Your Directors take pleasure in presenting the twenty seventh (27th) Annual Report onthe business performance and operations of the Company along with the audited standaloneand consolidated financial statements for the year ended 31st March 2021.
The financial performance of your Company for the financial year ended 31st March 2021is summarized below:
|PARTICULARS || |
| ||FY 2019-20 ||FY 2020-21 ||FY 2019-20 ||FY 2020-21 |
|Revenue from operations ||42185.16 ||49297.64 ||77852.80 ||89294.40 |
|Other Income ||3105.31 ||2157.57 ||560.65 ||864.52 |
|Total Income ||45290.47 ||51455.21 ||78413.45 ||90158.92 |
|Total Expenses ||41535.19 ||41573.56 ||73898.18 ||76638.95 |
|Profit before share of profit/loss from joint ventures exceptional items and tax ||3755.28 ||9881.65 ||4515.27 ||13519.97 |
|Share of profit/(loss) from associates or Joint Ventures ||- ||- ||(0.76) ||73.32 |
|Profit before exceptional items and tax ||3755.28 ||9881.65 ||4514.51 ||13593.29 |
|Add/less: Exceptional items ||- ||- ||- ||- |
|Tax expense ||782.14 ||2867.74 ||2128.34 ||3585.85 |
|Profit after tax for the year ||2973.14 ||7013.91 ||2386.17 ||10007.44 |
(1) The above figures are extracted from the audited standalone and consolidatedfinancial statements of the Company.
(2) The amount shown in bracket () in the above table are negative in value.
The financial results and revenue from operations including major developments whichhave been discussed in detail in the Management Discussion and Analysis Report attached tothis Annual Report.
The standalone and the consolidated financial statements have been prepared inaccordance with the Indian Accounting Standards (IND AS) applicable on the Company.
On a consolidated basis your Company has recorded an excellent performance withturnover of Rs.89294.40 lakhs as against Rs.77852.80 lakhs in previous year and profitafter tax of Rs.10007.44 lakhs as against Rs.2386.17 lakhs in previous year. The revenueearned by the Company on consolidated basis largely comprises of income from equitycommodity and currency brokerage & trading clearing services income from depositorybusiness financing capital market operations etc. The subsequent shift in the profits ofthe Company was due surge in the domestic equities as a result of the positive globalcues FPI inflows revival in economic activity robust corporate earnings and roll out ofCOVID-19 vaccine.
On a standalone basis your Company recorded an exceptional performance with turnoverof Rs. 49297.64 lakhs as against Rs. 42185.16 Lakhs in previous year and profit aftertax at Rs. 7013.91 Lakhs as against Rs. 2973.14 Lakhs in previous year. The shift ismainly due to exhibition of varying degrees of volatility in stock market during the yearwhich in turn accelerated the entry of investors to the market. Your Company being a stockbroking company has been a beneficiary of the increased level of activity in stockmarkets. In terms of the clientele of the Company the equity broking segment of theCompany recorded an increase of approximately 11% in the number of clients whereas thecurrency broking segment and commodity broking segment recorded around 17% increase andthe discount broking segment recorded an increase of approximately 400% in the number ofclients.
Refer to Management Discussion and Analysis report for more details.
State of Company's Affairs
Your Company along with its subsidiaries and joint venture company is involved indiversified portfolio of offering of services to its customers such as brokerage clearingservices depository participant services investment banking wealth management PMSreal estate broking mortgage and loan advisory NRI & FPI services etc. categorisedunder Broking Distribution and Trading segment apart from Financing business andInsurance Broking business. The Authorised Share Capital of the Company is Rs.955100000 and the paid up share capital of the Company is Rs. 226268900 comprisingof 113134450 equity shares of Rs. 2 each. The Company intends to strengthen and extendits position as leading diversified financial services provider by intensifying thecross-selling efforts across the client base expanding geographic presence expandingservice and product portfolio strategic alliances and acquisitions and by expandingfinancing and discount broking business.
During the year your Company has recorded an excellent performance and intends to keepup the growth prospects in coming future.
Impact of COVID-19 pandemic
The impact of the novel coronavirus (COVID-19) began to spread from the end offinancial year 2019-20 and remained prevalent throughout the financial year 2020-21.Globally the pandemic has caused massive disruptions in the business activities ofvarious sectors and industries. However we are humbled to state that during such timesthe operations of some essential services providers including securities marketintermediaries were allowed to operate with limited onsite capacity. Accordingly with thehelp of the minimum employees at the office and others working remotely from home theCompany was able to continue its operations. In this regard the Company's Board ofDirectors have played a vital role in adapting a business continuity plan and workedtowards the ultimate vision and mission of the Company. The Company has as always beenvery acceptable and resilient to the changes in the surroundings and have specificallyfocussed on the needs of its clients. Apart from adapting a business continuity strategythe Company for the purpose of containing the spread of virus ensured that its operationswere conducted remotely with minimal staff for ensuring the safety of its employees andthe society as whole.
Company's initiatives towards fighting COVID-19 pandemic
We have committed ourselves to the nation's fight against COVID-19 by giving allpossible support. During the year the Company has specifically allocated some portion ofits CSR budget for prevention of the spread of coronavirus. The Company for the purpose ofprevention of spread of COVID-19 has distributed N-95 masks to weaker sections of oursociety and has also contributed to various implementing agencies working for the intendedpurpose. Apart from the CSR spending the Company tries to extend as much support aspossible to various NGOs and other societies working for the welfare of COVID infectedpatients. In this regard the Company is determined to spend for prevention of COVID-19related activities in upcoming years through SMC Global Foundation a registered trust ofthe Company or through other implementing agencies.
Change in the nature of business
During the year there has been no change in the nature of business of the Company.
Your directors are happy to inform that the equity shares of the Company have beenlisted on nationwide trading platforms i.e. National Stock Exchange (NSE) and Bombay StockExchange (BSE) on 24th February 2021 through Direct Listing i.e. without fresh issue ofequity shares. Further as per the data issued by NSE and BSE as on 31st March 2021 yourCompany has been ranked as 864th among the top 1000 listed entities in India.
In furtherance to above we would like to inform that the Company has applied to theCalcutta Stock Exchange to voluntarily delist its 113134450 equity shares having facevalue of Rs.2/- each from the said Stock Exchange in accordance with Regulation 6(a) and(7) of SEBI (Delisting of Equity Shares) Regulations 2009. In this regard the approvalis still awaited.
The below mentioned table depicts the listing information of the Company as on 31stMarch 2021:
|Sl. No. ||ISIN/Scrip No. ||Stock Exchange ||Type of security ||No. of securities listed ||Status |
|1. ||INE103C01036/ Scrip No. SMC GLOBAL ||National Stock Exchange ||Equity Shares ||113134450* ||Active listing |
|2. ||INE103C01036/ Scrip Code No. 543263 ||Bombay Stock Exchange ||Equity Shares ||113134450* ||Active listing |
|3. ||INE103C01036/ Scrip Code No. 029186 ||Calcutta Stock Exchange ||Equity Shares ||113134450* ||Voluntary delisting application filed approval awaited. |
*The face value of each equity shares is Rs.2.
Material changes and commitments affecting the financial position between the end offinancial year and date of the report
There have been no material changes and commitments that have occurred after theclosure of the financial year until the date of the report which may affect the financialposition of the Company.
During the year the Company has distributed an interim dividend of 60% on the facevalue of the equity shares of the Company i.e. Rs.1.20 per equity share. The dividend waspaid to those shareholders whose name was registered in the Register of Members as on 18thFebruary 2021 being the record date. The Company has spent Rs.13 57 61340/- (RupeesThirteen Crore Fifty-Seven Lakhs Sixty-One Thousand Three Hundred Forty Only) on accountof dividend distribution pertaining to FY 2020-21 during the financial year. Consideringthe financial statements including capital buffers and liquidity levels of the Company forthe financial year the Board considered that the performance of the Company wasoutstanding and accordingly recommended declaration of final dividend of 40% on the facevalue of equity shares i.e. Rs. 0.80 per equity share which if approved shall result inpayment of total dividend @ 100% i.e. Rs. 2/- on the face value of equity shares of Rs.2/-each for the FY 2020-21. The book closure for the purpose of distribution of finaldividend and Annual General Meeting is fixed from 17th July 2021 to 21st July 2021.
|Particulars || |
| ||Per Share (in Rs.) ||(Rs. ||Payout in crores) ||Per Share (in Rs.) ||(Rs. ||Payout in crores) |
|Interim Dividend ||1.20 || ||13.58 ||0.72 || ||8.15 |
|Final Dividend ||0.80* || ||9.05* ||0.24 || ||2.72 |
|Total Dividend ||2 || ||22.63 ||0.96 || ||10.87 |
|Payout ratio || ||100% || || ||48% || |
*Recommended by the Board of Directors in its meeting held on 7th June 2021. Thepayment is subject to approval by the shareholders in the Annual General Meeting proposedto be held on 7th August 2021.
Pursuant to the Finance Act 2020 dividend income is taxable in the hands of theshareholders effective April 1 2020 and the Company is required to deduct tax at sourcefrom dividend paid to the Members at prescribed rates as per the Income Tax Act 1961.
The Register of Members and Share Transfer Books of the Company shall remain closedfrom Saturday July 17 2021 to Wednesday July 21 2021 (both days inclusive) for thepurpose of payment of dividend and AGM for the financial year ended 31st March 2021.
Your Company complies with the Dividend Distribution Policy while recommendingdeclaring and payment of dividend. Further in compliance with the requirements ofRegulation 43A of SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 the policy is annexed to this Annual Report as Annexure 1 and is also published onthe website of the Company and is available at https://smcindiaonline.com/w-content/uploads/2021/06/DIVIDEND-DISTRIBUTION-POLICY.pdf .
Transfer to Reserves
The Company has not transferred any amount to any reserve for the financial year ended31st March 2021.
Subsidiaries associates and joint ventures
As on 31st March 2021 the Company has ten (10) subsidiaries which include eight (8)wholly owned subsidiaries and two (2) partially owned subsidiaries. The Company also has ajoint venture company which is partially owned by its subsidiary i.e. SMC Investments andAdvisors Limited with 50% control over the said joint venture company. The Company doesnot have any associate company as defined under section 2(6) of the Companies Act 2013.In this regard Moneywise Financial Services Private Limited and SMC Insurance BrokersPrivate Limited are recognised as material subsidiary by the Board of Directors inaccordance with the provisions of Listing Regulations and in accordance with Company'spolicy for determining material subsidiaries.
The highlights of the performance of the Company's subsidiaries during the FY 2020-21are as under:
|Company Name ||Total Income ||Profit before tax ||Profit after tax |
|Moneywise Financial Services Private Limited ||8213.40 ||2218.23 ||1641.54 |
|SMC Insurance Brokers Private Limited ||24563.10 ||594.80 ||585.47 |
|Moneywise Finvest Limited ||749.62 ||(161.88) ||(152.46) |
|SMC Global IFSC Private Limited ||978.60 ||832.29 ||830.46 |
|SMC Capitals Limited ||669.70 ||52.08 ||36.85 |
|SMC Real Estate Advisors Pvt Limited ||3837.76 ||467.34 ||341.81 |
|SMC Investments and Advisors Limited* ||221.39 ||(248.47) ||(248.47) |
|SMC Comtrade Limited ||17.40 ||(5.02) ||(3.95) |
|SMC Comex International DMCC ||2181.55 ||680.95 ||680.95 |
|SMC Global USA Inc ||- ||- ||- |
The amount shown in () in the above table are negative in value. *Excludes profit ofSMC & IM Capitals Investment Manger LLP.
During the year no new company was acquired as a subsidiary or associate or jointventure by the Company. Further there was no change in the holding of the Company in itssubsidiary companies or Joint Venture Company during the year. The Board of Directors ofthe Company reviewed the affairs of the subsidiaries. A statement containing the salientfeatures of the financial statements of the subsidiary and joint venture in accordancewith the provision of section 129(3) of the Companies Act 2013 is provided in Form AOC-1as annexed to the Annual Report as Annexure 2.
Further pursuant to the provisions of section 136 of the Companies Act 2013 thefinancial statements and relevant information relating to subsidiary companies are alsoavailable on the website of the Company at https://smcindiaonline.com /investors/ .
Pursuant to Regulation 16(1)c of the Listing Regulations and in accordance withCompany's policy for determining material subsidiaries Moneywise Financial ServicesPrivate Limited and SMC Insurance Brokers Private Limited were recognised as materialsubsidiary by the Board of Directors of Company during the year. The Company ensurescompliances relating to subsidiary companies as is mentioned in Regulation 24 of theListing Regulations and other compliances mentioned in Companies Act 2013.
The policy can be accessed at the website of the Company https://smcindiaonline.com/w-content/uploads/2021/06/POLICY-FOR-DETERMINING-MATERIAL-SUBSIDIARY-COMPANIES.pdf
Directors' Responsibility Statement
Pursuant to the section 134(3)c & 134(5) of the Companies Act 2013 the Board ofDirectors to the best of their knowledge and ability state the following:
1. That in preparation of the annual financial statements the applicable accountingstandards have been followed along with proper explanation relating to materialdepartures if any.
2. That such accounting policies have been selected and applied consistently andjudgements and estimates have been made that are reasonable and prudent so as to give atrue and fair view of the state of affairs of the Company as at March 31 2021 and of theprofit of the Company for the year ended on that date.
3. That proper and sufficient care has been taken for the maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities.
4. That the annual financial statements have been prepared on a going concern basis.
5. That proper internal financial controls were in place and that the financial controlwere adequate and were operating effectively.
6. That proper systems to ensure compliance with the provisions of all applicable lawswere in place and were adequate and operating effectively.
Pursuant to the provisions of the Companies Act 2013 and Listing Regulations theBoard of Directors on recommendation from the Nomination and Remuneration Committee hasadopted a formal mechanism for evaluation of annual performance of the individualDirectors Board as a whole and Board Committees. The same was carried out by the Board ofDirectors for the financial year 2020-21 in accordance with the Guidance Note on BoardEvaluation issued by Securities and Exchange Board of India on 5th January 2017.
The independent directors of the Company also at their separate meeting held duringthe year reviewed the performance of non-independent directors Chairperson and Board asa whole including evaluation of timeliness and flow of information in the Company andprovided their suggestions for improvement.
In this regard the Board of Directors considers that the Independent Directors on theBoard of the Company has the required level of expertise experience and integrity as isrequired for the position. Further there has been no change in the circumstances whichmay affect the status of independent directors.
Familiarization program for independent director
In accordance with the provisions of Regulation 25(7) and 46(2) of the ListingRegulations the Company familiarises its independent directors at regular intervals withtheir roles and responsibilities and the business strategies of the Company. Apart fromthe aforementioned the Company also updates the independent directors periodically withthe recent changes in statutory provisions applicable on the Company and/or any change/addition in the business operations of the Company. The details of training andfamiliarization program conducted during the year are provided in the Corporate GovernanceReport and is also available on the website of the Company at https://smcindiaonline.com/w-content/uploads/2021/03/Details-of-familarisation-FY-2020-21-revised.pdf
During the FY 2020-21 the Company did not accept any deposit within the meaning ofsection 73 and 74 of the Companies Act 2013 read with the Companies (Acceptance ofDeposits) Rules 2014.
Vigil Mechanism Policy
The Company has in place a vigil mechanism policy to provide a formal mechanism to theDirectors employees and stakeholders of the Company to report their concerns includingconcerns about unethical behaviour actual or suspected fraud and violation of Company'scode of conduct and/or disclosure of unpublished price sensitive information. In thisregard the Policy provides an adequate safeguard to the whistle blower against anyvictimisation and also provides direct access to the Chairman of Audit Committee inexceptional circumstances. An update/report on the functioning of the mechanism includingthe complaints received and actions taken is presented to the Audit Committee on quarterlybasis. The Company also has a Vigil Mechanism committee comprising entirely of the Membersof Audit Committee of the Company for the purpose of receiving investigating andredressing the complaints received under the vigil mechanism.
In this regard the Board of Directors of the Company in its Meeting held on 7th June2021 approved to dissolve its existing Vigil Mechanism Committee comprising entirely ofAudit Committee Members so as to avoid similar layers in approval mechanism.
The Policy on vigil mechanism is available on the website of the Company at https://smcindiaonline.com/w-content/uploads/2021/06/VIGIL-MECHANISM-POLICY.pdf.
Prevention of Sexual Harassment of Women at Workplace
The Company has zero tolerance towards sexual harassment at the workplace and hasadopted a 'Policy for prevention of sexual harassment' to prohibit prevent or deter anyacts of sexual harassment at workplace and to provide a procedure for redressal ofcomplaints pertaining to such harassment. In order to sensitize the employees about thepolicy the Company has placed the policy on the online employee portal of the Company forease of access and unified dissemination of the policy to each and every employee of theCompany.
The Company also has an Internal Complaints Committee (ICC) constituted in compliancewith the Sexual Harassment of Women at Workplace (Prevention Prohibition and Redressal)Act 2013 read with its allied Rules. The ICC comprises of majority women members. Thecommittee is responsible for conducting inquiries pertaining to complaints under the Act.
During the year ICC has received 'nil' complaints of sexual harassment from theemployees of the Company. The details of sexual harassment complaints received anddisposed off by the Company are also provided in the Business Responsibility Reportannexed to this Annual Report. The Company ensures to sensitize its employees on regularbasis about prevention and prohibition of sexual harassment.
Particulars of contracts or arrangements with related parties
During the year the Company has not entered into any materially significanttransaction which may have potential conflict of interest in the Company. All the relatedparty transactions entered during the year were in ordinary course of business and atarm's length basis. The Company did not execute any material related party transactions asis prescribed under section 188(1) of the Companies Act 2013 read with Rule 15 of theCompanies (Meetings of Board and its Powers) Rules 2014. Further there were no materialrelated party transactions which were entered in ordinary course of business or arm'slength basis. Accordingly the reporting in form AOC-2 as per section 134 of the CompaniesAct 2013 is not applicable and hence does not form part of this report.
During the year the Company has entered into related party transactions which were inordinary course and were executed by virtue of prior omnibus approval granted by the AuditCommittee. In this regard transactions for which omnibus approval was not obtainedspecific approval of Audit Committee was obtained as and when required. The AuditCommittee on quarterly basis reviewed the related party transactions entered into on thebasis of the omnibus approval granted.
The suitable disclosures as required by the Accounting Standards (IND AS 24) and theListing Regulations have been made in the notes to the Financial Statements forming partof this Annual Report.
For the purpose of determination of related party and related party transactions and toensure compliance of approval and review mechanism relating to such transactions theCompany has formulated a policy for related party transactions. The policy on relatedparty transactions ensures proper identification approval review and reporting ofrelated party transactions. The same is published on the website of the Company and can beaccessed at https://smcindiaonline.com/w-content/uploads/2021/06/POLICY-ON-RELATED-PARTY-TRANSACTIONS.pdf
Significant and material orders passed by regulators or courts or tribunals
No significant or material orders were passed by the regulators or courts or tribunalswhich could impact the going concern status of the Company and its future operations.
Internal Control and Audit
Your Board of Directors had appointed M/s Prachi Agnihotri & Associates PracticingChartered Accountants as the Internal Auditors of the Company for FY 2020-21 to reviewmonitor and evaluate the efficacy and adequacy of internal control systems in the Companyits compliance with operating systems procedures and policies of the Company. The scopeof internal audit and authority are internally determined by the internal auditor and themanagement.
The Audit Committee comprising of independent directors regularly reviews thesignificant audit findings adequacy of internal controls compliance with accountingstandards as well as evaluates the reasons for any changes in accounting policies andpractices if any.
Internal Financial Control and their adequacy
The Company's has in place adequate internal financial controls with reference tofinancial statements which commensurate with the size scale and complexity of itsoperations. The internal financial control is supplemented by extensive internal auditsregular reviews by the Management and standard policies and guidelines to ensurereliability of financial statements and its reporting and other data. The Audit Committeeof the Board reviews internal audit reports given along with management responses atregular intervals. Detailed discussion on internal financial control can be referred inthe Management Discussion and Analysis Report which forms part of this Annual Report.
Company's risk management process is designed to identify and mitigate risks that havethe potential ability to materially impact our business objectives. Your Company being instock broking business is exposed to various risks which can be classified as marketrisk credit risk and operational risk. The Company adopts mitigation measures to reducethe adverse effects of such risks on real time basis. In this regard the Company has arisk management policy which acts as a guiding document for the purpose of identifying andmitigating risk.
Pursuant to the recent amendments introduced by the SEBI (Listing Obligations andDisclosure Requirements) Second Amendment Regulation 2021 the applicability ofconstitution of Risk Management Committee has been shifted from top 500 listed companiesto top 1000 listed companies as per market capitalisation calculated as on 31st March ofimmediately previous financial year. Accordingly as your Company has been ranked amongtop 1000 listed entities as per market capitalisation of 31st March 2021 the Company atits Board Meeting held on 7th June 2021 has constituted a risk management committee. Thedetails of composition and terms of reference of the committee can be referred in theCorporate Governance Report. The Company is also revisiting its existing risk managementpolicy to incorporate the additional requirements recently introduced by SEBI (ListingObligation and Disclosure Requirements) Regulation 2015.
Directors and Key Managerial Personnel who were appointed or have resigned during theyear
During the period no directors or key managerial personnel of the Company wereappointed or reappointed by the Company. Also no director or key managerial personnel ofthe Company have resigned or was/were removed from the Company during the year.
At the 26th Annual General Meeting of the Company held on 30th September 2020 Mr.Himanshu Gupta Non-Executive Director of the Company retired by rotation and beingeligible was reappointed at the Meeting.
In this regard the Board of the Company is diverse with skills such as financialskills accounting skills marketing skills business development and strategic decisionmaking technology skills etc. The details of skills and expertise of the directors isprovided in detail in the Corporate Governance Report of the Company annexed to thisAnnual Report. The Company also has a policy on Board diversity which sets out theapproach of the Company to diversity. The detailed profile of each Director and KeyManagerial Personnel of the Company is provided in this Annual Report.
Committees of Board
As on March 31 2021 following statutory Board committees were functional in theCompany:
1. Audit Committee
2. Nomination and Remuneration Committee
3. Corporate Social Responsibility Committee
4. Stakeholder's Relationship Committee
The details of composition terms of reference and number of meetings conducted duringthe year is provided in the Corporate Governance Report annexed to this Annual Report. TheBoard of Directors at its meeting held on 7th June 2021 constituted a risk managementcommittee and business responsibility and sustainability committee by virtue of SEBI(Listing Obligations and Disclosure Requirements) (Second Amendment) Regulations 2021.During the year all recommendations made by the committees were approved by the Board.
Code of conduct for directors and senior management personnel
The code of conduct for directors and senior management personnel of the Company is inconformity with the requirements of the Listing Regulations and is placed on the websiteof the Company at https://smcindiaonline.com/w-content/uploads/2018/04/Code-of-Conduct.pdf.
All the directors of the Company and Senior Management Personnel have affirmedcompliance with Company's Code of Conduct for Directors and Senior Management Personnelduring the year and a declaration to that effect signed by the CEO and Managing Directorof the Company is enclosed to this Annual Report.
Management discussion and analysis
Pursuant to the provisions of Regulation 34 of Listing Regulations the Managementdiscussion and analysis report is annexed to the annual report.
Board Meetings and Annual General Meeting
During the year four Board Meetings were held on 9th June 2020 21st August 202011th November 2020 and 10th February 2021 in accordance with the provisions of CompaniesAct 2013. A detailed discussion on Board Meetings including the attendance of thedirectors can be referred in the Corporate Governance Report annexed to this AnnualReport.
The 26th Annual General Meeting (AGM) of the Company was held on Wednesday 30thSeptember 2020. Further the 27th Annual General Meeting of the Company for the FY2020-21 is scheduled to be held on Saturday 7th August 2021. The details regarding theAnnual General Meeting are made available in the Notice of the Meeting as set out in thisAnnual Report.
Apart from the Annual General Meeting no Extra-Ordinary General
Meetings were conducted/held during the year.
Meetings of Independent Director
The Independent Directors of your Company meet at least once in a financial yearwithout the presence of other executive or non-executive directors. During the year aseparate meeting of independent directors was convened on 25th March 2021 inter alia toperform the following:
a) Review the performance of Non-Independent Directors and the Board as a whole
b) Review the performance of the Executive Chairman of the Company (considering theviews of the Executive and Non-Executive Directors)
c) Review the performance of the Company assess the quality quantity and timelinessof flow of information between the Company Management and the Board that is necessary forthe Board to effectively and reasonably perform their duties.
The aforementioned exercise was duly carried out by the Independent Directors inaccordance with the provisions of law.
Business Responsibility Report
The provisions of Regulation 34 of the Listing Regulations require every company rankedunder top 1000 listed entities of India as per market capitalisation to prepare and annexa business responsibility report to the annual report of the Company. Accordingly therequirement of business responsibility reporting has become applicable on the Company forthe first-time on the basis of its ranking among the top 1000 listed companies in India asper the market capitalisation issued by NSE and BSE as on 31st March 2021.
Accordingly the business responsibility report drafted in accordance with SEBIcircular CIR/CFD/CMD/10/2015 dated 4th November 2015 read along with Regulation 34(2)(f)of Listing Regulations describing the initiatives undertaken by the Company during FY2020-21 from an environmental social and governance perspective has been annexed to thisannual report.
In this regard the Board of Directors of the Company at its Meeting held on 7th June2021 has approved constitution of a voluntary committee named as "businessresponsibility and sustainability committee' for the purpose of implementation of businessresponsibility policies existent in the Company and for preparing and finalising businessresponsibility report annually.
Nomination and Remuneration Policy
The Board of Directors of the Company has a appropriate mix of executive andnon-executive directors. As on 31st March 2021 the Board of Directors of the Companyconsists of four executive directors two non-executive non-independent director and sixnon-executive independent directors. The details of Board of Directors and committees ofthe Board are provided in the Corporate Governance Report annexed to this Annual Report.
The Board has on the recommendation of Nomination and Remuneration Committee adoptedthe Nomination and
Remuneration policy which inter alia includes the criteria for determining thequalifications positive attributes independence of directors and other matters relatingto appointment and payment of remuneration to directors and senior management personnel ofthe Company. The policy ensures that the remuneration is aligned to the overallperformance of the Company. Further the remuneration paid to the directors and seniormanagement is in line with the remuneration policy of the Company.
The policy is available on the website of the Company at https://smcindiaonline.com/w-content/uploads/2021/06/NOMINATION-AND-REMUNERATION-POLICY.pdf
Corporate Social Responsibility
During the year the Company has focussed its CSR spending for the financial year onthree major activities mentioned in Schedule VII of the Companies Act 2013 i.e. HealthCare Education and Protection of national heritage. Apart from these activities theCompany has also contributed for initiatives which supported the Country in fightingCOVID-19 pandemic.
The Company has incurred a CSR expenditure of approximately Rs.73.29 lakhs and theentire SMC group have spent approximately Rs.271.54 Lakhs towards CSR during the FY2020-21. In this regard the Company along with its material subsidiary MoneywiseFinancial Services Private Limited has formed a trust named SMC Global Foundation for thepurpose of execution of CSR activities on behalf of SMC Global Securities Limited and theentire SMC group. The trust is a registered trust under the Indian Trusts Act 1882 andhas also acquired necessary registrations as prescribed under the CSR Amendment Rules2021. During the year the Company has allocated some portion of CSR spending to the SMCGlobal Foundation for spending towards objectives of the trust.
The Company complies with the provisions of section 135 of the Companies Act 2013 andhas framed and implemented a CSR policy which is available on the website of the Companyat https://smcindiaonline.com/w-content/uploads/2021/06/CORPORATE-SOCIAL-RESPONSIBILITY-POLICY.pdf.
Further the details of actual CSR spending of the Company on various activities can bereferred from the Annual Report on Corporate Social Responsibility as is annexed to thisReport as Annexure 3.
The CSR committee of the Company comprises of three directors including one independentdirector. The detailed composition and terms of reference of the committee can be referredin the Corporate Governance Report annexed to this Annual Report.
Declaration by Independent Directors
The Company has received necessary declarations pursuant to section 149(7) of theCompanies Act 2013 from all the Independent Directors of the Company confirming that theymeet the criteria of independence as prescribed under section 149(6) of the Companies Act2013 and in terms of Regulation 16 and 25 of Listing Regulations.
Criteria of making payments to Non-Executive Directors
The criteria of payments to the Non-Executive Directors are published on the website ofthe Company at https://smcindiaonline.com/invest ors/.
During the year the Company had framed and implemented all the policies required underthe Companies Act 2013 and the Listing Regulations. Further during the year the Companyamended the provisions of following policies and codes so as to align the same with therecent amendments in the law:
1. Corporate Social Responsibility Policy
2. Vigil Mechanism Policy
3. Codes formulated under SEBI (Prohibition of Insider Trading) Regulations 2015
The Company ensures compliance of all the provisions mentioned in the policies readalong with the applicable law. Further in accordance with recent amendments introduced inthe Companies Act 2013 and SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 the Board of Directors of the Company at its meeting held on 7th June2021 has revised its existing policies.
Directors & Officers Insurance Policy
The Company has an appropriate
Directors and Officers Liability Insurance Policy which provides indemnity in respectof liabilities incurred as a result of their office. The policy is renewed every year bythe Company.
The coverage of the insurance extends to all directors of the Company including theindependent directors.
The Company has complied with the applicable Secretarial Standards i.e. SS-1 forMeetings of Board of Directors and SS-2 for General Meetings.
Corporate Governance Report
In compliance with the provisions of Regulation 34 of Listing Regulations a separatereport on Corporate Governance along with certificate from the Auditors on itscompliance forms part of this Annual Report.
Pursuant to the provisions of section 92(3) and section 134(3)(a) of the Companies Act2013 the annual return as on 31st March 2021 in the prescribed format is available atcompany's website at https://smcindiaonline.com/investors/.
Particulars of loans guarantee and investments
Particulars of loans guarantee and investments outstanding during the financial yearas per section 186 of the Companies Act 2013 forms part of the Notes to the financialstatements provided in this Annual Report.
Auditor and Auditor's Report
M/s R. Gopal & AssociatesChartered Accountants bearing firm registration no.000846C have been appointed as the statutory auditors of the Company for a term of fiveyears at the 25th Annual General Meeting of the Company and shall hold office untilconclusion of 30th Annual General Meeting of the Company. The statutory audit of thefinancial statements of the Company for FY 2020-21 was conducted by the said auditors. Thestatutory auditors have confirmed that the auditors are competent qualified andindependent of the Board and management and there was no conflict of interest inaccordance with the provisions of the Companies Act 2013 and the Code of Ethics issued bythe Institute of Chartered Accountants of India.
In this regard the Company or its subsidiaries or its joint venture company has notavailed any service from the statutory auditor of the Company during the FY 2020-21 whichare prohibited non-audit services mentioned under clause (a) to (i) of section 144 of theCompanies Act 2013.
The Auditor's Report for the FY 2020-21 is enclosed with the financial statements inthis Annual Report. In this regard the report does not contain any qualificationreservation or adverse remark. Further there are no instances of any fraud reported bythe Auditors of the Company in pursuance of section 143(12) of the Companies Act 2013.
Qualification/Reservation/Adverse Remarks of the Statutory Auditor
The notes on financial statements referred to in the Auditors' Report areself-explanatory and do not call for any further comments. The Auditors Report does notcontain any qualification reservation adverse remark or disclaimer.
Secretarial Auditor and its Audit Report
Pursuant to the provisions of section 204 of the Companies Act 2013 and the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Board of Directorsof the Company had appointed M/s A. K. Roy & Associates Practicing CompanySecretaries Firm to conduct the secretarial audit for FY 2020-21. The Secretarial AuditReport in form MR-3 for the financial year ended 31st March 2021 is annexed herewith andmarked as Annexure 4. The Report does not contain any qualification reservation oradverse remark.
Further in accordance with the provisions of Regulation 24A of the ListingRegulations the material subsidiaries of the Company i.e. Moneywise Financial ServicesPrivate Limited and SMC Insurance Brokers Private Limited have also conducted secretarialaudit for FY 2020-21.
The secretarial audit report of SMC Insurance Brokers Private Limited does not containany qualification reservation or adverse remark.
However few observations have been made by the secretarial auditor of MoneywiseFinancial Services Private Limited in its Secretarial Audit Report. The company and theconcerned material subsidiary have taken note of the same and have taken necessarycorrective measures to strengthen its processes in this regard. Further the saidobservations are procedural in nature and have no bearing on the operations or thefinancials of the company or of the concerned material subsidiary.The report of materialsubsidiaries is available on the website of the Company.
Annual Secretarial Compliance Report
Pursuant to the provisions of Regulation 24A of the Listing Regulations read with SEBIcircular dated 8th February 2019 the Board of Directors of the Company has appointed M/sA. K. Roy & Associates Practising Company Secretaries Firm to conduct annualsecretarial audit for FY 2020-21 on compliance of all applicable SEBI Regulations andcirculars/ guidelines issued there under.
Qualification/Reservation/Adverse Remarks of the Auditor
The Annual Secretarial Compliance Report does not contain any qualificationreservation or adverse remark.
Particulars regarding conservation of energy technology absorption and foreignexchange earnings and outgo
During the year ended 31st March 2021 there were foreign currency earnings of6228998/- and the foreign exchange outgo was of 20349539/-.
The Company being in a stock broking company does not have any industrial or energyintensive operations. Hence the provisions mentioned under Rule 8(3) of Companies(Accounts of Companies) Rules 2014 are not applicable on the Company.
In this regard the Company is cognizant of the importance of adopting measures foroptimum energy utilisation and conservation.
Particulars of employees and related disclosures
The SMC Group employs around
3650 employees as on 31st March 2021 leveraging a strong partnership and ownershipculture. In terms of the provisions of section 197(12) of the Companies Act 2013 readwith Rule 5(2) and (3) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 (including any statutory amendment or modification thereof) astatement showing the names and other particulars of top ten employees of the Company andsuch other employees drawing remuneration in excess of the limit said out in the saidRules are provided in this Report and marked as Annexure 5.
Disclosures pertaining to remuneration and other details as required under Section197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 (including any amendment or modification thereof) arealso provided in this Report and marked as Annexure 5.
Unclaimed dividend and shares
Pursuant to the provisions of section 124(5) of the Companies Act 2013 read with theInvestor Education and Protection Fund Authority (Accounting Audit Transfer and Refund)Rules 2016 relevant amount which remained unpaid or unclaimed for a period of sevenyears should be transferred by the Company from time to time on due dates to theInvestor Education and Protection Fund (IEPF). During the year your Company hastransferred the Unpaid and Unclaimed Interim Dividend pertaining to FY 2013-14 ofRs.144864 (Rupees One Lakh Forty-Four Thousand and Eight Hundred and Sixty-Four) toIEPF in accordance with IEPF Rules.
Pursuant to Section 124 (6) of the Companies Act 2013 and read with Rule 6 of theInvestor Education and Protection Fund Authority (Accounting Audit Transfer and Refund)Rules 2016 (as amended from time to time) read with applicable provisions of theCompanies Act 2013 all the underlying shares in respect of which dividends are notclaimed/paid for the last seven consecutive years or more are liable to get transferred tothe IEPF DEMAT Account with a Depository Participant as identified by the IEPF Authority.Accordingly during the year 2 88 920 (Two Lakh Eighty-Eight Thousand and Nine TwentyOnly) equity shares of face value Rs.2/- each which is approximately 0.25% of totalshareholding of the Company were transferred to IEPF Demat account.
During the year CARE Ratings Limited has provided a rating of A1+ to the Companytogether with that of its subsidiary companies i.e. for the entire SMC Group as on 31stMarch 2021.
The Company has formulated and implemented cyber security policies. Considering theintroduction of concept of working remotely due to COVID-19 pandemic the Company hasformulated two new policies namely Policy on Remote Access and Policy on Work from Homefor the purpose of minimizing the cyber security risks existing while working remotely.The Company has been very adaptive and resilient to the changes in the environment andcontinues to ensure optimum level of cyber security in the Company.
Human resource engagement and development
Employee engagement is becoming one of the most important indicators in gauging worksatisfaction. Your Company believes in investing in employee engagement by increasingtheir productivity work quality and retaining the talent in the organisation. Everyemployee of the Company is imparted with an orientation programme called 'Abhinandhan' soas to familiarise the employee with the culture and processes of the organisation.
Further the Senior Management Personnel of the Company continuously interact with theconcerned employees of each department for keeping them motivated and conveying theexpectation of the Company. HR regularly talks about Career Progression Culture andValues followed within the Organization for establishing a mutual connect. The Companyperiodically undertakes sessions/webinars both physically and virtually on subjects suchas mental health emotional and psychic wellbeing etc for the overall wellbeing ofemployees.
Cost records and Cost Audit
The maintenance of cost records and conducting of cost audit in accordance with theprovisions of section 148(1) of the Companies Act 2013 are not applicable as the Companyis not involved in the business of production or manufacturing of goods or providing ofservices as is mentioned under Rule 3 of Companies (Cost Records and Audit) Rules 2014.
During the year neither the statutory auditors nor the secretarial auditor havereported to the Audit Committee under section 143(12) of the Companies Act 2013 anyinstances of fraud committed against the Company by its officers or employees which has tobe reported in the Annual Report.
Your directors value the professionalism and commitment of all employees of the Companyand place on record their appreciation and contribution to the excellence of the Company.Your Board also expresses their gratitude to the stakeholders of the Company for theircontinuous support and cooperation.
The statements in the Board's Report and Management Discussion and Analysis describingthe Company's objectives outlook opportunities and expectations which may constitute"Forward Looking Statements". Accordingly the actual results may differ fromthose expressed or implied expectations or projections among others. Several factors makea significant difference to the Company's operations including the government regulationstaxation and economic scenario affecting demand and supply natural calamity and othersuch factors over which the Company does not have any direct control.
|For and on behalf of the Board of Directors || |
|Sd/- ||Sd/- |
|Subhash Chand Agarwal ||Mahesh C. Gupta |
|Chairman and Managing Director ||Vice Chairman and Managing Director |
|Place: New Delhi || |
|Date: 07th June 2021 || |