Your Directors have pleasure in presenting their 21st Annual Report on thebusiness and operations of the Company together with the Audited Financial Statement forthe financial year ended on March 31 2016.
1. Financial Summary
(Rs. in Lacs except EPS)
|Particulars ||2015-16 ||2014-15 |
|Revenue from operations ||714.47 ||380.78 |
|Other income ||0.13 ||0.01 |
|Total income ||714.60 ||380.79 |
|Total expenditure ||289.85 ||100.47 |
|Profit/(Loss) before exceptional items & provision for tax ||424.75 ||280.32 |
|Exceptional items ||0.00 ||0.00 |
|Profit/(Loss) before tax ||424.75 ||280.32 |
|Provision for taxation ||142.07 ||92.03 |
|Net profit ||282.68 ||188.29 |
|EPS Basic & Diluted (Rs.) ||2.61 ||1.74 |
2. State of Company's Affairs
During the financial year under report total income of the Company has increased toRs. 714.60 Lacs as compared to Rs. 380.79 Lacs earned during the previous financial yearshowing an impressive growth of 87.66%. Profit before interest depreciation and taxincreased from Rs. 343.89 Lacs to Rs. 623.59 Lacs in the financial year ended on March 312016. Net profit after tax increased by 50.13% attaining an amount of Rs. 282.67 Lacs. Netprofit margin stands at 39.56% for the financial year under report. Overall your Companyachieved a notable growth in both top and bottom lines of the financials for the financialyear ended on March 31 2016 and the Directors are optimistic to achieve newer heights inthe upcoming years.
Considering the enhanced business during the financial year under report the totalexpenditure has also reported an increase of 188.49% as compared to previous financialyear. Further the enhanced business resulted an increase of 181.94% in the short termborrowings and the same has impacted the financial cost by hiking the same by 207.28% ascompared to the previous financial year ended on March 31 2015.
The detailed analysis as to review of Company's operational and financial performanceis given in the Management Discussion and Analysis Report.
Considering both the improved financial performance of the Company and conservation ofresources for future purposes your Directors are desirous of rewarding the shareholdersby sharing the profit in the form of increased dividend as compared to the previousfinancial year. In continuance of the earlier trends of cash dividends the Board ofDirectors are pleased to recommend a final dividend of Rs. 0.75 (Seventy Five Paisa Only)(i.e. 7.5%) per equity share of Rs. 10/- (Rupees Ten Only) each for the financial yearended on March 31 2016. The final dividend recommended and declared for the financialyear ended on March 31 2015 was Rs. 0.50 (Fifty Paisa Only) (i.e. 5%) per equity share ofRs. 10/- (Rupees Ten Only) each.
Further the payment of dividend is subject to the approval of shareholders of theCompany in the ensuing Annual General Meeting of the Company. The dividend if declared atthe ensuing Annual General Meeting will be paid to those shareholders whose names appearin the register of members as on the record date. The amount of final dividend shall beRs. 81.135 Lacs and the dividend distribution tax shall be Rs. 16.52 Lacs.
4. Transfer to Reserves
The Company proposes to transfer Rs. 56.54 Lacs to the special reserve out of amountavailable for appropriations and an amount of Rs. 392.35 Lacs is proposed to be retainedin the Statement of Profit and Loss.
During the financial year ended on March 31 2016 the Company has not accepted anydeposits from the public within the meaning of the provisions of the Non-Banking FinancialCompanies (Reserve Bank) Directions 1977 and RBI's Notification No. DFC.118DG(SPT)-98dated January 31 1998.
Further being a Non-Deposit Taking Non-Banking Financial Company the disclosures withrespect to deposits required as per Rule 8(5)(v) & (vi) of the Companies (Accounts)Rules 2014 read with the Companies (Acceptance of Deposits) Rules 2014 and Section 73 ofthe Companies Act 2013 are not applicable to it.
6. Share Capital
During the financial year under report the Company has neither made any issue ofequity shares with differential voting rights sweat equity shares or under employee stockoptions scheme nor it has made any provision of money for purchase of its own shares byemployees or by trustees for the benefit of employees.
7. Details of Subsidiary/Joint Venture/Associate Companies
The Company has not any subsidiary joint venture or associate company.
8. Directors and Key Managerial Personnel (KMP)
Director retiring by rotation
Pursuant to the provisions of Section 152 of the Companies Act 2013 and in accordancewith the Articles of Association of the Company Mr. Rajesh P. Khandwala ManagingDirector of the Company retires by rotation at the ensuing Annual General Meeting andbeing eligible offers himself for re-appointment. The Board of Directors recommends hisre-appointment.
In terms of the definition of the Independent Director as prescribed under Regulation16(1)(b) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015and Section 149(6) of the Companies Act 2013 Mr. Devang M. Shah and Mr. Dharmendra N.Soni have been appointed as Non Executive Independent Directors on the Board of theCompany.
The Independent Directors have submitted the declaration confirming that they meet thecriteria of independence as prescribed under both the provisions of the relevant laws.
Further a separate meeting of Independent Directors of the Company was held onFebruary 23 2016 in accordance with the provisions of Clause VII of the Schedule IV ofthe Companies Act 2013.
Pursuant to the provisions of Section 149 of the Companies Act 2013 and Regulation 17of the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 Mrs.Sonal R. Khandwala holds position of a Non Executive Woman Director of the Company.
All of the Directors of the Company have confirmed that they are not disqualified underprovisions of Section 164 of the Companies Act 2013 from being appointed/continue to holdposition of Directors of the Company.
Key Managerial Personnel
Pursuant to provisions of Section 203 of the Companies Act 2013 Mr. Bhavik J. Shahholds the position of Chief Financial Officer of the Company.
Subsequent to the closure of the financial year under report Ms. Krupa N. Joshiresigned from the post of Company Secretary cum Compliance Officer of the Company w.e.f.May 4 2016 and the Board at its meeting held on May 24 2016 has appointed Mr. Durgesh D.Soni in her place as the Company Secretary and Compliance Officer of the Company.
The Board places on record its sincere appreciation for the valuable services renderedby Ms. Krupa N. Joshi during her tenure.
The Company follows a policy on remuneration of Directors and Senior ManagementEmployees. The policy has been approved by the Nomination & Remuneration Committee andthe Board of Directors. More details on the same have been given in the CorporateGovernance Report.
The policy on Remuneration of Directors Key Managerial Personnel and Senior Employeescan be accessed on website of the Company at following web link:http://kifsfinance.com/wp-content/uploads/2015/02/Nomination-Remuneration-policy-KIFS.pdf
9. Number of meetings of the Board of Directors
The Board of Directors met four times during the financial year under report thedetails of which have been given in the Corporate Governance Report. The intervening gapbetween any two Board meetings did not exceed 120 days as prescribed under the provisionsof the law(s).
10. Committees of the Board
Currently the Company has four committees viz; Audit Committee Nomination andRemuneration Committee Stakeholders Relationship Committee and Risk Management Committeewhich have been established as a part of the better corporate governance practices and arein compliance with the requirements of the relevant provisions of applicable laws andstatutes.
Apart from the above statutory committees the Company also has a Managing Committee ofthe Board of Directors to look after the routine affairs of the Company.
The details with respect to the compositions terms of reference scope and powersroles meetings etc. of the relevant committees are given in detail in the CorporateGovernance Report forming part of this Annual Report.
11. Corporate Social Responsibility
During the financial year under report your Company has not met the criteria laid downunder the provisions of Section 135(1) of the Companies Act 2013 read with Companies(Corporate Social Responsibility Policy) Rules 2014 and accordingly the provisionsincluding but not limited up to constitution of Corporate Social Responsibility Committeeand formulation/implementation of a policy on Corporate Social Responsibility are notapplicable to the Company.
12. Performance evaluation of the Board
In accordance with the provisions of Regulation 17(10) of the SEBI (Listing Obligationsand Disclosure Requirements) Regulations 2015 and Schedule IV of the Companies Act 2013evaluation of performance of Independent Directors by the Non Independent Directors andreview of performance of Non Independent Directors and the Board as a whole by theIndependent Directors was made during the financial year under report. The Directors weresatisfied with the evaluation results which reflected the overall engagement of the Boardand its Committees with the Company. This may be considered as a statement underprovisions of Section 134(3)(p) of the Companies Act 2013 and Rule 8(4) of the Companies(Accounts) Rules 2014.
More details on the evaluation mechanism are given in the Corporate Governance Report.
13. Vigil Mechanism/Whistle Blower Policy
The Company promotes ethical behavior in all its business activities and has put inplace a mechanism wherein the employees are free to report illegal or unethical behavioractual or suspected fraud or violation of the Company's Codes of Conduct or CorporateGovernance Policies raise concerns against management and business practices incorrector misrepresentation of any financial statements and reports or any improper activitybeing negative in nature to the Chairman of the Audit Committee of the Company or Chairmanof the Board. The Whistle Blower Policy has been appropriately communicated within theCompany.
Under the Whistle Blower Policy the confidentiality of those reporting violation(s) isprotected and they are not subject to any discriminatory practices. No personnel have beendenied access to the Audit Committee. The functioning of the Vigil mechanism is reviewedby the Audit Committee from time to time. The Vigil Mechanism/Whistle Blower Policy hasbeen uploaded on website of the Company and can be accessed at following web link:http://kifsfinance.com/wp-content/uploads/2016/06/KIFS-FINANCIAL-Whistle-blower-policy-2016.pdf
14. Statement of Development & Implementation of Risk Management Policy
The Company has developed and implemented a Risk Management Policy to meet the risksassociated with the business of the Company. Business risk evaluation and management is anongoing process within the Company. The assessment is periodically examined by the RiskManagement Committee of the Board. The Company while giving loan to its customersfollows the criteria and procedure laid down in policy and the credibility of the clients.
15. Loans/Guarantees or Investment in Securities
Being a Non Banking Financial Company pursuing loan business in its ordinary course ofbusiness the disclosures relating to the details of loans made guarantees givensecurities provided or subscription/acquisition of securities pursuant to the provisionsof Section 186(11) of the Companies Act 2013 and Rule 11 of the Companies (Meetings ofBoard and its Powers) Rules 2014 are not required to be given.
16. Contracts or Arrangements with Related Parties
All related party transactions that were entered during the financial year under reportwere in the ordinary course of business of the Company and were on arm's length basis.There were no materially significant related party transactions entered by the Companywith its Promoters Directors Key Managerial Personnel or other persons which may have apotential conflict with the interest of the Company. All such related party transactionsare being quarterly placed before the Audit Committee for its review. Omnibus approval hasbeen obtained from the Audit Committee & Board of Directors for all the related partytransactions (including transactions which are foreseen and repetitive in nature).
Since no material related party transactions were entered by the Company and all thetransactions entered into by the Company with its related parties were in the ordinarycourse of business and on an arm's length basis disclosure in the Form AOC-2 is notrequired to be given.
The Policy on Related Party Transactions as approved by the Board has been uploaded onthe Company's website at the web link:
17. Internal Financial Control Systems and their adequacy
The Company has internal control systems commensurate with the size scale andcomplexity of its operations. Your Company has laid down set of standards processes andstructure which enable it to implement internal financial control systems across theorganization and ensure that the same are adequate and operating effectively. Internalfinancial control systems of the Company provide a reasonable assurance with regard tomaintaining of proper accounting controls monitoring of operations protecting assetsfrom unauthorized use or losses compliance with regulations and for ensuring reliabilityof financial reporting.
18. Extract of Annual Return
Pursuant to the provisions of Section 134(3)(a) and Section 92(3) of the Companies Act2013 read with Rule 12 of the Companies (Management and Administration) Rules 2014 theExtract of the Annual Return as at March 31 2016 in the Form MGT 9 is enclosedherewith as Annexure 1.
19. Disclosure as per the Rule 5 of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014
The details as per Rule 5(1) of the aforesaid Rule are enclosed herewith as Annexure 2.
20. Auditors Statutory Auditors
M/s. Shailesh C. Parikh & Co. Chartered Accountants Ahmedabad Statutory Auditorsof the Company were appointed at the 19th Annual General Meeting of the Companyfor a period of three years (including transitional period).
In accordance with the provisions of Section 139 of the Companies Act 2013 and Rulesframed there under the Board recommends the members to ratify their appointment up to theconclusion of next Annual General Meeting.
Pursuant to the provisions of Section 204 of the Companies Act 2013 and Rules framedthereunder the Board has re-appointed the existing Secretarial Auditors of the CompanyM/s. Anamika Jajoo & Co. Practicing Company Secretary Ahmedabad for conducting theSecretarial Audit for the financial year ending on March 31 2017.
Secretarial Audit Report issued by the Secretarial Auditor of the Company for thefinancial year ended on March 31 2016 is attached to the Directors' Report as Annexure 3.
Explanations or comments by the Board on qualification/reservation/adverse remark ordisclaimer made by the Statutory Auditors in their Audit Report and by the SecretarialAuditor in her Secretarial Audit Report
Both the Statutory Auditors' Report and Secretarial Audit Report are self explanatoryand no comment from the Board of Directors of the Company is required as no qualificationreservation or adverse remark or disclaimer is given by any of both of the Auditors of theCompany.
In accordance with the provisions of Section 138 of the Companies Act 2013 and Rulesframed thereunder your Company has appointed M/s. SMPK & Associates LLP Ahmedabadas the Internal Auditors of the Company in the Board meeting held on May 24 2016 toconduct the internal audit of the functions and activities of the Company for thefinancial year ending on March 31 2017.
21. Investment Advisory Business
With a view to having expansion of Company's present scope of operations your Companyhas also got itself registered as an Investment Advisor under the SEBI (InvestmentAdvisers) Regulations 2013 vide Registration No. INA000001852 during the financial yearended on March 31 2015. The said business is yet to be commenced by the Company.
22. Material changes and commitments affecting financial position of the Company
There are no material changes and commitments affecting the financial position of theCompany which have been occurred between the end of the financial year i.e. March 31 2016and the date of signing of the Directors' Report i.e. May 24 2016. Further nosignificant or material orders have been passed by the Regulators or Courts or Tribunalsimpacting the going concern status of the Company and/or the Company's operations infuture.
23. Remuneration given to the Managing Director from Holding/Subsidiary Company
The Managing Director of the Company Mr. Rajesh P. Khandwala also occupied the officeof the Managing Director in the erstwhile Holding Company of the Company viz; M/s. KIFSSecurities Private Limited (now amalgamated) and accordingly total managerial remunerationto the tune of Rs. 900000/- (Rupees Nine Lacs Only) was paid to him from the aforesaidHolding Company. Apart from this Mr. Rajesh P. Khandwala also received total Rs.500000/- (Rupees Five Lacs Only) towards managerial remuneration from your Company. TheCompany does not have any Subsidiary Company.
24. Disclosure under the Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013
A policy under the provisions of the Sexual Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013 has been laid down and circulated toevery employee of the Company so as to inform them about the redressal mechanism availableto them against any kind of harassment. Your Directors state that during the financialyear under report there were no cases filed or compliant received from any employeepertaining to sexual harassment.
Presently the equity share capital of your Company is listed at the Bombay StockExchange Limited (Scrip Code: 535566). The Company's equity shares are available fortrading in demat form by all the investors on BSE which is having trading terminals invarious cities affording to the investors convenient access to trade and deal in theCompany's equity shares across the country.
The Company is regular in complying with the requirements of the ListingAgreement/Regulations and has duly paid the requisite Listing Fees to the Bombay StockExchange Limited.
26. Code of Conduct
The Board has laid down a Code of Conduct ("Code") for Board MembersManagerial Personnel and for Senior Management Employees of the Company. This Code hasbeen posted on the Company's website at http://kifsfinance.com/code-of-conduct-policy/.All the Board Members and Senior Management Personnel have affirmed compliance with thisCode. A declaration by the Managing Director to this effect forms part of the CorporateGovernance Report.
The Board has also laid down a Code of Conduct for Independent Directors pursuant toSection 149(8) and Schedule IV to the Companies Act 2013 via terms and conditions forappointment of Independent Directors which is a guide to professional conduct forIndependent Directors and has been uploaded on the website of the Company at following weblink:http://kifsfinance.com/wp-content/uploads/2013/03/Terms-of-appointment-of-Independent-Directors.pdf
27. Corporate Governance
Your Company practices a culture that is built on core values and ethical governancepractices and is committed to transparency in all its dealings. A Report on CorporateGovernance along with a Certificate from Statutory Auditors of the Company regardingcompliance of conditions of Corporate Governance as stipulated under provisions ofRegulation 34(3) and Schedule V of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 is annexed to this Report.
28. Management Discussion and Analysis Report
A detailed analysis of the Company's performance is made in the Management Discussionand Analysis Report which forms part of this Annual Report.
29. Compliance with the Reserve Bank of India Guidelines
The Company being a Non Banking Financial Company categorized as a Loan Companycontinues to comply with all the applicable regulations and guidelines issued by theReserve Bank of India from time to time.
30. Particulars regarding Conservation of Energy Technology Absorption and ForeignExchange Earnings and Outgo
The disclosures required to be made under Section 134(3)(m) of the Companies Act 2013read with Rule (8)(3) of the Companies (Accounts) Rules 2014 pertaining to theconservation of energy technology absorption and foreign exchange earnings and outgo arenot applicable to the Company as the Company being a Non Banking Financial Company isneither involved in any manufacturing processing activities nor any of its transactionsinvolves foreign exchange earnings and outgo.
31. Directors' Responsibility Statement
Pursuant to the provisions of Section 134(3)(c) of the Companies Act 2013 yourDirectors based on the representations received from the head of the various departmentsand after due inquiry confirm that:
a) in the preparation of the annual accounts the applicable accounting standards hadbeen followed along with proper explanation relating to material departures;
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 for the financial year ended on March 312016 and of the 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 the Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities;
d) the Directors had prepared the annual accounts on a going concern basis;
e) the Directors had 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 had devised proper systems to ensure compliance with the provisions ofall applicable laws and that such systems were adequate and operating effectively.
Your Directors take this opportunity to express their deep and sincere gratitude to theClients Customers and Shareholders of the Company for their trust and patronage as wellas to the various Bankers Reserve Bank of India Securities and Exchange Board of IndiaBombay Stock Exchange Government of India and other Regulatory Authorities for theircontinued co-operation support and guidance.
For and on behalf of the Board of Directors
KIFS Financial Services Limited
Rajesh P. Khandwala
(Chairman & Managing Director)
May 24 2016.