To the Members of
SecUR Credentials Limited
Your Directors present their 18th Annual Report together with the Audited financialstatements of your Company for the year ended 31st March 2019.
1. FINANCIAL HIGHLIGHTS:
|PARTICULARS ||2018-19 ||2017 -18 |
|Revenue from Operations ||600439831 ||376494590 |
|Other income ||2894317 ||1640645 |
|Total Revenue ||603334148 ||378135235 |
|Less: Expenditure ||482827486 ||296794702 |
|Profit Before Finance cost Depreciation and Tax ||120506662 ||81340533 |
|Finance cost ||19652446 ||3372413 |
|Depreciation ||20439595 ||6097281 |
|Profit Before Tax ||80414621 ||71870839 |
|Current Tax ||16600000 ||16350000 |
|Deferred Tax ||7350404 ||3887220 |
|Profit After Tax ||56464217 ||51633619 |
2. STATE OF COMPANY AFFAIRS
During the year the Company earned total income of Rs. 600439831/- against theprevious year income of Rs. 376494590/-. Net Profit Before Tax Stood at Rs.80414621/- against the previous year Net Profit Before Tax of Rs. 71870839/-. NetProfit after tax for the current year stood at Rs. 56464217/- as against the previousyear profit after tax of Rs. 51633619/-. Your Directors are continuously working towardavenues for the future growth of the Company. The details about future outlook has beenmentioned under Management Discussion and Analysis section of this report.
There is no change in the nature of business during the year under review.
The Board of Directors of your Company has recommended a final dividend of Rs.0.50/-per equity share of Rs.10/- each for the financial year ended 31st March 2019. This finaldividend shall be paid subject to the approval of shareholders at the forthcoming AnnualGeneral Meeting and would involve cash outflow of Rs. 2946743/- (Rupees Twenty NineLakhs Forty Six Thousand Seven Hundred and Forty Three Only)
4. DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to Section 134(5) of the Companies Act 2013 the Board of Directors to thebest of their knowledge confirm that -
a) in the preparation of the accounts the applicable accounting standards have beenfollowed along with proper explanations relating to material departure;
b) appropriate accounting policies have been selected and applied consistently and havemade judgments and estimates that are reasonable and prudent so as to give a true and fairview of the state of affairs of the Company at the end of the financial year and of theprofit of the Company for that year;
c) proper and sufficient care has been taken for the maintenance of adequate accountingrecords in accordance with the provisions of the Act for safeguarding the assets of theCompany and for preventing and detecting fraud and other irregularities;
d) the annual accounts have been prepared on a going concern basis;
e) they have laid down internal financial controls to be followed by the Company andthat such internal financial controls are adequate and were operating effectively;
f) they have devised proper systems to ensure compliance with the provisions of allapplicable laws and that such systems were adequate and operating effectively.
5. MANAGEMENT DISCUSSION AND ANALYSIS
To avoid duplication between Directors' Report and the Management Discussion andAnalysis your Directors have presented a composite report.
As we had shared with you over the past year the background screening industry inIndia continues to grow in the high double digits. This is primarily driven by thefollowing factors:
Hiring in the IT industry has picked up in the last FY compared to the 'previous FY. This includes both campus and lateral hiring. Considering that the IT sectorcontinues to be one of the largest employers in India this has an almost . immediateimpact on our industry volumes.
While the additional hiring in the ITES / BPO sector has not been as high as inthe IT sector due to the inherent nature of the industry and the higher employee churn(due to the mobile nature of its employee population) the BGC requirements of theITES/BPO sector have shown steady growth.
An interesting pattern which has emerged in the last couple of years is that alarge (and increasing) number of organisations are now taking employee resources on boardnot on direct payroll but through third party manpower organisations such as Team Leaseand Quess. While the early adoption of third party staffing had been with large maturetraditional organisations we have seen a rapid increase in this route of staffing notjust with the new gen business enterprises (including ecommerce) but even public sectorand quasi Government organisations. Over the next few years we believe that the thirdparty staffing sector will become one of the largest client segments for our business.Having said that there are some challenges in working with this sector in terms of bothpricing and payment terms which we need to factor in when we project business volumesfrom here.
While we thought we saw a pattern but too early to comment on as a trend lastFY is now a definite trend. All the new age businesses in India including e-commercedigital businesses are accepting BGC as a standard and necessary HR practice and webelieve as this sector explodes there will be substantial growth opportunities here. Thishas applied even to the doorstep delivery service businesses which has very largeemployee populations although their BGC requirements tend to be more limited than thetraditional client segment.
One challenge that your Company has definitely faced in the last year is theshortage of trained manpower which is endemic to the IT/ITES sectors in India. Due to theplethora of jobs available in these sectors and the fact that fresh graduates in ourcountry tend to be educated but not skilled or job-ready ensuring that we havesufficient (both in numbers and as per job requirements) human resources is always achallenge. We are also plagued by the same attrition challenges that the rest of the ITESsector faces.
We believe the next few years will continue the same pattern of growth we havewitnessed the last two years and while there may be some concerns at the macro-economiclevel about growth rates these are not substantial enough to slow down your Company'sprogress.
The continued focus on digitisation across the country will be a definite boon. Todayone of the biggest challenges to bringing down cycle time for our product delivery is thefact that a lot of our processes continue to be manual on the ground activities. Asdigitisation increases our cycle times will come down dramatically and along with thatcost efficiencies will also improve. One immediate impact of changed cycle times will beour working capital cycle will reduce and hence overall capital utilisation will get muchbetter as we go along. So while some may perceive digitisation and online availability ofdata as a potential threat we believe that this will in fact make our service deliverymuch faster and more reliable. One must only look at markets such as the US which havehad high levels of digitisation but the BGC industry is thriving. Organisational HRs willcontinue to outsource any activity which they see as "non-core" such asrecruitment payroll processing and similarly BGC.
One startling example of how the BGC industry has benefited from digitisation is theonline availability of court records which has increased by leaps and bounds over the pastfew years. Our experience on these digitised court records has been more than encouraging- we are now able to share much more information on a candidate's criminal or litigationhistory than we ever have been to earlier. As our clients see tangible results from thecourt record searches we conduct on their behalf a record number of clients is now makingcourt record searches an integral part of their employee screening practices.
With the GOI pushing UIDAI-AADHAR program aggressively again we believe the benefitswe envisage from the program i.e. a single unique identifier for all Indians which cutsacross all databases and geographies will eventually turn into reality. We have alreadyseen how the use of the US Social Security Number have made background screening in thatcountry much more robust and quicker. Some other elements of digitisation such as theNational Academics Depository (NAD) are taking some time to deliver benefits because ofthe structure associated with storing and accessing this data. We are eagerly awaiting theday when the NAD database becomes much more pervasive as currently the education checkprocess is the longest and most cumbersome in our entire process delivery cycle.
There will be a flipside to digitisation of data and that is something your Companymust always keep an eye out for. There will be increasing demands for and regulationrelated to privacy of information. Although this will be gradual with increasingawareness at the individual level of the amount of data available online variousregulatory authorities are bound to step in to set boundaries on usage of this data. As anorganisation we are fully committed to ensure adherence to all privacy related norms andhave already factored certain international regulatory requirements such as theEurope-based GDPR guidelines.
As a team what we are most excited about and what we believe will completelytransform not just your Company but the shape the BGC industry in India will be the useof technology enablers arising from all this digitised data. For example we have alreadymade usage of APIs across not just our internal platforms but for exchange and sharingof data on both public and client platforms a standard element of our technologyarchitecture. We are actively testing and piloting various AI usages within our businessprocesses to make the business not just a Lean Organisation but to improve predictabilityand hence service quality of our delivery. We believe as an organisation that within thenext 18 months odd at least half our processes should be completely automated andtowards that objective we are re-working our entire business strategy in the coming FYitself.
Indian BGC Industry continues to growth in high double digits.
There is an increasing acceptance of background checks within the HR fraternity as anintegral part of HR processes. Our core focus on increasing our coverage of CorporateIndia will continue in the coming years.
We provide end to end background screening services to our clients. These backgroundscreening services are not restricted to only employees of organisations but can includecontract staff domestic staff odd job service providers potential target investmentcompanies persons being considered for leadership roles borrowers and many more. Ourservices can be broadly classified into the following.
Employee background checks: There is widespread falsification of information in resumesprepared by potential employees. This includes overstating of qualifications overstatedcompensation completely fake employment stints fake education degrees faked medicalrecords to even more dangerous masking of past criminal records and fake identities. Ourpast experience over so literally lakhs of resumes has shown us that in India thisincidence of fake information in resumes is as high as 15 -20 percent acrossgeographies across hierarchies and across industries. Our background screening servicesgo and verify the information claimed by the candidate against the source of thatinformation. For example if a candidate claims a post graduate degree from a particularUniversity we approach that University to ratify that information. Our employeebackground checks cover all elements of a candidate's resume - employment historyeducation qualifications litigation history medical status any possible substanceabuse candidate genuineness and so on.
Increasing trend of recruitment on rolls of third parties such as contract staffingtemp staffing has in fact given an impetus to BGC numbers. Client companies are insistingthat such outsourcing partners should also conduct thorough background checks on theirstaff.
Checks on contract staff / odd job service providers: Any individual entering anorganisation's premises either directly on its payrolls or through a third party serviceprovider such as staffing companies housekeeping agencies security agencies transportservice providers is a potential risk if not completely measured and monitored. There isan increasing awareness of this across corporates and so they are either insisting thatsuch third party providers conduct background checks on their employees before sendingthem on site or conducting checks on such employees themselves. As a result there issurge in delivering (slightly simplified) background checks on employees of suchorganisations.
Due diligence services: Due diligence services are a specialised service offeringwhich provide indepth information and analysis of profiles of either senior level hireswithin organisations or individuals who are being looked at as potential investmentpartners or even individuals and organisations which are being looked at as supply chainpartners. Due diligence tries to provide a 360 degree view of individuals and willinclude not just verifying the person's antecedents as stated in his resume but also pastbusiness partnerships and associations family member profiles and business associationsdiscreet checks to get informal feedback and so on. This service is an extremelyspecialised service and both pricing as well as service deliverables are decided on acase-by-case basis. This is an upcoming product niche and while it will never be a largevolume segment the value here is much better than the standard BGC product.
Verification of PAN card applicants: For the past couple of years we have been workingwith NSDL (National Securities Depository Ltd) for conducting verification of genuinenessof PAN card applicants across the country. Since potentially fraudulent applicants canactually become red herrings in the financial system this service offering is not just arevenue channel but also a matter of national pride for us. In this year we have beenawarded (as part of an RFP process) a similar contract by UTI as well which is the otherlarge issuer of PAN cards in the country.
SecUR Credentials Limited the India's only Background screening Company listed onNational Stock Exchange of India. Key highlights of the financials of the Company are asfollows:
OPERATIONAL HIGHLIGHTS PAST YEAR
We have continued our pattern of high growth rate in the past year. From exiting theprevious Financial Year with roughly 500 clients we have ended this Financial Year withover 1000 clients who represent some of the largest entities in Corporate India.
In terms of sectoral representation our client base includes leading names from almostall sectors IT/ITES Banks Insurance Mutual Funds NBFCs Hospitals Hospitality Gems& Jewellery Retail Ecommerce Staffing Companies Education Professional FirmsPharmaceutical FMCG and many more.
Apart from the growth in revenues clients and employees some of the key operationalhighlights of the past Financial Year which reflect also on our strategic direction goingforward are as below.
Continued focus on boosting foreign currency earnings
We have had strong growth in foreign currency earnings this year. As compared to theprevious FY earnings of Rs 6.70 crore our revenues in this FY in foreign currencyearnings have been Rs 14.37 crore.
While increasing the foreign currency earnings our focus has continued to be onworking with global background screening and due diligence service providers. We believethat the US and Europe markets are quite mature and it will be a better entry strategy tobecome the preferred India partner for such providers rather than attempt to approach theend client organisations directly. We will continue this approach in the current year aswell.
Purchase of property to build state of art scaleable delivery centre
In light of the fact that at least for the next few years Mumbai will be our primarydelivery location we have purchased a complete building in the MIDC Andheri area ofMumbai. This facility which currently has the capacity to seat close to 350 employees ina single shift has the benefit of having additional FSI which can be used to increasethe capacity by upto three times in the coming years.
Having an entire building to ourselves has also made it easier for us to manage servicedelivery under one roof and also more effectively handle client concerns related tophysical and information security.
However while the entire purchase transaction was supposed to take about 2 months endto end it eventually stretched close to nine months resulting both from the long termleasehold nature of MIDC property as well as issues cropping up relating to the previousownership. This delay in completion of the transaction has created significant stress onour regular cash flows as we had to divert money from our regular working capital usageto completing this purchase without bank funding.
This impact has been felt not just in the last Quarter of the FY 201819 but also inthe first Quarter of FY 2019-20.
BUILDING A LEANER ORGANISATION
There has been a significant slowdown in the macro economic scenario over the last fewQuarters. In our endeavour to manage most processes in-house we had built substantialfixed costs in our Profit & Loss in terms of both manpower as well as deliverycentres across the country.
Towards the end of this Financial Year we have taken a conscious strategic decisionto manage our ramp up on service delivery through more outsourcing. This will make thecost structure of our delivery model more variabilised and hence we believe morerecession-proof. Also as technology evolves a lean organisation will be more prepared torespond faster and take advantage of these changes.
With this strategic direction the Management Team has in fact projected zeroincrease in manpower numbers over the coming Financial Year irrespective of the increasein business numbers. Our endeavour will be to manage all these increases only throughoutsourcing and automation.
Focus on automation including use of AI and RPA tools
We believe to make our service delivery scaleable as well as to deliver world classdelivery the solution will be to re-engineer our business processes using every possibleautomation solution available. With this objective your Company has been experimentingwith various state of art technology solutions including using Artificial Intelligence(AI) tools voice recognition Robotic Process Automation (RPA) across different steps inour core processes.
The final design we are aspiring for is to build a completely automated servicedelivery model which will also tie in with our vision of building a Lean organisation. Itis only with extremely high degrees of automation that we will be able to provideconsistent high quality service experiences to our clients.
In this FY we have already started some pilot projects in this space and we arealready seeing exciting results. Our mission is to complete the first phase ofimplementation in the coming FY.
Build-up for retail portfolio
The evolution of background screening in the developed markets has been a transitionfrom a pure Corporate / B2B service to also covering retail users. Examples include usingscreening of household help (drivers maidservants etc.) of tenants by landlords ofpotential gun-owners by Government bodies and so on. In India there is another hugespace in the matrimony space which is fairly unique to our culture and yet probably hasmuch more potential than all the other segments put together.
Over the past year and more we have been doing a lot of research on the retailsegments. While we are not yet ready to launch a full-fledged retail portfolio (given thefact that a Retail / B2C business will need a completely different business design and thehuge initial cash burn required in retail product launches) we believe that is clearly aroadmap which we have to chart for the future. With this in mind we have been doing anenormous amount of background work in terms of market research product design softwareplatforms which we believe will eventually allow us to launch retail products in the next12-18 months.
INTERNAL CONTROL SYSTEMS
Your Company has in place adequate internal financial controls with reference to theFinancial Statements commensurate with the size scale and complexity of its operations.
In accordance with the requirements of Section 143(3) (i) of the Companies Act 2013the Statutory Auditors have confirmed the adequacy and operating effectiveness of theinternal financial control systems over financial reporting.
6. SHARE CAPITAL
The issued subscribed and paid up share capital of the Company stood atRs.48884250/- as on 31st March 2019 comprising of 4888425 Equity Shares of Rs.10/-each fully paid up. There was no change in the share capital during the year.
Further the Company has not issued shares with differential voting rights nor hasgranted any stock options or sweat equity.
7. CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
All contracts / arrangements / transactions entered into with the related partiesduring the year under review were in the ordinary course of business and on an arm'slength basis. All the related party transactions are part of the notes to accounts of thefinancial statements for the F.Y. 2018-19. There were no material related partytransactions i.e. transactions exceeding 10% of the annual consolidated turnover as perthe last audited financial statements. Hence no transactions are required to be reportedin form AOC-2.
Your Company has incorporated two wholly owned subsidiary Companies during the F.Y.2018-19. One in Singapore viz. SecUR Credentials Pte. Ltd. on 11th June 2018 and anotherin India viz. SecUR B2C Private Limited on 19th March 2019. Both of these subsidiaryCompanies have not started their operations as on 31st March 2019.
9. CONSOLIDATED FINANCIAL STATEMENT
Your Company has not prepared consolidated financial statements in a view that both thesubsidiary companies incorporated during the year under review have not started theiroperations as on 31st March 2019.
10. CORPORATE GOVERNANCE REPORT
Your Company is committed and has been complying with principles of Good CorporateGovernance. Pursuant to Regulation 15(2) of SEBI (Listing Obligations and DisclosuresRequirements) Regulations 2015 provisions of regulations 17 to 27 clauses (b) to (i) ofsub-regulation (2) of regulation 46 and para C D and E of Schedule V of the saidRegulation are not applicable to your Company. Hence report on Corporate Governance isnot annexed along with this Report.
11. LOANS GUARANTEE AND INVESTMENT:
Particulars of loans and investments made by the Company pursuant to Section 186 of theCompanies Act 2013
are given in the notes to the Financial Accounts which forms part of the AnnualReport. The Company has not given any guarantee.
Your Company has not accepted any deposits from the public falling within the ambit ofsection 73 of the Companies Act 2013 during the year under review.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNING AND OUTGO
The operations of the Company are not energy intensive. However adequate measures forconservation of energy usage of alternate sources of energy and investments for energyconservation wherever required have been taken. The company makes all the efforts towardsconservation of energy protection of environment and ensuring safety. The Company has notabsorbed any technology.
Particulars of foreign exchange earnings and outgo during the year under review are asfollows:
|Particulars ||Amount in INR |
|(a) Earning (Collections) in foreign currency ||Rs. 36844290/- |
|(b) Expenditure (Payments) in foreign currency ||Rs. 349502/- |
14. DIRECTORS AND KEY MANAGERIAL PERSONNEL
During the year under review designation of Mrs. Shibani Belwalkar was changed fromExecutive Director to NonExecutive Director w.e.f. 29th January 2019. Except this therewas no change in the constitution of Board of Directors throughout the year.
To comply with the Articles of Association of the Company and the Companies Act 2013Mr. Pankaj R. Vyas (DIN: 02496291) Director shall retire by rotation in the forthcomingAnnual General Meeting and being eligible offers himself for re-appointment.
The Company has appointed Ms. Dipika Detha as Company Secretary of the Company w.e.f31st August 2019 in place of Mr. Vipul Bhoy who resigned as on 30th August 2019.
The Company has following personnel as the Key Managerial Personnel (KMP) pursuant tothe provisions of Section 203 of the Companies Act 2013:
|1. Mr. Rahul Belwalkar ||Managing Director |
|2. Mr. Mayur Chheda ||Chief Financial Officer |
|3. Mr. Vipul Bhoy ||Company Secretary (Up till 30th August 2019) |
|4. Ms. Dipika Detha ||Company Secretary (w.e.f 31st August 2019) |
15. DISCLOSURE BY INDEPENDENT DIRECTORS
All the Independent Directors have furnished declarations that they meet the criteriaof independence as laid down under Section 149 (6) of the Companies Act 2013.
16. BOARD EVALUATION
Pursuant to the provisions of the Companies Act 2013 and the SEBI (Listing Obligationsand Disclosure Requirements) Regulations 2016 the Board has carried out an annualevaluation of its own performance and that of its committees as well as performance ofDirectors individually through internally developed questionnaire on performanceevaluation.
The Nomination and Remuneration Committee reviewed the performance of the individualdirectors on the basis of criteria such as the contribution of the individual director tothe Board and committee meetings.
The performance evaluation of Non-Independent Directors and the Board as a whole wascarried out by the Independent Directors. The performance evaluation of the Non-ExecutiveChairman of the Company was also carried out by the Independent Directors. The Directorsexpressed their satisfaction with the evaluation process.
17. MEETING OF THE BOARD OF DIRECTORS
Composition of the Board of Directors of the Company is in conformity with therequirements of Companies Act 2013 as well as SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015.
The Board meets at regular intervals to discuss on Company's Business policy/strategyapart from other business of the Board. The Board of Directors duly met 9 (nine) timesduring the financial year 2018-19 on 30th May 2018 14th August 2018 27th August 201814th November 2018 10th December 2018 19th December 2018 29th January 2019 22ndMarch 2019 and 29th March 2019.
18. AUDIT COMMITTEE
The Audit Committee Comprises of these Directors viz. Mr. Amit Bharti as Chairman ofthe Committee Mr. Ritesh Parekh and Pankaj Vyas as Members of the Committee. Mr. AmitBharti and Mr. Ritesh Parekh are Independent Directors and Mr. Pankaj Vyas isNon-Executive Director. All the members possess sound accounting and financial managementknowledge.
The Committee met six times during the financial year under review on 30th April 201830th May 2018 27th August 2018 30th October 2018 14th November 2018 and 11thMarch 2019.
19. NOMINATION & REMUNERATION COMMITTEE/POLICY
The Nomination and Remuneration Committee includes Mr. Amit Bharti IndependentDirector as a Chairman of the Committee Mr. Ritesh Parekh Independent Director and Mr.Pankaj Vyas Non-Executive Director as a Member of the Committee.
The Committee met once during the financial year under review on 11th March 2019.
The Nomination and Remuneration Policy recommended by the Nomination & RemunerationCommittee is duly approved and adopted by the Board of Directors. The said policy isannexed to the report as Annexure - I.
20. STAKEHOLDER RELATIONSHIP COMMITTEE
Company's Stakeholders Relationship Committee functions under the Chairmanship of Mr.Pankaj Vyas NonExecutive Director Mr. Amit Bharti and Mr. Ritesh Parekh both IndependentDirectors as members of the Committee. Company Secretary is the Compliance Officer of theCompany.
During the year under review Committee met once on 11th March 2019.
21. ISMS AND INFOSEC COMMITTEE
This is a voluntary initiative of your Company. ISMS and Infosec Committee ensuresInformation Security of the Company and its Management. Committee operates under theChairmanship of Mr. Rahul Belwalkar Managing Director of the Company. Mr. RichardDesouza Chief Risk Officer and Mr. Suhel Inamdar Chief Operating Officer are the membersof the Committee.
The Committee met twice during the year on 13th July 2018 and 18th January 2019.
22. CSR COMMITTEE
Financial Year 2018-19 was the first year where compliances of provisions of section135 of the Companies Act 2013 became applicable to the Company. During the year underreview a CSR Committee was constituted by the Board of Directors in their meeting held on30th May 2018 under the Chairmanship of Mr. Pankaj Vyas NonExecutive Director. Mr. AmitBharti an Independent Director and Mr. Rahul Belwalkar Managing Director are the membersof the Committee.
During the Financial Year 2018-19 the Company has made a provision for an amount ofRs.660745/- towards CSR activities as required by the act which is yet to paid as thecompany was unable to identify a suitable project and it is in the process to identify thesame Detailed report on CSR activities as per the provisions of the Companies Act 2013 isannexed to this report as an Annexure II.
The Corporate Social Responsibility Committee had formulated and recommended to theBoard a Corporate Social Responsibility Policy (CSR Policy) which was subsequentlyadopted by it and is being implemented by the Company. The CSR Policy can be accessed atthe Company's website www.secur.co.in under Policy section.
23. RISK MANAGEMENT
The management continuously access the risk involved in the business and all outefforts are made to mitigate the risk with appropriate action. The risk managementframework of the Company is appropriate compared to the size of the Company and theenvironment under which the Company operates. The Company has appointed Mr. RichardDesouza as Chief Risk Officer to look after and mitigate the risk factors.
24. MATERIAL CHANGES AND COMMITMENTS
There have been no material change and commitment affecting the financial position ofthe Company between the end of the financial year to which the financial statements relateand the date of this report.
The particulars of employees required under Rule 5(1) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 are annexed as Annexure III and formspart of this report.
Information required under Section 197(12) of the Companies Act 2013 read with Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Management Personnel) Rule2014 and forming part of Directors' Report for the year ended 31st March 2019 is givenin a separate annexure to this report. The said annexure is not being sent alongwith thisreport to the members of the Company in line with the provisions of Section 136 of theCompanies Act 2013. Members who are interested in obtaining these particulars may write
to the Company Secretary at the Registered Office of the Company. The aforesaidannexure is also available for inspection by the members at the registered office of theCompany 21 days before the 18th Annual general meeting and up to the date of the saidAnnual general meeting during normal business hours on working days.
26. AUDITORS Statutory Auditor:
M/s. B. M. Parekh & Co. Chartered Accountants (FRN: 107448W) were appointed byMembers as Statutory Auditors of the Company vide ordinary resolution passed by themembers of the Company at the 17th Annual General Meeting to hold the office till theconclusion of 22nd Annual General Meeting of the Company to be held in the year 2023.
Auditors' in their Report to the members have given their observation pertaining tooutstanding statutory dues for more than six months. The response of your Directors withrespect to it are as follows:
There has been a delay in compliance and statutory dues of the Financial Year. This hashappened for a combination of reasons. We recruit a large number of our employees underthe The Pradhan Mantri Rojgar Protsahan Yojana (PMRPY) Plan scheme- this requiresreconciliation of PF dues after adjustment of these benefits which causes delays in ourPF filing. Since we work with a number of vendors spread across the country who are smallbusinesses / individuals the delay in collecting their PAN details results in delayed TDSfiling. These dues have since been regularised.
Pursuant to the provisions of section 204 of the Companies Act 2013 and the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Company hadappointed M/s. Niyati Mehta & Associates Practicing Company Secretary (Certificate ofPractice Number: 16159) to undertake the Secretarial Audit of the Company.
A Secretarial Audit Report given by the Secretarial Auditor is annexed to this BoardReport as Annexure IV.
The Secretarial Audit Report contains observation to which the Board explains asfollows:
Secretarial Auditor has observed pertaining to non-compliance of SEBI (LODR)Regulations 2013 for nondisclosure of resignation of Internal Auditors during the F.Y.2018-19. Our response to this observation is that Company is very positive as far asdisclosure of material events are concerned and have made several disclosures underapplicable regulations of SEBI to the stock exchange from time to time during the year.Due to oversight resignation of Internal Auditor could not be intimated to stock exchangeas only the word Auditor has been used for the purpose of disclosure in respectiveprovisions of SEBI (LODR) Regulations 2015. However Company assures you to implementsuitable measures in the system so that such events shall not occur again.
Further Secretarial Auditor has made observation pertaining to non-payment of CSRexpenditure. It is hereby clarified that Company being the first year of CSRapplicability could not identify the suitable project to spend CSR amount. HoweverCompany has made respective provisions in the financial statements during the year andsame shall be spend in the current financial year i.e. 2019-20.
27. DETAILS OF SIGNIFICANT & MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS ORTRIBUNAL
No such order was passed by any of the authorities which impacts the going concernstatus and company's operations in future.
28. EXTRACT OF ANNUAL RETURN
Pursuant to section 134(3)(a) and section 92(3) of the Companies Act 2013 read withRule 12(1) of the Companies (Management and Administration) Rules 2014 an extract of theAnnual Return as on 31st March 2019 in Form No. MGT-9 is attached as Annexure V and formspart of this Report.
29. VIGIL MECHANASIM
The Company has a vigil mechanism policy to deal with instances of fraud andmismanagement to enable Directors employees and all the stakeholder's of the Company toreport genuine concerns to provide for adequate safeguards against victimization ofpersons who use such mechanism. The vigil mechanism is implemented through Company'swhistle blower policy adopted by the Board of Directors and the same is hosted on thewebsite of the Company www.secur.co.in .
30. FRAUD REPORTING
During the year no fraud whether actual suspected or alleged was reported to theBoard of Directors.
31. PREVENTION OF SEXUAL HARRASSMENT AT WORKPLACE
The Company has in place an Anti-Sexual Harassment Policy in line with the requirementsof The Sexual Harassment of Women at Workplace (Prevention Prohibition and Redressal)Act 2013. Internal Complaints Committee (ICC) has been set up to redress complaintsreceived regarding sexual harassment. All employees (permanent on probation contractualtemporary and employees on third party payroll) are covered under this Policy. During theyear under review No complaint with allegations of sexual harassment was filed during theyear under review which was disposed-off as per the provisions of The Sexual Harassmentof Women at Workplace (Prevention Prohibition and Redressal) Act 2013 and as of 31stMarch 2019 no complaint was pending.
32. CAUTIONARY STATEMENT
Statements in the Annual Report particularly those which relate to ManagementDiscussion and Analysis may constitute forward looking statements within the meaning ofapplicable laws and regulations. Although the expectations are based on the reasonableassumption the actual results might differ.
The Board of Directors would like to express its appreciation for the dedicated andsincere efforts of the employees of the Company for their unstinted support throughout theyear. The Board is also thankful to all its stakeholders including Bankers Investorsmembers customers consultants vendors contractors etc. for their continued support andconfidence reposed in the Company.
| ||For and on behalf of the Board |
| ||Sd/- |
| ||Pankaj R. Vyas |
| ||Chairman |
|Date: 31st August 2019 ||DIN:02496291 |
|Place: Mumbai || |
Nomination and Remuneration Policy
The Nomination and Remuneration Committee and this Policy shall be in compliance withSection 178 of the Companies Act 2013 read with relevant rules thereto and Regulation 19of the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015. The KeyObjectives of the Committee are:
To guide the Board in relation to appointment and removal of Directors KeyManagerial Personnel and Senior Management.
To evaluate the performance of the members of the Board and provide necessaryreport to the Board for further evaluation by the Board.
To recommend the Board on remuneration payable to the Directors Key ManagerialPersonnel and Senior Management.
To retain motivate and promote talent and to ensure long term sustainability oftalented managerial persons and create competitive advantage.
To devise a policy on Board diversity.
To develop a succession plan for the Board and to regularly review the plan.
a) "Act" means the Companies Act 2013 as amended from time to time and theRules made thereunder.
b) "Board" means Board of Directors of the Company.
c) "Directors" mean Directors of the Company.
d) "Key Managerial Personnel" means -
(i) Chief Executive Officer or the Managing Director or Whole-time Director;
(ii) Chief Financial Officer;
(iii) Company Secretary; and
(iii) Such other officer as may be prescribed.
e) "Senior Management" means personnel of the company who are members of itscore management team excluding the Board of Directors but including Functional Heads.
3. ROLE OF COMMITTEE
3.1 Matters to be dealt with perused and recommended to the Board by the Nominationand Remuneration Committee -
3.1.1 Formulate the criteria for determining qualifications positive attributes andindependence of a director.
3.1.2 Identify persons who are qualified to become Director and persons who may beappointed in Key Managerial and Senior Management positions in accordance with thecriteria laid down in this policy.
3.1.3 Recommend to the Board appointment and removal of Director KMP and SeniorManagement Personnel.
3.2 Policy for appointment and removal of Director KMP and Senior Management -
3.2.1 Appointment criteria and qualifications
a) The Committee shall identify and ascertain the integrity qualification expertiseand experience of the person for appointment as Director KMP or at Senior Managementlevel and recommend to the Board his / her appointment.
b) A person should possess adequate qualification expertise and experience for theposition he / she is considered for appointment. The Committee has discretion to decidewhether qualification expertise and experience possessed by a person is sufficient /satisfactory for the concerned position.
c) The Company shall not appoint or continue the employment of any person as Whole-timeDirector or Managing Director who has attained the age of seventy years; Provided thatthe term of the person holding this position may be extended beyond the age of seventyyears with the approval of shareholders by passing a special resolution based on theexplanatory statement annexed to the notice for such motion indicating the justificationfor extension of appointment beyond seventy years.
3.2.2 Term / Tenure
a) Managing Director/Whole-ti'me Director:
The Company shall appoint or re-appoint any person as its Executive Chairman ManagingDirector or Whole-time Director and designate them for a term not exceeding five years ata time. No re-appointment shall be made earlier than one year before the expiry of term.
An Independent Director shall hold office for a term up to five consecutiveyears on the Board of the Company and will be eligible for re-appointment on passing of aspecial resolution by the Company and disclosure of such appointment in the Board'sReport.
No Independent Director shall hold office for more than two consecutive termsbut such Independent Director shall be eligible for appointment after expiry of threeyears of ceasing to become an Independent Director;
Provided that an Independent Director shall not during the said period of threeyears be appointed in or be associated with the Company in any other capacity eitherdirectly or indirectly.
At the time of appointment of Independent Director it should be ensured that number ofBoards on which such Independent Director serves is restricted to seven listed companiesas an Independent Director and three listed companies as an Independent Director in casesuch person is serving as a Whole-time Director of a listed company or such other numberas may be prescribed under the Act.
The Committee shall carry out evaluation of performance of every Director KMP andSenior Management Personnel at regular interval (yearly).
Due to reasons for any disqualification mentioned in the Act or under any otherapplicable Act rules and regulations thereunder the Committee may recommend to theBoard with reasons recorded in writing removal
of a Director KMP or Senior Management Personnel subject to the provisions andcompliance of the said Act and rules made thereunder.
The Director KMP and Senior Management Personnel shall retire as per the applicableprovisions of the Act and the prevailing policy of the Company. The Board will have thediscretion to retain the Director KMP Senior Management Personnel in the same position/remuneration or otherwise even after attaining the retirement age for the benefit of theCompany.
3.3 Policy relating to the Remuneration for the Whole-time Director KMP and SeniorManagement Personnel
a) The remuneration / compensation / commission etc. to the Managing DirectorWhole-time Director KMP and Senior Management Personnel will be determined by theCommittee and recommended to the Board for approval. The remuneration / compensation /commission payable to Managing Director Whole-time Director and Director shall be subjectto the prior/post approval of the shareholders of the Company and Central Governmentwherever required.
b) The remuneration and commission to be paid to the Managing Director Whole- timeDirector and Directors shall be in accordance with the conditions laid down in theArticles of Association of the Company and as per the provisions of the Act.
c) Increments/revision to the existing remuneration / compensation payable to ManagingDirector Wholetime Director and Directors may be recommended by the Committee to theBoard which should be within the limits approved by the Shareholders.
d) Where any insurance is taken by the Company on behalf of its Directors ChiefExecutive Officer Chief Financial Officer the Company Secretary and any other employeesfor indemnifying them against any liability the premium paid on such insurance shall notbe treated as part of the remuneration payable to any such personnel; Provided that ifsuch person is proved to be guilty the premium paid on such insurance shall be treated aspart of the remuneration.
3.3.2 Remuneration to Whole-time Director Managing Director Directors KMP and SeniorManagement Personnel:
a) Fixed pay:
The Whole-time Director/ KMP and Senior Management Personnel shall be eligible for amonthly remuneration as may be approved by the Board on the recommendation of theCommittee. The breakup of the pay scale and quantum of perquisites including employer'scontribution to P.F pension scheme medical expenses club fees etc. shall be decided andapproved by the Board/ the Person authorized by the Board on the recommendation of theCommittee and approved by the shareholders and Central Government wherever required.
b) Minimum Remuneration:
If in any financial year the Company has no profits or its profits are inadequatethe Company shall pay remuneration to its Managing Director and Whole-time Director inaccordance with the provisions of Schedule V of the Act and if it is not able to complywith such provisions with the previous approval of the Central Government.
c) Provisions for excess remuneration:
If Managing Director and/or Whole-time Director draws or receives directly orindirectly by way of remuneration any such sums in excess of the limits prescribed underthe Act or without the prior sanction of the Central Government where required he / sheshall refund such sums to the Company and until such sum is refunded hold it in trust forthe Company. The Company shall not waive recovery of such sum refundable to it unlesspermitted by the Central Government.
3.3.3 Remuneration to Non- Executive / Independent Director:
a) Remuneration / Commission:
The remuneration / commission shall be fixed as per the slabs and conditions mentionedin the Articles of Association of the Company and the Act.
b) Sittng Fees:
The Non- Executive / Independent Director may receive remuneration by way of fees forattending meetings of Board or Committee thereof; Provided that the amount of such feesshall not exceed Rs.100000/- per meeting of the Board or Committee or such amount as maybe prescribed by the Central Government from time to time.
Commission may be paid within the monetary limit approved by shareholders subject tothe limit not exceeding 1% of the profits of the Company computed as per the applicableprovisions of the Act.
d) Stock Options:
An Independent Director shall not be entitled to any stock option of the Company.
4.1 The Committee shall consist of a minimum three (3) non-executive directorsmajority of them being independent.
4.2 Minimum two (2) members shall constitute a quorum for the Committee meeting.
4.3 Membership of the Committee shall be disclosed in the Annual Report.
4.4 Term of the Committee shall be continued unless terminated by the Board ofDirectors.
5.1 Chairperson of the Committee shall be an Independent Director.
5.2 Chairperson of the Company may be appointed as a member of the Committee but shallnot be a Chairman of the Committee.
5.3 In the absence of the Chairperson the members of the Committee present at themeeting shall choose one amongst them to act as Chairperson.
5.4 Chairman of the Nomination and Remuneration Committee meeting should be present atthe Annual General Meeting or may nominate some other member to answer the shareholders'queries.
6. FREQUENCY OF MEETINGS
The meeting of the Committee shall be held at such regular intervals as may berequired.
7. COMMITTEE MEMBERS' INTERESTS
7.1 A member of the Committee is not entitled to be present when his or her ownremuneration is discussed at a meeting or when his or her performance is being evaluated.
7.2 The Committee may invite such executives as it considers appropriate to bepresent at the meetings of the Committee.
8. DUTIES OF COMMITTEE
A) The duties of the Committee in relation to nomination matters shall include:
8.1 Ensuring that there is an appropriate induction in place for new Directors andmembers of Senior Management and reviewing its effectiveness;
8.2 Ensuring that on appointment to the Board Non-Executive Directors receive a formalletter of appointment;
8.3 Identifying and recommending Directors who are to be put forward for retirement byrotation.
8.4 Determining the appropriate size diversity and composition of the Board;
8.5 Seffing a formal and transparent procedure for selecting new Directors forappointment to the Board;
8.6 Developing a succession plan for the Board and Senior Management and regularlyreviewing the plan;
8.7 Evaluating the performance of the Board members and Senior Management in thecontext of the Company's performance from business and compliance perspective;
8.8 Making recommendations to the Board concerning any matters relating to thecontinuation in office of any Director at any time including the suspension or terminationof service of an Executive Director as an employee of the Company subject to the provisionof the law and their service contract.
8.9 Delegating any of its powers to one or more of its members or the Secretary of theCommittee;
8.10 Recommend any necessary changes to the Board; and
8.11 Considering any other matters as may be requested by the Board.
B) The duties of the Committee in relation to remuneration matters shall include:
8.12 To consider and determine the Remuneration Policy based on the performance andalso bearing in mind that the remuneration is reasonable and sufficient to attract retainand motivate members of the Board and such other factors as the Committee shall deemappropriate all elements of the remuneration of the members of the Board.
8.13 To approve the remuneration of the Senior Management including key managerialpersonnel of the Company maintaining a balance between fixed and incentive pay reflectingshort and long term performance objectives appropriate to the working of the Company.
8.14 To delegate any of its powers to one or more member(s) of the Committee.
9. MINUTES OF COMMITTEE MEETING
Proceedings of all meetings shall be minuted and signed by the Chairman of theCommittee at the subsequent meeting. Minutes of the Committee meetings will be tabled atthe subsequent Board and Committee meeting. This Policy has been adopted by the Board ofDirectors of the Company at its meeting held on 20th January 2018.
| ||For and on behalf of the Board |
| ||Pankaj R. Vyas |
| ||Chairman |
|Date: 31st August 2019 Place: Mumbai ||DIN:02496291 |