TO THE MEMBERS
Your Directors have pleasure in presenting the Thirty-Fourth Annual Report on thebusiness operations and state of affairs of the Company together with the Standalone andConsolidated Audited Financial Statements for the financial year ended 31st March 2019:
1. FINANCIAL HIGHLIGHTS
The Company's standalone financial performance under review along with previous year'sfigures is given hereunder:
|Particulars ||2018-19 ||2017-18 |
| ||Amount Rs. ||Amount Rs. |
|Income From Operations ||111938394 ||104164148 |
|Other Income ||934105 ||2308921 |
|Total Income ||112872499 ||106473069 |
|Profit before Interest Depreciation & Tax ||102282011 ||97014729 |
|Less : Interest ||63326767 ||9376121 |
|Profit Before Depreciation ||38955244 ||87638608 |
|Less : Depreciation ||861228 ||787419 |
|Profit After Depreciation and Interest ||38094016 ||86851189 |
|Less: Current Income Tax ||3100000 ||9500000 |
|Less: Previous year Adjustment of Income Tax ||(95178) ||184177 |
|Less: Deferred Tax ||(1333600) ||(117866) |
|Net Profit After Taxation ||36422794 ||77284878 |
|Less: Dividend ||8365080 ||6970900 |
|Less: Dividend Distribution Tax ||1719467 ||1419111 |
|Less: Transfer to Statutory Reserve ||7284559 ||15456975 |
|Less: Provision for Standard Assets ||472589 ||103274 |
|Balance carried to Balance Sheet ||18581099 ||53334618 |
|Earning Per Share (Basic/Diluted) ||5.22 ||11.09 |
2. TRANSFER TO RESERVE
A sum of Rs.7284559/- has been transferred to Special Reserve during the year. YourCompany does not propose to transfer any amount to General Reserve out of the amountsavailable for appropriation and an amount of Rs.18581099/- is proposed to be retained inthe Profit & Loss account.
The Board of Directors has recommended a dividend of Re.1.20 (Rupee One and TwentyPaise Only) per equity share on face value of Rs.10/- (Rupees Ten each) i.e.12% for thefinancial year ended 31st March 2019.
The payment of dividend is subject to approval of Members at the forthcoming AnnualGeneral Meeting (AGM) would result a Dividend outflow of Rs.8365080/- and DividendDistribution Tax of Rs.1719467/- aggregating a total outflow of Rs.10084547/-.
Dividend will be paid to those Members whose names appear in the Register of Members ason 12th September 2019.
4. SHARE CAPITAL
The Paid-up Equity Share Capital of the Company as on 31st March 2019 isRs.69675000/-. During the year under review the Company has neither issued any shareswith differential voting rights nor granted any stock options nor any sweat equity.
The Company's equity share capital is listed on BSE Limited. The shares are activelytraded on BSE and have not been suspended from trading.
5. PERFORMANCE REVIEW / OPERATIONS
During the year under review Income from Operations increased from Rs.1041.64 Lakh toRs.1119.38 Lakh (Increase of 7.46%). Profit before Interest Depreciation and Taxincreased from Rs.970.15 Lakh to Rs.1022.82 Lakh (Increase of 5.43%) and Profit after Taxdecreased from Rs.772.85 Lakh to Rs.364.23 Lakh (Decrease of 52.87%) Provision fortaxation for the year is Rs.16.71 Lakh (including Deferred Tax Provision) as compared toRs.95.66 Lakh in the previous financial year.
6. PERFORMANCE OF SUBSIDIARY COMPANIES
During the year under review the Company has only one subsidiary Mukesh BabuSecurities Limited (CIN: U67120MH1994PLC076455) and the Highlights of the financialperformance during Financial Year 2018-19 are as follows:
As on 31st March 2019 the Authorised & Paid up Share Capital of the Company isRs.50000000/- (Rupees Five Crores Only) The net profit of the Company for the year ended31st March 2019 is Rs.96.69 Lakh as compared to net loss of Rs.10.10 Lakh in previousyear.
Accounts of Subsidiary:
The Consolidated Financial Statements of the Company are prepared in accordance withthe provisions of Section 129(3) of the Companies Act 2013 and as per the applicableAccounting Standards issued by the Institute of Chartered Accountants of India.
Pursuant to proviso (b) to Section 136(1) of the Companies Act 2013 a copy of theAudited Financial statements for the year ended 31st March 2019 alongwith the Reports ofthe Board of Directors and the Auditors of the Company's subsidiary - Mukesh BabuSecurities Limited shall be furnished to any shareholder on demand.
These are also available for inspection at the Registered Office of the Company and arealso being posted on the Company's website www.mukeshbabu.com
7. CONSOLIDATED FINANCIAL STATEMENTS
As required under Regulation 33 of the Securities and Exchange Board of India (ListingObligations and Disclosure Requirements) Regulations 2015 ("SEBI ListingRegulations") and applicable provisions of Companies Act 2013 ("the Act")the Consolidated Financial Statements of the Company have been prepared in accordance withthe applicable Accounting Standards and forms part of the Annual Report. Pursuant toSection 129(3) of the Companies Act 2013 read with Rule 5 of The Companies (Accounts)Rules 2014 Statement containing salient features of the Financial Statements ofsubsidiary is annexed to this report as Annexure -A.
8. MATERIAL CHANGES AND COMMITMENT IF ANY AFFECTING THE FINANCIAL POSITION OF THECOMPANY THAT OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR TO WHICH THIS FINANCIALSTATEMENTS RELATE AND THE DATE OF THE REPORT
There are no material changes and commitments affecting the financial position of theCompany that occurred between the end of the financial year to which this financialstatements relate and the date of this report.
9. PUBLIC DEPOSITS
No disclosure is required for the year under review since the Company has neitheraccepted nor renewed any deposits within the meaning of Section 73 and 74 of the CompaniesAct 2013 read with the Companies (Acceptance of Deposits) Rules 2014.
10. PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS
The provisions of Section 186 of the Act pertaining to investment and lendingactivities is not applicable to the Company since the Company is a Non - Banking FinancialCompany registered with the Reserve Bank of India. The details of loan given investmentsmade and guarantees and security provided during the financial year are furnished in theNotes to the financial statements.
11. PARTICULARS OF CONTRACTS OR ARRANGEMENTS MADE WITH RELATED PARTIES
All the related party transactions/_ contracts / arrangements entered by the Companyduring the financial year were on an arms' length basis and were carried out in theordinary course of business.
All related party transactions were placed before the Audit Committee for theirapproval. Prior omnibus approval of the Audit Committee was obtained for the transactionswhich were of repetitive nature. The transactions entered into pursuant to the omnibus andspecific approvals are reviewed periodically by the Audit Committee.
There were no materially significant related party transactions made by the Companyduring the year under consideration with the Promoters Directors or Key ManagerialPersonnel which have a potential conflict with the interest of the Company at large.
In accordance with the Regulation 23 of SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 the Company has formulated a Policy on Materiality ofRelated Party Transactions and a Policy on dealing with Related Party Transactions. ThePolicy is available on the Company's Website at www.mukeshbabu.com_
The particulars as required under Section 188 of the Companies Act 2013 are furnishedin Form AOC-2 which is annexed as Annexure B to this report.
12. CORPORATE SOCIAL RESPONSIBILITY (CSR)_
During the financial year 2018-19 the Company made a contribution towards CSRamounting to Rs.1052000/-. The CSR initiatives undertaken by the Company were mainlyfocused on providing education especially among children women elderly and thedifferently-abled; eradicating hunger poverty and malnutrition; promoting health care.
A detailed list of the CSR contribution made brief outline of the CSR policy is setout in "Annexure C" in the format prescribed in the Companies (Corporate SocialResponsibility) Rules 2014. For details regarding the composition of the CSR Committeeand other information please refer the Corporate Governance Report which forms part ofthis Report. The CSR policy of the Company can be accessed on the Company's website atwww.mukeshbabu.com_
13. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
The Company has an internal control system commensurate with the size of itsoperations and nature of its business activities. The Internal Auditor of the Companymonitors and evaluates the efficacy and adequacy of its internal control system itscompliance with operating systems accounting procedures and policies of the Company.
14. RISK MANAGEMENT
The Company being a Non- Banking Financial Company is regulated by Reserve Bank ofIndia (RBI) and the Board of Directors of the Company has constituted the Risk ManagementCommittee to frame implement and monitor the Risk Management Policy of the Company. TheCommittee is responsible for reviewing the risk management plan and ensuring itsefficiency. The policy is available on the Company's website at www.mukeshbabu.com
15. WHISTLE BLOWER POLICY / VIGIL MECHANISM
As required under Regulation 22 of the Securities Exchange Board of India (ListingObligations and Disclosure Requirements) Regulations 2015 the Company has an effectiveWhistle Blower Policy to deal with the instances of fraud and mismanagement. The detailsof the policy are enumerated in the Corporate Governance Report. The policy is availableon the Company's website at www.mukeshbabu.com
The policy provides for adequate safeguard against the victimization of the employeesand Directors who express their concerns. The Company has also provided direct access tothe Chairman of the Audit Committee on reporting issues concerning the interests ofemployees and the Company. The functioning of Vigil Mechanism is overseen by the AuditCommittee.
16. DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTIONPROHIBITION AND REDRESSAL) ACT 2013
The Company has in place a Policy on Prevention of Sexual Harassment in line with therequirements of the Sexual Harassment of Women at the Workplace (Prevention Prohibitionand Redressal) Act 2013. The Company has voluntarily set up an Internal ComplaintsCommittee to redress the complaints received regarding sexual harassment. All employees(permanent contractual temporary trainees) are covered under this policy. There were nocases reported during the financial year ended 31st March 2019. The policy is availableon the Company's website at www.mukeshbabu.com
17. DIRECTORS AND KEY MANAGERIAL PERSONNEL (KMP)
(a) Board of Directors:
The Board of Directors of the Company has not undergone any change post the appointmentof Mrs. Meena Mukesh Babu on 29th May 2018. Presently the Board consists of fourDirectors namely:
Mr. Mukesh C. Babu - Chairman and Managing Director
As a Chairman and Managing Director Mr. Mukesh C. Babu has always led from the front.He is always firmly committed to the way of working - building consensus and democraticprocesses. He has been serving the Company since its incorporation. He is on the Board ofseveral other companies & his has been fairly experienced in the Industry.
Mr. Pankaj Majithia - Independent Director
Mr. Pankaj Majithia is a Chartered Accountant by profession and a highly respectedprofessional in corporate India. He is a founder Partner of M/s. Majithia &Associates Chartered Accountants and has vast experience in the field of AccountingAudit Finance Taxation Corporate Governance and Company Law. He is also Chairman of theAudit Committee Stakeholders Relationship Committee and Nomination & RemunerationCommittee.
Mr. Vijay Vora - Independent Director
Mr. Vijay L. Vora is a business entrepreneur and an Independent Director on the Boardof Directors of the Company. He has more than two decades of experience in the field ofinvestment with his keen & insightful perspective on the Indian Economy MacroEconomic conditions of Industry as a whole; he has furthered Company's advancements on theInvestments front. He is a Chairman of Corporate Social Responsibility Committee. He is amember of the Audit Committee Stakeholders Relationship Committee Nomination &Remuneration Committee Risk Management Committee.
Mrs. Meena Mukesh Babu Non-Executive Director
She is one of the Promoters of the Company and she is appointed as the Non-ExecutiveDirector of the Company with effect from 29th May 2018. She is also the Managing Directorof Mukesh Babu Securities Limited Company's Subsidiary since 1997 & has extensiveexpertise and experience over 3 decades in the field of Stocks & Shares InvestmentBanking and Merchant Banking. She is a member of the Nomination & RemunerationCommittee.
(b) Retirement by rotation:
In terms of the provisions of Section 152(6) of the Companies Act 2013 Mrs. MeenaBabu Director (DIN: 00799732) retires by rotation at the forthcoming Annual GeneralMeeting and being eligible offers herself for re-appointment. The Board recommends herre-appointment.
(c) Re-appointment of Independent Directors:
The existing tenure of Mr. Pankaj Majithia (DIN: 00224833) as an Independent Directorof the Company is upto 29th September 2019.
Also Mr. Vijay Vora (DIN: 00224394) Independent Director whose tenure is upto 29thSeptember 2019.
The Company has received Notice in writing under Section 160 of the Companies Act 2013from its Members proposing their candidature for the office of Independent Director forfurther tenure of 5 years.
The Company has also received their consent & intimation by Director pursuant toSection 164(2) and Rule 14(1) of the Companies (Appointment and Qualification ofDirectors) Rules 2014 in Form DIR- 8.
(d) Key Managerial Personnel:
There has been no change in the Key Managerial Personnel (KMPs) of the Company sincethe last Annual Report.
Pursuant to the provisions of Section 203 of the Act read with the rules made thereunder the following employees are the whole time key managerial personnel of the Company:
1. Mr. Mukesh Babu Managing Director
2. Mr. Mahesh Thakar Chief Financial Officer
3. Ms. Manasi Dalal Company Secretary & Compliance Officer
18. BOARD AND COMMITTEES
During the year ended 31st March 2019 Five Board meetings were held and the gapbetween two consecutive Board Meetings did not exceed 120 days and atleast one meeting washeld in each quarter.
The details of the constitution and meetings of the Board and its Committees heldduring the year are provided in the Corporate Governance Report which forms part of thisAnnual Report.
19. INDEPENDENT DIRECTORS
(i) Declaration from Independent Directors
The Board has received declaration from all the Independent Directors of the Companyconfirming that they meet the criteria of independence as prescribed both under theCompanies Act 2013 and SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015.
(ii) Criteria for Performance Evaluation
Nomination and Remuneration Committee has laid down various criteria for performanceevaluation of Independent Directors which inter-alia includes preparedness andattendance at the meetings understanding of Company's operations and business andcontribution at Board Meetings.
(iii) Details of Familiarization Programme
Pursuant to Regulation 25(7) of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 every Independent Director on the Board is familiarizedby the Executive Directors/ Senior Managerial Personnel about the Company's strategyoperations organization structure human resources quality finance and risk managementat each Board Meeting before taking up the Agenda items for discussion.
Further at the time of appointment of an independent director the Company issues aformal letter of appointment outlining his/ her role functions duties andresponsibilities as a director. The terms and conditions of letter of appointment isavailable on the Company's website at www.mukeshbabu.com
20. EVALUATION OF THE PERFORMANCE OF THE BOARD ITS COMMITTEES & INDIVIDUALDIRECTORS
Pursuant to the provisions of Section 178(2) of the Companies Act 2013 read with underClause VIII of Schedule IV to the Companies Act 2013 and the requirements laid down underSchedule II on Corporate Governance of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015; the Nomination and Remuneration Committee has framedPolicy for evaluation of performance of the Board its committees and individualDirectors. The Policy inter alia provides the criteria for evaluation of performance suchas Board effectiveness quality of discussion contribution at the meetings businessacumen strategic thinking and relationship with the stakeholders corporate governancepractices contribution of the Committees to the Board in discharging its functions etc.
During the year under review a meeting of Independent Directors was held on 29th May2018 to carry out annual evaluation of the performance of the Board its Committees and ofindividual directors. The manner in which the evaluation was carried out has beenexplained in the Corporate Governance Report.
21. POLICY ON DIRECTORS' APPOINTMENT AND REMUNERATION INCLUDING CRITERIA FORDETERMINING QUALIFICATIONS POSITIVE ATTRIBUTES INDEPENDENCE OF A DIRECTOR AND OTHERMATTERS PROVIDED UNDER SECTION 178 OF THE COMPANIES ACT 2013
Pursuant to the provisions of Section 178 of the Companies Act 2013 read with the SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 the Company hasformulated a Nomination
& Remuneration Policy on directors' appointment and remuneration criteria fordetermining qualifications positive attributes independence of a director and othermatters provided under subsection (3) of section 178. The Nomination & RemunerationPolicy of the Company is available on the Company's website: www.mukeshbabu.com.
22. POLICIES OF THE COMPANY
The Company is determined in maintaining a good corporate governance practice and has arobust system for smooth and effective functioning of the Board. Various policies havebeen framed by the Board of Directors as required under the Companies Act 2013 and SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 in order to follow auniform system of procedures. These policies are periodically reviewed and updated by theBoard of Directors of the Company from time to time. Following are some of the majorpolicies adopted by the Company:
1. Code for Insider Trading Policy
2. Nomination & Remuneration Policy
3. Policy for determination of Material Subsidiary
4. Policy on materiality of Related Party Transactions
5. Policy on dealing with Related Party Transactions
6. Whistle Blower Policy
7. Document Retention and Archival Policy
8. Code for Directors and Senior Managerial Personnel
9. Policy on evaluation of Directors
10. Policy on prevention of Sexual Harassment of Women at Workplace
The aforementioned policies are available on the website of the Company and can beaccessed at www.mukeshbabu.com
23. DIRECTORS RESPONSIBILITY STATEMENT
In accordance with the provisions of Section 134(5) of the Companies Act 2013 yourDirectors to the best of their ability & knowledge hereby confirms that-
(a) in the preparation of the annual accounts for the year ended 31st March 2019 theapplicable accounting standards have been followed from time to time and no materialdepartures have been made from the same;
(b) they have selected such accounting policies and applied them consistently and madejudgments and estimates that are reasonable and prudent so as to give a true and fair viewof the state of affairs of the Company as at 31st March 2019 and of the profit and lossof the Company for that period;
(c) they had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities;
(d) they have prepared the annual accounts on a going concern basis;
(e) they have laid down internal financial controls to be followed by the Company andthat they are adequate and are operating effectively and
(f) they have devised proper systems to ensure compliance with the provisions of allapplicable laws and that such systems were adequate and operating effectively.
24. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS
There were no significant and material orders passed by the Regulators / Courts whichwould impact the going concern status of the Company and its future operations.
25. AUDITORS AND AUDITORS' REPORT
At the 33rd Annual General Meeting of the Company held on 28th September 2018 themembers of the Company ratified the appointment of M/s. Chaitanya C. Dalal & Co.Chartered Accountants (FRN.101632W) as the Statutory Auditors of the Company for a term ofperiod of 5 (five) years up to the conclusion of 37th Annual General Meeting to be held inyear 2022 without further ratification of such appointment by the members.
The Auditors Report annexed to the Financial Statements does not contain anyqualification reservation or adverse remark or disclaimer.
Pursuant to the provisions of Section 204 of the Companies Act 2013 read with theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 the Board ofDirectors in its meeting 29th May 2018 appointed CS V. V. Chakradeo of M/s. V. V.Chakradeo & Co. Practicing Company Secretaries (FCS: 3382/ COP: 1705) to carry outthe audit of secretarial records of the Company for the financial year 2018-19. Theconsent of the Secretarial Auditor to undertake the secretarial audit for the financialyear ended 31st March 2019 has been received by the Company. The Secretarial Audit Reportis annexed to this report as Annexure D.
The Secretarial Auditors Report does not contain any qualification reservation oradverse remark or disclaimer.
As required under the Regulation 24A of SEBI (Listing Obligations and Disclosure &Requirements) Regulations 2015 the Secretarial Audit Report of Mukesh Babu SecuritiesLimited the material unlisted subsidiary of the Company for the financial year ended 31stMarch 2019 is provided as Annexure E.
Reporting of Frauds by Statutory Auditors
The Statutory Auditors of the Company have not reported any instances of fraud in theCompany during the year under review as specified under the Section 143(12) of theCompanies Act 2013.
26. SECRETARIAL STANDARDS
The Directors state that all the applicable Secretarial Standards have been dulyfollowed by the Company.
The Secretarial Auditor in his Secretarial Audit report confirms the same.
27. ANNUAL RETURN
In compliance with section 92(3) of the Companies Act 2013 the extract of AnnualReturn is given in the prescribed Form MGT-9 is provided under Annexure F
28. COST RECORDS AND COST AUDIT
Maintenance of Cost Records and requirement of Cost Audit as prescribed under theprovisions of Section 148(1) of the Companies Act 2013 are not applicable to ourCompany.
29. PARTICULARS OF EMPLOYEES
Pursuant to Section 197(12) of the Companies Act 2013 read with Rule 5(1) of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 in respect ofemployees of the Company a Statement showing names & other particulars of theemployees are provided under Annexure - G to this report.
During the year under review the Company does not have any employee who is drawingremuneration of Rs.10200000/- per annum or Rs.850000/- per month as stipulated in theAct and the rules made thereunder. Hence disclosures required under Rule 5(2) and 5(3) ofthe Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 have notbeen provided.
30. CORPORATE GOVERNANCE
In compliance with Regulations 17 to 27 and 34 read with Schedule V of SEBI (ListingObligations and Disclosure & Requirements) Regulations 2015 as applicable theCorporate Governance Report is given in Annexure H and forms part of the AnnualReport. The report is duly certified by the Statutory Auditors of the Company.
The certificate duly signed by the Managing Director on the Financial Statements of theCompany for the year ended 31st March 2019 as submitted to the Board of Directorsregarding compliance by the Board members and senior management personnel with Company'sCode of Conduct is also enclosed therewith.
31. CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGO
The particulars regarding Conservation of Energy and Technology Absorption are notfurnished since the Company is not a manufacturing entity.
During the financial year under review the Company did not have any foreign exchangeearnings and outgo.
32. MANAGEMENT DISCUSSIONS AND ANALYSIS REPORT
The Management Discussion and Analysis is annexed to this Report as Annexure - I andforms the integral part of this report and covers amongst other matters the performanceof the Company during the financial year under review as well as the future prospects.
33. OTHER DISCLOSURES
a. The Company has complied with the Secretarial Standards issued by the Institute ofCompany Secretaries of India on Meetings of the Board of Directors and General Meetings;
b. The Statutory auditors and the Secretarial auditors of the Company have not reportedany instances of fraud or irregularities as specified under Section 143(12) of the Actread with Rule 13 of the Companies (Audit and Auditors) Rules 2014;
c. There were no significant and material orders passed by the Regulators / Courtswhich would impact the going concern status of the Company and its future operation;
d. Maintenance of cost records u/s 148 of the Act is not required for the Company;
e. The Company does not have any scheme or provision of money for the purchase of orsubscription to its own shares by the employees/ Directors or by trustees for the benefitof the employees/ Directors.
34. GREEN INITIATIVE
As in the previous years this year too we are publishing only the statutorydisclosures in the print version of the Annual Report. Electronic copies of the AnnualReport 2018-19 and Notice of the 34th Annual General Meeting are sent to all members whoseemail addresses are registered with the Company / Depository Participant(s). For memberswho have not registered their email addresses physical copies are sent in the permittedmode.
The Board of Directors wish to place on record their gratitude for the valuableguidance and continued support extended by the Securities Exchange Board of India ReserveBank of India Stock Exchanges Insurance Regulatory and Development Authority of IndiaMinistry of Corporate Affairs other government authorities Banks and other stakeholders.Your Directors would also like to take this opportunity to express their appreciation forthe dedicated efforts of the employees of the Company.
| ||FOR AND ON BEHALF OF THE BOARD OF DIRECTORS |
|Mukesh Babu ||Meena Babu |
|Chairman & Managing Director ||Director |
|DIN: 00224300 ||DIN: 00799732 |
|Date: 13th August 2019 || |
|Place: Mumbai || |