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Directors Report of Mercantile Ventures Ltd.

Mar 31, 2014

Dear Members,

The Directors are pleased to present the Annual Report and the Audited Accounts of the Company for the year ended 31 March 2014.

Review of operations

During the year the company has reported a profit after tax of Rs. 259.12 lakhs as against a loss of Rs. 281.74 lakhs in the previous year Financial Results

(Rs.in lakhs) Description 2013-14 2012-13

Profit Before Interest & Depreciation 889.72 (419.84)

Depreciation 8.84 5.48

Profit Before Tax & Exceptional items 880.88 (425.32)

Exceptional items (508.03) 303.95

Profit Before Tax 372.85 (121.37)

Provision for Taxation: Current Tax 228.40 -

Deferred tax (114.67) 160.37

Profit After Tax 259.12 (281.74)

Joint Development Agreement

During the year the Company entered into a joint development agreement for development of freehold land belonging to the Company at Chennai. Pursuant to the agreement, the Company has transferred 75% of the Undivided Share to the developer and recognized the appropriate income thereon.

Formation of subsidiary

During the year the Company formed Oasis Ventures Private Limited, a wholly owned subsidiary on 4 November 2013 to do the business of facility management and other services. i3 Security Private Limited engaged in the business of security services became the subsidiary of Oasis Ventures Private Limited on 12 December 2013

Future Outlook

The main business of the Company would be that of investing in properties for leasing. Due to current slowdown of market conditions in the real estate sector, revenue from these operations is expected to improve over a period of time.

Dividend

The Company has not declared any dividend for the year.

Consolidated financial statements

Consolidated financial statements of Mercantile Ventures Limited, Oasis Ventures Private Limited and i3 Security Private Limited prepared in accordance with Accounting Standard AS 21, issued by the Institute of Chartered Accountants of India, and as required by the Listing Agreement are attached and forms part of the Annual Report and Accounts.

Directors

The Company''s Board comprises of the following directors at present:

Mr. AL Chandramouli Mr. K Gopalakrishanan Mr. M Rajamani Mr. E N Rangaswami

Mr. K Gopalakrishanan was appointed as an Additional Director with effect from 7 November 2013 and is proposed to be re-appointed in the ensuing Annual General Meeting.

Mr. S Kumar who was appointed as a Director in the Board on 15 November 2012 resigned from the Board with effect from 7 November 2013. The company places on record the invaluable contributions made by the outgoing Director.

Mr. M. Rajamani, Director of the company retires by rotation at the ensuing Annual General Meeting of the company and being eligible offers himself for re-election.

M/s. DPV & Associates, Chartered Accountants appointed as the Auditors of the Company at the 12th Annual General Meeting held on 30th September 2013 hold office till the conclusion of 13th Annual General Meeting and are eligible for re-appointment. As per Section 139 of the new Act, they can hold office from the conclusion of the 13th AGM till the conclusion of the 16th AGM. Their re-appointment will have to

be ratified by the Members at every AGM. In compliance with the requirements of the new Act, it is proposed to appoint the retiring Auditors to hold office till the conclusion of the 16th AGM to be held in the year 2017, subject to ratification at the next AGM.

Fixed Deposits

The Company has not invited or accepted any deposits during the year.

Corporate Governance

A Report on Corporate Governance as stipulated under Clause 49 of the Listing Agreement forms part of this Annual Report. The requisite certificate from a Practising Company Secretary confirming compliance with the conditions of Corporate Governance as stipulated under Clause 49 is attached to this Report.

Directors responsibility statement

Pursuant to Sub-Section 2AA of section 217 of the Companies Act 1956, the Directors confirm that:

1. In the preparation of annual accounts, the applicable accounting standards have been followed.

2. Appropriate Accounting Policies have been selected and applied consistently by the company and that the judgments and the estimates made thereat are prudent and reasonable so as to give a true and fair view of the state of affairs of the company as at 31 March 2014 and of the profit of the company for the year ended 31 March 2014

3. Proper and sufficient care has been taken in maintaining adequate accounting records of the company in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities and

4. The Annual Accounts of the company as aforesaid have been prepared on a going concern basis.

CEO /CFO Certification

The Whole time Director and the Chief Financial Officer have submitted a certificate to the Board regarding the financial statements and other matters as required under Clause 49 (V) of the Listing Agreement.

Particulars of Employees:

Details prescribed under Section 217(2A) of the Companies Act 1956, read with Companies (Particulars of Employees) Rules, 1975 are not applicable as no employee of the company was in receipt of remuneration exceeding the limits prescribed therein.

Financial Statements of Subsidiary companies:-

The statement pursuant to sub-section 3 of Section 212 of the Companies Act 1956 is given as annexure. Pursuant to the exemption granted by the department of Company Affairs, Government of India, the parent company is publishing the consolidated and standalone financial statements of Mercantile Ventures and its subsidiaries viz. Oasis Ventures Private Limited and i3 Security Private Limited. The financial statements and auditors'' report of the individual subsidiaries are available for inspection by the shareholders at the registered office. The information in aggregate on capital, reserves, total assets, total liabilities, details of investments, turnover, profit before taxation, provision for taxation, profit after taxation and proposed dividend for each subsidiary are given as annexure .

Internal control systems

The company has adequate internal control procedures commensurate with the size and nature of its operations. The internal control systems were further strengthened by internal audit conducted by an internal auditor, appointed by the Company. The Audit Committee of the board addresses issues raised by the internal auditor and the statutory auditors.

Reply to Auditor''s observation

The notes to the financial statements have adequately addressed the Auditor''s observation. The Company has initiated the process of review of the quantum of likely realizations and appropriate decisions will be taken in the current year

Acknowledgement

Your Directors express their grateful thanks for the assistance, co-operation and support extended to the Company by Promoters and the shareholders for their continued support. The Directors also place on record their appreciation of the good work put in by the employees of the company.

For and on behalf of the Board

Place : Chennai M. Rajamani E.N. Rangaswami Date : 13 August 2014 Director Whole-time Director


Mar 31, 2013

Dear Members,

The Directors are pleased to present the Annual Report and the Audited Accounts of the Company for the period ended 31st March 2013.

Revival of the Company

The shareholders are aware that the company was carrying on the business of leasing, Merchant Banking and Non Banking Financial Companies (NBFCs) activities such as accepting deposits from public, hire purchase against vehicles, machinery financial lease of assets, lease of properties, etc. In January 1998, in view of the revised guidelines from RBI requiring mandatory credit rating of NBFCs and new conditions imposed for accepting new deposits, many NBFCs could not attain the required credit rating. The borrowers of NBFCs taking advantage of the situation either failed or delayed repayments resulting in NBFCs defaulting repayment of the deposits. These events led to the event of filing of petition against the company and the company was ordered to be wound up by Order dated 3rd August 2001 of the Hon''ble High Court of Madras.

Even after the winding up order was passed, the promoters of the company had taken efforts to settle the deposit holders, bond holders, hundi holders and other secured creditors/unsecured creditors.

Mr AL Vadivelu, ex-Chairman of the company, submitted a Scheme of Arrangement between the company and the creditors u/s 391 - 394 of the Companies Act, 1956 to the Hon''ble High Court of Madras with a view to revive the company. The Hon''ble High Court of Madras passed an Order dated 18th October 2012 approving the Scheme of Arrangement and permitting reconstitution of the Board of the company to take charge of administration, management of affairs and assets of the company. The Board was constituted on 15th November 2012 as per the Scheme and the company started functioning from 15th November 2012.

As per the Scheme of Arrangement as approved by the Hon''ble High Court of Madras, the company would confine its activities to do only fund based activities without seeking any deposits from public. The main business of the company would be lease of properties and merchant banking services.

Issue of further shares:

As per the Scheme, Mr. AL Vadivelu or his nominees and the creditors of the Company or their nominees should be given the option to convert their outstanding to 3 year zero interest bonds for 40% of the amount outstanding or equity shares of Rs.10/- per share at a premium of Rs.15/- per share for the amount outstanding. Accordingly on 27th March 2013 at the Board Meeting, 8.16.68.000 Equity Shares of Rs.10/- at a premium of Rs.15/- per share aggregating to Rs.25/- per share were allotted and 22.48.000 Bonds of Rs.10/- each were issued. The company has obtained the approval from Madras Stock Exchange for listing the shares allotted on 27th March 2013.

The authorized share capital was increased by Rs.80 Crores for allotment of shares to the promoters and the creditors.

Postal Ballot

The company had approached members through postal ballot process during the year for following matters;

1. For change of name from MCC Finance Limited to Mercantile Ventures Limited

2. To change the main objects of the company

3. For recommencement of business

4. For increase in Authorised Capital

5. For alteration of Memorandum of Association pursuant to increase in Authorised Capital.

6. For alteration of Articles of Association pursuant to Increase in Authorised Capital.

7. For alteration of Articles of Association pursuant to dematerialization of shares.

8. For allotment of shares.

9. To give Powers to Board u/s 293(1 )(a) of the Companies Act, 1956.

10. To appoint whole time director u/s 198.269&309 of the Companies Act, 1956.

11. To maintain statutory Registers u/s 163 of the Companies Act 1956.

12. For the Appointment of Auditors.

The above Postal Ballot was conducted in accordance with the provisions of Section 192A of the Companies Act, 1956 read with Companies (Passing of Resolutions by Postal Ballot) Rules, 2011. All the resolutions were declared as passed with requisite majority on 15th March 2013.

PERFORMANCE OF THE COMPANY FINANCIAL RESULTS

Financial performance of the Company for the period ended 31st March 2013 is summarized below: Financial Results (Rs. in lakhs)

Description 2012-13

Profit Before Interest & Depreciation (115.89)

Depreciation 5.48

Profit Before Tax (121.37)

Provision for Taxation (Deferred Tax) 160.37

Profit After Tax (281.74)

REVIEW OF OPERATIONS

The company has taken possession of its properties from the Official Liquidator. The company is in the process of making payments towards arrears of maintenance charges, municipal taxes, electricity charges, etc.

The company has also complied with all the statutory and other formalities which were essential for commencing the operations. These activities were completed only by end March 2013.

Future Outlook

The company has plans to construct residential units and industrial warehouses which will be leased out. The revenue from these operations is expected by the end of the next financial year.

DIVIDEND

The Company has not declared any dividend for the year.

DIRECTORS

The Board of Directors was reconstituted as per the Scheme of Arrangement and the following Directors were appointed in the Board Meeting held on 15th November 2012 and they hold office till the ensuing Annual General Meeting:-

1) MrMRajamani

2) Mr S Kumar

3) Mr AL Chandramouli

Requisite notice under Section 257 of the Companies Act, 1956 has been received from members proposing Mr.M.Rajamani, Mr.S.Kumar and Mr.AL.Chandramouli''s appointment as directors.

Mr. E N Rangaswami was co-opted to the Board on 5th December 2012 and was designated as Whole-time Director of the company for a period of 3 years. Subsequently, his appointment was approved by the Shareholders through Postal Ballot

Mr. E N Rangaswami, Whole-time Director of the company retires by rotation at the ensuing Annual General Meeting of the company and being eligible offer himself for re-election.

AUDITORS

DPV Associates, Chartered Accountants, statutory auditors of your Company who was appointed through postal ballot retire at the conclusion of this Annual General Meeting and being eligible offer themselves for re-appointment.

FIXED DEPOSITS

The Company has not invited or accepted any deposits during the year.

CORPORATE GOVERNANCE

A Report on Corporate Governance as stipulated under Clause 49 of the Listing Agreement forms part of this Annual Report. The requisite certificate from a Practising Company Secretary confirming compliance with the conditions of Corporate Governance as stipulated under Clause 49 is attached to this Report.

DIRECTORS RESPONSIBILITY STATEMENT

1) Pursuant to Section 217(2AA) of the Companies Act 1956, the Board of Directors report that:

a) in the preparation of the Annual Accounts, the applicable Accounting Standards have been followed and that no material departures have been made from the same.

b) they have selected such accounting policies and applied them consistently and made judgments and estimates which are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March 2013 and of the profit & loss account of the Company for the period ended on that date.

c) they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and preventing and detecting fraud and other irregularities.

d) they have prepared the annual accounts on a going concern basis.

Particulars of Employees:

Details prescribed under Section 217(2A) of the Companies Act read with Companies (Particulars of Employees) Rules, 1975 is not applicable as no employee of the company was in receipt of remuneration exceeding the limits prescribed therein.

Reply to Auditor''s observations:

The notes to the Financial statements have adequately addressed the Auditor''s observations. The company has already initiated the process for review of the non current assets and provision for bad debts/write offs, if any, would be considered on completion of the review.

ACKNOWLEDGEMENT

Your Directors express their grateful thanks for the assistance, co-operation and support extended to the Company by the Promoters and the shareholders for their continued support. The Directors also place on record their appreciation of the good work put in by the employees of the company.

For and on behalf of the Board

Place: Chennai M. Rajamani E.N. Rangaswami Date : 8th August 2013 Director Whole-time Director

 
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