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SMIFS Capital Markets Ltd Directors Report

48.7
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Jul 18, 2024|12:00:00 AM

SMIFS Capital Markets Ltd Share Price directors Report

TO THE MEMBERS,

Your Directors have pleasure in presenting the Fortieth Annual Report of the Company together with the audited financial statements for the year ended March 31, 2023.

1. (a) FINANCIAL SUMMARY OR HIGHLIGHTS/ PERFORMANCE OF THE COMPANY

(Rs in million)

Particulars

Year ended Year ended
31.03.2023 31.03.2022
Profit before Interest, Depreciation & Tax 9.70 24.15
Less: Finance Charge 0.01 0.10
Profit before Depreciation & Tax 9.69 24.05
Less: Depreciation / Amortization 2.88 3.55

Profit before Tax

6.81 20.50
Less: Tax Expenses – Current / Earlier years 1.13 1.57
Less : Deferred Tax for the year 1.09 (0.96)

Profit after Tax

4.59 19.89
Profit brought forward from earlier year : 117.62 98.98
Profit transfer from OCI Reserve: (0.10) (1.25)

Profit available for Appropriation

122.11 117.62

APPROPRIATIONS

Dividend including Dividend Tax
Profit carried to Balance Sheet 122.11 117.62

(b) FINANCIALANDOPERATIONALPERFORMANCE

Profit Before Tax of the Company for the year was 6.81 million (previous year 20.50 million). Profit Before Tax for previous year ended 31-03-2023 included profit on sale of real estate amounting to 17.42 million.

Net worth of the Company as on March 31, 2023 was 1180.00 million (previous year

1163.95 million).

(c) CAPITAL

The paid up Equity Share Capital as on March 31, 2023 stood at 55,850,000/- divided into 5,585,000 equity shares of 10/- each.

(d) DIVIDEND

In view of inadequacy of profits, your Board of Directors do not recommend any dividend for the year.

(e) TRANSFERTOINVESTOREDUCATIONANDPROTECTIONFUND

Pursuant to the applicable provisions of the Companies Act, 2013 read with IEPF Authority (Accounting, Audit, Transfer and Refund) Rules, 2016, all unpaid or unclaimed dividends are required to be transferred by the Company to the IEPF established by the Central Government, after the completion of seven years. Further, according to the IEPF Authority (Accounting, Audit, Transfer and Refund) Rules, 2016, the shares in respect of which the dividend has not been paid or claimed by the shareholders for seven consecutive years or more shall also be transferred to the demat account created by the IEPF Authority. Accordingly the Company has transferred the unclaimed and unpaid dividend and shares. Attention is also being drawn that the unclaimed/unpaid dividend for the Financial year 2015-16 is due for transfer to Investor Education and Protection Fund during October/ November 2023. In view of this, Members of the Company, who have not yet encashed their dividend warrant(s) or those who have not claimed their dividend amounts, may write to the Company/ Companys Registrar and Transfer Agents, M/s Maheshwari Datamatics Private Limited.

2. MANAGEMENTDISCUSSIONANDANALYSIS

Management Discussion and Analysis of financial condition and of operations of the Company for the year under review as required under Regulation 34 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 with the Stock Exchanges is given in the part on Corporate Governance elsewhere in the Annual Report marked as "Annexure A".

3. FINANCE

The Company continues to focus on judicious management of its working capital. The Companys long term debt as on 31st March, 2023 was Rs. 0.07 million (Previous Year Rs. 0.42 million)

3.1 DEPOSITS

The Company has not accepted any deposit falling within the ambit of Section 73 of the Companies Act, 2013 and The Companies (Acceptance of Deposits) Rules, 2014 from the public.

3.2 PARTICULARSOFLOANS,GUARANTEESORINVESTMENTS

The particulars of loans, guarantees and investments have been disclosed in the financial statements.

4. INTERNALCONTROLSYSTEMSANDTHEIRADEQUACY

The Company has an Internal Control System, commensurate with the size, scale and complexity of its operations.

The Internal Audit monitors and evaluates the efficacy and adequacy of internal control system in the Company, its compliance with operating systems, accounting procedures and policies of the Company and its subsidiary. Based on the report of internal auditors, corrective action is undertaken in respective areas and thereby controls are strengthened. Significant audit observations and corrective actions taken thereon are presented to the Audit Committee of the Board.

5. SUBSIDARYCOMPANY

As on March 31, 2023, there is one wholly-owned subsidiary Company namely, SMIFS Capital Services Limited. Statement required under Section 129(3) of the Companies Act, 2013 in respect of the Subsidiary Company is attached herewith.

FINANCIALSUMMARYORHIGHLIGHTS/PERFORMANCEOFTHESUBSIDIARYCOMPANY

( in million)

Particulars

Year ended 31.03.2023 Year ended 31.03.2022
Profit/(Loss) before Interest, Depreciation & Tax 0.48 0.37
Less: Finance Charge
Profit/(Loss) before Depreciation & Tax 0.48 0.37
Less: Depreciation / Amortization 0.02 0.03
Profit/ (Loss) before Tax 0.46 0.34
Less : Tax Expenses (0.05) 0.01
Profit/ (Loss) after Tax 0.51 0.33
Profit/(Loss) brought forward from earlier years (5.06) (5.39)
Profit/(Loss) carried to Balance Sheet (4.55) (5.06)

6. YEARINRETROSPECTANDFUTUREOUTLOOK

The year 2022- 2023 began on a promising note as supply conditions were improving, financial markets exuded greater optimism and central banks were steering their economies towards a soft landing. However the launch of war by Russia on Ukraine which is still continuing resulted in a sharp increase in Price of various commodities causing high inflation in many countries of the world and it is expected that both Europe and USA may face recessionary conditions in the current year. The global economy is now witnessing a renewed phase of turbulence with fresh headwinds from the banking sector turmoil in some advanced economies. Bank failures and contagion risk have brought financial stability issues to the forefront. Given the stubbornness in inflation, central banks continue to tighten monetary policy, although at a reduced pace.

In our Country also inflation shot up and to contain inflation, RBI has increased the policy repo rate cumulatively by 250 bps in the last 11 months starting May 2022. This was preceded by the introduction of the Standing Deposit Facility (SDF) at a rate 40 bps higher than the fixed rate reverse repo. Thus, the effective rate hike has been 290 bps. Currently, Consumer Price Index (CPI) for April 2023 has come down to 4.7 percent within the RBIs tolerance limit of 2% to 6%. 10 years Bond yield has come down to around 7 percent. In the meeting held by RBI in April 2023 it decided to keep the policy repo rate unchanged at 6.50 per cent. Amidst this volatility, our banking and non-banking financial service sectors in India remain healthy and financial markets have evolved in an orderly manner. Economic activity remains resilient and real GDP growth is expected to have been 7.0 per cent in 2022-23. After taking various factors into consideration, RBI has projected real GDP growth for FY 2023-24 at 6.5 percent.

The Indian Rupee has moved in an orderly manner in the calendar year 2022 and continues to be so in 2023 also. This is reflective of the strength of domestic macroeconomic fundamentals and the resilience of the Indian economy to global spillovers.

In this daunting environment, Indias financial sector remains resilient and stable. As expected, favourable base of last year led the Headline WPI for April 2023 to come at -0.9%, a negative print for the first time in 33-months which indicated lower imported inflation. The easing of overall input cost pressures suggests an improved outlook for retail inflation.

Indias Trade Deficit improved to USD 15.2 bn in April 2023 from USD 18.6 bn in March due to a sharp reduction in non-oil-non-gold imports. The imports declined by 14.1% YoY and exports declined by 12.7% YoY indicative of domestic and foreign demand weakness. Indias services sector remained robust with a surplus of USD 13.9 bn. The estimate for FY24 is CAD/GDP at 1.2% with crude oil prices averaging at USD 80 per barrel. Brent crude has dropped to $73.74 per barrel from a high of $82.55 per barrel during the year.

Overall, the broadening of economic activity; the expected moderation in inflation; the fiscal consolidation with focus on capital spending; the significant narrowing of the current account deficit to more sustainable levels and the comfortable level of foreign exchange reserves are welcome developments which will further bolster Indias macroeconomic stability.

Foreign portfolio investors (FPIs) again withdrew substantial amounts from Indian equity market during the Financial Year 2022-2023, after selling a record amount in the previous year. However, FPIs are expected to return in the current financial year as India has a high growth potential in 2023-24. Factors including US Federal Reserve policy, oil prices and geopolitical developments may affect FPI flows this year. Domestic institutional investors have absorbed the massive selling by FPIs.

Your Company is registered as Category I Merchant Banker and executes assignments in areas of Mergers and Acquisitions, Debt Syndication, Placement of Equity Shares and Bonds.

7. LISTING OF THE SECURITIES OF THE COMPANY

Equity Shares of your Company continue to be listed on BSE Limited and The Calcutta Stock Exchange Limited and the listing fees for the year 2022-23 have been paid and 99.19 percent of the equity shares of your Company are held in dematerialized form.

8. DIRECTORSRESPONSIBILITYSTATEMENT

Pursuant to the requirement under section 134(3)(c) of the Companies Act, 2013 with respect to Directors Responsibility Statement, it is hereby confirmed that: (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 have selected such accounting policies and applied them consistently and made judgment 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 the profit and loss of the company for that period.

(c) the directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provision of this 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 control to be followed by the company and that such internal financial control are adequate and were operating effectively, and (f) the directors have devised proper systems to ensure compliance with the provision of all applicable laws and that such system were adequate and operating effectively.

9. RELATEDPARTYTRANSACTIONS

All related party transactions that were entered, into during the financial year were on an arms length basis and were in the ordinary course of business. There are no materially significant related party transactions made by the Company with Promoters, Directors, Key Managerial Personnel or other designated persons which may have a potential conflict with the interest of the Company at large.

All Related Party Transactions are placed before the Audit Committee as also the Board for approval. Prior omnibus approval of the Audit Committee is obtained on a yearly basis for the transactions which are foreseen and are of repetitive nature. The transactions entered into pursuant to the omnibus approval so granted are of audited and a statement giving details of all related party transactions is placed before the Audit Committee and the Board of Directors for their approval on a yearly basis. The policy on Related Party Transactions as approved by the Board is uploaded on the Companys website. None of the Directors have any pecuniary relationship or transactions vis-?-vis the Company.

10. VIGILMECHANISMFORDIRECTORSANDEMPLOYEES

The Company has a Vigil Mechanism to deal with instance of fraud and mismanagement, if any. The details of the Vigil Mechanism is explained in the Corporate Governance Report and also posted on the website of the Company.

11. DISCLOSURE OF SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION, REDRESSAL) ACT, 2013

In accordance with The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 to provide for the effective enforcement of the basic human right of gender equality and guarantee against sexual harassment and abuse, more particularly against sexual harassment at work place, your Company has a Policy on Prevention of Sexual Harassment at the Workplace duly approved by the Board of Directors.

During the year, no complaint was reported under The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

12. ONSERVATIONOFENERGY,TECHNOLOGYABSORPTION,FOREIGNEXCHANGEEARNING

ANDOUTGO

Particulars required under Section 134(3)(m) of the Act, read with Rule 8 of the Companies (Accounts) Rules, 2014, under the heads (a) conservation of energy; and (b) technology absorption, are not applicable to the Company.

During the year there was no foreign exchange earnings (previous year nil). Foreign Exchange outgo during the year aggregated to Nil. (previous year Nil).

13. DIRECTORS

Composition of the Board of Directors of your Company fulfills the criteria fixed by Regulation 17 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 with fifty per cent of the Directors being Independent Directors. Your Board comprises of 6 (six) directors out of which 3 (three) are independent directors.

Mr. Utsav Parekh is the Non- Executive Chairman. The three-year term of Mr. Kishor Shah as Managing Director ended on March 31, 2021 and on recommendation of the Nomination and Remuneration Committee and on approval of the Board of Directors in its meeting held on February 12, 2021 subject to ratification by the members at the ensuing Annual General Meeting by passing a Special Resolution, Mr. Kishor Shah has been re-appointed Managing Director of the Company with effect from April 1, 2021 for a further period of 3 (three) years. The same was ratified in the Annual General Meeting by a Special Resolution. Terms of appointment include payment of managerial remuneration as per the provisions of Sections 196, 197, 203 and other applicable provisions, if any, read with Schedule V, Part II, Section II (A) to the Companies Act, 2013.

Mr. Utsav Parekh, Non- Executive Director, retires by rotation in accordance with the requirements of Companies Act, 2013 and Articles of Association of the Company. He being eligible offers himself for re-appointment.

Brief resume of Mr. Utsav Parekh, nature of his expertise in specific functional areas, names of companies in which he holds directorships and/or memberships/chairmanships of committees of Board, his shareholdings are furnished in section on Corporate Governance elsewhere in the Annual Report.

All Independent Directors have given declarations that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

13.1 ANNUALPERFORMANCEEVALUATIONOFTHEBOARD

Pursuant to the provisions of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Board has carried out an annual performance evaluation of its own performance, the directors individually, Key Managerial Personnel (KMP), Senior Management as well as the evaluation of the working of its Audit Committee, Nomination & Remuneration Committee and Stakeholders Relationship Committee. The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report.

13.2 NOMINATION&REMUNERATIONPOLICY

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 contents of which are placed on the website of the Company at www.smifscap.com

13.3 MEETINGS

During the year five (5) Board Meetings and four (4) Audit Committee Meetings were convened and held, the details of which are given in the Corporate Governance Report. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013.

14. AUDITORS

14.1 STATUTORY AUDITORS

M/s S K Agarwal and Co Chartered Accountants LLP, Statutory Auditors of the Company hold office in accordance with the provisions of the Companies Act, 2013.

M/s S K Agarwal and Co Chartered Accountants LLP were appointed as the Statutory Auditors of the Company for the second term of 5 years from the conclusion of the Thirty Ninth Annual General Meeting until the conclusion of the Forty Fourth Annual General Meeting of the Company subject to the ratification by the Members at every Annual General Meeting, at a remuneration to be decided by the Board of Directors.

Since, the first proviso of Section 139 has been omitted w.e.f. May 7, 2018 by the Companies (Amendment) Act, 2017 which requires companies to place the appointment of Statutory Auditors for ratification before the members at every Annual General Meeting of the Company, the ratification of appointment of M/s S K Agarwal and Co Chartered Accountants LLP as the Statutory Auditors of the Company will not be placed before the Members at the ensuring Annual General Meeting of the Company.

The observation made in the Auditors Report are self-explanatory and therefore, do not call for any further comments under Section 134(3)(f) of the Act.

14.2 SECRETARIALAUDIT

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company had appointed Mr. Sudhansu Sekhar Panigrahi, Company Secretary in Practice to undertake the Secretarial Audit of the Company. The Secretarial Audit Report is annexed herewith as "Annexure B".

15. AUDITORSQUALIFICATION

(i) STATUTORYAUDITORSQUALIFICATIONS

Qualifications contained in the Auditors Report if any have been dealt with in the Notes to financial statements and are self-explanatory.

(ii) SECRETARIALAUDITORSQUALIFICATIONS

Qualifications contained in the Secretarial Auditors Report if any have been dealt with in the Notes to Form MR-3 and are self-explanatory.

16. PARTICULARS OF EMPLOYEES

The information required pursuant to Section 197 read with Rule 5 of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company, is given in "Annexure C".

17. EXTRACTOFANNUALRETURN

Extract of Annual Return in Form MGT-9 is available at the website of the Company at www.smifscap.com

18. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS

There are no significant material orders passed by the Regulators/Courts which would impact the going concern status of the Company and its future operation.

19. ACKNOWLEDGEMENTS

Your Directors express their sincere appreciation of the co-operation and assistance received from the shareholders, bankers, regulatory bodies and other business constituents during the year under review.

For and on behalf of the Board of Directors

Regd.Office:

‘Vaibhav (4F), 4 Lee Road,

Sd/-

Kolkata - 700 020

(UTSAVPAREKH)

Chairman
The 18th day of May, 2023 (DIN No. 00027642)

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