ANNUAL REPORT

Transcription

1 rd ANNUAL REPORT A ep ahead

2 Board of Directors Sri. P. Brahmanandam Director Sri. A. Indra Kumar Director Smt. Y. Prameela Rani Director Sri. G. Sambasiva Rao Director Sri. G. Sree Rama Krishna Director Sri. D. Nanha Ram Managing Director & CEO Executives Mr. A. Narayana Prasad Vice President & CFO Mr. K. Hari Krishna As. Vice President

3 Contents Notice to shareholders 1 Directors Report 11 Auditors Report 26 Balance Sheet 32 Statement of Profit and Loss 33 Cash flow atement 34 Notes to financial atements 35 Statutory Auditors M/s. Pendyala & Co Chartered Accountants Hyderabad Bankers Union Bank of India HDFC Bank Andhra Bank Regiered Office S.No.7, # /1, A.S.R Nagar, Seethammadhara, Visakhapatnam Phone: , co@maximusarc.com Corporate Office # 59A-18/1-5A, Sri Plaza, Teachers Colony, Patamata, Vijayawada Phone: /45, co@maximusarc.com Annual Report

4 Vision To be a diinguished leader and mo preferred ARC for resolution of impaired assets expeditiously and with optimum realization. To revive and reore economic value of sick units by adopting innovative resolution rategies. Mission To drive growth and maximize value creation through innovative and suainable business practices. To nurture human intellectual capital by promoting a culture that would attract, empower, reward and provide growth opportunities to its employees. To adopt and demonrate highe andards of professionalism, transparency, ethical conduct and governance. 02 Annual Report

5 Notice Notice is hereby given that the Third Annual General Meeting of the Company will be held on Monday, the 25th September, 2017 at a.m. at Carmichael, The Gateway Hotel, Visakhapatnam to transact the following business: Ordinary Business: 1. To receive, consider and adopt the Audited Balance Sheet, the atement of Profit and Loss Account and the Cash Flow atement for the year ended 31 March, 2017 together with Directors and Auditors Report thereon. 2. Sri G. Sree Rama Krishna (DIN: ) retires by rotation and does not offer himself for reappointment. 3. To ratify appointment of M/s. PENDYALA & Co., as Statutory Auditors. To consider and if thought fit to pass with or without modifications the following resolution as an Ordinary Resolution. RESOLVED THAT pursuant to the provisions of Section 139 and other applicable provisions, if any, of the Companies Act, 2013 and the Rules framed thereunder, as amended from time to time, the appointment of M/s. PENDYALA & Co., Chartered Accountants, as Auditors for a period of 5 years made at the 2nd Annual General Meeting be and is hereby ratified to hold office from the conclusion of this Annual General Meeting till the conclusion of the next Annual General Meeting of the Company to be held in the year 2018 and authorize the Board of Directors to fix their remuneration. Special Business: 4. To consider and if thought fit to pass with or without modifications the following resolution as a Special Resolution: RESOLVED THAT Pursuant to Provisions of section 12 and any other provisions of the Companies Act,2013 and Companies (Incorporation) Rules, 2014 and any other applicable provisions if any, approval of the members be and is hereby granted for shifting the Regiered office of the company from its present location at S.No.7, /1, A.S.R. Nagar, Seethammadhara, Visakhapatnam to #59A-18/1-5A, Sri Plaza, Teachers Colony, Patamata, Vijayawada under the jurisdiction of Patamata police ation, Autonagar, Vijayawada, outside the local limits of the town where present Regiered Office of the company is situated. RESOLVED FURTHER THAT, Sri D. Nanha Ram, Managing Director and CEO be and is hereby authorized to sign necessary documents and file form INC 22 containing verification of the location of the Regiered Office of the Company. 5. To consider and if thought fit to pass with or without modifications the following resolution as a Special Resolution. Alteration of Articles of Association: RESOLVED THAT pursuant to Section 14 and other applicable provisions, if any, of the Companies Act, 2013, the following alterations be made to the Articles of Association of the Company. Article 4 A ( to be inserted): The Company shall be entitled to dematerialise its shares and other securities pursuant to the provisions of Depositories Act, 1996 and to offer its shares and other securities for subscription in dematerialized form. The Company shall be entitled to treat the regiered holder of any share or where the name appears as the beneficial owner of shares in the records of the depository as the absolute owner of the shares. Annual Report

6 6. To appoint Sri Ravi Kumar Velagapudi as Independent Director. RESOLVED THAT pursuant to the provisions of Section 149 (4) of Companies Act 2013 read with rule 4 of Companies (Appointment of Directors and their Qualification) Rules 2014, approval of the members be and is hereby granted for the appointment of Sri Ravi Kumar Velagapudi (DIN No ) as an Independent Director of the company, subject to the approval of Reserve Bank of India. FURTHER RESOLVED THAT Sri D. Nanha Ram, the Managing Director and CEO of the Company be & is hereby authorized to do all necessary acts & deeds as may be required for giving effect to the above resolution. 7. To appoint Sri V. Kannan as Independent Director. RESOLVED THAT pursuant to the provisions of Section 149 (4) of Companies Act 2013 read with rule 4 of Companies (Appointment of Directors and their Qualification) Rules 2014, approval of the members be and is hereby granted for the appointment of Sri V. Kannan as an Independent Director of the company, subject to the approval of Reserve Bank of India. FURTHER RESOLVED THAT Sri D. Nanha Ram, the Managing Director and CEO of the Company be & is hereby authorized to do all necessary acts & deeds as may be required for giving effect to the above resolution. 8. To approve private placement/preferential allotment of equity shares: To consider and if thought fit to pass with or without modifications, the following resolution as a Special Resolution: RESOLVED THAT pursuant to Section 62 and other applicable provisions, if any, of the Companies Act, 2013 read with Companies (Prospectus and Allotment of Securities) Rules, 2014 including any atutory modification or re-enactment thereof for the time being in force and in accordance with the provisions of Articles of Association of the Company, rules and regulations framed by Reserve Bank of India (RBI) and other atutory /regulatory authorities, and subject to all applicable norms, guidelines, regulations in force, and atutory approvals/ consents/ permissions/ sanctions if any, the Board of Directors of the company (hereinafter referred to as the "Board", which expression shall be deemed to include a committee of Directors, duly authorised in this behalf) is hereby authorised and empowered to offer, issue and allot in one or more tranches: Up to a maximum of 2,60,00,000 (Two Crores Sixty Lakhs Only) equity shares of R10/- each at par to below mentioned exiing shareholders on preferential basis on such terms and conditions and in such manner as the Board may consider fit in its absolute discretion. S. No. Address Occupation Name of the Allottees No. of equity shares 1 Shri Alluri Indra Kumar /1/7, Road No.12, Bhawani Nagar, Banjara Hills, Hyderabad Telangana. Business 50,00,000 2 Shri Ravi Kumar Velagapudi 5521, Perugia Circle, Sanjose, Business 10,00,000 CA-95138, USA 3 M/s. Srinivasa Cyine Pvt. Ltd. G-2, Concorde Apartments, Business 2,00,00,000 Somajiguda, Hyderabad Total 2,60,00, Annual Report

7 RESOLVED FURTHER THAT the aforesaid equity shares shall rank pari passu with the exiing equity shares of the Company, except for the dividends, if any, declared for the year in which they are issued, on prorata basis. RESOLVED FURTHER THAT for the purpose of giving effect to this resolution, board be and is hereby authorized to do all such acts, deeds and things as the board may, in its absolute discretion consider necessary, expedient, usual, proper or incidental and to settle any queion, remove any difficulty or doubt that may arise from time to time in relation to the offer, issue and allotment of shares and the utilization of the issue proceeds thereof, to effect any modification(s) to the foregoing (including any modifications to the terms of the issue) in the be interes of the Company and its shareholders and to execute all such writings and inrument(s) as the Board may in its absolute discretion deem necessary or desirable. By order of the Board Place : Vijayawada Dated: D. Nanha Ram Managing Director & CEO Regiered office: S.No.7, # /1, A.S.R Nagar, Seethammadhara, Visakhapatnam CIN: U67190AP2015PLC co@maximusarc.com Annual Report

8 Notes 1) A MEMBER ENTITLED TO ATTEND AND VOTE AT THE MEETING, IS ENTITLED TO APPOINT A PROXY OR PROXIES WHO CAN ATTEND AND VOTE INSTEAD OF THE MEMBER AND THE PROXY NEED NOT BE A MEMBER OF THE COMPANY. 2) The Proxy Form duly completed mu be lodged at the Regiered Office of the Company at lea 48 hours before the time fixed for the Meeting. 3) Corporate Members intending to send their authorized representatives are requeed to send a duly certified copy of the Board resolution authorizing their representatives to attend and vote at the Annual General Meeting. 4) Members are requeed to intimate immediately any change in their address quoting their Regiered Folio enabling the Company to address future communication. 5) Explanatory atement pursuant to section 102(1) of the Companies Act, 2013 with respect to the special business set out in the Notice is annexed. By order of the Board Place : Vijayawada Dated: D. Nanha Ram Managing Director & CEO Regiered office: S.No.7, # /1, A.S.R Nagar, Seethammadhara, Visakhapatnam CIN: U67190AP2015PLC co@maximusarc.com 06 Annual Report

9 EXPLANATORY STATEMENT PURSUANT TO SECTION 102 OF THE COMPANIES ACT, 2013 Item no. 4: Since the Corporate Office of the company is located in Vijayawada, for operational conveneince, the Board has, in its meeting held on , proposed to change the Regiered Office from its present location at S.No.7, # /1, A.S.R. Nagar, Seethammadhara, Visakhapatnam to the address of its Corporate Office # 59A-18/1-5A, Sri Plaza, Teachers colony, Patamata, Vijayawada under the jurisdiction of Patamata police ation, Autonagar, Vijayawada. Reserve Bank of India has accorded its approval for shifting the Regiered Office subject to compliance with the provisions of the other applicable Acts. The Board of Directors recommends the resolution set out at Item No. 4 for approval of the Members. Item no. 5 Conversion of physical share certificates into dematerialized form will facilitate paperless transactions and provide ease of doing all related transactions by the company as well as the shareholders. Hence, the Board of Directors, in its meeting held on , proposed to adopt dematerialization of securities, for which the Articles of Association requires to be amended. The Board of Directors recommends the special resolution set out at Item No. 5 for approval of the Members. Item no. 6 The Board in its meeting held on proposed the candidature of Sri Ravi Kumar Velagapudi as Independent Director. Sri. Ravi Kumar Velagapudi is a US Citizen and a Person of Indian Origin carrying DIN Sri Ravi Kumar Velagapudi is a seasoned serial entrepreneur from Silicon Valley, CA, USA with 25 years experience in software indury. In the recent years, Sri Ravi Kumar founded Rofous Inc, built successfully with 1400 employees which got acquired by Goldman Sachs, Sequoia, NEA inveed company. With Rofous, he partnered with Google, Twitter, Linked In, nvidia, Stryker & Microsoft and helped build their flagship products. Prior to Rofous, Sri Ravi Kumar held executive positions at Innova Solutions where he led teams for setting up BOT for Franklin Templeton, Invesco and nvidia. Currently, Sri Ravi is the Founder President of M/s ATMECS Inc. USA, an organisation focused on R&D Services with ate of art next generation products in areas of Internet of Things, Cloud, Mobile, Automation, Machine Learning and Virtual Reality. He drives the company s vision. Sri. Ravi Kumar has submitted his consent letter and declaration of independence to the Board, ating that he is not disqualified to be an independent director. The Board opined that Sri Ravi Kumar s va global outlook, experience and vision will immensely benefit the company in achieving its objectives. The Board of Directors recommends the special resolution set out at Item no. 6 for approval of the members. Item no. 7 The Board in its meeting held on proposed the candidature of Sri V.Kannan as Independent Director. Sri Kannan, is a successful banking professional with over 37 years of varied experience. He arted his career in Bank of Maharashtra where he grew to the level of General Manager before his elevation as Executive Director of Oriental Bank of Commerce. Subsequently, in Jan 2014 he became the Chairman and Managing Director of Vijaya Bank where he retired in December Annual Report

10 He is a Certified Associate of the Indian Initute of Bankers. As General Manager of Bank of Maharashtra, he headed the following verticals: 1. Integrated treasury and international Division. 2. Commercial and Corporate credit 3. Priority Sector 4. Credit Monitoring and Rehabilitation 5. Regional Head of Mumbai Metro, Andhra Pradesh, Karnataka and Kerala regions. He was Director on the Board of SBI Factors, a subsidiary of SBI in the capacity of Nominee Director since 2008 till 2010 and on the Board of Canara HSBC Oriental Bank of Commerce Insurance Company Limited ( ). He was a Member of the Management Committee of the Indian Banks Association (2014). He acted as the Alternate Chairman of the sub-committee of IBA on retail lending (2014) and currently an independent director in Canara Robecco Asset Management Company Ltd. The Board opined that Sri Kannan s va banking experience and leadership will immensely benefit the company in achieving its objectives. The Board of Directors recommends the special resolution set out at Item no. 7 for approval of the members. Item no. 8: As per the provisions of Section 62 of the Companies Act, 2013, the increase in the subscribed capital of the Company by issue of further shares to the exiing shares holders noted below, on preferential basis, requires approval of the members by way of special resolution. Details of Allottee: S. No. Name of the Address Occupation Allottees No. of equity shares 1 Shri Alluri Indra Kumar /1/7, Road No.12, Bhawani Nagar Banjara Hills, Hyderabad Telangana. Business 50,00,000 2 Shri Ravi Kumar Velagapudi 5521, Perugia Circle, Sanjose, Business 10,00,000 CA-95138, USA 3 M/s. Srinivasa Cyine Pvt. Ltd. G-2, Concorde Apartments, Business 2,00,00,000 Somajiguda, Hyderabad Total 2,60,00, Annual Report

11 Disclosures as Required Under Companies (Share Capital and Debentures) Rules, 2014 and As Amended Thereon: Sl. No. Particulars Details 1. The objects of the issue The Company is expanding its Business operations across the Country. The Board has decided to issue the equity shares, so as to avail the funds for future requirements. 2. Total No of shares to be issued The Board is proposing for issue of 2,60,00,000 (Two Crores Sixty Lakhs) equity shares of R10/- each. 3. The price or price band at which the The proposed allotment of Equity Shares allotment is proposed will be at par. 4. Basis on which the price has been arrived at along The price has been arrived based on Net Asset with report of regiered valuer. value method. 5. The relevant date on the basis of which price is arrived Based on the provisional financials for the period ended March 31, The class or classes of persons to whom the The proposed Allotment is to be made to the following allotment is proposed to be made exiing share holders 1. Shri. Alluri Indra Kumar 2. Shri. Ravi Kumar Velagapudi 3. M/s. Srinivasa Cyine Private Limited 7. Proposed time within which the allotment shall be The resolution is valid for a period of 12 months completed from the date of approval and allotment needs to be completed within 60 days of receipt of Share Application Money. 8. Whether a Change in control is intended or expected. No change in control is expected except dilution of shareholding of exiing members. Annual Report

12 Pre and po issue shareholding pattern of the Company: S. No. Category Pre-Issue Po-Issue No. of Equity Shares (%) No. of Equity Shares (%) A. Promoters Holding 1. Indian Individual 45,80, ,80, Body Corporate 2,36,80, ,36,80, SUB TOTAL 2,82,60, ,32,60, Foreign a) NRIs Individuals SUB TOTAL A 2,82,60, ,32,60, B. Non Promoters Holding 1. Initutional Inveors Non Initution Private Corporate Bodies 55,00, ,00, Directors & Relatives Indian Public Others 83,00, ,00, SUB TOTAL B 1,38,00, ,48,00, GRAND TOTAL 4,20,60, ,80,60, Your Directors recommend the aforesaid resolution for your approval. None of the directors except Shri A. Indra Kumar along with their relatives are intereed in the aforesaid resolution. By Order of the Board For MAXIMUS ARC LIMITED Place : Vijayawada Dated: D. Nanha Ram Managing Director & CEO Regiered office: S.No.7, # /1, A.S.R Nagar, Seethammadhara, Visakhapatnam CIN: U67190AP2015PLC co@maximusarc.com, Web: 10 Annual Report

13 Directors Report Dear Members, Your Directors are pleased to present the 3rd Annual Report together with the audited accounts of the company for the Financial Year ended 31 March, Financial Results: The performance of the company for the year ended 31 March, 2017 is summarized below: ( R in Lakhs) Particulars Income from Operations Intere on Fixed Deposits Other Income - - Total Income Employee benefit expenses Finance Co - - Depreciation and Amortization Adminirative and other expenses Total Expenses Profit/(Loss) Before Tax & Exceptional Items (71.56) Exceptional Items (8.40) - Prior Period Item - - Current Tax Deferred Tax Income Tax provision for the earlier year (0.15) - Interim Dividend - - Dividend Diribution Tax - - Profit/(Loss) After Tax (56.07) 6.24 Earnings Per Share of R 10 (in Rupees) (1.33) 0.28 The Company s net worth as on 31 March, 2017 ood at R Lakhs. Annual Report

14 Performance of the Company Your company arted operations in November, 2016 after the assumption of the office by the Managing Director & CEO. During the year, your company acquired NPAs with an outanding due of R Crores at an acquisition co of R88.70 Crores. Of the accounts acquired, in line with the objectives of the company, two accounts were put on revival through reructuring of the corresponding debts. On the resolution side, since your company has commenced acquisition of assets only in the la quarter of the year, it could not regier any recoveries. However, your company is taking all eps to expedite resolution of the acquired debts. A summary of the debts acquired and realized during the financial year is given below. Acquired Number of seller Banks/FIs 6 - Debt acquired Co of acquisition ( R in Lakhs) Recovered Number of Accounts - - Amount recovered - - ( R in Lakhs) Share Capital During the year, paid up capital of the company has increased to R32.06 crores by issue of fresh equity shares. Changes in share capital During the year the Company has undertaken the following transactions: a) Issue of further Share Capital During the Financial Year, the Company has issued 2,95,00,000 equity shares of R10 each for cash at par for a sum of R29,50,00,000/- (Rupees Twenty Nine Crores Fifty Lakhs only) by way of Preferential Allotment / Private Placement basis to the promoters, shareholders and other persons. The details of allotment of shares are as follows: S. No. Date of Allotment No. of Shares allotted Annual Report

15 Dividend Since your company did not regier any profit for the year, your Directors have not recommended any dividend for the financial year ended 31 March, Transfer to Reserves Your Directors have not recommended transfer of any amount to the general reserves during the year. Management discussion and analysis The role of Asset Reconruction Companies(ARCs) is assuming more and more importance in the backdrop of the need on the part of banks to clean up their balance sheets and ARCs gradually proving their capabilities in resolution of even complex NPA cases, be it through revival or liquidation options. ARCs continue to offer a viable alternative to banks for speedy resolution of NPAs. It is eimated that the ARCs have so far acquired nearly R2.50 Lakh Crores of NPAs from banks, the bulk of which was acquired during the la few years, indicating the growing importance of ARCs as specialised initutions for resolution of NPAs. The Gross NPAs of Scheduled Commercial Banks have increased from 7.56% as on to 9.60% as on , further aggravating the problem of banks in resolution of their NPAs. Much again the expectations that the banks would come out with bulk sale of NPAs, the debts showcased in FY was less than R1 Lakh crores out of which debts with an aggregate outanding due of R45,331 Crores were sold to ARCs at an acquisition co of nearly R22,000 Crores. Not surprisingly, the deal closures have not been very encouraging, because of the continued high price expectations of the banks. It is a matter of concern that the banks while determining the Reserve Prices are not inclined to give appropriate weightage for increased akes of ARCs. The Reserve Bank of India, with an intention to improve the framework for sale of ressed assets, had on 1 September, 2016, issued certain guidelines to banks. The Guidelines urge the banks to create mechanism for timely identification of ressed accounts and take appropriate actions to ensure optimum realisation for banks. In order to make sure that the sale of ressed assets by banks actually result in a true sale; to create a vibrant ressed assets market and to progressively rerict banks invement in SRs backed by their own ressed assets, the guidelines ipulate that: i. With effect from 1 April, 2017, where the invement by a bank is more than 50 percent of SRs backed by its sold assets and issued under that securitisation, the provisions held in respect of these SRs will be subject to a floor, as defined. ii. With effect from 1 April, 2018, the above threshold of 50 percent will and reduced to 10 percent. These prescriptions would result in a subantial increase in ARCs akes, implying that they should necessarily gear up to attract invements from other permitted channels so as to leverage their business. The Guidelines further ate that the Banks should have a Board approved policy to buy-back financial assets from ARCs once the asset has become andard, after successful implementation of the reructuring programme by the ARCs and after satisfactory performance of the asset during the specified period, save with the exception that they cannot buy-back any asset they sold to ARC. This welcome measure is likely to facilitate and boo the efforts of ARCs in quick turnaround of ressed assets that have the potential for revival. The specific measures taken over the la few months, both by the Government and the Reserve Bank, to rengthen the legal, regulatory, supervisory and initutional framework are aimed at the ultimate objective of facilitating quick resolution of ressed assets in a time-bound manner. Annual Report

16 The path breaking Insolvency and Bankruptcy Code, 2016 (IBC) provides for a single window, time-bound process for resolution of assets with an explicit emphasis on promotion of entrepreneurship, maximisation of value of assets and balancing the interes of all akeholders. The code proposes a paradigm shift from the exiing 'Debtor in possession' to a 'Creditor in control' regime. The priority accorded to secured creditors in diribution of realisations will optimise the recoveries for Banks/ARCs.Simultaneously, the recent amendments relating to certain key provisions in SARFAESI Act, RDDB Act and Indian Stamp Act coupled with modifications made to SARFAESI & DRAT Rules have removed, to a large extent, the operational hiccups in undertaking resolution of NPAs. These measures are bound to expedite the whole resolution process and maximise the value to all the ake holders. RBI has also revised the norms increasing the net owned funds of ARCs from R2 Crores to R100 crores to be achieved by March, Your company planned to comply with the norm by March, 2018 itself. Accordingly, the company has increased its Authorised Capital to R100 crores. Future Prospects The gross NPA ratio of the banking syem at 9.6% and the ressed advances ratio at 12% as of March, 2017 poses a big challenge to the banking syem. To suain their health, the Banks should necessarily bring down NPA levels either by resolving them on their own or by sale to ARCs. During discussions with ARCs and PE firms on 30th July,2017, the Finance Minier Mr. Arun Jaitley said that Insolvency and Bankruptcy Code and the government's emphasis on resolution of NPAs provide opportunity for ARCs, as ressed assets ill have inherent value. He said that these NPAs are essentially productive which, if turned around, would not only create additional jobs but also contribute to national output. He further said that for this to happen, timely interventions, transparent price discovery and right management were required. Pointing out to various legislative and regulatory changes made over the la 18 months, like 100 per cent ownership by sponsors, higher ceiling of 100 per cent for FDI in ARCs, pass through atus to ARC trus for income tax, exemption from amp duty, enabling trading of Security Receipts etc., he said have created an enabling and supportive operational environment for ARCs and for takeover of ressed assets by PE firms/special situation funds. He went on to say that resultant collaboration between banks, ARCs, PE, Asset Management Companies and resolution professionals could pave the way to a virtuous cycle of fresh invements, new jobs and additional demand and that the increasing number of ARCs in the market was indicative of an increasing intere in the sector but also presented an opportunity for banks to offload ressed assets before fully provisioning for them. Needless to say, the Finance Minier s atements reveal the very serious concern of the government with regard to addressing the NPA problems of banks. These atements summarize the dominant role that ARCs are expected to play in the immediate future. Government of India had, on , notified 196 large NBFCs as deemed Financial Initutions, enabling them to deal in NPAs. This move will further increase the opportunities and as well throw challenges to the ARCs. Your company is fully geared up to grab every opportunity and take on the newer challenges as they unfold and be a ar performer in the indury. Internal Control Syems The company has in place well documented policies and adequate internal control syems to ensure transparency, effectiveness, efficiency of operations and compliance with the applicable laws and regulations. 14 Annual Report

17 Corporate Governance Corporate Governance defines the business behavior of a company and is aimed at creation and enhancement of long-term suainable value for all its akeholders through ethically driven business practices. It requires maintaining the right balance between economic, social, individual and community goals. The corporate governance is built on the fundamental principles such as transparency, accountability, responsibility and tru. Your company is truly wedded to corporate governance of high order. Board of Directors and Committees of the Board The Board formulates policies and provides rategic direction to the management in achieving the corporate objectives and further ensures the atutory and regulatory compliances, safeguarding the interes of the akeholders. The Board appoints key managerial personnel. The Board has conituted 2 committees namely Audit Committee and Management Committee. The Board met 11 times during the financial year on , , , , , , , , , and Details of attendance of directors at the Board Meetings during the year are provided below: Name of the Director Designation No. of Board Meetings Held Entitled Attended % of attendance Sri. G. M. Rama Rao Director Smt.Y. Prameela Rani Director Sri. P.Brahmanandam Director Sri. N.Hema Rao Director Sri. G.Sree Rama Krishna Director Sri. A. Indra Kumar Director Sri. G.Sambasiva Rao Director Sri. D.Nanha Ram Managing Director No Director is related to any other Director on the Board in terms of the definition of Relative given under the Companies Act, Audit Committee 1. Sri. G. Sambasiva Rao -Chairman 2. Smt. Y. Prameela Rani 3. Sri. G. Sree Rama Krishna The Audit Committee, oversees the financial reporting processes and the disclosure of its financial information to ensure correctness, adequacy and credibility of financial atements and recommends to the Board the appointment of atutory auditors and their remuneration. The committee reviews quarterly and annual financial atements before submission to the Board and the adequacy of internal control syems and the audit functions. Annual Report

18 Management Committee 1. Sri. P.Brahmanandam 2. Sri. A.Indra Kumar 3. Smt. Y.Prameela Rani 4. Sri. G.Sambasiva Rao 5. Sri. D. Nanha Ram The Management Committee under the guidance of the Board oversees the functional matters of the company such as matters relating to acquisition and resolution of financial assets; invements and appointment of aff, fixation of their remuneration; etc. The Management Committee also recommends policy matters to the Board. Directors and Key Managerial Personnel Sri D. Nanha Ram, Managing Director & CEO was appointed by the Board of Directors for a period of three years after getting necessary consent from Reserve Bank of India. Pursuant to the provisions of Section 203 of the Companies Act,2013 the appointments of Sri. D. Nanha Ram, Managing Director & CEO, as Key Managerial Personnel of the company was formalized. Board Evaluation The Board of Directors has carried out an annual evaluation of its own performance, Board Committees and individual directors pursuant to the provisions of the Act. The performance of the Board was evaluated by the Board after seeking inputs from all the Directors on the basis of the criteria such as the Board composition and ructure, effectiveness of board processes, information and functioning, etc. The performance of the committees was evaluated by the board after seeking inputs from the committee members on the basis of the criteria such as the composition of committees, effectiveness of committee meetings, etc. Auditors Pursuant to Section 139 of the Companies Act, 2013, the rules framed thereunder, M/s. Pendyala & Co., Chartered Accountants, were appointed as Auditors of the company from the conclusion of the 2nd Annual General Meeting of the company held on 30th September, 2016 for a term of 5 years, subject to ratification of their appointment at every Annual General Meeting. The resolution seeking approval of the Members for ratification of appointment of M/s. Pendyala & Co., Chartered Accountants as Statutory Auditors of the company has been incorporated in the notice of the Annual General Meeting. Auditors report The Auditors report does not contain any qualifications, reservations or adverse remarks. Particulars of loans, guarantees or invements The company has not granted any loans or made any invements and not extended guarantees for any individuals or corporates under Section 186 of the Act. Particulars of contracts or arrangements with related parties The details of all the contracts or arrangements made with related parties pursuant to Section 188(1) of the Act are reported in point No.20.3 under Additional Notes to Financial Statements. 16 Annual Report

19 Corporate Social Responsibility Since the provisions of Corporate Social Responsibility (CSR) are not applicable to the company as of now, the CSR Policy of the company has not been formulated. The policy will be formulated soon and made available on the website of the company. Extract of Annual Return As required pursuant to Section 92(3) of the Companies Act, 2013 and Rule 12(1) of the Companies (Management and Adminiration) Rules, 2014, an extract of annual return in MGT 9 as a part of this Annual Report is enclosed herewith as Annexure. Fixed Deposits The company has not accepted / invited any deposits from the public in terms of section 73 of the Companies Act, Directors Responsibility Statement Pursuant to requirement under Section 134(5) of the Companies Act, 2013, with respect to Directors Responsibility Statement, it is hereby confirmed that: (i) (ii) (iii) (iv) (v) In the preparation of the annual accounts for the year ended 31 March, 2017, the applicable accounting andards had been followed along with proper explanations relating to material departures; The Directors had selected such accounting policies and applied them consiently and made judgments and eimates that are reasonable and prudent so as to give a true and fair view of the ate of affairs of the company as at 31 March, 2017 and of the profit of the company for the year ended on that date; 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; The Directors had prepared the annual accounts of the company for the year ended 31 March, 2017 on a going concern basis; and The Directors had devised proper syems to ensure compliance with the provisions of all applicable laws and that such syems were adequate and operating effectively. Particulars of Employees The atement showing details of employees as required under Section 197 of the Companies Act, 2013 read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is not required to be appended as none of the employees are drawing salary as ipulated in the section under reference. Risk Management The Company has put in place syems and procedures sufficient enough to capture various kinds of risks associated with the business. The management ensures mitigation of such risks as appropriate and the Management Committee oversees the effectiveness in implementation of the same. Disclosure Under The Sexual Harassment of Women At Workplace (Prevention, Prohibition And Redressal) Act, 2013 Your Company believes in providing an environment that is free from discrimination and harassment including sexual harassment of every employee of the Company. During the year ended 31 March, 2017, no complaints were received pertaining to sexual harassment. The company has formulated and put in place a policy to deal with matters relating to sexual harassment of employees. Annual Report

20 Energy Conservation, Technology Absorption, Foreign Exchange Earnings and Outgo As the company is engaged in asset reconruction and securitization activities, the particulars relating to conservation of energy, technology absorption, foreign exchange earnings and outgo as required under section 134(3)(m) of the Companies Act, 2013 are not applicable to the company. Acknowledgements Your Directors express their sincere gratitude to the Shareholders, Reserve Bank of India, Banks, Financial Initutions, Government Authorities and other ake holders for the continued support and tru reposed in the company. Your Directors also place on record their appreciation to the members of aff for their commitment and contribution to the company s growth and performance. For and on behalf of the Board of Directors Place : Vijayawada Dated: D. Nanha Ram Managing Director & CEO 18 Annual Report

21 Annexure to Directors Report Form No. MGT-9 Extract of Annual Return As on the financial year ended on 31 March, 2017 [Pursuant to Section 92(3) of the Companies Act, 2013 and Rule 12(1) of the Companies (Management and Adminiration) Rules, 2014] Regiration and Other Details i) CIN U67190AP2015PLC ii) Regiration date iii) Name of the Company Maximus ARC Limited iv) Category / Sub-Category of the Company Company limited by Shares Non-Govt company v) Regiered Office address and contact details S. No. 7, # /1, A.S.R. Nagar, Seethammadhara, Visakhapatnam vi) Whether Lied Company No vii) Name, Address and contact details of Regirar and Transfer Agent, if any N.A. I. Principal Business Activities of the Company All the business activities contributing 10% or more of the total turnover of the company are given below: S.No. Name and Description of main NIC Code of the % to total turnover products / services product/ service of the company 1 Other financial service activities, except insurance and pension funding activities II. Particulars of Holding, Subsidiary and Associate Company: M/s Devi Sea Foods Limited - Holding Company. CIN: U15122AP1992PLC Annual Report

22 III. Shareholding Pattern (Equity share capital breakup as percentage of total equity) i) Category-wise Share Holding Category of The Shareholders A. Promoters Indian Individual / HUF - 7,80,000 7,80, ,80,000 45,80, (16.19) Central Govt State Govt(s) Bodies Corporate - 9,80,000 9,80, ,36,80,000 2,36,80, Banks / FI's Any Other Sub Total A-1-17,60,000 17,60, ,82,60,000 2,82,60, Foreign NRI's Individual Other Individuals Bodies Corporate Banks / FI's Any Other Sub Total A Total Shareholding of Promoters (A1 + A2) - 17,60,000 17,60, ,82,60,000 2,82,60, B. Public Shareholding 1. Initutions Mutual funds Banks / FI's Central Govt State Govt(s) Venture Capital Funds Insurance Companies FII's Foreign Venture Capital Funds Others (Specify) Sub Total - B Non Initutions a) Bodies Corporate No of Shares Held at The Beginning of The Year No of Shares Held at The End of The Year % of Total Demat Physical Total Demat Physical Total Shares % of Total Shares % Change During the Year Indian ,00,000 30,00, Overseas Annual Report

23 Category of The Shareholders b) Individual No of Shares Held at The Beginning of The Year No of Shares Held at The End of The Year % of Total Demat Physical Total Demat Physical Total Shares % of Total Shares % Change During the Year Individual Shareholders holding nominal share capital upto R1 Lakh Individual Shareholders holding nominal share capital in excess of R1 Lakh - 8,00,000 8,00, ,00,000 8,00, Others (Specify) Sub Total B2-8,00,000 8,00, ,00,000 38,00, (19.40) Total Public Shareholding (B1+B2) - 8,00,000 8,00, ,00,000 38,00, (19.40) C. Shares held by Cuodian for GDRs & ADRs Grand Total (A+B+C) - 25,60,000 25,60, ,20,60,000 3,20,60, ii) Shareholding of Promoters S.No. Shareholder s Name No of Shares Held at The Beginning of The Year No. of Shares % of total Shares of the company % of Shares Pledged / encumbered to total shares No of Shares Held at The End of The Year No. of Shares % of total Shares of the company % of Shares Pledged / encumbered to total shares % change in share holding during the year 1 M/s Devi Sea foods Limited 9,80, ,36,80, Sri. Alluri Indra Kumar 7,70, ,70, (18.94) 3 Sri P.Brahmanandam 10, ,10, Annual Report

24 iii) Change in Promoters Shareholding (Please Specify if there is no change) S.No. Name of the promoter Shareholding at the beginning of the year No of Shares % of total shares of the company Date wise increase / decrease in promoters shareholding specifying the reasons for increase / decrease (e.g. allotment / transfer/ bonus / sweat equity etc) No of Shares Shareholding at the end of the year % of total shares of the company 1 M/s. Devi Sea Foods Limited 9,80, Allotment of equity shares of 2,36,80, ,00,000 on , 1,85,00,000 on and 10,00,000 on Sri. Alluri Indra Kumar 7,70, Allotment of equity shares of 35,70, ,00,000 on Sri. P. Brahmanandam 10, Allotment of equity shares of 10,10, ,00,000 on iv) Shareholding Pattern of top ten Shareholders: (other than Directors, Promoters and Holders of GDRs and ADRs) S.No. Shareholding at the beginning of the year Cumulative Shareholding during the year For Each of the Top 10 Shareholders % of Total Shares % of total Shares No. of Shares No. of Shares of the Company of the Company At the beginning of the year: 1 M/s. Srinivasa Cyine Private Limited ,00, IV. Shareholding of Directors and Key Managerial Personnel S.No. Shareholding at the beginning of the year Cumulative Shareholding during the year Name of the Director % of Total shares % of Total Shares No. of Shares No. of Shares of the Company of the Company 1. Sri. A. Indra Kumar 7,70, ,70, Sri. N. Hema Rao 3,00, ,00, Sri. G. M. Rama Rao 1,00, ,00, Sri. G. Sree Ramakrishna 1,00, ,00, Sri. P. Brahmanandam 10, ,10, Total 12,80,000 50,80, Annual Report

25 v). Indebtedness - Indebtedness of the Company including intere outanding/accrued but not due for payment Indebtedness at the beginning of the financial year ( ) Secured Loans excluding deposits Unsecured Loans Deposits Total Indebtedness i) Principal Amount ii) Intere due but not paid iii) Intere accrued but not due Total (i+ii+iii) - Nil Nil Nil Change in Indebtedness during the financial year * Addition * Reduction Net Change - Nil Nil Nil Indebtedness at the end of the financial year ( ) (Amount inr) i) Principal Amount ii) Intere due but not paid iii) Intere accrued but not due Total (i+ii+iii) Nil Nil Nil V. Remuneration of Directors and Key Managerial Personnel A. Remuneration to Managing Director, Whole-time Directors and/or Manager: (Amount inr) SN. 1 Gross salary Particulars of Remuneration Name of MD/WTD/ Manager Sri. D. Nanha Ram, MD&CEO (a) Salary as per provisions contained in section 17(1) of the Income-tax Act, ,00,000 28,00,000 (b) Value of perquisites u/s 17(2) Income-tax Act, ,75,000 1,75,000 (c) Profits in lieu of salary under section 17(3) Income- tax Act, Stock Option Sweat Equity Commission - as % of profit - others, specify Others, please specify - Total (A) 29,75,000 29,75,000 Ceiling as per the Act Refer Note Note: The remuneration paid to the Managing Director is within the limits prescribed under the Companies Act,2013 and the Rules framed thereunder. Total Annual Report

26 B. Remuneration to other Directors Fee for attending board Others, S.No. Particulars of Remuneration Commission Total committee meetings Please specify 1 Independent Directors Smt. Y.Prameela Rani 2,00, ,00,000 2 Other Non-Executive Directors (Amount in R) Total (1) 2,00, ,00,000 Sri. Hema Rao Nandipati Sri. G.M. Rama Rao 1,00, ,00,000 Sri G. Sree Ramakrishna 1,00, ,00,000 Total (2) 2,00, ,00,000 Total (1+2) 4,00, ,00,000 C. Remuneration to Key Managerial Personnel Other Than MD / Manager / WTD S.No. Particulars of Remuneration Key Managerial Personnel 1 Gross salary CEO CS CFO Total (a) Salary as per provisions contained in section 17 (1) of the Income-tax Act, (b) Value of perquisites u/s 17(2) Income-tax Act, (c) Profits in lieu of salary under section 17(3) Income-tax Act, Stock Option Sweat Equity Commission as % of profit others, specify Others, Allowances Total Annual Report

27 VI. Penalties / Punishment / Compounding of Offence Details of Penalty / Section of the Brief Authority Appeal made, Punishment/ Type Companies Act Description [RD / NCLT/ if any Compounding fees COURT] (give Details) imposed A. Company Penalty Punishment Compounding B. Directors Penalty Punishment Compounding C. Other Officers in Default Penalty Punishment Compounding Nil Nil Nil Annual Report

28 PENDYALA & CO CHARTERED ACCOUNTANTS Independent Auditors` Report To the Members of, M/s Maximus ARC Limited Report on the Financial Statements We have audited the accompanying financial atements of M/s Maximus ARC Limited ( the Company ) which comprise the Balance Sheet as at 31 March, 2017, the Statement of Profit and Loss and the Cash Flow Statement for the year then ended and a summary of significant accounting policies and other explanatory information. Management s Responsibility for the Financial Statements The Company s Board of Directors is responsible for the matters ated in Section 134(5) of the Companies Act, 2013 ( the Act ) with respect to the preparation and presentation of these financial atements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014 and the accounting guidelines issued by Reserve Bank of India from time to time. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and eimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial atements that give a true and fair view and are free from material misatement, whether due to fraud or error. Auditor s Responsibility Our responsibility is to express an opinion on these financial atements based on our audit. We have taken into account the provisions of the Act, the accounting and auditing andards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made thereunder. We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial atements are free from material misatement. An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial atements. The procedures selected depend on the auditor s judgements, including the assessment of the risks of material misatement of the financial atements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company s preparation of the financial atements that give a true and fair view in order to design audit procedures that are appropriate in the circumances. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting eimates made by the Company s Directors, as well as evaluating the overall presentation of the financial atements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the financial atements. 26 Annual Report

29 Opinion In our opinion and to the be of our information and according to the explanations given to us, the aforesaid financial atements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the ate of affairs of the Company as at 31 March, 2017, its Loss and its cash flows for the year ended on that date. Report on Other Legal and Regulatory Requirements 1) As required by the Companies (Auditor s Report) Order, 2016 ( the Order ), issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act, we give in the Annexure-A, a atement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable. 2) As required by section 143 (3) of the Act, we report that: a) We have sought and obtained all the information and explanations which to the be of our knowledge and belief were necessary for the purposes of our audit. b) In our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books. c) The Balance Sheet, the Statement of Profit and Loss and the Cash Flow Statement dealt with by this Report are in agreement with the books of account. d) In our opinion, the aforesaid financial atements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014 and the accounting guidelines issued by Reserve Bank of India. e) On the basis of the written representations received from the Directors as on 31 March, 2017, taken on record by the Board of Directors, none of the directors is disqualified as on 31 March, 2017, from being appointed as a director in terms of Section 164(2) of the Act. f) With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate report in Annexure-B ; and g) With respect to the other matters to be included in the Auditor s Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the be of our information and according to the explanations given to us: i. The Company does not have any pending litigations which would impact its financial position. ii. iii. iv. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses. There are no amounts required to be transferred to the Inveor Education and Protection Fund by the Company. The Company has provided requisite disclosures in the financial atements as to the holdings as well as dealing in Specified Bank Notes during the period from November 08, 2016 to December 30, Based on audit procedures and relying on the management representation, we report that the disclosures are in accordance with the books of account as maintained and produced to us by the Management - Refer Note 20.7 to the financial atements. For PENDYALA & CO., Chartered Accountants Firm Regiration Number: S Hyderabad Augu 30, 2017 P. Ramachandram Proprietor Membership Number: Annual Report