The Members of
KJMC Financial Services Limited
Your Directors have pleasure in presenting the 28th Annual Report together with theaudited financial statement of the Company for the financial year ended March 31 2016.
The performance of the Company for the financial year ended March 31 2016 issummarized below:
(Rs. in "000")
| ||Standalone ||Consolidated |
|Particulars ||Year Ended March 31 2016 ||Year Ended March 31 2015 ||Year Ended March 31 2016 ||Year Ended March 31 2015 |
|Total Income ||22476 ||13379 ||23696 ||14800 |
|Total Expenses ||16309 ||12289 ||17524 ||13287 |
|Profit before Tax Less: Provision for Tax ||6167 ||1090 ||6172 ||1513 |
|-Current Tax ||Nil ||Nil ||7 ||41 |
|- Deferred Tax ||(145) ||(1193) ||(145) ||(1193) |
|- MAT Credit ||Nil ||Nil ||28 ||(40) |
|- Prior period taxes ||Nil ||472 ||(23) ||456 |
|Profit for the Year before Share in Associates' profit / Loss ||6312 ||1811 ||6305 ||2249 |
|Share in Associates' Profit/(Loss) ||NA ||NA ||14 ||(56) |
|Profit / (Loss) After Tax ||6312 ||1811 ||6319 ||2193 |
|Add: Surplus b/f ||19950 ||18754 ||18317 ||16739 |
|Fixed Assets not having remaining useful life as on 1st April 2014 ||Nil ||(208) ||Nil ||(208) |
|Disposable Profits ||26262 ||20357 ||24636 ||18724 |
|Appropriations towards: || || || || |
|Special Reserve ||1263 ||362 ||1263 ||362 |
|General Reserve ||158 ||45 ||158 ||45 |
|Balance carried forward ||24841 ||19950 ||23215 ||18317 |
|EPS || || || || |
|-Basic ||1.43 ||0.48 ||1.44 ||0.58 |
|-Diluted ||1.32 ||0.39 ||1.32 ||0.47 |
On standalone basis your Company earned the gross income of Rs. 224.76 Lakhs asagainst Rs. 133.79 Lakhs in the previous year. The total expenditure during the year underreview was Rs. 163.09 Lakhs as against Rs. 122.89 Lakhs in the previous year. The NetProfit after tax was Rs. 63.12 Lakhs as against Rs. 18.11 Lakhs in the previous year.
On consolidated basis your Company earned the gross income of Rs. 236.96 Lakhs asagainst Rs. 148.00 Lakhs in the previous year. The total expenditure during the year underreview was Rs. 175.24 Lakhs as against Rs. 132.87 Lakhs in the previous year. The NetProfit after tax was Rs. 63.19 Lakhs as against Rs. 21.93 Lakhs in the previous year.
TRANSFER TO RESERVES
The Company proposes to transfer Rs. 1.58 Lakhs to the general reserve and Rs. 12.63Lakhs to Special Reserves out of the amount available for appropriation and an amount ofRs. 248.41 Lakhs is proposed to be retained in the profit and loss account.
During the reporting period your Company has allotted 425000 equity shares of Rs.10/- each at a price of Rs. 20/- per share pursuant to Conversion of 42500 0% CompulsoryConvertible Preference Shares allotted on February 28 2014.
During the reporting period your Company has allotted 150000 equity shares of Rs.10/- each at a price of Rs. 25/- per share pursuant to Conversion of 15000 0% CompulsoryConvertible Preference Shares allotted on March 25 2015.
In order to conserve the resources for operations your Directors regret theirinability to recommend any dividend for the year under review.
RBI PRUDENTIAL NORMS
Since the Company does not accept and hold any public deposits the Non- BankingFinancial (Non Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank)Directions 2007 are not applicable to the Company as regard to capital adequacyrequirement.
ALTERATION IN THE MAIN OBJECT CLAUSE OF THE MEMORANDUM OF ASSOCIATION
During the financial year 2015-16 your Company has altered the main object clause ofthe Memorandum of Association of the Company in order to more clearly reflect varioustypes of NBFC activities such as lending borrowing guaranteeing investmentsecuritization assignment and re-assignment currency and interest rate swaps mezzaninefinancing derivatives syndicated and consortium finance etc.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
According to the Companies Act 2013 at least twothirds of the total number ofDirectors (excluding Independent Directors) shall be liable to retire by rotation. Forthis purpose considering the composition of the Board of Directors Mr. Rajnesh JainDirector of the Company is liable to retire by rotation at the ensuing Annual GeneralMeeting and being eligible offer himself for reappointment. Necessary resolution for thispurpose is being proposed in the notice of the ensuing annual general meeting for theapproval of the members.
The Independent Directors have submitted the Declaration of Independence as requiredpursuant to section 149(7) of the Companies Act 2013 stating that they meet the criteriaof Independence as provided in sub-section (6).
NUMBER OF MEETINGS
a. Board Meeting
The Board of Directors met Four (4) times in the financial year. The details of theBoard Meetings and the attendance of the Directors are provided in the CorporateGovernance Report which forms part of this report.
b. Audit Committee
During the year Four (4) Audit Committee Meetings were convened and held. The detailspertaining to composition of Audit Committee and the attendance of the Audit Committeemembers are provided in the Corporate Governance Report which forms part of this report.
c. Nomination and Remuneration Committee
During the year One (1) Nomination and Remuneration Committee Meeting were convenedand held. The details pertaining to composition of Nomination and Remuneration Committeeand the attendance of the Nomination and Remuneration Committee members are provided inthe Corporate Governance Report whichforms part of this report.
d. Share Transfer and Stakeholders Relationship Committee
During the year Nine (9) Share Transfer and Stakeholders Relationship CommitteeMeetings were convened and held. The details pertaining to composition of Share Transferand Stakeholders Relationship Committee and the attendance of the Share Transfer andStakeholders Relationship Committee members are provided in the Corporate GovernanceReport which forms part of this report.
e. Credit and Investment Committee
During the year Seven (7) Credit and Investment Committee Meetings were convened andheld. The details pertaining to composition of Credit and Investment Committee and theattendance of the Credit and Investment Committee members are provided in the CorporateGovernance Report which forms part of this report.
The Board of Directors has carried out an annual evaluation of its own performanceBoard committees and Individual Directors pursuant to the provisions of the Companies Act2013 and the Corporate Governance requirements as prescribed by Securities and ExchangeBoard of India ("SEBI") under the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015.
The performance of the Board was evaluated by the Board after seeking inputs from allthe Directors on the basis of the criteria such as the Board composition and structureeffectiveness of board processes information and functioning etc.
The performance of the committees was evaluated by the board after seeking inputs fromthe committee members on the basis of the criteria such as the composition of committeeseffectiveness of committee meetings etc.
The Board and the Nomination and Remuneration Committee reviewed the performance of theindividual Directors on the basis of the criteria such as the contribution of theindividual Director to the Board and committee meetings. In addition the Chairman wasalso evaluated on the key aspects of his role.
In a separate meeting of Independent Directors performance of non-IndependentDirectors performance of the board as a whole and performance of the Chairman wasevaluated taking into account the views of executive directors and non-executiveDirectors.
POLICY ON DIRECTORS' APPOINTMENT AND REMUNERATION
The Company's policy on Directors' appointment and remuneration and other mattersprovided in Section 178(3) of the Companies Act 2013 has been disclosed in the CorporateGovernance report which forms part of the Directors' report.
ADEQUACY OF INTERNAL CONTROL
The details in respect of internal financial control and their adequacy are included inthe Management Discussion & Analysis which forms part of this report.
The Company being a Non-Deposit Accepting Non-Banking Finance Company has not acceptedany deposits from the public during the year under review and shall not accept anydeposits from the public without obtaining prior approval of the Reserve Bank of India(RBI).
In accordance with Section 139 of the Companies Act 2013 and the rules made thereunder M/s. K. S. Aiyar & Co. Mumbai the Statutory Auditors of your Company has beenappointed as the Statutory Auditors of the Company in the 26th Annual General Meeting ofthe Company for a period of five years (subject to ratification of their appointment atevery AGM).
They have confirmed their eligibility under Section 141 of the Companies Act 2013 andthe Rules framed there under for appointment as Auditors of the Company.
The Auditors Report for the year under review does not contain any qualification.
Pursuant to the provisions of Section 204 of the Companies Act 2013 read withCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 the Companyhas appointed M/s. S.K. Jain & Associates a firm of Company Secretaries in Practiceto undertake the Secretarial Audit of the Company. The Secretarial Audit Report does notcontain any qualifications reservations or adverse remarks. The Secretarial Audit Reportis annexed and forms part of this report.
SUBSIDIARY AND ASSOCIATE COMPANIES
During the year the Company has incorporated a wholly owned subsidiary namely KJMCTrading & Agency Limited.
As on March 31 2016 the Company has three wholly owned subsidiaries namely KJMC AssetManagement Company Limited KJMC Investment Trust Company Limited and KJMC Trading &Agency Limited and two associate companies namely KJMC Realty Private Limited and KJMCPlatinum Builders Private Limited within the meaning of Section 2(6) of the Companies Act2013 ("Act"). There has been no material change in the nature of the business ofthe subsidiaries and associates.
Pursuant to provisions of Section 129(3) of the Act a statement containing salientfeatures of the financial statements of the Company's subsidiaries in Form AOC-1 isannexed and forms part of this report.
In accordance with third proviso of Section 136(1) of the Companies Act 2013 theAnnual Report of the Company containing therein its standalone and the consolidatedfinancial statements has been placed on the website of the Company www.kjmc.com. Furtheras per fourth proviso of the said section audited annual accounts of each of thesubsidiary companies have also been placed on the website of the Company www.kjmc.com.Shareholders interested in obtaining a copy of the audited annual accounts of thesubsidiary companies may write to the Company Secretary at the Company's registeredoffice.
DIRECTORS' RESPONSIBILITY STATEMENT UNDER SECTION 134 OF THE COMPANIES ACT 2013
Pursuant to Section 134 (5) of the Companies Act 2013 the Board of Directors to thebest of their knowledge and ability confirm that:
a. in the preparation of the annual financial statements for the year ended March 312016 the applicable accounting standards have been followed along with proper explanationrelating to material departures if any;
b. they have selected such accounting policies and applied them consistently and madejudgment and estimates that are reasonable and prudent so as to give a true and fair viewof the state of affairs of the Company as at the end of the financial year and of theprofit of the Company for that period;
c. they have taken proper and sufficient care to the best of their knowledge andability for the maintenance of adequate accounting records in accordance with theprovisions of the Companies Act 2013 for safeguarding the assets of the Company and forpreventing and detecting fraud and other irregularities;
d. they have prepared the annual accounts for the financial year ended March 31 2016on a going concern basis;
e. they have laid down internal financial controls to be followed by the Company andsuch internal financial controls are adequate and operating effectively;
f. they have devised proper systems to ensure compliance with the provisions of allapplicable laws and that such systems were adequate and operating effectively.
Pursuant to Regulation 15(2) of SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 compliance with the corporate governance provisions are not applicableto your Company as the Company's paid up Equity Share Capital does not exceed of Rs. 10Crores and net worth does not exceed of Rs. 25 Crores as on March 31 2016.
To maintain highest standards of Corporate Governance a separate section on CorporateGovernance is annexed and forms part of this report.
EXTRACT OF ANNUAL RETURN
The extract of the Annual Return as provided under sub-section (3) of Section 92 in theForm MGT 9 for the financial year under review is annexed and forms part of this report.
RELATED PARTY TRANSACTIONS
All related party transactions that were entered into during the financial year were onan arm's length basis and were in the ordinary course of business. There are no materiallysignificant related party transactions made by the Company with Promoters Directors KeyManagerial Personnel or other designated persons which may have a potential conflict withthe interest of the Company at large.
All Related Party Transactions are placed on a quarterly basis before the AuditCommittee and also before the Board for approval.
Information on transactions with related parties pursuant to Section 134(3)(h) of theAct read with rule 8(2) of the Companies (Accounts) Rules 2014 in Form AOC-2 is annexedand forms part of this report.
PARTICULARS OF LOANS GUARANTEES AND INVESTMENTS
The particulars of loans guarantees and investments have been disclosed in thefinancial statements.
MANAGEMENT DISCUSSION AND ANALYSIS
A report on the Management Discussion and Analysis for the financial year under reviewis annexed and forms part of this report.
LISTING OF SHARES
Equity Shares of the Company are listed with BSE Limited. During the reporting periodyour Company has allotted 575000 equity shares of Rs. 10/- each issued on conversion of57500 0%CCPS and the same got listed in BSE Limited. The Annual listing fee for thefinancial year 2016-17 has been paid to the BSE Limited (BSE).
PARTICULARS OF EMPLOYEES
The information required under Section 197 of the Companies Act 2013 read with rule5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014are given below:
i. The ratio of the remuneration of each Director to the median remuneration of theemployees of the company for the financial year 2015-16;
|Non-executive Directors ||Ratio to median remuneration |
|Mr. Inderchand Jain ||0.04 |
|Mr. S.C. Aythora ||0.05 |
|Mr. Nitin Kulkarni ||0.05 |
|Mrs. Aditi Jain ||0.03 |
|Mr. Girish Jain ||0.04 |
|Executive Director || |
|Mr. Rajnesh Jain ||5.65 |
ii. The percentage increase in remuneration of each Director
Chief Financial Officer Company Secretary if any in the financial year;
|Name ||Designation ||% increase in remuneration in the financial year i.e. 2015-16 |
|Mr. Inderchand Jain ||Non Executive Director ||- |
|Mr. S.C. Aythora ||Non Executive Director ||- |
|Mr. Nitin Kulkarni ||Non Executive Director ||- |
|Mr. Girish Jain ||Non Executive Director ||- |
|Mr. Rajnesh Jain ||Whole Time Director ||- |
|Mrs. Aditi Jain ||Non Executive Director ||- |
|Ms. Sankari Muthuraj* ||Company Secretary ||- |
|Mr. Kartik Konar ||Chief Financial Officer ||9.41 |
Ms. Sankari Muthuraj was appointed on March 25 2015.
iii. The percentage increase in the median remuneration of employees in the financialyear: 5.90%
iv. The number of permanent employees on the rolls of Company as on March 31 2016:8
v. Average percentile increase already made in the salaries of employees other than themanagerial personnel in the last financial year and its comparison with the percentileincrease in the managerial remuneration and justification thereof and point out if thereare any exceptional circumstances for increase in the managerial remuneration:
The average percentage increase in the salaries of employees other than managerialpersonnel in the financial year 2015-16 was around 9.5%. However there was no increase inthe salaries of Whole Time Director (Managerial Personnel) during the year. The incrementsgiven to employees are based on their potential performance and contribution which isalso benchmarked against applicable industry norms.
vi. Affirmation that the remuneration is as per the remuneration policy of the Company:
The Company affirms remuneration is as per the remuneration policy of the Company.
vii. There are no employees falling within the purview of Rule 5(2) of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 no such details arerequired to be given.
PARTICULARS OF CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION
Since the Company is a Financial Services Company the details required under Section134 of the Companies Act 2013 are not applicable. However Company believes in conservingthe natural resources and uses CFL and LED Lighting in the office premises which has lowenergy consumption.
FOREIGN EXCHANGE EARNINGS AND OUTGO
The Company earned Rs. Nil in foreign currency in the current financial year ascompared to Rs. Nil in the previous financial year and incurred expenditure of Rs. 6.92Lakhs in the current year as compared to Rs. 8.42 Lakhs in the previous year.
The Company's assets have been adequately insured.
The details in respect of risks and concerns are included in the Management Discussion& Analysis which forms part of this report.
WHOLE TIME DIRECTOR & CHIEF FINANCIAL OFFICER CERTIFICATION
Certificate from Mr. Rajnesh Jain Whole Time Director and Mr. Kartik Konar ChiefFinancial Officer as specified in Part B of Schedule II of the SEBI (Listing Obligationand Disclosure Requirements) Regulations 2015 for the financial year ended March 312016 was placed before the Board of Directors of the Company at its meeting held on May19 2016.
The Board of Directors takes the opportunity to express its sincere appreciation forthe support and cooperation from its members Reserve Bank of India banks andStatutory and Regulatory Authorities.
The Board also wishes to place on record their sincere appreciation of the contributionmade by the executives and employees at all levels for their dedication and commitment tothe Company throughout the year.
| ||For and on behalf of the Board of Directors |
| ||For KJMC Financial Services Ltd. |
| ||(Inderchand Jain) |
| ||Chairman |
|Place: Mumbai || |
|Date: August 10 2016 || |