DIRECTORS' REPORT TO, THE MEMBERS Your Directors have pleasure in presenting the 23rd Annual Report of the Company and the Audited Financial Statements for the year ended March 31, 2015. With the advent of the Companies Act, 2013 and revised frame work/guidelines/directions issued by Reserve Bank of India for Non-Banking Finance Companies, your Company is required to prepare Directors' Report, Financial Statements and documents required to be attached thereto, in respect of financial year under reference in accordance with the relevant provisions of the Companies Act, 2013 and revised frame work/guidelines/directions issued by Reserve Bank of India for Non-Banking Finance Companies. Therefore, in compliance with such provisions Your Company has prepared the Directors' Report, Financial Statements and attachments thereto accordingly. Review of Operations The Company is focused on providing a number of financial services by providing Income Generation Loan, Business Loan, SME Loans, which is expected to drive the growth of the Company at a higher level. During the year ending March 31, 2015 the Company reported a gross income of Rs. 17837.84 Lacs as against Rs. 20792.69 Lacs of last year. The Profit Before Tax (PBT) stood at Rs. 6,670.30 Lacs at the end of financial year 2014-2015 as compared to Rs. 8,414.66 Lacs during financial year 2014-15. Interest expenses for the year decreased by 9.02 % to Rs. 5,592.57 Lacs from Rs. 6,147.16 Lacs in the last year. Disbursements During the financial year 2014-2015, Total Disbursement (including figures of Subsidiary) reached Rs. 11,473.79 millions, recoding 2.80 % decrease in comparison to Rs. 11,801.80 millions achieved during last financial year. During the reporting period Company's main focus was on maintaining its quality loan portfolio without increasing the risk profile. Number of Customers Total Customers outreach stood at 6,55,232 being increased by 7.5 % as compared to previous year. Net Worth and Capital to Risk Adjusted Ratio (CRAR) The Net Worth of the Company improved to Rs. 50,650.90 Lacs as on March 31, 2015 from Rs. 46,571.72 Lacs as on March 31, 2014. The Capital to Risk Adjusted Ratio (CRAR) stood at 47.48 % as on March 31, 2015 as against 48.30 % as on March 31, 2014 which is much above the requirement as stipulated by Reserve Bank of India and is one of the best in the industry. Dividend Keeping in mind the overall performance and the outlook of your Company, your Directors are pleased to recommend a dividend of Re. 1/- (Rupee One only) per share i.e. 10% on each Equity Share of Rs. 10/- (Rupees Ten only) and a dividend of Re. 1/- (Rupee One only) per share i.e. 10% on each Preference Share of Rs. 10/- (Rupees Ten only). The dividend would be paid to all the shareholders, whose names appear in the Register of Members/ Beneficial Holders list on the Book Closure/Record date. Fixed Deposits Company has not accepted any public deposits and as such no amount on account of principal or interest on public deposits was outstanding as on the date of balance sheet. Application to Reserve Bank of India for Small Finance Bank It's our pleasure to inform you that your company has submitted application to Reserve Bank of India for conversion into Small Finance Bank. If the Company succeed to get the license it will increase its business manifolds and will boost the wealth of the shareholders. Directors In the light of new effective provisions of Companies Act, 2013 and new Corporate Governance regime as notified by SEBI with regards to Composition of Board of Directors, including provisions of eligibility criteria and qualification of Independent Directors and appointment of at least one woman director in the Board of the specified Companies, Your Company has accordingly made suitable changes in the composition of the Board and appointed Mr. Naresh Kumar Jain and Mrs. Anshu Gupta as Additional Independent Directors on the Board of the Company in the Month of August, 2014 and later in the 22nd Annual General Meeting their appointment has been regularized and they alongwith Mr. Dharam Vir Gupta and Mr. Brij Lai Goel have been appointed as Independent Directors, not liable to retire by rotation. In August, 2014 Mr. Suresh Chand Sharma and Mr. Purushottam Agrawal resigned from the Directorship of the Company. The Board places on record its appreciation for the valuable contribution made by them during their tenure as Directors of the Company. Further, with effect from March 28,2015 Mr. Pradeep Agarwal has been appointed as an additional Independent Director of the Company and Mr. Dharam Vir Gupta has resigned from the Office of Independent Director of the Company. Dr. Arun Gopal Agarwal, Non- Executive Non-independent Director of the Company is liable to retire by rotation at the ensuing Annual General Meeting and being eligible for re-appointment, offers himself for re-appointment. Brief resume of all the Directors proposed for appointment/re-appointment at the Annual General Meeting, as required by the Clause 49 of the Listing Agreement with the Stock Exchanges is enclosed with the Notice of Annual General Meeting. Statement on declaration by Independent Directors Declaration have been given by all the Independent Directors of the Company that they comply with all the criteria of Independent Director as envisaged in Clause 49 of the Listing Agreement and Section 149(6) the Companies Act, 2013. Brief Description of Policy on Directors Appointment and Remuneration of Directors, Key Managerial Personnel and Other Employees In accordance with Section 178 of the Companies Act, 2013 the Nomination and Remuneration Committee has formulated Remuneration Policy ("the policy"). The objective of the policy is to ensure that Executive Directors and other employees are sufficiently compensated for their performance. The Policy seeks to provide criteria for determining qualifications, positive attributes and independence of a director. Nomination and Remuneration Committee shall recommend the remuneration, including the commission, if any, based on the net profits of the Company, within the prescribed ceiling for the Non-Executive Directors and Whole-time Director and other Directors. This will be then approved by the Board and shareholders. Prior approval of shareholders will be obtained wherever applicable in case of remuneration to non-executive directors. Annual increments effective from 1st April each year, as recommended by the Nomination and Remuneration Committee, and are approved by the Board. The remuneration paid to Executive Directors is determined keeping in view the industry benchmark and the relative performance of the Company to the industry performance. Perquisites and retirement benefits are paid according to the Company policy as applicable to all employees. Independent Non-Executive Directors are appointed for their professional expertise in their individual capacity as independent professionals / Business Executives. Independent Non-Executive Directors receive sitting fees for attending the meeting of the Board and Board Committees as approved by the Board and shareholders. The remuneration of employees largely consists of basic salary, perquisites, allowances and performance incentives. Perquisites and other benefits are paid according to the Company policy, subject to prescribed statutory ceiling. The components of the total remuneration vary for different grades and are governed by the industry pattern, qualification & experience / merits, performance of each employee. The Company while deciding the remuneration package takes into consideration current employment scenario and remuneration package of the industry. Criteria for Board Membership of the Company The Company shall take into account following points: • Director must have relevant experience in Finance/ Law/ Management/ Sales/ Marketing/ Administration/ Research/ Corporate Governance/ Technical Operations or the other disciplines related to Company's business. • Director should possess the highest personal and professional ethics, integrity and values. • Director must be willing to devote sufficient time and energy in carrying out their duties and responsibilities. Independent Director Independent Director is a Non-Executive Director, who does not have any direct or indirect material pecuniary relationship with the Company or any of its officers, other than as a director or shareholder of Company. Independent Director shall meet all criteria specified in Section 149 of the Companies Act, 2013 and rules made thereunder and Clause 49 of the Listing Agreement entered into with Stock Exchanges. Subsidiary The Company has only one wholly owned subsidiary M/s Nupur Frnvest Private Limited, which is engaged in the non-banking finance business. A report on performance and financial position of the Subsidiary Company, under provisions of Section 134 of the Companies Act, 2013 and rules made thereunder, is enclosed in Auditors' Report & Financial Statements of the Company. Auditors & Audit Report M/s R. Lai & Company, Chartered Accountants & M/s P M S & Co., Chartered Accountants, have been appointed as Joint Statutory Auditors of the Company in 22nd Annual General Meeting of the Company for 3 and 2 years respectively subject to annual ratification. Further, Joint Statutory Auditors of the Company are eligible to continue as Statutory Auditors of the Company for the remaining term. Accordingly Board of Directors recommended to ratify their appointment as statutory auditors of the Company. The observations of Auditors in their report read with notes to the accounts are self-explanatory and do not call for any further explanation. The Auditors of the Company has not given any adverse remark or disclaimer in the report. Particulars of Contracts and Arrangements Related Party Transactions During the financial year under review, in the ordinary course of business your Company has entered into various related party transaction at arm's length basis details of the same are annexed herewith in Form AOC-2 as Annexure A as integral part of this report. Secretarial Auditor's Report In accordance with the provisions of Section 204 of the Companies Act, 2013 and as a measure of good corporate governance practice, the Board of Directors of the Company appointed CS Dimple Sachdeva, Practicing Company Secretary, to conduct Secretarial Audit of records and documents of the Company. The Secretarial Audit Report confirms that the Company has complied with all provisions of laws and regulations applicable to the Company. The Secretarial Audit Report being a part of this is enclosed with this report as Annexure B does not give any adverse remark or disclaimer regarding the compliances done by the Company. Risk Management Non-Banking Finance Companies (NBFCs) form an integral part of Indian financial system. NBFCs are required to ensure that a proper framework on Risk Management System is formulated and put in place. For this purpose Company has constituted Assets Liability Management Committee and Risk Management Committee to facilitate the Board to address the risk associated with the business of the Company and formulate policy to mitigate the The Company follows a disciplined risk management process and has taking business decision with balanced risk-reward paradigm. Detail statement on risk management policy of the Company is given in separate section on Management Discussion and Analysis and it forms part of this Director's Report. Extracts of Annual Return Pursuant to section 92(3) of the Companies Act, 2013 and Rule 12( 1) of the Companies (Management and Administration) Rules, 2014, Extracts of Annual Return in the form MGT-9 is annexed as integral part of this Report as Annexure C Particulars of Employees Information in accordance with provisions of section 134, 197 of the Companies Act, 2013 read with Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are disclosed in MGT-9, annexed as integral Part of this Report. Disclosures as per the Provision of Section 197 (12) of Companies Act, 2013 The particulars pursuant to Section 197( 12) of the Companies Act, 2013 read with rule 5 of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is given in annexure to this report and forms part of the Directors' Report as Annexure D. Your Directors also affirms that the Remuneration paid to them is according to the Remuneration Policy of the Company. Internal Financial Control Internal Financial Control System is an integral component of the Risk Management System of the Company. The internal financial control policies and internal audit program adopted by the Company play an important role in risk management feedback loop, in which the information generated in the internal control process is reported back to Board and Management. A firm of Competent Chartered Accountants has been engaged by the Company for conducting internal audit, to examine and evaluate the adequacy and effectiveness of internal financial control system of the Company. The Audit Committee of Board of Directors, Statutory Auditors and the Business Heads are periodically apprised of the internal audit findings and corrective actions taken. The Audit Committee of Board of Directors actively reviews the adequacy and effectiveness of internal financial control system and suggests improvements for strengthening them. Internal Financial Control System of the Company modified continuously in accordance with the dynamic changes in the business condition and to comply with the applicable laws, regulations, statutory and accounting requirement. Corporate Social Responsibility In accordance with the provisions of Section 135 of Companies Act, 2013 read with rules made thereunder. Company has constituted Corporate Social Responsibility Committee, which framed a Board approved CSR Policy for the Company, same is available on Company's website www.seil.in <http://www.seil.in>. CSR Policy of the Company has vision to make concrete efforts towards the animal welfare specially for Mother Cow also supported the cause of rural development, promoting education, providing preventive healthcare and sustainable development of green environment, provided they are covered as per the statutory requirements of social responsibility. The Board of the Company has decided to undertake its CSR activities through a registered trust, which is engaged in the welfare of Mother Cow. In the financial Year 2014-15, Company has made contribution of Rs. 1.95 Crores in the corpus fund of the Trust, more than 2% of Company's Average net profit of last three years of Rs. 96.26 Crores. Composition of CSR Committee disclosed in Corporate Governance Section of this Annual Report as part of Directors' Report and other details as required under Companies Act, 2013 is as annexed with this Report as Annexure E. Credit Rating The Bank Borrowings of the Company has been assigned rating of "A-" by CARE Limited which denotes "Adequate Safety". Reserve Bank of India Guidelines The Company continues to comply with all the requirements prescribed by the Reserve Bank of India as applicable to it. Timely Repayment of Loan Liabilities During the year 2014-2015, the Company has not defaulted in payment of interest and/or repayment of loans to any of the financial institutions and /or banks. Management Discussion and Analysis of Financial Conditions An analysis of the financial conditions and results of operations of the Company for the year under review, has been represented in the Annual Report as a separate section on Management Discussion and Analysis as Annexure F and it forms part of this Director's Report. Corporate Governance Your Company is committed to adhere to the best practices of governance. It is always ensured, that the practices being followed by the Company are in alignment with its philosophy towards Corporate Governance. Your Company believes that the Corporate Governance is all about effective management of relationship among constituents of the system and always works towards strengthening this relationship through corporate fairness, transparency and accountability. In your Company, prime importance is given to reliable financial information, integrity, transparency, fairness, empowerment and compliance with law in letter and spirit. Detailed compliances with the provisions of Clause 49 of the Listing Agreement for the year ended 2014-15 along with the Certificate of Compliance from the Auditor, has been mentioned in Corporate Governance Report, which is annexed as Annexure G and forms part of this report. Human Resources Development and Industrial Relation Your Company strives to provide the best work environment with ample opportunities to grow and explore. The human resources development function of the Company is guided by a strong set of value and policies. Healthy, cordial and harmonious industrial relations were been maintained by the Company at all levels. Your Directors further state that during the year under review there were no cases filed pursuant to the sexual harassment of women at workplace (Prevention Prohibition and Redressal) Act, 2013. Listing of Shares The shares of the Company are listed on BSE Limited and National Stock Exchange of India Limited. Depository Receipts of the Company is listed on Luxembourg Stock Exchange. The listing fee for all previous years had been paid to stock exchanges and fee for the current year has been paid within stipulated time. Directors' Responsibility Statement Pursuant to the requirement under Section 134(5) of the Companies Act, 2013 (Act) with respect to Directors' Responsibility Statement, it is hereby confirmed that: a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures; b. the Directors had 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 and loss of the Company for that period; c. the Directors had 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 and other irregularities; d. the Directors had prepared the annual accounts on a going concern basis; and e. the Directors had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively. f. the Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo The particulars pursuant to Section 134 of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014 to the extent applicable are as follows: A) Conservation of energy (i) Company has made its efforts and adopted relevant measures for conservation of the energy (ii) No step has been taken by the Company for utilizing alternate sources of energy. (iii) There is no significant proposal for additional investments for reduction of consumption of energy. (B) Technology Absorption No measure for technology absorption has been adopted by the Company. Performance of the Board of Directors, Its Committees and Individual Directors The performance of the Board of Directors and their committees, along with performance of individual Director reviewed and evaluated time to time, in the light of Company's performance. The performance of the Directors individually and collectively and performance of committees are found satisfactory. With the spirit of wealth creation for the shareholders of the Company, your Directors are committed to give their best efforts towards the development of the Company. Acknowledgments The Board of Directors would like to place on record their gratitude for the commitment, dedication and hard work done by the employees of the Company and the co-operation extended by Banks, Government Authorities, Customers, Shareholders and Employees of the Company and we look forward for mutual support and co-operation. For & on behalf of the Board of Directors of S. E. Investments Ltd. Sd/- (Sunil Agarwal) Managing Director DIN:00006991 Sd/- (Harish Singh) Director DIN: 00039501 Place: Delhi Date: August 14, 2015 |