DIRECTORS' REPORT TO, THE MEMBERS OF PARAGON FINANCE LIMITED Dear Members, The Board of Directors hereby presents the 29th Annual Report on the business and operations of your Company for the year ended 31st March, 2015. DIVIDEND The Board has not recommended any dividend for the year. STATEMENT OF COMPANY'S AFFAIRS The Income from Operation decreased by 3.73% and Loans against security of vehicles decreased by 35.94% during the year in comparison to the previous year. The Shareholders Funds as on 31.03.2015 were Rs.1786.11Lacs reflecting the inherent financial strength of the Company. We are having three branches in different areas of the India. MATERIAL CHANGES AND COMMITMENTS No material changes and commitments affecting the financial position of the company occurred between the end of the financial year to which this financial statements relates and the date of this report. EXTRACT OF ANNUAL RETURN Pursuant to section 92(3) of the Companies Act, 2013 ('the Act') and rule 12(1) of the Companies (Management and Administration) Rules, 2014, extract of annual return is Annexed as Annexure DETAILS OF SUBSIDIARY/ASSOCIATE COMPANY/ JOINT VENTURE The Company does not have any Subsidiary, Joint Venture or an Associate company. COMMITTEES OF BOARD The details of composition of the Committees of the Board of Directors are as under:- a. Audit Committee During the year, the Committee had met on 17.05.2014, 14.08.2014, 14.11.2014 and 03.02.2015. *The Members of the Committee was rearranged as on 07.08.2014 in the Board Meeting and hence Mr. Sanjay Kumar Gupta & Mrs. Sujata Agarwal became the members of the Audit Committee in place of Mr. Suvabrato Ganguly and Mr. Manoj Kumar Gupta. Vigil mechanism In pursuant to the provisions of section 177(9) & (10) of the Companies Act, 2013, a vigil mechanism for directors and employees to report genuine concerns has been established. To strengthen its policy of corporate transparency, the company has established an innovative and empowering mechanism for employees. Employees can report to the management their concerns about unethical behavior, actual or suspected fraud or violation of the company's code of conduct or ethics policy. Paragon Finance Limited, being a Listed Company has established a Vigil (Whistle Blower) Mechanism and formulated a Policy in order to provide a framework for responsible and secure whistle blowing/ vigil mechanism. The Company is committed to adhere to the highest standards of ethical, moral and legal conduct of business operations and in order to maintain these standards, the Company encourages its employees who have concerns about suspected misconduct to come forward and express these concerns without fear of punishment or unfair treatment Stakeholders Relationship Committee During the year, the Committee had met on 14.08.2014, 14.11.2014, 03.02.2015 and 09.03.2015. The name of Shareholders / Investors Grievance Committee has been changed to Stakeholders Relationship Committee as per the provisions of Companies Act, 2013. The Members of the Committee was rearranged as on 07.08.2014 in the Board Meeting and hence Ms. Parul Rajgaria became the member of the Committee in place of Mr. Sanjay Goenka and Mr. Aloke Kumar Gupta. DIRECTORS' RESPONSIBILITY STATEMENT Pursuant to the provision of section 134 (3) (c) of the Companies Act, 2013 the Directors give hereunder the Directors' Responsibility Statement relating to the Accounts of the Company: (1) In the preparation of the Annual Accounts, the applicable Accounting Standards have been followed along with proper explanation relating to material departures; (2) The Directors 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 as at March 31, 2015 and of the Profit and Loss of the Company for the said period; (3) 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; and (4) The Annual Accounts of the Company has been prepared on a going concern basis. (5) The directors, had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively. (6) 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. DIRECTORS & KEY MANAGERIAL PERSONNEL In accordance with the provisions of section 152 of the Companies, Act, 2013 and in terms of the Articles of Association of the Company, Mr. Aloke Kumar Gupta, Director, is liable to retire by rotation at the ensuing Annual General Meeting and being eligible, offer himself for re-appointment. The proposal regarding the re- appointment of Mr. Aloke Kumar Gupta as the Director of the company is placed for your approval. The Board of Directors of the Company recommends the above re-appointment. In Compliance with clause 49(VIII) (E) (1) of the Listing Agreement, brief resume, expertise and other details of the Director proposed to be re-appointed are attached to the Notice of the ensuing Annual General Meeting. In accordance with the provisions of section 161(1) of the Companies, Act, 2013, Mr. Pradip Kumar Khandelwal, Additional Director, liable to retire at the ensuing Annual General Meeting, has indicated to the Company that he is not seeking re-appointment due to pre-occupation. The Board places on record its sincere appreciation and recognition of the valuable contribution and services rendered by him during his tenure as a Director on the Board of the Company. The Board proposes that the vacancy caused by his retirement be not filled up. During the year, Mr. Sanjay Goenka, Mr. Suvabrato Ganguly, Mr. Ravi Agarwalla and Ms. Sujata Agarwal have been appointed as an Independent Directors for term of 5 years with effect from 26.09.2014. Also, Mr. Sanjay Kumar Gupta and Mr. S N Khemka have been appointed as Chief Executive Officer and Chief Financial Officer with effect from 26.09.2014 and 14.08.2014 respectively.Further, Mrs. Shreya Gupta and Ms. Parul Rajgaria have been appointed as Non-Executive Directors with effect from 26.09.2014. RISK MANAGEMENT POLICY In terms of the requirement of the Act, the Company has developed and implemented the Risk Management Policy and the Audit Committee of the Board reviews the same periodically. The Company has in place a mechanism to identify, assess, monitor and mitigate various risks to business objectives. Major risks identified by the business and functions are systematically addressed through mitigating actions on a continuous basis. They are discussed at the meetings of the board of directors of the company. The Company's internal control systems are commensurate with the nature of its business and the size and complexity of its operations. 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 Board. The Board of Directors review adequacy and effectiveness of the company's internal control environment and monitors the implementation of audit recommendations. DECLARATION BY INDEPENDENT DIRECTORS The Company has received the necessary declaration from each Independent Directors under section 149(7) of the Companies Act, 2013 that he/she meets the criteria of independence laid down in section 149(6) of the Companies Act, 2013 and Clause 49 of the Listing Agreement. V_/ COMPANY'S POLICY ON APPOINTMENT AND REMUNERATION The current policy is to have an appropriate mix of executive and independent directors to maintain the independence of the board, and separate its functions of governance and management. As on 31st March, 2015, the board consists of 11 members, one of whom is executive or whole time director, two of whom are KMP, two of whom are Non-Executive directors and 6 are independent directors. The Board periodically evaluates the need for change in its composition and size. The policy of the Company on director's 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 of the Companies Act, 2013 adopted by Board is annexed to the Board's Report. We affirm the remuneration paid to the directors is as per the terms laid out in the nomination and remuneration policy of the company. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS No significant or material orders were passed by the Regulators or courts or Tribunals which impact the going concern status and Company's operation in future. PUBLIC DEPOSITS The Company has not accepted any fixed deposits during the year 2014-15 from the public/shareholders. INTERNAL FINANCIAL CONTROLS The internal financial controls with reference to the Financial Statements are commensurate with the size and nature of business of the Company. Details are given in Management Discussion & Analysis Report. STATUTORY AUDITORS, THEIR REPORT AND NOTES TO FINANCIAL STATEMENTS In the last AGM held on 26.09.2014, M/s. Mandawewala & Co., Chartered Accountants have been appointed as Statutory Auditors of the Company for a period of 3 years. Ratification of appointment of Statutory Auditors is being sought from the members of the Company at the ensuing AGM. Further, the report of the Statutory Auditors alongwith notes forming part of the Company's accounts as given under Notes (No. 1 - 21) are enclosed to this report. The observations made in the Auditors' Report are self-explanatory and therefore do not call for any further comments. CASH FLOW STATEMENT In conformity with the provisions of Clause 32 of the Listing Agreement with the Stock Exchanges, the Cash Flow Statement for the year 2014-15 is annexed hereto. RELATED PARTY TRANSACTIONS All contracts / arrangements / transactions entered by the Company during the financial year with related parties were in the ordinary course of business and on an arm's length basis. During the year, the Company had not entered into any contract / arrangement / transaction with related parties which could be considered material in accordance with the policy of the Company on materiality of related party transactions. The Policy on materiality of related party transactions and dealing with related party transactions as approved by the Board may be accessed on the Company's website. Your Directors draw attention of the members to Note 1.B.3 to the financial statement which sets out related party disclosures. PARTICULARS OF EMPLOYEES Pursuant to rule 5(2) & (3) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, there is no such employee meeting the criteria under this rule. Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are provided in the Annual Report. SECRETARIAL AUDIT In terms of Section 204 of the Act and Rules made there under, M/s. K. Arun & Co., Practicing Company Secretary has been appointed as Secretarial Auditors of the Company. The report of the Secretarial Auditors is enclosed as Annexure 2 to this report. The report is self-explanatory and do not call for any further comments. LISTING The Company's shares are listed with BSE having nation widenationwide trading terminal under SEBI (ICDR) regulations, 2009. The Listing fees to the Stock Exchanges for the year 2014-15 have been paid. The address of the said Stock Exchange is as follows: The Bombay Stock Exchange Phiroze Jeejeebhoy Towers, Dalal Street, Mumbai - 400001. MANAGEMENT DISCUSSION AND ANALYSIS Management Discussion and Analysis has been annexed to this report in terms of Listing Agreement in Annexure 3. CORPORATE GOVERNANCE Pursuant to Clause 49 of the Listing Agreements with the Stock Exchanges, a Management Discussion and Analysis, Corporate Governance Report, Auditors' Certificate regarding compliance of conditions of Corporate Governance are made a part of the Annual Report. A note on the Company's corporate sustainability initiatives is also included. DETAILS OF CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO The Company does not engage in any manufacturing activity so there is no consumption of energy. The activities of the company do not involve any technology absorption. BOARD EVALUATION The board of directors has carried out an annual evaluation of its own performance, Board committees and individual directors pursuant to the provisions of the Act and the corporate governance requirements as prescribed by Securities and Exchange Board of India ("SEBI") under Clause 49 of the Listing Agreements ("Clause 49"). The performance of the Board was evaluated by the Board after seeking inputs from all the directors on the basis of the criteria such as the Board composition and structure, effectiveness of board processes, information and functioning, etc. The performance of the committees was evaluated by the board after seeking inputs from the committee members on the basis of the criteria such as the composition of committees, effectiveness of committee meetings, etc. The Board and the Nomination and Remuneration Committee ("NRC") reviewed the performance of the individual directors on the basis of the criteria such as the contribution of the individual director to the Board and committee meetings like preparedness on the issues to be discussed, meaningful and constructive contribution and inputs in meetings, etc. In addition, the Chairman was also evaluated on the key aspects of his role. In a separate meeting of independent Directors, performance of non-independent directors, performance of the board as a whole and performance of the Chairman was evaluated, taking into account the views of executive directors and non-executive directors. The same was discussed in the board meeting that followed the meeting of the independent Directors, at which the performance of the Board, its committees and individual directors was also discussed. CORPORATE SOCIAL RESPONSIBILITY (CSR) Your Company though does not fall under the compulsory compliance of CSR u/s 135 of the Companies Act, 2013, has decided to voluntarily participate in CSR activities. ACKNOWLEDGEMENT The Board of Directors would like to place on record their grateful appreciation of the cooperation and assistance received from the company's customers, shareholders, employees, brokers, dealers, banks, financial institutions and all others associated with the company. Your Directors also thank the Central and State Governments, and other statutory authorities for their continious support. For and on behalf of the Board of Directors Sanjay Kumar Gupta Executive Director Place : Kolkata Date : 29.05.2015 |