Your Directors have pleasure in presenting the Thirty-first Board's Report of MaxFinancial Services Limited ("MFSL" or "the Company") along with theaudited Statement of Accounts for the financial year ended March 31 2019.
The highlights of the standalone financial results of your Company along with previousyear's figures (prepared / restated as per IND-AS) are as under:
| || ||(Rs. in Crore) |
| ||Year ended 31.03.2019 ||Year ended 31.03.2018 |
|Revenue from operations ||316.63 ||263.49 |
|Other income ||1.15 ||0.72 |
|Total income ||317.78 ||264.21 |
|Expenses || || |
|Finance costs ||27.25 ||- |
|Loss on fair value chang- es on derivative financial instruments ||102.61 ||- |
|Impairment on financial instruments || || |
|Employee benefits expenses ||76.40 ||53.74 |
|Depreciation and amortiza- tion expense ||1.75 ||1.92 |
|Legal and professional expenses ||43.51 ||46.31 |
|Other expenses ||16.87 ||18.31 |
|Total expenses ||268.39 ||120.28 |
|Profit before tax ||49.39 ||143.93 |
|Tax expense ||- ||- |
|Profit after tax for the year ||9.39 ||3.93 |
|Other comprehensive income for the year ||(0.30) ||(0.23) |
|Total comprehensive in- come (after tax) ||49.09 ||143.70 |
Your Company is primarily engaged in business of making and holding investments in itssubsidiary Max Life Insurance Company Limited and accordingly in terms of extant RBIguidelines your Company is a Core Investment Company ("CIC") with its financialincome results of your exceeding 50% of its total income and financial assets (investmentin securities etc.) exceeding 50% of the total assets. However it does not meet thecriteria stipulated by RBI for Systemically Important CIC and hence registration underSection 45-IA of RBI Act 1934 is not required.
Net worth of your Company on a standalone basis grew by around 4.2% to Rs 2001 crore asat March 31 2019 as against Rs.1920 crore as at March 31 2018 (restated as per IND-AS).
In accordance with the Companies Act 2013 ("the Act") and applicableaccounting standards the audited consolidated financial this Annual Report.
The subsidiary of your Company Max Life Insurance Company Limited ("MaxLife") delivered another year of strong performance like last year. In FY2019 MaxFinancial Services Limited reported consolidated revenues of Rs. 17538 Crore with anencouraging growth of 17% over the previous year. The Company reported consolidated NetProfit of Rs. 406 Crore 28% lower compared to the previous year largely due to fairvaluation impact as per the recently introduced accounting methodology Ind AS andone-time expenses for pursuing an inorganic opportunity for Max Life.
Max Life achieved a significant Assets under Management (AUM) crossing the Rs. 60000crore mark for the first time. The AUM as at March 31 2019 stood at Rs. 62798 Croregrowing 20% over the previous year. Another benchmark set by Max Life was in the ClaimsPaid Ratio category. Already being an industry leader with the highest claims paid ratioof 98.26% in FY18 as per the Insurance Regulatory and Development Authority of India(IRDAI) Annual Report Max Life further improved the ratio by 48 bps to 98.74% duringFY19. The Market Consistent Embedded value of Max Life as on March 31 2019 was Rs.9257crore up 20% from previous year's Rs 7706 crore.
The highlights of the consolidated financial Company and its subsidiary are as under:
| || ||(Rs. in Crores) |
| ||Year ended 31.03.2019 ||Year ended 31.03.2018 |
|Revenue from operations ||19497.62 ||16337.45 |
|Other income ||3.61 ||1.26 |
|Total income ||19501.23 ||16338.71 |
|Expenses || || |
|Finance costs ||27.30 ||0.11 |
|Impairment on financial instruments ||5.02 ||0.32 |
|Employee benefits expenses ||84.37 ||37.17 |
|Depreciation and amortization expense ||1.75 ||1.92 |
|Legal and professional expenses ||43.51 ||46.31 |
|Policyholders' Expenses of Life Insurance operations ||18826.57 ||15693.64 |
|Other expenses ||31.87 ||29.22 |
|Total expenses ||19020.39 ||15808.69 |
|Profit before tax ||480.84 ||530.02 |
|Tax expense ||64.38 ||88.18 |
|Profit after tax for the year(including Non- controlling interests) ||416.46 ||41.84 |
|Other comprehensive income for the year ||1.31 ||(17.82) |
|Total comprehensive income (after tax) ||417.77 ||424.02 |
|Total comprehensive income attributable to || || |
|Owners of the company ||263.41 ||273.72 |
|Non-controlling interests ||154.36 ||150.30 |
Material Changes affecting Financial Position
There are no material changes and commitments affecting the financial position of theCompany which has occurred between the end of the financial year of the Company i.e. March31 2019 and the date of the Directors' report i.e. May 28 2019.
Subsidiaries Associates & Joint Venture companies
As on March 31 2019 your Company had only 1 (one) subsidiary i.e. Max Life InsuranceCompany Limited ("Max Life"). There were no other associate or joint venturecompanies. The basic details of subsidiary form part of Form MGT 9 attached to this reportas Annexure - 1.
During the year under review your Company acquired 198787368 equity shares of Rs.10/- each in Max Life. Accordingly the equity stake of the Company in Max Life increasedto 71.79% as at March 31 2019.
A report on the performance and financial position of Life included in theconsolidated financial presented in Form AOC 1 is attached to this report as Annexure -2 as per Rule 8(1) of the Companies (Accounts) Rules 2014.
Further a detailed update on the business achievements of Max Life being the keyoperating subsidiary is furnished as part of Management Discussion and Analysis sectionwhich forms part of this Annual Report.
As provided in Section 136 of the Companies Act 2013 the financial statements andother documents of the subsidiary company Max Life Insurance Company Limited are not beingattached with the financial statements of the Company. The complete set of financialstatements including financial statements of the subsidiary of the Company is available onwebsite of the Company at www. maxfinancialservices.com. These documents will also beavailable for inspection during business hours at the registered office of the Company andshall also be made available to the shareholders of the Company in hard copy on demand.
Your Directors have not recommended any dividend for the financial year 2018-19.
The Board of Directors of your Company has approved a Dividend Distribution Policy inline with Regulation 43A of Securities and Exchange Board of India (Listing Obligationsand Disclosure Requirements) Regulations 2015 ("Listing Regulations") and thesaid policy is attached to this report as Annexure - 3. The said policy is alsoavailable on website of the Company at www.maxfinancialservices.com/shareholder-information.
Transfer to Reserves
The Company has not transferred any amount to reserves during the year under review.
The Authorized share capital of the Company as on March 31 2019 remains unchanged atRs. 600000000/- (Rupees Sixty Crores only) comprising of 300000000 equity shares ofRs. 2/- each.
During the year under review 1001752 equity shares of Rs.2/- each were allotted tothe option-holders under the Max Employee Stock Plan 2003' (2003 Plan').
The Paid up capital of the Company as on March 31 2019 was Rs. 538771558/- (RupeesFifty three crores eighty seven lakhs seventy one thousand five hundred fifty comprisingof 269385779 equity shares of Rs. 2/- each.
Further after end of the financial year on March 31 2019 and till the date of thisreport i.e. May 28 2019 your Company had allotted 12958 equity shares of Rs.2/- each tothe option-holders under the aforesaid 2003 Plan.
Employee Stock Option Plan
Your Company has an employee stock option plan viz. Max Employee Stock Plan 2003'(2003 Plan') in place. The 2003 Plan provides for grant of stock options aggregatingnot more than 5% of number of issued equity shares of the Company to eligible employeesand Directors of the Company. The 2003 Plan is administered by the Nomination andRemuneration Committee constituted by the Board of Directors of the Company. Details ofoptions granted up to March 31 2019 and other disclosures as required under SEBI (ShareBased Employee Benefits) Regulations 2014 are enclosed to this report as Annexure - 4.
The statutory auditors of your Company M/s Deloitte Haskins & Sells LLP CharteredAccountants have time-to-time certified that the Employee Stock Option Scheme of theCompany has been implemented in accordance with the applicable SEBI Regulations and theresolutions passed by the Members in this regard. A certificate to this effect shall alsobe placed before the members at the ensuing Annual General Meeting.
During the year under review the Nomination and Remuneration Committee of Directors ofthe Company ("NRC") granted 44448 phantom stock units to Mr. Mohit TalwarManaging Director of the Company and 129275 phantom stock units to Mr. Rahul Khoslaerstwhile Executive President which vest(ed) in a graded manner and settled in cash.Further the NRC granted 115420 Stock Options to Mr. Mohit Talwar Managing Directorwith effect from April 1 2019 which will vest with him in a graded manner.
As on date of this report the Board of Directors of your Company comprised of 10 (ten)members with 1 (one) Executive Director and 9 (nine) Non-Executive Directors of which 5(five) are independent. Mr. Analjit Singh (DIN: 00029641) Chairman of the Company is aNon Executive Promoter Director.
Mr. Rajesh Khanna a non-executive independent director of the Company resigned fromthe Board of the Company effective February 11 2019. Your Directors place their deepappreciation for the valuable contributions made by Mr. Rajesh Khanna during hisassociation with the Company.
Mr. Jai Arya (DIN: 0008270093) has been appointed as an additional director innon-executive independent capacity with effect from November 14 2018. Further SirCharles Richard Vernon Stagg (DIN: 07176980) has been appointed as an additional directorin non-executive independent capacity on the Board of Directors of the Company witheffect from February 11 2019.
The above directors were appointed as additional directors and therefore their term ofoffice expires on the date of ensuing Annual General Meeting. The Company is in receipt ofnotices under Section 160 of the Companies Act 2013 from members proposing thecandidature of these directors for being appointed as directors of the Company. The Boardof Directors recommend to the shareholders for their appointment as Directors of theCompany. As per the provisions of the Companies Act 2013 Independent Directors arerequired to be appointed for a term of five consecutive years and shall not be liable toretire by rotation. Accordingly resolutions proposing appointment of Mr. Jai Arya and SirCharles Richard Vernon Stagg as Independent Directors of the Company form part of thenotice of the ensuing Annual General Meeting.
Mr. Aman Mehta was appointed by the Shareholders as an Independent Director of theCompany for a period of five years with effect from September 30 2014. The five yeartenure of Mr. Aman Mehta as Independent Director of the Company shall be completed onSeptember 29 2019. Similarly Mr. Dinesh Kumar Mittal was appointed as an IndependentDirector of the Company for a period of five years with effect from January 1 2015. Thefive year tenure of Mr. Mittal as Independent Director of the Company shall be completedon December 31 2019.
In accordance with the Section 149(10) of the Companies Act 2013 and the SEBI ListingRegulations an Independent Director shall hold office for a term up to 5 (five) years onthe Board of the Company and shall be eligible for re-appointment for another term of upto five consecutive years on passing of a special resolution by the Company.
Further as per SEBI Listing regulations no listed entity shall appoint a person orcontinue the directorship of any person as a non-executive director who has attained theage of 75 years unless a special resolution is passed to that effect along with ajustification in the explanatory statement annexed to the notice for such motion.
Your directors recommend the re-appointment of Mr. Aman Mehta as Independent Directoron the Board of the Company for another term of five years despite his attaining of 75years during this new term. Your directors also recommend the re-appointment of Mr. DineshKumar Mittal as an Independent Director on the Board of the Company for another term offive years.
Further in terms of Section 152 of the Act and the Articles of Association of theCompany Mr. Ashwani Windlass and Mr. Sanjay Nayar are liable to retire by rotation at theensuing Annual General Meeting. Mr. Ashwani Windlass and Mr. Sanjay Nayar being eligiblehave offered themselves for reappointment at the ensuing Annual General Meeting.
Brief profiles of aforesaid directors are annexed to the Notice convening the AnnualGeneral Meeting.
The Board met eight times during the financial 19:
|S.No. ||Date ||Board Strength ||No. of Directors present |
|1 ||April 9 2018 ||7 ||5 |
|2 ||May 25 2018 ||8 ||5 |
|3 ||July 23 2018 ||9 ||8 |
|4 ||August 6 2018 ||9 ||5 |
|5 ||September 28 2018 ||9 ||4 |
|6 ||November 14 2018 ||10 ||7 |
|7. ||February 11 2019 ||11* ||10 |
|8 ||March 22 2019 ||10 ||6 |
*Including one director appointed in the meeting
The details regarding number of meetings attended by each Director during the yearunder review have been furnished in the Corporate Governance Report attached as part ofthis Annual Report.
Statement of Declaration by Independent Directors
In terms of Section 149(6) of the Act and Regulation 25 of consecutive SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 the following Non-ExecutiveDirectors are categorized as Independent Directors of the Company: Mrs. Naina Lal Kidwai(DIN: 00017806) Mr. Aman Mehta (DIN: 00009364) Mr. Dinesh Kumar Mittal (DIN: 00040000)Mr. Jai Arya (DIN: 0008270093) and Sir Charles Richard Vernon Stagg (DIN: 07176980).
The Company has received declaration of independence from all the above mentionedIndependent Directors as per Section 149(7) of the Act confirming that they continue tomeet the criteria of independence.
Committees of the Board of Directors
The Company has the following committees which have been established as a part of thebest corporate governance practices and are in compliance with the requirements of therelevant provisions of applicable laws and statutes. A detailed note on the same isprovided under the Corporate Governance Report forming part of this Annual Report.
1. Audit Committee:
The Audit Committee met five times during the financial year 2018-19 viz. on May 252018 August 6 2018 November 14 2018 February 11 2019 and March 20 2019. TheCommittee as on March 31 2019 comprised of Mr. D.K. Mittal (Chairman) Mr. Aman MehtaMrs. Naina Lal Kidwai and Mr. Mohit Talwar. year 2018- All the recommendations by theAudit Committee were accepted by the Board.
2. Nomination and Remuneration Committee:
The Nomination and Remuneration Committee met seven times during the financial year2018-19 viz. on May 25 2018 July 23 2018 August 6 2018 November 14 2018 December21 2018 February 11 2019 and March 20 2019. The Committee as on March 31 2019comprised of Mr. Aman Mehta Mr. Ashwani Windlass and Mrs. Naina Lal Kidwai.
3. Investment & Finance Committee:
The Committee met six times during the financial year 2018-19 viz. on April 9 2018May 25 2018 August 6 2018 November 14 2018 February 11 2019 and March 22 2019. TheCommittee as on March 31 2019 comprised of Mr. Ashwani Windlass (Chairman) Mr. D.K.Mittal and Mr. Mohit Talwar.
4. Corporate Social Responsibility Committee:
The Committee met once during the financial year 2018-19 viz. on March 22 2019. TheCommittee as on March 31 2019 comprised of Mr. Aman Mehta Mr. Ashwani Windlass and Mr.D.K. Mittal.
5. Stakeholders' Relationship Committee:
The Committee met six times during the financial year 2018-19 viz. on May 25 2018August 6 2018 November 14 2018 December 24 2018 February 11 2019 and March 222019. The Committee as on March 31 2019 comprised of Mr. Ashwani Windlass (Chairman)Mr. D.K. Mittal and Mr. Mohit Talwar.
6. Risk & Compliance Review Committee:
The Committee met once during the financial 2018-19 viz. on March 22 2019. TheCommittee as on March 31 2019 comprised of Mr. Aman Mehta Mr. Ashwani Windlass and Mr.D.K. Mittal.
7. Independent Directors:
The Board of Directors included 5 Independent Directors as on March 31 2019 viz. Mr.Am an Mehta Mr. Dinesh Kumar Mittal Mrs. Naina Lal Kidwai Mr. Jai Arya and Sir CharlesRichard Vernon Stagg. The Independent Directors had a separate meeting on August 6 2018during the financial year 2018-19. The meeting was conducted to:
(a) Review the performance of non-independent Directors and the Board as a whole;
(b) Review the performance of the Chairperson of the Company taking into account theviews of executive Directors and non-executive Directors; and
(c) Assess the quality quantity and timeliness of flow of information between theCompany management and the Board that is necessary for the Board to effectively andreasonably perform their duties.
Performance Evaluation of the Board
As per the requirements of the Act and SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 formal Annual Evaluation process has been carried out forevaluating the performance of the Board the Committees of the Board and the IndividualDirectors including Chairperson.
The performance evaluation was carried out by obtaining feedback from all Directorsthrough a confidential online survey mechanism through Diligent Boards a securedelectronic medium through which the Company interfaces with its Directors. The outcome ofthis performance evaluation was placed before the meetings of the Nomination andRemuneration Committee and Independent Directors' and the Board meeting for theconsideration of the members.
The review concluded by affirming that the Board as a whole as well as its Chairmanall of its members individually and the Committees of the Board continued to displaycommitment to good governance by ensuring a constant year improvement of processes andprocedures and contributed their best in overall growth of the organization.
Key Managerial Personnel
As on the date of this Report Mr. Mohit Talwar - Managing Director Mrs. SujathaRatnam - Chief Financial Officer and Mr. Sandeep Pathak - Company Secretary are the KeyManagerial Personnel ("KMP") of the Company pursuant to the provisions of theCompanies Act 2013.
Mrs. Sujatha Ratnam has tendered her resignation and she will be continuing as ChiefFinancial business hours of June 30 2019.
We are primarily engaged in growing and nurturing business investment as a holdingCompany in the business of life insurance and providing management advisory services togroup companies. The remuneration of our employees is competitive with the market andrewards high performers across levels. The remuneration to Directors Key ManagerialPersonnel and Senior Management are a balance between fixed incentive pay and long-termequity program based on the performance objectives appropriate to the working of theCompany and its goals and is reviewed periodically and approved by the Nomination andRemuneration Committee of the Board.
Details pursuant to Section 197(12) of the Act read with the Rule 5(1) and Rule 5(2)of Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 areattached to this report as Annexure - 5A and Annexure - 5B.
As on March 31 2019 there were 12 employees on the rolls of the Company.
Nomination and Remuneration Policy
In adherence to the provisions of Sections 134(3)(e) and 178(1) & (3) of the Actthe Board of Directors on the recommendation of the Nomination and Remuneration Committeehad approved a policy on Directors' appointment and remuneration. The said policy includesterms of appointment criteria for determining qualifications performance evaluation andother matters. Copy of the same is available on the website of the Company at www.maxfinancialservices.com/shareholder-information.
Corporate Social Responsibility ("CSR")
The Board of Directors of your Company has constituted a Corporate SocialResponsibility Committee and adopted a CSR policy as approved by the CSR Committee copyof which is available on the website of the Company atwww.maxfinancialservices.com/shareholder-information. The CSR Policy comprises Vision andMission Statement philosophy and objectives. It also explains the governance structurealong with clarity on roles and responsibilities.
In terms of Section 135 of the Act read with Companies (Corporate Social ResponsibilityPolicy) Rules 2014 all Companies meeting the prescribed threshold criteria i.e. networth of Rs. 500 crores or more or turnover of Rs. 1000 crores or more or net profits ofin any financial year are required to spend at least 2% of the average net profits of theCompany for immediately preceding 3 financial years.
As per rule 2(f) of the Companies (Corporate Social Responsibility Policy) Rules 2014any dividend received from other companies in India which are already covered andcomplying with the provisions of the CSR shall not be included for the purposes ofcomputation of net profits' for a company.
As Max Life Insurance Company Limited ("Max Life") from whom the Company hasbeen receiving dividend from time to time discharged its CSR responsibilities for thefinancial year 2018 19 the dividend income received by the Company will be excluded forthe purposes of computation of its net profits'. After excluding the dividend incomereceived from Max Life the Company does not have net profits computed as per the CSRrules. Therefore it is not mandatorily required for the Company to spend on CorporateSocial Responsibility for the financial year 2018-19. However the Company has voluntarilygiven certain donations.
Business Responsibility Report
In terms of Clause 34(2)(f) of SEBI (Listing Obligations & Disclosure Requirements)Regulations 2015 a Business Responsibility Report on various initiatives taken by theCompany is enclosed to this report as Annexure - 6.
Policy for Prevention of Sexual Harassment
Your Company has requisite policy for Prevention of Sexual Harassment which isavailable on the website of the Company atwww.maxfinancialservices.com/shareholder-information. The comprehensive policy ensuresgender equality and the right to work with dignity. Your company has complied withprovisions relating to the constitution of Internal Complaints Committee under the SexualHarassment of Women at Workplace (Prevention Prohibition and Redressal) Act 2013. Nocase was reported to the Committee during the year under review.
Loans Guarantees or investments in Securities
The details of loans given and investments made by the company pursuant to theprovisions of Section 186 of the Act are provided in Note nos. 7 and 8 respectively tothe standalone financial statements of the Company for the FY .5croreor more 2018-19.
Management Discussion & Analysis
In terms of Regulation 34 of SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 a review of the performance of the Company including those of yourCompany's subsidiary is provided in the Management Discussion & Analysis sectionwhich forms part of this Annual Report.
Report on Corporate Governance
The Company has complied with all the mandatory requirements of Corporate Governancespecified by the Securities and Exchange Board of India through Part C of Schedule V ofSEBI (Listing Obligations and Disclosure Requirements) Regulations 2015. As required bythe said Clause a separate Report on Corporate Governance forms part of the Annual Reportof the Company.
A certificate from M/s Practicing Company Secretaries regarding compliance with theconditions of Corporate Governance pursuant to Part E of Schedule V of SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 and a the Managing Director andChief Financial Officer on compliance of Part B of Schedule II of SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 forms part of the CorporateGovernance Report.
Copies of various policies adopted by the Company are available on the website of theCompany at www. maxfinancialservices.com/shareholder-information.
Statutory Auditors and Auditors' Report
Pursuant to Sections 139 & 142 of the Act M/s Deloitte Haskins and Sells LLPChartered Accountants (Firm Registration Number: 117366W/W-100018) were appointed as theStatutory Auditors of the Company at 27th Annual General Meeting("AGM") held on September 23 2015 for a period of five years i.e. till theconclusion of the 32nd AGM of the Company to be held in the year 2020. Pursuant to anamendment in Section 139 of the Companies Act 2013 effective May 7 2018 there is norequirement the of annual ratification same is not being put up for shareholders' approvalin the ensuing AGM.
There are no audit qualifications reservations disclaimers or adverse remarks orreporting of fraud in the Statutory Auditors Report given by M/s Deloitte Haskins andSells LLP Statutory Auditors of the Company for the financial year 2018-19 as annexed inthis Annual Report.
Secretarial Auditors and Secretarial Audit Report
Pursuant to Section 204 of the Act your Company had appointed M/s ChandrasekaranAssociates Practicing Company Secretaries New Delhi as its Secretarial Auditors toconduct the secretarial audit of the Company for the FY 2018-19. The Company provided allassistance and facilities to the Secretarial Auditor for conducting their audit. TheReport of Secretarial Auditor for the FY 2018-19 is annexed to this report as Annexure- 7.
There are no audit qualifications reservations disclaimers or adverse remarks in thesaid Secretarial Audit Report except a remark on penalty paid by the Company to stockexchanges.
The Company was in receipt of letters from stock exchanges in respect of non-complianceof Regulation 17 of SEBI (LODR) Regulations 2015 which required the Board of Directors ofa Company to have equal number of Independent and from Non- Independent Directors in casethe Company is having a promoter chairman. The said requirement had arisen for the Companyon the appointment of Mr. Analjit Singh as the Chairman of the Board of Directors of theCompany on July 23 2018 and was subsequently complied in the Board meeting held onNovember 14 2018. The Company had represented to NSE and BSE contending that the saidregulation was silent on the timelines for compliance of the requirement and a reasonabletime was required for identification and appointment of Independent Directors. Also theappointment of promoter director as Chairman was on account of provision of Articles ofthe Company. However both BSE and NSE had levied penalty of Rs 570000/- each for periodJuly 23 2018 up to November 13 2018 which was paid UNDER PROTEST with a request toconsider the special circumstances of the matter and waive off the penalty. NSE hasformally communicated to the Company that such waiver cannot be granted.
Your Company complies with the applicable Secretarial Standards issued by the Instituteof Company Secretaries of India and notified by Ministry of Corporate Affairs.
The Company follows a robust Internal Audit process and audits are conducted on aregular basis throughout the year as per agreed audit plan. During the year underreview M/s MGC and KNAV Global Risk Advisory LLP were reappointed as Internal Auditorsfor conducting the Internal Audit of key functions and assessment of Internal FinancialControls etc.
Internal Financial Controls
The Company has in place adequate internal financial controls with reference tofinancial statements. During the year such controls were tested and no reportablematerial weaknesses in the design or operation were observed. The Management hasreviewed the existence of various risk-based controls in the Company and also tested thekey controls towards assurance for compliance for the present fiscal.
In the opinion of the Board the existing internal control framework is adequate andcommensurate with the size and nature of the business of the Company. Further the testingof adequacy of internal financial reporting has been also been carried out independentlyby the Statutory Auditors as mandated under the provisions of the Act.
During the year under review there were no instances of fraud reported by the auditorsto the Audit Committee or the Board of Directors.
Your Company considers that risk is an integral part of its business and therefore ittakes proper steps to manage all risks in a proactive and efficient has formed a Risk andCompliance Review Committee to identify the risks impacting the business formulatestrategies/ policies aimed at risk mitigation as part of risk management. Further a coreteam comprising of senior management has also been formed to identify and assess keyrisks risk appetite tolerance levels and formulate strategies for mitigation of risksidentified in consultation with process owners.
The Company has adopted a Risk Management policy whereby risks are broadlycategorized into Strategic Operational Compliance and Financial & Reporting Risks.The Policy outlines the parameters of identification assessment monitoring andmitigation of various risks which are key to the business performance.
There are no risks which in the opinion of the Board threaten the very existence ofyour Company. However some of the challenges / risks faced by its subsidiary have beendealt in detail in the Management Discussion and Analysis section of said subsidiaryforming part of this Annual Report.
The Company has a vigil mechanism pursuant to which a Whistle Blower Policy has beenadopted and is in place. The Policy ensures that strict confidentiality is maintainedwhilst dealing with concerns raised and also that no discrimination will be meted out toany person for a genuinely raised concern in respect of any unethical and improperpractices fraud or violation of Company's Code of Conduct.
The said Policy covering all employees Directors and other persons having associationwith the Company is hosted on the Company's website at www.maxfinancialservices.com/shareholder-information. A brief note on Vigil Mechanism / Whistle Blower Policy is alsoprovided in the Report on controls over financial Corporate Governance which forms partof this Annual Report.
Your Company is not required to maintain cost records as specifiedby the CentralGovernment under Section 148(1) of the Act.
During the year under review the Company has not accepted or renewed any deposits fromthe public.
Contracts or Arrangements with Related Parties
All transactions entered by the Company during the financialyear with related partieswere in the ordinary course of business and on an arm's length basis except an ongoingtransaction with Max Life Insurance Company Limited for allowing usage of trademarkswithout any consideration and an approval has already been obtained from shareholders ofthe Company in 2016 for the said transaction.
There is no material contract or arrangement in terms of SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015. Form AOC-2 furnishing particulars of contractsor arrangements entered into by the Company with related parties referred in Section188(1) of the Companies Act 2013 is annexed to this report as Annexure - 8.
The details of all the Related Party Transactions form part of Note no. 31 to thestandalone financial statements attached to this Annual Report.
The Policy on materiality of related party transactions and dealing with related partytransactions as approved by the Board may be accessed on the Company's website at www.maxfinancialservices.com/shareholder-information.
Particulars of Conservation Of Energy Technology Absorption and Foreign ExchangeEarnings & Outgo
The information on conservation of energy technology absorption and foreign exchangeearnings & outgo as stipulated under Section 134(3)(m) of the Act read with Companies(Accounts) Rules 2014 is as follows:
a) Conservation of Energy
(i) the steps taken or impact on conservation of energy: Regular efforts are made toconserve the energy through various means such as use of low energy consuming lightingsetc.
(ii) the steps taken by the Company for using alternate sources of energy: Since yourCompany is not an energy intensive unit utilization of alternate source of energy may notbe feasible.
(iii) capital investment on energy conservation equipment : Nil
b) Technology Absorption
Your Company is not engaged in manufacturing activities therefore there is no specificinformation to be furnished in this regard.
There was no expenditure incurred on Research and Development during the period underreview.
c) Foreign Exchange Earnings and Outgo
The foreign exchange earnings and outgo are given below:
|Total Foreign Exchange earned ||: Nil |
|Total Foreign Exchange used ||: Rs. 448.69 Lacs |
Extracts of Annual Return
Pursuant to Section 134(3)(a) and Section 92(3) of the er based Act read with Rule 12of the Companies (Management and Administration) Rules 2014 the extracts of the AnnualReturn as at March 31 2019 forms part of this report as Annexure - 1. writpetition
Directors' Responsibility Statement
Pursuant to Section 134(5) of the Companies Act 2013 it is hereby confirmed that:
(a) In the preparation of the annual accounts the applicable accounting standards hadbeen followed along with proper explanation relating to material departures if any;
(b) The Directors had selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company at the end of the financial year and ofthe profit of the Company for that period;
(c) The Directors had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;
(d) The Directors had prepared the annual accounts on a going concern basis;
(e) The Directors had laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and were operatingeffectively; and
(f) The Directors had devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS
During the year under review there were no such significant and material orders passedby the regulators or courts or tribunals which could impact the going concern status andcompany's operations in future.
During the year 2006 the Ministry of Corporate Affairs had carried out an inspectionwherein certain technical offences were alleged by the Inspection on which prosecutionproceedings were initiated against the Company its erstwhile Whole-time Directors and theCompany Secretary at Chief Judicial Magistrate against Chandigarh. The Company had filedthe prosecution proceedings with the Hon'ble High Court of Punjab and Haryana. The Hon'bleHigh Court had stayed the proceedings and listed the case for arguments which concludedin 2019.
The Hon'ble High Court passed the following judgements in the three matters on 5 March2019:
(a) Non-display of registered office address at its corporate office in a prominentmanner:
Decided in favour of the Company with no costs.
(b) Providing interest free loans to certain group companies:
A nominal compounding fee of INR 50000 had been levied on the Company and the matterwas disposed off. The said compounding fee has been paid by the Company in March 2019.
(c) Non-charging of interest on the excess remuneration received and refunded by formerexecutive directors:
The Hon'ble High Court directed the former executive directors to pay simple interest @12 per cent per annum for the period such excess remuneration was retained by them. TheCompany has received the interest amount from the former executive directors aggregatingRs 3189492/-. In case of one such director the number of days mentioned in the orderwere not correct and the Company has filed application for rectification of the same.
TRANSFER OF UNCLAIMED DIVIDEND AND SHARES TO THE INVESTOR EDUCATION AND PROTECTION FUND
The Company had paid interim dividend in FY2012-13 and the unpaid dividend wastransferred to a separate account in same year within prescribed time. After completion of7 years the unpaid amounts still lying in the said account shall be transferred to theInvestor Education and Protection Fund along with respective shares on which suchdividend remains unpaid.
Regulation 39(4) of the SEBI (Listing Obligations & Disclosure Requirements)Regulations 2015 inter alia requires every listed company to comply with certainprocedure in respect of shares issued by it in physical form pursuant to a public issueor any other issue and which remained unclaimed for any reason whatsoever.
The face value of the shares of the Company was split from Rs. 10/- each to Rs. 2/-each in the year 2007. Certain share certificates were returned undelivered and were lyingunclaimed. The Company had sent necessary reminders to concerned shareholders andsubsequently such shares were transferred to the Unclaimed Suspense Account.
The voting rights on the equity shares lying in the said Unclaimed Suspense Accountshall remain frozen till the rightful owner claims such shares. Further all corporatebenefits in terms of securities accruing on the said unclaimed shares viz. bonus sharessplit etc. if any shall also be credited to the said Unclaimed Suspense Account.
The concerned shareholder(s) are requested to write to the Registrar and Share TransferAgent to claim the said equity shares. On receipt of such claim additional documents maybe called for and subject to its receipt and verification the said shares lying in thesaid Unclaimed Suspense Account shall be transferred to the depository account provided bythe concerned shareholder(s) or the physical share certificate shall be delivered to theregistered address of the concerned shareholder(s).
The details of Equity Shares held in the Unclaimed Suspense Account are as follows:
|S. No. ||Particulars ||No. of Shareholders ||No. of Equity Shares |
|1. ||Aggregate number of shareholders and the outstanding shares originally lying in the Unclaimed Suspense Account (as at beginning of the financial year i.e. April 1 2018) ||2191 ||471060 |
|2. ||Number of shareholders who approached listed entity for transfer of shares from the Unclaimed Suspense Account during the year ||12 ||3265 |
|3. ||Number of shareholders to whom shares were transferred from the Un- claimed Suspense Ac- count during the year ||14* ||4165 |
|4. ||Aggregate number of shareholders and the outstanding shares in the Suspense Account (as at end of the financial year i.e. March 31 2019) ||2177 ||466895 |
*Two cases comprising 900 shares were transferred from the Unclaimed Suspense Accountin physical form in April 2018 corresponding requests having been received in FY2017-18.
Till date of this report the Company has approved overall 26 such claims fromshareholders comprising 8415 shares for transfer back of their shareholding from theUnclaimed Suspense Account in demat / physical form.
Statements in this Report particularly those which relate to Management Discussion andAnalysis describing the Company's objectives projections estimates and expectations mayconstitute "forward looking statements" within the meaning of applicable lawsand regulations.
Actual results might differ materially from those either expressed or implied in thestatement depending on the circumstances.
Your Directors would like to place on record their appreciation of the contributionmade by its management and its employees who through their competence and commitment haveenabled the Company to achieve impressive growth. Your Directors acknowledge with thanksthe co-operation and assistance received from various agencies of the Central and StateGovernments Financial Institutions and Banks Shareholders Joint Venture partners andall other business associates.
| ||On behalf of the Board of Directors || |
| ||Max Financial Services limited || |
| ||Sd/- ||Sd/- |
|Place: New Delhi ||Mohit Talwar ||Sahil Vachani |
|Date: May 28 2019 ||Managing Director ||Director |
| ||DIN: 02394694 ||DIN: 00761695 |