Frontline Securities Ltd.
|BSE: 533213||Sector: Financials|
|NSE: N.A.||ISIN Code: INE773B01020|
|BSE 13:05 | 23 Apr||38.00||
|NSE 05:30 | 01 Jan||Frontline Securities Ltd|
Frontline Securities Ltd. (FRONTLINESEC) - Director Report
Company director report
The Directors of your Company take pleasure in presenting this TwentyFourth Annual Report along with the Audited Financial Statements for the financial yearended March 31st 2018.
The financial performance of the Company for the year ended March31st 2018 is summarized below:
REVIEW OF OPERATIONS
During the year under review the Company had achieved a Gross Incomeof Rs. 1296.07 Lakhs as against Rs 560.00 Lakhs in the previous year. The profit beforetax stands at Rs.1161.92 Lakhs as against Rs.491.65 Lakhs in the previous year.
The improvement in the profitability of the Company had been due toimprovement in Indian Stock Market. During the year under review NIFTY grew from 9220.60as on 1st April 2017 to 10113.70 as on 31st March 2018. Due to this the investmentgave better returns during current year leading to capital gains of Rs. 860.65 lakhsagainst capital gains of Rs. 419.61 during the financial year 2016-17. Besides thebusiness of Mutual Fund distribution has grown substantially leading to commission incomegrowth to Rs. 309.52 lakhs against Rs. 22.87 lakhs during the financial year 2016-17.
STATE OF COMPANY AFFAIRS
During the year under review the Company operates in one geographicalsegment i.e. India & has identified two business segments i.e. Segment-I which isConsultancy Commission & Brokerage and Segment-II Investments in Bonds Fixeddeposits & Loan & Advances.
The various steps taken by the Government in the last 3 years havecreated a better business environment and barring unforeseen circumstances we expect abetter capital market in coming years which will improve Company's performances. Besidesthe Company has started adding new customers to the business of Mutual Fund Distribution.However the price of crude oil is increasing in the current period. Besides the USinterest Rate is also increasing. Due to global strategic situations increase in crudeoil prices US interest rates and their economy Indian Stock market may remain volatileduring the current year (i.e. 2018-19). Hence the income from investments may remainlittle subdued/uncertain. However the business of Mutual Fund Distribution is given morestress we expect to do well in this regard during the current year.
MATERIAL EVENTS OCCURING BETWEEN THE END OF FINANCIAL YEAR AND DATE OFREPORT
The Board of Directors has recommended the sub-division of equityshares of the Company in its Board Meeting held on 28th May 2018 from Rs. 10/- (Rupee TenOnly) per equity share to Rs. 5/- (Rupees Five Only) per equity share subject to approvalof Members at ensuing Annual General Meeting.
The Company has complied with the Regulations of the Reserve Bank ofIndia as on 31st March 2018 as are applicable to it as a Non-Banking Financial Company.
The Company has not accepted any public deposits during the yearwithin the meaning of Section 73 of the Companies Act 2013 read with Companies(Acceptance of Deposits) Rules 2014 and Section 2 (i) (xii) of the Non-Banking FinancialCompanies Acceptance of Public Deposits (Reserve Bank) Directions 1998.
There was no unclaimed deposit or overdue deposit with the Company ason 31.03.2018.
As per section 45IC of RBI Act 1934 the Company has transferred Rs.199.28 Lakhs in RBI reserve fund i.e. aggregating of 20% of its net profit.
Considering profits during the current year the Board has recommendeda final dividend @ 5 % (i.e. Rs. 0.5 per Equity Share after Buy Back of the Company) forthe financial year ended 31st March 2018.
LISTING OF EQUITY SHARES
The equity shares of the Company are listed on the Bombay StockExchange Limited Phiroze Jeejeebhoy Towers Dalal Street Mumbai-400001. The Listing Feesfor the financial year under review has been paid by the Company.
During the year under review the Company has neither issued Shareswith differential voting rights nor granted stock option and Sweat Equity Shares.
BUY BACK OF SHARES
The Board of Directors at its meeting on 20th October 2017 hasapproved a proposal for the company to Buyback upto 1277866 fully paid up equity sharesof face value Rs. 10/- each from the eligible shareholders of the company for an amountnot exceeding Rs.79227692/-. The Shareholders of the Company approved the proposal ofBuyback of equity shares through postal ballot that concluded on 8th December 2017. Sincethe Buy Back offer was undersubscribed the Company has bought back and extinguished1258843 Equity shares in February 2017. The Buyback was offered to all shareholders ason record date 22nd December 2017 on a proportionate basis through tender offer route inaccordance with the provisions of the SEBI ( Buy back of Securities ) Regulations 1998and Companies Act 2013. The Company has utilized a sum of Rs. 23754125/- from itsSecurity Premium Account to the extent available and Rs. 54294141 /- from its Profit& Loss Account to pay Rs 78048266/- to its shareholder for the Buy Back of Shares.
The Board of the Company is structured in accordance with therequirements of Companies Act 2013 and the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015. There is adequate number of Independent Directors on theBoard of the Company.
The Details of Board Composition & its Meetings are given in theCorporate Governance Report.
In accordance with the provisions of the Companies Act 2013 and theArticles of Association of the Company Mrs. Sarabjeet Kaur Director of the Companyretires by rotation at the ensuing Annual General Meeting and being eligible has offeredherself for re-appointment.
Further the Board has re-appointed Mr. Gauri Shanker Pandey as aWhole time Director of the Company for the period of five years w.e.f 16th March 2018subject to approval of Members in the ensuing Annual General Meeting.
Brief resume and other details of the Directors being re-appointed asrequired under the Securities Exchange Board of India (Listing Obligations And DisclosuresRequirement) Regulations 2015 are provided in the Explanatory Statement annexed to theNotice.
During the year under review Nine (9) Meetings were convened and helddetails of which are provided in the Report on Corporate Governance.
KEY MANEGERIAL PERSONNEL
Presently Mr. Mayank Agarwal Chartered Accountant is the ChiefFinancial Officer of the Company. He was appointed as the Chief Financial Officer w.e.f21.10.2017 due to the resignation of Ms. Swarna Gowri S. on 21.10.2017.
DECLARATION FROM INDEPENDENT DIRECTORS
The Company has received declaration from Dr. Charanjeet Singh BediMr. Baljit Singh Bedi Mr.Arun K. Jain and Mr. Atul K. Jain the Independent Directors ofthe Company confirming that they meet with the criteria of Independence as prescribedunder the Companies Act 2013 and the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015.
POLICY ON APPOINTMENT & REMUNERATION
In respect of Nomination and Remuneration of Directors the Company hasadopted the following policies:
a) Policy for selection of Directors and determining Director'sindependence: and
b) Remuneration Policy for Directors Key Managerial Personnel andother employees.
The above mentioned policies of the Company are attached herewithmarked as Annexure I and Annexure II.
FAMILIARISATION PROGRAMME FOR INDEPENDENT DIRECTORS
The Company has put in place a familiarization program for theIndependent Directors their roles rights responsibilities in the Company and relatedmatters. Quarterly updates on relevant statutory matters are also informed to Directors.
Details of familiarization program are available on the website of theCompany at the link http://fslindia.com/ pdf/FAMILIARIZATION+PROGRAMMES.pdf.
Pursuant to the provisions of Companies Act 2013 and SecuritiesExchange Board of India (Listing Obligations and Disclosure Requirements) Regulations2015 the Board has carried out annual performance evaluation of its own performance itscommittees and all the Directors individually.
The evaluation of Non - Independent Directors Chairman and the Boardas a whole was done at a separate meeting by the Independent Directors.
DIRECTORS RESPONSIBILITY STATEMENT
Your Directors makes the following statement in terms of Section 134(3)of Companies Act 2013:
a. In the preparation of the annual accounts for the year ended March31st 2018 the applicable accounting standards read with requirements set out underSchedule III to the Act have been followed and there are no material departures from thesame;
b. The Directors have selected such accounting policies and appliedthem consistently and made judgments and estimates that are reasonable and prudent so asto give a true and fair view of the state of affairs of the Company as at March 31st 2018and of the profit of the Company for the year ended on that date;
c. The Directors have taken proper and sufficient care for themaintenance of adequate accounting records in accordance with the provisions of the Actfor safeguarding the assets of the Company and for preventing and detecting fraud andother irregularities;
d. The Directors have prepared the annual accounts on a goingconcern' basis;
e. The Directors have laid down internal financial controls to befollowed by the Company and that such internal financial controls are adequate and areoperating effectively; and
f. The Directors have devised proper systems to ensure compliance withthe provisions of all applicable laws and that such systems are adequate and operatingeffectively.
PARTICULARS OF LOANS GIVEN AND INVESTMENTS MADE
Being a NBFC (Non-Banking Financial Company) the Company is exemptedunder Section 186(11) of the Companies Act 2013.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGEEARNINGS AND OUTGO
A) Conservation of Energy & Technology Absorption
Particulars under Companies (Accounts) Rules 2014 on conservation ofenergy Technology absorption are not applicable to your Company. Accordingly nodisclosure has been made in this regard.
B) Foreign Exchange Earnings and Outgo
The company has neither earned nor spent any foreign exchange duringthe year under review. RELATED PARTY TRANSACTIONS
All contracts / arrangements / transactions entered by the Companyduring the financial year under review with related party(s) were in the ordinary courseof business and on an arm's length basis. During the year the Company had not enteredinto any contract / arrangement / transaction with related parties which could beconsidered material in accordance with the policy of the Company on materiality of relatedparty transactions. The Policy on materiality of related party transactions and dealingwith related party transactions as approved by the Board may be accessed on the Company'swebsite at the link: http:// fslindia.com/pdf/RPT.pdf
Particulars of contracts or arrangement with related parties during theyear under review are provided in AOC-2 as Annexure III.>
CORPORATE SOCIAL RESPONSIBILITY (CSR)
In terms of Section 135 and Schedule VII of the Companies Act 2013the Company has a Corporate Social Responsibility (CSR) Committee which comprises totalthree members of which two Members including Chairman of the Committee are IndependentDirectors. Details of Committee & its meeting are given in Report on CorporateGovernance.
During the year under review the Company was required to spend Rs.9.73 lakhs (2% of Average net profits of last 3 financial years) on CSR Activities.
The Company shall utilize the available funds on long term projectssuch as Education Old Age Homes Orphanage etc. (as specified under Schedule VII ofCompanies Act 2013 for CSR activities). The Company is under the process of finding thesuitable options and finalization of the implementation plan for the same.
In view of the above the Company is preserving the funds so that as andwhen the adequate and appropriate option is available to the Company it will utilize thefunds for CSR activities.Hence the Company has decided not to spend the amount on CSRduring the year under review. However the Company has been compliant with the provisionsof Section 135 of the Companies Act 2013 in the past.
The CSR Policy may be accessed on the Company's website at the link:http://www.fslindia.com/pdf/ csr%201.pdf
The Annual report on CSR activities is annexed herewith as Annexure IV.
AUDITORS AND AUDITORS' REPORT
i) Statutory Auditors:
Pursuant to section 139 of the Companies Act 2013 the Board ofDirectors of the Company has appointed M/s Walecha Inder& Associates CharteredAccountants (FRN: 014205N) on 17.05.2017 as a Statutory Auditor for a term of Five Yearsto hold the office from the conclusion of the 23rd Annual General Meeting held in theFinancial year 2016-17 till the conclusion of the 28th Annual General Meeting to be heldfor the Financial year 2021-22 subject to ratification at every Annual General Meeting.
Further they have confirmed their eligibility to the effect that theirre-appointment if made would be within the prescribed limits under the Act and thatthey are not disqualified for the re-appointment.
The notes on financial statement referred to in the Auditor's reportare self-explanatory and do not call for any further comments. The Auditor's Report doesnot contain any qualification reservation and adverse remark.
During the year under Review the Auditor had not reported any matterunder Section 143 (12) of the Companies Act 2013; therefore no detail is required to bedisclosed under Section 134 (3) of the Companies Act 2013.
ii) Secretarial Audit:
The Board has re-appointed M/s Jain Aarti & Associates PracticingCompany Secretary to conduct Secretarial Audit for the financial year 2017-18. TheSecretarial Audit Report for the financial year ended March 31 2018 is annexed herewithmarked as Annexure V to this Report. The Secretarial Audit Report does not contain anyqualification reservation or adverse remark.
EXTRACT OF ANNUAL RETURN
Extract of Annual Return of the Company is annexed herewith in MGT-9 asAnnexure VI to this Report.
It may also be accessed on the website of the Company at
INTERNAL FINANCIAL CONTROLS
The Company has in place adequate internal financial controls withreference to financial statements. During the year such controls were tested and noreportable material weakness in the design or operations were observed.
VIGIL MECHANISM &WHISTLE BLOWER POLICY
The Company believes in conducting its affairs in fair &transparent manner by adopting highest standards of professionalism honesty integrity& ethical behavior. The Company is committed to develop a culture where it is safe forall employees to raise concern about any wrongful conduct. For this the Company hasestablished a Vigil Mechanism for directors and employees to report genuine concerns.
As per the Company's policy any personnel can approach the AuditCommittee. However no such instance has been reported during the year under review.
The Vigil Mechanism Policy may be accessed on the website of theCompany at http://www.fslindia.com/pdf/FSL_VIGIL%20MECHANISM%20AND%20whistle-blower-policy.pdf
SIGNIFICANT AND MATERIAL ORDERS
There are no orders passed by the any regulatory authorities or courtsor tribunal which would impact the going concern status of the Company and its operationin 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 asstrategic financial credit market liquidity security property IT legalregulatory reputation and other risks have been identified and assessed and there is anadequate risk management infrastructure in place capable of addressing those risks.
The risk management policy of the Company may be accessed on website ofthe Company under the http://www.fslindia.com/pdf/RISK%20MNGT.pdf link.
The Audit Committee comprises of four members of which all membersincluding Chairman of the committee are Independent Directors. During the year sixmeetings were convened and held. Details of the same are provided in Report on CorporateGovernance.
The Company has taken adequate steps to ensure compliances with theprovision of corporate governance as prescribed under SEBI (Listing Obligation andDisclosures Requirements) Regulations 2015.
A separate section on Corporate Governance Practices followed by theCompany together with Certificate from Company's Auditor & CFO confirming thecompliance of Corporate Governance forms an integral part of this Annual Report as PerRegulation 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 tobuild a work culture that promotes dignity of all employees. As required under theprovisions of sexual harassment of Women at Workplace (Prevention Prohibition andRedressal) Act 2013 and Rules framed there under the Company has implemented a policy onprevention prohibition and redressal of sexual harassment at workplace. All womenpermanent temporary or contractual including those of service provider are covered underthis policy.
Internal Complaints Committee (ICC) has been set up to redresscomplaints received regarding sexual harassment. There were No Complaints received fromany employee during the financial year 2017-18 and hence no complaint is outstanding as on31.03.2018 for redressal.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
Management Discussion and Analysis comprising an overview of thefinancial results operations/performances and future aspects form part of this annualreport.
PARTICULARS OF EMPLOYEE
The information required under Section 197 of the Act read with rule5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014are given below:
a. The ratio of the remuneration of each director to the medianremuneration of the employees of the Company for the financial year:
b. The percentage increase in remuneration of each director chiefexecutive officer chief financial officer company secretary in the Financial Year:
*There was no increase in salary. However revision of salary was done.
**Resigned as Chief Financial Officer w.e.f 21.10.2017 *** Appointed asChief Financial Officer w.e.f 21.10.2017
c. The percentage increase in the median remuneration of employees inthe financial year : 5.25%
d. The number of permanent employees on the rolls of Company: 12 (as on31st March 2018).
e. Average percentile increase already made in the salaries ofemployees other than the managerial personnel in the last financial year and itscomparison with the percentile increase in the managerial remuneration and justificationthereof and point out if there are any exceptional circumstances for increase in themanagerial remuneration:
The percentage increase in the median remuneration of employees in thefinancial year is 5.25% whereas increase in the managerial remuneration for the year was5.74%
f. Top Ten Employees in terms of Remuneration drawn as on 31.03.2018:
Company's Business Model does not require large no. of people. TotalNo. of employees as on 31.03.2018 is 12 which includes Senior Level Middle Level andlower level. Details of all senior level employees drawing salary are given below:
Note: #Appointed as Chief Financial Officer on 21.10.2017
1. None of the above mentioned employee is a relative of any directoror manger of the Company.
2. The above mentioned employees constitute the KMP's of the Companybesides this the other employees receives nominal salary depending upon their workprofile.
g. No employee who was employed throughout the Financial Year 17-18 wasin receipt of remuneration which in aggregate was of amount not less than Rupees OneCrore and Two lakh.
h. No employee who was employed for a part of the Financial Year 17-18was in receipt of remuneration for any part thereof which in aggregate was of amount notless than Rupees Eighty Lakhs and Fifty Thousand.
i. No employee who was employed throughout the Financial Year 17-18 orpart thereof was in receipt of remuneration which in aggregate or as the case may be wasat a rate which in aggregate was in excess of that drawn by the whole time director(s) andwho held by himself or along with his spouse and dependent children not less than 2percent of the Equity shares of the Company.
j. Affirmation that the remuneration is as per the remuneration policyof the Company: the Company hereby affirms that remuneration is paid as per theremuneration policy of the Company.
Your Directors express their sincere thanks and gratitude to theCompany's esteemed Shareholders Clients
Associates Financial Institutions Bankers the Securities andExchange Board of India Bombay Stock
Exchange Limited Reserve Bank of India and other GovernmentDepartments for their valuable contribution and whole hearted support.
We also acknowledge the sincere and dedicated efforts put in by theemployees of the Company at all levels.
For On behalf of the Board of Directors FRONTLINE SECURITIES LIMITED
Place:Noida Date: 28.05.2018