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Hem Holdings & Trading Ltd.

BSE: 505520 Sector: Financials
NSE: N.A. ISIN Code: N.A.
BSE 05:30 | 01 Jan Hem Holdings & Trading Ltd
NSE 05:30 | 01 Jan Hem Holdings & Trading Ltd

Hem Holdings & Trading Ltd. (HEMHOLDINGST) - Director Report

Company director report

Dear Members

Your directors are pleased to present their 38th Annual Report and Accountsof your Company for the year ended on 31 March 2020. The Management Discussion andAnalysis has also been incorporated into this report.

FINANCIAL RESULTS

(Rs in Lakhs)

31st March 2020 31st March 2019
Total Income 36.17 16.47
Total Expenses 16.66 8.55
Profit before tax 19.52 7.91
Profit after tax 16.33 7.64
Other Comprehensive Income (14.41) (25.90)
Total Comprehensive Income 1.92 (18.26)

PERFORMANCE REVIEW

Total income for the Financial Year 2019-20 is Rs. 36.17 lacs as against Rs. 16.47 lacsin previous year. Profit before tax for the financial year 2019-20 increased to Rs.19.52lacs as against Rs.7.91 lacs for previous financial year and Profit after Tax is Rs.16.33lacs against Rs. 7.64 lacs for previous financial Year.

The Company does not have any subsidiary or associate or joint venture Company.

RESERVES

The Company has transferred Rs.3.3 Lacs to Special Reserve Fund during Financial Year2019-20. DIVIDEND

In order to conserve funds of the Company for future growth the Board of Directorsregrets that no dividend is being recommended for the year under review.

TRANSFER OF UNCLAIMED DIVIDEND TO INVESTOR EDUCATION AND PROTECTION FUND

No amount is required to be transferred under the provisions of Section 125(2) of theCompanies Act 2013 as there was no dividend declared and paid in last years.

REMUNERATION

As per Section 197(12) read with Rule 5 of the Companies (Appointment and Remunerationof Managerial Personnel) Rules 2014 no remuneration has been paid to Directors of theCompany.

FAMILIARISATION PROGRAMME OF INDEPENDENT DIRECTORS

The Company conducts the Familiarization Programme for the Independent Directors toprovide them

an opportunity to familiarize with the Company its Management and its operation so asto gain a clear understanding of their roles rights and responsibilities and contributesignificantly towards the growth of the Company.

NOMINATION AND REMUNERATION POLICY

The Company continues to consider human resources as its invaluable assets. This policyon nomination and remuneration of directors Key Managerial Personnel (KMPs) and otheremployees has been formulated in terms of the provisions of the Companies Act 2013 andthe Listing Agreement.

MATERIAL CHANGES AND COMMITMENTS TF ANY AFFECTING THE FINANCIAL POSITION OF THECOMPANY

There are no material changes or commitments occurring after 31st March2020 which may affect the financial position of the Company or may require disclosure.

COMPLIANCE WITH RBI GUIDELINES

Your company has adopted “Fair practices Code” and complied and continues tocomply with all the applicable regulations circulars and guidelines issued by the RBI forevery NBFC Company from time to time.

PUBLIC DEPOSITS

The Company has not accepted any deposit within the meaning of Section 73 and Section74 of the Companies Act 2013 read with Companies (Acceptance of Deposits) Rule 2014including (any statutory modification(s) or re-enactment(s) for the time being in force).

CORPORATE GOVERNANCE

As per the provisions of Regulation 15(2) of SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 the compliance with the specified regulations of CorporateGovernance was not applicable on the Company during the financial year 2019-20.

COST RECORDS AND AUDIT

Maintenance of cost records and requirement of cost audit as prescribed under theprovisions of Section 148(1) of the Companies Act 2013 are not applicable for thebusiness activities carried out by the Company and accordingly no such accounts andrecords are made and maintained .

CHANGE IN THE NATURE OF BUSINESS. IF ANY

There was no change in the nature of business of the Company during the Financial Yearended 31st March 2020.

NUMBER OF MEETINGS OF THE BOARD

The following Meetings of the Board of Directors were held during the Financial Year2019-20:

Sr. No Date of Meeting Board Strength No. of Directors Present
a) 08.04.2019 03 3
b) 20.05.2019 04 4
c) 14.08.2019 03 3
d) 14.11.2019 03 3
e) 14.02.2020 03 3
f) 12.03.2020 03 3

The particulars of the Directors and attendance at the Board Meetings during the yearthe attendance in the last Annual General Meeting number of other directorships(excluding Hem Holdings and Trading Limited) and Committee Memberships as on 31- 03-2020are as follows:

Name of the Director

Attendance at meeting during 2019-20

No of other Director ship(s) as on 31-03-2020

No. of other Board Committes member/ Chairman

Category
BM AGM
Ketan M Shah 6/6 Yes 1 - Promoter/Non-Executive Director
Sangeeta K Shah 6/6 Yes 1 - Promoter/Managing Director
Rahul Sethi* 5/5 No - - Independent Director
Mehul Nisar* * 2/ 2 No - - Independent Director

Note:

(a) Directorships exclude Private Limited Companies Foreign Companies and Section 8Companies.

(b) Chairman/Membership of Committee only includes Audit Committee and StakeholdersRelationship Committee in Indian Public Limited Companies.

* Appointed with effect from 08.04.2019.

** Completed his tenure on 15.06.2019.

Currently the Board has three committees: Audit Committee Nomination and RemunerationCommittee and Stakeholders' Relationship Committee.

AUDIT COMMITTEE

The Company has duly constituted an Audit Committee in F.Y 2019-20 under chairmanshipof Mr Rahul Sethi with Mr Ketan M Shah and Mrs Sangeeta K Shah as members. The Board hasaccepted all recommendation made by the Audit committee made during the year.

During the Financial Year 2019-20 the Audit Committee met four times on 20.05.201914.08.2019 14.11.2019 and 14.02.2020.

The Composition of the Audit Committee of the Board of Directors of the Company alongwith the details of the meetings held and attended during the financial year ended 31March 2020 is detailed below:

Name of the Member(s) Category Category No of Meeting attended
Rahul Sethi* Chairman Independent Director 4/4
Mehul Nisar** Member Independent Director 1/1
Ketan M Shah Member Non-Executive Director 4/4
Sangeeta K Shah*** Member Managing Director 3/3

* Rahul Sethi inducted as Member from 08.04.2019.

** Completed his tenure on 15.06.2019.

*** Sangeeta k Shah inducted as Member from 20.05.2019.

NOMINATION AND REMUNERATION COMMITTEE

The Company has duly constituted an Nomination and Remuneration Committee in F.Y2019-20 under chairmanship of Mr Rahul Sethi with Mr Ketan M Shah and Mrs Sangeeta K Shahas members. The Board has accepted all recommendation made by the Nomination andRemuneration committee made during the year.

The committee met once during the year on 20.05.2019.The composition of the Nominationand Remuneration Committee of the Board of Directors of the Company along with the detailsof the meetings held and attended by the members of the Committee during the financialyear 2019-20 is detailed below:

Name of the Member(s) Category Attendance
Mr Mehul Nisar Independent Director 1/1
Mr. Ketan M Shah Non- Executive Director 1/1
Mr Rahul Sethi* Independent Director 1/1
Mrs Sangeeta K Shah Managing Director 0/0

* Rahul Sethi inducted as Member from 08.04.2019.

**inducted as Member from 20.05.2019

STAKEHOLDERS'* RELATIONSHIP COMMITTEE.

The committee met once during the year on 14.11.2019 .As on 31st March2020 the Stakeholders' Relationship Committee consists of the following members:

Name of the Member Status Meeting Category
Rahul Sethi* Chairman 1/1 Independent Director
Mr Ketan M Shah Member 1/1 Non-Executive Director
Mrs Sangeeta* K Shah Member 1/1 Managing Director

* Induced as Member with effect from 08.04.2019 DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to Section 134 of the Companies Act 2013 the Directors hereby confirm that:

a) In the preparation of the Annual Accounts the applicable Accounting Standards havebeen followed along with proper explanations relating to material departures if any;

b) They have selected such Accounting Policies and applied them consistently and madejudgment and estimates that are reasonable and prudent so as to give a true and fair viewof the state of affairs of the company as at March 31 2020 and of the profit and loss ofthe company for that period;

c) To the best of their knowledge and information they have taken proper andsufficient care for the maintenance of adequate accounting records in accordance with theprovisions of Companies Act 2013 for safeguarding the assets of the Company and forpreventing and detecting fraud and other irregularities;

d) They have prepared the Annual Accounts on a Going Concern basis;

e) They have laid down internal financial controls to be followed by the Company andthat such internal financial controls are adequate and are operating effectively; and

f) There is a proper system to ensure compliance with the provisions of all applicablelaws and that such systems are adequate and operating effectively.

CONSERVATION OF ENERGY TECHNOCLOGY & FOREIGN EXCHANGE

The Company is not a manufacturing Company and as such no provisions of Conservation ofEnergy Technology Absorption under Section 134 of the Companies Act 2013 read with theCompanies (Accounts) Rules 2014 are attracted. It is further stated that there was noinflow and outflow of foreign exchange.

INDIAN ACCOUNTING STANDARDS (IND AS)

Pursuant to the notification issued by The Ministry of Corporate Affairs datedFebruary 16 2015 relating to the Companies (Indian Accounting Standard) Rules 2015 theCompany has adopted “IND AS” with effect from April 01 2019.

RISK MANAGEMENT POLICY

The Company constantly manages monitors and reports on the principal risk anduncertainties that can have an impact on the Company. Your directors keep a close watch onthe risk prone areas and take actions from time to time.

INTERNAL FINANCIAL CONTROL

The Company has an adequate Internal Control System commensurate with its size scaleand operations to ensure proper recording of financial and operational information andcompliance of various internal control and other regulatory and statutory compliance.During the year no reportable material weakness in the design or operation were observed.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

In accordance with the provision of Section 152 of Companies Act 2013 Mr Ketan M ShahDirector shall be retiring by rotation at the ensuing Annual General Meeting and beingeligible offer himself for reappointment.

During the year under review Mrs Divya Garg has appointed as Company Secretary andCompliance officer of the Company with effect from 12.03.2020.

During the year under review Mr Rahul Sethi has appointed as Independent Director ofthe Company with effect from 08.04.2019.

STATUTORY AUDITORS

M/s Taunk & Shrikanth Chartered Accountants (Firm regd no. 001524C) was appointedas Statutory

Auditor of the Company in F.Y 2017-18 for a period of 5 years i.e from the conclusionof 36th AGM to the 41st AGM.

The Companies (Amendment) Act 2017 has waived the requirement for ratification of theappointment of statutory auditor by the shareholders at every Annual General Meeting . Thereport given by the statutory auditor on the financial statements of the Company is partof the Annual Report . There are no qualifications observations or adverse remarks in theAuditors' Report for the financial year 2019-20 which require anyclarification/explanation. The Notes on financial statements are self explanatory andneeds no further explanation.

SECRETARIAL AUDITOR AND THEIR REPORT

M/s Divanshu Mittal & Associates had been reappointed as Secretarial Auditor of theCompany for the FY 2019-20. The Secretarial Audit Report for the financial year ended 31March 2020 is annexed herewith as Annexure-I to this Report.

FRAUDS REPORTED BY AUDITORS

The Statutory Auditors or Secretarial Auditor of the Company have not reported anyfrauds under section 143(12) of the Companies Act 2013 including rules made thereunder.

EXTRACT OF ANNUAL RETURN

The details forming the part of the extract of Annual return as on 31stMarch 2020 in form MGT-9 in accordance with Section 92(3) of the Company Act 2013 readwith Companies (Management and Administration) Rule 2014 is annexed herewith as Annexure-IIto this report.

RELATED PARTY TRANSACTIONS

There is no materially significant Related Party Transaction made by the Company duringthe year that would require shareholders approval under the Listing Regulations.

Details of the transaction with Related Parties are provided in accompanying financialstatement. There was no transaction during the year which would require to be reported inform no AOC-2.

PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS

During the Financial Year 2019-20 details of Loans Guarantees and Investmentsoutstanding as on 31st March2020 are given in the notes to the financialstatements.

CHANGE TN CAPITAL STRUTURE AND LISTING OF SHARES

Presently the Company's shares are listed on the Bombay Stock Exchange (BSE). There areno changes in Capital Structure during the F.Y ended 31st March 2020. Yourcompany has not issued equity shares with differential rights as to dividends voting orotherwise and does not have ESOP scheme for its employees/Directors.

PARTICULARS OF EMPLOYEES

There was no employee receiving remuneration attracting provisions of section 134(3)(q)of the Companies Act 2013 read with Rule 5(2) & (3) of Companies (Appointment &Remuneration of Managerial Personnel) Rules 2014.

DECLARATION OF INDEPENDENCE

Your Company has received declarations from all the Independent Directors confirmingthat they meet the criteria of independence as prescribed under the provisions of theCompanies Act 2013 read with the Schedules and Rules issued thereunder as well asRegulation 16(1) (b) of Listing Regulations (including any statutory modification(s) orre-enactment(s) for the time being in force).In accordance with the provision of Section152 of the Companies Act 2013 none of Independent Director is liable to retire byrotation.

PERFORMANCE EVALUATION OF THE BOARD ITS COMMITTEES AND INDIVIDUAL DIRECTORS

Meeting the requirements of the statue and considering Boards Performance evaluation asan important step for a board to transit to a higher level of performance the Nominationand Remuneration Committee has laid down a comprehensive framework for carrying out theevaluation prescribed in the provisions of the Companies Act 2013 read with rules issuedthereunder and the Listing Regulations (including any statutory modifications or re-enactment (s) for the time being in force). The process for evaluation of the annualperformance of the Director /Board/Committees was carried out. The overall outcome waspositive.

VIGIL MECHANISM

A Vigil Mechanism Policy for Directors and employee of the Company is constituted asper Section 177 (9) to provide a mechanism which ensures adequate safeguards to employeesand Directors from any victimization on rising of concerns of any violations of legal orregulatory requirements incorrect or misrepresentation of any financial statements andreport etc.

NBFC LICENSE

Hem Holdings and Trading Limited is one of the certified non-deposit accepting(Category-B) NBFC business institution from Reserve Bank of India engaged in investmentsand other investment advisory financial services. Hem Holdings and trading limited since1980 has been engaged in providing quality services in field of Investment and buyingselling underwriting investing acquire and hold securities of every kind whether issuedby Companies operating within India or outside.

GLOBAL ECONOMY

The global economy grew 2.9% in 2019 compared to 3.6% in 2018. This sharp decline wasprecipitated by an increase in global trade disputes that affected the cross-bordermovement of products and services a slowdown in the global manufacturing sector weakgrowth coming out of some of the largest global economies and the impact of US Chine Tradewar and Brexit. Going ahead the ‘Great Lockdown' as a result of the pandemicCovid-19 is projected to shrink the global growth in calendar year 2020 and thereafter.(Source:World Economic Outlook April 2020 CNN Economic Times trading economicsStatista CNBC)

INDIAN ECONOMY

India emerged as the fifth largest world economy in 2019 with a gross domestic product(GDP) of $2.94 trillion. India jumped 14 places to 63 in the 2020 World Bank's Ease ofDoing Business ranking. However there was a decline in consumer spending that affectedIndia's GDP growth during the year under review. India's growth for FY2019-20 is estimatedat 4.2% compared with 6.1% in the previous year. Manufacturing growth is seen at 2% a15-year low as against 6.9% growth in FY19.

ECONOMIC OUTLOOK

The long-term fundamentals of the Indian economy continue to be strong due to risingincomes and large investments. These growth drivers are expected to sustain over a longperiod of time. At the same time there are some concerns due to uncertain global economicenvironment and slow recovery in developed markets.

INDUSTRY OVERVIEW

The NBFC sector continued to grow its share in the financial services industry. Creditgrowth of scheduled commercial banks (SCBs) continued to moderate throughout FY2020. On 31March 2019 growth in advances of SCBs was 13.2%. By 30 September 2019 this had reducedto 8.7% and on 27 March 2020 it was further down to 6.1%. SCBs also continued to faceasset quality challenges in FY2020. Data published by the RBI in its Financial StabilityReport dated 27 December 2019 show that NBFCs have outperformed SCBs on asset quality.

While the importance of NBFCs in credit intermediation continued to grow repaymentdefault by a systemically important NBFC in September 2018 brought to focusasset-liability mismatches of the sector — where some NBFCs were more impacted thanthe others. To strengthen the asset-liability profile of the sector RBI introduced aliquidity coverage ratio (LCR) requirement for all NBFCs with AUM of H 5000 crore andabove. The LCR regulation mandates NBFCs to maintain a minimum level of high-qualityliquid assets to cover expected net cash outflows in a stressed scenario. The regulationalso stipulates that NBFCs should attain LCR of 100% in a phased manner over a period offour years starting December 2020. It is a welcome regulatory change and willsignificantly strengthen ALM profile of the NBFC sector.

COVID-19 further accentuated ALM challenges of the NBFC sector. The RBI's moratoriummeasures for customers is likely to put additional stress on many NBFCs. There is anasymmetry. On one hand NBFCs have to offer such moratoriums to their customers; while onthe other their market borrowings must be repaid on due dates.

OPPORTUNITIES & THREATS

Opportunities

— Increase in Income levels will aid greater penetration of financial products.

— Positive regulatory reforms.

— Increase in corporate growth & risk appetite.

— Greater efficiency in debt market operations which will also help greaterpenetration.

— Increased securitization.

— Focus on selling new product/services.

Threats

— Inflation could trigger increase in consumer price inflation which would dampengrowth.

— Increased competition in both local & overseas markets.

— Unfavorable economic development.

— Market risk arising from changes in the value of financial instruments as aresult of changes in market variables like interest rate and exchange rates.

COVID-19

Owing to the pandemic the Government of India declared nation-wise lockdown on March24 2020 which was further extended from time to time causing destruction in economy ingeneral. The Company does not anticipate any material impact on the recoverability of thecarrying value of its assets/ on its working. Since normalcy in business operations arealso linked to directive of the government in future and implication of Covid-19 pandemicon the people and economy the position in future cannot be visualized as of now and willbe closely monitored and supervised by the Company to assess any material implication andadjustment to the carrying value of assets.

KEY RATIO:

The key ratios of the Company are given below:

Particulars FY 2019-20 FY 2018-19
EBIDTA/Total Income 53.97% 48.01%
Debt-equity ratio 0.00 0.00
Return on equity (%) 81.33 32.95
Book value per share (H) 68.04 98.31
Earnings per share (H) 6.80 3.18

HUMAN RESOURCE

The Company keeps developing its organizational structure consistently over time.Efforts are made to follow excellent Human Resource practices. Adequate efforts of thestaff and management personnel are directed on imparting continuous training to improvethe management practices.

The objective of your Company is to create a workplace where every person can achievehis or her full potential. The employees are encouraged to put in their best. Lot of hardwork is put in to ensure that new and innovative ideas are given due consideration toachieve the short- and long-term objectives of your company. The employees are satisfiedand having good relationship with the Management.

GENERAL

Your Directors state that no disclosure or reporting is required in respect of thefollowing items as there were no transactions on these items during the year underreview:-

(a) The Company is not covered under Section 135(2) of the Companies Act 2013 and assuch no disclosure regarding Corporate Social Responsibility is required under the saidsection or applicable rules.

(b) Issue of shares (including sweat equity shares) to employees of the Company underany scheme save and except ESOS referred to in this Report.

(c) No significant or material orders were passed by the Regulators or Courts orTribunals which impact the going concern status and Company's operations in future.

ACKNOWLEDGEMENT

Your Directors wishes to express its gratitude and record their appreciation for thecommitment and dedicated efforts put in by all the employees. Your director take thisopportunity of expressing the assistance and co-operation extended to the Company bybanks employees members and all other persons.

For and on behalf of the Board of Directors
(Ketan Moolchand Shah) (Sangeeta Ketan Shah)
DIRECTOR DIRECTOR
DIN: 00312343 DIN: 05322039
Place: Bhilai
Date:01.09.2020

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