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Director's Report
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5Paisa Capital LtdIndustry : Finance & Investments
BSE Code:540776
ISIN Demat:INE618L01018
Book Value(Rs):57.48
NSE Symbol:5PAISA
Div & Yield %:0
Market Cap (Rs Cr.):843.58
P/E(TTM):239.93
EPS(TTM):1.38
Face Value(Rs):10
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Dear Members,

Your Directors present the Thirteenth Annual Report of 5paisa Capital Limited ('your Company') along with the Audited Financial Statements for the financial year ended March 31, 2020. The consolidated performance of the Company and its subsidiaries has been referred to wherever required.

1. FINANCIAL RESULTS

A summary of the Consolidated and Standalone financial performance of your Company, for the financial year ended March 31,2020, is as under:

(Rs in Million)

Particulars

Consolidated Financial Results

Standalone Financial Results

2019-2020 2018-2019 2019-2020 2018-2019
Gross total income 1082.76 607.94 1081.36 606.76
Profit/(Loss) before interest, depreciation and taxation 93.04 (170.38) 93.55 (170.07)
Interest and financial charges 151.13 68.27 151.51 68.27
Depreciation 38.41 14.43 38.41 14.43
Profit/(Loss) before tax (96.5) (253.08) (96.37) (252.77)
Taxation - Current - - - -
- Deferred (17.54) (63.55) (17.42) (63.55)
- Short or excess provision for income tax - - - -
Net profit/ (Loss) for the year (78.96) (189.53) (78.95) (189.22)
Less: Appropriations - - - -
Add: Balance brought forward from the previous year (561.19) (371.66) (560.88) (371.66)
Balance to be carried forward (640.15) (561.19) (639.83) (560.88)

* Previous periods figures have been regrouped / rearranged wherever necessary

The Statement containing extract of subsidiaries financial statement are provided on the website of the Company at https://www.5paisa.com/investor- relations.

2. COVID -19

During the last month of FY 2020, the COVID-19 pandemic developed rapidly globally thereby forcing the government to enforce complete lock-down since March 24, 2020, of almost all economic activities except essential services which were allowed to operate with limited staff strength. As capital markets and banking services were declared as essential services, your Company continued its operations by strictly adhering to the minimal staff strength requirement and maintaining social distancing and other precautions as per the Government directions. In order to ensure health and well being of the employees, all the other employees were encouraged to work from home and were provided necessary infrastructure to ensure efficient functioning. All operations and servicing of clients were smoothly ensured without any interruptions as the activities of trading, settlement, Stock Exchanges and depository functions are fully-automated and seamless. Based on the facts and available figures, the Company has been operating in the normal course and there have been no adverse impact on the liquidity, revenues or operational parameters during the quarter and year ended March 31,2020.

3. REVIEW OF BUSINESS AND OPERATIONS AND STATE OF YOUR COMPANY'S AFFAIRS

At 5paisa.com. we have built a sustainable foundation to accelerate our growth. Our customer-centric products; transparency in operations; relentless focus on customer convenience; and investment in technology has helped us build a family of 540,000 happy customers in just 4 full years of our operations.

Your Company performed well during FY2020, by leveraging on the market opportunities bought by the growing trend of financialisation of savings and delivering quality service to attract new customers. With an unwavering resolve to provide best-in-class investment platform at the lowest cost, we delivered strong growth across parameters over the previous year.

Our customer base grew 171% in the last fiscal and our broking revenues recorded 78% growth and continues to be on rise. During the year, the total income of your Company was up from Rs 606.76 million to Rs 1081.36 million. Your Company reported an average annual daily turnover of Rs 30,150 crore and its market share further improved.

During the year, we focused on harnessing technology to fortify our business processes, ensure deeper market coverage and deliver a superior customer experience. As a result, your Company emerged as a strong player in the discount broking space offering superior products and services. Your Company also climbed to the No. 2 position in the discount broking segment, surpassing several established players.

Our growth was also fueled by the growing penetration of internet and smartphone in our country. Positive demographics have helped bring millions to explore digital investment services in financial space. Your Company successfully capitalised on the opportunity by offering an integrated investment platform. Today, your Company's mobile application/web platform can help an individual trade across equity, F&O, commodity, currency segments; invest in mutual fund and insurance; or avail algorithm based robo advisory services.

Looking forward, there is an enormous opportunity for growth as capital market participation still remains abysmally low in India when compared to the other developed nations. Owing to the huge growth prospects, your Company envisages a robust growth in its customer base in the years to come. Moreover, by offering seamless trading at the lowest cost, we are confident of widening reach across the country. Our robust internal risk-management systems and processes, supported by technology, will also fuel our growth journey.

4. MACRO-ECONOMIC OVERVIEW

Though the Indian economic growth has been faster than the world economy, it remained subdued as compared to previous years in FY2020. The slowdown

in the first 11 months of fiscal 2020 was mainly on account of the slump in the auto sector, contraction in capital goods output and slowdown in investment cycle. On the expenditure side, public expenditure remained moderately high whereas private expenditure was low as compared to the previous financial years. Almost all the major economies of the world have gone through some form of lockdown or social distancing. The lockdown in India is set to severely impair the economy in the fourth quarter of fiscal 2020 and continue till the first half of fiscal year 2021. The estimated GDP growth for Indian economy for FY2020 is expected to be 4.9% (Source: Fitch).

The shape of the post-pandemic recovery curve depends upon the length of time for which economic activity is subdued, and damage caused by it. The growth is expected to be affected in the first half of fiscal 2021, and thereafter to pick up pace in the second half. According to Fitch, India's GDP is expected to grow by 0.8% in FY2021. This reduced growth is mainly on account of reduced consumer spending and contraction in investments.

5. INDUSTRY OVERVIEW

The Indian financial services industry is vast and diverse consisting of banks, NBFCs, capital markets, insurance sector and the new payment banks. India's gross national savings (GDS) as a percentage of Gross Domestic Product (GDP) stood at 30.5% in 2019. With increasing finance penetration, the opportunity in India is very high especially in the rural areas for moving from physical savings to financial savings. With increasing internet penetration and financial literacy, the future growth prospects of financial service industry in India is very bright.

6. KEY INITIATIVES / DEVELOPMENTS

Investment Advisory Services:

During the year under review, your Company received registration as an Investment Advisor under SEBI (Investment Adviser) Regulations, 2013 and Rules made thereunder and shortly the Company will commence its Investment Advisory activities for its clients.

7. DIVIDEND

In view of accumulated losses, your Directors have not recommended any dividend on Equity Shares for the year under review.

During FY 2019-20, the company had not transferred any shares to Investor Education and protection Fund ('IEPF').

As on the March 31, 2020, Rs 177,764.94/- is lying as the unclaimed fractional entitlements in the unpaid fractional shares account.

8. AWARDS AND RECOGNITIONS:

During the year under review, your Company received numerous awards and accolades which were conferred by reputable organisations and is designed to honour the efforts made by the companies and the details of the same are given herein below:

• Brand Excellence Award in the Broking Industry by ABP News

• Best Digital Start-up of the Year by Mobby's Awards

• Best Trading App (5paisa Mobile App) by Mobby's Awards

• Best Mobile Marketing Campaign by Mobby's Awards

• Digital Pioneer Award (BFSI Sector) by ABP News

• Best Broking Fintech Product (5paisa Mobile App) BFSI Sector by ABP News

• Marketing Campaign of the Year (Karo Self Investment Start) by World Marketing Congress

• Award for Brand Excellence by World Marketing Congress

• Emerging Company of the year by ET Now

• Fintech Leader ofthe year (Mr. Prakarsh Gagdani - CEO) by ABP News

• Business Leader of the year (Mr. Prakarsh Gagdani - CEO) by ET Now

9. SHARE CAPITAL

The paid up equity share capital of the Company as on March 31, 2020 was Rs 254,776,680/- (254,776,68 equity shares of Rs 10/- each) pursuant to issue of 12,739,022 equity shares of Rs 10 each by the way of Rights Issue. The details of Rights Issue are as provided below.

10. RIGHTS ISSUE

During the year under review, the Board at its meeting held on July 17, 2018, September 12, 2018 and July 16, 2019 had authorized the rights issue of shares pursuant to Section 62 of Companies Act, 2013. The record date for Rights issue was May 29,2019. The said rights issue had opened on July 23, 2019 and closed on August 06, 2019. The Rights Issue Committee approved the allotment of 12,738,646 equity shares on August 20, 2019 and the shares were credited to the respective demat accounts on August 21,2019.

The Rights entitlement on 376 equity shares have been kept in abeyance.

Post rights issue, the paid up share capital of the Company is Rs 254,776,680 i.e. 25,477,668 equity shares of Rs 10 each.

11. EMPLOYEES STOCK OPTION SCHEMES (ESOS)

The Company has in force the following Schemes which are prepared as per the provisions of SEBI (Share Based Employee Benefits) Regulations, 2014:

1) 5paisa Capital Limited Employee Stock Option Scheme 2017 ("5PCL ESOS 2017")

2) 5paisa Capital Limited Employee Stock Option Trust Scheme 2017 ("5PCL ESOTS 2017")

During the financial year 2019-20, two options, details of which are provided below were approved for grant under 5PCL ESOS 2017. The Nomination and Remuneration Committee granted 1,00,000 options on April 18, 2019 and 1,00,000 options on December 31, 2019 to the eligible employees of the Company under 5paisa Capital Limited Employee Stock Option Scheme 2017 ("5PCL ESOS 2017").

Pursuant to Corporate Action in the form of Rights Issue which was undertaken by the Company in September, 2019 and as per the terms and conditions specified in the Letter of Offer issued for the purpose of Rights Issue, the existing option holders as on record date were eligible for additional options in the ratio of 1:1. Particulars of options granted by the Company upto March 31,2020 are given under:

Particulars 5paisa Employee Stock Option Scheme 2017
Options granted till March 31,2020 7,20,000
Options forfeited/lapsed 48,000
Options vested but not exercised 60,000
Options exercised Nil
Options Not vested 60,000
Total number of options outstanding 6,72,000
Number of shares allotted pursuant to exercise of options Nil
Extinguishment of options Nil
Amount realised by exercise of options (Rs million) Nil

There is no material change in Employees' Stock Option Scheme during the year under review and the Scheme is in line with the SEBI (Share Based Employee Benefits) Regulations, 2014 ("SBEB Regulations"). The Company has received a certificate from the Auditors of the Company that the Scheme has been implemented in accordance with the SBEB Regulations and the resolution passed by the members. The certificate would be placed at the Annual General Meeting for inspection by members. The disclosures relating to ESOPs required to be made under the provisions of the Companies Act, 2013 and the rules made thereunder and the SEBI (Share Based Employee Benefits) Regulations, 2014 are provided on the website at https://www.5paisa.com/investor-relations and the same is available for inspection by members at the Registered Office of the Company. If any member is interested in obtaining a copy thereof, such member may write to the Company Secretary, whereupon a copy would be sent over an email.

12. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

Disclosure on details of loans, guarantees and investments pursuant to the provisions of Section 186 of the Companies Act, 2013 and LODR Regulations, are provided in the financial statements.

13. DEPOSITS

The Company did not accept/renew any deposits within the meaning of Section 73 of the Companies Act, 2013 and the rules made thereunder and as such, no amount of principal or interest was outstanding as on the Balance Sheet date.

14. SUBSIDIARY COMPANIES

• 5paisa P2P Limited

During the year under review, the Company received Certificate of Registration from Reserve Bank of India ("RBI") bearing registration number N-13.02371 to act as NBFC P2P and accordingly the company is now eligible to commence its Peer-to-Peer Lending Platform. The Company is likely to commence its P2P business shortly after the necessary infrastructure and platform is ready.

• 5paisa Insurance Brokers Limited

During the year under review, the Company has applied for registration as an Insurance Broker with Insurance Regulatory and Development Authority (IRDA). On receipt of the approval, 5paisa Insurance Brokers Limited will commence its insurance broking operations.

• 5paisaTradingLimited

During the year under review, the Company also incorporated a subsidiary, named 5paisa Trading Limited, on February 27, 2020.

15. CONSOLIDATED FINANCIAL STATEMENTS

As per the provisions of Section 134 and 136 of the Companies Act, 2013 read with applicable Rules, Regulation 33 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and applicable Accounting Standards, the Board of Directors, had in their meeting held on May 07, 2020 approved the Consolidated Financials of the Company along with the Standalone Financial Statements. Copies of the Balance Sheet, Statement of Profit and Loss, Report of the Board of Directors and Report of the Auditors of the subsidiary company are not attached to the accounts of the Company for the financial year 2019-20. The Company will make these documents/details available upon reguest by any member of the Company. These documents/ details will also be available for inspection by any member of the 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 copy would be sent over an email. The Annual Report of subsidiaries is uploaded on the website of the Company 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, the 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", which forms part of this Report.

The policy on determining the material subsidiary is available on the website of the Company at https://www.5paisa.com/investor-relations. All the subsidiaries as on March 31, 2020, are yet to start the operations and hence they are not material subsidiaries as per the provisions of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

16. MANAGEMENT DISCUSSION AND ANALYSIS REPORT

In accordance with Regulation 34 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Management Discussion and Analysis Report forms part of this Annual Report.

17. DIRECTORS AND KEY MANAGERIAL PERSONNEL

a. Directors:

As on date of this report, the Board comprises of Mr. Prakarsh Gagdani (DIN: 07376258), Mr. Gourav Munjal (DIN: 06360031) and Mr. Santosh Jayaram (DIN: 07955607) as the Whole Time Directors and Dr. Archana Niranjan Hingorani (DIN: 00028037) and Ms. Nirali Sanghi (DIN: 00319389) as the Non - Executive Independent Directors of the Company. Mr. Milin Mehta (DIN:01297508) was appointed as Additional Non-Executive and Independent Director w.e.f. April 01, 2020, subject to the approval of Shareholders at ensuing Annual General Meeting.

• Change in Directors:

Appointment

Pursuant to amendments in SEBI (Listing Obligations and Disclosure Requirements) (Amendment) Regulations, 2018, the Company is required to have at least six directors on the Board of the Company. In accordance with same, Mr. Gourav Munjal was appointed as an Additional Whole Time director on the Board to comply with the amended regulations. Approval of members by special resolution for appointing Mr. Gourav Munjal as Whole Time Director has been sought in the Notice convening the Annual General Meeting of the Company. (Please refer to item No. 5 of the Notice).

Further, Mr. Milin Mehta (DIN: 01297508) was appointed as an Additional NonExecutive and Independent Director w.e.f. April 01, 2020.

Approval of members by ordinary resolution for appointing Mr. Milin Mehta as an Independent Director has been sought in the Notice convening the Annual General Meeting of the Company. (Please refer to item No. 6 of the Notice).

Resignation

Mr. Sarbeswar Lenka has ceased to be NonExecutive Director on the Board of 5paisa Capital Limited. His resignation is effective from close of working hours of March 31, 2020. The Directors of the Company place on record their sincere appreciation for the valuable contribution by Mr. Sarbeswar Lenka during their tenure as Directors of the Company.

Retirement by Rotation

In accordance with Section 152 of the Companies Act, 2013 ("Act") read with Article 157 ofthe Articles of Association of the Company, Mr. Prakarsh Gagdani (DIN: 07376258) is liable to retire by rotation at the ensuing Annual General Meeting and being eligible, has offered himself for reappointment. The Board recommends the same for the approval of Shareholders.

A proposal seeking Shareholders' approval for his appointment forms a part of the Notice of the ensuing AGM.

Re-appointment

Mr. Santosh Jayaram was appointed as Whole Time Director of the Company at the Annual General Meeting of the members of the Company held on January 11, 2018, for a period of 3 years ending on January 10, 2021. As part of the initiative to create enduring guidance for the Company, the management had proposed the re-appointment of Mr. Santosh Jayaram as Whole Time Director for a period of 3 years commencing January 11, 2021 on the terms and conditions and remuneration as approved by the Board, subject to approval of Shareholders at ensuing Annual General Meeting.

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 the Company as on March 31, 2020 are: Mr. Prakarsh Gagdani - Whole Time Director & Chief Executive Director, Mr. Santosh Jayaram - Whole Time Director, Mr. Gourav Munjal - Whole Time Director and Chief Financial Officer and Ms. Namita Godbole - Company Secretary & Compliance Officer.

During the year under review, Ms. Namita Godbole was appointed as a Company Secretary in place of Mr. Roshan Dave w.e.f. December 01,2019.

These changes in the Key Managerial Personnel were due to internal re-structuring.

The Remuneration and other details of the Key Managerial Personnel for the year ended March 31, 2020 are mentioned in the Extract to the Annual Return in Form MGT-9 which is attached as "Annexure II" and forms a part of this report of the Directors.

18. MEETING OF DIRECTORS & 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, Rights Issue, review of audit reports and other board businesses. For further details please refer to the report on Corporate Governance.

> Committees of the Board

In accordance with the applicable provisions of the Companies Act, 2013 and SEBI (Fisting Obligations and Disclosure Requirements) Regulations, 2015, the Board constituted the following Committees:

• Audit Committee

• Nomination and Remuneration Committee

• Stakeholders Relationship Committee

• Finance Committee

• Audit Committee:

As on the date of this report, the Committee comprises of Dr. Archana Niranjan Hingorani as the Chairman, Ms. Nirali Sanghi and Mr. Milin Mehta as the Members of the Audit Committee.

Mr. Sarbeswar Fenka has ceased to be member from the close of working hours of March 31,2020 and Mr. Milin Mehta has been appointed as member in his place w.e.f. April 01,2020, subject to approval of Shareholders at ensuing Annual General Meeting. During the year, the Audit Committee met Four (4) times in compliance with the provisions of SEBI (Fisting Obligations and Disclosure Requirements) Regulations, 2015 and Companies Act, 2013.

The role, terms of reference and powers of the Audit Committee are in conformity with the requirements of the Companies Act, 2013 and SEBI (Fisting Obligations and Disclosure Requirements) Regulations, 2015. The Committee met during the year under review and discussed on various matters including Rights Issue, financials and audit reports. During the period under review, the Board of Directors of the 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 and Remuneration Committee

As on the date of this report, the Committee comprises of Ms. Nirali Sanghi as Chairman and Dr. Archana Niranjan Hingorani and Mr. Milin Mehta as the Members of the Nomination and Remuneration Committee.

Mr. Sarbeswar Fenka has ceased to be member from the close of working hours of March 31, 2020 and Mr. Milin Mehta has been appointed as member in his place w.e.f. April 01, 2020, subject to approval of Shareholders at ensuing Annual General Meeting.

During the year, the Nomination and Remuneration Committee met Three (3) times, in compliance with the provisions of SEBI (Fisting Obligations and Disclosure Requirements) Regulations, 2015 and Companies Act, 2013.

The role, terms of reference and powers of the Nomination and Remuneration Committee are in conformity with the requirements of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

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, KMR senior management personnel of the Company. The said policy is stated in the Corporate Governance Report of the Company and also it is available on the website at https://www.5paisa.com/ investor-relations.

The terms of reference of Nomination and Remuneration Committee, details of Nomination and Remuneration policy and Committee meetings are provided in the Corporate Governance Report.

* Stakeholders Relationship Committee

As on the date of this report, the Committee comprises of Ms. Nirali Sanghi as Chairman, Dr. Archana Hingorani and Mr. Prakarsh Gagdani as the Members of the Stakeholders Relationship Committee.

During the year, the Stakeholders Relationship Committee met Once (1) in compliance with the provisions of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and Companies Act, 2013.

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 SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

During the year 2019-20, the Company received two (2) complaints from investors including complaints received through SEBI's scores portal. Complaints were redressed to the satisfaction of the shareholders. The terms of reference of Stakeholder Relationship Committee, details of Complaints and Committee meeting are provided in the Corporate Governance Report.

• Finance Committee

As on the date of this report, the Committee comprises of Mr. Prakarsh Gagdani as the Chairman, Mr. Santosh Jayaram and Mr. Gourav Munjal as the members of the Committee.

During the year, the Finance Committee met five times (5).

The terms of reference of Finance Committee and details of Committee meetings are provided in the Corporate Governance Report.

> Board Effectiveness

• Familiarisation Program for the Independent Directors

In compliance with the requirements of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company has put in place a Familiarisation Programme for Independent Directors to familiarise them with the working of the Company, their roles, rights and responsibilities vis-a-vis the Company, the industry in which the Company operates, business model etc. Details of the Familiarisation Programme are explained in the Corporate Governance Report and are also available on the Company's website at https://www.5paisa.com/investor-relations.

• Board Evaluation

The Board of Directors have carried out an annual evaluation of its own performance, board committees and individual directors pursuant to the provisions of the Act and SEBI Listing Regulations.

The performance of the Board was evaluated by the Board after seeking inputs from all the directors on the basis of criteria such as the board composition and structure, effectiveness of board processes, information and functioning, etc.

The performance of the committees was evaluated by the board after seeking inputs from the committee members on the basis of criteria such as the composition of committees, effectiveness of committee meetings, etc.

The above criteria are broadly based on the Guidance Note on Board Evaluation issued by the Securities and Exchange Board of India on January 5, 2017.

In a separate meeting of independent directors held on March 31, 2020, performance of non-independent directors, the Board as a whole and the Chairman of the Company was evaluated, taking into account the views of executive directors and non-executive directors.

The Board and the Nomination and Remuneration Committee reviewed the performance of individual directors on the basis of criteria such as the contribution of the individual director to the board and committee meetings like preparedness on the issues to be discussed, meaningful and constructive contribution and inputs in meetings, etc.

At the board meeting that followed the meeting of the independent directors and meeting of Nomination and Remuneration Committee, the performance of the Board, its Committees, and individual directors was also discussed. Performance evaluation of Independent Directors was done by the entire Board, excluding the independent director being evaluated.

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 the 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. The 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.

Further pursuant to Amendments in Companies (Appointment and Qualification of Directors) Rules, 2014, every individual who is appointed as Independent Director or who intends to be appointed as Independent Director in any company is required to register himself/herself in databank.

Hence, as required under the amended rules, the declaration of above compliance under sec. 149(7) of Companies Act, 2013 has also been obtained from the Independent Directors on the Board of the Company.

The above declarations were placed before the Board and in the opinion of the Board all the Independent Directors fulfill the conditions specified under the Act and the Listing Regulations and are Independent to the Management.

19. DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to the requirement under Section 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 had been followed along with proper explanation relating to material departures;

b) they 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 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 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; 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.

20. INTERNAL FINANCIAL CONTROLS SYSTEMS AND THEIR ADEQUACY

The 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 the 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 the Company's internal financial controls were adequate and effective during FY 2020.

21. CONTRACTS AND ARRANGEMENTS WITH RELATED PARTIES

The Company has put in place a policy for Related Party Transactions (RPT Policy), which has been approved by the Board of Directors in their meeting held on May 04, 2016. The policy provides for identification of RPTs, necessary approvals by the Audit Committee/Board/ Shareholders, reporting and disclosure requirements in compliance with Companies Act, 2013 and provisions of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

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 the 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. Also Company has obtained the Shareholders approval on the material related party transactions in the previous Annual General Meeting.

During the year, the Company has entered into any contract / arrangement / transaction with related parties, which are considered as material in accordance with Regulation 23 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and the same was also approved by the shareholders in the Annual General Meeting held on September 30, 2019. 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 the Company's website at https://www.5paisa.com/ investor-relations. You may refer to Note no. 33 to the financial statement, which contains related party disclosures.

The 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-avis the Company.

22. EXTRACT OF ANNUAL RETURN

As per the requirements of Section 92(3) of the Act and Rules framed thereunder, the extract of the annual return for FY 2020 is given in Annexure II in the prescribed Form No. MGT-9, which is a part of this report. The extract of Annual Return of the Company has been placed and can be accessed at website at https://www.5paisa.com/investor-relations.

23. MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY

There have been no material changes and commitments affecting the financial position of the Company, which have occurred between the end of the financial year of the Company to which the financial statements relate and the date of this annual report.

24. SECRETARIAL AUDIT

Pursuant to the requirements of Section 204 of the Act read with Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 and Regulation 24A of the Listing regulations, the Board had appointed M/s. Nilesh Shah & Associates, Company Secretary in Practice to conduct Secretarial Audit of the Company for the financial year 2019-20. The Auditor had conducted the audit and their report thereon was placed before the Board. There are no qualifications, reservations or adverse remarks in the Secretarial Audit Report for the Financial Year 201920. The Secretarial Auditor's Report is attached as "Annexure-lll" and forms a part of this report.

25 COMPLIANCE WITH SECRETARIAL STANDARDS

The Board of Directors affirms that the Company has complied with the applicable Secretarial Standards issued by the Institute of Companies Secretaries of India (SSI and SS2), respectively, relating to Meetings of the Board and its Committees that have mandatory application.

26. BUSINESS RESPONSIBILITY REPORT

As stipulated under Regulation 34 of the SEBI Listing Regulations, a Business Responsibility Report describing the initiatives taken by the Company from an environmental, social and governance perspective is attached as a part of this Annual Report. The Business Responsibility Report is also available on the Company's website: https://www.5paisa.com/ investor-relations.

27. 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 -IV" and forms part of this Report.

28. RISK MANAGEMENT

Your directors, on a regular basis:

(a) oversee and approve the Company's enterprise wide risk management framework; and

(b) oversee that all the risks that the organisation faces such as strategic, financial, credit, market, liquidity, security, property, IT, legal, regulatory, reputational and other risks have been identified and assessed and there is an adequate risk management infrastructure in place capable of addressing those risks.

Your Company has in place various policies and procedures covering the business, operations, employees, finance & accounting, customer services which are approved by the Board.

Your 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.

Your Company's management monitors and reports on the principal risks and uncertainties that can impact its ability to achieve its strategic objectives.

The Company's management systems, organisational structures, processes, standards and code of conduct together form the risk management governance system of the Company and management of associated risks. The development and implementation of risk management policy has been covered in the Management Discussion and Analysis Report, which forms part of Annual Report.

29. WHISTLE BLOWER POLICY/ VIGIL MECHANISM

In compliance with Section 177(9) of the Companies Act, 2013 and Regulation 22 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company has adopted a Whistle Blower Policy. The Company's vigil mechanism / Whistle blower Policy aims to provide the appropriate platform and protection for Whistle blowers to report instances of any actual or suspected incidents of unethical practices, violation of applicable laws and regulations including the Company's code of conduct or ethics policy or Code of Conduct for Prevention of Insider Trading in the Company, Code of Fair Practices and Disclosure. The Company has disclosed the policy at the website at https://www.5paisa.oom/investor-relations.

Your Company investigates such 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 2019-20, no cases under this mechanism were reported to the Company and/or to any of its subsidiaries.

30. PREVENTION OF SEXUAL HARASSMENT

Your Company recognises its responsibility and provides equal opportunities and is 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, your Company has put in place a Policy on prevention of Sexual Harassment of Women at workplace. The company has 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.

Your Directors further state that the during the financial year 2019-20, 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 programme against sexual harassment carried out: The Company has conducted an online training for creating awareness against the sexual harassment against the women at work place.

e) Nature of action taken by the employer or district officer: Not Applicable.

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 the 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, your 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.

31. PARTICULARS OF EMPLOYEES

Disclosures 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 - V".

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 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 the Company at its registered office and at the registered offices of the subsidiary during the business hours on working days except on Saturdays, Sundays and Public Holidays. Any Member interested in obtaining a copy of the same may write to the Company Secretary, whereupon a copy would be sent to the Member.

32. STATUTORY AUDITORS AND AUDITORS REPORT

M/s. V Sankar Aiyar & Co, Chartered Accountants, Mumbai (Firm Registration Number: 109208W) were appointed as Statutory Auditor of the Company at the 10th Annual General Meeting held on July 19, 2017 to hold office from the conclusion of the said Meeting till the conclusion of the 15th Annual General Meeting to be held in the fiscal year 2022 subject to ratification of their appointment by the Members at every intervening Annual General Meeting held thereafter. The requirement for the annual ratification of auditor's appointment at the Annual General Meeting has been omitted pursuant to Companies (Amendment) Act, 2017 notified on May 7,2018. Hence the resolution seeking ratification of the members for their appointment is not being placed at the ensuing Annual General Meeting. The Statutory Auditors have confirmed that they satisfy the independence criteria as required under the Act.

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 2019-20.

33. REPORTING OF FRAUDS BY AUDITORS

During the year under review, the Statutory Auditors and the Secretarial Auditors have not reported any instances of frauds committed in the 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.

34. CORPORATE GOVERNANCE

The 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. The Company's Corporate Governance policy is based on the belief that a good governance is an essential element of business, which helps the Company to fulfill its responsibilities towards all its stakeholders. The report on Corporate Governance as stipulated under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 forms an integral part of this Report. 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.

35. MAINTENANCE OF COST RECORDS

The maintenance of cost records, for the services rendered by the 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.

36. GENERAL

Your Directors state that during the financial year 2019-20:

1. The Company has not issued equity shares with differential rights as to dividend, voting or otherwise.

2. The Company has not issued any sweat equity shares during the year.

3. There are no significant and material orders passed against the Company by the Regulators or Courts or Tribunals during the year ended March 31, 2020 which would impact the going concern status of the Company and its future operations.

37. APPRECIATION

Your Directors place on record their sincere appreciation for the assistance and guidance provided by the Government, Regulators, Stock Exchanges, Depositories, other statutory bodies and Company's Bankers for the assistance, cooperation and encouragement extended to the Company.

Your 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 in the Company to scale new heights, year after year. Their commitment and contribution is deeply acknowledged. Your involvement as shareholders is also greatly valued. Your Directors look forward to your continuing support.

For and on behalf of the Board
Prakarsh Gagdani Santosh Jayaram
Whole Time Director & CEO Whole Time Director
DIN: 07376258 DIN: 07955607
Place: Mumbai
Date: May 07, 2020

   

   
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