BOARDS' REPORT Dear Members, Your Directors are pleased to present the Eighty Second Annual Report along with Audited Statement of Accounts for the Financial Year ended 31st March, 2016. GENERAL INFORMATION ABOUT THE COMPANY The Company has various business verticals inter alia Real Estate and Infrastructure Development, offering Business Centre facilities, Power Generation, Background Verification, Commodities Trading, International procurement solutions and services and Vocational Training amongst others. PERFORMANCE During the year under review (i.e 2015-2016) the stock markets tumbled due to the overall downturn in the overseas market conditions and the stock market has been bearing the brunt of the same. Though the Government of India has been unveiling a slew of measures and reforms through the Budget for the year 2016-17. The overall global business scenario is not favourable, with the Chinese economy stagnating, the Japanese economy on a downward trend but the positive being that the economic scenario is looking up with the United States reporting a small marginal growth in employment based on increase in demand and consumption. The Indian Economy has shown a degree of stabilization and is expected to do well, the GDP is expected to be around 7%. The sovereign rating have also improved. In our Company's context, the performance of the Company was average due to various reasons. As informed last year, the Company didn't renew any of the leave and license agreements, as the Company contemplates redevelopment, which has led to loss of rental income and with the NSEL crises, trading in commodities has been stopped. The total turnover during the year under review is Rs. 8053.36 lacs against Rs. 5593.09 lacs in the year 201415. Due to the above factors the Company has earned a marginal profit of Rs. 13.74 lacs after tax compared to a loss of Rs. 249.01 Lacs in the corresponding previous year. As informed earlier, the Company had planned to setup a 5 MW Solar Power plant at Satara of which 3 MW Solar Power Plant has been commissioned in April 2015 and has started supplying power to the various companies and the remaining 2 MW plant will be commissioned and operational during the current financial year. EVENTS SUBSEQUENT TO THE DATE OF FINANCIAL STATEMENTS No major event has occurred subsequent to the date of the financial statements. As informed, the Company has suffered losses due to the NSEL crisis which has shaken the faith of the investors in the commodity markets. Our Company along with three others had instituted a Representative Suit in the Bombay High Court inter alia against Financial Technologies (India) Limited (FTIL), National Spot Exchange Limited (NSEL) and 36 others for recovery of its dues as an investor for the trades executed on the NSEL. The said suit is now clubbed with other suits filed against FTIL, NSEL and others. The suit is in advanced stages of hearing and the Management is of the view that the Company will be in a position to recover its debts. The Company is regularly following up on the matter and keeps the Board Members updated about any development in the said matter. All possible steps are being taken to recover the amount receivable, Rs..1359.51 Lacs is outstanding as on 31st March 2016. CHANGE IN THE NATURE OF BUSINESS, IF ANY There are no changes in the nature of Business during the year under review. DIVIDEND AND RESERVES Despite the lackluster performance, your Directors are recommending a dividend of 0.30 per share, i.e 15 % per Equity Share of Rs..2/- each. The Dividend for the year amounts to 135.55 Lacs including the Dividend Distribution Tax. The Company has total reserves of 3839.17 lacs as on 31st March, 2016. BOARD MEETINGS AND ATTENDANCE Details of the Directors, their meetings, attendance etc have been given in the Corporate Governance Report which forms a part of this Annual Report. DIRECTORS AND KEY MANANGERIAL PERSONNEL: Smt Gauri Jatia (DIN:00096766), Director of the Company, retires by rotation and, being eligible, offers herself for re-appointment. The Management recommends her reappointment. The Companies Act, 2013 requires that the Independent Directors of the Company meet at least once a year without the presence of Executive Directors, the Non Executive Director or the Management or the Promoters of the Company. The Independent Directors of our Company have met once during the year on 23.03.2016 The Nomination and Remuneration Committee and the Board of Directors have carried out the annual performance evaluation of all the Directors and the Board as a whole. DECLARATION FROM INDEPENDENT DIRECTORS ON ANNUAL BASIS The Company has received necessary declaration from each Independent Directors of the Company under Section 149(7) of the Companies Act, 2013 stating that the Independent Directors of the Company meet with the criteria of their Independence as laid down under Section 149(6) of the Companies Act, 2013. COMMITTEES OF THE BOARD The Companies Act, 2013 provides for the formation and duties of various committees of the Board, the Company in compliance with the Act, already has the following Committees in existence as on 31st March, 2016 and all the committees have specific roles, duties and responsibilities. The following are the various Committees of the Board viz. Audit Committee, Nomination and Remuneration Committee, Stakeholders Relationship Committee, Corporate Social Responsibility Committee and Risk Management Committee. Details of the meetings held and attendance at the various committee meetings are given in the Corporate Governance Report which forms a part of this Annual Report. AUDIT COMMITTEE The Audit Committee was constituted in January, 2001 and has been reconstituted from time to time. The current strength of the Audit Committee is four Members. All the Members of the Audit Committee are Non-Executive Directors. Two-thirds of the Members of the Committee are Independent Directors. All the Members of Audit Committee are financially literate and possess accounting and related financial management expertise. The Audit Committee consists of: Shri. Anand Didwania Chairman Shri. Rajas Doshi Member Shri. Pradip Kumar Bubna Member Shri. S. D. Israni Member The Chairman & Managing Director of the Company is a permanent Invitee of the Audit Committee. At the invitation of the Committee, representatives from various divisions of the Company, Internal Auditors, Statutory Auditors and Chief Financial Officer also attend the Audit Committee meetings to respond to queries raised at the Committee meetings. Shri. Parind Badshah, Vice President and Company Secretary acts as the Secretary to the Audit Committee. NOMINATION AND REMUNERATION COMMITTEE: The Nomination and Remuneration Committee was constituted in April, 2002 and has been reconstituted from time to time. Shri. Vijay Kumar Jatia, Chairman and Managing Director of the Company was appointed as a member of the Committee in the Board meeting held on 11th May, 2015 and the Committee currently comprises of four directors where majority are Independent Directors. The Nomination and Remuneration Committee comprises: Shri. Rajas R Doshi Chairman Shri Vijay Kumar Jatia Member Shri. Anand Didwania Member Dr. S D Israni. Member The terms of reference of the Nomination and Remuneration Committee include reviewing and recommending the terms of remuneration payable to the Executive Director and the Key Managerial Personnel (KMPs) based on the evaluation of their performance. The Committee also evaluates the performance of the Board of Directors. Shri. Parind Badshah, Vice President and Company Secretary acts as the Secretary to the Nomination and Remuneration Committee. The Company has adopted a Nomination and Remuneration Policy for Directors, KMP and other employee formulated by the Committee for determining Qualification, Positive Attributes and Independence of a Director. STAKHOLDERS RELATIONSHIP COMMITTEE According to the provisions of section 178(5) of the Companies Act, 2013 and the Companies (Meetings of Board and its Powers) Rules, 2014, every company having more than 1000 shareholders/ debenture holders/ deposit holders and any other security holders is required to have a "Stakeholders Relationship Committee". The Stakeholders Relationship Committee considers and resolves the grievances of security holders of the Company. The Committee consists of the following Directors: • Shri Rajas R Doshi Chairman • Shri Vijay Kumar Jatia Member • Shri Pradip Kumar Bubna Member CORPORATE SOCIAL RESPONSIBILITY COMMITTEE As per the Provision of Section 135 of the Companies Act, 2013 and the Companies (Corporate Social Responsibility Policy) Rules 2014, the Company has formed a "Corporate Social Responsibility Committee" of the Board consisting of the following Directors: • Shri Vijay Kumar Jatia Chairman • Smt Gauri Jatia Member • Shri Kaiwan Kalyaniwalla Member • Shri Pradip Kumar Bubna Member The Committee is authorized to do all such acts, deeds and things which may be necessary for performing the duties and responsibilities defined under section 135 of the Companies Act, 2013 and the Companies (Corporate Social Responsibility Policy) Rules, 2014. They plan and execute the various CSR activities to be undertaken by the Company. RISK MANAGEMENT COMMITTEE The Company has formed a risk management committee to evaluate the various risk factors faced by the organization and how the same can be mitigated. The Committee comprises of the following Directors: • Dr S.D. Israni Chairman • Shri Vijay Kumar Jatia Member • Shri Kaiwan Kalyaniwalla Member VIGIL MECHANISM: The Companies Act, 2013 envisages a Vigilance Mechanism and accordingly keeping in view the above a Whistle Blower Policy ("the Policy") has been formulated with a view to provide a mechanism for employees of the Company to approach and report the Violation to :- (i) immediate supervisor; (ii) Chairman of Audit Committee (iii) anonymously, by sending an e-mail to: vigilance@modernindia.co.in All complaints / reports under this Policy will be promptly and appropriately investigated, and all information disclosed during the course of the investigation will remain confidential, except as necessary to conduct the investigation and take any remedial action, in accordance with applicable law. During the year, the Company had received no complaints. DIRECTORS' RESPONSIBILITY STATEMENT In pursuance of section 134 (5) of the Companies Act, 2013, the Directors hereby state that: i) in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departure. ii) appropriate accounting policies have been selected and applied them consistently and the judgments and estimates made are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2016 and of its profit for the year ended as on that date; iii) proper and sufficient care has been taken 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; iv) the annual accounts have been prepared on a going concern basis. v) Internal Financial Control have been followed by the Company and that such Internal Financial Controls are adequate and are operating effectively. vi) Directors have devised proper system to ensure Compliance with the provisions of all applicable laws and that such system are adequate and operating effectively. INTERNAL FINANCIAL CONTROL Detailed note on Internal Financial Control is given in the Management Discussion Analysis which forms a part of this report. It must be noted that the Management had appointed the Statutory Auditors M/s.K.S.Aiyar, Chartered Accountants to also carry out the Audit of Internal Financial Controls over Financial Reporting as required under the Act and the Auditors have given their report to the Board and based on which the Directors have stated in their Directors Responsibility Statement that the Internal Financial Control have been followed by the Company and that such Internal Financial Controls are adequate and are operating effectively. REPLY TO AUDITORS QUALIFICATION With reference to the amount of Rs. 13.59 Crores receivables outstanding in respect of commodity trading transactions on NSEL the management considers the same as good for recovery and a representative suit has been filed in the Hon'ble High Court at Bombay and the same is currently being heard, details of which have been given under events subsequent to the date of financial statements. With regards to note no. 30 of the Notes to Accounts, Management is of view that the diminution in value of the investment is temporary in nature. SUBSIDIARY COMPANIES MODERN INTERNATIONAL (ASIA) LIMITED, HONG KONG (MIAL) Modern International (Asia) Limited [MIAL] is actively involved in the B2B segment Business. MIAL sources products viz textile, furniture, luggage, building /construction material, gift articles etc primarily from China and other Countries and exports it to its clientele in other countries. The year 2015-16 was severely affected by the downturn in the Chinese market and global meltdown across, the Company's sales were adversely affected, in the given scenario MIAL has registered a turnover of US $10.82 million for the year 2015-16 as against US$ 23.25 million for the year 2014-15 and it has recorded profit of US $87,402 (previous year US $1,83,585) MODERN INDIA PROPERTY DEVELOPERS LIMITED (MIPDL): Company deploys its surplus funds in real estate activities viz., Bookings of under construction residential and / or commercial space. Funds committed towards booking of under construction spaces and to be paid over a period of time, are placed with corporate entities fetching interest in the intervening period. The Company has consciously invested into under construction spaces, which falls into affordable category wherein demand is reasonable and offers better exit opportunities. The Company has also undertaken construction and development activity in Bikaner along with a reputed builder. During the financial year 2015-16, Company has earned profit before tax of Rs. 47.93 lacs as compared to a profit of Rs. 13.69 lac in the year 2014-15. The Government has implemented the Real Estate (Regulation and Development) Act, 2016 which is expected to benefit both builders as well as the buyers. MODERN INDIA FREE TRADE WAREHOUSING PRIVATE LIMITED (MIFTWPL) The Company was set up with the aim of setting up free trade warehousing facilities, in this regards the Company has in its possession land at village Sai, District Raigad. The said land area has potential and will offer good opportunities over a period of time. VERIFACTS SERVICES PRIVATE LIMITED Verifacts Services Private Limited, is a human resources consulting company providing background/ antecedents verification services. The Company has started various other essential services like online chat facility to interact with existing and prospective clients Moreover, the Company is under negotiations with some of the giant corporate entities for extending their services. During the year Verifacts has achieved a turnover of Rs. 1853.41 lacs as against Rs. 1485.54 lacs in the corresponding previous year. This business has immense potential to flourish especially with the push by the Government of India for the Make in India concept, Start Up India initiative etc., this will result in the growth of the bottom line of your Company in the coming years. ASSOCIATE COMPANIES The Company does not have any associate companies nor does it have any existing joint venture as on 31st March, 2016. Details of the Companies which have become / ceased to be its Subsidiary/ JV/ Associate Company. During the year no other company became / ceased to be the subsidiary / JV / Associate Company. Details of existing subsidiaries is given below: EXTRACT OF ANNUAL RETURN As required pursuant to Section 92(3) of the Companies Act, 2013 and rules 12(1) of the Companies (Management and Administration) Rules,2014, an extract of Annual Return in MGT-9 is annexed to this Report as Annexure 1 AUDITORS' APPOINTMENT As per the requirement of the Companies Act, 2013, an auditor who has been the auditor of the Company for a period of 10 continuous years or more will be required to relinquish his position, however the act provides for an interim period of 3 years to the Company to scout for a new Auditor. Last year Messers K. S. Aiyar & Company, Chartered Accountants were appointed to hold office from the conclusion of the 81 st Annual General Meeting to the conclusion of the 83rd Annual General Meeting. The Board of Directors recommend the ratification of the appointment of the Statutory Auditors for the year 2016-2017 (i.e from the conclusion of the 82nd Annual General Meeting upto the conclusion of the 83rd Annual General Meeting). SECRETARIAL AUDIT REOPRT Secretarial Audit Report as provided by M/s Parikh & Associates Practicing Company Secretaries is annexed to this Report as Annexure 2. The Company has received the Secretarial Audit report with two observations with regards to the following a. During the period under review, the Company has spent an amount of f 3.76 lacs against the amount of f 4.24 lacs to be spent during the year towards Corporate Social Responsibility. The balance amount had remained un-utilised as repair work was progressing at a slow pace and the same will be utilised during the current financial year. b. Litigations in respect of Representative Suit filed by the Company against Financial Technologies (India) Ltd, National Spot Exchange Ltd and 36 others for recovery of its dues as an Investor for the Trade executed on the NSEL. With regard to receivables from NSEL the management considers the same as good for recovery and the representative suit filed in the Hon'ble High Court at Bombay is currently being heard, details of which have been given under events subsequent to the date of financial statements. CONSERVATION OF ENERGY, RESEARCH AND DEVELOPMENT, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGOINGS. In compliance with the provisions of Section 134 read with Companies (Accounts) Rules, 2014, a statement giving requisite information is given in Annexure 'A' forming part of this Report. FIXED DEPOSITS: During the year under review, the Company has neither accepted nor renewed any Fixed Deposits, under Section 73 & 74 of the Companies Act, 2013. SIGNIFICANT & MATERIAL ORDERS PASSED BY THE REGULATOR/ COURT OR TRIBUNALS There are no significant and material orders passed by the regulators or Court or Tribunals impacting the Going Concern status and the Company's operations in future. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS: The Company have duly complied with the Provision of the Companies Act, 2013 and the Company has taken / given SECURED LOANS (Taken) : Rs. 113832943 UNSECURED LOANS (Taken/ given): NIL CURRENT INVESTMENTS: NIL NON CURRENT INVESTMENTS : Rs. 665994869 GUARANTEES : Corporate Guarantee for US $ 5.6 million to Indian Overseas Bank. SECURITIES EXTENDED : Rs. 5.2 crores and land bearing plot no. D1 admeasring 1204.99 sq mtrs and Building appurtenent there to bearing C.S.No. 7/1895 (PART) Byculla Division. RISK MANAGEMENT POLICY: Risk is an integral and unavoidable component of business and the Management is committed to managing the risk in a proactive and effective manner. The Board of Directors in its Meeting held on 18.10.2015 constituted the "Risk Management Committee" and adopted the Risk Management Policy. The objective is to identify and mitigate the risk. The Company has adopted a systematic approach to mitigate risk associated with accomplishment of objective, operations, revenues and regulations. CORPORATE SOCIAL RESPONSIBILITY POLICY The Board of Directors in its meeting held on 16.05.2014 constituted "Corporate Social Responsibility Committee"(CSR) and adopted the Corporate Social Responsibility Policy. The Committee recommends the activities to be undertaken which are approved by the Board, an amount of Rs. 376250/-was spent out of Rs. 424188/- as CSR Activity for the year 2015-16. The balance unutilized amount is being carried forward to the next financial year. The balance amount of Rs. 47,938 is yet to be utilized, the total balance for the year 2014-15 and 2015-16 would be utilised along with the amount available for the year 2016-17 and the reason for not spending the un-utilised amount was because the repair work was progressing at a slow pace and the same will be utilised during the current financial year. ANNUAL REPORT ON CSR is annexed in ANNEXURE 3 PARTICULARS OF CONTRACT AND ARRANGEMENTS WITH RELATED PARTIES Details of contracts and arrangements with related parties is given in form AOC-2 as ANNEXURE-4 FORMAL ANNUAL EVALUATION The Board of Directors pursuant to Section 134 (3)(p) of the Companies Act, 2013 conducted an evaluation of the Board as a whole, its Committees as well as the performance of each individual director. The Independent Directors at their meeting held in March 2015 had laid down the criteria / parameters for conducting the said evaluation which was accepted by the Board and thereafter the evaluation was conducted. The performance of the Directors and their role and the performance of the Committees was found satisfactory and in turn the overall performance of the Board was also satisfactory. It is important to note here that the performance of the Company has not been upto the mark, due to the conscious decision taken to not renew the leave and license agreements of Modern Centre, stoppage of commodity trading due to NSEL crises and overall downward trend in the market witnessed in the year under review. DISCLOSURE ABOUT COST AUDIT Cost Audit is not Applicable to the Company. RATIOS OF REMUNERATION TO EACH DIRECTOR The Directors of the Board receive sitting fees for attending the meeting of the Board and its various Committees except Shri Vijay Kumar Jatia who is the Chairman and Managing Director of the Company, he is appointed by Members of the Company and the Company has made an application to the Central Government to approve the remuneration payable to him as the same being approved by the shareholders of the company in the 81st Annual General Meeting. Meanwhile, he continuous to draw at the rate payable to him during last appointment. In view of this, only one ratio of remuneration of the director (Managing Director) with the median of the employees is possible, which is enclosed as ANNEXURE 5. LISTING WITH STOCK EXCHAGE The Company confirms that it has paid the Annual Listing fees for the year 2016-2017 to BSE where the Company's Shares are listed. CORPORATE GOVERNANCE In compliance of Regulation 34 and 53 read with Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 with the Bombay Stock Exchange Limited, a Report on Corporate Governance, along with a Certificate of the Auditors on Corporate Governance is annexed to this Report marked as ANNEXURE-6. The Secretarial Standards I & II became effective from 01.07.2015 as per government notification and the Company has implemented the standards well within the time prescribed. ISSUE OF SWEAT EQUITY SHARES/ISSUE OF SHARES WITH DIFFERENTIAL RIGHTS/ISSUE OF SHARES UNDER EMPLOYEES STOCK OPTION SCHEME. The Company has not issued any sweat equity shares/ Issue of Shares with Differential Rights/Issue of Shares under Employee's stock option scheme during the year under review i.e 2015-16. DISCLOSURE ON PURCHASE BY COMPANY OR GIVING OF LOAN BY IT FOR PURCHASE OF ITS SHARES. The Company has neither purchased not given any loan to anyone for purchase of its shares. BUY BACK OF SHARES The Company has not considered any proposal for buyback of shares during the year under review. MANAGEMENT DISCUSSION AND ANALYSES As per the requirement of Regulation 34(2) and 53(f) read with Schedule V of the SEBI (Listing Obligations and Disclosure Requirements)Regulations, 2015 the Management Discussion and Analysis of the events, which have taken place and the conditions prevailed, during the period under review, are enclosed in ANNEXURE - B to this Report. GREEN INITIATIVE: Your Company has taken the initiative of going green and minimizing the impact on the environment. The Company has been circulating the copy of the Annual Report in electronic format to all those Members whose email address is available with the Company. Your Company would encourage other Members also to register themselves for receiving Annual Report in electronic form. ACKNOWLEDGMENT Your Directors wish to place on record their sincere thanks to the Valued Customers, Suppliers, Bankers, Central Government, State Governments and various Consultants and Business Associates for their continued support, co-operation and guidance during the year under review. Your Directors also wish to thank their employees and executives at all levels for their valuable contributions. For and on behalf of the Board of Directors Sd/- Vijay Kumar Jatia Chairman & ManagingDirector PLACE : Mumbai Date: 26.05.2016 Registered Office: Modern Centre,Sane Guriji Marg, Mahalaxmi,Mumbai- 400 011 |