TO THE MEMBERS
Your Directors have pleasure in presenting their 31st Annual Report togetherwith the Audited Accounts of the Company for the year ended 31st March 2019.
1. FINANCIAL PERFORMANCE:
| || ||(##Rs## In Lacs) |
|Particulars ||2018-19 ||2017-18 |
|Total Income ||2422.69 ||1223.12 |
|Total Expenditure ||3083.75 ||1488.31 |
|Profit/(Loss) before Tax ||(661.06) ||(265.19) |
|Less: Provision for taxation || || |
|Current Tax ||- ||- |
|Deferred Tax Asset ||- ||- |
|Net Profit/(Loss) after Tax ||(661.06) ||(265.19) |
|Transfer to Reserve under Section 45IC of the RBI Act 1934 ||- ||- |
|Balance brought forward from previous period ||(738.11) ||(472.95) |
|Balance carried to Balance Sheet ||(1399.17) ||(738.11) |
|Earning Per Share || || |
|- Basic ||(0.79) ||(0.46) |
|- Diluted ||(0.79) ||(0.46) |
During the year under review the revenues of the Company stood at ##Rs## 2422.69lakhs. The Company posted loss of ##Rs## 661.06 lakhs as against ##Rs## 265.19 lakhs inthe previous year.
2. OPERATIONAL PERFORMANCE:
Your Company is in the business of providing unsecured working capital credit to MSMEsacross India by applying state of the art fintech solutions that streamlines clientonboarding underwriting documentation loan disbursals and repayment. It is a registeredNon-Banking Finance Company under the Reserve Bank of India Act 1934 having theregistration number B-13.02061 and is listed on the Bombay Stock Exchange Limited (BSELimited). As on 31st March 2019 your Company has commenced its operations inthe States of Maharashtra Karnataka Tamil Nadu Gujarat Rajasthan.
In view of the loss incurred by the Company during the year under review yourDirectors do not recommend any dividend for the financial year ended 31st March2019.
4. DEBT EQUITY RATIO:
Your Company's Debt: Equity ratio as on 31st March 2019 stands NIL.
5. NET OWNED FUNDS:
The Net Owned Funds of your Company as on 31st March 2019 stood at Rs. 24910lakhs.
6. CREDIT RATING:
Since your Company is a Non-Deposit Accepting Non-Systematic NBFC it does not have anydeposits and thus does not require to obtain ratings for the same.
7. CHANGE IN THE REGISTERED OFFICE:
The Company's registered office has been shifted from the State of Maharashtra to theState of Tamil Nadu. The said change was approved by the shareholders vide postal ballotthe results of which were declared on 27th March 2019. Subsequently theRegional Director approved the said shifting of the Company's registered office vide orderdated 8th July 2019. The Company's new registered office is situated in Chennaiat F-22 3rd Floor Palm Spring Apartment 2nd Main Road Anna NagarEast Chennai 600 102. The Company's office in Mumbai shall continue to operate ascorporate office. The Company being NBFC is in the process of obtaining the consent ofReserve Bank of India to change its jurisdiction from the State of Maharashtra to theState of Tamil Nadu and the same is awaited.
The Board of Directors of your Company (the "Board") at its meeting held on5th September 2018 approved acquisition of 50.01% stake in Invest DirectCapital Services Private Limited ("ICSPL"). This acquisition will also result inthe Company acquiring indirect stake in ICSPL's wholly-owned subsidiary viz. MoneymapInvestment Advisors Private Limited ("Money front"). The said acquisition is anon-cash transaction wherein the Company will issue equity shares to the shareholders ofICSPL by way of preferential issue as consideration towards the shareholders of ICSPLtransferring part of their shareholding in ICSPL in the Company's name. The preferentialissue was approved by the Company's shareholders vide postal ballot the results of whichwere declared on 27th March 2019. The Company has also obtained in-principalapproval of the stock exchange for the said issue.
ICSPL is engaged in the business of distribution of financial products nationalpension schemes corporate deposits bonds and mutual funds. Moneyfront is an automateddirect plan platform provider helping clients invest in mutual funds and other fixedincome instruments and is registered with the SEBI under the SEBI (Investment Advisers)Regulations 2013.
It is envisaged that the acquisition will be beneficial for both since the partnershipwill help your Company to take a significant step forward in building its knowledge andcapabilities within the wealth solutions domain and on the other hand it will help ICSPLand its subsidiary to accelerate their growth by leveraging Company's distribution channeland state of the art technology platform.
Pursuant to SEBI Investment Advisors Regulations change in controlling interestwhether direct or indirect to the extent of more than 50 per cent of the voting rightscan be undertaken only after the prior approval of SEBI. Since this acquisition willresult in indirect change in control for Moneyfront it has approached SEBI for obtainingits approval which was accorded on 5th August 2019.
9. SHARE CAPITAL:
During the year under review till the date of this report the Company made thefollowing allotment:
Allotment of 4732433 (Forty Seven Lakhs Thirty Two Thousand Four Hundred and ThirtyThree) equity shares of Rs. 10/- each to Strategic India Equity Fund ("SIEF")(public category) pursuant to the conversion option exercised by SIEF in respect of4732433 Compulsorily Convertible Preference Shares ("CCPS") held by SIEF inthe Company. The said CCPS were issued to SIEF during the financial year 2016-17 onpreferential basis at a price of Rs. 21.60 (Rupees Twenty One and Paise Sixty Only Only)each including premium of Rs. 11.60 (Rupees Eleven and Paise Sixty Only) aggregating toRs. 102220552.80 (Rupees Ten Crores Twenty Two Lakhs Twenty Thousand Five Hundred andFifty Two and Paise Eighty Only). The said preferential issue was approved by theshareholders vide Postal Ballot results of which were declared on 18th February 2017.
Subsequent to the aforesaid allotment the issued and paid-up equity share capital ofthe Company stands at Rs. 847668830/- (Rupees Eighty Four Crores Seventy Six LakhsSixty Eight Thousand Eight Hundred and Thirty Only) divided into 84766883 (Eight CroresForty Seven Lakhs Sixty Six Thousand Eight Hundred and Eighty Three) equitys shares of Rs.10/- (Rupees Ten Only) each.
10. DEPOSITORY SYSTEM:
The Company's equity shares are compulsorily tradable in electronic form. As on 31stMarch 2019 99.93% of the Company's total paid-up capital representing 84707583 equityshares were in dematerialized form. In view of the benefits offered by the depositorysystem members holding shares in physical mode are advised to avail the demat facility.
11. PUBLIC DEPOSITS:
Your Company did not invite or accept deposits from public during the year underreview.
12 PARTICULARS OF LOANS GUARANTEES & INVESTMENTS:
In terms of Section 186(11) of the Companies Act 2013 read with Companies (Meetings ofBoard and its Powers) Rules 2014 loans made guarantees given or securities provided bythe Company are exempted from compliance with the requirements of Section 186 of theCompanies Act 2013. During the year under review your Company has invested surplus fundspending business deployment in various liquid debt securities in the ordinary course ofbusiness. For details of the current and non-current investments of the Company pleaserefer Note 13 and 10 to the Audited Financial Statements.
13. RELATED PARTY TRANSACTIONS:
All related party transactions that were entered into during the financial year were incompliance with the requirement of the Companies Act 2013 and the Rules framed thereunderand the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015. AllRelated Party Transactions are placed before the Audit Committee and also the Board asthe case may be for approval. A statement giving details of all related partytransactions is placed before the Audit Committee and the Board of Directors for theirapproval / noting on a quarterly basis. The policy on Related Party Transactions asapproved by the Board is uploaded on the Company's website.
14. REPORT ON CORPORATE GOVERNANCE AND MANAGEMENT DISCUSSION AND ANALYSIS:
Report on Corporate Governance and Management Discussion and Analysis Report for theyear under review together with a Certificate from Mitesh J. Shah & AssociatesCompany Secretaries regarding compliance of the conditions of Corporate Governance asstipulated under SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015forms part of the Annual Report.
15. DIRECTORS & KEY MANAGERIAL PERSONNEL:
As on the date of this report the Company's Board consists of the following Directors:
(i) Mr. Amit Rajpal Chairman & Non-Executive Director (DIN: 07557866)
(ii) Mr. Makarand Patankar Whole Time Director (DIN: 01584128)
(iii) Mr. Kapil Kapoor Independent Director (DIN: 00178966)
(iv) Ms. Sutapa Banerjee Independent Director (DIN: 02844650)
(v) Ms. Sucheta Dalal Independent Director (DIN: 01351168)
(vi) Mr. Eric Wetlaufer Independent Director* (DIN: 08347413)
*The Board of Directors at its meeting held on 11th February 2019appointed Mr. Eric Wetlaufer (Additional Director) as an Independent Director of theCompany for a period of 5 years effective 12th February 2019.
Brief Profile of Mr. Eric Wetlaufer:
Eric earned a B.A. from Wesleyan University Middletown Connecticut is a CharteredFinancial Analyst and a certified member of the Canadian Institute of Corporate Directors.He provides counsel as a director advisor and investor to a range of large public tosmaller private companies with a particular focus on technology and financial sectors. Asa seasoned institutional investor Eric most recently was responsible for leading the CPPInvestment Board's Public Market Investments department a multi-strategy platform of 220portfolio managers analysts and traders investing globally over C$180 billion inpublicly-traded assets and related derivatives for Canadian beneficiaries. Prior tojoining CPPIB in 2011 he was Group Chief Investment Officer International at Fidelity inBoston Massachusetts. Prior held the roles of Chief Investment Officer at PutnamInvestments and Managing Director at Cadence Capital Management in Boston. He currentlyserves on the Board of Directors of the TMX Group and of Soulpepper Theatre Company and isan advisor to GrainDiscovery CryptoNumerics and the Aion Foundation and is a pastpresident of the CFA Society Boston.
The Independent Directors of your Company have given the certificate of independence toyour Company stating that they meet the criteria of independence as mentioned underSection 149(6) of the Companies Act 2013.
In accordance with Section 152 and other applicable provisions of Companies Act 2013Mr. Makarand Patankar (DIN: 01584128) Whole Time Director retires by rotation andbeing eligible offers himself for reappointment at the ensuing Annual General Meeting.The Board commends his re-appointment for your approval.
(b) Key Managerial Personnel:
As on the date of this Report the following persons have been appointed as the KeyManagerial Personnel (KMP) of the Company pursuant to Section 2(51) and 203 of theCompanies Act 2013:
(i) Mr. Makarand Patankar Whole Time Director
(ii) Mr. Sandeep Akolkar Chief Financial Officer (w.e.f. 14thFebruary 2019)
(iii) Mr. Mandar GodboleCompany Secretary & Compliance Officer
During the year under review Mr. Sandeep Kumar Saraogi resigned as the Chief FinancialOfficer of the Company with effect from 2nd November 2018.
16. BOARD & COMMITTEE MEETINGS:
(a) Five (5) Board Meetings were held details of which are given in the CorporateGovernance Report. The intervening gap between the Meetings was within the periodprescribed under the Companies Act 2013.
(b) Four (4) Audit Committee Meetings were held details of which are given in theCorporate Governance Report. The intervening gap between the Meetings was within theperiod prescribed under the Companies Act 2013.
(c) Four (4) Nomination & Remuneration Committee Meeting was held details of whichare given in the Corporate Governance Report.
(d) One (1) Stakeholders Relationship Committee Meeting was held details of which aregiven in the Corporate Governance Report.
17. BOARD EVALUATION:
Pursuant to the provisions of the Companies Act 2013 and SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 the Board has carried out an annualperformance evaluation of its own performance the directors individually as well as theevaluation of the working of its Audit Committee and the Nomination & RemunerationCommittee. The manner in which the evaluation has been carried out has been explained inthe Corporate Governance Report.
18. DISCLOSURES BY DIRECTORS:
Based on the declarations and confirmations received in terms of provisions of theCompanies Act 2013 circular(s) / notification(s) / direction(s) issued by the RBI andother applicable laws none of the Directors on the Board of your Company are disqualifiedfrom appointment as Directors.
Your Company has received declarations from the Independent Director(s) affirmingcompliance with the criteria of independence as stipulated in Section 149(6) of theCompanies Act 2013.
19. FAMILIARIZATION PROGRAMME FOR INDEPENDENT DIRECTORS:
The Independent Directors have complete access to the information within the Company.As a part of Agenda of Board / Committee Meetings presentations are regularly made to theIndependent Directors on various matter inter-alia covering the Company's strategybusiness model operations markets organization structure product offerings financerisk management framework quarterly and annual financial results human resourcestechnology quality role rights responsibilities of the Independent Directors and suchother areas as may arise from time to time where Directors get an opportunity to interactwith the Company's management (Familiarization Programme).
20. REMUNERATION POLICY:
The Board has on the recommendation of the Nomination & Remuneration Committeeframed a policy for selection and appointment of Directors Senior Management and theirremuneration. The Remuneration Policy is stated in the Corporate Governance Report and isalso available on the Company's Website at www.niyogin.in.
21. DIRECTORS' RESPONSIBILITY STATEMENT:
Pursuant to Section 134(3)(c) of the Companies Act 2013 the Directors confirm that:
(a) in the preparation of the annual accounts for the financial year ended 31stMarch 2019 the applicable accounting standards and Schedule III of the Companies Act2013 have been followed and there are no material departures from the same;
(b) the Directors have 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 your Company as at 31st March 2019 and ofthe profit/loss of the Company for the financial year ended 31st March 2019;
(c) proper and sufficient care has been taken for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities;
(d) the annual accounts have been prepared on a going concern' basis;
(e) proper internal financial controls laid down by the Directors were followed by theCompany and that such internal financial controls are adequate and were operatingeffectively; and
(f) proper systems to ensure compliance with the provisions of all applicable laws werein place and that such systems were adequate and operating effectively.
22. STATUTORY AUDITORS:
As per Section 139 of the Act read with the Companies (Audit and Auditors) Rules 2014the Members of the Company in its 29th Annual General Meeting held on 28thSeptember 2017 approved the appointment of B S R & Co. LLP Chartered Accountants(ICAI Registration No - 101248W/W-100022) as the Statutory Auditors of the Company for aninitial term of 5 years i.e. from the conclusion of 29th Annual General Meetingtill the conclusion of the 34th Annual General Meeting of the Company. TheReport given by M/s. B S R & Co. LLP Chartered Accountants on the financialstatements of the Company for the year ended 31st March 2019 is part of theAnnual Report. There has been no qualification reservation or adverse remark ordisclaimer in their Report. During the year under review the Auditors had not reportedany matter under Section 143(12) of the Act therefore no detail is required to bedisclosed under Section 134(3)(ca) of the Act.
23. SECRETARIAL AUDIT:
Pursuant to the provisions of Section 204 of the Companies Act 2013 and The Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Company hadappointed M/s Mitesh J. Shah & Associates Company Secretaries to undertake theSecretarial Audit of the Company for the financial year ended 31st March 2019.The Report of the Secretarial Audit is annexed herewith as Annexure II'.
24. RBI GUIDELINES:
Your Company continues to fulfill and comply with all the circular(s) notification(s)direction(s) and guideline(s) issued by the RBI as are applicable to it as aNon-Systemically Important Non-Deposit Accepting or Holding Non-Banking Financial Company.In terms of the RBI Master Circular No. 15/2015-16 dated July 1 2015 on ForeignInvestment in India your Company has obtained a certificate from its Statutory Auditorscertifying that the Company is in compliance with the FEMA regulations.
25. PARTICULARS OF DEPOSITS:
Your Company being a Non-Deposit Accepting or Holding Non-Banking FinancialCompany' has not accepted deposits during the year under review and shall not accept anydeposits from the public without obtaining prior approval of the RBI. Accordingly thedisclosure requirements under Rule 8(5)(v) and (vi) of the Companies (Accounts) Rules2014 are not applicable to the Company.
26. INTERNAL FINANCIAL CONTROL SYSTEM:
According to Section 134(5)(e) of the Companies Act 2013 the term Internal FinancialControl (IFC) means the policies and procedures adopted by the company for ensuring theorderly and efficient conduct of its business including adherence to company's policiessafeguarding of its assets prevention and detection of frauds and errors the accuracyand completeness of the accounting records and the timely preparation of reliablefinancial information.
The Company has a proper and adequate internal financial control system which ensuresthat all assets are safeguarded and protected and that the transactions are authorisedrecorded and reported correctly. The Company's internal financial control system alsocomprises of compliances with the Company's policies and Standard Operating Procedures(SOPs) which is further reviewed by Protiviti India Member Private Limited the InternalAuditors. The Internal Auditors independently evaluate the adequacy of internal controls.
27. ADEQUACY OF INTERNAL FINANCIAL CONTROLS IN RELATION TO FINANCIAL STATEMENTS:
The Companies Act 2013 re-emphasizes the need for an effective Internal FinancialControl system in the Company. The system should be designed and operated effectively.Rule 8(5)(viii) of Companies (Accounts) Rules 2014 requires the information regardingadequacy of Internal Financial Controls with reference to the financial statements to bedisclosed in the Board's report. To ensure effective Internal Financial Controls theCompany has laid down the following measures:
All operations are executed through Standard Operating Procedures (SOPs) inall functional activities for which key manuals have been put in place. The manuals areupdated and validated periodically.
All legal and statutory compliances are ensured on a monthly basis for alllocations in India through a fully automated tool. Noncompliance if any is seriouslytaken by the management and corrective actions are taken immediately.
Approval of all transactions is ensured through a pre-approved delegation ofauthority schedule. The schedule is reviewed periodically by the management and complianceof the same is regularly checked and monitored by the auditors.
The Company follows a robust internal audit process wherein audits areconducted on a regular basis throughout the year by the Internal Auditors as per agreedaudit plan.
The audit reports of the Internal Auditors are submitted to the AuditCommittee and the Board for review and necessary action.
The Company has a comprehensive risk management framework.
The Company has a robust mechanism of building budgets at an integratedcross functional level. The budgets are reviewed on a monthly basis so as to analyze theperformance and take corrective action wherever required.
The Company has in place a well-defined Whistle Blower Policy / VigilMechanism.
The Company has a system of Internal Business Reviews. All departmentalheads discuss their business issues and future plans in monthly review meetings. Theyreview their achievements in quarterly review meetings.
Compliance of the secretarial functions is ensured by way of secretarialaudit.
28. CORPORATE SOCIAL RESPONSIBILITY:
As per the provisions of Section 135 of the Companies Act 2013 your Company is notrequired to contribute funds for CSR. However as a part of good corporate governancealong with an intent to work for a social cause the Company has constituted a CSRCommittee.
29. EXTRACT OF ANNUAL RETURN:
Pursuant to sub-section 3(a) of Section 134 and subsection (3) of Section 92 of theCompanies Act 2013 read with Rule 12 of the Companies (Management and Administration)Rules 2014 the extract of the Annual Return as on 31st March 2019 forms partof this report as Annexure I'.
30. PARTICULARS OF EMPLOYEES:
During the year there were 73 employees on the payroll of the Company. During theyear 1 employee employed throughout the year was in receipt of remuneration of ##Rs## 1crore and 2 lakh or more per annum and 0 employeesemployedforpartoftheyearwasinreceiptofremuneration of ##Rs## 8.5 lac or more per month. Inaccordance with the provisions of Rule 5(2) of the Companies(Appointment and Remunerationof Managerial Personnel) Rules 2014 the names and particulars of the top ten employeesin terms of remuneration drawn and of the aforesaid employees are set out in the annexureto the Directors' Report. In terms of the provisions of Section 136(1) of the CompaniesAct 2013 read with the rule the Directors' Report is being sent to all shareholders ofthe Company excluding the annex. Any shareholder interested in obtaining a copy of theannexure may write to the Company.
Further disclosures on managerial remuneration are annexed to this report.
31. EMPLOYEE STOCK OPTION PLAN:
During the year 918559 options were granted to the eligible employees pursuant to theCompany's Employee Stock Option Scheme 2018. The said options have not vested till thedate of this report. The applicable disclosures as stipulated under the SEBI Regulationsas on 31st March 2019 with regard to Employees Stock Option Plan are provided in AnnexureVI' to this report.
32. SEXUAL HARASSMENT POLICY:
During the year under review the Company has not received any complaint from theemployees related to sexual harassment. The Company has in place sexual harassment policywhich is available on the Company's website.
33. RISK MANAGEMENT:
The Company has in place a mechanism to identify assess monitor and mitigate variousrisks to key business objectives. Major risks identified by the businesses and functionsare systematically addressed through mitigating actions on a continuing basis.
34. VIGIL MECHANISM:
Your Company is committed to highest standards of ethical moral and legal businessconduct. Accordingly the Board of Directors has formulated a Whistle Blower Policy whichis in compliance with the provisions of Section 177 (10) of the Companies Act 2013 andRegulation 22 of the Listing Regulation. The policy provides for a framework and processwhereby concerns can be raised by its employees against any kind of discriminationharassment victimization or any other unfair practice being adopted against them.
35. ENERGY CONSERVATION TECHNOLOGY ABSORBTION AND FOREIGN EXCHANGE EARNING &OUTGO:
A. Conversation of Energy: NIL
B. Technology Absorption: NIL
C. Foreign Exchange Earning: NIL
D. Foreign Exchange Outgo: NIL
Your Directors take this opportunity to express their appreciation to all stakeholdersof the Company including the Reserve Bank of India the Ministry of Corporate Affairs theSecurities and Exchange Board of India the Government of India and other RegulatoryAuthorities Members Customers and Employees of the Company for their continued supportand trust. Your Directors would like to express deep appreciation for the commitment shownby the employees in supporting the Company in achieving continued robust performance onall fronts.
FOR AND ON BEHALF OF THE BOARD OF DIRECTORS
NIYOGIN FINTECH LIMITED
Date: 22nd May 2019