Your Directors have pleasure in presenting the Twenty Second Annual Report and theaudited statement of accounts of the Company for the year ended March 31 2016.
| || || || ||Rs. in Lacs |
|Particulars || |
| ||2015-16 ||2014-15 ||2015-16 ||2014-15 |
|Total Revenue ||18655.19 ||19216.08 ||19059.15 ||20607.96 |
|Total Expenses ||13111.05 ||5269.61 ||13147.65 ||5315.26 |
|Profit before Depreciation & Tax (PBDT) ||5544.14 ||13946.47 ||5911.50 ||15292.70 |
|Less: Depreciation ||332.16 ||358.78 ||347.64 ||383.10 |
|Profit Before Tax ||5211.98 ||13587.69 ||5563.86 ||14909.59 |
|Less: Provisions for taxation ||1091.49 ||5069.36 ||1198.89 ||5385.94 |
|Profit After Tax (PAT) ||4120.49 ||8518.33 ||4364.97 ||9523.65 |
|Add: Balance brought forward from previous year ||39231.08 ||33902.48 ||40353.10 ||35823.15 |
|Balance available for appropriations Appropriations ||43351.57 ||42420.81 ||44718.07 ||45346.80 |
|General Reserve ||310.00 ||700.00 ||310.00 ||700.00 |
|Statutory Reserve ||850.00 ||1850.00 ||900.00 ||1850.00 |
|Dividend on Equity Shares ||525.40 ||525.40 ||525.40 ||525.40 |
|Tax on Dividend ||106.96 ||106.96 ||106.96 ||106.96 |
|Depreciation Charged off as per Revised Depreciation Guidelines ||- ||7.36 ||- ||10.81 |
|Balance Carried to Balance Sheet ||41559.21 ||39231.08 ||42875.71 ||42153.63 |
RESULTS OF OPERATIONS AND STATE OF AFFAIRS:
During the year under review your company has strategically grown the MSME and Retailbusiness while adopting a cautious approach towards lending to the residential real estatesector under the Wholesale business. This strategic focus has yielded the desired resultsand the loan portfolio has moved positively to 68% (Previous Year 47%) in favour of MSMEand Retail business and 32% (Previous Year 53%) for Wholesale business. Accordingly theloan portfolio of MSME and Retail business has grown to ' 75704.70 lacs (PreviousYear ' 44592 lacs) and the Wholesale business loan portfolio has come down to '35353.78 lacs (Previous Year ' 50571 lacs). Overall the Loan book of the Companygrew by 16.70% to ' 1 11058.48 lacs from ' 95 167.99 lacs of the lastyear.
During the year under review the Real Estate sector witnessed significant slowdown andbuild up of unsold inventory thereby affecting the re-payment ability of the real estatedevelopers. Due to continuing default by few of the borrowers in re-payment of loans themanagement decided to write-off loan to the extent of ' 6593.77 lacs (net ofadjustments) during the year. These writeoffs considerably lowered the profitability ofthe Company during the year. The gross revenue of the Company was marginally lower at '18655.19 lacs as compared to ' 19216.08 lacs during the previous year while theProfit After Tax (PAT) was lower by 51.63% i.e. ' 4120.49 lacs as compared to '8518.33 lacs of the previous year.
The consolidated gross revenue decreased by 7.52% to ' 19059.15 lacs from '20607.96 lacs of previous year and the consolidated PAT decreased by 54.17% to '4364.97 lacs from ' 9523.65 lacs of previous year.
During the year under review the Company raised funds for its working capital andbusiness requirements from various banks to the extent of ' 38500 lacs as comparedto ' 10000 lacs sanctioned during the last year.
The total amount of bank loan outstanding was ' 14116.44 lacs as on March 312016 as against ' 5 000 lacs on March 31 2015.
Total Assets of the Company stood at ' 130388.41 lacs as compared to '113252.34 lacs during the last year showing an increase of 15.14%.
CAPITAL ADEQUACY RATIO
Your Company's total Capital Adequacy Ratio (CAR) as of March 31 2016 stood at79.72% of the aggregate risk weighted assets on balance sheet and risk adjusted value ofthe off-balance sheet items which is well above the regulatory minimum of 15%.
STANDARD ASSET'S PROVISIONING
Pursuant to the Notification No. DNBR (PD) CC.No.002/03.10.001/2014-15 dated November10 2014 issued by the RBI for making a general provision at 0.30% on the outstandingStandard Assets of NBFCs your Company has made provision at 0.50% exceeding the statutoryrequirements.
Further the Company has decided to create additional Floating Provision @ 1.50% ofStandard Assets over and above the statutory requirement which would be available foradjustment against Provision on Sub-standard Assets.
The Directors of the Company have recommended a dividend of ' 1.50/- per EquityShare for the financial year ended on March 31 2016. The dividend on Equity Shares ifapproved by the shareholders at the 22nd Annual General Meeting would amountto ' 632.36 lacs (inclusive of dividend distribution tax amount of ' 106.96lacs) and will be paid to those members whose names appear on the Register of Members ofthe Company as on July 16 2016.
TRANSFER TO RESERVES
The Company transferred an amount of ' 310 lacs to the General Reserves duringthe year.
MANAGEMENT DISCUSSION AND ANALYSIS
The Management Discussion and Analysis of financial condition including the results ofoperations of the Company for the year under review as required under regulation 34(2)(e)of the Securities and Exchange Board of India (Listing Obligations and DisclosureRequirements) Regulations 2015 is provided as a separate section forming part of theAnnual Report.
CONSOLIDATED FINANCIAL STATEMENTS
The audited consolidated financial statement of the Company prepared in accordance withapplicable Accounting Standards specified under section 133 of the Companies Act 2013read with rule 7 of the Companies (Accounts) Rules 2014 is provided in the Annual Report.
As on March 31 2016 the Company has the following subsidiaries:
1. Capri Global Housing Finance Private Limited;
2. Capri Global Resources Private Limited.
The following subsidiary companies got merged with the Company during the year:
1. Capri Global Distribution Company Private Limited;
2. Capri Global Finance Private Limited;
3. Capri Global Investment Advisors Private Limited; and
4. Capri Global Research Private Limited.
The audited financial statements the Auditors Report thereon and the Board's Reportfor each of the Companys subsidiaries for the year ended March 31 2016 areavailable on the website of the Company. If any member is interested in obtaining a copythereof such member may write to the Company Secretary in this regard.
Performance and financial position of each of the Subsidiaries Capri Global HousingFinance Private Limited received Registration from National Housing Bank on September 282015 to commence housing finance business. Company has plans to finance affordable housingsector and would commence business during the next financial year.
Capri Global Resources Private Limited proposes to carry on the investment managementbusiness during the next financial year.
Both the subsidiaries had deployed their funds in interest and income bearingsecurities during the year under review.
A report on the performance and financial position of each of the subsidiaries as perthe Companies Act 2013 is provided as Annexure -I to the Consolidated Financial statementand hence not repeated here.
There are no material subsidiaries of the Company. The Policy for determining materialsubsidiaries as approved by the Board may be accessed on the Companys website atlink: http://www.cgcl.co.in/images/Downloads/Policy%20on%20Material%20Subsidiaries_1.pdf.
Merger of subsidiaries with the Company
The Honble High Court of Judicature at Bombay on September 11 2015 approved theScheme of Amalgamation of Capri Global Distribution Company Private Limited Capri GlobalFinance Private Limited Capri Global Investment Advisors Private Limited and Capri GlobalResearch Private Limited (Transferor Companies) with the Company and theirrespective shareholders and creditors (the Scheme). The Scheme becameeffective on October 19 2015 upon obtaining all sanctions and approvals as requiredunder the Scheme. The Appointed Date for the Merger was April 1 2015. As the TransferorCompanies were wholly owned subsidiaries of the Company no shares of the Company wereissued and allotted pursuant to the Scheme. Necessary effects as a result of theaforesaid Merger have been given in the Financial Statements for the year 2015-16.
DIRECTORS' RESPONSIBILITY STATEMENT
In terms of section 134(5) of the Companies Act 2013 your Board of Directors statesthat:
a) i n the preparation of the annual financial statements for the year ended March 312016 the applicable accounting standards have been followed and there are no materialdepartures from the same;
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 as at March 31 2016 and of the profit ofthe Company for the year ended on that date;
c) the Directors have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities;
d) the Directors have prepared the annual accounts on a going concern basis';
e) the Directors have laid down proper internal financial controls to be followed bythe Company and that such financial controls are adequate and are operating effectively;
f) the Directors have devised proper systems to ensure compliance with the provisionsof all applicable laws and that the systems are adequate and are operating effectively.
The Company has been observing best governance practices and is committed to adhere tothe Corporate Governance requirements on an ongoing basis. A separate section on CorporateGovernance and a certificate from the Practicing Company Secretary regarding compliance ofconditions of Corporate Governance as stipulated under Part E of Schedule V of the SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 forms part of thisAnnual Report.
Further as required under regulation 17(8) of the SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 a certificate from the Executive Director andAssociate Director - Head of Finance & Accounts on the financial statements of yourCompany for the year ended on March 31 2016 was placed before the Board at its meetingheld on April 23 2016.
RELATED PARTY TRANSACTIONS
All contracts /transactions entered by the Company during the year with related partieswere at arm's length and were in the ordinary course of business. During the year theCompany has not entered into any transactions which can be considered material inaccordance with the policy of the Company.
The policy dealing with related party transaction as approved by the Board can beaccessed on the Companys website at the link:http://www.cgcl.co.in/images/Downloads/Policy%20on%20Related%20Party%20Transactions_1.pdf.
Your Directors would like to draw attention of members to Note 27 to the financialstatement which sets out details of related party transactions.
CORPORATE SOCIAL RESPONSIBILITY
The Corporate Social Responsibility Committee (CSR Committee) has formulated andrecommended to the Board a Corporate Social Responsibility Policy (CSR Policy) indicatingthe activities
to be undertaken by the Company which has been approved by the Board.
The CSR Policy may be accessed on the Companys website at the link:http://www.cgcl.co.in/images/Downloads/CSR_Policy_Website.pdf.
As part of its initiatives under Corporate Social Responsibility (CSR) theCompany has undertaken projects in the areas of education healthcare & livelihood ofthe unprivileged women and differently-abled. These projects are in accordance withSchedule VII of the Companies Act 2013.
The Annual Report on CSR activities is annexed herewith marked as Annexure - I to thisreport.
The Board of Directors of Company has constituted Risk Management Committee in additionto the Assets Liability Management Committee (ALCO) which is entrusted with theresponsibility to assist the Board in identification and mitigation of risks associatedwith the business of the Company. The details of the functioning of the Risk ManagementCommittee and ALCO are provided in the report on Corporate Governance forming part of thisAnnual Report. The Company follows a proactive risk management policy aimed at protectingits assets and employees while at the same time ensuring growth and continuity of itsbusiness. Regular updates are made available to Board at the Board Meeting and in specialcases on ad-hoc basis.
A detailed discussion on the identified risks and mitigation strategies is contained inthe Management Discussion and Analysis forming part of the Annual Report.
INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
The Company has in place adequate internal controls commensurate with the size scaleand complexity of its operations. To maintain its objectivity and independence theInternal Auditors report to the Chairman of the Audit Committee of the Board. InternalAuditors monitor and evaluate the efficacy and adequacy of internal control system in theCompany its compliance with operating systems accounting procedures and policies at alllocations of the Company and its subsidiaries.
Based on the report of Internal Auditors process owners undertake corrective action intheir respective areas and thereby strengthen the controls. Significant audit observationsand corrective actions thereon are presented to the Audit Committee of the Board.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
In accordance with the provisions of section 152 of the Companies Act 2013 and theArticles of Association of the Company Mr. Quintin E. Primo III retires by rotation atthe ensuing Annual General Meeting and offers him-self for reappointment.
During the year under review the members approved the reappointment of Mr. RajeshSharma as a Non-executive Director who is liable to retire by rotation. The members havealso appointed Mr. Sunil Kapoor as Executive Director of the Company for a term of oneyear which expired on January 23 2016 and the Board has re-appointed him for anotherperiod of three years starting from January 24 2016 which is proposed to be approved bythe members at the ensuing Annual General Meeting.
Declaration by Independent Director(s)
The Company has received declarations from all the Independent Directors of the Companyconfirming that they meet the criteria of Independence prescribed both under the CompaniesAct 2013 and regulation 16(1)(b) of the Securities and Exchange Board of India (ListingObligations and Disclosure Requirements) Regulations 2015.
Formal Annual Performance Evaluation
Pursuant to the provisions of the Companies Act 2013 and regulation 16(10) of the SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 the Board has carriedout an annual performance evaluation of Independent Directors Board Committees and otherindividual Directors process of evaluation was followed as per the Policy laid down inthis regard. The manner in which the evaluation has been carried out has been explained inthe Report on Corporate Governance.
Nomination and Remuneration Policy
The Board has on the recommendation of the Nomination & Remuneration Committeeframed a policy for selection of Directors determining Directors independence and paymentof remuneration to Directors Key Managerial Personnel and other employees.
The Nomination and Remuneration Policy is stated in the Report on Corporate Governance.
On appointment the concerned Director is issued a Letter of Appointment setting out indetail the terms of appointment duties responsibilities and expected time commitments.The details of programmes for familiarization of Independent Directors with the Companytheir roles rights responsibilities in the Company and related matters are put up on thewebsite of the Company at link:http://www.cgcl.co.in/images/Downloads/Familiarisation%20Programme%20for%20Independent%20Directors.pdf.
EMPLOYEES STOCK OPTION PLAN
The Nomination and Remuneration Committee of the Board of Directors of the Company inter-aliaadministers and monitors the Employees Stock Options Scheme in accordance with theapplicable SEBI guidelines.
During the year under review 400000 options were granted to Mr. Sunil KapoorExecutive Director of the Company at the exercise price of ' 200/- per option. The optionswould be vested over a period of 5 years starting from October 15 2016 and vesting wouldbe linked with attainment of return on equity.
No Stock Options were vested and exercised during the year by the employees.
There were no changes to the Employees Stock Options Scheme 2009 during the year.
The applicable disclosure as stipulated under the SEBI guidelines as on March 31 2016with regard to Employees Stock Options Scheme are put up on the website of the Company atlink: http://www.cgcl.co.in/images/Downloads/ESOS%20Details-2015-16.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 thereunderM/s. Karnavat & Co Chartered Accountants were appointed as statutory auditors of theCompany from the conclusion of the twenty first annual general meeting (AGM) of theCompany held on July 18 2015 till the conclusion of the twenty sixth AGM subject toratification of their appointment at every AGM.
The Notes on financial statements referred to in the Auditors Report are self-explanatory and do not call for any further comments. The Auditors' Report does notcontain any qualification reservation or adverse remark.
Pursuant to the provisions of section 204 of the Companies Act 2013 and The Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Company hasappointed PRS Associates Company Secretaries in Practice to undertake the SecretarialAudit of the Company. The Secretarial Audit Report is annexed herewith marked as Annexure- II to this Report.
The following qualification was observed by the Secretarial Auditor in their Report towhich the Board has shared the following explanations:
Qualification: The Company has not appointed Chief Financial Officer (CFO') asrequired under section 203(1) of the Companies Act 2013.
Explanation: Company has made sincere efforts to appoint Chief Financial Officer (CFO)as per defined KRA. Few of the candidates were interviewed from which one of thecandidate was selected. He had accepted the offer but he was not able to join Company dueto personal reasons. The Company has adequate resources and qualified personnel with morethan 20 years of experience looking after accounts finance taxation & treasuryoperations of the Company.
The Audit Committee comprises of Independent Directors namely Mr. Beni Prasad Rauka(Chairman) Ms. Bhagyam Ramani Mr. Mukesh Kacker and Mr. T. R. Bajalia as members. TheAudit Committee played an important role during the year. It coordinated with theStatutory Auditors Internal Auditors and other key personnel of the Company and hasrendered guidance in the areas of internal audit & control finance and accounts. Allthe recommendations made by the Audit Committee were accepted by the Board. Four meetingsof the Audit Committee were held during the year.
Stakeholders Relationship Committee
The Committee has met four times during the year. With the compulsory dematerializationof the Companys shares and electronic mode of transfers postal dispatches which ledto usual complaints have been minimized. At the year end 99.94% of the total shares weredematerialized with no unresolved pending investor grievances.
Nomination & Remuneration Committee
The Nomination and Remuneration Committee recommends to the Board the suitability ofcandidates for appointment as Key Managerial Personnel Directors and the remunerationpackages payable to them and other employees. The Nomination and Remuneration Committeemet twice during the year.
Vigil Mechanism / Whistle Blower Policy
The Company has a vigil mechanism named Whistle Blower Policy (WBP) to deal withinstance of fraud and mismanagement if any the details of the WBP is explained in thereport of Corporate Governance. The WBP may be accessed on the Companys website atthe link: http://www.cgcl.co.in/images/Downloads/Whistle%20Blower%20Policy-website_1.pdf.Meetings of Board
Four meetings of the Board of Directors were held during the year the details of whichare provided in report on Corporate Governance. The intervening gap between the meetingswas within the period prescribed under the Companies Act 2013.
Particulars of Loans Investments Guarantees
Not applicable being a Non-Banking Finance Company.
Conservation of Energy Technology Absorption Foreign Exchange Earnings and Outgo
The provisions of section 134(3)(m) of the Companies Act 2013 relating toconservation of energy and technology absorption are not applicable to the Company.However the Company has been continuously and extensively using technology in itsoperations.
There were no foreign exchange earnings during the year. There was foreign exchangeoutgo of ' 26.27 lacs during the year.
Extract of Annual Return
The details forming part of the extract of the Annual Return as prescribed in Companies(Management and Administration) Rules 2014 in form MGT- 9 is annexed herewith marked asAnnexure - III to this Report.
Particulars of Employees
Disclosures pertaining to remuneration and other details as required under section197(12) of the Companies Act 2013 read with rule 5(1) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 are provided in the Annual Report and ismarked as Annexure - IV to this Report.
The statement containing particulars of employees as required under section 197(12) ofthe Companies Act 2013 read with rule 5(2) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 is provided in a separate annexureforming part of this Report. Further the report and the accounts are being sent to themembers excluding the aforesaid annexure. In terms of section 136 of the Companies Act2013 the said annexure is open for inspection at the Registered Office of the Company.Any shareholder interested in obtaining a copy of the same may write to the CompanySecretary.
Details of significant and material orders passed by the regulators or courts ortribunals impacting the going concern status and companys operations in future
There are no significant material orders passed by the Regulators / Courts which wouldimpact the going concern status of the Company and its future operations.
Reserve Bank of India Directions
Your Company is categorized as a non deposit taking systematically important (ND-SI)non-banking finance company (NBFC). Accordingly during the year your Company has notaccepted any deposits from the public and there were no deposits which become due forrepayment or renewal. Your Company has complied with the directives issued by the ReserveBank of India under the Non Banking Financial Companies (Reserve Bank of India)Directions 2007 and Non-Banking Financial Companies - Corporate Governance (Reserve Bank)Directions 2015 as amended from time to time.
Increase in Share Capital
Pursuant to merger of four of the subsidiaries with the Company Authorised ShareCapital of the subsidiary companies of ' 170000000/- (Rupees Seventeen Croresonly) was combined with the Company. After combination the Authorised Share Capital of theCompany is ' 720000000/- (Rupees Seventy Two Crores only) divided into72000000 Equity Shares of ' 10/- each.
During the year under review the Company has not issued and equity shares either withor without differential voting rights nor has issued any sweat equity. As on March 312016 none of the Directors of the Company hold any convertible instruments of theCompany.
Disclosure under Sexual Harassment of Women
Company has Sexual Harassment Policy in place and available on Companys intranetportal. During the year under review there were no complaints from any of the employee.
The Board of Directors wish to place on record their deep and sincere gratitude for thecontinued co-operation and support extended by the customers bankers businessassociates consultants advisors shareholders investors and the employees of theCompany and subsidiaries.
The Board of Directors would also like to place on record their sincere appreciationfor the co-operation received from the Reserve Bank of India Securities and ExchangeBoard of India NSE & BSE Ministry of Corporate Affairs and all other regulatorybodies.
| || ||For and on behalf of the Board |
| ||Mr. Sunil Kapoor ||Mr. Rajesh Sharma |
|Place: Gangtok Sikkim ||Executive Director ||Director |
|Dated: April 23 2016 ||DIN: 01436404 ||DIN: 00020037 |