Ladies and Gentlemen
Your directors have pleasure in presenting their 25th Annual Report and the AuditedStatement of Accounts for the year ended on 31st March 2017
|1. FINANCIAL RESULTS || ||(Amount in Rs.) |
|Particulars ||For the financial year ||For financial year |
| ||2016-17 ||2015-16 |
|Net sales and other Income ||99928731 ||93507850 |
|Profit before financial costs depreciation and Tax ||77013263 ||75581114 |
|Finance Costs ||50610072 ||48593564 |
|Profit before depreciation and tax ||26403191 ||26987550 |
|Depreciation for the financial year ||93154 ||110295 |
|Profit /(Loss) before tax ||26310037 ||26877255 |
|Direct Taxes ||13886135 ||11857750 |
|Profit / (Loss) after Tax ||12423902 ||15019505 |
|Transfer to Reserve Fund ||5262007 ||5375451 |
In order to comply with the provisions of Reserve Bank of India Act 1934 the Companyhas transferred Rs.5262007/-(Rupees Fifty Two Lakhs Sixty Two Thousand Four Hundred andSeven only) to Special Reserve Funds and has also made provision of Rs.6362692/-(RupeesSixty Three Lakhs Sixty Two Thousand Six Hundred and Ninety Two only) for Sub StandardAssets and a provision of Rs.6570569/- (Rupees Sixty Five Lakhs Seventy Thousand FiveHundred and Sixty Nine only) for Standard Assets during the year under review.
Except as mentioned above no amount was proposed to transfer to any reserve by theCompany during the year under review.
2. OPERATIONS OF THE COMPANY
During the year under review the Company was engaged in carrying on the business asNon- Banking Financial Company without accepting public deposits for which the Certificateof Registration has been obtained from the Department of Non- Banking Supervision ReserveBank of India New Delhi. Your directors also intend to diversify its operation intoanother area / business in order to make the Company more profitable.
3. PERFORMANCE REVIEW
During the year under review the Company's total income has increased to Rs.99928731/- (Rupees Nine Crore Ninety Nine Lacs Twenty Eight Thousand Seven Hundred andThirty One only) as compared to Rs. 93507850/- (Rupees Nine Crore Thirty Five LakhsSeven Thousand Eight Hundred and Fifty only) in the previous year and the Company earned aprofit before tax of Rs.26310037/-(Rupees Two Crore Sixty Three Lakhs Ten Thousand andThirty Seven only) as compared to Rs. 26877255/- (Rupees Two Crore Sixty Eight LacsSeventy Seven Thousands Two Hundred Fifty Five only) in the previous year.
Your directors do not recommend any dividend for payment to the shareholders/ membersof the company for the financial year ended on 31st March 2017.
5. DIRECTORS OF THE COMPANY
Pursuant to the provisions of section 149 of the Act Mr. Samai Singh and Ms. RenukaHooda are independent directors of the Company. They have submitted a declaration thateach of them meets the criteria of independence as provided in section 149(6) of the Actand there has been no change in the circumstances which may affect their status asindependent director during the year.
During the year under review Rahul Rameshkumar Jain has been appointed asNon-executive Director on the Board of the Company w.e.f. 27th January 2017 and he hastendered his resignation from the Board due to his preoccupation w.e.f. 25th April 2017.
During the year under review the non-executive directors of the Company had nopecuniary relationship or transactions with the Company other than the sitting feescommission and reimbursement of expenses incurred by them for the purpose of attendingmeetings of the Company.
Mr. Kuldeep Singh Solanki Director of the Company retires by rotation and beingeligible has offered himself for re-appointment. Your directors recommend hisre-appointment as director of the Company.
Term of office Mr. Samai Singh Independent Director of the Company who was appointedas non -executive independent director will expire on 29th September 2017. Mr. SamaiSingh being eligible has offered himself to be appointed as independent director of theCompany for second term of 5 years under the provisions of the Companies Act 2013. He hasgiven declaration to the Board that they meet the criteria of independence as providedunder section 149(6) of the Companies Act 2013.
As required under regulation 36(3) of SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 the information on the particulars of the Directorsproposed for appointment / re-appointment has been given in the Notice of the AnnualGeneral Meeting
Pursuant to the provisions of the Companies Act 2013 and SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 the Board has carried out an evaluation of itsown performance the directors individually as well as the evaluation of the working ofits Audit Committee Nomination and Remuneration Committee. The manner in which theevaluation has been carried out has been explained in the Corporate Governance Report.
The Board has on the recommendation of the Nomination and Remuneration Committeeframed a policy for selection and appointment of directors senior management and to fixtheir remuneration. The Nomination and Remuneration Policy is stated in the CorporateGovernance Report.
During the year under review (7) Seven Board Meetings were convened and held. Thedetails of which are given in the Corporate Governance Report. The intervening gap betweentwo board meetings was within the period prescribed under the Companies Act 2013.
6. KEY MANAGERIAL PERSONNEL
Pursuant to the provisions of section 203 of the Act the key managerial personnel ofthe Company are - Mr. Kapil Sharma Chief Executive Officer Mr. Jagdish Chandra ChiefFinancial Officer and Mr. Kunal Gupta Company Secretary of the Company.
7. DEMATERIALISATION OF SHARES:
74.43% of the Company's paid up equity share capital is in dematerialized form as on31st March 2017 and balance 25.57% is in physical form. The Company's Registrars &Transfer Agent is M/s Indus Portfolio Private Limited having their communication officeat G-65 Bali Nagar New Delhi- 110015.
8. MANAGEMENT DISCUSSION AND ANALYSIS REPORT:
As required under regulation 34 of SEBI (Listing Obligation and DisclosureRequirements) Regulations 2015 the Management Discussion and Analysis Report is enclosedas a part of this report.
9. DIRECTORS RESPONSIBILITY STATEMENT:
The Board of Directors acknowledges the responsibility for ensuring compliance with theprovisions of section 134(3)(c) read with section 134(5) of the Companies Act 2013 in thepreparation of the Financial Statement for the financial year ended on 31st March 2017and state:
i) That in the preparation of Annual Accounts for the financial year ended as at 31stMarch 2017 the applicable Accounting Standards have been followed along with properexplanation relating to the material departures.
ii) That the Directors have selected such Accounting Policies and applied themconsistently and made judgements 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 financial yearended as at 31st March 2017 and of the profit and loss of the Company for the financialyear ended on 31st March 2017.
iii) That the Directors have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of this Act for safeguardingthe Assets of the Company and for preventing and detecting fraud or other irregularities.
iv) That the Directors have prepared the Annual Accounts on a Going Concern basis.
v) The Directors have laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and are operatingeffectively; and
vi) There is a proper system to ensure compliance with the provisions of all applicablelaws and that such systems are adequate and operating effectively.
Based on the framework of internal financial controls and compliance systemsestablished and maintained by the Company work performed by the internal statutory andsecretarial auditors and external consultants including audit of internal financialcontrols over financial reporting by the statutory auditors and the reviews performed bymanagement and the relevant board committees including the audit committee the board isof the opinion that the Company's internal financial controls were adequate and effectiveduring financial year 2016-17.
10. PUBLIC DEPOSITS
The Company has not invited or accepted any public deposits within the meaning ofSection 73 of the Companies Act 2013 and the rules made thereunder and section 45-I(bb)of the Reserve Bank of India Act 1934 during the year under review. The Company does nothold any public deposit as on date and will not accept the same in future without theprior approval of Reserve Bank of India in writing.
11. PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS
The Company being a non-banking finance company registered with the Reserve Bank ofIndia and engaged in the business of giving loans or finance & investment activitiesis exempt from complying with the provisions of section 186 of the Companies Act 2013.Accordingly the disclosures of the loans given as required under the aforesaid sectionhave not been given in this Report.
12. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
The Company has proper and adequate system of internal control geared towards achievingefficiency in its operations safeguarding assets optimum utilization of resources andcompliance with statutory regulations. The Company has an Internal Control Systemcommensurate with the size scale and complexity of its operations. Testing of suchInternal Control measures and systems forms a part of Internal Audit function. TheInternal Auditors of the Company conduct audits of various departments based on an annualaudit plan covering key areas of operations. Internal Audit reviews and evaluates theadequacy and effectiveness of internal controls ensuring adherence to operatingguidelines and systems and recommending improvements for strengthening them. To maintainits objectivity and independence the Internal Audit function reports to the Chairman ofthe Audit Committee of the Board. The Audit Committee of the Board of Directors reviewsthe adequacy of internal controls. This has improved the management of the affairs of theCompany and strengthened transparency and accountability. The Management ensures adherenceto all internal control policies and procedures as well as compliance with regulatoryguidelines. No significant audit observations and recommendations have been received fromthe Internal Auditors of the Company.
13. AUDITORS' REPORT AND SECRETARIAL AUDIT REPORT
The Company has at its meeting held on 11th August 2016 appointed M/s S.S. Bhati& Associates a firm of Company Secretaries in practice to undertake the SecretarialAudit of the Company for the financial year 2016 -17 in terms of provisions of section 204of the Companies Act 2013 read with the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014. Report of the secretarial auditor for the financial2017 is given as an annexure as Annexure - "A" which forms part of this report.
Further the statutory auditors' report and secretarial auditors' report does notcontain any qualifications reservations or adverse remarks.
a) Statutory Auditors:
Pursuant to the provision of section 139(2) of the Companies Act 2013 read with therules made thereunder no listed Company shall appoint or re-appoint an audit firm asauditors for more than two terms of five consecutive years. Any audit firm has beenfunctioning for than 10 or more years in the Company as statutory auditors of the Companysuch audit firm can be appointed as auditors in same Company for a further period of threefinancial years only. M/s Kumra Bhatia & Co. Chartered Accountants has beenfunctioning for more than 10 years in the Company and they had been appointed as Auditorsfor a period of three years by the members/ shareholders at their Annual General Meetingheld on 30th September 2014. Their term will expire on date of conclusion of the ensuingAnnual General Meeting.
Therefore pursuant to Section 139 142 and other applicable provisions of theCompanies Act 2013 and the Rules made thereunder pursuant to the recommendations of theaudit committee of the Board of Directors M/s Nagar Goel & Chawla CharteredAccountants New Delhi (bearing ICAI Registration No.009933N) shall be appointed asStatutory Auditors of the Company in place of M/s Kumra Bhatia & Co CharteredAccountants (bearing ICAI Registration No.002848N) retiring auditors of the Company tohold office from the date of conclusion of the 25th AGM of the Company till the date ofconclusion of 30th Annual General Meeting to be held for the financial year ending on 31stMarch 2022 subject to ratification of their appointment at every Annual General Meeting ofthe Company.
The Company has obtained a written consent from M/s Nagar Goel & Chawla CharteredAccountants New Delhi (bearing ICAI Registration No.009933N) Chartered Accountants NewDelhi for their appointment and also a obtained certificate to the effect that theirappointment if made would be in accordance with Section 139(1) of the Companies Act2013 and the rules made there under as may be applicable
b) Secretarial Auditors:
Pursuant provisions of section 204 of the Companies Act 2013 read with the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Company has at itsmeeting held on 10th August 2017 appointed M/s S.S. Bhati & Associates a firm ofCompany Secretaries in practice to undertake the Secretarial Audit of the Company for thefinancial year 2017-18.
15. EXTRACT OF ANNUAL RETURN
The details forming part of the extract of the Annual Return in form MGT-9 is annexedherewith as "Annexure B"
16. CORPORATE GOVERNANCE REPORT
The Company is committed to good Corporate Governance as the requirement of theSchedule V of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015. Asrequired under Schedule V of SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 a detailed report on Corporate Governance together with Auditor'sCertificate on compliance of conditions of Corporate Governance is annexed herewith as"Annexure - C" and is forming integral part of this Report.
17. RELATED PARTY TRANSACTIONS
The main business of the Company is financing & investment in shares etc. andgranting loans to related or unrelated parties. All related party transactions that wereentered into during the financial year were on an arm's length basis and were in theordinary course of business. All related party transactions are placed before the Auditcommittee for their consideration and approval. None of the transactions with relatedparties falls under the scope of section 188(1) of the Act. However the related partytransaction so entered are disclosed in note no 29 of Financial Statement of the Companyas attached herewith
The Policy relating to related party transactions duly approved by the Board ofDirectors of the Company has been placed on the Company's website www.sainikfinance.com
18. CODE OF CONDUCT:
The Board of directors has approved a Code of Conduct which is applicable to themembers of the Board and all employees in the course of day to day business operations ofthe Company. The Code has been placed on the Company's website www.sainikfinance.com
The Code lays down the standard procedure of business conduct which is expected to befollowed by the Directors and the designated employees in their business dealings and inparticular on matters relating to integrity in the work place in business practices andin dealing with stakeholders. All the Board Members and the Senior Management personnelhave confirmed compliance with the Code.
19. VIGIL MECHANISM / WHISTLE BLOWER POLICY
Pursuant to the provisions of section 177(9) & (10) of the Companies Act 2013 readwith the rules made thereunder and pursuant to the provision of SEBI (Listing Obligationsand Disclosure Requirements) 2015 the Company has established a Vigil Mechanism to beknown as the 'Whistle Blower Policy' for its Directors and Employees to report instancesof unethical behaviour actual or suspected fraud or violation of the Company's Code ofConduct. The aim of the policy is to provide adequate safeguards against victimization ofWhistle Blower who avails of the mechanism and also provide direct access to the Chairmanof the Audit Committee in appropriate or exceptional cases.
Accordingly Vigil Mechanism / Whistle Blower Policy have been formulated with a viewto provide a mechanism for the Directors and employees of the Company to approach theEthics Officer or the Chairman of the Audit Committee of the Company.
The purpose of this policy is to provide a framework to promote responsible and securewhistle blowing. It protects employees willing to raise a concern about seriousirregularities within the Company.
During the financial year 2016-17 no such complaint of unethical or improper activityhas been received by the Company.
20. PREVENTION OF INSIDER TRADING
The Company has adopted a Code of Conduct for Prevention of Insider Trading with a viewto regulate trading in securities by the Directors and designated employees of theCompany. The Code requires pre-clearance for dealing in the Company's shares and prohibitsthe purchase or sale of Company shares by the
Directors and the designated employees while in possession of unpublished pricesensitive information in relation to the Company and during the period when the TradingWindow is closed. The Board is responsible for implementation of the Code. All BoardDirectors and the designated employees have confirmed compliance with the Code.
21. CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGO:
During the year under review the provisions of Section 134(3)(m) of the Companies Act2013 read with Rule 8 of the Companies (Accounts) Rules 2014 are as follows:
Conservation of Energy
Your Company carries out its business in an environmental friendly manner and is on thelook-out for different ways and means to reduce the consumption of energy in its businessactivity.
Technology Absorption Adaption and Innovation
The Company continues to use the latest technologies for improving quality of itsservices. The Company's business do not require significant import of technology.
Foreign Exchange Earnings and Outgo
There was no foreign exchange earnings and outgo in the Company during the financialyear.
22. MATERIAL CHANGES AND COMMITMENTS IF ANY
There was no material changes and commitments affecting the financial position of thecompany which have occurred between the end of the financial year of the Company to whichthe financial statements relate and the date of the report;
23. CORPORATE SOCIAL RESPONSIBILITY (CSR)
During the year under review provision of section 135 and Schedule VII of theCompanies Act 2013 pertaining to Corporate Social Responsibility are not applicable toour Company. Hence details of expenditure of CSR Committee are not being furnished.
24. LISTING OF SECURITIES
Presently the Securities of the Company are listed on Bombay Stock Exchange LimitedMumbai. The listing fee for the financial year 2017-18 has been paid.
Your directors would like to place their grateful appreciation for the assistance andco-operation received from the Company's bankers during the year under review. Thedirectors also acknowledge with appreciation the support and co-operation rendered byvarious Government Agencies and Departments. Your Directors would also wish to place onrecord their deep sense of appreciation for the continued support of all the investors ofthe Company.
| ||By order of the Board of Directors || |
| ||For SAINIK FINANCE & INDUSTRIES LIMITED || |
|Place : New Delhi ||Kuldeep Singh Solanki ||Rudra Sen Sindhu |
|Dated : 10th August 2017 ||Director ||Director |
| ||DIN: 00009212 ||DIN: 00006999 |