DIRECTORS' REPORT Your Directors would like to present the Twenty-Second Annual Report together with the Audited Accounts for the year ended March 31, 2015. The financial highlights of your Company for the year 2014-15 are as follows: dividend The Company's operations resulted only in a nominal profit for the year 2014-15. Due to working capital requirements, your Directors have not recommended any dividend on the Equity Capital of the Company for the year ended March 31, 2015. BRIEF description OF THE COMPANY'S AFFAIRS India's Real GDP growth picked-up to 7.3% in FY 2015 (source: www.mospi.nic.in) and is likely to improve further in the current fiscal year. The Company has been conducting the following operational activities during the year: i.Buying, Selling and dealing in shares and other Securities in Secondary Markets. ii.Identifying investment avenues and advising on portfolio management of cash and assets. In the case of FPOs, we take up underwriting and broking. RESERVES The Company has not transferred any amount to the Reserves. material changes and commitments, if any, affecting the financial position of the company No material changes and commitments have occurred between the end of the financial year of the company to which the financial statements relate and the date of the report that affect the financial position of the company. directorate Mr. Prasan Chand Jain (DIN - 00050081), Director, retires by rotation and, being eligible, offers himself for re-appointment at the ensuing Annual General Meeting. Ms. Dhanesh Mrinalini (DIN - 05118819), has been appointed as an Additional Director in the category of Women Director pursuant to Section 149 of the Act w.e.f. March 31, 2015 who holds office up to the date of the ensuing Annual General Meeting of the Company. declaration of independence by directors The Company has received declarations from all the Independent Directors of the Company confirming that they meet with the criteria of independence as prescribed under sub-section (6) of Section 149 of the Companies Act, 2013. meetings of the board of directors The Company had 4 Board meetings during the financial year under review. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013. For further details please refer report on Corporate Governance of this Annual Report. extract of the annual return The extract of Annual Return pursuant to the provisions of Section 92 read with Rule 12 of the Companies (Management and Administration) Rules, 2014 is furnished in MGT-9 and is attached to this Report in Annexure A board evaluation Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, 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 Audit, Nomination & Remuneration Committee and other committees. In compliance with the provisions of the Companies Act, 2013 and revised Clause 49 of the Listing Agreement with the Stock Exchanges, the Independent Directors held a meeting on February 4, 2015, and: • Reviewed the performance of non-independent directors and the Board as a whole. • Assessed the quality, quantity and timeliness of flow of information between the Company's management and the Board, which is necessary for the Board to effectively and reasonably perform their duties. familiarization program for independent directors Pursuant to Clause 49 of the Listing Agreement, the Company shall familiarize the Independent Directors with the Company and their roles, rights, responsibilities in the Company, nature of industry in which the company operates, business model of the Company etc. However, the Independent Directors have been a part of the Board for a few years now, and so no separate sessions for familiarization have been conducted during the year. remuneration policy Your Board has a remuneration policy for selection and appointment of Directors, Senior Management and their remuneration. The remuneration policy forms a part of the Corporate Governance Report annexed to this report. details of subsidiary / joint ventures / associate companies The company neither has any subsidiary nor any joint venture(s) during the year. However M/s. Sugal Commodity Brokers P. Ltd. is an associate of the Company as per Section 2(6) of the Companies Act, 2013. auditor Mr. R. Mugunthan, Chartered Accountant, Chennai, is the retiring auditor and he is eligible for reappointment. The Company has received letter from Mr. R. Mugunthan to the effect that his re-appointment, if made, would be within the prescribed limits under Section 141(3)(g) of the Companies Act, 2013, and that he is not disqualified for re-appointment. auditors' report The Auditor, in his report, has made a reservation that the Company has not deposited Income Tax Dues of Rs. 55.62 Lacs (for Asst. Year 2010-11) and Rs. 4.24 Lacs (for Asst. Year 2012-13). The dues have not been deposited as the same is being contested by the Company and the dispute is pending before the Commissioner of Income Tax (Appeals). The observation in the report of the Auditor and the Annexure appended thereto is self-explanatory and does not call for any further comments. secretarial audit report In terms of Section 204 of the Act and Rules made there under, Mr. R. Sivasekaran, Practicing Company Secretary, has been appointed Secretarial Auditor of the Company. The report of the Secretarial Auditor is given as Annexure B to this report. The Secretarial Auditor in his audit report observed that there has been a general delay in filing the returns with the Registrar and the resolution for considering and adopting its unaudited quarterly accounts for the quarter ended 30th June, 2014 has not been filed. It was noted by the Board that it was an accidental omission and caused inadvertently due to oversight, without prejudice to the interests of the Shareholders of the Company and the General Public. It has also been pointed out that the Company has not framed any vigil mechanism / whistle blower policy as required in terms of sub-section (9) of section 177 of the Companies Act, 2013 and clause 49 of the listing agreement. However, a Whistle Blower Policy & Vigil Mechanism has now been adopted by the company and the same has been placed on the website of the Company viz., www.sugalshare.com. It has also been pointed out that the Company has not appointed a Company Secretary as its Key Managerial Personnel under section 203 of the Companies Act, 2013 and as its Compliance Officer under clause 47(a) of the listing agreement. However, the Company has not been able to appoint a suitable candidate in this connection and has placed multiple advertisements in the English and regional newspapers. Your Directors have now taken note of the qualifications and are making provisions for complying with the same. The Company had taken appropriate steps to avoid such instances in future. internal audit & controls The Company continues to engage Mr. Sudhir Jain, Chartered Accountant as its Internal Auditor. His scope of work includes review of processes for safeguarding the assets of the Company, review of operational efficiency, effectiveness of systems and processes, and assessing the internal control strengths in all areas. Internal Auditors findings are discussed with the process owners and suitable corrective actions taken as per the directions of Audit Committee on an ongoing basis to improve efficiency in operations. vigil mechanism In pursuant to the provisions of section 177(9) & (10) of the Companies Act, 2013, a Vigil Mechanism for directors and employees to report genuine concerns has been established. The Vigil Mechanism Policy has been uploaded on the website of the Company at www.sugalshare.com under Investor Relations > Company Policies > Whistle Blower and Vigil Mechanism. risk management policy The company is primarily exposed to credit risk, interest rate risk, liquidity risk and operational risks. The Board oversees and approves the Company's enterprise wide risk management framework. It reviews credit and operational risks and policies in relation to investment strategy and other risks like interest rate risk and liquidity risk. The Company's management monitors and reports principal risks and uncertainties that can impact its ability to achieve its strategic objectives. The company's management systems, organisational structures, processes, standards and code of conduct together form the risk management governance system of the company. Your company has a robust Risk Management Methodology which has been implemented effectively outlining the exposure given to the Clients of the Company and ensuring the integrity of the company's accounting and financial reporting systems, including the independent audit and compliance with the law and relevant standards. deposits Your Company did not invite or accept any Deposit during the year under review. nbfc status of the company The RBI permitted the Company to exit from the NBFC Business and RBI Certificate of Registration No. B.07.00362 dt. 13.10.2003 stands cancelled, as desired by the Company. particulars of loans, guarantees or investments under section 186 Details of loans, guarantees or investments under section 186 of the Companies Act, 2013 are annexed to this report in Annexure C. contracts and arrangements with related parties Related Party Transaction entered into during the year were on an arm's length basis and were in the ordinary course of business. There were no materially significant related party transactions with the Company's Promoters, Directors, Management or their relatives which could have had a potential conflict with the interests of the Company. management discussion and analysis Indian GDP has advanced 7.5 percent year-on-year in the first quarter of 2015, up from a downwardly revised growth of 6.6 percent in the previous period supported by a strong expansion in manufacturing and services sectors wherein financial services were up by 10.2 percent. Growth prospects are likely to improve in the current fiscal, driven by the government's development initiatives and pick-up in business cycle. (a) Industry Structure and Developments Indian equities are likely to continue its bullish run this year on the back of improved corporate earnings. The market trends will be determined by various domestic and international factors like global market movements, strengthening of US dollar, RBI's policy and visible improvement in corporate earnings of domestic firms. The year 2014 witnessed a spurt of around 35% in the BSE's benchmark index - Sensex. Besides, mid-and small-cap indices have been even better performers with the BSE Mid-cap index gaining more than 50% and the BSE Small-cap index rising as high as around 70%. In 2014, Rs 39,127 Crore was raised from the public equity market. A similar flurry of Initial Public Offerings (IPOs) from growth-starved companies and those backed by private equity investors is expected to start hitting the market in 2015. (b)Opportunities and threats The broking companies consolidated their network. Due to high inflation, domestic institutional investors will continue to be in "Sell off" mode for the coming few Quarters. Redemption pressures are also adding to the selling trend. (c)Segment-Wise or Product-Wise Performance During the financial year ended March 31, 2015 the Company operated only in one segment of business viz, Share Broking. (d)Outlook The secondary markets are expected to remain buoyant and the bull-run is expected to continue, a pre-requisite for revival of the primary markets. Lot of Foreign Direct Investment approval is expected with the much-awaited change of government reviving the investor sentiment. (e)Internal Control Systems and their adequacy In the opinion of your Directors, Internal Control Systems in the Company are adequate. (f)Financial Performance The financial performance during the year under review is given above. (g)Human Resources / Industrial Relations The number of people employed has become 22 and the employer-employee relations have been cordial throughout the year. (h)Risks and concerns The stock market is witnessing heightened activities and is increasingly gaining importance. The company is aware that it operates in an environment which is acutely vulnerable to several kinds of risks. The financial sector is vulnerable to a range of risks from economic, capital market and regulatory risks. Strategies, policies and limits are designed to ensure that risks are prudently diversified. Risk mitigating activities are reviewed periodically by senior management. As far as external risks are concerned, the company takes every precaution to ensure that it is not caught exposed to sudden changes in its operating environment. The continuous diversification of our businesses is meant to guard against any precipitous decline in income from broking. The company is also migrating towards providing state of the art trading platforms. policy on risk management In accordance with the requirement of Corporate Governance the Board of Directors of the Company has adopted a policy on risk management for assessment and minimization procedure of risk for periodical review by the Board. obligation of company under the sexual harassment of women at workplace (prevention, prohibition and redressal) act, 2013 In order to prevent Sexual Harassment of Women at Workplace the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 has been notified on December 9, 2013. Under the said Act every company is required to set up an Internal Complaints Committee to look into complaints relating to sexual harassment at work place of any women employee. Company has adopted a policy for Prevention of Sexual Harassment of Women at Workplace and has set up Committee for implementation of said policy. During the year Company has not received any complaint of Harassment. particulars of employees There was no employee whose particulars as per the provisions of Section 197(12) of the Act read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are to be reported. 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 are provided in this report in Annexure D. information required under section 134(3)(m) of the companies act, 2013 The consumption of electricity during the year was minimal. Management is taking conscious efforts to conserve energy. Your Company has no activity with regard to technology absorption. Your Company does not have any foreign exchange earnings or outgo during the year. corporate governance The Corporate Governance regulations as per the Listing Agreement have been fully complied with. The Report of your Directors on the practices of Corporate Governance forms part of this report in Annexure E. A Certificate from the Auditor of the Company regarding compliance with the Code of Corporate Governance, certification by CEO / CFO and Declaration of Compliance with Code of Conduct form a part of the Corporate Governance Report. directors' responsibility statement As required by Section 134(5) of the Companies Act, 2013, your Directors confirm: (a)that in the preparation of the Annual Accounts, the applicable Accounting Standards have been followed along with proper explanation relating to material departures; (b)that 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 at the end of the financial year ended March 31, 2015, and of the profit / loss of the Company for that year; (c)that the Directors have taken proper and sufficient care 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 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; (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. application for compounding of offences The Company has filed an application under Regulation 40(1) of the Company law Board Regulations, 1991 and Section 621A of the Companies Act, 1956 for compounding of offences u/s. 372A of the Companies Act, 1956. The Company has also filed an application under Regulation 40(1) of the Company law Board Regulations, 1991 and Section 621A of the Companies Act, 1956 for compounding of offences u/s. 295 of the Companies Act, 1956. The said applications are pending for hearing before the Company Law Board. listing with stock exchanges Shares of the Company are listed on Bombay Stock Exchange Limited, Mumbai, P.J. Towers, Dalal Street, Mumbai - 400 001 (Stock Code - 511654). Listing fee to the Stock Exchange has been paid up to date. The Shares of the Company were also listed on Madras Stock Exchange ("MSE"). However, Securities Exchange Board of India ("SEBI") has passed an Order on May 14, 2015 providing the exit to Madras Stock Exchange Limited ("MSE"). acknowledgment Your Directors would like to sincerely thank the Company's banker's viz., Axis Bank Ltd., HDFC Bank Ltd., & Karur Vysya Bank Ltd., and the shareholders of the Company. We also thank the employees of the Company for their co-operation and support. By order of the Board For sugal & damani share brokers ltd. Mahesh Chandak Executive Director DIN - 00050149 S. Kannadasan Director DIN – 00050177 Place: Chennai Date: May 29, 2015 |