TO THE MEMBERS
Your Directors have pleasure in presenting the Thirty Fourth Annual Report of theCompany together with the audited financial statements for the year ended March 31 2017.
1. (a) FINANCIAL SUMMARY OR HIGHLIGHTS/ PERFORMANCE OF THE COMPANY
(Rs. in million)
| ||Year ended 31.03.2017 ||Year ended 31.03.2016 |
|Profit before Interest Depreciation & Tax ||14.74 ||14.02 |
|Less: Interest ||0.22 ||0.17 |
|Profit before Depreciation & Tax ||14.52 ||13.85 |
|Less: Depreciation / Amortization ||2.98 ||2.86 |
|Profit before Tax ||11.54 ||10.99 |
|Less: Tax Expenses Current / Earlier years ||2.50 ||2.27 |
|Less : Deferred Tax for the year ||1.61 ||2.79 |
|Add: MAT Credit Entitlement ||2.39 ||2.56 |
|Profit after Tax ||9.82 ||8.49 |
|Profit brought forward from earlier year : ||72.08 ||68.63 |
|Add: Transfer from General Reserve: ||Nil ||Nil |
|Profit available for Appropriation ||81.90 ||77.12 |
|APPROPRIATIONS || || |
|Proposed Dividend including Dividend Tax ||6.72 ||5.04 |
|Profit carried to Balance Sheet ||75.18 ||72.08 |
FINANCIAL AND OPERATIONAL PERFORMANCE
Operating profit (PBDIT) of the Company for the year was Rs. 14.74 million (previousyear Rs. 14.02 million). Profit after tax for the year increased to Rs. 9.82 million (fromRs. 8.49 million in the previous year).
Net worth of the Company as on March 31 2017 was Rs. 1050.28 million (previous yearRs. 1050.09 million).
The paid up Equity Share Capital as on March 31 2017 stood at Rs. 55850000/- dividedinto 5585000 equity shares of Rs. 10/- each.
Your Directors recommend payment of dividend of Rs. 1/- per equity share (previous yearRs. 0.75 per share) on the paid up equity capital for the year ended March 31 2017.Dividend once approved will absorb a sum of Rs. 6.72 million including the dividenddistribution tax thereon.
(d) TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND
No unpaid and unclaimed dividend as on March 31 2017 was required to be transferred asper the provisions of Sections 123 and 124 of the Companies Act 2013.
Attention is being drawn that the unclaimed/unpaid dividend for the financial year2009-10 is due for transfer to Investor Education and Protection Fund duringOctober/November 2017. In view of this Members of the Company who have not yet encashedtheir dividend warrant(s) or those who have not claimed their dividend amounts may writeto the Company/ Company's Registrar and Transfer Agents M/s Maheshwari Datamatics PrivateLimited.
(e) MANAGEMENT DISCUSSION AND ANALYSIS
Management Discussion and Analysis of financial condition and of operations of theCompany for the year under review as required under Regulation 34 of SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 with the Stock Exchanges isgiven in the part on Corporate Governance elsewhere in the Annual Report marked as"Annexure A".
The Company continues to focus on judicious management of its working capital.Receivables and inventories were kept under strict check through continuous monitoring.
The Company has not accepted deposit from the public falling within the ambit ofSection 73 of the Companies Act 2013 and The Companies (Acceptance of Deposits) Rules2014.
2.2 PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS
Details of Loans Guarantees and Investments covered under the provisions of Section186 of the Companies Act 2013 are given in the notes to the Financial Statements.
3. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
The Company has an Internal Control System commensurate with the size scale andcomplexity of its operations.
The Internal Audit monitors and evaluates the efficacy and adequacy of internal controlsystem in the Company its compliance with operating systems accounting procedures andpolicies at all locations of the Company and its subsidiary. Based on the report ofinternal auditors corrective action is undertaken in respective areas and therebycontrols are strengthen . Significant audit observations and corrective actions takenthereon are presented to the Audit Committee of the Board.
4. SUBSIDARY COMPANY
As on March 31 2017 there was one wholly-owned subsidiary Company namely SMIFSCapital Services Limited. Statement required under Section 129(3) of the Companies Act2013 in respect of the Subsidiary Company is attached.
(Rs. in million)
| ||Year ended 31.03.2017 ||Year ended 31.03.2016 |
|Profit/(Loss) before Interest Depreciation & Tax ||(0.177) ||0.058 |
|Less: Interest || ||0.002 |
|Profit/(Loss) before Depreciation & Tax ||(0.177) ||0.056 |
|Less: Depreciation / Amortization ||0.114 ||0.106 |
|Profit/ (Loss) before Tax ||(0.291) ||(0.050) |
|Less : Tax Expenses ||0.001 ||(0.073) |
|Profit/ (Loss) after Tax ||(0.292) ||0.023 |
|Profit/(Loss) brought forward from earlier years : ||(2.821) ||(2.844) |
|Profit/(Loss) carried to Balance Sheet ||(3.113) ||(2.821) |
5. YEAR IN RETROSPECT AND FUTURE OUTLOOK
The global economy in FY 2016-17 once again witnessed low oil prices. Lower oil pricesbenefit commodity importing countries such as India and have significantly improvedIndia's overall fiscal landscape and also augur well for growth in domestic consumption.India's Current Account Deficit reduced to 0.7% of GDP in the first nine months of theyear ended March 2017 as compared to 1.4% of GDP during first nine months of the previousyear. The demonetization of Rs. 500 and Rs. 1000 notes effected by government in November2016 and introduction of new Rs.500 and Rs. 2000 notes greatly slowed down economicactivities in the next few months and your Company's business was also affected by thisslowdown. India's GDP grew by 7.2% during the first nine months of fiscal 2017 as comparedto a growth of 7.7% during first nine months of previous year.
India's economy is poised to return to its high-growth path in the medium term thanksto lower fiscal and current account deficits falling inflation and structural reformsand increased government spending. A normal monsoon in the current year will boost farmincome. However there could be a short period of slowdown once GST (Goods and Service Tax)is introduced and as Companies adjust to this new tax.
The government's call of Make in India' Digital India' and tax reformslike introduction of GST has sent out positive cues to the global investors. In first ninemonths of the fiscal year Foreign Portfolio Investors invested US $ 2.2 billions (net) inequity markets. As India stands at the cusp of acceleration in growth the financialservices sector will play a supportive role in achieving the same.
Your Company is registered as Category I Merchant Banker and executes variousassignments in areas of Mergers and Acquisitions Loan Syndication Capital MarketOperations Placement of Equity Shares and Debt. Your company is hopeful of executingcurrent assignments which should enable it to post better results in the current year.
6. LISTING OF THE SECURITIES OF THE COMPANY
Equity Shares of your Company continue to be listed on BSE Limited and The CalcuttaStock Exchange Limited and the listing fees for the year 2017-18 have been paid. 97.31 percent of the equity shares of your Company are held in dematerialized form.
7. DIRECTOR'S RESPONSIBILITY STATEMENT
Pursuant to the requirement under section 134(3)(c) of the Companies Act 2013 withrespect to Directors' Responsibility Statement it is hereby confirmed that:
(a) the preparation of the Annual Accounts the applicable accounting standards havebeen followed along with proper explanation relating to material departures.
(b) the directors have selected such accounting policies and applied them consistentlyand made judgement and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the company at the end of the financial year and theprofit and loss of the company for that period.
(c) the directors have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provision of this act for safeguarding theassets of the company and for preventing and detecting fraud and other irregularities.
(d) the directors have prepared the annual accounts on a going concern basis.
(e) the directors have laid down internal financial control to be followed by thecompany and that such internal financial control are adequate and were operatingeffectively and
(f) the director have devised proper systems to ensure compliance with the provision ofall applicable laws and that such system were adequate and operating effectively.
8. RELATED PARTY TRANSACTIONS
All related party transactions that were entered into during the financial year wereon an arm's length basis and were in the ordinary course of business. There are nomaterially significant related party transactions made by the Company with PromotersDirectors Key Managerial Personnel or other designated persons which may have a potentialconflict with the interest of the Company at large.
All Related Party Transactions are placed before the Audit Committee as also the Boardfor approval. Prior omnibus approval of the Audit Committee is obtained on a yearly basisfor the transactions which are of a foreseen and repetitive nature. The transactionsentered into pursuant to the omnibus approval so granted are audited and a statementgiving details of all related party transactions is placed before the Audit Committee andthe Board of Directors for their approval on a yearly basis. The policy on Related PartyTransactions as approved by the Board is uploaded on the Company's website.None of theDirectors has any pecuniary relationship or transactions vis--vis the Company.
9. VIGIL MECHANISM FOR DIRECTORS AND EMPLOYEES
The Company has a Vigil Mechanism to deal with instance of fraud and mismanagement ifany. The details of the Vigil Mechanism is explained in the Corporate Governance Reportand also posted on the website of the Company.
10. DISCLOSURE OF SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITIONREDRESSAL) ACT 2013
In accordance with The Sexual Harassment of Women at Workplace (Prevention Prohibitionand Redressal) Act 2013 to provide for the effective enforcement of the basic human rightof gender equality and the guarantee against sexual harassment and abuse moreparticularly against sexual harassment at work place your Company has a Policy onPrevention of Sexual Harassment at the Workplace duly approved by the Board of Directors.
During the year no complaint was reported under The Sexual Harassment of Women atWorkplace (Prevention Prohibition and Redressal) Act 2013.
11. CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE
EARNING AND OUTGO
Particulars required under Section 134(3)(m) of the Companies Act 2013 read with theCompanies (Disclosure of Particulars in the Report of the Board of Directors) Rules 1988under the heads (a) conservation of energy; and (b) technology absorption are notapplicable to the Company.
During the year there was no foreign exchange earnings (previous year nil). ForeignExchange outgo during the year aggregated to Rs. 2.29 million (previous year Rs. 1.99million).
Composition of the Board of Directors of your Company fulfills the criteria fixed byRegulation 17 of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015with fifty per cent of the Directors being Independent Directors. Your Board comprises of6 (six) directors out of which 3 (three) are independent directors.
There was no change in the composition of Board of Directors during the year. Mr. UtsavParekh is the Non- Executive Chairman. Mr. Kishor Shah is the Managing Director of theCompany being appointed for a further period of 3 (Three) years with effect from April 12015 at a remuneration approved by the shareholders in the Annual General Meeting held onSeptember 26 2015. Terms of appointment include payment of managerial remuneration as perthe provisions of Sections 196 197 203 and other applicable provisions if any 2013read with Schedule V Part II Section II (A) to the Companies Act 2013.
Mr. Utsav Parekh Director retires by rotation in accordance with the requirements ofCompanies Act 2013 and Articles of Association of the Company. He being eligible offeredhimself for reappointment. Brief resume of Mr. Utsav Parekh nature of his expertise inspecific functional areas names of companies in which he holds directorship and/ormembership/chairmanship of committees of Board his shareholding is furnished in CorporateGovernance elsewhere in the Annual Report.
All Independent Directors have given declarations that they meet the criteria ofindependence as laid down under Section 149(6) of the Companies Act 2013 and SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015.
In accordance with the provisions of the Companies Act 2013 and in terms of theMemorandum and Articles of Association of the Company Mr. Utsav Parekh retires by rotationand is eligible for re-appointment.
12.1 ANNUAL PERFORMANCE EVALUATION OF THE BOARD
Pursuant to the provisions of the Companies Act 2013 and SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 the Board has carried out an annualperformance evaluation of its own performance the directors individually Key ManagerialPersonnel (KMP) Senior Management as well as the evaluation of the working of its AuditNomination & Remuneration Committees and Stakeholders Relationship Committee. Themanner in which the evaluation has been carried out has been explained in the CorporateGovernance Report.
12.2 NOMINATION & 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 Nomination and Remuneration Policy is stated in the Corporate GovernanceReport.
During the year five Board Meetings and four Audit Committee Meetings were convened andheld. The details of which are given in the Corporate Governance Report. The interveninggap between the Meetings was within the period prescribed under the Companies Act 2013.
13.1 STATUTORY AUDITORS
In terms of the provisions of Section 139 of the Act read with the Companies (Audit andAuditors) Rules 2014 an audit firm can hold office as statutory auditor for two terms offive consecutive years i.e for a maximum period of ten years. They can be re-appointedafter a cooling period of five years. In computing the period of ten years the period forwhich the auditor held office before the commencement of the Act i.e. before April 1 2014is also to be taken into account.
M/s. J. S. Vanzara & Associates Chartered Accountants were appointed as thestatutory auditors of your Company in September 2004 and re-appointed at every AGMthereafter. M/s. J. S. Vanzara & Associates has been in office for more than ten yearsand in compliance with the provisions of the Act your Company will have to appoint a newauditor in their place by March 31 2017. The Board of Directors has at its meeting heldon May 23 2017 recommended the appointment of M/s. S.K Agarwal & Co. CharteredAccountants as the Statutory Auditors of your Company in place of M/s. J. S. Vanzara& Associates to hold office from the Thirty Fourth AGM until the conclusion of theThirty Fifth AGM of the Company.
Resolutions seeking your approval on these items are included in the Notice conveningthe AGM.
The observation made in the Auditor's Report are self-explanatory and therefore do notcall for any further comments under Section 134(3)(f) of the Companies Act 2013.
13.2 SECRETARIAL AUDIT
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. K. Arun & Co Company Secretaries in Practice to undertake theSecretarial Audit of the Company. The Report of the Secretarial Audit Report is annexedherewith as "Annexure B".
14. AUDITORS' QUALIFICATION
(i) STATUTORY AUDITORS' QUALIFICATIONS
Qualifications contained in the Auditors' Report if any have been dealt with in theNotes to financial statements and are self-explanatory.
(ii) SECRETARIAL AUDITORS' QUALIFICATIONS
Qualifications contained in the Secretarial Auditors' Report if any have been dealtwith in the Notes to Form MR-3 and are self-explanatory.
15. PARTICULARS OF EMPLOYEES
The information required pursuant to Section 197 read with Rule 5 of The Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 in respect of employeesof the Company is given in "Annexure C".
16. EXTRACT OF ANNUAL RETURN
The details forming part of the extract of the Annual Return in form MGT-9 is annexedherewith as "Annexure D".
17. 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 operation.
Your Directors express their sincere appreciation of the co-operation and assistancereceived from the shareholders bankers regulatory bodies and other business constituentsduring the year under review.
| ||For and on behalf of the Board of Directors |
|Regd. Office: || |
|Vaibhav' (4F) 4 Lee Road ||Sd/- |
|Kolkata - 700 020 ||(UTSAV PAREKH) |
| ||Chairman |
|The 23rd day of May 2017 ||(DIN No. 00027642) |