Your directors have pleasure in presenting the 26th annual report on thebusiness and operations of the company together withthe audited financial statement forthefinancial year ended on March 31 2021.
1. Financial summary
|Particulars ||2020-21 ||2019-20 |
|Revenue from operations ||2093.21 ||1559.34 |
|Other income ||10.35 ||0.24 |
|Total income ||2103.56 ||1559.58 |
|Total expenditure ||1595.71 ||1032.24 |
|Profit / (loss) before exceptional items & provision for tax ||507.84 ||527.35 |
|Exceptional items ||- ||- |
|Profit / (loss) before tax ||507.84 ||527.35 |
|Tax expenses ||129.13 ||133.44 |
|Net profit ||378.72 ||393.91 |
|EPS basic & diluted (Rs. ) ||3.50 ||3.64 |
2. State of company's affairs/ performance of the company
During the financial year under report total income of the company stands to Rs.2103.56 lakhs comprised of Rs. 2093.21 lakhs as revenue from operations and Rs. 10.35lakhs as other income as compared to Rs. 1559.58 lakhs comprised of Rs. 1559.34 lakhs asrevenue from operations and Rs. 0.24 lakhs as other income generated during the previousfinancial year. The revenue from operations has shown growth of 34.24% in compare toprevious financial year. Profit before interest depreciation and tax also stands at Rs.2056.26 lakhs as compared to Rs. 1485.67 lakhs in the financial year ended on March 312020. Considering increased finance cost net profit after tax has been reduced from Rs.393.91 lakhs to Rs. 378.72 lakhs which shows year to year decline of 3.86%. The net profitmargin remains at 18.09% forthe financial year under report.
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 2020-21 atsimilar rate of Rs. 1.25 (one rupee and twenty five paise only) (12.50%) per equity shareof Rs. 10/- (rupees ten only) each same as declared for the previous financial yearendedon March 31 2020 .
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 willbe Rs. 135.23lakhs.
4. Transfer to reserves
The company proposes to transfer Rs. 75.74 lakhs to the special reserve out of amountavailable for appropriations and an amount of Rs. 1244.72 lakhs is proposed to beretained in thestatement ofprofit and loss.
During the financial year ended on March 31 2021 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 2014and 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 2021 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 /-consisting of 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 herre -appointment.
Appointment of directors
At the board meeting held on June 29 2020 the board appointed Mr. Sharvil Suthar (apracticing company secretary) as an independent director of the company to hold the officefor a period of 5 years and his appointment was approved by the shareholders at the annualgeneral meeting held on Tuesday September 29 2020.
Also at the board meeting held on January 25 2021 the board appointed Mr. Vimal P.Khandwala as an additional executive director of the company whose appointment is proposedfor shareholders' approval in the ensuing annual general meeting.
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 Mr. Dharmendra N. Soniand Mr. Sharvil B. Suthar have been appointed as non executive independent directorson theboard of the company.
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 forthedirectors management and senior managerial personnel .
Further a separate meeting of independent directors of the company was held on MondayFebruary 22 2021 in accordance with the provisions of clause VII of the schedule IV ofthe Companies Act 2013.
All the independent directors of the company have completed their registration on theindependent directors' data bank within the timeline stipulated by the law. Also therequisite independent director(s) have cleared the proficiency self-assessment test or arenot required to do so based on the relaxation provided therein.
Also the board of directors of the company opines that during the year the integrityexpertise and experience (including proficiency) of the independent directors aresatisfactory to the company's requirements. The independent directors are proficient inthe field as specified in point II(h) of the corporate governance report attachedherewith.
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.
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 beengiven 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:
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) except where relaxation provided by the appropriate authorities.
10. Committees of theboard
The company has formed various committees namely audit committee nomination andremuneration committee stakeholders' relationship committee corporate socialresponsibility committee and risk management committee in compliance with the requirementsof the relevant provisions of the applicable laws and statutes. The risk managementcommittee has beenestablished as a part of the better corporate governance practices.
Apart from the above statutory committees the company also has a managing committee ofthe board of directors to look after the routineday 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 thisannual report .
11. Corporate social responsibility
During the financial year under report i.e. 2020-21 your company first time met thecriteria laid down under the provisions of section 135(1) of the Companies Act 2013 readwith the Companies (Corporate Social Responsibility Policy) Rules 2014 as per the netprofit of the company for the financial year 2019-20 and accordingly it has implemented apolicy and has formed a committee named corporate social responsibility committee moredetails on which along with details of spending w.r.t. CSR are provided in report oncorporate social responsibility enclosed along with this directors' reportas Annexure 1.
12. Performance evaluation ofthe 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 rule8(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. Details ofloans as financial assets are givenin noteno. 6 of the notes to the financial statementsof the company.
16. Contractsor 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 notbeinggiven .
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. Annual return
Pursuant to the provisions of section 92(3) read with section 134(3)(a) of theCompanies Act 2013 the annual return as on March 31 2021 is available under theinvestors tab on the company's website www.kifsfinance.com.
19. Disclosure as per the rule 5 of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014
The details as per rule5(1) and5(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 27thannual 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 2022.
Secretarial audit report issued by the secretarial auditor of the company for thefinancial year ended on March 31 2021 is attached to the directors' report as Annexure 3. Further the company has complied with the secretarial standards to theextent applicable to the company. Annual secretarial compliance report issued in terms ofprovisions of regulation 24A of the SEBI LODR is attached as Annexure 4.
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
The audit report issued by the statutory auditors of the company is 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.
The secretarial auditor has given her comments in the secretarial audit report issuedfor the period under report for which the directors state that the company being an NBFCit was mandatory for it to obtain prior approval of RBI for appointment of executivedirector for which RBI took some time to accord its prior approval and while granting suchapproval RBI also advised the company to follow the prescribed procedure of RBI's masterdirections DNBR.PD.007 /03.10.119/2016-17 dated September 1 2016 i.e. publication of onemonth's prior public notice in newspapers. The company accordingly complied with suchrequirements and appointed executive director and made optimum composition of board ofdirectors. The matter is pending before the waiver committee of BSE.
In accordance with the provisions of section 138 of the Companies Act 2013 and rulesframed thereunder your company has re-appointed M/s. SMPK & Associates LLPAhmedabad as the internal auditors of the company in the board meeting held on June 262021 to conduct the internal audit of the functions and activities of the company for thefinancial yearending on March 31 20 22.
21. Impact of COVID-19
The company deals in single business segment of providing loan against securities andIPO funding. As such it didn't face any material impact on its business operations sinceIndian stock markets were remained open and functioned in usual manner. Due to overalllack luster primary market it did not create any impact on pre or post COVID-19 for IPOfunding. No customers of the company have demaded for any moratorium and accordingly thecompany continued to avail benefit of interest on loans and advances already grantedduring lockdown period and accordingly the company doesn't see any major impact on itsprofitability liquidity and resources. Moreover the company has adopted work from homepolicy in accordance with applicable governmental and regulator's guidelines andaccordingly no operations of the company were required to be shut down for any period.
22. Investor education and protection fund (IEPF)
During the financial year under report i.e. 2020-21 the company has transferred Rs.160994.50 the unclaimed and unpaid dividend amount for the financial year 2012-13 tothe investor education and protection fund. Moreover 2460 number of equity shares werealso transferred to the IEPF corresponding to the unpaid dividend remained unclaimed andunpaid for seven consecutive years. The cumulative shares transferred to the IEPF standsat 168640 equity shares ofRs. 10/ - each as on March 31 2021.
Further the details as on March 31 2021 for unclaimed / unpaid dividend lying in theunpaid account and the corresponding shares which are liable to be transferredto the IEPFare as follows:
|no. ||year ||dividend ||dividend (Rs. ) ||of equity shares ||to IEPF |
|1 ||2013-14 ||Final dividend ||116972.50 ||233945 ||October 5 2021 |
|2 ||2014-15 ||Final dividend ||127507.50 ||255015 ||October 4 2022 |
|3 ||2015-16 ||Final dividend ||152140.50 ||202854 ||September 24 2023 |
|4 ||2016-17 ||Final dividend ||176350.50 ||195945 ||October 28 2024 |
|5 ||2017-18 ||Final dividend ||39907.80 ||44342 ||October 27 2025 |
|6 ||2018-19 ||Final dividend ||21633.00 ||21633 ||November 2 2026 |
|7 ||2019-20 ||Final dividend ||44952.75 ||37607 ||November 4 2027 |
23. 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 2021and the date of signing of the directors' report i.e. June 26 2021 except the effect ofglobal pandemic i.e. COVID-19 details of which are given already above in this report.Further no significant or material orders have been passed by the regulators or courts ortribunals impacting the going concern status of the company and/ or the company'soperations in future.
24. 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 Limited a group company to the Khandwalagroup. Mr. Khandwala was paid remuneration to the tune of Rs. 600000/- (rupees six lakhsonly) from your company during and for the financial year endedon March 31 20 21. Thecompany 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 22ndannualgeneral meeting of the company.
25. 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 thesexual 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.
27. 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 directorspursuant 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:
28. 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.
29. 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.
30. 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.
31. 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.
32. Directors' responsibility statement
Pursuant to the provisions ofsection 134( 3)(c) of the Companies Act 2013 yourdirectors confirm that:
a) in the preparation of the annual accounts the applicable accounting standards hadbeen followed along with proper explanation relating to material departures;
b) the directors had selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the company for the financial year ended on March 312021 and of the profit and loss of the company for that period;
c) the directors had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the company and for preventing and detecting fraud and otherirregularities;
d) the directors had prepared the annual accounts on a going concern basis;
e) 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
f) the directors had devised proper systems to ensure compliance with the provisions ofall applicable 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 onbehalf of the board of directors
KIFS Financial Services Limited
Rajesh P. Khandwala
(Chairman& m anaging director)
Ahmedabad June 26 2021