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Twentyfirst Century Management Services Ltd.

BSE:526921  |  NSE:21STCENMGMEQ  |  58888:twan  |  IND:Financial Services - Misc  |  ISIN code:INE253B01015  |  SECT:Financial Services

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You can view full text of the Director's Report for Twentyfirst Century Management Services Ltd.
Director Report
Mar2016   Mar 2019

DIRECTORS'' REPORT

Dear Shareholders

The Directors have pleasure in presenting the 33RD ANNUAL REPORT on the business and operations of your company along with the Audited Financial Statements for the year ended 31st March 2019. The Consolidated Financials of the Company and its subsidiaries have been referred.

1. FINANCIAL HIGHLIGHTS

The Financial Results for the year ended 31st March 2019.

STANDALONE

CONSOLIDATED

31/03/2019

31/03/2018

31/03/2019

31/03/2018

Profit/(Loss) from capital market operations

843.20

1034.93

(254.08)

2789.25

Other income

14.48

30.63

8.87

41.58

Profit/(Loss) before depreciation & tax

704.53

842.59

(440.74)

872.48

Interest

0.00

0.00

0.00

0.00

Depreciation

14.37

42.94

14.37

42.94

Profit/(Loss) before tax

690.16

799.65

(455.11)

829.54

Provision for tax

140.00

240.00

140.00

240.00

Tax for earlier years

0.00

0.00

0.00

0.00

Deferred tax

(0.59)

(8.69)

(0.59)

(8.69)

Profit/(Loss) aftertax

550.75

568.34

(594.52)

598.23

Other Comprehensive Income

(27.15)

467.02

(27.15)

467.02

Total Comprehensive Income for the period

523.6

1035.36

(621.67)

1065.25

2. BUSINESS & PERFORMANCE

During the year under review, the Company has made Profit of Rs.550.75 lacs, against Profit of Rs.568.34 lacs in the last financial year. The total comprehensive income / profit of the company for the year under review is Rs.523.60 lacs against comprehensive income / profit of Rs.1035.36 lacs in the last financial year.

3. SHARE CAPITAL

The paid up Equity Share Capital as on March 31, 2018was Rs.10.50 crore. No additions and alterations to the capital were made during the financial year 2018-19.

4. DIVIDEND

The Directors have not recommended any dividend for the financial year 2018-19.

Your Company has declared and paid a dividend (25%) of Rs.2/50 per share of the face value of Rs.10 each for the financial year 2017-18.The dividend approved by the Members at the Annual General Meeting has absorbed a sum of Rs. 315.94 lacs, inclusive of taxes.

Your Company has declared and paid a dividend (20%) of Rs.2 per share of the face value of Rs.10 each for the financial year 2014-15.The dividend approved by the Members at the Annual General Meeting has absorbed a sum of Rs. 251.99 lacs, inclusive of taxes

Transfer of Unclaimed / Unpaid amounts to the Investor Education and Protection Fund (“IEPF”)

Pursuant to Section 205A and 205C and other applicable provisions, if any, of the Companies Act, 1956 all unclaimed / unpaid dividend as applicable remaining unclaimed / unpaid for a period of seven years from the date they became due for payment, were required to be transferred to IEPF. Sections 124 and 125 of the Companies Act, 2013 read with the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 (''IEPF Rules''), both of which were applicable with effect from 7th September 2016, also contain similar provision for transfer of such amounts to the IEPF. Accordingly all unclaimed /unpaid dividend for a period of seven years from the date they became due for payment, in relation to the company have been transferred to the IEPF established by the Central Government. No claim shall be entertained against the company for the amounts so transferred.

The following table gives information relating to outstanding dividend accounts and the dates by which they can be claimed by the shareholders.

Financial Year

Date of Declaration

Last date for claiming unpaid dividend

2014 -2015

17th July 2015

16th July 2022

2017 -2018

12th July 2018

11th July 2025

5. PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS

Our Company has granted loans to wholly owned subsidiary Twenty-first Century Shares a and Securities Limited Loans, guarantees and investments under Section 186 of the Companies Act, 2013 form part of the Notes to the financial statements provided in this Annual Report.

6. Transfer to General Reserve

Your Company does not propose any transfer of funds to the General Reserve.

7. DEPOSITS

Your Company has not accepted any deposits from the public during the year under review. There are no outstanding deposits as on 31st March 2019.

8. PARTICULARS OF CONTRACTS OR ARRANGEMENTS MADE WITH RELATED PARTIES

Particulars of contracts or arrangements with related parties referred to Section 188(1) of the Companies Act, 2013, in the prescribed Form AOC 2, is appended as Annexure II.

9. MANAGEMENT''S DISCUSSION AND ANALYSIS

In terms of the provisions of Regulation 34 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Management''s Discussion and Analysis is set out in this Annual Report Annexure-A.

10. RISK MANAGEMENT REPORT

Although the company has long been following the principle of risk minimization as is the norm in every industry, it has now become a compulsion. Therefore, in accordance with the provisions of the listing agreement the Board members were informed about risk assessment and minimization procedures after which the Board formally adopted steps for framing, implementing and monitoring the risk management plan for the company.

The main objective of this policy is to ensure sustainable business growth with stability and to promote a pro-active approach in reporting, evaluating and resolving risks associated with the business. In order to achieve the key objective, the policy establishes a structured and disciplined approach to Risk Management, in order to guide decisions on risk related issues.

In today''s challenging and competitive environment, strategies for mitigating inherent risks in accomplishing the growth plans of the Company are imperative. The common risks inter alia are: Regulations, competition, Business risk, Investments, retention of talent and expansion of facilities. Business risk, inter-alia, further includes financial risk, political risk, fidelity risk, legal risk. As a matter of policy, these risks are assessed and steps as appropriate are taken to mitigate the same.

11. BOARD POLICIES

The details of the policies approved and adopted by the Board are provided in Annexure VIII to the Board''s Report.

12. HUMAN RESOURCES

The well-disciplined workforce which has served the company for the last 5 years lies at the very foundation of the company''s major achievements and shall well continue for the years to come. The management has always carried out systematic appraisal of performance and imparted training at periodic intervals. The company has always recognized talent and has judiciously followed the principle of rewarding performance.

13. DISCLOSURE AS PER SEXUAL HARRASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

The Company has amended the POLICY ON PREVENTION, PROHIBITION AND REDRESSAL OF SEXUAL HARASSEMENT giving effect to the recent amendments in the provisions of the Companies Act, 2013made on 31st July 2018 and SEBI (LODR) Regulations, 2015 and this is available in the website of the company www.tcms.bz > Investor Relations > Corporate Information > Policies.

The Company has constituted an Internal Complaint Committee with three members, as per the provisions of the sexual harassment of women at workplace (prevention, prohibition and redressal) Act, 2013 and complied with the provisions of the same.

Internal Complaint Committee Members

1. Presiding Officer - Ms. Jaylaxmi Mukta (Employee of the Company)

2. Member - Ms. Dipti D.Sakpal (Independent Woman Director of the Company)

3. Member - Mr. BhaskarShetty (CFO of the Company)

The Committee met once in the financial year 2018-19, on 14th November 2018 to assess the position in the company.

The Company has displayed in the Notice Board of the company the particulars regarding

1. Instructions to the employees

2. Procedure to be followed for lodging complaint and in redressal.

3. Complaint mechanism

The Company is committed to provide a safe and conducive work environment to its employees during the financial year. Your Directors state that during the financial year, there were no cases filed pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

14. SUBSIDIARY COMPANIES

Your Company has one subsidiary viz., TWENTYFIRST CENTURY SHARES AND SECURITIES LIMITED. The subsidiary company is engaged in Investment & Trading in Shares and Derivatives.

There are no associate companies within the meaning of Section 2(6) of the Companies Act, 2013 (“Act”). Further there has been no material change in the nature of business of the subsidiaries.

Shareholders interested in obtaining a copy of the audited annual accounts of the subsidiary company may write to the Company Secretary.

In terms of proviso to sub section (3) of Section 129 of the Act, the salient features of the financial statement of the subsidiaries is set out in the prescribed form AOC-1, which forms part of the annual report.

Performance and financial position of the subsidiary companies is given in Annexure-I.

15. CORPORATE GOVERNANCE REPORT, MANAGEMENT DISCUSSION & ANALYSIS AND OTHER INFORMATION REQUIRED UNDER THE COMPANIES ACT, 2013 AND SEBI (LODR) REGULATIONS 2015

As per provisions of the SEBI (LODR) Regulations 2015, Management Discussion and Analysis report (ANNEXURE A) and Corporate Governance Report with Auditors'' certificate thereon (ANNEXURE - B) are attached and form part of this report.

16. MATERIAL CHANGES BETWEEN THE END OF FINANCIAL YEAR AND THE DATE OFREPORT

There are no material changes and commitments occurred between the end of the financial year of the company to which the financial statements relate and the date of the report, affecting the financial position of the company.

17. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS

There are no significant material orders passed by the Regulators / Courts which would impact the going concern status of the Company and its future operations.

18. AUDITORS STATUTORY AUDITORS

Messrs. Lakhani & Lakhani, Mumbai, Chartered Accountants, (Firm Registration Number 115728W) has been appointed as statutory auditors of the company at the Annual General Meeting held on 17th July 2015 from the conclusion of 29th Annual General Meeting till the conclusion of 33rd Annual General Meeting of the company. The term of 5 years of the present Statutory Auditors is expiring at the ensuing 33rd Annual General Meeting (AGM) and they have expressed their inability to continue for the next term of 5 years.

In the place of retiring auditors the Board of Directors of the company has appointed M/s. Shankar & Kishor, Chartered Accountants, Mumbai (Firm Registration Number 112451W) from the conclusion of 33rd Annual General Meeting (From FY2019-20) till the conclusion of 37th Annual General Meeting (Till FY 2023-24) of the company subject to the approval and ratification by the members of the company in the Annual General Meeting (AGM) to be held on 15th July 2019.

REPLY TO THE OBSERVATIONS MADE BY THE STATUTORY AUDITOR

Statutory Auditors in their report have made the following observations:

1. Non Provision of Doubtful Loans & Advances amounting to Rs.2272.77 lacs advanced to its subsidiary company and Group Company.

2. We further report that, had the observation made by us above been considered, the loss for the year would have been Rs.1722.02 lacs (as against the reported profit figure of Rs.550.75 lacs) and loss after considering accumulated figures of previous years would have been Rs.46.62 lacs (as against reported figure of profit of Rs. 2226.15 Lacs) and the balance of amount due from subsidiary company and group company would have been Rs. Nil (as against the reported figure of Rs.2272.77 lacs).

Our Reply: Regarding the observation for non-provision for Doubtful Loans & Advances amounting to Rs.2272.77 lacs made to the subsidiary company and a group company, the management is of the opinion that the subsidiary is confident of repaying the current Short Term Loans & Advances amounting to Rs.2250.64 lacs (considered as Doubtful Loans & Advances by the auditor), representing borrowings made during this financial year 2018-19, in the next fiscal. The subsidiary company is making efforts to repay the dues to the holding company through improved profitability.

In respect of the balance amount of Rs.22.13 lacs is receivable from a related company and the company is proceeding legally to recover the same.

SECRETARIAL AUDITORS

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/s Lakshmmi Subramanian & Associates, Practising Company Secretaries, (CP No.1087, FCS:3534), Company Secretaries to undertake the secretarial audit of the company for three years from the financial year ended 31st March 2019 (FY 2018-19). The Secretarial Audit Report is annexed herewith as ''Annexure V’.

REPLY TO THE OBSERVATIONS MADE BY THE SECRETARIAL AUDITOR Secretarial Auditors in their report have made the following observations:

1. The Company is engaged in investment and trading activity with their own surplus funds. However, without any registration/license required under RBI (NBFC Rules and Regulations).

The Company is in the process of filing an application for registration/license required under RBI (NBFC Rules and Regulations).

2. The Company is yet to file relevant forms for appointment of Internal Auditor as required under Section 179(3) of the Companies Act, 2013.

Action has been initiated to file the relevant forms for appointment of Internal Auditor as required under Section 179(3) of the Companies Act, 2013.

3. The Company has not spent expenditure on Corporate Social Responsibility amounting to Rs. 5.30 Lakhs pertaining to FY 2017-18 and 2018-19, though a provision for the same has been made.

The company could not identify proper activity under CSR during the financial year 2018-19 and is confident of spending the amount during the financial year 2019-20.

4. The Company has extended Interest-free Loans to its Wholly-Owned Subsidiary and the compliance of provisions of Section 186(7) of the Companies Act, 2013 is yet to be regularized.

Board of Directors would like to obtain a legal opinion in the matter before proceeding further.

5. The Company is in the process of strictly complying with the observations made in the Secretarial Compliance Report under SEBI (PIT) Regulations.

INTERNAL AUDITORS

All the investments related activities are done under the direct supervision of the Chairman of our company. As per the provisions of the Companies Act, 2013 the company has appointed M/s. Om Prakash S.Chaplot& Co, Chartered Accountants, Mumbai as an Internal Auditor for the company for the financial year 2018-19.

The Company proposes to continue their services and appoint M/s. Om Prakash S.Chaplot & Co, Chartered Accountants, Mumbai as an Internal Auditor for the financial year 2019-20, to ensure proper and adequate systems and procedures commensurate with its size and nature of its business.

19. AUDIT COMMITTEE

The details pertaining to the composition of the Audit Committee are included in the Corporate Governance Report, which is a part of this report

20. CORPORATE SOCIAL RESPONSIBILITY

During the financial year 2017-18, the company has spent Rs.22.75 lacs on the Corporate Social Responsibility (CSR) activities. Your Company knows the importance of Corporate Social Responsibility (CSR) activities of the company under the provisions of the Companies Act, 2013. Accordingly a committee has been formed under the chairmanship of Mr.Sundar Iyer Chairman of the company.

During the financial year 2018-19 the company has provided Rs.5.30 lacs for spending under CSR Activities. The Committee could not identify and approve the activities during the year for such expenditure. The same will be done during the next financial year 2019-20.

The annual report on CSR activities for the financial year 2018-19 is enclosed herewith as Annexure VII

21. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION & FOREIGN EXCHANGE INFLOW & OUTGO

The Company had taken steps to conserve use of energy in its office, consequent to which energy consumption has been minimized. No additional Proposals/ Investments were made to conserve energy. Since the company has not carried on industrial activities, disclosures regarding impact of measures on cost of production of goods, total energy consumption, etc., are not applicable.

Company''s business does not require any technology absorption and hence no reporting is required to be furnished under this heading.

22. BOARD EVALUATION

Pursuant to the provisions of companies Act, 2013 and of the Listing Agreement, the Board has carried out annual performance evaluation of its own performance, the directors individually as well the evaluation of the working of its Audit, Nomination & Remuneration and Stakeholder committee. The manner in which the evaluation has been carried out has been explained in Corporate Governance Report.

23. DIRECTORS AND KEY MANAGEMENT PERSONNEL

At the 28th Annual General Meeting of the company held on 27th June 2014 the company had appointed the existing independent director Shri S.Hariharan (DIN 02545610) as independent director under the companies Act, 2013 for a period of 5 years commencing from 27thJune 2014.The Independent Director has given declaration that he meets the criteria of independence as laid down under section 149(6) of the Companies Act, 2013 and listing agreement. The term of this Independent Director expired on 31st March 2019. Fresh appointment of Independent Director is not made this year in his place since the company has got the required number of Independent Directors.

At the 29th Annual General Meeting of the company held on 17th July 2015, the company had appointed the existing Independent Director Shri Iyer Vishwanth (DIN 00137166) for a period of 5 years till 16th July 2020 and Ms. Sita Sunil (DIN 00041722) as an Independent Woman Director for a period of 5 years till 20th April 2020.

At the 31st Annual General Meeting of the company held on 28th September 2017, company appointed Ms. Dipti Dinesh Sakpal (DIN07305797) as Independent Woman Director with effect from 18th April 2017as recommended by the Board of Directors, in the vacancy created on account of the resignation of Independent Woman Director - Ms. Sita Sunil, for a period of 5 years till 17th April 2022.

All the three Independent Directors have given declaration that they meet the criteria of independence as laid down under section 149(6) of the Companies Act, 2013 and of listing agreement.

Shri Sundar Iyer (DIN 00481975) Executive Director of our company shall retire by rotation at the ensuing Annual General Meeting and being eligible offer himself for re-appointment. As stipulated in terms of the listing agreement with the stock exchanges, the brief profile of Shri Sundar Iyer is provided in the report on corporate governance, which forms an integral part of this Annual Report.

The Key Management Personnel of the company are as under:

1. Mr. Sundarlyer - Chief Executive Officer

2. Mr. A.V.M.Sundaram- Company Secretary

3. Mr. BhaskarShetty - Chief Financial Officer

24. POLICY OF DIRECTORS'' APPOINTMENT AND REMUNERATION

Company''s policy on Directors'' appointment and remuneration including criteria for determining qualifications, positive attributes, independence of a director and other matters provided under section 178(3) of the Act are covered in Corporate Governance Report which forms part of this Report. Further, information about elements of remuneration package of individual directors is provided in the extract of Annual Return as provided under Section92(3) of the Act, is enclosed at Annexure-VI in the prescribed form MGT-9 and forms part of this Report.

25. CODE OF CONDUCT FOR DIRECTORS AND SENIOR MANAGEMENT

The Directors and members of Senior Management have affirmed compliance with the Code of Conduct for Directors and Senior Management of the Company. A declaration to this effect has been signed by Mr. Sundar Iyer, Chairman & Chief Executive Officer and forms part of the Annual Report.

26. RELATIONSHIP BETWEEN DIRECTORS INTER-SE

Mr.Krishnan Muthukumar, Non-Executive Director is related to Mr.Sundar Iyer, Chairman and Chief Executive Officer of the company. None of the other Directors are related to each other within the meaning of the term “relative”, as per Section 2 (77) of the Act and the provisions of the revised listing agreements.

27. EVALUATION OF DIRECTORS BY INDEPENDENT DIRECTORS'' MEETING

During the year under review, the Independent Directors met on 30thMarch 2019, inter alia to:

i. Review the performance of non-independent directors and the Board as a whole

ii. Review the performance of the Chairperson of the company, taking into account the views of executive directors and non-executive directors

Hi. Assess the quality, quantity and timeliness of flow of information between the company management and the Board that is necessary for the Board to effectively and reasonably perform their duties

28. EVALUATION OF INDEPENDENT DIRECTORS BY DIRECTORS'' MEETING

During the year under review, the Directors (other than Independent Directors) met on 30th March 2019, inter alia to:

i. Review the performance of the independent directors of the company, taking into account the views of executive directors and non-executive directors.

ii. Assess the quality, quantity and timeliness of flow of information between the company management and the Board that is necessary for the Board to effectively and reasonably perform their duties.

29. INTERNAL FINANCIAL CONTROL SYSTEMS AND THEIR ADEQUACY

The information about internal financial control system and their adequacy is set out in the Management Discussion & Analysis report which is attached and forms part of this Report.

30. DIRECTORS'' RESPONSIBILITY STATEMENT

To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statements in terms of Section 134(3)(c) of the Companies Act, 2013:

a. That in the preparation of the annual financial statements for the year ended 31st March 2019, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

b. That such accounting policies as mentioned in Notes to the Financial Statements have been selected and applied consistently and judgment and estimates have been made That are reasonable and prudent so as to give a true and fair view of the state of affairs of The Company as at 31st March 2019 and of the profit of the Company for the year ended on that date;

c. That proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d. That the annual financial statements have been prepared on a going concern basis;

e. that proper internal financial controls were in place and that the financial controls were adequate and were operating effectively.

f. that systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively.

31. INDEPENDENT DIRECTORS'' DECLARATION

Mr. Iyer Vishwanath, Mr.S.Hariharan and Ms. Dipti D. Sakpal, who are Independent Directors, as on 31st March 2019 have submitted a declaration that each of them meets the criteria of independence as provided in Sub-Section (6) of Section 149 of the Act and in terms of the provisions of SEBI (LODR) Regulations, 2015. Further, there has been no change in the circumstances which may affect their status as independent director during the year 2018-19.

32. FAMILIARIZATION PROGRAM FOR INDEPENDENT DIRECTORS

The Company has practice of conducting familiarization program of the independent directors as detailed in the Corporate Governance Report which forms part of the Annual Report.

33. PARTICULARS OF REMUNERATION

The information required under Section 197(12) of the Companies Act, 2013 read with rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is not applicable, as none of the directors of the company are receiving any remuneration from the company.

The remuneration paid to all Key management Personnel was in accordance with remuneration policy adopted by the company. Particulars of remuneration/ Sitting Fees paid are detailed in Annexure-lll to the Director''s Report.

34. PECUNIARY RELATIONSHIP OR TRANSACTIONS OF NON-EXECUTIVE DIRECTORS

During the year, the Non-Executive Directors of the Company had no pecuniary relationship or transactions with the Company.

35. VIGIL MECHANISM

The Company has established a vigil mechanism for Directors and employees to report their genuine concerns. For details, please refer to the Corporate Governance Report attached to this Report.

36. ACKNOWLEDGEMENTS

The Board of Directors would like to thank all employees of the Company and also Company''s shareholders, auditors, customers and bankers for their continued support.

37. CAUTIONARY STATEMENT

The statements contained in the Board''s Report and Management Discussion and Analysis contain certain statements relating to the future and therefore are forward looking within the meaning of applicable securities, laws and regulations. Various factors such as economic conditions, changes in government regulations, tax regime, other statues, market forces and other associated and incidental factors may however lead to variation in actual results.

For and on behalf of the Board

Place: Mumbai Sundar Iyer

Date: 22nd May 2019 Chairman & CEO

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