STANROSE MAFATLAL INVESTMENTS AND FINANCE LIMITED
Your Directors have pleasure in presenting the Thirty-Ninth Annual Report together withthe Audited Statements of Account of the Company for the financial year ended 31st March2019.
| || |
|Current Year ||Rupees || |
|Total Income ||510.42 || |
|Gross Profit ||83.27 || |
|Less : Depreciation ||34.51 || |
|Profit before Tax ||48.76 || |
|Less: Provision for Taxation ||2.37 || |
|Less : Exceptional Item ||(17.88) || |
|Adjustments of earliear || || |
|years Tax ||(6.06) || |
|Profit after Tax ||70.33 || |
|Add: Profit brought forward || || |
|from Previous Year ||1717.44 || |
|Balance Available for || || |
|Appropriations ||1787.77 || |
|Less:Transfer to Reserve || || |
|u/s. 45 IC of RBI Act 1934 ||15.00 || |
|Transfer to General Reserve-I ||5.00 || |
|Transfer to General Reserve-II || || |
|Dividend Paid ||238.07 || |
|Tax on Dividend ||48.47 || |
|Balance carried forward ||1481.23 || |
Your Directors recommend a Dividend of Rs. 6/- per share (Previous Year Rs.6/-) on3967920 Equity Shares of Rs.10 each aggregating to Rs. 287.01 Lacs (inclusive ofdividend tax) for the financial year ended on 31st March 2019. If approved by theShareholders at the forthcoming Annual General Meeting to be held on August 23 2019 thesaid dividend will be paid on September 6 2019 or thereafter to (i) those shareholderswhose names appear on the Register of Members of the Company on August 16 2019 and (ii)those whose names as beneficial owners are furnished by National Securities DepositoryLimited and Central Depository Services (India) Limited for the purpose.
MANAGEMENT DISCUSSION AND ANALYSIS (MD&A) FINANCIAL REVIEW
The total income for the year was Rs. 510.42 Lacs as compared to Rs. 912.32 Lacs in theprevious year. Depreciation was Rs. 34.51 Lacs (Previous Year Rs. 40.92 Lacs). TheProvision for Taxation: (i) for the year under report was Rs. 2.37 Lacs (ii) Adjustmentsof earlier year tax was Rs. 6.06 Lacs. Profit after tax was Rs. 70.33 Lacs.
An amount of Rs.15.00 Lacs was transferred to Statutory Reserve Fund pursuant toSection 45 IC of RBI Act 1934 an amount of Rs. 5.00 Lacs was transferred to GeneralReserve I during the year under review.
The Net Worth of the Company as at 31st March 2019 stood at Rs. 5585.53 Lacs asagainst Rs. 5802.21 Lacs on 31st March 2018.
The NBFC (Non-Banking Finance Company) sector has evolved considerably in terms of itssize operations technological sophistication and entry into newer areas of financialservices and products. NBFCs are now deeply interconnected with the entities in thefinancial sector on both sides of their balance sheets.
Being financial entities they are exposed to risks arising out of counterpartyfailures funding and asset concentration interest rate movement and risks pertaining toliquidity and solvency as any other financial sector player.
The Company's operations continue to be mainly focused in the areas of Inter- corporateInvestments Capital Market activities and Financing. Segment-wise brief outline offinancial and operational performance during the year under report is as under:
The Company's investment portfolio is reviewed from time to time to buy securities toadd to the Portfolio or to sell in order to make Capital gains. Details of the Company'sinvestments are given under Note No. 9 to Financial Statements of the Company for the yearended on 31st March 2019. The total worth of Company's Quoted and Unquoted Investments inShares and Securities (Including Stock-in-trade) as at 31st March 2019 is Rs. 3682.99Lacs (Previous Year Rs. 4305.22 Lacs) which is 35.49 % (Previous Year 48.31%) higher thanrelated Book Value. The decrease in Book Value from 48.31% to 35.49% is mainly on accountof decrease in the market value of some of the shares purchase of new shares atcurrent-higher rates and sale of old-low cost shares from Non-current Investmentportfolio.
During the year under report the Company:
(a) has made disinvestment of Rs. 281.84 Lacs from its Non-current Quoted andNon-Quoted Equity Investments as against Rs. 568.29 Lacs in the Previous Year.
(b) booked a net profit of Rs. 352.59 Lacs on sale of Non-Current investments asagainst Rs.
731.26 Lacs in the previous year..
(c) earned income by way of Dividend of Rs.
137.67 Lacs against Rs.103.94 Lacs in the previous year which inter alia includes Rs.124.04 Lacs (Previous year Rs. 93.03 Lacs) received from Standard Industries Ltd.
After the close of the Financial Year ended on March 31 2019 the Company has bookedNet Capital Gain of Rs. 339.56 Lacs on sale of certain Non-Current Investments in sharesof the aggregate book value of Rs. 261.24 Lacs.
Interest on Inter-corporate Deposit:
During the year under report the Company earned interest income on Inter CorporateDeposits of Rs. 3.67 Lacs as against Rs. NIL in the previous year.
Changes in Key Financial Ratios
|Ratios ||F.Y. ||F.Y. |
| ||2018-19 ||2017-18 |
|1. Current Ratio ||34.31 ||19.84 |
|2. Debt Equity Ratio ||0.23 ||0.25 |
|3. Operating Profit Margin (%) ||13.06% ||44.86% |
|4. Net Profit Margin (%) ||13.78% ||37.46% |
|5. Return on Net Worth (%) ||17.72% ||86.13% |
Note: The Company is not having any Debt/Borrowings as at 31st March 2019. Alsothe Company is not into the Customer based products which are manufactured/produced by theCompany. Hence as required under Part B of Schedule V to the SEBI (Listing Obligationsand Disclosures Requirements) Regulations 2015 ratios such as Debtors Turnover RatioInventory Turnover Ratio and Interest Coverage Ratio have not been provided.
Opportunities and Threats
As various factors are posing constant threats and high volatility in the CapitalMarkets it appears beneficial to diversify the portfolio to reduce the risk and insulatefrom the vagaries of stock-market. Mutual Funds help to reduce risk throughdiversification and professional management and therefore the Company invests its surplusfunds in debt/equity oriented Mutual Funds. One of the biggest advantages of Mutual Fundinvestment is Liquidity. Open-end funds provide option to redeem on demand which isbeneficial during rising or falling markets. The management is exploring other avenues ofbusiness.
The Company intends to continue focusing on capital market activities including tradingin securities and emerging products in derivatives.
Risk and Concern
The Company is exposed to specific risks that are particular to its business and theenvironment within which it operates including interest rate volatility economic cyclecredit and market risks. The Company has quoted investments which are exposed tofluctuations in stock prices. These investments represent a material portion of theCompany's business and are vulnerable to fluctuations in the stock markets. Any decline inprices of the Company's quoted investments may affect its financial position and theresults of its operations. It continuously monitors its market exposure and tries tomanage these risks by following prudent business and risk management practices.
Adequacy of Internal Control
The Company has a proper and adequate system of internal control in all spheres of itsactivities to ensure that all its assets are safeguarded and protected against loss fromunauthorized use or disposition and that the transactions are authorized recorded andreported diligently. The Internal control is supplemented by an effective internal auditbeing carried out by an external firm of Chartered Accountants.
The Company ensures adherence to all internal control policies and procedures as wellas compliances with all regulatory guidelines.
The Audit Committee of the Board of Directors reviews the adequacy of internalcontrols.
Relations remained cordial with employees at all levels during the year.
The Company has complied with applicable provisions of Corporate Governance as providedunder SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015. A separatereport on Corporate Governance compliance is included as a part of the Annual Report alongwith the Auditors' Certificate.
Your Company has not accepted any public deposits during the year under review.
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to the requirements of Section 134(5) of the Companies Act 2013 with respectto Directors' Responsibility Statement the Directors confirm that:
1. In the preparation of the annual accounts for the financial year ended 31st March2019 the applicable accounting standards have been followed and that there are nomaterial departures from the same;
2. Accounting policies selected were applied consistently. Reasonable and prudentjudgments and estimates were made so as to give a true and fair view of the state ofaffairs of the Company as at 31st March 2019 and of the profit for the year ended on thatdate;
3. Proper and sufficient care has been taken for the maintenance of adequate accountingrecords in accordance with the provisions of the Companies Act 2013 for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;
4. The annual Accounts for the Financial Year ended 31st March 2019 have been preparedon a `going concern' basis.
5. Proper internal financial controls were in place and that the financial controlswere adequate and were operating effectively.
6. Proper systems devised to ensure compliance with the provisions of all applicablelaws were in place and were adequate and operating effectively.
The Company's wholly owned subsidiary Stan Plaza Limited is a Non-Listed Companyhaving its Registered Office at Mumbai. As on March 31 2019 in accordance with SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 it will be termed asa Non-Material Subsidiary of the Company.
Stanrose Mafatlal Lubechem Limited - In Liquidation a substantially owned subsidiaryof the Company was ordered to wind-up by the High Court of Mumbai vide its Order datedJune 10 2011 and appointed the Official Liquidator to take charge of its Assets BankAccounts Books of Accounts Affairs Business and Properties with all powers under thethen provisions of the Companies Act 1956.
In compliance with the requirements of the provisions of Section 129(3) read with Rule5 of Companies (Accounts) Rules 2014 a Statement in Form AOC-1 containing the salientfeatures of financial statements in respect of Stan Plaza Limited a wholly ownedsubsidiary of the Company has been included as a part of this Annual Report. StanroseMafatlal Lubechem Limited being inoperative its details are not disclosed in Form AOC-1.
The Company has framed a `Policy for Determining Material Subsidiaries' for identifyingmaterial subsidiaries and to provide governance framework for such material subsidiaries.The policy is available on the website of the Company www.stanrosefinvest.com.
AMALGAMATION OF SURCOT TRADING PRIVATE LIMITED (STPL) AND UMIYA REAL ESTATE PRIVATELIMITED (UREPL) ("THE TRANSFEROR COMPANIES") WITH STANROSE MAFATLAL INVESTMENTSAND FINANCE LIMITED (SMIFL) ("THE TRANSFEREE COMPANY")
As reported last year the Board of Directors of the Company at its meeting held on13th March 2018 had approved the proposed Scheme of Amalgamation of Surcot TradingPrivate Limited and Umiya Real Estate Private Limited ("the TransferorCompanies") with Stanrose Mafatlal Investments and Finance Limited ("theTransferee Company") to be undertaken by way of scheme of arrangement subject toreceipt of all necessary consents and approvals including the approval of shareholdersand creditors (if any) and the sanction of the Hon'ble National Company Law Tribunal(NCLT) SEBI BSE Limited and such other competent authorities as may be applicable. TheCompany has already received No-Objection Certificate from BSE Limited/SEBI on 14thNovember 2018. Thereby the Company has filed an application with the NCLT-AhmedabadBench for conveying the meeting of the Equity Shareholders and waiving of meeting ofcreditors as there were none. NCLT-Ahmedabad Bench ordered on 16th January 2019 forconveying the meeting of the equity Shareholders on 22nd February 2019 and waiving themeeting of the Creditors.
As on date after obtaining the approval of the Shareholders Registrar of CompaniesRegional Director and Official Liquidator the Company has filed a Petition with the NCLT- Ahmedabad Bench for sanction of the aforesaid Scheme and are awaiting for the same.
CONSOLIDATED FINANCIAL STATEMENTS
The Consolidated Financial Statements (CFS) of the Company and its wholly ownedsubsidiary Company viz. Stan Plaza Limited (SPL) are prepared in accordance with theprovisions of Schedule III of the Companies Act 2013 and relevant Accounting Standardsissued by the Institute of Chartered Accountants of India as applicable to the Companyand form part of this Annual Report. These Statements have been prepared on the basis ofaudited financial statements received from SPL as approved by its Board. Stanrose MafatlalLubechem Ltd. a substantially owned subsidiary Company being inoperative its financialstatements are not considered in preparation of CFS.
In terms of Section 152 of the Companies Act 2013 Shri Pradeep R. Mafatlal aNon-Independent Non-Executive Promoter Director of the Company is retiring by rotationand being eligible offers himself for re-appointment. Brief resume of Shri Pradeep R.Mafatlal as required under Regulation 36 of SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 is covered in the notes of the Notice of the 39th AGM ofthe Company.
All Independent Directors have given their declarations that they meet the criteria ofindependence as laid down under Section 149(6) of the Companies Act 2013 and Regulation16(1)(b) of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015.
None of the Directors of the Company is disqualified from being appointed orre-appointed as a Director as specified under Section 164 of the Companies Act 2013.
KEY MANAGERIAL PERSONNEL
The Company has appointed three Key Managerial Personnel viz. Shri Madhusudan J.Mehta Chief Executive Officer Shri Harshad V. Mehta Chief Financial Officer and ShriSoham A. Dave as Company Secretary to inter alia shoulder the responsibilities in theirrespective fields as envisaged under the provisions of the Companies Act 2013 & SEBI(Listing Obligations and Discloser Requirements) Regulations 2015.
FAMILIARIZATION PROGRAMME FOR THE INDEPENDENT DIRECTORS
The Board of Directors has adopted a Familiarization Programme for IndependentDirectors of the Company and posted the same on the website of the Company viz.www.stanrosefinvest.com. The Programme aims to provide insights into the Company to enablethe Independent Directors to understand and significantly contribute to its business.
AUDITORS Statutory Auditors
At the 37th Annual General Meeting M/s Manubhai & Shah Chartered Accountants(Firm Regn. No. 106041W/ W100136) Ahmedabad were appointed as the Statutory Auditors ofthe Company to hold office from the conclusion of the 37th AGM to the conclusion of the42nd AGM (subject to ratification of the appointment by the members at every AGM heldafter this AGM). On 7th May 2018 Section 40 of the Companies Amendment Act 2017(amending Section 139 of the Companies Act 2013) was notified whereby ratification ofStatutory Auditor's appointment is not required at every Annual General Meeting.Accordingly resolution for ratification of appointment of Statutory Auditors is notproposed.
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 hasappointed M/s. Manoj Hurkat and Associates a firm of Company Secretaries in Practice toundertake the Secretarial Audit of the Company. The Secretarial Audit Report is annexedherewith as
The Report confirms that the Company has complied with all the applicable provisions ofthe Companies Act 2013 Reserve Bank of India Act 1934 Equity Listing Agreement/ SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 Depositories Act1996 Securities Contracts (Regulation) Act 1956 SEBI (Prohibition of Insider Trading)Regulations 1992/2015 SEBI (Substantial Acquisition of Shares and Takeovers)Regulations 2011 and various Regulations and Guidelines as applicable to the Company.
CORPORATE SOCIAL RESPONSIBILITY
In accordance with the provisions of Section 135 of the Companies Act 2013 and therules made there under the Company has constituted a Corporate Social ResponsibilityCommittee of Directors. The role of the Committee is to review the CSR activities of theCompany periodically and recommend the Board the amount of expenditure to be incurred onthe CSR activities annually.
Annual Report on CSR activities carried out by the Company during F.Y. 2018-19 isenclosed as "Annexure -B" to this report.
NOMINATION AND REMUNERATION COMMITTEE
The Nomination and Remuneration Committee comprises of Shri Kersi J. PardiwallaChairman Shri Arun P. Patel and Shri Rajesh Jaykrishna members. The role andresponsibilities Company's policy on directors' appointment and remuneration includingthe criteria for determining the qualifications positive attributes independence of adirector and other related matters are in conformity with the requirements of theCompanies Act 2013 and SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015.
The information relating to the composition of the Committee scope & term ofreference no. of meetings held and attendance etc. during the year under report areprovided in the Corporate Governance Report.
ANNUAL PERFORMANCE EVALUATION:
In compliance with the provisions of the Act and SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 the performance evaluation was carried out asunder: Board: In accordance with the criteria suggested by the Nomination andRemuneration Committee the Board of Directors evaluated the performance of the Boardhaving regard to various criteria such as Board composition Board processes and Boarddynamics. The Independent Directors at their separate meeting also evaluated theperformance of the Board as a whole based on various criteria. The Board and theIndependent Directors were of the unanimous view that performance of the Board ofDirectors as a whole was satisfactory.
Committees of the Board: The performance of the Audit Committee the CorporateSocial Responsibility Committee the Nomination and Remuneration Committee and theStakeholders Relationship Committee was evaluated by the Board having regard to variouscriteria such as committee composition committee processes and committee dynamics. TheBoard was of the unanimous view that all the committees were performing their functionssatisfactorily and according to the mandate prescribed by the Board under the regulatoryrequirements including the provisions of the Act the Rules framed thereunder and theListing Agreement/SEBI (Listing Obligations and Disclosure Requirements) Regulations2015.
(a) Independent Directors: In accordance with the criteria suggested by theNomination and Remuneration Committee the performance of each independent director wasevaluated by the entire Board of Directors (excluding the director being evaluated) onvarious parameters like qualification experience availability and attendance integritycommitment governance independence communication preparedness participation and valueaddition. The Board was of the unanimous view that each independent director is a reputedprofessional and brought his rich experience to the deliberations of the Board. The Boardalso appreciated the contribution made by all the independent directors in guiding themanagement in achieving higher growth and concluded that continuance of each independentdirector on the Board will be in the interest of the Company.
(b) Non-Independent Directors: The performance of each of the non-independentdirectors (including the Chairperson) was evaluated by the Independent Directors at theirseparate meeting. Further their performance was also evaluated by the Board of Directors.Various criteria considered for the purpose of evaluation included qualificationexperience availability and attendance integrity commitment governance communicationetc. The Independent Directors and the Board were of the unanimous view that each of thenon-independent director was providing good business and people leadership.
DISCLOSURE OF RATIO OF REMUNERATION OF EACH DIRECTOR TO THE MEDIAN EMPLOYEES'REMUNERATION ETC.
The particulars of ratio of remuneration of each director to median remuneration of theemployees of the Company for the financial year under report percentage increase inremuneration of each Director and KMP etc. more particularly described under Section197(12) of the Companies Act 2013 and Rule 5 of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 are given in "Annexure C" tothis Report.
PARTICULARS OF LOANS AND INVESTMENTS
The Company being a Non-Banking Financial Company registered with Reserve Bank of Indiawith the principal business inter alia of Inter-Corporate Financing the provisions ofSection 186 except sub-section (1) are not applicable to it. Hence no particulars thereofas envisaged under Section 134(3)(g) are covered in this Report.
RELATED PARTY TRANSACTIONS
The particulars of contracts or arrangements entered by the Company with relatedparties which are subsisting during the year under Report are provided under"Annexure D" in Form AOC - 2. The Company has framed a 'Policy on Related PartyTransactions' for determining related parties transactions on arm's length basis andprocedures to be followed for obtaining various approvals etc.The policy is available onthe website of the company www.stanrosefinvest.com. As regards the justification forentering into related party transactions it may be noted that the same are entered intodue to business exigencies and are in the best interest of the Company.
ENERGY TECHNOLOGY AND FOREIGN EXCHANGE
Pursuant to the requirement under Section 134(3) of the Companies Act 2013 read withRule 8 of Companies (Accounts) Rules 2014: (a) The Company has no activity involvingconservation of energy or technology absorption.
(b) The Company does not have any Foreign Exchange Earnings.
(c) Outgo under Foreign Exchange - NIL.
Entire staff in the Company is working in a most congenial manner and there is nooccurrences of any incidents of sexual harassment during the year.
VIGIL MECHANISM / WHISTLE BLOWER POLICY
The Board has approved and adopted "Vigil Mechanism/ Whistle Blower Policy"in the Company. The Brief details of establishment of this Policy are provided in theCorporate Governance Report.
RISK MANAGEMENT POLICY
The Company has formalized risk management system by formulating and adopting RiskManagement Policy to identify evaluate monitor and minimize the identifiable businessrisks in the Organization.
EXTRACT OF ANNUAL RETURN
The extract of the Annual Return in Form MGT 9 is provided in "Annexure E"to this Report and the same is also available on the website of the Companywww.stanrosefinvest.com under "Investor Relations" Section.
PARTICULARS OF EMPLOYEES
The Company has not employed any individual whose remuneration falls within the purviewof the limits prescribed under the provisions of Section 197 of the Companies Act 2013read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel)Rules 2014.
Your Directors sincerely express their deep appreciation to employees at all levelsbankers customers and shareholders for their sustained support and co-operation and hopethat the same will continue in future.
For and on behalf of the Board
Pradeep R. Mafatlal
Dated: May 30 2019.