To,
The Members,
Your Directors hereby presents their 28th Annual Report on the business and operations of the Company together with the audited Statements of the accounts for the year ended on 31st March, 2024.
SUMMARY OF FINANCIAL PERFORMANCE:
DIVIDEND
Your Directors have not recommended any dividend.
DIRECTORS' RESPONSIBILITY STATEMENT:
Pursuant to Section 134(5) of the Companies Act, 2013, the Board of Directors, to be best of their knowledge, confirm that
a) in the preparation of the accounts the applicable accounting standards have been followed along with proper explanations relating to material departure; b) appropriate accounting policies have been selected and applied consistently and have 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 loss of the Company for that period; c) proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; d) the annual accounts have been prepared on a going concern basis; e) they have 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) they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
MANAGEMENT DISCUSSION AND ANALSYIS
To avoid duplication of certain information in Directors' Report and Management Discussion & Analysis, the Board of Directors of your Company has presented the composite summary of performance and functions of the Company.
INDUSTRY STRUCTURE AND DEVELOPMENT
Your Company is a Non-banking Finance Company mainly engaged in investment activities, providing finance against shares and securities and providing inter-corporate loans. Your Company also provides finance for investment in primary market issues and mutual fund schemes. Your Company caters to various categories of clients, namely Retail, NHI, HUFs and Corporate entities. Your Company being a NBFC is strictly regulated by Reserve Bank of India by its guidelines and notifications.
ECONOMIC OVERVIEW
India's economy carried forward the momentum it built last year despite a gamut of global and external challenges. India's GDP grew by 8.2% in the current Financial Year, driven by stable consumption demand and steadily improving investment demand. Various high frequency indicators reflect the growth in the service sector. Both Goods and Service Tax (GST) collections and issuance of e-way bills, reflecting wholesale and retail trade, demonstrated double digit growth. Financial and professional services have been a major driver of growth post the pandemic. With cleaner balance sheets and adequate capital buffers, the banking and financial sector is well positioned to cater to the growing financial needs of investment demand. Throughout Financial Year 2023-24, the focus on macroeconomic stability was vital in securing economic growth amidst domestic and external vulnerabilities. The sustained improvement in fiscal metrics is beginning to have an impact on India's credit ratings. For the first time in 13 years, S&P Global Ratings upgraded India's sovereign credit rating outlook ‘stable' to ‘positive' in May 2024 on the back of robust economic growth and sound economic fundamentals.
Fiscal year 2023-24 had its own set of challenges ranging from geo political issues (between Israel and Gaza) to supply side disruption in the Red Sea, but economic growth continued to be robust, most notably.
Indian Rupee was one of the least volatile currency, which reflected India's robust financial performance and also due to RBI's foreign exchange intervention.
OPPORTUNITIES, THREATS AND DEVELOPMENTS
Amid gloomy global prospects, India's economy is upbeat and is expected to remain the world's fastest growing major economy in 2024. Inflation is moderating, demand is growing and economic activity is strengthening. In India, NBFCs have emerged as critical pillars of financial support for a significant segment of the population. By playing a pivotal role in advancing financial inclusion, non-bank lenders have facilitated the growth of numerous MSMEs and fostered opportunities for self-employment. Furthermore, NBFCs are increasingly adopting digitization to enhance operational efficiency, elevate customer experiences, drive cost savings and ensure compliance with regulatory standards. Despite facing stiff competition from public and private sector banks and Microfinance Institution (MFI's) across market share and customer acquisition, NBFC's have spearheaded innovative digital initiatives.
Threats which business can face are mainly due to macro- economic factors such as geopolitical tensions, global economic threats impacting the business, economic situation, liquidity situation in the market and cost effective availability of funding.
FUTURE PROSPECTS
The global economy is anticipated to grow at a steady pace, with diminishing effects of positive shocks. Alongside, it is set to witness increasing yields and tighter credit conditions. However, India has solidified its position as the world's third largest fintech economy, ranking behind only USA and UK. The
Government's investment in both physical and digital infrastructure, coupled with measures to increase manufacturing have strengthened the supply side. Together, these developments are likely to provide impetus to the country's economic activity.
Considering the economic growth rate of Indian economy and bull sentiments in capital market both primarily and secondary, your Company is expected to record improved performance in coming years.
RISK AND CONCERNS
The risk of global recession has receded but concerns of inflation is impending which re-ignites the risk of global financial stability. IMF & World Bank and prominent agencies have predicted further slow-down in global growth this year. Escalation of the recent conflict in the Middle East, financial stress, persistent inflation and a slowdown in international trade are downside risk for global growth. A potential debt crisis is looming over the global economic landscape. The IMF's global debt monitor reported that the total global debt has risen to USD 235 trillion,a which is equivalent to 238 percent of the global GDP. Since the Indian economy cannot remain in isolation, it may be impacted by spillover effects, reflecting in rising inflation and further hardening in interest rate.
REGULATIONS
The Capital Market is regulated by stringent rules and regulations of the Securities & Exchange Board of India (SEBI) and the stock exchanges. The Company, being registered with the Reserve Bank of India as Non-Banking Finance Company (NBFC), is also subjected to strict rules and guidelines notified by the Reserve Bank of India from time to time. Your Company is committed to the best Corporate Governance practices based on conscience, openness, fairness, transparency, compliances and ethical practices towards attaining performance with integrity and accountability thereby paving the way for enhanced investors' and stakeholders' confidence. Thus, ensuring long term success.
PERFORMANCE
Total revenue including other operating income for the financial year ended 31st March, 2024 was Rs.833.24 lakhs as against Rs. 904.57 lakhs in the previous year. Interest income and dividend income for the year under review were high at Rs.727.45 lakhs and Rs.38.10 lakhs as against Rs.414.90 lakhs and Rs.10.75 lakhs respectively, a year ago. There was loss of Rs. 383.09 lakhs as against gain of Rs. 453.32 lakhs on account of fair value changes. Other income too was lower at Rs.4 lakhs as against Rs.16.53 lakhs in the previous year. The total expenses for the year under review was Rs.678 lakhs as against Rs.562.17 lakhs for the last year. Due to higher expenses, the Company earned a lower pre-tax profit of Rs.155.24 lakhs as against Rs.342.40 lakhs a year ago.
Your Directors do not propose to transfer any amount to general reserve. A sum of Rs.66.15 lakhs is transferred to Statutory Reserve Fund in terms of Section 45 IC(1) of RBI Act, 1934.
DELISTING OF SPS FINQUEST LIMITED:
The Company had received an initial public announcement dated 19th January, 2024 from Mr. Sandeep P. Shah, Promoter of your Company, and Sanrina Consultancy Pvt. Ltd., a Promoter Group Company, to acquire all the shares held by public shareholders and get voluntarily equity shares of the Company delisted from BSE Ltd. by making a delisting offer in accordance with the provisions of SEBI (Delisting of Equity Shares) Regulations, 2021. Accordingly, all the formalities are being complied with under the SEBI regulations.
The proposed delisting would enable the Promoters and Promoter Group of your Company to obtain full ownership, which will in turn provide increased operational flexibility to support the Company's business and make investments in the Company. The delisting proposal will provide the Public Shareholders an opportunity to realize immediate and certain value for their Equity Shares. The price will be determined in accordance with the reverse book building mechanism set out in the Delisting Regulations. The delisting of Equity Shares will also result in reduction of the on-going substantial compliance costs, which includes the costs associated with listing of Equity Shares.
SHARE CAPITAL:
During the year 2023-24 there was no change in share capital. As on 31st March, 2024 the issued, subscribed and paid-up capital of your Company was Rs.10,13,78,250/- divided into 1,01,37,825 Equity Shares of Rs.10/- each.
There was no issue of equity shares with differential rights related to the dividend, voting or otherwise, and there was no buyback of shares.
MATERIAL CHANGES AND COMMITMENT
There have been no material change and commitment affecting the financial position of the Company between the end of the financial year to which the financial statements relate and the date of this report.
SUBSIDIARY:
The Company does not have any subsidiary, joint venture or associate company.
CONSOLIDATED FINANCIAL STATEMENT
Since the Company does not have any subsidiary company or associate or joint venture, consolidated financial statements are not prepared.
CORPORATE GOVERNANCE:
A report on Corporate Governance is annexed as Annexure 1 and the same forms part of this Directors' Report.
LOANS, GUARANTEE AND INVESTMENT:
Particulars of loans and investments made by the Company pursuant to Section 186 of the Companies Act, 2013 are given in the notes to the Financial Accounts, which forms part of the Annual Report. The Company has not given any guarantee.
PUBLIC DEPOSIT:
Your Company has not accepted any deposits from the public, its shareholders or employees during the year under review.
TRANSACTION WITH RELATED PARTIES:
All the transactions with related parties entered into during the financial year 2023-2024 were on arm's length basis and also in the ordinary course of business. Details of all related party transactions are placed before the audit committee. The policy on related party transactions as approved by the Board of Directors is placed on the Company's website.
Since all the transactions with the related parties entered into by the Company were in ordinary course of business and were on arm's length basis, Form AOC-2 is not applicable.
CONSERVATION OF ENERGY, ETC.
Since your Company is not engaged in any manufacturing activity, information as required under the provisions of Section 143(3)(m) of the Act is not furnished. During the year under review, the Company neither earned nor spent any foreign exchange.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
To comply with the requirement of Articles of Association of the Company and the Companies Act, 2013, Mr. Sandeep P. Shah (DIN: 00368350) shall retire by rotation in the forthcoming Annual General Meeting and being eligible offers himself for re-appointment.
The shareholders had appointed Ms. Alpa V. Shah as Non-Executive Director and Mr. Premal N. Shroff as Independent Director by way of Postal Ballot, effective from 8th September, 2023.
Mr. Priyesh Jhaveri and Ms. Ankita M. Shah resigned on 16th June, 2023 on completion of their respective second term as Independent Director. The Board of Directors places on record their deep sense of appreciation for valued and prudent guidance provided by Mr. Priyesh Jhaveri an dMs. Ankita M. Shah during their association with the Company. Ms. Mahita S. Shah resigned on 22nd August, 2023 as Director due to her pre-occupation.
During the year under review, none of the Non-Executive Directors had any pecuniary relationship or transactions with the Company.
The Company has the following personnel as the Key Managerial Personnel (KMP) under Section 203 of the Companies Act, 2013: 1. Mr. Sandeep P. Shah, Executive Chairman 2. Mr. Girish Jajoo, Managing Director 3. Mr. Subhash R. Yadav, Chief Financial Officer (resigned on 20/01/2024) 4. Ms. Sarita Jotaniya, Company Secretary.
BOARD MEETINGS
Ten meetings of the Board were held during the year under review. One meeting of the Independent Directors was also held during the year.
DISCLOSURE BY INDEPENDENT DIRECTORS
All the Independent Directors have furnished declarations that they meet the criteria of independence as laid down under Section 149 (6) of the Companies Act, 2013.
The Independent Directors met on 28th March, 2024, without the attendance of Non-Independent Directors and members of the management. The Independent Directors reviewed the performance of Non-Independent Directors and the Board as a whole; the performance of the Chairman of the Company took into account the views of Executive Directors and Non-Executive Directors; it assessed the quality, quantity and timeliness of information flow between the Company's management and the Board necessary for the
Board to effectively perform their duties.
BOARD EVALUATION
Pursuant to the provisions of Section 134 (3) of the Companies Act, 2013 and the applicable regulations of the SEBI (Listing Obligations and Disclosure Requirements), Regulations, 2015, the Independent Directors evaluated the performance of Non-Independent Directors and Chairperson of the Company after considering the views of the Executive and Non-Executive Directors, the Board as a whole and assessed the quality, quantity and timeliness of flow of information between the Company's management and the Board. The Nomination and Remuneration Committee evaluated the performance of every Director. The Independent Directors were regularly updated on the industry and market trends and the operational performance of the Company through presentations.
AUDIT COMMITTEE
The Committee presently comprises of Ms. Megha M. Mehta and Mr. Kirit B. Rathod, both Independent Directors and Mr. Girish Jajoo, Managing Director. All the members of the Committee are having financial and accounting knowledge. The Committee was re-constituted during the financial year. The Committee met 4 times during the financial year 2023-24.
NOMINATION & REMUNERATION COMMITTEE/POLICY
The said Committee presently comprises of Ms. Megha M. Mehta and Mr. Kirit B. Rathod, both Independent Directors and Ms. Alpa V. Shah, Director. The Committee met thrice during the financial year. The Committee was re-constituted during the financial year
The Nomination and Remuneration Policy recommended by the Nomination & Remuneration Committee is duly approved and adopted by the Board of Directors. The said policy is available on the Company's website viz. www.spsfinqeust.com.
STAKEHOLDER RELATIONSHIP COMMITTEE
The Stakeholder Relationship Committee consists of three members viz. Ms. Megha M. Mehta, Chairperson, Mr. Sandeep Shah and Mr. Girish Jajoo as its members. The Committee mainly looks into redressal of shareholders and investors grievances with respect to transfer of shares, dematerialization of shares, non-receipt of annual report or declared dividend, etc. The shareholders grievances committee met once during the year. During the year ended 31st March, 2024, the Company did not receive any complaint from any of its members.
CSR COMMITTEE
As a part of its initiatives under Corporate Social Responsibility (CSR), the Company had undertaken projects in the areas of education. The project was undertaken in association with New Bombay Education Society, Mumbai and are largely in accordance with Schedule VII of the Companies Act, 2013. The brief outline of the CSR Policy and the CSR initiatives undertaken by the Company during the financial year under review are provided in the Annual Report on Corporate Social Responsibility Activities in Annexure 2 forming part of this report. The policy adopted by the Company can be viewed at the website of the Company viz. www.spsfinquest.co.in
The CSR Committee comprises of Mr. Sandeep Shah, Mr. Girish Jajoo and Ms. Megha Mehta.
INTERNAL CONTROL SYSTEM
Adequate internal control systems are in place to maintain quality of product, proper accounting as per norms and standards prescribed, asset maintenance and its proper use. The Company has an independent internal auditor, who periodically reviews the accounts and reports to the Audit Committee.
RISK MANAGEMENT
The management continuously access the risk involved in the business and all out efforts are made to mitigate the risk with appropriate action. All the assets of the Company are adequately covered by comprehensive insurance.
EMPLOYEE:
The Company had ten employees during the year under review.
Information required under Section 197(12) of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Management Personnel) Rule, 2014, and forming part of Directors' Report for the year ended 31st March, 2024 is given in a separate annexure 3 to this report.
The information relating to top ten employees in terms of remuneration will be provided to any Shareholder on a written request to the Company Secretary. In terms of Section 136 of the Act, the said report will be available for inspection of the Members at the registered office of the Company during the business hours on all working days of the Company upto the date of Annual General Meeting and through electronic mode.
STATUTORY AUDITORS
According to Directors, there is no adverse remarks made by Statutory Auditors in their report. Notes to the accounts are self-explanatory to comments/observation made by the auditors in their report. Hence, no separate explanation is given.
M/s. MAKK & Co., Chartered Accountants, (Firm Registration Number: 117246W) were appointed as Joint Statutory Auditor of the Company by the shareholders in their Extra-Ordinary General Meeting held on 21st May, 2024 till the conclusion of 30th Annual General Meeting.
M/s. Shah & Savla LLP, Chartered Accountants, (FRN 109364W/W100143), resigned as Statutory Auditors of your Company on 28th June, 2024.
INTERNAL AUDITORS
Ms. Bhavna Pandya, Chartered Accountant, is the internal auditor of the Company. She plays an important role in strengthening the internal control. The Internal Auditors reports to the Audit Committee.
SECRETARIAL AUDIT
During the year, Secretarial Audit was carried out by Mr. Upendra Shukla, Practicing Company Secretary, for the financial year 2023-24. The report on the Secretarial Audit is appended as Annexure 4 to this report. According to the Board of Directors, the report does not have any adverse remark.
COST AUDIT
Provisions relating to cost audit is not applicable to your Company.
ANNUAL RETURN
Pursuant to the provisions of Section 92(3) and Section 134 (3)(a) of the Companies Act, 2013 a copy of the Annual Return of the Company for the year ended 31st March, 2024 is placed on the website of the Company at www.spsfinquest.co.in.
DETAILS OF SIGNIFICANT & MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNAL
No such order was passed by any of the authorities, which impacts the going concern status and company's operations in future.
VIGIL MECHANASIM
The Company has a vigil mechanism policy to deal with instances of fraud and mismanagement. The whistle blower policy is adopted by the Board of Directors and is hosted on the website of the Company.
FRAUD REPORTING
During the year, no fraud whether actual, suspected or alleged was reported to the Board of Directors.
PREVENTION OF SEXUAL HARRASSMENT AT WORKPLACE
The Company has in place an anti-Sexual Harassment Policy in line with the requirement of the Prevention of Sexual Harassment of Women at Workplace (Prohibition, Prevention and Redressal) Act, 2013. Internal complaints committee (ICC) has been set-up to redress complaints received regarding sexual harassment during the year 2023-24 under review.
The Company has not received any complaint of sexual harassment during the year 2023-24.
CAUTIONARY STATEMENT
Statements in the Annual Report, particularly those which relate to Management Discussion and Analysis may constitute forward looking statements within the meaning of applicable laws and regulations. Although the expectations are based on the reasonable assumption, the actual results might differ.
ACKNOWLEDGEMENT
Your Directors places on record their deep sense of appreciation to the Company's Bankers, clients and all employees for their unstinted support. Your directors also wish to thank the shareholders for confidence reposed in the management of the Company.