DIRECTOR'S REPORT TO THE MEMBERS AKME STAR HOUSING FINANCE LIMITED UDAIPUR The Directors take pleasure in presenting the 10th Annual Report together with the audited financial statements for the year ended March 31, 2015. The Management Discussion and Analysis has also been incorporated into this report. HIGHLIGHTS OF PERFORMANCE The Company has achieved a gross income and net profit of Rs. 201.83 lacs and Rs. 66.69 lacs during the year under review as compared to Rs. 137.47 lacs and Rs. 36.74 lacs in the previous year respectively. The housing loans/other loan outstanding during the year ended 31st March, 2015 were of Rs. 1232.20 lacs as against Rs. 895.58 lacs during the previous year. The Net Owned Funds (NOF)/ Net worth of your Company is worth Rs 1538.25 Lacs as on 31.03.2015 as against Rs.1012.91 lacs during the previous year. The Earnings Per Share (EPS) is Rs. 1.52 as at March 31, 2015 as against Rs. 0.94 as at March 31, 2014. FINANCIAL RESULTS OF THE COMPANY The Board's Report shall be prepared based on the stand alone financial statements of the company. DIVIDEND To look after the further expansion of business activity and inadequacy of profits your directors do not recommend any payment of dividend for the year ended 31st March, 2015 PARTICULARS OF EMPLOYEES The information required pursuant to Section 197 read with Rule, 5 of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company, there are no employees of the Company covered under this section who is earning salary over and above specified limit. AMENDMENT IN MEMORANDUM & ARTICLES OF ASSOCIATION During the year under review, pursuant to a special resolution passed on September 10, 2015, in the Annual General Meeting, the Members of the Company had approved the adoption of new set of Articles of Association (AOA) of the Company (replacing the existing set of Articles of Association), in conformity with the provisions of the Companies Act, 2013 SHARE CAPITAL ¦ Authorized Share Capital The authorized share capital of the Company stood at 6,00,00,000 (divided into 60,00,000 Equity Shares of Rs. 10/- each. Company has increased its Authorized Capital during the year From Rs 3,00,00,000/- to Rs 6,00,00,000/-. ¦ Issued and Paid-up Capital Your Company's Share Capital was at Rs 5.93 crore as at March 31, 2015 as compared to Rs 2.16 crore as at March 31, 2014. The increase was mainly on account of issuance and allotment of following equity shares: 1. Bonus Issue at Ratio of 1:1 2. Company has offered its Shares to the Public by way of IPO during the year. FINANCE Cash and cash equivalent as at March 31, 2015 was 402.44 lacs. The Company continues to focus on judicious management of its working capital. Receivables, inventories and other working capital parameters were kept under strict check through continuous monitoring. DEPOSITS Your Company has neither accepted nor invited any fixed deposit from the Public during the year under review as per NHB regulations. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013, apart from the loans made, guarantee given or security provided by the Company in the ordinary course of business are given in the Notes to accounts forming part of the Audited Financial Statements for the year ended March 31, 2015. CAPITAL ADEQUACY As required under National Housing Bank Directions, your Company is presently required to maintain a minimum capital adequacy of 12% on a standalone basis. In addition, the National Housing Bank Directions also require that your Company transfers minimum 20% of its annual profits to a reserve fund. Your Company's Capital Adequacy Ratio is at 133.26 % as at March 31, 2015, which provides an adequate cushion to withstand business risks and is above the minimum requirement of 12% stipulated by the National Housing Bank. HUAN RESOURCES AND TRAINING The Company aims to align HR practices with business goals, motivate people for higher performance and build a competitive working environment. Productive high performing employees are vital to the company's success. The Board values and appreciates the contribution and commitment of the employees towards performance of your Company during the year. In pursuance of the Company's commitment to develop and retain the best available talent, the Company continued to offer in- house training program to staff members in executive development, leadership and management skills. The Company had organized various training programs for upgrading the skill and knowledge of its employees in different operational areas. The Company also sponsored its employees at various levels to attend various seminars and programs conducted by various organizations and institutions including Training programs conducted by the National Housing Bank so as to update their knowledge and to keep them abreast of all the developments in their respective fields. Employee relations remained cordial and the work atmosphere remained congenial during the year. DISCLOSURE UNDER SUB-SECTION (3) OF SECTION 134 OF COMPANIES ACT, 2013, READ WITH RULE 8(3) OF THE COMPANIES (ACCOUNTS) RULES, 2014 The details of conservation of energy, technology absorption, foreign exchange earnings and outgo are as follows: ¦ Conservation of energy: The Company does not fall under any of the industries covered by the Companies (Disclosure of particulars of Directors) Rules, 1988. ¦ Technology absorption: The Company is not involved in any technology absorption nor is there any R&D activity during the year ¦ Foreign Exchange Earnings and Outgo Your company does not have any foreign exchange earnings and outgo during the year under review. NATIONAL HOUSING BANK (NHB) GUIDELINES The Company has complied with the provisions of the Housing Finance Companies (NHB) Directions, 2010 as prescribed by NHB and has been in compliance with the various Circulars, Notifications and Guidelines issued by National Housing Bank (NHB) from time to time. The Circulars and the Notifications issued by NHB are also placed before the Audit Committee / Board at regular intervals to update Committee / Board members on the same. BUSINESS RISK MANAGEMENT Pursuant to the requirement of the Listing Agreement, the Company has constituted a Business Risk Management Committee. The details of Committee and its terms of reference are set out in the Corporate Governance Report forming part of the Board's Report. The Company has a robust Business Risk Management (BRM) framework to identify, evaluate business risks and opportunities. This framework seeks to create transparency, minimize adverse impact on the business objectives and enhance the Company's competitive advantage. The business risk framework defines the risk management approach across the enterprise at various levels including documentation and reporting. The framework has different risk models which help in identifying risks trend, exposure and potential impact analysis at a Company level. . Risk management forms an integral part of the Company's Mid-Term Planning cycle. During the year, the Board reviewed the risks associated with the business of the Company, its root causes and the efficacy of the measures taken to mitigate the same. The procedures are adopted to assess the risks and their mitigation mechanisms. ASSET LIABILITY MANAGEMENT COMMITTEE (ALCO) The Asset Liability Management Committee (ALCO) lays down policies and quantitative limits that involve assessment of various types of risks and shifts in assets and liabilities to manage such risks. ALCO ensures that the liquidity and interest-rate risks are contained within the limits laid down by the Board. The Company has also implemented NHB's Asset Liability Management Guidelines CODES, STANDARDS & POLICIES KNOW YOUR CUSTOMER & ANTI MONEY LAUNDERING MEASURE POLICY Your Company has a Board approved Know Your Customer & Anti Money Laundering Measure Policy (KYC & AML Policy) in place and adheres to the said Policy. The said Policy is in line with the National Housing Bank guidelines. The Company has also adhered to the compliance requirement in terms of the said policy relating to the monitoring and reporting of cash / suspicious transactions. The Company furnishes to Financial Intelligence Unit (FIU), India, in the electronic medium, information of all cash transactions of the value of more than Rupees ten lakh or its equivalent in foreign currency and suspicious transactions whether or not made in cash, in terms of the said Policy. ¦ Fair Practice Code Your Company has in place a Fair Practice Code (FPC), which includes guidelines on appropriate staff conduct when dealing with the customers and on the organization's policies vis-a-vis client protection. The FPC captures the spirit of the National Housing Bank guidelines on fair practices for Housing Finance Companies. During the year under review, FPC was modified by the Board and the grievance redressal mechanism within the Company was further strengthened. ¦ Code Of Conduct For Board Members And The Senior Management Your Company has adopted a Code of Conduct for its Board Members and Senior Management personnel. The code requires the directors and employees of the Company to act honestly, ethically and with integrity and in a professional and respectful manner. The declaration by the Chairman & Managing Director of the Company regarding compliance with the Code of Conduct for Board Members and Senior Management is annexed with the Corporate Governance report. ¦ Code For Prevention Of Insider Trading Practices Your Company has formulated and adopted a Code for Prevention of Insider Trading Practices in accordance with the model code of conduct as prescribed under the SEBI (Prohibition of Insider Trading) Regulations, 2015, as amended. The code lays down guidelines, which includes procedures to be followed and disclosures to be made while dealing in the shares of the Company. The code is applicable to the promoters, directors, senior designated employees and their dependents and the said persons are restricted from dealing in the securities of the Company during the 'restricted trading periods' notified by the Company, from time to time. ¦ Code Of Business Ethics (COBE) Your Company has adopted a Code of Business Ethics (COBE) which lays down the principles and standards that govern the activities of the Company and its employees to ensure and promote ethical behavior within the legal framework of the organization. ¦ Whistle Blower Policy Your Company believes and is committed to adhere to high ethical standards and compliance with laws and regulations applicable to its business. Company adopted a Whistle Blower Policy which provides for a vigil mechanism that encourages and supports its Directors and employees to report to the management / Chairperson of the Audit Committee instances of unethical behavior, actual or suspected, fraud or violation of the Company's Code of Conduct or Ethics Policy. The said policy, however, provides for adequate safeguards against the victimization of the Whistle Blower who avail this mechanism. The policy also provides for direct access to the Chairperson of the Audit Committee in exceptional cases. ¦ Sexual Harassment Policy The policy on "Workplace Sexual Harassment" was formulated and an Internal Complaints Committee (ICC) was also constituted as per the provisions of "Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. The said policy seeks to protect women employees from sexual harassment at the place of work. The primary objective of the same is to safeguard the interest of female employees in the Company and also provides for punishment in case of false and malicious representations. ¦ Comprehensive Risk Management Policy Your Company has formulated and adopted a Comprehensive Risk Management Policy which covers a formalized Risk Management Structure, along with other aspects of Risk Management i.e. Credit Risk Management, Operational Risk Management, Market Risk Management and Enterprise Risk Management. The Risk Management Committee of the Board, on periodic basis, oversees the risk management systems, processes and minimization procedures of the Company. ¦ Corporate Social Responsibility (CSR) Considering these, the concept of Corporate Social Responsibility (CSR) is the demand of the current era. CSR has become a concept that frequently overlaps similar approaches, such as corporate sustainability, corporate sustainable development and corporate responsibility. Your Company is a socially responsible organization and always keen to promote the interest of customers, employees, shareholders and communities as a whole. Our founder chairman's vision and legacy continues to guide our company and our people. Social responsibility is a way of life at AHFL. It means investing in and enriching our communities. It means encouraging employee volunteerism. Company has constituted a CSR Committee on in Board meeting held on 13th March 2015. ¦ Remuneration Policy The Board of Directors had on the recommendation of the Nomination & Remuneration Committee Appointed Mrs. Rajni Gehlot Independent Director as Chairman, Mr. Amrit Singh Rajpurohit and Mr. Avinash Bhatnagar Independent Director as Member. The Company follow a Policy on remuneration of Directors and senior management Employees, The Policy is approved by the Nomination & Remuneration Committee and the Board. VIGIL MECHANISM Fraud free and corruption free work culture has been core to the Company. on view of the potential risk of fraud and corruption due to rapid growth and geographical spread of operations, the company has put an even greater emphasis to address this risk. The Audit Committee of the Company is also looking for prevent the fraud under the Vigil mechanism for the Company. LISTING OF SHARES OF THE COMPANY The Equity Shares of your Company continue to remain listed on the BSE Ltd. and the National Stock Exchange of India Limited. The Company has paid the listing fees as payable to the BSE Ltd. and the National Stock Exchange Limited for the financial year 2013-14. DIRECTORS AND KEY MANAGERIAL PERSONAL ¦ Appointment To meet out the requirement of Companies Act 2013 and SME Listing Agreement Company has appointed Mr. Avinash Bhatnagar as Independent Director in Board of Directors meeting as Additional Director on 15.09.2014. As an Additional Director, Mr. Avinash Bhatnagar shall hold office up to the date of ensuing General Meeting. The Company has received notice as per section 160 (1) of the Companies Act 2013 from a member proposing her appointment as Director. The Board of Directors recommends his appointment. Further details about the all directors are given in Corporate Governance report as well as in the Notice of the ensuing General Meeting being sent to the shareholders along with Annual Report ¦ Appointment of Independent Directors The Board appointed all the existing Independent Directors viz. Mr. Amrit Singh Rajpurohit and Mrs. Rajni Gehlot as Independent Director under Section 149 of the Companies Act 2013 for a term of Five Years from the 9th Annual general Meeting. The Shareholder approves their appointment in Annual General Meeting held on 10th September 2014. All Independent Directors have given declarations that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 and Clause 52of the Listing Agreement ¦ Retire By Rotation In accordance with the provisions of section 152 (6) of the Companies Act, 2013 and in terms of the Memorandum and Articles of Association of the Company, Mr. Kalu Lal Jain (DIN 00451442) will retire by rotation at the ensuing general meeting of the Company and being eligible offer themselves for re-appointment. The Board recommends their re appointment. BOARD EVALUATION Pursuant to the provisions of the Companies Act, 2013 and Clause 52 of the SME Listing Agreement, 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 and Compliance Committees. MEETINGS A calendar of Meetings is prepared and circulated in advance to the Directors. During the year 13 Board Meetings and 4 (Four) Audit Committee Meetings were convened and held. The details of which are given in the Corporate Governance Report. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013. 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 before the Audit Committee as also the Board for approval. The transactions entered into pursuant to the omnibus approval so granted are audited and a statement giving details of all related party transactions is placed before the Audit Committee and the Board of Directors for their approval on a half yearly basis. SIGNIFICANT/MATERIAL ORDERS PASSED BY THE REGULATOR OR COURT OR TRIBUNALS There were no significant/material orders passed by any Regulator or Court or Tribunal which would impact the going concern status of the Company and its future operations INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY The Company has an Internal Control System, commensurate with the size, scale and complexity of its operations. To maintain its objectivity and independence, the Internal Audit function reports to the Chairman of the Audit Committee of the Board. The Internal Audit Department monitors and evaluates the efficacy and adequacy of internal control system in the Company, its compliance with operating systems, accounting procedures and policies of the Company. Based on the report of internal audit function, process owners undertake corrective action in their respective areas and thereby strengthen the controls. Significant audit observations and corrective actions thereon are presented to the Audit Committee of the Board. The internal audit department also assesses opportunities for improvement in business process systems and controls provides recommendations, designed to add value to the organization and follows up on the implementation of corrective actions and improvements in business process after review by the Audit Committee. SECRETARIAL AUDITOR & SECRETARIAL AUDIT REPORT Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board of Directors of the Company had appointed Mr. Ronak Jhuthawat Proprietress of M/s Ronak Jhuthawat & Co., Practicing Company Secretaries, Udaipur, to undertake the Secretarial Audit of the Company for the financial year 2014-15. The Secretarial Audit Report for the financial year ended March 31, 2015, is annexed as "Annexure - A" to this report. The said report, does not contain any qualification, reservation or adverse remark, however, contains certain observations of the Secretarial Auditor which are self explanatory, and thus do not call for any further comments. "Annexure A". AUDITORS ¦ Statutory Auditors The Company's Statutory Auditors, M/s Nyati Mundra & Co. (ICAI Firm Registration No. 08153C ), Chartered Accountants, Udaipur will hold office until the conclusion of the ensuing Annual General Meeting of the Company are eligible for reappointment as per section 139 of the Companies Act 2013. M/s Nyati Mundra & co have expressed their willingness to get re appointed as the statutory auditors of the company and They have confirmed their eligibility under Section 141 of the Companies Act, 2013 and the Rules framed there under for reappointment as Auditors of the Company. As required under Clause 52 of the SME Listing Agreement, the auditors have also confirmed that they hold a valid certificate issued by the Peer Review Board of the Institute of Chartered Accountants of India. The Board based on the recommendation of the audit committee recommends the re appointment of M/s Nyati Mundra & co as the statutory Auditor of the Company. The Members are requested to appoint M/s Nyati Mundra & co Chartered Accountants as Auditors from the conclusion of the ensuing annual general meeting till the Conclusion of the next Annual General Meeting in 2016 and to authorize the Board to fix their remuneration for the year 2015. ¦ Notes to Accounts and Auditors Report The notes to the accounts referred to in Auditors Report are self-explanatory and do not call for any further comments. The Statutory Auditors Report does not contain any qualification, reservation or adverse remark. DIRECTORS' RESPONSIBILITY STATEMENT To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statements in terms of Section 134 (3) (c) of the Companies Act, 2013: ¦ that in the preparation of the annual financial statements for the year ended March 31, 2015, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any; ¦ that such accounting policies as mentioned in Note of the Notes to the Financial Statements have been selected and applied consistently and judgment and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2015 and of the profit of the Company for the year ended on that date; ¦ 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; ¦ that the annual financial statements have been prepared on a going concern basis; ¦ that proper internal financial controls were in place and that the financial controls were adequate and were operating effectively; ¦ that systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively. CORPORATE GOVERNANCE Pursuant to Clause 52 of the listing agreement with Stock Exchanges, a separate section titled Report on Corporate Governance forms part of this Annual Report. The Report on Corporate Governance also includes certain disclosures that are required, as per Companies Act, 2013. Auditors' Certificate confirming compliance with the conditions of Corporate Governance as stipulated under Clause 52 of the Listing Agreement also forms part of this Annual Report. EXTRACT OF ANNUAL RETURN Pursuant to Section 134 (3) (a) and Section 92(3) of the Companies Act, 2013 read with Rule 12 of the Companies (Management and Administration) Rules, 2014,the extract of the Annual Return as at March 31, 2015, in the prescribed form MGT 9,forms part of this report and is annexed as "Annexure B ". ENHANCING SHAREHOLDERS VALUE Your Company believes that its Members are among its most important stakeholders Accordingly, your Company's operations are committed to the pursuit of achieving high levels of operating performance and cost competitiveness, consolidating and building for growth, enhancing the productive asset and resource base and nurturing overall corporate reputation. Your Company is also committed to creating value for its other stakeholders by ensuring that its corporate actions positively impact the socio-economic and environmental dimensions and contribute to sustainable growth and development. ACKNOWLEDGEMENTS Your Directors thank the various departments like NHB, MCA, Registrar of Companies, various Organizations and Agencies for the continued help and co-operation extended by them. The Directors also gratefully acknowledge all stakeholders of the Company viz. customers, members, dealers, vendors, banks and other business partners for the excellent support received from them during the year. The Directors place on record their sincere appreciation to all employees of the Company for their unstinted commitment and continued contribution to the Company. CAUTIONARY STATEMENT Statements in the Board's Report and the Management Discussion & Analysis describing the Company's objectives, expectations or forecasts may be forward-looking within the meaning of applicable securities laws and regulations. Actual results may differ materially from those expressed in the statement. Important factors that could influence the Company's operations include global and domestic demand and supply conditions affecting selling prices of finished goods, input availability and prices, changes in government regulations, tax laws, economic developments within the country and other factors such as litigation and industrial relations. For and on behalf of the Board Sd/- Mohan Lal Nagda (Managing Director) DIN 00211925 Sd/- Nirmal Kumar Jain (Director) DIN 00240441 Date: 11.07.2015 Registered office : AKME Business Center 4-5 Subcity Center Savina Circle Udaipur.313002 |