DIRECTORS' REPORT TO THE MEMBERS, Your Directors are pleased to present the 32nd Annual Report together with the Audited Statements of Accounts for the year ended 31st March, 2015 DIVIDEND In view of the brought forward losses, your directors regret their inability to recommend dividend for the year under review PERFORMANCE REVIEW & OUTLOOK During the year, the BSE sensitive Index was at 22,455 at the start of the financial year and ended at 27,597 in March 2015. The year was marked by high volatility in the stock market. As a result, the Divestment/ Investment activity of the Company was curtailed during the year and the Company posted a Gross Profit of Rs. 29.97 Lakhs as compared to Gross Loss of Rs. 29.39 Lakhs in the previous year. Net Profit after tax for the year under review was Rs. 31.68 Lakhs as compared to Gross Loss of Rs. 30.02 Lakhs in the previous year. According to IMF world economic outlook, overall, global growth is projected to reach 3.5% and 3.8% in 2015 and 2016 respectively. GDP Growth is projected to be stronger in 2015 as compared to 2014. The medium term to long term growth prospects look positive in view of the Government's determination to bring in reforms. For the year 2015, the economy is expected to grow at a higher rate than in 2014. The long term prospect for the economy is optimistic. Industry Trends and its future prospects have been summed up in the Management Discussion and Analysis Report which forms part of this report. SHARE CAPITAL As on March 31, 2015, the Company's Issued Share Capital is 1,11,83,681 Equity Shares of Rs. 10/- each and the Subscribed Share Capital is 1,10,62,731 Equity Shares of Rs. 10 each/-. After accounting for allotment money receivable amounting to Rs. 5,86,215/- the Paid up Equity Share Capital of the Company is Rs. 11,00,41,095. During the year under review, the Company has neither issued shares with differential voting rights nor granted stock options or sweat equity. The Shareholding of Directors of the Company (including Promoter Director) is given in the Corporate Governance Report forming part of this report. EXTRACT OF ANNUAL RETURN The extract of Annual Return under sub-section (3) of Section 92 of the Companies Act, 2013 in Form MGT-9 in annexed herewith as "Annexure A". MEETINGS OF THE BOARD During the year, four (4) Board Meetings were convened and held. The details of the Board Meetings are given in the Corporate Governance Report. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013. DIRECTORS' RESPONSIBILITY STATEMENT Pursuant to Section 134(3)(c) and sub-section (5) of the Companies Act, 2013, Directors of your Company hereby state and confirm that: a) in the preparation of the Annual Accounts for the year ended 31st March, 2015, the applicable accounting standards have been followed along with proper explanation relating to material departures; b) 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 at the end of the financial year and of the profit of the company for the same period; c) the directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities; d) they have prepared the annual accounts on a going concern basis; e) they have laid down internal financial controls in the company that are adequate and were operating effectively. f) they have devised proper systems to ensure compliance with the provisions of all applicable laws and these are adequate and are operating effectively. DECALARATION BY INDEPENDENT DIRECTORS The Company has received declarations from all the Independent Directors of the Company confirming that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 and Clause 49 of the Listing Agreement. NOMINATION AND REMUNERATION POLICY Pursuant to the provisions of Section 178 of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Board of Directors has, on the recommendation of the Nomination & Remuneration Committee framed a policy for selection and appointment of Directors, Senior Management and their remuneration. The Remuneration Policy of the Company, inter-alia, includes the aims and objectives, principles of remuneration, criteria for identification of Board Members and senior management. The Criteria for identification of the Board Members including for determining qualification, positive attributes, independence etc. are given hereunder: • The Board Member shall posses appropriate skills, qualification and experience. • Director should posses high level of personal and professional ethics and values. He should be able to manage the interests and concerns of the Company as well as the shareholders • Independent Director shall be a person with vast experience and expertise who fulfils the criteria of independency under Section 149 of the Companies Act, 2013 and could contribute to the growth of the Company. • The Director must be willing to denote sufficient time and energy to carry out his duties and responsibilities effectively and properly. The said policy forms a part of this Report as "Annexure B". PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS UNDER SECTION 186 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. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES Details of Loans, Guarantees and Investments covered under the provisions of Section 188 of the Companies Act, 2013 are given in the notes to the Financial Statements. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN OUTGO The particulars under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014 with regard to conservation of energy and technology absorption are not applicable to your Company. During the year under review, there were no earnings or outgo in foreign exchange. RISK MANAGEMENT POLICY- DEVELOPMENT AND IMPEMENTATION Your Company has been following the principle of risk minimization since 2006 as a significant norm in every industry which has now become mandatory under Section 134(3)(n) of the Companies Act, 2013. The Board of Directors has adopted a Risk Management Policy which emphasis on the risk assessment and minimization procedures, steps for framing, implementing and monitoring the risk management plan for the company. The contents of the policy have been included in the "Management Discussion and Analysis" forming part of this report. BOARD EVALUATION Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Board has carried out an annual performance evaluation of its own performance, the directors individually as well as the evaluation of the working of its Audit, Nomination & Remuneration and Compliance Committees. The manner in which the evaluation has been carried out is explained in the Corporate Governance Report. DIRECTORS AND KEY MANAGERIAL PERSONNEL (KMP) (a) Appointment / Re-appointment / Resignation of Directors and KMP As per the provisions of Section 152 of the Companies Act, 2013, Mr. Anil Goyal, Managing Director shall retire by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re-appointment. The Board of Directors recommends his re-appointment. As per the provisions of Section 161(1) of the Companies Act, 2013 and Articles of Association of the Company, the Board of Directors had appointed Mrs. Meenakshi Gopal as an Additional Director (Independent Non-Executive Director) of the Company w.e.f 31st March, 2015 who holds office upto the date of ensuing Annual General Meeting. The said appointment was based on the recommendation of the Nomination and Remuneration Committee subject to the approval of the Shareholders of the Company at the ensuing Annual General Meeting. Mrs. Meenakshi Gopal is eligible for re-appointment and the details of the proposal for the appointment of Mrs. Meenakshi Gopal as an Independent Director w.e.f 31st March, 2015 for a period of five consecutive years for a term upto 30th March, 2020, are mentioned in the Explanatory Statement under Section 102 of the Companies Act, 2013 of the Notice of the 32nd Annual General Meeting of the Company. The Company has received requisite Notice in writing from a member proposing the appointment of Mrs. Meenakshi Gopal as an Independent Non- Executive Director. The Company has also received declaration from Mrs. Meenakshi Gopal confirming that she meets the criteria of independence as prescribed under Section 149(6) of the Companies Act, 2013 and under Clause 49 of the Listing Agreement with the Stock Exchange. The Board of Directors recommends the appointment of Mrs. Meenakshi Gopal as Independent Non - Executive Director of the Company for a term of five (5) years and she shall not be liable to retire by rotation. Her appointment is appropriate and in the best interest of the Company. Dr. M. P. Jain and Mr. Arvind Kohli, Directors of the Company has resigned from the Board of the Company on 5th November, 2014 and 31st March, 2015 respectively. The Board has placed on record its appreciation for the outstanding contribution made by them during their tenure of office. Ms. Swati Vaish has been appointed as the Company Secretary and Compliance Officer, being the KMP of your Company w.e.f. 19th August. 2014 (b) Remuneration of the Directors / Key Managerial Personnel (KMP) and Particulars of Employees The provisions of Rule 5(2) & 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are not applicable, as there are no such employee who were drawing / in receipt of remuneration of prescribed amount during the period under review. The Company has one Executive Director, Mr. Anil Goyal. No remuneration is paid to him as he holds the office of the Managing Director of HB Portfolio Limited and opts to draw his remuneration from HB Portfolio Limited. The non-executive directors are paid only sitting fees for attending meeting of the Board of Directors and the Committees constituted by the Board. The information required pursuant to Section 197(12) of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of Directors / Key Managerial Personnel (KMP) and Employees of the Company is furnished hereunder: PUBLIC DEPOSITS Your Company has neither invited nor accepted any deposits from the public / shareholders pursuant to Section 73 of the Companies Act, 2013 read with the Companies (Acceptance of Deposits) Rules, 2014 during the year under review. SIGNIFICANT ORDERS PASSED BY THE REGULATORS OR COURTS There are no significant material orders passed by the Regulators / Courts or Tribunal during the year under review which has an impact on the Going Concern status and Company's status in the future. INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO FINANCIAL STATEMENTS Your Company has adequate system of Internal Controls with reference to financial statements. The detail of the adequacy of Internal Financial Control forms a part of the Management Discussion and Analysis Report. MANAGEMENT DISCUSSION AND ANALYSIS REPORT As required under Clause 49 of the Listing Agreement with Stock Exchanges, the Management Discussion and Analysis Report is enclosed as a part of this report. CORPORATE GOVERNANCE As required under Clause 49 of the Listing Agreement the report on Corporate Governance along with the Certificate from the Statutory Auditors of the Company regarding compliance for the year under review is annexed hereto and forms a part of the Directors' Report STATEMENT PURSUANT TO LISTING AGREEMENT The Company's Equity Shares are listed at Bombay Stock Exchange Ltd. (BSE), Mumbai. The listing fee for the year under review has been paid to BSE timely. AUDITORS OF THE COMPANY a) STATUTORY AUDITORS The Statutory Auditors, M/s. P. Bholusaria & Co., Chartered Accountants, New Delhi (FRN 000468N) retire at the ensuing Annual General Meeting and are eligible for re-appointment. The Company has also received their letter stating that they are not disqualified for re-appointment and their appointment would be within the prescribed limits under Section 141(3)(g) of the Companies Act, 2013. There has been no qualification, reservation, adverse remark or disclaimer given by the Auditors in their Report. b) INTERNAL AUDITOR Pursuant to the provisions of Section 138 of the Companies Act, 2013 and Rules related thereto, M/s. M.K. Choudhary & Co., Chartered Accountants, New Delhi acts as the Internal Auditors of the Company and their report is duly reviewed by the Audit Committee on quarterly basis. c) SECRETARIAL AUDITOR Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial personnel) Rules 2014, the Company has appointed Mr. A.N. Kukreja, M/s. A. N. Kukreja & Co., Company secretary in Practice to undertake the Secretarial Audit of the company. The Report of the Secretarial Audit in Form MR-3 is enclosed as a part of this report as "Annexure C". d) AUDITORS REPORT Statutory Auditor's and Secretarial Auditor's observations, if any, in their respective report(s), have been suitably explained by way of appropriate notes to accounts and also in the Directors' Report wherever necessary. AUDIT COMMITTEE The Board has reconstituted its Audit Committee on 31st March, 2015 comprises of Mr. L. N. Malik as its Chairman, Mr. Lalit Bhasin and Mrs. Meenakshi Gopal as its members. The functions of the Audit Committee are mentioned in the Corporate Governance Report. VIGIL MECHANISM - WHISTLE BLOWER POLICY In terms of the provisions of Sec 177(9) & (10) of the Companies Act, 2013 and pursuant to the provisions of Clause 49 of the Listing Agreement, the Board of Directors in its meeting held on 14th November, 2014 has duly approved a vigil mechanism for stakeholders, Employees and Directors about illegal or unethical practices and for the directors and employees to report concerns about unethical behaviour, actual or suspected fraud or violation of the Company's code of conduct or ethics Policy. The Whistle Blower Policy duly approved by the Board of Directors has been uploaded on the website of the Company viz. www.hbieasing.com having following web link, www.hbieasing.com/investor information/Corporate Governance. RELATED PARTY TRANSACTIONS In line with the requirements of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Board of Directors, on the recommendation of the Audit Committee, has formulated a Policy on Related Party Transactions which is also available on Company's website viz. www.hbleasing.com having following web link, www.hbleasing.com/Investor Information/ Corporate Governance. All Related Party Transactions are placed before the Audit Committee for review and approval. None of the Directors has any pecuniary relationships or transactions with the Company during the year under review. All Related Party Transactions entered during the year were in Ordinary Course of the Business and on Arm's Length basis. There were no materially significant Related Party Transactions entered into by the Company during the year under review. Accordingly, the disclosure of Related Party Transactions as required under Section 134(3)(h) of the Companies Act, 2013 in Form AOC 2 is not applicable. INTERNAL COMPLAINT COMMITTEE AND ITS POLICY AS PER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013 The Board has constituted an Internal Compliant Committee and adopted a policy on Sexual Harassmend in their meeting held on 06th August, 2014 as per the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the rules framed there under comprises of Mrs. Banmala Jha as its presiding Officer and Mrs. Madhu Suri, Mr. Anil Goyal and Ms. Swati Vaish as its members. The functions of the Committee are mentioned in the Corporate Governance Report. The Internal Complaints Committee has not received any complaints on sexual harassment during the year under review. ACKNOWLEDGMENTS Your Directors wish to thank and acknowledge the co-operation, assistance and support extended by the Banks, Company's Shareholders and Employees. For and on Behalf of The Board HB LEASING AND FINANCE COMPANY LIMITED Sd/- LALIT BHASIN (CHAIRMAN) DIN : 00002114 Date : 28.05.2015 Place : Gurgaon |