Your Directors have pleasure in presenting the 32nd Annual Report along with theAudited Accounts for the financial year ended March 31 2015.
Summary of the Companys financial performance for F.Y. 2014-2015 as compared tothe previous financial year is given below:
(Figures in Lacs)
|Particulars ||F.Y. 2014 - 2015 ||F.Y. 2013 - 2014 |
|Income ||745.60 ||562.67 |
|Profit before Dep. & Int. ||39.52 ||30.67 |
|Depreciation ||2.11 ||3.00 |
|Interest ||76.68 ||21.91 |
|Profit after Depreciation & Interest ||(39.27) ||5.76 |
|Provision for Taxation ||0.00 ||0.00 |
|Provison for Tax (deferred) ||0.32 ||2.48 |
|Provision for Taxation for earlier year ||(150.00) ||0.00 |
|Profit/ Loss after Tax ||(191.04) ||3.28 |
|Balance carried to Balance Sheet ||(191.04) ||3.28 |
The company is mainly engaged into Investment and Finance activities. Over thereporting period the total income of the company has increased to Rs. 745.60 Lacs fromRs. 562.67 Lacs as compared to previous financial year. The growth performance forfinancial year 2014-15 was affected by global economic and financial challenges all aroundthe world including India. Henceforth every sector and companys performance andprofitability suffered. The capital spending was at lower side. The company has incurrednet loss of Rs. 191.10 during the year as compared to 3.28 net profit in previous year.The main attributes for incurring such huge loss mainly due to Tax Demand raised by theIncome tax Authority of Rs.1.5 Crores for the previous and high administrative andbusiness running expenses.
The management of the Company hereby very optimistic regarding performance of theCompany in furture and taking every steps and making every efferts to turn the Company into profitable organization
During the year company incurred losses; your directors have not recommended anydividend on Equity Shares for the year under review.
BDARD DF DIRECTORS:
The Composition of the Board during the year as per the provisions of Clause 49QIA)read with the Companies Act 2013. During the period under review Mr. Tushar RamchandraRane Mrs. Madhu Rajkumar Goel and Mr. Dauji Chaturvedi had resigned from the Board witheffect from 24th March 2015 and 28th May 2015 respectively due to their preoccupationssomewhere else. The Board places on record their appreciation and gratitude for theirguidance and contribution during their association with the Company.
On the recommendation of Nomination and Remuneration Committee your Board inducted Ms.Seema Nirmalsingh Sidhu and Mr. Jatinkumar Chintamani Agarrwal as an Additional Directorsof the Company in the category of Independent Director with effect from 24th March 2015in order to comply with the requirement of Section 149(1) of the Companies Act 2013. Interms of Section 161 of the Companies Act 2013 she will hold office up to the date of theensuing Annual General Meeting. The Company has received a notice in writing along withdeposit pursuant to Section 160 of Companies Act 2013 proposing the appointment of Ms.Seema Sidhu and Mr. Jatinkumar Agarrwal Directors of the Company. Your Board hasrecommended the appointment of Ms. Seema Sidhu and Mr. Jatinkumar Agarrwal as
Independent Directors of the company for a period of five consecutive years up to thefifth consecutive Annual General Meeting of the Company not liable to retire by rotation.
During the year Pursuant to Section 152 of the Companies Act 2013 Mr. Girraj KishorAgrawal Director retires by rotation at the ensuing Annual General Meeting and beingeligible offers himself for re-appointment. Your Board has recommended his re-appointment.
Ms. Seema Sidhu and Mr. Ashwin Shah have given declarations that they continues to meetthe criteria of independence as laid down under Section 149(6) of the Act and Clause 49 ofthe Listing Agreement.
As required under clause 49 of the listing agreement with the stock exchanges theinformation on the particulars of Directors proposed for appointment/re-appointment hasbeen given in the notice of annual general meeting.
Your Company has not accepted any deposits within the meaning of Section 73 (1) and 74of the Companies Act 2013 read together with the companies (Acceptance of Deposits)Rules 2014.
DIRECTORS' RESPONSIBILITY STATEMENT:
In accordance with the provisions of Section 134 (3) (c) of the Companies Act 2013and based on the information provided by management your Directors state that:
a) In the preparation of the annual accounts for the financial year ended 31st March2015 the applicable accounting standards have been followed.
b) Accounting policies selected were applied consistently. Reasonable and prudentjudgments and estimates were made so as to give a true and fair view of the State ofaffairs of the corporation as at the end of March 31 2015 and of the profit of theCompany for the year ended on that date.
c) Proper and sufficient care to the best of their knowledge and ability for themaintenance of adequate accounting records in accordance with the provisions of theCompanies Act 2013 for safeguarding the assets of the Company and for preventing anddetecting fraud and other irregularities.
d) The Annual Accounts of the Company have been prepared on the ongoing concern basis.
e) That they have laid down internal financial controls commensurate with the size ofthe Company and that such financial controls were adequate and were operating effectively.
f) That system to ensure compliance with the provisions of all applicable laws was inplace and was adequate and operating effectively.
DECLARATION OF INDEPENDENCE BY DIRECTORS:
The Independent Non-executive Directors of the Company viz. Mr. Ashwin Jayantilal Shahand Ms. Seema Nirmalsingh Sidhu have affirmed that they continue to meet all therequirements specified under Clause 49(I)(A)(iii) of the listing agreement in respect oftheir position as an "Independent Director" of Banas Finance Limited.
POLICIES ON DIRECTORS' APPOINTMENT AND REMUNERATION:
The policies of the Company on Directors appointment and remuneration includingcriteria for determining qualifications positive attributes independence of a Directorand other matters provided under sub-section (3) of Section 178 of the Act is appended as AnnexureI to this Report.
EVALUATION OF BOARD OF DIRECTORS:
Pursuant to the provisions of the Act and Clause 49 of the Listing Agreement theNomination and Remuneration Committee of the Board carried out the annual evaluation ofthe performance of the Board as a whole the Directors individually as well as of variousCommittees of the Board. The performance evaluation of the Independent Directors wascarried out by the Nomination and Remuneration Committee and noted in turn by the Board.
M/s. Pravin Chandak & Associates Chartered Accountants having Registration No.116627W who are Statutory Auditors of the Company hold office up to the forthcomingAnnual General Meeting and are recommended for re-appointment to audit the accounts of theCompany for the Financial Year 2015-16. As required under the provisions of Section 139 ofthe Companies Act 2013 the Company has obtained written confirmation from M/s. PravinChandak & Associates that their appointment if made would be in conformity with thelimits specified in the said Section.
Observations made in the Auditors Report are self-explanatory and therefore donot call for any further comments under Section 134 (1) of the Companies Act 2013.
COMMENTS ON REMARKS/OBSERVATION/QUALIFICATION MADE BY STATUTORY AUDITORS:
M/s. Pravin Chandak and Associates Practicing Chartered Accountant in his IndependentAuditor Report for financial year 2014-15 have drawn the attention of the management onsome Prudential Norms of NBFC which have been marked as qualification in his report. Inconnection with the same management here with give the explanation for the same asfollows:
Your Company is Small NBFC as compare to other giant in market. Company had notaccepted any deposits from public. The Company is doing business out of its own fund. TheCompany operates its business with at most care and diligence. As far as making of Loanand Advances are concerned management grants demand loan only either to the parties knownto the Company or by reference which are governed by the Board policies. Considering theclose monitoring of Board no appraisal renewal Policies and Procedure therefore in somecases loan agreements or some KYC were not maintained. However your Directors are of aview that the Company has maintained all basic and necessary documents but according tothe auditor the documents are not appropriate/enough. The Company is under process to makeKYC documents in line with auditors directions for all future loan agreement andcontracts to be entered.
The Loans and Advances granted by the Company is cosidered as good and recoverable anddo not required any provisions and same has been closely supervised and monitered onregular basis and proper internal control is on place.
The management of the Company is quite confident that there is/was no NPA. The Companygrants unsecured loan either to the parties to whom Company knows personally or to theparties whose reference has been received from some parties with whom Company hasalready done the business. Though the repayment of the loan and interest there on mighthave been delayed some time by the parties but Company do receive the payment on laterdate.
The Company has received Order u/s 143(3) of Income Tax Act 1961 dated 28/03/2014 foran outstanding income tax demand of Rs.77450120/- pertaining to A.Y. 2011-12 in replyof the same Company has filed appeal before CIT(A) on 04/04/2014 the Income Taxdepartment has granted stay on the order of demand and directed Company to pay installmentof Rs.1500000/- for ten months from June 2014 to March 2015 till further order.
The Company has also received the notice u/s 154 of Income Tax Act 1961 dated21/08/2014 charging interest of Rs.23652216/- u/s 234B in addition to demand. As faras contingent liability of Rs.77450120/- is concerned the same is not provided as themanagement feels that the demand raised is likely to be either deleted or substantiallyreduced as the company has filed appeal in response to the demand raised by the AssessingOfficer deposited tax of Rs. 1500000 in response to the demand raised by the assessingofficer and accordingly no provision is considered.
Pursuant to the requirements of Section 204(1) of the Act and Rule 9 of Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Company hasappointed M/s. P.D. Pandya & Associates Company Secretary in Practice to conduct theSecretarial Audit for the financial year 2014-15. The Secretarial Audit Report as receivedfrom M/s. P.D. Pandya & Associates is appended to this Report as Annexure II.
COMMENTS ON REMARKS/OBSERVATION/QUALIFICATION MADE BY SECREATARIRAL AUDITORS:
M/s. P.D. Pandya and Associates Company Secretary in Practice in his SecretarialAudit Report for financial year 201415 have drawn the attention of the management on somethe non-compliances which have been marked as qualification in his report. In connectionwith the same management herewith give the explanation for the same as follows:
As pointed out by our Secretarial Auditors in their report it was a matter of factthat Income Tax Authority had conducted income tax search on 9th June 2015 and 10th June2015. During their search they had confiscated Minutes Books and certain other documentsfor their reference due to which the company could not produce physical copy of theMinutes Books to the secretarial auditor for their verification. However the soft copy ofthe minutes was produced before the auditor and the same was verified by them.
As far as the appointment of Internal Auditor and Internal Control is concerned TheManagement of the Company is of a view that the Companys size is very small ascompared to its peer group companies the Company has already in place Risk ManagementPolicy to cope up with unforeseeable threats risks and frauds. The management thinks thatCompany has adequate Internal Control System commensurate with the size of the Company andthe Statutory Auditor also conduct test audit on quarterly basis and submit the limitedreview certificate and draws the attention of the management on concerned matters. Howeverthe Management also ensures to strengthen the Internal Control System of the Company.However to make good of said default Company has appointed M/s. A M Gohel & Co. asInternal Auditor of the Company in current financial year for conducting periodic internalaudit in compliance of Section 138 of Companies Act 2013.
Mr. Girraj Kishor Agarwal Director of the Company also the Manging Director of M/s.Tilak Finance Limited and M/s. Banas Finance Limited a group companies. As all theseCompanies is being operated from the same place which will allows him to devote full timeto all companies by sitting at same place with the view of the same Mr. Girraj KishorAgrawal was also appointed as CFO of the Company. However the same contravenes theprovision of section 203 of Companies Act 2013 that one person cannot held position ofKMP in more than one Company. To ensure the Compliance with said section Company hassuggested to Mr. Girraj Kishor Agarwal to take resignation from the post of CFO of theCompany and confirmed with Mr. Girraj Kishor Agarwal.
REPORTS DN CORPORATE GOVERNANCE AND MANAGEMENT DISCUSSION S ANALYSIS:
The reports on Corporate Governance and Management Discussion and Analysis for the yearunder review as stipulated under Clause 49 of the Listing Agreement form part of theAnnual Report. The certificate from the Auditors of the Company confirming compliance withthe conditions of Corporate Governance is annexed to the Corporate Governance Report.
PARTICULARS DF CONTRACTS DR ARRANGEMENTS WITH RELATED PARTIES:
The particulars of contracts or arrangements with related parties referred to inSection 188(1) as prescribed in Form AOC - 2 are appended as Annexure III.
EXTRACT PF ANNUAL RETURN:
Pursuant to the requirements under Section 92(3) and Section 134(3) of the Act readwith Rule 12 of Companies (Management and Administration) Rules 2014 an extract ofAnnual Return in prescribed Form MGT-9 is given in the Report as Annexure IV.
PARTICULARS OF EMPLOYEES AND RELATED INFORMATION:
In terms of the provisions of Section 197(12) of the Act read with Rule 5 of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 a statementcontaining the disclosures pertaining to remuneration and other details as required underthe Act and the above Rules are provided in the Annual Report. The disclosures asspecified under Rule 5(1) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 have been appended to this Report as Annexure V.
No postal ballot was held during the year 2014-2015.
RISK MANAGEMENT AND INTERNAL CONTROLS:
The Company has the risk management and internal control framework in placecommensurate with the size of the Company. However Company is trying to strengthen thesame. The details of the risks faced by the Company and the mitigation thereof arediscussed in detail in the Management Discussion and Analysis report that forms part ofthe Annual Report.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS:
Details of the Investments covered under the provisions of Section 186 of the CompaniesAct 2013 (Act) will be produced for verification to the members at the registered officeof the Company on their request.
CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTION:
The Company being a non-banking finance company (NBFC) does not have anymanufacturing activity. The directors therefore have nothing to report onconservation of energy and technology absorption.
There is no inflow and outflow of Foreign Exchange.
LISTING OF SHARES:
Equity shares of your Company are listed on Bombay Stock Exchange only and the Companyhas paid the necessary Listing fees for the year 2015 - 2016.
VIGIL MECHANISM/WHISTLE BLDWER POLICY:
The Company has established a vigil mechanism to provide appropriate avenues to theDirectors and employees to bring to the attention of the Management the concerns aboutbehavior of employees that raise concerns including fraud by using the mechanism providedin the Whistle Blower Policy. The details of the said Policy are included in the Report onCorporate Governance which forms part of the Annual Report.
During the financial year 2014-15 no cases under this mechanism were reported in theCompany and any of its subsidiaries/ associates.
PDLICY FDR PREVENTION PRDHIBITIDN AND REDRESSAL DF SEXUAL HARASSMENT DF WDMEN ATWORKPLACE:
The company has framed policy in accordance with The Sexual Harassment of Women atWorkplace (Prevention Prohibition and Redressal) Act 2013.
During the financial year 2014-15 no cases in the nature of sexual harassment werereported at any workplace of the company.
CED AND CFD CERTIFICATION:
The Chief Executive Officer and Chief Financial Officer Certification as required underClause 49 of the Listing Agreements and Chief Executive Officer declaration about the Codeof Conduct is Annexed to this Report.
The Board of Directors wishes to express sincere thanks to Bankers Shareholdersclients Financial Institutions customers suppliers and employees of Companies forextending support during the year
FOR & ON BEHALF OF THE BOARD
Girraj Kishor Agrawal
(Director & CFO)
Policy On Selection & Appointment Of Directors:
Pursuant to the provisions of Section 178 of the Companies Act 2013 (the Act) theNomination and Remuneration Committee of a company is required formulate the criteria fordetermining the qualifications positive attributes and independence of a directorproposed to be appointed as a director on the board of the company. This Policy documentrecords the criteria for selection and appointment of directors on the Board of theCompany.
This Policy is applicable to selection and appointment of directors on the Board of theCompany.
Criteria for selection of Directors:
The Nomination and Remuneration Committee (the Committee) of the Board ofthe Company to keep the following criteria in mind while assessing the suitability of anindividual as a director on the Board of the Company:
a. Demonstration of independence integrity high personal and professional ethics;
b. Ability and willingness to commit sufficient time to the responsibilities as a Boardmember;
c. Understanding of the Companys/Groups business and related industry;
d. General understanding of marketing finance and other disciplines relevant to thebusiness of the Company/ Group;
e. Educational and professional background - professional qualification and/orexperience of having run a business at senior management and decision making level;
f. Age giving sufficient experience as well as length of service available;
g. Ability to assessment the conflict of interest if any;
h. Personal accomplishments and ability to influence decisions.
The above are the broad parameters for assessing the candidates suitability. TheCommittee has the discretion to apply additional or different criteria as it may deem fit.
The Committee shall assist the Board in ensuring Board nomination process with thediversity of gender thought experience knowledge and perspective in the Board.
The Committee may also consider the contributions that a board candidate can beexpected to make to the collective functioning of the Board based upon the totality of thecandidates credentials experience and expertise the composition of the Board atthe time and other relevant circumstances. The Committee will also keep in mindregulatory requirements in this regard.
An Independent Director can hold office for a term up to five consecutive years on theBoard of the Company and he is eligible for re-appointment on passing of a specialresolution by the Company and disclosure of such appointment in the Boards report.
No Independent Director can hold office for more than two consecutive terms of fiveyears but such Independent Director is eligible for appointment after expiry of threeyears of ceasing to become an Independent Director. Provided that an Independent Directorshall not during the said period of three years be appointed in or be associated withthe Company in any other capacity either directly or indirectly.
The Company may appoint or re-appoint any person as the Managing Director and/ orWhole-time Director for a term not exceeding five years at a time. Further they shall notbe reappointed earlier than one year before the expiry of their term.
Persons to be considered for appointment as directors are selected by the Nominationand Remuneration Committee in accordance with the policies and principles above and underthe Act and the Listing Agreement. The invitation to join the Board may be extended by theChairman of the Board.
Policy On Performance Evaluation & Remuneration Of The Directors!
All members of the Board of Directors
To assist in the process of assessing the participation and contribution in theBoard level deliberations by the directors of Banas Finance Limited
To monitor and evaluate the attainment of the Board objectives
To provide the Directors an opportunity to reflect on and assess their areas ofstrength and development.
Key Evaluation Criteria:
Providing effective leadership and strategic guidance to the management
Understanding the Business including the Risks and regulatory landscape
Attendance at and active engagement in the discussion of business performancecompetitive landscape and strategies
Development and monitoring of leadership teams
Compliance focus and insistence on ethical business practices
Nudging for long term focus areas such as Succession Planning BusinessContinuity Planning etc.
Management of conflicts in Board discussion
Management of Conflict of Interest
Evaluation Process for Independent Directors:
Banas Finance Limited follows annual 360 degree evaluation for its Key ManagerialPersons and other eligible employees including the senior management team. A processmodeled on this method has been designed for evaluation of Directors. Under this processthe Company Management team will:
help define criteria for evaluations
formulate the process for evaluating and rating each Director
design the evaluation templates/questionnaire and implementation process
coordinate and collate feedback received from each Director
analyze feedback received from each Director and prepare summary thereof
share the evaluation summary with the Chairman of the Nomination andRemuneration Committee
share the feedback with the Chairman of the Board
The above process will be implemented and controlled from the Chairmans officeand the summary will be prepared without attributing any comment to the person who madeit. Such summary of observations will be shared with the directors in confidence.
Criteria for determination of Remuneration of Directors:
The Non-executive Directors and Independent Directors will receive remuneration by wayof sitting fees for attending meetings of the Board and/or Committee thereof as decidedby the Board from time to time subject to the limits specified under the Companies Act2013 (the Act) including any amendments thereto. In addition to the sitting fees theNon-executive and
Independent Directors may also be paid commission as may be determined by the Boardsubject to the limits specified under the Act.
The remuneration of Non-executive Directors and Independent Directors will be governedby the role assumed number of meetings of the Board and the committees thereof attendedby the directors the position held by them as the Chairman and member of the committeesof the Board and overall contribution to the business. Besides these the determination ofremuneration of independent directors will also depend on the external competitiveenvironment track record individual performance of the directors and performance of theCompany as well as the industry standards. The compensation structure of the ExecutiveDirector is also being reviewed by the Nomination and Remuneration Committee and approvedby the Shareholders of the Company.