TO THE MEMBERS
The Directors have pleasure in presenting the Annual Report of the Company along withAudited Accounts for the year ended March 31 2020.
The summary of the financial results of the Company for the financial year ended March31 2020 is as under:
| ||For the Financial Year Ended |
|Particulars ||31.03.2020 ||31.03.2019 |
| ||(Rs) ||(Rs) |
|Income ||124210323 ||15717551 |
|Less : Expenditure ||246149072 ||82326647 |
|Loss before tax and exceptional item ||(121938749) ||(66609096) |
|Exceptional item : Profit on sale of shares ||53130319 ||97175455 |
|Profit/(Loss) before Tax ||(68808430) ||30566359 |
|Tax Expense (Earlier year) ||399081 ||500000 |
|Profit/(Loss) after Tax ||(68409349) ||30066359 |
In view of the loss no dividend has been recommended for the financial year endedMarch 31 2020.
Operations of the Company
The total income of the Company during the financial year under review wasRs.177340642 as against Rs.112893006 in the previous financial year. The increase inincome was primarily due to write back of provisions no longer required and profit on saleof investments. The total expenditure during the year was Rs.246149072 as againstRs.82326647 in the previous financial year. The increase in expenditure was primarilydue to increase in employee costs finance cost professional expenses and provisions. Thenet loss during the year was Rs.68409349 as against a profit of Rs.30066359 in theprevious year.
During the year under review to augment its revenue your Company altered the ObjectClause of the Memorandum of Association of the Company to enter into advisory andconsultancy services along with the existing activities of the Company being investmentin securities.
The SARS-CoV-2 virus responsible for COVID-19 continues to spread across the globe andIndia which has contributed to a significant volatility in global and Indian financialmarkets and a significant decrease in global and local economic activities. On March 112020 the COVID-19 outbreak was declared a global pandemic by the World HealthOrganization. On March 24 2020 the Indian government announced a strict 21-day lockdownwhich was further extended by 46 days up till May 31 2020 across the country to containthe spread of the virus. The extent to which the COVID-19 pandemic will impact theactivities/results of the Company will depend on the future developments which areincapable of assessment at this point in time including among other things any newinformation concerning the severity of the COVID-19 pandemic and any action to contain itsspread or mitigate its impact whether government mandated or elected by the Company.
The Company substantively holds investments in other companies. The adverse effect ofCOVID-19 on the industrial activity has a bearing on the value of securities in secondarymarket. The uncertainty prevailing during the current pandemic situation will continue tohave an impact on the carrying value of the investments held by the Company.
Market Value of Company's investment
The Company's net worth taking into account the market value of the Company'sinvestments would be more than adequate to meet its liabilities and to continue itsoperations in future.
Your Company is in the category of NBFC-CIC (exempted) and it continues to holdstrategic investments in different companies. The dividend distribution by the investeecompanies contributes to the Company's revenue.
Your Company has entered into advisory and consultancy services which under theexisting circumstances can be carried on advantageously along with the existingactivities of the Company to augment the revenue of the Company. In order to strengthenthe prospects of the Company your Directors/Management continue to evaluate options toenter into additional activities but the attachment of the Company's investments by theRegulators has affected the cash flow position of the Company and the process ofevaluating options has been adversely affected. The Company nevertheless would continue toevaluate future business options based on the changing business and external environment.
Directors and Key Managerial Personnel
Ms. Tushita Patel (DIN 07017591) a Non-Executive Woman Director is liable to retire byrotation at the ensuing Annual General Meeting and being eligible offers herself forreappointment. The Nomination and Remuneration Committee has recommended the reappointmentof Ms. Tushita Patel as a Director liable to retire by rotation.
Mr. Raghuveeran Kasargod and Mr. Girish Datar were appointed as Additional Directors inthe category of Non-Executive Independent Directors w.e.f. September 26 2019 and June 152020 respectively. The Nomination and Remuneration Committee has recommended theappointment of Mr. Raghuveeran Kasargod and Mr. Girish Datar as Independent Directors.Their appointment is subject to the approval of the Shareholders.
Mr. Manmohan Singh Kapur who was appointed as an Independent Director for a term of 3years from September 29 2016 to September 28 2019 ceased to hold office as a Director ofthe Company on completion of his term as in Independent Director w.e.f. September 282019. Mr. Nitin Kochhar a Non Executive Independent Director of the Company resigned asa Director of the Company w.e.f. February 29 2020.
The Board of Directors place on record their appreciation for the contribution by Mr.Manmohan Singh Kapur and Mr. Nitin Kochhar during their tenure as Independent Directors ofthe Company.
In pursuance of the provisions of Section 203 of the Companies Act 2013 Mr. Ajay KumarVijay Executive Director and Mr. Arindam Ash the Chief Financial Officer are functioningas the Key Managerial Personnel of the Company.
Mr. Manoj Kumar Company Secretary Compliance Officer and Key Managerial Personnelresigned from the services of the Company w.e.f. December 10 2019 and efforts arecontinuing to identify a successor.
The affairs of the Company are conducted under the overall supervision and guidance ofthe Board of Directors of the Company.
None of the Directors of the Company are disqualified under Section 164 (2) of theCompanies Act 2013. Your Directors have made necessary disclosures as required under theprovisions of the Companies Act 2013.
Directors' Responsibility Statement
The Board of Directors of the Company hereby state that:
(a) in the preparation of the Annual Accounts the applicable Accounting Standards havebeen followed along with proper explanation relating to material departures;
(b) accounting policies have been selected and applied consistently and the judgmentsand estimates made are reasonable and prudent so as to give a true and fair view of thestate of affairs of the Company as at the end of the financial year and of the loss of theCompany for that period;
(c) proper and sufficient care has been taken for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the Company and for prevention and detection of fraud and otherirregularities;
(d) the Annual Accounts have been prepared on a going concern basis;
(e) Internal Financial Controls have been laid down to be followed by the Company andthat such Internal Financial Controls are adequate and operating effectively and
(f) proper systems have been devised to ensure compliance with the provisions of allapplicable laws and that such systems are adequate and operating effectively.
(a) Appointment of Statutory Auditors:
The Members of the Company had appointed M/s. BVC & Co. Chartered Accountants(Firm Registration No. 008154S) as the Statutory Auditors of the Company for a period offive years commencing from the conclusion of the Thirteenth Annual General Meeting to theconclusion of the Eighteenth Annual General Meeting of the Company. The Auditors haveconfirmed that they continue to fulfill the criteria for appointment as Auditor of theCompany as prescribed under the Act and the Rules framed thereunder.
(b) Auditor's Qualifications and Board responses:
Certain issues relating to Company's income stream and its effect on the goingconcern aspects is the subject matter of Qualification in the Audit Report. ThisQualification has been explained in Note no. 34 of the financial statements.
Corporate Governance & Management Discussion and Analysis Reports
Pursuant to the Securities and Exchange Board of India (Listing Obligations andDisclosure Requirements) Regulations 2015 (SEBI LODR) a Report on Corporate Governanceand Management Discussion and Analysis Report are attached to this Report.
The Auditor's Certificate confirming compliance of conditions of Corporate Governanceis appended to this report. CEO/CFO Certificate as required under Regulation 17 of theSEBI LODR has been signed by the CEO/CFO of the Company.
Board and its Committees
The details of the meetings of the Board and its Committees held during the financialyear the composition of the committees and the details of committee meetings are given inthe Report on Corporate Governance. All the recommendations made by the Audit Committeeand Nomination and Remuneration Committee from time to time were accepted by the Board.
Declarations by Independent Directors
The Company has received declarations from the Independent Directors that they meet thecriteria of independence as provided in sub-section (6) of Section 149 of the CompaniesAct 2013.
Performance Evaluation of the Board and Committees
The details of annual evaluation made by the Board of its own performance and that ofits committees individual Directors individually and performance criteria for IndependentDirectors laid down by the Nomination and Remuneration Committee are enclosed as AnnexureA to this Report. The policy for performance evaluation of the Independent
Directors and Board of Directors is available on the Company's websitewww.mcdowellholdings.co.in.
Details of remuneration to Directors
During the year under review remuneration was paid to the Executive Director. TheNon-Executive Directors were paid sitting fee for attending the committee and boardmeetings and reimbursement of actual travel expenses boarding and lodging conveyance andincidental expenses incurred in attending such meetings.
Particulars of Employees and Related Disclosures
Disclosures with respect to the remuneration of Directors and Employees as requiredunder Section 197 of Companies Act 2013 and Rule 5(1) of Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 has been appended as Annexure D tothis Report.
The Company had not offered any shares to its employees or Key Managerial Personnelunder any scheme of Employees Stock Option and has also not issued any sweat equity at anytime.
During the year under review your Company did not accept any deposits within themeaning of provisions of Chapter-V (Acceptance of Deposits by Companies) of the CompaniesAct 2013 read with the Companies (Acceptance of Deposits) Rules 2014.
Corporate Social Responsibility (CSR)
The Company has constituted a Corporate Social Responsibility Committee as requiredunder Section 135 of the Companies Act 2013. Since the average net profit of the Companyfor the preceding three financial years was negative there was no necessity for theCompany to carry out any CSR spending for the period under review.
(a) Secretarial Audit Report
Pursuant to the provisions of Section 204 of the Companies Act 2013 and the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Board hasappointed Mr. K N Nagesha Rao (C.P.No.12861/Membership No. FCS 3000 CompanySecretary in Practice to undertake the Secretarial Audit of the Company. The Reportfurnished by Auditor in the format prescribed is enclosed as Annexure - E to thisreport.
(b) Qualifications and Board responses
The Board responses to the qualifications of the Secretarial Audit are as under:
(i) Consequent to the resignation of the Company Secretary from the services of theCompany w.e.f. December 10 2019 the Company engaged HR placement agencies andhead-hunters to fill up the post. Due to the attachment of the Company's investments andalso the freezing of the Company's demat account by the Enforcement Directorate ( inconnection with their investigation against Kingfisher Airlines Limited Dr. Vijay Mallya/ Ors) the generation of funds to pay salary dues and other administrative expenses havebeen adversely affected. In view of these facts the candidates identified by thePlacement Agency did not agree to join the Company. Apart from these candidates few morecandidates also disagreed to join on the same grounds. The Company is continuing in itsefforts to fill the vacancy.
(ii) The Board of Directors at its meeting held on June 15 2020 appointed Mr. GirishDatar as an Independent Director to fill the vacancy caused by the resignation of Mr.Nitin Kochhar Independent Director despite the extraneous circumstances occasioned owingto COVID-19 pandemic. The Company has complied with the Regulation 17(1)(a) of the SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 .
Internal Control System
The Company has a robust system of internal control the effectiveness of which istested by the process of internal audit under the supervision of Audit Committee.
Your Company through internal audit under the supervision of the Audit Committeereviews the risk management process risk mitigation plans and risk reporting.
The adequacy and effectiveness of Internal Financial Controls have been endorsed by theInternal Auditor and the Statutory Auditors. The report of the Independent StatutoryAuditors in the annexure to their Audit Report does not contain any adverse observations.
The Company has implemented a vigil mechanism to provide a framework for the
Company's employees and Directors to promote responsible and secure whistle blowing. Itprotects the employees who raise concern about serious irregularities within the Companyif any. A brief summary of the vigil mechanism implemented by the Company is set out in Annexure- B to this report.
Your Company hereby affirms that no Director/employee has been denied access to theChairman of the Audit Committee and that no complaints were received during the year underreview. The Whistle Blower Policy is available in the Company website www.mcdowellholdings.co.in.
The Authorised Share Capital of the Company stands at Rs.150000000 comprising of15000000 equity share of Rs.10 each and the issued subscribed and paid up capital ofthe Company as on March 31 2020 remain unchanged at Rs.139922580 comprising of13992258 equity shares of Rs.10 each.
The trading in the equity shares of your Company is under compulsory dematerialisationmode. As the depository system offers numerous advantages members are requested to takeadvantage of the same and avail the facility of dematerialisation of the Company's shares.Moreover transfer of shares of the Company by physical means has been barred from April1 2019 pursuant to SEBI's Notification dated December 3 2018.
Your Company's Equity Shares are listed on the BSE Limited and National Stock Exchangeof India Limited. The listing fees have been paid to both the Stock Exchanges for the year2020-2021.
Extract of Annual Return
An extract of Annual Return in Form MGT-9 as on March 31 2020 is available on thewebsite of the Company www. mcdowellholdings.co.in through the linkhttp://mcdowellholdings.co.in/investors/others.
Nomination and Remuneration Policy
The Board on the recommendation of the Nomination and Remuneration Committee has laiddown a policy for the appointment and remuneration of the Directors Key ManagerialPersonnel and Senior Executives of the Company. The same is set out in Annexure - C tothis report.
Particulars of Loans Guarantees or investments
Details of loans guarantees and investments covered under Section 186 of the CompaniesAct 2013 are given in Note 4 & 12 of the Notes to the Financial Statements.
Subsidiary Associates and Joint Ventures
The Company does not have any Subsidiary Associates and Joint Ventures.
Related Party Transactions
During the year under review all contracts/arrangements entered by your Company withrelated parties were on an arm's length basis and in the ordinary course of business anddid not consummate material transactions with any related party as defined in the Act. Allrelated party transactions entered for the year under review have been approved by theAudit Committee wherever applicable.
Transactions with related parties as per the requirements of Accounting Standards 18issued by The Institute of Chartered Accountants of India are disclosed in the relevantSchedule of Notes to Annual Accounts. The Policy for Related Party Transactions isavailable on the Company's website: www.mcdowellholdings.co.in.
Familiarisation Programme for Independent Directors
The details of programmes for familiarisation of the Independent Directors theirroles rights responsibilities in the Company nature of the industry in which theCompany operates business model of the Company and related matters are available on theCompany's website: www.mcdowellholdings.co.in.
Energy Conservation Technology Absorption Foreign Exchange Earnings and Outgo
The provisions under Section 134 of the Companies Act 2013 and rules made there underrelating to energy conservation technology absorption do not apply to the Company as theCompany is not engaged in the manufacturing activities. There were no foreign exchangeearnings or outgo during the year under review.
Sexual harassment of Women at Workplace (Prevention Prohibition and Redressal) Act2013
There were no cases filed pursuant to the Sexual Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013.
Your Directors wish to acknowledge the co-operation and support extended by theemployees and the shareholders of the Company.
| ||By Order of the Board |
|Bengaluru ||Raghuveeran Kasargod |
|August 20 2020 ||Chairman |
| ||(DIN: 00231382) |