The directors have the pleasure in presenting 34th Annual Report of YourCompany with the Audited Financial Statements of the Company for the financial year endedon March 31 2018.
1. Financial Results
(Amount in Rupees)
|Particulars ||2017-18 ||2016-17 |
|Revenue From Operations ||20197475 ||9468162 |
|Other operation Income ||660551 ||2802142 |
|Total Revenue ||20858026 ||12270304 |
|Less: Total Expenses before Depreciation Finance Cost & Tax ||5550400 ||2312303 |
|Operating Profits before Depreciation Finance Cost & Tax ||15307626 ||9958001 |
|Less: Depreciation ||206397 ||161477 |
|Finance cost ||6787853 ||127448 |
|Profit/(Loss) Before Tax ||8313376 ||9669076 |
|Less: Current Tax ||2124948 ||1959563 |
|Less: Deferred Tax Liability (Assets) ||(25083) ||167000 |
|Profit/(Loss) after Tax ||6213511 ||7542513 |
2. Review of Business Operation
During the financial year 2017-18 The Company has earned total income of Rs. 208.58Lakhs from business activities including income from other sources as compared to 122.70Lakhs in previous year. The total revenue of the company is increased by 70.00%. Duringthe financial year 2017-18 total 32 loan accounts were written off amounting to Rs. 1.55lakhs as the same was 100% bad debts. The total Profit before tax for the financial year2017-18 stood at Rs. 83.13 Lakh and the total net profit after tax for thefinancial year 2017-18 stood at Rs. 62.13 Lakh. Due to increase in business operationsour finance cost and employment expenses increased to 67.78 lakhs and 26.81 lakhsrespectively. The Directors of the Company are planning to expand the business of theCompany in the current year by providing the varied types of the financial services to thecustomers along with the prospect of opening various branches in the metros and thusconfident of presenting the better figures in the coming years.
To conserve resources for future prospect and growth of the Company your Directorsregret to declare Dividend for the Financial Year 2017-18 (Previous year - Nil).
4. Net Profit Transfer to Reserve
The Company has transferred Rs. 12.43 Lakh to Statutory Reserve Fund in terms ofSection 45-1C of the Reserve Bank of India Act 1934.
5. Change in Nature of Business
During the year your Company has not changed its business or object and continues tobe in the same line of business as per main object of the Company.
6. License For Money Changer
The Company has commenced activities of Full Fledged Money Changing and earned revenueof Rs. Rs. 1.85 Lakh in the financial year 2017-18 as compare to that in previousfinancial year i.e. Rs. 1.37 Lakh. which shows business progress of the company in thesaid line of business activity. The Board of Directors are in planning to expand theactivities of Full Fledged Money Changing Activities in coming years and thus increasingthe line of business of the Company.
7. Share Capital
The paid up share capital of the company as on March 31 2018 was Rs. 10.05 crores.
During the year under review on April 29 2017 the Authorized Share Capital of theCompany was increased by the Members of the Company from Rs. 100000000/- (Rupees TenCrore only) divided into 10000000 (One Crore only) Equity Shares of Rs. 10/- (RupeesTen only) each to Rs. 105000000/- (Rupees Ten Crore Fifty Lakh only) divided into10500000 (One Crore Five Lakh only) Equity Shares of Rs. 10/- (Rupees Ten only) eachby way of creation of an additional 500000 (Five Lakhs only) Equity Shares of Rs. 10/-(Rupees Ten only) each ranking pari passu in all respect with existing equity shares ofthe company aggregating to Rs. 5000000/- (Rupees Fifty Lakh only). The board ofdirectors had made allotment of 16 90000 Equity Shares on May 30 2017 to promotersincluding promoter group and public on preferential allotment. The Company has receivedListing and trading approval for the same by BSE Limited and the same was effective fromWednesday June 21 2017.
8. Migration of Listing
The Company had made application for Migration from SME Platform of BSE Limited to MainBoard of BSE Limited and the application of the Company was approved by the stock exchangeand the Equity Shares of the Company are available for the trading at Main Board of BSELimited w.e.f. Wednesday August 9 2017.
9. Dematerialization of Shares
The Company has entered into Tripartite Agreement with the depositories NationalSecurities Depository Limited (NSDL) and Central Depository Service (India) Limited (CDSL)for providing Demat facility to its Shareholders. For this purpose the company hasappointed Satellite Corporate Services Private Limited as its registrar and ShareTransfer Agent.
10. Material Changes & Commitments
There are no material changes and commitments affecting the financial position of thecompany which have occurred between the end of the financial year of the company to whichthe financial statement relates and the date of this report. Note: For bettertransparency accountability and for good governance of listed entity Securities andExchange Board of India (SEBI) and Reserve Bank of India (RBI) had mandated certaindisclosure by listed entity in a stipulated time frame. So line with the said circularcompany had made necessary compliances as required by SEBI and RBI to be compliant companyin letter as well spirit too.
11. Review of Business Operations & Future Prospects
The directors have taken various actions so as to expand the business of the companyand they are in planning to start a FinTech collaborations with another companies so as tohave a better growth of the company. Further they are also planning to open variousbranches of the company in the state of Gujarat and Maharastra for the purpose ofexpanding the business of money changing and thereby increasing the overall business ofthe company in a near future.
12. Corporate Governance
Details regarding Corporate Governance Report of the Company regarding compliance ofthe conditions of Corporate Governance pursuant to SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 are annexed herewith as "Annexure-I".
The company being Non-Deposit accepting Non-Banking Finance Company has not acceptedany deposits from the public. Hence the directives issued by the Reserve Bank of India& the Provision of Section 73 to 76 of the Company Act 2013 or any other relevantprovisions of the Act and the Rules there under are not applicable. Moreover the Companyis not holding any Deposit as at the financial year ended on March 31 2018.
14. Director's Responsibility Statement
Pursuant to section 134(5) of the Companies Act 2013 the board of directors to thebest of their knowledge and ability confirm that: a) In preparation of annual accountsfor the year ended March 31 2018 the applicable accounting standards have been followedand that no material departures have been made from the same; b) The Directors hadselected such accounting policies and applied them consistently and made judgments andestimates that are reasonable and prudent so as to give a true and fair view of the stateof affairs of the Company at the end of the financial year and of the profit or loss ofthe Company for that year; c) The Directors had taken proper and sufficient care for themaintenance of adequate accounting records in accordance with the provisions of theCompanies Act 2013 for safeguarding the assets of the Company and for preventing anddetecting fraud and other irregularities; d) The Directors had prepared the annualaccounts for the year ended March 31 2018 on going concern basis. e) The Directors hadlaid down the internal financial controls to be followed by the Company and that suchInternal Financial Controls are adequate and were operating effectively; and f) TheDirectors had devised proper systems to ensure compliance with the provisions of allapplicable laws and that such systems were adequate and operating effectively.
15. Statutory Auditor & their Report
During the financial year 2017-18 the company has received Resignation Letter from itsexisting Statutory Auditor i.e. M/S Maharishi & Co. Chartered Accountant Jamnagar(FRN:124872W) stating that they are not willing to act as a statutory auditor from October04 2017.
The Board of Directors at its meeting held on October 4 2017 and as per therecommendation of the Audit Committee and pursuant to the provisions of Section 139140(4) 142 and other applicable provisions if any of the Companies Act 2013 read withthe Companies (Audit and Auditors) Rules 2014 and other applicable provisions if anyrecommended the appointment M/s. Doshi Maru & Associates Chartered AccountantsMumbai (FRN: 0112187W) as statutory auditor of the Company to fill up the casual vacancycaused due to resignation of M/s. Maharishi & Co. Chartered Accountants (FRN: 124872W)Jamnagar. The Company has also received consent and eligibility certificate from M/s.Doshi Maru & Associates Chartered Accountants Mumbai (FRN: 0112187W) to act asStatutory Auditors of the Company along with a confirmation that their appointment ifmade would be within the limits prescribed under the Companies Act 2013. In terms ofprovisions of Section 139(8) of the Companies Act 2013; M/s. Doshi Maru & AssociatesChartered Accountants Mumbai (FRN: 0112187W) shall hold office as statutory auditor ofthe Company till the conclusion of 34th Annual General Meeting of the Company.The report of statutory auditor is self-explanatory and need not require any furtherclarification explanations and there is no adverse impact or observation or qualificationmade by the statutory auditor for the financial year 2017-18. Note: Members of company hadalso given their consent for appointment of M/s. Doshi Maru & Associates in theirmeeting held on Wednesday January 03 2018 by way of passing ordinary resolution fortheir appointment.
16. Management Discussion and Analysis Report
Management Discussion and Analysis for the year under review as stipulated underRegulations 27(2) of the SEBI (LODR) 2015 is attached to this report as an "Annexure-II"
17. Extracts of Annual Return
Pursuant to sub-section 3(a) of Section 134 and sub-section (3) of Section 92 of theCompanies Act 2013 read with Rule 12 of Companies (Management and Administration) Rules2014 the extract of the Annual Return as at March 31 2018 in Form MGT-9 forms part ofthis Annual Report as "Annexure - III".
18. Particulars Of Remuneration of Directors and Key Managerial Personnel
The details of remuneration paid during the financial year 2017-18 to ExecutiveDirector and Key Managerial Personnel of the Company is provided in Form MGT-9 (AnnexureIII) which is the part of this report.
19. Secretarial Auditor & their Report
Pursuant to the provisions of Section 204 of the Act and the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 the Company has appointed Mrs. AnkitaPatel Practicing Company Secretary Ahmedabad to carry out the Secretarial Audit for thefinancial year ended on March 31 2018. Secretarial Audit Report is attached to thisreport as "Annexure IV".
20. Particulars of contracts or arrangement made with Related Party
All transactions to be entered by the Company with related parties will be in theordinary course of business and on an arm's length basis. Further there are fewtransactions which may not be on Arms'Length Basis the detail of which is given in "AnnexureV" in Form AOC-2 and the same forms part of this report.
21. Particulars of Employees
The ratio of the remuneration of each whole-time director to the median of employees'remuneration as per Section 197(12) of the Companies Act 2013 read with Rule 5(1) of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 is annexed tothis Report as "Annexure VI". ? Statement containing the names of top 10employees in terms of remuneration drawn shall be made available on request ? Details ofemployees posted in India throughout the fiscal and in receipt of a remuneration of Rs1.02 crore or more per annum. Not Applicable since there was no such employee employed bythe Company during F.Y. 2017-18. ? Details of employees posted in India for part of theyear and in receipt of Rs 8.5 lakh or more a month. Not Applicable since there was no suchemployee employed by the Company during F.Y. 2017-18. ? Employees employed throughout thefinancial year or part thereof was in receipt of remuneration in that year which in theaggregate or as the case may be at a rate which in the aggregate is in excess of thatdrawn by the managing director or whole-time director or manager and holds by himself oralong with his spouse and dependent children not less than two percent of the equityshares of the company. Not Applicable since there was no such employee employed by theCompany during F.Y. 2017-18. ? There are no employees posted outside India.
22. Conservation of Energy Technology Absorption Foreign Exchange Earnings &Outgo
The details of conservation of energy technology absorption etc. as required to begiven under section 134(3)(m) of the Companies Act 2013 read with the Companies (Accounts)Rules 2014 are not applicable to our Company as the Company is not carrying on anymanufacturing activities. Further there was no foreign exchange earnings and outgo duringthe financial year 2017-18 (Previous Year Nil).
23. Board Evolution
The Board of Directors has carried out an annual evaluation of its own performanceboard committees and individual directors pursuant to the provisions of the Act. FurtherNomination and Remuneration Committee has also carried out the performance evaluation ofthe individual directors on the basis of the criteria such as the contribution of theindividual director to the board and committee meetings. In addition the chairman wasalso evaluated on the key aspects of his role. Separate meeting of independent directorswas held to evaluate the performance of non-independent directors performance of theboard as a whole and performance of the chairman taking into account the views ofexecutive directors and non-executive directors.
24. Particulars of loans guarantees or Investments made under section 186 of theCompanies Act
Details of Loans Guarantees Investments and Security covered under the provisions ofSection 186 of the Companies Act 2013 are given in the notes to the Financial Statement.
25. Internal Financial Control System and their Adequacy
The details on Internal Financial Control and their adequacy are provided in ManagementDiscussion and Analysis Report. Note: During the year under review the company hasappointed M/S Suresh Tejwani & Co as an Internal Auditor to look after the internalfinancial control and their adequacy.
26. Risk Management Policy
A well-defined risk management mechanism covering the risk mapping and trend analysisrisk exposure potential impact and risk mitigation process is in place. The objective ofthe mechanism is to minimize the impact of risks identified and taking advance actions tomitigate it. The mechanism works on the principles of probability of occurrence andimpact if triggered. A detailed exercise is being carried out to identify evaluatemonitor and manage both business and non-business risks.
27. Vigil Mechanism
The detailed vigil mechanism is provided in Annexure I "Corporate GovernanceReport"- under the title "Audit Committee".
28. Prevention of Insider Trading
The Company has adopted a Code of Conduct for Prevention of Insider Trading with a viewto regulate trading in securities by the Directors and designated employees of theCompany. The Code requires pre-clearance for dealing in the Company's shares and prohibitsthe purchase or sale of Company shares by the Directors and the designated employees whilein possession of unpublished price sensitive information in relation to the Company andduring the period when the Trading Window is closed. All the Board of Directors anddesignated employees have confirmed compliance with the Code.
29. Disclosure Under Sexual Harassment Of Women At Workplace (Prevention ProhibitionAnd
Rederessal) Act 2013
There were no incidences of sexual harassment reported during the year under review interms of the provisions of the Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013 as there are no woman employees employed by theCompany during the Financial Year 2016-17.
30. Names Of The Companies Which Have Become Or Ceased To Be Its Subsidiaries JointVentures Or Associate Companies During The Year
There is no subsidiary joint venture or associate company as on March 31 2018 so thesame is not applicable to the company.
31. Pecuniary Relationship Or Transactions Of Non-Executive Directors
During the year under review the non-executive directors of the company had nopecuniary relationship or transaction with the company.
32. General Disclosure
Your Directors state that the Company has made disclosures in this report for the itemsprescribed in section 134(3) of the Act and Rule 8 of The Companies (Accounts) Rules 2014to the extent the transactions took place on those items during the year.
Your Directors further state that no disclosure or reporting is required in respect ofthe following items as there were no transactions on these items during the year underreview:
1. Details of Annual Report on Corporate Social Responsibility as Company is notfalling within the criteria as prescribed u/s 135 of the Companies Act 2013
2. Issue of Equity Shares with differential rights as to dividend voting or otherwise.
3. Issue of shares (including sweat equity shares) to employees of the Company underany scheme save and ESOS.
4. No significant or material orders were passed by the Regulators or Courts orTribunals which impact the going concern status and Company's operations in future.
Your Directors take this opportunity to place on record the valuable co-operation andsupport extended by the banks government business associates and the shareholders fortheir continued confidence reposed in the Company and look forward to having the samesupport in all future endeavors.
| ||For and on behalf of Board of Directors Karnavati Finance Limited |
|Place: Mumbai ||Jay Morzaria ||Raman Morzaria |
|Date: August 13 2018 ||Managing Director ||Whole-Time Director |
| ||DIN: 02338864 ||DIN: 00203310 |