Your Directors are pleased to present the Annual Report and the AuditedFinancial Statements of the Company for the year ended 31 March 2020.
1. REVIEW OF OPERATIONS
The financial results for the year ended 31 March 2020 have beenprepared in accordance with Indian Accounting Standards. During the year the company hasreported a profit before tax and other comprehensive income of Rs. 686.80 lakhs (previousyear Rs. 405.52 lakhs) and total comprehensive income of Rs. (142.73) lakhs (previous yearRs. 1365.11 lakhs).
2. FINANCIAL RESULTS
|Description ||2019-20 ||2018-19 |
|Profit/(Loss) Before Interest & Depreciation ||802.73 ||560.24 |
|Interest ||20.24 ||51.74 |
|Depreciation ||95.69 ||102.98 |
|Profit/(Loss) Before Tax & Exceptional items ||686.80 ||405.52 |
|Exceptional items ||- ||- |
|Profit/(Loss) Before Tax ||686.80 ||405.52 |
|Provision for taxation Current tax ||187.06 ||149.47 |
|Deferred tax ||(354.00) ||(26.61) |
|Share of profit from LLP ||731.71 ||- |
|Profit/(Loss) After Tax ||1585.45 ||282.66 |
|Other Comprehensive Income ||(1728.18) ||1082.45 |
|Total Comprehensive Income for the year ||(142.73) ||1365.11 |
|Amount transferred to reserves if any ||Nil ||Nil |
The Board of Directors has not recommended any dividend for the year asthe profits are conserved to fund the future plans of the Company.
The Company has not bought back any of its shares during the year underreview. The Company also has not issued any sweat equity shares bonus shares or stockoption scheme during the year under review.
5. FIXED DEPOSIT
The Company has neither accepted nor renewed any deposits during theyear under review.
6. MATERIAL CHANGES AND COMMITMENTS
No material changes and commitments affecting the financial position ofthe Company occurred between the end of the financial year to which this financialstatement relates and the date of this report
7. CHANGE IN NATURE OF BUSINESS IF ANY;
The Company has commenced the facility management and manpower supplyservices business during the financial year.
8. SUBSIDIARIES & ASSOCIATES
The Company monitors the performance of subsidiary company inter-aliaby the following means:
a) The Company has one material unlisted Indian subsidiary andcompliance requirements as per SEBI (LODR) Regulations 2015 has been ensured.
b) During the year the company became entitled to 92.21% of the votingrights of India Radiators Limited due to non-receipt of preference dividend for 2 yearspursuant to sub section (2) of section 47 of the Companies Act 2013. Accordingly IndiaRadiators Limited became a subsidiary of Mercantile Ventures Limited.
c) The Audit Committee reviewed the financial statements inparticular the investments made by the unlisted subsidiary company.
d) Our Company formulated a policy on material subsidiary as requiredand uploaded in the website of the Company in the link"http://www.mercantileventures.co.in"
CONSOLIDATED FINANCIAL STATEMENTS
The consolidated financial statements were prepared in accordance withsection 129(3) of the Companies Act 2013 read with Rule 5 of the Companies [Accounts]Rules 2014. Also a separate statement containing the salient feature of the financialstatements of the subsidiaries and associate in Form AOC-1 is attached to the financialstatements.
PERFORMANCE AND FINANCIAL POSITION OF THE SUBSIDIARIES AND ASSOCIATES
As at the year end the Company had one Wholly Owned Subsidiary twoSubsidiaries and one Associate entity. The detailed financials of all these Subsidiaries /Associates have been consolidated and the financial and other information have beenfurnished in the Consolidated Financial Statement (CFS) attached to this Report.
(Rs. in lakhs)
|Particulars ||i3 Security Services Pvt Ltd ||India Radiators Limited $ Subsidiaries ||Chitaranjan Developers LLP ||National Trust Housing Finance Ltd Associate |
|% of shareholding held by MVL ||100.00% ||92.21 % ||98.00% ||49.00% |
| || ||( voting right ) ||(Share of profits) || |
|Total Income ||2258.68 ||196.44 ||770.24 ||4423.57 |
|Profit before tax ||102.72 ||50.12 ||746.65 ||(141.43) |
|Current Tax ||13.58 ||- ||- ||157.55 |
|Deferred tax liability ||1.36 ||(144.96) ||- ||(779.13) |
|Profit / (Loss) after tax ||87.78 ||195.08 ||746.65 ||480.15 |
|Other Comprehensive Income ||(219.59) ||(665.10) ||- ||11.08 |
|Total Comprehensive Income ||(131.81) ||(470.02) ||- ||491.23 |
$ The Company became entitled to 92.21% of voting rights in IndiaRadiators Limited due to non-receipt of dividend for the period of 2 years for theinvestment made in 9% Cumulative Redeemable Preference Shares.
9. DIRECTORS' RESPONSIBILITY STATEMENT
In accordance with the provisions of section 134(5) of the CompaniesAct 2013 the Board hereby submits its Responsibility Statement:-
a. In the preparation of the annual accounts the applicable accountingstandards had been followed along with proper explanation relating to material departures;
b. The directors had selected such accounting policies and applied themconsistently and made judgments and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of the company at the end of thefinancial year and of the profit and loss of the company for the year ended 31 March 2020;
c. The directors had taken proper and sufficient care for themaintenance of adequate accounting records in accordance with the provisions of theCompanies Act for safeguarding the assets of the company and for preventing and detectingfraud and other irregularities;
d. The directors had prepared the annual accounts on a going concernbasis;
e. The directors had laid down internal financial controls to befollowed by the company and that such internal financial controls are adequate and areoperating effectively. Internal financial control means the policies and proceduresadopted by the company for ensuring the orderly and efficient conduct of its businessincluding adherence to company's policies the safeguarding of its assets theprevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information and
f. The directors had devised proper systems to ensure compliance withthe provisions of all applicable laws and that such systems were adequate and operatingeffectively.
10. DISCLOSURE ON COMPLIANCE WITH SECRETARIAL STANDARDS
Your Directors confirm that the Secretarial Standards issued by theInstitute of Company Secretaries of India have been complied with.
11. DIRECTORS & KEY MANAGERIAL PERSONNEL:
The Company's Board comprises of the following directors:
Mr. A. L Chandramouli
Mr. B Narendran
Ms. Sashikala Srikanth
Mr. G D Sharma
Mr. K Gopalakrishnan and
Mr. E N Rangaswami.
The Board of directors appointed Mr. K Gopalakrishnan and Mr. G DSharma as additional directors on 12 June 2020.
A statement regarding integrity expertise and experience proposedindependent director Mr. G D Sharma:
Mr. G D Sharma is a Post Graduate in Personnel Management &Industrial Relations from Tata Institute of Social Sciences is a Senior HR professionalwith over 39 years' experience across industry verticals. He has enrolled himself inthe online databank maintained by the institute.
The Key Managerial personnel of the Company are: Mr. E N Rangaswami -Whole-time Director Mr. V Padmanabha Sarma - Chief Financial Officer and Mr. S.Yoganandhan Company Secretary.
12. BOARD AND COMMITTEE MEETINGS
The Company had six board meetings during the financial year underreview. The intervening gap between the Meetings was within the period prescribed underthe Companies Act 2013. Details of the Board and Committee meetings are given in theCorporate Governance Report.
13. CORPORATE GOVERNANCE
A report on Corporate Governance as stipulated under Schedule V andRegulation 34(3) of the SEBI (Listing obligations and Disclosure Requirements)Regulations 2015 forms part of this Annual Report. The requisite certificate from apracticing company secretary confirming compliance with the conditions of corporategovernance as stipulated is annexed to this Report.
14. COMPANY'S POLICY RELATING TO DIRECTORS APPOINTMENT PAYMENT OFREMUNERATION AND DISCHARGE OF THEIR DUTIES
The Company's Policies relating to appointment of directorspayment of managerial remuneration directors' qualifications positive attributesindependence of directors and other related matters as provided under Section 178(3) ofthe Companies Act 2013 are uploaded in the website of the Company in the following links.https://www.mercantileventures.co.in/wp-content/uploads/2019/07/CRITERIA-FOR-APPOINTMENT-OF-INDEPENDENT-DIRECTORS.pdfhttps://www.mercantileventures.co.in/wp-content/uploads/2019/07/Remuneration-Policy.pdfThe Remuneration policy also forms part of the Corporate Governance Report
15. FAMILIARIZATION PROGRAM
The details are provided in the Corporate Governance report and on thewebsite of the Company.
16. BOARD EVALUATION
Pursuant to the provisions of the Companies Act 2013 and SEBI (Listingobligations and Disclosure Requirements) Regulations 2015 the Boards' performanceand performance of the non-independent Director were considered/evaluated by theindependent directors at their meeting without the participation of the non-independentdirector and key managerial personnel.
They also assessed the quality quantity and timeliness of flow ofinformation between the Company's Management and that are necessary for the Board toeffectively and reasonably perform its duties.
Pursuant to the provisions of the Companies act 2013 and Regulation 17of SEBI (Listing obligations and Disclosure Requirements) Regulations 2015 the Board hascarried out an annual performance evaluation of its own performance the directorsindividually as well as the evaluation of the working of its various committees.
17. Internal Control Systems & their adequacy
Company's Internal Control System has been designed to providefor:
Accurate recording of transactions with internal checks andprompt reporting.
Adherence to applicable accounting standards and policies.
Compliance with applicable statutes management policies andprocedures.
Effective use of resources and safeguarding of assets.
The Internal audit was carried out periodically through a practicingchartered accountant. The observations arising out of the audit were periodically reviewedand compliance ensured. The summary of the internal audit observations and managementresponses were submitted to the Board after review by the Audit Committee.
18. FRAUDS REPORTED BY AUDITORS AS PER SEC 143 (12) OTHER THAN THOSEWHICH ARE REPORTABLE TO THE CENTRAL GOVERNMENT.
There were no frauds reported by auditors in their report.
19. PARTICULARS OF CONTRACTS OR ARRANGEMENTS MADE WITH RELATED PARTIES
All transactions entered by the Company with related parties were inthe ordinary course of business and at arm's length pricing basis. There were nomaterially significant transactions with related parties during the financial year 2019-20which were in conflict with the interests of the Company.
The Board has approved the policy on related party transactions.
Details of transaction with related parties as required under Section134(3)(h) of the Act read with Rule 8(2) of the Companies (Accounts) Rules 2014 areprovided in form AOC-2 and attached to the financial statement.
There are no transactions with entity belonging to promoter/promotergroup which hold(s) 10% or more shareholding in the Company.
The policy has been uploaded on the Company's website under theweb link: http://mercantileventures.co.in
20. AUDITORS STATUTORY AUDITORS
M/s. DPV & Associates Chartered Accountants have been appointed asthe auditors of the company at the 16th Annual General Meeting to hold office till theconclusion of the 21st AGM to be held in the year 2022 as per Section 139 of the CompaniesAct 2013.
The Company has appointed Mr. R Kannan Company Secretary in practiceto undertake the Secretarial Audit of the Company.
The Report of the Secretarial Auditor is annexed to this report.
COST AUDITOR MAINTENANCE OF COST RECORDS
The business activity of the Company is not covered under rule 3 of TheCompanies (Cost Records and Audit) Rules 2014. Accordingly the maintenance of costrecords under section 148(1) of the Companies Act 2013 is not applicable.
21. RISK MANAGEMENT.
The Risk Management Committee has been formed comprising Ms. SashikalaSrikanth Director as Chairperson of the committee and the other members are Mr. E NRangaswami Whole-time Director and Mr. V. Padmanabha Sarma Chief Financial officer. RiskManagement Committee ensures that the Company has an appropriate and effective riskmanagement system which carries out risk assessment and ensures that risk mitigation plansare in place by validating the same at regular intervals. The Committee met periodicallyto study the risks threats & concerns and submitted reports to the Board ofDirectors.
22. PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS
The particulars of Loans guarantees and investments covered undersection 186 of the Companies Act 2013 are provided in the notes to the financialstatements.
23. SEXUAL HARASSMENT
The Company has zero tolerance for sexual harassment at workplace. Apolicy is in place and an Internal Complaints Committee has been constituted which ismonitoring the prevention prohibition and redressal of sexual harassment at workplace inline with the provisions of POSH and the Rules made there under. There were no complaintsreported under the POSH during the year under review.
24. AUDIT COMMITTEE AND WHISTLE BLOWER POLICY
The Audit Committee consists of three independent directors: Mr. ALChandramouli Mr. B Narendran and Ms. Sashikala Srikanth
As required under Section 177 of the Companies Act 2013 the Companyhas established Whistle Blower policy and the same has been uploaded in the following weblink.https://www.mercantileventures.co.in/wp-content/uploads/2019/07/Whistle-blower-policy.pdf
25. CORPORATE SOCIAL RESPONSIBILITY
The company has complied with the provisions of Corporate SocialResponsibility. The CSR Policy related disclosures are annexed to this report.
26. ANNUAL RETURN
The extracts of annual return in Form MGT 9 pursuant to the provisionsof Section 92 read with Rule 12 of the Companies (Management and Administration) Rules2014 is annexed to this report.
The copy of annual return has been uploaded on the Company'swebsite under the web link: http://mercantileventures.co.in.
27. PARTICULARS OF EMPLOYEES
The Company has no employee whose salary exceeds the limits asprescribed under Rule (5)(2) of Companies (Appointment and
Remuneration of Key Managerial personnel) Rules 2014
28. TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGOConservation of Energy and Technical Absorption:
The business of the Company is leasing of immovable properties. Theparticulars prescribed under Section 134 of the Companies Act 2013 read with rule 8 (3)of the Companies (Accounts) Rules 2014 relating to conservation of energy and technologyabsorption are not applicable to the business operations of the Company.
Foreign Exchange Earnings and Outgo:
(a) Foreign Exchange Inflow: Nil
(b) Foreign Exchange Outflow: Nil
29. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTSOR TRIBUNALS IMPACTING THE GOING CONCERN STATUS OF THE COMPANY
There are no significant and material orders passed by the regulatorsor courts or tribunals which would impact the going concern status of the Company.
30. QUALIFICATIONS RESERVATIONS OR ADVERSE REMARKS OR DISCLAIMERS MADEBY THE AUDITORS AND THE PRACTICING COMPANY SECRETARY IN THEIR REPORTS
There were no qualifications reservations or adverse remarks in thereports of M/s DPV & Associates Statutory Auditors and Mr. Kannan SecretarialAuditor.
31. DECLARATION OF INDEPENDENT DIRECTORS
The Independent Directors have submitted their disclosures to the Boardthat they fulfill all the requirements as stipulated in Section 149(6) of the CompaniesAct 2013 so as to qualify themselves for the continuance / appointment as independentdirectors under the provisions of the Companies Act 2013 and the relevant rules.
32. MANAGEMENT DISCUSSION AND ANALYSIS REPORT Covid-19 Scenario
The Coronavirus pandemic has adversely affected the economy of theworld in general. The management believes it has of the company. The functional andintensity of the considered all the factors that could impact the financial pandemic isuncertain. The management will continuously monitor the macro economic scenario as itplays out and take the appropriate action.
a) Industry Scenario
The leasing business and manpower supply business continues to bestable in the current fiscal year. However in view of the Covid-19 pandemic the realestate market would be impacted.
b) Opportunities and Threats
Having assumed necessary security and discipline with the introductionof RERA it is expected to create a platform for further growth in the real estate sector.
c) Segment-wise or produce-wise performance
The company is operating in leasing of properties and Manpower supplyservices.
During the year the Company had entered into facility management andman power supply services business. The prospects for this line of business is consideredgood and the company is expected to generate decent revenue from the aforesaid activities.
d) Future Outlook and state of the company's affairs
The main business of the Company is investment in properties forleasing and Manpower supply services. The revenue stream from the operations is expectedto remain stable in the current fiscal year.
e) Risk and concerns
As per the SEBI (Listing obligations and Disclosure Requirements)Regulations 2015 the Risk Management Committee has to be set up by top 100 listedentities determined on the basis of market capitalisation as at the end of the immediateprevious financial year. As per this regulation the Company is not required to constitutea Risk Management Committee. The Company however has constituted a Risk ManagementCommittee to constantly review the technical and commercial risks the company has to faceso that the interests of the shareholders are protected.
f) Internal control systems and adequacy.
The company has an adequate internal control system.
g) Material developments in Human Resources / Industrial Relationsfront including number of people employed. - Nil
h) Details of significant changes in key financial ratios (Change of25% or more as compared to the immediately previous financial year).
During the year on a standalone basis the significant changes in thefinancial ratios of the Company which are more 25% as compared to the previous year aresummarized below:.
| ||Standalone || |
|Financial ratio ||FY 19-20 ||FY 18-19 ||Change % ||Reason for change |
|Debtors turnover ratio ||7.14 ||4.18 ||70.62 ||Manpower service activity started in May-19. |
|Interest coverage ratio ||34.93 ||8.84 ||295.27 ||Increase in profit due to manpower service activity and due to repayment of loan. |
|Net profit margin ||41.34 ||29.32 ||41.00 ||Starting of manpower activities during the year and reduction in other expenses. |
i) Any change in return of net worth as compared to the immediatelyprevious financial year.
The details of return of net worth as compared to the immediatelyprevious financial year are provided in the financial statements.
INFORMATION PURSUANT TO RULE 5(1) OF THE COMPANIES (APPOINTMENT ANDREMUNERATION OF MANAGERIAL PERSONNEL) RULES 2014.
|The ratio of the remuneration of each director to the median remuneration of the employees of the company for the financial year 2019-20 ||Mr. E N Rangaswami Whole-time Director ||7.49 |
|The percentage increase in remuneration of each director ||Mr. E N Rangaswami Whole-time Director ||- |
| ||Mr. V Padmanabha Sarma Chief Financial Officer ||19.78 |
|Chief Financial Officer Company Secretary in the financial year 2019-20. ||Mr. S Yoganandhan Company Secretary. ||17.61 |
|The percentage decrease in the median remuneration of employees in the financial Year 2019-20. || ||5.71 |
|The number of permanent employees on the rolls of Company as on 31.03.2020 || ||3 |
|Average percentage increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentage increase in the managerial remuneration and justification thereof ||Average percentage decrease already made in the salaries of employees other than the key managerial personnel in the FY 2019-20. ||18.80 |
| ||Average percentage increase already made in the salaries of the key managerial personnel in the FY 2019-20 ||5.51 |
INFORMATION PURSUANT TO RULE 5(2) OF THE COMPANIES (APPOINTMENT ANDREMUNERATION OF MANAGERIAL PERSONNEL) RULES 2014: DETAILS OF EMPLOYEES IN TERMS OFREMUNERATION RECEIVED DURING THE YEAR
Details of top 10 employees in terms of remuneration received duringthe year.
|Name ||Designation ||Remuneration ||Qualification ||Experience ||Date of Joining ||Age ||Last Employment |
| || ||(Rs. in Lakhs) || || || || || |
|E N . Rangaswami ||Whole-Time Director ||48.00 ||B.Sc. ACA ||41 Years ||05/12/2012 ||64 ||Manali petrochemicals Ltd General Manager (Finance) |
|V Padmanabha Sarma ||Chief Financial Officer ||16.65 ||B.Com. ACA ||44 Years ||01/12/2012 ||70 ||MCC Finance Ltd Senior Vice president Proactive Solutech |
|S. Yoganandhan ||Company Secretary ||6.41 ||B. Com. ACS ||11 Years ||02/11/2018 ||33 ||India Private Limited |
|V M Aruncahalam ||Assistant Manager (Accounts) ||7.96 ||B.Com. ||32 Years ||12/06/2013 ||53 ||Company Secretary SPIC SMO Accounts Manager |
|L S Venkataraman ||Assistant Manager (Accounts) ||5.49 ||BA. ||43 Years ||09/11/2012 ||67 ||Manali Petrochemicals Ltd executive |
|Gopichand Koduri ||Asst. Manager ||1.47 ||B.Com CA (Inter) ||7 Months ||09/12/2019 ||24 ||IBM India Private Ltd. |
1. As per the disclosure available with the Company none of the aboveemployees is related to any director and does not hold any shares in the Company exceptMr. V. Padmanabha Sarma.
2. The remuneration shown above includes contributions to provident andother funds.
AFFIRMATION THAT THE REMUNERATION IS AS PER THE REMUNERATION POLICY
Company is adopting remuneration guidelines for fixing the remunerationas per the Remuneration policy.
Your directors express their grateful thanks for the assistanceco-operation and support extended to the Company by promoters shareholders and thebankers and appreciation for their continued support. The Directors also place on recordtheir appreciation of the good work put in by the employees of the company.
| || ||By order of the Board |
| || ||For Mercantile Ventures Limited |
| ||E N Rangaswami ||B. Narendran |
|Place: Chennai ||(DIN: 06463753) ||(DIN 01159394) |
|Date: 13 August 2020 ||Whole-time Director ||Director |