Your directors have pleasure in presenting the 24th annual report on thebusiness and operations of the company together with the audited financial statement forthe financial year ended on March 31 2019.
1. Financial summary
| || |
(Rs. in lakhs except EPS)
|Particulars ||201819 - ||201718 - |
|Revenue from operations ||589.41 ||604.97 |
|Other income ||0.51 ||0.40 |
|Total income ||589.92 ||605.37 |
|Total expenditure ||186.06 ||190.52 |
|Profit / (loss) before exceptional items & provision for tax ||403.86 ||414.85 |
|Exceptional items ||- ||- |
|Profit / (loss) before tax ||403.86 ||414.85 |
|Tax expenses ||121.44 ||114.73 |
|Net profit ||282.41 ||300.11 |
|EPS basic & diluted (Rs.) ||2.61 ||2.77 |
2. State of company's affairs
During the financial year under report total income of the company stands to Rs.589.92 lakhs comprised of Rs. 589.41 lakhs as revenue from operations and Rs. 0.51 lakhsas other income as compared to Rs. 605.37 lakhs comprised of Rs. 604.97 lakhs as revenuefrom operations and Rs. 0.40 lakhs as other income generated during the previous financialyear. Profit before interest depreciation and tax also stands at Rs. 524.94 lakhs ascompared to Rs. 530.80 lakhs in the financial year ended on March 31 2018. Net profitafter tax has also been reduced to Rs. 282.41 lakhs as compared to Rs. 300.11 lakhs forthe financial year 2017-18 showing a decline of 5.90%. The net profit margin has alsoshown a slight decline i.e. from 49.58% for the financial year 2017-18 to 47.87% for thefinancial year 2018-19.The total expenditure has also reported decline of 2.34% year onyear basis. Total expenditure for the financial year 2018-19 stands at Rs. 186.06 lakhs ascompared to Rs. 190.52 lakhs for the financial year 2017-18. The directors of your companyare optimistic to achieve newer heights in the upcoming years.
The detailed analysis as to review of company's operational and financial performanceis given in the management discussion and analysis report.
Your directors propose to recommend final dividend for the financial year 2018-19 at ahigher rate of Rs. 1.00 (rupee one only) (10.00%) per equity share of Rs. 10/-(rupees tenonly) each as compared to Rs. 0.90 (ninety paisa only) (9.00%) per equity share of Rs.10/-(rupees ten only) each for the financial year ended on March 31 2018.
Further the payment of dividend is subject to the approval of shareholders in theensuing annual general meeting of the company. The dividend if declared at the ensuingannual general meeting will be paid to those shareholders whose names appear in theregister of members as on the record date. The amount of final dividend will be` 108.18lakhs and the dividend distribution tax will be Rs. 22.24 lakhs.
4. Transfer to reserves
The company proposes to transfer Rs. 56.48 lakhs to the special reserve out of amountavailable for appropriations and an amount of Rs. 761.85 lakhs is proposed to be retainedin the statement of profit and loss.
During the financial year ended on March 31 2019 the company has not accepted anydeposits from the public within the meaning of the provisions of applicable directions andnotifications issued by the Reserve Bank of India in this respect.
Further being a non-deposit taking non-banking financial company the disclosures withrespect to deposits required as per rule 8(5)(v) & (vi) of the Companies (Accounts)Rules 2014 read with the Companies (Acceptance of Deposits) Rules 2014 and section 73 ofthe Companies Act 2013 are not applicable to it.
6. Share capital
During the financial year under report the company has neither made any issue ofequity shares with differential voting rights sweat equity shares or under employee stockoptions scheme nor it has made any provision of money for purchase of its own shares byemployees or by trustees for the benefit of employees.
As on March 31 2019 the authorized share capital of the company stands at Rs.110000000/-consisting of 11000000 no. of equity shares of Rs. 10/-each and issuedsubscribed and paid up share capital of the company stands at Rs. 108180000/-consistingof 10818000 no. of equity shares of Rs. 10/-each fully paid-up.
7. Details of subsidiary / joint venture / associate companies
The company doesn't have any subsidiary joint venture or associate company.
8. Directors and key managerial personnel (KMP) Director retiring by rotation
Pursuant to the provisions of section 152 of the Companies Act 2013 and in accordancewith the articles of association of the company Mrs. Sonal R. Khandwala non executivedirector of the company retires by rotation at the ensuing annual general meeting andbeing eligible offers herself for re-appointment. The board of directors of the companyrecommends her re-appointment.
In terms of the definition of the independent director as prescribed under regulation16(1)(b) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015and section 149(6) of the Companies Act 2013 Mr. Devang M. Shah and Mr. Dharmendra N.Soni have been appointed as non executive independent directors on the board of thecompany. Both the independent directors of the company were reappointed for a furtherperiod of 5 years during the financial year 2018-19.
The independent directors have submitted the declaration confirming that they meet thecriteria of independence as prescribed under both the provisions of the relevant laws.Further the independent directors have complied with the code for independent directorsprescribed in schedule IV of the Companies Act 2013 and code of conduct prescribed forthe directors management and senior managerial personnel.
Further a separate meeting of independent directors of the company was held onFebruary 14 2019 in accordance with the provisions of clause VII of the schedule IV ofthe Companies Act 2013.
Pursuant to the provisions of section 149 of the Companies Act 2013 and regulation 17of the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 Mrs.Sonal R. Khandwala holds position of a non executive woman director of the company.
All of the directors of the company have confirmed that they are not disqualified underprovisions of section 164 of the Companies Act 2013 from being appointed / continue tohold position of directors of the company.
Key managerial personnel
Pursuant to the provisions of section 203 of the Companies Act 2013 Mr. Rajesh P.Khandwala holds position of managing director Mr. Durgesh D. Soni holds position ofcompany secretary and Mr. Bhavik J. Shah holds the position of chief financial officer ofthe company.
At the 22nd annual general meeting of the members of the company held onSeptember 22 2017 Mr. Rajesh P. Khandwala was re-appointed as a managing director of thecompany for a period of five years effective from February 4 2018.
The company follows a policy on remuneration of directors and senior managementemployees. The policy has been approved both by the nomination & remunerationcommittee and the board of directors. More details on the same have been given in thecorporate governance report.
The policy on remuneration of directors key managerial personnel and senior employeescan be accessed on website of the company at following web link:http://kifsfinance.com/wp-content/uploads/2015/02/Nomination-Remuneration-policy-KIFS.pdf
9. Number of meetings of the board of directors
The board of directors met four times during the financial year under report thedetails of which have been given in the corporate governance report. The intervening gapbetween any two board meetings did not exceed 120 days as prescribed under the provisionsof the law(s).
10. Committees of the board
At present the company has four committees viz. audit committee nomination andremuneration committee stakeholders relationship committee and risk management committeewhich have been established as a part of the better corporate governance practices and arein compliance with the requirements of the relevant provisions of the applicable laws andstatutes.
Apart from the above statutory committees the company also has a managing committee ofthe board of directors to look after the routine day to day affairs of the company.
The details with respect to the compositions terms of reference scope and powersroles meetings etc. of the relevant committees are given in detail in the corporategovernance report forming part of this annual report.
11. Corporate social responsibility
During the financial year under report your company did not meet the criteria laiddown under the provisions of section 135(1) of the Companies Act 2013 read with theCompanies (Corporate Social Responsibility Policy) Rules 2014 and accordingly theprovisions including but not limited upto constitution of corporate social responsibilitycommittee and formulation / implementation of a policy on corporate social responsibilityare not applicable to the company.
12. Performance evaluation of the board
In accordance with the provisions of regulation 17(10) of the SEBI (Listing Obligationsand Disclosure Requirements) Regulations 2015 and schedule IV of the Companies Act 2013evaluation of performance of independent directors by the non independent directors andreview of performance of non independent directors and the board as a whole by theindependent directors was made during the financial year under report. The directors weresatisfied with the evaluation results which reflected an overall engagement of the boardand its committees with the company. This may be considered as a statement underprovisions of section 134(3)(p) of the Companies Act 2013 and rule 8(4) of the Companies(Accounts) Rules 2014.
More details on the evaluation mechanism are given in the corporate governance report.
13. Vigil mechanism / whistle blower policy
The company promotes ethical behavior in all its business activities and has put inplace a mechanism wherein the employees are free to report illegal or unethical behavioractual or suspected fraud or violation of the company's codes of conduct or corporategovernance policies raise concerns against management and business practices incorrector misrepresentation of any financial statements and reports or any improper activitybeing negative in nature to the chairman of the audit committee of the company or chairmanof the board. The whistle blower policy has been appropriately communicated within thecompany.
Under the whistle blower policy the confidentiality of those reporting violation(s) isprotected and they are not subject to any discriminatory practices. No personnel have beendenied access to the audit committee. The functioning of the vigil mechanism is reviewedby the audit committee from time to time. The vigil mechanism / whistle blower policy hasbeen uploaded on website of the company and can be accessed at following web link:
14. Statement of development & implementation of risk management policy
The company has developed and implemented a risk management policy to meet the risksassociated with the business of the company. Business risk evaluation and management is anongoing process within the company. The assessment is periodically examined by the riskmanagement committee of the board. The company while giving loan to its customersfollows the criteria and procedure laid down in policy and the credibility of the clients.
15. Loans / guarantees or investment in securities
Being a non banking financial company pursuing loan business in its ordinary course ofbusiness the disclosures relating to the details of loans made guarantees givensecurities provided or subscription / acquisition of securities pursuant to theprovisions of section 186(11) of the Companies Act 2013 and rule 11 of the Companies(Meetings of Board and its Powers) Rules 2014 are not required to be given. Long term andshort term loans and advances made are enumerated in note 9 and 11 respectively of thenotes to the financial statements of the company.
16. Contracts or arrangements with related parties
All related party transactions that were entered during the financial year under reportwere in the ordinary course of business of the company and were on arm's length basis.There were no materially significant related party transactions entered by the companywith its promoters directors key managerial personnel or other persons which may have apotential conflict with the interest of the company. All such related party transactionsare being quarterly placed before the audit committee for its review. Omnibus approval hasbeen obtained from the audit committee board of directors and shareholders of the companyfor all the related party transactions (including transactions which are foreseen andrepetitive in nature).
Since no material related party transactions were entered by the company and all thetransactions entered into by the company with its related parties were in the ordinarycourse of business and on arm's length basis disclosure in the form AOC-2 is not beinggiven.
The policy on related party transactions as approved by the board has been uploaded onthe company's website at the web link:
17. Internal financial control systems and their adequacy
The company has internal control systems commensurate with the size scale andcomplexity of its operations. Your company has laid down set of standards processes andstructure which enable it to implement internal financial control systems across theorganization and ensure that the same are adequate and operating effectively. Internalfinancial control systems of the company provide a reasonable assurance with regard tomaintaining of proper accounting controls monitoring of operations protecting assetsfrom unauthorized use or losses compliance with regulations and for ensuring reliabilityof financial reporting.
18. Extract of annual return
Pursuant to the provisions of section 134(3)(a) and section 92(3) of the Companies Act2013 read with rule 12 of the Companies (Management and Administration) Rules 2014 theextract of the annual return as at March 31 2019 in the form MGT 9 is enclosed herewithas Annexure 1.
19. Disclosure as per the rule 5 of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014
The details as per rule 5(1) and 5(2) of the aforesaid rules are enclosed herewith as Annexure 2.
20. Auditors Statutory auditors
The shareholders of the company at their 22nd annual general meeting held onFriday September 22 2017 appointed M/s. Bimal Shah Associates chartered accountantsAhmedabad as statutory auditors of the company for a period of 5 years i.e. uptoconclusion of 27th annual general meeting of the company.
The said appointment of statutory auditors has been made in accordance with theprovisions of rule 6 of the Companies (Audit and Auditors) Rules 2014 i.e. manner ofrotation of auditors by the companies on expiry of their term.
In accordance with the provisions of the Companies (Amendment) Act 2017 requirementof placing the matter of ratification of appointment of statutory auditors at every annualgeneral meeting has been omitted.
Further the company being engaged in the financial service activities is notrequired to maintain cost records under the provisions of section 148 of the CompaniesAct 2013.
Pursuant to the provisions of section 204 of the Companies Act 2013 and rules framedthereunder the board has re-appointed the existing secretarial auditors of the companyM/s. Anamika Jajoo & Co. practicing company secretary Ahmedabad for conducting thesecretarial audit for the financial year ending on March 31 2020.
Secretarial audit report issued by the secretarial auditor of the company for thefinancial year ended on March 31 2019 is attached to the directors' report as Annexure 3 . Further the company has complied with the secretarial standards to theextent applicable to the company.
Explanations or comments by the board on qualification / reservation / adverse remarkor disclaimer made by the statutory auditors in their audit report and by the secretarialauditor in her secretarial audit report
Both the statutory auditors' report and secretarial audit report are self explanatoryand no comment from the board of directors of the company is required as no qualificationreservation or adverse remark or disclaimer is given by any of the auditors of thecompany.
In accordance with the provisions of section 138 of the Companies Act 2013 and rulesframed thereunder your company has appointed M/s. SMPK & Associates LLP Ahmedabadas the internal auditors of the company in the board meeting held on May 29 2019 toconduct the internal audit of the functions and activities of the company for thefinancial year ending on March 31 2020.
21. Investment advisory business
Post closure of financial year ended on March 31 2019 the company has dulysurrendered its registration as an investment advisor under the SEBI (Investment Advisers)Regulations 2013 availed vide registration no. INA000001852 during the financial yearended on March 31 2015.
22. Credit rating
The CARE Ratings Limited has vide its letter dated May 31 2019 provided the creditrating to the company as given below:
|Facilities ||Amount (Rs. Crore) || ||Rating |
|Long-term / short-term bank facilities (over draft against fixed deposits) ||25.00 ||ICRA (old) ||CARE (revised) |
|Total facilities ||25.00 (Rupees Twenty Five Crores Only) ||ICRA BBB+ (stable) ||CARE BBB+; Stable / CARE A2 (Triple B Plus; Outlook: Stable / A Two) |
23. Investor education and protection fund (IEPF)
During the financial year under report i.e. 2018-19 the company has transferred Rs.179400/- the unclaimed and unpaid dividend amount for the financial year 2010-11 to theinvestor education and protection fund. Moreover 8900 number of equity shares were alsotransferred to the IEPF corresponding to the unpaid dividend remained unclaimed and unpaidfor seven consecutive years. The cumulative shares transferred to the IEPF stands at161400 equity shares of Rs. 10/-each as on March 31 2019.
Further the details as on March 31 2019 for unclaimed / unpaid dividend lying in theunpaid account and the corresponding shares which are liable to be transferred to theIEPF are as follows:
|Sr. no. ||Financial year ||Type of dividend ||Unclaimed / unpaid dividend (Rs.) ||Corresponding number of equity shares ||Due date of transfer to IEPF |
|1 ||2011-12 ||Final dividend ||269625.00 ||215700 ||November 6 2019 |
|2 ||2012-13 ||Final dividend ||160994.50 ||321989 ||September 7 2020 |
|3 ||2013-14 ||Final dividend ||116972.50 ||233945 ||October 5 2021 |
|4 ||2014-15 ||Final dividend ||127507.50 ||255015 ||October 4 2022 |
|5 ||2015-16 ||Final dividend ||152140.50 ||202854 ||September 24 2023 |
|6 ||2016-17 ||Final dividend ||176350.50 ||195945 ||October 28 2024 |
|7 ||2017-18 ||Final dividend ||39907.80 ||44342 ||October 27 2025 |
24. Material changes and commitments affecting financial position of the company
There are no material changes and commitments affecting the financial position of thecompany which have been occurred between the end of the financial year i.e. March 31 2019and the date of signing of the directors' report i.e. May 29 2019. Further nosignificant or material orders have been passed by the regulators or courts or tribunalsimpacting the going concern status of the company and / or the company's operations infuture.
25. Remuneration given to the managing director
The managing director of the company Mr. Rajesh P. Khandwala also occupies the officeof the managing director in KIFS Housing Finance Private Limited a group company to theKhandwala group. Mr. Khandwala was paid remuneration to the tune of Rs. 600000/-(rupeessix lakhs only) from your company during and for the financial year ended on March 312019. The company does not have any subsidiary company.
The material terms and conditions of re-appointment and remuneration of Mr. Khandwalaare enumerated in the explanatory statement annexed to the notice of 22ndannual general meeting of the company.
26. Disclosure under the Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013
A policy under the provisions of the Sexual Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013 has been laid down and circulated toevery employee of the company so as to inform them about the redressal mechanism availableto them against any kind of harassment. Your directors state that during the financialyear under report there were no cases filed or compliant received from any employeepertaining to the sexual harassment.
A policy framed and adopted by the board of directors of the company on prevention ofsexual harassment is uploaded on the company website at below web link:
Presently the equity shares of your company are listed at the Bombay Stock ExchangeLimited (BSE) (scrip code: 535566). The company's equity shares are available for tradingin demat form by all the investors on BSE which is having nation-wide trading terminals invarious cities affording to the investors convenient access to trade and deal in thecompany's equity shares across the country.
The company is regular in complying with the requirements of the listing agreement /regulations and has duly paid the requisite listing fees to the BSE.
28. Code of conduct
The board has laid down a code of conduct ("code") for board membersmanagerial personnel and for senior management employees of the company. This code hasbeen posted on the company's website at http://kifsfinance.com/code-of-conduct-policy/.All the board members and senior management personnel have affirmed compliance with thiscode. A declaration by the managing director to this effect forms part of the corporategovernance report.
The board has also laid down a code of conduct for independent directors pursuant tosection 149(8) and schedule IV to the Companies Act 2013 via terms and conditions forappointment of independent directors which is a guide to professional conduct forindependent directors and has been uploaded on the website of the company at following weblink:
29. Corporate governance
Your company practices a culture that is built on core values and ethical governancepractices and is committed to transparency in all its dealings. A report on corporategovernance along with a certificate from statutory auditors of the company regardingcompliance of conditions of corporate governance as stipulated under provisions ofregulation 34(3) and schedule V of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 is annexed to this report.
30. Management discussion and analysis report
A detailed analysis of the company's performance is made in the management discussionand analysis report which forms part of this annual report.
31. Compliance with the Reserve Bank of India guidelines
The company being a non banking financial company categorized as a loan companycontinues to comply with all the applicable regulations directions and guidelines issuedby the Reserve Bank of India from time to time.
32. Particulars regarding conservation of energy technology absorption and foreignexchange earnings and outgo
The disclosures required to be made under section 134(3)(m) of the Companies Act 2013read with rule (8)(3) of the Companies (Accounts) Rules 2014 pertaining to theconservation of energy technology absorption and foreign exchange earnings and outgo arenot applicable to the company as the company being a non banking financial company isneither involved in any manufacturing processing activities nor any of its transactionsinvolves foreign exchange earnings and outgo.
33. Directors' responsibility statement
Pursuant to the provisions of section 134(3)(c) of the Companies Act 2013 yourdirectors confirm that: a) in the preparation of the annual accounts the applicableaccounting standards had been followed along with proper explanation relating to materialdepartures; b) the directors had selected such accounting policies and applied themconsistently and made judgments and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of the company for the financial yearended on March 31 2019 and of the profit and loss of the company for that period; c) thedirectors had taken proper and sufficient care for the maintenance of adequate accountingrecords in accordance with the provisions of the Companies Act 2013 for safeguarding theassets of the company and for preventing and detecting fraud and other irregularities; d)the directors had prepared the annual accounts on a going concern basis; e) the directorshad laid down 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.
Your directors take this opportunity to express their deep and sincere gratitude to theclients customers employees shareholders and other stakeholders of the company fortheir trust and patronage as well as to the various bankers Reserve Bank of IndiaSecurities and Exchange Board of India Bombay Stock Exchange Government of India andother regulatory authorities for their continued co-operation support and guidance.
|For and on behalf of the board of directors |
|KIFS Financial Services Limited |
|Rajesh P. Khandwala |
|(Chairman & managing director) |
|(DIN: 00477673) |
|Ahmedabad May 29 2019 |
Disclosure as per section 197(12) of the Companies Act 2013 & rule 5(1) of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014
|Particulars ||Disclosure || |
|(i) Ratio of the remuneration of each director to the median remuneration of the employees of the company for the financial year ||Director's name ||Ratio to median remuneration of the employees |
| ||Mr. Rajesh P. Khandwala -MD ||1.53:1 |
| ||Mrs. Sonal R. Khandwala ||Nil |
| ||Mr. Devang M. Shah ||Nil |
| ||Mr. Dharmendra N. Soni ||Nil |
|(ii) Percentage increase in remuneration of each director chief financial officer chief executive officer company secretary or manager if any in the financial year ||Director / CFO / CS ||Percentage increase |
| ||Mr. Rajesh P. Khandwala -MD ||Nil |
| ||Other Directors ||Nil |
| ||Mr. Bhavik J. Shah -chief financial officer ||10.05% |
| ||Mr. Durgesh D. Soni company secretary ||30.82% |
|(iii) Percentage increase in the median remuneration of employees in the financial year ||40.03% |
|(iv) Number of permanent employees on the rolls of company as on March 31 2019 ||7 employees |
|(v) Average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration ||Average percentage increase in the salaries of employees other than managerial personnel in the financial year was 31.25% whereas increase in managerial remuneration was nil. |
|(vi) Affirmation that the remuneration is as per the remuneration policy of the company ||The board of directors of the company affirms that the remuneration is as per the remuneration policy of the company. |
Disclosure as per section 197(12) of the Companies Act 2013 & rule 5(2) of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014
|Sr. no. ||1 ||2 ||3 ||4 ||5 ||6 ||7 |
|in terms of remuneration* || || || || || || || |
|Name of the employee ||Mr. Amit Modi ||Mr. Durgesh Soni ||Mr. Bhavik J. Shah ||Mr. Ketan Patel ||Mr. Nishit Vyas ||Mr. Kiran Jani ||Mrs. Juhi Giletwala |
|Designation of the employee ||Senior accountant ||Company secretary ||Chief financial officer ||Executive wealth ||Back office executive ||Driver ||Executive wealth |
|Remuneration received during FY 2018-19 (in `) ||201250/- ||411550/- ||421200/- ||392600/- ||277550/- ||240890/- ||207350/- |
|Nature of employment ||Permanent ||Permanent ||Permanent ||Permanent ||Permanent ||Permanent ||Permanent |
|Qualification ||B.Com ||Company Secretary M. Com. & LL. B. ||B. Com. ICAI Inter & ICMAI Inter ||B. Sc. ||M. Com. ||- ||M. Com. & LL. B. |
|Experience ||25 years ||4 years ||17 years ||10 years ||16 years ||- ||7 years |
|Date of commencement of employment ||November 1 2018 ||May 24 2016 ||September 25 2010 ||July 1 2013 ||December 26 2007 ||- ||July 16 2012 |
|Age of employee (years) ||48 ||25 ||47 ||34 ||36 ||40 ||27 |
|Last employment held before joining the company ||Khandwala Enterprise Private Limited ||Arfin India Limited ||Kunvarji Finstock Private Limited ||ICICI Bank Ahmedabad ||Interface Brokerage and Research Limited ||- ||NA |
|% of equity shares held in the company ||- ||- ||- ||- ||- ||- ||- |
|Whether relative of any director if yes name of such director ||No ||No ||No ||No ||No ||No ||No |
* based on last month salary of financial year under report