Dharani Finance Ltd Directors Report.

Dear Members,

The Board of Directors present herein the TWENTY NINTH Annual Report of the Company together with the Audited Accounts for the year ended 31st March 2019.

FINANCIAL SUMMARY

The Financial results for the year ended 31st March 2019 are briefly as follows: -

Rs. in Lakhs
Particulars For the year Ended 31.03.2019 For the year Ended 31.03.2018
Income through Travel Operations,
Finance Services and others 110.45 374.75
Expenditure (Employee &
Administrative Expenses) 69.41 218.44
Profit 41.04 156.31
Depreciation 7.23 7.57
Interest & Bank Charges 5.85 2.97
Profit after depreciation & Interest 27.96 145.77
Provision for Income Tax
- Current 9.24 0.45
- Deferred 1.50 6.21
Profit after Tax 17.22 139.11
Surplus brought forward 248.37 137.08
Profit available for appropriation 265.59 276.19
APPROPRIATIONS -
Transfer to Statutory Reserves 3.44 27.82
Proposed Dividend - -
Dividend Distribution Tax - -
Net Surplus carried over 262.15 248.37

PERFORMANCE

The total revenue was Rs 110.45 lakhs as against Rs 374.75 lakhs in the previous year. Last year there was a profit of nearly Rs.200.00 lakhs due to sale of investments. The income this year consists mainly of interest on loans granted to two Companies. Besides interest, the Company also received a sum of Rs.31.66 lakhs as lease charges for the vehicles given on lease to a Group Company. Dividend income has come down from Rs.4.48 lakhs to Rs.0.11 lakhs. Consequent to transfer of the vehicles on lease, along with the staff to a Group Company expenses on employee benefits and

Contribution to Provident Fund etc., came down from Rs. 78.73 lakhs to Rs.15.64 lakhs. There was also a reduction in other expenses from Rs.139.71 lakhs to Rs.53.77 lakhs due to reduced provision for diminution in value of investment from Rs.44.57 lakhs to Rs.5.44 lakhs. The Company has not been able to expand its financial services due to insufficient funds. Activities have remained at the same level as in the previous year due to this reason.

OUTLOOK

Your company is also exploring the possibility of increasing its resources by additional capital or borrowings. In addition, by using its surplus, your Company proposes to increase its financial services activities.

RESERVES

A sum of Rs.3.44 lakhs is being transferred to the Statutory Reserves, as required by RBI regulations. With this, total Statutory Reserves comes to Rs. 148.85 lakhs.

DIVIDEND

The profits for the year being negligible are proposed to be ploughed back to increase its range of financial services activities, and achieve the required % of financial assets and income from financial services as advised by RBI to retain the certificate of registration as an NBFC. Your directors do not therefore propose to recommend any dividend.

SHARE CAPITAL

There is no change in the Share Capital of the Company- either the Authorized Capital or the Issued Capital. The paid up equity capital as on March 31, 2019 continues to remain at Rs.4,99,44,000.00. The Company has not issued any shares during the period.

EXTRACT OF ANNUAL RETURN

This is available in web address of the Company.

BOARD MEETINGS

1. Board consists of five directors including one Woman Director, as given below.

2. During the year 2018-19 FOUR Board Meetings were held on 29.05.2018, 10.08.2018, 08.11.2018 and 14.02.2019. Attendance at these meeting is given below.

Name of the Director Category of Directorship No. of Board Meetings Attended
1 Dr Palani G Periasamy (DIN 00081002) Chairman (Non-Executive) - Promoter 4
2 Mrs Visalakshi Periasamy (DIN 00064517) Non Executive - Promoter 2
3 Mr K Kandasamy (DIN 00277906) Executive -Promoter 2
4 Mr M Ganapathy (DIN 00234337) Non Executive - Independent 4
5 Dr S Muthu (DIN 03331664) Non Executive - Independent 4

The following Committees are in existence. Audit / Nomination and Remuneration/Stakeholders and Risk Management Committee.

From 01.04.2019 transfer of shares can be only in demat form and Shareholders have been advised.

MANAGEMENT COMMITTEE

No Management Committee meeting was conducted during this period.

DIRECTORS RESPONSIBILITY STATEMENT

In terms of Section 134 (5) of the Companies Act, 2013, the directors would like to state that:

i) In the preparation of the annual accounts, the applicable accounting standards have been followed. ii) The directors have selected such accounting policies and applied them consistently and made judgments and estimates that were 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 or loss of the Company for the year under review. iii) The directors 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 the Company and for preventing and detecting fraud and other irregularities. iv) The directors have prepared the annual accounts on a going concern basis. v) The directors had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively. vi) The directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such system were adequate and operating effectively.

The new accounting standards Ind AS will become applicable to the your company with effect from the year 2019-20.

DECLARATION BY INDEPENDENT DIRECTORS

The Independent Directors have given their declarations as per Section 149 (6) to the effect that they meet the criteria of Independence. 2 Independent Directors were appointed as Independent Directors in the Annual General Meeting 25th September 2014 to hold office for 5 years from 25.09.2014 to 24.09.2019. They are being proposed for re-appointment for a Second Term.

LOANS, GUARANTEES OR INVESTMENTS

During the year 2018-19, the company has not given any loans or provided any guarantees covered under the provisions of Section 186 of the Companies Act, 2013. A sum of Rs.88000/- was invested in SBI by purchasing 300 fully paid equity shares of Rs.1/- each.

CONTRACTS, ARRANGEMENTS WITH RELATED PARTIES REFERRED TO IN SECTION 188(1)

All related party transactions that were entered into during the financial year were in the ordinary course of business and were on arms length basis. The statement in form AOC 2 is attached as Annexure- II. There are no materially significant related party transactions entered into by the Company with Promoters, Key Managerial Personnel or other designated persons which may have potential conflict with the interest of the Company at large.

AUDITORS REPORT

The observations made in the Auditors Report read together with relevant notes thereon are self explanatory and do not call for any further comments under Section 134(3)f of the Companies Act, 2013. There are no qualifications reservations, or adverse remarks. Their report is an unmodified one.

STATUTORY AUDITORS

M/s. CNGSN & Associates LLP, Chartered Accountants (Firm Regn. No. 004915S/S200036), Chennai, appointed in the Annual General Meeting held on 26th September 2017 will continue as, Statutory Auditors.

SECRETARIAL AUDIT

Pursuant to provisions of section 204 of the Companies Act, 2013 and the Companies

(Appointment and Remuneration of Managerial Personnel) Rules, 2014. Mr M Damodaran and Associates, Company Secretaries in practice have carried out the Secretarial Audit of the Company. Their Audit report as on 31.03.2019 is annexed as "Annexure III.

Important observations by the Auditors and the Companys explanations are given below.

Observations Reasons
a The Company has partly complied with the provisions of Section 203 of the Companies Act, 2013 with regard to the appointment of Whole-time Company Secretary. Effective action is being taken to appoint a whole time Company Secretary within the time allowed in place of the Company Secretary who resigned from 11th January 2019.
b The Company has not transferred shares pertaining to unpaid and unclaimed dividend to IEPF authority as per section 124(6) of the Companies Act, 2013 read with Rule 6(5) of the Investor Education and Protection Fund
Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 Transfer of shares (2010-11) to IEPF is underway and expected to be completed shortly. The form IEPF 4 will be filed on completion of the work.
c The Company has not filed e-form IEPF - 4 under rule 6(5) of the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016.
d There was delay in filing e-form IEPF - 6 as per Rule 8 of the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2015. There was some delay in getting the confirmation from bank which resulted in late filing.
e The website of the company was not updated as per regulation 46 of the SEBI (LODR) Regulations, 2015.
f There was delay of 5 hours 29 minutes in submission of Voting Results of the Annual General Meeting held for financial year ended 31.03.2018 under regulation 44 of the SEBI (LODR) Regulations, 2015.
g There was delay of 4 hours 29 minutes in submission of proceedings of the Annual General Meeting held for financial year ended 31.03.2018 under regulation 30 read with Schedule III of the SEBI (LODR) Regulations, 2015. It would be ensured in future, as delay occurred while concluding the proceedings of the Annual General Meeting and failure of computer connectivity.

It is declared that Company has complied with all the applicable Secretarial Standards.

MATERIAL CHANGES AND COMMITMENTS

There were no material changes and commitments affecting the financial position of the Company, which have occurred between the end of the financial year and the date of the report.

FOREIGN EXCHANGE EARNINGS AND OUT-GO, CONSERVATION OF ENERGY & TECHNOLOGY ABSORPTION

A. During the year there were no Foreign Exchange Earnings & Outflow.

B. Conservation of Energy & Technology absorption. These guidelines are not applicable to this Company.

SUBSIDIARY COMPANIES

The Company does not have any subsidiary or any associate Company

RISK MANAGEMENT POLICY

The Company has developed a risk management policy. Pursuant to Section 134 (3) (n) of the Companies Act, 2013 details of the Policy are disclosed in the Companys Website.

At present the Company has not identified any element of risk which may threaten the existence of the Company. In this context, report against heading ‘Material Changes of Commitments given above may be referred to.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

Dr Palani G Periasamy, (DIN 00081002) retires by rotation at the ensuing Annual General Meeting and being eligible offers himself for reappointment.

Dr S Muthu (DIN 03331664) and Mr M Ganapathy (DIN 00234337) are being proposed for reappointment as Independent Directors in the ensuing Annual General Meeting.

Mr P Rajasekaran, Company Secretary and CFO resigned with effect from 11th January 2019. Company is taking action to fill up the vacancy at the earliest, within the time allowed.

SIGNIFICANT AND MATERIAL ORDERS

There were no significant and material orders passed by the Regulators or Courts or Tribunals impacting the going concern status and Companys operations in future.

INTERNAL FINANCIAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has an Internal Control System, commensurate with the size, scale and complexity of its operations. The scope and authority of the Internal Audit function is defined in the assignment order. To maintain its objectivity and independence, the Internal Auditor reports to the Chairman of the Audit Committee of the Board & to the Chairman of the Board. The Internal Audit monitors and evaluates the efficacy and adequacy of internal control system in the Company, its compliance with operating systems, accounting procedures and policies. Based on the report of internal auditor, management undertakes corrective action and thereby strengthen the controls. Significant audit o b s e r v a t i o n s w h e r e v e r m a d e a n d recommendations along with corrective actions thereon are presented to the Audit Committee of the Board.

DEPOSITS

The Company does not hold any public deposits as on 31st March 2019. Your Company has not accepted any deposits covered under Chapter V of the Companies Act, 2013 and the Companies (Acceptance of Deposits) Rules, 2014.

The Company has stopped collecting public deposits and had got its Licence amended by Reserve Bank of India to indicate that it is a non deposit taking NBFC. Your Company does not propose to collect public deposits in the coming year.

CORPORATE SOCIAL RESPONSIBILITY INITIATIVES

Your Company does not fall within the parameters as per Section 135 of the Companies Act, 2013 and hence not mandated to formulate a Corporate Social Responsibility Policy or spend the prescribed amounts.

BOARD EVALUATION

Pursuant to the provisions of the Companies Act, 2013, the Board has carried out an evaluation of its own performance, the directors individually as well as the evaluation of the working of its Audit, Nomination & Remuneration Committees. The manner in which the evaluation is carried out is based on criteria approved by the Board which is available on the Companys Website.

VIGIL MECHANISM FOR DIRECTORS & EMPLOYEES

A competent Vigil mechanism has been established and a whistle blower policy has been designed to help Directors and Employees to report genuine concerns. The complete mechanism is given in the companys website.

CORPORATE GOVERNANCE

This requirement is not applicable to this Company at present, as per Regulation 15(2) of the SEBI (Listing Obligations and Disclosure Requirements), as its paid up capital is less than Rs. 10 crores and Net worth less than Rs.25 crores.

The above is also to be treated as Management discussion and analysis. Related Party disclosures are available in Note 28 to the accounts.

PREVENTION OF SEXUAL HARASSMENT AT WORK PLACE

The Company has in place an Anti Sexual harassment policy in line with the requirements of Section 4 of the Sexual harassment of Women at Work Place (Prevention, Prohibition & Redressal) Act, 2013. Internal Complaints Committee (ICC) has been set up to redress complaints received as sexual harassment. All employees are covered under this policy. Details have been displayed prominently in the work place and also in the Companys Website.

No complaints were received during the year 2018-19.

CODE OF CONDUCT

The Board of Directors has approved a Code of Conduct which is applicable to the Members of the Board and all employees in the course of day to day business operations of the Company.

The Code has been posted on the Companys website : www.dharanifinance.in

UNCLAIMED DIVIDEND

Pursuant to Section 124 & 125 of the Companies Act, 2013, dividend remaining unpaid or unclaimed for a period of 7 years will be transferred to the Investor Education and Protection Fund of the Central Government.

a. The Company transferred the following amounts of unclaimed dividend to the IEPF of the Central Government during this period.

Year % of Dividend Date of declaration Amount Transferred to IEPF on
2010-11 5% 20.10.2011 Rs. 4,97,151.50 25.12.2018

b. The following amount is due to be transferred to IEPF during the year 2019-20.

Year % of Dividend Date of declaration Amount Due date for transfer to IEPF
2011-12 7% 15.10.2012 Rs.7,55,444.50 24.10.2019

Reminders are sent to the shareholders as per records every year, for the unpaid dividends.

MCA by notification GSR 352 (E) dated 10.05.2012 has stipulated publication of details of unclaimed/ unpaid dividend in the Company website and MCA website. This will enable investors track unclaimed dividend by checking the status online and real time. Our company has already uploaded the requisite details that will get updated every year within 90 days of Annual General Meeting.

Transfer of unpaid Dividend and corresponding Shares to the Investor Education and Protection Fund.

a. During the financial year 2018-19, 567740 Equity Shares in respect of which dividend entitlements to the extent of Rs.480790/- for the year 2009-10 remained unclaimed for seven consecutive years or more, have been transferred by the Company to the Investor Education and Protection Fund established by the Central Government (IEPF), pursuant to the provisions of Section 124 of the Companies Act, 2013 read with the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016. The unclaimed dividend amount was already transferred to IEPF Account during 2017-18

Shareholders may claim their unclaimed dividend for the years prior to and including the financial year 2009-10 and the corresponding shares, from the IEPF

Authority by applying in the prescribed Form No. IEPF-5. This Form can be downloaded from the website of the IEPF Authority www.iepf.gov.in.

b. While the unclaimed dividend for the financial year 2010-11 has been transferred, the corresponding shares will be transferred by the Company to IEPF Account. Communication has been sent to the concerned Shareholders advising them to write to the Company or Registrar of Transfer Agent to claim their dividend. Notices in this regard have also been published in newspapers. Details of such unclaimed dividend and corresponding shares are available on the Companys corporate website.

ACKNOWLEDGEMENTS

Your Directors place on record their appreciation of the services rendered by the Staff and Executives of your Company. Your Directors also thank the shareholders who have continued to repose their confidence in the Company and its management.

For and on behalf of the Board of Directors
Dr. PALANI G PERIASAMY
PLACE: CHENNAI CHAIRMAN
DATE : 27.05.2019 (DIN 00081002)