The Members of
Arman Financial Services Limited
Your Directors have pleasure in presenting the 23rd Boards Report of your Company together with the Audited Statement of Accounts and the Auditors5 Report of your company for the financial year ended, 31st March, 2015.
|Profit Before Interest and Depreciation||202,342,970||159,003,695||100,097,718||118,605,538|
|Provision for Depreciation||2,398,245||1,139,409||2,230,635||1,123,848|
|Net Profit Before Tax||92,590,236||66,692,118||42,266,491||50,256,664|
|Provision for Tax||31,017,933||21,404,352||14,464,908||16,084,327|
|Net Profit After Tax||61,572,303||45,287,766||27,801,583||34,172,337|
|Balance of Profit brought forward||104,024,926||77,763,661||95,276,447||77,830,608|
|Balance available for appropriation||165,597,229||123,051,427||123,078,030||112,002,945|
|Proposed Dividend on Equity Shares||8,309,584||6,924,653||8,309,584||6,924,653|
|Tax on proposed Dividend||1,691,635||1,176,848||1,691,635||1,176,845|
|Transfer to General Reserve||1,200,000||1,500,000||1,200,000||1,500,000|
|Transfer to Special Reserve U/s 45-IC of RBI||12,700,000||9,425,000||5,700,000||7,125,000|
|Surplus carried to Balance Sheet||141,696,010||104,024,926||106,176,811||95,276,447|
STATE OF COMPANYS AFFAIRS AND FUTURE OUTLOOK
Your company is engaged in the business of Asset Financing and Microfinance. The Parent company, Arman Financial Services Ltd., is engaged in Asset Finance, viz. Two-Wheeler and ThreeWheeler financing; while the Microfinance business is managed through Armans wholly owned subsidiary, Namra Finance Ltd. The financial statements of both Arman and Namra, as well as the consolidated financials of Arman are included within the Annual Report.
The company has performed admirably in a highly competitive business segment and this performance was been consistent over a period of many years. Net interest revenue from operations totaled Rs 29.61 Crores, compared to Rs 24.47 Crores the previous year, a 21% increase. Earnings Before Interest & Taxes (EBIT) increased by 27%, from Rs 15.79 Crores in FY14 to Rs 19.99 Crores in the current Fiscal Year. Profit after taxes increased from Rs 4.53 Crores to Rs 6.16 Crores, a 36% increase. Earnings Per share (Rs 10 each) was Rs 8.89. The Companys Loan Assets-Under-Management has crossed Rs 115 Crores, and Disbursements totaled Rs 168 Crores.
CHANGE IN NATURE OF BUSINESS, IF ANY Your Company continues to operate the same business segment as that of previous year and there is no change in the nature of the business.
Your Directors are pleased to recommend a dividend of Rs 1.2/-(net of tax) per equity share of Rs 10/- each (i.e. 12%) for the year ended March 31, 2015.
The Register of Members and Share Transfer Books will remain closed from Tuesday, 22nd September, 2015 to Tuesday, 29th September, 2015 (both days inclusive) for the purpose of payment of dividend for the financial year ended March 31, 2015.
Dividend will be paid to those Members whose names appear in the Register of Members as on 22nd September, 2015; in respect of shares held in dematerialised form, it will be paid to those Members whose names are furnished by National Securities Depository Limited and Central Depository Services (India) Limited, as beneficial owners as on that date.
Above dividend would be paid subject to approval by the Members at the ensuing Annual General Meeting ("AGM").
AMOUNTS TRANSFERRED TO RESERVES
The Board of the company has transferred the amounts to reserve as under:
Transfer to special reserve as required by section 45-IC of the Reserve Bank Of India Act, 1934: Rs 57,00,000
Transfer to general reserve: Rs 12,00,000
CHANGES IN SHARE CAPITAL, IF ANY
There is no change in the share capital of the company during the Year.
INFORMATION ABOUT SUBSIDIARY/ JV/ ASSOCIATE COMPANY
The Company has one wholly owned subsidiary company named Namra Finance Limited as on date. During the year no changes took place in the group corporate structure of your Company.
The consolidated financial statements presented by the Company include financial information of its subsidiary prepared in compliance with applicable accounting standards. The salient features of Namra Finance Limited in Form AOC-1 is attached along with Financial statements as required under section 129 (3) of the Companies Act, 2013.
unclaimed DIVIDEND AS ON 31/03/2015
The unclaimed dividend as on 31/03/2015 was Rs 12,28,650.60. No transfer of unclaimed / unpaid dividend was required to be made to the Investor Education And Protection Fund during the year.
MATERIAL CHANGES AND COMMITMENTS
No material changes and commitments affecting the financial position of the Company occurred between the end of the financial year to which these financial statements relate as on the date of this report.
Except the loans, guarantees and investments made in subsidiary company, there were no loans, guarantees or investments made by the Company under Section 186 of the Companies Act, 2013 during the year under review and hence the said provision is not applicable.
The Company has not accepted any deposits from the public within the meaning of the provisions of Non-Banking Financial Companies Acceptance of Public Deposits (Reserve Bank) Directions, 1988.
DIRECTORS AND KMP
In accordance with the Articles of Association of the Company and pursuant to the provisions of Section 152 of the Companies Act, 2013, Shri Aakash J. Patel [DIN 02778878] and Shri Aditya Bhandari [DIN 03062463] would retire by rotation at the ensuing AGM and being eligible, offers themselves for reappointment.
The term of Shri Aalok Patel, Executive director and CFO has expired on 30/06/2015. On recommendation of Nomination & Remuneration Committee in their meeting held on 14/05/2015, your directors recommend his reappointment as Executive director and CFO for further period of five years on a remuneration as specified in the notice calling 23rd Annual General Meeting.
The Board has identified the following officials as Key Managerial Personnel pursuant to Section 203 of the Companies Act, 2013:
1. Mr. Jayendra B. Patel- Managing Director & CEO
2. Mr. Aalok Patel - Executive Director & Chief Financial Officer (CFO)
3. Mr. Shashikant N Thakar - Company Secretary
Shri Amit Manakiwala, Whole-time Director is also Key Managerial Person in the Company.
BOARD AND AUDIT COMMITTEE
During the Financial Year 2014-15, the Company held four meetings of the Board of Directors as per Section 173 of Companies Act, 2013 and four meetings of the Audit Committee.
All the recommendations made by the Audit Committee during the year were accepted by the Board.
The details of the constitution and meetings of the Board and the Committees held during the year are provided in the Corporate Governance Report which forms part of this Annual Report.
NOMINATION AND REMUNERATION COMMITTEE
As per the section 178 (1) of the Companies Act, 2013 the Company has constituted Nomination And Remuneration Committee, details of which are provided in the Corporate Governance Report which forms part of this Annual Report.
Remuneration to Executive Directors:
The remuneration paid to Executive Directors is recommended by the Nomination and Remuneration Committee and approved by Board in the Board meeting, subject to the subsequent approval of the shareholders at the General Meeting and such other authorities, as may be required. The remuneration is decided after considering various factors such as qualification, experience, performance, responsibilities shouldered, industry standards as well as financial position of the Company.
Remuneration to Non Executive Directors:
The Non-Executive Directors are paid sitting fees for each meeting of the Board and Committee of Directors attended by them.
RATIO OF REMUNERATION TO EACH DIRECTOR
The information required pursuant to Section 197 read with Rule 5 of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 and Companies (Particulars of Employees) Rules, 1975, in respect of employees of the Company and Directors is furnished hereunder as annexure-1.
DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to Section 134(5) of the Companies Act, 2013 the Board of Directors of the Company confirms that-
a) In the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;
b) The directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit and loss of the company for that period;
c) The directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;
d) The directors had prepared the annual accounts on a going concern basis; and
e) The directors, in the case of a listed company, had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively.
INDEPENDENT DIRECTORS AND DECLARATION
Mr. Chinubhai R. Shah, Mr. Kaushikbhai D shah and Mr. Lokesh Kumar Singh have been appointed as the Independent Director of the Company as per Section 149(10) of the Companies Act, 2013 on 24/09/2014 for a term of 5 (Five) consecutive years on the Board of the Company. However Mr. Lokesh Kumar Singh ceases to be director with effect from 14th May, 2015 and it is also proposed to appoint Mr. R. K. Nagpal as Independent Director of the Company with effect from 24th August, 2015 for a term of 5 (Five) consecutive years on the Board of the Company
The Board of Directors of the Company hereby confirms that all the Independent Directors duly appointed by the Company have given the declaration and they meet the criteria of independence as provided under section 149(6) of the Companies Act, 2013.
Since all Independent Directors are associated with the company for more than 5 (Five) years, the company has not conducted familiarization programme for Independent Director.
AUDITORS AND REPORT THEREON
The Auditors, M/s J. T. Shah & Co, Chartered Accountants, Ahmedabad (Membership No 45669) retire at the ensuing Annual General Meeting and, being eligible; offer themselves for reappointment for a period of two years from the conclusion of this Annual General Meeting [AGM] till the conclusion of 25th AGM.
There are no qualifications or adverse remarks in the Auditors Report which require any clarification/ explanation. The notes on financial statements are self-explanatory, and needs no further explanation.
SECRETARIAL AUDIT REPORT
The Company has appointed M/s Pinakin Shah & Co., Practicing Company Secretary as secretarial auditor to conduct the audit under section 204 of the Companies Act, 2013.
There are no qualifications or adverse remarks in the Secretarial Audit Report which require any clarification/ explanation.
Further the Secretarial Audit Report for the financial year ended, 31st March, 2015 is annexed herewith for your kind perusal.
RELATED PARTY TRANSACTIONS
All related party transactions that were entered into during the financial year were on an arms length basis and were in the ordinary course of business. There are no materially significant related party transactions made by the Company with Promoters, Directors, Key Managerial Personnel or other designated persons which may have a potential conflict with the interest of the Company at large and Approval of the Board of Directors & shareholders was obtained wherever required. Further all the necessary details of transaction entered with the related parties are attached herewith in Form No. AOC-2 as Annexure-2 for your kind perusal and information.
Periodic assessments to identify the risk areas are carried out and management is briefed on the risks in advance to enable the company to control risk through a properly defined plan. The risks are classified as financial risks, operational risks and market risks. The risks are taken into account while preparing the annual business plan for the year. The Board is also periodically informed of the business risks and the actions taken to manage them. The Company has formulated a policy for Risk management with the following objectives:
Provide an overview of the principles of risk management Explain approach adopted by the Company for risk management
Define the organizational structure for effective risk management
Develop a "risk" culture that encourages all employees to identify risks and associated opportunities and to respond to them with effective actions.
Identify access and manage existing and new risks in a planned and coordinated manner with minimum disruption and cost, to protect and preserve Companys human, physical and financial asset.
INTERNAL CONTROL SYSTEM
The Company has in place, adequate systems of Internal Control to ensure compliance with policies and procedures. It is being constantly assessed and strengthened with new / revised standard operating procedures and tighter Information Technology controls. Internal audits of the Company are regularly carried out to review the Internal Control Systems. The Audit Reports of Internal Auditor along with their recommendations and implementation contained therein are regularly reviewed by the Audit Committee of the Board. Internal Auditor has verified the key Internal Financial Control by reviewing key controls impacting financial reporting and overall risk management procedures of the Company and found the same satisfactory. It was placed before the Audit Committee of the Company.
Internal financial control is in place commensurate with the size of the Company
CORPORATE SOCIAL RESPONSIBILITY
The company does not meet the criteria of Section 135 of Companies Act, 2013 read with the Companies (Corporate Social Responsibility Policy) Rules, 2014 so there is no requirement to constitute Corporate Social Responsibility Committee.
Pursuant to the provisions of the Companies Act, 2013, the Board has carried out an annual performance evaluation of its own performance, the directors individually as well as the evaluation of the working of its Audit, Nomination & Remuneration Committees.
A separate exercise was carried out to evaluate the performance of individual Directors including the Chairman of the Board, who were evaluated on parameters such as level of engagement and contribution, independence of judgment, safeguarding the interest of the Company and its minority shareholders etc. The performance evaluation of the Independent Directors was carried out by the entire Board. The performance evaluation of the Chairman and the Non Independent Directors was carried out by the Independent Directors.
Report on Corporate Governance along with the Certificate of the Auditors, M/s. Pinakin Shah & Co. Practicing Company Secretary, Ahmedabad confirming compliance of conditions of Corporate Governance as stipulated in the Listing Agreement with the Stock Exchanges forms part of the Board Report.
As per Section 177(9) and (10) of the Companies Act, 2013, and as per the Clause 49 of the Listing Agreement, the company has established Vigil Mechanism for directors and employees to report genuine concerns and made provisions for direct access to the chairperson of the Audit Committee. Company has formulated the present policy for establishing the vigil mechanism to safeguard the interest of its stakeholders, Directors and employees, to freely communicate and address to the Company their genuine concerns in relation to any illegal or unethical practice being carried out in the Company.
In accordance with the Green Initiative the Company has been sending the Annual Report / Notice of AGM in electronic mode to those Shareholders whose e-mail Ids are registered with the Company and / or the Depository Participants. Your Directors are thankful to the Shareholders for actively participating in the Green Initiative
EXTRACT OF ANNUAL RETURN
The Extract of Annual Return as required under section 92(3) of the Companies Act, 2013 and rule 12(1) of the Companies (Management and Administration) Rules, 2014, in Form MGT- 9 is annexed herewith as annexure-3 for your kind perusal and information.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE OUTGO:
(A) Conservation of energy and Technology absorption
Since the Company does not carry out any manufacturing activity, the particulars regarding conservation of energy, technology absorption and other particulars as required by the Companies (Accounts) Rules, 2014 are not applicable.
(B) Foreign exchange earnings and outgo
There were no foreign exchange earnings and outgo during the year under review.
BUY BACK OF SECURITIES
The Company has not bought back any of its securities during the year under review.
The Company has not issued any Sweat Equity Shares during the year under review.
No Bonus Shares were issued during the year under review.
EMPLOYEES STOCK OPTION PLAN
The Company has not provided any Stock Option Scheme to the employees.
SHARES IN SUSPENSE ACCOUNT
i. Aggregate number of shareholders and the outstanding shares in the suspense account lying at the beginning of the year: Nil
ii. Number of shareholders who approached issuer for transfer of shares from suspense account during the year: Not Applicable
iii. Number of shareholders to whom shares were transferred from suspense account during the year: Not Applicable
iv. Aggregate number of shareholders and the outstanding shares in the suspense account lying at the end of the year: Nil
v. That the voting rights on these shares shall remain frozen till the rightful owner of such shares claims the shares: Not Applicable
SHARES IN UNCLAIMED SUSPENSE ACCOUNT
i. Aggregate number of shareholders and the outstanding shares lying in the Unclaimed Suspense Account at the beginning of the year: Nil
ii. Number of shareholders who approached the issuer for transfer of shares from the Unclaimed Suspense Account during the year: Not Applicable
iii. Number of shareholders to whom shares were transferred from the Unclaimed Suspense Account during the year: Not Applicable
iv. Aggregate number of shareholders and the outstanding shares lying in the Unclaimed Suspense Account at the end of the year: Nil
CODE OF CONDUCT
The Code of Conduct for all Board members and Senior Management of the Company have been laid down and are being complied with in words and spirit. The compliance on declaration of code of Conduct signed by Managing Director and CEO of the Company is included as a part of this Annual Report.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
As required under Clause 49 of the Listing Agreements with Stock Exchanges, the Management Discussion and Analysis Report should forms part of this Annual Report.
ANY SIGNIFICANT AND MATERIAL ORDER PASSED BY REGULATORS OR COURTS OR TRIBUNALS
No orders were passed by the regulators or courts or Tribunals impacting the going concern status and companys operation in future.
The Board places on record their appreciation of the support of all stakeholders.
For & on behalf of the Board
|Date: 24/08/2015||Chinubhai Shah|
Annexure - 1
Ratio of Director Remuneration To Employee Median Remuneration
The ratio of the remuneration of each director to the median employee,s remuneration and other details in terms of sub-section 12 of Section 197 of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014:
|1 The ratio of the remuneration of each director to the median remuneration of the employees for the financial year.||Jayendra Patel: 14x|
|Amit Manakiwala: 8x|
|Aalok Patel: 5x|
|2 The percentage increase in remuneration of each Director, CFO, CEO, CS in the financial year||Jayendra Patel (VC & MD): 0%|
|Amit Manakiwala (WTD): 0%|
|Aalok Patel (ED): (-7%)|
|3 The percentage increase in the median remuneration of employees in the financial year||(-8%)|
|4 The number of permanent employees on the rolls of the Company||155|
|5 The explanation on the relationship between average increase in remuneration and Company performance||Variable compensation is an integral part of the total pay package and is based on individual performance rating and business unit performance. Factors considered for overall remuneration increase (decrease) include growth in company's profits, growth in disbursements, growth in Assets Under Management, benchmark study of industry, and regulatory provisions.|
|6 Comparison of the remuneration of the Key Managerial Personnel against the performance of the Company||As per the company's policy of rewarding the employees, including Key Managerial Personnel (KMP), the increase (or decrease) in remuneration and variable pay is based on an individual performance rating, growth in company's profits, growth in disbursements, growth in Assets Under Management, benchmark study of industry, and regulatory provisions. Considering the performance of the KMPs during the year, they were appropriately compensated.|
|7 Variations in the market capitalization of the Company, price earnings ratio as at the closing date of the current FY and previous FY and percentage increase over decrease in the market quotations of the shares of the Company in comparison to the rate at which the Company came out with the last public offer.||The market capitalization of Arman as at March 31, 2015 was H70.93 Crores compared to Rs 11.10 Crores as at March 31, 2014, a 539% increase. Earnings per share was Rs 4.01 during FY15 compared to Rs 5.48 in FY14. The stock price of the share increased by 1140%, to Rs 124/share as at March 31, 2015 from Rs 10/share during the last public offering in 3/11/1995.|
|8 Average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration||Average KMP Salary Increase (Decrease): (-1.3%) Average Employees Salary Increase (Decrease): (-8.2%) Variable compensation is an integral part of the total pay package and is based on individual performance rating and business unit performance. The average percentile increase (decrease) in the remuneration of employees compared to KMP is in line with benchmark studies and the performance of the company over a period of time. There is no exceptional increase in the managerial remuneration.|
|9 Comparison of the each remuneration of the Key Managerial Personnel against the performance of the Company||Remuneration of KMP is in line with industry benchmark study and performance of the company, including consolidated results.|
|10 The key parameters for any variable component of remuneration availed by the directors||No variable component availed by directors.|
|11 The ratio of the remuneration of the highest paid director to that of the employees who are not directors but receive remuneration in excess of the highest paid director during the year||Nil|
|12 Affirmation that the remuneration is as per the remuneration policy of the Company||Company confirms the same|
Annexure - 2
FORM NO. AOC - 2
(Pursuant to clause (h) of sub-section (3) of section 134 of the Act and Rule 8(2) of the Companies (Accounts) Rules, 2014.
Form for Disclosure of particulars of contracts/arrangements entered into by the company with related parties referred to in sub section (1) of section 188 of the Companies Act, 2013 including certain arms length transaction under third proviso thereto.
Details of contracts or arrangements or transactions at arm's length basis.
|. Name of Related Party||Nature of Relationship||Nature of contracts/ arrangements/ transaction||Duration of Contracts/ Arrangements/ Transactions||Salient terms of the Contracts or arrangements or transaction including the value, if any||Date of approval by Board||Amount Accepted during the year including interest (Rs )|
|1 Aakash J. Patel - HUF||Director||Loan||Not Specific||-||10.11.2014||680000|
|2 Aalok Patel||Executive Director||Loan||Not Specific||-||10.11.2014||250000|
|3 Jayendra B. Patel||Vice Chairman & Managing Director||Loan||Not Specific||-||10.11.2014||900000|
|4 Ritaben J. Patel||Director||Loan||Not Specific||-
India Infoline Research
Chinubhai R Shah , Chairman
Jayendra B Patel , Vice Chairman & MD & CEO
Kaushikbhai D Shah , Director
Ritaben J Patel , Director
Company Head Office / Quarters:
502-503 Sakar III,
Sharepro Services India Pvt Lt