DIRECTORS' REPORT To, The Members of Frontier Capital Limited (Formerly known as Frontier Leasing & Finance Limited) Your Directors have pleasure in presenting the Thirty First Annual Report of the Company and the Audited Statements of Accounts for the Financial Year (FY) ended 31st March, 2015. 2. Operations Your Company continues to be profitable, dividend paying and debt free for the last three years. Profit after tax was 1.02 Crore and 0.92 Crore for Financial Year 2014 and 2013 respectively. In Financial Year 2015 total Income stood to Rs. 2.96 Crore. Key Highlights:- • As on 30th June 15, the Assets under Management stood at Rs. 15.43 Crores. • During the year, the Company has built a Truck/ Vehicle Finance of Rs. 1.60 Crores and Corporate Loan of Rs. 13.83 Crores as of 30th June 15. • Company has changed its name from 'Frontier Leasing & Finance Limited' to "Frontier Capital Limited" w.e.f. February 26th, 2015. • Company has issued 0.01%, 1,40,000 Preference Shares on 29th January, 2015, 6th February, 2015 and 13th March, 2015. • Company has increased its authorized capital from 20 Crores to 25 Crores. 3. Dividend Your Directors are pleased to recommend a Dividend of Re. 1/- (10%) Per Equity share of Rs. 10/-each and Re. 0.10 (0.01%) on Preference shares for the Year end 31st March, 2015. The Dividend if approved at the forthcoming Annual General Meeting will be paid out of the profits of the Company. The Dividend will be paid to those shareholders whose names appear on the Register of the Members of the Company after giving effect to all the valid transfers lodged with the share transfer agent on or before the 18th September, 2015 and to those whose name appear as beneficial owners in the records of National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL) as on the said date. 4. Transfer to Reserves The profit for the year is Rs. 0.15 Crore. After the appropriation, the balance of Rs. 3.13 crores is debited to Profit and loss Account. Rs 0.02 Crore has been transferred to Statutory Reserves. 6. Number of Board Meetings A calendar of meetings is prepared and circulated in advance to the Directors. During the year under review, 5 Board Meeting were convened and held. 7. Extract of the Annual Return As provided under Section 92(3), the details forming part of the extract of Annual return in Form MGT 9 is annexed herewith as Annexure I 8. Particulars of Contracts or Arrangements with Related Parties All Contracts/ Arrangements/ transactions entered by the company during the financial year with related parties were on arm's length basis, in ordinary course of business and were in the compliance with the applicable provisions of the Act and the Listing Agreement. There are no significant 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 at large. Accordingly there are no material transactions that are required to be reported in Form AOC 2 and as such do not form part of the Report. 9. Particulars of loans, Guarantees or Investments under Section 186 Being an Non-Banking Finance Company, the provision of Section 186 of Companies Act, 2013 are not applicable to the Company. 10. Secretarial Audit Pursuant to the provisions of Section 204 of the Act and The Companies (Appointement and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed CS Manish Baldeva, Proprietor M/s M Baldeva Associates, Company Secretaries to undertake the Secretarial Audit of the company. The Report of the Secretarial Audit is annexed herewith as Annexure- II. 11. Deposits: Your company has not accepted any Deposits during the financial year under review falling under provisions of Section 73 and 76 of the Companies Act, 2013 read with Companies (Acceptance of Deposits) Rules, 2014. 12. Risk Management: The Company has in August 2014 has constituted a Risk Management Committee (RMC) which has been entrusted with responsibility to assist the Board in overseeing the Company's Risk Management process and controls, risk tolerance and capital liquidity and funding and also setting the strategic plans and objections for the risk management and review of risk management of the company and also review the company's risk appetite and strategy relating to key risks, including credit risk, liquidity and funding risk, market risk, product risk and reputational risk, as well as guidelines, policies and processes for monitoring and mitigating such risks. The Board takes responsibility for the overall process of the risk management in the organization. The business risk is managed through cross functional involvement and communication across businesses. 13. Declaration by an Independent Director (s) : All Independent Directors have given declarations as required under the provisions of section 149(7) of the Companies Act, 2013 that they meet the criteria of independence as laid down under Section 149(6) of the companies Act, 2013. 14. Appointement of Auditors: M/s. Nisar & Kumar, Chartered Accountants, hold office as such upto the conclusion of the ensuing 31st Annual General Meeting. They have been Statutory Auditors of the Company since Financial Year 2010 i.e. for a continuous period of 5 years including Financial Year 2014-15. In terms of the Companies Act, 2013 ("the new Act") and the Rules framed thereunder and as recommended by Audit Committee, it is proposed to appoint M/s A.C Bhuteria, Chartered Accountants, Kolkata as new Statutory Auditors of the Company to hold office from the conclusion of 31st Annual General Meeting to be held on 25th September, 2015 till the conclusion of 36th Annual General Meeting of the Company to be held in the Year 2020 (subject to ratification of their appointment by the Members at every Annual General Meeting held after the ensuing Annual General Meeting). The company has received a written consent from M/s A.C Bhuteria, Chartered Accountants to the effect that they are willing to act as Statutory Auditors of the Company, if appointed, and their appointment if made, would be within the limits prescribed under the Act and Rules framed there under and they are not disqualified from being appointed as Auditors. The Members are requested to appoint them as Statutory Auditors as aforesaid and fix their remuneration. 15. Remarks or qualifications by Statutory Auditors and Secretarial Auditors: There are no negative remarks or qualification from Statutory Auditors. Remark of Secretarial Auditor has been recived for not maintaining minimum public shareholding at 25% of total equity paid up capital. Promoters have assured that they are in process of making Offer for Sale to reduce their holdings upto 75% of total equity paid up capital. 16. Internal Audit Pursuant to provision of section 138 of the Companies Act, 2013 & Rule 13 of Companies (Accounts) Rules, 2014, M/s Rajagopalan & Co., have been appointed as Internal Auditors of the Company for Financial Year 2014-15. 17. Material changes and commitment if any affecting the financial position of the company occurred between the end of the financial year to which this financial statements relate and the date of the report No material changes and commitments affecting the financial position of the Company occurred between the end of the financial year to which this financial statements relate on the date of this report. 18. Formal Annual Evaluation: Pursuant to the provisions of the Companies Act, 2013, 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 Committees. The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report. 19. Significant/material orders passed by the regulators: During the year under review, no significant or material order was passed by any regulatory authority which may have bearing on going concern status or on operations of the company in future. 20. Internal Control Systems And Their Adequacy The Company has an internal control system, commensurate with the size, scale and complexity of its operations. The Company monitors and evaluates the efficacy and adequacy of internal control system in place, its compliance with operating systems, accounting procedures and policies. 21. Corporate Social Responsibility Report (CSR): As per Section 135 of the companies Act, 2013 every Company having net worth of Rs. 500 Crore or more, or turnover of Rs. 1000 Crore or more, or a net profit of Rs. 5 Crore or more during any financial year is required to constitute a CSR Committee. As your Company does not fall under any of above limits, the Corporate Social responsibility (CSR) is not applicable to Company. 22. Audit Committee: i. The Audit Committee functions accordingly to its charter defines its composition, authority, responsibility and reporting functions in accordance with the Act, listing requirements and the regulations applicable to the company and is reviewed from time to time. The Audit Committee comprises of three Non-Executive (NE) Directors viz. Mr. V.G Raghavan, Mr. Nitin Chamaria (from 9th December, 2014) and Mr. D. G. Prasad (from 9th December, 2014), Mr. Rajesh Kathuria (Upto 22nd December, 2014) and Mr. S. Sridhar (Upto 30th July, 2014). All of them are financially literate and have relevant finance and/or audit exposure. ii. Quorum of Committee is two members. During the period under review, 4 Audit Committee meetings were held on 9th May, 2014, 11th August 2014, 10th December 2014 & 12th February, 2015. iii. Each Board Meeting which considers financial results is preceded by meeting of Audit Committee Members along with Auditors. 23. Nomination and Remuneration Committee: The Nomination and Remuneration Committee (NRC) of the company functions according to its charter, that defines it objective, composition, meeting requirements, authority and power, responsibilities, reporting and evaluation functions in accordance with the act and listing requirements, which are reviewed from time to time. Policy of Nomination and Remuneration committee is attached as a part of Directors' Report in Annexure - III 24. Vigil Mechanism: The company has adopted a Whistle Blower Mechanism Policy establishing vigil mechanism, to provide a formal mechanism to the directors and the employees to report their concerns about unethical behaviour, actual or suspected fraud or violation of the company's code of conduct or ethics policy. The policy provides for adequate "safeguard against victimization of employees who avail the mechanism. No employee of the Company has been denied access to the Audit Committee. 25. Prevention of Sexual harassment The company has zero tolerance for sexual harassment at work place and has adopted a policy on prevention, prohibition and redressal of sexual harassment at workplace in line with the provisions of the Sexual harassment of women at workplace (prevention, prohibition ad Redressal) Act, 2013 and the rules thereunder for prevention and redressal of complaints of sexual harassment at workplace. The Company is committed to provide equal opportunities to their race, caste, sex, religion, colour, nationality, disability, etc. All women associates (permanent, temporary, contractual and trainees) as well as women visiting the company's office premises or women service providers are covered under this policy. All are treated with dignity with a view to maintain a work environment free of sexual harassment whether physical, verbal or psychological 27. Subsidiary Company: A wholly owned subsidiary of the Company named "Frontier Digital Technologies Private Limited' (FDTPL) was incorporated on 21st March, 2014. A statement containing brief financial details of FDTPL for the year ended March 31, 2015 is included in the Annual Report. 28. Compliance: The Company is registered with RBI as an Asset Financing Non Deposit Accepting NBFC. The Company has complied with and continues to comply with the applicable Regulations and Directions of the RBI and it does not carry on any activities other than those specifically permitted by the RBI. 29. Directors' Responsibility Statement: Pursuant to the requirement under Section 134 (5) of the Companies Act, 2013 the Directors, based on the representation received from the Operating management, confirm that: (i) in the preparation of the annual accounts for the financial year ended 31st March, 2015, the applicable accounting standards had been followed along with proper explanation relating to material departures; (ii) 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 as at 31st March, 2015 and of the profit of the Company for that period; (iii) the directors had 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; (iv) the directors had prepared the annual accounts on a going concern basis; (v) the directors, in the case of a listed company, had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were opening effectively; and (vi) 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. 30. Consolidated Financial Statements The Consolidated Financial Statements of the Company and its subsidiary "FDTPL", prepared in accordance with Accounting Standard AS 21 form part of this Annual Report. 31. Corporate Governance Report: With the introduction of the new Companies Act, 2013 and the issue of SEBI circular no. CIR/CFD/POLICY CELL/2/2014 dated April 17, 2014, the provisions of amended Clause 49 of the Listing Agreement related to the corporate governance would be applicable with effect from 1st October, 2014 to the Company Companies having paid up equity share capital not exceeding Rs.10 crore and Net Worth not exceeding Rs.25 crore, as on the last day of the previous financial year. However, as a measure of good governance, the Company complies with most of the requirements specified under Clause 49. A summary of the Corporate Governance measures adopted by the Company is given below:- iv. The Company recognizes its role as a corporate citizen and endeavors to adopt the best practices and the highest standards of corporate governance through transparency in business ethics, accountability to its customers, government and others. v. The Company believes that good corporate governance practices enable the management to direct and control the affairs of the Company in an efficient manner and to achieve the Company's goal of maximizing value for all its stakeholders. vi. The Board of Directors along with its Committees provides leadership and guidance to the Company's management and directs, supervises and controls the activities of the Company. vii. The size of the Board is commensurate with the size and business of the Company. At present, the Board comprises of Mr. V.G Raghavan, Mr. Dasu Govind Prasad, Mr. Nitin Chamaria and Mrs. Usha Iyengar. Mr. V.G Raghavan and Mr. Dasu Govind Prasad are Independent Directors of the Company. Mr Ankkit Chaudhry has been appointed as a Manager of the company w.e.f 12th August 2015 for a period of three years. viii. The Board has constituted Committees with specific terms of reference to focus on specific issues and ensure expedient resolution of diverse matters. These include the Audit Committee, Nomination & Remuneration Committee & Independent Directors Committee. ix. The Audit Committee and Nomination and Remuneration Committee are constituted comprising three Non-Executive (NE) Directors viz. Mr. V.G Raghavan, Mr. Nitin Chamaria and Mr. D G Prasad. x. Minutes of Meetings of all Committees of the Board are placed before the Board for discussion/noting. A quarterly summary of the minutes of the meetings of the Boards of the Company's subsidiary FDTPL is also placed before the Board for noting. xi. The Company, Directors (including the Independent Directors) and its employees have adopted the Code of Conduct and the same will be posted on the Company's website. xii. The Company has adopted a Whistle - Blower Policy which provides a formal mechanism for all employees of the Company to make protected disclosures to the management about unethical behavior, actual or suspected fraud or violation of the Company's Code of Conduct. No employee of the Company has been denied access to the Audit Committee. xiii. The Company's website is www.flflindia.com 32. Accounts and Accounting Standards The Company adheres to the Accounting Standards as prescribed under section 133 of the Companies Act, 2013 and Rule 7 of the Companies (Accounts) Rules, 2014 in the preparation of its financial statements and also to the guidelines prescribed by the RBI. 33. Conservation of energy, technology absorption, foreign exchange earnings and outgo: Considering the nature of business activities of the Company, your Directors have nothing to report with respect to conservation of energy and technology absorption. During the year under review, the Company had NIL foreign exchange earnings (Previous Year: NIL) and outgo (Previous Year: NIL). 34. Particulars of Employees: The disclosures as required under Section 134 of the Companies Act, 2013 read with Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 as amended, is not required as there are no employees covered by it. 35. Disclosures: The Company has made adequate disclosures regarding related party transactions, contingent liabilities, and significant accounting policy in the Notes to Accounts as an integral part of the Balance Sheet and Statement of Profit & Loss. 36. Stock Exchanges - Compliance of Listing Agreements The Company's shares are listed at the BSE Ltd. and the Company has paid the listing fees to the Stock Exchange. Further, the Company has demat connectivity with both the Depositories, NSDL and CDSL and paid Annual Fees to both the Depositories. 37. Green Initiative Section 136 of the Companies Act, 2013 and the Rules made there under allow the Company to send its financial statements by electronic mode to such members whose shareholding is in dematerialized format and whose email addresses are registered with Depository for communication purposes. As a responsible corporate citizen, the Company proposes to effect electronic delivery of the Annual Report of the Company in lieu of the paper form to the Members who have registered their email IDs with the Depositories. However, as a matter of practice, a physical copy of the Annual Report has also been sent to the members at their address registered with the Company and the Depository Participants. A copy of this Annual Report along with the Annual Report of each of the Company's subsidiaries for FY 2014-15 will be placed on the website of the Company. 38. Acknowledgement: The Directors would like to place on record their gratitude for the valuable guidance and support received from the Reserve Bank of India, Securities and Exchange Board of India, Bombay Stock Exchange Limited and other Government and Regulatory Authorities and convey their appreciation to all the stakeholders, customers, bankers, lenders, vendors and all business associated for their valuable and continuous support and encouragement towards the conduct of the efficient operations of the company. For and on behalf of the Board Sd/- Nitin Chamaria Director Din: 03030771 Sd/- Usha Iyengar Director Din: 03447551 Date: 12th August, 2015 Place: Mumbai |