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DFL Infrastructure Finance Ltd.

BSE: 511393 Sector: Financials
NSE: N.A. ISIN Code: INE071C01019
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OPEN 0.72
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VOLUME 2499
52-Week high 0.76
52-Week low 0.67
P/E
Mkt Cap.(Rs cr) 0
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.72
Sell Qty 501.00
OPEN 0.72
CLOSE 0.72
VOLUME 2499
52-Week high 0.76
52-Week low 0.67
P/E
Mkt Cap.(Rs cr) 0
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.72
Sell Qty 501.00

DFL Infrastructure Finance Ltd. (DFLINFRA) - Director Report

Company director report

Your Directors present their Twenty Eighth Annual Report together with the Auditedaccounts for the financial year ended March 31 2015.

1. FINANCIAL RESULTS

(Rs. In Lakhs)

PARTICULARS For the Financial year ended 31.03.2015 For the Financial year ended 31.03.2014
GROSS INCOME 30.59 189.59
PROFIT/(LOSS) BEFORE INTEREST & DEPRECIATION (2315.01) (345.92)
LESS: INTEREST 1090.30 941.17
PROFIT/(LOSS) BEFORE DEPRECIATION (3405.31) (1287.09)
LESS: EXCEPTIONAL ITEMS
LESS : DEPRECIATION 15.69 22.56
PROFIT / (LOSS) BEFORE TAX (3421.00) (1309.65)
PROVISION FOR TAXATION (including FBT / Deferred tax)
PROFIT / (LOSS) AFTER TAX (3421.00) (1309.65)
ADD: BALANCE FROM LAST YEAR (18226.50) (16916.85)
PROFIT /(LOSS) AVAILABLE FOR APPROPRIATION (21647.50) (18226.50)
PROPOSED DIVIDEND (Including Dividend Tax) Nil Nil
TRANSFER TO STATUTORY RESERVE Nil Nil
TRANSFER TO GENERAL RESERVE Nil Nil
BALANCE CARRIED FORWARD (21647.50) (18226.50)

2. OPERATIONS

As the restriction imposed by Reserve Bank of India is in place the company could notcarryout any business afresh this year.

Your Company has been focusing on Collections during the year. In spite of the absenceof any fresh Funds infused by the Banks the Company was able to meet all the statutoryand Staff obligations because of the adequate collection mechanism.

3. DIVIDEND

In view of the absence of profit the Board is not recommending any dividend includinginterim dividend on the Equity Shares of the Company during the period under review.

The Preference Shares issued to the Banks in terms of the CDR Approval carry aCumulative Dividend of 9% and the Preference Shares Issued to Asia Pragati Capfin PrivateLimited a Cumulative Dividend of 4%. An amount of Rs. 346.52 Lakhs and Rs. 89.04 Lakhsrespectively amounting to total of Rs. 435.56 Lakhs being the amount of Dividendaccumulated but not paid are shown under Contingent Liability.

4. CORPORATE GOVERNANCE

Your Company is complying with the Code of Corporate Governance introduced by SEBI. Adetailed report on Corporate Governance together with a certificate from the StatutoryAuditor in compliance of Clause 49 of the Listing Agreement is attached as part of thisreport vide Annexure-1.

Compliance Report in respect of all laws applicable to the company have been reviewedby Board of Directors.

5. CONSOLIDATED FINANCIAL STATEMENTS

In accordance with the provisions of Section 129 (3) of the Companies Act 2013 theConsolidated Financial Statements drawn up in accordance with the applicable AccountingStandards form part of the Annual Report. A separate statement containing the salientfeatures of the financial statements of Subsidiaries Associates in Form AOC-I forms partof this report vide Annexure-II.

6. SECRETARIAL AUDIT:

Pursuant to provisions of section 204 of the Companies Act 2013 and the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Company hasappointed M/s. M Damodaran and Associates Company Secretaries in practice to undertake theSecretarial Audit of the Company. Their Audit report as on 31.03.2015 is annexed herewithas "Annexure III and also the qualifications and observations made by the PracticingCompany Secretary detailed in under the head 'Auditors observation'.

7. HOLDING COMPANY - AUCTUS HOLDINGS PRIVATE LIMITED

Auctus holds 3045453 equity shares of DFL Infrastructure Finance Limited comprisingof 51.15% to total Equity Capital.

8. PRUDENTIAL NORMS

Reserve Bank of India has prescribed prudential norms for registered Non BankingFinancial Companies on various parameters. Your Company is in Category "B" witheffect from 27th November 2012.

9. PROHIBITORY ORDER FROM RESERVE BANK OF INDIA

Subsequent to the completion of inspection by Reserve Bank of India under Section 45-Nof the RBI Act 1934 the Reserve Bank of India has directed that until further orders theCompany shall not

a) Sell transfer create charge or mortgage or deal in any manner with its propertyand assets without prior written permission of the Reserve Bank of India;

b) Declare or distribute any dividend;

c) Transact any business; or

d) Incur any further liabilities.

10. DEMATERIALISATION OF SHARES:

As on 31st March 2015 4993847 shares of the Company held by the shareholders are indematerialized form aggregating to 83.86% of the Equity share capital of the Company. TheCompany's Registrars are M/s Cameo Corporate Services Limited having their registeredoffice at "Subramanian Building" No. 1 Club House Road Chennai - 600 002.

11. DIRECTORS:

During the current financial year the following changes have occurred in theconstitution of directors of the company:

S.No. Particulars Compliance
1 Punjab National Bank has withdrawn the appointment of Mr. G S Gusain Nominee Director with effect from 9th December 2014 The Board accepted the withdrawal with effect from 9th December 2014
2 Mr. Dakshinamurthy Radhakrishnan was appointed as additional director with effect from 15th April 2015 Approval of the Board of Directors obtained vide the meeting dated 15th April 2015
3 Mr. Balasubramanian Ramaiah was appointed as additional director with effect from 15th April 2015 Approval of the Board of Directors obtained vide the meeting dated 15th April 2015
4 Mr. T R Suresh resigned on 15th April 2015 The Board accepted his resignation vide the Board Meeting dated 15th April 2015
5 Mr. S Mahadevan resigned on 06th July 2015 The Board accepted his resignation vide the Board Meeting dated 6th July 2015
6 Change in Designation of Mr. B Prakash Wholetime Director to Director The Board accepted change in the designation of Mr. Bakthavathsalu Prakash from Whole -Time Director to Director of the company with effect from 06th July 2015
7 Ms. Gomathi Shankar was appointed as additional director with effect from 06th July 2015 Approval of the Board of Directors obtained vide the meeting dated 6th July 2015

12. RETIREMENT BY ROTATION

Mr. BAKTHAVATHSALU PRAKASH (DIN: 01978381) director liable to retire by rotationbeing eligible offers himself for reappointment.

13. DISQUALIFICATION OF DIRECTORS:

None of the Directors is disqualified to hold directorships under the provisions ofSection 164 of the Companies Act 2013.

14. DIRECTORS RESPONSIBILITY STATEMENT:

Pursuant to Section 134(5) of the Companies Act 2013 Directors of your Company herebystate and confirm that:

a. In the preparation of the annual accounts the applicable accounting standards hadbeen followed along with proper explanation relating to material objects;

b. The directors had 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 at the end of the financial year and ofthe profit and loss of the company for that period;

c. The directors had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of this Act for safeguarding theassets of the company and for preventing and detecting fraud and other irregularities;

d. The directors had prepared the annual accounts on a going concern basis; and

e. They have devised proper systems to ensure compliance with the provisions of allapplicable laws and that such systems were adequate and operating effectively

15. STATUTORY STATEMENT

A. Statement pursuant to Sec.129 (3) of the Companies Act 2013 in respect ofSubsidiary Companies is annexed in AOC 1.

B. The equity shares of your Company are listed at the Bombay stock Exchange.

C. The Company has paid the Listing fees to Bombay stock Exchange for the Financialyear 2015-16.

D. Information under section 134 of the Companies Act 1956 read with Companies(Particulars of employees) Rules 1975 is given hereunder:

In terms of the provisions of section 134 of the Companies Act 1956 read withCompanies (Particulars of Employees) Rules 1975 as amended the name and otherparticulars of employees are required to be set in the Director's report. However as perthe provisions of Section 136 of the Act the annual report excluding the said informationis being sent to all the shareholders.

Members who are interested in obtaining such particulars may write to the company'sregistered office.

16. REAPPOINTMENT OF AUDITORS AND REPORT THEREON

M/s. P. B. Vijayaraghavan & Co Chartered Accountants (FRN.No:004721S) StatutoryAuditors of the Company retire at the ensuing Annual General Meeting and being eligibleoffer themselves for reappointment. A certificate from the Auditors that they satisfy theconditions prescribed under the Companies Act 2013 and the Rules made thereunder(including satisfaction of criteria under Section 141 of the Companies Act 2013) hasbeen received from them.

17. AUDIT OBSERVATIONS:

A. Statutory Auditor Observation

In response to the observations made by the Auditor the Board wishes to place thefollowing explanation:

Reference to the Auditors Report Head of Account Reference to notes below
CDR implementation Refer note a
Net worth Refer note b
Attention invited to Shareholder RBI directions Refer note c
Redeemable Preference Shares Refer note d
Loans & advances Refer note e
Remuneration to Wholetime Director Refer note f
Dividend for Preference Shares Refer note g
Internal Auditor Refer note h

a. Going Concern:

The Management of the Company approached the CDR Cell for the restructure of debtsextended by consortium banks and was approved by CDR. However during the implementationstage since some of the Banks did not accept the CDR/CDR Re-work schemes the Company wasunable to implement the CDR rework scheme. The management is taking efforts to arrive atan acceptable One Time Settlement (OTS) with Secured Creditors. The management isconfident of reaching a settlement with the Secured Creditors and hence the accounts areprepared under "Going Concern" norms.

b. Net Owned Funds: Reason for fall in Net Owned Funds:

Due to impairment of Assets the company had substantial write - offs in the last fiveyears resulting in fall in Net Owned Funds. Thereafter consequent to the directions ofReserve Bank of India under section 45JA and 45L of Reserve Bank of India Act 1934 thecompany could not carryout its main activity of lending and hence no revenue generationhas taken place which has further contributed to fall in the Net Owned Funds.

Actions taken to improve the Net Owned Funds:

i. The company has converted part of the debt into Preference Shares thus improving theCapital base.

ii. The management is in dialogue with investors to bring in fresh equity funds tostrengthen the capital base.

iii. The CDR package has not been approved by all the banks and hence no fresh fundshave been extended by the banks. The company is in dialogue with the Consortium Banks fora "one time settlement".

iv. The management is pursuing efforts to raise funds from financial entities tore-commence the lending operations.

c. Prohibitory Directions from Reserve Bank of India:

The Company has represented to Reserve Bank of India for withdrawing the Directions.

d. Preference Shares Allotted to Asia Pragati Capfin Pvt. Ltd.:

The Redeemable Preference Shares issued to Asia Pragati Capfin Private Limited in theyear 2007 should have been redeemed in December 2009. However due to absence of Profitsand financial strain the said shares were not redeemed. The company negotiated with thePreference Shareholders and rescheduled the redemption dates to 2017/2018/2019 years.Hence as on date of this Annual Report there is no default. However the Dividend on theseshares are due from 1-4-2013 which have not been paid / provided in the absence ofProfits.

e. Loans and Advances:

The remuneration paid to Mr. R. Ravichandran (erstwhile Managing Director) was notapproved by the shareholders in the general meeting held in December 2010. Hence thecompany could not approach the Central Government for approval. As the remuneration wasalready paid this amount was classified under Loans and Advances. Efforts are underway tosettle the amount.

f. Remuneration to Wholetime Director:

The remuneration of Whole Time Director for FY 2013-14 fixed by the Board of Directorswas partially approved by the Central Government Ministry of Corporate Affairs vide itsorder dated 26th August 2014 due to technical fallacies. The company has filed anapplication before Central Government for approval of the balance amount.

g. Dividend on Preference Shares issued to the Banks:

The consortium Banks have converted part of their outstanding to optionally ConvertiblePreference Shares as per the CDR Approval. These bear a cumulative dividend of 9%. Howeverin the absence of Profits the dividends have not been paid / provided since 2011-12.Since the dividends are cumulative in nature the same will be paid as and when profitsare made.

h. Internal Auditor:

Since there is no commercial activity undertaken by the Company no Internal Auditing isbeing carried out.

B. Secretarial Auditor's Observations

In observation made by the Practicing Secretary the Board wishes to place thefollowing explanation:

Observation in Secretarial Audit Report Reference to notes below
RBI directions Refer note a
Remuneration to Wholetime Director Refer note b
Internal Auditor Refer note c
Wholetime Company Secretary Refer note d
Women Director Refer note e
Dividend for Preference Shares Refer note f

a. RBI Directions:

The Company has represented to Reserve Bank of India for withdrawing the Directions.

b. Remuneration to Wholetime Director:

The remuneration of Whole Time Director for FY 2013-14 fixed by the Board of Directorswas approved only partially by the Central Government Ministry of Corporate Affairs videits order dated 26th August 2014 due to technical fallacies. The company has filed anapplication for approval of the balance amount.

c. Internal Auditor:

Since there is no commercial activity undertaken by the Company no Internal Auditing isbeing carried out.

d. Wholetime Company Secretary:

The Company is making efforts to appoint Wholetime Company Secretary.

e. Women Director:

Ms. Gomathi Shankar was appointed as Women Director with effect from 6th July 2015.

f. Dividend on Preference Shares issued to the Banks:

The consortium Banks have converted part of their outstanding to optionally ConvertiblePreference Shares as per the CDR Approval. These bear a cumulative dividend of 9%. Howeverin the absence of Profits the dividends have not been paid / provided since 2011-12.Since the dividends are cumulative in nature the same will be paid as and when profitsare made.

18. CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGO:

The particulars prescribed under section 134(3)(m) of the Companies Act 2013 read withRule 8 of the Companies (Accounts) Rules 2014 are as follows:

Conservation of Energy

The company has taken all steps for the conservation of energy in its operations.

Technology Absorption

There was no technology absorption during the year.

Foreign Exchange Earnings : NIL
Foreign Exchange outgo : NIL

19. CORPORATE SOCIAL RESPONSIBILITY (CSR):

The Company does not fall under the Sec 135 of the Companies Act 2013 hence the CSRCommittee is not applicable.

20. VIGIL MECHANISM:

The Mechanism of performance evaluation of Non-executive directors by peer group ofdirectors is under process. This would help the company to determine any modifications intheir terms of Appointment.

The Whistle Blower policy being a non mandatory requirement the Company has notevolved any policy for the same. However as a matter of internal check the Company's inhouse Internal Audit department is powered to bring to the notice of the management byway of internal reporting of any occasion of unethical activities which will be seriouslydiscussed and deliberated upon in the Audit committee meetings.

21. RELATED PARTY TRANSACTIONS:

There are no materially significant related party transactions made by the Company

22. EXTRACT OF ANNUAL RETURN:

As required pursuant to Section 92 (3) of the Companies Act 2013 and Rule 12 (1) ofthe Companies (Management and Administration) Rules 2014 an extract of Annual Return inMGT-9 is annexed as a part of this report vide Annexure IV

23. PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS:

There were no loans guarantees or investments made by the Company under Section 186 ofthe Companies Act 2013 during the year.

24. REMUNERATION RATIO OF THE DIRECTORS / KEY MANAGERIAL PERSONNEL (KMP) / EMPLOYEES:

The information required pursuant to Section 197 read with Rule 5 of The Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 and Companies(Particulars of Employees) Rules 1975 in respect of Directors of the Company isfurnished hereunder:

S.No. Name Designation Remuneration paid FY 2014-15 Remuneration paid FY 2013-14 Increase in remuneration from previous year Ratio/Times per Median of employee remuneration
Rupees in Lakhs
1 SREENIVASAN BALACHANDER Managing Director 50.00
2. BAKTHAVATHSALU PRAKASH Wholetime Director 39.05

25. DEVELOPMENT AND IMPLEMENTATION OF A RISK MANAGEMENT POLICY:

During the year your Directors have constituted a Risk Management Committee which hasbeen entrusted with the responsibility to assist the Board in (a) Overseeing and approvingthe Company's enterprise wide risk management framework; and (b) Overseeing that all therisks that the organization faces such as strategic financial credit market liquiditysecurity property IT legal regulatory reputational and other risks have beenidentified and assessed and there is an adequate risk management infrastructure in placecapable of addressing those risks. A Group Risk Management Policy was reviewed andapproved by the Committee.

26. RESTRICTIONS ON PURCHASE BY COMPANY OR GIVING LOANS FOR PURCHASE OF ITS OWN SHARES(Sec.67 of Companies Act 2013)

The Company has not purchased and shall not give any loan guarantee or any financialassistance for purchase or subscription of its own shares during the period.

27. BOARD & COMMITTEES

The details regarding number of board meetings held during the financial year andcomposition of Audit Committee Nomination and Remuneration Committee Share Transfer andInvestor Relation Committee and Asset Liability Management Committee is furnished in theCorporate Governance Report.

28. EQUITY SHARES HAVING DIFFERENTIAL VOTING RIGHTS - Share Capital and Debenture Rules4 (4) 2014

The Company has not issued the Equity Shares with the Differential Rights during thefinancial year 2014-2015 details as follows:

29. BUY BACK OF SECURITIES

The Company has not bought back any of its securities during the year under review.

30. SWEAT EQUITY SHARES

The Company has not issued any Sweat Equity Shares during the year under review.

31. ESOP DISCLOSURE

The Company has not provided any Stock Option Scheme to the employees.

32. BONUS SHARES

No Bonus Shares were issued during the year under review.

33. FORMAL ANNUAL EVALUATION

Formal Annual Evaluation by the Board of it own performance and that of its committeesand individual directors have been made.

34. DEPOSITS:

The company has not accepted any deposits during the year.

35. INTERNAL FINANCIAL CONTROLS

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

36. MANAGEMENT DISCUSSIONS AND ANALYSIS REPORT

Structure and Developments Opportunities and Threats Performance outlook Risks andConcerns:

As the restriction imposed by Reserve Bank of India is in place the company could notcarryout any business afresh this year.

Internal Control Systems and their Adequacy:

Management has put in place effective Internal Control Systems to provide reasonableassurance for Safeguarding Assets and their usage Maintenance of Proper AccountingRecords and Adequacy and Reliability of the Information used for carrying on BusinessOperations.

Since there is no commercial activity undertaken by the company no Internal Auditing isbeing carried out.

The Audit Committee is reviving the financial results regularly with specific emphasizeon key areas of the operations. Normal for seeable risks of the Company's assets areadequately covered by comprehensive insurance. Risk assessments inspections and safetyaudits are carried out periodically.

Financial and Operational Performance:

The financial and operation performance of the company is mentioned earlier.

Human Resources Development and Industrial Relations:

The Company has constituted an Internal Complaint Committee (ICC) in pursuant to theprovisions of Companies Act 2013 for prevention prohibition and redressal of complaints/ grievances on the sexual harassment of women at work places.

Cautionary Statement:

Statements in the Management Discussion and Analysis and Directors Report describingthe Company's strengths strategies projections and estimates are forward-lookingstatements and progressive within the meaning of applicable laws and regulations. Actualresults may vary from those expressed or implied depending upon economic conditionsGovernment Policies and other incidental factors. Readers are cautioned not to place unduereliance on the forward looking statements.

37. MATERIAL CHANGES IN FINANCIAL STATEMENT:

No material changes and commitments affecting the financial position of the Companyoccurred between the end of the financial year to which this financial statements relateon the date of this report.

38. GENERAL

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

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

Neither the Managing Director nor the Whole-time Directors of the Company receive anyremuneration or commission from any of its subsidiaries.

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

39. ACKNOWLEDGEMENT:

Your Directors thank the Company's Bankers and the Financial Institutions for theirsupport. Your Directors also thank the customers and share-holders and also appreciate thewholehearted effort and co-operation rendered by the employees at all levels.

for and on behalf of the Board
Place: Chennai S BALACHANDER
Date : 14.08.2015 Managing Director
(DIN : 02644584)