DIRECTOR'S REPORT To, The Members, Rajath Finance Limited, Your Directors are pleased to present their 30th Annual Report for the financial year ended on 31st March, 201 STATE OF COMPANY'S AFFAIRS AND FUTURE OUTLOOK: During the year under Report, your Company has recorded the total Revenue from Operations of Rs. 40,31,266/- as compared to Rs.31,33,790/- of previous financial year 2013-14 showing an approximate rise of about 28%. However, due to increasing inflation, unfavourable market conditions and writing off of Bad Debts, the Company has incurred loss of Rs.5,97,605/- as compared to Net Profit of Rs.1 1,65,607/- of previous year. However, the management assures that the Company will leave no effort unturned to recover the loss in the impending phase and improve the profitability of the Company. DECLARATION OF DIVIDEND & TRANSFER OF AMOUNT TO RESERVES: Due to loss, your Board of Directors does not recommend declaration of dividend. Moreover, no amount is being transferred to Reserves during the financial year 2014-15 SHARE CAPITAL: The paid up Equity Share Capital as on March 31, 2015 was Rs. 4 crores. During the year under review, the Company has not issued any shares or any convertible instruments. EXTRACT OF ANNUAL RETURN: Pursuant to Section 134 (3) (a) of Companies Act, 2013, Form MGT 9 i.e. the extract of Annual Return for the Financial Year 2014-1 5 is enclosed with this report. BOARD MEETINGS AND INDEPENDENT DIRECTOR'S MEETING: The Board of Directors of the Company respectively met Five times on 28/05/2014, 02/08/2014, 31/10/2014, 31/01/2015 and 31/03/2015 during the financial year 2014-15. Further, the Independent Directors meeting was held on 25th March, 2015 to review the performance of non-independent directors and the Board as a whole; review the performance of the Chairperson of the Company, taking into account the views of executive directors and non-executive directors and assess 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. BOARD'S RESPONSIBILITY STATEMENT: Pursuant to the provisions of Section 134 (5) of the Companies Act, 2013, the Directors based on the information and representations received from the operating management confirm that: a) in the preparation of the annual accounts, the applicable accounting standards had been followed and there are no material departures from the same; b) the directors 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 and loss of the company for that period; c) the directors have taken proper and sufficient care to the best of their knowledge and ability 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 have prepared the annual accounts on a going concern basis; and e) 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. f) the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and such systems were adequate and operating effectively. DECLARATION (OF INDEPENDENCE) BY INDEPENDENT DIRECTORS: The Company has received declarations from each Independent Director under section 149 (7) of the Companies Act, 2013 that he/ she meets the criteria of independence laid down in Section 149 (6) of the Companies Act, 2013 and Clause 49 of the Listing Agreement. The Company has the practice to take the declaration of independence from all Independent Directors on his/ her appointment/ re-appointment and also in first meeting of the Board of Directors every year. All these Directors are abiding to intimate to the Board about any change in their status of independence in the very next board meeting after such change. COMPANY'S POLICY ON DIRECTORS APPOINTMENT, NOMINATION, REMUNERATION AND FORMAL EVALUATION: Pursuant to provisions of Section 178 (1) of the Companies Act, 2013, the Board has, on the recommendation of the Nomination & Remuneration Committee framed a policy for selection, nomination, appointment and Remuneration of Directors suitably containing the criteria determining qualifications, positive attributes and independence of a Director. Moreover, in terms of Clause 49 of the Listing Agreement, the Board has carried out annual performance evaluation of its own performance, the directors individually as well the evaluation of the working of its Audit, Nomination & Remuneration and Shareholders Grievance committee. STATUTORY AUDITOR AND AUDITORS' REPORT: M/s. SADP & CO., Chartered Accountants, Rajkot, Statutory Auditors of the Company, hold office till the conclusion of the ensuing Annual General Meeting and are eligible for re-appointment. They have confirmed their eligibility to the effect that their re-appointment, if made, would be within the prescribed limits under the Act and that they are not disqualified for re-appointment. The Auditors' Report does not contain any qualification, reservation or adverse remark AND the Notes on financial statements referred to in the Auditors' Report are self-explanatory and do not require any further comments thereon. SECRETARIAL AUDITOR AND SECRETARIAL AUDIT REPORT: The Board has appointed Nayna Paramalji Chopra, Practising Company Secretary, to conduct Secretarial Audit for the financial year 2014-15. The Secretarial Audit Report for the financial year ended March 31, 2015 is annexed herewith. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark. PARTICULARS OF LOAN, GUARANTEES AND INVESTMENTS MADE: During the year under report, the Company has not granted any loan or provided any guarantee or made any investment exceeding the limits as specified in Section 186 (2) of the Companies Act, 2013. Hence no approval from the shareholders in this regard was required. PARTICULARS OF CONTRACTS/ARRANGEMENTS WITH RELATED PARTIES: The Company has not entered into any contract or arrangement with related party which is not at arms' length requiring approval of shareholders in the general meeting as required under section 188 of the Companies Act, 2013. The Audit Committee reviews all the transactions with related party on quarterly basis and recommends the same to the Board for their approval. Your Directors draw attention of the members to Note no. 24 to financial statements which set out related party disclosures. CORPORATE SOCIAL RESPONSIBILITY (CSR): Pursuant to provisions of Section 135 of the Companies Act, 2013 read with the Companies (Corporate Social Responsibility Policy) Rules, 2014, every company with a net worth of Rs. 500 Crores or more OR an annual turnover of Rs.1000 Crores or more OR with a net profit of Rs. 5 Crores or more is required to constitute a CSR Committee. At present, the Company is not required to constitute a CSR Committee in this regards as none of the above referred limits have been triggered. BOARD OF DIRECTORS: In terms of Section 152 (6) of the Companies Act, 2013 read with Companies (Appointment and Qualification of Directors) Rules, 2014, Mr. Hitesh Bagdai, Managing Director (DIN: 00575732) and Mr. Bhavdeep Vala, Director (DIN: 001 53775) retires by rotation and being eligible, has offered himself for re- appointment. The Board recommends the same for your approval. Mr. Kantilal Khakhar (DIN: 01957569), Mr. Ketan Dhulesiya (DIN: 02252208) and Mr. Janish Ajmera (DIN: 0670821 7) are the Independent Directors of the Company. In terms of provisions of Section 149 (10) read with Clause 49 of the Listing Agreement, all three independent directors have been reappointed with amended terms in the 29th Annual General Meeting of the Company held on 30th September, 2014. BOARD COMMITTEES : During the year under report, all the recommendations of the Audit Committee were duly considered. Detailed terms of reference of Audit Committee are provided in Corporate Governance Report. NOMINATION AND REMUNERATION COMMITTEE: The Company is having an adequate Nomination and Remuneration Committee comprising of following Directors: Detailed terms of reference of Nomination and Committee are provided in Corporate Governance Report. SHAREHOLDERS GRIEVANCE COMMITTEE: The Company is having a Shareholder Grievance Committee comprising of following Directors: CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO: The provisions of Section 134(3) (m) of the Companies Act, 2013, and the rules made there under relating to conservation of energy, technology absorption do not apply to your Company as it is not a manufacturing company. However, your Company has been increasingly using information technology in its operations and promotes conservation of resources. During the year under review, there was no foreign earning or expenditure in the Company. PARTICULARS OF EMPLOYEES: There are no employees in the Company drawing remuneration of more than Rs. 5 Lacs per month or 60 Lacs per annum, as prescribed in Rule 5 (2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. CORPORATE GOVERNANCE: The Company believes that the Corporate Governance is all about effective management of relationship among constituents of the system, i.e. shareholders, management, employees, customers, vendors, regulatory and the society at large. The Company has strong belief that this relationship can only be built and strengthen through corporate fairness, transparency, and accountability. The Securities and Exchange Board of India (SEBI), Reserve Bank of India (RBI), National Foundation for Corporate Governance (NFCG), Institute of Company Secretaries of India (ICSI) and other such regulatory bodies and organizations are continuously making stringent efforts to strengthen Corporate Governance framework in the country. Accordingly, a detailed Report on Corporate Governance as well as the Certificate from M/s. SADP & Co, Chartered Accountants, and the Statutory Auditors of the Company are annexed to this Report of Board of Directors. RISK MANAGEMENT: The Company has framework for managing its risk. It has led down detail procedure to inform Board member about the Risk assessment and Minimization Procedure. The Company has made the policy in this regard and the same is reviewed periodically to ensure the executive management control risk through means of proper framework. SUBSIDIARIES, IOINT VENTURE OR ASSOCIATE COMPANIES: As at 31st March, 201 5, the Company doesn't have any Subsidiary, Joint Venture or Associate Companies. INTERNAL FINANCIAL CONTROLS The Company has adequate internal financial controls with reference to financial statements. During the year under report, no reportable material weakness was observed. PARTICULARS OF LOAN, GUARANTEES AND INVESTMENTS MADE: During the year under report, the Company has not granted any loan or provided any guarantee or made any investment exceeding the limits as specified in Section 186 (2) of the Companies Act, 201 3. Hence no approval from the shareholders in this regard was required. VIGIL MECHANISM: Pursuant to the provisions of Section 177(9) & (10) of the Companies Act, 2013, a Vigil Mechanism for directors and employees to report genuine concerns has been established. The Vigil Mechanism Policy has been uploaded on the website of the Company at www.rajathfinance.com OTHER DISCLOSURES: • Your Company has not invited/ accepted any Fixed Deposits under the provisions of Section 73 of the Companies Act, 201 3 and the Rules made there under. • No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and Company's operations in future. • 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. • No material changes and commitments have occurred after the close of the year till the date of this Report, which affect the financial position of the Company. • The Company is not required to get its cost records audited for the financial year 2014-1 5. MANAGEMENT DISCUSSION AND ANALYSIS INDUSTRY STRUCTURE, DEVELOPMENT AND FUTURE OUTLOOK: NBFCs, which historically have been very reliant on bank borrowings, have now started to diversify their resource raising profile to reduce cost of funds. In the current environment financing through bonds, debentures and commercial papers (CPs) are much cheaper as compared to bank borrowings. The highlights of the reforms introduced by Government of India in their budget for the coming fiscal for the financial sector are as following: • Inclusion of NBFCs, having an asset size of Rs 500 crore and above, under the SARFAESI Act and new bankruptcy code will provide a boost to recovery efforts and help rein in asset quality problems over the long run. • Setting up of autonomous "Bank Board Bureau" marks the initial move towards formalizing a holding company structure for public sector banks. This will improve governance, optimise capital contribution by government, and provide greater functional autonomy. • The new Micro Units Development Refinance Agency (MUDRA) Bank for refinancing of microfinance institutions will support micro credit. The revised regulatory framework released in November, 2014 by the RBI focuses on strengthening the structural profile of the NBFC sector. These changes have to be implemented in a phased manner by Reserved Bank of India, by March 31, 2018. SEGMENTS: Rajath Finance Limited, does not have multiple segments, and hence, comments are not required. PERFORMANCE: During the year under Report, the Company has recorded total revenue of Rs. 40,61,468/-and major part of revenue is generated through Interest Income. Further, due to unfavorable conditions prevailing in the market, the Company has incurred a Net Loss of Rs.10,34,534/-. Your directors assure to recover the losses as early as possible. INTERNAL AUDIT SYSTEM The Company has implemented proper and adequate systems of internal control to ensure that all assets are safeguarded and protected against loss from any unauthorized use or disposition and all transactions are authorised, recorded and reported correctly. The System ensures appropriate information flow to facilitate effective monitoring. The internal audit system also ensures formation and implementation of corporate policies for financial reporting, accounting, and information security. CAUTIONARY STATEMENTS All statements made in Management and Discussion Analysis have been made in good faith. Many unforeseen factors may come into play and affect the actual results, which could be different from what the Management envisages in terms of performance and outlook. Market data, industry information etc. contained in this Report have been based on information gathered from various published and unpublished reports and their accuracy, reliability, and completeness cannot be assured. Factors such as economic conditions affecting demand/supply and priced conditions in domestic & international markets in which the Company operates, and changes in Government regulations, tax laws, other statues and other incidental factors, may affect the final results and performance of the Company. ACKNOWLEDGEMENT: Your directors put on record their whole hearted gratitude to bankers, employees of the Company for their sincere efforts for the Company. By Order of the Board of Directors For, RAIATH FINANCE LIMITED, Sd/- (BHAVDEEP VALA) DIRECTOR (DIN: 00153775) Sd/- (HITESH BAGDAI) MANAGING DIRECTOR (DIN: 00575732) Date : 30/05/2015 Place : Rajkot |