brokiug division): et; · eiei registered office: 46 i 47,6th floor, rajgir chambers, 12 i 14,...

ACTTON FTNANGTAL SERVTCES (rNDrA) LTMTTEDMEMBER : NSE / BSE (CASH SEGMENT) . NSE (DERIVATIVES) - DEPOSITO&Y PARTICIPANT

SEBI REGN. NO. : INB23074923? (NSE)-INB010749233 (BSE) - INF23074923? (NSE-D) - INP023074923? (NSE - CURRENCY) - DP ID IN3002?1 (NSDL)

CIN - L659441I[H1992PLC068879 o Websitdi wurw.actionfin.com

ET;EIEI

Registered Office:46 I 47,6th Floor, Rajgir Chambers,12 I 14, Shahid Bhagat Singh Road,Fort, Mumbai - 400 023.Tel.No.: (91) (022) 43654444Fax No. : (91) (022) 4365 4446E-Mail : [email protected]

Corporate Office (DP & Brokiug Division):1.1/ 15, 2nd Flooq Rajgir Chambers,12 I L4, Shahid Bhagat Singh Road,Fort, Mumbai - 400 001.Tel. No. : (91) (022) 4365 4444FaxNo.: (91) (022) 43654456E-Mail : [email protected]

Date:- 02.05.2016

To,BSE Limited,Listing Compliance,P.J.Towers, Dalal Street,Mumbai400001

Kind Attention: Mr.Rakesh Parekh

Subject: - Revised annual report of March -2012.

Dear 5ir,

With reference to the Action Financial Services (lndia) Limited has come to know that name of ourindependent directors i.e. Mr. Atul Zatakia & Mr. Ketan Mehta were wrongly shown as Promoter inannual report of the financial yea/ 2011-12. We have noticed the aforesaid error while referring our oldrecords it has came to know that the independent directors cannot be included as Promoters in Annualreport. So we have made necessary correction in annual report of March 20L2,

A correction in the annual reports has been made in tabular form are as follows:-

{ Promoters as per otd annual report Promoters as per Revised annual report

Name of thePromoters

Pan Number Name of thePromoters

Pan Number

Milan R. Parekh AACPP4OT3G Milan R. Parekh AACPP4OT3G

Bakul R. Parekh AACPP5587D Bakul R. Parekh AACPP5587DAtulZatakia AAAPZO65lJ Nayana M. Parekh AACPP5583H

Ketan Mehta AAEPMSO34E

Nayana M. Parekh AACPP5583H

Please send your queries/complaints at following Email Id : [email protected] mention the Division clearly (i,e. BrokinglDepository alongwith your Client Code/Demat Account No.) in your queries/complaints^

Further Corrections made in annual report are as follows:-

Further said revision in annual report for march 20t2 of Action Financiai Services (lndia) Limited isconvey to Board Of Director of the company & same will be conveyed to the shareholder of company innext coming Annual General Meeting which will be held in Financial year 2Ot6-L7.

Thanking You.Yours faithfully,

For Actlron Financial Services (lndia) limited

/ /i/*-/&-,LL{nil"nR. parekh

(Managing Director)(DlN:00108368)

Sr.No. Corrections made in annualreport

Reference page

numberStatus

.L. Capital structure 14 (point No. 3) L. Changes made in no ofshares & Percentage ofPromoters & public catesory.

2. Proposed allotees & the percentageof Pre & Post preferential issueCapital

15 (Point No. 5) L. Deletion of names ofpromoters & addition in Publiccategory.

3. Categories of shareholders as onmarch 3L,20Lz

33 (Sr.No 13 & 14) 1. Changes made in category ofpublic & promoters.

6rr*$d( l*

Q;-"r#

ACTIONFINANCIALSERVICES

(INDIA)LIMITED

NineteenthAnnual Report2011-2012

Action Financial Services (India) Limited

136

THE ACTION TEAM

Mr. Milan R. Parekh - Chairman & Managing Director

Mr. Bakul R. Parekh - Jt. Managing Director

Mr. Harbhajan Singh Dhillon - Director

Mr. Atul A. Zatakia - Director

Mr. Ketan H. Mehta - Director

AUDIT, REMUNERATION &

SHAREHOLDERS / INVESTORS’ GRIEVANCE COMMITTEE

Mr. Harbhajan Singh Dhillon

Mr. Atul A. Zatakia

Mr. Ketan H. Mehta

ACTION’S BELIEF

“If we don’t take care of thecustomer…

somebody else will.”“The customer is our reason

for being here.”“ A satisfied customer is the

businessstrategy of all.”

“ There is only one boss.The customer and

he can fire everybodyin the company from

the chairman on down,simply by spending

his money somewhere else.”“ It takes less effort to keep an oldcustomer satisfied than to get new

customer interested.”“ Your most unhappycustomers are your

greatest source of learning.”

..anonymous..

CONTENTS Pages

Notice 2

Director’s Report 17

Management Discussion & Analysis 23

Corporate Governance Report 25

Auditor’s Report 37

Balance Sheet 42

Profit & Loss Account 43

Cash Flow Statement 44

Notes 45

Statement Related 64to Subsidiary Company ASL

Subsidiary Company ACL 82

Consolidated Accounts 107

Proxy Form 129

1

19th Annual Report 2011-2012

AUDITORS : Ford, Rhodes, Parks & Co.

Chartered Accountants

BANKERS : Bank of India

HDFC Bank Ltd.

ICICI Bank Ltd.

REGISTRAR & SHARE : M/s. Link Intime India Private Limited.

TRANSFER AGENT C-13, Pannalal Silk Mills Compound,

L. B. S. Marg, Bhandup (West),

Mumbai - 400 078.

Tel.: 2596 3838 Fax : 2567 2693

REGISTERED OFFICE & : 31, 4th Floor, Rajgir Chambers,

BROKING DIVISION 12/14, Shahid Bhagatsingh Road,

Fort, Mumbai- 400 001.

Tel. 4062 4444 Fax: 4062 4446 / 47

Email ID : [email protected]

Website : www.actionfin.com

SECURITIES BANKING CELL : 31, 4th Floor, Rajgir Chambers,

(Depository Participant of NSDL) 12/14, Shahid Bhagatsingh Road,

Fort, Mumbai- 400 001.

Tel. 4062 4444 Fax: 4062 4446

BRANCH WITH BSE TERMINALS : Mumbai (Fort, Matunga, Borivali),

Surat, Bokaro, Dharmavaram

& Valsad

BRANCH WITH NSE TERMINALS : Mumbai (Fort), Mumbai Central,

Vaslad, Bokaro, Dhanbad, Surat,

& Dharmavaram

DEPOSITORY BRANCHES : Mumbai (Fort), Ahmedabad,

Bokaro, Kakinada & Valsad

LISTED AT : Mumbai


2

NOTICE

NOTICE is hereby given that the Nineteenth Annual General Meeting of theMembers of Action Financial Services (India) Limited will be held at theRegistered Office of the Company at 31, Rajgir Chambers, 12/14, Sahid BhagatSingh Road, Fort, Mumbai - 400 001 on 29th September, 2012 at 10.00a.m. totransact the following business:

ORDINARY BUSINESS:

1. To receive, consider and adopt the Audited Balance Sheet as at 31stMarch, 2012 and Statement of Profit & Loss Account for the year endedas on that date together with the Directors' Report and Auditors' Reportthereon.

2. To appoint a Director in place of Mr. Atul A. Zatakia, who retires by rotation,and being eligible offers himself for re-appointment.

3. To appoint a Director in place of Mr. Ketan H. Mehta, who retires byrotation, and being eligible offers himself for re-appointment.

4. To appoint Auditors and to fix their remuneration.

SPECIAL BUSINESS:

5. To consider and, if thought fit, to pass with or without modification(s) thefollowing resolution as an Ordinary Resolution:

Appointment of Mr. Harbhajan Singh Dhillon as a Director

"RESOLVED THAT Mr. Harbhajan Singh Dhillon who was appointed asAdditional Director of the Company by the Board of Directors, who holdsoffice under Section 260 of the companies Act, 1956, until the date of theAnnual General Meeting and in the respect of whom the company hasreceived notice in writing under section 257 of the Companies Act, 1956,from a member proposing his candidature for the office of a Director,who has given his consent to act as Director and declaration in Form DD-A, be and is hereby appointed as a Director of the company liable toretire by rotation."

6. Re-appointment of Mr. Milan R. Parekh, Managing Director

To consider and, if thought fit, to pass with or without modification(s) thefollowing resolution as a Special Resolution:

"RESOLVED THAT pursuant to Section 198, 269, 309 and otherprovisions, as applicable of the Companies Act, 1956, read with ScheduleXIII to the Companies Act, 1956, the Company hereby accord its approvalto the re-appointment of Mr. Milan R. Parekh, as Managing Director ofthe Company for a period of Three years effective from 1.10.2012 to

3


30.09.2015, on the terms and conditions including remuneration as setout herein below with power to the Board of Directors/ Committeeauthorized by the Board to alter or determine the conditions thereof fromtime to time:

(a) Salary:

Rs. 1,75,000/- (Rupees One Lakh Seventy Five Thousand only) permonth with annual increment not exceeding 25%.

(b) Perquisites: -

In addition to the salary as above, he will also be entitled to the followingperquisites:

Fully Furnished Accommodation, Leave Travel Concession, MedicalReimbursement, Club Fees, Personal Accident Insurance, Key maninsurance, Car with Driver, Telephone at Residence, Mobile, internet etc.

He shall also be eligible to following benefits:

* Contribution to provident fund, superannuation fund or annuity fund tothe extent, that these either singly or put together are not taxable underthe Income Tax Act, 1961.

* Gratuity payable at a rate not exceeding half a month's salary for eachcompleted year of service.

* Leave Encashment at the end of the tenure.

RESOLVED FURTHER THAT notwithstanding anything contained hereinabove, in any financial year, the remuneration payable to the ManagingDirector shall be within the limits stated in sub Section II (B) of the PartII of the Schedule XIII to the Companies Act, 1956, as may be amendedfrom time to time.

RESOLVED FURTHER THAT the Board of Directors/ Committeeauthorized by the Board of the Company be and is hereby authorised toalter and vary any or all of the terms and conditions as approved vide thisresolution as may be deemed fit or expedient or proper, from time totime, which may have the effect of increasing the remuneration orperquisites or benefits and for the purpose of giving effect to this resolutionthe Board of Directors/ Committee authorized by the Board be and ishereby authorised to do all such acts, deeds, matters and things as itmay in its absolute discretion deem necessary, expedient, usual or properin the best interest of the Company."

7 Re-appointment of Mr. Bakul R. Parekh, Jt. Managing Director

To consider and, if thought fit, to pass with or without modification(s) the


4

following resolution as a Special Resolution:

"RESOLVED THAT pursuant to Section 198, 269, 309 and otherprovisions, as applicable of the Companies Act, 1956, read with ScheduleXIII to the Companies Act, 1956, the Company hereby accord its approvalto the re-appointment of Mr. Bakul R. Parekh, Jt. Managing Director ofthe Company for a period of Three years effective from 1.10.2012 to30.09.2015, on the terms and conditions including remuneration as setout herein below with power to the Board of Directors/ Committeeauthorized by the Board to alter or determine the conditions thereof fromtime to time:

(a) Salary:

Rs. 1,75,000/- (Rupees One Lakh Seventy Five Thousand only) permonth with annual increment not exceeding 25%.

(b) Perquisites: -

In addition to the salary as above, he will also be entitled to the followingperquisites:

Fully Furnished Accommodation, Leave Travel Concession, MedicalReimbursement, Club Fees, Personal Accident Insurance, Key maninsurance, Car with Driver, Telephone at Residence, Mobile, internet etc.

He shall also be eligible to following benefits:

* Contribution to provident fund, superannuation fund or annuity fund tothe extent, that these either singly or put together are not taxable underthe Income Tax Act, 1961.

* Gratuity payable at a rate not exceeding half a month's salary for eachcompleted year of service.

* Leave Encashment at the end of the tenure.

RESOLVED FURTHER THAT notwithstanding anything contained hereinabove, in any financial year, the remuneration payable to the Jt. ManagingDirector shall be within the limits stated in sub Section II (B) of the PartII of the Schedule XIII to the Companies Act, 1956, as may be amendedfrom time to time.

RESOLVED FURTHER THAT the Board of Directors/ Committeeauthorized by the Board of the Company be and is hereby authorised toalter and vary any or all of the terms and conditions as approved vide thisresolution as may be deemed fit or expedient or proper, from time totime, which may have the effect of increasing the remuneration orperquisites or benefits and for the purpose of giving effect to this resolutionthe Board of Directors/ Committee authorized by the Board be and is

5


hereby authorised to do all such acts, deeds, matters and things as itmay in its absolute discretion deem necessary, expedient, usual or properin the best interest of the Company."


Increase in the Authorised Share Capital and alteration of Capital Clausein the Memorandum & Articles of Association of the Company:

"RESOLVED THAT pursuant to provisions of Section 94 of the CompaniesAct, 1956 and other applicable provisions, if any, (including any statutorymodifications or re-enactment thereof for the time being in force), and asauthorised by Article No. 3 of Articles of Association, the authorisedcapital of the company be and is hereby increased from Rs. 13,00,00,000/-(Rupees Thirteen Crores Only) divided into 1,20,000,00 equity shares ofRs. 10/- (Rupees Ten Only) and 1,00,000 preference shares Rs.100/-each to Rs.15,00,00,000 (Rupees Fifteen Crores Only) divided into1,40,00,000 equity shares of Rs.10/-(Rupees Ten Only) each and 1,00,000preference shares Rs.100/- each."


Alteration Clause V of Memorandum of Association due to increase inauthorized share capital:

"RESOLVED that pursuant to the provisions of section 16 and otherapplicable provisions of the Companies Act, 1956, in the existing ClauseV of the Memorandum of Association of the Company, for the existingwords and figures:

"Rs.13,00,00,000/- (Rupees Thirteen Crores Only ) divided into1,20,00,000 equity shares of Rs. 10/- (Rupees Ten Only) and 1,00,000preference shares of Rs.100/- each.” The following words and figuers &hereby substituted i.e.

Rs. 15,00,00,000/- (Rupees Fifteen Crores Only) divided into 1,40,00,000equity shares of Rs.10/- (Rupees Ten Only) each, and 1,00,000 preferenceshares of Rs.100/- each.

10. To consider and, if thought fit, to pass with or without modification(s) thefollowing resolution as a Special Resolution:

Alteration Articles no. 3 of Articles of Association due to increase inauthorized share capital

"RESOLVED that pursuant to the provisions of section 31 and otherapplicable provisions of the Companies Act, 1956, in the existing Articles


6

No. 3 of the Articles of Association of the Company, be altered for theexisting words and figures:

"Rs. 13,00,00,000/- (Rupees Thirteen Crores Only ) divided into1,20,00,000 equity shares of Rs. 10/- (Rupees Ten Only), and 1,00,000preference shares of Rs.100/- each.” The following words and figures beand are hereby substituted i.e.

Rs. 15,00,00,000/- (Rupees Fifteen Crores Only) divided into 1,40,00,000equity shares of Rs.10/- (Rupees Ten Only) each and 1,00,000 preferenceshares of 100 each."

11. To consider and, if thought fit, to pass with or without modification(s) thefollowing resolution as a Special Resolution:

Issue of Further shares

"RESOLVED THAT in accordance with the provisions of section 81(1A)and all other applicable provisions, if any, of the Companies Act, 1956,SEBI, (including any statutory modification or re-enactment thereof, forthe time being in force), of the prevailing Guidelines governing thepreferential issue of shares, and in the terms of the Memorandum andArticles of Association of the company and the Listing Agreement enteredinto by the company with the Stock Exchange/s and further subject toapprovals of all other concerned institutions and authorities, if any, and tothe extent necessary and subject to the conditions and modifications asmay be imposed by any of them while granting such approvals,permissions and sanctions, which may be agreed to by the Board ofDirectors of the company (hereinafter referred to as the 'Board' and/orany duly authorized committee thereof, for the time being exercising thepowers conferred by the Board ) in that behalf, the consent and approvalof the members be and are hereby accorded to the Board to issue/offer23,24,800 Equity Shares of Rs. 10/- and 12,30,000 warrants of Rs. 10/- each entitling one fully paid equity share against one warrant for cash ata price not less than price to be calculated with reference to Regulation76 of SEBI (ICDR), 2009 as the Board in its sole discretion may at anytime or time hereafter decide to selected persons as stated below onpreferential issue, in one or more trenches on such terms and conditionsas the Board or Committee thereof may in it absolute discretion think fiton the following terms and conditions

(i) The equity shares to be issued shall be subject to Memorandum andArticles of Association of the Company;

(ii) The equity shares to be issued shall rank pari passu in all respects withthe existing equity shares of the company including right to dividend;and.

7


(iii) An amount equivalent to at least twenty five per cent of the price to becalculated as above shall become payable for the warrants on or beforethe date of the allotment and balance amount shall be paid before theexchange of warrants for equity shares otherwise the said amount beforfeited, in case the option to acquire Equity Shares is not exercisedwithin period of 18 months from the date of issue of warrants.

RESOLVED FURTHER THAT for the purpose of giving effect to thisresolution, the Board or Committee thereof be and is hereby authorizedto do all such acts, deeds, matters and things and to finalise and executeall documents and writings as may be necessary, desirable or expedientas the Board or Committee thereof may deem fit."

For and on Behalf of the Board

Registered Office:

31, Rajgir Chambers,

12/14, Sahid Bhagatsingh Road, Sd/-

Mumbai - 400 001.

MILAN R. PAREKH

Date: 28th August, 2012 Chairman & Managing Director


8

NOTES

1. A member entitled to attend and vote at the meeting is entitled to appointa proxy to attend and vote on a poll instead of himself, and proxy soappointed need not be a member of the company. In order to be effective,proxy form must be lodged with the company not less than 48 hoursbefore the commencement of the meeting.

2. Explanatory Statements Pursuant to Section 173 (2) of the CompaniesAct 1956, relating to the special business is annexed herewith.-

3. Corporate Members are requested to send a duly certified copy of theBoard Resolution authorizing their representative to attend and vote atthe Meeting.

4. The register of members and the share transfer books of the Companywill remain closed from 26.9.2012 to 29.9.2012 (both days inclusive).

5. Members desirous of asking any questions at the Annual General Meetingare requested to send in their questions so as to reach the Company atleast 10 days before the Annual General Meeting so that the same canbe suitably replied.

6. In case of joint holders attending the Meeting, only such joint holder whois higher in the order of names will be entitled to vote.

7. Members are requested to bring their copies of Annual Report at the timeof attending the Annual General Meeting.

8. Members who hold shares in electronic form are requested to write theirDP ID and client ID numbers and those who hold shares in physical formare requested to write their folio number in the attendance slip for attendingthe Meeting to facilities identification of membership at the Meeting.Members are requested to bring their attendance slip along with theircopy of the Annual Report to the Meeting. As copies of Annual Reportwill not be distributed at the meeting.

9. Members are requested to intimate change of address, if any, to thecompany quoting reference to their Registered Folio Number.

10. At the ensuing Annual General Meeting Mr. Atul A. Zatakia and Mr. KetanH. Mehta retire by rotation and are being proposed for re appointment asDirectors, and Mr. Harbhajan Singh Dhillon is being appointed as Director,the detail as required under Clause 49 (IV)(v)of the Listing Agreement isgiven below:

9


Name Age Educational Experience No. ofQualification share hold

Mr. Atul Zatakia 48 B.com 20 Years 12045CapitalMarket

Mr. Ketan Mehta 42 B.com 20 Years 9232CapitalMarket

Mr. Harbhajan Singh Dhillon 67 B.E.(Mech.)(Hons.) 45 years NIL

Marketing


Registered office:

31, Rajgir Chambers,

12/14, Sahid Bhagatsingh Road, Sd/-

Mumbai - 400 001.

MILAN R. PAREKH

Date: 28th August, 2012 Chairman & Managing Director


10

EXPLANATORY STATEMENT PURSUANT TO SECTION 173 (2)OF THE COMPANIES ACTS, 1956

Item No. 5

The company has received a notice under section 257 of the Companies Act,1956 from member proposing his appointment of Mr. Harbhajan Singh Dhillonfor the office of the Director of the company. Mr. Harbhajan Singh Dhillon ishaving experiences in the field of marketing which will be helpful for upcomingproject and hence recommends their appointment for approval.

Mr. Harbhajan Singh Dhillon as Director in the category Independent and Non-Executive Director.

The Board recommends to pass the resolution.

None of the directors except Mr. Harbhajan Singh Dhillon is concern orinterested in this resolution.

Item No. 6 & 7

Being Mr. Milan R. Parekh, the main promoter of the company and hiscontinuous efforts has solely resulted in the growth of the company. He hasbeen instrumental in getting recognition, standard and status that the companyowns today in capital market. While Mr. Bakul R. Parekh is also one of thepromoters and first Directors of the company and has got the ample ofexperience of more than two decade in the secondary market in Mumbai Stockexchange. Board has decided to entrust him the overall administration ofsecondary market operation because of his vast experience in the capital marketand the expertise he has in the secondary market.

In view of the increasing business operations and future expansion programmeof the company, Board of Directors on recommendation of RemunerationCommittee, have proposed to re- appoint Mr. Milan R. Parekh as ManagingDirector and Mr. Bakul R. Parekh as Joint Managing Director, subject to approvalof members and other authorities as may be required, 3 years with effect from1st October, 2012 on the such remuneration, perquisites and benefits asembodied in the special resolution of their respective appointment.

The above may be treated as an abstract under Section 302 of the CompaniesAct, 1956.

Except Mr. Milan R. Parekh and Mr. Bakul R. Parekh, no other Directors of thecompany are deemed to be concerned or interested in the special resolutionsat item No. 6 and 7 of the accompanying notice.

Statement required to be given along with the notice of General Meetingpursuant to clause (B) of Section II of Part II of the Schedule XIII to theCompanies Act, 1956 is given hereunder:

11


Sr. Particulars ResponsesNo.I General Information:-1 Nature of Industries Broking2 Date of commencements of commercial 01st October 1992

production3 Incase of new companies, excepted date N.A

of commencement of activities as perproject approval by financial intuitionsappearing in the prospectus

4 Financial performance based on given 31/3/2012 31/3/2011 31/3/2010indications Turnover 50,834,893 32,063,981 34,828,410

Net Profit/ (350,882) 452,095 1,151,666(Loss)

5 Export performance and net foreign N.Aexchange collaborations

6 Foreign Investments or collaborations, if any N.AII Information about the Appointee1 Background details Annexure 1 & 22 Past remuneration Mr. Milan R. Parekh, Rs.1,75,000 per

month inclusive of all the perks andbenefits. AndMr. Bakul R Pareskh, Rs. 1,70,000/- permonth inclusive of all the perks andbenefits.

3 Recognition or awards Mr. Milan R. Parekh: Hind Ratan awardMr. Bakul R. Parekh: ---

4 Job profile and his suitability Mr. Milan R. Parekh is a Chairman andManaging Director and CEO of theCompany, He will be in charge of over alloperations under the direct supervision ofthe Board of Directors of the Company.He is directly reporting to the Board of theCompany.Mr. Bakul Parekh is Jt. Managing Directorand CFO and Compliance officer of theCompany. He is in charge of over allfinancial matters of the Company. He isalso responsible for over all legalcompliance. He is reporting to theChairman & Managing Director of theCompany.

5 Remuneration proposed As stated in the resolution.6 Comparative remuneration profile with CEO and CFO of other companies of

respect to industry, size of the Company, same size of Rs. 30 Lac per annuam.profile of the position and person.

7 Pecuniary relationship directly or indirectly Mr. Milan R. Parekh and Mr. Bakul R. Parekhwith the Company or relationship with the are the promoter Directors of themanagerial personnel, if any. Company and related to each other.


12

Annexure I

Profile of Directors

Name Milan R. Parekh

Age 53

Qualification B.Com.

Experience of Capital Market 33 Years

Directorship in other Company 1. Action Securities Limited

2. Action Commodities Limited

Shareholding in AFSL

No. of Equity shares 26.64%, 2679056 of Rs.10/- each

No. of Preference shares 78.29%, 64827 of Rs.100/- each

Name Bakul R. Parekh

Age 49

Qualification B,Com.

Experience of Capital Market 31 Years

Directorship in other Company 1. Action Securities Limited

2. Action Commodities Limited

Shareholding in AFSL

No. of Equity shares 20.27%, 2038889 of Rs.10/- each

No. of Preference shares 17.14%, 14193 of Rs.100/- each

II other information

Sr. Particulars Responses No.

1 Reasons of loss or inadequate Due to shortage of working capital &profits competition Brokerage rates has

come down which has resulted inlower profits. Even institution hasreduced the brokerage from 15bpto 10bp

2 Steps taken or proposed to be Planning to increase number oftaken for imperilments branches & institutional clients.

3 Expected increase in profits in Expect to increase substantiallymeasurable items subject to increase in institutional

clientele & branches

13


Item No. 8, 9 & 10

The present Authorized Share Capital of the Company is Rs. 13,00,00,000/- ,so as to raise the paid capital by further issue of equity shares for preferentialbasis. It is proposed to increase the company’s Authorized share capital fromRs. 13,00,00,000/- to Rs. 15,00,00,000/-.

Accordingly, pursuant to sections 94 and 16 of the Companies Act, 1956 - theincrease in the Authorized Share Capital and alteration in the Memorandum ofAssociation of the Company is required to be done by Ordinary Resolutionsand pursuant to Section 31 alteration in Articles No. 3 of Articles of Associationof the Company is required to be done by Special Resolution.

The Board of Directors of the Company recommends passing of the aforesaidResolutions.

None of the Directors of the Company is concerned or interested in the saidResolutions.

Item No.11

As stated in the resolution, to induct long term funds, it is proposed to raisefunds through further issue of equity shares and warrants entitling one shareagainst one warrant for cash at a price not less than price to be calculatedwith reference to Regulation 76 of SEBI (ICDR), 2009 on preferential basisto selected person on preferential basis.

The Relevant date 29th August, 2012 being 30 days prior to date of passingresolution,

The disclosures in terms of Regulation 73 of the Securities and ExchangeBoard of India (Issue of Capital and Disclosure Requirements)Regulations, 2009 are given as under:

1. The objects of the issue through preferential offer

To strengthen depository and Broking operations of the company withparticular emphasis on geographical spread on Pan India basis. Theproposed preferential allotment will strengthen the financial position ofthe company and clear the some debt of the company.

2. Intention of Promoters/Non Promoters/Directors/Key ManagementPersons to subscribe to the offer

It is not proposed to offer these shares to the existing promoters/ Directors/Key Management Persons, however, Ms. Esha Kedia and Mr. Aman Kediawho is joining as promoters are being offered and allotted the shares /and to the Non Promoters

fr)

Action Financial Serviceq (lndia) Limited

3. Shareholding Paftern ofthe Company before and afterthe offer

The shareholding pattern pre and post allotment of share/warrants(assuming conversion of all warrants into equity shares) based onpresent capital structure is as under

Capital Struclure

Th6,existing promolers will continue to be in control of the Company andthdie will not be any change in the management control of the company as aresult of the proposed preferential allotment.

4. Proposed time within which the allotment shall be completed

The proposed issue and allotrnent of the Equity Shares sra :ecompleted within a period of 15 days from the date of approE :' :'€issue by the shareholders of the company or where any othe: a:.-. r?is required from Bombay Stock Exchange, regulatory authc:r",es o':l'eCentral Govemment, '15 days from the date of the receipt of sr:aapproval, whichever is later.

5. The identity of the proposed allotees and the percentage c' irc a-,apost preferential issue Capital that may be held by ther.n is as a:"1,€(Based on the present capital structure)

It is proposed to issue and allot fully paid Sharesi/y'anant tc:

Sr.N( )ategory Pre issue No. of Shares Proposed lssue Post lssue No. Ol

Shares )

No. of share o/o No. of Shares o/o No. of Shares o/o

1)romoters 4761545 47.34 NIL 0 4761545 34.9i

2 )rornoters(new) 88S078 8.84 1 320000 13.12 2209078 16 2:

3: ilon-Promoters 62500 o.62 2234800 22.22 22973m 16 8t

4 ?.ublic 4345077 43.20 NIL 0 4345077 31.9i-otal

1 0058200 100 3554800 35.34 '13613000 100

14


lr hla )ategory Pre lssue No. of

Shares

Proposed lssue

Shares/Wanants

Post lssue No. Of

Shares )

No. of share % No. of Shares % No. of Shares o/o

1

2

)romoters:

I lllilan Ramniklal Parekh 2579056 26.61 0 0 2679056 19.68

Bekul Ramniklel Parekh 2038889 20.27 0 0 2038889 14.98

) Nayna M. Parekh 43600 0.43 0 0 43600 0.32

Tomoters(new)

:sha Kedia 54224 0.54 820000 8.15 874224 6.42

\man Kedia 0 0.00 500000 4.97 500000 3.67

edia Consultants Piyale Lld 499667 4.97 0 0 499667 3.67

tai Kumar Kedia 1 90696 1.89 0 0 1 90696 1.40

Esha Securities Ltd 91316 0.91 0 0 91316 0.67

iai Kumar Kedia (HtiF 53175 0.53 0 0 53175 0.39

3 lon-Promoters (public):

PIim Caphl Mailet Limited 0 0 740000 7.36 740000 5.44

laxmiramuna lnvestmenl

Private Limiied

0 0 740000 7.36 740000 5.44

) Suresh B Jajodia l 0 377400 3.75 377400 2.77.) Pinky S Jajodia 52500 0.62 377400 3.75 439900 3.23

4 )ublic 4345077 43.2C 0 0 4345077 31.92

l-otal 1 0058200 100 3554800 35.34 1 361 3000 100

While Mr. Aman Kedia is not holding any equity shares in the Company.

6. Payment Terms:

Full amount aggregating shall be paid before the allotment of sharesand 25Yo of the price on warrants before allotment.

7. Lock ln Period:

The equity shares shall be subject to a lock in period of not less than oneyear, from the date of allotment of shares to Non promoters and not lessthan Three years, from the date of allotment of shares to promoters asprescribed Regulation 78 assued by the SEB| (|CDR) 2009.

15


The certificate of the Statutory Auditors to the effect that the issue of Equity Shares on preferential basis in accordance with SEBI Regulations shall be available for inspection at the Registered office on all working days between 2.00 p.m. and 5.00 p.m. Annual general Meeting.

The Board of Directors of the company recommends the passing of the Special Resolution.

None of the director are concerned or interested in this resolution.

For and on Behalf of the BoardRegistered Office:31, Rajgir Chambers,12/14, Sahid Bhagatsingh Road, Sd/-Mumbai - 400 001.

MILAN R. PAREKHDate: 28th August, 2012 Chairman & Managing Director

16


DIRECTORS’ REPORT

To,

The Members,

Action Financial Services (India) Limited,

Dear Sir/Madam

The Directors have pleasure in presenting the 19th Annual Report together with the Audited Accounts for the year ended on 31st March, 2012.

FINANCIAL RESULTS :

Consolidated ConsolidatedYear Ended Year Ended31.3.2012 31.3.2011

Revenue from operations & other Income 50,696,304 32,434,888

Profit (Loss) before Interest & Depreciation 8,543,629 10,111,584

Less: Interest 6,597,376 6,827,008

Less: Depreciation 1,708,152 2,780,642

Profit After Depreciation & before Tax 238,101 503,934

- Taxation Current Year 100000 107,052

- Deferred Tax (written back) 556,178 476,381

Profit /(Loss) after tax (418,077) (79,499)

Profit/(Loss) brought forward from Previous Year (7282210) (7,734,305)

Profit available for appropriations (7633092) (7,282,210)

Profit/(Loss) carried forward to the Balance Sheet (7633092) (7,282,210)

FINANCIAL PERFORMANCE :

During the current year, the gross income of the Company was Rs.5,06,96,304/-

and the Company incurred net Loss (after tax) of Rs.4,18,077/-

17


CONSOLIDATED RESULTS:

The audited Standalone and consolidated Financial Statements of the Company along with its subsidiary companies are attached herewith and form part of this annual report. These have been prepared in accordance with the provisions of the Companies Act, 1956, the Listing Agreement, the Accounting Standard 21 (AS-21) on Consolidated Financial Statements and Accounting Standard 23 - (AS-23) on Accounting for Investments in Associates in Consolidated Financial Statements based on Audited Financial Results for the ended 31st March, 2012.

SUBSIDIARIES:

As on 31st March, 2012 your company has two wholly owned subsidiary companies namely Action Securities Limited and Action Commodities Limited. In terms of section 212 of the Companies Act, 1956, the company has attached the Director's Report, Balance sheet and Profit and Loss account of its subsidiaries to the Annual Report.

DIVIDEND

In view of the losses suffered by the Company, the Board of Directors do not recommend any dividend on Cumulative Redeemable Preference Shares and Equity Shares for the year ended 31st March, 2012.

OPERATIONS:

OVERVIEW:

During the year the company carried out capital market operations at moderate level. The corporate earning looks like nominal for the current year. At our end, we are building-up all our businesses steadily, in such a way that we are ready to en-cash on any up-turn in the market.

REVIEW of BUSINESS DIVISIONS:

Broking Division:

Our Services under the Broking Business comprising of Equity, Currency & Derivatives Services, we offer retail and Institutional broking services in Equity to a large institutional and retail clientele in India and also offer retail broking services in currency segment. During the year under review the total turnover was decreased to Rs 5529.98 crores as compared to Rs 7469.53 crores in the previous financial year.

Action offers personalized services and complete transaction support through our website to our client for investment in primary market through Mutual fund and IPO's.

The Company has expanded its retail network, branches continued to be opened on a selective basis and physical presence was enhanced through

18


increase in the Sub broker network and also search of new retail clientele in remote and rural area to explore the wide business available opportunities this has resulted into increase in clientele base of the company.

Action offers platform for trading in Equity Market in BSE, NSE for cash, Derivatives & currency segment of the Exchange.

Depository Division:

Company has completed 15 years as a Depository Participant. Company is holding approximately Rs1371.60 Crores worth stock on behalf of clients as on 31st March 2012.

Company is registered with NSDL for Internet based IDeAS facility for the convenience of the Investor to enable them to view latest holding with valuation as well as transactions. Company also has its own website through which client can view their 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 44 Promoters Accounts.

FUTURE OUTLOOK & EXPANSION PLAN

Your company is in the process of launching a unique proposition in broking industry. In this plan, investors who subscribe to a range of plans will tend to have great savings in the cost of trading.

In the view of the management the proposition is so strong and path breaking that it has the potential to re-define broking industry. The project will be launched on all India level.

Your management has already initiated working on the project and the same is at an advanced stage of execution. A core team is already set up and is working on the project. For the first stage a list of several key cities has been prepared and the process of setting up branches in these cities has already started.

Your management has already chalked out a series of innovations post the launch of this project to tackle the competition emerging from other players to stay ahead.

The project will enhance profitability of the company and is expected to create huge value for the shareholders.

19


SHARE CAPITAL

During the financial year the Paid up Equity Share Capital of the Company

increased from Rs. 9,98,10,000/- to Rs. 10,058,200/-, allotted 77,200 Equity

shares to its promoters against 77,200 warrants at a price of Rs 29/- per warrant.

FINANCE

The Company has availed credit facilities from Bank of India and ICICI Bank Limited. The performance of the last two years has led to significance liquidity pressure in the long term sources.

DEPOSITS:

During the year under review, your Company has not accepted any deposits within the meaning of Section 58A and Section 58AA of the Companies Act, 1956 and rules made there under.

DIRECTORS' RESPONSIBILITY STATEMENT:

Your Directors confirm:

i) That in the preparation of the annual accounts, the applicable accounting standards had been followed and that no material departures have been made from the same.

ii) That they 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 financial year ended 31st March, 2012 and of the profit or loss of the company for that period.

iii) That they 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 presenting and detecting fraud and other irregularities.

iv) That they had prepared the annual accounts on a going concern basis.

DIRECTORS

In accordance with the requirements of the Companies Act 1956, Mr. Atul A. Zatakia and Mr. Ketan H. Mehta will retire by rotation and, being eligible, have offered themselves for re-appointment.

Mr. Nirav K . Sanghavi has resigned as the Director of the Company and Mr. Harbhajan Singh Dhillon, is proposed to be appointed as Directors at the ensuing Annual General Meeting who was appointed as the Additional Director on 01.08.2012.

20


AUDITORS:

The present Auditors of the Company M/s. Ford, Rhodes, Parks & Co.,

Chartered Accountants, Mumbai, will retire at the conclusion of ensuing Annual

General Meeting and being eligible; offer, themselves for re-appointment to hold

the office till the conclusion of next Annual General Meeting.

They have submitted certificate for their eligibility for reappointment under section 224(1B) of the Companies Act, 1956.

The Auditors have confirmed that they have subjected themselves to the peer review process of the institute of Chartered Accountants of India (ICAI) and holds a valid certificate issued by the Peer Review Board of the ICAI."

AUDIT COMMITTEE:

The Board of Directors constituted an Audit Committee as per the existing clause 49 of the Listing Agreements entered into with Stock Exchanges and in terms of Section 292(A) of the Companies Act, 1956.

CORPORATE GOVERNANCE:

A Separate section on Corporate Governance, Management discussion and Analysis and a Certificate from Company's Auditors regarding compliance of the conditions of the corporate governance as stipulated under clause 49 of the Listing Agreements with the Stock Exchanges forms part of this Annual Report.

Certificate of CEO and CFO, inter alia, confirming the correctness of the financial

statements, adequacy of the internal measures and reporting of matters to the

audit committee in terms of the clause 49 of the listing agreements with Stock

Exchanges, is also attached as a part of this Annual Report.

PARTICULARS OF EMPLOYEES

None of the employees of the Company was paid remuneration of Rs. 60,00,000/- p.a. or more for the year or Rs. 5,00,000/- p.m. or more and hence the information required under section 217 (2-A) of the Companies (Particulars of Employees) Rules, 1975 is not required to be given.

PARTICULARS OF CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

(A) Conservation of Energy

Considering the nature of business activities carried out by the Company, your directors have nothing to report with regard to conservation of energy as required under Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988.

21


(B) Technology absorption, research and development

The management keeps itself abreast of the technological advancements in the industry and has adopted the state of the art transaction, billing and accounting systems and also risk management solutions.

(C) Foreign Exchange Earnings and Outgo

a) The foreign exchange earnings of the Company was Nil (previous year Nil)

b) The foreign exchange expenditure was Nil (previous year Nil)

DEPOSITORY SYSTEM :

As the Members are aware, your Company's share are tradable compulsorily in electronic form and your Company has established connectivity with the depositories, i.e. National Securities Depository Limited and Central Depository Services (India) Limited. In view of the numerous advantages offered by the Depository system, members are requested to avail the facility of dematerialisation of the Company's shares on either of the Depositories as aforesaid.

ACKNOWLEDGEMENT :

Your Directors would take this opportunity to express its deep appreciation for the co-operation and assistance received from the shareholders, Company's clients, suppliers, bankers and other authorities during the year under review. Your Directors also wish to place on record their appreciation for the services rendered by all the employees of your Company.


Sd/-

(Milan R. Parekh)

Chairman & Managing Director

Place: Mumbai

Date: 01/08/2012

22


MANAGEMENT DISCUSSION AND ANALYSIS:

Market Scenario:

Global equity markets had a better year, but India turned out to be the negative market in dollar terms. Indian Stock Markets had a sluggish year in F.Y. 2011-12, due to rupee depreciation, high inflation and high interest rates. FII and retail participation have been weak due to paralysed government policy.

During the current year, India Monsoon was slightly below average as compared to previous years. Elevated levels of inflation led to aggressive monetary tightening by RBI and this had an adverse impact on investment and growth. Further RBI has taken many steps to improve the liquidity but it was ruined by growing inflation and government taxation policies. Your director expects GDP will be remains around 6% during the current F.Y. 2012-13 against expected of 8 to 9% which is showing that overall economy is slowing down.

In FY13, the capital markets will continue to face challenges of global uncertainties and its impact on global risk appetite, local growth rates, fiscal and current account deficits.

We are hopeful that GST and direct tax code will be implementing in nextfinancial year which may bring some stability in market.

Opportunities and Threat:

Being a broking company, its opportunities and threat would be more specific to the ones, which apply to the companies operating in the capital market as brokers. But as it is known a healthy competition is always good for the industry we expect various new sources of revenues in coming future from financial and capital markets.

Segment wise Performance:

Your company is mainly engaged in Capital Market Related Activities i.e. Broking & Depository Participant, which are under one broad segment of capital market, so segment reporting is not applicable to it.

Outlook:

Review of the Operation of the Company has been given in detail in Directors' Report.

RISK AND CONCERNS:

Your company ensures adherence to best practice and has necessary internal system and control in place to manage the risk.

23


Further the strict regulations and guidelines imposed by the regulatory authorities like SEBI, Stock exchange and NSDL with reference to capital market operation and Depository functions are sufficient in controlling the market related financial and technical risks. All these guidelines of the regulatory authorities whether it for margin money in capital market transaction or otherwise are being strictly adhered to by your company.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:

Your company has appropriate and adequate internal control systems. The existing systems and procedures help in identifying the potential issues and problems, if any. Company had appointed skilled employees to monitor the regulatory compliance work, to avoid any shortfall in compliance related issues.

FINANCIAL PERFORMANCE:

Financial performance with the financial data and figures, have been given in detail in Directors' Report.

HUMAN RESOURCES:

ACTION has a set of experienced and qualified staff to look offers its operations, it offers a challenging work and growth-oriented culture to its employees with a people oriented philosophy to deploy right person at right place. ACTION allows its employees to learn all kind of work to educate them properly about the industry. Action lays tremendous emphasis on building and strengthening its human resources capital and accordingly existing employees undergo specific training and exams conducted by stock exchanges on their own assessment and the feedback received in their appraisal. The objective of learning and training process is to enable the employees to reach higher levels of performance and responsibility. Company encourages employees to clear NCFM exams for Capital market, Derivatives and Depository module.

CAUTIONARY STATEMENT:

Certain statements in the Management Discussion and Analysis describing the company's objectives, predictions may be "forward-looking statements" within the meaning of applicable laws and regulations. Actual results may vary significantly from the forward-looking statements contained in this document due to various risks and uncertainties. These risks and uncertainties include the effect of economic and political conditions in India, volatility in interest rates, new regulations and government policies that may impact the company's business as well as its ability to implement the strategy. The company does not undertake to update these statements.

24


Report on Corporate Governance

(Pursuant to clause 49 of the Listing Agreement)

1. Company's philosophy on code of Governance

The Company remains committed to the core aspect of Corporate Governance, viz. fairness, transparency, accountability and responsibility.

2. Board of Directors

• Composition of the Board:

The Board of Directors consists of 5 Directors out of which Two (2) are Executive Directors, three (3) are Non Executive Directors & Independent Directors. The Chairman of the Company is Executive Promoter Director.

All the Directors have made the requisite disclosures regarding Committee positions held by them in other companies. The details as on till date, of the composition of the Board and changes therein since the last Annual report, category of the Directors and their attendance at the Board Meetings and the last Annual General Meeting, number of their Directorships in other companies incorporated in India (excluding alternate directorships & directorship in Pvt. Ltd. Companies) are given below:

Name of Director Category of No. of Board Attendance Directorship in No. of specified No. ofDirectorship # Mtgs. at the last other Committees Equity

Attended AGM Companies (Other than AFSL) SharesIncorporated in in which Chairman / heldIndia excluding Member

(alternate $

directorships &directorship in Pvt.Ltd. Companies)

Chairman Member

Mr. Milan R. Parekh Chairman-M.D. 16 Yes 2 Nil Nil 2679056

Mr. Bakul R. Parekh Jt. M.D. 16 Yes 2 Nil Nil 2038889

Mr. Nirav K. Sanghavi @ I & N.E.D 15 Yes ---- Nil Nil NIL

Mr. Atul Zatakia I & N.E.D 16 Yes --- Nil Nil 12045

Mr. Ketan Mehta I & N.E.D 10 Yes --- Nil Nil 9232

Mr. Harbhajan Singh Dhillon @@ I & N.E.D 0 No --- Nil Nil NIL

# I - Independent Director, N.E.D. - Non-Executive Director, M.D. - ManagingDirector

@resigned as a director as on 01.08.2012

@@appointed as a additional director as on 01.08.2012

25


• Number of Board Meetings held during the year along with the dates:

During the year 2011-2012, Sixteen (16) Board Meetings were held as follows:-

April 2011 to June 2011 July 2011 to Oct. 2011 to Jan. 2012 toSept. 2011 Dec. 2011 March 2012

28.04.2011 15.07.2011 19.10.2011 30.01.2012

17.05.2011 28.07.2011 21.10.2011 07.02.2012

08.06.2011 26.08.2011 18..11.2011 ----

28.06.2011 23.09.2011 20.12.2011 -----

---- 30.09.2011 26.12.2011 -----

• Information placed before the Board of Directors

To enable the Board to discharge its responsibilities effectively and take informed decisions, necessary information is made available to the Board as per the Agenda Papers in advance of the Board Meetings.

In addition to matters statutorily required to be placed before the Board of Directors for its approval, all major decisions regarding resource mobilisation, capital expenditure, etc., are considered by the Board. Following informations are regularly put up before the Board for its consideration and approval:

• Strategic plan and direction of the Company;

• Annual Business Plan, Sales Budget;

• Quarterly financial Results of the Company;

• Minutes of the meetings of Audit Committee, Shareholders and Investors Grievance Committee of the Board;

• Matters related to significant environmental issues, accidents, if any, etc.;

• Material information from Government bodies, which may have implications on the business of the Company, if any;

• Information on material transactions, which are not in the ordinary course of business;

• Disclosure of material transactions with potential conflict of interest, if any; and

• Compliance with various listing and statutory requirements.

Code of Conduct:

The Company has laid down the code of conduct for all Board members and senior Management personnel of the Company. Requisite annual affirmations of compliance with the respective codes have been made by the Directors and Senior Management personnel of the Company. The copy of code of conduct is available on the web site of the Company. The Declaration signed by the Managing Director and CEO is given below.

3. Audit Committee

The Board of Directors constituted an Audit Committee as per the existing clause 49 of the Listing Agreements entered into with the Stock Exchanges.

26


Nine (9) meetings of the Audit Committee were held during the year. The Present composition of the Audit Committee and their attendance at meetings are as follows:

Name Designation Category Number of Meeting attended

Mr. Atul Zatakia Chairman I & N.E.D. 9

Mr. Nirav K. Sanghavi@ Member I & N.E.D. 9

Mr. Ketan Mehta Member I & N.E.D. 9


The Managing Director & CEO and Head of Accounts CFO are permanent invitees to the Audit Committee Meetings. The Statutory Auditor is also invited to attend the Audit Committee Meetings, as and when required.

The Minutes of the Audit Committee Meetings were noted by the Board of Directors at the Board Meetings.

The Chairman of the Audit Committee was present at the 18th Annual General Meeting held on 29th September, 2011.

The powers and role of the Audit Committee are as per Guidelines set out in Clause 49 of the Listing Agreement with the Stock Exchanges and the Section 292A of the Companies Act, 1956. The salient features of powers and role of the Audit Committee are:

Terms of Reference:

The Terms of reference of the Audit committee, broadly are as under:

1. Overseeing the Company's financial reporting process and the disclosure of its financial information to ensue that the financial statement is correct, sufficient and credible.

2. Recommending the Board, the appointment, reappointment of the statutory auditor, fixation of audit fees and for other services.

3. Reviewing with the Management, the quarterly and annual financial statements before submission to the Board for approval.

4. Discussions with statutory auditors before the audit commence nature and scope of audit as well as have post audit discussion to ascertain any area of concern.

5. Reviews with the management, statutory auditors and internal audit system, the adequacy and the compliances of internal control systems.

6. In addition to above, all items listed in clause 49, matters requiring under Section 292A and other clauses of the Listing Agreements.

4. Shareholders / Investors' Grievance Committee:

The Board of Directors, constituted a Shareholders/Investors' Grievance Committee, to attend to and redress the Shareholders and Investors' grievances. The present composition of the Shareholders/Investors' Grievance

27


Committee is as follows and Two (2) meetings of the Shareholders/Investors' Grievance Committee were held during the year. There were Nine (9) physical transfers during the year. The attendance of each Member of the Committee is given below:

Name Designation Category Number of Meeting attended

Mr. Nirav K. Sanghavi@ Chairman N.E.D. 2

Mr. Atul Zatakia Member I & N.E.D. 2

Mr. Ketan Mehta Member I & N.E.D. 2


Role of Shareholders/Investors' Grievance Committee:

a) Review the existing "Investor Redressal System" and suggest measures for improvement.

b) The Investors' Grievance Committee meets once in every quarter to review and to take note of the Compliance Report submitted to the Stock Exchanges and Grievances of the shareholders.

c) To look into redressing of Shareholders and Investors Complaints regarding transfer of shares, non receipt of annual Reports etc.

During the year 2011-2012, Twenty One (21) complaints were received by the Company and no complaints are pending to be resolved at the end of the financial year.

5. Remuneration Committee:

The Board of Directors, constituted a Remuneration committee. The Committee is empowered to approve the remuneration of the Directors of the Company and their relatives and their relatives and to ensure compliance of the Companies Act, 1956, Listing Agreements, etc. The present composition of Remuneration Committee is given below.

Name Designation Category

Mr. Ketan Mehta Chairman I & N.E.D.

Mr. Atul Zatakia Member I & N.E.D.

Mr. Nirav K. Sanghavi @ Member I & N.E.D.


There was no remuneration Committee meeting held during the year 2011-2012.

5A. Remuneration Policy:

Remuneration of employees largely consists of salary and perquisites. The objectives of remuneration policy are to motivate employees to excel in their performance, recognize their contribution, retain talent and reward merit.

28


Details of Remuneration paid to the Directors during the financial year

Name Position Sitting Salary & Commission Totalfees Perquisites

Mr. Milan R. Parekh Managing Director Nil 2459360 Nil 2459360

Mr. Bakul R. Parekh Jt. Managing Director Nil 2389360 Nil 2389360

6. Subsidiaries:

Though providing Stock Broking and Depository Services to be the prime business activity of the Company, the Company promoted two Unlisted subsidiary companies viz. Action Securities Limited (ASL) and Action Commodities Limited (ACL).

The Company monitors the performance of its subsidiaries, interalia, by the following means:

• The financial statements, investments, are reviewed by the Audit Committee and the Board.

• The minutes of Board Meetings of the subsidiary are noted at the Board Meeting of the Company.

7. Annual General Meetings:

The details of Annual General Meetings are below:

Financial year Date and Time Location

2008-2009 30th September, 2009 at 31, Rajgir Chambers, 4th Floor, 12/14,10.00 a.m. Sahid Bhagatsingh Road, Mumbai - 400 001

2009-2010 30th September, 2010 at 31, Rajgir Chambers, 4th Floor, 12/14,10.00 a.m. Sahid Bhagatsingh Road, Mumbai - 400 001

2010-2011 29th September,2011 at 31, Rajgir Chambers, 4th Floor, 12/14,10.00 a.m. Sahid Bhagatsingh Road, Mumbai - 400 001

The Shareholders passed all the resolutions including the Special Resolutions set out in the respective Notices. No item requiring for postal ballot under the statute was applicable at the aforesaid meetings. At the forthcoming AGM, there is no item on the agenda that needs approval by postal ballot.

8. Disclosure:

There were no transactions of material nature between the Company and its Directors or Senior Management and their relatives or Promoters that may have potential conflict with the interest of the Company. The Register of Contracts containing transactions, in which Directors are interested, have been placed before the Board regularly.

Transactions with the related parties are disclosed elsewhere in this Annual Report.

During the last three years there has been no instance of non-compliance by the Company on any matter related to capital market. Hence there were no

29


strictures or penalties imposed either by SEBI or by the Stock Exchanges or any statutory authority for non-compliance of any matter related to the capital market.

9. Implementation of Code of Conduct for Insider Trading:

Action Financial Services (India) Limited has adopted Code of Conduct for Insider Trading and is based on the SEBI framework. Action Financial Services (India) Limited follows strict guidelines in respect of insiders' stock trading and related disclosures. Periodic disclosures have been obtained from all the Directors and 'designated employees'. Under the aforesaid code all Directors and Designated Employees are required to conduct all their dealing in securities of the Company only in valid trading window after obtaining pre clearance form the Company as per the pre dealing procedure described in the Code.

10. Secretarial Audit for Reconciliation of Capital :

As stipulated by SEBI, a Company Secretary in practice carries out Secretarial Audit to reconcile the total admitted capital with National Securities Depository Limited and Central Depository Services (India) Limited and the total issued and listed capital. This audit is carried out every quarter and the report thereon are submitted to the Stock Exchanges as well as placed before the Board of Directors. The audit confirms that the total Listed and paid up capital is in agreement with the aggregate of the total number of Shares in dematerialised form (held by NSDL and CDSL) and total number of Shares in physical form.

Means of Communication with Shareholders:

Quarterly Results The quarterly and annual results ofthe Company are published in English andvernacular newspaper in accordance with therequirements of the Listing Agreement of thestock Exchanges.

News papers in which 1. Free Press (English)results are normally 2. Navshakti (Marathi)published

Web site www.actionfin.com

e -mail: [email protected]

Administrative Office :- 31, 4th Floor, Rajgir Chambers12/14, Shahid Bhagat Sigh RoadFort, Mumbai - 400 001

Tel:- (022) 40624444

Fax :- (022) 40624447

Whether Management YesDiscussions and Analysisreport is a part ofAnnual report

30


GENERAL SHAREHOLDERS' INFORMATION

Registered Office : 31, Rajgir Chambers,12/14, Sahid Bhagatsingh Road,Mumbai - 400 001.

Share Transfers in physical : Link Intime India Private Limitedform and other communicationin that regard including share Registrar & Share Transfer Agentcertificates, dividends and C-13, Pannalal Silk Mills Compoundchange of address etc. L. B. S. Marg, Bhandup (W)may be addressed to Mumbai-400078.

Tel. No.: 022 - 25963838Fax No.: 022 - 25946969

Annual General Meeting of : Date : 29th September 2012the Company to be held on Time : 10.00 a.m.

Venue : Registered Office at31, Rajgir Chambers,12/14, Sahid Bhagatsingh Road,Mumbai - 400 001.

Financial Calendar (tentative) : First quarter - 2nd week of August, 2012

Second quarter - 2nd week of November, 2012

Third quarter - 2nd week of February, 2013

Fourth Quarter - 2nd week of May, 2013

Book Closure dates : 26th September 2012 to 29th September 2012

(both days inclusive)

Listing on Stock Exchanges : Bombay Stock Exchange Limited

Listing Fees : Listing fees for all the aforesaid StockExchanges for the financial years2012-2013 have been paid.

Bombay Stock Exchanges : ACTIONFILimited (BSE Scrip ID)

Bombay Stock Exchanges : 511706Limited (BSE scrip Code)

ISIN NO. : INE-357A01032

31


MONTHWISE STOCK MARKET DATA (BSE) RELATING TO EQUITY

SHARES OF THE COMPANY FOR THE PERIOD 1.4.2011 TO 31-3-2012

Month High Low AverageBSE BSE BSE

Apr 11 44.05 37.15 40.600

May 11 47.40 35.35 41.450

Jun 11 44.90 30.95 37.925

Jul 11 46.30 37.00 41.650

Aug 11 43.75 37.90 40.825

Sep 11 36.60 24.00 30.300

Oct 11 25.25 18.95 22.100

Nov 11 28.85 22.35 25.600

Dec 11 25.75 19.25 22.500

Jan 12 35.15 23.30 29.225

Feb 12 47.00 33.20 40.100

Mar 12 38.05 25.75 31.900

Average price per shares upto March, 2012 33.681

Bombay Stock Exchange (BSE)

DISTRIBUTION OF SHAREHOLDING AS ON MARCH 31, 2012

No. of Shares held No. of % of Total No. of % ofShareholders Shareholders Shares Total Shares

1 5000 1620 79.2564 229275 2.2795

5001 10000 138 6.7515 120479 1.1978

10001 20000 69 3.3757 108761 1.0813

20001 30000 56 2.7397 147510 1.4666

30001 40000 12 0.5871 44147 0.4389

40001 50000 21 1.0274 102696 1.0210

50001 100000 38 1.8591 325845 3.2396

100001 and above 90 4.4031 8979487 89.2753

TOTAL 2044 100.00 10058200 100.00

Physical mode 889 43.49 315495 3.14

Electronic mode 1155 56.51 9742705 96.86

TOTAL 2044 100.00 10058200 100.00

32

19th Annual 2011-2012CATEGORIES OF SHAREHOLDERS AS ON MARCH 31,2012

Sr.No.

Category No. ofFolios

Total

Sharesheld

% to theShare

Capital

r,r...it:i .-!iinxi\. a,.','.

1 Other Bodies Coroorate 58 795751 7.912. Clearing Member 16 95053 0.953. Foreiqn Comoanv 0 0 04. Foreign lnstitutional lnvestors *

0 0 0

5. Trust 0 0 0

o. GIC & its subsidiaries 0 0 07. Mutual Fundy UTI 2 25m 0.028. Financial lnstitutions / Nationalised Banks 0 0 0

9. Non Nationalised Banks 0 0 0'10. Non Residents lndians (RFPAT) 5b 126287 1.26

11 Non Resident lndians(Non REPAT) 4 1176 0.01

12, Overseas CorDorate Bodies 0 0 013. Public 1922 4275888 42.51

14. Promoters o 4781545 47.U

Total 20u 10058200 100.00

No. of SharesNIL

Dematerialization of shares As on March 31 , 2012 alotal ol g7 ,42,7Q5 equity sharesconstituting 96.860/o of the equity share capital of theCompany shnd denuterialized and balance 3,.1S,495

shares are in physical mode beino 3.14%.

Appeared in the Annual Report elsewher+

lnvestors' conespondence to beaddressed to

Jt. Managing Director is the Compliance Officer.Action Financial Services (lndia) LimiledRegistered Office:

31, Rajgir Chambers,12l14, Sahid Bhagatsingh Road,Mumbai - 400 001 .

Telephone: 022 - 4ffi24444Fax No.: 022 - 40624447E-mail: [email protected] Complaint Email lD:- [email protected]


34

DECLARATION

I Milan R. Parekh, Chairman & Managing Director & CEO of Action FinancialServices (India) Limited hereby declare that all the members of the Board ofDirectors and the Senior management personnel have affirmed complianceswith the Code of conduct for the year ended 31st March, 2012.

BY AND ON BEHALF OF THE BOARD

Sd/-

(Milan R. Parekh) Managing Director & CEOMumbaiDate: 01.08. 2012

35


CERTIFICATE

ToThe Board of Directors

We, Milan R. Parekh, Chairman & Managing Director and Bakul R. Parekh, Jt.Managing Director & Head-Finance & Accounts (CFO) of Action financialServices (India) Ltd. both certify that :

(a) I have reviewed financial statements and the cash flow statement for theyear ended 31.3.2012 and that to the best of their knowledge and belief:

(i) These statements do not contain any materially untrue statementor omit any material fact or contain statements that might bemisleading;

(ii) These statements together present a true and fair view of thecompany's affairs and are in compliance with existing accountingstandards, applicable laws and regulations.

(b) There are, to the best of their knowledge and belief, no transactionsentered into by the company during the year which are fraudulent, illegalor violative of the company's code of conduct.

(c) I accept responsibility for establishing and maintaining internal controlsfor financial reporting and that they have evaluated the effectiveness ofinternal control systems of the company pertaining to financial reportingand I have disclosed to the auditors and the Audit Committee, deficienciesin the design or operation of such internal controls, if any, of which Iaware and the steps I have taken or propose to take to rectify thesedeficiencies.

(d) I have indicated to the auditors and the Audit Committee:

(i) Significant changes in internal control over financial reporting duringthe year;

(ii) Significant changes in accounting policies during the year and thatthe same have been disclosed in the notes to the financialstatements; and

(iii) Instances of significant fraud of which I have become aware andthe involvement therein, if any, of the management or an employeehaving a significant role in the company's internal control systemover financial reporting.

Action Financial Services (India) Limited Action Financial Services (India) Limited

(Milan R. Parekh) (Bakul R. Parekh)Managing Director & CEO CFO

Place : MumbaiDate :- 1.8.2012


36

CERTIFICATE ON CORPORATE GOVERNANCE

To,The Members,Action Financial Services (India) Limited,

We have examined the compliance of conditions of Corporate Governance byAction Financial Services (India) Limited, for the year ended on 31st March,2012, as stipulated in Clause 49 of the Listing Agreement of the said Companywith Stock Exchanges.

The compliance of conditions of Corporate Governance is the responsibility ofthe Management. Our examination has been limited to a review of theprocedures and implementations thereof, adopted by the Company for ensuringcompliance with the conditions of the Corporate Governance as stipulated inthe said clause. It is neither an audit nor an expression of option on the financialstatements of the Company.

In our opinion and to the best of our information and according to theexplanations given to us, and based on the representations made by theDirectors and the Management, we certify that the Company has compliedwith the conditions of Corporate Governance as stipulated in clause 49 of theabove mentioned Listing Agreement.

As required by the Guidance Note issued by the Institute of CharteredAccountants of India, we state that based on the records maintained by theCompany and confirmation received from the Registrars of the Company, noinvestor grievances are pending for a period exceeding one month against thecompany as at March 31, 2012.

We further state that such compliance is neither an assurance as to the futureviability of the company nor the efficiency or effectiveness with the managementhas conducted the affairs of the Company.

For FORD, RHODES, PARKS & CO.Chartered Accountants

A.D.Shenoy(Partner)

Membership No.11549Place : MumbaiDate : 01.08.2012.

37


AUDITORS' REPORT TO THE MEMBERS OFACTION FINANCIAL SERVICES (INDIA) LIMITED

FOR THE YEAR ENDED 31ST MARCH, 2012

1. We have audited the attached Balance Sheet of Action Financial Services(India) Limited as at 31st March, 2012, the Statement of Profit and Lossand also the Cash Flow Statement of the Company for the year ended onthat date annexed thereto. These financial statements are the responsibilityof the Company's management. Our responsibility is to express an opinionon these financial statements based on our audit.

2. We conducted our audit in accordance with auditing standards generallyaccepted in India. Those standards require that we plan and perform theaudit to obtain reasonable assurance about whether the financialstatements are free of material misstatement. An audit includes examining,on a test basis, evidence supporting the amounts and disclosure in thefinancial statements. An audit also includes assessing the accountingprinciples used and significant estimates made by management, as wellas evaluating the overall financial statement presentation. We believe thatour audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditor's Report) Order, 2003 (as amended)issued by the Central Government of India in terms of sub-section (4A) ofSection 227 of the Companies Act, 1956, we enclose in the Annexure astatement on the matters specified in paragraphs 4 and 5 of the said Order.

4. Further to our comments in the Annexure referred to above in paragraph3, we report that:

a) We have obtained all the information and explanations, which to the bestof our knowledge and belief were necessary for the purpose of our audit.

b) In our opinion, proper books of accounts as required by law have beenkept by the Company so far as appears from our examinations of thosebooks.

c) The Balance Sheet, Statement of Profit and Loss and Cash Flow statementdealt with by this report are in agreement with the books of account.

d) In our opinion, the Balance Sheet, Statement of Profit and Loss and CashFlow statement dealt with by this report comply with the accountingstandards referred to in Section 211 (3C) of the Companies Act, 1956.

e) On the basis of written representations received from the directors, as on31st March, 2012 and taken on record by the Board of Directors, we reportthat none of the directors is disqualified as on 31st March, 2012 from beingappointed as a director in terms of Section 274 (1) (g) of the CompaniesAct, 1956.


38

5. In our opinion, and to the best of our information and according to theexplanations given to us, the accounts read with the notes thereon, givethe information required by the Companies Act, 1956, in the manner sorequired and give a true and fair view in conformity with the accountingprinciples generally accepted in India.

i) In the case of the Balance Sheet, of the state of the affairs of theCompany as at 31st March, 2012

ii) In the case of the Statement of Profit and Loss, of the loss for the yearended on that date; and

iii) In the case of the Cash Flow Statement, of the cash flows for the yearended on that date.

For Ford, Rhodes, Parks & Co.Chartered AccountantsFirm Registration No.102860W

A. D. ShenoyPartnerMembership No.11549

Place : MumbaiDate: 1st August 2012

39


Annexure referred to in paragraph (3) of our report of even datefor the year 31st March, 2012

Re: Action Financial Services (India) Limited

1. a) The Company has maintained proper records showing full particularsincluding quantitative details and situation of fixed assets.

b) All fixed assets have been physically verified by the management duringthe year. No material discrepancies were noticed on such verification.

c) During the year the Company has not disposed off any substantialpart of fixed assets so as to affect the going concern.

2. The Company does not have any stock of raw materials, store, spare partsand finished goods. However the Company has stock of shares on hand.The management has conducted physical verification of shares on handat reasonable intervals. The procedure of physical verification of stock onhand followed by the management is reasonable and adequate in relationto the size of the Company and the nature of its business. The Company ismaintaining proper records of stock on hand and no discrepancies werenoticed on physical verification.

3. As informed to us, the Company has neither granted nor taken any loans,secured or unsecured to/from companies, firms or other parties covered inthe register maintained under Section 301 of the Companies Act, 1956.Hence clause iii of the order is not applicable.

4. In our opinion and according to the information and explanations given tous, there are adequate internal control procedures commensurate withthe size of the Company and the nature of its business, for the purchase ofshares and fixed asset and for providing services. During the course ofour audit, no major weakness has been noticed in the internal control systemin respect of these areas.

5. Based on the audit procedures applied by us and according to theinformation and explanations provided by the management, we are of theopinion that the transactions that need to be entered into the registermaintained under Section 301 of the Companies Act, 1956 has been soentered.

6. The Company has not accepted any deposits from the public during theyear.

7. The Company has no internal auditor. However in our opinion, the Companyhas an adequate internal control system commensurate with the size andnature of its business.

8. The Central Government has not prescribed maintenance of cost recordsunder section 209 (1) (d) of the Companies Act, 1956.

9. a) According to the records and information and explanations obtainedfrom the management, the Company is generally regular in depositingundisputed statutory dues including Provident fund, Employee State


40

Insurance, Income Tax and other statutory dues applicable to it withappropriate authorities. However in some cases there has been delayin depositing the government dues. According to the information andexplanations given to us undisputed amounts payable in respect ofIncome Tax outstanding at the end of the year for a period of morethan six months from the date they became payable amounted to Rs.25.88 lakhs (previous year Rs. 21.66 lakhs).

(b) In our opinion and according to information and explanations obtained,there are no disputed dues outstanding in respect of Sales tax, Wealthtax, Income tax, Service tax and Cess that have not been depositedon account of dispute except the following:

(Rupees in Lacs)

Sr.No. Name of dues Forum where Dispute is pending Period to which Amount involved amount relates

1 Income Tax ITAT Mumbai A.Y. 2008-09 101Less: amount deposited (54)

47

2 Tax Deducted Commissioner of Income A.Y. 2010-11 1.30/-at Sources (Appeals), Mumbai

3 Tax Deducted Commissioner of Income A.Y. 2011-12 1.43/-at Sources (Appeals), Mumbai

10. The company is registered for over 5 years and has accumulated lossesat the end of the financial year of Rs.58.76. Lakhs (previous year Rs. 72.82Lakhs) which is less than 50% 0f its networth. It has not incurred any cashlosses in the current as well as in the immediately preceding financial year.

11. Based on our audit procedures and on the information and explanationsgiven by the management, we are of the opinion that Company has notdefaulted in repayment of dues to banks. The Company does not haveany borrowing by way of debentures.

12. Based on our examination of documents and records the Company hasnot granted loans and advances on the basis of security by way of pledgeof shares, debentures and other securities.

13. In our opinion and according to the information and explanations given tous, the nature of activities of the Company does not attract any specialstatutes applicable to chit fund and nidhi/mutual benefit fund/societies.

14. The Company has dealing/trading in shares during the year. In respect ofdealing in securities and other investments, in our opinion and accordingto the information and explanations given to us, proper records have beenmaintained of the transactions and contracts and timely entries have beenmade therein. The securities and other investments have been held by theCompany in its own name.

41


15. According to the information and explanations given to us the Companyhas not given any guarantees for loans taken by associates from banks.

16. The term loans taken were applied for the purpose for which they wereobtained.

17. We have been informed by the management that the funds raised on shortterm basis have not been used for long term investment.

18. During the year has issued 77,200 Equity shares against warrant issuedto promoters. The price at which the warrants and shares have been issuedare not prima facie prejudicial to the interest of the company.

19. The Company does not have any debentures.

20. The Company has not raised any money through a public issue during theyear.

21. Based upon the audit procedures performed and information andexplanations given by the management, we report that no fraud on or bythe Company has been noticed or reported during the course of our audit.





42

ACTION FINANCIAL SERVICES (INDIA) LTD. BALANCE SHEET AS AT 31st MARCH 2012

Amount in `Particulars Note No. Current Year Previous Year

EQUITY AND LIABILITIESShareholders’ fundsShare capital 2 108,862,000 108,090,000Reserves and surplus 3 41,726,993 38,854,290Money received against share warrants - 2,238,800

150,588,993 149,183,090Non-current liabilitiesLong-term borrowings 4 2,688,403 4,815,560Other Long term liabilities 5 5,957,604 3,039,003Long-term provisions 6 2,461,098 2,327,697

11,107,105 10,182,260Current liabilitiesShort-term borrowings 7 37,552,389 28,083,379Trade payables 35,981,417 47,397,753Other current liabilities 8 10,923,261 15,234,780Short-term provisions 9 3,241,635 4,083,689

87,698,702 94,799,601

Total 249,394,800 254,164,951ASSETSNon-current assets

Fixed assets 10Tangible assets 13,533,535 9,640,090Intangible assets 4,657,582 5,633,851

Non-current investments 11 58,951,956 59,311,002Deferred tax assets (net) 12 2,513,421 2,905,048Long-term loans and advances 13 10,105,577 11,375,577Other non-current assets 14 3,263,657 2,541,018

93,025,728 91,406,586

Current assetsInventories 15 85,614,347 88,228,616Trade receivables 16 51,616,136 52,359,859Cash and Bank Balance 17 9,944,880 14,243,133Short-term loans and advances 18 1,935,701 3,108,873Other current assets 19 7,258,008 4,817,884

156,369,072 162,758,365

Total 249,394,800 254,164,951

Significant Accounting Policies 1Notes to Accounts 1-40

Significant Accounting Policies & Notes to Accounts forms an integral part of the accounts

As per our report of even date

For Ford,Rhodes,Parks & Co. For and on behalf of the Board

Chartered Accountants Milan R. ParekhFirm Registration No.102860W Chairman & Managing Director

A. D. Shenoy Bakul R. ParekhPartner DirectorMembership No.11549

Mumbai, Mumbai,Date :1st August 2012 Date :1st August 2012

43


ACTION FINANCIAL SERVICES (INDIA) LTD.STATEMENT PROFIT & LOSS FOR THE YEAR ENDED 31ST MARCH 2012

Amount in `

Particulars Note No. Current Year Previous Year

Revenue

Revenue from operations 20 49,280,704 30,371,857

Other income 21 1,554,189 1,692,124

Total Revenue 50,834,893 32,063,981

Expenses

Changes in Inventory 907,857 465,528

Employee benefits expense 22 9,352,136 9,122,664

Finance costs 23 6,597,376 6,827,008

Depreciation and amortization expense 1,605,628 2,647,148

Other expenses 24 32,231,151 11,877,024

Total expenses 50,694,148 30,939,372

Profit before tax 140,745 1,124,609

Less: Tax expense

Current tax (MAT) - 100,000 107,052

Deferred tax 391,627 565,462

Profit (Loss) for the Year (350,882) 452,095

Earnings per equity share of Rs. 10 each:

(1) Basic (0.12) 0.40

(2) Diluted (0.12) 0.40

Significant Accounting Policies 1Notes to Accounts 1-40

Significant Accounting Policies & Notes to Accounts forms an integral part of the accounts

As per our report of even date For and on behalf of the Board

For Ford,Rhodes,Parks & Co.Chartered Accountants Milan R. ParekhFirm Registration No.102860W Chairman & Managing Director


Mumbai, Mumbai,Date:1st August 2012 Date:1st August 2012


44

ACTION FINANCIAL SERVICES (INDIA) LTD.Cash Flow Statement For The Year ended 31st March 2012

Amount in `Year ended Year ended31.03.2012 31.03.2011

A. CASH FLOW FROM OPERATING ACTIVITIESNet Profit before Tax 140,745 1,124,609Depreciation 1,605,628 2,647,148Excess provision for taxation considered as per R& S 1,756,785 -Loss on sale of Fixed Assets - 279,338Interest and Dividend Income (1,157,018) (1,286,007)(Profit)/ Loss on sale of Investments 240,076 (1,104,787)Provision on Standard & Sub Standard Assets 134,769 -Interest Expenditure 6,597,376 6,827,008Tax Deducted at Source - -Operating Profit before Working Capital Changes 9,318,362 8,487,309Trade and Other Receivables 746,771 (25,666,002)Inventories 2,614,269 (9,652,815)Trade payables (11,416,336) 3,417,966Other Payables (Exluding Current tax Provision) (2,336,339) (2,575,984)Cash Generated from Operations (1,073,274) (25,989,526)Direct Taxes Paid (Net) - -Net Cash from Operating Activities [A] (1,073,274) (25,989,526)

B. CASH FLOW FROM INVESTING ACTIVITIES

Purchase & Creation of Fixed Assets (4,522,805) (1,839,559)Proceeds from sale of fixed assets - 273,999(Purchase) / Sale Of Investments (Net) 359,046 (6,122,649)Divivend Received 37,310 275,660Profit/ (Loss) on sale of Investments (240,076) 1,104,787Investment in Fixed deposit 3,519,135 (747,397)Interest Received 1,119,708 1,010,347Net Cash used in Investing Activities [B] 272,318 (6,044,812)

C. CASH FLOW FROM FINANCING ACTIVITIESProceeds from Secured Borrowing (Net) (2,127,157) 225,088Proceeds from UnSecured Borrowing (Net) 9,469,010 2,921,247Proceeds from issue of warrants - 2,238,800Proceeds from issue of Equity Shares - 11,710,000Securities premium on Equity Sahres - 22,249,000Interest paid (6,597,376) (6,827,008)Net Cash from Financing Activities [C] 744,477 32,517,127

Net increase/(decrease) in cash and cash equivalents[A+B+C] (56,479) 482,790Cash and cash equivalents as at 1st April (Opening) 684,628 201,839Cash and cash equivalents as at 31st March (Closing) 628,149 684,628Net increase / (decrease) in cash and cash equivalents (56,479) 482,790

Notes:i) Cash and Cash Equivalents include: Balances with Schedule Banks on Current Accounts 626,796 683,406

Cash in Hand 1,353 1,222628,149 684,628

ii) The above cash flow statement has been prepared under the 'Indirect Method' as set out in the Accounting Standard - 3 on Cash Flow Statements.iii) Cash and cash equivalents for the purpose of cash flow statement comprise of Cash at bank and in hand and short term investments with an original maturity of three months or less.iv) Figures in brackets denotes outflows.v) Previous year's figures regrouped /reclassified wherever required.


For Ford, Rhodes, Parks & Co. Milan R. ParekhChartered Accountants Chairman & Managing DirectorFirm Registration No: 102860W

Bakul R. ParekhA. D. Shenoy DirectorPartnerMembership No : 11549

Place : Mumbai Place : Mumbai Date : 1st August 2012 Date : 1st August 2012

45


Note forming part of financial statement for the year ended 31st March2012.

1. Significant Accounting Policies and Corporate Information:-

Corporate Information:-

Action Financial Services (India) Limited is a public Company listed in Bombaystock exchange. The company is engaged in share Broking and depositoryservices. The company has two wholly owned subsidiaries viz. Action SecuritiesLimited and Action Commodities Limited.

Significant Accounting Policies:

a. Accounting Concepts

The accounts have been prepared on accrual basis, in accordance with theAccounting Standards referred to in Section 211 (3C) of the Companies Act,1956, which have been prescribed by the Companies (Accounting Standards)Rules, 2006 and the provisions of the Companies Act, 1956, to the extentapplicable. Accounting policies have been consistently applied except wherea newly issued accounting standard is initially adopted or a revision to theexisting accounting standard or a more appropriate presentation of the financialstatements requires a change in the accounting policy hitherto in use.

b. Presentation in Revised Schedule VI:

For the year 31.03.2012 revised Schedule VI notified under the companiesact 1956, has become applicable to the company, for preparation & presentationof its financial statements. The adoption of revised schedule VI does not impactrecognition & measurement principal followed for preparation of financialstatements. However it has significant impact on presentation & disclosuremade in the financial statements. The company has also reclassified theprevious year figures in accordance with the requirement applicable in currentyear.

c. Use of Estimates

The preparation of financial statements requires estimates and assumptionsto be made that affect the reported amount of assets and liabilities on the dateof the financial statement and the reported amount of revenue and expensesduring the reporting periods. Difference between the actual results andestimates are recognized in the period in which the results are known /materialized.

d. Revenue Recognition

(i) Income from broking activities and depository services are recognized onlywhen it is reasonably certain that the ultimate collection will be made.

(ii) Income from trading in securities and Derivatives comprises of profit orloss on sale of securities held as stock in trade and profit or loss onDerivative instruments is accounted for based on the "Guidance note onaccounting for Equity Index and Equity Stock Futures and Options".


46

(iii) Interest income is recognized on time proportionate basis.

(iv) Dividend income is recognized when right to receive is established.

e. Fixed Assets

Tangible & Intangible Assets

All the fixed assets are accounted at cost of acquisition less accumulateddepreciation.

f. Leased Assets:

Operating Lease

Assets taken on lease under which the lessor effectively retains all the riskand rewards of ownership are classified as operating lease. Leasepayments under operating leases are recognized as expenses on accrualbasis in accordance with the respective lease agreement.

Finance Lease:

Leased assets acquired on which significant risk and rewards of ownershipis effectively transferred to the company are capitalized at lower of fairvalue or the amount paid under such lease arrangements.

g. Depreciation /Amortisation

Depreciation on Fixed Assets is provided on prorata basis in accordancewith the rates prescribed under Schedule XIV of the Companies Act, 1956under Straight Line Method. Goodwill shall be amortized over a period ofTwenty years. Assets acquired under Finance lease are amortised overthe period of lease or estimated useful life of Asset whichever is lower.

h. Impairment of Fixed Assets

An asset is treated as impaired when the carrying cost of assets exceedsits recoverable value. An impairment loss is charged to the Statement ofProfit and Loss in the year in which an asset is identified as impaired. Theimpairment loss recognized in prior accounting periods is reversed if therehas been a change in the estimate of recoverable amount.

i. Investments

Securities, which are bought with an intention of keeping for long term, areclassified under Investments and are valued at cost plus brokerage andstamp charges. Provision for diminution in the value of long-terminvestments is made only if such a decline is other than temporary in theopinion of the management.

j. Stock In Trade

Shares and Debentures are valued at cost or market price whichever islower, whereby the cost of each script is compared vis-à-vis its marketvalue and the resultant shortfall if any, is charged to revenue.

k. Taxation

(i) Provision for current tax is made on the basis of estimated taxable

47


income for the current accounting year in accordance with the Income-taxAct, 1961.

(ii) Deferred tax on timing difference between taxable income andaccounting income is accounted for, using the tax rates and the tax lawsenacted or substantially enacted as on the balance sheet date. Deferredtax assets are recognized for unabsorbed depreciation and carry forwardlosses to the extent there is virtual certainty that sufficient future taxableincome will be available against which deferred tax assets can be realized.

l. Employee Benefits

(i) Gratuity to employees is provided as per AS 15 and liability as onBalance Sheet date has been determined on the basis of actuarial valuation.The liability is not funded.

(ii) Leave encashment benefits payable to employees of the Company withrespect to accumulated leave outstanding at the year-end are accountedfor on the basis of an actuarial valuation as at the Balance Sheet date.

(iii)Contributions payable by the Company to the concerned governmentauthorities in respect of provident fund, family pension fund and ESIC arecharged to Statement of Profit and Loss.

m. Derivative Transactions:

Gain /losses on futures transactions pertaining to Equity &Currency Futuresare recognised on continuous basis. Gain / losses on options contractsare recognised on squaring off /settlement day.

n. Earning per Share

In determining the earning per share, the Company considers the net profitafter tax and includes the post tax effect of any extra ordinary/ exceptionalitems and also after reducing dividend on cumulative preference sharesfor the period ( irrespective a whether dividend paid to not). The number ofshares used in computing basic earnings per share is the weighted averagenumber of shares outstanding during the period. The number of sharesused in computing diluted earning per shares comprises the weightedaverage shares considered for deriving the basic earning per share andalso weighted average number of equity shares that could have been issuedon the conversion of all dilutive potential equity shares. The diluted potentialequity shares are deemed converted as of the beginning of the period,unless issued at a later date. The number of shares and potentially dilutiveequity shares are adjusted for any stock split and bonus shares issued.

o. Provisions for Contingent Liabilities and Contingent Assets

A provision is recognized for a present obligation as result of past events ifit is probable that an outflow of resources will be required to settle theobligation and in respect of which reliable estimates can be made.Provisions are determined based on net estimate of the amount requiredto settle the obligation at the Balance sheet date. Contingent liabilities arenot recognized but are disclosed in the notes. Contingent assets are neitherrecognized nor disclosed in the financial statements.


48

Notes to Financial Statements for the year ended 31st March 2012

2 Details of share CapitalA Details of Authorised,issued,subscribed and paid up capital

Particulars Current Previousreporting reporting

period period

SHARE CAPITALAuthorized share capital1,20,00,000 (1,20,00,000) Equity Shares of Rs.10/- each 120,000,000 120,000,0001,00,000 (1,00,000) Preference Shares of Rs. 100/- each 10,000,000 10,000,000

Issued share capital1,00,58,200 ( P.Y. 99,81,000) Equity Shares ofRs. 10/- each fully-paid 100,582,000 99,810,00082,800, 10 % Redeemable Cumulative Preferences Sharesof Rs.100/- 8,280,000 8,280,000

108,862,000 108,090,000

Subscribed & fully paid up1,00,58,200 ( P.Y. 99,81,000) Equity Shares ofRs. 10/- each fully-paid 100,582,000 99,810,00082,800, 10 % Redeemable Cumulative Preferences Sharesof Rs.100/- 8,280,000 8,280,000

108,862,000 108,090,000

B Reconciliation of number of shares outstanding at beginning & end ofthe reporting period

I) Equity Shares

Particulars As at 31st As at 31stMarch 2012 March 2011

Opening balance as on 01.04.11 9,981,000 8,810,000Add :- Shares issued on Preferential basis - 1,171,000Add :- Conversion of Warrant into Equity Shares 77,200 -

Closing Balance 31.03.12 10,058,200 9,981,000

II) Preference SharesDuring the year there is no movement.

Note:-1. The Company in its meeting of Board of directors held on 30th January 2012 allotted

77,200 Equity shares to its promoters on conversion of 77,200 warrants issued on13th October 2010, at a price of Rs 29/- per warrant. Accordingly a sum of Rs.14,66,800/- is credited to Securities Premium Account.

2. 10% Redeemable preference shares are redeemable on or before March 2015.3. During last year company has issued 1,171, 000 Equity share of Rs 10/- each for

cash at a premium of Rs 19/- per share vide board resolution dated 13th October2010. Accordingly a sum of Rs. 22,249,000/- is credited to Securities PremiumAccount.

49

19th Annual Report 2011-2012C Last 5 years details of Shares issued / bought back

There are no issues for consideration other than cash, Bonus shares or buyback in past 5 years,however in last year company had issued 6,25,000/-warrants which were later forterified .

D Shareholder's Information(No. of Shares)

Particulars As at 31st As at 31stMarch 2012 March 2011

1. Shares held by Group Companies NA NA- -

2. Share holders holding 5% or more shares

Name As at 31st March 2012 As at 31st March 2011Shares Percentage Shares Percentage

Milan R Parekh 2,679,056 26.64 2,601,856 26.07Bakul R Parekh 2,038,889 20.27 2,038,889 20.43

TOTAL 4,717,945 46.91 4,640,745 46.50

Milan Parekh's shareholding includes 267,600 shares having lock in period till 15.10.13and Bakul Parekh's shareholding includes 172,400/- shares having lock in period till15.10.13

E There are no convertible securities issued and outstanding as on Balance sheetdate.

F There are no shares reserved for issue under options and contracts /commitmentsfor sale of Shares/disinvestment.

G There are no unpaid calls as at Balancesheet date.H There are no forefeited shares on Balancesheet date.

3 RESERVES AND SURPLUS

Particulars Current Year Previous Year

a. Securities Premium A/cOpening Balance 29,741,500 7,492,500Add: Addition on Shares issued on Preferential basis - 22,249,000Add: Addition on conversion on warrants 1,466,800 -

Closing Balance 31,208,300 29,741,500

b. Capital Redemption Reserve Account 10,120,000 10,120,000

c. Capital Reserve A/cOpening Balance 6,275,000 5,650,000Add: Addition on Forefeiture of Warrants - 625,000

Closing Balance 6,275,000 6,275,000

d. Surplus as per Statement of Profit & LossOpening Balance (7,282,210) (7,734,305)Add: Profit (350,882) 452,095Add: Adjustment of eariler income tax 1,756,785 -

Closing Balance (5,876,307) (7,282,210)

Total Reserves & Surplus 41,726,993 38,854,290


50

4 LONG -TERM BORROWINGS


a. Term Loans from Banks (Secured) 5,155,871 6,887,180Less: Current maturities of Long Term Debt

disclosed under OCL (2,825,028) (2,821,788)

2,330,843 4,065,392

b. Payables under finance lease obligations 750,169 1,099,025Less: Current maturities of finance lease

obligations disclosed under OCL (392,609) (348,857)

357,560 750,168

2,688,403 4,815,560

5 Other Long term Liabilites


Deposit from Clients 5,957,604 3,039,003

5,957,604 3,039,003

6 Long - Term Provisions


Contigent Provision agst Standard Assets 134,769 -Provision for gratuity 2,213,809 2,243,565Provision for leave benefits 112,520 84,132

Total 2,461,098 2,327,697

7 Short Term Borrowings


Loans repayable on demand fromBanks (Secured ) 16,462,359 11,283,379

Inter corporate deposit (Secured) 16,059,292 16,800,000Inter corporate deposit (Unsecured) 5,030,738 -

Sub Total 37,552,389 28,083,379

8 Other Current Liabilities


Current maturities of Long- Term debt 2,825,028 2,821,788Others Loans & Advances : Book overdraft 1,327,991 3,075,580Current maturities of finance lease obligations 392,609 348,857Deposit reced 5,400,000 5,400,000Others payables 977,633 3,588,555

Total 10,923,261 15,234,780

9 Short Term Provisions


Provision for Gratuity 228,323 25,858Provision for leave benefits 325,526 59,039Provision for Taxation 2,687,786 3,998,792

Total 3,241,635 4,083,689

CRR represents Reserve created on redemption of 101,200 Preference shares in2008.CR represents forefeited amount of 11,90,000 warrants in year 2010 and 125,000warrants in year 2011

51

19th Annual Report 2011-2012A

CT

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976

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5,6

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51

Sub

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5,54

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4,73

5 2

0,26

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52

11 Non- Current Investment


Trade Investment (Unquoted)BSE shares 2,683,500 2,683,500BGSE Shares 1,229,609 1,229,609

3,913,109 3,913,109

Other InvestmentUnquoted Equity Instruments1. Investment in wholly owned Subsidiaries

Action Securities Limited. 500,000 500,000Action Commodities Limited. 8,500,000 8,500,000

2. Others 100,000 100,000

9,100,000 9,100,000

Quoted Equity InstrumentsEquity Instruments 45,788,997 46,297,893(Market value Rs. 44,729,359)

Other Investment (Quoted)HDFC Warrant 149,850 -(Market value Rs. 150,387)

58,951,956 59,311,002

12 Deferred Tax Assets (Net)

Particulars As at For the year As at01.04.2011 31.03.2012

WDV differential (1,489,051) (156,260) (1,645,311)Retirement benefits 725,949 140,697 866,646Unabsorbed Depreciation 475,656 - 475,656Business Loss 1,933,489 (49,566) 1,883,923Long Term Loss 273,310 (273,310) -Short Term Loss 985,695 (53,188) 932,507Net Deferred tax Asset /

(Liability) 2,905,048 (391,627) 2,513,421

13 Long -Term Loans & Advances


Security DepositsSecured, Considered good 10,105,577 11,375,577

10,105,577 11,375,577

14 Other non- current assets


Fixed Deposits having maturies after12 month from balance sheet date &held as margin money 3,263,657 2,541,018

Total 3,263,657 2,541,018

53

19th Annual Report 2011-201215 Inventories


Shares as at 31.03.2012 valued at Cost orMarket value, whichever is lower. 85,614,347 88,228,616

Total 85,614,347 88,228,616

16 Trade receivablesParticulars Current Year Previous YearReceivables outstanding for more than6 months from the due dateUnsecured, considered good 4,627,436 3,489,498Less : Provision for Non- Performing Debtors (462,744) (348,950)

4,164,692 3,140,548OthersUnsecured, Considered good 47,451,444 49,219,311

51,616,136 52,359,859

17 Cash & bank Balances.Particulars Current Year Previous YearCash & Cash equivalentsBalances with bank 626,796 683,406Cash on hand 1,353 1,222

628,149 684,628

Other bank balanceFD held having maturity less than 12 months

from bs date held as margin money 9,316,731 13,558,505FD held as margin money maturity more than

12 months from balance sheet date 3,263,657 2,541,018 Less: Amount considered sep under

non current asset (3,263,657) (2,541,018)

9,316,731 13,558,505

9,944,880 14,243,133

18 Short term loans and advancesParticulars Current Year Previous YearOthersUnsecured, Considered goodEmployee Loan 107,014 80,875Statutory Dues 162,428 376,859Prepaid Expenses 365,176 309,413Others 1,301,083 2,341,726

1,935,701 3,108,873

1,935,701 3,108,873

19 Other current assetsParticulars Current Year Previous YearSecurity Deposit 450,000 450,000Interest Accrued on Deposits 515,548 457,998Advance Tax Paid 5,400,000 3,100,000Tax Deducted at Source 892,460 809,886

7,258,008 4,817,884


54

20 Revenue from OperationsParticulars Current Year Previous Year

1. Revenue from ServicesIncome from broking activities 10,927,517 16,214,759Income from depository Services 3,448,403 3,839,608

14,375,920 20,054,3672. Other operating revenue

Mutual Fund Commission 103,001 63,626Profit on sale of securities 34,801,783 5,896,056Net gain or loss on sale of investments - 1,104,787Profit on Currency Derivatives - 666,336Profit on Derivatives - 2,586,685

34,904,784 10,317,490

49,280,704 30,371,857

21 Other IncomeParticulars Current Year Previous Year

Interest income 1,119,708 1,010,347Miscellaneous income 187,724 39,235Dividend Income 37,310 275,660Rent received. 120,000 120,000Stock Exchange Expenses Recovered

From Remisers 89,447 93,000Leave Salary Provision Written Back - 153,882

1,554,189 1,692,124

22 Employee Benefit ExpensesParticulars Current Year Previous Year

Salary & wages 8,404,073 8,195,270Contribution to provident & other Funds 239,336 284,633Leave Encashment 353,914 -Staff welfare Expenses 156,246 162,732Gratuity 198,567 228,975Incentive Paid - 251,054

Total 9,352,136 9,122,664

23 Finance cost


Interest Paid to Bank 1,541,132 2,216,852Interest Paid to Others 3,635,242 3,346,531Interest Paid on Car Loan 98,782 10,013Loan Processing Charges 250,000 -Interest Paid on Term Loan 1,072,220 1,253,612

Total 6,597,376 6,827,008

55

19th Annual Report 2011-201224 Other Expenses


Auditors Remuneration 180,680 123,900Bank Charges 813,630 933,248Commission Paid 168,775 -Communication Expenses 818,066 944,565Electricity Expenses 437,914 496,967Listing and License Fees 117,119 111,090Loss on Currency Derivatives 16,492,590 -Loss on Derivatives 1,930,315 -Loss on sale of Assets - 279,338Loss on sales of investment 240,076 -Maintainence Expenses 903,101 940,773Miscellaneous Expenses 397,508 298,005NSDL Expenses 595,436 696,785Penalty- NSE 544,163 158,337Printing & Stationery 327,643 465,845Professional Fees 2,373,488 1,699,004Provision for Non-Performing Assets 113,794 80,394Provision for Contingent against standard assets 134,769 -Rent , Rates & Taxes 754,258 1,209,734Settlement Charges 750,000 465,000Stock Exchange Expenses 1,552,462 1,523,706Sub Brokerage 1,802,099 1,226,261Travelling and Conveyance 133,265 224,072Prior Expenses 650,000 -

32,231,151 11,877,024

25 Contingent Liabilities not provided in respect ofa. Bank Guarantee amounting to Rs. 23,250,000 /- (previous year Rs. 29,850,000/-)

Secured by fixed deposit of Rs. 11,625,000/-.b. Allotment money payable on partly paid shares and debentures Rs. 1,782,000/-

(Previous year Rs. 1,782,000/-).c. Rs.3,312,000/- being Arrears of Dividend on Cumulative redeemable Preference

Shares as at 31st March 2012. (Previous Year Rs.2,484,000/-).d. Disputed Income Tax Dues are tabulated as under:Sr. Name of dues Forum where Dispute Period to which AmountNo. is pending amount relates involved

1 Income Tax ITAT Mumbai A.Y. 2008-09 10,130,835/-

2 Tax Deducted Commissioner of Incomeat Sources (Appeals), Mumbai A.Y. 2010-11 129,990/-

3 Tax Deducted Commissioner of Incomeat Sources (Appeals), Mumbai A.Y. 2011-12 143,056/-

Note:-1. The Company had contested Income Tax demand of Rs 10,130,835/- for

Assessment Year 2008-09. The Company has paid Rs.5,400,000/- and balanceamount is in abeyance till disposal of the case . The company has preferred anappeal in the ITAT against the CIT(A) order.

2. The Company had contested Income Tax Deducted at Sources of Rs 129,990/-and Rs 143,056/- for Assessment Year 2010-11 and 2011-12. The company haspreferred an appeal in CIT (A).


56

26. Borrowings1. Term Loan: Term Loans from ICICI Bank Ltd. aggregates to Rs. 5,155,871/-

(Previous Year Rs 68,87,180/-) and are Secured by way of mortgage of officepremises No. 46, 47 and 54, at Rajgir Chambers, Fort, Mumbai and PersonalGuarantee of both the Directors and carries interest @ 18.75% p.a. Term loanoutstanding of Rs. 2,720,290/- is maturing in June 2013 and Term Loanoutstanding of Rs 2,435,581/- is maturing in May 2032.

2. Vehicle Loan: The Company has availed vehicle loans from TATA capital limited.The said loans are secured against the vehicle purchased against them.Outstanding amount as on 31.03.2012 is Rs 750,169/-. (Previous Year Rs1,099,025/-). Loan carries interest @ 10.70%p.a. The tenure of loan is up toJanuary 2014.

3. Bank Overdraft: Overdraft of Rs.16,462,359/- (previous year Rs. 11,283,379/-)as at 31.03.2012 from the Scheduled Banks are secured against PersonalGuarantee of both Directors and pledge of Equity shares. Facility carries interestranging from 14 to 14.75%.

27. ICDS: Inter corporate deposit received from Enpee Enterprises Pvt. Limited issecured against Pledge of Equity shares as well as Company premises in BSEBuilding. It carries interest @21% p.a. Unsecured ICD taken from Golden overseasPvt. Ltd of RS 50,30,738/- carries interest @12% p.a. There are no stipulations asto repayment of ICD.

28. Managerial Remuneration: Whole time directors are paid remuneration aggregatingto Rs.4, 140,000 /- .The computation of net profit under section 198 / 349 of theCompanies Act, 1956 has not been given since no commission is paid / payable toany director in the current year.

29. Auditor's remuneration:-

Particulars 2011-12 2010-11

Audit Fees 80,000 55,000Tax Audit Fees 25,000 15,000Other Charges , Certification etc 75,680 53,900

Total 180,680 123,900

30. In compliance with RBI guidelines in relation to Non-Banking Financial Companies,the company has provided Rs. 134,769/-(previous year NIL) being 0.25% of standardasset as 'Contingent provision against standard assets' and 10% on Non performingassets totaling to Rs. 462,744/- (previous year Rs. 348,950/-).

31. Investments:(a)The aggregate market value of quoted investments as at 31.03.2012 is Rs.

44,879,746/-(Previous year Rs. 48,278,089/-) as against the total cost of quotedinvestment of Rs. 45,938,847/- (Previous Year Rs.46,297,894 /- )

(b)No provision for diminution in the value of quoted investment is considerednecessary as in the management's view the short fall is temporary in nature.

(c)Details of opening and closing stock of investments are given below: -

57


(A) Quoted Shares (Fully Paid) at cost

AS ON 31st March, 2012 AS ON 31st March, 2011

Name of the No. of Face Cost No. of Face CostCompany Shares Value Shares Value

` ` ` `

Bajajhind ltd 3,414 1 105,834 - - -Balrampur Chini 16,010 1 1,332,089 16,010 1 1,332,089BHEL 35,370 2 13,162,426 7,309 10 13,958,391Chambal Fertilisers 13,500 10 685,291 13,500 10 685,291Hindustan Constr. Co 1,543 1 56,088 1,543 1 56,088Hotel Leela 21,020 2 475,471 21,020 2 475,471IFCI Ltd 11,931 10 677,204 11,931 10 677,204Infosys Technologies 15 5 42,975 15 5 39,658Kanchi Karporam 60,000 10 597,000 70,600 10 702,470Mcleod Russel 100 5 27,159 50 5 13,509Morarji Realities 9682 10 898,490 9,682 10 898,490Sakti Sugar 17,081 10 1,013,757 17,081 10 1,013,757Hdfc Warrant 1850 .05 149,850 - - -Suryadeep Salt 19,682 10 923,641 19,682 10 923,641Tasc Pharmae 135,500 1 1,399,354 13,550 10 1,399,354Reliance Industries 4,225 10 3,409,632 5,155 10 5,330,565TTML 23,775 10 401,318 23,775 10 401,318TCS Ltd 7,766 1 7,327,327 7,166 1 5,568,124HDFC 5125 2 2,369,799 5,125 2 2,369,799Satyam comp 25,965 2 2,254,111 25,965 2 2,284,537Bharti 7114 5 2,432,218 6,264 5 2,118,350Tata Global Beverages Ltd 31,435 1 2,165,535 31,635 1 2,086,839India Securities 77,402 1 2,085,789 77,402 1 2,085,789Jaiprakash Associaties 14,106 2 1,877,159 14,106 2 1,877,159Total (A) 45,938,848 46,297,894(B) Unquoted Shares(Fully Paid)Banglore StockExchange Ltd 7,228 1 1,229,609 7,228 1 1,229,609BSE Limited 23,257 1 2,683,500 23,257 1 2,683,500Action Securities Limited 50,000 10 500,000 50,000 10 500,000Action Commodities Ltd. 100,000 10 8,50,000 100,000 10 8,500,000Suman Resort 10,000 10 100,000 10,000 10 100,000

Total (B) 13,013,109 13,013,109

Grand Total (A+B) 58,951,956 59,311,002

32. In case of Stock in Trade, full provision for diminution in value of stock amounting toRs. 907,857/- has been made in the accounts.

33. During the year the Company has entered into futures and option contracts onNational stock exchange in equity segment and currency segment. The open positionas on 31.03.12 is Rs 245,85,521.85/- (previous year Rs 628,67,237.50/-)

34. Defined Benefit Plan:The company has applied revised Accounting Standard AS - 15 Employees Benefitsnotified under the Companies (Accounting Standard) Rules, 2006. Consequent tothe introduction of AS - 15, we have obtained the Actuarial Certificate for Valuation


58

of Gratuity and Leave Salary as under:a) Gratuity: Disclosures are as under: (In `)

Assumptions as at 31-Mar-12 31-Mar-11Mortality LIC (1994-96) Ult.

Interest / Discount Rate 8.25% 8.17%

Rate of increase in compensation 12.50% 12.50%

Rate of return (expected) on plan assets - -

Employee Attrition Rate(Past Service (PS) ) PS: 0 to 5: 50% PS: 0 to 5: 40%

PS: 5 to 42: 5% PS: 5 to 42: 5%

Expected average remaining service 6.37 5.82

Changes in present value of obligations 31-Mar-12 31-Mar-11

PVO at beginning of period 22,96,423 32,21,510

Interest cost 184,356 1,73,964

Current Service Cost 267,735 2,23,140

Past service cost (Non vested benefits) - -

Past service cost (Vested benefits) - -

Benefits Paid (25,858) -

Actuarial (gain)/loss on obligation (253,524) (249,191)

PVO at end of period 2,442,132 2,269,423

Changes in fair value of plan assets 31-Mar-12 31-Mar-11

Fair Value of Plan Assets at beginning of period - -

Expected Return on Plan Assets - -

Contributions 25,858 -

Benefit Paid (25,858) -

Actuarial gain/(loss) on plan assets - -

Fair Value of Plan Assets at end of period - -

Fair Value of Plan Assets 31-Mar-12 31-Mar-11Fair Value of Plan Assets at beginning of period - -

Actual Return on Plan Assets - -

Contributions 25,858 -

Benefit Paid (25,858) -


Funded Status (including unrecognized

past services cost) (2,442,132) (2,269,423)

Excess of actual over estimated return on Plan Assets - -

Experience History 31-Mar-12 31-Mar-11(Gain)/Loss on obligation due to change in Assumption (38,166) (154,527)

Experience (Gain)/ Loss on obligation (215,358) (94,664)

Acturial (Gain)/ Loss on Plan Assets - -

Actuarial Gain/(Loss) Recognized 31-Mar-12 31-Mar-11

Actuarial Gain/(Loss) for the period (Obligation) 253,524 249,191

Actuarial Gain/(Loss) for the period (Plan Assets) - -

Total Gain/(Loss) for the period 253,524 249,191

59


Actuarial Gain/(Loss) recognized for the period 253,524 249,191

Unrecognized Actuarial Gain/(Loss) at end of period - -

Past service cost recognised 31-Mar-12 31-Mar-11Past service cost -Non vested benefits - -

Past service cost -Vested benefits - -

Average remaining future service till vesting of the benefits - -

Recognised Past service cost -Non vested benefits - 13,354

Recognised Past service cost - vested benefits - -

Unrecognised Past service cost -Non vested benefits - -

Amounts to be recognized in the balance sheet

and statement of Statement of profit & loss 31-Mar-12 31-Mar-11

PVO at end of period 2,442,132 22,69,423


Funded Status (2,442,132) (22,69,423)

Unrecognized Actuarial Gain/(Loss) - -

Unrecognized Past service cost- Non vested benefits - -

Net Asset/(Liability) recognized in the balance sheet (2,442,132) (22,69,423)

Expense recognized in the statement of P&L 31-Mar-12 31-Mar-11Current Service Cost 267,735 223,140

Interest cost 184,356 173,964

Past service cost (Non vested benefits) - 13,354

Past service cost (Vested benefits) - -

Expected Return on Plan Assets - -

Net Actuarial (Gain)/Loss recognized for the period (253,524) (249,191)

Expense recognized in the statement of P & L 198,567 161,267

Movements in the Liability recognized in Balance Sheet 31-Mar-12 31-Mar-11

Opening Net Liability 2,269,423 2,108,156

Expenses as above 198,567 161,267

Contribution paid (25,858) -

Closing Net Liability 2,442,132 2,269,423

Revised Schedule VI 31-Mar-12 31-Mar-11

Current Liability 228,323

Non-Current Liability 2,213,809

Assumptions as at 31-Mar-12 31-Mar-11Mortality LIC (1994-96) Ult.

Interest / Discount Rate 8.25% 8.17%

Rate of increase in compensation 12.50% 12.50%

Rate of return (expected) on plan assets

Employee Attrition Rate(Past Service (PS) ) PS: 0 to 5: 50% PS: 0 to 5: 40%

PS: 5 to 42: 5% PS: 5 to 42: 5%

Expected average remaining service 6.28 5.80

b) Leave Encashment: Disclosures are as under:


60

Changes in present value of obligations 31-Mar-12 31-Mar-11PVO at beginning of period 143,171 297,054Interest cost 9,285 24,037Current Service Cost 436,073 447,125Past Service Cost- (non vested benefits) - -Past Service Cost- (vested benefits) - -Benefits Paid (59,039) (7,840)Actuarial (gain)/loss on obligation (388,956) (617,205)PVO at end of period 140,535 143,171Changes in fair value of plan assets 31-Mar-12 31-Mar-11Fair Value of Plan Assets at beginning of period - -Expected Return on Plan Assets - -Contributions - -Benefit Paid 59,039 7,840Actuarial gain/(loss) on plan assets (59,039) (7,840)Fair Value of Plan Assets at end of period - -Fair Value of Plan Assets 31-Mar-12 31-Mar-11Fair Value of Plan Assets at beginning of period - -Actual Return on Plan Assets - -Contributions 59,039 7,840Benefit Paid (59,039) (7,840)Fair Value of Plan Assets at end of period - -Funded Status (including unrecognised past service cost) (140,535) (143,171)Excess of actual over estimated return on Plan Assets - -Experience History 31-Mar-12 31-Mar-11(Gain)/Loss on obligation due to change in Assumption (4,089) (25,633)Experience (Gain)/ Loss on obligation (384,867) (591,572)Experience (Gain)/ Loss on Plan Assets - -Actuarial Gain/(Loss) RecognizedActuarial Gain/(Loss) for the period (Obligation) 388,956 617,205Actuarial Gain/(Loss) for the period (Plan Assets) - -Total Gain/(Loss) for the period 388,956 617,205Actuarial Gain/(Loss) recognized for the period 388,956 617,205Unrecognized Actuarial Gain/(Loss) at end of period - -Past Service Cost Recognised 31-Mar-12 31-Mar-11Past Service Cost (non vested benefits) - -Past Service Cost ( vested benefits) - -Average remaining future service till vesting of the benefit - -Recognised Past Service Cost- non vested benefits - -Recognised Past Service Cost- vested benefits - -Unrecognised Past Service Cost- non vested benefits - -Amount to be recognized in the Balancesheet and statement of profit & loss 31-Mar-12 31-Mar-11PVO at end of period 140,535 143,171Fair Value of Plan Assets at end of period - -

61


Funded Status (140,535) (143,171)Unrecognized Actuarial Gain/(Loss) - -Unrecognised Past Service Cost- non vested benefits - -Net Asset/(Liability) recognized in the balance sheet (140,535) (143,171)Expense recognized in the statement of P & L 31-Mar-12 31-Mar-11Current Service Cost 436,073 447,125Interest cost 9,285 24,037Past Service Cost (non vested benefits) - -Past Service Cost ( vested benefits) - -Unrecognised Past Service Cost- non vested benefits - -Expected Return on Plan Assets - -Net Actuarial (Gain)/Loss recognized for the period (388,956) (617,205)Expense recognized in the statement of P & L 56,403 (146,043)Movements in the Liability recognized in Balance Sheet 31-Mar-12 31-Mar-11Opening Net Liability 143,171 297,054Expenses as above 56,403 (146,043)Contribution paid (59,039) (7,840)Closing Net Liability 140,535 143,171Revised Schedule VICurrent Liability 325,526Non- Current Liability 112,520Short Term Compensated Absence Liability 31-Mar-12 31-Mar-11Valuation date. 31-Mar-12 31-Mar-11No of Days 152.50 145Amount * 297,511 290,397

35. Provision for Taxation:Tax provision for the year has been made on the basis of MAT provision.

36. Earning Per Share (EPS):Sr. Particulars Year Ended Year EndedNo. 31.03.2012 31.03.2011(A) Profit /(Loss) After tax (350,882) 452,095

(B) Unpaid Dividend of preference Share

(Not Provided) 828,000 828,000

(C) Profit attributable to Equity Shareholders

(in Rs.) after tax (1,178,882) (375,905)

(D) Nominal Value of Equity Shares

(in Rs.) 10 10

(E) Weighted Number of Equity Shares

outstanding during the Year 9,981,000 9,355,397

(F) Diluted Number of Equity Shares

outstanding during the Year 9,993,656 9,417,895

(G) Basic Earnings Per Share (in Rs.) (C/E) (0.12) (0.04)

(H) Diluted Earnings Per Share (in Rs.) (C/F) (0.12) (0.04)


62

37. a. Based on the details regarding the status of the suppliers, to the extent obtained,no supplier is covered under the Micro, Small and Medium EnterprisesDevelopment Act, 2006. The auditors have relied upon the managementinformation in this regard.

b. To the extent information available with the company, the company does notowe any sum to small scale industrial unit as defined in clause (j) of Section 3 ofthe Industrial (Development & Regulation) Act, 1951. The auditors have reliedupon the management information in this regard.

c. There are no balances outstanding Investor education and protection fund u/s205 C of the Companies Act, 1956.

38. Disclosures as required by Accounting Standards 19, "Leases":The company hasno lease commitment as at year end.

39. As per Accounting Standard 18, the disclosures of transaction with the relatedparties as defined in the Accounting Standard are given below:a. Relationship & name of related party:

Sr. Relation Related PartyNo.1. Enterprise controlling the company NA2. Key Management Personnel 1. Managing Director:

Mr.Milan R.Parekh2. Jt.Managing Director:

Mr.Bakul R.Parekh3. Enterprise controlled by the company Subsidiaries:

1. Action Securities Limited2. Action Commodities Limited

4. Relative of key management Personnel NA5. Enterprise under control of relative of R. B. Parekh - HUF

Key Management Personnel6. Enterprise under common control of M/s Milan R. Parekh

Key Management Personnel

Sr. Relation Related PartyNo.1. Enterprise controlling the Company NA2. Key Management Personnel Mr Milan R Parkeh

Nature of Current PreviousTransaction Year YearRemuneration 2,459,360 1,726,380Conversion of - -77,200 warrantinto EquitySharesAdditional - 99,99,200issue ofequity shares

b. Details of transactions with related parties are as follows:

63


Mr. Bakul R ParkehNature of Current PreviousTransaction Year YearRemuneration 2,389,360 1,663,380Additional - 49,99,600issue ofequity shares

3. Enterprise controlled by the company Nature of Current PreviousTransaction Year YearShares Capital - 80,00,000Expense - 82,45,427reimbursementreceivedDeposit & - 54,00,000Fixed AssetreimbursementreceivedProfessional 10,13,312 -ExpensesBrokerage 19,689 -income onsharesRent received 1,20,000 1,20,000Balance 2,70,162 2,45,427

4. Relative of key management Personnel None

5. Enterprise under control of relative of Nature of Current PreviousKey Management Personnel Transaction Year Year

Purchase of 42,00,000 -property 90,000 1,20,000Rent PaidBalance 6,70,000 10,00,000deposit accepted

6. Enterprise under common control ofKey Management Personnel None

40. Company's primary business activates are Broking and Depository Services, both are coveredunder one board segment of Share broking activities hence segment reporting is not applicable.

As per our Report attached. For and on behalf of the boardFor FORD, RHODES, PARKS & CO.Chartered Accountants Milan R. ParekhFirm Registration No. 102860W Chairman & Managing Director

A. D. Shenoy Bakul R. ParekhPartner Jt. Managing DirectorMembership No.11549

Place: MumbaiDate: 1st August 2012


64

DIRECTORS’ REPORT

To,The Members,Action Securities Limited,

Dear Sir/Madam

The Directors have pleasure in presenting the 4th Annual Report togetherwith the Audited Accounts for the year ended on 31st March, 2012.

FINANCIAL RESULTS :

Year Ended Year Ended31.3.2012 31.3.2011

Amount ` Amount `

Revenue from operations & other Income 403,491 -Profit (Loss) before Depreciation 74,634 (227,579)Less: Depreciation 6,830 11,383Profit After Depreciation & before Tax 67,804 (238,962)- Taxation Current Year - -- Deferred Tax 42,655 (78,069)

Profit /(Loss) after tax 25,149 (160,893)Profit/(Loss) brought forward from Previous Year (543,846) (382,953)Profit/ (Loss) available for appropriations (518,696) (543,846)Profit/(Loss) carried forward to the Balance Sheet (518,696) (543,846)

FINANCIAL PERFORMANCE:

During the current year, the gross income of the Company was Rs.4,03,491/-and The Company incurred net Profits (after tax) of Rs.25,149/-.

DIVIDEND:

In view of insufficient profits, the Board of Directors do not recommend anydividend for the year ended 31st March, 2012.

DEPOSITS:

During the year under review, your Company has not accepted any depositswithin the meaning of Section 58A and Section 58AA of the Companies Act,1956 and rules made there under.

FUTURE OUTLOOK:

Your Company is planning to acquire Broking and Depository business in shortspan of time.

ACTION SECURITIES LIMITED

65




i) That in the preparation of the annual accounts, the applicable accountingstandards had been followed and that no material departures have beenmade from the same.

ii) That they had selected such accounting policies and applied themconsistently and made judgments and estimates that are reasonable andprudent so as to give a true and fair view of the state of affairs of theCompany at the financial year ended 31st March, 2012 and of the profitor loss of the company for that period.

iii) That they had taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of thisAct for safeguarding the assets of the Company and for presenting anddetecting fraud and other irregularities.


DIRECTORS:

In accordance with the requirements of the Companies Act 1956, Mr. SagarMilan Parekh will retire by rotation and, being eligible, has offered himself forre-appointment.

AUDITORS:

The present Auditors of the Company M/s. Ford, Rhodes, Parks & Co.,Chartered Accountants, Mumbai, will retire at the conclusion of ensuing AnnualGeneral Meeting and being eligible; offer, themselves for re-appointment tohold the office till the conclusion of next Annual General Meeting.

They have submitted certificate for their eligibility for reappointment undersection 224(1B) of the Companies Act, 1956.

The Auditors have confirmed that they have subjected themselves to the peerreview process of the institute of Chartered Accountants of India (ICAI) andholds a valid certificate issued by the Peer Review Board of the ICAI."

PARTICULARS OF EMPLOYEES:

None of the employees of the Company was paid remuneration of Rs.60,00,000/- p.a. or more for the year or Rs. 5,00,000/- p.m. or more and hencethe information required under section 217 (2-A) of the Companies (Particularsof Employees) Rules, 1975 is not required to be given.


66

PARTICULARS OF CONSERVATION OF ENERGY, TECHNOLOGYABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO


Considering the nature of business activities carried out by the Company, yourdirectors have nothing to report with regard to conservation of energy asrequired under Companies (Disclosure of Particulars in the Report of Board ofDirectors) Rules, 1988.


The management keeps itself abreast of the technological advancements inthe industry and has adopted the state of the art transaction, billing andaccounting systems and also risk management solutions.


a) The foreign exchange earnings of the Company was Nil (previous year Nil)


OTHER INFORMATION:

The other various information as required under section 217 either Nil or Notapplicable.

ACKNOWLEDGEMENT:

Your Directors would take this opportunity to express its deep appreciation forthe co-operation and assistance received from the shareholders, Company'sclients, suppliers, bankers and other authorities during the year under review.Your Directors also wish to place on record their appreciation for the servicesrendered by all the employees of your Company.


Sd/-(Milan R. Parekh)

Chairman

Place: MumbaiDate: 21st May, 2012

67


AUDITORS' REPORT TO THE MEMBERS OFACTION SECURITIES LIMITED

FOR THE YEAR ENDED 31st MARCH, 2012

1. We have audited the attached Balance Sheet of Action Securities Limitedas at 31st March, 2012, the Statement of Profit and loss and the CashFlow Statement of the Company for the year ended on that date annexedthereto. These financial statements are the responsibility of the Company'smanagement. Our responsibility is to express an opinion on these financialstatements based on our audit.



4. Further to our comments in the Annexure referred to above, we reportthat:

a) We have obtained all the information and explanations, which to thebest of our knowledge and belief were necessary for the purpose ofour audit.


c) The Balance Sheet, Statement of Profit and loss and Cash Flowstatement dealt with by this report are in agreement with the books ofaccount.

d) In our opinion, the Balance Sheet, Statement of Profit and loss andCash Flow statement dealt with by this report comply with theaccounting standards referred to in Section 211 (3C) of the CompaniesAct, 1956.

e) On the basis of written representations received from the directors, ason 31st March, 2012 and taken on record by the Board of Directors,we report that none of the directors is disqualified as on 31st March,2012 from being appointed as a director in terms of Section 274 (1) (g)of the Companies Act, 1956.


68

5. In our opinion, and to the best of our information and according to theexplanations given to us, the accounts read with the notes thereon, givethe information required by the Companies Act, 1956, in the manner sorequired and give a true and fair view in conformity with the accountingprinciples generally accepted in India:

i) In the case of the Balance Sheet, of the state of the affairs of theCompany as at 31st March, 2012;

ii) In the case of the Statement of Profit and loss, of the profit for the yearended on that date; and




Place : MumbaiDate : 21st May 2012

69


Annexure referred to in paragraph (3) of our report of

even date for the year ended 31st March, 2012

Re: Action Securities Limited



c) During the year the Company has not disposed off any substantialpart of fixed assets so as to affect the going concern.

2. The Company does not have any stocks of raw materials, stores, spareparts and finished goods. Hence the clause (ii) of the Order does notapply to the Company.

3. a) The Company has not granted any unsecured loans / Advances to itscompanies, firms or other parties covered in the Register maintainedunder Section 301 of the Act. Hence clauses iii (b), iii (c) and iii (d) ofthe order are not applicable.

b) The Company had taken unsecured loans from companies, firms orother party covered in the Register maintained under Section 301 ofthe Act. Amount outstanding as at 31st March 2012 is NIL and (PreviousYear Rs.12,766/-, no. of party one).

c) As per the information and explanations given to us, the above loantaken is interest free & there are no stipulations as to repayment of thesame. Hence clauses iii (f) & (g) of the order are not applicable.

4. In our opinion and according to the information and explanations given tous, there are adequate internal control procedures commensurate withthe size of the Company and the nature of its business, for the purchase ofshares and fixed asset and for providing services. During the course ofour audit, no major weakness has been noticed in the internal control systemin respect of these areas.

5. Based on the audit procedures applied by us and according to theinformation and explanations provided by the management, we are of theopinion that the transactions that need to be entered into the registermaintained under Section 301 of the Companies Act, 1956 have been soentered.

6. The Company has not accepted any deposits from the public during theyear.


70

7. The Company has an adequate internal control system commensuratewith the size and nature of its business.

8. The Central Government has not prescribed maintenance of cost recordsunder section 209 (1) (d) of the Companies Act, 1956.

9. a) According to the records and information and explanations obtainedfrom the management, the Company is generally regular in depositingundisputed statutory dues including Provident fund, Employee StateInsurance, Income Tax and other statutory dues applicable to it withappropriate authorities.

b) In our opinion and according to information and explanations obtained,there are no undisputed dues outstanding in respect of Sales tax,Wealth tax, Income tax, Service tax and Cess that have not beendeposited on account of dispute.

10. The company is in existence for less than 5 years. It has incurred profitduring the year but has incurred cash losses in the immediately precedingyear. The accumulated losses as on 31st March 2012 is Rs. 518,696/-.

11. The Company has not borrowed from any banks. The Company does nothave any borrowing by way of debentures.

12. Based on our examination of documents and records the Company hasnot granted loans and advances on the basis of security by way of pledgeof shares, debentures and other securities.

13. In our opinion and according to the information and explanations given tous, the nature of activities of the Company does not attract any specialstatutes applicable to chit fund and nidhi/mutual benefit fund/societies.

14. The Company has dealing/trading in shares during the year. In respect ofdealing in securities and other investments, in our opinion and accordingto the information and explanations given to us, proper records have beenmaintained of the transactions and contracts and timely entries have beenmade therein. The securities and other investments have been held by theCompany in its own name.

15. According to the information and explanations given to us the Companyhas not given any guarantees for loans taken by associates from banks.

16. The Company has not taken term loans during the year under review.

17. The Company has not raised any funds on short term basis during theyear.

18. During the year, the Company has not made any preferential allotment ofequity shares to its holding company.

71


19. The Company has not issued any debentures issued during the year.

20. The Company has not raised any money through a public issue during theyear.

21. Based upon the audit procedures performed and information andexplanations given by the management, we report that no fraud on or bythe Company has been noticed or reported during the course of our audit.



Place : MumbaiDate : 21st May 2012


72

ACTION SECURITIES LIMITED BALANCE SHEET AS AT 31st MARCH 2012

Amount in `Particulars Note No. Current Year Previous YearEQUITY AND LIABILITIESShareholders’ funds

Share capital 2 500,000 500,000Reserves and surplus 3 (518,697) (543,846)

(18,697) (43,846)

Current liabilities Trade payables - Holding Co. 272,531 274,198

Other current liabilities 4 350 12,766 272,881 286,964

Total 254,184 243,118

ASSETSNon-current assets

Fixed assetsTangible assets 5 10,244 17,074Deferred tax assets (net) 164,394 207,049

174,638 224,123

Current assetsCash and cash equivalents 6 40,657 18,995Other Current assets 7 38,889 -

79,546 18,995

Total 254,184 243,118

Significant Accounting Policies 1Notes to Account 1-19

Significant Accounting Policies and notes to Accounts form an integral part of the accounts


For Ford,Rhodes,Parks & Co.Chartered AccountantsFirm Registration No.102860W

Milan R. Parekh Bakul R. ParekhDirector Director


Mumbai, Mumbai,Date:21st May 2012 Date:21st May 2012

73


ACTION SECURITIES LIMITEDSTATEMENT PROFIT & LOSS FOR THE YEAR ENDED 31ST MARCH 2012


Revenue

Revenue from operations 8 401,991 -

Other income 9 1,500 -

Total Revenue 403,491 -

Expenses:

Employee benefits expense 10 291,961 61,260

Depreciation and amortization expense 5 6,830 11,383

Other expenses 11 36,896 166,319

Total expenses 335,687 238,962

Profit before tax 67,804 (238,962)

Tax expense:

Deferred tax 42,655 (78,069)

Profit (Loss) for the year 25,149 (160,893)

Earnings per equity share of Rs. 10/- each:

Basic 0.50 (3.22)

Diluted 0.50 (3.22)

Significant Accounting Policies 1

Notes to Account 1-19








74

ACTION SECURITIES LIMITEDCash Flow Statement For The Year ended 31st March 2012

Amount in `

Particulars Current Year Previous Year` a ` a

A. Cash Flow From Operating Activities:Profit / (Loss) Before Tax 67,804 (238,962)Add/(Less) Non-Cash And Non-Operating ItemsAdjustments For Depreciation 6,830 11,383

Operating Profit / ( Loss)Before Working Capital Changes 74,634 (227,579)

Changes In Working Capital(Increase) / Decrease In Current Assets(Increase) / Decrease In Other Cuurent Assets - -Increase / (Decrease) In Trade Payables (1,667) -Increase / (Decrease) In other Current Liabilities (12,416) 234,698

(14,083) 234,698

Cash Generated From Operations 60,551 7,119Less: Taxes Paid (38,889) -

Net Cash Flow From Operating Activities [A] 21,662 7,119

B. Cash Flow From Investing Activities - -Net Cash Used In Investing Activities [B] - -

21,662 7,119C Net Cash Flow From Financing Activities

Proceeds from Short term Borrowings - 11,000Net Cash Generated /(Used) From Financing Activities [C] - -

Net Changes In Cash & Cash Equivalents [A+B+C] 21,662 18,119

Cash&Cash Equivalents As At End Of Financial Year - Bank Balance 40,657 18,995 - Cash Balance - -

40,657 18,995Less: Cash & Cash Equivalents As At The Beginning Of Financial Year 18,995 876

Net Changes In Cash & Cash Equivalents 21,662 18,119

Note :1. Cash flows are reported using the indirect method, whereby net profit before tax is adjusted for

the effects of transactions of a non-cash nature and any deferrals or accruals.2. Figures in brackets denotes outflows.3. Cash and cash equivalents for the purpose of cash flow statement comprise of Cash at bank and

in hand and short term investments with an original maturity of three months or less.4. Previous years figures have been regrouped, reclassified and /or renamed to confirm to this

years classification.

For and on behalf of the BoardFor Ford,Rhodes,Parks & Co.

Chartered AccountantsFirm Registration No.102860W

Milan R. ParekhDirector

A. D. ShenoyPartner Bakul R. ParekhMembership No.11549 Director


75


Action Securities Limited


Note 1: Significant Accounting policies & Corporate Information

Corporate Information :-

Action Securities Limited is wholly owned subsidiary of Action FinancialServices (India) Limited. The main objects of the compnay are share Brokingand depository services; however the compnay is yet to start the full-fledgedactivities.

Significant Accounting Policies :



b. Presentation & Disclosure of Financial Statements:-

For the year ended 31.03.2012 revised Schedule VI notified under thecompanies act 1956, has become applicable to the company, for preparation& presentation of its financial statements. The adoption of revised schedule VIdoes not impact recognition & measurement principal followed for preparationof financial statements. However it has significant impact on presentation &disclosure made in the financial statements. The company has also reclassifiedthe previous year figures in accordance with the requirement applicable incurrent year.

c. Use of estimates



Income from broking activities and depository services are recognized onlywhen it is reasonably certain that the ultimate collection will be made.

e. Fixed Assets


f. Impairment of Fixed Assets

An asset is treated as impaired when the carrying cost of assets exceeds its


76

recoverable value. An impairment loss is charged to the Profit and Loss accountin the year in which an asset is identified as impaired. The impairment lossrecognized in prior accounting periods is reversed if there has been a changein the estimate of recoverable amount.

g. Depreciation

Depreciation on all fixed assets are provided on prorata basis in accordancewith the rates prescribed under Schedule XIV of the Companies Act, 1956under Written Down Value Method.

h. Taxation

Provision for current tax is made on the basis of estimated taxable income forthe current accounting year in accordance with the Income-tax Act, 1961.Deferred tax is recognized, subject to prudence, on timing differences, beingthe difference between the taxable income and the accounting income thatoriginate in one period and are capable of reversal in one or more subsequentperiods.

Deferred tax assets are recognized for unabsorbed depreciation and carryforward losses to the extent there is virtual certainty that sufficient future taxableincome will be available against which deferred tax assets can be realized.

i. Employee benefits

There are no employees eligible for gratuity and leave salary as such noprovision for gratuity is considered in accounts. Also there are no employeeseligible for PF and ESIC. Other employee benefits are accounted on accrualbasis.

j. Earning per Share

In determining the earning per share, the Company considers the net profitafter tax and includes the post tax effect of any extra ordinary/ exceptionalitems. The number of shares used in computing basic earnings per share isthe weighted average number of shares outstanding during the period. Thenumber of shares used in computing diluted earning per shares comprises theweighted average shares considered for deriving the basic earning per shareand also weighted average number of equity shares that could have beenissued on the conversion of all dilutive potential equity shares. The dilutedpotential equity shares are deemed converted as of the beginning of the period,unless issued at a later date. The number of shares and potentially dilutiveequity shares are adjusted for any stock split and bonus shares issued.

k. Provisions for Contingent liabilities and Contingent assets

A provision is recognized for a present obligation as result of past events if it isprobable that an outflow of resources will be required to settle the obligationand in respect of which reliable estimates can be made. Provisions aredetermined based on net estimate of the amount required to settle the obligationat the Balance sheet date. Contingent liabilities are not recognized but aredisclosed in the notes. Contingent assets are neither recognized nor disclosedin the financial statements.

77


Action Securities LimitedNotes to Financial Statements for the year ended 31st March 20122 Share Capital

a) Details of Shares authorised, issued, subscribed & Paid up


SHARE CAPITALAuthorized share capital500,000 Equity Shares of Re. 10 each 5,000,000 5,000,000(Previous year 500,000 Equity Shares ofRe. 10 each)

Issued,Subscribed & fully paid up50,000 Equity Shares of Re. 10 each 500,000 500,000

(b) Reconciliation of number of shaers outstanding at beginning & end ofthe reporting year


Opening balance as on 01.04.11 500,000 500,000Add/ (less) : Issued / (buyback) - -Closing Balance 31.03.12 500,000 500,000

Note:-All 50,000 Equity Shares are held by the holding company, Action FinancialServices(India) Ltd.

(c) Details of Shares issued / for consideration other cash & issue of bonusshares in last 5 yearNIL

(d) All The shareholder held by Action Financial Services (India) Limited.(e)There are no convertible securities issued and outstanding as on Balance sheet

date.(f) There are no shares reserved for issue under options and contracts /commitments

for sale of Shares/disinvestment.(g)There are no unpaid calls as at Balancesheet date.(h)There are no forefeited shares on Balancesheet date.

3 Reserve & Surplus


Surplus as per Stateemnt of Profit & LossOpening Balance (543,846) (382,953)Add: Profit for the year 25,149 (160,893)Closing Balance (518,697) (543,846)



Others payables 350 -Loans & advances from related parties 12,766

350 12,766

Action F

inancial Services (India) Lim

ited

78

Action Securities Limited

Notes to Financial Statements for the year ended 31st March 2012NOTE 5Fixed Assets

Gross Block Depreciation Net Block

Particulars As at Additions Disposal Closing Upto For the on Total As at As at

01.04.2011 Balance 31.03.2011 Year deletions 01.04.2011 31.03.2012

Tangible Assets

Computer 73,042 73,042 55,968 6,830 62,798 17,074 10,244

Total 73,042 - - 73,042 55,968 6,830 - 62,798 17,074 10,244

Previous Year 73,042 - - 73,042 44,585 11,383 55,968 28,457 17,074

79

19th Annual Report 2011-20126 Cash & Bank Balances


Cash & Cash equivalents Balances with ICICI bank 40,657 18,995

Total 40,657 18,995

7 Other Current Assets


TDS receivables 38,889 -

38,889 -

8 Revenue from Operations


Professional Income 388,889 Profit on F&O Transactions 13,102

401,991 -

9 Other Income


Miscellaneous income 1,500 -

1,500 -

10 Employee Benefit Expenses


Salary & wages 290,938 61,260Staff welfare Expenses 1,023 -

291,961 61,260

11 Other Expenses


Professional Fees 2,206 11,030Interest on Professional Tax 10 2F& O Expenses 9,391 -Demat Charges 200 -Proession Tax (Company) 2,500 10,000Rates & Taxes excluding taxes on income 5,000 10,000Printing & Stationery 184 -Auditors Remuneration 16,854 16,312Loss On Derivatives - 118,423Bank Charges 552 552

36,896 166,319

12. Contingent Liabilities and Commitments(to the extent not provided for) NIL

13. Managerial Remuneration: NIL

14. Employee Benefit

There are no employees eligible for gratuity, leave salary or provident fund etc. assuch no provision is considered for this period.


80

15. As the company has not started its full ledged activities, hence segment reportingis not applicable.

16. Related Party disclosures

As per Accounting Standard 18, the disclosures of transaction with the relatedparties as defined in the Accounting Standard are given below:

List of related parties with whom transactions have taken place and relationships:

Relationship Name of Related Party

Holding company Action Financial Services (India) Limited

Key Management Personnel Mr.Milan R.Parekh (Director)

Mr.Bakul R.Parekh (Director)

Transaction with Holding Company Expenses Reimbursed: NIL

(P.Y. Rs 2,45,427/-)

Closing Balance Rs 2,45,427/-

Expenses on F&O : Rs. 9,391/- (P.Y. Rs NIL)

Professional Income: Rs.3,88,889/- (P.Y. Rs NIL)

Transaction with Key Management Unsecured Loan received: NIL.

Personnel (P.Y. Rs. 11,000/-)

Unsecured Loan repaid : Rs 12,766/-

(P.Y. Rs NIL )

Closing Balance : Rs NIL (P.Y. Rs 12,766/-)

17. Earning Per Share (EPS)

Basic and Diluted EPS:

Particulars Year Ended Year Ended31.03.2012 31.03.2011

Profit/ (Loss) attributable to Equity 25,149 (160,893)Sharesholders (In Rs.) After tax

Nominal Value of Equity Shares (In Rs.) 10 10

Weighted Number of Equity Share 50,000 50,000outstanding during the year

Diluted Weighted Number of Equity Share 50,000 50,000outstanding during the year

Basic & Diluted Earning Per Share (in Rs.) 0.50 (3.22)

18. Provision for Deferred Tax:-

a) Deferred Tax has been considered on timing difference between book and taxableprofits . Movement in Deferred Tax Assets / Liabilites is as under

Deferred tax Assets/ (Liability) as at 31.03.2012

Particulars As at 31.03.2011 For the Year As at 31.03.2012

WDV differential (4,214) 1,694 (2,520)

Business Loss 188,025 (41,683) 146,342

Unabsored Deperciation 23,238 (2,666) 20,572

Deferred tax Assets/ (Liability) (Net) 207,049 (42,655) 164,394

81

19th Annual Report 2011-201219. a. Based on the details regarding the status of the suppliers, to the extent obtained,

no supplier is covered under the Micro, Small and Medium EnterprisesDevelopment Act, 2006. The auditors have relied upon the managementinformation in this regard.









82

DIRECTORS’ REPORTTo,The Members,Action Commodities Limited,

Dear Sir/Madam,

The Directors have pleasure in presenting the 3rd Annual Report togetherwith the Audited Accounts for the year ended on 31st March, 2012

FINANCIAL RESULTS :

Year Ended Year Ended31.3.2012 31.3.2011

Amount ` Amount `

Revenue from operations & other Income 806,401 535,340Profit (Loss) before Depreciation 125,245 (259,603)Less: Depreciation 95,694 122,111Profit After Depreciation & before Tax 29,551 (381,714)- Taxation Current Year 0 0- Deferred Tax 121.894 11,014

Profit /(Loss) after tax (92,343) (370,700)Profit/(Loss) brought forward from Previous Year (619,570) (248,870)Profit available for appropriations (711,913) (619,570)Profit/(Loss) carried forward to the Balance Sheet

FINANCIAL PERFORMANCE :

During the current year, the gross revenue from operations of the Companywas good and the there is good trend towards profitability, and minimisinglosses, soon the company will have positive results.

Due to uncertainties prevailing in the stock market last year, it was consideredprudent not to enter the field of portfolio investments. However, the Companyhas recently commenced investment activities and hopes to build up a goodportfolio in the coming year.

DIVIDEND

In view of the losses of the Company, the Board of Directors do not recommendany dividend for the year ended 31st March, 2012.

FUTURE OUTLOOK:

Your Company is expects to start the MCX commodities exchange membershipat the earliest.

ACTION COMMODITIES LIMITED

83


DEPOSITS:

During the year under review, your Company has not accepted any depositswithin the meaning of Section 58A and Section 58AA of the Companies Act,1956 and rules made there under.



i) That in the preparation of the annual accounts, the applicable accountingstandards had been followed and that no material departures have beenmade from the same.

ii) That they had selected such accounting policies and applied themconsistently and made judgments and estimates that are reasonable andprudent so as to give a true and fair view of the state of affairs of theCompany at the financial year ended 31st March, 2012 and of the profitor loss of the company for that period.

iii) That they had taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of thisAct for safeguarding the assets of the Company and for presenting anddetecting fraud and other irregularities.


DIRECTORS:

In accordance with the requirements of the Companies Act 1956, Mr. BakulParekh will retire by rotation and, being eligible, has offered himself for re-appointment.

AUDITORS:

The present Auditors of the Company M/s. Ford, Rhodes, Parks & Co.,Chartered Accountants, Mumbai, will retire at the conclusion of ensuing AnnualGeneral Meeting and being eligible; offer, themselves for re-appointment tohold the office till the conclusion of next Annual General Meeting.

They have submitted certificate for their eligibility for reappointment undersection 224(1B) of the Companies Act, 1956.

The Auditors have confirmed that they have subjected themselves to the peerreview process of the institute of Chartered Accountants of India (ICAI) andholds a valid certificate issued by the Peer Review Board of the ICAI."

COMPLIANCE CERTIFICATE:

Pursuance to provisions of section 383A of the Companies Act, 1956, theCompany has obtained the Compliance Certificate as on 31st March, 2012from Jagdish Patel & Co., Vapi, Company Secretaries in Practice, the copy ofthe same has been attached with the Directors' Report.


84

PARTICULARS OF EMPLOYEES

None of the employees of the Company was paid remuneration of Rs.60,00,000/- p.a. or more for the year or Rs. 5,00,000/- p.m. or more and hencethe information required under section 217 (2-A) of the Companies (Particularsof Employees) Rules, 1975 is not required to be given.

PARTICULARS OF CONSERVATION OF ENERGY, TECHNOLOGYABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO


Considering the nature of business activities carried out by the Company,your directors have nothing to report with regard to conservation of energyas required under Companies (Disclosure of Particulars in the Report ofBoard of Directors) Rules, 1988.


The management keeps itself abreast of the technological advancementsin the industry and has adopted the state of the art transaction, billingand accounting systems and also risk management solutions.


a) The foreign exchange earnings of the Company was Nil (previousyear Nil)


OTHER INFORMATION

The other various information as required under section 217 either Nil or Notapplicable.

ACKNOWLEDGEMENT

Your Directors would take this opportunity to express its deep appreciation forthe co-operation and assistance received from the shareholders, Company'sclients, suppliers, bankers and other authorities during the year under review.Your Directors also wish to place on record their appreciation for the servicesrendered by all the employees of your Company.


Sd/-(Milan R. Parekh)

ChairmanPlace: MumbaiDate: 18th May, 2012

85


COMPLIANCE CERTIFICATE

Under proviso to sub-section (1) of section 383A of the Companies Act, 1956

To,

The Members,ACTION COMMODITIES LIMITED31, RAJGIR CHAMBERS, 4TH FLOORSHAHID BHAGAT SINGH RDMUMBAI- 400001

Corporate Identity No. (CIN) U65999MH2009PLC194732

Authorised Share Capital Rs.10,00,000

Date of Incorporation 07/08/2009

Paid up Capital Rs.10,00,000

We have examined the Registers, Records, Books and Papers of ACTIONCOMMODITIES LIMITED as required to be maintained under the CompaniesAct, 1956, (the Act) and the Rules made thereunder and also the provisionscontained in the Memorandum and Articles of Association of the Company forthe financial year ended on 31st March, 2012. In our opinion and to the bestof our information and according to the examinations carried out by us andexplanations furnished to us by the Company, its officers and agents, we certifythat in respect of the aforesaid financial year:

1 The Company has kept and maintained all Registers as stated in Annexure‘A' to this certificate as per the provisions of the Act and the Rules madethereunder and all entries therein have been duly recorded.

2 The Company has filed the Forms and Returns as stated in Annexure ‘B'to this certificate, with the Registrar of Companies, Maharashtra,

3 The Company, being a Public Limited Company, has more than theminimum prescribed Paid up Capital.

4. The Board of Directors duly met Six times respectively as detailed in theAnnexure ‘C' in respect of which meetings proper notices were givenand the proceedings were properly recorded and signed in the MinutesBook maintained for the purpose.

5 The Company was not required to close its Register of Members duringthe financial year.

6. The Annual General Meeting for the period ended on 31st March, 2011was held on 27th June, 2011 after giving due notice to the Members of theCompany and the resolutions passed thereat were duly recorded in MinutesBook maintained for the purpose.

7. No Extra Ordinary General Meeting(s) was held during the financial year.

8. The Company has not advanced any loans to its directors or persons orfirms or Companies referred to under Section 295 of the Act.


86

9. The Company has not entered into any contracts falling within the purviewof Section 297 of the Act.

10. The Company was not required to make any entries in the registermaintained under Section 301 of the Act.

11. As there were no instances falling within the purview of Section 314 of theAct, the Company was not required to obtain any approvals from the Boardof directors, members or Central Government, as the case may be.

12. The Company has not issued any duplicate certificates during the financialyear.

13. The Company has :

(i) Not delivered any certificates of securities as there was no instancesfor allotment, transfer, or transmission of securities during the financialyear.

(ii) Not deposited any amount in a separate Bank Account as no dividendwas declared during the financial year.

(iii) Not posted warrants to any member of the Company as no dividendwas declared during the financial year.

(iv) Duly complied with the requirements of section 217 of the Act - DirectorsResponsibility Statement.

14. The Board of Directors of the Company is duly constituted. There was noappointment of additional directors, alternate directors and directors to fillcasual vacancy during the financial year.

15. The Company has not appointed any Managing Director / Whole- timeDirector/ Manager during the financial year.

16. The Company has not appointed any Sole Selling agents during thefinancial year.

17. The Company was not required to obtain any approvals of the CentralGovernment, Company Law Board, Regional Director, Registrar ofCompanies and/or such authorities prescribed under the various provisionsof the Act.

18. The Directors have disclosed their interest in other firms/Companies tothe Board of Directors pursuant to the provisions of the Act and the Rulesmade thereunder, and the Company has made necessary entries in theregister maintained under section 301(3) of the Act.

19. The Company has not issued any shares, debentures or other securitiesduring the financial year.

20. The Company has not bought back any shares during the financial year.

21. There was no redemption of preference shares during the financial year.

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22. There were no transactions necessitating the company to keep in abeyancethe rights to dividend, rights shares and bonus shares pending registrationof transfer of shares.

23. The Company has not invited/accepted any deposits including anyunsecured loans falling within the purview of Section 58A during the financialyear.

24. The Company has not made any borrowings during the financial year ended31st March, 2012.

25. The Company has not made any loans or advances or given guaranteesor provided securities to other bodies corporate and consequently no entrieshave been made in the register kept for the purpose.

26. The Company has not altered the provisions of the Memorandum withrespect to situation of the Company's registered office from one state toanother during the year under scrutiny.

27. The Company has not altered the provisions of the Memorandum withrespect to the objects of the Company during the year under scrutiny.

28. The Company has not altered the provisions of the Memorandum withrespect to name of the Company during the year under scrutiny.

29. The Company has not altered the provisions of the Memorandum withrespect to Share Capital of the Company during the year under scrutiny.

30. The Company has not altered its Articles of Association during the financialyear.

31. There was no prosecution initiated against or show cause notices receivedby the Company during the financial year, for offences under the Act.

32. The Company has not received any money as security from its employeesduring the financial year.

33. The Provisions of the employees' Provident Fund of the Act, are notapplicable to the Company.

FOR JAGDISH PATEL & CO.Company Secretaries,

CS Jagdish PatelPartnerPlace: MumbaiDate : 18th May, 2012


88

ANNEXURE "A"

Register as maintained by the Company

Statutory Registers

Sr. No. Name Of Register Section No.

1. Register of Disclosure of Directors' interest. 301(3)

Note: the Company has maintained the following registers. However, it wasinformed that there were no entries/ transactions to be recorded during theperiod under review.

Sr. No. Name Of Register Section No.

1. Application & Allotment Register ----

2 Register of Members 150

1. Register of Share Transfer/splitting/duplicate/ etc., ----

2. Register of Directors and Managing Director. 303

3. Register of Directors' shareholding. 307

4. Register of Charges 143

5. Register of contract with Directors. 301



89


ANNEXURE "B"

I. Forms and Returns as filed by the Company with Registrar ofCompanies, during the financial year ending 31st March, 2012.

Sr. No. Form No./ Filed for Date of Short Particular Whether filed If delayReturn & Date Under Filing & within in filingof Document section SRN prescribed whether

time requisiteYes/No additional

fee paidYes/No

1 From No.23 220 08.12.2011 Balances sheet as on 31.3.2011 Yes N.AAC & ACA P82367889 and profit and loss account as on27.06.2011 that date along with Director Report

and Auditors Reports thereon.

2 Form 20B 159 10.10.2011 Annual return as on 27.06.2011 Yes N.A27.06.2011 P84596477

3 Form 66 159 28.11.2011 Compliance certificate as Yes N.A27.06.2011 P81180986 on 31.3.2011

ANNEXURE "C"

Chart Showing dates of Board Meetings Quarter wise For the Year1.4.2011 to 31.3.2012

SR. NO. April to July to October to January to RemarkJune September December March

1 22.04.2011 25.07.2011 19.10.2011 27.01.2012 --

2 19.05.2011 --- --- 31.03.2012 --




90

AUDITORS' REPORT TO THE MEMBERS OFACTION COMMODITIES LIMITED

FOR THE YEAR ENDED 31st MARCH, 2012

1. We have audited the attached Balance Sheet of Action CommoditiesLimited as at 31st March, 2012 the Statement of Profit and Loss and theCash Flow Statement of the Company for the year ended on that dateannexed thereto. These financial statements are the responsibility of theCompany's management. Our responsibility is to express an opinion onthese financial statements based on our audit.



4. Further to our comments in the Annexure referred to in paragraph 3 above,we report that:

a) We have obtained all the information and explanations which to thebest of our knowledge and belief were necessary for the purpose ofour audit.


c) The Balance Sheet, Statement of Profit and Loss and Cash Flowstatement dealt with by this report are in agreement with the books ofaccount.

d) In our opinion, the Balance Sheet, Statement of Profit and Loss andCash Flow statement dealt with by this report comply with theaccounting standards referred to in Section 211 (3C) of the CompaniesAct, 1956.

e) On the basis of written representations received from the directors, ason 31st March, 2012 and taken on record by the Board of Directors,we report that none of the directors is disqualified as on 31st March,2012 from being appointed as a director in terms of Section 274 (1) (g)of the Companies Act, 1956.

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5. In our opinion, and to the best of our information and according to theexplanations given to us, the accounts read with the notes thereon, givethe information required by the Companies Act, 1956, in the manner sorequired and give a true and fair view in conformity with the accountingprinciples generally accepted in India:

i) In the case of the Balance Sheet, of the state of the affairs of theCompany as at 31st March, 2012;

ii) In the case of the Statement of Profit and Loss , of the loss for the yearended on that date; and




Place : MumbaiDate : 18th May 2012


92

Annexure referred to in paragraph (3) of our report of even datefor the year 31st March, 2012

Re: Action Commodities Limited



c) During the year the Company has not disposed off any substantial part offixed assets so as to affect the going concern.

2. The Company does not have any stocks of raw materials, stores, spare partsand finished goods. Hence the clause (ii) of the Order does not apply to theCompany.

3. a) The Company has not granted any unsecured loans / Advances to itscompanies, firms or other parties covered in the Register maintained underSection 301 of the Act. Hence the clauses iii (b), iii (c) and iii (d) of the orderare not applicable to the company.

b) The Company has taken unsecured loans from companies, firms or otherparties covered in the Register maintained under Section 301 of the Actand amount outstanding as at 31st March 2012 is NIL (P.Y.Rs. 30,359/-,No. of parties one).

c) As per the information and explanations given to us, the above loan takenis interest free & there are no stipulations as to repayment of the same.Hence the clauses iii (f) & (g) of the order are not applicable to the Company.

4. In our opinion and according to the information and explanations given to us,there are adequate internal control procedures commensurate with the size ofthe Company and the nature of its business, for the purchase of shares andfixed asset and for providing services. During the course of our audit, no majorweakness has been noticed in the internal control system in respect of theseareas.

5. Based on the audit procedures applied by us and according to the informationand explanations provided by the management, we are of the opinion that thetransactions that need to be entered into the register maintained under Section301 of the Companies Act, 1956 have been so entered.

6. The Company has not accepted any deposits from the public during the year.

7. The Company has an adequate internal control system commensurate with thesize and nature of its business.

8. The Central Government has not prescribed maintenance of cost records undersection 209 (1) (d) of the Companies Act, 1956.

9. a) According to the records and information and explanations obtained fromthe management, the Company is generally regular in depositing undisputedstatutory dues including Provident fund, Employee State Insurance, IncomeTax and other statutory dues applicable to it with appropriate authorities.

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b) In our opinion and according to information and explanations obtained, thereare no undisputed dues outstanding in respect of Sales tax, Wealth tax,Income tax, Service tax and Cess that have not been deposited on accountof dispute.

10. The company is in existence for less than 5 years. It has incurred cash lossduring the year and also in the immediately preceding financial year. Theaccumulated losses as on 31st March 2012 is Rs. 7,11,930/-.

11. The Company has not borrowed from any banks. The Company does not haveany borrowing by way of debentures.

12. Based on our examination of documents and records the Company has notgranted loans and advances on the basis of security by way of pledge of shares,debentures and other securities.

13. In our opinion and according to the information and explanations given to us,the nature of activities of the Company does not attract any special statutesapplicable to chit fund and nidhi /mutual benefit fund/societies.

14. The Company has dealing/trading in shares during the year. In respect of dealingin securities and other investments, in our opinion and according to theinformation and explanations given to us, proper records have been maintainedof the transactions and contracts and timely entries have been made therein.The securities and other investments have been held by the Company in itsown name.

15. According to the information and explanations given to us the Company has notgiven any guarantees for loans taken by associates from banks.

16. The Company has not taken term loans during the year under review.

17. The Company has not raised any funds on short-term basis during the year.

18. During the year, the Company has not made any preferential allotment of equityshares to its holding company.

19. The Company did not have any debentures.

20. The Company has not raised any money through a public issue during the year.

21. Based upon the audit procedures performed and information and explanationsgiven by the management, we report that no fraud on or by the Company hasbeen noticed or reported during the course of our audit.



Place : MumbaiDate : 18th May 2012


94

ACTION COMMODITIES LIMITED BALANCE SHEET AS AT 31st MARCH 2012

Amount in `Particulars Note No. Current Year Previous YearEQUITY AND LIABILITIESShareholders’ fundsShare capital 2 1,000,000 1,000,000Reserves and surplus 3 6,788,087 6,880,430

7,788,087 7,880,430

Non-current liabilities Deferred tax liabilities (Net) 4 12,361 -

12,361 -

Current liabilities Trade payables 68,589 43,300 Other current liabilities 5 725 31,260

69,314 74,560

TOTAL 7,869,762 7,954,990

ASSETSNon-current assetsFixed assets

Tangible assets 6 59,439 99,067Intangible assets 1,009,196 1,065,263

Non-current investments 7 191,987 1,152,149 Deferred tax assets (net) - 109,533 Long-term loans and advances 8 5,400,000 5,400,000

6,660,622 7,826,012

Current assetsCash and Bank Balances 9 41,197 18,711Trade Receivables 1,100,000 110,267Other current assets 10 67,943 -

1,209,140 128,978

TOTAL 7,869,762 7,954,990








Mumbai, Mumbai,Date:18th May 2012 Date: 18th May 2012

95


ACTION COMMODITIES LIMITEDSTATEMENT OF PROFIT & LOSS FOR THE YEAR ENDED 31ST MARCH 2012


Income

Revenue from operations 11 624,423 -

Other income 12 181,978 535,340

Total Revenue 806,401 535,340

Expenses

Employee benefits expense 13 507,140 536,351

Depreciation and amortization expense 6 95,694 122,111

Other expenses 14 174,017 258,592

Total expenses 776,850 917,054

Profit before tax 29,551 (381,714)

Tax expense:

Deferred tax 121,894 (11,014)

Profit (Loss) for the year (92,343) (370,700)

Earning per equity share of Rs.10/- each

Basic/ diluted (0.92) (4.34)








Mumbai, Mumbai,Date:18th May 2012 Date:18th May 2012


96

ACTION COMMODITIES LIMITEDCash Flow Statement For The Year ended 31st March 2012

Amount in `Particulars Current Year Previous Year

A. Cash Flow From Operating Activities:Profit / (Loss) Before Tax 29,551 (381,713)Add/(Less) Non-Cash And Non-Operating ItemsAdjustments For Depreciation 95,694 122,111Dividend Received - (4,200)(Profit)/Loss on investment (181,978) (531,140)

Operating Profit / ( Loss) Before Working CapitalChanges (56,733) (794,942)

Changes In Working Capital(Increase) / Decrease In Current Assets (1,057,675) (5,510,267)Increase / (Decrease) In Current Liabilities & Provisions (5,246) 31,700

Cash Generated From Operations (1,119,654) (6,273,509)Less: Taxes Paid - -

Net Cash Flow From Operating Activities [A] (1,119,654) (6,273,509)

B. Cash Flow From Investing ActivitiesPurchase Of Fixed Assets - (1,121,330)(Purchase)/sales of investment (net) 960,162 (1,152,149)Profit /(Loss) on sale of investment 181,978 531,140Dividend Income on investments - 4,200

Net Cash Used In Investing Activities [B] 1,142,140 (1,738,139)

C Net Cash Flow From Financing ActivitiesProceeds From Issue Of Equity Shares - 500,000Securities Premium On Equity Shares issued - 7,500,000Proceeds from Unsecured Loans - 30,360

Net Cash Generated /(Used) From Financing Activities [C] - 8,030,360

Net Changes In Cash & Cash Equivalents [A +B+C] 22,486 18,711

Cash&Cash Equivalents As At End Of Financial Year - Bank Balance 41,197 18,711 - Cash Balance -Less: Cash & Cash Equivalents As At The Beginning Of Financial Year 18,711 -Net Changes In Cash & Cash Equivalents 22,486 18,711

Note :1. Cash flows are reported using the indirect method, whereby net profit before tax is adjusted for

the effects of transactions of a non-cash nature and any deferrals or accruals.2. Figures in brackets denotes outflows.3 Cash and cash equivalents for the purpose of cash flow statement comprise of Cash at bank and

in hand and short term investments with an original maturity of three months or less.4 Previous years figures have been regrouped, reclassified and /or renamed to confirm to this

years classification.

For and on behalf of the BoardFor Ford,Rhodes,Parks & Co.

Chartered AccountantsFirm Registration No.102860W


A. D. ShenoyPartnerMembership No.11549Mumbai, Mumbai,Date:18th May 2012 Date:18th May 2012

97


Action Commodities Limited


Note 1: Significant Accounting policies & Corporate Information

Corporate Information :-

Action Securities Limited is wholly owned subsidiary of Action FinancialServices (India) Limited. The main objects of the compnay are share Brokingand depository services; however the compnay is yet to start the full-fledgedactivities.

Significant Accounting Policies :



b. Presentation & Disclosure of Financial Statements:-

For the year ended 31.03.2012 revised Schedule VI notified under thecompanies act 1956, has become applicable to the company, for preparation& presentation of its financial statements. The adoption of revised schedule VIdoes not impact recognition & measurement principal followed for preparationof financial statements. However it has significant impact on presentation &disclosure made in the financial statements. The company has also reclassifiedthe previous year figures in accordance with the requirement applicable incurrent year.

c. Use of estimates



Income from broking activities is recognized only when it is reasonably certainthat the ultimate collection will be made.Income from trading in Commoditiesand Derivatives comprises of profit or loss on sale of Commodities held asstock in trade and profit or loss on Derivative instruments is accounted forbased on the “ Guidance note on accounting for Equity Index and Equity StockFutures and Options” issued by the Institute of Chartered Accountants of India.Interest income is recognised on time proportionate basis. Dividend income is


98

recognised as and when payment is received. Income from investing activitiesare recognized only when it is reasonably certain that the ultimate collectionwill be made.

e. Fixed Assets


f. Depreciation/ Amortisation

Depreciation on all fixed assets are provided on prorata basis in accordancewith the rates prescribed under Schedule XIV of the Companies Act, 1956under Written Down Value Method. MCX Membership card shall be amortizedover a period of Twenty years.

g. Impairment of Fixed Assets

An asset is treated as impaired when the carrying cost of assets exceeds itsrecoverable value. An impairment loss is charged to the Profit and Loss accountin the year in which an asset is identified as impaired. The impairment lossrecognized in prior accounting periods is reversed if there has been a changein the estimate of recoverable amount.

h. Investments

Securities which are bought with an intention of keeping for long term areclassified under Investments and are valued cost plus brokerage and stampcharges. Provision for diminution in the value of long term investments is madeonly if such a decline is other than temporary in the opinion of the management.

i. Stock In Trade

Shares and Debentures are valued at cost or market price whichever is lower,whereby the cost of each script is compared vis-a-vis its market value and theresultant shortfall if any, is charged to revenue.

j. Taxation

Provision for current tax is made on the basis of estimated taxable income forthe current accounting year in accordance with the Income-tax Act, 1961.Deferred tax is recognized, subject to prudence, on timing differences, beingthe difference between the taxable income and the accounting income thatoriginate in one period and are capable of reversal in one or more subsequentperiods. Deferred tax assets are recognized for unabsorbed depreciation andcarry forward losses to the extent there is virtual certainty that sufficient futuretaxable income will be available against which deferred tax assets can berealized.

k. Employee benefits

There are no employees eligible for gratuity as such no provision for gratuity isconsidered in accounts.There are no employees eligible for Leave Salary assuch no provision for Leave salary is considered in accounts.There are noemployees eligible for PF and ESIC.

Other employee benefits are accounted on accrual basis.

99


l. Lease Rentals

Assets taken on lease under which the lessor effectively retains all the riskand rewards of ownership are classified as operating lease. Lease paymentsunder operating leases are recognized as expenses on accrual basis inaccordance with the respective lease agreement.

m. Derivative Transactions:

Gain /losses on futures transactions pertaining to Equity &Currency Futuresare recognised on continuous basis. Gain / losses on options contracts arerecognised on squaring off /settlement day


In determining the earning per share, the Company considers the net profitafter tax and includes the post tax effect of any extra ordinary/ exceptionalitems. The number of shares used in computing basic earnings per share isthe weighted average number of shares outstanding during the period. Thenumber of shares used in computing diluted earning per shares comprises theweighted average shares considered for deriving the basic earning per shareand also weighted average number of equity shares that could have beenissued on the conversion of all dilutive potential equity shares. The dilutedpotential equity shares are deemed converted as of the beginning of the period,unless issued at a later date. The number of shares and potentially dilutiveequity shares are adjusted for any stock split and bonus shares issued.

o. Provisions for Contingent liabilities and Contingent assets

A provision is recognized for a present obligation as result of past events if it isprobable that an outflow of resources will be required to settle the obligationand in respect of which reliable estimates can be made. Provisions aredetermined based on net estimate of the amount required to settle the obligationat the Balance sheet date. Contingent liabilities are not recognized but aredisclosed in the notes. Contingent assets are neither recognized nor disclosedin the financial statements.


100

2 Share Capital(a) Details of shares authorised,issued,subscribed & paid up

Particulars Current Year Previous YearAuthorized share capital100,000 Equity Shares of Re. 10 each 1,000,000 1,000,000(Previous year 100,000 Equity Shares ofRe. 10 each)

Issued,Subscribed & fully paid up share capital 100,000 Equity Shares of Re. 10 each 1,000,000 1,000,000

(b) Reconciliation of number of shaers outstanding at beginning & end of thereporting period./ Movement

(No. of Shares)

Particulars Current Year Previous YearOpening balance as on 01.04.11 100,000 50,000Add/ (less) : Issued / (buyback) - 50,000

Closing Balance 31.03.12 (previous year 31.03.11) 100,000 100,000

RemarkDuring previous year Company had increased its authorised share capital fromRs.5,00,000 consisting of 50,000 Equity Shares of Rs. 10/- each to Rs. 10,00,000/-consisting of 100,000 equity share of Rs 10/- each and issued 50,000 Equity Sharesof Rs. 10/- each to its holding Company i.e. Action Financial Services (India) Limitedat a premium of Rs. 150/- per share. The Premium so obtained is credited to securitiespremium account.All 100,000 Equity Shares are held by the holding company, Action Services(India)Ltd and its nominees.

(c) Details of Shares issued for consideration other than cash,bonus issue orbuy back in last 5 yearsThere are no transactions in above categories

(d) Shareholder's Information

Particulars Current Year Previous YearShares held by Group CompaniesAction Financial Services(India) Limited (100%) 100,000 100,000

(e) There are no convertible securities issued and outstanding as on Balance sheetdate.

(f) There are no shares reserved for issue under options and contracts /commitmentsfor sale of Shares/disinvestment.

(g) There are no unpaid calls as at Balancesheet date.(h) There are no forefeited shares on Balancesheet date.

101

19th Annual Report 2011-20123 Reserves and Surplus


a. Securities Premium AccountOpening Balance 7,500,000 -Add: Addition on issue of shares - 7,500,000

Closing Balance 7,500,000 7,500,000

b. Surplus as per Statement of

Profit and Loss

Opening Balance (619,570) (248,870)Add: Profit for the year (92,343) (370,700)

Closing Balance (711,913) (619,570)

c. Total Reserves & Surplus (a+b) 6,788,087 6,880,430

4 Deferred tax Asset / (Liability) (Net)

Particulars As at For the As at31.03.2011 year 31.03.2012

WDV differential (83,904) (45,001) (128,905)

Preliminary Expenses Written off 4,635 (1,545) 3,090

Unabsorbed Depreciation 110,632 (36,061) 74,571

Business Loss 78,169 (54,737) 23,433

Short Term Loss - 15,450 15,450

Deferred tax Asset / (Liability) (Net) 109,533 (121,894) (12,361)



Others payables 725 900Loans & advances from related parties - 30,360

725 31,260

Action F

inancial Services (India) Lim

ited

102

Action Commodities Limited

Notes to Financial Statements for the year ended 31st March 2012 (Contd.)NOTE 6Fixed Assets

Gross Block Depreciation Net Block

Particulars As at Additions Disposal Closing Upto For the Total As at As at

01.04.2011 Balance 31.03.2011 Year 31.03.2012 31.03.2011

Tangible Assets

Computer 185,000 - - 185,000 85,934 39,627 125,561 59,439 99,067

185,000 - - 185,000 85,934 39,627 125,561 59,439 99,067

Intangible Assets

Membership Card 1,121,330 - - 1,121,330 56,067 56,067 112,134 1,009,196 1,065,263

1,121,330 - - 1,121,330 56,067 56,067 112,134 1,009,196 1,065,263

Sub Total 1,306,330 - - 1,306,330 142,001 95,694 237,695 1,068,635 1,164,330

Previous Year 185,000 1,121,330 - 1,306,330 19,890 122,111 142,000 1,164,330 -

103

19th Annual Report 2011-20127 Non- Current Investment


Investment inQuoted Equity Instruments 191,987 1,152,149(Market Value Rs. 224,698)

191,987 1,152,149

8 Long -Term Loans & Advances


Security Deposits UnSecured to related parties 5,400,000 5,400,000

5,400,000 5,400,000

9 Cash & bank Balances


Cash & Cash equivalentsBalances with ICICI bank 41,197 18,711

41,197 18,711

10 Other current assets


TDS Receivable A.Y. 2012-2013 62,443 -Loan To Staff 5,500 -

67,943 -

11 Revenue from Operation


Profesional Income 624,423 -

624,423 -

12 Other Income


Profit on F&O 15,180 -Net gain or loss on sale of investments 166,798 531,140Dividend Income - 4,200

181,978 535,340

13 Employee benefit expenses


Salary & wages 506,310 533,351Staff welfare Expenses 830 3,000

507,140 536,351


104

15. Contingent Liabilities: NIL16. Capital Commitments: -

During the year company has acquired MCX membership card, howeverpending completion of procedural formalities business is not yet com-menced. Following are the capital commitment to stock exchange foractivation of the membership:-

Particulars Amount

Security Deposit (Cash) 15,00,000

Security Deposit (Non Cash) 15,00,000

Processing Charges 11,030

17. Managerial Remuneration: NIL

18. Auditors Remuneration:Particulars 2011-12 2010-11

Audit Fees 16,854 13,788

Total 16,854 13,788

19. Unsecured LoansThe company has paid unsecured loan to its Directors. The amount out-standing as on 31st March 2012 is Rs. NIL (Previous Year – Rs. 30,359/-).

20. Investments:(a) The aggregate market value of quoted investments as at 31.03.2012

is Rs. 224,698/- (Previous year Rs. 1,160,995/-) as against the totalcost of quoted investment of Rs. 191,987/- (Previous year Rs.1,152,149/-). No provision for diminution in the value of quoted in-vestment is considered necessary as in the management’s view theshort fall is temporary in nature.

14 Other Expenses


Professional Fees 14,419 26,657 Demat Charges 200 -Proessional Tax (Company) 2,500 5,000Rent 120,000 120,000Rates & Taxes excluding taxes on income 6,011 17,134Shares Expenses on Trading 10,298 44,433Printing & Stationery 3,735 3,425Auditors Remuneration 16,854 13,788Loss On Derivatives - 27,536Bank Charges - 619

174,017 258,592

105


(b) Details of movements in investments during the year are given be-low: -

Opening Balance Closing BalanceParticulars Face Qty V alue Qty Value

Value

Continental Controls Ltd 10 46,124 184,957 46,124 184,957

PVP Vent Ltd 10 500 7,030 500 7,030

21. Employee BenefitThere are no employees eligible for gratuity, leave salary or providedfund etc. as such no provision is considered for this period.

22. As the company has not started its full ledged activities, hence segmentreporting is not applicable.

23. As per Accounting Standard 18, the disclosures of transaction with therelated parties as defined in the Accounting Standard are given below:List of related parties with whom transactions have taken place and rela-tionships:

Sr. Relationship Name of the Related PartyNo.1. Holding Company Action Financial Services (India) Limited2. Key Management Personnel Mr. Milan R. Parekh (Director)

Mr. Bakul R. Parekh (Director)3. Transaction with Share Capital: Rs NIL (P.Y. Rs.5,00,000/-)

Holding Company Securities premium: Rs NIL (P.Y. Rs.75,00,000/-)Rent Expense: Rs.1, 20,000/- (P.Y. Rs.1,20,000/-)Stock Purchase (net): Rs NIL /- (P.Y.- Rs.14,136,977.24/-)Stock Sales (net): Rs. 1,126,960/- (P.Y Rs.13,515,968)Professional Income: Rs. 624,423/- (P.Y : NIL)Expenses on shares: - Rs. 10,298/- (P.Y. Rs.44,433/-)Deposit: Rs NIL (P.Y.– Rs. 54,00,000/-)Balance in closing Rs. 54,00,000/-

4. Transaction with Key Unsecured Loan received: Rs. NIL (P.Y. Rs.30,360/-)Management Personnel Unsecured Loan Repaid: Rs.30,360/- (P.Y. NIL)

24. Disclosures as required by Accounting Standards 19, “Leases” are givenbelow:i. The Company has taken office premises on rent for 11 months.ii. Rent payments are recognized in the Profit and Loss Account

under “Rent”


106

iii. The future minimum lease payments under Non Cancelableoperating lease is as under:

(In `)Particulars Year Ended Year Ended

31.03.2012 31.03.2011

Not later than one year 1,20,000 1,20,000

Later than one year and notlater than five years NIL NIL

More than five years NIL NIL

25. Earning Per Share (EPS): Sr. Particulars Year Ended Year Ended No. 31.03.2012 31.03.2011 (A) Profit / (Loss) attributable to Equity

Shareholders after tax 92,343 (370,700)

(B) Nominal Value of Equity Shares 10 10

(C) Weighted Number of Equity Sharesoutstanding during the Year 100,000 85,482

(D) Basic Earnings Per Share (A/C) (0.92) (4.34)

26. Provisions for Income Tax:In view of the loss for this year no provision for income tax is considered

27. a. Based on the details regarding the status of the suppliers, to theextent obtained, no supplier is covered under the Micro, Small andMedium Enterprises Development Act, 2006. The auditors have re-lied upon the management information in this regard.

b. To the extent information available with the company, the companydoes not owe any sum to small scale industrial unit as defined inclause (j) of Section 3 of the Industrial (Development & Regulation)Act, 1951. The auditors have relied upon the management informa-tion in this regard.

c. There are no balances outstanding Investor education and protec-tion fund u/s 205 C of the Companies Act, 1956.

As per our Report attached For and on behalf of the board

For FORD, RHODES, PARKS & CO.Chartered Accountants Milan R. ParekhFirm Registration No. 102860W Director

A. D. Shenoy Bakul R. Parekh(Partner) DirectorMembership No.11549Place: MumbaiDate: 18th May 2012

107

19th Annual Report 2011-2012AUDITORS' REPORT TO THE BOARD OF DIRECTORS ON

THE CONSOLIDATED FINANCIAL STATEMENT OFACTION FIANANCIAL SERVICES (INDIA) LTD. AND ITS SUBSIDIARIES

FOR THE YEAR ENDED 31ST MARCH 2012

1. We have audited the attached Consolidated Balance Sheet of Action FinancialServices (India) Limited ("the Company") and its subsidiaries as at 31st March,2012, the related Consolidated Statement of Profit and loss and the ConsolidatedCash Flow Statement of the Group for the year ended on that date which wehave signed under reference to this report. These Consolidated financialstatements are the responsibility of the Company's management and have beenprepared on the basis of separate financial statements and other financialinformation regarding components. Our responsibility is to express an opinionon this consolidated statement based on our audit.

2. We conducted our audit in accordance with auditing standards generallyaccepted in India. Those standards require that we plan and perform the auditto obtain reasonable assurance about whether the financial statements areprepared, in all material respects, in accordance with an identified financialreporting framework and are free of material misstatement. An Audit includes,examining on test basic, evidence supporting the amounts and disclosure inthe financial statements. Audit also includes assessing the accounting principlesused and significant estimates made by management, as well as evaluating theoverall financial statement presentation. We believe that our audit provides areasonable basis for our opinion.

3. We report that the consolidated financial statements have been prepared bythe Company in accordance with the requirements of Accounting Standard (AS)21, Consolidated Financial Statements, issued by the Institute of CharteredAccountants of India and on the basis of the separate audited financial statementsof the Company and its subsidiaries included in the consolidated financialstatements.

4. On the basis of the information and explanation given to us and on theconsideration of the separate audit reports on individual audited financialstatements of the Company and its subsidiaries, we are of the opinion that thesaid consolidated financial statements give a true and fair view in conformitywith the accounting principles generally accepted in India.

a) In the case of the consolidated Balance Sheet, of the consolidated state ofaffairs of the Company and its subsidiaries as at 31st March 2012;

b) In the case of the consolidated Statement of Profit and loss, of the loss forthe year ended on that date; and

c) In the case of the Consolidated Cash Flow Statement, of the consolidatedcash flows of the Company and its subsidiaries for the year ended on thatdate.


A.D. ShenoyPartnerMembership No.11549



108

ACTION FINANCIAL SERVICES (INDIA) LTD.CONSOLIDATED BALANCE SHEET AS AT 31ST MARCH 2012

Amount in `Particulars Note No. Current Year Previous YearEQUITY AND LIABILITIESShareholders’ fundsShare capital 2 108,862,000 108,090,000Reserves and surplus 3 40,496,382 37,690,871Money received against share warrants - 2,238,800

149,358,382 148,019,671Non-current liabilitiesLong-term borrowings 4 2,688,403 4,815,560Other Long term liabilities 5 5,957,604 3,039,003Long-term provisions 6 2,461,098 2,327,697

11,107,105 10,182,260Current liabilitiesShort-term borrowings 7 37,552,389 28,126,505Trade payables 34,952,376 47,469,823Other current liabilities 8 5,524,336 9,835,680Short-term provisions 9 3,241,635 4,083,689

81,270,736 89,515,697

TOTAL 241,736,223 247,717,628

ASSETSNon-current assets Fixed assets 10Tangible assets 13,603,218 9,756,231Intangible assets 5,666,778 6,699,114

Non-current investments 11 50,143,943 51,463,151Deferred tax assets (net) 12 2,665,454 3,221,626Long-term loans and advances 13 10,105,577 11,375,577Other non-current assets 14 3,263,657 2,541,018

85,448,627 85,056,717Current assetsCurrent investments - -Inventories 15 85,614,347 88,228,616Trade receivables 16 51,345,974 51,979,272Cash and Bank balance 17 10,026,734 14,280,839Short-term loans and advances 18 1,941,201 3,354,300Other current assets 19 7,359,340 4,817,884

156,287,596 162,660,911

TOTAL 241,736,223 247,717,628

Significant Accounting PoliciesNotes to Accounts 1-39Significant Accounting Policies & NotesNotes to Accounts form an integral part of the accountsAs per our report of even date For and on behalf of the BoardFor Ford,Rhodes,Parks & Co.



Mumbai, Mumbai,Date :1st August 2012 1st August 2012

109

19th Annual Report 2011-2012ACTION FINANCIAL SERVICES (INDIA) LTD.

CONSOLIDATED STATEMENT OF PROFIT & LOSS ACCOUNTFOR THE YEAR ENDED 31ST MARCH 2012


Revenue

Revenue from operations 20 49,260,616 30,858,564

Other income 21 1,435,688 1,576,324

Total Revenue 50,696,304 32,434,888

Expenses

Change in stock in trade 907,856 465,528

Employee benefits expense 22 10,151,236 9,720,275

Finance costs 23 6,597,376 6,827,008

Depreciation and amortization expense 10 1,708,152 2,780,642

Other expenses 24 31,093,583 12,137,501

Total Expenses 50,458,203 31,930,954

Profit Before Tax 238,101 503,934

Tax expense:

Current tax (MAT) - 100,000 107,052

Deferred tax 556,178 476,381

Profit (Loss) for the year (418,077) (79,499)

Earnings per equity share of Rs.10/- each:

(1) Basic (0.12) (0.08)

(2) Diluted (0.12) (0.08)

Significant Accounting Policies 1Notes to Accounts form an integral part of the accounts 1-39Significant Accounting Policies & NotesNotes to Accounts form an integral part of the accountsAs per our report of even date For and on behalf of the BoardFor Ford,Rhodes,Parks & Co.



Mumbai, Mumbai,Date:1st August 2012 Date:1st August 2012


110

ACTION FINANCIAL SERVICES (INDIA) LTD.Consolidated Cash Flow Statement For The Year ended 31st March 2012

Amount in `


A. CASH FLOW FROM OPERATING ACTIVITIES Net Profit before Tax 238,101 503,934 Depreciation 1,708,152 2,780,642 Excess provsion for taxation considered as per R& S 1,756,785 - Loss on sale of Fixed Assets - 279,338 Interest and Dividend Income (1,157,018) (1,290,207) (Profit)/ Loss on sale of Investments 73,278 (1,104,787) Provision on Standard & Sub Standard Assets 134,769 Interest Expenditure 6,597,376 6,827,008 Tax Deducted at Source - - Operating Profit before Working Capital Changes 9,351,443 7,995,928 Trade and Other Receivables 774,941 (25,530,843) Inventories 2,614,269 (9,652,816) Trade payables (12,517,448) (1,949,464) Other Payables (Exluding Current tax Provision) (2,336,165) (2,586,707) Cash Generated from Operations (2,112,960) (31,723,902) Direct Taxes Paid (Net) - - Net Cash from Operating Activities [A] (2,112,960) (31,723,902)

B. CASH FLOW FROM INVESTING ACTIVITIES Purchase & Creation of Fixed Assets (4,522,805) (2,960,889) Proceeds from sale of fixed assets - 273,999 (Purchase) / Sale Of Investments (Net) 1,319,208 725,202 Profit/ (Loss) on sale of Investments (73,278) 1,104,787 Investment in Fixed deposit 3,519,135 (16,099,523) Divivend Received 37,310 279,860 Interest Received 1,119,708 1,010,347 Net Cash used in Investing Activities [B] 1,399,278 (15,666,217)

C. CASH FLOW FROM FINANCING ACTIVITIES Proceeds from Secured Borrowing (Net) (2,127,157) 225,088 Proceeds from UnSecured Borrowing (Net) 9,425,884 2,962,607 Proceeds from issue of warrants - 2,238,800 Proceeds from issue of Equity Shares - 11,710,000 Securities premium on Equity Sahres - 22,249,000 Interest paid (6,597,376) (6,827,008) Net Cash from Financing Activities [C] 701,351 32,558,487

Net increase/(decrease) in cash and cash equivalents [A+B+C] (12,331) (14,831,631)

Cash and cash equivalents as at 1st April (Opening) 722,334 15,553,965 Cash and cash equivalents as at 31st March (Closing) 710,003 722,334 Net increase / (decrease) in cash and cash equivalents (12,331) (14,831,631)

-Notes:i) Cash and Cash Equivalents include:

Balances with Schedule Banks on Current Accounts 708,650 721,112 Cash in Hand 1,353 1,222

710,003 722,334

ii) The above cash flow statement has been prepared under the 'Indirect Method' as set out in theAccounting Standard - 3 on Cash Flow Statements.

iii) Figures in brackets denotes outflows. iv) Cash and cash equivalents for the purpose of cash flow statement comprise of Cash at bank

and in hand and short term investments with an original maturity of three months or less. v) Previous year's figures regrouped /reclassified wherever required.

As per our report of even date For and on behalf of the BoardFor Ford, Rhodes, Parks & Co. Milan R. ParekhChartered Accountants Chairman & Managing DirectorFirm Registration No: 102860W

Bakul R. ParekhA. D. Shenoy DirectorPartnerMembership No : 11549

Place : Mumbai Place : MumbaiDate : 1st August 2012 Date : 1st August 2012

111


Note forming part of consolidated financial statement for the year ended31st March 2012

Note 1: Corporate Information and Significant Accounting Policies:-

1. Corporate Information:-

Action Financial Services (India) Limited is share Broking and depositoryservices company and has two wholly owned subsidiaries viz. ActionSecurities Limited and Action Commodities Limited.

2. Significant Accounting Policies:

a. Basis of Preparation of Financial statements and AccountingConcepts:

The consolidated financial statements relate to Action Financial Services(India) Limited and its wholly owned subsidiaries viz Action SecuritiesLimited and Action Commodities Limited. The parent company with itssubsidiary constitutes the group. The financial statements of the parentcompany and its subsidiaries are drawn up to 31st March 2012.

The accounts have been prepared on accrual basis, in accordance withthe Accounting Standards referred to in Section 211 (3C) of the CompaniesAct, 1956, which have been prescribed by the Companies (AccountingStandards) Rules, 2006 and other provisions of the Companies Act, 1956,to the extent applicable. Accounting policies have been consistentlyapplied except where a newly issued accounting standard is initiallyadopted or a revision to the existing accounting standard or a moreappropriate presentation of the financial statements requires a change inthe accounting policy hitherto in use.

b. Presentation in Revised Schedule VI:

For the year ended 31.03.2012 revised Schedule VI notified under thecompanies act 1956, has become applicable to the company, forpreparation & presentation of its financial statements. The adoption ofrevised schedule VI does not impact recognition & measurement principalfollowed for preparation of financial statements. However it has significantimpact on presentation & disclosure made in the financial statements.The company has also reclassified the previous year figures in accordancewith the requirement applicable in current year.

c. Principles of consolidation:

The financial statements of the parent company and its wholly ownedsubsidiaries have been consolidated in accordance with Accountingstandard 21 on "Consolidated financial statements", on line-by-line basisby adding together the book values of like items of assets, liabilities,incomes and expenses after eliminating intra group balances, intra group


112

transactions and are presented to the extent possible, in the same manneras the company's independent financial statements. The financialstatements of the parent company and its subsidiaries have beenconsolidated using uniform accounting policies except to the extent statedhereunder.

d. Use of estimates

The preparation of financial statements requires estimates andassumptions to be made that affect the reported amount of assets andliabilities on the date of the financial statement and the reported amountof revenue and expenses during the reporting periods. Difference betweenthe actual results and estimates are recognized in the period in which theresults are known / materialized.

e. Revenue Recognition:

(i) Income from broking activities and depository services arerecognized only when it is reasonably certain that the ultimatecollection will be made.

(ii) Interest income is recognised on time proportionate basis.

(iii) Dividend income is recognized when right to receive is established.

(iv) Income from trading in Securities and Derivatives (Commodities,Currency and Equity) comprises of profit or loss on sale of securitiesheld as stock in trade and profit or loss on Derivative instruments.Profit or loss on Derivative instruments is accounted for based onthe "Guidance note on accounting for Equity Index and Equity StockFutures and Options.

f. Fixed Assets:

All the fixed assets are accounted at cost of acquisition less accumulateddepreciation

g. Depreciation / Amortisation

Depreciation on all fixed assets are provided on prorata basis inaccordance with the rates prescribed under Schedule XIV of theCompanies Act, 1956 under Straight Line Method. However subsidiariesare providing Depreciation on written Down Value Method. Assetsacquired under Finance lease are amortised over the period of lease orestimated useful life of Asset whichever is lower. Goodwill and MCXmembership shall be amortized over a period of Twenty years.

h. Leased Assets:

Assets taken on lease under which the lessor effectively retains all therisk and rewards of ownership are classified as operating lease. Lease

113


payments under operating leases are recognized as expenses on accrualbasis in accordance with the respective lease agreement.

i. Impairment of Fixed Assets

An asset is treated as impaired when the carrying cost of assets exceedsits recoverable value. An impairment loss is charged to the Profit andLoss account in the year in which an asset is identified as impaired. Theimpairment loss recognized in prior accounting periods is reversed if therehas been a change in the estimate of recoverable amount.

j. Investments

Securities, which are bought with an intention of keeping for long term,are classified under Investments and are valued at cost plus brokerageand stamp charges. Provision for diminution in the value of long-terminvestments is made only if such a decline is other than temporary in theopinion of the management.

k. Stock In Trade

Shares and Debentures are valued at cost or market price whichever islower, whereby the cost of each script is compared vis-à-vis its marketvalue and the resultant shortfall if any, is charged to revenue.

l. Taxation

(i) Provision for current tax is made on the basis of estimated taxableincome for the current accounting year in accordance with theIncome-tax Act, 1961.

(ii) Deferred tax on timing difference between taxable income andaccounting income is accounted for, using the tax rates and the taxlaws enacted or substantially enacted as on the balance sheet date.Deferred tax assets are recognized for unabsorbed depreciation andcarry forward losses to the extent there is virtual certainty thatsufficient future taxable income will be available against whichdeferred tax assets can be realized.

m. Employee benefits

(i) Gratuity to employees is provided as per AS 15 and liability as onBalance Sheet date has been determined on the basis of actuarialvaluation. The liability is not funded.

(ii) Leave encashment benefits payable to employees of the Companywith respect to accumulated leave outstanding at the year-end areaccounted for on the basis of an actuarial valuation as at the BalanceSheet date.

(iii) Contributions payable by the Company to the concerned governmentauthorities in respect of provident fund, family pension fund and


114

ESIC are charged to Profit and Loss account.

(iv) Other employee benefits are accounted on accrual basis.


In determining the earning per share, the Company considers the netprofit after tax and includes the post tax effect of any extra ordinary/exceptional items. The number of shares used in computing basic earningsper share is the weighted average number of shares outstanding duringthe period. The number of shares used in computing diluted earning pershares comprises the weighted average shares considered for derivingthe basic earning per share and also weighted average number of equityshares that could have been issued on the conversion of all dilutivepotential equity shares. The diluted potential equity shares are deemedconverted as of the beginning of the period, unless issued at a later date.The number of shares and potentially dilutive equity shares are adjustedfor any stock split and bonus shares issued.

o. Provisions for Contingent liabilities and Contingent assets

A provision is recognized for a present obligation as result of past eventsif it is probable that an outflow of resources will be required to settle theobligation and in respect of which reliable estimates can be made.Provisions are determined based on net estimate of the amount requiredto settle the obligation at the Balance sheet date. Contingent liabilitiesare not recognized but are disclosed in the notes. Contingent assets areneither recognized nor disclosed in the financial statements.

115


Consolidated Financial Statement for the year ended 31st March 2012 (Contd.)2 Share Capital

A Details of Authorised,issued,subscribed and paid up capital


SHARE CAPITALAuthorized share capital1,20,00,000 (1,20,00,000) Equity Shares 120,000,000 120,000,000of Rs.10/-each1,00,000 (1,00,000) Preference Shares 10,000,000 10,000,000of Rs. 100/- each

Issued share capital1,00,58,200 ( P.Y. 99,81,000) Equity Shares ofRs. 10/- each fully-paid 100,582,000 99,810,00082,800 10 % Redeemable CumulativePreference Shares of Rs.100 /- each 8,280,000 8,280,000

108,862,000 108,090,000Subscribed & fully paid up1,00,58,200 ( P.Y. 99,81,000) Equity Shares ofRs. 10/- each fully-paid 100,582,000 99,810,00082,800 10 % Redeemable CumulativePreference Shares of Rs.100/- each 8,280,000 8,280,000

108,862,000 108,090,000

B Reconciliation of number of shares outstanding at beginning & end of thereporting year.I) Equity Shares


Opening balance as on 01.04.2011 9,981,000 8,810,000Add :- Shares issued on Preferential basis - 1,171,000Add :- Conversion of Warrant into Equity Shares 77,200 -Closing Balance 31.03.2012 10,058,200 9,981,000

II) Preference SharesDuring the year there is no movement.Note:-

1. The Company in its meeting of Board of directors held on 30th January 2012 allotted77,200 Equity shares to its promoters on conversion of 77,200 warrants issued on13th October 2010, at a price of Rs 29/- per warrant. Accordingly a sum ofRs. 14,66,800/- is credited to Securities Premium Account.

2. 10% Redeemable preference share capital is redeemable on or before March 2015.3. During last year company has issued 1,171, 000 Equity share of Rs 10/- each for

cash at a premium of Rs 19/- per share vide board resolution dated 13th October2010. Accordingly a sum of Rs. 22,249,000/- is credited to Securities PremiumAccount.


116

C Last 5 years details of Shares issued / bought backThere are no issues for consideration other than cash, Bonus shares or buy back inpast 5 years,however in last year company had issued 6,25,000/- warrants whichwere later forterified .

D Shareholder's Information(No. of Shares)


1. Shares held by Group Companies NA NA

2. Share holders holding 5% or more shares

Name As at 31st March 2012 As at 31st March 2011Shares Percentage Shares Percentage

Milan R Parekh 2,679,056 26.64 2,601,856 26.07

Bakul R Parekh 2,038,889 20.27 2,038,889 20.43

TOTAL 4,717,945 46.91 4,640,745 46.50

Milan Parekh's shareholding includes 267,600 shares having lock in period till 15.10.13and Bakul Parekh's shareholding includes 172,400/- shares having lock in period till15.10.13

E There are no convertible securities issued and outstanding as on Balance sheetdate.

F There are no shares reserved for issue under options and contracts /commitmentsfor sale of Shares/disinvestment.

G There are no unpaid calls as at Balancesheet date.H There are no forefeited shares on Balancesheet date.

3 Reserves and SurplusParticulars Current Year Previous Yeara. Securities Premium AccountOpening Balance 29,741,500 7,492,500Add: Addition on Shares issued on Preferential basis - 22,249,000Add: Addition on conversion on warrants 1,466,800 -Closing Balance 31,208,300 29,741,500

b. Capital Redemption Reserve Account 10,120,000 10,120,000

C. Capital Reserve AccountOpening Balance 6,275,000 5,650,000

Add: Addition on Forefeiture of Warrants - 625,000Closing Balance 6,275,000 6,275,000

d. Surplus as per Statement of Profit & LossOpening Balance (8,445,625) (8,366,130)Profit for the year (418,077) (79,499)Add: Adjustment of earlier year income tax 1,756,785 -Closing Balance (7,106,918) (8,445,629)

Total Reserves & Surplus 40,496,382 37,690,871

117

19th Annual Report 2011-2012CRR represents Reserve created on redemption of 101,200 Preference shares in 2008.CR represents forefeited amount of 11,90,000 warrants in year 2010 and 125,000 warrantsin year 2011.4 Long Term Borrowings

Particulars Current Year Previous YearSecured borrowingTerm Loans from Banks 5,155,871 6,887,180Less: Current maturities of Long TermDebt disclosed under OCL (2,825,028) (2,821,788)

2,330,843 4,065,392Payables under finance lease obligations 750,169 1,099,025Less: Current maturities of finance leaseobligations disclosed under OCL (392,609) (348,857)

357,560 750,1682,688,403 4,815,560

5 Other Long Term LiabilitesParticulars Current Year Previous YearDeposit from Clients 5,957,604 3,039,003

5,957,604 3,039,003

6 Long - Term ProvisionsParticulars Current Year Previous YearContigent Provision agst Standard Assets 134,769 -Provison for gratuity 2,213,809 2,243,565Provisoin for leave benefits 112,520 84,132

2,461,098 2,327,697

7 Short Term BorrowingsParticulars Current Year Previous YearLoans repayable on demand from Banks (Secured ) 16,462,359 11,283,379Loans & advances from related parties - 43,126Inter corporate deposit (Secured) 16,059,292 16,800,000Inter corporate deposit (Unsecured) 5,030,738 -

37,552,389 28,126,505

8 Other Current LiabilitiesParticulars Current Year Previous YearCurrent maturities of Long- Term debt 2,825,028 2,821,788Others Loans & Advances Book overdraft 1,327,991 3,075,580Current maturities of finance lease obligations 392,609 348,857Others payables (Specify Nature) 978,708 3,589,455

5,524,336 9,835,680

9 Short Term ProvisionsParticulars Current Year Previous YearProvision for Gratuity 228,323 25,858Provision for leave benefits 325,526 59,039Provision for Taxation 2,687,786 3,998,792

3,241,635 4,083,689


118

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119

19th Annual Report 2011-201211 Non- Current Investment

Particulars Current Year Previous YearTrade Investment (Unquoted)BSE 2,683,500 2,683,500BGSE 1,229,609 1,229,609

3,913,109 3,913,109Other InvestmentUnquoted Equity InstrumentsOthers 100,000 100,000

100,000 100,000Quoted Equity InstrumentsEquity Instruments 45,980,984 47,450,042(Market value Rs. 44,954,057/-)Other Investment (Quoted)

HDFC Warrant 149,850 -(Market value Rs. 150,387/-)

50,143,943 51,463,151

12 Deferred Tax Assets (Net)

Particulars As at For the As at01.04.2011 year 31.03.2012

WDV differential (1,577,169) (199,567) (1,776,736)

Retirement benefits 725,949 140,694 866,646

Preliminary Expenses/w/off 4,635 (1,545) 3,090

Unabsorbed Depreciation 609,526 (38,727) 570,799

Business Loss 2,199,683 (145,985) 2,053,698

Long Term Loss 273,310 (273,310) -

Short Term Loss 985,695 (37,738) 947,957

Net Deferred tax Asset / (Liability) 3,221,629 (556,178) 2,665,454

13 Long -Term Loans & AdvancesParticulars Current Year Previous YearSecurity DepositsSecured, Considered good 10,105,577 11,375,577

10,105,577 11,375,577

14 Other Non-Current AssetsParticulars Current Year Previous YearFixed Deposits having maturies after 12 monthfrom balance sheet date & held as margin money 3,263,657 2,541,018

3,263,657 2,541,018

15 InventoriesParticulars Current Year Previous YearShares as at 31.03.2012 valued at Cost orMarket value, whichever is lower. 85,614,347 88,228,616

85,614,347 88,228,616


120

16 Trade ReceivablesParticulars Current Year Previous YearReceivables outstanding for more than6 months from the due date

Unsecured, considered good 4,627,436 3,489,498Less : Provision for Non- Performing Debtors (462,744) (348,950)

4,164,692 3,140,548Others

Unsecured, Considered good 47,181,282 48,838,72451,345,974 51,979,272

17 Cash & Bank BalancesParticulars Current Year Previous YearCash & bank BalancesBalances with bank 708,650 721,112Cash on hand 1,353 1,222

710,003 722,334Other bank balanceFD held having maturity less than 12 monthsfrom bs date held as margin money 9,316,731 13,558,505FD held as margin money maturity more than12 months from balance sheet date 3,263,657 2,541,018Less: Amount considered sep under noncurrent asset (3,263,657) (2,541,018)

9,316,731 13,558,505

10,026,734 14,280,839

18 Short Term Loans and AdvancesParticulars Current Year Previous YearOthers

UnSecured, Considered goodEmployee Loan 112,514 80,875Statutory Dues 162,428 376,859Prepaid Expenses 365,176 309,413Others 1,301,083 2,587,153

1,941,201 3,354,300

19 Other Current AssetsParticulars Current Year Previous YearSecurity Deposit 450,000 450,000Interest Accrued on Deposits 515,548 457,998Advance Tax Paid 5,400,000 3,100,000Tax Deducted at Source 993,792 809,886

7,359,340 4,817,884

121

19th Annual Report 2011-201220 Revenue from Operations

Particulars Current Year Previous Year1. Revenue from ServicesIncome from broking activities 10,907,829 16,170,326Income from depository Services 3,448,003 3,839,608

14,355,832 20,009,9342. Other operating revenueMutual Fund Commission 103,001 63,626Profit on sale of securities 34,801,783 5,896,056Profit or loss on sale of investments - 1,635,927Profit on Currency Derivatives - 666,336Profit on Derivatives - 2,586,685

34,904,784 10,848,63049,260,616 30,858,564

21 Other IncomeParticulars Current Year Previous YearInterest income 1,119,708 1,010,347Miscellaneous income 189,223 39,235Dividend Income 37,310 279,860Stock Exchange Expenses Recovered

From Remisers 89,447 93,000Leave Salary Provision Written Back - 153,882

1,435,688 1,576,324

22 Employee Benefit ExpensesParticulars Current Year Previous YearSalary & wages 9,201,320 8,789,881Contribution to provident & other Funds 239,336 284,633Leave Encashment 353,914 -Staff welfare Expenses 158,099 165,732Gratuity 198,567 228,975Incentive Paid - 251,054

10,151,236 9,720,275

23 Finance CostParticulars Current Year Previous YearInterest Paid to Bank 1,541,132 2,216,852Interest Paid to Others 3,635,242 3,346,531Interest Paid on Car Loan 98,782 10,013Loan Processing Charges 250,000 -Interest Paid on Term Loan 1,072,220 1,253,612

6,597,376 6,827,008


122

24 Other Expenses


Professional Fees 1,381,801 1,736,691Professional Tax Company 5,000 15,000Electricity Expenses 437,914 496,967Travelling and Conveyance 133,264 224,042Rent , Rates & Taxes 760,279 1,236,870Printing & Stationery 331,562 469,270Auditors Remuneration 214,388 154,000Bank Charges 814,182 934,419Listing and License 117,119 111,090Maintainence Expenses 903,101 940,773Communication Expenses 818,066 944,565Miscellaneous Expenses 397,508 298,035Prior Expenses 650,000 -Stock Exchange Expenses 1,552,462 1,523,706Settlement Charges 750,000 465,000NSDL Expenses 595,436 696,785Penalty- NSE 544,163 158,337Loss on sales of investment 73,278 -Loss on Currency Derivatives 16,492,590 -Loss on Derivatives 1,902,033 145,958Loss on sale of Assets - 279,338Provision for Non-Performing Assets 113,794 80,394Provision for Contingent against standard assets 134,769Commission Paid 168,775 -Sub Brokerage 1,802,099 1,226,261

31,093,583 12,137,501

Note forming part of financial statement for the year ended 31st March 2012

The consolidated financial statements have been prepared in accordancewith the Accounting Standard (AS) 21 and the Accounting Standard (AS)23, notified under section 211(3C) of the Companies Act, 1956. Theconsolidated financial statements of Action Financial Services (India) Ltd.(the parent company) include its wholly owned subsidiaries as under:-

Sr. Name Country Proportion of Proportion ofno. ownership ownership

Interest as at Interest as at31st March 2012 31st March 2011

1. Action Securities India 100 % 100 %Limited

2. Action Commodities India 100% 100%Limited

123

19th Annual Report 2011-201227. Contingent Liabilities not provided in respect of

a. Bank Guarantee amounting to Rs. 23,250,000 /- (previous year Rs. 29,850,000/-)Secured against fixed deposit of RS 11,625,000/-.

b. Allotment money payable on partly paid shares and debentures Rs. 1,782,000/-(Previous year Rs. 1,782,000/-)

c. Rs.3, 312,000/- being Arrears of Dividend on Cumulative redeemable PreferenceShares up till 31st March 2012. (Previous Year Rs.2,484,000/-).

d. Income Tax:-Sr.No. Name of dues Forum where Dispute Period to which Amount

is pending amount relates involved1 Income Tax ITAT Mumbai A.Y. 2008-09 10,130,835/-2 TAX Deducted at Sources Commissioner of Income

(Appeals), Mumbai A.Y. 2010-11 129,990/-3 TAX Deducted at Sources Commissioner of Income

(Appeals), Mumbai A.Y. 2011-12 143,056/-

Note:-1. The Company had contested Income Tax demand of Rs 10,130,835/- for Assessment

Year 2008-09. The Company has paid Rs.54,00,000/- and balance amount is inabeyance till disposal of the case . The company has preferred an appeal in the ITATagainst the CIT(A) order.

2. The Company had contested Income Tax Deducted at Sources of Rs 129,990/- andRs 143,056/- for Assessment Year 2010-11 and 2011-12. The company has preferredan appeal in the ITAT against the CIT (A) order.

28. Capital Commitments: - During previous year one of the subsidiary company (Action Commodities Limited)has acquired MCX membership card, however pending completion of proceduralformalities business is not yet commenced. Following are the capital commitment tostock exchange for activation of the membership:-Particulars AmountSecurity Deposit (Cash) 15,00,000Security Deposit (Non Cash) 15,00,000Processing Charges 11,030

29. Borrowings1. Term Loan: Term Loans from ICICI Bank Ltd. aggregates to Rs. 5,155,871/- (Previous

Year Rs.6,887,180/-) and are Secured by way of mortgage of office premises No. 46,47 and 54, at Rajgir Chambers, Fort, Mumbai and Personal Guarantee of both theDirectors and carries interest @18.75% p.a. Term loan outstanding of Rs.2,720,290/- ismaturing in June 2013 and term Loan outstanding of Rs.2,435,581/- is maturing inMay 2032.

2. Vehicle Loan: The Company has availed vehicle loans from TATA capital limited.The said loans are secured against the vehicle purchased against them. Outstandingamount as on 31.03.2012 is Rs 750,169/-. (Previous Year Rs.1,099,025/-). Loancarries interest @ 10.70%p.a. The tenure of loan is up to January 2014.

3. Bank Overdraft: Overdraft of Rs. 16,462,359/- (previous year Rs.11,283,379/-) asat 31.03.2012 from the Scheduled Banks are secured against Personal Guaranteeof both Directors and pledge of Equity shares. Facility carries interest ranging from14 to 14.75%.


124

30. ICDS: Inter corporate deposit received from Enpee Enterprises Pvt. Limited is securedagainst Pledge of Equity shares as well as Company premises in BSE Building. Itcarries interest @21% p.a. Unsecured ICD taken from Golden overseas Pvt. Ltd ofRS 50,30,738/- carries interest @12% p.a. There are no stipulations as to repaymentof ICD.

31. Managerial Remuneration: Whole time directors are paid remuneration aggregatingto Rs.4,140,000/- .The computation of net profit under section 198 / 349 of theCompanies Act, 1956 has not been given since no commission is paid / payable toany director in the current year.

32. Auditor's remuneration:-Particulars 2011-12 2010-11Audit Fees 113,708 85,100Tax Audit Fees 25,000 15,000Other Charges , Certification etc 75,680 53,900Total 214,388 1,54,000

33. In compliance with RBI guidelines in relation to Non-Banking Financial Companies,the company has provided Rs. 134,769/-(previous year NIL) being 0.25% of standardasset as 'Contingent provision against standard assets' and 10% on Non performingassets totaling to Rs. 462,744/- (previous year Rs. 348,950/-).

34. Investments:(a) The aggregate market value of quoted investments as at 31.03.2012 is Rs.

44,954,057/-(Previous year Rs. 49,439,084/-) as against the total cost of quotedinvestment of Rs. 46,130,834/- (Previous Year Rs.47,450,042 /- )

(b) No provision for diminution in the value of quoted investment is considerednecessary as in the management's view the short fall is temporary in nature.

125


(A) Quoted Shares (Fully Paid) at Cost AS ON 31st March, 2012 AS ON 31st March, 2011

Name of the No. of Face Cost No. of Face CostCompany Shares Value Shares Value

` ` ` `

Bajajhind ltd 3,414 1 105,834 - - -

Balrampur Chini 16,010 1 1,332,089 16,010 1 1,332,089

BHEL 35,370 2 13,162,426 7,309 10 13,958,391

Chambal Fertilisers 13,500 10 685,291 13,500 10 685,291

Hindustan Constr. Co 1,543 1 56,088 1,543 1 56,088

Hotel Leela 21,020 2 475,471 21,020 2 475,471

IFCI Ltd 11,931 10 677,204 11,931 10 677,204

Infosys Technologies 15 5 42,975 15 5 39,658

Kanchi Karporam 60,000 10 597,000 70,600 10 702,470

Mcleod Russel 100 5 27,159 50 5 13,509

Morarji Realities 9,682 10 898,490 9,682 10 898,490

Sakti Sugar 17,081 10 1,013,757 17,081 10 1,013,757

Hdfc Warrant 1850 .05 149,850 - - -

Suryadeep Salt 19,682 10 923,641 19,682 10 923,641

Tasc Pharmae 135,500 1 1,399,354 13,550 10 1,399,354

Reliance Industries 4,225 10 3,409,632 5,155 10 5,330,565

TTML 23,775 10 401,318 23,775 10 401,318

Continental Controls Ltd 46,124 10 184,957 46,124 10 184,957

PVP Vent Ltd 500 10 7,030 500 10 7,030

TCS Ltd 7,766 1 7,327,327 7,166 1 5,568,124

HDFC 5125 2 2,369,799 5,125 2 2,369,799

Satyam comp 25,965 2 2,254,111 25,965 2 2,284,537

Bharti 7114 5 2,432,218 6,264 5 2,118,350

Tata Global Beverages Ltd 31,435 1 2,165,535 31,635 1 2,086,839

India Securities 77,402 1 2,085,789 77,402 1 2,085,789

IFCI Ltd - - - 2,000 10 120,820

Dhampur Sugar - - - 3,200 10 216,512

Ram Kaashyap Investment Ltd. - - - 50,000 10 505,500

Reliance Power - - - 750 10 117,330

Jaiprakash Associaties 14,106 2 1,877,159 14,106 2 1,877,159

Total (A) 46,130,834 47,450,043(B) Unquoted Shares (Fully Paid)Banglore Stock Exchange Ltd 7,228 1 1,229,609 7,228 1 1,229,609

BSE Limited 23,257 1 2,683,500 23,257 1 2,683,500

Suman Resort 10,000 10 100,000 10,000 10 100,000

Total (B) 4,013,109 4,013,109Grand Total (A+B) 50,143,943 51,463,151

(c ) Details of opening and closing investments during the year are given below: -


126

35. Earning Per Share (EPS):Sr. No. Particulars Year Ended Year Ended

31.03.2012 31.03.2011(A) Profit /(Loss) After tax (418076) (79,499)(B) Unpaid Dividend of preference Share (Not Provided) 828,000 828,000(C) Profit attributable to Equity Shareholders (in Rs.) after tax (1246076) (748,501)(D) Nominal Value of Equity Shares (in Rs.) 10 10(E) Weighted Number of Equity Shares outstanding during the Year 99,93,656 9,355,397(F) Diluted Number of Equity Shares outstanding during the Year 99,93,656 9,417,895(G) Basic Earnings Per Share (in Rs.) (C/E) (0.12) (0.080)(H) Diluted Earnings Per Share (in Rs.) (C/F) (0.12) (0.079)

36. a. Based on the details regarding the status of the suppliers, to the extent obtained,no supplier is covered under the Micro, Small and Medium EnterprisesDevelopment Act, 2006. The auditors have relied upon the managementinformation in this regard.



37. Disclosures as required by Accounting Standards 19, "Leases":The company hasno lease commitment as at year end (In Rupees)

38. As per Accounting Standard 18, the disclosures of transaction with the related partiesas defined in the Accounting Standard are given below:

a. Relationship & name of related party:Sr. Relation Related PartyNo.1. Enterprise controlling the company NA2. Key Management Personnel 1. Managing Director:

Mr. Milan R. Parekh2. Jt. Managing Director:

Mr. Bakul R. Parekh3. Enterprise controlled by the company Subsidiaries:

1. Action Securities Limited2. Action Commodities Limited

4. Relative of key management Personnel NA5. Enterprise under control of relative of R. B. Parekh - HUF

Key Management Personnel6. Enterprise under common control of M/s. Milan R. Parekh

Key Management Personnel

127


Sr. Relation Related PartyNo.1. Enterprise controlling the Company NA2. Key Management Personnel Mr Milan R Parkeh

Nature of Current PreviousTransaction Year YearRemuneration 2,459,360 1,726,380Conversion of 77,200 -warrant Sharesinto EquityShares

Mr. Bakul R ParkehNature of Current PreviousTransaction Year YearRemuneration 2,389,360 1,663,380Unsecured Loan repaidRs. 43,126 (P.Y. Nil)

3. Enterprise controlled by the company NIL4. Relative of key management Personnel None

5. Enterprise under control of relative of Nature of Current PreviousKey Management Personnel Transaction Year Year

Rent Paid 90,000 1,20,000Balance NIL NIL

6. Enterprise under common control of NoneKey Management Personnel

39. Company's primary business activates are Broking and Depository Services, both are coveredunder one board segment of Share broking activities hence segment reporting is notapplicable.

As per our Report attached. For and on behalf of the board

For FORD, RHODES, PARKS & CO.

Chartered Accountants Milan R. ParekhFirm Registration No. 102860W Chairman & Managing Director

A. D. Shenoy Bakul R. ParekhPartner Jt. Managing DirectorMembership No.11549

Place: MumbaiDate: 1st August 2012

b. Details of transactions with related parties are as follows:


128

129


ACTION FINANCIAL SERVICES (INDIA) LIMITEDRegd.Office: 31, Rajgir Chambers,12/14, Shahid Bhagat Singh Road, Fort, Mumbai - 400 001.

ATTENDANCE SLIPPLEASE FILL IN ATTENDANCE SLIP AND HAND IT OVER AT THE ENTRANCE OFTHE MEETING HALL.

Joint shareholder may obtain additional slip on request.

D.P. Id* Folio No.

Client ID* No. of Share/(s) held

NAME OF THE SHAREHOLDER: NAME OF THE PROXY:

I hereby record my presence at 19th ANNUAL GENERAL MEETING of the Companyheld at 31, Rajgir Chambers, 12/14, Sahid Bhagat Singh Road, Fort, Mumbai -400001 on 29th September, 2012 at 10.00 a.m.

SIGNATURE OF THE ATTENDING MEMBER/PROXY

* Applicable for investors holding shares in electronic form.

ACTION FINANCIAL SERVICES (INDIA) LIMITEDRegd.Office: 31, Rajgir Chambers,12/14, Shahid Bhagat Singh Road, Fort, Mumbai -

400 001.

PROXY FORM

D.P. Id* Folio No.

Client ID* No. of Share/(s) held

I/We _________________________________________________________________

___________________________________of____________________________________in

the district of____________________________________________________

_______ being a Member/Members of of the above-named company, hereby appoint

__________________________ of _______________________________ in the district

of __________________________________________________ or failing him / her

_____________________________________________________________________

of__________________________________________________ in the district of

_____________________________________________ as my/our Proxy to attend and

vote for me/us and on my/our behalf at the 19th ANNUAL GENERAL MEETING of the Company

to be held at 31, Rajgir Chambers, 12/14, Sahid Bhagat Singh Road, Fort, Mumbai - 400 001

on 29th September, 2012 at 10.00 a.m. and at any adjournment thereof.Signed this … …. ……. …. day of …. … .. .. . . … 2012

*Applicable for investors holding shares in electronic form.

NOTE: The proxy in order to be effective should be duly stamped, completed and signed and must be depositedat the Registered Office of the Company not less than FORTYEIGHT HOURS before the time for holding theaforesaid meeting. The Proxy need not be a member of the Company.

OneRupee

RevenueStamp


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BOOK POSTPrinted Matter

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LINK INTIME INDIA PVT. LTD.C-13, Pannalal Silk Mills Compound,L.B.S. Marg, Bhandup (West),Mumbai - 400 078.

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