Dear Members,
We, the Board of Directors ("Board") are pleased to present the Sixteenth
(16th) Annual Report of 5paisa Capital Limited ("5paisa Capital", ''our
Company'', "We") along with the Audited Financial Statements for the Financial
Year ended March 31, 2023 ("year under review" or "year" or "FY
2022-23"). The consolidated performance of our Company and its subsidiaries has been
referred to wherever required.
In compliance with the applicable provisions of Companies Act, 2013, (including any
statutory modification(s) or re-enactment(s) thereof, for time being in force)
("Act") and the Securities and Exchange Board of India (Listing Obligations and
Disclosure Requirements) Regulations, 2015 ("SEBI Regulations"), this report
covers the financial results and other developments in respect of 5paisa Capital Limited
during the financial year ended March 31, 2023 and upto the date of the Board Meeting held
on May 01, 2023 to approve this report.
1. FINANCIAL RESULTS
Our Company's Standalone and Consolidated financial performance during Financial Year
2022-23, as compared with that of the previous Financial Year 2021-22 is summarized below:
|
|
|
|
(Rs. In Millions) |
Particulars |
CONSOLIDATED |
STANDALONE |
|
2022-23 |
2021-22 |
2022-23 |
2021-22 |
Gross total income |
3,393.68 |
2,979.81 |
3,381.47 |
2,975.67 |
Profit/(Loss) before interest, depreciation and taxation |
875.16 |
454.02 |
864.29 |
461.15 |
Interest and financial charges |
206.34 |
218.69 |
206.34 |
218.69 |
Depreciation |
87.94 |
50.29 |
80.40 |
42.75 |
Profit/(Loss) before tax |
580.89 |
185.04 |
577.55 |
199.72 |
Taxation- Current |
83.18 |
- |
82.91 |
- |
- Deferred |
62.05 |
47.68 |
61.67 |
51.37 |
- Short or excess provision for income tax |
- |
- |
- |
- |
Net profit/ (Loss) for the year |
435.67 |
137.36 |
432.97 |
148.35 |
Less: Appropriations |
- |
- |
- |
- |
Add: Balance brought forward from the previous year |
(355.89) |
(493.25) |
(318.28) |
(466.63) |
Balance to be carried forward |
79.77 |
(355.89) |
114.69 |
(318.28) |
Note: Previous periods figures have been regrouped/rearranged wherever necessary
The statement containing extract of subsidiaries financial statement are provided on
the corporate website at https://www.5paisa.com/investor-relations.
2. CONSOLIDATED FINANCIAL STATEMENTS:
The Consolidated Financial Statements of our Company for the FY 2022-23 are prepared in
compliance with the applicable provisions of the Companies Act, 2013 ('the Act'), Indian
Accounting Standards ('Ind AS') and the Securities and Exchange Board of India (Listing
Obligations and Disclosure Requirements) Regulations, 2015 ['SEBI (LODR) Regulations'].
3. REVIEW OF BUSINESS AND OPERATIONS AND STATE OF YOUR COMPANY'S AFFAIRS
We, at 5paisa Capital, are committed to fostering the financial journeys of both
prevailing and first-time investors. We provide them with a digital platform with various
features that helps investors to educate themselves about the world of investments,
authorize them to take measured decisions, invest through its mobile application and
elevate their participation and gains from the financial market.
Read more about our performance during the year on page no. 128 of this Report.
During the year, we focused on leveraging technology to strengthen our business
processes, ensure deeper market penetration and deliver a superior customer experience. As
a result, we have cemented our position as a strong player in the discount broking space,
offering superior products and services.
The growing penetration of internet and smartphone in the country has helped our
Company to expand its customer base. We have leveraged an integrated investment platform
to capitalize on the opportunity. Our mobile application/web platform has helped
individuals to trade across equity, F&O, commodity, currency segments; invest in
mutual fund and insurance; or facilitate algorithm based robo advisory services.
As capital market participation remains low in India when compared to the other
developed nations, there is an enormous opportunity for growth. The outlook for financial
products distribution looks healthy with gradual resumption of economic activities.
Retail participation is expected to increase, given the favourable demographics, rising
financial literacy and increasing smart phone and internet penetration. With the
ever-increasing demand for financial transactions, the digital payments ecosystem has also
been evolving continuously. These factors will enable us in fuelling 5paisa Capital's
future growth trajectory.
4. MACRO-ECONOMIC OVERVIEW
Read more about our performance during the year on page no. 128 of this Report.
5. INDUSTRY OVERVIEW
Read more about our performance during the year on page no. 128 of this Report.
6. KEY INITIATIVES/DEVELOPMENTS
a. Conversion of Share Warrants:
The Capital Raising Committee of the Board of Directors of our Company in its meeting
held on August 02, 2022 allotted 12,00,000 Equity Shares pursuant to exercise of options
attached to the convertible warrants held by Mr. Nirmal Jain, Mrs. Madhu Jain & Mr.
Venkataraman Rajamani, Promoters of the Company, consequent to the receipt of notice for
exercise, along with the balance 75% of the application money (being Rs.375/- per share)
due on the said warrants, i.e. Rs.45,00,00,000 (INR Forty Five Crore only). The trading
approval for the 12,00,000 equity shares was received by our Company from BSE and NSE on
August 25, 2022. However, the allotted shares are locked-in up to August 29, 2025 as
required by SEBI (ICDR) Regulations, 2018.
b. Scheme of Arrangement between IIFL Securities Limited and 5paisa Capital Limited and
their respective shareholders and creditors:
The Board of Directors at their meeting held on December 06, 2022, approved the Scheme
of Arrangement between IIFL Securities Limited and 5paisa Capital Limited and their
respective shareholders and creditors under Section 230-232 of the Companies Act, 2013, as
amended read with other applicable provisions of the Act and Rules made thereunder, which
envisages the transfer of the Online Retail Trading Business (Demerged Undertaking) from
the IIFL Securities Limited to our Company, so as to consolidate the said business under
our Company subject to the approval of the shareholders and such other class of persons as
directed by the Hon'ble National Company Law Tribunal, Mumbai Bench (Hon'ble NCLT),
sanction of the Hon'ble NCLT and such other approvals as may be required.
Our Company has filed an application with BSE Limited, National Stock Exchange of India
Limited and such other membership departments wherein your Company holds membership for
obtaining No Objection Certificate pursuant to Regulation 37 of SEBI (Listing Obligation
and Disclosure Requirement) Regulation, 2015 and the same is under process. We shall file
an application to the Hon'ble National Company Law Tribunal (NCLT), Mumbai Bench for the
sanction of scheme post receipt of No Objection Certificate from the aforesaid exchanges
and other authorities.
Upon the Scheme becoming effective, our Company shall issue 1 (one) fully paid up
equity share of INR 10 (Indian Rupees Ten only) each for every 50 (fifty) equity shares of
INR 2 (Indian Rupees Two only) each of IIFL Securities Limited.
The details of the Scheme and other related documents are available on our company's
corporate website at https://www.5paisa.com/ investor-relations.
c. Setting up of 5paisa International Securities (IFSC) Limited:
With a view to offer diversified products to its customers, our Company intends to
offer an option to its clients for trading in US stocks by registering itself with NSE
IFSC Ltd. as a trading cum clearing member. Consequently, our Company has incorporated a
wholly owned IFSC subsidiary viz. 5paisa International Securities (IFSC) Limited and is in
process of seeking all the regulatory licenses and permissions to commence its operations
shortly.
7. RETURN TO INVESTORS (DIVIDEND):
In order to conserve the resources of our Company for future expansion, the Directors
have decided not to recommend any dividend on equity shares of our Company for the
financial year under review.
The Dividend Distribution Policy is available on the website at
https://storage.googleapis.com/5paisa-prod- storage/files/investor
relations/2022-04/Dividend%20 Distribution%20Policy 1.pdf
8. TRANSFER TO GENERAL RESERVE:
During the year under review, our Company has not transferred any amount to the
reserves.
9. TRANSFER OF FUNDS TO INVESTOR EDUCATION AND PROTECTION FUND (IEPF):
Pursuant to the provisions of Section 124 and 125 of the Companies Act, 2013
("Act") read with the Investor Education and Protection Fund Authority
(Accounting, Audit, Transfer and Refund) Rules, 2016 ("IEPF Rules"), all unpaid
or unclaimed dividends are required to be transferred by our Company to the Investor
Education and Protection Fund ("IEPF" or "Fund") Account established
by the Central Government, after completion of seven years from the date the dividend is
transferred to unpaid/ unclaimed account. Further, according to the Rules, the shares in
respect of which dividend has not been paid or claimed by the members for seven
consecutive years or more shall also be transferred to the demat account created by the
IEPF Authority after complying with the procedure laid down under the Rules.
During FY 2022-23, our company had not transferred any shares to 'IEPF' Account.
However, as on the March 31, 2023, Rs.0.18 million is lying as the unclaimed fractional
entitlements in the unpaid fractional shares account.
10. AWARDS AND RECOGNITION:
During the year under review, our Company received numerous awards and accolades which
were conferred by reputable organizations and is designed to honor the efforts made by us
and the details of the same are given herein below:
The Great Indian BFSI CEO of the Year
Mr. Prakarsh Gagdani, Chief Executive Officer and Whole-Time Director of our Company
has been recognized as The Great Indian BFSI CEO of the Year.
The Great Indian BFSI fastest growing Company of the Year
5paisa Capital Limited was recognized as
"The Great Indian BFSI fastest growing Company of the Year".
Naya Bharat Business Conclave 2022
5paisa Capital Limited was awarded in Naya Bharat Business Conclave 2022.
Excellence in Online Share Trading
5paisa Capital Limited was recognized as
"Excellence in Online Share Trading".
Digixx Awards 2022
5paisa Capital Limited won Silver in Digixx Awards 2022.
Best Integration of Digital Content with TV
5paisa Capital Limited was recognized as "Best Integration of Digital Content with
TV".
11. SHARE CAPITAL:
The paid up equity share capital of our Company as on March 31, 2023 was
Rs.306,355,680/- divided into 30,635,568 equity shares of Rs.10/- each as compared to
Rs.294,173,180/- divided into 29,417,318 equity shares of Rs.10/- each as on March 31,
2022.
The increase in the share capital was on account of issuance of 12,00,000 equity shares
on preferential basis to promoters pursuant to conversion of Share Warrants as mentioned
above in Point No. 6 of this Report and pursuant to exercise of 18,250 ESOPs granted under
the 5paisa Capital Limited Employee Stock Option Scheme 2017, by eligible employees, which
were converted into equity shares Rs.10/- each.
12. EMPLOYEES STOCK OPTION SCHEMES ("ESOS"):
Presently, our Company has two Schemes which are prepared as per the provisions of SEBI
(Share Based Employee Benefits) Regulations, 2014 ("SBEB Regulations"):
1) 5paisa Capital Limited Employee Stock Option Scheme 2017 ("5PCL ESOS
2017") was approved by shareholders vide a special resolution dated January 25, 2018.
2) 5paisa Capital Limited Employee Stock Option Trust Scheme 2017 ("5PCL ESOTS
2017") was approved by shareholders vide a special resolution dated January 25, 2018.
During the year under review, there was no material change in ESOS of our Company. As
per Regulation 14 of "SBEB Regulations", read with SEBI circular no. CIR/CFD/
POLICY CELL/2/2015 dated June 16, 2015, the details of the "ESOS" are uploaded
on our corporate website at https://www.5paisa.com/investor-relations and the same
is available for inspection by the Members at the Registered Office of our Company. If any
member is interested in obtaining a copy thereof, such member may write to the Company
Secretary, whereupon a soft copy would be sent at the registered email address of the
Member. A certificate from Secretarial Auditor of the Company confirming that the Scheme
has been implemented in accordance with the applicable Regulations would be made available
for inspection by Members through electronic means.
13. INCREASE IN SIZE OF ESOP POOL:
The Board of Directors in their meeting held on January 11, 2023 and pursuant to
recommendation of Nomination and Remuneration Committee, approved the increase in size of
ESOP Pool for grant of options to eligible employees under the Employee Stock Option
Scheme-2017 from 15,00,000 (Fifteen Lakhs) options to 22,00,000 (Twenty-two Lakhs) options
convertible into equity shares of Rs.10/- each of the Company. Further, the members vide
Special Resolution dated March 01, 2023 passed through postal ballot also approved the
same.
14. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS:
Particulars of loans, guarantees given and investments made during the year, as
required pursuant to the provisions of Section 186 of the Companies Act, 2013 and schedule
V of the Securities and Exchange Board of India (Listing Obligations and Disclosure
Requirements) Regulations, 2015 ("LODR Regulations"), forms part of the
financial statements.
15. DEPOSITS:
Our Company has not accepted any deposits from public falling under the ambit of
Section 73 of the Companies Act, 2013 and the Rules framed thereunder and as such, no
amount on account of principal or interest on deposits from public was outstanding as on
the Balance Sheet date.
Further, our Company does not intend to raise any public deposits, in terms of its
declaration to the Reserve Bank of India.
16. SUBSIDIARIES:
5paisa P2P Limited
During the year under review, the company continued its operations as P2P NBFC.
However, the lending and borrowing activities on the said platform were carried out
conservatively.
5paisa Corporate Services Limited (Formerly known as 5paisa Insurance Brokers
Limited)
Since, no business was undertaken in the company from the date of incorporation and on
account of its inability to register as an Insurance Broker, the management decided to
change the main object of the Company and undertake different business under the said
company. Accordingly, the name of the company was changed from '5paisa Insurance Brokers
Limited' to '5paisa Corporate Services Limited' with effect from November 16, 2022
pursuant to receipt of fresh Certificate of Incorporation dated November 16, 2022 issued
by the Registrar of Companies, Mumbai, in order to align with the main object of the
company. The Company shall commence its business shortly.
5paisa Trading Limited
During the year under review, the Company commenced its business by offering an online
trading platform to its clients to trade in Digital Gold.
5paisa International Securities (IFSC) Limited
5paisa International Securities (IFSC) Limited was incorporated as a public limited
company on June 15, 2022 as a wholly owned subsidiary of 5paisa Capital Limited. 5paisa
International Securities (IFSC) Limited is incorporated with the intention of carrying out
business of IFSC (International Financial Service Centre) Unit and act as intermediary in
IFSC. The Company is in process of registration with NSE IFSC Limited as a trading cum
clearing member and shall commence its operations after receipt of necessary
clearances/licenses.
17. CONSOLIDATED FINANCIAL STATEMENTS:
As per the provisions of section 134 and 136 of the Companies Act, 2013 read with
applicable Rules, Regulation 33 of LODR Regulations and applicable Accounting Standards,
the Board of Directors had in their meeting held on May 01, 2023 approved the Consolidated
Financial Statements of our Company along with the Standalone Financial Statements. Copies
of the Balance Sheet, Statement of Profit & Loss, Report of the Board of Directors and
Report of the Auditors of the subsidiary company are not attached to the accounts of our
Company for the financial year 2022-23. Our Company will arrange for soft copies of these
documents/ details upon request by any member of the Company and dispatch the same on the
registered email address of the member.
These documents/details will also be available for inspection by any member of our
Company at its registered office and at the registered offices of the concerned subsidiary
during the business hours on working days i.e. except on Saturdays, Sundays and Public
Holidays. If any member is interested in obtaining a copy thereof, such member may write
to the Company Secretary, whereupon a soft copy of the same would be sent to the
registered email address of the member. The Annual Report of subsidiaries is uploaded on
our corporate website at https:// www.5paisa.com/investor-relations. As required by
Companies Act, 2013 and Accounting Standard - 21 (AS 21) issued by the Institute of
Chartered Accountants of India, our Company's Consolidated Financial Statements included
in this Annual Report incorporate the accounts of its subsidiaries. A report on the
performance and financial position of the subsidiaries is provided in the prescribed form
AOC-1 as "Annexure-I" to this Directors' Report.
The policy on determining the material subsidiary is available on our corporate website
at https://storage. googleapis.com/5paisa-prod-storage/files/investor_ relations/2021-05/policy-on-determining-material-
subsidiary.pdf.
18. MANAGEMENT DISCUSSION AND ANALYSIS REPORT:
In accordance with Regulation 34 of LODR Regulations, the Management Discussion and
Analysis Report is presented in separate section to this Annual Report.
19. BUSINESS RESPONSIBILITY AND SUSTAINABILITY REPORT:
Pursuant to Regulation 34(2) of the Listing Regulations read with SEBI Circular No.
CIR/CFD/CMD/10/2015 and PR No. 18/2021 dated November 04, 2015 and May 10, 2021
respectively, the Business Responsibility and Sustainability Report describing the
initiatives taken by our Company, from an environmental, social and governance perspective
is provided in a separate section and forms part of this Annual Report.
20. DIRECTORS AND KEY MANAGERIAL PERSONNEL:
a. Directors:
The Board comprises of the following Directors as on March 31, 2023.
Mr. Prakarsh Gagdani (DIN: 07376258) |
Whole-Time Director |
Mr. Gourav Munjal (DIN: 06360031) |
Whole-Time Director |
Dr. Archana Hingorani (DIN: 00028037) |
Non - Executive Independent Director |
Mr. Milin Mehta (DIN: 01297508) |
Non - Executive Independent Director |
Mr. Ravindra Garikipati (DIN: 00984163) |
Non - Executive Independent Director |
Ms. Nirali Sanghi (DIN: 00319389) |
Non - Executive Independent Director |
I. Changes in Board Composition
During the year under review, there were no changes in the composition of the Board.
II. Retirement by Rotation
In accordance with Section 152 of the Companies Act, 2013 ("Act") read with
Article 157 of the Articles of Association of the Company, Mr. Gourav Munjal (DIN:
06360031), Whole Time Director and Chief Financial Officer of our Company is liable to
retire by rotation at the ensuing Annual General Meeting and being eligible, has offered
himself for re-appointment. The Board recommends their re-appointment for the approval of
members. A resolution seeking approval of the members for his re-appointment forms part of
the Notice of 16th AGM of our Company.
There was no change in the composition of the Board of Directors and Key Managerial
Personnel during the financial year ended March 31, 2023, except as stated above.
b. Key Managerial Personnel:
Pursuant to the provisions of Section 203 of the Companies Act, 2013 and rules made
thereunder, the Key Managerial Personnel of our Company as on March 31, 2023 are:
Mr. Prakarsh Gagdani |
: Whole-Time Director & Chief Executive Officer |
Mr. Gourav Munjal |
: Whole-Time Director & Chief Financial Officer |
Mrs. Namita Godbole |
: Company Secretary & Compliance Officer |
The Remuneration and other details of the Key Managerial Personnel for the year ended
March 31, 2023 are mentioned in Form MGT-7 - Annual Return which can be accessed on our
corporate website at https://www.5paisa.com/investor-relations.
Further, pursuant to SEBI Circular No. SEBI/ HO/MIRSD/MIRSD-PoD-1/P/CIR/2023/24 dated
February 06, 2023, your company has recognized and has designated following CXO level
officers as a Key Managerial Personnel of your company for managing the key risks.
Mrs. Namita Godbole : |
Chief Compliance Officer |
Mr. Yogesh Maroli : |
Chief Information Security Office |
21. MEETING OF DIRECTORS AND COMMITTEE/BOARD EFFECTIVENESS:
Meetings of the Board of Directors
The Board met Five (5) times during the year to discuss and approve various matters
including financials, raising of funds, review of audit reports and other businesses. For
further details please refer to the report on Corporate Governance.
Committees of the Board of Directors (as on March 31, 2023)
In accordance with the applicable provisions of the Companies Act, 2013 and LODR
Regulations, the Board has in place the following Committees:
Audit Committee
Nomination and Remuneration Committee
Stakeholders Relationship Committee
Finance Committee
Risk Management Committee
Corporate Social Responsibility Committee
Environment, Social and Governance (ESG) Committee
Independent Directors (ID) Committee
Audit Committee:
During the year, there was no change in the composition of Audit Committee. The Audit
Committee met Five (5) times which is in compliance with the provisions of LODR
Regulations and Companies Act, 2013. The Committee comprises of Mr. Milin Mehta as the
Chairman, Ms. Nirali Sanghi and Dr. Archana Hingorani as the Members of the Audit
Committee.
The role, terms of reference and powers of the Audit Committee are in conformity with
the requirements of the Companies Act, 2013 and LODR Regulations. The Committee met during
the year under review and discussed on various matters including financials and audit
reports. During the period under review, the Board of Directors of our Company accepted
all the recommendations of the Audit Committee.
The terms of reference of Audit Committee and details of Committee Meeting are provided
in the Corporate Governance Report.
Nomination & Remuneration Committee
During the year, the Nomination & Remuneration Committee met Two (2) times. The
Committee comprises of Ms. Nirali Sanghi as the Chairperson, Dr. Archana Hingorani, Mr.
Ravindra Garikipati and Mr. Milin Mehta as members of the Committee.
The role, terms of reference and powers of the Nomination & Remuneration Committee
are in conformity with the requirements of the Companies Act, 2013 and LODR Regulations
and the same has been provided in the Corporate Governance Report.
The Board has, on the recommendation of the Nomination & Remuneration Committee
framed a Nomination and Remuneration Policy in compliance with the aforesaid provisions
for selection and appointment of Directors, Key Managerial Personnel (KMP), Senior
Managerial Personnel (SMP) of our company. The said policy is stated in the Corporate
Governance Report of our Company and can also be accessed on our corporate website at
https://www.5paisa.com/investor-relations.
The details of Committee Meeting are provided in the Corporate Governance Report.
Stakeholders Relationship Committee
During the year, the Stakeholders Relationship Committee met one (1) time in compliance
with the provisions of LODR Regulations and Companies Act, 2013. The Committee comprises
of Ms. Nirali Sanghi as the Chairperson, Dr. Archana Hingorani and Mr. Prakarsh Gagdani as
the Members of the Committee.
The role, terms of reference of the Stakeholders Relationship Committee are in
conformity with the requirements of the Companies Act, 2013 and Regulation 20 of LODR
Regulations and the same has been provided in the Corporate Governance Report.
During the year under review, our Company has not received any complaints from any
Stakeholders. The details of the Meeting are given in the Corporate Governance Report.
Finance Committee
During the year, the Finance Committee met Eighteen (18) times. The Committee comprises
of Mr. Prakarsh Gagdani as the Chairman and Mr. Gourav Munjal as the member of the
Committee.
The role and terms of reference of the Finance Committee are in conformity with the
requirements of the Companies Act, 2013 and Regulation 20 of LODR Regulations and the same
has been provided in the Corporate Governance Report.
The details of the Meetings are given in the Corporate Governance Report.
Risk Management Committee
During the year, the Risk Management Committee met Two (2) times. The Committee
comprises of Dr. Archana Hingorani as Chairperson, Mr. Prakarsh Gagdani and Mr. Gourav
Munjal as the member of the Committee.
Our Company is exposed to a lot of inherent uncertainties owing to the sector in which
it operates. A key factor in ascertaining a company's capacity to maintain its sustainable
value is the risks that it is willing to take at both - strategic and operational level
and its ability to manage them effectively.
Our Company's Risk Management processes focus on ensuring that the risks to which our
company is exposed to, at all times, are identified on a timely basis and addressed with
appropriate solutions. Further, as mandated by LODR Regulations, the Board of Directors,
in its meeting held on April 20, 2021, has constituted a Risk Management Committee.
The Committee has adopted a Risk Management policy which outlines the role,
responsibilities and powers of the Committee and the procedure and periodicity for
organizing the meeting of the Committee. The purpose of the Committee is to assist the
Board of Directors in fulfilling its oversight responsibilities with regard to enterprise
risk management. The Committee shall review the risk management practices and actions
deployed by the Management with respect to identification, impact assessment, monitoring,
mitigation and reporting of key risks while at the same time trying to achieve its
business objectives. Further, the Committee shall endeavor to assist the Board in framing,
implementing and monitoring the risk management plan for our Company and reviewing and
guiding the risk policy.
The Committee shall have the primary responsibility of implementing the Risk Management
Policy of our Company and achieving the stated objective of developing a risk mitigated
culture that supports decision making and helps improve our Company's performance.
The role, terms of reference of the Risk Management Committee are in conformity with
the requirements of the Companies Act, 2013 and LODR Regulations and the same has been
provided in the Corporate Governance Report.
The Directors, on a regular basis:
(a) oversee and approve our Company's enterprise-wide risk management framework
(b) oversee that all the risks that the organization faces such as strategic,
financial, credit, market, liquidity, security, property, IT, legal, regulatory,
reputational KYC Risk, technology risks, operational risk, general risk which includes
fraud risk, risk due to outsourcing of activities to third parties and other risks have
been identified and assessed and there is an adequate risk management infrastructure in
place capable of addressing those risks.
Our company has in place various policies and procedures covering the business,
operations, employees, finance & accounting, customer services which are approved by
the Board.
Our Company has in place specialized internal audits on Broking and Depository
Participant business as per the SEBI/Exchanges/Depositories norms. The findings on Audit
Reports are reviewed by the Audit Committee/Board at their periodical meetings and the
reports are submitted to the Exchanges/Depositories.
Our management monitors and reports on the principal risks and uncertainties that can
impact our Company's ability to achieve its strategic objectives.
Our management systems, organizational structures, processes, standards and code of
conduct together form the risk management governance system of our Company and management
of associated risks.
Corporate Social Responsibility Committee
During the year, the Corporate Social Responsibility Committee met One (1) time. The
Committee comprises of Mr. Milin Mehta as Chairman, Mr. Prakash Gagdani and Mr. Gourav
Munjal as Members of the Committee.
The Board of Directors, in their meeting held on April 20, 2021 has framed and adopted
the Corporate Social Responsibility (CSR) policy, which can be accessed on our corporate
website, at https://storage.googleapis.com/5paisa-prod- storage/files/investor
relations/2022-04/ CSR-Policy-updated.pdf.
Annual Report on CSR activities, as required under sections 134 and 135 of the
Companies Act, 2013 read with rule 8 of the (Corporate Social Responsibility Policy)
Rules, 2014, as amended ("CSR Rules") is provided as "Annexure V" to
this Directors Report.
Further, our Company is required to spend at least 2% of its average net profits during
three immediately preceding financial years, in pursuance of its Corporate Social
Responsibility Policy.
Environmental, Social and Governance ("ESG") Committee
The Environmental, Social and Governance ("ESG") Committee was constituted on
December 01, 2022 and the Members of the Committee comprises of Ms. Nirali Sanghi,
Independent Director, as the Chairperson, Mr. Gourav Munjal, Whole-Time Director and Chief
Financial Officer and Ms. Namita Godbole, Company Secretary and Compliance officer as the
Members.
The role and terms of reference of the ESG Committee has been provided in the Corporate
Governance Report.
Independent Directors (ID) Committee
The Independent Directors (ID) Committee was constituted on December 01, 2022 and the
Members of the Committee comprises of Mr. Ravindra Garikipati, Independent Director, as
the Chairman, Ms. Nirali Sanghi, Independent Director, Dr. Archana Hingorani, Independent
Director and Mr. Milin Mehta, Independent Director as the Members.
The role and terms of reference of the ID Committee has been provided in the Corporate
Governance Report.
The details of the Meeting are given in the Corporate Governance Report.
Board Effectiveness
Familiarization Program for the Independent Directors:
In compliance with the requirements of LODR Regulations, our Company has put in place a
Familiarization Program for Independent Directors to familiarize them with the working of
our Company, their roles, rights and responsibilities vis-a-vis our Company, the industry
in which the Company operates business model etc. Details of the Familiarization Program
are explained in the Corporate Governance Report and are also available on our corporate
website at https:// storage.googleapis.com/5paisa-prod- storage/files/investor
relations/2021-04/ familarisation-programmes.pdf
Board Evaluation:
Pursuant to the provisions of the Companies Act, 2013 and LODR Regulations and SEBI
Circular No. SEBI/CFD/CMD/CIR/P/2017/004 dated January 05, 2017, the Board of Directors
have carried out an annual performance evaluation of its own performance, its Committees,
the Directors individually including Independent Directors (wherein the concerned Director
being evaluated did not participate) based out of the criteria and framework adopted by
the Board. The Board approved the evaluation results as collated by Nomination &
Remuneration Committee ("NRC"). The evaluation process, manner and performance
criteria for independent directors in which the evaluation has been carried out is
explained in the Corporate Governance Report which forms part of this Annual Report. The
Board is responsible to monitor and review the evaluation framework.
The Board considered and discussed the inputs received from the Directors. Also, the
Independent Directors at their meeting held on March 21, 2023 reviewed the following:
Performance of Non-Independent Directors and the Board and the Committee as a
whole.
Performance of the Chairperson of your Company.
Assessed the quality, quantity and timeliness of flow of information between our
Company's management and the Board, which is necessary for the Board to effectively and
reasonably perform their duties.
The Independent Directors expressed their satisfaction with overall functioning and
implementations of their suggestions.
The evaluation process endorsed the Board Members confidence in the ethical standards
of our Company, the cohesiveness that exists amongst the Board Members, the two-way candid
communication between the Board and the Management and the openness of the Management in
sharing strategic information to enable Board Members to discharge their responsibilities.
Statement on declaration given by the Independent Directors :
The terms and conditions of appointment of Independent Directors are as per Schedule IV
of the Act. Our Company has received declarations from all the Independent Directors of
the Company confirming that they meet with the criteria of independence as prescribed
under sub-section (6) of Section 149 of the Companies Act, 2013 and rule 5 of the
Companies (Appointment and Qualifications of Directors) Rules, 2014 and as well as under
the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("SEBI
Listing Regulations") and there has been no change in the circumstances or situation,
which exist or may be reasonably anticipated, that could impair or impact the ability of
Independent Directors to discharge their duties with an objective independent judgment and
without any external influence.
The above declarations were placed before the Board and in the opinion of the Board,
all the Independent Directors fulfil the conditions specified under the Act and the SEBI
Listing Regulations and are Independent to the Management.
22. DIRECTORS' RESPONSIBILITY STATEMENT:
Pursuant to the requirement under Sections 134(3)(c) and 134(5) of the Companies Act,
2013, the Board of Directors, to the best of its knowledge and ability, confirm 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) t hey 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 our Company at the end of the financial year and of the profit
or loss of our 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 Companies Act, 2013 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.
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.
23. INTERNAL CONTROL SYSTEMS:
Internal audit and its adequacy
The scope and authority of the internal audit function is well defined and to maintain
independence and objectivity in its functions, the internal audit function reports
directly to the Audit Committee of the Board. At the beginning of each Financial Year, a
risk-based annual audit plan is rolled out after it is approved by the Audit Committee of
the Board. The audit plan aims to evaluate the efficacy and adequacy of the internal
control system(s) and compliance(s) thereof, robustness of internal processes, policies
and accounting procedures, compliance with laws and regulations. The Internal Audit
function, consisting of professionally qualified chartered accountants and specialists, is
adequately skilled and resourced to deliver audit assurances at highest levels. Based on
the reports of internal audit function, process owners undertake corrective action in
their respective areas. Significant audit observations and corrective actions thereon are
presented to the Audit Committee of the Board.
Internal Financial Controls Systems and their Adequacy
Our Company has in place adequate internal controls with reference to financial
statements and operations and the same are operating effectively. The Internal Auditors
tested the design and effectiveness of the key controls and no material weaknesses were
observed in their examination. Further, Statutory Auditors verified the systems and
processes and confirmed that the Internal Financial Controls system over financial
reporting are adequate and such controls are operating effectively.
Based on the framework of internal financial controls and compliance systems
established and maintained by our Company, the work performed by the internal, statutory
and secretarial auditors and external consultants, including the audit of internal
financial controls over financial reporting by the statutory auditors and the reviews
performed by management and the relevant board committees, including the Audit committee,
the Board is of the opinion that our Company's internal financial controls were adequate
and effective during FY 2022-23.
24. CONTRACTS AND ARRANGEMENTS WITH RELATED PARTIES:
Our Company has put in place a policy for Related Party Transactions (RPT Policy),
which has been approved by the Board of Directors. The policy provides for identification
of RPTs, necessary approvals by the Audit Committee/Board/Members, reporting and
disclosure requirements in compliance with Companies Act, 2013 and provisions of LODR
Regulations.
All transactions with Related Parties are placed before the Audit Committee and also
the Board for approval. Prior omnibus approval of the Audit Committee and the Board is
obtained for the transactions which are foreseeable and of a repetitive nature. The
transactions entered into pursuant to the approvals so granted are subjected to audit and
a statement giving details of all related party transactions is placed before the Audit
Committee and the Board of Directors on a quarterly basis. The statement is supported by a
certificate from Independent Chartered Accountant.
All contracts executed by our Company during the financial year with related parties
were on arm's length basis and in the ordinary course of business. All such Related Party
Transactions were placed before the Audit Committee/Board for approval, wherever
applicable.
During the year, our Company has entered into any contract/arrangement/transaction with
related parties, which are considered as material in accordance with Regulation 23 of LODR
Regulations and the same was also approved by the members in the Annual General Meeting
held on July 11,2022. The policy for determining 'material' subsidiaries and the policy on
materiality of Related Party Transactions and dealing with Related Party Transactions as
approved by the Board may be accessed on our corporate website at https://www.5paisa.com/investor-relations.
You may refer to Note no. 33 to the financial statement, which contains related party
disclosures.
Our Company had not entered into any contracts or arrangements or transactions under
sub-section (1) of section 188 of the Act. Hence, Form AOC-2 disclosure is not required to
be provided.
None of the Directors and the Key Managerial Personnel has any pecuniary relationships
or transactions vis-a-vis the Company.
25. ANNUAL RETURN:
As per the requirements of Section 92(3) of the Act and Rule 12 of the Companies
(Management and Administration) Rules, 2014, the Annual Return of our Company is available
on the corporate website at https://www.5paisa.com/investor-relations.
26. CHIEF EXECUTIVE OFFICER (CEO) AND CHIEF FINANCIAL OFFICER (CFO) CERTIFICATION:
A Certificate from Mr. Prakarsh Gagdani, CEO and Mr. Gourav Munjal, CFO, pursuant to
provisions of SEBI (LODR) Regulations, 2015, for the year under review was placed before
the Board of Directors of our Company at its meeting held on May 01, 2023.
27. MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF OUR COMPANY:
There have been no material changes and commitments affecting the financial position of
our Company, which have occurred between the end of the financial year of our Company to
which the financial statements relate and the date of this Annual Report. There has been
no change in the nature of business of our Company as on the date of this Report.
However, kindly note that Exchange vide its circulars no. NSE/INSP/4519 dated July 31,
2020 and NSE/ INSP/49929 dated October 12, 2021, had directed all the stock brokers for
reversing the penalties levied on account of short/non-collection of upfront margins to
its clients, if the same were debited to the clients in the past. Consequently, in
adherence to the directions, the company had reversed an amount of Rs.709 Lakhs to its
eligible clients during the year, being the amount recovered from such clients on account
of penalty levied by clearing corporation on company for "Short
Collection/Non-collection of upfront margins from the client" since October 11, 2021
as per NSE Circular Ref. No. NSE/ INSP/53525 dated September 02, 2022. The same has been
included in "Other Expenses" of above "Statement of Standalone Financial
Results" in Q3 FY 2022-23 and in FY 2022-23.
28. SECRETARIAL AUDITOR, SECRETARIAL AUDIT REPORT AND COMPLIANCE WITH SECRETARIAL
STANDARDS:
In terms of the provisions of Section 204 of the Act read with the Companies
(Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board has
appointed M/s. Nilesh Shah & Associates, Company Secretaries in whole-time practice,
Mumbai, as Secretarial Auditor for conducting Secretarial Audit of our Company for the
financial year 2022-23. The Auditor had conducted the audit and their report thereon was
placed before the Board. The Secretarial Audit Report for the Financial Year 2022-23 does
not contain any material observations or instances of non-compliance in respect of the
same. The Secretarial Auditor's report is appended as "Annexure - II" to this
Directors' Report. Our Company is in compliance with the Secretarial Standards, specified
by the Institute of Company Secretaries of India ("ICSI").
29. ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO:
The additional information on energy conservation, technology absorption and foreign
exchange earnings and outgo stipulated under Section 134(3)(m) of the Companies Act, 2013
read with Rule 8 of the Companies (Accounts) Rules, 2014, is appended as "Annexure
-III" to this Directors' Report.
30. WHISTLE BLOWER POLICY/ VIGIL MECHANISM:
Our Company since its inception believes in honest and ethical conduct from all the
employees and others who are directly or indirectly associated with us.
Further, in compliance of the Companies Act, 2013 and Regulation 22 of LODR
Regulations, we have adopted a Whistle Blower Policy. Our Company's vigil mechanism/
Whistle blower Policy aims to provide the appropriate platform for Whistle blowers to
report instances of any actual or suspected incidents of unethical practices, violation of
applicable laws and regulations including our Company's code of conduct or ethics policy
or Code of Conduct for Prevention of Insider Trading in our Company, Code of Fair
Practices and Disclosure. The Policy also provides for adequate safeguards against
victimization of Director(s)/ Employee(s) who avail of the mechanism and also provides for
direct access to the Chairman of the Audit Committee in exceptional cases. It is affirmed
that no person has been denied access to the Audit Committee. Our Company has disclosed
the policy at our corporate website at https://storage.googleapis.com/5paisa-prod-
storage/files/investor relations/2021-05/whistle-blower- policy.pdf.
The Audit Committee is also committed to ensure fraud-free work environment. We
investigate complaints speedily, confidentially and in an impartial manner and takes
appropriate action to ensure that the requisite standards of professional and ethical
conduct are always maintained.
During the financial year 2022-23, no cases under this mechanism were reported to our
Company and/or to any of its subsidiaries.
31. PREVENTION OF SEXUAL HARASSMENT:
We recognize our responsibility and provide equal opportunities and are committed to
creating a healthy working environment that enables all our employees to work with
equality and without fear of discrimination, prejudice, gender bias or any form of
harassment at workplace. In compliance with the Sexual Harassment of Women at Workplace
(Prevention, Prohibition and Redressal) Act, 2013, our Company has put in place a Policy
on prevention of Sexual Harassment of Women at workplace. We have complied with provisions
relating to the constitution of Internal Complaints Committee under the Sexual Harassment
of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.
The policy is frequently communicated at regular intervals through various assimilation
programs to all the employees.
The Directors further state that during the fiscal year 2022-23, there were no
complaints pending pursuant to the Sexual Harassment of Women at Workplace (Prevention,
Prohibition and Redressal) Act, 2013.
The following is reported pursuant to Section 22 of the Sexual Harassment of Women at
Workplace (Prevention, Prohibition and Redressal) Act, 2013:
a) Number of complaints received in the year: Nil
b) Number of complaints disposed off during the year: Nil
c) Number of cases pending more than ninety days: Nil
d) Number of workshops or awareness program against sexual harassment carried out: Our
Company has conducted an online training for creating awareness against the sexual
harassment against the women at workplace.
e) Nature of action taken by the employer or district officer: Not Applicable.
Further, awareness and training sessions about the Prevention of Sexual Harassment at
workplace are conducted for all employees, including our associates. Further, following
are some of the awareness programs imparted to train the employees and Internal Complaints
Committee ("ICC") during the year:
1. Every employee of our company has to undergo mandatory e-learning module on
"Prevention of Sexual Harassment" at workplace.
2. Every new joiner is trained on Prevention of Sexual Harassment during induction
program.
3. The Internal Complaints Committee is appropriately trained when the Committee
Members are on-boarded to the Committee.
4. Policy of "Prevention of Sexual Harassment" at workplace is available on
the intranet portal to access as and when required. Further, our company has setup an ICC
which has equal representation of men and women and is chaired by senior woman and has an
external women representation. The details of ICC members have been prominently displayed
across all areas in office.
32. PARTICULARS OF EMPLOYEES:
The statement of Disclosure pertaining to remuneration and other details as required
under Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and
Remuneration of Managerial Personnel) Rules, 2014 are provided in "Annexure -
IV" to this Directors' Report.
Further, a statement showing the names and other particulars of employees drawing
remuneration in excess of the limits as set out in the Rules 5(2) and 5(3) of the
aforesaid Rules, forms part of this Annual Report. However, in terms of first proviso to
Section 136(1) of the Act, the Annual Report and Accounts are being sent to the Members
and others entitled thereto, excluding the aforesaid information. The said information is
available for inspection by any member of our Company during the business hours on working
days except on Saturdays, Sundays and Public Holidays upto the date of the ensuing Annual
General Meeting ("AGM"). Any Member interested in obtaining a copy of the same
may write to the Company Secretary at csteam@5paisa.com. whereupon a soft copy
would be sent to the Member.
33. STATUTORY AUDITORS:
As per Section 139 of the Companies Act, 2013, read with Companies (Audit and Auditors)
Rules, 2014, the members of our Company in its 15th AGM of the Company approved the
re-appointment of M/s. V Sankar Aiyar & Co., Chartered Accountants, Mumbai (Firm
Registration Number: 109208W), as the Statutory Auditors of our Company for a term of five
consecutive years i.e. from the conclusion of 15th AGM till the conclusion of 20th AGM of
our Company.
34. AUDITORS' REPORT:
The notes on the financial statement referred in the Auditor's Report are
self-explanatory and do not call for any further comments. The Auditor's Report does not
contain any qualification, reservation, adverse remark or disclaimer for the Financial
Year 2022-23.
35. REPORTING OF FRAUDS BY AUDITORS:
During the year under review, the Statutory Auditors and the Secretarial Auditor have
not reported any instances of frauds committed in our Company by its Officers or Employees
to the Audit Committee under section 143(12) of the Companies Act, 2013, details of which
needs to be mentioned in this Report.
36. CORPORATE GOVERNANCE:
Our Company has a strong legacy of following fair, transparent and ethical governance
practices and is committed to maintain the highest standards of Corporate Governance and
strictly adheres to the Corporate Governance requirements set out by SEBI. Our Company's
Corporate Governance policy is based on the belief that good governance is an essential
element of business, which helps us fulfill our responsibilities towards all our
stakeholders. The report on Corporate Governance as stipulated under the LODR Regulations
forms an integral part of this Annual Report of our Company. The requisite Auditor's
Certificate on Corporate Governance obtained from M/s. V Sankar Aiyar & Co., Chartered
Accountants (Firm Registration Number: 109208W) for compliance with LODR Regulations is
attached to the report on Corporate Governance.
37. MAINTENANCE OF COST RECORDS:
The maintenance of cost records, for the services rendered by our Company is not
required pursuant to Section 148(1) of the Companies Act, 2013 read with Rule 3 of the
Companies (Cost records and audit) Rules, 2014.
38. GENERAL:
The Directors states that there being no transactions with respect to the following
items during the financial year 2022-23, no disclosure or reporting is required with
respect to the same:
1. Issue of equity shares with differential rights as to dividend, voting or otherwise.
2. Significant or material orders passed against our Company by the Regulators or
Courts or Tribunals during the year ended March 31, 2023 which would impact the going
concern status of our Company and its future operations.
3. Buyback of shares.
4. Receipt of any remuneration or commission by the Whole-time Director of our Company
from any of its subsidiaries.
5. Material changes and commitments affecting the financial position of our Company
that have occurred between the end of the financial year to which the financial statements
relate and the date of this report, unless otherwise stated in the report.
6. Application or proceedings made under the Insolvency and Bankruptcy Code, 2016.
39. APPRECIATION:
The Directors place on record their sincere appreciation for the assistance and
guidance provided by the Government, Regulators, Stock Exchanges, Depositories, other
statutory bodies and our Company's Bankers for the assistance, cooperation and
encouragement extended to our Company.
The Directors also gratefully acknowledge all stakeholders of the Company viz.
customers, members, dealers, vendors, banks and other business partners for the excellent
support received from them during the year. Our employees are instrumental for the Company
scaling new heights, year after year. Their commitment and contribution is deeply
acknowledged. Your involvement as members is also greatly valued. The Directors look
forward to your continuing support.
For 5paisa Capital Limited |
|
Prakarsh Gagdani |
Gourav Munjal |
Whole-Time Director & Chief Executive Officer |
Whole-Time Director & Chief Financial Officer |
DIN:07376258 |
DIN: 06360031 |
Date: May 01,2023 |
|
Place: Thane |
|
|