Your Directors present the 32nd Annual Report of your Company together with the AuditedAnnual Accounts for the Financial Year ended 31st March 2017.
|Particulars || |
Financial Year ended
| || |
(Amount in Rupees)
| ||31st March 2017 ||31st March 2016 |
|Total Income ||25905333 ||23327765 |
|Total Expenditure ||24748161 ||22214178 |
|Profit/ (Loss) before tax || || |
| ||1157172 ||1113587 |
|Profit/ (Loss) after tax || || |
| ||732481 ||611313 |
|Paid-up Share Capital || || |
| ||147385250 ||147385250 |
|Reserves and Surplus ||74889942 ||74025223 |
During the year under review revenue from operation of the Company is Rs. 25818356 asagainst Rs. 23218320 in the previous year. The Company incurred a profit of Rs. 732481after taxes as against Rs. 611313 in the previous year. Your Directors are putting intheir best efforts to improve the performance of the Company.
The Company (registered with the Reserve Bank of India (RBI) as a Non-Banking FinancialCompany) engaged mainly in the business of providing Secured and Unsecured Loans &Advances and investing in securities both quoted and unquoted. The Company offersspecialized solutions for meeting specific liquidity requirements with technical insightsinto capital markets.
In view of marginal profits made by the Company your Directors regret their inabilityto recommend any dividend for the financial year 2016-17.
There is no change in the Equity Share Capital of the Company during the financial yearunder review.
The Company has not accepted any fixed deposit during the year under review fallingwithin the purview of Section 73 of the Companies Act 2013 read with Companies(Acceptance of Deposits) Rules 2014. There are no deposits which are outstanding as on31st March 2017.
The Company entered into Listing Agreement with BSE Limited. The Company has alreadypaid listing fees for the financial year 2017-18 to the BSE Limited. The Company is alsolisted on Delhi Stock Exchange (Inoperative Stock Exchange).
Particulars of Loans Guarantees or Investments Under Section 186
The Company has not given guarantee in favour of any person or entity and theparticulars of loans and investments are provided in the financial statements (pleaserefer the 13 and 10 respectively to the financial Statements).
Adequacy of Internal Financial Controls
The Company has adequate system of internal control to safeguard and protect from lossunauthorized use for disposition of its assets. All the transactions are probablyauthorized recorded and reported to the Management. The Company is following allapplicable accounting standards for properly maintaining the books of accounts andreporting financial statements. The Internal Auditor of the company checks and verifiesinternal control and monitors them in accordance with policy adopted by the company. TheCompany continues to ensure proper and adequate systems and procedures commensurate withits size and nature of business.
Transfer to Reserves
The Company has transferred an amount of Rs. 146496 to the special reserve u/s 45-ICput of current year's profits and the same is in compliance with the applicable provisionsprescribed under the Special reserves u/s 45-IC of the RBI Act1934.
During the year under review your Company enjoyed cordial relationship with employeesat all levels.
Number of Meetings of the Board
During the year 12 (Twelve) Board Meetings were convened and held details of which areprovided in the Corporate Governance Report. The intervening gap between the Meetings wasin compliance with the Companies Act 2013.
Policy on Directors' Appointment and Remuneration
The current policy is to have a appropriate mix of Executive Non Executive andIndependent directors to maintain the independence of the board separate its function ofGovernance and Management. As on 31st March 2017 the Board consists of 4 members one ofwhom executive whole time directors one is non executive director and other two areindependent Directors. The Board periodically evaluates the need for change in itscomposition and its size.
The policy of the company on directors' appointment and remuneration includingcriteria for determining qualifications positive attributes independence of a directorand other matters provided under Sub-section (3) of Section 178 of the companies Act2013 adopted by the Board is appended as "Annexure A" to the Board's Report.We affirm that remuneration paid to the directors is as per the terms laid out in theremuneration policy of the company.
Declaration by Independent Directors
All independent directors have given declarations under section 149(7) of the CompaniesAct 2013 that they meet the criteria of independence as laid down under section 149(6) ofthe Companies Act 2013 and the SEBI LODR Regulations.
Evaluation of the performance of the Board
Pursuant to the provisions of the Act and the SEBI LODR Regulations the Board hascarried out the annual performance evaluation of its own performance the Directorsindividually as well as the evaluation of the working of its Committees. The criteriaapplied in the evaluation process is explained in the Corporate Governance Report.
The Independent Directors at a separate meeting evaluated performance ofnon-independent directors performance of the Board as a whole and performance of theChairperson of the Company.
Familiarization Programme For Independent Directors
In compliance with the requirements of SEBI LODR Regulations the Company has put inplace a familiarization programme for the Independent Directors to familiarize them withtheir roles rights and responsibilities as Directors the working of the Company natureof the industry in which the Company operates business model etc. The details of thefamiliarization programme are explained in the Corporate Governance Report. The same isalso available on the website of the Company at www.sonalmercantile.in
During the year under review there has not been any appointment of new Director(s) inthe Board of the Company.
In terms of Section 152 of the Companies Act 2013 Mr. Deep Chand Singhal (DIN:00815681) who retires by rotation at the ensuing AGM offered himself forreappointment. His Brief Resume is given in Annexure attached to the Notice. None ofIndependent Directors will retire at the ensuing Annual General Meeting.
During the year under review there has not been any resignation of Director(s) fromthe Board of the Company.
Disclosure of Relationships Between Directors Inter-Se
Mr. Deep Chand Singhal and Mr. Sunil Kumar are directly related to each other. As theyboth are Brothers.
Key Managerial Personnel
Mr. Sunil Kumar Whole-Time Director Ms. Deepika Rathore Company Secretary and Ms.Anjali Aggarwal Chief Financial Officer of the Company are the Key Managerial Personnels("KMP") of the Company.
There are no changes in the KMP during the year under review.
Director's Responsibility Statement
In terms of Section 134 (5) of the Companies Act 2013 the directors would like tostate that:
i) In the preparation of the annual accounts the applicable accounting standards havebeen followed along with proper explanation relating to material departure.
ii) The directors have selected such accounting policies and applied them consistentlyand made judgments 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 ofthe profit or loss of the Company for the year under review.
iii) The directors have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of this Act for safeguardingthe assets of the Company and for preventing and detecting fraud and other irregularities.
iv) The directors have prepared the annual accounts on a going concern basis.
v) The directors had laid down internal financial controls to be followed by thecompany and that such internal financial controls are adequate and were operatingeffectively.
vi) The directors had devised proper systems to ensure compliance with the provisionsof all applicable laws and that such system were adequate and operating effectively.
Committees of The Board
The Board has currently four committees names as Audit Committee Nomination andRemuneration Committee Risk Management Committee and Stakeholders Relationship Committee.A detailed note on the Board and its committees is provided under the Corporate Governancereport section in this annual report.
Subsidiary Companies/Associate Companies/Joint Ventures
The Company do not have any subsidiary joint venture or associate Company hence noneed to state anything about the same.
Code of Conduct
The Board of Directors has approved a Code of Conduct which is applicable to members ofthe Board and all employees in the course of day to day business operations of thecompany. The Code has been placed on the Company's website. The Code lays down thestandard procedure of business conduct which is expected to be followed by the directorsand the designated employees in their business dealings and in particular on mattersrelating to integrity in the work place in business practices and in dealing withstakeholders.
All the Board Members and the Senior Management personnel have confirmed compliancewith the Code.
Details of Establishment of Vigil Mechanism/ Whistle Blower Policy For Directors AndEmployees
In order to ensure that the activities of the company and its employees are conductedin a fair and transparent manner by adoption of highest standards of professionalismhonesty integrity and ethical behavior of the company has adopted a vigil mechanismpolicy. The aim of the policy is to provide adequate safeguards against victimization ofwhistle blower who avails of the mechanism and also provide direct access to the Chairmanof audit Committee in appropriate and exceptional cases.
Accordingly whistle Blower policy' has been formulated with a view to provide amechanism for the Directors and employees of the Company to approach the Ethics Counseloror the Chairman of the audit Committee of the Company.
The purpose of this policy is to provide a framework to promote responsible and securewhistle blowing. It protects employees willing to raise a concern about irregularitieswithin the Company. This policy is also posted on the website of the company. The WhitsleBlower Policy as approved by the Board is displayed on the website of the Company athttp://sonalmercantile.in/reports/corporate-governance-report/policies/Policy%20for%20Vigil%20Machanism.pdf
Business Risk Management And Policy
Pursuant to section 134 (3) (n) of the Companies Act 2013 and SEBI LODR Regulationsthe company has constituted a risk management committee. The details of the committee andits terms of reference are set out in the corporate governance report forming part of theAnnual report. The Company has implemented Risk Management Policy and the Board ofDirectors has prepared a comprehensive framework of risk management for assessment ofrisks and to determine the responses to these risks so as to minimize their adverse impacton the organization. The policy as approved by the Board of Directors is uploaded on
Company's website athttp://sonalmercantile.in/reports/corporate-governance-report/policies/Policy%20for%20Risk%20Management.pdf
Prevention of Insider Trading
The Company has adopted a Code of Conduct for Prevention of Insider Trading with a viewto regulate trading in securities by the Directors and certain designated employees of theCompany. The Code requires pre-clearance for dealing in the Company's shares and prohibitsthe purchase or sale of Company shares by the Directors and designated employees while inpossession of unpublished price sensitive information in relation to the Company andduring the period when the trading window is closed. The Board is responsible forimplementation of the Code. All Board Directors and the designated employees haveconfirmed compliance with the Code. The Code is uploaded on Company's website athttp://sonalmercantile.in/reports/corporate-governance-report/policies/Code%20of%20Conduct%20of%20Insider%20Trading.pdf
At the Thirtieth (30th) AGM held on 29th September 2015 the Members approved theappointment of M/s V.N. Purohit Chartered Accountants (ICAI Firm's Registration No.304040E) as Statutory Auditors for a period of three (3) years commencing from theThirtieth AGM till the conclusion of the Thirty Third (33rd) AGM subject to ratificationby Members every year. As recommended by the Audit
Committee the appointment of M/s V.N. Purohit Chartered Accountants as StatutoryAuditors of the Company until the conclusion of the Thirty Third (33rd) AGM proposal forratification is being included in the Notice of the ensuing AGM for your approval.
The Comments made by the Statutory Auditors in the Auditors' Report areself-explanatory and do not require any further clarification.
Pursuant to provisions of section 204 of the Companies Act 2013 and The Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the company hasappointed Ms. Rachna Bhasin Practicing Company Secretary to undertake the SecretarialAudit of the Company for financial year 2016-17. The Secretarial Audit Report is annexedherewith as "Annexure B".
The Board of Directors of your company has appointed Mr. Mukesh Kumar Gupta PracticingChartered Accountant as an internal auditor of the company and his report is reviewed bythe Audit Committee from time to time.
Extract of Annual Return
In accordance with Section 92(3) of the Companies Act 2013 the details forming partof the extract of the Annual Return in form MGT-9 is annexed herewith as "AnnexureC".
Corporate Social Responsibility
The provision of Section 135 of the Companies Act 2013 regarding Corporate SocialResponsibility shall not be applicable to companies having net worth not exceeding Rs. 500Cr. or turnover not exceeding Rs. 1000 Cr. or net profit not exceeding Rs. 5 Cr. or moreduring any financial year as on the last date of previous financial year. In thisconnection we wish to inform you that in respect of our company as on the last auditedbalance sheet as at 31st March 2017 neither the net worth exceeds Rs. 500 Cr. norturnover exceeds Rs. 1000 Cr. nor net profit exceeding Rs.
Cr. Hence the provisions of Companies Act 2013 regarding Corporate SocialResponsibility would not be applicable.
Prudential Norms & Directions of RBI for NBFCs
Your company has complied with all the requirements prescribed by the Reserve Bank ofIndia and has filed the required returns.
Conservation of Energy Technology Absorption Foreign Exchange Earnings and Outgo
a. Conservation of Energy & Technology Absorption:
The Company being a nonbanking finance company (NBFC) does not have anymanufacturing activity. The directors therefore have nothing to report onconservation of energy and technology absorption'.
b.Export Activities: There was no export activity in the Company during the year underreview. The Company has no immediate plans for export in the near future as well.
c. Foreign Exchange Earnings and Outgo: There was no
Foreign Exchange earnings and outgo during the year under review.
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 forms part of this report and annexed herewith as "Annexure D".In terms of Section 136 of the Act the reports and accounts are being sent to the membersand others entitled thereto including the information on employees' particulars which isavailable for inspection by the members at the Registered office of the company at allworking days except Saturdays between 11:00 A.M. to 01:00 P.M. up to the date of AGM. Ifany member is interested in inspecting the same such member may write to the companysecretary in advance.
3 Related Party Transactions
All the Related Party Transactions are entered into by the Company at arm's lengthbasis in the ordinary course of business and are in compliance with the applicableprovisions of the Act and the SEBI LODR Regulations and the Company's Policy on RelatedParty Transactions. During the financial year 2016-17 the Company did not enter into anymaterial related party transactions i.e. transactions exceeding ten percent of theconsolidated turnover as per the last audited financial statements. Accordingly thedisclosure of Related Party Transactions as required under Section 134(3) (h) of the Actin Form AOC - 2 is not applicable however Form AOC-2 attached as "Annexure E"for details of rent paid to Director. The policy on Related Party Transactions asapproved by the Board is displayed on the website of the Company athttp://sonalmercantile.in/reports/corporate-governance-report/policies/Policy%20for%20Related%20Party%20Transaction.pdf
The Company has in place a Prevention of Sexual harassment policy in line with therequirements of the sexual harassment of Women at workplace ( Prevention Prohibition andRedressal) Act 2013. All employees (permanent contractual temporary trainees) arecovered under this policy.
During the Year 2016-17 no complaints were received by the Company related to sexualharassment.
Business Responsibility Report
Business Responsibility Report as stipulated under Regulation 34 of the SEBI LODRRegulations is not applicable to the Company. Since no initiative with respect toenvironmental social etc has been taken.
The Company is committed to maintain the steady standards of corporate governance andadhere to the corporate governance requirements set out by SEBI. A detailed report on thecorporate governance systems and practices of the Company is provided as a separatesection along with a certificate from the Practicing Company Secretary as stipulated underthe Schedule V (E) of SEBI LODR Regulations confirming the compliance by the Company withthe conditions of Corporate Governance and also certificate from CFO as stipulated underthe Regulation 17(8) of the SEBI LODR Regulations forming part of this Report.
3 Management's Discussion and Analysis Report
Management's Discussion and Analysis Report for the year under review as stipulatedunder Regulation 34 of the SEBI LODR Regulations with the Stock Exchanges is presented ina separate section forming part of the Annual Report.
DISCLOSURES UNDER THE ACT
Significant and Material Orders
There are no significant and material orders passed by the regulators or courts ortribunals impacting going concern status and company's operations in future.
3 Material changes and commitments affecting the financial position of theCompany after the close of financial year
There are no material changes and commitments affecting the financial position of theCompany which has occurred between the end of the financial year of the Company i.e. 31stMarch 2017 and the date of the Directors' Report.
Change in the Nature of Business
There were no changes in the nature of the Business during the Financial Year ended31st March 2017.
Reporting of Frauds by Auditors
There were no frauds reported by auditors as per Section 134(3) and Section 143(12) ofthe Act.
Acknowledgments and Appreciation
The Directors take this opportunity to thank the Company's customers shareholdersinvestors suppliers bankers financial institutions and Central & State Governmentsfor their consistent support to the Company. The Directors also wish to place on recordtheir appreciation to employees at all levels for their hard work dedication andcommitment.
For and on Behalf of the Board For Sonal Mercantile Limited
Sunil Kumar Deep Chand Singhal Director Director
Date: 30th May 2017 Place: Delhi
ANNEXURES FORMAING PART OF DIRECTORS' REPORT
Nomination and Remuneration Policy
Pursuant to Section 178 of the Companies Act 2013 and extant provisions of SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 Sonal MercantileLimited ("the Company") has reconstituted a Nomination and RemunerationCommittee ("Committee") in its Board meeting held on 17th September 2015 as perthe terms and conditions provided in Section 178 of the Companies Act 2013 and otherapplicable provisions. As per the provisions the Company is required to frame a policy onnomination and remuneration of Directors Key Managerial Personnel (KMP) SeniorManagement and other employees of the Company.
1. Objective of the Policy
The policy is framed with the objective(s): a) That based on the Company's size andfinancial position and trends and practices on remuneration prevailing in peer companiesin the Industry the level and composition of remuneration is reasonable and sufficient toattract retain and motivate directors and talented managerial personnel of the qualityrequired to run the Company successfully and to ensure long term sustainability and createcompetitive advantage.
b) That the remuneration to Directors Key Managerial Personnel (KMP) and otheremployees of the Company involves a balance between fixed and incentive pay reflectingshort and long term performance objectives appropriate to the working of the Company andits goals.
2. Constitution of the Nomination and Remuneration Committee
The Board has reconstituted the nomination and remuneration committee of the Board.This is in line with the requirements under the Companies Act 2013 (the Act').
The Board has authority to reconstitute this committee from time to time.
3. Functions of the Nomination and Remuneration Committee
The Nomination and Remuneration Committee shall inter-alia perform the followingfunctions: a) Identify persons who are qualified to become Directors and employees who maybe appointed in key managerial position senior management in accordance with the criterialaid down recommend to the Board their appointment remuneration and removal includingsuccession planning.
b) Ensure that the Board comprises of a balanced combination of Executive Directors andNon- Executive Directors and also the Independent Directors including Board diversity.
c) Devise framework to ensure that Directors are inducted through suitablefamiliarization process along with criteria for evaluation of Independent Directors andthe Board and to provide for reward(s) linked directly to their effort performance.
d) Decide/approve details of fixed components and performance linked incentives alongwith the performance criteria.
e) Such other functions as may be decided in accordance with the Companies Act 2013and the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 asamended from time to time.
The Chairman of the Nomination and Remuneration committee could be present at theAnnual General Meeting to answer the shareholders' queries. However it would be up tothe Chairman to decide who should answer the queries.
This Policy is applicable to:
a) Directors viz. Executive Non-Executive and Independent b) Key Managerial Personnel("KMP") c) Senior Management Personnel d) Other Employees of the Company
5. Matters relating to the remuneration perquisites for the Whole-time /Executive / Managing Director Role of Committee
1. The remuneration / compensation / profit-linked commission etc. to theWhole-time/Executive/Managing Directors will be recommended by the Committee and approvedby the Board. The remuneration / compensation / profit-linked commission etc. shall be inaccordance with the percentage/slabs/conditions laid in the Companies Act 2013 and shallbe subject to the prior / post approval of the shareholders of the Company and CentralGovernment wherever required.
2. If in any financial year the Company has no profits or its profits are inadequatethe Company shall pay remuneration to its Whole Time Director(s) in accordance with theprovisions of Schedule V of the Companies Act 2013 and if it is not able to comply withsuch provisions then with the prior approval of the Central Government.
3. Increments to the Whole Time Director(s) should be within the slabs approved by theshareholders. Increments will be effective 1st April in respect of a Whole Time Directoras well as in respect of other employees of the Company unless otherwise decided.
The Committee may recommend to the Board with reasons recorded in writing removal ofa Director KMP or one level below KMP subject to the provisions of the Companies Act2013 and all other applicable Acts Rules and Regulations if any.
The Director KMP and one level below the KMP shall retire as per the applicableprovisions of the Regulations Act and the policy of the Company. Employment of theservices of the Director KMP Senior Management Personnel as consultants after theirretirement would be at the sole discretion of the Board.
8. Remuneration to Non-Executive / Independent Director
a) Sitting Fees
The Non-Executive Independent Directors of the Company shall be paid sitting fees asper the applicable Regulations. The quantum of sitting fees will be determined as per therecommendation of the Nomination and Remuneration Committee and approved by the Board ofDirectors of the Company.
b) Profit-linked Commission
The profit-linked Commission shall be paid within the monetary limit approved by theshareholders of the Company subject to the same not exceeding 2% of the net profits of theCompany computed as per the applicable provisions of the Regulations.
c) Stock Options
An Independent Director shall not be entitled to any stock option of the Company.
9. Remuneration to KMP Senior Management Personnel and Other Employees
The KMP Senior Management Personnel and other employees of the Company shall be paidmonthly remuneration as per the Company's HR policies and / or as may approved by theCommittee.
The Chief Executive Officer/Whole Time Director of the Company will make organization -wide annual presentation(s) before the Committee which would have requisite detailssetting out the proposed performance bonus payouts for the current financial year as wellas the proposed increments for the next financial year. The Committee shall peruse andapprove the same unless required under relevant regulations to refer the same to theBoard of Directors and/or Shareholders of the Company.
If the remuneration of KMPs or any other officer is to be specifically approved by theCommittee and/or the Board of Directors under any Regulations then such approval will beaccordingly sought. This Remuneration Policy shall apply to all future/continuingemployment/engagement(s) with the Company. In other respects the Remuneration Policyshall be of guidance for the Board. Any departure from the policy shall be recorded andreasoned in the Committee and Board meeting minutes. The Company reserves its right toamend or modify this Policy in whole or in part at any time without assigning any reasonwhatsoever.
10. Policy on Board diversity
The Board of Directors shall have the optimum combination of Directors from thedifferent areas/ fields like production Management Quality assurance finance Sales andMarketing supply Chain research and development human resources etc. or as may beconsidered appropriate.
The Board shall have atleast one Board Member who has accounting or related financialmanagement expertise and atleast three members who are financially literate.
For and on Behalf of the Board For Sonal Mercantile Limited
|Sunil Kumar ||Deep Chand Singhal |
|Director ||Director |
|(DIN: 00243057) ||(DIN: 00815681) |
|Date: 30th May 2017 |
|Place: Delhi |