The Members of
KJMC Financial Services Limited
Your Directors' have pleasure in presenting the 30th Annual Report of the KJMCFinancial Services Limited (KFSL) together with the Audited Financial Statements of theCompany for the financial year ended March 31 2018. The consolidated performances of theCompany and its subsidiaries have been referred to wherever required.
The performance of the Company for the financial year ended March 31 2018 issummarized below:
(Rs. in "000")
| ||Standalone ||Consolidated |
|Particulars ||Year Ended March 31 2018 ||Year Ended March 31 2017 ||Year Ended March 31 2018 ||Year Ended March 31 2017 |
|FINANCIAL RESULTS || || || || |
|Revenue from || || || || |
|Operation ||69242 ||28067 ||69444 ||29324 |
|Other Income ||652 ||221 ||840 ||614 |
|Total Revenue ||69894 ||28288 ||70284 ||29938 |
|Total Expenses ||63871 ||25249 ||64166 ||26472 |
|Profit before Tax ||6023 ||3039 ||6118 ||3466 |
|Less: Provision for Tax || || || || |
|- Current Tax ||967 ||93 ||973 ||116 |
|- Deferred Tax ||1049 ||(137) ||1049 ||(137) |
|- MAT Credit ||(967) ||(93) ||(964) ||(82) |
|- Prior period taxes ||- ||(1049) ||2 ||(1049) |
|Profit/(loss) after tax ||4974 ||4225 ||5058 ||4618 |
|Share in Associates' profit/(Loss) ||NA ||NA ||1350 ||104 |
|Profit/(loss) for the year ||4974 ||4225 ||6408 ||4722 |
|APPROPRIATIONS || || || || |
|Profit/(loss) for the year ||4974 ||4225 ||6408 ||4722 |
|Add: Balance brought forward from previous year ||28116 ||24842 ||26988 ||23216 |
|Amount available for appropriations ||33091 ||29067 ||33396 ||27938 |
|Less: Appropriations || || || || |
|Special Reserve ||995 ||845 ||995 ||845 |
|General Reserve ||124 ||106 ||124 ||106 |
|Balance carried to || || || || |
|Balance Sheet ||31972 ||28116 ||32277 ||26987 |
|EPS || || || || |
|-Basic ||1.04 ||0.90 ||1.34 ||1.01 |
|-Diluted ||1.04 ||0.88 ||1.34 ||0.99 |
OVERVIEW OF COMPANY'S FINANCIAL PERFORMANCE
On standalone basis your Company earned the gross income of Rs 698.94 Lakhs as againstRs 282.88 Lakhs in the previous year. The total expenditure during the year under reviewwas Rs 638.71 Lakhs as against Rs 252.49 Lakhs in the previous year. The Net Profit aftertax was Rs 49.74 Lakhs as against Rs 42.25 Lakhs in the previous year.
On consolidated basis your Company earned the gross income of Rs 702.84 Lakhs asagainst Rs 299.38 Lakhs in the previous year. The total expenditure during the year underreview was Rs 641.66 Lakhs as against Rs 264.72 Lakhs in the previous year. The Net Profitafter tax was Rs 64.08 Lakhs as against Rs 47.22 Lakhs in the previous year.
PERFORMANCE AND FINANCIAL POSITION OF THE SUBSIDIARIES AND ASSOCIATES
Subsidiary Companies :
Pursuant to Section 134 of the Companies Act 2013 and Rule 8(1) of the Companies(Accounts) Rules 2014 the report on performance and financial position of subsidiariesincluded in the Consolidated Financial Statements in the Company.
Pursuant to the provisions of Section 129(3) of Companies Act 2013 a separatestatement containing the silent features of the subsidiary companies in prescribed formAOC-1 is part of the consolidated financial statements. The Financial statements of theCompany along with the accounts of the subsidiaries will be available at the websites ofthe Company www.kjmc.com and kept open for inspection at the registered office of theCompany.
Brief Financial and Operation of subsidiary companies are given hereunder:
(i) KJMC Asset Management Company Limited: It earned gross income of Rs 10.62 Lakhs asagainst Rs 17.34 Lakhs in the previous year. The total expenditure during the year underreview was Rs 10.58 Lakhs as against Rs 17.02 Lakhs in the previous year. The Net Profitafter tax was Rs 0.04 Lakhs as against Rs 0.23 Lakhs in the previous year.
(ii) KJMC Investment Trust Company Limited: It earned gross income of Rs 0.96 Lakhs asagainst Rs 1.07 Lakhs in the previous year. The total expenditure during the year underreview was Rs 0.68 Lakhs as against Rs 0.73 Lakhs in the previous year. The Net Profitafter tax was Rs 0.20 Lakhs as against Rs 0.16 Lakhs in the previous year.
(iii) KJMC Trading & Agency Limited: It earned gross income of Rs 1.62 Lakhs asagainst Rs 4.70 Lakhs in the previous year. The total expenditure during the year underreview was Rs 0.99 Lakhs as against Rs 1.09 Lakhs in the previous year. The Net Profitafter tax was Rs 0.61 Lakhs as against Rs 3.54 Lakhs in the previous year.
(i) KJMC Platinum Builders Private Limited: It earned gross income of Rs 10.69 Lakhs asagainst Rs 10.49 Lakhs in the previous year. The total expenditure during the year underreview was Rs 5.68 Lakhs as against Rs 6.81 Lakhs in the previous year. The Net Profitafter tax was Rs 4.49 Lakhs as against Rs 2.52 Lakhs in the previous year.
(ii) KJMC Realty Private Limited: It earned gross income of Rs 52.78 Lakhs as againstRs 0.00 Lakhs in the previous year. The total expenditure during the year under review wasRs 0.20 Lakhs as against Rs 0.16 Lakhs in the previous year. The Net Profit after tax wasRs 52.47 Lakhs as against loss of Rs 0.16 Lakhs in the previous year.
In order to conserve the resources for operations of the Company your Directors regrettheir inability to recommend any dividend for the year under review.
TRANSFER TO RESERVES
The Company proposes to transfer Rs 1.24 Lakhs to the general reserve and Rs. 9.95Lakhs to Special Reserves out of the amount available for appropriation and an amount ofRs 319.72 Lakhs is proposed to be retained in the profit and loss account.
RBI PRUDENTIAL NORMS
Since the Company does not accept and hold any public deposits the Non- BankingFinancial (Non Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank)Directions 2007 are not applicable to the Company as regard to capital adequacyrequirement.
EXTRACT OF ANNUAL RETURN
The extract of the Annual Return as provided under sub-section (3) of Section 92 of theCompanies Act 2013 and rule 12(1) of the Companies (Management and Administration) Rules2014 in the Form MGT 9 for the financial year under review is annexed and forms part ofthis report.
NUMBER OF MEETINGS OF THE BOARD
The Board of Directors held Four (4) meeting during the year. The maximum time gapbetween any two meetings was less than 120 days as stipulated under SEBI (ListingObligations and Disclosure Requirements) Regulations 2015. The details of the BoardMeetings and the attendance of the Directors are provided in the Report on CorporateGovernance forming part of this report.
COMMITTEES OF THE BOARD
The Company has constituted/reconstituted various level committees in accordance withthe requirements of Companies Act 2013 The Board has the following committees:
i. Audit Committee
ii. Nomination and Remuneration Committee
iii. Share Transfer and Stakeholders Relationship Committee
iv. Credit and Investment Committee
The Audit Committee comprises of Shri S C Aythora (Chairman and Independent Director)Shri Inderchand Jain (Non-Executive Non-independent Director) and Nitin Kulkarni(Independent Director). During the year all the recommendations made by the AuditCommittee were accepted by the Board. Four (4) Audit Committee Meetings were convened andheld during the financial year. The details pertaining to composition of Audit Committeeand the attendance of the Audit Committee members are provided in the Corporate GovernanceReport which forms part of the annual report.
Nomination and Remuneration Committee
During the year One (1) Nomination and Remuneration Committee Meeting was convened andheld. The details pertaining to composition of Nomination and Remuneration Committee andthe attendance of the Nomination and Remuneration Committee members are provided in theCorporate Governance Report which forms part of the annual report.
Share Transfer and Stakeholders Relationship Committee
During the year Seven (7) Share Transfer and Stakeholders Relationship CommitteeMeetings were convened and held. The details pertaining to composition of Share Transferand Stakeholders Relationship Committee and the attendance of the Share Transfer andStakeholders Relationship Committee members are provided in the Corporate GovernanceReport which forms part of the annual report.
Credit and Investment Committee
During the year Eleven (11) Credit and Investment Committee Meetings were convened andheld. The details pertaining to composition of Credit and Investment Committee and theattendance of the Credit and Investment Committee members are provided in the CorporateGovernance Report which forms part of the annual report.
DIRECTORS' RESPONSIBILITY STATEMENT UNDER SECTION 134 OF THE COMPANIES ACT 2013
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 the preparation of the annual financial statements for the year ended March 312018 the applicable accounting standards had been followed along with proper explanationrelating to material departures if any;
b. the Directors' have selected such accounting policies and applied them consistentlyand made judgment and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company as at the end of the financial year andof the profit of the Company for that period;
c. the Directors' have taken proper and sufficient care to the best of their knowledgeand ability for the maintenance of adequate accounting records in accordance with theprovisions of the Companies Act 2013 for safeguarding the assets of the Company and forpreventing and detecting fraud and other irregularities;
d. the Directors' have prepared the annual accounts for the financial year ended March31 2018 on a going concern basis;
e. the Directors' have laid down internal financial controls to be followed by theCompany and such internal financial controls are adequate and operating effectively;
f. the Directors' have devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.
DETAILS IN RESPECT OF FRAUDS REPORTED BY AUDITORS UNDER SUB-SECTION (12) OF SECTION 143OTHER THAN THOSE WHICH ARE REPORTABLE TO THE CENTRAL GOVERNMENT
During the reporting period no frauds were reported by Auditors under sub section (12)of section 143 as such no offence involving fraud was committed against the Company byofficers or employees of the Company.
FAMILIARISATION PROGRAMMES FOR BOARD MEMBERS
The Board members are provided with necessary documents / brochures reports andinternal policies to enables them to familiarize with the Company's procedures andpractices.
Periodic presentations are made at the Board and Committee meetings on business andperformance updates of the Company global business environment business strategy andrisks involved. Detailed presentations on the Company's business segments are made at theseparate meetings of the Independent Directors from time to time.
CODE OF CONDUCT
The Company has in place a comprehensive Code of Conduct ('the code') applicable to theDirectors and employees. The Code is applicable to Non-executive Directors includingIndependent Directors to such an extent as may be applicable to them depending on theirroles and responsibilities. The Code gives guidance and support needed for ethical conductof business and compliance of law. The Code reflects the core values of the Company.
POLICY ON DIRECTORS' APPOINTMENT AND REMUNERATION AND OTHER DETAILS
The Company's policy on Directors' appointment and remuneration and other mattersprovided in Section 178(3) of the Companies Act 2013 has been disclosed in the CorporateGovernance report which forms part of the annual report.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS MADE UNDER SECTION 186 OF THE COMPANIESACT 2013
The particulars of loans guarantees and investments have been disclosed in thefinancial statements which forms part of the annual report.
PARTICULARS OF CONTRACTS OR ARRANGEMENTS MADE WITH RELATED PARTIES
All contracts/arrangements/transactions entered by the Company during the financialyear with related parties were in its ordinary course of business and on arm's lengthbasis and do not have potential conflict with interest of the Company at large.
All contracts / arrangements / transactions with related party which are required to bereported in Form No. AOC- 2 in terms of Section 134(3)(h) read with Section 188 of theAct and Rule 8(2) of the Companies (Accounts) Rules 2014 is annexed and forms part ofthis report .
Member may refer to Note 31 to the standalone financial statement which sets outrelated party disclosure pursuant to Indian Accounting Standard 18 (Ind AS 18)
MATERIAL CHANGES AND COMMITMENT IF ANY AFFECTING THE FINANCIAL POSITION OF THE COMPANYOCCURRED BETWEEN THE END OF THE FINANCIAL YEAR TO WHICH THE SE FINANCIAL STATEMENTS RELATEAND THE DATE OF THE REPORT
No material changes and commitments affecting the financial position of the Companyoccurred between the end of the financial year to which this financial statement relateand on the date of this report.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION
FOREIGN EXCHANGE EARNINGS AND OUTGO
Since the Company is a Financial Services Company the details required under Section134 of the Companies Act 2013 are not applicable to the Company. However Company believesin conserving the natural resources and uses CFL and LED Lighting in the office premiseswhich has low energy consumption.
During the reporting period there was no foreign exchange earning but incurred anexpenditure of Rs 11.22 lakhs as against Rs 3.63 Lakhs in the previous year.
The details in respect of risks and concerns are included in the Management Discussion& Analysis which forms part of this report.
DETAILS OF POLICY DEVELOPED AND IMPLEMENTED BY THE COMPANY ON ITS CORPORATE SOCIALRESPONSIBILITY INITIATIVES
The Company has not developed and implemented any Corporate Social Responsibilityinitiatives as the said provisions are not applicable to the Company.
The Board of Directors has carried out an annual evaluation of its own performanceBoard committees and Individual Directors pursuant to the provisions of the Companies Act2013 and the Corporate Governance requirements as prescribed by Securities and ExchangeBoard of India ("SEBI") under the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015. The performance of the Board was evaluated by the Boardafter seeking inputs from all the directors on the basis of the criteria such as thedegree of fulfilment of key responsibilities Board composition and structureeffectiveness of board processes information and functioning etc.
The performance of the committees was evaluated by the board after seeking inputs fromthe committee members on the basis of the criteria such as the composition of committeeseffectiveness of committee meetings skills board dynamics domain knowledgeunderstanding of Company's operations inter-personal skills etc. The Board and theNomination and Remuneration Committee reviewed the performance of the individual directorson the basis of the criteria such as the contribution of the individual director to theBoard and committee meetings.
In addition the Chairman was also evaluated on the key aspects of his role. In aseparate meeting of Independent Directors performance of non-independent directorsperformance of the board as a whole and performance of the Chairman was evaluated takinginto account the views of executive directors and non-executive directors. The directorsexpressed satisfaction with the evaluation process.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
In accordance with the provisions of the Act and the Articles of Association of theCompany Smt. Aditi Jain (Din: 00152373) non-executive Director of the Company will retireby rotation at the ensuing Annual General Meeting and being eligible has offered herselffor reappointment. The Board of Directors on the recommendation of the Nomination andRemuneration Committee and based on report of performance evaluation has recommendedre-appointment of Smt. Aditi Jain as Director of the Company liable to retire by rotationMs. Sankari Muthuraj has ceased to be the Company Secretary (KMP) of the Company w.e.f.30th March 2018.
It is proposed to continue appointment of Shri Inderchand Jain (DIN: 00178901) as theNon- executive Director of the Company on attaining age of 78 years by way of specialresolution by members pursuant to Regulation 17 (1A) of Securities and Exchange Board ofIndia (Listing Obligations and Disclosure Requirements) (Amendment) Regulations 2018.
The Company has received declarations from all Independent Directors of the Companyincluding the proposed Independent Directors confirming that they meet the criteria ofindependence prescribed under the Act and the Listing Regulations.
REMUNERATION OF DIRECTORS KEY MANAGERIAL PERSONNEL
The remuneration paid to the Directors is in accordance with the Nomination andRemuneration policy formulated in accordance with Section 178 of the Companies Act 2013and Regulation 19 of the Listing Regulations (including any statutory modification(s) orre-enactment (s) thereof for the time being in force) and as per section 197 of theCompanies Act 2013 read with Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014.
The Company being a Non-Deposit Accepting Non-Banking Finance Company has not acceptedany deposits from the public during the year under review and shall not accept anydeposits from the public without obtaining prior approval of the Reserve Bank of India(RBI).
THE DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS ORTRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANY'S OPERATIONS IN FUTURE
There are no significant or material orders which were passed by the Regulators orCourts or Tribunals which impact the going concern status and the Company's operations infuture.
ADEQUACY OF INTERNAL CONTROL
The Company has in place adequate financial controls commensurate with its size scaleand complexity of its operations. The company has in place policies and proceduresrequired and efficiently conduct its business safeguard its assets detect frauds anderrors maintain accuracy and completeness of accounting records in a timely and reliablemanner.
The Company continues to have periodical internal audits conducted of all its functionsand activities to ensure that system and processes are followed across all areas.
The Company complies with the applicable Secretarial Standards issued by the Instituteof Company Secretaries of India.
PARTICULARS OF EMPLOYEES
The information required under Section 197 of the Companies Act 2013 read with rule5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014are given below:
I. The ratio of the remuneration of each Director to the median remuneration of theemployees of the company for the financial year 2017-18;
|Non-executive Directors ||Ratio to median remuneration |
|Shri. Inderchand Jain ||0.04 |
|Shri. S.C. Aythora ||0.05 |
|Shri. Nitin Kulkarni ||0.05 |
|Smt. Aditi Jain ||0.03 |
|Shri. Girish Jain ||0.03 |
|Executive Directors || |
|Shri. Rajnesh Jain ||8.63 |
The median remuneration is calculated based on the salary paid during the financialyear to employees on payroll as on March 31 2018.
ii. The percentage increase in remuneration of each Director
Chief Financial Officer Company Secretary if any in the financial year;
|Name ||Designation ||% increase in remuneration in the financial year i.e. 2017-18 |
|Shri. Inderchand Jain ||Non Executive Director ||- |
|Shri. S.C. Aythora ||Independent Director ||- |
|Shri. Nitin Kulkarni ||Independent Director ||- |
|Shri. Girish Jain ||Non Executive Director ||- |
|Smt. Aditi Jain ||Non Executive Director ||- |
|Shri. Rajnesh Jain ||Whole Time Director ||(41%) |
|Ms. Sankari Muthuraj (resigned) ||Company Secretary ||10% |
|Shri. Kartik Konar ||Chief Financial Officer ||30% |
iii. The percentage increase in the median remuneration of employees in the financialyear: 21%
iv. The number of permanent employees on the rolls of Company as on March 31 2018: 4(Four)
v. Average percentile increase already made in the salaries of employees other than themanagerial personnel in the last financial year and its comparison with the percentileincrease in the managerial remuneration and justification thereof and point out if thereare any exceptional circumstances for increase in the managerial remuneration:
The average percentile increase in the salaries of the employees other than themanagerial personal in the financial year 2017-18 was 21%. The perquisites paid to thedirector was less compared to the previous year due to which the managerial remunerationwas decreased by 41%.
Note :- The average percentile increase in the salaries of the employees other thanthe managerial personal is calculated based on the employees on payroll as on March 312018.
The Increments given to employees are based on their potential performance andcontribution which is also benchmarked against applicable industry norms
vi. 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.
vii. There are no employees falling within the purview of Rule 5(2) of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 no such details arerequired to be given.
In accordance with Section 139 of the Companies Act 2013 and the rules made thereunder M/s. K. S. Aiyar & Co. Mumbai the Statutory Auditors of your Company has beenappointed as the Statutory Auditors of the Company in the Annual General Meeting held onSeptember 23 2014 for a consecutive term of five years (subject to ratification of theirappointment at every AGM). They have confirmed their eligibility and qualificationrequired under Sections 139 141 and other applicable provisions of the Companies Act2013 and the Rules framed there under for continuation as Auditors of the Company.
The requirement to place the matter relating to appointment of Auditors forratification by members at every Annual General Meeting is done away with videnotification dated 07th May 2018 issued by the Ministry of Corporate Affairs New Delhi.Accordingly no resolution is proposed for ratification of appointment of M/s. K. S. Aiyar& Co. Chartered Accountants (Firm Registration No. 100186W).
The Independent Auditors' Report for the financial year ended March 31 2018 on thefinancial statements of the Company forms part of this report. The Auditors' Report forthe financial year ended 31st March 2018 does not contain any qualification reservationor adverse remark.
Pursuant to the provisions of Section 138 of the Companies Act 2013 read withCompanies (Accounts) Rules 2014 the Company has appointed M/s Sanjay Raja Jain &Co. as an internal auditor of the Company for the financial year 2018-19.
Pursuant to the provisions of Section 204 of the Companies Act 2013 read withCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 the Companyhas appointed M/s. S.K. Jain & Company a firm of Company Secretaries in Practice toundertake the Secretarial Audit of the Company for the financial year 2018-19. TheSecretarial Audit Report is annexed and forms part of this report.
WHISTLE BLOWER/VIGIL MECHANISM:
The Company has adopted a Whistle Blower Policy to provide a formal mechanism to theDirectors and Employees to report their concerns about unethical behaviour actual orsuspected fraud or violation of the Company's Code of Conduct or Ethics Policy. The policyprovides for adequate safeguards against victimization of employees who avail of themechanism and also provides for direct access to the Chairman of the Audit Committee.During the financial year no cases under this mechanism were reported to the Companyand/or to any of its subsidiaries/associate. The Whistle Blower Policy has been posted onthe website of the Company.
The Authorised share capital of your Company as on March 31 2018 was Rs 500000000.The issued subscribed and paid up share capital of your Company as on 31st March 2018 wasRs 47857400 comprising of 478574 equity shares of Rs 10/- each. During the reportingperiod the Company has not altered its share capital.
LISTING OF SHARES
The 478574 Equity Shares of the Company are listed on BSE Limited. The annual listingfee for the financial year 2018-19 has been paid to BSE Limited (BSE).
Pursuant to Regulation 15(2) of SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 compliance with the corporate governance provisions are not applicableto your Company as the Company's paid up Equity Share Capital does not exceed of Rs. 10Crores and net worth does not exceed of Rs. 25 Crores as on March 31 2018.
However to maintain highest standards of Corporate Governance a separate section onCorporate Governance is annexed and forms part of the annual report.
MANAGEMENT DISCUSSION AND ANALYSIS
A report on the Management Discussion and Analysis for the financial year under reviewis annexed and forms part of this report.
The Company's assets have been adequately insured.
WHOLE TIME DIRECTOR & CHIEF FINANCIAL OFFICER CERTIFICATION
Certificate from Shri. Rajnesh Jain Whole Time Director and Shri. Kartik Konar ChiefFinancial Officer as specified in Part B of Schedule II of the SEBI (Listing Obligationand Disclosure Requirements) Regulations 2015 for the financial year ended March 312018 was placed before the Board of Directors of the Company at its meeting held on May21 2018.
The Board of Directors takes the opportunity to express its sincere appreciation forthe support and co operation from its members Reserve Bank of India banks and Statutoryand Regulatory Authorities.
The Board also wishes to place on record their sincere appreciation of the contributionmade by the executives and employees at all levels for their dedication and commitment tothe Company throughout the year.
| ||For and on behalf of the Board of Directors |
| ||For KJMC Financial Services Limited. |
|Place: Mumbai ||Inderchand Jain |
|Date: August 13 2018 ||Chairman |