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Canopy Finance Ltd.

BSE: 539304 Sector: Financials
NSE: N.A. ISIN Code: INE095R01016
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Canopy Finance Ltd. (CANOPYFINANCE) - Director Report

Company director report

For The Financial Year 2014-15

Dear Members

Your Directors have pleasure in presenting their 34th Annual Report on thebusiness and operations of the Company together with the audited financial statements forthe financial year ended March 31st 2015.

1. Financial Performance of the Company

The summarized consolidated and standalone financial performance of your Company is asfollows:

(Amount in Rs.)

STANDALONE

CONSOLIDATED

Particulars 2014-15 2013-14 2014-15 2013-14
Profit Before Tax & Provision 546264 29097 541809 (7429)
Less: Provision For Tax 404795 8729 404795 8729
Profit After Tax 141469 20368 137014 (16158)
Transfer to Statutory NBFC Reserve Fund 28294 4665 28294 4665
Profit/ Loss Brought Forward From Previous Year (715717) (731420) (766205) (745146)
Profit/ Loss Available for Appropriation 141469 20368 137014 (16158)
Proposed Dividend Nil Nil Nil Nil
Tax on Proposed Dividend Nil Nil Nil Nil
Profit/ Loss Carried Forward (602542) (715717) (643257) (766205)
Basic/ Diluted Earnings Per Share 0.02 0.01 0.01 0.00

2. Dividend

Your Directors have not recommended any dividend for the financial year 2014-15.

3. Transfer Of Unclaimed Dividend To Investor Education And Protection Fund

The provisions of Section 125(5) of the Companies Act 2013 do not apply on the companyas no dividend has been declared during the year.

4. Public Deposits

Being a non-deposit taking Company your Company has not accepted any deposits from thepublic within the meaning of the provisions of the Non-Banking Financial CompaniesAcceptance of Public Deposits (Reserve Bank) Directions 1998.

5. Reserves

Your Directors have proposed to transfer amount of Rs. 28294/- to Statutoiy NBFCReserve Fund during the year.

5. Brief description of the Company’s working during the year/State ofCompany’s affair

Your Company being a Non Banking Financial Company (NBFC) is currently engaged in thefinancial activities. The business of the Company largely depends on the policies by theReserve Bank of India Ministry of Finance as well as Global volatility in the financialmarket.

The company has resumed its operation this financial year (2014-15):

Particulars Standalone (Rupees in lacs) Consolidated (Rupees In lacs)
Revenue 101.97 102.46
Expenditure 96.50 97.05
Profit before tax 5.46 5.42

6. Change in the nature of business if any

The Company has not changed its nature of business during the year.

7. Material Changes and Commitments if any affecting the Financial Position of theCompany

There is no such material change and commitment affecting the financial position ofyour Company which have occurred between the end of the financial year of your Company towhich the financial statements relate and the date of the report.

8. Details in respect of adequacy of internal financial controls with reference to theFinancial Statements.

The directors have laid down internal financial controls to be followed by the companyand that such internal financial controls are adequate and were operating effectively.

9. Details of Subsidiary/Joint Ventures/Associate Companies

The Statement in Form AOC-I containing the salient feature of the financial statementof your Company’s subsidiaries associates and joint venture companies pursuant tofirst proviso to Section 129(3) of the Companies Act 2013 (Act) read with Rule 5 of theCompanies (Accounts) Rules 2014 forms part of the Annual Report. Further in line withSection 129(3) of the Act read with the aforesaid Rules the Listing Agreement with theStock Exchanges and in accordance with the Accounting Standard 21 (AS-21) ConsolidatedFinancial Statements prepared by your Company include financial information of itssubsidiary companies.

The following are the wholly owned subsidiaries of the Company:

a. Dhansubh Exim Pvt. Ltd.

b. Nishdin Vintrade Pvt. Ltd.

c. Bhooteshwar Barter Pvt. Ltd.

d. Brightful Retailers Pvt. Ltd.

e. Gajrup Management Pvt. Ltd.

10. Statutory Auditors

M/s GORA & CO Chartered Accountants have been re-appointed as Statutory Auditorsof the company till the conclusion of the Annual General Meeting of the company to be heldin the year 2018 (subject to ratification of their re- appointment at every AGM) and theDirectors of the Company shall fix the remuneration from time to time in consultation withthe Audit Committee.

11. Auditors* Report

The observations made by the Auditors are self- explanatory and do not require anyfurther clarification. Further the explanations or comments by the Board on everyqualification reservation or adverse remark or disclaimer made by the auditor in hisreport is annexed.

12. Familiarisation Programme for Independent Directors

In terms of Clause 49{II)(B)(7) of the Listing Agreement your Company is required toconduct the Familiarisation Programme for Independent Directors (IDs) to familiarise themabout their roles rights responsibilities in your Company nature of the industry inwhich your Company operates business model of your Company etc. through variousinitiatives. The details of such familiarization programmes are available on yourCompany’s website www.kartawa.info and a link to the said programmes has beenprovided elsewhere in this Annual Report.

13. Extract of Annual Return

An extract of Annual Return as on the financial year ended on March 31 2015 in FormNo. MGT-9 as required under Section 92(3) of the Companies Act 2013 read with Rule 12(1)of the Companies (Management and Administration) Rules 2014 is set out as an annexure tothe Directors’ Report and forms part of this Annual Report.

14. Share Capital

Issue of equity shares with differential rights

The Company has not issued any of its securities with differential rights during theyear under review.

Buy Back of Securities

The company has not bought back any of its securities during the year under review.

Sweat Equity Bonus Shares & Employee Stock Option Plan

The company has neither issued sweat equity or bonus shares nor has provided any stockoption scheme to the employees.

Preferential Issue of Capital

The company has issued 5813000 equity shares of Rs 10/- each amounted to Rs.58130000/- on preferential basis to Non- Promoters during the year.

15* Conservation of energy Technology absorption and Foreign exchange earningsand Outgo

The provisions of section 134(m) of the Companies Act 2013 regarding the disclosure ofparticulars of conservation of energy and technology absorption prescribed by the rulesare not applicable to our company. The company does not have any Foreign Exchangetransactions during the financial year.

16. Corporate Social Responsibility (CSR)

As the company does not have net worth of rupees five hundred crore or more orturnover of rupees one thousand crore or more or a net profit of rupees five crore or moreduring any financial year the disclosures as per Rule 9 of Companies (Corporate SocialResponsibility Policy) Rules 2014 is not applicable.

17. Directors:

A) Changes in Directors and Key Managerial Personnel

Pursuant to the Resolution of the Board of Directors passed at its meeting

i) Mr. Manish Trivedi who has been appointed as a director w.e.f. 29thSeptember 2000 resigned from his directorship w.e.f. 30th June 2014.

ii) Mr. Raj Kumar Sharma and Mrs. Vinita Agarwal have been appointed as an IndependentNon-Executive director w.e.f. 30th June 2014.

iii) Mr. Ashish Trivedi has been appointed as the Managing Director of the companyw.e.f. 1st July 2014

iv) Ms. Priya Kedia has been appointed as the Company Secretary of the Company w.e.f 1stAugust 2014.

v) Mr. Om Prakash Trivedi director of the company will also be appointed as the ChiefFinancial Officer w.e.f 29th May 2015.

B) Declaration by an Independent Director(s) and re- appointment

Mr. Raj Kumar Agarwal and Ms. Vinita Agarwal Independent Directors of the Company haveconfirmed that they fulfilled all the conditions of the Independent Directorship as laiddown in sub-section (6) of Section 149 of the Companies Act 2013 and the rules made thereunder and the same have been noted by the Board.

C) Formal Annual Evaluation

In compliance with the Schedule IV of the Companies Act 2013 a meeting of theIndependent Directors of the company was held to review and evaluate the performance ofthe Non- Independent Directors and the chairman of the company taking into account theviews of the Executive Directors and Non- Executive Directors assessing the qualityquantity and timeliness of flow of information between the company management and theBoard and also to review the overall performance of the Board. The meeting of the companywas held on 6th February 2015 wherein the performance of the Board as a wholewas evaluated.

18. Number of meetings of the Board of Directors

Seven Meetings of the Board of Directors were held during the financial year 2014-15.These were held on the following dates:

i) 28/05/2014 ii) 06/06/2014 iii) 28/07/2014 iv) 01/08/2014 v) 04/11/2014 vi)06/02/2015 vii) 27/03/2015

19. Audit Committee

Composition of the Audit committee is in accordance with the requirements of section177 of the Companies Act 2013 which is stated below:

Name Designation
Raj Kumar Sharma Chairman
Ashish Trivedi Member
Vinita Agarwal Member

20. Order of Court

The company is not subject to any legal proceedings and claims which will have amaterial or adverse effect on the going concern status or company’s operations orfinancial conditions.

21. Sexual Harassment Of Women At Work Place

The Company has in place a policy in line with the requirements of The SexualHarassment of Women at Workplace (Prevention Prohibition & Redressal) Act 2013.Internal Complaints Committee (ICC) has been set up to redress complaints receivedregarding sexual harassment. All employees (permanent contractual temporary trainees)are covered under this Policy. There were nil complaints received during the year underreview.

22. Details of establishment of vigil mechanism for directors and employees

Pursuant to sub-section (9) & (10) of section 177 of the Companies Act 2013 readwith rule 7 of the Companies (Meetings of Board and its Powers) Rules 2014 the Companyhas established a Whistle Blower Policy (Vigil mechanism) for Directors and Employees ofthe Company to report their genuine concerns or grievances. The policy was approved by theBoard of Directors of the Company at its meeting held on 28th July 2014 andthe Audit Committee was empowered by the Board of Directors to monitor the same and toreport to the Board about the complaints in an unbiased manner.

23. Nomination and Remuneration Committee

Composition of the Nomination & Remuneration Committee is in accordance with therequirements of section 178(1) of the Companies Act 2013. The composition is as under:

Name Designation
Raj Kumar Sharma Chairman
Om Prakash Trivedi Member
Vinita Agarwal Member

24. Particulars of Loans. Guarantees or Investments

Loans guarantees or investments covered under section 186 of the Companies Act 2013form part of the notes to the financial statements provided in this Annual Report

25. Particulars Of Contracts Or Arrangements With Related Parties:

Your company has no material individual transactions with its related parties which arecovered under section 188 of the Companies Act 2013 which are not in the ordinary courseof business and not undertaken on an arm’s length basis during the financial year2014-15.

26. Managerial Remuneration:

The Company earned minimal profit during the year so the Company has not provided anyManagerial Remuneration to the Directors.

27. Secretarial Audit Report

The Secretarial Audit Report has been given by M/s Raghunath Mandal CompanySecretaries and there is no qualification reservation or adverse remark or disclaimermade by the company secretary in the secretarial audit report.

28. Corporate Governance Certificate

The Corporate Governance certificate from the auditor regarding compliance ofconditions of corporate governance as stipulated in Clause 49 of the Listing agreement hasbeen annexed with the report.

29. Corporate Governance and Management Discussion & Analysis Reports

The Corporate Governance Report and Management Discussion & Analysis Report hasbeen annexed with the report

30. Risk management policy

The company does not have any Risk Management Policy as the element of risk threateningthe Company’s existence is very minimal.

31. Operational Review

The Company discloses standalone unaudited financial results on a quarterly basisstandalone audited financial results on an annual basis and consolidated audited financialresults on an annual basis. Your Company has complied with all the norms prescribed by theReserve Bank of India (RBI) including the Fair practices Anti Money Laundering and KnowYour Customer (KYC) guidelines.

32. NBFC Company

The Company is engaged in the Business of Non Banking Financial Institution and it hasobtained a certificate of Registration from the Reserve Bank of India. The Company has notaccepted any deposit from the public. The Company has complied with the prudential normsrelating to the Income Recognition Accounting Standards asset classification andprovisioning for bad and doubtful debts as applicable to it in terms of Non BankingFinancial (Non Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank)Directions -2007.

Non-banking Finance Companies (NBFCs) like Asset Finance Companies (NBFC-AFCs) andInfrastructure Finance Companies (NBFC-IFCs) form an integral part of the financial fabricof the Indian economy. Most of the banks are unable to cater to the finance needs ofmicro small and medium enterprises (MSMEs) and it is these NBFCs which bridge the gap andact as an extended arm of the banking system in India.

During the year under review several regulatory changes took place in the NBFC space.The important ones are mentioned hereafter:

> NBFCs desirous of issuing cobranded prepaid instruments need to apply for one-timeapproval from RBI.

> RBI simplified documentation for NBFC registration.

> No Debenture Redemption Reserve is required to be created by NBFCs for privatelyplaced debentures and only 25 per cent is required in case of publicly issued debentures.

> Banks have been allowed to engage non-deposit taking NBFCs (NBFCNDs) as BusinessCorrespondents (BCs) provided (a) there is no comingling of bank funds and those ofNBFC-ND appointed as BC and (b) there is a specific contractual agreement between bankand NBFC-ND to ensure that all possible areas of conflict of interest are adequately takencare of.

> Any NBFC with asset size of Rs. 1000 crore or more can participate in interestrate futures market in recognized stock exchanges as trading members subject to RBI/SEBIguidelines.

> NBFCs with asset size of Rs. 1000 crore or more need to report online to stockexchanges information on shares pledged in their favour by borrowers for availing loansRBI limited the amount NBFCs can lend against shares pledged as collateral to 50 per centof the value of shares.

> NBFCs are subject to different regulations when it comes to loans to volatilesectors such as capital market and real estate.

> In case of FDI in NBFCs minimum capitalization shall include share premiumreceived along with the face value of the share only when it is received by the companyupon issue of the shares to the nonresident investor.

> A panel set up by RBI has recommended that NBFCs along with banks shouldundertake 360 degree feedback in order to ensure a transparent and comprehensiveperformance assessment that can adequately differentiate performance among employees.

> NBFCs now figure among the list of eligible entities which can promote a SmallFinance Bank subject to fulfilment of other eligibility criteria NBFCs with minimum networth of Rs. 500 crore and with consistent track record of distributable profit for last 3years and with rating of not less than ‘AA-’ or equivalent will be eligible tofile shelf prospectus for public issue of debt securities.

> RBI relaxed guidelines for issuance of private placement of NCDs (maturity of morethan 1 year) by NBFCs. Guidelines stipulated for 2 categories - (a) issuance can be with amaximum subscription of less than Rs. 1 crore (Category A) and (b) can be with minimumsubscription of Rs. 1 crore (Categoiy B) which can be unsecured and such unsecureddebentures will not be treated as public deposits.

> RBI aligned loan restructuring norms of NBFCs with those of banks in order tominimize risk of defaults NBFCs planning to provide investment advisory services need toobtain approvals from both RBI and SEBI.

> NBFCs with minimum asset size of Rs. 500 crore to be empowered to enforce securityinterest in NPAs and the SARFAESI Act 2002 to be amended to this effect.

> For NBFCs the security for the debentures by way of charge or mortgage shall becreated in favour of the debenture trustee on any movable property of the NBFC which incase of any other Company shall only be created on specific movable property.

33. Directors' Responsibility Statement

Pursuant to Section 134(5) of the Companies Act 2013 your Directors confirmthat—

(a) in the preparation of the annual accounts the applicable accounting standards hadbeen followed along with proper explanation relating to material departures;

(b) the directors have selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the company at the end of the financial year and ofthe profit and loss of the company for that period;

(c) the directors have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of this Act for safeguarding theassets of the company and for preventing and detecting fraud and other irregularities;

(d) the directors have prepared the annual accounts on a going concern basis;

(e) the directors have laid down internal financial controls to be followed by thecompany and that such internal financial controls are adequate and were operatingeffectively and

(/) the directors have devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.

34. Acknowledgements

Your Directors would like to express their appreciation of the co-operation andassistance received from the shareholders bankers and other business constituents duringthe year under review.

For and on behalf of the Board of Directors
Sd/- Sd/-
Ashish Trivedi Om Prakash Trivedi
Managing Director Chief Financial Officer As Director
Din: 00402252 Din: 02658047
Place: Kolkata
Date: 29th May 2015

FORM NO. MR-3

SECRETARIAL AUDIT REPORT

(FOR THE FINANCIAL YEAR ENDED 31ST MARCH 2015)

[Pursuant to Section 204(1) of the Companies Act 2013 and Rule No. 9 of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014]

To

The Members

Kartavya Udyog Viniyog Limited

(Formerly known as Kanisk Udyog Viniyog Limited)

196/C C.R Avenue

Kolkata- 700 007.

I have conducted the secretarial audit of the compliance of applicable statutoryprovisions and the adherence to good corporate practices KARTAVYA UDYOG VINIYOG LIMITED(hereinafter called the Company). Secretarial Audit was conducted in a manner thatprovided us a reasonable basis for evaluating the corporate conducts/statutory compliancesand expressing my opinion thereon.

Based on our verification of the books papers minute books forms and returns filedand other records maintained by the Company and also the information provided by theCompany* its officers agents and authorized representatives during the conduct ofsecretarial audit I hereby report that in our opinion the Company has during the auditperiod ended on 31st March 2015complied with the statutory provisions listedhereunder and also that the Company has proper Board-processes and compliance-mechanism inplace to the extent in the manner and subject to the reporting made hereinafter:

I have examined the books papers minute books forms and returns filed and otherrecords maintained by The Company for the period ended on 31st March 2015according to the provisions of:

(i) The Companies Act 2013 (the Act) and the Rules made thereunder;

(ii) The Securities Contracts (Regulation) Act 1956 (‘SCRA’) and the Rulesmade thereunder;

(iii) The Depositories Act 1996 and the Regulations and Bye-laws framed thereunder;

(iv) Foreign Exchange Management Act* 1999 and the Rules and Regulations madethereunder to the extent of Foreign Direct Investment Overseas Direct Investment andExternal Commercial Borrowings;

(v) The following Regulations and Guidelines prescribed under the Securities andExchange Board of India Act 1992 (*SEB1 Act’) to the extent applicable to theCompany:-

a. The Securities and Exchange Board of India (Substantial Acquisition of Shares andTakeovers) Regulations 2011;

b. The Securities and Exchange Board of India (Prohibition of Insider Trading)Regulations 1992;

c. The Securities and Exchange Board of India (Issue of Capital and DisclosureRequirements) Regulations 2009;

d. The Securities and Exchange Board of India (Registrars to an Issue and ShareTransfer Agents) Regulations 1993 regarding the Companies Act and dealing with client;

e. The Company has complied with the requirements under the Equity Listing Agreementsentered into with The Calcutta Stock Exchange Limited; and

(vi) The Reserve Bank of India Act 1934 and the rules regulations and guidelines thecompany being a Non- Banking Financial Company (NBFC).

I have also examined compliance with the applicable clauses of the following:

i) Secretarial Standards issued by The Institute of Company Secretaries of India.

ii) The Listing Agreements entered into by the Company with The Calcutta Stock ExchangeLimited.

During the period under review the Company has complied with the provisions of the ActRules Regulations Guidelines Standards Listing Agreements etc mentioned above.

I further report that

The Board of Directors of the Company is duly constituted with proper balance ofExecutive Director Non-Executive Directors and Independent Directors. The changes in thecomposition of the Board of Directors that took place during the period under review werecarried out in compliance with the provisions of the Act.

Adequate notice is given to all Directors to schedule the Board Meetings agenda anddetailed notes on agenda were generally sent at least seven days in advance and a systemexists for seeking and obtaining further information and clarifications on the agendaitems before the meeting and for meaningful participation at the meeting.

All decisions at Board Meetings and Committee Meetings are carried out unanimously asrecorded in the minutes of the meetings of the Board of Directors or Committees of theBoard as the case may be.

I further report that there are adequate systems and processes in the Companycommensurate with the size and operations of the Company to monitor and ensure compliancewith applicable laws rules regulations and guidelines.

I further report that during the audit period the company:

a. has admitted the equity shares of the company with Central Depository Services(India) Limited and National Securities Depository Limited for the same has been made inview to give shareholders option to trade in demat mode.

b. has allotted 5813000 equity shares on preferential basis to strategic investornot forming part of promoter group as on 6th June 2014.

Sd/-

Raghunath Mandal

CP No.: 3678.

Place: Kolkata

Date: 29.05.2015.

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