DIRECTORS' REPORT TO, THE MEMBERS, Your Directors have pleasure in presenting their 22nd Annual Report of the Company for the financial year ended 31st March 2016 REVIEW OF PERFORMANCE On a standalone basis, your Company has recorded a total income of Rs. 236.37 crores for the financial year ended 31st March 2016, a decrease of 18% compared to last year's figure of Rs. 289.27 crores. The profit before tax is Rs. 54.53 crores and the net profit after tax is Rs. 35.60 crores. Basic earnings per share work out to Rs. 1.53 compared to Rs. 2.94 in the previous year. On a consolidated basis your company earned a total income of Rs. 271.96 crore for the financial year, a decrease of 17% over the previous year's figures of Rs. 326.38 crore, and profit before tax of Rs. 62.16 crores and a net profit of Rs. 37.61 crore. A detailed analysis of the performance is given in the Management Discussion and Analysis Report appended hereto. DIVIDEND During the year, your Company has declared an Interim Dividend of Rs. 1.00 per equity share of face value of Rs. 1/- (100%). The total outgo on payment of Interim Dividend was Rs. 23.49 crores. INCREASE IN SHARE CAPITAL During the year under review, the paid up share capital of the Company increased from Rs. 23,13,83,195/- divided into 23,13,83,195 equity shares of Rs. 1/- each to Rs. 23,48,98,476/- divided into 23,48,98,476 equity shares of Rs. 1/- each, consequent to the issue of 35,15,281 equity shares to employees upon exercise of stock options under Employee Stock Option Plans of the Company. CONSOLIDATED FINANCIAL STATEMENT The Consolidated Financial Statements of the Company are prepared in accordance with Section 129 of the Companies Act, 2013 read with relevant Accounting Standards issued by the Institute of Chartered Accountants of India and forms part of this Annual Report. SUBSIDIARIES, JOINT VENTURES AND ASSOCIATE COMPANIES As on 31st March 2016, following are the subsidiaries/associate/joint ventures of the Company: Subsidiaries : i. Geojit Credits Private Limited ii. Geojit Investment Services Limited iii. Geojit Financial Management Services Private Limited iv. Qurum Business Group Geojit Securities LLC v. Geojit Technologies Private Limited vi. Geojit Financial Distribution Private Limited Joint Ventures : i. Barjeel Geojit Securities L.L.C ii. Aloula Geojit Capital Company Associates : i. BBK Geojit Securities Co. K.S.C.C. Considering the insignificant activity and for operational convenience, the Board of Directors of the two wholly owned subsidiary companies viz. Geojit Financial Management Services Private Limited and Geojit Financial Distribution Private Limited proposed a scheme of merger with Geojit Investment Services Limited (another wholly owned subsidiary) pursuant to the provisions of Sections 391 to 394 and other applicable provisions, if any, of the Companies Act, 1956 (pending notification of the corresponding provisions of the Companies Act, 2013). Meetings of the shareholders for approval of the scheme of merger were held on 10 March, 2016 after giving due notice and publication in accordance with the directions of the High Court. The Honorable High Court appointed a learned Counsel as the Chairman for the said meetings. The shareholders of the aforementioned companies approved the Scheme of Arrangement. A Petition has been filed seeking sanction of the Scheme of Amalgamation between the said companies. In accordance with Section 136 of the Companies Act, 2013, the audited financial statements including the consolidated financial statements and related information of the Company and audited accounts of each subsidiaries are available on our website www.geojitbnpparibas.com These documents will also be available for inspection during business hours at the Registered Office of the Company. In accordance with Section 129(3) of the Companies Act, 2013, the salient features of the financial statement of the subsidiaries is set out in the prescribed form AOC-1, which forms part of this Annual Report. DIRECTORS AND KEY MANAGERIAL PERSONNEL I. CESSATION Dr. M Beena, Nominee Director of Kerala State Industrial Development Corporation Limited (KSIDC), a public financial institution ceased to be a director of the Company on 13th January 2016 and was re-appointed as director of the Company on 5th February 2016. II. RETIREMENT BY ROTATION In accordance with Article 80 of the Articles of Association of the Company, Mr. Rakesh Jhunjhunwala, NonExecutive Director (DIN 00777064) will retire by rotation at the ensuing Annual General Meeting of the company and being eligible, offers himself for re-appointment. The Board recommends his re-appointment. ANNUAL EVALUATION OF THE BOARD, ITS COMMITTEE AND INDIVIDUAL DIRECTORS Pursuant to the provisions of Companies Act, 2013 and the Listing Regulations, the Board of Directors has carried out an annual evaluation of its own performance, its Committee and individual Directors. A structured questionnaire was prepared after taking into consideration inputs received from the Directors, covering various aspects such as composition of the Board and its Committees, Board culture, overall growth of the organisation etc. Further the Independent Directors, at their meetings held during the year reviewed the performance of the Board, the non Independent Directors and the Chairman. FAMILIARIZATION PROGRAMME FOR INDEPENDENT DIRECTORS The Independent Directors of the Company are persons of integrity, possessing rich experience and expertise in the field of corporate management, finance, capital market, economic and business information. The company has issued appointment letter to the Independent Directors setting out in detail, the terms of appointment, duties, roles & responsibilities and expectations of the Independent Director. The Board of Directors has complete access to the information within the Company. Presentations are regularly made to the Board of Directors / Audit Committee / Nomination & Remuneration Committee / Corporate Social Responsibility Committee / Stakeholders Relationship Committee on various related matters, where Directors have interactive sessions with the Management. The details on the Company's familiarisation programme for Independent Directors can be accessed at <http://www>. geojitbnpparibas.com/pdfs/FAMILIARIZATIONPROGRAMME FORINDEPENDENTDIRECTORS.pdf. REMUNERATION POLICY The company follows a policy on remuneration of Directors, Key Managerial Personnel (KMP), Senior Management Personnel (SMP) and other employees of the Company. The policy was approved by the Nomination & Remuneration Committee of the Company. The Non-Executive Directors of the Company shall be entitled to receive remuneration by way of sitting fees for attending meeting of the Board and Committees thereof. The remuneration to KMP's and SMP's and employees shall include direct remuneration and indirect remuneration primarily and strategic remuneration which can be Performance Linked and/ or Profit linked incentive. Remuneration Policy of the Company is given as Annexure VIII to the Directors Report. RE-STATEMENT OF SHAREHOLDERS AGREEMENT The Board of Directors of the Company approved a Restated Shareholders' Agreement with BNP Paribas S.A, its affiliate, namely BNP Paribas India Holding Private Limited (collectively, BNPP") and the initial promoters of the Company, namely, Mr. C.J. George and Mrs. Shiny George which would replace the existing shareholders agreement dated March 13, 2007 on the date BNPP acquires control of Sharekhan Limited ("Effective Date"). Pursuant to the Restated Shareholders Agreement, while BNP Paribas continue to retain its present shareholding in the Company, in brief, rights of BNPP to nominate directors on the Board of the Company, affirmative voting / consent rights of BNPP at the Board level and shareholders level and information rights of BNPP would terminate on the Effective Date. The Company also entered into an agreement for phasing out use of BNPP's brands, name and associated intellectual property from the business of the Company within 6 months from the Effective Date. RISK MANAGEMENT POLICY Risks are an integral part of business and it is imperative to manage these risks at acceptable levels in order to achieve business objectives. The risks to which the Company is exposed are both external and internal. Your company has formulated a Risk Management Policy to provide an integrated and standardized approach in managing all aspects of risk to which your Company is exposed. An Internal Risk Management Committee monitors the Enterprise risk management policy with participation from officers responsible for risk management and to take appropriate steps to ensure that these risks are at acceptable levels. WHISTLE BLOWER POLICY & VIGIL MECHANISM Your Company has laid down a Vigil Mechanism and formulated a Whistle Blower Policy in order to provide a framework for responsible and secure whistle blowing mechanism. The Policy aims to provide an avenue for Employees and Directors to raise their concerns about unethical behavior, actual or suspected fraud or violation of the company's code of conduct and it also empowers the Audit Committee of the Board of Directors to investigate the concerns raised by the employees. All Directors and Employees of the Company are eligible to make protected disclosures under the Policy addressed to the Vigilance Officer of the Company in relation to matters concerning the Company. We further affirm that, no employee of the Company was denied access to the Audit Committee. The details on the Company's Whistle Blower Policy and Vigil Mechanism can be accessed at <http://www.geojitbnpparibas>. com/pdfs/Vigil_Mechanism_Whistle_blower_policy.pdf PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS Loans guarantees and investments covered under Section 186 of the Companies Act, 2013 forms part of the notes to the financial statements provided in this Annual Report. INTERNAL CONTROL SYSTEM The Company has put in place an adequate system of internal control commensurate with its size and nature of business. These systems provide a reasonable assurance in respect of providing financial and operational information, complying with applicable statutes, safeguarding of assets of the Company and ensuring compliance with corporate policies. The scope and authority of the Internal Audit activity are well defined in the Internal Audit Charter, approved by the Audit Committee. The Company has a dedicated Internal Audit team with skills commensurate with the size, nature & complexity of operations of the Company. Internal Audit reports functionally to the Audit Committee of Board which reviews and approves risk based annual internal audit plan. Audit Committee periodically reviews the performance of internal audit function. During the year, the Audit Committee met regularly to review reports submitted by the Internal Audit department. All significant audit observations and follow-up actions there on were reported to the Audit Committee. The Company's Board & audit committee reviews adherence to internal control systems, internal audit reports and legal compliances. The Audit Committee reviews all quarterly and yearly financial results of the Company and recommends the same to Board for its approval. TRANSFER OF UNPAID AND UNCLAIMED AMOUNTS TO IEPF Pursuant to the provisions of Section 124 of the Companies Act, 2013, money transferred to the Unpaid Dividend Account of the Company and which has remained unpaid or unclaimed for a period of seven years from the date of transfer has been transferred by the Company to the Investor Education and Protection Fund ("IEPF') established by the Central Government pursuant to Section 125 of the said Act. MANAGEMENT'S DISCUSSION & ANALYSIS The Management's Discussion and Analysis is given separately and forms part of this Annual Report. INSIDER TRADING REGULATIONS Based on the requirements under SEBI (Prohibition of Insider Trading) Regulations, 2015, as amended from time to time, the Company has adopted a Code of Conduct for Prevention of Insider Trading and Code of Corporate Disclosures which is applicable to all Directors and the Designated Employees of the Company. The Code lays down the guidelines, which advices on the procedures to be followed and disclosures to be made while dealing in shares of the Company and indicate the consequences of non-compliance. A copy of the Code has been put on the Company's website. CODE OF CONDUCT FOR DIRECTORS & SENIOR OFFICERS The Board has adopted a Code of Conduct for Directors & Senior Management in accordance with the provisions of the Companies Act, 2013 and Regulation 17(5) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The Code also incorporates the duties of Independent Directors. All the Board Members and Senior Management Personnel have confirmed compliance with the Code. A declaration to that effect signed by the Managing Director forms part of the Corporate Governance Report. A copy of the Code has been put on the Company's website. HUMAN RESOURCES As a service Company, the Company's operations are heavily dependent on qualified and competent personnel. As on 31st March 2016, the Company had 2198 employees. Your Company takes significant effort in training all employees at various levels. EMPLOYEE STOCK OPTION PLAN (ESOP) During the year some employees of the Company have exercised part of their stock options granted under the Employees Stock Option Plan 2010 (ESOP 2010) and Employees Stock Option Plan 2007 for Key Employees (ESOP 2007 Key Employees). The Board of Directors of the Company has allotted total 19,55,344 equity shares of Re.1/- each under ESOP 2010 Scheme and 15,59,937 equity shares of Re.1/- each under ESOP 2007 Scheme to its employees who exercised the stock options on various dates at various exercise prices in accordance with the terms and conditions of ESOP. The aforesaid ESOP Schemes are in compliance with SEBI (Share Based Employees Benefits Scheme) Regulations, 2014 and the details are attached as Annexure - I to this report and also available on our website and can be accessed at <http://www>. geojitbnpparibas.com/pdfs/ESOSDisclosure.pdf. Approval and implementation of Employee Stock Option Scheme - ESOS 2016 through direct route. The Company has formulated an Employee Stock Option Scheme (ESOS 2016) in accordance with Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014. The Board of Directors of the Company approved the proposal to issue 94,00,000 (Ninety Four Lakh) new stock options under Employee Stock Option Scheme 2016 (ESOS 2016). Necessary resolution along with Explanatory Statement in this regard is included in the notice of AGM for approval of members. CORPORATE SOCIAL RESPONSIBILITY (CSR) The Corporate Social Responsibility Committee has formulated and recommended to the Board a Corporate Social Responsibility Policy (CSR Policy) indicating activities to be undertaken by the Company, which has been approved by the Board. The Company established a charitable trust namely Geojit Foundation and intends to carry the CSR activities of the company through the foundation. The Company has identified Education and Health as key focus areas of engagement for CSR activities. The Company would also undertake other initiatives in compliance with the Schedule VII of the Companies Act 2013. The Annual Report on CSR activities is annexed herewith and marked as Annexure IV to this report. PARTICULARS OF EMPLOYEES Particulars of employees covered by the provisions of Section 197 of the Companies Act, 2013 read with Companies (Appointment and Remuneration of Managerial Personnel) Rules,2014 is given as Annexure III to this Report. DIRECTORS' RESPONSIBILITY STATEMENT Pursuant to requirement of Section 134(3)(c) and Section 134(5) of the Companies Act, 2013 and based on the representations received from the Management, your Directors state that : i. in the preparation of the annual accounts for the financial year ended 31st March, 2016, the applicable accounting standards have been followed and there are no material departures from the same; ii. 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 as at 31st March, 2016 and of the profit of the company for the year ended on that date; iii. 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; iv. the Directors have prepared the annual accounts on a going concern basis; v. the Directors have laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively; and vi. the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO The Company has nothing to report in respect of information on conservation of energy and technology absorption as required under Section 134 of the Companies Act, 2013 read with Companies (Accounts) Rules, 2014 since the Company is not engaged in manufacturing or processing business. The details regarding foreign exchange earnings and outgo are given as Annexure II to this Report. CORPORATE GOVERNANCE Your Company has complied with the Corporate Governance requirements under Companies Act,2013 and as stipulated under the provisions of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. A detailed Report on Corporate Governance is given as Annexure V to this Report. A certificate of Statutory Auditor confirming compliance of the Corporate Governance requirements by the Company is attached to the Report on Corporate Governance. SECRETARIAL AUDIT REPORT In accordance with the provisions of Section 204 of the Companies Act, 2013, the Board has appointed M/s. Satheesh & Remesh - Company Secretaries in Whole Time Practice, Kochi as the Secretarial Auditor for the financial year 2015-16. The report of the Secretarial Auditor is annexed to this report as Annexure VI. AUDITORS M/s. Deloitte Haskins & Sells, Chartered Accountants, Kochi were the Statutory Auditors of the Company since 2000. It is mandated as per the Companies Act 2013 to appoint a new Auditor if the current auditor holds office more than a continuous period of ten years. Hence, the Board proposed the name of M/s. B S R & Associates LLP, Chartered Accountants (ICAI Registration No. 116231W/ W-100024) to be appointed as Statutory Auditor of the company for a period of five years pursuant to the provisions of Section 139 of the Companies Act, 2013 M/s. B S R & Associates LLP have expressed their willingness to get appointed as the Statutory Auditors of the company and has furnished a certificate of their eligibility and consent under Section 141 of the Companies Act, 2013, and the rules framed there under. In terms of the SEBI (LODR) Regulations, 2015, the Auditors have confirmed that they hold a valid certificate issued by the Peer Review Board of the ICAI. The Auditors' Report to the Shareholders for the year under review does not contain any qualification. EXTRACT OF ANNUAL RETURN The extract of the Annual return in Form MGT - 9 is given as Annexure VII to this Report. NUMBER OF BOARD MEETINGS The Board of Directors met 6 (six) times in the financial year 2015-16. The details of the board meetings and the attendance of the Directors are provided in the Corporate Governance Report. COMPOSITION OF AUDIT COMMITTEE The Board has constituted the Audit Committee, which comprises of Mr. R. Bupathy as the Chairman and Mr. A.P. Kurian, Mr. Mahesh Vyas and Mr. Jean Christophe Gougeon as the members. More details on the committee are given in the Corporate Governance Report. RELATED PARTY TRANSACTIONS All contracts/arrangements/transactions entered by the Company during the financial year with the related parties were in the ordinary course of business and on an arm's length basis. During the year the company had not entered into any contract/ arrangement /transaction with related party which could be considered material in accordance with the policy of the company on materiality of related party transactions. The Policy on materiality of related party transaction and dealing with related party transactions as approved by the Board may be accessed on the Company's website. Your Directors draw attention of the members to Note 37 to the financial statement, which sets out related party disclosures. POLICY RELATING TO DIRECTORS APPOINTMENT The Company with the approval of Nomination & Remuneration Committee has adopted a policy on Board diversity and the recommendation of candidature for Board appointment will be based on merit that complements and expands the skills, experience and expertise of the Board as a whole, taking into account gender, age, professional experience and qualifications, cultural and educational background, and any other factors that the Board might consider relevant and applicable from time to time towards achieving a diverse Board. DECLARATION BY INDEPENDENT DIRECTORS The Company has received necessary declaration from each Independent Director under Section 149(7) of the Companies Act, 2013 that he meets the criteria of Independence laid down in Section 149(6) of the Companies Act, 2013. DISCLOSURE AS PER SEXUAL HARRASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013. The Company has zero tolerance for sexual harassment at work place and has adopted a policy on prevention, prohibition and redressal of sexual harassment at workplace in line with the provision of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the rules framed thereunder. As required under the Law, an internal complaints committee has been constituted for reporting and conducting inquiry into the complaints made by the victim on the harassments at the work place. Your Directors further state that during the year under review, there were no cases filed pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act 2013. GENERAL Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions on these items during the year under review. a. Details relating to deposits covered under Chapter V of the Companies Act 2013. b. Issue of equity shares with differential right as to dividend, voting or otherwise c. Issue of shares (including sweat equity shares) to employees of the company under any scheme save and except ESOP referred to in this report. d. No significant or material orders were passed by the regulators or Courts or tribunals which impact the going concern status and Company's operation in future. ACKNOWLEDGEMENTS Your Directors wish to acknowledge the valuable guidance and assistance received from Securities and Exchange Board of India, Stock Exchanges & other Regulatory Authorities, BNP Paribas, KSIDC, our clients and business partners. We look forward to receiving their continued support and encouragement. The Board of Directors wishes to extend their thanks and appreciation and express their gratitude for the continuing commitment and dedication of employees at all levels. The Directors are thankful to the esteemed shareholders for their support and the confidence reposed in the Company. For and on behalf of the Board of Directors A.P. Kurian Chairman Place: Kochi Date : 29.06.2016 |