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Directors Report of Emerald Leasing Finance & Investment Company Ltd.

Mar 31, 2015

Dear Members,

The Directors have pleasure in presenting before you their 32ndAnnual Report together with the Audited Accounts of the Company for the year ended 31st March, 2015.

FINANCIAL RESULTS:-

The financial results of the Company for the year under review are summarized for your consideration:

Particulars 2014-2015 2013-2014 (Amount in Lacs) (Amount in Lacs)

Gross Income 88.50 35.48

Expenses 75.33 26.31

Profit Before Depreciation and Tax 13.52 10.05

Depreciation 0.35 0.88

Net Profit Before Tax 13.17 9.17

Provision for Tax 4.07 2.83

Net Profit After Tax 9.10 6.34

Reserves NIL NIL

Basic EPS 0.30 0.21

Diluted EPS 0.30 0.21

STATE OF COMPANY'S AFFAIRS/ BRIEF DESCRIPTION OF THE COMPANY'S WORKING DURING THE YEAR/HIGHLIGHTS/OPERATIONS

The company is engaged in the business of Direct Selling Agent and Direct Marketing Agent for various banks and financial institutions. During the year under review, Gross revenue is Rs. 88.50Lacswhereas during the previous year gross revenue was 35.48Lacs. The Profit before tax stood at Rs. 13.17Lacs and Profit after stood at Rs. 9.10Lacs. For further details, kindly refer to Management Discussion & Analysis Report Annexure D-3 and Corporate Governance Report which forms part of this report.

DIVIDEND :-

Your Directors have not recommended any dividend in the current financial year and decided to reinvest the earnings in the expansion of the company.

DIRECTORS :-

In accordance with the provisions of the Companies Act, 1956 and Articles of Association of the Company, Mr. Sanjay Aggarwal (DIN 02580828), Managing Director of the Company retire by rotation in the ensuing Annual General Meeting and being eligible offer himself for re-appointment.

Mrs. Kiran Aggarwal (DIN 02557045) had been appointed as additional Director during the financial year and she holds office till the ensuing Annual General Meeting. It is proposed to be appointed as Directors by the Members. The Company has received requisite notices and deposits in writing from members proposing her for appointment as Director.

Sh. Ram Swaroop Aggarwal, Director resigned from the office of the Directorship in the Company on 24-03-2014.

The company has appointed Mr. Raman Aggarwal as Independent Director during the financial year.

All Independent Directors of the Company have given declarations that they meet the criteria of Independence as laid down under Section 149 (6) of the Companies Act, 2013 and Clause 49 of the Listing Agreement.

KEY MANAGERIAL PERSONNEL

The Key Managerial Personnel (KMP) in the Company as per Section 2(51) and 203 of the Companies Act, 2013 are as follows:

Mr. Sanjay Aggarwal Managing Director

Ms. Sheetal Kapoor Chief Financial Officer

Mrs. Amarjeet Kaur Company Secretary

During the year, Ms. Sheetal Kapoor was designated as Chief Financial Officer of the Company w.e.f. 04.04.2015. Mr. Kirti Arora resigned as Company Secretary during the financial year. Mrs. Amarjeet Kaur was appointed as Company Secretary w.e.f. 02.04.2015.

SHARE CAPITAL

a. Issue Of Shares With Differential Rights

The Company has not issued any shares with Differential Rights during the year under review.

b. Issue Of Sweat Equity Share

The Company has not issued any Sweat Equity shares Employee Stock Options during the year under review.

OBLIGATION OF COMPANY UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

The Company has adopted a policy for prevention of Sexual Harassment of Women at workplace and has set up Committee for implementation of said policy. During the year Company has not received any complaint of harassment.

EVENTS SUBSEQUENT TO THE DATE OF FINANCIAL STATEMENTS

The company has filed an application with Reserve Bank of India for registration as Non Banking Finance Company. The same is under process.

MAJOR CHANGES HAPPENING DURING THE FINANCIAL YEAR

Your Directors wish to inform that there have not been any changes during the Financial Year under review:

a. In the nature of Company's business

b. Generally in the class of business in which the Company has an interest Further, the Company has no Subsidiary and therefore information regarding any change in subsidiaries or in the nature of business carried on by them is not applicable to the Company.

LISTING WITH BSE LIMITED:

The equity shares of the company were earlier listed on the Stock Exchange at New Delhi. The company filed application with Bombay Stock Exchange under Direct Listing route for getting the scrips of the Company listed at Bombay Stock Exchange (BSE). The shares of the company got listed in BSE Limited and are being regularly traded on the Main Board of Exchange.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS & OUTGO

The requisite information has been given by way of an Annexure D-1 to this Report.

CORPORATE GOVERNANCE:-

Your Company is committed to maintain the highest standards of Corporate Governance. As required under Clause 49 of the Listing Agreement with the Stock Exchange, Report on Corporate Governance is annexed herewith and forms a part of this Annual Report. A Certificate from Mr. Kanwaljit Singh, a practicing Company Secretary confirming compliance with the conditions of Corporate Governance is also annexed under Clause 49 (XI) (A) of the Listing Agreement.

BUSINESS RESPONSIBILITY REPORT

Clause 55 of the Listing Agreement is not applicable to the Company.

POLICY ON DIRECTORS APPOINTMENT AND POLICY ON REMUNERATION

Pursuant to the requirement under Section 134(3)(e) and Section 178(3) of the Companies Act, 2013, the policy on appointment of Board members including criteria for determining qualifications, positive attributes, independence of a Director and the policy on remuneration of Directors, KMP and other employees is attached as Annexure D-2, which forms part of this report.

MANAGEMENT DISCUSSION & ANALYSIS REPORT:

Management Discussion & Analysis Report for the year under review, as stipulated under Clause 49 of the Listing Agreement is presented in a separate section as Annexure D-3 forming part of this Annual Report.

PARTICULARS OF REMUNERATION OF DIRECTORS/ KMP/EMPLOYEES:-

In terms of the provisions of Section 197(12) of the Companies Act, 2013 read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, there are no employees falling in the category as defined in Rule 5 (2)

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 is not applicable as company is not paying any remuneration to any of the director.

NUMBER OF MEETINGS OF BOARD

During the year 2014-15, 11 (Eleven) Board Meetings were held and 1 (One) Independent Directors meeting was held on 11.02.2015 as required under Schedule IV of Companies Act, 2013 and as per Clause 49 of the Listing Agreement. The dates on which the Board Meetings were held are 13.05.2014, 28.05.2014, 30.05.2014, 22.06.2014, 24.07.2014, 14.08.2014, 02.09.2014, 07.11.2014, 21.11.2014, 30.01.2015 and 24.03.2015.

PERFORMANCE EVALUATION OF THE BOARD, ITS COMMITTEES AND INDIVIDUAL DIRECTORS

Pursuant to applicable provisions of the Companies Act, 2013 and the Listing Agreement with Stock Exchanges, the Board, in consultation with its Nomination & Remuneration Committee, has formulated a framework containing, inter-alia, the criteria for performance evaluation of the entire Board of the Company, its Committees and Individual Directors, including Independent Directors. Accordingly, following is the criteria for evaluation:- a. Criteria for evaluation of the Board of Directors as a whole:

i. The Frequency of Meetings

ii. Quantum of Agenda

iii. Administration of Meetings

iv. Flow and quantity of Information from the Management to the Board

v. Number of Committees and their role.

vi. Overall performance of the Company

b. Criteria for evaluation of the Individual Directors including Independent Directors;

i. Experience and ability to contribute to the decision making process

ii. Problem solving approach and guidance to the Management

iii. Attendance and Participation in the Meetings

iv. Personal competencies and contribution to strategy formulation

v. Contribution towards statutory compliances, monitoring of controls and Corporate Governance

The Independent Directors had met separately on 11.02.2015 without the presence of Non- Independent Directors and the members of management and discussed, inter-alia, the performance of non-Independent Directors and Board as a whole and the performance of the Chairman of the Company after taking into consideration the views of Executive and Non- Executive Directors.

The Nomination and Remuneration Committee has also carried out evaluation of every Director's performance. The performance evaluation of all the Independent Directors have been done by the entire Board, excluding the Director being evaluated. On the basis of performance evaluation done by the Board, it shall be determined whether to extend or continue their term of appointment, whenever the respective term expires. The Directors express their satisfaction with the evaluation process.

STATUTORY AUDITORS & AUDITORS REPORT:-

M/s S. Lal Bansal & Co., Chartered Accountants, Chandigarh, were appointed as Statutory Auditors of the Company in the last Annual General Meeting. As their term expires at the ensuring Annual General Meeting, they have offered themselves for re- appointment as they are eligible for re-appointment. They are proposed to be re-appointed from the conclusion of this Annual General Meeting till the conclusion of the next Annual General Meeting.

The Auditors' Report being self-explanatory requires no comments from the Directors. Further, there are no reservations, qualifications or adverse remarks in the Audit Report given by them in respect of the Financial Year 2014-15.

SECRETARIAL AUDITORS AND THEIR REPORT

Mr. Kanwaljit Singh (FCS 5901), a Company Secretary in practice having CP no. 5870, was appointed as Secretarial Auditor of the Company for the financial year 2014-15 pursuant to Section 204 of the Companies Act, 2013. The Secretarial Audit Report submitted by him in the prescribed form MR- 3 is attached as Annexure D-5 and forms part of this report.

The Secretarial Auditors have made some observations regarding non filing of returns. The company will file them shortly.

FRAUDS REPORTED BY AUDITORS

There are no frauds reported by auditors under sub-section (12) of section 143 including those which are reportable to the Central Government.

COST AUDIT

As per the Cost Audit Orders, Cost Audit is not applicable to the Company.

CONSOLIDATED FINANCIAL STATEMENTS

As required under the Listing Agreement & in accordance with the Accounting Standard (AS)-21 on consolidated Financial Statements read with AS-23 on accounting for investments in Associates, the Audited consolidated financial statement is provided in the Annual report.

INTERNAL FINANCIAL CONTROLS AND THEIR ADEQUACY

As required pursuant to provisions of section 134(1) (e) of the Act, the Company has a well placed, proper and adequate internal financial control system, commensurate with the size, scale and complexity of its operations. The scope and authority of the internal Audit function is well defined in the Organization. The internal financial control system ensures that all assets are safeguarded and protected and that the transactions are authorized, recorded and reported correctly.

DEVELOPMENT AND IMPLEMENTATION OF RISK MANAGEMENT

The Company has in place comprehensive risk assessment and minimization procedures, which are reviewed by the Board periodically. During the year, as per the requirements of Listing Agreement with the Stock Exchanges, a Risk Management Committee was constituted by the Board of Directors with responsibility of preparation of Risk Management Policy, reviewing and monitoring the same on regular basis, to identify and review critical risks on regular basis, to update the Risk management on quarterly basis, to report key changes in critical risks to the Board on an ongoing basis, to report critical risks to Audit Committee in detail on yearly basis and such other functions as may be prescribed by the Board. The risks faced by the Company and their minimization procedures are assessed by the Board. Further, the Company identifies risks, and control systems are instituted to ensure that the risks in each business process are mitigated. The Board provides oversight and reviews the Risk Management Policy on a regular basis. In the opinion of the Board there has been no identification of elements of risk that may threaten the existence of the Company.

SUBSIDIARIES/ASSOCIATES

The Company has a subsidiary M/s Eclat Net Advisors Pvt. Ltd.(CIN:U74140CH2015PTC035473) as defined in the Companies Act, 2013. Report on the performance and Financial position of the subsidiary in the specified format AOC-1 is annexed to the Directors' Report as Annexure D-6.

DEPOSITS

The Company has neither accepted nor renewed any deposits during the Financial Year 2014-15 in terms of Chapter V of the Companies Act, 2013. Information in this regard, therefore, is nil.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERNS STATUS AND COMPANY'S OPERATIONS IN FUTURE

The Company has not received any significant or material orders passed by any Regulatory Authority, Court or Tribunal which shall impact the going concern status and Company's operations in future.

AUDIT COMMITTEE

Your Directors wish to inform that in Compliance with Section 177 of the Companies Act, 2013 and Clause 49 of listing agreement with the stock exchange, an audit committee has been duly constituted. The Audit Committee as on March 31, 2015 comprises of the following Independent Directors:

Mr. Deepak Gaur Independent Director, Chairman

Mr. Raman Aggarwal Independent Director, Member

Mr. Sanjay Aggarwal Managing Director, Member

w.e.f. 02-04-2015, following is the composition of the Audit Committee:-

Mr. Raman Aggarwal Independent Director, Chairman

Mr. TarunKhanna Independent Director, Member

Mr. Sanjay Aggarwal Managing Director, Member

Details of the Audit Committee have been separately given in the corporate governance report. Further, all recommendations of Audit Committee were accepted by the Board of Directors.

NOMINATION & REMUNERATION COMMITTEE

In terms of Clause 49 of the Listing Agreement and pursuant to the provisions of Companies Act, 2013, Nomination & Remuneration Committee as on March 31, 2015 comprises of the following Directors:

Mr. Deepak Gaur Independent Director, Chairman

Mr. Tarun Khanna Independent Director, Member

Mr. Raman Aggarwal Independent Director, Member

The details of Remuneration Policy and the Committee are furnished in the Report on Corporate Governance, which is annexed herewith.

STAKEHOLDERS RELATIONSHIP COMMITTEE

In terms of Clause 49 of the Listing Agreement, the Company has constituted Stakeholders Relationship Committee with following composition as on March 31, 2015:-

Mr. Deepak Gaur Independent Director, Chairman

Mr. Tarun Khanna Independent Director, Member

Mr. Sanjay Aggarwal Managing Director, Member

w.e.f. 02-04-2015, following is the composition of the Stakeholders Relationship Committee:-

Mrs. Kiran Aggarwal Non-executive Director, Chairman

Mr. Raman Aggarwal Independent Director, Member

Mr. Sanjay Aggarwal Managing Director, Member

EXTRACT OF ANNUAL RETURN

The extract of Annual Return as on March 31, 2015 in the prescribed Form No. MGT-9, pursuant to Section 92(3) of the Companies Act, 2013 and Rule 12 (1) of the Companies (Management and Administration) Rules, 2014 is attached herewith as Annexure D-8 and forms part of this Report.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186 OF THE COMPANIES ACT, 2013

Pursuant to Section 134(3)(g) of the Companies Act, 2013 particulars of loans, guarantees or investments under Section 186 of the Act as at end of the Financial Year 2014-15 are attached as Annexure D-9 which forms part of this report.

CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES UNDER SECTION 188(1) OF THE COMPANIES ACT, 2013 With reference to Section 134(3)(h) of the Companies Act, 2013, all contracts and arrangements with related parties under Section 188(1) of the Act, entered by the Company during the financial year, were in the ordinary course of business and on an arm's length basis. Hence, provisions of Section 188 (1) are not applicable. However, as these transactions were in the ordinary course of business and on an arm's length basis, in the opinion of the Board these transactions are justified to be executed. The detail of these transactions is given in Annexure D-10, which forms part of this report.

During the year, the Company had not entered into any contract or arrangement with related parties which could be considered 'material' according to the policy of the Company on Materiality of Related Party Transactions. Your attention is also drawn to the Related Party disclosures set out in Note no. 16 of the Financial Statements.

VIGIL MECHANISM

The Company has established a Vigil Mechanism cum Whistle Blower Policy in terms of Section 177 (10) of the Companies Act, 2013 and also in terms of Clause 49 of the Listing Agreement. The detail of the said Vigil Mechanism cum Whistle Blower Policy is given in the Corporate Governance Section, which is annexed herewith. The Vigil Mechanism cum Whistle Blower Policy is also available on the Company's website http://www.emeraldfin.com/wp- content/uploads/2015/03/Whistle-Blower-Policy.pdf.

DIRECTORS' RESPONSIBILITY STATEMENT:-

(a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

(b) the directors had 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 at the end of the financial year and of the profit and loss of the company for that period;

(c) the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets 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 the company 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.

COMPLIANCE

The company has devised proper systems to ensure compliance of all laws applicable to the company and the compliance reports issued by the Departmental Heads are placed before the Board every Quarter confirming compliance by the Company with all applicable Laws.

CEO/CFO CERTIFICATION

In terms of the requirements of Clause 49 (IX) of the Listing Agreement, the Managing Director and the CFO have submitted necessary certificate to the Board of Directors stating the particulars specified under the said Clause. The certificate has been reviewed by the Audit Committee and taken on record by the Board of Directors.

DEMATERIALIZATION OF SHARES

As mentioned in Company's earlier Annual Reports, the Company's equity shares are in compulsory Demat mode in terms of SEBI Guidelines. This has been facilitated through arrangement with NSDL and CDSL. About 76% of the shares of the Company are already in dematerialized form. M/s Mas Services Limited, New Delhi are acting as the Registrar and Share Transfer Agents for this purpose and acts as common share agency in terms of SEBI Guidelines.

TRANSFER OF AMOUNTS TO INVESTOR EDUCATION AND PROTECTION FUND

Your Company did not have any funds lying unpaid or unclaimed for a period of seven years. Therefore there were no funds which were required to be transferred to Investor Education and Protection Fund (IEPF).

ACKNOWLEDGEMENT:- Your Directors wish to express their sincere appreciation to valued Clients, Reserve Bank of India, Western Union Financial Services Inc, U.S.A, Company's Bankers, Government Agencies and Employees of the company for their continued support & co-operation.

For & On Behalf of the Board For& On Behalf of the Board

(Sanjay Aggarwal) (Kiran Aggarwal)

MANAGING DIRECTOR DIRECTOR

(DIN 02580828) (DIN 02557045)

PLACE: CHANDIGARH

Date : August 17, 2015

 
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