Mar 31, 2023
Your Directors have pleasure in presenting the Twenty-Sixth Annual Report on the business and operations of the Company together with the audited financial statements, prepared under Ind-AS, for the financial year ended March 31, 2023.
Effective October 1, 2015 post demerger of Financing Undertaking into IDFC FIRST Bank Limited (earlier known as IDFC Bank) (âIDFC FIRST Bankâ or âthe Bankâ), IDFC Limited (âIDFCâ or âthe Companyâ) is operating as an NBFC - Investment Company mainly holding investment in IDFC Financial Holding Company Limited (âIDFC FHCLâ) which is a non-operative financial holding company. IDFC FHCL in turn holds investments in IDFC FIRST Bank Limited. IDFC has minimal business operations and its main focus is to simplify corporate structure and unlock value for shareholders. During the year, Balance Sheet size increased from Rs. 9,416.45 crore as on March 31, 2022 to Rs. 9,570.64 crore as on March 31, 2023. Profit after tax and other comprehensive income was higher at Rs. 2,029.00 crore for FY23 as compared to Rs. 53.88 crore in FY22. Net worth of the Company increased from Rs. 9,391.06 crore as on March 31, 2022 to Rs. 9,518.64 crore as on March 31, 2023. During the year, the Company transferred
Rs. 405.83 crore to Special Reserve u/s 45-IC of Reserve Bank of India (âRBIâ)
Act, 1934. Details of business overview and outlook of the Company and its subsidiaries are appearing in the chapter Management Discussion and Analysis which forms part of this report.
The Board of Directors at its meeting held on February 01, 2023 declared a special dividend of Rs.11/- per share. The same was paid on February 23, 2023. The Board also at its meeting held on April 06, 2022 declared an interim dividend of Re. 1/- per share. The same was paid to th Shareholders on May 02, 2022. The Board has not recommended any final dividend for FY 23.
In accordance with the Regulation 43A of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (âSEBI LODR Regulationsâ), IDFC had formulated a Dividend Distribution Policy. The policy was adopted to set out the parameters and circumstances that will be considered by the Board in determining the distribution of dividend to its Shareholders and / or retaining profits earned by the Company. The said policy is hosted on the website of the Company and can be viewed at http://www.idfclimited. com/investor_ relations/corporate_ governance_policies.htm.
The Company has one domestic direct subsidiary & three associate companies as on March 31, 2023 which are given in Table 1.
CORPORATE SIMPLIFICATION DURING THE YEAR
Sale of IDFC Asset Management Company Limited (IDFC AMC) and IDFC AMC Trustee Company Limited (IDFC AMC Trustee)
The Board of Directors of IDFC and the Board of Directors of IDFC FHCL at their respective meetings held on April 06, 2022, had inter alia considered binding bids received in connection with divestment of IDFC AMC along with IDFC AMC Trustee and had approved sale of the entire shareholding of IDFC AMC and IDFC AMC Trustee held by IDFC FHCL to a consortium comprising of Bandhan Financial Holding Limited, Lathe Investment Pte. Ltd. (affiliate of GIC), Tangerine Investments Limited and Infinity Partners (affiliates of ChrysCapital). On July 07, 2022, the Shareholders of IDFC through postal ballot had approved the divestment/ sale/ disposal of the IDFC AMC (material subsidiary of IDFC) and IDFC AMC Trustee.
The aforesaid transaction was completed on January 31, 2023 after receipt of all necessary regulatory approvals and completion of mutually agreed closing related actions. On sale of IDFC AMC & IDFC AMC Trustee, IDFC FHCL (a wholly owned subsidiary of IDFC Limited) received sale consideration of Rs. 4,490.50 crore. The sale proceeds of Rs. 4,490.50 crore were utilised to:
(a) pay income tax of approx.: Rs. 350.00 crore;
(b) subscribe to preferencial offer made by IDFC FIRST Bank @ Rs. 58.18 per share to take our holding in IDFC FIRST Bank from 36.4% to 39.99%,
Rs. 2,200.00 crore;
(c) pay dividend to IDFC''s Shareholders Rs. 1,760.00 crore.
As a result of the sale, IDFC AMC and IDFC AMC Trustee ceased to be a part of IDFC Group Companies with immediate effect. Subsequently, on April 19, 2023 name has been changed from IDFC Asset Management Company Limited to Bandhan AMC Limited and IDFC AMC Trustee Company Limited to Bandhand Mutual Fund Trustee Limited.
MERGER OF THREE WHOLLY OWNED SUBSIDIARIES
In order to simplify corporate structure and to bring synergy, the Board of Directors (''the Board'') of IDFC at its meeting held on November 09, 2021 had inter alia considered and approved the Scheme of Amalgamation of IDFC Alternatives Limited (the Transferor Company 1), IDFC Trustee Company Limited (Transferor Company 2) and IDFC Projects Limited (Transferor Company 3) (wholly owned subsidiary Companies) into IDFC (Transferee Company) subject to regulatory approvals from various authorities, as applicable. The Registrar of Companies, Chennai upon receipt of the proposed scheme and Form CAA-9 has intimated the Transferor Company 1, the Transferor Company 2, the Transferor Company 3, and the Transferee Company that it has no observations/suggestions to the Scheme of Amalgamation vide letter dated February 01, 2022. On February 06, 2022, the Shareholders of IDFC through postal ballot had approved the aforesaid Scheme of Amalgamation. The Official Liquidator attached to the Madras High Court has intimated the Transferor Company 1, the Transferor Company 2 and the Transferor Company 3 that it has no observations/suggestions to the Scheme of Amalgamation vide letter dated March 24, 2022.
The aforesaid scheme was approved and sanctioned by the Hon''ble National Company Law Tribunal, Chennai bench vide Order dated November 22, 2022 (''NCLT Order''). The captioned Scheme of Amalgamation has become operative from December 09, 2022 (''Effective Date'').
As on March 31, 2023, IDFC Alternatives Limited, IDFC Trustee Company Limited and IDFC Projects Limited ceased to exist.
IDFC FOUNDATION
On October 28, 2022, IDFC had entered in to âDeed of Donationâ for Donation of entire equity stake held in IDFC Foundation by IDFC to Upajeevan Sangathan Foundation (a âNot for profitâ organisation within the meaning of section 8 of the Companies Act, 2013). With divestment of IDFC Foundation,
Delhi Integrated Multi - Modal Transit System Limited (DIMTS) and Infrastructure Development Corporation (Karnataka) Limited (iDeCK), both these two joint venture entities have also been divested. As on March 31, 2023, IDFC Foundation ceased to be subsidiary company of IDFC.
PROPOSED MERGER OF IDFC, IDFC FHCL AND IDFC FIRST BANK
The Boards of IDFC, IDFC FHCL and IDFC FIRST Bank at their respecting meetings held on December 30, 2021 have accorded in-principle approval to merge IDFC and IDFC FHCL with IDFC FIRST Bank. The Board of directors of IDFC and IDFC FHCL at their respective meetings held on March 18, 2023 approved: (a) Appointment of SSPA & CO., Chartered Accountants as registered valuer for recommendation of fair share exchange ratio (b) Appointment
of Axis Capital Limited for issuance of fairness opinion on the share exchange ratio (c) Appointment of Cyril Amarchand Mangaldas - Law Firm for conducting due diligence, drafting and finalizing scheme of amalgamation and filing regulatory applications.
Based on recommendations and report of the Audit Committee and the Independent Directors'' Committee, the Board of Directors of IDFC and IDFC FHCL, at their respective meetings held on July 3, 2023, have Inter alia, approved a composite Scheme of Amalgamation, (âthe Schemeâ) which inter alia envisages the amalgamation of: (i) IDFC FHCL into and with IDFC; and (ii) IDFC into IDFC FIRST Bank, and their respective shareholders, under Sections 230 to 232 of the Act and other applicable laws including the rules and regulations (âProposed Transactionâ). The Scheme is subject to the receipt of requisite approvals from: (i) the Reserve Bank of India (âRBIâ), (ii) Securities and Exchange Board of India (âSEBIâ),
(iii) Pension Fund Regulatory and Development Authority, (iv) Competition Commission of India (âCCIâ), (v) National Company Law Tribunal, (vi) BSE Limited and the National Stock Exchange of India Limited (collectively, the âStock Exchangesâ), and (vii) other statutory and regulatory authorities, and the respective Shareholders, under applicable law.
The share exchange ratio for the amalgamation of IDFC with and into IDFC FIRST Bank shall be 155 equity shares (credited as fully paid up) of face value of Rs. 10/- (Indian Rupees Ten) each of IDFC FIRST Bank for every 100 fully paid-up equity shares of face value of Rs. 10/-(Indian Rupees Ten) of IDFC.
As per the Scheme, (i) âAppointed date 1â means close of business hours on the day immediately preceding the Effective Date for the merger of IDFC FHCL into and with IDFC, and (ii) âAppointed Date 2â means opening of business hours on the Effective Date for merger of IDFC into IDFC FIRST Bank. The Scheme shall be operative from the Effective Date (as defined in the Scheme).
CONSOLIDATED FINANCIAL STATEMENTS
The Board of Directors of IDFC reviews the affairs of its subsidiary companies regularly. In accordance with the provisions of Section 129(3) of the Companies Act, 2013 (âthe actâ), the Company has prepared Consolidated Financial Statements including requisite details of the subsidiary. Further, a statement containing the salient features of performance and financial positions of all the subsidiary companies / associates/ joint ventures in the format AOC-I is appended as Annexure 1. In accordance with Section 136 of the Act, the Audited Financial Statements together with the Consolidated Financial Statements and related information of the Company and audited accounts of each subsidiary company are available on the website of the Company: www. idfclimited.com. Detailed analysis of the performance of IDFC and its businesses, including initiatives in the areas of Risk Management, Human Resources, have been presented in the section on Management Discussion & Analysis which forms part of this Annual Report.
PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES
IDFC had 7 employees as on March 31, 2023. In terms of the provisions of Section 197(12) of the Act, read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended from time to time, a statement showing the names and other particulars of the employees drawing remuneration in excess of the limits set out in the said rules is provided in this Annual Report. Having regard to the provisions of the first proviso to Section 136(1) of the Act, the Annual Report excluding the aforesaid information is being sent to the Shareholders of the Company. The said information is available for inspection at the Registered Office and Corporate Office of the Company during working hours and any Member interested in obtaining such information may write to the Company Secretary and the same will be furnished on request. Disclosure pertaining to remuneration & other details as required under section 197(12) of the Act, read with
Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended from time to time, are appended as Annexure 2.
SHARE CAPITAL UPDATE
During the year, the Company issued and allotted 35,48,494 equity shares to eligible employees of IDFC on exercise of options granted under Employee Stock Option Scheme 2016 (âIDFC ESOS -2016â). As on March 31, 2023, the total paid up capital of IDFC was 1,59,99,84,436 equity shares of Rs. 10/- each.
MANAGEMENT DISCUSSION ANALYSIS AND REPORT ON CORPORATE GOVERNANCE
In compliance with Regulation 34 of SEBI LODR Regulations, separate detailed chapters on Management Discussion & Analysis, Report on Corporate Governance and Additional Shareholder Information forms part of this Annual Report.
BUSINESS RESPONSIBILITY AND SUSTAINABILITY REPORT
As per Regulation 34(2)(f) of SEBI LODR Regulations and Notifications issued from time to time, a separate report called Business Responsibility and Sustainability Report (âBRSRâ) describing the initiatives taken by IDFC from an environmental, social and governance perspective which forms part of this Annual Report and also hosted on the website of the Company i.e. www.idfclimited.com.
PUBLIC DEPOSITS
During FY23, your Company has not accepted any deposits from the public within the meaning of the provisions of the Non-Banking Financial Companies Acceptance of Public Deposits (Reserve Bank) Directions, 1998 or under Chapter V of the Act.
PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS
Post demerger of financing undertaking into IDFC Bank w.e.f. October 1, 2015,
IDFC is registered with RBI as NBFC -Investment Company. Being an investment company, the provisions of Section 186 of the Act are not applicable to IDFC. Hence,
the requisite details of loans, guarantees and investments are not given.
VIGIL MECHANISM / WHISTLE BLOWER POLICY
IDFC has put in place a Whistle Blower Policy, which includes reporting to the Management instances of unethical behaviour, actual or suspected fraud or violation of the Company''s Code of Conduct. The Audit Committee directly oversees the Vigil Mechanism. The provisions of the policy are also in line with the provisions of Section 177 (9) &
(10) of the Act. The details of Whistle Blower Policy / Vigil Mechanism are posted on the website of the Company: www.idfclimited.com. There were no instances reported during the year.
FOREIGN EXCHANGE
There were no foreign exchange earnings or expenditure during the year under review.
PARTICULARS REGARDING CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTION
Since the Company does not carry out any manufacturing activity, the particulars regarding conservation of energy, technology absorption and other particulars as required by Section 134(3) (m) of the Act read with the Companies (Accounts) Rules, 2014 are not applicable to IDFC.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
The Board of IDFC at its Meeting held on August 14, 2019 had appointed Ms. Ritu Anand (DIN: 05154174) as an Additional Director in the category of Independent Director (âIDâ) w.e.f. August 16, 2019. At the 22nd AGM held on September 30, 2019, the Shareholders of the Company had approved her appointment as an ID for a period of three (3) consecutive years w.e.f. August 16, 2019 till August 15, 2022. Accordingly, Ms. Ritu Anand had completed her term of 3 (three) consecutive years at the close of business hours on August 15, 2022 and hence, ceased to be an ID of the IDFC. The Board places on record its sincere appreciation foi the valuable contribution by her.
The Nomination and Remuneration Committee and the Board of Directors of IDFC, at their respective meetings held on August 24, 2022 accepted the resignation of Mr. Mahendra N Shah as the Company Secretary and Compliance Officer of IDFC at the close of business hours on August
24, 2022. The Board also approved an appointment of Mr. Mahendra N Shah (DIN: 00124629) as the Managing Director-Designate of the Company with immediate effect.
Further, based on recommendation of Nomination and Remuneration Committee, the Board of Directors of the Company appointed Ms. Shivangi Mistry as the Company Secretary and Compliance Officer of the Company w.e.f. August
25, 2022 as designated Key Managerial Personnel in place of Mr. Mahendra N Shah.
Mr. Sunil Kakar was appointed as the Managing Director & Chief Executive Officer (âMD & CEOâ) of IDFC in the capacity of Key Managerial Personnel for a period of 3 years with effect from July 16, 2017 At the 20th AGM of the Company held on July 28, 2017, the Shareholders of the Company appointed Mr. Sunil Kakar (DIN: 03055561), as the MD & CEO, designated Key Managerial Personnel of the Company for a period of three (3) years w.e.f. July 16, 2017. Based on the recommendation of the Nomination and Remuneration Committee, the Board of Directors of the Company, at its meeting held on June 25, 2020 approved the re-appointment of Mr. Sunil Kakar as the MD & CEO of IDFC from July 16, 2020 till September 30, 2022 subject to approval of the Shareholders. The Shareholders of the Company vide a special resolution passed at its 23rd AGM held on September 25, 2020, re-appointed Mr. Sunil Kakar (DIN: 03055561) as the MD & CEO of IDFC w.e.f. July 16, 2020 till September 30, 2022. The term of Mr. Sunil Kakar as the MD & CEO of the Company ended at the close of business hours on September 30, 2022. The Board places on record its sincere appreciation for the valuable contribution by him.
The Shareholders of the Company, at its 25th AGM held on September 27, 2022,
approved appointment of Mr. Mahendra N Shah (DIN: 00124629) as the Managing Director with effect from October 01,
2022 till September 30, 2023. Accordingly, Mr. Mahendra N Shah was designated as the Managing Director in the capacity of Key Managerial Personnel of the Company with effect from October 01, 2022.
The current term of Mr. Mahendra N Shah will expire on September 30, 2023.
The Shareholders of the Company, at its 23rd AGM held on September 25, 2020, appointed Mr. Ajay Sondhi (DIN: 01657614) as Non-executive Independent Director for a period of 3 (three) consecutive years, from w.e.f. November 08, 2019. The Nomination and Remuneration Committee of the Company, at its meeting held on November 07, 2022, recommended the re-appointment of Mr. Ajay Sondhi as ID w.e.f. November 08, 2022 till conclusion of the 26th AGM of the Company to be held for FY23. Based on the recommendation of the Nomination and Remuneration Committee, the Board of Directors of the Company at its meeting held on November 11, 2022 approved and proposed to Members, the re-appointment of Mr. Ajay Sondhi as ID w.e.f. November 08, 2022 till conclusion of the 26th AGM of the Company to be held for FY 23. The Shareholders of the Company through Postal Ballot dated February 07, 2023, approved the re-appointment of Mr. Ajay Sondhi as ID w.e.f. November 08, 2022 till conclusion of the 26th AGM of the Company to be held for FY 23.
In accordance with the provisions of Section 152 of the Act, Mr. Mahendra N Shah (DIN: 00124629) would retire by rotation at the ensuing AGM and being eligible, offers himself for re-appointment.
Based on recommendation of Nomination and Remuneration Committee, the Board of Directors of the Company, at its meeting held on July 17, 2023, reappointed Mr. Mahendra N. Shah (DIN: 00124629) as the Managing Director w.e.f. October 01, 2023 till September 30, 2024 subject to approval of the Shareholders of the Company.
Further, based on recommendation of Nomination and Remuneration Committee and Audit Committee, the Board of Directors of the Company at its meeting held on July 17, 2023, appointed Mr.
Bipin Gemani (DIN: 07816126) as the Whole Time Director and Chief Financial Officer w.e.f. July 17, 2023 till Septemeber 30, 2024 subject to approval of the Shareholder of the Company.
Approval of the Shareholders is sought for re-appointment of Mr. Mahendra N. Shah and appointment of Mr. Bipin Gemani at the ensuing AGM.
FRAMEWORK FOR APPOINTMENT OF DIRECTORS
The Company has in place a framework for Board Diversity, Fit & Proper Criteria and Succession Planning for appointment of Directors on the Board of the Company.
The Company has received a declaration from all IDs that they meet the criteria of independence specified under Section 149 of the Act, read with Rule 5 of the Companies (Appointment and Qualification of Directors) Rules, 2014 and Regulation 16(1)(b) of SEBI LODR Regulations for holding the position of ID and that they shall abide by the âCode for Independent Directorsâ as per Schedule IV of the Act. Pursuant to IICA, Companies (Accounts) Amendments Rules, 2019 Companies (Creation and Maintenance of Databank of Independent Directors) Rules, 2019 and Companies (Appointment and Qualification of Directors) Fifth Amendment Rules,
2019 dated 22nd October, 2019, all IDs on the Board of the Company completed registration on Data Bank.
The Board of Directors recommends the following items under special business for approval of the Shareholders at the ensuing AGM:
i. Re-appointment of Mr. Mahendra N Shah as the Managing Director.
ii. Payment of the remuneration to Mr. Mahendra N Shah as the Managing Director.
iii. Appointment of Mr. Bipin Gemani as the Whole Time Director and Chief Financial Officer.
iv. Payment of Remuneration to
Mr. Bipin Gemani as the Whole Time Director and Chief Financial Officer.
SHAREHOLDERSâ UPDATE BOARD AND ITS COMMITTEES
During the year, 12 Board Meetings and 5 Audit Committee Meetings were held. The Audit Committee was reconstituted on August 24, 2022. The Committee is chaired by Mr. Anil Singhvi (DIN: 00239589) and has Mr. Ajay Sondhi (DIN: 01657614) and Ms. Anita Belani (DIN: 01532511) as its Members.
All the recommendations made by the Audit Committee during the year were accepted by the Board. The details of the constitution and meetings of the Board, Audit Committee and other Committees held during the year are provided in the Corporate Governance Report, which forms part of this Annual Report.
Pursuant to SEBI LODR Regulations and the Act, the process indicating the manner in which formal annual evaluation of the Chairman, Directors, Board as a whole and Board level committee is given in the Corporate Governance Report, which forms part of this Annual Report.
NOMINATION &REMUNERATION COMMITTEE / REMUNERATION POLICY
The Company has a policy in place for identification of independence, qualifications and positive attributes of Directors. IDFC has put in place a Remuneration Policy for the Directors, Key Managerial Personnel, Senior Management and Other Employees. The remuneration of the Executive Director and KMPs are recommended by NRC to the Board for its approval.
STATUTORY AUDITORS
At the 24th AGM of the Company held on September 22, 2021, the Shareholders had approved the appointment of KKC & Associates LLP (previously, Khimji Kunverji
& Co LLP), Chartered Accountants, (FRN 105146W/W-100621) as the Statutory Auditors for a period of 3 years to hold office from the conclusion of the 24th AGM till the conclusion of the 27th AGM of the Company. KKC has confirmed that they are not disqualified from continuing as Statutory Auditors of the Company for FY 24.
COST AUDIT
In terms of the Section 148 of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014, the Company is not required to undertake cost audit.
SECRETARIAL AUDIT
Pursuant to the provisions of Section 204 of the Act and Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company had appointed Bhandari & Associate, Company Secretaries to undertake the Secretarial Audit of the Company for FY23. The Secretarial Audit Report is appended as Annexure 3.
There are no qualifications or observations or adverse remarks made by the Statutory Auditors in their report. However, qualifications / observations / adverse remark made by Secretarial Auditors are mentioned on page no. 20.
COMPLIANCE WITH SECRETARIAL STANDARDS
Pursuant to the Secretarial Standard-I issued by the Institute of Company Secretaries of India pertaining to Board of Directors, the Company confirms that all applicable Secretarial Standards have been duly complied with during the period under review.
The Company has in place, adequate systems of Internal Control to ensure compliance with policies and procedures.
It is being constantly assessed and strengthened with new / revised standard operating procedures and tighter Information Technology controls. Internal Audit of the Company is regularly carried out. The Audit Reports of Internal Auditors
i.e. M/s Grant Thornton India LLP (âGTâ)
Limited (Transferee Company) was approved and sanctioned by the Hon''ble National Company Law Tribunal, Chennai bench vide Order dated November 22, 2022 (''NCLT Order''). Apart from above there were no significant and material orders passed by the Regulators / Courts/ Tribunals.
PROCEEDINGS UNDER INSOLVENCY AND BANKRUPTCY
During the year under review, the Company has not made any application nor any proceeding pending against the Company under the Insolvency and Bankruptcy Code, 2016.
ANTI SEXUAL HARASSMENT POLICY
The Company has in place the policy on Anti Sexual Harassment. The Company undertakes ongoing trainings to create awareness on this policy. There were no instances of Sexual Harassment that were reported during the period under review. The Company has constituted an Internal Complaints Committee for redressal of complaints and to prevent sexual harassment.
DIRECTORSâ RESPONSIBILITY STATEMENT
To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statements in terms of Section 134(3)(c) of the Act:
^ In that in the preparation of the annual financial statements for the year ended March 31, 2023, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;
^ In that such accounting policies have been selected and applied consistently and judgement and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2023 and of the Profit of the Company for the year ended on that date;
^ In that proper and sufficient care has been taken for the maintenance
along with their recommendations and implementation contained therein are regularly reviewed by the Audit Committee.
GT verified the key Internal Financial Control by reviewing key controls impacting financial reporting and overall risk management procedures of the Company and found the same satisfactory. Subsequently, it was placed before the Audit Committee of the Company.
RISK MANAGEMENT POLICY
IDFC as a group, has a robust risk management practice that enables it to book, manage and mitigate risks in all its businesses. The Company has a comprehensive Enterprise Risk Management framework which has been adopted across all entities in the group and covers all three types of risksâcredit, market and operational risks. The Board through its Risk Management & IT Strategy Committee monitors and reviews risk management of the group on a regular basis. The details of Risk Management Framework are provided in Management Discussion and Analysis.
MATERIAL CHANGES AND COMMITMENT AFFECTING FINANCIAL POSITION OF THE COMPANY
There are no material changes and commitments, affecting the financial position of IDFC which has occurred between the end of FY23 and the date of this Board''s report.
INSTANCES OF FRAUD REPORTED BY THE AUDITORS
There have been no instances of fraud reported by the Auditors under Section 143(12) of the Act.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS / COURTS / TRIBUNALS
During the year under review, the Scheme of Amalgamation of IDFC Alternatives Limited (the Transferor Company 1), IDFC Trustee Company Limited (the Transferor Company 2) and IDFC Projects Limited (the Transferor Company 3) (wholly owned subsidiary Companies) into IDFC
of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
^ In that the annual financial
statements have been prepared on a going concern basis;
^ In that proper internal financial
controls were in place and that the financial controls were adequate and were operating effectively;
^ In that systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively.
GREEN INITIATIVE
In accordance with the ''Green Initiative'', the Company has been sending the Annual Report / Notice of AGM in electronic mode to those Shareholders whose e-mail Ids are registered with the Company and / or the Depository Participants. Your Directors are thankful to the Shareholders for their active participation in this Green Initiative.
ANNUAL RETURN
The Annual Return of the Company has been placed on the website of the Company www.idfclimited.com in compliance with the provisions of section 134(3)(a) read with section 92(3) and the Rules made thereunder.
CORPORATE SOCIAL RESPONSIBILITY
The Corporate Social Responsibility (âCSRâ) was re-constituted on October 17, 2022. Mr. Anil Singhvi was inducted as the Member of the CSR Committee w.e.f. October 17, 2022. The CSR Committee consists of three Directors:
i. Dr. Jaimini Bhagwati (DIN: 07274047), Chairman
ii. Mr. Ajay Sondhi (DIN: 01657614), Member
iii. Mr. Anil Singhvi (DIN: 00239589), Member
The disclosure of contents of the Corporate Social Responsibility Policy of the Company as prescribed in the Companies (Corporate Social
Responsibility Policy) Rules, 2014 forms part of the Board''s Report and appended as Annexure 4.
The Company has in place the policy on Related Party Transactions and the same has been uploaded on the website of the Company i.e. www.idfclimited.com. In all related party transactions that were entered into during the financial year, an endeavor was made consistently that they were on an arm''s length basis and were in the ordinary course of business. IDFC has always been committed to good corporate governance practices, including matters relating to Related Party Transactions. Since all related party transactions entered into by the Company were in the ordinary course of business and were on an arm''s length basis, Form AOC-2 is not applicable to the Company. No Material Related Party Transactions, i.e. transactions exceeding 10% of the annual consolidated turnover of the Company as per the last audited financial statements, were entered during the year by your Company.
Pursuant to the resolution passed by the Members through Postal Ballot dated June 25, 2016, IDFC introduced IDFC Employee Stock Option Scheme, 2016 (âIDFC ESOS 2016â) to enable the employees of IDFC and its subsidiaries to participate in the future growth and financial success of the Company. The Scheme is in compliance with the SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021.
The Company determines the fair value of options using the black scholes model which considers the exercise price, the term of the option, share price at grant date, expected price volatility, dividend yield and risk-free interest rate for the term
of the option. The fair value so determined is charged to profit & loss account as employee benefit expense over the vesting period of the grant.
Disclosures as required under the SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021, have been hosted on the Company''s website: www.idfclimited.com which forms part of this Annual Report.
We are grateful to the Government of India, State Governments, RBI, SEBI, Stock Exchanges, various Ministries and other domestic and overseas regulatory bodies for their continuous collaboration and support. We would like to thank all our Shareholders, Banks for their co-operation and assistance during the year under review.
We would like to express our deep sense of appreciation for the hard work and efforts put in by the employees at all levels of the Group.
FOR AND ON BEHALF OF THE BOARD ANIL SINGHVI
Independent Non-Executive Chairman Mumbai | July 17, 2023
Mar 31, 2022
Your Directors have pleasure in presenting the Twenty-Fifth Annual Report on the business and operations of the Company together with the audited financial statements, prepared under Ind-AS, for the financial year ended March 31, 2022.
Effective October 1, 2015 post demerger of Financing Undertaking into IDFC FIRST Bank Limited (earlier known as IDFC Bank), IDFC Limited (âIDFCâ or âthe Companyâ) is operating as an NBFC - Investment Company mainly holding investment in IDFC Financial Holding Company Limited (âIDFC FHCLâ) which is a non-operative financial holding company. IDFC FHCL in turn holds investments in IDFC FIRST Bank Limited (âIDFC FIRST Bankâ) and IDFC Asset Management Company Limited (âIDFC AMCâ). IDFC has negligible business operations and is main focus is to simplify corporate structure and unlock value for shareholders. During the year, Balance Sheet size increased from Rs. 9,303.78 crore as on March 31, 2021 to Rs. 9,358.51 crore as on March 31, 2022. Profit after tax and other comprehensive income was higher at Rs. 21.86 crore for FY 2021-22 as compared to Rs. 8.87 crore in FY 2020-21. Net worth of the Company increased from Rs. 9,261.10 crore as on March 31, 2021 to
Rs. 9,284.77 crore as on March 31, 2022. During the year, the Company transferred Rs. 4.39 crore to Special Reserve u/s 45-IC of Reserve Bank of India (âRBIâ) Act, 1934. Details of business overview and outlook of the Company and its subsidiaries are appearing in the chapter Management Discussion and Analysis which forms part of this report.
The Board of Directors has not recommended any dividend for FY22. The Board of Directors declared an Interim dividend of Re. 1/- per share in April 2022 and the same was paid to shareholders on May 02, 2022.
In accordance with the Regulation 43A of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (âSEBI LODR Regulationsâ), IDFC had formulated a Dividend Distribution Policy. The policy was adopted to set out the parameters and circumstances that will be considered by the Board in determining the distribution of dividend to its Shareholders and / or retaining profits earned by the Company. The said policy is hosted on the website of the Company and can be viewed at http://www.idfclimited. com/investor_ relations/corporate_ governance_policies.htm.
The Company has seven domestic direct indirect subsidiaries, one foreign indirect subsidiary, four Associate Companies and two Joint Ventures as on March 31, 2022 which are given in Table 1.
IDFC Asset Management Company Limited
The Board of Directors of IDFC and the Board of Directors of IDFC FHCL at their respective meetings held on April 06, 2022, have inter alia considered binding bids received in connection with divestment of IDFC AMC along with IDFC AMC Trustee Company Limited
PROPOSED MERGER OF SUBSIDIARIES
In order to simplify corporate structure and to bring synergy, the Board of Directors (''the Board'') of IDFC Limited at its meeting held on November 09, 2021 had inter alia considered and approved the Scheme of Amalgamation of IDFC Alternatives Limited (Transferor Company 1), IDFC Trustee Company Limited (the Transferor Company 2) and IDFC Projects Limited (the Transferor Company 3) (wholly owned subsidiary Companies) into IDFC Limited (Transferee Company) subject to regulatory approvals from various authorities, as applicable. The Registrar of Companies, Chennai upon receipt of the proposed scheme and Form CAA-9 has intimated the Transferor Company 1, the Transferor Company 2, the Transferor Company 3, and the Transferee Company that it has no observations/ suggestions to the present scheme of amalgamation vide letter dated February 01, 2022. On February 06, 2022, the Shareholders of IDFC Limited through postal ballot had approved the aforesaid scheme of amalgamation. The Official Liquidator attached to the Madras High Court has intimated the Transferor
(âIDFC AMC Trusteeâ) and have approved sale of the entire shareholding of IDFC AMC and IDFC AMC Trustee held by IDFC FHCL to a consortium comprising of Bandhan Financial Holding Limited, Lathe Investment Pte. Ltd. (affiliate of GIC), Tangerine Investments Limited and Infinity Partners (affiliates of ChrysCapital) (âProposed Transactionâ). The Proposed Transaction will be completed upon receipt of requisite regulatory and other approvals, as applicable, and completion of closing related actions mutually agreed between the parties.
The gross consideration for the Proposed Transaction is Rs. 4,500 crores on a fully diluted basis and subject to customary price adjustments at the closure. This consideration is in addition to receipt of Rs. 250 crores as dividend from IDFC AMC in March 2022. The necessary applications have been made to concerned authorities/ regulators.
On July 07, 2022, the Shareholders of IDFC through postal ballot have approved the divestment/ sale/ disposal of the IDFC Asset Management Company Limited (material subsidiary of IDFC Limited) and IDFC AMC Trustee Company Limited.
Company 1, the Transferor Company 2 and the Transferor Company 3 that it has no observations/suggestions to the present scheme of amalgamation vide letter dated March 24, 2022. Approval from Regional Director / National Company Law Tribunal is awaited. Effective date of the merger is April 01, 2021. Post receiving all approvals, effect of merger will be given.
In FY 21-22, IDFC Foundation (âthe Foundationâ) through its division, IDFC Institute primarily focused on select projects of social and environment importance. The Foundation provides in-depth, actionable research and recommendations that are grounded in a contextual understanding of the political economy of execution. The Foundation approach to public policy issues rests on a solid foundation of evidence-based research. The Institute''s research focuses on two broad areas: a) growth and job creation in the context of India''s transition from farm to non-farm, rural to urban and informal to formal economic activity; and b) redefining the relationship between state and citizen to one of equals to improve the public delivery of essential services and welfare.
Ol SUBSIDIARY COMPANIES |
|||
SR. NO. |
NAME OF THE SUBSIDIARY |
DIRECT / INDIRECT SUBSIDIARY |
% OF SHAREHOLDING |
Domestic Subsidiaries |
|||
l i. |
IDFC Financial Holding Company Limited (âIDFC FHCLâ) |
Direct |
100% |
ii. |
IDFC Foundation (a Company within the meaning of section 8 of the Companies Act, 2013) |
Direct |
100% |
iii. |
IDFC Projects Limited |
Direct |
100% |
iv. |
IDFC Alternatives Limited |
Direct |
100% |
v. |
IDFC Trustee Company Limited |
Direct |
100% |
vi. |
IDFC AMC Trustee Company Limited |
Indirect through IDFC FHCL |
100% |
vii. |
IDFC Asset Management Company Limited (âIDFC AMCâ) |
Indirect through IDFC FHCL |
99.96% |
Foreign Subsidiaries |
|||
i. |
IDFC Investment Managers (Mauritius) Ltd. |
Indirect through IDFC FHCL |
99.96% |
Associate |
|||
! i. |
Novopay Solutions Private Limited |
Direct |
23.83% |
ii. |
IDFC FIRST Bank Limited |
Indirect through IDFC FHCL |
36.49% |
iii. |
IDFC FIRST Bharat Limited |
Indirect through IDFC FIRST Bank |
36.49% |
iv. |
Jetpur Somnath Tollways Private Limited |
Indirect through IDFC Projects Limited |
26% |
Joint Ventures |
|||
i. |
Delhi Intigrated Multi - Modal Transit System Limited |
Indirect through IDFC Foundation |
50% |
ii. i ¦_______ |
Infrastructure Development Corporation (Karnataka) Limited (âiDeckâ) |
Indirect through IDFC Foundation |
49.49% I |
The Foundation conducted sero-surveys in Delhi, Mumbai and Thane to assess the impact of the second wave and of the vaccination campaign. These studies, showing over 80% seroprevalence in children, contributed to the decision to reopen schools in both Mumbai and Delhi.
The Foundation launched The Indian COVID-19 Alliance (TICA) to develop a vaccination strategy in India with a focus on vaccine allocation, distribution, communication and financing. Foundation conducted a series of studies to better understand vaccine hesitancy and confidence in Punjab and Karnataka (February 2021), West Bengal (March-June 2021) and Maharashtra (June 2021). Their findings were presented to the Ministry of Health and Family Welfare as part of a national consultation on vaccine hesitancy. Building on these findings, they collaborated with the Health Department of the Government of Punjab to support their COVID-19 Vaccination Communication efforts.
The Foundation also engaged with policies put out by ministries by submitting comments on the ''Draft National Geospatial Policy (2021)'' in June, 2021 and the ''Proposed amendments to the Consumer Protection (e-commerce) Rules'' in July 2021. In addition to this, it also engaged with the Punjab government by offering guidance to the Department of Governance Reforms & Public Grievances on implementing their state data policy.
PROPOSED MERGER OF IDFC, IDFC FHCL AND IDFC FIRST BANK
The Boards of IDFC, IDFC FHCL and IDFC FIRST Bank at their respecting meetings held on December 30, 2021 have accorded in-principle approval to merge IDFC and IDFC FHCL with IDFC FIRST Bank post further simplification of corporate structure and divestment of IDFC AMC.
CONSOLIDATED FINANCIAL STATEMENTS
The Board of Directors of IDFC reviews the affairs of its subsidiary companies regularly. In accordance with the provisions of Section 129(3) of the
Companies Act, 2013 (âthe actâ), the Company has prepared Consolidated Financial Statements including requisite details of all the subsidiaries. Further, a statement containing the salient features of performance and financial positions of all the subsidiary companies / associates/ joint ventures in the format AOC-I is appended as Annexure 1. In accordance with Section 136 of the Act, the Audited Financial Statements together with the Consolidated Financial Statements and related information of the Company and audited accounts of each subsidiary company are available on the website of the Company: www.idfclimited.com. Detailed analysis of the performance of IDFC and its businesses, including initiatives in the areas of Risk Management, Human Resources and IDFC Foundation activities, have been presented in the section on Management Discussion & Analysis which forms part of this Annual Report.
PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES
IDFC had 6 employees as on March 31,
2022 and 328 employees at the group level (holding and subsidiaries). In terms of the provisions of Section 197(12) of the Act, read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended from time to time, a statement showing the names and other particulars of the employees drawing remuneration in excess of the limits set out in the said rules is provided in this Annual Report. Having regard to the provisions of the first proviso to Section 136(1) of the Act, the Annual Report excluding the aforesaid information is being sent to the Shareholders of the Company. The said information is available for inspection at the Registered Office and Corporate Office of the Company during working hours and any Member interested in obtaining such information may write to the Company Secretary and the same will be furnished on request. Disclosure pertaining to remuneration & other details as required under section 197(12) of the Act, read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as
amended from time to time, are appended as Annexure 2.
SHARE CAPITAL UPDATE
During the year, the Company issued and allotted 77,626 equity shares to eligible employees of IDFC on exercise of options granted under Employee Stock Option Scheme 2016 (âIDFC ESOS -2016â). As on March 31, 2022, the total paid up capital of IDFC was 1,59,64,35,942 equity shares of Rs. 10 each.
MANAGEMENT DISCUSSION ANALYSIS AND REPORT ON CORPORATE GOVERNANCE
In compliance with Regulation 34 of SEBI LODR Regulations, separate detailed chapters on Management Discussion & Analysis, Report on Corporate Governance and Additional Shareholder Information forms part of this Annual Report.
BUSINESS RESPONSIBILITY REPORT
As per Regulation 34(2)(f) of SEBI LODR Regulations and Notifications issued from time to time, a separate report called Business Responsibility Report (âBRRâ) describing the initiatives taken by IDFC from an environmental, social and governance perspective is hosted on the Company''s website: www.idfclimited.com which forms part of this Annual Report.
PUBLIC DEPOSITS
During FY22, your Company has not accepted any deposits from the public within the meaning of the provisions of the Non-Banking Financial Companies Acceptance of Public Deposits (Reserve Bank) Directions, 1998 or under Chapter V of the Act.
PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS
Post demerger of financing undertaking into IDFC Bank w.e.f. October 1, 2015,
IDFC is registered with RBI as NBFC -Investment Company. Being an investment company, the provisions of Section 186 of the Act are not applicable to IDFC. Hence, the requisite details of loans, guarantees and investments are not given.
VIGIL MECHANISM / WHISTLE BLOWER POLICY
IDFC has put in place a Whistle Blower Policy, which includes reporting to the Management instances of unethical behaviour, actual or suspected fraud or violation of the Company''s Code of Conduct. The Audit Committee directly oversees the Vigil Mechanism. The provisions of the policy are also in line with the provisions of Section 177 (9) & (10) of the Act. The details of Whistle Blower Policy / Vigil Mechanism are posted on the website of the Company: www.idfclimited. com. There were no instances reported during the year.
FOREIGN EXCHANGE
There were no foreign exchange earnings or expenditure during the year under review.
PARTICULARS REGARDING CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTION
Since the Company does not carry out any manufacturing activity, the particulars regarding conservation of energy, technology absorption and other particulars as required by Section 134(3) (m) of the Act read with the Companies (Accounts) Rules, 2014 are not applicable to IDFC.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
The Shareholders of the Company, at its 21st AGM held on July 31, 2018, appointed Mr. Vinod Rai (DIN: 00041867) as an Independent Non-Executive Director for the second term for a period of 3 (three) consecutive years, from July 31, 2018 to July 30, 2021. The Nomination and Remuneration Committee and the Board of Directors of IDFC Limited, at their respective meetings held on May 25, 2021 changed the designation of Mr. Vinod Rai as Non-Independent NonExecutive Director from Independent Non Executive Director on the Board of IDFC Limited with immediate effect & up to May 22, 2023 subject to approval of the Shareholders of the Company. At the 24th AGM of the Company held on September 22, 2021, proposal for an appointment
of Mr. Vinod Rai as Non-Independent Non-Executive Director on the Board of IDFC Limited did not receive the requisite votes, Mr. Vinod Rai vacated the office with immediate effect. The Board places on record its sincere appreciation for his long association and valuable contribution to IDFC.
The Nomination and Remuneration Committee and the Board of Directors of IDFC Limited, at their respective meetings held on May 25, 2021 also proposed the appointment of Dr. Jaimini Bhagwati (DIN: 07274047) and Mr. Anil Singhvi (DIN: 00239589) as Additional Directors in the category of Independent Director of the Company with immediate effect for a consecutive period of 3 (three) years.
The Shareholders of the Company at its 24th AGM held on September 22, 2021, approved the appointment of Dr. Jaimini Bhagwati and Mr. Anil Singhvi as Independent Directors of the Company for a period of 3 years. The Board of Directors at its meeting held on December 22, 2021, approved appointment of Mr. Anil Singhvi as the Chairman of the Board with immediate effect.
The Nomination and Remuneration Committee and the Board of Directors of IDFC Limited, at their respective meetings held on October 30, 2021 and November 09, 2021, proposed the appointment of Ms. Anita Belani (DIN: 01532511) as an Additional Director in the category of Independent Director of the Company with immediate effect for a consecutive period of 3 (three) years, subject to the approval of Shareholders.
On February 06, 2022, the Shareholders of IDFC through postal ballot had approved the appointment of Ms. Anita Belani as an Independent Director of the Company for a consecutive period of 3 (three) years.
The Board of Directors of IDFC Limited at its Meeting held on August 14, 2019 had appointed Ms. Ritu Anand as an Additional Director in the category of Independent Director w.e.f. August 16, 2019. At the 22nd AGM held on September 30, 2019, the Shareholders of the Company had approved her appointment as an
Independent Director for a period of three (3) consecutive years w.e.f. August 16, 2019 till August 15, 2022. Accordingly, Ms. Ritu Anand has completed her term of 3 (three) consecutive years at the close of business hours on August 15, 2022 and hence, ceased to be an Independent Director of the IDFC Limited.
The Nomination and Remuneration Committee and the Board of Directors of IDFC, at their respective meetings held on August 24, 2022 accepted the resignation of Mr. Mahendra N Shah as Company Secretary and Compliance Officer of IDFC at the close of business hours on August 24, 2022. The Board also approved appointment of Mr. Mahendra N Shah (DIN: 00124629) as Managing Director -Designate of the Company with immediate effect. The term of Mr. Sunil Kakar (DIN: 03055561) as Managing Director & CEO of the Company will end on September 30, 2022. Mr. Mahendra N Shah will be the Managing Director of the Company w.e.f. October 01, 2022 till September 30, 2023 subject to approval of the shareholders of IDFC and other applicable statutory/ regulatory approvals. The Board also appointed Ms. Shivangi Mistry as the Company Secretary and Compliance Officer of the Company w.e.f. August 25, 2022.
FRAMEWORK FOR APPOINTMENT OF DIRECTORS
The Company has in place a framework for Board Diversity, Fit & Proper Criteria and Succession Planning for appointment of Directors on the Board of the Company.
The Company has received a declaration from all IDs that they meet the criteria of independence specified under Section 149 of the Act, read with Rule 5 of the Companies (Appointment and Qualification of Directors) Rules, 2014 and Regulation 16(1)(b) of SEBI LODR Regulations for holding the position of ID and that they shall abide by the âCode for Independent Directorsâ as per Schedule IV of the Act. Pursuant to Companies (Accounts) Amendments Rules, 2019 Companies (Creation and Maintenance
of Databank of Independent Directors) Rules, 2019 and Companies (Appointment and Qualification of Directors) Fifth Amendment Rules, 2019 dated 22nd October, 2019, all Independent Directors on the Board of the Company completed registration on Data Bank.
SPECIAL BUSINESS
The Board of Directors recommends the following items under special business for approval of the Shareholders at the ensuing AGM:
i. Appointment of Mr. Mahendra N Shah (DIN: 00124629) as the Managing Director of the Company.
SHAREHOLDERSâ UPDATE BOARD AND ITS COMMITTEES
During the year, 17 Board Meetings and 5 Audit Committee Meetings were held. The Audit Committee was reconstituted on August 24, 2022, on cessation of Ms. Ritu Anand as an Independent Director of the Company w.e.f. August 15, 2022.
The Committee is chaired by Mr. Anil Singhvi (DIN: 00239589) and has Mr. Ajay Sondhi (DIN: 01657614) and Ms. Anita Belani (DIN: 01532511) as its Members.
All the recommendations made by the Audit Committee during the year were accepted by the Board. The details of the constitution and meetings of the Board, Audit Committee and other Committees held during the year are provided in the Corporate Governance Report which forms part of this Annual Report.
BOARD EVALUATION
Pursuant to SEBI LODR Regulations and the Act, the process indicating the manner in which formal annual evaluation of the Chairman, Directors, Board as a whole and Board level committee is given in the Corporate Governance Report, which forms part of this Annual Report.
NOMINATION &
REMUNERATION COMMITTEE / REMUNERATION POLICY
The Company has a policy in place for identification of independence, qualifications and positive attributes of Directors. IDFC has put in place a Remuneration Policy for the Directors, Key Managerial Personnel, Senior Management
and Other Employees. The remuneration of the Executive Director and KMPs is recommended by NRC to the Board for its approval.
STATUTORY AUDITORS
At the 24th AGM of the Company held on September 22, 2021, the Shareholders had approved the appointment of KKC & Associates LLP (previously, Khimji Kunverji & Co LLP), Chartered Accountants, (FRN 105146W/W100621) as Statutory Auditors for a period of 3 years to hold office from the conclusion of the 24th AGM till the conclusion of the 27th AGM of the Company. KKC has confirmed that they are not disqualified from continuing as Statutory Auditors of the Company for FY22-23.
COST AUDIT
In terms of the Section 148 of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014, the Company is not required to undertake cost audit.
SECRETARIAL AUDIT
Pursuant to the provisions of Section 204 of the Act and Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company had appointed Bhandari & Associates, Company Secretaries to undertake the Secretarial Audit of the Company for FY22. The Secretarial Audit Report is appended as Annexure 3. There are no qualifications or observations or adverse remarks made by the Statutory Auditors and Secretarial Auditors in their respective reports.
COMPLIANCE WITH SECRETARIAL STANDARDS
Pursuant to the Secretarial Standard-I issued by the Institute of Company Secretaries of India pertaining to Board of Directors, the Company confirms that all applicable Secretarial Standards have been duly complied with during the period under review.
The Company has in place, adequate
systems of Internal Control to ensure compliance with policies and procedures.
It is being constantly assessed and strengthened with new / revised standard operating procedures and tighter Information Technology controls. Internal Audit of the Company is regularly carried out. The Audit Reports of Internal Auditors i.e. M/s Grant Thornton India LLP(âGTâ) along with their recommendations and implementation contained therein are regularly reviewed by the Audit Committee.
GT verified the key Internal Financial Control by reviewing key controls impacting financial reporting and overall risk management procedures of the Company and found the same satisfactory. Subsequently, it was placed before the Audit Committee of the Company.
RISK MANAGEMENT POLICY
IDFC as a group, has a robust risk management practice that enables it to book, manage and mitigate risks in all its businesses. The Company has a comprehensive Enterprise Risk Management framework which has been adopted across all entities in the group and covers all three types of risksâcredit, market and operational risks. The Board through its Risk Management Committee monitors and reviews risk management of the group on a regular basis. The details of Risk Management Framework are provided in Management Discussion and Analysis.
MATERIAL CHANGES AND COMMITMENT AFFECTING FINANCIAL POSITION OF THE COMPANY
There are no material changes and commitments, affecting the financial position of IDFC which has occurred between the end of FY22 and the date of this Board''s report.
INSTANCES OF FRAUD REPORTED BY THE AUDITORS
There have been no instances of fraud reported by the Auditors under Section 143(12) of the Act.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS / COURTS / TRIBUNALS
During the year under review, there were no significant and material orders passed by the Regulators / Courts / Tribunals.
PROCEEDINGS UNDER INSOLVENCY AND BANKRUPTCY
During the year under review, the Company has not made any application nor any proceeding pending against the Company under the Insolvency and Bankruptcy Code, 2016.
ANTI SEXUAL HARASSMENT POLICY
The Company has in place the policy on Anti Sexual Harassment. The Company undertakes ongoing trainings to create awareness on this policy. There were no instances of Sexual Harassment that were reported during the period under review. The Company has constituted an Internal Complaints Committee for redressal of complaints and to prevent sexual harassment.
DIRECTORSâ RESPONSIBILITY STATEMENT
To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statements in terms of Section 134(3)(c) of the Act:
In that in the preparation of the annual financial statements for the year ended March 31, 2022, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;
^ In that such accounting policies have been selected and applied consistently and judgement and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2022 and of the Profit of the Company for the year ended on that date;
^ In that proper and sufficient care has been taken for the maintenance of adequate accounting records in
accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
^ In that the annual financial
statements have been prepared on a going concern basis;
^ In that proper internal financial
controls were in place and that the financial controls were adequate and were operating effectively;
^ In that systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively.
GREEN INITIATIVE
In accordance with the ''Green Initiative'', the Company has been sending the Annual Report / Notice of AGM in electronic mode to those Shareholders whose e-mail Ids are registered with the Company and / or the Depository Participants. Your Directors are thankful to the Shareholders for their active participation in this Green Initiative.
ANNUAL RETURN
The Annual Return of the Company has been placed on the website of the Company www.idfclimited.com in compliance with the provisions of section 134(3)(a) read with section 92(3) and the Rules made thereunder.
CORPORATE SOCIAL RESPONSIBILITY
The Corporate Social Responsibility (âCSRâ) was re-constituted on June 09, 2021. Dr. Jaimini Bhagwati was inducted as the Chairman of the CSR Committee w.e.f. June 09, 2021. The CSR Committee consists of three Directors:
i. Dr. Jaimini Bhagwati (DIN: 07274047), Chairman
ii. Mr. Ajay Sondhi
(DIN: 01657614), Member
iii. Mr. Sunil Kakar
(DIN: 03055561), Member
The disclosure of contents of the Corporate Social Responsibility Policy of the Company as prescribed in the Companies (Corporate Social Responsibility Policy) Rules, 2014 forms part of the Board''s Report and appended as Annexure 4.
RELATED PARTY TRANSACTIONS
The Company has in place the policy on Related Party Transactions and the same has been uploaded on the website of the Company i.e. www.idfclimited.com. In all related party transactions that were entered into during the financial year, an endeavor was made consistently that they were on an arm''s length basis and were in the ordinary course of business. IDFC has always been committed to good corporate governance practices, including matters relating to Related Party Transactions.
Since all related party transactions entered into by the Company were in the ordinary course of business and were on an arm''s length basis, Form AOC-2 is not applicable to the Company. No Material Related Party Transactions, i.e. transactions exceeding 10% of the annual consolidated turnover of the Company as per the last audited financial statements, were entered during the year by your Company.
EMPLOYEE STOCK OPTION SCHEME
Pursuant to the resolution passed by the Members through Postal Ballot dated June 25, 2016, IDFC introduced IDFC Employee Stock Option Scheme, 2016 (âIDFC ESOS 2016â) to enable the employees of IDFC and its subsidiaries to participate in the future growth and financial success of the Company.
The Scheme is in compliance with the SEBI (Share Based Employee Benefits) Regulations, 2014.
Pursuant to IDFC Employee Stock Option Scheme 2016 (ESOS), the Company, on May 10, 2021, has granted to an employee 12,00,000 options equivalent to 12,00,000 equity shares at a strike price of Rs. 53.60 per equity share. The vesting period and exercise period will be as per the said ESOS scheme.
The Company determines the fair value of options using the Black Scholes model which considers the exercise price, the term of the option, share price at grant date, expected price volatility, dividend yield and risk-free interest rate for the term of the option. The fair value so determined is charged to profit & loss
account as employee benefit expense over the vesting period of the grant.
Disclosures as required under the SEBI (Share Based Employee Benefits Regulations, 2014, are hosted on the Company''s website: www.idfclimited.com which forms part of this Annual Report.
ACKNOWLEDGEMENTS
We are grateful to the Government of India, State Governments, RBI, SEBI, Stock Exchanges, various Ministries and other domestic and overseas regulatory bodies for their continuous collaboration and support. We would like to thank all our Shareholders, Banks for their co-operation and assistance during the year under review.
We would like to express our deep sense of appreciation for the hard work and efforts put in by the employees at all levels of the Group.
FOR AND ON BEHALF OF THE BOARD IDFC LIMITED
ANIL SINGHVI
Independent Non-Executive Chairman New Delhi August 24, 2022
Mar 31, 2018
Dear Shareholders,
TheDirectors have pleasure in presenting the Twenty-First Annual Report on the business and operations of the Company together with the audited financial statements for the financial year ended March 31, 2018.
OPERATIONS REVIEW
Effective OctobeRs.1, 2015 post demerger of Financing Undertaking into IDFC Bank Limited (âIDFC Bankâ), IDFC Limited (âIDFCâ or âthe Companyâ) is operating as an NBFC - Investment Company mainly holding investment in IDFC Financial Holding Company Limited (âIDFC FHCLâ) which is a non-operative financial holding company. IDFC FHCL in turn holds investments in IDFC Bank, IDFC Asset Management Company Limited, IDFC Alternatives Limited, IDFC Securities Limited and IDFC Infrastructure Finance Limited.
During the year, Balance Sheet size decreased from RS.9,878 crore as on March 31, 2017 to RS.9,785 crore as on March 31, 2018. Profit after tax was higher at RS.148.43 crore for FY 2017-18 as compared to RS.55.75 crore in FY17.
Net worth of the Company increased from RS.9,650 crore as on March 31, 2017 to RS.9,760 crore as on March 31, 2018.
During the year, the Company transferred RS.30 crore to Special Reserve u/s 45-IC of Reserve Bank of India (âRBIâ) Act, 1934.
Details of business overview and outlook of the Company and its subsidiaries are appearing in the chapter Management Discussion and Analysis which forms part of this report.
DIVIDEND
Your Directors are pleased to recommend a dividend of RS.0.75 per equity share of RS.10 each (i.e. 7.5 %) for the year ended March 31, 2018.
The Register of Members and Share Transfer Books will remain closed from July 25, 2018 to July 31, 2018 (both days inclusive) for the purpose of payment of dividend for the financial year ended March 31, 2018.
Dividend will be paid to those Members whose names appear in the Register of Members as on July 24, 2018. In respect of shares held in dematerialised form, it will be paid to those Members whose names are furnished by National Securities Depository Limited and Central Depository Services (India) Limited, as beneficial owners as on that date.
Above dividend would be paid subject to approval by the Members at the ensuing Annual General Meeting (âAGMâ).
O1 SUBSIDIARY COMPANIES
SR. NO. |
NAME OF THE SUBSIDIARY |
DIRECT / INDIRECT SUBSIDIARY |
% OF SHAREHOLDING |
Domestic Subsidiaries |
|||
i. |
IDFC Financial Holding Company Limited (âIDFC FHCLâ) |
Direct |
100 |
ii. |
IDFC Foundation (a Company within the meaning of section 8 of the Act) |
Direct |
100 |
iii. |
IDFC Projects Limited |
Direct |
100 |
iv. |
IDFC Bank Limited |
Indirect through IDFC FHCL |
52.80 |
v. |
IDFC Bharat Limited (Formerly known as Grama Vidiyal Micro Finance Limited) |
Indirect through IDFC Bank |
52.80 |
vi. |
IDFC Infrastructure Finance Limited (Formerly known as IDFC Infra Debt Fund Limited) |
Indirect through IDFC FHCL |
81.48 |
vii. |
IDFC Alternatives Limited |
Indirect through IDFC FHCL |
100 |
viii. |
IDFC Trustee Company Limited |
Indirect through IDFC FHCL |
100 |
ix. |
IDFC Securities Limited |
Indirect through IDFC FHCL |
100 |
x. |
IDFC Asset Management Company Limited (âIDFC AMCâ) |
Indirect through IDFC FHCL |
100 |
xi. |
IDFC AMC Trustee Company Limited |
Indirect through IDFC FHCL |
100 |
Foreign Subsidiaries |
|||
i. |
IDFC Capital (Singapore) Pte. Limited |
Indirect through IDFC Alternatives |
100 |
ii. |
IDFC Securities Singapore Pte. Limited |
Indirect through IDFC Securities |
100 |
iii. |
IDFC Capital (USA) Inc. |
Indirect through IDFC Securities |
100 |
iv. |
IDFC Investment Managers (Mauritius) Ltd. |
Indirect through IDFC AMC |
100 |
Associate |
|||
i. |
Jetpur Somnath Tollways Private Limited |
Indirect through IDFC Projects Limited |
26 |
Joint Ventures |
|||
i. |
Delhi Intigrated Multi - Modal Transit System Limited |
Indirect through IDFC Foundation |
50 |
ii. |
Infrastructure Development Corporation (Karnataka) Limited (âiDeckâ) |
Indirect through IDFC Foundation |
49.49 |
iii. |
Rail Infrastructure Development Company (Karnataka) Limited |
Indirect through iDeck |
24.71 |
DIVIDEND DISTRIBUTION POLICY
In accordance with the Regulation 43A of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (âSEBI LODR Regulationsâ), IDFC had formulated a Dividend Distribution Policy. The policy was adopted to set out the parameters and circumstances that will be taken into account by the Board in determining the distribution of dividend to its Shareholders and / or retaining profits earned by the Company. The said policy is hosted on the website of the Company and can be viewed at http://www.idfc. com/investor_relations/corporate_ governance_policies.htm.
SUBSIDIARY COMPANIES
The Company has eleven domestic direct / indirect subsidiaries, four foreign indirect subsidiaries, one Associate Company and three Joint Ventures as on March 31, 2018 which are given in Table 1.
IDFC ALTERNATIVES LIMITED
IDFC Alternatives Limited has entered into a definitive agreement with Global Infrastructure Partners India for the sale of its infrastructure asset management business. All necessary regulatory approvals for the sale have been received. IDFC Alternatives will continue to manage Private Equity and Real Estate funds and the aforementioned sale to Global Infrastructure Partners India will not have any impact on its Private Equity and Real Estate verticals. IDFC Limited is evaluating divestiture of the Private Equity and Real Estate platform but no definitive agreement has been signed yet.
EXCLUSIVITY AGREEMENT WITH SHRIRAM GROUP
IDFC Group and Shriram Group had signed an exclusivity agreement on July 8, 2017 to allow for due diligence and discussions to arrive at an agreement on a transaction structure and swap ratio for a strategic combination between certain businesses of the Shriram Group with IDFC Limited and IDFC Bank.
However, despite best efforts, the two groups were not able to reach an agreement on a mutually acceptable swap ratio.
Accordingly, the exclusivity period was terminated with effect from October 30, 2017.
IDFC Bank, while focusing on enhancing its strategic momentum, continued to explore opportunities for inorganic growth as well.
PROPOSED MERGER OF CAPITAL FIRST GROUP WITH IDFC BANK
The Board of Directors of IDFC Bank and Capital First Limited (âCapital Firstâ) at their respective meetings held on January 13, 2018 had approved a composite scheme of amalgamation (âSchemeâ) of Capital First, Capital First Home Finance Limited and Capital First Securities Limited with IDFC Bank and their respective shareholders and creditors under Sections 230 to 232 and other applicable provisions of the Companies Act, 2013 (âAmalgamationâ).
The share exchange ratio for the Amalgamation was approved to be 139 (One Hundred and Thirty Nine) fully paid-up equity shares of IDFC Bank for every 10 (Ten) fully paid-up equity shares held in Capital First.
As on the date of this report, the Scheme has received;
a. Approvals from National Housing Bank and Competition Commission of India;
b. Approvals from BSE Limited and National Stock Exchange of India Limited (in the capacity of a SEBI registered Stock Broker);
c. No Objection Letters from BSE Limited and National Stock Exchange of India Limited under Regulation 37 of SEBI LODR Regulations;
d. No Objection Letter from RBI under RBI (Amalgamation of Private Sector Banks) Directions, 2016.
IDFC Bank has filed an application with the National Company Law Tribunal (âNCLTâ), Chennai Bench seeking its direction for convening meetings of the Shareholders and Creditors of IDFC Bank.
On receipt of directions from the NCLT, IDFC Bank shall convene meetings of its Shareholders and Creditors, as may be required.
Subsequent to the receipt of approval of the Shareholders and Creditors, IDFC Bank shall file a Petition with the NCLT for its final approval to the Scheme.
JOINT VENTURES
Additionally, IDFC Foundation, a Section 8 Company within the meaning of the Companies Act, 2013 (âActâ) and a wholly owned subsidiary of the Company has Joint Venture with Uttarakhand Infrastructure Development Company Limited (âUDeCâ) which is under liquidation.
ASSOCIATES
Additionally, IDFC Bank has one associate company namely Millennium City Expressways Private Limited.
CONSOLIDATED FINANCIAL STATEMENTS
The Board of Directors of IDFC reviews the affairs of its subsidiary companies regularly. In accordance with the provisions of Section 129(3) of the Act, the Company has prepared Consolidated Financial Statements including requisite details of all the subsidiaries. Further, a statement containing the salient features of performance and financial positions of all the subsidiary companies / associates / joint ventures in the format AOC-I is appended as Annexure 1.
In accordance with Section 136 of the Act, the audited Financial Statements together with the Consolidated Financial Statements and related information of the Company and audited accounts of each subsidiary company are available on the website of the Company: www.idfc.com.
Detailed analysis of the performance of IDFC and its businesses, including initiatives in the areas of Risk Management, Human Resources and IDFC Foundation activities, have been presented in the section on Management Discussion & Analysis which forms part of this Annual Report.
PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES
IDFC had 8 employees as on March 31, 2018 and 10,073 employees at the group level. In terms of the provisions of Section 197(12) of the Act, read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended from time to time, a statement showing the names and other particulars of the employees drawing remuneration in excess of the limits set out in the said rules are provided in this Annual Report. Having regard to the provisions of the first proviso to Section 136(1) of the Act, the Annual Report excluding the aforesaid information is being sent to the Shareholders of the Company. The said information is available for inspection at the Registered Office and Corporate Office of the Company during working hours and any Member interested in obtaining such information may write to the Company Secretary and the same will be furnished on request.
Disclosure pertaining to remuneration & other details as required under section 197(12) of the Act, read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended from time to time, are appended as Annexure 2.
SHARE CAPITAL UPDATE
During the year, the Company issued and allotted 412,996 equity shares to eligible employees of IDFC and its subsidiaries on exercise of options granted under Employee Stock Option Scheme 2016 (âIDFC ESOS -2016â).
As on March 31, 2018, the total paid up capital of IDFC was 1,596,354,566 equity shares of RS.10 each.
MANAGEMENT DISCUSSION & ANALYSIS AND REPORT ON CORPORATE GOVERNANCE
In compliance with Regulation 34 of SEBI LODR Regulations, separate detailed chapters on Management Discussion & Analysis, Report on Corporate Governance and Additional Shareholder Information forms part of this Annual Report.
BUSINESS RESPONSIBILITY REPORT
As per Regulation 34(2)(f) of SEBI LODR Regulations and Notifications issued from time to time, a separate report called Business Responsibility Report (âBRRâ) describing the initiatives taken by IDFC from an environmental, social and governance perspective is hosted on the Companyâs website: www.idfc.com which forms part of this Annual Report.
Any Member interested in obtaining a physical copy of the same may write to the Company by sending an e-mail on [email protected].
PUBLIC DEPOSITS
During FY18, your Company has not accepted any deposits from the public within the meaning of the provisions of the Non-Banking Financial Companies Acceptance of Public Deposits (Reserve Bank) Directions, 1998 or under Chapter V of the Act.
PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS
Post demerger of financing undertaking into IDFC Bank w.e.f. OctobeRs.1, 2015, IDFC is registered with RBI as NBFC -Investment Company. Being an investment company, the provisions of Section 186 of the Act are not applicable to IDFC. Hence, the requisite details of loans, guarantees and investments are not given.
VIGIL MECHANISM / WHISTLE BLOWER POLICY
IDFC has put in place a Whistle Blower Policy, which includes reporting to the Management instances of unethical behaviour, actual or suspected fraud or violation of the Companyâs Code of Conduct. The Audit Committee directly oversees the Vigil Mechanism. The provisions of the policy are also in line with the provisions of Section 177 (9) & (10) of the Act.
The details of Whistle Blower Policy / Vigil Mechanism are posted on the website of the Company: www.idfc.com.
FOREIGN EXCHANGE
There were no foreign exchange earnings during the year. The particulars regarding foreign exchange expenditure are furnished at Item No. 25 in the Notes forming part of the Standalone Financial Statements.
PARTICULARS REGARDING CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTION
Since the Company does not carry out any manufacturing activity, the particulars regarding conservation of energy, technology absorption and other particulars as required by Section 134(3)(m) of the Act read with the Companies (Accounts) Rules, 2014 are not applicable to IDFC.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
During the year Mr. Vikram Limaye (DIN: 00488534) resigned as the Managing Director and Chief Executive Officer (âMD & CEOâ) of the Company w.e.f. July 15, 2017. The Board places on record its sincere appreciation for the valuable contribution and services rendered by him during his tenure with IDFC Group. Subsequently, the Board appointed Mr. Sunil Kakar (DIN: 03055561) as MD & CEO of the Company w.e.f, July 16, 2017. The Shareholders at its 20th AGM held on July 28, 2017 approved the appointment of Mr. Sunil Kakar as MD & CEO of the Company for a period of three years w.e.f. July 16, 2017,
The Shareholders of the Company at its 20th AGM held on July 28, 2017 approved the reappointment of Mr. S S Kohli and Ms. Marianne 0kland for a period of 2 years from conclusion of the 20th AGM till the conclusion of 22nd AGM to be held for FY19.
In accordance with the Articles of Association of the Company and pursuant to the provisions of Section 152 of the Act, Mr. Soumyajit Ghosh (DIN: 07698741) would retire by rotation at the ensuing AGM and being eligible, offers himself for reappointment.
The Shareholders of the Company at its 16th AGM held on July 29, 2013 appointed Mr. Vinod Rai (DIN: 01119922) as Director in the category of Independent Director (âIDâ) to hold office till the conclusion of the ensuing AGM. Considering that his valuable contribution would be of immense benefit to the Company and based on the recommendation of the Nomination and Remuneration Committee (âNRCâ)the Board of Directors approved the reappointment of Mr. Vinod Rai as Director of the Company in the category of ID, for a period of 3 years, to hold office from the conclusion of the ensuing AGM to be held on July 31, 2018 till July 30, 2021. In terms of Section 160 of the Act, the Company has received a notice in writing from a Member signifying his intention to propose Mr. Vinod Rai for the office of Independent Director of the Company. Approval of the Shareholders is sought for reappointment of Mr. Vinod Rai at the ensuing AGM.
Mr. Manish Kumar (DIN: 07379535) who was on the Board of the Company as nominee of Government of India (âGoIâ) ceased to be a Nominee Director w.e.f, June 11, 2018 as directed by GoI, Ministry of Finance, Department of Financial Services. The Board places on record its sincere appreciation for the valuable contribution and services rendered by him.
The Shareholders of the Company at its 19th AGM held on July 27, 2016 reappointed Mr. Gautam Kaji and Mr. Donald Peck for theiRs.2nd term till the conclusion of the 21st AGM (ensuing AGM). Pursuant to the provisions of the Act read with the Rules made thereunder and SEBI LODR Regulations, Mr. Gautam Kaji and Mr. Donald Peck shall complete theiRs.2nd term at the conclusion of ensuing AGM and will cease to be IDs of the Company The Board places on record its sincere appreciation for their long association and valuable contribution to IDFC.
During the year, Mr. Bipin Gemani resigned as the Chief Financial Officer (âCFOâ) of the Company w.e.f. January 12, 2018 in view of his appointment as Interim CFO at IDFC Bank Limited. The Company is in process of appointing suitable candidate for the post of CFO. Mr. Ketan S. Kulkarni resigned as the Company Secretary & Compliance Officer of the Company w.e.f. January 31, 2018 and Mr. Amol Ranade was appointed as the Company Secretary & Compliance Officer of the Company w.e.f. February 1, 2018.
FRAMEWORK FOR APPOINTMENT OF DIRECTORS
The Company has in place a framework for Board Diversity, Fit & Proper Criteria and Succession Planning for appointment of Directors on the Board of the Company.
DECLARATION OF INDEPENDENCE
The Company has received a declaration from all IDs that they meet the criteria of independence specified under sub-section (6) of Section 149 of the Act, read with Rule 5 of the Companies (Appointment and Qualification of Directors) Rules, 2014 and Regulation 16(1)(b) of SEBI LODR Regulations for holding the position of ID and that they shall abide by the âCode for Independent Directorsâ as per Schedule IV of the Act.
SPECIAL BUSINESS
The Board of Directors recommends the following items under special business for approval of the Shareholders at the ensuing AGM:
a. Payment of Commission to Non-Executive Directors.
b. Reappointment of Mr. Vinod Rai (DIN: 01119922) as an ID.
c. Offer and Issue of Non-Convertible Securities through Private Placement basis.
d. Alteration of Articles of Association of the Company
SHAREHOLDERSâ UPDATE
PAYMENT OF COMMISSION TO NON-EXECUTIVE DIRECTORS
The Shareholders of the Company at its 16th AGM held on July 29, 2013, had accorded their approval for the payment of remuneration by way of commission or otherwise, not exceeding in aggregate of 1% of the Net Profits of the Company, to be paid to and distributed amongst any or all Non-Executive Directors (âNEDsâ) of the Company for a period of five years commencing from April 1, 2013 to March 31, 2018. NRC and the Board of Directors of the Company have recommended to continue compensating NEDs which shall not exceed in aggregate of 1% of the Net Profits of the Company as computed in the manner provided in Section 198 of the Companies Act, 2013; for their time and efforts as they bring with them significant professional expertise and rich experience across a wide spectrum of functional areas and it is necessary that adequate compensation should be given to NEDs for the valuable contribution made by them towards the business of the Company. The resolution seeking approval of the Shareholders regarding the same forms part of the Notice of ensuing AGM.
OFFER AND ISSUE OF NON-CONVERTIBLE SECURITIES THROUGH PRIVATE PLACEMENT BASIS
IDFC has been borrowing through issue of Secured Redeemable Non-Convertible Debentures (âNCDsâ) and Commercial Papers (âCPsâ) on Private Placement (âPPâ) basis, from time to time. Section 42 of the Act, read with Rule 14 of the Companies (Prospectus and Allotment of Securities) Rules, 2014, lays down the provisions subject to which a company is allowed to issue securities on PP basis.
In view of the same, it is proposed to seek approval of the Shareholders for borrowing, from time to time, by issuance of Non-Convertible Securities, on PP basis, including but not limited to NCDs and CPs up to an amount not exceeding RS.2,000 crore (Rupees Two Thousand crore only), which shall be within the overall borrowing limit of RS.10,000 crore (Rupees Ten Thousand crore only) as approved by the Shareholders at its 19th AGM under Section 180(1)(c) of the Act, under one or more shelf disclosure documents, for a period of one year from the conclusion of 21st (Twenty-First) AGM on such terms and conditions as the Board may deem fit and appropriate for each series as the case may be. The Board of Directors recommends the same to the Shareholders of the Company.
The resolution seeking approval of the Shareholders regarding the same forms part of the Notice of ensuing AGM.
ALTERATION OF ARTICLES OF ASSOCIATION OF THE COMPANY
RBI, while issuing Banking licence to IDFC being promoter of IDFC Bank, had stipulated certain terms and conditions, one of which being restrictions on the transfer of shares of IDFC that no person, without obtaining prior approval of RBI, directly or indirectly, by himself or acting in concert with any other person, can acquire 5% or more paid up equity share capital or voting rights therein of IDFC, which acquisition taken together with the shares / voting rights / compulsorily convertible debentures / bonds, if any already held by him or his relative or associate enterprise or person acting in concert with him and / or which may result in aggregate shareholding or voting rights therein of 5% or more (directly or indirectly) in IDFC Bank, in a transaction or in series of transactions.
Further, Section 58 of the Act provides that the shares of a public company are freely transferable.
However, Section 58(4) of the Act, recognises that in certain cases, the Board of Directors of a Company can refuse to register a transfer. Such a refusal can only be made for a âsufficient causeâ. The power to refuse a transfer can only be used under limited circumstances such as requirement of RBI in this case.
Before obtaining Banking license, the existing Article 60A was inserted in the Articles of Association (âAoAâ)after taking approval of the Shareholders on March 30, 2015 by way of postal ballot. These articles restricted aggregate indirect shareholding of any individual or entity or group in IDFC Bank being equivalent to 5% or more of the paid-up voting equity capital of IDFC Bank, in order to avoid hostile takeover of IDFC / IDFC Bank.
However, banking license conditions prescribed by RBI on IDFC being promoter of IDFC Bank Limited requires putting the same restriction on aggregate shareholding of any person / person(s) acting in concert in IDFC Limited holding equivalent to 5% or more of the paid-up voting equity capital of IDFC.
In order to comply with the restrictions relating to transfer of shares in certain circumstances as required above, it is proposed to replace the existing Article 60A of the AoA.
The Board of Directors recommends the same to the Shareholders of the Company. The resolution seeking approval of the Shareholders regarding the same forms part of the Notice of ensuing AGM.
BOARD AND ITS COMMITTEES
During the year, 8 (eight) Board Meetings and 4 (four) Audit Committee Meetings were held. Audit Committee comprises of Mr. Gautam Kaji (DIN: 02333127) -Chairman, Mr. Vinod Rai (DIN: 01119922) and Ms. Marianne 0kland (DIN: 03581266).
All the recommendations made by the Audit Committee during the year were accepted by the Board. The details of the constitution and meetings of the Board, Audit Committee and other Committees held during the year are provided in the Corporate Governance Report which forms part of this Annual Report.
BOARD EVALUATION
Pursuant to SEBI LODR Regulations and the Act, the process indicating the manner in which formal annual evaluation of the Chairman, Directors, Board as a whole and Board level committees is given in the Corporate Governance Report, which forms part of this Annual Report
NOMINATION & REMUNERATION COMMITTEE / REMUNERATION POLICY
The Company has a policy in place for identification of independence, qualifications and positive attributes of Directors. IDFC has put in place a Remuneration Policy for the Directors, Key Managerial Personnel, Senior Management and Other Employees.
The remuneration of the Executive Director and KMPs is recommended by NRC to the Board for its approval.
AUDITORS
STATUTORY AUDITORS
At the AGM of the Company held on July 28, 2017, the Shareholders had approved the appointment of Price Waterhouse & Co, Chartered Accountants LLP (FRN 304026E / E300009) (âPWCâ) as Statutory Auditors for a period of 5 years to hold office from the conclusion of the 20th AGM till the conclusion of the 25th AGM of the Company subject to ratification by the Shareholders at every AGM. PWC has confirmed that they are not disqualified from continuing as Statutory Auditors of the Company for FY19.
In accordance with the Companies Amendment Act, 2017, enforced on May 7, 2018, by the Ministry of Corporate Affairs, the appointment of the Statutory Auditors is not required to be ratified at every Annual General Meeting.
SECRETARIAL AUDIT
Pursuant to the provisions of Section 204 of the Act and Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company had appointed M/s. BNP & Associates, Company Secretaries to undertake the Secretarial Audit of the Company for FY18. The Secretarial Audit Report is appended as Annexure 3.
There are no qualifications or observations or adverse remarks made by the Statutory Auditors and Secretarial Auditors in their respective reports.
COMPLIANCE WITH SECRETARIAL STANDARDS
Pursuant to the Secretarial Standard-I issued by the Institute of Company Secretaries of India pertaining to Board of Directors, the Company confirms that all applicable Secretarial Standards have been duly complied with during the period under review,
INTERNAL CONTROL SYSTEMS
The Company has in place, adequate systems of Internal Control to ensure compliance with policies and procedures. It is being constantly assessed and strengthened with new / revised standard operating procedures and tighter Information Technology controls. Internal Audit of the Company is regularly carried out. The Audit Reports of Internal Auditors i.e. KPMG, along with their recommendations and implementation contained therein are regularly reviewed by the Audit Committee.
KPMG verified the key Internal Financial Control by reviewing key controls impacting financial reporting and overall risk management procedures of the Company and found the same satisfactory. Subsequently, it was placed before the Audit Committee of the Company.
RISK MANAGEMENT POLICY
IDFC as a group, has a robust risk management practice that enables it to book, manage and mitigate risks in all its businesses. The Company has a comprehensive Enterprise Risk Management framework which has been adopted across all entities in the group and covers all three types of risksâ credit, market and operational risks.
The Board through its Risk Management Committee monitors and reviews risk management of the group on a regular basis. Our Company has Board approved Group Operational Risk Management Policy which endeavours to lay down broad principles for operational risk management. The details of Risk Management Framework are provided in Management Discussion and Analysis.
MATERIAL CHANGES AND COMMITMENT AFFECTING FINANCIAL POSITION OF THE COMPANY
There are no material changes and commitments, affecting the financial position of IDFC which has occurred between the end of FY18 and the date of this Boardâs report.
INSTANCES OF FRAUD REPORTED BY THE AUDITORS
There have been no instances of fraud reported by the Auditors under Section 143(12) of the Act.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS / COURTS / TRIBUNALS
During the period under review, there were no significant and material orders passed by the Regulators / Courts / Tribunals.
ANTI SEXUAL HARASSMENT POLICY
The Company has in place the policy on Anti Sexual Harassment. The Company undertakes ongoing trainings to create awareness on this policy. There were no instances of Sexual Harassment that were reported during the period under review. The Company has constituted an Internal Complaints Committee for redressal of complaints and to prevent sexual harassment.
DIRECTORSâ RESPONSIBILITY STATEMENT
To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statements in terms of Section 134(3)(c) of the Act:
- In that in the preparation of the annual financial statements for the year ended March 31, 2018, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;
- In that such accounting policies have been selected and applied consistently and judgement and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2018 and of the profit of the Company for the year ended on that date.
- In that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
- In that the annual financial statements have been prepared on a going concern basis;
- In that proper internal financial controls were in place and that the financial controls were adequate and were operating effectively
- In that systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively
GREEN INITIATIVE
In accordance with the âGreen Initiativeâ, the Company has been sending the Annual Report / Notice of AGM in electronic mode to those Shareholders whose e-mail Ids are registered with the Company and / or the Depository Participants.
Your Directors are thankful to the Shareholders for their active participation in this Green Initiative.
EXTRACT OF ANNUAL RETURN
The extract of the Annual Return for FY18 in the prescribed Form No. MGT-9 is appended as Annexure 4.
CORPORATE SOCIAL RESPONSIBILITY
The Corporate Social Responsibility Committee, as constituted under section 135 of the Act, comprises of Mr. Sunil Kakar (DIN: 03055561) Chairman, Mr. Donald Peck (DIN: 00140734) and Mr. S S Kohli (DIN: 00169907).
The disclosure of contents of the Corporate Social Responsibility Policy of the Company as prescribed in the Companies (Corporate Social Responsibility Policy) Rules, 2014 forms part of the Boardâs Report and appended as Annexure 5.
RELATED PARTY TRANSACTIONS
The Company has in place the policy on Related Party Transactions and the same has been uploaded on the website of the Company i.e. www.idfc.com. In all related party transactions that were entered into during the financial year, an endeavour was made consistently that they were on an armâs length basis and were in the ordinary course of business. IDFC has always been committed to good corporate governance practices, including matters relating to Related Party Transactions.
Since all related party transactions entered into by the Company were in the ordinary course of business and were on an armâs length basis, Form AOC-2 is not applicable to the Company. No Material Related Party Transactions, i.e. transactions exceeding 10% of the annual consolidated turnover of the Company as per the last audited financial statements, were entered during the year by your Company.
EMPLOYEE STOCK OPTION SCHEME
Pursuant to the resolution passed by the Members through Postal Ballot dated June 25, 2016, IDFC introduced IDFC Employee Stock Option Scheme, 2016 (âIDFC ESOS - 2016â) to enable the employees of IDFC and its subsidiaries to participate in the future growth and financial success of the Company.
The Scheme is in compliance with the SEBI (Share Based Employee Benefits) Regulations, 2014.
All Options vest in graded manner and are required to be exercised within a specific period. The Company has used the intrinsic value method to account for the compensation cost of stock to employees of the Company. Intrinsic value is the amount by which the quoted market price of the underlying share on the date, prior to the date of the grant, exceeds the exercise price of the Option.
Disclosures as required under the SEBI (Share Based Employee Benefits) Regulations, 2014, are hosted on the Companyâs website: www.idfc.com which forms part of this Annual Report.
ACKNOWLEDGEMENTS
We are grateful to the Government of India, State Governments, RBI, SEBI, Stock Exchanges, various Ministries and other domestic and overseas regulatory bodies for their continuous collaboration and support. We would like to thank all our Shareholders, Banks for their co-operation and assistance during the year under review.
We would like to express our deep sense of appreciation for the hard work and efforts put in by the employees at all levels of the Group.
FOR AND ON BEHALF OF THE BOARD
Vinod Rai
Independent Non-Executive Chairman
Mumbai | June 26, 2018
Mar 31, 2017
Dear Shareholders,
The Directors have pleasure in presenting the Twentieth Annual Report on the business and operations of the Company together with the audited financial statements for the financial year ended March 31, 2017.
OPERATIONS REVIEW
During FY16, your Company transferred its financing undertaking into IDFC Bank Limited ("IDFC Bank") effective October 1, 2015, post receipt of approval from Hon''ble High Court of Madras to demerger scheme and on fulfillment of all conditions mentioned in the demerger scheme and receipt of Universal Banking License by IDFC Bank.
From October 1, 2015, your Company is operating as NBFC -Investment Company, mainly holding investment in IDFC Financial Holding Company Limited ("IDFC FHCL")
(Non Operative Financial Holding Company), which in turn holds investments in IDFC Bank, IDFC Asset Management Company Limited, IDFC Alternatives Limited, IDFC Securities Limited and IDFC Infrastructure Finance Limited (formerly IDFC Infra Debt Fund Limited).
During the year under review, IDFC Limited ("IDFC" or "the Company") infused additional equity in IDFC FHCL which has been dealt with in detail in the paragraph on Subsidiary companies.
Balance sheet size increased from Rs, 9,620 crore as at March 31, 2016 to Rs, 9,878 crore as at March 31, 2017. Profit After Tax for the year was Rs, 55.75 crore as compared to loss of Rs, 1,162.14 crore in previous year ended March 31, 2016. Net worth of the Company as at March 31, 2017 was Rs, 9,650 crore as compared to Rs, 9,589 crore as at March 31, 2016.
During the year, the Company transferred Rs, 11.20 crore to Special Reserve under section 45-IC of the Reserve Bank of India Act, 1934.
The details of amount transferred to reserves are given in note no. 5 of the notes forming part of standalone financial statements.
Details of business overview and outlook of the Company and its subsidiaries are appearing in the chapter Management Discussion and Analysis which forms part of this Annual Report.
SR. NO. |
NAME OF THE SUBSIDIARY |
DIRECT / INDIRECT SUBSIDIARY |
% OF SHAREHOLDING |
Domestic Subsidiaries |
|||
i. |
IDFC Financial Holding Company Limited |
Direct Subsidiary |
100 |
ii. |
IDFC Foundation (a Company within the meaning of Section 8 of the Act) |
Direct Subsidiary |
100 |
iii. |
IDFC Projects Limited |
Direct Subsidiary |
100 |
i v. |
IDFC Bank Limited |
Indirect Subsidiary through IDFC FHCL |
52.88 |
v. |
IDFC Bharat Limited (Formerly known as Grama Vidiyal Micro Finance Limited) |
Indirect Subsidiary through IDFC Bank |
52.88 |
vi. |
IDFC Infrastructure Finance Limited (Formerly known as IDFC Infra Debt Fund Limited) |
Indirect Subsidiary through IDFC FHCL |
81.48 |
vii. |
IDFC Alternatives Limited |
Indirect Subsidiary through IDFC FHCL |
100 |
viii. |
IDFC Trustee Company Limited |
Indirect Subsidiary through IDFC FHCL |
100 |
ix. |
IDFC Securities Limited |
Indirect Subsidiary through IDFC FHCL |
100 |
x. |
IDFC Asset Management Company Limited |
Indirect Subsidiary through IDFC FHCL |
100 |
xi. |
IDFC AMC Trustee Company Limited |
Indirect Subsidiary through IDFC FHCL |
100 |
Foreign Subsidiaries |
|||
i. |
IDFC Capital (Singapore) Pte. Limited |
Indirect Subsidiary through IDFC Alternatives |
100 |
ii. |
IDFC Securities Singapore Pte. Limited |
Indirect Subsidiary through IDFC Securities |
100 |
iii. |
IDFC Capital (USA) Inc. |
Indirect Subsidiary through IDFC Securities |
100 |
iv. |
IDFC Investment Managers (Mauritius) Ltd. |
Indirect Subsidiary through IDFC AMC |
100 |
DIVIDEND
Your Directors are pleased to recommend a dividend of Rs, 0.25 per equity share of '' 10 each (i.e. 2.5%) for the year ended March 31, 2017.
The Register of Members and Share Transfer Books will remain closed from July 22, 2017 to July 28, 2017 (both days inclusive) for the purpose of payment of dividend for the financial year ended March 31, 2017.
Dividend will be paid to those Members whose names appear in the Register of Members as on July 21, 2017. In respect of shares held in dematerialized form, it will be paid to those Shareholders whose names are furnished by National Securities Depository Limited and Central Depository Services (India) Limited, as beneficial owners as on that date.
Above dividend would be paid subject to approval by the Shareholders at the ensuing Annual General Meeting (âAGMâ).
DIVIDEND DISTRIBUTION POLICY
In accordance with the Regulation 43A of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("SEBI LoDR Regulations"), IDFC has formulated a Dividend Distribution Policy. The policy was adopted to set out the parameters and circumstances that will be taken into account by the Board in determining the distribution of dividend to its Shareholders and / or retaining profits earned by the Company. The said policy is hosted on the website of the Company and can be viewed at http://www.idfc. com/investor relations/corporate_ governance_policies.htm.
SUBSIDIARY COMPANIES
The Company has eleven domestic direct / indirect subsidiaries and four foreign indirect subsidiaries, as on March 31, 2017, details of which are given in Table 1.
During the year under review, the following changes took place in the group corporate structure of your Company:
1. Merger of IDFC Finance Limited with IDFC projects Limited
A petition was filed with the Hon''ble High Court of Judicature at Bombay on July 1, 2016 for the merger of IDFC Finance Limited with IDFC Projects Limited, which was approved by the Hon''ble High Court vide its Order dated November 18, 2016.
The said merger became effective from April 1, 2016.
2. Acquisition of Stake in IDFC Bharat Limited by IDFC Bank
On October 13, 2016, IDFC Bank acquired 100% equity stake of Grama Vidiyal Micro Finance Limited (now renamed as IDFC Bharat Limited) making it a wholly owned subsidiary of IDFC Bank.
In view of the acquisition, IDFC Bharat Limited ("IDFC Bharat") surrendered its NBFC-MFI Licence issued by the Reserve Bank of India
("RBI") and has discontinued its micro finance business. IDFC Bharat is presently acting as a Business Correspondent to IDFC Bank for distribution of the products of IDFC Bank.
3. Acquisition of Stake of Natixis global Asset Management in IDFC Asset Management Company Limited (âIDFC AMCâ) and IDFC AMC trustee Company Limited (âIDFC AMC trusteeâ)
IDFC FHCL, wholly owned subsidiary of IDFC held approximately 75% equity stake of IDFC AMC and IDFC AMC Trustee and the balance stake (approximately 25%) was held by Natixis Global Asset Management (âNGAMâ). In March 2017, IDFC FHCL acquired the stake held by NGAM in both IDFC AMC and IDFC AMC Trustee, thereby making them its wholly owned subsidiaries.
To give effect to the aforesaid transaction with NGAM, IDFC infused funds in IDFC FHCL by subscribing to the equity shares of IDFC FHCL at par.
JOINT VENTURES
IDFC Foundation, a Section 8 Company within the meaning of the Companies Act, 2013 (âActâ) and a wholly owned subsidiary of the Company has following three Joint Ventures:
- Delhi Integrated Multi-Modal Transit System Limited ("DIMTS")
- Infrastructure Development Corporation (Karnataka) Limited ("iDeCK")
- Uttarakhand Infrastructure Development Company Limited ("UDeC") - under liquidation
Additionally, iDeCK has one Joint Venture - Rail Infrastructure Development Company (Karnataka) Limited.
ASSOCIATES
IDFC Bank has two associate companies namely Feedback Infra
Private Limited and Millennium City Expressways Private Limited.
In addition, IDFC Projects Limited, a wholly owned subsidiary of the Company, has one associate company namely Jetpur Somnath Tollways Private Limited.
CONSOLIDATED FINANCIAL STATEMENTS
The Board of Directors of IDFC reviews the affairs of its subsidiary companies regularly. In accordance with the provisions of Section 129(3) of the Act, the Company has prepared Consolidated Financial Statements including requisite details of all the subsidiaries. Further, a statement containing the salient features of performance and financial positions of all the subsidiary companies / associates / joint ventures in the format AOC-I is appended as Annexure 1.
In accordance with Section 136 of the Act, the audited Financial Statements together with the Consolidated Financial Statements and related information of the Company and audited accounts of each subsidiary company are available on the website of the Company: www.idfc.com.
Detailed analysis of the performance of IDFC and its businesses, including initiatives in the areas of Risk Management, Human Resources and IDFC Foundation activities, has been presented in the section on Management Discussion & Analysis which forms part of this Annual Report.
PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES
IDFC had 10 employees as on March 31, 2017 and 4,294 employees at the group level.
In terms of the provisions of Section 197(12) of the Act, read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of
Managerial Personnel) Rules, 2014, as amended from time to time, a statement showing the names and other particulars of the employees drawing remuneration in excess of the limits set out in the said rules are provided in this Annual Report. Having regard to the provisions of the first proviso to Section 136(1) of the Act, the Annual Report excluding the aforesaid information is being sent to the Shareholders of the Company. The said information is available for inspection at the Registered Office and Corporate Office of the Company during working hours and any Member interested in obtaining such information may write to the Company Secretary and the same will be furnished on request.
Disclosure pertaining to remuneration & other details as required under section 197(12) of the Act, read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 as amended from time to time are appended as Annexure 2
SHARE CAPITAL UPDATE
During the year, the Company issued and allotted 1,920,902 Equity Shares to eligible employees of IDFC and its subsidiaries on exercise of options granted under Employee Stock Option Scheme 2016 (âIDFC ESoS
- 2016â). As on March 31, 2017, the total paid up capital of IDFC was 1,595,941,570 equity shares of '' 10/each.
EMPLOYEE STOCK OPTION SCHEME
Pursuant to the resolution passed by the Members through Postal Ballot dated June 25, 2016, IDFC introduced IDFC ESOS - 2016 to enable the employees of IDFC and its subsidiaries to participate in the future growth and financial success of the Company. The Scheme is in compliance with the SEBI
(Share Based Employee Benefits) Regulations, 2014.
All Options vest in graded manner and are required to be exercised within a specific period. The Company has used the intrinsic value method to account for the compensation cost of stock to employees of the Company. Intrinsic value is the amount by which the quoted market price of the underlying share on the date, prior to the date of the grant, exceeds the exercise price of the Option.
Disclosures as required under the SEBI (Share Based Employee Benefits) Regulations, 2014, are hosted on the Company''s website: www.idfc.com which forms part of this Annual Report.
MANAGEMENT DISCUSSION & ANALYSIS AND REPORT ON CORPORATE GOVERNANCE
In compliance with the provisions of SEBI LODR Regulations, separate detailed chapters on Management Discussion & Analysis, Report on Corporate Governance and Additional Shareholder Information form part of this Annual Report.
BUSINESS RESPONSIBILITY REPORT
As per Regulation 34(2)(f) of SEBI LODR Regulations and Notifications issued from time to time, a separate report called Business Responsibility Report ("BRR") describing the initiatives taken by IDFC from an environmental, social and governance perspective is hosted on the Company''s website: www.idfc.com which forms part of this Annual Report.
Any Member interested in obtaining a physical copy of the same may write to the Company Secretary of the Company by sending an e-mail on [email protected].
PUBLIC DEPOSITS
During FY17, your Company has not accepted any deposits from the public within the meaning of the provisions of the Non-Banking Financial Companies Acceptance of Public Deposits (Reserve Bank) Directions, 1998 or under Chapter V of the Act.
PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS
Post demerger of financing undertaking into IDFC Bank w.e.f. October 1, 2015, IDFC is registered with RBI as NBFC - Investment Company. Being an investment company, the provisions of Section 186 of the Act are not applicable to IDFC. Hence, the requisite details of loans, guarantees and investments are not given.
VIGIL MECHANISM / WHISTLE BLOWER POLICY
IDFC has put in place a Whistle Blower Policy, which includes reporting to the Management instances of unethical behavior, actual or suspected fraud or violation of the Company''s Code of Conduct. The Audit Committee directly oversees the Vigil Mechanism. The provisions of the policy are also in line with the provisions of Section 177 (9) & (10) of the Act.
The details of Vigil Mechanism are posted on the website of the Company: www.idfc.com
FOREIGN EXCHANGE
There were no foreign exchange earnings during the year. The particulars regarding foreign exchange expenditure are furnished at Item No. 26 in the Notes forming part of the Standalone Financial Statements.
PARTICULARS REGARDING CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTION
Since the Company does not carry out any manufacturing activity, the particulars regarding conservation of energy, technology absorption and other particulars as required by the Companies (Accounts) Rules, 2014 are not applicable.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
In accordance with the Articles of Association of the Company and pursuant to the provisions of Section 152 of the Act, Mr. Chintamani Bhagat (DIN: 07282200) would retire by rotation at the ensuing AGM and being eligible, offers himself for reappointment.
During the year, Mrs. Snehlata Shrivastava (DIN: 06478173) who was on the Board of the Company as a nominee of the Government of India, resigned as a Director w.e.f. November 29, 2016. The Board places on record its sincere appreciation for the valuable contribution and services rendered by her.
The Ministry of Finance nominated Mr. Soumyajit Ghosh (DIN: 07698741) and Mr. Manish Kumar (DIN: 07379535) as Nominees of the Government of India on the Board of IDFC. Based on the recommendation of NRC, the said Directors were appointed by the Board as Additional Directors in the category of Nominee Directors w.e.f. January 11, 2017. Their appointment is up to the conclusion of the ensuing AGM. Accordingly, the approval of Shareholders is sought for their appointment at the ensuing AGM.
Mr. S. S. Kohli (DIN: 00169907) and Ms. Marianne 0kland (DIN: 03581266) were appointed as Directors in the category of Independent Director ("ID") to hold office till the conclusion of the ensuing AGM. Considering that their continued association would be of immense benefit to the Company, the Board of Directors, based on recommendation of NRC approved the reappointment of Mr. S. S. Kohli and Ms. Marianne 0kland as Directors of the Company in the category of ID, for a period of two years, to hold office from the conclusion of the ensuing AGM till the conclusion of the 22nd AGM to be held for FY19. Approval of Shareholders is sought for the reappointment of Mr. S. S. Kohli and Ms. Marianne 0kland at the ensuing AGM.
The Board of Directors of National Stock Exchange of India Limited (âNSEâ) at its meeting held in January 2017 selected Mr. Vikram Limaye as Managing Director &
CEO of NSE, subject to approval of SEBI and Shareholders of NSE.
The Shareholders of NSE accorded their approval in March 2017 and in June 2017, SEBI granted conditional approval for the said appointment of Mr. Limaye, subject to he being relieved from the Committee of Administrators of the Board of Control for Cricket in India (âBCCIâ). The said appointment of Mr. Limaye on the Committee of Administrators of the BCCI was as per the Order passed by the Hon''ble Supreme Court of India in January 2017. The Hon''ble Supreme Court will reopen after vacation in first week of July 2017 and it is expected that it would grant its approval for relieving him by July 14, 2017. In view of the same, Mr. Vikram Limaye has tendered his resignation from the Board of IDFC as Managing Director & CEO with effect from July 15, 2017.
The Board of Directors of IDFC at its meeting held on June 24, 2017 took note of the resignation of Mr. Vikram Limaye as Managing Director & CEO of the Company w.e.f. July 15, 2017. Mr. Vikram Limaye has been associated with IDFC since 2005. He joined the Board of IDFC as a Whole-time Director in 2008 and took over the post of Managing Director & CEO of the Company in May 2013. He was pivotal in the growth and development of various business verticals of IDFC Group, including Mutual Fund, Institutional Broking, Investment Banking, Alternatives Business, etc. and was also instrumental in establishing the IDFC Brand. He also played a very vital role in setting up of IDFC Bank. The Company places on record its gratitude for the immense contribution made by Mr. Limaye during his tenure with IDFC Group.
The Board of the Company had earlier met in February 2017 to discuss about the probable candidate in place of Mr. Vikram Limaye to be appointed as Managing Director & CEO of the Company. After taking into consideration the views of all the Directors, the Board was of the opinion that an internal candidate who is well conversant not only with the existing businesses but also with the people, policies, procedures and work culture would be a better choice to avoid any incoherence. Accordingly, the NRC and the Board, at their meetings held on June 24, 2017, recommended the appointment of Mr. Sunil Kakar, who is currently Chief Financial Officer (âCFoâ) of IDFC Bank, as the Managing Director & CEO of IDFC for a period of three years with effect from July 16, 2017. The appointment is subject to the approval of the Shareholders, on the terms and conditions as set out in the Notice of ensuing AGM circulated along with this Report. Mr. Kakar was the former CFO of IDFC, before setting up of IDFC Bank and is well acquainted with the group and subsidiary businesses. A brief profile of Mr. Kakar is set out in the Exhibit to Notice of the ensuing AGM. Consequently, Mr. Sunil Kakar will resign as CFO of IDFC Bank.
The Board recommends the appointment / reappointment of the above Directors at the ensuing AGM.
DECLARATION OF INDEPENDENCE
The Company has received a declaration from all IDs that they meet the criteria of independence specified under sub-section (6) of Section 149 of the Act, read with Rule 5 of the Companies (Appointment and Qualification of Directors) Rules 2014, for holding the position of ID and that they shall abide by the âCode for Independent Directorsâ as per Schedule IV of the Act.
SPECIAL BUSINESS
The Board of Directors recommends the following items under special business for approval of the Shareholders at the ensuing AGM:
a. Appointment of Mr. Manish Kumar (DIN: 07379535), as Nominee Director.
b. Appointment of Mr. Soumyajit Ghosh (DIN: 07698741) as Nominee Director.
c. Appointment of Mr. Sunil Kakar (DIN: 03055561) as a Director of the Company.
d. Appointment of Mr. Sunil Kakar (DIN: 03055561) as Managing Director & CEO of the Company.
e. Reappointment of Mr. S. S. Kohli (DIN: 00169907) as an ID.
f. Reappointment of Ms. Marianne 0kland (DIN: 03581266) as an ID.
g. Offer and Issuance of Non-Convertible Securities through Private Placement basis.
BOARD AND ITS COMMITTEES
During the year, 7 (seven) Board Meetings and 4 (four) Audit Committee Meetings were held.
Audit Committee comprises of Mr. Gautam Kaji (DIN: 02333127) -Chairperson, Mr. Vinod Rai (DIN: 01119922) and Ms. Marianne 0kland (DIN: 03581266).
All the recommendations made by the Audit Committee during the year were accepted by the Board.
The details of the constitution and meetings of the Board, Audit Committee and other Committees held during the year are provided in the Corporate Governance Report which forms part of this Annual Report.
BOARD EVALUATION
Pursuant to SEBI LODR Regulations and the Act, the process indicating the manner in which formal annual evaluation of the Chairperson, Directors, Board as a whole and Board level committees is given in the Corporate Governance Report, which forms part of this Annual Report.
NOMINATION & REMUNERATION COMMITTEE ("NRC") / REMUNERATION POLICY
The Company has a policy in place for identification of independence, qualifications and positive attributes of Directors. IDFC has put in place a Remuneration Policy for the Directors, Key Managerial Personnel, Senior Management and Other Employees.
The remuneration of the Executive Director and KMPs is recommended by NRC to the Board for their approval.
AUDITORS
statutory auditors
In terms of Section 139(2) of the Act, all listed companies are required to mandatorily rotate their auditors once they have served office as an auditor for a consecutive period of 10 years or more. A moratorium period of three years is provided, which has ended on March 31, 2017. The term of Deloitte Haskins & Sells LLP, Chartered Accountants (âDHSâ) (Registration No. 117366W / W-100018), the Statutory Auditors of the Company, will end at the ensuing AGM. DHS, the retiring auditors, have completed their term of 10 years and a new audit firm is proposed to be appointed from FY18 onwards.
The Board of Directors of the Company at their meeting held on January 31, 2017 appointed Price Waterhouse & Co, Chartered Accountants LLP (FRN 304026E/ E300009) (âpWCâ) as Statutory Auditors of the Company. The approval of the Shareholders is requested, by passing an Ordinary Resolution, to appoint PWC as Statutory Auditors of the Company for a period of 5 (five) years from the conclusion of the ensuing AGM till the conclusion of AGM to be held for FY22. The Company has received a certificate from PWC to the effect that their appointment, if made, shall be in compliance with the provisions of Section 139 and 141 of the Act.
The Board recommends the appointment of PWC at the ensuing AGM.
secretarial audit
Pursuant to the provisions of Section 204 of the Act and Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company had appointed M/s. BNP & Associates, Company Secretaries to undertake the Secretarial Audit of the Company for FY17. The Secretarial Audit Report is appended as Annexure 3.
There are no qualifications or observations or other remarks made by the Statutory Auditors and Secretarial Auditors in their respective reports.
INTERNAL CONTROL SYSTEMS
The Company has in place, adequate systems of Internal Control to ensure compliance with policies and procedures. It is being constantly assessed and strengthened with new / revised standard operating procedures and tighter Information Technology controls. Internal Audit of the Company is regularly carried out. The Audit Reports of Internal Auditors i.e. KPMG, along with their recommendations and implementation contained therein are regularly reviewed by the Audit Committee.
KPMG verified the key Internal Financial Control by reviewing key controls impacting financial reporting and overall risk management procedures of the Company and found the same satisfactory. Subsequently, it was placed before the Audit Committee of the Company.
RISK MANAGEMENT POLICY
IDFC as a group, has a robust risk management practice that enables it to book, manage and mitigate risks in all its businesses. The Company has a comprehensive Enterprise Risk Management framework which has been adopted across all entities in the group and covers all three types of risksâcredit, market and operational risks. The Board through its Risk Management Committee monitors and reviews Risk Management of the Group on a regular basis. Our Company has Board approved Group Operational Risk Management Policy which endeavours to lay down broad principles for operational risk management. The details of Risk Management Framework are provided in Management Discussion and Analysis.
MATERIAL CHANGES AND COMMITMENT AFFECTING FINANCIAL POSITION OF THE COMPANY
There are no material changes and commitments, affecting the financial position of IDFC which has occurred between the end of FY17 and the date of the Board''s report.
INSTANCES OF FRAUD, IF ANY REPORTED BY THE AUDITORS
There have been no instances of fraud reported by the Auditors under Section 143(12) of the Act.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS / COURTS / TRIBUNALS
During the period under review, there were no significant and material orders passed by the Regulators / Courts / Tribunals.
ANTI SEXUAL HARASSMENT POLICY
The Company has in place the policy on Anti Sexual Harassment.
The Company undertakes ongoing trainings to create awareness on this policy. There were no instances of Sexual Harassment that were reported during the period under review.
TRANSFER OF AMOUNTS TO INVESTOR EDUCATION AND PROTECTION FUND
Pursuant to the applicable provisions of the Act, the dividend which remains unclaimed / unpaid for a period of seven years from the date of transfer to the unpaid dividend account are required to be transferred to the Investor Education and Protection Fund (âIEpFâ) established by the Central Government and no claim shall lie against the Company once such unpaid / unclaimed amounts are transferred by the Company.
Accordingly, an amount of Rs, 1,712,540 being unclaimed / unpaid dividend for FY09 and which remained unpaid and unclaimed for a period of 7 years has been transferred by the Company to the IEPF.
The Company regularly updates the details of unclaimed / unpaid dividend on the Company''s website (www.idfc.com) and on Ministry of Corporate Affairs ("MCA") website (www.mca.gov.in).
Further, the unclaimed / unpaid dividend amount pertaining to the FY10 will be transferred to IEPF during FY18.
TRANSFER OF SHARES TO IEPF
The MCA has notified the IEPF Authority (Accounting, Audit, Transfer & Refund) Rules, 2016 and the amendments thereto ("the Rules"). As per the Rules, all the shares in respect of which dividend has remained unpaid / unclaimed by the Shareholders for a period of seven consecutive years or more shall be transferred in the name of IEPF. The Company had already sent communication to the Shareholders in December, 2016 and April, 2017 requesting them to claim the dividend, in order to avoid their shares getting transferred to IEPF. Accordingly, Shareholders who have not claimed the dividend since FY10 are requested to contact Karvy Computershare Private Limited ("Karvy"), Registrar & Share Transfer Agent and submit requisite documents to Karvy or the Company, failing which the Company will be constrained to transfer the shares to IEPF as per the Rules.
DIRECTORSâ RESPONSIBILITY STATEMENT
To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statements in terms of Section 134(3)(c) of the Act:
- that in the preparation of the annual financial statements for the year ended March 31, 2017, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;
- that such accounting policies have been selected and applied consistently and judgment and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2017 and of the profit of the Company for the year ended on that date.
- that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
- that the annual financial statements have been prepared on a going concern basis;
- that proper internal financial controls were in place and that the financial controls were adequate and were operating effectively.
- that systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively.
GREEN INITIATIVE
In accordance with the ''Green Initiative'', the Company has been sending the Annual Report / Notice of AGM in electronic mode to those Shareholders whose e-mail Ids are registered with the Company and / or the Depository Participants.
Your Directors are thankful to the Shareholders for actively participating in the Green Initiative.
EXTRACT OF ANNUAL RETURN
The extract of the Annual Return in the prescribed Form No. MGT 9 is appended as Annexure 4.
CORPORATE SOCIAL RESPONSIBILITY
The Corporate Social Responsibility Committee comprises of Mr. Vikram Limaye (DIN: 00488534) Chairperson, Mr. Donald Peck (DIN: 00140734) and Mr. S. S. Kohli (DIN: 00169907).
The disclosure of contents of the Corporate Social Responsibility Policy of the Company as prescribed in the Companies (Corporate Social Responsibility Policy) Rules, 2014 forms part of the Board''s Report and appended as Annexure 5.
RELATED PARTY TRANSACTIONS
The Company has in place the policy on Related Party Transactions and the same has been uploaded on the website of the Company i.e. www.idfc.com. In all related party transactions that were entered into during the financial year, an Endeavour was made consistently that they were on an arm''s length basis and were in the ordinary course of business. IDFC has always been committed to good corporate governance practices, including matters relating to Related Party Transactions.
Since all related party transactions entered into by the Company were in the ordinary course of business and were on an arm''s length basis, Form AOC-2 is not applicable to the Company.
No Material Related Party Transactions, i.e. transactions exceeding 10% of the annual consolidated turnover of the Company as per the last audited financial statements, were entered during the year by your Company.
ACKNOWLEDGEMENTS
We are grateful to the Government of India, State Governments, RBI, SEBI, Stock Exchanges, various Ministries and other domestic and overseas regulatory bodies for their continuous collaboration and support.
We would like to thank all our Shareholders, Banks for their co-operation and assistance during the year under review.
We would like to express our deep sense of appreciation for the hard work and efforts put in by the employees at all levels of the Group.
FOR AND ON BEHALF OF THE BOARD
Vinod Rai
Independent Non-Executive Chairperson
Mumbai,
June 24, 2017
Mar 31, 2015
Dear Members,
The Directors have pleasure in presenting the Eighteenth Annual Report
on the business and operations of the Company together with the audited
financial statements for the financial year ended March 31,2015.
The Company''s financial performance, for the year ended March 31,
2015 is summarised on the facing page.
OPERATIONS REVIEW
Your Company is engaged inter alia in the business of financing
infrastructure projects in sectors like energy, telecommunication,
transportation, commercial and industrial projects including hospitals,
education, tourism and hotels.
Balance Sheet grew by 17% Year on Year (YoY) to reach H 86,520 crore
and Net Loans at H 52,427 crore witnessed a reduction of 10% YoY As on
March 31,2015, IDFC''s total exposure was H 75,573 crore, of which
Energy was highest at 37%, followed by Telecommunication 24%,
Transportation 24%, and Others 15%.
DIVIDEND
Your Directors are pleased to recommend a dividend of H 2.60 per equity
share of H 10 each (i.e. 26%) for the year ended March 31,2015.
The Register of Members and Share Transfer Books will remain closed
from July 25, 2015 to July 30, 2015 (both days inclusive) for the
purpose of payment of dividend for the financial year ended March
31,2015.
Dividend will be paid to those Members whose names appear in the
Register of Members as on July 24, 2015; in respect of shares held in
dematerialised form, it will be paid to those Members whose names are
furnished by National Securities Depository Limited and Central
Depository Services (India) Limited, as beneficial owners as on that
date.
Above dividend would be paid subject to approval by the Members at the
ensuing Annual General Meeting ("AGM").
DEMERGER
IDFC Limited ("IDFC" or "the Company") was granted an
In-principle approval by the Reserve Bank of India on April 9, 2014
("RBI In-Principle Approval") to set up a new bank in the private
sector under Section 22 of the Banking Regulation Act, 1949.
Accordingly, a new company namely IDFC Bank Limited
("IDFC Bank" ) was incorporated on October 21,2014.
The terms and conditions contained in the RBI in principle approval and
the Guidelines for Licensing of New Banks in the Private Sector dated
February 22, 2013 ("RBI New Banking Guidelines") requires IDFC to
transfer all lending and financing business ("Financing
Undertaking") to IDFC Bank. Accordingly, the Financing Undertaking is
to be demerged into IDFC Bank pursuant to a Scheme of Arrangement under
Sections 391 to 394 of the Companies Act, 1956 ("Demerger Scheme").
IDFC Bank will, without any further act or deed, issue and allot to the
Shareholders of IDFC whose name is recorded in the register of members
of IDFC as on the Record Date, equity shares of IDFC Bank in the ratio
of one (1) equity share having a face value of H 10 each of IDFC Bank
for every one (1) equity share having a face value of H 10 each of
IDFC, each equity share being fully paid-up.
On completion of demerger, equity share capital of IDFC Bank will be
held approximately 53% by IDFC Financial Holding Company Limited
("IDFC FHCL''), a 100% subsidiary of IDFC and approximately 47% by
the Shareholders of IDFC (as on the Record Date).
The Board of Directors of the Company at its meeting held on October
30, 2014 approved the Demerger Scheme.
The Shareholders of IDFC at the Court Convened Meeting held on April 9,
2015 unanimously approved the Demerger Scheme. The Hon''ble High
Court of Judicature at Madras, vide it''s Order dated June 25, 2015, has
sanctioned the Demerger Scheme.
The Demerger Scheme will be effective inter alia upon receipt of final
approval from the RBI for undertaking banking operations. After the
Scheme becoming effective, the shares of IDFC Bank will be listed on
National Stock Exchange of India Limited ("NSE") and BSE Limited
("BSE").
SUBSIDIARY COMPANIES
IDFC has nine direct subsidiary companies, as on date which are as
follows:
- IDFC Financial Holding Company Limited
- IDFC Alternatives Limited
- IDFC Trustee Company Limited
- IDFC Projects Limited
- IDFC Finance Limited
- IDFC Securities Limited
- IDFC Asset Management Company Limited
- IDFC AMC Trustee Company Limited
- IDFC Foundation (a Company within the meaning of Section 8 of the
Companies Act, 2013)
In addition,
a. IDFC Financial Holding Company Limited has a wholly owned subsidiary
company namely IDFC Bank Limited.
b. IDFC Alternatives Limited has one wholly owned subsidiary company,
namely IDFC Capital (Singapore) Pte. Limited.
c. IDFC Securities Limited has two wholly owned subsidiary companies
namely IDFC Securities Singapore Pte. Limited and IDFC Capital (USA)
Inc.
d. IDFC Asset Management Company Limited has one subsidiary, namely
IDFC Investment Managers (Mauritius) Limited.
e. IDFC holds 49% stake in IDFC Infra Debt Fund Limited and the
remaining 51% is held by IDFC Alternatives Limited and IDFC Finance
Limited.
During the year under review the following changes took place in the
group corporate structure of your Company:
1. On August 28, 2014, the entire equity stake in IDFC Primary
Dealership Company Limited and IDFC Housing Finance Company Limited
which was held by IDFC was transferred to IDFC Alternatives Limited,
thereby making the said companies wholly owned subsidiaries of IDFC
Alternatives Limited.
On September 26, 2014, the Scheme of Amalgamation under Sections 391 to
394 of Companies Act, 1956 was filed with the Hon''ble High Court of
Bombay to amalgamate IDFC Project Equity Company Limited, IDFC Housing
Finance Company Limited and IDFC Primary Dealership Company Limited
(the wholly owned subsidiaries of IDFC Alternatives Limited) with IDFC
Alternatives Limited. The Hon''ble High Court of Bombay approved the
amalgamation of the above entities on January 30, 2015 and the merger
became effective post filing of the court order with the Registrar of
Companies on March 12, 2015, with appointed date October 1,2014.
2. On September 29, 2014, the entire equity stake held by IDFC in
Galaxy Mercantiles Limited and Neopro Technologies Private Limited were
sold.
3. IDFC Bank Limited was incorporated as a wholly owned subsidiary of
IDFC on October 21, 2014.
4. IDFC Financial Holding Company Limited was incorporated as a wholly
owned subsidiary of IDFC on November 7, 2014.
On December 26, 2014, the entire equity Stake of IDFC Bank Limited
which was held by IDFC was transferred to IDFC Financial Holding
Company Limited, thereby making IDFC Bank Limited wholly owned
subsidiary of IDFC Financial Holding Company Limited.
5. An application was filed with Hon''ble High Court of Bombay for
merger of IDFC Investment Advisors Limited with IDFC Asset Management
Company Limited on November 26, 2014. The Hon''ble High Court of
Bombay approved the amalgamation of the above entities on April 18,
2015 and merger became effective post filing of the court order with
the Registrar of Companies on June 23, 2015, with appointed date April
1, 2015.
6. On December 12, 2014, an application for voluntary winding up of
IDFC Fund of Funds Limited was filed with the concerned regulatory
authority and the same was dissolved.
7. IDFC Infra Debt Fund Limited was incorporated on March 7, 2014 as a
wholly owned subsidiary of IDFC Limited, an Infrastructure Finance
Company ("IFC"). As per RBI guidelines prescribed for Infra Debt Fund
("IDFs"), Sponsor IFCs would be allowed to contribute a maximum up to
49% of the equity capital of IDF NBFCs. Accordingly, IDFC Infra Debt
Fund Limited made a preferential allotment to two of the wholly owned
subsidiaries of IDFC Limited namely IDFC Alternatives Limited and IDFC
Finance Limited. Post preferential allotment, IDFC holds 49% stake in
IDFC Infra Debt Fund Limited and the remaining 51% is held by IDFC
Alternatives Limited and IDFC Finance Limited.
8. On March 26, 2015, the entire equity stake of IDFC Capital
(Singapore) Pte. Limited was transferred from IDFC Securities Limited
to IDFC Alternatives Limited.
The Board of Directors of IDFC reviews the affairs of its subsidiary
companies regularly.
In accordance with the provisions of Section 129(3) of the Companies
Act, 2013, the Company has prepared Consolidated Financial Statement
including requisite details of all the subsidiaries. Further, a
statement containing the salient features of the financial statement
and all other requisite details of all the subsidiary companies in the
format AOC-I is appended as Annexure 1. The statement also provides
details of performance, financial positions of each of the
subsidiaries.
In accordance with Section 136 of the Companies Act, 2013, the audited
Financial Statements together with the Consolidated Financial Statement
and related information of the Company and audited accounts of each
subsidiary company are available on the website of the Company
www.idfc.com.
Detailed analysis of the performance of IDFC and its businesses,
including initiatives in the areas of Risk Management, Human Resources,
Information Technology and IDFC Foundation activities, has been
presented in the section on Management Discussion & Analysis of this
Annual Report.
JOINT VENTURES
IDFC Foundation, a Section 8 Company within meaning of the Companies
Act, 2013 and a wholly owned subsidiary of the Company has following
three Joint Ventures:
- Delhi Integrated Multi-Modal Transit System Limited ("DIMTS")
- Infrastructure Development Corporation (Karnataka) Limited
("iDeCK")
- Uttarakhand Infrastructure Development Company Limited ("UDeC")
ASSOCIATES
IDFC has two associate companies namely Feedback Infra Private Limited
and Millennium City Expressways Private Limited.
During the year, the Company acquired 29.98% equity stake in Millennium
City Expressways Private Limited.
In addition, IDFC Projects Limited, a wholly owned subsidiary of the
Company, has one associate company namely Jetpur Somnath Tollways
Private Limited.
PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES
IDFC had 529 employees as on March 31,2015 and 881 employees at the
group level.
In terms of the provisions of Section 197(12) of the Act read with
Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of
Managerial Personnel) Rules, 2014, a statement showing the names and
other particulars of the employees drawing remuneration in excess of
the limits set out in the said rules are provided in this Annual
Report. Having regard to the provisions of the first proviso to Section
136(1) of the Act, the Annual Report excluding the aforesaid
information is being sent to the members of the Company. The said
information is available for inspection at the Registered Office and
Corporate Office of the Company during working hours and any member
interested in obtaining such information may write to the Company
Secretary and the same will be furnished on request.
Disclosures pertaining to remuneration and other details as required
under Section 197(12) of the Act read with Rule 5(1) of the Companies
(Appointment and Remuneration of Managerial Personnel) Rules, 2014 is
appended as Annexure 2.
SHARE CAPITAL UPDATE
During the year, the Company issued and allotted 3,494,615 equity
shares of the Company to eligible employees of IDFC and its
subsidiaries on exercise of options granted under Employee Stock Option
Scheme 2007.
On September 16, 2014, the Company raised an amount of over H 1,000
crore by allotment of 73,000,000 equity shares of the Company by way of
Qualified Institutional Placement to Domestic Institutions. This issue
of capital was required to achieve domestic company status and bring
down the foreign shareholding in IDFC below 50% as required by RBI New
Banking Guidelines.
EMPLOYEE STOCK OPTION SCHEME (ESOS)
Pursuant to the resolution passed by the Members at the AGM held on
August 2, 2006, IDFC had introduced Employee Stock Option Scheme 2007
("the ESOS Scheme") to enable the employees of IDFC and its
subsidiaries to participate in the future growth and financial success
of the Company. Out of 32,889,410 Options outstanding at the beginning
of the current financial year, 1,209,752 Options lapsed on account of
cancellations and 3,494,615 Options were exercised during the year.
Additionally, during the year, 3,300,000 Options were granted to
eligible employees under the ESOS Scheme. Accordingly, 31,485,043
Options remain outstanding as of March 31,2015.
All Options vest in graded manner and are required to be exercised
within a specific period. The Company has used the intrinsic value
method to account for the compensation cost of stock to employees of
the Company. Intrinsic value is the amount by which the quoted market
price of the underlying share on the date, prior to the date of the
grant, exceeds the exercise price on the Option.
Disclosures as required by Clause 12 of the Securities and Exchange
Board of India (Employee Stock Option Scheme and Employee Stock
Purchase Scheme) Guidelines, 1999, are appended as Annexure 3.
MANAGEMENT DISCUSSION & ANALYSIS AND REPORT ON CORPORATE GOVERNANCE
In compliance with the provisions of Clause 49 of the Listing
Agreement, separate detailed chapters on Management Discussion &
Analysis, Report on Corporate Governance and Additional Shareholder
Information forms part of this Annual Report.
BUSINESS RESPONSIBILITY REPORT
SEBI, through its circular CIR/CFD/DIL/8/2012 dated August 13, 2012,
mandated inclusion of Business Responsibility Report ("BRR") as
part of the Annual Report for top 100 listed entities based on market
capitalisation at BSE and NSE as on March 31 2012.
In compliance with the said circular, a separate report called BRR
forms part of this Annual Report which is hosted on the Company''s
website: http://www.idfc.com/ investor_relations/annual_report.htm
PUBLIC DEPOSITS
During FY15, your Company has not accepted any deposits from the public
within the meaning of the provisions of the Non-Banking Financial
Companies Acceptance of Public Deposits (Reserve Bank) Directions, 1998
or under Chapter V of the Companies Act, 2013.
PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS
Pursuant to Section 186(11) of the Companies Act, 2013 loans made,
guarantees given or securities provided or acquisition of securities by
a company engaged in the business of financing of companies or of
providing infrastructural facilities in the ordinary course of its
business are not applicable, hence not given.
VIGIL MECHANISM / WHISTLE BLOWER POLICY
IDFC had already adopted a Whistle Blower Policy, which included
reporting to the Management instances of unethical behaviour, actual or
suspected fraud or violation of the Company''s Code of Conduct or
Ethics Policy. The Whistle Blower Policy had been modified in light of
the new provisions prescribed under the Companies Act, 2013 to ensure
that the Audit Committee directly oversees the Vigil Mechanism.
The details of Vigil Mechanism are posted on the website of the Company
www.idfc.com
FOREIGN EXCHANGE
The particulars regarding foreign exchange expenditure and earnings are
furnished at Item Nos. 29 & 30 in the Notes forming part of the
Standalone Financial Statements.
PARTICULARS REGARDING CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTION
Since the Company does not carry out any manufacturing activity, the
particulars regarding conservation of energy, technology absorption and
other particulars as required by the Companies (Accounts) Rules, 2014
are not applicable.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
In accordance with the Articles of Association of the Company and
pursuant to the provisions of Section 152 of the Companies Act, 2013,
Mr. Joseph Dominic Silva (DIN: 06388807)
would retire by rotation at the ensuing AGM and being eligible, offers
himself for reappointment.
During the year, Mr. Shardul Shroff, Independent Director ("ID") of the
Company resigned from the Board with effect from June 3, 2014. The
Board placed on record its appreciation for the valuable services
rendered by him during his tenure as an ID of the Company.
Based on the recommendation of Nomination and Remuneration Committee
("NRC") of the Company and subject to the approval of the Members at
the AGM, the Board of Directors of the Company at its meeting held on
June 3, 2014, accorded its consent to appoint Mr. S. H. Khan (DIN:
00006170), Mr. Gautam Kaji (DIN: 02333127) and Mr. Donald Peck (DIN:
00140734) as IDs of the Company under the Companies Act, 2013, for a
period of two (2) consecutive years to hold office from the conclusion
of
the 17th AGM till the conclusion of the 19th AGM of the Company. The
Shareholders of the Company at the 17th AGM held on July 29, 2014
approved the appointment of Mr. S. H. Khan, Mr. Gautam Kaji and Mr.
Donald Peck as IDs of the Company.
Based on the recommendation of NRC, the Board of Directors at its
meeting held on January 29, 2015 accorded its consent to appoint
remaining IDs namely Mr. S. S Kohli (DIN: 00169907), Ms. Marianne
0kland (DIN: 03581266) and Dr. Omkar Goswami (DIN: 00004258) as IDs of
the Company under the Companies Act, 2013, for a period of three (3)
consecutive years to hold office till the conclusion of the 20th AGM of
the Company. The Shareholders of the Company approved the appointment
of Mr. S. S. Kohli, Ms. Marianne 0kland and Dr. Omkar Goswami as IDs of
the Company by way of Postal Ballot on March 30, 2015.
Based on the recommendation of the NRC of the Company and subject to
the approval of the Members at the AGM, the Board has, on June 30,
2015, appointed Mr. Vinod Rai (DIN: 01119922) as an Additional Director
in the category of Independent Director of the Company. It is proposed
to appoint him for a period of three (3) consecutive years at the
ensuing AGM to hold office from the conclusion of the 18th AGM till the
conclusion of the 21st AGM of the Company.
The Company has received a declaration from the aforesaid Directors, at
the time of appointment and also on or before first meeting of the
Board of Directors held in FY15, that they meet the criteria of
independence specified under sub-section (6) of Section 149 of the
Companies Act, 2013, read with Rule 5 of the Companies (Appointment and
Qualification of Directors) Rules 2014, for holding the position of ID
and that they shall abide by the "Code for Independent Directors" as
per Schedule IV of the Companies Act, 2013.
The Board at its meeting held on June 3, 2014 identified the following
officials as Key Managerial Personnel pursuant to Section 203 of the
Companies Act, 2013:
1. Mr. Vikram Limaye - Managing Director & CEO
2. Mr. Sunil Kakar - Chief Financial Officer
3. Mr. Mahendra N. Shah - Company Secretary
BOARD AND AUDIT COMMITTEE
During the year six Board Meetings and four Audit Committee Meetings
were held.
Audit Committee comprises of Mr. S. H. Khan-Chairman (DIN: 00006170),
Ms. Marianne 0kland (DIN: 03581266),
Mr. Gautam Kaji (DIN: 02333127), Dr. Omkar Goswami (DIN: 00004258) and
Ms. Snehlata Shrivastava (DIN: 06478173).
All the recommendations made by the Audit Committee during the year
were accepted by the Board.
The details of the constitution and meetings of the Board and the
Committees held during the year are provided in the Corporate
Governance Report which forms part of this Annual Report.
BOARD EVALUATION
The process indicating the manner in which formal annual evaluation of
the Directors,
Board and Board level committees are given in detail in the Corporate
Governance Report, which forms part of this Annual Report.
NRC / REMUNERATION POLICY
The Company has a policy in place for identification of Independence,
Qualifications and positive attributes of Directors. IDFC is in the
process of developing a Remuneration Policy for the Directors, Key
Managerial Personnel, Senior Management and Other Employees.
The remuneration of the Executive Directors is recommended by NRC to
the Board for their approval.
SPECIAL BUSINESS
The Board of Directors recommends the following items under special
business for approval of the Shareholders at the ensuing AGM:
a. Appointment of Mr. Vinod Rai (DIN: 01119922) as a Director in the
category of Independent Director, of the Company, for a period of three
(3) consecutive years to hold office from the conclusion of the 18th
AGM till the conclusion of the 21st AGM of the Company,
b. Approval to offer & issue non-convertible securities under Private
Placement.
AUDITORS
Deloitte Haskins & Sells LLP Chartered Accountants ("DHS")
(Registration No. 117366W / W-100018), will retire as the Statutory
Auditors of the Company at the ensuing AGM.
DHS, the retiring auditors, have confirmed that their appointment, if
made, would be in conformity with the provisions of Section 139(1) read
with Rule 4 of the Companies (Audit and Auditors) Rules, 2014 and
Section 141 of the Companies Act, 2013, and have given their consent to
be appointed.
The approval of the Members is requested, by passing an Ordinary
Resolution, to reappoint DHS as Statutory Auditors of the Company for a
period of 1 (one) year, to hold office from the conclusion of this AGM
up to the conclusion of the next AGM of the Company.
SECRETARIAL AUDIT
Pursuant to the provisions of Section 204 of the Companies Act, 2013
and Rule 9 of the Companies (Appointment and Remuneration of Managerial
Personnel) Rules, 2014, the Company had appointed BNP & Associates,
Company Secretaries to undertake the Secretarial Audit of the Company
for FY15.
The Secretarial Audit Report is appended as Annexure 4.
INTERNAL CONTROL SYSTEMS
The Company has in place, adequate systems of Internal Control to
ensure compliance with policies and procedures. It is being constantly
assessed and strengthened with new / revised standard operating
procedures and tighter Information Technology controls. Internal
audits of all the business units of the Company are regularly carried
out to review the Internal Control Systems. The Audit Reports of
Internal Auditors i.e. KPMG along with their recommendations and
implementation contained therein are regularly reviewed by the Audit
Committee of the Board.
KPMG verified the key Internal Financial Control by reviewing key
controls impacting financial reporting and overall risk management
procedures of the Company and found the same satisfactory. It was
placed before the Audit Committee of the Company.
CONCURRENT AUDIT
KPMG has been appointed as Concurrent Auditors for FY16 to augment the
existing internal control framework and ensure compliance to the
policies and procedures as laid out by the Company. The scope of
coverage includes the areas of Fixed Income Treasury, Proprietary
Equity, Borrowing and Regulatory Compliance & Reporting.
RISK MANAGEMENT POLICY
IDFC has a robust risk management practice that enables it to book,
manage and mitigate risks in its businesses. The Company has a
comprehensive Enterprise Risk Management framework which has been
adopted across all entities in the group and covers all three types of
risksÂcredit, market and operational risks. The Board through its
Risk Committee monitors and reviews Risk Management of the Company on a
regular basis. Our Company has Board approved Group Operational Risk
Management Policy which endeavours to lay down broad principles for
operational risk management. The Risk Management Group is headed by the
Chief Risk Officer. The details of Risk Management Framework are
provided in Management Discussion and Analysis.
INSTANCES OF FRAUD, IF ANY REPORTED BY THE AUDITORS
There have been no instances of fraud reported by the Auditors under
Section 143(12) of the Companies Act, 2013.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS / COURTS /
TRIBUNAL
The Hon''ble High Court of Judicature at Madras by an Order dated
February 20, 2015 in Company Application No. 169, 170 and 171 of 2015
directed to convene the meeting of the equity Shareholders to approve
the Demerger Scheme, dispensed with the convening and holding of the
meeting of the secured creditors subject to fulfilling conditions and
dispensed with the requirement of following the procedure under Section
101(2) of the Companies Act, 1956 by IDFC Limited. The Company has
complied with the aforesaid Court Orders.
The Hon''ble High Court of Judicature at Madras, vide it''s Order dated
June 25, 2015, has sanctioned the Scheme of Arrangement among IDFC
Limited and IDFC Bank Limited and their respective Shareholders and
Creditors under Sections 391 to 394 of the Companies Act, 1956.
ANTI SEXUAL HARASSMENT POLICY
The Company at its Board Meeting held on April 30, 2015 adopted a
policy on Anti Sexual Harassment. There were no instances of Sexual
Harassment that were reported during the period under review.
TRANSFER OF AMOUNTS TO INVESTOR EDUCATION AND PROTECTION FUND
Pursuant to the applicable provisions of Companies Act, 1956 / 2013,
the dividend / interest / refund of applications which remains
unclaimed / unpaid for a period of seven years from the date of
transfer to the unpaid dividend / interest / refund account was
required to be transferred to the Investor Education and Protection
Fund (IEPF) established by the Central Government and no claim shall
lie against the Company.
Accordingly, an amount of H 12,34,533 being unclaimed / unpaid dividend
for the year 2006-07 and which remained unpaid and unclaimed for a
period of 7 years has been transferred by the Company to the IEPF.
The Company updates the details of unclaimed / unpaid dividend /
interest on the Company''s website (www.idfc.com) and on MCA website
(www.mca.gov.in) from time to time.
Further, the unpaid dividend amount pertaining to the financial year
2007-08 will be transferred to IEPF during FY16.
DIRECTORS'' RESPONSIBILITY STATEMENT
To the best of their knowledge and belief and according to the
information and explanations obtained by them, your Directors make the
following statements in terms of Section 134(3) (c) of the Companies
Act, 2013: t That in the preparation of the annual financial statements
for the year ended March 31,2015, the applicable accounting standards
have been followed along with proper explanation relating to material
departures, if any;
That such accounting policies have been selected and applied
consistently and judgement and estimates have been made that are
reasonable and prudent so as to give a true and fair view of the state
of affairs of the Company as at March 31, 2015 and of the profit of the
Company for the year ended on that date except having regard to the
Part C of schedule II of the Companies Act, 2013, the Company has
reviewed its policy of providing for depreciation on its tangible fixed
assets on straight line basis. Previously straight line method was used
for depreciating certain office equipment and leasehold improvements
while other tangible fixed assets were depreciated using written down
value method. t That proper and sufficient care has been taken for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 2013 for safeguarding the assets of
the Company and for preventing and detecting fraud and other
irregularities;
- That the annual financial statements have been prepared on a going
concern basis;
- That proper internal financial controls were in place and that the
financial controls were adequate and were operating effectively.
- That systems to ensure compliance with the provisions of all
applicable laws were in place and were adequate and operating
effectively.
GREEN INITIATIVE
In accordance with the ''Green Initiative'', the Company has been
sending the Annual Report / Notice of AGM in electronic mode to those
Shareholders whose e-mail Ids are registered with the Company and / or
the Depository Participants.
Your Directors are thankful to the Shareholders for actively
participating in the Green Initiative.
EXTRACT OF ANNUAL RETURN
The extract of the Annual Return in the prescribed Form No. MGT 9 is
appended as Annexure 5.
CORPORATE SOCIAL RESPONSIBLITY
Corporate Social Responsibility Committee was constituted during the
year comprising of Dr. Rajiv B. Lall, Chairman (DIN: 00131782);
Mr. Vikram Limaye (DIN: 00488534) and Dr. Omkar Goswami (DIN:
00004258). The disclosure of contents of the Corporate Social
Responsibility Policy of the Company as prescribed in the Companies
(Corporate Social Responsibility Policy) Rules, 2014 is appended as
Annexure 6.
RELATED PARTY TRANSACTION
In all related party transactions that were entered into during the
financial year, an endeavour was made consistently that they were on an
arm''s length basis and were in the ordinary course of business. IDFC
has always been committed to good corporate governance practices,
including matters relating to Related Party Transactions.
Pursuant to the provisions of Companies Act, 2013 and Rules made there
under & recent amendments in Clause 49 of the Listing Agreement and in
the back-drop of the Company''s philosophy on such matters, on the
recommendation of the Audit Committee the Board approved "Policy on
Related Party Transactions" at it''s meeting held on January 29, 2015.
The said policy is also uploaded on the website of the Company.
Since all related party transactions entered into by the Company were
in the ordinary course of business and were on an arm''s length basis,
Form AOC-2 is not applicable to the Company.
ACKNOWLEDGEMENTS
We are grateful to the Government of India, State Governments, National
Highways Authority of India, RBI, SEBI, Stock Exchanges, Hon''ble Madras
High Court, Hon''ble Bombay High Court, various Ministries and other
domestic and overseas regulatory bodies for their continuous
collaboration and support.
We would like to thank all our Shareholders, Bondholders, Banks and
Financial Institutions for their co-operation and assistance during the
year under review.
We would like to express our deep sense of appreciation for the hard
work and efforts put in by the employees at all levels of the Company.
For and on behalf of the Board
RAJIV B. LALL
Executive Chairman
Mumbai,
June 30, 2015
Mar 31, 2014
Dear Members,
The Directors have pleasure in presenting the Seventeenth Annual
Report on the business and operations of the Company together with the
audited accounts for the financial year ended March 31, 2014.
FINANCIAL RESULTS (STANDALONE) (RS. IN CRORE)
ARTICULARS FY14 FY13
Revenue from Operations 8,214.21 7,765.30
Other Income 17.72 11.19
Total Income 8,231.93 7,776.49
Less: Administrative Expenses * 237.95 249.21
Less: Provisions and Contingencies 628.83 394.11
Profit Before Finance Costs and Taxes 7,365.15 7,133.17
Less: Finance Costs 5,006.96 4,665.19
Profit Before Tax 2,358.19 2,467.98
Less: Tax Expenses ** 657.07 703.00
Profit After Tax 1,701.12 1,764.98
* Administrative Expenses include employee benefits expense, other
expenses and depreciation and amortisation expense.
**Tax Expenses is net of deferred tax.
APPROPRIATIONS Transfer to Reserves:
Debenture Redemption Reserve 177.00 150.00
Special Reserve u/s. 36(1)(viii) of
the Income-tax Act, 1961 423.00 400.00
Special Reserve u/s. 45-IC of the
RBI Act, 1934 341.00 353.00
General Reserve 170.11 176.50
Dividend & Dividend Distribution Tax:
Proposed Dividend on Equity Shares 394.24 393.84
[Rs. 2.60 per share
(Previous Year Rs. 2.60 per share)]
Dividend on Equity Shares pertaining
to previous year 0.15 0.20
Tax on proposed Equity Dividend 67.00 63.04
Tax on Equity Dividend for previous year (4.75) (0.04)
OPERATIONS REVIEW
Your Company is engaged inter alia in the business of financing
infrastructure projects in sectors like energy, telecommunication,
transportation, commercial and industrial projects including hospitals,
education, tourism and hotels.
Balance Sheet grew by 5.4% Year on Year (YoY) to reach C 73,764 crore
and Net Loans at C 58,545 crore witnessed an increase of 5% YoY. As on
March 31, 2014, IDFC''s total exposure was C 77,621 crore, of which
Energy was highest at 37%, followed by Telecommunication 28%,
Transportation 22% and Others 13%.
DIVIDEND
Your Directors are pleased to recommend a dividend of Rs. 2.60 per equity
share of Rs. 10 each (i.e. 26 %) for the year ended March 31, 2014.
The Register of Members and Share Transfer Books will remain closed
from July 19, 2014 to July 29, 2014 (both days inclusive) for the
purpose of payment of dividend for the financial year ended March 31,
2014.
Dividend will be paid to those Members whose names appear in the
Register of Members as on July 18, 2014; in respect of shares held in
dematerialised form, it will be paid to those Members whose names are
furnished by National Securities Depository Limited and Central
Depository Services (India) Limited, as beneficial owners as on that
date.
Above dividend would be paid subject to approval by the Members at the
ensuing Annual General Meeting ("AGM").
SUBSIDIARY COMPANIES
DFC Limited ("IDFC" or "the Company") has thirteen direct subsidiary
companies which are as follows
- IDFC Alternatives Limited
- IDFC Trustee Company Limited
- IDFC Projects Limited
- IDFC Finance Limited
- IDFC Securities Limited
- IDFC Primary Dealership Company Limited
- IDFC Asset Management Company Limited
- IDFC AMC Trustee Company Limited
- IDFC Foundation (Section 25 Company under Companies Act, 1956)
- IDFC Housing Finance Company Limited
- IDFC Infra Debt Fund Limited
- Neopro Technologies Private Limited
- Galaxy Mercantiles Limited In addition,
a. IDFC Alternatives Limited has a wholly owned subsidiary company
namely, DFC Project Equity Company Limited.
b. IDFC Securities Limited has four wholly owned subsidiary companies
namely, IDFC Fund of Funds Limited, IDFC Capital (Singapore) Pte.
Limited, IDFC Securities Singapore Pte. Limited and IDFC Capital (USA)
Inc.
c. IDFC Asset Management Company Limited has two subsidiaries namely,
IDFC nvestment Advisors Limited and IDFC nvestment Managers (Mauritius)
Limited.
During the year under review, the following changes took place in the
group corporate structure of your Company Â
1. On August 23, 2013, the name of IDFC PPP Trusteeship Company Limited
(subsidiary company of IDFC Foundation) was struck off from the
Register of Registrar of Companies and was dissolved pursuant to
Section 560 of the Companies Act, 1956 through Fast Track Exit Mode.
2. On October 18, 2013, the entire equity stake in IDFC Pension Fund
Management Company Limited, which was held by IDFC and IDFC Asset
Management Company Limited, was transferred to IDFC Securities Limited,
thereby making IDFC Pension Fund Management Company Limited a wholly
owned subsidiary of IDFC Securities Limited.
3. On November 16, 2013, the Scheme of Amalgamation under Sections 391
to 394 of Companies Act, 1956 was filed with the Hon''ble High Court of
Bombay to amalgamate IDFC Distribution Company Limited, IDFC Capital
Limited and IDFC Pension Fund Management Company Limited (the wholly
owned subsidiaries of IDFC Securities Limited) with IDFC Securities
Limited and their respective shareholders. The Hon''ble High Court of
Bombay approved the amalgamation of the above entities on March 28,
2014.
4. By virtue of the above amalgamation, the subsidiaries of IDFC
Capital Limited i.e. IDFC Fund of Funds Limited, IDFC Capital
(Singapore) Pte. Limited and IDFC Securities Singapore Pte. Limited,
became direct subsidiaries of IDFC Securities Limited.
5. IDFC Housing Finance Company Limited was incorporated as a wholly
owned subsidiary of IDFC on March 4, 2014.
6. IDFC Infra Debt Fund Limited was incorporated as a wholly owned
subsidiary of IDFC on March 7, 2014.
7. During the year, IDFC increased its share of investment in equity
shares of Galaxy Mercantiles Limited from 43.44% in previous year to
100% in current year, and by virtue of the same, Galaxy Mercantiles
Limited, which was earlier an associate company of IDFC, has now become
a wholly owned subsidiary of IDFC.
Detailed analysis of the performance of IDFC and its businesses,
including initiatives in the areas of Risk Management, Human Resources,
Information Technology and IDFC Foundation activities, has been
presented in the section on Management Discussion & Analysis of this
Annual Report. The Ministry of Corporate Affairs ("MCA") vide its
General Circular No. 2 / 2011 dated February 8, 2011 granted general
exemption under Section 212(8) of the Companies Act, 1956, to companies
from attaching accounts of its subsidiaries in its Annual Report
subject to fulfilment of certain conditions prescribed therein. The
Board of Directors of the Company at it''s meeting held on March 14,
2014, noted the provisions of the above mentioned circular of MCA and
passed the necessary resolution granting the requisite approvals for
not attaching copies of Balance Sheet, Statement of Profit and Loss,
Reports of the Board of Directors and Auditors of each of the
subsidiary companies to the accounts of the Company for FY14, subject
to complying with the provisions of the said circular.
The Company undertakes that annual accounts of the subsidiary companies
and the related detailed information will be made available to the
Shareholders of the holding and subsidiary companies seeking such
information at any point of time. The annual accounts of the subsidiary
companies will be available on the Company''s website: www.idfc.com and
will also be available for inspection by any Shareholder at the
Registered and Corporate Offices of the Company and the concerned
subsidiaries. The Company shall furnish a hardcopy of details of
accounts of subsidiaries to Shareholders on demand. In accordance with
the requirements of Accounting Standard 21 (Consolidated Financial
Statements) and Accounting Standard 23 (Accounting for Investment in
Associates in Consolidated Financial Statements) notified by the
Companies (Accounting Standards) Rules, 2006, the Consolidated Accounts
of IDFC and its subsidiaries have been prepared and the same forms part
of this Annual Report.
Statement of particulars of IDFC''s subsidiaries under Section 212 of
the Companies Act, 1956 is provided in Note 41 of the Notes forming
part of the Consolidated Financial Statements.
JOINT VENTURES
DFC Foundation, a Section 25 Company under the Companies Act, 1956 and
a wholly owned subsidiary of the Company has following three Joint
Ventures
- Delhi Integrated Multi-Modal Transit System Limited ("DIMTS")
- Infrastructure Development Corporation (Karnataka) Limited ("iDeCK")
- Uttarakhand Infrastructure Development Company Limited ("UDeC")
ASSOCIATES
DFC has one associate company namely Feedback Infra Private Limited
(formerly known as Feedback Infrastructure Services Private Limited).
In addition, IDFC Projects Limited, a wholly owned subsidiary of the
Company, has one associate company namely Jetpur Somnath Tollways
Private Limited.
PARTICULARS OF EMPLOYEES
DFC had 225 employees as on March 31, 2014 and 570 employees at the
group level. Particulars of employees as required to be furnished
pursuant to Section 217(2A) of the Companies Act, 1956, read with the
rules thereunder, form part of this Report. However, as per the
provisions of Section 219(1)(b)(iv) of the Companies Act, 1956, the
reports and accounts are being sent to all the Shareholders of the
Company excluding the statement of particulars of employees. Any
Shareholder interested in obtaining a copy of the same may write to the
Company Secretary of the Company.
EMPLOYEE STOCK OPTION SCHEME
Pursuant to the resolution passed by the Members at the AGM held on
August 2, 2006, DFC had introduced Employee Stock Option Scheme 2007
(referred to as "the Scheme") to enable the employees of IDFC and its
subsidiaries to participate in the future growth and financial success
of the Company. Out of 35,568,940 Options outstanding at the beginning
of the current financial year, 3,367,575 Options lapsed on account of
resignation and 1,558,622 Options were exercised during the year.
Additionally, during the year, 2,246,667 Options were granted to
eligible employees under the Scheme. Accordingly, 32,889,410 Options
remain outstanding as of March 31, 2014.
All Options vest in graded manner and are required to be exercised
within a specific period. The Company has used the intrinsic value
method to account for the compensation cost of stock to employees of
the Company. Intrinsic value is the amount by which the quoted market
price of the underlying share on the date, prior to the date of the
grant, exceeds the exercise price on the option.
Disclosures as required by Clause 12 of the Securities and Exchange
Board of India (Employee Stock Option Scheme and Employee Stock
Purchase Scheme) Guidelines, 1999, are annexed to this Report.
MANAGEMENT DISCUSSION & ANALYSIS AND REPORT ON CORPORATE GOVERNANCE
In compliance with the provisions of Clause 49 of the Listing
Agreement, separate detailed chapters on Management Discussion &
Analysis, Report on Corporate Governance and Additional Shareholder
Information forms part of this Annual Report.
BUSINESS RESPONSIBILITY REPORT
SEBI, through its circular CIR / CFD / DIL / 8 / 2012 dated August 13,
2012, mandated inclusion of Business Responsibility Report ("BRR") as
part of the Annual Report for top 100 listed entities based on market
capitalisation at BSE and NSE as on March 31, 2012. In compliance with
the said circular, a separate report called BRR forms part of this
Annual Report and is also hosted on the Company''s website:
http://www.idfc.com/investor_relations/annual_ report.htm
PUBLIC DEPOSITS
During FY14, your Company has not accepted any deposits from the public
within the meaning of the provisions of the Non-Banking Financial
Companies Acceptance of Public Deposits (Reserve Bank) Directions,
1998.
FOREIGN EXCHANGE
The particulars regarding foreign exchange expenditure and earnings are
furnished at Item
Your Directors have pleasure in informing you that RBI, vide its letter
dated April 9, 2014, granted its In-principle approval to IDFC to
establish a new bank in the private sector under Section 22 of the
Banking Regulation Act, 1949. One of the conditions of the letter is
that the bank is required to be established within 18 months from April
9, 2014.
Nos. 29 & 30 respectively, in the Notes forming part of the Financial
Statements.
PARTICULARS REGARDING CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTION
Since the Company does not carry out any manufacturing activity, the
particulars regarding conservation of energy, technology absorption and
other particulars as required by the Companies (Disclosure of
Particulars in the Report of the Board of Directors) Rules, 1998, are
not applicable.
DIRECTORS
Mr. Shardul Shroff (DIN-00009379), an Independent Director of the
Company, tendered his resignation from the Board of the Company w.e.f.
June 3, 2014. The Board placed on record it''s appreciation for the
valuable services rendered by him during his tenure as an Independent
Director of the Company.
In accordance with the Articles of Association of the Company and
pursuant to the provisions of Section 152 of the Companies Act, 2013,
Mr. Joseph Dominic Silva (DIN - 06388807) would retire by rotation at
the ensuing AGM and being eligible, offers himself for reappointment.
Mr. S. H. Khan (DIN - 00006170), Mr. Gautam Kaji (DIN - 02333127) and
Mr. Donald Peck (DIN - 00140734) were liable to retire by rotation at
the ensuing AGM under the erstwhile Companies Act, 1956.
Accordingly, on the recommendation of Nomination and Remuneration
Committee of the Company and subject to the approval of the Members at
the AGM, the Board of Directors of the Company at its meeting held on
June 3, 2014, accorded its consent to appoint the above Directors as
Independent Directors of the Company under the Companies Act, 2013 for
a period of two (2) consecutive years to hold office from the
conclusion of the Seventeenth AGM till the conclusion of the Nineteenth
AGM of the Company. The Company has received a declaration from the
aforesaid Directors that they meet the criteria of independence
specified under sub-section (6) of Section 149 of the Companies Act,
2013, read with Rule 5 of the Companies (Appointment and
Qualification of Directors) Rules 2014, for holding the position of
Independent Directors and that they shall abide by the "Code for
Independent Directors" as per Schedule IV of the Companies Act, 2013.
MCA vide its circular dated June 9, 2014 clarified that if the existing
Independent Directors are to be appointed under Companies Act, 2013,
the Company would be required to appoint those Independent Directors
within a period of one year from April 1, 2014. Accordingly, the
Company would appoint the remaining existing Independent Directors
within the prescribed period.
The Profiles of all the above Directors are provided in the Exhibit to
the Notice convening the ensuing AGM sent along with this Annual
Report.
The Board of Directors recommends appointment / reappointment of all
the above Directors at the ensuing AGM.
SHAREHOLDERS'' UPDATE
BANKING LICENSE
Your Company had filed an application with the Reserve Bank of India
("RBI") on July 1, 2013, seeking a banking license.
Your Directors have pleasure in informing you that RBI, vide its letter
dated April 9, 2014, granted its In-principle approval to IDFC to
establish a new bank in the private sector under Section 22 of the
Banking Regulation Act, 1949. One of the conditions of the letter is
that the bank is required to be established within 18 months from April
9, 2014.
The Board of Directors recommend the following items under special
business for approval of the shareholders at the ensuing AGM.
ALTERATION IN THE OBJECT CLAUSE OF MEMORANDUM OF ASSOCIATION
On receipt of the In-principle approval from RBI to set up a new bank
in the private sector, the Company is required to alter the Object
Clause of Memorandum of Association("MoA") of the Company by inserting
a new Object Clause no. 29A pertaining to banking business to be
carried out through a subsidiary company. Also, the existing Clause
no. 31 relating to restructuring / rearrangement would be required to
be replaced with a new clause so as to insert few more restructuring
options that the Company can opt from time to time.
The approval of the Shareholders by passing of a Special Resolution at
the ensuing AGM would be required for alteration of "Objects incidental
and ancillary to the attainment of the Main Objects" of MoA of the
Company.
FURTHER ISSUE OF SECURITIES
RBI introduced the guidelines for licensing of new banks in the Private
Sector on February 22, 2013, which inter alia states that the promoters
eligible to promote a bank pursuant to the said guidelines should be
''owned and controlled by residents''. Your Company received In-principal
approval for banking license from RBI on April 9, 2014. One of the
conditions of the letter requires IDFC to reduce foreign shareholding
below 50% so as to make the Company ''owned and controlled by
residents''. To achieve this, IDFC proposes to offer securities to the
domestic investors, in one or more tranches.
The approval of the Shareholders by passing of a Special Resolution at
the ensuing AGM would be required for the aforesaid further issue of
securities.
APPROVAL OF THE BORROWING LIMITS OF THE COMPANY
The Company at its 13th AGM held on June 28, 2010, had approved the
proposal to borrow monies up to C 80,000 crore under the then
applicable Section 293(1)(d) of the Companies Act, 1956.
In compliance with the provisions of Section 180(1)(c) of the Companies
Act, 2013 and after
taking into consideration Circular No. 4 / 2014 of MCA dated March 25,
2014, it is proposed to seek the approval of the Shareholders by way of
a Special Resolution at the ensuing AGM to approve the limit of
borrowings of the Company not exceeding C 80,000 crore.
APPROVAL TO OFFER & ISSUE NON-CONVERTIBLE SECURITIES UNDER PRIVATE
PLACEMENT
In compliance with the provisions of Section 42 of the Companies Act,
2013 read with Rule 14 of Companies (Prospectus and Allotment of
Securities) Rules 2014, it is proposed to seek the approval of the
Shareholders by way of a Special Resolution at the ensuing AGM for
borrowing funds through issuance of Non-Convertible Securities on
Private Placement basis for an amount not exceeding the overall
borrowing limit of C 80,000 crore, as may be approved under Section
180(1)(c) of the Companies Act, 2013 by the Shareholders at the ensuing
AGM.
AUDITORS
Deloitte Haskins & Sells LLP ("DHS"), Chartered Accountants
(Registration No. 117366W/W-100018), along with their associates, have
been Statutory Auditors of the Company for an aggregate period of more
than 10 years. DHS will retire as the Statutory Auditors of the Company
at the ensuing AGM.
DHS, the retiring Auditors, have confirmed that their reappointment, if
made, would be in conformity with the provisions of Section 139(1) of
Companies Act, 2013 read with Rule 4 of the Companies (Audit and
Auditors) Rules, 2014 and Section 141 of the Companies Act, 2013 and
have given their consent to be reappointed.
The approval of the Members is requested to reappoint DHS, by passing
an Ordinary Resolution, as Statutory Auditors of the Company for a
period of one (1) year, to hold office from the conclusion of this AGM
up to the conclusion of the next AGM of the Company.
INTERNAL CONTROL SYSTEMS
The Company has in place, adequate systems of Internal Control to
ensure compliance with policies and procedures. It is being constantly
assessed and strengthened with new / revised standard operating
procedures and tighter Information Technology controls. nternal audits
of all the units of the Company are regularly carried out to review the
Internal Control Systems. The Internal Audit Reports along with the
recommendations and mplementation contained therein are regularly
reviewed by the Audit Committee of the Board.
CONCURRENT AUDIT
The Company has appointed KPMG as Concurrent Auditors for FY15 to
augment the existing internal control framework and ensure compliance
to the policies and procedures as laid out by the Company. The scope of
coverage covers the areas of Fixed Income Treasury, Proprietary Equity,
Resources and Regulatory Compliance and Reporting.
TRANSFER OF AMOUNTS TO INVESTOR EDUCATION AND PROTECTION FUND
Pursuant to the provisions of Sections 205A and 205C of the Companies
Act, 1956, the dividend / interest / refund of applications which
remains unclaimed / unpaid for a period of seven years from the date of
transfer to the unpaid dividend / interest / refund account was
required to be transferred to the Investor Education and Protection
Fund ("IEPF") established by the Central Government.
Accordingly, an amount of Rs. 1,722,962 being unclaimed / unpaid dividend
for the year FY06 and which remained unpaid and unclaimed for a period
of 7 years has been transferred by the Company to the IEPF
The Company updates the details of unclaimed / unpaid dividend /
interest on the Company''s website (www.idfc.com) and on MCA website
from time to time.
Further, the unpaid dividend amount pertaining to the financial year
FY07 will be transferred to IEPF during this year.
DIRECTORS'' RESPONSIBILITY STATEMENT
Pursuant to Section 217(2AA) of the Companies Act, 1956, the Directors
confirm that: - in the preparation of the annual accounts, the
applicable accounting standards have been followed along with proper
explanation relating to material departures;
- appropriate accounting policies have been selected and applied
consistently and have made judgements 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 the year ended March 31, 2014;
- proper and sufficient care has been taken for 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;
- the annual accounts have been prepared on a going concern basis.
GREEN INITIATIVE
In accordance with the ''Green Initiative'' the Company has been sending
Annual Report, Notice of AGM etc. in electronic mode to those
Shareholders whose e-mail ids are registered with the Company and / or
the Depository Participants.
Your Directors are thankful to the Shareholders for actively
participating in the Green Initiative.
ACKNOWLEDGEMENTS
We are grateful to the Government of India, State Governments, National
Highways Authority of India, RBI, SEBI, Stock Exchanges, various
Ministries and other domestic and overseas regulatory bodies for their
continuous collaboration and support.
We would like to thank all our Shareholders, Bondholders, Banks and
Financial Institutions for their co-operation and assistance during the
year under review.
We would like to express our deep sense of appreciation for the hard
work and efforts put in by the employees at all levels of the Company.
FOR AND ON BEHALF OF THE BOARD
RAJIV B. LALL
Executive Chairman
Mumbai, June 30, 2014
IN-PRINCIPLE APPROVAL
FOR BANKING LICENSE
Mar 31, 2013
The Directors have pleasure in presenting the Sixteenth Annual Report
on our business and operations together with the audited accounts for
the year ended March 31, 2013.
OPERATIONS REVIEW
The Company is engaged in financing infrastructure projects in sectors
like energy, telecommunication, transportation, commercial and
industrial projects including hospitals, education, tourism and hotels.
Balance Sheet grew by 15% Year on Year (YoY) to reach H 69,994 crore
and Net Loans at H 55,736 crore witnessed an increase of 16% YoY As on
March 31, 2013, IDFC''s total exposure was H 72,597 crore, of which
Energy was highest at 41%, followed by Transportation 25%,
Telecommunication 23% and Others 11%.
DIVIDEND
Your Directors are pleased to recommend a dividend of H 2.60 per equity
share of H 10 each (i.e. 26%) for the year ended March 31, 2013. Above
dividend would be paid subject to approval by the Members in the
ensuing Annual General Meeting (AGM).
SUBSIDIARY COMPANIES
IDFC has ten direct subsidiary companies as follows:
1. IDFC Alternatives Limited
2. IDFC Trustee Company Limited
3. IDFC Projects Limited
4. IDFC Finance Limited
5. IDFC Securities Limited
6. IDFC Primary Dealership Company Limited
7. IDFC AMC Trustee Company Limited
8. IDFC Asset Management Company Limited
9. IDFC Foundation (Section 25 Company)
10. Neopro Technologies Private Limited In addition,
A. IDFC Alternatives Limited has one wholly owned subsidiary company
namely IDFC Project Equity Company Limited.
B. IDFC Securities Limited has three wholly owned subsidiary companies
namely IDFC Capital Limited, IDFC Distribution Company Limited and IDFC
Capital (USA) Inc. Further, IDFC Capital Limited has three wholly owned
foreign subsidiaries namely IDFC Fund of Funds Limited, IDFC Capital
(Singapore) Pte. Limited and IDFC Securities Singapore Pte. Limited.
C. IDFC Asset Management Company Limited also has three subsidiaries,
namely IDFC Pension Fund Management Company Limited, IDFC Investment
Advisors Limited and IDFC Investment Managers (Mauritius) Limited.
During the year, IDFC General Partners Limited, a wholly owned
subsidiary of IDFC Capital Limited was dissolved under voluntary
liquidation process with effect from September 21, 2012.
IDFC PPP Trusteeship Company Limited which is a subsidiary company of
IDFC Foundation had made an application to the Registrar of Companies,
Maharashtra, Mumbai (ROC) under Fast Track Exit Mode 2011 on April 25,
2013 to get its name struck off from the Register of Companies
maintained by ROC.
During the year, the Company divested its stake in Dheeru Powergen
Limited, a subsidiary of IDFC Projects Limited.
During the year under review, the Company acquired 71% stake in Neopro
Technologies Private Limited, making it a direct subsidiary of the
Company.
Statement of particulars of IDFC''s subsidiaries under Section 212 is
provided in Note 47 of the Notes forming part of the Consolidated
Financial Statements.
Detailed analysis of the performance of IDFC and its businesses -
financing and advisory, including initiatives in the areas of Resource
Raising, Human Resources, Information Technology and Risk Management
has been presented in the section on Management Discussion & Analysis
of this Annual Report.
The Ministry of Corporate Affairs (MCA) vide its General Circular No.
2/2011 dated February 8, 2011 has granted general exemption under
Section 212(8) of the Companies Act, 1956, to companies from attaching
accounts of its subsidiaries in its Annual Report subject to fulfilment
of certain conditions prescribed therein. The Board of Directors of the
Company at its meeting held on March 14, 2013, noted the provisions of
the above mentioned circular of MCA and passed the necessary resolution
granting the requisite approvals for not attaching copies of Balance
Sheet, Statement of Profit and Loss, Reports of the Board of Directors
and Auditors of each of the subsidiary companies to the accounts of the
Company for FY13 subject to complying with the provisions of the said
circular. The Company also undertakes that annual accounts of the
subsidiary companies and the related detailed information will be made
available to the Shareholders of the holding and subsidiary companies
seeking such information at any point of time. The annual accounts of
the subsidiary companies will be available on the Company''s website:
www.idfc. com and will also be available for inspection by any
Shareholder at the Registered and Corporate Offices of the Company and
the concerned subsidiaries. The Company shall furnish a hard copy of
details of accounts of subsidiaries to Shareholders on demand.In
accordance with the requirements of Accounting Standard 21
(Consolidated Financial Statements) and Accounting Standard 23
(Accounting for Investment in Associates in Consolidated Financial
Statements) notified by the Companies (Accounting Standards) Rules,
2006, the Consolidated Accounts of IDFC and its subsidiaries have been
prepared and the same forms part of this Annual Report.
JOINT VENTURES
IDFC Foundation, a Section 25 Company and a wholly owned subsidiary of
the Company has following three Joint Ventures:
1. Delhi Integrated Multi-Modal Transit System Limited
2. Infrastructure Development Corporation (Karnataka) Limited
3. Uttarakhand Infrastructure Development Company Limited
ASSOCIATES
IDFC has two associate companies as follows:
1. Feedback Infrastructure Services Private Limited
2. Galaxy Mercantiles Limited
In addition, IDFC Projects Limited, a wholly owned subsidiary of the
Company, has one associate company namely Jetpur Somnath Tollways
Private Limited.
PARTICULARS OF EMPLOYEES
IDFC had 238 employees as on March 31, 2013 and 586 employees at the
group level . Particulars of employees as required to be furnished
pursuant to Section 217(2A) of the Companies Act, 1956, read with the
rules thereunder, forms part of this Report. However, as per the
provisions of Section 219(1)(b)(iv) of the Companies Act, 1956, the
reports and accounts are being sent to all the Shareholders of the
Company excluding the statement of particulars of employees. Any
Shareholder interested in obtaining a copy of the same may write to the
Company Secretary of the Company.
EMPLOYEE STOCK OPTION SCHEME (ESOS)
Pursuant to the resolution passed by the Members at the AGM held on
August 2, 2006, IDFC had introduced Employee Stock Option Scheme 2007
(referred to as "the Scheme") to enable the employees of IDFC and its
subsidiaries to participate in the future growth and financial success
of the Company. Out of 37,970,105 options outstanding at the beginning
of the current financial year, 919,304 options lapsed on account of
resignations and 2,364,861 options were exercised during the year
Additionally, during the year, 883,000 options were granted to eligible
employees under the Scheme. Accordingly, 35,568,940 options remain
outstanding as of March 31, 2013.
All options vest in graded manner and are required to be exercised
within a specific period. The Company has used the intrinsic value
method to account for the compensation cost of stock to employees of
the Company. Intrinsic value is the amount by which the quoted market
price of the underlying share on the date, prior to the date of the
grant, exceeds the exercise price on the option.
Disclosures as required by Clause 12 of the Securities and Exchange
Board of India (Employee Stock Option Scheme and Employee Stock
Purchase Scheme) Guidelines, 1999, are annexed to this Report.
MD&A AND CORPORATE GOVERNANCE
Separate detailed chapters on Management Discussion & Analysis,
Corporate Governance and Additional Shareholder Information form part
of this Annual Report.
PUBLIC DEPOSITS
During FY13, your Company has not accepted any deposits from the public
within the meaning of the provisions of the Non-Banking Financial
Companies Acceptance of Public Deposits (Reserve Bank) Directions,
1998.
FOREIGN EXCHANGE
The particulars regarding foreign exchange expenditure and earnings are
furnished at Item Nos. 29 & 30 in the Notes forming part of the
Financial Statements.
PARTICULARS REGARDING CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTION
Since the Company does not carry out any manufacturing activity, the
particulars regarding conservation of energy, technology absorption and
other particulars as required by the Companies (Disclosure of
Particulars in the Report of the Board of Directors) Rules, 1998, are
not applicable.
DIRECTORS
The Board, at its meeting held on October 26, 2012, appointed Mr.
Joseph Dominic Silva, nominee of Sipadan Investments (Mauritius)
Limited as an Additional Director in place of Mr. Abdul Rahim Abu
Bakar. Upon the resignation of Mr. Abdul Rahim Abu Bakar on October 26,
2012, his Alternate Director Mr. Michael Fernandes also ceased to hold
the position of Alternate Director with effect from October 26, 2012.
Ministry of Finance (MoF), Government of India nominated Ms. Snehlata
Shrivastava, Additional Secretary, Department of Financial Services,
MoF, as Director on the Board of IDFC in place of Mr. Sunil Soni
(former Additional Secretary, Department of Financial Services, MoF).
Accordingly, at the Board Meeting dated February 1, 2013, Ms. Snehlata
Shrivastava was appointed as an Additional Director in place of Mr.
Sunil Soni.
At the Board Meeting held on May 1, 2013, Mr. Deepak Parekh, the
Founding Chairman of the Company resigned as the Non - executive
Chairman of the Company. The Board accepted his resignation with deep
regret. However, at the request of the Board, Mr. Parekh would remain
associated with your Company in his new role as Chairman of IDFC''s
Advisory Council, a consultative body, comprising of 3-4 eminent
persons, to be constituted by your Company in a few months.
The Nomination Committee of the Company, at its meeting held on May 1,
2013, recommended the appointment of:
Dr. Rajiv B. Lall as Executive Chairman of the Company, and Mr. Vikram
Limaye as Managing Director & CEO of the Company, on the same terms and
conditions as approved by Shareholders at the last AGM held on July 9,
2012.
The Compensation Committee of the Company, at its meeting held on May
1, 2013, also recommended the terms of appointment of Dr. Rajiv B. Lall
and Mr. Vikram Limaye, to be the same as were approved by Shareholders
at the AGM held on July 9, 2012.
Based on the recommendation of Nomination and Compensation Committees,
and subject to the approval of the Members at the ensuing AGM, the
Board of Directors at its meeting held on May 1, 2013, granted its
approval for the appointment of Dr. Rajiv B. Lall as Executive Chairman
and Mr. Vikram Limaye as Managing Director & CEO with effect from May
2, 2013 for a period of 3 years, other terms of their appointment being
same as approved by Shareholders at the last AGM held on July 9, 2012.
Both these appointments are subject to ratification by the Shareholders
in the ensuing AGM, the resolutions for which have been included in the
Notice.
Your Directors wish to place on record their appreciation for the
valuable services rendered by all the outgoing Directors during their
tenure as Directors of the Company
Mr. Joseph Dominic Silva and Ms. Snehlata Shrivastava hold their
respective offices as Additional Directors up to the date of the
ensuing AGM.
The Company has received notices from Members of the Company under
Section 257 of the Companies Act, 1956, proposing the candidature of
Mr. Joseph Dominic Silva and Ms. Snehlata Shrivastava as Directors at
the ensuing AGM.
Dr. Omkar Goswami and Mr. Shardul Shroff will retire by rotation and
being eligible, offer themselves for re-appointment at the ensuing AGM.
The profiles of the above Directors are provided in the Notice
convening the ensuing AGM.
The Board of Directors recommends appointment / re-appointment of all
the above Directors at the ensuing AGM.
SHAREHOLDERS'' UPDATE
PAYMENT OF COMMISSION TO NON- EXECUTIVE DIRECTORS (NEDs)
The Company, at its 11th AGM held on July 18, 2008, had approved the
payment of remuneration by way of commission or otherwise, not
exceeding 1% of the Net Profits of the Company, to NEDs for the period
of 5 years ended on March 31, 2013. It is proposed to seek the approval
of the Shareholders by way of a Special Resolution at the ensuing AGM
for continuing payment of commission to NEDs, other than Whole-time
Directors, which shall not exceed 1% of the Net Profits of the Company
as computed in the manner referred to in Sections 198, 349 and 350 of
the Companies Act, 1956.
ADDITIONAL 2% ISSUANCE OF SHARES UNDER ESOS
It is proposed to set aside additional 2% shares for issuance under
IDFC Employee Stock Option Scheme - 2007 ("ESOS-2007") of the
issued Equity Share Capital of the Company, from time to time.
DECREASE IN LIMIT OF FOREIGN INSTITUTIONAL INVESTORS'' (FIIs) HOLDING
IN THE EQUITY SHARE CAPITAL FROM 74% TO 54%
The Board of Directors of your Company had decided at its Board Meeting
held on June 18, 2013 to apply to RBI for a banking license pursuant to
the guidelines for licensing of new banks in the Private Sector
announced by RBI on February 22, 2013.
The said guidelines states that the eligible applicant
entities/promoter groups in private sectors must be owned and
controlled by residents i.e. the aggregate non-resident shareholding
including through Foreign Direct Investment, Non-Resident Indians and
FIIs shall not exceed 49% of the paid up Equity capital of the Company.
In view of the above provisions, it is proposed to seek the approval of
the Shareholders by way of a Special Resolution at the ensuing AGM to
authorise the Board to reduce the ceiling limit of foreign shareholding
to 54% as and when the Board thinks it appropriate considering the
extant foreign holding in the Company at that point of time. As and
when RBI''s in-principle approval for banking license is received, the
Company will seek Shareholders'' approval for further reducing the
foreign shareholding ceiling limit to 49%.
AUDITORS
M/s. Deloitte Haskins & Sells, Chartered Accountants, will retire as
the Statutory Auditors of the Company at the ensuing AGM. The Members
are requested to re-appoint M/s. Deloitte Haskins & Sells, Chartered
Accountants, as Statutory Auditors of the Company for FY14 and to
authorize the Board of Directors to fix their remuneration by way of
Special Resolution as per Notice convening the AGM.
M/s. Deloitte Haskins & Sells, the retiring auditors, have confirmed
that their re- appointment, if made, would be in conformity with the
provisions of Sections 224 and 226 of the Companies Act, 1956 and also
indicated their willingness to be re-appointed.
INTERNAL CONTROL SYSTEMS
The Company has in place, adequate systems of Internal Control to
ensure compliance with policies and procedures. It is being constantly
assessed and strengthened with new / revised standard operating
procedures and tighter Information Technology controls. Internal Audits
of all the units of the Company are regularly carried out to review the
Internal Control Systems. The Internal Audit Reports along with the
recommendations and implementation contained therein are regularly
reviewed by the Audit Committee of the Board.
CONCURRENT AUDITORS
KPMG were appointed as Concurrent Auditors for the FY14 for systematic
examination of all financial transactions of treasury department to
ensure accuracy and compliance of internal systems and procedures as
laid out by the Company
TRANSFER OF AMOUNTS TO INVESTOR EDUCATION AND PROTECTION FUND
Pursuant to the provisions of Sections 205A and 205C of the Companies
Act, 1956, the dividend/interest/refund of applications which remains
unclaimed/ unpaid for a period of seven years from the date of transfer
to the unpaid dividend /interest/refund account is required to be
transferred to the Investor Education and Protection Fund (IEPF)
established by the Central Government. In terms of the provisions of
Section 205C of the Companies Act, 1956, no claim shall lie against the
Company or IEPF after the said transfer.
Pursuant to the provisions of Section 205A(5) of the Companies Act,
1956, an amount of H 408,980 being the refund of the application money
received by IDFC at the time of its Initial Public Offer (IPO) in July/
August, 2005 and which remained unpaid and unclaimed for a period of 7
years has been transferred by the Company to the IEPF Further, the
unpaid dividend amount pertaining to the financial year 2005-06 will be
transferred to IEPF during this year
DIRECTORS'' RESPONSIBILITY STATEMENT
Pursuant to Section 217(2AA) of the Companies Act, 1956, the Directors
confirm that:
- In the preparation of the annual accounts, the applicable
accounting standards have been followed along with proper explanation
relating to material departures;
- Appropriate accounting policies have been selected and applied
consistently and have 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 the year ended March 31, 2013;
- Proper and sufficient care has been taken for 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;
- The annual accounts have been prepared on a going concern basis.
ACKNOWLEDGEMENTS
IDFC has developed close relationships with the Ministry of Finance,
Banking Division, Department of Economic Affairs; Ministry of Surface
Transport; National Highways Authority of India; Ministry of Power;
Department of Telecommunications; Ministry of Petroleum; Ministry of
Corporate Affairs and other Ministries of the Government of India
involved with infrastructure development; Reserve Bank of India;
National Stock Exchange of India Limited; BSE Limited; Securities and
Exchange Board of India and other regulatory bodies; Telecom Regulatory
Authority of India; the Central Electricity Regulatory Commission and
State Electricity Regulatory Commissions; Planning Commission; State
Governments and all IDFC''s Shareholders and Bondholders. The Board
of Directors would like to take this opportunity to express sincere
thanks to all Banks and Financial Institutions for their continuous
co-operation and support. The Directors express their appreciation for
the good work and efforts put in by the employees at all levels of the
Company. IS
For and on behalf of the Board
RAJIV B. LALL
Executive Chairman
Mumbai, July 1, 2013.
Mar 31, 2011
The Directors have pleasure in presenting the Fourteenth Annual Report
together with the audited accounts for the year ended March 31, 2011.
DIRECTORS REPORT TO THE SHAREHOLDERS
Your Directors have pleasure in presenting the Fourteenth Annual Report
together with the audited accounts for the year ended March 31, 2011.
Financial Results (Standalone) (Figures in Rs. crore)
Particulars FY 2010-11 FY 2009-10
Operating Income 4,545.96 3,569.98
Other Income 14.40 27.13
Total Income 4,560.36 3,597.11
Less: Administrative Expenses * 208.45 199.38
Less: Provision for assets and losses 234.94 130.36
Profit Before Interest and Taxes 4,116.97 3,267.37
Less: Interest and Other Charges 2,386.52 1,950.23
Profit Before Tax 1,730.45 1,317.14
Less: Provision for Tax ** 453.30 304.30
Profit After Tax 1,277.15 1,012.84
* Administrative expenses include staff expenses; travelling &
conveyance; postage, telephone & telex; establishment expenses; other
expenses and depreciation as reduced by shared service cost recovered
from subsidiaries. ** Provision for Tax is net of Deferred Tax.
Income from operations increased by 27.34% from Rs. 3,569.98 crore in FY
10 to Rs. 4,545.96 crore in FY 11. Other income reduced by 46.92% from Rs.
27.13 crore in FY 10 to Rs. 14.40 crore in FY 11. IDFCs total income,
increased by 26.78% from Rs. 3,597.11 crore in FY 10 to Rs. 4,560.36 crore
in FY 11.
Profit Before Tax (PBT) increased by 31.38% from Rs. 1,317.14 crore in FY
10 to Rs. 1,730.45 crore in FY 11. Profit After Tax (PAT) increased by
26.10% from Rs. 1,012.84 crore in FY 10 to Rs. 1,277.15 crore in FY 11.
IDFCs quality of assets continued to be good with Net NPAs at Rs.
38.91crore as on March 31, 2011.
DIVIDEND
Your Directors are pleased to recommend a dividend of X 2/- per share
(i.e. 20%) for the year ended March 31, 2011 on equity shares.
The Company will pay a dividend @ 6% on Compulsorily Convertible
Cumulative Preference Shares as per the terms of issue.
OPERATIONS REVIEW
The global economy witnessed two speed growths. While the emerging
economies grew by 7% in 2010, the advanced economies grew by 3% in
2010. World output, which had fallen by 0.6% in 2009 grew by 5% in
2010. Clearly, the global economy is in recovery mode. With the
financial turbulence firmly behind it, global financial markets also
recovered and capital flows re-emerged with increase in flows into
emerging economies. However, issues with Government finances in the
Euro area provided vulnerability to the system. Overall, while the
global financial system is improving from the debacle of 2008, there
are still some uncertainties and volatility in the system. The other
factor has been growing commodity and oil prices, which is leading to
inflation and a higher interest regime. In this environment, IDFC has
had to be very proactive in raising capital and managing liquidity for
the operations of its financing business.
While domestic GDP is expected to record an impressive 8.5% growth in
FY 11, there were some issues with the infrastructure sector.
Consequently, after a flurry of activity in the first half, project
development opportunities in the market reduced substantially in the
second half. The slowdown was particularly apparent in the road and
power sectors. However, the slowdown was primarily due to
administrative issues while the intrinsic demand for infrastructure
continues to grow.
Leveraging the opportunities provided by a growing economy, the Company
adopted a high growth model focused on significantly increasing the
project finance operations by growing the balance sheet. Gross
approvals increased by 40% to Rs. 42,716 crore (Rs. 427 billion) in FY 11.
Gross disbursements, increased by 106% to Rs. 26,702 crore (Rs. 267
billion) in FY 11.
Net loans increased by 50% to Rs. 37,652 crore, while the balance sheet
has grown by 42% to Rs. 47,367 crore.
As on March 31, 2011, IDFCs total exposure to infrastructure projects
was Rs. 58,273 crore of which Energy was the highest 45.8%, followed by
Transportation 28.7%, Telecommunication & IT 15.8% and Commercial &
Industrial sector 9.7% .
While the investment strategy for treasury operations continues to
ensure adequate levels of liquidity to support core business
requirements, it has started focusing on optimising levels of return
and functioning as a profit centre investing in fixed income assets,
while maintaining prudent safety norms. Net interest income from
treasury operations for IDFC increased by 61% from Rs. 75 crore in FY 10
to Rs. 121 crore in FY 11.
The financial markets were volatile during FY 11. Consequently, there
was a fall in fee- based non interest income. The investment banking
business under IDFC Capital and the institutional brokerage business
under IDFC Securities witnessed a drop in incomes. The mutual fund
business that was acquired in FY 09 and operated by IDFC-AMC also saw a
reduction in assets under management and management fees.
The Policy Advisory Group and CSR activities have been brought under
one umbrella with the formation of IDFC Foundation in FY 11. This SBU
continued to contribute to IDFCs mandate of leading private capital to
infrastructure projects, by providing impetus to rationalisation of
policy and regulatory frameworks, promoting PPP models, policy advocacy
and direct CSR activities.
IDFC Private Equity and IDFC Project Equity continue to be committed to
the development of infrastructure in the country. IDFC Private Equity
manages three funds - India Development Fund, IDFC Private Equity Fund
II and IDFC Private Equity Fund III having a total capital commitment
of X 5,735 crore or? 57.3 billion and IDFC Project Equity manages the X
3,837 crore India Infrastructure fund. The focus on asset management
was on maintenance of the funds.
During the year, fee income from managing third party asset decreased
by 14% from X 290 crore in FY 10 to X 249 crore in FY 11.
Detailed analysis of the performance of the Company and its businesses,
including initiatives in the area of Information Technology, has been
presented in the section on Management Discussion & Analysis of this
Annual Report.
- SUBSIDIARY COMPANIES
IDFC has eleven direct wholly owned subsidiary companies - IDFC Private
Equity Company Limited, IDFC Trustee Company Limited, IDFC Project
Equity Company Limited, IDFC Finance Limited, IDFC Securities Limited,
IDFC PPP Trusteeship Company Limited, IDFC Projects Limited, IDFC Asset
Management Company Limited, IDFC AMC Trustee Company Limited, IDFC
Foundation (a Section 25 Company) and Uniquest Infra Ventures Private
Limited. In addition IDFC Securities Limited has three wholly owned
subsidiary companies namely, IDFC Capital Limited (earlier known as
IDFC- SSKI Limited), IDFC Distribution Company Limited (earlier known
as IDFC-SSKI Stock Broking Limited) and IDFC Capital USA Inc. IDFC
Capital Limited has three wholly owned subsidiaries called IDFC Capital
(Singapore) Pte. Limited, IDFC Fund of Funds Limited and IDFC General
Partners Limited.
During the year, Jetpur Somnath Highway Limited (earlier known as IDFC
Capital Company Limited and a direct subsidiary of IDFC) has become a
subsidiary of IDFC Projects Limited. A company under the name of Jetpur
Somnath Tollways Limited, has been incorporated as a Subsidiary of IDFC
Projects Limited. IDFC Projects, alongwith the other companies, has
further floated Dheeru Powergen Limited, which was converted from
Private Limited Company to a Public Limited Company.
IDFC Asset Management Company Limited has further floated IDFC Pension
Fund Management Limited, one of the Pension Fund Managers appointed by
the Pension Fund Regulatory and Development Authority (PFRDA) to manage
retirement funds under the New Pension Scheme (NPS) open to individuals
in the private sector, and IDFC Investment Advisors Ltd. A company
under the name of IDFC Investment Managers (Mauritius) Limited, has
been incorporated as a Subsidiary of IDFC Asset Management Company
Limited.
During the year, IDFC Foundation (a Non- Profit Organisation) was
incorporated under Section 25 of the Companies Act, 1956, as a wholly
owned subsidiary company of IDFC. Further, the shares of the three
Joint ventures namely, Infrastructure Development Corporation
(Karnataka) Limited (iDeCK), Uttarakhand Infrastructure Development
Company Limited (UDeC) and Delhi Integrated Multi-Modal Transit System
Limited (DIMTS), which were initially held by IDFC, have been
transferred to IDFC Foundation and similarly, the units of the Trust,
namely India Infrastructure Initiative Trust & India PPP Capacity
Building Trust which were initially held by IDFC have also been
transferred to IDFC Foundation. Further during the year, Uniquest Infra
Ventures Private Limited was incorporated as a direct subsidiary of the
Company and IDFC Capital USA Inc. was also incorporated as a subsidiary
company of IDFC Securities Limited.
A statement of particulars of IDFCs subsidiaries is annexed to this
Annual Report.
Detailed analysis of the performance of IDFC and its businesses Ã
financing and advisory, including initiatives in the area of Human
Resources, Information Technology, and Risk Management has been
presented in the Leveraging the opportunities provided by a growing
economy, the Company adopted a high growth model focused on
significantly increasing the project finance operations by growing the
balance sheet. section on Management Discussion & Analysis of this
Annual Report.
In view of the General Circular no. 2/2011 dated February 8, 2011
issued by the Ministry of Corporate Affairs, granting a general
exemption under Section 212(8) of the Companies Act, 1956, copies of
Balance Sheet, Profit and Loss Account, Reports of the Board of
Directors and Auditors of each of the subsidiary companies have not
been attached to the accounts of the Company for the FY 11. The Company
undertakes to make available these documents/details upon request by
any member of the Company at any point of time. These documents/details
will be available on the Companys website www.idfc.com and will also
be available for inspection by any of the members of the Company at its
Registered and Corporate Offices and also at the Registered Office of
the concerned subsidiaries. In accordance with the requirements of
Accounting Standard 21 (Consolidated Financial Statements), Accounting
Standard 23 (Accounting for Investment in Associates in Consolidated
Financial Statements) and Accounting Standard 27 [Financial Reporting
of Interests in Joint Ventures notified by the Companies (Accounting
Standards)] Rules, 2006, the Consolidated Accounts of IDFC and its
subsidiaries have been prepared and the same are annexed to this Annual
Report.
PARTICULARS OF EMPLOYEES
IDFC had 586 employees as on March 31, 2011. Particulars of Employees
as required to be furnished pursuant to Section 217(2A) of the
Companies Act, 1956, read with the rules thereunder, forms part of this
Report. However, as per the provision of Section 219(1)(b)(iv) of the
Companies Act, 1956, the reports and accounts are being sent to all the
shareholders of the Company excluding the statement of particulars of
employees. Any shareholder interested in obtaining a copy of the same
may write to the Company Secretary of the Company.
EMPLOYEE STOCK OPTION
SCHEME (ESOS)
Pursuant to the resolution passed by the members at the Annual General
Meeting held on August 2, 2006, IDFC has introduced Employee Stock
Option Scheme 2007 (referred to as "the Scheme") to enable the
employees of IDFC and its subsidiaries to participate in the future
growth and financial success of the Company. Out of the 16,548,268
options outstanding at the beginning of the year, 673,790 options
lapsed on account of resignations and 2,583,065 options were exercised
during the year.
Additionally, during the year, 7,459,308 options were granted to
eligible employees under the Scheme. Accordingly, 20,750,721 options
remain outstanding as of March 31, 2011.
All options vest in graded manner and are required to be exercised
within a specific period. The Company has used the intrinsic value
method to account for the compensation cost of stock to employees of
the Company. Intrinsic value is the amount by which the quoted market
price of the underlying share on the date prior to the date of the
grant exceeds the exercise price on the option.
Disclosures as required by Clause 12 of the Securities & Exchange Board
of India (Employee Stock Option Scheme and Employee Stock Purchase
Scheme) Guidelines, 1999 are annexed to this Report.
CORPORATE GOVERNANCE
Separate detailed chapters on Corporate Governance, Additional
Shareholder Information and Management Discussion & Analysis are
attached herewith and form part of this Annual Report.
PUBLIC DEPOSITS
During the year FY 11, your Company has not accepted any deposits from
the public within the meaning of the provisions of the Non- Banking
Financial Companies (Reserve Bank) Directions, 1998.
FOREIGN EXCHANGE
The particulars regarding foreign exchange earnings and expenditure are
furnished at Item Nos. 24 & 25 in the Notes to the Accounts. Since the
Company does not own any manufacturing facility, the other particulars
in the Companies (Disclosure of Particulars in the Report of the Board
of Directors) Rules, 1998 are not applicable.
FUND RAISING
During the year, the Company had issued and allotted 157,752,090 equity
shares of Rs. 10/- each to Qualified Institutional Buyers (QIBs) under
Chapter VIII of the Securities & Exchange Board of India (Issue of
Capital & Disclosure Requirements) Regulations, 2009 at a premium of Rs.
158.25 per equity share aggregating to Rs. 2,654.18 crore.
During the year, the Company had issued 84,000,000 Compulsorily
Convertible Cumulative Preference Shares (CCCPS) having face value of Rs.
100 each of the Company on preferential basis in terms of Chapter VII
of the Securities & Exchange Board of India (Issue of Capital and
Disclosure Requirements) Regulations, 2009 aggregating to Rs. 840 crore.
During the financial year, the Company also made a fresh issue
aggregating to Rs. 1,451.76 crore by way of issuance of long-term
infrastructure bonds of face value of Rs. 5,000 each, in the nature of
secured, redeemable, non-convertible debentures, having benefits under
Section 80 CCF of the Income-tax Act, 1961, under the applicable SEBI
Guidelines.
LISTING OF SHARES
The Companys shares are listed on National Stock Exchange of India
Limited (NSE) and Bombay Stock Exchange Limited (BSE).
DIRECTORS
Ministry of Finance, Government of India, nominated Mr. Bimal Julka,
Director General, Currency, Department of Economic Affairs, Ministry of
Finance and Additional Secretary to Government of India, Ministry of
Finance, as a Nominee Director on the Board of IDFC in place of Mr. G.
C. Chaturvedi, Additional Secretary, Department of Financial Services.
Accordingly, Mr. G. C. Chaturvedi ceased to be Director with effect
from November 07, 2010. The Board placed on record its appreciation of
the invaluable guidance provided by Mr. G. C. Chaturvedi to the
Company.
The Board, at its meeting held on November 08, 2010, appointed Mr.
Bimal Julka, as a Director with effect from November 08, 2010 and he
holds office up to the date of the ensuing Annual General Meeting
(AGM). The Company has received notice from a Member of the Company
under Section 257 of the Companies Act, 1956 proposing the candidature
of Mr. Bimal Julka as a Director.
In accordance with the Articles of Association of the Company and
provisions of the Companies Act, 1956, Dr. Omkar Goswami, Mr. Shardul
Shroff and Mr. S. H. Khan would retire by rotation and being eligible,
offer themselves for re-appointment at the AGM.
The Board of Directors recommends appointment/re-appointment of all the
above Directors at the ensuing AGM.
INTERNAL CONTROL SYSTEMS
The Company has in place adequate systems of Internal Control to ensure
compliance
with policies and procedures. Internal Audits of all the units of the
Company are regularly carried out to review the internal control
systems. The Internal Audit Reports alongwith implementation and
recommendations contained therein are constantly reviewed by the Audit
Committee of the Board.
AUDITORS
Messrs Deloitte Haskins & Sells, Chartered Accountants, will retire as
the statutory auditors of the Company at the ensuing AGM. The Board at
its meeting held on April 29, 2011, has proposed their re-appointment
as Auditors to audit the accounts of the Company for the financial year
ending March 31, 2012.
Messrs Deloitte Haskins & Sells, the retiring auditors, have confirmed
that their re- appointment, if made, would be in conformity with the
provisions of Sections 224 and 226 of the Companies Act, 1956, and also
indicated their willingness to be re-appointed.
DIRECTORS RESPONSIBILITY STATEMENT
The Directors confirm that:
- in the preparation of the annual accounts, the applicable accounting
standards have been followed;
- they have selected such accounting policies and applied them
consistently and made judgements 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 profits of the
Company for the year;
- they 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; and
- they have prepared the annual accounts on a going concern basis.
ACKNOWLEDGEMENTS
IDFC has developed close relationships with the Ministry of Finance
(MoF), Banking Division, Ministry of Surface Transport, National
Highways Authority of India, Ministry of Power, Department of
Telecommunications,
Ministry of Petroleum and other Ministries of the Government of India
involved with infrastructure development; Reserve Bank of India,
Securities & Exchange Board of India and regulatory bodies, TRAI, the
Central Electricity Regulatory Commission and State Electricity
Regulatory Commissions; the Planning Commission; IIT (Kanpur); IIM
(Ahmedabad); the State Governments and all IDFCs shareholders. The
Board of Directors wishes to gratefully acknowledge the assistance and
guidance received from all of them. IDFC could make the progress it has
in these years due to the dedication and creativity of its staff at all
levels. The Board of Directors wishes to place on record their warm
appreciation for these efforts.
For and on behalf of the Board
DEEPAK S. PAREKH
Chairman
Mumbai, June 13, 2011
Mar 31, 2010
The Directors have pleasure in presenting the Thirteenth Annual Report
together with the audited accounts for the year ended March 31, 2010.
Particulars FY 2009-10 FY 2008-09
Operating Income 3,569.97 3,313.25
Other Income 27.13 9.45
Total Income 3,597.11 3,322.70
Less: Administrative Expenses* 199.38 128.79
Less: Provision for assets
and losses 130.36 149.45
Profit Before Interest
and Taxes 3,267.37 3,044.46
Less: Interest and Other
Charges 1,950.23 2,079.54
Profit Before Tax 1,317.14 964.92
Less: Provision for Tax ** 304.30 229.00
Profit After Tax 1,012.84 735.92
* Administrative expenses include staff expenses; travelling &
conveyance; postage telephone & telex; establishment expenses; other
expenses and depreciation. ** Provision for Tax is net of Deferred
Tax.
Income from operations increased by 7.75% from Rs. 3,313.25 crore in
2008-09 to Rs. 3,569.97 crore in 2009-10. Other income increased by
187.09% from Rs. 9.45 crore in 2008-09 to Rs. 27.13 crore in 2009-10.
IDFCs total income, increased by 8.26% from Rs. 3,322.70 crore in
2008-09 to Rs. 3,597.11 crore in 2009-10.
Profit Before Tax (PBT) increased by 36.50% from Rs. 964.92 crore in
2008-09 to Rs. 1,317.14 crore in 2009-10. Profit After Tax (PAT)
increased by 37.63 % from Rs. 735.92 crore in 2008-09 to Rs.1,012.84
crore in 2009-10.
IDFCÃs quality of assets continued to be good with Net NPAs at Rs.
42.86 crore as on March 31, 2010.
DIVIDEND
Your Directors are pleased to recommend a dividend of Re. 1.50 per
share (i.e. 15%) for the year ended March 31, 2010.
OPERATIONS REVIEW
The frst half of 2009 was characterized by contraction in most
economies of the world as the effect of the global financial crisis of
September 2008 began to impact various sectors of the real economy. In
the second half of 2009, some small signs of recovery began to
manifest. The major economies showed signs of recovery and in
particular, the stimulus package launched in the USA boosted consumer
confidence. Economic indicators also showed positive trends in some
countries.
A large domestic market, resilient banking system and a policy of
gradual liberalization of capital account helped India in the early
mitigation of the adverse impact of global financial crisis and
recession. Though credit growth declined refecting slowdown of the
Economy in general and the industrial sector in particular, investment
remained relatively buoyant. Increased plan expenditure, reduction in
direct taxes, sector specific measures for textiles, housing,
infrastructure, through stimulus packages coupled with regulation and
supervision of financial institutions and markets clearly contributed
to soften the impact of the global financial crisis on Indian Economy.
Revisiting the agenda of pending economic reforms has renewed the
growth momentum, though it is too early to predict a time frame for a
full-fledged revival of the Economy.
Leveraging the opportunities provided by a growing economy, the Company
continues to see healthy growth in its lending activities. Gross
approvals increased by 195% from Rs.10,317 crore in 2008-09 to
Rs.30,442 crore in 2009-10. Gross disbursements, increased by 60% from
Rs.8,085 crore in 2008-09 to Rs.12,962 crore in 2009-10.
As on March 31, 2010, IDFCÃs total exposure to infrastructure projects
was Rs.43,842 crore of which Energy was the highest (38.3%), followed
by Telecommunication & IT (24.4%) and Transportation (19.8%). The share
of Commercial and Industrial sector was 8.2%.
While the investment strategy for treasury operations continues to
ensure adequate levels of liquidity to support core business
requirements, it has started focusing on optimizing levels of return
and functioning as a profit centre investing in fixed income assets,
while maintaining prudent safety norms. Income from treasury operations
decreased by 41% from Rs. 164 crore in 2008-09 to Rs. 96 crore in
2009-10.
The investment banking and institutional brokerage business under the
IDFC Securities (earlier IDFC-SSKI) platform has improved
during the year and its income increased by 59 % from Rs. 115 crore in
2008-09 to Rs.183 crore in 2009-10. The mutual fund business that was
acquired in 2008-09 has been rechristened IDFC-AMC.
The Policy Advisory Group continued to contribute to IDFCÃs mandate of
leading private capital to infrastructure projects, by providing
impetus to rationalisation of policy and regulatory frameworks.
IDFC Private equity continues to be committed to the development of
infrastructure in the country and manages three funds à India
Development Fund, IDFC Private Equity Fund II and IDFC Private Equity
Fund III having a total capital commitment of Rs. 5,992 crore.
During the year, fee income from managing third party assets increased
substantially by 42% from Rs.203 crore in 2008-09 to Rs. 290 crore in
2009-10.
During the year, IDFC Group has received several awards and
recognitions, the details of which are given in this Annual Report.
Detailed analysis of the performance of the Company and its businesses,
including initiatives in the area of Information Technology, has been
presented in the section on Management Discussion and Analysis of this
Annual Report.
SUBSIDIARY COMPANIES
IDFC has ten direct wholly owned subsidiary companies- IDFC Private
Equity Company Limited, IDFC Trustee Company Limited, IDFC Project
Equity Company Limited, IDFC Finance Limited, IDFC Securities Limited
(earlier known as IDFC-SSKI Securities Limited), IDFC Capital Company
Limited, IDFC PPP Trusteeship Company Limited, IDFC Projects Limited,
IDFC Asset Management Company Limited and IDFC AMC Trustee Company
Limited. In addition IDFC Securities Limited has two wholly owned
subsidiary companies namely, IDFC Capital Limited (earlier known as
IDFC-SSKI Limited) and IDFC - SSKI Stock Broking Limited.
During the year, IDFC Investment Advisors Limited (earlier a direct
subsidiary of IDFC) has become a subsidiary of IDFC Asset Management
Company Limited. IDFC Asset Management Company Limited along with the
Company has further floated IDFC Pension Fund Management Limited, one
of the Pension Fund Managers appointed by the Pension Fund Regulatory
and Development Authority (PFRDA) to manage retirement funds under the
New Pension Scheme (NPS) open to individuals in the private sector.
Further, IDFC Projects Limited (earlier a subsidiary of IDFC Finance
Limited) has acquired 51% stake in Dheeru Powergen Private Limited.
Dheeru Powergen Private Limited is in the process of setting up a 1050
MW (3 x 350MW) coal based thermal power plant at District Korba, State
of Chhattisgarh, India.
IDFC Capital Limited has a wholly owned subsidiary called IDFC Capital
(Singapore) Pte Limited. During the year, IDFC Capital Limited has
further floated two wholly owned subsidiary companies namely, IDFC Fund
of Funds Limited and IDFC General Partners Limited.
A statement of particulars of IDFCÃs subsidiaries is annexed to this
report.
Detailed analysis of the performance of IDFC and its businesses Ã
financing and advisory, including initiatives in the area of Human
Resources, Information Technology, and Risk Management has been
presented in the section on Management Discussion and Analysis of this
Annual Report.
As approved by the Central Government vide letter dated May 18, 2010
under Section 212(8) of the Companies Act, 1956, copies of Balance
Sheet, Profit and Loss Account, Reports of the Board of Directors and
Auditors of each of the subsidiary companies have not been attached to
the accounts of the Company for F.Y. 2009- 10. The Company will make
available these documents/details upon request by any member of the
Company. These documents/details will be available on the CompanyÃs
website www.idfc. com and will also be available for inspection by any
member of the Company at its Registered and Corporate Offices and also
at the Registered Office of the concerned subsidiaries. In accordance
with the requirements of Accounting Standard 21 (Consolidated Financial
Statements), Accounting Standard 23 (Accounting for Investment in
Associates in Consolidated Financial Statements) and Accounting
Standard 27 (Financial Reporting of Interests in Joint Ventures
notified by the Companies (Accounting Standards) Rules, 2006, the
Consolidated Accounts of IDFC and its subsidiaries have been prepared
and the same are annexed to this Report.
JOINT VENTURES
IDFC has three joint ventures à Infrastructure Development Corporation
(Karnataka) Limited (iDeCK) in the state of Karnataka, Uttaranchal
Infrastructure Development Company Limited (UDeC) in the state of
Uttaranchal; and Delhi Integrated Multi Modal Transit System Limited
(DIMTS) in Delhi. IDFC has also invested in two associates - Feedback
Ventures Private Limited and Athena Power Projects Limited. iDeCK and
UDeC are engaged in advisory and project development work in the area
of infrastructure at respective state levels. DIMTS has been set up as
a special purpose vehicle to tackle the problem of ineffective public
transport delivery and provide expert services in the field of urban
transport. Feedback Ventures Private Limited provides consulting,
transaction advisory, project development, planning & engineering, and
project management services to companies, governments, financial
institutions, and developmental agencies in India and overseas. Athena
Power Projects Limited is a consortium between Power Trading
Corporation and IDFC to set up a 1,200MW power plant in Visakhapatnam
in Andhra Pradesh.
PARTICULARS OF EMPLOYEES
IDFC had 192 employees as on March 31, 2010. Particulars of employees
as required to be furnished pursuant to Section 217(2A) of the
Companies Act, 1956, read with the rules there under, form part of this
Report. However, as per the provision of Section 219(1)(b)(iv) of the
Companies Act, 1956, the reports and accounts are being sent to all the
shareholders of the Company excluding the statement of particulars of
employees. Any shareholder interested in obtaining a copy may write to
the Company Secretary.
EMPLOYEES STOCK OPTION SCHEME (ESOS)
Pursuant to the resolution passed by the members at the Annual General
Meeting held on August 2, 2006, IDFC has introduced Employee Stock
Option Scheme 2007 (referred to as Ãthe SchemeÃ) to enable the
employees of IDFC and its subsidiaries to participate in the future
growth and financial success of the Company. Out of the 21,766,956
options outstanding at the beginning of the year, 485,356 options
lapsed on account of resignations and 5,336,332 options were exercised
during the year.
Additionally, 603,000 options were granted to eligible employees under
the Scheme during the year. Accordingly 16,548,268 options remain
outstanding as of March 31, 2010.
All options vest in a graded manner and those are to be exercised
within a specific period. The Company has used the intrinsic value
method to account for the compensation cost of stock to employees of
the Company. Intrinsic value is the amount by which the quoted market
price of the underlying share on the date prior to the date of the
grant exceeds the exercise price on the option.
Disclosures as required by Clause 12 of the SEBI Employees Stock Option
Scheme and Employee Stock Purchase Scheme Guidelines, 1999 are annexed
to this Report.
CORPORATE GOVERNANCE
Separate detailed chapters on Corporate Governance, Additional
Shareholder Information and Management Discussion and Analysis are
attached herewith and form part of this Report.
PUBLIC DEPOSITS
During F.Y. 2009-10, your Company has not accepted any deposits from
the public within the meaning of the provisions of the Non-Banking
Financial Companies (Reserve Bank) Directions, 1998.
FOREIGN EXCHANGE
The particulars regarding foreign exchange earnings and expenditure are
furnished at Item No. 14 & 15 in the Notes to the Accounts. Since the
Company does not own any manufacturing facility, the other particulars
in the Companies (Disclosure of Particulars in the Report of the Board
of Directors) Rules, 1998 are not applicable.
LISTING OF SHARES
The CompanyÃs shares are listed on National Stock Exchange of India
Limited (NSE) and Bombay Stock Exchange Limited (BSE).
DIRECTORS
Ministry of Finance, Government of India nominated Mr. G. C.
Chaturvedi, Additional Secretary, Department of Financial Services, as
Director on the Board of IDFC in place of Mr. Arun Ramanathan,
Ex-Finance Secretary. Accordingly, Mr. Arun Ramanathan ceased to be a
Director with effect from July 20, 2009. The Board placed on record
its appreciation of the invaluable guidance provided by Mr. Arun
Ramanathan to the Company.
The Board, at its meeting held on July 20, 2009, appointed Shri G. C.
Chaturvedi, as Director with effect from July 21, 2009 and he holds
office up to the date of the ensuing Annual General Meeting (AGM).
The Board, at its meeting held on July 20, 2009, appointed Mr. Donald
Peck as Additional Director with effect from July 21, 2009 and he holds
office up to the date of the ensuing AGM.
In accordance with the Articles of Association of the Company and
provisions of the Companies Act, 1956, Mr. Gautam Kaji, Mr. Dimitris
Tsitsiragos and Mr. Abdul Rahim Abu Bakar are retiring by rotation and
being eligible, offer themselves for re-appointment at the AGM.
The Board of Directors recommends appointment/re-appointment of all the
above Directors at the ensuing general meeting.
INTERNAL CONTROL SYSTEMS
The Company has in place adequate systems of Internal Control to ensure
compliance with policies and procedures. Internal Audits of all the
units of the Company are regularly carried out to review the internal
control systems. The Internal Audit Reports along with implementation
and recommendations contained therein are constantly reviewed by the
Audit Committee of the Board.
AUDITORS
Messrs Deloitte Haskins and Sells, Chartered Accountants, will retire
as the statutory auditors of the Company at the ensuing AGM. The Board
at its meeting held on April 27, 2010 has proposed their re-appointment
as Auditors to audit the accounts of the Company for the financial year
ending March 31, 2011.
Messrs Deloitte Haskins and Sells, the retiring auditors, have
confirmed that their re-appointment, if made, would be in conformity
with the provisions of Sections 224 and 226 of the Companies Act, 1956,
as also indicated their willingness to be re-appointed.
DIRECTORSÃ RESPONSIBILITY STATEMENT
The Directors confirm that in the preparation of the annual accounts,
the applicable accounting standards have been followed;
- they have selected such accounting policies and applied them
consistently and made judgements 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 profits of the Company for the year;
- they 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; and
- they have prepared the annual accounts on a going concern basis.
ACKNOWLEDGEMENTS
IDFC has developed close relationships with the Ministry of Finance
(MoF), Banking Division (MoF), Ministry of Surface Transport, National
Highways Authority of India, Ministry of Power, Department of
Telecommunications, Ministry of Petroleum and other Ministries of the
Government of India involved with infrastructure development; Reserve
Bank of India, Securities & Exchange Board of India and regulatory
bodies, TRAI, the Central Electricity Regulatory Commission and State
Electricity Regulatory Commissions; the Planning Commission; IIT
(Kanpur); IIM (Ahmedabad); the State Governments and all IDFCÃs
shareholders. The Board of Directors wishes to gratefully acknowledge
the assistance and guidance received from all of them. IDFC could make
the progress it has in these years due to the dedication and creativity
of its staff at all levels. The Board of Directors wishes to place on
record their warm appreciation for these efforts.
FOR AND ON BEHALF OF THE BOARD
DEEPAK S. PAREKH,
Chairman
Mumbai, May 21, 2010