Mercantile Ventures Ltd Management Discussions.
The real estate market continue to witness a downward trend during the year also and is likely to continue in the coming years.
The main business of the Company is investment in properties for leasing. The revenue stream from the operations is expected to remain flat in the immediate future.
Opportunities and Threats
Market instability due to introduction of Real Estate regulation may create a slight flutter in real estate industry. The expected better economic outlook can improve the industry growth and can create a positive effect in attracting further investments.
Risks & Concerns
As per the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Risk Management Committee has to be set up by top 100 listed entities, determined on the basis of market capitalisation, as at the end of the immediate previous financial year. As per this regulation company need not constitute a risk management committee. The company however has constituted a risk management committee to constantly review the technical and commercial risks the company has to face so that the interests of the shareholders are protected. The Risk Management Committee has been formed comprising Ms. Sashikala Srikanth, as Chairperson of the committee and the other members are Mr. E N Rangaswami, Whole-time Director and Mr. Padmanabha Sarma, Chief Financial officer. Risk Management Committee ensures that the Company has an appropriate and effective risk management system which carries out risk assessment and ensures that risk mitigation plans are in place by validating the same at regular intervals.
The Committee met periodically to study the risks, threats & concerns and submitted reports to the Board of Directors.
Internal Control Systems & their adequacy
Companys Internal Control System has been designed to provide for:
Accurate recording of transactions with internal checks and prompt reporting.
Adherence to applicable accounting standards and policies.
Compliance with applicable statutes, management policies and procedures.
Effective use of resources and safeguarding of assets.
The Internal audit was carried out periodically through a practicing chartered accountant. The observations arising out of the audit were periodically reviewed and compliance ensured. The summary of the internal audit observations and management responses were submitted to the Board after review by the Audit Committee.
DIRECTORS RESPONSIBILITY STATEMENT
In accordance with the provisions of section 134(5) of the Companies Act, 2013 the Board hereby submits its Responsibility Statement:-
(a) in the pre paration 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 and loss of the company for the year ended 31 March 2017;
(c) the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies 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;
(e) the directors had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and are operating effectively. Internal financial control means the policies and procedures adopted by the company for ensuring the orderly and efficient conduct of its business including adherence to companys policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records and the timely preparation of reliable financial information and
(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.
The Company monitors the performance of subsidiary companies inter-alia, by the following means:
a) The Company does not have any material unlisted Indian subsidiary, and hence, is not required to nominate an Independent Director of the Company on the Board of any subsidiary.
b) The Audit Committee reviews the financial statements, in particular, the investments made by the unlisted subsidiary companies.
c) Your Company formulated a Policy on material subsidiary as required, uploaded in the website of the Company in the link http://www.mercantileventures.co.in/files/Material%20Subsidaries-%20Policy.pdf
CONSOLIDATED FINANCIAL STATEMENTS
The consolidated financial statements were prepared in accordance with accounting standard AS 21 in respect of its wholly owned subsidiary Oasis Ventures Private Limited and its subsidiaries i3 Security Services Private Limited and Rayce Electronic Intelligence India Pvt Ltd. Particulars of associate company as required in AS 23 were considered in respect of National Trust Housing Finance Ltd (NATRUST)
PERFORMANCE AND FINANCIAL POSITION OF THE SUBSIDIARIES AND ASSOCIATES
The financial highlights of the subsidiaries and associate company as on 31 March 2017 are given below:
|Particulars||Oasis Ventures Pvt Ltd||i3 Security Services Pvt Ltd||Rayce Electronic Intelligence India Pvt Ltd||National Trust Housing Finance Ltd|
|% of shareholding||100.00%||100.00%||100.00%||40.00%|
|held by||Mercantile||Oasis Ventures||Oasis Ventures||Mercantile Ventures Ltd|
|Ventures Ltd||Pvt Ltd||Pvt Ltd|
|Profit before tax||36.78||70.85||1.17||702.07|
|Provision for Taxation||20.55||21.98||0.38||228.28|
|Profit after tax||25.34||48.96||0.81||446.39|
The financial highlights of National Trust Housing Finance Ltd (NATRUST) are based on the unaudited financial statements submitted by the company. The equity shares purchased during the year are yet to be transferred in the name of the company and hence the acquisition has not been considered while determining the holding percentage. M/s. Navia Markets Limited ceased to be an associate of the company during the year.
During the year M/s. Alyx Enterprises Private Limited became an associate with effect 09 January 2017 and subsequently it ceased to be an associate on 30 March 2017.
The following companies become subsidiaries during the year and subsequently ceased to be subsidiaries consequent to the sale of the entire stake in these companies.
|S.No. Name of the Company||Date of becoming a Subsidiary||Date of Cessation as a Subsidiary|
|1 M/s. Harrington Ventures Limited||23 January 2017||30 March 2017|
|2 M/s. Panteon Ventures Limited||23 January 2017||30 March 2017|
|3 M/s. Armenian Ventures Limited||27 January 2017||30 March 2017|
|4 M/s. Eka Enterprises Limited||27 January 2017||30 March 2017|
|5 M/s. Unmaj Enterprises Limited||27 January 2017||30 March 2017|
|6 M/s. Ajara Ventures Limited||20 February 2017||30 March 2017|
|7 M/s. Dick Enterprises Private Limited||22 February 2017||30 March 2017|
The Companys Board comprises of the following directors:
Mr. AL Chandramouli
Mr. B Narendran
Ms. Sashikala Srikanth
Mr. E N Rangaswami
In the Meeting of the Board held on 03 February 2017, Mr. B Narendran was appointed as an Additional Director of the company.
Mr. M Rajamani resigned as a Director with effect from 08 February 2017. The Board of Directors places on record its appreciation of the good services rendered by Mr. M Rajamani as a Director of the company.
KEY MANAGERIAL PERSONNEL
The Key Managerial personnel of the Company are:
Mr. E N Rangaswami- Whole-time Director
Mr. V Padmanabha Sarma- Chief Financial Officer
Ms. N Prasanna Varadan- Company Secretary
DECLARATION OF INDEPENDENT DIRECTORS
The Independent Directors have submitted their disclosures to the Board that they fulfill all the requirements as stipulated in Section 149(6) of the Companies Act, 2013 so as to qualify themselves for the continuance / appointment as independent directors under the provisions of the Companies Act, 2013 and the relevant rules.
Pursuant to the provisions of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Boards performance and performance of the Non-independent Director were considered/evaluated by the independent directors at their meeting without the participation of the non-independent director and key managerial personnel.
They also assessed the quality, quantity and timeliness of flow of information between the Companys Management and the Board that are necessary for the Board to effectively and reasonably perform its duties.
Pursuant to the provisions of the Companies act, 2013 and regulation 17 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Board has carried out an annual performance evaluation of its own performance, the directors individually as well as the evaluation of the working of its various committees.
M/s. DPV & Associates, Chartered Accountants appointed as the auditors of the company at the 13th Annual General Meeting to hold office till the conclusion of the 16th AGM to be held in the year 2017 as per Section 139 of the Companies Act, 2013. M/s. DPV & Associates, Chartered Accountants have expressed their willingness to be re-appointed as statutory auditors of the Company, for a second term of five years to hold office from the conclusion of the 16th Annual General Meeting (AGM) until the conclusion of the 21st AGM, subject to ratification by members every year.
SECRETARIAL AUDIT REPORT
The Company has appointed Mr. R Kannan, Company Secretary in practice to undertake the Secretarial Audit of the Company. The Report of the secretarial auditor is annexed to this report.
A report on Corporate Governance as stipulated under Schedule V and Regulation 34(3) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 forms part of this Annual Report. The requisite certificate from a practicing company secretary confirming compliance with the conditions of corporate governance as stipulated is annexed to this Report.
AUDIT COMMITTEE AND WHISTLE BLOWER POLICY
The Audit Committee consists of three independent directors.
Mr. AL Chandramouli
Mr. B Narendran
Ms. Sashikala Srikanth
As required under Section 177 of the Companies Act 2013, the Company has established Whistle Blower Policy and the same has been uploaded in the following web link
The Company has not bought back any of its shares during the year under review. The Company also has not issued any sweat equity shares, bonus shares or stock option scheme during the year under review.
The extracts of annual return in Form MGT 9 pursuant to the provisions of Section 92 read with Rule 12 of the Companies (Management and Administration) Rules, 2014 is annexed to this report.
TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO
Conservation of Energy and Technical Absorption:
The business of the Company is leasing of immovable properties. The particulars prescribed under Section 134 of the Companies Act, 2013 read with rule 8 (3) of the Companies (Accounts) Rules, 2014, relating to conservation of energy and technology absorption are not applicable to the business operations of the Company.
Foreign Exchange Earnings and Outgo:
(a) Foreign Exchange Inflow: Nil
(b) Foreign Exchange Outflow: Nil
PARTICULARS OF EMPLOYEES
The Company has no employee whose salary exceeds the limits as prescribed under Rule(5)(2) of Companies (Appointment and Remuneration of Key Managerial Personnel) Rules, 2014
INFORMATION PURSUANT TO RULE 5 OF THE COMPANIES (APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL) RULES, 2014
|The ratio of the remuneration of each director to the median remuneration of the employees of the company for the financial year 2016-17||Mr. E N Rangaswami Whole-time Director||6.84|
|The percentage increase in remuneration of each director, Chief Financial Officer, Company Secretary in the financial year 2016-17.||Mr. E N Rangaswami, Whole-Time Director||-|
|Mr. V Padmanabha Sarma, Chief Financial Officer||7.80%|
|Mr. N Prasanna Varadan, Company Secretary||10.00%|
|The percentage increase in the median remuneration of employees in the financial Year 2016-17||3.87%|
|The number of permanent employees on the rolls of Company as on 31.03.2017|
|The explanation on the relationship between average increase in remuneration and Company performance. Comparison of the remuneration of the Key managerial personnel against the performance of the Company||Profit/(Loss) after tax (Rs. in Lakhs)||(2297.75)|
|Average increase in remuneration||2.70%|
|Profit/(Loss) after tax (Rs. in Lakhs)||(2297.75)|
|Remuneration of key managerial personnel (Rs. in Lakhs)||51.12|
|Variations in the market capitalisation of the company, price earnings ratio as at the closing date of the current financial year and percentage increase/ decrease in the market quotations of the shares of the company||Month||Share Price (Rs.)||Market Capitalisation (Rs. in lakhs)|
|Price Earnings Ratio||(5.41)|
|Average percentage increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentage increase in the managerial remuneration and justification thereof||Average percentage increase already made in the salaries of employees other than the key managerial personnel in the FY 2016-17||11.73%|
|Average percentage increase already made in the salaries of the key managerial personnel in the FY 2016-17||2.36%|
INFORMATION PURSUANT TO RULE 5(2) OF THE COMPANIES (APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL) RULES, 2014: DETAILS OF EMPLOYEES IN TERMS OF REMUNERATION RECEIVED DURING THE YEAR
|Name||Designation||Remuneration (Rs. in Lakhs)||Qualification||Experience||Date of Joining||Last Employment|
|E N Rangaswami||Whole-time Director||36.00||B.Sc., ACA||38 Years||05/12/2012||Manali Petrochemicals Ltd, General Manager (Finance)|
|V Padmanabha Sarma||Chief Financial Officer||10.50||B.Com., ACA||41 Years||01/12/2012||MCC Finance Ltd, Senior Vice President|
|N Prasanna Varadan||Company Secretary||4.62||B.Com., MBA, ACS||5 Years||13/07/2015||S V Global Ltd, Secretarial Executive|
|V M Aruncahalam||Assistant Manager (Accounts)||5.90||B.Com.,||29 Years||12/06/2013||SPIC-SMO, Accounts manager|
|LSVenkataraman||Executive (Co-ordination)||4.20||BA.,||40 Years||09/11/2012||Manali Petrochemicals Ltd, Executive|
AFFIRMATION THAT THE REMUNERATION IS AS PER THE REMUNERATION POLICY
Company is adopting remuneration guidelines for fixing the remuneration as per the Remuneration policy.
Your directors express their grateful thanks for the assistance, co-operation and support extended to the Company by Promoters, shareholders and the bankers for their continued support. The Directors also place on record their appreciation of the good work put in by the employees of the company.
|By order of the Board|
|FOR MERCANTILE VENTURES LIMITED|
|E N RANGASWAMI|
|Place: Chennai||(DIN: 06463753)|
|Date: 18 May 2017||Whole-time Director|