Ladies and Gentlemen
Your directors have pleasure in presenting their 27th Annual Report and theAudited Statement of Accounts for the year ended on 31st March 2019.
|1. FINANCIAL RESULTS || ||(Amount in Rs.) |
|Particulars ||For the financial year 2018-19 ||For the financial year 2017-18 |
|Total Revenue ||297989760 ||257577864 |
|Profit before financial costs depreciation and tax ||285084768 ||248448943 |
|Finance Costs ||210555522 ||182166176 |
|Profit before depreciation and tax ||74529246 ||66282767 |
|Depreciation for the financial year ||87477 ||89839 |
|Profit /(Loss) before tax ||74441769 ||66192928 |
|Direct Taxes (current and deferred taxes) ||20195105 ||16703060 |
|Profit / (Loss) after Tax ||54246664 ||49489868 |
|Transfer to Reserve Fund ||10849333 ||9897974 |
2. TRANSFERS TO RESERVES AND PROVISIONS
Except as mentioned below no amount was proposed to transfer to any reserve by theCompany during the year under review.
During the year under review the Company has transferred Rs. 10849333/-(Rupees OneCrores Eight Lakhs Forty Nine Thousand Three Hundred and Thirty Three Only) to SpecialReserve Funds in order to comply with the provisions of Section 45IA read with section45IC of the Reserve Bank of India Act 1934.
As on 31st March 2019 the Company has made the provision of Rs. 4473810/- (RupeesForty Four Lakhs Seventy Three Thousand Eight Hundred and Ten Only) for Sub StandardAssets and Rs. 6772249/- (Rupees Sixty Seven Lakhs Seventy Two Thousand Two Hundred andForty Nine Only) for Standard Assets in order to comply with the guidelines of the ReserveBank of India.
3. OPERATIONS OF THE COMPANY
During the year under review the Company was engaged in carrying on the business asNon- Banking Financial Company without accepting public deposits for which the Certificateof Registration has been obtained from the Department of Non- Banking Supervision ReserveBank of India New Delhi. Your directors also intend to diversify its operation intoanother area / business in order to make the Company more profitable.
4. PERFORMANCE REVIEW
During the year under review the Company's total income has increased toRs.297989760/- (Rupees Twenty Nine Crores Seventy Nine Lakhs Eighty Nine Thousand SevenHundred and Sixty Only) as compared to Rs. 257577864/- (Rupees Twenty Five CroresSeventy Five Lakhs Seventy Seven Thousand Eight Hundred Sixty Four Only) in the previousyear and the Company earned a profit before tax of Rs.74441769/- (Rupees Seven CroresForty Four Lakhs Forty One Thousand Seven Hundred and Sixty Nine Only) as compared to Rs.66192928/- (Rupees Six Crores Sixty One Lakhs Ninety Two Thousand Nine Hundred TwentyEight Only) in the previous year.
5. SHARE CAPITAL OF THE COMPANY
The Authorised share capital of the Company is Rs.110000000/- divided into11000000 Equity shares of Rs.10/- each. Issued Subscribed and Paid up share capital ofthe Company is Rs.108800000/- divided into 10880000 Equity Shares of Rs.10/- eachfully paid up.
Out of the above 9407381 Equity Shares being 86.46% of the Company's paid up equityshares capital are in dematerialized form as on 31st March 2019 and balance 1472619Equity Shares being 13.54% of the Company's paid up equity shares capital are in physicalform. The Company request all the shareholders who hold equity shares in physical form toget their equity shares dematerialised with their depository at earliest. Our Registrar& Transfer Agent is M/s Indus Portfolio Private Limited having their communicationoffice at G-65 Bali Nagar New Delhi -110015.
6. PAYMENT OF DIVIDEND
Your directors do not recommend any dividend for payment to the shareholders / membersof the Company for the financial year ended on 31st March 2019.
7. DIRECTORS OF THE COMPANY
In term of the Section 152 of the Companies Act 2013 and Articles of Association ofthe Company Mr. Kuldeep Singh Solanki (DIN-00009212) non- executive director of theCompany retires by rotation at ensuing Annual General Meeting being eligible offershimself for re-appointment. Your directors recommend his re-appointment as director of theCompany. Further Ms. Renuka Hooda independent director whose term will expire on 29thMarch 2020 being eligible for appointment and also appointed as independent director forthe second term for five years. There was no other change in directors of the Company.
As required under regulation 36(3) of SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 the information on the particulars of the Directorsproposed for appointment/re-appointment has been given in the Notice of the Annual GeneralMeeting
Declaration by Independent Directors
Pursuant to the provisions of section 149 of the Act Mr. Samai Singh and Ms. RenukaHooda are the independent directors of the Company. They have submitted declaration thateach of them meets the criteria of independence as provided in section 149(6) of the Actand there has been no change in the circumstances which may affect their status asindependent director during the year.
During the year under review the non-executive directors of the Company had nopecuniary relationship or transactions with the Company other than the sitting feescommission and reimbursement of expenses incurred by them for the purpose of attendingmeetings of the Company.
Pursuant to the provisions of the Companies Act 2013 and SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 the Board has carried out an evaluation of itsown performance the directors individually as well as the evaluation of the working ofits Audit Committee Nomination and Remuneration Committee. The manner in which theevaluation has been carried out has been explained in the Corporate Governance Report.
The Board has on the recommendation of the Nomination and Remuneration Committeeframed a policy on appointment and remuneration including criteria for determiningqualification positive attributes independence of directors and other matters providedunder section 178(3) of the Companies Act 2013. The summary of Nomination andRemuneration Policy is stated in the Corporate Governance Report and is also available onthe Company's website www.sainikfinance.com.
Disclosure under section 197 (12) of the Companies Act 2013 read with rules madethereunder
Disclosures with respect to the remuneration of Directors and employees as requiredunder Section 197 of the Act and Rule 5 (1) Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 (Rules) is given below:
|The ratio of the remuneration of each director to the median remuneration of the employees of the company for the financial year; ||Name of the Director ||Ratio to the median |
| ||N.A. ||N.A. |
|The percentage increase in remuneration of each director Chief Financial Officer Chief Executive Officer Company Secretary or Manager if any in the financial year; ||Name of Director/CS/CFO ||% increase |
| ||Jagdish Chandra CFO ||8% |
| ||Kapil Sharma CEO* ||- |
| ||Kunal Gupta CS** ||- |
|The percentage increase in the median remuneration of employees in the financial year; ||10% || |
|The number of permanent employees on the rolls of Company at end of the financial year under review; ||6 || |
|Average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration; ||The average % increase is 10% for all employees based on the fixed and variable components. The increase in the percentile of managerial personnel is 9% which is slightly less than other employees. |
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| || |
|Affirmation that the remuneration is as per the remuneration policy of the company. ||Yes; the remuneration is as per the remuneration policy of the company. |
| || |
*Mr. Kapil Sharma CEO resigned w.e.f. 30.04.2018 and ** Mr. Kunal Gupta CompanySecretary resigned w.e.f. 28.05.2019 None of employees of the Company has receivedremuneration of Rs.10200000 per annum and Rs.850000 per month during the financialunder review. Details of employees remuneration as required under provisions of Section197 of the Companies Act 2013 and Rule 5(2) and 5(3) of Rules are available at theregistered office of the Company during working hours 21 days before the Annual GeneralMeeting and shall be made available to any shareholders on their request in written.
During the year under review (5) Board Meetings were convened and held. The details ofwhich are given in the Corporate Governance Report. The intervening gap between two boardmeetings was within the period prescribed under the Companies Act 2013.
8. KEY MANAGERIAL PERSONNEL
Pursuant to the provisions of section 203 of the Act as on date the key managerialpersonnel of the Company are - Mr. Akash Shrivastava Chief Executive Officer Mr. JagdishChandra Chief Financial Officer and Ms. Pooja Bansal Company Secretary of the Company.During the year under review Mr. Kapil Sharma Chief Executive Officer of the Company hastendered his resignation from the post of Chief Executive officer from 30th April 2018.Subsequent to end of financial year Mr. Akash Shrivastava was appointed as ChiefExecutive Officer w.e.f. from 1st April 2019. Mr. Kunal Gupta Company Secretary of theCompany a member of ICSI resigned with effect from 28th May 2019 and Ms. Pooja Bansalwas appointed as Company Secretary and Compliance Officer of the Company with effect from1st June 2019.
9. MANAGEMENT DISCUSSION AND ANALYSIS REPORT:
As required under regulation 34 of SEBI (Listing Obligation and DisclosureRequirements) Regulations 2015 the Management Discussion and Analysis Report is enclosedas a part of this report.
10. DIRECTORS RESPONSIBILITY STATEMENT:
The Board of Directors acknowledges the responsibility for ensuring compliance with theprovisions of section 134(3)(c) read with section 134(5) of the Companies Act 2013 in thepreparation of the Financial Statement for the financial year ended on 31st March 2019and state: i) That in the preparation of Annual Accounts for the financial year ended asat 31st March 2019 the applicable Accounting Standards have been followed along withproper explanation relating to the material departures. ii) That the Directors haveselected such Accounting Policies and applied them consistently and made judgements andestimates that are reasonable and prudent so as to give a true and fair view of the stateof affairs of the Company at the financial year ended as at 31st March 2019 and of theprofit and loss of the Company for the financial year ended on 31st March 2019. iii) Thatthe Directors have 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 or other irregularities. iv)That the Directors have prepared the Annual Accounts on a "Going Concern basis".v) The Directors have laid down internal financial controls to be followed by the Companyand that such internal financial controls are adequate and are operating effectively; andvi) There is a proper system to ensure compliance with the provisions of all applicablelaws and that such systems are adequate and operating effectively.
Based on the framework of internal financial controls and compliance systemsestablished and maintained by the Company work performed by the internal statutory andsecretarial auditors and external consultants including audit of internal financialcontrols over financial reporting by the statutory auditors and the reviews performed bymanagement and the relevant board committees including the audit committee the board isof the opinion that the Company's internal financial controls were adequate and effectiveduring financial year 2018-19.
11. PUBLIC DEPOSITS
The Company has not invited or accepted any public deposits within the meaning ofSection 73 of the Companies Act 2013 and the rules made thereunder and section 45-I(bb)of the Reserve Bank of India Act 1934 during the year under review. The Company does nothold any public deposit as on date and will not accept the same in future without theprior approval of Reserve Bank of India in writing.
12. PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS
The Company being a non-banking finance company registered with the Reserve Bank ofIndia and engaged in the business of giving loans or finance & investment activitiesis exempt from complying with the provisions of section 186 of the Companies Act 2013.Accordingly the disclosures of the loans given as required under the aforesaid sectionhave not been given in this Report.
13. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
The Company has proper and adequate system of internal control geared towards achievingefficiency in its operations safeguarding assets optimum utilization of resources andcompliance with statutory regulations. The Company has an Internal Control Systemcommensurate with the size scale and complexity of its operations. Testing of suchInternal Control measures and systems forms a part of Internal Audit function. TheInternal Auditors of the Company conduct audits of various departments based on an annualaudit plan covering key areas of operations. Internal Audit reviews and evaluates theadequacy and effectiveness of internal controls ensuring adherence to operatingguidelines and systems and recommending improvements for strengthening them. To maintainits objectivity and independence the Internal Audit function reports to the Chairman ofthe Audit Committee of the Board. The Audit Committee of the Board of Directors reviewsthe adequacy of internal controls. This has improved the management of the affairs of theCompany and strengthened transparency and accountability. The Management ensures adherenceto all internal control policies and procedures as well as compliance with regulatoryguidelines. No significant audit observations and recommendations have been received fromthe Internal Auditors of the Company.
14. AUDITORS' REPORT AND SECRETARIAL AUDIT REPORT
The Independent Audit Report submitted by M/s Nagar Goel & Chawla CharteredAccountants New Delhi Statutory Auditors of the Company for Financial Year ended 31stMarch 2019 is unmodified i.e. it does not contain any qualification reservation oradverse remark and is also self-explanatory. Hence no explanation is required to be givenin Board Report.
The Secretarial Audit Report submitted by the Secretarial Auditor for the financialended 31st March 2019 in Form MR-3 is annexed as an "Annexure- A". SuchSecretarial auditors' report is also self-explanatory and does not contain anyqualifications reservations or adverse remarks.
15. RATIFICATION OF APPOINTMENT OF STATUTORY AND APPOINTMENT OF SECRETARIAL AUDITORS
a) Statutory Auditors:
Pursuant to the provisions section 139 142 and other applicable provisions of theCompanies Act 2013 and the Rules made thereunder and pursuant to the recommendations ofthe audit committee of the Board of Directors M/s Nagar Goel & Chawla CharteredAccountants New Delhi (bearing ICAI Registration No.009933N) were appointed as statutoryauditors of the Company to hold office from the conclusion of the 25th Annual GeneralMeeting of the Company held on 28th September 2017 till the conclusion of the 30th AnnualGeneral Meeting of the Company to be held for the financial year ending on 31st March 2022subject to ratification of their appointment at every annual general meeting. However theprovision of annual ratification of the appointment of statutory Auditor was dropped videthe Companies (Amendment) Act 2017. Consequently your directors proposed to ratify theappointment of M/s Nagar Goel & Chawla Chartered Accountants New Delhi as StatutoryAuditors of the Company at ensuing annual general meeting for their remaining term ofthree years and to fix their remuneration.
The Company has obtained a certificate from M/s Nagar Goel & Chawla CharteredAccountants New Delhi (bearing ICAI Registration No.009933N) that they are notdisqualified for being continuing as Statutory Auditors of the Company in terms of theprovisions of the Companies Act 2013 read with the Companies (Audit and Auditors) Rules2014.
b) Secretarial Auditors:
Pursuant provisions of section 204 of the Companies Act 2013 read with the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Company has at itsmeeting held on 12th August 2019 appointed M/s S.S. Bhati &Associates a firm ofCompany Secretaries in practice to undertake the Secretarial Audit of the Company for thefinancial year 2019-20.
16. DISCLOSURE UNDER SECTION 134(3)(a) AND SECTION 92(3) READ WITH RULE 12(1) OF THECOMPANIES (MANAGEMENT AND ADMINISTRATION) RULES 2014
The details forming part of the extract of the Annual Return in form MGT-9 is annexedherewith as "Annexure B" 17. CORPORATE GOVERNANCE REPORT
The Company is committed to good Corporate Governance as the requirement of theSchedule V of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015. Asrequired under Schedule V of SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 a detailed report on Corporate Governance together with Auditor'sCertificate on compliance of conditions of Corporate Governance is annexed herewith as"Annexure - C" and is forming integral part of this Report.
18. CERTIFICATE FROM PRACTISING COMPANY SECRETARY WITH REGARDS TO NON
DISQALIFICATION OF DIRECOTRS
A certificate from M/s S.S Bhati & Associate Practising Company Secretary to theeffect that none of the directors on the Board of the Company have been debarred ordisqualified from being appointed or continuing as directors of the Company by theMinistry of Corporate Affairs Securities and Exchange Board of India or any otherstatutory authority is attached herewith as "Annexure - D". The sameforms a part of this Report.
19. RELATED PARTY TRANSACTIONS
The main business of the Company is financing & investment in shares etc. andgranting loans to related or unrelated parties. All related party transactions that wereentered into during the financial year were on an arm's length basis and were in theordinary course of business. All related party transactions are placed before the Auditcommittee for their consideration and approval. None of the transactions with relatedparties falls under the scope of section 188(1) of the Act. However the related partytransactions so entered are disclosed in note No. 32 to Financial Statement of the Companyas attached herewith. During the year under review no material related party transactionwas entered by the Company. The Policy relating to related party transactions dulyapproved by the Board of Directors of the Company has been placed on the Company's websitewww.sainikfinance.com
20. CODE OF CONDUCT:
The Board of directors has approved a Code of Conduct which is applicable to themembers of the Board and all employees in the course of day to day business operations ofthe Company. The Code has been placed on the Company's website www.sainikfinance.com. TheCode lays down the standard procedure of business conduct which is expected to be followedby the Directors and the designated employees in their business dealings and in particularon matters relating to integrity in the work place in business practices and in dealingwith stakeholders. All the Board Members and the Senior Management personnel haveconfirmed compliance with the Code.
21. MECHANISM / WHISTLE BLOWER POLICY
Pursuant to the provisions of section 177(9) & (10) of the Companies Act 2013 readwith the rules made thereunder and pursuant to the provision of SEBI (Listing Obligationsand Disclosure Requirements) 2015 the Company has established a Vigil Mechanism to beknown as the 'Whistle Blower Policy' for its Directors and Employees to report instancesof unethical behaviour actual or suspected fraud or violation of the Company's Code ofConduct. The aim of the policy is to provide adequate safeguards against victimization ofWhistle Blower who avails of the mechanism and also provide direct access to the Chairmanof the Audit Committee in appropriate or exceptional cases.
Accordingly Vigil Mechanism / Whistle Blower Policy have been formulated with a viewto provide a mechanism for the Directors and employees of the Company to approach theEthics Officer or the Chairman of the Audit Committee of the Company. The purpose of thispolicy is to provide a framework to promote responsible and secure whistle blowing. Itprotects employees willing to raise a concern about serious irregularities within theCompany. During the financial year 2018-19 no such complaint of unethical or improperactivity has been received by the Company.
22. PREVENTION OF INSIDER TRADING
The Company has adopted a Code of Conduct for Prevention of Insider Trading with a viewto regulate trading in securities by the Directors and designated employees of theCompany. The Code requires pre-clearance for dealing in the Company's shares and prohibitsthe purchase or sale of Company shares by the Directors and the designated employees whilein possession of unpublished price sensitive information in relation to the Company andduring the period when the Trading Window is closed. The Board is responsible forimplementation of the Code. All Board Directors and the designated employees haveconfirmed compliance with the Code.
23. CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE
EARNINGS AND OUTGO:
The particular as prescribed under Rule 8(3) of the Companies (Accounts) Rules 2014read with the provisions of Section 134(3) (m) of the Companies Act 2013 are as follow:
|A) Conservation of energy- || |
|Sr. No. Particular ||Remark |
|(i) The steps taken or impact on conservation of energy; ||Your Company carries out its business in an environmental friendly manner and is on the look-out for different ways & means to reduce the consumption of energy in its operations. Fuel & electricity consumption in different stages were monitored regularly and suitable corrective actions were taken wherever possible. |
|(ii) The steps taken by the company for utilizing alternate sources of energy; || |
|(iii) The capital investment on energy conservation equipment; ||The Company's operations do not require capital investment on energy conservation equipment. |
B) Technology absorption adaption and innovation:
|Sr. No. ||Particular ||Remark |
|(i) ||the efforts made towards technology absorption; ||The Company continues to use the latest technologies for improving the productivity and quality of its services and products. |
|(ii) ||the benefits derived like product improvement cost reduction product development or import substitution; ||Not Applicable |
|(iii) ||in case of imported technology (imported during the last three years reckoned from the beginning of the financial year) the details of technology imported; the year of import; whether the technology been fully absorbed; if not fully absorbed areas where absorption has not taken place and the reasons thereof; and ||The Company's operations do not require significant import of technology. |
|(iv) ||the expenditure incurred on Research and Development. ||The Company's operations do not require the expenditure on Research and Development |
C) Foreign exchange earnings and Outgo
During the year under review there was no Foreign Exchange Earnings and ForeignExchange Outgo.
24. MATERIAL CHANGES AND COMMITMENTS IF ANY
There was no material changes and commitments 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;
25. CORPORATE SOCIAL RESPONSIBILITY (CSR)
During the year under review the Company has spent Rs. 800000/- on corporate socialresponsibility (CSR) activities as against mandatory expenditures (CSR Budget) ofRs.795868/-. Detailed information on the CSR policy and CSR initiatives taken duringyear under review and 'Annual Report on CSR activities including composition of the CSRCommittee is given in the annexed as "Annexure - E" .
Further the Company's net profit calculated in accordance with the provisions ofsection 198 of the Companies Act 2013 for the financial year ended 31st March 2019 isRs.74441769/ and average net profit of preceding three financial years isRs.55648245/-. Hence the Company is required to spend Rs.1112965/- (i.e.2% of averagenet profit of preceding three financial years) during the financial year 2019-20.
26. DISCLOSURE RELATING TO MAINTENANCE OF COST RECORD
As the Company is Non-Banking Finance Company the Central Government does not requireto maintenance of cost records as specified by the Central Government under sub-section(1) of section 148 of the Companies Act 2013.
27. OBLIGATION OF COMPANY UNDER THE SEXUAL HARASSMENT OF WOMEN AT
WORKPLACE (PREVENTION PROHIBITION AND REDRESSAL) ACT 2013
In compliance with the Sexual Harassment of Women at Workplace (Prevention Prohibitionand Redressal) Act 2013 notified on December 9 2013 the Company has a policy forPrevention of Sexual Harassment of Women at Workplace. During the financial year ended31st March 2019 no complaint of sexual harassment has been received by the Company.
28. DISCLOSURE ABOUT THE SHARES ISSUED ON PREFERENTIAL BASIS IF ANY.
During the year under review your Company has not made any allotment of shares onpreferential basis.
29. DISCLOSURE ABOUT SWEAT EQUITY SHARES AND ESOP SCHEME.
Your company has not issued sweat equity shares or given stock option in the year underreview.
30. LISTING OF SECURITIES
Presently the Securities of the Company are listed on BSE Limited Mumbai. The listingfee for the financial year 2019-20 has been paid.
Your directors would like to place their grateful appreciation for the assistance andco-operation received from the Company's lenders bankers employee during the year underreview. The directors also acknowledge with appreciation the support and co-operationrendered by various Government authorities and departments. Your Directors would also wishto place on record their deep sense of appreciation for the continued support of all theinvestors of the Company.
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By Order of the Board of Directors
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For SAINIK FINANCE & INDUSTRIES LIMITED
|Place : Gurugram ||Kuldeep Singh Solanki ||Rudra Sen Sindhu |
|Dated : 12th August 2019 ||Director ||Director |
| ||DIN: 00009212 ||DIN: 00006999 |