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Upsurge Investment & Finance Ltd.

BSE: 531390 Sector: Financials
NSE: N.A. ISIN Code: INE890B01014
BSE 00:00 | 24 Apr Upsurge Investment & Finance Ltd
NSE 05:30 | 01 Jan Upsurge Investment & Finance Ltd
OPEN 12.78
PREVIOUS CLOSE 13.45
VOLUME 6
52-Week high 20.35
52-Week low 9.20
P/E 20.95
Mkt Cap.(Rs cr) 19
Buy Price 12.94
Buy Qty 9.00
Sell Price 12.94
Sell Qty 53.00
OPEN 12.78
CLOSE 13.45
VOLUME 6
52-Week high 20.35
52-Week low 9.20
P/E 20.95
Mkt Cap.(Rs cr) 19
Buy Price 12.94
Buy Qty 9.00
Sell Price 12.94
Sell Qty 53.00

Upsurge Investment & Finance Ltd. (UPSURGEINVEST) - Director Report


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Company director report

To

The Members

Your Directors have pleasure in presenting their Twenty Fifth (25th) AnnualReport on the business and operations of the company along with the Audited Financialaccounts for the Financial Year ended 31st March 2019.

FINANCIAL RESULTS

(Rs. In Lacs)

Particulars Year Ended Year Ended
31st March 19 31st March 18
Total Income 2476.80 3957.51
Profit before Depreciation and Tax 46.83 384.28
Less: Depreciation 2.56 2.70
Profit before Tax 44.27 381.58
Less: Provision for Income Tax 12.46 77.09
Profit after Tax 31.81 304.49
Balance brought forward from previous years 191.22 (36.95)
Transfer to Statutory Reserve (8.86) (76.32)
Dividend Including dividend tax Paid (91.34) -
Balance carried to Balance Sheet 122.83 191.22

REVIEW OF OPERATION

During the financial year under review total income of the Company is Rs. 2476.80 lacsas compared to last year's total income of Rs. 3957.51 lacs. Profit after tax decreasedfrom Rs. 304.49 lacs in the previous year to Rs. 31.81 lacs (before other comprehensiveincome) during the year.

BUSINESS REVIEW

Upsurge Investment & Finance Limited ("The Company") is a non-bankingfinancial company that fulfills aspirations of its Individual and Corporate clients bysatisfying their financial needs. We are engaged in Primary and Secondary capital marketactivities and provide a wide range of services including: -

Corporate Finance
SME Finance
Loans against Shares and securities

Our range of offerings allows our clients to tap opportunities and execute valuecreating transactions. While most of our existing ventures are largely focused oncorporate clients.

DIVIDEND

The Company had paid a Final Dividend of Rs. 0.50 per share on 15152400 EquityShares of 10/- fully paid up (5.00%) aggregating to 7576200/- (Rupees Seventy Five LakhsSeventy Six Thousand Two Hundred only) for the FY 2017-18. The same was declared by Boardof Directors in their meeting held on 22nd May 2018 which was subsequentlyapproved by members in the 24th Annual general meeting held on 28thSeptember 2018. The said dividend was paid on 16th October 2018.

An amount of 1557667/- was paid as dividend distribution tax on the dividend.

During the year under review to conserve the funds for future business growth thedirectors do not recommend any dividend for the year ended 31st March 2019.

MANAGEMENT DISCUSSION ANALYSIS REPORT

The Management Discussion and Analysis forms an integral part of this Report and givesdetails of the overall industry structure economic developments performance and state ofaffairs of your Company's various businesses internal controls and their adequacy riskmanagement systems and other material developments during the financial year 2018-19.

A. INDUSTRY STRUCTURE & DEVELOPMENT

The global economy slowed to 3.6% in 2018 (Source: IMF) from 3.8% in 2017 as theEurozone economies weakened crude prices became volatile commodity prices remainedsubdued uncertainty around Brexit persisted and the ongoing US-China trade tensionsheightened the rhetoric around protectionism. The US witnessed strong economic growth of2.9% in 2018 (2.2% in 2017) owing to strengthening dollar neutral unemployment andminimal inflation. Growth in the Eurozone dipped to 1.8% (2.4% in 2017) due to sluggishdomestic demand while China remained squeezed between issues at home and abroad. The UShowever bucked the trend growing at 2.9% in 2018 (2.2% in 2017) on the back of astronger US dollar neutral unemployment and low inflation.

As of 27th March 2019 there were approximately 10000 NBFCs registered withReserve Bank of India (RBI) of which 89 deposit accepting NBFC. The primary activities ofNBFCs are providing consumer credit including automobile finance home finance andconsumer durable products finance wholesale finance products such as bills discountingfor small and medium companies and infrastructure finance and fee-based services such asinvestment banking and underwriting. NBFCs have carved niche business areas for themwithin the financial sector space and are also popular for providing customized products.For instance your Company providing finance for re-possessed vehicles at the doorstep ofthe customer. NBFCs bring the much-needed diversity to the financial sector. NBFCs play animportant role to promote financial inclusion agenda of the government by catering to thefinancial needs of people belonging to weaker section of the society.

The crisis faced by a large prominent financial institution of the country in Septemberled to drying-up bank lending thereby forcing NBFCs to scout for alternate sources offunding. In February 2019 Reserve Bank of India (RBI) had eased risk weight norms toincrease credit flow to NBFCs. The banks are now required to assign differentialrisk-weights to their exposures to NBFCs based on ratings assigned by credit ratingagencies as against the existing practice of a uniform risk weight of 100%.

The move is aimed at not only freeing up capital for banks for further lending but alsoslash borrowing costs for well-rated NBFCs which have been grappling with a systemicliquidity crisis triggered by a series of defaults by a large prominent financialinstitution and its subsidiaries.

In order to provide NBFCs with greater operational flexibility the RBI has merged thecategories of NBFCs classified as asset finance companies investment companies and loancompanies into a new category called NBFC - Investment and Credit Company("NBFC-ICC").

B. OPPORTUNITIES & THREATS

Opportunities

• Demographic changes.
• Large untapped rural and urban markets.
• Use of digital solutions for business/collections.
• Partnerships with private financiers for enhancement of reach without significant investments
• Penetration into rural markets for financing
• On boarding customers on technology platform
Threats
• High cost of funds.
• Rising Non-performing Assets (NPAs).
• Restrictions on deposit taking NBFCs.
• Competition from other NBFCs and small banks.
• Growing number of Fintech companies.
• Inadequate availability of bank finance and upsurge in borrowing cost
• External risks associated with liquidity stress political uncertainties fiscal slippage concerns etc.

C. RISKS AND CONCERNS

The cash crunch is in stark contrast to the banking sector which has not faced significant liquidity pressure or deposit withdrawals despite asset-quality and capital weaknesses.
NBFC's liquidity is sensitive to market sentiment as their business models rely on short-term wholesale funding which can dry up fast if market sentiment turns negative it said. Fitch further said funding models of housing finance companies and loan companies which have become increasingly reliant on short-term funding to fund longer-term assets have been particularly affected by the liquidity squeeze.
The sector pressures have led India's top NBFCs to explore other sources of funding and to start positioning themselves to tap the US dollar bond market.
The funding squeeze has contributed to higher funding costs and a slowdown in loan growth for NBFC sector Fitch said. NBFCs are an important channel for extending credit to the wider economy given their wide distribution networks which are often more extensive across rural India than those of banks
The NBFC sector's role as a credit provider became outsized as the Indian banking system was forced to deal with its weak asset quality Fitch added. Banks particularly public-sector banks were undercapitalized and had limited capacity to lend more. NBFCs now account for nearly 20 per cent of credit to the economy compared with about 15 per cent five years ago.
During the year Non- Banking Finance Companies (NBFCs) faced several challenges as banks curtailed lending to these institutions

D. OUTLOOK

The International Monetary Fund (IMF) expects the global economy to slow down further in 2019 before stabilizing at 3.6% in 2020. This is mainly due to significant revisions in the eurozone especially in Germany where production difficulties in the auto sector and lower external demand will weigh on growth in 2019. In Italy too sovereign and financial risks are hampering economic growth.
Additionally there is increasing uncertainty due to trade protectionism and Brexit. However further monetary policy adaptation and policy-easing measures by China would account for a soft landing.
India has a lot of un-banked and under-banked consumers and businesses. Hence there is a lot of potential for
NBFCs which can still be tapped. The NBFCs and Housing Finance Companies (HFCs) are being recognized as being vital for growth. Regardless of the recent panic NBFCs are here to stay and play an important role in economic growth and financial inclusion. Given the crisis and despite concerns surrounding the sector NBFCs with robust business models strong liquidity mechanisms governance and risk management standards are well positioned to take benefit of the market opportunity.

E. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

Internal Control measures and systems are established to ensure the correctness of thetransactions and safe guarding of the assets. Considering the size and nature ofactivities the company has adequate internal control system covering both accounting andadministrative control. In addition the internal audit is carried out periodically. Themanagement ensuring an effective internal control system so that the financial statementsand reports give a true and fair view and during the year under review no material orserious observation has been received from the Internal Auditors of the Company forinadequacy or ineffectiveness of such control.

F. HUMAN RESOURCES

The company always regards human resources as its most valuable asset and continuouslyevolves policies and process to attract and retain its substantial pool of managerialresources through friendly work environment that encourages initiatives by individuals andrecognizes their performance.

G. CAUTIONARY NOTE

Certain Statements in the Management Discussion and Analysis describing the company'sviews about the industry expectations objectives etc. may be understood 'forwardlooking statement' within the meaning of applicable laws and regulations. Factors likechanges in Government regulations tax laws and other factors such as industrial relationsand economic developments etc. may further influence the company's operations orperformance. Actual results may differ substantially or materially from those expressed orimplied.

RESERVES

The company proposes to transfer Rs.8.86 lacs to the statutory reserves out of theamount available for appropriation.

SHARE CAPITAL

The Company had not issued any equity shares either with or without differential rightsduring the F.Y. 2018 - 2019 and hence the disclosure requirements under Section 43 andRule 4 (4) of the Companies (Share Capital and Debentures) Rules 2014 are notapplicable.

DEPOSITIS

The Company has neither accepted nor renewed any deposits from public or members duringthe year under review under Section 73 of the Companies Act 2013 read with Chapter V ofthe Companies Act 2013 and the Companies (Acceptance of Deposits) Rules 2014. There areno unclaimed deposits unclaimed / unpaid interest refunds due to the deposit holders orto be deposited to the Investor Education and Protection Fund as on March 31 2019.

DIRECTORS

In accordance with the provisions of section 152 of the Companies Act 2013 andarticles of association of the Company Mr. Dayakrishna Goyal (DIN:00398539) (ExecutiveDirector) of the company retires by rotation in the ensuring Annual General Meeting andbeing eligible has offered himself for re-appointment. The first term of office of Mr.Hansraj Goyal and Mr. Dinesh Vijayvargia as Independent Directors expires at the ensuingAnnual General Meeting. The Board has recommended re-appointment of Mr. Hansraj Goyal andMr. Dinesh Vijayvargia as Independent Directors of the Company for a second term of 5(five) consecutive years. Brief resume of the directors seeking appointment/re-appointmentis given in the notice to the annual general meeting. None of the Directors of yourCompany is disqualified under provisions of Section 164(2)(a) and (b) of the CompaniesAct 2013.

CHANGES IN KEY MANAGERIAL PERSONNEL (KMP'S) DURING THE YEAR 2018-19

During the year under review Mr. Manish Kabra has been appointed as interim asCompliance Officer of the company w.e.f. 31st March 2018. After that Ms. ElaGupta was appointed as Company Secretary and Compliance Officer of the Company w.e.f. 22ndMay 2018.

Except as explained herein above There were no changes in Key Managerial Personnelcategory during the period under review.

DIRECTOR'S RESPONSIBILITY STATEMENT

Pursuant to Section 134(3)(c) & 134(5) of the Companies Act 2013 the Board ofDirectors of the Company hereby confirm that:

i. in the preparation of the annual accounts the applicable accounting standards havebeen followed along with proper explanation relating to material departures;

ii. the directors have 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;

iii. proper and sufficient care has been taken for the maintenance of adequateaccounting records in accordance with the provisions of this Act for safeguarding theassets of the company and for preventing and detecting fraud and other irregularities;

iv. proper annual accounts have been prepared on a going concern basis;

v. internal financial controls to be followed by the company and that such internalfinancial controls are adequate and were operating effectively; and

vi. proper systems to ensure compliance with the provisions of all applicable laws andthat such systems were adequate and operating effectively.

DECLARATION BY INDEPENDENT DIRECTOR

All Independent Directors have submitted the declaration of Independence as requiredpursuant to Section 149(7) of the Act stating that they meet the criteria of Independenceas provided in section 149(6) of the Companies Act 2013 and are not disqualified fromcontinuing as Independent Directors.

EVALUATION OF DIRECTORS COMMITTEE AND BOARD

Pursuant to the provisions of the Companies Act 2013 and the Listing Regulations theBoard of Directors has carried out evaluation of the Board its Committees and IndividualDirectors. The evaluation process has been explained in the Report on CorporateGovernance which forms part of this Board's Report. Also the Independent Directors attheir meeting reviewed the performance of the Board its Chairman and Non-ExecutiveDirectors of the Company.

NUMBER OF BOARD MEETINGS HELD DURING THE PERIOD

A notice of the Board Meeting is circulated well in advance with Agenda includingdetailed explanation to be discussed to enable the Board to take an informed decision.

The intervening gap between the meetings was within the period prescribed under theCompanies Act 2013 and the Listing Agreement/Securities and Exchange Board of India(Listing Obligations and Disclosure Requirements) Regulations 2015. Further 05 (Five)Board Meetings were held during the year ended 31st March 2019 the dates are22nd May 2018 23rd July 2018 11th August 2018 14thNovember 2018 23rd January 2019. Detailed information on the Board Meetingswith regard to attendance of each of the Directors thereat have been included in theCorporate Governance Report which forms part of this Board Report. Additionally duringthe financial year ended 31st March 2019 a separate meeting of the IndependentDirectors was held on 23rd January 2019 in compliance with the requirements ofSchedule IV of the Companies Act 2013 and Regulation 25(3) and 25(4) of the ListingRegulations

Post the Independent Directors Meeting the collective feedback of each of theIndependent Director was scaled and measured on defined ratings thereby covering theperformance of Board as a whole performance of the non-independent directors andperformance of the Chairman.

COMMITTEES OF THE BOARD

The Board of Directors of your company has constituted various committees in compliancewith the provisions of the Companies Act 2013 and Listing Regulations.

Audit Committee
Nomination & Remuneration Committee
Stakeholder Relationship Committee

All decisions pertaining to the constitution of Committees appointment of members andfixing of terms of reference/ role of the committees are taken by the Board of Directors.A detailed note on the Board and its Committees is provided under the Corporate GovernanceSection in this Annual Report.

NOMINATION & REMUNERATION POLICY

The Board has on the recommendation of the Nomination & Remuneration Committeeframed a policy for selection and appointment of Directors Senior Management and theirremuneration. The appointment and Remuneration Policy is stated in the CorporateGovernance Report of the Company that forms part of the Annual Report.

PARTICULARS OF EMPLOYEES AND REMUNERATION

Information as required under the provisions of Section 197(12) of the Companies Act2013 and Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel)Rules 2014 (including any statutory modification(s)/amendment(s)/re-enactment thereoffor the time being in force) is set out in Annexure-I hereto which forms part ofthis Board's Report.

DETAILS OF SUBSIDIARY/JOINT VENTURES/ASSOCIATE COMPANY

The Company does not have any subsidiary or associate company and has not entered intojoint venture with any other company during the financial year ended 31st March2019. Accordingly a statement under the provisions of Section 129(3) of the CompaniesAct 2013 containing salient features of the financial statements of the Company'ssubsidiary(ies) in Form AOC-1 is not enclosed.

CORPORATE GOVERNANCE REPORT

As stipulated under the provision of Regulation 34 (3) read with Schedule V (c) of theSEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 a separate reporton Corporate Governance Report forms integral part of this Board Report. The requisitecompliance certificate as required under Part E of Schedule V of the Listing Regulation isissued by Jain & Trivedi Chartered Accountants pertaining to the compliance of theconditions of Corporate Governance is Annexed thereto.

EXTRACT OF ANNUAL RETURN

The extract of the Annual Return pursuant to the provisions of Section 92 read withRule 12 of the Companies (Management and Administration) Rules 2014 is annexed herewithas Annexure -II to this report. The weblink for the same iswww.upsurgeinvestment.com

STATUTORY AUDITORS

M/s Jain & Trivedi Chartered Accountants (FRN:113496W) were appointed as theStatutory Auditors of the Company during the 23rd AGM held on 29thSeptember 2017 for a period of five years as per the provisions of Section 139 of theCompanies Act 2013. However with the Notification dated May 7th 2018 issuedby the Ministry of Corporate Affairs (‘MCA') the first proviso to Section 139(1) ofthe Companies Act 2013 pertaining to the requirement of annual ratification ofappointment of Auditors by member is omitted. Accordingly as per the companies (Amendment)Act 2017 ratification of the appointment of Statutory Auditors during their period ofappointment will not be considered.

AUDITORS' REPORT Independent Auditor's Report

There are no qualifications reservation or adverse remark or disclaimer in theIndependent Auditor's Report provided by M/s. Jain & Trivedi Chartered Accountantsfor the F.Y. 2018-2019. The notes to accounts forming part of financial statements areself-explanatory and need no further clarification.

Secretarial Audit Report

Pursuant to Provision of Section 204 of the Companies Act 2013 and Rules framed thereunder Board of Directors have appointed M/s. Kamlesh Jain & Associates PracticingCompany Secretaries to conduct Secretarial Audit. The Secretarial Audit Report for theFinancial Year ended 31st March 2019 forms the integral part of the BoardReport as Annexure-III. There are no qualifications reservation or adverse remarkor disclaimer in Secretarial Audit Report.

Details in respect of frauds reported by auditors under sub-section (12) of section 143other than those which are reportable to the central government

There are no such frauds committed by the Company which are reported by auditors.

PARTICULARS OF LOANS GUARAUNTEES OR INVESTMENTS

Pursuant to Section 186 (11) of the Companies Act 2013 read with Rule 11(2) of theCompanies (Meetings of Board and its Powers) Rules 2014 the loan made guarantee givenor security provided in the ordinary course of business by a Non- Banking FinancialCompany (NBFC) registered with Reserve Bank of India are exempt from the applicability ofprovisions of Section 186 of the Act.

PARTICULARS OF CONTRACTS OR ARRANGEMENTS MADE WITH RELATED PARTIES

All related party transactions that were entered into during the financial year were onarm's length basis and were in the ordinary course of the business. There are nomaterially significant related party transactions made by the company with Promoters KeyManagerial Personnel or other designated persons which may have potential conflict ofinterest with the company at large. Accordingly disclosures of related party transactionsin Form AOC-2 have not been furnished. All Related Party Transactions were placed beforeAudit Committee and Board for their approval. Your Company has formulated policy ofRelated Party Transaction which is also available on the website of the Companywww.upsurgeinvestment.com

MATERIAL CHANGES AND COMMITMENT AFFECTING FINANCIAL POSITION OF THE COMPANY

No material changes and commitments which could affect the Company's financial positionhave occurred till date of this report.

TRANSFER OF AMOUNTS TO INVESTOR EDUCATION AND PROTECTION FUND

The Company does not have any funds lying unpaid or unclaimed for a period of sevenyears. Therefore there were no funds which were required to be transferred to InvestorEducation and Protection Fund (IEPF).

CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGO

Conservation of Energy & Technology Absorption

The Company is not engaged in manufacturing activities and therefore provisionsrelating to conservation of energy and technology absorption are not applicable to it.However efforts are being made to minimize consumption of energy wherever possible.

Foreign Exchange Earnings and Outgo

During the year under review there were no Foreign Exchange earnings and outgo.

RISK MANAGEMENT POLICY

The Board of Directors of the Company has approved Risk Management policy andguidelines wherein all material risks faced by the company are identified and assessed.Moreover in the said Risk Management Policy the Board has defined a structured approach tomanage uncertainty cultivating the same in their decision making pertaining to allbusiness divisions and corporate functions. For each of the risks identifiedcorresponding controls are assessed and policies and procedures are put in place formonitoring mitigating and reporting on periodic basis.

CORPORATE SOCIAL RESPONSIBILITY

The provisions of Corporate Social Responsibility are not applicable to the company ascompany does not fall into ambit of the provisions of section 135 of Companies Act 2013and Companies (Corporate Social Responsibility Policy) Rules 2014 .

ADEQUACY OF INTERNAL FINANCIAL CONTROL WITH REFERENCE TO FINANCIAL STATEMENTS

In respect of internal financial control the Board has adopted the policies andprocedures for ensuring the orderly and efficient conduct of its business includingadherence to the Company's policies the safeguarding of its assets the timely preventionand detection of frauds and errors the accuracy and completeness of the accountingrecords and the timely preparation of reliable financial information. Further themanagement regularly reviews the control for any possible changes and takes appropriateactions.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The details in respect of internal control systems and their adequacy are included inthe Management Discussion and Analysis Report which forms part of this report.

CHANGES IN NATURE OF BUSINESS IF ANY

During the year under review there is no change in the nature of business of theCompany.

VIGIL MECHANISM/WHISTLE BLOWER POLICY

In pursuant to the provisions of section 177(9) and (10) of the Companies Act 2013 aWhistle Blower Policy / Vigil Mechanism for directors and employees to report genuineconcerns has been established by the Company in order to maintain highest standards ofethical moral and legal conduct adopted Vigil Mechanism/Whistle Blower policy to providean avenue to its employees to raise concerns of any violations of legal or regulatoryrequirements incorrect or misrepresentations of any financial statements and reportsetc. The Audit committee of the company oversees the said mechanism from time to time.None of the Company personnel has been denied access to the Audit Committee. The WhistleBlower Policy of the Company is also available on the website of the Companywww.upsurgeinevstment.com

DISCLOSURE UNDER THE HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITION ANDREDRESSAL) ACT 2013

The company has in place an Anti-Harassment policy in line with the requirements of Thesexual harassment of women at the workplace (Prevention Prohibition & Redressal) Act2013. Internal Complaints Committee (ICC) has been set up to redress complaints receivedregarding sexual harassment. All employees (permanent contractual temporary trainees)are covered under this policy. During the year under review company has not received anySexual Harassment Complaints. Company has zero tolerance policy in case of sexualharassment at workplace and is committed to provide a healthy environment to each andevery employee of the company.

RBI GUIDELINES

The company continues to comply with all the requirements prescribed by the ReserveBank of India from time to time as applicable.

SIGNIFICANT ORDERS PASSED BY REGULATORS COURTS OR TRIBUNALS IMPACTING GOING CONCERNAND COMPANY'S OPERATIONS

No orders have been passed by any Regulator or Court or Tribunal which can have animpact on the going concern status and the Company's operations in future.

COMPLIANCE WITH SECRETARIAL STANDARDS ON BOARD AND GENERAL MEETING

Pursuant to Clause 9 of the Revised Secretarial Standard-1(SS-1) and Standard-2 (SS-2)your company has complied with applicable Secretarial Standard issued by the Institute ofCompany Secretaries of India during the financial year under review.

ACKNOWLEDGEMENT

The Directors takes this opportunity to thank all their colleagues at UpsurgeInvestment & Finance Ltd. for their professionalism and dedication to the task athand. The board also wishes to place on record their appreciation for valuable supportgiven by the Bankers Clients and Shareholders.

For and on behalf of the Board of Directors

Dayakrishna Goyal Hansraj Goyal
Managing Director Director
DIN: 00398539 DIN: 00398273
Mumbai dated 2nd August 2019