Your Directors are pleased to present the 27th Annual Report of the Company togetherwith the Audited Financial Statements for the year ended 31st March 2020.
SUMMARY OF FINANCIAL RESULTS OF THE COMPANY:
|PARTICULARS ||2019-2020 ||2018-2019 |
|Total Income ||- ||- |
|Total Expenditure ||1305436 ||1908461 |
|Profit Before Interest and depreciation ||(1305436) ||(1908461) |
|Less: Depreciation ||- ||- |
|Interest ||- ||- |
|Tax ||- ||- |
|Net Profit/(Loss) After Tax ||(1305436) ||(1908461) |
Income of the company from operations is Rs. Nil. Loss before tax is Rs. (1305436) ascompared to Rs(1908461) in previous year.
TRANSFER TO RESERVES:
Due to unabsorbed losses no amount has been proposed to be transferred to Reserves.
In view of accumulated losses your Directors did not recommend any dividend for theyear.
The company has not accepted/renewed deposits within the meaning of Section 73 of theCompanies Act 2013 and rules made there under from public or from the shareholders duringthe period under review.
MANAGEMENT'S DISCUSSION AND ANALYSIS REPORT:
Management's Discussion and Analysis Report for the year under review as stipulatedunder Regulation 34 (3) read with Schedule Part V of the SEBI (Listing Obligations andDisclosures Requirements) Regulations 2015 with Stock Exchange in India is presented ina separate Annexure -I forming part of the Annual Report.
CHANGE IN THE NATURE OF BUSINESS IF ANY:
There was no change in the nature of business of the Company or any of its subsidiariesduring the year.
MATERIAL CHANGES AND COMMITMENT IF ANY AFFECTING THE FINANCIAL POSITION OF THECOMPANY:
During the year under review there were no material changes and commitments affectingthe financial position of the Company.
The Forensic Audit was conducted for the period from April 12015 to January 152018.The Forensic Audit
Report was submitted by BSE to SEBI on September 27 2018.On the basis of theexamination of Forensic Audit Report by SEBI an Show Cause Notice was issued dated August9 2019.The Company has filled its reply dated January 15 2020. After considering all thefacts and circumstances of the case and exercising the power conferred an order was passedby Adjudicating Officer dated February 28 2020 imposing a monetary penalty of Rs.600000 on the Company. There was also another proceeding initiated by the Whole TimeMember SEBI by issuing a show cause notice dated April 222019.The Company has filled itsreply dated November 222019 to the SCN. After considering all the facts and circumstancesof the case and exercising the power conferred an order was passed by Whole Time Member(SEBI) dated April 20 2020. SEBI has issued another Show Cause Notice dated May 05 2020after an order passed by Adjudicating Officer dated February 28 2020 .The Company hasfilled its reply dated May 212020 to the SCN.Also the Company is in the process of filingan appeal before Securities Appellate Tribunal. The Company is unable to predict thescope duration or the outcome of these matters therefore no provision has been made forpenalty leviable due to the above report.
DIRECTORS AND KEY MANAGERIAL PERSONNEL:
As per the provisions of Section 149(4) of the Companies Act 2013 every listed companyshall have at least one-third of the total number of directors as independent directors.The Board of the Company to comply with the aforesaid requirements
As per the Section 149(10) of the Companies Act 2013 provides that independentdirector shall hold office for a term of upto five consecutive years on the Board of theCompany. Further according to the Section 149(11) of the Companies Act 2013 noindependent director shall be eligible for appointment for more than two consecutive termsof five years. Sub-section (13) states that the provisions of retirement by rotation asdefined in Sub-sections (6) and (7) of Section 152 of the Act shall not apply to suchindependent directors.
1. Mr. Anil Mansukhlal Kothari (DIN: 01991283) has been reappointed as non- executiveIndependent Director for the 2nd term (5 years) w.e.f 23 March2020 to 20 March 2025 forperiod of 5 years.
2. Mrs. Kirti Ghag Rakesh (DIN: 07141300) has been re-appointed as Managing Directorfor the 2nd term w.e.f. August 26 2020 to August 25 2025 for a period of 5 years.
NUMBER OF MEETINGS OF THE BOARD:
The Board 5 times during the financial year the details of which are given in theCorporate Governance Report that forms part of this Annual Report. The intervening gapbetween any two meetings was within the period prescribed by the Companies Act 2013.
INDEPENDENT DIRECTORS DECLARATION:
The Company has received necessary declaration from each independent director underSection 149(7) of the Companies Act 2013 that he/she meets the criteria of independencelaid down in Section 149(6) of the Companies Act 2013 and Regulation 25 of SEBI (ListingObligations and Disclosures Requirements) Regulations 2015.
The Independent Directors under section 149(6) of the Companies Act 2013 declaredthat:
1. They are not promoters of the Company or its holding subsidiary or associatecompany;
2. They are not related to promoters or directors in the company its holdingsubsidiary or associate company.
3. The independent Directors have /had no pecuniary relationship with company itsholding subsidiary or associate company or their promoters or directors during thetwo immediately preceding financial years or during the current financial year;
4. None of the relatives of the Independent Director has or had pecuniary relationshipor transaction with the company its holding subsidiary or associate company or theirpromoters or directors amounting to two per cent or more of its gross turnover or totalincome or fifty lakh rupees or such higher amount as may be prescribed whichever islower during the two immediately preceding financial years or during
the current financial year;
5. Independent Director neither himself nor any of his relatives--
(i) holds or has held the position of a key managerial personnel or is or has beenemployee of the company or its holding subsidiary or associate company in any of thethree financial years immediately preceding the financial year in which he is proposed tobe appointed;
(ii) is or has been an employee or proprietor or a partner in any of the threefinancial years immediately preceding the financial year in which he is proposed to beappointed of--
(A) a firm of auditors or company secretaries in practice or cost auditors of thecompany or its holding subsidiary or associate company; or
(B) any legal or a consulting firm that has or had any transaction with the companyits holding subsidiary or associate company amounting to ten percent or more of the grossturnover of such firm;
(iii) Holds together with his relatives two percent. or more of the total voting powerof the company; or
(iv) is a Chief Executive or Director by whatever name called of any nonprofitorganization that receives twenty-five percent. or more of its receipts from the companyany of its promoters directors or its holding subsidiary or associate company or thatholds two percent or more of the total voting power of the company;
6. Independent Director possesses such qualifications as may be directed by the Board.
7. The Company & the Independent Directors shall abide by the provisions specifiedin Schedule IV of the Companies Act 2013.
SEBI (Listing Obligations and Disclosures Requirements) Regulations 2015 mandates thatthe Board shall monitor and review the Board evaluation framework. The Companies Act 2013states that a formal annual evaluation needs to be made by the Board of its ownperformance and that of its committees and individual directors. The Schedule IV of theCompanies Act 2013 states that the performance evaluation of independent directors shouldbe done by the entire Board of Directors excluding the director being evaluated.
The evaluation of all the directors and the Board as a whole was conducted based on thecriteria and framework adopted by the Board. The Board approved the evaluation resultsalong with evaluation done by the Nomination and Remuneration Committee.
PERFORMANCE OF THE BOARD AND COMMITTEES:
During the year under review the performance of the Board & Committees andIndividual Director(s) based on the below parameters was satisfactory:
(i) All Directors had attended the Board meetings.
(ii) The remunerations paid to Executive Directors are strictly as per the Company andindustry policy.
(iii) The Independent Directors only received sitting fees.
(iv) The Independent Directors contributed significantly in the Board and committeedeliberation and business and operations of the Company and subsidiaries based on theirexperience and knowledge and Independent views.
(v) The Credit Policy Loan Policy and compliances were reviewed periodically;
(vi) Risk Management Policy was implemented at all critical levels and monitored by theInternal Audit team who places report with the Audit committee and Board.
MEETING OF INDEPENDENT DIRECTORS:
Pursuant of the provision of Section 149 (8) of the Companies Act 2013 read withSchedule IV and Regulation 25 of SEBI (Listing Obligations and Disclosures Requirements)Regulations 2015 the Independent Directors of the Company held their meeting on 12thFebruary 2020 reviewed the performance of non- independent directors and the Board as awhole including the Chairperson of the Company views expressed by the executive directorsand non-executive directors at various level and quantified the quality quantity andtimeliness of flow of information between the Company management and the Board andexpressed satisfaction. The Board is professionally managed.
POLICY ON DIRECTORS APPOINTMENT AND REMUNERATION:
The current policy is to have an appropriate mix of executive and independent directorsto maintain the independence of the Board and separate its functions of governance andmanagement. As on 31st March 2020 the Board consists of 3 members. Out of which one isthe Managing Director two are independent Directors.
The policy of the Company on directors appointment and remuneration including criteriafor determining qualifications positive attributes independence of a director and othermatters provided under Sub section of Section 178 of the Companies Act 2013 adopted bythe Board and are stated in this Board report. We affirm that the remuneration paid to thedirectors is as per the terms laid out in the nomination and remuneration policy of theCompany.
COMMITTEES OF THE BOARD:
Currently the Board has Four Committees :(1) Audit Committee (2) Nomination andRemuneration Committee(3) Stakeholders Relationship Committee (4) Shares TransferCommittee
A detailed note on the Board and its Committees is provided under the CorporateGovernance Report that forms part of this Annual Report.
NOMINATION AND REMUNERATION COMMITTEE AND STAKEHOLDERS RELATIONSHIP COMMITTEE:
Pursuant to the Section 178 of the Companies Act 2013 the Company has set up aNomination and Remuneration and Stakeholders Relationship Committee. A detailed note onthe composition of the Committees is provided in the corporate governance report sectionof this Annual Report.
The Key Features of the Policy of the said committee are as follows:
For Appointment of Independent Director (ID):
a. Any person who is between the age of 25 years and below 75 years eligible to becomeIndependent Director(ID);
b. He has to fulfill the requirements as per section 149 of the Companies Act 2013read with Clause 49 of the Listing Agreement;
c. Adhere to the code of conduct as per Schedule IV to the Companies Act 2013;
d. Strictly adhere to the Insider Trading Regulation of the SEBI and Insider Tradingpolicy of the Company;
e. Independent Director should have adequate knowledge and reasonably able tocontribute to the growth of the Company and stakeholders;
f. Independent Director should be able to devote time for the Board and other meetingsof the company;
g. Entitled for sitting fees and reasonable conveyance to attend the meetings; and
h. Able to review the policy participate in the meeting with all the stakeholders ofthe company at the Annual General Meeting.
DIRECTORS' RESPONSIBILITY STATEMENT:
Pursuant to the Section 134(3)(c) and Section 134 (5) of the Companies Act 2013 theBoard of Directors of the Company hereby confirm:
(i) That in the preparation of the accounts for the financial year ended 31st March2020 the applicable accounting standards have been followed along with proper explanationrelating to material departures;
(ii) That the Directors have selected such accounting policies and applied themconsistently and made judgments and estimates that were 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 under review;
(iii) That the Directors have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of the Companies Act 2013for safeguarding the assets of the Company and for preventing and detecting fraud andother irregularities;
(iv) That the Directors have prepared the accounts for the financial year ended 31stMarch 2020 on a 'going concern' basis.
(v) The internal financial controls are laid and have been followed by the company andthat such controls are adequate and are operating effectively. Such controls meanscontrols and policies and procedures adopted and adhered by the company for orderly andefficient conduct of the business for safeguarding assets prevention and detection offrauds and errors and maintenance of accounting records and timely preparation offinancial statements and review its efficiency.
The Directors had devised proper systems to ensure compliance with the provisions ofall applicable laws and that such systems were adequate and operating effectively.
VIGIL MECHANISM / WHISTLE BLOWER POLICY:
In terms of the provisions of Section 177(9) of the Companies Act 2013 the Companyhas implemented a vigil mechanism named Whistle Blower Policy to deal with instance offraud and mismanagement if any in staying true to our values of Strength Performanceand Passion and in line with our vision of being one of the most respected companies inIndia the Company is committed to the high standards of Corporate Governance andstakeholder responsibility.
A Committee has been constituted which looks into the complaints raised. The Committeereports to the Audit Committee and the Board. The Whistle Blower Policy ensures thatstrict confidentiality is maintained whilst dealing with concerns and also that nodiscrimination will be meted out to any person for a genuinely raised concern.
INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:
The Board has adopted the policies and procedures for ensuring the orderly andefficient conduct of its business including adherence to the Company's policies thesafeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial disclosures.
The Company has an Internal Control System commensurate with the size scale andcomplexity of its operations. To maintain its objectivity and independence the InternalAudit function reports to the Chairman of the Audit Committee.
The Internal Audit Department monitors and evaluates the efficacy and adequacy ofinternal control system in the Company its compliance with operating systems accountingprocedures and policies at all locations of the Company.
Based on the report of internal audit function process owners undertake correctiveaction in their respective areas and thereby strengthen the controls. Significant auditobservations and recommendations along with corrective actions thereon are presented toBoard.
SDK & Associates (Membership no- 111573) as the internal auditor for the financialyear 2020-21 STATUTORY AUDITORS:
pursuant 139 142 of the Companies Act 2013 and the Companies (Audit and Auditors)Rules 2014 and pursuant to the recommendation made by the Audit Committee to the Board ofDirectors M/s. Kala Jain & Co. Chartered Accountants having registration no.127886W be and are hereby re-appointed as a Auditors of the Company who shall holdoffice from the conclusion of this 27th Annual General Meeting for a term of 5 years tillconclusion of the 32nd Annual General Meeting to be held in the calendar year 2025 andthat the Board of Directors be and is hereby authorized to fix such remuneration as may bedetermined by the Audit Committee in consultation with the Auditors and that suchremuneration may be paid on a progressive billing basis in addition to reimbursement ofall out-of-pocket expenses as may be incurred in connection with the audit of the accountsof the Company.
The requirement for the annual ratification of auditors' appointment at the AGM hasbeen omitted pursuant to Companies (Amendment) Act 2017 notified on May 07 2018.
The Auditors have not made any qualification to the financial statement. Their reportson relevant notes on accounts are self-explanatory and do not call for any comments undersection 134 of the companies Act 2013.
SECRETARIAL AUDITORS AND THEIR REPORT:
M/s. Ramesh Chandra Mishra & Associates Company Secretary in Practice wasappointed to conduct the secretarial audit of the Company for the financial year 2019-20as required under Section 204 of the Companies Act 2013 and Rules there under. TheSecretarial Audit Report for F.Y 2019-20 is Annexure-II to this Board's Report.
The Board has re-appointed M/s. Ramesh Chandra Mishra & Associates CompanySecretary in Practice as secretarial auditor of the Company for the financial year2020-21.
SIGNIFICANT AND MATERIALORDERS PASSED BY THE COURTS/REGULATORS:
The Forensic Audit was conducted for the period from April 12015 to January 152018.The Forensic Audit Report was submitted by BSE to SEBI on September 27 2018.On thebasis of the examination of Forensic Audit Report by SEBI an Show Cause Notice was issueddated August 9 2019.The Company has filled its reply dated January 15 2020. Afterconsidering all the facts and circumstances of the case and exercising the power conferredan order was passed by Adjudicating Officer dated February 28 2020 imposing a monetarypenalty of Rs. 600000 on the Company. There was also another proceeding initiated by theWhole Time Member SEBI by issuing a show cause notice dated April 222019.The Company hasfilled its reply dated November 222019 to the SCN. After considering all the facts andcircumstances of the case and exercising the power conferred an order was passed by WholeTime Member (SEBI) dated April 20 2020. SEBI has issued another Show Cause Notice datedMay 05 2020 after an order passed by Adjudicating Officer dated February 28 2020 .TheCompany has filled its reply dated May 212020 to the SCN.Also the Company is in theprocess of filing an appeal before Securities Appellate Tribunal. The Company is unable topredict the scope duration or the outcome of these matters therefore no provision hasbeen made for penalty leviable due to the above report
1. EFD/DRA1 /SM/RR/MPFSL / 10051 / 2019/ 01 DATED April 222019
Show cause notice under 11(1) 11(4) 11A AND 11B OF SEBI ACT 1992 AND SECTION 12A OFSECURITIES CONTRACT (REGULATION) ACT1956 in the matter of MPF Systems Limited.
2. EFD/DRA1 /RJB/TT/MPF / 28332 / 2019/ 01 DATED October 252019
SCN dated April 22201-9 issued under Section 11(4) and 11(B) in the matter of MPFSystems Limited.
3. EAD-7/BJD/BKM/ 20494/1/2019 dated 09-08-2019
Notice under Rule 4(1) of SEBI (Procedure for Holding inquiry and imposing penalties byAdjudications Officer) Rules. 1995 read with Section 15 I of SEBI Act. 1992 &Securities Contracts (Regulation) (Procedure for Holding inquiry and imposing Penalties byAdjudicating Officer) Rules. 2005 read with Section 23 I of SCRA 1956.
Reply to all SCN has been given in reasonable due dates.
CONSERVATION OF ENERGY TECHNOLOGY AND FOREIGN EXCHANGE:
The details of Conversion of Energy Technology Absorption are not applicable in thecase of the company. However the company took adequate steps to conserve the energy andused the latest technology.
During the year under review there were no foreign Exchange Earnings. The ForeignExchange outgo is Nil.
RELATED PARTY TRANSACTIONS/CONTRACTS:
The Company has implemented a Related Party Transactions policy for the purposes ofidentification and monitoring of such transactions. All the transactions that were enteredinto during the financial year were on arm's length basis and were in the ordinary courseof business. There were no materially significant related party transactions made by thecompany with Promoters Key Managerial Personnel or other designated persons which mayhave potential conflict with interest of the company at large.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS:
There were no loans Guarantees and Investments covered under Section 186 of theCompanies Act2013. EXTRACT OF ANNUAL RETURNS:
Pursuant to the Section 134(3)(a) of the Companies Act 2013 the details forming partof the extract of the Annual Return is Form MGT-9 is Annexure-III.
A Report on Corporate Governance along with a Certificate from M/s. Ramesh ChandraMishra & Associates regarding compliance with the conditions of Corporate Governanceas stipulated under SEBI (Listing Obligations and Disclosures Requirements) Regulations2015 forms part of this Report and Annexure-IV to this Board's Report
CORPORATE SOCIAL RESPONSIBILITY:
As per the Companies Act 2013 all companies having net worth of 500 crore or more orturnover of Rs. 1000 crore or more or a net profit of Rs. 5 crore or more during anyfinancial year are required to constitute a appropriate corporate social responsibility(CSR) Committee of the Board of Directors comprising there or more directors at least oneof whom an independent director and such company shall spend at least 2% of the averagenet profits of the Company's three immediately preceding financial year.
The Company presently does not with any of the criteria stated herein above.
BANK AND FINANCIAL INSTITUTIONS:
Directors are thankful to their bankers for their continued support to the company.
Your Directors convey their sincere thanks to the Government Banks Shareholders andcustomers for their continued support extended to the company at all times.
The Directors further express their deep appreciation to all employees for commendableteamwork high degree of professionalism and enthusiastic effort displayed by them duringthe year.
| ||On behalf of the Board of Directors |
| ||For MPF Systems Limited |
|Place: Mumbai || |
|Dated: 26.06.2020 || |
| ||Sd/- |
| ||Kirti Ghag Rakesh |
| ||Managing Director |
| ||DIN:07141300 |