DIRECTORS' REPORT TO THE MEMBERS, Your Directors have pleasure in presenting the Thirty Second Annual Report of the Company together with the audited financial statements for the year ended March 31, 2015. 1. (a)Financial and Operational Performance OF THE COMPANY Operating profit (PBDIT) of the Company for the year was Rs. 14.05 million (previous year Rs. 8.19 million) or an increase of 71.55% over the previous year. Profit after tax for the year stood at Rs. 9.55 million (previous year Rs. 2.08 million) or an increase of 359.13% over the previous year. Net worth of the Company as on March 31, 2015 was Rs. 1049.73 million (previous year Rs. 1049.72 million). (b) CAPITAL The paid up Equity Share Capital as on March 31, 2015 stood at Rs. 55,850,000/- divided into 5,585,000 equity shares of Rs. 10/- each. (c) DIVIDEND Your Directors recommend payment of dividend of Rs. 1/- per equity share (previous year Rs. 1/- per share) on the paid up equity capital for the year ended March 31, 2015. Dividend will absorb a sum of Rs. 6.72 million including the dividend distribution tax thereon. In order to conserve the resources of the Company, the Directors recommended the same amount of dividend. (d) TRANSFER FROM GENERAL RESERVES Rs. 5.58 million (Previous Year: Rs. Nil) has been transferred from General Reserve of the Company to Statement of Profit and Loss. Current year dividend has been paid out of profit of the Company for the year in accordance with Section 123 of the Companies Act, 2013. (e) TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND During the year, the unclaimed dividend pertaining to the dividend for the year ended March 31, 2007 was transferred to the Investor Education & Protection Fund after giving due notice to the Members. Attention is being drawn that the unclaimed/unpaid dividend for the financial year 2007-08 is due for transfer to Investor Education and Protection Fund during October/November 2015. In view of this, Members of the Company, who have not yet encashed their dividend warrant(s) or those who have not claimed their dividend amounts, may write to the Company/ Company's Registrars and Transfer Agents, M/s. Maheshwari Datamatics Private Limited. (f) MANAGEMENT DISCUSSION AND ANALYSIS Management Discussion and Analysis of financial condition and of operations of the Company for the year under review as required under Clause 49 of the Listing Agreement with the Stock Exchanges is given in the part on Corporate Governance elsewhere in the Annual Report marked as "Annexure A". 2. FINANCE The Company continues to focus on judicious management of its working capital. Receivables and inventories were kept under strict check through continuous monitoring. 2.1 DEPOSITS The Company has not accepted deposit from the public falling within the ambit of Section 73 of the Companies Act, 2013 and The Companies (Acceptance of Deposits) Rules, 2014. 2.2 PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the notes to the Financial Statements. 3. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY The Company has an Internal Control System, commensurate with the size, scale and complexity of its operations. The Internal Audit Department monitors and evaluates the efficacy and adequacy of internal control system in the Company, its compliance with operating systems, accounting procedures and policies at all locations of the Company and its subsidiaries. Based on the report of internal audit function, process owners undertake corrective action in their respective areas and thereby strengthen the controls. Significant audit observations and corrective actions thereon are presented to the Audit Committee of the Board. 4. SUBSIDARY COMPANY As on March 31, 2015, there was one wholly-owned subsidiary Company namely, SMIFS Capital Services Limited. Statement required under Section 129(3) of the Companies Act, 2013 in respect of the Subsidiary Company is attached. 5. YEAR IN RETROSPECT AND FUTURE OUTLOOK The global economy in FY 2014-15 witnessed divergent trends among major economies and stress on major oil producing countries as a direct result of sharp decline in energy prices, especially in the second half of the year. Lower oil prices however benefit commodity importing countries, such as India. Falling energy prices have significantly improved India's overall fiscal landscape, and augur well for growth in domestic consumption. India's economy is poised to return to its high-growth path, thanks to lower fiscal and current account deficits, falling inflation, benign commodity prices, and structural reforms to boost investments. Monetary policy is also likely to be supportive with the Reserve Bank of India (RBI) having already reduced interest rates twice.The manufacturing sector is likely to benefit from lower interest rates. The government's call for 'Make in India' has sent out positive cues to the global investors Community. As India stands at the cusp of phenomenal opportunities, the financial services sector will play a supportive role in transforming the nation's future. Your Company is registered as Category I Merchant Banker and is executing various assignments in areas of Mergers and Acquisitions, Loan Syndication, Capital Market Operations, Placement of Equity shares and debt. Your Company's real estate project at Bondel Road is progressing well and is expected to be completed within the next one year. Barring unforeseen circumstances, your Company is hopeful of achieving better results in the current year. 6. LISTING OF THE SECURITIES OF THE COMPANY Equity Shares of your Company continue to be listed on BSE Limited and The Calcutta Stock Exchange Limited and the listing fees for the year 2015-16 have been paid. 97.31 per cent of the equity shares of your Company are held in dematerialized form. 7. DIRECTOR'S RESPONSIBILITY STATEMENT Pursuant to the requirement under section 134(3)(c) of the Companies Act, 2013 with respect to Directors' Responsibility Statement, it is hereby confirmed that : (a) in the preparation of the Annual Accounts the applicable accounting standards have been followed along with proper explanation relating to material departures. (b) the directors have selected such accounting policies and applied them consistently and made judgment and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and the profit and loss of the Company for that period. (c) the directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provision of this act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities. (d) the directors have prepared the annual accounts on a going concern basis. (e) the directors, in the case of a Listed Company, have laid down internal financial control to be followed by the Company and that such internal financial control are adequate and were operating effectively, and (f) the director have devised proper systems to ensure compliance with the provision of all applicable laws and that such system were adequate and operating effectively. 8. RELATED PARTY TRANSACTIONS All related party transactions that were entered, into during the financial year were on an arm's length basis and were in the ordinary course of business. There are no materially significant related party transactions made by the Company with Promoters, Directors, Key Managerial Personnel or other designated persons which may have a potential conflict with the interest of the Company at large. All Related Party Transactions are placed before the Audit Committee as also the Board for approval. Prior omnibus approval of the Audit Committee is obtained on a yearly basis for the transactions which are of a foreseen and repetitive nature. The transactions entered into pursuant to the omnibus approval so granted are audited and a statement giving details of all related party transactions is placed before the Audit Committee and the Board of Directors for their approval on a yearly basis. The policy on Related Party Transactions as approved by the Board is uploaded on the Company's website. None of the Directors has any pecuniary relationships or transactions vis-a-vis the Company. 9. VIGIL MECHANISM FOR DIECTORS AND EMPLOYEES The Company has a Vigil Mechanism to deal with instance of fraud and mismanagement, if any. The details of the Vigil Mechanism is explained in the Corporate Governance Report and also posted on the website of the Company. 10. DISCLOSURE OF SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION, REDRESSAL ACT 2013) In accordance with The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 to provide for the effective enforcement of the basic human right of gender equality and the guarantee against sexual harassment and abuse, more particularly against sexual harassment at work place, your Company has a Policy on Prevention of Sexual Harassment at the workplace duly approved by the Board of Directors. During the year, no complaint was reported under The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. 11. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNING AND OUTGO Particulars required under Section 134(3)(m) of the Act, read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988, under the heads (a) conservation of energy; and (b) technology absorption, are not applicable to the Company. During the year there was no foreign exchange earnings (previous year Rs. nil). Foreign Exchange outgo during the year aggregated to Rs. 1.30 million (previous year Rs. 2.19 million). 12. DIRECTORS Composition of the Board of Directors of your Company fulfills the criteria fixed by Clause 49 of the listing agreement with fifty per cent of the Directors being Independent Directors. Your Board comprises of six directors out of which three are independent directors. Mr. Utsav Parekh is the Non-Executive Chairman. Further, Mr. Chandranath Mukherjee, Independent Director of the Company ceased to be the Director due to his sad and sudden demise on September 5, 2014. The Board of Directors had on the recommendation of the Nomination & Remuneration Committee appointed Mrs. Ramya Hariharan as an Additional Director w.e.f September 20, 2014 and her appointment was regularized by conducting a Postal Ballot whose results were announced on November 18, 2014. The three-year term of Mr. Kishor Shah as Managing Director ended on March 31, 2015 and on recommendation of the Nomination and Remuneration Committee and approval of the Board of Directors in its meeting held on January 30, 2015 subject to the same being ratified by the members at the ensuing Annual General Meeting by passing a Special Resolution, Mr. Kishor Shah has been re-appointed Managing Director of the Company with effect from April 1, 2015 for a further period of 3 (three) years. Terms of appointment include payment of managerial remuneration as per the provisions of Sections 196, 197, 203 and other applicable provisions, if any, read with Schedule V, Part II, Section II (A) to the Companies Act, 2013. All Independent Directors have given declarations that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 and Clause 49 of the Listing Agreement. In accordance with the provisions of the Companies Act, 2013 and in terms of the Memorandum and Articles of Association of the Company Mr. Utsav Parekh retires by rotation and is eligible for re-appointment. 12.1. Board Evaluation Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Board has carried out an annual performance evaluation of its own performance, the Directors individually, Key Managerial Personnel (KMP), Senior Management as well as the evaluation of the working of its Audit, Nomination & Remuneration Committees and Stakeholders Relationship Committee. The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report. 12.2. Nomination & Remuneration Policy The Board has, on the recommendation of the Nomination & Remuneration Committee framed a policy for selection and appointment of Directors, Senior Management and their remuneration. The Nomination and Remuneration Policy is stated in the Corporate Governance Report. 12.3 Meetings During the year five Board Meetings and four Audit Committee Meetings were convened and held. The details of which are given in the Corporate Governance Report. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013. 13. AUDITORS 13.1. Statutory Auditors M/s. J. S. Vanzara & Associates, Chartered Accountants, Statutory Auditors of the Company hold office in accordance with the provisions of the Companies Act, 2013 upto the conclusion of the forthcoming Annual General Meeting. M/s. J. S. Vanzara & Associates, Chartered Accountants confirmed that their appointment, if made, would be within the prescribed limits under section 141(3)(g) of the Companies Act, 2013 and that they are not disqualified for such appointment within the meaning of section 141 of the Companies Act, 2013 and they hold valid certificate issued by the Peer Review Board of ICAI. 13.2. Secretarial Audit Pursuant to the provisions of Section 204 of the Companies Act, 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company had appointed Ms. Disha Dugar, Company Secretary in Practice to undertake the Secretarial Audit of the Company. The Report of the Secretarial Audit Report is annexed herewith as "Annexure B". 14. AUDITORS' QUALIFICATION (i) Statutory Auditors' Qualifications Qualifications contained in the Auditors' Report if any have been dealt with in the Notes to financial statements and are self-explanatory. (ii) Secretarial Auditors' Qualifications Qualifications contained in the Secretarial Auditors' Report if any have been dealt with in the Notes to Form MR-3 and are self-explanatory. 15. PARTICULARS OF EMPLOYEES The information required pursuant to Section 197 read with Rule 5, of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company, is given in "Annexure C". 16. EXTRACT OF ANNUAL REPORT The details forming part of the extract of the Annual Report in form MGT-9 is annexed herewith as "Annexure D". 17. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS There are no significant material orders passed by the Regulators/Courts which would impact the going concern status of the Company and its future operation. 18. ACKNOWLEDGEMENTS Your Directors express their sincere appreciation of the co-operation and assistance received from the shareholders, bankers, regulatory bodies and other business constituents during the year under review. For and on behalf of the Board of Directors (UTSAV PAREKH) Chairman Regd. Office : 'Vaibhav' (4F), 4 Lee Road, Kolkata - 700 020 The 27th day of May, 2015 |