Shardul Securities Ltd Directors Report.



The Members of

Shardul Securities Ltd.

Your Directors are pleased to present the Thirty-Third Annual Report and the Audited Accounts for the year ended March 31, 2018.

1. Financial Results: - (Rs. in lakhs)
2017-2018 2016-2017
Profit/(Loss) before Depreciation 319.99 67.71
Less: Depreciation 32.09 32.24
Profit/(Loss) before Taxation 287.90 35.47
Less: Tax Expenses
Provision for tax 40.00 2.25
Current tax expense relating to prior years - (6.74)
Deferred Tax Liability/(Asset) (5.26) 18.09
Profit / (Loss) after Taxation 253.16 21.87
Surplus/(Deficit) brought forward from previous years 4070.04 4178.90
4323.20 4200.77
Statutory Reserve Fund as per RBI Guidelines 50.63 4.37
Proposed Dividend(including dividend tax) on Equity Shares - 126.36
Balance carried to Balance Sheet 4272.57 4070.04

2. Dividend:-

Your Directors recommend a dividend of Re. 0.60 per Equity Share on 1,74,98,433 equity shares of Rs.10 each aggregating to Rs. 126.36 lakhs (including dividend tax) for the financial year ended 31st March 2018 which if approved at the ensuing Annual General Meeting, will be paid to (i) all those Equity Shareholders whose names appear in the Register of Members as on 19th July 2018 and (ii) to those whose names as beneficial owners are furnished by the National Securities Depositories Ltd., and Central Depositories Service (India) Ltd.

3. Transfer to Reserves:-

As per requirement of RBI regulations, the Company has transferred to Statutory Reserve Fund an amount of Rs. 50.63 Lakhs in Financial Year ended March 31, 2018.

4. Management Discussions and Analysis Report:-(i) Financial performance:

Your Company achieved a gross revenue of Rs.556.22 lakhs during the year under report and a net profit of Rs.253.16 lakhs. However, on a consolidated basis including the subsidiary, your company achieved a net profit of Rs. 346.80 lakhs.

(ii) Industry Structure and developments:

Though the monsoon conditions were better during the year under report, yet many parts of the country still had to go through severe drought conditions. Notwithstanding increased farm output, adequate relief to the farmers by way of fair support price as per Professor Swaminathan report on agri pricing that the Govt had promised did not materialize resulting in gloomy state of affairs for farmers across the country. The service sector and industrial sector, however, contributed marginally higher at 7 and 9 percent respectively which resulted in an increase in the GDP growth to about 7.2% as compared to about 6% during the previous financial year. The low crude oil prices in international market helped the Government to substantially mobilize towards infrastructure developments but during the year under report, the international crude oil prices started moving up again and with the Government Agencies being reluctant to lower the tax advantages they gained during the previous year, it resulted in an increase in the domestic petroleum prices leading to inflationary trends and higher cost of living affecting the common man in general.

The capital markets remained volatile though there was positive trend in terms of better valuations in metal, banking, auto and pharmaceutical segments. The continued influx of funds through foreign investments and the general growth in the contributions towards mutual fund industry ensured constant money supply to the capital markets resulting in increase in stock market indices. The foreign exchange reserves crossed $ 400 Billion for the first time, thanks to Direct Foreign Investments which increased by almost 8% besides the foreign remittances for investments and savings. However the adverse balance of payments due to negative Import/Export activities witnessed Rupee depreciating substantially in the recent times.

The Banking sector has been going through the pains of accumulated burden of making huge provisions for bad and doubtful debts that got further accentuated by some huge frauds committed by a few delinquent traders in diamond and Jewellery Industry that did not augur well for the Industry. The Credit off take was low with cost of funds being not borrower friendly.

The NBFCs in the country generally showed an improved performance particularly in the micro finance and SME segments and your company though basically engaged in investment activities also showed a better growth and performance during the year under review.

(iii) Business Review:

Despite the volatility in Capital markets, your company could achieve better results as compared to previous year for the aforesaid reasons and looks forward to better its performance during the ensuing year as the monsoon conditions are expected to be positive. Due to ensuing general election year, Government spending is also likely to increase and would contribute for accelerated economic growth that should auger well for your company’s activities as well.

(iv) Opportunities and threats:

Despite a reasonable GDP growth that is expected to be around 7.3%, the Government’s finances have been under intense strain after the introduction of GST wherein determination of the right kind of rate mix is still in an evolution stage. The Government has taken lot of measures to support the rural and power sectors that requires huge capital expenditure but the strict provisioning norms in the banking system has resulted in erosion of capital and ability of the banks to lend freely for supporting the accelerated economic growth envisaged by the Government. Money supply which was a cause of worry is restored to its normalcy and with higher Govt expenditure, the economy should move ahead on a positive note in the coming years.

(v) Segment-wise – product-wise reporting:

As there has been no change in your company’s business activities and broking activities there are no separate reportable segment.

(vi) Outlook:

Your company expects the capital markets continuing to be volatile in view of the political developments consequent to the ensuing election year and would like to be guarded in making projections for the year. However, if the anticipated Government expenditure to boost the economy takes place, the market should remain vibrant and your company should be able to achieve better results for the coming year.

(vii) Risks and concerns:

Your company’s activities which are essentially in the capital market segments and the risk perception of our activity could be discerned as under: Market Risk: Your company’s major investments are mostly in capital market instruments like shares, mutual funds and bonds and any volatility could erode the capital value of the investments. No doubt, your company would keep a close vigil on movement of prices and take appropriate steps to minimize this risk.

Interest risk: The changes in interest rates by RBI and Banks could result in fluctuations in prices and consequently the income of various investments and borrowings by the company may vary. Your company has put in measures to hedge this risk but this cannot be eliminated totally.

Operation Risk: The stock market operations are fraught with certain risks associated with market judgments by operational executives and their decision making process based on certain perceptions prevailing at any given time and these could change suddenly resulting in unexpected adverse positions. As the operations are human dependent, the error factor is always inbuilt in this activity. Some of the risks could be wrong data input, deviations from the rules of SEBI or Exchange due to oversight, lack of coordination amongst the dealing and back office, administrative delays in adhering to schedules etc. This is not exhaustive and your company strives to minimize this type of risk through adequate training and motivation periodically.

(viii) Internal Financial control Systems and their Adequacy:

Your company has in place adequate interest control measures. There is continuous monitoring of all the activities and necessary creative measures are taken periodically to manage any unforeseen risk factors.

(ix) Human Resources:

Your company has adequate trained professionals to manage the affairs of the company in the most prudent manner.

5. Subsidiaries:-

Shriyam Broking Intermediary Limited, a wholly owned subsidiary of the company achieved a significant improvement in its working results during the year under report. The net profit for the year was at Rs.88.82 lakhs as compared to Rs.50.38 lakhs during the previous year. The subsidiary is poised to improve its performance in coming year with more active participation in the markets and increase in the clientele base.

Shriyam Realtors Private Limited (Formerly known as Shriyam Broking (IFSC) Private Limited) a wholly owned subsidiary of Shriyam Broking Intermediary Limited was incorporated on 15th December 2016. However the company has not yet started any business activities.

6. Names of companies which have become or ceased to be its subsidiaries, joint ventures or associate companies during the year:- During the year under review no company has ceased to be its subsidiaries, joint ventures or associate companies.

7. Directors:-

In accordance with the Articles of Association of the Company and the provisions of the Companies Act, 2013, Mr. Yogendra Chaturvedi (DIN: 00013613), director is liable to retire by rotation at the ensuing AGM and is eligible for reappointment.

The present term of office of Mr. R. Sundaresan (holding Din No. 00029840), Whole-time Director expires on 15th June 2018. Your Directors approved his re-appointment as Whole-time Director of the Company for a period of three years with effect from 16th June 2018, subject to the approval of shareholders of the Company at the Annual General Meeting At a board meeting held on 14th November 2017 the board had appointed Ms. Daya Bariya, (holding Din No. 07049483) as an Additional Executive Women Director, who is liable to retire by rotation and would vacate her office at the ensuing Annual General Meeting of the Company and is eligible for re-appointment at the ensuing Annual General Meeting of the Company.

Necessary resolutions for the appointment /re-appointment of the aforesaid directors have been included in the notice convening the ensuing AGM and details of the proposal for appointment / re-appointment are mentioned in the explanatory statement of the notice. Your directors recommend their appointment / re-appointment.

Brief resume of the Directors proposed to be appointed/ reappointed, nature of their experience in specific functions and area and number of companies in which he/she hold membership/chairmanship of Board Committees as stipulated regulation 36(3) of SEBI

(Listing Obligations and Disclosure Requirements) Regulations, 2015 are provided in the Report of Corporate Governance forming part of the Annual Report.

All independent directors have given declaration that they meet the criteria of independence as laid under section 149(6) of the Companies Act, 2013 and regulation 25 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

8. Appointments/Resignations of the Key managerial personnel:-

Ms Daya Bariya was appointed as an Additional Executive Director with effect from 14 November 2017. Ms Daya Bariya was also appointed as the Company Secretary with effect from 1st December 2017 in place of Ms Monika Agarwal who resigned as Company Secretary of the Company with effect from 30th November 2017.

9. Board evaluation:-

Pursuant to the provisions of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirement) Regulations, 2015, the Board has carried out an evaluation of its own performance, the directors individually as well as the evaluation of the working of its Audit, Nomination & Remuneration Committees. The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report.

10. Remuneration policy:-

The Board has, on the recommendation of the Nomination & Remuneration Committee framed a policy for selection and appointment of Directors, Senior Management and their remuneration. The Remuneration Policy is stated in the Corporate Governance Report.

11. Number of meetings of the Board:-

Four Meetings of the Board of Directors were held during the year and the details of such meetings forms part of the Corporate Governance Report.

12. Audit committee:-

The Audit Committee as on 31st March 2018 comprises of Independent Directors namely Mr. Devesh Vasavada (Chairman), Mr. Kantilal Shah, Mr. Charul Abuwala and Mr. Yogendra Chaturvedi (Executive Director) as other members. All the recommendations made by the Audit Committee were accepted by the Board.

13. Extract of Annual Return:-

The details forming part of the extract of the Annual Return in form MGT-9 as required under section 92 of the Companies Act 2013, is included in this Report as Annexure A and forms as integral part of this Report.

14. Taxation:-

In opinion of Directors, the provision for Income Tax is made as per the provisions of the Income Tax Act, 1961.

15. Cash flow:-

As required by SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a Cash Flow Statement is appended with this report.

16. Directors’ Responsibility Statement:-

To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statements in terms of Section 134(3)(c) of the Companies Act, 2013:

a) that in the preparation of the annual financial statements for the year ended March 31, 2018, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

b) that such accounting policies as mentioned in Notes to the Financial Statements have been selected and applied consistently and judgments and estimates have been made 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 31, 2018 and of the profit of the Company for the year ended on that

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

d) that the annual financial statements have been prepared on a going concern basis;

e) that proper internal financial controls were in place and that

f) that systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively.

17. Statutory Auditors and Auditors’ Report:-

M/s Khimji Kunverji & Co., Chartered Accountants, (Firm Registration No: 105146W have conducted audit for the F.Y. 2017-18. M/s Khimji Kunverji & Co. has tendered their resignation to discontinue as the Statutory Auditor of the Company w.e.f. F.Y. 2018-19 and further remaining terms of their period.

The Board of Directors recommends appointment of M/s J. Kala & Associates, Chartered Accountants (Firm Registration No.: 118769W) as Statutory Auditors of the Company in place of M/s Khimji Kunverji & Co., Chartered Accountants, (Firm Registration No: 105146W who have tendered their resignation as Statutory Auditors of the Company w. e. f. F.Y. 2018-19.

The Board of Directors of the Company at its meeting held on 29th May 2018 have appointed M/s J. Kala & Associates, Chartered Accountants (Firm Registration No.: 118769W), subject to approval of shareholders at ensuing Annual General Meeting, to hold office from the conclusion of 33rd Annual General Meeting till the conclusion of 38th Annual General Meeting of the Company. The Board recommends to the members of the Company for approval of appointment of M/s J. Kala & Associates, Chartered Accountants (Firm Registration No.: 118769W) as the Statutory Auditors of the Company.

Your Company has received a letter from M/s J. Kala & Associates, Chartered Accountants (Firm Registration No.: 118769W) to the effect that their appointment, if made, would be under Section 139 (1) of the Companies Act, 2013 and that they are not disqualified within the meaning of Section 141 of the Companies Act, 2013 read with Rule 4(1) of the Companies (Audit and Auditors) Rules, 2014. The notes to the Financial Statement referred to in the Auditors’ Report are self-explanatory and, therefore, do not call for any further comments.

18. Secretarial Audit:-

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and rules made there under, the Company has appointed M/s Dhirendra Maurya & Associates, Company Secretary in Practice to undertake Secretarial Audit of the Company. The Secretarial Audit Report is included in Annexure B and forms an integral part of this Report.

There is no secretarial audit qualification for the year under review.

19. Internal Audit:-

The Company’s internal control system is commensurate with its size, scale and complexities of the operations. The internal audit is entrusted to M/s Anil B Jain & Associates, Chartered Accountants. The Audit Committee of the Board of Directors and Statutory Auditors are periodically apprised of the internal audit findings and corrective actions taken.

20. Significant and material orders passed by the regulators or courts:- by the Regulators / There are no significant Courts which would impact the going concern status of the

Company and its future operations.

21. Corporate Governance:-

Report on Corporate Governance stipulated under Regulation 34(3) and Regulation 53(f) read with Schedule V of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 with Stock Exchange form part of this annual report. A certificate from the auditors of the Company M/s Khimji Kunverji & Co. Chartered Accountants, confirming compliance of conditions of Corporate Governance as stipulated under aforesaid regulation is annexed to and forms part of this Report.

22. Consolidated Accounts:-

In accordance with the requirements of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and the Accounting Standard -21 prescribed by the Institute of Chartered Accountants of India, Company had made additional disclosure in respect of Consolidated Financial Statements and Accounting Standard-18 for Related Party transactions.

23. Particulars of loans, guarantees or investments by the company:–

Details of Loans, guarantees or investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the notes to Financial Statements.

24. Related party transactions:- transactions, which could have had a potential conflict with the interests of the There were no materially significant


As required under Regulation 23 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company has formulated policy on dealing with Related Party Transactions. The Policy is available on the website of the Company.

Weblink of the same is:

25. Whistle blower policy and vigil mechanism:-

The Company has established a whistle blower policy and vigil mechanism for directors and employees to report concerns about unethical behavior, actual or suspected fraud or violation of the company’s code of conduct policy. The mechanism provides for adequate safeguards against victimization of directors and employees. None of the personnel have been denied access to the Audit Committee of the Board. The details of Whistle Blower Policy are available on the website of the Company www.shardulsecurities. com

26. Corporate Social Responsibility committee:-

In compliance with Section 135 of the Companies Act, 2013 read with the Companies (Corporate Social Responsibility Policy) Rules 2014, the Company has established Corporate Social Responsibility (CSR) Committee and statutory disclosures with respect to the CSR Committee and an Annual Report on CSR Activities forms part of this Report as Annexure C.

27. Disclosure under the Sexual harassment of Women at Workplace (prevention, prohibition and Redressal) Act, 2013:-

The Company has in place a requisite policy in line with the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. All employees (permanent, temporary, trainees) are covered under the policy. There was no compliant received from any employee during the financial year 2017-18 and hence no complaint is on 31.03.2018 for redressal.

28. Other Statutory information:-a. particulars of employees:

Information pursuant to Section 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, in respect of the employees of the Company are annexed to this report as ‘Annexure D’.

In terms of provisions of Section 197(12) of the Companies Act, 2013 read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, none of the employees are in receipt of remuneration in excess of the limits set out in the said Rules.

b. Conservation of energy, technology Absorption and foreign exchange earnings and outgo:

i) Provisions pertaining to conservation of Energy and Technology Absorption are not applicable or not relevant to the working of Company. The Directors keep themselves acquainted with ongoing seminars and research papers. ii) The Company has neither earned nor spent any amount by way of Foreign Exchange.

c. Deposits:

i) There are no deposits covered under Chapter V of the Act, which has remained unclaimed or claimed but not paid for which information is required to be given in this report. The Company neither hold any Public Deposits nor is accepting any deposits. ii) The Company has complied with various requirements in terms of the capital adequacy under the guidelines issued by the Reserve Bank of India for the Non-Banking Financial Companies.

29. CEO/CFO Certification:-

The Chief Executive Officer and Chief Financial Officer have issued certificate pursuant to the provisions SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 certifying that the financial statements do not contain any untrue statement and these statements represent a true and fair view of the Company’s affairs. The said certificate is annexed and forms part of the Annual


30. Acknowledgment:-

Your Directors appreciate the co-operation and support extended by the Shareholders, Employees, Financial Institutions and Banks.

For and on behalf of the Board
Place: mumbai R Sundaresan Daya Bariya
Date: 29th may 2018 executive Director executive Director and company Secretary
Regd. Office :
G-12, Tulsiani Chambers
212, Nariman Point
Mumbai 400 021