You are here » Home » Companies » Company Overview » PNB Gilts Ltd

PNB Gilts Ltd.

BSE: 532366 Sector: Financials
BSE 13:09 | 27 Oct 66.25 0.50






NSE 13:04 | 27 Oct 66.25 0.55






OPEN 67.20
VOLUME 17566
52-Week high 94.65
52-Week low 37.15
P/E 5.77
Mkt Cap.(Rs cr) 1,193
Buy Price 66.20
Buy Qty 181.00
Sell Price 66.35
Sell Qty 94.00
OPEN 67.20
CLOSE 65.75
VOLUME 17566
52-Week high 94.65
52-Week low 37.15
P/E 5.77
Mkt Cap.(Rs cr) 1,193
Buy Price 66.20
Buy Qty 181.00
Sell Price 66.35
Sell Qty 94.00

PNB Gilts Ltd. (PNBGILTS) - Director Report

Company director report

Dear Members

Your Directors are pleased to present the Twenty Fourth Annual Reporttogether with the Company's audited financial statements for the financial year endedMarch 312020.


The Company's financial performance for the year ended March312020 is summarized below:

(' in lacs)

For the year ended 31.03.2020 For the year ended 31.3.2019
Total Income 88259.87 50801.34
Less : Total Expenditure 55157.72 42499.27
Exception Items 8121.58 -
Profit/(loss) Before Tax 24980.57 8302.07
Less : Tax Expense 6345.11 3016.29
Profit for the period 18635.46 5285.78
Other Comprehensive Income (115.19) (55.43)
Total Comprehensive Income 18520.27 5230.35
Opening Balance of Retained Earnings 20713.66 18710.60
Closing Balance of Retained Earnings 32472.45 20713.66
Earnings per share (Rs.) 10.35 2.94

The financial year 2019-20 was a challenging year for the bond marketwhich witnessed huge volatility. Initially the yields fell triggered by successive ratecuts by RBI on account of persistent growth concerns. However reduction in corporate taxstructure resulting in concerns on weak Government finances and rise in CPI inflationabove RBI's target weighed on sentiments and market turned extremely cautious.Operation twist by RBI did help to improve the sentiments but it was again short livedwith expectation of additional borrowing in the Union Budget weighing on marketsentiments. It was only towards the close of the year RBI took some unprecedentedmeasures in order to mitigate the risks to the economy from the Covid crisis by slashingthe repo rate by 75 basis points Reverse Repo rate by 90 basis points & CRR by 1 percent besides announcing a host of regulatory forbearance & massive liquidity infusionmeasures in order to avoid major setbacks in the financial system and freezing of creditflow. The bond markets reacted positively to these steps and the 10-yr closed the year at6.14 per cent. Thus the 10 year bond yield which opened at 7.35 per cent touched a highof 7.47 per cent and a low of 5.98 per cent closed the year at 6.14 per cent.

During FY'20 Company posted excellent profits with PBT at Rs.24980.57 lacs vis-a-vis PBT of Rs. 8302.07 lacs during FY'19. The PBT achieved duringthe year is post complete write off of bonds of DHFL and RHFL (non-payment of principaland interest) and currently there are no default bonds in the books of the company.Additionally Company continued to fulfill all its obligations as a Primary Dealer in bothprimary and secondary market. With regard to Treasury Bills commitment the Companyexceeded the stipulated success ratio of 40 per cent achieving 41.10 per cent and 40.24per cent in H1 and H2 respectively. In G-sec category Company fulfilled the underwritingcommitments thereby supporting the government borrowing program. Company's totalturnover ratio (secondary market) stands at 190 times for treasury bills and 422 times forgovernment-dated securities as on March 312020 against the minimum RBI stipulation of 10times and 5 times respectively.

Impact of COVID-19

In the last month of FY 2020 the COVID-19 pandemic developed rapidlyinto a global crisis forcing governments to enforce lock-down of all economic activity.Your Company being a Primary Dealer is in the list of essential services provider.Accordingly the company has not faced any business stoppage / interruption on account oflockdown. Based on existing facts and circumstances the Company does not anticipate anymaterial uncertainties which can affect its liquidity position or its ability to continueas a going concern.

The Company has ensured the health and well-being of all its employeesand continuation of its business operations as well without any disruption. From a highlycentralized model consisting of work spaces set up in different locations of the countrythe switch to work from home for employees through its BCP model was carried outseamlessly much before the lockdown restrictions imposed by the Government. In this modelwork from home was enabled to close to 81 per cent of the employees to work remotely andsecurely. Remaining employees operated from different office locations without any healthissues.

Under the prevailing most challenging conditions your Company throughits pro-active approach and prudent risk management practices and systems etc. has beenable to run the business operations successfully. Your Company stands committed towardsits employees clients government and the society. As a measure of CSR your Companyduring the year 2019-20 has given a sum of Rs. 175.56 lacs to PM Cares Fund set up by theGovt. of India for dealing in emergent situations like Covid-19. In addition to this thecompany has given Rs. 100 lacs under its CSR activity of current fiscal i.e. 2020-21.

Material Changes and Commitments

Save as otherwise provided in this report no material changes andcommitments affecting the financial position of the Company have occurred after the closeof the year till the date of this report.

Capital Adequacy

Capital adequacy ratio as on March 312020 stood at 32.47 per cent asagainst the RBI stipulation of 15 per cent. Dividend

Your Board has recommended a dividend of ' 3 (i.e. 30 per cent) perequity share (last year ' 1.40 per equity share) for the financial year ended March312020 subject to approval in the ensuing Annual General Meeting. The total outflow onaccount of said dividend shall be ' 5400.30 lacs.

Transfer to Reserves

Your Company proposes to transfer ' 3727.09 lacs in Statutory Reserveas required under the provisions of Section 45-IC of the Reserve Bank of India Act 1934.Further in terms of the first proviso to Section 123(1) of the Companies Act 2013 theCompany proposes not to transfer any sum in General Reserve.


Corporate Governance for your Company means achieving high level ofaccountability efficiency responsibility and fairness in all areas of operations. Ourworkforce is committed towards the protection of the interest of the stakeholdersincluding shareholders creditors investors customers employees etc. Our policiesconsistently undergo improvements keeping in mind our goal i.e. maximization of value ofall the stakeholders.

We comply with the SEBI and RBI guidelines on Corporate Governance. Wehave documented our internal code on Corporate Governance in compliance of SEBI and RBIguidelines. The Corporate Governance practices followed by the Company are given in theCorporate Governance section of this Annual Report. A certificate from M/s Pranav Kumar& Associates Company Secretaries regarding compliance of conditions of CorporateGovernance as stipulated in the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 ("the Listing Regulations") is enclosed with the ‘Reporton Corporate Governance' forming part of the Board's Report.

Number of meetings of the Board

The Board met five times during the financial year 2019-20 to reviewstrategic operational technological and financial matters besides laying down policiesand procedures for operational management of the Company. The details of such meetings aregiven in the ‘Report on Corporate Governance' that forms part of thisBoard's Report.

Directors and Key Managerial Personnel

During the year 2019-20 Dr. Kamal Gupta (DIN: 00038490) IndependentDirector resigned from the directorship of the Company w.e.f. June 28 2019.

The members in their Annual General Meeting held on August 28 2019approved the re-appointment of

Sh. P. P. Pareek (DIN : 00615296) as an Independent Director foranother term of 5 consecutive years from August 30 2019 to August 29 2024.

In the same meeting the members also approved the followingappointments-

• Smt. Uma Ajay Relan (DIN: 07087902) as an Independent Directorfor a period of 5 years from June 28 2019 to June 27 2024.

• Dr. T. M. Bhasin (DIN: 03091429) as an Independent Director fora period of 5 years from July 30 2019 to July 29 2024.

• Sh. V. K. Srivastava (DIN: 07234326) General Manager &Group Chief Risk Officer of Punjab National Bank as a Non-Executive Director.

• Sh. Vikas Goel (DIN: 08322541) as Managing Director & CEOfor a period of 3 years from February 012019 to January 312022. Sh. Vikas Goel is alsoKey Managerial Personnel of the Company.

Further consequent to completion of tenure as Managing Director &CEO of Punjab National Bank Sh. Sunil Mehta (DIN:07430460) Chairman of the Companyresigned from the Board of the Company w.e.f September 30 2019. Your Board places onrecord its appreciation for the valuable contribution and guidance extended by him duringhis tenure as Chairman.

Further in accordance with the provisions of the Companies Act 2013and the Articles of Association of the Company Sh. Vikas Goel (DIN: 08322541) shallretire by rotation in the ensuing Annual General Meeting and being eligible offershimself for reappointment.

The tenure of Smt. Sunita Gupta (DIN: 06902258) Whole-Time Director(designated as ‘Executive Director & CFO') was upto August 312020.Accordingly she ceased from her position in Company w.e.f September 12020.

None of the Directors are debarred from holding the office of Directorpursuant to order of SEBI or any other authority.

Performance Evaluation

The Company has devised a policy for performance evaluation of Board ofits own performance Independent Directors Non-Independent/Executive Directors and Boardlevel Committees etc. as required under the provisions of the Companies Act 2013 and SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015and also Guidance Noteon Board Evaluation as prescribed by SEBI. The performance of all the Directors the Boardas a whole and its Committees was evaluated after seeking inputs from the directors basedon the criteria and framework adopted by the Board. The evaluation criteria are based onthe Guidance Note on Board Evaluation issued by the Securities and Exchange Board of Indiaon January 5 2017.

In a separate meeting of independent directors performance ofnon-independent directors the board as a whole and the Chairman of the Company wasevaluated taking into account the views of executive directors and nonexecutivedirectors.

The Board and the Nomination and Remuneration Committee reviewed theperformance of individual directors on the basis of criteria such as the contribution ofthe individual director to the board and committee meetings like preparedness on theissues to be discussed meaningful and constructive contribution and inputs in meetingsetc.

In the board meeting and meeting of Nomination and RemunerationCommittee the performance of the board its committees and individual directors was alsodiscussed. Performance evaluation of independent directors was done by the entire boardexcluding the independent director being evaluated.

Copy of said policy inter-alia containing the process and criteriafor evaluation is available at Company's website at the link

Familiarization programme

The details of programme for familiarization of Independent Directorswith the Company their roles rights responsibilities in the Company nature of industryin which the Company operates business model of the Company and related matters areplaced at Company's website at the link Quarterly updates on relevantstatutory changes are also circulated to the Directors.

Policy on Directors' Appointment and Remuneration etc.

The policies of the Company on Directors' Appointment andRemuneration formulates the criteria for determining qualifications competenciespositive attributes and independence of a Director and other matters like remuneration ofdirectors key managerial personnel senior management and other employees. The policiesare appended as Annexure A to the Board's Report.

Declaration by Independent Directors

The Company has received declarations from all the IndependentDirectors confirming that they meet the criteria of independence as prescribed under theprovisions of Companies Act 2013 and SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015. In terms of Regulation 25(8) of the Listing Regulationsthe Independent Directors have confirmed that they are not aware of any circumstance orsituation which exist or may be reasonably anticipated that could impair or impact theirability to discharge their duties. All the Independent Directors have got themselvesregistered with Indian Institute of Corporate Affairs. The Board is of the opinion thatthe Independent Directors of the Company possess requisite qualifications experience andexpertise and they hold highest standards of integrity.

Business Responsibility Report

Business Responsibility Report for the year under review as stipulatedunder Regulation 34(2)(f) of SEBI (LODR) Regulations forms part of the Annual Report.

3. OTHER DISCLOSURES - Audit Committee

The composition of Audit Committee during FY 2019-20 was as under-

Name of Director Position
Sh. P. P. Pareek Chairman
Dr. Kamal Gupta1 Member
Sh. S. K. Kalra Member
Smt. Uma Ajay Relan2 Member
Dr. T. M. Bhasin3 Member

1 Relinquished the position of Independent Director and consequentlyceased to be a member of the Committee w.e.f. June 28 2019.

2 Member of the Committee w.e.f. June 28 2019.

3 Member of the Committee w.e.f. November 9 2019.

All the recommendations made by the Audit Committee during the yearwere accepted by the Board.

Corporate Social Responsibility (CSR) Committee

For composition of the CSR Committee during FY 2019-20 please referthe Annual Report on CSR at Annexure B.

The CSR policy of the Company duly recommended by the CSR Committeeand approved by the Board is available at Company's website at the link During the year 2019-20the scope of activities that can be undertaken under CSR policy of the Company has beenwidened and modalities for implementation have been clarified in the Policy. The CSRactivity of the Company is carried out as per the instructions of the Committee and Board.During the year 2019-20 the Company has spent 2 per cent of its average net profits ofthe three immediately preceding financial years on CSR activity.

The annual report on the CSR for the year 2019-20 in the prescribedformat is presented at Annexure B to the Board's Report.

Other details of above said and other Committees of the Board are givenin the ‘Report on Corporate Governance' forming part of the Board's Report.

Whistle Blower Policy (including Vigil Mechanism)

Your Company believes in conducting its affairs in a fair andtransparent manner by adopting highest standards of professionalism honesty integrityand ethical behaviour. Your Company is committed to develop a culture where it is safe fordirectors and employees to raise concerns about any wrongful conduct.

The Board of Directors has approved a Whistle Blower Policy (includingVigil Mechanism) which provides a framework to promote a responsible and secure whistleblowing. It protects employees wishing to raise a concern about serious irregularitieswithin the Company. The Audit Committee reviews the functioning of this mechanism and noemployee / director has been denied access to the Audit Committee. During the year underreview no such matter has been reported to the Audit Committee. The said policy may beaccessed on the Company's website at the link

Contracts and Arrangements with Related Parties

All the contracts/ arrangements/transactions entered by the company arein ordinary course of business and at arm's length (except those given in form AOC-2at Annexure C). Further during the year the company had not entered into any contract /arrangement transactions with related parties which could be considered material inaccordance with the company policy / standard operating procedures (SOP) on related partytransactions Company's Policy/SOP on Related party Transactions can be accessed atthe Company's website at the link

Necessary disclosure in prescribed form AOC-2 is annexed at Annexure C.


The Company being a RBI regulated Primary Dealer is prohibited toform any subsidiary. As such the Company has not formulated any policy for determining‘material' subsidiaries under SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015.

Further since the Company is not having any subsidiary or associate orjoint venture it is not required to consolidate the financial statements in terms ofSection 129 of the Companies Act 2013 read with Rule 5 of the Companies (Accounts) Rules2014. However the financial statements of the Company for FY 2019-20 had already beenconsidered by its parent bank i.e. Punjab National Bank for consolidation.

Directors' Responsibility Statement

Pursuant to the requirements of Section 134(3)(c) of the Companies Act2013 your Directors confirm that:

(a) in the preparation of the annual accounts for the year ended March31 2020 the applicable accounting standards read with the requirements set out under theSchedule III to Companies Act 2013 have been followed and there are no materialdepartures from the same;

(b) the Directors had selected such accounting policies and appliedthem consistently and made judgments and estimates that are reasonable and prudent so asto give a true and fair view of the state of affairs of the Company as at March 312020and of the profit and loss of the Company for the year ended on that date;

(c) the Directors had taken proper and sufficient care for themaintenance of adequate accounting records in accordance with the provisions of the Actfor safeguarding the assets of the Company and for preventing and detecting fraud andother irregularities;

(d) the Directors had prepared the annual accounts on a going concernbasis;

(e) the Directors had laid down internal financial controls to befollowed by the Company and that such internal financial controls are adequate and wereoperating effectively; and

(f) the Directors had devised proper systems to ensure compliance withthe provisions of all applicable laws and that such systems were adequate and operatingeffectively.

Human Resource Management

Your Company treats its human resources as one of its most importantassets. To ensure good human resource management in the Company the Company focuses onall the aspects of employee lifecycle. During their tenure

in the Company employees are motivated through various skilldevelopment and volunteering programmes. Recreational programmes are also conducted onregular basis so as to create stress-free environment. All the while the Company alsocreates effective dialogues through various communication channels like face to faceinteractions so as to ensure that feedback reach the relevant teams. In house meetings andtraining sessions are also arranged to engage and develop the employees and to gatherideas around innovation.

The information required to be disclosed under Section 197(12) and Rule5 (1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014is provided at Annexure D.

The information required pursuant to Section 134 read with rule 5(2) ofCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 shall beprovided upon request. In terms of Section 136 of the Act the report and accounts arebeing sent to members excluding the information on employee's particulars which isavailable for inspection by the members at the registered office of the Company duringbusiness hours on working days of the Company up to the date of the ensuing GeneralMeeting. Interested members may write to the Company. No employee is related to anyDirector of the Company.

Sexual Harassment at Workplace

Your company has complied with provisions relating to the Sexualharassment of Women at Workplace (Prevention Prohibition and Redressal) Act 2013. TheCompany has constituted Internal Complaints Committee and has put in place a formal policyfor prevention of sexual harassment of its employees at workplace. During the year2019-20 there were no cases filed pursuant to the said Act.

Particulars of Loans given investment made guarantees given andsecurities provided

The information required to be disclosed under Section 134(3)(g) of theCompanies Act 2013 may be treated as ‘Nil' as the Company is exempted underSection 186(11) of the Companies Act 2013.

Annual Return

Annual Return is available at Company's website at the link Deposits

During the year ended March 312020 the Company has not accepted anydeposits from the public within the meaning of the provisions of the Non- BankingFinancial Companies (Reserve Bank) Directions 1977 and RBI's notification no.DFC.118DG/(SPT)-98 dated January 311998 as amended from time to time.

Risk Management

In terms of RBI guidelines for NBFCs and Primary Dealers RiskManagement Committee of the Board has been entrusted with the responsibility by the Boardin laying down procedures for risk assessment and minimization. The Committee also reviewsthese procedures periodically to ensure that executive management is implementing andcontrolling the risks through means of a properly defined risk framework.

The Company also has an Asset-Liability Committee (ALCO) of executivesof the Company comprising of the Managing Director & CEO Executive Director & CFOand other senior executives of the Company.

Risk Management Policy is reviewed annually by the Audit Committee andRisk Management Committee and on the basis of the recommendation of these Committees theBoard approves the same.

The Risk Management Committee IT Strategy Committee and AuditCommittee on periodic basis oversees all the risks that the Company faces such asstrategic financial market liquidity security property IT legal regulatory andother identified risks alongwith the implementation of risk management policy. There is anadequate risk management infrastructure in place capable of addressing the possible risks.Thus in the opinion of the Company there are no such risks which may threaten theexistence of the Company.

Commercial Paper

The Company has received the highest credit ratings from credit ratingagencies - ICRA and CRISL as under - a. ‘ICRA A1+' assigned to Rs. 500 croreCommercial Paper programme of the Company.

b. ‘CRISIL A1+' assigned to Rs. 500 crore (enhanced from Rs.250 crore from January 30 2019) Commercial Paper Programme of the Company.

During the year your Company issued commercial papers and as on March31 2020 outstanding value of commercial papers of the Company was Rs. 500 crore.

Significant and material orders

There are no significant and material orders passed by the regulatorsor courts or tribunals impacting the going concern status and Company's operations infuture.

Issue of Shares

There was no issue of shares during the year neither with differentialrights as to dividend voting or otherwise nor to employees of the company.

Management Discussion and Analysis

Management Discussion and Analysis comprising an overview of thefinancial results operations/performance and future aspects forms part of thisBoard's Report.

Secretarial Standards

The Company has complied with all applicable Secretarial Standards.

Non-applicability of Section 148 of Companies Act 2013

The Company is not required to maintain cost records in accordance withSection 148 of the Companies Act 2013.


The Comptroller and Auditor General of India had appointed M/s RasoolSinghal & Co. Chartered Accountants (Firm Reg. No. 500015N) as the Statutory Auditorof the Company for the financial year ended March 312020. The report of the auditor isself-explanatory and does not call for any further comments. Pursuant to the provisions ofSection 143(12) of the Companies Act 2013 the Statutory Auditor of the Company has notreported any incident of fraud during the FY 2019-20. The Auditor Report does not containany qualification reservation or adverse remark.

Secretarial Auditor

The Board had appointed M/s Pranav Kumar & Associates CompanySecretaries to conduct the Secretarial Audit for the financial year 2019-20. TheSecretarial Audit Report for the financial year ended March 312020 is annexed as AnnexureE to this Report. The Report of the Secretarial Auditor forming part of the Annual Reportdoes not contain any qualification reservation adverse remark or disclaimer. Theobservation made in the Auditor's Report is self-explanatory and therefore do notcall for any further comments.

Internal control systems and their adequacy

The Company considers the internal control systems to be a verysignificant part of its Corporate Governance practices. Your Board has adopted thepolicies and procedures for ensuring the orderly and efficient conduct of its businessincluding adherence to the Company's policies the safeguarding of its assetsprevention and detection of frauds etc. The Company's internal control systems arecommensurate with the nature of its business and the size and complexity of itsoperations. These have been designed to provide reasonable assurance with regard torecording and providing reliable financial and operational information complying withapplicable statutes safeguarding assets from unauthorized use executing transactionswith proper authorization and ensuring compliance with corporate policies. The Company hasa well-defined delegation of power with authority limits for approvingtransactions/contracts including expenditure. Processes for formulating and reviewingannual and long term business plans have been laid down. M/s Rasool Singhal & Co thestatutory auditor of the Company has audited the financial statements included in thisannual report and have issued a report on our internal control over financial reporting(as defined in section 143 of Companies Act 2013).

As a part of this control system your Board appoints Internal Auditorand other auditors as well. Accordingly these internal controls are routinely tested andcertified by the auditors. For the year 2019-20 the Board appointed M/s Lodha & the Internal Auditor of the Company. The scope of Internal Audit included audit oftreasury transactions on a monthly basis and reporting to the Audit Committee of the Boardthat the company has operated within the limits of various risk parameters laid down bythe Board Reserve Bank of India and other statutory authorities. Besides the said firmalso audited and reviewed the related party transactions on monthly basis and key businessprocesses including IT systems of the Company on quarterly basis. All the reports of theInternal Auditor were submitted to the Audit Committee. Timeliness of submission of allthe periodic statutory returns/forms etc. to regulatory bodies was also checked by theInternal Auditor. The Audit Committee reviews adequacy and effectiveness of theCompany's internal control environment and monitors the implementation of auditrecommendations including those relating to strengthening of the Company's riskmanagement policies and systems.


The Company is a Primary Dealer as defined and regulated by the ReserveBank of India and is not a manufacturing company hence the particulars required to bedisclosed with respect to conservation of energy and technology absorption in terms ofSection 134(3)(m) of the Companies Act 2013 and the Rules made thereunder are notapplicable/ Nil.

However every endeavor is made to ensure optimal use of energy avoidwastages and conserve energy as far as possible. Some of these measures include switchingoff lights and computer systems when not in use creating awareness among employees aboutthe necessity of energy conservation etc. Your Company has installed the integratedtreasury management software and RBI's Negotiated Dealing System with the help of TheInstitute for Development and Research in Banking Technology (IDRBT) and reputed ITcompanies. The Company recognizes the growing importance of Information Technology in theemerging business environment. The Company has also implemented Business Continuity Plan(BCP) and Disaster Recovery Plan (DRP) with the help of IDRBT (consultants forimplementation of BCP and DRP) to identify and reduce risk exposures and proactivelymanage any contingencies.

Your Company has neither used nor earned any foreign exchange duringthe year under review. Acknowledgements

Your Directors thank the Government of India Reserve Bank of IndiaSecurities and Exchange Board of India National Stock Exchange of India Ltd. BSE Ltd.Parent Bank Commercial Banks Cooperative & Regional Rural Banks FinancialInstitutions PF Trusts Public Sector Undertakings Private Sector Corporate Bodies andother valued clients for their whole-hearted support. We acknowledge the sincere anddedicated efforts put in by the employees of the Company at all levels.

On behalf of Board of Directors

Date : September 4 2020 Sd/- Sd/-
P apQ' i\. a'hi liolrli Place: New Delhi (Vikas Goel) (Tejendra Mohan Bhasin)
Managing Director & CEO Independent Director
DIN: 08322541 DIN:03091429