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Ladies and Gentlemen,
Your directors have pleasure in presenting their 27th Annual Report and the Audited Statement of Accounts for the year ended on 31st March, 2019.
|1. FINANCIAL RESULTS||(Amount in Rs.)|
|Particulars||For the financial year 2018-19||For the financial year 2017-18|
|Profit before financial costs, depreciation, and tax||28,50,84,768||24,84,48,943|
|Profit before depreciation and tax||7,45,29,246||6,62,82,767|
|Depreciation for the financial year||87,477||89,839|
|Profit /(Loss) before tax||7,44,41,769||6,61,92,928|
|Direct Taxes (current and deferred taxes)||20,195,105||1,67,03,060|
|Profit / (Loss) after Tax||5,42,46,664||4,94,89,868|
|Transfer to Reserve Fund||1,08,49,333||98,97,974|
2. TRANSFERS TO RESERVES AND PROVISIONS
Except as mentioned below, no amount was proposed to transfer to any reserve by the Company during the year under review.
During the year under review, the Company has transferred Rs. 1,08,49,333/-(Rupees One Crores Eight Lakhs Forty Nine Thousand Three Hundred and Thirty Three Only) to Special Reserve Funds in order to comply with the provisions of Section 45IA read with section 45IC of the Reserve Bank of India Act, 1934.
As on 31st March, 2019, the Company has made the provision of Rs. 44,73,810/- (Rupees Forty Four Lakhs Seventy Three Thousand Eight Hundred and Ten Only) for Sub Standard Assets and Rs. 67,72,249/- (Rupees Sixty Seven Lakhs Seventy Two Thousand Two Hundred and Forty Nine Only) for Standard Assets in order to comply with the guidelines of the Reserve Bank of India.
3. OPERATIONS OF THE COMPANY
During the year under review, the Company was engaged in carrying on the business as Non- Banking Financial Company without accepting public deposits for which the Certificate of Registration has been obtained from the Department of Non- Banking Supervision, Reserve Bank of India, New Delhi. Your directors also intend to diversify its operation into another area / business in order to make the Company more profitable.
4. PERFORMANCE REVIEW
During the year under review, the Companys total income has increased to Rs.29,79,89,760/- (Rupees Twenty Nine Crores Seventy Nine Lakhs Eighty Nine Thousand Seven Hundred and Sixty Only) as compared to Rs. 25,75,77,864/- (Rupees Twenty Five Crores Seventy Five Lakhs Seventy Seven Thousand Eight Hundred Sixty Four Only) in the previous year and the Company earned a profit before tax of Rs.7,44,41,769/- (Rupees Seven Crores Forty Four Lakhs Forty One Thousand Seven Hundred and Sixty Nine Only) as compared to Rs. 6,61,92,928/- (Rupees Six Crores Sixty One Lakhs Ninety Two Thousand Nine Hundred Twenty Eight Only) in the previous year.
5. SHARE CAPITAL OF THE COMPANY
The Authorised share capital of the Company is Rs.11,00,00,000/- divided into 1,10,00,000 Equity shares of Rs.10/- each. Issued, Subscribed and Paid up share capital of the Company is Rs.10,88,00,000/- divided into 1,08,80,000 Equity Shares of Rs.10/- each fully paid up.
Out of the above 94,07,381 Equity Shares being 86.46% of the Companys paid up equity shares capital are in dematerialized form as on 31st March, 2019 and balance 14,72,619 Equity Shares being 13.54% of the Companys paid up equity shares capital are in physical form. The Company request all the shareholders who hold equity shares in physical form to get their equity shares dematerialised with their depository at earliest. Our Registrar & Transfer Agent is M/s Indus Portfolio Private Limited, having their communication office at G-65, Bali Nagar, New Delhi -110015.
6. PAYMENT OF DIVIDEND
Your directors do not recommend any dividend for payment to the shareholders / members of the Company for the financial year ended on 31st March, 2019.
7. DIRECTORS OF THE COMPANY
In term of the Section 152 of the Companies Act, 2013 and Articles of Association of the Company, Mr. Kuldeep Singh Solanki (DIN-00009212), non- executive director of the Company, retires by rotation at ensuing Annual General Meeting being eligible, offers himself for re-appointment. Your directors recommend his re-appointment as director of the Company. Further Ms. Renuka Hooda, independent director whose term will expire on 29th March, 2020, being eligible for appointment and also appointed as independent director for the second term for five years. There was no other change in directors of the Company.
As required under regulation 36(3) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the information on the particulars of the Directors proposed for appointment/re-appointment has been given in the Notice of the Annual General Meeting
Declaration by Independent Directors
Pursuant to the provisions of section 149 of the Act, Mr. Samai Singh and Ms. Renuka Hooda are the independent directors of the Company. They have submitted declaration that each of them meets the criteria of independence as provided in section 149(6) of the Act and there has been no change in the circumstances which may affect their status as independent director during the year.
During the year under review, the non-executive directors of the Company had no pecuniary relationship or transactions with the Company, other than the sitting fees, commission and reimbursement of expenses incurred by them for the purpose of attending meetings of the Company.
Pursuant to the provisions of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, 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 Committee, Nomination and Remuneration Committee. The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report.
The Board has, on the recommendation of the Nomination and Remuneration Committee framed a policy on appointment and remuneration including criteria for determining qualification, positive attributes, independence of directors and other matters provided under section 178(3) of the Companies Act, 2013. The summary of Nomination and Remuneration Policy is stated in the Corporate Governance Report and is also available on the Companys website www.sainikfinance.com.
Disclosure under section 197 (12) of the Companies Act, 2013 read with rules made thereunder
Disclosures with respect to the remuneration of Directors and employees as required under Section 197 of the Act and Rule 5 (1) Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 (Rules) is given below:
|The ratio of the remuneration of each director to the median remuneration of the employees of the company for the financial year;||Name of the Director||Ratio to the median|
|The percentage increase in remuneration of each director, Chief Financial Officer, Chief Executive Officer, Company Secretary or Manager, if any, in the financial year;||Name of Director/CS/CFO||% increase|
|Jagdish Chandra, CFO||8%|
|Kapil Sharma , CEO*||-|
|Kunal Gupta, CS**||-|
|The percentage increase in the median remuneration of employees in the financial year;||10%|
|The number of permanent employees on the rolls of Company at end of the financial year under review;||6|
|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;||The average % increase is 10% for all employees based on the fixed and variable components. The increase in the percentile of managerial personnel is 9% which is slightly less than other employees.|
|Affirmation that the remuneration is as per the remuneration policy of the company.||Yes; the remuneration is as per the remuneration policy of the company.|
*Mr. Kapil Sharma, CEO resigned w.e.f. 30.04.2018 and ** Mr. Kunal Gupta, Company Secretary resigned w.e.f. 28.05.2019 None of employees of the Company has received remuneration of Rs.1,02,00,000 per annum and Rs.8,50,000 per month during the financial under review. Details of employees remuneration as required under provisions of Section 197 of the Companies Act, 2013 and Rule 5(2) and 5(3) of Rules are available at the registered office of the Company during working hours 21 days before the Annual General Meeting and shall be made available to any shareholders on their request in written.
During the year under review, (5) Board Meetings were convened and held. The details of which are given in the Corporate Governance Report. The intervening gap between two board meetings was within the period prescribed under the Companies Act, 2013.
8. KEY MANAGERIAL PERSONNEL
Pursuant to the provisions of section 203 of the Act, as on date the key managerial personnel of the Company are - Mr. Akash Shrivastava, Chief Executive Officer, Mr. Jagdish Chandra, Chief Financial Officer and Ms. Pooja Bansal, Company Secretary of the Company. During the year under review, Mr. Kapil Sharma, Chief Executive Officer of the Company has tendered his resignation from the post of Chief Executive officer from 30th April, 2018. Subsequent to end of financial year, Mr. Akash Shrivastava was appointed as Chief Executive Officer w.e.f. from 1st April, 2019. Mr. Kunal Gupta, Company Secretary of the Company a member of ICSI, resigned with effect from 28th May, 2019 and Ms. Pooja Bansal was appointed as Company Secretary and Compliance Officer of the Company with effect from 1st June, 2019.
9. MANAGEMENT DISCUSSION AND ANALYSIS REPORT:
As required under regulation 34 of SEBI (Listing Obligation and Disclosure Requirements) Regulations, 2015, the Management Discussion and Analysis Report is enclosed as a part of this report.
10. DIRECTORS RESPONSIBILITY STATEMENT:
The Board of Directors acknowledges the responsibility for ensuring compliance with the provisions of section 134(3)(c) read with section 134(5) of the Companies Act, 2013 in the preparation of the Financial Statement for the financial year ended on 31st March, 2019 and state: i) That in the preparation of Annual Accounts for the financial year ended as at 31st March, 2019, the applicable Accounting Standards have been followed along with proper explanation relating to the material departures. ii) That the Directors have selected such Accounting Policies and applied them consistently and made judgements 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 financial year ended as at 31st March, 2019 and of the profit and loss of the Company for the financial year ended on 31st March, 2019. iii) That 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 or other irregularities. iv) That the Directors have prepared the Annual Accounts on a "Going Concern basis". v) The Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively; and vi) There is a proper system to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.
Based on the framework of internal financial controls and compliance systems established and maintained by the Company, work performed by the internal, statutory and secretarial auditors and external consultants, including audit of internal financial controls over financial reporting by the statutory auditors, and the reviews performed by management and the relevant board committees, including the audit committee, the board is of the opinion that the Companys internal financial controls were adequate and effective during financial year 2018-19.
11. PUBLIC DEPOSITS
The Company has not invited or accepted any public deposits within the meaning of Section 73 of the Companies Act, 2013 and the rules made thereunder and section 45-I(bb) of the Reserve Bank of India Act, 1934 during the year under review. The Company does not hold any public deposit as on date and will not accept the same in future without the prior approval of Reserve Bank of India in writing.
12. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS
The Company, being a non-banking finance company registered with the Reserve Bank of India and engaged in the business of giving loans or finance & investment activities, is exempt from complying with the provisions of section 186 of the Companies Act, 2013. Accordingly, the disclosures of the loans given as required under the aforesaid section have not been given in this Report.
13. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
The Company has proper and adequate system of internal control geared towards achieving efficiency in its operations, safeguarding assets, optimum utilization of resources and compliance with statutory regulations. The Company has an Internal Control System, commensurate with the size, scale and complexity of its operations. Testing of such Internal Control measures and systems forms a part of Internal Audit function. The Internal Auditors of the Company conduct audits of various departments based on an annual audit plan covering key areas of operations. Internal Audit reviews and evaluates the adequacy and effectiveness of internal controls, ensuring adherence to operating guidelines and systems and recommending improvements for strengthening them. To maintain its objectivity and independence, the Internal Audit function reports to the Chairman of the Audit Committee of the Board. The Audit Committee of the Board of Directors reviews the adequacy of internal controls. This has improved the management of the affairs of the Company and strengthened transparency and accountability. The Management ensures adherence to all internal control policies and procedures as well as compliance with regulatory guidelines. No significant audit observations and recommendations have been received from the Internal Auditors of the Company.
14. AUDITORS REPORT AND SECRETARIAL AUDIT REPORT
The Independent Audit Report submitted by M/s Nagar Goel & Chawla, Chartered Accountants, New Delhi, Statutory Auditors of the Company for Financial Year ended 31st March, 2019 is unmodified, i.e., it does not contain any qualification, reservation or adverse remark and is also self-explanatory. Hence, no explanation is required to be given in Board Report.
The Secretarial Audit Report submitted by the Secretarial Auditor for the financial ended 31st March, 2019 in Form MR-3 is annexed as an "Annexure- A". Such Secretarial auditors report is also self-explanatory and does not contain any qualifications, reservations or adverse remarks.
15. RATIFICATION OF APPOINTMENT OF STATUTORY AND APPOINTMENT OF SECRETARIAL AUDITORS
a) Statutory Auditors:
Pursuant to the provisions section 139, 142 and other applicable provisions of the Companies Act, 2013 and the Rules made thereunder and pursuant to the recommendations of the audit committee of the Board of Directors, M/s Nagar Goel & Chawla, Chartered Accountants, New Delhi (bearing ICAI Registration No.009933N) were appointed as statutory auditors of the Company to hold office from the conclusion of the 25th Annual General Meeting of the Company held on 28th September, 2017 till the conclusion of the 30th Annual General Meeting of the Company to be held for the financial year ending on 31st March 2022 subject to ratification of their appointment at every annual general meeting. However, the provision of annual ratification of the appointment of statutory Auditor was dropped vide the Companies (Amendment) Act, 2017. Consequently, your directors proposed to ratify the appointment of M/s Nagar Goel & Chawla, Chartered Accountants, New Delhi as Statutory Auditors of the Company at ensuing annual general meeting for their remaining term of three years and to fix their remuneration.
The Company has obtained a certificate from M/s Nagar Goel & Chawla, Chartered Accountants, New Delhi (bearing ICAI Registration No.009933N), that they are not disqualified for being continuing as Statutory Auditors of the Company in terms of the provisions of the Companies Act, 2013 read with the Companies (Audit and Auditors) Rules, 2014.
b) Secretarial Auditors:
Pursuant provisions of section 204 of the Companies Act 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 the Company has, at its meeting held on 12th August, 2019 appointed M/s S.S. Bhati &Associates, a firm of Company Secretaries in practice to undertake the Secretarial Audit of the Company for the financial year 2019-20.
16. DISCLOSURE UNDER SECTION 134(3)(a) AND SECTION 92(3) READ WITH RULE 12(1) OF THE COMPANIES (MANAGEMENT AND ADMINISTRATION) RULES 2014
The details forming part of the extract of the Annual Return in form MGT-9 is annexed herewith as "Annexure B" 17. CORPORATE GOVERNANCE REPORT
The Company is committed to good Corporate Governance as the requirement of the Schedule V of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. As required under Schedule V of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a detailed report on Corporate Governance together with Auditors Certificate on compliance of conditions of Corporate Governance is annexed herewith as "Annexure - C" and is forming integral part of this Report.
18. CERTIFICATE FROM PRACTISING COMPANY SECRETARY WITH REGARDS TO NON
DISQALIFICATION OF DIRECOTRS
A certificate from M/s S.S Bhati & Associate, Practising Company Secretary to the effect that none of the directors on the Board of the Company have been debarred or disqualified from being appointed or continuing as directors of the Company by the Ministry of Corporate Affairs, Securities and Exchange Board of India or any other statutory authority is attached herewith as "Annexure - D". The same forms a part of this Report.
19. RELATED PARTY TRANSACTIONS
The main business of the Company is financing & investment in shares etc. and granting loans to related or unrelated parties. 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. All related party transactions are placed before the Audit committee for their consideration and approval. None of the transactions with related parties falls under the scope of section 188(1) of the Act. However, the related party transactions so entered are disclosed in note No. 32 to Financial Statement of the Company as attached herewith. During the year under review, no material related party transaction was entered by the Company. The Policy relating to related party transactions duly approved by the Board of Directors of the Company has been placed on the Companys website www.sainikfinance.com
20. 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 placed on the Companys website www.sainikfinance.com. The Code lays down the standard procedure of business conduct which is expected to be followed by the Directors and the designated employees in their business dealings and in particular on matters relating to integrity in the work place, in business practices and in dealing with stakeholders. All the Board Members and the Senior Management personnel have confirmed compliance with the Code.
21. MECHANISM / WHISTLE BLOWER POLICY
Pursuant to the provisions of section 177(9) & (10) of the Companies Act, 2013 read with the rules made thereunder and pursuant to the provision of SEBI (Listing Obligations and Disclosure Requirements), 2015, the Company has established a Vigil Mechanism to be known as the Whistle Blower Policy for its Directors and Employees, to report instances of unethical behaviour, actual or suspected, fraud or violation of the Companys Code of Conduct. The aim of the policy is to provide adequate safeguards against victimization of Whistle Blower who avails of the mechanism and also provide direct access to the Chairman of the Audit Committee, in appropriate or exceptional cases.
Accordingly, Vigil Mechanism / Whistle Blower Policy have been formulated with a view to provide a mechanism for the Directors and employees of the Company to approach the Ethics Officer or the Chairman of the Audit Committee of the Company. The purpose of this policy is to provide a framework to promote responsible and secure whistle blowing. It protects employees willing to raise a concern about serious irregularities within the Company. During the financial year 2018-19, no such complaint of unethical or improper activity has been received by the Company.
22. PREVENTION OF INSIDER TRADING
The Company has adopted a Code of Conduct for Prevention of Insider Trading with a view to regulate trading in securities by the Directors and designated employees of the Company. The Code requires pre-clearance for dealing in the Companys shares and prohibits the purchase or sale of Company shares by the Directors and the designated employees while in possession of unpublished price sensitive information in relation to the Company and during the period when the Trading Window is closed. The Board is responsible for implementation of the Code. All Board Directors and the designated employees have confirmed compliance with the Code.
23. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE
EARNINGS AND OUTGO:
The particular as prescribed under Rule 8(3) of the Companies (Accounts) Rules, 2014 read with the provisions of Section 134(3) (m) of the Companies Act, 2013 are as follow:
|A) Conservation of energy-|
|Sr. No. Particular||Remark|
|(i) The steps taken or impact on conservation of energy;||Your Company carries out its business in an environmental friendly manner and is on the look-out for different ways & means to reduce the consumption of energy in its operations. Fuel & electricity consumption in different stages were monitored regularly and suitable corrective actions were taken wherever possible.|
|(ii) The steps taken by the company for utilizing alternate sources of energy;|
|(iii) The capital investment on energy conservation equipment;||The Companys operations do not require capital investment on energy conservation equipment.|
B) Technology absorption, adaption and innovation:
|(i)||the efforts made towards technology absorption;||The Company continues to use the latest technologies for improving the productivity and quality of its services and products.|
|(ii)||the benefits derived like product improvement, cost reduction, product development or import substitution;||Not Applicable|
|(iii)||in case of imported technology (imported during the last three years reckoned from the beginning of the financial year) the details of technology imported; the year of import; whether the technology been fully absorbed; if not fully absorbed, areas where absorption has not taken place, and the reasons thereof; and||The Companys operations do not require significant import of technology.|
|(iv)||the expenditure incurred on Research and Development.||The Companys operations do not require the expenditure on Research and Development|
C) Foreign exchange earnings and Outgo
During the year under review, there was no Foreign Exchange Earnings and Foreign Exchange Outgo.
24. MATERIAL CHANGES AND COMMITMENTS, IF ANY
There was no material changes and commitments affecting the financial position of the Company which have occurred between the end of the financial year of the Company to which the financial statements relate and the date of the report;
25. CORPORATE SOCIAL RESPONSIBILITY (CSR)
During the year under review, the Company has spent Rs. 8,00,000/- on corporate social responsibility (CSR) activities as against mandatory expenditures (CSR Budget) of Rs.7,95,868/-. Detailed information on the CSR policy and CSR initiatives taken during year under review and Annual Report on CSR activities including composition of the CSR Committee is given in the annexed as "Annexure - E" .
Further, the Companys net profit calculated in accordance with the provisions of section 198 of the Companies Act, 2013 for the financial year ended 31st March, 2019 is Rs.7,44,41,769/ and average net profit of preceding three financial years is Rs.5,56,48,245/-. Hence the Company is required to spend Rs.11,12,965/- (i.e.2% of average net profit of preceding three financial years) during the financial year 2019-20.
26. DISCLOSURE RELATING TO MAINTENANCE OF COST RECORD
As the Company is Non-Banking Finance Company, the Central Government does not require to maintenance of cost records as specified by the Central Government under sub-section (1) of section 148 of the Companies Act, 2013.
27. OBLIGATION OF COMPANY UNDER THE SEXUAL HARASSMENT OF WOMEN AT
WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013
In compliance with the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 notified on December 9, 2013, the Company has a policy for Prevention of Sexual Harassment of Women at Workplace. During the financial year ended 31st March 2019, no complaint of sexual harassment has been received by the Company.
28. DISCLOSURE ABOUT THE SHARES ISSUED ON PREFERENTIAL BASIS, IF ANY.
During the year under review, your Company has not made any allotment of shares on preferential basis.
29. DISCLOSURE ABOUT SWEAT EQUITY SHARES AND ESOP SCHEME.
Your company has not issued sweat equity shares or given stock option in the year under review.
30. LISTING OF SECURITIES
Presently, the Securities of the Company are listed on BSE Limited, Mumbai. The listing fee for the financial year 2019-20 has been paid.
Your directors would like to place their grateful appreciation for the assistance and co-operation received from the Companys lenders, bankers, employee during the year under review. The directors also acknowledge with appreciation the support and co-operation rendered by various Government authorities and departments. Your Directors would also wish to place on record their deep sense of appreciation for the continued support of all the investors of the Company.
By Order of the Board of Directors
For SAINIK FINANCE & INDUSTRIES LIMITED
|Place : Gurugram||Kuldeep Singh Solanki||Rudra Sen Sindhu|
|Dated : 12th August, 2019||Director||Director|
|DIN: 00009212||DIN: 00006999|