To The Members
Your Directors are pleased to present the 31st Annual Report and theAudited Accounts of your
Company for the financial year ended 31st March 2018.
The Financial performance of the Company for the year is summarisedbelow:
(Rs in Lacs)
|PARTICULARS || |
Current Year Ended 31-03-2018
Previous year Ended 31-03-2017
|Total Revenue || |
|Total Expenses || |
|Profit for the Year before Tax and exceptional items || |
|-Tax Expenses (including earlier years) || |
|- Exceptional items || |
|Profit After tax and Exceptional Items || |
|Earning per Equity Shares (Before exceptional items) || || |
|EPS Basic (Rs.) || |
|EPS Diluted (Rs.) || |
|(After Exceptional Items) || || |
|EPS Basic (Rs.) || |
|EPS Diluted (Rs.) || |
In view of loss [due to the effect given in the Books of Accounts onsanction of Scheme of Arrangement between the company HB Portfolio Limited and HB EstateDevelopers Limited and their respective members and creditors] Directors of your companydo not recommend any dividend for the year ended 31st March 2018.
PERFORMANCE REVIEW & OUTLOOK
Due to the effect given in the Books of Accounts on sanction of Schemeof Arrangement between the company HB Portfolio Limited and HB Estate Developers Limitedand their respective members and creditors the financial figures reported for the yearended 31 st March 2018 are not comparable to the figures for the year ended 31st March2017.
In line with the uptick in global economic activity the Indian economyduring 2017-18 is projected to see an improvement in GDP growth in October to March 2018to 7.2% from 6.1%
2018 infirst and 7.5% in the year 2017 according to the Central
Statistical Organization. The withdrawal of high denomination notes bythe Reserve Bank of India in November 2016 and the implementation of the Goods andServices Tax in July 2017 resulted in a transient loss in growth momentum especially infirst half of the year. However the recovery has been stronger in second half of 2018led by Government consumption growth and gross fixed capital formation. On the sectoralfront while the industry slowed down higher momentum was recorded for ConstructionTransport Communication Financial and Real Estate sectors. The recovery is expected tocontinue with in the year 2019 and GDP growth being pegged at 7.5% as per yearly forecast.On the bond market the 10-year G-sec yield rose by 72 bps to 7.40% during the course ofthe year 2018. Uptick in inflation trajectory in second half of 2017-18 slippage in theyear 2018 fiscal deficit and fast dwindling surplus on money market liquidity amidst risein global crude prices and hardening of US treasury yields cumulatively weighed on themarket sentiment. The Indian Rupee weakened marginally by 0.5% and closed the year at Rs.65.18 vis-a-vis the US dollar. Rupee largely remained stable amidst recovering globalgrowth a softer dollar and benign global financial market conditions. In additionfavourable domestic factors like normalization in second half of 2018 growth momentum andsovereign credit rating upgrade by international rating agency Moody's aidedsentiment.
SCHEME OF ARRANGEMENT
The Board of Directors in their meeting held in February 2016 approveda Composite Scheme of Arrangement between HB Stockholdings Limited (thecompany') HB Portfolio Limited (HBPL) and HB Estate Developers Limited (HBEDL) andtheir respective members and creditors under Sections 391 to 394 read with Sections 100 to104 of the Companies Act 1956 or any corresponding provisions of the Companies Act 2013subject to various Statutory approvals as may be required. The appointed date fixed forthe Scheme of Arrangement was 1st April 2015.
Hearing in the Scheme of Arrangements was concluded on 22nd December2017 by Hon'ble National Company Law Tribunal (NCLT) Bench at Chandigarh and a Copyof the Order was filedwith the Registrar of Companies (ROC) New Delhi. The Scheme ofArrangement becomes effective / operational on 30th January 2018.
On the Scheme of Arrrangement becoming effective / operational theBooks of Account of the Company have been recasted / adjusted based on the Appointed Date.Turnover Operational
Expenses Profit / Loss Assets and Liabilities of the Companypertaining to the Demerged undertaking(s) from Appointed Date till the Effective Date havebeen adjusted/ accounted for in the Account Books of the Company. Gist of the Scheme ofArrangement is as under:-a. Investment Division 1 was transferred by the Company to HBPortfolio Ltd (HBPL) (Demerger 1); and Investment Division 2 was transferred by theCompany to HB Estate Developers Ltd (HBEDL) (Demerger 2); b. (i) Consequent to the aboveShareholders of the Company (HBSL) shall get 25 Equity Share of Rs. 10/- each fully paidup of HBPL for every 100 Equity Shares of the Company as a consideration of Demerger 1.
(ii) Shareholders of the Company (HBSL) shall get 24 Equity Share ofRs. 10/- each fully paid up of HBEDL for every 100 Equity Shares of the Company as aconsideration of Demerger 2. c. After the above mentioned demerger(s) the face value ofthe equity shares shall reduce from 1 (one) equity share of Rs. 10/- each fully paid up to1 (one) equity share of Rs. 3/- each fully paid. d. As a result the issued and paid upequity share capital shall be reduced from Rs. 237922180 comprising of 23792218shares of Rs. 10/- each to Rs. 71376654 comprising of 23792218 shares of Rs. 3/-each. e. Simultaneously 10 (Ten) equity shares of Rs.3/- each fully paid up shall beconsolidated into 3 (three) fully paid- up share of Rs. 10/- each resulting in 7137665fully paid-up Equity Shares of Rs. 10/- each after ignoring fraction shares.
In consultation of Stock Exchange(s) 12th March 2018 was fixed asRecord Date by the
Company for determining the List of Equity Shareholders who shall beallotted Equity Shares by HB Portfolio Limited (HBPL) and HB Estate Developers Limited(HBEDL) on transfer of Investment Undertakings respectively and also to determin the Listof shareholders for Reduction and Reorganization of its Share Capital A meeting of CapitalRestructuring Committee (CRC) was held on 17th March 2018 for allotment of 7137665 newEquity Shares on Reduction of Capital to the allottees as per the List of Shareholdersbased on the aforesaid Record date. The Company applied to BSE Limited (BSE) and NationalStock Exchange of India Limited (NSE) for seeking Listing approval on completion ofnecessary formalities and the same was granted by BSE on 22nd May 2018 and NSE on 24th May2018. A Copy of Scheme of Arrangement along with all other documents are available on thewebsite of the BSE Ltd. (BSE) and National Stock Exchange of India Limited (NSE)http://www.bseindia.com and on nseindia.com and also on the Company's website havingfollowing web link http://www.hbstockholdings.com/investorcentre/ Scheme ofArrangement.html
The Company has taken necessary steps to dispatch the New ShareCertificate(s) to
Shareholders holding Shares in the physical form and for others aCorporate Action shall be initiated with NSDL and CDSL for crediting the beneficiaryshareholders.
On implementation of the Scheme of Arrangement approved by theHon'ble NCLT Bench Chandigarh the Authorized Share Capital of the Company standsdecreased by Rs. 650000000/- (Rupees Sixty Five Crore) i.e. from Rs. 1000000000(Rupees One Hundred Crore) to Rs. 35 0000000 (Rupees Thirty Five Crore) divided into25000000 (Two Crore Fifty Lac) Equity Shares of Rs. 10/- each (Rupees Ten only) and10000000 (One Crore ) Redeemable Preference Shares of Rs. 10/- each (Rupees Ten only).
The paid up Share Capital of the Company as on March 31 2018 was Rs.71376650 consisting of 7137665 Equity shares of Rs. 10 /-each. During the year underreview the Company has not issued shares with differential rights for voting dividend orotherwise and not granted Stock options to employees and sweat equity was issued topromoters.
SUBSIDIARY AND ASSOCIATE COMPANIES Subsidiary
The company does not have an unlisted material subsidiary as per Reg24(1) of SEBI (Listing Obligation and Disclosure Requirements) Reg 2015 in the immediatelypreceding accounting year. In Compliance to Reg 16 (c) of the Listing Regulations apolicy of determining Material Subsidiary was formulated by the Audit Committee andapproved by the Board and the same was posted on the web site of the Company and may beaccessed at the web link www. hbstockholdings.com
The company has prepared Consolidated Financial Statement along withsubsidiary Company M/s Mount Finance Limited the Indian Wholly Owned Subsidiary CompanyIn compliance with the provision of Section 129 (3) of the Companies Act 2013. A Reporton the financial performance of Subsidiary Company in form AOC-1 forms part of theDirectors' Report Audited Financial Statement as on 31-03-2018 of SubsidiaryCompany shall be made available for inspection at its Regd. office upon request by anyMember of the Company. The Financial
Statements of the Subsidiary Company shall be available at website ofthe Company at link www.hbstockholdings.com / investor centre Associate Company
Investment held by the Company in the Equity Shares of Taurus AssetManagement Company Limited (TAMCO) has since been vested into HB Portfolio Limited as perthe Scheme of Arrangement. In view of this TAMCO ceases to be an Associate Company withinthe meaning of Sec 2(6) of the Companies Act 2013 w.e. f. 30th January 2018.
The Consolidated Financial Statement for the year 2017-18 forms a partof the Annual Report and Accounts and these documents shall be laid before the AnnualGeneral Meeting in the Company for approval.
RELATED PARTY TRANSACTIONS
The disclosure of Related Party Transactions under Section 134(3)(h) ofthe Companies Act 2013 in Form AOC-2 is not applicable since all Related PartyTransactions during year ended 31st March 2018 were on arm's length basis and were inthe ordinary course of business. There was no materially significant Related PartyTransactions entered into by the the year under review. None of the Directors of theCompany has any pecuniary relationships or transactions vis--vis the Company. On therecommendation of the Audit Committee the Board of Directors has approved a Policy toregulate transactions between the Company and its Related Parties in compliance of theCompanies Act 2013 and the Rules made there under read with Regulation 23 of the SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015. The Policy on RelatedParty Transactions has been uploaded on the Company's website atwww.hbstockholdings.com. The web link for the same is www.hbstockholdings.com/InvestorInformation/Corporate Governance
Internal Control Systems and their Adequacy
The Internal Control System adopted by the Company is commensurate withits size scale and business operations and covers all the business locations of theCompany. To maintain objectivity and independence the Internal Audit function reports tothe Chairman of the Audit Committee. The scope and authority of the Internal Auditfunction has been detailed in the Audit Committee section of the Corporate GovernanceReport of the Company.
Internal Auditors of the Company monitors and evaluates the efficacyand adequacy of internal control systems in the company its compliance with the operatingsystems accounting procedures and policies of the company's operation. InternalAudit Report stimulates other functional departments to improve their systems andprocedures to strengthen the controls. All these issues are regularly placed before theAudit Committee meeting for its deliberations and monitoring.
In order to achieve sustained business growth the Company has laid aComprehensive Risk Assessment and minimization procedure. The Company has developed a RiskManagement process to ensure that all current and future risk exposures are identifiedassessed quantified appropriately mitigated minimised and managed and same is reviewedby the Audit Committee and approved by the Board from time to time. These procedures arereviewed to ensure management controls risks through means of a properly definedframework; best risk management policies are followed and risk minimisation exercises tobe attributed and same are monitored by Audit Committee of the Board.
MANAGEMENT DISCUSSION AND ANALYSIS AND CORPORATE GOVERNANCE
As required under Regulation 34(3) read with Schedule V of the SEBI(Listing Obligations and
Disclosure Requirements) Regulations 2015 the Management Discussion& Analysis Report; and a Report on the Corporate Governance together with theCompliance Certificate G. C. Agarwal & Associate Charted Accountants Delhibeing the Company's Statutory Auditor's confirming compliance(s) forms anintegral part of this Report.
NOMINATION AND REMUNERATION COMMITTEE
In terms of Section 178 of the Companies Act 2013 read with Regulation19 of SEBI (LODR) Regulations 2015 a Nomination and Remuneration Committee wasconstituted of all independent directors on the Board of the Company. Nomination andRemuneration Policy of the Company forms part of the Boards' Report and enclosed at AnnexureI. The detailed terms of reference of the Nomination and Remuneration Committeenumber and date of the meetings held attendance of the directors etc. are givenseparately in the attached Corporate Governance Report.
CORPORATE SOCIAL RESPONSIBILITY COMMITTEE
The Board constituted a Corporate Social Responsibility (CSR) Committeepursuant to Section 135 of the Act and composition of the Committee is stipulated in theCorporate Governance Report forms part of this Annual Report. The Corporate SocialResponsibility Policy of the Company was approved by Board and its contents are disclosedin the Annexure II. The CSR Policy is available on the website of the Company at wwwhbstockholdings.com.
Based on the average Net profit of the Company in respect ofimmediately preceding three financial years ended 31-03-2017 the Company was to spend asum of Rs. 4.22 Lakhs on
Corporate Social Responsibility related expenses however no amountcould be spent during the year 2017. During the financial year a sum of Rs. 4.31 Lakhs wasspent by the Company on CSR related activities by contributing to M/s Earth SaviourFoundation an Organisation Founded by Sh Ravi Kalra a Karamyogi as an Old Age Home (OAH)near Gurgaon. The amount was utilised by them to procure modern Utility appliances fortheir Kitchen and for Outdoor Lighting Units for their Old Age Home (OAH) Campus. TheReport on CSR activities with expenditure incurred is given else wherein as an AnnexureIIA of this Annual Report.
WHISTLE BLOWER POLICY / VIGIL MECHANISM
A Vigil Mechanism for Stakeholders Employees and Directors of theCompany has been established by the Company in terms of the provisions of Sec 177(9) &(10) of the Companies
Act 2013 and pursuant to the provisions of Regulation 22 of the SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015; Whistle Blower Policyduly approved by the Board is available on the website of the Company and can be accessed atwww.hbstockholdings. com. During the year under review no matter relating to VigilMechanism was reported to the Audit Committee.
(1) Statutory Auditors
M/s G C. Agarwal & Associates Chartered Accountants Delhi havingFRN 017851N were appointed as Statutory Auditors of the Company for a period of Fiveyears in the 30th Annual General Meeting held in 2017 subject to ratification of theirappointment by the members of the Company every year in the Annual General Meeting.Accordingly Board of the Company have recommended their re-appointment as StatutoryAuditors for a further period of one year to the shareholders for approval in the ensuingAGM of the Company.
(2) Internal Auditors
M/s MARV & Associates LLP Chartered Accountants New Delhi wereappointed as
Internal Auditors of the Company by the Board in terms of Sec 138 ofthe Companies Act 2013. Internal Audit Report is regularly placed before the AuditCommittee of the Board for their review and follows up.
(3) Secretarial Auditors
M/s A N Kukreja & Co. Company Secretaries New Delhi was appointedby the Board to undertake the Secretarial Audit of the Company for the year 2017-2018pursuant to the provisions of Section 204 of the Companies Act 2013 and other applicablerules. The Secretarial Audit Report in MR-3 is annexed herewith and marked as AnnexureIII.
(4) Observation on Statutory Auditor's and SecretarialAuditor's Report
There are no qualifications reservation or adverse remarks made bythe Statutory
Auditor's. Observation made by the Auditor's in theirReport(s) has been suitably explained else wherein the Report of the Management. Exceptthat no reservation or adverse remarks were made by the Auditors save and exceptdisclaimer made by them in discharge of their professional duties.
The Secretarial Auditors have made following observations in theirSecretarial Audit Report:
The Company did not have Managing Director or Chief Executive Officeror Manager and in their absence a whole time director since 1.12.2016.
The Board of Directors the Company is making efforts to fill up thevacancy of Managing Director/ Chief Executive Officer/ Manager.
DIRECTORS & OTHER KEY MANAGERIAL PERSONNEL
(1) Appointment and Reappointment of Directors' & KMP
Board members of the Company comprises of eminent persons with provencompetence and integrity. All members have financial literacy experience leadershipqualities and the ability of thinking strategically. Directors of the Company have asignificant and devotion and spare their adequate time for the meetings and for otherdeliberations. As per Article 89(1) and (2) of Article of Association of the Company readwith Section 152 of the Companies Act 2013 Mr. Anil Goyal Director of the Company shallretire by rotation at the ensuing Annual General Meeting and being eligible offershimself for reappointment.
(2) Meeting of Board of Director(s)
The Board of Directors of the Company meets at regular intervals todiscuss and decide the business policy strategy of the Company apart from other routinebusinesses. The Board meetings are held in Gurgaon and Notice of the meetings are givenwell in advance to all the directors. Agenda papers of the Board and Committee meetingsare circulated a week prior to the date of the meeting including notes on the importantitems to be discussed at the meeting(s) to enable directors to take an informed decision.Details of the Board Meeting(s) held during the year are given in the Corporate GovernanceReport attached with Directors' Report.
(3) Board Diversity
The Company recognizes the importance and benefits of having thediverse Board to enhance quality of its performance.
A diverse Board will enhance the quality of the decisions made by thecompany by utilizing the different skills qualification professional experience genderknowledge etc. of the members of the Board necessary for achieving sustainable andbalanced growth of the Company. On the recommendations of the Nomination and RemunerationCommittee the Board of Directors has adopted a Policy on Diversity of Board of Directorsin terms of Regulation 19 of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015.
(4) Annual Evaluation of the Board
The Board has carried out an Annual Performance Evaluation of its ownperformance andfrom of all the Directors of the Company individually as well as theevaluation of the working of Audit Nomination & Remuneration and other ComplianceCommittees; pursuant to the provisions of the Companies Act 2013 and applicableprovisions of the SEBI (Listing Obligations and Disclosure Requirements) Regulations2015. The manner in which the annual evaluation has been carried out is been suitablyexplained in the Corporate Governance Report.
(5) Declaration by Independent Directors
Declaration Forms duly filled in under Section 149(6) of the CompaniesAct 2013 were received from Mr. Gulshan Rai Mr. Harbans Lal and Mrs Asha MehraIndependent
Directors of the Company which confirms that all these directorsrespectively met with the criteria of Independence as prescribed in the Companies Act 2013and also in Reg 16(b) of the SEBI Listing Regulations.
(6) Remuneration Policy
On the recommendation of the Nomination & Remuneration Committeethe Board has framed a policy for selection and appointment of directors SeniorManagerial personnel and payment of remuneration to them. The Nomination and RemunerationPolicy being a part of the Corporate Governance Report is enclosed as Annexure I
(7) Remuneration of Directors Key Managerial Personnel and Employees
Remuneration and other details as required under section 197(12) of theCompanies Act 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration ofManagerial personnel) Rules 2014 is not applicable as none of the Director / and oremployee of the Company are in receipt of the remuneration specified in these Rules.
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to Section 134 (3) (c) read with sub section (5) of theCompanies Act 2013 the Directors Responsibility Statements hereby states that
a) in the preparation of the Annual Accounts the applicableaccounting standards have been followed along with proper explanation relating to materialdepartures;
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 at the end of thefinancial year and of the profit or loss of the Company for that period
;c ) The Directors have taken proper and sufficient care for themaintenance of adequate accounting records in accordance with the provisions of this Actfor safeguarding the assets of the Company and for preventing and detecting fraud andother irregularities;
d) The Directors had prepared the annual financial statementshave been prepared on a going concern basis and
e) The Directors have laid down proper internal financial controlsto be followed by the Company and that such internal financial controls were adequate andoperating effectively.
f) The Directors have devised proper systems to ensure compliancewith the provisions of all applicable laws and that such systems were adequate andoperating effectively.
SIGNIFICANT AND OTHER MATERIAL ORDERS PASSED BY THE REGULATORS ORCOURTS
Approval of the Scheme of Arrangement between (the Scheme')between HB Stockholdings Limited (HBSL) HB Portfolio Limited (HBPL) and HB EstateDevelopers Limited (HBEDL) and their respective Shareholders and Creditors under Sections391 to 394 read with Section 100 to 104 of the Companies Act 1956 by the Hon'bleNational Company Law Tribunal (NCLT) Chandigarh Bench at Chandigarh.
There are no other significant material orders passed by the Regulatorsor Courts during the year under review which has an impact on the Going Concern status andCompany's operations in future.
Information as per Section 134 (3) (m) of the Companies Act 2013
The particulars under Section 134 (3)(m) of the Companies Act 2013read with Rules 8(1) of Companies (Accounts) Rules 2014 information in respect ofconservation of energy and technology absorption are not applicable to the Company.
During the year under review there were no Earnings or outgo of ForeignExchange by the Company.
Particulars of Employees
A statement containing particulars of employees required pursuant toSection 197(12) of the Companies Act 2013 read with Rules 5(2) of the Companies(Appointment and Remuneration of Managerial personnel) Rules 2014 is not given as none ofthe Employee is eligible.
During the year under review your Company had complied with all theapplicable Secretarial Standards.
EXTRACT OF ANNUAL RETURN
The details forming part of the extract of the Annual Return in FormMGT-9 is required under Section 92 of the Companies Act 2013. The extract of AnnualReturn in Form MGT-9 is annexed herewith as Annexure V.
The Board of Directors of your Company state's that no disclosureor reporting is required in respectdegree of commitment the following items asthere were no transactions on these items during the year under review:
1. Details relating to deposits covered under Chapter V of the Act.
2. The Managing / Whole Time Director(s) if any of the Companyreceives no remuneration or commission from any of its subsidiaries.
3. As per the Annual Report submitted by the Committee constituted tomonitor the cases for Sexual Harassment of Women at Workplace (Prevention Prohibition andRedressal)
Act 2013 during the year under review there was no case filedorpending for review.
4. There was no change in the nature of business during the year underreview.
5. No Listing Fee and other dues are pending to the Stock Exchange(s)and other depositories.
Your Directors would like to express their appreciations for theassistance and cooperation received from National Company Law Tribunal Chandigarh BenchStock exchange(s) Depositories members and other stake holders during the year underreview. Your Directors also wish to acknowledge the valuable services rendered by theexecutives and staff of the Company at all levels.
For and on Behalf of the Board of Directors Sd/-LALIT BHASIN
Place : Gurugram (CHAIRMAN) Date : 25th May 2018 DIN 00002114