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Directors Report of Capital First Ltd.

Mar 31, 2015

Dear Members,

The Directors have pleasure in presenting the Tenth Annual Report of your Company with the audited financial statement for the financial year ended March 31, 2015.

FINANCIAL HIGHLIGHTS

The highlights of the consolidated and standalone financial statement of the Company for the financial years 2014-15 and 2013-14 are as under:

(Rs. in Million) Particulars Consolidated Standalone 2014-15 2013-14 2014-15 2013-14

Total Income 14,418.58 10,625.14 14,259.32 10,797.12

Total Expenditure 12,791.40 9,977.63 12,646.13 10,043.79

Profit Before Tax and exceptional items 1,627.18 647.51 1,613.19 753.33

Exceptional income/ (expense) - - - (344.48)

Provision For Tax 510.59 58.00 492.99 39.02

Profit after tax from continuing operations 1,116.59 589.51 1,120.20 369.83

Profit/(Loss) after tax from Discontinuing operations 26.22 (63.23) - -

Profit for the year 1,142.81 526.28 1,120.20 369.83

Profit/(Loss)brought forward from previous Year 931.95 676.22 1,216.26 1,113.55

Less: Accelerated Depreciation as per the Companies Act, 2013 6.71 - 6.71 -

Less: Loss in recovery of advances granted to Employee Welfare Trusts 18.36 - 18.36 -

Profit available for appropriation 2,049.69 1,202.50 2,311.39 1,483.38

Appropriations:

Transfer to Reserve Fund under Section 45- IC of the RBI Act, 1934 224.04 73.96 224.04 73.97

Transfer to statutory reserve under section 29C of the National Housing Bank Act, 1987 4.03 3.44 - -

Proposed Dividend 200.24 165.41 200.24 165.41

Dividend Tax thereon 40.76 - 40.76 -

Transfer to General Reserve 112.02 27.74 112.02 27.74

Balance carried forward to Balance Sheet 1,468.60 931.95 1,734.34 1,216.26

The Company is focused on providing loans to Retail, MSME, Consumer and Wholesale credit, which is expected to drive growth for the Company going forward.

During the year under review, the Company has successfully grown its outstanding Loan Assets under Management from Rs. 96.79 billion to Rs. 119.75 billion, a growth of 24%. The Retail Assets under Management has grown from Rs. 78.83 billion to Rs. 101.17 billion, a growth of 28%. Wholesale Book increased only by 4% from Rs. 17.96 billion to Rs. 18.62 billion.

The Net worth of the Company increased from Rs. 11.71 billion to Rs. 15.74 billion as at March 31, 2015.

Consolidated Net Interest Income increased by 58% from Rs. 3393 million during the financial year ending March 31, 2014 to Rs. 5363 million during the financial year ending March 31, 2015.

The profit after tax was up by 117% from 526.28 million to Rs. 1,142.81 million.

The Company proposes to transfer an amount of Rs. 112.02 million to the General Reserves.

DIVIDEND

Keeping in mind the overall performance and the outlook for your Company, your Directors are pleased to recommend a dividend of Rs. 2.20 (Rupees Two and paise Twenty only) per share i.e. 22% on each Equity Share having face value of Rs. 10/- (Rupees Ten only). The total outgo for the current year amounts to Rs. 200.24 million as against Rs. 165.41 million in the previous year.

CAPITAL ADEQUACY

The Company''s capital adequacy ratio was 23.44% as on March 31, 2015, which is significantly above the threshold limit of 15% as prescribed by the Reserve Bank of India.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

As required under Clause 49 of the Listing Agreement entered into with the Stock Exchanges and Circular/Notifications/ Directions issued by Reserve Bank of India from time to time, the Management Discussion and Analysis of the financial condition and result of consolidated operations of the Company for the year under review is presented in a separate section forming part of the Annual Report.

CORPORATE GOVERNANCE

A Report on Corporate Governance as required under Clause 49 of the Listing Agreement entered into with the Stock Exchanges, forms part of the Annual Report.

A Certificate from M/s. Makarand M Joshi & Co., Practicing Company Secretaries, confirming compliance with the conditions of Corporate Governance as stipulated under the aforesaid Clause 49, also forms part of the Annual Report.

SHARE CAPITAL

During the year under review, the Company raised funds through issue and allotment of 76,92,300 Equity Shares at a price of Rs. 390/- per Equity Share (including a premium of Rs. 380/- per Equity Share), aggregating to Rs. 2,99,99,97,000/- to Qualified Institutional Buyers through Qualified Institutions Placement mode pursuant to Chapter VIII of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009, as amended and section 42 of the Companies Act, 2013 and the rules made thereunder.

During the year under review, the Company had issued and allotted 6,58,500 equity shares and subsequent to the year under review, 27,050 equity shares were also allotted to the eligible employees of the Company under various Employee Stock Option Schemes of the Company. The paid up equity share capital of the Company as on date of this report stands at Rs. 91,00,93,190/- comprising of 9,10,09,319 equity shares of Rs. 10/- each.

In order to meet its growth objectives and to strengthen its financial position, it is required to generate long term resources by issuing securities. It is, therefore, deemed appropriate to reclassify the Authorised Share Capital of the Company from Rs. 113,00,00,000/- (Rupees One Hundred and Thirteen Crore) comprising of 10,30,00,000 (Ten Crore Thirty Lac) Equity Shares of Rs. 10/- (Rupees Ten) each and 1,00,00,000 (One Crore) Compulsorily Convertible Preference Shares of Rs. 10/- (Rupees Ten) each to Rs. 113,00,00,000/- (Rupees One Hundred and Thirteen Crore) comprising of 11,30,00,000 (Eleven Crore Thirty Lakhs) Equity Shares of Rs. 10/- (Rupees Ten) subject to the approval of shareholders at the ensuing Annual General Meeting of the Company.

SUBSIDIARIES

During the year under review, the Board of Directors of Capital First Investment Advisory Limited (''CFIAL) and Capital First Home Finance Private Limited (''CFHFPL''), both being wholly owned subsidiary Companies of the Company had approved the Scheme of Amalgamation pursuant to which a petition has been filed with Hon''ble Bombay High Court for merger of CFIAL into CFHFPL.

During the year under review, Anchor Investment & Trading Private Limited which had been involved in investment management and advisory activity, has initiated the process of winding up. As this business was discontinued by the Company in 2010-11.

PUBLIC DEPOSITS

The Company being a Non-Deposit Accepting Non-Banking Finance Company has not accepted any deposits from the public during the year under review and shall not accept any deposits from the public without obtaining prior approval of the Reserve Bank of India (RBI).

RBI GUIDELINES

As a Systemically Important Non Deposit taking Non-Banking Finance Company, your Company always aims to operate in compliance with applicable RBI laws and regulations and employs its best efforts towards achieving the same.

NUMBER OF MEETINGS OF THE BOARD

The Board met 8 times in financial year 2014-15 viz., on April 02, 2014, May 08, 2014, August 05, 2014, September 24, 2014, November 07, 2014, December 22, 2014, January 06, 2015 and February 10, 2015. The maximum interval between any two meetings did not exceed 120 days.

COMMITTEES OF THE BOARD

During the year, in accordance with the Companies Act, 2013 and Clause 49 of Listing Agreement, the Board re-constituted some of its Committees and also formed a Corporate Social Responsibility Committee. The Committees are as follows:

- Audit Committee

- Nomination and Remuneration Committee

- Stakeholders'' Relationship Committee

- Corporate Social Responsibility Committee

Details of the said Committees along with their charters, composition and meetings held during the year, are provided in the "Report on Corporate Governance", a part of this Annual Report.

GOLD AUCTIONED

The disclosures as required by circular no. DNBS.CC.PD.No.356 /03.10.01/2013-14 dated September 16, 2013 issued by Reserve Bank of India, regarding reporting of the Gold Auctioned during the financial year 2014-15 are provided at Note No. 43 of Notes to the Standalone Financial Statements.

CREDIT RATING

Short-term borrowing programme: During the year under review, Credit Analysis & Research Ltd. ("CARE") reaffirmed the "A1 " ("A One Plus") rating for the short term borrowing program. The rating is the highest rating issued by CARE for short term debt instruments and indicates strong capacity for timely payment of short term debt obligations and further indicates that the borrowing carries the lowest credit risk. During the year under review, the rating of short term borrowing programme was enhanced by Rs. 3,000 million i.e. from Rs. 9,000 million to Rs. 12,000 million.

During the year, Credit Analysis & Research Ltd. (CARE) and Brickwork Ratings India Private Limited (Brickwork) reaffirmed the long term rating of "AA " (Double A Plus) of your Company. Instruments with this rating are considered to have high degree of safety regarding timely servicing of financial obligations. Such instruments carry very low credit risk.

Long-term Bank Loan Facilities: During the year, the Company''s rating of "CARE AA " ("Double A Plus") by CARE in respect of the bank loan facilities of the Company, was enhanced from Rs. 81,450 million to Rs. 82,450 million.

Secured Redeemable Non-Convertible Debentures (NCDs):

During the year CARE reaffirmed the Company''s rating of "CARE AA " ("Double A Plus") for the Secured Redeemable NCDs for an aggregate amount of Rs. 13,000 million (enhanced from Rs.10,500 million). The rating of "BWR AA " ("BWR Double A Plus") for an aggregate amount of Rs. 12,500 million (enhanced from Rs.10,000 million) was also reaffirmed by Brickwork.

Subordinated Non-Convertible Debentures (NCDs): During the year CARE reaffirmed the rating of "CARE AA " ("Double A Plus") rating for the Unsecured Subordinated Debt program of the Company for an aggregate amount of Rs. 2,000 million. Brickwork also reaffirmed the rating to "BWR AA " ("BWR Double A Plus") for the Unsecured Subordinated Debt program of the Company for an aggregate amount of Rs. 2,000 million.

Perpetual Non-Convertible Debentures (NCDs): During the year CARE reaffirmed the "CARE AA" ("Double A") rating to the Perpetual Debt program of the Company for an aggregate amount of Rs. 2,000 million (enhanced from Rs. 1,500 million). Brickwork also reaffirmed the "BWR AA" ("Double A") rating to the Perpetual Debt program of the Company for an aggregate amount of Rs. 2,000 million (enhanced from Rs. 1,500 million).

DIRECTORS & KEY MANAGERIAL PERSONNEL

a. Cessation

During the year under review, Mr. Anil Singhvi (DIN 00239589) resigned from the post of Non Executive Independent Directorship and Committees in which he was serving as Chairman/Committee Member with effect from December 22, 2014. The Board placed on its records its appreciation for the valuable contribution provided by Mr. Anil Singhvi.

b. Retire by Rotation

In accordance with Section 152 and other applicable provisions of Companies Act, 2013, Mr. Vishal Mahadevia (DIN 01035771), being Non- Executive Director, retires by rotation and being eligible offers himself for re- appointment at the ensuing Annual General Meeting. The Board recommends his appointment.

c. Reappointment of Mr. V. Vaidyanathan (DIN 00082596) as Chairman & Managing Director and revision in remuneration

The term of Mr. V. Vaidyanathan (DIN 00082596), Chairman & Managing Director of the Company who was appointed for a term of five years with effect from August 10, 2010, expires on August 09, 2015. It is therefore proposed to reappoint Mr. V. Vaidyanathan (DIN 00082596) for a period of five years with effect from August 10, 2015 and revise remuneration terms as approved by the Board.

d. Appointment of Independent Directors

With coming into force of the provisions of Companies Act, 2013, the Board had appointed the existing Directors viz. Mr. N.C. Singhal (DIN 00004916), Mr. Hemang Raja (DIN 00040769) and Mr. M. S. Sundara Rajan (DIN 00169775) as Independent Directors of the Company for a consecutive term of three years up to March 31, 2017 as per Section 149 of the Companies Act, 2013 read with its Rules. The shareholders of the Company at their Annual General Meeting held on June 18, 2014 had approved aforesaid appointment.

During the year under review, Dr (Mrs.) Brinda Jagirdar (DIN 06979864) and Mr. Dinesh Kanabar (DIN 00003252) had been appointed as Additional Non Executive Independent Directors and Mr. Narendra Ostawal (DIN 06530414) as Additional Non Executive Director of the Company who shall hold office upto the date of ensuing Annual General Meeting of the Company. The Company has received notices in writing under Section 160 of the Companies Act, 2013 from members proposing appointment as Directors. The Board recommends their appointment.

The details of the aforesaid Directors forms part of this Report as Annexure I.

Based on the confirmations received, none of the Directors are disqualified for appointment under Section 164(2) of Companies Act, 2013.

e. Key Managerial Personnel

During the year under review, Mr. V. Vaidyanathan - Chairman & Managing Director (DIN 00082596); Mr. Pankaj Sanklecha - Chief Financial Officer & Head Corporate Centre; and Mr. Satish Gaikwad - Head - Legal, Compliance & Company Secretary were designated as the Key Managerial Personnel of the Company pursuant to the requirements of the applicable provisions of Companies Act, 2013 read with its Rules, by the Board of Directors and their terms and conditions of the appointment and remuneration was considered by the Board.

BOARD''S INDEPENDENCE

Our definition of ''Independence'' of Directors is derived from Clause 49 of the Listing Agreement with Stock Exchanges and Section 149(6) of the Companies Act, 2013. Based on the confirmation / disclosures received from the Directors and on evaluation of the relationships disclosed, the following Non- Executive Directors are Independent in terms of Clause 49 of the Listing Agreement and Section 149(6) of the Companies Act, 2013 :-

1. Mr. N.C. Singhal (DIN 00004916)

2. Mr. Hemang Raja (DIN 00040769)

3. Mr. M.S. Sundara Rajan (DIN 00169775)

4. Dr. (Mrs.) Brinda Jagirdar (DIN 06979864)

5. Mr. Dinesh Kanabar (DIN 00003252)

DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to the requirements of Section 134 (5) of the Companies Act, 2013, with respect to Directors'' Responsibility Statement, it is hereby stated that:

(a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

(b) the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit and loss of the company for that period;

(c) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

(d) the Directors have prepared the annual accounts on a going concern basis;

(e) the Directors have laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively; and

(f) the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

COMPANY''S POLICY ON DIRECTORS'' APPOINTMENT AND REMUNERATION & EVALUATION

Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, Policy on Nomination and Remuneration of Directors, Key Managerial Personnel, Senior Management and other employees has been formulated including criteria for determining qualifications, positive attributes, Independence of a Director and other matters as required under the said Act and Listing Agreement.

The evaluation framework for assessing the performance of Directors comprises of the following key areas:

- Expertise;

- Objectivity and Independence;

- Guidance and support in context of life stage of the Company;

- Understanding of the Company''s business;

- Understanding and commitment to duties and responsibilities;

- Willingness to devote the time needed for effective contribution to Company;

- Participation in discussions in effective and constructive manner;

- Responsiveness in approach;

- Ability to encourage and motivate the Management for continued performance and success;

The evaluation involves Self-Evaluation by the Board Member and subsequently assessment by the Board of Directors. A member of the Board will not participate in the discussion of his / her evaluation.

Accordingly a process of evaluation was followed by the Board for if own performance and that of its Committees and individual Directors and also the necessary evaluation was carried out by Nomination and Remuneration Committee and Independent Director at their respective meetings held for the purpose.

CONSOLIDATED FINANCIAL STATEMENTS

The Audited Consolidated Financial Statements are provided in this Annual Report which have been prepared in accordance with relevant Accounting Standards issued by the Institute of Chartered Accountants of India.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

Details of Loans, Guarantees and Investments are given in the notes to the Financial Statements.

PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES REFERRED TO IN SECTION 188

During and subsequent to the year under review, the contracts or arrangements with related parties have been on arms length and in ordinary course of business and they were not material in nature. Accordingly, the particulars of the transactions as prescribed in Form AOC - 2 of the rules prescribed under Chapter IX relating to Accounts of Companies under the Companies Act, 2014 are not required to be disclosed as they are not applicable.

EXTRACT OF ANNUAL RETURN

The details forming part of the extract of the Annual Return in form MGT 9 is annexed herewith as Annexure 2 to this Director''s Report.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

During the year under review the Board of Directors at its meeting held on May 08, 2014 had constituted Corporate Social Responsibility (CSR) Committee in accordance with Section 135 of Companies Act, 2013 read with rules formulated therein. The Company pursuant to the recommendation of the CSR Committee had adopted a detailed policy on Corporate Social Responsibility and also discussed and identified the core areas in which the CSR activities was proposed to be carried out in the CSR Committee Meetings from time to time.

The details of contents of CSR Policy of the Company and the details about the development of CSR Policy and initiatives taken by the Company on Corporate Social Responsibility during the year as per annexure attached to the Companies (Corporate Social Responsibility Policy) Rules, 2014 have been appended as Annexure 3 to this Report.

STATUTORY AUDITORS & THEIR REPORT

M/s. S. R. Batliboi & Co. LLP, Chartered Accountants, having ICAI Firm Registration No. 301003E were appointed as Statutory Auditors of your Company at the Ninth Annual General Meeting (AGM) held on June 18, 2014 from the conclusion of the said AGM till conclusion of Twelfth Annual General Meeting. As per the provisions of Section 139 of the Companies Act, 2013, the appointment of Statutory Auditors is required to be ratified by members at every Annual General Meeting. Accordingly, the appointment of M/s. S. R. Batliboi & Co. LLP, as Statutory Auditor of the Company is placed for ratification by the shareholders.

The Auditor''s Report does not contain any qualification, reservation or adverse remark.

SECRETARIAL AUDITORS & THEIR REPORT

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and Rules made thereunder, the Company had appointed M/s. Makarand M Joshi & Co., Practicing Company Secretaries, to undertake the Secretarial Audit of the Company for the financial year 2014-15. The Secretarial Audit Report for financial year 2014-15, has been appended as Annexure 6 to this Report.

The Auditor''s Report does not contain any qualification, reservation or adverse remark.

The Board of the Directors at their Meeting held on May 13, 2015 have reappointed M/s. Makarand M Joshi & Co., Practicing Company Secretaries, to undertake the Secretarial Audit of the Company for the financial year 2015-16.

PARTICULARS OF EMPLOYEES, EMPLOYEES STOCK OPTION SCHEME AND EMPLOYEES STOCK PURCHASE SCHEME

The details in terms of Section 197 of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are forming part of this report as Annexure 5. The statement containing particulars of employees as required under Section 197(12) of the Companies Act, 2013 read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 may be obtained by the members by writing to the Company Secretary of your Company.

During the year under review, Board of Directors of the Company on the recommendation of Nomination & Remuneration Committee at its Meeting held on April 02, 2014 and shareholders at Annual General Meeting held on June 18, 2014 approved the ''CMD Stock Option Scheme - 2014''.

Also, during the year under review, the Company has granted employee stock options to eligible employees under various Employee Stock Option Schemes. During the year under review, the Company had also issued and allotted 6,58,500 equity shares and subsequent to the year under review also, 27,050 equity shares were allotted to the eligible employees of the Company under various Employee Stock Option Schemes of the Company.

The details with respect to the Employee Stock Option Schemes/ Employee Stock Purchase Scheme are annexed and forms part of this Report as Annexure 4.

PARTICULARS OF ENERGY CONSERVATION, TECHNOLOGY ABSORPTION, EXPENDITURE ON RESEARCH AND DEVELOPMENT, FOREIGN EXCHANGE INFLOW/OUTFLOW, ETC.

The requirements of disclosure with regard to Conservation of Energy in terms of Section 134 of the Companies Act, 2013, read with the Companies (Accounts) Rules, 2014, are not applicable to the Company since it doesn''t own any manufacturing facility.

However, the Company makes all efforts towards conservation of energy, protection of environment and ensuring safety.

The details of the earnings and outgoing Foreign Exchange during the year under review are provided in Notes to the Financial Statements as at March 31, 2015. The Members are requested to refer to the said Note for details in this regard.

VIGIL MECHANISM

Your Company has established a ''Whistle Blower Policy and Vigil Mechanism'' for directors and employees to report to the appropriate authorities concerns about unethical behavior, actual or suspected, fraud or violation of the Company''s code of conduct policy and provides safeguards against victimization of employees who avail the mechanism and also provide for direct access to the Chairman of the Audit Committee. The said policy has been uploaded on the website of the Company.

MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY

There have been no material changes and commitments, if any, affecting the financial position of the Company which have occurred between the end of the financial year of the Company to which the financial statements relate and the date of the report.

DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANY''S OPERATIONS IN FUTURE

There have been no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and company''s operations in future.

RISK MANAGEMENT POLICY AND INTERNAL CONTROL

The Company has adopted a Risk Management Policy duly approved by the Board and also has in place a mechanism to identify, assess, monitor and mitigate various risks to key business objectives. Major risks identified by the businesses and functions are systematically addressed through mitigating actions on a continuing basis. These are discussed at the meetings of the Risk Management Committee, Audit Committee and the Board of Directors of the Company. The Company''s internal control systems are commensurate with the nature of its business and the size and complexity.

DISCLOSURES UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION & REDRESSAL) ACT 2013 READ WITH RULES

Pursuant to the requirements of Section 22 of Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act 2013 read with Rules thereunder, the Company has not received any complaint of sexual harassment during the year under review.

ACKNOWLEDGEMENT

We are grateful to the Government of India, the Reserve Bank of India, the Securities and Exchange Board of India, the Stock Exchanges, Insurance Regulatory and Development Authority of India, National Housing Bank and other regulatory authorities for their valuable guidance and support and wish to express our sincere appreciation for their continued co-operation and assistance. We look forward to their continued support in future.

We wish to thank our bankers, investors, rating agencies, customers and all other business associates for their support and trust reposed in us.

Your Directors express their deep sense of appreciation for all the employees whose commitment, co-operation, active participation, dedication and professionalism has made the organization''s growth possible.

Finally, the Directors thank you for your continued trust and support.

On behalf of the Board of Directors

V. Vaidyanathan Chairman & Managing Director DIN:00082596

Place : Mumbai Date : May 13, 2015


Mar 31, 2014

Dear Members,

The Directors have pleasure in presenting the Ninth Annual Report of your Company with the audited statement of accounts for the year ended March 31, 2014.

FINANCIAL HIGHLIGHTS

The highlights of the consolidated and standalone financial results of the Company for the financial years 2013-14 and 2012-13 are as under:

(Rs. in Million)

Particulars Consolidated Standalone

2013-14 2012-13 2013-14 2012-13

Total Income 10,625.14 8,086.36 10,797.12 8,000.54

Total Expenditure 9,977.63 7,502.65 10,043.79 7,459.31

Profit Before Tax and exceptional items 647.51 583.71 753.33 541.23

Exceptional income/ (expense) - 213.10 (344.48) 243.21

Provision For Tax 58.00 99.071 39.02 86.70

Profit after tax from continuing operations 589.51 697.74 369.83 697.74

Profit/(Loss) after tax from discontinuing operations (63.23) (66.64) - -

Profit/(Loss) brought forward from previous year 676.22 353.83 1,113.55 757.26

Add: Loss of subsidiary excluded on sale - 32.74 - -

Profit available for appropriation 1,202.50 1,017.67 1,483.38 1,455.00

Appropriations:

Transfer to Reserve Fund under Section 45- IC of the RBI Act, 1934 73.96 139.55 73.97 139.55

Transfer to statutory reserve under Section 29Cof the National Housing Bank Act, 1987 3.44 - - -

Proposed Dividend 165.41 127.84 165.41 127.84

Dividend Tax thereon - 21.73 - 21.73

Transfer to General Reserve 27.74 52.33 27.74 52.33

Balance carried forward to Balance Sheet 931.95 676.22 1,216.26 1,113.55

The Company is focused on providing a number of financial services to Retail, MSME, Consumer and Wholesale credit, which is expected to drive growth for the Company goingforward.

During the year under review, the Company has successfully grown its outstanding Loan Assets under Management from Rs. 75.10 billion to Rs. 96.79 billion, a growth of 29%. The Retail Assets under Management has grown from Rs. 55.60 billion to Rs. 78.83 billion, a growth of 42%. As part of the plan to change the mix of assets, the Wholesale Book reduced by 8% from Rs. 19.50 billion toRs. 17.96 billion.

The Net worth of the Company increased from Rs. 9,607 million to Rs. 11,710 million as at March 31, 2014.

Consolidated Net Interest Income increased by 34% from Rs. 2,499 million during the financial year ending March 31, 2013 to Rs. 3,361 million during the financial year ending March 31, 2014.

The Profit Before Tax, before exceptional items, increased from Rs. 519 million during the financial year ending March 31, 2013 to Rs. 590 million during the financial year ending March 31, 2014. The profit after tax was down by 17% from Rs. 631 million to Rs. 526 million. This is essentially on account of an exceptional and one time item of Rs. 213 million reported in previous year for sale of subsidiaries.

DIVIDEND

Keeping in mind the overall performance and the outlook for your Company, your Directors are pleased to recommend a dividend of Rs. 2/- (Rupees Two only) per share i.e. 20% on each Equity Share of Rs. 10/- (Rupees Ten only). The dividend would be paid to all the shareholders, whose names appear in the Register of Members/ Beneficial Holders list on the Book Closure/Record date.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

As required under Clause 49 of the Listing Agreement entered into with the Stock Exchanges, the Management Discussion and Analysis of the financial condition and result of consolidated operations of the Company for the year under review, is annexed and forms an integral part of this Directors'' Report.

CORPORATE GOVERNANCE

A Report on Corporate Governance as required under Clause 49 of the Listing Agreement entered into with the Stock Exchanges, forms part of the Annual Report.

A Certificate from M/s. Chetan Gandhi & Associates, Practicing Company Secretary, confirming compliance with the conditions of Corporate Governance as stipulated under the aforesaid Clause 49, also forms part of the Annual Report.

SHARE CAPITAL

Duringtheyear under review, the Board of Directors of the Company with the approval of the shareholders, allotted 32,50,000 Equity Shares to HDFCStandard Life Insurance Company Limited ("HDFC Life") & 83,57,145 Equity Shares to Cloverdell Investment Ltd ("Cloverdell") on March 28, 2014, for an aggregate consideration of Rs. 1785.18 million at a price of Rs. 153.80 per Equity Share (face value of Rs. 10/- each and premium of Rs. 143.80 per share), in accordance with the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009 ("ICDR Regulations"). The Subscription Amount (invested in the form of Equity Shares) entitles HDFC Life & Cloverdell to not more than an aggregate of 3.87% & 70.48% of total paid up capital of the Company, respectively, of the enhanced equity share capital of the Company. The total shareholding of Promoter Group i.e Cloverdell and Dayside Investment Ltd. in the Company remains unchanged at 71.99% post Preferential Allotment of Equity shares.

Subsequent to the year under review, 74,500 equity shares were allotted to eligible employees of the Company under various Employee Stock Option Schemes of the Company.

SUBSIDIARIES

During the year under review, Capital First Home Finance Private Limited, a Wholly Owned Subsidiary of the Company has received the Certificate of Registration from National Housing Bank to commence business of housing finance institution without accepting public deposits.

During the year under review, the Board of Directors of Subsidiary Companies namely Capital First Securities Limited (CFSL) and Capital First Commodities Limited (CFCL) had decided to close down the security & commodity broking operations, respectively and also approved the surrender of the licenses availed for conducting the broking businesses of both the subsidiaries except for National Spot Exchange Limited.

In terms of the General Circulars No. 2/2011 & 3/2011 of the Ministry of Corporate Affairs (MCA), dated 8th and 21st February 2011, respectively, copies of the Balance Sheet, Profit and Loss Account, Report of the Board of Directors and Auditors of the Subsidiaries of the Company have not been attached with the Balance Sheet of the Company. These documents will be made available upon request by any Member of the Company interested in obtaining the same and these documents are also kept for inspection by any Member at the Corporate Office of the Company and the Subsidiaries. However, as directed by the MCA, the financial data of the Subsidiaries has been furnished under ''Details of Subsidiaries'', forming part of the Audited Accounts. Further, pursuant to Accounting Standard (AS - 21) issued by the Institute of Chartered Accountants of India, the Consolidated Financial Statements presented by the Company in this Annual Report includes financial information of its Subsidiaries.

PUBLIC DEPOSITS

The Company being a Non-Deposit Accepting Non-Banking Finance Company has not accepted any deposits from the public during the year under review and shall not accept any deposits from the public without obtaining prior approval of the Reserve Bank of India (RBI).

RBI GUIDELINES

As a Systemically Important Non Deposit taking Non-Banking Finance Company, your Company always aims to operate in compliance with applicable RBI laws and regulations and employs its best efforts towards achieving the same.

GOLD AUCTIONED

The disclosures as required by circular no. DNBS.CCPD.No.356/ 03.10.01/2013-14 dated September 16, 2013 issued by Reserve Bank of India, regarding reporting of the Gold Auctioned during the financial year 2013-14 are provided at Note No. 44 to Notes to the Standalone Financial Statements.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

Subsequent to the year under review the Board of Directors at its meeting held on May 08, 2014 has constituted Corporate Social Responsibility (CSR) Committee in accordance with Section 135 of Companies Act, 2013 read with rules formulated therein.

The Company is in process of formulating a detailed policy on Corporate Social Responsibility.

CAPITAL ADEQUACY

The Company''s capital adequacy ratio was 22.16% as on March 31, 2014, which is significantly above the threshold limit of 15% as prescribed by the RBI.

CREDIT RATING

Short-term borrowing programme: During the year under review, Credit Analysis & Research Ltd. ("CARE") reaffirmed the "A1 " ("A One Plus") rating for the short term borrowing program for an amount of Rs. 9,000 million. The rating is the highest rating issued by CARE for short term debt instruments and indicates strong capacity for timely payment of short term debt obligations and further indicates that the borrowing carries the lowest credit risk.

During the year, Credit Analysis & Research Ltd. (CARE) and Brickwork Ratings India Private Limited (Brickwork) reaffirmed the long term rating of "AA " (Double A Plus) of your Company. Instruments with this rating are considered to have high degree of safety regarding timely servicing of financial obligations. Such instruments carry very low credit risk.

Long-term Bank Loan Facilities: During the year, the Company''s rating of "CARE AA " ("Double A Plus") by CARE in respect of the long-term bank loan facilities, having tenure of more than one year of the Company, was enhanced fromRs. 45,000 million toRs. 81,450 million.

Secured Redeemable Non-Convertible Debentures (NCDs):

During the year CARE reaffirmed the Company''s rating of "CARE AA " ("Double A Plus") for the Secured Redeemable NCDs for an aggregate amount of Rs. 10,500 million. The rating of "BWR AA " ("BWR Double A Plus") for Secured Redeemable NCDs was also reaffirmed by Brickwork.

Subordinated Non-Convertible Debentures (NCDs): During the year CARE reaffirmed the rating of "CARE AA " ("Double A Plus") ratingforthe Unsecured Subordinated Debt program of the Company for an aggregate amount ofRs. 2,000 million. Brickwork also reaffirmed the rating to "BWR AA " ("BWR Double A Plus") for the Unsecured Subordinated Debt program of the Company for an aggregate amount of Rs. 2,000 million.

Perpetual Non-Convertible Debentures (NCDs): During the year CARE reaffirmed the "CAREAA" ("Double A") ratingtothe Perpetual Debt program of the Company for an aggregate amount of Rs. 1,500 million. Brickwork also reaffirmed the "BWR AA" ("Double A") rating to the Perpetual Debt program of the Company for an aggregate amount of Rs. 1,500 million.

DIRECTORS

In accordance with Section 152 and other applicable provisions of Companies Act, 2013, Mr. Vishal Mahadevia, being Non- Executive Director, retires by rotation and being eligible offers himself for re-appointment at the ensuing Annual General Meeting. Also, as per the provisions of Companies Act, 2013, it is proposed to appoint Mr. Anil Singhvi, Mr. N.C. Singhal, Mr. Hemang Raja and Mr. M.S. Sundara Rajan as Independent Directors of the Company for a consecutive term of three years up to March 31, 2017.

Brief resumes of Directors, nature of their expertise in specific functional areas and names of companies in which they hold Directorship and/or Membership/Chairmanship of Committees of the Board (excluding Private Limited Company, Non Profit making Companies and Foreign Companies) are annexed and forms part of this Report {Annexure 1).

Based on the confirmations received, none of the Directors are disqualified for appointment under Section 274(l)(g) of the Companies Act, 1956 and Section 164(2) of Companies Act, 2013.

DIRECTORS''RESPONSIBILITY STATEMENT

Pursuant to the requirements of Section 217(2AA) of the Companies Act, 1956, with respect to Directors'' Responsibility Statement, it is hereby confirmed:

i) that in the preparation of the annual accounts for the financial year ended March 31, 2014, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any.

ii) that the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that period.

iii) that the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

iv) that the Directors have prepared the annual accounts for the financial year ended March 31, 2014, on a going concern basis.

CONSOLIDATED FINANCIAL STATEMENTS

The Audited Consolidated Financial Statements are provided in this Annual Report. These statements have been prepared on the basis of the financial statements received from Subsidiaries, as approved by their respective Board of Directors.

AUDITORS

M/s. S. R. Batliboi & Co. LLP, Chartered Accountants, Statutory Auditors of the Company, retire at the ensuing Annual General Meeting and have expressed their willingness to continue, if so appointed. As required under the provisions of Sections 139 and 141 of the Companies Act, 2013, the Company has obtained a written consent and relevant certification from the Auditors proposed to be re-appointed.

A proposal seeking their re-appointment is provided as part of the Notice of the ensuing Annual General Meeting.

PARTICULARS OF EMPLOYEES, EMPLOYEES STOCK OPTION SCHEME AND EMPLOYEES STOCK PURCHASE SCHEME

In terms of the provisions of Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, as amended from time to time, the name and other particulars of certain employees are required to be set out in the Annexure to the Directors'' Report. However, as per the provisions of Section 219(l)(b)(iv) of the said Act, the Directors'' Report excluding the aforesaid information is being sent to all the Members of the Company and others entitled thereto. Members who are interested in obtaining such particulars may write to the Company.

Subsequent to the year under review, Board of Directors of the Company on the recommendation of Compensation & Nomination Committee at its Meeting held on April 02, 2014, approved the ''CMD Stock Option Scheme - 2014''.

Also, during the year under review, Company has granted employee stock options to eligible employees under various Employee Stock Option Schemes. Subsequent to the year under review, the Company has allotted 74,500 equity shares to eligible employees under aforesaid Schemes.

The disclosure(s) as required under the Securities and Exchange Board of India (Employee Stock Option Scheme & Employee Stock Purchase Scheme) Guidelines, 1999, are annexed and forms part of this Report {Annexure 2).

PARTICULARS OF ENERGY CONSERVATION, TECHNOLOGY ABSORPTION, EXPENDITURE ON RESEARCH AND DEVELOPMENT, FOREIGN EXCHANGE INFLOW/OUTFLOW, ETC.

The requirements of disclosure with regard to Conservation of Energy in terms of Section 217(l)(e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, are not applicable to the Company.

The Company''s activities do not require any technology to be absorbed as mentioned in the aforesaid Rules. However the Company makes all efforts towards conservation of energy, protection of environment and ensuring safety.

The details of the earnings and outgo in Foreign Exchange during the year under review are provided in Notes to the Financial Statements as at March 31, 2014. The Members are requested to refer to the said Note for details in this regard.

ACKNOWLEDGEMENT

We are grateful to the Government of India, the Reserve Bank of India, the Securities and Exchange Board of India, the Stock Exchanges, Insurance Regulatory and Development Authority of India, National Housing Bank and other regulatory authorities for their valuable guidance and support and wish to express our sincere appreciation for their continued co-operation and assistance. We look forward to their continued support in future.

We wish to thank our bankers, rating agencies, customers and all other business associates for their support and trust reposed in us.

Your Directors express their deep sense of appreciation for all the employees whose commitment, co-operation, active participation, dedication and professionalism has made the organisation''s growth possible.

Finally, the Directors thank you for your continued trust and support.

On behalf of the Board of Directors

V. Vaidyanathan

Chairman

Place : Mumbai

Date : May 08, 2014


Mar 31, 2013

Dear Members,

The Directors have pleasure in presenting the Eighth Annual Report of your Company with the audited statement of accounts for the year ended March 31, 2013.

FINANCIAL HIGHLIGHTS

The highlights of the consolidated and standalone financial results of the Company for the financial years 2012-13 and 2011-12 are as under:

(Rs. in Million)

Particulars Consolidated Standalone 2012-13 2011-12 2012-13 2011-12

Total Income 8,196.19 7,437.45 8,000.54 7,027.62

Total Expenditure 7,677.11 5,921.51 7,459.31 5,676.50

Profit Before Tax and exceptional items 519.08 1,515.94 541.23 1,351.12

Exceptional income/ (expense) 213.10 - 243.21 -

Provision For Tax 101.08 457.63 86.70 429.19

Profit After Tax 631.10 1,058.31 697.74 921.93

Profit/(Loss) brought forward from previous year 353.83 (359.07) 757.26 178.78

Add: Loss of subsidiary excluded on sale 32.75 - - -

Profit available for appropriation 1,017.68 699.24 1,455.00 1,100.71

Appropriations:

Transfer to Reserve Fund under Section 45- IC of the RBI Act, 1934 139.55 186.34 139.55 184.39

Proposed Dividend 127.84 97.20 127.84 97.20

Dividend Tax thereon 21.73 15.77 21.73 15.77

Transfer to General Reserve 52.33 46.10 52.33 46.09

Balance carried forward to Balance Sheet 676.23 353.83 1,113.55 757.26

The Company is focused on providing a number of retail financial services to Retail, MSME, Consumer and wholesale credit, which is expected to drive growth for the Company going forward. Towards this end, the Company has launched a number of retail businesses recently.

During the year under review, the Company has successfully grown its outstanding Loan Assets under Management from Rs. 61.86 billion to Rs. 75.09 billion, a growth of 21%. The Retail Assets under Management has grown from Rs. 34.60 billion to Rs. 55.60 billion, a growth of 61%. As part of the plan to change the mix of assets, the Wholesale Book reduced by 28% from Rs. 27.25 billion to Rs. 19.50 billion.

The Net worth of the Company increased from Rs. 8,316 million to Rs. 9,607 million as at March 31, 2013.

Consolidated Net Interest Income increased by 29% from Rs. 1,970 million during the financial year ending March 31, 2012 to Rs. 2,538 million during the financial year ending March 31, 2013.

The Profit After Tax was down by 40% from Rs. 1,058 million to Rs. 631 million. However this is not representative of any reduced prospects of profitability of the Company. In fact the reduced profits are because of investments to scale up new business like Consumer Durables (grown from Rs. 444 million in FY 12 to Rs. 1,821 million in FY 13), Gold Loans (grown from Rs. 2,343 million in FY12 to Rs. 4,408 million in FY13), Two wheeler Loans (grown from Rs. 138 million in FY12 to Rs. 1,631 million in FY13), Loan against Property (grown from Rs. 30,510 million in FY12 to Rs. 46,234 million in FY13). Scaling up of these businesses also required commensurate investment in IT, collections and credit resources. In fact, the Company is confident of growing profits in a sustainable manner in the years to come based on the above investments. Further, the Company changed its accounting policies on amortising income on certain key income items which will make the income more stable and sustainable in future years.

DIVIDEND

Keeping in mind the overall performance and the outlook for your Company, your Directors are pleased to recommend a dividend of Rs. 1.80/- (Rupee One and Paise Eighty only) per share i.e. 18% on each Equity Share of Rs. 10/- (Rupees Ten only). The dividend would be paid to all the shareholders, whose names appear in the Register of Members/Beneficial Holders list on the Book Closure/Record date.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

As required under Clause 49 of the Listing Agreement entered into with the Stock Exchanges, the Management Discussion and Analysis of the financial condition and result of consolidated operations of the Company for the year under review, is annexed and forms an integral part of this Directors'' Report.

CORPORATE GOVERNANCE

A Report on Corporate Governance as required under Clause 49 of the Listing Agreement entered into with the Stock Exchanges, forms part of the Annual Report.

A Certificate from M/s. SVJS & Associates, Company Secretaries, confirming compliance with the conditions of Corporate Governance as stipulated under the aforesaid Clause 49, also forms part of the Annual Report.

SHARE CAPITAL

During the year under review, the Board at its Meeting held on June 4, 2012 had approved the execution of Share Purchase Agreement inter-alia with Pantaloon Retail (India) Limited, Future Value Retail Limited and Cloverdell Investment Ltd ("Cloverdell") and also the execution of Share Subscription Agreement with Cloverdell, pursuant to which an open offer was proposed by Cloverdell. Consequent to the subscription of shares and secondary acquisition through the above arrangement, Cloverdell acquired substantial stake and control of the Company and became Promoter of the Company. Cloverdell is a part of Warburg Pincus group. Warburg Pincus is a leading global private equity firm focused on growth investing. The firm has more than US$40 billion in assets under management. Its active portfolio of more than 125 companies is highly diversified by stage, sector and geography. Warburg Pincus is an experienced partner to management teams seeking to build durable companies with sustainable value. Founded in 1966, Warburg Pincus has raised 13 private equity funds which have invested more than US$45 billion, in over 675 companies, in more than 35 countries.

During the year under review, pursuant to the approval of the shareholders sought through Postal Ballot, results of which were announced on July 5, 2012, the authorized share capital of the Company has been reclassified into 10,30,00,000 equity shares of Rs. 10/- each and 1,00,00,000 Compulsorily Convertible Preference Shares (CCPS) of Rs. 10/- each, aggregating to Rs. 1,13,00,00,000/-.

During the year under review, 53,000 equity shares were allotted to eligible employees of the Company under various Employee Stock Option Schemes of the Company.

Also, during the year under review, Cloverdell, who had been allotted 30,86,420 CCPS on September 28, 2012, requested for conversion of said shares into equity shares. Accordingly, the Board of Directors of the Company at its meeting held on March 14, 2013 allotted 30,86,420 equity shares against conversion of CCPS in the ratio of one equity share against one CCPS.

CHANGE OF NAME OF THE COMPANY & ITS SUBSIDIARIES

Pursuant to the change in control and acquisition of majority stake by Cloverdell Investment Ltd in the Company through preferential allotment, acquisition of stake from erstwhile Promoters and from public shareholders under an open offer under the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 and as envisaged in the Share Purchase Agreement, the name of the Company changed from ''Future Capital Holdings Limited'' to ''Capital First Limited'' on November 8, 2012 vide the approval received from Registrar of Companies, Maharashtra, Mumbai.

To realign the name of the subsidiaries with the name of the holding Company i.e. Capital First Limited, the name of the following subsidiaries were changed in the manner given below pursuant to the approval received from Registrar of Companies:

1. Capital First Securities Limited (Formerly Future Capital Securities Limited)

2. Capital First Commodities Limited (Formerly Future Capital Commodities Limited)

3. Capital First Home Finance Private Limited (Formerly Future Capital Home Finance Private Limited)

4. Capital First Investment Advisory Limited (Formerly Kshitij Investment Advisory Company Limited)

SUBSIDIARIES

Your Directors are pleased to inform that the Hon''ble High Court of Judicature at Bombay, vide its order dated April 13, 2012, has approved the Scheme of Amalgamation of two wholly owned subsidiaries of the Company viz. Future Capital Investment Advisors Limited and FCH Securities & Advisors Limited with Capital First Investment Advisory Limited (formerly Kshitij Investment Advisory Company Limited) and the same has been effective pursuant to filing a certified copy of the said order with the Registrar of Companies on June 2, 2012.

Pursuant to inflow of Foreign Direct Investment by Cloverdell Investment Ltd, downstream investment was made pursuant to adherence of minimum capitalization norms as per Consolidated Foreign Direct Investment Policy in subsidiary companies of the Company viz. Capital First Securities Limited, Capital First Home Finance Private Limited, Capital First Investment Advisory Limited and Capital First Commodities Limited through Capital First Securities Limited.

During the year under review, the Company sold the entire 10,00,000 fully paid-up equity shares of Rs. 10/- each held in its Wholly Owned Subsidiary Company namely Myra Mall Management Company Limited (Myra Mall) to Providence Educational Academy Private Limited, in its capacity as a Trustee of AAA Holding Trust, a private trust. Consequently, Myra Mall ceased to be a Subsidiary of the Company with effect from July 9, 2012.

Also, the Company sold the entire 1,07,50,000 fully paid-up equity shares of Rs. 10/- each held in its Wholly Owned Subsidiary Company namely Future Finance Limited to APAC Consultants Private Limited and its Associates. Consequently, Future Finance Limited also ceased to be a Subsidiary of the Company with effect from March 1, 2013.

Subsequent to the year under review, Capital First Home Finance Private Limited (formerly known as Future Capital Home Finance Private Limited), a Wholly Owned Subsidiary of the Company has received the Certificate of Registration from National Housing Bank to commence business of housing finance institution without accepting public deposits.

In terms of the General Circulars No. 2/2011 & 3/2011 of the Ministry of Corporate Affairs (MCA), dated 8th and 21st February, 2011, respectively, copies of the Balance sheet, Profit and Loss Account, Report of the Board of Directors and Auditors of the Subsidiaries of the Company have not been attached with the Balance Sheet of the Company. These documents will be made available upon request by any Member of the Company interested in obtaining the same and these documents are also kept for inspection by any Member at the Corporate Office of the Company and the Subsidiaries. However, as directed by the MCA, the financial data of the Subsidiaries has been furnished under ''Details of Subsidiaries'', forming part of the Audited Accounts. Further, pursuant to Accounting Standard (AS - 21) issued by the Institute of Chartered Accountants of India, the Consolidated Financial Statements presented by the Company in this Annual Report includes financial information of its Subsidiaries.

PUBLIC DEPOSITS

The Company being a Non Deposit Accepting Non Banking Finance Company has not accepted any deposits from the public during the year under review and shall not accept any deposits from the public without obtaining prior approval of the Reserve Bank of India (RBI).

RBI GUIDELINES

The Company has complied with the Regulations of the RBI as on March 31, 2013, as are applicable to it as a Systemically Important Non Deposit taking Non Banking Finance Company.

CAPITAL ADEQUACY

The Company''s capital adequacy ratio was 23.53% as on March 31, 2013, which is significantly above the threshold limit of 15% as prescribed by the RBI.

CREDIT RATING

Short-term borrowing programme: During the year under review, Credit Analysis & Research Ltd. ("CARE") retained the "A1 " ("A One Plus") rating of short term borrowing program for an amount of Rs. 9,000 million. The rating is the highest rating issued by CARE for short term debt instruments and indicates strong capacity for timely payment of short term debt obligations and further indicates that the borrowing carries the lowest credit risk.

During the year, the long term rating of your Company was upgraded by two notches to "AA " (Double A Plus) from "AA-" (Double A Minus) by both the rating agencies; CARE and Brickwork Ratings India Private Limited (Brickwork). Instruments with this rating are considered to have high degree of safety regarding timely servicing of financial obligations. Such instruments carry very low credit risk.

Long-term Bank Loan Facilities: During the year CARE has upgraded your Company''s rating to "CARE AA " ("Double A Plus") from "CARE AA-" ("Double A Minus") in respect of the long-term bank loan facilities of the Company aggregating to Rs. 45,000 million (enhanced from Rs. 22,500 million), having tenure of more than one year.

Secured Redeemable Non-Convertible Debentures (NCDs):

During the year CARE has upgraded your Company''s rating to "CARE AA " ("Double A Plus") from "CARE AA-" ("Double A Minus") for the Secured Redeemable NCDs for an aggregate amount of Rs. 10,500 million (enhanced from Rs. 6,000 million). The rating of the Secured Redeemable NCDs was also upgraded by Brickwork to "BWR AA " ("BWR Double A Plus") from "BWR AA-" ("BWR Double A Minus") for issue size upto Rs. 10,000 million (enhanced from Rs. 5,500 million).

Subordinated Non-Convertible Debentures (NCDs): During the year CARE has assigned the "CARE AA " ("Double A Plus") rating to the Unsecured Subordinated Debt program of the Company for an aggregate amount of Rs. 2,000 million. Brickwork upgraded the rating to "BWR AA " ("BWR Double A Plus") from "BWR AA-" ("BWR Double A Minus") to the Unsecured Subordinated Debt program of the Company for an aggregate amount of Rs. 2,000 million (enhanced from Rs. 1,500 million).

Perpetual Non-Convertible Debentures (NCDs): During the year CARE has also assigned the "CARE AA" ("Double A") rating to the Perpetual Debt program of the Company for an aggregate amount of Rs. 1,500 million. Brickwork has also assigned the "BWR AA" ("Double A") rating to the Perpetual Debt program of the Company for an aggregate amount of Rs. 1,500 million.

DIRECTORS

During the year under review, Mr. Kishore Biyani, Mr. G. N. Bajpai, Mr. Shailesh Haribhakti, Mr. Pradeep Mukerjee and Mr. K. K. Rathi resigned as Directors of the Company. The Board of Directors of the Company placed on record its appreciation for the valuable contribution made by these esteemed members in steering the Company on its growth path over the years.

Subsequent to the investment made by Warburg Pincus through its affiliate Cloverdell Investment Ltd, Mr. V. Vaidyanathan was designated as the Chairman of the Board of Directors of the Company.

Mr. Vishal Mahadevia, Mr. M S Sundara Rajan and Mr. Hemang Raja were appointed as additional Directors of the Company, during the year under review.

In accordance with Sections 255 and 256 of the Companies Act, 1956, read with the Articles of Association of the Company, Mr. Anil Singhvi, being Non-Executive and Independent Director, retire by rotation and being eligible offer himself for re-appointment at the ensuing Annual General Meeting.

Brief resumes of Directors, nature of their expertise in specific functional areas and names of companies in which they hold Directorship and/or Membership/Chairmanship of committees of the Board, are annexed and forms part of this Report (Annexure 1).

Based on the confirmations received, none of the Directors are disqualified for appointment under Section 274(1)(g) of the Companies Act, 1956.

DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to the requirements of Section 217(2AA) of the Companies Act, 1956, with respect to Directors'' Responsibility Statement, it is hereby confirmed:

i) that in the preparation of the annual accounts for the financial year ended March 31, 2013, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any.

ii) that the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that period.

iii) that the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

iv) that the Directors have prepared the annual accounts for the financial year ended March 31, 2013, on a going concern basis.

CONSOLIDATED FINANCIAL STATEMENTS

The Audited Consolidated Financial Statements are provided in this Annual Report. These statements have been prepared on the basis of the financial statements received from Subsidiaries, as approved by their respective Board of Directors.

AUDITORS

M/s. S. R. Batliboi & Co. LLP, Chartered Accountants, Statutory Auditors of the Company, retire at the ensuing Annual General Meeting and have expressed their willingness to continue, if so appointed. As required under the provisions of Section 224(1B) of the Companies Act, 1956, the Company has obtained a written confirmation from the Auditors proposed to be re-appointed to the effect that their re-appointment, if made, would be in conformity with the limits specified in the said Section.

A proposal seeking their re-appointment is provided as part of the Notice of the ensuing Annual General Meeting.

PARTICULARS OF EMPLOYEES, EMPLOYEES STOCK OPTION SCHEME AND EMPLOYEES STOCK PURCHASE SCHEME

In terms of the provisions of Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, as amended from time to time, the name and other particulars of certain employees are required to be set out in the Annexure to the Directors'' Report. However, as per the provisions of Section 219(1)(b)(iv) of the said Act, the Directors'' Report excluding the aforesaid information is being sent to all the Members of the Company and others entitled thereto. Members who are interested in obtaining such particulars may write to the Company.

During the year under review, the Members of the Company vide Special Resolutions passed through Postal Ballot, result of which was announced on July 5, 2012, approved the CFL Employees Stock Option Scheme - 2012 (CFL ESOS - 2012) for the employees of the Company and its Subsidiary Companies.

Also, during the year under review, Company has granted employee stock options to eligible employees under various Employee Stock Option Schemes and also allotted 53,000 equity shares to eligible employees under aforesaid Schemes.

The disclosure(s) as required under the Securities and Exchange Board of India (Employee Stock Option Scheme & Employee Stock Purchase Scheme) Guidelines, 1999, are annexed and forms part of this Report (Annexure 2).

PARTICULARS OF ENERGY CONSERVATION, TECHNOLOGY ABSORPTION, EXPENDITURE ON RESEARCH AND DEVELOPMENT, FOREIGN EXCHANGE INFLOW/OUTFLOW, ETC.

The requirements of disclosure with regard to Conservation of Energy in terms of Section 217(1)(e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, are not applicable to the Company.

The Company''s activities do not require any technology to be absorbed as mentioned in the aforesaid Rules. However the Company makes all efforts towards conservation of energy, protection of environment and ensuring safety.

The details of the earnings and outgo in Foreign Exchange during the year under review are provided in Notes to the Financial Statements as at March 31, 2013. The Members are requested to refer to the said Note for details in this regard.

ACKNOWLEDGEMENT

We are grateful to the Government of India, the Reserve Bank of India, the Securities and Exchange Board of India, the Stock Exchanges, Foreign Investment & Promotion Board, Insurance Regulatory and Development Authority of India, National Housing Bank and other regulatory authorities for their valuable guidance and support and wish to express our sincere appreciation for their continued co-operation and assistance. We look forward to their continued support in future.

We wish to thank our bankers, rating agencies, customers and all other business associates for their support and trust reposed in us.

Your Directors express their deep sense of appreciation for all the employees whose commitment, co-operation, active participation, dedication and professionalism has made the organisation''s growth possible.

Finally, the Directors thank you for your continued trust and support.

On behalf of the Board of Directors

V. Vaidyanathan

Chairman & Managing Director

Place : Mumbai

Date : May 27, 2013

 
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