DCM Financial Services Ltd Directors Report.
Your Directors are pleased to present to the valued stakeholders, the 26th Annual Report of DCM Financial Services Limited along with the Audited Financial Statements of the Company for the Year ended March 31st, 2017.
FINANCIAL HIGHLIGHTS- AT A GLANCE Overall Performance of your Company
The Financial Year 2016-17 had been a little tumultuous for the Company as your Company has shown a conventional performance during the year under review. The net Profits of your Company had gone down from Rs. 2,09,18,498/- in 2015-16 to Rs. 1,72,31,740/- in 2016-17.
The financial summary, performance highlights operations/state of affair of your Company for the year are summarized below:
(Amount in Rupees)
|Income from Business||-||-||-||-|
|Less: Expenditure except Depreciation||1,20,54,256.84||99,36,283.84||1,21,66,535.50||1,00,53,972.85|
|Profit/Loss before Interest, Depreciation and Tax||2,46,88,497.16||2,93,86,638.16||2,45,81,077.50||2,95,22,388.15|
|Less: Interest and other Financial Charge(s)||-||36,314.00||-||36,314.00|
|Profit/Loss before Depreciation and Tax||2,46,88,497.16||2,93,50,324.16||2,45,81,077.50||2,96,86,074.15|
|Profit/Loss before Tax||2,16,31,740.16||2,62,78,451.16||2,14,12,146.50||2,63,31,469.15|
|Less: Tax Expense||44,00,000.00||53,59,953.00||44,00,000.00||53,59,953.00|
|Add: Deferred Tax Asset||-||-||-||-|
|Net Profit/Loss after Tax||1,72,31,740.16||2,09,18,498.16||1,70,12,146.50||2,09,71,516.15|
|Less: Minority Interest||-||-||(19,459.00)||5,302.00|
|Net Profit/Loss for the period||1,72,31,740.16||2,09,18,498.16||1,70,31,605.50||2,09,66,214.15|
|Earnings per share: (Basic and Diluted)||0.78||0.95||0.77||0.95|
With a view of augmenting financial resources for generating stable growth in future, the Board of Directors of the company have decided to carry forward entire profit and hence do not propose to recommend any dividend for the financial year on equity shares.
The Board proposes to transfer no amount to the reserves and an amount of Rs. 1,72,31,740/- is proposed to be retained in Surplus
MANAGEMENT DISCUSSION & ANALYSIS REPORT
Management Discussion and Analysis Report for the year under review, as stipulated under Regulation 34 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, is presented in a separate section of this Annual Report
TRANSFER OF UNCLAIMED DIVIDEND TO INVESTOR EDUCATION AND PROTECTION FUND
Since there was no unpaid/unclaimed Dividend declared or paid by the Company, the provisions of Section 125 of the Companies Act, 2013 do not apply.
CHANGE IN NATURE OF BUSINESS
During the year under review, there was no change in nature of business of the Company.
The paid up equity share capital outstanding as on 31st March, 2017 was Rs. 2,21,250,540/-.
As on 31st March, 2017 none of the Directors of the Company has held shares of the Company.
Issue of equity shares with differential voting rights
No equity shares with differential voting rights have been issued by the company during the financial year 2016-17.
Issue of Sweat Equity Shares
The Company has not issued any sweat equity shares during the year under review.
Issue of Employee Stock Options
The Company has not issued any shares under employees stock options scheme during the year under review.
Buy Back of Securities
The Company has not bought back any of its securities pursuant to the provisions of Section 67 and Section 68 of the Companies Act 2013 during the year under review.
Voting Rights of Employees
During the year under review, the company has not given any loan to any employee for purchase of its own shares as per section 67 (3) (c) of the Companies Act, 2013. Therefore the company is not required to make any disclosure as per rule 6 (4) of the Companies (Share Capital and Debentures) Rules, 2014.
CONSOLIDATED FINANCIAL STATEMENTS
The Consolidated Financial Statements prepared in accordance with the Companies Act, 2013 and Accounting Standards-21 are attached with the Annual Report..
During the year under review, the Company has not invited any fixed Deposits. As on 31st March, 2017, there were 50928 fixed deposits aggregating to Rs. 5637.28 Lacs which remained unpaid as the scheme of repayment to fixed depositors is pending approval before the Honble High Court of Delhi and out of these deposits, Rs 3.51 Cr ( 3639 depositors) have not submitted fixed deposit receipts and can be considered as unclaimed. However, since while making the repayments in terms of sanction of the scheme by the Honble Court, all deposits will be verified, as recommended by the One Man Committee of Retd, Justice Anil Kumar. The duplicate or invalid deposits once discovered might be reversed.
SUBSIDIARY / ASSOCIATE/ JOINT VENTURES COMPANIES OF THE COMPANY
The details about the Companys subsidiary Global IT Options Limited are mentioned in the Form AOC-1marked as "Annexure B".
CHANGE IN DIRECTORS /KEY MANAGERIAL PERSONNEL DURING THE YEAR
The details about the changes in Directors or Key Managerial Personnel by way of Appointment, Re - designation, Resignation, variation made or withdrawn etc. are as follows:
|S. No.||Name||Designation||Nature of Change||With Effect From|
|1.||Richa Kalra||Additional Independent Director||Appointment||06.10.2016|
|2.||Om Prakash Gupta||Independent Director||Resignation||06.10.2016|
|3.||Richa Kalra||Independent Director||Re-designation||30.11.2016|
|4.||Medini Jaiswal||Additional Independent Director||Appointment||22.05.2017|
|5.||Srishti Singh||Company Secretary||Appointment||22.05.2017|
|6.||Mr. Sehdev Shori||Independent Director||Resignation||11.08.2017|
|7.||Ms. Daman Preet Kaur||Additional Independent Director||Appointment||11.08.2017|
During the year under review, the Board of Directors appointed Ms. Richa Kalra (DIN: 07632571), as the Additional Independent Director w.e.f. from 6th October, 2016 in place of Mr. Om Prakash Gupta (DIN: 00024646) who has resigned with effect from the same date due to his personal preoccupation.
Further, Ms. Richa Kalra who was appointed as the Additional Independent Director on 6th October, 2016 was re-appointed as Independent Director on 30th November, 2016.
RELATIONSHIP BETWEEN DIRECTORS INTERSE
None of the Directors are related to each other within the meaning of term "relative" as per Section 2(77) of the Companies Act, 2013
STATEMENT ON DECLARATION GIVEN BY INDEPENDENT DIRECTORS UNDER SECTION 149(6) OF COMPANIES ACT, 2013
All Independent Directors have given declarations under section 149(7)that they meet the criteria of Independence as laid down under section 149(6) of the Companies Act, 2013 and Rules made thereunder to be read with SEBI (Listing Obligation & Disclosure Requirement) Regulation, 2015.
DISCLOSURE OF CHANGE IN ACCOUNTING TREATMENT IN FINANCIAL STATEMENTS
During the period under review, there were no changes in the Accounting treatment in the Financial Statements for the financial year 2016-17, different from that as prescribed in Accounting Standards, prescribed by the Institute of Chartered Accountants of India (ICAI).
EXTRACT OF ANNUAL RETURN
The details forming part of extract of Annual Return under sub section 3 of Section 92 of the Companies Act, 2013 in Form MGT-9 is annexed herewith as "Annexure A."
NUMBER OF MEETINGS OF THE BOARD AND COMMITTEES
During the year under review, 6 Board Meetings,4 Audit Committee Meetings, 2 Nomination & Remuneration Committee Meetings, 4 Stakeholders Relationship Committee Meetings, were convened and held. All the Meetings including Committee Meetings were duly held and convened and the intervening gap between two consecutive meetings was within the period prescribed under the Companies Act, 2013 to be read with the SEBI(Listing Obligations & Disclosure Requirements), Regulations 2015.
The Audit Committee of the Company is constituted in line with the provisions of section 177 of the Companies Act, 2013 to be read with Regulation 18 of the SEBI (Listing Obligation & Disclosure Requirement) Regulation, 2015.
NOMINATION & REMUNERATION COMMITTEE
The Nomination & Remuneration Committee of the Company is constituted in line with the provisions of section 178 of the Companies Act, 2013 to be read with Regulation 19 of the SEBI (Listing Obligation & Disclosure Requirement) Regulation, 2015.
STAKEHOLDERS RELATIONSHIP COMMITTEE
The Stakeholders Relationship Committee of the Company is constituted in line with the provisions of section 178 of the Companies Act, 2013 to be read with Regulation 20 of the SEBI (Listing Obligation & Disclosure Requirement) Regulation, 2015.
BOARD ANNUAL EVALUATION
The provisions of section 134(3)(p) of the Companies Act, 2013 read with SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 mandate that a Formal Annual Evaluation is to be made by Board of its own performance and that of its Committee and individual Directors. Schedule IV of the Companies Act, 2013 states that performance evaluation of the Independent Director shall be done by Directors excluding the Director being evaluated. The Board carried out a formal annual performance evaluation as per the criteria/framework laid down by the Nomination & Remuneration Committee of the company and adopted by the Board. The evaluation was carried out through a structured evaluation process to judge the performance of individual Directors including the Chairman of the Board. They were evaluated on parameters such as their education, knowledge, experience, expertise, skills, behavior, leadership qualities, level of engagement & contribution, independence of judgment, decision making ability for safeguarding the interest of the Company, stakeholders and its shareholders.
The performance evaluation of the Independent Directors was carried out by the entire Board except the participation of concerned Independent Director whose evaluation was to be done. The performance evaluation of the Chairman and the Independent Directors was also carried out by the Independent Directors. The Board was satisfied with the evaluation process and approved the evaluation results thereof.
REMUNERATION POLICY OF DIRECTORS AND KEY MANAGERIAL PERSONNEL
The Board on the recommendation of Nomination & Remuneration Committee, framed a policy for selection and appointment of Directors, Senior Management Personnel and fixation of their remuneration thereof. The Policy contains, inter-alia, directors appointment and remuneration including criteria for determining qualifications, positive attributes independence of a Director, etc.
Pursuant to the provisions of Regulation 25(7) of Listing Regulations, 2015, the Board has framed a policy to familiarize Independent Directors about the Company.
STATUTORY AUDITOR AND SECRETARIAL AUDITOR WITH THEIR QUALIFICATION, RESERVATION ORADVERSE REMARKS ALONG WITH THE EXPLANATION OR COMMENTS BY THE DIRECTORS
A. STATUTORY AUDIT AND AUDITOR
The members at the Annual General Meeting held on 30th Nov, 2015 appointed M/s V. Sahai Tripathi & Co, Chartered Accountants (Registration No. 00262N) as Statutory Auditors of the Company for a period of two years to hold office till the conclusion of 26th Annual General Meeting of the Company subject to ratification at every AGM. Their period of office will expire at the ensuing Annual General Meeting. Therefore, the Board recommends the appointment of M/s Mukesh Aggarwal & Co., Chartered Accountants, as Statutory Auditor of the Company for a term of five years subject to approval of members in ensuing Annual General Meeting of the Company.
Qualification(s) and Directors comments on the report of Statutory Auditor:
I. The accounts and financials of the Company have been prepared on going concern on the assumption and premises made by the management of the Company that (a) The fresh restmcturing scheme would be approved by the Honble Delhi High Court in totality which is still pending for approval & acceptance (b) adequate finances and opportunities would be available in the foreseeable future to enable the company to start operating on a profitable basis and
(c) injection of Rs. 1950.00 Lacs as promoters quota which has already been infused by the management group. The same has been explained in Note 27.
Directors Comment: Going Concern Basis- Para (i) and Note 27-In accordance with section 134 (5) (d) of the Companies Act, 2013, the Financial Statements are required to be made on going concern basis. In light of the fresh Scheme of Restructuring pending before the Honble Delhi High Court, the Company has plans for future business and income generation. Accordingly, it is not only prudent but also imperative to draw Financial Statement based on such
Going Concern basis. The scheme seeks to restructure relying on debt equity swaps and profits earned by engaging service oriented, fee based business leading to progressive reduction in the debt of the equity. The scheme arrangement would not only enable the company to wipe out its debt but will also enable it to reduce carry forward losses to be a profitable entity.
II. No provision of Rs. 817.81Lacs (Rs. 1,6465.30 Lacs towards accumulated Interest as at 31st March, 2017)(Previous Year - Rs. 1,5647.48 Lacs) which is simple interest calculated @10% per annum towards Interest on Debentures, Fixed Deposits and Inter Corporate Deposits, have been provided in the financial statements on the outstanding amount of Debentures, Fixed Deposits and Inter Corporate Deposits. Fresh Restructuring Scheme filed before Honble Delhi High Court, does not envisage and seek payment of any interest as the interest has been considered waived off in the proposed scheme. The order of Company Law Board (CLB) which was issued in 1998 in the context of Fixed Deposits stipulated payment of Interest of 10% per annum to Fixed Depositors. The order of Company Law Board (CLB) applies to Fixed Deposits only, however considering the principles of prudence, it is deemed prudent to provide Interest @10% per annum since inception or renewal on outstanding amount of Debentures and Inter Corporate Deposits also.
Had interest @10% per annum been provided for in the financial statements on outstanding amount of Debentures, Fixed Deposits and Inter Corporate Deposits, the Net Profit before tax would have been lowered by Rs 817.81 Lacs and Net Profit after tax would have been lowered by Rs 651.07 Lacs as at 31st March, 2017. The cumulative net loss as well as Current / NonCurrent Liabilities as at 31st March, 2017 would have been higher by Rs 16298.55 Lacs. The tax effect will be consequential. The same has been explained in Note 3.1.f, Note 3.4(g) and Note 3.6.
Directors Comment: Provision of Interest on Certain Liabilities- Para (ii) and Note 3.1.g
and 3.4 (b) (c) (g): In accordance with the Scheme of restructuring filed by the Company before the Honble Delhi High Court, which provides for waiver and cancellation of interest and the same is pending before the Honble Court.
III. For redemption of B series debentures of Rs. 2544.36 Lacs debenture redemption reserve is required to be created. Debenture redemption reserve of Rs. 2544.36 Lacs has not been created due to insufficient profits. The same has been explained in Note 2.2.
Directors Comment: Creation Debenture Redemption Reserve- Para (iii) and Note 2.2: Noncreation of debenture redemption reserve is self-explanatory and cannot be created due to insufficient profits.
IV. The value of assets charged as security in favor of banks, debenture-holders & financial institutions have been depleted over a period of time. The depletion has not yet been ascertained by the Company. To the extent of shortfall, if any, the liability is unsecured, whereas the same has been shown as secured. The same has been explained in Note 3.1.d and Note
3.2.b & 3.3.1.
Directors Comment: Depletion in the value of Assets charged to Banks/Institution and Debentures-Para (iv) and Notes 3.1.d, 3.2.b& 3.3.1: It relates to ascertainment of Security against Debentures and Bank Loan, which could not be ascertained since the Company is in litigation with various Lease and Hire Purchase customers and the matters are sub-judice, hence confirmations and acknowledgments are not feasible.
V. Balance confirmation of bills receivable and payable, advances recoverable in cash or in kind, receivables and payables relating to lease and hire purchase, lease security deposit of which party wise details are not available. Balance confirmation of inter-corporate deposits, balance of ex-employees, margin against L/C, loans from institutions, banks, and other receivables and payables have not been received from the parties/persons concerned. In the absence of balance confirmation the closing balances as per books of accounts have been incorporated in the final accounts and have been shown, unless otherwise stated by the management about its recoverability in the financials including considering the NPA Provisions, are good for recovery/ payment. Time barred debts under the Limitations Act have not been separately ascertained and written off or provided for. In the absence of such confirmation & corresponding reconciliation, it is not feasible for us to determine financial impact on the financials and the amount referred as payable in the financials can differ. Please refer Note No-28
Directors Comment: Balance Confirmation of Bills Receivable and Payable, advances recoverable in cash or in kind, receivables and payables relating to lease and hire purchase and
lease security deposit-Para (v) and Note 28-In view of litigation with creditors mentioned in the para v, its not possible to obtain the balance confirmations.
VI. The subsidiary company namely, Global IT Options Limited has till 31st March, 2017 incurred expenditure of Rs 22.84 Lacs for & on behalf of its Holding Company (i.e. DCM Financial Services Limited). It comes under the category of short term funding which is in-fact InterCorporate Deposit. In case of Inter-Corporate Deposit, Section 186 of Companies Act, 2013 stipulates to charge interest at a rate not less than the bank declared by Reserve Bank of India. No Interest has not been provided on outstanding balance of Rs 22.84 Lacs by Company to its subsidiary - Global IT Options Limited with effect from 1-june-2014.
Had interest @12% per annum which comes to Rs. 2.74 Lacs been provided for in the financial statements on outstanding amount of Inter Corporate Deposit,the net profit before tax would have been lowered by Rs. 2.74 Lacs and net profit after tax would have been lowered by Rs. 2.18 Lacs towards Interest expense for the year ended 31st March, 2017. The cumulative net loss as well as Current / Non-Current Liabilities / Provision as at 31st March 2017 would have been higher by Rs. 5.16 Lacs on account of cumulative interest with effect from 01-June-2014. The tax effect will be consequential. It is non compliance of Section 186 of the Companies Act, 2013, which could attract penalties.
Directors Comment: Short-Term Funding by Global IT Options Limited- Para (vi): In view of restriction imposed by the Honble High Court of Delhi on the operations of bank accounts since 2006, assistance of Rs. 22.84 lacs has been taken to meet the essential expenses and obligations from Global IT Options Limited. The Company being sick and as the scheme of arrangement pending before the Court does not provide payment of any interest to creditors, the subsidiary company has given this amount without interest and element of interest and its payment will be decided once the scheme is approved and liquidity position improves.
VII. Pursuant to sub-section 5 of section 203 Companies Act, 2013 read with Rule 8 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 every listed company is required to appoint a Whole Time Company Secretary, non compliance of which the company shall be punishable with fine which shall not be less than one lakh rupees but which may extend to five lakh rupees. During the year ended March 31st, 2017, the Company was in contravention of the aforesaid provision. As explained to us, the management has made various attempts to appoint a Whole Time Company Secretary, however was unable to appoint Whole Time Company Secretary in the absence of suitable candidate. The Company has made relevant disclosures in the Board of Directors meeting regarding this issue. It is non compliance of Section 203 of Companies Act, 2013, which could attract penalties. Presently it is not feasible to determine the financial impact on the financial.
Directors Comment: Appointment of Whole-Time Company Secretary- Para (vii): The Company has appointed Whole Time Company Secretary, Ms. Srishti Singh on 22nd May, 2017 pursuant to the provisions of Section 203 (1) (ii) of the Companies Act, 2013 read with Rule 8A of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. Thus, it has already complied with the requirements.
VIII. Pursuant to section 149 of Companies Act, 2013 read with rule 3 of Companies (Appointment and Qualification of Directors) Rules, 2014 every listed company is required to appoint at least one Woman Director. During the year ended March 31st, 2016, the Company was in contravention of the aforesaid provision as no woman director has been appointed. It is non compliance of Section 149 of Companies Act, 2013. Presently Section 149(1) of the Companies Act, 2013 is silent on the component of penalty. SEBI guidelines prescribed penalties for the non compliance which are Rs. 50,000 from 1-April-2015 to 30th June,2015 and thereafter Rs. 1000 per day for next 01-July-2015 to 30-Sep-2015 and thereafter from 01-Oct-2015 onwards Rs. 5000 per day. With effect from 6-October 2016, woman director has been appointed by the Company. Total estimated penalty/fine comes to Rs. 16.85 Lacs (P.Y RS.10.50 Lacs) till date of appointment of women director (i.e. 5th October, 2016). Had provision been provided for in the financial statements, the net profit before tax for the year ended 31st March, 2017 would have been lower by Rs 6.35 Lacs and net profit after tax would have been lowered by Rs. 5.05 Lacs. The cumulative net loss as well as Current/Non Current Liability/Provisions as at 31st March, 2017 would have been higher by Rs.15.55Lacs. The tax effect would be consequential.
Directors Comment: Appointment of Woman Director- Para (viii): The Company had appointed Ms. Richa Kalra (DIN: 07632571) on 6th October, 2016 as Non Executive Independent Director pursuant to the provisions of Section 149 (4) of Companies Act, 2013 read with Rule
3 of Companies (Appointment and Qualification of Directors) Rules, 2014. Thus, it has already complied with the requirements.
IX. As per the Guidance Note on Accounting for credit available in respect of Minimum Alternative Tax, MAT Credit is an asset to be recognized in the Financial Statement when it is Probable that the future economic benefits associated with it will flow to the enterprise and asset has a cost or value that can be measured reliably. In the previous periods, the company has already recorded MAT Credit Entitlement of Rs 28.52 Lacs in the books of accounts. Considering that the matter is under jurisdiction of Delhi High Court for many years and the company as described in point no (i) of Basis of Qualification and Company is not allowed to carry on its operations except the realization of old debts and permitted payments, there is no virtual certainty that future economic benefit would flow to company. Considering this, we are of opinion that such MAT Credit Entitlement of Rs 28.52 Lacs needs to be derecognized.
Had MAT Credit of Rs 28.52 Lacs had been reversed in financial statements in year ended March, 2017, the net profit after tax would have been lower by Rs 28.52 Lacs and net profit after tax would have been lowered by Rs. 22.70 Lacs and consequently the net cumulative loss would have been higher by Rs 22.70 Lacs. In addition to, non-current loans and advances would have been lowered by Rs 22.70 Lacs after considering the tax effects.
Directors Comment: MAT Credit Entitlement-Para (ix): The Fresh Restructuring Scheme filed by the Company would be approved by the Honble Delhi High Court Adequate finances and opportunities would be available in the foreseeable future to enable the Company to start operating on a profitable basis. Therefore, Company can avail MAT Credit in near future when it will become profitable.
X. Contingent liabilities and Other Commitments
i. Mr. Dhruv Prakash had lodged a claim of Rs 6.50 Lacs and winding up petition against the company. The contingent liability arising out of this suit amounts to Rs. 6.50 Lacs. There are also other cases filed in consumer, civil & criminal courts and other courts against the company for which the company is contingently liable but for which the amount is not quantifiable. Refer Note No. 22(a)
Directors Comment: Para (ix(a)) - The Company is contesting claims lodged against it not acknowledged as debts, including claims of Mr. Dhruv Prakash and on account of securitization transaction and underwriting obligations. Rest of the contingent liabilities are being addressed through the Scheme.
ii. As per the Fresh Restructuring Scheme, the total amount payable to PSB remains quantified at Rs. 901.80 Lacs as on 30th June 2004 (after providing interest @10% p.a, compounded quarterly from 30th September 1999 till 31st March, 2000 on the principal debt as on 30.09.1997). The company has till date paid/adjusted Rs. 98.40 Lacs and the balance of Rs. 803.40 Lacs as on 30th June 2008 is payable as per the Fresh Restructuring Scheme pending before the Honble Delhi High Court. Out of Rs. 803.40 Lacs i.e. Rs. 442.68 Lacs shall be payable in 6 equal yearly installments after one year from the date of approval of the scheme or 1st April, 2006 whichever is earlier. The balance of Rs. 360.72 Lacs shall be converted in equity shares at any time within 3 years of the effective date of approval of Fresh Restructuring Scheme by Honble Delhi High Court in accordance with applicable SEBI Guidelines for issuance of preferential allotment of the effective date or 1st April, 2006 whichever is earlier
Prior to filing of Fresh Restructuring Scheme by company before Honble Delhi High Court, Punjab & Sind Bank had filed a recovery suit before the Debt Recovery Tribunal (DRT) for recovery of Rs. 1,217.52 Lacs against which the amount payable to them as per books is Rs. 803.40 Lacs. After taking effect of interim payments made to Punjab & Sind Bank till date of Rs 98.40 Lacs, the claim suite of Rs 1,217.52 Lacs is also reduced to Rs. 1119.12 Lacs. Since fresh restructuring scheme was not approved and made effective by 1st April 2006, the claim of Rs. 1119.12 Lacs filed before the Debt Recovery Tribunal could be adjudicated by Debt Recovery Tribunal. No communication has been received from Punjab & Sind Bank or Debt Recovery Tribunal (DRT) regarding any adjudication of claim.
The company contends that the dues of the Bank will be settled as per the Fresh Restructuring Scheme and consequently no provision for the difference of Rs. 315.72 Lacs has been made. The company contends that in the event of default in the payment of interest and principal or default as per Fresh Restructuring Scheme or Fresh Restructuring
Scheme is rejected, the concessions made by Punjab & Sind bank shall stand withdrawn and their claim before the Debt Recovery Tribunal of Rs. 1119.12 Lacs (after taking effect of payment of Rs 98.40 Lacs) will become payable upon adjudication by Debt Recovery Tribunal. Refer Note No 3.3.2 and 22(b)
The amount payable to IndusInd Bank after calculating interest up to March 31,2000 had been quantified at Rs. 651.49 Lacs as on 30-June-2004 in accordance with the "Fresh Restructuring Scheme Under Review". Out of which Fixed Deposit of Rs 74.49 Lacs has been adjusted by IndusInd Bank. The balance amount of Rs. 577.00 Lacs shall be payable as per Fresh Restructuring Scheme.
Prior to filing of Fresh Restructuring Scheme by company before Honble Delhi High Court, IndusInd Bank has filed a recovery suit before the Debt Recovery Tribunal (DRT), of Rs.
1042.42 Lacs against which the amount payable to them as per books is Rs. 577.00 Lacs. After taking effect of interim payments made to Punjab & Sind Bank till date of Rs 74.49 Lacs, the claim suite is also correspondingly reduced to Rs 96,793,133 from Rs. 1042.42 Lacs. The company contends that the dues of the Bank will be settled as per the Fresh Restructuring Scheme and consequently no provision for the difference of Rs. 390.93 Lacs has been made. In the event that the company fails to pay the interest or principal or company default as per Fresh Restructuring Scheme or Fresh Restructuring Scheme is rejected, the concessions made by IndusInd Bank will be withdrawn and the amount claimed in the Debt Recovery Tribunal amounting to Rs 967.93 Lacs (after taking effect of payment of Rs 74.49 Lacs) would become payable upon adjudication by Debt Recovery Tribunal. Refer Note No3.3.3 and 22(c)
Directors Comment: Para (ix(b)) &(ix(c)): it is submitted that the scheme of restructuring, pending before the Honble Delhi High Court and repayment issue to these banks is being addressed in the scheme of arrangement with creditors . Further, the Honble Court has stayed the suits filed in DRT by PSB &IndusInd Bank.
iii. During the year 1999, the company had received Rs. 100.00 Lacs from one of its debtors
i.e. Pure Drinks New Delhi Ltd. where the winding up petition proceedings was already initiated. Upon receipt of payment, the Company reduced the recoverable amount accordingly. Subsequently, the Honble Punjab and Haryana Court deemed that payment is out of turn/preferential payment made by Pure Drinks New Delhi Ltd where winding up petition proceedings was already initiated and asked the company to deposit back the said amount with Honble Punjab and Haryana Court. The company had filed a SLP with the Honble Supreme Court of India which has been dismissed by them. Therefore the company is liable to deposit the amount mentioned above which is yet to be deposited. And in view of restrictions imposed on operations of Bank A/cs by Honble Delhi High Court, the company has filed an application to release this money for depositing the same with Punjab & Haryana High Court which still pending to be addressed. Refer Note No. 22(d)
Directors Comment: Para (ix(d)): the Company has filed an application with Honble High Court of Delhi for the release of amount to be deposited in the Punjab & Haryana High Court and the same is pending.
iv. During the year ended 30th June, 2011 the companys tenant had filed a claim of Rs.100.00 Lacs against the company due to damages suffered by the tenant which is still pending under arbitration proceedings as on 31st March, 2017. Refer Note No. 22(e)
Directors Comment: Para (ix (e)): There are certain disputes with the tenant and the claim of tenant is contested .
v. There is a demand of Rs. 34.59 Lacs raised by Income Tax Department for the Assessment Year 2006-07 for payment of income tax under the Income Tax Act, 1961, which is disputed by the company and pending before the appropriate authorities. Refer Note No. 22(f)
Directors Comment: Para viii (ix (f)): the Company has filed necessary application for the rectification application for the deletion of said demand, however the same is pending.
vi. There is an award passed by the arbitrator against the company in the matter of MS Shoes East Limited on May 28, 2012 for Rs. 51.28 Lacs i.e. the claim amount, along with Rs. 306.80 Lacs towards interest cost for an underwriting given by the company in the year 1995 for the public issue of M/s MS Shoes East Ltd. Furthermore, an incidental cost
which includes arbitration venue rent, record keeping cost, administrative cost and stamp paper charges amounting to Rs. 5.49 Lacs, had been awarded to the company. The total financial impact comes to Rs. 363.58 Lacs which has been contested by Company before Honble Delhi High Court. Refer Note No. 22(g)
Directors Comment: Para viii (ix(g)): Company has preferred an appeal/objections before Honble High Court of Delhi in the MS Shoes East Limited matter against the arbitration order and the same pending adjudication.
vii. Due to dispute with the builder namely M/s NBCC Ltd. from which the company had purchased an office premises in the year 1995, regarding a claim of Rs. 288.30 Lacs on account of increase in super area and certain other expenditure which the builder i.e. M/s NBCC Ltd. had incurred and the same is pending in arbitration. Breakup of the amount of Rs 288.30 Lacs mentioned supra is as follows Refer Note No. 22(h):-
|S. No.||Description||Amount (In Lacs)|
|1.||Difference in super area Vs. provisional area||229.28/-|
|2.||Claim of property tax||3.19/-|
|3.||Claim of ground rent||21.67/-|
|5.||Augmentation of Electric sub station||1.33/-|
|6.||Loss of profit||20.00/-|
Directors Comment: Para (ix (h)): Company is contesting the claim of NBCC, which is pending before arbitration under the Indian Arbitration Act.
viii. SIDBI had filed a petition for winding-up on alleged non-payment of Rs. 54.40 Lacs which consist of interest, overdue interest and other charges, before the Honble Delhi High Court. Out of which the company has recorded Rs. 36.30 Lacs in the books of account. Provision for Rs. 18.10 Lacs liability on account of interest, overdue interest, and other charges claimed and claimable by SIDBI has not been ascertained and provided in the books due to waiver of interest sought under the proposed "Fresh Restructuring Scheme" filed with Honble Delhi High Court. Refer Note No. 22(i)
Directors Comment: Para (ix(i)): it is submitted that the scheme of restructuring, pending before the Honble Delhi High Court and repayment issue to SIDBI is being addressed in the scheme of arrangement with creditors.
All the other notes are self-explanatory.
B. SECRETARIAL AUDITOR
Pursuant to provision of section 204 of the Companies act, 2013, read with the Companies (Appointment and Remuneration of Managerial Personnel) Rule, 2014, the Company has appointed M/s Latika Chawla & Associates, Company Secretaries to undertake Secretarial Audit of the Company.
The Secretarial Audit was conducted by Ms. Latika Chawla, Practicing Company Secretary, and the report thereon is annexed herewith as "Annexure- D".
Qualification(s) and Directors comments on the report of Secretarial Auditor:
Observations in the report are on the basis of facts and self explanatory.
The Company had appointed M/s SVTG & Co., Chartered Accountants, as Internal Auditor to carry out the Internal Audit functions. The Internal Auditor submits a "Quarterly Report" to the Audit Committee.
DETAILS IN RESPECT OF FRAUDS REPORTED BY AUDITOR
There were no instances of fraud, those have been observed by the Statutory Auditor during audit of the financial statements for the financial year 2016-17, which are required to be disclosed by the company in its Board Report under Section 143 (12) of the Companies Act, 2013.
PARTICULAR OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186 OF THE COMPANIES ACT, 2013
The details of loans, guarantees or investments made by the company, if any pursuant to the provisions of section 186 of the Companies Act, 2013can be found in the balance sheet
PARTICULAR OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES UNDER SECTION 188 OF THE COMPAIES ACT, 2013
During the period under review, the Company had not entered into any contract/ arrangement/ transaction with any related parties which could be considered material in accordance with the policy of the Company on materiality of related party transactions. Form AOC-2 is also enclosed as Annexure-E.
The Policy on materiality of related party transactions and dealing with related party transactions as provided by the Board may be accesses on the Companys website www.dfslonline.com under Investor Information.
Your Directors draw attention of the members to Note 29 to the financial statement which sets out related party disclosures.
MATERIAL CHANGES AND COMMITMENTS, IF ANY
There are no material changes or commitments noticed by the Board between the end of Financial Year of the company as on 31st March, 2017 and the date of this Report.
DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANYS OPERATIONS IN FUTURE
The Honble High Court of Delhi, in a winding up petition filed by the Reserve Bank of India, in the year 2006 has restricted the Company to operate its bank accounts.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION & FOREIGN EXCHANGE EARNINGS AND OUT-GO
The provisions of Section 134(3)(m) of the Companies Act, 2013 are not applicable to your Company since your Company being engaged in financing business, does not have any activity relating to conservation of energy neither does it undertake any Research and Development Activity or derive any benefit out of it. No effort made towards technology absorption. There was no foreign exchange inflow or outflow during the year under review.
The provisions of SEBI Regulations for formation of Risk Management Committee are not applicable to the Company. However, as per section 134 (3) (n) of Companies Act 2013, the company regularly maintains a proper check in normal course of its business regarding risk management. Currently, the company does not identify any element of risk which may threaten the existence of the company.
CORPORATE SOCIAL RESPONSIBILITY INITIATIVES
The company does not fall under the criteria of net worth, turnover or profit for applicability of Corporate Social Responsibility (CSR) provisions as per Section 135 of the Companies Act, 2013, hence the same are not applicable to the company for the period under review.
VIGIL MECHANISM / WHISTLE BLOWER POLICY
As per Regulation 22 of the SEBI Regulations, 2015, in order to ensure that the activities of the Company & its employees are conducted in a fair & transparent manner by adoption of highest standards of professionalism, honesty, integrity and ethical behavior, the company has adopted a vigil mechanism policy. This policy is explained in "Corporate Governance Report" and is also posted on website of the company.
PREVENTION OF SEXUAL HARASSMENT AT WORKPLACE
As per the requirement of "The Sexual Harassment of Women at Workplace (Prevention, Prohibition &Redressal) Act, 2013" and Rules made thereunder, your Company has constituted Internal Complaints Committee (ICC) at its workplaces.
CORPORATE GOVERNANCE REPORT
As per Reg. 34 of SEBI Regulation, 2015 to be read with Part A of Schedule V of the said regulations, a separate section on corporate governance practices followed by the company, together with the certificate from the Practicing Company Secretary confirming compliance forms an integral part of this Report.
The relationship with employees continues to be harmonious. The company always considers its human resource as its most valuable asset. Imparting adequate and specialized training to its employees is ongoing exercise in the company.
INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
The Company has a robust and comprehensive Internal Financial Control system commensurate with the size, scale and complexity of its operation. The system encompasses the major processes to ensure reliability of financial reporting, compliance with policies, procedures, laws, and regulations, safeguarding of assets and economical and efficient use of resources.
The Company has performed an evaluation and made an assessment of the adequacy and the effectiveness of the Companys Internal Financial Control System. The Statutory Auditors of the Company have also reviewed the Internal Financial Control system implemented by the Company on the financial reporting and in their opinion, the Company has, in all material respects, adequate Internal Financial Control system over Financial Reporting and such Controls over Financial Reporting were operating effectively as on 31stMarch, 2017 based on the internal control over financial reporting criteria established by the Company.
The policies and procedures adopted by the Company ensures the orderly and efficient conduct of its business and adherence to the companys policies, prevention and detection of frauds and errors, accuracy & completeness of the records and the timely preparation of reliable financial information.
The Internal auditors continuously monitor the efficacy of internal controls with the objective of providing to the Audit Committee and the Board, an independent, objective and reasonable assurance on the adequacy and effectiveness of the organizations risk management with regard to the internal control framework.
Audit committee meets regularly to review reports submitted by the Internal Auditors. The Audit Committee also meet the Companys Statutory Auditors to ascertain their views on the financial statements, including the financial reporting system and compliance to accounting policies and procedures followed by the Company.
The shares of the Company are presently listed at BSE Limited, National Stock Exchange of India Limited and The Calcutta Stock Exchange Limited.
All statutory dues including Annual Listing Fees for the Financial Year 2017-18 have been paid by the Company except the fees of The Calcutta Stock Exchange Limited.
Your Directors hereby place on record their appreciation for the services rendered by executives, staff and other workers of the Company for their hard work, dedication and commitment. During the year under review, relations between the Employees and the Management continued to remain cordial.
CODE OF CONDUCT
The Board of Directors has laid down the code of conduct for all Board Members and members of the Senior Management of the Company. Additionally, all Independent Directors of the company shall be bound by duties of Independent Directors as set out in Companies Act, 2013 to be read with SEBI Listing Regulations, 2015.
All Board Members, Key Managerial Personnel and Senior Management Personnel have affirmed compliance with the Code of Conduct.
PARTICULARS OF EMPLOYEES
The company has one Executive Director and remuneration paid to him, is disclosed in MGT-9.
None of the employees of your Company is in receipt of remuneration requiring disclosure pursuant to the provisions of Section 197, read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014;
Disclosures pertaining to remuneration and other details as required under Section 197(12) of the
Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed as Annexure - C and forms an integral part of this Report.
Further, no sitting fee has been paid to any director during the year.
The particulars of the employees who are covered by the provisions contained in Rule 5(2) and rule 5(3) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are:
a) Employed throughout the year As per Annexure-C
a) Employed for part of the year As per Annexure-C
DIRECTORS RESPONSIBILITY STATEMENT
In terms of Section 134(3) of the Companies Act 2013, the Directors, would like to state as follows:
(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 had selected such accounting policies and applied them consistently and made judgments & estimates that are reasonable and prudent so as to give a true & fair view of the state of affairs of the company at the end of the financial year and of the profit & loss of the Company for that period ;
(c) The Directors had taken proper & 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 & detecting fraud & other irregularities;
(d) The Directors had prepared the Annual Accounts on a going concern basis;
(e) The Directors had laid down Internal Financial Controls to be followed by the Company and such controls are adequate and are 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.
Your Directors would like to express their sincere appreciation for assistance and co-operation received from the various stake holders including Financial Institutions, Banks, Governmental authorities and other business associates who have extended their valuable support and encouragement during the year under review.
Your Directors take the opportunity to place on record their deep appreciation of the committed services rendered by the employees at all levels of the Company, who have contributed significantly towards Companys performance and for enhancing its inherent strength. Your Directors also acknowledge with gratitude the encouragement and support extended by our valued stakeholders.
|By Order of the Board of Directors|
|For DCM Financial Services Limited|
|Surender Kumar||Richa Kalra|
|Date: 25.10.2017||(DIN: 02188166)||(DIN: 07632571)|
|Place: Delhi||Whole Time Director||Director|