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Directors Report of KIFS Financial Services Ltd.

Mar 31, 2016

Directors'' Report

Dear members,

The Directors have pleasure in presenting their 21st Annual Report on the business and operations of the Company together with the Audited Financial Statement for the financial year ended on March 31, 2016.

1. Financial Summary

(Rs. in Lacs except EPS)

Particulars

2015-16

2014-15

Revenue from operations

714.47

380.78

Other income

0.13

0.01

Total income

714.60

380.79

Total expenditure

289.85

100.47

Profit / (Loss) before exceptional items & provision for tax

424.75

280.32

Exceptional items

0.00

0.00

Profit / (Loss) before tax

424.75

280.32

Provision for taxation

142.07

92.03

Net profit

282.68

188.29

EPS - Basic & Diluted (Rs.)

2.61

1.74

2. State of Company''s Affairs

During the financial year under report, total income of the Company has increased to Rs. 714.60 Lacs as compared to Rs. 380.79 Lacs earned during the previous financial year showing an impressive growth of 87.66%. Profit before interest, depreciation and tax increased from Rs. 343.89 Lacs to Rs. 623.59 Lacs in the financial year ended on March 31, 2016. Net profit after tax increased by 50.13% attaining an amount of Rs. 282.67 Lacs. Net profit margin stands at 39.56% for the financial year under report. Overall your Company achieved a notable growth in both top and bottom lines of the financials for the financial year ended on March 31, 2016 and the Directors are optimistic to achieve newer heights in the upcoming years.

Considering the enhanced business during the financial year under report, the total expenditure has also reported an increase of 188.49% as compared to previous financial year. Further, the enhanced business resulted an increase of 181.94% in the short term borrowings and the same has impacted the financial cost by hiking the same by 207.28% as compared to the previous financial year ended on March 31, 2015.

The detailed analysis as to review of Company''s operational and financial performance is given in the Management Discussion and Analysis Report.

3. Dividend

Considering both the improved financial performance of the Company and conservation of resources for future purposes, your Directors are desirous of rewarding the shareholders by sharing the profit in the form of increased dividend as compared to the previous financial year. In continuance of the earlier trends of cash dividends, the Board of Directors are pleased to recommend a final dividend of Rs. 0.75 (Seventy Five Paisa Only) (i.e. 7.5%) per equity share of Rs. 10/- (Rupees Ten Only) each for the financial year ended on March 31, 2016. The final dividend recommended and declared for the financial year ended on March 31, 2015 was Rs. 0.50 (Fifty Paisa Only) (i.e. 5%) per equity share of Rs. 10/- (Rupees Ten Only) each.

Further, the payment of dividend is subject to the approval of shareholders of the Company in the ensuing Annual General Meeting of the Company. The dividend, if declared at the ensuing Annual General Meeting, will be paid to those shareholders whose names appear in the register of members as on the record date. The amount of final dividend shall be Rs. 81.135 Lacs and the dividend distribution tax shall be Rs. 16.52 Lacs.

4. Transfer to Reserves

The Company proposes to transfer Rs. 56.54 Lacs to the special reserve out of amount available for appropriations and an amount of Rs. 392.35 Lacs is proposed to be retained in the Statement of Profit and Loss.

5. Deposits

During the financial year ended on March 31, 2016, the Company has not accepted any deposits from the public within the meaning of the provisions of the Non-Banking Financial Companies (Reserve Bank) Directions, 1977 and RBI''s Notification No. DFC. 118DG(SPT)-98 dated January 31, 1998.

Further, being a Non-Deposit Taking Non-Banking Financial Company, the disclosures with respect to deposits, required as per Rule 8(5)(v) & (vi) of the Companies (Accounts) Rules, 2014 read with the Companies (Acceptance of Deposits) Rules, 2014 and Section 73 of the Companies Act, 2013 are not applicable to it.

6. Share Capital

During the financial year under report, the Company has neither made any issue of equity shares with differential voting rights, sweat equity shares or under employee stock options scheme nor it has made any provision of money for purchase of its own shares by employees or by trustees for the benefit of employees.

7. Details of Subsidiary / Joint Venture / Associate Companies

The Company has not any subsidiary, joint venture or associate company.

8. Directors and Key Managerial Personnel (KMP) Director retiring by rotation

Pursuant to the provisions of Section 152 of the Companies Act, 2013 and in accordance with the Articles of Association of the Company, Mr. Rajesh P. Khandwala, Managing Director of the Company, retires by rotation at the ensuing Annual General Meeting and being eligible offers himself for re-appointment. The Board of Directors recommends his re-appointment.

Independent Directors

In terms of the definition of the Independent Director as prescribed under Regulation 16(1)(b) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and Section 149(6) of the Companies Act, 2013, Mr. Devang M. Shah and Mr. Dharmendra N. Soni have been appointed as Non Executive Independent Directors on the Board of the Company.

The Independent Directors have submitted the declaration, confirming that they meet the criteria of independence as prescribed under both the provisions of the relevant laws.

Further, a separate meeting of Independent Directors of the Company was held on February 23, 2016 in accordance with the provisions of Clause VII of the Schedule IV of the Companies Act, 2013.

Woman Director

Pursuant to the provisions of Section 149 of the Companies Act, 2013 and Regulation 17 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, Mrs. Sonal R. Khandwala holds position of a Non Executive Woman Director of the Company.

All of the Directors of the Company have confirmed that they are not disqualified under provisions of Section 164 of the Companies Act, 2013 from being appointed / continue to hold position of Directors of the Company.

Key Managerial Personnel

Pursuant to provisions of Section 203 of the Companies Act, 2013, Mr. Bhavik J. Shah holds the position of Chief Financial Officer of the Company.

Subsequent to the closure of the financial year under report, Ms. Krupa N. Joshi resigned from the post of Company Secretary cum Compliance Officer of the Company w.e.f. May 4, 2016 and the Board at its meeting held on May 24, 2016 has appointed Mr. Durgesh D. Soni in her place as the Company Secretary and Compliance Officer of the Company.

The Board places on record its sincere appreciation for the valuable services rendered by Ms. Krupa N. Joshi during her tenure.

Remuneration Policy

The Company follows a policy on remuneration of Directors and Senior Management Employees. The policy has been approved by the Nomination & Remuneration Committee and the Board of Directors. More details on the same have been given in the Corporate Governance Report.

The policy on Remuneration of Directors, Key Managerial Personnel and Senior Employees can be accessed on website of the Company at following web link:

http://kifsfinance.com/wp-content/uploads/2015/02/Nomination-Remuneration-policy-KIFS.pdf

9. Number of meetings of the Board of Directors

The Board of Directors met four times during the financial year under report, the details of which have been given in the Corporate Governance Report. The intervening gap between any two Board meetings did not exceed 120 days, as prescribed under the provisions of the law(s).

10. Committees of the Board

Currently, the Company has four committees viz; Audit Committee, Nomination and Remuneration Committee, Stakeholders Relationship Committee and Risk Management Committee which have been established as a part of the better corporate governance practices and are in compliance with the requirements of the relevant provisions of applicable laws and statutes.

Apart from the above statutory committees, the Company also has a Managing Committee of the Board of Directors to look after the routine affairs of the Company.

The details with respect to the compositions, terms of reference, scope and powers, roles, meetings etc. of the relevant committees are given in detail in the Corporate Governance Report forming part of this Annual Report.

11. Corporate Social Responsibility

During the financial year under report, your Company has not met the criteria laid down under the provisions of Section 135(1) of the Companies Act, 2013 read with Companies (Corporate Social Responsibility Policy) Rules, 2014 and accordingly the provisions including but not limited up to constitution of Corporate Social Responsibility Committee and formulation / implementation of a policy on Corporate Social Responsibility are not applicable to the Company.

12. Performance evaluation of the Board

In accordance with the provisions of Regulation 17(10) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and Schedule IV of the Companies Act, 2013, evaluation of performance of Independent Directors by the Non Independent Directors and review of performance of Non Independent Directors and the Board as a whole by the Independent Directors was made during the financial year under report. The Directors were satisfied with the evaluation results, which reflected the overall engagement of the Board and its Committees with the Company. This may be considered as a statement under provisions of Section 134(3)(p) of the Companies Act, 2013 and Rule 8(4) of the Companies (Accounts) Rules, 2014.

More details on the evaluation mechanism are given in the Corporate Governance Report.

13. Vigil Mechanism / Whistle Blower Policy

The Company promotes ethical behavior in all its business activities and has put in place a mechanism wherein the employees are free to report illegal or unethical behavior, actual or suspected fraud or violation of the Company''s Codes of Conduct or Corporate Governance Policies, raise concerns against management and business practices, incorrect or misrepresentation of any financial statements and reports or any improper activity being negative in nature to the Chairman of the Audit Committee of the Company or Chairman of the Board. The Whistle Blower Policy has been appropriately communicated within the Company.

Under the Whistle Blower Policy, the confidentiality of those reporting violation(s) is protected and they are not subject to any discriminatory practices. No personnel have been denied access to the Audit Committee. The functioning of the Vigil mechanism is reviewed by the Audit Committee from time to time. The Vigil Mechanism / Whistle Blower Policy has been uploaded on website of the Company and can be accessed at following web link:

http://kifsfinance.com/wp-content/uploads/2016/06/KIFS-FINANCIAL-Whistle-blower-policy-

2016.pdf

14. Statement of Development & Implementation of Risk Management Policy

The Company has developed and implemented a Risk Management Policy to meet the risks associated with the business of the Company. Business risk evaluation and management is an ongoing process within the Company. The assessment is periodically examined by the Risk Management Committee of the Board. The Company, while giving loan to its customers, follows the criteria and procedure laid down in policy and the credibility of the clients.

15. Loans / Guarantees or Investment in Securities

Being a Non Banking Financial Company pursuing loan business in its ordinary course of business, the disclosures relating to the details of loans made, guarantees given, securities provided or subscription / acquisition of securities, pursuant to the provisions of Section 186(11) of the Companies Act, 2013 and Rule 11 of the Companies (Meetings of Board and its Powers) Rules, 2014 are not required to be given.

16. Contracts or Arrangements with Related Parties

All related party transactions that were entered during the financial year under report were in the ordinary course of business of the Company and were on arm''s length basis. There were no materially significant related party transactions entered by the Company with its Promoters, Directors, Key Managerial Personnel or other persons, which may have a potential conflict with the interest of the Company. All such related party transactions are being quarterly placed before the Audit Committee for its review. Omnibus approval has been obtained from the Audit Committee & Board of Directors for all the related party transactions (including transactions which are foreseen and repetitive in nature).

Since no material related party transactions were entered by the Company and all the transactions entered into by the Company with its related parties were in the ordinary course of business and on an arm''s length basis, disclosure in the Form AOC-2 is not required to be given.

The Policy on Related Party Transactions as approved by the Board has been uploaded on the Company''s website at the web link:

http://kifsfinance.com/wp-content/uploads/2015/02/RPT-Policy-KIFS.pdf

17. Internal Financial Control Systems and their adequacy

The Company has internal control systems, commensurate with the size, scale and complexity of its operations. Your Company has laid down set of standards, processes and structure which enable it to implement internal financial control systems across the organization and ensure that the same are adequate and operating effectively. Internal financial control systems of the Company provide a reasonable assurance with regard to maintaining of proper accounting controls, monitoring of operations, protecting assets from unauthorized use or losses, compliance with regulations and for ensuring reliability of financial reporting.

18. Extract of Annual Return

Pursuant to the provisions of Section 134(3)(a) and Section 92(3) of the Companies Act, 2013 read with Rule 12 of the Companies (Management and Administration) Rules, 2014, the Extract of the Annual Return as at March 31, 2016, in the Form MGT - 9 is enclosed herewith as Annexure 1.

19. Disclosure as per the Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014

The details as per Rule 5(1) of the aforesaid Rule are enclosed herewith as Annexure - 2.

20. Auditors Statutory Auditors

M/s. Shailesh C. Parikh & Co., Chartered Accountants, Ahmadabad, Statutory Auditors of the Company were appointed at the 19th Annual General Meeting of the Company for a period of three years (including transitional period).

In accordance with the provisions of Section 139 of the Companies Act, 2013 and Rules framed there under, the Board recommends the members to ratify their appointment up to the conclusion of next Annual General Meeting.

Secretarial Auditors

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and Rules framed there under, the Board has re-appointed the existing Secretarial Auditors of the Company, M/s. Anamika Jajoo & Co., Practicing Company Secretary, Ahmadabad for conducting the Secretarial Audit for the financial year ending on March 31, 2017.

Secretarial Audit Report issued by the Secretarial Auditor of the Company for the financial year ended on March 31, 2016 is attached to the Directors'' Report as Annexure - 3.

Explanations or comments by the Board on qualification / reservation / adverse remark or disclaimer made by the Statutory Auditors in their Audit Report and by the Secretarial Auditor in her Secretarial Audit Report

Both the Statutory Auditors'' Report and Secretarial Audit Report are self explanatory and no comment from the Board of Directors of the Company is required as no qualification, reservation or adverse remark or disclaimer is given by any of both of the Auditors of the Company.

Internal Auditors

In accordance with the provisions of Section 138 of the Companies Act, 2013 and Rules framed there under, your Company has appointed M/s. SMPK & Associates LLP, Ahmadabad, as the Internal Auditors of the Company in the Board meeting held on May 24, 2016 to conduct the internal audit of the functions and activities of the Company for the financial year ending on March 31, 2017.

21. Investment Advisory Business

With a view to having expansion of Company''s present scope of operations, your Company has also got itself registered as an Investment Advisor under the SEBI (Investment Advisers) Regulations, 2013 vide Registration No. INA000001852 during the financial year ended on March 31, 2015. The said business is yet to be commenced by the Company.

22. Material changes and commitments affecting financial position of the Company

There are no material changes and commitments, affecting the financial position of the Company which have been occurred between the end of the financial year i.e. March 31, 2016 and the date of signing of the Directors'' Report i.e. May 24, 2016. Further, no significant or material orders have been passed by the Regulators or Courts or Tribunals impacting the going concern status of the Company and / or the Company''s operations in future.

23. Remuneration given to the Managing Director from Holding / Subsidiary Company

The Managing Director of the Company, Mr. Rajesh P. Khandwala also occupied the office of the Managing Director in the erstwhile Holding Company of the Company viz; M/s. KIFS Securities Private Limited (now amalgamated) and accordingly total managerial remuneration to the tune of Rs. 9,00,000/- (Rupees Nine Lacs Only) was paid to him from the aforesaid Holding Company. Apart from this, Mr. Rajesh P. Khandwala also received total Rs. 5,00,000/- (Rupees Five Lacs Only) towards managerial remuneration from your Company. The Company does not have any Subsidiary Company.

24. Disclosure under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

A policy under the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 has been laid down and circulated to every employee of the Company so as to inform them about the redressal mechanism available to them against any kind of harassment. Your Directors state that during the financial year under report, there were no cases filed or compliant received from any employee pertaining to sexual harassment.

25. Listing

Presently, the equity share capital of your Company is listed at the Bombay Stock Exchange Limited (Scrip Code: 535566). The Company''s equity shares are available for trading in demat form by all the investors on BSE which is having trading terminals in various cities affording to the investors convenient access to trade and deal in the Company''s equity shares across the country.

The Company is regular in complying with the requirements of the Listing Agreement / Regulations and has duly paid the requisite Listing Fees to the Bombay Stock Exchange Limited.

26. Code of Conduct

The Board has laid down a Code of Conduct ("Code") for Board Members, Managerial Personnel and for Senior Management Employees of the Company. This Code has been posted on the Company''s website at http://kifsfinance.com/code-of-conduct-policy/. All the Board Members and Senior Management Personnel have affirmed compliance with this Code. A declaration by the Managing Director to this effect forms part of the Corporate Governance Report.

The Board has also laid down a Code of Conduct for Independent Directors pursuant to Section 149(8) and Schedule IV to the Companies Act, 2013 via terms and conditions for appointment of Independent Directors, which is a guide to professional conduct for Independent Directors and has been uploaded on the website of the Company at following web link:

http://kifsfinance.com/wp-content/uploads/2013/03/Terms-of-appointment-of-Independent-

Directors.pdf

27. Corporate Governance

Your Company practices a culture that is built on core values and ethical governance practices and is committed to transparency in all its dealings. A Report on Corporate Governance along with a Certificate from Statutory Auditors of the Company regarding compliance of conditions of Corporate Governance, as stipulated under provisions of Regulation 34(3) and Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is annexed to this Report.

28. Management Discussion and Analysis Report

A detailed analysis of the Company''s performance is made in the Management Discussion and Analysis Report, which forms part of this Annual Report.

29. Compliance with the Reserve Bank of India Guidelines

The Company being a Non Banking Financial Company categorized as a Loan Company continues to comply with all the applicable regulations and guidelines issued by the Reserve Bank of India from time to time.

30. Particulars regarding Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo

The disclosures required to be made under Section 134(3)(m) of the Companies Act, 2013 read with Rule (8)(3) of the Companies (Accounts) Rules, 2014 pertaining to the conservation of energy, technology absorption and foreign exchange earnings and outgo are not applicable to the Company as the Company being a Non Banking Financial Company, is neither involved in any manufacturing, processing activities nor any of its transactions involves foreign exchange earnings and outgo.

31. Directors'' Responsibility Statement

Pursuant to the provisions of Section 134(3)(c) of the Companies Act, 2013, your Directors, based on the representations received from the head of the various departments, and after due inquiry, confirm that:

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 for the financial year ended on March 31, 2016 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 the Companies Act, 2013 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; and

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.

32. Acknowledgement

Your Directors take this opportunity to express their deep and sincere gratitude to the Clients, Customers and Shareholders of the Company for their trust and patronage, as well as to the various Bankers, Reserve Bank of India, Securities and Exchange Board of India, Bombay Stock Exchange, Government of India and other Regulatory Authorities for their continued co-operation, support and guidance.

For and on behalf of the Board of Directors

KIFS Financial Services Limited

Rajesh P. Khandwala

(Chairman & Managing Director)

(DIN: 00477673)

Ahmadabad, May 24, 2016


Mar 31, 2015

Dear Members,

The Directors have pleasure in presenting their 20th Annual Report of the Company together with Audited Statement of Accounts for the FY ended on 31st March, 2015.

1. FINANCIAL RESULTS

(Rs. in Lacs)

Particulars 2014-15 2013-14

Revenue from Operations 380.78 474.48

Other Income 0.01 2.57

Total Income 380.79 477.05

Total Expenditure 100.47 239.34

Profit/ Loss before Exceptional Items & provision for Tax 280.32 237.71

Exceptional Items 0.00 0.00

Profit before Tax 280.32 237.71

Provision for Taxation 92.03 77.39

Net Profit 188.29 160.32

EARNINGS PER SHARE (Rs.)

Basic & Diluted 1.74 1.48

2. REVIEW OF OPERATIONS

During the year under review, total income of the Company has declined to Rs. 380.79 Lacs as compared to Rs. 477.05 Lacs earned during the previous year showing a fall of about 19.75%. The reason of fall in the Company's income is the poor performance in the primary as well as secondary markets in the FY 2014-15.

On the other side, the total expenditure of the Company, during the current year has also showed a reduction of more than 50% as compared to that of previous year. Current year's total expenditure is Rs. 100.47 Lacs and that during previous year it was Rs. 239.34 Lacs. The reduction of expenditure is due to curtailing of borrowings by the Company owing to the higher interest rates. Thus, the Company has achieved an OPM of Rs. 90.34%.

The Net profit of the company after providing for all expenditure, necessary provisions and prior period adjustments as well as current tax stood at Rs. 188.29/- lacs compared to Rs. 160.32/- lacs of previous year showing an increase of about 18%. Thus, the Company was able to achieve NPM of 49.45% during the year under review.

The detailed results of operations of the Company are given in the "Management Discussion & Analysis" forming part of this report.

3. DIVIDEND

Considering the consistent financial performance of the Company, your Company is desirous of rewarding its shareholders by sharing its Profit in the form of dividend. In continuance of the earlier trends of cash dividends, the Board of Directors have recommended Dividend of Rs. 0.50/- (Fifty Paisa only, i.e. 5%) per Equity Share on the face value of Rs. 10/- each on the total paid up capital as on 31st March, 2015 for approval by the shareholders at the 20th Annual General Meeting. The dividend, if approved by the members at ensuing Annual General Meeting, will be paid to those shareholders whose names appear in the Register of Members as on the date of Book closure. The dividend and dividend distribution tax will absorb a total sum of Rs. 6510272/-.

4. TRANSFER TO RESERVES

The Company proposes to transfer Rs. 3766000/- to the Special Reserve out of amount available for appropriations and an amount of Rs. 26386654/- is proposed to be retained in the Profit and Loss Account.

5. DEPOSITS

During the year ended March 31, 2015, the Company has not accepted any deposits from the public within the meaning of the provisions of the Non-Banking Financial Companies (Reserve Bank) Directions, 1977 and RBI's notification no. DFC. 118DG/ (SPT)-98 dated 31st January, 1998.

Further, being a non banking financial company, the disclosures required as per Rule 8 (5)(v)&(vi) of the Companies (Accounts) Rules, 2014 read with Rule 3 (ii) of Companies (Acceptance of Deposits) Rules, 2014, and section 73 of the Companies Act, 2013, are not applicable to the Company

6. EMPLOYEE STOCK OPTIONS SCHEME

Your Company has not issued any Employee Stock Options Plans. As such no Employee Stock Option Schemes have been framed.

7. SUBSIDIARY COMPANIES

The Company has no Subsidiaries / Associates or Joint venture companies during the period under review. As such the requirement for submission of report on the performance and the financial position of the Subsidiary/ Associate/ Joint venture companies is not applicable to the Company.

8. DIRECTORS AND KEY MANAGERIAL PERSONNEL (KMP)

a.) Director Retiring by Rotation:

Pursuant to provisions of Section-152 of the Companies Act, 2013 and in accordance with the Articles of Association of the Company, Mrs. Sonal R. Khandwala, Director of the Company, retires by rotation at the ensuing Annual General Meeting and being eligible offers herself for re-appointment. The Board of Directors recommends her re-appointment.

b.) Independent Directors:

In terms of the definition of 'Independence' of Directors as prescribed under Clause 49 of the Listing Agreement entered with Stock Exchanges and Section 149(6) of the Companies Act, 2013 Mr. Devang Manubhai Shah and Mr. Dharmendra Navnitlal Soni are the Non-executive Independent Directors on the Board of the Company. They were appointed as Independent Directors for a period of five years from the date of previous Annual General Meeting i.e. 6th September, 2014. None of the Independent Directors are due for re-appointment.

The Independent Directors have given declarations confirming that they meet the criteria of independence as prescribed both under the Companies Act, 2013 and Clause 49 of the Listing Agreement with the Stock Exchange.

c. ) Woman Director:

In terms of the provisions of Section 149 of the Companies Act, 2013 and Clause 49 of the Listing Agreement, a company shall have at least one Woman Director on the Board of the Company. In order to comply with the said provisions of the Companies Act, 2013 and the Listing Agreement, your Company had appointed Mrs. Sonal R. Khandwala as Director on the Board of the Company in the previous Annual General Meeting held on 6th September, 2014. She holds the position as such on the date.

All the directors of the Company have confirmed that they are not disqualified from being appointed as directors in terms of the Companies Act, 2013.

d.) Resignation of Directors:

There were no resignations of Directors during the year.

e.) Key Managerial Personnel:

Pursuant to provisions of section 203 of the Companies Act, 2013, Mr. Bhavik J. Shah was appointed as the Chief Financial Officer of the Company w.e.f. 27th May, 2014.

The appointment of Mr. Rajesh P. Khandwala, Managing Director of the Company and Ms. Krupa N. Joshi Company Secretary of the Company, who were already in the respective offices before the commencement of the Companies Act, 2013, were formalized as the Key Managerial Personnel of the Company in terms of the said section.

None of the Key Managerial Personnel have resigned during the year under review.

9. NUMBER OF MEETINGS OF THE BOARD

During the year four Board Meetings and four Audit Committee Meetings were convened and held, the details of which are given in the "Corporate Governance Report" that forms part of this Annual Report. The intervening gap between any two Meetings was within the period prescribed under the Companies Act, 2013.

Additionally, other committee meetings as well as separate meeting exclusively of the Independent Directors were also held during the year under review.

10. COMMITTEES OF THE BOARD

Currently, the Company has four committees viz; "Audit Committee", "Nomination and Remuneration Committee", "Stakeholders Relationship Committee" and "Risk Management Committee" which have been established as a part of the better corporate governance practices and are in compliance with the requirements of the relevant provisions of applicable laws and statutes as well as listing agreement.

Apart from the above statutory committees, the Company also has a Managing Committee of the Board of Directors to look after the routine affairs of the Company.

The details with respect to the compositions, scope and powers, roles, terms of reference, meetings, etc. of the relevant committees are given in detail in the "Corporate Governance Report" section forming part of this Annual Report.

11. CORPORATE SOCIAL RESPONSIBILLITY

During the year under, your Company does not meet the criteria laid under section 135(1) of the Companies Act, 2013 read with Companies (Corporate Social Responsibility Policy) Rules, 2014 pertaining to the constitution of the Corporate Social Responsibility Committee and other provisions covered there under regarding expenditure to be made on certain specified activities as a part of the Corporate Social Responsibility. Therefore the Company has not framed the Corporate Social Responsibility Committee/ Policy and has not incurred any expenditure thereon.

12. PERFORMANCE EVALUATION OF BOARD

In accordance with Clause - 49 of the Listing Agreement which mandates the Board to monitor and review the Board evaluation framework as well as the provisions of the Companies Act, 2013, which states that a formal annual evaluation needs to be made by the Board of its own performance and that of its committees and individual directors and further in accordance with schedule IV of the Companies Act, 2013 which also states that the performance evaluation of the independent directors shall be done by the entire Board of Directors, excluding the Director being evaluated, the evaluation of all the Directors and the Board as a whole as well as all the committees of the Board, was conducted on the basis of the criteria and framework adopted by the Board.

The evaluation process has been mentioned in details in the "Corporate Governance Report" section forming part of this Annual Report.

13. VIGIL MECHANISM/ WHISTLE BLOWER POLICY

The Company has implemented a Whistle Blower Policy pursuant to which Whistle Blowers can raise concerns against unacceptable work behaviour, management practices, business practices, physiologically adverse work conditions, actual or suspected fraud or violation of the Codes of conduct or violation of legal or regulatory requirements, incorrect or misrepresentation of any financial statements and reports and such other activities of reasonably negative nature which may be seen to tarnish the image of the Company, its products, its social image, employee morale and employee's safety at the workplace etc. and such other Reportable Matters (as defined in the policy). Further, the mechanism adopted by the Company encourages the Whistle Blower to report genuine concerns or grievances and provides for adequate safeguards against victimization of Whistle Blower who avail of such mechanism and also provides for direct access to the Chairman of the Audit Committee, in exceptional cases.

The functioning of the Vigil mechanism is reviewed by the Audit Committee from time to time. None of the Whistle Blowers have been denied access to the Audit Committee of the Board. The details of the Vigil mechanism/ Whistle Blower Policy are explained in the "Corporate Governance Report" and also available on the website of the Company (www.kifsfinance.com).

14. STATEMENT OF DEVELOPMENT & IMPLEMENTATION OF RISK MANAGEMENT POLICY

The Company has framed and implemented a policy in the name of "Risk Management Policy" for assuring to meet the risks associated with business of the Company. Business risk evaluation and management is an ongoing process within the Company. The assessment is periodically examined by the Risk Management Committee of Board. The Company, while giving loan to its customers, follows the criteria and procedure laid in its Risk Management Policy and the credibility of the clients.

15. LOANS/ GUARANTEES OR INVESTMENT IN SECURITIES

Pursuant to Section 186(11) of the Companies Act, 2013, read with Rule 11(2) of Companies (Meetings of Board and its Powers) Rules, 2014, the loans made, guarantees given or securities provided or acquisition of securities by a Non Banking Financial Company in the ordinary course of its business are exempted from disclosure in the Annual Report.

Since your Company is a Non Banking Financial Company registered with the Reserve Bank of India in the Category of Loan Company, it is exempted under the said section from giving disclosure regarding the Loans or guarantees given or securities provided.

As regards investments made by the Company, the details of same are provided in Balance Sheet and under the Notes forming part of the Annual Accounts of the Company for the year ended March 31, 2015.

16. CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

All related party transactions that were entered during the financial year were in the ordinary course of the business of the Company and were on arm's length basis. There were no materially significant related party transactions entered by the Company with Promoters, Directors, Key Managerial Personnel or other persons which may have a potential conflict with the interest of the Company.

Considering the nature of the industry in which the Company operates, transactions with related parties of the Company are in the ordinary course of business specially w.r.t. IPO Funding and Loan against securities which are also on arms' length basis. All such Related Party Transactions are placed before the Audit Committee for approval, wherever applicable.

The policy on materiality of Related Party Transactions and also on dealing with Related Party Transactions as approved by the Audit Committee and the Board of Directors is uploaded on the website of the Company and the link for the same is (http://kifsfinance.com/wp-content/uploads/2015/02/RPT-Policy-KIFS.pdf). Since no material related party transactions were entered by the Company and all the transactions entered into by the Company with related parties were in the ordinary course of business and on an arm's length basis, form AOC-2 is not applicable to the Company.

17. INTERNAL FINANCIAL CONTROL SYSTEMS AND THEIR ADEQUACY

Your Company has laid down set of standards, processes and structure which enables to implement internal financial control across the organization and ensure that the same are adequate and operating effectively. Internal Financial Control system of the Company provides a reasonable assurance with regard to maintaining of proper accounting controls, monitoring of operations, protecting assets from unauthorized use or losses, compliance with regulations and for ensuring reliability of financial reporting.

The certification provided in the CEO / CFO certification section of the Annual Report confirms the adequacy of our internal control system and procedures.

18. EXTRACTS OF ANNUAL RETURN

Pursuant to section134 (3) (a) section 92 (3) of the Companies Act 2013, read with Rule 12 of the Companies (Management and Administration) Rules, 2014 the extracts of the Annual Return as at 31st March, 2015, in the prescribed form MGT - 9 forms part of this report as "Annexure 1".

19. AUDITORS

a.) STATUTORY AUDITORS:

As per the provisions of section 139 of the Companies Act, 2013 read with Rules made there under, the members, in the 19th Annual General Meeting of the Company held on 6th September, 2014, had appointed M/s. Shailesh C. Parikh & Co., Chartered Accountants, Ahmedabad, ( FRN No: 109858W) as the statutory auditors of the Company for a period of 3 years i.e. till the conclusion of the Annual General Meeting of the Company to be held for the Financial year 2016-17, subject to ratifying the said appointment at every AGM till 2016-17.

The Company has received a certificate from M/s. Shailesh C. Parikh & Co., Chartered Accountants, giving confirmation to the effect that their appointment, if made, at the ensuing AGM would be in terms of Sections 139 and 141 of the Companies Act, 2013 and rules made there under. The board proposes to the members to ratify the said appointment of M/s. Shailesh C. Parikh & Co., Chartered Accountants, Ahmedabad.

b.) INTERNAL AUDITORS:

In accordance with the provisions of section 138 of the Companies Act, 2013, read with Rules made thereunder, your Company has re-appointed M/s. Nimita A. Desai & Co., Chartered Accountants, Ahmedabad as the Internal Auditors of the Company in the Board meeting held on 28th May, 2015 to conduct the internal audit of the functions and activities of the Company for the financial year - 2015-16.

c.) SECRETARIAL AUDITORS:

Pursuant to provisions of section 204 of the Companies Act, 2013 and Rules framed thereunder, M/s. Jay Bhavsar & Associates, Practicing Company Secretaries, Ahmedabad were appointed as the Secretarial Auditors to conduct the secretarial Audit of the Company for the Financial Year 2014-15 by the Board of Directors in their meeting held on 27th May, 2014. However, M/s. Jay Bhavsar & Associates, Practicing Company Secretaries showed their unwillingness to continue as the Secretarial Auditor and resigned w.e.f. 12th February, 2015 from the said office due to his pre-occupations.

As such M/s. AG Shah & Associates, Practicing Company Secretaries, Ahmedabad were appointed as the Secretarial Auditor by the Board in their meeting held on 12th February, 2015 to conduct the Secretarial Audit for the FY 2014-15. The Report of the Secretarial Auditor, M/s. AG Shah & Associates, Practicing Company Secretaries for the FY 2014-15 is annexed herewith as "Annexure - 2".

d.) Explanations or comments by the Board on every qualification/

reservation/ adverse remark or disclaimer made by the Statutory Auditor in his Audit Report and by the Secretarial Auditor in his Secretarial Audit Report

The Statutory Auditors have not given any qualification, reservation or made any adverse remarks or disclaimer in their Audit Report. The Secretarial Auditor has not made any adverse comments or given any qualification, reservation or adverse remarks or disclaimer in their Audit Report.

20. INVESTMENT ADVISORY BUSINESS

Your Company intends to expand its present scope of operations and is proposing to venture into activities of "Investment Adviser" at appropriate time considering the market scenario, whereby the Company will advise its clients in placing their funds or other securities for short, medium or long term periods in various financial instruments/ products in accordance with the requirements of the client. For conducting the said activity, the Company has also obtained registration with SEBI as "Investment Adviser" under SEBI (Investment Advisers) Regulations, 2013 vide registration no. INA000001852 dated 13th June, 2014.

21. ALTERATION OF THE MEMORANDUM OF ASSOCIATION THROUGH POSTAL BALLOT

The Company is required to alter its Memorandum of Association, for the inclusion of the activity of "Investment Adviser" in the Main Objects Clause of the Memorandum of Association of the Company. The Board of Directors have approved the alteration of the Memorandum of Association and further for obtaining the approval of the members for the said purpose, the Company is issuing the Postal Ballot Notice, since, in terms of Section 110 of the Act and the Companies (Management and Administration) Rules, 2014, the consent of the members for alteration of the Memorandum of Association is required to be obtained through postal ballot process.

22. MATERIAL CHANGES AND COMMITMENT AFFECTING FINANCIAL POSITION OF THE COMPANY

There are no material changes and commitments, affecting the financial position of the Company which has occurred between the end of the financial year of the Company i.e. 31st March, 2015 and the date of the Directors' Report i.e. 28th May, 2015.

The Company does not have any subsidiary. There has been no change in the nature of business of the Company No significant or material Orders have been passed by the regulators or Courts or Tribunals impacting the going concern status of the Company and/ or the Company's operations in future.

23. RATIO OF REMUNERATION OF EACH DIRECTOR

The ratio of the remuneration of each director to the median employee's remuneration and other details in terms of sub-section 12 of Section 197 of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014:

Sr. Requirements/ Particulars No.

(i.) ratio of the remuneration of each director to the median remuneration of the employees of the company for the financial year;

(ii.) percentage increase in remuneration of director, Chief Financial Officer, Chief Executive Officer, Company Secretary or Manager, if any, in the financial year;

(iii.) percentage increase in the median remuneration of employees in the financial year;

(iv.) number of permanent employees on the rolls of company;

(v.) explanation on the relationship between average increase in remuneration and company performance;

(vi.) comparison of the remuneration of the Key Managerial Personnel against the performance of the company;

(vii.) variations in the market capitalisation of the company, price earnings ratio as at the closing date of the current financial year and previous financial year and percentage increase over decrease in the market quotations of the shares of the company in comparison to the rate at which the company came out with the last public offer in case of listed companies, and in case of unlisted companies, the variations in the net worth of the company as at the close of the current financial year and previous financial year;

(viii.) average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration;

(ix.) comparison of the each remuneration of the Key Managerial Personnel against the performance of the company;

(x.) the key parameters for any variable component of remuneration availed by the directors;

(xi.) the ratio of the remuneration of the highest paid director to that of the employees who are not directors but receive remuneration in excess of the highest paid director during the year;

(xii.) affirmation that the remuneration is as per the remuneration policy of the Company.

Sr. Disclosure No.

(i.) Director's Name Ratio to median remuneration.

Mr. Rajesh P. 3.7:1

Khandwala, MD

Mrs. Sonal R. Nil

Khandwala

Mr. Devang Shah Nil

Mr. Dharmendra Soni Nil

(ii.) Director/ CFO/ CS Ratio to median remuneration.

MD Nil

Other Director Nil

CFO 7.5%

CS 7.5%

(iii.) 14%

(iv.) 8

(v.) Normal industry standards applied based on turnover of the Company.

(vi.) During the year under review the total remuneration to KMPs were Rs. 13.06 Lacs which works out to 6.94% of the Net Profit of the Company of Rs. 188.29 Lacs

(vii.) Details 31.03.2015 31.03.2014

Market Capitalization Rs. 28.13 Rs. 27.32 Crores Crores

Price Earnings Ratio 14.94 17.06



% increase/ The stock price of the (decrease) of market Company has increased to Rs. quotations 26/- as on 31.03.2015 which shows increase of 36.84% to the last preferential allotment rate of Rs. 19/-.

(viii.) Average % increase in the salaries of employees other than managerial personnel in the Financial Year was 14% whereas increase in managerial remuneration was NIL.

(ix.) Name & Rem. Of Performanc Rem. Of KMP Designation KMP e of the Co. in of KMP (Rs. In (Rs. In comparison Lacs) Lacs) with performance of the Co.

Mr. Rajesh P. 6.00 188.29 3.19% Khandwala - MD

Mr. Bhavik J. 287 188.29 1.52% Shah - CFO

Mr. Krupa N. 4.19 188.29 2.23% Joshi - CS

(x.) Not applicable since no other payment or commission based on net profit is being paid to the Directors.

(xi.) None

(xii.) The Board of Directors of the Company affirms that the remuneration is as per the remuneration policy of the company

24. REMUNERATION GIVEN TO MANAGING DIRECTOR FROM HOLDING/ SUBSIDIARY COMPANY

The Managing Director of the Company, Mr. Rajesh P. Khandwala also occupies the office of the Managing Director in the Holding Company of the Company viz; KIFS Securities Private Limited and is receiving by way of salary, commission, perquisites and other allowances, the total remuneration of Rs. 5,00,000/- p.m. (Rupees Five lacs p.m.) from the holding company.

25. PARTICULARS OF EMPLOYEES

Pursuant to section 197(12) of the Companies Act, 2013 read with Rule 5(2) of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, there was no employee, who, if employed,

(i) throughout the financial year was in receipt of remuneration for the year which, in the aggregate, was not less than sixty lakh rupees;

(ii) for a part of the financial year, was in receipt of remuneration for any part of the year, at a rate which, in the aggregate, was not less than five lakh rupees per month;

(iii) throughout the financial year or part thereof, was in receipt of remuneration in that year which, in the aggregate, or as the case may be, at a rate which, in the aggregate, is in excess of that drawn by the managing director or whole-time director or manager and holds by himself or along with his spouse and dependent children, not less than two percent of the equity shares of the company.

As such, the Company is not required to submit the statement containing details as required under Rule 5(2) of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

26. DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

The Company has been employing women employees in various cadres. A policy of the The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 has also been laid and circulated to every female employee of the Company so as to inform them about the redressal mechanism available to them in the cases of such harassment. Your Directors state that during the year under review, there were no cases filed or compliant received from any employee pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

27. LISTING

Presently, the entire Equity Share Capital of your Company is listed at Bombay Stock Exchange Ltd. (BSE) (Scrip Code - 535566). The company's equity shares are available for compulsory trading in demat form by all investors on BSE which is having trading terminals in various cities affording to the investors convenient access to trade and deal in the company's equity shares across the country.

The Company is regular in complying with the requirements of the Listing Agreement and has duly paid the requisite Listing Fees at BSE, where the Company is listed.

28. CORPORATE GOVERNANCE

The Company has been observing the best corporate governance practices and benchmarking itself against each such practice on an ongoing basis. A separate section on Corporate Governance as per the Listing Agreement is annexed to the Directors Report and a Certificate from the Statutory Auditors of the Company regarding compliance of the conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreements with the Stock Exchanges forms part of this Annual Report (enclosed as "Annexure - 3").

29. MANAGEMENT DISCUSSION AND ANALYSIS

A detailed chapter on Management Discussion and Analysis as per Clause - 49 of the Listing Agreement forming part of the Directors' Report is included in this Annual Report.

30. COMPLIANCE WITH RESERVE BANK OF INDIA (RBI) GUIDELINES

The Company being a Non Banking Financial Company categorized as a Loan Company continues to comply with all the applicable regulations and Guidelines issued by RBI from time to time.

31. PARTICULARS REGARDING CONSERVATION OF ENERGY/ TECHNOLOGY ABSORPTION/ FOREIGN EXCHANGE EARNINGS & OUTGO

The disclosures to be made under Section 134 (3) (m) of the Companies Act, 2013 read with Rule (8)(3) of the Companies (Accounts) Rules, 2014 pertaining to conservation of energy and technology absorption and foreign exchange earnings and outgo, are not applicable to the Company as the Company being a non banking financial company, is neither involved in any manufacturing, processing activities nor any of its transactions involve foreign exchange earnings and outgo.

32. DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to the requirement under 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 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 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 the Companies Act, 2013 for safeguarding the assets of the Bank 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; and

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.

33. ACKNOWLEDGEMENT

Your Directors take this opportunity to express their deep and sincere gratitude to the clients, customers and shareholders of the Company for their trust and patronage, as well as to the Reserve Bank of India, Securities and Exchange Board of India, Government of India and other Regulatory Authorities for their continued co-operation, support and guidance. Your Directors also express a profound sense of appreciation for the commitment shown by the employees in supporting the Company at all levels and looks forward to their continued commitment to achieve further growth and take up more challenges.

By Order of the Board FOR KIFS FINANCIAL SERVICES LTD. Sd/-

Place: Ahmedabad Rajesh P. Khandwala Date: 28/05/2015 Chairman

Regd. Office:

B-81, Pariseema Complex, C.G. Road, Ellisbridge, Ahmedabad-380006 CIN:L67990GJ1995PLC025234


Mar 31, 2014

Dear members,

The Directors have pleasure in presenting their 19th Annual Report of the Company together with Audited Statement of Accounts for the FY ended on 31st March, 2014.

FINANCIAL RESULTS (Rs. In Lacs)

Particulars 2013-14 2012-13

Revenue from Operations 474.48 182.30

Other Income 2.57 2.44

Total Income 477.05 184.74

Total Expenditure 239.34 36.76

Profit / Loss Before Exceptional Items and Provision for Tax 237.71 147.98

Exceptional Items 0.00 0.00

Profit Before Tax 237.71 147.98

Provision for Taxation 77.39 41.50

Net Profit 160.32 106.48

EARNINGS PER SHARE (Rs.)

Basic & Diluted 1.48 1.57

REVIEW OF OPERATIONS

During the year under review, total income of the Company has increased to Rs. 477.05 Lacs as compared to Rs. 184.74 Lacs earned during the previous year showing a rise of about more than 150%. The rise in the income of the Company is because of the interest earned on primary market funding as new IPOs were initiated in the FY 2012-13 as well as by interest earned on loans against shares.

On the other side, the total expenditure of the Company, during the current year has also increased from Rs. 36.76 Lacs to Rs. 239.34 Lacs due to increase in finance costs which consists mainly of interest on borrowings.

The Net profit of the company after providing for all expenditure, necessary provisions and prior period adjustments stood at Rs. 160.32/- lacs compared to Rs. 106.48/- lacs of previous year showing a rise of about 50.00%.

The detailed results of operations of the Company are given in the "Management Discussion &Analysis" forming part of this report.

DIVIDEND

Keeping in view the overall performance during the year, your Directors recommend a dividend of Rs. 0.50/- (Fifty Paisa only, i.e. 5%) per Equity Share on the face value of Rs. 10/- each on the total paid up capital as on 31st March, 2014. The dividend, if approved by the members at ensuing Annual General Meeting, will be paid to those shareholders whose names appear in the Register of Members as on the date of Book closure. The dividend and dividend distribution tax will absorb a sum of Rs. 6328260/-.

DIRECTORS

Pursuant to provisions of Section-152 of the Companies Act, 2013 and in accordance with the Articles of Association of the Company, Mr. Rajesh P. Khandwala, Director of the Company, retires by rotation at the ensuing Annual General Meeting and being eligible offers himself for re-appointment. Mr. Rajesh P. Khandwala is the Managing Director. As such on his reappointment, he will resume to the office of the Managing Director. The Board of Directors recommends his re-appointment.

The Directors viz; Mr. Dharmendra N. Soni and Mr. Devang M. Shah, have been on the Board of Directors of the Company since 28th December, 2002. They were designated as the Independent Directors pursuant to clause 49 of the Listing Agreement entered into with the Bombay Stock Exchange Ltd. by the Company. But as per the new Companies Act, 2013, Mr. Dharmendra N. Soni and Mr. Devang M. Shah are required to be appointed as the Independent Directors in terms of section 149 of the Companies Act, 2013. They shall hold office for a term upto five consecutive years on the Board of a Company subject to approval by the members in the ensuing Annual General Meeting.

Your Board is of the opinion that both the Directors i.e. Mr. Dharmendra N. Soni and Mr. Devang M. Shah, fulfill the conditions specified in the Companies Act, 2013 and the rules made thereunder for being appointed as the Independent Directors of the Company. Both the Directors are well versed with the capital market and have huge experience in this field. The Board believes that their continued association with the Company would be of immense benefit to the Company.

Further, 149 of the Companies Act, 2013 also contain the provisions for appointment of a Woman Director on the Board of the Company. As such, Mrs. Sonal R. Khandwala was appointed as the Additional Director by the Board with effect from 27/05/2014 in accordance with section 161 of the Companies Act, 2013 read with the Articles of Association of the Company. Mrs. Sonal R. Khandwala will hold office upto the date of the ensuing Annual General Meeting. The Company has received notice in writing under the provisions of section 160 of the Companies Act, 2013, from a member along with a deposit of Rs. 1,00,000/- proposing the candidature of Mrs. Sonal R. Khandwala for being appointed as the Director liable to retire by rotation as contained in section 152 of the Companies Act, 2013.

DE-LISTING

Presently, the Equity Shares of your Company are listed at Bombay Stock Exchange Ltd. (BSE). Earlier the Equity Shares were also listed at Ahmedabad Stock Exchange Ltd. (ASE) and Vadodara Stock Exchange Ltd. (VSE). Since there was no liquidity/total absence of trading for a considerable long period of time in ASE and VSE, your Company decided to get its Equity Shares delisted from the said Stock Exchanges viz; ASE and VSE. Therefore, based on Regulation 6(a) of SEBI Delisting Regulations, which provides that a Company can voluntarily delist its securities from regional stock exchanges, if the equity shares continue to remain listed on the stock exchange(s) having nationwide trading terminals like BSE, your Company made an application to ASE and VSE for voluntary delisting of its entire 10818000 Equity Shares from the said Exchanges viz; ASE and VSE.

The Equity Shares of the Company were delisted from VSE and ASE vide their approval letters dated 30th October, 2013 and 20th January, 2014 respectively.

Thus, the company''s equity shares are now available for compulsory trading in demat form by all investors on BSE which is having trading terminals in various cities affording to the investors convenient access to trade and deal in the company''s equity shares across the country.

The Company is regular in complying with the requirements of the Listing Agreement and has duly paid the requisite Listing Fees at BSE, where the Company is listed.

PUBLIC DEPOSITS

During the year ended March 31, 2014, the Company has not accepted any deposits from the public within the meaning of the provisions of the Non-Banking Financial Companies (Reserve Bank) Directions, 1977 and RBI''s notification no. DFC. 118DG/(SPT)-98 dated 31st January, 1998.

CORPORATE GOVERNANCE

The Company has been observing the best corporate governance practices and benchmarking itself against each such practice on an ongoing basis. A separate section on Corporate Governance and a Certificate from the Statutory Auditors of the Company regarding compliance of the conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreements with the Stock Exchanges forms part of this Annual Report (enclosed as "Annexure-1").

MANAGEMENT DISCUSSION AND ANALYSIS

A detailed chapter on Management Discussion and Analysis as per Clause - 49 of the Listing Agreement forming part of the Directors'' Report is included in this Annual Report.

COMPLIANCE WITH RESERVE BANK OF INDIA (RBI) GUIDELINES

The Company being a Non Banking Financial Company categorized as a Loan Company continues to comply with all the applicable regulations and Guidelines issued by RBI from time to time.

AUDITORS

a.) STATUTORY AUDITORS:

The Statutory Auditors of the Company M/s. Shailesh C. Parikh & Co., Chartered Accountants, Ahmedabad shall retire at the ensuing Annual General Meeting and being eligible offer themselves for re-appointment. The Auditors have furnished a certificate to the effect that if re-appointed, their appointment shall be within the limits prescribed under Section 224 (1-B) of the Companies Act, 1956.

As per provisions of section 139 of the Companies Act, 2013 read with Rules thereunder, M/s. Shailesh C. Parikh & Co., Chartered Accountants, Ahmedabad, can be reappointed for a period of three consecutive years from the ensuing AGM subject to ratification of the reappointment by the members at every Annual General Meeting held after this Annual General Meeting. Therefore, the Board of Directors recommends their re-appointment for a period of three years i.e. from the conclusion of the ensuing AGM to the conclusion of the Annual General Meeting held for the financial year 2016-17.

b.) INTERNAL AUDITORS:

In accordance with the provisions of section 138 of the Companies Act, 2013, read with Rules made thereunder, your Company has appointed M/s. Nimita A. Desai & Co., Chartered Accountants, Ahmedabad as the Internal Auditors of the Company in the Board meeting held on 27th May, 2014 to conduct the internal audit of the functions and activities of the Company.

c.) SECRETARIAL AUDITORS:

Pursuant to provisions of section 204 of the Companies Act, 2013 and Rules framed thereunder, M/s. Jay Bhavsar & Associates, Practicing Company Secretaries, Ahmedabad were appointed as the Secretarial Auditors to conduct the secretarial Audit of the Company for the Financial Year 2014-15.

PARTICULARS OF EMPLOYEES

No employee, employed throughout the financial year was in receipt of remuneration equal to or exceeding Rs. 60,00,000/- p.a. or if employed for a part of the financial year, was in receipt of remuneration equal to or exceeding Rs. 5,00,000/- p.m., therefore the Company is not required to submit the details as required under Section 217(2-A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975.

CONSERVATION OF ENERGEY, TECHNOLOGY ABOSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The Company is a non banking financial company. It is neither involved in any manufacturing, processing activities nor any of its transactions involve foreign exchange earnings and outgo. In view of the same, the particulars in terms of section 217(1)(e) of the Companies Act, 1956 and the Companies (Disclosures of Particulars in the Report of the Board of Directors) Rules, 1988, regarding conservation of energy and technology absorption and foreign exchange earnings and outgo, are not applicable to the Company.

DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to the requirement of Section 217(2AA) of the Companies Act, 1956 with respect to Directors'' Responsibility Statement, it is hereby confirmed:

I) That in the preparation of the Annual Accounts, all the applicable Accounting Standards have been followed

ii) That the accounting policies are adopted and consistently followed and the judgments and estimates made 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 of the Company for the Financial Year

iii) That the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing/detecting fraud and irregularities

iv) That the Directors have prepared the Annual Accounts on Going Concern Basis.

ACKNOWLEDGEMENT

Your Company would like to take this opportunity to express its sincere thanks to its clients and customers for their continued patronage. Your Directors wish to place on record their deep sense of appreciation for the co-operation and assistance extended to the company by its Promoters, Bankers, Government Authorities, Shareholders and Employees of the Company at all levels.



Place: Ahmedabad By Order of the Board Date: 27/05/2014 For, KIFS FINANCIAL SERVICES LTD.

Regd. Office B - 81, Pariseema Complex, S/d C. G. Road, Ellisbridge, Rajesh P. Khandwala Ahmedabad - 380006. Chairman


Mar 31, 2013

To, The Members of KIFS Financial Services Limited

Ahmedabad

The Directors have pleasure in presenting their 18th Annual Report of the Company together with Audited Statement of Accounts for the FY ended on 31st March, 2013.

FINANCIAL RESULTS (Rs. In Lacs)

Particulars 2012 -13 2011 -12

Revenue from Operations 182.30 238.75 Other Income 2.44 3.69

Total Income 184.74 242.44

Total Expenditure 36.76 80.58

Profit / Loss Before Exceptional Items and Provision for Tax 147.98 161.86

Exceptional Items (MAT Credit entitlement net of 0.00 34.24

Current Year sutilization

Profit Before Tax 147.98 196.10

Provision for Taxation 41.50 33.67

Net Profit 106.48 162.43

REVIEW OF OPERATIONS

During the year under review, total income of the Company has reduced to Rs. 184.74 Lacs as compared to Rs. 242.44 Lacs earned during the previous year showing a fall of about 23.80%. The reason of fall in the Company''s income is the poor performance in the securities market in the FY 2012-13 more particularly, in the primary markets.

On the other side, the total expenditure of the Company, during the current year has also showed a reduction of more than 50% as compared to that of previous year. Current year''s total expenditure is Rs. 36.76 Lacs and that during previous year it was Rs. 80.58 Lacs. The reduction of expenditure is duetocurtailingofborrowingsbythe Company owingto the higherinterest rates.

The Net profit of the company after providing for all expenditure, necessary provisions and prior period adjustments stood at Rs. 106.48/- lacs compared to Rs. 162.43/- lacs of previous year showing a decline of about 34.45%.

The detailed results of operations of the Company are given in the "Management Discussion & Analysis" forming part of this report.

DIVIDEND

Keeping in view the overall performance during the year, your Directors recommend a dividend of Rs. 0.50/- (Fifty Paisa only, i.e. 5%) per Equity Share on the face value of Rs. 10/- each on the total paid up capital as on 31st March, 2013. The dividend, if approved by the members at ensuing Annual General Meeting, will be paid to those shareholders whose names appear in the Register of Members as on the Book closure date. The dividend and dividend distribution tax will absorb a sum ofRs. 62.86 lacs.

DIRECTORS

Pursuant to provisions of Section-256 of the Companies Act, 1956 and in accordance with the Articles of Association of the Company, Mr. Dharmendra N. Soni, Director of the Company, retires by rotation at the ensuing Annual General Meeting and being eligible offers himself for re- appointment. The Board of Directors recommends his re-appointment.

During the year, Mr. Rajesh P. Khandwala, Director of the Company was appointed as Managing Director for a period of Five years w.e.f. 4th February, 2013.

Further, Mr. Atul N. Parikh, who held the office of Independent Director on the Board of the Company, has resigned from the said Directorship w.e.f. 14th May, 2013. The Board of Directors places their appreciation for the valuable services and guidance provided by him during his tenure as the Director of the Company as well as the Chairman of the Audit Committee of the Company.

INCREASE IN AUTHORISED SHARE CAPITAL

During the year under review, the Authorised Share Capital of the Company was increased from Rs. 3,30,00,000/- (Rupees Three Crores and Thirty Lacs Only) divided into 33,00,000 (Thirty Three lacs) Equity Shares of Rs.10/- each to Rs. 11,00,00,000/- (Rupees Eleven Crores Only) divided into 1,10,00,000 (One Crore Ten Lacs) Equity Shares of Rs. 10/- each vide special resolution passed by the members of the Company in the Extra-ordinary General Meeting held on 4th December, 2012.

CAPITALIZATION OF RESERVES & BONUS ISSUE

In the Extraordinary General Meeting of the members of the Company held on 4th December, 2012, the members gave their consent for the capitalization of reserves to the extent of Rs. 2,40,40,000/- for the purpose of Bonus issue of Equity Shares and thereafter on 14th December, 2012, the Company made the Bonus issue of 24,04,000 Equity Shares in the ratio of 4:5 i.e. FOUR new fully paid up Equity Shares of Rs. 10/- each for every FIVE fully paid up Equity Shares of Rs. 10/- each held in the Company by the Shareholders on the Record date fixed by the Company.

PREFERENTIAL ISSUE / PRIVATE PLACEMENT OF EQUITY SHARES & UTILIZATION OF ISSUE PROCEEDS

The Members of the Company at their Extraordinary General Meeting held on 4th December, 2012 passed the special resolution for issue and allotment of 54,09,000 Equity Shares of Rs. 10/- each at a premium of Rs. 9/- each to the Promoter(s) and Non promoter(s) on preferential/ private placement basis. Subsequently, on 27th December, 2012, the said allotment of 54,09,000 Equity Shares was made to the Promoter(s) and Non-promoter(s), contained in the Notice convening the Extraordinary General Meeting.

The Capital, including Premium raised through such preferential issue/ private placement amounting to Rs. 1027.71 Lacs has been fully utilized as on 31st March, 2013 for the attainment of the objects specified in the Explanatory Statement to the Notice convening Extra-ordinary General Meeting and has also been disclosed to the Audit Committee. The detailed break-up of the utilization of such issue proceeds has been provided in the Notes to Accounts.

INCREASE IN PAID-UP EQUITY SHARE CAPITAL

During the year under review, the Paid Up Equity Share Capital of the Company was increased from Rs. 3,00,50,000/- (Rupees Three Crores and Fifty Thousand only) to Rs. 10,81,80,000/- (Rupees Ten Crores Eighty One Lacs and Eighty thousand only) as the Company made the Bonus issue of 2404000 Equity Shares of Rs. 10/- each fully paid up and 5409000 Equity Shares of Rs. 10/- each by way of Preferential Issue/ Private placement.

LISTING

Your Company made the Listing application to the Bombay Stock Exchange Limited (BSE) under "BSE''s Direct Listing Norms" for getting its entire Equity Share Capital listed on BSE. The Company received Final Listing and Trading approval of BSE on 8th May, 2013 and the trading of the Equity Shares of the Company on the platform of BSE was permitted from 10th May, 2013 onwards.

Earlier the Equity Shares of the Company were listed on the Ahmedabad Stock Exchange Limited (ASE) and Vadodara Stock Exchange Limited (VSE).

The Company is regular in complying with the requirements of the Listing Agreement and has duly paid the requisite Listing Fees at all the Exchanges where the Company is listed.

PUBLIC DEPOSITS

During the year ended March 31, 2013, the Company has not accepted any deposits from the public within the meaning of the provisions of the Non-Banking Financial Companies (Reserve Bank) Directions, 1977 and RBI''s notification no. DFC .118DG/ (SPT)-98 dated 31st January, 1998.

CORPORATE GOVERNANCE

The Company continues to adhere to High standard of Corporate Governance. The efforts of the Company in this direction are widely recognized by the investors and other stake holders.

As required under clause 49 of the Listing Agreement entered into with stock exchanges, a report on Corporate Governance forming part of this report together with the Certificate from the Auditors of the Company (enclosed as "Awiexure-1"), confirmingthe compliance of conditions of Corporate Governance is annexed to this Report.

MANAGEMENT DISCUSSION AND ANALYSIS

As per Clause-49 of the Listing Agreement, the Management Discussion and Analysis should form part of Directors'' Report. Hence a detailed chapter on Management Discussion and Analysis forms part of this Annual Report.

COMPLIANCE WITH RESERVE BANK OF INDIA (RBI) GUIDELINES

The Company being a Non Banking Financial Company categorized as a Loan Company continues to comply with all the applicable regulations and Guidelines issued by RBI from time to time.

AUDITORS

The Statutory Auditors of the Company M/s. Shailesh C. Parikh & Co., Chartered Accountants, Ahmedabad shall retire atthe ensuing Annual General Meeting and being eligible offer themselves for re-appointment. The Auditors have furnished a certificate to the effect that if re-appointed, their appointment shall be within the limits prescribed under Section 224 (1-B) of the Companies Act, 1956.

The Board of Directors recommends their re-appointment.

PARTICULARS OF EMPLOYEES

No employee, employed throughout the financial year was in receipt of remuneration equal to or exceeding Rs. 60,00,000/- p.a. or if employed for a part of the financial year, was in receipt of remuneration equal to or exceeding Rs. 5,00,000/- p.m., therefore the Company is not required to submit the details as required under Section 217(2-A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975.

CONSERVATION OF ENERGEY, TECHNOLOGY ABOSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The Company is a non banking financial company. It is neither involved in any manufacturing, processing activities nor any of its transactions involve foreign exchange earnings and outgo. In view of the same, the particulars in terms of section 217(l)(e) of the Companies Act, 1956 and the Companies (Disclosures of Particulars in the Report of the Board of Directors) Rules, 1988, regarding conservation of energy and technology absorption and foreign exchange earnings and outgo, are not applicable to the Company.

DIRECTORS''RESPONSIBILITY STATEMENT

Pursuant to the requirement of Section 217(2AA) of the Companies Act, 1956 with respect to Directors'' Responsibility Statement, it is hereby confirmed:

i) That in the preparation of the Annual Accounts, all the applicable Accounting Standards have been followed

ii) That the accounting policies are adopted and consistently followed and the judgments and estimates made 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 of the Company forthe FinancialYear

iii) That the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing/detecting fraud and irregularities

iv) That the Directors have prepared the Annual Accounts on Going Concern Basis.

ACKNOWLEDGEMENT

Your Company would like to take this opportunity to express its sincere thanks to its clients and customers for their continued patronage. Your Directors wish to place on record their deep sense of appreciation for the co-operation and assistance extended to the company by its Promoters, Bankers, Government Authorities, Shareholders and Employees of the Company at all levels.

Place: Ahmedabad By Order of the Board

Date: 24/05/ 2013 For, KIFS FINANCIAL SERVICES LTD.

Regd. Office

B/81, Pariseema Complex, S/d

C.G. Road, Ellisbridge, Rajesh P. Khandwala

Ahmedabad - 380006. Chairman


Mar 31, 2012

The Directors have pleasure in presenting their 17th Annual Report of the Company together with Audited Statement of Accounts for the financial year ended on 31st March, 2012.

FINANCIAL RESULTS

(Rs. in Lacs)

Particulars 2011-12 2010-11

Business and Other Income 242.44 402.54

Total Expenditure 80.58 29.33

Profit/ Loss before Exceptional Items 161.86 373.21 and provision for Tax

Exceptional Items (Mat Credit entitlement 34.24 0.00 net of Current Year''s utilization)

Profit before Tax 196.10 373.21

Provision for Taxation 33.67 74.57

Net Profit 162.43 298.64

REVIEW OF OPERATIONS

During the year under review, total income of the Company has reduced to Rs. 242.44 Lacs as compared to Rs. 402.54 Lacs earned during the previous year because of exceptional income of Rs. 317.64 lacs towards profit from sale of Investment in previous year. However, the Company''s income from operations which mainly comprises of Interest from Margin Funding, IPO Funding and Loans against Securities has shown a significant rise of Rs. 238.75 lacs as compared to Rs. 82.98 lacs during the previous financial year.

Amount of total expenditure has increased to Rs. 80.58 Lacs compared to Rs. 29.33 Lacs in previous year due to higher interest charges on borrowings. The other expenses largely remained flat during the year. The Net profit of the company after providing for all expenditure, necessary provisions and prior period adjustments was Rs. 162.43/- lacs compared to Rs. 298.64/- lacs of previous year showing a decline of about 46%.

The detailed results of operations of the Company are given in the Management Discussion & Analysis forming part of this report.

DIVIDEND

Keeping in view the overall performance during the year, your Directors recommend a dividend of Rs. 1.25/- (One Rupee and Twenty five paisa only, i.e. 12.50 %) per Equity Share on the face value of Rs. 10/- each on the total paid up capital as on 31st March, 2012. The dividend, if approved by the members at ensuing Annual General Meeting, will be paid to those shareholders whose names appear in the Register of Members as on the Book closure date. The dividend and dividend distribution tax will absorb a sum of Rs. 43.66 lacs.

DIRECTORS

Pursuant to provisions of Section-256 of the Companies Act, 1956 Mr. Devang M. Shah, retires by rotation at the forthcoming Annual General Meeting and being eligible offers himself for re-appointment.

The Ex-Chairman and Director, Mr. Parmanand G. Khandwala has resigned from the Board of the Company w.e.f. 19th May, 2012. The Board of Directors place their appreciation for the valuable services and guidance provided by him during his tenure as the Chairman & Director of the Company.

MANAGEMENT DISCUSSION AND ANALYSIS

As per Clause - 49 of the Listing Agreement, the Management Discussion and Analysis should form part of Director''s Report. Hence a detailed chapter on Management Discussion and Analysis forms part of this Annual Report.

CORPORATE GOVERNANCE

A report on Corporate Governance along with a certificate from the Auditors of the Company (enclosed with this Report as Annexure - 1) regarding the compliance of conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreement is annexed to this Report.

PUBLIC DEPOSITS

During the year ended March 31, 2012, the Company has not accepted any deposits from the public within the meaning of the provisions of the Non- Banking Financial Companies (Reserve Bank) Directions, 1977 and RBI''s notification no.DFC .118DG/(SPT)-98 dated 31st January, 1998.

AUDITORS

The statutory Auditors of the Company M/s. Shailesh C. Parikh & Co., Chartered Accountants, Ahmadabad retire at the ensuing Annual General Meeting and being eligible offer themselves for re-appointment. The Auditors have furnished a certificate to the effect that if re-appointed, their appointment shall be within the limits prescribed under Section 224 (1-B) of the Companies Act, 1956.

The Board of Directors recommends their re-appointment.

PARTICULARS OF EMPLOYEES

No employee, employed throughout the financial year was in receipt of remuneration not less than Rs. 24,00,000/- p.a. or if employed for a part of the financial year, was in receipt of remuneration not less than Rs. 2,00,000/- p.m. therefore the Company is not required to submit the details as required under Section 217(2-A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975.

CONSERVATION OF ENERGEY, TECHNOLOGY ABOSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The Company is a non banking financial company. It is neither involved in any manufacturing, processing activities nor any of its transactions involve foreign exchange earnings and outgo. In view of the same, the particulars in terms of section 217(1)(e) of the Companies Act, 1956 and the Companies (Disclosures of Particulars in the Report of the Board of Directors) Rules, 1988, regarding conservation of energy and technology absorption and foreign exchange earnings and outgo, are not applicable to the Company.

DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to the requirement of Section 217(2AA) of the Companies Act, 1956 with respect to Directors'' Responsibility Statement, it is hereby confirmed:

i) That in the preparation of the Annual Accounts, all the applicable Accounting Standards have been followed

ii) That the accounting policies are adopted and consistently followed and the judgments and estimates made 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 of the Company for the Financial Year

iii) That the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing/detecting fraud and irregularities

iv) That the Directors have prepared the Annual Accounts on Going Concern Basis.

ACKNOWLEDGEMENT

Your Company would like to take this opportunity to express its sincere thanks to its clients and customers for their continued patronage. Your Directors wish to place on record their deep sense of appreciation for the co- operation and assistance extended to the company by its Promoters, Bankers, Government Authorities, Shareholders and Employees of the Company at all levels.

FOR AND ON BEHALF OF THE BOARD

Sd

Place: Ahmadabad Rajesh P. Khandwala

Date: 23/05/2012 Chairman

Regd. Office:

B-81, Pariseema Complex,

C.G. Road, Ellisbridge,

Ahmedabad-380006


Mar 31, 2011

The Company was incorporated on 29th March 1995 as a Public Limited Company. It is listed on ASE & VSE and it is registered with the Reserve Bank of India {RBI) as a Non Banking Finance Company (NBFC).

The Directors hereby present the Annual Report of your company together with Audited Statement of Accounts for the year ended on 31rt March, 2011.

FINANCIAL RESULTS:

(Rs. in Lacs) Particulars 2010-11 2009-10

Business and Other Income 402.08 126.22

Total Expenditure 29.28 18.85

Profit/ Loss before provision for 372.80 107.37 Tax

Provision for Taxation 75.09 18.51

Profit after provision for Tax 298.23 88.88

REVIEW OF OPERATIONS:

During the year under review, total income of your Company has shown a remarkable growth as compared to the previous year. Total income has increased to Rs. 402.08 Lacs compared to Rs. 126,22 Lacs in the previous year. Amount of total expenditure also increased to Rs.29.28 Lacs compared to Rs, 18.85 Lacs in previous year. The net profit of the company after providing for all expenditure and necessary provisions was Rs. 298.23 lacs compared to Rs.88.88 Lacs of previous year. Your Directors are pleased to inform you that this significant rise income level is due to increase in interest income and IPO distribution income compared to previous year''s performance. During the year, there was also one exceptional source of income i.e. profit from sale of investment.

DIVIDEND:

Your Directors are pleased to recommend a special dividend of Re. 1 (Rupee One only, i.e. 10 %) on the paid up equity share capital of the Company for the year ended on 31st March, 2011. The dividend, if approved by the members at ensuing Annual General Meeting, will be paid to those shareholders whose names appear in the Register of Members as on the record date fixed for the purpose of determining eligibility for receiving dividend.

CHANGE IN CONSTITUTION OF AUDIT COMMITTEE AND SHAREHOLDERS'' GRIEVANCE COMMITTEE:

The Board of Directors at its meeting held on 14/02/2011 reconstituted the Audit Committee. Mr. Devang Shah and Mr. Parmanand G. Khandwala showed their unwillingness to continue as a member of Audit Committee, and their resignation from the committee were accepted. At the same time, it was proposed to appoint Mr. Atul N, Parikh (Non- Executive Independent Director) and Mr. Rajesh P. Khandwala (Non- Executive Non-Independent Director) of the Company to be appointed as a Member of the Audit Committee which was agreed by both. Further, Mr. Atul N. Parikh was also appointed as the Chairman of the Audit Committee meeting.

There was also reconstitution of in Shareholders'' Grievance Committee w.e.f. 14/02/2011. Mr. Rajesh P. Khandwala was inducted into the Committee place of Mr. Parmanand G. Khandwala who resigned from the post of Committee member / Chairman.

However, both Mr. Parmanand G. Khandwala and Mr. Devang Shah continue to be the Director of the Company.

CONSTITUION OF SHARE TRANSFER, ISSUE AND ALLOTMENT COMMITTEE:

The Board of Directors in its meeting held on 14/02/2011 constituted Share Transfer, Issue and Allotment Committee, which shall look after the day to day transfer, transmission of shares, issue and allotment of shares activities. Mr. Dharmendra Soni was appointed as a Chairman of the Committee and Mr. Devang Shah and Mr, Rajesh P. Khandwala are appointed as the Members of the said Committee.

MANAGEMENT DISCUSSION AND ANALYSIS ON OUTLOOK AND FUTURE PLANS;

Your directors are pleased to inform you that during the year under review the company has enlarged margin trading and loans against shares activities. The funding of primary market investment for retail category initiated during the last financial year has also shown a significant growth in the business performance of the Company.

INDUSTRY STRUCTURE AND DEVELOPMENT:

Indian economy is going through a period of rapid ''financial liberalisation''. Today, the ''intermediation'' is being conducted by a wide range of financial institutions through customer friendly financial products. The segment consisting of NBFCs, such as equipment leasing/hire purchase finance, loan and investment companies, etc. have made great strides in recent years and are meeting the diverse financial needs of the economy. These NBFCs provide a variety of services including fund-based and fee-based activities and cater to retail and non-retail markets and niche segments. They are being recogni2ed as complementary to the banking sector due to their customer-oriented services, simplified procedures, attractive rates of return on deposits, flexibility and timeliness in meeting the credit needs of specified sectors.

OUTLOOK & STRATEGY:

The year 2010-11 proved to be a year of global economic resurgence. The global economy, after faltering due to recession during 2008-09, witnessed an improvement mainly on account of infusion of stimulus funds by various countries. China and India led the recovery from the front, on account of huge domestic demand and continued thrust on infrastructure creation, further propelling demand within the core sectors.

India enjoys a strong domestic demand that bolsters a robust economic outlook. India''s economy is estimated to grow in 2011-12 compared to 2010-11. Economic growth prospects are expected to improve significantly in fiscal 2011-12 as the private sector demand - both consumption as well as investment - begins to pick up.

FINANCIAL & BUSINESS REVIEW

The Company''s operations continue to be mainly focused in the areas of NBFC activities and are predominantly engaged in following capital market products at present;

- Margin Trading

- Loan against shares

- Funding Primary market investment for retail category

In-spite of limited resources, our Company has outperformed in almost every facet for vibrant increase of interest income and profit in this fiscal year,

KFSL has been able to bring in higher operating efficiencies within the company based on the understanding and strength of our superior knowledge of local markets and efficient, proactive and conservative approach,

FUTURE OUTLOOK

The Company has plans to expand its business by offering a wide array of financial products and services. Apart from existing funding activities, the Company will also plan out to offer other financial products and services like;

- Loan against Property

- Equipment Financing

- Debt Market operations

- Corporate advisory services - Loan syndication

The Company will also try to get a sustainable credit rating that will help to provide source to access to a wide range of financial markets and funding sources supported by a Capital Adequacy Ratio as per RBI norms.

RISKS & CONCERNS

Being a Financial company, KFSL is exposed to specific risks that are particular to its business and the environment within which it operates, including interest rate volatility, economic cycle, credit risk and market risk. The most important among them are credit risk, market risk and operational risk. The measurement, monitaring management of risk remains key focus areas for the company.

KFLS has laid down stringent credit norms through the Lending Policy Framework approved by the Board. The company maintains a conservative approach and manages the credit risk through prudent selection of clients, delegation oi appropriate lending powers and by stipulating various prudential limits.

In retail loan businesses like lives. overall portfolio diversification and reviews also facilitate mitigation a ad management.

INTERNAL CONTROL SYSTEM:

The Company has adequate internal control systems appropriate for the business process having efficiency of operations systems, financial reporting and for compliance with applicable laws.

HUMAN RESOURCES:

One of the key pillars of our business is people. The company''s HR policies and practices are on company''s core value of integrity, passion, speed, commitment and seamlessness, while initially the challenges were around integration. The company firmly believes that intellectual capital and human resources is the backbone of the company''s success. The company is committed to provide development and training opportunities to employees to equip them with the best skill which enable them to contemporary technological advancements. Industrial related during the year continues to be harmonious.

CORPORATE GOVERNANCE:

The Corporate Governance report and Auditors'' Report thereon form part of this record.

PUBLIC DEPOSITS:

During the year ended March 31st 2011, the Company has not accepted any deposits from the public within the meaning of the provisions of the Non-Banking Financial Companies . Reserve Bank] Directions, 1977 and RBFs notification no.DFC dated 31st January, 1998.

DIRECTORS:

Pursuant to provisions of Section 256 of the Companies Act, 1956 Mr. Dharnundra Soni and Mr. Parmanand G, Khandwasa, retire by rotation and being eligible offers themselves for re-appointment.

AUDITORS:

The retiring Auditors Shailesh C. Parikh & Co.. Chartered Accountants, Ahmadabad arc eligible for re-appointment and offer themselves for re- appointment. The Auditors have furnished a certificate to the effect that if re-appointed, their appointment shall be within the limits prescribed under Section 224 (1-B) of the Companies Act, 1956,

PARTICULARS OF EMPLOYEES:

No employee 11 rows remuneration for which information is required to be submitted under Section 217(2-A} of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975.

CONSERVATION OF ENERGEY, TECHNOLOGY ABOSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO:

As the Company''s operations neither involve any manufacturing or processing activities nor any transactions involving foreign exchange earnings and outgo, the particulars in terms of section 217(1](e) of the Companies Act, 1956 and the Companies (Disclosures of Particulars in the Report of the Board of Directors) Rules, 1988, regarding conservation of energy and technology absorption and foreign exchange earnings and outgo, are not applicable.

DIRECTORS'' RESPONSIBILITY STATEMENT:

Pursuant to the requirement of Section 217(2AA) of the Companies Act, 1956 with respect to Directors'' Responsibility Statement, it is hereby confirmed;

i) That in the principals of the Annual Accounts, all the applicable Accounting Standards have been followed.

ii) That the accounting policies are adopted and consistently followed and the judgments and estimates made 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 of the Company for the Financial Year

iii) That the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for proven ting/ detecting fraud and irregularities iv) Thai the Directors have prepared the Annual Accounts on Going Concern Basis.

ACKNOWLEDGEMENT:

Your Company would like to take this opportunity to express sincere thanks to its clients and customers for their continued patronage. Your Directors wish to place on record their deep sense of appreciation for the co-operation and assistance extended to the company by its Promoters, Bankers, Government Authorities, Shareholders and Employees of the Company at all Jewels.

FOR AND ON BEHALF OF THE BOARD

Place: Ahmadabad

Date: 04/06/ 2011 P. G, Khandwala

Kegd. Office: Chairman

B/81, Pariseema Complex,

C.G. Road, Ellisbridge,

Ahmedabad-380006


Mar 31, 2010

The Directors hereby present the Annual Report of your company together with Audited Statement of Accounts for the year ended on 31st March, 2010.

FINANCIAL RESULTS :

(Rs. in Lacs)

Particulars 2009-10 2008-09

Business and Other Income 126.22 66.28

Total Expenditure 18.85 38.52

Profit/ Loss before provision for Tax 107.37 27.76

Provision for Taxation 18.51 8.71

Profit after provision for Tax 88.88 19.06

REVIEW OF OPERATIONS:

During the year under review your Company has achieved more than double the growth in total income as compared to the previous year. Your company has recorded a total income of Rs.126.22 Lacs compared to the total income of Rs.66.28 Lacs in the previous year and incurred the total expenditure of Rs.18.85 Lacs compared to Rs.38.52 Lacs in previous year. The net profit of the company after providing for all expenditure and necessary provisions was Rs. 88.88 lacs compared to Rs.19.06 Lacs of previous year. During the year under review your company has become a subsidiary company of M/s. KIFS Securities Pvt. Ltd. by way of interse promoter transfer of shares.

DIVIDEND:

Your Directors are pleased to recommend for your consideration a dividend of 1.50 (Rupees One and Fifty Paise Only) on the paid up equity share capital of the Company for the year ended on 31st March, 2010. The dividend, if approved, will be paid to those shareholders whose names appear in the Register of Members as on the record date fixed for the purpose of determining eligibility for receiving dividend.

MANAGEMENT DISCUSSION AND ANALYSIS ON OUTLOOK AND FUTURE YEAR PLANS:

Your directors are pleased to inform you that during the year under review the company has enlarged margin trading and loans against shares activities and has also contemplated to initiate funding of primary market investment for retail category this ultimately reflected in the business performance of the Company for the year under review.

INDUSTRY STRUCTURE AND DEVELOPMENT:

The NBFC Structure in India is represented by mix of few large companies with nationwide presence and large number of small and medium sized companies with regional focus. The Reserve Bank of India regulates the operations of NBFCs. In recent years NBFCs are facing strong competition from Banks and financial institutions as they are providing funds at lower cost. Hence, NBFCs are under pressure to cut cost and to develop focused marketing approach by offering more personalized services. Entries of strong NBFCs in insurance and banking sector have been some of the major development in this sector.

OUTLOOK & STRATEGY :

Considering the growth prospects of India in the long-term and various opportunities that will emerge across different sectors from time to time , we continue to remain enthused about the manifold growth of the financial services sector in India. The Capital market in India have performed well over the past few years barring F.Y.2008-09 and certain level of moderation in growth is likely to take place in the near future depending upon the depth of the global economic recession, the pace of recovery and the Indian economic scenario. We continue to be optimistic and believe that the Indian markets will see pull back and continue their northward journey once the global markets stabilise and to some extent even before that for the years to come.

With an eye on growth we keep expanding our portfolio of financial services. Our strategic focus on diversified activities in the financial services sector, will help stabilize base level for earning.

OPPORTUNITIES AND THREATS:

The pace of economic recovery in India is reflective of the transitory impact of the global financial crisis on the Indian economy. India''s strong domestic fundamentals are expected to remain operative over the log term, with the twin drivers of assumption and investment supporting sustained high growth for the economy. Over the next year, while economic recovery is expected to strengthen and assume a broad - based nature, the management of inflation expectations, , the pace of withdrawal of stimulus measures and the management of systemic liquidity in view of the large government borrowing programme and the impact of volatile global markets on capital flows will be key factors impacting the economy and financial markets.

Political stability always has a direct co-relation with the investment environment of any economy. The stability of government has presented an optimistic scenario for the Indian business, economy and capital market. The continuous demands for experienced and skilled human capital is one of the major challenges faced by any financial firm.

RISK MANAGEMENT:

Your Company follows well-established and detailed risk assessment and minimisation procedures. The Company especially focuses on improving sensitivity to assessment of risks and improving methods of computation of risk weights and capital charges. The risk assessment and mitigation procedures are reviewed by the Board periodically. The Company has a comprehensive risk management framework. Additionally, the company has a dedicated work force that monitors risk management in the Company. The work force monitors different types of risks across the organisation i.e. credit risk, market risk , liquidity risk , operational risk , competition risk, business continuity risk and general risks arising out of various economic factors. Overall framework for monitoring these risks is called enterprise Risk Management System.

INTERNAL CONTROL SYSTEM:

The Company has adequate internal control systems appropriate for the business process having regard to efficiency of operations systems, financial reporting and for compliance with applicable laws.

HUMAN RESOURCES:

One of the key pillars of our business is people. The company''s HR policies and practices are built on company''s core value of integrity , passion , speed, commitment and seamlessness, while initially the challenges were around integration. The company firmly believes that intellectual capital and human resources is the backbone of the company''s success. The company is committed to provide development and training opportunities to employees to equip them with the best skill which enable them to adapt to contemporary technological advancements. Industrial relation during the year continues to be harmonious.

CORPORATE GOVERNANCE:

The Corporate Governance Report and Auditors'' Report thereon form part of this report.

PUBLIC DEPOSITS:

During the year under review, your company has not accepted any deposits from the public.

DIRECTORS:

Pursuant to provisions of Section 256 of the Companies Act, 1956 Mr. Devang Shah retires by rotation and being eligible offers himself for re-appointment.

AUDITORS:

The retiring Auditors Shailesh C. Parikh & Co., Chartered Accountants, Ahmadabad are eligible for re-appointment and offer themselves for re-appointment. The Auditors have furnished a certificate to the effect that if re-appointed, their appointment shall be within the limits prescribed under Section 224 (1-B) of the Companies Act, 1956.

PARTICULARS OF EMPLOYEES:

No employee draws remuneration for which information is required to be submitted under Section 217(2-A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975.

CONSERVATION OF ENERGEY, TECHNOLOGY ABOSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO:

As the Company''s operations neither involve any manufacturing or processing activities nor any transactions involving foreign exchange earnings and outgo, the particulars in terms of section 217(1)(e) of the Companies Act, 1956 and the Companies (Disclosures of Particulars in the Report of the Board of Directors) Rules, 1988, regarding conservation of energy and technology absorption and foreign exchange earnings and outgo, are not applicable.

DIRECTORS'' RESPONSIBILITY STATEMENT:

Pursuant to the requirement of Section 217(2AA) of the Companies Act, 1956 with respect to Directors'' Responsibility Statement, it is hereby confirmed:

i) That in the preparation of the Annual Accounts, all the applicable Accounting Standards have been followed

ii) That the accounting policies are adopted and consistently followed and the judgments and estimates made 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 of the Company for the Financial Year

iii) That the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing/detecting fraud and irregularities

iv) That the Directors have prepared the Annual Accounts on Going Concern Basis.

ACKNOWLEDGEMENT:

Your Company would like to take this opportunity to express sincere thanks to its clients and customers for their continued patronage. Your Directors wish to place on record their deep sense of appreciation for the co-operation and assistance extended to the company by its Promoters, Bankers, Government Authorities, Shareholders and Employees of the Company at all levels.

FOR AND ON BEHALF OF THE BOARD

Place: Ahmadabad S/d.

Date: 18 /05/ 2010 P.G.Khandwala

Regd. Office : Chairman

B/81, Pariseema Complex,

C.G. Road, Ellisbridge,

Ahmedabad-380006

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