TO THE MEMBERS OF MODERN SHARES AND STOCKBROKERS LIMITED
The Directors take pleasure in presenting the Eightieth AnnualReport together with the audited financial statements for the year ended March 31 2019.
1. FINANCIAL RESULTS
| ||31/03/2019 ||31/03/2018 |
| ||Rupees (Rs.) ||Rupees (Rs.) |
|GROSS PROFIT/ (LOSS) ||(340019) ||4824041 |
|Less: Depreciation ||(477967) ||(225757) |
|PROFIT/ (LOSS) BEFORE || || |
|EXCEPTIONAL ITEMS AND TAXATION ||(817986) ||4598284 |
|EXCEPTIONAL ITEMS ||(4246310) ||(1181500) |
|PROVISION FOR TAXATION (net) ||36934 ||(1343313) |
|PROFIT/ (LOSS) AFTER TAX ||(5027362) ||2073471 |
|Add: Brought Forward Profit of Previous Year ||58202210 ||57892767 |
|AMOUNT AVAILABLE FOR APPROPRIATION ||53174848 ||59966238 |
|Less: Dividend Paid for previous year ||(1465651) ||(1465656) |
|Less: Corporate tax on dividend ||(301269) ||(298372) |
|Less: Transfer to General Revenue ||NIL ||NIL |
|Balance carried to Balance Sheet ||51407928 ||58202210 |
2. BUSINESS ACTIVITIES AND OPERATIONS
The Company's operations resulted in a gross loss of Rs. 3.40lakhs as against gross profit of Rs. 48.24 lakhs in the previous year. After providing fordepreciation of Rs. 4.78 lakhs (previous year Rs. 2.26 lakhs) and making net provision fortaxation of
Rs. 0.37 lakhs as against previous year Rs. 13.43 lakhs your Companyhas incurred a net loss of Rs. 50.27 lakhs after provisioning exceptional items of Rs.42.46 lakhs (shortfall in the value of the investments made by the company in the previousyears) as against net profit of Rs. 20.73 lakhs in the previous year. Your Board ofDirectors has decided not to transfer any amount to the Reserves for the year under reviewin view of the Loss incurred during the year.
This year's loss includes mark to market investment write off ofRs. 42.46 lakhs in Innovative B2B Solutions Private Limited shares. As per the AccountingStandard requirements the Company has to provide in the books any diminution in theinvestment made in the books of accounts and accordingly the same was provided. Thus we donot have any more mark to market investments in our books that need any further markingdown to market value with the sale of Innovative B2B Solutions Private Limited shares inthe current year.
It has been a tough year for both the markets and our company. Whilethe main indices did eke out some gains it was a very difficult year for the broadermarkets and we have seen significant drops in the prices of midcap and small cap stocks.In addition clients turnover especially on the institutional front have seen a slowdownin the past year. The major worry for the markets has been the sluggishness in the Indianeconomy as reflected in the slowdown in Automobile sector. Further we have seen a drop inboth GDP and IIP data and with the RBI cutting rates; it reflects that they too haverecognized that the overall growth in the economy is an issue in the near term. India isone of the most expensive stock markets at the current moment with the Nifty P/E at alltime highs.
The one positive for the markets is that the Elections are out of theway and we have a continuity of government which is good for the overall stability of boththe country and the stock markets. Foreign inflows have picked up sharply in the pastthree months and more of the same is expected going forward. While the government has todo a lot to kick start the economy we are hopeful that it will continue with the reformsof the past five (5) years and we will start to see the benefits soon for policies alreadytaken earlier and new ones that will be taken going forward over the next few months.
The Board of Directors of your company after considering holisticallythe relevant circumstances and keeping in view the loss incurred during the financial yearended March 31 2019 has decided that it would be prudent not to recommend any dividendfor the year under review.
The Board of Directors of the Company is duly constituted and followingcessation and appointment of directors have been made during the period under review.
Mr. U.K Mallik (DIN: 00012099) Non-executive Independent Director andChairman of the Company expired on February 11 2019. Your Board of Directors wish toplace on records their gratitude and sincere appreciation for the rich contributions andvaluable guidance from time to time made by him over the years and the work carried on byhim during his long tenure of association as Director. Your Board of Directors also praysthat the departed soul rest in peace.
In accordance with the Articles of Association of the Company Mrs.Roshan Advani Patheria (DIN: 00651144) who is longest in the office retires by rotationand being eligible for re-appointment and has indicated her willingness to serve ifreappointed.
Mr. Anil Sugno Manghnani (DIN: 00012806) Whole-time Director whosere-appointment is due for renewal be and he is hereby recommended by the Board ofDirectors for his re-appointment. The Company has received notice from a member underSection 160 of the Companies Act 2013 proposing his candidature for the office of theWhole-time Director. Mr. Anil Sugno Manghnani (DIN: 00012806) has also given his consentfor his re-appointment as Whole-time Director and also a declaration that he is not in anyway disqualified from being appointed as a Director with regards to his status vis-a-visthe Company.
Mr. Pankaj Rajnikant Ved (DIN: 00207079) was appointed as an AdditionalNon-Executive Independent Director effective April 1 2019. As per the provisions ofSection 160 of the Companies Act 2013 your company has received a notice from a memberspecifying his intention to propose the appointment of Mr. Pankaj Rajnikant Ved who alsohas given his consent for his appointment as non-executive Independent Director for aconsecutive period of five (5) years up to March 31 2024 and has confirmed that he is notin any way disqualified from being appointed as a Director with regards to his statusvis-a-vis the Company subject to his appointment being approved by the members at theensuing Annual General Meeting.
Mr. Ashok Tikamdas Kukreja (DIN: 00463526) one of the IndependentDirector of the Company has been appointed by the members through Postal Ballot on March31 2015 for a term of five (5) years and whose current term of office as IndependentDirector expires on March 31 2020 and is eligible for re-appointment for another term offive (5) consecutive years up to March 31 2025 subject to the approval of the Members bySpecial Resolution. The said Director has shown his willingness and also given his consentfor re-appointment and has confirmed that he still retains the status as IndependentDirector and that he does not suffer from any disqualifications for being re-appointed asIndependent Director. The Company has received a notice under Section 160 of the CompaniesAct 2013 from a member proposing the re-appointment of Mr. Ashok Tikamdas Kukreja (DIN:00463526) as Independent Director of the Company for a consecutive period of five (5)years up to March 31 2025. Approval of members by a Special resolution is being sought atthe ensuing Annual General Meeting.
All Independent Directors have given declaration that they meet thecriteria of independence as laid down under Section 149(6) of the Companies Act 2013 andRegulation 25 of the Securities and Exchange Board of India (Listing Obligations andDisclosure Requirements) Regulations 2015.
The Company has not accepted any deposits falling under the ambit ofSection 73 of the Companies Act 2013 (hereinafter referred to as The Act') andthe Rules framed thereunder during the year under review.
6. BOARD EVALUATION
Pursuant to the provisions of the Companies Act 2013 and Regulation 25(4) & 26 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 the Board has carried out an annual performance evaluation of its own performancethe directors individually as well as the evaluation of the working of its AuditNomination
& Remuneration and Stakeholders & Grievance Committees. Themanner in which the evaluation has been carried out has been explained herein below:
A structured questionnaire was prepared after inputs received from theDirectors covering various aspects of the Board's functioning such as adequacy ofthe composition of the Board and its committees Board culture execution and performanceof specific duties obligation and governance.
A separate exercise was carried out to evaluate the performance ofIndividual Directors including the Chairman of the Board who were evaluated on parameterssuch as level of engagement and contribution independent judgment safeguarding theinterest of the Company and its stakeholders etc. The performance evaluation ofIndependent Directors was carried out by the entire Board. The performance ofNon-independent Directors could not be carried out by the Independent Directors due to thedeath of U. K. Mallik on February 11 2019 as the Committee of the Independent Directorswas left with only one Independent Director. However Mr. Ashok Tikamdas Kukreja a loneIndependent Director on the Board had reviewed the performance of the compliancedepartment and had expressed his satisfaction with the evaluation process.
Number of Board Meetings held:
The Board of Directors duly met 4 (Four) times during the financialyear from 1st April 2018 to 31st March 2019. The dates on which the meetings were heldare as follows:
|Dates on which ||Strength of the Board ||No. of Directors Present |
|Board Meetings held || || |
|23rd May 2018 ||6 ||4 |
|02nd August 2018 ||6 ||6 |
|01st November 2018 ||6 ||4 |
|30th January 2019 ||6 ||5 |
Relevant Details of Directors
|Sr. No. ||Name of the Director ||Date of Appointment ||Category ||Number of Directorship held in other Indian Companies ||Committee(s) Position Member and Chairperson in all Companies |
|1 ||Mr. U. K. Mallik* ||20.11.1970 ||Chairperson & Non Executive Director/ Independent ||None ||3 and 2 |
| ||(Upto February 11 2019) || || || || |
|2 ||Mr. Anil Sugno Manghnani ||25.10.2000 ||Whole Time Director ||2 ||1 |
|3 ||Mr. Narendra Hira Advani ||30.05.2011 ||Non Executive Director ||4 ||- |
|4 ||Mr. Ghansham Shewakramani ||25.01.1995 ||Non Executive Director ||20 ||2 |
|5 ||Mrs. Roshan Advani Patheria ||31.01.2007 ||Woman Non Executive Director ||- ||1 |
|6 ||Mr. Ashok Tikamdas Kukreja ||18.02.2015 ||Non-executive Director/Independent ||2 ||9 and 7 |
*(Ceased as Director due to Death on 11-2-2019)
Attendance of Directors at Board Meetings and Annual GeneralMeeting:
|Name of the Director ||Attendance at the Board Meeting held on ||Attendance at the AGM held on 02/08/2018 |
| ||23/05/2018 ||02/08/2018 ||01/11/2018 ||30/01/2019 || |
|Mr. Anil Sugno Manghnani ||Attended ||Attended ||Attended ||Attended ||Attended |
|Mr. Narendra Hira Advani ||Leave ||Attended ||Leave ||Attended ||Attended |
|Mr. Uday Kumar Mallik* ||Attended ||Attended ||Attended ||Attended ||Attended |
|Ms. Roshan Advani Patheria ||Leave ||Attended ||Leave ||Leave ||Attended |
|Mr. Ghansham Shewakramani ||Attended ||Attended ||Attended ||Attended ||Attended |
|Mr. Ashok Tikamdas Kukreja ||Attended ||Attended ||Attended ||Attended ||Attended |
Audit Committee Member
|Name of the Member ||23/05/2018 ||02/08/2018 ||01/11/2018 ||30/01/2019 |
|Mr. Ashok Tikamdas Kukreja || || || || |
|(Chairperson) ||Attended ||Attended ||Attended ||Attended |
|Mr. Uday Kumar Mallik* ||Attended ||Attended ||Attended ||Attended |
|Mr. Anil Sugno Manghnani ||Attended ||Attended ||Attended ||Attended |
Stakeholder & Grievance Committee Member
|Name of the Member ||23/05/2018 ||02/08/2018 ||01/11/2018 ||30/01/2019 |
|Mr. Uday Kumar Mallik *(Chairperson) ||Attended ||Attended ||Attended ||Attended |
|Mr. Ghansham Shewakramani ||Attended ||Attended ||Attended ||Attended |
|Mr. Ashok Tikamdas Kukreja ||Attended ||Attended ||Attended ||Attended |
Nomination & Remuneration Committee Member
|Name of the Member ||23/05/2018 ||02/08/2018 ||01/11/2018 ||18/01/2019 |
|Mr. Uday Kumar Mallik* (Chairperson) ||Attended ||Attended ||Attended ||Attended |
|Mr. Ashok Tikamdas Kukreja ||Attended ||Attended ||Attended ||Attended |
|Mrs. Roshan Advani Patheria ||Leave ||Attended ||Leave ||Attended |
*(Ceased as Director due to Death on 11-2-2019)
The Independent Directors meeting was fixed to be held on February14 2019. However due to the sad demise of Mr. U. K. Mallik on February 11 2019 theIndependent Directors Meeting could not be held as the Independent Directors Committee wasleft with only one Independent Director Mr. Ashok Kukreja.
7. DIRECTORS' RESPONSIBILITY STATEMENT
To the best of their knowledge and belief and according to theinformation and explanations obtained by them your Directors make the followingstatements in terms of Section 134(5)(c) of the Companies Act 2013:
a) that in the preparation of the annual financial statements for theyear ended March 31 2019 the applicable accounting standards have been followed alongwith proper explanation relating to material departures if any;
b) that such accounting policies as mentioned in Notes to the FinancialStatements have been selected and applied consistently and judgment and estimates havebeen made that are reasonable and prudent so as to give a true and fair view of the stateof affairs of the Company as at March 31 2019 and of the Loss of the Company for the yearended on that date;
c) that proper and sufficient care has been taken for the maintenanceof adequate accounting records in accordance with the provisions of the Companies Act2013 for safeguarding the assets of the Company and for preventing and detecting fraud andother irregularities;
d) that the annual financial statements have been prepared on a goingconcern basis;
e) that systems to ensure compliance with the provisions of allapplicable laws were in place and were adequate and operating effectively and
f) that proper internal financial controls were in place and that thefinancial controls were adequate and were operating effectively.
8. BUSINESS RISK MANAGEMENT
Although the Company has long been following the principle of riskminimization as is the norm in every industry it has now become a compulsion. Thereforein accordance with Regulation 21 of the Securities and Exchange Board of India (ListingObligations and Disclosure Requirements) Regulations 2015 the Board members were informedabout risk assessment and minimization procedures after which the Board formally adoptedsteps for framing implementing and monitoring the risk management plan for the Company.The main objective of this policy is to ensure sustainable business growth with stabilityand to promote a pro-active approach in reporting evaluating and resolving risksassociated with the business. In order to achieve the key objective the policyestablishes a structured and disciplined approach to Risk Management in order to guidedecisions on risk related issues. In today's challenging and competitive environmentstrategies for mitigating inherent risks in accomplishing the growth plans of the Companyare imperative.
The common risks inter alia are: Regulations competition Businessrisk Technology obsolescence Investments retention of talent and expansion offacilities. Business risk inter-alia further includes financial risk political riskfidelity risk and legal risk.
As a matter of policy these risks are assessed and steps asappropriate are taken to mitigate the same.
9. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
The Company has an Internal Control System commensurate with the sizescale and complexity of its operations. The scope and authority of the Internal Audit (IA)function is to maintain its objectivity and independence the Internal Audit functionreports to the Chairperson of the Audit Committee of the Board.
The Internal Audit Department monitors and evaluates the efficacy andadequacy of internal control system in the Company its compliance with operating systemsaccounting procedures and policies of the Company. Based on the report of internal auditfunction each department undertakes corrective action in their respective areas andthereby strengthens the controls. Significant audit observations and corrective actionsthereon are presented to the Audit Committee of the Board.
In order to strengthen the system of Internal Control and provide Boardof Directors with an added ability to oversee internal controls Internal FinancialControl (IFC) system was put in place in accordance with the requirements of Section134(5)(e) of the Companies Act 2013. Systems of Internal Control were implementedconsidering the framework suggested in Guidance Note on Audit of Internal FinancialControls over the Financial Reporting issued by The Institute of Chartered Accountants ofIndia to address its operational and financial risk.
10. VIGIL MECHANISM/ WHISTLE BLOWER
In pursuant to the provisions of Section 177(9) & (10) of theCompanies Act 2013 a Whistle Blower Policy for directors and employees to report genuineconcerns has been established. The Policy has been uploaded on the website of the Companyat www.modernshares.com under investors/ policy documents/ Vigil Mechanism Policy link.
11. RELATED PARTY TRANSACTIONS
All related party transactions that were entered into during thefinancial year were on an arm's length basis and were in the ordinary course ofbusiness. An omnibus approval was taken for one (1) year from Audit Committee and Board attheir Meeting held on 23/05/2018. There are no materially significant related partytransactions made by the Company with Promoters Directors Key Managerial Personnel orother designated persons which may have a potential conflict with the interest of theCompany. None of the Directors has any pecuniary relationships or transactions vis--visthe Company.
In compliance under the provisions of the Companies Act 2013transactions with related parties entered by the Company in the normal course of businessare periodically placed before the Audit Committee for its omnibus approval and theparticulars of contracts entered during the year in Form AOC-2 is enclosed as Annexure-A to this report.
12. SIGNIFICANT AND MATERIAL ORDERS
PASSED BY THE REGULATORS OR COURTS
There are no orders passed by the Regulators/ Courts which would impactthe going concern status of the Company and its future operations.
13.1 STATUTORY AUDITORS
M/s. Baheti & Co. Chartered Accountants (Firm Registration No.006287C) Bhopal have been appointed as Statutory Auditor of the Company at the AnnualGeneral Meeting held on July 28 2017 for a period of five (5) years up to the conclusionof the Annual General Meeting to be held in the year 2022. The requirement for seekingratification of the members for continuation of their appointment has been withdrawnconsequent upon the changes made by the Companies (Amendments) Act 2017 with effect fromMay 7 2018. Hence the resolution seeking ratification of the members for theirappointment is not being placed at the ensuing Annual General Meeting.
13.2 SECRETARIAL AUDITORS
The Secretarial Audit Report for the Financial Year ended March 312019 is annexed herewith as Annexure- B.
Pursuant to the provisions of Section 204 of the Companies Act 2013and the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 theCompany has appointed Mr. Janak Pandya Company Secretary in Practice (CP No.: 5940 ACS:10841) to undertake the secretarial audit of the Company for the Financial Year endedMarch 31 2020.
13.3 INTERNAL AUDITORS
M/s. Jayant Associates Chartered Accountants (Firm Registration No:104099W) appointed as Internal Auditors for the Financial Year ended March 31 2020 toperform the duties as Internal Auditors of the Company and their report is reviewed by theAudit Committee from time to time.
14. FIXED ASSETS
The Fixed Assets of the Company as at the close of the financial yearstood at Rs. 23.61 Lakhs (Previous year Rs. 12.28 Lakhs). In compliance with theAccounting Standard AS-28 relating to "Impairment of Assets" the Company hasreviewed the carrying amount of its fixed assets as at the end of the financial year.
15. CORPORATE GOVERNANCE & ANNUAL SECRETARIAL COMPLIANCE REPORT
As per Regulation 15(2)(a) of SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 as amended from time to time the compliance with thecorporate governance provisions shall not apply in respect of the listed entity havingpaid up equity share capital not exceeding Rs. 10 Crores and Net Worth not exceeding Rs.25 Crores as on the last day of the previous financial year. Since the Company's paidup equity capital and the net worth fall below the limit mentioned above compliance withcorporate governance are not applicable to the Company. Accordingly as per BSEclarification vide circular LIST/COMP/12/2019-20 the Companies to which the Regulation15(2)(a) of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 arenot applicable Regulation 24A of SEBI (Listing Obligations and Disclosure Requirements)(Amendments) Regulations 2018 is also not applicable and not required to submit theAnnual Secretarial Compliance Report.
16. EXTRACT OF ANNUAL RETURN
The details forming part of the extract of the Annual Return in FormMGT-9 is annexed herewith as Annexure- C.
17. COMPLIANCE WITH SECRETARIAL STANDARDS
The Board of Directors affirms that the Company has complied with theapplicable Secretarial Standards issued by the Institute of Companies
Secretaries of India (SS-1 & SS-2) respectively relating toMeetings of the Board and its Committees which have mandatory application and GeneralMeeting.
18. REMUNERATION RATIO OF THE DIRECTORS/ KEY MANAGERIAL PERSONS (KMP)/EMPLOYEES
The information required pursuant to Section 197 read with Rule 5(1) ofthe Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 and theCompanies (Particulars of Employees) Rules 1975 in respect of employees of the Companyand Directors is furnished hereunder:
There were 20 permanent employees on the rolls of the Company as on 31March 2019.
|Sr. No. ||Name ||Designation ||Remuneration paid FY 2018-19 ||Remuneration paid FY 2017-18 ||Increase in Remuneration from previous ||Ratio/ Times per median of employee remuneration |
| || || ||(Rs. Lakhs) ||(Rs. Lakhs) ||Year (Rs. Lakhs) || |
|1 ||Mr. Anil Sugno Manghnani ||Whole-time Director ||10.34 ||10.30 ||0.00 ||1.56 |
|2 ||Mr. Radhakrishna N Shenvi ||CFO ||10.08 ||10.08 ||0.00 ||1.55 |
|3 ||Ms. Vibha Dinesh Mehta ||Company Secretary & Compliance Officer ||0.74* ||NIL ||NA ||NA |
*Part of the year (effective 19th November 2018)
19. PARTICULARS OF EMPLOYEES
Disclosure pertaining to the remuneration and other details as requiredunder Section 197(12) of the Act and the Rules framed thereunder is not attached as noneof the employees exceed the limit prescribed under the Act.
The particulars of the conservation of energy technology andabsorption foreign exchange earnings and outgo as required u/s. 134(3)(m) of theCompanies Act 2013 and Rule 8(3) of the Companies (Accounts) Rules 2014 the same arenot applicable to the Company. The information required pursuant to Section 197 read withRule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014in respect of employees of the Company is not given as none of the employees of thecompany exceeds the limit.
21. DEMATERIALISATION OF SHARES
97.73% of the Company's paid up equity share capital is indematerilised form as on 31st March 2019 and balance 2.27% is in physical form. TheCompany's Registrar and Share Transfer Agents is M/s. Link Intime India Pvt. Ltd.having office at C-101247 Park LBS Marg Vikhroli west Mumbai 400083.
22. TRANSFER OF EQUITY SHARES UNPAID/ UNCLAIMED DIVIDEND TO IEPF
In line with the statutory requirements the Company has transferred tothe credit of the Investor Education and Protection Fund set up by the Government ofIndia equity shares in respect of which dividend had remained unpaid/ unclaimed for aperiod of seven (7) consecutive years within the time lines laid down by the Ministry ofCorporate Affairs. Unpaid/ unclaimed dividend for seven (7) years or more has also beentransferred to the IEPF pursuant to the requirements under the Act.
The Board of Directors take this opportunity to thank the employees fortheir dedicated service and contribution towards the growth of the Company our sincereappreciation to Institutional and Retail Clients for their patronage to our Company and tothe Shareholders for their continuous support.
24. CAUTIONARY STATEMENT
The statements contained in the Board's Report contain certainstatements relating to the future and therefore are forward looking within the meaning ofapplicable securities laws and regulations. Various factors such as economic conditionschanges in government regulations tax regime other statues market forces and otherassociated and incidental factors may however lead to variation in actual results.
|By Order of the Board of Directors |
|For Modern Shares and Stockbrokers Limited |
|Sd/- ||Sd/- |
|Anil Sugno Manghnani ||Ghansham Shewakramani |
|Whole Time Director ||Director |
|(DIN-00012806) ||(DIN-00413343) |
|Mumbai dated 28th May 2019 |
|Registered Office: || |
|Wankhede Stadium || |
|North Stand Staircase No. 13 |
|D. Road Churchgate || |
|Mumbai - 400020 || |
|CIN: L45200MH1939PLC002958 |
|Website: www.modernshares.com |
EXTRACT OF ANNUAL RETURN
as on the financial year ended on 31st March 2019
[Pursuant to section 92(3) of the Companies Act 2013 and rule 12(1) ofthe Companies (Management and Administration) Rules 2014]