Adcon Capital Services Ltd Directors Report.

Dear Shareholders,

Your Directors are pleased to present the 25th Annual Report together with the Audited Accounts for the year ended March 31, 2019.

CORPORATE OVERVIEW:

Adcon Capital Services Limited, (“the Company”) is a registered Non - Banking Financial Company (NBFC) holding certificate of registration from Reserve Bank of India. It is a listed NBFC Company, engaged in the business of providing loans, investment in securities of other companies and providing other related Financial and Consultancy Services and a professionally managed company.

FINANCIAL PERFORMANCE:

The summary of operating results for the year is given below:

(Amt. in Lacs)
Particulars

For the financial year ended

31st March, 2019 31st March, 2018
Total Income 24.19 30.02
Less: Total Expense 18.25 15.52
Profit Before Tax 5.94 14.50
Less: Tax Expense 0.39 1.09
Profit / (Loss) for the year 5.55 13.41

RESULTS OF OPERATIONS:

Total revenue of the Company for the financial year is Rs.24,19,156/-as compare to Rs. 30,02,550/- in the corresponding previous year and the Company has earned net profit of Rs.5,54,689/- as compared to Rs. 13,41,130/- in the corresponding previous year. The income comprises of activities in the business of financing to corporates and small and medium enterprises sector and investments in securities.

DIVIDEND:

In order to conserve the reserves to meet the needs of increased operation of the Company, the Board of Directors has decided not to declare dividend for the year.

TRANSFER TO STATUTORY RESERVES:

Your Company being a registered Non - banking Financial Company (NBFC) in terms of provisions of Section 45(IC) of Reserve Bank of India Act, 1934, required to transfer minimum 20% of its Net Profit to reserves under this section, accordingly, as per directions of RBI your Board has recommended to transfer an amount equal to 20% of net profits of Company from financial year 2000-2001 to 2018-19 amounting to Rs.6,90,413 to Statutory Reserves u/s 45(IC) of the RBI Act,1934.

SHARE CAPITAL:

The paid up Equity Share Capital as at March 31,2019 stood at Rs.3,55,11,000. During the year under review, the Company has not issued shares with differential voting rights nor has granted any stock options or sweat equity. As on March 31,2019, none of the Directors of the Company hold instruments convertible into equity shares of the Company. The Companys Equity Shares are listed on BSE Limited and available for trading.

DEPOSITS:

Your Company has not accepted any fixed deposits from the public and is therefore not required to furnish information in respect of outstanding deposits under Non-Banking Financial Companies (Reserve bank) Directions, 1966 and Companies (Acceptance of Deposits) Rules, 1975. Further, the Company has not accepted or renewed any amount falling within the purview of provisions of Section 73 of the Companies Act, 2013 read with the Companies (Acceptance of Deposit) Rules, 2014 during the year under review. Hence, the details relating to deposits which are not in compliance with Chapter V of the Act are not applicable.

MATERIAL CHANGES AND COMMITMENTS:

In terms of Section 134(3)(i) of the Companies Act, 2013, no material changes and commitment made between the end of financial year and the date of report which could affect the Financial position of the Company.

INTERNAL FINANCIAL CONTROLS:

The Internal Financial Controls with reference to financial statements as designed and implemented by the Company are adequate as per the nature of the business, the size and complexity of its operation. The Company has a strong and independent in-house Internal Audit (“IA”) department that functionally reports to the Chairman of the Audit Committee, thereby maintaining its objectivity. Remediation of deficiencies by the IA department has resulted in a robust framework for internal controls.

During the year under review, no material or serious observation has been received from the Internal Auditors of the Company for inefficiency or inadequacy of such controls.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS BY COMPANY:

The Company being Non - Banking Financial Company (NBFC), the details required under section 134(3)(g) of the Companies Act, 2013 are not required as the provisions of Section 186 of the Companies Act, 2013 are not applicable to the Company.

PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES:

During the year there are no such details which are required to be disclosed in terms of provisions of Section 188(1) of the Companies Act, 2013, accordingly the requirement to disclose in Form AOC - 2 is not required.

DIRECTORS AND KEY MANAGERIAL PERSONNEL:

Board of Directors of your Company comprises of four (4) Directors and all of them being Non - Executive Directors as on March 31,2019.

The members in the last Annual General Meeting held on September 25, 2018 have appointed Mr. Sandeep Jha as an Independent Director for a period of 5 years i.e. from February 14, 2018 to February 13, 2023. Mr. Manjit Jajoo, Independent Director who was appointed at the Annual General Meeting of the Company held on September 30, 2014 for a period of 5 years i.e. from April 1,2014 to March 31,2019, whose term is expired on March 31,2019 and is eligible for reappointment. The Board at their meeting held on March 25, 2019, based on the recommendation of the Nomination and Remuneration Committee approved the re-appointment of Mr. Manjit Jajoo for a further period of 5 year i.e. from April 1,2019 to March 31,2024, subject to the approval of the shareholders. The approval of the shareholders relating to Mr. Manjit Jajoos re-appointment is being sought at the forthcoming Annual General Meeting.

In accordance with the provisions of Section 152 of the Companies Act, 2013 and the Companys Articles of Association, Mr. Sanjay Minda retires by rotation at the forthcoming Annual General Meeting and being eligible, offer himself for re-appointment.

Your Directors on the recommendation of Nomination and Remuneration Committee has appointed Mr. Manoj Kumar Mishra, as a Chief Executive Officer w.e.f. April 1,2019. Pursuant to the provisions of Section 203 of the Act, the KMPs of the Company are; Mr. Manoj kumar Mishra, Chief Executive Officer and Mr. Sanjaykumar Vishwakarma, CFO & Company Secretary (resigned w.e.f. 17.07.2019).

DECLARATION OF INDEPENDENCE UNDER SECTION 149 (6) OF THE COMPANIES ACT, 2013:

Your Company has received the declaration of Independence as provided under section 149(6) of the Act from all the Independent Directors. Further, the familiarisation program for Independent Directors is also available on website of the Company viz. www.adconcap.com.

NUMBER OF MEETINGS OF THE BOARD:

During the year the Directors met at regular interval and gap between the two meetings does not exceed the minimum required. The Board met five (5) times during the financial year on May 30, 2018, August 14, 2018, November 14, 2018, February 14, 2019 and March 25, 2019.

AUDIT COMMITTEE:

The Audit Committee of Directors was constituted pursuant to the provisions of Section 177 of the Companies Act, 2013. The composition of the Audit Committee is in conformity with the provisions of the said section and Regulation 18 of the SEBI (LODR) Regulations, 2015. The Composition and the functions of the Audit Committee of the Board of Directors of the Company are disclosed in the Report on Corporate Governance, which is forming a part of this report. During the year under review, the Board of Directors of the Company had accepted all the recommendations of the Committee.

NOMINATION AND REMUNERATION COMMITTEE:

The Nomination and Remuneration Committee (NRC) of Directors was constituted by the Board of the Company in accordance with the requirements of Section 178 of the Companies Act, 2013 and Regulation 19 of the SEBI (LODR) Regulations, 2015.

The Board of Directors has framed a policy which lays down a framework in relation to remuneration of Directors, Key Managerial Personnel and Senior Management of the Company. This policy also lays down criteria for selection and appointment of Board Members. The Nomination and Remuneration Policy of the Company is attached herewith as “Annexure - A”.

STAKEHOLDERS RELATIONSHIP COMMITTEE:

Pursuant to Section 178 of the Companies Act, 2013 and the Regulation 20 of the SEBI (LODR) Regulations, 2015, the Board of Directors of the Company has constituted the Stakeholders Relationship Committee.

The Composition and the functions of the Stakeholders Relationship Committee of the Board of Directors of the Company are disclosed in the Report on Corporate Governance, which is forming a part of this report.

PERFORMANCE EVALUATION:

Pursuant to the provisions of the Companies Act, 2013 and Regulation 17 of the SEBI (LODR) Regulations, 2015 a criteria for performance evaluation of Directors was prepared after taking into consideration various aspects of the Boards functioning, composition of the Board and its committees, culture, execution and performance of specific duties, obligations and governance.

The Board of Directors has carried out an annual evaluation of its own performance, Board Committees, and individual directors pursuant to the provisions of the Act and the SEBI (LODR) Regulations. The Board evaluated its performance after seeking inputs from all the directors on the basis of criteria such as the Board composition and structure, effectiveness of board processes, information and functioning, etc. The performance of the Committees was evaluated by the Board after seeking inputs from the committee members on the basis of criteria such as the composition of committees, effectiveness of committee meetings, etc.

The performance evaluation of the Independent Directors was completed. The performance evaluation of the Chairman and Non-Independent Director was also carried out by the Independent Directors. The Board of Directors expressed their satisfaction with the evaluation process.

STATEMENT OF COMPLIANCE WITH SECRETARIAL STANDARDS:

Your Directors confirm that the Company has complied with applicable secretarial standards.

EXTRACT OF ANNUAL RETURN:

As required under Section 92 of Companies Act, 2013 the detailed extract of the Annual Return in form MGT - 9, is attached as “Annexure - B” and forms part of this report. In compliance with section 134(3)(a) of the Act, MGT 9 is also uploaded on Companies website and can be accessed at www.adconcap.com

DIRECTORS RESPONSIBILTY STATEMENT:

Pursuant to the requirement under Section 134(5) of the Companies Act, 2013 with respect to Directors Responsibility Statement, it is hereby confirmed:

a) that in the preparation of the Annual Accounts for the year ended March 31,2019, the applicable accounting standards had been followed along with proper explanation relating to material departures, if any;

b) the Directors had selected such accounting policies and applied them consistently and made judgments 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 ended on March 31,2019 and profit of the Company for that period;

c) that the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d) the directors had prepared the annual accounts on a going concern basis;

e) that the Directors had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and

f) that the Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

WHISTLE BLOWER POLICY:

The Board has, pursuant to the provisions of Section 178(9) of the Companies Act, 2013 read with rule 7 of the Companies (Meetings of Board and its Powers) Rules, 2014 and as per (LODR) Regulations, 2015 framed whistle blower policy to report genuine concerns or grievances. The whistle blower policy has been posted on the website of the Company (www.adconcap.com). During the year no such instance was reported in the Company.

STATUTORY AUDITORS:

There is no audit qualification or observation on the financial statements of Company, by the statutory auditors for the year under review. M/s. Gupta Saharia & Co., Chartered Accountants, (Firm Registration No. 103446W) the Statutory Auditors of the Company, were appointed at 20th Annual General Meeting until the conclusion of 25th Annual General Meeting of Company (subject to ratification of appointment by the members at every AGM) in terms of the provisions of Section 139 of the Companies Act, 2013.

Since the term of Statutory Auditors of the Company i.e. M/s. Gupta Saharia & Co., Chartered Accountants has completed in this 25th AGM and pursuant to recommendation of Audit Committee the Board of Directors had approved the re-appointment of M/s. Gupta Saharia & Co., Chartered Accountants as per section 139 of the Companies Act, 2013. Accordingly, the resolution for re-appointment of M/s. Gupta Saharia & Co., Chartered Accountants as Statutory Auditors has been set forth for approval of Shareholder from conclusion of 25th Annual General Meeting till the conclusion of 27th Annual General Meeting.

The Company has received confirmation from M/s. Gupta Saharia & Co., to the effect that they fulfill the eligibility criteria as prescribed under Section 139 and 141 of the Companies Act, 2013. Your Directors recommends the re-appointment as the Statutory Auditors in the notice of ensuing 25th Annual General Meeting.

SECRETARIAL AUDIT AND MANAGEMENTS REPLY TO OBSERVATIONS BY THE SECRETARIAL AUDITOR:

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and rules made thereunder, the Company has appointed Jain Rahul & Associates, practicing company secretaries to undertake the Secretarial Audit of your Company. The Secretarial Audit Report is included as “Annexure - C” and forms an integral part of this report.

With respect to the observations made in the Secretarial Audit Report in their report, your Board of Directors provides clarification as under:

As required under section 45(IC) of the Reserve Bank of India Act, 1934 on the recommendation of the Board of Director the Company has transferred 20% of Net Profits of the current year including of the previous years to Statutory Reserve Account and a separate note is being forming part of the Notes to Accounts refer note no. E.

The Company has appointed the whole time key managerial personnel as mentioned in clause (i) of subsection (1) of section 203 of the Companies Act, 2013 on April 01,2019.

The Company is obtained one more Credit Information Company membership and is in process of obtaining membership of two remaining CICs as well.

CORPORATE GOVERNANCE:

In terms of the provisions of regulation 15 (2) of Securities and Exchange Board of India (Listing Obligation and Disclosure Requirements) Regulation, 2015 the compliance with Corporate Governance provisions as specified is not applicable as your Companys paid up equity share capital is not exceeding Rs.10 Crores and net worth is not exceeding Rs.25 Crores as on March 31,2019. However your Company has complied with the requirements of Corporate Governance as stipulated under the various Regulations of the LODR and accordingly, the Report on Corporate Governance forms part of this Annual Report as “Annexure - D”.

MANAGEMENTS DISCUSSION AND ANALYSIS REPORT:

The Managements Discussion and Analysis Report for the year under review, as stipulated under Regulation 34(3) read with Schedule V(B) of the SEBI (LODR) Regulations, 2015 is given in “Annexure - E” to this report.

ENERGY CONSERVATION, TECHNOLOGY ABSORPTION:

Considering the nature of the business of your Company there are no particulars which are required to be furnished in this report relating to conservation of energy and technology absorption.

FOREIGN EXCHANGE EARNINGS AND OUTGO:

The Foreign Exchange earnings and outgo of the Company during the year under review amounted to Rs. Nil.

DISCLOSURE UNDER THE SEXUAL HARRASMENT OF WOMEN AT THE WORKPLACE (PREVENTION, PROHIBITION & REDRESSAL) ACT, 2013:

Presently, the compliance with respect to Sexual Harassment of Women at the workplace (Prevention, Prohibition & Redressal) Act, 2013 is not applicable to the Company as there is no woman employee (permanent, contractual, temporary, trainees) employed in the Company. However the working environment in your company remains cordial and employee friendly.

ACKNOWLEDGEMENTS:

The Board of Directors places on record its gratitude to the Ministry of Corporate Affairs (MCA), Reserve Bank of India (RBI), Stock Exchanges, other government and regulatory authorities, financial institutions and correspondent banks for their strong support and guidance. The Board acknowledges the support of the shareholders and also places on record its sincere thanks to its valued clients and customers for their continued patronage.

For and on behalf of the Board of Directors

Sd/-
Place: Mumbai Sanjay Minda
Date: 30.05.2019 Chairman

ANNEXURE A

NOMINATION AND REMUNERATION POLICY OF ADCON CAPITAL SERVICES LIMITED

Policy Title Nomination and Remuneration Policy
Authorised by Board of Directors

The Nomination and Remuneration Committee and this Policy shall be in compliance with Section 178 of the Companies Act, 2013 read along with the applicable rules thereto and Regulation 19 of the SEBI (LODR) Regulations, 2015. The Key Objectives of the Committee would be:

1. OBJECTIVE:

• To guide the Board in relation to appointment and removal of Directors, Key Managerial Personnel and Senior Management;

• To evaluate the performance of the members of the Board and provide necessary report to the Board for further evaluation of the Board;

• To recommend to the Board on Remuneration payable to the Directors, Key Managerial Personnel and Senior Management;

• To provide to Key Managerial Personnel and Senior Management reward linked directly to their effort, performance, dedication and achievement relating to the Companys operations;

• To retain, motivate and promote talent and to ensure long term sustainability of talented managerial personnels and create competitive advantage;

• To devise a policy on Board diversity;

• To develop a succession plan for the Board and to regularly review the plan

2. DEFINITIONS:

• “Act” means the Companies Act, 2013 and Rules framed thereunder, as amended from time to time.

• “Board” means Board of Directors of the Company.

• “Directors” mean Directors of the Company.

• “Key Managerial Personnel” means -

a) Chief Executive Officer or the Managing Director or the Manager or Whole-time director or Chief Financial Officer or Company Secretary.

b) “Senior Management” means Senior Management means personnel of the company who are members of its core management team excluding the Board of Directors including Functional Heads.

3. COMPOSITION:

• The Committee shall consist of a minimum three non-executive directors, majority of them being independent.

• Minimum two (2) members shall constitute a quorum for the Committee meeting.

• Membership of the Committee shall be disclosed in the Annual Report.

• Term of the Committee shall be continued unless terminated by the Board of Directors.

• Chairperson of the Committee shall be an Independent Director.

• Chairperson of the Company may be appointed as a member of the Committee but shall not be a Chairman of the Committee.

• In the absence of the Chairperson, the members of the Committee present at the meeting shall choose one amongst them to act as Chairperson.

• Chairman of the Nomination and Remuneration Committee meeting could be present at the Annual General Meeting or may nominate some other member to answer the shareholders queries.

4. ROLE OF COMMITTEE:

Matters to be dealt with, perused and recommended to the Board by the Nomination and Remuneration Committee:

• The Committee shall identify and ascertain the integrity, qualification, expertise and experience of the person for appointment as Director, KMP or at Senior Management level and recommend to the Board his / her appointment.

• A person should possess adequate qualification, expertise and experience for the position he / she is considered for appointment. The Committee has discretion to decide whether qualification, expertise and experience possessed by a person is sufficient / satisfactory for the concerned position.

• The Company shall not appoint or continue the employment of any person as Whole-time Director who has attained the age of seventy years. Provided that the term of the person holding this position may be extended beyond the age of seventy years with the approval of shareholders by passing a special resolution based on the explanatory statement annexed to the notice for such motion indicating the justification for extension of appointment beyond seventy years.

• The Committee shall carry out evaluation of performance of every Director, KMP and Senior Management Personnel at regular interval (yearly).

• Due to reasons for any disqualification mentioned in the Act or under any other applicable Act, rules and regulations thereunder, the Committee may recommend, to the Board with reasons recorded in writing, removal of a Director, KMP or Senior Management Personnel subject to the provisions and compliance of the said Act, rules and regulations.

• The remuneration / compensation / commission etc. to the Whole-time Director, KMP and Senior Management Personnel will be determined by the Committee and recommended to the Board for approval. The remuneration / compensation / commission etc. shall be subject to the prior/post approval of the shareholders of the Company and Central Government, wherever required.