Transwarranty Finance Ltd Directors Report.

Dear Members,

Your Directors have pleasure in presenting the 25th Annual Report of the Company along with the audited financial statements for the year ended 31st March, 2019.

Financial Highlights

The table below gives the standalone financial highlights of the Company for the year ended 31st March, 2019, as compared to the previous year.

( Rs in Lakhs)
Particulars Year ended 31st March, 2019 Year ended 31st March, 2018
Total Income 1084.68 962.49
Total Expenditure 996.00 900.92
Profit/(Loss) from Operations before Other Income, Finance Cost & Exceptional Items 88.68 61.57
Finance Costs 72.75 26.60
Profit / (Loss) from Ordinary Activities after Finance Cost but before Exceptional Items 15.93 34.97
Exceptional Items:
Goodwill written Off (as per the Scheme of Amalgamation) - 22.24
Profit / (Loss) from Ordinary Activities before Tax 15.93 12.73
Current Tax 9.30 20.49
MAT Entitlement Credit - (16.68)
Deferred Tax (6.02) 0.80
Net Profit / (Loss) for the period 12.65 8.12
Appropriations:
Reserves u/s.45 IC of RBI Act 2.53 1.62

Performance Review

During the year ended 31st March, 2019, your Company earned revenue of Rs1084.68 Lakhs as compared to Rs962.49 Lakhs in the previous year. The operations have recorded a profit of Rs.12.65 Lakhs as compared to a profit of Rs8.12 Lakhs in the previous year. During the year ended 31st March, 2019, your Company earned consolidated revenue of Rs1868.66 Lakhs as compared to Rs.1782.29 Lakhs in the previous year. The consolidated operations have recorded a profit of Rs.45.37 Lakhs as compared to a profit of Rs82.46 Lakhs in the previous year.

Detailed information on operational and financial performance. of the Company for the financial year is given in the Management Discussion and Analysis which is set out separately with the Directors Report.

Dividend

Due to inadequacy of profits and in order to consolidate the financial position of the Company, your Directors have not recommended any dividend for the year.

Consolidated Accounts

Pursuant to Section 136 of the Companies Act, 2013, the standalone financial statements of the Company, consolidated financial statements along with the relevant documents form part of the Annual Report and separate audited accounts in respect of the subsidiaries are available on the website of the Company.

Share Capital

The issued, subscribed and paid-up Equity Share Capital as on 31st March, 2019 was Rs. 24.46 Crores, comprising of 2,44,60,568 Equity Shares of the face value of Rs. 10 each, fully paid-up.

There is no change in the Authorised, Issued, Subscribed and Paid Up Share Capital of the Company during the year.

Subsidiary Companies

Vertex Securities Limited (VSL), Vertex Commodities And Finpro Private Limited (VCFPL) and Transwarranty Capital Market Services Private Limited (TCMSPL) are the subsidiaries of the Company.

VSL and VCFPL are engaged in the following businesses:

1. Stock and currency broking services to retail, HNI and institutional clients.

2. Commodity broking services through Vertex Commodities And Finpro Private Limited (VCFPL) to retail, HNI and corporate clients.

3. Merchant banking.

4. Corporate Agency for Insurance

Vertex Securities Limited (VSL) is a member of: -

1. National Stock Exchange of India Limited (NSE)

2. Bombay Stock Exchange Limited, (BSE)

3. National Securities Depository Ltd., (NSDL) (for depository services)

4. SEBI registration as a Merchant Banker

5. Association of Mutual Funds of India(AMFI) registered Mutual Fund Advisor.

Vertex Commodities And Finpro Private Limited (VCFPL)is a member of following commodity exchanges : -

1. Multi Commodity Exchange of India (MCX)

2. National Commodity and Derivative Exchange (NCDEX)

3. National Multi Commodity Exchange (NMCE)

During the year ended 31st March, 2019, the subsidiary company, Vertex Securities Limited earned revenue of Rs686.33 lakhs as compared to Rs765.02 lakhs in the previous year. The operations have recorded a profit of Rs.18.08 lakhs as compared to a profit of Rs77.32 lakhs in the previous year. The subsidiary company, Vertex Commodities And Finpro Private Limited had total revenue of Rs109.09 lakhs and a profit of Rs14.78 lakhs for the year ended 31st March, 2019 as against the total revenue of Rs110.73 lakhs and loss of Rs2.74 lakhs respectively in the previous year.

The subsidiary company, Transwarranty Capital Market Services Pvt. Ltd recorded a loss of Rs0.14 lakh for the year ended 31st March, 2019 as against a loss Rs0.25 lakh in the previous year.

In accordance with Section 136 of the Companies Act, 2013, the audited financial statements, (including the consolidated financial statements and related information of the Company and audited accounts of its subsidiaries), are available on our website www.transwarranty.com. These documents will also be available for inspection during business hours at our registered office.

The Consolidated Financial Statements presented by the Company include the financial results of its subsidiary companies.

Pursuant to the provisions of Section 129(3) of the Companies Act, 2013, a statement containing the salient features of the financial statements of the Companys subsidiaries in Form AOC 1 is attached to the financial statements of the Company.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

I. Re-appointment of independent directors

The Board, at its meeting held on 29th August, 2019, considering the report of performance evaluation and based on the recommendation of Nomination and

Remuneration Committee, re-appointed the following independent directors for a second term as given below:

Sr. No. Name of independent director Tenure of second term
1. Mr. Pravin Khatau Five years w.e.f. 25th February, 2020
2. Mrs. Nirmala Sachin Parab Five years w.e.f. 30th March, 2020

Accordingly, resolutions seeking approval of the members for the aforementioned re-appointments forms part of notice convening the 25th AGM.

Necessary details regarding their re-appointment as required under the Act and the Listing Regulations are given in the notice of AGM.

II. Retirement by Rotation

In accordance with the provisions of Section 152 of the Companies Act, 2013 read with Companies (Appointment and Qualification of Directors) Rules, 2014, Mr. U. Ramachandran, Director & CFO of the Company (DIN 00493707), retires by rotation at the ensuing Annual General Meeting and being eligible, has offered himself for re-appointment and your Board has recommended his re-appointment.

Pursuant to Regulation 36(3) of the SEBI (Listing Obligations & Disclosure Requirements), 2015, ["Listing Regulations"] brief resume of the Directors proposed for appointment/re-appointment has been given in the statement annexed to the Notice convening the Annual General Meeting.

Management Discussion and Analysis

A detailed review on the operations and performance of the Company and its business is given in the Management Discussion and Analysis, which forms part of this report as

Annexure A.

Corporate Governance Report

A detailed report on Corporate Governance and Auditors Certificate on compliance with Corporate Governance requirements by the Company is attached and also forms part of this report as Annexure B.

Auditors Report

There are no qualifications in the Auditors Report for standalone accounts for the financial year ended 31st March, 2019. Referring to observations given under "Basis for Qualified Opinion" in the Independent Auditors Report for Consolidated Accounts, it is clarified that as the Company has initiated legal actions for the recovery of the dues and it will not be prudent to make any provisions as the cases are in various stages in different Courts.

The Statement on Impact of Audit Qualification submitted to the stock exchange pursuant to SEBI Listing Regulations for modified opinion in Audit Report for consolidated accounts is appended to this report as Annexure C.

Directors Responsibility Statement

In terms of Section 134 (5) of the Companies Act, 2013 your Directors state that:

1. In preparation of annual accounts for the year ended 31stMarch, 2019, the applicable accounting standards have been followed along with proper explanations relating to material departures, if any;

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 the Company as at 31st March, 2019 and profit of the Company for the year ended on that date;

3. They have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

4. They have prepared the annual accounts on a going concern basis;

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

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

Public Deposits

During the financial year under report the Company has not

accepted deposits within the meaning of Section 73 of the

Companies Act, 2013 read with the Companies (Acceptance

of Deposits) Rules, 2014.

Harmonisation of different categories of NBFCs

RBI, vide its circular dated 22 February 2019, harmonised different categories of NBFCs into fewer ones on the basis of the principle of regulation by activity rather than regulation by entity in order to provide greater operational flexibility.

Accordingly, the three categories of NBFCs viz., Asset Finance Companies, Loan Companies and Investment Companies have been merged into a new category called NBFC - Investment and Credit Company.

The Company now is categorised as NBFC- Investment and Credit Company.

Particulars of Loans, Guarantees and Investments

Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the notes to the Financial Statements.

Familiarization Programme for Directors

At the time of appointment of a Director, a formal letter of appointment is given to the Director. The Director is also explained in detail the role, functions, duties and responsibilities expected from him/her and also compliance required from him/her under the Companies Act, 2013, and Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements), Regulations 2015. Further the Managing Director also has one to one discussion with the newly appointed Director to familiarize with him/her the Companys operation.

The Board of Directors has complete access to the information within the Company. Presentations are regularly made to the Board of Directors and various Committees of the Board. The details of the Companys familiarization programme for Independent Directors can be accessed at (http://www. transwarranty.com/Investors).

Performance Evaluation of the Board

The board of directors has carried out an annual evaluation of its own performance, board committees and individual directors pursuant to the provisions of the Companies Act, 2013 and the corporate governance requirements as prescribed by SEBI Listing Regulations.

The evaluation was done on various parameters like vision and strategy, Board participation, quality of contribution to Board discussions and decisions, disclosure of interest, strategic insights or inputs regarding future growth of the Company and its performance, ability to challenge views in a constructive manner, knowledge acquired with regard to the Companys business/ activities, leadership skills, marketing and corporate communications etc.

The performance of the board was evaluated by the board after seeking inputs from all the directors on the basis of the criteria such as the board composition and structure, effectiveness of board processes, information and functioning, etc.

The board reviewed the performance of the individual directors on the basis of the criteria such as the contribution of the individual director to the board and committee meetings like preparedness on the issues to be discussed, meaningful and constructive contribution and inputs in meetings, etc. In a separate meeting of independent directors, performance of non-independent directors, performance of the board as a whole was evaluated, taking into account the views of executive directors and non-executive directors. The same was discussed in the board meeting that followed the meeting of the independent directors, at which the performance of the board, its committees and individual directors was also discussed. Performance evaluation of independent directors was done by the entire board, excluding the independent directors being evaluated.

Board Committees

The Board of Directors of the Company has constituted various Committees in compliance with the provisions of the Companies Act, 2013 and SEBI Listing Regulations, such as Audit Committee, Nomination, Remuneration and Compensation Committee and Stakeholders Relationship Committee.

All decisions pertaining to the constitution of the Committees, appointment of members and fixing of terms of reference/role of the Committees are taken by the Board of Directors.

Details of the role and composition of these Committees, including the number of meetings held during the financial year and attendance at meetings, are provided in the Corporate Governance Report, which forms a part of the Annual Report.

Meetings

The details regarding the meetings of the Board of Directors, Committees of the Board and meeting of Independent Directors are provided in the Report on Corporate Governance, which forms part of the Annual Report.

Extract of Annual Return

An extract of annual return as provided under Section 92(3) of the Companies Act, 2013, in the prescribed form in Form MGT-9 is annexed to this report as Annexure D and is also hosted on the Companys website www.transwarranty.com/ investor relations.

Risk Management

The Company has Risk Management Systems in place including identification of elements of risk, if any, which in the opinion of the Board may threaten the existence of the Company. After identifying the risk and assessing the level of impact, controls are put in place to mitigate the risk by the concerned executives/the Board to control the exposure of the risk and balance the impact of risk on a continuous basis.

Nomination & Remuneration Policy

The Board, on the recommendation of Nomination, Remuneration and Compensation Committee, has adopted a policy for selection, appointment and remuneration of Directors, Key Managerial Personnel and Senior Management. The said policy is available on our website at www.transwarranty.com. The details of this Policy are provided in the Corporate Governance Report.

Sexual Harassment Policy

The Company has constituted an Internal Complaints Committee as per Section 4 of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

In line with the requirements of Sexual harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act 2013, the Company has in place a policy to prevent sexual harassment of women at workplace. Your Directors state that during the year under review, there were no cases filed pursuant to the above Act.

Whistle Blower Policy

The Company has adopted a Whistle Blower Policy as part of vigil mechanism to provide appropriate avenues to the Directors and Employees to bring to the attention of the management any issue which is perceived to be in violation of or in conflict with the fundamental business of the Company. The employees are encouraged to voice their concerns by way of whistle blower policy and all the employees have been given access to the Audit Committee. All cases registered under the Code of Business Principles and Whistle Blower Policy will be reported to the Audit Committee.

Employees Stock Option Plan 2008 (ESOP 2008)

Disclosures as per the Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014, and disclosure pursuant to the Rule 12(9) of Companies (Share Capital and Debenture) Rules, 2014 are provided as Annexure E to the Boards Report.

Internal control system

The Company has put in place an adequate system of internal controls commensurate with its size and nature of business. These systems provide a reasonable assurance in respect of providing financial and operational information, complying with applicable statutes, safeguarding of assets of the Company and ensuring compliance with corporate policies.

The Companys Board & Audit Committee reviews adherence to internal control systems, internal audit reports and legal compliances. The Audit Committee reviews all quarterly and yearly financial results of the Company and recommends the same to Board for its approval.

Declaration by Independent Directors

The Independent Directors of the Company have furnished necessary declarations to the Company under Section 149(7) of the Companies Act, 2013 confirming that they meet the criteria of independence as prescribed for independent directors under Section 149(6) of the Act and Regulation 16(b) of the SEBI Listing Regulations.

During the year under review a meeting of Independent Directors was held on 8th February, 2019.

Related Party Transactions

All related party transactions that were entered into during the year were on arms length basis and in the ordinary course of business. The Audit Committee has approved the related party transactions and subsequently the same were approved by the Board of Directors. The disclosures on the Related Party Transactions in Form AOC-2 is provided as Annexure F to the Boards Report.

Auditors:

The Companys Auditors, M/s. Rahul Gautam Divan and Associates, Chartered Accountants, who were appointed as statutory auditors of the Company at the 21st AGM of the Company held on 11th September, 2015 for a period of four years, will complete their present term on conclusion of the ensuing 25th AGM of the Company.

The Board, on the recommendation of the Audit Committee, recommended for the approval of the Members, the appointment of S.S. Khan & Co., Chartered Accountants, as the Auditors of the Company for a period of five years from the conclusion of the ensuing 25th AGM till the conclusion of the 30th AGM. On the recommendation of the Audit Committee, the Board also recommended for the approval of the Members, the remuneration of Rs2,10,000/- (Rupees Two Lakhs and Ten Thousand only) to conduct statutory audit including Limited Reviews for the financial year 2019-20. Appropriate resolution seeking your approval to the appointment and remuneration of S.S. Khan & Co., as the Statutory Auditors is appearing in the Notice convening the 25th AGM of the Company.

Secretarial Audit

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Rules made there under the Company has appointed Mr. M. P. Sharma, a Company Secretary in Practice to undertake the Secretarial Audit of the Company. The Secretarial Audit Report is annexed to this Report as Annexure G. The said report contains one observation regarding material related party transactions. Due to urgent circumstances, the company entered into material related party transactions. The resolution for ratification of previous transactions/ approval of the shareholders is placed at this Annual General Meeting.

Energy Conservation and Technology Absorption

The company ensures optimized and efficient consumption of energy in all the offices/branches of the Company. With the implementation of its digital initiatives the company has also substantially reduced its paper consumption.

The Company has been at the forefront of using technology absorption and has always leveraged technological innovations to improve our operational efficiency and satisfy and retain our customer base.

Foreign Exchange Earnings and outgo

Earnings: Nil

Outgo: Nil

Maintenance Of Cost Records

The provision of section 148 of the Act are not applicable to the Company. Accordingly, there is no requirement of maintenance of cost records as specified under section 148(1) of the Act.

Particulars of Employees and related disclosure

There are no employees drawing a monthly or yearly remuneration in excess of the limits specified under Section 197 of the Companies Act, 2013 read with Rules 5(2)and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 including any amendments thereof. The information containing particulars of employees as required under Section 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended from time to time is attached herewith as Annexure H.

Orders Impacting Going Concern Significant

Status

No significant or material orders were passed by the regulators or Courts or tribunals which impact the going concern status and Companys operations in future.

Secretarial standards of ICSI

The Company has complied with the requirements prescribed under the Secretarial Standards on Meetings of the Board of Directors (SS–1) and General Meetings (SS–2).

General

Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions on these items during the year under review:

a. Issue of equity shares with differential right as to dividend, voting or otherwise

b. Issue of shares (including sweat equity shares) to employees of the company under any scheme save and except ESOS referred to in this report.

c. Provisions related to Corporate Social Responsibility are not applicable to the Company

d. Pursuant to the provisions of the Act, no fraud was reported by auditors of the Company during FY 2019.

Acknowledgement

Your Directors acknowledge the support and counsel extended by the bankers, government agencies, debenture trustees, shareholders, investors, employees and others associated with the Company. The Directors look forward the same in future also.

For and on behalf of the Board of Directors
Kumar Nair
Place: Mumbai Chairman
Date: 29 August, 2019 (DIN 00320541)