To The Members
Your Directors have pleasure in presenting the Twenty Ninth Annual Report of SKPSecurities Limited for the Financial Year ended 31st March 2019.
(In र Lacs)
|Particulars || |
| ||2019 ||2018 ||2019 ||2018 |
|Revenue from Operations and other Income ||1206.47 ||1756.39 ||1201.03 ||1822.22 |
|Total Expenses ||961.77 ||1080.85 ||958.12 ||1033.26 |
|Profit Before Tax ||244.70 ||675.54 ||242.91 ||788.96 |
|Tax Expenses ||60.27 ||165.13 ||59.80 ||164.94 |
|Profit attributable to the owners of Company ||184.43 ||510.41 ||183.11 ||624.02 |
|Other Comprehensive Income ||(2.52) ||(1.95) ||(2.52) ||(195) |
|Total Comprehensive Income ||181.91 ||508.46 ||180.59 ||622.07 |
|Retained Earnings : Opening Balance ||1814.60 ||1814.54 ||1812.97 ||1699.29 |
|Less : Used for Buyback of Shares ||- ||(498.39) ||- ||(498.39) |
|Less : Transfer to General Reserve ||(10.00) ||(10.00) ||(10.00) ||(10.00) |
|Retained Earnings : Closing Balance ||1986.51 ||1814.60 ||1983.56 ||1812.97 |
Finanical Year 2019 witnessed significant structural changes in financial markets andregulations which had a game changing impact on the businesses that your company isengaged in causing significant short term pains.
Regulatory categorization of mutual fund schemes forced fund managers to reshuffle fundportfolios to align them with the prescribed category in a time bound manner. This lead toa severe meltdown in mid and small cap stocks whereas the frontline indices remained highdue to a mid year rally in a handful of frontline stocks. Debt markets witnessed a seriesof crisis unprecedented in nature and quantum primarily caused by the IL&FS crisisleading to issues related to NBFC/HFC and leverage against promoter holdings. Theresultant liquidity shortage which was already weak added fuel to the fire. By the endof the financial year inflow of global liquidity lead to frontline indices scaling newhighs again lead by a handful of stocks while a few mid and small cap stocks alsorecovered a bit. Growth in corporate earnings remained elusive. Uncertainties have alsobeen caused by slowdown in global and domestic economy a simmering global trade war andthe on going General Elections 2019.
Such uncertain situation in equity markets almost irrational kept equity investors atbay. Most equity mutual funds underperformed leading to diminishing investors confidence.In fact there was a crisis of confidence for debt fund investors which witnessed aflight to safety. All this lead to lower business volumes for your Company in both itsBroking and Distribution Services. Income from Distribution Services was further impactedby the complete discontinuation of Upfront Fees and move to Trail Fees only for the firsttime in the history of Indian Mutual Fund industry. In this back drop your Directorsexpress satisfaction on the company's performance.
SHARE BUY BACK DIVIDEND AND RESERVES
With an objective to return non-operational surplus cash available with the Company toShareholders and improve performance ratios like Return on Equity Earnings per Shareetc. the Board of Directors at their meeting held on 27th April 2019 recommended Buy-Backof upto 995000 equity shares of र 10/- each fully paid up representing 22.62% ofthe total number of equity shares in the paid up equity capital of the Company from allexisting shareholders/beneficial owners of the Company on a proportionate basis throughTender Offer Route at a price of र 70/- per share payable in cash for an aggregateconsideration of र 69650000/- not exceeding 25% of the fully paid up equitycapital and free reserves of the Company as on 31st March 2019 subject to receipt ofnecessary regulatory and shareholders' approval in compliance with SEBI (Buy-Back ofSecurities) Regulations 2018.
In view of this your Directors do not recommend any dividend for the Financial Year2018-2019 and propose to transfer a sum of र 10 Lacs to General Reserve.
The challenges mentioned above may have a moderating impact on the company's businessfor the short term. Mid year discontinuation of upfront fees from mutual funds will have afull year impact on Company's performance during the ensuing year. Expense Ratiorationalization in mutual funds introduced by the regulators in the new Financial Yearwill further reduce income from Distribution Services. Till such time uncertaintiescontinue to surround financial markets your Directors continue to remain cautiouslyoptimistic for the company's performance in the short term although quite confident overthe medium and long term. Your company has recently received SEBI's registrations forMerchant Banking Services and Portfolio Management Services and plan to commence theseservices during FY20. These strategic diversifications which are synergetic to company'scurrent business are likely to take your company to greater heights.
STATE OF THE COMPANY'S AFFAIRS
Detailed information on the operations of the Company business environment and futureexpectations are provided in the Management Discussion and Analysis Report in compliancewith Regulations 34(2)(e) of SEBI (Listing Obligations and Disclosure Requirement)Regulations 2015 which is annexed and marked as Annexure A to this report.
CONSOLIDATED FINANCIAL STATEMENTS
The Consolidated Financial Statements of the Company and its subsidiary for thefinancial year ended 31st March 2019 have been prepared in accordance with Section 129(3)of the Companies Act 2013 (the Act'). Further a statement containing salientfeatures of the financial statements of the Subsidiary Company in the prescribed formatAOC-1 is annexed and marked as Annexure B to this Report.
In accordance with section 136 of the Act the Audited Financial Statements includingthe consolidated financial statements and related information of the Company and auditedaccounts of its subsidiary Company are available on Company's websitewww.skpsecurities.com . These documents will also be available for inspection till thedate of the AGM during business hours at our Registered Office.
SUBSIDIARIES JOINT VENTURES & ASSOCIATES
Your Company has one wholly owned subsidiary viz. SKP Insurance Advisors PrivateLimited. With low levels of operations primarily in the field of insurance advisory ithas earned profits during the year under review.
Further your Company does not have any Joint Venture and Associate Company.
Your Company believes in transparent and ethical corporate governance practices. TheCompany has taken requisite steps to comply with recommendations concerning CorporateGovernance.
Detailed report on the Corporate Governance together with Auditors Certificateregarding compliance of conditions of Corporate Governance as stipulated under Regulation34 of SEBI (LODR) Regulations 2015 forms an integral part of this Report which isannexed and marked as Annexure C to this Report.
Mr. Santanu Ray was appointed as an Additional Independent Director of the Companyby the Board of Directors at their meeting held on 5 th May 2018 and his appointment wasregularized as Non Executive Independent Director at the last AGM held on 28th July 2018.
Mr. Saurabh Sonthalia who qualifies to be an Independent Director onrecommendation of the Nomination and Remuneration Committee and after obtaining regulatoryapprovals was appointed as an Additional Director of the Company by the Board ofDirectors at their meeting held on 10th November 2018 to hold office up to the conclusionof the ensuing AGM. He possess appropriate skills experience and knowledge inter alia inFinancial Markets. Accordingly it is proposed to appoint Mr. Sonthalia as an NonExecutive Independent Director for a first term of five consecutive years to hold officefrom the conclusion of 29th AGM up to the conclusion of 34th AGM to be held in thecalendar year 2024 subject to approval of shareholders at the ensuing AGM.
Mr. Ravi Todi was appointed as an Non Executive Independent Director at the 24thAGM of the Company held on 27th September 2014 for a first term of five consecutive yearswhose term ends at the conclusion of ensuing AGM of the Company. On recommendation ofNomination and Remuneration Committee the Board of Directors have re-appointed Mr. RaviTodi as an Non Executive Independent Director for a second term of five consecutive yearseffective from conclusion of 29th AGM up to the conclusion of 34th AGM to be held in thecalendar year 2024 subject to approval of shareholders at the ensuing AGM.
Mrs. Manju Pachisia who is a Non-Executive/Non-Independent Director of the Companywill retire by rotation at the ensuing AGM of the Company in accordance with theprovisions of Section 152(6) of the Act being eligible offers herself for reappointment.The Board recommends her reappointment.
Mr. Kishore Bhimani who is a Non-Executive Independent Director of the Companywhose term ends at the conclusion of ensuing AGM of the Company has intimated hisintention to retire from the Board of Directors and all its Committees at the ensuing AGMafter serving the Board for a period of about 14 years. Your Directors wish to place onrecord their appreciation for his service and contribution made during his tenure as aDirector of the Company.
KEY MANAGERIAL PERSONNEL
During the year there were no changes in Key Managerial Personnel.
NOMINATION AND REMUNERATION POLICY
Based on the recommendation of the Nomination and Remuneration Committee revisedNomination & Remuneration Policy and Code of Conduct for Board Members and SeniorManagement Personnel were adopted by the Board of Directors at their meeting held on 2ndFebruary 2019 and the same is also available on the Company website www.skpsecurities.com.
INDEPENDENT DIRECTOR'S DECLARATION
The Company has received requisite declarations from all Independent Directors inaccordance with the provisions of section 149(7) of the Act stating that they meet thecriteria of independence as laid down in Section 149(6) of the Act and Regulation 25 ofSEBI (LODR) Regulations 2015.
In accordance with the provisions of the Act none of the Non-Executive IndependentDirectors are liable to retire by rotation.
FAMILIARIZATION PROGRAM FOR INDEPENDENT DIRECTORS
Your Company conducts a Familiarization Program when new Director(s) is/are appointedduring the year. The program aims to provide insights into the Company to enableIndependent Directors to understand its business and processes in depth and to assist themin performing their role as Independent Director of the Company. Details ofFamiliarization Program for Independent Directors are provided in the Corporate GovernanceReport and are also available on the Company's website www.skpsecurities.com .
Your Company has laid down the process and criteria for Annual Performance Evaluationof the Board its Committee and Individual Directors. In terms of the provisions of theAct and SEBI (LODR) Regulations 2015 the Board of Directors carried out evaluationprocess of its own performance its various committees and individual Directors. Astructured questionnaire was prepared after taking into consideration inputs received fromthe Directors covering various aspects of the Board's functioning. The criteria appliedin the evaluation process are explained in the Corporate Governance Report.
The Independent Directors met on 10th November 2018 and reviewed the performance of theBoard its Committees and Individual Directors.
BOARD & COMMITTEE MEETINGS
During the year under review the Board met four times on 5th May 2018 28th July 201810th November 2018 and 2nd February 2019. The intervening gap between the meetings waswithin the period prescribed under the Act.
At present the Board of Directors has the following four committees:
i) Audit Committee
ii) Nomination and Remuneration Committee
iii) Stakeholders Relationship Committee
iv) Corporate Social Responsibility Committee
The details of composition of the Board its various Committees brief terms ofreference meetings held and attendance of the Directors are provided in the CorporateGovernance Report.
AUDITORS' AND AUDIT REPORT
M/s. G.P. Agrawal & Co. (FRN No: 302082E) Chartered Accountants Kolkata wereappointed as Statutory Auditors of the Company for a period of five consecutive years atthe 27th Annual General Meeting held on 29th July 2017 to hold office from the conclusionof the said meeting till the conclusion of the 32nd Annual General Meeting of the Companyto be held in the Calender Year 2022. The requirement for the annual ratification ofAuditors appointment at the AGM has been omitted pursuant to Companies (Amendment) Act2017 notified on 7th May 2018.
The Auditors have given a confirmation to the effect that they are eligible to continuewith their appointment and have not been disqualified in any manner from continuing asStatutory Auditor.
The Auditors Report for the Financial Year ended 31st March 2019 does not contain anyqualification reservation or adverse remark. Further the Auditors of the Company havenot reported any fraud as specified under Section 143(12) of the Act. The Auditors Reportis enclosed with the financial statements in this Report.
Mr. Anil Murarka Practicing Company Secretary (FCS: 3150 CP No: 1857) Proprietor ofM/s. A. Murarka & Co. Kolkata was appointed to conduct the Secretarial Audit of theCompany for the Financial Year 2018-19 pursuant to the provisions of Section 204 of theAct the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 andthe SEBI (LODR) Regulations 2015. The Secretarial Audit Report is annexed and marked as AnnexureD. The said report does not contain any observation or qualification or adverse remarkrequiring explanation.
EXTRACT OF THE ANNUAL RETURN
The extract of the Annual Return in Form MGT- 9 in accordance with Section 92(3) of theAct read with the Companies (Management and Administration) Rules 2014 is annexed andmarked as Annexure E to this report. Further the Annual Return would be placed onthe website of the Company and can be accessed at www.skpsecurities.com .
CORPORATE SOCIAL RESPONSIBILITY (CSR)
Your Company had constituted a CSR Committee in compliance with Section 135 of the Act.On the recommendation of the CSR Committee the Board has approved the CSR Policy of theCompany and the web link for the same ishttp://www.skpsecurities.com/index.php/investor/policies . The annual report on CSRactivities is annexed and marked as Annexure F to this report.
RELATED PARTY TRANSACTIONS
All transactions entered into with related parties during the year was in ordinarycourse of business and on arm's length basis and are in compliance with the applicableprovisions of the Act and SEBI (LODR) Regulations 2015 details of which are provided innotes to financial statements which forms an integral part of this Report.
All new related party transactions are first placed before the Audit Committee andthereafter placed before the Board for their consideration and approval. A prior omnibusapproval of the Audit Committee is obtained on an annual basis for the transactions whichare of foreseen and repetitive nature.
The particulars of contracts or arrangements with related parties referred to inSection 188(1) of the Act read with Rule 15 of the Companies (Meetings of Board and itsPowers) Rules 2014 in Form AOC-2 is not applicable for the Financial Year 2018-19. Therevised Policy on Related Party Transaction was adopted by the Board of Directors at itsmeeting held on 2nd February 2019 and the same is hosted on the website of the Companywww.skpsecurities.com .
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS
Your Company did not provide any Loans or Guarantees in terms of provisions of Section186 of the Act. The details of Investments made are provided in Notes to the FinancialStatements which forms an integral part of this Annual Report.
PARTICULARS OF EMPLOYEES
Information sought under Section 197(12) of the Act read with Rule 5 of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 is annexed and markedas Annexure G to this Report.
Your Company recognizes that risk is an integral part of business and is committed tomanaging the risks in a proactive and efficient manner. Your Company has implemented anintegrated Risk Management framework through which it reviews and assesses significantrisks on a regular basis to help ensure that there is a robust system of risk controls andmitigation in place. Senior management periodically reviews this risk management frameworkto keep updated and address emerging challenges. In the opinion of the Board at presentthere are no risks which threaten the existence of the Company.
VIGIL MECHANISM / WHISTLE BLOWER POLICY
Your Company has a well established Whistle Blower Policy as part of vigil mechanismfor Directors and Employees to report their genuine concerns in compliance with provisionsof Section 177(10) of the Act and Regulation 22 of SEBI (LODR) Regulations 2015. Thismechanism also provides for adequate safeguards against victimization of DirectorsEmployees who avail of the mechanism and also provides for direct access to the Chairmanof the Audit Committee.
During the year under review none of the Directors/Employees were denied access to theChairman of the Audit Committee and that no complaints were received during the year. Theweb link of the said Policy is http://www.skpsecurities.com/index.php/investor/policies .
DISCLOSURE IN TERMS OF SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITIONAND REDRESSAL) ACT 2013
All women who are associated with the Company either as permanent or temporaryemployees or contractual or trainees etc are covered under the above policy. Your Companyhas zero tolerance towards sexual harassment at workplace. No complaints relating tosexual harassment were received during the year.
INVESTOR EDUCATION AND PROTECTION FUND (IEPF)
Pursuant to the applicable provisions of the Act read with IEPF Authority (AccountingAudit Transfer and Refund) Rules 2016 as amended all unpaid or unclaimed dividends arerequired to be transferred by the Company to the IEPF after completion of seven years.Further the shares on which the dividend had remained unpaid or unclaimed by theshareholders for seven consecutive years or more are also be transferred to the demataccount of the IEPF Authority.
INTERNAL FINANCIAL CONTROLS
The Company has an Internal Control System commensurate with size scale andcomplexity of its operations to ensure proper recording of financial and operationalinformation and compliances of various internal controls and other regulatory andstatutory compliances. During the year under review no material or serious observationhas been reviewed from the Internal Auditor of the Company for inefficiency or inadequacyof such controls.
Audit Committee in consultation with the Internal Auditor formulates the scopefunctioning periodicity and methodology for conducting the Internal Audit. Based on theInternal Audit Report corrective actions in the respective area are undertaken andcontrols are strengthened.
ENERGY CONSERVATION TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
Information sought under the provisions of Section 134(3)(m) of the Act read with Rule8 of the Companies (Accounts) Rules 2014 is annexed and marked as Annexure H tothis Report.
The details of the policies approved and adopted by the Board are annexed and marked asAnnexure I to this report.
DIRECTOR'S RESPONSIBILITY STATEMENT
Pursuant to the provisions of Section 134(3)(c) read with Section 134(5) of the Actthe Board of Directors to the best of its knowledge and ability confirm that:
a) in the preparation of the annual accounts the applicable accounting standards havebeen followed along with proper explanation relating to material departures if any;
b) 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 and loss of the Company for that period;
c) the directors have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of this Act for safeguarding theassets 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 have laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and were operatingeffectively;
f) the directors have devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.
Your Company complies with all the applicable Secretarial Standards issued by theInstitute of Companies Secretaries of India.
Your Directors state that no disclosure or reporting is required in respect of thefollowing items as there were no transactions on these items during the year under review:
1. No equity shares with differential rights as to dividend voting or otherwise orshares (including sweat equity shares) to employees of the Company under any scheme wereissued.
2. No Deposits covered under Chapter V of the Act were accepted.
3. Neither the Managing Director nor Whole-time Director of the Company received anyremuneration or commission from its subsidiary.
4. No significant or material orders were passed by any regulatory authority or courtsor tribunals impacting the going concern status and Company's operation in future.
5. Except the approval of Buy-Back by the Board of Directors no other material changesand commitments have occurred after the close of financial year till date of this Reportwhich affects the financial position of the Company.
GRATITUDE & ACKNOWLEDGEMENT
Your Directors expresses its deep gratitude to clients business associatesprincipals bankers regulators exchanges depositories and shareholders for theirvaluable contribution towards the progress of the Company. Your Directors particularlywish to place on record their sincere appreciation of the best efforts put in by theemployees at all levels but for which the Company could not have achieved what it didduring the year under review.
| ||For and on behalf of the Board || |
|Registered Office: || || |
|Chatterjee International Centre ||Naresh Pachisia ||Nikunj Pachisia |
|Level-21 33A Jawaharlal Nehru Road ||Managing Director ||Whole-time Director |
|Kolkata - 700 071 ||DIN: 00233768 ||DIN: 06933720 |
|Date: 27th April 2019 || || |