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CSL Finance Ltd.

BSE: 530067 Sector: Financials
NSE: N.A. ISIN Code: INE718F01018
BSE LIVE 15:40 | 17 Nov 571.25 -0.65
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NSE 05:30 | 01 Jan Stock Is Not Traded.
OPEN 585.00
PREVIOUS CLOSE 571.90
VOLUME 5837
52-Week high 645.00
52-Week low 150.00
P/E 23.55
Mkt Cap.(Rs cr) 337
Buy Price 571.25
Buy Qty 113.00
Sell Price 0.00
Sell Qty 0.00
OPEN 585.00
CLOSE 571.90
VOLUME 5837
52-Week high 645.00
52-Week low 150.00
P/E 23.55
Mkt Cap.(Rs cr) 337
Buy Price 571.25
Buy Qty 113.00
Sell Price 0.00
Sell Qty 0.00

CSL Finance Ltd. (CSLFINANCE) - Director Report

Company director report

Dear Shareholders

Your Directors take pleasure in presenting the 25th Annual Report togetherwith the Audited Annual Accounts of your Company for the year ended 31st March2017 together with the Auditor's Report thereon.

1. Financial Performance

(Rs. in Crores)

Particulars Current year ended 31.03.2017 Previous year ended 31.03.2016
Total Revenue 40.66 44.67
Profit before Tax 23.78 18.49
Tax 7.36 5.44
Profit After taxes 16.42 13.05

2. Dividend

The directors recommend for consideration of the members at the ensuing annual generalmeeting payment of dividend of Re.1/- per equity share of the face value of Rs.10/- eachfor the financial year 2016-17. The amount of dividend and tax thereon aggregate toRs.56.35 lacs.

3. Transfer to reserves

The Bank transferred Rs.3.28 Crores to Statutory Reserves in accordance with theprovisions of Section 45-IC of the Reserve Bank of India Act 1934.

4. Credit Rating

The Credit Rating enjoyed by the Company from Care Ratings Limited as on 31st March2017 is as given below:

Credit Rating Agency Instrument Rating as on 31st March 2017 Migration during the FY 2016 - 2017
CARE Fund Based - LT - Cash Credit CARE BBB; Stable No Change*

*During the year 2016-17 the credit rating was earlier issued for working capitallimit of Rs.10 crores and was later increased to working capital limits of Rs.60 crores.

5. Management Discussion & Analysis Report

The Management Discussion and Analysis Report for the year under review as stipulatedin Regulation 34 of the Listing Regulations 2015 is annexed to this Report.

6. Corporate Governance

A separate report on Corporate Governance is annexed to this Report. The certificatereceived from the Auditors of the Company confirming compliance to the conditions ofCorporate Governance as stipulated in Regulation 34 and Schedule V to the ListingRegulations 2015 is annexed to Report on Corporate Governance.

7. Fixed Deposits

Since your Company is a non-deposit taking Non-Banking Financial Company it has notaccepted any deposits under Chapter V of Companies Act 2013/applicable guidelines ofReserve Bank of India during the year under review.

8. RBI Guidelines

As a Non-Deposit accepting Non-Banking Finance Company your Company always aims tooperate in compliance with applicable RBI laws and regulations and employs its bestefforts towards achieving the same.

9. Subsidiaries Companies Joint Ventures And Associates

The Company has no subsidiary Company. The company has one Associate company- CatalystFinancial Services Private Limited which was incorporated on 06.08.2015.

10. Number of Meetings of The Board

The Board met 10 times in the Financial Year 2016-17 viz. 30th May 2016 18thJuly 2016 13th August 2016 22nd August 2016 1stSeptember 2016 8th September 2016 8th October 2016 3rdNovember 2016 25th January 2017 and 28th March 2017. The maximumtime interval between any two meetings did not exceed 120 days.

11. Committees of the Board

The details of all the Committees of the Board along with their charters compositionand meetings held during the year are provided in the Report on Corporate Governancewhich forms part of this Annual Report. The Board has accepted all the recommendations ofthe Audit Committee.

12. Directors and Key Managerial Personnel

As on 31st March 2017 the Board of your Company consists of four Directors asfollows:

Name Category
Kapil Aggarwal* Non-executive Independent Director
Rohit Gupta Managing Director (Executive Promoter Director)
Ashok Kumar Kathuria Non-executive Promoter Director
Anjna Non-executive Independent Director (Woman Director)

*Kapil Aggarwal resigned as Director w.e.f. 23.05.2017 and Mr.Manoj Gupta was appointedas Additional Director (Independent Director) w.e.f. 16.05.2017.

The composition of the Board is as per the Companies Act 2013 and the SEBI (ListingObligations and Disclosure Requirements) (LODR) Regulations 2015. All the Directors arehaving vast knowledge and experience in their relevant fields and the Company hadbenefitted immensely by their presence in the Board.

a) Directors

- Mr. Kapil Aggarwal resigned from the board of Directors of the Company with effectfrom 23.05.2017 due to his personal pre-occupation.

- The Board has also appointed Mr.Manoj Gupta as the Additional Independent Director ofthe Company wef 16.05.2017 subject to the approval of the shareholders of the Company atthe ensuing Annual General Meeting.

- Mr. Ashok Kumar Kathuria retires by rotation at the forthcoming Annual GeneralMeeting and being eligible offer himself for reappointment. The details of Mr. AshokKumar Kathuria are stated in the Corporate Governance Report forming part of this AnnualReport and Notice of the Annual General Meeting of the Company.

- The board of directors of the company in their meeting held on 10.08.2017re-appointed Mr. Rohit Gupta as the Managing Director of the Company for a period of 5years subject to the approval of the shareholders in the ensuing Annual General Meeting.

b) Woman Director

In terms of the provisions of Section 149 of the Companies Act 2013 and Regulation 17(1) (a) of the SEBI (LODR) Regulations 2015 the Company shall have at least one WomanDirector on the Board. Your Company has Ms. Anjna as Woman Director on the Board of theCompany.

c) Key Managerial Personnel

In accordance to the provisions of Companies Act 2013 the following persons are theKMPs of the Company as recorded by the Board as on 31st March 2017:

Mr. Rohit Gupta: Managing Director Mr. Sandeep Kumar Lohani: Chief Executive OfficerMr.Naresh Chandra Varshney: Chief Financial Officer Mr. Akash Gupta: Company Secretary& Legal Head

d) Changes in Directors and Key Managerial Personnel (KMP) during the FY 2016 - 2017

During the year under review Sandeep Kumar Lohani was appointed as the Chief Executiveofficer of the company w.e.f. 08th September 2016.

13. Performance Evaluation

Pursuant to the provisions of section 134(3)(p) of the Companies Act 2013 and ScheduleIV of the Companies Act 2013 and in accordance to Regulation 17(10) of the ListingRegulations 2015 the Board has carried out the annual performance evaluation of theBoard as a whole various Committees of the Board and of the Directors. A structuredquestionnaire was prepared after taking into consideration the inputs received from theDirectors covering various aspects of functioning mechanism of the Board and Committee.The performance evaluation of the Independent Directors was carried out by the entireBoard. The Directors expressed their satisfaction with the evaluation process. The mannerin which the evaluation has been carried out has been explained in the CorporateGovernance Report annexed to this Report.

14. Related Party Transactions

During FY2017 the Company entered into transactions with related parties pursuant toapproval of the Audit Committee. The details of such transactions were placed before theCommittee for noting/review. All related party transactions entered into during FY2017were on an arm's length basis and in the ordinary course of business under the companiesAct 2013 and not material under Securities and Exchange Board of India (ListingObligations and Disclosures Requirements) Regulations 2015 (the Listing Regulations) andhence did not require members' prior approval under the Companies Act 2013 and theListing Regulations. During FY2017 there were no related party transactions requiringdisclosure under section 134 of the Companies Act 2013. A policy on materiality ofrelated party transactions and dealing with related party transactions is placed on theCompany's website https://www. cslfinance.in.

15. Board's Independence

The definition of 'Independence' of Directors is derived from Section 149(6) of theCompanies Act 2013. Based on the confirmation/ disclosures received from the Directorsand on evaluation of the relationships disclosed the following Non-Executive Directorsare Independent in terms of Listing Regulations 2015 and Section 149(6) of the CompaniesAct 2013 :-

1. Mr. Kapil Aggarwal (DIN: 00032225)*

2. Ms. Anjna (DIN: 07143461)

3. Mr.Manoj Gupta (DIN: 01160953)**

* Resigned w.e.f. 23.05.2017

** Appointed w.e.f. 16.05.2017 as Additional Director (Independent Director)

16. Director's Responsibility Statement

In pursuance to applicable provisions of the Companies Act with respect to Director'sResponsibility Statement your directors hereby state and confirm:

a. that in the preparation of the annual accounts for the financial year ended 31stMarch 2017 the applicable accounting standards has been followed

b. that the Directors has selected such accounting policies and applied themconsistently and made judgment and estimates that were reasonable and prudent so as togive a true and fair view of the state of affairs of the company at the end of thefinancial year and of the profits or loss of the company for the year under review

c. that the Directors had taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of the Companies Act forsafeguarding the assets of the company and for preventing and detecting frauds and otherirregularities

d. that the Directors had prepared the annual accounts for the financial year ending31st March 2017 on a going concern basis.

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

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

17. Significant & Material Orders Passed By The Regulators

The company has received the final sanction order for the Scheme of Amalgamationbetween CSL Holdings Private Limited and CSL Finance Limited from the Hon'ble NationalCompany Law Tribunal on 31.05.2017. The copy of this order was filed with the Registrar ofCompanies and the same was approved by the Registrar of Companies on 20.06.2017. CSLHoldings Private Limited stands amalgamated as on date. The company is in the process ofallotting the shares to the shareholders of CSL Holdings Private Limited pursuant to theScheme of Amalgamation.

18. Nomination and Remuneration Policy

The Board has on the recommendation of Nomination and Remuneration/CompensationCommittee framed a policy on directors' appointment and remuneration of Directorsincluding criteria for determining qualification positive attributes independence ofdirectors and remuneration for Directors Key Managerial Personnel and other employees.

19. Secretarial standards of ICSI

Pursuant to the approval from the Ministry of Corporate Affairs the Institute ofCompany Secretaries of India (ICSI) has on 23 April 2015 notified the SecretarialStandards on Meetings of the Board of Directors (SS-1) and General Meetings (SS-2)effective from 1 July 2015. The Company is compliant with the same.

20. Particulars of Loans Guarantees or Investments

Details of loans guarantees and investments are given in the notes to the FinancialStatements.

21. Particulars of Contracts or Arrangements With Related Parties Referred To InSection 188

During and subsequent to the year under review the contracts or arrangements withrelated parties have been on arms length and in ordinary course of business and they werenot material in nature. Accordingly the particulars of the transactions as prescribed inForm AOC-2 of the rules prescribed under Chapter IX relating to Accounts of Companiesunder the Companies Act 2013 are not required to be disclosed as they are not applicable.

22. Disclosure Under The Sexual Harassment Of Women At Workplace (PreventionProhibition And Redressal) Act 2013

The Company has zero tolerance towards sexual harassment of women at the workplace. TheCompany has in place a Policy on Prevention Prohibition and Redressal of SexualHarassment of Women at Workplace and an Internal Complaint Committee in line with therequirements of the Sexual Harassment of Women at Workplace (Prevention Prohibition andRedressal) Act 2013 and rules made thereunder for reporting and conducting inquiry intothe complaints made by the victim on the harassments at the work place. The functioning ofthe Committees were carried out as per letter and spirit contained in the provisions ofthe Act. During the FY 2016-2017 the Company has not received any complaint of sexualharassment and hence there were no complaints pending for redressal as on 31st March2017. The Company had conducted 4 workshops/awareness programs regarding women empowermentduring the period under review.

23. Fair Practice Code (FPC)

The Company has in place a Fair Practice Code approved by the Board in compliance withthe guidelines issued by the RBI to ensure better service and provide necessaryinformation to customers to take informed decisions. The FPC is posted on the website ofthe Company. The FPC is also reviewed by the Board at frequent intervals to ensure itslevel of adequacy and appropriateness.

24. Statutory Auditors & their Report

M/s. R. Mahajan & Associates Chartered Accountants were appointed as StatutoryAuditors of your Company at the Twenty Fourth Annual General Meeting (AGM) held on 30thSeptember 2016 from the conclusion of the said AGM till conclusion of Twenty FifthAnnual General Meeting. As per the provisions of Companies Act 2013 read with rules madethereunder no listed Company shall appoint an audit firm as auditor for more than twoconsecutive terms of five years and an audit firm which has completed its term shall notbe eligible for reappointment as auditor in the same company. Every listed Companyexisting on or before the commencement of Companies Act 2013 (i.e. 01st April 2014)shall comply with the provisions of Companies Act 2013 within three years. Accordinglythe term of the existing Statutory Auditors R. Mahajan & Associates CharteredAccountants is coming to end. The Board of Directors have recommended appointment ofM/s.Aggarwal & Rampal Chartered Accountants (FRN: 003072N) as the Statutory Auditorsof the Company in place of R. Mahajan & Associates Chartered Accountants existingStatutory Auditors of the Company to hold Office from the conclusion of the ensuingTwenty Fifth Annual General Meeting till the conclusion of the Thirtieth Annual GeneralMeeting.

The Auditor's Report does not contain any qualification reservation or adverse remark

25. Secretarial Auditors & their Report

Pursuant to the provisions of Section 204 of the Companies Act 2013 and Rules madethereunder the Company had appointed Mr.Sanjay Kumar Practicing Company Secretary toundertake the Secretarial Audit of the Company for the Financial Year 2016-17. TheSecretarial Audit Report for Financial Year 2016-17 has been appended as Annexure-I tothis Report.

26. Extract of Annual Return

The details forming part of the extract of the Annual Return in form MGT-9 is annexedherewith as Annexure to this Director's Report.

27. Corporate Social Responsibility (CSR)

The Board of Directors of the company had constituted the Corporate SocialResponsibility (CSR) Committee in accordance with Section 135 of Companies Act 2013 readwith rules formulated therein.

The CSR Policy of the Company has been annexed as Annexure to this Report.

28. The state of the Company's affairs

During the year under review the performance of the company has been good even despitethe challenges in the operating environment. The company continues to run a zero-defaultloan book. Though credit growth is yet to pick up going ahead the company sees ampleopportunities in the secured lending segment and is looking to scale up its loan book inthe years to come.

29. Change In the Nature of Business if any

There has been no change in the nature of business of the company during the FinancialYear 2016-17. The company has forayed into the SME segment.

30. Meeting of Independent Directors

During the year under review the Independent directors in their meeting held on27.03.2017 reviewed the performance of Non-Independent Directors the Board as a whole andthe Chairperson of the company; and also assessed the quality quantity and timelines offlow of information between the company management and the Board in line with therequirement of Listing Regulations 2015 read with applicable provisions of Schedule IV ofthe Companies Act 2013.

31. Vigil Mechanism/ Whistle Blower Policy

Your Company has established a 'Whistle Blower Policy and Vigil Mechanism' fordirectors and employees to report to the appropriate authorities concerns about unethicalbehavior actual or suspected fraud or violation of the Company's code of Conduct. Thesaid policy has been uploaded on the website of the Company.

32. Material changes and commitments affecting the Financial position of the company

Scheme of Amalgamation between CSL Holdings Private Limited and CSL Finance Limited:The company has received the final sanction order for the scheme of amalgamation betweenCSL Holdings Private Limited and CSL Finance Limited from the Hon'ble National Company LawTribunal on 31.05.2017. The copy of the order was filed with the Registrar of Companiesand the same was approved by the Registrar of Companies on 20.06.2017. CSL HoldingsPrivate Limited stands amalgamated as on date. The company is the process of allotting theshares to the shareholders of CSL Holdings Private Limited pursuant to the scheme ofamalgamation.

33. Particulars of Energy Conservation Technology Absorption expenditure on researchand development foreign exchange inflow/outflow etc.

The requirements of disclosure with regard to Conservation of Energy in terms ofSection 134 of the Companies Act 2013 read with the Companies (Accounts) Rules 2014are not applicable to the Company since it doesn't own any manufacturing facility.

34. Risk Management Policy And Internal Control

The Company has adopted a Risk Management Policy to identify assess monitor andmitigate various risks to its key business objectives. Major risks if any identified aresystematically addressed through corrective measures on a continuing basis. The Company'sinternal control systems are commensurate with the nature of its business and the size andcomplexity.

35. CSL Employee Stock Option Scheme 2016

The Board of Directors of your Company has approved an Employees' Stock Option Schemeduring the Year 2016-17 in accordance with SEBI (Share Based Employee Benefit)regulations 2014. The details pursuant to SEBI (Share Based Employee Benefit)regulations 2014 have been placed on the website and weblink of the same iswww.cslfinance.in.

During the period ended 31.03.2017 the Company had one share-based paymentarrangement which is described below:

Type of arrangement General Employee Stock Option Scheme
Date of Grant 03.02.2017
11.02.2017
Number Granted 235000 options on 03.02.2017
215000 options on 11.02.2017
Contractual Life Upto 5 years
Vesting Conditions Vesting period shall commence after 1 (One) Year from the date of grant of Options and may extend upto 5 (Five) years from the date of grant. The Committee shall have the power to modify the vesting schedule on a case-to-case basis subject to the minimum gap of 1 (One) year between the grant and first vesting.

B. Details related to ESOS

(i) A description of each ESOS that existed at any time during the year including thegeneral terms and conditions

of each ESOS

(a) Date of shareholders' approval - 30.09.2016

(b) Total number of options approved under ESOS- 700000

(c) Vesting requirements- Vesting period shall commence after 1 (One) Year from thedate of grant of Options and may extend upto 5 (Five) years from the date of grant. TheCommittee shall have the power to modify the vesting schedule on a case-to-case basissubject to the minimum gap of 1 (One) year between the grant and first vesting.

(d) Exercise price or pricing formula- Rs.226/- for the option granted during financialyear 2016-2017

(e) Maximum term of options granted- 5 years

(f) Source of shares (primary secondary or combination) - Primary (trust). CSLemployee welfare has been incoporated on 28th Oct. 2016

(g) Variation in terms of options - None

(ii) Option movement during the year:

Particulars Details
Number of options outstanding at the beginning of the period 700000
Number of options granted during the year 450000
Number of options forfeited/lapsed during the year 127500
Number of options vested during the year Nil
Number of options exercised during the year Nil
Number of shares arising as a result of exercise of options Nil
Money realized by exercise of options (INR) if scheme is implemented directly by the company Nil
Loan repaid by the Trust during the year from exercise price received Nil
Number of options outstanding at the end of the year 322500
Number of options exercisable at the end of the year Nil

36. Disclosure pursuant to Rule 5 of Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014

Ratio of Remuneration of each director to the median remuneration of the employees forthe financial year:

The remuneration is paid by company to Mr.Rohit Gupta Managing Director of thecompany. No other director was paid any remuneration during the year. The ratio of theremuneration of Mr.Rohit Gupta to the median employee's remuneration is as follows:

Median Employee's Remuneration -Rs.336000/-
Annual Salary of the Managing Director -Rs.8400000/-
Ratio (remuneration of MD: remuneration of median employee) -0.04:1

Percentage increase in remuneration of each director Chief Financial officer chiefExecutive Officer Company Secretary of Manager if any in the Financial year:

Directors/KMP Designation % increase in remuneration
Naresh Chandra Varshney Chief Financial Officer 12.35

Percentage increase in the median remuneration of employees in the financial year:

The percentage increase in the median remuneration of employees in the financial year2016-17 is 11.62%

Number of permanent employees on the rolls of company at the end of the year:

22 permanent employees are on the rolls of the company at the end of the financial year2016-17.

Average percentile increase already made in the salaries of employees other than themanagerial personnel in the last financial year and its comparison with the percentileincrease in the managerial remuneration and justification thereof and point out if thereare any exceptional circumstances for increase in the managerial remuneration:

There were no exceptional circumstances for increase in the managerial remunerationduring the financial year.

Therefore no justification required for the same.

Affirmation that the remuneration is as per the remuneration policy of the Company:

The Company is in compliance with its remuneration policy. The company has in place theNomination and Remuneration Committee to monitor the same.

37. Acknowledgement

Your directors take this opportunity to place their sincere appreciation forsignificant contribution made by all the employees for their dedication hard work andcommitment towards the success and growth of the Company. The directors also place theirthanks to the company's bankers depositories Government and all the regulatoryauthorities including SEBI Stock Exchanges Ministry of Corporate Affairs Registrar ofCompanies and Reserve Bank of India.

And last but not the least we put our sincere thanks to the shareholders for theconfidence reposed by them in the company and looking forward to have the same support inthe coming time.

Place: New Delhi For on & behalf of the Board
Date: 10th August 2017
Sd/- Sd/-
Rohit Gupta Ashok Kumar Kathuria
Managing Director Director
(DIN:00045077) (DIN: 01010305)