Lead Financial Services Limited
Your Directors have immense pleasure in presenting their 24thAnnual Reporton the business and operations of the Company and Audited Accounts for the Financial Yearended March 31 2017.
1. Financial Performance (Standalone)
The Financial results of the Company during the period ended on 31st March2017 are as under:
| || ||(Rs in Lacs) |
|PARTICULARS ||CURRENT YEAR (2016-17) ||PREVIOUS YEAR (2015-16) |
|1. Total Income ||408.40 ||93.30 |
|Less : i) Operating Administrative & other Exp. ||354.63 ||75.51 |
|2. Earning before interest and depreciation || || |
|Less : i) Interest ||3.12 ||3 |
|ii) Depreciation ||0.37 ||9.47 |
|3. Profit before Extra-ordinary item ||50.27 ||5.32 |
|Add: Extra-ordinary item ||- ||2.02 |
|3. Profit before Tax ||50.27 ||7.34 |
|Less : provision for Tax || || |
|i) Current ||9.96 ||1.45 |
|ii) Deferred ||(2.61) ||0.48 |
|iii) Earlier year Tax ||- ||.09 |
|iv) MAT Credit ||- ||(1.45) |
|4. Profit after Tax ||42.92 ||6.77 |
|Add : Balance of Profit as per last Balance Sheet ||100.74 ||95.31 |
|Less : Adjustment of depreciation on account of change in estimated life of fixed assets ||- ||- |
|Less : Transfer to Statutory Reserve ||(8.59) ||(1.35) |
|5. Balance available for appropriation ||164.47 ||121.55 |
|6. Equity Capital ||330.00 ||330.00 |
|7. Earnings Per Share ||1.30 ||0.21 |
2 . Dividend
Your Directors regret their inability to recommend any dividend in view of requirementof the funds for expansion of business during the financial year under review.
3. Reserves and surplus
Reserves and Surplus as at 31st March 2017 is Rs. 16446866/- . TheCompany has transferred an amount of Rs 858460/- to the Statutory Reserve during theyear under review.
4. Management And Discussion Analysis Industrial Structure and Development
The year proved that analysts and markets often get it completely wrong. The keysurprises globally were Brexit results of the US elections and impact of Demonetisationof the largest democracy in the world. It is heartening to note that even in the weakglobal backdrop our economy remains avisible bright spot. The macro economic conditionsof India are amongst the best they have been inrecent times.
This year the incumbent Government pushed ahead with its reform agenda backed by keywins in the State elections. The outcome of the State elections pushed the equity marketsto an all time high in March 2017 and the Rupee witnessed considerable relativestrengthening in the current fiscal. The top three reforms during the current fiscal wereDemonetisation Goods and Services Tax and operationalisation of the Monetary PolicyCommittee.
The new Governor of the RBI cut rates by 25 bps in his first policy but has since heldrates given that the inflation pressures are likely to be exerted by a reviving commoditycycle and global risks to the Indian economy. On the fiscal front our country's positionhas improved helped mainly by controlled spending and higher GDP to Tax ratio. The lowcrude prices and consequently lower subsidies and higher cesses played an important partin the fiscal strength demonstrated by the Government.
On the interest rate front globally the Federal Reserve Bank raised rates for thefirst time in December 2016 and indicated that they could further raise rates upto 3times in the calendar year 2017. Closer home the 10-year Government Securities ratesdeclined by approximately 125 bps.
The declining interest rates in India were helped by easing liquidity which the RBImopped up in the course of the year through the Market Stabilisation Scheme in the latterpart of the financial year. The outlook on interest rates is mixed as the RBI will needto balance growth objectivesespecially post Demonetisation with Inflation targeting. FY2017-18 may provide some pockets forrate reduction but the key determinants will be themonsoon and uptick in commodity and crudeprices driven largely by artificial supplyconstraints than demand side.
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 Company's internal control system is designed to ensure operational efficiencyprotection and conservation of resources accuracy and promptness in financial reportingand compliance with laws and regulations. The internal control system is supported byqualified personnel for reviewing the adequacy and efficacy of the Company's internalcontrols including its systems and processes and compliance with regulations andprocedures. The Company's internal control system is commensurate with the size natureand operations of the Company.
During the Financial year under review your company achieved total income of Rs.408.40 Lacs as compared to Rs. 93.30 Lacs in the previous year. Net profit (after tax) forthe year is Rs. 42.92 Lacs as compared to net profit of Rs. 6.77 Lacs in the previousyear. Your directors are undertaking the initiatives to improve the financial results inthe coming years.
Segment wise Performance:
Company operates only in one segment.
5. 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 Director'sReport.
6. 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 Financial year such controls were checked and noreportable material weaknesses were observed.
7. 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.
9 . Auditors
M/s G.C. Sharda & Co. Chartered Accountants New Delhi have been appointed asstatutory auditors of the company at the 21stAnnual General Meeting held on29.09.2014 for a period of three years subject to ratification by members at everysubsequent Annual General Meeting. At the conclusion of the ensuing AGM M/s G.C. Sharda& Co would be completing a period of three years as Statutory Auditors of the Companywhich is the prescribed tenor as per the provisions of the Act and the applicable Rulesframed thereunder.
Accordingly based on the recommendation of the Audit Committee the Board of Directorsof the Company had at its Meeting held on August 12 2017 proposed the appointment of(BGG & Associates Chartered Accountants (ICAI Firm Registration Number: 016874N) asthe Statutory Auditors of the Company for a term of five consecutive years commencing fromthe conclusion of the ensuing 24th AGM up to the conclusion of the 29thAGM of the company to be held in 2022 for the approval of the Members of the Company atthe ensuing AGM and ratification of their appointment at every AGM.
BGG & Associates have expressed their willingness to act as the Statutory Auditorsof the Company and have further confirmed that if appointed the said appointment wouldbe in conformity with the provisions of Section 139 read with Section 141 of the Actalong with the Rules made thereunder.
The Board commends the appointment of BGG & Associates as Statutory Auditors of theCompany. The Members of the Company may wish to refer to the accompanying Notice of theAGM of the Company.
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.
Ms Seema Gupta Chartered Accountant performs the duties of internal auditors of theCompany and their report is reviewed by the audit committee from time to time
10. Auditors' Report
The observations in the Auditor's Report are dealt in the notes forming part ofaccounts at appropriate places and the same being self explanatory no further comment isconsidered necessary.
11. 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
Ms.Kusha Bindal Director of the Company retires by rotation at the forthcomingAnnual General Meeting and being eligible offers herself for re-appointment.
Mr Chetan Sharma who was appointed as a Company Secretary and ComplianceOfficer of the Company w.e.f. 21.07.2016 has resigned w.e.f. 29.04.2017.
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 theprovisions of the Act and the corporate governance requirements as prescribed bySecurities and Exchange Board of India (Listing Obligations and DisclosureRequirements)Regulations 2015 ("SEBI Listing Regulations") the Board hascarried out an annual evaluation of its own performance the individual Directors(including the Chairman) as well as an evaluation of the working of all Board Committees.The Board of Directors was assisted by the Nomination and Remuneration Committee. Theperformance evaluation was carried out by seeking inputs from all the Directors/Members ofthe Committees as the case may be and discussions with the Directors by the Chairman ofthe NRC.
13. Number of meetings of the Board of Directors
During the year Seven(7) Board Meetings and one independent directors' meeting washeld. The Details of which are given in Corporate Governance Report. The provisions ofCompanies Act 2013 and Securities and Exchange Board of India (Listing Obligations andDisclosure Requirements)Regulations 2015 were adhered to while considering the time gapbetween two meetings.
14. 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.
15. 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.
16. 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.
17. Corporate Social Responsibility (CSR)
Section 135 of the Companies Act 2013 is not applicable to the company.
18. Related Party Transactions :
Particulars of Contracts or Arrangements with Related parties referred to in Section188(1) are mentioned in Form AOC- 2 (Annexure 2) 19. Share Capital
The paid-up Equity Share Capital of the Company as on March 31 2017 was Rs.33000000/- There was no change in the Authorised or Paid-up Capital or SubscribedCapital during FY 2016-17.
20. 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; development of new export markets for products services and export plans. ||NIL |
|2. Total foreign exchange used and earned. || |
|The information of foreign exchange earnings and outflow is furnished in notes to accounts. ||NIL |
21. Extract of the annual return
Pursuant to section 92(3) of the Companies Act 2013 and rule 12(1) of the Companies(Management and Administration) Rules 2014 an extract of annual return in MGT 9 isannexed (Annexure- 3)
22. 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.
23. 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 5) 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
24. Corporate Governance And Shareholders Information:
Your Company has taken adequate steps to adhere to all the stipulations laid down inprovisions of Securities and Exchange Board of India (Listing Obligations and DisclosureRequirements) Regulations 2015 (SEBI Listing Regulation). A report on CorporateGovernance is included as a part of this Annual Report.
Certificate from the Statutory Auditors of the company confirming the compliance withthe conditions of Corporate Governance is enclosed to this report.
25. 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 thepreparation of the annual accounts the applicable accounting standards have been followedalong with proper explanation relating to material departures;
(b) the directors have selected such accounting policies and applied themconsistently and made judgments and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of the company at the end of thefinancial year and of the profit and loss of the company for that period; (c) thedirectors have taken proper and sufficient care for the maintenance of adequate accountingrecords in accordance with the provisions of this Act for safeguarding the assets of thecompany and for preventing and detecting fraud and other irregularities; (d) thedirectors have prepared the annual accounts on a going concern basis; and (e) thedirectors have laid down internal financial controls to be followed by the company andthat such internal financial controls are adequate and were operating effectively.
(f) the directors have devised proper systems to ensure compliance with theprovisions of all applicable laws and that such systems were adequate and operatingeffectively.
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 Company's employees are the keys for its attaining new heights. Your Directorsplace on record their deep appreciation of the commitment and professionalism displayed bythem.
We also value the support provided by the Company's Shareholders and we look forward toyour continuing future support.
| ||For and on behalf of the Board || |
| ||For Lead Financial Services Limited || |
| ||PADAM CHANDRA BINDAL ||KUSHA BINDAL |
|Place : New Delhi ||CHAIRMAN ||DIRECTOR |
|Date : 12.08.2017 ||DIN: 00004769 ||DIN: 06952708 |