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RSD Finance Ltd.

BSE: 539875 Sector: Financials
NSE: N.A. ISIN Code: INE616F01014
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RSD Finance Ltd. (RSDFINANCE) - Director Report

Company director report

To

The Members RSD Finance Limited

Your Directors have pleasure in presenting their Fifty-third Annual Report togetherwith the Audited Accounts of your Company for the year ended 31st March 2016.

KEY FINANCIAL HIGHLIGHTS

(AMT. IN RUPEES)

STANDALONE CONSOLIDATED
FINANCIAL RESULTS

31.03.2016

31.03.2015

31.03.2016

31.03.2015

Profit for the year ended 28900601

23714680

136023423

64973868

Less : Provision for Taxation
Current Tax 2922154

2713264

26307850

13592090

Deferred Tax (Assets) (55242)

(327672)

4163371

(862425)

Adjustment related to Earlier Year - - -

5167731

Less : Minority Interest

5874394

26033689

21329088

99677808

47076472

Add : Profit B/F from previous Year 212329384

197916259

248176625

212165971

Sub Total 238363073

219245347

347854433

259242443

Less: P/L Appropriation (255736)

2650145

(280226) -
Less : Transferred to Statutory 5206738

4265818

5206738

4265818

Reserve
Less: Proposed Dividend including DDT - - 6830531

6800000

Balance C/f to Balance Sheet 233412071

212329384

336097390

248176625

BUSINESS PERFORMANCE REVIEW

The main operations of the Company are that of investment. The main source of incomefor the Company is in the form of dividends. The Company has received dividend income ofRs. 1.33 Crores during the year and an Interest income of Rs. 2.99 crores during the Year.The Company is also engaged in Job Work business.

During the Financial Year the company has tried to maximize its return by utilizationof its fund. It has entered into new sectors of business through its wholly ownedsubsidiary Company Precision Automotive Private Limited. The Company also entered intohospitality business by acquiring 52.55% Equity shares of SRP Oil Private Limited whichis running a four star category hotel in Jamshedpur.

DIVIDEND

Your Director’s regret for not recommending any Dividend on Equity Shares and hasdecided to retain the profits for future investments and to strengthen the business of theCompany.

RESERVES

The Company proposes to transfer Rs. 52.06 lakhs to the statutory reserves and anamount of Rs. 2334.12 lakhs is proposed to be retained in the P/L account during theFinancial Year 2015-16.

PUBLIC DEPOSIT

Your Company has not accepted any Deposit from the Public during the financial yearwithin the meaning of section 73 of the Companies Act 2013 nor any amount of principal orinterest on deposit from the public was outstanding as on the date of the balance sheet.

FINANCIAL LIQUIDITY

The Company’s cash and cash equivalents as on March 31 2016 was Rs. 14.33 lakhscompared to Rs. 49.08 lakhs as on March 31 2015. The Company continues to focus onjudicious management of its working capital. Receivables and other working capitalparameters were kept under strict check through continuous monitoring.

SUBSIDIARY COMPANIES AND CONSOLIDATED FINANCIAL STATEMENTS

The Consolidated Financial Statements of the Company and its subsidiaries prepared inaccordance with the accounting principles generally accepted in India including theAccounting Standards specified under Section 133 of the Companies Act 2013 (‘theAct’) read with Rule 7 of the Companies (Accounts) Rules 2014 form part of theAnnual Report and are reflected in the Consolidated Financial Statements of the Company.The consolidated financial results reflect the operations of Precision Automotive PrivateLimited (PAPL) and SRP Oil Private Limited.

The Company has adopted a Policy for determining Material Subsidiaries in terms ofRegulation 16 (1) (c) of the Securities and Exchange Board of India (Listing Obligationsand Disclosure Requirements) Regulations 2015 (’Listing Regulations’).

The Policy as approved by the Board is uploaded on the Company’s website.

PERFORMANCE OF SUBSIDIARIES

i) PRECISION AUTOMOTIVE PRIVATE LIMITED (PAPL)

Precision Automotive Private Limited is a wholly owned subsidiary Company of RSDFinance Limited. The revenue from operations of PAPL decreased from Rs. 19.62 Crores inthe previous year to Rs. 14.57 crores during 2015-16. Whereas the net profit before taxduring the period increased from Rs. 4.13 crores to Rs. 8.95 crores during the FY 2015-16.

During the year PAPL has entered into a new line of business. It has set up a Solarplant in Newai Rajasthan. The Company is hopeful for a brighter future.

ii) S R P OIL PRIVATE LIMITED

During the year the Company has acquired the Equity Shares in SRP Oil Private Limited.Consequently the shareholding of the Company in SRP has increased to 52.55%

Net sales of SRP Oil increased from Rs. 14.84 crores in the previous year to Rs. 15.25crores during 2015-16. Net profit before tax also increased from Rs. 0.95 crores to Rs.1.76 crores during the FY 2015-16.

The Company does not have any associate or joint venture Companies. Pursuant to theprovisions of Section 129(3) of the Companies Act 2013 a statement containing the salientfeatures of the financial position of the above mentioned subsidiary Companies in FormAOC-1 is attached as ‘Annexure - I’.

SHARE CAPITAL

The Equity shares of the Company are listed on the BSE and the CSE. The paid up EquityShare Capital as on March 31 2016 was Rs. 6.47 crores. The Company has neither issuedshares with differential rights as to dividend voting or otherwise nor issued shares(including sweat equity shares) to the employees or Directors of the Company under anyScheme.

LISTING

The Equity Shares of the Company got the trading approval from the Bombay StockExchange (BSE) on May 13 2016. The shares of the Company continue to be listed on the CSELimited (CSE). The scrip code number of the Equity Shares of the Company on BSE is 539875and on CSE is 28123.

Pursuant to the Reg. 109 – SEBI (ICDR) Regulation – 2009 (amendment) and SEBI(Listing Obligations and Disclosure Requirements) Regulations – 2015 which werenotified on September 2 2015 with the objective of bringing the framework governing theregime of listed entities in line with the Companies Act 2013 a new Listing Agreementwas executed with CSE Limited on 26 February 2016.

The Annual Listing Fee for the Financial Year 2016-17 has been duly paid within thestipulated time to both the Stock Exchanges.

DIRECTOR AND KEY MANAGERIAL PERSONNEL

As per the provisions of the Companies Act 2013 and Articles of Association of theCompany Mr. Roop Narayan Choudhary Director of the Company retires by rotation and beingeligible offers himself for re-appointment.

Necessary resolutions for the re-appointment has been included in the notice conveningthe ensuing AGM and details of the proposal for re-appointment is mentioned in theexplanatory statement of the notice. Your directors recommend the re-appointment.

Ms. Simi Sen resigned as the Company Secretary w.e.f close of business hours of May 312016. Ms. Puja Choudhary was appointed as the Company Secretary w.e.f June 01 2016.

Mr. Rajeev Singh Dugal (Managing Director) Mr. Rechan Chhabra (Chief Finance Officer)and Ms. Puja Choudhary (Company Secretary) are the Key Managerial Personnel (KMP) of theCompany pursuant to the provisions of the Company Act 2013 as on the date of thisreport.

All the directors of the Company have confirmed that they are not disqualified frombeing appointed as Directors in terms of Section 164 of the Companies Act 2013.

DECLARATION BY INDEPENDENT DIRECTORS

The Company has received necessary declarations from each of its Independent Directorsunder section 149(7) of the Companies Act 2013 that he/she meets the criteria as laiddown under section 149(6) of the Companies Act 2013 and Regulation 25 of the SEBI(Listing Obligation and Disclosure Requirement) Regulations 2015.

The Board confirms that the said Independent Directors meet the criteria as laid downunder the Companies Act 2013 as well as the SEBI (LODR) Regulations 2015.

BOARD AND ITS COMMITTEES

BOARD MEETINGS

The Board met Eighteen times during the financial year. The intervening gap between themeetings was within the period prescribed under the Companies Act 2013 and the SEBIRegulation 2015. The details of dates of meetings held by the Board and its Committeesattendance of Directors etc. is given separately in the Report of Corporate Governancewhich forms part of the report.

AUDIT COMMITTEE

The Audit Committee comprises of 2 Independent Directors namely Mr. Sushil KumarKhowala (Chairman) and Mr. Malkeet Singh Saini. Mr. Rajeev Singh Dugal as the 3rd member.All the recommendations made by the Audit Committee were accepted by the Board. Thedetails of term of reference of the Audit Committee member dates of meeting held andattendance of the Directors are given separately in the Corporate Governance Report.

Details of the composition of other Committees and the Meetings held and attendance ofthe members at such Meetings are provided in the Corporate Governance Report. Theintervening gap between the Meetings was within the period prescribed under the Act andthe Listing Regulations.

BOARD EVALUATION

As required under section 178(2) of the Companies Act 2013 and under Schedule IV tothe Companies Act 2013 on Code of conduct for Independent Directors a comprehensiveexercise for evaluation of the performances of every individual director of the Board asa whole as well as working of the Audit Nomination Stakeholders Relationship Committeeand the Risk Management Committee has been carried by your company during the year underreview as per the evaluation criteria approved by the Board and based on guidelines givenin Schedule IV to the Companies Act 2013.

The Board’s functioning was evaluated on various aspects including inter aliadegree of fulfillment of key responsibilities Board structure and compositionestablishment and delineation of responsibilities to various Committees effectiveness ofBoard processes information and functioning. Directors were evaluated on aspects such asattendance and contribution at Board/ Committee Meetings and guidance/ support to themanagement outside Board/ Committee Meetings.

In addition the Managing Director was evaluated on key aspects of his role includingsetting the strategic agenda of the Board encouraging active engagement by all Boardmembers and motivating and providing guidance to the Management. Areas on which theCommittees of the Board were assessed included degree of fulfillment of keyresponsibilities adequacy of Committee composition and effectiveness of meetings.

The performance evaluation of the Independent Directors was carried out by the entireBoard excluding the Director being evaluated. The performance evaluation of the NonIndependent Directors was carried out by the Independent Directors who also reviewed theperformance of the Board as a whole.

INTERNAL FINANCIAL CONTROLS

The Company has in place adequate internal financial controls with reference tofinancial statements. We have documented policies and procedures covering all financialand operating functions and processes. These have been designed to provide a reasonableassurance with regard to maintaining of proper accounting controls for ensuringreliability of financial reporting monitoring of operations protecting assets fromunauthorized use or losses and compliance with regulations.

The internal financial control is supplemented by extensive internal audits regularreviews by management and all other records to prepare financial statements and otherdata.

CONSERVATION OF ENERGY TECHNOLOGICAL ABSORPTION and FOREIGN EXCHANGE EARNING &OUTGO

Considering its nature of activities the following disclosures are made as per theprovisions of Section 134 (3) (m) of the Companies Act 2013 read with Rule 8 (3) of theCompanies (Accounts) Rules 2014:

(i) The Company has no activities relating to conservation of energy and technologyabsorption.

(ii)There are no foreign exchange earnings or outgo during the period under review.

RELATED PARTY TRANSACTION

All Related Party Transactions that were entered into during the financial year were onarm’s length basis and were in the ordinary course of 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 withinterest of the Company at large. Your Directors draw attention of the members to Notes tothe financial statement which sets out related party disclosures.

The Company has adopted a Related Party Transactions Policy. The Policy as approved bythe Board is uploaded on the Company’s website.

Details of the transactions with Related Parties are provided in the accompanyingfinancial statements. There were no transactions during the year which would require to bereported in Form AOC - 2. AOC 2 is attached as ‘Annexure – II’

RISK MANAGEMENT POLICY

Pursuant to section 134(3) (n) of the Companies Act 2013 the Board of directors ofthe Company has adopted a Risk management Policy of the Company. The Company managesmonitors and reports on the principal risks and uncertainties that can impact its abilityto achieve its strategic objectives. The objectives of the Policy are to optimize businessperformance protect it from damages frauds and to promote confidence amongst ourstakeholders in the effectiveness of our business management process and our ability toplan & meet our strategic objectives.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

The provisions of Section 135 of the Companies Act 2013 in respect of CorporateSocial Responsibility are not applicable to the Company.

VIGIL MECHANISM/WHISTLE BLOWER POLICY

The Company promotes ethical behavior in all its business activities and has put inplace a mechanism for reporting illegal or unethical behavior. The Company has a Vigilmechanism / Whistle blower policy under which the employees are free to report violationsof applicable laws and regulations and the Code of Conduct. The reportable matters may bedisclosed to the Audit Committee. Employees may also report to the Chairman of the AuditCommittee. During the year under review no employee was denied access to the AuditCommittee. The said policy is available on the website of the Company.

STATUTORY AUDITORS

The financial statements have been audited by M/s. Manisha Gupta & Associates (FRN-017879C) Chartered Accountants Statutory auditors of the Company.

Pursuant to the provisions of Sec. 139 of the Companies Act 2013 and the rules framedthereunder M/s. Manisha Gupta & Associates (FRN- 017879C) were appointed as theStatutory Auditor for a period of 5 years to hold office from the conclusion of the AGM ofthe Company held on 30th September 2014 subject to the ratification of their appointmentat every AGM.

A resolution seeking ratification of their appointment forms part of the Notice of AGM.

The Notes on financial statement referred to in the Auditors’ Report areself-explanatory and do not call for any further comments.

SECRETARIAL AUDITOR

Pursuant to provisions of section 204 of the Companies Act 2013 and The Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the company hadappointed Mr. Sital Prasad Swain Practicing Company Secretary (Membership No. F6338 &CP No – 6814) to undertake the Secretarial Audit of the Company. The SecretarialAudit Report for the financial year ended March 31 2016 is annexed to the Boards Reportas "Annexure – III".

AUDITORS’ REPORT

a) INDEPENDENT AUDITOR’S REPORT

There are no qualification reservation or adverse remark or disclaimer in theIndependent Auditor’s Report provided by M/s. Manisha Gupta & AssociatesChartered Accountants for the FY 2015 - 2016. The notes to accounts forming part offinancial statements are self-explanatory and need no further clarification.

b) SECRETARIAL AUDIT REPORT

There are no qualifications reservation or adverse remark or disclaimer in SecretarialAudit Report provided by Mr. Sital Prasad Swain whole time Company Secretary in practice(Membership No. F6338 & CP No – 6814)

DIRECTORS RESPONSIBILITY STATEMENT

To the best of their knowledge and belief and according to the information andexplanations obtained your Directors make the following statement in terms of Section 134(3)(c) and 134 (5) of the Companies Act 2013:

(a) that in the preparation of Annual Accounts the applicable Accounting Standard hasbeen followed.

(b) that 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 financialyear and the Statement of Profit and Loss for that period.

(c) that the Directors have taken proper and sufficient care for maintenance ofadequate accounting records in accordance with the provisions of the Companies Act 2013for safeguarding assets of the Company and for preventing and detecting frauds and otherirregularities.

(d) that the Directors have prepared the Annual Accounts ongoing concern basis.

(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 a proper system to ensure compliance with the provisionsof all applicable laws.

PARTICULARS OF EMPLOYEES

Your Directors acknowledge and appreciate the sincere efforts and effective servicesrendered by the committed employees and staff of the company.

Information in accordance with the provisions of Section 134 (3) (q) and Section 197(12) of the Companies Act 2013 read with Rule 5 (1) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 regarding employees is provided in‘Annexure IV’ forming part of this report.

PARTICULARS OF LOANS GIVEN INVESTMENTS MADE GUARANTEES GIVEN AND SECURITIES PROVIDED

Particulars of loans given investments made guarantees given and securities providedalong with the purpose for which the loan or guarantee or security is proposed to beutilized by the recipient are provided in Notes to the Financial Statements which arewithin the limits prescribed under Section 186 of the Companies Act 2013.

POLICY FOR APPOINTMENT AND REMUNERATION:

The Board has on recommendation of the Nomination and Remuneration Committeeformulated a policy for selection and appointment of Directors senior managements andtheir remuneration. The details of the said policy are attached to the report as‘Annexure- V’

PREVENTION OF INSIDER TRADING

The Company has adopted a Code of Conduct for Prevention of Insider Trading for itsDesignated Persons in compliance with the SEBI (Prohibition of Insider Trading)Regulations 2015 which was amended in May 2016. The Code lays down Guidelines whichadvise them on procedures to be followed and disclosures to be made while dealing withthe shares of the Company and cautioning them of the consequences of violations. The Coderequires pre- clearance for dealing in the Company’s shares and prohibits thepurchase or sale of Company shares by the Directors and the designated employees while inpossession of unpublished price sensitive information in relation to the Company andduring the period when the Trading Window is closed.

The code of conduct for Prevention of Insider Trading is posted on the website of theCompany and can be accessed at: www.rsdfinancelimited.com

All the Board of Directors and designated employees have confirmed compliance with theCode.

EXTRACT OF ANNUAL RETURN

The extract of Annual Return pursuant to Section 92 of the Companies Act 2013 readwith The Companies (Management and Administration) Rules 2014 in the prescribed FormMGT-9 is hereby attached with this Report in ‘Annexure VI’ and is a part of thisReport. The same is as on 31st March 2016.

CORPORATE GOVERNANCE

The Companies Act 2013 and the listing agreement with the Stock exchanges requirecompliances with specified Corporate Governance practices. These practices have been fullyimplemented. The Company is regularly complying with Corporate Governance practices. YourCompany is also enlisted in the SEBI compliant redressal system (SCORES) enabling theinvestors to register their complaint if any for speedy redressal.

Pursuant to Schedule V of the SEBI Regulation the following Reports/Certificates formpart of the Annual Report:

• the Report on Corporate Governance;

• the Certificate duly signed by the Managing Director and Chief Financial Officeron the Financial Statements of the Company for the year ended March 31 2016 as submittedto the Board of Directors at their meeting held on May 30 2016 ;

• the declaration by the Managing Director regarding compliance by the Boardmembers and senior management personnel with the Company’s Code of Conduct ;

• the Auditors’ Certificate on Corporate Governance; and

• the Management Discussion & Analysis Report

SIGNIFICANT & MATERIAL ORDERS PASSED BY THE REGULATORS

Your Directors confirm that there were no significant and material orders passed by theregulators or courts or tribunals impacting the going concern status and Company’soperations in future.

MATERIAL CHANGES AND COMMITMENTS IF ANY AFFECTING THE FINANCIAL POSITION OF THECOMPANY

No material changes or events affecting the financial position of the Company haveoccurred between the end of the Financial year of the Company to which the financialStatements relates and the date of this report.

OBLIGATION OF COMPANY UNDER THE SEXUAL HARASSMENT OF WOMEN AT THE WORKPLACE(PREVENTION PROHIBITION & REDRESSAL) ACT 2013

The Company has zero tolerance for sexual harassment at workplace and has adopted aPolicy on Prevention Prohibition and Redressal of Sexual Harassment at the Workplace inline with the provisions of the Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013 and the Rules there under. The Policy aims to provideprotection to employees at the workplace and prevent and redress complaints of sexualharassment and for matters connected or incidental thereto with the objective ofproviding a safe working environment where employees feel secure.

The Company has not received any complaint of sexual harassment during the financialyear 2015-16.

ANNEXURES FORMING PART OF DIRECTOR’S REPORT

The Annexure referred to in this Report and other information which are required to bedisclosed are annexed herewith and form a part of this Report:

ANNEXURE PARTICULARS
I AOC-1
II AOC- II
III Secretarial Audit Report
IV Particulars of Employees under Section 134 (3) (q) and Section 197 (12) of the Companies Act 2013
V Remuneration Policy
VI Extract of the Annual Return in Form MGT-9
VII Corporate Governance Report
VIII Managing Director’s and CFO’s certification in terms of Regulation 17(8) read with Part B of Schedule II of the Listing Regulations
IX Managing Director’s Certificate under Schedule V Part D of SEBI (Listing Obligations and Disclosure Requirement) Regulations 2015 on compliance of Code of Conduct
X Management Disclosure and Analysis Report
XI Certificate from Statutory Auditors on Corporate Governance Report

APPRECIATION

The Board of Directors would like to place on record their gratitude for the guidanceand cooperation extended by Government of India and the other regulatory authorities. TheBoard takes this opportunity to express their sincere appreciation for the excellentpatronage received from the Banks Financial Institutions SEBI RTA and for the continuedenthusiasm total commitment dedicated efforts of the executives and employees of theCompany at all levels. We are also deeply grateful for the continued confidence and faithreposed on us by the Stakeholders.

For and on behalf of the Board
Sd/-
Place: Jamshedpur Rajeev Singh Dugal
Dated: August 11 2016 Chairman
DIN - 00052037

Registered Office:

224 AJC Bose Road Krishna Building 9th Floor Room No -904 Kolkata – 700 017