Your Board of Directors (the Board) take pleasure in presenting theTwenty-fifth Annual Report of Dhanvarsha Finvest Limited (the Company)together with the audited financial statements for the year ended March 31 2019.
|The financial performance of the Company is summarized below: || ||(Rs. in Lakh) |
|Particulars ||FY 2018-19 ||FY 2017-18 |
|Total revenue ||2129.93 ||1189.17 |
|Profit before interest and depreciation ||1106.90 ||667.00 |
|Less: Interest and finance charges ||517.67 ||200.11 |
|Less: Depreciation and amortization ||16.60 ||5.39 |
|Profit Before Tax ||572.63 ||461.50 |
|Less: Provision for taxation ||130.02 ||53.22 |
|Profit After Tax ||442.61 ||408.28 |
|Add: Balance brought forward from previous year ||386.92 ||60.30 |
|Balance available for appropriation ||829.53 ||468.58 |
|Statutory reserve ||88.52 ||81.66 |
|Balance carried to Balance Sheet ||578.26 ||386.92 |
|Basic Earnings Per Share (EPS) (Rs.) ||3.66 ||5.26 |
|Diluted EPS (Rs.) ||3.53 ||5.26 |
|Proposed Dividend on equity shares of Rs.10/- each ||33.75 ||135.00 |
|Tax on Proposed Dividend ||6.94 ||27.75 |
For the financial year ended March 31 2019 your Company earned Profit Before Tax ofRs.572.63 Lakhs as against Rs.461.50 Lakhs in the previous financial year and the ProfitAfter Tax of Rs.442.61 Lakhs as against Rs.408.28 Lakhs in the previous financial year.The total Income for the year under consideration was Rs.2129.93 Lakhs and totalexpenditure was Rs.1557.30 Lakhs. As of March 31 2019 the Company had 225 Borrowersoperating out of two (2) Branches in Mumbai and Pune with a gross loan portfolio ofRs.4873 Lakh. The Company repaid a sum of Rs.1455 Lakhs of short-term loans.
Your Company's strategy had the following building blocks:
- Offering sustainable financial products for the unbanked and underpenetrated;
- Providing turnkey solutions across secured and unsecured lending to suit borrowerneeds; and
- Focus on Micro Small Medium Enterprises and Low to Mid Income Group;
Your Company currently offer Secured Loans - Loan against Property Equipment Financingand proposes to introduce new products in the year ahead with Affordable Housing LoansVehicles Loans and Unsecured Loans - Business Loans for Working Capital Requirement andBusiness Expansion Personal Loans and Loans through Digital platform.
The Members of the Company at the Twenty-third Annual General Meeting (AGM)held on August 28 2017 had approved Preferential Issue of 5742200 equity shares of facevalue of Rs.10/- each at a price of Rs.21/- each to Wilson Holdings Private Limited(formerly "Truvalue Agro Ventures Private Limited) aggregating to Rs.1205.86Lakh subject to receipt of regulatory approvals.
Your Company successfully completed Preferential Issue on June 29 2018 consequent toprior approval accorded by Reserve Bank of India ("RBI) for change inshareholding and management on June 18 2018. The proceeds from the Preferential Allotmentaggregating Rs.1205.86 Lakh brought in the much-needed growth capital for your Company.
Post allotment of equity shares as aforesaid the issued subscribed and paid-up sharecapital of the Company stands at Rs.135000000 (Rupees Thirteen Crore Fifty Lakh only)comprising of 13500000 (One Crore Thirty-five Lakh) equity shares of Rs.10/- each as onMarch 31 2019 as against the issued subscribed and paid-up share capital ofRs.77578000 (Rupees Seven Crore Seventy-five Lakh Seventy-eight Thousand only)comprising of 7757800 (Seventy-seven Lakh Fifty-seven Thousand Eight Hundred) equityshares of Rs.10/- each as on March 31 2018.
Subsequently the Members of the Company at the Twenty-fourth AGM held on September 282018 had approved issuance of fully convertible Warrants on Preferential basis for anamount up to Rs.7500 Lakh to Wilson Holdings Private Limited Promoters of the Companywith a rights exercisable to subscribe for one equity share of the Company per Warrantwithin 18 months from the date of issue of the Warrants in accordance with the Securitiesand Exchange Board of India (lssue of Capital and Disclosure Requirements) Regulations2009 as amended and other applicable laws subject to the receipt of necessary approvals;
The Board at its meeting held on November 5 2018 issued and allotted 775200 (SevenLakh Seventy-five Thousand Two Hundred) Warrants (convertible into equivalent number ofEquity Shares) to Wilson Holdings Private Limited on receipt of subscription priceequivalent to 25% of the Issue Price (Issue Price being Rs.64.50 per warrant). As theCompany has allotted Warrants there is no change in the paid-up share capital of theCompany. Fully paid-up equity shares of the face value of Re.10/- each of the Company willbe allotted on receipt of balance 75% Issue Price on each Warrant within eighteen monthsfrom November 5 2018. The Company has also obtained in principle approval from the BSELimited to issue and allot above mentioned Warrants.
The State of Company's Affairs
The Company continues to be categorised as a Non-Banking Financial Company -Non-Systemically Important Non-Deposit taking Company under the Reserve Bank f India("RBI) Regulations. The Company is in compliance with the conditions of RBIMaster Direction - Non-Banking Financial Company - Non-Systemically Important Non-Deposittaking Company (Reserve Bank) Directions 2016 as amended
Investment in Subsidiary
The Board on August 13 2019 approved incorporation of a wholly owned subsidiary ofthe Company for carrying on the business of Digital Lending Solutions subject to receiptof necessary approvals.
The Board is pleased to recommend a dividend of Rs.0.25/- (i.e. 2.5%) per equity shareof Rs.10/- each for your approval at the Twenty-fifth AGM. The dividend shall be subjectto tax on distribution of dividend to be paid by the Company. The dividend distributionwill involve in a cash outflow of Rs.40.69 Lakhs together with tax on dividend.
In terms of the provisions of Section 124(5) of the Companies Act 2013 (theAct) the Company is not required to transfer the unclaimed dividend amount tothe Investors Education and Protection Fund as of yet since the Company has declared thedividend only for FY18.
During the year under review your Company has not accepted any deposit from thepublic.
Transfer to Reserves
Your Company has transferred an amount of Rs.8.8 lakhs to the statutory reserve duringFY19.
Capital Adequacy Ratio
Your Company's total Capital Adequacy Ratio (CAR) as of March 31 2019 stood at55.23% of the aggregate risk weighted assets on balance sheet and risk adjusted value ofthe off-balance sheet items which is above the regulatory minimum of 15%.
Reclassification of Promoter
Mrs. Aarti Jagdishkumar Thakkar and Mr. Malay Rohitkumar Bhow the erstwhile promotersof the Company have requested the Company to reclassify them from promoter andpromoter group category' to public category'. The Members at the Twenty-fourth AGMheld on September 28 2018 had approved the reclassification of Promoters of the Companyas Public Shareholders.
BSE Limited vide its letter LIST/COMP/BP/1130/2018-19 dated February 26 2019 accordedapproval for the reclassification of Mrs. Aarti Jagdishkumar Thakkar and Mr. MalayRohitkumar Bhow from 'Promoter Category to 'Public Category' under Regulation 31A of theListing Regulations and accordingly Wilson Holdings Private Limited (formerlyTruvalue Agro Ventures Private Limited) is the only remaining Member inPromoter Category.
Shifting of the Registered Office from Gujarat to Maharashtra
The Members vide Special Resolution dated April 8 2019 passed through postal ballotapproved the shifting of the Registered Office from Gujarat to Maharashtra by amendmentto the Situation Clause of the Memorandum of Association of your Company.
Your Company is in the process of obtaining the necessary statutory approvals forshifting the Registered Office of your Company to Maharashtra.
Cessation of Directorships
Consequent to the approval accorded by RBI for change in shareholding and management onJune 18 2018 Mr. Malay Rohitkumar Bhow (DIN:02770605) Whole-time Director of theCompany resigned from the directorship of the Company with effect from August 10 2018.Subsequently Mrs. Arunaben Shah (DIN: 00014528) and Mr. Darmil Shah (DIN:02496445)Non-Executive Independent Directors of the Company resigned from the directorship of theCompany with effect from August 24 2018.
Appointment of Directors
The Board appointed (i) Mr. Nimir Kishore Mehta ((DIN:00699993) and (ii) Mr. AshishSharad Dalal (DIN:00024632) as Additional Directors in the category of Non-ExecutiveDirector of the Company liable to retire by rotation with effect from August 10 2018;(iii) Mr. Nirmal Vinod Momaya (DIN:01641934) as an
Additional Director in the category of Independent Director of the Company with effectfrom August 10 2018 for a period of five consecutive years up to August 9 2023; (iv) Mr.Krishipal Tarachand Raghuvanshi (DIN: 07529826) as an Additional Director in the categoryof Independent Director of the Company with effect from August 24 2018 for a period offive consecutive years up to August 23 2023; and (v) Mr. Karan Neale Desai (DIN:05285546)as Managing Director & Chief Executive Officer of the Company with effect from August11 2018 for a period of three years up to August 10 2021. The Members of the Company atthe Twenty-fourth AGM held on September 28 2018 had approved the appointment of theabove-mentioned Directors.
The Board of Directors appointed (i) Mrs. Manjari Ashok Kacker (DIN:06945359) as anAdditional Director in the category of Independent Director of the Company with effectfrom September 28 2018 for a period of five consecutive years up to September 27 2023;and (ii) Mr. Surendra Kumar Behera (DIN: 07480667) as an Additional Director in thecategory of Independent Director of the Company with effect from May 22 2019 for a periodof five consecutive years up to May 21 2024 subject to approval of Members at theensuing Twenty-fifth AGM.
Retirement of Director by Rotation
Mr. Nimir Kishore Mehta ((DIN:00699993) Non-Executive Non- Independent Director of theCompany will retire by rotation at the ensuing Twenty-fifth AGM and being eligible offershimself for re-appointment.
All the above appointments / re-appointments by the Board are based on therecommendation of the Nomination and Remuneration Committee. The resolutions forappointment / reappointments together with requisite disclosures are set out in the Noticeof the ensuing Twenty-fifth AGM. The Board recommends all the resolutions for yourapproval.
Declaration by Independent Directors
The Board has received the declaration from all the Independent Directors as per theSection 149(7) of the Act and Regulation 16(1)(b) of the Listing Regulations and the Boardis satisfied that all the Independent Directors meet the criteria of independence asmentioned in Section 149(6) of the Act and Regulation 16(1)(b) of the Listing Regulations.
Policies on Selection and Appointment of Directors
In compliance with the provisions of the Act and Listing Regulations the Board on therecommendation of the Nomination and Remuneration Committee had adopted the Policy forSelection and Appointment of Directors.
The aforesaid Policy provides a framework to ensure that suitable and efficientsuccession plans are in place for appointment of Directors on the Board so as to maintainan appropriate balance of skills and experience within the Board. The Policy also providesfor selection criteria for appointment of directors viz. educational and professionalbackground general understanding of the Company's business dynamics Board diversity andpayment of remuneration to the directors of the Company. The Nomination and RemunerationCommittee takes into account the fit and proper criteria for appointment of directors asstipulated by RBI.
Number of Meetings of the Board
Eleven Board Meetings were held during the financial year ended March 31 2019. Thedetails of the Board and various Committee meetings are given in the Corporate GovernanceReport which is provided separately in this Annual Report.
Performance Evaluation of Directors at Board and Independent Directors' Meetings
Pursuant to the provisions of the Act and Listing Regulations the Board has carriedout an annual performance evaluation of its own performance the Directors individually aswell as the evaluation of the working of its various Committees for FY19. The evaluationwas conducted on the basis of a structured questionnaire which comprises performancecriteria such as performance of duties and obligations independence of judgement levelof engagement and participation attendance of directors their contribution in enhancingthe Board's overall effectiveness etc.
The Independent directors met without the presence of other directors or members ofManagement. All the Independent Directors were present at the meeting. In the meeting theIndependent Directors reviewed performance of Non-Independent Directors the Board as awhole and Chairperson. They assessed the quality quantity and timeliness of flow ofinformation between the Company's management and the Board.
Key Managerial Personnel
As on the date of the report Mr. Karan Neale Desai Managing Director and ChiefExecutive Officer Mr. Narendra Kumar Tater Chief Financial Officer and Mr. M Vijay MohanReddy AVP - Legal and Company Secretary of the Company are the Key Managerial Personnel(KMP'j of the Company The KMP were appointed during the year under review.
During the year under review Mr. Malay Rohitkumar Bhow Whole-time Director and Mr.Dhairya Kumar Thakkar Company Secretary have resigned from the services of the Companywith effective August 10 2018.
Directors' Responsibility Statement
Your Board to the best of their knowledge and belief confirm that:
1. in the preparation of the accounts for the year ended March 31 2019 the applicableaccounting standards have been followed and there are no material departures from thesame;
2. they have selected such accounting policies and applied them consistently and madejudgments and estimates that were reasonable and prudent so as to give a true and fairview of the state of affairs of the Company as at March 31 2019 and of the profit of theCompany for that period;
3. they have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;
4. they have prepared annual accounts of the Company on a going concern' basis;
5. they have laid down internal financial controls to be followed by the Company andthat such internal financial controls are adequate and were operating effectively; and
6. they have devised proper systems to ensure compliance with the provision of allapplicable laws and that such systems were adequate and operating effectively.
The Company continues to comply with all the requirements prescribed by the RBI fromtime to time. Corporate Social Responsibility
The provisions of the Act and rules framed there under with regard to Corporate SocialResponsibility do not apply to the Company and hence no disclosure have made in thatregard.
Extract of Annual Return
Pursuant to Section 134 (3a) and Section 92 (3) of the Act read with Rule 12 of theCompanies (Management and Administration) Rules 2014 an extract of the Annual Return asat March 31 2019 in form MGT-9 has been annexed as Annexure - I to the Directors' Report.
Extract of Annual Return is also available on the website of the Company athttps://www.dfltd.in/general- meeting.php#investor-relations31
Material Changes and Commitments if any affecting the Financial Position of theCompany
There are no material changes and commitments affecting the financial position of theCompany which has occurred between the end of the financial year of the Company i.e.March 31 2019 and the date of the Directors' Report.
Conservation of Energy Technical Absorption and Foreign Exchange Earnings and Outgo
The provisions of Section 134(3) (m) of the Act relating to conservation of energy andtechnology absorption do not apply to the Company. The Company has however usedinformation technology extensively in its operations.
During the year under review the Company's earning and outgo in foreign exchange wereNil and Rs.163832/- respectively.
Contracts or Arrangements with Related Parties
In line with the requirements of the Act and Listing Regulations your Company hasformulated a Policy on Related Party Transactions which is also available onhttps://www.dfltd.in/pdf/new-pdf/policy-related- party-transactions.pdf. All Related PartyTransactions are placed before the Audit Committee for review and approval of theCommittee on a quarterly basis.
All the related party transactions entered into during the financial year were inordinary course of business and were on an arm's length basis. During the year yourCompany has entered into a transaction with Wilson Holdings Private Limited (formerlyknown as "Truvalue Agro Ventures Private Limited) Promoter and holdingcompany details of the said transaction are provided in Form AOC-2 as annexed to thisreport as Annexure - II.
The Board has adopted the Risk Management Policy based on the recommendation of theAudit Committee in order to assess monitor and manage risk throughout the Company.
Risk is an integral part of the Company's business and sound risk management iscritical to the success of the organization. Detailed information on risk management isprovided in the Management Discussion and Analysis Report.
Whistle Blower Policy/ Vigil Mechanism
The Company has adopted the Whistleblower Policy and details of the same are explainedin the Corporate Governance Report.
The details are spread over in the Annual Report.
Subsidiaries joint ventures or associate companies
There were no entity(ies) which became or ceased to be subsidiaries joint ventures orassociate companies of the Company during the financial year ended March 31 2019.
Details of Significant and Material Orders passed by the Regulators or Courts orTribunals impacting the going concern status and Company operations in future
There are no significant material orders passed by the Regulators/ Courts which wouldimpact the going concern status of the Company and its future operations.
Information Required under Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013
The Company has a policy against sexual harassment and a formal process for dealingwith complaints of harassment or discrimination. The Company seeks to ensure that all suchcomplaints are resolved within defined timelines. During FY19 the Company has notreceived any complaints. The Company has conducted awareness sessions on prevention ofsexual harassment for its employees.
Internal Financial Controls
The Company has adequate internal controls and processes in place with respect to itsoperations which provide reasonable assurance regarding the reliability of thepreparation of financial statements and financial reporting as also functioning of otheroperations. These controls and processes are driven through various policies andprocedures.
Particulars of Employees
The Company has not employed any individual whose remuneration falls within the purviewof the limits prescribed under the provisions of Section 197 of the Act read with Rule5(2) of The Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014.
The Disclosure required as under Rule 5(1) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 is annexed to this report asAnnexure-III.
(a) Statutory Auditors
Haribhakti & Co. LLP Chartered Accountants (Firm Regd. No: 103523W/W100048) wereappointed as Statutory Auditors of the Company at the Twenty-third Annual General Meetingheld on August 28 2017 till the conclusion of the Twenty-fifth Annual General Meetingsubject to ratification by Members every year. Hence the term for Statutory Auditors ofthe Company will end at the ensuing Annual General Meeting. Accordingly on the basis ofrecommendations of the Audit Committee the Board of Directors of the Company haveapproved the appointment of Haribhakti & Co. LLP Chartered Accountants as theStatutory Auditors of the Company for a period of five years from the five continuousyears i.e. from the conclusion of Twenty-fifth Annual General Meeting till the conclusionof Thirtieth Annual General Meeting of the Company.
Further pursuant to Section 139 of the Companies Act 2013 read with the Companies(Audit and Auditors) Rules 2014 Haribhakti & Co. LLP Chartered Accountants beingeligible offer themselves for reappointment for a term of five years. The Company hasalso received written consent from Haribhakti & Co. LLP Chartered Accountants and aconfirmation to the effect that their re-appointment if made would be within the limitsprescribed under the Section 141 of the Companies Act 2013 and the rules made thereunder.
The Board recommends re-appointment of Haribhakti & Co. LLP Chartered Accountantsas Statutory Auditors of the Company from the conclusion of Twenty-fifth Annual GeneralMeeting up to the conclusion of Thirtieth Annual General Meeting of the Company.
Members' attention is drawn to a Resolution proposing the re-appointment of Haribhakti& Co. LLP Chartered Accountants as the Statutory Auditors of the Company which isincluded in the Notice convening the Twenty-fifth AGM.
The Report given by the Auditors on the financial statements of the Company for thefinancial year ended on March 31 2019 forms part of this Annual Report. There has been noqualification reservation adverse remark or disclaimer given by the Auditors in theirReport. Also no offence of fraud was reported by the Auditors of the Company.
(b) Secretarial Auditors and Secretarial Audit Report
Secretarial Audit Report pursuant to the provisions of Section 204 of the Act for theFY19 issued by MMJC & Associates LLP Company Secretaries is annexed to this report asAnnexure - IV. The report contains the following qualification reservation or adverseremark:
1. The Company was required to submit to the Stock Exchange the proceedings of ExtraOrdinary General Meeting held on May 29 2018 within 24 hours under Regulation 30 readwith Schedule III of LODR however there was a delay.
2. Haribhakti & Co. LLP Statutory Auditors of the Company have been appointed atthe Annual General Meeting held on August 28 2017 for a term of two years.
3. The Company under Section 179 read with Section 117 of the Act has not filede-form MGT - 14. Management's Reply
1. The Secretarial Department has been strengthened by appointment of experiencedCompany Secretary and new staff. Due care will be taken to avoid such instances in future.
2. The Board re-appointed Haribhakti & Co. LLP Statutory Auditors of the Companyfor a further term of five years at its meeting held on May 22 2019 as per the provisionof Companies Act 2013 and the Rules made thereunder.
3. The Company has filed applications for condonation of delay and for filing e-formMGT-14.
Details of Frauds Reported by the Statutory Auditors
During the year under review the Statutory Auditors the Internal Auditors and theSecretarial Auditors of the Company have not reported any fraud as required under Section143(12) of the Act.
Particulars of Loans or Guarantees or Investments
Pursuant to the clarification dated February 13 2015 issued by the Ministry ofCorporate Affairs and Section 186(11) of the Act the provision of Section 134 (3)(g) ofthe Act requiring disclosure of particulars of the loans given investments made orguarantees given or securities provided is not applicable to the Company.
Management Discussion and Analysis
The Management Discussion and Analysis report for the year under review is givenseparately in the Annual Report.
Your Company is committed to conducting its business in accordance with the applicablelaws rules and regulations. A report on Corporate Governance (forming part of Directors'Report) is provided separately in this Annual Report together with a certificate fromMMJC & Associates LLP Company Secretaries on compliance with corporate governancenorms under the Listing Regulations for FY19 is annexed to the Corporate Governance Reportwhich is provided separately in the Annual Report.
Employee Stock Option Plan (ESOP)
Your Company has instituted "Dhanvarsha ESOP Plan - 2018 ("ESOP2018) to motivate incentivize and reward employees. The Nomination RemunerationCommittee administers the ESOP 2018. The ESOP 2018 is in compliance with Securities andExchange Board of India (Share Based Employee Benefits) Regulations 2014 ("EmployeeBenefits Regulations) and there have been no material changes to ESOP 2018 duringFY19. Disclosures on ESOP 2018 details of options granted etc. as required under theEmployee Benefits Regulations has been annexed as Annexure - V to the Directors' Report.
Disclosure on compliance with Secretarial Standards
Your Company has complied with the provisions of all applicable Secretarial Standardsissued by the Institute of Company Secretaries of India and has systems which are adequateand are operating effectively.
Your Company is having a valid Certificate of Registration dated March 11 1998 issuedby RBI under Section 45-IA of the Reserve Bank of India Act 1934. However RBI does notaccept any responsibility or guarantee about the present position as to the financialsoundness of your Company or for the correctness of any of the statements orrepresentations made or opinions expressed by your Company and for discharge of anyliability by your Company.
Neither there is any provision in law to keep nor does your Company keep any part ofthe deposits with RBI and by issuing a Certificate of Registration to your Company RBIneither accepts any responsibility nor guarantees the payment of deposits to any depositoror any person who has lent any sum to your Compa ny.
Your Directors would like to express their sincere appreciation of the co-operation andassistance received from Reserve Bank of India Members and other Business constituentsduring the year under review. Your directors also wish to place on record their deep senseof appreciation for the commitment displayed from all employees resulting in thesuccessful performance of the Company during the year.
For and on behalf of the Board of Directors
| ||Sd/- ||Sd/- |
| ||Nimir Kishore Mehta ||Karan Neale Desai |
|Mumbai ||Non-Executive Chairperson ||Managing Director and CEO |
|August 13 2019 ||(DIN:00699993) ||(DIN:05285546) |