DIRECTORS' REPORT AND MANAGEMENT DISCUSSION AND ANALYSIS REPORT Dear Members, Your Directors are pleased to present their Eighteenth Report together with Audited Financial Statements for the year ended March 31, 2015: FINANCIAL PERFORMANCE: Revenue: Total revenue for FY 2014-15 at Rs. 916.24 lacs increased by over 47.71% over the previous year revenue of Rs. 620.31 lacs. The increase in revenue is due to increase in dividend and interest income and profit on sale of certain shares. Expenses: Total expenses for FY 2014-15 at Rs. 124.75 lacs increased by over 61.72% over the previous year expenses of Rs. 77.14 lacs, on account of appointment of Chief Financial Officer and increase in postage and courier expenses to comply with the provisions of the Companies Act, 2013 relating to appointment of KMP and dispatch of Annual Reports for FY 2013-14 respectively. Profit After Tax: The Profit after Tax (PAT) stood at Rs. 787.05 lacs for FY 2014-15 as against PAT of Rs. 500.26 lacs for FY 2013-14. Amounts proposed to be carried to any reserves: An amount of Rs. 157.41 lacs has been transferred to Statutory Reserve as a part of the statutory requirement. DIVIDEND: with a view to conserve resources, your Directors consider it prudent not to recommend any dividend for the year under review. MANAGEMENT DISCUSSION AND ANALYSIS: a. Industry Structure & Developments, Opportunities and Future Outlook: The global economy growth remained sluggish in the last year, with stagnating GDPs and low inflation continuing to plague the developed economies. The weak global growth led to decline in commodity prices including crude oil. This has helped the oil importing countries like India to reduce their fiscal deficit. India's GDP growth during FY 2014-15 was 7.3% as against a growth of 6.9% in FY 2013-14. while India's economic revival has been moderate, there have been plenty of positives during FY 2014-15. Easing of international crude oil prices helped in reducing the subsidies bill which has supported the fiscal consolidation efforts of the government. Inflation, which remained high for last several years, has dropped to reasonable levels now. This has prompted RBI to cut the repo rate three times in the last year to bring it down 7.25%. FDI inflows have increased to $34.9 billion in FY 2014-15, a reflection of increased confidence of foreign investors in Indian economy. The new government has initiated several key policy reforms like 'Make In India', improving ease of doing business, coal mining auctions, infrastructure project approvals etc. Driven by these positives, FY 2015-16 is expected to be a turnaround year for the Indian economy. A lot will depend on the ability of the government to push the key pending policy reforms like GST, Land Acquisition Bill etc. Overall, the prospect of high growth backed by policy reforms, combined with macroeconomic stability, is the promise of India going forward. The Company, being a Non-Banking Financial Company (NBFC) registered with RBI, derives major revenue from its investments. Sectoral policy changes by the Government, therefore, have direct impact on the profitability of the Company, as the value of the stocks, shares and bonds depends on the prevailing capital markets scenario. The future success of the Company would depend on its ability to anticipate the volatility of the Stock Markets and minimising risks through prudent investing decisions. with the stock markets hitting new peaks on a regular basis, the FY 2014-15 turned out to be a bonanza for investors. The investments of the Company are typically long term in nature and predominantly in the equities market. All investments decisions are reviewed by the Board of Directors on a quarterly basis. As at March 31, 2015, the market value of the Company's quoted investment portfolio stood at Rs. 644.55 crores. b. Risks, Threats and Concerns: Risk management can be construed as the identification, assessment, and prioritization of risks followed by coordinated and economical application of resources to minimize, monitor, and control the probability and/or impact of unfortunate events or to maximize the realization of opportunities. The Risk Management Committee (RMC) of the Board of Directors manages and monitors the Company's risks. c. Internal control systems and their adequacy: The Company has an adequate internal audit and control system commensurate with its size and nature of business to ensure operational efficiency, accuracy and promptness in financial reporting and compliance of various laws and regulations. The Audit Committee of the Board of Directors reviews the Internal Audit Report and the adequacy and effectiveness of internal controls periodically. d. Human Resources: Employee relations continued to remain cordial during the year under review. As on March 31, 2015, there were six (6) employees including Key Managerial Personnel of the Company. CAUTIONARY STATEMENT: Statements in the Management Discussion and Analysis describing the Company's objectives, projections, estimates and expectations may constitute "forward looking statements" within the meaning of applicable laws and regulations. Actual results might differ materially from those either expressed or implied. MATERIAL CHANGES AND COMMITMENTS, IF ANY: Change in Registered Office: The Company changed its Registered Office with effect from November 11, 2014 to the following address: 213, Bezzola Complex, B wing, 71, Sion-Trombay Road, Chembur, Mumbai 400 071. The new office is within the local limits of the city and within the jurisdiction of the Registrar of Companies, Maharashtra, Mumbai. The Company has complied with the disclosure requirments and necessary intimation has been given to RBI as well. CONSOLIDATED FINANCIAL STATEMENTS: In accordance with Section 129(3) of the Companies Act, 2013 and Clause 32 of the Listing Agreement entered into with the Stock Exchanges, the Consolidated Financial Statements of the Company, including the financial details of all the subsidiary companies of the Company, forms part of the Annual Report 2014-15. The Consolidated Financial Statements have been prepared in accordance with the Accounting Standards issued by the Institute of Chartered Accountants of India. RISK MANAGEMENT PROCESS: The Risk Management Committee of the Board of Directors (Risk Management Committee) was set up in terms of the Guidelines on Corporate Governance issued by the Reserve Bank of India in the year 2010 and was reconstituted during the FY 2014-15. Its terms of reference were also revised to widen its scope in accordance with Clause 49 of the Listing Agreement entered into with the Stock Exchanges read with applicable provisions under the Companies Act, 2013 and Rules made there under. Risk Management Policy has been formulated by the Risk Management Committee of the Board of Directors in accordance with its terms of reference. This policy defines a process for adoption so that a structured, disciplined and consistent risk strategy, providing guidance for risk activity within the Company by embedding Enterprise Risk Management within the culture of the business is in place. One of the element in the Risk Management Process as defined in the Risk Management Policy is identification and assessment of risks. Some of the identified risks pertaining to the nature of business carried out by the Company comprise of Business Risks, Finance Risks, Regulatory Risks, Environment Risks, etc. Risk Mitigation measures are also reviewed alongside the identified risks. A Report on Risk Evaluation and Mitigation covering the elements of risks, impact and likelihood, mitigation measures and risk assessment is periodically presented before the Committee for review and also placed before the Board of Directors for information. SUBSIDIARY COMPANIES: As at March 31, 2015, the Company had one wholly owned subsidiary viz. Instant Holdings Limited and one step down subsidiary viz. Sudarshan Electronics and T.V. Limited. Statement containing salient features of financial statements and performance of the Company's subsidiaries for the year ended March 31, 2015 in accordance with sub-section (3) of Section 129 of the Act read with the Rule 5 of the Companies (Accounts) Rules, 2014 in the prescribed Form AOC-1 forms part of the Annual Report of the Company. Further, the Annual Accounts of these subsidiaries are uploaded on the website of the Company in accordance with Section 136 of the Act. The Annual Accounts of these subsidiaries and the other related information will be made available to any Member of the Company seeking such information and is also available for inspection at the Registered Office of the Company. As required under Clause 49(III)(V)(D), the Company has formulated the Policy on Materiality of Subsidiaries and the same is published on the Company's website www. summitsecurities.net <http://summitsecurities.net> at the link <http://summitsecurities.net/> PolicyonMaterialSubsidiary.pdf RELATED PARTY TRANSACTIONS: The Company has formulated a Policy on Related Party Transactions for purpose of identification and monitoring of related party transactions. The policy on Related Party Transactions as approved by the Board is uploaded on the Company's website www.summitsecurities.net at the link <http://> The Company has not entered into any transaction with related parties during the year under review which requires reporting in Form AOC-2 in terms of the Section 134(3) and 188(1) of the Companies Act, 2013 read with Rule 8(1) Companies (Accounts) Rules, 2014. Further, there were no materially significant related party transactions during the year under review. None of the Directors or Key Managerial Personnel had any pecuniary relationships or transactions vis a vis the Company except the sitting fees paid to Directors and remuneration paid to KMP's. EXTRACT OF THE ANNUAL RETURN: An extract of the Annual Return pursuant to Section 92(3) of the Companies Act, 2013 read with Rule 12 of the Companies (Management and Administration) Rules, 2014 in the Form MGT-9 is appended with this report as Annexure A. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS: The Company, registered as Non-Banking Financial Company not accepting public deposits with the Reserve Bank of India and having its principal business of making investments, is exempted from the provisions of sub-section(1) of Section 186 of the Act. DIRECTORS AND KEY MANAGERIAL PERSONNEL: a) Directors and Key Managerial Personnel: Mr. Paras Mal Rakhecha was appointed as the Chief Financial Officer of the Company w.e.f. May 23, 2014. Further, the following Directors have been appointed as the Independent Directors at the Seventeenth AGM of the Company held on September 27, 2014 for a tenure of five years with effect from the Seventeenth AGM: 1. Mr. S. K. Tamhane 2. Mr. H. C. Dalal 3. Mr. Prem Kapil 4. Ms. Sneha Karmarkar In accordance with the provisions of the Companies Act, 2013 ('the Act') and Articles of Association, Mr. A. N. Misra is liable to retire by rotation and being eligible has offered himself for re-appointment. b) Declarations from Independent Directors: The Company has received declarations as required under Section 149(7) of the Companies Act, 2013 from all the Independent Directors stating that they meet the criteria of independence pursuant to Section 149(6) of the Act. c) Training and Familiarisation Programme for Independent Directors: Pursuant to the Code of Conduct for Independent Directors specified under the Act and Clause 49(II)(B)(7) of the Listing Agreement entered into with the Stock Exchanges, the Company familiarised its Independent Directors on their roles, rights, responsibilities in the Company, nature of the industry in which Company operates, business model of the Company, etc. The note on this familiarization program is also posted on the Company's website under the link <http://> summitsecurities.net/DetailsofFamiliarisationProg.pdf <http://summitsecurities.net/DetailsofFamiliarisationProg.pdf> MEETINGS OF THE BOARD OF DIRECTORS: The Board of the Company has met five times during the year ended March 31, 2015, the details of the meetings of the Board of Directors held during the year are mentioned under the Corporate Governance Report, which forms part of this Annual Report. BOARD COMMITTEES: Detailed Composition of the Board Committees comprising of mandatory and non-mandatory committees viz., Audit Committee, Nomination and Remuneration Committee, Stakeholders Relationship Committee, Risk Management Committee and Asset Liability Management Committee, number of meetings held during the year and other related details are set out in the Corporate Governance Report which forms part of this Report. As on March 31, 2015, the Audit Committee comprised of 4 members namely, Mr. H. N. Singh Rajpoot (Non-Independent Director), Mr. H.C. Dalal (Independent Director), Ms. Sneha Karmarkar (Independent Director) and Mr. S. K. Tamhane (Independent Director). Mr. S. K. Tamhane is the Chairman of the Audit Committee. There have been no situations where the Board has not accepted any recommendations of the Audit Committee. ANNUAL EVALUATION OF BOARD AND ITS COMMITTEES: The Annual Evaluation as required under the Companies Act, 2013 read with relevant rules made thereunder and Clause 49 of the Listing Agreement has been carried out by the Board of its own performance, the performance of each individual Director and its Committees. For this purpose, an Evaluation Questionnaire was circulated to all the Directors and their responses were received in a sealed envelope addressed to the Chairman of the Board of Directors and results thereof were then discussed in the next meeting of the Directors The said questionnaire was prepared considering the criteria for evaluation and was in accordance with the Company's Policy on Appointment, Training, Evaluation and Remuneration approved by the Board on recommendation of the Nomination and Remuneration Committee, interalia comprising of: (a) attendance at meetings of the Board and Committees thereof, (b) participation in Meeting of the Board or Committee thereof, (c) contribution to strategic decision making, (d) review of risk assessment and risk mitigation, (e) review of financial statements and business performance, (f) contribution to the enhancement of brand image of the Company. REMUNERATION POLICY: The Board of Directors has on the recommendation of the Nomination and Remuneration Committee formulated a policy on "Appointment, Training, Evaluation and Remuneration of Directors, Key Managerial Personnel and Senior Management Personnel". This policy interalia covers the requirements specified under Section 178(3) of the Act comprising of criteria for determining qualifications, positive attributes and independence of a director, etc. The Policy provisions covering the requirements under Section 178 of the Act, is given as Annexure B to this report. DIRECTORS RESPONSIBILITY STATEMENT: Pursuant to Section 134(3)(c) of the Act, your Directors to the best of their knowledge and belief confirm that: (a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures, if any; (b) such accounting policies have been selected and applied consistently and such judgements and estimates have been made that are reasonable and prudent to give a true and fair view of the state of affairs of the Company in the Balance Sheet as at March 31, 2015 and the Statement of Profit and Loss for the said financial year ended March 31, 2015; (c) 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; (d) the annual accounts have been prepared on a going concern basis; (e) the proper internal financial controls were in place and that such internal financial controls were adequate and were operating effectively; (f) the systems to ensure compliance with the provisions of all applicable laws were in place and that such systems were adequate and operating effectively. WHISTLE BLOWER POLICY: The Company has a vigil mechanism named whistle Blower Policy (wBP) for directors and employees to report concerns about unethical behavior, actual or suspected fraud or violation of the Company's code of conduct or ethics policy. The wBP is also posted in the Company's website namely www.summitsecurities.net PARTICULARS OF EMPLOYEES: a. During the year under review, no employee was in receipt of remuneration which in aggregate was equal or more than the limit specified under Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. b. Statement containing the Disclosures pursuant to Section 197(12) of the Companies Act, 2013 and Rule 5 of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is attached as Annexure C to this Report. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, RESEARCH AND DEVELOPMENT, FOREIGN EXCHANGE EARNINGS AND OUTGO: The Company is a Non-Banking Financial Company and engaged in investments and financial activities and, as such, its operations do not account for substantial energy consumption. However, the Company is taking all possible measures to conserve energy and several environment friendly measures are adopted by the Company. The management ensures strict compliance of the measures adopted. The provisions relating to research and development and technology absorption are not applicable to the Company. During the year under review, there have been no transactions in the Company relating to foreign exchange earnings and outgo. CORPORATE SOCIAL RESPONSIBILITY: The provisions of Section 135 of the Companies Act, 2013 are not applicable to the Company as the Company does not fall into the criteria specified in sub-section (1) of Section 135 of the Act. CORPORATE GOVERNANCE: A report on Corporate Governance along with a certificate from the Auditors of the Company stipulated under Clause 49 of the Listing Agreement, are annexed to this Report. SECRETARIAL AUDITORS: M/s. Parikh Parekh & Associates, Company Secretaries were appointed as the Secretarial Auditors for conducting the Secretarial Audit in accordance with Section 204 of the Act for the year ended March 31, 2015. The Secretarial Audit Report required pursuant to sub-section (3) of Section 134 and Section 204(1) of the Act in prescribed Form MR-3 furnished by M/s. Parikh Parekh & Associates, Company Secretaries is attached as Annexure D to this Report. STATUTORY AUDITORS: Messrs Chaturvedi & Shah, Chartered Accountants were appointed as the Statutory Auditors of the Company at the Seventeenth AGM of the Company held on September 27, 2014 to hold office for a period of 4 (four) consecutive years from the conclusion of the Seventeenth AGM till the conclusion of the Twenty First AGM subject to ratification by the members at every AGM of the Company. They have confirmed that they are eligible to act as Statutory Auditors, if appointed, in accordance with Sections 139 and 141 of the Companies Act, 2013 and Rules made thereunder. The Board of Directors after considering the recommendation by the Audit Committee recommends the ratification of appointment of Messrs Chaturvedi & Shah, Chartered Accountants as the Statutory Auditors of the Company to hold office from the conclusion of the ensuing AGM till the conclusion of the next AGM. EXPLANATION AND COMMENTS ON AUDITORS' REPORT AND SECRETARIAL AUDIT REPORT: There is no qualification, reservation or adverse remark or disclaimer made either by the Statutory Auditor in Auditors Report or by the Company Secretary in practice (Secretarial Auditor) in his Secretarial Audit Report. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS: There are no significant and material orders passed by the Regulators or Courts or Tribunals impacting the going concern status and Company's operations in future. CHANGE IN THE NATURE OF BUSINESS: During the year under review, there was no change in the nature of business. INTERNAL FINANCIAL CONTROL: Details in respect of adequacy on internal financial controls with reference to the Financial Statements are stated in the Management Discussion and Analysis section of this Report. DISCLOSURE UNDER SEXUAL HARASSMENT OF WOMEN AT WORK PLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013: The Company has in place a Policy on Prevention of Sexual Harassment at workplace of the Sexual Harassment of women at the workplace (Prevention, Prohibition and Redressal) Act, 2013. Internal Complaints Committee has been set up to redress complaints. The Company has not received any complaints during the year under review. ACKNOWLEDEMENTS: The Board of Directors wishes to place on record its gratitude for the continued support and co-operation extended by the Government authorities, banks, members and employees of the Company. On behalf of the Board of Directors Ramesh D. Chandak Chairman Place : Mumbai Date : 28.05.2015 |