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Directors Report of SMIFS Capital Markets Ltd.

Mar 31, 2015

The Directors have pleasure in presenting the Thirty Second Annual Report of the Company together with the audited financial statements for the year ended March 31, 2015.

1. (a) FINANCIAL SUMMARY OR HIGHLIGHTS / PERFORMANCE OF THE COMPANY

(Rs. in million) Year ended Year ended 31.03.2015 31.03.2014

Profit before Interest, Depreciation & Tax 14.05 8.19

Less: Interest 0.29 0.28

Profit before Depreciation & Tax 13.76 7.91

Less: Depreciation / Amortization 3.72 3.29

Profit before Tax 10.04 4.62

Less : Tax Expenses - Current / Earlier years 1.79 2.84

Less : Deferred Tax for the year 0.45 2.46

Add : MAT Credit Entitlement 1.75 2.76

Profit after Tax 9.55 2.08

Profit brought forward from earlier year : 61.12 65.57

Add : Transfer from General Reserve : 5.58 -

Less : Adjusted for fixed assets having remaining useful life nil as on 01.4.2014 : 0.90 65.80 65.57

Profit available for Appropriation 75.35 67.65

APPROPRIATIONS

Proposed Dividend including Dividend Tax 6.72 6.53

Profit carried to Balance Sheet 68.63 61.12

Financial and Operational Performance

Operating Profit (PBDIT) of the Company for the year was Rs. 14.05 million (previous year Rs. 8.19 million) or an increase of 71.55% over the previous year. Profit after tax for the year stood at Rs. 9.55 million (previous year Rs. 2.08 million) or an increase of 359.13% over the previous year.

Net worth of the Company as on March 31, 2015 was Rs. 1049.73 million (previous year Rs. 1049.72 million).

(b) CAPITAL

The paid up Equity Share Capital as on March 31, 2015 stood at Rs. 55,850,000/- divided into 5,585,000 equity shares of Rs. 10/- each.

(c) DIVIDEND

Your Directors recommend payment of dividend of Rs. 1/- per equity share (previous year Rs.1/- per share) on the paid up equity capital for the year ended March 31, 2015. Dividend will absorb a sum of Rs. 6.72 million including the dividend distribution tax thereon. In order to conserve the resources of the Company, the Directors recommended the same amount of dividend.

(d) TRANSFER FROM GENERAL RESERVES

Rs. 5.58 million (Previous Year: Rs. Nil) has been transferred from General Reserve of the Company to Statement of Profit and Loss. Current year dividend has been paid out of Profit of the Company for the year in accordance with Section 123 of the Companies Act, 2013.

(e) TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND

During the year, the unclaimed dividend pertaining to the dividend for the year ended March 31, 2007 was transferred to the Investor Education & Protection Fund after giving due notice to the Members.

Attention is being drawn that the unclaimed/unpaid dividend for the fi nancial year 2007-08 is due for transfer to Investor Education and Protection Fund during October/November 2015. In view of this, Members of the Company, who have not yet encashed their dividend warrant(s) or those who have not claimed their dividend amounts, may write to the Company/ Company's Registrars and Transfer Agents, M/s. Maheshwari Datamatics Private Limited.

(f) MANAGEMENT DISCUSSION AND ANALYSIS

Management Discussion and Analysis of financial condition and of operations of the Company for the year under review as required under Clause 49 of the Listing Agreement with the Stock Exchanges is given in the part on Corporate Governance elsewhere in the Annual Report marked as "Annexure A".

2. FINANCE

The Company continues to focus on judicious management of its working capital. Receivables and inventories were kept under strict check through continuous monitoring.

2.1 DEPOSITS

The Company has not accepted deposit from the public falling within the ambit of Section 73 of the Companies Act, 2013 and The Companies (Acceptance of Deposits) Rules, 2014.

2.2 PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the notes to the Financial Statements.

3. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has an Internal Control System, commensurate with the size, scale and complexity of its operations.

The Internal Audit Department monitors and evaluates the efficacy and adequacy of internal control system in the Company, its compliance with operating systems, accounting procedures and policies at all locations of the Company and its subsidiaries. Based on the report of internal audit function, process owners undertake corrective action in their respective areas and thereby strengthen the controls. Significant audit observations and corrective actions thereon are presented to the Audit Committee of the Board.

4. SUBSIDARY COMPANY

As on March 31, 2015, there was one wholly-owned subsidiary Company namely, SMIFS Capital Services Limited. Statement required under Section 129(3) of the Companies Act, 2013 in respect of the Subsidiary Company is attached.

FINANCIAL SUMMARY OR HIGHLIGHTS/ PERFORMANCE OF THE SUBSIDIARY COMPANY

(Rs. in million)

Year ended Year ended 31.03.2015 31.03.2014

Profit before Interest, Depreciation & Tax (0.80) (1.37)

Less : Interest 0.016 0.02

Profit before Depreciation & Tax (0.816) (1.39)

Less : Depreciation / Amortization 0.169 0.15

Profit before Tax (0.985) (1.54)

Less : Tax Expenses (0.023) 0.01

Profit after Tax (0.962) (1.53)

Profit brought forward from earlier year: (1.880) (0.35)

Less : Adjusted for fixed assets having remaining useful life nil as on 01.4.2014 (0.0014)(1.8814) - (0.35)

Profit carried to Balance Sheet (2.8434) (1.88)

5. YEAR IN RETROSPECT AND FUTURE OUTLOOK

The global economy in FY 2014-15 witnessed divergent trends among major economies and stress on major oil producing countries as a direct result of sharp decline in energy prices, especially in the second half of the year. Lower oil prices however benefit commodity importing countries, such as India. Falling energy prices have significantly improved India's overall fiscal landscape, and augur well for growth in domestic consumption.

India's economy is poised to return to its high-growth path, thanks to lower fiscal and current account deficits, falling inflation, benign commodity prices, and structural reforms to boost investments. Monetary policy is also likely to be supportive with the Reserve Bank of India (RBI) having already reduced interest rates twice.The manufacturing sector is likely to benefit from lower interest rates.

The government's call for 'Make in India' has sent out positive cues to the global investors Community. As India stands at the cusp of phenomenal opportunities, the financial services sector will play a supportive role in transforming the nation's future.

Your Company is registered as Category I Merchant Banker and is executing various assignments in areas of Mergers and Acquisitions, Loan Syndication, Capital Market Operations, Placement of Equity shares and debt. Your Company's real estate project at Bondel Road is progressing well and is expected to be completed within the next one year. Barring unforeseen circumstances, your Company is hopeful of achieving better results in the current year.

6. LISTING OF THE SECURITIES OF THE COMPANY

Equity Shares of your Company continue to be listed on BSE Limited and The Calcutta Stock Exchange Limited and the listing fees for the year 2015-16 have been paid. 97.31 per cent of the equity shares of your Company are held in dematerialized form.

7. DIRECTOR'S RESPONSIBILITY STATEMENT

Pursuant to the requirement under section 134(3)(c) of the Companies Act, 2013 with respect to Directors' Responsibility Statement, it is hereby confirmed that :

(a) in the preparation of the Annual Accounts the applicable accounting standards have been followed along with proper explanation relating to material departures.

(b) the directors have selected such accounting policies and applied them consistently and made judgment and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and the Profit and loss of the Company for that period.

(c) the directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provision of this act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

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

(e) the directors, in the case of a Listed Company, have laid down internal financial control to be followed by the Company and that such internal financial control are adequate and were operating effectively, and

(f) the director have devised proper systems to ensure compliance with the provision of all applicable laws and that such system were adequate and operating effectively.

8. RELATED PARTY TRANSACTIONS

All related party transactions that were entered, into during the fi nancial year were on an arm's length basis and were in the ordinary course of business. There are no materially significant related party transactions made by the Company with Promoters, Directors, Key Managerial Personnel or other designated persons which may have a potential confl ict with the interest of the Company at large.

All Related Party Transactions are placed before the Audit Committee as also the Board for approval. Prior omnibus approval of the Audit Committee is obtained on a yearly basis for the transactions which are of a foreseen and repetitive nature. The transactions entered into pursuant to the omnibus approval so granted are audited and a statement giving details of all related party transactions is placed before the Audit Committee and the Board of Directors for their approval on a yearly basis.

The policy on Related Party Transactions as approved by the Board is uploaded on the Company's website.

None of the Directors has any pecuniary relationships or transactions vis-à-vis the Company.

9. VIGIL MECHANISM FOR DIECTORS AND EMPLOYEES

The Company has a Vigil Mechanism to deal with instance of fraud and mismanagement, if any. The details of the Vigil Mechanism is explained in the Corporate Governance Report and also posted on the website of the Company.

10. DISCLOSURE OF SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION, REDRESSAL ACT 2013)

In accordance with The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 to provide for the effective enforcement of the basic human right of gender equality and the guarantee against sexual harassment and abuse, more particularly against sexual harassment at work place, your Company has a Policy on Prevention of Sexual Harassment at the workplace duly approved by the Board of Directors.

During the year, no complaint was reported under The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

11. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNING AND OUTGO

Particulars required under Section 134(3)(m) of the Act, read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988, under the heads (a) conservation of energy; and (b) technology absorption, are not applicable to the Company.

During the year there was no foreign exchange earnings (previous year Rs. nil). Foreign Exchange outgo during the year aggregated to Rs. 1.30 million (previous yearRs. 2.19 million).

12. DIRECTORS

Composition of the Board of Directors of your Company fulfills the criteria fixed by Clause 49 of the listing agreement with fifty per cent of the Directors being Independent Directors. Your Board comprises of six directors out of which three are independent directors.

Mr. Utsav Parekh is the Non-Executive Chairman. Further, Mr. Chandranath Mukherjee, Independent Director of the Company ceased to be the Director due to his sad and sudden demise on September 5, 2014.

The Board of Directors had on the recommendation of the Nomination & Remuneration Committee appointed Mrs. Ramya Hariharan as an Additional Director w.e.f September 20, 2014 and her appointment was regularized by conducting a Postal Ballot whose results were announced on November 18, 2014.

The three-year term of Mr. Kishor Shah as Managing Director ended on March 31, 2015 and on recommendation of the Nomination and Remuneration Committee and approval of the Board of Directors in its meeting held on January 30, 2015 subject to the same being ratified by the members at the ensuing Annual General Meeting by passing a Special Resolution, Mr. Kishor Shah has been re-appointed Managing Director of the Company with effect from April 1, 2015 for a further period of 3 (three) years. Terms of appointment include payment of managerial remuneration as per the provisions of Sections 196, 197, 203 and other applicable provisions, if any, read with Schedule V, Part II, Section II (A) to the Companies Act, 2013.

All Independent Directors have given declarations that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 and Clause 49 of the Listing Agreement.

In accordance with the provisions of the Companies Act, 2013 and in terms of the Memorandum and Articles of Association of the Company Mr. Utsav Parekh retires by rotation and is eligible for re-appointment.

12.1. Board Evaluation

Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Board has carried out an annual performance evaluation of its own performance, the Directors individually, Key Managerial Personnel (KMP), Senior Management as well as the evaluation of the working of its Audit, Nomination & Remuneration Committees and Stakeholders Relationship Committee. The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report.

12.2. Nomination & Remuneration Policy

The Board has, on the recommendation of the Nomination & Remuneration Committee framed a policy for selection and appointment of Directors, Senior Management and their remuneration. The Nomination and Remuneration Policy is stated in the Corporate Governance Report.

12.3 Meetings

tDuring the year five Board Meetings and four Audit Committee Meetings were convened and held. The details of which are given in the Corporate Governance Report. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013.

13. AUDITORS

13.1. Statutory Auditors

M/s. J. S. Vanzara & Associates, Chartered Accountants, Statutory Auditors of the Company hold office in accordance with the provisions of the Companies Act, 2013 upto the conclusion of the forthcoming Annual General Meeting.

M/s. J. S. Vanzara & Associates, Chartered Accountants confirmed that their appointment, if made, would be within the prescribed limits under section 141(3)(g) of the Companies Act, 2013 and that they are not disqualified for such appointment within the meaning of section 141 of the Companies Act, 2013 and they hold valid certificate issued by the Peer Review Board of ICAI.

13.2. Secretarial Audit

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company had appointed Ms. Disha Dugar, Company Secretary in Practice to undertake the Secretarial Audit of the Company. The Report of the Secretarial Audit Report is annexed herewith as "Annexure B".

14. AUDITORS' QUALIFICATION

(i) Statutory Auditors' Qualifications

Qualifications contained in the Auditors' Report if any have been dealt with in the Notes to financial statements and are self-explanatory.

(ii) Secretarial Auditors' Qualifications

Qualifications contained in the Secretarial Auditors' Report if any have been dealt with in the Notes to Form MR-3 and are self-explanatory.

15. PARTICULARS OF EMPLOYEES

The information required pursuant to Section 197 read with Rule 5, of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company, is given in "Annexure C".

16. EXTRACT OF ANNUAL REPORT

The details forming part of the extract of the Annual Report in form MGT-9 is annexed herewith as "Annexure D".

17. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS

There are no significant material orders passed by the Regulators/Courts which would impact the going concern status of the Company and its future operation.

18. ACKNOWLEDGEMENTS

Your Directors express their sincere appreciation of the co-operation and assistance received from the shareholders, bankers, regulatory bodies and other business constituents during the year under review.

Regd. Office : For and on behalf of the Board of Directors

'Vaibhav' (4F), 4 Lee Road,

Kolkata - 700 020 (UTSAV PAREKH)

The 27th day of May, 2015 Chairman


Mar 31, 2014

DEAR MEMBERS,

The Directors have pleasure in presenting the Thirty First Annual Report of the Company together with the audited financial statements for the year ended March 31, 2014.

1. (a) FINANCIAL HIGHLIGHTS

(Rupees in million) Year ended Year ended 31.03.2014 31.03.2013

Profit before Interest, Depreciation & Tax 8.19 17.59

Less: Interest 0.28 0.34

Profit before Depreciation & Tax 7.91 17.25

Less: Depreciation/Amortization 3.29 3.58

Profit before Tax 4.62 13.67

Less: Tax Expenses-Current/Earlier years 2.84 5.50

Less : Deferred Tax for the year 2.46 25.82

Add: MAT Credit Entitlement 2.76 27.84

Profit after Tax 2.08 10.19

Profit brought forward from earlier year 65.57 65.08

Profit available for Appropriation 67.65 75.27

APPROPRIATIONS

Proposed Dividend including Dividend Tax 6.53 9.15

Transfer to General Reserve - 0.55

Profit carried to Balance Sheet 61.12 65.57



Financial and Operational Performance

Operating profit (PBDIT) of the Company for the year was Rs. 8.19 million (previous year Rs. 17.59 million). Profit after tax for the year stood at Rs. 2.08 million (previous year Rs. 10.19 million).

Net worth of the Company as on March 31, 2014 was Rs. 1049.72 million (previous year Rs. 1057.54 million).

(b) CAPITAL

Paid up capital of the Company as on March 31, 2014 stood at Rs. 55,850,000/- divided into 5,585,000 equity shares of Rs. 10/- each.

(c) DIVIDEND

In spite of the reduction in profit after tax for the year as compared to the previous year, your Directors recommend payment of dividend of Rs. 1.00 per equity share (previous year Rs. 1.40 per share) on the paid up equity capital for the year ended March 31, 2014. Dividend will absorb a sum of Rs. 6.53 million including the dividend distribution tax thereon. Due to inadequacy of profits the dividend is being paid out of free reserves.

(d) TRANSFER TO GENERAL RESERVES

Rs. Nil (Previous Year: Rs. 0.55 million) has been transferred to the General Reserve of the Company. Current year dividend has been paid out of free reserves.

(e) TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND

No unpaid and unclaimed dividend as on March 31, 2014 was required to be transferred as per the provisions of Sections 205A and 205C of the Companies Act, 1956.

Attention is being drawn that the unclaimed/unpaid dividend for the Financial Year 2006-07 is due for transfer to Investor Education and Protection Fund during October/November 2014. In view of this, Members of the Company, who have not yet encashed their dividend warrants(s) or those who have not claimed their dividend amounts, may write to the Company/Company’s Registrar and Transfer Agents M/s. Maheshwari Datamatics Private Limited.

(f) MANAGEMENT DISCUSSION AND ANALYSIS

Management Discussion and Analysis of financial condition and of operations of the Company for the year under review as required under Clause 49 of the Listing Agreement with the Stock Exchanges is given in the part on Corporate Governance elsewhere in the Annual Report.

2. SUBSIDIARY COMPANY

As on March 31, 2014, there was one wholly-owned subsidiary Company namely, SMIFS Capital Services Limited. Statement required under Section 212 of the Companies Act, 1956 in respect of the Subsidiary Company is attached.

3. YEAR IN RETROSPECT AND FUTURE OUTLOOK

The global economy began its modest recovery in FY 2013-14 with somewhat improved demand from OCED economies in the second half of 2013. While the trend is expected to continue in the current year, the positive outlook is subdued by the potential consequences of gradual ''tapering'' by US Federal Reserve of its quantitative easing policies.

Emerging markets like India faced multiple challenges during the year namely capital outflows, intense exchange rate pressure and volatile current account movement. A combination of persistent inflation, fiscal imbalances, external sector vulnerabilities and low investments resulted in sluggish domestic demand growth. Fiscal and monetary initiatives taken by the Indian government and the Reserve Bank of India (RBI) helped stabilize currency and financial markets, but the domestic macro-economic environment still remains challenging.

The slowdown was mainly due to policy paralysis at the center and steps taken to curtail fiscal deficit and current account deficit and continued uncertainty and slowdown in the global economy. Fiscal deficit and current account deficit of the country climbed sharply in the first half of the year and India faced threat of ratings downgrade from international rating agencies. In this backdrop, the then finance minister took several steps to rein in both fiscal deficit and current account deficit and also cut government spending in last few months of the year. With the new stable government now coming to power with absolute majority, things are expected to improve over time.

Rising inflationary pressures required adoption of tight monetary policies by RBI in the preceding years. Increasing risks to growth from external as well as domestic sources and tight monetary policy in the preceding few years in face of persistent inflationary pressures has also resulted in a slowdown of the economy. A cautious monetary policy and slowdown in economy has impacted investment and consumption growth. Investments by Foreign Institutional Investors also slowed down during the year.

The slowdown in 2011-12 and 2012-13 has been precipitated by domestic factors as well as factors emanating from the rest of the world, particularly advanced economies and India''s major trading partners.

The inflation has started gradually receding and with the steps taken to rein in fiscal deficit and current account deficit and a gradual reduction in interest rates, it is expected that Indian Economy will bottom out in the second half of the current year 2014-15.

Your Company is registered as Category I Merchant Banker and is executing various assignments in areas of Mergers and Acquisitions, Loan Syndication, Capital Market Operations, Placement of Equity shares and debt. Your Company''s real estate project at Bondel road is progressing well. Barring unforeseen circumstances, your Company is hopeful of achieving better results in the current year.

4. LISTING OF SECURITIES OF THE COMPANY

Equity shares of your Company continue to be listed on BSE Limited and The Calcutta Stock Exchange Limited and the listing fees for the year 2014-15 have been paid. 97.29 per cent of the equity shares of your Company are held in dematerialized form.

5. DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to the requirement under section 217(2AA) of the Companies Act, 1956 with respect to Directors'' Responsibility Statement, it is hereby confirmed that.

(i) in the preparation of the accounts for the financial year ended March 31, 2014, the applicable Accounting Standards have been followed and that there are no material departures.

(ii) the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2014 and of the profit of the Company for the year ended on that date

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

(iv) the Directors have prepared the annual financial statements of the Company on a ''going concern'' basis.

6. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO.

Particulars required under Section 217(1)(e) of the Act, read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988, under the heads (a) conservation of energy; and (b) technology absorption, are not applicable to the Company.

During the year there was no foreign exchange earning (previous year ''nil''). Foreign Exchange outgo during the year aggregated to Rs. 2.19 million (previous year Re 2.38 million).

7. DIRECTORS

Composition of the Board of Directors of your Company fulfills the criteria fixed by Clause 49 of the listing agreement with fifty per cent of the Directors being independent directors. Your Board comprises of six directors out of which three are independent directors.

There was no change in the composition of Board of Directors during the year. Mr. Utsav Parekh is the Non- Executive Chairman.

The three-year term of Mr. Kishor Shah as Managing Director ended on 31st March 2012 and thereafter on recommendation of the Remuneration Committee, his reappointment was approved by the Board of Directors and also by the members by a Special Resolution at the Annual General Meeting held on September 8, 2012. Mr. Kishor Shah has been re-appointed Managing Director of the Company with effect from April 1, 2012 for a further period of 3 (three) years. Terms of appointment include payment of managerial remuneration as per the provisions of Sections 198, 269, 309, 310, 311 and other applicable provisions, if any, of the Companies Act, 1956 read with Schedule XIII, Part II, Section II 1(B) to the Companies Act, 1956.

Mr. Ajay Kumar Kayan, Director retire by rotation in accordance with the requirement of the Companies Act, 2013 and the Articles of Association of the Company. He being eligible offered himself for re-appointment.

Brief resume of Mr. Ajay Kumar Kayan, nature of his expertise in specific functional areas, names of companies in which he hold directorship and/or membership/Chairmanship of committees of the board, his shareholdings as stipulated under Clause 49 of the listing agreement are furnished in the part on Corporate Governance elsewhere in the Annual Report.

Section 149(10) of the Companies Act, 2013 (the Act) which has become effective from 01st April, 2014, provides for appointment of Independent Directors for a period of 2 terms of 5 consecutive years. The Act provides that while considering the reappointment, the tenure of holding of the office as Independent Directors prior to the commencement of the Act shall not be taken into account. In terms of Section 149, 152 and any other applicable provisions of the Companies Act, 2013, effective from 1st April, 2014, for the purpose of determining the directors liable to retire by rotation, the Independent Directors shall not be included in the total number of directors of the Company.

Our three Independent Directors, viz Mr. Ramesh Maheshwari, Mr. Chandranath Mukherjee and Mr. Santosh Kumar Mukherjee were appointed on 10th July, 1990, 27th October, 2006 and 16th September, 2006 respectively and hence they will be appointed for 5 consecutive years for a term upto 31st March, 2019. Details of the resolution for the appointment of Mr. Ramesh Maheshwari, Mr. Chandranath Mukherjee and Mr. Santosh Kumar Mukherjee are given in the Explanatory Statement prepared under Section 102 of the Companies Act, 2013 of the Notice of the Annual General Meeting.

8. AUDITORS

M/s. J. S. Vanzara & Associates, Chartered Accountants, statutory auditors of the Company hold office in accordance with the provisions of the Companies Act, 1956 upto the conclusion of the forthcoming Annual General Meeting.

M/s. J. S. Vanzara & Associates, Chartered Accountants confirmed that their appointment, if made, would be within the prescribed limits under section 141 (3) (g) of the Companies Act, 2013 and that they are not disqualified for such appointment within the meaning of section 141 of the Companies Act, 2013 and they hold valid certificate issued by the Peer Review Board of ICAI.

9. AUDITORS'' QUALIFICATION

Qualifications contained in the Auditors'' Report if any have been dealt with in the Notes to financial statements and are self-explanatory.

10. PARTICULARS OF EMPLOYEES

Information pursuant to Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 forming part of the Directors'' Report is not required to be annexed. MCA vide its notification dated March 31, 2011 raised the exemption limit of disclosure of salary to employees to Rs.5 Lac per month or Rs. 60 Lac per annum. There are no employees in your company drawing remuneration more than Rs.5 Lac per month or Rs. 60 Lac per annum

11. ACKNOWLEDGEMENTS

Your Directors express their sincere appreciation of the co-operation and assistance received from the shareholders, bankers, regulatory bodies and other business constituents during the year under review.



Regd. Office : On behalf of the Board of Directors

''Vaibhav'' 4F, 4 Lee Road, Kolkata - 700 020

(UTSAV PAREKH) The 28th day of May, 2014 Chairman


Mar 31, 2013

TO THE MEMBERS,

The Directors have pleasure in presenting the Thirtieth Annual Report of the Company together with the audited financial statements for the year ended March 31, 2013.

1. (a) FINANCIAL HIGHLIGHTS

(Rupees in million)

Year ended Year ended 31.03.2013 31.03.2012

Profit before Interest, Depreciation & Tax 17.59 56.87

Less: Interest 0.34 0.42

Profit before Depreciation & Tax 17.25 56.45

Less: Depreciation / Amortization 3.58 3.90

Profit before Tax 13.67 52.55

Less: Tax Expenses - Current / Earlier years 5.50 0.19

Less : Deferred Tax for the year 25.82 12.96

Add: MAT Credit Entitlement 27.84 -

Profit after Tax 10.19 39.40

Profit brought forward from earlier year 65.08 54.76

Profit available for Appropriation 75.27 94.16

Appropriations

Proposed Dividend including Dividend Tax 9.15 9.08

Transfer to General Reserve 0.55 20.00

Profit carried to Balance Sheet 65.57 65.08

Financial and Operational Performance

Operating profit (PBDIT) of the Company for the year was Rs. 17.59 million (previous year Rs. 56.87 million). Profit after tax for the year stood at Rs. 10.19 million (previous year Rs. 39.40 million).

Net worth of the Company as on March 31, 2013 was Rs. 1057.54 million (previous year Rs. 1060.06 million).

(b) CAPITAL

Paid up capital of the Company as on March 31, 2013 stood at Rs. 55,850,000/- divided into 5,585,000 equity shares of Rs. 10/- each.

(c) DIVIDEND

Inspite of the reduction in profit after tax for the year as compared to the previous year, your Directors recommend payment of dividend of Rs. 1.40 per equity share (previous year Rs. 1.40 per share) on the paid up equity capital for the year ended March 31, 2013. Dividend will absorb a sum of Rs. 9.15 million including the dividend distribution tax thereon.

(d) TRANSFER TO GENERAL RESERVES

Rs. 0.55 million (Previous Year: Rs. 20 million) has been transferred to the General Reserve of the Company.

(e) TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND

No unpaid and unclaimed dividend as on March 31, 2013 was required to be transferred as per the provisions of Sections 205A and 205C of the Companies Act, 1956.

(f) MANAGEMENT DISCUSSION AND ANALYSIS

Management Discussion and Analysis of financial condition and of operations of the Company for the year under review as required under Clause 49 of the Listing Agreement with the Stock Exchanges is given in the part on Corporate Governance elsewhere in the Annual Report.

2. SUBSIDIARY COMPANY

As on March 31, 2013, there was one wholly-owned subsidiary Company namely, SMIFS Capital Services Limited. Statement required under Section 212 of the Companies Act, 1956 in respect of the subsidiary Company is attached.

3. YEAR IN RETROSPECT AND FUTURE OUTLOOK

India''s economic growth rate in terms of gross domestic product had slipped to decade''s low of 5% in 2012-13, as against 6.2% in the previous fiscal and a slowdown in the industrial activity was witnessed throughout the year.

The slowdown was mainly due to policy paralysis at the center and the continued uncertainty and slowdown in the global economy. Growth of exports for most of the current year remained in negative territory while imports picked up during the year. Fiscal deficit and current account deficit of the country climbed sharply in the first half of the year and India faced threat of ratings downgrade from international rating agencies. In this backdrop, the current finance minister took several steps to rein in both fiscal deficit and current account deficit and also cut government spending in last few months of the year.

Rising inflationary pressures required adoption of tight monetary policies by RBI in the preceding years. Increasing risks to growth from external as well as domestic sources and tight monetary policy in the preceding few years in face of persistent inflationary pressures has also resulted in a slowdown of the economy. The RBI reduced repo rates by 50 basis points in April, 2012 and by 25 basis points again in January 2013 and reduced Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR) to improve liquidity conditions. A cautious monetary policy and slowdown in economy has impacted investment and consumption growth. Investments by Foreign Institutional Investors has also slowed down.

The slowdown in 2011-12 and 2012-13 has been precipitated by domestic factors as well as factors emanating from the rest of the world, particularly advanced economies and India''s major trading partners. The crisis in the Euro-zone area and slow growth in many other advanced economies have affected growth in India.

The inflation has started gradually receding and with the steps taken to rein in fiscal deficit and current account deficit and a gradual reduction in interest rates, it is expected that Indian Economy will bottom out in the second half of the current year 2013-14.

Your Company is registered as Category I Merchant Banker and is executing various assignments in areas of Mergers and Acquisitions, Loan Syndication, Capital Market Operations, Placement of Equity shares and debts. Your Company''s real estate project at Bondel road is progressing well. Barring unforeseen circumstances, your Company is hopeful of achieving better results in the current year.

4. LISTING OF SECURITIES OF THE COMPANY

Equity shares of your Company continue to be listed on BSE Limited and The Calcutta Stock Exchange Limited and the listing fees for the year 2013-14 have been paid. 97.29 per cent of the equity shares of your Company are held in dematerialized form.

5. DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to the requirement under section 217(2AA) of the Companies Act, 1956 with respect to Directors'' Responsibility Statement, it is hereby confirmed that:

(i) in the preparation of the accounts for the financial year ended March 31, 2013, the applicable Accounting Standards have been followed and that there are no material departures;

(ii) the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2013 and of the profit of the Company for the year ended on that date;

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

(iv) the Directors have prepared the annual accounts of the Company on a ''going concern'' basis.

6. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

Particulars required under Section 217(1)(e) of the Act, read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988, under the heads (a) conservation of energy; and (b) technology absorption, are not applicable to the Company.

During the year there was no foreign exchange earning (previous year ''nil''). Foreign Exchange outgo during the year aggregated to Rs. 2.38 million (previous year Re. 1.17 million).

7. DIRECTORS

Composition of the Board of Directors of your Company fulfills the criteria fixed by Clause 49 of the listing agreement with fifty per cent of the Directors being independent directors. Your Board comprises of six directors out of which three are independent directors.

There was no change in the composition of Board of Directors during the year. Mr. Utsav Parekh is the Non- Executive Chairman.

The three-year term of Mr. Kishor Shah as Managing Director ended on 31st March 2012 and on recommendation of the Remuneration Committee and approval of the Board of Directors and also by the members by a Special Resolution at the Annual General Meeting held on September 8, 2012, Mr. Kishor Shah has been re-appointed Managing Director of the Company with effect from April 1, 2012 for a further period of 3 (three) years. Terms of appointment include payment of managerial remuneration as per the provisions of Sections 198, 269, 309, 310, 311 and other applicable provisions, if any, of the Companies Act, 1956 read with Schedule XIII, Part II, Section II 1(B) to the Companies Act, 1956.

Mr. Utsav Parekh, Director and Mr. Santosh Kumar Mukherjee, Director retire by rotation in accordance with the requirement of the Companies Act, 1956 and the Articles of Association of the Company. They being eligible offered themselves for re-appointment.

Brief resume of Mr. Utsav Parekh and Mr. Santosh Kumar Mukherjee, nature of their expertise in specific functional areas, names of companies in which they hold directorship and / or membership / Chairmanship of committees of the board, their shareholdings as stipulated under Clause 49 of the listing agreement are furnished in the part on Corporate Governance elsewhere in the Annual Report.

8. AUDITORS

M/s. J. S. Vanzara & Associates, Chartered Accountants, statutory auditors of the Company hold office in accordance with the provisions of the Companies Act, 1956 upto the conclusion of the forthcoming Annual General Meeting.

M/s. J. S. Vanzara & Associates, Chartered Accountants confirmed that their appointment, if made, would be within the prescribed limits under section 224(1B) of the Companies Act, 1956 and that they are not disqualified for such appointment within the meaning of section 226 of the Companies Act, 1956 and they hold valid certificate issued by the Peer Review Board of ICAI.

9. AUDITORS'' QUALIFICATION

Qualifications contained in the Auditors'' Report have been dealt with in the Notes to financial statements and are self-explanatory.

10. PARTICULARS OF EMPLOYEES

Information pursuant to Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 forming part of the Directors'' Report is not required to be annexed. MCA vide its notification dated March 31, 2011 raised the exemption limit of disclosure of salary to employees to Rs.5 Lac per month or Rs. 60 Lac per annum. There are no employees in your company drawing remuneration more than Rs.5 Lac per month or Rs. 60 Lac per annum

11. ACKNOWLEDGEMENTS

Your Directors express their sincere appreciation of the co-operation and assistance received from the shareholders, bankers, regulatory bodies and other business constituents during the year under review.

Regd. Office : On behalf of the Board of Directors

''Vaibhav'' 4F, 4 Lee Road,

Kolkata - 700 020 (UTSAV PAREKH)

The 24th day of May, 2013 Chairman

 
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