Mar 31, 2018
BOARD''S REPORT
Dear Members,
Your Directors are pleased to present the Twenty Second Annual Report together with the Company''s audited financial statements for the financial year ended March 31, 2018.
1. RESULTS OF OUR OPERATIONS AND STATE OF AFFAIRS
The Company''s financial performance, for the year ended March 31, 2018 is summarized below:
(Rs in lacs) |
||
For the year ended 31 .3.2018 |
For the year ended 31 .3.2017 |
|
Total Income |
40993.67 |
50054.47 |
Less : Total Expenditure |
35465.64 |
24400.36 |
Profit/(loss) Before Tax |
5528.03 |
25654.11 |
Less : Provision for Income Tax (including deferred tax) |
1870.45 |
8936.73 |
Profit /(loss) After Tax |
3657.58 |
16717.38 |
Add: Balance in Statement of Profit and Loss brought forward |
23951 .20 |
12807.02 |
Add: Prior Period Income |
- |
- |
Amount available for Appropriation |
27608.78 |
29524.39 |
Proposed Appropriations |
||
Transfer to Statutory Reserve |
731 .52 |
3343.48 |
Capital Reserve |
331 .08 |
2229.71 |
Final Dividend of FY 2016-17 |
4500.25 |
- |
Dividend Distribution Tax of FY 2016-17 |
916.15 |
- |
Balance carried forward |
21129.78 |
23951 .20 |
FY 2017-18 was a challenging year for the debt market. The yields on Government Securities trended upward, with the ten-year benchmark yield rising to 7.40 per cent as on March 31, 2018 as against previous year close of 6.66 per cent. Market remained exposed to intermittent bouts of volatility due to domestic developments as well as uncertainty surrounding the evolution of global financial markets which impacted the market sentiment and liquidity conditions significantly. Domestic factors like increasing inflation rate, fiscal slippage, concerns over increase in the supply of papers in the form of bank recapitalization bonds, low GST collections and additional borrowing played a major role in rise of yields. Internationally, rising crude prices, Fed rate hikes and initiation of balance sheet normalization added to the uncertainty in the market.
Against the backdrop of adverse developments, your Company managed to post a Profit Before Tax of Rs 5528.03 lacs as against Rs 25654.11 lacs in FY 2016-17. The net revenue from operations of your Company during FY 2017-18 stood at Rs 40993.67 lacs vis-a-vis Rs 50054.47 lacs in the previous fiscal and Profit after Tax for FY 2017-18 stood at Rs 3657.58 lacs vis-a-vis Rs 16717.38 lacs in the previous fiscal. Additionally, your Company fulfilled all its obligations as a Primary Dealer in both primary and secondary market. With regard to Treasury Bills commitment, the Company exceeded the stipulated success ratio of 40 per cent, achieving 42.48 per cent and 40.91 per cent in H1 and H2 respectively. In G-sec category, Company fulfilled the underwriting commitments, thereby supporting the government borrowing program.
Material Changes and Commitments
No material changes and commitments affecting the financial position of the Company have occurred after the close of the year till the date of this report.
Capital Adequacy
Capital adequacy ratio as on March 31, 2018 stood at 67.09 per cent as against the RBI stipulation of 15 per cent.
Dividend
Your Board has recommended a dividend of Rs 1/- (i.e. 10 per cent) per equity share (last year Rs 2.50 per equity share) for the financial year ended March 31, 2018, subject to approval in the ensuing Annual General Meeting. The total outflow on account of said dividend shall be Rs 2166.56 lacs (including Dividend Distribution Tax of Rs 370.02 lacs).
Transfer to Reserves
Your Company proposes to transfer Rs 731.52 lacs in Statutory Reserve as required under the provisions of Section 45-IC of the Reserve Bank of India Act, 1934. Rs 331.08 lacs is proposed to be transferred in Capital Reserve in terms of RBI guidelines for Primary Dealers. Further, in terms of the first proviso to Section 123(1) of the Companies Act, 2013, the Company proposes not to transfer any sum in General Reserve.
2. CORPORATE GOVERNANCE
Corporate Governance for your Company means achieving high level of accountability, efficiency, responsibility and fairness in all areas of operations. Our workforce is committed towards the protection of the interest of the stakeholders including shareholders, creditors, investors, customers, employees, etc. Our policies consistently undergo improvements keeping in mind our goal i.e. maximization of value of all the stakeholders.
We comply with the SEBI and RBI guidelines on Corporate Governance. We have documented our internal code on Corporate Governance in compliance of SEBI and RBI guidelines. The Corporate Governance practices followed by the Company are given in the Annual Report. A certificate from M/s Kapoor Tandon & Co. (Firm Reg. No. 000952C), Statutory Auditor of the Company regarding compliance of conditions of Corporate Governance as stipulated in the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 is enclosed with the ''Report on Corporate Governance'' forming part of the Board''s Report.
Number of meetings of the Board
The Board met four times during the financial year 2017-18 to review strategic, operational, technological and financial matters besides laying down policies and procedures for operational management of the Company. The details of such meetings are given in the ''Report on Corporate Governance'' that forms part of this Board''s Report.
Directors and Key Managerial Personnel
During the year 2017-18, the members in their Annual General Meeting held on September 16, 2017 approved the appointment of Sh. Sunil Mehta (DIN : 07430460), Additional Director as Director (under Non-Executive and Non-independent category). In terms of Article 98(2) of Articles of Association of the Company, he is the Chairman of the Company.
In the same meeting, the members approved reappointment of Sh. S. K. Dubey (DIN: 01770805) as Managing Director for a period from February 1, 2018 to January 31, 2019. The members also approved the reappointment of Smt. Sunita Gupta (DIN: 06902258) as Whole-time Director (with designation ''Executive Director & CFO'') for a period from September 1, 2017 to August 31, 2020.
Sh. R. S. Ramasubramaniam (DIN : 00008937), Independent Director vide letter dated June 29, 2018, received by the Company on July 3, 2018, has resigned from the directorship of the Company. Accordingly, in terms of Section 168 of the Companies Act, 2013, he ceases to be Director of the Company w.e.f. July 3, 2018. Your Board places on record his valuable contribution as member of the Board and its Committees.
Further, in accordance with the provisions of the Companies Act, 2013 and the Articles of Association of the Company, Smt. Sunita Gupta (DIN: 06902258) shall retire by rotation in the ensuing Annual General Meeting and is eligible for reappointment.
Performance Evaluation
The Company has devised a policy for performance evaluation of Board of its own performance, Independent Directors, Non-Independent/Executive Directors and Board level Committees etc. as required under the provisions of the Companies Act, 2013, SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and also Guidance Note on Board Evaluation as prescribed by SEBI. The evaluation of all the Directors, the Board as a whole and its Committees was conducted based on the criteria and framework adopted by the Board. Copy of said policy, inter-alia, containing the process and criteria for evaluation is available at Company''s website at the link https://pnbgilts.com/data/governence/1523278049.pdf.
Familiarization programme
The details of programme for familiarization of Independent Directors with the Company, their roles, rights, responsibilities in the Company, nature of industry in which the Company operates, business model of the Company and related matters are placed at Company''s website at the link https://pnbgilts.com/data/governence/1523273950.pdf.
Quarterly updates on relevant statutory changes are also circulated to the Directors. Policy on Directors'' Appointment and Remuneration etc.
The policies of the Company on Directors'' Appointment and Remuneration including criteria for determining qualifications, positive attributes, independence of a Director and other matters provided under Sub-section (3) of Section 178 of the Companies Act, 2013 is appended as Annexure A to the Board''s Report.
Declaration by Independent Directors
The Company has received declaration pursuant to Section 149(7) of the Companies Act, 2013 from each Independent Director confirming therein the criteria of Independence as prescribed both under the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
3. OTHER DISCLOSURES
Audit Committee
The composition of Audit Committee during FY 2017-18 was as under-
Name of Director |
Position |
Dr. Kamal Gupta |
Chairman |
Sh. S. K. Soni |
Member |
Sh. P. P. Pareek |
Member |
Sh. R. S. Ramasubramaniam |
Member |
All the recommendations made by the Audit Committee during the year were accepted by the Board. |
Corporate Social Responsibility (CSR) Committee
The composition of the CSR Committee during FY 2017-18 was as under -
Name of Director |
Position |
Sh. K. V. Brahmaji Rao |
Chairman |
Dr. Kamal Gupta |
Member |
Sh. S. K. Dubey |
Member |
The CSR policy of the Company, duly recommended by the CSR Committee and approved by the Board, is available at our website at the link http://pnbgilts.eom/data/governence/1523278002.pdf. The CSR activity of the Company is carried out as per the instructions of the Committee and Board. During the year, the Company has spent 2 per cent of its average net profits of the three immediately preceding financial years on CSR activity.
The annual report on the CSR for the year 2017-18 in the prescribed format is presented at Annexure B to the Board''s Report.
Other details of above said and other Committees of the Board are given in the ''Report on Corporate Governance'' forming part of the Board''s Report.
Whistle Blower Policy (including Vigil Mechanism)
Your Company believes in conducting its affairs in a fair and transparent manner by adopting highest standards of professionalism, honesty, integrity and ethical behaviour. Your Company is committed to develop a culture where it is safe for directors and employees to raise concerns about any wrongful conduct.
The Board of Directors has approved a Whistle Blower Policy (including Vigil Mechanism), which provides a framework to promote a responsible and secure whistle blowing. It protects employees wishing to raise a concern about serious irregularities within the Company. The Audit Committee reviews the functioning of this mechanism. No employee / director has been denied access to the Audit Committee. During the year under review, no such matter has been reported to the Audit Committee. The said policy may be accessed on the Company''s website at the link http://pnbgilts.com/data/governence/1409222609.pdf
Contracts and Arrangements with Related Parties
All the contracts/ arrangements/transactions entered by the company are in ordinary course of business and at arm''s length (except those given in form AOC-2 at Annexure C). Further during the year, the Company had not entered into any contract/arrangement/transaction with related parties, which could be considered material in accordance with the Company''s Policy/Standard Operating Procedures (SOP) on Related Party Transactions. The said Policy/ SOP can be accessed at the Company''s website at the link http://pnbgilts.eom/data/governence/1523277954.pdf.
Necessary disclosure in prescribed form AOC-2 is annexed at Annexure C. Subsidiaries
The Company, being a RBI regulated Primary Dealer, is prohibited to form any subsidiary. As such, the Company has not formulated any policy for determining ''material'' subsidiaries under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
Further, since the Company is not having any subsidiary or associate or joint venture, it is not required to consolidate the financial statements in terms of Section 129 of the Companies Act, 2013 read with Rule 5 of the Companies (Accounts) Rules, 2014. However, the financial statements of the Company for FY 2017-18 had already been considered by its parent bank i.e. Punjab National Bank for consolidation.
Directors'' Responsibility Statement
Pursuant to the requirements of Section 134(3)(c) of the Companies Act, 2013, your Directors confirm that:
(a) in the preparation of the annual accounts for the year ended March 31, 2018, the applicable accounting standards read with the requirements set out under the Schedule III to Companies Act, 2013, have been followed and there are no material departures from the same;
(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 as at March 31, 2018 and of the profit and loss of the Company for the year ended on that date;
(c) the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
(d) 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 were operating effectively; and
(f) the Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
Human Resource Management
Your Company treats its human resources as one of its most important assets. To ensure good human resource management in the Company, the Company focuses on all the aspects of employee lifecycle. During their tenure
in the Company, employees are motivated through various skill development and volunteering programmes. Recreational programmes are also conducted on regular basis so as to create stress-free environment. All the while, the Company also creates effective dialogues through various communication channels like face to face interactions so as to ensure that feedback reach the relevant teams. In house meetings and training sessions are also arranged to engage and develop the employees and to gather ideas around innovation.
The information required to be disclosed under Section 197(12) and Rule 5 (1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is provided at Annexure D.
The information required to be disclosed under Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 be treated as NIL as there was no employee, whether employed throughout the year 2017-18 or part thereof, who was in receipt of remuneration beyond the limits laid down in above said Rule. No employee is related to any Director of the Company.
Sexual Harassment at Workplace
Your Company has in place a formal policy for prevention of sexual harassment of its employees at workplace. During the year 2017-18, there were no cases filed pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.
Particulars of Loans given, investment made, guarantees given and securities provided
The information required to be disclosed under Section 134(3)(g) of the Companies Act, 2013 may be treated as ''Nil'', as the Company is exempted under Section 186(11) of the Companies Act, 2013.
Extract of the Annual Return
Extract of Annual Return of the Company is annexed herewith as Annexure E to this Report.
Deposits
During the year ended March 31, 2018, the Company has not accepted any deposits from the public within the meaning of the provisions of the Non- Banking Financial Companies (Reserve Bank) Directions, 1977 and RBI''s notification no. DFC.118DG/(SPT)-98 dated January 31, 1998.
Risk Management
In terms of RBI guidelines for NBFCs, a Risk Management Committee, constituted at management level, has been entrusted with the responsibility by the Board in laying down procedures for risk assessment and minimization. The Committee also reviews these procedures periodically to ensure that executive management is implementing and controlling the risks through means of a properly defined risk framework.
The Audit Committee, on periodic basis, oversees all the risks that a company faces such as strategic, financial, market, liquidity, security, property, IT, legal, regulatory and other identified risks alongwith the implementation of risk management policy. There is an adequate risk management infrastructure in place capable of addressing the possible risks.
Risk Management Policy is reviewed annually by the Audit Committee and on the basis of the Committee''s recommendation, the Board approves the same.
Significant and material orders
There are no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and Company''s operations in future.
Issue of Shares
There was no issue of shares during the year neither with differential rights as to dividend, voting or otherwise nor to employees of the company.
Management Discussion and Analysis
Management Discussion and Analysis comprising an overview of the financial results, operations/performance and future aspects form part of this Annual Report.
Secretarial Standards
The Company has complied with all applicable Secretarial Standards.
4. AUDITORS, INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
Statutory Auditor
The Comptroller and Auditor General of India had appointed M/s Kapoor Tandon & Co., Chartered Accountants (Firm Reg. No. 000952C) as the Statutory Auditor of the Company for the financial year ended March 31, 2018. The report of the auditor is self-explanatory and does not call for any further comments. Pursuant to the provisions of Section 143(12) of the Companies Act, 2013, the Statutory Auditor of the Company has not reported any incident of fraud during the FY 2017-18. The Auditors'' Report does not contain any qualification, reservation or adverse remark.
Secretarial Auditor
The Board had appointed M/s Pranav Kumar & Associates, Company Secretaries, to conduct the Secretarial Audit for the financial year 2017-18. The Secretarial Audit Report for the financial year ended March 31, 2018 is annexed as Annexure F to this Report. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark.
Internal control systems and their adequacy
The Company considers the internal control systems to be a very significant part of its Corporate Governance practices. Your Board has adopted the policies and procedures for ensuring the orderly and efficient conduct of its business, including adherence to the Company''s policies, the safeguarding of its assets, prevention and detection of frauds etc. The Company''s internal control systems are commensurate with the nature of its business and the size and complexity of its operations. As a part of this control system, your Board appoints Internal Auditor and other auditors as well. Accordingly, these internal controls are routinely tested and certified by the auditors. For the year 2017-18, the Board appointed M/s Lodha & Co. as the Internal Auditor of the Company. The scope of Internal Audit included audit of treasury transactions on a monthly basis and reporting to the Audit Committee of the Board that the company has operated within the limits of various risk parameters laid down by the Board, Reserve Bank of India and other statutory authorities. Besides, the said firm also audited and reviewed the related party transactions on monthly basis and key business processes, including IT systems of the Company, on quarterly basis. All the reports of the Internal Auditors were submitted to the Audit Committee. Timeliness of submission of all the periodic statutory returns/forms etc. to regulatory bodies was also checked by the Auditor. The Audit Committee reviews adequacy and effectiveness of the Company''s internal control environment and monitors the implementation of audit recommendations, including those relating to strengthening of the Company''s risk management policies and systems.
5. DETAILS OF CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO
The Company is a Primary Dealer as defined and regulated by the Reserve Bank of India and is not a manufacturing company, hence the particulars required to be disclosed with respect to conservation of energy and technology absorption in terms of Section 134(3)(m) of the Companies Act, 2013 and the Rules made thereunder are not applicable/ Nil.
However, every endeavor is made to ensure optimal use of energy, avoid wastages and conserve energy as far as possible. Some of these measures include switching off lights and computer systems when not in use, creating awareness among employees about the necessity of energy conservation etc. Your Company has installed the integrated treasury management software and RBI''s Negotiated Dealing System with the help of The Institute for Development and Research in Banking Technology (IDRBT) and reputed IT companies. The Company recognizes the growing importance of Information Technology in the emerging business environment. The Company has also implemented Business Continuity Plan (BCP) and Disaster Recovery Plan (DRP) with the help of IDRBT (consultants for implementation of BCP and DRP) to identify and reduce risk exposures and proactively manage any contingencies.
Your Company has neither used nor earned any foreign exchange during the year under review. Acknowledgements
Your Directors thank the Government of India, Reserve Bank of India, Securities and Exchange Board of India, National Stock Exchange of India Ltd., BSE Ltd., Parent Bank, Commercial Banks, Cooperative & Regional Rural Banks, Financial Institutions, PF Trusts, Public Sector Undertakings, Private Sector Corporate Bodies and other valued clients for their whole-hearted support. We acknowledge the sincere and dedicated efforts put in by the employees of the Company at all levels.
On behalf of Board of Directors |
|
Date: July 17, 2018 |
(Sunil Mehta) |
Place: New Delhi |
Chairman |
DIN: 07430460 |
Annexure A
REMUNERATION POLICY
The Policy reflects the Company''s objectives for good corporate governance as well as sustained long-term value creation for shareholders. The Remuneration Policy is applicable to Independent Directors, Non-independent Directors, Key Managerial Personnel, senior management and other employees. HR Policy including Service Regulations, increment policy etc. of the Company is a part of this Policy.
Purpose and Basic Principles
The Remuneration Policy seeks to ensure adequate remuneration in recognition of their dedication and the responsibility assumed, and in accordance with the remuneration paid in the market by peer group, taking into account the long term interest of all the shareholders. The guiding principle is to offer remuneration systems that make it possible to attract, retain, and motivate the most outstanding professionals in order to enable the Company to attain its strategic objectives within the increasingly competitive environment in which the Company operate.
The Remuneration Policy seeks to:
⢠Ensure that the remuneration, in terms of structure and total amount, is in line with best practices, as well as competitive vis-a-vis that of comparable entities.
⢠Establish the remuneration, in accordance with objective standards, based on individual performance and on the achievement of the business objectives of the Company.
⢠Include a significant annual variable component tied to performance and to the achievement of specific, pre-established, quantifiable objectives in line with the corporate interest and strategic goals of the Company.
⢠The foregoing should be understood to be without prejudice to the possibility of considering other objectives, especially in the area of corporate governance and corporate social responsibility.
⢠Foster and encourage the attainment of the strategic goals of the Company through the inclusion of long-term incentives, strengthening continuity in the competitive development of the company, of its directors, and of its management team, and generating a motivating effect that acts as a driving force to ensure the loyalty and retention of the best professionals.
⢠Set appropriate limits to any short-term or long-term variable remuneration, and establish suitable mechanisms to reconsider the implementation and payment of any deferred variable remuneration when a reformulation occurs that has a negative effect on the Company''s annual accounts, including the potential total or partial cancellation of the payment of deferred variable remuneration if there is a correction of the annual accounts upon which such remuneration was based.
Competent Bodies
The Board of Directors, at the proposal of the Nomination and Remuneration Committee, is the body with authority to determine the remuneration of directors within the overall limit established in the Act.
Limit on Directors'' Remuneration
Pursuant to the provisions of the Act and rules made thereunder, the Directors'' Remuneration shall be within the overall limits defined under Section 197 and other applicable provisions of the Companies Act, 2013 and Schedule V of the Act and Rules made thereunder. The terms of service, including remuneration matters, of Managing Director, Executive Director, other Key Managerial Personnel, senior management and other employees shall be subject to Service Regulations of the Company, which is being reviewed by Nomination & Remuneration Committee and approved by the Board on annual basis.
Structure of remuneration of Managing Director, Executive Director, Key Managerial Personnel and other employees
The remuneration that Managing Director and Executive Director etc. are entitled to receive for the performance of executive duties at the Company is structured as follows:
(a) Fixed Remuneration/CTC -
(i) Fixed Remuneration/CTC of Managing Director and Executive Director -
This portion of the remuneration shall be in line with the remuneration paid in the market by competing companies. Under ordinary circumstances, it includes remuneration by way of salary, perquisites and allowances. The Nomination & Remuneration Committee recommends suitable package to the Board for approval, which is subject to shareholders'' approval and limits specified under Schedule V of the Companies Act, 2013.
(ii) Fixed Remuneration/CTC of Key Managerial Personnel, Senior Management and other employees -
Remuneration of employees largely consists of salary, perquisites, and allowances. The detailed components of the fixed remuneration are defined in the service regulations of the company. Annual increments are given each year in line with the performance parameters defined in the increment policy.
(b) Variable Remuneration
In order to strengthen employees'' commitment to the Company, to retain and promote a better performance of their duties, the Company gives a performance linked incentive. This variable remuneration shall be tied, for the most part, to the achievement of specific and pre-established profit targets and other objectives as a Primary Dealer that are quantifiable and aligned with the corporate interest and with the strategic objectives of the Company. The Nomination and Remuneration Committee will assess the achievement of Company''s objectives vis-a-vis individual performance. The Committee may seek the advice of independent professionals in this regard. The proposal thereof shall be submitted to the Board of Directors for approval on annual basis. While assessing the performance of the employee, the Committee/Board also broadly takes into account the profits earned by the Company for the year.
The recommending authority must ensure appropriate balance between fixed and variable remuneration. Structure of remuneration of Non-Executive / Independent Directors
Remuneration of Non-Executive/ Independent Directors is subject to the provisions of Section 197 of the Companies Act, 2013 & Rules made thereof and Articles of Association of the Company. The Board approves the sitting fee payable to Non-executive/independent Directors. At present, Non-Executive/Independent Directors are entitled to sitting fee of Rs 25000/- for attending each meeting of the Board and Rs 10000/- for attending each meeting of Audit Committee / CSR Committee / Nomination and Remuneration Committee/ Only Independent Directors'' Meeting. Sitting fee for attending each meeting of (a) Share Transfer and Issue of Duplicate Shares Committee; and (b) Stakeholders'' Relationship Committee and the honorarium to be paid to Independent Directors for holding interviews, if any, is Rs 5000/-. In addition, the Company also pays out of pocket expenses incurred by them for attending such meetings.
Principle of Full Transparency
The Board of Directors assumes the commitment to enforce the principle of the fullest transparency of all the items of remuneration received by all directors, providing clear and adequate information as much in advance as required and in line with the good governance practices generally recognised in Indian markets in the area of director remuneration.
For such purpose, the Board of Directors establishes the Remuneration Policy and ensures the transparency of director remuneration by including in the Company''s report a detailed breakup, according to positions and status, of all remuneration received by the directors, whether as such, in their capacity as executives, if applicable, or in any other capacity. The Company''s Remuneration Policy shall be published suitably in the Directors'' report or Annual Report.
General
Any or all provisions of this Policy would be subject to revision/amendment in accordance with the guidelines etc. on the subject as may be issued by Government/regulatory bodies etc., from time to time.
ELIGIBILITY CRITERIA OF DIRECTORS AND POLICY ON BOARD DIVERSITY
Introduction
In pursuance of the provisions of Section 178 of the Companies Act, 2013 and Rules made thereunder read with SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (''the Listing Regulations'') and RBI guidelines for NBFCs, the Nomination and Remuneration Committee of the Board (the "Committee") is responsible for evaluating the qualifications of each director candidate and of those directors who are to be nominated for election by shareholders at each annual general meeting and for recommending duly qualified director nominees to the full Board for election. The qualification criteria set forth herein are designed to describe the qualities and characteristics desired for the Board as a whole and for Board members individually.
Director Qualification Review Procedures
The Committee shall evaluate each director and director candidate under the Director Qualification Criteria set forth herein and recommend to the Board for their appointment accordingly.
Director Qualification Criteria
The Committee has not established specific education, and years of business experience or specific types of skills for Board members, but, in general, expects qualified directors to have ample experience and a proven record of professional success, leadership and the highest level of personal and professional ethics, integrity and values.
In evaluating the suitability of individual Board members, the Committee takes into account many factors, including general understanding of the Company''s business dynamics, global business and social perspective, educational and professional background and personal achievements. Thus, the Committee shall consider whether each director candidate and each director possess the following:-
⢠High level of personal and professional ethics, reputation, integrity and values;
⢠An appreciation of the Company''s mission and purpose, and loyalty to the interests of the Company and its shareholders;
⢠The ability to exercise objectivity and independence in making informed decisions;
⢠The ability to communicate effectively and collaborate with other Board members to contribute effectively to the diversity of perspectives that enhances Board and Committee deliberations, including a willingness to listen and respect the views of others; and
⢠The skills, knowledge and expertise relevant to the Company''s business, with extensive experience at a senior leadership level in a comparable company or organization, including, but not limited to relevant experience in treasury operations, finance, accounting, strategic planning, technology, human resources, legal matters etc.;
⢠Directors must possess experience/capability at policy-making and operational levels in large/mid-level organizations that will indicate their ability to make meaningful contributions to the Board''s discussion and decision making in the array of complex issues facing a financial conglomerate;
⢠Directors should be able to balance the legitimate interests and concerns of all the Company''s stakeholders in arriving at decisions; and
⢠Directors shall abide with the Code of Conduct for Directors and Senior Management.
In addition, directors must be willing to devote sufficient time and energy in carrying out their duties and responsibilities effectively. They must have the aptitude to critically evaluate management''s working as a part of a team in an environment of collegiality and trust.
The Committee evaluates each individual with the object of having a group that best enables the success of the Company''s business.
Qualifications and tenure of Directors as per Companies Act, 2013
The Act has also prescribed certain criteria for qualification of directors, which has since been adopted by the Company i.e.:
Section 196 and Schedule V (Part-l) (for the appointment of Managing Director, Whole Time Director and Manager),
Section 149 (for appointment of Independent Directors) and any other applicable provisions of Companies Act, 2013 and Rules made thereunder.
Further, a Director should not be disqualified in terms of Section 164 of the Act. What constitutes independence for Directors
For a Director to be considered Independent, the Board determines that the Director does not have any direct or indirect material pecuniary relationship with the company. The Board has adopted guidelines to determine independence, which are in line with the applicable legal requirements as stated in Section 149 of the Companies Act, 2013 and the Rules made thereunder read with Listing Regulations. Apart from the provisions laid down under the Companies Act, 2013 and Listing Regulations, the Board also considers all relevant facts and circumstances, not merely from the standpoint of the Directors but also from that of persons or organizations with which the director has an affiliation in forming an opinion on the independence of the concerned director(s).
The criteria of independence is provided in the Section 149 of the Companies Act, 2013 and Listing Regulations. The Company also obtains an annual declaration from all Independent Directors confirming that they meet the requirements of an Independent Director as per the Companies Act, 2013 and Listing Regulations.
Succession Planning
A planned programme of recruitment and retirement amongst Board members and senior management is of significant importance.
It is an important part of the Board''s work to ensure that there is adequate management development and succession planning particularly at the top levels. Succession planning also involves an assessment of the challenges and opportunities facing the company, and an evaluation of the skills and expertise that will be needed in the future. The Nomination and Remuneration Committee is to provide support on this. Both executive and non-executive requirements shall be considered. The Committee shall satisfy itself that processes and plans are in place for orderly succession for appointments to the Board and to senior management to maintain an appropriate balance of skills on the Board and in the company.
In addition, the annual appraisal assessment process for all the employees including the senior management personnel has succession planning and employee progression as one of the key attributes.
The process is institutionalized in the Company''s HR framework and by design, it is the responsibility of the superiors to identify the succession path and suggest the training and development of skill necessary for the company executives or suggest new recruitment wherever gaps exist.
Board Diversity
In accordance with the requirements of the Listing Regulations, atleast half of the Board shall comprise of Independent Directors. Further, atleast one woman director should also be there. The Committee, along with the Board, reviews on an annual basis, appropriate skills, characteristics and experience required from the Board as a whole and its individual members. The objective is to have a Board with diverse background and experience in business, government, academics, technology and in the areas that are relevant for the Company''s operations.
Thus, the Committee should strive for a diversified Board consisting of executive and non-executive members (more of non-executive). At present, the Board consists of 2 executive members and 6 non-executive members.
The Board of the Company always strives to maintain equilibrium between the Independent Directors and Non-independent Directors.
General
Any or all provisions of this Policy would be subject to revision/amendment in accordance with the guidelines etc. on the subject as may be issued by Government/regulatory bodies etc., from time to time.
On behalf of Board of Directors |
|
Date: July 17, 2018 |
(Sunil Mehta) |
Place: New Delhi |
Chairman |
DIN: 07430460 |
Annexure B
REPORT ON CSR ACTIVITIES/ INITIATIVES
[Pursuant to Section 135 of the Act & Rules made thereunder]
1. A brief outline of the company''s CSR policy, including overview of the projects or programmes proposed to be undertaken and reference to the web-link to the CSR Policy and projects or programmes
As a Responsible Corporate Citizen, PNB Gilts Ltd. endeavours to ensure an increased commitment at all levels in the organization to operate its business in an economically and socially sustainable manner, while recognising the interests of all its stakeholders and directly or indirectly taking up programmes that benefit the society at large.
The focus area of CSR activity of the Company is education or research in the field of finance/debt markets and working in the field of education for economically weaker sections.
The Company can also pool funds with the group companies, peer companies in Primary Dealer industry or Fixed Income Money Market and Derivatives Association of India (FIMMDA). It can join the eligible initiatives of CSR by any organ of parent bank and can also make contribution to the Prime Minister''s National Relief Fund etc. For more information, please refer CSR policy of the Company at the link http://pnbgilts.com/data/ governence/1523278002.pdf.
2. Composition of the CSR Committee
The composition of the CSR Committee during FY 2017-18 was as under -
Name of Director |
Position |
Sh. K. V. Brahmaji Rao |
Chairman |
Dr. Kamal Gupta |
Member |
Sh. S. K. Dubey |
Member |
3. Average Net Profit of the Company for last 3 financial years : Rs 14577.94 lacs
4. Prescribed CSR expenditure (2 per cent of amount) - Rs 291.56 lacs
5. Details of CSR spent during the financial year:
(a) Total amount to be spent during the financial year - Rs 291.56 lacs
(b) Amount un-spent, if any - Nil
(c) Manner in which the amount spent during financial year is detailed below:
Sr. No. |
CSR project/ activity identified |
Sector in which the Project is covered |
Projects/ Programmes 1 . Local area/ others 2. Specify the state and district where project/ programme was undertaken |
Amount outlay (budget) project/ programme wise |
Amount spent on the project/ programme Sub-heads: 1. Direct expenditure on project/ programme 2. Overheads: |
Cumulative expenditure up to the reporting period |
Amount spent: Direct/ through implementing agency |
1 |
Contribution to Prime Minister''s National Relief Fund |
Rs 291. 56 lacs |
Rs 291 .56 lacs (Direct) |
Rs 29 1.56 lacs |
Direct-Rs 29 1.56 lacs |
6. In case the company has failed to spend the 2 per cent of the average net profit of the last 3 financial years or any part thereof, reasons for not spending the amount in its Board Report - Not Applicable.
7. Responsibility Statement by the CSR Committee -
We hereby affirm that CSR policy, as approved by the Board, has been implemented and the CSR Committee monitors the implementation of the CSR projects and activities in compliance with CSR objectives and policy of the Company.
Date : June 12, 2018 |
(S. K. Dubey) |
(Kamal Gupta) |
Place : New Delhi |
Managing Director |
Chairman, CSR Committee |
DIN: 01 770805 |
DIN: 00038490 |
Form AOC-2
Disclosure of particulars of contracts/arrangements entered into by the Company with related parties referred to in Sub-section (1) of Section 188 of the Companies Act, 2013 including certain arms length transactions under third proviso thereto:
1. Details of contracts / arrangements or transactions entered into during the financial year ended March 31, 2018, which were not at arm''s length basis :
1 |
Name(s) of the related party and nature of relationship |
Punjab National Bank (PNB), parent bank |
Punjab National Bank (PNB), parent bank |
I Punjab National Bank (PNB), parent bank |
I Punjab National Bank (PNB), parent bank |
2 |
Nature of contracts/ arrangements/ transactions |
Availing or rendering of any services |
Leasing of property (residential premises) |
Leasing of property (business premises) |
Leasing of property (business premises) |
3 |
Duration of the contracts / arrangements/ transactions |
Mutual arrangement on continuous basis for holding various meetings like meetings of Board and its Committees, general meetings and other meetings of the company at the premises of PNB and vice-a-versa. |
Residential Flats of the Company to PNB officers as per their entitlement in PNB for a period of 11 months, with two/more extensions. |
Business premises from PNB taken on lease / rent sharing arrangement - Mumbai Branch Office: The lease for 5 years is effective from September, 2016, renewable after every five years. |
Business premises from PNB taken on lease / rent sharing arrangement - Chennai Branch Office: The premises has been provided under a mutual rent sharing arrangement by PNB since 15.05.12 on the basis of area occupied. The said premises has been taken by PNB on lease from Tamil Nadu Khadi and Village Industries Board, Tamil Nadu (State Govt. Department) for a period of 5 years (subject to continuation of their office at this place), extendable for a period as may be decided between the said Board and PNB. |
4 |
Salient terms of the contracts or arrangements or transaction including the value, if any |
No transaction value is there as these transactions are being done in view of parent- subsidiary relationship and on mutual understanding. |
Residential premises: Rent is as per the lease entitlement of PNB officers in PNB. |
Mumbai Branch Office: Rent at present is Rs 273434/- p.m. plus taxes |
Chennai Branch Office: Rent at present is Rs 12250/- p.m. plus taxes. (The rent is subject to enhancement as may be done by above said State Govt Department.) |
5 |
Justification for entering into such contracts or arrangements or transactions |
The Company and parent bank are entering into these transactions due to its parent- subsidiary relationship. |
The Company and parent bank are entering into these transactions due to its parent-subsidiary relationship. As a matter of policy, the Company does not enter such property related transactions with outside parties. Further, the Company will also be able to get their residential flats vacated at any time they need the same for their officers/ sale. |
The Company and parent bank are entering into these transactions due to its parent- subsidiary relationship. |
The Company and parent bank are entering into these transactions due to its parent- subsidiary relationship. |
6 |
Date(s) of approval by the Board |
03.08.2015 |
29.01.2015 |
26.10.2016 |
30.07.2016 |
7 |
Amount paid as advances, if any |
Nil |
Nil |
Nil |
Nil |
8 |
Date on which the special resolution was passed in general meeting as required under first proviso to Section 188 of the Act |
Not required as the same is below the limit specified under first proviso to Section 188 of the Companies Act, 2013 and Rules made thereunder |
Not required as the same is below the limit specified under first proviso to Section 188 of the Companies Act, 2013 and Rules made thereunder |
Not required as the same is below the limit specified under first proviso to Section 188 of the Companies Act, 2013 and Rules made thereunder |
Not required as the same is below the limit specified under first proviso to Section 188 of the Companies Act, 2013 and Rules made thereunder |
2. Details of material contracts or arrangement or transactions at arm''s length basis -
There were no material contracts or arrangement or transactions entered into during the financial year ended March 31, 2018.
On behalf of Board of Directors |
|
Date: July 17, 2018 |
(Sunil Mehta) |
Place : New Delhi |
Chairman |
DIN: 07430460 |
Annexure D Particulars of Employees Pursuant to the Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the information is furnished below:
a. The ratio of the remuneration of each director to the median remuneration of the employees of the company for the financial year 2017-18
(Rs in lacs) |
|||||
SI. No |
Name of Director |
Director''s Remuneration |
Employee Median Remuneration |
Ratio (No. of times) |
|
1 |
Sh. Sunil Mehta |
1.00 |
12.08 |
0.08 |
|
2 |
Sh. K. V. Brahmaji Rao |
1.50 |
0.12 |
||
3 |
Dr. Kamal Gupta |
3.40 |
0.28 |
||
4 |
Sh. S. K. Soni |
3.15 |
0.26 |
||
5 |
Sh. P. P. Pareek |
2.20 |
0.18 |
||
6 |
Sh. R. S. Ramasubramaniam |
3.70 |
0.31 |
||
7 |
Sh. S. K. Dubey* |
82.29** |
6.81 |
||
8 |
Smt. Sunita Gupta |
65.13** |
5.39 |
* He also receives pension from PNB, being an ex-employee.
** Above remuneration includes variable pay (Performance linked incentive) which is paid based on performance of the company and employee in the last financial year i.e. on deferred basis, as recommended by the Nomination & Remuneration Committee and approved by the Board.
During 2017-18, variable pay of Rs 39.10 lacs and Rs 29.25 lacs (Prev. Year: Rs 7.21 lacs and Rs 5.40 lacs) was paid to the Managing Director and Executive Director & CFO, at SI. No. 7 and 8 above, respectively. Apart from this, benefit on account of leave encashment and gratuity which are provided based on actuarial valuation for the company as a whole, is also available.
Notes: 1. Directors at SI. No. 1 to 6 are Non-Executive Directors and only sitting fee has been paid. Sitting fee of promoter directors at SI. No. 1 and 2 has been paid to Punjab National Bank, who is the promoter of the Company, as per the instructions received from said bank/directors.
2. Out of pocket expenses incurred by them for attending the meetings and service tax not taken into account.
b. The percentage increase in remuneration of each Director, Chief Financial Officer, Chief Executive Officer, Company Secretary or Manager, if any, in the financial year:
SI. No |
Name of Director and Key Managerial Personnel |
% increase in remuneration |
1 |
Sh. Sunil Mehta** |
- |
2 |
Sh. K. V. Brahmaji Rao** |
7.14 |
3 |
Dr. Kamal Gupta** |
(19.05) |
4 |
Sh. S. K. Soni** |
(8.70) |
5 |
Sh. P. P. Pareek** |
(2.22) |
6 |
Sh. R. S. Ramasubramaniam** |
1.37 |
7 |
Sh. S. K. Dubey |
67.62 |
8 |
Smt. Sunita Gupta |
58.68 |
9 |
Smt. Monika Kochar |
45.72 |
* Details not given, as he was not director in the financial year 2016-17.
** received only sitting fee during the year. Sitting fee of Promoter Director at SI. No. 2 has been paid to PNB as per instructions.
Note: Above remuneration includes variable pay (Performance linked incentive) which is paid based on performance of the company and employee in the last financial year i.e. on deferred basis, as recommended by the Nomination & Remuneration Committee and approved by the Board. During 2017-18, variable pay of Rs 39.10 lacs, Rs 29.25 lacs and Rs 7.50 lacs (Prev. Year: Rs 7.21 lacs, Rs 5.40 lacs and Rs 1.32 lacs) was paid to the Managing Director, Executive Director & CFO and Company Secretary, at SI. No. 7, 8 and 9 above, respectively. Apart from this, benefit on account of leave encashment and gratuity which are provided based on actuarial valuation for the company as a whole, is also available.
c. In the financial year 2017-18, there was an increase of 20.68 per cent in the median remuneration of employees.
d. Total number of employees of the Company as on March 31, 2018 were 36 (including 3 employees on deputation from parent bank). The Company has maintained peaceful and harmonious relations with all its employees.
e. Average percentile increase already made in the salaries of employees other than the managerial personnel in FY 2017-18 was 31.51 per cent whereas the increase in managerial remuneration was 63.15 per cent in this period. This was based on the recommendations of Nomination and Remuneration Committee, based on industry benchmarks and the respective employee''s performance and contribution. The Company''s remuneration philosophy is to ensure that it is competitive in the Primary Dealer (PD) industry in which it operates, for attracting and retaining the best talent. Further, the remuneration includes variable pay (Performance linked incentive) which is paid based on performance of the company and employee in the last financial year i.e. on deferred basis. The remuneration is in line with the PD industry benchmarks.
f. It is hereby affirmed that the remuneration paid is as per the Remuneration policy of the Company.
On behalf of Board of Directors |
|
(Sunil Mehta) |
|
Date: July 17, 2018 |
Chairman |
Place: New Delhi |
DIN: 07430460 |
Annexure E
Form No. MGT-9
EXTRACT OF ANNUAL RETURN as on the financial year ended on March 31, 2018 of
PNB GILTS LIMITED
[Pursuant to Section 92(1) of the Companies Act, 2013 and rule 12(1) of the Companies (Management and Administration) Rules, 2014
I. Registration and other details: |
|
i) Corporate Identity Number (GIN) |
L74899DL1996PLC077120 |
ii) Registration Date |
March 13, 1996 |
iii) Name of the Company |
PNB Gilts Limited |
iv) Category / Sub-Category of the Company |
Public Limited Company |
v) Address of the Registered Office and Contact details |
5, Sansad Marg, New Delhi, India, PIN -11 0001 Tel : 01 1-23325759, 23325779 Fax : 011-23325751 , 23325763 Email: [email protected] website: www.pnbgilts.com |
vi) Whether listed company (Yes/No) |
Yes |
vii) Name, Address and contact details of Registrar & Transfer Agents (RTA) |
MCS Share Transfer Agent Limited (Unit: PNB Gilts) F-65, 1st Floor, Okhla Industrial Area, Phase - 1, New Delhi, India. PIN-1 10 020 Tel.: 01 1-41 4061 49-52 Fax No.: 011-41709881 E-mail : [email protected] website:www.mcsregistra rs.com |
II. PRINCIPAL BUSINESS ACTIVITIES OF THE COMPANY
All the business activities contributing 10 per cent or more of the total turnover of the company is as under:-
SI. No. |
Name and Description of main products / services |
NIC Code of the Product/ service |
% to total turnover of the company |
1 |
Securities Trading |
6599 |
100.00 |
III. PARTICULARS OF HOLDING, SUBSIDIARY AND ASSOCIATE COMPANIES -
s. No. |
Name and Address of the company |
CIN/GLN |
Holding /Subsidiary/ Associate |
% of shares held |
Applicable Section |
1. |
Punjab National Bank |
PUNB |
Holding |
74.07 |
2(46) |
(ii) Shareholding of Promoters
SI No. |
Shareholder''s Name |
Shareholding at the beginning of the year |
Share holding at the end of the year |
% Change in share holding during the year |
||||
No. of Shares |
% of total shares of the company |
% of Shares Pledged / encumbered to total shares |
No. of Shares |
% of total shares of the company |
% of Shares Pledged / encumbered to total shares |
|||
1. |
Punjab National Bank |
133333333 |
74.07 |
0 |
133333333 |
74.07 |
0 |
0 |
(iii) Change in Promoters'' Shareholding
SI. No. |
Particulars |
Shareholding at the beginning of the year |
Cumulative Shareholding during the year |
||
No. of shares |
% of total shares of |
No. of shares |
% of total shares of |
||
the company |
the company |
||||
At the beginning of the year |
133333333 |
74.07 |
133333333 |
74.07 |
|
Date wise Increase / |
|||||
Decrease in Promoters |
|||||
Share holding during the Year specifying the reasons for increase / decrease |
NIL |
||||
(e.g. allotment / transfer / bonus/ sweat equity etc) |
|||||
At the end of the year |
133333333 |
74.07 |
133333333 |
74.07 |
(iv) Shareholding Pattern of top ten Shareholders (other than Directors, Promoters and Holders of GDRs and ADRs):
SI. No. |
Name |
Shareholding |
Date |
Increase/ (Decrease) in share- holding |
Reason |
Cumulative Shareholding during the year (01-04-17 to 31-03-18) |
||
No. of Shares at the beginning (01 -04-1 7)/ end of the year (31-03-2018) |
% of total shares of the Company |
No. of shares |
% of total Shares of the company |
|||||
1 |
Morgan Stanley |
1753377 |
0.97 |
01/04/2017 |
||||
Mauritius Company |
07/04/2017 |
(5695) |
Sale |
1747682 |
0.97 |
|||
Ltd. |
15/09/2017 |
(53310) |
Sale |
1694372 |
0.94 |
|||
22/09/2017 |
(183543) |
Sale |
1510829 |
0.84 |
||||
29/09/2017 |
(169005) |
Sale |
1341824 |
0.75 |
||||
06/10/2017 |
(58527) |
Sale |
1283297 |
0.71 |
||||
1283297 |
0.71 |
31/03/2018 |
1283297 |
0.71 |
||||
2 |
The Oriental |
630866 |
0.35 |
01/04/2017 |
||||
Insurance Company Limited |
630866 |
0.35 |
31/03/2018 |
0 |
Nil |
630866 |
0.35 |
|
3 |
Mala Rajan |
585938 |
0.33 |
01/04/2017 |
||||
Bharvani |
585938 |
0.33 |
31/03/2018 |
0 |
Nil |
585938 |
0.33 |
|
4 |
Narnolia Capital |
188932 |
0.11 |
01/04/2017 |
||||
Advisors Private |
07/04/2017 |
(7500) |
Sale |
181432 |
0.10 |
|||
Limited |
14/04/2017 |
(5364) |
Sale |
176068 |
0.10 |
|||
21/04/2017 |
(4500) |
Sale |
171568 |
0.10 |
||||
28/04/2017 |
(10000) |
Sale |
161568 |
0.09 |
||||
05/05/2017 |
(4200) |
Sale |
157368 |
0.09 |
||||
12/05/2017 |
(8000) |
Sale |
149368 |
0.08 |
19/05/2017 |
(2000) |
Sale |
147368 |
0.08 |
||||
26/05/2017 |
28110 |
Purchase |
175478 |
0.10 |
||||
02/06/2017 |
48828 |
Purchase |
224306 |
0.12 |
||||
09/06/2017 |
3000 |
Purchase |
227306 |
0.13 |
||||
16/06/2017 |
63808 |
Purchase |
291114 |
0.16 |
||||
30/06/2017 |
(3000) |
Sale |
288114 |
0.16 |
||||
04/08/2017 |
(5500) |
Sale |
282614 |
0.16 |
||||
11/08/2017 |
(3000) |
Sale |
279614 |
0.16 |
||||
18/08/2017 |
(2000) |
Sale |
277614 |
0.15 |
||||
01/09/2017 |
(1900) |
Sale |
275714 |
0.15 |
||||
08/09/2017 |
(6000) |
Sale |
269714 |
0.15 |
||||
15/09/2017 |
(3500) |
Sale |
266214 |
0.15 |
||||
22/09/2017 |
(15000) |
Sale |
251214 |
0.14 |
||||
29/09/2017 |
(5000) |
Sale |
246214 |
0.14 |
||||
06/10/2017 |
39250 |
Purchase |
285464 |
0.16 |
||||
20/10/2017 |
13871 |
Purchase |
299335 |
0.17 |
||||
27/10/2017 |
(2000) |
Sale |
297335 |
0.17 |
||||
31/10/2017 |
(3000) |
Sale |
294335 |
0.16 |
||||
03/11/2017 |
(5300) |
Sale |
289035 |
0.16 |
||||
10/11/2017 |
(34000) |
Sale |
255035 |
0.14 |
||||
17/11/2017 |
17690 |
Purchase |
272725 |
0.15 |
||||
08/12/2017 |
32000 |
Purchase |
304725 |
0.17 |
||||
29/12/2017 |
18129 |
Purchase |
322854 |
0.18 |
||||
05/01/2018 |
(7000) |
Sale |
315854 |
0.18 |
||||
12/01/2018 |
(10500) |
Sale |
305354 |
0.17 |
||||
19/01/2018 |
(7500) |
Sale |
297854 |
0.17 |
||||
26/01/2018 |
30900 |
Purchase |
328754 |
0.18 |
||||
02/02/2018 |
(6500) |
Sale |
322254 |
0.18 |
||||
09/02/2018 |
28500 |
Purchase |
350754 |
0.19 |
||||
23/02/2018 |
28000 |
Purchase |
378754 |
0.21 |
||||
02/03/2018 |
(14000) |
Sale |
364754 |
0.20 |
||||
09/03/2018 |
(24500) |
Sale |
340254 |
0.19 |
||||
23/03/2018 |
26000 |
Purchase |
366254 |
0.20 |
||||
31/03/2018 |
214128 |
Purchase |
580382 |
0.32 |
||||
580382 |
0.32 |
31/03/2018 |
580382 |
0.32 |
||||
5 |
Bengal Vipanapan |
440043 |
0.24 |
01/04/2017 |
||||
Pvt. Ltd |
440043 |
0.24 |
31/03/2018 |
0 |
Nil |
440043 |
0.24 |
|
6 |
Vikas Kumar |
328037 |
0.18 |
01/04/2017 |
||||
Agarwal |
13/10/2017 |
(6) |
Sale |
328031 |
0.18 |
|||
328031 |
0.18 |
31/03/2018 |
328031 |
0.18 |
||||
7 |
Acatis India |
0 |
0.00 |
01/04/2017 |
||||
Value Equities |
16/02/2018 |
74800 |
Purchase |
74800 |
0.04 |
|||
23/02/2018 |
241548 |
Purchase |
316348 |
0.18 |
||||
316348 |
0.18 |
31/03/2018 |
316348 |
0.18 |
||||
8 |
Nahar Capital and |
225733 |
0.13 |
01/04/2017 |
||||
Financial Services |
17/11/2017 |
25000 |
Purchase |
250733 |
0.14 |
|||
Ltd. |
08/12/2017 |
312 |
Purchase |
251045 |
0.14 |
|||
15/12/2017 |
24688 |
Purchase |
275733 |
0.15 |
||||
22/12/2017 |
25000 |
Purchase |
300733 |
0.17 |
||||
05/01/2018 |
(20455) |
Sale |
280288 |
0.16 |
||||
12/01/2018 |
(25982) |
Sale |
254306 |
0.14 |
19/01/2018 |
(28573) |
Sale |
225733 |
0.13 |
||||
16/02/2018 |
85000 |
Purchase |
310733 |
0.17 |
||||
310733 |
0.17 |
31/03/2018 |
310733 |
0.17 |
||||
9 |
AJO Emerging |
0 |
0.00 |
01/04/2017 |
||||
Markets Small Cap |
22/09/2017 |
165105 |
Purchase |
165105 |
0.09 |
|||
Master Fund Ltd. |
29/09/2017 |
147707 |
Purchase |
312812 |
0.17 |
|||
06/10/2017 |
103622 |
Purchase |
416434 |
0.23 |
||||
31/10/2017 |
(7817) |
Sale |
408617 |
0.23 |
||||
03/11/2017 |
(89890) |
Sale |
318727 |
0.18 |
||||
02/03/2018 |
(8566) |
Sale |
310161 |
0.17 |
||||
310161 |
0.17 |
31/03/2018 |
310161 |
0.17 |
||||
10 |
General Insurance |
300000 |
0.17 |
01/04/2017 |
||||
Corporation of India |
300000 |
0.17 |
31/03/2018 |
0 |
Nil |
300000 |
0.17 |
|
11 |
Dilipkumar Lakhi* |
300000 |
0.17 |
01/04/2017 |
||||
12/05/2017 |
(32108) |
Sale |
267892 |
0.15 |
||||
11/08/2017 |
(15000) |
Sale |
252892 |
0.14 |
||||
19/01/2018 |
(12892) |
Sale |
240000 |
0.13 |
||||
240000 |
0.13 |
31/03/2018 |
240000 |
0.13 |
||||
12 |
Edelweiss |
274498 |
0.15 |
01/04/2017 |
||||
Custodial Services |
07/04/2017 |
41754 |
Purchase |
316252 |
0.18 |
|||
Ltd.* |
14/04/2017 |
8272 |
Purchase |
324524 |
0.18 |
|||
05/05/2017 |
17096 |
Purchase |
341620 |
0.19 |
||||
12/05/2017 |
(1074) |
Sale |
340546 |
0.19 |
||||
19/05/2017 |
1074 |
Purchase |
341620 |
0.19 |
||||
26/05/2017 |
(6113) |
Sale |
335507 |
0.19 |
||||
02/06/2017 |
(192042) |
Sale |
143465 |
0.08 |
||||
09/06/2017 |
3452 |
Purchase |
146917 |
0.19 |
||||
16/06/2017 |
2731 |
Purchase |
149648 |
0.08 |
||||
23/06/2017 |
14864 |
Purchase |
164512 |
0.09 |
||||
30/06/2017 |
35985 |
Purchase |
200497 |
0.11 |
||||
07/07/2017 |
37484 |
Purchase |
237981 |
0.12 |
||||
14/07/2017 |
79691 |
Purchase |
317672 |
0.18 |
||||
21/07/2017 |
64929 |
Purchase |
382601 |
0.21 |
||||
28/07/2017 |
17403 |
Purchase |
400004 |
0.22 |
||||
04/08/2017 |
63786 |
Purchase |
463790 |
0.26 |
||||
11/08/2017 |
(31137) |
Sale |
432653 |
0.24 |
||||
18/08/2017 |
31137 |
Purchase |
463790 |
0.26 |
||||
25/08/2017 |
(197913) |
Sale |
265877 |
0.15 |
||||
01/09/2017 |
2374 |
Purchase |
268251 |
0.15 |
||||
08/09/2017 |
3731 |
Purchase |
271982 |
0.15 |
||||
15/09/2017 |
(6581) |
Sale |
265401 |
0.15 |
||||
22/09/2017 |
(60742) |
Sale |
204659 |
0.11 |
||||
29/09/2017 |
(22602) |
Sale |
182057 |
0.10 |
||||
30/09/2017 |
(312) |
Sale |
181745 |
0.10 |
||||
06/10/2017 |
5400 |
Purchase |
187145 |
0.10 |
13/10/2017 |
(3851) |
Sale |
183294 |
0.10 |
||||
27/10/2017 |
(113) |
Sale |
183181 |
0.10 |
||||
31/10/2017 |
9402 |
Purchase |
192583 |
0.11 |
||||
03/11/2017 |
16172 |
Purchase |
208755 |
0.12 |
||||
10/11/2017 |
(24876) |
Sale |
183879 |
0.10 |
||||
17/11/2017 |
(1697) |
Sale |
182182 |
0.10 |
||||
24/11/2017 |
(32873) |
Sale |
149309 |
0.08 |
||||
01/12/2017 |
14979 |
Purchase |
164288 |
0.09 |
||||
08/12/2017 |
33228 |
Purchase |
197516 |
0.11 |
||||
15/12/2017 |
15940 |
Purchase |
213456 |
0.12 |
||||
22/12/2017 |
61840 |
Purchase |
275296 |
0.15 |
||||
29/12/2017 |
(1070) |
Sale |
274226 |
0.15 |
||||
30/12/2017 |
(716) |
Sale |
273510 |
0.15 |
||||
05/01/2018 |
(3215) |
Sale |
270295 |
0.15 |
||||
23/02/2018 |
(35909) |
Sale |
234386 |
0.13 |
||||
09/03/2018 |
(7218) |
Sale |
227168 |
0.13 |
||||
16/03/2018 |
5278 |
Purchase |
232446 |
0.13 |
||||
31/03/2018 |
(55322) |
Sale |
177124 |
0.10 |
||||
177124 |
0.10 |
31/03/2018 |
177124 |
0.10 |
||||
13 |
Gaurav Manocha* |
260556 |
0.14 |
01/04/2017 |
||||
260556 |
0.14 |
31/03/2018 |
0 |
Nil |
260556 |
0.14 |
(v). Shareholding of Directors and Key Managerial Personnel:
s. No. |
Name |
Shareholding |
Date |
Increase/ (Decrease) in Shareholding |
Reason |
Cumulative shareholding during the year (01-04-17 to 31 -03-1 8) |
||
No. of Shares at beginning (01 -04-1 7) / end of the year (31-03-18) |
% of total shares of the Company |
No. of Shares |
% of total shares of the Company |
|||||
1 |
Sh. P. P Pareek, Director |
1333 |
0.00 |
01/04/2017 |
NIL |
|||
1333 |
0.00 |
31/03/2018 |
0 |
1333 |
0.00 |
The following Directors and Key Managerial Personnel (KMP) did not hold/held any shares during the financial year 2017-18
a. Smt. Usha Ananthasubramanian - Chairperson1
b. Sh. Sunil Mehta - Chairman1
c. Sh. K. V. Brahmaji Rao - Director
d. Dr. Kamal Gupta - Director
e. Sh. S. K. Soni - Director
f. Sh. R. S. Ramasubramaniam - Director
g. Sh. S. K. Dubey - Managing Director (KMP)
h. Smt. Sunita Gupta, Executive Director and CFO (KMP)
i. Smt. Monika Kochar - Company Secretary (KMP)
''directorship held for part of the year.
V. INDEBTEDNESS
Indebtedness of the Company including interest outstanding/accrued but not due for payment
(Rs in lacs) |
||||
Particulars |
Secured Loans excluding deposits |
Unsecured Loans |
Deposits |
Total Indebtedness |
Indebtendness at the beginning of the financial year |
||||
i) Principal Amount |
155219.24 |
196173.71 |
- |
351392.95 |
ii) Interest due but not paid |
- |
- |
- |
- |
iii) Interest accrued but not due |
34.17 |
51.77 |
- |
85.94 |
Total (i ii iii) |
155253.41 |
196225.48 |
- |
351478.89 |
Change in Indebtedness during the financial year |
||||
Addition |
73982272.47 |
38844318.67 |
- |
112826591.10 |
Reduction |
73806026.31 |
38935092.38 |
- |
112741118.65 |
Net Change |
176246.16 |
(90773.71) |
- |
85472.45 |
Indebtedness at the end of the financial year |
||||
i) Principal Amount |
331465.40 |
105400.00 |
- |
436865.40 |
ii) Interest due but not paid |
- |
- |
- |
- |
iii) Interest accrued but not due |
226.58 |
702.49 |
- |
929.07 |
Total (i ii iii) |
331691.98 |
106102.49 |
- |
437794.47 |
VI. REMUNERATION OF DIRECTORS AND KEY MANAGERIAL PERSONNEL
A. Remuneration to Managing Director, Whole-time Directors and/or Manager:
(Rs in lacs) |
|||||
SI. No. |
Par |
ticulars of Remuneration |
Name of MD/WTD/Manager |
Total Amount |
|
Sh. S. K. Dubey, Managing Director |
Smt. Sunita Gupta, Executive Director & CFO |
||||
1. |
Gross salary |
||||
(a) |
Salary as per provisions contained in Section 17(1) of the Income-tax Act, 1961 |
42.16* |
32.28 |
74.44 |
|
(b) |
Value of perquisites under Section 17(2) Income-tax Act, 1961 |
- |
- |
- |
|
(c) |
Profits in lieu of salary under Section 17 (3) of the Income Tax Act, 1 961 |
||||
2 |
Stock Option |
- |
- |
- |
|
3 |
Sweat Equity |
- |
- |
- |
4 |
Commission |
- |
- |
- |
|
a) |
as % of profit |
- |
- |
- |
|
b) |
others |
- |
- |
- |
|
5 |
Others - |
||||
a) |
Company''s contribution to Provident Fund |
. |
2.09 |
2.09 |
|
b) |
Medical facilities |
0.15 |
- |
0.15 |
|
c) |
Child education allowance |
- |
0.01 |
0.01 |
|
d) |
Variable pay (Performance Linked Incentive ) |
39.10 |
29.25 |
68.35 |
|
e) |
Leave travel concession |
0.88 |
1.50 |
2.38 |
|
Total (A) |
82.29 |
65.13 |
147.42 |
||
Ceiling as per the Act |
Rs 775.85 lacs (being 1 0 per cent of the net profits of the Company calculated as per Section 198 of the Companies Act, 2013) |
* In addition, he also receives pension from PNB, being an ex-employee.
Note 1: Above remuneration includes variable pay (Performance linked incentive) which is paid based on performance of the company and employee in the last financial year i.e. on deferred basis, as recommended by the Nomination & Remuneration Committee and approved by the Board. During 2017-18, variable pay of Rs 39.10 lacs and Rs 29.25 lacs (Prev. Year: Rs 7.21 lacs and Rs 5.40 lacs) was paid to the Managing Director and Executive Director & CFO, respectively.
Note 2: Apart from above, benefit on account of leave encashment and gratuity which are provided based on actuarial valuation for the company as a whole, is also available.
B. Remuneration to other directors:
(Rs in lacs) |
|||||||
Particulars of Remuneration |
Name of Director |
Total Amount |
|||||
Sh Sunil Mehta |
Sh K V Brahmaji Rao |
Dr Kamal Gupta |
Sh S K Soni |
Sh P P Pareek |
Sh R S Ramasubramaniam |
||
1 Independent Directors |
|||||||
⢠Fee for attending Board / Committee meetings |
. |
. |
340 |
315 |
220 |
370 |
1245 |
⢠Commission |
- |
- |
- |
- |
- |
- |
- |
⢠Others |
- |
- |
- |
- |
- |
- |
- |
Total (1 ) |
- |
- |
340 |
315 |
220 |
370 |
1245 |
2 Other Non-Executive Directors (paid to PNB for its nominated directors) |
|||||||
⢠Fee for attending Board / Committee meetings |
1 00 |
1 50 |
- |
- |
- |
- |
250 |
⢠Commission |
- |
- |
- |
- |
- |
- |
- |
⢠Others |
- |
- |
- |
- |
- |
- |
- |
Total (2) |
1 00 |
1 50 |
- |
- |
- |
- |
250 |
Total (B)=(1 2) |
1 00 |
1 50 |
340 |
315 |
220 |
370 |
1495 |
Total Managerial Remuneration* |
16237 |
Overall Ceiling as per the Act for Directors other than Managing Director and Whole-time Directors is Rs 77.58 lacs (being 1% of the net profits of the Company calculated as per Section 198 of the Companies Act, 2013).
* total remuneration to Managing Director, Whole-time Director and other Directors (being the total of A and B) Note: Service tax/GST on above fees paid extra.
C. Remuneration to Key Managerial Personnel other than MD / Manager/WTD
(Rs in lacs) |
||||||
SI. No. |
Particulars of Remuneration |
Key Managerial Personnel |
Total Amount |
|||
CEO |
Smt. Monika Kochar, Company Secretary |
CFO |
||||
1. |
Gross salary |
Not |
Smt. Sunita |
|||
(a) ''Salary as per provisions contained in Section 17(1) of the Income-tax Act, 1961 |
Applicable |
12.98 |
Gupta, Executive |
12.98 |
||
(b) |
Value of perquisites under Section 17(2) of the Income-tax Act, 1961 |
1.51 |
Director is also CFO. |
1.51 |
||
(c) |
Profits in lieu of salary under Section 17 (3) of the Income Tax Act, 1 961 |
_ |
Hence, disclosed in A above |
_ |
||
2 |
Stock Option |
- |
- |
|||
3 |
Sweat Equity |
- |
- |
|||
4 |
Commission |
|||||
a) |
as % of profit |
- |
- |
|||
b) |
others |
- |
- |
|||
5 |
Others - |
|||||
a) |
Company''s contribution to Provident Fund |
0.92 |
0.92 |
|||
b) |
Medical facilities |
0.15 |
0.15 |
|||
c) |
Child education allowance |
- |
- |
|||
d) |
Variable pay (Performance Linked Incentive) |
7.50 |
7.50 |
|||
e) |
Leave travel concession |
0.32 |
0.32 |
|||
Total |
23.39 |
23.39 |
Note 1: Above remuneration includes variable pay (Performance linked incentive) which is paid based on performance of the company and employee in the last financial year i.e. on deferred basis, as recommended by the Nomination & Remuneration Committee and approved by the Board. During 2017-18, variable pay of Rs 7.50 lacs (Prev. Year: Rs 1.32 lacs) was paid to the Company Secretary.
Note 2: Apart from above, benefit on account of leave encashment and gratuity which are provided based on actuarial valuation for the company as a whole, is also available.
VII. PENALTIES / PUNISHMENT/ COMPOUNDING OF OFFENCES:
Type |
Section of the Companies Act |
Brief Description |
Details of Penalty /Punishment/ Compounding fees imposed |
Authority [RD/ NCLT/ COURT] |
Appeal made, if any (give Details) |
|
A. |
COMPANY |
NIL | ||||
Penalty |
||||||
Punishment |
||||||
Compounding |
||||||
B. |
DIRECTORS |
|||||
Penalty |
||||||
Punishment |
||||||
Compounding |
||||||
C. |
OTHER OFFICERS IN DEFAULT |
|||||
Penalty |
||||||
Punishment |
||||||
Compounding |
On behalf of Board of Directors |
|
(Sunil Mehta) |
|
Date: July 17, 2018 |
Chairman |
Place: New Delhi |
DIN: 07430460 |
Annexure F
Form No. MR-3
SECRETARIAL AUDIT REPORT
FOR THE FINANCIAL YEAR ENDED 31ST MARCH, 2018
[Pursuant to Section 204(1) of the Companies Act, 2013 and Rule No.9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014]
To,
The Members,
PNB Gilts Limited,
5, Sansad Marg, New Delhi-110001
We have conducted the Secretarial Audit of the compliance of applicable statutory provisions and the adherence to good corporate practices by PNB Gilts Limited (hereinafter called "the Company") for the audit period covering the financial year ended on March 31, 2018. Secretarial Audit was conducted in a manner that provided us a reasonable basis for evaluating the corporate conducts/statutory compliances and expressing our opinion thereon.
Based on our verification of the Company''s books, papers, minute books, forms and returns filed and other records maintained by the Company and also the information provided by the Company, its officers, agents and authorised representatives during the conduct of Secretarial Audit, the explanations and clarifications given to us and the representation made by the management, we hereby report that in our opinion, the Company has, during the audit period under consideration complied with the statutory provisions listed hereunder and also that the Company has proper Board-processes and compliance-mechanism in place to the extent, in the manner and subject to the reporting made hereinafter:
We have examined the books, papers, minute books, forms and returns filed and other records maintained by the Company for the financial year ended on March 31, 2018, according to the provisions of:
(i) The Companies Act, 2013 (''the Act'') and the Rules made thereunder;
(il) The Securities Contracts (Regulation) Act, 1956 (''SCRA'') and the Rules made thereunder;
(iii) The Depositories Act, 1996 and the Regulations and Bye-laws framed thereunder;
(iv) Foreign Exchange Management Act, 1999 and the Rules and Regulations made thereunder to the extent of Foreign Direct Investment, Overseas Direct Investment and External Commercial Borrowings - Not applicable to the Company during the audit period;
(v) The following Regulations and Guidelines prescribed under the Securities and Exchange Board of India Act, 1992(''SEBI Act''):-
(a) The Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011;
(b) The Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015;
(c) The Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009 - Not applicable to the Company during the audit period;
(d) The Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 - Not applicable to the Company during the audit period;
(e) The Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008 -Not applicable to the Company during the audit period;
(f) The Securities and Exchange Board of India (Registrars to an Issue and Share Transfer Agents) Regulations, 1993 regarding the Companies Act and dealing with client - Not applicable to the Company during the audit period;
(g) The Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2009 - Not applicable to the Company during the audit period;
(h) The Securities and Exchange Board of India (Buy back of Securities) Regulations, 1998 - Not applicable to the Company during audit period; and
(i) SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015; (vi) Reserve Bank of India Act, 1934 and Guidelines made thereunder; and
(vii) RBI guidelines/Master Directions for NBFCs/Systemically Important Non-deposit taking Non-Banking Financial Companies (NBFC-ND- SI) and Primary Dealers.
We have also examined compliance with the applicable clauses of the following:
(i) Secretarial Standards with respect to Meetings of Board of Directors (SS-1) and General Meetings (SS-2) issued by The Institute of Company Secretaries of India.
During the period under review, the Company has complied with the provisions of the Act, Rules, Regulations, Guidelines, Standards, etc. mentioned above and other appicable Acts.
We further report that, based on the information provided and the representation made by the Company and also on the review of the internal compliance reports taken on record by the Board of Directors of the Company, in our opinion, adequate systems and processes exist in the Company to monitor and ensure compliance with the provisions of applicable industry specific Acts, general laws like labour laws and environmental laws etc.
During the audit period, there were no major events which had bearing on the Company''s affairs in pursuance of above referred laws, rules, regulations, guidelines etc.
We further report that, the compliance by the Company of applicable financial laws like direct and indirect tax laws and maintenance of financial records and books of accounts has not been reviewed in this Audit since the same have been subject to review by statutory financial audit and other designated professionals.
We further report that-
The Board of Directors of the Company is duly constituted with proper balance of Executive Directors, Non-Executive Directors, Independent Directors and Woman Director. The changes in the composition of the Board of Directors that took place during the period under review were carried out in compliance with the provisions of the Act.
Adequate notice is given to all Directors to schedule the Board Meetings; agenda and detailed notes on agenda were sent at least seven days in advance, and a system exists for seeking and obtaining further information and clarifications on the agenda items before the meeting and for meaningful participation at the meeting.
All decisions at the Board Meetings and Committee Meetings were carried out unanimously as recorded in the minutes of the Meetings of the Board of Directors or Committee(s) of the Board, as the case may be.
We further report that there are adequate systems and processes in the Company commensurate with the size and operations of the Company to monitor and ensure compliance with applicable laws, rules, regulations and guidelines.
For Pranav Kumar & Associates |
|
Company Secretaries |
|
Pranav Kumar |
|
Partner |
|
Place: Ghaziabad |
FCS:5013 |
Date: May 2, 2018 |
CP No.:3429 |
Mar 31, 2017
The Directors are pleased to present the Twenty First Annual Report together with the Companyâs audited financial statements for the financial year ended March 31, 2017.
1. RESULTS OF OUR OPERATIONS AND STATE OF AFFAIRS
The Companyâs financial performance, for the year ended March 31, 2017 is summarized below:
(Rs, in lacs)
For the year ended 31.3.2017 |
For the year ended 31.3.2016 |
|
Total Income |
50054.47 |
34339.65 |
Less : Total Expenditure |
24400.36 |
29195.04 |
Add: Prior Period Income |
- |
2.62 |
Profit/(loss) Before Tax |
25654.11 |
5147.23 |
Less : Provision for Income Tax (including deferred tax) |
8936.73 |
1697.58 |
Profit /(loss) After Tax |
16717.38 |
3449.65 |
Add: Balance in Statement of Profit and Loss brought forward |
12807.02 |
12786.97 |
Add: Prior Period Income |
- |
0.10 |
Amount available for Appropriation |
29524.39 |
16236.72 |
Proposed Appropriations |
||
Transfer to Statutory Reserve |
3343.48 |
689.93 |
General Reserve |
- |
- |
Capital Reserve |
2229.71 |
356.56 |
Proposed Dividend |
- |
1980.11 |
Dividend Distribution Tax |
- |
403.10 |
Balance carried forward |
23951.20 |
12807.02 |
During FY 2016-17, your Company fulfilled all its obligations as a Primary Dealer in both primary and secondary market. With regard to Treasury Bills commitment, the Company exceeded the stipulated success ratio of 40 per cent, achieving 56.07 per cent in both H1 and H2. In G-sec category, Company fulfilled the underwriting commitments, thereby supporting the government borrowing program.
During FY 2016-17, the yields on Government Securities trended down, with the ten-year benchmark yield moving down to 6.66 per cent as on March 31, 2017 as against previous year close of 7.46 per cent. The market remained highly volatile with the yields touching low of 6.14 per cent after demonetization and policy rate cut in October, 2016 and then again moving up after application of the Incremental Cash Reserve Ratio (ICRR) to absorb surplus liquidity. Status quo on monetary policy in December, 2016 and change in stance of RBI from accommodative to neutral in February, 2017 also hardened yields. Inflation was well contained and declined to significantly low levels during November, 2016 - February, 2017. Current Account Deficit was at comfortable levels. Internationally, with strengthening of US economy, the Federal Reserve raised the target federal funds rate twice in December, 2016 and March, 2017 while ECB has kept policy rate unchanged since March, 2016.
The Central Government reduced its market borrowings in Q4 by Rs, 1800000 lacs through dated securities and Rs, 5100000 lacs through T-Bills. Average liquidity surplus in Q2 was Rs, 2930000 lacs which declined to Rs, 630000 lacs in October, 2016. However, after demonetization, currency in circulation declined drastically and this increased the liquidity in the banking system. To manage this excess liquidity RBI did open market sales of
CMBs issued under MSS and variable rate reverse repos of various tenors. The peak level of liquidity absorbed reached Rs, 79560000 lacs on January 4, 2017. The ICRR was in place for one fortnight ending December 9, 2016, which helped in draining liquidity to the extent of Rs, 40000000 lacs. ICRR was withdrawn after increase in limit on issuance of securities under MSS from Rs, 3000000 lacs to Rs, 60000000 lacs. In Q4, with re-monetization at an accelerated pace, the liquidity surplus in the system reduced to Rs, 31410000 lacs by end of March, 2017. Yields got further support by lower fiscal deficit target of 3.2 per cent and reduced government borrowing for 2017-18.
During the FY 2016-17, your Company posted a Profit Before Tax of Rs, 25654.11 lacs as against Rs, 5147.23 lacs in FY 2015-16. The net revenue from operations of your Company during FY 2016-17 stood at Rs, 50054.47 lacs as against Rs, 34339.65 lacs and Profit after Tax for FY 2016-17 stood at Rs, 16717.38 lacs vis-a-vis Rs, 3449.65 lacs in the previous fiscal.
No material changes and commitments have occurred after the close of the year till the date of this report, which affect the financial position of the Company.
Capital Adequacy
Capital adequacy ratio as on March 31, 2017 stood at 54.48 per cent as against the RBI stipulation of 15 per cent. Dividend
Your Board has recommended a dividend of Rs, 2.50 (i.e. 25 per cent) per equity share (last year Rs, 1.10 per equity share) for the financial year ended March 31, 2017, subject to approval in the ensuing Annual General Meeting. The total outflow on account of said dividend shall be Rs, 5416.40 lacs (including Dividend Distribution Tax of Rs, 916.15 lacs).
Transfer to Reserves
Your Company proposes to transfer Rs, 3343.48 lacs in Statutory Reserve as required under the provisions of Section 45-IC of the Reserve Bank of India Act, 1934.Rs, 2229.71 lacs is proposed to be transferred in Capital Reserve in terms of RBI guidelines for Primary Dealers. Further, in terms of the first proviso to Section 123(1) of the Companies Act, 2013, the Company proposes not to transfer any sum in General Reserve.
2. CORPORATE GOVERNANCE
Corporate Governance for your Company means achieving high level of accountability, efficiency, responsibility and fairness in all areas of operations. Our workforce is committed towards the protection of the interest of the stakeholders including shareholders, creditors, investors, customers, employees, etc. Our policies consistently undergo improvements keeping in mind our goal i.e. maximization of value of all the stakeholders.
We comply with the SEBI and RBI guidelines on Corporate Governance. We have documented our internal code on Corporate Governance in compliance of SEBI and RBI guidelines. The Corporate Governance practices followed by the Company are given in the Annual Report. A certificate from M/s Kapoor Tandon & Co. (Firm Reg. No. 000952C), Statutory Auditor of the Company regarding compliance of conditions of Corporate Governance as stipulated in the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 is enclosed with the âReport on Corporate Governanceâ forming part of the Boardâs Report.
Number of meetings of the Board
The Board met five times during the financial year 2016-17 to review strategic, operational, technological and financial matters besides laying down policies and procedures for operational management of the Company. The details of such meetings are given in the âReport on Corporate Governanceâ that forms part of this Annual Report.
Directors and Key Managerial Personnel
During the year 2016-17, the members in their Annual General Meeting held on September 17, 2016 approved the appointment of Sh. R. S. Ramasubramaniam (DIN : 00008937) as an Independent Director for a term of 5 consecutive years effective from February 3, 2016.
Smt. Usha Ananthasubramanian (DIN: 02784580), consequent upon her appointment as Managing Director & CEO of Allahabad Bank, demitted the office of Managing Director & CEO of Punjab National Bank on May 5, 2017. Accordingly, she resigned from the Directorship and Chairpersonship of the Company w.e.f. May 5, 2017. The Board appreciate and thank her for her vision, leadership and guidance, enabling your Company to reach another standard of excellence.
In her place, on the recommendation of Nomination and Remuneration Committee, the Board of Directors appointed Sh. Sunil Mehta (DIN: 07430460), Managing Director & CEO of Punjab National Bank as an Additional Director (in the Non-Executive & Non-Independent category) effective from May 12, 2017. In terms of the Articles of Association of the Company, he will act as Chairman of the Board of your Company.
Further, in accordance with the provisions of the Companies Act, 2013 and the Articles of Association of the Company, Sh. K. V. Brahmaji Rao (DIN: 06861202) shall retire by rotation in the ensuing Annual General Meeting and is eligible for reappointment.
Performance Evaluation
The Company has devised a policy for performance evaluation of Board of its own performance, Independent Directors, Non-Independent/Executive Directors and Board level Committees etc. as required under the provisions of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The evaluation of all the Directors, the Board as a whole and its Committees was conducted based on the criteria and framework adopted by the Board. Copy of said policy, inter-alia, containing the process and criteria for evaluation is available at Companyâs website at the link http://pnbgilts.com/data/governence/1461912736.pdf.
Familiarization programme
The details of programme for familiarization of Independent Directors with the Company, their roles, rights, responsibilities in the Company, nature of industry in which the Company operates, business model of the Company and related matters are placed at Companyâs website at the link http://pnbgilts.com/data/governence/1459924857.pdf.
Quarterly updates on relevant statutory changes are also circulated to the Directors.
Policy on Directorsâ Appointment and Remuneration etc.
The policies of the Company on Directorsâ Appointment and Remuneration including criteria for determining qualifications, positive attributes, independence of a Director and other matters provided under Sub-section (3) of Section 178 of the Companies Act, 2013 is appended as Annexure A to the Boardâs Report.
Declaration by Independent Directors
The Company has received declaration pursuant to Section 149(7) of the Companies Act, 2013 from each Independent Director confirming therein the criteria of Independence as prescribed both under the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
3. OTHER DISCLOSURES -
Audit Committee
The Audit Committee comprises of the following members -
Name of Director |
Position |
Dr. Kamal Gupta |
Chairman |
Sh. S. K. Soni |
Member |
Sh. P. P. Pareek |
Member |
Sh. R. S. Ramasubramaniam |
Member |
All the recommendations made by the Audit Committee during the year were accepted by the Board.
Corporate Social Responsibility (CSR) Committee
The composition of the CSR Committee is as under -
Name of Director |
Position |
Sh. K. V. Brahmaji Rao |
Chairman |
Dr. Kamal Gupta |
Member |
Sh. S. K. Dubey |
Member |
The CSR policy of the Company, duly recommended by the CSR Committee and approved by the Board, is available at our website at the link http://pnbgilts.com/data/governence/1461912787.pdf. The CSR activity of the Company is carried out as per the instructions of the Committee and Board. During the year, the Company has spent 2 per cent of its average net profits of the three immediately preceding financial years on CSR activity.
The annual report on our CSR for the year 2016-17 in the prescribed format is presented at Annexure B to the Boardâs Report.
Other details of above said and other Committees of the Board are given in the âReport on Corporate Governanceâ forming part of the Boardâs Report.
Whistle Blower Policy (including Vigil Mechanism)
Your Company believes in conducting its affairs in a fair and transparent manner by adopting highest standards of professionalism, honesty, integrity and ethical behavior. Your Company is committed to develop a culture where it is safe for directors and employees to raise concerns about any wrongful conduct.
The Board of Directors has approved a Whistle Blower Policy (including Vigil Mechanism), which provides a framework to promote a responsible and secure whistle blowing. It protects employees wishing to raise a concern about serious irregularities within the Company. The Audit Committee reviews the functioning of this mechanism.
No employee / director has been denied access to the Audit Committee. During the year under review , no matter has been reported to the Audit Committee. The said policy may be accessed on the Companyâs website at the link http://pnbgilts.com/data/governence/1409222609.pdf
Contracts and Arrangements with Related Parties
All the contracts/arrangements/transactions entered by the company are in ordinary course of business and at armâs length (except those given in form AOC-2 at Annexure C). Further during the year, the Company had not entered into any contract/arrangement/transaction with related parties, which could be considered material in accordance with the Companyâs Policy/Standard Operating Procedures (SOP) on Related Party Transactions. The said Policy/SOP can be accessed at the Companyâs website at the link http://pnbgilts.com/data/governence/1461912704.pdf.
Necessary disclosure in prescribed form AOC-2 is annexed at Annexure C.
Subsidiaries
The Company, being a RBI regulated Primary Dealer, is prohibited to form any subsidiary. As such, the Company has not formulated any policy for determining âmaterialâ subsidiaries under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
Further, since the Company is not having any subsidiary or associate or joint venture, it is not required to consolidate the financial statements in terms of Section 129 of the Companies Act, 2013 read with Rule 5 of the Companies (Accounts) Rules, 2014. However, the financial statements of the Company for FY 2016-17 had already been considered by its parent bank i.e. Punjab National Bank for consolidation.
Directorsâ Responsibility Statement
Pursuant to the requirements of Section 134(3)(c) of the Companies Act, 2013, your Directors confirm that:
(a) in the preparation of the annual accounts for the year ended March 31, 2017, the applicable accounting standards read with the requirements set out under the Schedule III to Companies Act, 2013, have been followed and there are no material departures from the same;
(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 as at March 31, 2017 and of the profit and loss of the Company for the year ended on that date;
(c) the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
(d) 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 were operating effectively; and
(f) the Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
Human Resource Management
Your Company treats its human resources as one of its most important assets. To ensure good human resource management in the Company, the Company focuses on all the aspects of employee lifecycle. During their tenure in the Company, employees are motivated through various skill development and volunteering programmes. Recreational programmes are also conducted on regular basis so as to create stress-free environment. All the while, the Company also creates effective dialogues through various communication channels like face to face interactions so as to ensure that feedback reach the relevant teams. In house meetings and training sessions are also arranged to engage and develop the employees and to gather ideas around innovation.
The information required to be disclosed under Section 197(12) and Rule 5 (1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is provided at Annexure D.
The information required to be disclosed under Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 be treated as NIL as there was no employee, whether employed throughout the year 2016-17 or part thereof, who was in receipt of remuneration beyond the limits laid down in above said Rule. No employee is related to any Director of the Company.
During the year 2016-17, there were no cases filed pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.
Particulars of Loans given, investment made, guarantees given and securities provided
The information required to be disclosed under Section 134(3)(g) of the Companies Act, 2013 may be treated as âNilâ, as the Company is exempted under Section 186(11) of the Companies Act, 2013.
Extract of the Annual Return
Extract of Annual Return of the Company is annexed herewith as Annexure E to this Report.
Deposits
During the year ended March 31, 2017, the Company has not accepted any deposits from the public within the meaning of the provisions of the Non- Banking Financial Companies (Reserve Bank) Directions, 1977 and RBIâs notification no. DFC.118DG/(SPT)-98 dated January 31, 1998.
Risk Management
In terms of RBI guidelines for NBFCs, a Risk Management Committee, constituted at management level, has been entrusted with the responsibility by the Board in laying down procedures for risk assessment and minimization. The Committee also reviews these procedures periodically to ensure that executive management is implementing and controlling the risks through means of a properly defined risk framework.
The Audit Committee, on periodic basis, oversees all the risks that a company faces such as strategic, financial, market, liquidity, security, property, IT, legal, regulatory and other identified risks alongwith the implementation of risk management policy. There is an adequate risk management infrastructure in place capable of addressing the possible risks.
Risk Management Policy is reviewed annually by the Audit Committee and on the basis of the Committeeâs recommendation, the Board approves the same.
Significant and material orders
There are no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and Companyâs operations in future.
Issue of Shares
There was no issue of shares during the year neither with differential rights as to dividend, voting or otherwise nor to employees of the company.
Management Discussion and Analysis
Management Discussion and Analysis comprising an overview of the financial results, operations/performance and future aspects form part of this Annual Report.
4. AUDITORS, INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
Statutory Auditor
The Comptroller and Auditor General of India had appointed M/s Kapoor Tandon & Co., Chartered Accountants (Firm Reg. No. 000952C) as the Statutory Auditor of the Company for the financial year ended March 31, 2017. The report of the auditor is self-explanatory and do not call for any further comments. Pursuant to the provisions of Section 143(12) of the Companies Act, 2013, the Statutory Auditor of the Company has not reported any incident of fraud during the FY 2016-17. The Auditorsâ Report does not contain any qualification, reservation or adverse remark.
Secretarial Auditor
The Board had appointed M/s Pranav Kumar & Associates, Company Secretaries, to conduct the Secretarial Audit for the financial year 2016-17. The Secretarial Audit Report for the financial year ended March 31, 2017 is annexed as Annexure F to this Report. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark.
Internal control systems and their adequacy
The Company considers the internal control systems to be a very significant part of its Corporate Governance practices. Your Board has adopted the policies and procedures for ensuring the orderly and efficient conduct of its business, including adherence to the Companyâs policies, the safeguarding of its assets, prevention and detection of frauds etc. The Companyâs internal control systems are commensurate with the nature of its business and the size and complexity of its operations. As a part of this control system, your Board appoints Internal Auditor and other auditors as well. Accordingly, these internal controls are routinely tested and certified by the auditors. For the year 2016-17, the Board appointed M/s Lodha & Co. as the Internal Auditor of the Company. The scope of Internal Audit included audit of treasury transactions on a monthly basis and reporting to the Audit Committee of the Board that the company has operated within the limits of various risk parameters laid down by the Board, Reserve Bank of India and other statutory authorities. Besides, they said firm also audited and reviewed the related party transactions on monthly basis and key business processes, including IT systems of the Company on quarterly basis. All the reports of the Internal Auditors were submitted to the Audit Committee. Timeliness of submission of all the periodic statutory returns/forms etc. to regulatory bodies was also checked by the Auditor. The Audit Committee reviews adequacy and effectiveness of the Companyâs internal control environment and monitors the implementation of audit recommendations, including those relating to strengthening of the Companyâs risk management policies and systems.
5. DETAILS OF CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO
The Company is a Primary Dealer as defined and regulated by the Reserve Bank of India and is not a manufacturing company, hence the particulars required to be disclosed with respect to conservation of energy and technology absorption in terms of Section 134(3)(m) of the Companies Act, 2013 and the Rules made there under are not applicable/ Nil.
However, every endeavor is made to ensure optimal use of energy, avoid wastages and conserve energy as far as possible. Some of these measures include switching off lights and computer systems when not in use, creating awareness among employees about the necessity of energy conservation etc. Your Company has installed the integrated treasury management software and RBIâs Negotiated Dealing System with the help of The Institute for Development and Research in Banking Technology (IDRBT) and reputed IT companies. The Company recognizes the growing importance of Information Technology in the emerging business environment. The Company has also implemented Business Continuity Plan (BCP) and Disaster Recovery Plan (DRP) with the help of IDRBT (consultants for implementation of BCP and DRP) to identify and reduce risk exposures and proactively manage any contingencies.
Your Company has neither used nor earned any foreign exchange during the year under review. Acknowledgements
Your Directors thank the Government of India, Reserve Bank of India, Securities and Exchange Board of India, National Stock Exchange of India Ltd., BSE Ltd., Parent Bank, Commercial Banks, Cooperative & Regional Rural Banks, Financial Institutions, PF Trusts, Public Sector Undertakings, Private Sector Corporate Bodies and other valued clients for their whole-hearted support. We acknowledge the sincere and dedicated efforts put in by the employees of the Company at all levels.
On behalf of Board of Directors
Date : July 3, 2017 (Sunil Mehta)
Place: New Delhi Chairman
DIN: 07430460
Mar 31, 2015
Dear Members,
The Directors are pleased to present the Nineteenth Annual Report
together with the Company's audited financial statements of the company
for the financial year ended March 31,2015.
1. RESULTS OF OUR OPERATIONS AND STATE OF AFFAIRS
The Company's financial performance, for the year ended March 31,2015
is summarized below:
(Rs. in lacs)
For the year For the year
ended ended
31.3.2015 31.3.2014
Total Income 41001.18 34626.38
Total Expenditure 27611.92 25556.06
Profit/(loss) Before Tax 13389.26 9070.32
Less : Provision for Income Tax 4427.85 2932.13
(including deferred tax)
Profit /(loss) After Tax 8961.41 6138.19
Add: Balance in Statement of Profit and 10103.02 8271.51
Loss brought forward
Less : Adjustment for depreciation for 24.95 -
Fixed Assets as per Schedule II of the
Companies Act, 2013
Amount available for Appropriation 19039.48 14409.70
Proposed Appropriations
Transfer to Statutory Reserve 1792.28 1227.64
General Reserve - -
Capital Reserve 1072.52 1183.62
Amount spent on CSR activities 134.71 -
Proposed Dividend 2700.15 1620.09
Dividend Distribution Tax 552.85 275.33
Balance carried forward 12786.97 10103.02
During FY 2014-15, your Company fulfilled all its obligations as a
Primary Dealer in both primary and secondary market. With regard to
Treasury Bills commitment, the Company exceeded the stipulated success
ratio of 40 per cent, achieving 42.92 per cent and 49.60 per cent in H1
and H2 respectively. In G-sec category, Company fulfilled the
underwriting commitments, thereby supporting the government borrowing
program. Company delivered good performance during the year by astutely
deriving advantage from volatile G-sec market condition and judicious
deployment of funds in high yielding assets. The total Profit Before
Tax for FY 2014-15 stands at Rs. 13389.26 lacs as against Rs. 9070.32
lacs in FY 2013-14. During the year, the net revenue from operations of
your Company increased by 45.07 per cent, from Rs. 9990.01 lacs to Rs.
14492.48 lacs. Profit After Tax stood at Rs. 8961.41 lacs vis-a-vis
Rs. 6138.19 lacs in the previous fiscal, registering a growth of 45.99
percent.
The profitability was boosted by trading performance and judiciously
taking advantage of arbitrage opportunity by the Company. During FY
2014-15, Company posted trading income of Rs. 7585.27 lacs as against
Rs. 3140.78 lacs in last fiscal i.e. registered growth of 141.51 per
cent. The Government Securities yields rallied sharply due to sharp
fall in crude prices, moderation in inflation, ultra-accommodative
monetary easing in the euro zone and Japan, receding fears of imminent
normalization of US monetary policy and strong Fll demand for
Government Securities. Rate cuts by Reserve Bank of India (RBI) in two
tranches by 25 basis points each also aided the government bonds market
and the yields fell further. Amid these factors the yield on 10 year
benchmark paper closed the year at 7.74 per cent as against 8.80 per
cent as on March 31,2014.
No material changes and commitments have occurred after the close of
the year till the date of this report, which affect the financial
position of the Company.
Capital Adequacy
Capital adequacy ratio as on March 31, 2015 stood at 65.07 per cent as
against the RBI stipulation of 15 per cent.
Dividend
Your Board has recommended a final dividend of Rs. 1.50 (i.e. 15 per
cent) per equity share (last year Rs. 0.90 per equity share) for the
financial year ended March 31,2015, subject to approval in the ensuing
Annual General Meeting. The total outflow on account of said dividend
shall be Rs. 3253 lacs (including Dividend Distribution Tax of Rs.
552.85 lacs).
Transfer to Reserves
Your Company proposes to transfer Rs. 1792.28 lacs in Statutory
Reserve as required under the provisions of Section 45-IC of the
Reserve Bank of India Act, 1934. Rs. 1072.52 lacs is proposed to be
transferred in Capital Reserve in terms of RBI guidelines for Primary
Dealers. Further, in terms of the first proviso to Section 123(1) of
the Companies Act, 2013, the Company proposes not to transfer any sum
in General Reserve.
2. CORPORATE GOVERNANCE
Corporate Governance for your Company means achieving high level of
accountability, efficiency, responsibility and fairness in all areas of
operations. Our workforce is committed towards the protection of the
interest of the stakeholders including shareholders, creditors,
investors, customers, employees, etc. Our policies consistently undergo
improvements keeping in mind our goal i.e. maximization of value of all
the stakeholders.
We comply with the SEBI and RBI guidelines on corporate governance. We
have documented our internal code on Corporate Governance in compliance
of SEBI and RBI guidelines. The Corporate Governance practices followed
by the Company are given in the Annual Report. A certificate from M/s
Kapoor Tandon & Co. (Firm Reg. No. 000952C), Statutory Auditor of the
Company regarding compliance of conditions of Corporate Governance
stipulated by Stock Exchanges is enclosed with the 'Report on Corporate
Governance' forming part of the Board's Report.
Number of meetings of the Board
The Board met seven times during the financial year 2014-15 to review
strategic, operational, technological and financial matters besides
laying down policies and procedures for operational management of the
Company. The details of such meetings are given in the 'Report on
Corporate Governance' that forms part of this Annual Report.
Directors and Key Managerial Personnel
During the year 2014-15, the members in their Annual General Meeting
held on August 30, 2014 approved the appointment of Dr. O. P. Chawla
(DIN: 00026712), Dr. Kamal Gupta (DIN: 00038490), Sh. S. K. Soni (DIN:
00046856) and Sh. P. P. Pareek (DIN: 00615296) as Independent Directors
for a term of five years with effect from August 30, 2014.
In the same Annual General Meeting, members also approved the
appointment of Smt. Sunita Gupta (DIN: 06902258) as Whole-time Director
with designation 'Executive Director and CFO' effective from June 26,
2014 to August 31,2017.
The members also approved reappointment of Sh. S. K. Dubey (DIN:
01770805) as Managing Director for a period from February 1,2014 to
June 30, 2015. Further, on the recommendation of Nomination and
Remuneration Committee, the Board in its meeting held on April 29,2015
re-appointed Sh. S.K. Dubey as Managing Director for a period effective
from July 1,2015 to June 30, 2016, subject to the shareholders approval
in the ensuing Annual General Meeting.
During the year, Sh. K. R. Kamath (DIN: 01715073), Non-Executive
Director and Chairman, upon completion of his term as Chairman and
Managing Director of Punjab National Bank, resigned from the
Directorship and Chairmanship of the Company with effect from October
29, 2014. The Board appreciate and thank him for his vision, leadership
and guidance, enabling your Company to reach another standard of
excellence.
Sh. P. K. Mohapatra (DIN: 02660553), who was appointed as a
Non-Executive Director in the Annual General Meeting held on August 30,
2014, also demitted office effective from March 24, 2015. The Board
places on record its appreciation for the services rendered by him
during his tenure in the Company.
During the year, on recommendation of Nomination and Remuneration
Committee, the Board has appointed -
a. Sh. K. V. Brahmaji Rao (DIN: 06861202), Executive Director - Punjab
National Bank as Additional (Non- Executive) Directorw.e.f. November
1,2014.
b. Sh. Gauri Shankar (DIN: 06764026), Managing Director & Chief
Executive Officer - Punjab National Bank as Additional (Non-Executive)
Directorw.e.f. March 25, 2015.
Further, in accordance with the provisions of the Companies Act, 2013
and the Articles of Association of the Company, Smt. Sunita Gupta (DIN:
06902258) shall retire by rotation in the ensuing Annual General
Meeting and is eligible for reappointment.
Performance Evaluation
The Company has devised a policy for performance evaluation of Board of
its own performance, Independent Directors, Non-Independent/Executive
Directors and Board level Committees etc. as required under the
provisions of the Companies Act, 2013 and Clause 49 of the Listing
Agreement. The evaluation of all the Directors, the Board as a whole
and its Committees was conducted based on the criteria and framework
adopted by the Board. Copy of said policy, inter-alia, containing the
process and criteria for evaluation is available at Company's website
at the link http://pnbgilts.com/data/governence/1433237578.pdf.
Familiarization programme
The details of programme for familiarization of Independent Directors
with the company, their roles, rights, responsibilities in the company,
nature of industry in which the company operates, business model of the
company and related matters are placed at Company's website at the link
http://pnbgilts.com/data/governence/1433236985. pdf.
Quarterly updates on relevant statutory changes are also circulated to
the Directors.
Policy on Directors' appointment and Remuneration etc.
The policies of the Company on Directors' appointment and Remuneration
including criteria for determining qualifications, positive attributes,
independence of a director and other matters provided under Sub-section
(3) of Section 178 of the Companies Act, 2013 is appended as Annexure A
to the Board's Report.
Declaration by Independent Directors
The Company has received declaration pursuant to Section 149(7) of the
Companies Act, 2013 from each Independent Director confirming therein
the criteria of Independence as prescribed both under the Companies
Act, 2013 and Clause 49 of the Listing Agreement.
3. OTHER DISCLOSURES - Audit Committee
The Audit Committee comprises of the following members -
Name of Director Position
Dr. Kamal Gupta Chairman
Dr. O. P. Chawla Member
Sh. S. K. Soni Member
Sh. P. P. Pareek Member
Sh. P. K. Mohapatra1 Member
1 Resigned from the directorship of the company w.e.f. March 24, 2015.
All the recommendations made by the Audit Committee during the year
were accepted by the Board. Corporate Social Responsibility (CSR)
Committee
The CSR Committee was constituted by the Board before enactment of the
Companies Act, 2013. After enactment, the Board in its first meeting
held on April 26, 2014, reconstituted the CSR Committee.
The composition of the Committee is as under -
Name of Director Position
Sh. K. V. Brahmaji Rao1 Chairman
Dr. Kamal Gupta Member
Sh. S. K. Dubey Member
Sh. P. K. Mohapatra Member
1 Inducted as Chairman on November 1,2014. Till his induction, Dr.
Kamal Gupta acted as Chairman and Sh. P. K. Mohapatra acted as member.
The CSR policy of the Company, duly recommended by the CSR Committee
and approved by the Board, is available at our website at the link
http://pnbgilts.com/data/governence/1433236913.pdf. The CSR activity of
the Company is carried out as per the instructions of the Committee and
Board. During the year, the Company has spent 2 per cent of its average
net profits of the three immediately preceding financial years on CSR
activity.
The annual report on our CSR for the financial year 2014-15 in the
prescribed format is presented at Annexure B to the Board's Report.
Other details of above said and other Committees of the Board are given
in the 'Report on Corporate Governance' forming part of the Board's
Report.
Whistle Blower Policy (including Vigil Mechanism)
Your Company believes in conducting its affairs in a fair and
transparent manner by adopting highest standards of professionalism,
honesty, integrity and ethical behaviour. Your Company is committed to
develop a culture where it is safe for all employees to raise concerns
about any wrongful conduct.
The Board of Directors has approved a Whistle Blower Policy (including
Vigil Mechanism), which provides a framework to promote a responsible
and secure whistle blowing. It protects employees wishing to raise a
concern about serious irregularities within the Company. The Audit
Committee reviews the functioning of this mechanism. No employee /
director has been denied access to the Audit Committee. The said policy
may be accessed on the Company's website at the link
http://pnbgilts.com/data/governence/1409222609.pdf
Contracts and Arrangements with Related Parties
All the contracts/ arrangements/transactions entered by the company are
in ordinary course of business and generally at arm's length. Further
during the year, the company had not entered into any
contract/arrangement/ transaction with related parties, which could be
considered material in accordance with the Company's Policy/ Standard
Operating Procedures (SOP) on Related Party Transactions. The said
Policy/SOP can be accessed at the Company's website at the link
http://pnbgilts.com/data/shareholder/1417690793.pdf
Necessary disclosure in prescribed form AOC-2 is annexed at Annexure C.
Subsidiaries
The Company, being a RBI regulated Primary Dealer, is prohibited to
form any subsidiary. As such, the Company has not formulated any policy
for determining 'material' subsidiaries under Clause 49 of Listing
Agreement.
Further, since the Company is not having any subsidiary or associate or
joint venture, it is not required to consolidate the financial
statements in terms of Section 129 of the Companies Act, 2013 read with
Rule 5 of the Companies (Accounts) Rules, 2014. However, the financial
statements of the Company for FY 2014-15 had already been considered by
its parent bank i.e. Punjab National Bank for consolidation.
Directors' Responsibility Statement
Pursuant to the requirements of Section 134(3)(c) of the Companies Act,
2013, your Directors confirm that:
(a) in the preparation of the annual accounts for the year ended March
31, 2015, the applicable accounting standards read with the
requirements set out under the Schedule III to Companies Act, 2013,
have been followed and there are no material departures from the same;
(b) the Directors had selected such accounting policies and applied
them consistently and made judgements and estimates that are reasonable
and prudent so as to give a true and fair view of the state of affairs
of the Company as at March 31,2015 and of the profit and loss of the
company for the year ended on that date;
(c) the Directors had taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Act for safeguarding the assets of the Company and
for preventing and detecting fraud and other irregularities;
(d) 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 were operating effectively; and
(f) the Directors had devised proper systems to ensure compliance with
the provisions of all applicable laws and that such systems were
adequate and operating effectively.
Human Resource Management
Your Company treats its human resources as one of its most important
assets. To ensure good human resource management in the Company, the
Company focuses on all the aspects of employee lifecycle. During their
tenure in the Company, employees are motivated through various skill
development and volunteering programmes. Recreational programmes are
also conducted on regular basis so as to create stress-free
environment. All the while, the Company also creates effective
dialogues through various communication channels like face to face
interactions so as to ensure that feedback reach the relevant teams. In
house meetings and training sessions are also arranged to engage and
develop the employees and to gather ideas around innovation.
The information required to be disclosed under Rule 5(2) of the
Companies (Appointment and Remuneration of Managerial Personnel) Rules,
2015 be treated as NIL as none of the employees of the Company draws
remuneration in excess of Rs. 5 lacs p.m. No employee is related to
any Director of the Company.
The information required to be disclosed under Section 197(12) and Rule
5 (1) of the Companies (Appointment and Remuneration of Managerial
Personnel) Rules, 2015 is provided at Annexure D.
During the year 2014-15, there were no cases filed pursuant to the
Sexual Harassment of Women at Workplace (Prevention, Prohibition and
Redressal) Act, 2013.
Particulars of Loans given, investment made, guarantees given and
securities provided
The information required to be disclosed under Section 134(3)(g) of the
Companies Act, 2013 may be treated as 'Nil', as the Company is exempted
under Section 186(11) of the Companies Act, 2013.
Extract of the Annual Return
Extract of Annual Return of the Company is annexed herewith as Annexure
E to this Report.
Deposits
During the year ended March 31,2015, the Company has not accepted any
deposits from the public within the meaning of the provisions of the
Non- Banking Financial Companies (Reserve Bank) Directions, 1977 and
RBI's notification no. DFC.118DG/(SPT)-98dated January31, 1998.
Risk Management
In terms of RBI guidelines for NBFCs, a Risk Management Committee,
constituted at management level, has been entrusted with the
responsibility by the Board in laying down procedures for risk
assessment and minimization. The Committee also reviews these
procedures periodically to ensure that executive management is
implementing and controlling the risks through means of a properly
defined risk framework.
The Audit Committee, on periodic basis, oversees all the risks that a
company faces such as strategic, financial, market, liquidity,
security, property, IT, legal, regulatory and other identified risks
alongwith the implementation of risk management policy. There is an
adequate risk management infrastructure in place capable of addressing
the possible risks.
Risk Management Policy is reviewed annually by the Audit Committee and
on the basis of the Committee's recommendation, the Board approves the
same.
Significant and material orders
There are no significant and material orders passed by the regulators
or courts or tribunals impacting the going concern status and Company's
operations in future.
Issue of Shares
There was no issue of shares during the year neither with differential
rights as to dividend, voting or otherwise nor to employees of the
company.
Management Discussion and Analysis
Management Discussion and Analysis comprising an overview of the
financial results, operations/performance and future aspects form part
of this Annual Report.
4. AUDITORS, INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
Statutory Auditor
The Comptroller and Auditor General of India had appointed M/s Kapoor
Tandon & Co., Chartered Accountants (Firm Reg. No. 000952C) as the
Statutory Auditor of the Company for the financial year ended March
31,2015. The report of the auditor is self-explanatory and do not call
for any further comments. The Auditors' Report does not contain any
qualification, reservation or adverse remark.
Secretarial Auditor
The Board had appointed M/s Pranav Kumar & Associates, Company
Secretaries, to conduct the Secretarial Audit for the financial year
2014-15. The Secretarial Audit Report for the financial year ended
March 31, 2015 is annexed as Annexure F to this Report. The Secretarial
Audit Report does not contain any qualification, reservation or adverse
remark.
Internal control systems and their adequacy
The Company considers the internal control systems to be a very
significant part of its Corporate Governance practices. Your Board has
adopted the policies and procedures for ensuring the orderly and
efficient conduct of its business, including adherence to the Company's
policies, the safeguarding of its assets, prevention and detection of
frauds etc. As a part of this control system, your Board appoints
Internal Auditor as well. For the year 2014-15, the Board appointed M/s
Ernst & Young LLP as the Internal Auditor of the Company. The scope of
Internal Audit included audit of treasury transactions on a monthly
basis and reporting to the Audit Committee of the Board that the
company has operated within the limits of various risk parameters laid
down by the Board, Reserve Bank of India and other statutory
authorities. Besides, the said firm also audited and reviewed the
related party transactions on monthly basis and key business processes,
including IT systems of the Company on quarterly basis. All the reports
of the Internal Auditors were submitted to the Audit Committee.
5. DETAILS OF CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN
EXCHANGE EARNINGS AND OUTGO
a) Part A pertaining to the conservation of energy is not applicable to
the Company.
With regard to Part B pertaining to technology absorption, the Company
has installed the integrated treasury management software and RBI's
Negotiated Dealing System with the help of The Institute for
Development and Research in Banking Technology (IDRBT) and reputed IT
companies. The Company recognizes the growing importance of Information
Technology in the emerging business environment. The Company has also
implemented Business Continuity Plan (BCP) and Disaster Recovery Plan
(DRP) with the help of IDRBT (consultants for implementation of BCP and
DRP) to identify and reduce risk exposures and proactively manage any
contingencies.
b) Foreign Exchange earnings and outgo:
The Company has neither used nor earned any foreign exchange during the
year under review.
Acknowledgements
Your Directors thank the Government of India, Reserve Bank of India,
Securities and Exchange Board of India, National Stock Exchange of
India Ltd., BSE Ltd., Parent Bank, Commercial Banks, Cooperative &
Regional Rural Banks, Financial Institutions, PF Trusts, Public Sector
Undertakings, Private Sector Corporate Bodies and other valued clients
for their whole-hearted support. We acknowledge the sincere and
dedicated efforts put in by the employees of the Company at all levels.
On behalf of Board of Directors
Date : June 27, 2015
Place: New Delhi (Gauri Shankar)
Chairman
DIN:06764026
Mar 31, 2014
Dear Members,
The Directors have pleasure in presenting the Eighteenth Annual Report
together with the audited financial statements of the Company for the
year ended March 31, 2014.
1. FINANCIAL RESULTS
The financial results for the year ended March 31, 2014 along with
comparative figures for the previous year are given below:
(Rs. in lacs)
For the year For the year
ended 31.3.2014 ended 31.3.2013
Total Income 34626.38 28865.00
Total Expenditure 25556.11 19988.47
Profit/(loss) Before Tax 9070.32 8876.53
Less : Provision for Income Tax
(including deferred tax) 2932.13 2751.97
Profit /(loss) After Tax 6138.19 6124.56
Add: Balance in Profit &
Loss Account brought forward 8271.51 6057.48
Amount available for Appropriation 14409.70 12182.04
Proposed Appropriations
Transfer to Statutory Reserve 1227.64 1224.92
General Reserve - -
Capital Reserve 1183.62 1106.09
Proposed Dividend 1620.09 1350.08
Dividend Distribution Tax 275.33 229.44
Balance carried forward 10103.02 8271.51
During FY 2013-14, Company fulfilled all its obligations as a Primary
Dealer in both primary and secondary market. With regard to Treasury
Bills commitment, Company exceeded the stipulated success ratio of 40
per cent, achieving 40.17 per cent and 46.57 per cent in H1 and H2
respectively. In G-sec category, Company fulfilled the underwriting
commitments, thereby supporting the government borrowing program.
Company delivered good performance during the year by astutely deriving
advantage from volatile G-sec market condition and judicious deployment
of funds in high yielding assets. The total Profit Before Tax for FY
2013-14 stands at Rs. 9070.32 lacs as against Rs. 8876.53 lacs in FY
2012-13.
The profitability was boosted by trading performance and judiciously
taking advantage of arbitrage opportunity by the Company. During FY
2013-14, Company posted trading income of Rs. 3140.78 lacs under extreme
volatility in the bond market. The G-Sec Yields rose due to surging
headline inflation, falling domestic currency, apprehensions on U.S
stimulus tapering and spike in short term borrowing rates. The
commencement of term repo auctions served to infuse adequate liquidity
into the market. While short term rates remained under continuous upward
pressure due to tight liquidity conditions and hike in policy rates,
long term yields rose due to heavy supply over the year. Amid these
factors, the yield on 10-yr benchmark paper closed the year at 8.80 per
cent after touching a high and low of 9.46 per cent and 7.09 per cent
respectively as against 7.95 per cent as on March 31, 2013.
2. CAPITAL ADEQUACY
Capital adequacy ratio as on March 31, 2014 stood at 49.14 per cent as
against the RBI stipulation of 15 per cent.
3. BONUS ISSUE
During the year 2013-14, your Board announced a Bonus Issue in the ratio
of 1:3 i.e. 1 (one) Bonus Equity Share of Rs. 10/- for every 3 (three)
fully paid-up Equity Shares of Rs. 10/- each held. As a result, the
paid-up equity capital of the Company increased from Rs. 13500.76 lacs
to Rs. 18001.01 lacs.
4. DIVIDEND
Your Board has recommended a final dividend of Rs. 0.90 per share (i.e.
9 per cent) for the financial year 2013-14 on enhanced equity and the
proposed dividend amounts to Rs.1620.09 lacs. The total outflow on
account of said dividend shall be Rs. 1895.42 lacs (including Dividend
Distribution Tax).
5. OTHER MATTERS
5.1. Directors
During the year, the Board of Directors met five times to review
strategic, operational, technological and financial matters besides
laying down policies and procedures for operational management of the
Company against the required minimum of 4 meetings in a year. The Audit
Committee of the Board met four times; the Share Transfer Committee met
twenty six times and Shareholders''/Investors'' Grievance Committee
met twelve times.
Changes during the financial year 2013-14
The following changes took place in the Board of Directors of the
Company during the financial year 2013-14:
* Sh P. K. Mohapatra (DIN : 02660553), General Manager - Punjab
National Bank, has been appointed as an Additional Director by the Board
in its meeting held on August 10, 2013.
* Sh. S. R. Bansal (DIN : 06471984), Executive Director - Punjab
National Bank, has resigned from the Directorship of the Company w.e.f.
October 4, 2013 on his elevation to the office of Chairman and Managing
Director of Corporation Bank.
Retirement of Directors by Rotation
As per Article 99 of the Articles of Association of the Company, Sh. S.
K. Dubey (DIN : 01770805) shall retire by rotation in the forthcoming
Annual General Meeting and is eligible for reappointment.
Appointment of Independent Directors
In terms of Section 149 of the Companies Act, 2013, your Board proposes
to fix tenure of Independent Directors [Dr. O. P. Chawla (DIN :
00026712), Dr. Kamal Gupta (DIN : 00038490), Sh. S. K. Soni (DIN :
00046856) and Sh. P. P. Pareek (DIN : 00615296)] for a period of five
years w.e.f. the date of ensuing Annual General Meeting i.e. from August
30, 2014. All these directors have submitted the required declaration of
independence as required under Section 149(7) of the Companies Act,
2013. In the opinion of Board, the Independent Directors, proposed to be
appointed, fulfill the conditions specified under the Companies Act,
2013 and Rules made thereunder and they are independent of the
management.
Corporate Governance
Corporate Governance for the Company means achieving high level of
accountability, efficiency, responsibility and fairness in all areas of
operations. Our workforce is committed towards the protection of the
interest of the
stakeholders including shareholders, creditors, investors, customers,
employees, etc. Our policies consistently undergo improvements keeping
in mind our goal i.e. maximization of value of all the stakeholders. The
Corporate Governance practices followed by the Company are given in the
Annual Report. A certificate from M/s S. Mohan & Co. (Firm Registration
No. 000608N), Statutory Auditors of the Company regarding compliance of
conditions of Corporate Governance stipulated by stock exchanges is
enclosed with the ''Report on Corporate Governance''.
5.2. Directors'' Responsibility Statement
Pursuant to Section 217(2AA) of the Companies (Amendment) Act 2000, the
Directors confirm that in the preparation of the annual accounts:
> The applicable accounting standards have been followed.
> Appropriate accounting policies have been selected and applied
consistently. Judgements and estimates made are reasonable and prudent
so as to give true and fair view of the state of affairs of the Company
at the end of the financial year ended March 31, 2014 and the Profit and
Loss Account for the year ended March 31, 2014.
> Proper and sufficient care has been taken 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 for
preventing and detecting fraud and other irregularities.
> The annual accounts have been prepared on a going concern basis.
5.3. Audit, Internal Control Systems & their adequacy
M/s S. Mohan & Co., Chartered Accountants (Firm Registration No.
000608N), Delhi were appointed as the Statutory Auditors of the Company
by the Comptroller and Auditor General of India for the financial year
ended March 31, 2014. The report of the auditors is self-explanatory.
The Company considers Internal Audit to be a very significant part of
its Corporate Governance practices. For the year 2013-14, the Board
appointed M/s Ernst & Young LLP as the Internal Auditor of the Company.
The scope of Internal Audit included audit of treasury transactions on a
monthly basis and reporting to the Audit Committee of the Board that the
Company has operated within the limits of various risk parameters laid
down by the Board, Reserve Bank of India and other statutory
authorities. Besides, the said firm also audited and reviewed related
party transactions on monthly basis and key business processes,
including IT systems of the Company, on quarterly basis. All the reports
of the Internal Auditors were submitted to the Audit Committee and the
monthly audit reports were submitted to Reserve Bank of India as well.
5.4. Human Resources
Total number of employees of the Company as on March 31, 2014 was 33
(including 4 employees on deputation from parent bank). The Company has
maintained peaceful and harmonious relations with its employees.
The information required under Section 217 of the Companies Act, 1956
read with the Companies (Particulars of Employees)(Amendment) Rules,
2011 be treated as NIL as none of the employees of the Company draws
remuneration in excess of Rs. 500000/- p.m. No employee is related to
any Director of the Company.
During the year 2013-14, the Company has not received any case relating
to sexual harassment from its employees.
5.5. Particulars required to be furnished by the Companies (Disclosure
of particulars in the report of the Board of Directors) Rules, 1988.
a) Part A pertaining to the conservation of energy is not applicable to
the Company.
With regard to Part B pertaining to technology absorption, the Company
has installed the integrated treasury management software and RBI''s
Negotiated Dealing System with the help of IDRBT and reputed IT
companies. The Company recognizes the growing importance of Information
Technology in the emerging business environment. The Company has also
implemented Business Continuity Plan (BCP) and Disaster Recovery Plan
(DRP) with the help of IDRBT (consultants for implementation of BCP and
DRP) to identify and reduce risk exposures and proactively manage any
contingencies.
b) Foreign Exchange earnings and outgoing:
The Company has neither used nor earned any foreign exchange during the
year under review.
5.6. Public Deposits
During the year ended March 31, 2014, the Company has not accepted any
deposits from the public within the meaning of the provisions of the
Non- Banking Financial Companies (Reserve Bank) Directions, 1977 and
RBI''s notification no. DFC.118DG/(SPT)-98 dated January 31, 1998.
5.7. Acknowledgement
Your Directors thank Government of India, Reserve Bank of India,
Securities and Exchange Board of India, National Stock Exchange of India
Ltd., Bombay Stock Exchange Ltd., Parent Bank, Commercial Banks,
Cooperative & Regional Rural Banks, Financial Institutions, PF Trusts,
Public Sector Undertakings, Private Sector Corporate Bodies and other
valued clients for their whole-hearted support. We acknowledge the
sincere and dedicated efforts put in by employees of the Company at all
levels.
On behalf of Board of Directors
Date : June 26, 2014 (K. R. Kamath)
Place : New Delhi Chairman
DIN : 01715073
Address : 20, Rajdoot
Marg, Chanakyapuri,
New Delhi - 110021
Mar 31, 2012
The Directors have pleasure in presenting the Sixteenth Annual Report
together with the audited accounts of the company for the year ended
March 31, 2012.
1. FINANCIAL RESULTS
The financial results for the year ended March 31, 2012 along with
comparative figures for the previous year are given below:
(Rs. in lacs)
For the year For the year
ended 31.3.2012 ended 31.3.2011
Total Income 16529.71 10321.28
Total Expenditure 13565.58 5916.88
Profit/(loss) Before tax 2964.13 4404.40
Less : Provision for Income Tax
(including deferred tax) 858.87 1346.55
Profit /(loss) After Tax 2105.26 3057.85
Add: Balance in Profit & Loss Account
brought forward 5982.82 5503.14
Amount available for Appropriation 8088.08 8560.99
Proposed Appropriations
Transfer to Statutory Reserve 421.05 612.00
General Reserve - 77.00
Capital Reserve 40.46 -
Proposed Dividend 1350.08 1620.09
Dividend Distribution Tax 219.01 269.08
Balance carried forward 6057.48 5982.82
During the year, the company continued to fulfill all its obligations
as a Primary dealer in both Primary and Secondary market. In Treasury
Bills, the company exceeded the stipulated success ratio of 40 per
cent. Due to significant rise in interest rates in general and short
term rates in particular, the company's Net Interest Margin was
affected. However, to minimize the risks in a rising interest rate
environment, the company traded aggressively with the total secondary
turnover increasing significantly to Rs. 208982 crore from Rs. 68745
crore in 2010-11. The total Profit Before Tax stood at Rs. 2964.13 lacs
as against Rs. 4404.40 lacs in 2010-11.
This was achieved despite the challenging conditions of deteriorating
fiscal position, inflationary pressures, tight liquidity and slowing
economic growth. Reserve Bank of India hiked the reverse repo and repo
rate by 175 basis points each. This put an upward pressure on short
term rates significantly. Increase in gross market borrowings by 22.3
per cent over the budgeted amount and significant recourse to Treasury
Bills and Cash Management Bills (CMBs) exerted further pressure on the
liquidity conditions. The liquidity stress to some extent was handled
by the Reserve Bank through CRR cut by 125 basis points and open market
operations (OMO) including repos under the LAF, but the sentiments
continued to remain cautious with the 10 yr yield moving up to as high
as 8.97per cent as against 7.98per cent on March 31, 2011 before
closing at 8.57per cent.
2. CAPITAL ADEQUACY
Capital adequacy ratio as on March 31, 2012 stood at 74.42 per cent as
against the RBI stipulation of 15 per cent.
3. DIVIDEND
Your Board has recommended a final dividend of Re. 1.00 per share for
the financial year 2011-12 amounting to Rs. 1350.08 lacs. The total
outflow on account of said dividend shall be Rs. 1569.09 lacs
(including Dividend Distribution Tax).
4. OTHER MATTERS
4.1. Directors
During the year, the Board of Directors met six times to review
strategic, operational, technological and financial matters besides
laying down policies and procedures for operational management of the
company against the required minimum of 4 meetings in a year. The Audit
Committee of the Board met four times; the Share Transfer Committee met
twenty four times and Shareholders' / Investors' Grievance Committee
met twelve times.
Changes during the financial year 2011-12
The following changes took place in the Board of Directors of the
company during the financial year 2011-12 :
- Sh. A. S. Agarwal and Sh. M. S. Aftab resigned from the
Directorship of the company w.e.f. May 20, 2011 and May 21, 2011
respectively.
- Sh. Rakesh Sethi, Executive Director - Punjab National bank has
been appointed as an Additional Director by the Board in its meeting
held on October 24, 2011.
- Sh P. K. Chhokra, General Manager - Punjab National Bank has been
appointed as an Additional Director by the Board in its meeting held on
January 28, 2012.
- Sh. D.V.S.S.V. Prasad resigned from Directorship and Managing
Directorship on February 1, 2012 due to recall of his services by the
parent bank, Punjab National Bank.
- Sh. S. K. Dubey, who is already holding Directorship of the
company, has been appointed as Managing Director by the Board w.e.f.
February 1, 2012. He retired from Punjab National Bank on December 31,
2011.
Retirement of Directors by Rotation
As per Article 99 of the Articles of Association of the company, Dr.
Kamal Gupta and Sh. S. K. Soni shall retire by rotation in the
forthcoming Annual General Meeting and are eligible for reappointment.
Corporate Governance
Corporate Governance for the company means achieving high level of
accountability, efficiency, responsibility and fairness in all areas of
operations. Our workforce is committed towards the protection of the
interest of the stakeholders including shareholders, creditors,
investors, customers, employees, etc. Our policies consistently
undergo improvements keeping in mind our goal i.e. maximization of
value of all the stakeholders. The Corporate Governance practices
followed by the company are given in the Annual
Report. A certificate from M/s S. Mohan & Co., Statutory Auditors of
the company regarding compliance of conditions of Corporate Governance
stipulated by stock exchanges is enclosed with the 'Report on Corporate
Governance'.
4.2. Directors' Responsibility Statement
Pursuant to Section 217(2AA) of the Companies (Amendment) Act 2000, the
Directors confirm that in the preparation of the annual accounts:
- The applicable accounting standards have been followed.
- Appropriate accounting policies have been selected and applied
consistently. Judgements and estimates made are reasonable and prudent
so as to give true and fair view of the state of affairs of the company
at the end of the financial year ended March 31, 2012 and the Profit
and Loss Account for the year ended March 31, 2012.
- Proper and sufficient care has been taken 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 for
preventing and detecting fraud and other irregularities.
- The annual accounts have been prepared on a going concern basis.
4.3. Audit, Internal Control Systems & their adequacy
M/s S. Mohan & Co., Chartered Accountants, Delhi were appointed as the
Statutory Auditors of the company by the Comptroller & Auditor General
of India for the financial year ended March 31, 2012. The report of the
auditors is self-explanatory.
The company considers Internal Audit to be a very significant part of
its Corporate Governance practices. For the year 2011-12, the Board
appointed M/s Deloitte Haskins & Sells as the Internal Auditors of the
company. The scope of Internal Audit included audit of treasury
transactions on a monthly basis and reporting to the Audit Committee of
the Board that the company has operated within the limits of various
risk parameters laid down by the Board, Reserve Bank of India and other
statutory authorities. Besides, the firm also audited and reviewed key
business processes, including IT systems of the company on quarterly
basis. All the reports of the Internal Auditors were submitted to the
Audit Committee and the monthly audit reports were submitted to Reserve
Bank of India as well.
4.4. Human Resources
Total number of employees of the company as on March 31, 2012 was 36
(including 4 employees on deputation from parent bank). The company has
maintained peaceful and harmonious relations with its employees.
The information required under Section 217 of the Companies Act, 1956
read with the Companies (Particulars of Employees)(Amendment) Rules,
2011 be treated as NIL as none of the employees of the company draws
remuneration in excess of Rs. 500000/- p.m. No employee is related to
any Director of the company.
4.5. Particulars required to be furnished by the Companies (Disclosure
of particulars in the report of the Board of Directors) Rules, 1988.
a) Part A pertaining to the conservation of energy are not applicable
to the company.
With regard to Part B pertaining to technology absorption, the company
has installed the integrated treasury management software and RBI's
Negotiated Dealing System with the help of IDRBT and reputed IT
companies. The company recognizes the growing importance of Information
Technology in the emerging business environment. The company has also
implemented Business Continuity Plan (BCP) and Disaster
Recovery Plan (DRP) with the help of IDRBT (consultants for
implementation of BCP and DRP) to identify and reduce risk exposures
and proactively manage any contingencies.
b) Foreign Exchange earnings and outgoing:
The company has neither used nor earned any foreign exchange during the
year under review.
4.6. Public Deposits
During the year ended March 31, 2012, the company has not accepted any
deposits from the public within the meaning of the provisions of the
Non- Banking Financial Companies (Reserve Bank) Directions, 1977 and
RBI's notification no. DFC.118DG/(SPT)-98 dated 31st January 1998.
4.7. Acknowledgement
Your Directors thank Government of India, Reserve Bank of India,
Securities and Exchange Board of India, National Stock Exchange Ltd.,
Bombay Stock Exchange Ltd., Parent Bank, Commercial, Cooperative &
Regional Rural Banks, Financial Institutions, PF Trusts, Public Sector
Undertakings and Private Sector Corporate Bodies and other valued
clients for their whole-hearted support. We acknowledge the sincere and
dedicated efforts put in by employees of the company at all levels.
On behalf of Board of Directors
Date : May 29, 2012 (K.R.Kamath)
Place : New Delhi Chairman
Mar 31, 2011
The Directors have pleasure in presenting the Fifteenth Annual Report
together with the audited accounts of the company for the year ended
March 31, 2011.
1. FINANCIAL RESULTS
The financial results for the year ended March 31, 2011 along with
comparative figures for the previous year are given below:
(Rs. in lacs>
For the For the
year year
ended ended
31.3.2011 31.3.2010
Total Income 10321.28 10172.94
Total Expenditure 5916.88 4569.66
Profit/(loss) Before Tax 4404.40 5603.28
Less : Provision for Income Tax
(including deferred tax) 1346.55 1932.83
Profit /(loss) After Tax 3057.85 3670.45
Add: Balance in Profit & Loss
Account brought forward 5503.14 4147.21
Amount available for Appropriation 8560.99 7817.66
Proposed Appropriations
Transfer to Statutory Reserve 612.00 735.00
General Reserve 77.00 -
Proposed Dividend 1620.09 1350.08
Dividend Distribution Tax 269.08 229.44
Balance carried forward 5982.82 5503.14
The year 2010-11 was marked by the process of exit from the
accommodative monetary policy stance with focus on containing inflation
and inflationary expectations. As a result, during 2010-11, RBI raised
the policy rates seven times, whereby the repo rate under LAF has
cumulatively been increased by 175 basis points to 6.75 per cent and
the reverse repo rate by 225 basis points to 5.75 per cent. The Cash
Reserve Ratio (CRR) was, however, retained at 6 per cent. In tune with
the tight monetary policy stance, the money market rates also hovered
around the upper bound of the LAF corridor and the borrowing cost of
the company accordingly went higher.
In the Govt securities market, monetary policy, inflation concerns and
supply issues were the major factors influencing yields on govt
securities. Initially, higher than budgeted collections from auctions
of 3 G and BWA licences receded the concerns on fiscal deficit with
yield on 10-year G-sec touching a low of 7.35 per cent in mid May from
7.85 per cent as on March 31, 2010. Improved sentiments were, however,
offset by high inflation and tight monetary policy stance by RBI and
the 10 -year yield rose to as high as 8.23 per cent in mid January
before closing the year at 7.98 per cent as on March 31, 2011.
Moreover, with consistently tight liquidity conditions prevailing
almost throughout the year, the short term rates remained high
resulting in a flat yield curve with spread between 1 year and 30 year
security declining to 102 basis points from 300 basis points in the
beginning of the year. Owing to tight liquidity conditions the
borrowing cost remained high which hurt the net interest margin
considerably.
Against the above backdrop of tight money market rates and firm G-sec
yields, the Profit Before Tax of the company stood at Rs. 44.04 crore
in 2010-11 as against Rs. 56.03 crore during FY 2009-10. While Profit
After
Tax stands at Rs. 30.58 crore during FY 2010-11 as against Rs. 36.70
crore during FY 2009-10. The networth of the company stands at Rs.
568.92 crore as on March 31, 2011.
2. CAPITAL ADEQUACY
Capital adequacy ratio as on March 31, 2011 stood at 94.42 per cent as
against the RBI stipulation of 15 per cent.
3. DIVIDEND
Your Board has recommended a final dividend of Rs. 1.20 per share for
the financial year 2010-11 amounting to Rs. 1620.09 lakhs. The total
outflow on account of said dividend shall be Rs. 1889.17 lakhs
(including Dividend Distribution Tax).
4. OTHER MATTERS
4.1. Directors
During the year, the Board of Directors met five times to review
strategic, operational, technological and financial matters besides
laying down policies and procedures for operational management of the
company against the required minimum of 4 meetings in a year. The Audit
Committee of the Board met four times; the Share Transfer Committee met
twenty four times and Shareholdersà / Investorsà Grievance Committee
met twelve times.
Changes since last Annual General Meeting
The following changes took place in the Board of Directors of the
company since last Annual General Meeting :
Sh. Nagesh Pydah, Executive Director - Punjab National Bank, had
resigned from Directorship of the company on his elevation as Chairman
and Managing Director - Oriental Bank of Commerce.
Retirement of Directors by Rotation
As per Article 99 of the Articles of Association of the company, Dr. O.
P. Chawla & Sh. P. P. Pareek shall retire by rotation in the
forthcoming Annual General Meeting and are eligible for reappointment.
Corporate Governance
Corporate Governance for the company means achieving high level of
accountability, efficiency, responsibility and fairness in all areas of
operations. Our workforce is committed towards the protection of the
interest of the stakeholders including shareholders, creditors,
investors, customers, employees, etc. Our policies consistently
undergo improvements keeping in mind our goal i.e. maximization of
value of all the stakeholders. The Corporate Governance practices
followed by the company are given in the Annual Report. A certificate
from M/s S. Mohan & Co., Statutory Auditors of the company regarding
compliance of conditions of corporate governance stipulated by stock
exchanges is enclosed with the ÃReport on Corporate Governance.
4.2. Directorsà Responsibility Statement
Pursuant to Section 217(2AA) of the Companies (Amendment) Act 2000, the
Directors confirm that in the preparation of the annual accounts:
The applicable accounting standards have been followed.
- Appropriate accounting policies have been selected and applied
consistently, judgements and estimates made are reasonable and prudent
so as to give true and fair view of the state of affairs of the company
at the end of the financial year ended March 31, 2011 and the profit
and loss account for the year ended March 31, 2011.
- Proper and sufficient care has been taken 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 for
preventing and detecting fraud and other irregularities.
- The annual accounts have been prepared on a going concern basis.
4.3. Audit, Internal Control Systems & their adequacy
M/s S. Mohan & Co., Chartered Accountants, Delhi were appointed as the
Statutory Auditors of the company by the Comptroller & Auditor General
of India for the financial year ended March 31, 2011. The report of the
auditors is self-explanatory.
The company considers Internal Audit to be a very significant part of
its corporate governance practices. For the year 2010-11, the Board
appointed M/s Deloitte Haskins & Sells as the Internal Auditors of the
company. The scope of Internal Audit included audit of treasury
transactions on a monthly basis and reporting to the Audit Committee of
the Board that the company has operated within the limits of various
risk parameters laid down by the Board, Reserve Bank of India and other
statutory authorities. Besides, they also audited and reviewed key
business processes, including IT systems of the company, on quarterly
basis. All the reports of the Internal Auditors were submitted to the
Audit Committee and the monthly audit reports were submitted to Reserve
Bank of India as well.
4.4. Human Resources
Total number of employees of the company as on March 31, 2011 was 36
(including 5 employees on deputation from parent bank). The company has
maintained peaceful and harmonious relations with its employees.
The information required under Section 217 of the Companies Act, 1956
read with the Companies (Particulars of Employees) (Amendment) Rules,
2011 be treated as NIL as none of the employees of the company draws
remuneration in excess of Rs 5,00,000 /- p.m. No employee is related to
any Director of the company.
4.5. Particulars required to be furnished by the Companies (Disclosure
of particulars in the report of the Board of Directors) Rules, 1988.
a) Part A pertaining to the conservation of energy are not applicable
to the company.
With regard to Part B pertaining to technology absorption, the company
has installed the integrated treasury management software and RBIÃs
Negotiated Dealing System with the help of IDRBT and reputed IT
companies. The company recognizes the growing importance of Information
Technology in the emerging business environment. The company has also
implemented Business Continuity Plan (BCP) and Disaster Recovery Plan
(DRP) with the help of IDRBT (consultants for implementation of BCP and
DRP) to identify and reduce risk exposures and proactively manage any
contingencies.
b) Foreign Exchange earnings and outgoing:
The company has neither used nor earned any foreign exchange during the
year under review.
4.6. Public Deposits
During the year ended March 31, 2011, the company has not accepted any
deposits from the public within the meaning of the provisions of the
Non- Banking Financial Companies (Reserve Bank) Directions, 1977 and
RBIÃs notification no. DFC.118DG/(SPT)-98 dated 31st January 1998.
4.7. Acknowledgement
Your Directors thank Government of India, Reserve Bank of India,
Securities and Exchange Board of India, National Stock Exchange Ltd.,
Bombay Stock Exchange Ltd., Punjab National Bank, Commercial,
Cooperative & Regional Rural Banks, Financial Institutions, PF Trusts,
Public Sector Undertakings and Private Sector Corporate Bodies and
other valued clients for their whole-hearted support. We acknowledge
the sincere and dedicated efforts put in by employees of the company at
all levels.
On behalf of Board of Directors
(K.R.Kamath)
Chairman
Date : May 11, 2011
Place : New Delhi
Mar 31, 2010
The Directors have pleasure in presenting the Fourteenth Annual Report
together with the audited accounts of the company for the year ended
March 31, 2010.
1. FINANCIAL RESULTS
The financial results for the year ended March 31, 2010 along with
comparative figures for the previous year are given below:
(Rs. in lacs)
For the year For the year
ended 31.3.2010 ended 31.3.2009
Total Income 10172.94 11246.56
Total Expenditure 4569.66 7434.39
Profit/(loss) Before Tax 5603.28 3812.17
Less : Provision for Income
Tax (including deferred tax) 1932.83 1362.98
Profit /(loss) After Tax 3670.45 2449.19
Add: Balance in Profit & Loss
Account brought forward 4147.21 3451.64
Amount available for Appropriation 7817.66 5900.83
Proposed Appropriations
Transfer to Statutory Reserve 735.00 490.00
General Reserve
Proposed Dividend 1350.08 1080.06
Dividend Distribution Tax 229.44 183.56
Balance carried forward 5503.14 4147.21
During FY 2009-10 yields on G-sec rose consistently indicating market
concern over huge government borrowings and inflationary expectations.
Nevertheless intermittent easing of yields was also witnessed on
account of slow credit off take and easy liquidity conditions. During
the year, trading remained highly skewed towards short and medium term
papers. Yields firmed up considerably in the second quarter following
announcement of revised projection of government borrowing at Rs.
451000 crore as against Rs. 362000 crore estimated in the interim
budget. Yields charted up as unabated rise in food inflation and
improvement in domestic economic condition weighed on market sentiment.
Yields rose traded with a hardening bias during the fourth quarter, as
players remained wary of government borrowings for FY 2010-11. However,
yields retreated from nearly 18-months high at the close of the year on
announcement of lower than expected borrowing quantum for the first
half of FY 2010-11. Yield on 10-year benchmark paper firmed up by 84
basis points to close the year at 7.85 per cent as against 7.01 per
cent as on March 31, 2009. The company, despite this volatility, made a
profit before tax of Rs. 5603.28 lacs during the year ended March 31,
2010 due to prudent funds management and reorientation of trading
strategies.
2. CAPITAL ADEQUACY
Capital adequacy ratio as on March 31, 2010 stood at 41.59 per cent as
against the RBI stipulation of 15 per cent.
3. DIVIDEND
The Board has recommended a final dividend of Re. 1 per share for the
FY 2009-10 amounting to Rs. 1350.08 lacs. The total outflow on account
of said dividend shall be Rs. 1579.52 lacs (including Dividend
Distribution Tax).
4. OTHER MATTERS
4.1. Directors
During the year, the Board of Directors met seven times to review
strategic, operational, technological and financial matters besides
laying down policies and procedures for operational management of the
company against the required minimum of 4 meetings in a year. The Audit
Committee of the Board met five times; the Share Transfer and Issue of
Duplicate Shares Certificates Committee met twenty four times and
Shareholders / Investors Grievance Committee met twelve times.
Changes since last Annual General Meeting
The following changes took place in the Board of Directors of the
company since the date of last Annual General Meeting :
Sh. K. R. Kamath, Chairman and Managing Director- Punjab National Bank,
has been appointed as an Additional Director and Chairman by the Board
in its meeting held on January 21, 2010.
Sh. S. Ranganathan, General Manager - Punjab National Bank, had
resigned from Directorship and Managing Directorship on April 3, 2010
due to recall of his services by the parent bank, Punjab National Bank.
Sh. D.V.S.S.V. Prasad, General Manager-Punjab National Bank, has been
appointed as an Additional Director and Managing Director by the Board
in its meeting held on May 3, 2010, in place of Sh. S. Ranganathan.
Retirement of Directors by Rotation
As per Article 99 of the Articles of Association of the company, Dr.
Kamal Gupta and Sh. S. K. Soni shall retire by rotation in the
forthcoming Annual General Meeting and are eligible for reappointment.
Corporate Governance
Corporate Governance for the company means achieving high level of
accountability, efficiency, responsibility and fairness in all areas of
operations. Our workforce is committed towards the protection of the
interest of the stakeholders including shareholders, creditors,
investors, customers, employees, etc. Our policies consistently undergo
improvements keeping in mind our goal i.e. maximization of value of all
the stakeholders. The Corporate Governance practices followed by the
company are given in the Annual Report. A certificate from M/s Bansal
R. Kumar and Associates, Statutory Auditors of the company regarding
compliance of conditions of Corporate Governance stipulated by stock
exchanges is enclosed with the ÃReport on Corporate GovernanceÃ.
4.2. Directors Responsibility Statement
Pursuant to Section 217(2AA) of the Companies (Amendment) Act 2000, the
Directors confirm that in the preparation of the annual accounts:
The applicable accounting standards have been followed.
Appropriate accounting policies have been selected and applied
consistently, judgements and estimates made are reasonable and prudent
so as to give true and fair view of the state of affairs of the company
at the end of the financial year ended March 31, 2010 and the profit
and loss account for the year ended March 31, 2010.
Proper and sufficient care has been taken 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 for
preventing and detecting fraud and other irregularities.
The annual accounts have been prepared on a going concern basis.
4.3. Audit, Internal Control Systems & their adequacy
M/s Bansal R. Kumar and Associates, Chartered Accountants, Delhi were
appointed as the Statutory Auditors of the company by the Comptroller &
Auditor General of India for the financial year ended March 31, 2010.
The report of the auditors is self-explanatory.
The company considers Internal Audit to be a very significant part of
its corporate governance practices. For the year 2009-10, the Board
appointed M/s Ernst & Young Pvt. Ltd. as the Internal Auditors of the
company. The scope of Internal Audit included audit of treasury
transactions on a monthly basis and reporting to the Audit Committee of
the Board that the company has operated within the limits of various
risk parameters laid down by the Board, Reserve Bank of India and other
statutory authorities. Besides, they also audited and reviewed key
business processes, including IT systems of the company, on quarterly
basis. All the reports of the Internal Auditors were submitted to the
Audit Committee and the monthly audit reports were submitted to Reserve
Bank of India as well.
4.4. Human Resources
Total number of employees of the company as on March 31, 2010 was 31
(including 7 employees on deputation from parent bank). The company has
maintained peaceful and harmonious relations with its employees.
The information required under Section 217 of the Companies Act, 1956
read with the companies (Particulars of Employees)(Amendment) Rules,
2002 be treated as NIL as none of the employees of the company draws
remuneration in excess of Rs 2,00,000/- p.m. No employee is related to
any Director of the company.
4.5. Particulars required to be furnished by the Companies (Disclosure
of particulars in the report of the Board of Directors) Rules, 1988.
a) Part A pertaining to the conservation of energy are not applicable
to the company.
With regard to Part B pertaining to technology absorption, the company
has installed the integrated treasury management software and RBIs
Negotiated Dealing System with the help of IDRBT and reputed IT
companies. The company recognizes the growing importance of Information
Technology in the emerging business environment. The company has also
implemented Business Continuity Plan (BCP) and Disaster Recovery Plan
(DRP) with the help of IDRBT (consultants for implementation of BCP and
DRP) to identify and reduce risk exposures and proactively manage any
contingencies.
b) Foreign Exchange earnings and outgoing:
The company has neither used nor earned any foreign exchange during the
year under review.
4.6. Public Deposits
During the year ended March 31, 2010, the company has not accepted any
deposits from the public within the meaning of the provisions of the
Non- Banking Financial Companies (Reserve Bank) Directions, 1977 and
RBIs notification no. DFC.118DG/(SPT)-98 dated January 31, 1998.
4.7. Acknowledgement
Your Directors thank Government of India, Reserve Bank of India,
Securities and Exchange Board of India, National Stock Exchange Ltd.,
Bombay Stock Exchange Ltd., Punjab National Bank, Commercial,
Cooperative & Regional Rural Banks, Financial Institutions, PF Trusts,
Public Sector Undertakings and Private Sector Corporate Bodies and
other valued clients for their whole-hearted support. We acknowledge
the sincere and dedicated efforts put in by employees of the company at
all levels.
On behalf of Board of Directors
Date : June 8, 2010 (K. R. Kamath)
Place : New Delhi Chairman