DIRECTORS' REPORT The members, Ladies and Gentlemen, 1. Your directors have pleasure in presenting their 23rd Annual Report and the Audited Statement of Accounts for the year ended on 31st March, 2015. 2. 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. 3. PERFORMANCE REVIEW During the year under review, the Company's total income has increased to Rs. 95,025,102/- from Rs. 62,216,377/- and profit (before tax) to Rs. 3,20,87,260/- from Rs.54,75,966/- in the previous year. 4. DIVIDEND Your directors do not recommend any dividend for payment to the shareholders for the financial year ended on 31st March, 2015. 5. DIRECTORS Mr. Kuldeep Singh Solanki, Director of the Company retires by rotation and being eligible, has offered himself for re-appointment. Your directors recommend his re-appointment as director of the Company. During the year under review, Mr. Vivek Varma, an Independent Director has tendered his resignation from the Board due to his preoccupation w.e.f. 30th March, 2015 and Mrs. Renuka Hooda has been appointed as Woman Independent Director on the Board of the Company w.e.f. 30th March, 2015. Mrs. Renuka Hooda (DIN 03611979), who was appointed as an additional director w.e.f. 30th March, 2015 on the Board of the Company in terms of Section 161 of the Companies Act, 2013 and who holds office up to the date of this Annual General Meeting and in respect of whom the Company has received a notice in writing from a member proposing her candidature for the office of Director, is proposed to be appointed as an Woman Independent Director of the Company for a period upto 29th March, 2020, not liable to retire by rotation. The requisite resolution for the appointment of Mrs. Renuka Hooda as a Woman Independent Director is being proposed in the Notice of the ensuing Annual General Meeting for the approval of the Members. The Company has received declarations from all the Independent Directors of the Company confirming that they meet the criteria of independence as prescribed in Section 149(6) of the Companies Act, 2013 and clause 49 of the Listing Agreement. As required under Clause 49 of the Listing Agreement with the Stock Exchange, the information on the particulars of the Directors proposed for appointment/ re-appointment has been given in the Notice of the Annual General Meeting. Board Evaluation Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, 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. Remuneration Policy The Board has, on the recommendation of the Nomination and Remuneration Committee framed a policy for selection and appointment of directors, senior management and to fix their remuneration. The Nomination and Remuneration Policy is stated in the Corporate Governance Report. Meetings During the year under review, (8) Eight 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. 6. KEY MANAGERIAL PERSONNEL Mr. Ashok Arora resigned as Company Secretary and Ms. Shagun Taneja (Membership No. 38841) was appointed as Company Secretary w.e.f. 31st March, 2015. Mr. Kapil Sharma was appointed as Chief Executive Officer and Mr. Jagdish Chandra was appointed as Chief Financial Officer of the Company w.e.f. 31st March, 2015. 7. DEMATERIALISATION OF SHARES: 74.38% of the Company's paid up equity share capital is in dematerialized form as on 31st March, 2015 and balance 25.62% is in physical form. The Company's Registrars & Transfer Agent is M/s Indus Portfolio Private Limited, having their communication office at G-65, Bali Nagar, New Delhi-110015. 8. MANAGEMENT DISCUSSION AND ANALYSIS REPORT: As required under Clause 49 of the Listing Agreements with Stock Exchanges, the Management Discussion and Analysis Report is enclosed as a part of this report. 9. 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 and Clause 49(III)(D)(4)(a) of the listing agreement with Stock Exchanges in the preparation of the Financial Statement for the financial year ended on 31st March, 2015 and state: i) That in the preparation of Annual Accounts for the financial year ended as at 31st March, 2015, 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, 2015 and of the profit and loss of the Company for the financial year ended on 31st March, 2015. 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. 10. 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. 11. PARTICULARS OF LOANS, GUARANTEES ORINVESTMENTS The Company, being a non-banking finance company registered with the Reserve Bank of Indiaand engaged in the business of giving loans or finance & investment activities, is exempt from complying with the provisionsof section 186 of the Companies Act, 2013. Accordingly, the disclosures of the loans given asrequired under the aforesaid section have not been given in this Report. 12. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY The Company has an Internal Control System, commensurate with the size, scale and complexity of its operations. Such Internal Control measures and systems are established to ensure the correctness of the transactions and safe guarding of the assets. The Management ensures adherence to all internal control policies and procedures as well as compliancewith regulatory guidelines. The Audit Committee of the Board of Directors reviews the adequacy of internal controls. Thishas improved the management of the affairs of the Company and strengthened transparency and accountability.No significant audit observations and recommendations have been received from the Internal Auditors of the Company. 13. AUDITORS REPORT The Auditors' Report on Annual Financial Statement of the Company for the financial year ended on 31st March, 2015 is self- explanatory. Hence, no explanation is required to be given. 14. AUDITORS a) Statutory Auditors: Pursuant to Section 139, 142 and other applicable provisions of the Companies Act, 2013 and the Rules made thereunder, pursuant to the recommendations of the audit committee of the Board of Directors, and pursuant to the resolution passed by the members at the AGM held on 30th September, 2014, the appointment of M/s Kumra Bhatia & Co, Chartered Accountants, (bearing ICAI Registration No.002848N) as the auditors of the Company to hold office till the conclusion of the 25th AGM of the Company to be held for the financial year ending on 31st March 2017, is required to be ratified at the ensuing Annual General Meeting. Your Directors recommend ratification for their re-appointment. 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 21st August, 2014 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 2014-15. The Secretarial Audit report is annexed herewith as "Annexure A". 15. EXTRACT OF ANNUAL RETURN The details forming part of the extract of the Annual Return in form MGT-9 is annexed herewith as "Annexure B" 16. CORPORATE GOVERNANCE REPORT The Company is committed to good Corporate Governance as the requirement of the Clause 49 of the Listing Agreement. As required under Clause 49 of the Listing Agreement, a detailed report on Corporate Governance together with Auditor's Certificate on compliance of conditions of Corporate Governance is annexed herewith as "Annexure - C" and is forming integral part of this Report. 17. RELATED PARTY TRANSACTIONS The main business of the Company is financing & Investment in shares itc. and granting loans to related or unrelated parties. All related party transactions that were entered into during the financial year were on an arm's length basis and were in the ordinary course of business. There are no related party transactions made by the Company with Promoters, Directors, Key Managerial Personnel or other designated persons which may have a potential conflict with the interest of the Company. All Related Party Transactions are placed before the Audit Committee for their approval. The material related party transactions for which the shareholders' approved is being sought, are mentioned in notice of Annual General Meeting. The details of all related parties transactions are annexed in AOC-2. Your Board of Directors of the Company has, on the recommendation of the Audit Committee, adopted a policy to regulate transactions between the Company and its related parties, in compliance with the applicable provisions of the Companies Act 2013 and the rules made thereunder and the Listing Agreement. This Policy was considered and approved by the Board has been placed on the Company's website www.sainikfinance.com 18. 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 Company's 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. 19. VIGIL 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 clause 49(II)(f) of Listing Agreement, 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 Company's 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. 20. 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 Coderequires pre-clearance for dealing in the Company's 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. 21. BUSINESS RISK MANAGEMENT Pursuant to section 134 (3) (n) of the Companies Act, 2013 & Clause 49(III) (VI) of the Listing Agreement, the Company has constituted a Business Risk Management Committee. The details of the committee and its terms of reference are set out in the Corporate Governance Report forming part of the Boards Report. At present the Company has not identified any element of risk which may threaten the existence of the Company. 22. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO: During the year under review, the provisions of Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014 were not applicable to our Company. Hence, Statement detailing the particulars required under the said Section and rules are not being furnished. There was no foreign exchange earnings and outgo in the Company during the financial year. 23. CORPORATE SOCIAL RESPONSIBILITY (CSR) During the year under review, provision of section 135 and Schedule VII of the Companies Act, 2013, pertaining to Corporate Social Responsibility are not applicable to our Company. Hence, details of expenditure of CSR Committee are not being furnished. 24. LISTING OF SECURITIES Presently, the Securities of the Company are listed on Bombay Stock Exchange Limited, Mumbai. The listing fee for the financial year 2015-16 has been paid. 25. ACKNOWLEDGEMENTS Your directors would like to place their grateful appreciation for the assistance and co-operation received from the Company's bankers during the year under review. The directors also acknowledge with appreciation the support and co-operation rendered by various Government Agencies 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 Kuldeep Singh Solanki Director DIN: 00009212 Rudra Sen Sindhu Director DIN: 00006999 Place : New Delhi Dated : 28th August, 2015 |