CIFCO Finance Ltd Directors Report.

Your Directors present the THIRTY-THIRD ANNUAL REPORT of the Company together with the Audited Statements of Accounts for the year ended 31st March, 2017.

1. FINANCIAL RESULTS

Amount (Rs Lacs)
Year ended 31st March, 2017 Year ended 31st March, 2016
Profit/Loss for the year 0.34 48.46
Add: Reversal of provision in diminution in value of investments no longer required -- --
0.34 48.46
Profit/(Loss) before Depreciation (2.08) (10.71)
(Add)/Less: Depreciation 0.10 0.10
Profit/(Loss) Before Tax (2.18) (10.81)
(Add)/Less: Provision for
Taxation -- --
Prior Years’ Tax Adjustment -- --
Profit/(Loss) after Tax (2.18) (10.81)
Add/(Less): Losses brought forward from previous year (2,885.58) (2,874.77)
Surplus/(Deficit) carried to
Balance Sheet (2,887.76) (2,885.58)

2. DIVIDEND

In view of the accumulated losses, the Directors do not recommend any dividend for the year under report.

3. CHANGE IN THE NATURE OF BUSINESS, IF ANY

There has been no change, in the nature of business of the Company.

4. MANAGEMENT ANALYSIS

The Company continued to be impeded by the restrictions for pursuing any activity of a Non-Banking Finance Company, as imposed by the Reserve Bank of India. Other income was mainly on account of rent received. However, the quantum of revenues generated being nominal, it was inadequate to discharge the liabilities. In the absence of any employee on the payrolls, the Company continued to rely on the honorary help rendered by the personnel of Associate Companies, without any obligation, legal or otherwise, arising on the Company on account of such help being accepted by it, or any kind of binding on such personnel, legal or otherwise, on account of their rendering such help to the Company.

5. NOTE ON STATE BANK OF INDIA MATTERS

As reported earlier, the Company had offered a One-Time Settlement of about Rs.7.50 lacs to State Bank of India (SBI) in respect of its Dividend Warrant Account liability.

The matter was pending before the Debt Recovery Tribunal (DRT). DRT found no merit in the application of SBI and declared the matter as closed with an option to re-open the same if SBI could identify further assets of the Company.

6. MATERIAL CHANGES DURING THE FINANCIAL YEAR AS WELL AS BETWEEN THE END OF THE FINANCIAL YEAR AND THE DATE OF THE BOARD REPORT

During the year under report, the Promoters of the Company disinvested 27,19,843 equity shares, which constituted 41.84% of the paid-up capital. The disinvestments were made to two acquirers of whom one is a Director of the Company and the other is a body corporate. Subsequent to the acquisitions by the two acquirers, the Promoter Group has changed.

There has been no material change between the end of the Financial Year and the date of the Board Report.

7. DETAILS IN RESPECT OF ADEQUACY OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THE FINANCIAL STATEMENTS

There are adequate internal control procedures commensurate with the size of the Company and the nature of its business, for the purchase of inventory and fixed assets and for the sale of goods.

8. DETAILS OF SUBSIDIARY/JOINT VENTURES

As on the date of this Report, the Company has no Subsidiary/Joint Ventures.

9. ASSOCIATE COMPANIES

As on the date of this Report, the Company has 1 (one) Associate. A statement containing the salient features of the financial statements of the Associate, prepared in the prescribed format viz Form AOC-1 is attached as part of the Financial Statements of the Company.

10. FIXED DEPOSITS/NON-CONVERTIBLE DEBENTURES

As reported earlier, in the light of various restrictions, the Company was unable to generate any income which could be deployed for repayment of the deposits as well as non-convertible debentures (NCDs). Further, the Company’s application to the Company Law Board for revision in the Schedule of Repayments is still pending approval. During the year under report, 5 deposits amounting to Rs.67,000/- have been repaid.

11. REDEMPTION OF PREFERENCE SHARES

As reported earlier, 12,00,000 10% Cumulative Preference Shares of Rs 10/- each fully paid-up, aggregating Rs 1.20 crores, allotted by the Company in 1998, were redeemable at par on 31st March, 2003. However, on account of acute financial crisis being faced by the Company, the repayment was not done.

Further, the Company was unable to issue any equity shares to facilitate such redemption.

12. AUDITORS

As per the provisions of Section 139 of the Companies Act, 2013, the term of office of M/s M.D.Pandya & Associates, Chartered Accountants, as Statutory Auditors of the Company will come to an end from the forthcoming Annual General Meeting. The Board, of Directors places on record its appreciation of the services rendered by M/s M.D.Pandya & Associates as Statutory Auditors of the Company.

Subject to the approval of the members, the Board has recommended the appointment of M/s Mayur Mahesh Shah & Co., Chartered Accountants, Mumbai, bearing ICAI Registration No.117604W, as Statutory Auditors of the Company for a period of 5 (five) years from the conclusion of the forthcoming Annual General Meeting till the conclusion of the Thirty-Eighth Annual General Meeting to be held in the calendar year 2022.

A resolution proposing the appointment of the Statutory Auditors forms part of the accompanying Notice. Your Directors recommend the appointment of the Statutory Auditors.

13. AUDITORS’ REPORT

The Auditors have made certain observations in their Report on compliances not made by the Company. As explained earlier, despite the rejection by the Reserve Bank of India (RBI) of the Company’s application for registration as a Non-Banking Financial Company (NBFC) and the consequential restrictions imposed by RBI, the Company continued to carry on activities of an NBFC, in terms of a legal opinion obtained, for the limited purpose of discharging its liabilities, including repayment to the depositors, and to meet administrative overheads. Hence, the Accounts have been prepared on a going concern basis. This has been further explained in Note 15(2) under Notes to Accounts.

Further, the Company has also been legally advised that in the light of RBI’s rejection referred above, the applicability of the various provisions of "Prudential Norms Directions" does not arise. Hence, Prudential Norms for Income Recognition, Assets Classification and Provisioning for Non-Performing Assets have not been followed. As regards repayment of deposits, in compliance of the Order passed by the Company Law Board (CLB), read together with the Corrigendum issued thereunder, as also the repayment of Non-Cumulative Debentures, in terms of the Schedule prepared therefor, the developments in respect thereof during the period under report have been explained separately, as well as in Note 15(5)(a) and 15(5) (b) under Notes to Accounts.

As regards the observation regarding disqualification of Directors, for appointment as Directors, in terms of Section 164(2) of the Companies Act, 2013, the Board was revamped and the present Directors offered themselves for appointment with the sole intention of co-ordinating with the Promoters of the Company in their efforts to discharge the Company’s liabilities expeditiously, notwithstanding that such appointment would attract disqualification under the said Section, as stated herein and as observed by the Auditors.

14. SHARE CAPITAL

During the year under report, the Company has not issued any shares.

15. NOMINATION AND REMUNERATION COMMITTEE, RISK MANAGEMENT COMMITTEE OR ANY OTHER COMMITTEE

The Company is not paying remuneration to its Directors and hence has not constituted any Remuneration Committee.

Further, in the absence of any commercial activities as well as means of revenue generation, constitution of any Committee to monitor the activities is not feasible and hence not constituted.

16. EXTRACT OF THE ANNUAL RETURN

The extract of the Annual Return prepared in Form MGT-9 in pursuance of Section 92 of the Companies Act, 2013 is annexed and forms part of this Report.

17. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

Given the nature of business being retailing, providing information with regard to conservation of energy and technology absorption as required under Section 134 of the Companies Act, 2013 and the Rules thereunder and hence information in this regard is not required to be furnished. Further, the Company neither used nor earned any foreign exchange during the year under report.

18. CORPORATE SOCIAL RESPONSIBILITY

In the absence of any commercial activity for the last several years and the huge accumulated losses being suffered by the Company, the Company has not been able to take up any project as part of Corporate Social Responsibility and hence disclosures thereon in compliance of the provisions of clause (o) of Section 134(3) of the Companies Act, 2013 read together with Rule 9 of the Companies (Corporate Social Responsibility) Rules, 2014 have not been made.

19. DIRECTORS

In terms of the Articles of Association of the Company, Mr.P.Krishnan retires at the ensuing Annual General Meeting.

The Company has received a notice in writing from a member proposing the candidature of Mr.P.Krishnan for appointment as Independent Director. The Company has received declaration from Mr.Deepak Sheth confirming that he meets with the criteria of independence as prescribed under of Section 149(6) of the Companies Act, 2013. Your Directors recommend the appointment of Mr.P.Krishnan as Independent Director.

Mr.S.K.Nandi, Independent Director, acquired 11,53,793 equity shares of the Company which constituted 17.75% of the paid-up equity capital. By virtue of the acquisition the status of Mr.S.K.Nandi changed from an Independent Director to a Promoter Director.

20. NUMBER OF MEETINGS OF THE BOARD OF DIRECTORS

During the year 2016-2017, the Board of Directors met four times viz. on 30th May, 2016; 12th August, 2016, 11th November, 2016 and 30th January, 2017.

21. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186

The Company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under Section 189 of the Companies Act, 2013 and hence no information is required to be furnished.

Details of investments in all bodies corporate are given in Note 8 in the Financial Statements.

22. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

The Company has not entered into any contract with any related party.

23. MANAGERIAL REMUNERATION

The Company has not paid remuneration to the Key Managerial Personnel.

24. COST AUDIT REPORT

Given the nature of the Company’s activities, the provisions relating to submission of Cost Auditors’ Report do not apply to the Company.

25. CORPORATE GOVERNANCE

A report on Corporate Governance is included as a part of this Annual Report alongwith a certificate from the Company’s Auditors.

26. PARTICULARS OF EMPLOYEES

During the year under report, there was no employee of the category mentioned in Section 134 and the Rules thereunder and hence information in this regard is not required to be furnished.

27. DIRECTORS’ RESPONSIBILITY STATEMENT

As required under Section 134(5) of the Companies Act, 2013, the Directors hereby confirm that:

1. In the preparation of the Annual Accounts, the applicable accounting standards have been followed;

2. They have 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 your Company at the end of the financial year covered under this Report and of the Profit of your Company for the year;

3. They have 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 your Company and for preventing and detecting fraud and other irregularities;

4. The Annual Accounts have been prepared on a going concern basis.

5. They have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively.

6. They have devised proper systems to ensure compliance with the provisions of all applicable laws and such systems were adequate and operating effectively.

28. ACKNOWLEDGEMENTS

Your Directors wish to place on record their deep sense of appreciation of the devoted and diligent services rendered by personnel of Associate Companies at all levels and the co-operation extended by them. The Board also wishes to place on record its gratitude to the Company’s Bankers.

FOR AND ON BEHALF OF THE BOARD
S.K.NANDI V.M.SATYAN
Mumbai DIRECTOR DIRECTOR
Dated: 20th May, 2017 DIN: 00075702 DIN: 00076016