Your Directors have pleasure in presenting the Twenty Third Annual Report together withthe audited financial statements for the financial year ended March 31 2017.
The summary of the Company's financial performance both on a standalone andconsolidated basis for the Financial Year ("FY") 2016-17 as compared to theprevious FY2015-16 is given below:
( Rs in lacs)
|Particulars || |
| ||2016-17 ||2015-16 ||2016-17 ||2015-16 |
|Total Revenue ||23167.53 ||18655.19 ||23508.72 ||19059.15 |
|Less: Operating Expenses & Provisions ||9432.29 ||11933.33 ||9726.05 ||11969.92 |
|Profit before Interest Depreciation & Taxes (PBIDT) ||13735.24 ||6721.86 ||13782.67 ||7089.23 |
|Less: Depreciation ||419.38 ||332.16 ||430.26 ||347.64 |
|Less: Interest & Finance Charges ||3796.34 ||1177.73 ||3798.70 ||1177.73 |
|Profit Before Tax ||9519.52 ||5211.98 ||9553.70 ||5563.86 |
|Less: Provisions for taxation ||3741.03 ||1091.49 ||3741.49 ||1198.89 |
|Profit After Tax (PAT) ||5778.49 ||4120.49 ||5812.22 ||4364.97 |
|Add: Balance brought forward from previous year ||41559.21 ||39231.08 ||42875.71 ||40353.10 |
|Balance available for appropriations ||47337.70 ||43351.57 ||48687.93 ||44718.07 |
|APPROPRIATIONS || || || || |
|General Reserve ||450.00 ||310.00 ||450.00 ||310.00 |
|Statutory Reserve ||1160.00 ||850.00 ||1180.00 ||900.00 |
|Dividend on Equity Shares ||- ||525.40 ||- ||525.40 |
|Tax on Dividend ||- ||106.96 ||- ||106.96 |
|Balance Carried to Balance Sheet ||45727.70 ||41559.21 ||45057.94 ||42875.71 |
RESULTS OF OPERATIONS AND STATE OF AFFAIRS
During the year under review the total revenue of the Company was Rs 23167.53 lacs ascompared to Rs18655.19 lacs during the previous year an increase of 24.19% while the PATwas
Rs5778.49 lacs as compared to Rs4120.49 lacs of the previous year an increase by40.24% due to better control over the NPAs and negligible write-offs during the year.During the year under review your Company has grown both the business verticals withgreater emphasis on the MSME business. The loan book grew from Rs111058.48 lacs of theprevious year to Rs181659.64 lacs an increase by 63.57%. Accordingly the loan portfolioof MSME business has grown by 60.33% to
Rs121379.55 lacs (previous year Rs 75704.70 lacs) and the construction financebusiness loan portfolio has grown by 70.50% to Rs60280.09 lacs (previous year Rs35353.78lacs). The gross revenue on consolidated basis has grown by 23.81% to Rs23508.72 lacsfrom Rs 19059.15 lacs of previous year and the consolidated PAT increased by 33.16% toRs5812.23 lacs from Rs4364.97 lacs of previous year.
The Directors of your Company are pleased to recommend a dividend of Rs0.30 per EquityShare (Rs2/- paid up per share) for the financial year ended on March 31 2017. Thedividend on Equity Shares if approved by the shareholders at the 23rd Annual GeneralMeeting would amount to Rs632.36 lacs (inclusive of dividend distribution tax amount ofRs106.96 lacs) and will be paid to those members whose names appear on the Register ofMembers of the Company as on July 7 2017. As per Companies (Accounting Standards)Amendment Rules 2016 dividend and tax thereon will be recognised as liability onapproval of shareholders at the ensuing Annual General Meeting (AGM).
TRANSFER TO RESERVES
The Company proposes to transfer Rs450 lacs (previous year
Rs 310 lacs) to General Reserve and Rs1160 lacs (previous year
Rs850 lacs) to Statutory Reserve created pursuant to section 45IC of the ReserveBank of India Act 1934.
Total Assets of the Company stood at Rs1 94464.77 lacs as compared to Rs1 30388.41lacs during the last year showing an increase of 49.14%.
CAPITAL ADEQUACY RATIO
Your Company's Capital Adequacy Ratio (CAR) as of March 31 2017 stood at 52.97% ofthe aggregate risk weighted assets on balance sheet and risk adjusted value of theoff-balance sheet items which is well above the regulatory minimum of 15% providing muchneeded headroom for fund raising for business operations of the Company.
STANDARD ASSET'S PROVISIONING
Pursuant to the Master Direction DNBR. PD. 008/03.10.119/2016-17 dated September 12016 issued by the Reserve Bank of India (RBI) for making a general provision at 0.35 % onthe outstanding Standard Assets your Company has made provision at 0.50% exceeding thestatutory requirements.
Further the Company has decided to create additional Floating Provision @ 1.50% ofStandard Assets over and above the statutory requirement which is available foradjustment against specific Provision on Sub-standard Assets and NPAs.
During the year under review the Company raised funds for its working capital andbusiness requirements from various banks and had sanctioned facilities of Rs85500 lacs ascompared to Rs48500 lacs during the last year. The total amount of bank loan outstandingas on March 31 2017 was Rs60285.80 lacs as against Rs14116.44 lacs on March 31 2016.
FUND RAISING THROUGH ISSUE OF NCDS AND CP
During the year under review the Company raised Rs7500 lacs through issue of three(3) tranches of Secured Redeemable No-Convertible Debentures (NCDs) on Private Placementbasis. The NCDs are listed on the BSE Limited. The Company also raised Rs5000 lacsthrough issue of Commercial Paper (CP).
During the year Credit Analysis and Research Ltd. ("CARE") has accorded arating of CARE A+' [Single-A Plus] for the issue of Non-convertible Debentures andCARE A1+ [A One plus] for the issue of Commercial Paper. Further CARE has alsoaccorded a rating of CARE A+' [Single A Plus] with respect to the Bank facilitiesavailed by the Company.
MANAGEMENT DISCUSSION AND ANALYSIS
The Management Discussion and Analysis report for the year under review as requiredunder regulation 34(2)(e) of the Securities and Exchange Board of India (ListingObligations and Disclosure Requirements) Regulations 2015 (Listing Regulations) isprovided as a separate section forming part of the Annual Report.
As on March 31 2017 the Company has the following subsidiaries:
1. Capri Global Housing Finance Limited;
2. Capri Global Resources Private Limited;
3. Capri Global Asset Reconstruction Private Limited*
*Incorporated on February 22 2017 as a wholly owned subsidiary of the Company.
PERFORMANCE AND FINANCIAL POSITION OF SUBSIDIARY
During the year under review Capri Global Housing Finance Limited (HFC') startedthe business of financing affordable housing and made a humble beginning by disbursingloan amounting to Rs696.98 lacs. The HFC has earned a Profit After Tax of Rs85.34 lacs ascompared to Rs244.58 lacs of the previous year. Decrease in profit is attributable toincrease in operational expenses of the HFC necessitated by the launch of the housingfinance business.
Capri Global Resources Private Limited (CGRPL) has incurred a loss of Rs51.59 lacsduring the year as compared to the losses of
Rs0.11 lacs in the previous year. CGRPL has invested its capital in developing thebusiness plans and for registration of the Capri India Real Estate Investment Fund'with Securities & Exchange Board of India (SEBI). Capri Global Assets ReconstructionPrivate Limited was incorporated on February 22 2017 and is yet to commence businessoperations. As required under rule 5 of the Companies (Accounts) Rules 2014 a statementcontaining the salient features of the financial statement of the subsidiaries is appendedas Annexure I to the Consolidated Financial statement.
All the subsidiaries are wholly owned by the Company. The Company does not have anyoverseas subsidiary.
INVESTMENT IN SUBSIDIARIES
During the year under review the Company has infused capital in its followingsubsidiaries by subscribing to their equity shares:
|Name of subsidiary company ||Amount of capital subscribed |
| ||(Rsin lacs) |
|Capri Global Resources Private Limited ||50.00 |
|Capri Global Asset Reconstruction ||1.00 |
|Private Limited || |
There are no material subsidiaries of the Company as at March 31 2017. However theBoard of Directors of the Company has framed a Policy for determining MaterialSubsidiaries and the same is available at http://www.cgcl.co.in/images/Downloads/Policy_on_Material_Subsidiaries_1.pdf
DIRECTORS' RESPONSIBILITY STATEMENT
The Board of Directors of the Company to the best of their knowledge and beliefconfirms that: a) in the preparation of the annual accounts the applicable accountingstandards have been followed along with proper explanation relating to materialdepartures; b) the directors have selected such accounting policies and applied themconsistently and made judgments and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of the Company as at March 31 2017 andof the profit of the Company for that period; c) the directors have taken proper andsufficient care for the maintenance of adequate accounting records in accordance with theprovisions of the Act for safeguarding the assets of the Company and for preventing anddetecting fraud and other irregularities; d) the directors have prepared the annualaccounts on a going concern basis; e) the directors have laid down internal financialcontrols to be followed by the Company and that such internal financial controls areadequate and operating effectively; f) the directors have devised proper systems to ensurecompliance with the provisions of all applicable laws and that such systems were adequateand operating effectively
INTERNAL FINANCE CONTROLS
The Company has put in place adequate internal controls with reference to financialstatements commensurate with the size scale and complexity of operations. The design andeffectiveness of key controls were tested and no material weaknesses were observed.
REPORTS ON CORPORATE GOVERNANCE
The Report on Corporate Governance for the year under review is forming part of theAnnual Report. The certificate from the Secretarial Auditor of the Company confirmingcompliance with the conditions of Corporate Governance is annexed to the Report onCorporate Governance.
PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
The Board of Directors has approved the Related Party Transactions ("RPT")Policy which is also available on the Company's website athttp://www.cgcl.co.in/images/Downloads/ Policy_on_Related_Party_Transactions_1.pdf. ThePolicy intends to ensure that proper reporting approval and disclosure processes arefollowed for all transactions between the Company and Related Parties.
All RPT that were entered into during the FY2016-17 were on an arm's length basis andwere in the ordinary course of business. There were no materially significant RPT made bythe Company with Promoters Directors KMP or Body Corporate(s) which had a potentialconflict with the interest of the Company at large. Accordingly the disclosure of RPT asrequired under the provisions of section 134(3)(h) of the Companies Act 2013 (Act')in Form AOC-2 is not applicable. The Directors draw attention of the Members to Note No.26 to the Financial Statements which sets out details of related party transactions.
CORPORATE SOCIAL RESPONSIBILITY
In accordance with the requirements of the provisions of section 135 of the Act theCompany has constituted a Corporate Social Responsibility ('CSR') Committee. Thecomposition and terms of reference of the CSR Committee is provided in the Report onCorporate Governance.
The Company has also formulated a CSR Policy which is available on the website of theCompany at http://www.cgcl. co.in/images/Downloads/CSR_Policy_website.pdf. As part of itsCSR initiatives the Company has undertaken multiple programmes covering areas ofeducation livelihood development healthcare and sanitation during the year. The projectsundertaken during the year are in accordance with Schedule vII of the Act and the CSRPolicy of the Company. The Annual Report on CSR activities is annexed herewith marked as AnnexureI to this report.
RISK MANAGEMENT FRAMEWORK
The Board of Directors of Company has constituted Risk Management Committee in additionto the Assets Liability
Management Committee (ALCO) which is entrusted with the responsibility to assist theBoard in identification and mitigation of risks associated with the business of theCompany. The details of the functioning of the Risk Management Committee and ALCO areprovided in Report on Corporate Governance forming part of this Annual Report. The Companyfollows a proactive risk management policy aimed at protecting its assets and employeeswhile at the same time ensuring growth and continuity of its business. Regular updates onthe development in the business environment and the risk mitigation initiatives areprovided to Board at its meetings. A detailed discussion on the identified risks andmitigation strategies is contained in the Management Discussion and Analysis forming partof the Annual Report.
During the year under review Mr. Bhagwati Prasad resigned as Independent Director onthe Board of the Company with effect from August 1 2016 due to his appointment as theChairman of the Gujarat State Human Rights Commission. The Board places on record itsappreciation for the services rendered by Mr. Bhagwati Prasad during his tenure as anIndependent Director of the Company.
Mr. Desh Raj Dogra was appointed as an Additional Director Independent of theCompany with effect from May 10 2017. Pursuant to the sub-section (1) of section 161 ofthe Act he holds the office of Additional Director upto the ensuing Annual GeneralMeeting. The Company has received a notice in writing under section 160 of the Act from amember proposing his candidature for the office of Director. The Board recommends approvalof his appointment as an Independent Director of the Company. In accordance with section152 of the Act and the Articles of Association of the Company Mr. Rajesh Sharma Directorwill retire by rotation at the ensuing AGM and being eligible has offered himself forre-appointment. As at March 31 2017 the Company had four Independent Directors includingone woman Director. The Company has familiarised the Independent Directors with theCompany their roles responsibilities in the Company nature of industry in which theCompany operates business model of the Company etc. The details of the familiarizationprogramme are available on the website of the Company at http://www.cgcl.co.in/images/Downloads/Familiarisation_Programme_for_ Independent_Directors.pdf.
All Independent Directors have given declarations that they meet the criteria ofindependence as provided under section 149 (6) of the Act and regulation 16(1)(b) of theListing Regulations. Further all the Directors meet the Fit and Proper criteria as perthe policy of the Company and as stipulated by RBI pursuant to the revised regulatoryframework notified during the year. The terms and conditions of appointment of IndependentDirector is also available on the website of the Company at https://www.cgcl.co.in/docs/Letter_of_Appointment_for_Independent_ Directors.pdf.
The Directors of the Company have affirmed compliance with the Code of Conduct of theCompany. Additional information and brief profile as stipulated under regulation 36(3) ofthe Listing Regulations and clause 1.2.5 of the Secretarial Standard on General Meetings("SS-2") with respect to the director seeking re-appointment is annexed to theNotice of the AGM. Further the business items relating to the re-appointment ofDirector(s) have been included in the Notice of the AGM.
KEY MANAGERIAL PERSONNEL
As at March 31 2017 the Company had the following KMPs:
1) Mr. Sunil Kapoor Executive Director
2) Mr. Harish Agrawal Company Secretary
NOMINATION AND REMUNERATION POLICY
The Board of Directors of the Company has on the recommendation of the Nomination andRemuneration
Committee framed a policy for selection of Directors determining Directorsindependence and payment of remuneration to Directors Key Managerial Personnel and otheremployees. The Nomination and Remuneration Policy is stated in the Report on CorporateGovernance.
EMPLOYEE STOCK OPTION SCHEME
The Members are informed that 400000 Stock Options granted to Mr. Sunil KapoorExecutive Director of the Company in the year 2015 have lapsed due to non-fulfillment ofthe conditions of vesting during the year. During the year under review the Nominationand Remuneration Committee at its meeting held on December 12 2016 had decided to grant250000 stock options to one of the senior management employee which would get vestedover a period of five years starting from completion of third year of his service at Rs62per share. The applicable disclosure as stipulated under the SEBI guidelines as on March31 2017 with regard to Employees Stock Options scheme are put up on the website of theCompany at link: https://www.cgcl.co.in/docs/ESOS_Details_2016_17.pdf.
The Company has received a certificate from the Auditors of the Company that the Schemehas been implemented in accordance with the SEBI guidelines and the resolution passed bythe members. The certificate would be placed at the Annual General Meeting for inspectionby members.
AUDITORS AND AUDITORS' REPORT
Pursuant to the provisions of section 139 of the Act and the rules framed there underthe Members at their Twenty First Annual General Meeting (AGM) held on July 18 2015 hadappointed M/s. Karnavat & Co Chartered Accountants as Statutory Auditors of theCompany from the conclusion of Twenty First AGM till the conclusion of the Twenty SixthAGM subject to ratification of their appointment at every AGM.
M/s. Karnavat & Co. Chartered Accountants Mumbai has expressed their intentionnot to be re-appointed as Statutory Auditors of the Company with effect from theconclusion of Twenty Third Annual General Meeting due to pre-occupation. Considering theintentions of existing Statutory Auditors the Board of Directors at its meeting held onMay 13 2017 has recommended appointment of M/s. Deloitte Haskins and Sells LLPChartered Accountants as the Statutory Auditors of the Company to hold office from theconclusion of the Twenty Third AGM till the conclusion of Twenty Eigth AGM. The Notes onfinancial statements referred to in the Auditors Report are self explanatory and donot call for any further comments. The Auditors' Report does not contain anyqualification reservation or adverse remark.
Pursuant to the provisions of section 204 of the Act and the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 the Company has appointed M/s. PRSAssociates Company Secretaries in Practice to undertake the Secretarial Audit of theCompany. The Secretarial Audit Report is annexed herewith marked as Annexure II tothis Report.
The following qualification was observed by the Secretarial Auditor in their Report towhich the Board has shared the following explanations: Qualification: The Companyhas not appointed Chief Financial Officer (CFO') as required under section 203(1) ofthe Act. Explanation: The Company has been making sincere efforts to appoint ChiefFinancial Officer ('CFO') as per defined KRA. The Company has adequate resources andqualified personnel with more than 21 years of experience looking after accounts financetaxation and treasury operations of the Company.
Five meetings of the Board were held during the year the details of which aredisclosed in the Report on Corporate Governance forming part of the Annual Report of theCompany.
The Company has constituted an Audit Committee comprising of Independent Directors. Thecomposition terms of reference and details of meeting held during the year are disclosedin the Report on Corporate Governance. Five meetings of the Audit Committee were heldduring the year.
Stakeholders Relationship Committee
The Committee met four times during the year. The composition terms of reference anddetails of meeting held during the year are disclosed in the Report on CorporateGovernance
Nomination and Remuneration Committee
The Nomination and Remuneration Committee recommends to the Board the suitability ofcandidates for appointment as Director/Managing Director and Key Managerial Personnel andthe remuneration packages payable to them. The Nomination and Remuneration Committee metfour times during the year. The composition terms of reference and details of meetingheld during the year are disclosed in the Report on Corporate Governance.
Vigil Mechanism/Whistle Blower Policy
The Company has formulated and established a vigil
Mechanism named whistle Blower Policy to deal with instances of fraud andmismanagement and to enable Directors and Employees to report genuine concerns aboutunethical behaviour actual or suspected fraud or violation of Code of Conduct. Thedetails of the same are explained in the Report on Corporate Governance. The whistleBlower Policy may be accessed on the Company's website at http://www.cgcl.co.in/images/Downloads/whistle_Blower_Policy_website_1.pdf.
Conservation of Energy Technology Absorption and Foreign Exchange Earnings and Outgo
Company being a non-banking finance company the particulars regarding conservation ofenergy and technology absorption as required to be disclosed pursuant to the rule 8(3) ofthe Companies (Accounts) Rules 2014 are not relevant to its activities.
There were no foreign exchange earnings during the year (previous year RsNil); theforeign exchange outgo by the Company during the year was Rs46.85 lacs (previous yearRs26.27 lacs) towards Directors' sitting fees and travelling expenses.
Extract of Annual Return as prescribed under Section 92(3) of the Act and Rules Madethereunder
The extract of Annual Return in MGT-9 as required under section 92(3) of the Act andprescribed in rule 12 of the Companies (Management and Administration) Rules 2014 isappended as Annexure-III to this Report.
Particulars of Loans Given Investments Made Guarantees Given or Security Provided bythe Company
Company being a non-banking finance company provisions of section 186 of the Actrelating to loans investments and guarantees given or securities provided are notapplicable to the Company.
Particulars of Employees
The information required pursuant to the provisions of section 197 of the Act read withrule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules2014 in respect of employees of the Company has been appended as Annexure IV ofthis Report. In terms of first proviso to section 136 of the Act the Report and Accountsare being sent to the Members and others entitled thereto excluding the information onemployees' particulars as required pursuant to provisions of rule 5(2) and rule 5(3) ofthe Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014. The saidinformation is available for inspection by the Members at the Registered Office of theCompany during business hours on working days of the Company up to the date of the ensuingAGM. If any Member is interested in obtaining a copy thereof such Member may write to theCompany Secretary in this regard.
The Board of Directors affirm that the remuneration paid to employees of the Company isas per the Remuneration Policy of the Company and none of the employees listed in the saidAnnexure/information is related to any Director of the Company.
Significant and Material Orders Passed by the Regulators or
There are no significant and material orders passed by the Regulators/Courts whichwould impact the going concern status of the Company and its future operations. Furtherno penalties have been levied by the RBI/any other Regulators during the year underreview.
Reserve Bank of India Directions
The Company is categorised as a non deposit taking systemically important non-bankingfinance company (NBFC-NDSI). Accordingly during the year the Company has not accepted anydeposits from the public and there were no deposits which become due for repayment orrenewal. The Company has complied with the Master Direction-Non-Banking FinancialCompany-Systemically Important Non-Deposit taking Company and Deposit taking Company(Reserve Bank) Directions 2016' amended from time to time.
Registered as Corporate Agents
During the year under review the Company got itself registered with the InsuranceRegulatory and Development Authority of India as a Corporate Agents (Composite) videCertificate of Registration no. CA0438 dated November 7 2016 for a period of three years.
Sub-division of Share Capital
During the year under review the Company had sub-divided the face value of its equityshares from Rs10/- to Rs2/- per share with an objective to improve liquidity and increasein the shareholders base. The sub-divided shares were credited in the demat accounts ofthe shareholders on November 25 2016. Post sub-division the shareholders base of theCompany has increased from 3105 (September 2016) to 4189 as at March 31 2017.
Dematerialisation of Equity Shares
Equity Shares of the Company are compulsorily tradable in electronic form. As on March31 2017 99.95% of the Equity Shares are held in electronic form and only 91410 EquityShares out of 17 51 34805 Equity Shares were held in physical form. In view of thenumerous advantages offered by the Depository System the Members holding shares inphysical form are advised to avail of the facility of dematerialisation.
Material Changes and Commitments
There were no material changes and commitments affecting the financial position of theCompany which occurred between the end of the financial year to which these financialstatements relate and the date of this Report.
Policy for Prevention Prohibition and Redressal of Sexual Harassment at Workplace
The Company has in place a Policy for Prevention Prohibition and Redressal of SexualHarassment at work Place. Appropriate reporting mechanisms are in place for ensuringprotection against Sexual Harassment and the right to work with dignity. During the yearunder review the Company has not received any complaints in this regard.
The Directors express their sincere gratitude to the Reserve Bank of India Securitiesand Exchange Board of India BSE Limited National Stock Exchange of India LimitedMinistry of Finance Ministry of Corporate Affairs Registrar of Companies InsuranceRegulatory and Development Authority of India other government and regulatoryauthorities lenders financial institutions and the Company's bankers for the ongoingsupport extended by them.
The Directors also place on record their sincere appreciation for the continued supportextended by all the stakeholders and trust reposed by them in your Company. The Directorssincerely appreciate the commitment displayed by the employees of the Company and itssubsidiaries across all levels resulting in successful performance during the year.
|Place : Mumbai ||For and on behalf of the Board |
|Date : May 13 2017 ||Quintin E. Primo-III |
| ||Non-executive Chairman |
| ||DIN: 06600839 |