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Munoth Financial Services Ltd.

BSE: 531821 | NSE: | Series: NA | ISIN: INE348D01019 | SECTOR: Finance - General

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Annual Report

For Year :
2015 2014 2013 2012 2011 2010 2009 2008 2004

Director’s Report

Dear Members, Your Directors have pleasure in presenting their Twenty Fourth Annual Report together with the Audited Accounts for the year ended March 31,2015. FINANCIAL RESULTS: Particulars 2014-2015 2013-2014 Rs.in Lacs Rs. in Lacs Total Revenue 153.56 121.67 Total Expenses 162.88 134.98 Profit or Loss before Exceptional and Extraordinary items and Tax (9.32) (13.31) Less: Exceptional Items - - Less: Extraordinary Items - - Profit /(Loss)before Tax (9.32) (13.31) Less: Current Tax - - Deferred Tax (2.63) 0.76 Profit/(Loss) after Tax (6.69) (14.07) Add: Balance as per statement of Profit & Loss 27.75 41.82 Add: Adjustment relating to Fixed Asset (6.48) - Balance (statement of Profit & Loss) Transferred to Balance Sheet 14.57 27.75 REVIEW OF BUSINESS OPERATIONS: During the financial year 2014-15, the Company''s total revenue has increased to Rs. 153.56 lakhs compared to Rs. 121.67 lakhs in the previous year. The total income from operations has increased to Rs. 145.01 lakhs compared to Rs. 104.13 lakhs in the previous year. The Company was able to reduce losses to Rs. 6.69 lakhs as against Rs. 14.07 lakhs in the previous year. Stock Broking Income from stock broking operations has increased from Rs. 26.90 lakhs in the previous year to Rs. 52.15 lakhs in the current year. The broking turnover of the company in cash segment is Rs. 184.78 crores compared to Rs. 188.69 crores in the last financial year and in F & O segment is Rs.2926.61 crores compared to Rs. 501.10 crores in the last financial year. The Company provides institutional broking business and is empanelled with several public sector banks and insurance companies. Depository participant: As a Depository Participant the company offers facilities to both institutional and retail investors to maintain their investments in securities in electronic form. Income from Depository operations has increased to Rs. 22.01 lakhs against Rs. 10.05 lakhs in the previous year. Portfolio Management Services: The Company continues to provide PMS services under both discretionary and non - discretionary basis. Income from Portfolio Management services amounted to Rs. 0.83 lakhs in the current financial year. Merchant Banking: The Company is in the process of doing assignments related to SME segment. The Company has been appointed as Investment Managers by IL & FS Trust Company Limited for Valmark Infra and Realty Trust, a SEBI registered Alternate Investment Fund - Category II (AIF II) .and the first scheme of the trust is targeting a corpus of Rs 125 crores comprising of units of INR 1 crore each on private placement basis for investment horizon of 3 to 5 years. The fund announced its first closing on October 29, 2013 Income from Management services amounted to Rs. 70 Lakhs in the current financial year FUTURE PROSPECTS The Company will endeavor to increase income from operations by focusing on HNI''s in the retail segment in stock broking division. The Company is also working on getting itself empanelled with more public sector banks and insurance companies under institutional broking. The Company will continue to focus on getting more HNIs and NRIs in both discretionary and non-discretionary basis in Portfolio Management service division. The company will try to do assignments related to SME segment, delisting and other issue related activities. DIVIDEND: The Board of Directors has decided not to recommend any dividend. TRANSFER OF UNCLAIMED DIVIDEND TO INVESTOR EDUCATION AND PROTECTION FUND: The provisions of Section 125(2) of the companies Act, 2013 do not apply as there was no dividend declared and paid last year. MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY WHCIH HAS OCCURRED BETWEEN 31ST MARCH 2015 ( THE END OF THE FINANCIAL YEAR and 22nd MAY 2015 (THE DATE OF REPORT) There were no material changes and commitments affecting the financial position of the company between 31st March 2015 ( the end of the financial year) and 22nd May 2015 (the date of the report). CONSERVATION OF ENERGY, TECHNOLOGYABSORPTION, FOREIGN EXCHANGE EARNING AND OUTGO. The Company has no activities relating to conservation of energy, technology absorption, foreign exchange earning and outgo and hence the provisions of Section 134(m) of the Companies Act, 2013 is not applicable to the Company. STATEMENT CONCERNING DEVELOPMENT AND IMPLEMENTATION OF RISK MANAGEMENT POLICY OF THE COMPANY The Risk Management Committee of the Company continuously monitors business and operations risk through an efficient risk management system. DETAILS OF POLICY DEVELOPED AND IMPLEMENTED BY THE COMPANY ON ITS CORPORATE SOCIAL RESPONSIBILITY INITIATIVES: The Company has not developed and implemented any Corporate Social Responsibility initiatives as the said provisions are not applicable for the financial year 2014-15. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186 The Company has not provided working capital loan, Guarantee or provided security. The details of investments made by the company are given in the notes to the financial statements. COMPANY''S POLICY RELATING TO DIRECTORS APPOINTMENT, PAYMENT OF REMUNERATION AND DISCHARE OF THEIR DUTIES. The Company''s Policy relating to appointment of Directors, payment of managerial remuneration, Director''s qualifications, positive attributes, independence of Directors and other related matters as provided under Section 178(3) of the Companies Act, 2013 is furnished as Annexure 1 and is attached to this report. EVALUATION The aspects covered in the evaluation included the contribution made by the Directors to the corporate governance practices, long term strategic planning, fulfillment of Director''s obligations and fiduciary responsibilities and active participation at the Board and Committee meetings. The effectiveness of Board / Committee processes were assessed based on the Directors'' inputs received during the meetings of the Board and one to one meeting by the Chairman with the Directors. EXTRACT OF ANNUAL RETURN The Extract of Annual return as on March 31,2015 as provided under Sub-section (3) of section 92 in Form No. MGT - 9 is being annexed as Annexure 2 to the report MANAGEMENT DISCUSSION ANDANALYSIS REPORT Management Discussion and Analysis Report for the year under review, as stipulated under Clause 49 of the Listing Agreement with the Stock Exchange is presented in separate section forming part of the Annual Report as Annexure 3 DIRECTOR''S RESPONSIBILITY STATEMENT: As requred in Clause (c) of Sub- Section (3) of Section 134 of the Companies Act, 2013, your Director confirms and state that- a) In the preparation of the annual accounts, the applicable accounting standards have been followed, along with proper explanation relating to material departures. b) The Directors 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 close of the financial year ended 31st March 2015 and of the Profit/Loss of the company for the year ended 31st March 2015. c) The Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities. d) The Directors have prepared the annual accounts on a going concern basis. e) The Directors, have 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. DEPOSITS The Company has not accepted any public deposits and, as such, no amount on account of principal or interest on public deposits was outstanding as on the date of balance sheet. DIRECTORS: Mr. Bharat Munoth, Mr. Jaswant Munoth and Mr. Lalchand Munoth retires by rotation at the forthcoming Annual General Meeting and being eligible offers themselves for re-appointment. Mr. Jaswant Munoth, whose period of office of Managing Director expired on June 24, 2015 was appointed as the Managing Director of the Company for the period of 2 years from 25th June 2015 to 24th June 2017 subject to the approval of the shareholders at the AGM. Ms. Lakshika Mehta has been appointed as an Additional Director of the Company with effect from May 22, 2015. she is proposed to be appointed as Independent Director at the ensuing Annual General Meeting for a term of 5 consecutive years from the date of the ensuing Annual General Meeting as required under Section 149 of the Companies Act, 2013 and Clause 49 of the Listing Agreement. The profiles of Mr. Jaswant Munoth, Managing Director, Mr. Bharat Munoth, Mr. Lalchand Munoth and Ms. Lakshika Mehta are given separately in the Corporate Governance Report. DECLARATION OF INDEPENDENT DIRECTORS: The independent Directors have confirmed and declared that they are not disqualified to act as an independent Director in compliance with the provisions of Section 149 of the Companies Act., 2013. ADEQUACY OF INTERNAL CONTROL, FINANCIAL CONTROLS WITH REFERENCE TO FINANCIAL STATEMENTS: The Company has in place adequate internal financial controls with reference to financial statements. During the year under review, such controls were tested and no reportable material weakness in the design or operation were observed. STATUTORY AUDITORS: M/s Mardia & Associates, Chartered Accountants ,who are the statutory auditors of the Company, hold office until the conclusion of the ensuing AGM and are eligible for re-appointment. Members of the Company at the AGM held on 20th September, 2014 had approved the appointment of Mardia & Associates as the Statutory Auditors for a period of three financial years i.e., up to 31 March, 2017. As required by the provisions of the Companies Act, 2013, their appointment should be ratified by members each year at the AGM. Accordingly, requisite resolution forms part of the notice convening the AGM. SECRETARIALAUDIT REPORT: A Secretarial Audit was conducted during the year by the secretarial Auditor, Mr. V. Chandramowli, Practicing Company Secretary in accordance with provisions of section 204 of the Companies Act, 2013. The Secretarial Audit Report is attached as Annexure 4 and forms a part of the report of the Directors. COST AUDIT: Cost Audit is not applicable to the Company for the financial year 2014-15. EXPLANATION / COMMENTS ON QUALIFICATIONS, RESERVATIONS OR ADVERSE REMARKS OR DISCLAIMERS MADE BY THE AUDITORS AND THE PRACTICING COMPANY SECRETARY IN THEIR REPORTS. The comments made by the Auditors in their report have been duly explained in the attached Notes on Accounts. (Note No. 1(I)) The Company, in order to comply with the requirement of Clause 49(II) (A) (1) of Listing Agreement , regarding appointment of woman director has sent an invitation letter to Ms. Lakshika Mehta to join the Board of Company on March 2, 2015. Ms. Lakshika Mehta has also sent a letter dated March 16, 2015 accepting the invitation to join the board. The Board in the meeting held on May 22, 2015 has appointed Ms. Lakshika Mehta as an additional Director in terms of Section 161 of the Companies act, 2013 in the category of Independent Director. Her appointment as independent director is placed before the Members for approval under Item 6 of the accompanying notice. SUBSIDIARIES, JOINT VENTURES AND ASSOCIATE COMPANIES: The Company does not have any Subsidiary or Joint venture Company. The Company, Munoth Neg Wind Farm(P) Ltd ceased to be associate during the financial year 2014-15. As per exception provided under Rule 6 of the Companies (Accounts) Rules, 2014 (Notification G.S.R. 723(E) dated 14.10.2014). a company having no subsidiaries but having only associate company(ies) and/or joint venture(s) is exempted from consolidation of financial statement in respect of associate company(ies) and/or joint venture(s) for the financial year commencing on or after 01.04.2014 and ending before 31.03.2015. The nil disclosure in Form No. AOC 1 is enclosed as Annexure 5. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES: In line with the requirements of the Companies act, 2013 and equity listing agreement, the Company has formulated a policy on Related Party transactions which is also available on Company''s website at www.munothfinancial.com. The policy intends to ensure that proper reporting, approval and disclosure procedures are in place for all transactions between the Company and Related Parties. All Related Party transactions are placed before the Audit Committee for review and approval, Prior omnibus approval is obtained for Related Party transactions on a quarterly basis for transactions which are of repetitive nature and / or entered in the Ordinary Course of Business and are at Arm''s Length. There is no materially significant related party transactions which exceeds 10% of the consolidated turnover of the Company. The nil disclosure in Form No . AOC.2 is enclosed as Annexure 6 PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURE: There are no persons employed in the Company during the year or for part of the year who were in receipt of remuneration in excess of the limits set out in Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 read with in terms of provisions of Section 197(12) of the Companies Act, 2013. Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) rules, 2014 are provided in the Annual Report as Annexure 7 In terms of Section 136 of the Act, the reports and accounts are being sent to the members and others entitled thereto, which is available for inspection by the members at the registered office of the company during business hours on working days of the company. If any member is interested in inspecting the same, such member may write to the Company in advance and the same will be furnished. The full annual report is also available on the Company''s website. VIGIL MECHANISM: The Vigil Mechanism of the Company, which also incorporates a whistle blower policy in terms of the Listing Agreement, includes an Ethics & Compliance Task Force comprising Senior Executives of the Company. The policy on vigil mechanism and whistle blower policy may be accessed on the company''s website www.munothfinancial.com CORPORATE GOVERNANCE: A report on Corporate Governance along with the Auditor''s Certificate regarding compliance of the conditions of Corporate Governance and also a Management Discussion and Analysis Report pursuant to Clause 49 of the Listing Agreement are annexed hereto. The Auditor''s have certified the Company''s Compliance of the requirements of Corporate Governance in terms of the Listing Agreement and the same is enclosed to the Corporate Governance Report. NUMBER OF BOARD MEETINGS CONDUCTED DURING THE YEAR UNDER REVIEW: The Company has conducted 5 Board meetings during the financial year under review. The details regarding the Board Meetings, Audit Committee Meetings, Nomination and Remuneration Committee meeting etc., are given separately in the Corporate Governance Report . AUDIT COMMITTEE: The Audit Committee comprises of Independent Directors namely Mr. Ajit Kumbhat (Chairman) , Mr. M Jayantilal Jain and Mr. Mah Sau Cheong as Members. All the recommendations made by the Audit Committee were accepted by the Board STOCKEXCHANGES The Company''s shares are listed on The Stock Exchange, Mumbai. PREVENTION OF INSIDER TRADING: The Company has adopted a Code of Conduct as per the Guidelines issued by the Securities and Exchange Board of India for prevention of Insider Trading with a view to regulate trading in securities by the Directors and designated employees of the Company. The Board of Directors and the designated employees have confirmed compliance with the code. GENERAL: Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions on these items during the year under review. 1. Issue of equity shares with differential rights as to dividend, voting or otherwise 2. Issue of shares ( including sweat equity shares) to employees of the company and ESOS under any scheme 3. The company does not have any subsidiaries and hence the disclosure stating that the Managing Director / whole Time Director of the Company not receiving any remuneration or commission for subsidiary is not applicable. 4. 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. 5. There were no cases filed pusuant to the Sexual Harassment of Women at Workplace ( Prevention, Prohibition and Redressal) Act, 2013. ACKNOWLEDGEMENTS: Your Directors would like to express their gratitude to the Shareholders, vendors, bankers and customers for their support and co-operation. They wish to thank all the employees of the Company for their sincere and dedicated services. For and on behalf of the Board of Directors Chennai LALCHAND MUNOTH May 22, 2015 CHAIRMAN

Director’s Report