Your Directors are pleased to present the Thirty First Annual Report together with theAudited Financial Statements for the year ended March 31 2020.
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(Rs. in lakhs except equity share data)
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|Particulars ||Year ended 31.3.2020 ||Year ended 31.3.2019 ||Year ended 31.3.2020 ||Year ended 31.3.2019 |
|Total Income ||1865.75 ||1865.25 ||1855.44 ||1856.87 |
|Cash Profit ||(262.18) ||646.93 ||(334.37) ||603.36 |
|Less: Depreciation ||54.42 ||53.13 ||53.92 ||52.64 |
|Profit before Tax ||(316.60) ||593.80 ||(388.29) ||550.72 |
|Less: Provision for Taxation ||2.37 ||141.24 ||- ||139.50 |
|Add / (Less): Deferred Tax ||21.07 ||(8.15) ||20.45 ||(1.72) |
|Profit after Tax (Net of adjustment for earlier years) ||(285.61) ||450.06 ||(354.85) ||415.20 |
|Other Comprehensive Income ||(21.32) ||(6.82) ||(8.52) ||0.67 |
|Add : Retained Earning brought forward ||3178.54 ||2831.55 ||3041.71 ||2722.09 |
|Balance available for appropriation ||2871.62 ||3274.79 ||2678.34 ||3137.96 |
|APPROPRIATION || || || || |
|Less: Dividend Paid (Including Dividend Tax) ||96.25 ||96.25 ||96.25 ||96.25 |
|Balance carried to Balance Sheet ||2775.37 ||3178.54 ||2582.09 ||3041.71 |
|Earnings per Share (Rs.10/- each) || || || || |
|Basic (in Rs.) ||(3.58) ||5.64 ||(4.44) ||5.20 |
|Diluted (in Rs.) ||(3.58) ||5.64 ||(4.44) ||5.20 |
In 2019-20 your Company's total Income from Operations stood Rs. 1782.88 at lacs asagainst Rs.1808.72 lacs during the previous year.
Your Company continued its focus on fee based activities (Investment Banking) andincome therefrom was Rs. 1185.76 lacs as against Rs. 1122.61 lacs during the previousyear recording an increase of 5.62%. It continues to be the thrust area for the Company.
Income from Other Sources was at Rs. 72.55 lacs as against Rs. 48.14 lacs during theprevious year. There has not been any change in the nature of business of the Companyduring the year.
Indian Accounting Standards
Pursuant to the notification dated February 16 2015 issued by the Ministry ofCorporate Affairs the Company has adopted the Indian Accounting Standards ("IndAS") notifiedunder the Companies (Indian Accounting Standard) Rules 2015.Accordingly the Financial Statements have been prepared in compliance with Ind AS.Consequently the subsidiary associate and joint venture companies also have adopted IndAS (irrespective of their net worth).
Dividend & Reserves
The Board of Directors is pleased to recommend a dividend of Re. 0.60/- per share (6%)for the year ended March 31 2020 subject to the approval of the Members at the 31stAnnual General Meeting.
During the year under review there was no transfer to General Reserve (Previous yearRs. Nil).
Employee Stock Option Scheme
No shares have been issued under the SFSL Employee Stock Option Scheme 2011 during theFY 2019-20. Disclosures with respect to Stock Options as required under Regulation 14 ofthe SEBI SBEB Regulations are available on the Company's websitehttp://www.sumedhafiscal.com under the section INVESTORS/ESOP DISCLOSURE.
Your Company's Auditors M/s. V. Singhi & Associates have certified that theEmployees Stock Option Scheme of the Company have been implemented in accordance with theRegulations and the resolutions passed by the members in this regard.
The Paid-up Equity Share Capital as at March 31 2020 stood at Rs. 79844240/-.During the year under review the Company has not issued shares with differential votingrights nor has granted any stock options or sweat equity. As on March 31 2020 none ofthe Directors of the Company hold instruments convertible into equity shares of the
Management Discussion and Analysis Report
In terms of requirements of Regulation 34 of the SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 (SEBI LODR) a Management Discussion andAnalysis Report is attached Annexure I forming part of this Report.
Report on Corporate Governance
In terms of requirements of Regulation 34 of the SEBI LODR a Report on CorporateGovernance together with Auditors' Certificate regarding compliance of Conditions ofCorporate Governance are attached asAnnexure - II and
Annexure - III forming part of this Report.
Consolidated Financial Statement
In accordance with Section 136 of the Companies Act 2013 and Regulation 34 of theListing Regulations read with other applicable provisions your Directors have attachedthe Consolidated Financial Statements of the Company for the financial year ended March31 2020 prepared in accordance with applicable Ind AS which form a part of the AnnualReport. The financial statements including consolidated financial statements and theaudited accounts of the subsidiary are available on the Company's websitehttp://www.sumedhafiscal.com/financials.asp.
Accordingly a statement in Form AOC-1 is attached to the Financial Statements ofthe Company for your information.
SFSL Commodity Trading Pvt. Ltd. - Subsidiary
During the year the Company recorded Total Revenue of Rs. 1931159/- (previous yearRs. 1817379/-) and Net Profit of Rs. 1517357/- for the year ended 31st March 2020(Previous Year: Rs. 905168/-/-).
The subsidiary has formally discontinued commodity trading activities (Membership withMCX) from April 1 2019 considering overall profitability and risks associated withcommodity trading.
Performance of Associate Companies
US Infotech Pvt. Ltd.
During the year the Company recorded Total Revenue of Rs. 4191445/- (previous yearRs. 5133289/-) and Net Profit of Rs. 1635201/- for the year ended 31st March 2020(Previous Year: Rs. 2441885/-).
The Company continues to explore growth opportunities.
Brandshoots Ventures Pvt. Ltd.
During the year the Company recorded a revenue of Rs. 554411/- (Previous year : Rs.709367/-) and booked Net Loss of Rs. 716842/- for the year ended 31st March 2020(Previous year : Rs. 695425/-).
The Company is building requisite eco-system to support start-up entities.
Sumedha Management Solutions Pvt. Ltd. (IPE)
During the year the Company recorded a revenue of Rs. 95905405/- (Previous year :Rs. 66908158/-) and Net Profit of Rs. 16121072/- for the year ended 31st March 2020(Previous year : Rs. 9702763/-).
In accordance with the Regulation 16 of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 (Listing Regulations') the unlisted subsidiary ofthis Company is not a material subsidiary. The Company has formulated a policy fordetermining material subsidiary. The policy can be accessed at the Company's website athttp://www.sumedhafiscal.com/material_subsidiary.pdf.
Corporate Social Responsibility
The Company is not yet required to comply to with the requirement associated withSection 135 of the Companies Act 2013.
Business Responsibility Report
The Company is not required to comply with the requirements associated with Regulation34(2)(f) of the Listing
The applicable Secretarial Standards i.e. SS-1 and SS-2 relating to Meetings ofthe Board of Directors' and General Meetings' respectively have been duly followedby the Company.
Directors' Responsibility Statement
To the best of knowledge and belief and according to the information and explanationsobtained by them your Directors make the following statement in terms of Section134(3)(c) of the Companies Act 2013: (i) that in the preparation of the Annual Accountsfor the year ended March 31 2020 the applicable accounting standards have been followedand there are no material departure; (ii) and applied them consistently and made judgmentsand estimates that are reasonable and prudent so as to give a true and fair view of thestate of affairs of the Company as at March 31 2020 and profits of the Company for theyear ended on that date; (iii) that Directors have taken proper and sufficient care forthe maintenance of adequate accounting records in accordance with the provisions of theCompanies Act 2013 for safeguarding the assets of the Company and for preventing anddetecting fraud and other irregularities; (iv) the annual accounts have been prepared on agoing concern basis; (v) that the Directors had financialcontrols to be followed by theCompany and that such laid down internal internal financial controls are adequate and wereoperating effectively; and (vi) the Directors have devised proper systems to ensurecompliance with the provisions of all applicable laws and that such systems were adequateand operating effectively.
Based on the framework of internal financial controls and compliance systemsestablished and maintained by the Company the work performed by the internal statutoryand secretarial auditors including the audit of internal financial controls overfinancial reporting by the statutory auditors and the reviews performed by management andthe relevant board committees including the audit committee the Board is of the opinionthat the Company's internal financial controls were adequate and effective during FY 2020.
Members of the Company at its 30th Annual General Meeting held on 14th September 2019approved reappointment of Mr. Bijay Murmuria (DIN 00015948) as a Director liable to retireby rotation.
In accordance with the provisions of Section 152 of the Companies Act 2013 and theCompany's Articles of Association Mr. Vijay Maheshwari (DIN: 00216687) Director retiresby rotation at the forthcoming Annual General Meeting and being eligible offers himselffor re-appointment. The Board of Directors on recommendation of the Nomination andRemuneration Committee has recommended his re-appointment.
The Company had annual evaluation of its Board Committees and individual Directorspursuant to the provisions of Companies Act 2013 and Listing Regulations. The Nominationand Remuneration Committee (NRC) specified the methodology for effective evaluation ofperformance of Board and Committees and individual Directors and also finalised theevaluation criteria (containing required particulars as per Guidance Note issued by theSEBI) and authorized the Board to undertake the evaluation process. The EvaluationStatement was reviewed by the Independent Directors.
The performance of individual directors was evaluated on parameters such as number ofmeetings attended contribution made in the discussions contribution towards formulationof the growth strategy of the Company independence of judgement safeguarding theinterest of the Company and minority shareholders etc. The Board then evaluated theperformance of the Board Committees and the individual Directors in the prescribedmanner.
Number of Meetings of the Board
Four meetings of the Board were held during the year ended 31st March 2020.
Key Managerial Personnel (KMP)
The Company is having the following Key Managerial Personnel during the year
|Name ||Designation |
|Mr. Bhawani Shankar Rathi ||Wholetime Director |
|Mr. Deb Kumar Sett ||Company Secretary |
|Mr. Girdhari Lal Dadhich ||Chief Financial Officer |
Committees of the Board
The Board of Directors has the following Committees:
1. Audit Committee
2. Nomination and Remuneration Committee
3. Stakeholders' Relationship Committee
The details of the Committees along with their composition number of meetings andattendance at the meetings are provided in the Corporate Governance Report.
Loans Guarantees or Investments
Details of Loans Guarantees and Investments covered under the provisions of Section186(4) of the Companies Act 2013 are provided in the Notes to Financial Statements.
Vigil Mechanism/Whistle Blower Policy
The Company has a Whistle Blower Policy to report genuine concerns or grievances. TheWhistle Blower Policy has been posted on the website of the Company http://www.sumedhafiscal.com/whistle_blower_policy.pdf.
Remuneration and Nomination Policy
The Company has updated its Nomination and Remuneration Policy for determiningremuneration of its Directors Key Managerial Personnel and Senior Management and othermatters provided under Section 178(3) of the Companies Act 2013 and Listing Regulationsadopted by the Board. The details of this policy have been posted on the website of theCompany http:// www.sumedhafiscal.com/remuneration_policy.pdf .
The Remuneration Policy has also been outlined in the Corporate Governance Reportforming part of this Annual
Related Party Transactions
All transactions entered with Related Parties for the year under review were inordinary course of business and on arm's length basis and thus a disclosure in Form AOC-2in terms of Section 134 of the Companies Act 2013 is not required. Further there is nomaterial related party transaction during the year. All related party transactions arementioned in the Notes to Accounts.
All Related Party Transactions are placed before the Audit Committee (for approval) aswell as the Board of Directors on a quarterly basis. There has not been any Omnibusapproval for such transactions pursuant to Regulation 23 of the Listing Regulations 2015.
In line with the requirements of the Companies Act 2013 and Listing Regulations yourCompany has updated its Policy on Related Party Transactions which is also available on http://www.sumedhafiscal.com/policy_on_rpt.pdf. The Policy intends to ensure that proper reporting approval and disclosureprocesses are in place for all transactions between the Company and Related Parties.
Risk Management Policy and Internal Financial Control
The Company has a risk management policy the objective of which is to lay down astructured framework for identifying potential threats to the organisation on a regularbasis assessing likelihood of their occurrence designate risk owners to continuallyevaluate the emergent risks and plan measures to mitigate the impact on the Company tothe extent possible. The framework and the system are reviewed from time to time toenhance their usefulness and effectiveness. The policy recognizes that all risks in thebusiness cannot be eliminated but these could be controlled or minimised through effectivemitigation measures effective internal controls and by definingrisk limits.
A comprehensive Risk Management Framework has been put in place for each of thebusinesses segments of the Company which is stringently followed for the management ofrisks including categorisation thereof based on their impact on the organisation. Suchcategorisation gives highest weightage to the risks which have the potential to threatenthe existence of the Company. The risks with higher severity receive more attention andmanagement time and it is the endeavour of the Company to strengthen internal controls andother mitigation measures on a continuous basis to improve the risk profile of theCompany.
Risk Management System has been integrated with the requirements of internal controlsas referred to in Section 134(5)(e) of the Companies Act 2013 to evolve risk relatedcontrols.
Closure of PMS & Mutual Funds Distribution Operations
The Company intends to discontinue its Portfolio Management Services (as anIntermediary) and Mutual Funds Distribution Operations (effective April 1 2020)considering regulatory changes (for PMS) and deteriorating market condition in compliancewith all regulatory requirements.
The Company has neither accepted nor renewed any deposits during the year. No deposithas remained unpaid or unclaimed at the end of the year under review.
Going Concern Status by the Regulators or Courts or Tribunals impacting the goingNo significant concern status of the Company and its operation in the future.
Material Changes and Commitments
Except closure of PMS & Mutual Funds Distribution Operations of the Company therehas not been any material change and commitment affecting the financial position of theCompany occurred between the end of the Financial
Year 2019-20 and the date of the Report.
Based on quarterly reports on the status of statutory compliance from DepartmentalHeads/ Responsibility Centres Section 205 of the Companies Act 2013 (Act) and Rules madethe Company Secretary issues Certificate thereunder. The Certificate is also endorsed bythe Wholetime Director of the Company and placed before the Audit Committee and Board ofDirectors for review.
The status of Statutory Compliance is verified by the Internal Auditors and SecretarialAuditors pursuant to Sections 138 and 204 of the Companies Act 2013 as well as AnnualSecretarial Compliance Report pursuant to Reg. 24A of
Annual Return of the Company pursuant to the provisions of Section 92 of the CompaniesAct 2013 has been uploaded to the website of the Company and can be accessed at http://www.sumedhafiscal.com/annual_return.asp. The extract of Annual Return in Form MGT-9 pursuant to aforesaid provision of theCompanies Act 2013 and Rules made there under is attached to this report as Annexure- IV.
M/s. V. Singhi & Associates Chartered Accountants 4 Mangoe Lane Ground FloorKolkata 700001 (Firm Registration No. 311017E) were appointed as the Statutory Auditors ofthe Company for a period of 5 (five) consecutive years for the period from Financial Year2018-19 to 2021-22 at the 28th AGM of the Company held on 23-Sep-17. The Board and theAudit Committee has approved their continuation as Statutory Auditors of the Company forthe
Financial Year 2020-21 based on their consent and confirmation of The Notes onfinancialstatement referred to in the Auditors' Report are self-explanatory and do notcall for any further comments. The Auditors' Report does not contain any qualification eservationadverse remark or disclaimer.
In terms of the requirements of Section 204 of the Companies Act 2013 and theCompanies (Appointment & Remuneration of Managerial Personnel) Rules 2014 M/s. A. K.Labh & Co. Practicing Company Secretaries has been re-appointed to conduct theSecretarial Audit of the Company for FY 2019-20.
Based on the consent received from M/s. A. K. Labh & Co. and recommendation of theAudit Committee the Board has appointed them as Secretarial Auditor of the Company for FY2020-21.
The Secretarial Audit Report for FY 2019-20 (attached as Annexure V) is freefrom any qualification.
The Company is not engaged in production of goods or providing services pursuant toSection 148 of the Act and therefore not required to comply with the requirementsthereunder.
Board's Response on Auditors' Qualification Reservation or Adverse Remark orDisclaimer Made
There are no qualifications reservations or adverse remarks made by the StatutoryAuditors in their report or by the Practicing Company Secretary in their Secretarial Auditfor FY 2019-20. During the year there has been no instances of frauds reported byAuditors under section 143(12) of the Companies Act 2013.
Significant and Material Orders Passed by the Courts/ Regulators
Disclosure under the Sexual Harassment of Women at Workplace (Prevention Prohibitionand Redressal) Act 2013
The Company has a Prevention of Sexual Harassment Policy in line with the requirementsof Sexual Harassment of Women at Workplace (Prevention Prohibition and Redressal) Act2013. During the period under review no complaint was received by the Internal ComplaintCommittee.
Conservation of Energy and Technology Absorption
Since the Company does not own any manufacturing facility the other particularsrelating to conservation of energy and technology absorption stipulated in the Companies(Accounts) Rules 2014 are not applicable.
Foreign Exchange Earning and Outgo
Foreign Exchange earnings and outgo during the year under review were Rs. 10.09 Lacsand Rs. 6.87 Lacs respectively (previous year Rs. 7.62 Lacs and Rs. 10.00 Lacsrespectively).
The Company as an Intermediary (Merchant Banker Portfolio Management Serviceprovider) is registered with the Securities and Exchange Board of India (SEBI) and isrequired to comply with the prescribed risk management measures. Accordingly thequarterly status of various risks being faced by the Company and measures for mitigationthereof are placed before the Audit Committee and Board of Directors of the Company forreview and appropriate measures. With closure of PMS & Mutual Funds DistributionOperations (effective April 1 2020) risks associated therewith stand extinguished.
Further details about the pertinent risks are contained in the statement of ManagementDiscussion and Analysis
Particulars of Employees
The ratio of the remuneration of each Director to the median employee's remunerationand other particulars or details of employees pursuant to Section 197(12) of the CompaniesAct 2013 read with Rule 5 of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 are attached to this Report as Annexure VI. None of theemployees of the Company is in receipt of remuneration coming under purview of the saidSection/Rule. A Statement comprising of top 10 employees in terms of remuneration drawn isannexed Annexure VII. The said Annexure is not being sent along with this AnnualReport to the Members of the Company in line with the provisions of Section 136 of theAct. Members who are interested in obtaining these particulars may right to the CompanySecretary at the Registered Office of the Company.
Key Financial Ratio
Key financial Ratios for the financial year ended March 31 2020 are provided in theManagement Discussion and
We acknowledge our appreciation to Shareholders Bankers Regulators and Clients fortheir continued support. The Board also takes this opportunity to express itswhole-hearted appreciation of the efforts put in by the employees at all levels. We lookforward to the future with confidence and stand committed to creating a brighter futurefor all shareholders.