smart finsec ltd Directors report

The highlights of the financial performance of the Company are summarized herein below:

There are no material changes and commitments affecting the financial position of the Company between the end of the financial year and the date of this report.

As per Section 45 IC of Reserve Bank of India Act, 1934, the Company has transferred Rs. 29,00,000 in Statutory Reserve.

During the period under review, Partial Dividend of Rs. 24,000 paid to Mr. Arun Khera @ 0.1% Non-Convertible Redeemable Preference Shares 2,60,000 @ Rs. 100 (During the year, the Board of Directors Redeemed 1,20,000 Preference shares out of 2,60,000 Cumulative Non-Convertible Redeemable Preference shares, face value of Rs. 100 each, so dividend paid partially).

The paid-up Equity Share Capital as on 31^st March, 2023 stood at Rs. 3, 00, 00,000 /- (Rs. Three Crore) and 1,40,000 Non-Convertible Cumulative Preference shares of Rs. 100 Each. During the year under review, the Board of Directors on February 07, 2023 decided to Redeem 1,20,000 Cumulative Non-Convertible Redeemable Preference shares, out of 2,60,000 Cumulative Non-Convertible Redeemable Preference shares of face value Rs. 100 each. Redemption of Preference shares has been done out of Profit of the Company.

During the period under review, there was no such changes in the nature of business of the Company.

Being a non-deposit taking Company, your Company has not accepted any deposits from the public during the year under review.

During the year under review, the Company was not required to transfer any funds or shares to the Investor Education and Protection Fund established by Central Government

The shares of the Company are listed on main platform of BSE Limited. The International Securities Identification Number (ISIN) of company is INE766D01020 and the Scrip code is 539494.

As on March 31, 2023, the Board comprises of 5 Directors, four of whom are Non-Executive (of which two are Independent Directors) and one Executive Director. During the year under review following changes were taken place in the composition of Board of Directors of the Company: Mr. Sachit Khera, who was appointed as an Additional Director

w.e.f. 11th January, 2022 was regularised by the members of the Company at the AGM held on September 30, 2023 as a Director of the Company. Mr. Vishesh Chaturvedi and Ms. Parul Pathak was appointed as an Additional Independent Directors of the Company

w.e.f. 31st March 2022. Later on, members of the Company approved the appointment of Mr. Vishesh Chaturvedi and Ms. Parul Pathak as an Independent Directors for a term of 5 consecutive years commencing from March, 31, 2022 at the Annual General Meeting held on 30th September, 2022. Ms. Vimmi Sachdev who was liable to retire by rotation was reappointed by the members vide ordinary resolution at the AGM held on September 30, 2022. Ms. Sangita Jain and Mr. Arjun Pahwa has resigned from the post of Independent Director

w.e.f. 10th April, 2022.

Pursuant to the provisions of Section 152 of the Companies Act 2013, Mr. Sachit Khera is liable to retire by rotation at the ensuing AGM and being eligible, has offered himself for re-appointment. The resolution seeking Members approval for his re-appointment forms part of the AGM Notice. The Board of Directors of your Company has recommended his re-appointment.

Key Managerial Personnel

The following persons are the Key Managerial Personnel (‘KMP) of the Company as on March 31, 2022 in terms of the provisions of Section 203 of the Companies Act;

Mr. Arun Khera (Managing Director),

Mrs. Priyanka Sharma (Company Secretary & Compliance Officer) Mrs. Shashi Sharma (Chief Financial Officer)

Mrs. Priyanka Sharma has resigned w.e.f. from 30^th June, 2023 (close of business hours) and the The Board of Directors in their Board Meeting held on 30^th June, 2023 has appointed Ms. Rajvinder Kaur as a Company Secretary & Compliance Officer w.e.f. 3^rd July 2023.

10. INDEPENDENT DIRECTORS

The Independent Directors of the Company have been appointed by the members for a fixed term of 5 (five) consecutive years from their respective dates of appointment / regularization in the AGM and they are not liable to retire by rotation as per the requirements of the Act and Listing Regulations, 2015.

The Company has received necessary declaration from all the independent directors that they meet the criteria of Independence throughout the year as provided under Section 149(6) of the Companies Act, 2013 and Regulation 16(1)(b) of the Listing Regulations.

Meeting of Independent Director

The Independent Directors met once during the year as on 20^th March, 2023 without the attendance of Non- Independent Directors and the members of the Management.

The Independent Directors, inter alia, reviewed the performance of Non- Independent Directors and the Board as a whole; the performance of the Chairman of the Company and assessed the quality, quantity and timeliness of flow of information between the Company Management and the Board that is necessary for the Board to effectively and reasonably perform their duties.

11. MEETINGS OF BOARD OF DIRECTORS

All the board meetings were held in compliance with section 173 of the Companies Act, 2013 as the intervening gap between the meetings was within the period prescribed under the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements), 2015.

Four (5) meetings of the Board were held during FY 2022-2023 held on May 27, 2022, August 10, 2022, September 03, 2022, November 14, 2022 and February 07, 2023. The maximum gap between any two meetings did not exceed one hundred and twenty (120) days.

The Company has complied with the requirements prescribed under the Secretarial Standards issued by the Institute of Company Secretaries of India on meetings of the board of directors (SS 1) and general meetings (SS 2).

12. COMMITTEES OF BOARD

The Board has constituted necessary Committees pursuant to the provisions of the Companies Act, 2013, rules framed there under and SEBI (Listing Obligations and Disclosure Requirements), Regulation 2015. The Committees of the Board comprises of Audit Committee, Nomination and Remuneration Committee and Stakeholders Relationship Committee.

The details about Composition of Committees and their Meetings are given below:

Audit Committee

The Company has constituted Audit Committee as per requirement of Section 177 of the Companies Act 2013 and Regulation 18 of SEBI (Listing Obligations and Disclosure Requirements) Regulation, 2015. The terms of reference of Audit Committee are broadly in accordance with the provisions of Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulation, 2015. During the year the committee met on four occasions on following dates viz., 02nd June, 2022, 22nd August, 2022, 11th November, 2022 and 9th February, 2023.

Composition and Attendance of Members at the meetings of the Audit Committee held during the financial year 2022-23 are mentioned below:

Ms. Sangita Jain and Mr. Arjun Pahwa resigned from the Directorship of the Company w.e.f.10^th April, 2022. Accordingly, they also ceased from membership of the committee and Mr. Vishesh Chaturvedi (DIN: 09370037) and Ms. Parul Pathak was appointed as an Additional Independent Director of the Company w.e.f. 31^st March, 2022. The Board of Directors in their Board Meeting held on 31^st March, 2022 has re-constituted Committee consisting of Mr. Vishesh Chaturvedi (Chairman), Ms. Parul Pathak and Mr. Arun Khera as Members of the Committee.

All the members of Audit Committee are independent directors except Mr. Arun Khera, who is Managing Director of the Company.

Nomination and Remuneration Committee

The Company has constituted Nomination & Remuneration Committee as per requirement of Section 178(1) of the Companies Act 2013 and Regulation 19 of SEBI (Listing Obligations and Disclosure Requirements) Regulation, 2015. The terms of reference of Nomination & Remuneration Committee are broadly in accordance with the provisions of Companies Act, 2013. During the year the committee met once on 18^th August, 2022.

Composition and Attendance of Members at the meetings of the Nomination & Remuneration Committee held during the financial year 2022-23 are mentioned below:

Ms. Sangita Jain and Mr. Arjun Pahwa resigned from the Directorship of the Company w.e.f.10^th April, 2022. Accordingly, they also ceased from membership of the committee and Mr. Vishesh Chaturvedi (DIN: 09370037) and Ms. Parul Pathak was appointed as an Additional Independent Director of the Company w.e.f. 31^st March, 2022. The Board of Directors in their Board Meeting held on 31^st March, 2022 has re-constituted Committee consisting of Mr. Vishesh Chaturvedi (Chairman), Ms. Parul Pathak and Ms. Vimmi Sachdev as Members of the Committee.

Stakeholders Relationship Committee

As required under Section 178(5) of the Companies Act, 2013, the Board has in place Stakeholders Relationship Committee to specifically looks into the mechanism of redressal of grievances of shareholders. During the year the committee met once on 18^thMarch, 2023.

Composition and Attendance of Members at the meetings of the Stakeholders Relationship Committee held during the financial year 2022-23 are mentioned below:

The Board of Directors in their Board Meeting held on 07th February, 2023 has constituted Committee consisting of Ms. Sachit Khera (Chairman), Mr. Vishesh Chaturvedi, and Mr. Arun Khera as Members of the Committee.

13. ANNUAL EVALUATION OF DIRECTORS, COMMITTEES AND THE BOARD

Pursuant to the provisions of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Board has carried out an annual evaluation of its own performance, performance of the Directors as well as the evaluation of the working of its Committees.

The performance of the Board as a whole was evaluated by the Board after seeking inputs from all the Directors based on criteria such as structure of the Board, meetings of the Board, functions of the Board, effectiveness of the board processes, professional development etc.

The performance of the Committees was evaluated by the Board after seeking inputs from the Committee members based on criteria such as composition of committees, effectiveness, Committee meetings, independence of committee from the Board, etc.

The performance of the individual Directors was evaluated by Nomination and Remuneration Committee as well as the Board after seeking inputs from all the Directors except the Director being evaluated based on criteria such as qualifications, experience, knowledge & competency, ability to function as a team, initiative, availability and attendance, commitment, contribution, integrity, etc.

In a separate meeting of Independent Directors, performance of Non-Independent Directors, the Board as a whole and the Chairman of the Company was evaluated, taking into account the views of the Executive Directors and Non-Executive Directors.

14. VIGIL MECHANISM

In accordance with the provisions of Section 177(9) of the Companies Act, 2013, read with Rule 7 of the Companies (Meeting of the Board and its Powers) Rules, 2014 and Regulation 22 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company has framed a “Whistle Blower Policy” which provides a mechanism to ensure adequate safeguards against victimization of Directors and Employees and ensures that the activities of the Company and its employees are conducted in a fair and transparent manner. The Employees of the Company have the right/option to report their concerns/grievances to the Chairperson of the Audit Committee.

During the year under review, the Company had not received any complaint under Whistle Blower Policy and no complaint was pending as on March 31, 2023.

15. DIRECTOR RESPONSIBILTY STATEMENT

To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statements in terms of Section 134(3)(c) of the Act:

i. that in preparation of the annual financial statements for the year ended March 31, 2023, the applicable accounting standards have been followed along with proper explanation relating to material departures; i

i. that appropriate accounting policies have been selected & applied consistently & judgments and estimates made are reasonable & prudent so as to give a true & fair view of the state of affairs of the Company at the end for the financial year and of the profits of the Company for the financial year ended March 31, 2023; ii

i. that proper & sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Act, for safeguarding the assets of the Company & for preventing & detecting fraud & other irregularities;

iv. that the annual accounts have been prepared on a going concern basis;

v. that the Company had laid down internal financial controls to be followed and that such internal financial controls are adequate and were operating effectively; and v

i. that systems to ensure compliance with the provisions of all applicable laws were in place and that such systems were adequate and operating effectively

16. AUDITORS AND AUDITORS REPORTS

A. Statutory Auditor

In terms of Section 139 of the Act, the members of the company at 27^th AGM appointed M/s A. Mohan & Co., Chartered Accountants (FRN. 017403N) as statutory auditors of the company for a period of five years commencing from the financial year 2022-23 until the financial year 2026-27. The statutory auditors have confirmed they are not disqualified from continuing as auditors of the Company.

The report of the auditors is self-explanatory and there are no qualifications, reservations or adverse remarks made by the Statutory Auditors in their audit report on the financial statement for the year ended 31^st March, 2023.

B. Secretarial Auditor

Pursuant to the provisions of Section 204 of the Act and rules made there under, the Board has appointed M/s P.K. Mishra & Associates, Practising Company Secretary, to conduct Secretarial Audit of company for the financial year 2022-23. The Secretarial Audit Report for the financial year ended March 31, 2023, is annexed to this report as Annexure III. The Secretarial Audit Report is self-explanatory and there are no qualifications, reservations or adverse remarks made by the Secretarial Auditor.

17. REPORTING OF FRAUDS

During the year under review, the Statutory Auditor or Secretarial Auditor have not reported any instances of fraud in the Company committed by officers or employees of the Company under Section 143(12) of the Companies Act, 2013.

18. SUBSIDIARIES, ASSOCIATES AND JOINT VENTURES COMPANIES

The Company has no subsidiary Company or Associate Company. The Company has not entered into any joint venture during the year under review.

19. RELATED PARTY TRANSACTIONS

During the year under review, all contracts/arrangements/transactions entered into by the Company with related parties were in ordinary course of business and on an arms length basis in compliance with the applicable provisions of the Act and SEBI Listing Regulations. There was no material related party transactions by the Company during the year under review. Accordingly, the disclosure of Related Party Transactions as required under Section 134(3)(h) of the Act in Form AOC-2 is not applicable. Attention of the members is drawn to Note No. 29 to the Financial Statements which sets out related party disclosure.

20. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND

OUTGO

In view of the nature of the activities carried out by the Company, disclosure in terms of Section 134 (3) (m) of the Companies Act 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014 pertaining to the Conservation of Energy and Technology Absorption is not applicable to the Company. There was no foreign exchange inflow or outflow during the year under review.

21. BUSINESS RESPONSIBILITY REPORT

The Business Responsibility Report as required by Regulation 34(2) of the SEBI Listing Regulations, 2015, is applicable to the Top 1000 companies based on the market capitalisation of the company. Therefore, the requirement of preparing Business Responsibility Report is not applicable to the company.

22. ANNUAL RETURN

In pursuance to the provisions of Section 92(3), read with Section 134(3) (a) of the Companies Act, 2013 the copy of Annual Return for the Financial year ended 31^st March, 2023 is available on the website of the Company at www.smartfinsec.com.

23. CORPORATE SOCIAL RESPONSIBILTY

During the financial year under review, your Company has not met criteria laid down under the provisions of Section 135(1) of the Companies Act, 2013 read with companies (Corporate Social Responsibility Policy) Rules, 2014 and accordingly the provisions Corporate Social Responsibility are not applicable to the Company.

24. COST AUDIT

The provisions of Section 148 read with the Companies (Cost records and Audit) Rules, 2014, pertaining to maintaining of Cost records and cost audit, is not applicable to the Company.

25. MANAGEMENT DISCUSSION AND ANALYSIS.

The Management Discussion and Analysis Report for the year under review as stipulated under Regulation 34 of SEBI Listing Obligations and Disclosure Requirements) Regulations, 2015, is annexed as “Annexure IV” to this Report.

26. CORPORATE GOVERNANCE

Since, the paid- up capital of the Company is less than 10 Crores and Net worth is less than 25 Crores, the provisions of the Corporate Governance as stipulated under Regulation 15(2) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 are not applicable to the Company. Provided that where the provision of the Act becomes applicable to the Company at a later date, the Company shall comply with the requirements within six months from the date on which the provisions become applicable to the Company.

27. PARTICULARS OF INVESTMENTS, LOANS, GUARANTEES AND SECURITIES.

Since the Company is Non-Banking Financial Company registered with the RBI, the disclosures pertaining to Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 are not applicable. However, the brief particulars can be found in the Financial Statement of the Company for financial year 2022-23.

28. DISCLOSURE OF ORDERS PASSED BY REGULATORS OR COURTS OR TRIBUNAL

There are no significant material orders passed by the regulators or courts or tribunals which would impact the going concern status and companys operations in future.

29. COMPLIANCE WITH RBI GUIDELINES

Your Company is compliant with all the applicable RBI regulatory norms. Since the company is Non-systematically important Non deposit taking NBFC, the company is complying with all the provisions of the master directions and other applicable circulars, issued in this regard from time to time.

30. MATERIAL CHANGES AND COMMITMENT AFFECTING FINANCIAL POSITION OF THE COMPANY

There are no material changes and commitments affecting the financial position of the Company between the end of the financial year and the date of this report.

31. PARTICULARS OF EMPLOYEES

The information required under section on 197(12) of the Act read with rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are mentioned as per Annexure II

32. DISCLOSURE OF COMPANY UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE

(PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

Your Company has zero tolerance towards sexual harassment at workplace and has adopted a policy on prevention, prohibition & redressal of sexual harassment at work place in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. The Company has also constituted an Internal Committee under the Sexual Harassment of women at workplace (Prevention, Prohibition and Redressal) Act, 2013. There was no complaint on sexual harassment during the year under review.

33. IBC CODE & ONE TIME SETTLEMENT

During the year under review, there were no applications made or proceedings pending in the name of the Company under Insolvency and Bankruptcy Code, 2016. There has not been any instance of one time settlement of the company with any bank or financial institution.

34. CAUTIONARY STATEMENT:

Statements in this Directors Report describing the Companys objectives, projections, estimates, expectations or predictions may be “forward-looking statements” within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make difference to the Companys operations include changes in Government regulations, Tax regimes, economic developments within India and other ancillary factor.

35. APPRECIATION

We are grateful to the Government of India, Reserve Bank of India, Securities and Exchange Board of India, BSE Limited, Ministry of Finance, Ministry of Corporate Affairs, Registrar of Companies, other government and regulatory authorities, lenders, financial institutions and the Companys bankers for their valuable guidance and support and wish to express our sincere appreciation for their continued co-operation and assistance. We look forward to their continued support in future.

We wish to thank our bankers, investors, customers, Shareholders, Stakeholders and all other business associates for their support and trust reposed in us.

Your Directors express their profound feeling of appreciation for every one of the employees whose responsibility, co-activity, dynamic interest, commitment and polished skill has made the organizations growth possible.

Finally, the Directors thank you for your continued trust and support.