Your Directors have pleasure in presenting the 34th Annual Report of yourCompany together with the Audited Statements of Accounts for the year ended March 312019.
|FINANCIAL HIGHLIGHTS ||Year Ended 31.03.2019 ||Year Ended 31.03.2018 |
|Income ||337.30 ||280.66 |
|Profit/(Loss) before Tax & extraordinary item ||15.92 ||12.13 |
|Less : Provision for Taxation including Deferred Tax ||4.72 ||5.55 |
|Profit/(Loss) after Tax ||11.20 ||6.58 |
|Less : Transfer to Statutory Reserves ||2.24 ||1.31 |
|Less / (Add) : Transfer to Contingent Provision against Standard Assets ||(0.17) ||0.11 |
|Add: Profit brought forward from Previous Year ||157.24 ||152.09 |
|Balance carried forward ||166.38 ||157.24 |
OVERVIEW OF ECONOMY
The economy of India is a developing mixed economy. It is the world's seventh-largesteconomy by nominal GDP and the third-largest by purchasing power parity (PPP). The countryranks 139th in per capita GDP (nominal) and 119th in per capita GDP (PPP) as of 2018.After the 1991 economic liberalization India achieved 6-7% average GDP growth annually.Since 2014 India's economy has been the world's fastest growing major economy surpassingChina. The long-term growth perspective of the Indian economy is positive due to its youngpopulation English proficiency corresponding low dependency ratio healthy savings andinvestment rates and increasing integration into the global economy. India topped theWorld Bank's growth outlook for the first time in fiscal year 2015 16 during which theeconomy grew 7.6%. Despite previous reforms economic growth is still significantly slowedby bureaucracy poor infrastructure and inflexible labor laws (especially the inabilityto lay off workers in a business slowdown). India has one of the fastest growing servicesectors in the world with an annual growth rate above 9% since 2001 which contributed to57% of GDP in 2012 13. India has become a major exporter of IT services Business ProcessOutsourcing (BPO) services and software services with $177 billion revenue in FY 2019.The IT industry continues to be the largest private-sector employer in India. India is thesecond-largest start-up hub in the world with over 3100 technology start-ups in 2018 19.The Indian automobile industry is one of the largest in the world with an annualproduction of 21.48 million vehicles (mostly two and three-wheelers) in 2013 14. India had$600 billion worth of retail market in 2015 and one of world's fastest growing e-commercemarkets. INDUSTRTY OVERVIEW NBFCs continued to grow their share in the financial servicesindustry. Data published by the RBI in its Financial Stability Report dated 31 December2018 show that NBFCs have outperformed scheduled commercial banks (SCBs) on growth inadvances asset quality and profitability. This growth momentum of NBFCs should result intheir share in the financial services sector increasing in the near future.
OVERALL PERFORMANCE & OUTLOOK
The revenue for FY 2018-19 were below expectation due to reduction in interest ratesand alarming situation in stock market wherein valuation of stocks moved down continuouslyfollowed by liquidity crunch as well as lack of interest by FIIs who were majorcontributor to the stock market success in recent past. Gross revenue from operationsduring the year stood at Rs. 339.71 lakh in comparison to last years' figure of Rs. 280.66lakh. The Net Profit after Tax for the year was of Rs. 11.20 lakh in comparison to lastyears' Net Profit of Rs. 6.58 lakh. Your Company is one of the RBI registered NBFC and isengaged in the business of finance and investments. The Company is carryingtrading/investment activities in both Equity and FNO Segment and also trading inCommodities market apart from its financing activities. Management of company is continueto have positive outlook for current financial year however outcome depends entirely onthe capital market environment as well as RBI/Govt. policies on NBFC activities. Accordingto Ind AS considering that the views of the management have precedence over the erstwhilerisks and rewards model.
DIVIDEND & RESERVES
In order to conserve resources and to meet financial requirements to implement itsfuture plans your Directors do not propose any dividend for the year under review. Duringthe year under review Rs. 2.07 lakh was transferred to General Reserve as per RBIguidelines.
The paid-up Equity Share Capital as on March 31 2019 was ` 29.085 Crore. During theyear under review the Company has not issued any shares with differential voting rightsnor has granted any stock options or sweat equity. As on March 31 2019 none of theDirectors of the Company hold instruments convertible into equity shares of the Company.FINANCE AND ACCOUNTS Your Company prepares its financial statements in compliance with therequirements the Companies Act 2013 and the Generally Accepted Accounting Principles(GAAP) in India. The financial statements have been prepared on historical cost basis. Theestimates and judgments relating to the financial statements are made on a prudent basisso as to reflect in a true and fair manner the form and substance of transactions andreasonably present the Company's state of affairs profits/(loss) and cash flows for theyear ended 31st March 2019.
The Company continues to focus on judicious management of its Working Capital.Receivables Inventories and other working capital parameters were kept under strict checkthrough continuous monitoring.
AUDITORS REMARK ON ACCOUNTS
Information and explanations on items contained in the Auditors Report which might beconsidered to be "Reservations Qualifications or adverse Remarks" is providedherein below:
MANAGEMENT'S PERCEPTION OF AUDITORS REMARK
With regard to inadequacy of supporting for some of the expenditure of revenue naturethe Board of Directors of the Company is on opinion that the same is wholly andexclusively attributable to the business of the Company. PARTICULARS OF LOANS GURANTEES& INVESTMENTS Details of Loans Guarantees and Investments if any covered under theprovisions of Section 186 of the Companies Act 2013 are given in the notes to theFinancial Statements.
The Company does not have any material subsidiary whose net worth exceeds 20% of theconsolidated net worth of the holding company in the immediately preceding accounting yearor has generated 20% of the consolidated income of the Company during the previousfinancial year. Accordingly a policy on material subsidiaries has not been formulated.RELATED PARTY TRANSACTIONS All transactions entered into with related parties as definedunder the Companies Act 2013 during the financial year were in the ordinary course ofbusiness and on an arm's length pricing basis and do not attract the provisions of Section188 of the Companies Act 2013. There were no materially significant transactions with therelated parties during the financial year which were in conflict with the interest of theCompany and hence enclosing of Form AOC-2 is not required. Suitable disclosure asrequired by the Accounting Standard (Ind-AS 24) has been made in the notes to theFinancial Statements. All Related Party Transactions are placed before the Audit Committeefor approval. Omnibus approval was obtained on a yearly basis for transactions which areof repetitive nature. Transactions entered into pursuant to omnibus approval are verifiedby the Risk Assurance Department and a statement giving details of all Related PartyTransactions are placed before the Audit Committee and the Board for review and approvalon a quarterly basis. None of the Directors has any pecuniary relationships ortransactions vis--vis the Company The Company has put in place a mechanism forcertifying the Related Party Transactions Statements placed before the Audit Committee andthe Board of Directors from an Independent Chartered Accountant Firm. The Policy onRelated Party Transactions as approved by the Board of Directors has been uploaded on thewebsite of the Company. None of the Directors has any pecuniary relationship ortransactions vis--vis the Company except remuneration and sitting fees. MANAGEMENTDISCUSSION & ANALYSIS The Management Discussion and Analysis on the operations of theCompany as prescribed under Part B of Schedule V read with regulation 34(3) of the ListingRegulations 2015 is provided in a separate section and forms part of the Directors'Report.
CHANGE IN NATURE OF BUSINESS IF ANY
There are no changes in the nature of business in the financial year 2018-19. BOARDEVALUATION
The Board of Directors have laid down the manner for carrying out an annual evaluationof its own performance its various Committees and individual directors pursuant to theprovisions of the Act and relevant Rules and the Corporate Governance requirements are incompliance with Regulation 17 of Listing Regulations 2015. The performance of the Boardwas evaluated by the Board after seeking inputs from all the Directors on the basis ofvarious criteria such as Board Composition process dynamics quality of deliberationsstrategic discussions effective reviews committee participation governance reviews etc.The performance of the Committees was evaluated by the Board after seeking inputs from theCommittee members on the basis of criteria such as Committee composition processdynamics deliberation strategic discussions effective reviews etc. The Nomination andRemuneration Committee reviewed the performance of the individual Directors on the basisof the criteria such as transparency analytical capabilities performance leadershipethics and ability to take balanced decisions regarding stakeholders etc. NUMBER OFMEETINGS OF THE BOARD The details of the Board Meetings and other Committee Meetings heldduring the financial year 2018-19 are given in the separate section of CorporateGovernance Report.
All Committees of the Board of Directors are constituted in line with the provisions ofthe Companies Act 2013 and applicable regulations of SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015. MANAGEMENT During the year Mr. Vijay JaideoPoddar Managing Director of the Company and part of Promoter group has resigned from theBoard w.e.f. 26th November 2018 and in his place Mr. Goutam Bose then IndependentDirector has been appointed as Chairman & Managing Director of the Company w.e.f. 26thNovember 2018. DIRECTORS During the year Mr. Vijay Jaideo Poddar Managing Director of theCompany and part of Promoter group has resigned from the Board w.e.f. 26th November 2018and in his place Mr. Goutam Bose then Independent Director has been appointed asChairman & Managing Director of the Company w.e.f. 26th November 2018. Further Mrs.Amita Bose has been appointed as Independent Director of the Company w.e.f. 26th November2018. All Independent Directors have given declarations that they meet the criteria ofindependence as laid down under Section 149(6) of the Companies Act 2013 and Regulation16 (b) of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015.Further none of the Directors of the Company are disqualified under sub-section (2) ofSection 164 of the Companies Act 2013. INDEPENDENT DIRECTORS As per provisions of Section149 of the 2013 Act independent directors shall hold office for a term up to fiveconsecutive years on the board of a company but shall be eligible for re-appointment foranother term up to five years on passing of a special resolution by the company anddisclosure of such appointment in Board's Report. Further Section 152 of the Act providesthat the independent directors shall not be liable to retire by rotation in the AnnualGeneral Meeting (AGM') of the Company.
As per requirements of Regulation 25 of SEBI LODR Regulations 2015 a person shall notserve as an independent director in more than seven listed entities: provided that anyperson who is serving as a whole time director in any listed entity shall serve as anindependent director in not more than three listed entities. Further independentdirectors of the listed entity shall hold at least one meeting in a year without thepresence of non-independent directors and members of the management and all theindependent directors shall strive to be present at such meeting. All IndependentDirectors of the Company have given declarations that they meet the criteria ofindependence as laid down under Section 149(6) of the Act and Regulation 16(1) (b) of theListing Regulations. In the opinion of the Board the Independent Directors fulfil theconditions of independence specified in Section 149(6) of the Act and Regulation 16(1) (b)of the Listing Regulations. The Independent Directors have also confirmed that they havecomplied with the Company's Code of Business Conduct & Ethics. DETAILS OF DIRECTORS /KMP APPOINTED AND RESIGNED DURING THE YEAR
|Sl. No. ||Name ||Designation ||Date of Appointment ||Date of Resignation |
|1. ||Vijay Jaideo Poddar ||MD & CEO ||- ||26th Nov 2018 |
|2. ||Goutam Bose ||MD & CEO* ||26th Nov 2018 ||- |
|3. ||Amita Bose ||Independent Director ||26th Nov 2018 ||- |
*Mr. Goutam Bose was earlier an Independent Director of the Company who has beenappointed as MD & CEO in the meeting of Board of Directors held on 26th November 2018.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS TRIBUNALS OR COURTS
There are no significant and material orders passed by the Regulators/Courts that wouldimpact the going concern status of the Company and its future operations.
MATERIAL CHANGES AND COMMITMENTS AFFECTING FINANCIAL POSITION BETWEEN THE END OF THEFINANCIAL YEAR AND DATE OF REPORT
There have been no material changes and commitments affecting the financial position ofthe Company between the end of financial year and date of the report.
DIRECTORS RESPONSIBILITY STATEMENT
To the best of knowledge and belief and according to the information and explanationsobtained your Directors make the following statement in terms of Section 134(3)(c) of theCompanies Act 2013:
1. that in the preparation of the Annual Accounts for the year ended March 31 2019the applicable accounting standards have been followed along with proper explanationrelating to material departures if any;
2. 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 as at March 31 2019 and of the profit ofthe Company for the year ended on that date;
3. that the Directors have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of the Companies Act 2013for safeguarding the assets of the Company and for preventing and detecting fraud andother irregularities;
4. the annual accounts have been prepared on a going concern basis;
5. that 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 6. that the Directors had devised proper systems to ensure compliancewith the provisions of all applicable laws and that such systems were adequate andoperating effectively.
Innovation and Technology are synonymous with the Company. The investment in technologyacts as a catalyst and enables the Company to be innovative. BUSINESS RISK MANAGEMENT Asan NBFC the Company is exposed to credit liquidity and interest rate risk. On the otherhand investment in Stock Market both in Quoted and Unquoted Shares have the risk ofchange in the price and value both in term of up and down and thus can affect theprofitability of the Company.
Risk management is embedded in your Company's operating framework. Your Companybelieves that managing risks helps in maximizing returns. The Company's approach toaddressing business risks is comprehensive and includes periodic review of such risks anda framework for mitigating controls and reporting mechanism of such risks. The riskmanagement framework is reviewed periodically by the Board and the Audit Committee.However the Company is not required to constitute Risk Management Committee under ListingRegulations 2015.
INTERNAL AUDIT AND INTERNAL FINANCIAL CONTROL AND ITS ADEQUACY
Your Company has an Internal Control System which is commensurate with the sizescale scope and complexity of its operations. To maintain its objectivity andindependence an independent firm of Chartered accountants has been appointed as theInternal Auditors who report to the Chairman of the Audit Committee of the Board. TheInternal Auditors monitor and evaluate the efficacy and adequacy of internal controlsystem in your Company its compliance with operating systems accounting procedures andpolicies of your Company. Based on the report of the Internal Auditors placed before theAudit Committee process owners undertake corrective action in their respective areas andthereby strengthen the controls. The internal controls have been reported by the Auditorsto be adequate and effective during the year.
NOMINATION REMUNERATION AND BOARD DIVERSITY POLICY
The Board of Directors has framed a policy which lays down a framework in relation toremuneration of Directors Key Managerial Personnel and Senior Management of the Company.The Policy broadly lays down the guiding principles philosophy and the basis for paymentof remuneration to Executive and Non-executive Directors (by way of sitting fees andcommission) Key Managerial Personnel Senior Management and other employees. The policyalso provides the criteria for determining qualifications positive attributes andIndependence of Director and criteria for appointment of Key Managerial Personnel /SeniorManagement and performance evaluation which are considered by the Nomination andRemuneration Committee and the Board of Directors while making selection of thecandidates. The above policy has been posted on the website of the Company.
VIGIL MECHANISM / WHISTLE BLOWER POLICY
The Company has a Whistle Blower Policy to report genuine concerns or grievances. TheWhistle Blower Policy has been posted on the website of the Company i.e. www.nclfin.com
RESEARCH & DEVELOPMENT
The Company believes that technological obsolescence is a reality. Only progressiveresearch and development will help us to measure up to future challenges andopportunities. We invest in and encourage continuous innovation. During the year underreview expenditure on research and development is not significant in relation to thenature size of operations of your Company.
M/s DBS & Associates Chartered Accountants Mumbai (FRN 018627N) were appointed asStatutory Auditors of the Company for a period of five consecutive years at the AnnualGeneral Meeting (AGM) of the Members held on September 26 2015 on a remuneration mutuallyagreed upon by the Board of Directors and the Statutory Auditors. Their appointment wassubject to ratification by the Members at every subsequent AGM held after the AGM held onSeptember 25 2018. Pursuant to the amendments made to Section 139 of the Companies Act2013 by the Companies (Amendment) Act 2017 effective from May 7 2018 the requirement ofseeking ratification of the Members for the appointment of the Statutory Auditors has beenwithdrawn from the Statute. Hence the resolution seeking ratification of the Members forcontinuance of their appointment at this AGM is not being sought. In regard to the Auditqualification and adverse remark by Statutory Auditors the same has been addressed andexplained in Notes to Accounts section of Annual Report. Secretarial Auditors Pursuant tothe provisions of Section 204 of the Companies Act 2013 and The Companies (Appointmentand Remuneration of Managerial Personnel) Rules 2014 the Company has re-appointed Mrs.Kriti Daga Company Secretaries in Practice (C. P. No. 14023) to undertake the SecretarialAudit of the Company. The Report of the Secretarial Audit Report in the prescribed FormMR-3 is annexed in this Annual Report as Annexure II. The same does not contain anyqualification reservation or adverse remark. In addition to the above and pursuant toSEBI circular dated 8 February 2019 a report on secretarial compliance by Mrs. Kriti Dagafor the FY2019 has been submitted with stock exchange. There are no observationsreservations or qualifications in the said report.
Your Company has an effective internal control and risk-mitigation system which areconstantly assessed and strengthened with new/revised standard operating procedures. TheCompany's internal control system is commensurate with its size scale and complexities ofits operations. The internal and operational audit is entrusted to M/s A. K. Das &Co. Chartered Accountants Kolkata (FRN - 325204E). The main thrust of internal audit isto test and review controls appraisal of risks and business processes besidesbenchmarking controls with best practices in the industry. The Audit Committee of theBoard of Directors actively reviews the adequacy and effectiveness of the internal controlsystems and suggests improvements to strengthen the same. The Company has a robustManagement Information System which is an integral part of the control mechanism. TheAudit Committee of the Board of Directors Statutory Auditors and the Business Heads areperiodically apprised of the internal audit findings and corrective actions taken. Auditplays a key role in providing assurance to the Board of Directors. Significant auditobservations and corrective actions taken by the management are presented to the AuditCommittee of the Board. To maintain its objectivity and independence the Internal Auditfunction reports to the Chairman of the Audit Committee.
EXTRACT OF ANNUAL RETURN
Pursuant to the provisions of Section 134(3)(a) of the Companies Act 2013 extract ofthe Annual Return for the financial year ended 31st March 2019 made under the provisionsof Section 92(3) of the Act is attached as Annexure III to this report.
PARTICULARS OF EMPLOYEES
In terms of the provisions of Section 197(12) of the Act read with Rules 5(2) and 5(3)of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 thesame is not applicable to the Company as none of employee is drawing remuneration inexcess of the limits set out in the said rules and thus no disclosure has been provided inthis Annual Report. Disclosures pertaining to remuneration and other details as requiredunder Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 by way of Companies (Appointment andRemuneration of Managerial Personnel) Rules 2016 dated June 30 2016 ("AmendedManagerial Remuneration Rules 2016") the report is not applicable to the Company.
DISCLOSURES UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITION& REDRESSAL) ACT 2013 READ WITH RULES
Pursuant to the requirements of Section 22 of Sexual Harassment of Women at Workplace(Prevention Prohibition & Redressal) Act 2013 read with Rules thereunder the Companyhas not received any complaint of sexual harassment during the year under review.
STATUTORY INFORMATION AND OTHER DISCLOSURES
Since the Company is into the business of financing (NBFC activities) and investmentactivities in Shares and Securities; the information regarding Conservation of EnergyTechnology Absorption Adoption and Innovation as defined under section 134(3)(m) of theCompanies Act 2013 read with Rule 8(3) of the Companies (Accounts) Rules 2014 isreported to be NIL. The Disclosure required under Section 197(12) of the Act read with theRule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules2014 is annexed as Annexure IV' and forms an integral part of this Report.
A statement comprising the names of top 10 employees in terms of remuneration drawn andevery person employed throughout the year who were in receipt of remuneration in terms ofRule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules2014 is annexed as Annexure V' and forms an integral part of this annual report. Theabove Annexure is not being sent along with this annual report to the members of theCompany in line with the provisions of Section 136 of the Act. Members who are interestedin obtaining these particulars may write to the Company Secretary at the Registered Officeof the ompany. The aforesaid Annexure is also available for inspection by Members at theRegistered Office of the Company 21 days before and up to the date of the ensuing AnnualGeneral Meeting during the business hours on working days. None of the employees listed inthe said Annexure is a relative of any Director of the Company. None of the employees hold(by himself or along with his spouse and dependent children) more than two percent of theEquity Shares of the Company.
BUSINESS RESPONSIBILITY REPORT
As the Company is not among top 500 or 1000 Companies by turnover on Stock Exchangesthe disclosure of Report under of Regulation 34(2) of the Listing Regulations is notapplicable to the Company for the year under review.
FOREIGN EXCHANGE EARNINGS AND OUTGO
The Company has not earned or used foreign exchange earnings/outgoings during the yearunder review.
During the year under review your Company has not accepted any deposit from the publicfalling within the ambit of Section 73 of the Companies Act 2013 and The Companies(Acceptance of Deposits) Rules 2014.
REPORT ON CORPORATE GOVERNANCE
As per Regulation 34(3) read with Schedule V of the SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 a separate section on corporate governancepractices followed by the Company together with a certificate from the Company's Auditorsconfirming compliance forms an integral part of this Report.
Statements in this Directors' Report and Management Discussion and Analysis describingthe Company's objectives projections estimates expectations or predictions may be"forward-looking statements" within the meaning of applicable securities lawsand regulations. Actual results could differ materially from those expressed or implied.
Your Directors wish to place on record their appreciation towards the contribution ofall the employees of the Company and their gratitude to the Company's valued customersbankers vendors and members for their continued support and confidence in the Company.
|Mumbai May 25 2019 ||By order of the Board |
| ||For NCL RESEARCH & FINANCIAL SERVICES LTD. |
|Registered Office : ||S/d- |
|Bhagyodaya Building 3rd Floor ||GOUTAM BOSE |
|79 N. M. Road Fort Mumbai-400 023 ||Managing Director |