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Capital Trust Ltd.

BSE: 511505 Sector: Financials
NSE: CAPTRUST ISIN Code: INE707C01018
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OPEN 515.05
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VOLUME 1031
52-Week high 655.00
52-Week low 322.90
P/E 47.11
Mkt Cap.(Rs cr) 837
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 515.05
CLOSE 503.70
VOLUME 1031
52-Week high 655.00
52-Week low 322.90
P/E 47.11
Mkt Cap.(Rs cr) 837
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Capital Trust Ltd. (CAPTRUST) - Director Report

Company director report

Your Directors take pleasure in presenting the Thirty First Annual Report on thebusiness and operations of your company along with the standalone and consolidated auditedfinancial statements for the year ended March 31 2017.

1. FINANCIAL RESULTS

The Company’s financial performance for year ended 31st March 2017 is summarizedbelow:

(Rs. In lakhs)

Standalone

Consolidated

Particulars

2016-17

2015-16 %age of Change

2016-17

2015-16 %age of Change
Total Income from operation 11875.9 6131.56 94% 12477.7 6131.56 103%
EBIDTA 7870.88 4341.11 81% 8383.31 4341.11 93%
Less:
Interest 2341.43 1217.85 92% 2657.33 1217.85 118%
Depreciation 39.14 20.91 87% 39.14 20.91 87%
Profit Before Tax 5490.31 3102.35 77% 5686.84 3102.35 83%
Profit/(Loss) after tax 3688.94 2024.52 82% 3785.72 2024.52 87%
Available for appropriation 3688.94 2024.52 82% 3785.72 2024.52 87%
Transfer to Reserve fund u/s 45IC of RBI Act 1934 737.79 404.9 82% 757.14 404.9 87%

The year under review was affected by demonetization of high currency notes which hasaffected the business as a whole in general and NBFCs dealing in microfinance and microcredit loans in particular. After demonetization the disbursements had dried up and thecollection was also affected due to no availability of legal currency notes with theclients. The situation improved a bit only after January 2017. However due to electionsin UP and false propaganda by political parties the collection was low as compared toother states in India. In spite of these difficulties the company has done exceptionallywell and has increased its assets under Management to Rs. 55500 Lakhs in year 2017 fromRs. 30400 Lakhs in year 2016. During the year the company has takeover a NBFC-MFI companyand has started the Microfinance business under that company. The results given above aretherefore consolidated as well as standalone. The consolidated income from operations hasincreased from Rs. 6131.56 Lakhs in year ending 31st March 2016 to Rs. 12477.67 Lakhs inyear ending 31st March 2017 increasing by 103%. The net profit has also increased fromRs. 2024.52 Lakhs in year ending 31st March 2016 to Rs. 3785.72 Lakhs in year ending 31stMarch 2017 increasing by 87%.

Your company has opened branches in two more states of Rajasthan and Madhya Pradesh. Inthe current year the company is planning to expand in new states. The company has alwaysbeen following the path having a neat portfolio. Your company has strict checks andbalances which enable the company to have a good clean portfolio.

Your company has tied up with various financial institutions thereby raising the loanof Rs. 360 crs from them during the year. Your company has never failed in paying anyinstallments or interest to the lenders. The company enjoys good reputation with all itsstakeholder.

2. FUND RAISING

During the year under review the company has converted 1550000 warrants issued to Mr.Yogen Khosla into equal number of equity shares at the rate of Rs. 117/- per equity share.The company has allotted 143915 equity shares to Capital Employee Welfare Trust underCapital Trust Employee Stock Option Scheme 2016. Pursuant to these developments the paidup capital of the company has increased to Rs. 163614150 divided into 16361415 fullypaid equity shares of Rs. 10/- each.

3. DIVIDEND

Keeping the tradition of paying dividend your Directors have recommended a dividend ofRs. 1.50/- per Equity Share of the company for the financial year ended March 31 2017amounting to Rs 2.45 crores. The Dividend payout is subject to approval of members at theensuing Annual General Meeting.

The dividend payout for the year under review has been formulated to pay sustainabledividend linked to long term growth objectives of the Company.

4. RESERVE FUNDS

As per section 45 IC of RBI Act 1934 the Company has transferred Rs. 757.14 Lakhs inreserve fund i.e aggregating of 20% of its net profit.

5. CONSOLIDATED FINANCIAL STATEMENT

In accordance with Section 129(3) of the Companies Act 2013 and Accounting Standards(AS) - 21 on Consolidated Financial Statements the audited consolidated financialstatement have been prepared which forms part of the Annual Report.

6. SUBSIDIARY COMPANIES

During the year under review the company tookover 100% shareholding of a MicrofinanceCompany registered with RBI in the name of Parikarma Investments and Financial ServicesPrivate Limited and subsequently changed its name to Capital Trust Microfinance PrivateLimited.

During the year the Board of Directors reviewed the affairs of company’ssubsidiary.

The Policy for determining material subsidiaries has been approved by the Board.

7. COMPLIANCE WITH RBI GUIDELINES:

During the year the assets of the company have crossed Rs. 500 Crores andthe companyhas become Systemativally important NBFC. The company has thus started complying theprovisons as applicable to NBFC-ND-SI regulations set by Reserve Bank of India.

During the year your company has complied with all applicable regulations of theReserve Bank of India. As per Non Banking Finance Companies RBI Directions 1998 thedirectors hereby report that the company did not accept any public deposits during theyear and did not have any public deposits outstanding at the end of the year.

8. CAPITAL ADEQUACY

The Capital Adequacy Ratio of the company was 46.83% as of March 31 2017 as comparedto 18.50% in year 2015 as against the minimum capital adequacy requirements of 15% by RBI.

9. THE CHANGE IN NATURE OF BUSINESS

There has not been any change in the nature of business.

10. DIRECTORS’ RESPONSIBILITY STATEMENT

Pursuant to Section 134(5) of the Companies Act 2013

Your Directors state that:

i. in the preparation of the annual accounts for the year ended March 31 2017 theapplicable accounting standards read with requirements set out under Schedule III to theAct have been followed and there are no material departures from the same;

ii. 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 as at March 31 2017 and of the profit ofthe Company for the year ended on that date;

iii. the Directors have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of the Act for safeguardingthe assets of the Company and for preventing and detecting fraud and other irregularities;

iv. the Directors have prepared the annual accounts on a 'going concern' basis;

v. the Directors have laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and are operatingeffectively; and

vi. the Directors have devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems are adequate and operating effectively.

11. CORPORATE GOVERNANCE

The Company is committed to maintain the highest standards of corporate governance andadhere to the corporate governance requirements set out by SEBI. The Company has alsoimplemented several best corporate governance practices as prevalent globally. The reporton

Corporate Governance as stipulated under Listing Regulations forms an integral part ofthis Report. The company has also adopted various Social and Environmental policies anduploaded the same on the website of the company.

The requisite certificate from the Auditors of the Company confirming compliance withthe conditions of corporate governance is attached to the report on Corporate Governance.

12. CONTRACTS AND ARRANGEMENTS WITH RELATED

PARTIES

All contracts / arrangements / transactions entered by the Company during the financialyear with related parties were in the ordinary course of business and on an arm's lengthbasis. During the year the Company had not entered into any contract / arrangement /transaction with related parties which could be considered material in accordance with thepolicy of the Company on materiality of related party transactions.

All Related Party Transactions are placed before the Audit Committee as also the Boardfor approval. Information on transaction with related parties pursuant Particulars ofcontracts or arrangements with related parties referred to in Section 188(1) in theprescribed form AOC -2 is annexed to the Board’s Report.

13. PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS

The provisions of Section 186(4) of the Companies Act 2013 requiring disclosure in thefinancial statements of the full particulars of the loans given investment made orguarantee given or security provided and the purpose for which the loan or guarantee orsecurity is proposed to be utilised by the recipient of the loan or guarantee or securityis not applicable to us.

14. PUBLIC DEPOSITS

Being a Non Deposit taking Non-Banking Financial Company your Company has not acceptedany deposits from the public under section 73 of the Companies Act 2013 and the Companies(Acceptance of Deposits) Rules 2014 during the year under review.

15. EXTRACT OF ANNUAL RETURN

The details forming part of the extract of the Annual

Return in Form MGT 9 as per provisions of Section 134(3)

(a) Companies Act 2013 and rules thereto is annexed to this report.

16. NO. OF MEETINGS OF THE BOARD DURING THE FY 2016-17

During the Financial Year 2016-17 your Board met sixteen times on 26.04.201610.06.2016 12.07.2016 26.08.2016 26.09.2016 28.09.2016 30.09.2016 13.10.201602.11.2016 09.11.2016 19.11.2016 24.11.2016 01.12.2016 08.12.2016 09.02.2017 and06.03.2017. As per Companies Act 2013 minimum four meetings are required to be held in ayear. The details of these meetings are given in Corporate Governance Report which formspart of directors’ report.

17. NOMINATION AND REMUNERATION POLICY

Capital Trust Limited believes in the manner of its affairs in a fair and transparentview by adopting the ethical behavior standards integrity and professionalism and incompliance of laws towards the society government & its stakeholders. In terms ofSection 178 of the Companies Act 2013 the company has formulated and adopted theNomination & Remuneration policy. This policy acts as a guideline for determininginter-alia qualifications positive attributes and independence of a Director mattersrelating to the remuneration appointment removal and evaluation of performance of theDirectors and Key Managerial Personnel.

The policy is available on the website of the company

www.capital-trust.com.

18. RISK MANAGEMENT POLICY

The Company has a Risk Management Committee which has been entrusted with theresponsibility to assist the Board in (a) Overseeing and approving the Company'senterprise wide risk management framework; and (b) Overseeing that all the risks that anorganization like ours faces such as strategic financial credit market liquidity interest rate risk equity price security IT legal regulatory reputational andother risks have been identified and assessed and there is an adequate risk managementinfrastructure in place capable of addressing those risks.

The Company manages monitors and reports on the principal risks and uncertainties thatcan impact its ability to achieve its strategic objectives. The Company's managementsystems organisational structures processes standards code of conduct and behaviours

together manage associated risks.

The Company has introduced several improvements to Integrated Enterprise RiskManagement Internal Controls Management and Assurance Frameworks and processes to drive acommon integrated view of risks optimal risk mitigation responses and efficientmanagement of internal control and assurance activities.

The main objects of the Risk Management Policy adopted by the company are to ensurethat all the current and future material risk exposures of the company are identifiedassessed quantified appropriately mitigated minimized and managed i.e to ensureadequate systems for risk management and assure business growth with financial stability.

19. INTERNAL FINANCIAL CONTROLS

The Company has in place adequate internal financial controls with reference tofinancial statements. During the year such controls were tested and no reportablematerial weakness in the design or operations were observed.

20. CHANGES IN THE COMPOSITION OF THE BOARD OF DIRECTORS AND OTHER KEY MANAGERIALPERSONNEL

During the year under review following changes took

place on the Board:

• Cessation of directorship of Mr. Manpreet Singh Chawla at the Annual GeneralMeeting as his name was not proposed for directorship.

• Appointment of Mr. Sachin Kumar Bhartiya as a Nominee Director pursuant tosection 152 of the Companies Act 2013.

• Appointment of Mr. Joginder Pal Dua as additional director in the capacity ofIndependent Director

• Reappointment of Mrs. Anju Khosla as Executive Director after retiring byrotation.

• Appointment of Mr. Nitin Dhingra as CFO of the company.

The Company has received declarations from all the Independent Directors of the Companyconfirming that they meet the criteria of independence as prescribed both under the Actand Listing Regulations.

21. BOARD EVALUATION

The Company has devised a Policy for performance evaluation of Independent DirectorsBoard Committees and other individual Directors which includes criteria for performanceevaluation of the non-executive directors and executive directors.

Pursuant to the provisions of the Companies Act 2013 and the corporate governancerequirements as prescribed by Securities and Exchange Board of India (Listing Obligationsand Disclosure Requirements) Regulations 2015 ("SEBI Listing Regulations") theBoard has carried out an annual performance evaluation of its own performance thedirectors individually as well as the evaluation of the Audit Committee Nomination andRemuneration Committee. The evaluation was placed before the board of directors in theirmeeting held on 6th March 2017. The Board performance is evaluated on the basis of numberof Board and Committee meeting attended by individual director participation of directorin the affairs of the company duties performed by each director during the year.

The company has also formulated familiarisation of Independent Directors. The detailsof programmes for familiarisation of Independent Directors with the Company their rolesrights responsibilities in the Company nature of the industry in which the Company doperates business model of the Company and related matters are put up on the website ofthe Company www.capital-trust.com.

22. EMPLOYEE STOCK OPTION SCHEME

The company has allotted shares to Capital Employee Welfare Trust under Capital TrustEmployee Stock Option Scheme 2016. The Company has received a certificate from theAuditors of the Company that the Scheme has been implemented in accordance with the SEBIGuidelines and the resolution was passed by the members in the Extra Ordinary GeneralMeeting 24th October 2016.

23. COMPOSTION OF AUDIT COMMITTEE

The Audit Committee of the Company includes:

Name Design. Category
Mr. Hari Baskaran Chairman Independent Director
Mr. Surendra Mahanti Member Independent Director
Col. Vijay Kumar (Retd.) Member Independent Director

24. VIGIL MECHANISM

The company has adopted Vigil Mechanism policy with a view to provide a mechanism fordirectors and employees of the Company to report genuine concerns. The provisions of thispolicy are in line with the provisions of the Section 177(9) and (10) of the CompaniesAct 2013 and Securities and Exchange Board of India (Listing Obligations and DisclosureRequirements) Regulations 2015.

25. AUDITORS AND AUDITORS’ REPORT

a) Statutory Auditors

M/s. Walker Chandiok & Co LLP Chartered Accountants who are the StatutoryAuditors of the Company hold office till the conclusion of the ensuing Annual GeneralMeeting and are eligible for re-appointment.

However the company has received a letter dated 30.06.2017 from M/s Walker Chandiok andCo. LLP Chartered Accountants showing their unwillingness to continue as statutoryauditors of the company.

It is now proposed to appoint M/s Singhi and Co. Chartered Accountants (FirmRegistration No. 302049E) as statutory auditors of the company to hold office fromconclusion of this Annual General Meeting till the conclusion of thirty sixth AnnualGeneral Meeting in the year 2021-22.

b) Secretarial Audit

Section 204 of the Companies Act 2013 inter-alia requires every listed company toannex with its Board’s report a Secretarial Audit Report given by a CompanySecretary in practice in the prescribed form.

The Board has appointed M/s Shashank Sharma and Associates firm of Practising CompanySecretaries to conduct Secretarial Audit for the financial year 2016-17. The SecretarialAudit Report for the financial year ended March 31 2017 forms part of this Report. TheReport does not contain any qualification reservation or adverse remark.

c) Internal Auditor

The company has appointed M/s D P Bhardwaj and Associates Chartered Accountants as theInternal Auditors to present a fair and true view on the affairs of the Company.

26. EXPLANATIONS ON COMMENTS BY THE BOARD ON ANY QUALIFICATION RESERVATION OR ADVERSEREMARK OR DISCLAIMER MADE

(i) Statutory Auditor’s report

There are no disqualifications reservations adverse remarks or disclaimers in theauditor’s report.

The Notes on financial statement referred to in the Auditors' Report areself-explanatory and do not call for any further comments. The Auditors' Report does notcontain any qualification reservation or adverse remark.

(ii) Secretarial Auditor’s Report

The Secretarial Audit Report does not contain any qualification reservation or adverseremark made by Secretarial Auditor.

(iii) Internal Auditors’ Report

The Internal Audit Reports does not contain any qualification reservation or adverseremark made by Internal Auditor.

27. CORPORATE SOCIAL RESPONSIBILITY

As per the provisions of Section 135(1) of the Companies Act 2013 the company has aCorporate Social Responsibility Committee comprising of the below members:

Name Design. Category
Mr. Hari Baskaran Chairman Independent Director
Mr. Surendra Mahanti Member Independent Director
Col. Vijay Kumar (Retd.) Member Independent Director
Mrs. Anju Khosla Member Executive Director
Mr. Yogen Khosla Member Managing Director

The company is of the view that it is working for the upliftment of poor people andalso imparting financial literacy. The Company has provided training to people at Ruraland semi urban areas in various fields in finance and credit sector free of cost and haveprovided employment to deserving candidates among them. So the Company feels that there isno additional CSR expenditure required.

28. TRANSFER OF AMOUNTS TO INVESTOR EDUCATION AND PROTECTION FUND.

There are no amounts due and outstanding to be credited to Investor Education andProtection Fund as at 31st March 2017.

29. CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGO

As the Company is not engaged in the manufacturing activity the prescribed informationregarding compliance of rules relating to conservation of Energy and Technology absorptionpursuant to Section 134 (3) (m) of the Companies Act 2013 read with Rule – 8 (3) ofthe Companies (Accounts) Rules 2014 is not provided.

Foreign Exchange Inflow: Nil

Foreign Exchange Outflow: Nil

30. PARTICULARS OF EMPLOYEES

The statement showing the name of every employee of the company who if employedthroughout the financial year was in receipt of remuneration for that year which in theaggregate was not less than sixty lakh rupees is not required to be given as Company doesnot have any such employee. Further company does not have any employee who is employed forpart of the year and drawing remuneration of Rupees Five Lakhs per month. Further there isno employee in receipt of remuneration which in the aggregate or as the case may be ata rate which in the aggregate is in excess of that drawn by the managing director orwhole-time director or manager and holds by himself or along with his spouse and dependentchildren not less than two percent of the equity shares of the company.

Your Directors state that no disclosure or reporting is required in respect of thefollowing items as there were non applicability/ no transactions on these items during theyear under review:

1. Details relating to deposits covered under Chapter V of the Act.

2. Issue of equity shares with differential rights as to dividend voting or otherwise.

3. Issue of shares (including sweat equity shares) to employees of the Company underany scheme save and except ESOS referred to in this Report.

4. Neither the Managing Director nor the Whole-time Directors of the Company receiveany remuneration or commission from any of its subsidiaries.

5. No significant or material orders were passed by the Regulators or Courts orTribunals which impact the going concern status and Company's operations in future.

6. Your Directors further state that during the year under review there were no casesfiled pursuant to the Sexual Harassment of Women at Workplace (Prevention Prohibition andRedressal) Act 2013.

31. ACKNOWLEDGMENTS

Your Directors would like to express their sincere appreciation for the assistance andco-operation received from the financial institutions banks Government authoritiescustomers vendors and members during the year under review. Your Directors also wish toplace on record their deep sense of appreciation for the committed services by theCompany's executives employees and field staff.

FOR AND ON BEHALF OF THE BOARD

OF CAPITAL TRUST LIMITED

Sd/-

Yogen Khosla

Chairman and Managing Director

DIN-00203165

Dated : 15th July 2017

Place : New Delhi

Form No. AOC-2

(Pursuant to clause (h) of sub-section (3) of section 134 of the Act and Rule 8(2)

of the Companies (Accounts) Rules 2014)

Form for disclosure of particulars of contact or arrangements entered into by theCompany with the related party referred to in

subsection (1) of section 188 of the Companies Act 2013 including certain arm’slength transactions under third proviso thereto:

Details of Contract or arrangements or transactions not at arm’s length basis:Capital Trust Limited has not entered into any contracts/ arrangements/ transaction withits related parties which is not in the ordinary course of business or at arm’slength during 2016-2017.

1. Details of contracts or arrangements or transactions not at Arm’s length basis.

S. No. Particulars Details
1. Name (s) of the related party & nature of relationship Not Applicable
2. Nature of contracts/arrangements/transaction Not Applicable
3. Duration of the contracts/arrangements/transaction Not Applicable
4. Salient terms of the contracts or arrangements or transaction including the value if any Not Applicable
5. Justification for entering into such contracts or arrangements or transactions’ Not Applicable
6. Date of approval by the Board Not Applicable
7. Amount paid as advances if any Not Applicable
8. Date on which the special resolution was passed in General meeting as required under first proviso to section 188 Not Applicable
2. Details of contracts or arrangements or transactions at Arm’s length basis.
Name (s) of the related party & Mr. Vahin Khosla
Nature of contracts/arrangements/transaction Remuneration
Duration of the contracts/arrangements/transaction On going
Salient terms of the contracts or arrangements or transaction including the value if any In the Ordinary
Course of Business
Date of approval by the Board June 10 2016
Value of Transactions 1788656 as salary

Note: The above disclosures on material transaction are based on the principle thattransactions with wholly owned subsidiaries are exempt for the purpose of section 188(1)of the Act.