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Director's Report
Home >> Markets >> Corporate Information >> Director's Report
5Paisa Capital LtdIndustry : Finance & Investments
BSE Code:540776
ISIN Demat:INE618L01018
Book Value(Rs):55.57
NSE Symbol:5PAISA
Div & Yield %:0
Market Cap (Rs Cr.):431.73
P/E(TTM):0
EPS(TTM):0
Face Value(Rs):10
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Dear Shareholders,

Your Directors present the Twelfth Annual Report of 5paisa Capital Limited (‘your Company') together with the Audited Financial Statements for the financial year ended March 31, 2019.

1. FINANCIAL RESULTS

A summary of the consolidated and Standalone financial performance of your Company, for the financial year ended March 31, 2019, is as under: ( Rs in Millions)

Particulars

Consolidated Financial Results

Standalone Financial Results

2018-2019 2017-2018 2018-2019 2017-2018
Gross total income 627.57 196.52 626.40 196.52
Profit/(Loss) before interest, depreciation and taxation (142.47) (317.48) (142.14 ) (317.48)
Interest and financial charges 68.27 7.95 68.27 7.95
Depreciation 14.43 6.67 14.43 6.67
Profit/(Loss) before tax (225.17) (332.10) (224.84 ) (332.10)
Taxation - Current Nil Nil NIL Nil
- Deferred (59.14) (79.12) (59.14) (79.12)
- Short or excess provision for income tax Nil Nil NIL Nil
Net profit/ (Loss) for the year (166.02) (252.99) (165.70) (252.99)
Less: Appropriations Nil Nil Nil Nil
Add: Balance brought forward from the previous year (369.07) (116.08) (369.07) (116.08)
Balance to be carried forward (535.09) (369.07) (534.77) (369.07)

* 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. 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 2 lakh+ happy customers in just two full years of our operations.

Your Company performed well during FY 2019, 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 6x in the last fiscal and our broking revenues recorded 310.87 % growth and continues to be on rise. During the year, the total income of your Company was up from Rs 196.52 million to Rs 626.40 million. Your Company reported an average annual daily turnover of Rs 14,025 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 fuelled 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 capitalized 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; 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.

3. MACRO_ECONOMIC OVERVIEW

Fears about next recession became evident during the year as both, developed and emerging market economies, underperformed compared to the last year. A long-running US-China trade war, liquidity tightening in US, rising crude oil prices, political issues in Euro zone and Brexit uncertainty led to deterioration of global trade. Factory activity in US and Europe contracted in the last quarter while industrial output growth fell to 17-year low in China. In its latest world economic outlook edition of October 2018, global growth is estimated at 3.7%. In January 2019, IMF downgraded world GDP growth at 3.5% in 2019 and 3.6% in 2020, below October 2018's projections.

India was the fastest growing economy in the world in FY19 and will remain in FY20 too. India's real gross domestic product (GDP) growth is projected at 7% for FY19. Capacity utilization has picked up in last couple of quarters of FY19 along with increase in real gross fixed capital formation (GFCF). This is positive for PAT growth for companies in the next year. Cement production increased from 5.6% YoY in FY18 to 13% YoY up to February 2019 owing to increase in construction activity. Price levels remained in line within RBI's target and headline inflation was largely at the same levels as in last year. But food prices experienced deflation in the second half of the year.

Key macroeconomic risks hovering Indian economy were global slowdown, increase in commodity prices, fiscal slippage and monetary over-stimulus. Domestic activity decelerated due to slowdown in consumption. Manufacturing growth has slowed down (from 16.7% YoY in Q1FY19 to 11% YoY in Q3FY19) while there has been deceleration in agricultural output (from 6.8% YoY in Q1FY19 to 2% YoY in Q3FY19). Services sector growth has remained stagnant ~13% throughout FY19. High frequency indicators signalled deceleration in many activities. Air traffic has slowed down sharply (from 24.1% 3mma YoY in March 2018 to 9.2% 3mma YoY in February 2019) while passenger vehicle sales decelerated (from 7.9% YoY growth in FY18 to 2.7% YoY in FY19). Rising commodity prices, especially of crude, could widen current account deficit. Fiscal stimulus in election year could possibly breach the fiscal deficit target of 3.4% in FY19. The uncertainty around election outcomes could make investors jittery in the short run.

4. INDUSTRY OVERVIEW

Average daily cash trading volumes went up ~4% YoY to

` 351 billion/day in FY19 from Rs 338 billion /day in FY18. Also, the share of institutions (FII + DII) edged up to 33.2% in FY19 from 31.9% in the previous year. Bond markets saw a volatile year due multiple factors. Some of them are i) potential fiscal slippage due to revenue shortfall, ii) risks from rising crude oil prices can increase import bill, iii) a declining currency and iv) liquidity crunch.

5. PROPOSED RIGHTS ISSUE

The Board at its Meeting held on July 17, 2018 and September 12, 2018 approved the proposal of issue of equity shares by way of a Rights Issue ("Issue") to the existing shareholders of the Company in the ratio of 1 equity share of Rs 10 each for every 1 equity share of Rs 10 each held in the Company at a premium of Rs 70 per share i.e. issue price of Rs 80 each aggregating to Rs 101.91 Cr. in accordance with the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009, as amended. The Company has filed the Draft Letter of Offer with SEBI, NSE and BSE on September 17, 2018. The Company has received the in-principle approval from NSE, BSE and is awaiting the observation letter from SEBI. The record date for determining the entitlement will be announced in due course subject to receipt of relevant approvals from regulatory authorities, as may be required.

6. AWARDS AND RECOGNITIONS:

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

Recognized as Premier Depository Participant in Gold category by CDSL.

Emerging brand excellence in the BFSI Sector by ABP.

Marketing Excellence in brand award banking,

financial service, and insurance sector by Global marketing excellence Awards.

Best Overall Mobile App by Mobbys Awards at World marketing Congress.

Best use of Social Media in Marketing by Mobbys

Awards at World marketing Congress.

Best Mobile Marketing Campaign by Mobbys Awards at World marketing Congress.

Best use of Mobile Technology in Financial services by

ET Now.

Fintech Leader of the year (Mr. Prakarsh Gagdani

CEO) by ET Now.

7. DIVIDEND

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

8. SHARE CAPITAL

The paid up equity share capital of the company as on March 31, 2019 was Rs 127,390,220/- (12,739,022 equity shares of Rs 10/- each).

9. 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, no options were approved for grant under 5PCL ESOS 2017 and 5PCL ESOTS 2017. During the year, 20,000 options under 5PCL ESOS 2017 lapsed and the same have been added back to the pool, which are available for further grant.

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 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 the 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.

10. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

Loans, Guarantees and Investments covered under the provisions of the Section 186 of the Companies Act, 2013 forms part of the notes to the financial statements provided in this Annual Report.

11. SUBSIDIARIES

5paisa P2P Limited

During the year under review the Company has received the in-principle approval from RBI for registration as NBFC Peer-to-Peer Lending Platform (NBFC-P2P) from Reserve Bank of India (RBI). In terms of the said approval, 5paisa P2P Limited is required to set up the systems and processes and to comply with the other terms and conditions within a period of 12 months for obtaining final approval from RBI and commencement of NBFC- P2P activities. The Company is in process of setting up necessary system and process. On receipt of registration from RBI, 5paisa P2P Limited will commence the operations.

5paisa Insurance Brokers Limited

During the year under review, the Company incorporated, a wholly owned subsidiary namely 5paisa Insurance Brokers Limited on October 27, 2018. The Company is in process of making an application for registration as Insurance Brokers with Insurance Regulatory and Development Authority. On receipt of the approval, 5paisa Insurance Brokers Limited will commence the activities.

12. 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 at their meeting held on April 16, 2019 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 2018-19. The Company will make these documents/details available upon request 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. 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 .

13. 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 report.

14. DIRECTORS AND KEY MANAGERIAL PERSONNEL a. Directors:

The Board comprises of Mr. Prakarsh Gagdani (DIN: 07376258) and Mr. Santosh Jayaram (DIN: 07955607) as the Whole Time Directors, Dr. Archana Niranjan Hingorani (DIN: 00028037) and Ms. Nirali Sanghi (DIN: 00319389) as the Non Executive Independent Directors of the Company and Mr. Sarbeswar Lenka (DIN: 07306325) as the Non - Executive Non - Independent Director of the Company.

Appointment

Mr. Sarbeswar Lenka was appointed as Additional Director designated as Non - Executive Director. The Company has received notices under Section 160 of the Act, from a Member proposing the appointment of Mr. Sarbeswar Lenka as the Non - Executive Director of the Company. Approval of members by ordinary resolution for appointing Mr. Sarbeswar Lenka as Non - Executive Director has been sought in the Notice convening the Annual General Meeting of the Company. (Please refer to item No. 3 of the Notice)

Con_rmation

I. Mr. Santosh Jayaram was confirmed as the Whole Time Director by the Shareholders of the Company in the 11th Annual General Meeting held on July 17, 2018 for a period of three years w.e.f. January 11, 2018.

II. Ms. Nirali Sanghi was appointed as the Independent director by the Shareholders of the Company in the 11th Annual General Meeting held on July 17, 2018 for a period of Five years w.e.f. January 11, 2018.

III. Mr. Prakarsh Gagdani was reappointed as the Whole Time Director by the Shareholders of the Company in the 11th Annual General Meeting held on July 17, 2018 for a period of three years w.e.f. December 22, 2018.

Declaration by 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 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/confirmations were placed before the Board and duly noted.

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. Santosh Jayaram 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 shareholders' approval. b. Key Managerial Personnel:

As on March 31, 2019, Mr. Prakarsh Gagdani - Whole Time Director & Chief Executive Director, Mr. Santosh

Jayaram - Whole Time Director, Mr. Roshan Dave

Company Secretary & Compliance Officer and Mr. Gourav Munjal - Chief Financial Officer are the Key Managerial Personnel as per the provisions of the Companies Act, 2013 and rules made thereunder.

During the year under review, Mr. Mahesh Shetty was appointed as a Chief Financial officer in place of Ms. Ankita Lakhotia w.e.f. July 18, 2018. Mr. Mahesh Shetty - Chief Financial officer resigned w.e.f. January 16, 2019 and in his place Mr. Gourav Munjal was appointed as the Chief Financial Officer of the Company w.e.f. January 16, 2019. These changes in the Key Managerial Personnel were due to internal re-structuring.

The Remuneration and other details of the Key Managerial Person 2019 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.

15. 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 (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Board constituted the following Committees:

Audit Committee

Nomination and Remuneration Committee

Stakeholders Relationship Committee

Audit Committee:

During the year, the Audit Committee met Five (5) times in compliance with the provisions of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and Companies Act, 2013, during the year under review, the Company has re-constituted the Audit Committee and details thereof have been provided in Corporate Governance Report. At present the Committee comprises of Dr. Archana Niranjan Hingorani as the Chairman, Ms. Nirali Sanghi and Mr. Sarbeswar Lenka 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 SEBI (Listing 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

During the year, the Nomination and Remuneration Committee met Four (4) times.

The Company re-constituted the Nomination and Remuneration Committee and details thereof have been provided in Corporate Governance Report. At present, the Committee comprises of Ms. Nirali Sanghi as the Chairman and Dr. Archana Niranjan Hingorani and Mr. Sarbeswar Lenka as members of the Committee.

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 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, KMP, 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 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 SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and Companies Act, 2013. The Committee comprises of Ms. Nirali Sanghi as the Chairman, Dr. Archana Niranjan 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 SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and the same has been provided in the Corporate Governance Report.

During the year under review, the Company has received six (6) complaints on the scores portal and the same has been resolved. The details of the Meeting are given 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--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.

Board Evaluation

Pursuant to the provisions of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and SEBI Circular no SEBI/CFD/CMD/CIR/P/2017/004 dated January 05, 2017, the Board of Directors has carried out an annual performance evaluation of its own performance its Committees, the Directors individually including Independent Directors based out of the criteria and framework adopted by the Board. The Board approved the evaluation results as collated by Nomination and Remuneration Committee ("NRC"). The evaluation process, manner and performance criteria for independent directors in which the evaluation has been carried out by is explained in the Corporate Governance Report.

The Board considered and discussed the inputs received from the Directors. Also, the Independent Directors at their meeting held on March 18, 2019 reviewed the following:Performance of Non-Independent Directors and the Board as a whole.

Performance of the Chairperson of the Company.

Assessed the quality, quantity and timeliness of flow of information between the 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 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.

16. DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to the requirement under Section 134(5) of the Companies Act, 2013, it is hereby confirmed 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) the directors had 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 and loss of the Company for that period;

c) the directors had 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) the directors had prepared the annual accounts on a going concern basis;

e) the Directors had 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 ) the Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

17. INTERNAL FINANCIAL CONTROLS

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.

18. 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. 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 as 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.

During the year, the Company has entered into any contract / arrangement / transaction with related parties, which 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 July 17, 2018. 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. 27 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--vis the Company.

19. ANNUAL RETURN

The details forming part of the extract of the Annual Return of the Company in form MGT 9 is annexed herewith as "Annexure - II". The extract of Annual Return of the Company has been placed and can be accessed at website at https://www.5paisa.com/investor-relations .

20. 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.

21. SECRETARIAL AUDIT

The Board had appointed M/s. Nilesh Shah & Associates, Company Secretary in practice to conduct Secretarial Audit of the Company for the financial year 2018-19. The Auditor had conducted the audit and their report thereon was placed before the Board. The Auditor in their report stated that Company has appointed one Non-Executive Director w.e.f. July 18, 2018. The said noting is self-explanatory. The report of the Secretarial Auditor is annexed herewith as "Annexure - III".

22. 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" to and forms part of this Report.

23. 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 specialised 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.

24. WHISTLE BLOWER POLICY/ VIGIL MECHANISM

In compliance 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 and has established the necessary vigil mechanism for Directors, Employees and Stakeholders to report genuine concerns about unethical behaviour, actual or suspected fraud or violation of the Company's code of conduct or ethics policy. The Company has disclosed the policy at the website at https://www.5paisa.com/investor-relations.

During the financial year 2018-19, no cases under this mechanism were reported to the Company and/or to any of its subsidiaries.

25. PREVENTION OF SEXUAL HARASSMENT

Your Company recognises its responsibility and continues to provide a safe working environment for women, free from sexual harassment and discrimination. In Compliance with the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, the 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.

Your Directors further state that the during the fiscal year 2018-19, 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.

26. 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. If any member is interested in obtaining a copy thereof, such member may write to the Company Secretary, whereupon a copy would be sent.

27. 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 year 2022 subject to ratification of their appointment by the Members at every intervening Annual General Meeting held thereafter. However the requirement of seeking ratification of the members for continuance of their appointment has been withdrawn consequent upon the changes made in the provisions of the Companies Act, 2013 by the Companies (Amendment) Act, 2017 with effect from May 07, 2018. Hence the resolution seeking ratification of the members for their appointment is not being placed at the ensuing Annual General Meeting.

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.

28. 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 (SS1 and SS2) respectively relating to Meetings of the Board and its Committees which have mandatory application.

29. 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 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.

30. CORPORATE GOVERNANCE

The Company is committed to maintain the highest standards of Corporate Governance and adhere to the Corporate Governance requirements set out by SEBI. 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 certificate from the Auditors of the Company confirming compliance with the conditions of Corporate Governance is attached to the report on Corporate Governance.

31. GENERAL

Your Directors state that during the financial year 2018-19:

1. The Company did not accept/renew any deposits within the meaning of Section 73 of the Companies Act, 2013 and the rules made there under and as such, no amount of principal or interest was outstanding as on the balance-sheet date.

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

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

4. There are no significant and material orders passed against the Company by the Regulators or Courts or Tribunals, which would impact the going concern status of the Company and its future operations.

32. 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: April 16, 2019

   

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