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Dharani Finance Ltd.

BSE: 511451 Sector: Financials
NSE: N.A. ISIN Code: INE899D01011
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OPEN 10.33
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VOLUME 38909
52-Week high 10.33
52-Week low 4.56
P/E 2.24
Mkt Cap.(Rs cr) 5
Buy Price 10.33
Buy Qty 11030.00
Sell Price 0.00
Sell Qty 0.00
OPEN 10.33
CLOSE 10.13
VOLUME 38909
52-Week high 10.33
52-Week low 4.56
P/E 2.24
Mkt Cap.(Rs cr) 5
Buy Price 10.33
Buy Qty 11030.00
Sell Price 0.00
Sell Qty 0.00

Dharani Finance Ltd. (DHARANIFINANCE) - Director Report

Company director report

Dear Members

The Board of Directors present herein the TWENTY SEVENTH Annual Report of the Companytogether with the Audited Accounts for the year ended 31st March 2017.

FINANCIAL SUMMARY

The Financial results for the year ended 31st March 2017 are briefly as follows: -

Rupees in Lakhs

Particulars For the year Ended 31.03.2017 For the year Ended 31.03.2016
Income through Travel Operations Finance Services and others 265.16 245.41
Expenditure ( Employee & Administrative Expenses) 219.67 197.97
Profit 45.49 47.44
Depreciation 3.26 3.26
Interest & Bank Charges - 0.13
Profit after depreciation & Interest 42.23 44.05
Provision for Income Tax
- Current 4.00 -
- MAT - -
- Deferred 5.25 11.78
Profit after Tax 32.97 32.27
Surplus brought forward 110.70 84.88
Profit available for appropriation 143.67 117.16
APPROPRIATIONS -
Transfer to Statutory Reserves 6.59 6.45
Proposed Dividend - -
Dividend Distribution Tax - -
Net Surplus carried over 137.08 110.70

PERFORMANCE

Total income of the Company is Rs.265.16 lakhs as against Rs. 245.41 lakhs in theprevious year though income through travel operations has increased from Rs.225.94 lakhsto Rs.235.93 lakhs. Company provides travel services to the guests of the Group’s 5star hotels at Chennai and Coimbatore. The Company earns a major portion of its incomefrom travel services only. There was a slight increase in the amount of dividend receivedon long term investments from Rs.9.35 lakhs in the previous year to Rs.10.31 lakhs in thecurrent year. The Company could not expand its financial services due to the low capitalbase.

The Company’s expenses have increased to

Rs.219.67 lakhs from the previous year’s Rs.197.97 lakhs. The gross profits areRs.45.47 lakhs against Rs.47.44 lakhs. Software services which the company commencedearlier could not bring in much business. After providing Rs.3.26 lakhs towardsdepreciation net profit comes to Rs. 42.23 lakhs as against a profit of Rs. 44.05 lakhsin the previous year while profit after tax works out to Rs.32.97 lakhs against Rs.32.27lakhs in the previous year.

OUTLOOK

Your company is exploring the possibility of increasing its resources by additionalcapital or borrowings which will help in expanding its financial services business.

DIVIDEND

As the profits for the year are not sufficient enough your directors regret theirinability to recommend any dividend.

RESERVES

A sum of Rs.6.59 lakhs is being transferred to the Statutory Reserves as required byRBI regulations. With this total Statutory Reserves comes to Rs.117.59 lakhs.

SHARE CAPITAL

There is no change in the Share Capital of the Company- either the Authorised Capitalor the Issued Capital. The paid up equity capital as on March 31 2017 continues to remainat Rs.49944000. The Company has not issued any shares during the period.

EXTRACT OF ANNUAL RETURN

Extract of the Annual Return in form MGT-9 as provided under Section 92(3) of theCompanies Act 2013 is attached herewith. Annexure - I

BOARD MEETINGS

Board consists of the following directors including one Woman Director. During the year2016-17 four Board Meetings were held on 26.05.2016 12.08.2016 04.11.2016 and10.02.2017. Their attendance at the meeting are given below.

Sl. No Name of the Director Category of Directorship No. of Board Meetings Attended
1 Dr Palani G Periasamy (DIN 00081002) Chairman (Non Executive) - Promoter 4
2 Mrs Visalakshi Periasamy (DIN 00064517) Non Executive - Promoter 2
3 R K Viswanathan (DIN 00047420) * Non Executive - Independent 3
4 K Kandasamy (DIN 00277906) Executive - Promoter 4
5 M Ganapathy (DIN 00234337) Non Executive - Independent 3
6 Dr S Muthu (DIN 03331664) Non Executive - Independent 4

* Mr. R K Viswanathan a long time Director resigned from 10.02.2017 due to personalreasons.

LOANS GUARANTEES OR INVESTMENTS

The Company has not given any loans or provided any guarantees covered under theprovisions of section 186 of the Companies Act 2013.

CONTRACTS ARRANGEMENTS WITH RELATED PARTIES REFERRED TO IN SECTION 188(1)

All related party transactions that were entered into during the financial year were inthe ordinary course of the business and were on arm’s length basis. The statement inform AOC 2 is attached. There are no materially significant related party transactionsentered into by the Company with Promoters Key Managerial Personnel or other designatedpersons which may have potential conflict with interest of the Company at large.

AUDITOR’S REPORT

The observations made in the Auditors’ Report read together with relevant notesthereon are self explanatory and hence do not call for any further comments under Section134 of the Companies Act 2013. There are no qualifications reservations or adverseremarks. Their report is an unmodified one.

MATERIAL CHANGES AND COMMITMENTS

There were no material changes and commitments affecting the financial position of theCompany which have occurred between the end of the financial year and the date of thereport.

As the Company being a NBFC registered with Reserve Bank of India has not been able tocomply with the RBI norms during the last few years in regard to maintenance of % ofrevenue from financial services to total revenue and % of financial assets to totalassets it was earlier decided to seek the advice of RBI whether the Company can surrenderthe Certificate of RBI as a NBFC temporarily till such time the Company is able toincrease its financial services business and is in a position to conform to the RBI norms.This was discussed with RBI who have advised the company to come up with a clear andconcrete plan for increasing its financial services and to conform to RBI guidelines ifthe Company wants to retain the NBFC certificate. The company is exploring possibilitiesof increasing the resources available for this purpose either by infusing additionalcapital or by borrowings. The Company is in talks with some investors for this purpose.Your Company hopes to conclude this arrangement within the next few months. At the sametime your company is also considering regulating its travel operations suitably such thatsuch income does not distort the RBI norms regarding maintenance of % of revenue fromfinancial services to total revenue.

FOREIGN EXCHANGE EARNINGS AND OUT-GO CONSERVATION OF ENERGY & TECHNOLOGYABSORPTION

A. During the year there were no Foreign Exchange Earnings & Outflow.

B. Conservation of Energy & Technology absorption. These guidelines are notapplicable to this Company.

SUBSIDIARY COMPANIES

The Company does not have any subsidiary or any associate Company. Hence no report onsubsidiary associate joint venture Company is provided.

RISK MANAGEMENT POLICY

The Company has developed a risk management policy. Pursuant to Section 134 (3) (n) ofthe Companies Act 2013 details of the Policy are disclosed in the Company’s Website.At present the Company has not identified any element of risk which may threaten theexistence of the Company. In this context report against heading ‘Material Changesof Commitments’ given above may be referred to.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

Dr Palani G Periasamy (DIN 00081002) retires by rotation at the ensuing Annual GeneralMeeting and being eligible offers himself for reappointment. Mr R K Viswanathan hasresigned with effect from 10.02.2017. The strength of the Board is reduced to 5.

SIGNIFICANT AND MATERIAL ORDERS

There were no significant and material orders passed by the Regulators or Courts orTribunals impacting the going concern status and Company’s operations in future.Reserve Bank of India have however advised us to improve the financial services businessand the financial assets to conform to RBI’s norms.

INTERNAL FINANCIAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has an Internal Control System commensurate with the size scale andcomplexity of its operations. The scope and authority of the Internal Audit function isdefined in the assignment order. To maintain its objectivity and independence theInternal Auditor reports to the Chairman of the Audit Committee & to the Chairman ofthe Board.

The Internal Audit monitors and evaluates the efficacy and adequacy of internal controlsystem in the Company its compliance with operating systems accounting procedures andpolicies. Based on the report of internal auditor management undertake corrective actionand thereby strengthen the controls. Significant audit observations wherever made andrecommendations along with corrective actions thereon are presented to the Audit Committeeof the Board.

DEPOSITS

The Company does not hold any public deposits as on 31st March 2017. Your Company hasnot accepted any deposits covered under Chapter V of the Companies Act 2013 and theCompanies (Acceptance of Deposits) Rules 2014. The Company has stopped collecting publicdeposits and had got its Licence amended by Reserve Bank of India to indicate that it is anon deposit taking NBFC. Your Company does not propose to collect public deposits in thecoming year.

DECLARATION BY INDEPENDENT DIRECTORS

The Independent Directors have given their declarations as per Section 149 (6) to theeffect that they meet the criteria of Independence. 3 Independent Directors were appointedas Independent Directors in the Annual General Meeting 25th September 2014 to hold officefor 5 years from 25.09.2014 to 24.09.2019. 1 Independent Director viz. Mr R K Viswanathanresigned with effect from 10th February 2017. There are now 2 Independent Directors.

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 Mr M Damodaran and Associates Company Secretaries in practice to undertake theSecretarial Audit of the Company. Their Audit report as on 31.03.2017 is annexed herewithas "Annexure III. There were no qualifications or observations requiring Board’scomments.

CORPORATE SOCIAL RESPONSIBILITY INITIATIVES

Your Company does not fall within the parameters as per section 135 of the CompaniesAct and hence not mandated to form a Corporate Social Responsibility Policy or spend theprescribed amounts.

AUDIT COMMITTEE

A qualified Audit Committee is in position consisting of the following directors. Mr MGanapathy Chairman Dr S Muthu and R K Viswanathan Independent Directors. Due to theresignation of Mr. R K Viswanathan Mr. K Kandasamy has been inducted.

The Company Secretary is the Secretary to this Committee. The Audit Committee met 4times on 26.05.2016 12.08.2016 04.11.2016 and 10.02.2017. There was no instance wherethe recommendation of the Audit Committee was not accepted by the Board.

Sl. No Name of the Director Category of Directorship No. of Meetings Attended
1 R K Viswanathan (Resigned w.e.f. 10-02-2017) Non Executive Independent 3
2 M Ganapathy Non Executive Independent 3
3 Dr S Muthu Non Executive Independent 4

BOARD EVALUATION

Pursuant to the provisions of the Companies Act 2013 the Board has carried out anevaluation of its own performance the directors individually as well as the evaluation ofthe working of its Audit Nomination & Remuneration Committees. The manner in whichthe evaluation is carried out is based on criteria approved by the Board which isavailable on the Company’s Website.

NOMINATION AND REMUNERATION COMMITTEE

As required by Section 178 of the Companies Act 2013 a Nomination & RemunerationCommittee has been set up. Mr M Ganapathy and Dr S Muthu and Mr R K Viswanathan with Mr.M. Ganapathy as the Chairman are the members of this Committee. Due to the resignation ofMr. R K Viswanathan Mrs. Visalakshi Periasamy has been inducted in his place. TheCommittee has formulated appropriate criteria for appointment of Directors and theirremuneration. The Board has on the recommendation of the Nomination & RemunerationCommittee framed a policy for selection and appointment of Directors Senior Managementand their remuneration. The Remuneration Policy is available in Website.

Sl. No Name of the Director Category of Directorship No. of Meetings Attended
1 R K Viswanathan (Resigned w.e.f. 10-02-2017) Non Executive Independent 1
2 M Ganapathy Non Executive Independent 0
3 Dr S Muthu Non Executive Independent 1

VIGIL MECHANISM FOR DIRECTORS & EMPLOYEES

A competent Vigil mechanism has been established and a whistle blower policy has beendesigned to help Directors and Employees to report genuine concerns. The completemechanism is given in the company’s website.

CORPORATE GOVERNANCE

This requirement is not applicable to this Company at present as per Regulation 15(2)of the SEBI (Listing Obligations and Disclosure Requirements).By paid up capital beingless than Rs. 10 crores and Net worth being less than Rs.25 crores.

The above is also to be treated as Management discussion and analysis Related Partydisclosures are available in Notes 20.7 to the accounts.

MANAGERIAL REMUNERATION

A Details of the ratio of the remuneration of each director to the median employee’s remuneration and other details as required pursuant to Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014. (Applicable to listed Company)* Annexure (III) - enclosed
B Details of the every employee of the Company as required pursuant to 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 There are no employees falling within the requirements of Section 197 read with rule 5 (2) (second part) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014.
C Any director who is in receipt of any commission from the company and who is a Managing Director or Whole-time Director of the Company shall receive any remuneration or commission from any Holding Company or Subsidiary Company of such Company subject to its disclosure by the Company in the Board’s Report. NIL
D The following disclosures shall be mentioned in the Board of Director’s report under the heading "Corporate Governance" if any attached to the financial statement: as per Schedule V Part II Section II of the Companies Act2013 In Rupees
(i) all elements of remuneration package such as salary benefits bonuses Salary 12.60000.00
stock options pension etc. of all the directors; HRA 90000.00
Total 1350000.00
Contribution to Superannuation & Provident Fund Gratuity 336878.00
Total 1686878.00
(ii) details of fixed component and performance linked incentives along with the performance criteria; N/A
(iii) service contracts 5 years
notice period 3 months
severance fees; Nil
(iv) stock option details if any and whether the same has been issued at a discount as well as the period over which accrued and over which exercisable. Nil

As the profits of the Company for the year were inadequate remuneration within theprescribed limits as given in D (i) above has been proposed to be paid to the ManagingDirector. The same amount as was paid in the last year is proposed to be paid for the year2016-17 Approval of the Shareholders in accordance with Schedule V Part II Section II ofthe Companies Act 2013 for making this payment for a period of 3 years has been obtainedthrough a special resolution in the Annual General Meeting held on 25th September 2015.This is valid for the years 2014-15 2015-16 and 2016-17.

* The information as per Rule 5(2) of the rules forms part of this report. However asper first proviso to Section 136(1) of the Act and second proviso of Rule 5(2) of theRules the Report and Financial Statements are being sent to the Members of the Companyexcluding the statement of particulars of employees under Rule 5(2) (first part)of theRules. Any Member interested in obtaining a copy of the said statement may write to theCompany Secretary at the Registered Office of the company.

PREVENTION OF SEXUAL HARASSMENT AT WORK PLACE

The Company has in place an Anti Sexual harassment policy in line with the requirementsof Section 4 of the Sexual harassment of Women at Work Place (Prevention Prohibition& Redressal) Act 2013. Internal Complaints Committee (ICC) has been set up to redresscomplaints received sexual harassment. All employees are covered under this policy.Details have been displayed prominently in the work place and also in the Company’sWebsite.

No complaints were received during the year 2016-17.

STATUTORY AUDITORS

M/s K. Ramkrish & Co. Chartered Accountants (Firm Regn. No. 1030125) Chennairetire as Statutory Auditors on the conclusion of this Annual General Meeting as theyhave completed their maximum tenure. New Auditors are proposed for appointment.

DIRECTOR’S RESPONSIBILITY STATEMENT

In terms of Section 134 (5) of the Companies Act 2013 the directors state that:

I) In the preparation of the annual accounts the applicable accounting standards havebeen followed.

ii) The directors have selected such accounting policies and applied them consistentlyand made judgments and estimates that were 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 or loss of the Company for the year under review.

iii) The directors have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of this Act for safeguardingthe assets of the Company and for preventing and detecting fraud and other irregularities.

iv) The directors have prepared the annual accounts on a going concern basis.

v) The directors had laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and were operatingeffectively.

vi) The directors had devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.

MANAGEMENT COMMITTEE

The Members of the Management Committee are: only one Meeting was held during 2016-17on 29th May 2016

Sl. No Name of the Director Category of Directorship No. of Meetings Attended
1 Dr Palani G Periasamy Chairman -Non Executive 1
2 Visalakshi Periasamy Non Executive 1
3 Mr K Kandasamy Executive 1

STAKEHOLDER RELATIONSHIP COMMITTEE

The Stakeholders’ Relationship Committee is in position to specifically look intoshareholders / investors complaints on transfer of shares non receipt of balance sheetnon- receipt of declared dividend etc. and also the action taken by the Company on thosematters. The Committee met on 26.05.2016. The Directors of the Stakeholders RelationsCommittee are Mr M Ganapathy Independent Director (Chairman) and Mr K Kandasamy ManagingDirector.

Sl. No Name of the Director Category of Directorship No. of Meetings Attended
1 R K Viswanathan (Resigned w.e.f. 10-02-2017) Non Executive Independent 1
2Mr K Kandasamy Executive 1

CODE OF CONDUCT

The Board of Directors has approved a Code of Conduct which is applicable to theMembers of the Board and all employees in the course of day to day business operations ofthe Company. The Code has been posted on the Company’s website www.dharanifinance.inThe Code lays down the standard procedure of business conduct which is expected to befollowed by the Directors and the designated employees in their business dealings and inparticular on matters relating to integrity in the work place in business practices andin dealing with stakeholders. All the Board Members and the Senior Management personnelhave confirmed compliance with the Code. All Management Staff were given appropriatetraining in this regard.

PREVENTION OF INSIDER TRADING

The Company has adopted a Code of disclosures & a Code of Conduct for Prevention ofInsider Trading with a view to regulate trading in securities by the Directors anddesignated employees of the Company. This has been disclosed in the Company’swebsite. The Code requires pre-clearance for dealing in the Company’s shares andprohibits the purchase or sale of Company shares by the Directors and the designatedemployees while in possession of unpublished price sensitive information in relation tothe Company and during the period when the Trading Window is closed. The Board isresponsible for implementation of the Code.

All the Directors and the designated employees have confirmed compliance with the Code.

UNCLAIMED DIVIDEND

Pursuant to Section 124 & 125 of the Companies Act 2013 dividend remaining unpaidor unclaimed for a period of 7 years will be transferred to the Investor Education andProtection Fund of the Central Government. Reminders are sent to the shareholders as perrecords every year for the unpaid dividends.

Year % of Dividend Date of Declaration Amt in lakhs Due date for transfer to IEPF
2009-10 5 01.10.2010 488040.00 11.10.2017
2010-11 5 20.10.2011 510276.50 30.10.2018
2011-12 7 15.10.2012 760939.90 24.10.2019

MCA by notification GSR 352 (E) dated 10.05.2012 has stipulated publication of detailsof unclaimed/ unpaid dividend in the Company website and MCA website. Your company hasalready uploaded the requisite details that will get updated every year within 90 days ofAnnual General Meeting.

ACKNOWLEDGEMENTS

Your Directors place on record their appreciation of the services rendered by the Staffand Executives of your Company. Your Directors also thank the shareholders who havecontinued to repose their confidence in the Company and its management.

For and on behalf of the Board of Directors

DR PALANI G PERIASAMY

CHAIRMAN

(DIN 00081002)

Place : Chennai

Date : 25.05.2017