DIRECTORS REPORT Your Directors have pleasure in presenting the Twenty Second Annual Report of your Company along with the Financial Statements for the year ended March 31, 2015. Dividend Your Company paid a total dividend of Rs 205.89 crore (Rs. 71/- per share) and has recommended Rs. 23.20 crore (Rs. 8/- per share) as final dividend for 2014-15 at the ensuing Annual General Meeting. The dividend would be paid in compliance with the applicable rules and regulations. Transfer to reserves Your Director recommends to transfer Rs. 15.00 (Fifteen) crore to the General Reserve of the Company. Share Capital The Authorised Share Capital of your Company is 3,00,00,000 (Three Crore) Equity Shares of Rs.10/- (Rupees Ten Only) each amounting to Rs.30,00,00,000/- (Thirty Crore Only) and the Paid-up Share Capital is 2,89,99,122 (Two Crore Eighty Nine Lakhs Ninety Nine Thousand One Hundred Twenty Two Only) Equity Shares amounting to Rs.28,99,91,220/- (Twenty Eight Crore Ninety Nine Lakhs Ninety One Thousand Two Hundred Twenty Only). There was no change in share capital of the Company during the year under review. Economic Backdrop The formation of a strong government at the centre in May 2014 held strong promise and hope for the economy which had decelerated considerably in 2013 and 2014 due to a number of reasons - both domestic and global. The government started off its business by bringing in several changes in the style of functioning and cleared stalled projects which had slowed down or got stalled for various reasons. By successfully carrying out the auctions in spectrum as well as coal, two stumbling blocks were cleared. The projects especially in the power sector should benefit from these auctions. However, other issues such as land reforms and environment still are challenges for investors that have come in the way of investment especially in infrastructure. Overall growth in GDP came in higher at 7.3% in FY15 compared with 6.9% in FY14, which is based on a new methodology computed by the CSO in line with global definitions where GDP is reckoned on 2011-12 prices but at basic market prices. This higher growth rate however has been at odds with the physical indicators such as growth in the index of industrial production, banking sector, trade and transportation. This has led to the conclusion that at the ground level we still have to see a takeoff to a comparable extent. Further the corporate performance of companies (excluding banks) was quite disappointing. For a set of 3,558 companies studied by us growth in net sales turned negative in 2014-2015 at 4.5% while net profit also declined by 1.7%. The interest cover ratio had come down to a low of 2.79 in the last 5 years indicating pressure on their P & L accounts. While low inflation did help to keep costs under check, their pricing power on the whole was also affected with the WPI for manufactured products showing a marginal decline of 0.2% in 2014-2015. The government did continue to pursue the path of fiscal consolidation and targeted a deficit ratio of 4.1% for the year. However, with growth not picking up to the expected extent, certain expenditures had to be pruned towards the end of the year, which while helping to attain the fiscal targets affected overall investment. Capital formation declined in 2014-2015 with private investment also remaining dormant. Hence, the investment climate did not improve during the course of the year. The financial system in turn came under pressure with banks' being affected by a combination of factors. Growth in credit remained low at 9.5% with the retail and agriculture segments being the only ones to show high growth. This was also in sync with the lower growth in bank deposits which were of the order of 11.4% in 2014-2015 as against 14.5% in 2013-2014. Growth in credit to manufacturing and services remained low at 5.6%. With overall growth still being low, the NPAs of banks continued to increase and were at 4.6% in 2014-2015 as against 4.1% in 2013-2014. Restructured assets had cumulated to an outstanding of Rs 2,86,405 crore as of March 2015. During the year Rs 56,995 crore was withdrawn while there was successful exit from Rs 59,604 crore. Therefore, the banking sector too was fairly subdued. Also the public sector banks have had problems of capitalization which are being addressed by the government appropriately in course of time. The RBI had introduced the concept of banks raising infra bonds in the market without the CRR and SLR stipulations to channel more funds to the infrastructure sector. This lead to an increase in the issuance of debt in the market. However, while the overall level of debt raised was Rs 4.34 lakh crore in 2014-2015 compared with Rs 3.13 lakh crore in 2013-2014, the issuances from non-financial segment remained low. This could be attributed to the fact that capacity utilization levels in industry was still low at 71.7% as of December 2014 and the commencement of the stalled projects was still limited. Other issues such as land and environment have to be dealt with. The RBI on its part had also followed a conservative monetary policy and was watchful of CPI inflation which was targeted at 8% for January 2015 and 6% for January 2016. With inflation coming down towards the end of calendar 2014, the RBI did lower rates twice in January and March by 25 bps each. However, the transmission has been a bit sluggish even though some banks have lowered their base lending rates. GSec yields on the other hand have moved from an average of 8.8% in March 2014 to 7.75% in March 2015 for the 10-year benchmark On the positive side the country's balance of payments had improved substantially with the CAD coming down to 1.3% for 2014-2015 and with good inflows of FII funds into the markets, the forex reserves increased by $ 30 bn during the course of the year. Hence, while the rupee had declined from an average of Rs 61.01/$ in March 2014 to Rs 62.45/$ in March 2015, it continued to be one of the better performing currencies in the global context. India was less affected by the expectation of the Federal Reserve increasing their interest rates, which now appears to be possible in the last quarter of calendar 2015. The rupee had withstood quite commendably the rollback of the quantitative easing programme of the Fed which started in late 2013. The performance of your Company may be evaluated against this background. Business Operations Your Company continues to follow the strategy of working on building the ratings book in terms of both widening the client base as well deepening the same. Your Company has now completed 39,354 rating assignments since inception to March 2015. The cumulative amount of debt rated has increased to about Rs. 68 lakh crore as of March 2015 from Rs. 57 lakh crore as of March 2014, which is around 54% of GDP at current market prices. As of March 2015, we had business relationships with 9,828 clients (7,754 in March 2014). This approach will continue to be pursued in the coming years to ensure that we are able to grow the business as the economy revives and more investment takes place. As indicted in the table above, the total number of rating assignments completed during 2014-2015 grew by 1.4% while the aggregate volume of debt rated recorded a significant increase of 23.8%. The growth in volume of debt rated is attributed to the significant increase of 29.6% in volume of debt for medium and long term instruments. Besides, the volume of debt of bank facilities which accounts for a larger portion of 59% of the total debt rated too increased by 15.9% contributing significantly to the aggregate debt rated. The higher volumes of debt rated on a lower growth in assignments does indicate an increase in the average ticket size of an assignment. The higher business volumes can be attributed to increase in the number of clients as well as number of assignments. The total number of active clients has increased continuously over the years from 711 in 2008-09 to 9,828 in 2014-15. In 2013-14 there were 7,754 active clients. We added 3,878 new clients in the current year. Business during the year Large and Medium Enterprises (LME) The overall increase in business levels can be attributed to the effort put in by the business teams to widen the customer base where a focused approach was followed. Also our client retention approach included deepening the relationship with the companies so as to increase the overall size of the debt rated by your Company. Given the competitive nature of our business we had focused separately on the larger companies to increase the depth of the relationship. CARE retained the leadership position in terms of highest coverage in the Economic Times (ET) Top 500 companies in 2014-15 with a share of 54% of a sub-sample of 444 rated companies as per the published accepted ratings on the websites of rating agencies. Your Company also accounts for the highest coverage in Business Standard (BS) Top 1000 companies with a share of 46% of the universe of 858 rated companies (as per published accepted ratings of various rating agencies) in 2014-15. Your company had a share of 52% in the sample of rated 445 Financial Express (FE) Top 500 companies. Your Company has also widened its reach by having our business development team in 69 locations. We had opened a branch in Coimbatore during the course of the year. New Products We have been in the forefront of launching new products and this has been in the field of both ratings and grading. In this context, we rated the first Alternative Investment Fund (AIF) which is an opinion on the asset selection ability and asset management capabilities in their respective segments for these schemes. These ratings are based on the evaluation of the sponsor, evaluation of the asset management company, investment process adopted by the asset management company (AMC), risk management systems and operations /technology set up. CARE also rated the first green infrastructure bond issued by YES Bank. Also ITI grading has been launched for rating of industrial training institutes under Directorate General of Employment and Training (DGE&T). We are also the first CRA to launch the rating of Real Estate Investment Trusts (REITs) which are corporations or trusts which utilizes the pooled capital of many investors to purchase, and in most cases, operate income-producing real estate such as offices, apartments, shopping complexes, hotels and warehouses. CARE's Rating of REIT fund is an opinion on the REIT's investment quality, based on the fundamental assessment of the REIT. Your Company has also been accredited by the Government of Karnataka for launching a grading product for tourism facilities. Facilities with a certain level of rating would be entitled to several concessions from the state government. Small and Medium Enterprises (SME) The SME Vertical took several initiatives during the year to streamline internal processes with increased level of automation. With these initiatives the processes became more robust to handle large volume business with higher efficiency and dependability. Central MIS was strengthened to track end to end movement of cases from origination to completion. CARE's SME team collaborated with the office of the Development Commissioner - MSME, Ministry of MSME, in developing a rating model for enterprises with ZED (Zero Effect Zero Defect) orientation under the Make in India campaign. The rating model will also be utilized for identifying capable enterprises for availing of business opportunities under Defence Offset Policy of the Government of India. In 2014-2015, CARE had rated 1,832 SMEs under the NSIC scheme compared with 1,047 in 2013-2014. The NSIC provides a subsidy to MSMEs for obtaining a rating from a recognized credit rating agency. This scheme has been in operation since 2005-06. The subsidy is a part of the Union Budget allocation which is presented annually. For the year 2015-16, the government has reduced this subsidy from Rs 85 crore (revised figure for 2014-15) to Rs 26 crore in 2015-16. Your Managing Director and CEO, Mr. D. R. Dogra has been appointed a member of the task force constituted during the year by the Ministry of Finance under the Chairmanship of CMD, SIDBI. The task force has been formed for developing a Common Rating Model to help MSMEs access credit from the banking system in a smooth manner. CARE's SME team supported SIDBI in holding discussions with bankers, Indian Banks' Association and other rating agencies on the subject. Knowledge dissemination CARE does believe that all ratings have to be based on strong research at both the macro and industry levels as the prospective behaviour of the Company would be contingent on both the industry and economy performance. Therefore, we do invest in skills to ensure that there are regular reports brought out on various aspects of the subject that are used both internally as well as disseminated extensively to our clients and the media. Future prospects and Outlook of the Company The future outlook for the Company will be dependent largely on how the economy performs with the focus being on investment. As the core strength of the Company is on rating of debt and bank loan instruments, the volume of business will be mainly driven by credit activity in the market. Given the measures taken by the government since June 2014, there does appear to be renewed sentiment which is also manifested in some movement in investment activity in the first few months of the year, though the picture is still mixed. It is however expected that there will be some traction in GDP growth involving investment which will be positive for your company. This should provide some positive impetus to the debt market and bank lending. The future prospects would also be contingent on the structure of interest rates which though moving downwards can be reversed if inflation begins to increase. The RBI has buffered in an inflation rate of 6% based on present conditions for early calendar 2016. Any disruption in the supply flows or a reversal of downward movement in commodity prices can impact the pace of change in interest rates. While the probability of this risk materializing is low, it would still be a factor that will impact the debt and credit markets and hence the rating business. Your Company would however continue to look at also enlarging the customer base from within and deepen the relations with existing customers so as to improve business. Economics The Economics Division continues to provide near real time global and domestic economic updates through reports that are released almost immediately after economic announcements are made. There are standardized reports which are brought out immediately after data releases such as industrial growth, GDP, inflation, budget, monetary policy etc. Special studies include a Prognosis for the fiscal which is reviewed once during the year, investment trends, FDI, ECBs etc. Also corporate studies, where a set of companies is analyzed at various levels, are brought out every quarter so that the analysts too are aware of how the industries are performing when doing their own rating exercises. Your Company also brings out a daily debt market update which is circulated just after the RBI brings out its press releases as well as a monthly Debt Market Review which is a compendium of all developments during the period. Sector specialists Your Company has also carved out sector specialists from the ratings personnel which includes experts in specific industries, who bring out sector specific reports on a regular basis. Besides, these sector specialists do bring out reports on any topical development in their areas of specialization so that CARE's views on the sector and policy are known. SME Newsletter and Digest Addressing the specific requirements of the SME sector, we have been bringing out a daily news letter covering all news of interest in this segment as well as a monthly digest that is widely circulated. These reports are put on our website: www.careratings.com for public viewing and mailed to all our clients.All these reports are also circulated widely to officials in the government, banks, mutual funds, investors, clients, economists and media so as to circulate CARE Ratings' views to a larger audience. Select reports are also printed and sent to opinion makers and government officials. Branding and Media Brand building is a continuous exercise and special attention is paid to improving our visibility in the media. The listing of your Company on the bourses has been very useful in ensuring that CARE performance is reported and analyzed on a continuous basis. Besides the mandatory filings on the stock exchanges and media, we do have discussions with analysts and investors from time to time. Your MD and DMD are interviewed by the leading business news channels whenever results are announced where they share their perspectives about our performance. Presentations on the same are put up on the company web site as well as those of NSE and BSE for viewing by investors and other interested parties. CARE has been a knowledge partner for several conferences where a knowledge report prepared by the Economics or the regional teams serves as the background for the conference. These associations have been with organizations like CII, FICCI, Indian Chambers of Commerce, SME Chamber of Commerce, ASSOCHAM etc. We also have top management participation in these seminars with speaker sessions besides being present at the time of unveiling the knowledge paper. All this ensures that there is significant branding of the company in all these forums. Besides, we do encourage all our staff members to participate in seminars so as to enhance the vision of CARE in various forums besides enabling to also grow in profile. As a continuation of our objective of being a thought leader, we held a CARE Debt Market Summit-2015 (CDMS-2015) in Mumbai in March 2015 which was graced by RBI Deputy Governor Mr R. Gandhi. Mr Anant Barua, Executive Director SEBI also chaired and monitored a session. The half day seminar had three sessions where several CEOs, CFOs, Investment heads of mutual funds and insurance companies expressed their views in an interactive manner with the audience. CARE has also been holding various webinars to reach out to the concerned audience on various industries where our sector specialists interact with them through this medium. Top Management representation The top management has represented CARE at various events at the national and international level during the year. Some of the significant events attended and participated are-Mr. D. R. Dogra, Managing Director & CEO was a jury member for the Business Today -YES Bank CFO Awards, Business Rankers Awards and ICAI Awards held during the year. He has been a panelist at various seminars including among others, the National Conference on Growing NPAs organized by ASSOCHAM, Axis Capital BFSI Conclave, Trinity India Conference organized by B&K Securities. He was also a panelist at FICCI's 'Progressive Maharashtra 2015'Conference held in Mumbai in February '15. Mr. Rajesh Mokashi, Deputy Managing Director made presentations at the Seminar on 'Opportunities for Retirement funds in wake of New Investment Pattern organized by A.K. Securities in Bangalore. He was also a panelist at the Symposium on Microfinance and Social Performance Management organized by Maanaveeya Development & Finance Ltd and at the 'VC Circle Financial Services Investment Summit 2014'. He was also a panelist at the 'Securitization Summit 2014' organized by Vinod Kothari Consultants Pvt. Ltd and at the 'Progressive Maharashtra 2015' summit organized by FICCI. IT initiatives During the year our IT initiatives were focused on improving, optimising and thus efficiently managing IT infra and software by using open source tools. We added new modules and reporting to core business application Ci3 to handle new businesses. We have implemented applications using open source software and tools for IT Infra monitoring and asset management. We also took steps in spreading IT Security and general Awareness campaigns through monthly newsletter, posters and training sessions. This helped in spreading new Ideas to create awareness on information security, vulnerabilities and also update the staff on IT in general. ISO Certification CARE has been ISO 9001:2008 certified for its credit rating of debt instruments/facilities, various grading services and its data processing services at CARE Knowledge Centre since 2011. The certification, which was valid for three years, was renewed in 2014 by Systems and Services Certification (SSC) agency - SGS India Private Limited, for a further period of three years after a rigorous audit. It covers all offices of CARE in India and reflects high quality standards set by CARE in delivery of its services to various stakeholders. CARE continues to remain committed to provide Ratings which provide value added information to serve investors and other users in a timely manner. CARE in global space Our global ventures have made significant progress since last year. ARC Ratings has already started assigning ratings to various sovereigns with India being the first one followed by Malaysia, Mauritius, and Portugal. The ARC Ratings teams had interactions with various government officials, multilateral institutions, and academics on their visits to India for doing the sovereign rating in late 2014. Also as part of business development, they were introduced to our own clients who do raise funds from global markets on a regular basis. Two such interactive meetings were held in New Delhi and Mumbai for this purpose. We are hopeful that some of them would turn to ARC Ratings for a global rating when accessing these markets. We have also obtained a licence for doing business in Mauritius and will operate under the banner of CARE Ratings (Africa) Private Limited (CRAF). This venture is based on a MOU signed with partners, MCB Equity Fund Limited (Mauritius Commercial Bank - MCB Group) and SBM (NFC) Holdings Limited (State Bank of Mauritius - SBM Group). CRAF commenced operations in August 2015 and has completed its first assignment. Human Resources We do value our human resources as for a business like ours, it is people who matter. While we are very selective when recruiting staff for various responsibilities, once in the organization, we do work towards enhancing their skills and giving them wide exposure. To this extent, we have a comprehensive induction programme that runs parallel to the work schedule in the office. These sessions are conducted by experts within the organization. This way the ratings analysts in particular are better able to relate with their work as the technical class room sessions are linked to their own work. As of March 31, 2015, we had 655 Employees spread across the country which marks an increase over the 594 staff strength as on March 31, 2014. Around 85% of the staff is professionally qualified in the areas of management, CAs, CS, legal, economics, engineering etc. holding professional qualifications or post graduates. The company has also announced to reimburse the fees for relevant professional courses such as CFA and FRM programmes by the employees with effect from April 2014. Depository System Your Company's equity shares are available for dematerialisation through National Securities Depository Limited and Central Depository Services (India) Limited. As on March 31, 2015, 99.97 % of the equity shares of your Company were held in dematerialised form. Extract of Annual Return The Extract of Annual Return as provided under Section 92(3) of the Companies Act, 2013 and as prescribed in Form No. MGT-9 of the Companies (Management and Administration) Rules, 2014 is appended as Annexure I. Number of Meetings of the Board The Board met 10 times during the year during the financial year viz May 07, 2014, May 20, 2014, June 04, 2014, June 13, 2014, July 31, 2014, September 15, 2014, October 06, 2014, November 14, 2014, December 24, 2014 and February 10, 2015. Directors Responsibility Statement Your Directors hereby confirm that: i. In the preparation of the annual accounts for the financial year ended March 31, 2015, the applicable accounting standards have been followed along with proper explanation relating to material departures; ii. 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 March 31, 2015 and of the profit of the Company for the year ended on that date. iii. They have 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. iv. They have prepared the annual accounts for financial year ended March 31, 2015 on a 'going concern' basis. v. They have laid down internal financial control to be followed by the Company and that such internal financial controls are adequate and have been operating efficiently. vi. They have devised proper systems to ensure compliance with provisions of all applicable laws and that such systems were adequate and operating effectively. Declaration by Independent Directors The Independent Directors of the Company have submitted the declaration of Independence as required under Section 149(7) of the Companies Act, 2013 confirming that they meet the criteria of independence under Section 149(6) of the Companies Act, 2013 and Clause 49 of the Listing Agreement. Policy on Directors' appointment and remuneration The Policy of the Company on Directors' appointment and remuneration including criteria for determining qualifications, positive attributes, independence of a Director and other matters provided under sub-section (3) of section 178, is appended as Annexure II to this Report and also available on the website of the Company viz; www.careratings.com Particulars of Loans, Guarantees or Investments under Section 186 Your Company has not given any Loans, provided Guarantees and made Investments covered under the provisions of Section 186 of the Companies Act, 2013. Particulars of Contracts or Arrangements with Related Parties All transactions entered into during the financial year 2014-15 with Related Parties as defined under the Companies Act and clause 49 of the Listing Agreement were in the ordinary course of business and on an arm's length basis. During the year, the Company had not entered into any transaction referred to in Section 188 of the Companies Act, 2013 with related parties which could be considered material under the Listing Agreement. Accordingly the disclosure of Related Party Transactions as required under Section 134(3) of the Companies Act in Form AOC-2 is not applicable. As required under Clause 49(VIII) of the Listing Agreement, the Company has formulated a Policy on Materiality of and dealing with Related Party Transactions which is available on the website of the Company at www.careratings.com Material Changes and Commitments affecting the Financial Position of the Company There have been no material changes and commitments affecting the financial position of the Company which have occurred between the end of the financial year of the Company to which the financial statements relate and the date of the report. Particulars regarding conservation of energy, technology absorption and foreign exchange earnings and outgo The particulars in respect of conservation of energy, technology absorption and foreign exchange earnings and outgo, as required under Section 134(3)(m) of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014 is as follows: Conservation of Energy & Technology Absorption As your Company is not engaged in any manufacturing activity, the particulars relating to conservation of energy and technology absorption as required under Section 134 (3) (m) of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014 are not applicable. Foreign Exchange Earnings and Outgo During the year under review, the Company has earned a foreign exchange of Rs. 99,88,231/- and has spent a foreign exchange of Rs. 83,03,822/-. Risk Management Policy Your Company has formulated a risk management policy to ensure that every effort is made to manage risk appropriately so as to maximize potential opportunities and minimize the adverse effects of risk. As required under Clause 49 of the Listing Agreement, your Company has constituted a Risk Management Committee consisting of an Independent Director, Executive Director and Senior Management Personnel to identify and assess business risks and opportunities. The business risks identified are reviewed by the Risk Management Committee. Corporate Social Responsibility The Board has constituted a Corporate Social Responsibility (CSR) Committee in accordance with Section 135 of the Companies Act, 2013. The CSR Policy has been devised on the basis of the recommendations made by the CSR Committee. The CSR Policy of the Company and details about the development of CSR Policy as required under the Companies (Corporate Social Responsibility Policy) Rules, 2014 are given in CSR Report appended as Annexure III to this Report along with reasons for not spending any amount under CSR in the financial year 2014-15. Vigil Mechanism - Whistle Blower The Company has established a vigil mechanism for directors and employees to report their genuine concerns, details of which have been given in the Corporate Governance Report annexed to this Report and also posted on the website of the Company www.careratings.com Annual Evaluation of Performance of the Board Pursuant to the provisions of the Act and Clause 49 of the Listing Agreement, the Board assessed and evaluated the effectiveness of its functioning and that of the Committees and of the individual Directors on the basis of criteria such as skills, knowledge, discharge of duties, level of participation at the meetings etc., on the issues to be discussed. Subsidiary Companies During the financial year under review, your Company has two subsidiaries as follows: 1) CARE Kalypto Risk Technologies and Advisory Services Private Limited:- In November, 2011, the Company had acquired 75.13% stake in this company and during the financial year 2014-15, acquired the balance 24.87% shares of this company making it 100% subsidiary of your Company. A new CEO has been appointed to head the company. During 2014-15, CARE Advisory, a part of CARE Kalypto Risk Technologies and Advisory Services Pvt. Ltd. undertook ten assignments. This included formulation of Guidelines for valuation of securities for an NBFC, appraisal of a railway project, feasibility study for a medical college in an African Country, formulation of business plans for a Central PSU and an NBFC, funding options for a 1600 MW power project, independent review and validation of ICAAP for a PSU Bank and risk analysis for change of off-take terms for a power project. Clients included Banks, NBFCs and Central public sector undertakings. During the year, the mandate for developing a Credit Rating Model for MSMEs with embedded Green parameters, a project sponsored by World Bank, was under execution. 2) CARE Ratings (Africa) Pvt. Ltd (CRAF):- The Company was incorporated on December 12, 2014 in Mauritius. Further CRAF received the licence from the Financial Services Commission, Mauritius on May 07, 2015 for credit rating operations. The Company shall provide the copy of the annual accounts of its subsidiary companies to the members of the Company and also to the members of the subsidiary companies on their request. The annual accounts of the subsidiary companies will also be kept open for inspection by any members at the Registered Office of the Company and also at the Registered Office of the subsidiary companies during business hours. Material Non-Listed Indian Subsidiary There is no material non-listed Indian subsidiary of your Company as on March 31, 2015. Performance and Financial Position of Subsidiary, Associate and Joint Venture Company As required under Section 129 of the Companies Act, 2013 and Clause 32 of the Listing Agreement, the Consolidated Financial Statements have been prepared by the Company in accordance with the applicable Accounting Standards and forms part of the Annual Report. A statement containing the salient features of the Financial Statements of the subsidiaries, joint ventures and associate companies in Form AOC-1 as required under Rule 5 of the Companies (Accounts) Rules, 2014 forms part of the Annual Report. Details relating to Deposits covered under Chapter V of the Companies Act, 2013 Your Company has not accepted any deposits within the purview of Chapter V of the Companies Act, 2013 during the year under review. Significant and Material Orders passed by the Regulators or Courts or Tribunals There are no significant material orders passed by the Regulators/Courts which would impact the going concern status of your Company and its future operations. Instances of fraud, if any reported by the Auditors There have been no instances of fraud reported by the Auditors under Section 143(12) of the Companies Act, 2013. Internal Financial Control System The Company has an Internal Financial Control System commensurate with the size, scale and complexity of its operations. Your Company has in place a mechanism to identify, assess, monitor and mitigate various risks to key business objectives. Major risks identified by the businesses and functions are systematically addressed through mitigating action on continuing basis. These are routinely tested and certified by Statutory as well as Internal Auditors. Significant Audit observations and follow up actions thereon are reported to the Audit Committee. Directors and Key Managerial Personnel In accordance with the Articles of Association of the Company and the provisions of the Section 152(6)(e) of the Companies Act, 2013, Mr. Rajesh Mokashi (DIN 02781355) will retire by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re-appointment. During the year Ms. Bharti Prasad (DIN 03025537), Independent Director resigned with effect from August 23, 2014 and Mr. S. Venkatraman (DIN 00246012), Independent Director who was liable to retire by rotation and eligible for re-appointment at the 21st Annual General Meeting intimated the Company that due to pre-occupation he may not be considered for re-appointment as director and hence ceased to be a director with effect from 29th September, 2014. Your Company wishes to thank Ms. Bharti Prasad and Mr. S. Venkatraman for their contribution to the Company and the continuous encouragement and support provided to the management. The Board places on record its appreciation for the valuable services and guidance given by both during their tenure as the Directors of the Company. The Board of Directors appointed Dr. Ashima Goyal (DIN 00233635) as an Additional Airector on August 26, 2014. Further she was appointed as an Independent Director at the 21st Annual General Meeting of the Company held on September 29, 2014. Your Company welcomes Dr. Ashima Goyal as an Independent Director on the Board. The Board of Directors appointed Mr. S. Ananthakrishnan (DIN 00074049) and Mr. B. S. Keshava Murthy (DIN 06965816) as Additional Directors with effect from October 06, 2014. Further, the Board of Directors appointed Mr. S. B. Mainak (DIN 02531129) as an Additional Director with effect from August 17, 2015. The appointment of these Directors is upto the date of the ensuing Annual General Meeting. Mr. S. Ananthakrishnan and Mr. B. S. Keshava Murthy will hold office upto the date of ensuing Annual General Meeting proposed to be held on September 29, 2015. Your Company has received notice in writing under Section 160 of the Companies Act, 2013 proposing the candidature of Mr. S. B. Mainak for the office of Director at the ensuing Annual General Meeting along with a cheque of Rs. 1 Lakh (Rupees One Lakh only) in favour of the Company. Your Company welcomes Mr. S. B. Mainak (Managing Director of LIC) as our new Non-Executive Chairman and Non-Executive Director on the Board. The Board of Directors at its meeting held on August 17, 2015, extended the tenure of Mr. D. R. Dogra, (DIN 00226775) as Managing Director & Chief Executive Officer, whose tenure was upto August 21, 2015, for a further period of one year i.e upto August 21, 2016 subject to the approval of the members at the ensuing Annual General Meeting. Auditors' Appointment M/s. Khimji Kunverji & Co., Chartered Accountants (Firm Registration No. 105146W) were appointed as the Statutory Auditors of the Company at the 21st Annual General Meeting to hold office from the conclusion of 21st Annual General Meeting till the conclusion of the 23rd Annual General Meeting to be held in 2016, subject to ratification of their appointment at every Annual General Meeting. The Board of Directors of the Company at its meeting held July 17, 2015 recommended to members of the Company ratification of appointment of M/s. Khimji Kunverji & Co., Chartered Accountants as the Statutory Auditors of the Company for financial year 2015-2016. Your Company has received a letter from M/s. Khimji Kunverji & Co., Chartered Accountants to the effect that their re-appointment, if made, would be under the second and third proviso to Section 139 (1) of the Act and that they are not disqualified within the meaning of Section 141 of the Act read with Rule 4(1) of the Companies (Audit and Auditors) Rules, 2014. There are no qualifications, reservations or adverse remarks or disclaimers made by M/s. Khimji Kunverji & Co., Chartered Accountants, Statutory Auditors, in their report. Secretarial Audit Report The Board of Directors of your Company have appointed M/s A K Jain & Co., Company Secretaries, Mumbai, to conduct the Secretarial Audit and his Report on Company's Secretarial Audit is appended to this Report as Annexure IV. There are no qualifications, reservations or adverse remarks or disclaimers made by M/s A K Jain & Co., Company Secretaries, Mumbai in their secretarial audit report. Employees Stock Option Schemes As required in terms of the Securities and Exchange Board of India (Employees Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999, the disclosure relating to Credit Analysis and Research Limited ("ESOS - 2013") is given in Annexure V. Management Discussion and Analysis Report The Management's Discussion and Analysis Report for the year under review, as stipulated under Clause 49 of the Listing Agreement with the Stock Exchanges is annexed as Annexure VI to this report. Corporate Governance The Company is committed to maintaining the highest standards of Corporate Governance and adhering to the Corporate Governance requirements as set out by Securities and Exchange Board of India. The Report on Corporate Governance as stipulated under Clause 49 of the Listing Agreement forms part of the Annual Report. The Certificate from the Auditors of the Company confirming compliance with the conditions of Corporate Governance as stipulated under Clause 49 is also published elsewhere in this Annual Report. Audit Committee of the Company Your Company's Audit Committee comprises the following directors as its members: 1. Dr. Ashima Goyal Chairperson (Independent Director) 2. Mr. Anil Kumar Bansal Member (Independent Director) 3. Mr. Rajesh Mokashi Member (Whole time Director) The composition of the Audit Committee is in compliance with the requirements of Section 177 of the Companies Act, 2013 and amended Clause 49 of the Listing Agreement entered into with the Stock Exchanges. Disclosures under Sexual Harassment of women at workplace (Prevention, Prohibition & Redressal) Act, 2013 Your Company has always believed in providing a safe and harassment free workplace for every individual working in the Company's premises through various interventions and practices. The Company always endeavours to create and provide an environment that is free from discrimination and harassment including sexual harassment. Your Company has a policy on Prevention of Sexual Harassment at Workplace. The policy aims at prevention of harassment of employees and lays down the guidelines for identification, reporting and prevention of undesired behaviour. An Internal Complaints Committee (ICC) was set up from the senior management with women employees constituting majority in order to investigate any complaints / issues related to sexual harassment. The ICC is responsible for redressal of complaints related to sexual harassment and follows the guidelines provided in the Policy. During the year ended March 31, 2015, the ICC did not receive any complaint pertaining to sexual harassment. Particulars of Employees Disclosures with respect to the remuneration of Directors and employees as required under Section 197 of the Companies Act and Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 has been appended as Annexure VII to this Report. The information required pursuant to Section 197 of the Companies Act read with Rule 5(2) & (3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of your Company is available for inspection by the members at the Registered Office of the Company during business hours on working days up to the date of the ensuing Annual General Meeting. If any member is interested in obtaining a copy thereof, such member may write to the Company Secretary, whereupon a copy would be sent. Acknowledgements The Board places on record its appreciation of the contribution of its employees to the company's operations and the trust reposed in it by market intermediaries, issuers and investors. The Board also appreciates the support provided by the Reserve Bank of India, Securities Exchange Board of India and the Company's Bankers, IDBI Bank, HDFC Bank and State Bank of India. On behalf of the Board of Directors S. B. Mainak Chairman (DIN: 02531129) Place: Mumbai Date: August 26, 2015 |