THE MEMBERS OF
CEEJAY FINANCE LIMITED
Your Directors hereby present their TWENTY THIRD Annual Report together with theaudited accounts of the company for the year ended 31st March 2016.
| || ||(Rs. in Lacs) |
|PARTICULARS ||YEAR ENDED ||YEAR ENDED |
| ||31/03/2016 ||31/03/2015 |
|Revenue From Operations ||1227.49 ||1157.63 |
|Total Revenue ||1228.44 ||1160.3 |
|Profit Before Depreciation & Tax ||578.21 ||565.94 |
|Depreciation ||14.19 ||14.77 |
|Profit before Tax ||563.72 ||551.17 |
|Provision for tax || || |
|Current ||187.51 ||180.45 |
|Deferred ||0.33 ||-1.92 |
|Provision of Income Tax of earlier period ||0.69 ||- |
|Profit After Tax ||375.19 ||372.64 |
|Balance of Profit brought forward ||72.82 ||71.89 |
|Profit available for Appropriation ||448.01 ||444.53 |
|APPROPRIATION || || |
|Proposed Dividend ||51.75 ||48.30 |
|Corporate tax on Dividend ||10.54 ||8.21 |
|Transferred to || || |
|Statutory reserve ||75.20 ||75.00 |
|General reserve ||240.00 ||240.20 |
|Balance Carried to Balance Sheet ||68.89 ||72.82 |
We are pleased to recommend dividend of 15% p.a (Rs. 1.50 per share) on the EquityShare Capital of the Company for the financial year ended March 31 2016. The dividend ifapproved by the members will be paid to members within the period stipulated by theCompanies Act 2013.
UNCLAIMED DIVIDEND AS ON 31ST MARCH 2016
The unclaimed dividend as on 31st March 2016 was Rs. 15.99 lakhs. Notransfer of unclaimed/unpaid dividend was required to be made to the Investor EducationAnd Protection Fund during the year.
COMPANYS AFFAIRS AND FUTURE OUTLOOK:
Your Company has continued to grow steady but substantially due to the concertedmarketing efforts in new business centers new product and prudent recovery system.Company has maintained steady growth in operations and profit during fiscal 2015-16. Totalrevenue including income from operations and other income increased to Rs. 1227.49 lacs inthe current year from Rs. 1157.63 lacs in previous year. The total expenses increased from609.13 lacs in previous year to Rs. 664.72 lacs in current year mainly towards provisionsof doubtful debt/ NPA and increase in sales expenses due to competition. The finance costdecreased marginally to Rs. 208 lacs in the current year compared to Rs. 225.37 lacs inprevious year. Accordingly the profit before tax increased from Rs. 551.17 lacs in theprevious year to Rs. 563.72 lacs in the current year. After providing tax of Rs. 187.51lacs in the current year (Rs. 180.45 lacs in previous year) profit after tax remained375.19 lacs against Rs. 372.64 lacs in the previous year.
The disbursement in the current year remains almost similar to Rs. 4611.73 lacscompared to Rs. 4720.67 lacs in previous year. The Companys strategy to focus forthe business in smaller places and specialization in two/ three wheeler segment hasremained unchanged. Hypothecation / loan stock of the Company has increased from Rs.4181.77 lacs in previous year to Rs. 4252.57 lacs in the current year.
The assets of the company are properly and adequately insured and recoveries are atsatisfactory level.
CHANGE IN NATURE OF BUSINESS IF ANY
Your Company continues to operate the same business segment as that of previous yearand there is no change in the nature of the business.
MATERIAL CHANGES AND COMMITMENTS
No material changes and commitments have occurred after the close of the financial yeartill the date of this report which affect the financial position of the Company.
MANAGEMENT DISCUSSION AND ANALYSIS
Indian economy recorded a growth rate of 7.6 % in terms of real GDP in 2015-16. Thegrowth rate was highest in preceding five years despite the continued slowdown in globalgrowth and two consecutive years of deficient monsoons in India. Inflation moderated withthe average level of consumer price inflation declining to 5% in 2015-16 from 6% in2014-15. Domestic manufacturing growth improved to a robust 9.5% compare to 5.5% infinancial year 2014-15. FDI inflow increased by 40% in April-December period of 2015compare to previous corresponding period.
The NBFC (Non-Banking Finance Company) sector has evolved considerably in terms ofsize operations technological sophistication and entry into newer areas of financialservices and products. The growth inflation mix should improve for 2016-17 as theGovernment is expected to undertake more structural reforms and RBI is likely to be moreaccommodative in its monetary policy.
As on now company major focus is on two wheeler business in rural area. The growthrate of two wheeler industry and its financing pattern make direct impact on theperformance of the company. Hero Moto Corp on the cumulative sales front the companyreported sales of 6632322 units during FY2015-16 as against FY2014-15 sales of 6631826units which marks growth albeit by a thin margin. Honda Motorcycle & Scooter India(HMSI) on the cumulative front recorded total domestic sales of 4283345 units duringFY2015-16. An official release quotes that "increased efficiency and flexibility inproduction translated to a growth of 1% even as Hondas all three existing plants inIndia continued to run on peak capacity." Bajaj Autos consolidated sales standat 3358252 units during FY2015-16 as against total sales of 3292084 units inFY2014-15. This underlines growth of 2.01 percent YoY for Bajaj Auto. However financingits own product by manufacturers is big threat to small and middle level NBFC.
Our mission is to be sound NBFC among regional players in terms of product offeringstechnology service levels risk management and audit and compliance etc. The objective isto continue building sound customer / franchises across distinct businesses so as to be apreferred provider of NBFC services for its target retail and customer segments and toachieve a healthy growth in profitability consistent with the companys riskappetite. The companys range of retail financial products and excellent services andbranches net work is fairly exhaustive to meet up the coming challenges. The objective iscontinue to build sound customer/dealer friendly atmosphere to achieve healthy growth inprofitability consistent with companys risk appetite. The company also emphasizesto develop innovative products and services that attract its Customers Increase itsmarket share as NBFC and financial services industry by following a disciplined growthstrategy focusing on balancing quality and volume growth while delivering high qualitycustomer service maintain reasonably good standards for asset quality through disciplinedcredit risk management; and continue to develop products and services that reduce its costof funds; and Focus on healthy earnings growth with low volatility. Our company growth ismore important especially looking to the concentration in rural area for the business. Thecompany grew its retail assets portfolio in a well balanced manner focusing on bothreturns as well as risk. Company intends to follow conservative view in the coming years.Company also expects continuous threats to small/medium Company like us from global/giantplayers in the retail finance market especially with large size/volume lower rate ofinterest and ability to sustain in the market is inevitable for the company to sustain inthe market.
Overall in spite of various pros and corns your company has demonstrated outstandingachievement in terms of earned valued and well built market presence. Your company is cashrich has better liquidity improved working capital and it has shown its readiness toaccept market challenges. All of these are signs of strong fundamentals which the companyhas been able to establish with the help of batter and professional management support.
RISK MANAGEMENT / SWOT ANALYSIS
Your company has comprehensive Risk Management System towards identification andevaluation of all potential business risks. Management has developed Risk Management Planand reviews its implementation regularly. The company is exposed to external and internalrisk associated with its business. To counter these risks the company continues tobroaden its product portfolio increase customer profile and geographic reach.
Taking on various types of risk is integral to the NBFC business. Sound risk managementand balancing risk-reward trade-offs are critical to a companys success. Businessand revenue growth have therefore to be weighed in the context of the risks implicit inthe companys business strategy. Of the various types of risks your company isexposed to the most important are credit risk credit concentration risk market riskbusiness risk strategic risk interest rate risk model risk technology risk includingliquidity risk price risk and operational risk. The identification measurementmonitoring and management of risks accordingly remain a key focus area for the Company.For credit risk appropriate distinct policies and processes are in place for the retailbusinesses. Overall portfolio diversification and reviews also facilitate mitigation andmanagement. Especially a small capital based company faces multiple problems due to poorrecovery systems. The specific NPA provisions that the company has made continue to bemore conservative than the regulatory requirements. This will help the company to maintainhigh standards for assets quality through disciplined credit risk management.
However while the balance of risks in the last financial year were largely externalpoor monsoon as well as firm inflationary pressures have meant that domestic factors havenow emerged as points of concern for growth in the current fiscal year.
The company has strength as being the pioneer in the two wheeler vehicles financingsector in Gujarat/ Maharashtrs Oldest NBFC since last 20 years sound financial positionsince inception a well-defined and scalable organisation structure strong financialtrack record with low Non Performing Assets (NPAs) Experienced and stable managementteam strong relationships with public private as well as banks fast Procedure. Howeveryour company is facing the threat of small organisation structure availability ofcheaper fund competition with large NBFCs/Banks direct manufacturer involvement infinance business and rain fall affecting rural area.
As on 31st March 2016 against hypothecation of loan stock of Rs. 4252.57 lacs(previous year Rs. 4181.77) Rs. 2903.05 is falling due within 12 months. Company has madeprovision for Non Performing Hypothecation loan stocks for Rs. 7.83 lacs (previous yearRs. 5.33 lacs). The NPA of bad debts/hypo.loans written off is Rs. 21.29 lacs (previousyear Rs. 21.47 lacs) while provision for doubtful/ nonperforming assets is Rs. 36.56 lacs(Previous year Rs. 0.04 lacs.)
INTERNAL AUDIT AND COMPLIANCE:
The Company has Internal Audit and Compliance functions which are responsible forindependently evaluating the adequacy of all internal controls and ensuring operating andbusiness units adhere to internal processes and procedures as well as to regulatory andlegal requirements. The audit function also recommends improvements in operationalprocesses and service quality. To mitigate operational risks the Company has put in placeextensive internal controls including restricted access to the companys computersystems appropriate segregation of front and back office operations and strong audittrails. The Audit Committee of the Board also reviews the performance of the audit andcompliance functions and reviews the effectiveness of controls and compliance withregulatory guidelines. The Board has formed a new audit committee considering therequirement under the Companies Act 2013 and rules made thereunder. Along with keeping inview the requirement under listing agreement.
RESOURCE MOBILATION/ICRA RATING
Cost of funds for retail-focused NBFCs which remained high at 12%-14% is likely toremain stable during the year. As mentioned earlier company is in constant search toavail cheaper fund to reduce our cost of funds. The cash credit limit of the company hasremained at Rs. 1500 lacs with the Banks.
The Company has discontinued accepting or renewing fresh deposits therefore there nooutstanding fixed deposit as on date. Inter Corporate Deposit almost remain constant from884.54 lacs in the previous year to Rs. 887.63 lacs in current year.
The company has obtained ICRA rating for Rs. 1500 lacs Cash Credit Limits from Bank.ICRA has assigned +BB (Stable) ratings for the same.
Your companys Capital Adequacy Ratio (CAR) stood at 60.98% well above theregulatory minimum of 15%. The revised Guidelines issued by R.B.I for recognition ofIncome asset classification Investment accounting provision for non-performing assetsand capital adequacy have been followed by your company. The company has also made theprovision for non performing assets in case of Sub-standard doubtful and loss assets asper R.B.I. guidelines.
The company has not accepted any deposits from the public within the meaning ofprovision of Non- Banking financial companies accepted of public deposits ( reserve banks) direction 1988.
As reported earlier the Company has discontinued to accept or renewed fresh/existingfixed deposits. At the close of the year no amount remained unclaimed or unpaid. Thecompany does not have any claimed but unpaid deposits.
Mr.Harshad Dalal and Mr.Kiran Patel are liable to retire by rotation at the ensuingAnnual General Meeting and being eligible offer themselves for reappointment during theyear under review.
The Board of Directors of the Company hereby confirms that all the Independentdirectors duly appointed by the Company have given the declaration and they meet thecriteria of independence as provided under section 149(6) of the Companies Act 2013.
As per regulation 27(2) of the SEBI listing Obligations and Disclosure RequirementsRegulations 2015 with stock exchanges your company was required to implement the code ofcorporate Governance. Accordingly your company has complied in all material respects withthe features of the said code. A report on the same is given separately.
DIRECTORS RESPONSIBILITY STATEMENT:
To the best of their knowledge and belief and according to the information andexplanations obtained by them your Directors make the following statements in terms ofclause (c) of sub-section (3) of Section 134 of the Companies Act 2013 which statesthat
(a) in the preparation of the Annual Accounts the applicable Accounting Standards havebeen followed along with proper explanation relating to material departures; (b) theDirectors have selected such accounting policies and applied them consistently and madejudgments and estimates that are reasonable and prudent so as to give a true and fair viewof the state of affairs of the company at the end of the financial year and of the profitof the company for that period; (c) the Directors have taken proper and sufficient carefor the maintenance of adequate accounting records in accordance with the provisions ofthis Act for safeguarding the assets of the company and for preventing and detecting fraudand other irregularities; (d) the Directors have prepared the Annual Accounts on a goingconcern basis; (e) the Directors have laid down Internal Financial Controls to be followedby the Company and that such Internal Financial Controls are adequate and were operatingeffectively; and (f) the Directors have devised proper systems to ensure compliance withthe provisions of all applicable laws and that such systems were adequate and operatingeffectively.
LISTING AGREEMENT WITH STOCK EXCHANGES:
Pursuant to the provisions of listing agreement with stock exchanges the equity sharesof the company are listed at Ahmedabad (regional) and Mumbai stock exchanges. Since StockExchange Ahmedabad is inoperative company has made application for delisting and awaitsreply from the exchange.
Your company has established electronic connectivity with National SecuritiesDepository Ltd. (NSDL) and Central Depository Services (India) Ltd. In view of thecompulsory dematerialization of companys equity shares on stock exchanges membersare requested to dematerialize the shares on either of the depositories as aforesaid.
Kantilal Patel & Co. Chartered Accountants auditors of the company hold officeuntil the conclusion of the ensuing Annual General Meeting of the company and beingeligible offer themselves for reappointment.
Pursuant to the provisions of Section 204 of the Companies Act2013 and the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the company hasappointed M/S Tushar Vora & Associates proprietor company secretaries in practice toundertake the secretarial audit of the company. The secretarial audit report is annexedherewith as Annexure A. There was no transection of Equity Shares of theCompany by KMP/Directors. No listing fees to Ahmedabad Stock Exchange has been paid as theexchange has applied to SEBI for Surrendering of licence as Stock Exchange and has stoppedtrading platform for the last nine years. With regards to fine imposed by BSE theobservation is self explanatory.
CORPORATE SOCIAL RESPONSIBILITY
Since the net profit for the year ended 31st March 2016 is less than 5crores the relevant provision of the Act is not applicable.
NOMINATION AND REMUNERATION COMMITTEE
The Board of Directors at its meeting held on 31st October2015 constituteda Nomination and remuneration Committee comprising of Mr.Bharat Amin as ChairmanMr.Kiritkumar Dalal Mrs.Mrudulaben Patel Mr.Sunil G.Patel and Deepak patel as othermembers. The role and responsibilities Companys policy on directorsappointment and remuneration including criteria for determining qualifications positiveattributes independence of a director and other related matters are in conformity withthe requirements of the Companies Act 2013 and the listing agreement as on 31stMarch 2016.
MEETING OF THE BOARD & AUDIT COMMITTEE
The Board of Directors and members of Audit committeeduring the financial year 2015-16met five times. The Board of Directors at its meeting held on 31st October 2015constituted Audit Committee comprising of Mr.Bharat Amin as Chairman Mr.Kirit kumarDalal Mrs.Mrudula ben Patel and Mr.Sunil G.Patel and Deepak Patel as other members. Thescope of Audit committee is enhanced in accordance with the Companies Act 2013 and thelisting agreement.
STAKEHOLDERS RELATIONSHIP/SHARE TRANSFER COMMITTEE
The Board of Directors at its meeting held on 31st October 2015 constituteda Stakeholders Relationship/Share Transfer committee of Mr.Bharat Amin as ChairmanMr.Kirit kumar Dalal Mrs.Mrudulaben Patel Mr.Sunil G.Patel And Deepak Patel as othermembers in accordance with the Companies Act2013 and the listing agreement.
EVALUATION OF BOARD COMMITTEE AND DIRECTORS
A detailed exercise for evaluation of the performance of the Board its variouscommittees and also the performance of individual Directors was carried out by the Board.The performance of the Board and that of its committees was evaluated on the basis ofvarious parameters like adequacy of Composition Board Culture Execution and performanceof specific duties obligations and governance etc. Whereas the evaluation of individualdirectors and that of the Chairman of the Board was on the basis of various factors liketheir attendance level of their engagement their contribution and independency ofjudgment their contribution in safeguarding the interest of the company and otherrelevant factors. The Board and committees put sufficient efforts to safeguard theinterest of the company. The information relating to its terms of reference no. ofmeetings held and attendance etc during the year under report are provided in CorporateGovernance Report.
During the year under report the Board of Directors has adopted the familiarizationprogram for independent directors of the company.
During the year under report the company has appointed Key Managerial Personnel tointer alia shoulder the responsibilities in their respective fields as envisaged under theprovisions of the Companies Act 2013.
DISCLOSURE OF REMUNERATION RATIO
The particulars of ratio of remuneration of Director KMP and employees moreparticularly described under section 197(12) of the Companies Act2013 and Rules 5 ofCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 are given inAnnexure B to this report.
PARTICULARS OF LOANS AND INVESTMENTS
The company being NBFC registered with Reserve Bank of India with principal business asloan company the provisions of Section 186 except sub section (1) of the CompaniesAct2013 are not applicable to it. Hence no particulars thereof as envisaged under Section134(3)(g) of the Act are covered in this report.
RELATED PARTY TRANSECTIONS
The company has no transection with related parties referred to sub section (1) ofSection 188 of the Companies Act 2013. However other related party transections notcovered above are disclosed in note 22.8 of this report
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGO:
As the main business of the company is of finance the company has no activitiesrelating to conservation of energy or technology absorption. The company has had noforeign exchange earnings or out goes during the year under review.
DISCLOSURES AS PER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITIONAND REDRESSAL) ACT 2013
The Company has zero tolerance for sexual harassment at workplace and has adopted apolicy on prevention prohibition and redressal of sexual harassment at workplace in linewith the provisions of the Sexual Harassment of Women at Workplace (PreventionProhibition and redressal) Act 2013 and no complaint has been received on sexualharassment during the financial year 2015-16.
VIGIL MECHANISM/WHISTLE BLOWER POLICY
The Board during the year under report approved and adopted "VigilMechanism/Whistle Blower Policy" in the company. The Brief details of establishmentof this policy are provided in the Corporate Governance Report.
In accordance with the Green Initiative the Company has been sending theAnnual Report/Notice of AGM in electronic mode to those Shareholders whose Email ids areregistered with the Company and / or the Depository Participants. Your Directors arethankful to the Shareholders for actively participating in the Green Initiative.
RISK MANAGEMENT POLICY
The company was already having risk management system to identify evaluate andminimize the business risks. The company during the year had formalized the same byadopting Risk Management Policy. This policy intends to identify evaluate monitor andminimize the identifiable risks in the organization.
The extract of the Annual Return in Form MTG 9 is provided in Annexure D to thisreport.
Remuneration to Managing Director
The remuneration paid to managing Director is recommended by the Nomination andRemuneration Committee and approved by Board in the Board meeting subject to thesubsequent approval of the shareholders at the ensuing Annual General Meeting and suchother authorities as may be required. The remuneration is decided after consideringvarious factors such as qualification experience performance responsibilitiesshouldered industry standards as well as financial position of the Company.
Remuneration to Non Executive Directors:
No fees/remuneration are being paid to the Non-Executive Directors.
PARTICULARS OF EMPLOYEES:
There are no Employees covered by Section 197 of the Companies Act 2013 read with Rule5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014.
CODE OF CONDUCT
The Code of Conduct for all Board members and Senior Management of the Company havebeen laid down and are being complied with in words and spirit. The compliance ondeclaration of code of Conduct signed by Managing Director of the Company is included as apart of this Annual Report.
ANY SIGNIFICANT AND MATERIAL ORDER PASSED BY REGULATERS OR COURTS OR TRIBUNALS
No orders were passed by the regulators or courts or tribunals impacting the goingconcern status and Companys operation in future.
The Directors would like to place on record their sincere appreciation to all theemployees of their continued effort towards the growth of the company and would also liketo express their thanks to the Bankers Shareholders and Customers for their support andcontribution which enabled the company to achieve its goals for the year.
| ||FOR AND ON BEHALF OF THE BOARD |
|Place : NADIAD. ||CHAIRMAN |
|Dated : 14th May 2016 || |