Cil Securities Ltd Directors Report.

Dear Members,

Your Directors present the 30th Annual Report and the Audited Accounts for the Financial Year ended 31st March 2019.

FINANCIAL RESULTS

The Financial performance of the Company for the Financial Year ended 31st March, 2019 is summarized below:

(Rs. in Lakhs)
Particulars Year Ended 31.03.2019 Year Ended 31.03.2018
Total Revenue 428.44 675.96
Profit before Interest,
Depreciation & Tax 38.66 165.56
Profit before Depreciation and Tax 38.66 165.56
Depreciation 12.14 13.76
Profit Before Tax 26.52 151.8
Less: Provision for Tax (Net) 4.83 33.29
Profit After Tax 21.69 118.51
Add: Balance Brought Forward
from the last year 1290.61 1183.96
Profit available for Appropriation 1312.30 1302.47

The Companys Profit after Tax is Rs. 21.69 Lakhs (Previous Year Rs. 118.51 Lakhs). The Board recommends transfer of a sum of Rs.2.16 Lakhs(Previous Year Rs. 11.86Lakhs) to General Reserve.

DIVIDEND

Your Directors are pleased to recommend the payment of dividend on Equity Shares @ Rs. 0.50 per share for the Financial Year ending 31-03-2019.

MATERIAL CHANGES AND COMMITMENTS

There were no material changes and commitments, affecting the financial position of the Company which have occurred between the end of the Financial Year of the Company to which the financial statements related and the date of this report.

MARKET REVIEW

FY18-19 was the year of record highs for the markets, where the SENSEX and the NIFTY rallied 15% and 17% year over year, respectively. However, not all was green as volatility played a pivotal role in shaping market direction during the year. In the beginning of year, positive economic outlook for the Indian economy buoyed the markets, as it continued to be the best performer in the emerging market space. Notably, India was largely oblivion to the global trade tensions that roiled other EMs, given its domestic-consumption driven economy.

As such, the S&P BSE Sensex ended the month of July 2018, at the then-all time high of 37606. The rally escalated further into August, with the NIFTY gaining 14% between April-August. However, the highs were short-lived as markets took a sharp down turn in September dented by fallout of Indias leading infrastructure financing company. This raised concern over lack of liquidity in the NBFC space, driving major sell-offs in peer companies.

This, along with rising interest rate environment in the U.S and a strengthening dollar against the rupee, resulted in massive sell-off from the FIIs during the first half of FY19. Notably, they pulled out nearly $4 billion from Indian market during the period. In addition, weak corporate governance, primarily in the BFSI space, and falling consumption demand, kept investors at bay from select sectors.However, India benefitted from the US-China trade tensions, a drop in crude prices, and strong buying by domestic funds. This helped it in becoming the best performing market of Asia in CY2018.Nonetheless, FIIs fuelled the markets in the end of FY19, by pumping in over $5 billion.

MARKET OUTLOOK

Markets commenced FY19-20 with continuation of the market rally witnessed in March. April and May saw extension of the rally, as the incumbent government returned to power for a second term with a larger majority than the one witnessed in 2014. Going forward, the current slowdown in auto sector, which has led to production and plant shutdowns across players like Maruti, Bajaj Auto, M&M, Ashok Leyland and Tata Motors, will continue to be tepid. However, analysts expect to see gradual improvement in the second half of FY20. Further, demand for rural-related sectors like fertilizers and commercial vehicles (like tractors), will likely remain muted owing to deficient monsoon experienced year to date. FMCG companies with exposure to Tier 2 and 3 cities, too, will likely witness subdued demand over the coming few quarters. In addition, sectors like cement and infrastructure are likely to perform well given governments focus on building infrastructure and construction activities.

SHARE CAPITAL

During the Financial Year 2018-19, the Share Capital of the Company has remained unchanged

EXTRACT OF ANNUAL RETURN

The details forming part of the extract of the Annual Return, in format MGT -9, for the Financial Year 2018-19 has been enclosed with this report.

The same is also placed on the website of the Company www.cilsecurities.com

NUMBER OF BOARD MEETINGS

Four Board Meetings were held during the Financial Year 2018-19 which are as follows: 22.05.2018, 11.08.2018, 03.11.2018 and 09.02.2019.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

In accordance with the provisions of Section 152 of the Companies Act 2013 Shri K K Maheshwari and Shri Piyush Modi, retires by rotation at the ensuing Annual General Meeting and being eligible offer themselves for reappointment. The Board in its meeting held on 25.05.2019 has approved the re-appointment of Shri K K Maheshwari as a Managing Director for a period of five years effective from 31st July, 2019. The said appointment is subject to the approval of members in the forthcoming Annual General Meeting through item no.5.

The Board in its meeting held on 25.05.2019 has approved the re-appointment of Shri Budhi Prakash Toshniwal and Shri F R Bhote as Independent Directors for a period of five years (2nd Term) effective from 01st October, 2019 to the Annual General Meeting to be held in 2024. The said appointment(s) are subject to the approval of members in the forthcoming Annual General Meeting through item no.6 and 7.

POLICY ON DIRECTORS APPOINTMENT AND REMUNERATION

(Includingcriteria for determining qualification, positive attributes, independence of a director, policy relating to remuneration for Directors, Key Managerial Personnel and other employees)

Policy on Directors Appointment

Policy on Directors appointment is to follow the criteria as laid down under the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and good corporate practices. Emphasis is given to persons from diverse fields or professions.

Policy on Remuneration

Guiding Policy on remuneration of Directors, Key Managerial Personnel and employees of the Company is that -i Remuneration to Key Managerial Personnel, Senior Executives, Managers and staff is industry driven in which it is operating taking into account the performance leverage and factors such as to attract and retain quality talent. i For Directors, it is based on the shareholders resolutions, provisions of the Companies Act, 2013 and Rules framed therein, circulars and guidelines issued by Central Government and other authorities from time to time.

ANNUAL EVALUATION BY THE BOARD OF ITS OWN PERFORMANCE, ITS COMMITTEES AND INDIVIDUAL DIRECTORS

The Board of Directors of the Company has initiated and put in place evaluation of its own performance, its committees and individual directors. The result of the evaluation is satisfactory and adequate and meets the requirement of the Company.

DECLARATION OF INDEPENDENCE BY THE INDEPENDENT DIRECTORS

Pursuant to Section 149(6) of the Companies Act, 2013, Independent Directors of the Company have made a declaration confirming the compliance of the conditions of the Independence stipulated in the aforesaid section

REMUNERATION RATIO OF THE DIRECTOS / KEY MANAGERIAL PERSONNEL

The information required pursuant to Section 197 read with rule 5 of the Companies (Appointment and Remuneration) Rules, 2014 and Companies (Particulars of Employees) Rules 1975, in respect of employees of the Company and Directors is furnished hereunder:

A) Ratio of remuneration of each Director to the median remuneration of all the employees of your Company for the Financial Year 2018-19 as follows:

S.No Name Remuneration Paid in the FY 2018-19 in Rs. Ratio / Times per Median of employee remuneration
1 Shri Krishna Kumar Maheshwari 14,41,496/- 4.60
2 Shri Piyush Modi 6,00,000/- 1.91
3 Shri Ashok Kumar Inani 13,37,342/- 4.26

The aforesaid details are calculated on the basis of remuneration for the Financial Year 2018-19.

Median remuneration of the Company for all its employees is Rs 3,13,398/- for the Financial Year 2018-19.

B. Details of percentage increase in the remuneration of each Director and CFO and Company Secretary in the Financial Year 2018-19 are as follows:

Name Designation Remuneration in Rs. Increase %
2018-19 2017-18
Shri Krishna Kumar Maheshwari Managing Director 14,41,496/- 14,38,190/- 0.22
Shri Piyush Modi Whole Time Director 6,00,000/- 6,00,000/- 0.00
Shri Ashok Kumar Inani Director Finance/ CFO 13,37,342/- 12,42,843/- 7.60
Shri Govind Toshniwal Company Secretary 6,67,011/- 5,94,902/- 12.12

The remuneration to Directors is within the overall limits approved by the shareholders.

C. Percentage increase in the median remuneration of all employees in the Financial Year 2018-19:

Particulars 2018-19 2017-18 Increase / (decrease)%
Median remuneration of all employees per annum Rs.3,13,398/- Rs.2,87,429/- 9.03%

D. Number of permanent employees on the rolls of the Company as on 31st March, 2019 are 29 and as on 31st March, 2018 are 29.

E. Comparison of average percentage increase in salary of employees other than the key managerial personnel and the percentage increase in the key managerial remuneration:

Amount in Rs.
Particulars 2018-19 2017-18 Increase /(Decrease)%
Average Salary of all the Employees (Other than KMP) 3,56,282/- 3,12,532/- 14.00%
Salary of Key Managerial Personnel
Managing Director 14,41,496/- 14,38,190/- 0.22%
Whole Time Director 6,00,000/- 6,00,000/- 0.00%
Director Finance / CFO 13,37,342/- 12,42,843/- 7.60%
Company Secretary 6,67,011/- 5,94,902/- 12.12%

The increase in remunerations of employees other than the managerial personnel is in line with increase in remuneration of managerial personnel

F. There are no employees of the Company who receive remuneration in excess of the highest paid Director of the Company.

G. Affirmation:

Pursuant to Rule 5(1)(xii) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, it is affirmed that the remuneration paid to the Directors, Key Managerial Personnel and senior management is as per the Remuneration Policy of the Company.

AUDITORS REPORT

The observations made in the Auditors Report, read together with the relevant notes thereon are self-explanatory and hence, do not call for any comments.

STATUTORY AUDITORS

M/s. Sridhar Jhawar & Associates, Statutory Auditors of the Company hold office until the conclusion of 33rd Annual General Meeting.

The Members in their Annual General Meeting held on 28.09.2017 have appointed M/s Sridhar Jhawar and Associates, Chartered Accountants as Statutory Auditors of the Company to hold office for a period of 5 years until the conclusion of the Annual General Meeting to be held in the calendar year 2022.Ratification of their appointment by the members in every Annual General Meeting (AGM) is done away by Companies Amendment Act, 2017. Hence, no resolution to this effect is proposed in the Notice calling AGM.

INTERNAL AUDIT

Raju and Prasad, Chartered Accountants, Hyderabad are the internal auditors of the Company.

SECRETARIAL AUDIT

According to the provisions of section 204 of the Companies Act, 2013 read with Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Secretarial Audit Report submitted by Company Secretary in Practice is enclosed as a part of this report

WHISTLE BLOWER / VIGIL MECHANISM POLICY

In pursuance to the provisions of section 177 of the Companies Act, 2013 and SEBI(LODR) Regulations 2015, a Vigil Mechanism for Directors and Employees to report genuine concerns has been established. The Policy has been uploaded on the website of the Company.

RELATED PARTY TRANSACTIONS

Related Party transactions that were entered during the Financial Year were on an Arms Length Basis and were in the Ordinary Course of Business. There were no materially significant related party transactions with the Companys Promoters, Directors, Management and their relative, which could have had a potential conflict with the interests of the Company. Transactions with related parties entered by the Company in the normal course of business are periodically placed before the Audit Committee for its omnibus approval.

The Board of Directors of the Company has, on the recommendation of the Audit Committee, adopted a policy to regulate transactions between the Company and its Related Parties, in compliance with the applicable provisions of the Companies Act. 2013 and rules thereunder and the SEBI (LODR) Regulations, 2015. This policy was considered and approved by the Board and has been uploaded on the website of the Company.

PARTICULARS OF LOANS GIVEN, INVESTMENTS MADE, GUARANTEES GIVEN, AND SECURITIES PROVIDED

The Company has not given loans, guarantee or provided securities. However, a particular of investments made is provided in Notes to Financial Statements in Note no. 2 and 4.

LISTING ARRANGEMENTS

The Companys shares are listed on BSE LIMITED.

The Company has paid up to date annual listing fee of the Stock Exchange

PUBLIC DEPOSITS

During the year under review the Company has not accepted any public deposits.

INTERNAL COMPLAINTS COMMITTEE

The Company has formed Internal Complaints Committee as per the provision of Sexual Harassment Act (The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, wherein it mandates for every workplace and every employer in charge of a work place with more than 10 workers to constitute an Internal Complaints Committee as prescribed under the Act, for receiving complaints of sexual harassment.

The Company has not received any complaints

DETAILS OF ADEQUACY OF INTERNAL FINANCIAL CONTROLS:

Your Company has well established procedures for internal control across its various locations, commensurate with its size and operations. The organization is adequately staffed with qualified and experienced personnel for implementing and monitoring the internal control environment. The internal audit function is adequately resourced commensurate with the operations of the Company and reports to the Audit Committee of the Board.

INSURANCE

Adequate Insurance cover has been taken for properties of the Company including Buildings, Computers, Office Equipments, Vehicles, etc.

STATUTORY INFORMATION

Particulars of Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo, Information under Section 134(3)(m) of the Companies Act, 2013. The Company is not required to furnish information in Form A under the head Conservation of Energy under Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988.

The Company uses electric energy for its equipments such as air conditioners, computer terminals, lighting and utilities in the work premises. All possible measures have been taken for economic consumption and to conserve the same. Technologically updated UPS Systems have also been installed for proper service support. During the year under review, the Company does not have any Foreign Exchange earnings /outgo.

MANAGEMENTS DISCUSSION AND ANALYSIS REPORT

Managements Discussion and Analysis Report for the year under review, as stipulated under Regulation 34 of SEBI (LODR) Regulations 2015 is presented in a separate section forming part of the Annual Report.

DIRECTORS RESPONSIBILITY STATEMENT

The Directors Responsibility Statement referred to in clause (c) of sub-section (3) of Section 134 of the Companies Act, 2013, shall state that-

(a) In the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

(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 and of the profit of the company for that period;

(c) The directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act 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; and

(e) 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.

(f) 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.

CORPORATE GOVERNANCE

The Company is committed to maintain the highest standards of Corporate Governance even though the same is not applicable to the Company.

DEPOSITORY SYSTEM

The Companys shares are available for trading in depository systems of both the National Securities Depository Limited (NSDL) and the Central Depository Services India Limited (CDSL).

As on 24th May, 2019, a total of 49,09,260 Equity shares of the Company, which forms 98.18% of the Share Capital of the Company, stands dematerialized.

DEVELOPMENT AND IMPLEMENTAION OF RISK MANAGEMENT POLICY

The Company has been addressing various risks impacting the Company and the policy of the Company on risk management is provided in this report in Management discussions and Analysis.

INVESTOR EDUCATION AND PROTECTION FUND (IEPF):

In terms of the provisions of the Companies Act, the Company is obliged to transfer dividends which remain unpaid or unclaimed for a period of seven years from the date of declaration to the credit of the Investor education and Protection Fund established by the Central Government. Accordingly, the Members are hereby informed that the 7 years period for payment of the dividend pertaining to Financial Year 2011-2012 will expire on 03.10.2019 and thereafter the amount standing to the credit in the said account will be transferred to the "Investor Education and Protection Fund" of the Central Government.

The Due date for the transfer of Dividends to Investor Education and Protection Fund (IEPF) pertaining to previous Financial Years is given below:

Financial Year Date of Declaration of Dividend Last Date of Claiming Dividend Due date for transfer to Investor Education and Protection Fund (IEPF)
2011-12 28.08.2012 03.10.2019 02.11.2019
2012-13 30.09.2013 05.11.2020 04.12.2020
2013-14 28.07.2014 02.09.2021 02.10.2021
2014-15 15.09.2015 21.10.2022 20.11.2022
2015-16 30.09.2016 05.11.2023 04.11.2023
2016-17 28.09.2017 03.11.2024 02.12.2024
2017-18 29.09.2019 04.11.2025 03.12.2025

COMPOSITION OF CSR COMMITTEE AND CONTENTS OF CSR POLICY

Since the Company does not have the net worth of Rs. 500 Crore or more, or turnover of Rs. 1000 Crore or more, or a net profit of Rs. 5 Crore or more during the Financial Year, section 135 of the Companies Act, 2013 relating to Corporate Social Responsibility is not applicable and hence the Company need not adopt any Corporate Social Responsibility Policy.

DETAILS IN RESPECT OF FRAUDS REPORTED BY AUDITORS UNDER SUB SECTION (12) OF SECTION 143 OTHER THAN THOSE WHICH ARE REPORTABLE TO THE CENTRAL GOVERNMENT

There have been no frauds reported by the auditors u/s 143(12).

DETAILS RELATING TO DEPOSITS, COVERING THE FOLLOWING

Your Company has not accepted any deposits falling within the meaning of Sec.73, 74 & 76 of the Companies Act, 2013 read with the Rule 8(v) of Companies (Accounts) Rules 2014, during the Financial Year under review. Further, there are no deposits which are not in compliance with the requirements of Chapter V of the Companies Act, 2013.

SIGNIFICANT & MATERIAL ORDERS PASSED BY THE REGULATORS

During the period under review there were no significant and material orders passed by the regulators or Courts or Tribunals impacting the going concern status and the companys operations in future.

CODE OF CONDUCT FOR THE PREVENTION OF INSIDER TRADING

The Board of Directors has adopted the Insider Trading Policy in accordance with the requirements of the SEBI (Prohibition of Insider Trading) Regulation, 2015 and the applicable Securities laws. The Insider Trading Policy of the Company lays down guidelines and procedures to be followed, and disclosures to be made while dealing with shares of the Company, as well as the consequences of violation. The policy has been formulated to regulate, monitor and ensure reporting of deals by employees and to maintain the highest ethical standards of dealing in Company securities. The Insider Trading Policy of the Company covering code of practices and procedures for fair disclosure of unpublished price sensitive information and code of conduct for the prevention of insider trading, is available on our website (www.cilsecurities.com)

ACKNOWLEDGEMENT

The Board of Directors wish to place on record its appreciation for the extended co-operation and assistance rendered to the Company and acknowledge with gratitude the continued support and cooperation extended by the investors, clients, business associates and bankers. The regulatory authorities have also put Indian Capital market on par with other international Markets. Your Directors also acknowledge the full-fledged cooperation and dedicated efforts put in by the employees across all levels in the organization and place on record its appreciation for the services rendered.

Registered office By Order of the Board of Directors of
CIL SECURITIES LMITED
214, Raghava Ratna Towers
Chirag Ali lane, Abids K K Maheshwari A K Inani
Hyderabad-500 001 Chairman & Managing Director Director Finance/CFO
Place: Hyderabad DIN: 00223241 DIN: 00223069
Date: 25.05.2019