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Action Financial Services (India) Ltd.

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Feb 13, 16:00
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Action Financial Services (India) is not listed on NSE

Annual Report

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Director’s Report

The Directors have pleasure in presenting the 15th Annual Report of your Company together with the Audited statement of accounts for the year ended 31st March ,2008. 1. FINANCIAL RESULTS: Financial Results Year Ended Year Ended 31st March, 2008 31st March, 2007 Profit / (Loss) Before Interest & Depreciation 12,847,720 6,226,635 Interest 3,324,518 1,955,993 Depreciation 2,018,415 1,903,640 Profit / (Loss) Before Tax 7,504,787 2,367,003 Taxation - Current Year 3,585,000 77,000 - Earlier Years 358,441 - - Deferred Tax (written back) (239,557) (2,583,631) Profit / (Loss) After Tax 3,800,903 4,873,634 Profit/(Loss) brought forward from Previous Year 14,849,156 12,128,230 Profit available for appropriations 18,650,059 17,001,864 Appropriation as under: Transfer to Capital Redemption Reserve 10,120,000 - Dividend on preference Shares 1,809,585 1,840,000 Tax on Dividend 307,539 312,708 Profit/(Loss) carried forward to the Balance Sheet 6,412,935 14,849,156 Paid Up Equity Share Capital 8,390,000 8,000,000 Earning Per Share Re 10/-Paid up-Basic EPS 0.21 0.34 Diluted EPS 0.19 0.31 During the financial year 2007-2008 company earned operating profit of Rs. 12,847,720/- against the operating profit of Rs. 6,226,635/- previous year while the net profit stood at Rs. 3,800,903/- against Rs. 4,873,634/- in the previous year. During the year under review the company had sold some shares of BSE Ltd. and BGSE Ltd., which has resulted in higher profitability. 2. DIVIDEND: 2.1 On Preference Shares: Directors are glad to recommend a Dividend @ 10% p.a. on 184,000 Cumulative Redeemable Preference Shares of Rs. 100/- each fully paid up for the year ended 31st March, 2008 on pro-rata basis. 2.2 On Equity Shares: With a view to conserve resources, your Directors do not recommend any dividend for the year under review. 3. OPERATIONS: OVERVIEW: During the financial year 2007-08 due to high market volumes and boom in share market activities, companys gross receipt was very high compare to previous year. Company has started business at various new places and created a large clientele base. Further company has recently got the membership of Currency Derivatives with NSE, operation of which is scheduled to commence from 29th August 2008. Management predicts a huge growth in business due to increase in retail and institutional clients. REVIEW Of BUSINESS DIVISIONS : 3.1 Broking Division: Company has opened 9 New branches / sub-brokers all over the country, for the purpose of access to wide business opportunities available in remote areas. This has resulted into increase in clientele base of the company. During the year company had taken an additional office on lease in Mumbai to boost its broking activities. During the year Company has made a gross turnover of Rs. 2075 crores in cash segment and Rs. 1,126 crores in F&O Segment as compared to Rs. 1591 crores in cash segment and 428 crores in F&O segment (in the previous year.) 3.2 Depository Division: Company has completed 11 years as a Depository Participant. Company is holding approximately Rs. 1,200 Crores worth stock on behalf of clients as on 31st March 2008. Company has registered with NSDL for Internet based IDe AS facility for the convenience of the Investor to view latest holding with valuation as well as transactions. Company has also its own website through which client can view previous day 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, 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 28 Clearing Members Pool Account and maintains 62 Promoters Accounts. The company has started branches at Surat & Bokaro. 3.3 PRIMARY MARKET & MUTUAL FUND DISTRIBUTION: During the year there was huge rush for various Initial Public Offering, which also received good response from public. As our company has a good distribution channels set up across the country, it had given us chance to make good profit. 4. FUTURE OUTLOOK & EXPANSION PLAN: Year 2007-08 was a very memorable year for the country as well as the Indian Capital Markets. Indias GDP growth for the year was around 8.7%, though slightly lower previous year, but was on a growth track. Indian capital markets had achieved new heights during the year with benchmark indices climbing upto new highs every month. Despite the robust growth, the last quarter of the financial year was a set back for stock market where the indices fell almost 35%. The start of the current financial year 2008-09 was not very encouraging with the indices making new lows every month during the first half of the year,. It was prompted by heavy withdrawals by foreign funds coupled with worldwide slowdown and rising inflation. The company expects this slump may continue for few more weeks, but it forecast a bright days ahead in the capital market. We expect the Bull Run to resume in the second half of this financial year Your company has got registration for trading in currency derivatives, operations of which would have commenced by the time you get this annual report. This segment is expected to open up new avenues in the capital market. We have in pipeline various braches, awaiting the legal formalities to be completed and we expect these to start operation in next few months. This will generate good revenue over the coming period and enhance the profitability of the company. We are further planning to launch online trading facilities for the ease of clients, expected to bring more clientele base. 5. BOARD OF DIRECTORS Mr. Sujir R. Nayak and Mr. Bakul R. Parekh retire by rotation at ensuing Annual General Meeting and being eligible, have offered themselves for re-appointment. You are requested to appoint them. 6. STATEMENT OF DIRECTORS RESPONSIBILITY: Pursuant to the requirement of section 217(2AA) of the Companies Act, 1956, the Board of Directors hereby state that: a. In preparation of annual accounts, the applicable accounting standard had been followed along with proper explanation relating to material departure; b. The directors had selected such accounting policies and applied them consistently and made judgment and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit or 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 frauds and other irregularities; d. The directors had prepared the annual accounts on a going concern basis. 7. SHARE CAPITAL: During the financial year 2007-08 the Equity Share Capital of the Company has increase from Rs. 80,000,000/- to Rs. 83,900,000/- pursuant to conversion of 390,000 convertible warrants into 390,000 fully paid equity shares of Rs. 10/- each to the promoters. During the financial year 2007-08 due to the redemption of 101,200 Preference Shares of Rs. 100/- each, the Preference share capital of the company has reduced from Rs. 18,400,000/- to Rs. 8,280,000/-. 8. CORPORATE GOVERNANCE: The Company has been following the principles and practices of good Corporate Governance and has ensured due compliance of the requirements stipulated under clause - 49 of the Listing Agreement with the stock Exchanges. A separate detailed report on Corporate Governance is given in 15th Annual Report. A Certificate dated 25th August, 2008 issued by the companys Statutory Auditors in terms of clause - 49 of the Listing Agreement with Stock Exchanges is annexed to the said Corporate Governance Report. 9. SECRETARIAL AUDIT: As directed by Securities and Exchange Board of India (SEBI) secretarial audit is being carried out at the specified periodicity by practicing Company Secretary. The findings of the secretarial audit were entirely satisfactory. 10. FIXED DEPOSITS During year under review the company has not accepted any deposit with in the meaning of section 58A of the Companies Act, 1956 read with the Companies (Acceptance of Deposit) Rules, 1975 as amended. 11. MANAGEMENT DISCUSSIONS AND ANALYSIS: A Report on Management discussion and analysis given in the Annual Report is forming part of this report and it deals with the Operations & Business Performance, Expansion & Diversification, Research & Development etc. 12. AUDITORS & AUDITORSREPORT: M/s. Ford, Rhodes, Parks & Co., Chartered Accountants, Mumbai, the Companys Statutory Auditors, retire at the ensuing Annual General Meeting and being eligible offer themselves for re-appointment. M/s. Ford, Rhodes, Parks & Co. have sought re-appointment and confirmed that their re-appointment shall be within the limits of Section 224(1 B) of the Companies Act, 1956. The necessary eligibility certificate under Section 224(1 B) of the Companies Act, 1956, has been received from them. The Audit Committee and Board of Directors recommend the appointment of M/s. Ford, Rhodes, Parks & Co., Chartered Accountants, as the Auditors of the Company. The notes to the accounts referred to in the Auditors Report are self-explanatory and therefore do not call for any further comments. 13. DECLARATION: The Board has formulated a code of conduct for the Board members and senior management of the Company. All Board members and senior management personnel have affirmed their compliance with the code. 14. PARTICULARS OF EMPLOYEES: Your Company had a compliment of 36 staff members. Your company continues its efforts to strengthen its human- resource base by arranging requisite training and varied exposure to its existing staff to enable to keep their skills updated. Since None of the employee is in receipt of remuneration for whole/ part of the year exceeding the limit prescribed u/s. 217 (2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975, as amended, the particulars have not been given. 15. Information Required Under the Companies (Disclosure of particulars in the report of the Board of Directors) Rules, 1988: 15.1 Conservation of Energy: Companys operation involves no manufacturing or processing activities. The Company utilizes energy for lighting, air-conditioning and other office equipments at its offices. The Companys operations involve low energy consumption and wherever possible, energy conservation measures have already been implemented and there are no major areas where further conservation measures appear necessary. However, efforts to conserve and optimize the use of energy through improved operational methods and other mean will continue on an on-going basis. 15.2 Form of Disclosure of particulars with respect to absorption of Technology, research & Development (R & D): FORM-B 1. Specific areas in which R&D carried out by the Company Nil 2. Benefits derived as a result of the above R&D Nil 3. Future Plan of Action Nil 4. Expenditure on R & D Nil 15.3 Technology Absorption, Adaptation & Innovation: There is no imported technology involved in the operations of the Company. The Company continues to focus its attention towards the rapid technological changes in the fields of its activity and trains the manpower continuously to improve the productivity. The technologies being used are VPN / CTCL. 15.4 Foreign exchange earning and out go: Foreign Exchange Earned Nil Foreign Exchange Used Nil 16. ACKNOWLEDGEMENT: Your Directors wish to express their gratitude for the continuous assistance and support received from the investors, clients, bankers, regulatory and government authorities, during the year. Your Directors also wish to place on record their deep sense of appreciation for the contributions made and committed services rendered by the employees of the Company. For and on behalf of the Board of Directors Place: Mumbai Milan R. Parekh Date : 25th August, 2008 Chairman & Managing Director

Director’s Report