The Members of
Shardul Securities Ltd.
Your Directors are pleased to present the Thirty-Fourth Annual Report and the AuditedAccounts for the year ended March 31 2019.
|1. Financial Results: - || ||(Rs. in lakhs) |
| ||2018-2019 ||2017-2018 |
|Profit/(Loss) before Depreciation ||314.19 ||319.99 |
|Less: Depreciation ||31.62 ||32.09 |
|Profit/(Loss) before Taxation Less: Tax Expenses ||282.57 ||287.90 |
|Provision for tax ||35.00 ||40.00 |
|Deferred Tax ||13.29 ||(5.26) |
|Profit/(Loss) after Taxation ||234.28 ||253.16 |
|Surplus/(Deficit) brought forward from previous years ||4272.57 ||4070.04 |
|Appropriations: ||4506.85 ||4323.20 |
|Statutory Reserve Fund as per RBI Guidelines ||46.86 ||50.63 |
|Proposed Dividend (including dividend tax) on Equity Shares ||126.36 ||- |
|Balance carried to Balance Sheet ||4333.63 ||4272.57 |
Your Directors recommend a dividend of Re. 0.60 per Equity Share on 17498433 equityshares of Rs.10 each aggregating to Rs. 126.36 lakhs (including dividend tax) for thefinancial year ended 31st March 2019 which if approved at the ensuing AnnualGeneral Meeting will be paid to (i) all those Equity Shareholders whose names appear inthe Register of Members as on 05th September 2019 and (ii) to those whose namesas beneficial owners are furnished by the National Securities Depositories Ltd. andCentral Depositories Service (India) Ltd.
3. Transfer to Reserves:-
As per requirement of RBI regulations the Company has transferred to Statutory ReserveFund an amount of Rs. 46.86 Lakhs in Financial Year ended March 31 2019.
4. Management Discussions and Analysis Report:-
(i) Financial Performance:
Despite the general trend being one of pessimism in the Non-Banking Finance Company'ssegment that has been going through a period of confidence crisis your Company stayedafloat achieving a gross revenue of Rs.526 lakhs during the year under report and a netprofit of Rs.234 lakhs. On a consolidated basis including the subsidiary your companyachieved a net profit of Rs.265 lakhs albeit the results were marginally lower compared tothe previous financial year.
(ii) Industry Structure and developments:
The year under report passed through a critical and grueling period of uncertainty onthe economic front thanks to the impending General elections in the ensuing year coupledwith reports of economic down turn unemployment and job losses slowdown in creditofftake and a lack of a booster by way of sizable investments either domestic or foreignto reverse the trend.
The global economy led the way with USA tightening on their imports with heavy leviesand the so called principles of free market economy were set aside to bring aboutprotective measures to encourage domestic production and consumption. This was furtheraccentuated by hostile political stand off by USA against China Iran for import of oil Russia and partly India and certain other European countries as well on trade issues.
The NBFC sector in India faced liquidity crisis due to the impact created by thefailure of ILFS to honor their debt commitments and there was also repercussion in thefinancial sector due to certain major frauds for huge amounts suffered by many banks.These were in addition to huge provisions for bad debts of Public Sector and some privatesector banks.
The Industrial sector suffered due to the slowdown and the Airlines Industry was badlyhit apart from other heavy medium and small scale industries resulting in lowering ofproduction heavy accumulation of rolling stock reduced profitability and job losses. TheAgricultural sector continued to face uphill task to maintain the production levelswithout the base support price apart from drought like conditions prevailing in many partsof the country. It fell to 15% of GDP from around 17%.
The service sector and industrial sector however contributed marginally higher asduring the previous years which enabled the GDP growth to hover around 6.8%. The steadycrude oil prices in international market also helped the Government to marginally mobilizetowards infrastructure developments.
The capital markets remained volatile though it appeared to be more index driven thanreal time appreciation in small and medium cap stocks. It was reported that many stocks inmedium to small cap were trading well below their low levels during the previous years andtrading was only concentrated mostly on index based stocks.
The foreign exchange reserves continued to remain at a level exceeding $ 400 Billionmark though an air of discomfort and uncertainty was hanging over waiting for thepolitical developments in the country. Even after this got cleared it could be seen thatmarkets reacted adversely to the New Budget announcements on direct taxes on high incomegroup. The FDIs remittances increased by 6% to 42 billion dollars FIIs PNote remittancesexceeded Rs 81000 Crores during the year.
The Exports for the year stood at $330 billion while the imports increased to $ 514billions thus widening the gap further. The Current account deficit was at 2.5% of GDPwhile the Fiscal deficit was contained at 3.4%. The inflation fell too low for adeveloping economy causing widespread discontent particularly in the Agriculture sector.
(iii) Business Review:
Despite the economic slowdown high volatility in Capital markets and otheruncertainties your company could achieve comparable results with that of the previousyear. While the markets are looking up to the Govt to provide impetus for a higher levelof growth in coming months certain measures initiated by the Govt on taxes especially inthe capital market segment appear to be backfiring to the detriment of the investors.
India is going through a kind of economic down turn and it is not clear to forecast howthe year will turn out to be and when the situation might reverse. We are watching themarkets and the developments and would take appropriate steps to ensure that we put ourresources to optimum use.
(iv) Opportunities and Threats:
The GDP is projected at 7.2 percent for the current year but the Government's financesmight be under severe stress due to fall in GST collections a downward trend in Directtax collections slackness in FDI inflows and lack of investment in infrastructure due tofunds constraint. The Government has projected huge investments but the availability ofresources is not clear. It remains to be seen if the Government would be able to reach itstargets depending on which the spur in the Economy might happen.
(v) Segment-wise - Product-wise reporting:
As there has been no change in your company's business activities and brokingactivities there are no separate reportable segment.
Your company expects the capital markets continuing to be volatile in view of thepresent down turn in economy and would like to be guarded in making projections for theyear. However if the anticipated Government expenditure to boost the economy takes placethe market might become vibrant and your company should be able to achieve better resultsfor the coming year.
(vii) Risks and Concerns:
Your company's activities which are essentially in the capital market segments and therisk perception of our activity could be discerned as under:
Market Risk: Your company's major investments are mostly in capital market instrumentslike shares mutual funds and bonds and any volatility could erode the capital value ofthe investments. No doubt your company would keep a close vigil on movement of prices andtake appropriate steps to minimize this risk.
Interest risk: The changes in interest rates by RBI and Banks could result influctuations in prices and consequently the income of various investments and borrowingsby the company may vary. Your company has put in measures to hedge this risk but thiscannot be eliminated totally.
Operation Risk: The stock market operations are fraught with certain risks associatedwith market judgments by operational executives and their decision making process based oncertain perceptions prevailing at any given time and these could change suddenly resultingin unexpected adverse positions.
(viii) Internal Financial Control Systems and their Adequacy:
Your company has in place adequate interest control measures. There is continuousmonitoring of all the activities and necessary creative measures are taken periodically tomanage any unforeseen risk factors.
(ix) Human Resources:
Your company has adequate trained professionals to manage the affairs of the company inthe most prudent manner.
(x) Details of significant changes in key financial ratios are given in Annexure Dto Board Report.
Shriyam Broking Intermediary Limited a wholly owned subsidiary of the company achieveda modest profit in its working results during the year under report. The net profit forthe year was at Rs. 23 lakhs as compared to Rs. 89 lakhs during the previous year. Themarket factors would determine the performance in coming year though all efforts would bemade to improve the bottomline. Shriyam Realtors Private Limited a wholly owned subsidiaryof Shriyam Broking Intermediary Limited was incorporated on 15th December 2016.However the company has not yet started any business activities.
6. Names of Companies which have become or ceased to be its subsidiaries jointventures or associate companies during the year:-
During the year under review no company has ceased to be its subsidiaries. The Companydoesn't have any joint ventures or associate company.
i) Mr. Kantilal Maganlal Shah has resigned from the Directorship (in the Capacity ofIndependent Director) of the Company with effect from 1st April 2019 due topersonal reason.
The Company appreciates the valuable Services rendered by him during his tenure as anIndependent Director of the Company.
ii) Mr. Charul Abuwala was appointed as an Independent Non-Executive Director of theCompany by the members at the 29th AGM of the Company held on 5th September2014 for a period of five consecutive years.
The Board of Director of the Company based on recommendation of Nomination andRemuneration Committee and in terms of the provisions of Sections 149 150 152 read withSchedule IV and any other applicable provisions of the Act and SEBI (Listing Obligationsand Disclosure Requirements) Regulations 2015 has proposed to reappoint Mr. CharulAbuwala as an Independent Director for second term of five consecutive years upto theconclusion of the 39th Annual General Meeting of the Company in the calendaryear 2024 subject to approval of Shareholder at Annual General Meeting.
iii) The Board of Director of the Company at its meeting held on 27th May2019 has appointed Mr. Lalit Shah as Additional Director designated as an IndependentDirector of the Company with effect from 6th June 2019
Mr. Lalit Shah aged about 59 years holds a B. Com degree from Mumbai University and isa member of Chamber of Tax Consultants. He has more than 30 Years of experience in thefield of Taxation Accountancy and Audit. He is a partner in two Tax Consultancy firmsM/s. Shah & Associates and M/s. Shah & Bhuta Associates. He is active in manysocial programmes and is a part of such organizations.
Necessary resolutions for the appointment /re-appointment of the aforesaid directorshave been included in the notice convening the ensuing AGM and details of the proposal forappointment/re-appointment are mentioned in the explanatory statement of the notice.
Your directors recommend their appointment.
Brief resume of the Directors proposed to be appointed/ reappointed nature of theirexperience in specific functions and area and number of companies in which he/she holdmembership/chairmanship of Board Committees as stipulated regulation 36(3) of SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 are provided in theReport of Corporate Governance forming part of the Annual Report.
All independent directors have given declaration that they meet the criteria ofindependence as laid under section 149(6) of the Companies Act 2013 and regulation 16 (1)B of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015.
8. Board Evaluation:-
Pursuant to the provisions of the Companies Act 2013 and SEBI (Listing Obligations andDisclosure Requirement) Regulations 2015 the Board has carried out an evaluation of itsown performance the directors individually as well as the evaluation of the working ofits Audit Nomination & Remuneration Committees. The manner in which the evaluationhas been carried out has been explained in the Corporate Governance Report.
9. Remuneration Policy:-
The Board has on the recommendation of the Nomination & Remuneration Committeeframed a policy for selection and appointment of Directors Senior Management and theirremuneration. The Remuneration Policy is stated in the Corporate Governance Report.
10. Number of Meetings of the Board:-
Five Meetings of the Board of Directors were held during the year and the details ofsuch meetings forms part of the Corporate Governance Report.
11. Audit Committee:-
The Audit Committee as on 31st March 2019 comprises of Independent Directorsnamely Mr. Devesh Vasavada (Chairman) Mr. Kantilal Shah Mr. Charul Abuwala and Mr.Yogendra Chaturvedi (Executive Director) as other members. All the recommendations made bythe Audit Committee were accepted by the Board.
12. Extract of Annual Return:-
The details forming part of the extract of the Annual Return in form MGT-9 as requiredunder section 92 of the Companies Act 2013 is included in this Report as Annexure -A andforms as integral part of this Report.
In opinion of Directors the provision for Income Tax is made as per the provisions ofthe Income Tax Act 1961.
14. Cash flow:-
As required by SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 a Cash Flow Statement is appended with this report.
15. Directors' Responsibility Statement:-
To the best of their knowledge and belief and according to the information andexplanations obtained by them your Directors make the following statements in terms ofSection 134(3)(c) of the Companies Act 2013:
a) that in the preparation of the annual financial statements for the year ended March312019 the applicable accounting standards have been followed along with properexplanation relating to material departures if any;
b) that such accounting policies as mentioned in Notes to the Financial Statements havebeen selected and applied consistently and judgments and estimates have been made that arereasonable and prudent so as to give a true and fair view of the state of affairs of theCompany as at March 31 2019 and of the profit of the Company for the year ended on thatdate;
c) that proper and sufficient care has been taken 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) that the annual financial statements have been prepared on a going concern basis;
e) that proper internal financial controls were in place and that the financialcontrols were adequate and were operating effectively.
f) that systems to ensure compliance with the provisions of all applicable laws were inplace and were adequate and operating effectively.
16. Statutory Auditor and Auditors' Report:-
M/s J. Kala & Associates Chartered Accountants (Firm Registration No: 118769Whave conducted audit for the F.Y 2018-19. The Auditor's Report for F. Y. 2018-19 does notcontain any qualification reservation or adverse remark. The Auditor's Report is enclosedwith the financial statement in this Annual Report.
The notes to the Financial Statement referred to in the Auditors' Report areself-explanatory and therefore do not call for any further comments.
17. Secretarial Audit:-
Pursuant to the provisions of Section 204 of the Companies Act 2013 and rules madethere under the Company has appointed M/s Dhirendra Maurya & Associates CompanySecretary in Practice to undertake Secretarial Audit of the Company. The Secretarial AuditReport is included in Annexure - B and forms an integral part of this Report.
There is no secretarial audit qualification for the year under review.
18. Internal Audit:-
The Company's internal control system is commensurate with its size scale andcomplexities of the operations. The internal audit is entrusted to M/s Anil B Jain &Associates Chartered Accountants. The Audit Committee of the Board of Directors andStatutory Auditors are periodically apprised of the internal audit findings and correctiveactions taken.
19. Significant and material orders passed by the regulators or courts:-
There are no significant material orders passed by the Regulators/Courts which wouldimpact the going concern status of the Company and its future operations.
20. Corporate Governance:-
Report on Corporate Governance stipulated under Regulation 34(3) read with Schedule Vof SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 with StockExchange form part of this annual report. A certificate from the auditors of the CompanyM/s J. Kala & Associates Chartered Accountants confirming compliance of conditionsof Corporate Governance as stipulated under aforesaid regulation is annexed to and formspart of this Report.
21. Consolidated Accounts:-
In accordance with the requirements of SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 and the Accounting Standard -21 prescribed by theInstitute of Chartered Accountants of India Company had made additional disclosure inrespect of Consolidated Financial Statements and Accounting Standard-18 for Related Partytransactions.
22. Particulars of loans guarantees or investments by the Company:-
Details of Loans guarantees or investments covered under the provisions of Section 186of the Companies Act 2013 are given in the notes to Financial Statements.
23. Related Party Transactions:-
There were no materially significant related party transactions which could have had apotential conflict with the interests of the Company.
As required under Regulation 23 of SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 the Company has formulated policy on dealing with RelatedParty Transactions. The Policy is available on the website of the Company.
Weblink of the same is:http://www.shardulsecurities.com/related%20party%20transaction%20policy.pdf
24. Whistle blower policy and vigil mechanism:-
The Company has established a whistle blower policy and vigil mechanism for directorsand employees to report concerns about unethical behavior actual or suspected fraud orviolation of the company's code of conduct policy. The mechanism provides for adequatesafeguards against victimization of directors and employees. None of the personnel havebeen denied access to the Audit Committee of the Board. The details of Whistle BlowerPolicy are available on the website of the Company www.shardulsecurities. com.
Weblink of the same is: http://www.shardulsecurities.com/vigil%20mechanism%20policy.pdf
25. Corporate Social Responsibility Committee:-
Provisions of Section 135 of the Companies Act 2013 are not applicable to the Companyduring the period under review.
26. Disclosure under the Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013:-
The Company has in place a requisite policy in line with the requirements of the SexualHarassment of Women at Workplace (Prevention Prohibition and Redressal) Act 2013. Allemployees (permanent temporary trainees) are covered under the policy. There was nocompliant received from any employee during the financial year 2018-19 and hence nocomplaint is outstanding as on 31.03.2019 for redressal.
27. Other Statutory information:-
a. Particulars of Employees:
Information pursuant to Section 197(12) of the Companies Act 2013 read with Rule 5(1)of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 inrespect of the employees of the Company are annexed to this report as 'Annexure C'.
In terms of provisions of Section 197(12) of the Companies Act 2013 read with Rules5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel)Rules 2014 none of the employees are in receipt of remuneration in excess of the limitsset out in the said Rules.
b. Conservation of Energy Technology Absorption and foreign Exchange earnings andoutgo:
i) Provisions pertaining to conservation of Energy and Technology Absorption are notapplicable or not relevant to the working of Company. The Directors keep themselvesacquainted with ongoing seminars and research papers.
ii) The Company has neither earned nor spent any amount by way of Foreign Exchange.
i) There are no deposits covered under Chapter V of the Act which has remainedunclaimed or claimed but not paid for which information is required to be given in thisreport. The Company neither hold any Public Deposits nor is accepting any deposits.
ii) The Company has complied with various requirements in terms of the capital adequacyunder the guidelines issued by the Reserve Bank of India for the Non-Banking FinancialCompanies.
28. CEO/CFO Certification:-
The Chief Executive Officer and Chief Financial Officer have issued a certificatepursuant to the provisions SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 certifying that the financial statements do not contain any untruestatement and these statements represent a true and fair view of the Company's affairs.The said certificate is annexed and forms part of the Annual Report.
29. Acknowledgment: -
Your Directors appreciate the co-operation and support extended by the ShareholdersEmployees Financial Institutions and Banks.
| || |
For and on behalf of the Board
|Place: Mumbai ||Yogendra Chaturvedi ||Daya Bhalia |
|Date: 27th May 2019 ||Executive Director & CEO ||Executive Director and Company Secretary |
|Regd. Office: || || |
|G-12 Tulsiani Chambers || || |
|212 Nariman Point || || |
|Mumbai 400 021 || || |