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Sakthi Finance Ltd.

BSE: 511066 Sector: Financials
NSE: SAKTHIFIN ISIN Code: INE302E01014
BSE 15:44 | 02 Aug 24.20 -0.20
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NSE 05:30 | 01 Jan Sakthi Finance Ltd
OPEN 24.00
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VOLUME 9489
52-Week high 25.90
52-Week low 12.05
P/E 16.92
Mkt Cap.(Rs cr) 157
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Buy Qty 0.00
Sell Price 24.15
Sell Qty 120.00
OPEN 24.00
CLOSE 24.40
VOLUME 9489
52-Week high 25.90
52-Week low 12.05
P/E 16.92
Mkt Cap.(Rs cr) 157
Buy Price 0.00
Buy Qty 0.00
Sell Price 24.15
Sell Qty 120.00

Sakthi Finance Ltd. (SAKTHIFIN) - Director Report

Company director report

To the Members

Your Directors are pleased to present their 61st Annual Report together with theaudited financial statements of the company for the year ended 31st March 2018.

FINANCIAL PERFORMANCE (Rs. lakh)
Particulars 2017-18 2016-17
Profit before tax 1853.95 2111.54
Less: Provision for Taxation:
- Current Tax 839.28 599.84
- Deferred tax (180.23) (163.88)
- Net provision for tax (earlier years) 2.27 0.02
Profit after tax 1192.63 1675.56
Surplus brought forward from previous year 1087.19 1472.88
Transfer from General Reserve 1000.00
Transfer from Revaluation Reserve 43.24 43.24
Amount available for appropriation 3323.06 3191.68
Appropriations
Transfer to Statutory Reserve 238.53 335.11
Interim Dividend on Preference Shares* 110.61 105.00
Tax on Preference Dividend* 22.51 21.38
Dividend on Equity Shares Paid (FY 2017) 500.00
Tax on Equity Dividend (FY 2017) 101.80
Transfer to Debenture Redemption Reserve 1333.00 1643.00
Balance carried over to Balance Sheet 1016.61 1087.19
Total 3323.06 3191.68

* Interim Dividend for the financial year 2017-18 was paid during April 2018

Equity Dividend recommended for the financial year 2017-18 if approved by the memberswill be recognised as a liability during the financial year 2018-19

2. BUSINESS

For the year under review the company disbursed Rs. 54964 lakh in hire purchaseoperations as against Rs. 53791 lakh during the previous financial year. The collectionefficiency continues to be good. Your directors hope to achieve better businessdisbursements and profitability in the coming years.

3. CHANGE IN NATURE OF BUSINESS IF ANY

During the year there was no change in the nature of business of the company.

4. DIVIDEND Preference Shares

Your Directors have at their meeting held on 28th March 2018 declared an interimdividend of Rs. 10 per share on 10% Redeemable Cumulative Preference Shares of Rs. 100each and a pro rata dividend on 9% Redeemable Cumulative Preference Shares of Rs. 100 eachfor the financial year ended 31st March 2018 amounting to Rs. 110.61 lakh. The dividenddistribution tax on the above is Rs. 22.51 lakh.

Equity Shares

Your Directors are pleased to recommend a dividend of Rs. 1 per equity share (10% onthe face value of equity share of Rs. 10 each) for the year ended 31st March 2018amounting to Rs. 500.00 lakh. The dividend distribution tax works out to Rs. 102.80 lakh.

5. TRANSFER TO RESERVES

No amount has been proposed to be transferred to general reserve.

6. MANAGEMENT DISCUSSION AND ANALYSIS REPORT

As required under Regulation 34(2) of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 (Listing Regulations) a report on Management Discussionand Analysis which forms part of this report is set out in Annexure 1.

7. REDEMPTION OF SECURED REDEEMABLE NON-CONVERTIBLE DEBENTURES

As per the terms and conditions of the Public Issue Prospectus dated 18th February2015 your company has redeemed Non-Convertible Debentures issued under Option III IV andV aggregating to Rs. 1535.32 lakh. The repayment was made on 31st March 2018 to therespective Debenture holders.

Further as per the terms and conditions of the Public Issue Prospectus dated 30thMarch 2016 your company has redeemed Non-Convertible Debentures issued under Option I andII aggregating to Rs. 3432.09 lakh. The repayment was made on 18th May 2018 to therespective Debenture holders.

8. ALLOTMENT OF REDEEMABLE CUMULATIVE PREFERENCE SHARES ON PRIVATE PLACEMENT BASIS

During the year your company has issued and allotted 9% Redeemable CumulativePreference Shares of Rs. 100 each for an amount of Rs. 835 lakhs.

9. DEPOSITS

The total deposits with the company as at 31st March 2018 stood at Rs. 16296.73 lakhas against

Rs. 14959.06 lakh as at the end of the previous year.

As at the end of the financial year 2018 403 public deposits aggregating to Rs. 274.30lakh were due for repayment but remained unclaimed. The Company has been regularlyreminding the depositors about the maturity and out of the said deposits 169 depositsamounting to Rs. 153.94 lakh have since been claimed and repaid / renewed as per theirinstructions.

10. TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND

During the year 2017-18 your Company has transferred unclaimed matured debentures anddeposits amounting to Rs. 2.91 lakhs to Investor Education and Protection Fund.

11. DIRECTORS AND KEY MANAGERIAL PERSONNEL a. Cessation

Your Directors regret to inform that Sri A Shanmugasundaram Independent Directorpassed away on 19th September 2017. The Board places on record it s deep appreciation forthe valuable guidance provided by him during his long association with the Company. b.Retiring by rotation

In accordance with the provisions of Section 152(6) of the Companies Act 2013 Dr. MManickam Chairman (DIN: 00102233) will retire by rotation at the ensuing Annual GeneralMeeting of the Company and being eligible offers himself for re-appointment. The Boardrecommends his re-appointment. c. Continuation of Directorship

In terms of Regulation 17(1A) of the Listing Regulations as amended on 9th May 2018Sri P S Gopalakrishnan Non-Executive Independent Director who is aged more than 75years will be continuing as an Independent Director till the end of his present tenurei.e. up to 26th September 2019 which has been recommended by Nomination and RemunerationCommittee and Board of Directors to members. d. Key Managerial Personnel

In terms of Section 203 of the Companies Act 2013 Sri M Balasubramaniam Vice Chairmanand Managing Director Dr S Veluswamy Chief Executive Officer Sri M K VijayaraghavanChief

Financial Officer and Sri S Venkatesh Company Secretary are the Key ManagerialPersonnel (KMPs) of the Company. e. Remuneration Policy

Company's policy on Director s appointment and remuneration including criteria fordetermining qualifications positive attributes independence of a director and othermatters provided under Section 178(3) of the Act are covered in the Corporate GovernanceReport which forms part of the Board's Report. The policy on remuneration is set out inAnnexure 2. Further information about elements of remuneration package of individualdirectors is provided in the extract of Annual Return as required under Section 92(3) ofthe Act and is enclosed as Annexure 3 in the prescribed form MGT-9 which forms part ofthis Report. f. Number of Meetings of the Board

Five (5) meetings of the Board of Directors of the Company were held during the year.For details of the meetings please refer to the Corporate Governance Report which formspart of this Report.

g. Independent Directors' Declaration

Sri P S Gopalakrishnan Dr A Selvakumar Smt. Priya Bhansali and Sri K P Ramakrishnanwho are Independent Directors have submitted declarations that each of them meet thecriteria of independence as provided in sub-section (6) of Section 149 of the Act andRegulation 25 of the Listing Regulations. Further there has been no change in thecircumstances which affect their status as independent directors during the year. h. Codeof Conduct for Directors and Senior Management

The Directors and members of the Senior Management have confirmed compliance with thecode of conduct. A declaration to this effect has been signed by Vice Chairman andManaging Director and forms part of the Annual Report. i. Inter se relationship amongstDirectors

Except Dr M Manickam Chairman Sri M Balasubramaniam Vice Chairman and ManagingDirector and Sri M Srinivaasan Director who are related to each other none of the otherDirectors is related to each other within the meaning of the term "relative" asper Section 2(77) of the Companies Act 2013 read with Listing Regulations. j. BoardEvaluation

In terms of the requirements of Companies Act 2013 and Listing Regulations the Boardhas carried out an annual performance evaluation of its own performance individualDirectors as well as the evaluation of its Committees.

The evaluation was carried out based on a structured questionnaire which includesperformance criteria such as performance of duties and obligations independence ofjudgement level of engagement and participation contribution in increasing the Board'sover-all effectiveness etc. Your directors have expressed their satisfaction onfunctioning and performance of Individual Directors Board and its Committees.

12. AUDIT COMMITTEE

The present Audit Committee has three non-executive directors as members of which twoare Independent Directors.

The composition of the Committee is given below: a. Dr A Selvakumar Chairman b. Sri MSrinivaasan Member c. Sri K P Ramakrishnan Member

13. PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS

During the financial year 2017-18 there has been no loans guarantees or investmentswhich would attract the provisions of Section 186 of the Act.

14. TRANSACTIONS WITH RELATED PARTIES

The Company has entered into contracts or arrangements with the related parties in theordinary course of business and these are on arm's length basis only. There are nocontract or arrangement entered into with Related Party(ies) during the year to bedisclosed under Sections 188(1) and 134(h) of the Companies Act 2013.

15. INTERNAL CONTROL

The information about internal controls is set out in the Management Discussion andAnalysis Report which forms part of this Report.

16. RISK MANAGEMENT

The Risk Management is overseen by the Risk Management Committee of the Company. TheCommittee oversees the Company's processes and policies for determining risk toleranceagainst established levels. Major risks identified by the business and functions aresystematically addressed through mitigating actions on a continuous basis. For detailsplease refer to the Management Discussion and Analysis Report which forms part of theBoard's Report.

17. VIGIL MECHANISM

The Company has established a vigil mechanism of Directors and employees to reporttheir genuine concerns. During the year no complaint has been received in this regard.For details please refer to Corporate Governance Report which forms part of this Report.

18. CORPORATE GOVERNANCE REPORT

As required under Regulation 34(3) and Schedule V to the Listing Regulations a reporton Corporate Governance and a certificate from the auditors of the company regardingcompliance of the conditions of Corporate Governance form part of the Annual Report.

19. DISCLOSURE AS PER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITIONAND REDRESSAL) ACT 2013

The Company has put in place a Sexual Harassment Prevention Policy in line with therequirements of the Sexual Harassment of Women at Workplace (Prevention Prohibition andRedressal) Act 2013. An Internal Compliance Committee (ICC) has been set up to redresscomplaints received regarding sexual harassment. All employees are covered under thisPolicy. During the year 2017-18 there were no complaints received in this regard by theICC.

20. ADEQUACY OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THE FINANCIAL

STATEMENTS

The Company has put in place necessary internal financial controls which are adequateand are operating effectively. The controls are adequate for ensuring the orderly andefficient conduct of the business completeness of accounting records and timelypreparation of reliable financial information besides adherence to the Company'spolicies safeguarding of assets prevention and detection of frauds and errors accuracyetc.

21. DIRECTORS' RESPONSIBILITY STATEMENT

As required under Section 134(5) of the Companies Act 2013 your directors confirm tothe best of their knowledge and belief that: a. in the preparation of the annual accountsthe applicable accounting standards have been followed and that there are no materialdepartures; b. they have selected such accounting policies and applied them consistentlyand made judgements and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the company at the end of the financial year and ofthe profit of the company for the financial year; c. they have taken proper and sufficientcare for the maintenance of adequate accounting records in accordance with the provisionsof the Companies Act 2013 for safeguarding the assets of the company and for preventingand detecting fraud and other irregularities; d. they have prepared the annual accounts ona going concern basis; e. they have laid down internal financial controls to be followedby the Company and that such internal financial controls are adequate and operatingeffectively; and f. they have devised proper systems to ensure compliance with theprovisions of all applicable laws and that such systems were adequate and operatingeffectively.

22. CORPORATE SOCIAL RESPONSIBILITY (CSR)

The CSR Policy of the Company and the details about the initiatives taken by theCompany on CSR during the year as per the Companies (Corporate Social ResponsibilityPolicy) Rules 2014 have been disclosed in Annexure - 4. Further details regardingcomposition of Corporate Social Responsibility Committee and other particulars areprovided in the Corporate Governance Report which forms part of this report.

Your Company has so far spent Rs. 10.21 lakhs as against Rs. 44.68 lakhs required to bespent during the previous financial year 2016-17. The unspent balance amount of Rs. 34.47lakh for previous year 2016-17 was also spent during the financial year 2017-18.

23. AUDITORS a. Statutory Auditors

M/s P K Nagarajan & Co. Chartered Accountants (ICAI Regn. No. : 016676S) wereappointed as statutory auditors of the Company at the 60th Annual General Meeting to holdoffice up to the conclusion of the 65th Annual General Meeting. They have confirmed theireligibility under Section 141 of the Companies Act 2013 and the rules framed under the Actfor continuation of their term.

M/s. P K Nagarjan & Co Chartered Accountants have audited the accounts of thecompany for year 2017-18 and submitted their report thereon. There has been noqualification reservation adverse remarks or disclaimer given by the Auditors in theirreport. b. Secretarial Auditors

The Board appointed M/s. S Krishnamurthy & Co Practicing Company SecretariesChennai as Secretarial Auditors for the year 2017-18 and they have given their SecretarialAudit Report for the financial year 2017-18. The Secretarial Audit Report for thefinancial year 31st March 2018 is set out in Annexure - 5.

M/s. S Krishnamurthy & Co Secretarial Auditors have submitted their report forthe financial year 2017-18 and there has been no qualification reservation adverseremarks or disclaimer given by the Auditors in their report.

24. PARTICULARS REQUIRED UNDER SECTION 134 OF THE COMPANIES ACT 2013

Particulars as required under Section 134(3)(m) of the Companies Act 2013 read withCompanies (Accounts) Rules 2014 are given below: a. The Company has no activity involvingconservation of energy or technology absorption; b. The Company does not have any ForeignExchange Earnings; and c. Foreign Exchange Outgo : Rs. 95.48 lakh The disclosures in termsof Section 197(12) of the Companies Act 2013 read with rule 5(1) (2) and (3) of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 relating toremuneration is enclosed as Annexure 6.

25. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURT

There are no significant and material orders passed by the regulators or courts ortribunals affecting the going concern status of your company and its operations in future.

26. MATERIAL CHANGES AND COMMITMENTS

There are no material changes and commitments which occurred between the end of thefinancial year of the company and the date of this report affecting the Company'sfinancial position.

27. EXTRACT OF ANNUAL RETURN

The extract of Annual Return as provided under sub-section (3) of Section 92 of theCompanies Act 2013 is enclosed as Annexure - 3 in the prescribed Form MGT-9 and forms partof this Report.

28. PECUNIARY RELATIONSHIP OR TRANSACTIONS OF NON-EXECUTIVE DIRECTORS

During the year the Non-Executive Directors of the Company had no pecuniaryrelationship or transactions with the Company.

29. SECRETARIAL STANDARDS COMPLIANCE

Your Directors confirm that the Company has complied with the applicable SecretarialStandards issued by the Institute of Company Secretaries of India in relation to Board andGeneral Meetings.

30. ACKNOWLEDGEMENT

Your Directors wish to place on record the valuable assistance and excellentco-operation extended by the members banks financial institutions rating agenciesReserve Bank of India and other regulatory authorities. The Board of Directors wish toconvey their sincere thanks to the depositors and debenture holders of the company fortheir continued patronage. They also wish to appreciate the excellent services rendered bythe employees of the company.

We pray the Goddess SAKTHI to continue to shower Her blessings and to guide us in allour endeavors.

For and on behalf of the Board
9th August 2018 M Manickam
Coimbatore Chairman

Annexure - 2

POLICY ON REMUNERATION

The Remuneration policy of the Company is in consonance with the industry practices andaims to attract retain develop and motivate a high performance workforce. The policyensures equality fairness and consistency in rewarding the employees on the basis ofperformance. The details of Policy on remuneration for Directors Key Managerial Personneland other employees of the Company are given below.

In order to identify attract retain and motivate competent persons a clearrelationship of remuneration to performance and a balance between rewarding short andlong-term performance of the Company the Board of Directors of the Company asrecommended by the Nomination and Remuneration Committee (NR Committee) has adopted acharter on appointment and remuneration as enumerated in Section 178 of the Companies Act2013 on 9th August 2014. The policy provides a framework for remuneration to the membersof the Board of Directors Key Managerial Personnel (KMPs) and other employees of theCompany.

A. Criteria for selection/appointment of and Remuneration to Non-Executive Directors

i. Criteria of selection

a. The Non-Executive Directors shall be persons of integrity with relevant expertiseand experience so as to have a diverse Board with Directors having expertise in the fieldsof finance banking accounts taxation and general management.

b. In the case of Independent Directors that the candidate in addition to therequirements under (a) above should satisfy the criteria of independence as stipulated inthe Companies Act 2013 and the Listing Regulations.

c. The Nomination and Remuneration Committee while recommending a candidate forappointment as a Director shall consider and get itself satisfied about:

??the candidate is qualified for appointment under Section 164 of the Companies Act2013

? Attributes / criteria regarding qualification and experience in relevant field

? Personal Professional or business standing

? Requirement with respect to Board's diversity

d. In the case of re-appointment the performance evaluation of the Director and hislevel of participation will be considered.

ii. Remuneration to Non-Executive Directors

The Non-Executive Directors are entitled to receive remuneration by way of sitting feesfor each meeting of the Board or Committee of the Board attended by them of such sum asmay be approved by the Board of Directors within the overall limits prescribed under theCompanies Act 2013 and the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014. They are also entitled for reimbursement of expenses in connectionwith participation in the Board / Committee Meetings.

The Independent Directors of the Company are not entitled for Stock Option Scheme ofthe Company if any.

B. Criteria for selection/appointment of and Remuneration to Executive Directors

i. Criteria for selection/appointment

The NR Committee shall identify persons of integrity having relevant experienceexpertise and leadership quality for appointment for the position of Executive Directorviz. Managing Director etc. The NR Committee shall ensure that the identified persons alsofulfill the conditions like age limit under the Companies Act 2013 and other applicablelaws if any.

ii. Remuneration

The Managing Director will be paid such remuneration and perquisites as may be mutuallyagreed upon at the time of appointment or re-appointment between the Company and theManaging Director taking into consideration the profitability of the Company and theoverall limits prescribed under the Companies Act 2013.

The remuneration of Managing Director of the Company consists of fixed remuneration andvariable portion by way of commission not exceeding 5% of the net profits calculated inaccordance with the Companies Act 2013.

C. Criteria for selection/appointment of and Remuneration to Senior ManagementPersonnel

Based on the criticality of the role and responsibility of the Key Managerial Personnel(KMPs) the NR Committee decides on the required qualifications experience and attributesfor the position and on the remuneration based on the industry benchmark and the currentcompensation trend in the market. The remuneration consists of fixed components likesalaries perquisites and a variable component comprising annual bonus if declared. Basedon the selection criteria laid as above and remuneration the Committee identifies personsand recommends to the Board for consideration and appointment.

In respect of other Senior Management Employees and other employees below KMPs theManaging Director is authorised by the Nomination and Remuneration Committee to fix theremuneration based on the criticality and responsibility of the employees.

Annual increments are given on time scale basis and further increase to deservingemployees based on the performance review.

Annexure - 6 a. PARTICULARS OF REMUNERATION

Details pertaining to remuneration as required under Section 197(12) of the CompaniesAct 2013 read with rule 5(1) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014

Sl No Name and Designation of the Director / Key Managerial Personnel (KMP) Remuneration for FY 2017-18 (Rs. lakh) % increase in remuneration in FY 2017-18 Ratio to median remuneration
1 Mr M Balasubramaniam Vice Chairman and Managing Director 116.88 20.59 38.96
2 Mr M K Vijayaraghavan Chief Financial Officer 33.90 27.77 NA
3 Dr S Veluswamy Chief Executive Officer 25.80 43.65 NA
4 Mr S Venkatesh Company Secretary 16.06 49.53 NA

 

Other Information
i the percentage increase in the median remuneration of employees in the financial year 3.19%
ii the number of permanent employees on the rolls of the company 472
iii average percentile increase already made in the salaries of employee 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 in salaries of employees other than managerial personnel for 2017-18 was 7.35%. Percentage increase in the managerial remuneration for the year was 3.9%.
iv affirmation that the remuneration is as per the remuneration policy of the company. The Company's remuneration policy is driven by the success and performance of the individual employees and the Company. Through its compensation package the Company endeavours to attract retain develop and motivate high performance. The Company follows a compensation mix of fixed pay benefits and performance based variable pay. Individual performance pay is determined through the annual appraisal process. The Company affirms that remuneration is as per the remuneration policy of the Company / the Act.

b. Statement of particulars of employees pursuant to the provisions of Section 197(12)of the Companies Act 2013 read with Rule 5(2) and 5(3) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 Top 10 Employees in terms of remunerationdrawn during the year

Sl No Name of the Employee Designation Remu- neration received (Rs. LAKH) Qualifi- cations Total Experience (Years) Date of commencement of employment Age (in years) Last employment held before joining the company
1 Mr M Balasubramaniam Vice Chairman & Managing Director 116.88 M.Com MBA (USA) 33 21/08/1985 60 Director ABT Industries Ltd
2 Dr S Veluswamy Chief Executive Officer 25.80 M.ComACS Ph.D 37 01/04/1994 59 Asst Company Secretary Sakthi Sugars Ltd
3 Mr M K Vijayaraghavan Chief Financial Officer 33.90 B.ComFCA 43 10/07/2009 68 Vice President (Finance) Karur KCP Packagings Ltd
4 Dr K Natesan President 19.62 MA LLB MBA Ph.D Diploma in Tourism & Development 37 03/04/1992 59 Asst Manager (Personnel) Tamilnadu Telecommunications Limited
5 Mr K Guruprasad Vice President (Management Services) 21.27 B.Com MBA CAIIB Grad ICMA (Inter) 45 03/05/1996 68 Credit-in-Charge Regional Office State Bank of India
6 Dr G Sundar Vice President - Credit 21.62 MA MBA Ph.D 38 20/01/1997 62 Manager Union Bank of India
7 Mr N Radhakrishnan Vice President (Operations) 19.41 B.Sc MBA Markt.Mngt. 25 01/09/2004 49 Senior Manager ABT Industries Ltd
8 Mr M Purushothaman Associate Vice President - OSM 17.96 B.Sc. MBA 35 02/06/2010 59 General Manager - Business Excellence Calcom Cement India Limited Kolkata
9 Dr N Raveendran Sr. General Manager - Office of Informn. Capital Mgmt. 19.46 B.Com MBA Ph.D. 37 11/06/2009 58 Senior Manager IT Services Pricol Ltd Coimbatore
10 Mr S Saravanakumar General Manager (Business Development) 18.33 BBM MCA 15 05/01/2015 41 Zonal Manager HDB Financial Services Ltd

Notes: a. the above table is based on payouts made during the year. b. Remunerationincludes salary bonus various allowances contribution to Provident Fund SuperannuationFund Gratuity Fund and taxable value of perquisites calculated in accordance with theIncome Tax Act / Rules. c. None of the employees mentioned above is related to anydirector of the Company. d. During the Financial year 2017-18 no employee was in receiptof remuneration in excess of the Managing Director of the Company and held himself oralong with his spouse and dependent children two percent or more of the equity shares ofthe company. e. The appointment of Managing Director is contractual in nature.