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SRG Housing Finance Ltd.

BSE: 534680 Sector: Financials
NSE: N.A. ISIN Code: INE559N01010
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OPEN 245.00
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VOLUME 13235
52-Week high 278.90
52-Week low 66.00
P/E 63.86
Mkt Cap.(Rs cr) 306
Buy Price 230.55
Buy Qty 4.00
Sell Price 235.00
Sell Qty 46.00
OPEN 245.00
CLOSE 235.00
VOLUME 13235
52-Week high 278.90
52-Week low 66.00
P/E 63.86
Mkt Cap.(Rs cr) 306
Buy Price 230.55
Buy Qty 4.00
Sell Price 235.00
Sell Qty 46.00

SRG Housing Finance Ltd. (SRGHOUSING) - Director Report

Company director report

To

The Members

The Directors have pleasure in presenting before you the Annual Reportof the Company together with the Audited Statements of Accounts for the year ended 31stMarch 2017.

FINANCIAL SUMMARY/HIGHLIGHTS OPERATIONS & STATE OF AFFAIRS:

Particulars 2016-17 2015-16
Gross Income 1455.77 1025.41
Less: Finance Cost 564.66 404.45
Overheads 450.06 332.24
Depreciation 31.60 8.16
Provision for Investment 6.63 3.58
Pro t before Tax & Exceptional Items 402.82 276.98
Add : Exceptional Items 0.00 0.00
Pro t before Tax 402.82 276.98
Less : Provision for taxation (Including Deferred tax) 132.02 90.24
Pro t after tax 270.80 186.74
Add : Balance b/d from the previous year 344.53 212.76
Surplus available for appropriations 615.33 399.50
Appropriations
Transferred to Special Reserve u/s 29C of NHB Act & 36(1)(viii) of the Income Tax Act 1961 54.25 37.50
Provision for Standard Assets 11.27 5.78
Provision for NPA 12.84 6.10
Def. Tax Liab. on special I.T. Reserve 8.48 4.24
Excess provision 0.01 1.35
Balance carried over to Balance Sheet 528.48 344.53

LENDING OPERATIONS & DISBURSEMENT OF LOANS:

Your Company registered a remarkable growth in its operations. Thehighlights of Company's Performance are as follows: The operating profit before chargingdepreciatiown and tax amounted to Rs. 434.42 lacs in the year 2016-17 as against Rs.285.14 lacs in the preceding year; representing a rise of 52.35%.

Pro t after Tax (PAT) before extraordinary items went up by 45.01% toRs. 270.80 lacs in the year 2016-17 from Rs.186.74 lacs in the previous year.

As at 31st March 2017 the loan book stood at Rs. 8182.87 lacs asagainst Rs. 5328.45 lacs in the previous year marking an increase of 53.58%.

Disbursements during the year amounted to Rs. 4736.97 lacs as againstRs. 2730.59 lacs in previous year representing a growth of 73.48%.

As a part of its liability management your Company endeavors todiversify its resource base in order to achieve an appropriate maturity structure andminimize the weighted average cost of borrowed funds.

DIVIDEND:

Your Directors felt it prudent to retain the earnings for the yearunder review to be ploughed back in business which shall result in further augmentationof the Company's growth and shareholders' wealth.

CHANGES IN SHARE CAPITAL:

During the year under review the Authorized Share Capital of theCompany increased from Rs. 12 Cr to Rs. 15 Cr. The Paid up Share Capital of the Companywas increased from Rs. 11.31 Cr to Rs. 13.00 Cr as a result of allotment of 1687300equity shares of face value of Rs. 10 each at an issue price of Rs. 90/- per share(including Premium of Rs. 80/- per share) by the way of Private Placement. As at March31st 2017 the Paid up Equity Share Capital of the Company stood at Rs. 130000000divided into 13000000 equity shares of Rs. 10 each.

BORROWINGS:

NHB Re nance: SRGHFL availed re nance aggregating to Rs. 7.00 Croresduring the year from NHB. The re nance outstanding as at 31st March 2017 was Rs. 6.74Crores.

Loan from Banks and FIs: SRGHFL availed various credit facilities fromBanks and Financial Institutions aggregating to Rs. 81 Crores during the year. The loanoutstanding from Banks and Financial Institutions as at 31st March 2017 was Rs. 68.30Crores.

UNCLAIMED DIVIDEND:

As at March 31st 2017 dividend amounting to Rs. 5025/- has not beenclaimed by shareholders. The Company has been intimating the shareholders to lodge theirclaim for dividend from time to time.

Under the provisions of section 125 of Companies Act 2013 dividendsthat remain unclaimed for a period of seven years from the date of declaration arerequired to be transferred to the Investor Education and Protection Fund (IEPF)administered by the Central Government. As at March 31st 2017 there is no unpaid/Unclaimed Dividend to be transferred to Investor Education & Protection Fund. In termsof the IEPF (Uploading of information regarding unpaid and unclaimed amounts lying withCompanies) Rules 2012 the Company has made the relevant disclosures to the Ministry ofCorporate Affairs (MCA) regarding unclaimed dividends. SRGHFL has uploaded the prescribedinformation on www.iepf.gov.in and www.srghousing.com.

MANAGEMENT DISCUSSION AND ANALYSIS:

Pursuant to SEBI (LODR) Regulations 2015 and NHB Directions dated 9February 2017 Report on Management Discussion and Analysis is annexed herewith inAnnexure V.

SUBSIDIARY COMPANIES:

The Company does not have any subsidiary.

DIRECTOR'S RESPONSIBILITY STATEMENT:

In pursuance of section 134 (3) (c) of the Companies Act 2013 andbased on the information provided by the management your Directors hereby con rm that:(a) In the preparation of the annual accounts the applicable accounting standards hadbeen followed; (b) Accounting policies selected were applied consistently. Reasonable andprudent judgments and estimates were made so as to give a true and fair view of the stateof affairs of the Company as at March 31st 2017 and of the profit of the Company for theyear ended on that date; (c) Proper and sufficient care has been taken for the maintenanceof adequate accounting records in accordance with the provisions of the Companies Act2013 for safeguarding the assets of the Company and for preventing and detecting fraudsand other irregularities; (d) The annual accounts of the Company have been prepared on agoing concern basis.

(e) Internal controls have been laid down to be followed by the Companyand such internal controls were adequate and were operating effectively.

(f) Systems to ensure compliance with the provisions of all applicablelaws were in place and were adequate and operating effectively.

CORPORATE GOVERNANCE AND SHAREHOLDERS INFORMATION:

Your Company has taken adequate steps to adhere to all the stipulationslaid down in SEBI (LODR) Regulations 2015 and NHB Directions dated 9 February 2017. Areport on Corporate Governance is included as a part of this Annual Report in ANNEXURE VI.

Certi cate from the Statutory Auditors of the company con rming thecompliance with the conditions of Corporate Governance as stipulated under SEBI (LODR)Regulations 2015 is attached to this report.

In terms of Section 136 of the Act the reports and accounts are beingsent to the members and others entitled thereto.

RELATED PARTY TRANSACTIONS:

All contracts / arrangements / transactions entered by the Company withrelated parties are in the ordinary course of business and on an arm's length basis. YourDirectors draw attention of the members to Note 29.10 to the financial statement whichsets out related party disclosures.

During the year the Company had not entered into any contract /arrangement / transaction with related parties which could be considered material inaccordance with the policy of the Company on materiality of related party transactionsaccordingly information in Form AOC-2 is not annexed. As required by NHB Noti cation noNHB.HFC.CG-DIR1/ MD&CEO/2016 dated February 9 2017 a policy on transaction withrelated parties is given as Annexure IV to this report.

The Policy on materiality of related party transactions and dealingwith related party transactions as approved by the Board may be accessed on the link: http://srghousing.com/DataImages/download/Related%20Party%20Transaction%20Policy.pdf.

RISK MANAGEMENT POLICY:

Pursuant to section 134 (3) (n) of the Companies Act 2013 & SEBI(LODR) Regulations 2015 the company has in place a risk management framework approved bythe Board of Directors. SRGHFL's Risk Management framework provides the mechanism for riskassessment and mitigation. Company has in place Risk Management Committee. The details ofthe committee and its terms of reference are set out in the corporate governance reportforming part of the Boards report.

At present the company has not identified any element of risk which maythreaten the existence of the company.

CORPORATE SOCIAL RESPONSIBILTY POLICY:

Pursuant to the provisions of section 135 and schedule VII of theCompanies Act 2013 at present the CSR provisions are not applicable on the Company.

DETAILS OF ADEQUACY OF INTERNAL FINANCIAL CONTROLS:

The Company has an Internal Control System commensurate with the sizescale and complexity of its operations. The scope and authority of the Internal Auditfunction is defined by board. To maintain its objectivity and independence the InternalAuditor reports to the Chairman of the Audit Committee of the Board and/or to the ManagingDirector.

The Internal Auditor monitors and evaluates the ef cacy and adequacy ofinternal control system in the Company its compliance with operating systems accountingprocedures and policies of the Company.

Based on the report of internal auditor respective heads undertakecorrective action in their respective areas and thereby strengthen the controls. Signicant audit observations and recommendations along with corrective actions thereon arepresented to the Audit Committee of the Board and/or to the Managing Director.

DIRECTORS:

In accordance with the provisions of the Act and the Articles ofAssociation of the Company Mrs. Seema Jain Director is liable to retire by rotation atthe ensuing Annual General Meeting and being eligible offers herself for re-appointment.Necessary resolution for the re-appointment of the aforesaid director and her detailed prole has been included in the Notice conveying the ensuing AGM.

Your Directors recommend her re-appointment.

The Nomination and Remuneration Committee of the Board and the Board ofDirectors had at their meeting held on April 8th 2017 revised the yearly remunerationof Mr. Vinod K. Jain Managing Director of the Company to Rs. 60 Lacs plus 5% of netprofits of the company for that financial year computed in the manner laid down in section198 (except that the remuneration of the directors shall not be deducted from the grosspro ts) and benefits as provided under Section IV Part II of Schedule V of Companies Act2013. The revised remuneration shall be payable to Mr. Vinod K. Jain monthly in suchmanner as may be decided by board for the remaining term of his office i.e. from 07th May2017 till 06th May 2019.

Necessary resolution for the approval of above terms and his detailedpro le has been included in the Notice conveying the ensuing AGM.

Your Directors recommend the same for approval.

All the directors of the Company have con rmed that they are notdisquali ed from being appointed as directors in terms of Section 164 of the CompaniesAct 2013.

During the year under review Board of Directors of the Company intheir meeting held on 28th April 2016 accepted resignation of Mr. Hitesh Soni from thepost of Company Secretary and appointed Ms. Sunaina Nagar as the Company Secretary of theCompany with effect from 28th April 2016.

DECLARATION FROM INDEPENDENT DIRECTORS ON ANNUAL BASIS:

The Company has received necessary declaration from each IndependentDirector of the Company under Section 149(7) of the Companies Act 2013 that theIndependent Directors of the Company meet with the criteria of their Independence as laiddown in Section 149(6).

AUDITORS:

STATUTORY AUDITORS:

In accordance with provisions of Companies Act 2013 the currentStatutory Auditor M/s. Valawat & Associates Chartered Accountants (FRN: 003623C)(Change in name from M/s Valawat

Jha Pamecha & Co to M/s Valawat& Associates with effect from01.01.2017.) hold office upto the conclusion of ensuing AGM. As per the provisions ofSection 139 of Companies Act 2013 M/s Valawat & Associates are not eligible forre-appointment for a fresh term. The Board of Directors places on record its appreciationfor the services rendered by M/s Valawat & Associates as the statutory auditors of thecompany.

The Board of Directors of the Company on the recommendation of AuditCommittee has considered and recommended the appointment of PKJ & Co. (FRN:124115W)Chartered Accountant as statutory auditor for a term of five years beginning from theconclusion of 18th AGM till the conclusion of 23rd AGM subject to approval of members atthe ensuing AGM.

SECRETARIAL AUDITORS:

M/s Deepak Vijaywargey & Associates Practicing Company SecretaryUdaipur was re-appointed as the Secretarial Auditor of the Company for the financial year2016-17 by the Board of Directors pursuant to provisions of Companies Act 2013 and rulesthere under. Secretarial Audit Report as provided by M/s Deepak Vijaywargey &Associates Practicing Company Secretary is annexed to this Report as ANNEXURE II.

QUALIFICATIONS IN AUDIT REPORTS:

There are no quali cations reservations or adverse remarks ordisclaimer made-(a) By the statutory auditor in his report; and (b) By the companysecretary in practice in his secretarial audit report

DISCLOSURES:

BOARD MEETINGS:

The Board of Directors met 19 (nineteen) times during the financialyear 2016-17.

COMPOSITION OF AUDIT COMMITTEE:

The Audit Committee consists of adequate composition of Non-ExecutiveIndependent Directors. The details of which are mentioned in the Corporate GovernanceReport.

COMPOSITION OF NOMINATION & REMUNERATION COMMITTEE:

The Nomination & Remuneration Committee consists of adequatecomposition of Non-Executive Independent Directors and Non- Executive Directors. Thedetails of which are mentioned in the Corporate Governance Report.

COMPOSITION OF STAKEHOLDER'S RELATIONSHIP COMMITTEE:

The Stakeholder's Relationship Committee consists of adequatecomposition of Non- Executive Directors and Non-Executive Independent Directors. Thedetails of which are mentioned in the Corporate Governance Report.

PARTICULARS OF LOANS GAURANTEES OR INVESTMENTS:

Since the Company is a Housing Finance Company the disclosureregarding particulars of loans given guarantees given and security provided is exemptunder the provisions of Section 186 (11) of the Companies Act 2013.

As regards investments made by the Company the details of the same areprovided under Note No. 11 forming part of the annual accounts of the Company for the yearended March 31st 2017.

CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGEOUTGO:

(A) CONSERVATION OF ENERGY:

The Company's operations are not power intensive. Nevertheless yourCompany is taking every step to conserve and minimize the use of energy wherever possiblesuch as using energy efficient computer terminals purchasing energy efficient equipmentsetc.

(B) TECHNOLOGY ABSORPTION:

The Company has imported no technology. Indigenous technology availableis continuously upgraded to improve overall performance.

(C) EXPENDITURE INCURRED ON RESEARCH AND DEVELOPMENT:

The Company has no formal research and development department but theCompany is continuously making efforts to strengthen research and development activitiesto improve quality and reduce cost.

(D) FOREIGN EXCHANGE EARNINGS AND OUTGO:

During the year under review there was no earnings and outgo in foreignexchange.

EXTRACT OF ANNUAL RETURN:

As required pursuant to section 92(3) of the Companies Act 2013 andrule 12(1) of the Companies (Management and Administration) Rules 2014 the detailsforming part of extract of annual return in MGT 9 is annexed herewith as ANNEXURE III.

PARTICULARS OF EMPLOYEES:

As at March 31st 2017 there was no employee employed throughout theyear who was in receipt of remuneration of Rs. 1.02 Crores or more per annum or Rs. 8.50Lakhs or more per month if employed for the part of the year.

EVENTS SUBSEQUENT TO THE DATE OF FINANCIAL STATEMENTS:

There are no material changes and commitments affecting financialposition of the company between 31st March and the date of Board's Report.

CHANGE IN THE NATURE OF BUSINESS:

There are no changes in the Nature of Business.

DETAILS RELATING TO DEPOSITS:

The Company has been granted registration by the National Housing BankNew Delhi as a non-deposit taking Housing Finance Company. Being so the Company hasneither accepted in the past nor has any future plans to accept any public deposits bywhatever name called.

SIGNIFICANT & MATERIAL ORDERS PASSED BY THE REGULATORS:

The Company has been following directions guidelines circulars issuedby SEBI BSE MCA NHB etc. from time to time relating to companies and that there are nosignificant & material orders passed by these regulators so far.

DISCLOSURES ON MANAGERIAL REMUNERATION:

Details of Managerial remuneration as required under Rule 5(1) of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 is given asper "Annexure VIII" to this report.

LISTING WITH STOCK EXCHANGES:

The Company con rms that it has paid the Annual Listing Fees for theyear 2017-2018 to BSE where the Company's Shares are listed.

INVESTOR COMPLAINTS AND COMPLIANCE:

During the year company has not received any investor complaints andthat as on 31ST March 2017 no complaints are pending.

EARNINGS PER SHARE (EPS)

The Earnings Per Share (EPS) is ` 2.38 as at March 31st 2017 asagainst ` 1.65 as at March 31st 2016.

CAPITAL ADEQUACY:

Particulars as on 31st March 2017 2016
Capital Adequacy Ratio 72.71% 49.91%

SRGHFL's capital adequacy in the form of CRAR stood at 72.71% as ofMarch 31st 2017 which is well above the NHB's minimum stipulated requirement of 12% andentirely in the form of Tier I Capital. High Tier I capital shall provide the Companyadequate headroom to raise Tier II capital for future business expansion. This positionenables the company to expand the loan book significantly by debt route.

NON-PERFORMING ASSETS AND PROVISIONS FOR CONTINGENCY:

Your Company adhered to the prudential guidelines for Non performingAssets (NPAs) issued by the National Housing Bank (NHB) under its Directions of 2010 asamended from time to time. As per the prudential norms the income on such NPAs is not tobe recognized if unrealized.

As per the prudential norms prescribed by the NHB the Company has madeprovision for contingencies on standard as well as non-performing housing loans andproperty loans.

A NOTE OF APPRECIATION:

Your Directors place on record their appreciation for the adviceguidance and support given by various regulatory authorities including the NHB RBI SEBIMCA the Stock Exchange (BSE) Depositories and all the bankers of the Company. TheDirectors would also like to acknowledge the role of all its stakeholders - shareholdersborrowers key partners and lenders for their continuing support to the Company. YourDirectors also record their appreciation for the dedicated services of the employees andtheir contribution to the growth of the Company. The Board would also like to express itssincere appreciation to all the Company's valued Shareholders RTA Service Providers andCounselors for their continued support and patronage.

Best Wishes

Sd/- Sd/-
Vinod K. Jain Rajesh Jain
Managing Director Director
DIN: 00248843 DIN: 00212393
Date: 10.05.2017 Place: Udaipur