the financial year |
|Gauri Shanker Pandey (Whole Time Director) ||NIL* |
|Richa Arora ( Company Secretary) ||25% |
|Mayank Agarwal ( Chief Financial Officer) ||30% |
There was no increase in salary. However re-structure of salary was done.
c. The percentage increase in the median remuneration of employees in the financialyear: 4.28%
d. The number of permanent employees on the rolls of Company: 11 (as on 31 st March2019).
c. Average percentile increase already made in the salaries of employees other than themanagerial personnel in the last financial year and its comparison with the percentileincrease in the managerial remuneration and justification thereof and point out if thereare any exceptional circumstances for increase in the managerial remuneration:
The percentage increase in the median remuneration of employees in the financial yearis 1.61% whereas increase in the managerial remuneration for the year was 4.61%
f. Top Ten Employees in terms of Remuneration drawn as on 31.03.2019:
Company's Business Model docs not require large no. of people. Total No. of employeesas on 31.03.2019 is 11 which includes Senior Level Middle Level and lower level. Detailsof all senior level employees drawing salary are given below:
|Particulars ||Mr. Gauri Shanker Pandey ||Mr. Mayank Agarwal ||Ms. Richa Arora |
|Designation ||Whole Time Director ||Chief Financial Officer ||WholeTime Director & Company Secretary |
|Remuneration Received (Rs. In Lakhs ) ||7.23 ||5.62 ||5.72 |
|Nature of Employment ||Permanent ||Permanent ||Permanent |
|Qualification ||B.com ||CA & B.com ||CS & B.com (H) |
|Experience ||30 years of Experience in Human Resource and administration ||1 year of experience in the Field of Accounts taxation &Audit. ||2 years of Experience in the field of Company law SEBI Regulation & other corporate law matter. |
|Date of |
Commencement of Employment
|16.03.2013 (appointed as a Whole Time Director) Associated with the company since beginning ||21.10.2017 ||26.02.2016 |
|Age ||61 years ||26 years ||26 years |
|Previous Employment & Designation ||Dolsun Containers Private Limited Manager ||MJMJ & Associates LLP Audit Manager ||Tiwari & Mishra Chartered Accountant as an Accounts Executive |
|No. of shares held in the Company ||NIL ||NIL ||NIL |
1. None of the above mentioned employee is a relative of any director or manger of theCompany.
2. The above mentioned employees constitute the ICMP's of the Company besides thisthe other employees receives nominal salary depending upon their work profile.
g. No employee who was employed throughout the Financial Year 18-19 was in receipt ofremuneration which in aggregate was of amount not less than Rupees One Crore and Twolakh.
h. No employee who was employed for a part of the Financial Year 18-19 was in receiptof remuneration for any part thereof which in aggregate was of amount not less thanRupees Eighty Lakhs and Fifty Thousand.
i. No employee who was employed throughout the Financial Year 18-19 or part thereof wasin receipt of remuneration which in aggregate or as the case may be was at a rate whichin aggregate was in excess of that drawn by the Whole Time Directors) and who held byhimself or along with his spouse and dependent children not less than 2 percent of theEquity shares of the Company.
j. Affirmation that the remuneration is as per the remuneration policy of the Company:the Company hereby affirms that remuneration is paid as per the remuneration policy of theCompany.
Your Directors express their sincere thanks and gratitude to the Company's esteemedShareholders Clients Associates Financial Institutions Bankers the Securities andExchange Board of India Bombay Stock Exchange Limited Reserve Bank of India and otherGovernment Departments for their valuable contribution and whole hearted support.
We also acknowledge the sincere and dedicated efforts put in by the employees of theCompany at all levels.
| || |
For On behalf of the Board of Directors
| || |
FRONTLINE SECURITIES LIMITED
| ||Gauri Shanker Pandey ||Rakesh K. Jain |
|Date: 24.05.2019 ||Whole Time Director ||Chairman |
|PIace:Noida ||DIN: 00050614 ||DIN:00050524 |