DIRECTOR"S REPORT Dear Shareholders, The Directors take pleasure in presenting their Twenty-first Annual Report along with the audited financial statements for the financial year ended March 31, 2015. PERFORMANCE OF THE COMPANY During the year under review, the Company has earned Profit before Tax of Rs. 568.75 Lacs as against previous year Rs. 469.63 Lacs. The Company's Profit after tax for the current year is Rs. 477.31 Lacs as against previous year of Rs. 333.75 Lacs. The major business segments of the Company included Commission and Brokerage ,Income received for providing services to its clients in respect of wealth management, Mutual Fund Distribution, Corporate Advisory. The Company's affairs were smoothly managed by the Board of Directors of the Company FUTURE OUTLOOK The year under review has seen improved market environment due to formation of new Government with majority. However, during the year under review, the company could not add to its mutual fund distribution business due to restrictive instruction of Reserve Bank of India. This will lead to de-growth of fee based business. However, considering improved market conditions, the company anticipates to cover up the gap by investment activities (barring unforeseen circumstances). As in the previous year, this year also the Directors have recommended dividend @ 10% (i.e. Re. 1 per equity share) for the financial year ended March 31, 2015. LISTING OF EQUITY SHARES The equity shares of the Company are listed on the Bombay Stock Exchange Limited, Phiroze Jeejeebhoy Towers, Dalal Street, Mumbai-400 001. DIRECTORS AND KEY MANAGERIAL PERSONNEL In accordance with the provisions of the Act and the Articles of Association of the Company, Mr. Rakesh K. Jain, Director of the Company, retires by rotation at the ensuing Annual General Meeting and being eligible has offered himself for reappointment Mr. Avinash Chandra resigned from the post of Company Secretary, w.e.f April 13, 2015 and on the said date Mrs. Ekta Karwa was appointed as Company Secretary who due to personal reasons continued in office only till July 29, 2015. The Company has now appointed Mr. Yatandra Singh Pal as Company Secretary w.e.f. July 29, 2015. The Board of the Company is structured in accordance with the requirements of Companies Act, 2013 and the Listing Agreement. There is adequate number of Independent Directors on the Board of the Company. The Company has received declarations from all the Independent Directors of the Company confirming that they meet the criteria of independence as prescribed both under the Act and Clause 49 of the Listing Agreement with the Stock Exchanges. The Company has put in place a familiarization program for the Independent Directors, their roles, rights, responsibilities in the Company and related matters. Details of familiarization program are available on the website of the Company at the link http://fslindia. com/pdf/FAMILIARIZATION+PROGRAMMES.pdf. The Company has devised a Policy for performance evaluation of Independent Directors, Board, Committees and other individual Directors which include criteria for performance evaluation of the non-executive directors and executive directors. In respect of nomination and remuneration of Directors the Company has adopted the following policies: a) Policy for selection of Directors and determining Directors independence: and b) Remuneration Policy for Directors, Key Managerial Personnel and other employees. The above mentioned policies of the Company are attached herewith marked as Annexure I and Annexure II DIRECTORS RESPONSIBILITY STATEMENT Your Directors state that: a) In the preparation of the annual accounts for the year ended March 31, 2015, 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; b) The Directors have 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 as at March 31, 2015 and of the profit of the Company for the year ended on that date; c) The Directors 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; 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 are operating effectively; and f) The Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively. RELATED PARTY TRANSACTIONS All contracts / arrangements / transactions entered by the Company during the financial year with related parties were in the ordinary course of business and on an arm"s length basis. During the year, the Company had not entered into any contract / arrangement / transaction with related parties which could be considered material in accordance with the policy of the Company on materiality of related party transactions. The Policy on materiality of related party transactions and dealing with related party transactions as approved by the Board may be accessed on the Company"s website at the link: <http://fslindia/>com/pdf/RPT.pdf Particulars of contracts or arrangement with related parties during the year under review is provided in AOC-2 as Annexure III CORPORATE GOVERNANCE AND MANAGEMENT DISCUSSION AND ANALYSIS REPORT As per the applicable provisions of Clause 49 of the Listing Agreement with the Stock Exchange(s), a Management Discussion & Analysis, a Report on Corporate Governance together with the Auditor"s certificate on the compliance of conditions of Corporate Governance form part of the Annual Report. CORPORATE SOCIAL RESPONSIBILITY (CSR) In terms of section 135 and Schedule VII of the Companies Act, 2013, the Board of Directors of your Company has constituted a Corporate Social Responsibility (CSR) Committee. The Committee comprises of 2 Independent Directors namely Mr. Atul K. Jain and Mr. Arun K. Jain and 1 Whole Time Director namely Mr. Gauri Shanker Pandey. The Corporate Social Responsibility (CSR Committee) has formulated and recommended to the Board, a Corporate Social Responsibility Policy (CSR Policy) indicating the activities to be undertaken by the Company, which has been approved by the Board. The CSR Policy may be accessed on the Company"s website at the link: <http://www.fslindia.com/pdf/csr%201.pd> During the year, the Company has spent Rs. 9.25 Lac (approx 2.02% of the average net profits of last three financial years) on CSR activities. The Annual Report on CSR activities is annexed herewith marked as Annexure IV. AUDIT COMMITTEE The Audit Committee comprises of four Directors, namely, Mr. Baljit Singh Bedi, Dr. C. S. Bedi, Mr. Atul K. Jain and Mr. Arun K. Jain. The Committee oversees the Company"s financial reporting process and disclosure of its financial information, reviews the quarterly / half yearly / annual financial statements before they are submitted to the Board of Directors and performs such other functions as are prescribed to it by the terms of its reference. AUDITORS AND AUDITORS REPORT i) Statutory Auditors : M/s J. Jain & Company, Chartered Accountants, Statutory Auditors of the Company, hold office till the conclusion of the Annual General Meeting to be held in the year 2017 (subject to ratification of their appointment at every Annual General Meeting) and are eligible for re-appointment at the ensuing Annual General Meeting. They have confirmed their eligibility to the effect that their re-appointment, if made, would be within the prescribed limits under the Act and that they are not disqualified for re-appointment. The notes on financial statement referred to in the Auditors" report are self-explanatory and do not call for any further comments. The auditors" report does not contain any qualification, reservation or adverse remark. ii. Secretarial Audit: The Board has appointed Prashant Gupta and Associates, Practicing Company Secretary, to conduct Secretarial Audit for the financial year 2014-15. The Secretarial Audit Report for the financial year ended March 31, 2015 is annexed herewith marked as Annexure V to this Report. The Secretarial Audit report does not contain any qualification, reservation or adverse remark. VIGIL MECHANISM The Company has established a Vigil Mechanism for directors and employees to report genuine concerns. This includes a Whistle Blower policy in terms of the Listing Agreement and intends to develop a culture where it is safe for all employees to raise concerns about any poor or unacceptable practice and any event of misconduct. The Vigil Mechanism Policy may be accessed on the website of the Company at <http://www.fslindia.com/pdf/FSL_VIGIL%20MECHANISM%20AND%20whistle-blower-policy.pdf> RISK MANAGEMENT The Board of Directors has constituted a Risk Management Committee b. For evaluating the various risks impacting the Company; and c. Overseeing that all the risks that organization faces such as strategic, financial, credit, market, liquidity, security, property, IT, legal, regulatory, reputation and other risk have been identified and assessed and there is an adequate risk management infrastructure in place capable of addressing those risks. The risk management policy of the Company may be accessed on website of the Company under the http://www.fslindia.com/pdf/RISK%20MNGT.pdf l ink. INTERNAL FINANCIAL CONTROLS The Company has in place adequate internal financial controls with reference to financial statements. During the year, such controls were tested and no reportable material weakness in the design or operation were observed MEETINGS OF THE BOARD Eight meetings of the Board of Directors were held during the year. Details of the same are provided in the report on Corporate Governance. PARTICULARS OF LOANS GIVEN, INVESTMENTS MADE The Company has not made any Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO Particulars under Companies (Accounts) Rules, 2014 on conservation of energy, Technology absorption are not applicable to your Company. Accordingly no disclosure has been made in this regard. Foreign Exchange Earnings: Nil (Previous year: Nil) Foreign Exchange Outgo: Nil (Previous year: Nil) Extract of Annual Return Extract of Annual Return of the Company is annexed herewith in MGT-9 as Annexure VI to this Report. PARTICULARS OF EMPLOYEES The information required under Section 197 of the Act read with rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are given below: c. The percentage increase in the median remuneration of employees in the financial year: 13.16% d. The average number of permanent employees on the rolls of Company: 4 e. The explanation on the relationship between average increase in remuneration and Company performance: On an average, employees received an annual increase of 10% in India. The individual increments varied from 6 % to 14%, based on individual performance and overall performance of the Company. c. The percentage increase in the median remuneration of employees in the financial year: 13.16% d. The average number of permanent employees on the rolls of Company: 4 e. The explanation on the relationship between average increase in remuneration and Company performance: On an average, employees received an annual increase of 10% in India. The individual increments varied from 6 % to 14%, based on individual performance and overall performance of the Company Average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration: The average annual increase was around 10 % in India. During the course of the year, increase in salaries to employees was approximately 14 %, after accounting for promotions and other event based compensation revisions. Increase in the managerial remuneration for the year was 4.37%. j. The key parameters for any variable component of remuneration availed by the directors: NIL k. The ratio of the remuneration of the highest paid director to that of the employees who are not directors but receive remuneration in excess of the highest paid director during the year: NIL l. Affirmation that the remuneration is as per the remuneration policy of the Company The Company affirms remuneration is as per the remuneration policy of the Company. m. no information as required under Section 197(12) of the Act read with Rule 5(2) of the Companies (Appointment and remuneration of Managerial Personnel) Rules, 2014 has been furnished as during the year no employee was in receipt of remuneration in excess of the prescribed limits. FIXED DEPOSIT The Company has not accepted any public deposits during the year, within the meaning of Section 2 (i) (xii) of the Non-Banking Financial Companies Acceptance of Public Deposits (Reserve Bank) Directions 1998. RBI GUIDELINES The Company has complied with the Regulations of the Reserve Bank of India st as on 31 March, 2015, as are applicable to it as a Non-Banking Financial Company. ACKNOWLEDGEMENT Your Directors place on record their sincere thanks to the Company"s esteemed Shareholders,Clients, Associates, Financial Institutions, Bankers, the Securities and Exchange Board of India, Bombay Stock Exchange Limited, Delhi Stock Exchange Association Limited, Reserve Bank of India and other Government Departments for their valuable contribution and support. On behalf of the Board of Directors For FRONTLINE SECURITIES LIMITED Rakesh K. Jain Chairman DIN:00050524 Place: Noida Date: 29/07/2015 |