Oscar Investments Limited
Your Directors have immense pleasure in presenting this 40th Annual Report along withAudited Financial Statements for the financial year ended March 31 2018.
The brief highlights of Standalone and Consolidated financial results of the Companyfor the Financial Years 2017-18 and 2016-17 are as under:
Standalone Financial Result:
| || ||(Rs in Lacs) |
|Particulars ||March 31 2018 ||March 31 2017 |
|Income || || |
|Revenue from operations ||193.52 ||28126.49 |
|Other Income ||82.03 ||34.11 |
|Total Revenue ||275.55 ||28160.60 |
|Expenditure || || |
|Employee benefit expenses ||84.10 ||118.74 |
|Finance cost ||8955.41 ||10696.69 |
|Depreciation & amortization expenses ||14.01 ||26.66 |
|Other expenses ||2474.70 ||12593.31 |
|Provisions and loan losses ||96409.26 ||(3979.18) |
|Total Expenses ||107937.48 ||19456.22 |
|Profit /(Loss) before exceptional items and Tax ||(107661.93) ||8704.38 |
|Exceptional Items || || |
|Provision for Litigation/Arbitration Claims ||51829.19 ||- |
|Profit /(Loss) after exceptional items and before Tax ||(159491.12) ||8704.38 |
|Tax Expenses || || |
|- Current Tax ||- ||1055.00 |
|- Mat Credit Entitlement ||- ||(1055.00) |
|- Prior year- expenses/ (reversal of provision) ||(47.84) ||- |
|Deferred Tax ||0.47 ||(5.38) |
|Wealth Tax ||- ||- |
|Profit /(Loss) for the year ||(159443.75) ||8709.76 |
|Earning per equity share of Rs 10/- each || || |
|Basic (Rs) ||(922.67) ||50.40 |
|Diluted (Rs) ||(922.67) ||50.40 |
Consolidated Financial Result:
| || ||(Rs in Lacs) |
|Particulars ||March 31 2018 ||March 31 2017 |
|Income || || |
|Revenue from operation ||193.52 ||28134.49 |
|Other Income ||82.26 ||41.99 |
|Total Revenue ||275.78 ||28176.48 |
|Expenditure || || |
|Cost of Material consumed ||- ||- |
|Employee benefit expense ||84.10 ||118.82 |
|Finance cost ||8956.79 ||10697.08 |
|Depreciation & amortization expenses ||14.01 ||26.66 |
|Other expenses ||2676.54 ||12658.98 |
|Provisions and loan losses ||102281.76 ||(3979.18) |
|Total Expenses ||114013.20 ||19522.36 |
|Profit /(Loss) before exeptional items and Tax ||(113737.42) ||8654.12 |
|Particulars ||March 31 2018 ||March 31 2017 |
|Exceptional Items || || |
|Provision for Litigation/Arbitration Claims ||51829.19 ||- |
|Profit /(Loss) after exceptional items and before Tax ||(165566.61) ||8654.12 |
|Tax Expenses || || |
|- Current Tax ||- ||1057.43 |
|- Deferred Tax ||0.47 ||(5.39) |
|- Prior year- expenses/ (reversal of provision) ||(47.84) ||1.42 |
|MAT Credit Entitlement ||- ||(1055.00) |
|Profit /(Loss) after Tax and before minority interest ||(165519.24) ||8655.66 |
|and share in associate || || |
|Less: Share of Profit /(Loss) Transferred to minority ||(1635.47) ||(13.47) |
|Add: Share of Profit/ (Loss) of associate ||(48268.78) ||145.65 |
|Profit /(Loss) for the year ||(212152.55) ||8814.78 |
|Earning per equity share of Rs 10/- each || || |
|Basic (Rs) ||(1227.69) ||51.01 |
|Diluted (Rs) ||(1227.69) ||51.01 |
During the financial year 2017-18 the Company recorded 'loss after exceptional itemsand before Tax' of Rs. 165566.61 lacs. The 'loss after Tax and before minority interestand share in associate' was Rs. 165519.24 lacs as compared to the 'profit after Tax andbefore minority interest and share in associate' of Rs. 8655.66 lacs in the previous yearand the loss for the year is Rs. 212152.55 lacs as compared to profit of 8814.78 lacs inthe previous year.
During the financial year 2017-18 the Company recorded 'loss before exceptional itemsand Tax' of Rs 107661.93 lacs. The 'loss after exceptional items and before Tax' was Rs159491.92 lacs as compared to the 'profit after exceptional items and before tax' of Rs8704.38 lacs in the previous year and the loss for the year is Rs. 159443.75 lacs ascompared to profit of 8709.76 lacs in the previous year.
No amount was transferred to Statutory Reserve Fund pursuant to Section 45(I) C of theReserve Bank of India Act 1934 for the year ended March 312018. The Company's Net Worthas on March 31 2018 stood at Rs. 14747.80 lacs as against Rs 174191.09 lacs last year.
MANAGEMENT DISSCUSSION AND ANALYSIS REPORT
a. Global Economy and Industry Overview
World growth strengthened in 2017 to 3.8 percent with a notable rebound in globaltrade. It was driven by an investment recovery in advanced economies continued stronggrowth in emerging Asia a notable upswing in emerging Europe and signs of recovery inseveral commodity exporters. Global growth is expected to tick up to 3.9 percent this yearand next supported by strong momentum favorable market sentiment accommodativefinancial conditions and the domestic and international repercussions of expansionaryfiscal policy in the United States.
At 3.8 percent global growth last year was percentage point faster than in 2016 andthe strongest since 2011. Two-thirds of countries accounting for about three-fourths ofglobal output experienced faster growth in 2017 than in the previous year (the highestshare of countries experiencing a year-over-year growth pickup since 2010). Thepreliminary outcome for global growth in 2017 was 0.2 percentage point stronger thanforecast in the October 2017 World Economic Outlook (WEO) with upside surprises in thesecond half of 2017 in advanced as well as emerging market and developingeconomies.(Source IMF Report April2018) b. Outlook
According to IMF's World Economic Outlook Update Growth in India is projected toincrease from 6.7 percent in 2017 to 7.4 percent in 2018 and 7.8 percent in 2019 liftedby strong private consumption as well as fading transitory effects of the currencyexchange initiative and implementation of the national goods and services tax. Over themedium term growth is expected to gradually rise with continued implementation ofstructural reforms that raise productivity and incentivize private investment.
As per World Bank Report India's recent reforms such as the "Make in India"initiative and demonetization are expected to encourage formal sector activity broadenthe tax base and improve long-term growth prospects despite short term disruptions in thecase of demonetization.
The July 2017 introduction of the Goods and Services Tax (GST) in India has causedtemporary disruptions in manufacturing and is linked to the recent weakness in thePurchasing Managers' Index and industrial production growth. However eventually it isexpected to simplify tax compliance deepen economic linkages between Indian statesbroaden the tax base and improve revenue collections. In turn this is expected to enhancethe broader business environment and help foster investment and employment (IMF 2017).
The Indian Economy posted a growth rate of 7.7 percent during the January to March 2018Quarter enabling the country to retain its position as the fastest growing major economyas per data released by Central Statistical Office. However for the fiscal year thatended March 31 India's growth rate works out to 6.7 per cent down from 7.1 per cent in2016-17.
The country's financial services sector consists of the capital markets insurancesector and non-banking financial companies (NBFCs). The financial services industry ishighly correlated to overall economic growth and as seen from the sectoral split ofIndia's GDP growth it has in fact been a large driver of this growth. The improving GDPgrowth trajectory is therefore expected to further propel the financial services industry.
c. Risks And Concerns
The Company is subject generally to changes in Indian law as well as to changes ingovernment regulations changes made in the regulations by applicable regulators in Indiaand policies and accounting principles. Any changes in the regulatory framework affectingnon-banking financial companies could adversely affect the profitability of the Issuer orits future financial performance by requiring a restructuring of its activitiesincreasing costs or otherwise. The Company is also subject to interest rate risks andcredit risks.
d. Internal Financial Control Systems and their adequacy
The Company has proper and adequate internal financial control systems commensuratewith its size and nature of its operations. These have been designed to ensure that thefinancial and other records are reliable for preparing financial and other statementsmaintain accountability of assets complying with applicable statutes safeguarding assetsfrom unauthorized use executing transactions with proper authorization and ensuringcompliance of corporate policies.
e. Financial Overview of the Company
The total revenue of the Company on standalone basis for the Financial Year 2017-18 wasRs. 275.55 lacs as against Rs. 28160.60 Lacs in Financial Year 2016-17. During thefinancial year 2017-18 the Company incurred a 'loss after exceptional items and beforeTax' of Rs. 159491.12 Lacs as compared to a 'profit before tax' of 8704.38 lacs in thelast year. The loss after Tax was Rs. 159443.75 lacs as compared to the profit of Rs.8709.76 lacs in the previous year.
f. Human Resources - Contribution to Business Success
HR policies and processes were strengthened with focus on building a culture where highperformance is suitably rewarded. Adherence to various HR policies alignment toorganizational culture and values and efficacy of organisation structure are monitored andsupported by the group HR leadership for superior business performance and higher employeeengagement and satisfaction levels. Our continuous attempt has been to provide employeeswith challenging roles opportunities for learning and growth an enabling workenvironment relevant training and performance support through various existing and new HRinitiatives.
DIVIDEND AND TRANSFER TO RESERVE
In view of losses in the Company the Board of Directors has decided not to recommendany dividend for the financial year ended March 312018.
No amounts were transferred to reserves.
During the period under review there has been no change in the Share Capital of theCompany.
During the Financial Year no funds were raised by way of public issue rights issuepreferential issue etc. by stating any object in the offer document or explanatorystatement to the notice for the general meeting. Therefore no explanation is required tobe given in this report pursuant to Regulation 32(4) of SEBI LODR Regulations.
EXTRACT OF ANNUAL RETURN
The Annual Return extract in Form No. MGT 9 as required to be prepared in terms ofSection 92(3) of the Act is being uploaded on the website of the Company and can beaccessed through the link: oscarinvestments.org/invester/annualreturn/2017-18. The same isalso annexed herewith as Annexure I.
DETAILS OF SUBSIDIARIES/JOINT VENTURES/ASSOCIATE COMPANIES AND REPORT ON THEPERMORMANCE AND FINANCIAL POSITION
As on March 31 2018 your Company has one subsidiary; Shimal Research LaboratoriesLimited and one step-down subsidiary; Fortis Clinical Research Limited. The Company hasone Associate Company; RHC Finance Private Limited within the meaning of Section 2(6) ofthe Companies Act 2013 ("Act"). During the Financial year under review therehas been no material change in the nature of business of the subsidiaries.
A report on the performance and financial position of each of the subsidiaries includedin the Consolidated Financial Statement is provided in accordance with the provisions ofSection 129 of the Act read with Rule 5 of the Companies (Accounts) Rules 2014 as aseparate statement in Form AOC- 1 annexed to the Consolidated Financial Statements of theCompany containing the salient features of the financial statement of Company'ssubsidiaries and hence is not repeated here for sake of brevity.
The Board of Directors have also formulated a Policy on Subsidiaries which has alsobeen uploaded on the Company's website and can be accessed through the linkhttp://oscarinvestments.org/pdf/Policy-on-Subsidiaries.pdf Pursuant to the provisions ofSection 136 of the Act the Financial Statements including Consolidated FinancialStatements of the Company along with other documents required to be attached thereto andseparate audited accounts in respect of each of its subsidiaries are available on thewebsite of the Company.
None of the Directors of your Company is disqualified as per provision of Section164(2) of the Act as on March 31 2018. The directors of the Company have made necessarydisclosures as required under various provisions of the Act and SEBI LODR Regulations.
CONSOLIDATED FINANCIAL STATEMENT
Pursuant to Regulation 34 of the SEBI Listing Regulations and Section 129 of theActConsolidated Financial Statements of the Company and all its subsidiaries dulyaudited by the Statutory Auditors of the Company is published in this Annual Report. TheConsolidated Financial Statements are prepared in terms of the Accounting Standards as perCompanies (Accounting Standard) Rules 2006 and referred to in Sections 129 & 133 ofthe Act.
PARTICULARS OF LOANS GUARANTEES AND INVESTMENTS
The Company being an NBFC is exempted from the provisions of Section 186 [exceptsub-section (1)] of the Act. Accordingly details of particulars of loans guarantees orinvestments as required to be provided as per Section 134(3)(g) of the Act are notprovided.
PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
The related party transactions that were entered into during the financial year weregenerally in ordinary course of business and on arm's length basis except as provided inthe Auditor's Report and also referred in the Form AOC- 2 which is annexed to this report.
Except as above there were no materially significant transactions with related partiesin the financial year which were in conflict with the interest of the Company.
The Related Party Transactions are placed before the Audit Committee for approval asrequired under Regulation 23 of Listing Regulations and per the Related Party TransactionPolicy of the Company as approved by the Board. Prior omnibus approval of the AuditCommittee is obtained for the transactions which are of a foreseen and repetitive nature.The transactions entered into pursuant to the omnibus approval so granted are audited anda statement giving details of all related party transactions is placed before the AuditCommittee for their approval on a quarterly basis.
Further the Company has also taken approval from shareholders' of the Company at thelast Annual General Meeting held on September 29 2017 for entering into Related partyTransactions in terms of Section 188 of the Companies Act and the rules made thereunderread with Regulation 23 of the Securities and Exchange Board of India (Listing Obligationsand Disclosure Requirements) Regulations 2015.
The policy on Related Party Transactions has also been uploaded on the Company'swebsite and can be accessed through the linkhttp://www.oscarinvestments.org/pdf/Oscar-RPT-Policy.pdf.
Disclosures as required under Section 134(3)(h) read with Rule 8(2) of the Companies(Accounts) Rules 2014 are provided in Form AOC- 2 which is annexed herewith as AnnexureA and forms part of this report.
As an NBFC the Company is exposed to credit risk liquidity risk and interest raterisk. The Company has a Risk Management Policy which is being monitored by the RiskManagement Committee.
Company's Asset-Liability Committee (ALCO) set up in line with the guidelines issued bythe RBI monitors asset-liability mismatches and ensures that there are no materialimbalances or excessive concentration on either side of the balance sheet. The companymanages the risk by maintaining a conservative financial profile and by following prudentbusiness and risk management practices.
The details of the Committee are set out in the CGR forming part of the Board's Report.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
In terms of the provisions of Section 152 of the Act and Article of Association of theCompany Mr. Shivinder Mohan Singh Non-Executive Director is liable to retire byrotation at the ensuing Annual General Meeting of the Company and being eligible hasoffered himself for re-appointment. The Nomination and Remuneration Committee and theBoard of Directors recommend his re-appointment.
Mr. Ravi Sikka (Non-Executive Independent Director) Mr. Varun Sood (Managing Director)and Dr. Preetinder Singh Joshi (Non-Executive Independent Director) have stepped down fromthe Board w.e.f. August 17 2017 February 20 2018 and April 11 2018 respectively.
Mrs. Aditi Shivinder Singh (Non-Executive Director) has resigned from the Board ofDirectors w.e.f. June 08 2018.
The Board of Directors placed on record their appreciation for the valuable servicesand guidance provided by them during their tenure as Directors of the Company.
The Board of Directors on the recommendation of the Nomination & RemunerationCommittee (Committee) appointed Mr. Prakash Mishra and Mrs. Kiran Sharma as AdditionalDirectors in the category of Non-Executive Independent Directors on August 14 2018 andthey hold office upto the date of the ensuing Annual General Meeting.The Board ofDirectors and the Committee have proposed to appoint Mr. Prakash Mishra and Mrs. KiranSharma as Directors of the Company at the ensuing Annual General Meeting.
The brief resume of the Directors proposed to be appointed/ re-appointed nature oftheir expertise in specific functional areas names of companies in which they holddirectorships memberships/chairmanships of board committees and shareholding (both own orheld by/ for other persons on a beneficial basis) in the Company as stipulated underRegulation 36(3) of the Listing Regulation are provided in the Notice convening theAnnual General Meeting of the Company.
During the year the non-executive directors of the Company had no pecuniaryrelationship or transactions with the Company.
The Company has received declarations from all the Independent Directors of the Companythat they meet with the criteria of independence as provided in Section 149(6) of the Actand Regulation 16 of the Listing Regulations.
Mr. Vivek Kumar Singh Company Secretary of the Company has resigned with effect fromSeptember 14 2017
BOARD/COMMITTEE COMPOSITION AND MEETINGS
The Board of Directors of the Company met Five (5) times during the financial year2017-18. The details of composition of Board and Committees and their meetings held duringthe year are provided in the Report on Corporate Governance which forms part of thisreport. The intervening gap between two meetings of the Board was within the period asprescribed under the Companies Act 2013 and the SEBI (Listing Obligations and DisclosureRequirements) Regulations2015.
Pursuant to the provisions of the Companies Act 2013 and SEBI Listing (Obligation& Disclosure Requirements) Regulation 2015 the Board has carried out performanceevaluation of its own performance the Directors individually Chairman as well as theevaluation of the working of its Audit Committee Nomination and Remuneration Committee(NRC) Stakeholders' Relationship Committee and Corporate Social Responsibility Committee.Following process of evaluation was followed:
|S. No. Process ||Remarks |
|1. Individual Self- Assessment ||Self-evaluation forms were shared and completed by the Directors and submitted to the Chairperson of Nomination and Remuneration Committee. |
|2. One to One discussion ||An independent Advisor was authorised to interact with each member to assess performance invite direct feedback and seek inputs to identify opportunities for improvement |
|3. Board Evaluation for the Board Nomination and Remuneration Committee and of Independent Directors ||Using the Self-Assessment feedback and output from the one-on-one discussions the formal Board Evaluation Process was conducted. A compilation of the individual self-assessments and one to one discussions were placed at the meeting of the Nomination and Remuneration Committee (NRC the Independent Director's (ID's) and the Board of Directors (BoD) held on February 14 2018 for them to review and include as additional feedback to the formal process completed in the meetings. |
|4. Final recording and reporting ||Based on the above a final report on Board Evaluation was collated presented presented and tabled at a meeting of the Board of Directors. The report also noted best practices in certain areas and considered opportunities for improvement. |
SCHEME OF AMALGAMATION BETWEEN HEALTHFORE TECHNOLOGIES LIMITED AND OSCAR INVESTMENTSLIMITED AND THEIR RESPECTIVE SHAREHOLDERS AND CREDITORS
The Board of Directors of Oscar Investments at their meeting held on December 14 2015had approved the Scheme of Amalgamation ('the Scheme') between HealthForeTechnologies Limited ('HealthFore' or 'the Amalgamating Company') and OscarInvestments Limited ('Oscar' or 'Amalgamated Company') and their respectiveshareholders and creditors under Sections 391 to 394 and other applicable provisions ofthe Companies Act 1956.
The Board of Directors have withdrawn the Scheme in view of ongoing Daiichi Litigationwhich includes the Company as a party.
UPDATE ON DAIICHI MATTER
The Hon'ble Supreme Court vide its interim order dated August 11 2017 in the matterrelating to M/s Daiichi Sankyo Company Limited v/s Oscar Investments Limited & Othersdirected that status quo as on date with regard to shareholding of M/s Fortis HealthcareHoldings Private Limited one of the Promoter Group Entity in Fortis Healthcare Limited(listed on the National Stock Exchange of India and BSE Limited) be maintained and furtheron August 31 2017 clarified that the directions relating to maintaining of status quoapplies for both the encumbered and unencumbered shares.
Further in the matter relating to M/s Daiichi Sankyo Company Limited v/s MalvinderMohan Singh & Others ("respondents") which includes Oscar InvestmentsLimited ("Company") as a party Hon'ble Delhi High Court vide its order datedJanuary 31 2018 directed the enforcement of Arbitration Award dated 29th April2016passed by Arbitration Tribunal in Singapore for an amount of INR 2562.78 Crore along withquantified interestcost and expenses of Arbitration till the date of Award .
The Hon'ble Supreme Court of India had on February 152018 clarified that thedirection to maintain status quo shall not apply to shares of FHL held by FHHPL as mayhave been encumbered on or before the interim orders dated August 11 2017 and August 312017.
The necessary intimation in this regard pursuant to Regulation 30 of of SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 has also been filed with BSELimited.
The Board has on the recommendation of the Nomination & Remuneration Committeeframed a policy for appointment of Directors Key Managerial Personnel and theirremuneration as well as policy on other employees remuneration. The detailed policy isavailable on the website of the Company can be accessed through the linkhttp://oscarinvestments.org/pdf/DIRECTORS-APPOINTMENT-&-REMUNERATION-POLICY.pdf. TheRemuneration Policy is stated in the Corporate Governance Report.
MAINTENANCE OF COST RECORDS
The Company is in the financial service industry. In view of the nature of activitieswhich are being carried by the Company the maintenance of cost records as specified bythe Central Government under subsection (1) of Section 148 of the Act is not applicable onthe Company and hence such accounts and records are not maintained.
TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND
No amount was required to be transferred to Investor Education and Protection Fudduring the year under review.
FAMILIARISATION PROGRAMME FOR INDEPENDENT DIRECTORS
The Company has laid down a policy on training for Independent Directors. The Directorsare updated on the regulatory changes Business strategy and operations by the seniorleadership of the Company periodically. Apart from this during the year under review onefamiliarization program was conducted by respective functional heads of the Company tofamiliarize the Directors with the business model of Research & Information Services.
Details of Familiarization Program conducted are uploaded on the website of the Companyand can be accessed through the linkhttp://oscarinvestments.org/pdf/Familiarisation-programme-for-Independent-Directors.pdf
The details of composition of Audit Committee and mentioned in the Corporate GovernanceReport. As on the date of this report the composition of the Audit Committee is incompliance with provisions of the Companies Act 2013 and SEBI LODR Regulations. Duringthe year all the recommendations of the Audit Committee are included in the Report onCorporate Governance which forms part of this report.
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to Section 134 (5) of the Companies Act 2013 the Board of Directors basedon the representation as provided to the Board by the management confirm that:
a. In the preparation of the annual accounts for the financial year ended March 312018 the applicable accounting standards have been followed along with properexplanations relating to material departures wherever applicable;
b. The Directors had selected such accounting policies and applied them consistentlyand made judgements and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company as at March 31 2018;
c. The Directors 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. The Directors had prepared the annual accounts for the financial year ended March31 2018 on a 'going concern' basis;
e. The Directors had laid down internal financial controls to be followed by theCompany and such internal controls are adequate and were operating effectively; and
f. The Directors had devised proper systems to ensure proper compliance with provisionsof all applicable laws and that such systems were adequate and operating effectively.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
In compliance with Section 135 of the Companies Act 2013 read with the Companies(Corporate Social Responsibility Policy) Rules 2014 the Company has established aCorporate Social Responsibility (CSR) Committee during the financial year 2014-2015.
The CSR Committee has formulated and recommended to the Board a CSR Policy indicatingthe activities to be undertaken by the Company which has been approved by the Board.
The Company has spent an amount of Rs. 72 Crore towards the CSR projects during thecurrent financial year 2017-18.The average net profit of the Company computed as perSection 198 of the Act during the three immediately preceding financial years was Rs.3599.75 Lacs .It was hence required to spend Rs.71.99 Lacs on CSR activities during thefinancial year 2017-18 being 2% of the average net profits of the three immediatelypreceding financial years.
Annual Report on CSR in format prescribed in companies (Corporate Social ResponsibilityPolicy) Rules 2014 in attached as Annexure B.
Your Company believes that Corporate Governance is the basis of stakeholdersatisfaction and therefore your Board continues to be committed to uphold the higheststandards of Corporate Governance and adhere to the requirements set out by the Securitiesand Exchange Board of India.
A detailed Report on Corporate Governance along with the Auditors' Certificateconfirming the compliance to the conditions of Corporate Governance as stipulated in PartC of Schedule V of the Listing Regulations is set out in this Annual Report and forms anintegral part of this Report.
The members may please note that for the financial year ended March 31 2018finalisation of annual audited accounts had taken more than anticipated time. The Companywas not able to declare its audited financial results within the prescribed timelinesunder SEBI LODR Regulations. The Company declared its audited financial results on 06thJune 2018.
BSE vide its communication dated 18th June 2018 had levied the fine of Rs. 41300/-For delated submission of financials for the period ended March 31 2018. The Company haspaid the fine.
M/s M.S. Sekhon & Co. (Firm Registration No. 003671N) Chartered Accountants whoare the Statutory Auditors of the Company hold office till the conclusion of the AGM ofthe Company to be held in the year 2021 as per shareholders' resolution dated September30 2016 subject to ratification of their appointment by the Members at every AGM as perthe provisions of Section 139(1) of the Companies Act 2013.
The Company has received a written confirmation from M/s M.S. Sekhon & Co. to theeffect that their ratification if made would be within the prescribed limit underSection 141(3)(g) of the Act and they are not disqualified from being auditors of theCompany.
Based on recommendation of the Audit Committee the Board of Directors of the Companyrecommends the ratification of appointment of M/s M.S. Sekhon & Co. as statutoryauditors of the Company from the conclusion of the forthcoming AGM till the conclusion ofthe next AGM to be held in the year 2019.
Management's Response on the Statutory Auditors' Qualification/Comments on theCompany's Standalone and Consolidated Financial Statements
a. Qualification pertaining to non- provision for interest on short term borrowingsfrom Related Parties
The Company borrowed from related and other lenders for further lending to related andother entities to meet their business requirements. During the year Hon'ble Court inDaiichi Litigation imposed lot of restrictions on group entities as well as on the Companybeing one of the Respondents in the litigation. Moreover there are other litigationsgoing on which impacted the financials of group entities negatively and impacted theirdebt repayment capacity to the Company.
Due to non-service of interest and principal the management provided almost all itsloans and advances as NPAs in adherence to RBI guidelines issued from time to time henceincurred huge losses in the Company during the year. In view of above liability onaccount of Interest on borrowing amounting to Rs. 2783.34 Lacs was not provided by theCompany.
b. Qualification pertaining to non-provision of interest income on loans classified asNon-Performing Assets(Point No.1 of Emphasis of Matter and Sr. Nos. (iii) and (xiii) ofAnnexure A to Auditor's Report)
During the year the Company faced challenges in receipt of interest and principalamounts in view of the several challenges faced by the group companies emanating from thevarious legal issues faced by the group this year. Accordingly the Company had to makeadequate provisions in respect of Non-Performing Assets for loans and advances to variousgroup companies and non-group companies income on non-performing assets has not beenrecognized in the accounts in accordance with the guidelines issued by the Reserve Bank ofIndia and based on best estimates of management.
c. Qualification pertaining to default in repayment of loan(Sr. no. (viii) of AnnexureA to Auditor's Report)
The Company availed secured loan of Rs. 56500 Lacs from Yes Bank Ltd. for onwardlending. During the year Hon'ble Court in Daiichi Litigation imposed lot of restrictionson group entities as well as on the Company being one of the Respondents in thelitigation. Due to such restrictions bankers and other financial institutions had stoppedgiving funds to the Company and the existing lenders recalled its loans for prevailinguncertainty in the litigations. Moreover the Company faced challenges in receipt ofinterest and principal amounts in view of various litigations faced by the groupcompanies. Accordingly the Company had to make adequate provisions in respect ofNon-Performing Assets for loans and advances to various group companies and non-groupcompanies.
We are in discussion with the Bank to settle the loan through security already invokedby the Bank.
d. Point no. 2 of Emphasis of Matter pertaining to appointment of Company Secretaryis self-explanatory and hence no comments in this regard have been offered by the Board ofDirectors.
DETAILS OF FRAUD REPORTABLE BY STATUTORY AUDITOR TO BOARD
Basis the confirmations reported to the Board in this regard there were no instancesof fraud misfeasance or irregularity detected and reported in the Company during thefinancial year 2017-18 by the Statutory Auditors of the Company pursuant to Section143(12) of the Companies Act 2013.
SECRETARIAL AUDITOR REPORT
Pursuant to the provisions of Section 204 of the Companies Act 2013 ("Act")and the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2015 theBoard of Directors of the Company had appointed M/s Arora Shekhar & Co. as theSecretarial Auditor of the Company to conduct the Secretarial Audit of the Company for thefinancial year 2017-18.
The Secretarial Audit Report of the Company for the financial year ended March 312018 is annexed herewith as Annexure C to this Report. Management Comments onqualifications given by the Auditors' in the Secretarial Audit Report are as follows:
1) The Company does not have Chief Financial Officer (CFO) as whole time key managerialpersonnel.
2) Branch information report of Second Quarter is not filed however it may be notedthat the company has no branches.
3) All Attendance Sheets are not properly signed however the concerned director wasshown present as per respective Board or Committee minutes.
4) In case of minutes:
-No proof of circulation of the minutes of the meeting was maintained.
-All Minutes were not signed.
5) During the financial year under review after resignation of Mr. Ravi Sikka(Independent Director) the Composition of the board was not adequate.
6) The records of resolution passed by Circulation were not signed by Directors.
7) Company Does not have any Key Managerial Personnel in Compliance of the provisionsof Section 203 of the Companies Act 2013.
8) Return NBFCs-ND-SI 500 cr for March 2018 - not filed.
9) Return ALM-2 & ALM-3 for Half Year March 2018 - not filed.
10) Return ALM (NBFC-ND-SI) - not filed.
11) Statutory Auditors Certificate- Company has to file the certificate through COSMOSportal. No Proof of submission through COSMOS provided.
12) Company was classified as High Risk NBFC by FIU-IND for non appointing principleofficer. However during the financial year the company has changed principal officerduring the financial year under review. No proof of submission or intimation of change toRBI and FIU-IND were provided.
13) Company does not have a Designated Director as per KYC Guidelines and PMLA.
14) Company is not registered with CERSAI.
15) Company has not submitted Board resolution for non acceptance of Public Deposit tothe Reserve Bank of India.
16) As per the records provided the Company is only registered with 2 CIC i.e. Equifaxand High Mark. Membership proof of other 2 CIC not provided.
17) The Company is not in Compliance of Net Owned Fund CRAR and Prudential norms asprescribed by RBI.
18) For the financial year ended March 312018 finalisation of annual audited accountshad taken more than anticipated time.The Company was not able to declare its auditedfinancial results within the prescribed timelines under SEBI LODR Regulations.The Companydeclared its audited financial results on 06th June 2018. BSE vide its communicationdated 18th June2018 had levied the fine of Rs. 41300/- For delayed submission offinancials for the period ended March 31 2018.
19) During the period under review the company has granted interest free loan torelated parties during the financial year. The outstanding amount of loans as on 31stMarch 2018 is Rs. 7143.21 lakhs.
20) The Company has defaulted in payment in repayment of Rs. 56500 lakhs (Principalamount) in respect of loan availed from Yes Bank Ltd. The default occurred on 20th July2017 being the date on which the credit facility to the Company was recalled by the bankand this was not settled till 31st March 2018.
21) According to information given by the management of the company transactions withthe related parties have been generally entered into by the company in ordinary course ofbusiness on arm's length basis except for the transactions relating to loan given to sixrelated parties during the year on which no interest has been charged. The outstandingamount of such loans on which interest has not been charged as at the end of the yearaggregate to Rs. 112603.70 lakhs.
Reply to Point No. 1 and 7(non appointment of CFO and KMP):
It was expected that the Company will appoint CFO post merger of HealthforeTechnologies Limited with the Company. However due to circumstances beyond the controlthe Company had to withdrawn the Scheme in view of ongoing Daiichi Litigation whichincludes the Company as a party. However the management is now reviewing the future plansof the Company and will appoint suitable candidate as CFO.
Further during the year Mr. Vivek Kumar Singh Company Secretary of the Companyresigned on September 14 2017 and Mr. Varun Sood Managing Director of the Companyresigned on February 20 2018. The Company is now looking for suitable candidates forappointment as KMPs.
Reply to Point No.2 and 8 to 17(Compliance under RBI Act and related applicableprovisions):
In view of the fact that the Company does not have a full time Compliance Officer theCompany has not been able to look after the RBI Compliances during the year under review.However the management is looking for suitable candidates for appointment as KMPs.
Reply to Point No.3 to 6 (Non-Compliance with Secretarial Standards read with theCompanies Act and related applicable provisions):
The Company has complied with Secretarial Standards and other applicable laws except infew cases where the minutes attendance sheets and resolutions passed by circulation couldnot be signed although approved by the Board with the requisite quorum.
As already mentioned above the Company does not have a full time Compliance Officerhowever the management is looking for suitable candidates for appointment as KMPs.
Further as also mentioned in Corporate Governance Report forming part of the AnnualReport the Company has appointed 2(Two) Independent Directors out of which one is a WomanDirector. Hence as an the date of this report the composition of Board is in accordancewith Companies Act 2013 and SEBI LODR Regulations.
Reply to Point No.18 :
As already mentioned elsewhere in the Directors' Report and also in CorporateGovernance Report forming part of Annual Reportthis is self-explanatory and hence nocomments in this regard have been offered by the Board of Directors. The Company has paidthe fine.
Reply to Point No.19 to 21(Related Party Transactions and Default in Repayment ofLoan):
The response to the same is already provided under the head "Management's Responseon the Statutory Auditors' Qualification/Comments on the Company's Standalone andConsolidated Financial Statements"
Your Company has neither invited nor accepted any deposits from the public within themeaning of the Section 2(31) of the Companies Act 2013Section 73 of the Companies Act2013 read with Companies (Acceptance of Deposit) Rules 2014 during the period underreview.
LISTING WITH STOCK EXCHANGE
The Equity Shares of your Company continue to be listed on BSE Limited("BSE"). The Annual Listing Fee for the financial year 2017-18 has been paid tothe BSE.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION
Even though operations of the Company are not energy intensive the management has beenhighly conscious of the importance of conservation of energy and technology absorption atall levels and efforts are made in this direction on continuous basis.
The Company requires energy for its business operations and every endeavor has beenmade to ensure the optimal use of energyavoid wastage and conserve energy as far aspossible.
Howeverin view of the nature of activities which are being carried on by your Companywhich are not energy intensive the particulars as prescribed under Section 134(3)(m) ofthe Companies Act 2013 read with Companies (Accounts) Rules 2014 regarding Conservationof Energy Research and Development and Technology Absorption are not applicable to theCompany and hence not been provided.
FOREIGN EXCHANGE EARNINGS AND OUTGO
The Company has incurred an expenditure of Rs. 406.29 lacs (previous year Rs. 213.23lacs) in foreign exchange and earned Nil (previous year: Nil) in foreign exchange duringthe year under review on a standalone basis.
INTERNAL FINANCIAL CONTROLS AND INTERNAL CONTROL SYSTEM
The Company has in place adequate systems of internal control commensurate with itssize and the nature of its operations. These have been designed to provide reasonableassurance with regard to recording and providing reliable financial and operationalinformation complying with applicable statutes safeguarding assets from unauthorizeduse executing transactions with proper authorization and ensuring compliance of corporatepolicies.
To ensure that all systems and procedures are in place and order regular internalaudit is conducted. Internal Audit of the Company during FY 2017-18 was conducted by M/s.VMA & Associates Chartered Accountants. To maintain its objectivity and independencethe Internal Auditor reports to the Audit Committee about the Internal Audit findings andcorrective actions thereon on a quarterly basis.
PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES
The details of remuneration required under Section 197(12) of the Act read with Rule5(1) & 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel)Rules 2014 are annexed herewith as Annexure- D to this report.
The details of remuneration paid to the Directors including Executive Directors of theCompany are given in Form No. MGT-9 forming part of this Report.
VIGIL MECHANISM/ WHISTLE BLOWER POLICY
The Company has a vigil mechanism named Whistle Blower Policy for Directors andemployees of the Company to report their genuine concerns and to deal with instance ofunethical practices fraud and mismanagement or gross misconduct by the employees of theCompany if any that can lead to financial loss or reputation risk to the organization.
The policy has also been uploaded on the website of the Company and can be accessedthrough the link http://oscarinvestments.org/pdf/Whistle-Blower-Policy.pdf
DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT THE WORK PLACE (PREVENTIONPROHIBITION AND REDRESSAL) ACT 2013
The Company has in place an Anti-Sexual Harassment Policy in line with the requirementsof The Sexual Harassment of Women at the Work Place (Prevention Prohibition andRedressal) Act 2013. An Internal Complaints Committee (ICC) has been set up to redresscomplaints received regarding sexual harassment.
All employees are covered under this policy. No case has been reported during the yearunder review.
MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY
Except as disclosed above or elsewhere in this Annual Report there have been nomaterial changes and commitments affecting the financial position of the Company whichhave occurred between the end of financial year under review and the date of this report.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS
Except as disclosed above or elsewhere in this Annual Report there are no significantmaterial orders passed by the Regulators/ Courts which would impact the going concernstatus of the Company and its operations in future.
Your Directors would like to express their sincere appreciation for the co-operationand assistance received from the Company's Bankers Regulatory Bodies Stakeholdersincluding Financial Institutions and other business associates who have extended theirvaluable sustained support and encouragement during the year under review.
Your Directors also gratefully acknowledge and appreciate the commitment displayed byall executives officers and staff towards the success of the Company. We look forward foryour continued support in the future.
| || ||On behalf of the Board of Directors |
| ||Sd/- ||Sd/- |
|Place: New Delhi ||(Malvinder Mohan Singh) ||(Shivinder Mohan Singh) |
|Date : August 30 2018 ||Director ||Director |