Mar 31, 2023
The Board of Directors are pleased to present the Company''s 40th Annual Report on the business and operations along with the Audited Financial Statements for the Financial Year ended March 31, 2023.
FINANCIAL PERFORMANCE (H lakhs) |
||||
Particulars |
Consolidated |
Standalone |
||
March 31, 2023 |
March 31, 2022 |
March 31, 2023 |
March 31, 2022 |
|
Revenues from Operations |
4,054 |
4,154 |
2,404 |
3,115 |
Other Income |
630 |
417 |
469 |
298 |
Total Income |
4,684 |
4,571 |
2,873 |
3,413 |
Total Expenses |
3,340 |
2,706 |
1,962 |
1,926 |
Profit before Exceptional Items and Tax |
1,344 |
1,865 |
911 |
1,487 |
Extraordinary Items |
173 |
277 |
173 |
277 |
Profit before Tax |
1,517 |
2,142 |
1,084 |
1,764 |
Tax Expenses |
399 |
444 |
308 |
344 |
Profit after Tax |
1,118 |
1,698 |
776 |
1,420 |
Other Comprehensive Income (Net of Tax) |
732 |
691 |
738 |
699 |
Total Comprehensive Income |
1,850 |
2,389 |
1,514 |
2,119 |
number of industry-leading names to our client list. Our team remained committed and worked effectively during this period. Customers were attracted by our ability to craft unique solutions through our ''intellectual property'' and the strength of our ''network''.
New Opportunities
We see the slowdown in fund raising by startups as a healthy correction of frothy valuation in some segment of startup world. This will create opportunities for bargain hunting and availability of quality opportunities at reasonable valuations. Our investment in Startups remained stable, as our thesis ensured investment in quality business with significant growth opportunities and reasonable valuation.
India''s growth continues to be resilient despite some signs of moderation in growth, says the World Bank in its latest India Development Update. India GDP growth is expected to be much better vis-a-vis the looming recession threat in the developed economies.
Financial statements are prepared in accordance with the Companies (Indian Accounting Standards)
OVERVIEW OF COMPANY''S FINANCIAL & OPERATIONAL PERFORMANCE
Consolidated income was R 4,684 lakhs for the Year ended March 31, 2023 compared to R 4,571 lakhs in the previous financial year. Consolidated Profit after Tax including Comprehensive Income for the Year ended March 31, 2023 was R 1,850 lakhs as compared to R 2,389 lakhs during the previous financial year.
Standalone income was R 2,873 lakhs for the Year ended March 31, 2023 compared to R 3,413 lakhs in the previous financial year. Standalone Profit after Tax including Comprehensive Income for the Year ended March 31, 2023 was R 1,514 lakhs compared to R 2,119 lakhs during the previous financial year.
In light of global slowdown, significant tightening of global liquidity and low volumes in capital market, we have recorded healthy revenues and profits. Our diversified advisory services across both debt capital and equity capital enabled us to tide through the funding winter seen by start-up segment. We saw a significant addition to our cash balances, driven by repeat and referral business that signified customer satisfaction. We added a
Rules, 2015 (Ind-AS) notified under Section 133 and other applicable provisions of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014, as amended from time to time.
ACQUISTION OF ARTIFICIAL INTELLIGENCE / MACHINE LEARNING-BASED TECHNOLOGY COMPANY IN UNITED KINFDOM
Pursuant to the authority granted by the Board of Directors on April 13, 2023, the Company entered into an agreement with Bridgeweave Limited ("Bridgeweave"), a UK based an Artificial Intelligence / Machine Learning-based technology company, that has developed a suite of financial products for retail investors. The agreement envisages the acquisition of a majority / 100% ownership in Bridgeweave in a two-step process:
a) Acquisition of an 8% Equity stake in Bridgeweave, at a pre-money valuation of R 115 Cr, through a primary infusion of INR 10 Cr in two tranches of R 5 Cr each, over a period of 90 days from the date of agreement.
b) The Company will seek to acquire the balance 92% Equity stake in Bridgeweave, at a floor valuation of R 125 Cr (including R10 Cr infused by the Company), through a stock swap, post execution of definitive documentation over the 90 days from the date of agreement. The Company will issue Equity Shares to Members of Bridgeweave UK for the balance 92% Equity stake at a floor valuation of R 130/- per Equity Share.
The acquisition is subject to execution of definitive documentation, regulatory / statutory approvals as may be required under applicable laws, including the approval of Members of the Company for issuance of Equity Shares.
The Board of Directors recommend a dividend of R 0.50 per Equity Share of face value of R 5/- each for the Financial Year 2022-23, subject to the approval of the Members at the 40th Annual General Meeting. In the previous year, the Company had declared dividend of R 2.25 per Equity Share.
During the year under review, no amount from the Profit was transferred to Reserves.
EQUITY SHARE CAPITAL
Paid-up Equity Share Capital of the Company as of March 31, 2023 was R 1,618 lakhs. The outstanding Equity Shares were 3,23,57,225 Equity Shares of face value of R 5/- each.
During the year under review, 11,81,400 Equity Shares were allotted to the eligible Employees / Directors of the Company / Subsidiaries pursuant to exercise of Options granted under Employee Stock Option Scheme 2018.
UTILISATION OF PROCEEDS OF PREFERENTIAL ISSUE OF EQUITY SHARES
The Board of Directors had allotted 45,50,000 Equity Shares in November 2021 to select investors, on a Preferential basis, pursuant to approval granted by the Members at their Extraordinary General Meeting held on November 10, 2021. The issue proceeds of R 4,038 lakhs received on allotment of Equity Shares have been invested in the fixed deposits till deployment of funds for the purpose for which the funds were raised.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
Pursuant to the provisions of the Regulation 34 of the SEBI Listing Regulations, the Management Discussion and Analysis Report giving a detailed account of the operations and the state of affairs of the Company is annexed as Annexure "1" to this Report.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
The Members of the Company, at their 39th Annual General Meeting held on September 27, 2022, appointed Mr. Ashok Kacker (DIN: 01647408) and Mr. Sujit Kumar Varma (DIN: 09075212) as NonExecutive & Non-Independent Directors, pursuant to the notice received under Section 160 of the Companies Act, 2013.
Based on the recommendation of Nomination and Remuneration Committee, the Board of Directors on March 22, 2023 approved the change in designation of Mr. Akshay Gupta (DIN: 01272080) from Non-Executive and Non-Independent Director to Whole-time Director of the Company, for a term of Five Years effective March 22, 2023. The Company received declaration, under Section
149(7) of the Companies Act, 2013, from all the Independent Directors of the Company confirming that they meet the criteria of Independence as prescribed under Section 149(6) of the Companies Act, 2013 and Regulation 16(1)(b) of the SEBI Listing Regulations and that their names have been included in the Databank of Independent Directors as prescribed under the Companies Act, 2013. In the opinion of the Board, the Independent Directors of the Company possess necessary expertise, integrity and experience.
In accordance with the provisions of Section 152 of the Companies Act, 2013 and the Articles of Association of the Company, Mr. Sujit Kumar Varma, Non-Executive & Non-Independent Director, retires by rotation at the ensuing Annual General Meeting and being eligible, offers himself for reappointment. Appropriate resolution for re-appointment of Mr. Sujit Kumar Varma, who retires by rotation, is being placed before you for your approval at the ensuing Annual General Meeting. The information on the particulars of Director seeking appointment / re-appointment, as required under SEBI Listing Regulations, is given in the Notice of the Annual General Meeting, forming part of this Annual Report. The Board recommends his re-appointment for the consideration of the Members of the Company at the ensuing Annual General Meeting.
Based on the recommendation of Nomination and Remuneration Committee, the Board of Directors appointed Mr. Arun Shah as a Chief Financial Officer of the Company with effect from March 22, 2023, to fill up the vacancy caused by the untimely demise of erstwhile Chief Financial Officer, Mr. S. R. Sharma on September 23, 2022.
Mr. N. Jayakumar, Managing Director and Group CEO, Mr. Akshay Gupta, Whole-time Director, Mr. Arun Shah, Chief Financial Officer and Mr. Ajay Shah, Company Secretary were the key managerial personnel of the Company as on date of this report.
NUMBER OF MEETINGS OF THE BOARD & ITS COMMITTEES
During the year under review, Six Board meetings were convened and held, the details of which are given in the Report on Corporate Governance, which forms a part of the Annual Report.
The Board of Directors constituted Audit
Committee, Nomination and Remuneration Committee, Corporate Social Responsibility Committee, Stakeholders'' Relationship Committee and Risk Management Committee, established in compliance with the requirements of the relevant provisions of applicable laws and regulations. The details with respect to the composition, terms of reference, number of meetings held, etc. of these Committees are included in the Report on Corporate Governance, which forms a part of the Annual Report.
The intervening gap between the Board and Committee Meetings were within the period prescribed under the Companies Act, 2013 and SEBI Listing Regulations. The Company has complied with the applicable Secretarial Standards 1 (SS-1) on Board Meetings, issued by the Institute of Company Secretaries of India.
Annual performance evaluation of the Board of Directors, its committees and all the Directors individually were done in accordance with the performance evaluation framework adopted by the Company and a structured questionnaire was prepared after taking into consideration the various aspects of the Board''s functioning, composition of the Board and its Committees, culture, execution and performance of specific duties, obligations and governance. The performance evaluation framework sets out the performance parameters as well as the process of the performance evaluation. Pursuant to the provisions of the Companies Act, 2013, a separate Meeting of Independent Directors was held during the year to review (i) performance of the Non-Independent Directors and the Board of Directors as a whole (ii) performance of the Board Committees (iii) performance of the Chairperson of the Company, taking into account the views of Executive Directors and Non-Executive Directors (iv) assess the quality, quantity and timeliness of flow of information between the Management and the Board of Directors that is necessary for the Board of Directors to effectively and reasonably perform its duties. The Board of Directors expressed satisfaction with the evaluation process.
POLICY ON DIRECTORS'' APPOINTMENT, REMUNERATION, ETC
The Remuneration Policy of the Company
for appointment and remuneration of the Directors, Key Managerial Personnel and other employees of the Company along with other related matters have been explained in the Corporate Governance Report forming part of this Annual Report. Depending on the need to appoint / re-appoint Director, the Nomination and Remuneration Committee (NRC Committee) of the Company determines the criteria based on the specific requirements. NRC Committee, while recommending candidature to the Board, takes into consideration the qualification, attributes, experience and independence of the candidate.
CORPORATE GOVERNANCE AND CODE OF CONDUCT
Pursuant to Regulation 34(3) read with Schedule V(C) of the SEBI Listing Regulations, a separate report on Corporate Governance practices followed by the Company together with the Certificate required under Schedule V(E) of the SEBI Listing Regulations from M/s. Pramod S. Shah & Associates, Practicing Company Secretaries, confirming compliance by the Company of the conditions of Corporate Governance is annexed as Annexure "2â to this Report.
Certificate of Non-Disqualification of Directors, pursuant to Regulation 34(3) and Schedule V(C) clause (10)(i) of SEBI Listing Regulations, 2015, from M/s. Pramod S. Shah & Associates, Practicing Company Secretaries, forms part of the Report on Corporate Governance.
Pursuant to the provisions of Regulation 17(5)(a) of the SEBI Listing Regulations, your Company has also laid down a Code of Conduct for its Board Members and Senior Management Personnel. All the Directors and the Senior Management Personnel have affirmed compliance with the said Code of Conduct. A declaration by the Managing Director & Group CEO confirming the compliance by Board Members and Senior Management Personnel with the Code of Conduct for the year ended March 31, 2023 forms a part of the Report on Corporate Governance.
CONSOLIDATED FINANCIAL STATEMENT
The Audited Consolidated Financial Statements was prepared in accordance with the Companies (Indian Accounting Standards) Rules, 2015 (Ind-AS) notified under Section 133 and other
applicable provisions of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014, as applicable and shows the financial information of the Company and its Subsidiaries as a single entity, after elimination of minority interest, if any. As required under provisions of the Companies Act, 2013, as applicable, the Audited Consolidated Financial Statements of the Company and all its Subsidiaries together with Auditor''s Report thereon forms a part of this Annual Report.
Consolidated Revenues for the Year were R 4,684 lakhs compared to R 4,571 lakhs in the previous year, which comprises Investment Banking and Advisory Fees of R 2,404 lakhs, Restructuring Advisory Fees of R 1,650 lakhs, Gain on Sale of Investment of R 117 lakhs, Income from Dividend, Interest and Other Income of R 513 lakhs. Consolidated Net Profit after Tax including Comprehensive Income for the Year under review was R 1,850 lakhs as compared to R 2,389 lakhs in the previous year.
SUBSIDIARY COMPANIES / JOINT VENTURES
Pursuant to the provisions of Section 129(3) of the Companies Act, 2013 read with the Rule 5 of the Companies (Accounts) Rules, 2014, a statement containing the salient features of the Audited Financial Statements of the Subsidiaries / Associate Companies for the year ended March 31, 2023 is given in Form AOC-1 as an annexure to the Consolidated Financial Statements of the Company forming part of this Annual Report.
The policy for Determining Material Subsidiaries has been placed on the website of the Company (www.primesec.com). Separate Audited Financial Statements of each of the Subsidiaries are available on the website of the Company (www. primesec.com) and the same will also be made available to the Members seeking such information at any point of time.
The summary of the state of affairs and performance of the subsidiaries is given below:
Prime Research & Advisory Limited
Prime Research & Advisory Limited (PRAL) operates in the segment of financial services business comprising value-added intermediation services in wealth management and investment advisory, assisting banks and institutional investors in risk assessment, portfolio analysis and
or transactions vis-a-vis the Company except remuneration and sitting fees.
All transactions entered into by the Company with the related parties during the financial year were in ordinary course of business and are on an arm''s length basis. Disclosure pursuant to the Accounting Standards on related party transaction has been made in the notes to the Audited Financial Statements. No material related party transactions were entered into during the year by the Company and accordingly, the disclosure of contracts or arrangements with related parties in accordance with the provisions of Section 134(3) (h) of the Companies Act, 2013 in Form AOC-2 is not applicable.
DEPOSITS
Your Company did not accept any Fixed Deposits under Chapter V of Companies Act, 2013, during this financial year and no amount on account of principal or interest on deposits from the public was outstanding as on March 31, 2023. The Company had no Deposit which was not in compliance with the provisions of Chapter V of the Companies Act, 2013 read with the Companies (Acceptance of Deposit) Rules, 2014.
DIRECTORS'' RESPONSIBILITY STATEMENT
To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors made the following statements in terms of Section 134(3)(c) and 134(5) of the Companies Act, 2013 that:
(a) In the preparation of the Annual Accounts for the year ended March 31, 2023, the applicable Accounting Standards read with the requirements set out under Schedule III to the Companies Act, 2013, have been followed and there are no material departures from the same.
(b) They have 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, 2023 and of the profits of the Company for the year ended on that date.
(c) They have taken proper and sufficient care for the maintenance of adequate accounting
portfolio rebalancing through execution of specific strategies. PRAL''s target clients include corporate treasuries, fund management companies and family offices among others. PRAL through its network of investors substantially enhances our capability to execute mandates.
During the year under review, PRAL earned revenues of R 1,820 lakhs as compared to R 1,169 lakhs in the previous year. This includes Advisory Fees of R 1,650 lakhs, Income from Dividend, Interest & Other Income of R 157 lakhs and Gain on Sale of Investment of R 13 lakhs. During the year, PRAL earned Net Profit after Tax including Comprehensive Income of R 336 lakhs as compared to R 270 lakhs in the previous year.
Prime Funds Management Limited
Prime Funds Management Limited (PFML) was incorporated in 2018 as a 100% subsidiary of the Company to carry on Portfolio Management and setting up Alternative Investments Funds. PFML is yet to commence business.
The Company has not entered into any joint ventures.
Pursuant to the provisions of Section 92(3) of the Companies Act, 2013, the Annual Return of the Company is uploaded on the website of the Company (www.primesec.com).
RELATED PARTY CONTRACTS & ARRANGEMENTS
In accordance with the provisions of the Companies Act, 2013 and the SEBI Listing Regulations, the Company has formulated a Policy on Related Party Transactions and a copy of the same is available on the website of the Company (www.primesec.com). The policy intends to ensure that proper reporting, approval and disclosure processes are in place for all transactions with related parties and also deals with material related party transactions.
All related party transactions are placed before the Audit Committee for necessary review and approval. Prior omnibus approval of the Audit Committee is obtained for transactions with related parties, which are repetitive in nature and / or are entered into in the ordinary course of business and are on an arm''s length basis. None of the Directors has any pecuniary relationships records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.
(d) They have prepared the annual accounts on a going concern basis.
(e) They have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively.
(f) They have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.
CORPORATE SOCIAL RESPONSIBILITY
Pursuant to the provisions of Section 135 of the Companies Act, 2013 read with Schedule VII of the Companies Act, 2013 and the Companies (Corporate Social Responsibility Policy) Rules, 2014, the Company has constituted Corporate Social Responsibility ("CSRâ) Committee. The Members of the Committee are (i) Ms. Namrata Kaul, Independent Director (ii) Mr. Pradip Dubhashi, Independent Director and (iii) Mr. N. Jayakumar, Managing Director & Group CEO. The Company has also formulated CSR Policy and the same is available on the website of the Company (www.primesec.com). Detailed report on CSR activities as required under the Companies Corporate Social Responsibility Policy) Rules, 2014 is annexed as Annexure "3â to this Report.
PARTICULARS OF LOANS GIVEN, INVESTMENTS MADE, GUARANTEES GIVEN AND SECURITIES PROVIDED
Particulars of Loans, Guarantees and Investments made by the Company pursuant to the provisions of Section 186 of the Companies Act, 2013 are given in the notes to the Audited Financial Statements forming part of this Annual Report.
VIGIL MECHANISM / WHISTLE BLOWER POLICY
The Company established a Vigil Mechanism / Whistle Blower Policy for Directors and Employees to report genuine concerns or grievances about unethical behaviour, actual or suspected fraud or violation of the Company''s Code of Conduct, which provides for adequate safeguards against victimisation of persons who avail of such a
mechanism. A copy of the Whistle Blower Policy is available on the website of the Company (www. primesec.com).
AUDITORS AND AUDITORS'' REPORT
Pursuant to provisions of Section 139 of the Companies Act, 2013 read with the Companies (Audit and Auditors) Rules, 2014, M/s. Walker Chandiok & Co. LLP, (Firm Registration No. 001076N/N500013) Chartered Accountants, were appointed as Statutory Auditors of the Company for a term of 5 years, to hold office from the conclusion of 36th Annual General Meeting held on September 27, 2019 until the conclusion of 41st Annual General Meeting.
The Report issued by the Statutory Auditor on the Audited Financial Statements of the Company for Financial Year 2022-23 forms part of this Annual Report and does not contain any qualification, reservation, adverse remark or disclaimer.
Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Rules made thereunder, the Board of Directors has appointed M/s. Pramod Shah & Associates, Company Secretaries (C.P. No. 3804), to undertake the Secretarial Audit for the year ended March 31, 2023. The Secretarial Report given by the Secretarial Auditor is annexed as Annexure "4â to this Report. Your directors confirm that the Secretarial Standards issued by the Institute of Company Secretaries of India have been duly complied with.
MATERIAL CHANGES AND COMMITMENTS, IF ANY, AFFECTING THE FINANCIAL POSITION OF THE COMPANY OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR TO WHICH THIS FINANCIAL STATEMENTS RELATE AND THE DATE OF THE REPORT
Except as disclosed elsewhere in this Report, no material changes and commitments affecting the financial position of the Company occurred between the end of the Financial Year to which this Financial Statements relate and the date of this Report.
The disclosures with respect to the remuneration
of Directors and Employees as required under Section 197(12) of the Companies Act, 2013 and the Rule 5(1) Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed as Annexure "5â to this Report. The information on Employee particulars as required under Section 197(12) of the Companies Act, 2013 read with Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 (as amended) is annexed as Annexure "6â to this Report. In terms of Section 136 of the Companies Act, 2013, the Report and Financial Statements are being sent to the Members and others entitled thereto, excluding the aforesaid Annexure. Any Member interested in obtaining a copy of the same may write to the Company Secretary.
None of the Employee of the Company is a Relative of any Director of the Company.
The Company implemented Employee Stock Option Scheme viz Employee Stock Option Scheme 2018 (ESOS 2018). The Nomination and Remuneration Committee of the Board of Directors has granted, to eligible Employees / Directors of the Company and Subsidiary Companies pursuant to ESOS 2018 and 23,43,100 Options are outstanding as at March 31, 2023.
The disclosures in accordance with the provisions of the Section 62(1)(b) of Companies Act, 2013 read with the Rule 12(9) of the Companies (Share Capital and Debentures) Rules, 2014 (as amended from time to time) and the Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 are set out as Annexure "7â to this Report. The shares arising out of exercise of the Options will be allotted in the name of the respective Employees and accordingly, the provisions relating to disclosure of voting rights not exercised directly by the employees are not applicable.
DISCLOSURE AS PER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013
The Company adopted a policy on prevention, prohibition and redressal of sexual harassment at workplace in line with the provisions of the Sexual
Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules made thereunder. As required under law, an Internal Complaints Committee was constituted for reporting and conducting inquiry into the complaints made by the victim on the harassments at the workplace. During the year under review, no complaint of sexual harassment was received and there was no complaint of sexual harassment pending as at the date of this report.
PARTICULARS REGARDING CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
In view of nature of business activities of the Company, the particulars regarding conservation of energy and technology absorption, as prescribed under Section 134 of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014, are not given. However, the Company has taken various measures for conservation of energy, like switching from conventional lighting systems to LED lights, etc.
During the year under review, the Company''s earnings of foreign exchange of USD 25,073 and expenditure of foreign exchange were USD 56,450.
The Equity Shares of the Company are listed on the Bombay Stock Exchange Limited and the National Stock Exchange of India Limited and the Listing Fees for the year 2023-24 have been duly paid.
Your Directors state that during the year under review:
(a) The Business Responsibility Reporting as required pursuant to the provisions of Regulation 34(2) of the SEBI Listing Regulations is not applicable to your Company.
(b) No Equity Shares with Differential Rights, as to Dividend, Voting or otherwise, were issued.
(c) Equity Shares (including Sweat Equity Shares) were allotted to employees of the Company under Employee Stock Option Scheme 2018.
(d) The Company did not resort to any buyback of Equity Shares during the Year under review.
(e) Managing Director of the Company did not
receive any Remuneration or Commission from any of its Subsidiaries.
(f) There was no instance of fraud during the year under review, which required the Statutory Auditors to report to the Audit Committee and/or Board under Section 143(12) of the Companies Act, 2013 and Rules framed thereunder.
(g) No significant or material orders were passed by the Regulators or Courts or Tribunals, which impact the Going Concern status and Company''s operations in future.
The Board wishes to place on record its sincere appreciation for the hard work put in by the Company''s employees at all levels in this difficult environment. The Board of Directors also wish to thank the Company''s members, bankers and business associates for their unstinted support during the year.
Mar 31, 2018
The Directors are pleased to present their 35th Annual Report on the business and operations of the Company along with the Audited Financial Statements for the Financial Year ended March 31, 2018.
FINANCIAL HIGHLIGHTS
(Rs. in lacs)
Particulars |
Consolidated |
Standalone |
||
March 31, 2018 |
March 31, 2017 |
March 31, 2018 |
March 31, 2017 |
|
Total Revenues |
2,402 47 |
1,957 65 |
899 42 |
676 60 |
Total Expenses |
792 19 |
1,072 47 |
60137 |
894 01 |
Profit / (Loss) before Exceptional Items & Tax |
1,610 28 |
88518 |
298 05 |
(217 41) |
Exceptional Items |
104 71 |
1,049 66 |
27 56 |
(473 56) |
Profit / (Loss) before Tax |
1,714 99 |
1,934 84 |
325 61 |
(690 97) |
Tax Expenses |
284 51 |
593 53 |
(21 59) |
Nil |
Profit / (Loss) after Tax |
1,430 48 |
1,341 31 |
347 20 |
(690 97) |
Other Comprehensive Income / (Loss) (Net of Tax) |
(15 69) |
(39 43) |
(15 04) |
(32 89) |
Total Comprehensive Income |
1,414 79 |
1,30188 |
332 16 |
(723 86) |
The Company has prepared the financial statements for the financial year ended March 31, 2018 under Section 129, 133 and Schedule II to the Companies Act, 2013 read with the Companies (Indian Accounting Standards) Rules, 2015 (Ind-AS), as amended. Figures for the financial year ended March 31, 2017 have been restated as per Ind-AS and therefore may not be comparable with financials for financial year ended March 31, 2017 approved by the Directors and disclosed in the financial statements of previous year.
BUSINESS REVIEW & PROSPECTS
As you will note from the results, the year gone by has been satisfying and has helped in creating a base for sustained growth in our activity in the coming months. The hallmark of our work has been innovation and focused execution. The mandates we have executed range from corporate restructuring, debt and equity issuances and strategic corporate advisory. Repeat business, referrals drive healthy deal flow and our teams have been busy! We will add to our team to increase capacity as per the demand of the business.
The temporary effects of demonetization have now faded and economic growth in the latest quarter is expected to top 7.7%. Growth is likely to be robust across sectors especially in agriculture and construction, which saw a negative rate of growth of 3.9% in the last quarter. This is clearly indicating that the lingering effects, if any were there, of demonetization and the roll out of GST are firmly in the rear-view mirror. Firms in key sectors, autos, cement, steel are reporting robust growth rates and this will trigger fresh investments. As the investment cycle begins its cyclical uptrend, deal flow will inevitably increase. We see this in the robust pipeline of deals.
This yearâs southwest monsoon ended the June-September season with 5% lower than average rainfall and expectations of a slightly lower output of kharif, or summer-sown crops, after bouts of floods and dry weather in different parts of the country. Forecasts for the current year are positive and the onset of monsoon is expected to be on time! This augurs well for a continuation of robust agricultural growth and in maintaining the momentum we have seen in the growth of our rural economy. Increasingly agriculture plays a smaller role in the rural economy with other activities contributing more. Overall, this will lead to more stable and higher growth rates in rural demand with its accompanying knock on impact.
Benign crude oil prices have helped the Government manage the fiscal deficit. The recent increase in prices, though have dampened the mood a bit. Pump prices of gasoline and diesel have gone up, and despite criticism, remain on par with the rest of the world. This indicates that the Government has maintained the policy of pump pricing in line with global prices and has not succumbed to the reintroduction of any subsidy. The recent turmoil with the USA withdrawing from the Iran accord may reduce supply but the statements from Saudi Arabia and Russia committing to maintain supply augur well for the supply and pricing of this key energy input. Crude oil production from new sources like shall remain robust.
The global macro-economic environment has been stable though some storm clouds loom. Brexit and continuing political turmoil in Italy and Spain have again reignited the debate on the future of the Euro. Rising rates in the US may dampen emerging market flows. This is tempered by the fact that Indian remains the Emerging Market of choice and should attract more than its share of fund flows.
We saw an opportunity in Wealth Management Advisory, driven by the rapidly expanding flows into mutual funds and the rapid growth of this sector, and effective April 1, 2018, a team of 20 investment professionals have joined the group in our wholly owned subsidiary, Prime Research and Advisory Limited. We are very optimistic for the prospects for this new business segment. In this the team services the institutional segment and, as a bonus, we see opportunities in cross selling.
As always, we are humbled by the confidence reposed in us by our customers. They continue to bless us with repeat business and referrals and for this we must express our deepest gratitude.
DIVIDEND AND RESERVES
The Board of Directors has not recommended any Dividend on Equity Shares for the Year under review. During the Year, no amount from Profit was transferred to General Reserve.
ISSUE OF EQUITY SHARE WARRANTS
The Paid-up Equity Share Capital of the Company as at March 31, 2018 stood at RS.1,329.94 lacs. During the year under review, the Company has not issued Equity Share. The Board of Directors at their Meeting held on February 15, 2018 and the Members of the Company at their Extraordinary General Meeting held on March 20, 2018, has approved the issue, on a Preferential basis, of upto 70,00,000 Equity Share Warrants. Pursuant to the same, the Board of Directors at their Meeting held on April 3, 2018, has allotted 70,00,000 Equity Share Warrants on a Preferential basis. Each Equity Share Warrant carries an entitlement to apply for One Equity Shares of Face Value RS.5/-each of the Company, at a price of RS.49.50 per Equity Share (âExercise Priceâ), in one or more tranches, within a period of 18 Months from the date of allotment of Equity Share Warrants. The Company has received an amount equivalent to the 25% of the Exercise Price of the Equity Share arising on the exercise of Options under the Equity Share Warrants.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
Pursuant to the provisions of the Regulation 34 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Management Discussion and Analysis Report giving a detailed account of the operations and the state of affairs of the Company is annexed as Annexure â1â to this Report.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
During the year under review, Mr. S. R. Sharma, who was earlier appointed as an Independent Director for a period of Five Years w.e.f. March 1, 2015, has been appointed as Managing Director of 100% Subsidiary, Primesec Investments Limited w.e.f. December 7, 2017. In view of the same, Mr. S. R. Sharma has ceased to be an Independent Director and he continues to be a Non-Executive Director for the remainder of his term, subject to liable to retire by rotation.
Mr. N. Jayakumar, Managing Director, has been re-designated as Managing Director and Group CEO wef May 29, 2018
Mr. Vineet Suri, who has been associated with the Company as Director & Head - Corporate Finance since December 2016, has been appointed as an Executive Director of the Company for a period of five years wef May 29, 2018
In accordance with the provisions of Section 152 of the Companies Act, 2013 and the Articles of Association of the Company, Mr. S. R. Sharma, Director, retires by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re-appointment.
Appropriate Resolution for appointment / reappointment is being placed before you for your approval at the ensuing Annual General Meeting. The information on the particulars of Director seeking re-appointment, as required under SEBI (Listing Obligations and Disclosure) Regulations, 2015, is given in the Notice of the Annual General Meeting, forming part of this Annual Report. The Board recommends his re-appointment for the consideration of the Members of the Company at the ensuing Annual General Meeting.
The Company has received declaration form all the Independent Directors of the Company confirming that they meet the criteria of Independence as prescribed under Section 149(6) of the Companies Act, 2013 and Regulation 16(b) of the SEBI (Listing Obligations and Disclosure) Regulations, 2015.
Mr. N. Jayakumar, Managing Director and Group CEO, Mr. Nikhil Shah, Chief Financial Officer and Mr. Ajay Shah, Company Secretary are the Key Managerial Personnel and there is no change in the same during the Year.
NUMBER OF BOARD MEETINGS CONDUCTED DURING THE YEAR
During the year under review, Six Board Meetings were conducted on April 6, 2017, July 11, 2017, October 17, 2017, November 17, 2017, January 23, 2018 and February 15, 2018 The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The Company has complied with the applicable Secretarial Standards 1 on Board Meetings, issued by the Institute of Company Secretaries of India.
COMMITTEES OF THE BOARD
The Board of Directors has constituted the Audit Committee, Nomination and Remuneration Committee, Stakeholdersâ Relationship Committee, Corporate Social Responsibility Committee.
The detailed information about the Committees including their composition, number of meetings held and attendance at the meetings are provided in the Corporate Governance Report forming part of this Report.
BOARD EVALUATION
Annual performance evaluation of the Board of Directors, its Committees and all the Directors individually have been done in accordance with the performance evaluation framework adopted by the Company and a structured questionnaire was prepared after taking into consideration the various aspects of the Boardâs functioning, composition of the Board and its Committees, culture, execution and performance of specific duties, obligations and governance. The performance evaluation framework sets out the performance parameters as well as the process of the performance evaluation. Pursuant to the provisions of the Companies Act, 2013, a separate Meeting of Independent Directors was held during the year to review (i) performance of the Non-Independent Directors and the Board of Directors as a whole (ii) performance of the Board Committees (iii) performance of the Chairperson of the Company, taking into account the views of Executive Directors and Non-Executive Directors (iv) the assess the quality, quantity and timeliness of flow of information between the Management and the Board of Directors that is necessary for the Board of Directors to effectively and reasonably perform its duties. The Board of Directors expressed their satisfaction with the evaluation process.
POLICY ON DIRECTORSâ APPOINTMENT, REMUNERATION, ETC
The Board of Directors of the Company has adopted a policy on remuneration of Directors, Key Managerial Personnel and other employees, which also lays down the criteria for selection and appointment of Board Members and Board diversity. The details of this policy are explained in the Corporate Governance Report forming part of this Annual Report and the same is also available on the website of the Company (www. primesec.com).
CORPORATE GOVERNANCE AND CODE OF CONDUCT
Pursuant to Regulation 34(3) read with Schedule V of the SEBI (Listing Obligations and Disclosures) Regulations, 2015, a separate report on Corporate Governance practices followed by the Company together with the certificate from the Statutory Auditors, confirming compliance by the Company of the conditions of Corporate Governance is annexed as Annexure â2â to this Report.
Pursuant to the provisions of Regulation 17(5)(a) of the SEBI (Listing Obligations and Disclosures) Regulations, 2015, your Company has also laid down a Code of Conduct for its Board Members and Senior Management Personnel. All the Directors and the Senior Management Personnel have affirmed compliance with the said Code of Conduct. A declaration by the Managing Director regarding compliance by Board Members and Senior Management Personnel with the Code of Conduct for the year ended March 31, 2018 forms part of the Report on Corporate Governance.
CONSOLIDATED FINANCIAL STATEMENT
The Audited Consolidated Financial Statements has been prepared in accordance with the Indian Accounting Standards (Ind-AS) notified under Section 133 and other relevant provisions of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014, as applicable and shows the financial information of the Company and its Subsidiaries as a single entity, after elimination of minority interest, if any. As required under provisions of the Companies Act, 2013, as applicable, the Audited Consolidated Financial Statements of the Company and all its Subsidiaries together with Auditorâs Report thereon forms part of this Annual Report.
During the period, the Consolidated Revenues were RS.2,402.47 lacs as compared to RS.1,957.65 lacs in the previous period, which comprises Merchant Banking and Advisory Fees of RS.2,311.42 lacs, Gain / (Loss) on Sale of Investments, Derivatives and other transactions of RS.7.73 lacs, Income from Dividend, Interest & Other Income of RS.83.32 lacs. The Consolidated Net Profit / (Loss) after Tax & Exceptional Items for the year under review was RS.1,430.48 lacs as compared to RS.1,341.31 lacs in the previous period.
SUBSIDIARY COMPANIES / JOINT VENTURES
Pursuant to Section 129(3) of the Companies Act, 2013 read with the Rule 5 of the Companies (Accounts) Rules, 2014, a statement containing the salient features of the Audited Financial Statements of the Subsidiaries / Associate Companies for the year ended March 31, 2018 is given in Form AOC-1 as an annexure to the Consolidated Financial Statements of the Company forming part of this Annual Report.
The policy for Determining Material Subsidiaries has been placed on the website of the Company (www.primesec.com). Separate Audited Financial Statements of each of the Subsidiaries are available on the website of the Company (www.primesec.com) and will be kept open for inspection by any shareholder of the Company at the registered office of the Company and the same will also be made available to the shareholders seeking such information at any point of time.
The summary of the state of affairs and performance of the subsidiaries is given below:
Prime Broking Company (India) Limited
During the year under review, the Honâble High Court at Mumbai passed the order for winding-up of Subsidiary viz. Prime Broking Company (India) Limited (âPBCILâ) and accordingly, the Consolidated Financial Statement for the Year ended March 31, 2018 does not include Financial Results of PBCIL. There is no impact of winding-up of PBCIL on the financial results of the Company, as PBCIL was not carrying any activities since last few years and the Company had also written-off its investments in PBCIL in earlier years.
Primesec Investments Limited
During the year under review, Primesec Investments Limited (âPILâ), which was involved in investments activities in the past, has entered into new segment of financial services comprising of corporate advisory services relating to restructuring of corporate debt, restructuring of corporate entities, especially cases involving National Company Law Tribunal (âNCLTâ), placement of secondary debt and equity, etc. During the year under review, PIL earned revenues of RS.1,485.17 lacs as compared to RS.1,261.67 lacs in the previous year. This includes Advisory Fees of RS.1,484.24 lacs, Gain / (Loss) on Sale of Investments of RS. 0.93 lacs. During the year, PIL incurred Net Profit / (Loss) after Tax and Exceptional Items of RS.863.72 lacs as compared to RS.2,120.57 lacs in the previous year.
Prime Research & Advisory Limited
During the year under review, Prime Research & Advisory Limited (âPRALâ) earned revenues of RS.1.08 lacs as compared to Rs. Nil in the previous year. During the year under review, PRAL incurred Net Profit / (Loss) after Tax of RS.207.61 lacs as compared to H (101.38) lacs in the previous year. The Net Profit / (Loss) is after an Exceptions Items of RS.274.61 lacs, which represents an amount no longer payable and written-back in the books of PRAL. PRAL is diversifying into newer segments of financial services business comprising of value added intermediation services in wealth management and investment advisory, assisting banks and institutional investors in risk assessment, portfolio analysis and portfolio rebalancing through execution of specific strategies. PRALâs target clients will include corporate treasuries, fund management companies and family offices among others. To facilitate entry into these exciting and rapidly growing segments, PRAL is in the process of taking on board a highly experienced, connected and networked team of twenty five reputed professionals with a proven track record of several years. The team currently has an enviable roster of clients and counter-parties. The new teamâs business is robust and it has a fairly full opportunity pipeline and substantial current income through fees and annuities that it will bring to PRAL.
Prime Commodities Broking (India) Limited
Prime Commodities Broking (India) Limited (âPCBILâ) was incorporated in 2006 to carry on Broking and other related activities in the Commodities Markets. However, PCBIL has not yet commenced the proposed activity. During the year under review, PCBIL earned revenues of RS.34.51 lacs as compared to RS.27.57 lacs in the previous year. During the Year under review, PCBIL earned a Net Profit after Tax of RS.11.96 lacs as compared to RS.13.07 lacs in the previous year.
The Company has not entered into any Joint Ventures.
EXTRACT OF THE ANNUAL RETURN
The details forming part of the extract of the Annual Return in Form MGT-9 as per provisions of Section 92 of the Companies Act, 2013 and the Rules made thereunder is annexed as Annexure â3â to this Report.
RELATED PARTY CONTRACTS & ARRANGEMENTS
In accordance with the provisions of the Companies Act, 2013 and the SEBI (Listing Obligations and Disclosures) Regulations, 2015, the Company has formulated a Policy on Related Party Transactions and a copy of the same is available on the website of the Company (www. primesec.com). The policy intends to ensure that proper reporting, approval and disclosure processes are in place for all transactions with related parties and also deals with material related party transactions.
All related party transactions are placed before the Audit Committee for necessary review and approval. Prior omnibus approval of the Audit Committee is obtained for transactions with related parties, which are repetitive in nature and / or are entered into in the ordinary course of business and are on an armâs length basis. None of the Directors has any pecuniary relationships or transactions vis-a-vis the Company except remuneration and sitting fees.
All transactions entered into by the Company with the related parties during the financial year were in ordinary course of business and are on an armâs length basis. Disclosure pursuant to the Accounting Standards on related party transaction has been made in the notes to the Audited Financial Statements. No material related party transaction were entered into during the year by the Company and accordingly, the disclosure of contracts or arrangements with related parties in accordance with the provisions of Section 134(3)(h) of the Companies Act, 2013 in Form AOC-2 is not applicable.
DEPOSITS
Your Company has not accepted any Fixed Deposits under Chapter V of Companies Act, 2013, during this financial year and as such, no amount on account of principal or interest on Deposits from public was outstanding as on March 31, 2018. The Company has no Deposit which is not in compliance with the provisions of Chapter V of the Companies Act, 2013 and as the Companies (Acceptance of Deposit) Rules, 2014.
DIRECTORSâ RESPONSIBILITY STATEMENT
Pursuant to the provisions of Sections 134(3) (c) of the Companies Act, 2013, with respect to the Directorsâ Responsibilities Statement, 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 Schedule III to the Companies Act, 2013, have been followed and there are no material departures from the same,
b) They have 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, 2018 and of the profits of the Company for the year ended on that date,
c) They have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities,
d) They have prepared the annual accounts on a going concern basis,
e) They have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively, and
f) They have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.
CORPORATE SOCIAL RESPONSIBILITY
Pursuant to the provisions of Section 135 of the Companies Act, 2013 read with Schedule VII of the Companies Act, 2013 and the Companies (Corporate Social Responsibility Policy) Rules, 2014, the Company has constituted Corporate Social Responsibility (âCSRâ) Committee, consisting of Mr. Pradip Dubhashi, Independent Director, Mr. Anil Dharker, Independent Director and Mr. N. Jayakumar, Managing Director. The Company has also formulated CSR Policy and the same is available on the website of the Company (www.primesec.com). The report on CSR activities as required under the Companies (Corporate Social Responsibility Policy) Rules, 2014 is annexed as Annexure â4â to this Report.
PARTICULARS OF LOANS GIVEN, INVESTMENTS MADE, GUARANTEES GIVEN AND SECURITIES PROVIDED
Particulars of Loans, Guarantees and Investments made by the Company pursuant to the provisions of Section 186 of the Companies Act, 2013 are given in the notes to the Audited Financial Statements forming part of this Annual Report.
VIGIL MECHANISM / WHISTLE BLOWER POLICY
The Company has established a Vigil Mechanism / Whistle Blower Policy for Directors and Employees to report genuine concerns or grievances for redressal, which provides for adequate safeguards against victimization of persons who avail of such a mechanism. A copy of the Whistle Blower Policy is available on the website of the Company (www.primesec.com).
AUDITORS AND AUDITORSâ REPORT
M/s. Gandhi & Associates LLP, Chartered Accountants (Firm Registration No: 102965W/ W100192), were appointed as Statutory Auditors, for a term of Four years, commencing from the Financial Year 2015-16. A certificate from them has been received, to the effect that their appointment as Statutory Auditors of the Company is in accordance with the applicable provisions of Section 139 and 141 of the Companies Act, 2013 and rules framed thereunder, as amended from time to time.
Report given by the Auditors on the Audited Financial Statements of the Company forms part of this Annual Report. Observations made in the Auditorsâ Report are self-explanatory and therefore, do not call for any further explanation.
SECRETARIAL AUDIT REPORT
Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Rules made thereunder, the Board of Directors has appointed M/s. Pramod Shah & Associates, Company Secretaries (C.P. No. 5540), to undertake the Secretarial Audit for the year ended March 31, 2018. The Secretarial Report given by the Secretarial Auditor is annexed as Annexure â5â to this Report.
MATERIAL CHANGES AND COMMITMENT, IF ANY, AFFECTING THE FINANCIAL POSITION OF THE COMPANY OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR TO WHICH THIS FINANCIAL STATEMENTS RELATE AND THE DATE OF THE REPORT
Except as disclosed elsewhere in this Report, no material changes and commitments affecting the financial position of the Company occurred between the end of the Financial Year to which this Financial Statements relate and the date of this Report.
EMPLOYEES
Disclosures with respect to the remuneration of Directors and Employees as required under Section 197(12) of the Companies Act, 2013 and the Rule 5(1) Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed as Annexure â6â to this Report.
The information on Employees particulars as required under Section 197(12) of the Companies Act, 2013 read with Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 (as amended) is annexed as Annexure â7â to this Report. In terms of Section 136 of the Companies Act, 2013, the Report and Financial Statements are being sent to the Members and others entitled thereto, excluding the aforesaid Annexure. The said information is available for inspection by the Members at the Registered Office of the Company as per the details mentioned in notice of the Annual General Meeting on any working day of the Company up to the date of the 35th Annual General Meeting. Any Member interested in obtaining a copy of the same may write to the Company Secretary.
None of the Employee of the Company is a Relative of any Director of the Company.
EMPLOYEE STOCK OPTION SCHEMES
The Company presently has one Employee Stock Option Schemes viz. Employee Stock Option Scheme 2009 (ESOS 2009) The Compensation Committee of the Board of Directors had granted, to eligible Employees / Directors of the Company and Subsidiary Companies 1,485,000 options pursuant to ESOS 2009.
The disclosures in accordance with the provisions of the Section 62(1)(b) of Companies Act, 2013 read with the Rule 12(9) of the Companies (Share Capital and Debentures) Rules, 2014 (as amended from time to time), the Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 are set out as Annexure â8â to this Report. The shares arising out of exercise of the Options are allotted in the name of the respective Employees and accordingly, the provisions relating to disclosure of voting rights not exercised directly by the Employees are not applicable.
PARTICULARS REGARDING CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
Since the Company is not engaged in any manufacturing activity, the disclosures as required under the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 pertaining to conservation of energy, etc. are not applicable.
During the period, there were no earnings and expenditure in foreign exchange.
LISTING & LISTING FEES
The Equity Shares of the Company are listed on the Bombay Stock Exchange Limited and the National Stock Exchange of India Limited and the Listing Fees for the year 2018-19 have been duly paid.
GENERAL DISCLOSURES
Your directors state that during the year under review:
a) The Business Responsibility Reporting as required pursuant to the provisions of Regulation 34(2) of the SEBI (Listing Obligations and Disclosures) Regulations, 2015 is not applicable to your Company.
b) No Equity Shares with Differential Rights, as to Dividend, Voting or otherwise, were issued.
c) No Equity Shares (including Sweat Equity Shares) were issued to Employees of the Company under any Scheme.
d) The Company has not resorted to any Buyback of its Equity Shares during the Year under review.
e) Managing Director of the Company has not received any Remuneration or Commission from any of its Subsidiaries.
f) No significant or material orders were passed by the Regulators or Courts or Tribunals, which impact the Going Concern status and Companyâs operations in future.
ACKNOWLEDGEMENTS
The board wishes to place on record its sincere appreciation for the hard work put in by the Companyâs Employees at all levels in this difficult environment. The Board of Directors also wishes to thank the Companyâs Members, Bankers and all other business associates for their unstinted support during the year.
For and on behalf of the Board of Directors
Mumbai Pradip Dubhashi N. Jayakumar
May 29, 2018 Chairman Managing Director and Group CEO
Mar 31, 2016
DIRECTORSâ REPORT
Dear Members,
The Directors are pleased to present their 33rd Annual Report on the business and operations of the Company along with the Audited Financial Statements for the Financial Year ended March 31, 2016.
FINANCIAL HIGHLIGHTS (STANDALONE) (Rs. in lacs)
Year ended March 31, 2016 (12 months) |
Period ended March 31, 2015 (18 months) |
|
Total Revenues |
1,983.97 |
(295.86) |
Total Expenses |
463.86 |
445.67 |
Profit / (Loss) before Extraordinary Items & Tax |
1,520.11 |
(741.53) |
Extraordinary Items |
(52.61) |
250.00 |
Profit / (Loss) before Tax |
1,467.50 |
(491.53) |
Tax Expenses |
63.30 |
Nil |
Profit / (Loss) after Tax |
1,404.20 |
(491.53) |
Profit / (Loss) brought forward from previous year |
(4,197.12) |
(3,705.59) |
Balance carried to Balance Sheet |
(2,792.92) |
(4,197.12) |
BUSINESS REVIEW & PROSPECTS
The period under review has been an exciting one. A key development was on oil prices, which saw a steep fall helping to ease inflationary pressures and the fiscal deficit and gave room for the RBI to reduce rates, a very welcome if much delayed step. The RBI and the Government drove banks to deal with the problem of NPAs, which helped create a number of new business opportunities for your company. Global economic activity remains subdued, but fortunately, given excellent economic performance here, global investor interest in Indian Capital Markets remains buoyant.
We have had unprecedented drought conditions in this past year and that has been a drag on the economy. Despite these head winds, growth remains robust, driven by an increased focus on infrastructure and a determined push by the Government to remove hurdles. Power and road sectors have seen robust activity and that has slowly percolated down into the rest of the economy. We saw the end of Quantitative Easing by the Federal Reserve but the ECB and the Bank of Japan have picked up some of the slack. Unfortunately, global growth remains tepid. We see this as a silver lining with commodity prices remaining subdued and underpinning domestic economic growth.
Your Company was able to take advantage of the economic conditions and was mandated by a number of leading corporate to assist them in restructuring of debt and equity. There has been some turnaround in corporate plans and as a consequence, your company sees significant rise in deal flow in the recent quarters with a number of transactions closing in the period under review. We expect to see robust deal flow in the months ahead.
The business of Prime Broking Company (India) Limited remains suspended, as a consequence of the actions by the stock exchanges. Prime Broking Company (India) Limited has appealed against the order of Honâble Securities Appellate Tribunal in the Honâble Supreme Court, which has been admitted by the Honâble Supreme Court and is pending hearing.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
Pursuant to regulation 34 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the management discussion and analysis report giving a detailed account of the state of affairs of the Company forms part of the Annual Report.
DIVIDEND AND RESERVES
The Board of Directors has not recommended any dividend on equity shares for the year under review. During the year, no amount from profit was transferred to general reserve.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
During the year, Mr. N. Jayakumar was re-appointed as Managing Director of the Company for a further period of 5 years w.e.f. February 11, 2016. The re-appointment of Mr. N. Jayakumar as Managing Director is subject to the approval of the shareholders of the Company at the ensuing Annual General Meeting.
In accordance with the provisions of section 152 of the Companies Act, 2013 and the articles of association of the Company, Mr. N. Jayakumar, Managing Director, retires by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re-appointment.
The Company has received declaration form all the independent directors of the Company confirming that they meet the criteria of independence as prescribed under section 149 (6) of the Companies Act, 2013 and Regulation 16 of the SEBI (Listing Obligations and Disclosure) Regulations, 2015.
Appropriate resolution for appointment / re-appointment is being placed before you for your approval at the ensuing Annual General Meeting. The information on the particulars of director seeking appointment / re-appointment, as required under SEBI (Listing Obligations and Disclosure) Regulations, 2015, is given in the notice of the Annual General Meeting, forming part of this Annual Report.
Mr. N. Jayakumar, Managing Director, Mr. Nikhil Shah, Head - Accounts & Finance and Mr. Ajay Shah, Company Secretary are the key managerial personnel and there is no change in the same in the year.
NUMBER OF BOARD AND COMMITTEE MEETINGS CONDUCTED DURING THE YEAR
During the year under review, four Board and Audit Committee meetings were conducted on May 27, 2015, August 14, 2015, October 20, 2015 and January 14, 2016. The intervening gap between the meetings was within the period prescribed under the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
BOARD EVALUATION
Annual performance evaluation of the Board of Directors, its committees and all the directors individually have been done in accordance with the performance evaluation framework adopted by the Company. The performance evaluation framework sets out the performance parameters as well as the process of the performance evaluation. Pursuant to the provisions of the Companies Act, 2013, a separate meeting of independent directors was held during the year to review the performance of (i) non-independent directors and the board of directors as a whole (ii) board committees (iii) the chairperson of the Company, taking into account the views of executive directors and non-executive directors (iv) assess the quality, quantity and timeliness of flow of information between the management and the board of directors that is necessary for the board of directors to effectively and reasonably perform its duties.
POLICY ON DIRECTORSâ APPOINTMENT, REMUNERATION, ETC
The Company has adopted a policy on remuneration of directors, key managerial personnel and other employees, which also lays down the criteria for selection and appointment of board members and board diversity. The details of this policy are explained in the corporate governance report.
DIRECTORSâ RESPONSIBILITY STATEMENT
Pursuant to the requirement under Sections 134(3)(c) of the Companies Act, 2013, with respect to the Directorsâ Responsibilities Statement, your Directors confirm that:
1. in the preparation of the annual accounts for the year ended March 31, 2016, the applicable accounting standards read with requirements set out under Schedule III to the Act, have been followed and there are no material departures from the same;
2. they have 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, 2016 and of the profit of the Company for the year ended on that date;
3. they have 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;
4. they have prepared the annual accounts on a âgoing concernâ basis;
5. they have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively; and
6. they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.
CONSOLIDATED FINANCIAL STATEMENT
The audited consolidated financial statement has been prepared in accordance with the generally accepted accounting principles in India (Indian GAAP) to comply with the accounting standards notified under section 133 and other relevant provisions of the Companies Act, 2013 read with rule 7 of the Companies (Accounts) Rules, 2014, as applicable and shows the financial information of the Company and its subsidiaries as a single entity, after elimination of minority interest, if any. As required under provisions of the Companies Act, 2013, as applicable, the audited consolidated financial statement of the Company and all its subsidiaries together with auditorâs report thereon forms part of this annual report.
During the period, the consolidated revenues were Rs. 2,328.20 lacs as compared to Rs. (498.29) lacs in the previous period, which comprises merchant banking and advisory fees of Rs. 1,040.56 lacs, gain / (loss) on sale of investments, derivatives and other transactions of Rs. 84.65 lacs, provisions written-back of Rs. 1,137.51 lacs and income from dividend, interest & other income of Rs. 65.48 lacs. The consolidated net profit / (loss) after tax & extraordinary items for the period under review was Rs. 1,419.58 lacs as compared to Rs. (1,521.41) lacs in the previous period.
SUBSIDIARY COMPANIES / JOINT VENTURES
Pursuant to section 129(3) of the Companies Act, 2013 read with rule 5 of the Companies (Accounts) Rules, 2014, a statement containing the salient features of the audited financial statement of the subsidiaries / associate companies for the year ended March 31, 2016 is given in form AOC-1 as an annexure to the consolidated financial statements of the Company forming part of this annual report.
The policy for determining material subsidiaries has been placed on the website of the Company (www.primesec.com). Separate audited financial statements of each of the subsidiaries are available on the website of the Company (www.primesec.com) and will also be kept open for inspection by any shareholder of the Company at the registered office of the Company and the same will also be made available to the shareholders seeking such information at any point of time.
The summary of the performance of the subsidiaries is given below:
Prime Broking Company (India) Limited
Prime Broking Company (India) Limited (âPBCILâ), a wholly owned subsidiary of your Company, was, as we have communicated in the past, at the receiving end of a series of moves by the National Stock Exchange of India Limited (âNSEâ) in the previous year, where changes in collateral rules were implemented on an arbitrary, retrospective basis by the NSE (to begin with) and subsequently, the unwillingness to sell collateral held by them resulted in a sharp decline in the value of the collateral pledged by PBCIL (on behalf of its clients) to the NSE - the latter declared PBCIL a defaulter and expelled PBCIL as a member of the exchange, an action followed by the Bombay Stock Exchange Limited (âBSEâ) in terms of the cross default clause of SEBI.
The above actions of the exchanges had been challenged by PBCIL in the Securities Appellate Tribunal (âSATâ), which was dismissed by SAT in the month of June/July 2015. PBCIL has preferred an appeal in the Honâble Supreme Court against the order of SAT dismissing the appeals, which has been admitted by the Honâble Supreme Court and is pending hearing. As a consequence of this unwarranted action by the NSE, PBCIL has also filed a suit for damages in the Honâble High Court, which is pending hearing.
The National Securities Clearing Corporation Limited (âNSCCLâ), a subsidiary Company of NSE, has subsequently filed a petition in the Honâble Bombay High Court for winding up of PBCIL, which has been challenged by the Company.
In view of the above eventualities, during the year, PBCIL has not been able to carry on any activities. Since the matter is sub-judice, it suffices to say that the company is taking all possible steps to arrive at a solution, while looking at other options to compensate for the loss in revenues.
During the year, total revenues of PBCIL were Rs. 41.69 lacs as compared to Rs. (8.48) lacs in the previous year, which comprises of Provisions no longer required, Written back of Rs. 41.68 lacs and income from securities, dividend & other income of Rs. 0.01 lacs. The net profit / (loss) loss after tax & extraordinary items for the period under review was Rs. (14.92) lacs as compared to Rs. (591.38) lacs in the previous period.
Primesec Investments Limited
Primesec Investments Limited (âPILâ) was incorporated in November 2007 to carry on investment activities. During the period under review, PIL earned revenues of Rs. 249.69 lacs as compared to Rs. (250.71) lacs in the previous period. This includes gain / (loss) on sale of investments and interest & dividend income. During the period, PIL incurred net profit / (loss) after tax of Rs. (20.45) lacs as compared to Rs. (489.66) lacs in the previous period.
Prime Research & Advisory Limited
Prime Research & Advisory Limited (âPRALâ) has during the period under review earned revenues of Rs. Nil as compared to Rs. Nil lacs in the previous period. PRAL did not undertake any activities during 2015-16. During the period, PRAL incurred net profi t / (loss) after tax of Rs. (1.24) lacs as compared to Rs. (3.31) lacs in the previous period.
Prime Commodities Broking (India) Limited
Prime Commodities Broking (India) Limited (âPCBILâ) was incorporated in 2006 to carry on broking and other related activities in the commodities markets. During the period under review, PCBIL earned revenues of Rs. 28.71 lacs as compared to Rs. 41.65 lacs in the previous period. During the period, PCBIL earned a net profit / (loss) after tax of Rs. 3.39 lacs as compared to Rs. 3.84 lacs in the previous period.
The Company has not entered into any Joint Ventures.
CORPORATE GOVERNANCE AND CODE OF CONDUCT
Pursuant to regulation 34(3) of the SEBI (Listing Obligations and Disclosures) Regulations, 2015, a report on corporate governance and a certificate from the statutory auditors, confirming compliance by the Company of the conditions of corporate governance forms part of the annual report.
Pursuant to the provisions of regulation 17(5)(a) of the SEBI (Listing Obligations and Disclosures) Regulations, 2015, your Company has also laid down a code of conduct for its board members and senior management personnel. All the directors and the senior management personnel have affirmed compliance with the said code of conduct. A declaration by the managing director regarding compliance by board members and senior management personnel with the code of conduct for the period ended March 31, 2016 forms part of the annual report.
EXTRACT OF THE ANNUAL RETURN
The details forming part of the extract of the annual return in form MGT-9 as per provisions of section 92 of the Companies Act, 2013 and rules made there under is annexed as Annexure â1â to this report.
RELATED PARTY CONTRACTS & ARRANGEMENTS
In accordance with the provisions of the Companies Act, 2013 and the SEBI (Listing Obligations and Disclosures) Regulations, 2015, the Company has formulated a policy on related party transactions and a copy of the same is available on the website of the Company (www.primesec.com). The policy intends to ensure that proper reporting, approval and disclosure processes are in place for all transactions with related parties and also deals with material related party transactions.
All related party transactions are placed before the audit committee for necessary review and approval. Prior omnibus approval of the audit committee is obtained for transactions with related parties, which are repetitive in nature and/or are entered into in the ordinary course of business and are on an armâs length basis.
All transactions entered into by the Company with related parties during the financial year were in ordinary course of business and are on an armâs length basis. Disclosure pursuant to accounting standards on related party transaction has been made in the notes to the audited financial statement. No material related party transaction were entered into during the year by the Company and accordingly, the disclosure of contracts or arrangements with related parties in accordance with the provisions of section 134(3)(h) of the Companies Act, 2013 in Form AOC-2 is not applicable.
DEPOSITS
Your Company has not accepted any fixed deposits under Chapter V of Companies Act, 2013, during this financial year and as such, no amount on account of principal or interest on deposits from public was outstanding as on March 31, 2016. The Company has no deposit which is not in compliance with the provisions of Chapter V of the Companies Act, 2013 and as the Companies (Acceptance of Deposit) Rules, 2014.
PARTICULARS OF LOANS GIVEN, INVESTMENTS MADE, GUARANTEES GIVEN AND SECURITIES PROVIDED
Particulars of loans, guarantees and investments made by the Company pursuant to the provisions of section 186 of the Companies Act, 2013 are given in the notes to the financial accounts forming part of the annual report.
VIGIL MECHANISM
The Company has established a vigil mechanism (whistle blower policy) for directors and employees to report genuine concerns, which provides for adequate safeguards against victimization of persons who avail of such a mechanism. A copy of the whistle blower policy is available on the website of the Company (www.primesec.com).
AUDITORS AND AUDITORSâ REPORT
M/s. Gandhi & Associates, Chartered Accountants (Firm Registration No: 102965W), were appointed as statutory auditors, for a term of four years, commencing from the financial year 2015-16, subject to ratification by members at every annual general meeting. A certificate from them has been received, to the effect that their appointment as statutory auditors of the Company, if ratified at the ensuing annual general meeting, would be in accordance with the applicable provisions of section 139 and 141 of the Companies Act, 2013 and rules framed there under, as amended from time to time.
Report given by the auditors on the audited financial statements of the Company forms part of this annual report. Observations made in the auditorsâ report are self-explanatory and therefore, do not call for any further explanation.
SECRETARIAL AUDIT REPORT
Pursuant to the provisions of section 204 of the Companies Act, 2013 and the rules made there under, the Company has appointed M/s. Pramod Shah & Associates, Company Secretaries (C.P. No. 3804), to undertake secretarial audit for the year ended March 31, 2016. The secretarial report given is given as Annexure â2â to this report.
MATERIAL CHANGES AND COMMITMENT, IF ANY, AFFECTING THE FINANCIAL POSITION OF THE COMPANY OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR TO WHICH THIS FINANCIAL STATEMENTS RELATE AND THE DATE OF THE REPORT
Except as disclosed elsewhere in this report, no material changes and commitments affecting the financial position of the Company occurred between the end of the financial year to which this financial statements relate and the date of this report.
EMPLOYEES
Disclosures with respect to the remuneration of directors and employees as required under section 197(12) of Companies Act, 2013 and rule 5(1) Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is given as Annexure â3â to this report.
The Company had 6 employees as on March 31, 2016. None of employees were (i) in receipt of remuneration in excess of rupees sixty lacs (for employees employed throughout the year) or rupees five lacs per month (for employees employed for part of the year) and (ii) holding (by himself or along with their spouse and dependent children) more than 2% of the equity shares of the Company and drawing remuneration in excess of the remuneration drawn by the managing director or whole-time director or manager. Accordingly, the statement of employee remuneration as required under provisions of section 197(12) of the Companies Act, 2013 and rule 5(2) & 5(3) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is not applicable to the Company.
None of the employee listed in the said annexure is a relative of any director of the Company.
EMPLOYEE STOCK OPTION SCHEMES
The Company presently has three employee stock option schemes viz. Employee Stock Option Scheme 2007 (ESOS 2007), Employee Stock Option Scheme 2008 (ESOS 2008) and Employee Stock Option Scheme 2009 (ESOS 2009). The compensation committee of the board of directors has granted, to eligible employees / directors of the Company and subsidiary companies 999,000, 1,197,750 and 1,485,000 options pursuant to ESOS 2007, ESOS 2008 and ESOS 2009 respectively.
The disclosures in accordance with the provisions of the Section 62(1)(b) of Companies Act, 2013 read with the Rule 12(9) of the Companies (Share Capital and Debentures) Rules, 2014 (as amended from time to time), the Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 and the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999, are set out as Annexure â4â to this report. The shares arising out of exercise of employee stock options are allotted in the name of the respective employees and accordingly, the provisions relating to disclosure of voting rights not exercised directly by the employees are not applicable.
PARTICULARS REGARDING CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
Since the Company is not engaged in any manufacturing activity, the disclosures as required under the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 pertaining to conservation of energy, etc. are not applicable.
During the period, there were no earnings and expenditure in foreign exchange.
LISTING & LISTING FEES
The equity shares of the Company are listed on the Bombay Stock Exchange Limited and the National Stock Exchange of India Limited and the listing fees for the year 2016-17 have been duly paid.
GENERAL DISCLOSURES
Your directors state that during the year under review:
1. The business responsibility reporting as required pursuant to the provisions of regulation 34(2) of the SEBI (Listing Obligations and Disclosures) Regulations, 2015 is not applicable to your Company.
2. No equity shares with differential rights, as to dividend, voting or otherwise, were issued
3. No equity shares (including sweat equity shares) were issued to employees of the Company under any scheme.
4. The Company has not resorted to any buy-back of its shares during the year under review.
5. Managing Director of the Company has not received any remuneration or commission from any of its subsidiaries.
6. No significant or material orders were passed by the regulators or courts or tribunals, which impact the going concern status and Companyâs operations in future.
ACKNOWLEDGEMENTS
The board wishes to place on record its sincere appreciation for the hard work put in by the Companyâs employees at all levels in this difficult environment. The board of directors also wishes to thank the Companyâs members, bankers and all other business associates for their unstinted support during the period.
For and on behalf of the Board of Directors
Mumbai Pradip Dubhashi N. Jayakumar
May 17, 2016 Chairman Managing Director
Mar 31, 2015
Dear Members.
The Directors are pleased to present their 32nd Report on the business
operations along with the Audited Financial Statements of your Company
for the Financial Year ended March 31, 2015.
FINANCIAL HIGHLIGHTS (STANDALONE) (Rs. in lacs)
Period ended Period ended
March 31, 2015 September 30, 2013
(18 months) (18 months)
Total Revenues (45.86) (1,303.32)
Total Expenses 445.67 3,846.31
Profit / (Loss) before Tax (491.53) (5,149.63)
Tax Expenses Nil Nil
Profit / (Loss) after Tax (491.53) (5,149.63)
Profit / (Loss) Brought Forward (3,705.59) 1,444.04
from Previous Year
Balance Carried to Balance Sheet (4,197.12) (3,705.59)
CHANGE IN FINANCIAL YEAR
The Company has obtained an approval of the Registrar of Companies,
Maharashtra, under section 2 (41) of the Companies Act, 2013, vide
their order dated November 17, 2014, to extend the Financial Year of
the Company by a period of six months so as to end on March 31, 2015.
Accordingly, the financial statements for the current period are for
eighteen months.
BUSINESS REVIEW & PROSPECTS
The period under review saw new political dispensation at the centre
and that, together with determined leadership at the Reserve Bank of
India, saw renewed initiatives to deal with the NPAs in the banking
sector through stricter controls and recapitalization. The new
leadership at the Ministry of Finance also initiated measures to bring
investors back to the capital market. Nonetheless, this period was
tumultuous for the corporate sector with slowing growth and squeeze on
liquidity due to banking sector problems inherited from the past. Fears
of withdrawal of global liquidity through roll back of quantitative
easing by western central banks helped create a feeling of uncertainty
in the minds of domestic corporate leadership.
Your company was also affected by these factors playing out in the
economy and the larger corporate finance area, as plans to raise long
term capital through the Private Equity route were largely kept on the
back burner. However, there was also an opportunity for your company's
advisory team in handling stressed assets and consequent sell down of
distressed portfolios. There has been some turn around in corporate
plans and as a consequence, your company sees significant rise in deal
flow in the recent quarters. However, successful closure may take some
time.
As a consequence of this unwarranted action by the NSE, Prime Broking
has filed a suit for damages in the Bombay High Court, along with the
Appeal in the Hon'ble Supreme Court (in which SEBI, too, has been made
one of the respondents).
The corporate finance and advisory business has seen improvement in
activities in this period, especially in the advisory part of handling
of stressed assets and sell down of distressed portfolios. While there
are numerous deals in the pipeline, closures of such deals could take
time.
Pursuant to clause 49 of the listing agreements with the stock
exchanges, management discussion and analysis report giving a detailed
account of the state of affairs of the Company is given as an annexure
to this report.
DIVIDEND
The board of directors has not recommended any dividend on equity
shares for the year under review.
DIRECTORS
In accordance with the provisions of section 161 of the Companies Act,
2013 read with the rules made thereunder, as amended from time to time,
and article 94 of the articles of association, Ms. Alpana Parida was
appointed as an additional director of the Company, for a term of five
years with effect from March 27, 2015 to March 26, 2020, not liable to
retired by rotation.
Pursuant to the provisions of section 149 the Companies Act, 2013 read
with the rules made thereunder, as amended from time to time, and
clause 49 of the listing agreement with the stock exchanges, Mr. Pradip
Dubhashi, Mr. Anil Dharker and Mr. S. R. Sharma, existing independent
directors, were appointed independent directors of the Company, for a
fresh term of five years w.e.f. March 27, 2015 to March 26, 2020 and
shall not be liable to retire by rotation.
Mr. N. Jayakumar, Managing Director, retires by rotation and being
eligible, offers himself for re-appointment.
Appropriate resolution for appointment / re-appointment is being placed
before you for your approval at the ensuing annual general meeting. The
information on the particulars of director seeking appointment /
re-appointment, as required under clause 49 of the listing agreement,
has been given as an annexure to the notice of annual general meeting in
this annual report.
The Company has received declaration form all the independent directors
of the Company confirming that they meet the criteria of independence
as prescribed under section 149 (6) of the Companies Act, 2013 and
clause 49 of the listing agreement.
NUMBER OF BOARD MEETINGS CONDUCTED DURING THE YEAR
During the year under review, seven board meetings were conducted.
BOARD EVALUATION
Annual performance evaluation of board of directors, its committees and
all the directors individually have been done in accordance with the
performance evaluation framework adopted by the Company. The
performance evaluation framework sets out the performance parameters as
well as the process of the performance evaluation. Pursuant to the
provisions of the Companies Act, 2013, a separate meeting of
independent directors was held during the year to review the
performance of (i) non-independent directors and the board of directors
as a whole (ii) board committees (iii) the chairperson of the Company,
taking into account the views of executive directors and non-executive
directors (iv) assess the quality, quantity and timeliness of flow of
information between the management and the board of directors that is
necessary for the board of directors to effectively and reasonably
perform its duties.
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to the provisions of Section 217(2AA) of the Companies Act,
1956, your Directors confirm that:
1. in the preparation of the annual accounts, the applicable
accounting standards have been followed and that there are no material
departures;
2. they have selected such accounting policies in consultation with
the statutory auditors 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 on March
31, 2015 and of the profit / (loss) of the Company for the year ended
on that date;
3. they have taken proper and sufficient care for the maintenance of
adequate accounting records in accordance with the provisions of the
Companies Act, 1956, for safeguarding of the assets of the Company and
for preventing and detecting fraud and other irregularities;
4. they have prepared the annual accounts on a going concern basis.
CONSOLIDATED FINANCIAL STATEMENT
The audited consolidated financial statement has been prepared by your
Company in accordance with the generally accepted accounting principles
in India (Indian GAAP) to comply with the accounting standards notified
under section 211(3C) of the Companies Act, 1956 (which are deemed to
be applicable as per section 133 of the Companies Act, 2013, read with
rule 7 of the Companies (Accounts) Rules, 2014) and the relevant
provisions of the Companies Act, 1956 or the Companies Act, 2013, as
applicable and shows the financial information of the Company and its
subsidiaries as a single entity, after elimination of minority
interest, if any As required under provisions of the Companies Act,
1956 or the Companies Act, 2013, as applicable and the listing
agreement, the audited consolidated financial statement of the Company
and all its subsidiaries together with auditor's report thereon forms
part of this annual report.
During the period, the consolidated revenues were Rs. (248.29) lacs as
compared to Rs. (3,563.81) lacs in the previous period, which comprises
merchant banking and advisory fees of Rs. 269.14 lacs, gain / (loss) on
sale of investments, derivatives and other transactions of Rs.
(1,263.51) lacs, Amounts written-back / provisions made and earlier no
longer required / written-back of Rs. 677.42 lacs and income from
dividend, interest & other income of Rs. 68.66 lacs. Extraordinary
items of Rs. 591.92 lacs represent income from sale of PMS business of
a subsidiary Company. The consolidated net loss after tax &
extraordinary items for the period under review was Rs. 1,521.41 lacs
as compared to Rs. 8,670.24 lacs in the previous period.
SUBSIDIARY COMPANIES / JOINT VENTURES
A statement containing the salient features of the audited financial
statement of the subsidiaries for the year ended March 31, 2015 has
been given as an annexure to the consolidated financial statements of
the Company and forms part of this annual report.
The policy for determining material subsidiaries has been placed on the
website of the Company (www.primesec.com). Separate audited financial
statements of each of the subsidiaries are available on the website of
the Company (www.primesec.com) and will also be kept open for
inspection by any shareholder of the Company at the registered office
of the Company and the same will also be made available to the
shareholders seeking such information at any point of time.
The summary of the performance of the subsidiaries is given below:
Prime Broking Company (India) Limited
Prime Broking Company (India) Limited ("PBCIL"), a wholly owned
subsidiary of your Company, was at the receiving end of a series of
moves by the National Stock Exchange of India Limited ("NSE") in the
previous year, where changes in collateral rules were implemented on an
arbitrary, retrospective basis by the NSE (to begin with) and
subsequently, the unwillingness to sell collateral held by them resulted
in a sharp decline in the value of the collateral pledged by PBCIL (on
behalf of its clients) to the NSE - the latter declared PBCIL a
defaulter and expelled PBCIL as a member of the exchange, an action
followed by the Bombay Stock Exchange Limited ('BSE") in terms of the
cross default clause of SEBI.
The above actions of the exchanges had been challenged by PBCIL in the
Securities Appellate Tribunal ("SAT"), which was dismissed by SAT in
the month of June/July 2015. PBCIL has preferred an appeal in the
Hon'ble Supreme Court against the order of SAT dismissing the appeals.
As a consequence of this unwarranted action by the NSE, PBCIL has also
filed a suit for damages in the Hon'ble High Court, which is pending
hearing.
The National Securities Clearing Corporation Limited ("NSCCL"), a
subsidiary Company of NSE, has subsequently filed a petition in the
Hon'ble Bombay High Court for winding up of PBCIL, which has been
challenged by the Company.
In view of the above eventualities, during the year, PBCIL has not been
able to carry on any activities. Since the matter is sub- judice, it
suffices to say that the company is taking all possible steps to arrive
at a solution, while looking at other options to compensate for the
loss in revenues. Further, to protect the interest of the portfolio
management services ("PMS") clients, PBCIL sold its PMS business during
the year to Religare Portfolio Managers & Advisor Private Limited and
transferred all extant clients with the business.
During the year, total revenues of PBCIL were Rs. (8.48) lacs as
compared to Rs. 2,056.70 lacs in the previous year, which comprises of
gain / (loss) on sale of investments of Rs. (12.03) lacs and income
from securities, dividend & other income of Rs. 3.55 lacs.
Extraordinary items of Rs. 591.92 lacs represent income from sale of
PMS business. The net loss after tax & extraordinary items for the
period under review was Rs. 591.38 lacs as compared to net loss after
tax and extraordinary items of Rs. 371.97 lacs in the previous period.
Primesec Investments Limited
Primesec Investments Limited ("PIL") was incorporated in November 2007
to carry on investment activities. During the period under review, PIL
earned revenues of Rs. (250.71) lacs as compared to Rs. (3,975.90) lacs
in the previous period. This includes gain / (loss) on sale of
investments and interest & dividend income. During the period, PIL
incurred net loss after tax of Rs. 489.66 lacs vis-a-vis a net loss
after tax of Rs. 4,479.09 lacs in the previous period.
Prime Research & Advisory Limited
Prime Research & Advisory Limited ("PRAL") has during the period under
review earned revenues of Rs. Nil as compared to Rs. (341.83) lacs in
the previous period. PRAL did not undertake any activities during the
period under review. During the period, PRAL incurred net loss after
tax of Rs. 3.31 lacs vis-a-vis a net loss after tax of Rs. 371.66 lacs
in the previous period.
Prime Commodities Broking (India) Limited
Prime Commodities Broking (India) Limited ("PCBIL") was incorporated in
2006 to carry on broking and other related activities in the
commodities markets. PCBIL did not undertake any activities during the
period under review. During the period under review, PCBIL earned
revenues of Rs. 41.65 lacs as compared to Rs. 0.53 lacs in the previous
period. During the period, PCBIL earned a net profit after tax of Rs.
3.84 lacs vis-a-vis a net profit after tax of Rs. 0.03 lacs in the
previous period.
The Company has not entered into any Joint Ventures.
CORPORATE GOVERNANCE AND CODE OF CONDUCT
Pursuant to clause 49 of the listing agreements with the stock
exchanges, report on corporate governance and a certificate from the
statutory auditors, confirming compliance by the Company of the
conditions of corporate governance as provided in clause 49 of the
listing agreement, are given as an annexure to this report and form
part of this annual report.
Pursuant to the provisions of clause 49(II)(E) of the listing
agreement, your Company has also laid down a code of conduct for its
board members and senior management personnel. All the directors and
the senior management personnel have affirmed compliance with the said
code of conduct. A declaration by the managing director regarding
compliance by board members and senior management personnel with the
code of conduct for the period ended March 31,2015 is annexed to this
report.
RELATED PARTY CONTRACTS & ARRANGEMENTS
In accordance with the provisions of the Companies Act, 2013 and the
listing agreement with the stock exchanges, the Company has formulated
a policy on related party transactions and a copy of the same is
available on the website of the Company (www.primesec.com). The policy
intends to ensure that proper reporting, approval and disclosure
processes are in place for all transactions with related parties and
also deals with material related party transactions.
All related party transactions are placed before the audit committee
for necessary review and approval. Prior omnibus approval of the audit
committee is obtained for transactions with related parties, which are
repetitive in nature and/or are entered into in the ordinary course of
business and are on an arm's length basis.
All transactions entered into by the Company with related parties
during the financial year were in ordinary course of business and are
on an arm's length basis. Disclosure pursuant to accounting standards
on related party transaction has been made in the notes to the audited
financial statement. No material related party transaction were entered
into during the year by the Company and accordingly, the disclosure of
contracts or arrangements with related parties in accordance with the
provisions of section 134(3)(h) of the Companies Act, 2013 in Form
AOC-2 is not applicable.
VIGIL MECHANISM
The Company has established a vigil mechanism (whistle blower policy)
for directors and employees to report genuine concerns, which provides
for adequate safeguards against victimization of persons who avail of
such a mechanism. A copy of the whistle blower policy is available on
the website of the Company (www.primesec.com).
EMPLOYEE STOCK OPTION SCHEMES
The Company presently has three employee stock option schemes viz.
Employee Stock Option Scheme 2007 (ESOS 2007), Employee Stock Option
Scheme 2008 (ESOS 2008) and Employee Stock Option Scheme 2009 (ESOS
2009). The compensation committee of the board of directors has
granted, to eligible employees / directors of the Company and
subsidiary companies 999,000, 1,197,750 and 1,485,000 options pursuant
to ESOS 2007, ESOS 2008 and ESOS 2009 respectively.
The disclosures in accordance with the provisions of the Section
62(1)(b) of Companies Act, 2013 read with the Rule 12(9) of the
Companies (Share Capital and Debentures) Rules, 2014 (as amended from
time to time), the Securities and Exchange Board of India (Share Based
Employee Benefits) Regulations, 2014 and the Securities and Exchange
Board of India (Employee Stock Option Scheme and Employee Stock
Purchase Scheme) Guidelines, 1999, are set out as an annexure to this
report. The shares arising out of exercise of employee stock options
are allotted in the name of the respective employees and accordingly,
the provisions relating to disclosure of voting rights not exercised
directly by the employees are not applicable.
AUDITORS AND AUDITORS' REPORT
M/s. Gandhi & Associates, Chartered Accountants, retire as statutory
auditors at the ensuing annual general meeting and being eligible,
offer themselves for re-appointment. The board of directors of the
Company, based on the recommendation of audit committee, recommends the
appointment of M/s. Gandhi & Associates, Chartered Accountants (Firm
Registration No: 102965W) as statutory auditors of the Company, for a
term of four years, commencing from the financial year 2015-16, subject
to ratification by members at every annual general meeting. A
certificate from them has been received, to the effect that their
appointment as statutory auditors of the Company, if made, would be in
accordance with the applicable provisions of section 139 and 141 of the
Companies Act, 2013 and rules framed thereunder, as amended from time
to time.
Report given by the auditors on the audited financial statements of the
Company is part of the annual report. Observations made in the
auditors' report are self-explanatory and therefore, do not call for
any further explanation.
MATERIAL CHANGES AND COMMITMENT, IF ANY, AFFECTING THE FINANCIAL
POSITION OF THE COMPANY OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR
TO WHICH THIS FINANCIAL STATEMENTS RELATE AND THE DATE OF THE REPORT
No material changes and commitments affecting the financial position of
the Company occurred between the end of the financial year to which
this financial statements relate and the date of this report.
EMPLOYEES
The particulars of employees required to be furnished under section
217(2A) of the Companies Act, 1956 read with the Companies (Particulars
of Employees) Rules, 1975, as amended, forms part of this report.
However, as per the provisions of section 219(1) (b)(iv) of the
Companies Act, 1956, the reports and accounts are being sent to all the
shareholders of the Company excluding the statement of particulars of
employees. Any member interested in obtaining a copy may write to the
Company at the registered office of the Company
PARTICULARS REGARDING CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND
FOREIGN ExCHANGE EARNINGS AND OUTGO
Since the Company is not engaged in any manufacturing activity, the
disclosures as required under the Companies (Disclosure of Particulars
in the Report of Board of Directors) Rules, 1988 pertaining to
conservation of energy, etc. are not applicable. During the period,
there were no earnings and expenditure in foreign exchange.
LISTING & LISTING FEES
The equity shares of the Company are listed on the Bombay Stock
Exchange Limited and the National Stock Exchange of India Limited and
the listing fees for the year 2015-16 have been duly paid.
ACKNOWLEDGEMENTS
The board of directors wishes to place on record its sincere
appreciation of the efforts put in by the Company's employees in this
difficult environment. The board of directors also wishes to thank the
Company's members, bankers and all other business associates for their
unstinted support during the period.
For and on behalf of the Board of Directors
Mumbai Pradip Dubhashi N. Jayakumar
August 14, 2015 Chairman Managing Director
Sep 30, 2013
The Directors have pleasure in presenting their Thirty First Annual
Report, together with the Audited Accounts for the year ended September
30, 2013.
(Rs. in lacs)
Year ended Year ended
FINANCIAL RESULTS September
30, 2013 March 31, 2012
(18 Months) (12 Months)
Total Revenues (1,303.32) 955.89
Total Expenses 3,846.31 1,258.97
Profit / (Loss) before Tax (5,149.63) (303.08)
Tax Expenses Nil 116.00
Profit/(Loss) after Tax (5,149.63) (419.08)
Profit Brought Forward from
Previous Year 1,444.04 1,863.12
Balance Carried to Balance Sheet (3,705.59) 1,444.04
CHANGE IN FINANCIAL YEAR
The Company has obtained an approval of the Registrar of Companies,
Maharashtra, under section 210(4) of the Companies Act, 1956, vide
their order dated April 8, 2013, to extend the Financial Year of the
Company and its subsidiaries by a period of six months to end on
September 30, 2013. Accordingly, the financial statements for the
current period are for eighteen months.
PERFORMANCE REVIEW
The 18 month period gone by has been one of the toughest periods for
the country and the banking sector in general, and the financial
services sector and your company in particular. This was a year when
Non Performing Assets of the banking industry rose quite dramatically
putting huge pressure on further disbursements to companies in trouble.
This led to substantial liquidity issues down the line, as companies
found it impossible to deal with a combination of slowing growth, lower
demand and poor liquidity. This situation was further exacerbated by a
fear of liquidity being squeezed through a gradual reduction/ phase-out
of Quantitative Easing measures undertaken by the Western World.
The RBI kept interest rates elevated as fears of a stagflation kind of
scenario became evident in policy making - a combination of low growth
and high inflation, principally due to supply side being a huge
constraint.
Your company was at the receiving end of a series of moves by the
National Stock Exchange (NSE), where changes in collateral rules were
implemented on an arbitrary, retrospective basis by the NSE (to begin
with) and subsequently, the unwillingness to sell collateral by them
resulted in a sharp decline in the value of the collateral pledged by
Prime Broking (on behalf of its clients) to the NSE - the latter
declared Prime Broking a defaulter, which has been challenged by our
subsidiary in the Securities Appellate Tribunal.
As a consequence of this unwarranted action by the NSE, Prime Broking
has filed a suit for damages in the Bombay High Court, along with the
SAT Appeal (in which SEBI, too, has been made one of the respondents).
In the first hearing itself, in the SAT, the judges asked the parties
to settle out of court, which both the parties agreed to, in principle.
The specific details of a settlement, if any, could well take a lot
more time to emerge.
The Corporate Finance and Advisory business has been quite weak in this
period, as private equity investors and strategic buyers, which are the
typical clients of the company, have been quite nervous about the
investment climate in general. While there are numerous deals in the
pipeline, closures of such deals could take time.
DIVIDEND
The Board of Directors has not recommended any Dividend on Equity
Shares for the year under review.
SUBSIDIARY COMPANIES AND CONSOLIDATED FINANCIAL STATEMENT
Prime Broking Company (India) Limited (PBCIL) has during the year under
review earned revenues of Rs. 2,056.70 lacs as compared to Rs. 868.96
lacs in the previous financial year. This includes income from broking
operations, income from portfolio management services, gain / (loss) on
sale of investments and interest & dividend income. During the year,
PBCIL incurred a net loss after tax of Rs. 371.97 lacs vis-a-vis a net
loss after tax of Rs. 7.88 lacs in the previous financial year.
The operations of the company have had to be shut down due to the
ongoing issues with the NSE, as described above. Since the matter is
sub-judice, it suffices to say that the company is taking all possible
steps to arrive at a solution, while looking at other options to
compensate for the loss in revenues.
One of the unintended fall-outs of this was also the withholding of
client shares by the exchanges - both broking clients as well as retail
Portfolio Management clients. This too has gone into appeal in the SAT.
Primesec Investments Limited (PIL) was incorporated in November 2007 to
carry on investment activities. During the year under review, PIL
earned revenues of Rs. (3,975.90) lacs as compared to Rs. (1,664.39)
lacs in the previous financial year. This includes gain / (loss) on
sale of investments and interest & dividend income. During the year,
PIL incurred net loss after tax of Rs. (4,479.09) lacs vis-a-vis a net
loss after tax of Rs. (2,338.94) lacs in the previous financial year.
Prime Research & Advisory Limited (PRAL) has during the year under
review earned revenues of Rs. (341.83) lacs as compared to Rs. 2.38
lacs in the previous financial year. This includes gain / (loss) on
sale of investments and interest & dividend income. During the year,
PIL incurred net loss after tax of Rs. (371.66) lacs vis-a-vis a net
profit after tax of Rs. 0.33 lacs in the previous financiafyear.
Prime Commodities Broking (India) Limited (PCBIL) was incorporated in
2006 to carry on broking and other related activities in the
commodities markets. PCBIL did not undertake any activities during
2012-2013. During the year under review, PCBIL earned revenues of Rs.
0.53 lacs as compared to Rs. 3.25 lacs in the previous financial year.
During the year, PCBIL earned a net profit after tax of Rs. 0.03 lacs
vis-a-vis a net profit after tax of Rs. 2.17 lacs in the previous
financial year.
A statement pursuant to Section 212 of the Companies Act, 1956 relating
to the Subsidiary Companies is annexed.
In terms of the general permission granted by the Government of India,
Ministry of Corporate Affairs, New Delhi u/s 212 (8) of the Companies
Act, 1956 vide its circular no. 02/2011 dated February 8, 2011, copies
of the Balance Sheet, Profit & Loss Account, Director''s Report and
Auditor''s Report of all the Subsidiary Companies have not been attached
to the Balance Sheet of the Company as at September 30, 2013. However,
as directed by the said approval, the financial data of the Subsidiary
Companies have been disclosed under "Subsidiary Companies Particulars"
forming part of the Annual Report. The annual accounts of the
Subsidiary Companies and the related detailed information will be made
available to the holding and subsidiary companies investors seeking
such information at any point of time. The annual accounts of the
Subsidiary Companies will also be kept open for inspection by any
investor at the Registered Office of the Company and that of the
Subsidiary Companies concerned.
As required under the Listing Agreement with the Stock Exchanges, a
Consolidated Financial Statement of the Company and all its
subsidiaries is attached. The Consolidated Financial Statement has been
prepared in accordance with Accounting Standards issued by the
Institute of Chartered Accountants of India and shows the financial
information of the Company and its subsidiaries as a single entity,
after elimination of minority interest.
EMPLOYEE STOCK OPTION SCHEMES
The Company is presently having three employee stock option schemes
viz. Employee Stock Option Scheme 2007 (ESOS 2007), Employee Stock
Option Scheme 2008 (ESOS 2008) and Employee Stock Option Scheme 2009
(ESOS 2009). The compensation committee of the board of directors has
granted, to the eligible employees / directors of the Company and
subsidiary companies 999,000,1,197,750 and 1,485,000 Options pursuant
to ESOS 2007, ESOS 2008 and ESOS 2009 respectively. The disclosures in
accordance with the provisions of clause 12 of the Securities Exchange
Board of India (Employee Stock Option Scheme and Employee Stock
Purchase Scheme) Guidelines, 1999 are set out in the annexure to this
report.
CORPORATE GOVERNANCE AND CODE OF CONDUCT
Pursuant to Clause 49 of the Listing Agreements with the Stock
Exchanges, a Management Discussion and Analysis Report and a Report on
Corporate Governance are given as annexures to this Report. A
certificate from the Statutory Auditors confirming compliance by the
Company of the conditions of Corporate Governance as provided in Clause
49 of the Listing Agreement is also annexed to this Report.
Pursuant to the provisions of Clause 49(1 )(D) of the Listing
Agreement, your Company has also laid down a Code of Conduct for its
Board Members and Senior Management Personnel. All the Directors and
the Senior Management Personnel have affirmed compliance with the said
Code of Conduct. A declaration by the Whole-time Director regarding
compliance by Board Members and Senior Management Personnel with the
Code of Conduct for the year ended September 30, 2013 is annexed to
this Report.
DIRECTORS
Mr. S. R. Sharma is retiring at the ensuing Annual General Meeting and
is eligible for re-appointment. Appropriate resolution for
re-appointment is being placed before you for your approval at the
ensuing Annual General Meeting. The information on the particulars of
Director seeking re-appointment as required under Clause 49 of the
Listing Agreement have been given in the Notice of Annual General
Meeting in this Annual Report. Your Directors recommend his
re-appointment as a Director of your Company.
DIRECTORS'' RESPONSIBILITY STATEMENT
As required under Section 217(2AA) of the Companies Act, 1956, your
Directors confirm that:
1. in the preparation of the annual accounts, the applicable
accounting standards have been followed and that there are no material
departures;
2. they have selected such accounting policies in consultation with
the statutory auditors 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 at the end
of the financial year and of the profit of the Company for that period;
3. they have taken proper and sufficient care for the maintenance of
adequate accounting records in accordance with the provisions of the
Companies Act, 1956, for safeguarding of the assets of the Company and
for preventing and detecting fraud and other irregularities;
4. they have prepared the annual accounts on a going concern basis.
AUDITORS AND AUDITORS'' REPORT
M/s. Gandhi & Associates, Auditors of the Company, hold office until
the conclusion of the ensuing Annual General Meeting and are eligible
for re-appointment. The Company has received letters from them to the
effect that their appointment, if made, would be within the prescribed
limits under Section 224 (1B) of the Companies Act, 1956. Members are
requested to re-appoint them as Auditors and to authorise the Board of
Directors to fix their remuneration.
Observations made in the Auditors'' Report are self-explanatory.
EMPLOYEES
The particulars of employees required to be furnished under Section
217(2A) of the Companies Act, 1956 read with the Companies (Particulars
of Employees) Rules, 1975, as amended, forms part of this Report.
However, as per the provisions of Section 219(1)(b)(iv) of the
Companies Act, 1956, the reports and accounts are being sent to all the
shareholders of the Company excluding the statement of particulars of
employees. Any shareholders interested in obtaining a copy may write to
the Company at the registered office of the Company.
PARTICULARS REGARDING CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND
FOREIGN EXCHANGE EARNINGS AND OUTGO
Since the Company is not engaged in any manufacturing activity, the
disclosures as required under the Companies (Disclosure of Particulars
in the Report of Board of Directors) Rules, 1988 pertaining to
conservation of energy, etc. are not applicable.
During the year, there were no earnings and expenditure in foreign
exchange.
LISTING & LISTING FEES
The equity shares of the Company are listed on The Bombay Stock
Exchange Limited and The National Stock Exchange of India Limited.
Listing fees for the year 2013-14 have been duly paid.
ACKNOWLEDGEMENTS
The Board would like to place on record their appreciation to bankers
and shareholders for their continued support to the Company.
For and on behalf of the Board of Directors
Mumbai N. Jayakumar
Dated: February 14, 2014 Managing Director
Mar 31, 2011
Dear Members,
The Directors have pleasure in presenting their Twenty-Ninth Annual
Report, together with the Audited Accounts for the Year ended March 31,
2011.
(Rs. in lacs)
Year ended Year ended
FINANCIAL RESULTS March 31, 2011 March 31, 2010
Total Income 2,045.60 1,780.17
Administrative and Other Expenditure 529.57 290.90
Loss in Derivatives and Other
Transactions (Net) - 41.47
Loss on Sale of Investments (Net) 88.25 -
Diminution in Value of Investments
(Net of written-back) 19.01 51.95
Depreciation 21.97 22.02
Interest and Finance charges 863.05 511.53
Profit before Tax 523.75 862.31
Current Tax 100.00 144.00
Income Tax of earlier years 2.67 13.46
Profit after Tax 421.07 704.85
Profit Brought Forward from Previous Year 1,442.05 737.20
Balance Carried to the Balance Sheet 1,863.12 1,442.05
PERFORMANCE REVIEW
During the year under review, there was a turnaround in the economics
of developed as well as emerging markets. However, recovery in
developed markets have been muted. Central Banks and Governments across
the world have provided fiscal and monetary stimulus to stabilize
global demand, through the quantitative easing program.
This has caused inflation in emerging countries like India. Reserve
Bank of India, has acted prudently by raising rates in order to tame
the inflation. As a consequence of high interest rates, GDP growth
estimate has even reduced to 7.5% for FY 12 as against earlier estimate
of 9%.
The Corporate Finance & Advisory business has gained momentum during
the year, however closing of rush transactions became extended due to
investors being wary about investments. We believe many of the mandates
that we have been working on throughout 2010-11 will start giving
fruits in the coming years.
Your Company will strive to consumate several deals in the areas of
Private Equity and Corporate Finance in the coming years. Once the
International investors focus on mid cap segment, we will be able to
close the deals faster.
We see a huge opportunity in Wealth Management franchise and hope to
launch new products both in India and overseas markets..
DIVIDEND
The Board of Directors has not recommended any Dividend on Equity
Shares for the year under review.
EMPLOYEE STOCK OPTION SCHEMES
The Company is presently having two employee stock option schemes viz.
Employee Stock Option Scheme 2007 (ESOS 2007), Employee Stock Option
Scheme 2008 (ESOS 2008) and Employee Stock Option Scheme 2009 (ESOS
2009). The compensation committee of the board of directors has
granted, to the eligible employees / directors of the Company and
subsidiary companies, 999,000, 1,197,750 and 1,300,000 Options pursuant
to ESOS 2007, ESOS 2008 and ESOS 2009 respectively. The disclosures in
accordance with the provisions of clause 12 of the Securities Exchange
Board of India (Employee Stock Option Scheme and Employee Stock
Purchase Scheme) Guidelines, 1999 are set out in the annexure to this
report.
SUBSIDIARY COMPANIES AND CONSOLIDATED FINANCIAL STATEMENT
Prime Broking Company (India) Limited (PBCIL) has during the year under
review earned revenues of Rs. 836.65 lacs as compared to Rs. 1,168.21
lacs in the previous financial year. This includes Income from Broking
Operations, Income from Portfolio Management Services, Profit on Sale
of Investments and Interest & Dividend Income. During the year, PBCIL
has incurred a net loss after tax of Rs. 25.60 lacs vis-a-vis a net
profit after tax of Rs. 289.84 lacs in the previous financial year.
Prime Commodities Broking (India) Limited (PCBIL) was incorporated in
2006 to carry on broking and other related activities in the
commodities markets. PCBIL did not undertake any activities during
2010-2011. During the year under review, PCBIL earned revenues of Rs.
2.90 lacs as compared to Rs. 4.38 lacs in the previous financial year.
The net profit after tax for the year ended March 31, 2011 amounted to
Rs. 1.64 lacs as against net profit after tax of Rs. 3.01 lacs in the
previous financial year.
Primesec Investments Limited (PIL) was incorporated in November 2007 to
carry on Non-Banking Financial Companies (NBFC) activities. During the
year under review, PCBIL earned revenues of Rs. 613.27 lacs as compared
to Rs. 54.38 lacs in the previous financial year. This includes Gain on
Sale of Investments and Interest & Dividend Income. The net loss after
tax for the year ended March 31, 2011 amounted to Rs. 107.81 lacs as
against net profit after tax and adjustments of Rs. 611.54 lacs in the
previous financial year.
Prime Research & Advisory Limited (PRAL) did not undertake any
activities during 2010-2011.
A statement pursuant to Section 212 of the Companies Act, 1956 relating
to the Subsidiary Companies is annexed.
In terms of the general permission granted by the Government of India,
Ministry of Corporate Affairs, New Delhi u/s212 (8) of the Companies
Act, 1956 vide its circular no. 51/12/2007-CL-lll dated February 8,
2011, copies of the Balance Sheet, Profit & Loss Account, Director's
Report and Auditor's Report of all the Subsidiary Companies have not
been attached to the Balance Sheet of the Company as at March 31, 2011.
However, as directed by the said approval, the financial data of the
Subsidiary Companies have been disclosed under "Subsidiary Companies
Particulars" forming part of the Annual Report. The annual accounts of
the Subsidiary Companies and the related detailed information will be
made available to the holding and subsidiary companies investors
seeking such information at any point of time. The annual accounts of
the Subsidiary Companies will also be kept open for inspection by any
investor at the Registered Office of the Company and that of the
Subsidiary Companies concerned.
As required under the Listing Agreement with the Stock Exchanges, a
Consolidated Financial Statement of the Company and all its
subsidiaries is attached. The Consolidated Financial Statement has been
prepared in accordance with Accounting Standards issued by the
Institute of Chartered Accountants of India and shows the financial
information of the Company and its subsidiaries as a single entity,
after elimination of minority interest.
CORPORATE GOVERNANCE AND CODE OF CONDUCT
Pursuant to Clause 49 of the Listing Agreements with the Stock
Exchanges, a Management Discussion and Analysis Report and a Report on
Corporate Governance are given as annexures to this Report. A
certificate from the Pramod Shah & Associate, Practising Company
Secretaries, confirming compliance by the Company of the conditions of
Corporate Governance as provided in Clause 49 of the Listing Agreement
is also annexed to this Report.
Pursuant to the provisions of Clause 49(1 )(D) of the Listing
Agreement, your Company has also laid down a Code of Conduct for its
Board Members and Senior Management Personnel. All the Directors and
the Senior Management Personnel have affirmed compliance with the said
Code of Conduct. A declaration by the Whole-time Director regarding
compliance by Board Members and Senior Management Personnel with the
Code of Conduct for the year ended March 31, 2011 is annexed to this
Report.
DIRECTORS
During the year, Mr. S. R. Sharma, Mr. N. Jayakumar and Mr. Anil
Dharker were inducted on the Board as an Additional Directors w.e.f.
January 25, 2011, February 25, 2011 and May 28, 2011. They hold office
as an Additional Directors till the conclusion of the ensuing Annual
General Meeting. Mr. N. Jayakumar has been designated as Managing
Director, subject to approval of the shareholders at the ensuing annual
general meeting. During the year, Mr. Arun Shah, resigned as Chairman
of the Company w.e.f. January 25, 2011 and the Directors place on
record their appreciation of the services rendered by him during his
tenure as Chairman of the Company. Subsequent to the resignation of Mr.
Arun Shah, Mr. Pradip Dubhashi has been designated as a Chairman of the
Company. Mr. Pradip Dubhashi is retiring at the ensuing Annual General
Meeting and is eligible for re-appointment. Appropriate resolution for
appointment and re-appointment are being placed before you for your
approval at the ensuing Annual General Meeting. The information on the
particulars of Director seeking re-appointment as required under Clause
49 of the Listing Agreement have been given in the Notice of Annual
General Meeting in this Annual Report. Your Directors recommend their
appointment as a Director of your Company.
DIRECTORS' RESPONSIBILITY STATEMENT
As required under Section 217(2AA) of the Companies Act, 1956, your
Directors confirm that:
1. in the preparation of the annual accounts, the applicable
accounting standards have been followed and that there are no material
departures;
2. they have selected such accounting policies in consultation with
the statutory auditors 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 at the end
of the financial year and of the profit of the Company for that period;
3. they have taken proper and sufficient care for the maintenance of
adequate accounting records in accordance with the provisions of the
Companies Act, 1956, for safeguarding of the assets of the Company and
for preventing and detecting fraud and other irregularities;
4. they have prepared the annua! accounts on a going concern basis.
CORPORATE SOCIAL RESPONSIBILITIES
As a part of corporate social responsibilities, during the year under
review, the Company has donated an amount of Rs. t ,708,000/- to
various organisation for support to children education, protection,
survival and many more things to benefit them. These are the world's
leading independent organization for children that works to inspire
breakthroughs in the way the world treats children to achieve immediate
and lasting change in their lives.
AUDITORS AND AUDITORS' REPORT
M/s. Gandhi & Associates, Auditors of the Company, hold office until
the conclusion of the ensuing Annual General Meeting and are eligible
for re-appointment. The Company has received letters from them to the
effect that their appointment, if made, would be within the prescribed
limits under Section 224 (1B) of the Companies Act, 1956. Members are
requested to re-appoint them as Auditors and to authorise the Board of
Directors to fix their remuneration.
Observations made in the Auditors' Report are self-explanatory.
EMPLOYEES
The particulars of employees required to be furnished under Section
217(2A) of the Companies Act, 1956 read with the Companies (Particulars
of Employees) Rules, 1975, as amended, forms part of this Report.
However, as per the provisions of Section 219(1) (b)(iv) of the
Companies Act, 1956, the reports and accounts are being sent to all the
shareholders of the Company excluding the statement of particulars of
employees. Any shareholders interested in obtaining a copy may write to
the Company at the registered office of the Company.
PARTICULARS REGARDING CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND
FOREIGN EXCHANGE EARNINGS AND OUTGO
Since the Company is not engaged in any manufacturing activity, the
disclosures as required under the Companies (Disclosure of Particulars
in the Report of Board of Directors) Rules, 1988 pertaining to
conservation of energy, etc. are not applicable.
During the year, there were no earnings and expenditure in foreign
exchange.
LISTING & LISTING FEES
The equity shares of the Company are listed on The Bombay Stock
Exchange Limited and The National Stock Exchange of India Limited.
Listing fees for the year 2011-12 have been duly paid.
ACKNOWLEDGEMENTS
The Board would like to place on record their appreciation of the
contributions made by every employee of the Company. The Board would
like to thank the bankers, shareholders for their continued support to
the Company.
For and on behalf of the Board of Directors
Mumbai N. Jayakumar
Dated: August 6, 2011 Managing Director
Mar 31, 2010
The Directors have pleasure in presenting their Twenty-Eighth Annual
Report, together with the Audited Accounts for the Year ended March 31,
2010.
(Rs. in lacs)
FINANCIAL RESULTS Year ended Year ended
March 31, 2010 March 31, 2009
Total Income 1,780.17 178.14
Administrative and Other
Expenditure 290.90 638.44
Loss in Derivatives and Othe
r Transactions (Net) 41.47 -
Loss on Sale of Investments (Net) - 503.58
Diminution in Value of Investments
(Net of written-back) 51.95 1,215.42
Depreciation 22.02 22.97
Interest 511.53 16.27
Profit before Tax 862.31 (2,218.55)
Current Tax 144.00 -
Fringe Benefit Tax - 3.37
Profit after Tax 718.31 (2,221.91)
Prior Period Adjustments - Tax 13.46 -
Net Profit after Adjustment 704.85 (2,221.91)
Profit Brought Forward from
Previous Year 737.20 2,959.11
Balance Carried to Balance Sheet 1,442.05 737.20
PERFORMANCE REVIEW
During the year under review, world financial markets started
stabilizing due to pumping in of huge liquidity by central banks of
various countries, thereby arresting recessionary trends. Fears are
being expressed if high level of liquidity at low interest rates would
lead to higher iinfation. Indian markets have improved significantly
during the year under review and Companies have shown strong financial
performance during the period. Earnings growth has been significant for
most of Companies.
Total revenues of your Company for the year under review were Rs.
1,780.17 lacs as compared to Rs. 178.14 lacs in the previous year and
net profit after tax and adjustments amounted to Rs. 704.85 lacs as
against net loss after tax and adjustments of Rs. 2,221.91 lacs in the
previous year.
For the year ended March 31, 2010, the consolidated revenues for the
Group as a whole was Rs. 3,010.09 lacs as compared to Rs. 834.69 lacs
in the previous financial year and consolidated net profit after tax
and other adjustments was Rs. 377.62 lacs against net loss after tax
and adjustments of Rs. 2,521.89 lacs for the previous financial year.
DIVIDEND
The Board of Directors has not recommended any Dividend on Equity
Shares for the year under review.
EMPLOYEE STOCK OPTION SCHEMES
The Company is presently having two employee stock option schemes viz.
Employee Stock Option Scheme 2007 (ESOS 2007) and Employee Stock Option
Scheme 2008 (ESOS 2008). The compensation committee of the board of
directors has granted, to the eligible employees / directors of the
Company and subsidiary companies, 9,99,000 and 11,97,750 Options
pursuant to ESOS 2007 and ESOS 2008 respectively. The disclosures in
accordance with the provisions of clause 12 of the Securities Exchange
Board of India (Employee Stock Option Scheme and Employee Stock
Purchase Scheme) Guidelines, 1999 are set out in the annexure to this
report.
SUBSIDIARY COMPANIES AND CONSOLIDATED FINANCIAL STATEMENT
Prime Broking Company (India) Limited (PBCIL) has during the year under
review earned revenues of Rs. 1,168.21 lacs as compared to Rs. 685.35
lacs in the previous financial year. This includes Income from Broking
Operations, Income from Portfolio Management Services, Profit on Sale
of Investments and Interest & Dividend Income. During the year, PBCIL
has earned a net profit after tax and other adjustments of Rs. 289.84
lacs vis-ÃÂ -vis a net loss after tax and other adjustments of Rs. 285.26
lacs in the previous financial year.
Prime Commodities Broking (India) Limited (PCBIL) was incorporated in
2006 to carry on broking and other related activities in the
commodities markets. PCBIL did not undertake any activities during
2009-2010. During the year under review, PCBIL earned revenues of Rs.
4.38 lacs as compared to Rs. 2.52 lacs in the previous financial year.
The net profit after tax and adjustments for the year ended March 31,
2010 amounted to Rs. 3.01 lacs as against net loss after tax and
adjustments of Rs. 0.68 lacs in the previous financial year.
Primesec Investments Limited (PIL) was incorporated in November 2007 to
carry on Non-Banking Financial Companies (NBFC) activities. During the
year under review, PCBIL earned revenues of Rs. 54.38 lacs as compared
to Rs. 14.46 lacs in the previous financial year. This includes Income
from Trading, Profit on Sale of Investments and Interest & Dividend
Income. The net loss after tax and adjustments for the year ended March
31, 2010 amounted to Rs. 611.54 lacs as against net profit after tax
and adjustments of Rs. 8.85 lacs in the previous financial year.
Prime Research & Advisory Limited (PRAL) did not undertake any
activities during 2009-2010.
A statement pursuant to Section 212 of the Companies Act, 1956 relating
to the Subsidiary Companies is annexed.
In terms of the approval granted by the Government of India, Ministry
of Corporate Affairs, New Delhi u/s 212 (8) of the Companies Act, 1956
vide its letter no. 47/629/2010-CL-III dated July 1, 2010, copies of
the Balance Sheet, Profit & Loss Account, Directors Report and
Auditors Report of all the Subsidiary Companies have not been attached
to the Balance Sheet of the Company as at March 31, 2010. However, as
directed by the said approval, the financial data of the Subsidiary
Companies have been disclosed under ÃSubsidiary Companies ParticularsÃ
forming part of the Annual Report. The annual accounts of the
Subsidiary Companies and the related detailed information will be made
available to the holding and subsidiary companies investors seeking
such information at any point of time. The annual accounts of the
Subsidiary Companies will also be kept open for inspection by any
investor at the Registered Office of the Company and that of the
Subsidiary Companies concerned.
As required under the Listing Agreement with the Stock Exchanges, a
Consolidated Financial Statement of the Company and all its
subsidiaries is attached. The Consolidated Financial Statement has been
prepared in accordance with Accounting Standards issued by the
Institute of Chartered Accountants of India and shows the financial
information of the Company and its subsidiaries as a single entity,
after elimination of minority interest.
CORPORATE GOVERNANCE AND CODE OF CONDUCT
Pursuant to Clause 49 of the Listing Agreements with the Stock
Exchanges, a Management Discussion and Analysis Report and a Report on
Corporate Governance are given as annexures to this Report. A
certificate from the Pramod Shah & Associate, Practising Company
Secretaries, confirming compliance by the Company of the conditions of
Corporate Governance as provided in Clause 49 of the Listing Agreement
is also annexed to this Report.
Pursuant to the provisions of Clause 49(1)(D) of the Listing Agreement,
your Company has also laid down a Code of Conduct for its Board Members
and Senior Management Personnel. All the Directors and the Senior
Management Personnel have affirmed compliance with the said Code of
Conduct. A declaration by the Whole-time Director regarding compliance
by Board Members and Senior Management Personnel with the Code of
Conduct for the year ended March 31, 2010 is annexed to this Report.
DIRECTORS
Mr. Pradip Dubhashi is retiring at the ensuing Annual General Meeting
and is eligible for re-appointment. Appropriate resolution for his
reappointment is being placed before you for your approval at the
ensuing Annual General Meeting. The information on the particulars of
Director seeking re-appointment as required under Clause 49 of the
Listing Agreement have been given in the Notice of Annual General
Meeting in this Annual Report. Your Directors recommend his
re-appointment as a Director of your Company
DIRECTORS RESPONSIBILITY STATEMENT
As required under Section 217(2AA) of the Companies Act, 1956, your
Directors confirm that:
1. in the preparation of the annual accounts, the applicable
accounting standards have been followed and that there are no material
departures;
2. they have selected such accounting policies in consultation with
the statutory auditors 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 at the end
of the financial year and of the profit of the Company for that period;
3. they have taken proper and sufficient care for the maintenance of
adequate accounting records in accordance with the provisions of the
Companies Act, 1956, for safeguarding of the assets of the Company and
for preventing and detecting fraud and other irregularities;
4. they have prepared the annual accounts on a going concern basis.
CORPORATE SOCIAL RESPONSIBILITIES
As a part of corporate social responsibilities, during the year under
review, the Company has donated an amount of Rs. 250,000/- to EXNORA
International Foundation, an organisation based in Chennai, which is a
voluntary, not for profit organization, committed to environmental
protection through peoples participation.
The Company has further donated an amount of Rs. 486,000/- to ÃSave the
ChildrenÃ, an organisation based in New Delhi, for support to children
education, protection, survival and many more things to benefit them.
It is the worlds leading independent organization for children that
works to inspire breakthroughs in the way the world treats children to
achieve immediate and lasting change in their lives.
AUDITORS AND AUDITORS REPORT
M/s. Gandhi & Associates, Auditors of the Company, hold office until
the conclusion of the ensuing Annual General Meeting and are eligible
for re-appointment. The Company has received letters from them to the
effect that their appointment, if made, would be within the prescribed
limits under Section 224 (1B) of the Companies Act, 1956. Members are
requested to re-appoint them as Auditors and to authorise the Board of
Directors to fix their remuneration.
Observations made in the Auditors Report are self-explanatory.
EMPLOYEES
The particulars of employees required to be furnished under Section
217(2A) of the Companies Act, 1956 read with the Companies (Particulars
of Employees) Rules, 1975, as amended, forms part of this Report.
However, as per the provisions of Section 219(1) (b)(iv) of the
Companies Act, 1956, the reports and accounts are being sent to all the
shareholders of the Company excluding the statement of particulars of
employees. Any shareholders interested in obtaining a copy may write to
the Company at the registered office of the Company.
PARTICULARS REGARDING CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND
FOREIGN ExCHANGE EARNINGS AND OUTGO
Since the Company is not engaged in any manufacturing activity, the
disclosures as required under the Companies (Disclosure of Particulars
in the Report of Board of Directors) Rules, 1988 pertaining to
conservation of energy, etc. are not applicable.
During the year, there were no earnings and expenditure in foreign
exchange.
LISTING & LISTING FEES
The equity shares of the Company are listed on The Bombay Stock
Exchange Limited and The National Stock Exchange of India Limited.
Listing fees for the year 2010-11 have been duly paid.
ACKNOWLEDGEMENTS
The Board would like to place on record their appreciation of the
contributions made by every employee of the Company. The Board would
like to thank the bankers, shareholders for their continued support to
the Company.
For and on behalf of the Board of Directors
Mumbai R. Ramachandran
Dated: July 29, 2010 Whole-time Director