STANROSE MAFATLAL INVESTMENTS AND FINANCE LIMITED
Your Directors have pleasure in presenting the Fortieth Annual Report together with theAudited Statements of Account of the Company for the financial year ended 31st March2020.
| || |
(Rupees in Lacs)
| ||Current Year ||Previous Year |
| ||Rupees ||Rupees |
|Total Income ||39.00 ||147.00 |
|Gross Profit ||(778.39) ||(278.78) |
|Less : Depreciation ||40.60 ||34.52 |
|Profit/(Loss) before Tax & Exceptional Item ||(818.99) ||(313.30) |
|Less: Current Tax ||(5.75) ||(6.57) |
|Less: Exceptional Item ||(0.45) ||17.88 |
|Profit/(Loss) after Tax ||(813.68) ||(288.85) |
|Add: Profit brought forward from Previous Year Balance Available for ||1480.76 ||1724.93 |
|Appropriations ||667.08 ||1436.08 |
|Less : Dividend Paid (Including tax on dividend) ||287.01 ||287.01 |
|Items of the OCI for the year net of tax: || || |
|Remeasurement benefit of defined benefit plans ||(0.49) ||0.90 |
|Transfer to Reserve ||00.00 ||20.00 |
|Add: Other Comprehensive Income: Transfer from OCI to || |
|Retained Earnings ||726.65 ||352.59 |
|Balance carried forward ||1107.21 ||1480.76 |
Your Directors recommend a Dividend of Rs.6/- per share (Previous Year Rs.6/-) on3967920 Equity Shares of Rs.10 each aggregating to Rs. 238.08 Lacs for the financialyear ended on 31st March 2020. If approved by the Shareholders at the forthcoming AnnualGeneral Meeting to be held on August 29 2020 the said dividend will be paid on September9 2020 or thereafter to (i) those shareholders whose names appear on the Register ofMembers of the Company on August 22 2020 and (ii) those whose names as beneficial ownersare furnished by National Securities Depository Limited and Central Depository Services(India) Limited for the purpose.
MANAGEMENT DISCUSSION AND ANALYSIS (MD&A)
The total income for the year was Rs. 39.00 Lacs as compared to Rs.147.00 Lacs in theprevious year.
Depreciation was Rs. 40.60 Lacs (Previous Year Rs. 34.52 Lacs). The Provision forTaxation: (i) for the year under report was NIL. (ii) Adjustments of earlier year tax wasRs. (3.29) Lacs.Loss after tax was Rs. 813.68 Lacs.
This year the company has decided not to transfer any funds to General Reserve andStatutory Reserve Fund pursuant to Section 45IC of RBI Act 1934.
The Net Worth of the Company as at 31st March 2020 stood at Rs. 4921.10 Lacs asagainst Rs. 6527.02 Lacs on 31st March 2019.
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. 8 to Financial Statements of the Company for the yearended on 31st March 2020. The total worth of Company's Quoted and Unquoted Investments inShares and Securities (Including Stock-in-trade) as at 31st March 2020 is Rs.2330.67Lacs (Previous Year Rs. 4022.55 Lacs). The Company has adopted IND-AS from 1st April2019. Under IND-AS investments are valued at fair value whereas in case of IGAAP Longterm investments were valued at lower of cost or fair value.
During the year under report the Company:
(a) has made disinvestment of Rs. 805.46 Lacs from its Non-current Quoted andNon-Quoted Equity Investments as against Rs. 281.84 Lacs in the Previous Year.
(b) booked a net profit of Rs. 726.40 Lacs on sale of Non-Current investments asagainst Rs. 352.59 Lacs in the previous year.
(c) earned income by way of Dividend of Rs. 32.97 Lacs against Rs. 137.67 Lacs in theprevious year.
After the close of the Financial Year ended on March 312020 the Company has bookedNet Capital Gain of Rs. 36.79 Lacs on sale of certain Non-Current Investments in shares ofthe aggregate book value of Rs. 276.96 Lacs.
Interest on Inter-corporate Deposit:
During the year under report the Company earned interest income on Inter CorporateDeposits of Rs. NIL as against Rs. 3.67 Lacs in the previous year.
Changes in Key Financial Ratios
|Sr. No. ||Ratios ||F.Y. ||F.Y. |
| || ||2019-20 ||2018-19 |
|1. ||Current Ratio ||12.92 ||34.31 |
|2. ||Debt Equity Ratio ||0.23 ||0.23 |
|3. ||Operating Profit Margin (%) ||-0.21 ||13.06% |
|4. ||Net Profit Margin (%) ||-20.86% ||13.78% |
|5. ||Return on Net Worth (%) ||-205.07% ||17.72% |
Note: The Company is not having any Debt/Borrowings as at 31st March 2020. 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 Disclosure 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 March2020 the applicable Indian accounting standards (IndAS) have been followed and that thereare no material 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 2020 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 2020 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 2020 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 inoperativeits details are not disclosed in Form AOC-1.
The Company has framed a "Policy for Determining Material Subsidiaries' foridentifying material subsidiaries and to provide governance framework for such materialsubsidiaries. 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 Company has already received No-Objection Certificate fromBSE Limited/SEBI on 14th November 2018.Thereby the Company has filed an application withthe NCLT-Ahmedabad Bench for conveying the meeting of the Equity Shareholders and waivingof meeting of creditors as there were none. NCLT-Ahmedabad Bench ordered on 16th January2019 for conveying the meeting of the equity Shareholders on 22nd February 2019 andwaiving the meeting of the Creditors.
The Company had obtained approval from Shareholders in the NCLT Convene MeetingRegistrar of Companies Regional Director and Official Liquidator. The Company had filedPetition with the NCLT-Ahmedabad Bench and after various hearing the NCLT - AhmedabadBench had approved the Scheme of Amalgamation on 17th July 2019 subject to approval ofNCLT-Chennai Bench where the Transferor Company Umiya Real Estate Private Limited hadfiled petition for Approval of the said 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 Indian AccountingStandards issued by the Institute of Chartered Accountants of India as applicable to theCompany and form part of this Annual Report. These Statements have been prepared on thebasis of audited financial statements received from SPL as approved by its Board. StanroseMafatlal Lubechem Ltd. a substantially owned subsidiary Company being inoperative itsfinancial statements are not considered in preparation of CFS.
In terms of Section 152 of the Companies Act 2013 Shri Madhusudan J. Mehta Director& CEO of the Company is retiring by rotation and being eligible offers himself forreappointment
Shri Arun P. Patel has resigned from the Directorship of the Company with effect from20th January 2020 on health grounds. Your Directors place on record their appreciationof the valuable services rendered by Shri Patel during his tenure as a director.
Shri Rajesh Jaykrishna was re-appointed at the 37th AGM for three years upto the AGMthat may be held for the F.Y 2019-20. According to Section 149(11) of the Companies Act2013 no Independent Directors can hold office for more than two consecutive terms.
As Shri Jaykrishna's second term will be expired on this AGM the Board does notpropose him for further reappointment.
To fill the vacancy of Independent Directors caused due to resignation of Shri Arun P.Patel and the non-appointment of Shri Rajesh Jaykrishna in accordance with Section 149(11)of the Companies Act 2013 the Board has appointed Shri Harit S. Mehta and Ms. Aziza A.Khatri as an Independent Directors both for Five consecutive years. Accordingly aresolution proposing his appointment along with their brief resume is provided underNotice of 40th AGM.
Shri Kersi J. Pardiwalla is due for retirement from its first term as IndependentDirector under the Companies Act 2013. Based on his skills experience knowledgeperformance evaluation and recommendation of Nomination and Remuneration Committee it isproposed to re-appoint him for Five consecutive years up to August 28 2025.
Brief resumes of Shri Harit S. Mehta Ms. Aziza Khatri and Shri Kersi J. Pardiwalla asrequired under Regulation 36 of SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 are covered under notes of the Notice of the 40th AGM of the 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 Disclosure Requirements) Regulations 2015.
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 "Annexure A".
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 Takeover) Regulations2011 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 thereunder 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. For the Financial Year 2019-20 the Company is not fallingunder Section 135(1) of the Companies Act 2013 as the Net worth Turnover and Net Profitsof the Company are less than the prescribed limit for the past three consecutive years andso the reporting under the Companies (Corporate Social Responsibility Policy) Rules 2014is not applicable to the Company.
NOMINATION AND REMUNERATION COMMITTEE
The Nomination and Remuneration Committee comprises of Shri Kersi J. PardiwallaChairman Shri Rajesh Jaykrishna Shri Harit S. Mehta and Ms. Aziza A. Khatri members.The role and responsibilities Company's policy on directors' appointment and remunerationincluding the criteria for determining the qualifications positive attributesindependence of a director and other related matters are in conformity with therequirements of the Companies Act 2013 and SEBI (Listing Obligations and DisclosureRequirements) 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 and RemunerationCommittee the Board of Directors evaluated the performance of the Board having regard tovarious criteria such as Board composition Board processes and Board dynamics. TheIndependent Directors at their separate meeting also evaluated the performance of theBoard as a whole based on various criteria. The Board and the Independent Directors wereof the unanimous view that performance of the Board of Directors as a whole wassatisfactory.
Committees of the Board:
The performance of the Audit Committee the Corporate Social Responsibility Committeethe Nomination and Remuneration Committee and the Stakeholders Relationship Committee wasevaluated by the Board having regard to various criteria such as committee compositioncommittee processes and committee dynamics. The Board was of the unanimous view that allthe committees were performing their functions satisfactorily and according to the mandateprescribed by the Board under the regulatory requirements including the provisions of theAct the Rules framed thereunder and the Listing Agreement/SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015.
(a) Independent Directors:
In accordance with the criteria suggested by the Nomination and Remuneration Committeethe performance of each independent director was evaluated by the entire Board ofDirectors (excluding the director being evaluated) on various parameters likequalification experience availability and attendance integrity commitment governanceindependence communication preparedness participation and value addition.
The Board was of the unanimous view that each independent director was 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-independent directors (including the Chairperson)was evaluated by the Independent Directors at their separate meeting. Further theirperformance was also evaluated by the Board of Directors. Various criteria considered forthe purpose of evaluation included qualification experience availability and attendanceintegrity commitment governance communication etc. The Independent Directors and theBoard were of the unanimous view that each of the non-independent director was providinggood 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 B"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 C" 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 justificationfor entering into related party transactions it may be noted that the same are enteredinto due 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 involving conservation of energy or technologyabsorption.
(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 are 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 D" tothis Report and the same is also available on the website of the Company www.stanrosefinvest.comunder "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 |
| ||Chairman |
|Place: Mumbai || |
|Dated: June 29 2020. || |