DIRECTORS' REPORT Dear Members, 1. Your Directors are pleased to present the Thirty First Annual Report and the Company's audited financial statement for the financial year ended March 31, 2015. 2. DIVIDEND In view of the losses, the Directors do not recommend any dividend for the Financial Year 2014-2015. 3. OPERATIONAL REVIEW/COMPANY'S PERFORMANCE On a Standalone basis, the gross earnings rose to Rs.372.41 lakhs from Rs.256.16 lakhs. The year ended with a loss after tax of Rs. 42.37 lakhs as compared to Rs.152.54 lakhs in the previous year. The Company has let out part of the office premises on Leave and License basis to Asit C. Mehta Investment Interrmediates Limited and earned license fee income of Rs.146.24 lakhs. The Company offered advisory and consultancy services to certain clients and earned the fees aggregating to Rs.95.06 lakhs from Advisory and Consultancy Division. On a consolidated basis, the gross revenues were at Rs.1,435.69 lakhs as compared to Rs.460 lakhs in the previous year and loss after tax was at Rs.224.55 lakhs as against Rs.220.88 lakhs in the previous year. The overall consolidated loss aggregated to Rs.238.60 lakhs (excluding share of loss from an Associate concern). There was a loss of Rs.224.55 lakhs in the previous year (including share of loss from a Associate concern) Nucleus IT Enabled Services Limited, a wholly-owned subsidiary of the company, engaged in to ITeS services showed a stable income from operations and the loss before depreciation and finance cost increased to Rs.120.28 lakhs as against loss of Rs.5.37 lakhs in the previous year. The said loss is due to unexceptional bad debt of Rs.85.77 lakhs. The overall loss stood at Rs.214.00 lakhs as against Rs.72.32 lakhs in the previous year. 4. SUBSIDIARIES, JOINT VENTURES AND ASSOCIATE COMPANIES The Company has three subsidiaries as on March 31, 2015. There are no associate companies within the meaning of Section 2(6) of the Companies Act, 2013 (''the Act"). There has been no change in the nature of the business of the subsidiaries. The Company has a wholly owned subsidiary viz. Nucleus IT Enabled Services Limited. During the year under review, Asit C. Mehta Investment Interrmediates Limited (ACMIIL) has become the Subsidiary, under section 2(87) of the Act and material non-listed Indian subsidiary of the Company as per Clause 49, sub-clause (V)(E) of the Listing Agreement, pursuant to the conversion of the Fully Convertible Debentures held by the Company in ACMIIL into Equity Shares. As Asit C. Mehta Comdex Services DMCC, a company incorporated in Dubai, is the wholly owned subsidiary of ACMIIL, it becomes the subsidiary of the Company under section 2(87) of the Act. Pursuant to provisions of Section 129(3) of the Act, a statement containing salient features of the financial statements of the Company's subsidiaries in Form AOC-1 is attached to the financial statements of the Company. Pursuant to the provisions of section 136 of the Act, the financial statements of the Company, consolidated financial statements along with relevant documents and separate audited accounts in respect of subsidiaries, are available on the website of the Company. The financial statement of Asit C. Mehta Comdex Services DMCC has not been consolidated with the Company's financial statements pursuant to Rule 6 of Companies (Accounts) Rules, 2015, which gives an exemption with respect to consolidation of the financial statement of subsidiary or subsidiaries incorporated outside India only for the financial year commencing on or after 1st April, 2014. 5. DIRECTORS' RESPONSIBILITY STATEMENT: Pursuant to Section 134(5) of the Act, the Board of Directors states that: a) in the preparation of the annual accounts for the year ended March 31, 2015, the applicable accounting standards have been followed along with proper explanation and there are no material departures from the same. b) they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent, to give a true and fair view of the state of affairs of the Company at the end of the financial year March 31, 2015 and of the profit and loss of the Company for that period; c) they have taken proper and sufficient care 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) they have prepared the annual accounts on a 'going concern' basis. e) they have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively; and f) they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively. 6. DIRECTORS AND KEY MANAGERIAL PERSONNEL a. Retirement by Rotation In accordance with the provisions of the Act, Mrs. Deena A. Mehta, Non-Executive Director of the Company, retires by rotation and being eligible has offered herself for re-appointment. b. Declaration by Independent Directors Pursuant to the provisions of Section 149 of the Act, Mr. Vjay Ladha, Mr. R. Krishnamurthy and Mr. Pundarik Sanyal were appointed as Independent Directors at the Annual General Meeting (AGM) of the Company held on September 26, 2014. The terms and conditions of appointment of Independent Directors are as per Schedule IV of the Act. They have submitted a declaration that each of them meets the criteria of independence as provided in Section 149(6) of the Act and Clause 49 of the Listing Agreement and there has been no change in the circumstances, which may affect their status as Independent Director during the year. c. Appointment of KMP Pursuant to the provisions of Section 203 of the Act, Mr Raj Gandhi was appointed as Company Secretary and Compliance Officer of the Company w.e.f. 1st December, 2014. Ms. Purvi Ambani was appointed by the Board of Directors, as the Chief Financial Officer of the Company and Mr. Stanley Santmayor was appointed as Manager of the Company, designated as Key Managerial Persons, with effect from 3rd February, 2015. 7. MEETINGS OF THE BOARD Six meetings of the board were held during the year. For details of the meetings of the board, please refer to the corporate governance report, which forms part of the Annual Report. 8. BOARD EVALUATION The Board of Directors has carried out an annual evaluation of its own performance, Board Committees and individual Directors pursuant to the provisions of the Act and the corporate governance requirements as prescribed under Clause 49 of the Listing Agreement. The evaluation framework for assessing the performance of Directors comprises of the following key areas: 1. Expertise; 2. Objectivity and Independence 3. Guidance and support in context of life stage of the Company; 4. Understanding of the Company's business; 5. Understanding and commitment to duties and responsibilities; 6. Willingness to devote the time needed for effective contribution to Company; 7. Participation in discussions in effective and constructive manner; 8. Responsiveness in approach; 9. Ability to encourage and motivate the Management for continued performance and success; The evaluation involves self-evaluation by the Board Member and subsequently assessment by the Board of Directors. A member of the Board will not participate in the discussion of his / her evaluation. Accordingly a process of evaluation was followed by the Board for its own performance and that of its Committees and individual Directors and also the necessary evaluation was carried out by Nomination and Remuneration Committee and Independent Directors at their respective meetings held for the purpose. 9. POLICY ON DIRECTORS' APPOINTMENT AND REMUNERATION AND OTHER DETAILS The Company's policy on Directors' appointment and remuneration and other matters provided in Section 178(3) of the Act has been disclosed in the Corporate Governance report, which forms part of the Annual Report. 10. INTERNAL FINANCIAL CONTROL SYSTEMS AND THEIR ADEQUACY The Company has in place adequate internal financial controls with reference to financial statements. During the year, such controls were tested and no reportable material weakness in the design or operation was observed. 11. AUDIT COMMITTEE The details pertaining to composition of Audit Committee are included in the Corporate Governance Report, which forms part of the Annual report. 12. AUDITORS Pursuant to the provisions of Section 139 of the Act and the rules framed thereunder, M/s Manek & Associates (Firm Registration No 126679W) Chartered Accountants, were appointed as Statutory Auditors of the Company from the conclusion of the thirtieth AGM of the Company held on September 26, 2014 till the conclusion of the thirty-third AGM to be held in the year 2017, subject to ratification of their appointment at every AGM. Accordingly, a resolution seeking Members ratification for the re-appointment of M/s Manek & Associates (Firm Registration No 126679W) Chartered Accountants, as the Statutory Auditors of the Company for the remaining tenure is placed before the members in the ensuing AGM. The Audit Committee and Board have reviewed their eligibility criteria, as laid down under Section 141 of the Act and recommended the ratification of their re-appointment as Statutory Auditors for the remaining tenure. 13. AUDITOR'S REPORT AND SECRETARIAL AUDITOR'S REPORT The Auditors' Report does not contain any qualifications, reservations or adverse remarks. Pursuant to Section 204 of the Act and Rules thereunder, the Company had appointed M/s Mehta & Mehta, Company Secretaries, to undertake the Secretarial Audit of the Company. The Secretarial Audit Report for the FY 2014-15 in form MR-3 given by M/s. Mehta & Mehta, Company Secretaries, is attached as Annexure I with this report. The Secretarial Auditor has made an observation with regard to Section 184 of the Companies Act, 2013 ("Act, 2013"). In the first board meeting of the year, the Company had complied with Section 299 of the Companies Act, 1956, which is corresponding to Section 184 of the Act, 2013. The majority of the provisions related to the Act, 2013 had become effective from April 1, 2014, which includes Section 184. As the Company had already complied with the Section 299 of the Companies Act, 1956, the Company was of the view that there is no need to complied with Section 184 of the Act, 2013. The Company Sought professional advice on the same and then complied with Section 184 of the Act, 2013 also in the subsequent board meeting. 14. RISK MANAGEMENT The development and implementation of Risk Management Policy has been covered in the Corporate Governance Report, which forms part of the Annual report. 15. PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS 16. TRANSACTIONS WITH RELATED PARTIES All contracts / arrangements / transactions entered by the Company during the financial year with related parties were in the ordinary course of business and on an arm's length basis. No Material Related Party Transactions, i.e. transactions exceeding ten percent of the annual consolidated turnover as per the last audited financial statements, were entered during the year by your Company. Accordingly, the disclosure of Related Party Transactions as required under Section 134(3) (h) of the Act, in Form AOC - 2 is not applicable. 17. CORPORATE SOCIAL RESPONSIBILITY The Company is not required to constitute a Corporate Social Responsibility Committee as it does not fall within purview of Section 135(1) of the Act, and hence it is not required to formulate policy on Corporate Social Responsibility. 16. TRANSACTIONS WITH RELATED PARTIES All contracts / arrangements / transactions entered by the Company during the financial year with related parties were in the ordinary course of business and on an arm's length basis. No Material Related Party Transactions, i.e. transactions exceeding ten percent of the annual consolidated turnover as per the last audited financial statements, were entered during the year by your Company. Accordingly, the disclosure of Related Party Transactions as required under Section 134(3) (h) of the Act, in Form AOC - 2 is not applicable. 17. CORPORATE SOCIAL RESPONSIBILITY The Company is not required to constitute a Corporate Social Responsibility Committee as it does not fall within purview of Section 135(1) of the Act, and hence it is not required to formulate policy on Corporate Social Responsibility. 18 DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION & REDRESSAL) ACT, 2013 The Company has in place an Anti-Sexual Harassment Policy in line with requirements, inter-alia, of The Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013. An Internal Compliance Committee has been set up to redress complaints received regarding sexual harassment. All employees (permanent, contractual, temporary and trainee) are covered under this policy. The following is a summary of sexual harassment complaints received and disposed off during the Financial Year 2014-15: • No. of complaints received: NIL • No. of complaints disposed off: NIL 19. EXTRACT OF ANNUAL RETURN As provided under Section 92(3) of the Act, the extract of annual return is given in Annexure II in the prescribed Form MGT- 9, which forms part of this report. 20. PARTICULARS OF EMPLOYEES The information required under Section 197 of the Act read with rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are given below: (i) The ratio of the remuneration of each director to the median remuneration of the employees of the company for the financial year: The Directors of the Company are not paid any remuneration except the sitting fees. Hence, the ratio of the remuneration of each director to the median remuneration of the employees is NIL. (ii) The percentage increase in remuneration of each director, Chief Financial Officer, Chief Executive Officer, Company Secretary or Manager, if any, in the financial year: The Board of the Company consists of Non-executive Directors. The non-executive directors are paid no remuneration except the sitting fees plus reimbursement of actual travel expenses, if any. There is no increase in the remuneration of Company Secretary, Chief Financial Officer and Manager of the Company. (iii) The percentage increase in the median remuneration of employees in the financial year: There was a decrease of 6.33% in median remuneration of employees in the financial year. (iv) The number of permanent employees on the rolls of company: The Company has 4 (Four) permanent Employees on the rolls of Company as on 31st March, 2015 as compared to 8 (Eight) permanent employees as on 31st March, 2014. (v) The explanation on the relationship between average increase in remuneration and company performance: On an average, employees received an annual increase of 10%. The individual increment varied from 5% to 12% based on individual performance. The increase in remuneration is in line with the market trends in the country. In order to ensure that remuneration reflects Company performance, the performance pay is also linked to organization’s performance, apart from an individual’s performance. (viii) Average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration: Not Applicable (x) The key parameters for any variable component of remuneration availed by the directors: No remuneration is paid to the Directors except for the sitting fees. Therefore, there are no variable components availed by any of the Directors of the Company. xi) The ratio of the remuneration of the highest paid director to that of the employees who are not directors but receive remuneration in excess of the highest paid director during the year: There is no such employee receiving remuneration in excess of highest paid director as no remuneration is paid to the Directors except for the sitting fees. (xii) Affirmation that the remuneration is as per the remuneration policy of the company. The Company affirms that the remuneration is as per the Remuneration Policy of the Company. (xiii) The statement containing particulars of employees as required under Section 197(12) of the Act read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014: There are no employees who were employed for a part of the financial year or throughout the financial year and are in: a. receipt of remuneration which is not less than sixty lakhs rupees per annum; b. receipt of remuneration which is not less than five lakh rupees per month; c. in receipt of remuneration which is in excess of that drawn by Managing Director/Whole-time Director/ Manager and holds by himself or along with his spouse and dependent children not less than two percent of the equity shares of the company. Therefore, the statement containing particulars of employees is not required to be attached. 21. DISCLOSURE REQUIREMENTS As per Clause 49 of the Listing Agreement entered into with the Stock Exchange, Corporate Governance Report with Compliance Certificate thereon and Management Discussion and Analysis are attached, which form part of the Annual report. Details of the Familiarization Programme for the Independent Directors are available on the website of the Company (URL: gov.htm) Policy for determining Material Subsidiaries of the Company is available on the website of the Company (URL: <http://> www.acmfsl.com/cor gov.htm) Policy on Dealing with Related Party Transactions is available on the website of the Company (URL: . com/cor gov.htm) The Company has formulated and published a Whistle Blower Policy to provide Vigil Mechanism for employees including Directors of the Company to report genuine concerns. The provisions of this policy are in line with the provisions of the Section 177(9) of the Act and the revised Clause 49 of the Listing Agreement with Stock Exchange (URL: /cor <http://acmfsl.com/cor> gov.htm) 22. DEPOSITS FROM PUBLIC The Company has not accepted any deposits from public and as such, no amount on account of principal or interest on deposits from public was outstanding as on the date of the balance sheet. 23 CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO Conservation of Energy The operations of your company involved low energy consumption. Energy conservation efforts are being pursued on a continuous basis. Close monitoring of power is maintained to minimize wastage and facilitate optimum utilization of energy. Technology Absorption During the year under review, there is no technology absorption. The company has neither imported any technology nor incurred any expenditure on research and development of technology. Foreign Exchange Earnings And Outgo During the year under review, there is no foreign exchange earnings or outgo 24. MATERIAL CHANGES AND COMMITMENT IF ANY AFFECTING THE FINANCIAL POSITION OF THE COMPANY OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR TO WHICH THIS FINANCIAL STATEMENTS RELATE AND THE DATE OF THE REPORT No material changes and commitments affecting the financial position of the Company occurred between the end of the financial year to which this financial statements relate and the date of this report. 25. ORDER PASSED BY REGULATOR OR COURTS OR TRIBUNALS There are no orders passed by the regulator or courts or tribunals against the company impacting its status as going concern and on its operations. 26. ACKNOWLEDGEMENT The Directors thank the Company's stakeholders, employees, customers, vendors, investors and banks for their continuous support. The Directors also thank the Government of India, the Governments of various states in India and concerned Government Departments / Agencies for their co-operation. The Directors appreciate and value the contributions made by every member of the team of Asit C. Mehta Financial Services Limited. FOR AND ON BEHALF OF THE BOARD ASIT C. MEHTA CHAIRMAN DIN: 00169048 Mumbai 29th May, 2015 |