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The Directors of your Company take pleasure in presenting this Twenty Fourth Annual Report along with the Audited Financial Statements for the financial year ended March 31st, 2018.
The financial performance of the Company, for the year ended March 31st, 2018 is summarized below:
(Rs In Lakhs)
|Profit before Depreciation and Amortization Expenses,||
|Finance Costs and Tax Expenses|
|Depreciation & Amortization expenses||
|Profit before Tax||
|Profit for the year||
|Add: Balance in Profit & Loss Account||
|Buy Back of Shares||
|Transferred to RBI Reserve||
|Proposed Dividend on equity shares||
|Proposed Dividend Tax||
|Contingency Provision against Standard Assets||
|Short Provision made in the previous year||
REVIEW OF OPERATIONS
During the year under review, the Company had achieved a Gross Income of Rs. 1,296.07 Lakhs as against Rs 560.00 Lakhs in the previous year. The profit before tax stands at Rs.1,161.92 Lakhs as against Rs.491.65 Lakhs in the previous year.
The improvement in the profitability of the Company had been due to improvement in Indian Stock Market. During the year under review, NIFTY grew from 9,220.60 as on 1st April, 2017 to 10,113.70 as on 31st March, 2018. Due to this, the investment gave better returns, during current year leading to capital gains of Rs. 860.65 lakhs against capital gains of Rs. 419.61 during the financial year 2016-17. Besides, the business of Mutual Fund distribution has grown substantially leading to commission income growth to Rs. 309.52 lakhs against Rs. 22.87 lakhs during the financial year 2016-17.
STATE OF COMPANY AFFAIRS
During the year under review, the Company operates in one geographical segment i.e. India & has identified two business segments i.e. Segment-I which is Consultancy, Commission & Brokerage and Segment-II Investments in Bonds, Fixed deposits & Loan & Advances.
The various steps taken by the Government in the last 3 years have created a better business environment and barring unforeseen circumstances, we expect a better capital market in coming years which will improve Companys performances. Besides, the Company has started adding new customers to the business of Mutual Fund Distribution. However the price of crude oil is increasing in the current period. Besides, the US interest Rate is also increasing. Due to global strategic situations, increase in crude oil prices, US interest rates and their economy, Indian Stock market may remain volatile during the current year (i.e. 2018-19). Hence the income from investments may remain little subdued/uncertain. However the business of Mutual Fund Distribution is given more stress, we expect to do well in this regard during the current year.
MATERIAL EVENTS OCCURING BETWEEN THE END OF FINANCIAL YEAR AND DATE OF REPORT
The Board of Directors has recommended the sub-division of equity shares of the Company in its Board Meeting held on 28th May, 2018 from Rs. 10/- (Rupee Ten Only) per equity share to Rs. 5/- (Rupees Five Only) per equity share, subject to approval of Members at ensuing Annual General Meeting.
The Company has complied with the Regulations of the Reserve Bank of India as on 31st March, 2018, as are applicable to it as a Non-Banking Financial Company.
The Company has not accepted any public deposits during the year, within the meaning of Section 73 of the Companies Act, 2013 read with Companies (Acceptance of Deposits) Rules 2014 and Section 2 (i) (xii) of the Non-Banking Financial Companies Acceptance of Public Deposits (Reserve Bank) Directions 1998.
There was no unclaimed deposit or overdue deposit with the Company as on 31.03.2018.
As per section 45IC of RBI Act 1934, the Company has transferred Rs. 199.28 Lakhs in RBI reserve fund i.e. aggregating of 20% of its net profit.
Considering profits during the current year, the Board has recommended a final dividend @ 5 % (i.e. Rs. 0.5 per Equity Share after Buy Back of the Company) for the financial year ended 31st March, 2018.
LISTING OF EQUITY SHARES
The equity shares of the Company are listed on the Bombay Stock Exchange Limited, Phiroze Jeejeebhoy Towers, Dalal Street, Mumbai-400001. The Listing Fees for the financial year under review has been paid by the Company.
During the year under review, the Company has neither issued Shares with differential voting rights, nor granted stock option and Sweat Equity Shares.
BUY BACK OF SHARES
The Board of Directors at its meeting on 20th October, 2017 has approved a proposal for the company to Buyback upto 12,77,866 fully paid up equity shares of face value Rs. 10/- each from the eligible shareholders of the company for an amount not exceeding Rs.7,92,27,692/-. The Shareholders of the Company approved the proposal of Buyback of equity shares through postal ballot that concluded on 8th December, 2017. Since the Buy Back offer was undersubscribed, the Company has bought back and extinguished 12,58,843 Equity shares in February 2017. The Buyback was offered to all shareholders as on record date 22nd December, 2017 on a proportionate basis through tender offer route in accordance with the provisions of the SEBI ( Buy back of Securities ) Regulations, 1998 and Companies Act, 2013. The Company has utilized a sum of Rs. 2,37,54,125/- from its Security Premium Account to the extent available and Rs. 5,42,94,141 /- from its Profit & Loss Account to pay Rs 7,80,48,266/- to its shareholder for the Buy Back of Shares.
The Board of the Company is structured in accordance with the requirements of Companies Act, 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. There is adequate number of Independent Directors on the Board of the Company.
The Details of Board Composition & its Meetings are given in the Corporate Governance Report.
In accordance with the provisions of the Companies Act, 2013 and the Articles of Association of the Company, Mrs. Sarabjeet Kaur, Director of the Company, retires by rotation at the ensuing Annual General Meeting and being eligible has offered herself for re-appointment.
Further, the Board has re-appointed Mr. Gauri Shanker Pandey, as a Whole time Director of the Company for the period of five years w.e.f 16th March, 2018 subject to approval of Members in the ensuing Annual General Meeting.
Brief resume and other details of the Directors being re-appointed as required under the Securities Exchange Board of India (Listing Obligations And Disclosures Requirement) Regulations, 2015 are provided in the Explanatory Statement annexed to the Notice.
During the year under review, Nine (9) Meetings were convened and held, details of which are provided in the Report on Corporate Governance.
KEY MANEGERIAL PERSONNEL
Presently, Mr. Mayank Agarwal, Chartered Accountant is the Chief Financial Officer of the Company. He was appointed as the Chief Financial Officer w.e.f 21.10.2017 due to the resignation of Ms. Swarna Gowri S. on 21.10.2017.
DECLARATION FROM INDEPENDENT DIRECTORS
The Company has received declaration from Dr. Charanjeet Singh Bedi, Mr. Baljit Singh Bedi, Mr.Arun K. Jain and Mr. Atul K. Jain, the Independent Directors of the Company confirming that they meet with the criteria of Independence as prescribed under the Companies Act, 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
POLICY ON APPOINTMENT & REMUNERATION
In respect of Nomination and Remuneration of Directors, the Company has adopted the following policies:
a) Policy for selection of Directors and determining Directors independence: and
b) Remuneration Policy for Directors, Key Managerial Personnel and other employees.
The above mentioned policies of the Company are attached herewith marked as Annexure I and Annexure II.
FAMILIARISATION PROGRAMME FOR INDEPENDENT DIRECTORS
The Company has put in place a familiarization program for the Independent Directors, their roles, rights, responsibilities in the Company and related matters. Quarterly updates on relevant statutory matters are also informed to Directors.
Details of familiarization program are available on the website of the Company at the link http://fslindia.com/ pdf/FAMILIARIZATION+PROGRAMMES.pdf.
Pursuant to the provisions of Companies Act, 2013 and Securities Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Board has carried out annual performance evaluation of its own performance, its committees and all the Directors individually.
The evaluation of Non - Independent Directors, Chairman and the Board as a whole was done at a separate meeting by the Independent Directors.
DIRECTORS RESPONSIBILITY STATEMENT
Your Directors makes the following statement in terms of Section 134(3) of Companies Act, 2013:
a. In the preparation of the annual accounts for the year ended March 31st, 2018, the applicable accounting standards read with requirements set out under Schedule III to the Act, have been followed and there are no material departures from the same;
b. The Directors have 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 as at March 31st, 2018 and of the profit of the Company for the year ended on that date;
c. The Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
d. The Directors have prepared the annual accounts on a going concern basis;
e. The Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively; and
f. The Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.
PARTICULARS OF LOANS GIVEN AND INVESTMENTS MADE
Being a NBFC (Non-Banking Financial Company), the Company is exempted under Section 186(11) of the Companies Act, 2013.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
A) Conservation of Energy & Technology Absorption
Particulars under Companies (Accounts) Rules, 2014 on conservation of energy, Technology absorption are not applicable to your Company. Accordingly no disclosure has been made in this regard.
B) Foreign Exchange Earnings and Outgo
The company has neither earned nor spent any foreign exchange during the year under review. RELATED PARTY TRANSACTIONS
All contracts / arrangements / transactions entered by the Company during the financial year under review with related party(s) were in the ordinary course of business and on an arms length basis. During the year, the Company had not entered into any contract / arrangement / transaction with related parties which could be considered material in accordance with the policy of the Company on materiality of related party transactions. The Policy on materiality of related party transactions and dealing with related party transactions as approved by the Board may be accessed on the Companys website at the link: http:// fslindia.com/pdf/RPT.pdf
Particulars of contracts or arrangement with related parties during the year under review are provided in AOC-2 as Annexure III.>
CORPORATE SOCIAL RESPONSIBILITY (CSR)
In terms of Section 135 and Schedule VII of the Companies Act, 2013, the Company has a Corporate Social Responsibility (CSR) Committee which comprises total three members of which two Members including Chairman of the Committee are Independent Directors. Details of Committee & its meeting are given in Report on Corporate Governance.
During the year under review, the Company was required to spend Rs. 9.73 lakhs (2% of Average net profits of last 3 financial years) on CSR Activities.
The Company shall utilize the available funds on long term projects such as Education, Old Age Homes, Orphanage etc. (as specified under Schedule VII of Companies Act, 2013 for CSR activities). The Company is under the process of finding the suitable options and finalization of the implementation plan for the same.
In view of the above the Company is preserving the funds so that as and when the adequate and appropriate option is available to the Company, it will utilize the funds for CSR activities.Hence, the Company has decided not to spend the amount on CSR during the year under review. However, the Company has been compliant with the provisions of Section 135 of the Companies Act, 2013 in the past.
The CSR Policy may be accessed on the Companys website at the link: http://www.fslindia.com/pdf/ csr%201.pdf
The Annual report on CSR activities is annexed herewith as Annexure IV.
AUDITORS AND AUDITORS REPORT
i) Statutory Auditors:
Pursuant to section 139 of the Companies Act, 2013, the Board of Directors of the Company has appointed M/s Walecha Inder& Associates, Chartered Accountants (FRN: 014205N) on 17.05.2017 as a Statutory Auditor for a term of Five Years to hold the office from the conclusion of the 23rd Annual General Meeting held in the Financial year 2016-17 till the conclusion of the 28th Annual General Meeting to be held for the Financial year 2021-22 subject to ratification at every Annual General Meeting.
Further they have confirmed their eligibility to the effect that their re-appointment , if made, would be within the prescribed limits under the Act and that they are not disqualified for the re-appointment.
The notes on financial statement referred to in the Auditors report are self-explanatory and do not call for any further comments. The Auditors Report does not contain any qualification, reservation and adverse remark.
During the year under Review the Auditor had not reported any matter under Section 143 (12) of the Companies Act, 2013; therefore no detail is required to be disclosed under Section 134 (3) of the Companies Act, 2013.
ii) Secretarial Audit:
The Board has re-appointed M/s Jain Aarti & Associates, Practicing Company Secretary, to conduct Secretarial Audit for the financial year 2017-18. The Secretarial Audit Report for the financial year ended March 31, 2018 is annexed herewith marked as Annexure V to this Report. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark.
EXTRACT OF ANNUAL RETURN
Extract of Annual Return of the Company is annexed herewith in MGT-9 as Annexure VI to this Report.
It may also be accessed on the website of the Company at
INTERNAL FINANCIAL CONTROLS
The Company has in place adequate internal financial controls with reference to financial statements. During the year, such controls were tested and no reportable material weakness in the design or operations were observed.
VIGIL MECHANISM &WHISTLE BLOWER POLICY
The Company believes in conducting its affairs in fair & transparent manner by adopting highest standards of professionalism, honesty, integrity & ethical behavior. The Company is committed to develop a culture where it is safe for all employees to raise concern about any wrongful conduct. For this the Company has established a Vigil Mechanism for directors and employees to report genuine concerns.
As per the Companys policy, any personnel can approach the Audit Committee. However no such instance has been reported during the year under review.
The Vigil Mechanism Policy may be accessed on the website of the Company at http://www.fslindia.com/ pdf/FSL_VIGIL%20MECHANISM%20AND%20whistle-blower-policy.pdf
SIGNIFICANT AND MATERIAL ORDERS
There are no orders passed by the any regulatory authorities or courts or tribunal which would impact the going concern status of the Company and its operation in future.
The Board of Directors has constituted a Risk Management Committee for
a. evaluating the various risks impacting the Company; and
b. overseeing that all the risks that the organization faces such as strategic, financial, credit, market, liquidity, security, property, IT, legal, regulatory, reputation and other risks have been identified and assessed and there is an adequate risk management infrastructure in place capable of addressing those risks.
The risk management policy of the Company may be accessed on website of the Company under the http://www.fslindia.com/pdf/RISK%20MNGT.pdf link.
The Audit Committee comprises of four members of which all members including Chairman of the committee are Independent Directors. During the year six meetings were convened and held. Details of the same are provided in Report on Corporate Governance.
The Company has taken adequate steps to ensure compliances with the provision of corporate governance as prescribed under SEBI (Listing Obligation and Disclosures Requirements) Regulations, 2015.
A separate section on Corporate Governance Practices followed by the Company together with Certificate from Companys Auditor & CFO confirming the compliance of Corporate Governance forms an integral part of this Annual Report as Per Regulation 34 & Schedule V of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
SEXUAL HARASSMENT OF WOMEN AT WORKPLACE
The Company is an equal opportunity employer and consciously strives to build a work culture that promotes dignity of all employees. As required under the provisions of sexual harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and Rules framed there under, the Company has implemented a policy on prevention, prohibition and redressal of sexual harassment at workplace. All women, permanent, temporary or contractual including those of service provider are covered under this policy.
Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment. There were No Complaints received from any employee during the financial year 2017-18 and hence no complaint is outstanding as on 31.03.2018 for redressal.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
Management Discussion and Analysis comprising an overview of the financial results, operations/performances and future aspects form part of this annual report.
PARTICULARS OF EMPLOYEE
The information required under Section 197 of the Act read with rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are given below:
a. The ratio of the remuneration of each director to the median remuneration of the employees of the Company for the financial year:
Ratio to median remuneration
|No remuneration has been paid to Non-executive directors|
Ratio to median remuneration
|Gauri Shanker Pandey||
b. The percentage increase in remuneration of each director, chief executive officer, chief financial officer, company secretary in the Financial Year:
|Directors, Chief Executive Officer, Chief||
% increase in remuneration in
|Financial Officer and Company Secretary||
the financial year
|Gauri Shanker Pandey (Whole Time Director)||
|Richa Arora ( Company Secretary)||
|**Swarna Gowri S. ( Chief Financial Officer)||
|***Mayank Agarwal ( Chief Financial Officer)||
*There was no increase in salary. However, revision of salary was done.
**Resigned as Chief Financial Officer w.e.f 21.10.2017 *** Appointed as Chief Financial Officer w.e.f 21.10.2017
c. The percentage increase in the median remuneration of employees in the financial year : 5.25%
d. The number of permanent employees on the rolls of Company: 12 (as on 31st March, 2018).
e. Average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration:
The percentage increase in the median remuneration of employees in the financial year is 5.25% whereas increase in the managerial remuneration for the year was 5.74%
f. Top Ten Employees in terms of Remuneration drawn as on 31.03.2018:
Companys Business Model does not require large no. of people. Total No. of employees as on 31.03.2018 is 12 which includes Senior Level, Middle Level and lower level. Details of all senior level employees drawing salary are given below:
|Particulars||Mr. G.S Pandey||Mr. Mayank Agarwal||Ms. Richa Arora|
|Designation||Whole Time Director||Chief Financial Officer ( from 21.10.2017 )||Whole Time Director & Company Secretary|
|Remuneration Received (Rs. In Lakhs )||7.22||1.82*||4.17|
|Nature of Employment||Permanent||Permanent||Permanent|
|Qualification||B.com||CA & B.com||CS & B.com(H)|
|Experience||30 years of Experience in Human Resource and administration||1 year of experience in the Field of Accounts , taxation & Audit.||2 years of Experience in the field of Company law, SEBI Regulation & other corporate law matter.|
|Date of Commencement of Employment||16.03.2013 (appointed as a Whole Time Director )||21.10.2017||26.02.2016|
|Age||60 years||25 years||25 years|
|Previous Employment & Designation||Dolsun Containers Private Limited , Manager||MJMJ & Associates LLP, Audit Manager||Tiwari& Mishra , Chartered Accountant as an Accounts Executive|
|No. of shares held in the Company||0||0||0|
Note: #Appointed as Chief Financial Officer on 21.10.2017
1. None of the above mentioned employee is a relative of any director or manger of the Company.
2. The above mentioned employees constitute the KMPs of the Company, besides this, the other employees receives nominal salary depending upon their work profile.
g. No employee who was employed throughout the Financial Year 17-18 was in receipt of remuneration, which in aggregate was of amount not less than Rupees One Crore and Two lakh.
h. No employee who was employed for a part of the Financial Year 17-18 was in receipt of remuneration for any part thereof, which in aggregate was of amount not less than Rupees Eighty Lakhs and Fifty Thousand.
i. No employee who was employed throughout the Financial Year 17-18 or part thereof was in receipt of remuneration which in aggregate or as the case may be, was at a rate which in aggregate was in excess of that drawn by the whole time director(s) and who held by himself or along with his spouse and dependent children, not less than 2 percent of the Equity shares of the Company.
j. Affirmation that the remuneration is as per the remuneration policy of the Company: the Company hereby affirms that remuneration is paid as per the remuneration policy of the Company.
Your Directors express their sincere thanks and gratitude to the Companys esteemed Shareholders, Clients,
Associates, Financial Institutions, Bankers, the Securities and Exchange Board of India, Bombay Stock
Exchange Limited, Reserve Bank of India and other Government Departments for their valuable contribution and whole hearted support.
We also acknowledge the sincere and dedicated efforts put in by the employees of the Company at all levels.
For On behalf of the Board of Directors FRONTLINE SECURITIES LIMITED
|Gauri Shanker Pandey||
Rakesh K. Jain
|Whole Time Director||
Place:Noida Date: 28.05.2018