The Directors of Margo Finance Limited ("your Company") present the 29thAnnual Report on the business and operations of your Company together with the AuditedFinancial Statements for the year ended 31st March 2020.
The Company's financial performance for the year ended 31st March 2020 issummarized below:
(? In Lakhs except EPS)
|Particulars ||2019-2020 ||2018-2019* |
|Total Income ||30.26 ||28.99 |
|Profit/(Loss) before depreciation ||(0.98) ||(183) |
|Less : depreciation ||0.70 ||0.89 |
|Profit/(Loss) before tax ||(168) ||(2.72) |
|Less: Tax Expenses/ (Credit) ||(173) ||7.01 |
|Profit/(Loss) after tax ||0.05 ||(9.73) |
|Balance carried to the Balance Sheet ||0.05 ||(9.73) |
|EPS (?) ||0.00 ||(0.21) |
*Figures of FY 2018-19 are restated as per IND AS
Operations and the state of Company Affairs
The total income of your Company for the year ended 31st March 2020increased by 4.38% to ' 30.26 Lakhs as against ' 28.99 Lakhs in previousyear. The total expenses of the Company increased to ' 31.94 Lakhs for the yearended March 312020 from ' 31.71 Lakhs in the previous year. This resulted inmarginal profit of ' 0.05 Lakhs for the year ended 31st March 2020 asagainst net loss of ' 9.73 Lakhs in the previous year.
In order to conserve the resources the Board of Directors of the Company has notrecommended any dividend on the equity shares of the Company for the financial year underreview.
Transfer to Reserves
During the financial year ended on 31st March 2020 no any amount has beentransferred to the General Reserve / retained earnings of the Company.
There was no change in capital structure of your Company during the year under review.As on 31st March 2020 the paid up equity share capital of your Company is '45700000/- comprising of 4570000 Equity shares of Face Value of ' 10/- each.During the financial year 2019-20 your Company has not issued any equity shares withdifferential rights as to dividends voting or otherwise or any convertible securitieswarrants or Sweat Equity shares. Your Company does not have any Employee Stock OptionScheme or Employee Stock Purchase Scheme.
Adoption of Indian Accounting Standards
In accordance with the notification issued by the Ministry of Corporate Affairs (MCA)your Company is required to prepare financial statements under Indian Accounting Standards(Ind AS) prescribed under section 133 of the Companies Act 2013 read with rule 3 of theCompanies (Indian Accounting Standards Rules 2015) and Companies (Indian AccountingStandards) Amendment Rules 2016. Ind AS has replaced the existing Indian GAAP prescribedunder Section 133 of the Companies Act 2013 read with rule 7 of Companies (Accounts)Rules 2014.
Accordingly your Company has adopted Indian Accounting Standard ("Ind AS")with effect from 1st April 2019 with the transition date of 1st April 2018and the Financial Statements for the year ended 31st March 2020 have beenprepared in accordance with Ind AS. The financial statements for the year ended 31stMarch2019 have been restated to comply with Ind AS to make them comparable.
Directors and Key Managerial Personnel
During the year under review Mr. G. P. Agrawal (DIN: 00008429) was re-appointed as aNon-Executive Independent Director of the Company for a Second term of five consecutiveyears w.e.f. 23rd August 2019. His re-appointment as an Independent Directorwas duly approved by the members of the Company at the Annual General Meeting("AGM") of the Company held on 13thAugust 2019.
Pursuant to the recommadation of NRC Mr. Ambarish Ratilal Sodha (DIN: 00489489) wasappointed as an Additional Director of the Company and as a Non-Executive IndependentDirector of the Company for a first term of five consecutive years w.e.f. 11thSeptember 2019 subject to the approval of members of the Company. The resolution for theappointment of Mr. Ambarish Ratilal Sodha as an Independent Director of the Company w.e.f.11th September 2019 is placed before the members at the ensuing AGM.
Pursuant to the provisions of Section 152 of the Companies Act 2013 ("Act")and articles of association of the Company Mr. Sushilkumar Agrawal (DIN: 00400892)Non-Executive Non-Independent Director of the Company retires by rotation atthe ensuingAGM and being eligible has offered himself for the re-appointment. The Board recommendshis re-appointment for consideration at the ensuing AGM.
As required under the provisions of Listing Regulations Companies Act 2013 andSecretarial Standard - 2 details of Directors being appointed/re-appointed are providedin the Notice of Annual General Meeting.
Mr. Anil Kumar Gulati (DIN: 02739661) Non-Executive Independent Director of theCompany resigned from the Directorship the Company w.e.f. 11th September 2019due to personal reasons. The Board places on record its appreciation for the valuableguidance and contributions made by Mr. Anil Kumar Gulati as a Board Member during hisassociation with the Company.
As on 31st March 2020 Mr. Shri Dass Maheshwari Whole Time Director &Chief Financial Officer and Mr. Kailash Rawat Company Secretary & Compliance Officerare the Key Managerial Personnel (KMP) of the Company in terms of Section 203 of theCompanies Act 2013.
All the Independent Directors of the Company have given declarations that they meet thecriteria of independence as prescribed under Section 149(6) of the Act and Regulation16(1)(b) of Securities and Exchange Board of India (Listing Obligations and DisclosureRequirements) Regulations 2015 (''Listing Regulations") and that they are not awareof any circumstance or situation which exist or may be reasonably anticipated that couldimpair or impact their ability to discharge duties with an objective independent judgmentand without any external influence. The said declarations were taken on record by theBoard after assessing due veracity of the same. In the opinion of the Board allIndependent Directors are independent of the management.
Pursuant to Rule 6 of Companies (Appointment and Qualification of Directors) Rules2014 as amended w.e.f. 1st December 2019 Mr. S. K. Agrawal Mr. G. P.Agrawal Ms. Smita Kulkarni Mr. V. V. Parlikad and Mr. Ambarish Sodha have registeredthemselves in the Independent Directors data bank maintained with the Indian Institute ofCorporate Affairs (IICA).
Number of Board Meetings
During the year under review Five (5) Board Meetings were held on 13th May2019 2nd July 2019 11th September 2019 27thNovember 2019 and 4th February 2020 the details of which are given in theCorporate Governance Report. The maximum gap between any two consecutive Board meetingsdid not exceed 120 days.
Company's policy on appointment and remuneration of Directors and Key ManagerialPersonnel
Pursuant to Section 178 of the Companies Act 2013 the Nomination and RemunerationCommittee (NRC) has formulated "Nomination and Remuneration Policy" which deals inter-aliawith the appointment and remuneration of Directors Key Managerial Personnel SeniorManagement and other employees. The said policy is uploaded on the website of the Companyand_web-link thereto ishttp://www.margofinance.com/upload/MFL%20Nomination%20and%20Remuneration%20Policv.pdf
The salient features of the policy are as under:
I. Criteria for appointment:
1. NRC shall identify ascertain and consider the integrity qualification expertiseand experience of the person for
the appointment as a Director of the Company and recommend to the Board his / herappointment. The Directors shall uphold ethical standards of integrity and probity andshall exercise their duties and responsibilities in the interest of the Company.
2. A person proposed to be appointed as Director should possess adequate qualificationexpertise and experience for the position he / she is considered for appointment. Theyshall possess appropriate core skills / expertise/ competencies / knowledge in one or morefields of finance law management sales and marketing administration research and inthe context of business and / or the sector in which the company operates. The NRC has thediscretion to decide whether qualifications expertise and experience possessed by aperson are sufficient / satisfactory for the concerned position.
3. The Company shall comply with the provisions of the Act and Listing Regulations andany other laws if applicable for appointment of Director of the Company. The Company shallensure that provisions relating to limit of maximum directorships age term etc. arecomplied with.
II. Remuneration of the Whole Time /Executive Director(s) / Managing Director :
a. The remuneration including commission payable to the Whole Time / ExecutiveDirector(s) / Managing Director shall be determined and recommended by the NRC to theBoard for approval.
b. While determining the remuneration of the Executive Directors following factorsshall be considered by the NRC/Board:
Role played by the individual in managing the Company including responding tothe challenges faced by the Company.
Individual performance and company performance so that remuneration meetsappropriate performance benchmarks.
Reflective of size of the Company complexity of the sector/ industry/company'soperations and the Company's financial position.
Consistent with recognized best industry practices.
Remuneration involves balance between fixed and incentive pay reflectingperformance objectives appropriate to the working of the Company and its goals.
Remuneration is reasonable and sufficient to retain and motivate directors torun the company successfully.
III. Remuneration to Non- Executive / Independent Directors:
Sitting Fees: Independent Directors are entitled for sitting fees for attendingmeetings of the Board and Committee of the Board or for any other purposes as may bedecided by the Board of such sum as may be approved by the Board of Directors of theCompany within the overall limits prescribed under the Act and the rules made there underListing regulations or other applicable law.
Annual Evaluation of Board Performance and its Committee and Individual Directors
Criteria of performance evaluation of the Board Committees and Directors are laid downby Nomination and Remuneration Committee (NRC) of the Company. Further pursuant to theprovisions of Section 178(2) of the Companies Act 2013 as amended by the Companies(Amendment) Act 2017 NRC decided to continue the existing method of performanceevaluation through circulation of performance evaluation sheets based on SEBI GuidanceNote dated 5th January 2017 and that only Board should carry out performanceevaluation of the Board its Committees and Individual Directors.
The performance evaluation sheets based on aforesaid SEBI Guidance Note containing theparameters of performance evaluation along with rating scale was circulated to all theDirectors. The Directors rated the performance against each criteria. Thereafterconsolidated score was arrived. Pursuant to the provisions of the Companies Act 2013 andListing Regulations the Board has carried out performance evaluation of its ownevaluation of working of the Committees and performance evaluation of all Directors in thesaid manner. The performance of the Board committees and individual directors was foundsatisfactory.
A meeting of the Independent Directors of the Company was held on 4thFebruary 2020 in which Independent Directors inter-alia reviewed performance ofMr. Anil Kumar Jain Non-Executive Chairman and Mr. S. K. Agarwal Non-Independent and theBoard as a whole through performance evaluation sheets.
Directors' Responsibility Statement
Pursuant to the provisions of Section 134(3)(c ) and 134(5) of the Companies Act 2013your Directors to the best of their knowledge and belief and according to the informationand explanations obtained by them state and confirm that:
in the preparation of the annual accounts for the year ended 31stMarch 2020 the applicable accounting standards have been followed along with properexplanation relating to material departures if any;
such accounting policies as mentioned in the notes to the Financial Statementsfor the year ended 31st March 2020 have been selected and appliedconsistently and judgments and estimates have been made that are reasonable and prudent soas to give a true and fair view of the state of affairs of the Company as at 31stMarch 2020 and of the Profit of the Company for the year ended on that date;
the annual financial statements for the year ended 31st March 2020have been prepared on a going concern basis;
internal financial controls to be followed by the Company have been laid downand that the said financial controls were adequate and were operating effectively;
proper systems to ensure compliance with the provisions of all applicable lawshave been devised and such systems were adequate and operating effectively.
During the year under review Mr. Ambarish Sodha Independent Director was appointed asChairman of the Audit Committee and position of Ms. Smita Kulkarni Independent Directorwas changed from Chairperson to Member of Audit Committee w.e.f. 27th November2019.
As on 31st March 2020 the Audit Committee comprises of 5 (Five) membersviz. Mr. Ambarish Ratilal Sodha Non-Executive Independent Director as Chairman Ms.Smita Kulkarni Mr. Govind Prasad Agrawal and Mr. Venkiteswaran Venkitaswaran ParlikadNon-Executive Independent Directors and Mr. Sushilkumar Agrawal as Non-ExecutiveNon-Independent Director. More details on the Audit Committee are given in CorporateGovernance Report. All the recommendations made by the Audit Committee during the yearunder review were accepted by the Board.
In accordance with the provisions of Section 139 of the Act at the Annual GeneralMeeting ("AGM") held on 21st August 2017 M/s. Pawan Shubham &Co. Chartered Accountants (Firm Registration No. 011573C) were appointed as the StatutoryAuditors of the Company for a period of 5 years to hold office from the conclusion of the26th AGM till the conclusion of 31st AGM subject to theratification by members at every AGM.
The requirement to place the matter relating to appointment of Auditors forratification by Members at every Annual General Meeting was omitted vide notificationdated 7th May 2018 issued by the Ministry of Corporate Affairs. Accordinglyno resolution is proposed for ratification of appointment of Auditors in ensuing AGM ofthe Company. The Company has received a letter from M/s. Pawan Shubham & Co.Chartered Accountants confirming that they are eligible for continuing as StatutoryAuditors of the Company.
The Auditors' Report on the standalone financial statements of the Company for the yearended 31st March 2020 forms part of this Annual Report. The Auditors' Reportdoes not contain any qualifications reservations adverse remarks or disclaimer. In termsof the provisions of Section 143(12) of the Act no frauds have been reported by theStatutory Auditors in their report for the year under review. Notes to the FinancialStatements are self-explanatory and do not call for any further comments.
Secretarial Auditor and Secretarial Audit Report
Pursuant to the provisions of Section 204 of the Act read with rules thereunder theBoard at its meeting held on 27th November 2019 has appointed M/s. Ashu Gupta& Co. Practicing Company Secretaries as Secretarial Auditors to conduct SecretarialAudit of the Company for the year ended 31st March 2020. The Secretarial AuditReport issued by Secretarial Auditors in Form No. MR-3 is provided as an "Annexure1" to this Report. The Secretarial Audit Report does not contain anyqualifications reservations or adverse remarks.
Further in terms of the provisions of the Circular No. CIR/ CFD/CMD1/27/2019 dated 8thFebruary 2019 issued by Securities and Exchange Board of India (SEBI) M/s. Ashu Gupta& Co. Practicing Company Secretaries have issued the Annual Secretarial ComplianceReport for the financial year ended 31st March 2020 thereby confirmingcompliance of the applicable SEBI Regulations and circulars / guidelines issued thereunderby the Company.
Internal control systems and their adequacy
Your Company maintains adequate internal control system and procedures commensuratewith its size and nature of operations. The internal control systems are designed toprovide a reasonable assurance over reliability in financial reporting ensure appropriateauthorization of transactions safeguarding the assets of the Company and prevent misuse/losses and legal compliances.
The internal control system includes a well-defined delegation of authority and acomprehensive Management Information System coupled with quarterly reviews of operationaland financial performance a well-structured budgeting process and Internal Audit. TheInternal Audit reports are periodically reviewed by the management and the Audit Committeeand necessary improvements are undertaken if required.
Your Company is a Non-deposit taking NBFC. During the year under review Company hasnot accepted any deposits from public under Chapter V of the Act.
During the year under review your Company does not have any subsidiaries or jointventures or associate companies as defined under the Act. However the Company has frameda policy for determining material subsidiaries which can be accessed at web-link givenbelow:
http://www.margofinance.com/ upload/Margo%20Policv%20on%20 Material%20Subsidiaries.pdf CorporateGovernance Report
Your Company has adopted best practices of Corporate Governance and complied with allthe requirement of Corporate Governance laid down by SEBI. A Corporate Governance Reportalong with Statutory Auditors' Certificate confirming compliance of corporate governancefor the year ended 31st March 2020 is provided separately and forms integralpart of this Annual Report.
Management Discussion and Analysis Report
Pursuant to Regulation 34 of the Listing Regulations Management Discussion andAnalysis Report containing information inter-alia on industry trends yourCompany's performance future outlook opportunities and threats for the year ended 31stMarch 2020 is provided in a separate section forming integral part of this AnnualReport.
Extract of Annual Return
Pursuant to the provisions of Section 92(3) of the Act read with Rule 12 of theCompanies (Management and Administration) Rules 2014 Extract of the Annual Return inForm MGT-9 as on 31st March 2020 is annexed as an "Annexure 2"to this report and is also available on the website of the Company athttps://www.margofinance.com/investor-relations/
In accordance with the provisions of Section 134(3)(a) of the Act a copy of AnnualReturn for FY 2018-19 was hosted on the website of the Company and web-link to access thesame is http://www.margofinance.com/upload/MGT-7.pdf. Further a copy of Annual Return forthe year ended 31st March 2020 will be hosted on the website of the companywww.margofinance.com
Vigil Mechanism / Whistle Blower Policy
Pursuant to the provision of Section 117(10) of the Act and Regulation 22 of theListing Regulations the Board of Directors of the Company has established Vigil Mechanism/ Whistle Blower Policy. The details of the Vigil Mechanism / Whistle Blower Policy areprovided in the Corporate Governance Report. The Vigil Mechanism / Whistle Blower policycan be accessed on the website of the Company at the web-linkhttp://www.margofinance.com/upload/Whistle% 20Blower%20Policy% 20Vigil%20Mechanism%20annexure-III.pdf
Related Party Transactions
All Related Party Transactions entered during FY 2019-20 were on arm's length basis andin the ordinary course of business. Further there were no material related partytransactions during FY 2019 - 20 under Section 188 of the Act and Regulation 23 of ListingRegulations. Hence pursuant to the provisions of Section 134 of the Act particulars ofcontracts/ arrangements with Related Parties are not required to be provided in FormAOC-2. The related party transactions are provided in the notes to the financialstatements.
Prior approval of Audit Committee is obtained for all Related Party Transactions. Astatement of all Related Party Transactions is reviewed by the Audit Committee and Boardon quarterly basis. Your Company has adopted a policy on Related Party Transactions and isuploaded on the website of the Company at http://www.margofinance.com /upload/Related%20Partv%20Transaction-Policv.pdf
Particulars of Loans Investments Guarantees Securities under Section 186 of theCompanies Act 2013
The Provisions of Section 186 of the Act with respect to the investments is notapplicable to the Company being a NBFC. The details of Investments made by the Company areprovided in the notes to the financial statement. During the year under review no loanswere given to any person nor any Guarantees or securities were provided by the Company.
The Company has designed a Risk Management Policy to avoid events situations orcircumstances which may lead to negative consequences on the Company's businesses. Keybusiness risks and their mitigation are considered in the annual business plans and inperiodic management reviews.
Policy on Prevention Prohibition and Redressal of Sexual Harassment of Women atWorkplace
In order to prevent sexual harassment of women at workplace your Company has adopted apolicy for prevention of Sexual Harassment of Women at workplace under the SexualHarassment of Women at Workplace (Prevention Prohibition and Redressal) Act 2013. Therequirement of constitution of Internal Complaints Committee is not applicable to Company.
During the year under review your Company has not received any complaint pertaining tosexual harassment and no complaint was pending as on 31st March 2020.
Conservation of Energy Technology Absorption & Foreign Exchange Earning &Outgo
The Company Operates in a Service Sector as a Non-Banking financial Company (NBFC) andtherefore energy consumption is only limited to electricity required for officefunctioning for administration functions. However necessary initiatives have been takenby the company from time to time for optimum utilization of energy. Since the conservationimpact is minimal it cannot be quantified.The company has not made any capital investmenton energy conservation equipment. During the year under review there was no foreignexchange inflow or outflow.
Particulars of Employees and Related Disclosures
The information required pursuant to Section 197 read with Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 is provided as "Annexure3-(I)" and "Annexure 3-(II)" to this report regarding remuneration ofDirectors Key Managerial Personnel and other related disclosure.
Significant or Material Orders Passed by Regulators / Courts
During the year under review no significant or material orders were passed by theRegulators or Courts or Tribunals which impact the going concern status and Company'soperations in future.
Material Changes and Commitments Affecting the Financial Position of the Company
There are no material changes and commitments affecting the financial position of theCompany which have occurred between the end of the Financial Year 2019-20 to which theFinancial Statements relate and the date of the Board's Report.
During the year under review your Company has complied with all the applicablesecretarial standards issued by the Institute of Company Secretaries of India. The samehas also been confirmed by Secretarial Auditors of the Company in the Secretarial AuditReport.
1. There was no change in the general nature of business of the Company during FY2019-20.
2. The provisions pertaining to Corporate Social Responsibility (CSR) were notapplicable to the Company during the year under review.
Acknowledgments and Appreciation
Your Directors also place on record sincere appreciation for the contribution andcommitment by all the employees of the Company.
Your Directors take this opportunity to thank Central and State Governments customersshareholders and bankers for their consistent support and co-operation to the Company.
| ||For and on behalf of the Board of Directors |
| ||For Margo Finance Limited |
|Place : Mumbai ||Anil Kumar Jain |
|Date : 27th August 2020 ||DIN: 00086106 |