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Shriram Transport Finance Company127

Shriram Transport Finance Company Ltd.

BSE:511218  |  NSE:SRTRANSFINEQ  |  58888:shtf  |  IND:NBFC - Vehicle Finance  |  ISIN code:INE721A01013  |  SECT:NBFC

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You can view full text of the Director's Report for Shriram Transport Finance Company Ltd.
Director Report
Mar2018   Mar 2019

To the Members,

The Directors have pleasure in presenting their Fortieth Annual Report and the Audited Statements of Accounts for the financial year ended March 31, 2019.

FINANCIAL HIGHLIGHTS

Your Company has adopted Indian Accounting Standards (‘Ind AS’) notified under section 133 of the Companies Act 2013 (‘the Act’) read with the Companies (Indian Accounting Standards) Rules, 2015 from April 01, 2018 and the effective date of such transition is April 01, 2017. Such transition has been carried out from the erstwhile Accounting Standards notified under the Act, read with relevant rules issued thereunder and guidelines issued by the Reserve Bank of India (‘RBI’). The financial statements have been prepared in accordance with the format prescribed for a Non-Banking Financial Company (NBFC) in compliance of the Companies (Indian Accounting Standards) Rules, 2015, in Division III of Notification No. GSR 1022 (E) dated October 11, 2018, issued by the Ministry of Corporate Affairs, Government of India. The financial results along with the comparatives have been prepared in accordance with the recognition and measurement principles stated Ind AS.

(Rs. in lacs)

Particulars

2018-19

2017-18

Profit Before Depreciation And Taxation

382,124.77

383,793.63

Less: Depreciation, amortisation and impairment

4,297.27

3,613.40

Profit Before Tax

377,827.50

380,180.23

Less: Tax expense

121,428.83

134,126.21

Profit for the year

256,398.67

246,054.02

Add: Balance brought forward from previous year

682,981.38

523,027.40

Balance available for appropriation

939,380.05

769,081.42

Appropriations

General reserve

25,700.00

15,700.00

Statutory reserve

51,400.00

31,400.00

Debenture redemption reserve

25,147.25

9,206.55

Dividend on equity shares of Rs. 10/- each

24,957.10

24,957.10

Tax on dividend

5,130.01

4,836.39

Balance carried to Balance Sheet

807,045.69

682,981.38

DIVIDEND

Your Directors at their meeting held on October 25, 2018 declared interim dividend of Rs. 5.00/- per equity share (i.e. 50%) for the financial year 2018-19. The interim dividend was paid on November 16, 2018 and involved a cash outflow of Rs. 13,675.97 lacs including tax on dividend.

Your Directors have recommended higher final dividend of Rs. 7/- per equity share (i.e. 70%) for the financial year 2018-19 as against final dividend of Rs. 6/- per equity share (i.e.60%) for the financial year 2017-18. The final dividend distribution will involve in a cash outflow of Rs. 19,146.34 lacs including tax on dividend.

Thus, the total dividend (including interim dividend paid) for the financial year 2018-19 shall be Rs.12/- per equity share (i.e. 120%) aggregating to Rs. 32,822.31 lacs including tax on dividend as against Rs. 11/- per equity share (i.e. 110%) aggregating to Rs. 29,820.39 lacs including tax on dividend for the financial year 2017-18. The Dividend Distribution Policy forms part of the Corporate Governance Report and is also available on the website of the Company at https://www.stfc.in/pdf/Dividend-Distribution-Policy-2017. pdf.

TRANSFER TO RESERVES

The amounts proposed to be transferred to General Reserve, Statutory Reserve and Debenture Redemption Reserve are mentioned in the Financial Highlights under the heading ‘Appropriations.

CAPITAL ADEQUACY RATIO

Your Company’s total Capital Adequacy Ratio (CAR), as of March 31, 2019, stood at 20.27% of the aggregate risk weighted assets on balance sheet and risk adjusted value of the off-balance sheet items, which is above the regulatory minimum of 15%.

CREDIT RATING

The credit rating enjoyed by the Company as on March 31, 2019 is as follows:

Credit Rating Agency

Instrument

Ratings

CRISIL

Bank Loan Long Term

CRISIL AA /Stable

Bank Loan Short Term

CRISIL A1

Non-Convertible Debentures

CRISIL AA /Stable

Subordinate Debt

CRISIL AA /Stable

Short Term Debt

CRISIL A1

Fixed Deposit

CRISIL FAAA/Stable

India Ratings & Research Private Limited

Non-Convertible Debentures

IND AA /Stable outlook

Subordinated Debt

IND AA /Stable outlook

Commercial Paper

IND A1

CARE

Non-Convertible Debentures

CARE AA /Stable

Subordinated Debt

CARE AA /Stable

Commercial Paper

CARE A1

ICRA

Fixed Deposit

MAA with Stable

Standard & Poor’s Ratings

Long-Term Issuer Credit Rating

BB /Stable

Short-Term Issuer Credit Rating

B

Offshore Rupee Denominated Bond (Masala Bond)

BB

U.S. Dollar Senior Secured Notes

BB

Fitch Ratings

Long-Term Issuer Default Rating

BB /Stable Outlook

Short-Term Issuer Default Rating

B

Offshore Rupee Denominated Bond (Masala Bond)

BB

U.S. Dollar Senior Secured Notes

BB

OPERATIONS & COMPANY’S PERFORMANCE

For the financial year ended March 31, 2019, your Company earned Profit Before Tax of Rs. 377,827.50 lacs as against Rs. 380,180.23 lacs in the previous financial year and the Profit After Tax of Rs. 256,398.67 lacs as against Rs. 246,054.02 lacs in the previous financial year. The total Income for the year under consideration was Rs. 1,554,570.12 lacs and total expenditure was Rs. 1,176,742.62 lacs.

Mobilization of funds from following sources/instruments was as under:

(Rs. in lacs)

Sr. No.

Particulars

2018-19

2017-18

1

Non-Convertible Debentures - Institutional - Secured

91,500.00

973,340.00

2

Subordinated Debts - Institutional

236,000.00

142,900.00

3

Term Loans from Banks - Secured

1,350,730.00

2,140,325.00

4

Term Loans from Financial Institutions/ corporates - Secured

156,900.00

185,000.00

5

Commercial Papers

2,482,000.00

1,401,900.00

6

Fixed Deposit

495,609.67

302,106.45

7

Masala Bonds

-

116,000.00

8

Inter Corporate Deposits

5,000.00

18,770.00

9

Non-Convertible Debentures Institution- Unsecured

50,000.00

-

10

Non-Convertible Debentures Public Issue- Secured

479,262.94

-

11

External Commercial Borrowings (Loan)

240,233.00

-

12

U.S. Dollar Senior Secured Notes

284,990.00

-

The total Assets Under Management had increased from Rs. 9,625,298.47 lacs to Rs. 10,448,228.38 lacs. During 2018-19, the Company securitised its assets worth Rs. 1,512,305.83 lacs(accounting for 14.47% of the total assets under management as on March 31, 2019) as against Rs. 1,246,716.07 lacs during 2017-18. With securitisation, the Company ensures better borrowing profile, leading to lower interest liability owing to its lending to priority sector as per RBI. The outstanding securitised assets portfolio stood at Rs. 1,939,755.62 lacs as on March 31, 2019.

The Company continued its focus on financing of pre-owned commercial vehicles. Our relationship based business model enabled us to maintain the leadership position in the preowned commercial vehicles financing segment. For further market penetration, the Company opened 332 new Branches and other offices. With this the total number of Branch and other offices across India has now increased to 1,545.

ISSUE OF SECURITIES

Share Capital

The paid up Equity Share Capital of the Company stood at Rs. 22,688.27 lacs (226,882,736 shares of Rs. 10/- each) as on March 31, 2019. There was no change in the paid up Equity Share Capital in the Financial Year 2018-19.

An ordinary resolution is proposed in the Notice of the ensuing 40th Annual General Meeting for cancellation of 48,000 forfeited shares from Issued and Subscribed Share Capital of the Company as set out item 5 of the Notice of the ensuing 40th Annual General Meeting of the Company.

Public Issue of Non-convertible Debentures

During the year under review, the Company through Shelf Prospectus dated June 22, 2018 offered 5,00,00,000 Secured Redeemable Non-Convertible Debentures (NCDs) of face value of Rs. 1,000 each to the Public for an amount aggregating upto Rs. 5,00,000 lacs pursuant to the Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008 as amended. The Company under the Shelf Prospectus and three Tranche Prospectuses issued and allotted 4,79,26,294 NCDs aggregating to Rs. 479,262.94 lacs. Utilisation of funds raised were as per the objects of the Public Issue of NCDs. The said NCDs are listed on the National Stock Exchange of India Limited and BSE Limited.

Issue of U.S. Dollar Senior Secured Notes

The Company had established INR 50,000 Million Medium Term Note Programme (MTN Programme) in the financial year 2017-18 for issue of rupee denominated bonds (Masala bonds) with an objective of diversifying the borrowing portfolio of the Company and to open new market/avenue for borrowing. The Company had raised Rs. 116,000 lacs under the MTN Programme.

During the year 2018-19, the Company issued 5.70 percent Senior Secured Notes Due 2022 aggregating to USD 400 Million under the MTN Programme. The issue of Senior Secured Notes evinced encouraging response from high quality real money investors from the international market including institutional investors from Singapore, Hongkong and London. The order book for initial price guidance was in excess of USD 1 billion with oversubscription of -2.5x. The funds raised through the issue of Senior Secured Notes have been utilized for onward lending and other activities as permitted by the ECB Directions.

Having regard to the opportunities and appetite for the bonds of the reputed Indian companies in the international market, the Company updated, up sized and converted the MTN Programme into USD 2 billion Global Medium Term Note

Programme (GMTN Programme). On April 24, 2019, the Company issued 5.950 percent Senior Secured Notes due 2022 aggregating to USD 500 Million to the Qualified Institutional Buyers (QIBs) under the Rule 144A of the U.S. Securities Act 1933 and to the eligible investors outside United States under Regulation S of the U.S. Securities Act 1933. The said Senior Secured Notes are listed on the Singapore Exchange Securities Trading Limited. All Senior Secured Notes issued under the above programmes are fully hedged and would not involve any foreign exchange risk to the Company.

FIXED DEPOSITS

As on March 31, 2019, there were 14,223 fixed deposits aggregating to Rs. 17,339.65 lacs that have matured but remained unclaimed. There were no deposits, which were claimed but not paid by the Company. The unclaimed deposits have since reduced to 9,764 deposits amounting to Rs. 10,342.04 lacs. Appropriate steps are being taken continuously to obtain the depositors’ instructions so as to ensure renewal/ repayment of the matured deposits in time.

DIRECTORS Cessation of Directorships

Due to other work commitments, Mr. Amitabh Chaudhry (DIN 00531120), independent director and Mr. Gerrit Lodewyk Van Heerde (DIN 06870337), Non-Executive Non-Independent Director of the Company resigned from the directorship of the Company with effect from October 26, 2018 and May 9, 2019 respectively. The tenure of Mr. S.M. Bafna (DIN 00162546), independent director of the company expired on March 31, 2019. He had expressed his willingness not to seek reappointment as an independent director of the Company. The Board of Directors have placed on record its appreciation of the invaluable services rendered by the said directors.

Appointment of Directors

The Board of Directors appointed (i) Mr. Pradeep Kumar Panja (DIN 03614568) as an Additional Director in the category of independent director of the Company with effect from October 25, 2018 for a period of five consecutive years up to October 24, 2023 and (ii) Mr. Ignatius Michael Viljoen as a Director of the Company in the category of non-executive non-independent director in a casual vacancy caused by the resignation of Mr. Gerrit Lodewyk Van Heerde (DIN 06870337), non-executive non-independent director of the Company, subject to approval of members at the ensuing 40th Annual General Meeting (AGM).

Re-appointment of Directors

Mrs. Kishori Udeshi (DIN 01344073), independent director of the Company was re-appointed for a second term of five years commencing from April 1, 2019 to March 31, 2024 by the members of the Company by way of passing of Special Resolution through Postal Ballot on December 05, 2018.

The Board of Directors re-appointed (i) Mr. S. Lakshminarayanan (DIN 02808698) and Mr. S. Sridhar (DIN 00004272) as independent directors of the Company for a second term of five years with effect from January 24, 2020 and October 20, 2019 respectively and (ii) Mr. Umesh Revankar (DIN 00141189) as Managing Director & CEO of the Company for a further period of five years with effect from October 26, 2019, subject to approval of members at the ensuing 40th AGM.

Retirement of director by rotation

Mr. D. V Ravi (DIN 00171603), non-executive non- independent director of the Company will retire by rotation at the ensuing 40th AGM and being eligible, offers himself for re-appointment.

All the above appointments/re-appointments by the Board of Directors are based on the recommendation of the Nomination and Remuneration Committee. The resolutions for aforementioned appointment/re-appointments and for payment of remuneration to Managing Director & CEO together with requisite disclosures are set out in the Notice of the ensuing 40th AGM. The Board recommends all the resolutions for your approval.

Declaration by Independent Directors

The Board has received the declaration from all the Independent Directors as per the Section 149(7) of the Act and Regulation 16(1)(b) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (‘the Listing Regulations’) and the Board is satisfied that all the Independent Directors meet the criteria of independence as mentioned in Section 149(6) of the Act and Regulation 16(1)(b) of the Listing Regulations.

Policies on appointment of Directors and Remuneration Your Company recognizes the importance and benefits of having the diverse Board to enhance quality of its performance and has adopted a Policy on Board Diversity formulated by the Nomination and Remuneration Committee. The Company’s Remuneration Policy has laid down a framework for remuneration of Directors (Executive and Non-Executive), Key Managerial Personnel and Senior Management Personnel. These Policies are available on the Company’s website at the weblink:https://www.stfc.in/pdf/Policy-on-Board-Diversity.pdf and https://www.stfc.in/pdf/STFC-Remuneration-Policy-Final.pdf.

The Nomination and Remuneration Committee also takes into account the fit and proper criteria for appointment of directors as stipulated by Reserve Bank of India. The Company has also formulated policy on Succession Planning for Directors and Key Managerial Personnel for continuity and smooth functioning of the Company.

Number of Meetings of the Board

Five Board Meetings were held during the financial year. The details of the Board and various Committee meetings are given in the Corporate Governance Report.

Performance evaluation of directors at Board and independent directors’ meetings

Pursuant to the provisions of the Act and Listing Regulations, 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 various Committees for the financial year 2018-19. The evaluation was conducted on the basis of a structured questionnaire which comprises performance criteria such as performance ofduties and obligations, independence ofjudgement, level of engagement and participation, attendance of directors, their contribution in enhancing the Board’s overall effectiveness, etc. The Board has expressed their satisfaction with the evaluation process. The observations made during the evaluation process were noted and based on the outcome of the evaluation and feedback of the Directors, the Board and the management agreed on various action points to be implemented in subsequent meetings. The observations included those relating to further improvement in participation and deliberations at the meetings and conduct of the meetings, circulation of board presentations and its content.

The independent directors met on January 28, 2019 without the presence of other directors or members of Management. All the independent directors were present at the meeting. In the meeting, the independent directors reviewed performance of nonindependent directors, the Board as a whole and Chairman. They assessed the quality, quantity and timeliness of flow of information between the Company management and the Board.

KEY MANAGERIAL PERSONNEL

There was no change (appointment/resignation) in the key managerial personnel namely, Managing Director & CEO, the Chief Financial Officer and the Company Secretary of the Company during the financial year.

DIRECTORS’ RESPONSIBILITY STATEMENT

Pursuant to the provisions of Section 134(3)(c) of the Act, the directors confirm that, to the best of their knowledge and belief:

a) In the preparation of the annual accounts, the applicable Indian accounting standards have been followed along with proper explanation relating to material departures;

b) That such accounting policies as mentioned in note 6 to the financial statements have been selected and applied consistently, and judgments 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, 2019 and of the profit of the Company for the year ended on that date;

c) That proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Act, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d) The annual accounts have been prepared on a going concern basis.

e) The Company had followed the internal financial controls laid down by the directors and that such internal financial controls are adequate and were operating effectively.

f) 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.

RBI GUIDELINES

The Company continues to comply with all the requirements prescribed by the Reserve Bank of India, from time to time.

BUSINESS RESPONSIBILITY REPORT

Pursuant to Regulation 34(2)(f) of the Listing Regulations, Business Responsibility Report is annexed and forms part of the Annual Report.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

The CSR Report for the Financial Year 2018-19 is annexed to this report as Annexure-I. The composition of CSR Committee and the details of the ongoing CSR projects/ programs/activities are included in the CSR report/section. The CSR policy is uploaded on the Company’s website at the web link:http://stfc.in/pdf/Corporate-Social-Responsibility-Policy.pdf.

EXTRACT OF ANNUAL RETURN

Pursuant to the provisions of Section 92(3) of the Act, the extract of the annual return in form MGT-9 is annexed as Annexure - II. The same is also available on the website of the company at the web link: https://www.stfc.in/annual-reports.aspx

DISCLOSURES AS PER THE SECTION 134 OF THE ACT READ WITH RULE 8 OF THE COMPANIES (ACCOUNTS) RULES, 2014

Conservation of Energy, Technical Absorption and Foreign Exchange Earnings and Outgo

The information pursuant to Section 134(3)(m) of the Act, read with Companies (Accounts) Rules, 2014 is as follows:

a. The Company has no activity involving conservation of energy or technology absorption.

b. The Company does not have any Foreign Exchange Earnings.

c. Outgo under Foreign Exchange - Rs. 6,836.66 lacs.

Loans, guarantee or investments in securities

The loan made, guarantee given or security provided in the ordinary course of business by a NBFC registered with Reserve Bank of India are exempt from the applicability of provisions of Section 186 of the Act. As such, the particulars of loans and guarantee have not been disclosed in this Report.

During the year under review the Company has invested surplus funds in various securities in the ordinary course of business. For details of the investments of the Company refer to Note 15 of the financial statements.

Contracts or Arrangements with Related Parties

All the related party transactions were entered in ordinary course of business on an arm’s length basis. Hence, no disclosure in Form AOC-2 is necessary and the same does not form part of this report. For details of the transactions with related party entered in ordinary course of business on an arm’s length basis refer to the Note 51 to the financial statements.

As required under the Master Direction - Non-Banking Financial Company - Systemically Important Non-Deposit taking Company and Deposit taking Company (Reserve Bank) Directions, 2016, policy on materiality of related party transactions and dealing with related party transactions as approved by the Board is uploaded on the Company’s website at the web link:http://stfc.in/pdf/Policy-on-Materiality-of-Related-Party-Transactions-and-dealing-with-Related-Party-Transactions-v1.pdf.

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. None of the Directors has any pecuniary relationships or transactions vis-a-vis the Company save and except the payment of sitting fees and commission paid to independent directors.

Risk Management

The Company’s Risk Management policy deals with identification, mitigation and management of risks across the organization. The same has been dealt with the Management Discussion and Analysis annexed to the Annual Report.

Whistle Blower Policy/ Vigil Mechanism

The Company’s Whistle Blower policy provides a mechanism under which an employee/director of the Company may report unethical behaviour, suspected or actual fraud, violation of code of conduct and personnel policies of the Company. The Vigil Mechanism ensures standards of professionalism, honesty, integrity and ethical behavior. The Whistle Blower Policy/Vigil Mechanism is uploaded on the Company’s website: www.stfc.in.

Financial summary/highlights

The details are spread over in the Annual Report as well as are provided in the beginning of this report.

Subsidiaries, joint ventures or associate companies

There were no entity(ies) which became or ceased to be subsidiaries, joint ventures or associate companies of the Company during the financial year ended March 31, 2019. Shriram Automall India Limited (SAMIL), Associate of the Company provides fee-based facilitation services for the sale of pre-owned commercial and passenger vehicles, agricultural and construction equipment, dealer’s stock of pre-owned two wheelers, etc. repossessed by banks and financing companies. SAMIL has 81 Automalls located across the Country. For the year ended March 31, 2019, SAMIL’s total revenue from operations was Rs. 16,040.74 lacs as against Rs. 10,795.20 lacs in the previous year 2017-18 and the Net Profit of Rs. 2,623.47 lacs as against net profit of Rs. 2,054.64 lacs in the previous year 2017-18.

Internal Financial Control System

The Company’s well defined organisational structure, documented policy guidelines, defined authority matrix and internal financial controls ensure efficiency of operations, protection of resources and compliance with the applicable laws and regulations. Moreover, the Company continuously upgrades its systems and undertakes review of policies.

The internal financial control is supplemented by extensive internal audits, regular reviews by management and standard policies and guidelines to ensure reliability of financial and all other records to prepare financial statements and other data. The Audit Committee of the Board reviews internal audit reports given along with management comments. The Audit Committee also monitors the implemented suggestions.

Composition of Audit Committee

The Audit Committee comprised of following directors namely, Mr. S. Sridhar - Chairman, Mrs. Kishori Udeshi, Mr. S. M. Bafna (upto January 28, 2019), Mr. Pradeep Kumar Panja (w.e.f January 29, 2019) and Mr. Puneet Bhatia.

OTHER DISCLOSURES

- There were no material changes and commitments, affecting the financial position of the Company which has occurred between the end of the financial year of the Company and the date of the Directors’ report.

- There are no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and company’s operations in future.

- No equity shares were issued with differential rights as to dividend, voting or otherwise.

- No equity shares (including sweat equity shares) were issued to employees of your company, under any scheme.

- The company has not resorted to any buy back of its equity shares during the year under review.

- There was no change in the nature of business of the Company.

- There was no fraud reported by the Auditors of the Company under the Section 143(12) of Act to the Audit Committee.

- Your Company has constituted IT Strategy committee and the committee has approved IT Strategy policy and documents to mitigate the Company’s exposure towards IT risks. The detailed terms of reference of the IT Strategy committee are given in the Corporate Governance Report forming part of the Annual Report.

- The Company has a policy for prevention of Sexual Harassment for Women at Workplace. An Internal Complaints Committee has been constituted in line with the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 (‘the said Act’). During the year under review, there were no cases filed under the said Act.

- Disclosure regarding details relating to deposits covered under Chapter V of the Act is not applicable since our company is a Non-Banking Financial Company regulated by Reserve Bank of India. The Company accepts deposits as per Master Direction - non-banking financial companies acceptance of public deposits (Reserve Bank) Directions, 2016.

- The Company has obtained a certificate from the statutory auditor certifying that the Company has complied with the requirements of the Regulation 9 of the Master Direction - Foreign Investment in India with regard to downstream investments.

- The Company has complied with Secretarial Standards issued by the Institute of Company Secretaries of India on Board Meetings, Annual General Meetings and Dividend.

CONSOLIDATED FINANCIAL STATEMENTS

Pursuant to Section 129 read with Rule 5 to the Companies (Accounts) Rules, 2014, Statement containing salient features of the financial statement of associate company (Form AOC-1) and a statement on consolidated financial position of the Company with that ofthe SAMIL, an associate ofthe Company is attached to the Annual Report. The consolidated financial statements attached to this Annual Report are prepared in compliance with the applicable Indian Accounting Standards and Listing Regulations. The annual report and the annual accounts of SAMIL and the related detailed information shall be made available to members of the Company seeking such information. The annual accounts of the SAMIL shall also be kept for inspection by members at the Registered Office of the Company and of the SAMIL. The annual accounts of SAMIL shall be available on the website of the Company viz. https://www.stfc.in/annual-reports.aspx. The Company shall furnish hard copy of details of accounts of the SAMIL to the member on demand.

PARTICULARS OF EMPLOYEES

The Company has not employed any individual whose remuneration falls within the purview of the limits prescribed under the provisions of Section 197 of the Act, read with Rule 5(2) of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

The Disclosure required as under Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed to this report as Annexure-III.

AUDITORS

Pursuant to the provisions of Section 139 of the Act and the Companies (Audit and Auditors) Rules, 2014, M/s Haribhakti & Co. LLP, Chartered Accountants, Mumbai (Firm Registration No. 103523W/W100048) and M/s Pijush Gupta & Co. Chartered Accountants, Gurugram (Firm Registration No. 309015E) had been appointed as joint Auditors of the Company at the 38th AGM held on June 29, 2017 to hold office from the conclusion of the 38th AGM until the conclusion of the 43rd AGM of the Company. The Companies (Amendment) Act, 2017 has waived the requirement for ratification of the appointment of auditor by the shareholders at every Annual General Meeting with effect from May 07, 2018. Hence, the approval of the members is not being sought for the re-appointment of the joint Auditors in line with the resolution passed for their appointment at the 38th AGM held on June 29, 2017. The joint Auditors have confirmed that they are not disqualified to act as Auditors and are eligible to hold office as Auditors of the Company. They have also confirmed that they hold a valid peer review certificate as prescribed under Listing Regulations. Approval of the members is being sought for fixation of remuneration of joint Auditors of the Company for the financial year 2019-20. The Auditors’ Report to the members for the year under review does not contain any qualification, reservation or adverse remark.

SECRETARIAL AUDIT

Secretarial Audit Report pursuant to the provisions of Section 204 of the Act for the financial year 2018-19 issued by Mr. P. Sriram, Practicing Company Secretary (Certificate of Practice No. 3310) (Membership No. FCS 4862) is annexed to this report as Annexure-IV. The report does not contain any qualification, reservation or adverse remark.

CORPORATE GOVERNANCE

Pursuant to Schedule V to the Listing Regulations, the following Reports/Certificates form part of the Annual Report:

- the Report on Corporate Governance;

- the Certificate duly signed by the Managing Director & CEO and Chief Financial Officer on the Financial Statements of the Company for the year ended March 31, 2019 as submitted to the Board of Directors at their meeting held on May 08, 2019 ;

- the declaration by the Managing Director & CEO regarding compliance by the Board members and senior management personnel with the Company’s Code of Conduct ; and

- the Management Discussion & Analysis Report

The Auditors’ Certificate on Corporate Governance is annexed to this report as Annexure-V.

ACKNOWLEDGEMENT

The Board of Directors would like to place on record their gratitude for the guidance and cooperation extended by Reserve Bank of India and the other regulatory authorities. The Board takes this opportunity to express their sincere appreciation for the excellent patronage received from the Banks and Financial Institutions and for the continued enthusiasm, total commitment, dedicated efforts of the executives and employees of the Company at all levels. We are also deeply grateful for the continued confidence and faith reposed on us by all the Stakeholders including Shareholders, Depositors, Debenture holders and Debt holders.

For and on behalf of the Board of Directors

S. Lakshminarayanan

Mumbai Chairman

May 08, 2019 (DIN: 02808698)

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