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Hybrid Financial Services Ltd.

BSE: 500262 Sector: Financials
NSE: MAFATLAFIN ISIN Code: INE965B01014
BSE 05:30 | 01 Jan Hybrid Financial Services Ltd
NSE 05:30 | 01 Jan Hybrid Financial Services Ltd

Hybrid Financial Services Ltd. (MAFATLAFIN) - Director Report

Company director report

To

The Members

Hybrid Financial Services Limited

(Formerly known as Mafatlal Finance Company Limited)

Your Directors present the Thirty Second Annual Report with the Audited Statement ofAccounts of the Company for the year ended 31st March 2019.

1. FINANCIAL RESULTS

The Financial results of the company for the year under review as compared to theprevious year are summarized below for your consideration:

Particulars Year Ended 31.03.2019 Year Ended 31.03.2018
(Rs. in Lakhs) (Rs. in Lakhs)
Gross Income 154.63 173.26
Gross Profit before
Depreciation Exceptional
Item and Income Tax 37.74 55.76
Depreciation 0.24 0.31
Provision for Tax Nil Nil
Net Profit After Tax 37.50 55.45
Other Comprehensive Income 0.10 0.27
Add: Amount brought forward
from previous year (796.37) (852.09)
Provision for Contingencies 505.62 -
Balance carried forward (1264.39) (796.37)

2. OPERATIONS

The Financial Year 2018-2019 has ended with the company earning a profit of Rs.37.50Lakhs after Tax mainly on account of Write Backs and Tax Refunds. The Company's operationsare still on very low scale due to the uncertainties of business environment andinadequate liquidity. The Company does not anticipate any significant revenue growth fromoperations in the coming years till the resolution of many pending issues. The Companyonly foresees lower level of operation in the coming year due to dwindling businessopportunities.

3. OUTLOOK

The company is trying to undertake new Non - NBFC activities and these activitiesearned a net income of Rs.0.04 Lakhs during the year. Other operations have yielded anincome of Rs.79.20 Lakhs and Rs.24.00 Lakhs as Rent. Company's business is confined toattending to past issues from its earlier operations. The business outlook of theCompany's subsidiary is also showing negative trend and is attempting to reduce costs byrationalisation and outsourcing.

4. DIVIDEND

The Board of Directors have recommended a Dividend of 1% on Preference Shares amountingto Rs.2.53 Lakhs inclusive of Dividend Distribution Tax. However no dividend isrecommended on Equity Shares to conserve resources and inadequate profit.

5. EXTRACT OF ANNUAL RETURN

As per the provisions of the Companies (Amendment) Act 2017 Extract of Annual Returnin the prescribed Form MGT-9 will be placed on the web site of the Company: www.hybridfinance.co.in

6. BOARD MEETINGS

The details of the Board Meetings held during the Financial Year 2018-2019 have beenfurnished under clause I 2(d) of the Corporate Governance Report forming a part of thisAnnual Report.

7. OTHER COMMITTEES

The Company has constituted the following Committees and the date of its constituentsand changes during the year are as under:

a) Audit Committee:

The Audit Committee of the Company is Constituted in line with the provisions ofsection 177 of the Companies Act 2013 read with Regulation 18 of Securities and ExchangeBoard of India (Listing Obligations and Disclosure Requirement) Regulations 2015. Themembers of the Audit Committee are as under on 31.03.2019:

Name of Member Status Nature of Directorship
Mr. Jayesh Talpade Chairman Independent Director
Mr. Tanveer Shaikh Member Independent Director
Mr. N. R. Divate Member Wholetime Director

Mr. K. Chandramouli is an Ex-officio Secretary of the Audit Committee.

b) Nomination and Remuneration Committee:

To meet with the requirements of Regulation 19 of Securities and Exchange Board ofIndia (Listing Obligations and Disclosure Requirements) Regulations 2015 Mr. N. R.Divate ceased to become the member of Nomination and Remuneration committee with effectfrom 22nd May 2018 and the committee stands reconstituted. The members of thereconstituted Nomination and Remuneration committee are as under on 31.03.2019:

Name of Member Status Nature of Directorship
Mr. Tanveer Shaikh Chairman Independent Director
Mr. Jayesh Talpade Member Independent Director
Mrs. Megha J. Vazkar Member Women Director

c) Stakeholders Relationship Committee:

The company has a Stakeholder Relationship Committee consisting of the followingmembers as on 31.03.2019:

Name of Member Status Nature of Directorship
Mr. Jayesh Talpade Chairman Independent Director
Mr. K. Chandramouli Member Wholetime Director
Mr. N. R. Divate Member Wholetime Director
Mr. Tanveer Shaikh Member Independent Director
Mrs. Megha Vazkar Member Non – Executive
Director

d) Risk Management Committee:

The company has constituted a Risk Management Committee and following are the membersin the committee as on 31.03.2019:

Name of Member Status Nature of Directorship
Mr. K. Chandramouli Chairman Wholetime Director
Mr. N. R. Divate Member Wholetime Director
Mr. Tanveer Shaikh Member Independent Director

The details regarding the meetings held during the Financial Year 2018-2019 are givenin the Corporate Governance Report forming a part of this Annual Report.

8. COMPLIANCES OF APPLICABLE SECRETARIAL STANDARDS

The Company has complied with the provisions of Secretarial Standard 1 (Board Meetings)and Secretarial Standards 2 (General Meetings) to the extent as applicable to the Company.

9. BOARD EVALUATION

The Board generally evaluate the overall performance and the evaluation are as under:

(a) As growth opportunities are getting stymid by environmental threats the managementneeds to be in guard to prevent any unforeseen dangers.

(b) The need to preserve the integrity and ethics are more important than any otherbusiness demands.

(c) Long pending issues need to be addressed and resolved at the earliest so that thefuture path can be hormonised with greater focus.

10. PARTICULRS OF CONTRACTS OR ARRANGEMENTS WITH

RELATED PARTIES

The details of Related Parties and the Transaction with them are disclosed as requiredby Ind AS - 24 issued by The Institute of Chartered Accountants of India under Note No.2.19.8 forming part of this Annual Report.

In our opinion there were no "material" transactions that warrant adisclosure in this report.

Accordingly particulars of Contracts or Arrangements with related parties referred toin Section 188(1) in Form AOC-2 does not form a part of this report.

Further the members may note that the Company has not entered intoContracts/Arrangements/Transactions which are not at arm's length basis.

11. PARTICULARS OF LOANS GIVEN INVESTMENT MADE GUARANTEES GIVEN AND SECURITIESPROVIDED

During the year under review pursuant to the provisions of Section 186 Company has notgranted any Loan or has made any Investment or given any guarantees and Security.

12. TRANSFER TO RESERVES

The Company has not made any transfer to the reserve other than transfer of surplusearned during the year.

13. LISTING OF SHARES

The company made an appeal in Securities Appellate Tribunal on 21st April 2017 againstBSE for Non-Revocation of Suspension and Listing of New Shares Pursuant to CapitalReduction and against NSDL for not allotting new ISIN subsequent to Capital reduction.Subsequently Securities Appellate Tribunal has passed an order on October 16 2017stating that the Company should make the necessary presentations to BSE and NSE asrequired by them within 4 weeks after passing this order and BSE and NSE shall considerthe same and pass the appropriate order thereon within 3 months from the date of receivingthe representations from the Company.

The company has made the sufficient representations and awaiting for the final order tobe passed by BSE and NSE. Although the Company is in compliance with the standard ofoperating procedure for Revocation of Suspension the BSE is denying the matter due to thealleged difference in capital issued in the year 2000 which is contested by the Company.Due to the same BSE has not revoked the suspension nor has listed the shares issued postreduction of capital in 2011 nor the preferential allotment made in 2012. This delay isalso causing damage to the Company but beneficial to BSE. As the reinstatement fees leviedare based on the number of years of suspension of trading in shares of the Company. Thisis also contested by the Company as there is no fault of the Company. Further BSE is alsoinsisting on the listing of shares in NSE and the Company has not officially delisted fromNSE although shareholders have approved the same in the year 2003. Due to the same it isfelt that the cost implication of the revocation of suspension of listing of shares isprohibitively high and a future drain on the Companies major resources. The Companyhowever is attempting to negotiate the matter for a satisfactory resolution focusing itsoutcome to provide an opportunity to the shareholders to have an exit opportunity and hopethe same shall be done in the current year. In view of the impasses in the matter thepromoters are of the opinion that there may be no other option but to get the Companydelisted at an exit price decided in consultation with the Exchanges.

The Company's ISIN remains suspended as new ISIN subsequent to Name Change andReduction of Capital is not yet allotted.

As the Depositories are providing no services presently the Company has not madepayment of their Annual Custodial Fees.

14. MAXIMUS SECURITIES LIMITED (MSL) – SUBSIDIARY

COMPANY]

The Subsidiary Company has earned a net profit of Rs. 32.80 Lakhs for the financialyear ended 31st March 2019. The Subsidiary Company is exploring various options toimprove its earnings in the current financial year.

15. CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS ANDOUTGOING

The Company is not engaged in manufacturing activities therefore there is noinformation to submit in respect of conservation of energy and absorption of technology.

Foreign Exchange Earnings: Nil
Foreign Exchange Outgoings: Nil

16. CONTINGENCY PROVISIONS

With the uncertainties in the operations environment to mitigate the adverse effect ofunforeseen and disputed liabilities the company in this year has created additionalprovision for contingency of Rs. 505.62 Lakhs with a review by the Management after threeyears.

17. DIRECTORATE

The present tenure of Mr. Nandakishore R. Divate as Wholetime Director will end on July30 2019. The Nomination and Renumeration Committee has already recommended thereappointment of Mr. Nandakishore R. Divate as Wholetime Director for a period of threeyears commencing from 1st August 2019. Members are hereby requested to consider andapprove his reappointment on the terms as per Special resolution placed in the AnnualGeneral Meeting. Mr. Nandakishore R. Divate is interested in the said resolution. TheBoard of Directors also recommend the same.

18. DEPOSITORIES

Effective October 30 2000 the Equity Shares of your Company have been mandated bySecurities and Exchange Board of India for delivery only in dematerialized form for allinvestors.

Your Company has already entered into arrangements with National Securities DepositoryLimited (NSDL) and Central Depository Services Limited (CDSL) for custody anddematerialization of shares in accordance with the Depositories Act 1996.

19. E-VOTING

In terms of the requirements of Listing the Company has concluded an Agreement withCentral Depository Services (India) Limited (CDSL) for E-Voting Facility for itsShareholders.

20. PARTICULARS OF EMPLOYEES

There are no employees who are covered under Section 134(3) of the Companies Act 2013read with Companies (Particulars of Employees) Rules 1975.

21. WEBSITE OF THE COMPANY

The Company maintains a website www.hybridfinance.co.in where detailedinformation of the Company is provided.

22. WHISTLE BLOWER MECHANISM

The Company has a Whistle Blower Policy in place for vigil mechanism. The said policyhas been implemented keeping in view of the amendments in the Companies Act 2013 and incompliance with the Listing Agreement.

23. INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY

The Company has an adequate internal control system commensurate with the size of theCompany and the nature of its business. The Internal Control System of the Company ismonitored and evaluated by Internal Auditor and his Audit Reports are periodicallyreviewed by the Audit Committee of the Board of Directors. The observations and commentsof the Audit Committee are placed before the Board.

24. DIRECTOR'S RESPONSIBILITY STATEMENT

The financial statements are prepared in accordance with Indian Accounting Standards(Ind AS) under the historical cost convention on accrual basis except for certainfinancial instruments which are measured at fair values. The Company has adopted all theInd AS standards and the adoption was carried out in accordance with applicable transitionguidance.

As required under section 134(3)(c) of the Companies Act 2013 the Directors herebyconfirm that:

i. in the preparation of the annual accounts for the financial year ended March 312019 the applicable accounting standards had been followed along with proper explanationrelating to material departures;

ii. the Directors had selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company at the end of the financial year and ofthe profit of the Company for the year;

iii. the Directors had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of this Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;

iv. the Directors have prepared the Annual Accounts on a going concern basis.

25. CORPORATE GOVERNANCE

Pursuant to the Listing Regulations of Securities and Exchange Board of India (ListingObligations and Disclosures Requirements) Regulations 2015 Management Discussion andAnalysis and Corporate Governance Report are made a part of the Annual Report.

26. AUDIT REOPORTS

The Statutory Auditors have expressed their opinion or observations in the Audit Reportand Management of the Company offers their response on the same:

Opinion / Observations of the Response of the
Statutory Auditors Management
Emphasis of Matter

Disclosure Required under

Ind AS-19 of The Institute

We draw attention to Note 2.19.12 of the standalone financial statements which states that the Company has made provision towards gratuity on the basis of Gratuity Act instead of Ind AS 19 as prescribed by ICAI. "Employee Benefit. Our opinion is not modified in respect of this matter Opinion / Observations of the Statutory Auditors We have sought and obtained all the information and explanations subject to Item No 4 of Note No. 2.19.4 regarding non-receipt of confirmation of certain bank balances which to the best of our knowledge and belief were necessary for the purpose of our audit.

of Chartered Accounts of India with regard to Employee Benefit are not given as the Company has no employees as on 31st March 2019 other than Two Whole Time Directors and Chief Financial Officer (on deputation). However during the year the Company has provided Gratuity with effect from 1st April 2011 for the two Wholetime Directors as per the Gratuity Act1972. Response of the Management Most of the Bank Accounts are in-operative for a long time. We have already taken measures to close all these inoperative accounts. Some of the Statutory Accounts which have to be transferred to Investor Education and Protection Fund have already been transferred during the year ended 31st March 2013. In the absence of complete bank statements these balances do not appear to be recoverable.

27. STATUTORY AUDITORS

The Audit committee recommend the appointment of M/s. BDMV & Co CharteredAccountants Mumbai having Firm Registration No. 101256W as Statutory Auditors of theCompany for a term of 3 (Three) consecutive years from the conclusion of this AnnualGeneral Meeting till the conclusion of the 35th Annual General Meeting to be held in theyear 2022.

The Board of Directors also recommend their appointment and members are herebyrequested to consider and approve the same.

28. SECRETARIAL AUDITOR

The Board of Directors have appointed Mr. Vijay S. Tiwari a practising CompanySecretary as Secretarial Auditor for the Financial Year 2018-2019.

29. CORPORATE SOCIAL RESPOSIBILITY

The said provisions are not applicable to the Company.

30 ACKNOWLEDGEMENTS

Your Directors wish to thank and place on record their appreciation of the valuablesupport given by Company's Customers Shareholders and Bankers.

FOR AND ON BEHALF OF THE BOARD

K. CHANDRAMOULI

Wholetime Director and Company Secretary

Place : Mumbai Date : 21st May 2019

MANAGEMENT DISCUSSION AND ANALYSIS

The company would be drawing up the resource plans to carry out future operations infee-based areas.

FINANCIAL REVIEW

The company's income was Rs.154.63 Lakhs which includes Rs.79.24 Lakhs towardsoperational income and Rs.75.39 Lakhs as other income (which includes write-backs and TaxRefunds) and the company earned a pre-tax profit of Rs.37.50 Lakhs.

BUSINESS ANALYSIS OUTLOOK

The company has been exploring the possibility of alternate activities on the hope ofimproved market conditions in future in the fee based segment. As the medium-term strategyis to further enhance the competitiveness and activities of its wholly owned stock brokingsubsidiary. However the long-term strategy is to develop new areas of operations tofurther augment its revenue after resolving long pending issues.

Presently the Company's operations are muted due to the overhang of past matters andthe inability to put additional resources and relative stagnancy in its subsidiary'soperations. The compliance environment is also demanding extreme care and caution. TheCompany is however facing the challenges with appropriate risk mitigating strategies.Having regard to the dynamics of its business the Company has to ensure that unforeseenand any other operational error do not impinge on its subsistence or continuity. Hencebuilding an appropriate defence mechanism is a critical focus area.

RISK AND CONCERNS

The company faces the challenge of Contingent Risks which the company is not currentlyfacing but may be exposed too.

The Business environment has still not improved and gives the strained financialposition the Company continuous to focus only on Fee Based Activities. Also due totougher regulatory conditions the Company is not contemplating any immediate businessplans. The Companies' financial position also does not provide any opportunities toundertake any fund based business presently.

INTERNAL CONTROL AND THEIR ADEQUACY

The company has appropriate and adequate internal control system which are sufficientfor the level of activities carried by it. The internal audit is being carried out by anexternal firm of Chartered Accountant and their findings are reviewed at reasonableintervals. The Board is of the opinion that the internal control system is adequate to thesize of the Company's business.

The company has fully computerised and integrated financial and accounting function.

INDUSTRIAL RELATIONS

The Company as on 31st March 2019 has two employees (Two Wholetime Directors) on itspayroll. The relationship was cordial.

CAUTIONARY STATEMENTS

Statement in the Management Discussion and Analysis describing the Company's positionand expectations may be "forward looking statements" within the meaning ofapplicable securities laws and regulation. Actual results could differ materially fromthose expressed or implied. Important factors that could make a difference to theCompany's operations include among others economic conditions affecting demand/supplyand price conditions in the market in which the Company operates changes in theGovernment Regulations tax laws and other statutes and incidental factors.

ANNEXURE – PARTICULARS OF EMPLOYEES

a) Information as per Rule 5 (1) of Chapter XIII Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014

The ratio of the remuneration of each Director to the median employee's remunerationand other details in terms of Sub-section 12 of Section 197 of the Companies Act 2013read with Rule 5(1) of the Companies (Appointment and Remuneration Managerial personnel)Rules 2014 is as under:

Disclosure Requirement Disclosure Details
Director Title Ratio
Mr. K. Chandramouli Wholetime Director 111.11
1. Ratio of the remuneration of each Director to the median remuneration of the employees of the Company for the financial year. Mr. N. R . Divate Wholetime Director 100
2. Percentage increase in remuneration of each Director Chief Financial Officer Company Secretary or Manger if any in the financial year Director / Key Managerial Personnel Title % Increase / Decrease in remuneration
Mr. K. Chandramouli Wholetime Director (1.44%)
Mr. N. R. Divate Wholetime Director (0.01%)
Mr. Vinay Kulkarni Chief Financial Officer (21.37%)
3. Percentage increase in the median remuneration of employees in the financial year (0.01%)
4. Number of permanent employees on the rolls of the Company at the end of the year 3 (2 Directors + 1 CFO)
5. Average percentile increases already made in the salaries of employees other than the Managerial Personnel in the last financial year and its comparison with percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration. Not Applicable
6. Affirmations that the remuneration is as per the Remuneration Policy

It is affirmed that the remuneration paid is as per the Remuneration Policy of the Company and also in compliance with the relevant Statutory Provisions.

* Mr. Vinay Kulkarni is not on the roles of the Company and is deputed by HybridSystems Limited a Group Company. His Remuneration is being reimbursed by the Company tothe said Group Company.

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