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Star Housing Finance Ltd.

BSE: 539017 Sector: Financials
NSE: N.A. ISIN Code: INE526R01010
BSE 00:00 | 23 Jul 94.90 -1.00
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NSE 05:30 | 01 Jan Star Housing Finance Ltd
OPEN 99.90
PREVIOUS CLOSE 95.90
VOLUME 5973
52-Week high 109.00
52-Week low 52.00
P/E 95.86
Mkt Cap.(Rs cr) 149
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 99.90
CLOSE 95.90
VOLUME 5973
52-Week high 109.00
52-Week low 52.00
P/E 95.86
Mkt Cap.(Rs cr) 149
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Star Housing Finance Ltd. (STARHOUSINGFIN) - Director Report

Company director report

To

The Members

Akme Star Housing Finance Limited Udaipur

Your directors are pleased to present the Fifteenth Annual Report of your Company alongwith the audited accounts for financial year the year ended March 31 2020.

Global & Economy Pandemic - Covid-19 Outbreak.

Towards the end of Calendar Year 2019 there were new flows of novel corona virus(COVID-19) that gradually hit the entire world and termed as pandemic by World HealthOrganization (WHO) on March 11 2020. The rapid spread of the virus has almost haltedeconomic activities across the world. Besides huge loss of human lives the pandemic hastaken its economic toll due to shut down in most parts of the world from quarter 4 onward.The estimates of the economic loss are still evolving. In April 2020 the InternationalMonetary Fund (IMF) predicted that the global GDP will contract by 3% in 2020 given thatthe pandemic decelerates towards the end of 2020. The pandemic has similarly impactedIndia forcing the Government to announce a complete lockdown of the Country from March24 2020 to contain the spread of virus.

The following measures were taken by the Company to mitigate the risk of COVID-19 toits business operations:

1. The Company invoked its 'Business Continuity Plan' and 'Risk Management Framework'quite early to minimize the impact on its employees and ensured that the Company remainsoperational and that recovery time objectives are met.

2. The Company proactively framed and implemented 'work from home policy' to ensurethat employees stay safe and business remains operational.

3. The Company ensured that its offices and branches are properly sanitized and clean.

4. All the guidelines issued by the Central and State Government authorities from timeto time are being strictly adhered to.

5. Pursuant to Notification no. RBI/2019-20/186 DOR. No.BP.BC.47/21.04.048/2019-20dated March 27 2020 issued by the Reserve Bank of India (RBI) in respect of COVID-19 -Regulatory Package the Company has framed and implemented a 'Policy on Deferment ofPEMI/EMI (COVID-19)' which gave Company's borrowers an option to defer their EMI's forthree months.

Financial Summary or Highlights/performance Of The Company

The Board's Report shall be prepared based on the stand alone financial statements ofthe company. The Company's financial performance for the financial year ended March 31st2020 is summarized below: -

(Rs In Lacs)

PARTICULAR 2019-20 2018-19
Gross Income 1590.436 1172.590
Less : Finance Cost 491.817 451.352
Overhead
Depreciation 4.228 3.209
Profit Before Tax 612.476 595.494
Less : Provision for taxation 108.437 185.204
Profit After tax 504.039 410.290
Balance Brought Forward from last year 808.382 512.540
Appropriations 504.039 410.290
Transferred to Statutory Reserve under Section 36(1)(viii) of the Income Tax Act 1961 read with Section 29C of National Housing Bank Act 19871 122.495 119.099
Transferred to General Reserve Nil Nil
Transferred to Impairment Reserve (Covid-19) 76.920 Nil
Balance Carried over to the Balance Sheet 1113.006 808.382

Business Performance:

(Rs In Lacs)

KEY FACTORS 2019-20 2018-19 Growth (%)
Portfolio (Outstanding Housing Loan/ Other Loan) 7710.146 6386.813 20.72%
EPS (Basis) in Rs. 3.687 3.397 8.53%
CRAR (%) 93.09% 70.92% -

Note: Figures have been regrouped whenever necessary while preparing the statement asper IND-AS requirements The above mentioned performance was amidst very strong headwindscreated due to certain events which had contagion effect on the entire sector. It is worthmentioning that due to focusing on fundamentals which has been the main plank over theseone decade enable the company not only to navigate through this situation but achieved ahigher than the targeted growth.

Prospects and Developments:

There is a very huge market to be served which needs an efficient last mile deliveryof credit thus creating enormous opportunity for all the financial institutions and HFCsin special. The Company continues to pursue the strategy of being multi product and multilocation thus giving the distinct edge from the risk management and scalabilityperspective. The focus across the product is of catering to the lower and the middleincome segment which are the key driver of our economy.

Housing Finance:

The Company aims at serving the middle income and the lower income sector of theeconomy especially in the semi urban and rural areas which are reckoned to be the keydrivers of the sector in the coming decades. Full-fledged efforts are on to

execute efficiently as per the detail planning. Being aware of the challenges involvedin serving this class of the society a very cautious approach is adopted in building upvolumes. Nevertheless Company is quite confident of building substantial volumes in thenear future. The Company's rural initiative will also start yielding results shortly. Itis worth mentioning that despite of credit worthy customer class ascertaining the titleof the property remains a challenging job. The Company is actively involved with all thestake holders to smoothen the process and is assertive in getting the right set ofdocuments. We continue to endeavour relentlessly and are confident of creating a qualityportfolio and add value to the ecosystem we work in.

Distribution Network:

Your company has been successful in continuous expansion of its branch network with aview to support its disbursement growth deeper penetration in the states in which theCompany operates and enhancing customer reach. During the Financial Year under review theCompany has expanded its branch network to 5 states with 6 branches as on March 31 2020.Your Company now operates in the Udaipur Mumbai Pune Akola Indore and Chennai.

Human Resource Management

During the year the HR continued to timely on-board experienced resources across alllocations imparted functional and system training to develop productive resources for allthe functional teams. The Company also gave an opportunity to identify and develop theinternal talent pool. Company hired professionals at senior positions as Functional Headsfor heading the various Departments of the Company having relevant industry experienceand expertise to strengthen and grow the housing finance business of the Company.

Company's success depends largely upon the quality and competence of its Managementteam and key personnel. Attracting and retaining talented professionals is therefore a keyelement of the Company's strategy and a significant source of competitive advantage. TheCompany has a diverse workforce of 44 employees as on 31st March 2020.

Human resource development is considered vital for effective implementation of businessplans. Constant endeavors are being made to offer professional growth opportunities andrecognition apart from imparting training to the employees at all levels. Your Companyhas also provided the training to the new recruits to provide them better understanding ofthe Company and align them towards the working culture of the Company.

Trust with all the above qualities accompanied by the determination to excel this teamforms a formidable second line of management at Akme Star HFC.

Your Company will always strive to strengthen this most important resource in its questto have enabling human capital.

Capital and Liability Management:

The Company in tandem with its philosophy of pursuing the mission of "Excellencethrough Endeavors" will strive to maximize the shareholders' value. The Companycontinues to pursue an efficient capital management policy which aims at maximizing thereturn on capital employed and at the same time adhering to the prudential guidelines laiddown by NHB from time to time.

The Company by virtue of its performance over the years enjoys very good relationshipswith many leading banks and financial institutions. The Company could raise the requiredresources from various banks and financial institutions easily. We anticipate the sameresponse from all our lending partners for the coming years too. The Company anticipatescredit lines from few more banks and financial institutions besides the existing ones.

During the year passed by when the whole sector was looked upon as a risky prepositionthe Company could not only manage to raise the required resources but also obtained creditlines for the coming year.

Your Company continues to command the respect and the confidence of Bankers as theirextended channel in their task of providing efficient delivery of credit. The companyacknowledges the constructive support of the Investors and Banks.

Resource Mobilisation

Your Company's borrowing policy is under the control of the Board. The Company has videspecial resolution passed by means of special Resolution on 21st September 2019 underSection 180(1)(c) of the Companies Act 2013 authorized the Board of Directors to borrowmoney upon such terms and conditions as the Board may think fit in excess of aggregate ofpaid up share capital free reserves security premium of the Company up to an amount ofRs. 500 crore and the total amount so borrowed shall be within the limits as prescribedunder the Housing Finance Companies (NHB) Directions 2010.

Your Company continued to use a variety of funding sources to optimize funding costsprotect interest margins and maintain a diverse funding portfolio which furtherstrengthened its funding stability and liquidity needs. Your Company continued to keeptight control over the cost of borrowings through negotiations with lenders and thusraised resources at competitive rates from its lenders while ensuring proper assetliability match.

Your Company continued to diversify its funding sources by exploring the Debt CapitalMarket through private placement of Secured NCDs to Multilateral/Development FinancialInstitutions NHB Refinance NHB SRF (Special Refinance Facility Assistance) NHB's LIFT(Liquidity infusion scheme).

Term Loan from Banks and Financial Institutions

Subsequent event occurred after the financial year 2019-20 your Company received Rs. 5Crore (Rupees Five Crore only) under NHB's Liquidity Infusion scheme (LIFT) from National

Housing Bank Rs. 3.25 Crore (Rupees Three Crore Twenty Five Lakhs only) under SpecialRefinance Facilities Assistance (SRF) from National Housing Bank and sanctined Rs. 5Crore (Rupees Five Crore only) under regular Refinance scheme from National Housing Bankand Company raised Rs. 7 Crore (Rupees Seven Crore only) through term loan augmentation(TLTRO) from State Bank of India for meeting the working capital requirements. PresentlyCompany is in line up with more proposals with banks and Financial Institutions formeeting the working capital requirement of the company in FY 2020-21.

The Outstanding Bank Borrowing as on 31.03.2020 stood at Rs. 36.32 Crores

Credit Rating Upgrades

The Company has been assigned upgraded credit Rating from Brickwork Ratings IndiaPrivate Limited as on 23.07.2020.

The details of the same are mentioned below:-

S. No. Facility Limits (IN CR.) Tenure Rating
Previous Present
1. Fund Based (Bank Facilities) 36.48 Long Term ACUITE BBB- (Triple B Negative)Outlook- Stable BWR BBB -(BWR Triple B) Negative)Outlook- Stable
2. Non-Convertible Debentures 30.00 Long Term - BWR BBB -(BWR Triple B Negative) Outlook- Stable

Particulars of Loans Guarantees or Investments

Details of Loans Guarantees and Investments covered under the provisions of Section186 of the Companies Act 2013 apart from the loans made guarantee given or securityprovided by the Company in the ordinary course of business are given in the Notes toaccounts forming part of the Audited Financial Statements for the year ended March 31st2020.

Capital Adequacy

NHB vide its Notification No. NHB.HFC.DIR.22/MD&CEO/2019 dated June 17 2019 hasamended capital adequacy ratio for HFCs from 12% to 15% by March 2022.The capital adequacyratio of HFCs is to be increased to 13% by March 31 2020 14% by March 31 2021 and 15%by March 31 2022.

As required under NHB Directions your Company was required to maintain a minimumcapital adequacy of 13% on a standalone basis on March 31 2020.

Your Company's Capital Adequacy Ratio as at March 31 2020 was 93.09% which providesan adequate cushion to withstand business risks and is above the minimum requirement of13% as well as the proposed level of 15%.

Assets under Management (AUM)

The AUM of your company stood at Rs. 77.10 Crores as at March 31st 2020 as against Rs.63.89 Crores in the previous financial year with a growth of 20.72%.

Implementation of Indian Accounting Standards ("IND AS")

The Ministry of Corporate Affairs (MCA) based on its notification in the OfficialGazette vide Notification G.S.R. 111(E) and G.S.R. 365(E) dated February 16 2015 andMarch 30 2016 respectively notified the Indian Accounting Standards (Ind AS) applicableto certain class of companies. Ind AS has replaced the Indian GAAP prescribed undersection 133 of the Companies Act 2013 read with Rule 7 of the Companies (Accounts) Rules2014. These notifications are applicable to all Housing Finance Companies (HFCs) effectivefrom April 1 2019.

Accordingly your Company has adopted Ind AS as prescribed under Section 133 of theCompanies Act 2013 read with Rule 3 of the Companies (Indian Accounting Standards) Rules2015 and the effective date of such transition is April 01 2018. Such transition has beencarried out from the erstwhile accounting standards notified under the Act read withrelevant rules issued thereunder and guidelines issued by National Housing Bank("NHB") (collectively referred to as 'the Previous GAAP'). Accordingly theimpact of transition has been recorded in the opening reserves as at April 01 2018 andthe corresponding financial figures presented in this Report have beenrestated/reclassified.

Transfer to Reserves

During the year under review your Company having Rs. 122.50 Lacs to the StatutoryReserve under Section 36(1) (viii) of the Income Tax Act 1961 read with Section 29C ofNational Housing Bank (NHB) Act 1987 out of the amount available for appropriation and anamount of Rs. 504.04 Lacs is proposed to be retained in the Profit and Loss Account.

Dividend

The Board of directors has recommended a dividend of Rs. 0.10 (Ten paise only) perequity share of Rs. 10/- (Ten Rupee) each fully paid up of the company Dividend issubject to approval of members at the ensuring Annual General Meeting (AGM) and shall besubject to deduction of Income Tax at sources.

Share Capital

• Authorized Share Capital - During the year under review the authorized sharecapital of the company increased from Rs. 140000000 (divided into 14000000 EquityShare of Rs. 10/-each) to Rs. 170000000/- divided into 17000000 Equity Share of Rs.10/-each) vide passing ordinary resolution in Extra Ordinary General Meeting of themembers of the company held on 02.08.2019.

• Issued and Paid-up Capital - During the year under review the paid-up EquityShare Capital of the company has been increased is Rs. 120790000 (divided into 12079000Equity Shares of Rs. 10/-each) to Rs. 156735000 as at March 31st 2020. During the yearunder review The company has allot 3369500 equity Share on preferential basis to ArkfinInvestments Private Limited.

• Share warrants - During the year under review the Company has allotted andconverted 225000 outstanding warrant into Equity share to promoter and promoter group inits Board meeting held on 22.05.2019.

Adoption and alteration in Memorandum and Article of Association:

During the year under review the Members of the Company vide Special Resolution passedat 14th Annual General Meeting (AGM) held on September 21st 2019 has adopt the newArticles of Association and Memorandum of Association as per the provisions of theCompanies act 2013 and made alteration in the provisions of the Memorandum of Associationof the Company by way of altering authorized share capital clause in accordance with theprovisions of Companies Act 2013 vide Special Resolution passed at 02nd August 2019Extra Ordinary General Meeting (EGM).

Non-performing Assets and Provisions for Contingency:

Your Company adhered to the provisions of Indian Accounting Standards (Ind AS) theprudential guidelines for Non performing Assets (NPAs) issued by the National HousingBank (NHB) under its Directions of 2010 as amended from time to time. As per theprudential norms the income on such NPAs is not to be recognized if unrealized. As perthe prudential norms prescribed by the NHB the Company has made provision forcontingencies on standard as well as non-performing housing

loans and property loans. The details of NPA have been given in financial Statements.

The Gross NPA of your company as on March 31st 2020 was Rs. 2.57 crore. (Previous YearRs. 1.09 crore ) the net NPA as on March 31st 2020 was Rs. 2.13 crore. (Previous Year Rs.0.86 crore)

Details Relating to Deposits

The Company has been granted registration by the National Housing Bank New Delhi as anon deposit taking Housing Finance Company. Being so the Company has neither accepted inthe past nor has any future plans to accept any public deposits by whatever name called.

National Housing Bank (NHB) Guidelines

The Company has complied with the provisions of the Housing Finance Companies (NHB)Directions 2010 as prescribed by NHB and has been in compliance with the variousCirculars Notifications and Guidelines issued by National Housing Bank (NHB) from time totime. The Circulars and the Notifications issued by NHB are also placed before the AuditCommittee / Board at regular intervals to update Committee / Board members on the same.

BSE Compliances

The Company has submitted various returns and reports as required quarterly/halfyearly/ yearly in accordance with the prescribed guidelines.

Investor Complaints and Compliance

During the year under review the Company did not receive any investor complaints andthat as on the date no complaints are pending. And also the Company has timely submittedall the reports relating to Investor Complaints pursuant to SEBI (LODR) Regulations 2015to BSE.

Events Subsequent to the end of Financial year

1. Appointment of Director

(a) Mr. Kavish Jain (DIN 02041197) has been appointed as an Executive Director on theBoard w.e.f 18.05.2020.

(B) Mr. Amlendra Prasad Saxena (DIN: 06964564) has been appointed as an Non-ExecutiveIndependent Director on the Board w.e.f 14.09.2020 subject to the approval of Members inthe ensuring Annual General Meeting.

2. Resignation of Director

(a) Resignation of Mr. Kalu lal Jain (DIN: 00451442) from the post of ExecutiveDirector of the Company w.e.f 17.05.2020.

(b) Resignation of Mr. Suresh Chandra Gupta (DIN: 08527990) from the post of NonExecutive Independent Director of the Company w.e.f 22.07.2020

3. The Board has proposed to issue of secured Rated Non Convertible RedeemableDebentures upto an amount not exceeding Rs. 100 Crore (Rupees one hundred crore only) videits Board meeting held on 18th May 2020 and the same has been passed by the shareholdersin EGM held on 08th June 2020.

Subsidiary Joint Ventures and Associate Companies

The Company does not have any subsidiary Company or Joint Company or Associate Company.

Particulars of Employees

The information required pursuant to Section 197 read with Rule 5 of The Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 in respect of employeesof the Company there are no employees of the Company covered under this section who isearning salary over and above specified limit.

Particulars of Conservation of Energy Technology Absorption Foreign Exchange Earningand Outgo

In accordance with the provision of sec 134(3) (m) of the Act read with Rule 8 of thecompanies (Accounts)Rules 2014 the requisite information relating to your Company are asunder:-

A. Conservation of energy:

The Company does not fall under any of the industries covered by the Companies(Disclosure of particulars of Directors) Rules 1988.

B. Technology absorption:

Your company has implemented a next generation core housing virtual solution with thepurpose of aligning itself with the fast growing technology evolution and leveragingoperational capabilities while reducing the time taken for whole loan process.

With inter-connection of different branches with the head office in a safe secure andreliable 360 cloud platform.

• For the aforesaid purpose your company has signed-up with Jaguar Software India& IXL( Mobility Solutions) in 2019-2020 and customized it with the practical needs toarea of operation of company which results in following benefits

• Digitization of documents

• Centralization of all branches with corporate /registered office

• Speed-up the loan process

• Single- Click Report Generation

• "Inter-departmental solution ( robust the collaboration )

• Android / iOs app based system for field staff to submit initial documents andverification remarks

• Saving cost in logistics handling printing and mitigating risk of physicalmovements.

• Improves the quality of credit analysis.

• Secured and Safe cloud based system with end to end encryption.

• Predefined roles with maker-checker concept with final approval authority toManaging director/ Authorized Personnel

• Keeping of Digital trails which can keep the whole loan process details in oneclick and useful during audit(s) and tracing purpose.

• Simplification of work flow with regular MIS.

Jaguar Software India as a service provider / software vendor will provide applicableupgrades and latest security protocols.

The NHB had notified Information technology framework (guidelines) for Housing Financecompanies ('HFCs') vide its Notification No. NHB/ND/DRS and policy circular no. 90/2017-2018 dated June 15 2018. To enhance safety security efficiency in process leading tobenefit for HFCs and their customer .

Your company is in compliance with the aforesaid guidelines.

Your company and its software vendor conducts it's IT audit through external agenciesat regular intervals. The scope of IT audit is to identify the areas of risk checkvulnerabilities & cyber security etc. at periodic intervals. The external agenciessuggestions and recommendations are reported to the Audit Committee & implementedwherever feasible.

C. Foreign Exchange Earnings and Outgo:

Your company does not have any foreign exchange earnings and outgo during the yearunder review. Insurance

Your Company has insured its various properties and facilities against the risk offire theft and other perils etc. and has also obtained Directors' and Officers'Liability Insurance Policy which covers the Company's Directors and Officers (employeesin managerial or supervisory position) against the risk of financial loss including theexpenses pertaining to defense cost and legal representation expenses arising in thenormal course of business

Risk Management Framework

The Company has set up a policy framework for ensuring better management of its asset& liability profile. Your Company gives due importance to prudent lending practicesand has put in place suitable measures for risk mitigation which include verification ofcredit history from credit information bureaus personal verification of customer'sbusiness place and residence in house technical and legal verification conservative loanto value parameters and compulsory term cover for insurance. The Risk managementframework of your Company seeks to minimize adverse impact of risks on the key businessobjectives and enables your Company to leverage market opportunities effectively. The NHBvide its circular "NHB/ND/DRS/Policy Circular No. 95/2018-19 dated May 29 2019 hadissued the guidelines for appointment of Chief Risk Officer (CRO) by HFCs to ensurehighest standards of risk management.

The Company has duly complied with the aforesaid guidelines by appointing Mr. B. S.Kachhawah as CRO of the Company who has direct reporting to MD of the Company. During theFinancial Year under review the Risk Management Committee reviewed the risks associatedwith the business of your Company undertook its root cause analysis and monitored theefficacy of the measures taken to mitigate the same.

Your Company continues to give prime importance to the function of receivablesmanagement as it considers this the ultimate reflection of the correctness of marketingstrategy as well as appraisal techniques. Pursuant to Regulation 21(5) of Securities andExchange Board of India (Listing Obligations and Disclosure Requirements) Regulations2015 the regulations of Risk management committee is applicable to top 500 listed entitiesdetermined on the basis of market capitalization as at the end of the immediate previousfinancial year.

As per the size of the provisions of risk management committee not applicable to theCompany however the Board of Directors has adopted a risk management policy for theCompany which provides identification assessment and control of risks which in theopinion of the Board may threaten the existence of the Company. The Management identifiesand controls risks through a properly defined framework in terms of the aforesaid policy.

Asset Liability Management Committee (ALCO)

The Asset Liability Management Committee (ALCO) lays down policies and quantitativelimits that involve assessment of various types of risks and shifts in assets andliabilities to manage such risks. ALCO ensures that the liquidity and interest rate risksare contained within the limits laid down by the Board. The Company has duly implementedthe NHB's Asset Liability Management Guidelines

Vigil Mechanism/Whistle Blower Policy

Pursuant to the provisions of Section 177 (9) & (10) of the Companies Act 2013read with Rule 7 of Companies (Meetings of Board and its Powers) Rules 2014 andSecurities and Exchange Board of India (Listing Obligations and Disclosure Requirements)Regulations 2015 the Company has in place a Whistle Blower Policy which provides for aframework to promote a responsible and secure whistle blowing. It protects Directors/employees wishing to raise a concern about serious irregularities within the Company. Itprovides for a vigil mechanism to channelize reporting of such instances/ complaints/grievances to ensure proper governance. The Audit Committee oversees the vigil mechanism.No employee has been denied access to the Chair pe rso n of Au dit Committee. The whistleblower policy is placed on the website of the Company and can be accessed at https://akmestarhfc.in/pdf/Whistle%20Blower%20Policy- converted.pdf

Codes and Standards

Your Company has formulated various policies and codes in compliance with provisions ofDirections and Guidelines issued by the National Housing Bank Companies Act 2013Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements)Regulations 2015 and to ensure high ethical standards in the overall functioning of theorganization. The said policies and codes are periodically reviewed by the Board ofDirectors. The key policies and codes as approved by the Board of Directors and therespective compliance there under are detailed herein below:

(a) Know Your Customer & Anti Money Laundering Measure Policy

Your Company has approved Know Your Customer & Anti Money Laundering Measure Policy(KYC & AML Policy) in place and adheres to the said Policy. The said Policy is in linewith the National Housing Bank guidelines. The Company has also adhered to the compliancerequirement in terms of the said policy relating to the monitoring and reporting of cash /suspicious transactions. The Company furnishes to Financial Intelligence Unit (FIU)India in the electronic medium information of all cash transactions of the value of morethan Rupees ten lakh or its equivalent in foreign currency and suspicious transactionswhether or not made in cash in terms of the said Policy. The following policy is placedon the website of the Company and can be accessed athttps://akmestarhfc.in/pdf/KYC%20Policy- converted.pdf

(b) Fair Practice Code

Your Company has in place a Fair Practice Code (FPC) which includes guidelines onappropriate staff conduct when dealing with the customers and on the organization'spolicies vis-a-vis client protection. The FPC captures the spirit of the National HousingBank guidelines on fair practices for Housing Finance Companies. During the year underreview FPC was modified by the Board and the grievance redressal mechanism within theCompany was further strengthened. The following policy is placed on the website of theCompany and can be accessed at https://akmestarhfc.in/pdf/Fair%20Practices%20Code-converted.pdf

(c) Policy on Disclosure of material events and information

During the year under review your Company has adopted the Policy on Disclosure ofMaterial Events and Information in accordance with Securities and Exchange Board of India(Listing Obligations and Disclosure Requirements) Regulations 2015 to determine theevents and information which are material in nature and are required to be disclosed tothe Stock Exchanges.

(d) Code of Conduct for Board Members and the senior management

Your Company has in place Code of Conduct for the Board of Directors and the SeniorManagement Personnel to set forth the guiding principles on which the Company and itsBoard and Senior Management Personnel shall operate and conduct themselves withmultitudinous stakeholders government and regulatory agencies media and anyone else withwhom it is connected. A declaration by Chief Financial Officer and Managing Director withregard to the Compliance with the said code forms part of this Annual Report.

(e) Code for Prevention of Insider Trading Practices

Your Company has formulated and adopted a Code for Prevention of Insider TradingPractices in accordance with the model code of conduct as prescribed under the Securitiesand Exchange Board of India (Prohibition of Insider Trading) (Amendment) Regulations2018 as amended. The code lays down guidelines which includes procedures to be followedand disclosures to be made while dealing in the shares of the Company. The code isapplicable to the promoters directors senior designated employees and their dependentsand the said persons are restricted from dealing in the securities of the Company duringthe 'restricted trading periods' notified by the Company from time to time.

(f) Code of Business Ethics (COBE)

Your Company has adopted a Code of Business Ethics (COBE) which lays down theprinciples and standards that govern the activities of the Company and its employees toensure and promote ethical behaviour within the legal framework of the organization.

Your Company has in place a Policy on Prevention Prohibition & Redressal of SexualHarassment of Women at Workplace and an Internal Complaints Committee (ICC) has beenconstituted there under. The Policy's primary objective is to protect the women employeesfrom sexual harassment at the place of work and also provides for punishment in case offalse and malicious representations. During the year no complaints were received in thisregard.

(g) Comprehensive Risk Management Policy

Your Company is committed to manage its risk in a proactive manner and has adopted astructured and disciplined approach to risk management by developing and implementing riskmanagement framework. With a view to manage its risk effectively your Company has in placea Comprehensive Risk Management Policy which covers a formalized Risk ManagementStructure along with other aspects of risk management i.e. credit risk managementoperational risk management market risk management and enterprise risk management. TheRisk

Management Committee of the Board on periodic basis oversees the risk managementsystems processes and minimization procedures of the Company.

(h) Corporate Social Responsibility (CSR) Policy

Your Company has voluntarily framed Corporate Social Responsibility Policy (CSRPolicy) as per the provisions of the Companies (Corporate Social Responsibility Policy)Rules 2014 as amended which inter-alia lays down the guidelines and mechanism forundertaking socially useful projects for welfare and sustainable development of thecommunity at large. As per the provisions of Section 135 of the Companies Act 2013 theCompany has constituted a Corporate Social Responsibility Committee. The Committee assiststhe Board in fulfilling its duty towards the community and society at large by identifyingthe activities and programmers that can be undertaken by the Company in terms of theCompany's CSR Policy. The composition of the CSR Committee and its terms of reference aregiven in the Corporate Governance Report forming part of this Annual Report in "AnnexureV".

(i) Remuneration Policy

The Board of Directors had on the recommendation of the Nomination & RemunerationCommittee Appointed Dr. Rekha Jain Independent Director as chairperson Mr. Amrit SinghRajpurohit and Mr. Suresh Chandra Gupta Independent Director as Member.

The Company follow a Policy on remuneration of Directors and senior managementEmployees The Policy is approved by the Nomination & Remuneration Committee and theBoard and is marked as "Annexure-I

(j) Related Party Transactions Policy

Your Company has in place Related Party Transaction

Policy intended to ensure requisite approval reporting and disclosure of transactionsbetween the Company and its related parties. The said policy also defines the materialityof related party transactions and lays down the procedures of dealing with related partytransactions. During the year under review the Related Party Transaction Policy wasamended to align the same with the requirements of Companies (Amendment) Act 2015 andSecurities and Exchange Board of India (Listing Obligations and Disclosure Requirements)Regulations 2015.

(k) Familiarization Programme for Independent Directors:

The objective of a familiarization programme is to ensure that the non-executivedirectors are updated on the business environment and overall operations of the Company.This enables the non executive directors to make better informed decisions in the interestof the company and its stakeholders.

https://www.akmestarhfc.in/pdf/Familiarization%>20Program% 20for%20

Listing of Shares of the Company

Your Company's equity shares continue to remain listed on BSE Limited. Your Company haspaid the listing fees as payable to the BSE Limited for the financial year 2020-21 ontime.

Directors and Key Managerial Personal

The Board of Directors of the Company comprises of Six [6] directors of which Two [2]are Executive Directors; One [1] is Chairman & Managing Director & Three [3] areIndependent & Non- Executive Director including one woman director as on March 312020 who bring in a wide range of skills and experience to the Board.

The Board of Directors of the Company are:-

Composition of the Board as on 31 March 2020

DIN Name of Director Category of Directors
02041164 Mr. Ashish Jain Chairman & Managing Director
00240441 Mr. Nirmal Kumar Jain Promoter & Executive Director
00451442 Mr. Kalu Lal Jain Executive Director
02173432 Mr. Amrit Singh Rajpurohit Non Executive & Independent Director
08527990 Mr. Suresh Chandra Gupta Non Executive & Independent Director
07703994 Dr. Rekha Jain Non Executive & Independent Director

Based on the confirmations received none of the Directors are disqualified for beingappointed/re-appointed directors in terms of Section 164 the Companies Act 2013.

During the year following changes took place in the Board of Directors of Company:

S. No. Name of Directors/ KMP Designation Appointment/ Resignation Date of change
1 Ms. Rajni Gehlot Non-Executive Independent Director Resignation 22.05.2019
2. Mr. Suresh Chandra Gupta Non-Executive Independent Director Appointment 12.08.2019
3. Mr. B.S. Kachhawaha Chief Financial Officer Resignation 14.02.2020
4. Mr. Natesh Narayanan Chief Financial Officer Appointment 06.03.2020
5. Mr. Kalu Lal Jain Executive Director Resignation 17.05.2020
6. Mr. Kavish Jain Executive Director Appointment 18.05.2020
7. Mr. Suresh Chandra Gupta Non -Executive Independent Director Resignation 30.07.2020
8. Mr. Amlendra Pradad Saxena Non -Executive Independent Director Appointment 14.09.2020

*Note: Events accrued after closer of financial year has been consider.

• Retirement of Director by rotation

In accordance with the provisions of Section 152 of the Companies Act 2013 andArticles of Association of the company Mr. Nirmal Kumar Jain Executive Director of theCompany is liable to retire by rotation at the ensuring 15th Annual General Meeting ofthe company. He is eligible and offered himself for re-appointment. A resolution for theirreappointment is being proposed at the 15th Annual General Meeting and their Profile isincluded in the Notice of the 15th Annual General Meeting.

• Regularization of Additional Director

(a) The Board proposed regarding the Regularization of Additional Director Mr. KavishJain as Executive Director of the Company in accordance with the provisions of Companiesact 2013 subject to approval of Members and details of which is more particularly formingpart of the notice calling AGM.

(b) The Board proposed regarding the Regularization of Additional Director Mr. AmlendraPrasad Saxena as Non -Executive Independent Director of the Company in accordance with theprovisions of Companies act 2013 subject to approval of Members and details of which ismore particularly forming part of the notice calling AGM.

• Declaration from Independent Directors on Annual Basis

The Company has received necessary declaration from each Independent Director of theCompany Under Section 149(7) of the Companies Act 2013 that the Independent Directors ofthe Company meet with the criteria of their Independence as laid down in Section 149(6)and the provisions of Regulation 16(1)(b) of the Securities and Exchange Board of India(Listing Obligations and Disclosure Requirements) Regulations 2015.

Based on the confirmations received none of the Directors are disqualified for beingappointed/re- appointed as directors in terms of Section 164 the Companies Act 2013.

• Stock Option

During the year under review no stock options were issued to the Directors of theCompany.

Formal Evaluation of the performance of the Board Committee of the Board and individualDirector:

The provisions of the Companies Act 2013 mandates formal annual evaluation of theBoard of Directors its committees and individual Directors. Schedule IV of the CompaniesAct 2013 also requires the performance evaluation of Chairman & Managing Director andNon Executive Directors and Board as a whole to be carried out at a separate meeting bythe Company's Independent Directors. It also states that performance evaluation ofIndependent Directors shall be done by the entire Board excluding the Director beingevaluated. The provisions of Securities and Exchange Board of India (Listing Obligationsand Disclosure Requirements) Regulations 2015 also require that the Board shall monitorand review the Board Evaluation Framework. The annual performance evaluation of the Boardas a whole all Directors as well as the evaluation of the Board Committees includingAudit Committee Nomination & Remuneration Committee Risk Management CommitteeStakeholders' Relationship Committee and Corporate Social Responsibility Committee of theBoard of Directors of the Company was carried out.

MEETINGS

• Board

Your Company holds at least four Board meetings in a year one in each quarterinter-alia to review the financial results and also holds additional Board Meetings to

address its specific requirements as and when required. All the decisions and urgentmatters approved by way of circular resolutions are placed and numbered and noted at thesubsequent Board meeting. Annual calendar of meetings of the Board are finalized wellbefore the beginning of the financial year after seeking concurrence of all the Directors.

During the financial year 2019-20 Nine (9) Board Meetings were held are as follows.

S.No. Date of Meeting
1 22.05.2019
2 08.07.2019
3 12.08.2019
4 14.09.2019
5 16.10.2019
6 26.10.2019
7 13.12.2019
8 14.02.2020
9 06.03.2020

The intervening gap between the Meetings was within the period prescribed under theCompanies Act 2013 and the Securities and Exchange Board of India (Listing Obligation andDisclosure Requirements) Regulations 2015. The details of the Board composition itsmeetings held during the year along with the attendance of the respective Directorsthereat are set out in the Corporate Governance Report forming part of this Annual Report.

The Company's Independent Directors meet at least once in every financial year withoutthe presence of Executive Directors or management personnel. The Independent Directors ofthe Company met once during the year on March 24th 2020 to review the performance ofNon-Independent Directors and the Board as a whole review the performance of theChairperson of the Company and access the quality quantity and timeliness of flow ofinformation between the company management and the Board.

Shareholder's Meeting

During the financial year 2019-20 Extra Ordinary General Meeting was held as follows

Day/Date/Time Location Details of Ordinary/Special Resolution passed
Friday 02.08.2019 at 03.00 pm Registered office of the Company at AKME Business Centre (ABC) 4-5 Subcity Centre Savina Circle Opp. Krishi Upaz Mandi Udaipur Raj. 313002 Ordinary Resolution

1. To increase in Authorized Share Capital of the company

Special Resolution

1. Issue of 3885000 Equity on Preferential Basis to M/s Arkfin Investments Private Limited

Audit Committee & Other Board Committees

Your Company has a duly constituted Audit Committee as per the provisions of Section177 of Companies Act 2013 and provisions of Securities and Exchange Board of India(Listing Obligations and Disclosure Requirements) Regulations 2015.

The Board of Directors has constituted four other committees namely -

• Nomination and Remuneration Committee

• Stakeholders' Relationship Committee

• Risk Management Committee

• Corporate Social Responsibility Committee

Which enables the Board to deal with specific areas / activities that need a closerreview and to have an appropriate structure to assist in the discharge of theirresponsibilities.

The Audit Committee and other Board Committees meet at regular intervals and ensure toperform the duties and functions as entrusted upon them by the Board.

The details of the Audit Committee and other Board Committees are also set out in theCorporate Governance Report forming part of this Annual Report.

Related Party Transactions

In accordance with the provisions of Section 188 of the Act and rules made thereunderthe transactions entered with related parties are in the ordinary course of business andon an arm's length pricing basis the details with respect to the related partytransactions are mentioned in the notes to the audited financial statements.

During the financial year under review your company had entered into material relatedparty translations with M/s Arkfin Investments private limited ("AIPL") foravailing services including but not limited to Business management services Assetmanagement Services advisory and consulting services for an estimated amount up to Rs. 15Crore (Rupees Fifteen Crores) for five years on such terms and conditions as may bemutually agreed between company and AIPL as defined under Securities and Exchange Board ofIndia (Listing Obligations and Disclosure Requirements) Regulations 2015 and RelatedParty Transaction Policy of the Company.

Form AOC-2 as per the Related Party Transactions is attached as "Annexure-M"to this Report and forms a part of it. The Related Party Transaction Policy as approved bythe Board of Directors is available on the website of the Company

https:/'akmestarhfc.in/pdf/Related%20Party%20Transaction%20Policy-converted.pdf.

Significant and Material Orders Passed by the Regulator or Court or Tribunals

During the year no significant or material order was passed by the Regulators or Courtsor Tribunals and the Company has complied with the order and Compliances of Companies act2013.

Auditors

1. Statutory Auditors

At the Eleventh (11th) Annual General Meeting held on September 24th 2016 the Membershad appointed M/S.

H.R. Jain & Co. Chartered Accountants (FRN 000262C) as the Statutory Auditors ofthe Company by way of ordinary resolution under section 139 of the Companies Act 2013to hold office from the 11th Annual General Meeting until the conclusion of the 16thAnnual General Meeting of the Company to be held in the year 2021 of the Company.

The Company has received consent from the Statutory Auditors and confirmation to theeffect that they are not disqualified to be appointed as the Statutory Auditors of theCompany in terms of the provisions of Companies Act 2013 and Rules framed there under.

• Notes to Accounts and Auditors Report

The notes to the accounts referred to in Auditors Report are self-explanatory and donot call for any further comments. The Statutory Auditors Report does not contain anyqualification reservation or adverse remark.

• Qualifications in Audit Reports:

There are no qualifications reservations or adverse remarks or disclaimer made by thestatutory auditor in his report.

Secretarial Auditor & Secretarial Audit Report

2. Secretarial Auditor

Pursuant to the provisions of Section 204 of the Companies Act 2013 and Rule 9 of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 and Pursuantto Reg. 24A of Securities Exchange Board of India (Listing Obligation & DisclosureRequirement) (Amendments) Regulations 2018 the Board of Directors of the Company hadappointed Mr. Ronak Jhuthawat Proprietor of M/s Ronak Jhuthawat & Co. PracticingCompany Secretaries Udaipur to undertake the Secretarial Audit of the Company for thefinancial year 2019-20. The Secretarial Audit Report for the financial year ended March31st 2020 is annexed as "Annexure - III" to this report. The said report doesnot contain any qualification reservation or adverse remark however contains certainobservations of the Secretarial Auditor which are self explanatory and thus do not callfor any further comments.

• Qualifications in Secretarial Audit Reports:

There are no qualifications reservations or adverse remarks or disclaimer made by thecompany secretary in practice in his secretarial audit report.

Internal Audit & Internal Control Systems And Their Adequacy

3. Internal auditor

Your Company has appointed T.R. Dangi & Associates Chartered Accountant Udaipur asan Internal Auditor of the Company who reports to the Audit Committee and to the Board ofDirectors of the Company. The Internal

Auditor conducts comprehensive audit of functional areas and operations of the Companyto examine the adequacy of and compliance with policies procedures statutory andregulatory requirements. Significant audit observations and follow up actions thereon arereported to the Audit Committee. The Audit Committee reviews adequacy and effectiveness ofthe Company's internal control environment and monitors the implementation of auditrecommendations.

The audit function maintains its independence and objectivity while carrying outassignments. It evaluates on a continuous basis the adequacy and effectiveness ofinternal control mechanism. The function also proactively recommends improvement inpolicies and processes suggests streamlining of controls against various risks

Your Company has laid down set of standards processes and structure which enables itto implement internal financial control across the Company and ensure that the same areadequate and operating effectively.

Directors' Responsibility Statement

To the best of their knowledge and belief and according to the information andexplanations obtained by them your Directors make the following statements in terms ofSection 134(3) (c) read with Section 134(5) of the Companies Act 2013:

• that in the preparation of the annual financial statements for the year endedMarch 31st 2020 the applicable accounting standards have been followed along with properexplanation relating to material departures if any;

• that such accounting policies as mentioned in Note of the Notes to the FinancialStatements have been selected and applied consistently and judgment and estimates havebeen made that are reasonable and prudent so as to give a true and fair view of the stateof affairs of the Company as at March 31 2020 and of the profit of the Company for theyear ended on that date;

• that 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;

• that the annual financial statements have been prepared on a going concernbasis;

• that proper internal financial controls were in place and that the financialcontrols were adequate and were operating effectively;

• that systems to ensure compliance with the provisions of all applicable lawswere in place and were adequate and operating effectively.

Report on Corporate Governance

Pursuant to Securities and Exchange Board of India (Listing Obligations and DisclosureRequirements) Regulations 2015 a separate section titled 'Report on CorporateGovernance' forms part of this Annual Report.

The Report on Corporate Governance also includes certain disclosures that are requiredas per Companies Act 2013. The certificate by the Statutory Auditors confirmingCompliance with the conditions of Corporate Governance as stipulated in Securities andExchange Board of India (Listing Obligations and Disclosure Requirements) Regulations2015 is annexed as "Annexure-VN" to this report. The said certificate forfinancial year 2019-20 does not contain any qualification reservation or adverse remark.

In terms of Section 136 of the Act the Reports and Accounts are being sent to themembers and others entitled thereto.

Management Discussion And Analysis

Pursuant to Securities and Exchange Board of India (Listing Obligations and DisclosureRequirements) Regulations 2015 a separate section titled 'Report on CorporateGovernance' forms part of this Annual Report.

Extract of Annual Return

Pursuant to Section 134(3)(a) and Section 92(3) of the Companies Act 2013 read withRule 12(1) of the Companies (Management and Administration) Rules 2014an extract of theAnnual Return as at March 31st 2020 in the prescribed form MGT 9 forms part of thisreport and is annexed as "Annexure- IV" and same has been placed on thewebsite of the company at www.akmestarhfc.in.

Enhancing Shareholders Value

Your Company believes that its Members are among its most important stakeholders.Accordingly your Company's operations are committed to the pursuit of achieving highlevels of operating performance and cost competitiveness consolidating and building forgrowth enhancing the productive asset and resource base and nurturing overall corporatereputation. Your Company is also committed to creating value for its other stakeholders byensuring that its corporate actions positively impact the socio-economic and environmentaldimensions and contribute to sustainable growth and development.

Outlook

During the year Indian economy continued to consolidate the gains achieved throughmacroeconomic stability. The country remained on a stable growth path on the back of sharpreduction in crude oil prices and resilient domestic consumption. Besides inflationremained under control and fiscal and current account deficits continued to be moderate.

As all key business enablers are currently showing favorable signs your Company ispositive and expects another year of healthy growth in 2019-20.

Acknowledgements

Your Directors wish to place on record their gratitude to the National Housing BankSecurities and Exchange Board of India Ministry of Corporate Affairs Registrar ofCompanies Financial Intelligence Unit (India) the Company's Customers Bankers and otherLenders Members and others for their continued support and faith reposed in the Company.The Board also places on record its deep appreciation for the dedication and commitment ofthe employees at all levels as their hard work co-operation and support had enabled theCompany to maintain its consistent growth. The Directors would also like to thank the BSELimited National Securities Depository Limited Central Depository limited.

Best Wishes
Sd/- Sd/-
AshishJain Nirmal Kumar Jain
Managing Director Director
DIN:02041164 DIN: 00240441
Date :29.09.2020
Place: Udaipur

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