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Manipal Finance Corporation Ltd.

BSE: 507938 Sector: Financials
NSE: N.A. ISIN Code: INE798E01013
BSE 05:30 | 01 Jan Manipal Finance Corporation Ltd
NSE 05:30 | 01 Jan Manipal Finance Corporation Ltd

Manipal Finance Corporation Ltd. (MANIPALFINCOR) - Director Report

Company director report

To

The Members

Your Directors have pleasure in presenting their 35th Annual Report on thebusiness and operations of the Company and the accounts for the Financial Year ended March31 2018.

1. Financial summary or highlights/Performance of the Company:

31st March 2018 31st March 2017
Gross Income 5123 13565
Administrative and other Expenses 5531 5007
Net Profit /(Loss) before Depreciation Lease Equalisation provision for doubtful debts and bad debts written off (408) 8558
Less: Depreciation 650 650
Add: Lease Adjustment (Credit) - -
Less: Provisions & write offs of debts (net) & Prior period items 11950 1484
Profit/(Loss) before Tax and extraordinary items 10892 9392
Extraordinary Items 5304 3305
Profit (Loss) before provision for taxation 16196 12697
Provision for Taxation - -
Profit/(Loss) after provision for taxation 16196 12697
Add: Balance of Loss b/f from previous year 630247 642944
Net Loss carried forward 614051 630247

2. State of Company's Affair:

During the year ending 31st March 2005 the Scheme of Compromise andArrangement under Section 391 of the Companies Act1956 to effect the restructure ofCompany's debts particularly Debentures and subordinated debts of the Company was framedand presented before the Honorable High Court of Karnataka. Accordingly the meeting ofthe Shareholders Debenture Holders and Subordinated Debt holders were held on 20thApril 2005. The scheme as proposed had provided for payment of principal in a phasedmanner over 60 months from effective date and payment of interest accrued till 30thJune 2002 within 72 months from the effective date. The Scheme as proposed do not providefor accrual of interest after 30th June 2002. (For the above purpose theeffective date means the date on which the Order of High Court of Karnataka sanctioningthe Scheme of Arrangement is filed with the Registrar of Companies in Karnataka.)

On 10th July 2009 Honorable High Court of Karnataka has directed theCompany to submit the details of payments made to Non-Convertible Debenture holders andsubordinated debt holders from 1st April 2005. Accordingly the details were furnished toHonorable Court. It was submitted before the Honorable Court that the Company has settledsubstantial portion of Non-Convertible Debentures and Subordinated Debts and it wastherefore felt that the scheme requires to be changed having regard to the settlementsalready made and quantum of non-convertible debentures and subordinated debts remaining tobe settled. Therefore the Company had proposed to withdraw the scheme of arrangement fromthe Honorable High Court of Karnataka with an option to present a new scheme ofarrangement. The Honorable High Court of Karnataka has permitted the Company to withdrawthe petition with liberty to file a fresh petition vide its order dated 28thOctober 2009. Accordingly the Company is exploring the possibility of proposing a freshpetition to be filed before the Honorable High Court of Karnataka. At present the Companyis concentrating only on recovery of its dues and setting the debts.

3. Dividend:

The Company has not declared any Dividend on equity shares due to insufficient profit.

4. Reserves:

During the year the Company has not transferred any amount to General Reseive Account.

5. Share Capital:

The paid up Equity Share Capital as on 31st March 2018 was Rs.838 Lakhs and PreferenceShare Capital of Rs.295 Lakhs During the year under review the Company has not issued anyshares. The Company has not issued shares with differential voting rights. It has neitherissued employee stock options nor sweat equity shares and does not have any scheme to fundits employees to purchase the shares of the Company.

6. Directors and Key Managerial Personnel:

Mr. Raghavendra Nayak (DIN: 00101525) resigned from the Board w.e.f. 30.05.2018 and inhis place Sri B. Ashok Pai (DIN: 08136975) was appointed as an additional Directors on theBoard of the Company at its meeting held on 30.05.2018. The Company has received noticefrom a member together with requisite deposit under the Companies Act 2013 proposing hiscandidature for the office of the Director at the ensuing Annual General Meeting.

7. Particulars of Employees:

During the year under review the Company had no employees whose remuneration exceededthe limit prescribed under Section 197 of the Companies Act 2013 read with Rule 5(1) ofthe Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 andsubsequent amendments thereto.

Particulars of top ten employees of the Company in terms of remuneration drawn duringthe year 2017-18 presented as an annexure to the Board Report during the Board Meeting ispreserved separately and the same will be made available to any shareholders on requestmade to the company in writing.

8. Meetings:

A calendar of Meetings is prepared and circulated in advance to the Directors. Duringthe year four Board Meetings and four Audit Committee Meetings were convened and held. Thedetails of which are given in the Corporate Governance Report. The intervening gap betweenthe Meetings was within the period prescribed under the Companies Act 2013.

9. Board Evaluation:

Pursuant to provisions of SEBI (LODR) Regulations 2015 the Board has carried out anannual evaluation of its own performance performance of the Directors as well as theevaluation of the working of its Committees. The Nomination and Remuneration Committee hasdefined the evaluation criteria procedure and time schedule for the PerformanceEvaluation process for the Board its Committees and Directors.

The Board's functioning was evaluated on various aspects including inter aliadegree of fulfillment of key responsibilities Board structure and compositionestablishment and delineation of responsibilities to various Committees effectiveness ofBoard processes information and functioning. Directors were evaluated on aspects such asattendance and contribution at Board / Committee Meetings and guidance / support to themanagement outside Board / Committee Meetings. In addition the Chairman was alsoevaluated on key aspects of his role including setting the strategic agenda of the Boardencouraging active engagement by all Board members and motivating and providing guidanceto the Managing Director. Areas on which the Committees of the Board were assessedincluded degree of fulfillment of key responsibilities adequacy of Committee compositionand effectiveness of meetings.

The performance evaluation of the Independent Directors was carried out by the entireBoard excluding the Director being evaluated. The performance evaluation of the Chairmanand the Non-Independent Directors was carried out by the Independent Directors who alsoreviewed the performance of the Board as a whole. The Nomination and RemunerationCommittee also reviewed the performance of the Board its Committees and of the Directors.

10. Corporate Governance:

Corporate governance represents a set of systems and practices to ensure that theaffairs of the Company are managed in a way that ensures accountability transparency andfairness in all transactions. Your Company is fully committed to pursue goals andobjectives which are in the best interests of stake holders. The Company aims at achievinghighest standards of corporate governance. The Company has Board Committees for differentmatters and subjects. These committees also make their contribution to better corporategovernance. Also there is a system of internal audit in the Company which is conducted byan independent firm of chartered accountants. The Company also reviews the corporategovernance practices with reference to the practice obtaining in the corporate sector andthe regulatory developments. The Company has complied with not only statutory requirementsbut also voluntarily adhered to a set of strong corporate governance practices.

11. Remuneration Policy and Managerial Remuneration:

None of the Directors of the Company who may be a Managing or Whole-time Director ofthe Company's have received any remuneration including commission from the Companyduring the year.

None of the Directors of the Company have received any remuneration or commission fromany Holding Company or Subsidiary Company service contracts notice period severancefees fixed component and performance linked incentives etc.

12. Details of Subsidiary / Joint Ventures / Associate Companies

The Company does not have any Subsidiary / Joint Ventures / Associate Companies.

13. Auditors:

a. The Auditors M/s Sriramulu Naidu & Co. Chartered Accountants Mangalore (FirmRegistration No. 008975S) retire at the ensuing Annual General Meeting and beingeligible offer themselves for reappointment to hold office till the conclusion of the 39thAGM to be held in the Calendar year 2022 subject to ratification in the ensuing AnnualGeneral Meeting.

b. In respect of the Qualification / Observation made by the Auditors vide "Basisfor Qualified Opinion" "Emphasis of the Matter" and Para 3 4(e) 4(f)4(g) 4(i) (1) 4(i)(2) and 4(i)(3) of the "Report on other Legal and RegulatoryRequirements" of "Report on Financial Statements" and Clause Nos.1 5 816of Annexure "A" to the Auditors Report and Qualification given in Annexure B tothe Audit Report and Qualification given under Basis for Issues of Qualified Opinion underAnnexure "C" for the Auditors Report the clarifications given vide Note Nos.2.01 5.01 24.01 24.01(I) 24.02 24.06 24.08 24.10 24.11 24.13 24.14 24.15 and24.16 are self-explanatory.

Secretarial Audit Report:

In terms of Section 204 of the Act and Rules made there under Sri S. Ramachandra BhatPracticing Company Secretary (Membership No. 04441 C P No. 5421) from Bangalore has beenappointed as Secretarial Auditor of the Company. The report of the Secretarial Auditor isenclosed as Annexure III to this report. As per Section 134 (3f) of the Companies Act 2013Company is required to make comments on the adverse remarks / comments on the SecretarialAuditor's Report.

1. As per the Secretarial Auditor's Report placed before the Board the Secretarialauditor have opined that the Company has not published the unaudited financial results innews papers as per the provisions of Regulation 33 of SEBI (LODR) Regulation 2015.

Your Directors reiterate that due to poor financial conditions the Company is not ableto publish the results in news papers. However once the financial conditions of theCompany revived Company will arrange to publish the same.

2. As per the Secretarial Auditor's Report placed before the Board the Secretarialauditor have opined that the Company has not appointed Key Managerial Person (CompanySecretary).

Your Directors reiterate that Company was not engaged in any business consequentlythere were no income. Due to poor financial conditions the Company was forced to reducethe number of branches and also number of employees. This is the main reason for notappointing a whole-time Company secretary. However as and when the Company engages itselfin a proper business it would certainly comply with this requirement.

14. Internal Audit and Controls:

The Company has established and maintained adequate internal controls over thefinancial reporting. Internal controls have been designed to provide reasonable assuranceregarding the reliability of financial reporting and preparation of financial statementsin accordance with accounting principles generally accepted in India. The Company hasinternal control system commensurate with the size and nature of the business. The Companyengages M/s N. P Pai & Co. Chartered Accountants Udupi (Firm Registration No.115271W / Membership No. 039351) as its Internal Auditor. During the year the Companycontinued to implement their suggestions and recommendations to improve the controlenvironment. Their scope of work includes review of processes for safeguarding the assetsof the Company review of operational efficiency effectiveness of systems and processesand assessing the internal control strengths in all areas. Internal Auditors findings arediscussed and acted upon and suitable corrective actions taken as per the directions ofAudit Committee on an ongoing basis to improve efficiency in operations.

15. Vigil Mechanism:

The Company has adopted a formal mechanism to the Directors and employees to reporttheir concerns about unethical behaviour actual or suspected fraud or violation of theCompany's Code of Conduct or ethics policy.

16. Risk Management Policy:

The Company has adopted a Risk Management Policy in accordance with the provisions ofthe Act and in pursuant to provisions of SEBI (LODR) Regulations 2015. It establishesvarious levels of accountability and oveiview within the Company while vesting identifiedmanagers with responsibility for each significant risk.

The Internal Audit Department facilitates the execution of Risk Management Practices inthe Company in the areas of risk identification assessment monitoring mitigation andreporting. Through this programme each Function and Unit addresses opportunities andrisks through a comprehensive approach aligned to the Company's objectives. The Companyhas laid down procedures to inform the Audit Committee as well as the Board of Directorsabout risk assessment and management procedures and status. Sustainability is embedded inthe Corporate Enterprise Risk Management programme which gives an opportunity to increasethe effectiveness of risk management practices and for improving business efficiency. TheCompany's social and environmental policies correlate strongly with the risk managementstrategy and ultimately the financial performance. This risk management process which isfacilitated by internal audit covers risk identification assessment analysis andmitigation. Incorporating sustainability in the process also helps to align potentialexposures with the risk appetite and highlights risks associated with chosen strategies.The current risk slate and the comprehensive risk policy have been further redefinedduring the year. The major risks forming part of the Enterprise Risk Management processare linked to the audit universe and are covered as part of the annual risk based auditplan.

17. Extract of Annual Return:

As required pursuant to Section 92(3) of the Companies Act 2013 and rule 12(1) of theCompanies (Management and Administration) Rules 2014 an extract of annual return in MGT9 as a part of this Annual Report as Annexure I .

18. Material changes and commitments if any affecting the financial position of theCompany which have occurred between the end of the financial year of the Company to whichthe financial statements relate and the date of the report and changes in nature ofbusiness if any:

There are no such material changes to be reported in this regard and there are nochange in nature of business.

19. Details of significant and material orders passed by the regulators or courts ortribunals impacting the going concern status and Company's operations in future:

Your Directors wish to state that there have been no significant or material ordersthat were passed by the Regulators or Courts or Tribunals which may impact the goingconcern status and operations of the Company in future.

20. Particulars of loans guarantees or investments under Section 186:

Details of Loans: Not applicable to NBF Companies since same are given in theordinary course of business. Further no loans are given to any party.

Details of Guarantee / Security Provided: Not applicable to NBF Companies. Howeverno such guarantee or security provided. Investments made are of the nature quoted /unquoted equity shares. Particulars of such investments are provided in the financialstatements vide Note Nos. 7.05 and 9.01.

21. Conservation of Energy Technology Absorption and Foreign Exchange Earnings andOutgo:

The Company did not have any activity in relation to conservation of energy ortechnology absorption. The Company had no foreign exchange earnings or outgoings duringthe year under report.

22. Details in respect of adequacy of Internal Financial Controls with reference to theFinancial Statements:

The Company has in place adequate internal financial controls with reference tofinancial statements. During the year such controls were tested and no reportablematerial weakness in the design or operation were observed.

23. Deposits:

The details relating to deposits covered under Chapter V of the Act -

(a) accepted during the year: Nil

(b) remained unpaid at the end of the year: Rs.1.79 Lakhs

(c) whether there has been any default in repayment of deposits or payment of interestthereon during the year and if so number of such cases and the total amount involved:

(i) at the beginning of the year: Rs.13.53 Lakhs

(ii) maximum during the year: Nil

(iii) at the end of the year: Rs.1.79 Lakhs

The details of deposits which are not in compliance with the requirements of Chapter Vof the Act;

24. Particulars of Contracts or Arrangements with Related Parties:

All related party transactions that were entered into were on an arm's length basis inthe ordinary course of business and were in compliance with the applicable provisions ofCompanies Act 2013 ("the Act"). There were no materially significant RelatedParty Transactions made by the Company during the year that would have requiredshareholders approval under the provisions of the Act. Details of the transactions withrelated parties are provided in the Note No. 24.04 of accompanying financial statements.Form AOC-2 pursuant to Clause (h) of sub-section (3) of Section 134 of the Act and Rule8(2) of the Companies (Accounts) Rules 2014 is annexed herewith marked as Annexure II.

25. Corporate Governance Certificate:

The Compliance certificate from the auditors or practicing Company secretariesregarding compliance of conditions of corporate governance as stipulated in provisions ofSEBI (LODR) Regulations 2015 shall be annexed with the report.

26. Management Discussion and Analysis:

The Management Discussion and Analysis forms part of this Annual Report. The details ofwhich are given in the Corporate Governance Report.

27. Obligation of Company under the Sexual Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013

The Company has zero tolerance for sexual harassment at workplace and has adopted aPolicy on Prevention Prohibition and Redressal of Sexual Harassment at the Workplace inline with the provisions of the Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013 and the Rules there under. The Company has notreceived any complaint of sexual harassment during the financial year 2016-17.

28. Corporate Social Responsibility (CSR) : Not applicable

29. Human Resources:

Your Company treats its "human resources" as one of its most importantassets.

Your Company continuously invest in attraction retention and development of talent onan ongoing basis. A number of programs that provide focused people attention are currentlyunderway. Your Company thrust is on the promotion of talent internally through jobrotation and job enlargement.

30. Directors' Responsibility Statement:

The Directors' Responsibility Statement referred to in Clause (c) of sub-section (3) ofSection 134 of the Companies Act 2013 shall state 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 at the end of the financial year and ofthe 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 this Act 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; and

(e) the directors in the case of a listed Company had laid down internal financialcontrols to be followed by the Company and that such internal financial controls areadequate and were operating effectively.

(f) the directors had devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.

31. Transfer of Amounts to Investor Education and Protection Fund:

As all the matured deposits debentures and debts were already claimed the question oftransfer of such amounts to Investor Education and Protection Fund does not arise.

32. Listing with Stock Exchanges:

The Company confirms that it has paid the Annual Listing Fees for the year 2017-2018 toBombay Stock Exchange Mumbai where the Company's Shares are listed.

33. Acknowledgements:

An acknowledgement to all with whose help co-operation and hard work the Company isable to achieve the results.

For and on behalf of the Board of Directors

Sd/-

T. Narayan M. Pai
Place: Manipal Managing Director
Date: 30.5.2018 (DIN: 00101633)