DIRECTORS REPORT TO, THE MEMBERS OF KJMC Financial Services Limited Your Directors have pleasure in presenting the 27th Annual Report, together with the audited financial statement of the Company for the financial year ended 31st March, 2015. PERFORMANCE REVIEW On standalone basis, your Company earned the gross income of Rs. 133.79 Lakhs as against Rs. 71.88 Lakhs in the previous year. The total expenditure during the year under review was Rs. 122.89 Lakhs as against Rs. 65.17 Lakhs in the previous year. The Net Profit after tax was Rs. 18.11 Lakhs as against Rs. 10.37 Lakhs in the previous year. On consolidated basis, your Company earned the gross income of Rs. 147.99 Lakhs as against Rs. 76.55 Lakhs in the previous year. The total expenditure during the year under review was Rs. 132.87 Lakhs as against Rs. 72.25 Lakhs in the previous year. The Net Profit after tax was Rs. 21.92 Lakhs as against Rs. 7.54 Lakhs in the previous year. TRANSFER TO RESERVES The Company proposes to transfer Rs. 0.45 Lakhs to the general reserve and Rs. 3.62 Lakhs to Special Reserves out of the amount available for appropriation and an amount of Rs.199.51 Lakhs is proposed to be retained in the profit and loss account. SHARE CAPITAL During the reporting period, your Company has allotted 45000, 0% Compulsory Convertible Preference Shares of Rs. 100/- each (CCPS) at a price of Rs. 250/- per share to Promoter and Part of the Promoters Group of the Company on Preferential basis in accordance with the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009 pursuant to approval of members on special resolution passed through postal ballot on 19th March, 2015. As a result of this, the issued, subscribed and paid up capital of the Company has increased from Rs.433.57 lacs to Rs. 478.57 lacs. The 45,000 CCPS are convertible into 450,000 equity shares within 18 months from the date of allotment of CCPS i.e. 25th March, 2015 at an offer price Rs. 25/- per share. DIVIDEND In order to conserve the resources for operations, your Directors regret their inability to recommend any dividend for the year under review. RBI PRUDENTIAL NORMS Since the Company does not accept and hold any public deposits, the Non-Banking Financial (Non Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2007 are not applicable to the Company as regard to capital adequacy requirement. DIRECTORS AND KEY MANAGERIAL PERSONNEL Mr. Raghunath Mohanlal Kumar (Din: 00261227), Independent Director of the Company, stepped down from the Board of the Company on 10th November, 2014 due to his ill health. He was associated with the Company since 5th October, 1994. Mr. Sanjeev Singh Sengar, Company Secretary and Compliance Officer of the Company resigned w.e.f. 15th November, 2014. The Board places on record their appreciation for the valuable services rendered by Mr. Raghunath Mohanlal Kumar and Mr. Sanjeev Singh Sengar. Pursuant to the requirement of Section 149 of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Board has also inducted Mrs. Aditi Jain (Din: 00152373), as an Additional Director of the Company with effect from 25th March, 2015. She is B.E (Computers) & PGDBM (Finance) and has experience in corporate finance, capital market and general administration besides technology related issues. Necessary resolutions are being proposed in the notice of the ensuing annual general meeting for the approval of the members for appointment of Mrs. Aditi Jain, as a Director of the Company. The Company has received a notice from a member pursuant to Section 160 of the Companies Act 2013 proposing her appointment as a Director. According to the Companies Act, 2013, at least two-thirds of the total number of Directors (excluding Independent Directors) shall be liable to retire by rotation. For this purpose, considering the composition of the Board of Directors, Mr. Girish Jain, Director of the Company is liable to retire by rotation at the ensuing Annual General Meeting and being eligible, offer himself for reappointment. Necessary resolution for this purpose is being proposed in the notice of the ensuing annual general meeting for the approval of the members. The Independent Directors have submitted the Declaration of Independence, as required pursuant to section 149(7) of the Companies Act, 2013, stating that they meet the criteria of Independence as provided in sub-section (6). The Board has appointed Mr. Kartik Konar as Chief Financial Officer of the Company with effect from 11 th August, 2014. The Board has appointed Ms. Sankari Muthuraj as Company Secretary of the company with effect from 25th March, 2015 within a meaning of Section 203 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. She has been designated as Compliance Officer of the Company pursuant to Clause 47 of the Listing Agreement. NUMBER OF BOARD MEETING The Board of Directors met six (6) times in the financial year. The details of the Board Meetings and the attendance of the Directors are provided in the Corporate Governance Report. BOARD EVALUATION The Board of Directors has carried out an annual evaluation of its own performance, Board committees and Individual Directors pursuant to the provisions of the Act and the Corporate Governance requirements as prescribed by Securities and Exchange Board of India ("SEBI") under Clause 49 of the Listing Agreements ("Clause 49"). The performance of the Board was evaluated by the Board after seeking inputs from all the Directors on the basis of the criteria such as the Board composition and structure, effectiveness of board processes, information and functioning, etc. The performance of the committees was evaluated by the board after seeking inputs from the committee members on the basis of the criteria such as the composition of committees, effectiveness of committee meetings, etc. The Board and the Nomination and Remuneration Committee reviewed the performance of the individual Directors on the basis of the criteria such as the contribution of the individual Director to the Board and committee meetings. In addition, the Chairman was also evaluated on the key aspects of his role. In a separate meeting of Independent Directors, performance of non-Independent Directors, performance of the board as a whole and performance of the Chairman was evaluated, taking into account the views of executive directors and non-executive Directors. POLICY ON DIRECTORS' APPOINTMENT AND REMUNERATION The Company's policy on Directors' appointment and remuneration and other matters provided in Section 178(3) of the Companies Act, 2013 has been disclosed in the Corporate Governance report, which forms part of the Directors' report. ADEQUACY OF INTERNAL CONTROL The details in respect of internal financial control and their adequacy are included in the Management Discussion & Analysis, which forms part of this report. PUBLIC DEPOSITS The Company being a Non-Deposit Accepting Non-Banking Finance Company has not accepted any deposits from the public during the year under review and shall not accept any deposits from the public without obtaining prior approval of the Reserve Bank of India (RBI). AUDITORS In accordance with Section 139 of the Companies Act, 2013 and the rules made there under, M/s. K. S. Aiyar & Co., Mumbai, the Statutory Auditors of your Company has been appointed as the Statutory Auditors of the Company in the 26th Annual General Meeting of the Company, for a period of five years (subject to ratification of their appointment at every AGM). They have confirmed their eligibility under Section 141 of the Companies Act, 2013 and the Rules framed there under for appointment as Auditors of the Company. The Auditors Report for the year under review does not contain any qualification. AUDIT COMMITTEE The details pertaining to composition of audit committee are included in the Corporate Governance Report, which forms part of this report. SECRETARIAL AUDIT Pursuant to the provisions of Section 204 of the Companies Act, 2013 read with Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/s. S. S. Rauthan & Associates, a firm of Company Secretaries in Practice to undertake the Secretarial Audit of the Company. The Secretarial Audit Report is annexed and forms part of this report. SUBSIDIARY COMPANIES The Company has two wholly owned subsidiaries namely KJMC Asset Management Company Limited and KJMC Investment Trust Company Limited and two associate companies namely KJMC Realty Private Limited and KJMC Platinum Builders Private Limited within the meaning of Section 2(6) of the Companies Act, 2013 ("Act"). There has been no material change in the nature of the business of the subsidiaries and associates. Pursuant to provisions of Section 129(3) of the Act, a statement containing salient features of the financial statements of the Company's subsidiaries in Form AOC-1 is annexed and forms part of this report. In accordance with third proviso of Section 136(1) of the Companies Act, 2013, the Annual Report of the Company, containing therein its standalone and the consolidated financial statements has been placed on the website of the Company, www.kjmc.com Further, as per fourth proviso of the said section, audited annual accounts of each of the subsidiary companies have also been placed on the website of the Company, www.kjmc.com Shareholders interested in obtaining a copy of the audited annual accounts of the subsidiary companies may write to the Company Secretary at the Company's registered office. DIRECTORS' RESPONSIBILITY STATEMENT UNDER SECTION 134 OF THE COMPANIES ACT, 2013 Pursuant to Section 134 (5) of the Companies Act, 2013, your Directors hereby confirm that: a. that in the preparation of the annual financial statements for the year ended 31st March, 2015, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any; b. that such accounting policies have been selected and applied them consistently and made judgement 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 that period; c. that proper and sufficient care has been taken 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. that the annual accounts have been prepared on a going concern basis; e. that proper internal financial controls were in place and that the financial controls were adequate and were operating effectively; and f. that systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively. CORPORATE GOVERNANCE In terms of SEBI Circular No: CIR/CFD/POLICY CELL/7/2014 dated 15th September, 2014, compliance of Clause no. 49 of the Equity Listing Agreement is not applicable to your Company as the Company's paid up Equity Share Capital does not exceed of Rs. 10 Crores and net worth does not exceed of Rs. 25 Crores as on 31st March, 2015. To maintain highest standards of Corporate Governance, a separate section on Corporate Governance, is annexed and forms part of this report. EXTRACT OF ANNUAL RETURN The extract of the Annual Return as provided under sub-section (3) of Section 92 in the Form MGT 9 for the financial year under review is annexed and forms part of this report. RELATED PARTY TRANSACTIONS 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 materially 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. All Related Party Transactions are placed on a quarterly basis before the Audit Committee and also before the Board for approval. Information on transactions with related parties pursuant to Section 134(3)(h) of the Act read with rule 8(2) of the Companies (Accounts) Rules, 2014 in Form AOC-2 is annexed and forms part of this report. PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS The particulars of loans, guarantees and investments have been disclosed in the financial statements. MANAGEMENT DISCUSSION AND ANALYSIS A report on the Management Discussion and Analysis for the financial year under review is annexed and forms part of this report. LISTING OF SHARES Equity Shares of the Company are listed with BSE Limited. The Annual listing fee for the financial year 2015-16 has been paid to the BSE Limited (BSE). The Company has complied with the delisting formalities with the Bhubaneshwar Stock Exchange Association Limited and the Calcutta Stock Exchange Association Limited. Delisting approval from these exchanges are awaited. FUTURE BUSINESS PLAN The Board of Directors of your Company are looking continuously to increase and grow the business of the Company and also considering the new business proposal to start a Housing finance business through its subsidiary company as a special purpose vehicle (SPV). PARTICULARS OF EMPLOYEES The information required under Section 197 of the Companies Act, 2013 read with rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are given below: ii. The percentage increase in remuneration of each Director, Chief Financial Officer, Company Secretary, if any, in the financial year; Whole Time Director, Chief Financial Officer & Company Secretary : Nil iii. The percentage increase in the median remuneration of employees in the financial year: Nil iv. The number of permanent employees on the rolls of Company as on 31st March, 2015: 8 v. The explanation on the relationship between average increase in remuneration and Company performance: On an average, employees received an annual increase of 6%. The individual increments varied from 5% to 8% based on individual performance. Equity Shares of Rs.10/- each were offered at a premium of Rs. 50/-per share to the Financial Institutions and Indian Public and at a premium of Rs. 60/- per share to Mutual Funds. ix. Average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration: The average annual increase of employees was around 6%. However, during the course of the year, managerial remuneration was not increased xi. The key parameters for any variable component of remuneration availed by the Directors: None xii. The ratio of the remuneration of the highest paid Director to that of the employees who are not Directors but receive remuneration in excess of the highest paid Director during the year: None xiii. Affirmation that the remuneration is as per the remuneration policy of the Company: The Company affirms remuneration is as per the remuneration policy of the Company. xiv. There are no employees falling within the purview of Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, no such details, are required to be given. PARTICULARS OF CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION Since the Company is a Financial Services Company, the details required under Section 134 of the Companies Act, 2013 are not applicable. FOREIGN EXCHANGE EARNINGS AND OUTGO There were no earnings and outgo in foreign exchange during the year under review. INSURANCE The Company's fixed assets as well as current assets have been adequately insured. RISK MANAGEMENT The details in respect of risks and concerns are included in the Management Discussion & Analysis, which forms part of this report. ACKNOWLEDGMENT The Board of Directors takes the opportunity to express its sincere appreciation for the support and co-operation from its members, Reserve Bank of India, banks and Statutory and Regulatory Authorities. The Board also wishes to place on record their sincere appreciation of the contribution made by the executives and employees at all levels for their dedication and commitment to the Company throughout the year. For and on behalf of the Board of Directors (I. C. Jain) Chairman Place: Mumbai Date: 27th May, 2015 |