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Sterling Guaranty & Finance Ltd.

BSE: 508963 Sector: Financials
NSE: N.A. ISIN Code: INE668Y01016
BSE 05:30 | 01 Jan Sterling Guaranty & Finance Ltd
NSE 05:30 | 01 Jan Sterling Guaranty & Finance Ltd

Sterling Guaranty & Finance Ltd. (STERGUARANTY) - Director Report

Company director report

The directors have pleasure in presenting before the Shareholders Directors' Reportand Audited Accounts of the Company for the year ended 31st March 2017.

FINANCIAL RESULTS

(Rs. In Lacs)

Particulars For the year ended 31.3.2017 For the year ended 31.3.2016
Rs. Rs.
Profit (Loss) before Non-Cash Charges (5.33) (6.45)
Profit (Loss) before Tax (5.33) (6.45)
Provision for Taxation Nil Nil
Net Profit (Loss) after Tax (5.33) (6.45)
Balance brought forward (835.08) (82863)
Profit (Loss) carried forward (840.41) (835.08)

DIVIDEND

Since your Company has incurred loss this year. Your Directors regret their inabilityto recommend any dividend for the year ended 31sr March 2017.

CAPITAL STRUCTURE

There has been no material changes in the capital structure of the Company during theFinancial Year ended 31sy March 2017. During the year under review the Company hasneither issued shares with differential voting rights nor issued sweat equity or grantedstock options. But the company proposes to issue 6:1 Rights. Current Net Worth of thecompany is negative Rs. 69 lacs. The company proposes to issue rights equity of Rs. 390.In the event of the Rights issue being fully subscribed the Networth of the company willbecome Rs. 321 Lacs. SEBI has placed the Company as a suspected Shell Company. However thecompany is an active NBFC company and not involved in any shell company activity. Properrepresentations are being made to BSE/SEBI/MCA to satisfy them. We propose to recapitalizeand revive the company. There are consequential changes into Authorized Equity ShareCapital and in issued subscribed and Paid up Equity Share Capital in Memorandum andArticles of Association.

RESERVES

In view of loss incurred and carry forward losses of Rs. 84041674 the Company donot propose to transfer any amount to its Reserves. However with proposed reduction ofCapital and adjustment of Securities Premium A/c the loss will get reduced to Rs. 147.15Lacs.

GENERAL

The Company is in the process of revival of NBFC business. It has suffered Net Loss ofRs.5.34 lac compared to previous year of Rs.6.45 lacs because of increasing statutory& compliance expenses. The Company is advised by letter dated 17th June2016 by Reserve Bank of India to come up with time bound program to increase the NOF toRs. 2 Cr. as per circular No RBI/2014-2015/299 DNBR(PD CC.No.002/03.10.001/2014-15 datedNovember 10 2014. The company has not done any NBFI busines during the year. The Companyproposes to raise minimum Rs. 300 lacs in time bound program to increase the NOF asrequired by RBI. As per Decision of last AGM BOD has explored the possibility of raisingshan capital from Promoters and balance from other shareholders and investors. It isdecided to raise Rs. 39(Lacs by issuing Rights Equity shares.

OPERATIONS & FUTURE PLAN

During the year under review the company had been doing business of recoveriesinvestments and have been involved with various compliance. During the year no NBFIBusiness was carried out since Net Owned Funds (NOF) of the company has fallen below theminimum prescribed limit. Equity Shares of the Company is listed on BSE under Code No.508963 and is traded under physical segment under GSM VI. The company propose to demat theshares as required. In future after recapitalization the company proposes to do businessof Micro Finance financing of securities and investments.

CHANGE IN NATURE OF BUSINESS IF ANY

There is no change in nature of Business.

MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY AFTERBALANCE SHEET DATE

There have been positive material changes affecting the financial position of theCompany between the end of the financial year of the Company to which the financialstatements relate and the date of the report. The Company could recover Rs. 851244 andreduce liabilities of Rs. 475000. Further MCA records of Satisfaction of Charges have beenrectified to the extent of Rs. 287 Lacs.

PUBLIC DEPOSITS

The Company has not invited or accepted deposits from the public covered under Section73 of the Companies Act 2013 and the Companies (Acceptance of Deposits) Rules 2014.

CORPORATE GOVERNANCE

A separate section on Corporate Governance and a certificate from the StatutoryAuditors of the Company regarding compliance of Corporate Governance as stipulated underClause 49 of the Listing Agreement with BSE forms part of the Annual Report.

BOARD OF DIRECTORS AND KEY MANAGERIAL PERSONNEL

The Board of Directors is duly constituted in compliance with the provisions of Section149 of the Companies Act 2013 and relevant rules made there under and as per Memorandumand Articles of Association of the Company.

The detailed information and particulars of director Shri Sunil Jangir seekingreappointment is incorporated in Notice calling Annual General Meeting

INDEPENDENT DIRECTOR

Currently Mr. Sunil Kumar jangir (DIN : 06653333) Mrs. Geeta V. Ashar (DIN : 0036710)are independent Directors on the Board of the Company and Mrs. Geeta V. Ashar (DIN :036710) is Independent Women Director of the Company. She is also giving honorary serviceof Compliance officer.

KEY MANAGERIAL PERSONNEL

During the year under review the Company continues to have Mr. Dharmen D. MehtaChairman & Managing Director as Key Managerial Personnel. No remuneration feesincluding salary was paid to Executive as well as Non-Executive Directors during the year.He is the Key Managerial Personnel holding position of CMD & Principal Officer.

NO DISQUALIFICATION OF MANAGING DIRECTOR/WHOLE-TIME DIRECTOR

In compliance with the provisions of Section 197(14) of the Companies Act 2013 noManaging Director/Whole-time Director of the Company shall be disqualified from receivingcommission or remuneration from the Company's Holding Company or Subsidiary Company if heis in receipt of nay commission from the Company During the year.

NUMBER OF MEETING OF THE BOARD AND OTHER COMMITTEE

During the year under review the Board of Directors of the Company met 5 (Seven) timeson 16/05/2016 04/08/201608/11/2016 03/02/2017 & 31/03/2017. The details ofcomposition of the Board of Directors and its attendance are as under:

Name of the Director(s) No. of Board Meeting(s) attended
Mr. Dharmen D. Mehta 5
Mr. Sunil Kumar Jangir 5
Mrs. Geeta V. Ashar 5

The Company has duly complied with the provisions related to Notice Minutes andMeetings as prescribed under the Companies Act 2013 and Rules made there under if any.

AUDIT COMMITTEE

In compliance with the provisions of Section 177 of the Companies Act 2013 andrelevant rules made thereunder the Audit Committee constituted on 16th May2016 04th August 2016 08th November 2016 and 03rd February 2017by the board of director comprises independent director namely Mrs. Geeta V. Ashar and Mr.Sunil Kumar Jangir and Mr. Dharmen Mehta Chairman & Managing Director. TheChairperson of the Committee is Mrs. Geeta Ashar. Mr. Sunil Jangir is a Secretary to themeeting of the Committee. All the recommendations made by the Audit Committee wereaccepted by the board. The details of the Audit Committee of the Board of Directors are asunder :

Name Chairman/Members No. of Meetings attended
Mr. Dhiren D. Mehta Executive Chairman

A

Mr. Sunil Kumar Jangir Member 4
Mrs. Geeta V. Ashar Member 4

Subsequent to 31/03/2017 the Audit Committee has approved reduction of Face Value ofissued subscribed and paid up equity shares from Rs. 10 to Rs. 1 and also approved NewRights Equity issue of Rs. 390 Lacs.

NOMINATION AND REMUNERATION COMMITTEE

In compliance with the provisions of Section 178 of the Companies Act 2013 andrelevant rules made thereunder the Executive Chairman was appointed without anyremuneration. The non-executive directors do not draw any remuneration from the Company.Therefore the Board did not feel the need to constitute a Nomination and RemunerationCommittee of Directors.

RISK MANAGEMENT POLICY

In terms of the requirement of provisions of Section 134(3)(n) of the Companies Act2013 the Company has developed and implemented a risk management policy which identifiesmajor risks which may threaten the existence of the Company. The same has also beenadopted by your Board and is also subject to its review from time to time Your Companyrecognizes the need to control and limit the risk which it faces in day to day course ofthe business. The Company is exposed to certain financial risks- principally interest raterisk liquidity risk credit risk and risks associated with the economy regulationscompetition among others. These risk management policies that are designated to minimizethe potential adverse effects of these risks on financial performance of the Company. Thepolicy contains the procedures to inform the Board Members about the risk assessment andminimization process these processes are periodically reviews to ensure that themanagement of the Company controls risk and runs through a well-defined framework.

WHISTLE BLOWER POLICY/VIGIL MECHANISM

The Company has formed a Whistle Blower Policy/Vigil Mechanism policy as required underSection 177 of Companies Act 2013 and Clause 49 of the Listing Agreement. A Vigil{Whistle Blower) mechanism provides a channel to the employee and Directors to report tothe management concerns about unethical behavior actual or suspected fraud or violationof the Codes of Conduct or policy. The mechanism provides for adequate safeguards againstvictimization of employees and Directors to avail of the mechanism and also provide fordirect access to the Chairman of the Audit Committee to exceptional cases.

POLICY MATERIALITY & DELAING WITH RPTs CONTRACT AND ARRANGEMENT WITH RELATED PARTY

All transactions entered with Related Parties for the year under review were on arm'slength basis and in the ordinary course of business and that the provisions of section 188of the Companies Act 2013 are not attracted.

Further there were no Contracts /Arrangements/transactions of a materially significantnature with the Promoters the Directors or the Management their subsidiaries orrelatives that may have potential conflict with the interest of the Company at large.Details of Related Party Transaction forms part of Corporate Governance Report.

CODE OF CONDUCT

The Company's Code of Conduct is based on the principle that business should beconducted in a professional manner with honesty and integrity and thereby enhancing thereputation of the Company. The Code ensures lawful and ethical conduct in ail affairs ofthe Company.

CODE OF INSIDER TRADING

The Company has devised a framework to avoid Insider Trading and abusive self-dealing.The Code on prevention of Insider Trading which applies to the Board Members and allofficers and employees seeks to prohibit trading in the securities of the Company basedon unpublished price sensitive information.

DISCLOSURE UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITION ANDREDRESSAL) ACT 2013

The Company has in place an Anti-Sexual Harassment Policy in line with the requirementsof the Sexual Harassment of Women at Workplace (Prevention Prohibition and Redressal)Act 2013. Interna Complaints Committee has been set up to redress complaints receivedregarding sexual harassment There is no sexual harassment complaints received during theyear 2016-17.

EXTRACT OF ANNUAL RETURN

Pursuant to Section 92(3) of the Companies Act 2013 ('the Act) and Rule 12(1) of theCompanies (Management and Administration) Rules 2014 the extract if Annual Return inForm MGT-9 for the Financial Year ended March 31 2017 is Annexed to this Report as anAnnexure -I and forms part of this Report.

STATUTORY AUDITORS AND AUDITORS1 REPORT

M/s. Vinod S. Mehta & Co. Chartered Accountants (Firm Registration no.111524W)have been appointed as statutory auditors of the Company by the members at the previousAnnual General Meeting (AGM) held on 30th September 2016 has approved the appointment ofM/s. Vinod S. Mehta & Co. Chartered Accountants as Statutory Auditors of the Companyis placed for ratification by shareholders.

In this connection the Company had received certificate pursuant to Section 139(1) ofthe Companies Act 2013 stating that their appointment if made at the ensuing AnnualGeneral Meeting will be within the limits prescribed under Companies Act 2013.

INTERNAL AUDITOR

Pursuant to the provisions of Section 138 of the Act read with Rule 13 of "TheCompanies (Accounts) Rules 2014' and based on the Audit Committee recommendations theBoard of Directors of the Company at its meeting February 6 2015 has approved theappointment of Ms. Aditi Parth Ingreji (M. No. 113426) Chartered Accountant as theInternal Auditor of the Company for the financial year 2016- 2017 and 2017-18 to conductthe internal audit of the Company.

SECRETARIAL AUDITOR

Pursuant to the provision of Section 204 of the Companies Act 2013 and The Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Board of Directorsof the Company at its meeting has approved the appointment of M/'s. SAT & AssociatesCompany Secretaries in practice Propertier Sunil Thakur (ACS: 24713/CP: 11978) as theSecretarial Auditor of the Company for the financial year 2016-17 to conduct secretarialaudit of the Company .

STATUTORY AUDITOR'S OBSERVATIONS & MANAGEMENT REPLY

The Auditors' Report to the Members for the year under review does not contain anyqualification(s) or observation(s). The Notes no Financial Statements referred to in theAuditors' Report are self- explanatory and do not call for any further comments.

SECRETARIAL AUDITOR'S OBSERVATIONS & MANAGEMENT REPLY

Secretarial Auditor's observation Comments in their report dated 29th May 2017 isself-explanatory. Directors are actively working to recapitalizing the company.

DETAILS OF SUBSIDIARIES JOINT VENTURES AND ASSOCIATES COMPANIES

The Company has no subsidiaries Joint Ventures & Associates Companies.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to the requirement of Section 134(3)(c) and 134(5) of the Companies Act. 2013with respect to Directors' Responsibility Statement your Directors confirm that:

i. In the preparation of the annual accounts for the year ended March 31 2017 theapplicable accounting standards have been followed along with proper explanationsrelating to material departures if any;

ii. Your Directors have selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company as at March 31 2017 and of the Loss ofthe Company for year ended on that date;

iii. Your Directors have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of the Companies Act 2013for safeguarding the assets of the Company and for preventing and detecting fraud andother irregularities;

iv. Your Directors have prepared the annual account on a going concern basis;

v. Your Director had laid down internal financial controls to be followed by thecompany ant that such internal financial controls are adequate and were operatingeffectively;

vi. Your Director had advised proper system to ensure compliance with the provision ofall applicable laws and that such system were adequate and operating effectively.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Management Discussion and Analysis Report are set out as separate annexure to thisreport.

PERFORMANCE AND BOARD EVALUATION

Pursuant to the provision of the Companies Act 2013 the Board has carried out anannual performance evaluation of its own performance and that if its Committees andindividual Directors. A structured questionnaire was prepared after taking intoconsideration inputs received from the Directors covering various aspect of the Board'sfunctioning such as adequacy of the composition of the Board and its Committees Boardculture execution and performance of specific duties obligations and governance.

To determine the criteria of evaluation of the performance of the Independent Directorsas required under the clause 49 of the Listing Agreement the Company has devised a Policyfor performance evaluation of Independent Directors Board Committees and otherindividual Directors which includes criteria for performance evaluation of thenon-executive directors and executive directors The Board of Director expressed theirsatisfaction with the evaluation process.

A separate exercise was carried out to evaluate the performance of individual Directorsincluding the Chairman of the Board who were evaluated on parameters such as level ofengagement and contribution independent of judgment safeguarding the interest of theCompany and its minority shareholders etc. The performance evaluation of the independentDirectors was carried out by the entire Board. The performance evaluation of the Chairmanand the Nob independent Directors was carried out by the Independent Directors.

The Directors expressed their satisfaction over the evaluation process and resultthereof.

PARTICULARS OF EMPLOYEES

During the year under review the Company had not paid remuneration to its directorshence the disclosures pertaining to remuneration and other details as required underSection 197(12) of the Companies Act 2013 read with Rule 5(1) of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 are not provided in thereport.

Further there were no employees during the year within the meaning of Section 197(12)of the Companies Act 2013 read with Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014.

STATEMENT IN RESPECT OF ADEQUANCY AND INTERNAL CONTROL WITH REFERENCE TO THE FINANCIALSTATEMENTS AND THEIR ADEQUACY

There are adequate internal control procedures commensurate with the size of theCompany and nature of its business. The management has put in place effective InternalControl Systems to provide reasonable assurance for safeguarding Assets from unauthorizedaccess and Maintenance of Proper Accounting Records and Adequacy & reliability of theinformation used for carrying on Business Operations.

Further the Company has taken adequate steps to ensure proper authorization offinancial transactions and to prevent possibilities of frauds or other irregularities.

DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS/ COURTS/REIBUNALS

There are no significant and material order passed by the Regulators / Courts/Tribunaisimpacting the going concern status of the Company and its future operations.

DETAILS OF CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS ANDOUTGO

(a) Conservation of Energy

(i) The steps taken or impact on conservation of energy The Company has no activity relating to conservation of energy details of which are required to be furnished in this report as per provision of Section 134 (3){m) of the Companies Act 2013 read with Rule 8(3) of the Companies (Accounts) Rules 2014. Making every possible effort to conserve the use of power. No Capital investment was required to be made during the year
(ii) The steps taken by the Company for utilizing alternate sources of energy
(ii) The capital investment on energy conservation equipments

(b) Technology Absorption

(i) The efforts made towards technology absorption The company has no activity which requires technology absorption details of which are required to be furnished in this report as per the provision of Section 134 (3)(m) of the companies Act 2013 read with Rule 8(3) of the Companies (Accounts) Rules2014. No import was made during the 3(Three) Financial Year ended March 31 2017. Further to note that no expenditure was incurred on Research and Development.
(ii) The benefits derived like product improvement cost reduction product development or import substitution
(iii) In case of imported technology (imported during the last three reckoned from the beginning of the financial year)
(a) the details of technology imported
(b) the year of import;
(c) Whether the technology been fully absorbed
(d) if not fully absorbed areas where absorption has not taken place and the reason thereof
(iv) The expenditure incurred on Research and Deve3lopment

PARTICULARS OF LOAN GUARANTEES OR INVESTMENT BY THE COMPANY

During the year under review no Loan Guarantees or Investment is made by the company.

PARTICULARS OF FOREIGN EXCHANGE EARNINGS AND OUTGO

March 31 2017 March 31 2016
Foreign Exchange Earnings Nil Nil
Foreign Exchange Outgo Nil Nil

PROTOTERS

There has been no change in the shares of the Company under the "Promoters andPromoter Group". ACKNOWLEDGEMENT

Your Director wish to place on record their sincere appreciation for the valuablesupport received from the Company's bankers financial institutions centra I and stategovernment authorities clients consultants suppliers and members of the company andlook forward to a greater measure of the same in the coming years.

For and on behalf of the Board of Directors
Place: Mumbai Mr. DHARMEN D. MEHTA
Dated: 05-09-2017 Chairman & Managing Director