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Shardul Securities Ltd.

BSE: 512393 | NSE: SHRIYAMSEC | Series: NA | ISIN: INE037B01012 | SECTOR: Finance - Investments

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Dec 27, 11:22
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Shardul Securities is not listed on NSE

Annual Report

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Director’s Report

The Directors are pleased to present the Twenty Second Annual Report and the Audited Accounts for the year ended March 31, 2007. 1. Financial Results : (Rs. in lacs) 2006 - 2007 2005 - 2006 Profit before Depreciation 1316.05 1268.63 Less: Depreciation 37.49 34.20 Profit before Taxation 1278.56 1234.43 Less : Provision for taxation Current 150.00 165.00 FBT 6.35 3.65 Deferred 3.14 11.73 Profit after Taxation 1119.07 1054.05 Add: Prior Year Adjustments 1.10 (0.80) Profit after Prior Period Adjustments 1120.17 1053.25 Surplus / (Deficit) brought forward 653.01 9.94 from previous years 1773.18 1063.19 Appropriations: Statutory Reserve Fund as 224.03 210.65 per RBI Guideline Proposed Dividend (including 204.73 199.53 dividend tax) on Equity Shares Balance carried to Balance Sheet 1344.42 653.01 1773.18 1063.19 2. Dividend: - Your Directors recommends a dividend of Re. 1 per Equity Shares on 1,74,98,433 equity shares of Rs. 10 each aggregating to Rs. 204.73 lacs (including dividend tax) for the financial year ended March 31, 2007, which if approved at the ensuing Annual General Meeting, will be paid to (i) all those Equity Shareholders whose names appear in the Register of Members as on 27th August 2007 and (ii) to those whose names as beneficial owners are furnished by the National Securities Depositories Ltd., and Central Depositories Services (India) Ltd. 3. Management Discussions and Analysis Report: - i) FinancialPerformance Your Company achieved good results for the Financial Year ended 31st March 2007. The Gross Income was Rs. 2378.62 Lacs for the year ended 31st March 2007 as compared to Rs. 1822.98 Lacs in the previous year. The profit after tax of the Company was Rs. 1120.17 Lacs as against Rs. 1053.25 Lacs during the previous year. ii) Trend in Indian Economy and Financial Markets: Our GDP growth maintained its high momentum clocking 9.2% rate in 2007-08, while the industrial growth improved to 14%. However, infrastructure, especially power sector lagged behind creating uncertainty on the sustainability of our DGP growth rate. We continued upward trend in foreign exchange reserves with large net inflow of foreign investment attracted by investment opportunities offered by a highly dynamic economy. Large inflow of foreign exchange reserves which exceeded US$ 190 billion at the end of financial year 2006-07 maintained monetary liquidity. Money supply increased by about 18% as compared to 20% in the preceding year, and Bank credit expanded appreciably, though the credit offtake slowed down during last quarter of the year due to tighter money policy of Reserve Bank. The financial developments leading to excess and easy liquidity generated inflationary pressures. Hence, Reserve Bank of India tightened monetary policy in steps including increase in interest rate, to an extent, which would not impact adversely our economic growth momentum. RBI maintained our exchange rate at competitive level. These trends in financial market and inflation rate crossing safe target of 5% created uncertainty among investors which in turn led to volatility and higher risk in our stock market, especially in the last quarter of 2006-07. Your management adopted a prudent and somewhat cautious policy of not taking undue risk regarding your Companys operations. Further, the fixed income security market was again sluggish, as trading opportunities were limited in view of the rising interest rates and after a gap of about four years the market witnessed peak interest rates being offered on deposits and borrowings thus dampening opportunities for trading in the secondary security market. Due to the limitations imposed by the Government, the commodity market also witnessed a slowdown though in certain select commodities high volumes of trading were witnessed during the year. iii) Business Review: - Your companys operations were again focused on the investment activities in equity and debt markets, taking into account distinct upward trends in growth rates of our economy and industrial sector, inflationary pressures, particularly during the third and fourth quarters and consequent tightening of monetary policy - all leading to uncertainty and volatility. The companys investments were again targeted in growth areas in industry like Banking, Petrochemical and Telecommunication sectors and consequently, your company was able to build a good portfolio of investment with a potential for better profitability and growth. Your company was also active in primary issues on a selective basis through funding to High Networth Individuals and corporates. However, on trading front the company suffered some setback due to unexpected volatility, especially during the last quarter of the year. The Company also had large stream of revenues through professional and advisory services during the year. The income from operations for the current year thus stood at 836.96 lacs as compared to Rs.804.07 lacs during the previous year despite the fact that interest and financial charges for the year recording a high of Rs.689.25 lacs as compared to Rs.242.77 lacs during the last year. This reflects agility of the management, efficient risk management strategy becoming increasingly important with globalization of Indian economy and financial markets and resilience of your company. iv) Opportunities and Threats: The capital markets continue to remain volatile though the market index has been improving during the last few months. The interest rate scenario seems to have reached peak level with no likelihood of further rise with the containment of inflation. As inflation rate has fallen below its safe target and monetary liquidity has remained satisfactory, it is expected market volatility would be lower than last years. However, there is always an element of uncertainty especially regarding capital markets as a result of increasing integration of global financial markets. Within these expected parameters of our economy and financial market, your companys focus will continue to be on investment activities. The commodity business, which started during the year, is expected to make headway in the coming years. v) Segment wise or Product wise reporting: - Your Company is mainly engaged in the business of investment activities and all other activities of the Company revolve around the main business, and as such there are no separate reportable segments. vi) Outlook: - Your company will explore all possible avenues to improve profitability of the company and increase shareholders wealth. The company has already made efforts to expand the clientele base and will continue to reach out more and more to the potential clients in order to improve the volume of business. Your company will strengthen its research base by introducing additional competent analysts to support all the above activities in order to ensure that the resources of the company are put to optimum use. vii) Risks and Concerns: - The company is mainly engaged in investment activities, in which risk is inherent in all countries including India. However, your company is well placed to minimize impact of unexpected adversities. Your company will continue to improve its risk management system and strategy so as to project and promote shareholders interests. viii) Internal Control Systems and their Adequacy: The Company has put in place adequate systems and internal controls including internal audit to ensure that inadequacies are immediately attended and regulated. The requisite management information system has been continuously in operation to monitor performance of the Company so as to take necessary corrective measures as and when needed. ix) Human Resources: The company has experienced and trained professionals to manage the affairs of the company in the most prudent manner. The top level executive force has been strengthened for better monitoring and control and the existing staff are adequately equipped to handle day-to-day jobs competently. x) Cautionary Statement: The Management Discussion and Analysis Report may contain certain statements that might be considered forward looking. These statements are subject to certain risk and uncertainties. Actual results may differ materially from those expressed in the statements as important factors could influence the Companys operation such as Government policies, local, political and economic development. 4. Subsidiaries: Financial performance of the wholly owned subsidiary, Shriyam Broking Intermediary Ltd., has been creditable for the year ended 31st May, 2007. Its volume of brokerage business was satisfactory as compared to last year. The companys other subsidiary, namely, Shardul Commodities Intermediary Ltd., has commenced operations and culminating market penetration for broking in commodities. As adequate infrastructure is yet to be finalise, the activities were on a somewhat low key. The balance sheet and profit and loss account together with Directors Report of your subsidiary company is appended to the accounts of the Company. Particulars required pursuant to Section 212 of the Companies Act, 1956 is appended to the accounts of the Company. 5. Directors: - In terms of Article 155 of the Articles of Association of the Company, Shri V.C. Shah, Shri Kantilal M Shah and Shri Charul Abuwala, Directors retire by rotation and being eligible offer themselves for re-appointment at the Annual General Meeting. Shri Naveen Chaturvedi who was appointed as an Additional Director by the board on 16th January 2007, and in respect of whom notice along with the deposit of Rs 500/- has been received from a member u/s 257 of the Companies Act, 1956 proposing his appointment as an Director. Shri Naveen Chaturvedi is also appointed as Executive Director. Brief resume of the Directors proposed to be appointed/ reappointed, nature of their experience in specific functions and area and number of companies in which they hold membership/chairmanship of Board Committees as stipulated under clause 49 of the Listing Agreement of Stock Exchange are provided in the Report of Corporate Governance forming part of the Annual Report. 6. Taxation: - In opinion of Directors, the provision for Income Tax is sufficient to meet Income Tax demands. 7. Donation: - During the year the Company has given the total donation of Rs. 11.21 lacs to various Trusts. 8. Cashflow :- As required by Clause 37 of the Listing Agreement, a Cash Flow Statement is appended with this report. 9. Directors Responsibility Statement: - Pursuant to the requirement under section 217(2AA) of the Companies Act, 1956, with respect to Directors Responsibility Statement, it is hereby confirmed: - (i) That in the preparation of the accounts for the financial year ended 31st March, 2007, the applicable accounting standards have been followed along with proper explanations relating to material departures; (ii) That the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit or loss of the Company for the year under review; (iii) That the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; (iv) That the Directors have prepared the accounts for the financial year ended 31st March 2007 on a going concern basis. 11. Auditors and Auditors Report: - The Companies Auditors, M/s Rajen Damani & Associates., Chartered Accountants, hold office upto the conclusion of the ensuing Annual General Meeting. The Company has received the letter from them pursuant to section 224(1-6) of the Companies Act, 1956, confirming their eligibility for re-appointment as 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. 12. Corporate Governance: - Report on Corporate Governance stipulated under Clause 49 of the Listing Agreement with Stock Exchange form part of this annual report. A certificate from the auditors of the Company M/s Rajen Damani & Associates, Chartered Accountants confirming compliance of conditions of Corporate Governance as stipulated under aforesaid clause 49 is annexed to and forms part of this Report. 13. Consolidated Accounts: - In accordance with the requirements of Listing Agreement and the Accounting Standard -21 prescribed by the Institute of Chartered Accountants of India, Company had made additional disclosure in respect of Consolidated Financial Statements and Accounting Standard-18 for Related Party transactions. 14. Appointment of Company Secretary: - - The Companys Secretarial work is handled under the supervision of practising Company Secretary. The Company is in the process of appointing suitable qualified Company Secretary. 15. Statutory information: - 1. Personnel: - Details of remuneration paid to employees as required by Section 217(2A) of the Companies Act, 1956, is not applicable to the Company as none of the employees is paid remuneration as stipulated in that Section. 2. Particulars required to be furnished by the Companies (Disclosure of particulars to the Report of Board of Directors) Rules, 1988. (i) Part A & B pertaining to conservation of Energy and Technology Absorption are not applicable or not relevant to the working of Company. The Directors keep themselves acquainted with ongoing seminars and research papers. (ii) The Company has not earned any Foreign Exchange. The Company has spent Rs 38.50 lacs as and by way of Foreign Exchange outflow during the year. The foreign exchange outflow is on account of Directors foreign travel mainly undertaken to acquire and keep in touch with the latest marketing and financial strategy and different norms of finance that is part of companys research program and sponsorship of employee for study in abroad. 3. Deposits: - a) There are no deposits, which has remained unclaimed or claimed but not paid for which information is required to be given in this report. The Company does neither hold any Public Deposits nor is accepting any deposits. b) The Company has complied with various requirements in terms of the capital adequacy under the guidelines issued by the Reserve Bank of India for the Non-Banking Financial Companies. 16. Acknowledgment: - Your Directors appreciate the co-operation and support extended by the Shareholders, Employees, Financial Institutions and Banks.

Director’s Report