for the Financial Year 2022-23
Dear Members,
The Board of Directors hereby submits the 42nd Annual Report of the business
and operations of Canopy Finance Limited ("the Company") together with the
Audited Financial Statements for the financial year ended 31st March, 2023.
1. Financial Performance of the Company
The summarized audited financial performance of the Company is as follows:
Amount (Rs in '000')
| Particulars |
As at 31st March, 2023 |
As at 31st March, 2022 |
| Revenue from Operations |
10,003 |
34,894 |
| Expenses |
5,154 |
29,189 |
| Profit before Tax & Provision |
4,849 |
5,706 |
| Less: Provision for Tax |
461 |
- |
| Less: Deferred Tax |
(315) |
615 |
| Less: Provision for Standard Assets |
55 |
(4) |
| Profit After Tax |
4,649 |
5,095 |
| Transfer to Statutory NBFC Reserve Fund |
930 |
1,019 |
| Profit for the period |
3,719 |
4,076 |
| Basic/ Diluted Earnings Per Share |
0.35 |
0.44 |
2. Dividend
The Board has not recommended dividend for the Financial Year.
The provisions of Section 125(5) of the Companies Act, 2013 regarding transfer of
Unclaimed Dividend to Investor Education and Protection Fund do not apply on the company
as no dividend has been declared during the year.
3. General Reserve
The Company during the year under review has transferred Rs. 9,30,000 to Special
Reserve as per applicable regulation for NBFCs, prescribed by the Reserve Bank of India
Act, 1934.
4. NBFC Company
The Company is engaged in the Business of Non-Banking Financial Institution and it has
obtained a certificate of Registration from the Reserve Bank of India. The Company has not
accepted any deposit from the public. Being an NBFC company the Company continues to
comply with all the rules, regulations and the guidelines issued by RBI and applicable on
NBFC - Non-Deposit Accepting.
5. Change in the nature of business, if any
The Company has not changed its nature of business during the year.
6. Public Deposits
The Company being an NBFC - non deposit taking Company, the provisions relating to
Chapter V of the Companies Act, 2013 i.e., acceptance of deposit, are not applicable to
the Company and that the Company has not accepted any deposits from the public within the
meaning of the provisions of the Non-Banking Financial Companies Acceptance of Public
Deposits (Reserve Bank) Directions, 2016.
7. Operations and State of Company's Affairs
The Company being a Non-Banking Financial Company (NBFC) is currently engaged in the
financial activities. The business of the Company largely depends on the policies by the
Reserve Bank of India, Ministry of Finance as well as Global volatility in the financial
market.
| Particulars |
Amount (Rs in '000') |
| Revenue |
10,003 |
| Expenditure |
5,154 |
| Profit/Loss before Tax |
4,849 |
8. Material Changes and Commitments affecting the Financial Position of the Company
No material changes and commitments which can affect the financial position of the
Company occurred between the end of the financial year of the company and the date of this
report.
9. Significant and Material Orders Passed by the Regulators or Courts or Tribunals
The Company is not subject to any legal proceedings or claims and no significant and
material order has been passed by the regulators, courts, tribunals which will have a
material or adverse effect on the going concern status or company's operations or
financial conditions.
10. Internal Financial Control
The Company has in place adequate internal financial control with reference to
financial statements. During the year, such controls were tested and no reportable
material weakness in the design or operation was noticed. The details in respect of
Internal Financial Control Systems and their Adequacy are included in the Management
Discussion and Analysis which form part of this report.
11. Details of Subsidiary/Toint Ventures/Associate Companies
The Company does not have any Subsidiary, Joint venture or Associate Company. Hence,
statement containing salient features of the financial statement of Subsidiaries/Associate
Companies/Joint Ventures pursuant to first proviso to sub-section (3) of section 129 read
with rule 5 of Companies (Accounts) Rules, 2014 under Form AOC-1, is not applicable to the
Company.
12. Declaration by Independent Directors
Independent Directors of the Company have confirmed that they meets the criteria of
independence as laid down in sub-section (6) of Section 149 of the Companies Act, 2013 and
clause (b) of sub-regulation (1)
of regulation 16 of SEBI (Listing Obligations and Disclosure Requirements) Regulations,
2015and that they are not aware of any circumstance or situation, which exist or may be
reasonably anticipated, that could impair or impact their ability to discharge their
duties with an objective independent judgment and without any external influence. The
Board of Directors have taken on record the declaration and confirmation submitted by the
independent directors after undertaking due assessment of the veracity of the same.
13. Familiarization Programme for Independent Directors
In terms of Reg. 25(7) of the SEBI (LODR) Regulations, 2015 the Company has conducted
the Familiarization Programme for Independent Directors (IDs) to familiarize them about
their roles, rights, responsibilities in the Company, nature of the industry in which the
Company operates, business model of the Company, etc., through various initiatives.
Details of program for familiarization of independent directors of the company are
accessible on yours company website.
14. Independent Directors' Meeting
During the year under review, Independent Directors met on 10th February,
2023, inter-alia, to discuss:
• Evaluation of the performance of Non-Independent Directors and the Board as
whole.
• Evaluation of the performance of the Chairman of the Company, taking into
account the views of the Executive and Non-Executive Directors.
• Evaluation of the quality, quantity, content and timeless of flow of information
between the management and the Board.
15. Annual Return
In accordance with Section 92(3) and 134(3)(a) of the Companies Act, 2013 read with the
Companies (Management and Administration) Rules, 2014, the Annual Return as on 31st
March, 2023 is available on the Company's website www.canopyfinance.org.
16. Share Capital
The Authorized Share Capital of your Company is Rs. 15,00,00,000/- divided into
1,50,00,000 Equity Shares of face value of Rs. 10/- each.
The Issued, Subscribed and Paid-up Share Capital of your Company as on 31st
March, 2023 is Rs. 10,59,30,010/- divided into 1,05,93,001 Equity Shares of face value of
Rs. 10/- each.
Issue of equity shares with differential rights
The Company has not issued any of its securities with differential rights during the
year under review.
Buy Back of Securities
The Company has not bought back any of its securities during the year under review.
Sweat Equity, Bonus Shares & Employee Stock Option Plan
The Company has neither issued sweat equity or bonus shares nor has provided any stock
option scheme to the employees.
Preferential Issue of Securities
The Company vide resolution dated 29th August, 2022 allotted 13,00,001
equity shares (F.V Rs 10/-) at a premium of Rs 20/ - per share to Strategic Investors
being Non-Promoters on Preferential Allotment basis. The Company has duly complied with
section 42 and 62 of the Companies Act, 2013. Money was raised with an object to meet the
long-term funding requirements of the Company including but not limited to working capital
requirement, lending activities and for general corporate purposes in order to support the
future growth plan of the Company.
Amount of fund raised- Rs. 3.900 crores Amount of fund utilized- Rs. 3.888 crores
17. Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and
Outgo
Business activities of the Company being financial in nature, no energy is used or
technology absorbed by the Company for conducting its business. The Company does not have
entered into any Foreign Exchange transactions during the financial year under review.
18. Corporate Social Responsibility (CSR)
In terms of Section 135 of the Companies Act, 2013, the provisions relating to
Corporate Social Responsibility is not applicable to the Company as the Company does not
have net worth of rupees five hundred crore or more, or turnover of rupees one thousand
crore or more or a net profit of rupees five crore or more during any financial year.
19. Changes in Directors and Key Managerial Personnel
Your Company's Board is duly constituted in compliance with the requirement of the
Companies Act, 2013 and the Securities and Exchange Board of India (Listing Obligations
and Disclosure Requirements) Regulations, 2015 (Listing Regulations).
During the financial year under review following changes in Directors were as follows:
a) Mr. Bipinchandra Shivnarayan Kabra, Non- Executive Independent Director of the
Company, resigned his office with effect from 13th May, 2022 due to
preoccupation in other activities and inability to devote time.
b) Mr. Aneish Kumaran Kumar was appointed with effect from 25th May, 2022 by
the Board of the Directors as Additional Non- Executive Independent Director of the
Company. His appointment was regularized at the Annual General Meeting held on 30th
September, 2022.
c) Mrs. Khushboo Vasudev, Non- Executive Independent Director of the Company, resigned
her office with effect from 5th September, 2022 due to relocation from Mumbai.
d) Mr. Suresh Salian was appointed as Additional Non- Executive Independent Director
with effect from 9th November, 2022 by the Board of the Directors of the
Company. His appointment was regularized by the Shareholders through passing Special
Resolution via postal ballot dated 4th February, 2023.
e) Mrs. Priyanka Agarwal, Company Secretary and Compliance Officer of the Company
resigned with effect from 3rd January, 2023 due to personal reasons, and
f) Ms. Prity Bishwakarma was appointed as a Company Secretary & Compliance Officer
of the Company with effect from 27th March, 2023.
20. Annual Performance Evaluation of the Directors
In compliance with the Schedule IV of the Companies Act 2013 and regulation 25(3) of
SEBI(Listing Obligations and Disclosure Requirements), 2015, a meeting of the Independent
Directors of the Company was held on 10th February, 2023 to review and evaluate
the performance of the Non- Independent Directors and the Chairman of the Company taking
into account the views of the Executive Directors and Non- Executive Directors, assessing
the quality, quantity and timeliness of flow of information between the Company's
management and the Board and also to review the overall performance of the Board.
Further the same was discussed in the Board meeting that followed the meeting of the
Independent Directors, at which the performance of the Board, its committees and
Individual Directors was also discussed. Performance evaluation of Independent Directors
was done by the entire Board, excluding the Independent Director being evaluated.
21. Meetings of the Board:
The Board Meetings of your Company are normally planned in advance in consultation with
the Board Members. However, in certain emergency situation and / or to maintain the price
sensitivity of the transaction, Board meeting was also convened on shorter notice after
complying necessary requirement for the same.
The Board met at least once in every calendar quarter and the gap between two meetings
did not exceed one hundred and twenty days. 13 (Thirteen) Meetings of the Board of
Directors were held during the financial year 2022-23.
The Board Meetings were well attended by the directors and validly held on the
following dates:
- 5th April, 2022
- 25th May, 2022
- 28th June, 2022
- 15th July, 2022
- 12th August, 2022
- 19th August, 2022
- 29th August, 2022
- 5th September, 2022
- 9th November, 2022
- 15th November, 2022
- 4th January, 2023
- 10th February, 2023 and
- 27th March, 2023
22. Compliance with Secretarial Standards
The Company has complied with the Secretarial Standards issued by the Institute of
Company Secretaries of India on Board Meeting and General Meeting.
23. Corporate Insolvency
There is no Corporate Insolvency Resolution Process initiated under the Insolvency and
Bankruptcy Code, 2016.
24. Promoter's Group Shareholding
As on 31st March, 2023, the total shareholding of the Promoter of your
Company is 16.35 per cent and none of the Promoter/Promoters' Group shareholding is under
pledge. Further, in compliance with Regulation 31(2) of SEBI Listing Regulations, 2015,
the entire shareholding of promoter(s) and promoter group is in dematerialized form.
25. Audit Committee:
Audit Committee meeting is generally held for the purpose of recommending the
Quarterly, half yearly and yearly financial result. Additional meeting is held for the
purpose of reviewing the specific item included in terms of reference of the Committee.
Committee met 5 (Five) times during the year on 25.05.2022, 12.08.2022, 09.11.2022,
15.11.2022 and 10.02.2023. As on 31st March, 2023 following are the members of
the Committee.
| Name |
Designation |
| Manisha Agarwal |
Chairperson |
| Aneish Kumaran Kumar |
Member |
| Varun Newatia |
Member |
The Statutory Auditors of the Company are invited in the meeting of the Committee
wherever requires. Chief Financial Officer of the Company is a regular invitee at the
Meeting. Recommendations of Audit Committee, wherever/whenever given, have been accepted
by the Board.
26. Nomination and Remuneration Committee
The Company has formed Nomination and Remuneration committee in line with the
provisions of Section 178 of the Companies Act, 2013. Nomination and Remuneration
Committee meetings are generally held for identifying the persons who are qualified to
become Directors and may be appointed in senior management and recommending their
appointments and removal. Committee met three times during the year on 25.05.2022,
09.11.2022 & 27.03.2023. As on 31st March, 2023, following is the
composition of committee.
| Name |
Designation |
| Manisha Agarwal |
Chairperson |
| Aneish Kumaran Kumar |
Member |
| Suresh Salian |
Member |
27. Nomination and Remuneration Policy
The Nomination and Remuneration Policy formulated by the Nomination and Remuneration
committee of the Company is in conformity with the requirement of Section 178(3) of the
Companies Act, 2013 and Listing Regulations. The objectives and key features of this
Policy are:
• Formulation of the criteria for determining qualifications, positive attributes
and independence of the Directors, Key Managerial Personnel and Senior Management
Personnel;
• Devising a policy on Board diversity;
• Identifying persons who are qualified to become Directors and persons who may be
appointed in Key Managerial and Senior Management positions in accordance with the
criteria laid down in this policy;
• Formulation of criteria for performance evaluation of the Board, its Committees
and Directors including Independent Directors / Non-Executive Directors; and
• Recommend to the Board all the remuneration in whatever form, payable to the
Senior Management.
The guiding principles of the Policy are:
• The level and composition of remuneration is reasonable and sufficient to
attract, retain and motivate Directors of the quality required to run the Company
successfully;
• Relationship of remuneration to performance is clear and meets appropriate
performance benchmarks; and
• Remuneration to Directors, Key Managerial Personnel and Senior Management
involves a balance between fixed and incentive pay reflecting short- and long-term
performance objectives appropriate to the working of the Company and its goals.
The aforesaid Nomination and Remuneration Policy has been uploaded on the website of
your Company www.canopyfinance.org.
28. Stakeholder's Grievance & Relationship Committee
The Company has constituted Stakeholder's Grievance & Relationship Committee mainly
to focus on the redressal of Shareholder's/ Investor's Grievances, if any, like Transfer /
Transmission /Demat of Shares; Loss of Share Certificates; Non-receipt of Annual Report;
Dividend Warrants; etc. Committee met four times during the year respectively on
25.05.2022, 12.08.2022, 09.11.2022 and 10.02.2023. As on 31st March, 2023
following are the members of the Committee.
| Name |
Designation |
| Manisha Agarwal |
Chairperson |
| Aneish Kumaran Kumar |
Member |
| Suresh Shivanna Salian |
Member |
29. Details of establishment of vigil mechanism for directors and employees
The Company is committed to the high standards of Corporate Governance and stakeholder
responsibility. The Company has established a vigil mechanism to be known as the 'Whistle
Blower Policy' for its Director's and employees, to report instances of unethical
behavior, actual or suspected, fraud or violation of the Company's Code of Conduct.
The aim of the policy is to provide adequate safeguards against victimization of
whistle blower who avails of the mechanism and also provide direct access to the Chairman
of the Audit Committee, in appropriate or exceptional cases. The details of establishment
of such mechanism have been disclosed on the website of the Company at
www.canopyfinance.org.
30. Prevention of Insider Trading
The Company has adopted a Code of Conduct for Prevention of Insider Trading as amended
from time to time with a view to regulate trading in securities by the Directors and
designated employees of the Company. The Code requires pre-clearance for dealing in the
Company's shares and prohibits the purchase or sale of Company shares by the Directors and
the designated employees while in possession of unpublished price sensitive information in
relation to the Company and during the period when the Trading Window is closed.
The Board is responsible for implementation of the Code. All Board Directors and the
designated employees have confirmed compliance with the Code.
31. Risk Management
Y our Company recognizes that risk is an integral part of business and is committed to
managing the risks in a proactive and efficient manner. The Board of the Company at
regular intervals monitors the financial, operational, legal risk to the Company. There is
no risk, which in the opinion of the Board which may threaten the existence of the
Company. Pursuant to section 134 (3) (n) of the Act it is stated that at present the
company has not identified any element of risk which may threaten the existence of the
Company
32. Particulars of Loans, Guarantees or Investments
Being an NBFC, the disclosures regarding particulars of loans given, guarantees given
and security provided is exempted under the provisions of section 186 of the Act. As
regards investments made by the Company, the details of the same are provided under
Financial Statements of the Company for the year ended 31st March, 2023.
33. Particulars of Contracts or Arrangements with Related Parties:
The Company has no material individual transactions with its related parties which are
covered under section 188 of the Companies Act, 2013, which are not in the ordinary course
of business and not undertaken on an arm's length basis during the financial year 2022-23,
there are no transactions to be reported in Form AOC-2 and as such do not form part of
this report.
34. Statutory Auditors
M/s SDG & Co., Chartered Accountants (Firm Regn No 137864W), the Statutory Auditors
of the Company were appointed at the 41st Annual General Meeting held on 30th
September 2022 for the term of 5 (five) consecutive years from the conclusion of 41st
AGM till the conclusion of the 46th AGM to be held for the financial year
2026-27.
Further, the observations made by the Statutory Auditors are self- explanatory and do
not require any further clarification. There are no qualifications or reservations on
adverse remarks or disclaimers in the said report. Further, there are no frauds has been
reported by the Auditors to the Audit & Compliance Committee or the Board under
Section 143(12) of the Companies Act, 2013.
35. Secretarial Audit Report
Pursuant to the provisions of Section 204 of the Companies Act, 2013 read with
corresponding Rules framed there under, Mrs. Twinkle Agarwal, Practicing Company Secretary
was appointed as the Secretarial Auditor of the Company to carry out the Secretarial Audit
for the year ending 31st March, 2023.
There is a qualification remarks but no reservation or adverse remark or disclaimer
made by the Practicing Company Secretary in the Secretarial Audit Report.
Mr. Aneish Kumaran Kumar was appointed as Additional Non-Executive Independent Director
w.e.f. 25th May, 2022 but his appointment was not regularized within the
stipulated time frame as stated in Regulation 17(1C) of the SEBI (Listing Obligations and
Disclosure Requirements), Regulations, 2022.
Reply by the Board on such qualification: We would like to state that we had
inadvertently missed to regularize his appointment within stipulated time frame as stated
in Regulation 17(1C) of the SEBI (Listing Obligations and Disclosure Requirements),
Regulations, 2022 and duly assures that the same inadvertence shall not be repeated and
would take care to comply with good corporate governance in future.
The Secretarial Audit Report is enclosed herewith and forms part of this Report.
36. Internal Auditor
Mr. Supratim Roy Chowdhury, Chartered Accountants, Internal Auditor has submitted a
report based on the internal audit conducted during the period under review. The Internal
Auditor has not reported any qualification, reservation or adverse opinion during the
period under review.
37. Reporting of Fraud by Auditors
During the year under review, the Statutory Auditors and Secretarial Auditor have not
reported, any incident of fraud committed in your Company by its Officers or Employees, to
the Audit Committee and / or to the Board under Section143(12) of the Companies Act, 2013
details of which needs to be mentioned in this Report.
38. Maintenance of Cost Records:
The provisions relating to maintenance of cost records are not applicable to the
Company.
39. Managerial Remuneration, Particulars of Employees and related disclosure
Disclosures pertaining to remuneration and other details as required under Section
197(12), read with the Companies (Appointment and Remuneration of Managerial Personnel)
Rules, 2014, are given in Annexure enclosed hereto and forms part of this Report.
40. Management Discussion & Analysis Reports
The Management Discussion & Analysis Report has been annexed with the report.
41. Corporate Governance
Pursuant to Regulation 15 of SEBI (LODR) Regulations, 2015, the compliance with the
corporate governance provisions as specified in Regulations 17, 18, 19, 20, 21,22, 23, 24,
25,26, 27 and clauses (b) to (i) of subregulation (2) of regulation 46 and para C , D and
E of Schedule V of SEBI (LODR) Regulations, 2015, shall apply, in respect of the listed
entity having paid up equity share capital exceeding rupees ten crore and net worth
exceeding rupees twenty five crore, as on the last day of the previous financial year.
Thus, a separate report of Corporate Governance providing the disclosures as required
under para-C of Schedule V has not been provided in this Annual report.
42. Operational Review
The Company discloses Unaudited Financial Results on a quarterly basis, Audited
Financial Results on an annual basis. The Company has complied with all the norms
prescribed by the Reserve Bank of India (RBI) including the Fair practices, Anti Money
Laundering and Know Your Customer (KYC) guidelines.
43. Sexual Harassment of Women at Work Place
The Company has in place a policy in line with the requirements of The Sexual
Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013.
Internal Complaints Committee (ICC) has been set up to redress complaints received
regarding sexual harassment. All employees (permanent, contractual, temporary, trainees)
are covered under this Policy.
Policy on Prevention of Sexual Harassment at Workplaceis available on the website of
the Company at www.canopyfinance.org. No complaints relating to the sexual harassment has
been received during the year under report.
44. Other Information:
Merger
The Company has made application to SEBI under Regulation 37 of the SEBI (Listing
Obligations and Disclosure Requirements), Regulations, 2015 for Scheme of Merger by
Absorption of Canopy Finance Limited ("the Transferor Company"/ "the
Company"/ "CFL") and Purple Finance Limited ("the Transferee
Company"/ "PFL") as per section 230 to 232 of the Companies Act, 2013.
Hon'ble RBI has given their no objection for the proposed Merger by Absorption and
approval from SEBI is awaited as on date.
45. Directors' Responsibility Statement
Pursuant to Section 134(5) of the Companies Act, 2013, your Directors 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 have selected such accounting policies and applied them consistently
and made judgments and estimates that are reasonable and prudent so as to give a true and
fair view of the state of affairs of the company at the end of the financial year and of
the profit and loss of the Company for that period;
c) the directors have taken proper and sufficient care for the maintenance of adequate
accounting records in accordance with the provisions of this Act for safeguarding the
assets of the company and for preventing and detecting fraud and other irregularities;
d) the directors have prepared the annual accounts on a going concern basis;
e) the directors, 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) the directors have devised proper systems to ensure compliance with the provisions
of all applicable laws and that such systems were adequate and operating effectively.
46. Acknowledgements
Your Director's would like to express their appreciation of the co-operation and
assistance received from the shareholders, bankers and other business constituents during
the year under review. Your Director's also place on record their deep sense of
appreciation to all employees for their dedicated services rendered at various levels.
On behalf of the Board of Directors For Canopy Finance Limited
| Sd/- |
Sd/- |
| Lalit Kumar Tapadia |
Varan Newatia |
| Managing Director |
Director |
| DIN: 08117881 |
DIN: 08071741 |
| Place: Mumbai |
|
| Date: 8th May, 2023 |
|
|