Your Directors are presenting the Twenty Second (22nd) Annual Report of the Companytogether with the Audited Accounts for the Financial Year ended 31st March 2016.
| || ||(Rs. In Lacs) |
| ||Year Ended 31.03.2016 ||Year Ended 31.03.2015 |
|Total Income ||1428.76 ||2823.94 |
|Profit before Depreciation and Tax ||23.93 ||19.59 |
|Less: Depreciation ||4.30 ||5.56 |
|Profit before Tax ||19.63 ||14.03 |
|Less: Provision for Income Tax ||0.45 ||1.50 |
|Profit after Tax ||19.18 ||12.53 |
|Balance brought forward from previous years ||(91.03) ||(100.42) |
|Adjustments as per new Companies Act 2013 ||- ||(0.49) |
|Transfer to Statutory Reserve ||(3.95) ||(2.65) |
|Balance carried to Balance Sheet ||(75.81) ||(91.03) |
The Company is mainly engaged into investment and finance activities. During the yearunder review the total revenues for the year were Rs. 1428.76 lacs as compared to Rs.2823.94 lacs last year. Company has reported net profit of Rs.19.18 lacs during the yearas compared to Rs. 12.53 lacs in the last year.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
A. INDUSTRY STRUCTURE & DEVELOPMENT
The financial year 2015-16 did not witness any major surge in economic activity. Globalgrowth declined from 3.4% in 2014 to 3.1% in 2015. This slowdown was primarily driven byunprecedented decline in oil and commodities prices volatility in financial marketsdecline in trade and low inflationary trends owing to depressed growth around the world.
Government initiatives low interest rates decline in fiscal deficit and moderateinflation have enabled the Indian economy to achieve strong growth estimates. Policyadjustments and improved macro-economic environment have helped India attract more FDIflows during the year compared to last year.
With governments growth agenda intact and the tide turning favourable on theeconomic front India looks poised to perform better than its global counterparts in2016-17 and is expected to grow at closer to 8% in 2016-17.
Indias financial services industry is expanding at a rapid pace driven by thegovernments pro-sector measures announced in the last fiscal. These initiativeshave given significant impetus to the sector that includes commercial banks insurancecompanies non-banking financial companies cooperatives pension funds mutual funds andother smaller financial entities. Government schemes like Pradhan Mantri Jan Dhan YojanaAtal Pension Yojana MUDRA the new bankruptcy law gold monetisation scheme and debtrestructuring scheme are contributing to the financial sectors growth. Besides thesector is positively impacted by favourable micro economic factors like rising incomelevels improving life expectancy and good economic growth numbers.
Housing for all by 2022 or Pradhan Mantri Awas Yojna is an ambitious mega housingscheme of Indian Government under which the government aims to develop 2 crore affordablehousing units for the urban poor through a financial assistance of 2 trillion (US$30billion) from central government. Housing a basic need for humans could play animportant role in accommodating high urban growth in India.
The Reserve Bank of India (RBI) has issued in-principle approvals for setting up tensmall finance banks and eleven payment banks. These initiatives are likely to speed up theprocess of financial inclusion opening new avenues of funding for micro small and mediumenterprises (MSMEs). This in turn is expected to open new business opportunities forNBFCs.
A. OPPORTUNITY & THREATS
The NBFC sector has great potential to grow further and the Government of India is alsofocusing on their development and expansion in rural areas. The recent steps by theGovernment of India to create Infrastructure for NBFC and to provide banking license forNBFCs is a positive signal and the emergence of REMF (Real Estate Mutual Funds)& REIT (Real Estate Investment Trust) has brought new scope for funding in Real EstateSector.
The sector is subject to many external threats like down trends in the economy risinginflation squeeze in market liquidity etc. to overcome the upcoming changes taking placein the financial policies and sector is the major challenge for the company. TheDevelopment of Industry has resulted in the emergence of various new entrants and hencemaking the industry more competitive. Your Company is confident of meeting the competitionand sustaining in the market.
Over the medium term however along with an increase in demand a supportive operatingenvironment and a stable or soft interest rate regime are factors which could supportNBFCs ability to improve profitability and shareholder returns. The Company faces stiffcompetition from Banks and other NBFCs operating in similar areas of business andchallenges from regulatory changes in the NBFC and ancillary sectors. However with itsexcellent service customer focus and unique differentiators in the product the Companyhas been able to continue to expand its business.
B. RISKS AND CONCERNS
Risk is the integral part of any business. Even as the risk cannot be avoided in abusiness it can be minimized or the probability of loss due to manifestation of such riskcan be reduced to a greater extent.
Volatile macro-economic conditions and change in the sectors attitude towardsvarious economic segments cause ups and downs in the business. There may be increasedcompetition lower spreads available and non-performance of certain customer segments
Fluctuations in interest rates could adversely affect borrowing costs interest incomeand net interest margins of companies in the financial sector. Any changes in interestrates can impact the companys asset liability position together with makingthe business exposed to risk of lower profitability and lower returns.
NBFCs are regulated by RBI and given the nature of the business there are alwaysregulatory changes and compliance additions being made.
The RBI conducted a comprehensive review of NBFC regulations in 2014. The revisedregulatory framework is designed to focus supervisory attention to those NBFCs whichgenuinely can pose risks to the financial system and bring operational freedom to smallerNBFCs. Assets classification and Provisioning norms of NBFCs are going to converge withthose of banks by the 2018.
Further change in regulatory requirements for NBFCs from time to time can have abearing on the running of the Company. The overall economic slowdown and its impact onservice sector is also a cause of concern.
Over the years NBFCs have played a significant role in providing small-ticket loans toretail customers in underserved regions who do not have access to formal sources offinance. There is huge opportunity for credit intermediation and expansion in the countryowing to improved economic activity and moderate interest rates as well as consumerdemand.
D. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
Internal Control measures and systems are established to ensure the correctness of thetransactions and safe guarding of the assets. Considering the size and nature ofactivities the company has adequate internal control system covering both accounting andadministrative control. In addition the internal audit is carried out periodically. Themanagement ensuring an effective internal control system so that the financial statementsand reports give a true and fair view.
E. HUMAN RESOURCES
The company always regards human resources as its most valuable asset and continuouslyevolves policies and process to attract and retain its substantial pool of managerialresources through friendly work environment that encourages initiatives by individuals andrecognizes their performance.
F. CAUTIONARY NOTE
Certain Statements in the Management Discussion and Analysis describing the company'sviews about the industry expectations objectives etc may be understood 'forward lookingstatement' within the meaning of applicable laws and regulations. Factors like changes inGovernment regulations tax laws and other factors such as industrial relations andeconomic developments etc. may further influence the company's operations or performance.Actual results may differ substantially or materially from those expressed or implied.
In view of insufficient profit and brought forward losses the directors do notrecommend any dividend for the year ended March 31 2016.
The Company proposes to transfer 3.95 lacs to the statutory reserves out of the amountavailable for appropriation.
The Company has not accepted any deposits within the meaning of Section 73 of theCompanies Act 2013 and/or rules framed there under.
Company had not issued any equity shares either with or without differential rightsduring the FY 2015 - 2016 and hence the disclosure requirements under Section 43 and Rule4 (4) of the Companies (Share Capital and Debentures) Rules 2014 is not applicable
The composition of the Board is as per the Companies Act 2013 and the SEBI (ListingObligations and Disclosure Requirements) (LODR) Regulations 2015. All the Directors arehaving vast knowledge and experience in their relevant fields and the Company hadbenefitted immensely by their presence in the Board.
In accordance with the provisions of section 152 of the Companies Act 2013 Mrs.Pratibha Goyal (DIN:3 00399056) Director of the Company retires by rotation at theensuing Annual General Meeting and being eligible has offered herself for re-appointment.
During the year under review there are no changes in the composition of the Board ofDirectors.
CHANGES IN KEY MANAGERIAL PERSONNEL (KMPS) DURING THE YEAR 2015 2016
The Board appointed Mrs. Prerana Lokhande as the Chief Financial Officer and designatedher as key managerial personnel of the company w.e.f. 30.10.2015. Mrs. Prerana Lokhandehas resigned from the post of Chief Financial Officer w.e.f. 16.02.2016.
The Board appointed Ms. Rupali Verma as Company Secretary of the Company w.e.f.16.02.2016 in place of Ms. Rajeshree Gaikwad who has resigned from the post of CompanySecretary w.e.f 30.10.2015.
DIRECTORS RESPONSIBILITY STATEMENT
In accordance with the provisions of Section 134(5) of the Companies Act 2013 yourdirectors confirm that:
i. in the preparation of the annual accounts the applicable accounting standards hadbeen followed along with proper explanation relating to material departures;
ii. the directors had selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the company as at March 31 2016 and of the profit ofthe company for that period;
iii. the directors had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of this Act for safeguarding theassets of the company and for preventing and detecting fraud and other irregularities;
iv. the directors have prepared the annual accounts on a going concern basis.
v. the directors had laid down internal financial controls to be followed by thecompany and that such internal financial controls are adequate and were operatingeffectively.
vi. the directors had devised proper system to ensure compliance with the provisions ofall applicable laws and that such system were adequate and operating effectively.
DECLARATION BY INDEPENDENT DIRECTORS
The Company has received necessary declaration from all the Independent Directors ofthe Company confirming that they meet the criteria of independence as prescribed bothunder Section 149(6) of the Companies Act 2013 and Regulation 16 (1) (b) of the ListingRegulations. In the opinion of the Board they fulfill the conditions of independence asspecified in the Act and the Rules made there under and are independent of the management.
EVALUATION OF PERFORMANCE OF THE BOARD MEMBERS
Pursuant to the provisions of the Companies Act 2013 and Regulation 19 (4) & 20(4) of the Listing Regulation the evaluation of the performance of the Board as well asof the Audit Committee Nomination and Remuneration Committee and StakeholdersRelationship Committee has been carried out.
The performance evaluation of the Independent Directors was carried out by the entireBoard and the performance evaluation of the Chairman and Non-Independent Directors wascarried out by the Independent Directors
NUMBER OF BOARD MEETINGS CONDUCTED DURING THE YEAR UNDER REVIEW
During the year Five (5) Board Meetings were convened and held. The details of whichare given in the Corporate Governance Report. The intervening gap between the Meetings waswithin the period prescribed under the Companies Act 2013.
COMMITTEES OF THE BOARD:
The Board of Directors of your Company had already constituted various Committees incompliance with the provisions of the Companies Act 2013 /Listing Regulation viz.:
a) Audit Committee.
b) Nomination and Remuneration Committee.
c) Stakeholder Relationship Committee.
d) Risk Management Committee.
e) Finance Committee.
All decisions pertaining to the constitution of Committees appointment of members andfixing of terms of reference / role of the Committees are taken by the Board of Directors.A detailed note on the Board and its Committees is provided under the Corporate GovernanceSection in this Annual Report
CHANGES IN THE NATURE OF BUSINESS IF ANY:
During the year under review there is no change in the nature of business of theCompany.
SUBSIDIARIES/JOINT VENTURE/ASSOCIATE COMPANY
The Company has no subsidiary/joint venture/associate company and hence consolidationand applicable provision under the Companies Act 2013 and Rules made there under are notapplicable to the Company.
Your Company has taken adequate steps to adhere to all the stipulations laid down inRegulation 27 of the SEBI (LODR) Regulations 2015 on Corporate Governance. The detailedreport on Corporate Governance along with certificate on Corporate Governance from theStatutory Auditors is forming part of this Report.
EXTRACT OF ANNUAL RETURN
The extract of Annual Return pursuant to the provisions of Section 92 read with Rule 12of the Companies (Management and administration) Rules 2014 is annexed herewith asAnnexure-1 to this Report.
M/s Bansal Bansal & Co. Chartered Accountants were appointed as the StatutoryAuditors of the Company during the 20th AGM held on 30th September 2014 for a period ofthree years. As per the provisions of Section 139 of the Companies Act 2013 theappointment need to be ratified at each AGM during their tenure and your Directorsrecommend ratification of the appointment of Statutory Auditors for the FY 2016 - 2017 inthe ensuing AGM.
a) Independent Auditors Report
There are no qualifications reservation or adverse remark or disclaimer in theIndependent Auditors Report provided by M/s. Bansal Bansal & Co. CharteredAccountants for the FY 2015 - 2016. The notes to accounts forming part of financialstatements 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 M/s. Kamlesh Jain & Associates Company Secretaries for theFY 2015 - 2016. The said report is annexed to this report as Annexure 2.
c) Details in respect of frauds reported by auditors under sub-section (12) ofsection 143 other than those which are reportable to the central government
There are no such frauds committed by the Company which are reported by auditors.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS
Pursuant to Section 186(11) (a) of the Companies Act 2013 read with Rule 11(2) of theCompanies (Meetings of Board and its Powers) Rules 2014 the loan made guarantee givenor security provided in the ordinary course of business by a Non- Banking FinancialCompany (NBFC) registered with Reserve Bank of India are exempt from the applicability ofprovisions of Section 186 of the Act.
PARTICULARS OF CONTRACTS OR ARRANGEMENTS MADE WITH RELATED PARTIES
All related party transactions that were entered into during the financial year were onarms length basis and were in the ordinary course of the 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 ofinterest with the company at large.
MATERIAL CHANGES AND COMMITMENT AFFECTING FINANCIAL POSITION OF THE COMPANY
No material changes and commitments which could affect the Companys financialposition have occurred between the end of the financial year of the Company and date ofthis report.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGO
a) CONSERVATION OF ENERGY & TECHNOLOGY ABSORPTION
The Company is not engaged in manufacturing activities and therefore provisionsrelating to conservation of energy and technology absorption are not applicable to it.However efforts are being made to minimize consumption of energy wherever possible.
3 b) FOREIGN EXCHANGE EARNINGS AND OUTGO
| ||Rs. |
|i. Foreign exchange earning- ||Nil. |
|ii. Foreign Exchange outgo- ||Nil |
Pursuant to section 134 (3) (n) of the Companies Act 2013 & Regulation 21 of theListing Regulation the company has constituted a business Risk Management Committee. Thedetails of the committee and its terms of reference are set out in the CorporateGovernance Report forming part of the Boards Report. At present the company has notidentified any element of risk which may threaten the existence of the company.
CORPORATE SOCIAL RESPONSIBILITY
The provisions of Corporate Social Responsibility are not applicable to the company.
SIGNIFICANT ORDERS PASSED BY REGULATORS COURTS OR TRIBUNALS IMPACTING GOING CONCERNAND COMPANYS OPERATIONS:
No orders have been passed by any Regulator or Court or Tribunal which can have animpact on the going concern status and the Companys operations in future.
ADEQUACY OF INTERNAL FINANCIAL CONTROL WITH REFERENCE TO FINANCIAL STATEMENTS
The Company has in place adequate internal financial controls with reference to thefinancial statements which is evaluated by the Audit Committee as per Schedule II Part Cof the SEBI (LODR) Regulations 2015. During the year under review there were noreportable material weaknesses in the systems or operation.
INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
The details in respect of internal control systems and their adequacy are included inthe Management Discussion and Analysis Report which forms part of this report.
INDEPENDENT DIRECTORS MEETING
During the year under review the independent Directors of the Company met on January18 2016 inter-alia to discuss:
a. Evaluation of performance of Non-Independent Directors and the Board of Directors ofthe Company as a whole.
b. Evaluation of performance of the Chairman of the Company taking into views ofExecutive and Non Executive Directors.
c. Evaluation of the quantity content and timelines of flow of information between theManagement and the board that is necessary for the Board to effectively and reasonablyperform its duties.
NOMINATION & REMUNERATION POLICY
The Board has on the recommendation of the Nomination & Remuneration Committeeframed a policy for selection and appointment of Directors Senior Management and theirremuneration. The appointment and Remuneration Policy is stated in the CorporateGovernance Report of the Company that forms part of the Annual Report.
VIGIL MECHANISM/WHISTLE BLOWER POLICY
The Company in order to maintain highest standards of ethical moral and legal conductadopted Vigil Mechanism/Whistle Blower policy to provide an avenue to its employees toraise concerns of any violations of legal or regulatory requirements incorrect ormisrepresentations of any financial statements and reports etc. The Audit committee ofthe company oversees the said mechanism from time to time. None of the Company personnelhas been denied access to the Audit Committee. The Whistle Blower Policy of the Company isalso posted on the website of the Company www.upsurgeinevstment.com
PARTICULARS OF EMPLOYEES AND DISCLOSURE UNDER SECTION 197(12) AND RULE 5(1) OF THECOMPANIES (APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL) RULES 2014:
The information required under Section 197 (12) of the Companies Act 2013 read withRule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules2014 is attached herewith as Annexure-3.
DISCLOSURE UNDER RULE 5(2) AND RULE 5(3) OF THE COMPANIES (APPOINTMENT AND REMUNERATIONOF MANAGERIAL PERSONNEL) RULES 2014
There are no employees covered under Rule 5 (2) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 in respect of whom particulars arerequired to be furnished.
DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITIONAND REDRESSAL) ACT 2013
The company has in place an Anti Harassment policy in line with the requirements of Thesexual harassment of women at the workplace (Prevention Prohibition & Redressal) Act2013. Internal Complaints Committee (ICC) has been set up to redress complaints receivedregarding sexual harassment. All employees (permanent contractual temporary trainees)are covered under this policy. During the year under review company has not received anySexual Harassment Complaints.
The company continues to comply with all the requirements prescribed by the ReserveBank of India from time to time as applicable.
The Directors takes this opportunity to thank all their colleagues at UpsurgeInvestment & Finance Ltd. for their professionalism and dedication to the task athand. The board also wishes to place on record their appreciation for valuable supportgiven by the Bankers Clients and Shareholders.
| ||By Order of the Board of Directors || |
| ||D.K. Goyal ||Hansraj Goyal |
| ||Managing Director ||Director |
| ||DIN: 00398539 ||DIN: 00398273 |
|Mumbai dated 5th August 2016 || || |