DIRECTORS' REPORT Dear Members, Your Directors are pleased to present the 28th Annual Report and the Audited Accounts of your Company for the financial year ended 31st March 2015. DIVIDEND In order to conserve resources for the future, Directors' of your company do not recommend any dividend for the year ended 31st March 2015. PERFORMANCE REVIEW & OUTLOOK In the financial year 2014-2015, the Indian economy posted an improvement in its growth dynamics. Due to positive changes in sentiment associated with the political stability from May 2014, the commodity prices environment remained benign since July 2014. Building on the macroeconomic mending process, the Indian economy has made some progress in the previous year. Led by the manufacturing, finance and electricity sectors, government expects GDP growth for FY 2015-2016 to be around 7.4%. While financial markets stabilised from the second half of the previous year economic sentiment continued to remain bullish, though improvements were limited in real economy During the year under review, Income from operation was Rs. 813.27 Lakhs (previous year Rs. 1469.06 Lakhs including other income of Rs. 14.78 lakhs). Income of the Company comprises of Dividend Income Rs. 156.72 Lakhs (previous year Rs. 116.44 Lakhs), Securities Trading gain was Rs. 26.56 Lakhs (previous year Loss of Rs. 11.48 Lakhs), Profit booked on Sale of Investments was Rs. 107.54 Lakhs (previous year Rs. 864.27 Lakhs), Provisions for diminution in the value of Investment written back Rs. 347.37 Lakhs (previous year Rs. 436.85 Lakhs). Net Profit before Tax and exceptional items for the year was Rs. 504.83 Lakhs (previous year Rs. 1125.23 Lakhs) With a change of Government at the Centre, curtailing of inflation, some reduction in the interest rates, positive policy pronouncements and high expectations of fiscal consolidation coupled with demand stimulus and structural de-bottlenecking, measures to curb black money and tightening of regulatory frame work in this regard, economic growth in the current and medium term has shown improvement over the previous year. This is a positive for the Capital market. First signs of this were reflected in the upswing in the Equity indices in the previous fiscal year. Industry Trends and its future prospects have been summed up in the Management Discussion and Analysis Report which forms part of this report. Subsidiary Company In accordance with the provision of section 129(3) of the Companies Act, 2013, the company has prepared a Consolidated Financial Statement of the Company and its wholly owned subsidiary Mount Finance Limited. The Consolidated Financial Statement for the year 201415 forms a part of the Annual Report and Accounts and shall be laid before the Annual General meeting while laying it financial statement. A Report on the performance and the financial position of the Subsidiary Company in form AOC-1 forms a part of the Consolidated Financial Statement. The company does not have a Material Subsidiary in the immediately preceding accounting year. However, as per the Clause 49 of the Listing Agreement, SEBI has made it mandatory for all listed companies to formulate a policy of determining Material Subsidiaries. Accordingly a policy was formulated by the Audit committee of the Board and the same was posted on the web site of the Company and may be accessed at the link www.hbstockholdings.com Associate Companies One of the associates Pisces Portfolios Pvt Ltd merged with another entity during the year under review. The merged entity does not qualify to be an Associate Company. A Report on the performance and the financial position of the Associate Company in form AOC-1 forms a part of the Consolidated Financial Statement. Internal Control Systems and their Adequacy The Company has an Internal Control System, commensurate with the size, scale and operations, which covers both locations of its operations. The scope and authority of the Internal Audit function has been detailed in the Audit Committee section of the Corporate Governance Report of the Company. To maintain objectivity and Independence, the Internal Audit function reports to the Chairman of the Audit Committee of the Board. Internal Auditor monitors and evaluates the efficacy and adequacy of internal control systems in the company, its compliance with the operating systems, accounting procedures and policies at all locations of company's operation. Internal Audit Report stimulates other functional departments to improve their systems and procedures to strengthen the controls. All these issues are placed before the Audit Committee of the Board for deliberations. Related Party Transactions All Related Party Transactions that were entered into during the financial year were on arm's length basis and were in the ordinary course of business. Hence the provisions of section 188 of the Companies Act, 2013 are not attracted. Thus disclosure in the Format AOC 2 is not required. Further, there are no material Related Party Transactions during the year under review made by the Company with Directors, Key Managerial Personnel or other designated persons and others. The policy on Related Party Transactions as approved by the Board is uploaded on the company's website and may be accessed at www.hbstockholdings.com Risk Management The Company has developed a Risk Management process to ensure that all current and future risk exposures are identified, assessed, quantified, appropriately mitigated, minimised and managed. In order to achieve sustained business growth, the Company has laid a Comprehensive Risk Assessment and minimization Procedure, which is reviewed by the Audit Committee and approved by the Board from time to time. These procedures are reviewed to ensure management controls risk through means of a properly defined framework best risk management policies are followed and risk minimisation exercises to be attributed and same are monitored by Audit Committee of the Board. Remuneration Policy The Board has, on the recommendation of the Nomination & Remuneration Committee framed a policy for selection and appointment of Directors, Senior Managerial personnel and their remuneration. The said Remuneration Policy is stated and being a part of the Corporate Governance Report. Corporate Governance Report Your Company is committed to maintain the applicable Corporate Governance standards and is committed to ensure due compliance of any modifications that may be stipulated by SEBI and communicated through stock exchange(s) from time to time and observe their timely implementation. Compliances of your Company with the requirements are presented in the enclosed pages. A Corporate Governance Report forms part of the Annual Report together with the Certificate from the Statutory Auditor's in respect of compliance(s) of Clause 49 of the Listing Agreement. Corporate Social Responsibility Committee The Board constituted a Corporate Social Responsibility Committee (CSR) pursuant to Section 135 of the Act, as per Composition stipulated in the Corporate Governance Report forming part of the Annual Report. The Board after consultations approved the Corporate Social Responsibility Policy for the Company and disclosed its contents has been elaborated in the Corporate Governance Report. Corporate Social Responsibility Policy of the Company forming part of the Boards Report is enclosed Annexure-I. The details of the CSR Policy is also posted on the Web site of the Company and may be accessed at the link www.hbstockholdings.com A sum of Rs. 2.45 Lakhs was to be incurred on the programme relating to Corporate Social Responsibility however no suitable / viable project of such small size cannot be ascertained hence the amount was not spent during 2014-2015. However, the Board shall endure to spend the amount in the ensuing financial year along with current year contribution. Nomination and Remuneration Committee A Nomination and Remuneration Committee was reconstituted by the Board in terms of Section 178 of the Companies Act, 2013 comprises of all Independent directors on the Board of the Company. Nomination and Remuneration Policy of the Company forming part of the Boards Report is enclosed Annexure-II. The detailed terms of reference of the Nomination and Remuneration Committee, number and date of the meetings held, attendance of the Directors etc. are given separately in the attached Corporate Governance Report. Vigil Mechanism / Whistle blower Policy In compliance of Section 177 (9) of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the company approved a Vigil mechanism / Whistle Blower Policy effective from 01st October, 2014, enabling stakeholders, to freely communicate their concerns about illegal or unethical practices and for the directors and employees to report concerns about unethical behaviour, actual or suspected fraud or violation of the Company's Code of Conduct or ethics Policy. No matter relating to Vigil mechanism was reported during the year under review. The Whistle Blower Policy approved by the Board of Directors is also posted on the website and may be accessed at the link www.hbstockholdings.com Directors During the year under review, Mr. Pradeep Kumar Mittal- Director, resigned from the Board with effect from 1st December 2014 and Mr. J M L Suri, resigned as Executive Director of the Company at the close of business hours on 21st May 2015. Resignation(s) were accepted by the Board and placed on record its appreciation for the valuable services rendered by Mr. Pradeep Kumar Mittal and Mr. J M L Suri as the Director(s) of the Company during their respective tenures of office. Board of Directors in terms of Sec 161 of the Companies Act, 2013 appointed Mrs. Asha Mehra a Woman Director (in the Independent category) as an Additional Director effective from 30th March 2015 and her term of office shall be upto the date of the ensuing Annual General Meeting. A Notice along with security deposit was received from a member proposing her for appointment as an Independent Director in the ensuing Annual General Meeting for a consecutive term of 5 (Five) years. As an Independent Director she shall not be liable to retire by rotation. As per Article 89(1) and (2) of the Article of Association of the Company and the provisions of Section 152 of the Companies Act, 2013, Mr. Lalit Bhasin shall retire by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re-appointment. Meeting of Board of Director(s) During the year under review, Four Board Meetings were convened and held respectively on 17th May 2014; 06th August 2014; 12th November 2014; and 11th February, 2015. The details of such meeting(s) are also given in the Corporate Governance Report. The intervening gap between the meetings was within the period prescribed under the Companies Act, 2013 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 and of all the directors individually as well as the evaluation of the working of Audit, Nomination & Remuneration and other Compliance Committees. The manner in which the evaluation has been carried out is explained in the Corporate Governance Report. Declaration by Independent Directors Mr. Gulshan Rai, Mr. Harbans Lal and Mrs Asha Mehra are Independent Director(s) on the Board of the company. The Company has received declarations under Section 149(6) of the Companies Act from all the Independent Director(s) of the Company confirming that they respectively met with the criteria of Independence as prescribed both in Companies Act 2013 and in Clause 49 of the Listing Agreement. Directors' Responsibility Statement Pursuant to Section 134 (3) (c) and sub section (5) of the Companies Act, 2013, The Directors Responsibility Statements, it is hereby stated 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 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 and of the profit or 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 provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; d) The Directors had prepared the annual financial statements have been prepared on a going concern basis and e) The Directors have laid down proper internal financial controls to be followed by the Company and that such internal financial controls were adequate and operating effectively. f) 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. Statutory Auditors Pursuant to the provisions of Section 139 of the Companies Act, 2013 and the rules framed thereunder, M/s. P. Bholusaria & Co., Chartered Accountants, New Delhi having FRN 000468N, the Statutory Auditors of the Company, hold office till the conclusion of the ensuing Annual General Meeting and are eligible offers themselves for reappointment. The Company has received a Letter from them to this effect that their re-appointment, if made would be within the prescribed limits under Section 141(3) (g) of the Companies Act, 2013 and they are not disqualified for reappointment. Secretarial Auditors Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial personnel) Rules 2014, M/s A N Kukreja & Co. a Firm of Company Secretary in Practice was appointed to undertake the Secretarial Audit for 2014-2015 of the company. The Secretarial Audit Report in MR-3 is annexed herewith and marked as Annexure-III. Observation on Auditor's and Secretarial Auditor's Report Statutory Auditor's and Secretarial Auditor's observations, if any, in their respective report(s), have been suitably explained by way of appropriate notes to accounts and also in the Board's Report wherever it was considered necessary. Particulars of Employees As required pursuant to Section 197 of the Companies Act, 2013 read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial personnel) Rules 2014 in respect of employees of the Company have been forms part of the Director's Report and marked as Annexure to Directors' Report as given below. Details relating to Remuneration of Directors, Key Managerial Personnel and Employee Disclosure pertaining to remuneration and other details as required under section 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial personnel) Rules 2014 is marked as Annexure-IV which is annexed hereto and forms a part of the Board's Report. Statement pursuant to the Listing Agreement The Equity Shares of the Company are listed at Bombay Stock Exchange Ltd (BSE) and National Stock Exchange of India Ltd. (NSE) and Listing fees for the current financial year have been paid in time to both the Stock Exchange(s). Extract of Annual Return The details forming part of the extract of the Annual Report in Form MGT-9 as required under section 92 of the Companies Act, 2013 is annexed herewith as "Annexure-V" Information as per Section 134 (3) (m) of the Companies Act, 2013: The particulars under Section 134 (3)(m) of the Companies Act, 2013 read with Rules 8(1) of Companies (Accounts) Rules 2014, information in respect of conservation of energy and technology absorption are not applicable to your Company. During the year under review there have been no Earnings or outgo of Foreign Exchange. 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: 1. Details relating to deposits covered under Chapter V of the Act. 2. Issue of Equity Shares with differential rights as to dividend, voting or otherwise. 3. Neither the Managing Director nor the Whole-time Directors of the Company receive any remuneration or commission from any of its subsidiaries. 4. No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and Company's operations in future. 5. 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. Acknowledgment Your Directors would like to express their appreciations for the assistance and cooperation received from banks, customers, members and other stake holders during the year under review. Your Directors also wish to acknowledge the valuable services rendered by the executive and staff of the Company at all levels. For and on Behalf of The Board of Directors Lalit Bhasin Chairman DIN : 00002114 Dated : 21st May, 2015 Place : Gurgaon |