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Action Financial Services (India) Ltd.

BSE: 511706 | NSE: | Series: NA | ISIN: INE357A01032 | SECTOR: Finance - Investments

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Annual Report

For Year :
2015 2014 2013 2012 2011 2010 2009 2008 2006

Director’s Report

Dear Members, The Directors have pleasure in presenting the 22nd Annual Report together with the Audited Financial Statement for the year ended on 31st March, 2015. FINANCIAL RESULTS Consolidated Year ended Year ended 31.3.2015 31.3.2014 Revenue from operations & other 36,886,665 43,583,390 Income Profit (Loss) before Interest & 6,396,475 4,071,268 Depreciation Less: Interest 4991441 59,98,567 Less: Depreciation 4,403,953 3,833,230 Profit (Loss) After Depreciation & (2,998,919) (5,760,529) before Tax Exceptional Item 5,696,734 63,94,442 Profit before Tax 2,697,815 633,913 - Taxation Current Year 100,000 390,600 - Deferred Tax 567,234 (886,805) Profit /(Loss) after tax 2,030,581 1,130,118 Standalone Year ended Year ended 31.3.2015 31.3.2014 Revenue from operations & other 36,954,021 4,37,03,207 Income Profit (Loss) before Interest & 6,662,439 37,32,540 Depreciation Less: Interest 4,991,441 59,98,567 Less: Depreciation 4,401,980 38,16,506 Profit (Loss) After Depreciation & (2,730,982) (60,82,533) before Tax Exceptional Item 5,696,734 63,94,442 Profit before Tax 2,965,752 3,11,909 - Taxation Current Year 100,000 3,20,000 - Deferred Tax 653,188 (6,06,493) Profit /(Loss) after tax 2,212,564 5,98,402 FUTURE OUTLOOK & EXPANSION PLAN: The company is focused on building a long term stable business with emphasis on retail business brokerage that does not rely on highly leveraged trading clients. The actions of the new government will have a significant bearing on the pace of policy reforms, improvement in investment climate and on the public market sentiments. Stability in global markets and sustained demand from the industrialized nations are also imperative for the growth playing out along expected lines. With the launch of our most innovative product, ''1 Paise brokerage per executed order'' in capital market, your Company has commenced its journey to create wonders in conducting business and change the overall views of broking industry. To make this a super success and break the myth of how stock brokers operate, we want to go few steps ahead. Our roadmap is ready with lot of ideas and we are all set to achieve our goals. We have set of targets to be achieved & to accelerate the growth Company is looking out for fresh Investments. Our subsidiary Company, Action Commodities Limited, became one of the first Company all over India, to get the approval from Insurance Regulatory Development Authority (IRDA) to dematerialize all insurance policies of all policy holders including individuals, firms and corporate. This will create additional client base for the Company and will also help generate additional revenue for the Company. DIVIDEND The Company does not recommend any dividend on Cumulative Redeemable Preference Shares and Equity Shares for the year ended 31st March, 2015. TRANSFER TO RESERVE The Company did not transfer any amount to reserve this year. SHARE CAPITAL The paid up Share Capital of the company as on 31st March, 2015 was Rs. 133,325,000. During the year under review, the Company has not issued shares with differential voting rights nor granted stock options nor sweat equity. REPORT ON PERFORMANCE OF SUBSIDIARIES, ASSOCIATES COMPANIES AND JOINT VENTURES: As on March 31st, 2015, the Company had two Indian wholly owned non material subsidiaries. There has been no change in the number of subsidiaries or in the nature of business of the subsidiaries, during the year under review. In accordance with Section 129(3) of the Companies Act, 2013, the Company has prepared a consolidated financial statement of the Company and all its subsidiary companies, which is forming part of the Annual Report. A statement containing salient features of the financial statements of the subsidiary companies is also included in the Annual Report. There is no new incorporation or Cessation of any Company as a subsidiary, associate company or joint venture during the year. TRANSFER OF UNCLAIMED DIVIDEND TO INVESTOR EDUCTION AND PROTECTION FUND Since there was no unpaid/unclaimed Dividend declared and paid last year, the provisions of Section 125 of the Companies Act, 2013 do not apply. CONSOLIDATED RESULTS: The audited Standalone and consolidated Financial Statements of the Company along with its subsidiary companies are attached herewith and form part of this annual report. These have been prepared in accordance with the provisions of the Companies Act, 2013, the Listing Agreement, the Accounting Standard 21 (AS-21) on Consolidated Financial Statements and Accounting Standard 23-(AS-23) on Accounting for Investments in Associates in Consolidated Financial Statements based on Audited Financial Results for the year ended 31st March, 2015. The statement containing the salient feature of the financial statement of a company''s subsidiaries under the first proviso to sub-section (3) of section 129 set out as Annexure A in Form AOC-1. FINANCIAL PERFORMANCE This year witnessed huge volatility and further due to political instability led the client base grows at sluggish rate. As we have launched one paisa brokerage scheme which brought down our brokerage income to great extent as many of the active clients moved into this scheme, so there is a fall in the brokerage income. The primordial focus of the Company has been on raising fresh funds, in an increasingly difficult economic environment. The economic slowdown, poor dollar returns on the back of significant currency devaluation, and policy inaction have prompted most investors to await changes in government before relooking at India as an investment option. OVERVIEW: With the stable government and optimistic sentiments of FII and retail investors, there are lot of opportunities in the market to build wealth and expand. However, being a broking company, its opportunities and threat would be more specific to the ones, which apply to the companies operating in the capital market as brokers. But as it is known a healthy competition is always good for the industry we expect various new sources of revenues in coming future from financial and capital markets. REVIEW OF BUSINESS DIVISIONS: Broking Division and Depository Division: Our Services under the Broking Business comprising of Equity, Currency & Derivatives Services, we offer retail and Institutional broking services in Equity to a large institutional and retail clientele in India and also offer retail broking services in currency segment. Action offers personalized services and complete transaction support through our website to our client for investment in primary market through Mutual fund and IPO''s. Action offers platform for trading in Equity Market in BSE, NSE for cash, Derivatives & currency segment of the Exchange. Action offers mobile trading facility to the clients. Company has completed 18 years as a Depository Participant. Company is holding approximately Rs. 2,045.99 Crores worth stock on behalf of clients as on 31st March, 2015. Company is registered with NSDL for Internet based IDeAS facility for the convenience of the Investor to enable them to view latest holding with valuation as well as transactions. Company also has its own website through which client can view their holding, transaction and ledger balances. Company has introduced various tariff Schemes for clients as per their requirement & convenience. As a result, of flexible working hours, experienced staff, timely information to clients regarding failure of instructions, acceptance of last minute Pay-In instructions, less processing time, Low cost etc. Clients of other Brokers also prefer to open their Demat Accounts with us. Key areas of service are retail clientele, clearing members and promoters of various companies. DP Division caters to 29 clearing Members Pool Account and maintains 40 Promoters Accounts. Mobile Application Facility We are pleased to inform you that our Share Transfer Agent (STA) Link Intime India Pvt (LIIPL) Ltd has launched a new mobile application namely blinkInsta. This mobile application is exclusively designed for all such investors who have invested in the securities where LIIPL is the Share Transfer Agent. To have this facility on your mobile phone; you need to download blinkInsta via Play-store for all android base phones and via App-Store on all I-phones which are free of cost to the investors. Once you download the application on your mobile phone the same will prompt you toward the simple registration process for KYC. This is very useful application which will enable you with lot of relevant information such as dividend/interest payments, forthcoming AGMs etc. DEPOSITORY SYSTEM As the Members are aware, your Company''s share are tradable compulsorily in electronic form and your Company has established connectivity with both the depositories, i.e. National Securities Depository Limited and Central Depository Services (India) Limited. In view of the numerous advantages offered by the Depository system, members are requested to avail the facility of dematerialisation of the Company''s shares on either of the Depositories as aforesaid. FINANCE The Company has availed credit facilities from Bank of India. The performance of the last two years has led to significance liquidity pressure in the long term sources. DEPOSITS Your Company has not accepted any deposits in terms of the provisions of Section 73 of the Companies Act, 2013 and The Companies (Acceptance of Deposits) Rules, 2014 as amended, during the year under review. DIRECTORS AND KEY MANAGERIAL PERSONNEL During the current financial year the following changes have occurred in the constitution of directors of the company: S. Name Designation Date of No appointment 1. Mr. Atul A. Zatakia Director 29.01.2010 2. Mrs. Archana Andhare Company Secretary 01.01.2014 3. Mr. Jayantilal Suthar Company Secretary 01.10.2014 4. Mr. Keyur Doshi Chief Financial Officer 08.08.2014 5. Mr Bakul R. Parekh Chief Financial Officer 12.02.2015 6. Mrs. Parul Doshi Additional Director 20.03.2015 S. Name Date of Mode of No cessation Cessation 1. Mr. Atul A. Zatakia 12.11.2014 Resignation 2. Mrs. Archana Andhare 30.09.2014 Resignation 3. Mr. Jayantilal Suthar - 4. Mr. Keyur Doshi 30.01.2015 Resignation 5. Mr Bakul R. Parekh - 6. Mrs. Parul Doshi - Further, In accordance with the requirements of the Companies Act 2013, Mr. Milan R. Parekh (DIN: 00108368) will retire by rotation being eligible, has offered himself for re-appointment. BOARD INDEPENDENCE In terms of Section 149 of the Companies Act, 2013 and Clause 49 of the Listing Agreement with Stock Exchanges and based on the confirmation / disclosures received from the Directors and on evaluation of the relationships disclosed, the following Non-Executive Directors are Independent in terms of Clause 49 of the Listing Agreement and Section 149(6) of the Companies Act, 2013:- a) Mr. Ketan Mehta b) Mr. Harbhjan Singh Dhillon c) Mrs. Parul Doshi ANNUAL EVALUATION BY THE BOARD The evaluation framework for assessing the performance of Directors comprises of the following key areas: i. Attendance of Board Meetings and Board Committee Meetings ii. Quality of contribution to Board deliberations iii. Strategic perspectives or inputs regarding future growth of Company and its performance iv. Providing perspectives and feedback going beyond information provided by the management v. Commitment to shareholder and other stakeholder interests The evaluation involves Self-Evaluation by the Board Member and subsequently assessment by the Board of Directors. A member of the Board will not participate in the discussion of his / her. DIRECTOR RESPONSIBILITY STATEMENT The Directors Responsibility Statement referred to in clause (c) of sub section (3)of section 134 of Companies Act, 2013 shall State that; (a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures; (b) the directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit and loss of the company for that period; (c) the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities; (d) the directors had prepared the annual accounts on a going concern basis; and (e) The directors, in the case of a listed company, had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively. (f) The directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively. NUMBER OF MEETING OF THE BOARD The Board meets at regular intervals to discuss and decide on Company / business policy and strategy apart from other Board business. The notice of Board meeting is given well in advance to all the Directors. Usually, meetings of the Board are held in Mumbai. The Agenda of the Board / Committee meetings is circulated at least a week prior to the date of the meeting. The Agenda for the Board and Committee meetings includes detailed notes on the items to be discussed at the meeting to enable the Directors to take an informed decision. The Board met nine times in financial year 2014-2015 and the maximum interval between any two meetings did not exceed 120 days as follows; 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter 12.05.2014 08.08.2014 12.11.2014 12.02.2015 30.05.2014 05.09.2014 20.03.2015 12.06.2014 30.09.2014 Further, in terms of Schedule IV of the Companies Act, 2013, the Separate meeting of the Independent Directors held on March 20, 2015 and all Independent Directors were presented without attendance of non- Independent Directors of the Company . COMMITTEES OF THE BOARD During the year, in accordance with the Companies Act, 2013, the Board reconstituted some of its Committees and also formed a Risk Management Committee. There are currently Four Committees of the Board, as follows: * Audit Committee * Nomination and Remuneration Committee * Stakeholders'' Relationship Committee * Risk Management Committee Details of all the Committees along with their charters, composition and meetings held during the year, are provided in the Report on Corporate Governance, a part of this Annual Report. AUDIT COMMITTEE: The Board of Directors constituted an Audit Committee as per the existing clause 49 of the Listing Agreements entered into with Stock Exchanges and in terms of Section 177 of the Companies Act, 2013. CORPORATE GOVERNANCE: The Company is committed to maintaining the highest standards of Corporate Governance and adhering to the Corporate Governance requirements as set out by Securities and Exchange Board of India. The Report on Corporate Governance as stipulated under Clause 49 of the Listing Agreement forms part of the Annual Report. The Certificate from the Auditors of the Company confirming compliance with the conditions of Corporate Governance as stipulated under Clause 49 is also published elsewhere in this Annual Report. Certificate from Mr. Milan Parekh, Managing Director & CEO and Mr. Bakul Parekh, Jt. Managing Director & Chief Financial Officer, pursuant to provisions of Clause 49(IX) of the Listing Agreement, for the year under review was placed before the Board of Directors of the Company at its meeting held on 29th May, 2015. A copy of the certificate on the financial statements for the financial year ended March 31, 2015 is annexed along with this Report. MANAGEMENT''S DISCUSSION AND ANALYSIS REPORT The Management''s Discussion and Analysis Report for the year under review, as stipulated under Clause 49 of the Listing Agreement with the Stock Exchanges in India, is annexed to this report. AUDITORS M/s Ford, Rhodes, Parks & Co. (Firm Registration No.102860W), Chartered Accountants, Mumbai, were appointed as Statutory Auditors for a period of 3 years in the Annual General Meeting held on 25th September, 2014. Their continuance of appointment and payment of remuneration are to be confirmed and approved in the ensuing Annual General Meeting. The Company has received letter from them to the effect that their appointment, if made, would be within the prescribed limits under Section 141(3)(g) of the Companies Act, 2013 and that they are not disqualified from appointment. There are no qualifications or adverse remarks in the Auditors'' Report which require any clarification/ explanation. The Notes on financial statements are self-explanatory, and needs no further explanation. Further the Auditors'' Report for the financial year ended, 31st March, 2015 is annexed herewith for your kind perusal and information. DECLARATION BY INDEPENDENT DIRECTOR: The declaration as required to affirm u/s 149(6) of the Companies Act, 2013, obtain from all Independent Directors. INSURANCE All the properties of your Company including Office Premises Furniture & Fixtures Office Equipments and Computer are adequately insured. SECRETARIAL AUDIT REPORT The Board of Directors of the Company has appointed CS. Nisha R. Nawani, Practicing Company Secretary; to conduct the Secretarial Audit and her Report on Company''s Secretarial Audit is appended to this Report as In accordance with the provisions of Section 197(12) of the Companies Act, 2013 and Rule 5 of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the ratio of remuneration of each director to the median employee''s remuneration set out in Annexure C to the Directors'' Report. PARTICULARS REGARDING CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, AND FOREIGN EXCHANGE EARNINGS AND OUTGO The particulars regarding foreign exchange earnings and outgo appear as separate items in the notes to the Accounts. Since the Company does not own any manufacturing facility, the other particulars relating to conservation of energy and technology absorption stipulated in the Companies (Accounts) Rules, 2014 are not applicable. EXTRACT OF ANNUAL RETURN The extract of Annual Return as required under Section 92(3) is attached in form MGT-9. Annexure D. PARTICULAR OF LOAN, GUARANTEES & INVESTMENT The company has not given any loan, guarantees and not made any Investment covered under the provisions of section 186 of the Companies Act, 2013. DISCLOSURE OF RELATED PARTY TRANSACTION All related party transactions that were entered into during the financial year were on arm''s length basis and were in the ordinary course of the business. There are no materially significant related party transactions made by the company with Promoters, Key Managerial Personnel or other designated persons which may have potential conflict with interest of the company at large. RISK MANAGEMENT POLICY: The Company has in place a mechanism to identify, assess, monitor and mitigate various risks to key business objectives. Major risks identified by the businesses and functions are systematically addressed through mitigating actions on a continuing basis. These are discussed at the meetings of the Audit Committee and the Board of Directors of the Company. INTERNAL CONTROL SYSTEM The Company''s internal control systems are commensurate with the nature of its business and the size and complexity of its operations. These are routinely tested and certified by Statutory as well as Internal Auditors. Significant audit observations and follow up actions thereon are reported to the Audit Committee. CODE OF CONDUCT: The Board of Directors has approved a Code of Conduct which is applicable to the Members of the Board and all employees in the course of day to day business operations of the company. The Code has been placed on the Company''s website www.actionfin.com The Code lays down the standard procedure of business conduct which is expected to be followed by the Directors and the designated employees in their business dealings and in particular on matters relating to integrity in the work place, in business practices and in dealing with stakeholders. All the Board Members and the Senior Management personnel have confirmed compliance with the Code. PREVENTION OF INSIDER TRADING The Company has adopted a Code of Conduct for Prevention of Insider Trading with a view to regulate trading in securities by the Directors and designated employees of the Company. The Code requires pre-clearance for dealing in the Company''s shares and prohibits the purchase or sale of Company shares by the Directors and the designated employees while in possession of unpublished price sensitive information in relation to the Company and during the period when the Trading Window is closed. The Board is responsible for implementation of the Code. All Board of Directors and the designated employees have confirmed compliance with the Code. VIGIL MECHANISM The Company has established a vigil mechanism for Directors and employees to report their genuine concerns, details of which have been given in the Corporate Governance Report annexed to this Report. ACKNOWLEDGEMENT Your Directors would take this opportunity to express its deep appreciation for the co-operation and assistance received from the shareholders, Company''s clients, suppliers, bankers and other authorities during the year under review. Your Directors also wish to place on record their appreciation for the services rendered by all the employees of your Company. For and on Behalf of the Board Place:Mumbai Date: 29th May, 2015 Milan R. Parekh Chairman & Managing Director (DIN:00108368)

Director’s Report