Lead Financial Services Limited
Your Directors have immense pleasure in presenting their 23rd Annual Reporton the business and operations of the Company and Audited Accounts for the Financial Yearended March 31 2016.
1. FINANCIAL RESULTS:
The Financial results of the Company during the period ended on 31st March2016 are as under:
(Rs in Lacs)
|PARTICULARS ||CURRENT YEAR ||PREVIOUS YEAR |
| ||(2015-16) ||(2014-15) |
|1. Total Income ||93.30 ||70.15 |
|Less: i) Operating Administrative & other Exp. ||75.51 ||19.41 |
|2. Earning before interest and depreciation || || |
|Less: i) Interest ||3 ||3 |
|ii) Depreciation ||9.47 ||18.63 |
|3. Profit before Extra-ordinary item ||5.32 ||29.11 |
|Add: Extra-ordinary item ||2.02 ||- |
|3. Profit before Tax ||7.34 ||29.11 |
|Less: provision for Tax || || |
|i) Current ||1.45 ||8.90 |
|ii) Deferred ||0.48 ||(0.02) |
|iii) Earlier year Tax ||.09 ||0.31 |
|iv) MAT Credit ||(1.45) ||- |
|4. Profit after Tax ||6.77 ||19.92 |
|Add: Balance of Profit as per last Balance Sheet ||95.31 ||79.49 |
|Less: Adjustment of depreciation on account of change in estimated life of fixed assets ||- ||(0.12) |
|Less: Transfer to Statutory Reserve ||(1.35) ||(3.98) |
|5. Balance available for appropriation ||121.55 ||114.77 |
2 . Dividend
Your Directors regret their inability to recommend any dividend in view of low profitsand requirement of the funds for expansion of business during the financialyear underreview.
3 . Performance Review
During the Financial year under review your company achieved total income of Rs. 93.30Lacs as compared to Rs.70.15 Lacs in the previous year. Net profit (after tax) for theyear is Rs. 6.77 Lacs as compared to net profit of Rs. 19.92 Lacs in the previous year.Your directors are undertaking the initiatives to improve the financial results in thecoming years.
4. Management And Discussion Analysis Industrial Structure and Development
The Indian economy has weathered many challenges successfully in recent times. Marketsare optimistic as a result of various policy measures announced or taken by theGovernment.
In FY 2015-16 the Government focused on its theme "Transform India". TheBudget for FY 2016-17 preferred fiscal prudence and stability over growth. The prioritiesof the Government were to provide additional resources for the vulnerable sections ofsociety to rural areas and for creating social and physical infrastructure. TheGovernment encouraged private and public spending but private investment is not likely torecover in FY 2016-17 as there is significant unutilized capacity and private sectorBalance Sheets are stretched. By maintaining fiscal deficit at 3.5% the Government hasprecluded the possibility of any direct fiscal stimulus. The positive effect of theGovernments fiscal discipline is that it has created conditions for the Reserve Bankof India ("RBI") to cut rates thereby indirectly benefiting the economy bybringing down the cost of borrowing for both the Government and the private sector. TheRBI started cutting rates in FY 2015-16 the transmission of which is likely to happen inFY 2016-17.
The banking system in India saw a major shift with the RBI ending forbearance in April2015 and through the Asset Quality Review process ensuring that banks were takingproactive steps to clean up their Balance Sheets by March 2017. In all adversity there isopportunity and as a result of the stressed bank Balance Sheets the NBFC sector has asignificant opportunity to grow. NBFCs do not have the NPA problem of the magnitude ofthat of the banks and are already operating under strict regulatory supervision. The NBFCsector is likely to report higher NPAs in the initial period as it moves to the 90+recognition norm but the sector as a whole will emerge stronger after the implementationof these initiatives. Additionally SARFAESI cover and a new bankruptcy code would makecollections through the judicial system much simpler.
A normal monsoon and further rate cuts by RBI are expected to facilitate rural andurban consumption. The year ahead will be challenging on many fronts credit quality andshifts in operating model to name a couple. Each individually and all of themcollectively have the ability to change the face of the financial services sector. TheNBFC sector appears to be best placed to take advantage and succeed in this changingenvironment.
Outlook Risk and Concern
The Outlook of the Company for the year ahead is to diversify risk and stabilize itsasset quality. Credit risk Market risk Operational risk and Liquidity risk are the keyrisks faced by the Company. The Company takes risk management seriously and in process toset the procedures and policies in the area for the assessment and management ofindividual risk categories. Except for some unforeseen and extreme event the Company iswell placed on the liquidity front and appropriate policies exist for underwriting creditrisk. The Company endeavors to continuously learn and modifies its policies to manage theaforementioned risks.
Opportunities and threats
There are several large and profitable opportunities for NBFCs and the sector plays animportant role in the Indian financial system. The key is for the NBFC sector to grow in aprudential manner while focusing on financial innovation and in having in place theadequate risk management systems and procedures before entering into risky areas.
It will be critical to retain talent at the right cost for effectively building a highperformance organization with an engaged and young workforce. Adequate funding at theright cost and tenure will be critical to achieve business growth.
Adequacy of Internal Control System
The Companys internal control system is designed to ensure operationalefficiency protection and conservation of resources accuracy and promptness in financialreporting and compliance with laws and regulations. The internal control system issupported by qualified personnel for reviewing the adequacy and efficacy of theCompanys internal controls including its systems and processes and compliance withregulations and procedures. The Companys internal control system is commensuratewith the size nature and operations of the Company.
Operational Results 2014-15 versus 2015-16
(Rs. in Lacs)
|Particulars ||2014-15 ||2015-16 |
|Total Revenue ||70.15 ||93.30 |
|Interest & Financial Charges ||3.02 ||3.01 |
|Expenses ||19.40 ||65.50 |
|Depreciation ||18.62 ||9.47 |
|Total Expenditure ||41.04 ||87.98 |
|Profit Before Tax (PBT) ||29.11 ||7.34 |
|Provision for Tax ||9.18 ||.57 |
|Profit after Tax (PAT) ||19.92 ||6.77 |
|Equity Capital ||330 ||330 |
|Reserves & Surplus ||114.77 ||121.55 |
|Earnings Per Share ||0.60 ||0.21 |
5. Segment wise Performance:
Company operates only in one segment.
6. Material Changes:
There are no material changes and commitments affecting the financial position of thecompany between the end of financial year of your Company and the date of DirectorsReport.
7. Details in respect of adequacy of internal financial controls with reference to theFinancial Statements:
The Company has in place adequate internal financial controls with reference tofinancial statements. During the year such controls were checked and no reportablematerial weaknesses were observed.
8. Details of Subsidiary/Joint Ventures/Associate Companies
|The names of companies which have become or ceased to be its Subsidiaries joint ventures or associate companies during the year. ||Not Applicable |
|Performance & Financial position of each of the subsidiaries associates and joint venture companies included in the consolidated financial statement. ||Not Applicable |
The Company did not hold any public deposits at the beginning of the year nor has itaccepted any public deposits during the year under review.
10 . Auditors
M/s G.C. Sharda & Co. Chartered Accountants New Delhi have been appointed asstatutory auditors of the company at the 21st Annual General Meeting held on29.09.2014 for a period of three years subject to ratification by members at everyconsequent Annual General Meeting. Therefore ratification of their re-appointment ofStatutory Auditors M/s G.C. Sharda & Co. being eligible is being sought from themembers of the Company at the ensuing AGM for financial year 2016-17.
Pursuant to the provisions of Section 204 of the Companies Act 2013 and The Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Company hasappointed M/s Pooja Anand & Associates Company Secretaries to undertake thesecretarial audit of the company.
M/s Alok Subhash & Co. Chartered Accountants performs the duties of internalauditors of the company and their report is reviewed by the audit committee from time totime
11. Auditors Report
The observations in the Auditors Report are dealt in the notes forming part ofaccounts at appropriate places and the same being self explanatory no further comment isconsidered necessary.
12. Secretarial Audit Report
A Secretarial Audit Report in Form_MR-3 given by Mr.Mukul Tyagi of M/s Pooja Anand& Associates Company Secretary in whole time practice is annexed with the reportinAnnexure 1.
Regarding the remarks of Secretarial Auditor the Board of the Company explained thatit is in process to appoint suitable Key Managerial Person(s) in compliance withprovisions of Section 203 of Companies Act 2013 read with Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014.
A) Changes in Directors and Key Managerial Personnel
Mr. Padam Chandra Bindal Director of the Company retires by rotation at theforthcoming Annual General Meeting and being eligible offers himself for re-appointment.
With a recommendation of Nomination and Remuneration Committee the Board ofDirectors of the Company has proposed to revise the maximum remuneration payable to Mr.Vijay Kumar Manager of the Company upto Rs. 20000 per month with effect from 1stOctober 2016 for the remaining tenure of his appointment till 20th December 2018.
Mr Chetan Sharma has been appointed as a Company Secretary and Compliance Officer ofthe Company w.e.f.21.07.2016.
B) Declaration by an Independent Director(s) and re- appointment if any
At the 21st Annual General Meeting of the company held on 29th September2014 the company had appointed the existing Directors Mr. Pradeep Kumar Jain (DIN00303976) and Mr. Sanjay Kumar Aggarwal (DIN 00832074) as independent directors under theCompanies Act 2013 for 5 consecutive years for a term upto 28th September2019.
The Company has received necessary declaration from each Independent Director of theCompany under Section 149(7) of the Companies Act 2013 that the Independent Directors ofthe Company meet with the criteria of their Independence laid down in Section 149(6).
C) Evaluation of the Board its Committees and Individual Directors
The Company has devised a Policy for performance evaluation of Independent DirectorsBoard Committees and other individual Directors which includes criteria for performanceevaluation of the non-executive directors and executive directors.
Pursuant to the provisions of the Act and the corporate governance requirements asprescribed by Securities and Exchange Board of India (listing obligations and DisclosureRequirement) Regulation 2015 (SEBI Listing Regulation) the Board has carried out anannual evaluation of its own performance the individual Directors (including theChairman) as well as an evaluation of the working of all Board Committees. The Board ofDirectors was assisted by the Nomination and Remuneration Committee. The performanceevaluation was carried out by seeking inputs from all the Directors/Members of theCommittees as the case may be and discussions with the Directors by the Chairman of theNRC.
14. Number of meetings of the Board of Directors
During the year Eight(8) Board Meetings and one independent directors meeting washeld. The Details of which are given in Corporate Governance Report. The provisions ofCompanies Act 2013 and (SEBI Listing Obligation and Disclosure Requirement) Regulation2015 were adhered to while considering the time gap between two meetings.
15. Committee of the Board
A. Audit Committee
|i Composition of Audit Committee ||The Audit Committee comprises two Independent Directors namely Mr. Pradeep Kumar Jain (Chairman) Mr. Sanjay Kumar Agarwal and Mr. Padam Chandra Bindal Non-executive as other members. |
|ii. Reasons for not accepting the recommendations of the Audit Committee if any ||All the recommendations made by the Audit Committee were accepted by the Board. |
B. Nomination & Remuneration Committee
The nomination and remuneration committee of the Company is constituted in line withthe provisions of Regulation 19 of SEBI Listing Regulations read with Section 178 of theAct.
The policy on directors appointment and remuneration including criteria fordetermining qualifications positive attributes independence of a director and othermatters provided under sub-section (3) of section 178 is available on our website i.e.www.leadfinancialservices.in .
The broad terms of above mentioned policy has also been disclosed in the corporategovernance report which forms part of this report.
16. Vigil Mechanism and Whistle Blower Policy:
The Company promotes ethical behaviour in all its business activities and has put inplace a mechanism for reporting illegal or unethical behaviour. The Company has a Vigilmechanism and Whistle blower policy under which the employees are free to reportviolations of applicable laws and regulations and the Code of Conduct. Employees may alsoreport to the Chairman of the Audit Committee. During the financial year no employee wasdenied access to the Audit Committee.
17. Particulars of Loans Guarantees or Investments under section 186
The provisions of Section 186 of the Act pertaining to granting of loans to any personsor bodies corporate and giving of guarantees or providing security in connection with theloan to any other bodies corporate or persons are not applicable to the Company as theCompany is a Non Banking Financial Company.
18. Corporate Social Responsibility (CSR)
Section 135 of the Companies Act 2013 is not applicable to the company.
19. Related Party Transactions :
Particulars of Contracts or Arrangements with Related parties referred to in Section188(1) in Form AOC- 2 (Annexure-2)
20. Share Capital
The paid-up Equity Share Capital of the Company as on March 31 2015 was Rs.33000000. There was no change in the Authorised or Paid-up Capital or SubscribedCapital during FY 2015-16.
21. Conservation of Energy Technology Absorption and Foreign Exchange Earnings andOutgo
The details of conservation of energy technology absorption foreign exchange earningsand outgo are as follows:
A) Conservation of energy:
|(i) the steps taken or impact on conservation of energy; ||N.A. |
|(ii) the steps taken by the company for utilising alternate sources of energy; ||N.A. |
|(iii) the capital investment on energy conservation equipments; ||N.A. |
|B) Technology absorption: || |
|(i) the efforts made towards technology absorption; ||N.A. |
|(ii) the benefits derived like product improvement cost reduction product development or import substitution; ||N.A. |
|(iii) in case of imported technology (imported during the last three years reckoned from the beginning of the financial year)- ||N.A. |
|(a) the details of technology imported; ||N.A. |
|(b) the year of import; ||N.A. |
|(c) whether the technology been fully absorbed; ||N.A. |
|(d) if not fully absorbed areas where absorption has not taken place and the reasons thereof; and ||N.A. |
|(iv) the expenditure incurred on Research and Development. ||N.A. |
(C) Foreign exchange earnings and Outgo:
1. Activities relating to exports; initiative taken to increase exports;
|2. Total foreign exchange used and earned. ||NIL |
|The information of foreign exchange earnings and outflow is furnished in notes to accounts. ||NIL |
22. Extract of the annual return
As required pursuant to section 92(3) of the CompaniesAct2013 and rule 12(1) of theCompanies (Management and Administration) Rules 2014 an extract of annual return in MGT9 is annexed (Annexure- 3)
23. Regulatory Action:
There are no significant and material orders passed by the regulators or courts ortribunals impacting the going concern status and operations of the Company in future.
24. Managerial Remuneration:
The information required under section 197 of the Act read with rule 5(1) of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 is mentionedin (Annexure 4) No employees is in receipt of remuneration as specified undersection 197(12) of the Act read with Rule 5(2) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014
25. Corporate Governance And Shareholders Information:
Your Company has taken adequate steps to adhere to all the stipulations laid down inClause 49 of the Listing agreement (Listing Agreement) of the Company with the stockexchanges for the period from 1st April 2015 to 30th November 2015 and as per the relevantprovisions of Securities and Exchange Board of India (Listing Obligations and DisclosureRequirements) Regulations 2015 (SEBI Listing Regulation) for the period from 1st December2015 to 31st March 2016. A report on Corporate Governance is included as a part of thisAnnual Report.
Certificate from the Statutory Auditors of the company confirming the compliance withthe conditions of Corporate Governance is enclosed to this report.
26. Directors Responsibility Statement
The Directors Responsibility Statement referred to in clause (c) of sub-section(3) of Section 134 of the Companies Act 2013 confirm that
(a) in the preparation of the annual accounts the applicable accounting standards havebeen followed along with proper explanation relating to material departures;
(b) 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 and loss of the company for that period;
(c) the directors have taken proper and sufficient care 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;
(d) the directors have prepared the annual accounts on a going concern basis; and
(e) the directors have laid down internal financial controls to be followed by thecompany and that such internal financial controls are adequate and were operatingeffectively.
(f) the directors have devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.
We thank our clients investors and bankers for their continued support during theyear. We place on record our appreciation of the contribution made by employees at alllevels. We thank the Government of India particularly the Securities and Exchange Boardof India (SEBI) Stock Exchanges the State Governments and other governmentagencies/authorities for their support and look forward to their continued support infuture.
Your Companys employees are the keys for its attaining new heights. YourDirectors place on record their deep appreciation of the commitment and professionalismdisplayed by them.
We also value the support provided by the Companys Shareholders and we lookforward to your continuing future support.
For and on behalf of the Board For Lead Financial Services Limited
| ||P.C. BINDAL ||KUSHA BINDAL |
|Place : New Delhi ||CHAIRMAN ||DIRECTOR |
|Date : 12.08.2016 ||DIN: 00004769 ||DIN: 06952708 |