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Explicit Finance Ltd.

BSE: 530571 Sector: Financials
NSE: N.A. ISIN Code: INE335G01019
BSE LIVE 14:15 | 17 Oct Stock Is Not Traded.
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OPEN 2.40
PREVIOUS CLOSE 2.50
VOLUME 800
52-Week high 5.52
52-Week low 2.37
P/E
Mkt Cap.(Rs cr) 2
Buy Price 2.50
Buy Qty 4400.00
Sell Price 2.62
Sell Qty 500.00
OPEN 2.40
CLOSE 2.50
VOLUME 800
52-Week high 5.52
52-Week low 2.37
P/E
Mkt Cap.(Rs cr) 2
Buy Price 2.50
Buy Qty 4400.00
Sell Price 2.62
Sell Qty 500.00

Explicit Finance Ltd. (EXPLICITFIN) - Director Report

Company director report

To

The Members

Your Directors have pleasure in presenting their 23rd Annual Report on the business andoperations of the company along with the Audited Financial accounts for the Financial Yearended March 31 2017.

FINANCIAL RESULTS

(Rs. In Lacs)

Particulars Year Ended 31st March 17 Year Ended 31st March 16
Total Income 554.60 565.09
Profit before Depreciation and Tax (5.22) 1.49
Less: Depreciation 0.77 1.05
Profit before Tax (5.99) 0.43
Less: Provision for Income Tax 0.05 0.38
Profit after Tax (6.04) 0.05
Balance brought forward from previous years (47.73) (47.78)
Adjustments as per new Companies Act2016 0.00 0.00
Tax of Earlier Years 30.07 0.00
Transfer to Statutory Reserve 0.00 0.00
Balance carried to Balance Sheet (83.84) (47.73)

REVIEW OF OPERATION

The Company is mainly engaged into trading and finance activities. During the yearunder review the total revenues for the year were Rs. 553.38 lacs as compared to Rs.565.09lacs last year. However company has incurred a net loss of Rs.5.99lacs as comparedto profit of Rs. 0.43lacs last year.

BUSINESS REVIEW

Explicit Finance Limited is a Non-Banking Financial Company that fulfils aspirations ofits Individual and Corporate client by satisfying their financial needs. The Company isactively investing in Secondary Market having wide range of research techniques whichenable company in identifying early stage investment opportunities in growing companiesand provide a wide range of services including Business Loan Corporate Finance RealEstate Mortgage Finance Loans against Shares and securities etc.

DIVIDEND

To strengthen the financial position of the company and in view of brought forwardlosses the directors do not recommend any dividend for the year ended March 31 2017.

MANAGEMENT DISCUSSION ANALYSIS REPORT A. INDUSTRY STRUCTURE & DEVELOPMENT

The NBFC sector in India has undergone a significant transformation over the past fewyears. It is now recognized as one of the systemically important components of thefinancial system and has shown consistent year-on-year growth. NBFCs play a critical rolein the core development of infrastructure transport employment generation wealthcreation opportunities and financial support for economically weaker sections; they alsomake a huge contribution to state exchequer.

Non-Banking Finance Companies (NBFCs) form an integral part of the Indian financialsystem. They play an important role in nation building and financial inclusion bycomplementing the banking sector in reaching out credit to the unbanked segments ofsociety especially to the micro small and medium enterprises (MSMEs) which form thecradle of entrepreneurship and innovation. NBFCs’ ground-level understanding of theircustomers’ profile and their credit needs gives them an edge as does their abilityto innovate and customize products as per their clients’ needs. This makes them theperfect conduit for delivering credit to MSMEs. However NBFCs operate under certainregulatory constraints which put them at a disadvantage vis--vis banks. While there hasbeen a regulatory convergence between banks and NBFCs on the asset side on the liabilityside NBFCs still do not enjoy a level playing field. This needs to be addressed to helpNBFCs realize their full potential and thereby perform their duties with greaterefficiency. Moreover with the banking system clearly constrained in terms of expandingtheir lending activities the role of NBFCs becomes even more important now especiallywhen the government has a strong focus on promoting entrepreneurship so that India canemerge as a country of job creators instead of being one of job seekers. Innovation anddiversification are the important contributors to achieve the desired objectives.

So far Non-Banking Finance Companies (NBFCs) have scripted a great success story.Their contribution to the economy has grown in leaps and bounds from 8.4% in 2006 to above14% in March 2015. In terms of financial assets NBFCs have recorded a healthy growth acompound annual growth rate (CAGR) of 19% over the past few years comprising 13% of thetotal credit and expected to reach nearly 18% by 2018–19

B. OPPORTUNITIES & THREATS

• In 5 years NBFCs have doubled their market share in SME loans and wholesalefinance

• More than 15 financiers ready to ride the 'Housing for All' opportunity

• Asset growth in 5 product segments including infra financing could deceleratethis fiscal

• In 5 segments including LAP NBFCs assets grew at more than twice India's GDPlast fiscal

• With the share of lending to the retail segment still below par there ispotential for banks and NBFCs to increase their exposure to this loan category and therebyattain growth thus making them preferred investment options in comparison to others

• NBFCs are working in different competitive fields like vehicle financinghousing loans hire purchase lease and personal loans. NBFCs have emerged as keyfinancial intermediaries particularly for small-scale and retail sectors. With easiersanction procedures flexibility low operating cost and focus on core business activityNBFCs stand on a surer footing vis-a-vis banks.

• NBFCs' growth had been constrained due to lack of adequate capital. Goingforward we believe capital infusion and leverage thereupon would catapult NBFCs' growthin size and scale. A number of NBFCs have been issuing non- convertible debentures (NCDs)in order to increase their balance sheet liquidity. Also to address this purposeespecially in the infrastructure financing space a new category of NBFCs was formedcalled Infrastructure financing companies (IFCs).

C. RISKS AND CONCERNS

As an NBFC the Company is subjected to both external risk and internal risk. Externalrisk due to interest rate fluctuation slowdown in economic growth rate politicalinstability market volatility decline in foreign exchange reserves etc. Internal riskis associated with your Company's business which includes deployment of funds in specificprojects diversification into other business operations retention of talented personnelmanaging effective growth rate volatility in interest rate NPAs in portfolio changes incompliance norms and regulations contingent liabilities and other legal proceedings. YourCompany recognizes the importance of risk management and has invested in people processand technologies to effectively mitigate the above risks.

Company’s performance is closely linked to the Indian Capital Market as thecompany has investments in securities. These investments represent a substantial portionof the company’s business and are vulnerable to fluctuations in the stock market. Anydecline in the price of quoted investments may affect its financial position and resultsof operations. The value of the company’s investments may be affected by factorsaffecting capital markets such as price and volume volatility interest rates currencyexchange rates foreign investment

Government policy changes political and economic developments crude oil prices andeconomic performance abroad etc.

As a non-deposit taking NBFC the Company is subjected to regulations by Indiangovernmental Authorities including the Reserve Bank of India. Their Laws and regulationsimpose numerous requirements on the Company there may be future changes in the regulatorysystem or in the enforcement of the Laws and regulations that may adversely affect theCompany’s performance.

Moreover any slowdown in the economic growth in India could cause the business of theCompany to suffer. Recently the growth of industrial production has been variable. Anyslowdown in Indian economy could adversely affect the Company’s business.

D. OUTLOOK

Outlook for the Company is linked to Capital Market. The Board of Directors of theCompany believes that Company’s Investments in the equity shares of various companieswould reasonably perform in the ensuing years. The role of NBFCs has become increasinglyimportant from both the macroeconomic perspective and the structure of the Indianfinancial system. Over a period of time one has to accept; that it is only those whichare big enough and serious about being in the finance business will and must grow. Tosurvive and constantly grow NBFCs have to focus on their core strengths while improvingon weaknesses. They have to constantly search for new products and services in order toremain competitive. The coming years will be testing ground for the NBFCs and only thosewho will face the challenge and prove themselves will survive in the long run. For severalyears NBFCs have rapidly emerged as an important segment of the Indian Financial System.The sector is now being recognized as complementary to the banking sector due to theimplementation of innovative marketing strategies introduction of tailor made productscustomer oriented services attractive rates of return on deposits Government increasedinitiative and simplified procedures.

E. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

Internal Control measures and systems are established to ensure the correctness of thetransactions and safe guarding of the assets. Considering the size and nature ofactivities the company has adequate internal control system covering both accounting andadministrative control. In addition the internal audit is carried out periodically. Themanagement ensuring an effective internal control system so that the financial statementsand reports give a true and fair view and during the year under review no material orserious observation has been received from the Internal Auditors of the Company forinadequacy or ineffectiveness of such control.

F. HUMAN RESOURCES

The company always regards human resources as its most valuable asset and continuouslyevolves policies and process to attract and retain its substantial pool of managerialresources through friendly work environment that encourages initiatives by individuals andrecognizes their performance.

G. CAUTIONARY NOTE

Certain Statements in the Management Discussion and Analysis describing the company'sviews about the industry expectations objectives etc may be understood 'forward lookingstatement' within the meaning of applicable laws and regulations. Factors like changes inGovernment regulations tax laws and other factors such as industrial relations andeconomic developments etc. may further influence the company's operations or performance.Actual results may differ substantially or materially from those expressed or implied.

RESERVES

The company does not propose to transfer to the statutory reserves due to losses in thecurrent year.

SHARE CAPITAL

Company had not issued any equity shares either with or without differential rightsduring the FY 2016 - 2017 and hence the disclosure requirements under Section 43 and Rule4 (4) of the Companies (Share Capital and Debentures) Rules 2014 are not applicable.

DEPOSITIS

The Company has neither accepted nor renewed any deposits from public or members duringthe year under review under Section 73 of the Companies Act 2013. There are no unclaimeddeposits unclaimed / unpaid interest refunds due to the deposit holders or to bedeposited to the Investor Education and Protection Fund as on March 31 2017.

DIRECTORS

The composition of the Board is framed as per Companies Act 2013 and the SEBI (ListingObligations and Disclosure Requirements) 2015. All the directors have vast knowledge andexperience in their respective fields and they keep on advising company for the benefit ofall.

During the year under review there was no change in the composition of the board ofdirectors.

CHANGES IN KEY MANAGERIALPERSONNEL (KMP’S) DURING THE YEAR 2016-17

There was no change in Key Managerial Personnel during the year 2016-17.

DIRECTOR’S RESPONSIBILITY STATEMENT

Pursuant to Section 134(3)(c) & 134(5) of the Companies Act 2013 the Board ofDirectors of the Company hereby confirm that:

i. In the preparation of the annual accounts the applicable accounting standards havebeen followed along with 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 at the end of the financial year and ofthe profit of the company for that period;

iii. proper and sufficient care has been taken 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;

iv. proper annual accounts have been prepared on a going concern basis; and

v. Internal financial controls to be followed by the company and that such internalfinancial controls are adequate and were operating effectively.

vi. Proper systems to ensure compliance with the provisions of all applicable laws andthat such systems were adequate and operating effectively.

DECLARATION BY INDEPENDENT DIRECTOR

The Company has received declarations pursuant to Section 149 (7) of the Companies Act2013 and Regulation 16 of the Securities and Exchange Board of India (Listing Obligationsand Disclosure Requirements) Regulations 2015 from all the Independent Directors of thecompany viz Mr. Jayesh Jain and Mrs. Lata Dave confirming that they meet the criteria ofindependence as prescribed under Sub Section 6 of 149 of the Companies Act 2013.

BOARD EVALUATION

Pursuant to the provisions of the Companies Act 2013 and the Listing Agreement SEBI(LODR) Regulations 2015 the Board has carried out an annual performance evaluation ofits own performance the directors individually as well as the evaluation of the workingof its Committees. Independent Directors at their meeting reviewed the performance of theBoard and its Chairman and Non-Executive Directors.

NUMBER OF BOARD MEETINGS HELD DURING THE PERIOD

A calendar of meetings is prepared and circulated in advance to the Directors. Theintervening gap between the meetings was within the period prescribed under the CompaniesAct 2013 and the Listing Agreement / Securities and Exchange Board of India (ListingObligations and Disclosure Requirements) Regulations 2015. Further 04 (Four) BoardMeetings were held during the year ended 31st March 2017 the dates are 27th May 201612th August 2016 14thNovember 2016 and9th February 2017.

Sr No. Name of the Directors Number of Board Meeting
1. Mrs. Swati Dave Executive Director 4
2. Mr. Avinash Mainkar 4
3. Mr. Satish Pai Non Independent Non-Executive Director 4
4. Mr. Jayesh Jain Independent Non Executive 4
5. Mrs. Lata Dave Independent Non Executive 4

COMMITTEES OF THE BOARD

The Board of Directors of your company has constituted various committees in compliancewith the provisions of the Companies Act 2013 and Listing Regulations.

• Audit Committee

• Nomination & Remuneration Committee

• Stakeholder Relationship Committee

All decisions pertaining to the constitution of Committees appointment of members andfixing of terms of reference/ role of the committees are taken by the Board of Directors.A detailed note on the Board and its Committees is provided under the Corporate GovernanceSection in this Annual Report.

INDEPENDENT DIRECTORS MEETING

During the year under review the Independent Directors of the Company met on January16 2017 inter-alia to discuss:

• Evaluation of performance of Non-Independent Directors and the Board ofDirectors of the Company as a whole.

• Evaluation of performance of the Chairman of the Company taking into views ofExecutive and Non-Executive Directors.

• Evaluation of the quantity content and timelines of flow of information betweenthe Management and the board that is necessary for the Board to effectively and reasonablyperform its duties.

NOMINATION & REMUNERATION POLICY

The Board has on the recommendation of the Nomination & Remuneration Committeeframed a policy for selection and appointment of Directors Senior Management and theirremuneration. The appointment and Remuneration Policy is stated in the CorporateGovernance Report of the Company that forms part of the Annual Report.

PARTICULARS OF EMPLOYEES AND DISCLOSURE UNDER SECTION 197(12) AND RULE 5(1) OF THE

COMPANIES (APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL) RULES 2014:

The information required pursuant to Section 197 read with Rule 5(1) of the Companies(Appointment and Remuneration of Managerial Personnel) Amendment Rules 2016 in respect ofemployees of the Company is enclosed as Annexure - 1 and forms part of this Report.

Further no employee of the Company is earning more than the limits as prescribedpursuant to Section 197 read with Rule 5(2) of the Companies (Appointment and Remunerationof Managerial Personnel) Amendment Rules 2016 in respect of employees of the Company.

DETAILS OF SUBSIDIARY/JOINT VENTURES/ASSOCIATE COMPANY

The Company does not have any subsidiary or associate company and has not entered intojoint venture with any other company during the financial year ended 31st March 2017.

CORPORATE GOVERNANCE REPORT

As stipulated under the provision of Regulation 34 (3) read with Schedule V (c) of theSEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 a separate reporton Corporate Governance Report forms integral part of this Board Report. The requisiteCompliance certificate as required under Part E of Schedule V of the Listing Regulation isissued by MVK ASSOCIATES Chartered Accountants pertaining to the compliance of theconditions of Corporate Governance is Annexed thereto.

EXTRACT OF ANNUAL RETURN

The extract of Annual Return pursuant to the provisions of Section 92 read with Rule 12of the Companies (Management and Administration) Rules 2014 is annexed herewith asAnnexure-2 to this Report.

STATUTORY AUDITORS

M/s. MVK Associates Chartered Accountants Statutory Auditors of the Company holdoffice till the conclusion of the ensuing Annual General Meeting (AGM) and their term of10 years is expiring at the ensuing AGM. Accordingly as per the requirements of Section139(2) of the Companies Act 2013 (‘the Act’)

AUDITORS’ REPORT

Independent Auditor’s Report

There are no qualifications reservation or adverse remark or disclaimer in theIndependent Auditor’s Report provided by M/s MVK ASSOCIATES Chartered Accountantsfor the FY 2016 -2017. The notes to accounts forming part of financial statements areself-explanatory and need no further clarification.

Secretarial Audit Report

Pursuant to Provision of Section 204 of the Companies Act 2013 and Rules framed thereunder Board of Directors have appointed M/s. Vishal Manseta Practicing Company Secretaryto conduct Secretarial Audit. The Secretarial Audit Report for the Financial Year ended31st March 2017 forms the integral part of the Board Report as Annexure 3. There are noqualifications reservation or adverse remark or disclaimer in Secretarial Audit Report.

Details in respect of frauds reported by auditors under sub-section (12) of section 143other than those which are reportable to the central government

There are no such frauds committed by the Company which are reported by auditors.

PARTICULARS OF LOANS GUARAUNTEES OR INVESTMENTS

Pursuant to Section 186 (11) of the Companies Act 2013 read with Rule 11(2) of theCompanies (Meetings of Board and its Powers) Rules 2014 the loan made guarantee givenor security provided in the ordinary course of business by a Non- Banking FinancialCompany (NBFC) registered with Reserve Bank of India are exempt from the applicability ofprovisions of Section 186 of the Act.

PARTICULARS OF CONTRACTS OR ARRANGEMENTS MADE WITH RELATED PARTIES

All related party transactions that were entered into during the financial year were onarm’s length basis and were in the ordinary course of the business. There are nomaterially significant related party transactions made by the company with Promoters KeyManagerial Personnel or other designated persons which may have potential conflict ofinterest with the company at large. Accordingly disclosures of related party transactionsin Form AOC-2 has not been furnished. All Related Party Transactions were placed beforeAudit Committee and Board for their approval. Your Company has formulated policy ofRelated Party Transaction which is also available on the website of the Company.

MATERIAL CHANGES AND COMMITMENT AFFECTING FINANCIAL POSITION OF THE COMPANY

No material changes and commitments which could affect the Company’s financialposition have occurred till date of this report.

TRANSFER OF AMOUNTS TO INVESTOR EDUCATION AND PROTECTION FUND

The Company does not have any funds lying unpaid or unclaimed for a period of sevenyears. Therefore there were no funds which were required to be transferred to InvestorEducation and Protection Fund (IEPF).

CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGO

• CONSERVATION OF ENERGY & TECHNOLOGY ABSORPTION

The Company is not engaged in manufacturing activities and therefore provisionsrelating to conservation of energy and technology absorption are not applicable to it.However efforts are being made to minimize consumption of energy wherever possible.

• FOREIGN EXCHANGE EARNINGS AND OUTGO

During the year under review there were no Foreign Exchange earnings and outgo.

RISK MANAGEMENT POLICY

The Board of Directors of the Company has approved Risk Management policy andguidelines wherein all material risks faced by the company are identified and assessed.Moreover in the said Risk Management Policy the Board has defined a structured approach tomanage uncertainty cultivating the same in their decision making pertaining to allbusiness divisions and corporate functions. For each of the risks identifiedcorresponding controls are assessed and policies and procedures are put in place formonitoring mitigating and reporting on periodic basis.

CORPORATE SOCIAL RESPONSIBILITY

The provisions of Corporate Social Responsibility are not applicable to the company ascompany does not fall into ambit of the provisions of section 135 of Companies Act 2013and Companies (Corporate Social Responsibility Policy)Rules 2014 .

ADEQUACY OF INTERNAL FINANCIAL CONTROL WITH REFERENCE TO FINANCIAL STATEMENTS

The Company has in place adequate internal financial controls with reference to thefinancial statements which is evaluated by the Audit Committee as per Schedule II Part Cof the SEBI (LODR) Regulations 2015. During the year under review there were noreportable material weaknesses in the systems or operation.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The details in respect of internal control systems and their adequacy are included inthe Management Discussion and Analysis Report which forms part of this report.

VIGIL MECHANISM/WHISTLE BLOWER POLICY

In pursuant to the provisions of section 177(9) and (10) of the Companies Act 2013 aWhistle Blower Policy / Vigil Mechanism for directors and employees to report genuineconcerns has been established by the Company in order to maintain highest standards ofethical moral and legal conduct adopted Vigil Mechanism/Whistle Blower policy to providean avenue to its employees to raise concerns of any violations of legal or regulatoryrequirements incorrect or misrepresentations of any financial statements and reportsetc. The Audit committee of the company oversees the said mechanism from time to time.None of the Company personnel has been denied access to the Audit Committee. The WhistleBlower Policy of the Company is also available on the website of the Companywww.explicitfinance.net

DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITIONAND REDRESSAL) ACT 2013

The company has in place an Anti-Harassment policy in line with the requirements of Thesexual harassment of women at the workplace (Prevention Prohibition & Redressal) Act2013. Internal Complaints Committee (ICC) has been set up to redress complaints receivedregarding sexual harassment. All employees (permanent contractual temporary trainees)are covered under this policy. During the year under review company has not received anySexual Harassment Complaints. Company has zero tolerance policy in case of sexualharassment at workplace and is committed to provide a healthy environment to each andevery employee of the company.

RBI GUIDELINES

The company continues to comply with all the requirements prescribed by the ReserveBank of India from time to time as applicable.

SIGNIFICANT ORDERS PASSED BY REGULATORS COURTS OR TRIBUNALS IMPACTING GOING CONCERNAND COMPANY’S OPERATIONS:

No orders have been passed by any Regulator or Court or Tribunal which can have animpact on the going concern status and the Company’s operations in future.

ACKNOWLEDGEMENT

The Directors takes this opportunity to thank all their colleagues at UpsurgeInvestment & Finance Ltd. for their professionalism and dedication to the task athand. The board also wishes to place on record their appreciation for valuable supportgiven by the Bankers Clients and Shareholders.

For and on behalf of the Board of Directors
Swati Dave Avinash Mainkar
Managing Director Director
Palghar dated 14th August 2017 DIN: 003299627 DIN: 001986289