Your Directors are pleased to present this 30th Annual Report of the Companytogether with the Audited Accounts for the year ended 31st March 2021
FINANCIAL HIGHLIGHTS AND PERFORMANCE
|PARTICULARS ||2020-21 ||2019-20 |
|Income from operations ||351.86 ||252.91 |
|Other Income ||- ||- |
|Gross Receipts ||351.86 ||252.91 |
|Expenses ||292.14 ||261.28 |
|Depreciation & Amortization ||0.94 ||2.22 |
|Total Expenses ||293.08 ||263.50 |
|PBT ||58.78 ||(10.59) |
|TAX ||9.22 ||2.43 |
|PAT ||49.56 ||(13.03) |
|Proposed Dividend/Dividend ||- ||- |
|Proposed Dividend Tax/Dividend Tax ||- ||- |
|Transfer to Statutory Reserve ||49.56 ||(13.03) |
During the Financial year under review your Company's income from operations is higherby 39% compared to that of the previous year. The increase is attributed to the receipt ofinsurance bonus during the year under review. The profit before tax for the year underreview is Rs. 58.78 Lacs than that of previous year Profit before tax of Rs. (10.59 Lacs).The Profit after tax of your Company for the year under review is Rs. 49.56 Lacs asagainst Rs. (13.03) Lacs for the previous year. However in view of the inadequate profityour Company is not in a position to recommend dividend for the year under review.
The financial year 2020-21 experienced a continuous turmoil in Financial Sectorattributed to severe Global recession raise in unemployment fall in equity prices deepdecline in residential real estate price unprecedented stress in the corporate debtmarket as well as commercial real estate sector. The continued failure of certain largeNBFCs resulted in huge liquidity crunch forcing the Government to introduce severalreforms to liberalise and RBI taking various measures to facilitate easy access to financefor MSMEs. Due to this a shock appeared in the NBFC circle as banks tightened creditflows and liquidity squeeze reduced the pace of acceleration of credit as entities chooseto focus on asset-liability management rather than just growing their portfolio. Inaddition Mutual funds too reduced their exposures to NBFCs forcing the sector walk atight rope while managing the funds requirement. IFL having no exposure to either bankborrowings or to public deposits saw one more financial year passing with asset sizefurther reducing attributing to recovery as well as wait & watch policy. Thecontinued rapid spread of corona virus (COVID-19) has dramatic impacts on financialmarkets all over the world. It has created an unprecedented level of risk causinginvestors & lenders to suffer significant loses in a very short period. Even advancedeconomies entered this crisis with interest rates at historical lows unprecedented jobloss and sharp & continuous fall in the GDP. If the liquidity crunch caused by thesystemic failure of certain large sized NBFC and global recession are the root cause forthe low growth the continuous pandemic caused by Covid-19 worldwide and its negativeimpact on every business sector has overshadowed the minimal growth achieved. Withprediction of negative growth already in place across all regions of the world in bothadvanced economies and emerging markets and Developing economies there left hardlyanything to appreciate the performance of your Company during the year under review.
The world is engulfed in the new crisis for the second year in succession caused by theCOVID- 19 pandemic with unimaginable impacts on health and economy. The health crisis andpoor healthcare system in the developing economies have a severe impact on the economicactivities. According to fair estimates the Indian economy is expected to register arecord contraction of over 4.5% in the current fiscal year due to the pandemic. Themedium-term outlook for the Indian economy also appears to be very uncertain with supplychains and demand yet to be restored fully while the trajectory of the corona virusspread and the length of its impact remain unknown. The Global economy is expected tocontract further in the current fiscal also and is expected to be much worse than thefinancial crisis of 2008-09. Effective policies to forestall the possibilities of worseoutcome and necessary measures to protect the lives are the need of the hour. The CentralGovernment had announced several economic stimulus packages announcing significant fiscalsupport to heavily impacted sectors and workers. The future suggests that NBFCs willcontinue to experience normal growth if the credit flow does not stop and the riskmitigation mechanisms improve.
OPPORTUNITIES & THREAT
Under the back drop of Covid-19 break down situation with increased stress on assetquality liquidity crunch had made the NBFCs to focus on diversification and findalternate source of income. The biggest strength of the NBFC sector is their existingcustomer base distribution capability and consumer understanding and they can leveragethese for an alternate business model. Subject to Regulatory approvals NBFCs can use theircore strength in developing a market driven business platform.
According to a study on Indian Economic performance there are around 55-60 millionMSMEs in India contributing to about 30 per cent of India's GDP. This sector had a creditdemand of about INR 45 lakh crores in 2018 out of which 40 per cent was served by informalcredit. As a result there is big opportunity in the coming years for NBFCs to capturethis unserved population and partner in India's growth story. This is because banks oftenfind it expensive or unviable to serve these segment which new-age NBFCs are serving onthe back of advanced technology and better reach in the remote corners of the country.Another most affected social segments is the informal sector comprising small businesseslocal shopkeepers daily wage earners and farmers most of whom have been dealing with theNBFCs for ages. On the way to recovery all these business as well as individuals needfresh credit. Many of them being new to credit and there being no past credit history itis unlikely that the traditional or formal lenders would grab the opportunity by deviatingthe norms or match the speed with which a NBFCs delivers. This segment is expected to bemuch bigger in size and NBFC should be able to grab this opportunity should there beenough liquidity in the system. However the real threat lies in maintaining the quality ofthe portfolio and complying with the regulatory norms. The challenge to maintaining andaugmenting the deposit portfolio due to shaken customer confidence and . stricterregulatory norms default in payment by the existing borrowers due to Covid-19 pandemicbreakdown and resultant impact on liquidity mismatch and profitability may severely affectmany small and mid-sized NBFCs.
RISKS & CONCERNS
The disruption caused by Covid-19 has put most of the small and mid-sized NBFCsparticularly those having substantial exposure to public funds by way of debt &deposit as the large lenders (NBFCs) have an avenue to tap the Targeted Long TermRefinancing operations [TLTRO] announced by the Regulator. With substantial quantum ofcommercial papers and NCDs becoming due during the current year mid-sized NBFCs will beforced to dip into the reserves to pay back the liabilities may find it very difficult toraise funds. With this background it is likely that business models of some of the NBFCsundergo considerable changes within the regulatory framework given the uncertainty due tolockdown. With auto sales having virtually coming to a standstill real estate sectorexperiencing unprecedented recession and MSME sector a paradise for these NBFCs yet tocommence operations small and medium sized NBFCs will take lot of time to recuperate.Another major concern for the NBFCs in the near future is the significantly deterioratingasset quality as economic disruptions from the corona virus outbreak deepen an economicslowdown that has been underway in the past few years. According to rating agency Moody's Non-bankingfinancial companies (NBFCs) in the country are more vulnerable to the risks brought on bythe Covid-19 disruption than banks. The agency reported that Stresses on theliquidity and asset-quality fronts are set to be exacerbated for nonbank lenders.With flattening of the covid-19 curve still uncertain and the complete effect of outbreakof the pandemic unknown it is very difficult to imagine the bottom line of the NBFCsector at least in the next two fiscals.
The Covid-19 pandemic is truly an unprecedented event. No one would have imagined thatthe whole world would come to a standstill for a couple of years. The potential economicloss caused by the pandemic is as brutal as the loss of life. In addition to both internaland external risks hitherto experienced IFL also experienced one more risk theeffect of Pandemic caused by covid-19 like the rest of the world. The managementfollowed all the statutory and regulatory guidelines issued in dealing with the situation.While Your Company has suitable policies in place to manage the interest liquiditymarket and credit risk it has also evolved proper standard operating procedure [SOP] todeal with the Corona virus outbreak. As mentioned in our earlier year's reports thecautious wait & watch approach adapted by the Company for the last couple of years hasenabled to survive the vulnerable market conditions. Your company wishes to have the sameapproach for the current fiscal also.
DETAILS OF SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS
The current ratio and Debt Equity Ratio is more by 38% and less by 17% as compared tothe previous financial year. The variance is due to repayment of loan.
The operating profit and Net profit is more by 17.01% and 16.75% respectively ascompared to the previous financial year. The negative variance is on account of increasein expenses.
NUMBER OF MEETINGS OF BOARD
Indus Finance Ltd held 4 Board Meetings during the year ended 31st March2021. These were on 29th July 2020 15th September 2020 11thNovember 2020 and 11th February 2021.
REAPPOINTMENT OF DIRECTORS RETIRING BY ROTATION
In terms of Section 152 of the Companies Act 2013 Mr. Bala V Kutti (DIN 00765036) isliable to retire by rotation at the ensuing Annual General Meeting and being eligibleoffers himself for re-appointment. The Board of Directors based on the recommendation ofNomination and Remuneration Committee has recommended the re-appointment of Mr. Bala VKutti (DIN 00765036) retiring by rotation.
STATEMENT ON DECLARATION GIVEN BY INDEPENDENT DIRECTORS' UNDER SECTION 149 (6) OFCOMPANIES ACT 2013
The Company has obtained declaration from the Independent Directors that they meet thecriteria of Independence as provided in section 149 (6) of the Companies Act 2013.
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to Section 134 (3) (c) and 134 (5) of the Companies Act 2013 the Board ofDirectors hereby state that;
1. In the presentation of the Annual accounts applicable standards have been followedand there are no material departures.
2. The Directors have selected such accounting policies and apply them consistently andmade judgments and estimates that are reasonable and prudent so as to give a true and fairview of the state of affairs of the Company as at 31st March 2021 andprofit/loss for the Company for the year ended 31st March 2021.
3. The Directors have taken proper and sufficient care in the maintenance of adequateaccounting records in accordance with the provisions of the Act for safe guarding theassets of the Company and for preventing and detecting fraud and other irregularities.
4. The Directors have prepared the annual accounts on a going concern basis.
5. The Directors had laid down internal financial controls to be followed by thecompany and that such internal financial controls are adequate and were operatingeffectively and
6. The Directors had devised proper systems to ensure compliance with the provisions of
. all applicable laws and that such systems were adequate and operating effectively.
A qualified and Independent Audit Committee of the Board of the company is functioning.
It monitors and supervises the Management's financial reporting process with a view toensure accurate and proper disclosure transparency and quality of financial reporting.The . committee reviews the financial and risk management policies and also the adequacyof
internal control systems and holds discussions with Statutory Auditors and InternalAuditors. This is enhancing the credibility of the financial disclosures of the companyand also provides transparency.
a) Terms of reference
The role and terms of reference of the Audit Committee cover the areas mentioned underRegulation 18 (3) of Listing Regulations and Section 177 of the Companies Act 2013besides other terms as may be referred to by the Board of Directors from time to time.
The Company continued to derive immense benefit from the deliberation of the AuditCommittee comprising of Directors Mr.Niranjan R. Jagtap Dr.K.R. Shyamsundar and Mr.BalaV Kutti who are highly experienced and having knowledge in project finance accounts andcompany law. Mr.Niranjan R Jagtap is the Chairman of the Audit Committee. The CompanySecretary acts as the Secretary of the Audit Committee.
NOMINATION AND REMUNERATION COMMITTEE
a) Term of reference
The role and terms of reference of the Nomination and Remuneration Committee cover theareas mentioned under Regulation 19 (4) of Listing Regulations and Section 178 of theCompanies Act 2013 besides other terms as may be referred to by the Board of Directorsfrom time to time.
b) Composition name of members and Chairperson
The Committee consists of the following members of the Board Mr. Niranjan R. Jagtap(Chairman) Dr. K.R. Shyamsundar.
c) Meetings and attendance during the year
The Committee met on 29th July 2020 during the Financial Year 2020-21 andthe details of the attendance of the Members are as follows:
|Name of Directors ||No. of Meetings attended |
|Mr. Niranjan R. Jagtap ||1 |
|Dr. K.R. Shyamsundar ||1 |
d) Criteria for evaluation of the performance of the Independent directors
The criteria for evaluation of the performance of Independent Directors include theirqualification experience competency knowledge understanding of respective roles (asIndependent Director and as a member of the Committee of which they areMembers/Chairpersons) adherence to Codes and ethics conduct attendance andparticipation in the meetings etc.
THE RATIO OF THE REMUNERATION OF EACH DIRECTOR TO THE MEDIAN REMUNERATION OF THEEMPLOYEES OF THE COMPANY FOR THE FINANCIAL YEAR 2019-20 ARE GIVEN BELOW
|Name of the Director ||Ratio to Median Employee Remuneration (Rs. in Lacs) |
|Mr. Bala V Kutti - Executive Chairman ||11.82:1 |
|Mr. Niranjan R. Jagtap - Independent Director ||0.20:1 |
|Dr. K.R. Shyamsundar - Independent Director ||0.20:1 |
|Ms. KBK. Vasuki - Independent Director ||0.15:1 |
|Mr. Bhaskara Chakkera - CEO ||5.63:1 |
|Mr. V. Kannappan - CFO ||4.47:1 |
THE PERCENTAGE INCREASE IN REMUNERATION OF DIRECTORS. KMP AND MEDIAN EMPLOYEE FOR THEFINANCIAL YEAR 2020-21
There is no increase in remuneration to the Directors and KMP during the financial year202021.
THE KEY PARAMETERS FOR ANY VARIABLE COMPONENT OF REMUNERATION AVAILED BY THE DIRECTORS
THE RATO OF THE REMUNERATION OF THE HIGHEST PAID DIRECTOR TO THAT OF THE EMPLOYEES WHOARE NOT DIRECTORS BUT RECEIVE REMUNERATION IN EXCESS OF THE HIGHEST PAID DIRECTOR DURINGTHE YEAR
THERE ARE NO EMPLOYEES IN RECEIPT OF REMUNERATION MORE THAN THE STIPULATED AMOUNTMENTIONED UNDER RULE 5(21 OF COMPANIES (APPOINTMENT AND REMUNERATION) RULES 2014
AFFIRMATION THAT THE REMUNERATION IS AS PER THE REMUNERATION POLICY OF THE COMPANY
The Company affirms remuneration is as per the remuneration policy of the Company.
POLICY FOR SELECTION AND APPOINTMENT OF DIRECTORS AND THEIR REMUNERATION
The details are available in the website of the Company at www.indusfinance.inPREVENTION OF INSIDER TRADING
The Company has adopted a Code of Conduct as per the Guidelines issued by theSecurities and Exchange Board of India for prevention of insider trading with a view toregulate trading in securities by the Directors and designated employees of the Company.The Code prohibits the purchase or sale of Company shares by the Directors and thedesignated employees while in possession of unpublished price sensitive information inrelation to the Company and during the period when the Trading Window is closed.
DETAILS OF DIRECTORS OR KEY MANAGERIAL PERSONNEL WHO WERE APPOINTED OR HAVE RESIGNEDDURING THE YEAR
There is on appointment and resignation of Directors or Key Managerial Personnel forduring the year under review.
PARTICULARS OF LOANS. GUARANTEE OR INVESTMENTS
Detailed information is provided in respect of loans under long term loans and advancesin Notes No.23 of Notes forming part of the financial statements similarly detailedinformation is provided under Non-Current Investments in Note No.23 of Notes forming partof the financial statements. As regards guarantee the Company has not provided anyguarantee to any person or Bodies Corporate.
BUSINESS RISK MANAGEMENT
The details are available in the website of the Company at www. indusfinance. inBOARD EVALUATION:
Section 134 of the Companies Act 2013 states that formal evaluation needs to be madeby the Board of its own performance and that of its committees and the individualDirectors. Schedule IV of the Companies Act2013 and regulation 17(10) of SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 states that the performanceevaluation of Independent Directors shall be done by the entire Board of Directorsexcluding the Directors being evaluated.
Pursuant to the Provisions of Section 134 (3) (p) of the Companies Act 2013 and SEBI(LODR) Regulations 2015 the Board has carried out an evaluation of its own performancethe Directors individually as well as the evaluation of the working of its Committees. Astructured questionnaire was prepared after taking into consideration inputs received fromthe Directors covering various aspects of the Board's functioning such as adequacy of thecomposition of the Board and its Committees Board culture execution and performance ofspecific duties obligations and governance. A separate exercise was carried out toevaluate the performance of individual Directors including the Chairman of the Board whowere evaluated on parameters such as level of engagement and contribution independence ofjudgment safeguarding the interest of the Company and its shareholders etc. The Directorsexpressed their satisfaction with the evaluation process.
During the year under review the company has not accepted any deposits from the publicwithin the ambit of section 73 of the companies Act 2013 and The companies (Acceptance ofDeposits) Rules 2014.
DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY ANY COURTS DURING THE UNDERREVIEW:
As required under Section 177 of Companies Act 2013 (the Act) and Regulation 22 of theSEBI (Listing Obligations & Disclosure Requirements) Regulations 2015 the Company hasestablished a vigil mechanism for Directors and employees to report genuine concernsthrough the whistle blower policy of the Company as published in the website of theCompany. As prescribed under the Act and the Listing Regulations provision has been madefor direct access to the Chairperson of the Audit Committee in appropriate or exceptionalcases.
FINANCIAL STATEMENTS OF THE SUBSIDIARY COMPANY IF ANY
The Company does not have any Subsidiary
INDUSTRIAL RELATIONS AND PARTICULARS OF EMPLOYEES
As of 31st March 2021 Your Company has 7 employees on its rolls. Theemployees will be inducted in to permanent services of the Company after training to fillup vacancies as when arises. Your company has not issued any shares under Employees' StockOption Scheme during the year under review.
VARIATIONS IN THE MARKET CAPITALISATION OF THE COMPANY. PRICE EARNINGS RATIO AS AT THECLOSING DATE OF THE CURRENT FINANCIAL YEAR AND PREVIOUS FINANCIAL YEAR
|Particulars ||March 31 2021 ||March 31 2020 || |
|Market Capitalization (Rs.) ||74807064/- ||82584036/- ||(9.42) |
|Price earnings ratio ||4.96 ||6.99 ||(29.04) |
PERCENTAGE OF INCREASE OR DECREASE IN THE MARKET QUOTATION OF THE SHARES IN COMPARISONTO THE RATE AT WHICH THE COMPANY CAME OUT WITH THE LAST PUBLIC OFFER
Price of public offer Rs. 30/- Market price as on 31.03.2021 Rs.8.08/- difference(Rs.21.92) (73.07%)
LISTING OF EQUITY SHARES
Your Company's equity shares are continued to be listed on the Bombay Stock ExchangeLtd Mumbai.
As per section 139 (2) of the Companies Act 2013 M/s. Sanjiv Shah & AssociatesChartered Accountants Chennai having (ICAI Firm Registration No. 003572S) be and arehereby appointed as Statutory Auditors of the Company to hold the office from theconclusion of this Annual General Meeting until the conclusion of the next AnnualGeneral Meeting of the Company.
RESPONSE TO THE AUDITORS' BASIS OF QUALIFIED OPINION:
As regards Auditors' Report dated 29.6.2021 under heading Basis for qualified opinionyour Directors wish to state under:
Indowind Energy Ltd has filed an appeal challenging the admission by the single Judgeis still pending before the Bench of Hon'ble High Court of Madras. Unless the subjectappeal is adjudicated it may be difficult to accept the qualification as the admissionby the Ld. Single judge does not seem to be sustainable under the Law. Hence it isdecided to wait till the outcome of the appeal or any other subsequent appeals beforehigher Courts by either parties.
Annual Return click the Link mentioned herein;
http://indusfinance.in/wp-content/uploads/2021/09/Form MGT 7-lndus.pdf TRANSACTIONSWITH RELATED PARTIES
The particulars of contracts or arrangements with related parties referred to insection 188(1) and applicable rules of the Companies Act 2013 is provided with respect tothe list of Related Parties under note No.23 of the Notes on accounts and with respect totransactions with related parties are given in detailed under note No.23 of the notes onaccounts in the format Form AOC-2 which forms part of this report in Annexure (2).
SECRETARIAL AUDIT REPORT
Mrs. Aishwarya PCS is the Secretarial Auditor of the company for the year under reviewand her report is attached with this report in Form No. MR-3 under Annexure (2). Asregards the observation of the Secretarial Auditor in her report your company is takingsteps for appropriate solution.
ADEQUACY OF INTERNAL CONTROL
Your Company has effective and adequate internal control systems in combination withdelegation of powers. The control system is also supported by internal audits andmanagement reviews with documented policies and procedures.
M/s. Kailash Jain & Associates are the Internal Auditors who continuously monitorand strengthen the financial control procedures in line with the operations of theCompany.
PARTICULARS REQUIRED UNDER SECTION 134 OF THE COMPANIES ACT. 2013 AND COMPANIES(ACCOUNTS) RULES 2014 & SECTION 148 OF THE ACT
The particulars required to be given in terms of section 134 of the Companies Act 2013and Companies (Accounts) Rules 2014 regarding conservation of Energy TechnologyAbsorption Foreign Exchange Earnings and Foreign Exchange outgo are not applicable toyour company. Similarly the Central government has not prescribed the maintenance of CostRecords under Section 148 (1) of the Act. Further there is no significant and materialorders were passed by the regulators or courts or tribunals impacting the going Concernstatus and Company's operations in future.
The Directors wish to place on record their sincere thanks and gratitude to all itsShareholders Bankers State Governments Central Government and its agencies statutorybodies and customers for their continued co-operation and excellent support extended tothe Company from time to time.
Your Directors place on record their utmost appreciation for the sincere and devotedservices rendered by the employees at all levels.
The management Discussion and Analysis contained herein is based on the informationavailable to the Company and assumptions based on experience in regard to domestic andglobal economy on which the Company's performance is dependent. It be may materiallyinfluenced by changes in economy government policies environment and the like on whichthe Company may not have any control which could impact the views perceived or expressedherein.
| ||For and on behalf of the Board of |
| ||INDUS FINANCE LIMITED |
|Place: Chennai - 600 034 ||Bala V Kutti |
|Date: 10th August 2021 ||Director |