Notes to Accounts of Bajaj Finserv Ltd.
Mar 31, 2023
i) Pursuant to approval of the Members
ia) Sub-division of each existing equity share of face value of C 5 (Rupees Five only) into Five (5) equity shares of face value of C 1 (Rupees One only) fully paid-up and consequently the number of issued capital was increased from 159,281,546 equity shares of face value of C 5 each into 796,407,730 equity shares of face value of C 1 each.
ib) Authorised share capital of the Company was increased from C 100 crore consisting of 200,000,000 equity shares of face value of C 5 each to C 200 crore consisting of 2,000,000,000 equity shares of face value of C 1 each post sub-division.
ii) Subsequent to said approval, the Allotment Committee allotted 796,407,730 equity shares of face value of C 1 each as bonus shares in the proportion of one bonus equity share of face value of C 1 for every one equity share of face value of C 1 held as on the record date, by capitalising an amount of
C 79.64 crore from securities premium. The bonus shares were listed on BSE Ltd. and National Stock Exchange of India Ltd. w.e.f. 22 September 2022.
iii) Consequently, in terms of the Employee Stock Option Scheme of the Company, the grant price and the number of outstanding stock options in respect of stock options granted under the Employee Stock Option Scheme were proportionately adjusted.
b. Terms/rights attached to equity shares
The Company has only one class of equity shares having a par value of C 1 per share (Previous year C 5 per share). Each holder of equity shares is entitled to one vote per share. The interim dividend declared by the Board of Directors and the final dividend proposed by the Board of Directors and approved by the shareholders in the annual general meeting is paid in Indian rupees. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.
d. Shares reserved for issue at a subsequent date
137,980 equity shares of C 1 each (31 March 2022: 14,417 equity shares of C 5 each) offered by way of right in an earlier year, have been held in abeyance pending adjudication of title and subscription thereafter.
During the year, the Company issued 619 (before sub division (split) and bonus issue) of such equity shares at the offered price of C 650, thereby collecting C 0.04 crore as premium.
b Nature and purpose of reserve Securities premium
Securities premium is used to record the premium on issue of shares. The reserve can be utilised only for limited purposes in accordance with section 52 and other provisions of the Companies Act, 2013.
General reserve is free reserve available for distribution as recommended by Board in accordance with requirements of the Companies Act, 2013.
Share based payments reserve is created as required by Ind AS 102 ''Share Based Payments'' on the employee stock option scheme operated by the Company.
The reserve for shares of the Company held by the BFS ESOP Trust (ESOP Trust). Company has issued employees stock option scheme for its employees. The equity shares of the Company have been purchased and held by ESOP Trust. Trust to transfer such shares to employees at the time of exercise of option by employees.
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27 Contingent liabilities |
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(C In Crore) As at 31 March |
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Particulars |
2023 |
2022 |
|
a. Claims against the Company not acknowledged as debts |
8.53 |
8.53 |
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b. Income-tax matters under dispute |
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Appeal by Company |
6.31 |
6.31 |
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c. Value Added Tax (VAT), service tax and GST matters under dispute |
1.47 |
4.50 |
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In all the cases mentioned above, outflow is not probable and hence not provided by the Company. |
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It is not practicable for the Company to estimate the timings of the cash flows, if any, in respect of the above pending resolution of the respective proceedings. |
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28 Capital and other commitments |
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(C In Crore) As at 31 March |
||
|
Particulars |
2023 |
2022 |
|
Capital commitments, net of capital advances |
0.22 |
1.73 |
Liability for employee benefits has been determined by an actuary, appointed for the purpose, in conformity with the principles set out in the Indian Accounting Standard 19 the details of which are as hereunder.
The Company provides for gratuity payments to employees. The gratuity benefit payable to the employees of the Company is greater of the provisions of the Payment of Gratuity Act, 1972 and the Company''s gratuity scheme. Employees who are in continuous service for a period of 5 years are eligible for gratuity. The gratuity plan is a funded plan and the Company makes contributions to approved gratuity fund.
Gratuity is a lump sum plan and the cost of providing these benefits is typically less sensitive to small changes in demographic assumptions. The key actuarial assumptions to which the benefit obligation results are particularly sensitive to are discount rate and future salary escalation rate. The following table summarises the impact in percentage terms on the reported defined benefit obligation at the end of the reporting period arising on account of an increase or decrease in the reported assumption by 50 basis points.
These sensitivities have been calculated to show the movement in defined benefit obligation in isolation and assuming there are no other changes in market conditions at the accounting date. There have been no changes from the previous periods in the methods and assumptions used in preparing the sensitivity analysis.
Funding arrangement and policy
The money contributed by the Company to the fund to finance the liabilities of the plan has to be invested.
The trustees of the plan have outsourced the investment management of the fund to insurance companies.
The insurance companies in turn manage these funds as per the mandate provided to them by the trustees and the asset allocation which is within the permissible limits prescribed in the insurance regulations.
There is no compulsion on the part of the Company to fully pre fund the liability of the Plan. The Company''s philosophy is to fund the benefits based on its own liquidity and tax position as well as level of under funding of the plan.
The expected contribution payable to the plan next year is C 0.95 crore.
Segment information based on consolidated financial statements is given in note 43 to consolidated financial statements.
The Company has disclosed the business segments as primary reporting segment on the basis that risks and returns are primarily determined by the nature of products and services. Consequently, geographical segment has been considered as a secondary segment.
The business segments have been identified on the basis of the nature of products and services, the risks and returns and internal performance reporting systems
The business segments comprise the following:
i. Life insurance
ii. General insurance
iii. Windpower
iv. Retail financing
v. Investments and others
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction in the principal (or most advantageous) market at the measurement date under current market conditions (i.e., an exit price), regardless of whether that price is directly observable or estimated using a valuation technique.
In order to show how fair values have been derived, financial instruments are classified based on a hierarchy of valuation techniques, as explained below
Level 1: Level 1 hierarchy includes financial instruments measured using quoted prices in active markets. Quotes would include rates/values/valuation references published periodically by BSE, NSE etc. basis which trades take place in a linked or unlinked active market. This includes traded bonds and mutual funds, as the case may be, that have quoted price/rate/value.
Level 2: The fair value of financial instruments that are not traded in an active market are determined using valuation techniques which maximise the use of observable market data (either directly as prices or indirectly derived from prices) and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.
Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. This is the case for unlisted equity securities, contingent consideration and indemnification asset included in level 3.
Valuation techniques used to determine fair value
Valuation techniques used to determine fair value include
⢠Open ended mutual funds and certain bonds and debentures at NAV''s/rates declared and/or quoted.
⢠Close ended mutual funds at NAV''s declared by AMFI.
⢠For other bonds and debentures values with references to prevailing yields to maturity matching tenures, quoted on sites of credible organisation such as ICRA (Investment Information and Credit Rating Agency).
⢠Commercial papers and certificate of deposits, being short-term maturity papers, amortised cost is assumed to be the fair value.
The carrying amounts of certificate of deposits, trade receivables, trade payables, other financial assets/liabilities and cash and cash equivalents are considered to be the same as their fair values, due to their short-term nature.
The Company operates, at present, only in India. Whilst risk is inherent in the Company''s activities, it is managed through a risk management framework, including ongoing identification, measurement and monitoring subject to risk limits and other controls. The Company''s activities expose it to credit risk, liquidity risk and market risk.
This note explains the sources of risk which the Company is exposed to and how the entity manages the risk.
The Board of Directors provide guiding principles for overall risk management, as well as policies covering specific areas, such as, credit risk, liquidity risk, and investment of available funds. The Company''s risk management is carried out by its Risk Management Committee as per such policies approved by the Board of Directors. Accordingly, Company''s Risk Management Committee identifies, evaluates and manages financial risks.
Credit risk refers to the risk that a counterparty may default on its contractual obligations leading to a financial loss to the Company. Credit risk primarily arises from cash equivalents, financial assets measured at amortised cost, financial assets measured at FVTPL and trade receivables.
In regard to Trade receivables, which are typically unsecured, credit risk is managed through credit approvals, establishing credit limit and continuously monitoring the credit worthiness of customers to whom credit is extended (substantially through debt securities) in the normal course of business.
With regards to financial assets represented substantially by investments, the Company has an investment policy which allows the Company to invest only with counterparties having a credit rating equal to or above AA and P1 . The Company reviews the creditworthiness of these counterparties on an on-going basis. Counter party exposure limits maybe updated as and when required, subject to approval of Board of Directors.
The Company''s principal sources of liquidity are ''cash and cash equivalents, investments in money market instruments'' and cash flows that are generated from operations. The Company believes that its working capital is sufficient to meet the financial liabilities within maturity period.
The Company has deployed its surplus funds in debt and money market instruments (including through funds). The Company is exposed to price risk on such investments; which arises on account of movement in interest rates, liquidity and credit quality of underlying securities.
As an unregistered CIC, the Company must invest at least 90% of its net assets in Group companies, of which at least 60% must be through equity investments. Therefore 10% of its net assets are currently invested in liquid fixed income securities such as certificate of deposits and liquid mutual funds to ensure adequate liquidity is available. Hence temporary market volatility, if any is not considered to have material impact on the carrying value of these Investments. Nevertheless, the Company has invested its surplus funds primarily in debt instruments of its subsidiary with CRISIL AAA and STABLE A1 rating and thus the Company does not have significant risk exposure.
a) Objectives, policies and processes of capital management
The Company is cash surplus and has only equity capital. Under Master Direction - Core Investment Companies (Reserve Bank) Directions, 2016, the Company is termed as an Unregistered Core Investment Company (CIC) as per Reserve Bank of India Guidelines dated 13 August 2020 and is not exposed to any regulatory imposed capital requirements.
The cash surpluses are currently invested in debt and money market instruments (including through mutual funds) depending on economic conditions in line with the CIC guidelines set out by the RBI and Investment Policy set by the Management. Safety of capital is of prime importance to ensure availability of capital for operations. Investment objective is to provide safety and adequate return on the surplus funds. The Company does not have any borrowings.
38 Share-based payments (Employee stock option plan)
The Company has established employees stock options plan, 2018 (ESOP Scheme) for its employees pursuant to the special resolution passed by shareholders at the annual general meeting held on 19 July 2018. The employee stock option plan is designed to provide incentives to the employees of the Company and for its subsidiaries to deliver long-term returns and is an equity settled plan. The ESOP Scheme is administered by the Compensation Committee of the Board. Participation in the plan is at the Compensation Committee''s discretion and no individual has a contractual right to participate in the plan or to receive any guaranteed benefits.
Options granted under ESOP scheme would vest in not less than one year and not more than five years from the date of grant of the options. The Compensation Committee of the Company has approved grant with related vesting conditions. Vesting of the options would be subject to continuous employment with the Company and hence the options would vest with passage of time. In addition to this, the Compensation Committee may also specify certain performance parameters subject to which the options would vest. Such options would vest when the performance parameters are met.
Once vested, the options remain exercisable over period of eight years from the date of vesting or such period as may be decided by the Compensation Committee at its sole discretion from time to time. Options granted under the plan are for no consideration and carry no dividend or voting rights. On exercise, each option is convertible into one equity share.
Below disclosures have been adjusted for sub-division of shares and issue of bonus shares thereon in the current year.
a. The Company has performed an assessment to identify transactions with struck off companies as at 31 March 2023 and no such company was identified.
b. No funds (which are material either individually or in the aggregate) have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person(s) or entity(ies), including foreign entities (''Intermediaries''),
with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company (''Ultimate Beneficiaries'') or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
c. No funds (which are material either individually or in the aggregate) have been received by the Company from any person(s) or entity(ies), including foreign entities (''Funding Parties''), with the understanding, whether recorded in writing or otherwise, that the Company shall, directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the funding party (''Ultimate Beneficiaries'') or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
d. The Company has not traded or invested in crypto currency or virtual currency during the financial year.
e. The Company does not have any Benami property, where any proceeding has been initiated or pending against the Company for holding any Benami property.
40 Events after reporting date
There have been no events after the reporting date that require disclosure in these financial statements.
Amounts less than C 50,000 have been shown at actual against respective line items statutorily required to
be disclosed.
The accompanying notes are an integral part of the standalone financial statements
Mar 31, 2022
16 Equity share capital (Contd.)
b. Terms/rights attached to equity shares
The Company has only one class of equity shares having a par value of ? 5 per share. Each holder of equity shares is entitled to one vote per share. The interim dividend declared by the Board of Directors and the final dividend proposed by the Board of Directors and approved by the shareholders in the annual general meeting is paid in Indian rupees. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.
d. Shares reserved for issue at a subsequent date
14,417 (31 March 2021: 14,417) equity shares of ? 5 each offered by way of right in an earlier year, have been held in abeyance pending adjudication of title and subscription thereafter. In the previous year, the Company had issued and allotted 154 of such equity shares at the offered price of ? 650, thereby collecting ? 0.01 crore as premium. During the year, the Company did not issue any such equity shares.
17 Other equity (Contd.) b. Nature and purpose of reserve Securities premium
Securities premium is used to record the premium on issue of shares. The reserve can be utilised only for limited purposes in accordance with section 52 and other provisions of the Companies Act, 2013.
General reserve is free reserve available for distribution as recommended by Board in accordance with requirements of the Companies Act, 2013.
Share based payments reserve is created as required by Ind AS 102 ''Share Based Payments'' on the employee stock option scheme operated by the Company.
The reserve for shares of the Company held by the BFS ESOP Trust (ESOP Trust). Company has issued employees stock option scheme for its employees. The equity shares of the Company have been purchased and held by ESOP Trust. Trust to transfer such shares to employees at the time of exercise of option by employees.
30 Employee benefit plans
Liability for employee benefits has been determined by an actuary, appointed for the purpose, in conformity with the principles set out in the Indian Accounting Standard 19 the details of which are as hereunder.
The Company provides for gratuity payments to employees. The gratuity benefit payable to the employees of the Company is greater of the provisions of the Payment of Gratuity Act, 1972 and the Company''s gratuity scheme. Employees who are in continuous service for a period of 5 years are eligible for gratuity. The gratuity plan is a funded plan and the Company makes contributions to approved gratuity fund.
Sensitivity Analysis
Gratuity is a lump sum plan and the cost of providing these benefits is typically less sensitive to small changes in demographic assumptions. The key actuarial assumptions to which the benefit obligation results are particularly sensitive to are discount rate and future salary escalation rate. The following table summarises the impact in percentage terms on the reported defined benefit obligation at the end of the reporting period arising on account of an increase or decrease in the reported assumption by 50 basis points.
These sensitivities have been calculated to show the movement in defined benefit obligation in isolation and assuming there are no other changes in market conditions at the accounting date. There have been no changes from the previous periods in the methods and assumptions used in preparing the sensitivity analysis.
Funding arrangement and policy
The money contributed by the Company to the fund to finance the liabilities of the plan has to be invested.
The trustees of the plan have outsourced the investment management of the fund to insurance companies. The insurance companies in turn manage these funds as per the mandate provided to them by the trustees and the asset allocation which is within the permissible limits prescribed in the insurance regulations.
There is no compulsion on the part of the Company to fully pre fund the liability of the Plan. The Company''s philosophy is to fund the benefits based on its own liquidity and tax position as well as level of under funding of the plan.
The expected contribution payable to the plan next year is ? 0.95 crore
31 Segment information
Segment information based on consolidated financial statements is given in note 43 to consolidated financial statements.
The Company has disclosed the business segments as primary reporting segment on the basis that
risks and returns are primarily determined by the nature of products and services. Consequently, geographical
segment has been considered as a secondary segment.
The business segments have been identified on the basis of the nature of products and services, the risks and returns and internal performance reporting systems
The business segments comprise the following:
i. Life insurance
ii. General insurance
iii. Windmill
iv. Retail financing
v. Investments and others
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction in the principal (or most advantageous) market at the measurement date under current market conditions (i.e., an exit price), regardless of whether that price is directly observable or estimated using a valuation technique.
In order to show how fair values have been derived, financial instruments are classified based on a hierarchy of valuation techniques, as explained below
Level 1: Level 1 hierarchy includes financial instruments measured using quoted prices in active markets. Quotes would include rates/values/valuation references published periodically by BSE, NSE etc. basis which trades take place in a linked or unlinked active market. This includes traded bonds and mutual funds, as the case may be, that have quoted price/rate/value.
Level 2: The fair value of financial instruments that are not traded in an active market are determined using valuation techniques which maximise the use of observable market data (either directly as prices or indirectl derived from prices) and rely as little as possible on entity-specific estimates. If all significant inputs requirec to fair value an instrument are observable, the instrument is included in level 2.
Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. This is the case for unlisted equity securities, contingent consideration and indemnificatic asset included in level 3.
Valuation techniques used to determine fair value
Valuation techniques used to determine fair value include
⢠Open ended mutual funds and certain bonds and debentures at NAV''s/rates declared and/or quoted.
⢠Close ended mutual funds at NAV''s declared by AMFI.
⢠For other bonds and debentures values with references to prevailing yields to maturity matching tenures, quoted on sites of credible organisation such as ICRA (Investment Information and Credit Rating Agency).
⢠Commercial papers and certificate of deposits, being short-term maturity papers, amortised cost is assumed to be the fair value.
The carrying amounts of certificate of deposits, trade receivables, trade payables, other
financial assets/liabilities and cash and cash equivalents are considered to be the same as their fair values,
due to their short-term nature.
35 Financial risk management
The Company operates, at present, only in India. Whilst risk is inherent in the Company''s activities, it is managed through a risk management framework, including ongoing identification, measurement and monitoring subject to risk limits and other controls. The Company''s activities expose it to credit risk, liquidity risk and market risk.
This note explains the sources of risk which the Company is exposed to and how the entity manages the risk.
The Board of Directors provide guiding principles for overall risk management, as well as policies covering specific areas, such as, credit risk, liquidity risk, and investment of available funds. The Company''s risk management is carried out by its Risk Management Committee as per such policies approved by the Board of Directors. Accordingly, Company''s Risk Management Committee identifies, evaluates and manages financial risks.
Credit risk refers to the risk that a counterparty may default on its contractual obligations leading to a financial loss to the Company. Credit risk primarily arises from cash equivalents, financial assets measured at amortised cost, financial assets measured at FVTPL and trade receivables.
In regard to trade receivables, which are typically unsecured, credit risk is managed through credit approvals, establishing credit limit and continuously monitoring the credit worthiness of customers to whom credit is extended (substantially through debt securities) in the normal course of business.
With regards to financial assets represented substantially by investments, the Company has an investment policy which allows the Company to invest only with counterparties having a credit rating equal to or above AA and P1 . The Company reviews the creditworthiness of these counterparties on an on-going basis. Counter party exposure limits maybe updated as and when required, subject to approval of Board of Directors.
The Company''s principal sources of liquidity are ''cash and cash equivalents, investments in money market instruments'' and cash flows that are generated from operations. The Company believes that its working capital is sufficient to meet the financial liabilities within maturity period.
The Company has deployed its surplus funds in debt and money market instruments (including through funds). The Company is exposed to price risk on such investments; which arises on account of movement in interest rates, liquidity and credit quality of underlying securities.
As an unregistered CIC, the Company must invest at least 90% of its net assets in Group companies, of which at least 60% must be through equity investments. Therefore 10% of its net assets are currently invested in liquid fixed income securities such as certificate of deposits and liquid mutual funds to ensure adequate liquidity is available. Hence temporary market volatility, if any is not considered to have material impact on the carrying value of these Investments. Nevertheless, the Company has invested its surplus funds primarily in debt instruments of its subsidiary with CRISIL AAA and STABLE A1 rating and thus the Company does not have significant risk exposure.
36 Capital management
a) Objectives, policies and processes of capital management
The Company is cash surplus and has only equity capital. Under Master Direction - Core Investment Companies (Reserve Bank) Directions, 2016, the Company is termed as an Unregistered Core Investment Company (CIC) as per Reserve Bank of India Guidelines dated 13 August 2020 and is not exposed to any regulatory imposed capital requirements.
The cash surpluses are currently invested in debt and money market instruments (including through mutual funds) depending on economic conditions in line with the CIC guidelines set out by the RBI and investment policy set by the Management. Safety of capital is of prime importance to ensure availability of capital for operations. Investment objective is to provide safety and adequate return on the surplus funds. The Company does not have any borrowings.
38 Share-based payments (Employee stock option plan)
The Company has established employees stock options plan, 2018 (ESOP Scheme) for its employees pursuant to the special resolution passed by shareholders at the annual general meeting held on 19 July 2018. The employee stock option plan is designed to provide incentives to the employees of the Company and for its unlisted subsidiaries to deliver long-term returns and is an equity settled plan. The ESOP Scheme is administered by the Compensation Committee of the Board. Participation in the plan is at the Compensation Committee''s discretion and no individual has a contractual right to participate in the plan or to receive any guaranteed benefits. Options granted under ESOP scheme would vest in not less than one year and not more than five years from the date of grant of the options. The Compensation committee of the Company has approved grant with related vesting conditions. Vesting of the options would be subject to continuous employment with the Company and hence the options would vest with passage of time. In addition to this, the Compensation Committee may also specify certain performance parameters subject to which the options would vest. Such options would vest when the performance parameters are met.
Once vested, the options remain exercisable over period of eight years from the date of vesting or such period as may be decided by the Compensation Committee at its sole discretion from time to time. Options granted under the plan are for no consideration and carry no dividend or voting rights. On exercise, each option is convertible into one equity share.
Set out below is a summary of options granted under the plan to employess of the Company and unlisted subsidiaries
The fair value at grant date is determined using the Black Scholes model which takes into account the exercise price, the term of the option, the share price at grant date and expected volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of the option.
The expected price volatility is based on the historic volatility (based on the remaining life of the options),
adjusted for any expected changes to future volatility due to publicly available information.
39 Other notes
a. The Company has performed an assessment to identify transactions with struck off companies as at 31 March 2022 and no such company was identified.
b. No funds (which are material either individually or in the aggregate) have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person(s) or entity(ies), including foreign entities (''Intermediaries''), with the understanding, whether recorded in writing or otherwise, that the intermediary shall, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company (''Ultimate Beneficiaries'') or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
c. No funds (which are material either individually or in the aggregate) have been received by the Company from any person(s) or entity(ies), including foreign entities (''Funding Parties''), with the understanding, whether recorded in writing or otherwise, that the Company shall, directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the funding party (''Ultimate Beneficiaries'') or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
d. The Company has not traded or invested in crypto currency or virtual currency during the financial year.
e. The Company does not have any Benami property, where any proceeding has been initiated or pending against the Company for holding any Benami property.
40 Events after reporting date
There have been no events after the reporting date that require disclosure in these financial statements.
41 Miscellaneous
Amounts less than ? 50,000 have been shown at actual against respective line items statutorily required to be disclosed.
Mar 31, 2021
# On 7 November 2019, the Company through Qualified Institutions Placement (QIP) allotted 21,794,871 equity shares to the eligible Qualified Institutional Buyers (QIB) at a price of I 3,900 per equity share of I 2 face value (inclusive of premium of I 3,898 per share) aggregating to approximately I 8,500 crore. The issue was made in accordance with the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018. Funds received in the QIP of equity shares have been utilised for the purpose mentioned in the objects of the issue in the offer document.
On 14 September 2016, the Allotment Committee of the Board of Directors allotted 269,360,950 equity shares of face value of I 2 each as bonus shares in the proportion of one bonus equity share for every one equity share of face value of I 2 held as on the record date, by capitalising an amount of I 538,721,900 from securities premium account. The bonus shares were listed on BSE Limited and National Stock Exchange of India Limited w.e.f. 19 September 2016. Other than this, Company has not allotted any bonus shares in previous five years.
(b) Terms/rights/restrictions attached to equity shares
The Company has only one class of equity shares having a par value of I 2 per share. Each holder of equity shares is entitled to one vote per share. The dividend recommended by the Board of Directors and approved by the shareholders in the Annual General Meeting is paid in Indian Rupees. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.
Consequent to the opinion expressed by the ''Expert Advisory Committee'' of the Institute of Chartered Accountants of India on the applicability of clause 22A.1 of the SEBI Guidelines, the balance unexercised equity shares held by the trust at the close of the year have been reduced against the share capital as if the trust is administered by the Company itself. The securities premium related to the unexercised equity shares held by the trust at the close of the year aggregating I 869,605,787 (As at 31 March 2020 I 670,428,124) has also been reduced from securities premium account and adjusted against the loan outstanding from the trust.
Dividends declared by the Company do not accrete to unexercised options. Accordingly, any dividend received by the ESOP trust is remitted to the Company and adjusted against the source from which dividend has been paid.
Securities premium is used to record the premium on issue of shares. It can be utilised only for limited purposes in accordance with the provisions of the Companies Act, 2013.
Retained earnings represents the surplus in Profit and Loss Account and appropriations.
The Company recognises change on account of remeasurement of the net defined benefit liability (asset) as part of retained earnings with separate disclosure, which comprises of: actuarial gains and losses;
return on plan assets, excluding amounts included in net interest on the net defined benefit liability (asset) ; and any change in the effect of the asset ceiling, excluding amounts included in net interest on the net defined benefit liability (asset).
(iii) Reserve fund in terms of section 45-IC(1) of the Reserve Bank of India Act, 1934
Reserve fund is created as per the terms of Section 45 IC(1) of the Reserve Bank of India Act, 1934 as a statutory reserve.
(iv) General reserve
Amounts set aside from retained profits as a reserve to be utilised for permissible general purpose as per Law.
(v) Infrastructure reserve created under section 36(1)(viii) of the Income Tax Act, 1961
Infrastructure reserve is created to avail the deduction as per the provisions of section 36(1)(viii) the Income Tax Act 1961 on profits derived from the business of providing long term finance for development of infrastructure facility in India.
(vi) Other comprehensive income On equity investments
The Company has elected to recognise changes in the fair value of certain investments in equity securities in other comprehensive income. These changes are accumulated in the FVOCI equity investments reserve. The Company transfers amounts from this reserve to retained earnings when the relevant equity securities are derecognised.
The Company recognises changes in the fair value of debt instruments held with a dual business objective of collect and sell in other comprehensive income. These changes are accumulated in the FVOCI debt investments reserve. The Company transfers amounts from this reserve to profit or loss when the debt instrument is sold. Any impairment loss on such instruments is reclassified immediately to the Statement of Profit and Loss.
It represents the cumulative gains/(losses) arising on revaluation of the derivative instruments designated as cash flow hedges through OCI.
The Company recognises changes in the fair value of loans measured under FVOCI in other comprehensive income and impairment loss allowances are recognised in profit or loss.
(vii) Share options outstanding account
Share options outstanding account is created as required by Ind AS 102 ''Share Based Payments'' on the Employee Stock Option Scheme operated by the Company for employees of the group.
Basic EPS is calculated in accordance with Ind AS 33 ''Earnings per share'' by dividing the profit for the year attributable to equity holders of the Company by the weighted average number of equity shares outstanding during the year.
Diluted EPS is calculated by dividing the profit attributable to equity holders of the Company by the weighted average number of equity shares outstanding during the year plus the weighted average number of equity shares that would be issued on conversion of all the dilutive potential equity shares into equity shares of the Company.
38 Segment Information
The Company operates in a single reportable segment i.e. financing, since the nature of the loans are exposed to similar risk and return profiles hence they are collectively operating under a single segment. The Company operates in a single geographical segment i.e. domestic.
39 Transfer of financial assets that are derecognised in their entirety where the Company has continuing involvement
The Company has not transferred any assets that are derecognised in their entirety where the Company continues to have continuing involvement.
41 Employee benefit plans Defined benefit plans (A) Gratuity
The gratuity plan is governed by the Payment of Gratuity Act, 1972. Under the Gratuity Act, an employee who has completed five years of service is entitled to specific benefits. The level of benefits provided depends on the member''s length of service, managerial grade and salary at retirement age.
In case of certain employees, the Provident fund contribution is made to Bajaj Auto Ltd. Provident Fund Trust. In terms of the guidance note issued by the Institute of Actuaries of India, the actuary has provided a valuation of provident fund liability based on the assumptions listed below and determined that there is no shortfall as of 31 March 2021. The assumptions used in determining the present value of obligation of interest rate guarantee under deterministic approach
The Indian Parliament has approved the Code on Social Security, 2020 which subsumes the Provident Fund and the Gratuity Act and rules there under. The Ministry of Labour and Employment has also released draft rules thereunder on 13 November 2020, and has invited suggestions from stakeholders which are under active consideration by the Ministry. The Company will evaluate the rules, assess the impact, if any, and account for the same once the rules are notified and become effective.
|
42 Contingent liabilities and commitments |
||
|
(a) Contingent liabilities not provided for in respect of |
(H In Crore) As at 31 March |
|
|
Particulars |
2021 |
2020 |
|
Disputed claims against the Company not acknowledged as debts |
51.98 |
44.18 |
|
VAT matters under appeal |
4.29 |
4.39 |
|
ESI matters under appeal |
5.14 |
5.14 |
|
GST/Service tax matters under appeal |
||
|
On interest subsidy |
1,905.44 |
1,971.65 |
|
On penal interest/charges |
237.25 |
223.15 |
|
On others |
6.42 |
6.22 |
|
Income tax matters |
||
|
Appeals by the Company |
- |
0.32 |
|
Appeals by the Income tax department |
0.28 |
0.24 |
|
175 |
||
(i) The Company is of the opinion that the above demands are not tenable and expects to succeed in its appeals/defense.
(ii) The Commissioner, Service Tax Commissionerate Pune, through an order dated 31 March 2017, has confirmed the demand of service tax of I 644.65 crore and penalties of I 198.95 crore from the Company in relation to the interest subsidy the Company received from manufacturers and dealers during the period 1 April 2010 to 30 September 2016. The Commissioner has also demanded payment of interest on the service tax amount confirmed until the date the Company pays the service tax demanded, which as at 31 March 2021 amounted to I 690.56 crore. In accordance with legal advice, the Company filed an appeal on 6 July 2017 with the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Mumbai disputing the demands. The Company, in line with the opinion obtained from a senior legal counsel, is of view that the said demands are not tenable.
I n addition, the Principal Commissioner, Central GST and Central Excise, Commissionerate Pune -I, through order dated 3 February 2021, has confirmed the demand of service tax of I 217.22 crore and penalty thereon of I 21.72 crore from the Company in relation to the interest subsidy received from manufacturers and dealers during the period 1 October 2016 to 30 June 2017. The Principal Commissioner has also demanded payment of interest on the service tax amount confirmed until the date the Company pays the service tax demanded, which as at 31 March 2021 amounted to I 132.34 crore. In accordance with legal advice, the Company is in process to file an appeal with the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Mumbai against the said demand. The Company, in line with the opinion obtained from a senior legal counsel, is of view that the said demands are not tenable.
(iii) The Commissioner, Central Excise and CGST, Pune -I, Commissionerate, through an order dated 7 September 2018, has confirmed the demand of service tax of I 53.87 crore and penalties of I 53.87 crore from the Company in relation to the penal interest/charges the Company received from the customers during the period 1 July 2012 to 31 March 2016. In addition, the Commissioner has demanded payment of interest on the service tax amount confirmed until the date the Company pays the service tax demanded, which as at 31 March 2021 amounted to I 59.54 crore. In accordance with legal advice, the Company filed an appeal on 26 December 2018 with the Customs, Excise and Service Tax Appellate Tribunal, Mumbai disputing the demands. The Company, in line with the opinion obtained from a legal counsel, is of view that the said demands are not tenable.
In addition, the Principal Commissioner, Central GST and Central Excise, Pune -I Commissionerate, through an order dated 30 December 2019, has confirmed the demand of service tax of I 40.22 crore and penalty thereon of I 4.02 crore on penal interest/charges received by the Company from the customers during the period 1 April 2016 to 30 June 2017. The Principal Commissioner has also demanded payment of interest on the service tax amount demanded, until the date the Company pays the demand, which as at 31 March 2021, amounted to I 25.74 crore. In accordance with legal advice, the Company filed an appeal on 28 August 2020 with the Customs, Excise and Service Tax Appellate Tribunal, Mumbai disputing the demands. The Company, in line with the opinion obtained from a legal counsel, is of view that the said demands are not tenable.
(iv) It is not practicable for the Company to estimate the timings of the cash flows, if any, in respect of the above pending resolution of the respective proceedings.
The Company actively manages its capital base to cover risks inherent to its business and meet the capital adequacy requirement of RBI. The adequacy of the Company''s capital is monitored using, among other measures, the regulations issued by RBI.
(i) Capital management Objective
The Company''s objective is to maintain appropriate levels of capital to support its business strategy taking into account the regulatory, economic and commercial environment. The Company aims to maintain a strong capital base to support the risks inherent to its business and growth strategies. The Company endeavours to maintain a higher capital base than the mandated regulatory capital at all times.
The Company''s assessment of capital requirement is aligned to its planned growth which forms part of an annual operating plan which is approved by the Board and also a long range strategy. These growth plans are aligned to assessment of risks - which include credit, liquidity and market.
The Company monitors its capital to risk-weighted assets ratio (CRAR) on a monthly basis through its assets liability management committee (ALCO).
The Company endeavours to maintain its CRAR higher than the mandated regulatory norm. Accordingly, increase in capital is planned well in advance to ensure adequate funding for its growth.
The Company''s dividend distribution policy states that subject to profit and other financial parameter as per applicable legal provision the Board shall endeavour to maintain a dividend payout in the range of 15% to 25% of profits after tax on standalone basis, to the extent possible.
The Company is also the provider of equity capital to its wholly owned subsidiaries and also provides them with non-equity capital where necessary. These investments are funded by the Company through its equity share capital and other equity which inter alia includes retained profits.
There have been no events after the reporting date that require adjustment/disclosure in these financial statements.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction in the principal (or most advantageous) market at the measurement date under current market conditions (i.e., an exit price), regardless of whether that price is directly observable or estimated using a valuation technique.
In order to show how fair values have been derived, financial instruments are classified based on a hierarchy of valuation techniques.
This note describes the fair value measurement of both financial and non-financial instruments.
The Company has an internal fair value assessment team which assesses the fair values of assets qualifying for fair valuation.
The Company''s valuation framework includes:
Benchmarking prices against observable market prices or other independent sources;
Development and validation of fair valuation models using model logic, inputs, outputs and adjustments.
Use of fair values as determined by the derivative counter parties.
These valuation models are subject to a process of due diligence and validation before they become operational and are continuously calibrated. These models are subject to approvals by various functions including risk, treasury and finance functions. Finance function is responsible for establishing procedures, governing valuation and ensuring fair values are in compliance with accounting standards.
Valuation methodologies adopted
Fair values of financial assets, other than those which are subsequently measured at amortised cost, have been arrived at as under:
Fair values of investments held for trading under FVTPL have been determined under level 1 (refer note no. 48) using quoted market prices of the underlying instruments;
Fair values of investments in unquoted equity instruments designated under FVOCI have been measured under level 3 (refer note no. 48) at fair value based on a discounted cash flow model.
Fair values of investment in quoted equity and other instruments designated under FVOCI have been determined under level 1 using quoted market prices of the underlying instruments;
Fair value of loans held under a business model that is achieved by both collecting contractual cash flows and partially selling the loans through partial assignment to willing buyers and which contain contractual terms that give rise on specified dates to cash flows that are solely payments of principal and interest are designated under FVOCI. The fair value of these loans have been determined under level 3.
Cross currency interest rate swap (CCIRS) held for the purpose of hedging foreign currency denominated External Commercial Borrowings are accounted as a cash flow hedge. CCIRS is being considered under Level 2 for fair valuation which is performed through discounted cash flow method by deriving future forward rates from published zero coupon yield curve. All future cashflows for both the paying and receiving legs in the swap contract are discounted to present value using these forward rates and accordingly arrived at the valuation for a point of time.
The Company has determined that the carrying values of cash and cash equivalents, bank balances, trade receivables, short term loans, floating rate loans, investments in equity instruments designated under FVOCI, trade payables, short term debts, borrowings, bank overdrafts and other current liabilities are a reasonable approximation of their fair value and hence their carrying values are deemed to be fair values.
The Company determines fair values of its financial instruments according to the following hierarchy:
Level 1- valuation based on quoted market price: financial instruments with quoted prices for identical instruments in active markets that the Company can access at the measurement date.
Level 2- valuation using observable inputs: financial instruments with quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in inactive markets and financial instruments valued using models where all significant inputs are observable.
Level 3- valuation technique with significant unobservable inputs: financial instruments valued using valuation techniques where one or more significant inputs are unobservable.
(a) Liquidity and funding risk
The Company''s ALCO monitors asset liability mismatches to ensure that there are no imbalances or excessive concentrations on either side of the Balance Sheet.
The Company maintains a judicious mix of borrowings from banks, money markets, foreign market, public deposits and other deposits and continues to diversify its sources of borrowings with an emphasis on longer tenor borrowings. This strategy of balancing varied sources of funds and long tenor borrowings along with liquidity buffer framework has helped the Company maintain a healthy asset liability position and interest rate during the financial year 2020-21 (FY2021) - the weighted average cost of borrowing was 7.87% versus 8.40% during the financial year 2019-20 (FY2020) despite highly uncertain market conditions. The overall borrowings including debt securities, deposits and subordinated debts stood at I 99,865.84 crore as of 31 March 2021. As part of strategy to granularise its overall borrowings, the Company has increased contribution of public and other deposits to overall borrowings from 21% in FY2020 to 26% in FY2021.
The Company continuously monitors liquidity in the market; and as a part of its ALM strategy, the Company maintains a liquidity buffer managed by an active investment desk to reduce this risk. In a normal economic scenario liquidity buffer of 5% to 8% is maintained by the Company. During the year, amindst pandemic, the Company maintained significantly higher amount of liquidity buffer to safeguard itself against any significant liquidity risk. The average liquidity buffer for FY2021 was I 15,144.04 crore. The Company maintained a liquidity buffer of I 12,168.89 crore as on 31 March 2021.
49 Risk management objectives and policies (Contd.)
RBI vide Circular No. RBI/2019-20/88 DOR.NBFC (PD) CC. No.102/03.10.001/2019-20 has issued with guidelines on liquidity risk framework for NBFCs. It covers various aspects of Liquidity risk management in NBFCs such as granular level classification of buckets in structural liquidity statement and tolerance limits thereupon, Liquidity risk management tools and principles. The Company has formulated a policy on Liquidity Risk Management Framework which covers Liquidity Risk Management Policy, Strategies and Practices, LCR, stress testing, contingency funding plan, Maturity profiling, Liquidity Risk Measurement - Stock approach, Currency Risk, Interest Rate Risk and Liquidity Risk Monitoring Tools.
RBI has mandated minimum liquidity coverage ratio (LCR) of 50% to be maintained by December 2020, which is to be gradually increased to 100% by December 2024. The Company has LCR of 270% as of 31 March 2021 as against the LCR of 50% mandated by RBI.
The Company focuses on funding the balance sheet through long term liabilities against relatively short tenor assets. This practice lends itself to having an inherent ALM advantage due to large EMI inflow emanating from short tenor businesses which puts it in an advantageous position for servicing of its near term obligations.
Market risk is the risk that the fair value of future cash flow of financial instruments will fluctuate due to changes in the market variables such as interest rates, foreign exchange rates and equity prices.
On investment book
The Company holds short duration investment portfolio and thus it has a minimum fair value change impact on its investment portfolio. The interest rate risk on the investment portfolio and corresponding fair value change impact is monitored using VaR and the parameters for monitoring the same are defined in its investment policy.
On assets and liabilities
Interest rate sensitivity on fixed and floating rate assets and liabilities with differing maturity profiles is measured by using the duration gap analysis. The same is computed monthly and sensitivity of the market value of equity assuming varied changes in interest rates are presented and monitored by ALCO.
The Company''s quoted equity investments carry a risk of change in prices. To manage its price risk arising from investments in equity securities, the Company periodically monitors the sectors it has invested in, performance of the investee companies, measures mark- to- market gains/losses and reviews the same.
The Company is exposed to foreign currency fluctuation risk for its foreign currency borrowing (FCB). The Company''s borrowings in foreign currency are governed by RBI guidelines (RBI master direction RBI/FED/2018-19/67 dated 26 March 2019 and updated from time to time) which requires entities raising ECB for an average maturity of less than 5 years to hedge minimum 70% of the its ECB exposure (Principal and Coupon). The Company hedges its entire ECB exposure for the full tenure of the ECB as per Board approved Interest Rate risk, Currency risk and Hedging policy.
The Company for its FCB, evaluates the foreign currency exchange rates, tenure of FCB and its fully hedged costs. The Company manages its currency risks by entering into derivatives contracts as hedge positions and the same are being governed through the Board approved Interest rate risk, Currency risk and hedging policy.
Hedging policy
The Company''s hedging policy only allows for effective hedging relationships to be considered as hedges as per the relevant Ind AS. Hedge effectiveness is determined at the inception of the hedge relationship, and through periodic prospective effectiveness assessments to ensure that an economic relationship exists between the hedged item and hedging instrument. The Company enters into hedge relationships where the critical terms of the hedging instrument match with the terms of the hedged item, and so a qualitative and quantitative assessment of effectiveness is performed.
Credit risk is the risk of financial loss arising out of a customer or counterparty failing to meet their repayment obligations to the Company. It has a diversified lending model and focuses on six broad categories viz: (i) consumer lending, (ii) SME lending, (iii) rural lending, (iv) mortgages, (v) loan against securities, and (vi) commercial lending. The Company assesses the credit quality of all financial instruments that are subject to credit risk.
Classification of financial assets under various stages
The Company classifies its financial assets in three stages having the following characteristics:
stage 1: unimpaired and without significant increase in credit risk since initial recognition on which a 12-month allowance for ECL is recognised;
stage 2: a significant increase in credit risk since initial recognition on which a lifetime ECL is recognised; and stage 3: objective evidence of impairment, and are therefore considered to be in default or otherwise credit impaired on which a lifetime ECL is recognised.
Unless identified at an earlier stage, all financial assets are deemed to have suffered a significant increase in credit risk when they are 30 days past due (DPD) or one instalment overdue on the reporting date and are accordingly transferred from stage 1 to stage 2. For stage 1 an ECL allowance is calculated based on a 12-month Point in Time (PIT) probability weighted probability of default (PD). For stage 2 and 3 assets a life time ECL is calculated based on a lifetime PD.
The Company offered One Time Restructing (OTR) on loans in accordance with RBI guidelines on ''Resolution Framework for COVID-19 related stress''. The Company has considered OTR as an early indicator of significant increase in credit risk and accordingly classified such loans as Stage 2.
Computation of impairment on financial instruments
The Company calculates impairment on financial instalments ECL approach prescribed under Ind AS 109 ''Financial instrument''. ECL uses three main components: PD, LGD (loss given default) and EAD (exposure at default) along with an adjustment considering forward macro economic conditions [refer note no.3.4(i) of significant accounting policies for methodology of computation of ECL].
The Company recaliberates components of its ECL model periodically by; (1) using the available incremental and recent information, except where these informations do not represent the future outcome, and (2) assessing changes to its statistical techniques for a granular estimation of ECL. The incremental information of the portfolio performance in FY2021 has not been considered appropriate for recaliberation of ECL model. This was due to the distortion caused by the pandemic induced lockdown resulting in very low economic activity, unforseen distortion of customers financial position and volitile repayment behaviour, leading to RBI announcing EMI moratorium and OTR. Given the temporary distortion of input variables, the Company has not recalibrated components of its ECL model.
Trade receivables and other financial assets were subjected to simplified ECL approach under Ind AS 109 ''Financial instruments''.
The nature of products across these broad product categories are either unsecured or secured by collateral. Although collateral is an important risk mitigant of credit risk, the Company''s practice is to lend on the basis of assessment of the customer''s ability to repay rather than placing primary reliance on collateral. Based on the nature of product and the Company''s assessment of the customer''s credit risk, a loan may be offered with suitable collateral. Depending on its form, collateral can have a significant financial effect in mitigating the Company''s credit risk.
The Company periodically monitors the market value of collateral and evaluates its exposure and loan to value metrics for high risk customers. The Company exercises its right of repossession across all secured products and primarily in its two wheeler and three wheeler financing business. It also resorts to invoking its right under the SARFAESI Act and other judicial remedies available against its mortgages and commercial lending business. The repossessed assets are either sold through auction or released to delinquent customers in case they come forward to settle their dues. For its loan against securities business, the Company recoups shortfall in value of securities through part recall of loans or additional securities from the customer, or sale of underlying securities. The Company does not record repossessed assets on its Balance Sheet as noncurrent assets held for sale.
The Company continues to grow its granularity of its Loans portfolio by expanding its geographic reach in order to reduce geographic concentrations while continually calibrating its product mix across its six categories of lending mentioned above.
Measurement uncertainty and sensitivity analysis of ECL estimates
Expected credit loss impairment allowances recognised in the financial statements reflect the effect of a range of possible economic outcomes, calculated on a probability-weighted basis, based on the economic scenarios described below. The recognition and measurement of expected credit losses (''ECL'') involves the use of estimation. It is necessary to formulate multiple forward-looking economic forecasts and its impact as an integral part of ECL model.
The global as well as the Indian economy has passed through a difficult phase in FY2021. The macro numbers have been a reflection of the impact which COVID-19 had on the industry, prices, employment and economy as a whole. The Company has adopted the use of three scenarios, representative of its view of forecast economic conditions, required to calculate unbiased expected loss. They represent a most likely outcome i.e. central scenario and two less likely outer scenarios referred to as the Upside and Downside scenarios. The Company has assigned a 10% probability to the two outer scenarios, while the Central scenario has been assigned an 80% probability. These weights are deemed appropriate for the unbiased estimation of impact of macro factors on ECL. The key scenario assumptions are used keeping in mind external forecasts and management estimates which ensure that the scenarios are unbiased.
The Company has used multiple economic factors and tested their correlations with past loss trends witnessed. The economic factors tested were GDP growth rates, growth of bank credit, wholesale price index (WPI), consumer price index (CPI), industrial production index, unemployment rate, crude oil prices and policy interest rates. Based on past correlation trends, CPI and unemployment rate were the two factors with acceptable correlation with past loss trends which were in line with Management views on the drivers of portfolio trends. These factors were assigned appropriate weights to measure ECL in forecast economic conditions.
During the year, the macro variables have been tested for their resilience in the difficult operating conditions of lockdown, loss of business on account of COVID-19 scare and social distancing norms. The first half of the year saw the maximum stress on the numbers with GDP growth turning negative to -23.9% unemployment rate touching a peak of 23%, retail inflation touching a high of 7.22% and IIP turning negative to the extent of over 57%. Almost all the macro-economic fundamentals have passed through the period of immense stress during the year. It was only after the first half year, that some of the economic fundamentals started showing signs of recovery.
The Central Scenario taken by the Company takes into account the stress and the downside risk prevalent during most part of the year, by capturing the macro variables numbers of the most difficult period of COVID-19 pandemic.
Amongst the list of macro indicators, unemployment and inflation are the two variables which are very critical from an income and expenditure perspective. Unemployment has a direct relation with the income levels and thus the growth of the economy from the expenditure side, inflation and inflationary expectations affect the disposable income of the people. Both the macro-variables directly and indirectly impact the disposable income of the people, which eventually drives the economy.
For unemployment, the Company has considered data published by a leading business information (BI) company engaged in monitoring of Indian economic indicators. The Unemployment rate, which averaged around 7.6% for FY20 jumped to 18% in the first quarter of FY21 and peaked at over 23% in April 2020. It continued to stay at elevated levels during the first half of the year i.e., April 2020 to September 2020 averaging at 13%. In the second half of FY2021, which can be construed as months of recovery and account for recovery in industrial production etc, the average unemployment rate numbers have moderated to 7.1%, with unemployment rate at 6.5% as of March 2021.
While formulating the Central Scenario, the Company has considered the peak unemployment rate of around 18% in Q1 FY2021 and assumed it to moderate thereafter.
For the downside scenario, while the Company believes that the downside risks might have passed, the rate of improvement may be slower and, therefore factored in a slow recovery rate. Accordingly, starting with a peak of 18% in March 2021 quarter, the downside scenario assumes it to fall from the peak but continue to stay at double-digit levels till March 2022.
For the upside scenario, the Company acknowledges various surveys and studies indicating improving employment situation as also industrial recovery. However, it maintained a caution stance that the unemployment levels after reaching the peak in March 2021 quarter, though may improve to a best case of 4% by the end of March 2022 but may come back to an historical (excluding COVID period) 4 year average of 6.45%. The unemployment numbers as such captured the impact of lockdown, migration of labour and various other restrictions hitting the overall employment environment.
Similarly, CPI which hovered between 3.50% to 5.84% for quarter ending September 2019 and December 2019, went to a high of 6.53% in Q1 FY2021, 6.96% in Q2 FY2021 and 6.38% in Q3 FY2021 respectively. While the Central Scenario assumed by the company considers the signs of easing inflation in Q4 FY2021 owing to improvement on the supply side, but it also acknowledges the COVID-19 impact, which still prevails in the economy. Accordingly, due to multiplicity of factors, Inflation is expected to remain moderately high till the end of this year. The CPI numbers as such reflects the stress impact due to lockdown and disruption in supply chains and increased prices for food and beverages.
For the downside scenario, the company believes that the inflation risk still remains and, therefore, assumes the Retail inflation to marginally see a uptick due to demand-supply imbalances and hit a peak of over 9% by the end of next year, before easing off to the average of pre-COVID period in the three-year time horizon.
For the upside scenario, we believe that there would be certain factors which might come into play viz, base effect, higher food grain production, better supply chain management and improving trade scenario etc, and, therefore, inflation may see easing to a minimum of over 2% before averaging back to the pre-COVID levels.
Risk management amidst COVID-19
The unprecedented health scare caused by COVID-19 which led to a countrywide lockdown in month of March 2020 and continued till May 2020 followed by gradual unlocking from June 2020, had a varying impact on different sectors of the economy. Salaried individuals had to contend with a scenario of reduced income and/or job losses. Corporates, SMEs and MSMEs struggled on account of reduced economic activities and business rhythm that was not efficient due to severe disruption in both demand and supply. All these lead to major cash flow constraints and erosion in the asset value, though temporary in nature. These developments severely tested risk management frameworks across the financial sector.
On 27 March 2020, the RBI, in order to provide relief on debt servicing obligations, permitted financial institutions to offer moratorium to their borrowers on instalments falling due between 1 March 2020 to 31 May 2020 which was further extended to 31 August 2020 vide RBI''s order dated 23 May 2020. With uncertainties caused by COVID-19 pandemic including the pace of easing of the lockdown restrictions, the time needed to restart the economy and attaining some level of normalcy, the credit performance and repayment behaviour of the customers was distorted and was monitored closely. The Company has witnessed significant movement of portfolio from stage 1 to stage 2 and stage 3 post moratorium period which ended on 31 August 2020 and accordingly accounted for higher credit cost in FY2021.
The Company observed elevated default on payment of instalments and collection related constraints which resulted in much higher credit costs in the current year compared to previous year. This was dispite the Company making requisite investment to deepen its collections infrastructure to control its credit costs by enhancing collection efforts, tightening in its risk underwriting policies as well as COVID-19 and macro overlay provision of I 850 crore in FY2020.
During the year, the Company, as a matter of prudence, has written off principal and interest amounts (including capitalised interest) of I 2,497 crore and I 482 crore respectively, of potentially unrecoverable loans, which were under moratorium, by utilising the available expected credit loss provision (including management overlay). The Company has carried a contingency provision of I 672 crore as on 31 March 2021.
Operational risk is the risk arising from inadequate or failed internal processes, people or systems, or from external events. The Company manages operational risks through comprehensive internal control systems and procedures laid down around various key activities in the Company viz. loan acquisition, customer service, IT operations, finance function etc. Internal Audit also conducts a detailed review of all the functions at least once a year, this helps to identify process gaps on timely basis. Further IT and Operations have a dedicated compliance and control units within the function who on continuous basis review internal processes. This enables the Management to evaluate key areas of operational risks and the process to adequately mitigate them on an ongoing basis.
The Company has put in place a robust Disaster Recovery (DR) plan and Business Continuity Plan (BCP) to ensure continuity of operations including services to customers, if any eventuality is to happen such as natural disasters, technological outage etc. Robust periodic testing is carried, and results are analysed to address gaps in the framework, if any. DR and BCP audits are conducted on a periodical basis to provide assurance regarding the effectiveness of the Company''s readiness.
50 Employee stock option plan
The Board of Directors at its meeting held on 14 October 2009, approved an issue of stock options up to a maximum of 5% of the then issued equity capital of the Company aggregating to 1,829,803 equity shares of the face value of I 10 each in a manner provided in the SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines 1999 subject to the approval of the shareholders under Section 81(1 A) of the Companies Act, 1956. The shareholders of the Company vide their special resolution passed through postal ballot on 15 December 2009 approved the issue of equity shares of the Company under one or more Employee Stock Option Scheme(s). The shareholders, at the Annual General Meeting held on 16 July 2014, approved an additional issue of 677,313 stock options i.e. from 1,829,803 to 2,507,116 options of the face value of I 10 each under the stock options scheme of the Company i.e. Employee Stock Option Plan 2009.
Pursuant to the sub-division of each equity share of face value of I 10 into five equity shares of face value of I 2 on 10 September 2016 and allotment of bonus equity share in the proportion of one equity share of face value of I 2 for every one equity share on 14 September 2016, the aggregate number of equity shares which would be available for future grants under the Employee Stock Option Plan, 2009 were adjusted from 2,507,116 equity shares of face value of I 10 to 25,071,160 equity shares of face value of I 2 each.
Further, vide the Special Resolution passed by the members of the Company through postal ballot on 19 April 2021, the Company has approved the increase in the aforesaid limit of options by 10,000,000 options. The maximum limit under the scheme now stand revised from 25,071,160 options (adjusted for sub-division and bonus) to 35,071,160 options.
Vesting period of the options issued under the ESOP Scheme is on a straight line basis over the period of 4 years with the vesting condition of continuous employement with the Company or the Group except in case of death and retirement where the vesting would happen immediately.
(II) Exchange traded interest rate derivatives
The Company has not traded in exchange traded interest rate derivative during the current and previous year.
(III) Disclosures on risk exposure in derivatives(III) Details of financing of Parent Company products
The Company does not have any financing of Parent Company products during the current and previous year.
(IV) Details of Single Borrower Limit (SGL)/Group Borrower Limit (GBL) exceeded
The Company has not exceeded the prudential exposure limits during the current and previous year.
(V) Unsecured advances
Gross loans and advances includes unsecured advances of I 62,883.76 crore (Previous year I 62,076.36 crore) There are no advances secured against intangible assets.
The Liquidity Coverage Ratio (LCR) is one of the key parameters closely monitored by RBI to enable a more resilient financial sector. The objective of the LCR is to promote an environment wherein balance sheet carry a strong liquidity for short term cash flow requirements. To ensure strong liquidity NBFCs are required to maintain adequate pool of unencumbered High-Quality Liquid Assets (HQLA) which can be easily converted into cash to meet their stressed liquidity needs for 30 calendar days. The LCR is expected to improve the ability of financial sector to absorb the shocks arising from financial and/or economic stress, thus reducing the risk of spill over from financial sector to real economy.
The Liquidity Risk Management of the Company is managed by the Asset Liability Committee (ALCO) under the governance of Board approved Liquidity Risk Framework and Asset Liability Management policy. The LCR levels for the balance sheet date is derived by arriving the stressed expected cash inflow and outflow for the next calendar month.
To compute stressed cash outflow, all expected and contracted cash outflows are considered by applying a stress of 15%. Similarly, inflows for the Company is arrived at by considering all expected and contracted inflows by applying a haircut of 25%.
Company for purpose of computing outflows, have considered: (1) all the contractual debt repayments, (2) committed credit facilities contracted with the subsidiaries and customers, and (3) other expected or contracted cash outflows. Inflows comprises of: (1) expected receipt from all performing loans, and (2) liquid investment which are unencumbered and have not been considered as part of HQLA.
For the purpose of HQLA the Company considers: (1) Unencumbered government securities, (2) Cash and Bank balances and (3) Pledged Government Securities for purpose of Statutory Liquid Ratio (SLR) with haircut of 20%.
The LCR is computed by dividing the stock of HQLA by its total net cash outflows over one-month stress period. LCR guidelines have become effective from 1 December 2020, requiring NBFCs to maintain minimum LCR of 50%, LCR is gradually required to be increased to 100% by 1 December 2024. NBFCs are required to maintain LCR of 50% as on 31 March 2021.
56 In accordance with the instructions in the RBI circular dated 7 April 2021, all lending institutions shall refund/adjust ''interest on interest'' to all borrowers including those who had availed working capital facilities during the moratorium period, irrespective of whether moratorium had been fully or partially availed, or not availed. Pursuant to these instructions, the Indian Banks Association (IBA) in consultation with other industry participants/bodies published
the methodology for calculation of the amount of such ''interest on interest''. Accordingly, the Company has made a provision of I 2.53 crore.
57 Amounts less than I 50,000 have been shown at actuals against respective line items statutorily required to be disclosed.
Mar 31, 2019
Notes to standalone financial statements for the year ended 31 March 2019 34 Fair value measurement
i) Financial instruments by category
|
(Rs. In Crore) |
|||||||||
|
31 March 2019 |
31 March 2018 |
1 April 2017 |
|||||||
|
Particulars |
FVTPL |
FVTOCI |
Amortised cost |
FVTPL |
FVTOCI |
Amortised cost |
FVTPL |
FVTOCI |
Amortised cost |
|
Financial assets |
|||||||||
|
Investments |
|||||||||
|
Bonds and debentures |
- |
- |
750.65 |
- |
- |
637.06 |
- |
- |
465.42 |
|
Liquid mutual funds |
9.22 |
- |
- |
13.53 |
- |
- |
18.65 |
- |
- |
|
Commercial papers |
- |
- |
- |
- |
- |
- |
- |
- |
24.47 |
|
Certificate of Deposit |
- |
- |
- |
- |
- |
- |
- |
- |
50.00 |
|
Trade receivables |
- |
- |
0.29 |
- |
- |
3.96 |
- |
- |
0.63 |
|
Loans |
- |
- |
25.85 |
- |
- |
- |
- |
- |
- |
|
Other financial assets |
- |
- |
50.90 |
- |
- |
44.13 |
- |
- |
39.74 |
|
Cash and cash equivalents |
- |
- |
59.97 |
- |
- |
12.11 |
- |
- |
1.30 |
|
Other bank balances |
- |
- |
0.30 |
- |
- |
0.29 |
- |
- |
0.25 |
|
Total financial assets |
9.22 |
- |
887.96 |
13.53 |
- |
697.55 |
18.65 |
- |
581.81 |
|
Financial liabilities |
|||||||||
|
Trade payables |
- |
- |
4.69 |
- |
- |
2.85 |
- |
- |
1.54 |
|
Other financial liabilities |
- |
- |
24.42 |
- |
- |
12.54 |
- |
- |
9.99 |
|
Total financial liabilities |
- |
- |
29.11 |
- |
- |
15.39 |
- |
- |
11.53 |
ii) Fair value hierarchy
This section explains the basis of estimates made in determining the fair values of the financial instruments that are
(a) recognised and measured at fair value and
(b) measured at amortised cost and for which fair values are disclosed in the financial statements. To provide an indication about the reliability of the inputs used in determining fair value, the Company has classified its financial instruments into the three levels prescribed under the Accounting Standard, which are explained herein below.
Financial assets measured at fair value - recurring fair value measurements at 31 March 2019
|
Rs. In Crore |
|||||
|
Particulars |
Notes |
Level 1 |
Level 2 |
Level 3 |
Total |
|
Financial investments at FVTPL |
|||||
|
Liquid mutual funds |
7B |
9.22 |
- |
- |
9.22 |
|
Total financial assets |
9.22 |
- |
- |
9.22 |
|
|
Assets disclosed at fair value - at 31 March 2019 |
|||||
|
Rs. In Crore |
|||||
|
Particulars |
Notes |
Level 1 |
Level 2 |
Level 3 |
Total |
|
Investment property |
10 |
- |
39.29 |
- |
39.29 |
|
Financial assets measured at fair value - recurring fair value measurements at 31 March 2018 |
|||||
|
Rs. In Crore |
|||||
|
Particulars |
Notes |
Level 1 |
Level 2 |
Level 3 |
Total |
|
Financial investments at FVTPL |
|||||
|
Liquid mutual funds |
7B |
13.53 |
- |
13.53 |
|
|
Total financial assets |
13.53 |
- |
13.53 |
||
|
Financial assets which are measured at amortised cost for which fair values as at 31 March 2018 are disclosed below. |
|||||
|
Rs. In Crore |
|||||
|
Particulars |
Notes |
Level 1 |
Level 2 |
Level 3 |
Total |
|
Bonds and debentures |
7B |
637.26 |
- |
637.26 |
|
|
Commercial papers |
7B |
- |
- |
||
|
Total financial assets |
637.26 |
- |
637.26 |
||
|
Assets disclosed at fair value - at 31 March 2018 |
|||||
|
Rs. In Crore |
|||||
|
Particulars |
Notes |
Level 1 |
Level 2 |
Level 3 |
Total |
|
Investment property |
10 |
- |
38.06 |
- |
38.06 |
|
Financial assets measured at fair value - recurring fair value measurements at 1 April 2017 |
|||||
|
Rs. In Crore |
|||||
|
Particulars |
Notes |
Level 1 |
Level 2 |
Level 3 |
Total |
|
Financial investments at FVTPL |
|||||
|
Liquid mutual funds |
7B |
18.65 |
- |
18.65 |
|
|
Total financial assets |
18.65 |
- |
18.65 |
Financial assets which are measured at amortised cost for which fair values as at 31 March 2019 are disclosed below.
|
Particulars |
Notes |
Level 1 |
Level 2 |
Level 3 |
Rs. In Crore Total |
|
Bonds and debentures |
7B |
749.74 |
- |
- |
749.74 |
|
Commercial papers |
7B |
- |
- |
- |
- |
|
Total financial assets |
749.74 |
- |
- |
749.74 |
Financial assets which are measured at amortised cost for which fair values as at 1 April 2017 are disclosed below.
|
Rs. In Crore |
|||||
|
Particulars |
Notes |
Level 1 |
Level 2 |
Level 3 |
Total |
|
Bonds and debentures |
7B |
474.53 |
- |
474.53 |
|
|
Commercial papers |
7B |
- |
24.47 |
- |
24.47 |
|
Certificate of deposit |
7B |
- |
50.00 |
- |
50.00 |
|
Total financial assets |
474.53 |
74.47 |
- |
547.00 |
Assets disclosed at fair value - at 1 April 2017
|
Particulars |
Notes |
Level 1 |
Level 2 |
Level 3 |
Rs. In Crore Total |
|
Investment property |
10 |
- |
35.95 |
- |
35.95 |
Valuation principles
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction in the principal (or most advantageous) market at the measurement date under current market conditions (i.e., an exit price), regardless of whether that price is directly observable or estimated using a valuation technique.
In order to show how fair values have been derived, financial instruments are classified based on a hierarchy of valuation techniques, as explained below
Level 1: Level 1 hierarchy includes financial instruments measured using quoted prices in active markets. Quotes would include rates/values/valuation references published periodically by BSE, NSE etc. basis which trades take place in a linked or unlinked active market. This includes traded bonds and mutual funds, as the case may be, that have quoted price/rate/value.
Level 2: The fair value of financial instruments that are not traded in an active market are determined using valuation techniques which maximise the use of observable market data (either directly as prices or indirectly derived from prices) and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.
Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. This is the case for unlisted equity securities, contingent consideration and indemnification asset included in level 3.
Valuation techniques used to determine fair value
Valuation techniques used to determine fair value include
⢠Open ended mutual funds and certain bonds and debentures at NAV''s/rates declared and/or quoted
⢠Close ended mutual funds at NAV''s declared by AMFI
⢠For other bonds and debentures values with references to prevailing yields to maturity matching tenures, quoted on sites of credible organisation such as FIMMDA (Fixed Income Money Market and Derivative Association of India)
⢠Commercial papers and certificate of deposits, being short term maturity papers, amortised cost is assumed to be the fair value
iii) Fair value of financial assets and liabilities measured at amortised cost
|
(Rs. In Crore) |
||||||
|
31 March 2019 |
31 March 2018 |
1 April 2017 |
||||
|
Particulars |
Carrying Amount |
Fair value |
Carrying Amount |
Fair value |
Carrying Amount |
Fair value |
|
Financial assets |
||||||
|
Investments |
||||||
|
Bonds and debentures |
750.65 |
749.74 |
637.06 |
637.26 |
465.42 |
474.53 |
|
Total financial assets |
750.65 |
749.74 |
637.06 |
637.26 |
465.42 |
474.53 |
The carrying amounts of commercial papers, certificates of deposits, trade receivables, trade payables, other financial assets/liabilities, loans and cash and cash equivalents are considered to be the same as their fair values, due to their short-term nature.
35 Financial risk management
The Company has operations in India. Whilst risk is inherent in the Company''s activities, it is managed through a risk management framework, including ongoing identification, measurement and monitoring subject to risk limits and other controls. The Company''s activities expose it to credit risk, liquidity risk and market risk.
This note explains the sources of risk which the Company is exposed to and how the entity manages the risk
|
Risk |
Exposure arising from |
Measurement Management |
|
|
Credit Risk |
Cash and cash equivalents, financial assets measured at amortised cost and fair value through profit or loss Trade receivables |
Credit ratinqs Credit Limit & Aqinq analysis |
Settinq limits on the amount of acceptable risk, diversification of investment limits, monitorinq of counterparties basis credit ratinq No. of overdue days, monitorinq of credit limits |
|
Liquidity Risk |
Other liabilities |
Maturity analysis |
Maintaininq sufficient cash/cash equivalents and marketable securities |
The Board of Directors provide guiding principles for overall risk management, as well as policies covering specific areas, such as, credit risk, liquidity risk, and investment of available funds. The Company''s risk management is carried out by its Risk Management Committee as per such policies approved by the Board of Directors. Accordingly, Company''s Risk Management Committee identifies, evaluates and manages financial risks
A. Credit risk
Credit risk refers to the risk that a counterparty may default on its contractual obligations leading to a financial loss to the Company. Credit risk primarily arises from cash equivalents, financial assets measured at amortised cost, financial assets measured at fair value through profit or loss and trade receivables.
Credit Risk Management
In regard to Trade receivables, which are typically unsecured, credit risk is managed through credit approvals, establishing credit and exposure limits and continuously monitoring the credit worthiness of customers to whom credit is extended (substantially through Debt securities) in the normal course of business.
For other financial assets the Company has an investment policy which allows the Company to invest only with counterparties having a credit rating equal to or above AA and P1 . The Company reviews the creditworthiness of these counterparties on an on-going basis. Counter party limits maybe updated as and when required, subject to approval of Board of Directors.
B. Liquidity Risk
The Company''s principal sources of liquidity are ''cash and cash equivalents'' and cash flows that are generated from operations. The Company believes that its working capital is sufficient to meet the financial liabilities within maturity period.
C. Other risk (Market Risk)
The Company has deployed its surplus funds in debt instruments (including through mutual funds) and money market instruments. The Company is exposed to price risk on such investments; which arises on account of movement in interest rates, liquidity and credit quality of underlying securities.
The Company has invested its surplus funds primarily in debt instruments of its subsidiary with CRISIL AAA & STABLE A1 rating and thus the Company does not have significant risk exposure here.
36 Capital management
a) Objectives, policies and processes of capital management
The Company is cash surplus and has only equity capital. The Company has been recognised as a Core Investment Company (CIC) by the Reserve Bank of India (RBI) in terms of the regulations governing Non-Banking Financial Companies and is not exposed to any regulatory imposed capital requirements.
The cash surpluses are currently invested in income generating debt instruments (including through mutual funds) and money market instruments depending on economic conditions in line with the CIC guidelines set out by the RBI and investment policy set by the Management. Safety of capital is of prime importance to ensure availability of capital for operations. Investment objective is to provide safety and adequate return on the surplus funds.
|
The Company does not have any borrowings. |
(Rs. In Crore) |
|
|
As at 31 March |
||
|
Particulars |
2019 |
2018 |
|
Equity |
3,160.91 |
2,879.75 |
|
Less: Tangible and other assets |
106.76 |
81.35 |
|
Working capital |
108.67 |
31.92 |
|
Deferrred tax assets (net) |
8.08 |
8.36 |
|
Investments in subsidiaries and joint venture |
2,177.53 |
2,107.53 |
|
Investments in debt and similar investments |
759.87 |
650.59 |
No changes were made in the objectives, policies and processes of capital management during the year. b) Dividends distributed and proposed
|
(Rs. In Crore) |
||
|
Particulars |
As at 31 March |
|
|
2019 |
2018 |
|
|
Dividends recognised in the financial statements Final dividend for the year ended 31 March 2018 of ? 1.75 (31 March 2017 - ? 1.75) per equity share, declared and paid |
27.85 |
27.85 |
|
Dividends not recognised at the end of the reporting period Directors have recommended the payment of a final dividend of ? 2.50 per equity share (31 March 2018 - ? 1.75). This proposed dividend is subject to the approval of shareholders in the ensuing annual general meeting. |
39.79 |
27.85 |
|
37 Maturity analysis of assets and liabilities |
|||||||||
|
(Rs. In Crore) |
|||||||||
|
As at 31 March 2019 |
As at 31 March 2018 |
As at 1 April 2017 |
|||||||
|
Particulars |
Within 12 months |
After 12 months |
Total |
Within 12 months |
After 12 months |
Total |
Within 12 months |
After 12 months |
Total |
|
Assets |
|||||||||
|
Financial assets |
|||||||||
|
Cash and cash equivalents |
59.97 |
- |
59.97 |
12.11 |
- |
12.11 |
1.30 |
- |
1.30 |
|
Bank balance other than cash and cash equivalents |
- |
0.30 |
0.30 |
- |
0.29 |
0.29 |
- |
0.25 |
0.25 |
|
Trade receivables |
0.29 |
- |
0.29 |
3.96 |
- |
3.96 |
0.63 |
- |
0.63 |
|
Loans |
- |
25.85 |
25.85 |
- |
- |
- |
- |
- |
- |
|
Investment in subsidiaries and a joint venture |
- |
2,177.53 |
2,177.53 |
- |
2,107.53 |
2,107.53 |
- |
2,107.53 |
2,107.53 |
|
Other investments |
149.69 |
610.18 |
759.87 |
28.61 |
621.98 |
650.59 |
182.25 |
376.29 |
558.54 |
|
Other financial assets |
46.05 |
4.85 |
50.90 |
39.80 |
4.33 |
44.13 |
35.41 |
4.33 |
39.74 |
|
Non-financial assets |
|||||||||
|
Current tax assets (net) |
- |
20.39 |
20.39 |
- |
14.71 |
14.71 |
- |
10.17 |
10.17 |
|
Deferred tax assets (net) |
- |
8.08 |
8.08 |
- |
8.36 |
8.36 |
- |
6.21 |
6.21 |
|
Investment property |
- |
5.63 |
5.63 |
- |
5.76 |
5.76 |
- |
5.89 |
5.89 |
|
Property, plant and equipment |
- |
67.79 |
67.79 |
- |
67.40 |
67.40 |
- |
68.06 |
68.06 |
|
Capital work-in-proqress |
- |
33.34 |
33.34 |
- |
8.19 |
8.19 |
- |
1.19 |
1.19 |
|
Other non-financial assets |
1.42 |
7.54 |
8.96 |
0.37 |
3.33 |
3.70 |
0.47 |
4.66 |
5.13 |
|
Total |
257.42 |
2,961.48 |
3,218.90 |
84.85 |
2,841.88 |
2,926.73 |
220.06 |
2,584.58 |
2,804.64 |
|
Liabilities |
|||||||||
|
Financial liabilities |
|||||||||
|
Trade payables |
4.69 |
- |
4.69 |
2.85 |
- |
2.85 |
1.54 |
- |
1.54 |
|
Other financial liabilities |
21.98 |
2.44 |
24.42 |
10.38 |
2.16 |
12.54 |
7.87 |
2.12 |
9.99 |
|
Non-financial liabilities |
|||||||||
|
Current tax liabilities (net) |
- |
17.41 |
17.41 |
- |
17.41 |
17.41 |
- |
17.41 |
17.41 |
|
Provisions |
3.08 |
6.78 |
9.86 |
2.74 |
8.50 |
11.24 |
0.79 |
8.69 |
9.48 |
|
Other non-financial liabilities |
1.61 |
- |
1.61 |
2.94 |
- |
2.94 |
0.20 |
- |
0.20 |
|
Total |
31.36 |
26.63 |
57.99 |
18.91 |
28.07 |
46.98 |
10.40 |
28.22 |
38.62 |
|
Net |
226.06 |
2,934.85 |
3,160.91 |
65.94 |
2,813.81 |
2,879.75 |
209.66 |
2,556.36 |
2,766.02 |
38 Share-based payments (Employee option plan)
The Company has established employees stock options plan, 2018 (ESOP Scheme) for its employees pursuant to the special resolution passed by shareholders at the annual general meeting held on 19 July 2018.The employee stock option plan is designed to provide incentives to the employees of the Company to deliver long-term returns and is an equity settled plan. The ESOP Scheme is administered by the Compensation committee of the Board. Participation in the plan is at the Compensation committee''s discretion and no individual has a contractual right to participate in the plan or to receive any guaranteed benefits. Options granted under ESOP scheme would vest in not less than one year and not more than four years from the date of grant of the options. The Compensation committee of the Company has approved grant with related vesting conditions. Vesting of the options would be subject to continuous employment with the Company and hence the options would vest with passage of time. In addition to this, the Compensation committee may also specify certain performance parameters subject to which the options would vest. Such options would vest when the performance parameters are met
Once vested, the options remain exercisable for a period of one year. Options granted under the plan are for no consideration and carry no dividend or voting rights. On exercise, each option is convertible into one equity share Set out below is a summary of options granted under the plan:
|
Particulars |
31 March 2019 Number of options |
|
Opening balance |
|
|
Granted during the year |
94,397 |
|
Exercised during the year |
|
|
Forfeited during the year |
|
|
Closing balance |
94,397 |
|
Vested and exercisable |
No options expired during the year Fair value of options granted Tranche I
The fair value at grant date of options granted on 19 July 2018 was Rs. 1,520 per option. The fair value at grant date is determined using the Black Scholes model which takes into account the exercise price, the term of the option, the share price at grant date and expected volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of the option.
Tranche II
The fair value at grant date of options granted on 29 January 2019 was Rs. 1,434 per option. The fair value at grant date is determined using the Black Scholes model which takes into account the exercise price, the term of the option, the share price at grant date and expected volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of the option.
The model inputs for options granted during the year ended 31 March 2019 included
|
|
Particulars |
Tranche I |
Tranche II |
|
a) |
options are granted for no consideration and vesting period is |
4 years |
2 to 4 years |
|
b) |
exercise price |
Rs. 6,365.70 per option |
Rs 6,050.90 per option |
|
c) |
grant date |
19 July 2018 |
29 January 2019 |
|
d) |
expiry date |
18 July 2026 |
28 January 2027 |
|
e) |
share price at grant date |
? 6,296.90 |
? 6,233.05 |
|
f) |
expected price volatility of the Company''s shares |
29.65% |
30.50% |
|
g) |
expected dividend yield |
0.03% |
0.03% |
|
h) |
risk-free interest rate |
8.07% |
7.45% |
The expected price volatility is based on the historic volatility (based on the remaining life of the options), adjusted for any expected changes to future volatility due to publicly available information.
39 On the basis of information requested from vendors with regards to their registration (filing of Memorandum) under ''The Micro, Small and Medium Enterprises Development Act, 2006. (27 of 2006)'' and in view of the terms of payments not exceeding 45 days, which has been promptly paid, no liability exists as at 31 March 2019, 31 March 2018 and
1 April 2017 and hence no disclosures have been made in this regard.
40 Standards issued but not effective
Ind AS 116 Leases was notified on 30 March 2019 and it replaces Ind AS 17 Leases, including appendices thereto.
Ind AS 116 is effective for annual periods beginning on or after 1 April 2019. Ind AS 116 sets out the principles for the recognition, measurement, presentation and disclosure of leases and requires lessees to account for all leases under a single on-balance sheet model similar to the accounting for finance leases under Ind AS 17 The standard includes two recognition exemptions for lessees - leases of ''low-value'' assets (e.g., personal computers) and short-term leases (i.e., leases with a lease term of 12 months or less). At the commencement date of a lease, a lessee will recognise a liability to make lease payments (i.e., the lease liability) and an asset representing the right to use the underlying asset during the lease term (i.e., the right-of-use asset). Lessees will be required to separately recognise the interest expense on the lease liability and the depreciation expense on the right-of-use asset. As the Company does not have any material leases, therefore the adoption of this standard is not likely to have a material impact in its Standalone
Financial Statements.
41 Events after reporting date
There have been no events after the reporting date that require disclosure in these financial statements
42 Miscellaneous
Amounts less than Rs. 50,000 have been shown at actual against respective line items statutorily required to be disclosed.
|
As per our report of even date |
On behalf of the Board of Directors |
|
|
For SRBC & CO LLP |
Rahul Bajaj |
|
|
ICAI Firm Registration Number: 324982E/E300003 |
Chairman |
|
|
Chartered Accountants |
||
|
S Sreenivasan |
Sanjiv Bajaj |
|
|
per Arvind Sethi |
Chief Financial Officer |
Managing Director & CEO |
|
Partner |
||
|
Membership Number: 89802 |
Sonal R Tiwari |
Nanoo Pamnani |
|
Pune: 16 May 2019 |
Company Secretary |
Chairman - Audit Committee |
Mar 31, 2018
3) Property, plant and equipment and depreciation/amortization
A. Property, plant and equipment
i) Property, plant and equipment, capital work in progress except land are carried at cost of acquisition or construction as the case may be, less accumulated depreciation and amortization. Land is carried at cost 2 Summary of significant accounting policies followed by the Company (Contd.)
of acquisition. Cost comprises of the purchase price including import duties and non-refundable taxes, and directly attributable expenses incurred to bring the asset to the location and condition necessary for it to be capable of being operated in the manner intended by the Management. The Company identifies and determines cost of each component/part of the asset separately, if the component/part has a cost which is significant to the total cost of the asset and has useful life that is materially different from that of the remaining asset. When significant parts of property, plant and equipment are required to be replaced at intervals, the Company depreciates them separately based on their specific useful lives. Likewise, when a major inspection is performed, its cost is recognized in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognized in the Statement of Profit and Loss as incurred.
ii) Gains or losses arising from derecognition of property, plant and equipment are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the Statement of Profit and Loss when the asset is derecognized.
iii) Land and buildings acquired/constructed, not intended to be used in the operations of the Company are categorized as investment property under Investments.
B. Depreciation and amortization
(a) Leasehold land
Premium on leasehold land is amortized over the period of lease.
(b) On other tangible assets
i. a. Depreciation is provided on the straight line method over the useful lives of the assets.
b. Where a significant component (in terms of cost) of an asset has an economic useful life shorter than that of its corresponding asset, the component is depreciated over such shorter life.
c. Useful life of assets are determined by the Management by internal technical assessments.
iii. Depreciation on additions is being provided on pro rata basis from the month of such additions.
iv. Depreciation on assets sold, discarded or demolished during the year is being provided upto the month in which such assets are sold, discarded or demolished.
v. The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted prospectively, if appropriate.
C. Impairment of assets
An assessment is done at each Balance Sheet date as to whether there are any indications that an asset may be impaired. If any such indication exists, an estimate of the recoverable amount of the asset/Cash Generating Unit (CGU) is made. Where the carrying value of the asset/CGU exceeds the recoverable amount, the carrying value is written down to the recoverable amount.
2 Summary of significant accounting policies followed by the Company (Contd.)
4) Investments
a) Current investments representing debt securities with a maturity less than 1 year and those intended to be held for a period less than 1 year from the date on which the investment is made are stated at the lower of cost adjusted for amortization and diminution; and fair value.
b) Debt securities, other than current, are carried at cost, less amortization of premium/discount, as the case may be, and provision for diminution, if any, as considered necessary.
c) Other long-term investments (eg. equity, mutual funds, etc.) are carried at cost. However, provision for diminution is made to recognize a decline, other than temporary, in the value of the investments. Current investments are valued at the lower of cost or fair value.
d) Long-term investments are carried at cost. However, provision for diminution is made to recognize a decline, other than temporary, in the value of the investments.
e) Long-term investments maturing within 12 months from the close of the year (current maturities) are disclosed as current investments.
f) The Management has laid out guidelines for the purpose of assessing likely impairments in investments and for making provisions based on given criteria. Appropriate provisions are accordingly made, which in the opinion of the Management are considered adequate.
g) Investment property represents immovable property not intended to be used for the Company''s own operations and is carried at cost, less depreciation computed in the manner prescribed under Schedule II to the Companies Act, 2013.
5) Employee benefits
a) Compensated absences and long-term incentive plan
Compensated absences entitlements are recognized as a liability, in the calendar year of rendering of service, as per the rules of the Company. As accumulated leave can be availed and/or encashed at any time during the tenure of employment the liability is recognized on the basis of an independent actuarial valuation.
The Company''s liability towards long-term incentive plan, being a defined benefit plan, is accounted for on the basis of an independent actuarial valuation.
They are therefore measured at the present value of expected future payments to be made in respect of services provided by employees up to the end of the reporting period using the projected unit credit method. The benefits are discounted using the market yields at the end of the reporting period that have terms approximating to the terms of the related obligation.
Remeasurements as a result of experience adjustments and changes in actuarial assumptions are recognized in Statement of Profit or Loss.
b) Gratuity
The Company operates defined benefit plan for its employees, viz., gratuity. Payment for present liability of future payment of gratuity is being made to an approved gratuity fund, which fully covers the same under cash accumulation policy and debt fund of the Life Insurance Corporation of India (LIC) and Bajaj Allianz Life Insurance Company Ltd. (BALIC). However, any deficit in plan assets managed by LIC and BALIC as compared to the liability on the basis of an independent actuarial valuation is recognized as a liability.
The liability or asset recognized in the Balance Sheet in respect of defined benefit gratuity plans is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets.
The defined benefit obligation is calculated annually by an independent actuarial valuation using the projected unit credit method in conformity with the principles and manner of computation specified in Accounting Standard 15. Remeasurements as a result of experience adjustments and changes in actuarial assumptions are recognized in Statement of Profit or Loss.
c) Defined contribution plans
The Company operates three defined contribution plans for its employees:
- Contribution to superannuation fund as per the scheme of the Company
- Contribution to provident fund is made to Government Provident Fund Authority
- Contribution to Employees Pension Scheme 1995 is made to Government Provident Fund Authority
The Company recognizes contribution payable to these fund/schemes as an expenditure, when an employee renders the related service. If the contribution payable to the scheme for service received before the Balance Sheet date exceeds the contribution already paid, the deficit payable to the scheme is recognized as a liability after deducting the contribution already paid. If the contribution already paid exceeds the contribution due for services received before the Balance Sheet date, then excess is recognized as an asset to the extent that the prepayment will lead to, for example, a reduction in future payment or a cash refund.
6) Taxation
a) Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities, in accordance with the Income-tax Act, 1961 and the Income Computation and Disclosure Standards prescribed therein. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.
b) Minimum alternate tax (MAT) paid in a year is charged to the Statement of Profit and Loss as current tax.
MAT is recognized as an asset only when and to the extent there is convincing evidence that the Company will pay normal income-tax during the specified period, i.e., the period for which MAT credit is allowed to be carried forward. Such asset is reviewed at each Balance Sheet date and the carrying amount of the MAT credit asset is written down to the extent there is no longer a convincing evidence to the effect that the Company will pay normal tax during the specified period.
c) Deferred tax resulting from timing difference between book profits and taxable profits are accounted for to the extent deferred tax liabilities are expected to crystalise with reasonable certainty. However, in case of deferred tax assets (representing unabsorbed depreciation or carried forward losses) are recognized, if and only if there is virtual certainty that there would be adequate future taxable income against which such deferred tax assets can be realized. The carrying amount of deferred tax assets are reviewed at each reporting date. The Company writes-down the carrying amount of deferred tax asset to the extent that it is no longer reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which deferred tax asset can be realized. Any such write-down is reversed to the extent that it becomes reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available.
7) Provisions and contingent liabilities
The Company creates a provision when there is present obligation as a result of a past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Company or a present obligation that is not recognized because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognized because it cannot be measured reliably. When there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.
8) Operating leases As a lessee
Leases in which a significant portion of the risks and rewards of ownership are retained by the less or are classified as operating leases. Payments made under operating leases are charged to the Statement of Profit and Loss on a straight line basis over the period of the lease.
As a less or
Leases where the lesser substantially retains all the risks and rewards of ownership are classified as operating leases. Lease income on such operating leases are recognized in the Statement of Profit and Loss on a straight line basis over the lease term which is representative of the time pattern in which benefit derived from the use of the leased asset is diminished. Initial direct costs are recognized as an expense in the Statement of Profit and Loss in the period in which they are incurred.
9) Cash and cash equivalents
In the cash flow statement, cash and cash equivalents include cash in hand, demand deposits with banks, other short-term highly liquid investments with original maturities of 3 months or less.
10)Earnings per share
Basic earnings per share is calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. Earnings considered in ascertaining the Company''s earnings per share is the net profit for the period. The weighted average number of equity shares outstanding during the period and all periods presented is adjusted for events, such as bonus shares, other than the conversion of potential equity shares that have changed the number of equity shares outstanding, without a corresponding change in resources. For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of share outstanding during the period is adjusted for the effects of all dilutive potential equity shares.
11) Segment reporting
a) Identification of segments
The Company''s operating businesses are organized and managed separately according to the nature of products and services provided, with each segment representing a strategic business unit that offers different products and serves different markets.
b) Inter-segment transfers
The Company generally accounts for inter-segment sales and transfers at cost plus appropriate margins.
c) Allocation of common costs
Common allocable costs are allocated to each segment according to the relative contribution of each segment to the total common costs.
d) Unallocated items
Unallocated items include general corporate income and expense items which are not allocated to any business segment.
e) Segment accounting policies
The Company prepares its segment information in conformity with the accounting policies adopted for preparing and presenting the financial statements of the Company as a whole.
b. Terms/rights attached to equity shares
The Company has only one class of equity shares having a par value of H 5 per share. Each holder of equity shares is entitled to one vote per share. The interim dividend declared by the Board of Directors and the final dividend proposed by the Board of Directors and approved by the shareholders in the annual general meeting is paid in Indian rupees.
In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.
d. Shares reserved for issue at a subsequent date
16,764 (20,081) equity shares of H 5 each offered by way of right in an earlier year, have been held in abeyance pending adjudication of title and subscription thereafter.
The Company received H 16,585 (H 1,635) from the shares issued out of the shares held in abeyance.
28 Segment information
Segment information based on consolidated financial statements is given in note 35 to consolidated financial statements.
The Company has disclosed the business segments as primary reporting segment on the basis that risks and returns are primarily determined by the nature of products and services. Consequently, geographical segment has been considered as a secondary segment.
The business segments have been identified on the basis of the nature of products and services, the risks and returns and internal performance reporting systems.
The business segments comprise the following:
i. Insurance
ii. Windmill
iii. Retail financing
iv. Investments and others
Mar 31, 2017
b. Further, of the above
Euro Equity issue represented by Global Depository Receipts (GDR) evidencing Global Depository Shares issued in earlier years has been disbanded during the year 2016-17, hence there are no outstanding GDRs at the close of the year.
c. Terms/rights/restrictions attached to equity shares
The Company has only one class of equity shares having a par value of H 5 per share. Each holder of equity shares is entitled to one vote per share. The interim dividend declared by the Board of Directors and the dividend proposed by the Board of Directors and approved by the shareholders in the annual general meeting is paid in Indian rupees. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.
* On the basis of information requested from vendors with regards to their registration (filing of Memorandum) under ''The Micro, Small and Medium Enterprises Development Act, 2006. (27 of 2006)'' and in view of the terms of payments not exceeding 45 days, which has been promptly paid, no liability exists at the close of the year and hence no disclosures have been made in this regard.
Notes to Investments
1 Quoted investments for which quotations are not available, if any, have been included in market value at the face value/paid-up value, whichever is lower, except in case of Debentures and Bonds, where the Net Present Value at current yield to maturity have been considered. Mutual funds (open ended) though not listed are quoted on National Stock Exchange (NSE) at transact able NAVs with fund houses through the exchange and hence categorized as quoted.
2 Investments made by the Company other than those with a maturity of less than one year, are intended to be held for long-term, hence diminutions in the value of quoted investments are considered to be of a temporary nature. No provision has been determined during the year ended 31 March 2017.
3 Refer note 2 clause 5 for accounting policy and valuation principles for investments.
4 Segment information
Segment information based on consolidated financial statements is given in note 33 to consolidated financial statements.
The Company has disclosed the business segments as primary reporting segment on the basis that risks and returns are primarily determined by the nature of products and services. Consequently, geographical segment has been considered as a secondary segment.
The business segments have been identified on the basis of the nature of products and services, the risks and returns and internal performance reporting systems.
The business segments comprise the following:
i. Insurance
ii. Windmill
iii. Retail financing
iv. Investments and others
5 From 2015-16, the Company has been classified as a ''Core Investment Company'' (CIC) and hence is no more registered with RBI under section 45-IA of the Reserve Bank of India Act, 1934. Consequently, the requirement of creating a Reserve fund in terms of section 45-IC(1) of the Reserve Bank of India Act, 1934 and other prudential norms for Non Banking Finance Companies are not applicable to the Company.
6 The consolidated financial statements of the Company along with its subsidiaries and joint venture are attached to these standalone financial statements. The details of the group regarding the nature of relationship and the basis of consolidation can be referred to in note 1 to the said consolidated financial statements.
7 Previous year figures
Previous year figures have been regrouped wherever necessary to make them comparable with those of the current year.
8 Miscellaneous
a. RS, 1 crore is equal to H 10 million.
b. Amounts less than H 50,000 have been shown at actual against respective line items statutorily required to be disclosed.
Mar 31, 2015
1 The Company is primarily engaged in the business of promoting
financial services such as finance, insurance, wealth management etc.
through its investments in subsidiaries and joint ventures. The Company
is also engaged in the business of generating power through wind
turbines, a renewable source of energy. Since investments dominated
the composition of assets and revenue, the Company was registered on 30
October 2009 by RBI as a Non-Banking Financial Institution (Non-Deposit taking). However, the Company has obtained an exemption from RBI vide
its letter dated 8 March 2010 on the compliance with the norms in respect ''concentration of investments'' prescribed in para 18(1) of the
Non Banking Financial (Non-Deposit Accepting or Holding) Companies
Prudential Norms (Reserve Bank) Directions, 2007. The said exemption
has been renewed for one more year upto 31 March 2015 vide its letter
dated 8 July 2014.
2 Share capital
A. Further, of the above
i. 101,183,510 equity shares were allotted as fully paid up pursuant to
the scheme of arrangement for demerger of erstwhile Bajaj Auto Ltd.
(now Bajaj Holdings & Investment Ltd.) by the Company on 3 April 2008.
ii. 1,805,071 equity shares thereof are deemed to be issued by way of
Euro Equity Issue represented by Global Depository Receipts (GDR)
evidencing Global Depository Shares outstanding on the record date.
Outstanding GDRs at the close of the year were 41,132 (41,132)
B. Terms/rights attached to equity shares
The Company has only one class of equity shares having a par value of B
5 per share. Each holder of equity shares is entitled to one vote per
share. The dividend proposed by the Board of Directors and approved by
the shareholders in the annual general meeting is paid in Indian
rupees. In the event of liquidation of the Company, the holders of
equity shares will be entitled to receive remaining assets of the
Company, after distribution of all preferential amounts. The
distribution will be in proportion to the number of equity shares held
by the shareholders.
c. Shares reserved for issue at a subsequent date
26,677 (29,509) equity shares of B 5 each offered by way of right in an
earlier year, have been held in abeyance pending adjudication of title
and subscription thereafter.
3 Contingent liabilities
(Rs. In Crore)
As at 31 March
Particulars 2015 2014
a Claims against the Company not acknowledged
as debts 8.26 12.23
b Income Tax matters under dispute
Appeal by Company 27.85 27.85
c Value Added Tax (VAT) matters under
dispute 1.64 0.61
4 Segment information
Segment information based on consolidated financial statements is given
in note 33 to consolidated financial statements.
The Company has disclosed the business segments as primary reporting
segment on the basis that risks and returns are primarily determined by
the nature of products and services. Consequently, geographical segment
has been considered as a secondary segment.
The business segments have been identified on the basis of the nature
of products and services, the risks and returns and internal
performance reporting systems.
The business segments comprise the following:
i. Insurance
ii. Windmill
iii. Retail financing
iv. Investments and others
5 Lease
As a lessor:
The Company has given a premise on operating leases. This lease
arrangement is for a period of 3 years and is a cancellable lease.
This lease agreement is renewable for further period on mutually
agreeable terms and also include escalation clauses.
(6) Miscellaneous disclosures
a) Registration obtained from other financial sector regulators:
Apart from RBI, Company is also governed by SEBI and MCA.
b) Disclosure of penalties imposed by RBI and other regulators:
During previous year, no penalty was imposed by RBI or other
regulators.
c) Related party transactions:
Please refer note 26 for details of related party transactions.
d) Ratings assigned by credit rating agencies and migration of ratings
during the year:
Not applicable
Note:
Company is a non-deposit taking/accepting NBFC. It does not carry out
lending/securitisation activity. Hence, there are ''Nil'' values in
respect of following disclosures -
1. Derivatives
- Forward rate agreement/Interest rate swap
- Exchange traded interest rate (IR) derivatives
- Qualitative disclosures on risk exposure in derivatives
- Quantitative disclosures on risk exposure in derivatives
2. Securitisation
- Disclosures relating to securitised assets etc.
- Details of financial assets sold to securitisation/reconstruction
company for asset reconstruction
- Details of assignment transactions undertaken by NBFCs
- Details of non-performing financial assets purchased/sold
3. Details of financing of parent company products
4. Details of Single Borrower Limit (SBL)/Group Borrower Limit (GBL)
exceeded by the NBFC
5. Unsecured advances
6. Concentration of deposits, advances, exposures and NPAs
- Concentration of deposits (for deposit taking NBFCs)
- Concentration of advances
- Concentration of exposures
- Concentration of NPAs
- Sector-wise NPAs
- Movement of NPAs
7. Overseas assets (for those with joint ventures and subsidiaries
abroad)
8. Off-balance sheet SPVs sponsored
9. Disclosure of customer complaints
7 The consolidated financial statements of the Company and its group
are attached to these independent financial statements.
The details of the group regarding the nature of relationship and the
basis of consolidation can be referred to in note 1 to the said
consolidated financial statements.
8 Previous year figures
Previous year figures have been regrouped wherever necessary to make
them comparable with those of the current year.
9 Miscellaneous
a. Rs. 1 crore is equal to Rs. 10 million.
b. Amounts less than Rs. 50,000 have been shown at actual against
respective line items statutorily required to be disclosed.
Mar 31, 2014
1 The Company is primarily engaged in the business of promoting
financial services such as finance, insurance, wealth management etc.
through its investments in subsidiaries and joint ventures. The Company
is also engaged in the business of generating power through wind
turbines, a renewable source of energy. Since investments dominated the
composition of assets and revenue, the Company was registered on 30
October 2009 by RBI as a Non-Banking Financial Institution (Non-Deposit
taking). However, the Company has obtained an exemption from RBI vide
its letter dated 8 March 2010 on the compliance with the norms in
respect ''concentration of investments'' prescribed in para 18(1) of the
Non Banking Financial (Non-Deposit Accepting or Holding) Companies
Prudential Norms (Reserve Bank) Directions, 2007. The said exemption
has been renewed vide its letter dated 3 October 2013 for one more
year.
2 Summary of significant accounting policies followed by the Company
Basis of preparation
These financial statements have been prepared in accordance with the
generally accepted accounting principles in India under the historical
cost convention on accrual basis. Consequent to the clarification from
the Ministry of Corporate Affairs, vide General Circular 08/2014 dated
4 April 2014, these financial statements have been prepared in
accordance with the relevant provisions/Schedules/ Rules of the
Companies Act, 1956. Accordingly, these financial statements have been
prepared to comply in all material aspects with the accounting
standards notified under section 211(3C) [Companies (Accounting
Standards) Rules, 2006, as amended] and the other relevant provisions
of the Companies Act, 1956 and the RBI guidelines/regulations to the
extent applicable.
All assets and liabilities have been classified as current or
non-current as per the criteria set out in the Revised Schedule VI to
the Companies Act, 1956.
3 Contingent liabilities
(Rs. In Crore)
As at 31 March
Particulars 2014 2013
a Claims against the Company not
acknowledged as debts 12.23 7.67
b Income Tax matters under dispute
Appeal by Company 27.85 0.14
c Value Added Tax (VAT) matters under dispute 0.61 0.29
4 The consolidated financial statements of the Company and its group
are attached to these independent financial statements. The details of
the group regarding the nature of relationship and the basis of
consolidation can be referred to in note 1 to the said consolidated
financial statements.
5 Previous year figures
Previous year figures have been regrouped wherever necessary to make
them comparable with those of the current year.
Mar 31, 2013
1 The Company is primarily engaged in the business of promoting
financial services such as finance, insurance, wealth management etc.
through its investments in subsidiaries and joint ventures. The Company
is also engaged in the business of generating power through wind
turbines. Since investments dominate the composition of assets and
revenue, the Company was registered on 30 October 2009 by RBI as a
Non-Banking Financial Institution (non-deposit taking). However, the
Company has obtained an exemption from RBI vide its letter dated 8
March 2010 on the compliance with the norms in respect ''concentration
of investments'' prescribed in para 18(1) of the Non Banking Financial
(Non-Deposit Accepting or Holding) Companies Prudential Norms (Reserve
Bank) Directions, 2007. The said exemption has been renewed vide its
letter dated 27 June 2012 for one more year.
2 Contingent liabilities
(Rs. In Crore)
2013 2012
a Claims against the Company not acknowledged
as debts 7.67 7.71
b Income Tax matters under dispute
Appeal by Company 0.14 0.14
c Value Added Tax (VAT) matters under dispute 0.29 -
3 Lease
Future minimum lease rental in respect of assets given on operating
lease in the form of office premises after 1 April 2001 Minimum future
lease payments as on 31 March 2013:
4 Schedule to Balance Sheet as on 31 March 2013
Balance sheet of a non deposit taking non-banking financial company
(As required in terms of Paragraph 13 of Non-Banking Financial
(Non-Deposit Accepting or Holding) Companies Prudential Norms (Reserve
Bank) Directions, 2007)
5 The consolidated financial statements of the Company and its group
are attached to these independent financial statements. The details of
the group regarding the nature of relationship and the basis of
consolidation can be referred to in note 1 to the said consolidated
financial statements.
6 Previous year figures
Previous year figures have been reclassified to conform to this year''s
classification.
7 Miscellaneous
Rs. 1 crore is equal to Rs. 10 million.
Amounts less than Rs. 50,000 have been shown at actual against
respective line items statutorily required to be disclosed.
Mar 31, 2012
1 The company is primarily engaged in the business of promoting
financial services such as finance, insurance, wealth management etc.
through its investments in subsidiaries and joint ventures. The company
is also engaged in the business of generating power through wind
turbines. Since investments dominate the composition of assets and
revenue, the Company was registered on 30 October 2009 by RBI as a
Non-Banking Financial Institution (non-deposit taking). However, the
Company has obtained an exemption from RBI vide its letter dated 8
March 2010 on the compliance with the norms in respect of
'concentration of investments' prescribed in para 18(1) of the
Non Banking Financial (Non-Deposit Accepting or Holding) Companies
Prudential Norms (Reserve Bank) Directions, 2007. The said exemption
has been renewed vide its letter dated 18 July 2011 for one more year.
2 Contingent liabilities
(Rs. In Crore)
2012 2011
a. Claims against the Company not
acknowledged as debts 7.71 7.65
b. Income Tax matters under dispute
Appeal by company 0.14 0.14
3 The consolidated financial statements of the Company and its group
are attached to these independent financial statements. The details of
the group regarding the nature of relationship and the basis of
consolidation can be referred to in note 1 to the said consolidated
financial statements.
4 Previous year figures
The financial statements for the year ended 31 March 2011 had been
prepared as per the then applicable, pre-revised Schedule VI to the
Companies Act, 1956. Consequent to the notification of Revised Schedule
VI under the Companies Act, 1956, the financial statements for the year
ended 31 March 2012 are prepared as per Revised Schedule VI.
Accordingly, the previous year figures have also been reclassified to
conform to this year's classification. The adoption of Revised Schedule
VI for previous year figures does not impact recognition and
measurement principles followed for preparation of financial
statements.
4 Miscellaneous
Rs. 1 crore is equal to Rs. 10 million.
Amounts less than Rs. 50,000 have been shown at actual against respective
line items statutorily required to be disclosed.
Mar 31, 2011
Balance sheet of a non deposit taking non-banking financial company
(As required in terms of Paragraph 13 of Non-Banking Financial
(Non-Deposit Accepting or Holding) Companies Prudential Norms (Reserve
Bank) Directions, 2007)
(Rs. In Lakhs)
Particulars
Liabilities Side:
Amount Amount
Outstanding Overdue
(1) Loans and advances availed by the
NBFCs inclusive of interest
accrued thereon but not paid:
(a) Debentures : Secured Nil Nil
: unsecured Nil Nil
(Other than falling
within the meaning
of public deposit*)
(b) Deferred Credits
Nil Nil
(c) Term Loans Nil Nil
(d) Inter-corporate Loans and Borrowings Nil Nil
(e) Commercial Paper Nil Nil
(f ) Other Loans (specify nature) Nil Nil
* Please see Note 1 below
Mar 31, 2010
1. A. The Company was incorporated on 30th April 2007 with the object
of carrying out financial services under the name Bajaj Finserv Ltd.
Under a scheme of arrangement under section 391 to 394 of the Companies
Act 1956 between the company and erstwhile Bajaj Auto Ltd., now known
as Bajaj Holdings & Investment, the "Strategic Business Undertaking"
comprising of interests in the insurance joint ventures, financing
business through an associate and investment activity of erstwhile
Bajaj Auto Ltd, vested with the company from 1st April 2007 ("the
appointed date").
B. In response to the application made by the company, the company has
been registered on 30th October 2009 as a Non-Banking Financial
Institution (non-deposit taking).The company has complied with
Non-Banking Financial (non-Deposit Accepting or Holding) Companies
Prudential Norms (Reserve Bank) Directions, 2007, as applicable
thereto, except in respect ofconcentration of investmentsprescribed
in para 18(1) of the above mentioned directions, for which the company
has obtained exemption dated 8 March 2010, subject to fulfillment /
observance of certain terms and conditions and review by RBI at the end
of one year.
2. Significant Accounting Policies followed by the Company are as
stated in the Statement annexed to this schedule.
As at As at
31 March 2010 31 March 2009
(Rs. In Million) (Rs. In Million)
3. Contingent Liability,
not provided for:
Claims against the company not
acknowledged as debts 109.2 100.4
4. Estimated amounts of contracts
remaining to be 1.6 135.2
executed on capital account and not
provided for,
net of Advances.
5. (a) Expenditure in foreign
currencies VER Sale Expenses -- 3.3
Travelling Expenses 0.4 0.8
(b) Earning in foreign currencies
FOB Value of Exports (VER Sale) -- 52.7
6. Investments:
a. Investments made by the Company other than those with a maturity of
less than one year, are intended to be held for a long term, hence
diminution in the value of quoted Investments are not considered to be
of a permanent nature. On an assessment of the non-performing
investments (quoted and unquoted) and keeping in mind the relevant
provisioning norms applicable to the company as a NBFC and as per
guidelines adopted by the management, no provision has been determined
during the year ended 31 March 2010.
b. The company had acquired 2,178,490 detachable warrants, attached to
Non Convertible debentures, issued by Bajaj Auto Finance Limited
(hereinafter referred to as"BAFL") as part of rights issue of Non
Convertible debentures in 2006-07. The warrant entitled the company to
apply for equity shares in BAFL at the warrant exercise price of Rs.
500/- per warrant, within the warrant exercise period, which expired on
8 January 2010. Since the market price of equity shares of BAFL was
lower than the warrant exercise price through the warrant exercise
period, the company did not exercise its right to apply for shares of
BAFL. Consequently amount of Rs. 104.6 million, being cost of warrants
has been fully provided for.
7. The Sales tax deferral benefit available to the company as a wind
power generator was availed by the manufacturing undertaking vested
with Bajaj Auto Ltd. The amount of liability deferred by the latter has
been passed on to the company, and recognised as a liability, as the
obligation to pay now lies with the company.
8. In absence of any information on earlier requests to the vendors
with regards to their registration (filing of Memorandum) under "The
Micro, Small and Medium Enterprises Development Act, 2006. (27 of
2006)"and in view of the terms of payments not exceeding 45 days, which
has been promptly paid, no liability exists at the close of the year
and hence no disclosures have been made in this regard.
9. The disclosures required in terms of paragraph 13 of Non-Banking
Financial (Non-Deposit Accepting or Holding) Companies Prudential Norms
(Reserve Bank) Directions, 2007 are given in the Annexure forming part
of these Financial Statements.
10. Disclosure of transactions with Related Parties, as required by
Accounting Standard 18Related Party Disclosureshas been set out in a
separate statement annexed to this Schedule. Related parties as defined
under clause 3 of the Accounting Standard have been identified on the
basis of representations made by key managerial personnel and
information available with the Company.
11. a) The consolidated financial information/ statements of the
company and its group are attached to these independent financial
statements. The details of the group regarding the nature of
relationship and the basis of consolidation can be referred to in Note
No. 1 to the said consolidated financial statements.
b) Segment Information based on the Consolidated Financial Statements
attached to the Independent Financial Statements has been disclosed in
the Statement annexed to this Schedule.
12. Amounts less than Rs. 50,000 have been shown at actual, against
respective line item statutorily required to be disclosed.
13. Previous year figures have been regrouped to make them comparable
with that of the current year.
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