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Sakthi Finance Ltd.

BSE: 511066 Sector: Financials
NSE: SAKTHIFIN ISIN Code: INE302E01014
BSE LIVE 19:40 | 19 Oct 40.00 1.00
(2.56%)
OPEN

41.80

HIGH

41.80

LOW

39.05

NSE 00:00 | 22 May Stock Is Not Traded.
OPEN 41.80
PREVIOUS CLOSE 39.00
VOLUME 4017
52-Week high 51.00
52-Week low 27.75
P/E 11.59
Mkt Cap.(Rs cr) 200
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 41.80
CLOSE 39.00
VOLUME 4017
52-Week high 51.00
52-Week low 27.75
P/E 11.59
Mkt Cap.(Rs cr) 200
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Sakthi Finance Ltd. (SAKTHIFIN) - Director Report

Company director report

To the Members

Your Directors are pleased to present their 59th Annual Report together with theaudited accounts of the company for the financial year ended 31st March 2016.

FINANCIAL PERFORMANCE

(Rs. lakh)

Particulars 2015-16 2014-15
Profit before tax 2039.93 2128.96
Less: Provision for Taxation:
- Current Tax 863.07 806.18
- Deferred tax (75.71) (259.09)
- Net Provision for tax (earlier years) (2.77)
Profit after tax 1252.57 1584.64
Surplus brought forward from previous year 2112.13 1567.14
Transfer from Revaluation Reserve 46.06
Amount available for appropriation 3410.76 3151.78
Appropriations
Transfer to Statutory Reserve 250.51 316.93
Dividend on Preference Shares 104.34 100.76
Tax on Preference Dividend 21.24 20.15
Proposed Dividend on Equity Shares 500.00 500.00
Tax on Equity Dividend 101.79 101.81
Transfer to Debenture Redemption Reserve 960.00
Balance carried over to Balance Sheet 1472.88 2112.13
Total 3410.76 3151.78

BUSINESS

For the year under review the company disbursed Rs. 52562 lakh in hire purchaseoperations as against Rs. 50266 lakh during the previous financial year. Thecollection efficiency has been good. Your directors hope to achieve better businessdisbursements and profitability in the years to come.

CHANGE IN NATURE OF BUSINESS IF ANY

During the year there was no change in the nature of business of the company.

DIVIDEND Preference Shares

The Board of Directors have at their meeting held on 12th March 2016 declared aninterim dividend of Rs. 10 per share on 10% Redeemable Cumulative Preference Sharesof Rs. 100 each for the financial year ending 31st March 2016 amounting to Rs.125.58 lakh including dividend distribution tax amount of Rs. 21.24 lakh on prorata basis.

Equity Shares

Your Directors are pleased to recommend a dividend of Rs. 1 per equity share(10% on the face value of equity share of Rs. 10 each) for the year ended 31stMarch 2016 amounting to Rs. 601.79 lakh including dividend distribution tax amount of Rs.101.79 lakh.

TRANSFER TO RESERVES

There is no amount proposed to be transferred to general reserve.

ISSUE OF PREFERENCE SHARES (NEW)

During the current year 302450 10% Redeemable Cumulative Preference Shares of Rs.100 each have been issued on private placement basis aggregating to Rs. 302.45lakh. Further 309700 10% Redeemable

Cumulative Preference Shares of Rs. 100 each which were issued on privateplacement basis during the year 2012 aggregating to Rs. 309.70 lakh has beenredeemed out of the proceeds of the fresh issue of preference shares.

As at 31st March 2016 the company has a paid-up preference share capital of Rs.1050.00 lakh comprising of 1050000 10% Redeemable Cumulative Preference Shares of Rs.100 each.

DEPOSITS

The total deposits with the company as at 31st March 2016 stood at Rs. 16242.60 lakhas against Rs. 16513 lakh as at the end of the previous year.

As at the end of the financial year 1088 public deposits aggregating to Rs.709.91 lakh were due for repayment but remained unclaimed. The Company has been remindingthe depositors regularly about the maturity and out of the said deposits 252 depositsamounting to Rs. 190.83 lakh have since been claimed and repaid / renewed as pertheir instructions.

PUBLIC ISSUE OF SECURED REDEEMABLE NON-CONVERTIBLE DEBENTURES FOR Rs. 200CRORE

The Company made a public issue of Secured Redeemable Non-Convertible Debentures(NCDs) of Rs. 1000 each up to Rs. 100 crore with an option to retain oversubscription up to Rs. 100 crore aggregating to Rs. 200 crore. The NCDissue opened on 7th April 2016 and closed on 6th May 2016. The Company received asubscription of Rs. 164.87 crore. The Company made allotment of 1648708 NCDs tothe applicants on 18th May 2016. The NCDs have been listed and admitted for trading withBSE Limited with effect from 23rd May 2016.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

1. Retiring by rotation

In accordance with the provisions of Section 152(6) of the Companies Act 2013 Dr. MManickam (DIN: 00102233) will retire by rotation at the ensuing Annual General Meeting ofthe Company and being eligible offers himself for reappointment. The Board recommends hisreappointment.

2. Changes in Key Managerial Personnel

Dr.S.Veluswamy resigned from the post of Chief Financial Officer (CFO) with effectfrom 14th November 2015 and continues as Senior President (Operations). The Board has alsoappointed him as a Key Managerial Personnel.

Based on the recommendation of the Nomination and Remuneration Committee the Board ofDirectors appointed Sri. M.K. Vijayaraghavan Senior President (Finance and CorporateServices) as Chief Financial Officer (CFO) of the Company with effect from 14th November2015.

In terms of Section 203 of the Companies Act 2013 Sri M Balasubramaniam Vice Chairmanand Managing Director Sri M K Vijayaraghavan Chief Financial Officer Dr S VeluswamySenior President (Operations) and Sri S Venkatesh Company Secretary are the KeyManagerial Personnel (KMP) of the Company.

AUDIT COMMITTEE

The Audit Committee has been functioning with the following three non-executivedirectors of which two are Independent Directors.

1. Dr A Selvakumar Chairman

2. Sri A Shanmugasundaram Member

3. Sri M Srinivaasan Member

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

As required under Regulation 34(2) of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 a report on Management Discussion and Analysis Reportforms part of this report.

CORPORATE GOVERNANCE REPORT

As required under Regulation 34(3) and Schedule V to the SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 a report on Corporate Governance and acertificate from the auditors of the company regarding compliance of the conditions ofCorporate Governance as stipulated under the listing regulations forms part of the AnnualReport.

DISCLOSURE AS PER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITION ANDREDRESSAL) ACT 2013

The company has adopted a policy on prevention prohibition and redressal of sexualharassment at workplace in line with the provisions of the Sexual Harassment of Women atWorkplace (Prevention Prohibition and Redressal) Act 2013 and the rules framed under it.

During the financial year 2015-16 the company has not received any complaint on sexualharassment.

DISCLOSURES REQUIRED UNDER THE COMPANIES ACT 2013 AND THE LISTING REGULATIONS

The information required to be disclosed under the Companies Act 2013 and the ListingRegulations is set out in the Annexure-I and forms part of this report.

ADEQUACY OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THE FINANCIAL STATEMENTS

The Company has put in place internal financial controls which are adequate and areoperating effectively. The controls are adequate for ensuring the orderly and efficientconduct of the business including adherence to the Company's policies safeguarding ofassets prevention and detection of frauds and errors accuracy and completeness ofaccounting records and timely preparation of reliable financial information.

DIRECTORS' RESPONSIBILITY STATEMENT

As required under Section 134(5) of the Companies Act 2013 your directors confirm tothe best of their knowledge and belief that:

a. in the preparation of the annual accounts the applicable accounting standards havebeen followed and that there are no material departures;

b. they have selected such accounting policies and applied them consistently and madejudgments and estimates that are reasonable and prudent so as to give a true and fair viewof the state of affairs of the company at the end of the financial year and of the profitof the company for the financial year;

c. they have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the company and for preventing and detecting fraud and otherirregularities;

d. they have prepared the annual accounts on a going concern basis;

e. they have laid down internal financial controls to be followed by the Company andthat such internal financial controls are adequate and operating effectively; and

f. they have devised proper systems to ensure compliance with the provisions of allapplicable laws and that such systems were adequate and operating effectively.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

The CSR Policy of the Company and the details about the initiatives taken by theCompany on CSR during the year as per the Companies (Corporate Social ResponsibilityPolicy) Rules 2014 have been disclosed in Annexure-II. Further details regardingcomposition of Corporate Social Responsibility Committee and other details are provided inthe Corporate Governance Report which forms part of this report.

BOARD EVALUATION

The performance evaluation of the Board its Committees and individual directors wasconducted and the same was based on questionnaire and feedback from all the Directors onthe Board as a whole Committees and self-evaluation.

Directors held separate discussions with each of the Directors of the Company andobtained their feedback on overall Board effectiveness as well as each of the otherDirectors.

Based on the questionnaire and feedback the performance of every director wasevaluated in the meeting of the Nomination and Remuneration Committee (NRC). The meetingof NRC also reviewed performance of the Managing Director on goals (quantitative andqualitative) set at the beginning of the year in April 2015.

A separate meeting of the Independent Directors ("Annual ID meeting") wasconvened which reviewed the performance of the Board (as a whole) the non-independentdirectors and the Chairman. Post the Annual ID meeting the collective feedback of each ofthe Independent Directors was discussed by the Chairman of the NRC with the Board'sChairman covering performance of the Board as a whole performance of the non-independentdirectors and performance of the Board s Chairman.

Some of the key criteria for performance evaluation are as follows:

Performance evaluation of Directors:

• Attendance at Board / Committee Meetings

• Contribution at Board / Committee Meetings

• Guidance to management outside of Board / Committee meetings

Performance evaluation of Board and Committees:

• Degree of fulfilment of key responsibilities

• Board structure and composition

• Establishment of Committee's responsibilities

• Effectiveness of Board processes and information

• Efficacy of communication with external stakeholders

AUDITORS

1. Statutory Auditors

M/s P N Raghavendra Rao & Co (ICAI Reg.No.003328S) were appointed as statutoryauditors of the Company at the 57th Annual General Meeting to hold office up to theconclusion of the 60th Annual General Meeting subject to the annual ratification of theappointment by the members. They have confirmed their eligibility under Section 141 of theCompanies Act 2013 and the rules framed under the Act for continuation of their term.

2. Secretarial Auditors

The Company appointed M/s. S Krishnamurthy & Co Practicing Company SecretariesChennai to carry out Secretarial Audit for the financial year 2015-16. The SecretarialAudit Report for the financial year 31st March 2016 is enclosed as Annexure- III.

The clarification to the observations made by the Statutory Auditors and SecretarialAuditor is given below:

The Company had gone in for change of accounting software from the earlier softwaredeveloped in-house to newly bought-out software. Due to the migration to the newsoftware the checks and balances with regard to verification of validity of accountingfigures generated from the new software is taking additional time. Because of this therehas been delay in compilation of the various returns like NBS-1 NBS-2 NBS-3 NBS-6 andALM being submitted to RBI periodically. The company is now taking efforts to streamlinethe operational procedure and data compiling operations under the new software during thecurrent year and expects to submit the above returns within the time limit prescribed byRBI in future.

The shortfall in maintenance of liquid assets in government securities is reported byreckoning the investment at acquisition cost instead of market price as prescribed by RBI.The correct position in this regard was brought to the notice of RBI and they haveaccepted the company's contention. However RBI has advised the company to incorporate thefigures with respect to market price in future.

The Board has appointed M/s. S Krishnamurthy & Co Practicing Company SecretariesChennai as the Secretarial Auditors for the financial year 2016-17. Necessary consent hasbeen received from them to act as Secretarial Auditors.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURT

There are no significant and material orders passed by the regulators or courts ortribunals affecting the going concern status of your company and its operations in future.

MATERIAL CHANGES AND COMMITMENTS

There are no material changes and commitments which occurred during the period underreview affecting the Company's Financial position.

PARTICULARS REQUIRED UNDER SECTION 134 OF THE COMPANIES ACT 2013

Particulars as required under Section 134(3)(m) of the Companies Act 2013 read withCompanies (Accounts) Rules 2014 are given below:

a. The Company has no activity involving conservation of energy or technologyabsorption;

b. The Company does not have any Foreign Exchange Earnings; and

c. Foreign Exchange Outgo : Rs. 48.96 lakh

The company has no employee drawing remuneration more than the limits prescribed underSection 197 of the Companies Act 2013.

ACKNOWLEDGEMENT

Your Directors wish to place on record the valuable assistance and excellentco-operation extended by the members banks financial institutions rating agenciesReserve Bank of India and other regulatory authorities. The Board of Directors wish toconvey their sincere thanks to the depositors and debenture holders of the company fortheir continued patronage. They also wish to appreciate the excellent services rendered bythe employees of the company.

We pray the Goddess SAKTHI to continue to shower Her blessings and to guide us in allour endeavors.

For and on behalf of the Board
10th August 2016 M Manickam
Coimbatore Chairman