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INFORMATION MEMORANDUM KIFS FINANCIAL SERVICES LIMITED

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Invest your trust

INFORMATION MEMORANDUM

KIFS FINANCIAL SERVICES LIMITED

Registered Office:

B‐81, Pariseema Complex,

C. G. Road, Ellisbridge,

Ahmedabad – 380 006


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KIFS FINANCIAL SERVICES LIMITED

[CIN: L67990GJ1995PLC025234 ]

KIFS Financial Services Limited was incorporated as Public limited Company in the name of

“Khandwala Financial Services Limited” on 29th March, 1995 and obtained the Certificate for

Commencement of Business on 31st March, 1995. Thereafter its name was changed to “Khandwala

Capital Services Limited” and fresh certificate of Incorporation was received on 22nd September, 1995.

Again the name of the Company was changed to “KIFS Financial Services Limited” and a fresh

certificate of Incorporation was received on 23rd January, 2009.

Registered Office: B-81, Pariseema Complex,



Phone Number: +91-79-26420592/594, +91-79-30000320/21/22

Fax Number: +91-79-26403717

E-Mail: [email protected]; [email protected]

Company Secretary & Compliance Officer: Ms. Krupa Joshi

Registrar and Share Transfer Agent: M/s Link Intime India Pvt. Ltd.

Unit No. 303, 3rd Floor, Shoppers Plaza V,

Opp. Municipal Market,

Behind Shoppers Plaza II,

Off C. G. Road, Ahmedabad – 380 009

Tel.: +91-79-26465179

Fax: +91-79-26465179

Email: [email protected]

Website: www.linkintime.co.in


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FORWARD LOOKING STATEMENT

This Information Memorandum may contain certain words or phrases, including, “will”, “aim”, “will

likely result”, “believe”, “expect”, “will continue”, “anticipate”, “estimate”, “intend”, “plan”,

“contemplate”, “seek to”, “future”, “would”, “objective”, “goal”, “project”, “should”, “will pursue” and

similar expressions or variations of such expressions, that are forward-looking statements.

All forward-looking statements are subject to risks, uncertainties and assumptions that could cause actual

results to differ materially from those contemplated by the relevant forward-looking statement. Important

factors that could cause actual results to differ materially from the Company’s expectations include,

amongst others:

• Changes in law and regulations that apply to the industries in India, wherein the Company is

operating;

• Increasing competition and the conditions of the customers of the Company;

• Changes in Government Policies;

• Changes affecting Company’s ability to successfully implement its strategy, growth and

expansion plans;

• General economic and business conditions in the markets in which the Company operates and in

the local, regional and national economies;

• Changes in the value of the Rupee vis-à-vis other currencies;

• Changes in political and socio-economic conditions in India;

• Changes affecting Company’s ability to meet its capital expenditure requirements;

• Fluctuations in operating costs;

• Changes affecting Company’s ability to attract and retain qualified personnel;

• The performance of the financial markets in India and globally; and

• Any adverse outcome in the legal proceedings in which the Company may get involved.


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INFORMATION MEMORANDUM

FOR LISTING AND TRADING OF 10818000 EQUITY SHARES OF

Rs. 10/- EACH FULLY PAID UP

I. GENERAL RISK

Investment in equity and equity-related securities involve a degree of risk and investors should not invest

in the equity shares of KIFS Financial Services Limited unless they can afford to take the risk of losing

their investment. Investors are advised to read the Risk Factors carefully before taking an investment

decision in the shares of KIFS Financial Services Limited. For taking an investment decision, investors

must rely on their own examination of the Company including the risks involved.

II. ABSOLUTE RESPONSIBILITY OF KIFS FINANCIAL SERVICES LIMITED.

KIFS Financial Services Limited having made all reasonable inquiries, accepts responsibility for, and

confirms that this Information Memorandum contains all information with regard to KIFS Financial

Services Limited which is material, that the information contained in the Information Memorandum is

true and correct in all material aspects and is not misleading in any material respect, that the opinions and

intentions expressed herein are honestly held and that there are no other facts, the omission of which

makes this Information Memorandum as a whole or any of such information or the expression of any such

opinions or intentions misleading in any material respect.

III. LISTING

The entire Equity Share Capital of the Company is currently listed on the Ahmedabad Stock Exchange

Limited (ASEL) and the Vadodara Stock Exchange Limited (VSEL). The Company made an application

to Bombay Stock Exchange Ltd. (BSE) for the listing of its entire Equity Share Capital and has duly

received its in-principle approval. The Company is now seeking Final Listing Approval of BSE; and

hence Final Listing application is being made along with this Information Memorandum to BSE.


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IV. RISK FACTORS AND MANAGEMENT PERCEPTIONS THEREOF

An investment in equity securities involves a high degree of risk. Investors should carefully consider all

the information in this Information Memorandum, including the risks and uncertainties described below,

before making an investment in our Equity Shares. Occurrence of any of the following risks as well as the

other risks and uncertainties discussed in this Information Memorandum could have a material adverse

effect on our business, financial condition and results of operations and could cause the trading price of

our Equity Shares to decline, which could result in the loss to the investor.

(A.) EXTERNAL RISK

The External risk basically relates to the regulatory risks involving changes in law and policies of the

Government etc. The Company being a Non Banking Financial Company (NBFC) is currently engaged in

the financial activities like Margin Trading, Loan against Shares and Funding IPO/ FPO retail

applications. The business of the Company largely depends on the policies framed by the Reserve Bank

of India, Ministry of Finance as well as Global volatility in the financial market.

Recession in the economies of the abroad countries affects the economy of India which further results in

the Financial Market performance. Our business is dependent on the performance of the Securities Market

viz; Primary as well as Secondary Market in India, and our operations could be adversely affected if

market conditions deteriorate.

MANAGEMENT PERCEPTION ON EXTERNAL RISK

The Company, at present follows such rules, regulations and guidelines as may be applicable to a NBFC.

It follows and regularly complies with the guidelines issued by RBI from time to time. Thus, the

applicability of such laws may not affect the operations of the company adversely as the Company will

always strive to take due care to follow the same.


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(B.) INTERNAL/ OPERATING RISKS

The internal risk is mainly related to the risk associated with the management decisions, HR policies,

manpower as well as resources of the Company. The Internal Risk may also be construed as the

operational risk, a risk arising from execution of a company's business functions. It is a very broad

concept which focuses on the risks arising from the people, systems and processes through which a

company operates. The Company’s success is dependent upon the implementation of strategic plans and

if the company is unable to implement these plans, operations and financial condition could be materially

affected.

MANAGEMENT PERCEPTION ON INTERNAL/ OPERATIONAL RISK

The Company has been in the business for the last 17 years and has seen many ups and down in the

economy of India as well as Global economy. It has laid down stringent credit norms through the Lending

Policy Framework. The Company follows a systematic process for planning and implementation of its

strategies. The Company is exposed to specific risks that are particular to its business and the

environment within which it operates, including interest rate volatility, economic cycle, credit risk and

market risk. The measurement, monitoring management of risk remains key focus areas for the company.

Barring unforeseen circumstances and political fluctuations as well as natural calamities, the Company

expects to withstand the Global/ India economy meltdown as the Company, alongwith applying stiff and

conventional measures, follows conservative approach and manages the credit risk through prudent

selection of clients, delegation of appropriate lending powers and stipulating various prudential limits.

(C.) LEGAL RISKS:

The legal risk depends on the involvement of the Company in the legal proceedings. So far there are no

cases either criminal or civil or under any other applicable laws lodged against the Company. The

Company is also regular in the recoveries from the clients. There are no cases lodged by the Company

against any person(s), Companies, Body Corporates, firms etc.


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V. GENERAL INFORMATION

KIFS Financial Services Limited was incorporated as Public limited Company in the name of

“Khandwala Financial Services Limited” on 29th March, 1995 and obtained the Certificate for

Commencement of Business on 31st March, 1995. Thereafter its name was changed to “Khandwala

Capital Services Limited” and fresh certificate of Incorporation was received on 22nd September, 1995.

Again the name of the Company was changed to “KIFS Financial Services Limited” and a fresh

certificate of Incorporation was received on 23rd January, 2009.

Registered Office: B-81, Pariseema Complex,



Phone Number: +91-79-26420592/594, +91-79-30000320/21/22

Fax Number: +91-79-26403717

E-Mail: [email protected]; [email protected]

Website: www.kifsfinance.com

Details Registration No./Identification number

Company Identification Number : L67990GJ1995PLC025234

NBFC Registration No. issued by RBI

01.00007

Stock Exchanges Where Company is currently listed:

1. Ahmedabad Stock Exchange Ltd.,

Kamdhenu Complex, Opp. Sahajanand College,

Panjara-Pole, Ambawadi, Ahmedabad- 380 015.

2. Vadodara Stock Exchange Ltd.

Fortune Towers, Sayajigunj,

Vadodara – 390005


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Listing of equity shares at BSE:

Equity Shares of the Company are proposed to be listed and traded on BSE. Such admission for trading

will be subject to fulfillment by the Company of listing criteria and subject to such other terms and

conditions as may be prescribed by BSE at the time of the application by the Company seeking listing.

Eligibility Criteria:

The Company is submitting its Information Memorandum, for listing of Equity Shares under new norms

for direct listing for the companies already listed on other recognized Stock Exchange(s) and it contains

information about the Company, making disclosures in line with the disclosure requirement for public

issues, to the extent applicable, to BSE for making the said Information Memorandum available to public

through their website viz. www.bseindia.com.

Prohibition by SEBI:

The company, its directors, its promoters, other companies promoted by the promoters and companies

with which the company’s directors are associated as directors have not been prohibited from accessing

the capital markets under any order or direction passed by SEBI.

Mr. Jayesh P. Khandwala who is the relative (real brother of present Managing Director / Promoter of the

Company) against whom a prohibitory order was passed by SEBI in the year 2006, which has been set

aside and remanded back for further trials by Hon’ble SAT vide its order dated 3rd April, 2012 in appeal

no. 29/2011. However Mr. Jayesh P. Khandwala is neither a Director nor a Shareholder of the applicant

company and has no interest in the assets of the applicant company.

General Disclaimer from the Company:

The Company accepts no responsibility for statements made otherwise than in the Information

Memorandum or any other material issued by or at the instance of the Company and anyone placing

reliance on any other source of information would be doing so at his or her own risk. All information

shall be made available by the Company to the public and investors at large and no selective or additional

information would be available for a section of the investors in any manner.


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Listing:

Application is being made to BSE, for permission to deal in and for an official quotation of the Equity

Shares of the company. The company has taken steps for completion of necessary formalities for direct

listing of its shares and commencement of trading at the Bombay Stock Exchange.

Demat Credit:

The Company has executed Agreements with NSDL and CDSL for its securities in demat form. Tripartite

agreements have been signed between the Company, the Registrar and CDSL and NSDL. The ISIN No.

allotted to the Company is INE902D01013.

Registrar of Companies,

Gujarat, Dadra & Nagar Haveli

CGO Bhavan, Opp. Rupal Park Society,

Naranpura, Ahmedabad – 380 013

Registrar and Share Transfer Agent:

M/s Link Intime India Pvt. Ltd.

Unit No. 303, 3rd Floor, Shoppers Plaza V,

Opp. Municipal Market,

Behind Shoppers Plaza II,

Off C. G. Road, Ahmedabad – 380 009

Tel.: +91-79-26465179

Fax: +91-79-26465179

Email: [email protected]

Website: www.linkintime.co.in

AUDITORS:

M/s. Shailesh C. Parikh & Co., Chartered Accountants

412, 4th Floor, Ashwamegh Avenue, Mayur Colony,

Nr. Mithakhali Circle, Navrangpura, Ahmedabad – 380 009.


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BANKERS TO THE COMPANY:

1. HDFC Bank Ltd.,

HDFC Bank House, Nr. Mithakhali Six Roads,

Navrangpura, Ahmedabad – 380 009

2. AXIS Bank Ltd.

Opp. Law Garden, Ellisbridge, Ahmedabad – 380 009

3. Bank of Maharashtra

Raja Complex, Nr. Vijay Cross Roads,

Navrangpura, Ahmedabad – 380 009

4. Indus-Ind Bank Ltd.

Premises No-1, Sonawalla Building,

57, Mumbai Samachar Marg, Fort, Mumbai - 400 001.

5. Central Bank of India

Kamdhenu Complex, Panjarapole Cross Road,

Ambawadi, Ahmedabad – 380 006


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VI. CAPITAL STRUCTURE OF THE COMPANY:

Particulars No. of Shares Share Capital (Rs.)

A. Authorized Share Capital

11000000 Equity Shares of

Rs. 10/- each

11,00,00,000

B. Issued, Subscribed and Paid-

up Capital

10818000 Equity Shares of

Rs. 10/- each fully paid up

10,81,80,000

(A.) Changes in the Capital Structure of the Company since Incorporation: Sr. No.

Date of Allotment

No. of Equity Shares

Face Value

Total Value (Rs.)

Mode of Issue

1. 29/03/1995 700 10 7000 Subscription to Memorandum

2. 01/06/1995 7,00,000 10 70,00,000 Further Allotment

3. 03/06/1995 49,300 10 4,93,000 Further Allotment

4. 31/12/1995 7,50,000 10 75,00,000 Further Allotment

5. 10/07/1996 7,50,000 10 75,00,000 Issued to Promoters in Public Issue

6. 10/07/1996 7,55,000 10 75,50,000 By Public Issue

7. 14/12/2012 24,04,000 10 2,40,40,000 By Bonus Issue

8. 27/12/2012 54,09,000 10 5,40,90,000 By Preferential Issue/ Private Placement to Promoters and Non Promoters at a Premium of Rs. 9/- each.

Total 1,08,18,000 10 10,81,80,000


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(B.) Shareholding Pattern As On 31/03/2013

(I)(a) Statement showing Shareholding Pattern:

Name of the Company KIFS FINANCIAL SERVICES LTD.

ISIN INE902D01013

Quarter ended on 31-03-2013

Cate gory Code

(I)

Category of Shareholder

(II)

Total No. of Share-holders

(III)

Total No. of Shares

(IV)

No. of shares held in

dematerialized form

(V)

Total shareholding as a percentage of total number of shares

Shares pledged or otherwise encumbered

As a (%) of (A+B) (VI)

As a (%) of (A+B+C)

(VII)

No. of Shares (VIII)

As a (%) (IX)

(A) Shareholding of Promoter and Promoter Group

(1) Indian (a) Individuals/ HUF - - - - - NIL NIL (b) Central Govt. / State

Government(s) - - - - - NIL NIL

(c ) Bodies Corporate 1 8050000 8050000 74.41 74.41 NIL NIL (d) FIs / Banks - - - - - NIL NIL (e) Any Other (Specify) - - - - - NIL NIL Sub Total (A) (1) 1 8050000 8050000 74.41 74.41 NIL NIL (2) Foreign (a) Individuals (NRIs/

Foreign national/ Individuals

- - - - - NIL NIL

(b) Bodies Corporate - - - - - NIL NIL (c ) Institutions - - - - - NIL NIL (d) Any Other (Specify) - - - - - NIL NIL Sub Total (A) (2) - - - - - NIL NIL Total Shareholding

of Promoter and Promoter Group (A)= (A)(1)+(A)(2)

1 8050000 8050000 74.41 74.41 NIL NIL

(B) Public Shareholding

(1) Institutions - - - - - NIL NIL (a) Mutual Funds/ UTI - - - - - NIL NIL (b) FIs/ Banks - - - - - NIL NIL (c ) Central Govt./ State

Govt.(s) - - - - - NIL NIL

(d) Venture Capital Funds

- - - - - NIL NIL


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(e) Insurance Companies

- - - - - NIL NIL

(f) FIIs - - - - - NIL NIL (g) Foreign Venture

Capital Investors - - - - - NIL NIL

(h) Any Other (Specify) - - - - - NIL NIL Sub Total (B)(1)

- - - - - NIL NIL

(2) Non-Institutions

(a) Bodies Corporate

1 3420 - 0.03 0.03 NIL NIL

(b) Individuals- i. Individual

Shareholders holding nominal share capital up to Rs.1 Lakh.

1752 433980 47140 4.01 4.01 NIL NIL

ii. Individual Shareholders holding nominal share capital in excess of Rs.1 Lakh.

19 2330600 2316740 21.55 21.55 NIL NIL

( c) Any Other (Specify) NRI

- - - - - NIL NIL

Clearing Member - - - - - NIL NIL Sub Total (B)(2)

1772 2768000 2363880 25.59 25.59 NIL NIL

Total Public Shareholding (B) = (B)(1)+(B)(2)

1772 2768000 2363880 25.59 25.59 NIL NIL

TOTAL (A)+(B)

1773 10818000 10413880 100.00 100.00 NIL NIL

(c) Shares held by Custodians and against which Depository Receipts have been issued

- - - - - NIL NIL

GRAND TOTAL (A)+(B)+(C)

1773 10818000 10413880 100.00 100.00 NIL NIL


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(I) (b) Statement showing holding of securities (including shares, warrants, convertible Securities) of persons belonging to the category “Promoter and Promoter Group”.

Sr. No.

(I)

Name of the

Share-holder

(II)

Details of shares held

Encumbered Shares (*) Details of warrants

Details of convertible securities

Total shares

(including underlying

shares assuming

full conversion

of warrants

and convertible securities) as a % of diluted share

capital No. of shares held

(III)

As a % of

grand total

(A)+(B)+ (C)

(IV)

No.

(V)

As a (%)

(V)/ (III)*100

(VI)

As a % of grand total

(A)+(B)+ (C) of sub-

clause (I)(a)

(VII)

No. of warrants

held

(VIII)

As a % of total no. of warrants of same class

(IX)

No. of convertible securities

held

(X)

As a % of total no. of con.

securities of same class (XI)

(XII) 1. KIFS

Securities Ltd.

8050000 74.41 - - - - - - - 8050000

TOTAL

8050000 74.41 - - - - - - - 8050000

(*) The term “encumbrance” has the same meaning as assigned to it in regulation 28(3) of the SAST

Regulations, 2011


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(I) (c ) (i) Statement showing holding of securities (including shares, warrants, convertible

securities) of persons belonging to the category “Public” and holding more than 1% of the total number of shares:

Sr. No.

Name of the Share-

holder

No. of shares held

Shares as (%) of total no. of shares

{i.e., Grand Total

(A)+(B)+ (C)

indicatedin st. at para (I)

(a)above}

Details of warrants

Details of convertible securities

Total shares (including underlying

shares assuming

full conversion of warrants

and convertible securities)

as % of diluted share

capital

No. of warra-nts held

As a % total no.

of warrants

of the same class


held

% w.r.t. total no.

of convertible securities of same

class

1. Kamini R. Patel

276120 2.55 - - - - 276120

2. Kalpesh Gajjar

266220 2.46 - - - - 266220

3. Tejas R. Shah

261180 2.41 - - - - 261180

4. Janmajay V. Gandhi

119000 1.10 - - - - 119000

5. Anjana R. Vora

215000 1.99 - - - - 215000

6. Bharat S. Bhatt

215000 1.99 - - - - 215000

7. Sanjay C. Agarwal

215000 1.99 - - - - 215000

8. Kishorbhai P. Mandalia

115000 1.06 - - - - 115000

9. Suresh D. Majithia

115000 1.06 - - - - 115000

TOTAL 1797520 16.61 - - - - 1797520


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(I) (c ) (ii) Statement showing holding of securities (including shares, warrants, convertible

securities) of persons (together with PAC) belonging to the category “Public” and holding more than 5% of the total number of shares of the company:

(I) (d) Statement showing details of locked-in-shares

Sr. No.

Name of the shareholder Number of locked-in shares

Locked-in shares as a percentage of total number of shares {i.e., Grand Total (A)+(B)+(C) indicated in Statement at para (I) (a) above}

1. KIFS Securities Limited *8050000 74.412. Harsha Jhaveri **75,000 0.693. Vicky Jhaveri **70,000 0.654. Sagar Jhaveri **70,000 0.655. Janmajay V. Gandhi **1,19,000 1.106. Anjana R. Vora **2,15,000 1.997. Bharat S. Bhatt **2,15,000 1.998. Sanjay C. Agarwal **2,15,000 1.999. Kishorbhai P. Mandalia **1,15,000 1.06

10. Vipul Z. Mandalia **1,00,000 0.9211. Suresh D. Majithia **1,15,000 1.0612. Hasmukh D. Majithia **1,00,000 0.92

TOTAL 9459000 87.43

* Out of 80,50,000 Equity Shares of KIFS Securities Limited, 40,50,000 Equity Shares are locked in till 26th June, 2013, 18,36,400 Equity Shares are locked in till 26th December, 2013 and 21,63,600 Equity Shares are locked in till 26th December, 2015 as per SEBI (ICDR) Regulations, 2009

** These shares are locked in till 26th December, 2013 as per SEBI (ICDR) Regulations, 2009

Sr. No.

Name of the Share- holder

No. of shares held

Shares as (%) of total no. of shares {i.e., Grand

Total (A)+(B)+(C) indicated in statement at para (I) (a)

above}

Details of warrants Details of convertible securities

Total shares (incl.

underlying shares

assuming full conversion of warrants & convertible

securities) as % of diluted share capital

No. of warrants

held

As a % total no.

of warrants

of the same class


held

% w.r.t. total no. of

convertible securities of

the same class

1. Nil Nil Nil

- - - - -


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(II) (a) Statement showing details of Depository Receipts (DRs)

Sr. No. Type of outstanding DR (ADRs, GDRs,

SDRs, etc.)

Number of outstanding

DRs

Number of shares

underlying outstanding

DRs

Shares underlying outstanding DRs as a percentage of total

number of shares {i.e., Grand Total (A)+(B)+(C) indicated in Statement at para (I)(a) above}

N.A. N.A. N.A. N.A. N.A.

(II) (b) Statement showing holding of Depository Receipts (DRs), where underlying shares held by ‘promoter/promoter group’ are in excess of 1% of the total number of shares

(III) (a) Statement showing the voting pattern of shareholders, if more than one class of shares/securities is issued by the issuer.- NOT APPLICABLE AS THE COMPANY HAS

ONLY ONE CLASS OF SHARES

(Give description of voting rights for each class of security: Class X: Class Y: Class Z)

Category

(I)

Category of shareholder

(II)

Number of Voting Rights held in each class of securities

Total Voting Rights (III+IV+V)

(VI)

Total Voting rights i.e. (VI)

Class X

(III)

Class Y

(IV)

Class Z

(V)

As a (%) of (A+B)

(VII)

As a (%) of (A+B+C)

(VIII) (A) Promoter and

Promoter Group N.A. N.A. N.A. N.A. N.A. N.A.

(1) Indian N.A. N.A. N.A. N.A. N.A. N.A. (a) Individuals/ HUF N.A. N.A. N.A. N.A. N.A. N.A. (b) Central Government/

State Government(s) N.A. N.A. N.A. N.A. N.A. N.A.

(c) Bodies Corporate N.A. N.A. N.A. N.A. N.A. N.A. (d) FIs/ Banks N.A. N.A. N.A. N.A. N.A. N.A. (e) Any Other (specify) N.A. N.A. N.A. N.A. N.A. N.A.

Sub-Total (A)(1)

N.A. N.A. N.A. N.A. N.A. N.A.

Sr. No.

Name of the DR Holder Type of outstanding DR

(ADRs, GDRs, SDRs, etc.)

No. of sharesunderlying outstanding

DRs

Shares underlying outstanding DRs as a percentage of total

number of shares {i.e., Grand Total (A)+(B)+(C) indicated in Statement

at para (I)(a) above} N.A. N.A. N.A. N.A.


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(2) Foreign N.A. N.A. N.A. N.A. N.A. N.A. (a) Individuals (NRIs/

Foreign Individuals) N.A. N.A. N.A. N.A. N.A. N.A.

(b) Bodies Corporate N.A. N.A. N.A. N.A. N.A. N.A. (c) Institutions N.A. N.A. N.A. N.A. N.A. N.A. (d) Any Other (specify) N.A. N.A. N.A. N.A. N.A. N.A. Sub-Total (A)(2) N.A. N.A. N.A. N.A. N.A. N.A. Total Shareholding of

Promoter and Promoter Group (A)= (A)(1)+(A)(2)


(B) Public shareholding N.A. N.A. N.A. N.A. N.A. N.A. (1) Institutions N.A. N.A. N.A. N.A. N.A. N.A. (a) Mutual Funds/ UTI N.A. N.A. N.A. N.A. N.A. N.A. (b) F Is/ Banks N.A. N.A. N.A. N.A. N.A. N.A. (c) Central Government/

State Government(s) N.A. N.A. N.A. N.A. N.A. N.A.

(d) VCFs N.A. N.A. N.A. N.A. N.A. N.A. (e) Insurance Companies N.A. N.A. N.A. N.A. N.A. N.A. (f) FIIs N.A. N.A. N.A. N.A. N.A. N.A. (g) Foreign Venture

Capital Investors N.A. N.A. N.A. N.A. N.A. N.A.

(h) Any Other (specify) N.A. N.A. N.A. N.A. N.A. N.A. Sub-Total (B) (1) N.A. N.A. N.A. N.A. N.A. N.A. (2) Non-institutions N.A. N.A. N.A. N.A. N.A. N.A. (a) Bodies Corporate N.A. N.A. N.A. N.A. N.A. N.A. (b) Individuals -

i. Individual shareholders holding nominal share capital up to Rs. 1 lakh.


ii. Individual shareholders holding nominal share capital in excess of Rs. 1 lakh.

(c) Any Other (specify) N.A. N.A. N.A. N.A. N.A. N.A. Sub-Total (B)(2) N.A. N.A. N.A. N.A. N.A. N.A. Total Public

Shareholding (B)= (B)(1)+(B)(2)


TOTAL (A) + (B) N.A. N.A. N.A. N.A. N.A. N.A. (C) Shares held by

Custodians & against which DRs have been issued


GRAND TOTAL (A)+(B)+(C)



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VII. LIST OF TOP 10 SHAREHOLDERS AS ON 31ST MARCH, 2013 ALONGWITH THE NO. OF SHARES HELD

Sr.

No.

Name of the Shareholder No. of

Shares Held

% of Total

Share Capital

1 KIFS Securities Limited 8050000 74.41

2 Kaminiben R. Patel 276120 2.55

3 Gajjar Kalpesh 266220 2.46

4 Tejas Rohitkumar Shah 261180 2.42

5 Anjana R. Vora 215000 1.99

6 Bharat S. Bhatt 215000 1.99

7 Sanjay C. Agarwal 215000 1.99

8 Janmajay V. Gandhi 119000 1.10

9 Kishorbhai P. Mandalia 115000 1.06

10 Suresh D. Majithia 115000 1.06


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VIII. COMPANY HISTORY, MAIN OBJECTS, PRESENT BUSINESS:

History: KIFS Financial Services Limited was incorporated as Public limited Company

in the name of Khandwala Financial Services Limited on 29/03/1995 and

obtained the Certificate of Commencement of Business on 31/03/1995.

Thereafter its name was changed to Khandwala Capital Services Limited and

fresh certificate of Incorporation was received on 22/09/1995. Again the name

of the Company was changed to its present name “KIFS Financial Services

Limited” and a fresh certificate of Incorporation was received on 23/01/2009.

The Company came out with a public issue during the year 1996 and got

listed on the ASEL and VSEL. The Company was subsequently registered

with Reserve bank of India as a Non Banking Financial Company not

accepting Public Deposits on 18th February, 1998 vide RBI registration

no.01.00007.

Main Objects: 1. To carryon business as financiers, merchant, bankers, investment factors,

Liasors, loan, syndicators, underwriters, brokers, share transfer agents,

securitization, securities, treasury management, merger, acquisition and

takeover consultants, project counselors, finance consultants, management

consultants, project evaluators, leasing, hire purchase and installments, in

all or its branches in respect of any movable and immovable property, NRI

investment liasors, corporate, consultancy, capital restructuring, bill

discounting, inter-corporate deposits, placement of securities, financing

against securities, buying and selling stock invest on behalf or customers

taking membership of OTCE, NSE or any other stock exchanges (s),

corporate advisory services, trade financing and investment. As the

company may deem fit, also, to carry out business of finance, holding and

investment company to promote companies, engaged in industrial,

manufacturing, trading, export, finance business, project feasibility study

within India/Abroad either singly or jointly in association with any Indian

or foreign entity, in addition to entering into collaboration agreement for

the manufacture of items, which the company is entitled to produce in

Indian and abroad with the companies, firms, individuals, governments or

any body corporate, subject to the provisions of Law.


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2. To carryon business of financing and advancing short term and long term

loans, credits, to individuals or associations of person by a whatever name

called either on securities such as land, buildings or part thereof,

machinery, plants, cattles, shares, debentures, government securities, stock

certificates, life insurance policies, units, stock-in-trade or on guarantee or

clean without securities on such terms as may seem expedient and to

release or discharge any debt or obligation owing to the company. To

arrange and buy commercial papers or any other financial instruments

permitted by Reserve Bank of/Government of India.

3. To carry on the business of importers of all kinds of goods, articles, raw

materials, components, plant and equipments, agricultural products such as

wheat, rise, pulse, grain, spices, fruits, vegetables, all and every kind of

processes foods, packing materials, textile goods such as gold, silver, gems,

jewellery, diamonds, and cosmetics items. To carry on business of

manufacturer’s representatives, agents, traders, dealers, exporters,

consignors, and consignees of all kinds and types of and size of articles,

goods, merchandise and commodities such as ferrous and non-ferrous

metals, scrap, plastics, gold, silver, precious metals, gems, jewellery,

diamonds for all domestic, industrial, commercial agricultural and defense

purposes / uses in India or elsewhere.

4. To carry on business of importing training for software development,

hardware, assembling and networking and to develop software for various

purposes, create websites, design web pages, placing of the sites, undertake

portal development work engage in E-Commerce activity, engage body

shopping facility, management services.

Present Business: The Company being a Non Banking Financial Company duly registered with

Reserve Bank of India is, at present, engaged in the Non banking financing

activities like Margin Trading and loans against shares/ securities activities.

The Company is also funding for IPO/ FPO retail category applicants.


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IX. MANAGEMENT:

KIFS Financial Services Limited is a professionally managed company. Under our Articles of

Association, we are required to have not more than twelve directors. The overall management is vested in

the Board of Directors, comprised of qualified and experienced persons. We currently have four Directors

on our Board out of which 1 is Non Independent – Executive Director and the other 3 are Non-executive

Independent Directors.

(A.) BOARD OF DIRECTORS: Sr. No.

Name and Address of the Directors

Designation Date of Appointment

Directorships in other Companies

1. Shri Rajesh P. Khandwala 24, Santosa Park, Ambli – Bopal Road, Makarba, Ahmedabad – 380 015 Occupation: Business

Chairman cum

Managing Director

31/07/2010

(M.D. w.e.f. 04/02/2013)

1. KIFS Securities Limited 2. Khandwala Finstock Pvt. Ltd. 3. KIFS Commodities Pvt. Ltd. 4. KIFS Capital Markets Pvt. Ltd. 5. Active Finstock Pvt. Ltd.

2. Shri Atul N. Parikh 14, Bank of Baroda Staff Co-operative Housing Society, Rajnagar Society, Opp. Prabhudas Thakker College, Paldi, Ahmedabad – 380 007 Occupation: Business

Non-Executive

Independent Director

31/07/2010 NIL

3. Shri Dharmendra N. Soni 430, Jethabhai ni Pol., Khadia, Ahmedabad – 380 001 Occupation: Business

Non-Executive


28/12/2002 NIL

4. Shri Devang M. Shah A/4, Lavanya Appartment, Near Jaltarang Club, Vasna, Ahmedabad – 380 007 Occupation: Business

Non-Executive


28/12/2002 NIL


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(B.) BRIEF PROFILE OF DIRECTORS:

1. Shri Rajesh P. Khandwala – Chairman-cum-Managing Director:

Shri Rajesh P. Khandwala, son of Shri Parmanand G. Khandwala aged about 48 years, holds the

Bachelors Degree in Commerce and has an experience of more than two decades in capital market

activities. He has rich and varied experience in the field of Primary market, Secondary market and Mutual

Funds. He is an independent thinker and a measured risk taker with a passion for equities. With his

expertise in the field of derivatives, arbitrage and margin trading activities, Shri Rajesh P. Khandwala is

taking up the Company to the new heights, growth and success.

2. Shri Atul N. Parikh – Non-executive Independent Director:

Shri Atul Parikh aged about 61 years is having a Bachelors Degree in Commerce, Diploma in Taxation

Law & Practice, Post Graduation diploma in Business Management and a CAIIB. He has been seasoned

banker for more than 3 decades. He has wide range of banking experience in Operations; Audit; Retail

Banking; Foreign Exchange; Credit Management; Training; Merchant Banking; Capital Market

operations etc. He has held various positions in Banking Industry and at the time of his retirement he was

designated as a Sr. Vice President with one of the best private sector bank. With his vast and rich

experience in Banking and Financial Services sector coupled with his knowledge and education, he is

contributing significantly in the growth of the Company.

3. Shri Dharmendra N. Soni – Non-executive Independent Director:

Shri Dharmendra Soni is commerce graduate and involved in the securities market for more than a

decade. With his expertise in the field, he has significantly contributed in the development of the business

of the company.

4. Shri Devang M. Shah – Non-executive Independent Director:

Shri Devang Shah holds a Bachelors degree in commerce and has been actively working in the Primary as

well as secondary market activities. With his vast knowledge in the field of financing activities he is

keenly engaged in the growth and development of the Company.


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X. PROMOTERS AND GROUP COMPANIES:

(A.) Promoter(s):

Sr.

No.

Name of the

Promoter

Back ground and Details of Promoters

1. KIFS Securities

Limited:

KIFS Securities Limited is the Promoter as well as the Holding

Company of the applicant Company. It was incorporated on 27th

January, 1995 in the name of Khandwala Integrated Financial Services

Private Limited. It is acting as a Stock broker member of NSE, BSE,

MCX-SX, USE, OTCEI. It is also a Depository Participant of NSDL

and Portfolio Manager registered with SEBI.

(B.) Group Companies:

Sr. No.

Name of the

Company

Details of the Company

1. KIFS Commodities

Pvt. Ltd.

KIFS Commodities Pvt. Ltd. was originally incorporated in the

name of KIFS Equities Private Limited on 07/08/2008. Thereafter

its name was changed to KIFS Commodities Private Limited and

fresh certificate of Incorporation was received on 01/10/2010.

The Company is currently engaged in the business of a

commodity broking as a broker member of Multi Commodity

Exchange of India Ltd. (MCX), National Commodities and

Derivatives Exchange Ltd. (NCDEX) and ACE Derivatives and

Commodity Exchange Ltd. (ACE)

2. KIFS Capital Markets

Pvt. Ltd.

Kifs Capital Markets Pvt. Ltd. was incorporated on 31st

December, 2012 with an object of undertaking the Stock Broking

activities, Merchant Banking, Depository Participant as a well as

Portfolio Management Services including Corporate advisory

services. Since the Company is formed recently, it is yet to

commence the business.


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3. Khandwala Finstock

Pvt. Ltd.

Khandwala Finstock Private Limited was incorporated on

27/01/1995. The Company is a stock broker member of

Ahmedabad Stock Exchange Limited (ASE). However, the said

membership is currently in-operative.

4. Khandwala Fincap

Pvt. Ltd.

Khandwala Fincap Private Limited was incorporated on

19/07/2000. The Company was a stock broker member of Delhi

Stock Exchange Association Limited (DSE). The said

membership is voluntarily surrendered and the approval of DSE

as well as SEBI has been received in this regard.

5. Khandwala Trading

Pvt. Ltd.

(Earlier known as

Khandwala Insurance

Broking Pvt. Ltd.)

Khandwala Trading Pvt. Ltd. was originally incorporated in the

name of Khandwala Insurance Broking Private Limited on

20/04/2007 with an object of carrying on Insurance business. The

company also applied to Insurance Regulatory and Development

Authority (IRDA) to acquire Direct-Insurance Broker license.

However, the said application for the Direct – Insurance Broker

License was withdrawn on 3rd January, 2012 as the Company

intended to change its business so as to deal in different types of

materials & goods. Consequently the name of the Company was

also changed to the present name w.e.f. 23/01/2013

6. KIFS Realty Pvt. Ltd. KIFS Realty Private Limited was incorporated in the name of

Richgold Realty Private Limited on 25/06/2009. Thereafter its

name was changed to KIFS Realty Private Limited and fresh

certificate of Incorporation was received on 02/05/2011. The

Company is presently in-operative.

7. Active Finstock Pvt.

Ltd.

Active Finstock Private Limited was incorporated on

14/08/1995.The Company is a stock broker member of Bombay

Stock Exchange Limited (BSE). However, the said membership is

currently in-operative.


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XI. VARIOUS REGISTRATIONS / LICENSES / PERMISSIONS OBTAINED BY THE COMPANY:

(A.) Corporate Related Approvals:

Sr.

No.

Approval Granted Authority Reference/ Registration

Number

Granted

on

Validity

1. Certificate of

Incorporation as

“KHANDWALA

FINANCIAL SERVICES

LIMITED”

Asst. Registrar

of Companies,

Gujarat, Dadra

& Nagar

Haveli

04-25234 of 1994-95 29th

March,

1995

Until

Cancellation

or winding

up

2. Certificate of

Commencement of

Business to

“KHANDWALA

FINANCIAL SERVICES

LIMITED”

Asst. Registrar

of Companies,

Gujarat, Dadra

& Nagar

Haveli

04-25234 of 1994-95 31st

March,

1995

Until

Cancellation

or winding

up

3. Fresh Certificate of

Incorporation Consequent

upon change of name to

“KHANDWALA

CAPITAL SERVICES

LIMITED”

Registrar of

Companies,

Gujarat, Dadra

& Nagar

Haveli

04-25234 22nd

September,

1995

Until

Cancellation

or winding

up

4. Fresh Certificate of

Incorporation Consequent

upon change of name to

“KIFS FINANCIAL

SERVICES LIMITED”

Registrar of

Companies,

Gujarat, Dadra

& Nagar

Haveli

Corporate Identity No.

L67990GJ1995PLC025234

23rd

January,

2009

Until

Cancellation

or winding

up


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(B.) Business Related Approvals: Sr. No.

Approval Granted

Authority Reference/ Registration Number

Granted on

Validity

1. Registration Certificate of Establishment under Bombay Shops and Establishment Act, 1948 for the registered office

Deputy Municipal Commissioner, Ahmedabad Municipal Corporation

PII/EL/32/0000056 20TH January, 2011

20/01/2011 TO 31/12/2011 Renewed: 06/08/2012 To 31/12/2016

2. Registration as Non Banking Financial Company not accepting public deposits with RBI.

Reserve Bank of India

No. 01.00007 18th February, 1998

Valid unless cancelled or revoked.

3. Registration under the Import- Export code (issued in the name earlier name of the company viz; of Khandwala Capital Services Ltd.)

Office of Jt. Director General of Foreign trade, Ahmedabad

0801005442 13th September, 2001

Valid unless cancelled or revoked.

4. Registration Certificate as an AMFI Registered Mutual Fund Advisor

AMFI, Mumbai

ARN – 21402 4th August, 2004

Valid till 20th December, 2014

(C.) Tax Related Approvals:

Sr. No.

Approval Granted Authority Reference/ Registration Number

Granted on

Validity

1. Permanent Account Number

Income Tax Department

AAACK6203E 29th March, 1995

Until Surrender or Cancelled

2. Allotment of Tax Deduction Account Number

Income Tax Department

AHMK00487E Not Available

Until Surrender or Cancelled

3. Professional Tax Registration Certificate

Ahmedabad Municipal Corporation

PE/C015131187 20th August, 2008

Until surrendered or Cancelled


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XII. OUTSTANDING LITIGATIONS, DEFAULTS AND MATERIAL DEVELOPMENTS:

(A.) KIFS FINANCIAL SERVICES LIMITED: Sr. No.

Details of Litigations/ Cases Summary & Status

1. Litigations Against the Company NIL

2. Litigations By the Company NIL

(B.) GROUP COMPANIES: AS PER “ENCLOSURE – 1” ATTACHED HEREWITH.

XIII. STATUS ON CORPORATE GOVERNANCE

1. CORPORATE GOVERNANCE The corporate governance is an important tool for shareholder protection and maximization of their

long term values. The objective of Corporate Governance is to achieve excellence in business thereby

increasing shareholders’ worth in the long term which can be achieved keeping the interest of

shareholders’ and comply with all rules, regulations and laws. The principal characteristics of

Corporate Governance are Transparency, Independence, Accountability, Responsibility, Fairness, and

Social Responsibility alongwith efficient performance and respecting interests of the stakeholders and

the society as a whole.

2. COMPANY’S PHILOSOPHY ON CORPORATE GOVERNANCE The Company's philosophy on corporate governance is founded on the fundamental ideologies of the

group viz., Trust, Value and Service. Obeying the law, both in letter and in spirit, is the foundation on

which the Company's ethical standards are built. It has been a constant endeavour on the part of the

Company to achieve excellence in Corporate Governance by following the principles of transparency,

accountability and integrity in functioning, so as to constantly striving to enhance value for all

stakeholders and the society in general. As a good corporate citizen, the Company is committed to

sound corporate practices based on conscience, openness, fairness, professionalism and accountability

in building confidence of its various stakeholders in it thereby paving the way for its long term

success. We are making continuous efforts to adopt the best practices in corporate governance and we

believe that the practices we are putting into place for the company shall go beyond adherence to


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regulatory framework. The Company's corporate governance philosophy has been further

strengthened by adopting a Code of Fair Practice in accordance with the guidelines issued by Reserve

Bank of India from time to time.

3. BOARD OF DIRECTORS The Board of the Company consists of four Directors at present, out of which three Directors are

independent. The Chairman-cum-Managing Director of the Company is an Executive Director.

According to clause 49, if the Chairman is an Executive Director, at least one half of the Board of the

company should consist of independent directors. As such the Company has duly complied with the

requirements of clause 49 of the listing agreement as the Company has three Independent Directors.

The names and categories of Directors, their attendance at the Board Meetings held during the

financial year 2012-13 and at the Annual General Meeting (AGM) held on 29th September, 2012 and

also the number of Directorships and Committee positions held by them in other Companies are given

herein below :-

Details of the composition of the Board, number of Board Meetings held and the attendance of the Directors thereat and number of Directorships etc. held:

Name of Director

Category No. of Board Meetings during

2012‐13

Attendance at AGM held on

29/09/2012

No. of Directorships and Committee Membership/ Chairmanship in other public

Companies*** Held Attended Directorships

in Unlisted Public Cos.

Committee Membership

Committee Chairmanship

*Mr. Rajesh P. Khandwala

*Chairman & Managing Director

6 6 Yes 1 3 0

**Mr. Atul N. Parikh

Independent 6 6 Yes **1 0 **1

Mr. Devang M. Shah

Independent 6 3 Yes ‐‐‐ ‐‐‐ ‐‐‐

Mr. Dharmendra N. Soni

Independent 6 4 Yes ‐‐‐ ‐‐‐ ‐‐‐

* Mr. Rajesh P. Khandwala was elected as Chairman of the Company w.e.f. 19/05/2012 upon resignation of

Late Mr. Parmanand G. Khandwala. Further, he got appointed as Managing Director w.e.f. 04/02/2013.

** As on the date of this Application, Mr. Atul N. Parikh is not a Director of any Public Company.

However, during the period from 01/04/2012 to 31/03/2013, he held Directorship as well as Committee

Chairmanship in KIFS Securities Ltd., the holding Company which is an Unlisted Public Company.


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***Notes:

Private Limited Companies, Foreign Companies and Companies under section 25 of the Companies Act,

1956 are excluded for the above purposes. Only Audit Committee, Shareholders’ Transfer Committee and

Investor grievance Committee are considered for the purpose of Committee positions as per listing

agreement.

Number of Board Meetings held during the financial year 2012-13 and dates of Board meetings:

No. of Board Meeting Date of Board Meeting 1 23/05/2012 2 30/07/2012 3 03/09/2012 4 31/10/2012 5 18/12/2012 6 04/02/2013

4. AUDIT COMMITTEE Pursuant to the provisions of Section 292A of the Companies Act, 1956 and the provisions of Clause 49

of the listing Agreement, Audit Committee has been constituted by the Board of Directors. The Chairman

of the committee is a Non – executive Independent Director of the Company and possesses sound

financial and accounting knowledge. Members are regularly present at the meetings.

The terms of reference of Audit Committee are very wide. Besides having access to all the required

information from within the Company, the Committee can obtain external professional advice whenever

required. The Committee acts as a link between the Statutory Auditors and the Board of Directors of the

Company. It is authorized to select and establish accounting policies, review reports of the Statutory

Auditors, meet with them to discuss their findings, suggestions and other related matters. The Committee

is empowered to review, inter alia, the remuneration payable to the Statutory Auditors and to recommend

a change in Auditors, if felt necessary. It is also empowered to Management Discussion & Analysis,

Material individual transactions with related parties not in normal course of business or which are not on

an arm’s length basis. Generally all items listed in Clause 49 II (D) and (E) of the Listing Agreement are

covered in the terms of reference and review. The Audit Committee has been granted powers as

prescribed under Clause 49 II (C) of the Listing Agreement.

The Audit Committee met four times during the financial year 2012-13 i.e. on 23/05/2012, 30/07/2012,

31/10/2012 and 04/02/2013 and that the time gap between any two meetings was less than four months.


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The details of the Composition of the Committee including the category and Designation of the members,

number of meetings held and the attendance of the Directors thereat is given herein below:-

Composition of the Audit Committee

Name Designation Category No. of Meetings

Held Attended Mr. Atul N. Parikh Chairman Non-Executive-Independent 4 4 Mr. Dharmendra N. Soni Member Non-Executive- Independent 4 4 Mr. Rajesh P. Khandwala Member Executive- Non Independent 4 4

5. SHAREHOLDERS’/INVESTORS’ GRIEVANCE COMMITTEE

The Board of Directors of the Company has constituted Shareholders’/ Investors’ Grievance

Committee to specifically look into the shareholders’/ investors’ complaints on matters relating to

non-receipt of annual report, non-receipt of dividend etc. In addition, the committee also looks into

matters that can facilitate better investor services and relations. The Committee meets as and when

required, to deal with the investor related matters and takes due care that all the complaints are

disposed off timely and upto the satisfaction of the shareholders. The details of the Composition of

the Committee including the category and Designation of the members, number of meetings held

during the financial year 2012-13 and the attendance of the Directors thereat is given herein below:-

Composition of the Shareholders’/ Investors’ Grievance Committee

Name Designation Category Committee

meeting attendedMr. Dharmendra N. Soni Chairman Non-Executive-Independent 4 Mr. Devang M. Shah Member Non-Executive-Independent 4 Mr. Rajesh P. Khandwala Member Executive Non-Independent 4

6. REMUNERATION COMMITTEE

Being a non-mandatory requirement of the listing agreement, the Company has not constituted the

remuneration committee.

Remuneration to the Directors:

The Chairman-cum-Managing Director of the Company viz; Mr. Rajesh P. Khandwala is being paid

Rs. 50,000/- (Rupees Fifty Thousand) per month as remuneration w.e.f. the date of his appointment

as Managing Director. The other Non-executive- Independent Directors are being paid sitting fees

and apart from such sitting fees no other remuneration is being paid to them.


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7. CODE OF CONDUCT

The Board has laid down the Code of Conduct for all Board members and Senior Management

Personnel. The code is a comprehensive code applicable to all Directors and Members of Senior

Management of the Company. It is in alignment with Company’s vision and values to achieve the

Mission and Objectives and aims at enhancing ethical and transparent process in managing the affairs

of the Company. All Board members and Senior Management Personnel have affirmed compliance

with the Code of Conduct. A copy of the code has been posted on the Company’s website

www.kifsfinance.com. The declaration signed by Chairman towards the compliance of Code of

Conduct is also enclosed with the Annual Reports of the Company.

8. CEO / CFO CERTIFICATION

As required under Clause 49 of the Listing Agreement with the Stock Exchanges, Mr. Rajesh P.

Khandwala, Chairman-cum-Managing Director of the Company certifies to the Board the Financial

Statements of the Company at the end of the respective financial years. The last such certification is

made for the year ended on 31st March, 2012 and the respective certificate is annexed to the Annual

Report for the year 2011-12.

9. GENERAL BODY MEETINGS

The details of the Annual General Meetings held during past three years are as under:

Year Date Time Venue 2009-10 31/07/2010 11.00 A.M. At Registered Office of the Company at B-81,

Pariseema Complex, C. G. Road, Ellisbridge, Ahmedabad – 380 006

2010-11 30/07/2011 11.00 A.M. ‘do’ 2011-12 29/09/2012 12.00 NOON ‘do’

None of the resolutions have been passed by Postal Ballot since the date of last Annual General

Meeting.

10. NOTE ON DIRECTORS’ APPOINTMENT/RE-APPOINTMENT:

Mr. Devang M. Shah, Director of the Company retiring by rotation was reappointed at the Annual

General Meeting of the Company held on 29/09/2012.


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11. CODE FOR PREVENTION OF INSIDER TRADING PRACTICES

In compliance with the provisions of the Securities and Exchange Board of India, the Company has

framed a comprehensive Code of Conduct for prevention of Insider Trading for its designated

employees. The Code lays down guidelines, which advises them on procedures to be followed and

disclosures to be made, while dealing with shares of the Company, and cautioning them of the

consequences of violations.

12. ANTI MONEY LAUNDERING AND KNOW YOUR CUSTOMER POLICY

In keeping with specific requirements of RBI for NBFCs, the company has also formulated

Prevention of Anti Money Laundering & Know your customer Policies.

13. MEANS OF COMMUNICATIONS

The Company regularly publishes its Quarterly, Half yearly & Annual results in newspapers &

submits to stock exchange in accordance with the Listing Agreement requirements.

14. GENERAL SHAREHOLDER’S INFORMATION

1. Date of Last Annual General

Meeting : 29th September, 2012

2. Time and Venue

: 12:00 noon at the Registered office of the Company at B-81, Pariseema Complex, C. G. Road, Ellisbridge, Ahmedabad – 380 006.”

3. Listing on Stock Exchanges : (1) Ahmedabad Stock Exchange Ltd. (ASE), Ahmedabad.

(2) Vadodara Stock Exchange Ltd.

(VSE), Vadodara.

4. Financial Calendar : 1st April to 31st March


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Calendar for Financial Year ending 31st March, 2014

Financial Reporting for the Tentative dates of the Board Meeting

First quarter ending 30/06/2013 : 30th July, 2013 Half year ending 30/09/2013 : 31st October, 2013 Third quarter ending 31/12/2013 : 31st January, 2014 Fourth quarter ending 31/03/2014 : End of May, 2014

5. Date of Book Closure for last

AGM : 25/09/2012 to 29/09/2012 (Both Days

inclusive)

6. Dividend Payment Date : The Dividend declared at the 17th AGM credited/ dispatched by 28/10/2012.

7. Name of Compliance Officer : Ms. Krupa Joshi – w.e.f. 04/02/2013 (Mr. Bhavik Shah was compliance officer till 03/02/2013)

8. Market Price Data Information as to Market Price cannot be given as both the Stock Exchanges viz; the ASE and VSE are not providing trading platform to the Companies and hence the Shares of the Company could not be traded. The Company’s shares are not listed on any Exchanges other than ASE & VSE.

9. Stock Code : ASE – 30644, VSE – 501 ISIN – INE902D01013

10. Registrars & Transfer Agents

Link Intime India Pvt. Ltd. Unit No. 303, 3rd Flr, Shoppers Plaza V, Opp. Municipal Market, B/h. Shoppers Plaza II, Off C. G. Road, Ahmedabad – 380 009 Phone No.: 079-26465179 Fax No.: 079-26465179 Email: [email protected]

15. LISTING AND TRANSFER OF SHARES AND LIQUIDITY: The Company’s Shares are listed at Ahmedabad Stock Exchange Ltd. and Vadodara Stock

Exchange Ltd. For expediting physical transfer, the Board has delegated share transfer

formalities to the Share Transfer Committee. Ms. Krupa Joshi, Company Secretary of the

Company is designated as Compliance Officer for the same w.e.f. 04/02/2013. Earlier Mr. Bhavik

Shah occupied the position of Compliance officer for the same till 03/02/2013.


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16. DISCLOSURES

a) Disclosures on materially significant related party transactions i.e. transaction of the

Company of material nature, with its promoters, the directors or the management, their

subsidiaries or relatives, etc., that may have potential conflict with the interests of the

company at large and disclosure required under listing agreement as amended: The details of

this disclosure are mentioned in Notes on Accounts and covered by accounts.

b) Details of non-compliance by the Company, penalties, strictures imposed on the company by

Stock Exchanges or SEBI, or any statutory authority, on any matter related to capital markets,

during the last three years: No instance of levy of penalty by the stock exchange or SEBI due

to non-compliance by the company except that the trading of the Company’s shares were

suspended by Ahmedabad Stock Exchange from 15/05/2009 To 18/08/2009 due to

nonpayment of the listing fees by the Company:

c) There is no pecuniary relationship or transaction of the non executive Director. Further no

remuneration, benefits, incentives and stock options are provided to directors.

d) All the mandatory requirements of clause 49 of the Listing agreement are complied with.


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XIV. MANAGEMENT DISCUSSION AND ANALYSIS:

The Company is a Non deposit taking Non Banking Financial Company (“NBFC –ND”) registered as

such with Reserve Bank of India. It is the Financial Services arm of the Khandwala group.

The Company operates in the business of Loans against securities, IPO funding and Margin Funding.

Before detailing on each of these businesses and their rationale, it is useful to give a brief overview of the

Indian Economy during FY 2012-13 and the prospects for FY 2013-14.

INDIAN ECONOMY DURING FY 2012-13 AND THE PROSPECTS FOR FY 2013-14

The India’s economy has bottomed out in the Financial Year 2012-13 as the GDP (Gross Domestic

Product) of India showed a growth of mere 5% during this fiscal which is recorded as the lowest since the

year 2003-04. The reason for such a steep slowdown is attributed to both, the domestic as well as the

uncertain global economic environment. Among domestic factors, the tightening of monetary policy in

order to control inflation resulted in the slowing down of investment and growth, particularly in the

industrial sector in 2012-13. The Global factors include crisis in euro-zone and sluggish growth in several

industrialized economies in 2012.

However, the steps are being undertaken by the government to revive the economy which includes better

access to finance for manufacturing sector, fast tracking of large investment projects in infrastructure, use

of buffer stocks to moderate food inflation, strengthening of financial and banking sector, reducing the

volatility of exchange rate. Also, the government has announced disinvestment in certain public sector

undertakings, liberalization of FDI in multi- brand retail, aviation, broadcasting, reduction in subsidy in

diesel, the road map for fiscal consolidation all of which are expected to revive market confidence, and

restore growth momentum over the medium term. The current year’s i.e. FY 2013-14 growth of India’s

GDP is expected at 6.4% as against 5% recorded in the previous fiscal.

INDUSTRY STRUCTURE AND DEVELOPMENT

NBFCs have been playing a complimentary role to the banking sector, catering to the financial needs of

unbanked sectors and promoting financial inclusions. NBFCs have been vital to the growth of the

economy by providing financial support to some of the important segments of the economy. NBFCs

account for 12.3% of assets of the total financial system. Due to the global economic slowdown and its


25‐04‐2013

impact on the domestic economy, NBFC sector faced significant stresses on asset quality, liquidity and

funding costs.

Earlier the NBFCs were classified into NBFC – Loan Companies, Asset Finance Companies, Investment

Companies, Infrastructure Finance Companies, Core Investment Companies. However, RBI has, during

the recent times introduced further new categories of NBFCs viz; NBFC-MFIs catering to Microfinance

sector, Infrastructure Debt Fund and NBFC – Factors.

STRATEGY & OUTLOOK

The Company operates in the business of providing Loans against securities, IPO retail funding and

Margin Trading. There is a clearly defined set of procedures for evaluating the creditworthiness of

customers that extends from initial evaluation to loan approval. Funds are advanced after due process of

evaluation and upon providing the necessary documentation. A lot of emphasis is placed on tailoring

funding to customer needs. The Company’s objective is to ensure appraisal and disbursement within the

shortest possible time, without compromising on asset quality.

The Company expects to deliver sound performance in FY 2013-14 with expectation of improvements in

the markets as well as anticipating momentum in its lines of businesses. Further, with the RBI’s

projection of the country's economic growth to be slightly better at 6.4 per cent in this financial year and

the inflation rate to rule at around 6 per cent by end-March 2014 as well as anticipation of encouraging

government policies for Foreign Portfolio inflows (FPI), as FPIs are key factors for success of Indian

stock markets, the Company also expects to perform good in the coming fiscal. While monetary policy is

likely to be eased further in 2013-14 and beyond and as progress is made on bringing down inflation, the

performance of the Company is anticipated to be sound during the current financial year.

FINANCIAL PERFORMANCE OF COMPANY DURING FIRST NINE MONTHS OF FY2012-13

The global as well as domestic downturn trend has also affected the Company’s performance and

profitability during the first nine months of the FY 2012-13. The company’s income from operations

during this period showed a fall of about 19% as compared to the income from operations during the same

period of previous year i.e. FY2011-12. The Company’s total expenses in the first nine months showed a

rise of mere 14% in comparison to that of previous year’s same period results.


25‐04‐2013

The Net profit of the company before providing for tax provisions during the first nine months of FY

2012-13 was Rs. 99.48/- lacs compared to Rs. 119.98/- lacs of previous year showing a decline of about

17.09%.

RISKS & CONCERNS

While risk is an inherent aspect of any business, the Company being an NBFC, is primarily exposed to

credit risk, liquidity risk, interest rate risk as well as operational risks. KFSL has invested in people,

processes and technology to effectively mitigate risks posed by external environment and by its

borrowers. It maintains a conservative approach and manages the credit risk through prudent selection of

clients, delegation of appropriate lending powers and by stipulating various prudential limits. It has in

place a proper risk management team and an effective credit operations structure.

The company has also framed a Risk Management Policy and while giving loan to its customers, it duly

follows the criteria and procedure laid in its policy.

INTERNAL CONTROL SYSTEM:

The Company’s internal control systems are commensurate with the nature of its business and size and

complexity of its operations. These systems are designed to ensure that all the assets of the Company are

safeguarded and protected against any loss and that all transactions are properly authorized. Amongst

other things, the internal control system of the Company also provides for reasonable assurance of

recording and reporting the transactions of operations in all material aspects and of providing protection

against significant misuse or loss of funds. The Audit committee of the Company reviews the internal

control measures at appropriate intervals.

HUMAN RESOURCES

The Company firmly believes that the success of any organization largely depends upon the quality and

competence of its human resource i.e. employees, who built a strong alignment between the customers

and the organization's vision & value framework. Attracting and retaining talented professionals is

therefore a key element of your Company’s strategy and a significant source of competitive advantage.

Management firmly believes in developing and nurturing its human resources and improving their talents

which subsequently help in the growth of the Company. While, the Company has continued to equip

employees with the necessary skills and attitude to deliver on their current job responsibilities, the prime


25‐04‐2013

focus has been to identify, assess, groom and build leadership potential for future. Proper care and

measures are taken for satisfaction, safety, health and welfare of the employees. The employee

relationship with the company remained harmonious throughout the year.

The details of the Key Personnel are:

Sr.

No.

Name of the Personnel Designation Qualification

1. *Ms. Krupa Joshi Company Secretary -cum-

Compliance Officer

ACS, M.com.

2. Mr. Bhavik Shah Assistant Manager Inter C.A., Inter I.C.W.A.

3. Ms. Sunita Gadape Assistant Manager Inter C.S., B.Com.

4. Ms. Ankita Shah Sr. Executive – Finance M.Com.

* Ms. Krupa Joshi has been appointed as the Company Secretary-cum-compliance Officer of the

Company w.e.f. 4th February, 2013.


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XV. FINANCIAL OVERVIEW:

UN-AUDITED FINANCIAL RESULTS FOR THE QUARTER ENDED ON 31st DECEMBER, 2012:

Part I (Rs. In Lakhs) Statement of Un-Audited Financial Results for the Quarter Ended 31/12/2012

No.

Particulars

3 months ended

31/12/2012

Preceding 3 months ended

30/09/2012

Previous year's 3 months ended

31/12/2011

Year to date figures for Current

period ended 31/12/2012

Year to date figure for the Pr. Yr.

ended 31/12/2011

Previous Year ended

31/03/2012

(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Audited) 1 Income From Operations (a) Net Sales/ Income from Operations

(Net of Excise Duty) 48.37 37.67 40.80 120.84 149.88 238.75 Total Income from Operations (net) 48.37 37.67 40.80 120.84 149.88 238.752 Expenses (a)Employee benefit expenses 3.12 2.94 3.33 8.66 8.03 10.56 (b) Depreciation & amortization

expenses 0.02 0.02 0.02 0.05 0.06 0.08 (c) Other expenses (any item

exceeding 10% of the total expenses 2.80 1.11 1.16 5.51 4.36 7.45 relating to continuing operations to be shown separately) Total Expenses 5.94 4.07 4.51 14.22 12.45 18.093 Profit/(loss) from operations before

other Income , Finance costs & exceptional item (1-2) 42.43 33.60 36.29 106.62 137.43 220.664 Other Income 0.71 1.68 0.00 1.86 2.20 3.695 Profit/(loss) from ordinary activities

after finance costs but before exceptional items (3+4) 43.14 35.28 36.29 108.48 139.63 224.356 Finance Cost 4.47 1.48 0.73 9.00 18.67 62.497 Profit/(loss) from ordinary activities

after finance costs but before exceptional items (5-6) 38.67 33.80 35.56 99.48 120.96 161.868 Exceptional Items 0.00 0.00 0.00 0.00 0.98 34.249 Profit/(loss) from ordinary activities

before tax (7-8) 38.67 33.80 35.56 99.48 119.98 196.1010 Tax Expenses 0.00 0.00 0.00 0.00 0.00 33.6711 Net Profit/(Loss) from ordinary

activities after tax 38.67 33.80 35.56 99.48 119.98 162.4312 Paid-up Equity Share Capital

(F.V. Rs. 10/-) 1081.80 300.50 300.50 1081.80 300.50 300.5013 Reserve excluding Revaluation

Reserves as per B/s. of previous 0.00 0.00 0.00 0.00 0.00 542.32 accounting year

14 Basic and Diluted Earnings Per Share (Rs. 10/- each) (not annualized) before & after extraordinary items 0.70 0.62 0.66 1.81 2.22 3.00


25‐04‐2013

Notes: 1. The above financial results have been reviewed by the Audit Committee and approved by the Board in its meeting held on

04/02/2013 2. The Provision for taxation shall be made at the end of the year. 3. Exceptional items for the year ended 31/03/2012 is comprised of Minimum Alternate Tax Credit of earlier years. 4. The Company has only one business segment of finance hence declaration of segment wise results is not applicable. 5. The above results are subject to the Limited Review by the Statutory Auditors of the Company. 6. Figures for previous year period have been regrouped / rearranged wherever necessary. 7. The Company has made Bonus allotment of 24,04,000 Equity shares of F. V. Rs. 10/- each as fully paid up on 14/12/2012 and

Preferential \ Private placement of 54,09,000 Equity shares @ of Rs. 19/- on 27/12/2012. 8. Basic & diluted EPS for all the periods prior to this reporting period are restated considering Bonus Issue as per AS-20 of ICAI. Part II

No. Particulars

3 months ended

31/12/2012

Preceding 3 months

ended 30/09/2012

Previous year's 3 months ended

31/12/2011

Year to date figures for Current

period ended 31/12/2012

Year to date figure for the Pr. Yr.

ended 31/12/2011

Previous Year ended 31/03/2012

A PARTICULARS OF SHARE HOLDING

1 Public Share Holding Number of Shares 2768000 755000 755000 2768000 755000 755000 Percentage of Share Holding 25.59 25.12 25.12 25.59 25.12 25.12 2 Promoters and Promoter Group

Share Holding (A) Pledged / Encumbered - Number of Shares 0.00 0.00 0.00 0.00 0.00 0.00 - Percentage of Share ( as a % of the

total shareholding of promoter & promoter group)

0.00 0.00 0.00 0.00 0.00 0.00

- Percentage of Share ( as a % of the total share capital of the Company)

0.00 0.00 0.00 0.00 0.00 0.00

(B) Non Encumbered - Number of Shares 8050000 2250000 2250000 8050000 2250000 2250000 - Percentage of Share ( as a % of the

total shareholding of Promoter and Promoter group)

100 100 100 100 100 100

- Percentage of Share ( as a % of the total share capital of the Company)

74.41 74.83 74.83 74.41 74.83 74.83

B INVESTOR COMPLAINTS Pending at the beginning of the

Quarter

NIL NIL NIL NIL NIL NIL Received during the Quarter Disposed of during the Quarter Remaining unresolved at the end of

the Quarter


25‐04‐2013

(Rs. In Lakhs)STATEMENTS OF ASSETS AND LIABLITIES

As at half year ended As at Previous year ended

(30/09/2012) (31/03/2012) A EQUITY AND LIABLITIES 1 (a) Share Capital 300.50 300.50 (b) Reserves and Surplus

604.01 542.32

Subtotal Shareholder's Funds 904.51 842.82

2 Share application money pending allotment

00.00

00.00

3 Minority interest

00.00

00.00

4 Non Current Liabilities (a) Deferred tax liabilities (net) 0.07 0.07 Subtotal of noncurrent liabilities 0.07 0.07

5 Current Liabilities (a) Short term borrowings 325.90 707.23 (b) Other current liabilities 7.69 11.86 (c) Short term Provisions 43.66 77.17 Subtotal of current liabilities 377.25 796.26 Total Equity and Liabilities 1281.83 1639.15

B ASSETS

1 Non Current Assets (a) Fixed Assets 0.43 0.47 (b) Long term loans and advances 35.40 35.40 Sub total Non Current assets 35.83 35.87

2 Current Assets (a) Inventories 22.55 0.00 (a) Cash and Cash equivalents 500.61 299.38 (b) Short term loans and advances 722.84 1303.90 Sub total Current assets 1246.00 1603.28

Total Assets 1281.83 1639.15


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XVI. FINANCIAL STATUS OF LAST THREE YEARS:

Particulars Year Ended

31st March, 2012 (Amt. in Rs.) AUDITED



Total Income 24244016 40253881 12621336

Profit before Tax 16185823 37320839 10736388

Provision for Tax:

Current Tax 3352000 7500000 1850000

Deferred Tax 14959 9465 1546

Profit after tax 12818864 29830304 8887934

Prior Period Adjustments 3423822 33839 205

Net Profit 16242686 29864143 8888139

Profit brought forward 24365510 14012933 12178343

Profit available for

appropriation

40608196 43877076 21066482

Appropriations:

Interim Dividend 0 3005000 0

Corporate Div. Tax on Interim

dividend

0 514066 0

Final Dividend 3756250 3005000 4507500

Corporate Div. Tax on Final

dividend

609354 487500 766050

Profit transferred to Special

Reserve Fund

3000000 12500000 1780000

Surplus carried to Balance

sheet

33242592 24365510 14012933


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XVII. DETAILS OF OUTSTANDING CONVERTIBLE INSTRUMENTS/ DIVIDEND HISTORY/ CASH BONUSES/ COMMISSION, BROKERAGE, DISCOUNT OR OTHER SPECIAL TERMS FOR ISSUE OF ANY KIND OF SECURITIES

a.) Details of outstanding convertible instruments including warrants pending conversion: -

The Company has not issued any convertible instruments including any warrants at any time since its incorporation. As such there are no convertible instruments or warrants which are pending conversion.

b.) Statement showing dividends and cash bonuses paid during the last 10 years or such shorter

period as the Company has been in existence: -

The Company has not paid any cash bonuses during the last 10 years or in any year since which the Company has been in existence. However, the Company has made the Bonus issue of 2404000 Equity Shares in December, 2012 i.e. during the year 2012-13.

Further the Company is declaring the dividend since the financial year 2008-09. The rates of the dividends paid by the company in respect of each class of shares in the company for each of the four financial years immediately preceding the date of application to BSE for listing and trading of its Equity Shares, are herein mentioned below:

Sr. No. Financial Year

Rate of Dividend

Dividend in Amount Rupees per Equity Share

1. 2007-08 NIL NIL

2. 2008-09 5% At the rate of Rs. 0.50/- per Equity Share on total Equity Shares 3005000

3. 2009-10 15% At the rate of Rs. 1.50/- per Equity Share on total Equity Shares 3005000 as Final Dividend

4. 2010-11 10%

10%

At the rate of Rs. 1.00/- per Equity Share on total Equity Shares 3005000 as Interim Dividend At the rate of Rs. 1.00/- per Equity Share on total Equity Shares 3005000 as Final Dividend

5. 2011-12 12.50%

At the rate of Rs. 1.25/- per Equity Share on total Equity Shares 3005000 as Final Dividend

c.) Statement containing particulars of any commission, brokerage, discount or other Special

terms including an option for the issue of any kind of securities granted to any person, if applicable: - Not Applicable As the Company has never granted to any person any commission, brokerage, discount or other Special terms including an option for the issue of any kind of securities


25‐04‐2013

XVIII. DETAILS OF THE MATERIAL CONTRACTS AND AGREEMENTS:

The Company has entered into the Managerial Agreement with Mr. Rajesh P. Khandwala, who was

appointed as the Managing Director of the Company with effect from 4th February, 2013. There are

no other material contracts, agreements (including agreements for technical advice and collaboration),

concessions and similar other documents (except those entered into in the ordinary course of business

carried on or intended to be carried on by the company).

The Statement containing the brief description of terms, subject matter and general nature of the

Agreement is as follows:

Date Name of the Party

Nature of Agreement

Brief description of the terms of the Agreement

04/02/2013 Mr. Rajesh P. Khandwala

Managerial Agreement

The terms of the agreement interalia contains the following: 1. Shri Rajesh P. Khandwala shall be paid Rs.

50,000/- p.m. as a part of his remuneration. 2. He shall be entitled to exercise the following

powers: a. to enter into contracts with any other body

corporate(s)/ firm(s)/ Individual(s) on behalf of the Company in ordinary course of the business of the Company.

b. to invest the surplus funds of the Company in

accordance with the provisions of section 372A of the Companies Act, 1956

c. to ensure about the timely payment of the statutory taxes and dues with the Central and State Governments and other statutory authorities.

d. to engage the persons in the employment of the Company and to sanction the remuneration, annual increases, bonuses etc. of the employees.


25‐04‐2013

XIX. PURPOSE OF LISTING

The entire Equity Share Capital of the Company is currently listed at ASEL and VSEL and the

Company is regularly complying with the Listing compliances. However, since no trading platform is

available on either of the stock exchanges viz; ASEL and VSEL, the trading of the securities of the

Company is not carried out in these stock exchanges.

Since the Bombay Stock Exchange Ltd. (BSE) is the world's No. 1 exchange in terms of listed

companies (over 5000) providing a host of services to capital market participants including risk

management, clearing, settlement, market data services and education, nation-wide trading terminals

and also has a global reach with customers around the world with a nation-wide presence, getting the

Company listed at BSE will provide the members of the Company, investors and/or traders, the

facility to trade in the shares of the company, better liquidity of funds, help in mobilizing savings for

economic development as well as protect the investors interest by ensuring full disclosures.

Further considering the followings benefits of listing, the Management has got motivated to get the

securities of the Company listed on BSE*:-

a.) Fund Raising and exit route to investors:

Listing provides an opportunity to the Corporates / entrepreneurs to raise capital to fund new

projects/undertake expansions/diversifications and for acquisitions. Listing also provides an exit

route to private equity investors as well as liquidity to the ESOP-holding employees.

b.) Ready Marketability of Security:

Listing brings in liquidity and ready marketability of securities on a continuous basis adding

prestige and importance to listed companies.

c.) Ability to raise further capital:

An initial listing increases a company's ability to raise further capital through various routes like

preferential issue, rights issue, Qualified Institutional Placements and ADRs/GDRs/FCCBs, and

in the process attract a wide and varied body of institutional and professional investors.


25‐04‐2013

d.) Supervision and Control of Trading in Securities:

The transactions in listed securities are required to be carried uniformly as per the rules and bye-

laws of the exchange. All transactions in securities are monitored by the regulatory mechanisms

of the stock exchange, preventing unfair trade practices. It improves the confidence of small

investors and protects them.

e.) Fair Price for the Securities:

The prices are publicly arrived at on the basis of demand and supply; the stock exchange

quotations are generally reflective of the real value of the security. Thus listing helps generate an

independent valuation of the company by the market.

f.) Timely Disclosure of Corporate Information:

The listing agreement signed with the exchange provides for timely disclosure of information

relating to dividend, bonus and right issues, book closure, facilities for transfer, company related

information etc by the company. Thus providing more transparency and building investor

confidence.

g.) Collateral Value of Securities:

Listed securities are acceptable to lenders as collateral for credit facilities. A listed company can

also borrow from financial institutions easily as it is rated favorably by lenders of capital; the

company can also raise additional funds from the public through the new issue market with a

greater degree of assurance.

h.) Better Corporate Practice:

Since the violation of the listing agreement entails the de-listing/suspension of securities from the

rings of the exchange, the listed companies are expected to follow fair practices to the advantage

of investors and public.

i.) Benefits to the Public:

The data daily culled out by the stock exchange in the form of price quotations and others;

provide valuable information to the public which can be used for project and research studies.

The stock exchange prices can be an index of the state of the economy. Financial institutions,

NRIs, individual investor’s etc. can take wise decisions before making investments.


25‐04‐2013

j.) Subdivision and Consolidation of Holdings:

Stock exchange bye-laws provide for explicit rules for sub division and consolidation of

securities as desired by the investors. There is special trading sessions in the exchange for

conversion of odd lots into market lots arranged by financial and institutional investors. Thus

listing helps to provide flexibility to investors in the subdivision and consolidation of their

holdings with speed and earnestness.

*Source BSE website

XX. MATERIAL DOCUMENTS FOR INSPECTION

1. Memorandum and Articles of Association of the Company as amended from time to time.

2. Certificate of Incorporation of the Company.

3. Copies of Annual Report of KIFS Financial Services Limited for the year ended 31st March, 2012.

The material contracts and the other documents shall be available for the inspection at the Registered

Office of the Company and during the normal business hours.

XXI. DECLARATION

No statement made in this Information Memorandum contravenes any of the provisions of the

Companies Act, 1956 and the rules made there under. All the legal requirements connected with the

said issue as also the guidelines, instructions etc. issued by SEBI, Government and any other

competent authority in this behalf have been duly complied with. All the information contained in this

document is true and correct.

On behalf of the Board of Directors of KIFS FINANCIAL SERVICES LIMITED Sd/- KRUPA JOSHI COMPANY SECRETARY Place: Ahmedabad Date: 1st May, 2013


25‐04‐2013

ENCLOSURE ‐ 1

(OUTSTANDING LITIGATIONS INVOLVING: KIFS SECURITIES LTD (Holding Company)

I. Civil Cases filed by KIFS SECURITIES LTD.

Sr. No.

Case Title Court Status Brief Summary

1. KIFS Securities Pvt. Ltd. V/s. Sanjay M Ghelani

Small Cause Court, Ahmedabad

Pending The recovery suit has been filed against client due to overdue outstanding of the client.

2. KIFS Securities Pvt. Ltd. V/s. Lodaliya Nilesh N



3. KIFS Securities Pvt. Ltd. V/s. Sarojben I Dave

City Civil Court, Ahmedabad


4. KIFS Securities Pvt. Ltd. V/s. Janakbhai Kantilal Gohil



5. KIFS Securities Pvt. Ltd. V/s. Lodaliya Prakash N



6. KIFS Securities Pvt. Ltd. V/s. Dodia Dineshbhai K



7. KIFS Securities Pvt. Ltd. V/s. Kailash Ganesh Pal



8. KIFS Securities Pvt. Ltd. V/s. Anunaya Srivastava



9. KIFS Securities Pvt. Ltd. V/s. Veenaben Ramniklal Thumar



10. KIFS Securities Pvt. Ltd. V/s. Mukeshbhai Jaiswal



11. Vijaykumar Manubhai Sanghvi V/s. Khandwala Integrated Financial Services Pvt. Ltd.

Civil Court, Bhavnagar

No further communication since then.

Mr. Vijaykumar Manubhai Sanghvi (complainant) of Bhavnagar filed civil summary suit no. 05/2011 under Order 37 of Civil Procedure Code 1908 read with Rule 1, 2 against Khandwala Int. Fin. Ser. P. Ltd. (a member of NSE) (KIFSPL) in the court of Hon’ble Principal Civil Judge, Bhavnagar to recover an amount of Rs. 5,45,000/‐ on 11‐01‐2011. Hon’ble Principal Civil Judge, Bhavnagar issued summons dated 21‐01‐2011 to appear in person or through authorised person before him within 10 days of the summons. The authorised representative of KIFSPL appeared before Hon’ble Principal Civil Judge, Bhavnagar as per the direction. No further communication since then.


25‐04‐2013

II. Criminal Cases filed by KIFS SECURITIES LTD.

Sr. No.


1. M/s. Khandwala Integrated Financial Services Pvt. Ltd. V/s. Sunil Soni

Metropolitan Magistrate Court, Ahmedabad

Pending The present matter is filed by the company against Sunil R. Soni. for offence under section 138 of the Negotiable Instrument Act as the cheque issued by the said party was dishonoured / returned unpaid. The said cheque was issued by the said party towards trading of shares.

2. M/s. Khandwala Integrated Financial Services Pvt. Ltd. V/s. Talat Ahmed

District Judicial Magistrate Court, Ahmedabad

Pending The present matter is filed by the company against Talat Ahmed for offence under section 138 of the Negotiable Instrument Act as the cheque issued by the said party was dishonoured / returned unpaid. The said cheque was issued by the said party towards trading of shares.

3. M/s. Khandwala Integrated Financial Services Pvt. Ltd. V/s. Vijay Sangvi

Metropolitan Magistrate Court, Ahmedabad.

Pending The present matter is filed by the company against Vijaykumar Manubhai Sanghvi for offence under section 138 of the Negotiable Instrument Act as the cheque issued by the said party was dishonoured / returned unpaid. The said cheque was issued by the said party towards trading of shares.

4. M/s. Khandwala Integrated Financial Services Pvt. Ltd. V/s. Suhas Sonal Bhatt


Pending The present matter is filed by the company against Suhas Sonal Bhatt for offence u/s‐ 138 of the Negotiable Instrument Act as the cheque issued by the said party was dishonoured / returned unpaid. The said cheque was issued by the said party towards trading of shares.

5. M/s. KIFS Securities Pvt. Ltd. V/s. Ravi Thanvi


Pending The present matter is filed by the company against Ravi Thanvi for offence under section 138 of the Negotiable Instrument Act as the cheque issued by the said party was dishonoured / returned unpaid. The said cheque was issued by the said party towards trading of shares.

6. M/s. Khandwala Integrated Financial Services Pvt. Ltd. V/s. Pritesh Soni


Pending The present matter is filed by the company against Pritesh Soni for offence u/s‐ 138 of the Negotiable Instrument Act as the cheque issued by the said party was dishonoured / returned unpaid. The said cheque was issued by the said party towards trading of shares.

7. M/s. Khandwala Integrated Financial Services Pvt. Ltd. V/s. Parul Davada


Pending The present matter is filed by the company against Parul Davada for offence under section 138 of the Negotiable Instrument Act as the cheque issued by the said party was dishonoured / returned unpaid. The said cheque was issued by the said party towards trading of shares.

8. M/s. Khandwala Integrated Financial Services Pvt. Ltd. V/s. Manish Soni


Pending The present matter is filed by the company against Manish Soni for offence u/s‐ 138 of the Negotiable Instrument Act as the cheque issued by the said party was dishonoured / returned unpaid. The said cheque was issued by the said party towards trading of shares.


25‐04‐2013

9. M/s. Khandwala Integrated Financial Services Pvt. Ltd. V/s. Ghanshyam bhai Patel


Pending The present matter is filed by the company against Ghanshyambhai Patel for offence u/s‐138 of the Negotiable Instrument Act as the cheque issued by the said party towards trading of shares was dishonoured / returned unpaid.

10. M/s. Khandwala Integrated Financial Services Pvt. Ltd. V/s. Kishor Dimke


Pending The suit has been filed against client due to overdue outstanding of the client in our books.

11. M/s. Khandwala Integrated Financial Services Pvt. Ltd. V/s. DarshanKumar Patel


Pending The present matter is filed by the company against DarshanKumar Patel for offence u/s‐ 138 of the Negotiable Instrument Act as the cheque issued by the said party towards trading of shares was dishonoured / returned unpaid.

12. M/s. Khandwala Integrated Financial Services Pvt. Ltd. V/s. Praveen and Ashaben Patel


Pending The present matter is filed by the company against Praveen and Ashaben Patel for offence u/s‐ 138 of the Negotiable Instrument Act as the cheque issued by the said party towards trading of shares was dishonoured / returned unpaid.

13. M/s. Khandwala Integrated Financial Services Pvt. Ltd. V/s. Rashid Khan


Pending The present matter is filed by the company against Rashid Khan for offence u/s‐ 138 of the Negotiable Instrument Act as the cheque issued by the said party was dishonoured / returned unpaid. The said cheque was issued by the said party towards trading of shares.

14. M/s. KIFS Securities Pvt. Ltd. V/s. Achalkumar Solanki


Pending The present matter is filed by the company against Achalkumar Solanki for offence u/s138 of the Negotiable Instrument Act as the cheque issued by the said party was dishonoured / returned unpaid. The said cheque was issued by the said party towards trading of shares.

15. M/s. KIFS Securities Pvt. Ltd. V/s. Amitkumar Saravwat


Pending The present matter is filed by the company against Amitkumar Saravwat for offence u/s‐138 of the Negotiable Instrument Act as the cheque issued by the said party towards trading of shares was dishonoured / returned unpaid.

16. M/s. Khandwala Integrated Financial Services Pvt. Ltd. V/s. Ashok Agraval


Pending The present matter is filed by the company against Ashok Agraval for offence under section 138 of the Negotiable Instrument Act as the cheque issued by the said party was dishonoured / returned unpaid. The said cheque was issued by the said party towards trading of shares.

17. M/s. Khandwala Integrated Financial Services Pvt. Ltd. V/s. Chauhan Mahomad haseeb


Pending The present matter is filed by the company against Chauhan Mahomad haseeb for offence u/s‐138 of the Negotiable Instrument Act as the cheque issued by the said party towards trading of shares was dishonoured / returned unpaid.


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18. M/s. Khandwala Integrated Financial Services Pvt. Ltd. V/s. Hetal Jitendrabhai Choksi


Pending The present matter is filed by the company against Hetal Jitendrabhai Choksi for offence under section 406, 420 of IPC as the cheque issued by the said party was dishonoured / returned unpaid. The said cheque was issued by the said party towards trading of shares.

19. M/s. Khandwala Integrated Financial Services Pvt. Ltd. V/s. Neelam Pandey


Pending The present matter is filed by the company against Neelam Pandey for offence under section 138 of the Negotiable Instrument Act as the cheque issued by the said party towards trading of shares was dishonoured / returned unpaid.

20. M/s. Khandwala Integrated Financial Services Pvt. Ltd. V/s. Nileshkumar Savalia


Pending The present matter is filed by the company against Nileshkumar Savalia for offence under section 138 of the Negotiable Instrument Act as the cheque issued by the said party towards trading of shares was dishonoured / returned unpaid.

III. Criminal Cases filed against KIFS SECURITIES LTD.

Sr. No.


1. Rajendra Keshavlal Thakkar V/s. Khandwala Int. Fin. Services Pvt. Ltd. (as respondent no. 4)

Chief Judicial Magistrate, Bhavnagar

Pending The Complainant has lodged a criminal complaint under CRPC bearing reference no. 615/2008 u/s 406, 409, 420, read with section 34/114 due to their internal disputes with others wherein name of the company is mentioned as respondent no. 4. On 01‐12‐2008, Hon’ble Chief Judicial Magistrate, Bhavnagar has ordered the Police Authority to investigate the matter u/s 202 for criminal procedure code and we have submitted the due reply. Since then, there is no further communication.

2. Neela Kirit Thakkar V/s. Khandwala Int. Fin. Services Pvt. Ltd. (as respondent no. 4)

Chief Judicial Magistrate, Bhavnagar

Pending The complainant who happened to be the relative of complainant under sr. No. 1 herein above, also lodged a criminal complaint under CRPC bearing reference no. 268 of 2009 u/s 406, 409, 420, read with section 34/114 due to their internal disputes with others wherein name of the company is mentioned as respondent no. 4. On 25‐05‐2009, Hon’ble Chief Judicial Magistrate, Bhavnagar has ordered the Police Authority to investigate the matter u/s 202 for criminal procedure code and we have submitted the due reply. Since then, there is no further communication.


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OTHER MATTERS INVOLVING KIFS SECURITIES LTD.:

Sr. No.


1. Shailendra Khandelwal V/s. M/s KIFS Securities Ltd. & Onr.

Baripada District Court, Mayurbhanj, Orissa and High Court, Cuttack, Orissa

Pending The petitioner (Applicant) has earlier filed a complaint before Investor Service Cell and Investor Greiveance Redressal Committee. Thereafter the matter was referred to Arbitration Panel. The Panel of 3 Arbitrators gave their unanimous decision in favour of the company. Dissatisfied with the order, the petitioner thereafter filed Arbitration Appellate Petition challenging the Arbitration Award passed by original Arbitrators. The Appellate Arbitrators also gave their unaninoius decision in favour of the company. Aggrieved by the same, the petitioner thereafter challenged the said arbitration award(s) by filing a Petition bearing ref. No. 51/3 of 2012 before Hon’ble District Judge, Baripada, Dist. Mayurbhanj, Orissa agains the company and another. By order dated 20.12.2012, the Hon’ble District Judge, Baripada transferred the case to Addl. Dist. Judge, Baripada for disposal in accordance with law. Thereafter we (company) have moved to Hon’ble Cuttack High Court by filing a Writ Petition no. 7144/2013 under Article 226 and 227 of the Constitution of India for quashing the order dated 20.12.2012 passed by Hon’ble District Judge, Mayurbhanj at Baripada in transferring the matter to the Court of the Additional District Judge, Mayurbhanj‐Baripada for adjudication. Vide order dated 04.04.2013, the Hon’ble Judge, Cuttack High Court has inter‐alia, stayed the operation of the order dated 20.12.2012 passed by District Judge, Mayurbhanj at Baripada.

2. M/s. Khandwala Integrated Financial Services Pvt. Ltd. V/s. The Commissioner of Service Tax.

Appeal pending with CESAT, Ahmedabad

Pending The office of the Commissioner of Service tax, Ahmedabad issued a show cause Notice on 24.10.2008 to KIFS with regard to the non‐ payment of service tax on the amount received on account of their services, such as NSE/ BSE transaction, charges and SEBI Turnover Fees and Stamp duty which forms an integral part of taxable value of their services viz; Stock Broker service. By order dated 09.02.2011, the Commissioner of Service tax, Ahmedabad, imposed the value mentioned on KIFS. Aggrieved by the said order KIFS appealed before the Customs, Excise & Service tax Appellate Tribunal on 04.05.2011 and also stay application was filed on 04.05.2011. The said appeal and application for stay are pending for hearing.

3. Shri Madhukant Shankerbhai Patel & Ors.

Consumer Dispute Redressal Commission,

Pending Shri Madhukant Shankerbhai Patel filed a complaint u/s 17 of the Consumer Protection Act, 1986, against Jaiprakash Associates Ltd. (formerly known as Jaiprakash Industries Ltd.) & others wherein KIFS was Opponent no. 3, for allegedly


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V/s. M/s. Jaiprakash Associates Ltd., KIFS & Ors.

Gujarat State, at Ahmedabad

failing to give delivery of 23,125 shares of Jaiprakash Industries Ltd., to Shri Madhukant Shankerbhai Patel & Others. KIFS filed its written statement dated 26.10.2010 stating that the compliant be dismissed against KIFS. Shri Madhukant Patel filed Rejoinder dated 18.07.2011 to the written statement against which KIFS applied for its discharge being the Opposite Party no. – 3. The Case and the application are pending for hearing and the next date is fixed on 8th May, 2013.

OUTSTANDING LITIGATIONS INVOLVING OTHER GROUP COMPANIES:

1. ACTIVE FINSTOCK PRIVATE LIMITED (AFPL) I. Civil Cases filed by AFPL Sr. No.


1. M/s. Active Finstock Pvt. Ltd. V/s. Prakashkumar Jaswantlal Rawal


Pending The recovery suit has been filed against client due to overdue outstanding of the client in our books.

2. M/s. Active Finstock Pvt. Ltd. V/s. Harshadbhai P. Patel



3. M/s. Active Finstock Pvt. Ltd. V/s. Arun Chhabilal Chaudhary



4. M/s. Active Finstock Pvt. Ltd. V/s. Vinodbhai Desaibhai Patel



5. M/s. Active Finstock Pvt. Ltd. V/s. Sanjaybhai Mavjibhai Ghelani



6. M/s. Active Finstock Pvt. Ltd. V/s. Mahendrakumar O. Sharma




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7. M/s. Active Finstock Pvt. Ltd. V/s. Shilaben Dhanjibhai Gohel



8. M/s. Active Finstock Pvt. Ltd. V/s. Ashish Sadashiv



9. M/s. Active Finstock Pvt. Ltd. V/s. Tribhovandas Khajansingh Hans



10. M/s. Active Finstock Pvt. Ltd. V/s. Kishore Gangaram Dimke



II. Criminal Cases filed by AFPL

Sr. No.


1 M/s. Active Finstock Pvt. Ltd. V/s. Mahendra Moondra



2 M/s. Active Finstock Pvt. Ltd. V/s. Jagruti Rajendra Kapadia



3 M/s. Active Finstock Pvt. Ltd. V/s. Yashwantsingh Parihar



4 M/s. Active Finstock Pvt. Ltd. V/s. Sandeep Panwar



5 M/s. Active Finstock Pvt. Ltd. V/s. Sanjay Mathur



6 M/s. Active Finstock Pvt. Ltd. V/s. Pragnesh Patel



7 M/s. Active Finstock Pvt. Ltd. V/s. Praveen goswami



8 M/s. Active Finstock Pvt. Ltd. V/s. Mohd. Memon Qureshi




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9 M/s. Active Finstock Pvt. Ltd. V/s. Ketan Venilal Jani



10 M/s. Active Finstock Pvt. Ltd. V/s. Kuldeep Bothara



11 M/s. Active Finstock Pvt. Ltd. V/s. Hemand Laddha



12 M/s. Active Finstock Pvt. Ltd. V/s. Tribhuvan Hans



13 M/s. Active Finstock Pvt. Ltd. V/s. Tushar Purohit14



14 M/s. Active Finstock Pvt. Ltd. V/s. Nikunj Patel



15 M/s. Active Finstock Pvt. Ltd. V/s.

Ashish Sadashiv



16 M/s. Active Finstock Pvt. Ltd. V/s.

Naishadh Purohit



III. Criminal Cases Filed Against AFPL Sr. No.


1 Presto Finance Ltd. V/s. M/s. Active Finstock Pvt. Ltd. & Ors.

Bombay High Court

Pending Shares of M/s Presto Finance Limited were listed BSE on 28th February, 1996. The listed shares on ASE were suspended for 3 days by ASE w.e.f. 4th April, 1996 and ASE also requested SEBI to put the scrip under suspension till further notice. After receipt of required information from ASE, it was also brought to the notice that some defective / duplicate invalid share certificates were circulating in the exchange and share market. Later on, Mr. Mahesh Ratilal Shah filed a Criminal Complaint No. 1217/S2000 in the Court of Metropolitan Magistrate, 33rd Court, Ballard Pier, Mumbai, against the BSE and others including the AFPL (as Respondent No. 8) in respect of the transactions of


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Presto Finance Ltd., in Sett. No. 01/96‐97 of B2 Group. Being aggrieved with said criminal proceedings, BSE filed Criminal Application No. 1638 of 2002 in the High Court at Mumbai for quashing the above criminal proceeding. The Hon'ble Court had admitted the petition and was pleased to grant stay on further proceeding before Metropolitan Magistrate. The above Criminal Petition is pending for final hearing.

2 Yogesh Mehta V/s. M/s. Active Finstock Pvt. Ltd. & Ors.

Bombay High Court

Pending Mr. Yogesh Mehta ‐ Defaulter, filed a Criminal Complaint No. 518/5/2000 before the Hon'ble Metropolitan Magistrate, 33rd Court at Ballard Estate, Mumbai, against BSE and others including the aforesaid member (Accused No.7), for commission of offence under various sections of I. P.C, in respect of the transactions of Presto Finance Ltd., in Sett. No. 01/96, 97 and Sett. No. 02/96‐97 of B2 Group. Being aggrieved with the said criminal proceeding, the Exchange filed a Criminal Writ Petition No. 1611 of 2001 in the High Court at Bombay for quashing the above criminal proceeding. The said petition was admitted by the Hon'ble High Court and granted stay of further proceedings pending before Metropolitan Magistrate. The above Criminal Petition is pending for final hearing.

2. KHANDWALA FINSTOCK PRIVATE LIMITED (KFPL)

Sr. No.


1 SEBI V/s. KFPL (Respondent No. 61)

Supreme Court

Pending Vide notification no. F.NO. SEBI/LE/ /98 dated 21st January, 1998, SEBI has notified about SEBI Fee liability benefit upon conversion of individual or partnership membership card of the exchange into corporate entity. It was not clarified in the notification whether the same is applicable with prospective / retrospective effect. It was also not clear whether the stock brokers who have converted their individual/partnership into corporate entity prior to April 1, 1997 are entitled to fee continuity benefit in terms of paragraph 4 of Schedule‐III to the Regulation. Later on SEBI issued one circular dated 28th March, 2002 in this regard. Accordingly, various Brokers entities claimed exemption under para 4 of the regulations from time to time even though all these entities were converted prior to 01.04.1997. However, SEBI rejected the applications for exemption on the ground that the fee continuity benefit in paragraph 4 was applicable only to those entities which were corporatized on and after 01.04.1997. Hence aggrieved by SEBI’s order, these entities including KFPL (appeal no. 207 of 2004 decided on 09/05/2006) filed appeals


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before SAT, wherein SAT has set aside the circular dated 28th March, 2002 of SEBI in Appeal No. 123 of 2004 filed by M/s Alliance Finstock P. Ltd. and Mr. Sunil P. Mantri and decided that the paragraph 4 of the regulation was retrospective and not prospective, and all the entities which have been corporatized even prior to 01.04.1997 were entitled to get fee continuity benefit. Being aggrieved by this order of SAT, SEBI preferred civil appeal no. 4493 of 2006 before Supreme Court of India. KFPL being one of the respondents has received the copy of the said appeal which is pending before Supreme Court of India.

3. MATTER OF JAYESH P. KHANDWALA

Sr. No.

Case Title Authority Brief Summary

1. SEBI V/s. Jayesh P. Khandwala HUF.

SEBI/ SAT SEBI carried out an investigations into the alleged irregularities in several Initial Public Offerings (IPOs) of securities of various companies during the year 2003‐2005 and found that certain entities have cornered shares meant for retail category through thousands of benami / factitious demat accounts. Based on the investigation, SEBI came out with an ad‐interim ex‐parte order bearing No. WTM/GA/60/ISD/04/06 on 27th April, 2006 wherein Jayesh P. Khandwala – HUF (Proprietor of M/s Zealous Trading Company) was named as one among 84 Financiers to 24 Master Account Holders including Roopal Panchal. SEBI Order alleged that Jayesh P. Khandwala – HUF had advanced money for 3 IPOs of IDFC, Sasken and Suzlon. As such, vide the aforesaid SEBI Order, Jayesh P. Khandwala – HUF was directed not to buy, sell or deal in the securities market including in IPOs, directly or indirectly, till further direction. Jayesh P. Khandwala – HUF is duly complying with this direction since 27.04.2006. In the mean time, SEBI issued a show cause notice dated April 08, 2009 (SCN) under Sections 11, 11(4) and 11B of the SEBI Act, 1992 alleging that Jayesh provided finance to three key operators (KOs) viz., Ms. Roopalben Panchal (Roopal), M/s. Sugandh Estates and Investment Pvt. Ltd. (SEIPL) and Mr. Biren Kantilal Shah (Biren) to make applications in the retail category of the IPOs of IDFC Ltd. (IDFC), Sasken Communication Technologies Ltd. (Sasken) and Suzlon Energy Ltd. (Suzlon). JPK‐HUF duly replied the aforesaid SCN. However, SEBI vide its further order No. WTM/MSS/ISD/ 78 /2010 dated 26.10.2010 superseded its earlier order dated 27.04.2006 against JPK‐HUF and has ordered / directed that: a. Jayesh P. Khandwala‐HUF (PAN AAAHJ4784N) and Mr. Jayesh P.

Khandwala (PAN ABHPK0873H) shall not buy, sell or deal in the securities market in any manner whatsoever or access the securities


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market, directly or indirectly, for a period three months from the date of this Order;

b. Jayesh P. Khandwala‐HUF shall disgorge the unlawful gain of Rs.4,04,20,658. It shall also pay Rs.1,21,26,197, being the simple interest at the rate of 6% per annum for 5 years (2005‐10) on the unlawful gain of Rs.4,04,20,658. Thus, it shall pay a total amount of Rs.5,25,46,855 (Rupees five crore twenty five lakh forty six thousand eight hundred fifty five only) within 45 (forty five) days from the date of this order by way of crossed demand draft drawn in favour of ‘Securities and Exchange Board of India’, payable at Mumbai; and

c. In case the aforesaid amount Rs.5,25,46,855 is not paid within the specified time, Jayesh P. Khandwala‐HUF and Mr. Jayesh P. Khandwala shall be restrained for a further period of seven years from (i) buying, selling or dealing in securities market in any manner whatsoever, (ii) accessing the securities market, directly or indirectly, or (iii) associating with any securities market intermediary or listed company in any manner or capacity, without prejudice to SEBI’s right to enforce disgorgement.

Present Status: The said order date 26th October, 2010 is challenged by filing an appeal bearing reference no. 29/2011 before Securities Appellate Tribunal (SAT). By passing an order on 3rd April, 2012, SAT has set aside this SEBI Order and remanded back for further trials.

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