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Escorts Finance Ltd.

BSE: 511716 Sector: Financials
NSE: ESCORTSFIN ISIN Code: INE359A01012
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OPEN 8.15
PREVIOUS CLOSE 8.20
VOLUME 500
52-Week high 19.18
52-Week low 5.52
P/E
Mkt Cap.(Rs cr) 33
Buy Price 0.00
Buy Qty 0.00
Sell Price 8.20
Sell Qty 150.00
OPEN 8.15
CLOSE 8.20
VOLUME 500
52-Week high 19.18
52-Week low 5.52
P/E
Mkt Cap.(Rs cr) 33
Buy Price 0.00
Buy Qty 0.00
Sell Price 8.20
Sell Qty 150.00

Escorts Finance Ltd. (ESCORTSFIN) - Director Report

Company director report

Your Directors are pleased to present the Twenty Eighth Annual Report together withthe Audited Accounts of the Company for the financial year ended March 31 2016 and theAuditors’ Report thereon.

Financial Results

Particulars Financial Year ended March 31 2016 Financial Year ended March 31 2015
Gross Income 76.47 43.21
Profit/ (Loss) before write off provisions & tax 36.42 (8.68)
Tax adjustment for earlier years - -
Profit/ (Loss) after Tax 36.42 (8.68)

The Gross Income comprises of amount(s) received on recovery of delinquent assetsthrough settlement/ compromise/ legal action.

Dividend

In order to conserve the resources of the Company no dividend has been considered forthe year.

Fixed Deposits

An amount of Rs. 78.62 Lacs has been paid to the Fixed Deposit holders during thefinancial year ended March 31 2016. As on the said date there is an unclaimed/ unpaidfixed deposit liability of Rs. 1278.78 Lacs.

Management Discussion and Analysis

(i) Industry Structure and Development

Non Banking Finance Companies (NBFC) sector in India is represented by a mix of a fewlarge companies with nationwide presence and a few small and medium sized companies withregional focus primarily engaged in hire purchase financing investments corporateloans IPO funding venture capital and other non-fund based activities. The Reserve Bankof India (RBI) regulates and supervises these NBFCs.

The Company has surrendered its Certificate of registration and RBI also through itscorrespondence dated May 6 2016 has cancelled Company’s Certificate of RegistrationNo- A-14.01690.

(ii) Opportunities and Threats

The NBFCs are facing stiff competition from Banks and Financial Institutions due tothe ability of Banks & FII’s to raise low cost funds which enables them toprovide funds at more favourable rates. More stringent capital adequacy norms have beenstipulated by RBI for NBFCs also resulted into their inability to give cheaper finance.

(iii) Segment-wise or Product-wise Performance

The Company has been primarily engaged in the business of hire purchase leasing billdiscounting and non-fund based activities. Since the risk and returns in these businessesare similar therefore they are grouped as a single segment. This is in accordance withthe guiding principle provided in the Accounting Standard on

Segment Reporting (AS- 17) issued by The Institute of Chartered Accountants of India.

(iv) Future Outlook

The Company is presently engaged in recovery of delinquent loan assets and settlementof old legal cases filed by/ against the Company. Your directors are exploring thepossibilities of venturing into new business areas.

(v) Risks and Concerns

High interest regime in the economy may act as a dampener for the financing business.There is also stiff competition due to entry of large players in the market.

(vi) Internal Control Systems and their adequacy

The Internal Control Systems are in place to serve the existing operations of theCompany.

(vii) Financial Performance

The profit for the year after write offs/ provisions etc. and tax amounts to Rs.36.42Lacs.

(viii) Human Resource and Industrial Relations

The Company is having three employees as on the date of this report. Your Directorsrelation at all levels with employees were cordial.

Cautionary Statement

Statements in this Management Discussion and Analysis section describing theCompany’s objectives projections estimates and expectations may be ‘forwardlooking statements’ within the meaning of applicable laws and regulations. Actualresults may differ substantially or materially from those expressed or implied. Importantdevelopments that could affect the Company’s operations are significant changes inpolitical and economic environment in India tax laws RBI regulations exchange ratefluctuation and related costs.

Directors

In terms of the provisions of the Companies Act 2013 and the Articles of Associationof the Company Mr. Pritam Narang Director retires by rotation at the ensuing AnnualGeneral Meeting (AGM) of your Company and being eligible offers himself forre-appointment.

Your Directors recommend the re-appointment of Mr. Pritam Narang at the ensuing AGM.

Due to the demise of Mr. Inder Mohan Sakhuja he ceased as Director of the Companyw.e.f January 25 2016. The Board places on record its appreciation for the valuableguidance and services rendered by him during his tenure with the Company.

The Company has received declarations from all the Independent Directors of the Companyconfirming that they meet with criteria of independence as prescribed under sub-section(6) of Section 149 of the Act and SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 (hereinafter referred as "the Listing Regulations"). Thepolicy for Appointment and Remuneration of Director’s Key Managerial Personnel andOther Employees is attached as Annexure A and forms an integral part of thisreport.

The Company has devised the criteria for performance evaluation of IndependentDirectors Board Committees and other individual Directors which includes criteria forperformance evaluation of the non-executive directors.

Evaluation was done by the Board for its own performance and that of its Committees andindividual Directors.

The brief resume and other details relating to the Director who is proposed to beappointed/ re-appointed as required to be disclosed under Listing Regulations is given inthe Annexure B.

The details of programme for familiarisation of Independent Directors with the Companytheir roles rights responsibilities in the Company nature of industry in which theCompany operates business model of the Company and related matters are put up on thewebsite of the Company www.escortsfinance.com. Corporate Governance reaffirms YourCompany its commitment to the good corporate governance practices and has adopted the Codeof Conduct which has set out the systems processes and policy conforming to establishedstandards. Pursuant to the Listing Regulations the Corporate Governance Report andAuditors’ Certificate regarding compliance of conditions of Corporate Governance areenclosed as Annexure B and forms an integral part of this Report.

Consolidated Financial Statements

The Consolidated Financial Statements in accordance with the Companies Act 2013 andAccounting Standard (AS) 21 applicable to the Consolidated Financial Statements read withAS-23 on Accounting for Investments in Associates and AS-27 on Financial Reporting ofInterests in Joint Ventures issued by The Institute of Chartered Accountants of India havebeen prepared. The Audited Consolidated Financial Statements along with the Auditors’Report thereon are annexed with this Report.

Subsidiaries Joint Ventures and Associate Companies

The statement containing salient features of financial statements of associatecompanies prepared in accordance with Section 129 of the Companies Act 2013 read withRule 5 of Companies (Accounts) Rules 2014 forms an integral part of this Report. TheConsolidated Financial Statements presented by the Company include the financial resultsof its associate company.

The Company will make available the Annual Accounts of its associate company andrelated information to the members of the Company who may be interested in obtaining thesame. The annual accounts of its associate company will also be kept open for inspectionat the Registered Office of the Company.

Auditors and Auditors’ Report Statutory Auditors

M/s. N.M. Raiji & Co. Chartered Accountants Delhi (Firm Registration No.108296W) Statutory Auditors of the Company hold office upto the conclusion of the ensuingAnnual General Meeting and are eligible for re-appointment. The Company has receivedletter from M/s. N.M. Raiji & Co. Chartered Accountants to the effect that theirappointment if made would be within the prescribed limits as specified under Section 139of the Companies Act 2013 and that they are not disqualified for such appointment withinthe meaning of Section 141 of the Companies Act 2013 read with Companies (Audit andAuditors) Rules 2014.

Auditors Qualifications/ Observations and Management Comments

The qualifications/ observations made by the Statutory Auditors in the Auditors’Report are dealt with separately in the Notes to the Balance Sheet and the Statement ofProfit and Loss. Management response to the same is as under: Note 25: Completefacts have been disclosed in the note which is self-explanatory and do not call for anyfurther comments.

Note 29: Provision for dividend on preference share could not be made in view ofsubstantial accumulated losses from earlier year.

Note 30: The Company had only three employees on its rolls at the end of thefinancial year. The gratuity liability is being provided on actual basis as per theprovisions of Payment of Gratuity Act 1972. Similarly leave encashment liability is alsoprovided on actual basis. The management feels that provision on actual basis is moreprudent than the actuarial estimate in view of only three employees on roll.

Management responses to the observations made by the Secretarial Auditors in theSecretarial Audit Report are dealt as under: a) Please refer to note 25 of the Notes toAccounts forming part of Balance Sheet which is self-explanatory and does not call for anyfurther comments. b) The Company filed all its RBI returns and forms with provisionalfigures within prescribed time and thereafter audited numbers were filed with the RBIpost audit.

Directors’ Responsibility Statement

Pursuant to the requirement under Section 134(5) of the Companies Act 2013 withrespect to Directors’ Responsibility Statement it is hereby confirmed that:

(i) in the preparation of the annual accounts for the year ended March 31 2016 theapplicable accounting standards read with requirements set out under Schedule III to theAct have been followed alongwith proper explanation relating to material departures;

(ii) the Directors have selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company as at March 31 2016 and of the profitand loss of the Company for the year ended on that date;

(iii) the Directors have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of the Companies Act 2013for safeguarding the assets of the Company and for preventing and detecting fraud andother irregularities;

(iv) the Directors have prepared the annual accounts for financial year ended March 312016 on a ‘going concern’ basis;

(v) the Directors have laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and are operatingeffectively; and

(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.

Particulars of Employees

In terms of provisions of Section 197(12) of the Act read with the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 a statement showingthe names of the employees in terms of remuneration drawn is available with the CompanySecretary. Having regard to the provisions of Section 136(1) of the Act the

Annual Report excluding the aforesaid information is being sent to the members of theCompany. Any member interested in obtaining such particulars may write to the CompanySecretary of the Company and the same will be furnished on request.

Disclosures pertaining to remuneration and other details as required under Section197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 is annexed as

Annexure C and forms an integral part of this Report.

Conservation of Energy Technology Absorption Foreign Exchange Earnings and Outgo

The particulars relating to conservation of energy technology absorption foreignexchange earnings and outgo as required to be disclosed under Section 134(3)(m) of theCompanies Act 2013 read with Companies (Accounts) Rules 2014 are as follows:-

I. Conservation of Energy

Your Company being engaged in financing business and does not have any activityrelating to conservation of energy.

II. Research & Development (R&D)

Specific R&D Activities : There is no Research and Development activity in theCompany.

Benefits derived as a result of above R&D: N.A.

Future Plan of Action: NIL

Expenditure on R & D: NIL

III. Technology Absorption Adaptation and Innovation:

Efforts in brief made towards Technology absorption etc.: NIL

Benefits derived as a result of above: N.A.

Technology imported years of Import Has technology been fully absorbed? If not fullyabsorbed areas where this has not taken place reasons therefor and future plans ofaction: N.A.

IV. Foreign exchange earnings and outgo

During the period under review there was no foreign exchange outflow from your Companyand it had no foreign exchange earnings.

Disclosures Meetings of the Board

Four meetings of the Board of Directors were held during the year. For further detailsplease refer Report on Corporate Governance annexed as Annexure B to this report.

Audit Committee

All the recommendations made by the Audit Committee were accepted by the Board.

For constitution and other details of the Audit Committee please refer Report onCorporate Governance annexed as Annexure - B to this report.

Extracts of Annual Return

In terms of provisions of Section 92 of the Companies Act 2013 read with the Companies(Management and Administration) Rules 2014 the extracts of Annual Return in Form MGT-9is enclosed as Annexure D and forms an integral part of this Report.

Particulars of Loans given Investments made Guarantees given and Securities provided

During the year under review no loan investment guarantees and securities has beenprovided.

Contracts and Arrangements with Related Parties

During the year the Company had not entered into any contract/ arrangement/transaction with related parties.

The particulars of contracts and arrangement with related parties under section 188(1)in Form AOC-2 are enclosed as Annexure E.

The Policy on materiality of related party transactions and dealing with related partytransactions as provided by the Board may be accesses on the Company’s website at thelink: www.escortsfinance.com.

Your directors draw attention of the members to Note 32 to the financial statementwhich sets out related party disclosures.

Secretarial Auditors

The Board of Directors of the Company has appointed M/s Jayant Gupta and AssociatesCompany Secretaries to conduct secretarial audit of the Company for the financial year2015-16. The Secretarial Audit Report for the financial year ended March 31 2016 isenclosed as Annexure F and forms an integral part of this Report.

The observations and comments given by the Secretarial Auditors in their report areself-explanatory and hence do not call for any further comments under Section 204(3) ofthe Companies Act 2013.

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 weakness in the design or operation was observed.

Risk Management

A Risk Management Committee which has been entrusted with the responsibility to assistthe Board in (a) overseeing and approving the Company’s enterprise wide riskmanagement framework; and (b) overseeing that all the risks that the organisation facessuch as strategic financial credit market liquidity security property IT legalregulatory reputational and other risks have been identified and assessed and there is anadequate risk management infrastructure in place capable of addressing those risks.

Acknowledgement

Your Directors wish to acknowledge and thank the co-operation and assistance extendedby the Banks Financial Institutions Government Agencies Customers and Depositors.

The Directors also wish to convey their deep appreciation for the contribution made bythe employees to the operations of the Company in particular those who continued with theCompany and extended their full support during this difficult period. We also convey ourthanks to our esteemed shareholders for their continued support and encouragement.

For and on behalf of the Board of Directors
Sd/- Sd/-
Pritam Narang Rochak Puri
Place: Faridabad Director Director
Dated: August 23 2016 DIN: 00982418 DIN: 00042536

Details pertaining to Remuneration as required under Section 197(12) of the CompaniesAct 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014

(i) The percentage increase in remuneration of each Director Chief Financial Officerand Company Secretary during the financial year 2015-16 ratio of the remuneration of eachDirector to the median remuneration of the employees of the Company for the financial year2015-16 and the comparison of remuneration of each Key Managerial Personnel (KMP) againstthe performance of the Company are as under:

Sl. No. Name of Director/ KMP and Designation Remuneration of Director/ KMP for the financial year 2015-16 (Rs. In Lacs) % Increase in Remuneration in the financial year 2015-16 Ratio of remuneration of each Director/ to median remuneration of employees
1. Mr. Inder Mohan Sakhuja Chairman and Non-Executive Director 0.06 0 *
2. Mr. Pritam Narang Non-Executive Director 0.16 0 0.05
3. Mr. Rochak Puri Non-Executive Director 0.16 0 0.05
4. Ms. Preeti Chauhan Non-Executive Director 0.16 0 0.05
5. Mr. P.K. Marwah Manager 0 0
6. Mr. Donald Fernandez Chief Financial Officer 5.89 7.00% Not Applicable
7. Mr. Vicky Chauhan Company Secretary 0 0

*Details not given as Mr. Inder Mohan Sakhuja was Director only for the part offinancial year i.e. upto January 25 2016.

(ii) The median remuneration of employees of the Company during the financial year wasRs. 3.38 Lacs.

(iii) In the financial year there was an increase of 60.19% in the median remunerationof employees.

(iv) There were 3 permanent employees on the rolls of the Company as on March 31 2016.

(v) Average percentage increase made in the salaries of employees other than themanagerial personnel in the last financial year i.e. 2015-16 was 18.92% whereas nomanagerial remuneration was paid during the financial year.

(vi) The key parameters for the variable component of remuneration availed by thedirectors are considered by the Board of Directors based on the recommendations of theNomination and Remuneration Committee as per the Remuneration Policy for Directors KeyManagerial Personnel Senior Management and other Employees.

(vii) It is hereby affirmed that the remuneration paid is as per the RemunerationPolicy for Directors Key Managerial Personnel and other Employees.

For and on behalf of the Board of Directors
Sd/- Sd/-
Pritam Narang Rochak Puri
Place: Faridabad Director Director
Dated: August 23 2016 DIN: 00982418 DIN: 00042536