Directors Report of IFCI Ltd.

Mar 31, 2023

The Board of Directors of Your Company (“Your Company” or “IFCI”) presents the 30^th (Thirtieth) Annual Report of IFCI Ltd., together with the audited financial statements for the year ended March 31, 2023.

Financial Summary and State of Company’s Affairs

The summarized financial performance of Your Company during the year and the previous year are as under:

(Rs. in Crore)
Particulars	Standalone		Consolidated
	2022-23	2021-22	2022-23	2021-22
Total Income	546	764	1,519	1,596
Less:
Total Expenses before Impairment Allowance, Depreciation & Amortisation	786	1,153	1,504	1,661
Impairment on financial instruments	(79)	1,373	(86)	1,391
Depreciation and amortisation	24	23	74	66
Total Expenses	731	2,549	1,492	3,118
Exceptional Items	0	-	1	1
Profit/(Loss) before tax	(185)	(1,785)	26	(1,523)
Tax expense	102	206	146	(238)
Profit/(Loss) before share in profit of associates	(287)	(1,991)	(120)	(1,761)
Total Expenditure Share in profit of associates	0	-	-	-
Profit/(Loss) for the year	(287)	(1,991)	(120)	(1,761)
Other comprehensive income (net of tax)	(32)	(35)	1,269	1,754
Total Comprehensive Income	(319)	(2,026)	1,149	(7)
Net profit/(Loss) attributable to - Owners of the Company	NA	NA	(207)	(1,831)
Non-controlling interest	NA	NA	88	70
Total Comprehensive Income attributable to - Owners of the Company	NA	NA	448	(920)
Non-controlling interest	NA	NA	701	914
Earnings per share Basic Earnings per share of '' 10 each	(1.31)	(9.47)	(0.95)	(8.71)
Diluted Earnings per share of '' 10 each	(1.31)	(9.47)	(0.95)	(8.71)

The above numbers are extracted from the financial statements prepared in accordance with the Indian Accounting Standards (Ind-AS), in compliance with the Companies (Account) Rules, 2014 and Accounting Standards notified under Section 133 of the Companies Act, 2013, read with the Companies (Indian Accounting Standards) Rules, 2015 as amended.

Any regulation/ guidance/ clarifications/ directions issued by Government of India, RBI or by any other Regulators, of Your Company will be implemented by Your Company as and when they are issued/ applicable.

Financial Performance

During the year Your Company has continued to strengthen and expand its footprints in Advisory Services and has positioned itself as a preferred advisor to Government of India for Schemes launched under the aegis of AatmaNirbhar Bharat. However, owing to decline in loan assets, due to repayments and non-recognition of income on stage 3 assets, Your Company booked a total comprehensive loss of '' 319.35 crore during the year under report. Provisions made during the year enhanced the provision coverage ratio to over 86.47%. However, the capital adequacy ratio reduced in current FY to -70.66 % with Tier-I capital at -71.06%. During the year, the Government of India infused '' 400 crore towards subscribing to the share capital of Your Company. To augument its liquidity, Your Company has also adopted aggressive recovery measures and fintech tools. Your Company is also focusing

on measures for recovery in order to maximize recovery under Insolvency and Bankruptcy Code (IBC) route and other modes, expediting divestment of non-core assets and strengthening of the advisory business, which are expected to improve the cash flow of Your Company and make the balance sheet of Your Company healthier.

Sanctions, Disbursements and Recovery

Advisory Services business is fast becoming the mainstay of business operations of IFCI. During the FY 2022-23, Your Company did not sanction any new loans. There were also no disbursements towards loans/advances during FY 2022-23.

Your Company actively pursued recovery from Non-Performing Assets (NPAs), thereby recovering '' 714 crore out of NPAs & Security Receipts (SRs) during FY 2022-23.

Your Company remains committed to continue its aggressive approach for recovery from NPAs and stressed assets through multi-pronged resolution modes and strategies.

Treasury, Investment and Forex Operations

Your Company has been cautious in investing the surplus funds across diversified instruments with focus on safety while making every effort towards maximizing yield in consonance with liquidity management. In Rupee operations, the objective has been to manage the surplus funds effectively with minimum risk and deployment of surplus funds in lower duration instruments, to get optimum return. This was done

because of volatility in interest rates, in anticipation of future monetary tightening. The underlying investment principle was safety, liquidity, and risk containment and accordingly Your Company invested in Treasury Bills, Government Securities, Certificate of Deposit, Commercial Papers, Inter-Corporate Deposits / Short Term Deposits (STD), Fixed Deposits / Bonds and Mutual Fund Schemes during the year. Average Deployment during the year was '' 411.19 crore against '' 1346.83 crore in FY 2021-22 and annualized return on fund deployed was 4.87%. The return during FY 2022-23 from Treasury operations was higher than the previous year as investments were made in instruments with shorter maturity, with the objective of ensuring safety and liquidity. During the year under report, Your Company registered an Interest income of '' 26.51 crore from investments as against '' 75.68 crore during the previous year.

In view of volatility prevailing in market due to uncertainties on account of increasing commodity prices and geographical conflict in later part of the year, Your Company continued with the prudent strategy of selective disinvestment of slow moving/illiquid stocks and booking profits from investments in stocks. Net investment portfolio of Your Company as on March 31, 2023 stood at '' 2,277 crore as against '' 2,944 crore at the end of previous Financial Year. The Foreign Currency (FC) operations were confined to servicing FC liabilities and containing the exchange risk arising due to a mismatch in the outstanding amount of FC assets and liabilities. The mismatches were covered through forward contracts and currency futures. The net mismatch position was maintained well below the limits approved by the Board and RBI, by maintaining almost square position.

Resource Mobilization and Borrowing Profile

During the year, Your Company was not able to mobilise fresh resources due to rating constraints and weak financial parameters. However, through effective liquidity management, Your Company has serviced its liabilities on and before due dates. During FY 2022-23, Your Company serviced debt of '' 1,832 crore (Principal of '' 1,267 crore and Interest of '' 565 crore), which included prepayments.

The Principal liability outstanding of Your Company as on March 31, 2023 was '' 5,808.07 crore comprising of rupee borrowings of '' 5,443.82 crore and foreign currency loan of '' 364.25 crore. Interest liability outstanding (i.e. interest accrued but not due on borrowings) as on March 31, 2023 was '' 696.59 crore. The broad instrument wise break-up of outstanding borrowings as on March 31, 2023 is indicated below:

Your Company is committed to maintaining a high standard of Investor services and devotes considerable effort to identify and follow best practices for timely resolution of investor complaints. Your Company has taken various investor friendly initiatives like encouraging updation of KYC details with R&TA, dematerialization of securities, electronic payment of interest & redemption proceeds and implementation of Online Service Request Portal for registering investor requests etc.

Conservation of Energy, Technology Absorption, Foreign Exchange
Earnings and Outgo Conservation of Energy -	The Company’s operations do not involve any manufacturing or processing activities. It provides financial assistance to the industries, thereby requiring normal consumption of electricity. Accordingly, the provisions of Section 134 (3) (m) of the Companies Act, 2013 read with Rule 8 (3) of Companies (Accounts) Rules, 2014 are not applicable to the Company. Nevertheless, Your Company has prioritized energy efficiency. In May, 2023 IFCI Tower received Gold Certification
	from the Indian Green Building Council.
Technology Absorption -	Information Technology (IT) has transformed the conduct of businesses in
	every sector of the economy. The in-house team of IT professionals in Your Company is using in house developed “CIIS” which largely consists of applications supporting major business functions as well as noncore functions. The system has been successfully running and has constantly been upgraded in line with requirements. During FY 2022-23, the existing software applications were upgraded with enhanced/added features. New modules were developed in-house for different functions. Your Company has launched a Service Request Portal as per regulatory guidelines. Your Company maintains proper data backup and has set up a Disaster Recovery Site to protect data and business information systems. Your Company has also implemented various tools as a cybersecurity measure and upgraded its IT Infrastructure. Your Company has started using Document Management Systems and has upgraded its IT infrastructure. Video Conferencing Facility has also been enhanced to provide streamlined video communication and
	live content sharing by using Webex/ Teams Meeting.

Foreign Exchange Earnings The details in respect of foreign expenditure / earnings are as follows: ('' in crore)
Particulars	Year End	Year End
	31.03.2023	31.03.2022
Expenditure in Foreign
Currencies:
Interest on borrowings	2.87	3.16
Other Matters	0.00	0.00
TOTAL	2.87	3.16
Earning in Foreign Currencies:
Earning in Foreign Currency	NIL	NIL

Internal Financial Controls

Your Company has sound Internal Financial Controls over financial reporting through policies and procedural manuals, designed to provide reasonable assurance regarding the reliability of financial reporting and preparation of financial statements for external purposes

in accordance with generally accepted accounting principles. The entity level control framework, designed and implemented in earlier years, was subjected to sample tests, for various processes, during the year under report by a well experienced Internal Audit Team of Your Company with a frequency parallel with Internal Audit. There were a few Internal Financial Control related issues, though not material, were addressed and remedial actions were taken in the subsequent period of review. Based on the satisfaction over the operating effectiveness of the Internal Financial Controls, the Board of Directors believes that adequate Internal Financial Controls exist and are operating effectively.

Vigilance

The Company has a dedicated Vigilance Department, headed by Chief Vigilance Officer. Vigilance Department at Head Office which takes care of all vigilance matters of IFCI, its Regional Offices & Subsidiaries. The comprehensive functioning of the Department is divided into Preventive Vigilance, Detective Vigilance and Punitive Vigilance. With amplified prominence given to Preventive Vigilance, the department conducts inspection of various offices from time to time. If irregularities/ lapses are observed, then the same are shared with Regional Incharges and the concerned departments of Head Office for taking various steps to initiate corrective measures or to take actions towards systemic improvements or initiate penal action based on the nature of case. Vigilance Department also advises the Management for systemic improvement based on the findings. Vigilance Department ensures the completion of Disciplinary proceedings as per extant guidelines within the set timelines.

Vigilance Department ensures disposal of complaints and other referred cases as per extant guidelines. Vigilance Department shares the communication with employees about Preventive Vigilance. With the help of Vigilance Department, Your Company ensures disposal of Vigilance Cases and Non-Vigilance cases.

During the year, systemic improvements suggested by Vigilance Department have been implemented by the Management like procurement of goods and services through GeM portal, rotation of staff in general and sensitive post. The Vigilance Awareness week is celebrated every year, to promote ethical practices.

During the year Vigilance Awareness Week-2022 was observed from October 31 to November 06, 2022 with the Theme “sraFPR eDT HRT -lodilfl HURT - Corruption free India for a developed Nation”.

Whistle Blower Policy

The Company has put in place a Vigil Mechanism in terms of the provisions of Section 177 (9) and (10) of the Companies Act, 2013, SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulations). Under Whistle Blower Policy, Director(s) and employee(s) of IFCI can report to the Management their concerns, about unethical behaviour, actual or suspected fraud or violation of the IFCI’s Code of Conduct or Ethics Policy and to provide adequate safeguards to them against any sort of victimization on raising an alarm. The Policy also provides for direct access to the Chairman of the Audit Committee in exceptional cases. The Whistle Blower Policy is available on the link https://www.ifciltd.com/202 2/

Whistle%20Blower%20Policy.pdf

Disclosure as per Sexual Harassment of Women at Workplace (Prevention, Prohibition And Redressal) Act, 2013

An Internal Complaints Committee has been formed and the Members of the Committee, as on the date of this report is as under:

1. Chief General Manager (HR) - Presiding Officer

2. Ms. Lata Lochav - External Member

3. General Manager (HR)

4. Ms. Shikha Gupta, DGM

5. Ms. Trina Tejaswini, DGM (Law)

In the absence of any of the aforesaid internal members, Ms. Priyanka Sharma, DGM & Company Secretary would be the alternate member. The quorum of the Committee shall comprise of all members. A brief of the complaints received under Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 is as under:

No. of complaints pending at the start of the Financial Year 2022-23	Nil
No. of complaints received during the Financial Year 2022-23	Nil
No. of complaints resolved during the Financial Year 2022-23	Nil
No. of Complaints pending at the end of the Financial Year 2022-23	Nil
Number of workshops or awareness programs against sexual harassment carried out during the Financial Year 2022-23	1
Nature of action taken by the employer	Nil

Management Discussion and Analysis1. Industry Structure and Developments*

Industry Outlook - The Indian Financial Sector has remained stable and resilient, with further improvement in asset quality, capital and profitability, notwithstanding the recent global financial market turbulence and acute banking stress witnessed in some jurisdictions, macro stress tests for credit risk reveal that all banks would comply with the minimum capital requirements even under a severe stress scenario. Contagion and solvency risks have reduced. Since December 2022, the Indian Banking Sector has expanded its balance sheet, business and profitability. Even as gross non-performing assets and net non-performing assets of scheduled commercial banks declined to a decadal low, the system-level capital to risk weighted assets ratio reached a new high. The net interest margin increased further and post-tax profits recorded growth as credit expanded alongside adequate provisioning and strengthening of capital buffers. As credit growth has been outpacing deposit growth, financing conditions, especially banks’ cost of funds have tightened. The retail sector has been a major driver of bank credit growth in the recent period.

Non-Banking Financial Companies (NBFCs)

Annual growth of credit disbursed by NBFCs sustained pace, after reaching double digits in September 2022, with personal loans rising by 31.3% and loans to industry by 12.7% (Y-o-Y) in March 2023. The personal loans portfolio of NBFCs grew the most during the last four-year period {compound annual growth rate (CAGR) being more than 30%} resulting in increase of its share in total loan portfolio to 31.2% in March 2023. As per the activity-based classification, the largest two categories, namely, Investment and Credit Company (NBFC-ICC) and Infrastructure Finance Company (NBFC-IFC), with shares of 54% and 40%, respectively, in outstanding credit registered double digit credit growth in March 2023. Micro Finance Institutions (NBFC-MFIs) have maintained robust credit growth over the past two years (with a CAGR 27.6%).

The GNPA ratio of NBFCs continued to decline during H2:2022-23, with industry and services each registering more than two percentage points reduction. Public sector NBFCs (with a share of 44% in outstanding credit) had low GNPA ratios (2.8%) relative to their private counterparts (credit share 56% and GNPA ratio 5.5%). The aggregate NNPA ratio of NBFCs ebbed further to 1.3%,

with the provisioning coverage ratio (PCR) increasing to 70.4% in March 2023.

The capital position of NBFCs remained robust, with CRAR at 27.5% in March 2023, much above the minimum requirement of 15%. The RoA recouped gradually to reach 3.3% by end of the FY 2022-23. Share capital, reserves and surplus of NBFCs increased over the years, contributed mostly by capital reserves and balances in profit and loss accounts. On the other hand, their share of total borrowings in total funds reduced from 66.4% in March 2020 to 62.3% in March 2023 mostly due to lower issuance of debentures by NBFCs than other sources of funds during the period. Around two-thirds of borrowings were long-term (more than one year) in nature. NBFCs’ borrowing from banks increased in 2022-23.

2. Opportunities & Threats

To create national manufacturing champions and generate employment opportunities for the country’s youth, Production Linked Incentive (PLI) Schemes are the cornerstone of the Government of India’s push for achieving an AatmaNirbhar Bharat. The objective is to make domestic manufacturing globally competitive and to create global champions in manufacturing. The strategy behind PLI Schemes is to offer the companies incentives on incremental sales from products manufactured in India, over the base year. They have been specifically designed to boost domestic manufacturing in sunrise and strategic sectors, curb cheaper imports and reduce import bills, improve cost competitiveness of domestically manufactured goods, and enhance domestic capacity and exports. Following are the PLI and other Schemes of Government of India, where IFCI has been appointed as the Nodal Agency/ Project Management Agency (PMA):

SI. No.	Particulars of the PLI & Other Schemes	Details of the Schemes available on the below Portals / Websites
1	Scheme for Promotion of Manufacturing of Electronics Components and Semiconductors (SPECS)	https://specs.ifciltd.com
2	Production Linked Incentive (PLI) Scheme for Large Scale Electronics Manufacturing (PLI-LSEM)	https://pli.ifciltd.com
3	PLI Scheme for critical Key Starting Materials (KSMs)/Drug Intermediates (DIs)/ Active Pharmaceutical Ingredients (API) (PLI-Bulk Drugs)	https://plibulkdruss.ifciltd.com
4	PLI for Medical Devices (PLI-MD)	https://plimedicaldevices.ifciltd.com
5	Scheme for Promotion of Bulk Drugs Parks	httPs://pharmaceuticals.sov.in/schemes/suidelines-scheme-promotion-bulk-drus-parks
6	Scheme for Promotion of Medical Devices Parks	https://pharmaceuticals.gov.in/schemes/guidelines-scheme-promotion-medical-devices-parks
7	PLI for Food Processing Industry (PLISFPI)	https://plimofpi.ifciltd.com
8	PLI for IT Hardware (PLI-ITHW)	https://pliithw.com
9	PLI for White Goods (PLI-WG)	https://pliwhitegooHs.ifciltH.com
10	PLI Scheme for Automobile & Auto Component Industry (PLI-Auto)	https://pliauto.in
11	PLI Textile Products: MMF Segment & Technical Textiles	https://pli.texmin.gov.in
12	PLI Scheme for Drone and Drone Components	https://www.civilaviation.gov.in/en/application-pli-scheme
13	PLI Scheme ''National Programme for Advanced Chemistry Cell Battery Storage'' (PLI-ACC)	https://pliacc.in/
14	Scheme for Faster Adoption and Manufacturing of Electric Vehicles in India Phase II (FAME-II)	https://fame2.heavyindustries.gov.in/
15	Nodal Agency for Sugar Development Fund	https://www.ifciltd.com/?q=en/content/nodal-agency-sugar-development-fund
16	Modified Special Incentive Package Scheme (M-SIPS)	https://www.ifciltd.com/?q=en/content/msips

Note:

1. IFCI is also associated with India Semiconductor Mission as Agency for Techno Financial Appraisal, Due Diligence and Verification for (i) Scheme for setting up of Semiconductor Fabs, (ii) Scheme for setting up of Display Fabs and (iii) Scheme for setting up of Compound Semiconductors / Silicon Photonics / Sensors Fab/ Discrete Semiconductors Fab and Semiconductor Assembly, Testing, Marking and Packaging (ATMP)/ Outsourced Semiconductor Assembly and Test (OSAT) facilities in India (Portal: https:llism.gov.inl).

2. IFCI is also appointed as Verification Agency for Special Incentives Scheme for ESDM Sector 2020-2025 of Government of Karnataka (Portal: https://k-tech.karnataka.gov.in/).

While positioning itself as a preferred advisor to Government of India, Your Company also explored similar opportunities with State Governments and bagged an assignment from the Government of Karnataka.

During the year, Your Company also made inroads into Corporate Advisory and bagged 31 assignments. Assignments included business restructuring, debt syndication and strategic investment analysis across industries / sectors. Your Company has been empanelled as the sole consultant with Technology Development Board (TDB) for a period of 3 years to undertake due diligence / project appraisal of funding proposals submitted to TDB by industrial concerns with innovative technologies. Your Company is also empanelled with Maharatna and Navratna Companies.

To explore all business opportunities, the Company is focusing on reskilling of employees. Various Training Programmes are being organised for employees on a wide range of topics such as BRSR Framework, Climate Finance/ESG. Advanced Financial Modelling, Negotiation Skills, Leadership, Functional Analysis of Business.

Your Company focuses on group synergies and value maximization at the Group level. IFCI through its subsidiary Stock Holding Corporation of India Limited (SHCIL), is making contribution in promotion of digital economy in the country. SHCIL is one of the largest Depository Participants, in the Country besides being the Country’s largest premier custodian in terms of assets under custody, and provides post trading and custodial services to institutional investors, mutual funds, banks, insurance companies, etc. It acts as a Central Record Keeping Agency (CRA) for collection of stamp duty, e-court fee and e-registration in various States and Union Territories (UTs).

As on March 31, 2023, e-stamping services were operational in 23 States and UTs and mobilised an amount of '' 53,132 crore in FY 2022-23 as compared to '' 39,672 crore in FY 2021-22 in e-stamping services.

StockHolding Document Managemnet Services (SDMS) bagged a prestigious project of National importance and has developed a CRCS Sahara Refund Portal for processing claims of genuine investors of Sahara Cooperative Societies. Portal was inaugrated by Hon’ble Home Minister.

IFCI Venture Capital Funds Limited (IVCF), another subsidiary of IFCI, is promoting social sector initiatives of Government of India for encouraging entrepreneurship amongst socially backward groups in the country. IVCF manages the Venture Capital Fund for Scheduled Castes (VCF-SC) and Venture Capital Fund for Backward Classes (VCF-BC), initiatives of Ministry of Social Justice and Empowerment (MoSJE) to promote entrepreneurship amongst the selected segments of the society by providing concessional finance. On April 14, 2022, IVCF, in association with MoSJE and Dalit Chambers of Commerce & Industry (DICCI), had conducted a national level event by the name “Dr Ambedkar Young Entrepreneur League” (AYE League) to provide further impetus to entrepreneurship in the SC Community and to bring them in the mainstream. The event saw participation of more than 1000 SC entrepreneurs from accross the Nation. The objective was to create a platform for SC youth to showcase their innovative ideas and get funding of upto '' 30 lakh under Ambedkar Social Innovation and Incubation Mission (ASIIM), an initiative under VCF-SC. During the event, SC entrepreneurs across MSMEs were recognized for Business Excellence and few leading Banks/ FIs which have played a significant role in promoting SC entrepreneurship were also recognized. Apart from funding, IVCF also promoted a Mentor Network that helps to connect the budding SC entrepreneurs with industry experts/mentors, encouraging sharing of domain knowledge and experience from business experts/mentors with young SC entrepreneurs. Ambedkar Young Entrepreneur League

(AYE) has onboarded 90 Mentors with varied skills / experience and around 200 Mentorship sessions have been facilitated. IVCF is also managing another initiative of MoSJE named “Senior Care Ageing Growth Engine Venture Fund” (SAGE) which aims to provide equity support for innovative ideas in elderly care segment. Further, looking at the success MoSJE initiatives, Ministry of Tribal Affairs (MOTA) has also entrusted IVCF with management of Venture Capital Fund for Scheduled Tribes (VCF-ST) which focuses on promoting entrepreneurship amongst Scheduled Tribes in the country.

The details of all the subsidiaries are available on the website of IFCI at www.ifciltd.com.

As regards threats, Your Company is facing liquidity risk, negative CRAR, high NPA level and downward revision in credit rating. Your Company is taking steps to reduce the level of NPAs through aggressive recovery efforts to augment its liquidity. Your Company has also enlarged its footprint in Advisory Services so as to diversify its revenue streams. Your Company has also adopted cost optimization measures including energy efficiency measures. Government of India is the Promoter and the largest equity shareholder of Your Company and it offers sufficient comfort and confidence to the stakeholders. Government of India has consistently infused funds in Your Company through equity participation. For the year 2022-23, the Government had infused funds aggregating upto '' 100 crore and '' 400 crore in September 2022 and March 2023, respectively.

3. Segment-Wise or Product-Wise Performance

Your Company’s main business is to provide financial assistance and it operates under a single segment reporting framework.

4. Outlook*

The provisional estimates of national income released by the National Statistical Office (NSO) on May 31, 2023 placed India’s real Gross Domestic Product (GDP) at a growth of 7.2% for FY 2022-23 (Y-o-Y basis) vis-a-vis a growth of 9.1% registered in previous FY. The GDP growth of 6.1% has been registered in Q4 of FY 2022-23 (Y-o-Y basis) in comparison to 4.1% growth registered in the corresponding quarter of previous FY.

As per the Annual Report 2022-23, of the Reserve Bank of India, a sustained recovery in discretionary spending, particularly in contact intensive services, restoration of consumer confidence, high festival season spending after two consecutive years of COVID-19 induced isolation and the government’s thrust on capex provided impetus to the growth momentum.

As per the NSO, an impressive 14.0% growth was registered by the “Trade, Hotels, Transport, Communication & Services related to Broadcasting” sector, during 2022-23, followed by 10.0% growth by the Construction sector, over the previous year. While “Financial, Real Estate & Professional Services” sector registered growth of 7.1%, Manufacturing sector registered a growth of 1.3%. Mining & Quarrying grew by 4.6% and “Electricity, Gas, Water Supply & Other Utility Services” grew by 9.0% in 2022-23. Agriculture and allied activities were resilient in 2022-23, with Gross Value Added (GVA) registering a growth of 3.3%. In the industrial sector, manufacturing activity withstood global spillovers, while electricity generation exhibited robust growth, and mining recorded steady activity. Sustained momentum was seen in construction activity, while infrastructure and capital goods production benefitted from the government-led investment in infrastructure. Production of consumer goods, on the other hand, remained muted and recovery in sectors such as automobiles was lopsided. Uneven recovery in consumption was evident as growth in the price sensitive entry-level car segment turned sluggish as compared to the recovery in passenger cars.

*(Source: RBI annual report 2022-23, RBIFSR June 2023, RBI Governor

Statement Aug 10, 2023, MoSPI Press Releases)

The continued lag in two-wheeler sales, 40% of which caters to rural India, is also indicative of subdued rural demand. Financial markets experienced bouts of volatility in 2022-23, as geopolitical tensions intensified, interest rate hikes by the US Fed, turned aggressive and the global growth outlook deteriorated, dampening investors’ sentiments. Equity markets in India, however, gained marginally, despite portfolio outflows and forex market pressures, reflecting India’s growth resilience and rising investment in the market by resident entities. Money market interest rates hardened during 2022-23, tracking the increase in the policy repo rate and the ebbing surplus liquidity conditions. Sovereign bond yields hardened in line with the monetary policy actions and changing inflation growth outlook. Weak global cues amid emergence of financial stability risks following the collapse of a few niche banks in the US and concerns about financial health of a major financial services provider in Europe imparted volatility to the markets towards the close of the year.

Tax revenues remained robust - gross tax revenues exceeded budget estimates by '' 2.9 lakh crore - underpinned by Goods and Services Tax (GST) and direct tax collections. State Governments had budgeted a Gross Fiscal Deficit (GFD) at 3.4% of GDP for 2022-23. Provisional accounts indicate that the actual performance of State Governments may have been better, primarily due to higher-than expected tax devolution from the Centre and a healthy growth in states’ own tax revenues. Despite prolonged geopolitical tensions and slowing global trade, India’s merchandise exports touched US$ 450.4 billion during

2022- 23, which is 6.7 per cent above the previous year’s record level. India witnessed a transition from net importer to exporter in areas such as mobile phones and toys and registered a 10-fold increase in exports of defence goods in a short span, leveraging on policies such as ‘Make in India’ and AatmaNirbhar Bharat’. Unlike merchandise exports, strong growth of 2 7.9% was witnessed in services exports, led by software services across key verticals such as Information Technology (IT) services, Business Process Management (BPM), and Engineering Research and Design (ER&D), supported by a rise in Global Capability Centres (GCCs). Within capital flows, net inflows under Foreign Direct Investment (FDI), albeit strong, were lower during 2022-23 at US$ 28.0 billion than US$ 38.6 billion a year ago. Belying market fears of a possible spike in India’s external vulnerabilities, India’s current account deficit (CAD) at 2.7% of GDP (during April-December 2022) remained sustainable, although it expanded from 1.1% a year ago. India’s foreign exchange reserves declined by US$ 28.9 billion during 2022-23. As stated by the Governor, Reserve Bank of India in his statement: August 10, 2023, the global economy continues to face daunting challenges of elevated inflation, high levels of debt, tight and volatile financial conditions, continuing geopolitical tensions, fragmentations and extreme weather conditions. The global growth is likely to remain low by historical standards in the current year and next few years, despite the upward revision in the global growth forecast for 2023 by the IMF. World merchandise trade volume growth is projected by the WTO to decelerate from 2.7% in 2022 to 1.7% in 2023. Taking all these factors into consideration, real GDP growth for

2023- 24 is projected at 6.5% with Q1 at 8.0%; Q2 at 6.5%; Q3 at 6.0%; and Q4 at 5.7%. Real GDP growth for Q1:2024-25 is projected at 6.6%. The risks are evenly balanced.

5. Risks and Concerns

In order to address risks, Your Company has put in place an Integrated Risk Management Policy (IRMP) which addresses Credit Risk, Market Risk, Operational Risk and Asset-Liability Management, as a part of Comprehensive Risk Management Framework which is integrated with its business model.

The General Lending Policy, IRMP, Liquidity Risk Management and other business policies of Your Company are reviewed

periodically, keeping in view the changing economic and business environment. The Risk Management Vision Statement and Qualitative Risk Appetite Statements of IFCI have also been put in place. Parameters included in the Qualitative Risk Appetite statement are tested periodically.

Your Company assesses the Portfolio Level Risks by way of monitoring of actual exposures against prudential limits, stress testing under various scenarios, annual rating migration exercise, rating distribution, portfolio rating highlighting the quality of portfolio, mapping of internal and external ratings. Your Company regularly monitors and revises its Benchmark Rates based on current market, macro & micro economic factors and profitability. As part of Ind AS implementation, Your Company estimates rating grade-wise Probability of Default (PD) numbers of its credit portfolio, based on past data while Loss Given Default (LGD) numbers are worked out based on past history of cashflows from NPAs. The risk components are utilized for calculation of Expected Credit Loss (ECL), as part of Ind AS implementation. The Risk and Asset Liability Management Committee of Executives (RALMCE), analyses the Dynamic Liquidity Position, Structural Liquidity Gaps and Interest Rate Sensitivity positions, on a periodic basis, based on extant regulatory prescriptions. The mid-office function of Integrated Treasury reports to the Risk Management function and acts as an independent risk monitoring functionary. To manage the Operational Risks, there are adequate internal controls and systems in place, aided and assisted by Internal Audit, Internal Financial Controls, remote back-up of data, Disaster Management Policy, IT security, physical security and suitable insurance of insurable assets of Your Company, as well as of the assets mortgaged to Your Company. Besides mechanism for stress testing of loan portfolio and measurement of liquidity position is also in place, to assess likely impact on CRAR, profitability and liquidity.

Your Company would continue to work on various initiatives aimed at strengthening credit risk standards, post sanction monitoring of the portfolio to mitigate any adverse impact on the loan portfolio of Your Company. Your Company would also strive to develop a strong culture for risk management and awareness within the organisation.

6. Internal Control Systems, their adequacy and Internal Audit

Your Company has adequate Internal Control System commensurate with size, scale and complexity of its business and allied operations. The efficacy of these internal controls is being verified by the Internal Audit Department on a regular basis. From Financial Year 2018-19, the internal audits are being carried in-house by a team of experienced personnel. The periodicity of such audits varied from quarterly to yearly depending upon the criticality and materiality of transaction risks based on the scope approved by the Audit Committee of Directors. Besides this, exercise to ensure adequacy of Internal Financial Controls (IFCs) with a periodicity in line with the Internal Audit is also done by the Internal Audit Department. Based on the observations of Internal Audit Department, corrective actions are undertaken by the process owners in their respective areas thereby strengthening the control systems.

Your Company carries out audit, based on the guidelines of Risk Based Internal Audit (RBIA) in terms of RBI guidelines issued vide Circular No. DoS. CO. PPG/ SEC.05/ 11.01.005/2020-21 dated February 03, 2021 for All non-deposit taking NBFCs.

7. Material Development in Human Resources, Industrial Relations Front, Including Number of People Employed

Over the past few years, Your Company has taken long strides in the Advisory Services business. Advisory Services business is fast becoming the mainstay of business operations of IFCI. Recognizing the same, IFCI has made efforts to reorient and

develop its human resource pool to cater to the paradigm shift in its business operations.

In this endeavour, major focus has been towards building capability, enhancing skills, knowledge and attitude required for an Advisory focused business. Accordingly, in the financial year 2022-23, 98% of the workforce has been provided training in areas which are relevant to the organisation. In all, a total of 2,900 man hours of training was provided on topics encompassing Behavioural, Technical and Functional aspects.

IFCI has also focused on critical levers provided by robust Human Resource Management Policies to enhance the productivity of employees and foster accountability in all respects. Delegation of Powers have been reviewed to create platforms for consultative decision making and improve speed & quality in delivery of assignments. Value system of the organisation is being clearly communicated to define expected behaviours and in this direction Staff Accountability related Policies have also been strengthened. To identify talent that can manage critical positions and cater to the career aspirations of employees, Promotion Policy has also been revised, making it more relevant to the requirements of the organisation in the wake of paradigm shift that is taking place in its business operations.

The organization has also prioritized employee cohesiveness and the welfare of its employees through the arrangement of a diverse

range of events and celebrations. These include activities such as observing International Day of Yoga, commemorating the 75 th IFCI Foundation Day, marking Independence Day, engaging in Swatchhta Campaigns, celebrating Diwali, hosting a New Year Event, recognizing International Women’s Day, and participating in a 10k Marathon, among others. Sessions have also been organized for increasing financial awareness amongst female employees.

Welfare of SCs/STs/OBCs/EWSs/PWDs

Your company makes continuous efforts for welfare of Scheduled Castes (SCs), Scheduled Tribes (STs), Other Backward Classes (OBCs), Persons with Disabilities (PwDs), and Economically Weaker Sections (EWSs) and adhers to the policies of Government of India in this regard. The guideline governing reservations and relaxations for specific categories as laidout by the Government of India are strictly followed by Your Company. Further, in the training programmes Your Company give due representation to employees belonging to reserved categories. Over the course of the year, 92% SC, 100% ST, and 78% OBCs employees were covered in training by Your Company.

As of March 31, 2023, Your Company had 148 regular employees, of whom 21 (14%) were from Other Backward Classes, 13 (9%) were from Scheduled Castes, and 1 (1%) were from Scheduled Tribes.

8. Details of Significant Changes in Key Financial Ratios The details of significant changes in Key Financial Ratios are as under:
Particulars	FY 2023	FY 2022	Remarks	Significant Changes1
Interest Coverage Ratio	0.71	-0.93	Earnings before interest and taxes / Total Interest expense (Profit before Tax finance cost)/finance cost	Yes (>25%)
Current Ratio	1.53	1.33	Current asset / current liability	No(<25%)
Debt Equity Ratio	9.28	15.74	Total borrowings / net worth	Yes (>25%)
Operating Profit Margin (%)	-48.57%	-53.93%	Operating profit / total revenue(Profit before tax impairment)/total revenue	Yes (>25%)
Net Profit Margin (%)	-58.57%	-265.41%	Total comprehensive income / total revenue	Yes (>25%)
Return on Net Worth	-59.61%	-143.86%	Total comprehensive income / average net worth	Yes (>25%)

IFCI Group. ISF is guided by its values viz. Inclusiveness, Integrity, Commitment and Passion with the overall vision “To be one of India’s premier CSR Institutions and strive to make sustainable social impact with inclusiveness”. Its major focus has been in areas of Education, Skill development, Healthcare and Sanitation, Poverty alleviation, Women empowerment and Social Welfare of Women and Girl Child.

To associate with the CSR Activities a Trust, by the name of “IFCI Social Foundation” (ISF) has also been established (MCA registration number CSR 00005110) to carry out CSR activities. IFCI and ISF through its CSR projects have covered almost 23 states and Union Territories in India. The trust is registered for exemptions u/s 12A & 80G of the Income Tax Act. The trust is also registered with Ministry of Corporate Affairs in line with CSR Amendment Rules, 2021. ISF carries out CSR activities on behalf of IFCI and IFCI Group Companies. The Annual Report on CSR activities forms part of Board’s Report at Annexure - I.

CORPORATE SOCIAL RESPONSIBILITY

The investment in CSR activities is project based and for every project, time frame and periodic milestones are set at the outset. As the Average Net Profit of IFCI Ltd for the last preceding three years was negative, IFCI was not required to allocate any amount for CSR activities for FY 2022-23.

Cautionary Statement

Certain Statements in Management Discussion and Analysis describing the Company’s objectives, estimates and expectations may be ‘forward looking’ within the meaning of applicable laws and regulations. Actual results might differ materially from those expressed or implied.

Details of Directors and Key Managerial Personnel (KMP) appointed or resigned during the year

Following were the changes in Directors and Key Managerial Personnel during the FY 2022-23 and till the date of signing of this Board’s Report:

a) Shri Sunil Kumar Bansal (DIN: 06922373), Deputy Managing Director, ceased to be on the Board of the Company w.e.f. September 13, 2022 upon completion of his tenure.

b) Shri Kanakasabapathi Kadiresan (DIN: 09551363) ceased to be on the Board of the Company w.e.f. October 02, 2022 upon resignation.

c) Shri Surendra Behera (DIN: 09784122) and Shri Arvind Kumar Jain (DIN: 07911109) were appointed on Board of the Company w.e.f. November 09, 2022. Their appointments were regularized and they were appointed as Director liable

to retire by rotation pursuant to shareholders resolution passed at 29^th AGM held on December 22, 2022.

d) Dr. Bhushan Kumar Sinha (DIN: 08135512) Government Director, ceased to be on the Board of the Company w.e.f. January 06, 2023 vide Order of Government of India dated January 06, 2023.

e) Ms. Anindita Sinharay (DIN: 07724555), Government Director, ceased to be on the Board of the Company w.e.f. January 06, 2023 vide Order of Government of India dated January 06, 2023.

f) The Government vide its Order dated January 06, 2023 had nominated Shri Mukesh Kumar Bansal, Joint Secretary, DFS (DIN: 03359724) on the Board of the Company as Government Director. Accordingly, Shri Mukesh Kumar Bansal, Joint Secretary, DFS was appointed as Director on the Board of Your Company w.e.f. February 02, 2023.

g) The Government vide its Order dated January 06, 2023 had nominated Shri Kartikeya Misra, Director, DFS, (DIN: 06440653) on the Board of the Company as Government Director. Accordingly, Shri Kartikeya Misra, Director, DFS was appointed as Director on the Board of Your Company w.e.f. February 02, 2023.

h) The Govenment vide its order dated May 10, 2023, has appointed Shri Umesh Kumar Garg (DIN: 00599426) as Independent Director on the Board of the Company for a period of 3 (three) years from the date of order of his appointment (w.e.f. May 10, 2023) or until further order, whichever is earlier. The Board at its meeting held on May 25, 2023 had appointed him as Additional and Independent Director for a period of 3(three) years from the date of order of his appointment or until further orders, whichever is earlier in accordance with the provisions of Companies Act, 2013, SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and the Articles of Association of the Company. Further, his appointment will be placed before the shareholders at this Annual General Meeting of the Company for approval.

i) The Board at its Meeting held on August 11, 2023, had appointed Shri Suneet Shukla, Chief General Manager as Chief Financial Officer(CFO) of the Company w.e.f. August 11, 2023.

j) Prof. Narayanaswamy Balakrishnan (DIN: 00181842) who retires by rotation at this Annual General Meeting(AGM) and being eligible, offers himself for re-appointment and his proposal for re-appointment is being placed before the shareholders, at this AGM.

Corporate Governance & Compliances

A detailed report on Corporate Governance as stipulated under

SEBI (Listing Obligations and Disclosure Requirements)

Regulations, 2015 is attached to the Annual Report.

a) The credit ratings assigned to the various financial facilities / instruments of the Company during the Financial Year 2022-23 is provided in the Corporate Governance Report forming part of this Annual Report.

b) The details of the Meetings of the Board of Directors and the Audit Committee forms part of the Corporate Governance Report appearing separately in the Annual Report. Further, there has been no instance during the FY under report where the Board has not accepted the recommendations of the Audit Committee.

c) The details of Composition of Board & Committees forms part of the Corporate Governance Report appearing separately in the Annual Report.

d) Pursuant to the provisions of the Companies Act, 2013 and

SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company is required to place various Policies / Documents / Details on the Website of the Company. The Company has a functional website www.ifciltd.com and all the requisite information are being uploaded thereat and available at https://www.ifciltd.com/?q = en/content/ disclosure-under-regulation-46-and-62-sebi-%E2%80%93-lodr

e) During the Financial Year 2022-23, there were no Independent Directors on the Board of Your Company, as per the requirement of the Companies Act 2013. However, IFCI being a Government Company, the power to appoint Independent Directors vests with the Department of Financial Services, being the Ministry administratively in charge of the Company. Considering, Your Company’s request, DFS, MOF vide letter dated May 10, 2023 had appointed Shri Umesh Kumar Garg as Independent Director on the Board of the company, for a period of 3 years.

f) As stipulated under the Listing Regulations, the Business Responsibility and Sustainability Report (‘BRSR’) forms part of the Annual Report for the FY 2022-23.

g) During the Financial Year 2022-23, neither the Statutory Auditors nor the Secretarial Auditors have reported any fraud in their respective Audit Reports.

h) The Company is in compliance with the applicable Secretarial Standards issued by the Institute of Company Secretaries of India and approved by the Central Government under Section 118 (10) of the Companies Act, 2013. Further, during the Financial Year 2022-23, all returns / data / statements submitted by concerned departments as advised by RBI, SEBI and other Regulatory Authorities have been submitted.

i) In view of delay in receiving of the comments of Comptroller and Auditor General of India (C&AG) on the Supplementary Audit Report for the FY 2022-23, approval of the Registrar of Companies (ROC) for extension of 3 months, for convening, calling and holding AGM beyond September 30, 2023 was sought. The ROC had granted extension of 3 months for holding the AGM for FY 2022-23.

j) Key Initiatives taken for Investor services continued to be of utmost importance for your Company. Investors’ grievances received in physical or electronic form or through web-based query submission system, were taken up promptly and redressed.

Other Disclosures

a) Your Company has made an application to the Registrar of Companies (ROC) - Delhi & Haryana to grant extension of time for holding the Annual General Meeting of Your Company for the Financial Year ended March 31, 2023. Accordingly, this Annual General Meeting is being convened within the time period allowed by the ROC.

b) In view of the loss incurred during the Financial Year 202223, no dividend has been recommended on equity shares. Also, as per the provisions of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company has formulated a Dividend Distribution Policy which is available on the website of Your Company at www.ifciltd.com.

c) During the FY 2022-23, there was no Company which has become or ceased to be Subsidiary, Joint Venture or Associate Company of IFCI Ltd. The Company as on March 31, 2023 has 2 ‘Material Subsidiaries’ viz. Stock Holding Corporation of India Ltd. and IFCI Infrastructure Development Ltd. Policy on Determining Material Subsidiary is available on the website of the Company at www.ifciltd.com. Details on

performance and financial position of subsidiaries, associates and joint venture during the FY 2022-23 can be referred from Form AOC-1 forming part of this Annual Report.

d) During the Financial Year 2022-23, 9,29,36,802 number of Equity Shares were allotted to the Promoters of the Company i.e. Government of India (GoI) at a price of '' 10.76 (Rupees Ten and Seventy Six Paisa only) [including a premium of '' 0.76 (Seventy Six Paisa only)] per Equity Share aggregating upto '' 100,00,00,000 (Rupees One Hundred Crore). Consequent to the allotment of equity shares, the shareholding of GoI increased from extant 64.86% to 66.35% in FY 2022-23.

Further, 29,36,85,756 number of Equity Shares were allotted to the Promoters of the Company i.e. Government of India (GoI) at a price of '' 13.62 (Rupees Thirteen and Sixty Two Paisa only) [including a premium of '' 3.62 (Rupees Three and Sixty Two Paisa only)] per Equity Share aggregating upto '' 400,00,00,000 (Rupees Four Hundred Crore) in Financial Year 2023-24. Consequent to the allotment of equity shares in FY 2023-24, the shareholding of GoI increased from 66.35% to 70.32% of the Total Paid-Up Share Capital of the Company (as on April 27, 2023).

Change in the debt structure of the Company during the FY 2022-23 is as under:

Total Number of Securities at the beginning of the year	Issued during the year	Redemption made during the year	Total number of securities at the end of the year
113,92,949		65,395	113,27,554

e) During the Financial Year 2022-23, Your Company had transferred an amount of '' 1,30,82,420 and '' 2,25,96,911 pertaining to the unclaimed dividend for Financial Year 2014-15 (Final) and 2015-16 (Interim) respectively. Further, 40,78,288 number of equity shares were transferred to IEPF in respect of which dividend has remained unclaimed for 7 consecutive years. Shareholders whose unclaimed dividends/shares have been transferred to IEPF, may claim the same by making an application to the IEPF Authority, in Form No. IEPF-5, available on www.iepf.gov.in.

f) As the Company is primarily engaged in the business of financing Companies in the capacity of being a Non-Banking Financial Company, therefore the provisions of Section 186 [except for subsection (1)] of the Companies Act, 2013 are not applicable to the Company.

g) Your Company did not raise any public deposit during the year.

h) During the FY 2022-23, there were no significant or material orders passed by Regulators or Court impacting the going concern status of the Company. Further, there has been no change in the business of the Company during the reporting period. Further, there have been no material changes and commitments which affect the financial position of Your Company between the end of financial year and date of Board’s Report.

i) Pursuant to Notification dated June 5, 2015 issued by the Ministry of Corporate Affairs, Government Companies are exempted from the disclosure requirements of Section 197 of the Companies Act, 2013. Therefore, such particulars have not been included in Board’s Report. Further, no Director of the Company, including MD&CEO, was paid any commission during the FY 2022-23 by any of the Subsidiaries of Your Company, on whose Boards they were Directors as nominees of Your Company.

j) Pursuant to the provisions of the Companies Act, 2013 (to

the extent applicable) and Listing Regulations, the Company had framed a Nomination and Remuneration Policy. However, pursuant to the exemption granted to Government Companies vide Notification No. F.No. 1/2/2014-CL.V dated June 5, 2015, issued by The Ministry of Corporate Affairs, the Policy has not been made part of Board’s Report.

k) Pursuant to the provisions of the Companies Act, 2013, the Annual Return of the Company is available on the website of the Company at www.ifciltd.com

l) All Related Party Transactions entered into during the year under report were in Ordinary Course of the Business and at Arm’s Length basis. No Material Related Party Transactions were entered into during the year by Your Company. Accordingly, the disclosure of Related Party Transactions as required under Section 134(3)(h) of the Companies Act, 2013, in Form AOC-2 is not applicable and hence do not form part of the Board’s Report.

m) The performance evaluation of the Board, its Committees and individual Directors was conducted by the Nomination and Remuneration Committee and the Board. The focus areas of improvements mentioned by the Directors included Structure of the Board / Composition of the Committees which are non-compliant as per the statutory requirements. Since, there was no Independent Director on the Board of the Company during the Financial Year 2022-23 hence, no Meeting of the Independent Directors could be held. Communications requesting appointment of requisite number of Independent Directors have been sent to the Department of Financial Services being the Administrative Ministry In-Charge and the appointments are awaited. Meanwhile, considering our request 1(one) Independent Director Shri Umesh Kumar Garg, has been appointed on the Board by GoI.

n) No application was made or any proceedings was pending against Your Company under the Insolvency and Bankruptcy Code, 2016, during the year under report.

o) Details of the Debenture Trustee(s) for the debt securities issued by Your Company are as under:

Name of Debenture Trustee	Contact Details
Axis Trustee Services Limited	The Ruby, 2nd Floor, SW 29 Senapati Bapat Marg, Dadar West Mumbai - 400028 Phone no : 91 022 6230 0451 E-mail: [email protected] Website: www.axistrustee.in
IDBI Trusteeship Services Limited	Universal Insurance Building, Ground Floor, Sir P M Road, Fort, Mumbai - 400 001 Phone nos: 022 66311776 E-mail: [email protected] Website: www.idbitrustee.com
Centbank Financial Services Limited	3rd Floor (East Wing) Central Bank of India, MMO Building 55 M G Road, Mumbai - 400 001 Phone no: [phone] E-mail: [email protected]: [email protected] Website: www.cfsl.in

Auditors

M/s M K Aggarwal & Co. (DE0500) (Firm Reg. No. 001411N) was appointed by the Comptroller & Auditor General of India (C&AG) as Statutory Auditors of Your Company for Financial Year 202223. Further, C&AG has appointed M/s S Mann and Company (DE1161) (Firm Reg. No. 000075N) as Statutory Auditors of Your

Company for FY 2023-24. As per the requirement of Section 148 of the Companies Act, 2013, the requirement of Cost Audit is not applicable to the Company.

Qualifications, Reservation or Adverse Remarks or Disclaimer made by the Statutory Auditors

The Standalone and Consolidated Financial Results of the Company for the Financial Year 2022-23 were unqualified by the Statutory Auditors of the Company. However, the Statutory Auditors provided for certain ‘Emphasis of Matter’. The complete Auditors’ Report on the Standalone and Consolidated Financial Statements forms part of the Annual Report.

M/s Agarwal S. & Associates, Company Secretaries was appointed as Secretarial Auditor of the Company for the Financial Year 202223. The observations of the Secretarial Auditor along with Management Reply is as under:

S. No.	Observations of Secretarial Auditor	Management Reply
a.	Non-compliance of Regulation 17(1)(a) of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company shall have at least one Independent Woman Director during the period from April 01, 2022 to March 31, 2023.	As per the applicable provision of Regulation 17(1) (a) of SEBI Listing Regulation, 2015, the Board of Directors shall have at-least 1 Woman Independent Director. In this regard, this is to submit that as per the provisions of Regulation 149(6)(a) of the Companies Act, 2013, the power to appoint Independent Directors including Woman Independent Director vests with the Ministry administratively in-charge of the Company i.e. Department of Financial Services, MOF. MOF, DFS, being the Ministry administratively in-charge of the Company, is seized of the matter as request for appointment of Independent Directors, has already been sent to MOF, DFS. The appointment of requisite number of Independent Directors is awaited. Once the appointment of Woman Independent Director is made by the Department of Financial Services, the abovementioned provisions will be complied with.
b.	Non-Compliance of Section 149 (4) of Companies Act, 2013 and Regulation 17(1)(b) of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company shall have requisite no. of Independent Directors on the Board of Company from April 01, 2022 to March 31, 2023.	In the absence of Independent Directors on the Board of the Company, the Company is not in compliance of the provisions of Section 149 (4) of Companies Act, 2013 and Regulation 17(1)(b) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. As mentioned in point (a) above, in terms of Section 149(6)(a) of the Companies Act, 2013, IFCI being a Government Company, the power to appoint the Independent Directors vest with the Administrative Ministry in-Charge i.e. Ministry of Finance (MOF), Department of Financial Services (DFS). As stated above DFS has been already requested to appoint requisite number of Independent Directors. Once the requisite number of Independent Directors are appointed, the provisions will be complied with.

S. No.	Observations of Secretarial Auditor	Management Reply
c.	Non-compliance of Regulations 17(10) and 25(4) of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, in the absence of Independent Directors, no separate meeting was held during the financial year. Accordingly, performance evaluation for/by the Independent Directors was not carried out.	In the absence of Independent Directors on the Board of the Company, the performance evaluation of and by Independent Directors as envisaged under Regulation 17(10) & 25(4) of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, could not be carried out.
d.	Non-Compliance of Section 177(2) & 178(1) of Companies Act, 2013 and Regulation 18(1)(b), 19(1)(b) &(c), 20(2A) and 21 of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, the composition of Audit Committee, Nomination and Remuneration Committee, Stakeholders’ Relationship Committee and Risk Management Committee were not complied with the statutory requirements during the period from April 01, 2022 to March 31, 2023.	Due to the absence of Independent Directors on the Board of the Company, the Audit Committee, Nomination and Remuneration Committee, Stakeholders’ Relationship Committee and Risk Management Committee were constituted without the Independent Directors and the Company was not in compliance of Section 177(2) & 178(1) of the Companies Act, 2013 and Regulation 18(1)(b), 19(1)(b) & (c), 20(2A) and 21 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015. Once the requisite number of Independent Directors are appointed by Department of Financial Services, the Committees will accordingly be constituted.

The Secretarial Audit Report of the Company along with the Secretarial Audit Reports of the ‘Material Subsidiaries’ i.e. M/s IFCI Infrastructure Development Limited and M/s Stock Holding Corporation of India Limited for the Financial Year ended March 31, 2023, are enclosed at Annexure - II.

Comments of Comptroller & Auditor General of India

The comments of Comptroller & Auditor General of India (C&AG) along with Consolidated IFCI’s Comments on C&AG Supplementary Audit observations will be enclosed at Annexure-III.

Directors Responsibility Statement

Pursuant to the requirement under Section 134 of the Companies Act 2013, with respect to Directors’ Responsibility Statement, it is hereby confirmed that:

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

(ii) The Directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the Financial Year and of the profit and loss of the Company for that period;

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

(iv) The Directors had prepared the annual accounts on a going concern basis;

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

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

Appreciation

Your Directors wish to express gratitude for the cooperation, guidance and support from the Ministry of Finance, various other Ministries and Departments of the Government of India, The Reserve Bank of India, The Securities and Exchange Board of India, the Stock Exchanges and other regulatory bodies, the Comptroller & Auditor General of India and the State Governments. Your Directors also acknowledge the valuable assistance and continued cooperation received from all banks, financial institutions, overseas correspondent banks, other members of the banking fraternity and investors. Your Directors would also like to express their appreciation for the efforts and dedicated service put in by the employees at all levels of Your Company.

Arvind Kumar Jain Manoj Mittal

Director Managing Director and

DIN: 07911109 Chief Executive Officer

Address: IFCI Tower DIN: 01400076

61, Nehru Place Address: IFCI Tower

New Delhi - 110019 61, Nehru Place

New Delhi - 110019

Dated: November 08, 2023

1

Explanation: The change in the ratios were due to decrease in operational income which was impacted on account of prepayment of loans and decline in standard assets. Further, as Debtor Turnover Ratio or Inventory Turnover Ratios are not applicable to the company (NBFC), the same has not been incorporated in the Table above.

9. Corporate Social Responsibility IFCI SOCIAL FOUNDATION (ISF)

IFCI has always strived to conduct its business holistically and responsibly. At IFCI, along with economic performance, community and social stewardship have been key factors for its holistic business growth. IFCI has been an early adopter of Corporate Social Responsibility (CSR) initiatives and has been involved in socially relevant activities ever since its inception in 1948. Today, it continues to work towards social and community development and areas needing focus and attention, through the IFCI Social Foundation (ISF), a registered Trust, established in 2014. ISF is functioning as an arm for CSR activities of IFCI and

---

Mar 31, 2022

The Board of Directors of Your Company ("Your Company" or "IFCI") presents the 29^th (Twenty Ninth) Annual Report of IFCI Ltd., together with the audited financial statements for the year ended March 31, 2022.

Financial Summary and State of Company''s Affairs

The summarized financial performance of Your Company during the year and the previous year are as under:

(? in crore)
Particulars	Standalone		Consolidated
	2021-22	2020-21	2021-22	2020-21
Total Income	764	1,397	1,596	2,094
Less:
Total Expenses before Impairment Allowance, Depreciation & Amortisation	1,153	1,243	1,661	1,803
Impairment on financial instruments	1,373	2,272	1,391	2,305
Depreciation and amortisation	23	29	66	72
Total Expenses	2,549	3,544	3,118	4,181
Exceptional Items	-	-	1	(2)
Profit/(Loss) before tax	(1,785)	(2,147)	(1,523)	(2,085)
Tax expense	206	(189)	(238)	(173)
ProfitZ(Loss) before share in profit of associates	(1,991)	(1,958)	(1,761)	(1,912)
Total Expenditure Share in profit of associates	-	-	-	-
Profit/(Loss) for the year	(1,991)	(1,958)	(1,761)	(1,912)
Other comprehensive income (net of tax)	(35)	22	1,754	416
Total Comprehensive Income	(2,026)	(1,936)	(7)	(1,495)
Net profit/(Loss) attributable to - Owners of the Company	NA	NA	(1,831)	(1,942)
Non-controlling interest	NA	NA	70	30
Total Comprehensive Income attributable to - Owners of the Company	NA	NA	(920)	(1,711)
Non-controlling interest	NA	NA	914	216
Earnings per share Basic Earnings per share of ? 10 each	(9.47)	(10.33)	(8.71)	(10.24)
Diluted Earnings per share of ? 10 each	(9.47)	(10.33)	(8.71)	(10.24)

The above numbers are extracted from the financial statements prepared in accordance with the Indian Accounting Standards (Ind AS), in compliance with the Companies (Account) Rules, 2014 and accounting standards notified under Section 133 of the Companies Act, 2013, read with the Companies (Indian Accounting Standards) Rules, 2015 as amended.

Any regulation/ guidance/ clarification/ direction issued by Government of India, RBI or by any other Regulators, of Your Company will be implemented by Your Company as and when they are issued/ applicable.

During the year, there was reduction in operational income on account of decline in loan assets caused by prepayments of certain loans & scheduled repayments with no fresh sanction or disbursement, increase in stage-3 assets, non-recognition of interest income on stage-3 assets and write off of stage-3 income in certain cases.

Financial Performance

Your Company suffered a total comprehensive loss of ? 2026.66 crore during the year under report, mainly on account of unfavorable economic environment, non-recognition of income of stage-3 assets and large amount of impairment made in respect of Stage-3 assets. The substantial amount of provisions enhanced the provision coverage ratio to over 82.68%. However, the capital adequacy ratio reduced in current FY to -64.85% with Tier-I capital at -64.96%. Various initiatives

were taken during the year in order to maximize recovery from non-performing loan assets, expedite divestment of non-core assets and strengthen the advisory business, which are expected to improve the cash flow of Your Company and make the balance sheet of Your Company healthier.

Sanctions, Disbursements and Recovery

During the FY 2021-22, while keeping in view the macroeconomic situation and impact of COVID pandemic, Your Company adopted a cautious approach and did not sanction any new loans.

Your Company actively pursued recovery towards Non-Performing Assets (NPAs), majorly through settlement and assignment routes, as recovery through legal route was delayed on account of COVID pandemic, thereby recovering ? 1,097 crore out of NPAs, and ? 257 crore out of Security Receipts (SRs) and unquoted equity, during FY 2021-22.

Your Company will continue to maintain momentum of NPA Resolution & Recovery achieved in the last financial year and will make efforts for expeditious recovery in the current financial year also.

Treasury, Investment and Forex Operations

Your Company has been cautious in investing the surplus funds across diversified instruments with focus on safety while making every effort towards maximizing yield in consonance with liquidity management.

Investor services continued to be of utmost importance for Your Company. Investors'' service requests / grievances received in physical or electronic form or through web-based query submission system, were taken up promptly and redressed.

	financial assistance to the industries, and thereby requires normal consumption of electricity. Accordingly, the provisions of Section 134 (3) (m) of the Companies Act, 2013 read with Rule 8 (3) of Companies (Accounts) Rules, 2014 are not applicable to the Company.
Technology Absorption -	Information technology (IT) has transformed the conduct of businesses in every sector of the economy. The inhouse team of IT professionals in Your Company had developed system namely "CHS" which largely consists of applications supporting major business functions as well as non-core functions. The system has been successfully running for over 20 years and the system has constantly been upgraded in line with requirements. During FY 2021-22, the existing software applications were upgraded with enhanced/added features. New Modules were developed in-house for different functions. Your
	Company is maintaining proper Data Backup and has set up a Disaster Recovery Site to protect data and business information systems. Your Company has started using Document Management Systems and has upgraded its IT infrastructure. Video Conferencing Facility was also enhanced to provide streamlined video communication and live content sharing by using Webex Meetings/Teams Meeting.

In rupee operations, the objective had been to manage the surplus funds effectively with minimum risk and deployment of surplus funds in shorter duration instruments to meet liquidity requirements. The underlying investment principle was safety, liquidity and risk containment and accordingly Your Company invested in Treasury Bills, Government Securities, Certificate of Deposit, Commercial Papers, Inter-Corporate Deposit / Short Term Deposit, Fixed Deposits / Bonds and Mutual Fund Schemes during the year. Average Deployment during the year was ? 1,346.83 crore against ? 851.70 crore in FY 2020-21 and annualized return on fund deployed was 3.51%. The return during FY 2021-22 from Treasury operations was lower than the previous year as investments were made in instruments with shorter maturity, with the objective to ensure safety and liquidity. During the year under report, Your Company registered an interest income of ? 75.68 crore from investments as against ? 79.83 crore during the previous year.

In view of volatility prevailing in market due to uncertainties on account of increasing commodity prices and geographical conflict in later part of the year, Your Company continued with the prudent strategy of selective disinvestment of slow moving/illiquid stocks and booking profits from investments in stocks. Net investment portfolio of Your Company as on March 31, 2022 stood at ? 2,944 crore as against ? 4,294 crore at the end of previous Financial Year. The Foreign Currency (FC) operations were confined to servicing of FC liabilities and containing the exchange risk arising due to mismatch in the outstanding amount of FC assets and liabilities. The mismatches were covered through forward contracts and currency futures. The net mismatch position was maintained well below the limits approved by Board and RBI, by maintaining almost square position.

Resource Mobilisation and Borrowing Profile:

During the year, Your Company could not channelise fresh resources due to rating constraints and weak financial parameters. The servicing of liabilities was done majorly from own sources.

The Principal liability outstanding of Your Company as on March 31, 2022 was ? 7,011.90 Crore comprising of rupee borrowings of ? 6,639.15 Crore and foreign currency loan of ? 372.75 Crore. Interest liability outstanding (i.e. interest accrued but not due on borrowings) as on March 31, 2022 was ? 674.14 crore. The broad instrument wise break-up of outstanding borrowings as on March 31, 2022 is indicated below:

Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo
Conservation of Energy -	The Company''s operations do not involve any manufacturing or processing activities. It provides

During pandemic, the IT System of Your Company enabled employees to work from home and attend and conduct regular meetings using collaboration tools.

Foreign Exchange Earnings

The details in respect of foreign expenditure / earnings are as follows:

(? in crore
Iferticulars	Year End	Year End
	31.03.2022	31.03.2021
Expenditure in Foreign
Currencies:
Interest on borrowings	3.16	3.43
Other Matters	0.00	0.00
TOTAL	3.16	3.43
Earning in Foreign Currencies:
Earning in Foreign Currency	NIL	NIL

Internal Financial Control

Your Company has sound Internal Financial Controls over financial reporting through policies and procedural manuals, designed to provide reasonable assurance regarding the reliability of financial reporting and preparation of financial statements for external purposes in accordance with Generally Accepted Accounting Principles. The entity level control framework, designed and implemented in earlier years, was subjected to sample tests by the Management of Your Company, for various processes, during the year under report by a well experienced Internal Audit Team of Your company with a frequency parallel with Internal Audit. Based on the satisfaction over the operating effectiveness of the Internal Financial Controls, the Board of Directors believes that adequate Internal Financial Controls exist and are operating effectively.

Vigilance

The Company has a dedicated Vigilance Department, headed by Chief Vigilance Officer. Vigilance Department at Head Office takes care of all vigilance matters of IFCI, its Regional Offices & subsidiaries.

With amplified prominence given to preventive vigilance, the department conducts inspection of various offices from time to time. If irregularities/ lapses are observed, then the same is shared with Regional Incharges and concerned departments of Head Office for taking various steps to initiate the corrective measures or to take actions towards systemic improvements or initiate penal action based on the nature of case. Vigilance Dept, also informs the management for systemic improvement based on the findings. Vigilance Dept, ensures the completion of disciplinary proceedings as per extant guidelines within the set timelines. It helps Your Company to promote ethical practices within the organization.

During 2021-22, Vigilance Department organized various online workshops / trainings on awareness about PIDPI (Public Interest Disclosure and Protection of Informer), CTE (Chief Technical Examiner) Type Inspection and CVC guidelines to the vigilance officers of IFCI Limited and its subsidiaries.

This year also IFCI has celebrated Vigilance Awareness Week by conducting various activities for the employees of IFCI and its subsidiaries. IFCI insured active and enthusiastic participation by conducting the Vigilance Awareness week. This year, various competitions were also conducted to enhance vigilance awareness for IFCI Group Employees such as Quiz / MCQ Competition and Slogan/ Poem/Essay writing competition, depicting the real meaning of "Independent India @ 75: Self Reliance with Integrity; wrf* «w @ 75: «t4(H«dl tl A Nukkad Natak was also organized in IFCI on this occasion.

Whistle Blower Policy

The Company has put in place a Vigil Mechanism in terms of the provisions of Section 177 (9) and (10) of the Companies Act, 2013, and SEBI Listing Regulations. Under Whistle Blower Policy, Director(s) and employee(s) of IFCI, can report to the Management their concerns about unethical behaviour, actual or suspected fraud or violation of the EFCTs code of Business conduct and ethics and to provide adequate safeguards to them against any sort of victimization on raising an alarm. The Policy also provides for direct access to the Chairperson of the Audit Committee in exceptional cases. The Whistle Blower Policy is available on the link https://www.ifciltd.com/2022/ WhistlB%20BlowBr%20Policv.pdf

Disclosure as per Sexual Harassment Of Women At Workplace (Prevention, Prohibition And Redressal) Act, 2013

An Internal Complaint Committee has been formed and the Members of the said Committee, at present, are as under:

1. General Manager (HR) - Presiding Officer

2. Ms. Lata Lochav- External Member

3. Ms. Chhavi Singhal, DGM

4. Ms. Trina Tejaswini, DGM (Law)

5. Mr. Rahul Agrawal, DGM

In the absence of any of the aforesaid internal members, Ms. Shikha Gupta, DGM would be the alternate member. A brief of the complaints received under Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 is as under:

No. of complaints pending at the start of the Financial Year 2021-22	1
No. of complaints received during the Financial Year 2021-22	Nil

No. of complaints resolved during the Financial Year 2021-22	One complaint of sexual harassment of previous financial year i.e. FY 2019-20 was disposed of on April 05, 2021
No. of Complaints pending at the end of the Financial Year 2021-22	Nil
Number of workshops or awareness programs against sexual harassment carried out during the Financial Year 2021-22	1 workshop was conducted during FY 2021-22 on the said topic covering 32 employees
Nature of action taken by the employer	Based on the recommendation of Internal Complaint Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, the Competent Authority disposed-off the complaint.

Management Discussion and Analysis

1. Industry Structure and Developments*

Industry Outlook- Financial entities have generally emerged resiliently from the pandemic and are expanding their business as the economic recovery takes hold. Their asset quality has improved and capital positions remained strong. Macro stress tests reveal that Scheduled Commercial Banks would be able to withstand adverse macroeconomic circumstances. Also, any negative shock to house prices is not likely to significantly impact banks'' capital positions. Sensitivity analysis shows that credit concentration risk and equity price risk may not be substantial but banks, especially PSBs, having substantial unrealised losses in their books at the beginning of the interest rate tightening cycle, portends risks to their financial health going forward. Network analysis results suggest that contagion losses have increased during H2:2021-22.

Non Banking Financial Companies (NBFCs)

Aggregate credit extended by NBFCs stood at ? 28.5 lakh crores in March 2022. Loans to industry constituted the largest segment (39.1 per cent), followed by personal loans (27.4 per cent) and those to services (15.3 per cent). Credit to the agriculture sector accounted for a miniscule share (1.8 per cent). Government owned NBFCs accounted for 45.6 per cent of aggregate credit extended by all NBFCs. Their dominant share of over three fourth of the industrial loans has, however, been receding. In terms of credit dispensation by category of NBFCs, investment and credit companies (NBFC-ICC) and infrastructure finance companies (NBFC-IFC) predominated in gross loans and advances in March 2022. The GNPA ratio of NBFCs eased in March 2022 from 6.8 per cent in September 2021, the moderation witnessed across both public and private sector NBFCs. The improvement was primarily on account of 340 bps dip in the GNPA ratio of the services sector. Nevertheless, it remained higher than other sectors at 9.9 per cent. There was a larger concentration of NPAs in the industrial sector for which the loan book size far exceeds that of the services sector. The aggregate NNPA ratio of NBFCs also ebbed in March 2022, despite a 90 bps rise in the NNPA ratio for the industrial sector loans on account of curtailed provisioning. The capital position of NBFCs remained robust and their Return on Assets (RoA) recouped in March 2022. Borrowings remained the major source of funds for NBFCs, mainly in the form of debentures and bank borrowings.

NBFCs were the largest net borrowers of funds from the financial system, with gross payables of ? 12.46 lakh crore and gross

SI. No.	Particulars of the PLI & Other Schemes	Details of the Schemes available on the below Portals / Website
1	Scheme for Promotion of manufacturing of Electronics Components and Semiconductors (SPECS)	https://specs.ifciltd.com
2	Production Linked Incentive (PLI) Scheme for Large Scale Electronics Manufacturing (PLI-LSEM)	https://pli.ifciltd.com
3	PLI Scheme for critical Key Starting Materials (KSMs)/Drug Intermediates (DIs)/ Active Pharmaceutical Ingredients (API) (PLI-Bulk Drugs)	httns://nlihulkdru es.ifciltd.com
4	PLI for Medical Devices (PLI-MD)	httns://nlimedicaldevices.ifciltd.com
5	Scheme for Promotion of Bulk Drugs Parks	httnsV/nharmaceuticals.eov.in/schemes/euidelines-scheme-nromoti on-hulk-drug-parks
6	Scheme for Promotion of Medical Devices Parks	httns://nharmaceu ticals.eov.in/schemes/euidelines-scheme-nromoti on-medical-devices-narks
7	PLI Scheme for Food Processing Industry (PLISFPI)	httns://nlimofni. ifciltd.com
8	PLI for IT Hardware (PLI-ITHW)	httns ://nliithw.com
9	PLI for White Goods (PLI-WG)	httns://n]iwhiteeoods.ifciltd.com
10	PLI Scheme for Automobile & Auto Component Industry (PLI-Auto)	httns ://nliauto.in
11	PLI Textile Products: MMF segment & Technical Textiles	httns ://nli.texmin.gov.in
12	PLI Scheme for Drone and Drone Components	httns://www.civilaviation.eov.in/en/annlicatiom-pli-gclieH(ie
Note: 1. IFCI is also associated with the Ministry of Heavy Industries (MHI) for carrying out International Competitive Bidding for PU Scheme ''National Programme for Advanced Chemistry Cell Battery Storage'' (PU-ACC). 2. IFCI is also associated with India Semiconductor Mission as Agency for Techno Financial Appraisal, Due Diligence and Verification for (i) Scheme for setting up of Semiconductor Fhbs, (ii) Scheme for setting up of Display Ftibs and (iii) Scheme for setting up of Compound Semiconductors / Silicon Photonics / Sensors Ftib/ Discrete Semiconductors Ftib and Semiconductor Assembly, Testing, Marking and Packaging (ATMP)/ Outsourced Semiconductor Assembly and Test fOSATj facilities in India.

receivables of? 1.62 lakh crore as at end-March 2022. Over half of their borrowings were from SCBs and this share increased further during H2:2021-22 as their reliance on funding by AMC-MFs and insurance companies reduced. Instrument wise, the NBFC funding mix saw a rise in Long Term loans whereas the share of Long Term debt instruments and CPs declined during 2021-22.

2. Opportunities & Threats

To create national manufacturing champions and generate employment opportunities for the country''s youth, PLI Schemes are the cornerstone of the Government''s push for achieving an

On other fronts, Efforts are being made to create synergies on the CSR front amongst Group Companies by consolidating these activities under a single organization. Further details are covered in the section on Corporate Social responsibility.

Various training courses are being organized for employees on a wide range of topics such as BRSR framework, CSR, Climate Finance/ESG, Advanced Financial Modelling Negotiation skills, Risk Management.

IFCI through its subsidiary Stock Holding Corporation of India Limited (SHCIL), is making contribution in promotion of digital

Atmanirbhar Bharat. The objective is to make domestic manufacturing globally competitive and to create global Champions in manufacturing. The strategy behind the PLI schemes is to offer companies incentives on incremental sales from products manufactured in India, over the base year. They have been specifically designed to boost domestic manufacturing in sunrise and strategic sectors, curb cheaper imports and reduce import bills, improve cost competitiveness of domestically manufactured goods, and enhance domestic capacity and exports. Following are the PLI and other Schemes of Government of India, where IFCI has been appointed as the nodal agency/ Project Management Agency (PMA): economy in the country. SHCIL is one of the largest Depository Participants, besides being the country''s largest premier Custodian in terms of assets under custody. SHCIL also acts as a Central Record Keeping Agency for collection of stamp duty, e-court fee and e-registration in various States and Union Territories. As on March 31, 2022, e-stamping services were operational in 23 States and UTs and SHCIL mobilised an amount of? 39,672 crore in FY 2021-22 as compared to ? 24,897 crore in FY 2020-21 in e-stamping services i.e. an increase of about 59%. The number of certificates issued in FY 2021-22 were 15.22 crore as compared to 10.57 crore in FY 2020-21 i.e. an increase of about 44%.

IFCI Venture Capital Funds Limited (IVCF), IFCI''s another subsidiary, caters to social sector and presently manages Venture Capital Fund for Scheduled Castes (VCF-SC) and Venture Capital Fund for Backward Classes (VCF-BC), both initiatives of Ministry of Social Justice and Empowerment (MoSJE) to promote entrepreneurship among the select segments of the society by providing concessional finance.

On 14th April 2022, IVCF, in association with MoSJE and Dalit Chambers of Commerce & Industry (DICCI), had conducted a national level event to provide further impetus to entrepreneurship in the SC Community and to bring them in the mainstream business. The objective was to create a platform to SC Youth to showcase their innovative ideas and get funding upto ? 30 lakh under Ambedkar Social Innovation and Incubation Mission (ASKM). In the event, the contribution of successful SC entrepreneurs across MSMEs were recognized under Dr. Ambedkar Business Excellence (ABEA) felicitation. IVCF is also promoting Dr Ambedkar Young Entrepreneur League (AYE), a Mentor Network that helps to connect the budding entrepreneurs with industry experts/mentors; Promotes sharing of domain knowledge & experience from business experts/mentors with young SC entrepreneurs. AYE has onboarded 90 Mentors with varied skills / experience and 157 Mentorship sessions have been facilitated.

The details of all the subsidiaries are available on the website of IFCI at www.ifciltd.com.

On the other hand, Your Company is struggling with liquidity risk, negative CRAR, high NPA level and downward revision in credit rating. The immediate objective of Your Company is to reduce the level of NPAs through aggressive recovery efforts and maintain sufficient liquidity to meet liabilities. Efforts were also made to adopt cost optimization measures and to cut on avoidable expenses.

The fact that the Government of India is the Promoter and the largest equity shareholder of Your Company, offers sufficient comfort and confidence to the stakeholders. The Government of India has consistently infused funds in Your Company through equity participation. For the year 2021-22, the Government had infused funds aggregating upto ? 100 crore in January 2022. The Government has also infused funds aggregating upto ? 100 crore in September 2022 for the year 2022-23.

3. Segment-Wise or Product-Wise Performance

Your Company''s primary business is to provide financial assistance and it operates under a single segment reporting framework.

4. Outlook

The provisional estimates of national income released by the National Statistical Office (NSO) on May 31, 2022 placed India''s real Gross Domestic Product (GDP) at a growth of 8.7% for FY 2021-22 (Y-o-Y basis) vis-a-vis a contraction of (-)6.6% registered in previous FY. The provisional estimates of GDP growth for FY 2021-22 take the economy above its pre-pandemic level and exhibit improvement. The GDP growth of 4.1% has been registered in Q4 of FY 2021-22 (Y-o-Y basis) in comparison to 2.5% growth registered in the corresponding quarter of previous FY.

The impressive 10.3% growth registered in Industry Sector (Mining & Quarrying, Manufacturing, Electricity, Gas, Water Supply & Other Utility Services and Construction) in comparison to contraction of (-)3.3% in previous FY has largely contributed to the overall GDP growth for FY 2021-22. The Services Sector (Trade, hotels, transport, communication & broadcasting, Financial, Real Estate & Professional Services, Public

administration, defense and other services), grew by 8.4% vis-avis a contraction of (-)7.8% registered in previous FY.

Indian Economy grew at a decelerated rate in Q4 of FY 2021-22 in comparison to previous 3 quarters wherein it grew by 20.1%, 8.4% and 5.4% in Ql, Q2 and Q3, respectively. The economy was hit hard by the third wave of COVID Pandemic. As the economy was gaining pace after the third wave, global supply bottlenecks due to outbreak of the Russia-Ukraine war and higher input costs again slowed the pace of recovery. The contraction in the manufacturing sector, which struggled with supply bottlenecks and high input prices, in the last quarter of FY22 is a cause of concern. The other worrying aspect is the reduction in consumption to GDP ratio in Q4 of FY22, despite bouncing back of investment to GDP ratio. The slowest quarterly growth in Q4 of FY22 was also partly because of the unfavorable base effect. Share of Private Consumption in GDP fell significantly to 55.5% in Q4 of FY22 from 61% in Q3 of FY22 resulting in moderation of growth in Private Final Consumption Expenditure (PFCE) growth to 1.8% in Q4 FY22 in comparison to 7.4% in Q3 of FY22. High inflation has had a dampening impact on consumer sentiments. Other high-frequency indicators such as IIP consumer goods and auto sales are also reflecting the weak consumption spending in rural and urban areas.

The global economy continues to grapple with multi-decadal high inflation and slowing growth, persisting geopolitical tensions and sanctions, elevated prices of crude oil and other commodities and lingering COVID-19 related supply chain bottlenecks. Global financial markets have been roiled by turbulence amidst growing stagflation concerns, leading to a tightening of global financial conditions and risks to the growth outlook and financial stability. As per RBI monetary policy review during June 06-08, 2022, it is expected that the tense global geopolitical situation and the consequent elevated commodity prices would impart considerable uncertainty to the domestic inflation outlook. The restrictions on wheat exports should improve the domestic supplies but the shortfall in the rabi production due to the heat wave could be an offsetting risk. The forecast of a normal southwest monsoon augurs well for the kharif agricultural production and the food price outlook. Edible oil prices remain under pressure on adverse global supply conditions, notwithstanding some recent correction due to the lifting of export ban by a major supplier. Consequent to the recent reduction in excise duties, domestic retail prices of petroleum products have moderated. International crude oil prices, however, remain elevated, with risks of further pass-through to domestic pump prices. There are also upside risks from revisions in the prices of electricity. Early results from manufacturing, services and infrastructure sector firms polled in the Reserve Bank''s surveys expect further input and output price pressures going forward.

The RBI monetary policy review indicated that the recovery in domestic economic activity is gathering strength. Rural consumption should benefit from the likely normal south-west monsoon and the expected improvement in agricultural prospects. A rebound in contact-intensive services is likely to bolster urban consumption, going forward. Investment activity is expected to be supported by improving capacity utilisation, the government''s capex push, and strengthening bank credit. Growth of merchandise and services exports is set to sustain the recent buoyancy. Spillovers from prolonged geopolitical tensions, elevated commodity prices, continued supply bottlenecks and tightening global financial conditions nevertheless weigh on the outlook. Taking all these factors into consideration, the real GDP growth projection for 2022-23 is estimated at 7.2%, with Ql at 16.2%; Q2 at 6.2%; Q3 at 4.1%; and Q4 at 4.0%, with risks broadly balanced.

5. Risks and Concerns

In order to address risks, Your Company has put in place an Integrated Risk Management Policy (IRMP) which addresses Credit Risk, Market Risk, Operational Risk and Asset-Liability Management, as a part of Comprehensive Risk Management Framework which is integrated with its business model.

The General Lending Policy, IRMP, Liquidity Risk Management and other business policies of Your Company are reviewed periodically, keeping in view the changing economic and business environment. The Risk Management Vision Statement and Qualitative Risk Appetite Statements of IFCI have also been put in place. Parameters included in the Qualitative Risk Appetite statement are tested periodically.

Your Company assessed the Portfolio level risks by way of monitoring of actual exposures against prudential limits, stress testing under various scenarios, annual rating migration exercise, rating distribution, portfolio rating highlighting the quality of portfolio, mapping of internal and external ratings. Your company regularly monitors and revises its Benchmark Rates based on current market, macro & micro economic factors and profitability. As part of Ind As implementation, Your Company estimates rating grade-wise Probability of Default (PD) numbers of its credit portfolio, based on past data while Loss Given Default (LGD) numbers are worked out based on past history of cashflows from NPAs. The risk components are utilized for calculation of Expected Credit Loss (ECL), as part of Ind AS implementation. The Risk and Asset Liability Management Committee of Executives (RALMCE), analyses the Dynamic Liquidity Position, Structural Liquidity Gaps and Interest Rate Sensitivity positions, on a periodic basis, based on extant regulatory prescriptions. The mid-office function of Integrated Treasury reports to the Risk Management function and acts as an independent risk monitoring functionary. Your Company has a scientific methodology for fixing IFCI Benchmark Rate for long and short term loans. Methodology for risk based pricing and fixing risk premium over benchmark rate for each rating grade is in place. To manage the Operational Risks, there are adequate internal controls and systems in place, aided and assisted by Internal Audit, Internal Financial Controls, remote back-up of data, Disaster Management Policy, IT security, physical security and suitable insurance of insurable assets of Your Company, as well as of the assets mortgaged to Your Company. Besides, a mechanism for stress testing of loan portfolio and measurement of liquidity position is also in place, to assess likely impact on CRAR, profitability and liquidity. Your Company continues to strive for development of a strong culture for risk management and awareness within the organization.

6. Internal Control Systems, their adequacy and Internal Audit

Your Company has an adequate Internal Control System commensurate with size, scale and complexity of its business and allied operations. The efficacy of these internal controls is being verified by the Internal Audit Department on a regular basis. From the Financial Year 2018-19, the internal audits are being carried in-house by a team of experienced personnel. The periodicity of such audits varied from quarterly to yearly depending upon the criticality and materiality of transactions based on the scope approved by the Audit Committee of Directors.

7. Material Development in Human Resources, Industrial Relations Front, Including Number of People Employed

Your company believes that skilled, energised and engaged Human Resource pool is the foundation for effective performance

of any organization. Focusing on activities that lead to the development of human resource pool with such competencies was the mainstay of Human Resources Management in Your Company, throughout the year.

The performance of the organization in the recent past required the creation of structures that promote out-of the box thinking amongst employees, in order to mount effective response to the challenges being faced. In this direction, several initiatives were undertaken wherein focus was on creation of cross functional teams. These teams identified problems/challenges on various fronts, suggested ways to address the same and were also made responsible for implementing the suggestions. Institutional structures wherein such working groups have been at the forefront to redress many challenging issues have not only brought innovative solutions but have also increased employee engagement.

Your organization also managed to deal effectively with continued challenges posed due to Covid-19 throughout the year. Measures such as Work-from-home policies to safeguard health and safety of employees, deploying a Rapid Action Task force along with strict implementation of Standard Operating Procedures (SOPs) mandated by local authorities, staggered office hours, a sound IT support architecture, productivity monitoring systems, medical consultation services, COVID isolation center, sanitization precautions, and staff sensitization regarding COVID appropriate behavior were all put in place, to ensure that functioning of the organization is not hampered.

Your Company continued its focus on learning and development activities. Due to Covid-19, most of the trainings were held through virtual/online learning mode. Considering that Advisory Services has emerged as a major business vertical within IFCI, special focus was laid to develop skills that cater to the requirements of this function. Rirther, efforts have also been made to skill the employees in the emerging business areas viz. ESG/ Sustainability/Climate Financing etc. through several learning/ certification programmes during the year. Additionally, employees were nominated to take part in conferences, webinars, and discussion forums that were held by the industry on digital platforms in order to keep them abreast with the most recent advancements and explore commercial potential. Your Company covered around 60% of its employees in various training/ conferences/seminars etc. In all, there were 137 nominations, in the in-house training/workshops and external trainings, covering topics of functional and behavioral nature. Rirther, Your Company has also exposed its employees to various challenging assignments for their development.

Welfare of SCs/STs/OBCs/EWSs/PWDs

Your Company follows various policies and guidelines issued by the Government of India towards the upliftment of Scheduled Castes (SCs), Scheduled Tribes (STs), Other Backward Classes (OBCs), Economically Weaker Sections (EWSs), Persons with Disabilities (PwDs), etc. In accordance with the guidelines issued by the Government of India, the rules governing reservations and relaxations for certain categories are strictly adhered to. Additionally, appropriate representation of such employees is ensured by Your Company in various training programmes. During the year, Your Company provided training to 57% SCs, 100% STs and 65% OBCs employees.

Your company had 170 regular employees as of March 31, 2022, of whom 23 (14%) belonged to Other Backward Classes, 14 (8%) to Scheduled Castes, and 1 (1%) to Scheduled Tribes.

8. Details of Significant Changes in Key Financial Ratios

The details of significant changes in Key Financial Ratios are as under:

Particulars	FY 2022	FY 2021	Remarks	Significant Changes*
Interest Coverage Ratio	-0.93	-0.92	Earnings before interest and taxes / Total Interest expense (Profit before Tax finance cost)/finance cost	No (<25%)
Current Ratio	1.33	0.81	Current asset / current liability	Yes (>25%)
Debt Equity Ratio	15.74	4.58	Total borrowings / net worth	Yes (>25%)
Operating Profit Margin (%)	-53.93%	8.91%	Operating profit / total revenue (Profit before tax impairment)/total revenue	Yes (>25%)
Net Profit Margin (%)	-265.41%	-138.57%	Total comprehensive income / total revenue	Yes (>25%)
Return on Net Worth	-143.86%	-59.74%	Total comprehensive income / average net worth	Yes (>25%)

* Explanation: The change in the ratios was due to a decrease in operational income, which got impacted on account of prepayment of loans and consequent decline in standard assets. Further, as Debtor Ttimover Ratio or Inventory Turnover Ratios are not applicable to the company (NBFC), the same has not been incorporated in the Table above.

9. Corporate Social Responsibility IFCI SOCIAL FOUNDATION (ISF)

IFCI has always strived to conduct its business holistically and responsibly. At IFCI, apart from financial performance, community and social stewardship have been key factors for its holistic business growth. IFCI has been an early adopter of Corporate Social Responsibility (CSR) initiatives and has been involved in socially relevant activities ever since its inception in 1948. Today, it continues to work towards social and community development and areas needing focus and attention, through the IFCI Social Foundation (ISF), a registered Trust, established in 2014. ISF is functioning as an arm for CSR activities of IFCI and IFCI Group. ISF is guided by its values viz. Inclusiveness, Integrity, Commitment and Passion with the overall vision "To be one of India''s premier CSR Institutions and strive to make sustainable social impact with inclusiveness". Its major focus has been in areas of Education, Skill development, Healthcare and Sanitation, Poverty alleviation, Women empowerment and social welfare of women and girl child. The investment in CSR activities is project based and for every project, time frame and periodic milestones are set at the outset.

IFCI and ISF through its CSR projects have covered almost 23 states and Union Territories in India. The trust is registered for exemptions u/s 12A & 80G of the Income Tax Act. The trust is also registered with the Ministry of Corporate Affairs in line with CSR Amendment Rules, 2021. ISF carries out CSR activities on behalf of IFCI and IFCI Group Companies.

The Annual Report on CSR activities forms part of the Board''s Report at Annexure -1.

CORPORATE SOCIAL RESPONSIBILITY

As the Average Net Profit of IFCI Ltd for the last preceding three

years was negative, IFCI was not required to allocate any amount for CSR activities for FY 2021-22.

Cautionary Statement

Certain Statements in Management Discussion and Analysis describing the Company''s objectives, estimates and expectations may be ''forward looking'' within the meaning of applicable laws and regulations. Actual results might differ materially from those expressed or implied.

Details of Directors and Key Managerial Personnel (KMP) appointed or resigned during the year

Following were the changes in Directors and Key Managerial Personnel during FY 2021-22 and till the date of signing of this Board''s Report:

a) Shri Manoj Mittal (DIN: 01400076) was appointed as Managing Director & Chief Executive Officer of Your Company w.e.f. June 12, 2021.

b) Consequent to the cessation of Ms. Rupa Deb, Company Secretary from the services of the Company w.e.f. September 07, 2021, Ms. Priyanka Sharma was appointed as Company Secretary w.e.f. September 16, 2021 by the Board of Directors at its Meeting held on September 16, 2021. The Board at its Meeting held on September 16, 2021 also appointed Shri Prasoon, Chief General Manager as Chief Financial Officer (CFO) of the Company vice Ms. Jhummi Mantri w.e.f. September 16, 2021.

c) Shri MML Verma (DIN: 07610648) ceased to be on the Board of the Company w.e.f. March 04, 2022 upon resignation.

d) Shri Kanakasabapathi Kadiresan was appointed as Additional Director on the Board of Your Company w.e.f. March 30, 2022. His appointment was regularized and he was appointed as Director liable to retire by rotation pursuant to shareholders resolution passed through Postal Ballot on June 13, 2022. Thereafter, he ceased to be on the Board of the Company w.e.f. October 2, 2022, upon resignation due to his personal commitments.

e) Prof. Arvind Sahay (DIN: 03218334) will retire by rotation at the conclusion of the forthcoming Annual General Meeting and he, being eligible, has offered himself for reappointment.

f) Shri Sunil Kumar Basal (DIN: 06922373), Deputy Managing Director, ceased to be on the Board of the Company w.e.f. September 13, 2022 upon completion of his tenure.

g) Shri Surendra Behera and Shri Arvind Kumar Jain, were appointed as Additional Directors (Non-Executive) by the Board w.e.f November 09, 2022.

Corporate Governance & Compliances

A detailed report on Corporate Governance as stipulated under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is attached to the Annual Report.

a) The credit ratings assigned to the various financial facilities / instruments of the Company during the Financial Year 2021-22 are provided in the Corporate Governance Report forming part of this Annual Report.

b) The details of the Meetings of the Board of Directors and the Audit Committee forms part of the Corporate Governance Report appearing separately in the Annual Report. Further, there has been no instance during the FY under report where the Board has not accepted the recommendations of the Audit Committee.

c) The details of Composition forms part of the Corporate Governance Report appearing separately in the Annual Report.

2021-22 is as under:
Total Number of Securities at the beginning of the year	Issued during the year	Redemption made during the year	Total number of securities at the end of the year
419,94,79,039	Nil	418,80,86,090	113,92,949

d) Pursuant to the provisions of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company is required to place various Policies / Documents / Details on the Website of the Company. The Company has a functional website www.ifciltd.com and all the requisite information are being uploaded there at and available at https://www.ifciltd.com/?q=en/content/ disclosure-under-regulation-46-and-62-sebi-%E2%80%93-lodr

e) During the year under report, there were no Independent Directors on the Board of Your Company, as per the requirement of the Companies Act, 2013 & SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

f) As stipulated under the Listing Regulations, Your Company has voluntarily prepared the Business Responsibility and Sustainability Report (''BRSR'') and forms part of the Annual Report for the FY 2021-22.

g) During the Financial Year 2021-22, neither the Statutory Auditors nor the Secretarial Auditors have reported any fraud in their respective Audit Reports.

h) The Company is in compliance with the applicable Secretarial Standards issued by the Institute of Company Secretaries of India and approved by the Central Government under Section 118 (10) of the Companies Act, 2013. Further, during the Financial Year 2021-22, all returns / data / statements submitted by concerned departments as advised by RBI, SEBI and other Regulatory Authorities have been submitted.

i) In view of delay in receiving of the comments of C&AG on the Supplementary Audit Report for the FY 2021-22, approval of the Registrar of Companies (ROC) for extension of 3 months, for convening, calling and holding AGM beyond September 30, 2022 was sought. The ROC had granted an extension of 3 months for holding the AGM for FY 2021-22.

j) Key Initiatives taken for initiatives Investor services continued to be of utmost importance for Your Company. Investors'' grievances received in physical or electronic form or through web-based query submission system, were taken up promptly and redressed.

Other Disclosures:

a) Your Company had made an application to the Registrar of Companies- Delhi & Haryana to grant extension of time for holding the Annual General Meeting of Your Company for the Financial Year ended March 31, 2022. Accordingly, this Annual General Meeting is being convened within the time period allowed by the ROC.

b) In view of the loss incurred during the financial year 202122, no dividend has been recommended on equity shares. Also, as per the provisions of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company has formulated a Dividend Distribution Policy which is available on the website of Your Company at www.ifciltd.com.

c) During the FY 2021-22, there was no Company which have become or ceased to be Subsidiaries, Joint Venture or Associate Company of IFCI Ltd. The Company as on March 31, 2022 has two ''Material Subsidiaries'' viz. Stock Holding Corporation of India Ltd. and IFCI Infrastructure Development Ltd. Policy on Determining Material Subsidiary is available on the website of the Company at www.ifciltd.com. Details on performance and financial position of subsidiaries, associates and joint venture during

the FY 2021-22 can be referred from Form AOC-1 forming part of this Annual Report.

d) During the financial year 2021-22, 6,10,12,812 number of Equity Shares were allotted to the Promoter of the Company i.e. Government of India (GOI) at a price of? 16.39 (Rupees Sixteen and Thirty Nine Paisa only) [including a premium of ? 6.39 (Rupees Six and Thirty Nine Paisa only)] per Equity Share aggregating upto ? 100,00,00,000 (Rupees One Hundred Crore). Consequent to the allotment of equity shares, the shareholding of GOI increased from extant 61.02% to 64.86% of the Total Paid-Up Share Capital of the Company (as on February 25, 2022).

Thereafter, during the financial year 2022-23, 9,29,36,802 number of Equity Shares were allotted to the Promoter of the Company i.e. Government of India (GOI) at a price of ? 10.76 (Rupees Ten and Seventy Six Paisa only) [including a premium of ? 0.76 (Paisa Seventy Six only)] per Equity Share aggregating upto ? 100,00,00,000 (Rupees One Hundred Crore). Consequent to the allotment of equity shares, the shareholding of GOI increased from extant 64.86% to 66.35% of the Total Paid-Up Share Capital of the Company (as on October 27, 2022).

Change in the debt structure of the Company during the FY 2021-22 is as under:

e) During the Financial Year 2021-22, Your Company transferred 9,78,386 number of equity shares to IEPF. Further, an amount of ? 2,28,92,262 pertaining to the unclaimed dividend for Financial Year 2013-14 was also transferred to IEPF. Further, Your Company has also transferred 10,98,778 number of Equity Shares to IEPF and an amount of ? 2,34,40,309 pertaining to the unclaimed interim dividend for Financial Year 2014-15 to IEPF, as on the date of the Board''s Report. Shareholders whose unclaimed dividends/ shares have been transferred to IEPF, may claim the same by making an application to the IEPF Authority, in Form No. IEPF-5, available on www.iepf.gov.in.

f) As the Company is primarily engaged in the business of financing Companies in the capacity of being a Non-Banking Financial Company, therefore the provisions of Section 186 [except for subsection (1)] of the Companies Act, 2013 are not applicable to the Company.

g) Your Company did not raise any public deposit during the year.

h) During FY 2021-22, there were no significant or material orders passed by Regulators or Court impacting the going concern status of the Company. Further, there has been no change in the business of the Company during the reporting period. Further, there have been no material changes and commitments which affect the financial position between the end of the financial year and the date of Board''s Report.

i) Pursuant to notification dated June 5, 2015 issued by the Ministry of Corporate Affairs, Government Companies are exempted from the disclosure requirements of Section 197 of the Companies Act, 2013. Therefore, such particulars have not been included in the Board''s Report. Further, no Director of the Company, including MD&CEO, was paid any commission during the FY 2021-22 from any of the subsidiaries of Your Company, on whose Boards they were Directors as nominees of Your Company.

j) Pursuant to the provisions of the Companies Act, 2013 (to the extent applicable) and Listing Regulations, the Company has framed Nomination and Remuneration Policy. However, pursuant to the exemption granted to Government Companies vide Notification No. F.No. 1/2/2014-CL.V dated June 5, 2015, issued by the Ministry of Corporate Affairs, the Policy has not been made part of Board''s Report.

k) Pursuant to the provisions of the Companies Act, 2013, the Annual Return of the Company is available on the website of the Company at www.ifciltd.com.

l) All Related Party Transactions entered during the year under report were in Ordinary Course of the Business and at Arm''s Length basis. No Material Related Party Transaction was entered during the year by Your Company. Accordingly, the disclosure of Related Party Transactions as required under Section 134(3)(h) of the Companies Act, 2013, in Form AOC-2 is not applicable and hence, does not form part of the Board''s Report.

m) The performance evaluation of the Board, its Committees and individual Directors was conducted by the Nomination and Remuneration Committee and the Board. The focus area of improvement mentioned by the Directors included Structure of the Board / Composition of the Committees which are non-compliant as per the statutory requirements. Since there was no Independent Director on the Board of the Company during the financial year 2021-22, no Meeting of the Independent Directors could be held. Communications requesting appointment of requisite number of Independent Directors have been sent to the Department of Financial Services being the Administrative Ministry In-Charge and the appointments are awaited.

n) No application was made, or any proceedings was pending against Your Company under the Insolvency and Bankruptcy code, 2016, during the year under report.

o) Details of the Debenture Trustee(s) for the debt securities issued by Your Company are as under:

Name of Debenture Trustee	Contact Details
Axis Trustee Services Limited	The Ruby, 2nd Floor, SW 29 Senapati Bapat Marg, Dadar West Mumbai - 400028 Phone no : 91 022 6230 0451 E-mail: [email protected] Website: www.axistrustee.in
IDBI Trusteeship Services Limited	Asian Building, Ground Floor 17, R. Kamani Marg, Ballard Estate, Mumbai - 400 001 Phone nos: 022 40807000, 91 7208822299, 91 8591585821 E-mail: [email protected] Website: www.idbitrustee.com
Centbank Financial Services Limited	3rd Floor (East Wing) Central Bank of India, MMO Building 55 M G Road, Mumbai - 400 001 Phone no: [phone] E-mail: [email protected]: [email protected] Website: www.cfsl.in

Auditors

M/s M K Aggarwal & Co. (DE0500) (Firm Reg. No. 001411N) was appointed by the Comptroller & Auditor General of India (C&AG) as Statutory Auditors of Your Company for Financial Year 202122. C&AG has appointed M/s M K Aggarwal & Co. (DE0500) (Firm Reg. No. 001411N) as Statutory Auditors of Your Company for FY 2022-23 as well. As per the requirement of Section 148 of the

Companies Act, 2013, the requirement of Cost Audit is not applicable to the Company.

Qualifications, Reservation or Adverse Remark or Disclaimer Made By the Statutory Auditors

The Standalone and Consolidated Financial Results of the Company for the Financial Year 2021-22 were unqualified by the Statutory Auditors of the Company. However, the Statutory Auditors provided for certain ''Emphasis of Matter''. The complete Auditors'' Report on the Standalone and Consolidated Financial Statements forms part of the Annual Report.

Qualifications, Reservation or Adverse Remark or Disclaimer Made By the Secretarial Auditor

M/s Agarwal S. & Associates, Company Secretaries was appointed as Secretarial Auditor of the Company for the Financial Year 202122. The observations of the Secretarial Auditor along with Management Reply is as under:

S. Observations of Management Reply

No. Secretarial Auditor

a. Non-compliance of As per the applicable provision of

Regulation 17(l)(a) of Regulation 17(l)(a) of SEBI Listing Securities and Exchange Regulation, 2015, the Board of Board of India (Listing Directors shall have at-least 1 Woman Obligations and Independent Director. In this regard,

Disclosure this is to submit that as per the Requirements) provisions of Section 149(6)(a) of the Regulations, 2015, the Companies Act, 2013, the power to Company shall have at appoint Independent Directors least one independent including Woman Independent woman director during Director vests with the Ministry the period from April 01, administratively in-charge of the 2021 to March 31, 2022. Company i.e. Department of Financial

Services, MOF. MOF, DFS, being the Ministry administratively in-charge of the Company, is seized of the matter as request for appointment of Independent Directors, has already been sent to MOF, DFS. The appointment of Independent Directors is awaited. Once the appointment of Woman Independent Director is made by the Department of Financial Services, the abovementioned provisions will be complied with.

b. Non-Compliance of In the absence of Independent

Section 149 (4) of Directors on the Board of the

Companies Act, 2013 Company, the Company is not in and Regulation 17(l)(b) compliance of the provisions of of Securities and Section 149 (4) of Companies Act, Exchange Board of India 2013 and Regulation 17(l)(h) of SEBI (Listing Obligations and (Listing Obligations and Disclosure Disclosure Requirements) Regulations, 2015. As Requirements) mentioned in point (a) above, in terms Regulations, 2015, the of Section 149(6)(a) of the Companies Company shall have Act, 2013, EFCI being a Government requisite no. of Company, the power to appoint the Independent Directors Independent Directors vest with the on the Board of Administrative Ministry in-Charge i.e. Company from April 01, Ministry of Finance (MOF), 2021 to March 31, 2022. Department of Financial Services

(DFS). As stated above DFS has been already requested to appoint Independent Directors. Once the requisite number of Independent Directors are appointed, the provisions will be complied with.

c.	Non-compliance of Regulations 17(10) and 25(4) of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, in the absence of Independent Directors, no separate meeting was held during the financial year. Accordingly, performance evaluation for/by the Independent Directors was not carried out.	In the absence of Independent Directors on the Board of the Company, the performance evaluation of and by Independent Directors as envisaged under Regulation 17(10) & 25(4) of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, could not be carried out.
d.	Non-Compliance of Section 177(2) & 178(1) of Companies Act, 2013 and Regulation 18(l)(b), 19(l)(b) & (c), 20(2A) and 21 of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, the composition of Audit Committee, Nomination and Remuneration Committee, Stakeholders'' Relationship Committee and Risk Management Committee were not complied with the statutory requirements during the period from April 01, 2021 to March 31, 2022.	Due to the absence of Independent Directors on the Board of the Company, the Audit Committee, Nomination and Remuneration Committee, Stakeholders'' Relationship Committee and Risk Management Committee were constituted without the Independent Directors and the Company was not in compliance of Section 177(2) & 178(1) of the Companies Act, 2013 and Regulation 18(l)(b), 19(l)(b) & (c), 20(2A) and 21 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015. Once the Independent Directors are appointed by Department of Financial Services, the Committees will accordingly be constituted.

The Secretarial Audit Report of the Company along with the Secretarial Audit Reports of the ''Material Subsidiaries'' i.e. M/s EFCI Infrastructure Development Limited and M/s Stock Holding Corporation of India Limited for the Financial Year ended March 31, 2022, are enclosed at Annexure - Q.

Comments of Comptroller & Auditor General of India

The comments of Comptroller & Auditor General of India (C&AG) along with Consolidated IFCI''s Comments on C&AG Supplementary audit observations are at Annexure-in.

Directors Responsibility Statement

Pursuant to the requirement under Section 134 of the Companies Act 2013, with respect to Directors'' Responsibility Statement, it is hereby confirmed that:

(i) In the preparation of the annual accounts, the applicable accounting standards were followed along with proper explanation relating to material departures;

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

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

(iv) The Directors had prepared the annual accounts on a going concern basis;

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

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

Appreciation

Your Directors wish to express gratitude for the cooperation, guidance and support from the Ministry of Finance, various other Ministries and Departments of the Government of India, The Reserve Bank of India, The Securities and Exchange Board of India, The Stock Exchanges and other regulatory bodies, The Comptroller & Auditor General of India and The State Governments. Your Directors also acknowledge the valuable assistance and continued cooperation received from all banks, financial institutions, overseas correspondent banks, other members of the banking fraternity and investors. Your Directors would also like to express their appreciation for the efforts and dedicated service put in by the employees at all levels of Your Company.

Prof. Arvind Sahay Shri Manoj Mittal

Director Managing Director and

DIN: 03218334 Chief Executive Officer

Address: IFCI Tower DIN: 01400076

61 Nehru Place Address: EFCI Tower

New Delhi - 110019 61 Nehru Place

New Delhi -110019

Dated: November 09, 2022

---

Mar 31, 2018

To the Members

The Board of Directors of Your Company presents the Twenty Fifth (25^th) Annual Report of IFCI Ltd., together with the Audited Financial Statements for the year ended March 31, 2018.

FINANCIAL SUMMARY AND STATE OF COMPANY’S AFFAIRS

The financial statements of Your Company have been prepared in accordance with the applicable Accounting Standards, RBI Guidelines, Schedule III of the Companies Act, 2013 and other applicable laws/ regulations. During the year, despite increased business compared to previous year, there was reduction in operational income because of overall decline in loan assets due to prepayment of certain loans; increase in proportion of non-recognition of interest income on accrual basis, due to increase in NPAs, stricter RBI norms with regard to slippage of standard assets to NPAs and further down gradation within NPAs, as compared to norms in the previous year.

The operation wise segregation of operational income is depicted in the chart below:

The borrowing cost was lower compared to the previous year on account of reduction in interest rates of existing borrowing, fresh raising of funds at lower cost and prepayment of certain high cost borrowing.

Dividend

During the year, Your Company paid dividend of ''0.24 crore on preference shares. However, in view of the loss incurred during the year and with a view to preserving capital and cash for future growth, no dividend has been recommended on equity shares. As per the provisions of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company has formulated a Dividend Distribution Policy which is enclosed at Annexure-I. The Dividend Distribution Policy is also available on the website of the Company at www.ifciltd.com.

Financial Performance

As the overall economic environment and especially credit growth was subdued during FY 2017-18, IFCI’s performance was also affected in line with the overall financial sector. Though, the economy and credit growth started showing signs of recovery in the later part of FY 2017-18, its effect is expected to be visible in FY 2018-19.

Despite challenging environment and high NPAs, Your Company could achieve pre-provision profit of Rs,5 70 crore as compared to Rs,413 crore in the previous year. However, Your Company suffered a loss of Rs,1,008.51 crore during the year under report, which was mainly on account of large amount of provisioning made in respect of NPAs, especially the cases admitted in National Company Law Tribunal (NCLT).

The capital adequacy ratio was at 14.02% with Tier-I capital at 7.52% due to the loss incurred on account of provisions made for non-performing assets. As per RBI’s circular issued on February 12,

2018, all the existing restructuring mechanisms including CDR, SDR, S4A, JLF and 5/25 loan scheme were scrapped. Almost all the banks saw increased provisioning on account of fresh accretion to NPAs due to withdrawal of above schemes. IFCI’s NPA level also increased on account of above developments. With higher provisioning, the provision coverage ratio was at an enhanced level.

Insolvency and Bankruptcy Code (IBC) process is underway in many large NPAs, which are expected to be resolved during FY 2018-19, along with divestment of non-core assets which will improve the asset quality as well as cash flow of Your Company and also strengthening the balance sheet of Your Company.

sanction and Disbursements

During the year under consideration, Your Company focused on improvement of asset quality and made gross sanctions to the tune of Rs,7,216 crore vis-a-vis gross sanctions of Rs,7,923 crore in FY 2016-17. Subdued credit demand and slowdown in economic growth specifically during first half of FY 2017-18 contributed towards marginal decrease in gross sanctions on year on year (YoY) basis. However, disbursements registered a growth of 45.2% and aggregated to Rs,4,434 crore in FY 2017-18, as compared to disbursements of Rs,3,053 crore made in FY 2016-17.

Recovery

Your Company focused very strongly on the recovery front, which led to proactive measures of suitable recovery/restructuring of stressed assets that resulted in recovery of Rs,949 crore along with recovery from NPA to the extent of Rs,854 crore. Recovery of non-recognised interest of Rs,109 crore from restructured assets was made during FY 2017-18. Further, resolution of certain large NPAs is expected through National Company Law Tribunal (NCLT) forum.

Treasury, Investment and Forex Operations

Global economy demonstrated recovery in FY 2017-18 with stronger activity and easing of recessionary conditions in commodity exporting large economies. International financial markets performed well on account of improving global growth prospects and broadly accommodative monetary policy stances of systemic central banks. However, markets turned cautious towards Q3 FY 2018 due to uncertainty over the pace of normalization of the US Fed monetary policy and the Fed interest rate hikes over the year. The domestic financial environment was impacted by adoption of GST regime, admission of key stressed accounts under Insolvency and Bankruptcy Code, exaltation of India’s sovereign rating and Public Sector Banks (PSBs) recapitalization by the Government. Led by consistent traction in policy reforms, increasing digitization and successful GST implementation, equity markets scaled fresh peaks in FY 2017-18, amidst a cautious return of investor appetite and capital flows. However, rupee weakened in later part of the year owing to US-China trade war and hardening of oil prices. The budget proposal towards institution of long term capital gains tax coupled with rise in US bond yields, impacted both foreign portfolio, retail investors and equity market corrected sharply on this event.

During second half of the year, the policy repo rate was decreased by 0.25% by RBI on the assessment of macro economic situation with the objective of achieving medium term target for CPI inflation of of 4% with a band of ±2%, while supporting growth. Economic and investment activity displayed revival and the GDP growth in FY 2018-19 is expected by RBI to be higher at 7.4% as compared with 6.7% in FY 2017-18. In the above backdrop, Your Company has been cautious in investing the surplus funds across diversified instruments with focus on safety while making every effort towards maximizing yield in consonance with liquidity management.

In rupee operation, the objective has been to manage the surplus fund effectively with minimum risk and deploying to optimize returns with availability of funds for business requirements. The underlying investment principle is safety, liquidity and risk containment. Therefore, Your Company invested the available liquidity mostly in Treasury Bills, Government Securities, Certificate of Deposit, Commercial Papers, Inter-Corporate Deposit / Short Term Deposit (STD) / AAARs, rated Bonds and Liquid Mutual Fund Schemes. Average Deployment during the FY 2017-18 was Rs,1,069.64 crore during the year against Rs,1,393.31 crore in FY 2016-17 and annualized return on funds deployed was 7.76%. Your Company has consistently generated returns higher than the average 91 days T-bill yield during FY 2017-18 from Treasury operations. During the year under report, Your Company registered an income of Rs,88 crore from Fixed Income Money Market operations as against Rs,112 crore in FY 2016-17 with 7.76% return p.a. as against average yield of 6.17% p.a. of 91 days T-bill. Taking advantage of surge in stock prices during the year, Your Company continued with the strategy of selective disinvestment of slow moving/illiquid stocks and booked profits from investments in blue chip stocks. Net investment portfolio of Your Company as on March 31, 2018 stood at Rs,6,637 crore as against Rs,6,394 crore as on March 31, 2017.

The foreign currency operations were confined to servicing of Foreign Currency (FC) liabilities and containing the exchange risks arising due to mismatch in the outstanding amount of FC assets and liabilities. The mismatches were covered through forward contracts, currency futures and principal only swap. The net mismatch position was restricted to below the limits approved by Board of Your Company by maintaining almost square position.

Resource Mobilization

Keeping in view the debt servicing, disbursements and disinvestments made during the year under report, an amount of Rs,1,312.50 crore was mobilized through Term loans at the competitive rates. Your Company had emphasised to raise funds at the lowest possible cost. Consistent efforts are being made by Your Company to explore new avenues of fund raising. The total borrowing of Your Company were Rs,20,047 crore as on March 31, 2018 comprising of Rupee borrowing of Rs,19,575 crore and foreign currency loan of Rs,472 crore.

Investor service is all about maintaining a valuable relationship and trust with our stakeholders. Your Company has always believed in delivering highest level of services to investors, timely resolution of grievances of investor is our top priority. Investor grievances were taken up promptly and resolved to the investors’ satisfaction. FUNCTIONAL VERTICALs

(A) Credit

During the year, under report appraisal of all the credit proposals was centralized and carried out by the Credit Appraisal Department at Head Office, which was further divided into two verticals viz. Infrastructure sector and Non-Infrastructure sector. Subsequently, the credit function was further reorganized and the Credit Appraisal and Credit Monitoring departments were merged into a single Credit Department which functioned under two verticals from November, 2017 onwards, wherein, the appraisal function was divided into Infrastructure and non-Infrastructure verticles, while monitoring of existing standard cases was divided among the verticals, zone-wise. The Credit Department was also actively engaged in formulation of Policy, refinement of processes and improvement in practices of credit appraisal and effective monitoring of the standard assets of IFCI. During the year, the primary focus was to bring in more good value clients into IFCI’s fold across sectors to augment quality of the portfolio.

(B) Monitoring and Recovery

Resolution of stressed & non-performing assets has been one of the major challenges to the overall credit and economic growth in the country. Realizing the gravity of the situation, efforts have been made even by the regulator viz. The Reserve Bank of India (RBI) in this regard by identifying large stressed accounts for reference to National Company Law Tribunal (NCLT) under the new Insolvency and Bankruptcy Code (IBC). The same has started yielding results and some of the stressed/NPA accounts have achieved successful resolution & other accounts are also going through various stages of the Corporate Insolvency Resolution Process. However, many accounts lost the benefit of “stand still” clause and slipped to NPA category due to withdrawal of earlier resolution schemes viz. Joint Lenders’ Forum, Corporate Debt Restructuring, Flexible Structuring of Existing Long Term Project Loans, Strategic Debt Restructuring, S4A etc. by RBI vide its guidelines issued in February, 2018 resulting in surge in NPA level in the FY 2017-18.

The Gross NPAs increased from Rs,7,553 crore as on March 31, 2017 to Rs,8,672 crore as on March 31, 2018, however, due to aggressive provisioning, the Net NPAs have shown a reduction at Rs,5,127 crore as on March 31, 2018 vis-a-vis Rs,5,882 crore as on March 31, 2017. While the Gross NPA and Net NPA stood at 40.97% and 29.56% respectively at the end of the FY 2017-18, the Provision coverage ratio improved from 42.03% as on March 31, 2017 to 55.52% as at the end of FY18. It is pertinent to highlight that in such a challenging time, Your

Company responded adequately by making higher recoveries in the FY 2017-18 as under :-

(Rs, in crore)

sl. No.	Resolution strategy	Amount
1.	Recovery from NPAs	854
2.	Sale of unquoted shares	130
3.	Recovery from Stressed Assets	949
	Total	1,933

Your Company remains committed to expedite resolution of stressed and non-performing assets and maximize recoveries by making all out efforts through various strategies viz. one time settlements/ restructuring, sale of assets under SRFA & ESI, assignment of loans and other legal remedies available in the system.

(C) Legal

On the legal front, Your Company has a full-fledged qualified and experienced legal team who carry out the legal functions for facilitation of sanctions and disbursements and has ensured compliance with statutory requirements during the year. Further, Your Company initiated prompt legal measures for recovery against the borrowers and was able to defend successfully before various judicial forums in India in the suits filed against it, during the FY 2017-18.

Your Company has also been successful in obtaining a favourable order from the Hon’ble Supreme Court of India in the matter of sale of assets of hotel property at Goa. The Hon’ble Supreme Court of India vide its order dated 19^th March, 2018 has upheld the sale made by IFCI of the hotel at Goa under SRFA&ESI Act.

(D) sugar Development Fund

Your Company has been acting as the “Nodal Agency” of the Government of India since inception of the Sugar Development Fund (SDF) for the purpose of disbursement, follow up and recovery of SDF loans sanctioned for modernisation / expansion of sugar factories, setting up of bagasse based cogeneration power projects, anhydrous alcohol or ethanol projects, zero-liquid discharge (ZLD) distillery projects and cane development scheme. Cumulative sanctions and disbursements under SDF up to March 31, 2018 stood at Rs,6,670 crore and Rs,5,409 crore respectively. The Agency Commission booked in FY 2017-18 was Rs,10.75 crore (excluding Service Tax).

(E) Credit Enhancement Guarantee scheme for scheduled Castes (CEGssC)

The Department of Social Justice & Empowerment under the aegis of Ministry of Social Justice & Empowerment, Government of India, has sponsored the “Credit Enhancement Guarantee Scheme for Scheduled Castes” under its social sector initiatives. The objective of the Scheme is to promote entrepreneurship amongst the Scheduled Castes, by providing Credit Enhancement Guarantee to Member Lending Institutions (MLIs), who shall be providing financial assistance to these entrepreneurs. The Government of India has initially allocated a corpus of Rs,200 crore for the Scheme while contributing annually Rs,0.01 crore, Government may further contribute depending upon utilization of funds. IFCI has been designated as the Nodal Agency under the Scheme, to issue the guarantee cover in favour of Member Lending Institutions, who shall be encouraged to finance Scheduled Caste entrepreneurs to boost entrepreneurship amongst the marginal strata of the Society.

The Scheme has commenced operations from the FY 2015-16 with registration of 25 Member Lending Institutions under it. Upto the FY 2017-18, loans aggregating to Rs,27.27 crore have been sanctioned by some of the Member Lending Institutions against which the total guarantee cover of Rs,18.95 crore has been provided by IFCI. Your Company is making all out efforts to promote this Scheme through wide publicity by conducting seminars, conferences and awareness programmes in co-ordination with various Chapters of Dalit Indian Chamber of Commerce and Industry (DICCI) and attending State Level Bankers Committee (SLBC) Meetings. The corpus of the fund has increased to Rs,240 crore as on March 31, 2018.

IFCI has launched a web portal of the above mentioned scheme (www.ifcicegssc.in) on 14^th February, 2017 and the link is also available on website of Your Company i.e. www.ifciltd.com. Further, promotion of the CEGSSC Scheme is made through social media, linkedin, Facebook, twitter etc.

(F) Human Resources

Your Company believes that competent, energised and involved Human Resources pool provides foundation for performance driven culture and sustainable growth of any organisation. This tenet guides the Human Resource practices in Your Company.

In order to enhance competencies in different critical spheres, Your Company has continued to lay focus on development of knowledge, skills and attitudes through various interventions. Training & Development activities, regular interaction with key functionaries for sharing vision, mission, strategic, tactical and operational direction of the company along with exposure of employees to challenging assignments have been key pillars on which development of Human resources has progressed.

Your Company covered around 80% of its employees in various trainings/conferences. In all, there were 390 nominations, in the in-house training/workshops and external trainings, covering topics of functional and behavioral nature. Eight employees were also nominated to attend international trainings/conferences. Further, optimum utilization of Human Resources pool has also been a major focus area. In order to streamline various processes within the organization and reduce redundancies, rationalization of allocation of work and resources was done through organization restructuring.

To generate spirit of involvement in the company, Your Company organized various employee engagement activities like celebration of various occasions, birthdays etc. Responsiveness of Human Resource services to employees was also improved through introduction of online services regarding various facilities to employees during the year. Your Company also shows promptness in resolving grievances of employees through a well-established system.

Your Company also believes that employees who superannuate from IFCI, are its brand ambassadors with immense knowledge about its working and they need to be engaged in a constructive manner. Keeping this in view, Your Company has developed a portal for retired employees and also extended facilities like Holiday Homes to these employees. This has resulted in more positive engagement and in settlement of various issues and court cases which were pending for a long time.

(G) Information Technology

Information Technology (IT) has transformed the conduct of business in every sector of the economy. Financial sector is one such area where IT has been instrumental in enhancing the quality, efficiency and speed of delivery of financial services. The in-house team of IT professionals in Your Company has developed system namely Centralised Integrated Information System (CIIS) which largely consists of applications supporting major business functions as well as non-core functions. The system has been running successfully for over 20 years without any glitch & the system has constantly been upgraded in line with requirements. During the FY 2017-18, to meet the current and emerging business needs, the existing software applications were upgraded with enhanced/added features. New modules were developed in-house for different functions / products for better and effective seamless control over the processes being implemented and also to improve efficiency.

During the FY 2017-18, IT team of Your Company successfully developed and implemented Goods and Services Tax (GST) application along with automated returns generation w.e.f. July 1, 2017. The GST applications were also implemented in subsidiaries of Your Company viz. IFCI Venture Capital Funds Ltd. & IFCI Factors Ltd. The in-house system is periodically audited by external expert agencies for effective control and operating effectiveness of security mechanisms.

(H) Right to Information

Your Company has implemented the Right to Information Act, 2005 from 2013 onwards following the applicability of the RTI Act, 2005 to IFCI and has been providing desired information to the applicants under the provision of RTI Act. Necessary disclosures under Section 4 of the RTI Act has already been posted on the website of Your Company i.e. www.ifciltd.com. Your Company has nominated one Central Public Information Officer at Head Office, nine Assistant Central Public Information Officers at Regional Offices & one First Appellate Authority and Transparency Officer at Head Office under the provision of RTI Act.

During the FY 2017-18, Your Company has received 95 applications and 13 first appeals and were disposed of within the stipulated time frame.

(I) Promotion of Rajbhasha

During the year, Your Company continued its efforts to promote the use of Hindi in its official work. With a view to motivating and encouraging the officers to use Hindi in official work, Hindi workshops and competitions were organized at Head Office as well as other offices of the company. Special workshop was also conducted with the help of officials of Hindi Newspaper, “Business Standard”. Many officers of Your Company participated in various Hindi Competitions organized by Town Official Language Implementation Committee.

The Official Language Committee at Corporate Office monitored the use of Hindi in all Regional Offices and provided necessary guidelines. All the computers have Unicode facility and the website of Your Company has also been made bilingual for the benefit of the shareholders and to further promote use of Hindi.

(J) Nominee Directors

Your Company appoints Nominee Directors on the Boards of some of the assisted concerns by stipulating condition for appointment of Nominee Director under certain situations as per the Board approved Policy, wherever it is considered necessary to do so. This is in line with the established practice of lending Institutions and Banks to monitor the performance of the companies where they have provided financial assistance. The underlying objective of making such appointment is to help build professional management and facilitate effective functioning of the Board as well as formulation of proper corporate policies and strategies to improve productive efficiency and promote long term growth of the assisted companies, keeping in view the overall interest of the shareholders and financial institutions. The feedback received from Nominee Directors act as a tool for credit monitoring.

PERFORMANCE OF sUBsiDIARIEs AND AssOCIATEs PROMOTED

BY IFCI sUBsIDIARIEs

stock Holding Corporation of India Ltd. (sHCIL)

SHCIL, one of the largest Depository Participants, besides being the

country’s largest premier Custodian in terms of assets under custody, provides post trading and custodial services to institutional investors, mutual funds, banks, insurance companies, etc. It acts as a Central Record Keeping Agency (CRA) for collection of stamp duty in 19 States and Union Territories on Pan India basis. It is one of the largest Professional Clearing Member of the country. It distributes Fixed Deposits, Bonds & NCDs of reputed Institutes & Corporates, Mutual Fund Schemes, Initial Public Offers (IPOs) and National Pension System (NPS) etc. and is a corporate agent registered with IRDA for distribution of insurance products. SHCIL has its registered office at Mumbai, a world class main operations office at Navi Mumbai and operates through its 188 retail branches all over India and has been profit making and dividend paying company right from its inception. SHCIL has two wholly owned subsidiaries viz. (i) SHCIL Services Ltd. (SSL) and (ii) Stock Holding Document Management Services Ltd. (Stock Holding DMS).

- SSL, the broking arm of SHCIL, is providing stock broking services to retail and institutional clients across the country. SSL offers services in Cash & F&O segment of BSE & NSE.

- Stock Holding DMS is a Microsoft Gold certified partner for all its products and services and is ISO 9001:2008 and CMMI Level-3 certified company. DMS provides End to End Document Management Solutions.

As on date IFCI holds 52.86% shareholding in SHCIL, making it a subsidiary Company of IFCI.

IFCI Infrastructure Development Ltd. (IIDL)

IIDL was set up by IFCI in the year 2007 as its wholly owned subsidiary to venture into the real estate and infrastructure sector as an institutional player.

IIDL has completed a Serviced Apartments known as “Fraser suites” which is being run successfully through Frasers Hospitality Pte Ltd., Singapore. The project has Gold Standard, 9 storey and 92 luxurious Serviced Apartments comprising studios, one bedroom & two bedroom suites. It offers an ideal living environment that will impress even the most tech-savvy guests thus making it one of the most sought after luxury apartments.

On the residential front, IIDL has successfully developed two projects viz. 21^st Milestones Residency, Ghaziabad, Uttar Pradesh and IIDL Aerie at Panampilly Nagar, Kochi, Kerala.

It was awarded a prestigious Financial City project spread over an area of 50 acres near Bengaluru International Airport, Karnataka for development. It has developed the said project and sub-leased the plots to Banks/Institutions for further development.

As on date IFCI holds 100% shareholding in IIDL, making it a subsidiary of IFCI.

IFCI Venture Capital Funds Ltd. (IVCF)

IVCF is at present managing 5 SEBI-registered private equity (PE) funds/Alternate Investment Funds (AIF) viz. India Automotive Component Manufacturers Private Equity Fund-1-Domestic (IACM-1-D), Green India Venture Fund (GIVF), India Enterprise Development Fund (IEDF), Venture Capital Fund for Scheduled Castes (VCF-SC) and Venture Capital Fund for Backward Classes (VCF-BC) with an aggregate corpus of ''848 crore. IVCF derives income from the fund management activities by way of management fee on the corpus/ outstanding amount of funds and by way of profit on these investments. Out of the above, three funds namely GIVF, IACM-1-D and IEDF are likely to close soon and all efforts are being made for optimizing recovery from outstanding investments.

The “Venture Capital fund for Scheduled Castes” (VCF-SC), is a Government of India initiative of Ministry of Social Justice and Empowerment (MoSJE) being the implementing agency. VCF-SC is a first of its kind Venture Capital Fund in India dedicated to promote entrepreneurship among the Scheduled Castes by providing concessional finance to them. During the year, Government contributed an amount of Rs,40 crore for VCF-SC fund. As a result, the corpus of VCF-SC fund has increased to Rs,330 crore including contribution of Rs,50 crore by Your Company. Recently Government of India had mandated IVCF to manage the Rs,Venture Capital Fund for Backward Classes’ (VCF-BC) and ''10 crore initial corpus has been received.

With a view to tapping further opportunities in PE/ VC space, IVCF is in the process of raising the next round of funds viz. Small & Medium Enterprises Advantage Fund (SMEAF) and Green India Venture Fund II (GIVF-II) for which Your Company has consented to act as the “Settlor” and “Sponsor” along with commitment of contribution of Rs,50 crore in each of the Funds. The Funds, having a target corpus of Rs,500 crore each, are floated as Trust Funds, registered under SEBI as Category II Alternative Investment Fund (AIF). The fund raising process for GIVF-II and SMEAF is being undertaken. Another Fund on Affordable Housing is also likely to be launched shortly.

Being an NBFC, IVCF also extends corporate loans to companies by raising funds through bank loans and bonds, with security of mortgage of property and/or shares of listed companies.

As on date IFCI holds 98.59% shareholding in IVCF, making it a subsidiary of IFCI.

IFCI Financial services Ltd. (IFIN)

IFIN is primarily involved in the business of Stock Broking, Currency Trading, Depository Participant Services, Merchant and Investment Banking, Insurance (Corporate agent for both life and General Insurance), Mutual Fund Products Distribution and Corporate Advisory Services.

IFIN is a registered member of SEBI, National Stock Exchange of India Limited (NSE), BSE Limited (BSE), Metropolitan Stock Exchange of India Limited (MCX-SX), National Commodity and Derivatives Exchange Limited (NCDEX), NSDL and CDSL. IFIN has three wholly-owned subsidiaries namely IFIN Securities Finance Ltd, IFIN Commodities Ltd and IFIN Credit Ltd.

IFIN Securities Finance Ltd, an NBFC is primarily engaged in the business of margin funding, providing loan against shares & property, promoter funding etc. to various clients. Being an NBFC, it is registered with RBI. IFIN Commodities Ltd, a registered member of the Multi Commodity Exchange of India Ltd (MCX), NCDEX and National Spot Exchange Limited (NSEL), is primarily engaged in the business of providing commodity market related transaction services. IFIN Credit Ltd is not engaged in any major business activity.

As on date, IFCI holds 94.78% shareholding in IFIN, making it a subsidiary of IFCI.

IFCI Factors Ltd. (IFL)

IFL is a major provider of factoring services in India. IFL also offers Corporate Loans for a tenor of upto five years.

The Government of India had notified a total of 196 systematically important NBFCs (including IFL), as ''Secured Lenders’ under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SRFA & ESI).

It is now focusing upon standard factoring deals with quality debtors and has done away with riskier variants. At the same time IFL is also targeting MSME customers having acceptable risk profile having quality debtors.

In view of Insolvency and Bankruptcy Code (IBC), 2016 being enacted, IFL, expects strengthening of recovery mechanism and reduction in NPAs. In terms of IBC, 2016, IFL has submitted its claims before the Resolution Professionals, in certain cases. It has also secured a line of $20 million from Exim Bank which would augment its Export Factoring business.

As on date, IFCI holds 99.89% shareholding in IFL, making it a subsidiary of IFCI Ltd.

MPCON Ltd. (MPCON)

MPCON is a premier consulting organization having base in Central India, providing quality consulting services. The company consolidated its project consultancy business and also enhanced its presence in the training and capacity building spheres. It has bagged skilling projects in 13 states of the country including Madhya Pradesh and Chhattisgarh from various Central & State Government Departments/ Corporations. Having status as NSDC partner, it is working with National Safai Karamcharis Finance & Development Corporation (A Government of India Undertaking, under the Ministry of Social Justice and Empowerment), National Handicapped Finance and Development Corporation (Department of Empowerment of Persons with Disabilities, Ministry of Social Justice and Empowerment, Government of India), Department of Science & Technology, Ministry of Science & Technology, Government of India, Development Commissioner (Handicraft), Ministry of Textiles, Government of India etc. for skilling division. Apart from Training and Skilling Development, the financial inclusion project has been expanded further to cover areas beyond Madhya Pradesh and started Corporate & Project Advisory services. It has also provided its expertise in other spheres of consultancy services such as Document Management System, Solid & Liquid Waste Management, Renewable Energy, Rural Development through specialization in CSR impact studies for NMDC and implementation of CSR for big PSU’s like NTPC Ltd., Power Finance Corporation Ltd. and Rural Electrification Corporation Ltd.

As on date, IFCI holds 79.72% shareholding in MPCON, making it a subsidiary of IFCI.

ASSOCIATES KITCO LTD. (KITCO)

KITCO is one of the premier Engineering, Management & Project consultancy firm in India. Some of the other fields where KITCO is a prominent player are Energy Studies, Skill Certification and Placement Services. The Company is also a dedicated provider of professional technical consultancy services to Small and Medium Enterprises (SME) sector. At present, KITCO is having 10 divisions viz., Infrastructure, Tourism, Aviation, Urban Planning, Process Engineering, Human Resource Development, Management and Financial Consultancy, Technical Services, Sea ports and Environmental Engineering. KITCO is the first consultancy organization in the State having EIA accreditation. The strength of KITCO is a core team of well qualified and experienced professionals in various branches of engineering and in management, media, marketing, economics, finance etc. numbering more than 260.

KITCO is continuing consultancy services for construction of three new medical colleges in Kerala. It is rendering consultancy services to its prestigious clients like Kannur International Airport Ltd, Cochin International Airport Limited and other airports, Directorate of Sports and Youth Affairs etc.

KITCO has been allotted major assignments during the year including providing consultancy services for construction of theatres for Kerala State Film Development Corporation, DPR for AMRUT Project- SWD-Kochi Corporation, Design and Engineering Consultancy Services for Development/ Re-development of Ernakulam Railway Station & land parcels for National Buildings Constructions Corp Ltd, Comprehensive Development at Aralam Farm, Kannur by Scheduled Tribes Development, the assignment for the preparation of DPR for Setting up of a Pharmaceutical Manufacturing Unit in Vietnam initiative by EXIM Bank, Consultancy service for Bengaluru Airport (BIAL), Design & Construction Service for Infra facilities for new AERDC complex at Bengaluru during the year.

As on date, IFCI holds 20.26% shareholding in KITCO, making it an Associate of IFCI.

JOINT VENTURE

IFCI sycamore Capital Advisors Pvt. Ltd. (IsCAPL)

Your Company has 50% interest in ISCAPL incorporated in November 2011 which is under voluntary liquidation and Official Liquidator has been appointed. The liquidator of ISCAPL repaid the amount of ''2.64 crore in the year 2016-17 towards Fully Convertible Debentures subscribed by the Your Company. Adequate provisions have been made against the equity investment, considering the probability and quantum of share in distribution upon liquidation of the Company. ISCAPL has not been considered for the purpose of consolidation of financial statements.

SOCIETIES

Institute of Leadership Development (ILD) ILD, was sponsored by IFCI as a society registered under the Rajasthan Societies Registration Act, 1958.

The campus was provided with the world class infrastructural/ technical facilities besides developing its picturesque settings amidst lush green Aravali ranges thereby making it a perfect integrated centre for teaching, learning, training, research in all areas across all sectors of leadership development and organising conferences/ Seminars/ Conclaves of national and international repute. The Institute is working on ''no profit no loss basis’.

Apart from Leadership programs, Education, Training, Research, Consultancy, Social change, Skill Development Trainings, Entrepreneurship development, Conferences, Seminars, Workshops and Interventions, Knowledge Creation, Awareness Programmes, Dialogue and Discourse are the key activities pursued by ILD.

During the year 2017-18, ILD, as Nodal agency, imparted skill training in textiles, technology, fashion technology, hospitality etc. to 2000 urban youth of various Districts of Rajasthan. ILD conducted 20 orientation workshops for the Panchayat Elementary Education Officers under the UNICEF sponsored Leadership Orientation Training Programme for the Panchayat Elementary Education Officers. ILD also conducted two programmes of two week duration on Renewal Energy -Solar for the ITI instructors from Electronic and Electrical field under the MOU signed amongst Government of Rajasthan, Schneider Electric India Foundation (SEIF) and ILD. Further, ILD also conducted training programmes for Entrepreneurship Development Institute of India (EDII), Rajasthan State Industrial Development & Investment Corporation of India (RIICO), Tourism Finance Corporation of India Ltd. (TFCI) and Assets Care & Reconstruction Enterprise Ltd. etc., during the year under report.

Management Development Institute (MDI)

MDI Gurgaon, one of the leading Business Schools in India is consistently ranked among the top B-schools of the country by reputed agencies and publications. MDI has the distinction of being the first internationally accredited Indian Business School having received international accreditation by Association of MBAs (AMBA) London in 2006.

MDI continues to be a flourishing cauldron of excellence in management education, high quality research, executive development and value added consultancy. More than 91,000 managers have been trained over 44 years of its existence. More than 100 specially designed executive development programmes are conducted for top, senior and middle level managers of different organizations every year.

Having established its footprints worldwide, MDI’s vision is to become one of the top business schools in the world by incorporating the world’s best academic practices in all its programmes for full time students and corporate executives. The institute as of now has 60 plus collaborative partnerships with leading B-schools in several regions of the world.

MDI’s offerings are continuously updated in keeping with the ever changing global business environment, while setting high standards for all our stakeholders.

This year’s Annual Convocation of MDI Gurgaon, held on 24^th March, 2018 was graced by the presence of Shri G M Rao, Group Chairman, GMR Group. Total of 489 students from various Post Graduate Management Programmes and 5 Fellow Scholars received their diplomas on this momentous occasion. 24 Medals were awarded to the meritorious students for different courses.

This year the placement of students was marked with not only 100% placement but a substantial increase in the average compensation. The highest international salary offered was ''55 lakh per annum and the highest domestic salary touched ''35 lakh per annum. The season witnessed an average salary of ''19.17 lakh per annum. A total of 119 companies visited the campus for recruitment, out of which 28 companies were first time recruiters at MDI. Our students have been placed in almost all areas across all sectors Rashtriya Gramin Vikas Nidhi (RGVN)

RGVN having its headquarters in Guwahati, Assam is an autonomous, non-profit organisation registered under the Society’s Registration Act XXI of 1860. RGVN is a national level multi - state development and support organization working in the states of Assam, Arunachal Pradesh, Meghalaya, Mizoram, Nagaland, Manipur, Tripura, Sikkim, Odisha, Jharkhand and Bihar, poverty stricken pockets of Eastern Uttar Pradesh, coastal Andhra Pradesh and Chhattisgarh. RGVN’s core strength comes from its network of NGOs and Self Help Groups, which are capable of handling large development projects. One of its domain has been hived off into an NBFC called RGVN (North East) Microfinance Ltd. which has also been given small finance bank license by the RBI. Over the years, RGVN has been able to groom and support small Community - based Organizations involved in a variety of livelihood enhancement programmes.

However, over the last few years, RGVN has effected a significant policy shift in its operations by implementing projects directly with funding support from Central and State Governments, Banks, Financial Institutions and Corporate Houses under their CSR activities or other social Programmes. International Donor Agencies have also contributed to its funding for poverty reduction projects. To effectively enhance the quality of life in the rural areas, RGVN is now working on the following major verticals including agriculture & livelihood generation, financial literacy & inclusion, drinking water, sanitation & hygiene, solar lighting and handloom & weaving.

IFCI social Foundation (IsF)

IFCI has always strived to conduct its business holistically and responsibly. At IFCI, along with economic performance, community and social stewardship have been key factors for its holistic business growth. IFCI has been an early adopter of Corporate Social Responsibility (CSR) initiatives and has been involved in socially relevant activities ever since its inception in 1948.

Today, it continues to work towards social and community development and areas needing focus and attention, through the IFCI social Foundation (IsF), a registered Trust,

established in 2014. ISF is functioning as an arm of IFCI for CSR activities of the IFCI Group. It aims at improving the socio-economic well-being of the society, particularly the underprivileged and vulnerable sections of the society, who are deprived to live up to the potential that they possess. It aims to create assets so as to deliver sustainable and measurable societal benefit to all the geographical regions of the country, without any regional, linguistic, caste, creed, religious or other barriers.

IFCI and ISF through its CSR projects have covered almost 19 states and Union Territories in India. ISF has been making efforts to take up long gestation, high impact projects from the budget allocated for CSR by IFCI and its subsidiaries. The trust is registered for exemptions u/s 12A & 80G of the Income Tax Act.

Some of the major CSR projects supported by ISF during FY 2017-18 are as under:

- Partnered with Hope Ek Asha for setting up Day Care Centre for Alzheimer patients.

- Partnered with Rama Krushna Temple Trust for construction of Shelter House and toilets - to give shelter to villagers during natural calamities in Odisha.

- Partnered with Save our Soul India under Swachhta Action Plan for construction of toilets and cleanliness drive in Nehru Place and Paschim Vihar.

- Partnered with Rashtriya Gramin Vikas Nidhi under Swachhta Action Plan for construction of 400 toilets in Bihar, Jharkhand, UP and Odisha.

- Partnered with Institute of Leadership Development for setting up Centre of Excellence in Textiles at Jaipur.

- Empowering women by giving means for livelihood by providing ASU Machines to Women weavers of Pochampalli sarees.

- Partnered with Aroh Foundation for construction of toilets in schools at Bihar.

- Partnered with Sulabh Sanitation Foundation Mission for construction of household toilets.

- Partnered with Akshayapatra by providing 3 meal vending vans.

- Providing infrastructure and stationery in schools situated in remote villages of Andhra Pradesh.

companies WHICH HAVE BECOME OR CEAsED TO BE sUBsIDIARIEs, JOINT VENTUREs OR AssOCIATE COMPANIEs DURING THE YEAR

Consequent to the transfer of shareholding by Your Company, North India Technical Consultancy Organisation Ltd., Himachal Consultancy Organisation Ltd. and Tourism Finance Corporation of India Limited, have ceased to be the associate companies. Details on performance and financial position of subsidiaries, associates and joint venture during the FY 2017-18 are provided in Annexure-II MANAGEMENT DIsCUssION AND ANALYsIs Industry structure and developments:-

1.1 Macro-Economic scenario & Developments:

The world economy grew at a fast pace in 2017 at 3.8% since 2011 as compared to 3.2% growth registered in 2016. The economic activity in 2017 was supported by a recovery in investment, picked up in second half of 2017 and ended on a high note with more than 4% growth, the strongest since the second half of 2010. Financial conditions also remained supportive, despite the recent volatility in equity markets and increase in bond yields following signs of firming inflation in advanced economies. However, financial stability is at a risk due to volatility of equity markets, downward trend in bond prices and international trade wars making the road ahead bumpy and could impede the growth trend. In South Asia, growth slowed to an estimated 6.5% in calendar year 2017 owing to temporary disruptions on account of adverse weather conditions across the region.

In India, growth slowed for the first 2 quarters of FY 2017-18, partly reflecting adjustments by businesses to GST.

In the second quarter of FY 2017-18, the slowdown in economic activity bottomed out at 6.3% (year-on-year) growth. With gradual stabilization of GST impact, in Q3 of FY 2017-18, GDP grew at 7% and it further accelerated to 7.7% in Q4 of FY 201718. Domestic demand continued to drive growth, with strong private consumption and a public infrastructure spending push in India. Overall FY 2017-18 was a mixed year for the Indian economy, as the implementation of GST affected the urban consumption through loss of output and employment in labour-intensive unorganized sector in the 1^st half of FY 2017-18. However, Government’s continued support through expenditure boosted the industrial growth and pick-up in demand was observed in the 2^nd half of FY 2017-18. Similarly, the growth in non-food credit was observed after nearly 2 years, specifically, growth in industry was observed from December 2017 onwards. Further, expansion in capital goods production and revival of construction activity is expected to support the growth trajectory of India’s GDP in FY 2018-19. Other initiatives such as recapitalization of public sector banks as well as the steps towards NPA resolution under the Insolvency and Bankruptcy Code are also expected to contribute to economic growth. On the other hand, the banking sector risks can be an impediment to sustainable growth.

1.2 Banking sector:

The Scheduled Commercial Banks’ (SCB) credit growth picked up on a year on-year basis across bank groups between September 2017 and March 2018. However, deposit growth decelerated for PSBs impacting the deposit growth of all SCBs. Their Capital to Risk-Weighted Assets Ratio (CRAR) as well as the Tier-I leverage ratio declined marginally between September 2017 and March 2018. SCBs’ profit after tax plummeted mainly due to higher risk provisions in 2018. The share of net interest income (NII) in total operating income increased from 63.7% in 2016-17 to 65.2% in 2017-18, whereas, their other operating income (OOI) declined. Among the components of OOI share of profit/loss due to securities trading showed significant decline in 2017-18 over 2016-17. Cost of interest bearing liabilities as well as return of interest earning assets for SCBs’ declined in 2017-18 as compared with 2016-17. Profitability ratios of SCBs’ turned negative mainly due to PSBs. The Asset quality of the SCBs’ also deteriorated during the FY 2017-18. The Gross Non-Performing Advances (GNPA) ratio rose from 10.2% in September 2017 to 11.6% in March 2018. However, their Net Non-Performing Advances (NNPA) ratio registered only a smaller increase during the period due to increase in provisioning. The GNPA ratio in the industry sector rose from 19.4% to 22.8% during the same period whereas stressed advances ratio increased from 23.9% to 24.8%.

1.3 NBFC sector:

Non-Banking Financial Companies (NBFCs) have been consistently increasing their share of lending in the Indian financial sector. While the Banks had the first mover advantage and were a main source of funding, off-late they have been saddled with their own issues such as high NPAs in the large ticket corporate and infrastructure lending. The NBFCs have been growing at a faster pace on account of their customised offerings, better market understanding and doorstep delivery to the customers. In 2017, NBFCs increased their share in the total credit market to 16%, from 13% in 2015. GNPAs of the NBFC sector as a percentage of total advances decreased from 6.1 percent in 2016-17 to 5.8 percent in 2017-18 .The CRAR of NBFC sector increased from 22.0 per cent in 2016-17 to 22.9 per cent in 2017-18.

As of March 2018, there were 11,402 NBFCs registered with The Reserve Bank of India, of which 156 were deposit accepting (NBFCs-D), and 249 were systemically important non-deposit accepting NBFCs (NBFCs ND-SI). All NBFC-D and NBFCs-ND-SI are subjected to prudential regulations such as capital adequacy requirements and provisioning norms along with reporting requirements.

1.4 Initiatives and Developments at IFCI

Your Company continued with the initiatives taken during previous year in the areas of information technology, cost cutting,

employee empowerment and took further initiatives during the year under report with primary objectives of consolidation of business and cost reduction. As per decision taken by the Board of Your Company, two more small regional offices at Chandigarh and Jaipur were closed in FY 2017-18 in continuation to closure of seven small regional offices at Bhopal, Bhubaneshwar, Kochi, Luck now, Patna, Raipur and Vijayawada in calendar year 2017 as per an earlier Board decision with an objective to reduce cost and effectively utilize the existing manpower. An organizational restructuring exercise was undertaken during the year under report, so as to ensure optimum utilisation of human resources and various functions were centralized with a view to increase speed and efficiency.

During FY 2017-18, the main focus was on improvement in asset quality. Therefore, the policies were revamped and lending was limited to the companies having good track records and higher credit ratings.

During the year under consideration, Your Company has been appointed for a period of 3 years, extendable for a further period of 3 years to act as a Verification Agency by the Ministry of Electronics & IT (MeitY), Government of India, for verification of claim applications under Modified Special Incentive Package Scheme (M-SIPS), with fee structure linked to incentives disbursed. A capex expenditure of Rs,32,000 crore has been approved by MeitY for about 160 cases on which 20% to 25% capital subsidy is committed by Government of India out of the fund amount of Rs,10,000 crore allocated towards the Scheme. Approximately Rs,170 crore has been disbursed so far under the Scheme as on 31^st March, 2018 out of which, Your Company has enabled disbursements of Rs,128 crore for about 18 cases during the FY 2017-18. During the FY 2018-19, an amount of Rs,500 crore is targeted for disbursement of subsidy under the Scheme. This non-fund based activity not only fetches fee income, but also enhances the brand image of Your Company.

Your Company was also mandated to be nodal agency to manage the Venture Capital Fund for Scheduled Castes which is in operation since January, 2015, in order to promote entrepreneurship among the Scheduled Castes (SC) and to provide concessional finance. The Fund is being managed by one of the subsidiaries of Your Company namely IFCI Venture Capital Funds Ltd (IVCF). since inception. The total Corpus under the scheme as on 31^st March, 2018 is Rs,330.01 crore out of which Your Company has provided Rs,50 crore and balance has been provided by Ministry of Social Justice and Empowerment, GoI. As on 31^st March, 2018, aggregate sanctions funds of Rs,240 crore to 66 companies and disbursements worth Rs,169 crore to 52 beneficiaries has taken place under the scheme.

Based on IFCI Venture’s performance with regard to VCF-SC, the Ministry of Social Justice and Empowerment (MoSJE), Government of India has mandated IVCF, a subsidiary of Your Company to manage the ''Venture Capital Fund for Backward Classes’. The target corpus of Rs,200 crore has been earmarked towards the scheme and the scheme has been set up as Category

II Alternative Investment Fund under the SEBI (Alternative Investment Funds) Regulations, 2012. The fund has already received an initial contribution of Rs,10 crore from MoSJE, GoI towards the corpus in FY 2017-18. IVCF has also contributed ''5 crore as Sponsor Investor. Marketing efforts have already been initiated for creating awareness of the said Fund. The scheme related details can also be viewed on website of IVCF at www. ifciventure.com/Venture-Capital-Fund-for-Backward-Classes. pdf.

During the year under consideration, IFCI exited from some of the non-core assets with a view to leverage good returns on long term investments and to focus on its core business activities.

Focus on the use of Information Technology to streamline and standardize the various processes continued during current year. Various new applications in credit monitoring and other areas were developed by IT Dept. Website of IFCI as well as that of IFCI Social Foundation was also revamped to enhance the user experience, by utilising in-house capabilities. A portal for retired employees was also launched in order to facilitate dissemination of required information and online application for various purposes. Further, automation was updated for accounting and taxation, so as to strengthen regulatory compliances under GST regime.

2. strengths, Weakness, Opportunities & Challenges

Over the long existence for seven decades, Your Company has gained rich experience and developed core expertise in serving the corporate clients. Your Company has provided financial assistance across all major sectors of economy and built a well-diversified portfolio in infrastructure, real estate, manufacturing, services, and NBFC sector.

Your Company is uniquely positioned as one of the ''sector agnostic’ large NBFC, which would be advantageous for harnessing emerging opportunities across sectors. While keeping in view the Government’s initiatives to boost infrastructure development and to provide thrust to the core industries, Your Company plays a pivotal role to fill the investment gap by financing these segments due to the core competencies developed over the years.

Your Company faces stiff competition in lending business as the borrowing cost is higher compared to the banks and peer NBFCs, due to lower credit rating. Further downgrading of credit rating of Your Company during the year has added pressure on resource raising at competitive cost. Also, worsening of the legacy asset quality leading to high provisioning requirements, net losses and consistent shrinkage in the loan portfolio adds to the constraints being faced by Your Company. However, the new loans sanctioned in FY 2017-18 were of better quality, the average credit rating being “A”.

As Government of India is the Promoter and the largest equity shareholder, it offers additional comfort and confidence to the stakeholders of Your Company. In this direction, the Government has reposed its confidence and commitment with further equity infusion of Rs,100 crore during financial year 2017-18.

In the wake of the fall in overall consumption and investment in the economy, the entire financial sector is grappling with sustained pressure on portfolio quality and dwindling balance sheets besides an all-time high NPAs. Your Company is also affected with this phase of economic cyclic pressures accentuated by recent policy developments for cleaning of stressed assets expeditiously. To phase out the above challenges, Your Company has given focused attention to contain further slippage in the portfolio and has, therefore, constituted a dedicated team to expedite recovery from non-performing accounts. Your Company is optimistic for faster resolution of non-performing accounts after introduction of time bound and efficient resolution process under Insolvency and Bankruptcy Code, 2016. Further, Your Company has been making sincere efforts in reducing lending rate to competitive levels to attract higher rated borrowers and downsizing the financial exposures to the corporate borrowers in order to improve the asset quality and to reduce concentration risk. The immediate objective of Your Company is to reduce the level of NPAs through aggressive recovery and improvement in quality of portfolio.

3. segment-wise or Product-wise Performance

During FY 2017-18, Your Company strived to perform better, despite facing challenging macro-economic and subdued credit offtake. Your Company sanctioned project finance as well as corporate loans of various maturities, with emphasis on lower maturities. It also continued providing short term loans to corporates with good track record and higher credit ratings. During the year, Your Company sanctioned and disbursed short term loans worth Rs,710 crore and Rs,475 crore, respectively which constituted 9.84% and 10.71% share in the aggregate sanctions and disbursements at Rs,7,216 crore and Rs,4,434 crore, respectively. The overall sanctions and disbursements were well diversified across borrower groups as well as sectors.

4. Outlook

4.1 Global developments & outlook:

Global growth outlook for 2018 remains positive despite some recent softness. Spillover risk from advanced financial markets to emerging markets, however, has increased. Tightening of liquidity conditions in the developed markets alongside expansionary US fiscal policy and a strong US dollar have started to adversely impact emerging market currencies, bonds and capital flows. Firming commodity prices, evolving geopolitical developments and rising protectionist sentiments pose added risks.

The International Monetary Fund (IMF) projects global economic growth to be robust during 2018. Growth is expected to be broad-based with the Advanced Economies (AEs) growing above their potential and Emerging Markets and Developing Economies (EMDEs) also posting higher growth. Latest indicators such as Purchasing Managers’ Index (PMI) and Organisation for Economic Cooperation and Development (OECD) Composite leading indicators suggest some moderation in the underlying drivers of economic growth. On balance, however, the global economic growth outlook remains positive. Consequently, financial conditions in advanced economies have tightened. A stronger US dollar is rattling emerging market currencies. At the same time, crude oil prices, partly reflecting geopolitical risks, have firmed up. Thus, the underlying global macro-financial conditions coupled with geopolitical uncertainty have potentially increased spillover risk to EMDEs.

Driven by an investment-led recovery in AEs, global trade growth rebounded in 2017 after two years of weakening. However, notwithstanding talks of inward looking policies, trade intensity of global growth rose in 2017. The IMF Direction of Trade Statistics indicates that the decline in exports to AEs which was evident till January 2016 has been arrested. On the other hand, in the backdrop of growing trade tensions with the US, China posted a trade deficit in March, 2018 which has, however, since been reversed. Going forward, changing protectionist rhetoric into reality could pose a significant risk to global growth.

4.2 Domestic developments & outlook:

India’s growth prospects appears promising, with household consumption expected to remain strong, exports expected to recover, and investment projected to revive with the support of structural reforms. Continuing improvements in infrastructure are further expected to aid growth. A normal monsoon is projected for FY 2018-19 which would auger well for agriculture and allied sectors and would help in generating stable rural demand. Due to improvement in capacity utilization in manufacturing sector owing to pick up in demand, both credit off take and investments are expected to improve in FY 2018-19.

As per World Economic Outlook, the Emerging and Developing Asia region grew by 6.5% in 2017. Similar level of growth rate i.e. 6.5% is expected in 2018 as well.

India’s Gross Domestic Product (GDP) growth at 7.7% in Q4: 2017-18 shows that the Indian economy is well on the recovery track on the back of a sharp pick-up in gross fixed capital formation. Further, there has been an uptick in capacity utilization with some industries such as steel closing the gap. The aggregate demand composition indicates a broad-based growth with revival of investment.

Growth in India is expected to be balanced with both rural and urban consumption projected to support the economic activity. Private investment is also expected to revive on account of expansion in formal economy due to GST, increase in infrastructure spending, subsidy reforms, fiscal consolidation and a stable balance of payment situation. The present situation of higher debt in capital intensive sectors, is expected to be mitigated with the help of the efforts of the Government and RBI. Further, the Government’s focus on enhancing ease of doing business are expected to create an environment conducive to attract higher levels of foreign direct investment. The recapitalization package for public sector banks announced by the Government of India is expected to strengthen the balance sheets of public sector banks so that they can continue to provide requisite credit support to various sectors of the economy.

The major risks to the aforesaid outlook include fiscal slippage, further deterioration in asset quality of public sector banks, rise in crude oil prices and tightening of global liquidity.

Also, the Government has shown a significant commitment to fiscal consolidation. Gross fiscal deficit of the Central Government was brought down from 4.1% of GDP in 2014-15 to 3.9% in 2015-16 and further to 3.5% in 2016-17, and remained at 3.5% in 2017-18. It is budgeted to decline to 3.3% of GDP in 2018-19. There could, however, be challenges on the fiscal front unless there is a buoyancy in tax receipts and/or a restraint on expenditure.

5. Risks and Concerns

Risk is an inherent part of business of any financial institution, including IFCI, which makes it susceptible to credit risks that arise when a borrower is expecting future cash flows to pay a current debt. Effective management of credit risk is a critical component of comprehensive risk management and necessary for long term success of a financial institution. The goal of credit risk management is to maximize a FI’s risk-adjusted rate of return by maintaining credit risk exposure within acceptable parameters.

In order to address risks, Your Company has put in place an Integrated Risk Management Policy (IRMP) which addresses Credit Risk, Market Risk & Operational Risk as a part of comprehensive risk management framework which is integrated with its business model.

The General Lending policy, IRMP (comprising Credit Risk Management, Market Risk Management, Operational Risk Management and Asset-Liability Management) of Your Company are reviewed periodically, keeping in view the changing economic and business environment. The Risk Management Vision Statement and Qualitative Risk Appetite Statements of IFCI have also been put in place. Parameters included in the Quantitative Risk Appetite statement are tested periodically. Integrated Risk Management Department (IRMD) manages transaction level risks by way of carrying out risk assessment of all new credit proposals and assigning an internal risk rating after due consideration by the Rating Committee. Portfolio level risks are assessed by way of monitoring exposure against prudential limits, annual rating migration analysis, rating distribution, portfolio rating highlighting the portfolio quality, mapping of internal & external ratings, analysis of NPA cases and Risk Adjusted Return on Capital (RAROC) estimation. IRMD also ensures compliance of all pre-disbursement terms and conditions of sanction, prior to disbursements of loans.

Market and Liquidity risks are monitored by Risk and Asset Liability Management Committee of Executives (RALMCE), through analysis of dynamic liquidity position, structural liquidity gaps and interest rate sensitivity positions. The midoffice function of Integrated Treasury has started reporting to IRMD and acts as an independent risk monitoring functionary. Scientific methodology for fixing IFCI Bench mark Rate for long and short term loans has been evolved. Methodology for risk based pricing and fixing risk premium over benchmark rate for each rating grade has also been put in place.

To manage the operational risks, there are adequate internal controls and systems in place, aided and assisted by internal audit, remote back-up of data, disaster management policy, IT security, physical security and suitable insurance of insurable assets of Your Company, as well as of the assets mortgaged to Your Company.

Besides, mechanism for stress testing of loan portfolio and liquidity position has also been put in place, to assess likely impact on CRAR, profitability and liquidity. Impact of interest rate risk on net interest income and market value of equity of IFCI, under stress scenarios are also assessed on a periodic basis and remedial measures taken, as deemed necessary.

In line with the industry best practices and to ensure proper credit evaluations and monitoring standards, Your Company carries out credit audit of all standard exposures. The main objectives of the credit audit exercise includes, detection of weaknesses in outstanding exposures, initiation of timely corrective action, compliance with internal sanction and disbursement norms and follow-up and monitoring of cases, which serves as a tool for senior management to assess portfolio quality with constant endeavor for asset quality improvement.

Risk management is expected to play a more prominent role in future because of on-going liberalization, deregulation and global integration of financial markets, which would add newer dimensions to risks faced by the Banks and NBFCs. Interrelationships and associations amongst various risk categories and mushrooming of new risks, will require more proactive and efficient management of risks which will determine the strength and resilience of financial institutions. Your Company would continue to work on various initiatives aimed at strengthening credit risk standards, post sanction monitoring of the portfolio to mitigate any adverse impact on the loan portfolio of Your Company. Your Company would also strive to develop a strong culture for risk management and awareness within the organisation.

6. Internal Control systems and Internal Audit

Your Company has adequate Internal Control Systems commensurate with size, scale and complexity of its business and allied operations. The efficacy of these internal controls is being verified by the Internal Audit Department on a regular basis through “Risk based Internal Audit” process. The internal audits are being carried out by the Internal Audit Department through external established and reputed Chartered Accountant Firms. The periodicity of such audits varied from quarterly to yearly depending upon the criticality and materiality of transactions after scope was approved by the Audit Committee of Directors. Based on the observations of internal auditors, corrective actions were undertaken by the process owners in their respective areas thereby strengthening the control systems.

7. Material Development in Human Resources, Industrial Relations Front, including number of people employed

Your Company believes that a pool of competent, involved, energised and satisfied Human Resources provides foundation for performance driven culture and sustainable growth of any organisation. Your Company has continued to lay focus on development of knowledge, skills and attitudes through various interventions. Training & Development activities, regular interaction with key functionaries for sharing vision, mission, strategic, tactical and operational direction of the company along with exposure of employees to challenging assignments have been key pillars on which development of Human resources has progressed. Your Company covered around 80% of its employees in various trainings/conferences. In all, there were 390 nominations, in the in-house training/workshops and external trainings, covering topics of functional and behavioural nature. Eight employees were also nominated to attend international trainings/conferences. Apart from training and development, Your Company also gave sufficient attention to healthcare of its employees and their families and initiated various measures to create an environment of happiness and satisfaction for enhanced productivity.

As on March 31, 2018, the number of people employed was 242.

8. Environmental Protection and Conservation, Technological Conservation, Renewable Energy Developments, Foreign Exchange Conservation.

Your Company has made sincere efforts for conservation of foreign exchange. During the year under report, the amount of foreign exchange outgo was only to the tune of Rs,3.99 crore mainly on account of payment of interest on foreign currency borrowings. Your Company has also put in sincere efforts to protect and conserve the environment and promote community development. Besides, Your Company has been actively engaged in financing of renewable energy projects which are sustainable and environment friendly. Further, Your Company has, through its CSR Projects contributed to environment cleanliness by constructing number of toilets in unreachable areas.

9. Corporate social Responsibility (CsR)

The Corporate Social Responsibility Committee of Directors formulates the CSR Policy and recommends to the Board of Directors on activities to be undertaken by the Company as specified in Schedule VII of Companies Act, 2013 and Companies (Corporate Social Responsibility Policy) Rules,

2014. The CSR Committee recommended the amount to be incurred on the activities and earmarked funds for the envisaged priority areas, as per vision of the Company for a particular financial year. To associate with the CSR Activities of IFCI and its Subsidiaries and Associates, a Trust, by the name of “IFCI Social Foundation” has been established. The investment in CSR activities is mostly project based and for every project, time frame and periodic milestones are set at the outset. Some of the CSR activities undertaken includes contribution to The Akshaya Patra Foundation for purchase of 3 meal distribution Vans in Bhubaneswar, Vishakhapatnam, and Mangalgiri, A.P.; Contribution to Rashtriya Gramin Vikas Nidhi, for construction of toilets in UP, Bihar, Jharkhand and Odisha under Govt.’s Swachhta Action Plan; Contribution to Kalyanam Karoti for construction of toilet complex for differently abled students (both boys and girls) as part of Govt.’s Swachhta Action Plan; Contribution to Asu Machines for providing innovative Asu machines to women weavers of Pochampalli tradition in the state of Telangana; Contribution to Ramakrushna Temple Trust for building of Shelter house/ Shed and toilet for socially and economically backward people of Tunda Village of District Cuttack, Odisha, etc.

Cautionary statement

Certain Statements in Management Discussion and Analysis describing the Company’s objectives, estimates and expectations may be ''forward looking’ within the meaning of applicable laws and regulations. Actual results might differ materially from those expressed or implied.

OWNERSHIP / CAPITAL STRUCTURE / CHANGE IN SECURITIES

An allotment of 3,39,55,857 number of equity shares of face value of ''10/- each was made to The Government of India (GoI) on March 31, 2018 on preferential basis. Also, during the Financial Year 2017

18, 3,88,43,100 number of preference shares were redeemed as per schedule. As on March 31, 2018, GoI, being the Promoter, held 52.94% in the paid-up share capital of Your Company. Apart from this, there has been no other change in the capital structure of the Company.

The Change in the debt structure of the Company is as under:

Total number of securities at the beginning of the year	Issued during the year	Redemption made during the year	Total number of securities at the end of the year
422,14,18,212	-	36,93,152	421,77,25,060

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

Conservation of Energy-The Company’s operations do not involve any manufacturing or processing activities. It provides financial assistance to the industries, thereby requires normal consumption of electricity. Accordingly, the provisions of Section 134 (3) (m) of the Companies Act, 2013 read with Rule 8 (3) of Companies (Accounts) Rules, 2014 are not applicable on the Company.

Technology Absorption-Information Technology (IT) has transformed the conduct of businesses in every sector of the economy. Financial sector is one such area where IT has been instrumental in enhancing the quality, efficiency and speed of delivery of financial services.

During the FY 2017-18, to meet the current and emerging business needs, the existing software applications were upgraded with enhanced/added features. New modules were developed in-house for different functions / products for better and effective seamless control over the processes being implemented and also to improve efficiency.

Your Company has also taken other technologically progressive measures for digitisation of records and digital receipt or remittance of money.

Foreign Exchange Earnings

The details in respect of foreign expenditure / earnings are as follows:

(Rs, in crore)

Particulars	Year End 31.03.2018	Year End 31.03.2017
Expenditure in Foreign Currencies:
Interest on borrowings	3.57	3.69
Other Matters	0.42	0.21
TOTAL	3.99	3.90
Earning in Foreign Currencies:
Earning in Foreign Currency	NIL	NIL

INTERNAL FINANCIAL CONTROLs

Your Company has adequate Internal Control Systems commensurate with size, scale and complexity of its business and allied operations. The efficacy of these internal controls is being verified by the Internal Audit Department on a regular basis through “Risk based Internal Audit” process. The internal audits are being carried out by the Internal Audit Department through external established and reputed Chartered Accountant Firms. The periodicity of such audits varied from quarterly to yearly depending upon the criticality and materiality of transactions after the scope was approved by the Audit Committee of Directors. Based on the observations of internal auditors, corrective actions were undertaken by the process owners in their respective areas thereby strengthening the control systems.

In association with an external consultant of repute, the framework of Internal Financial Control was designed and implemented in FY 2016-17. The operative effectiveness of such controls were tested by Internal and Statutory Auditors during the financial year and was found to be satisfactory. The areas of controls with gaps were identified and bridged or decided for closure within finite period. DECLARATION BY INDEPENDENT DIRECTOR As on March 31, 2018, there was no Independent Director on the Board of the Company. However, during the Financial Year

2017-18, the declaration of Independence was obtained from Prof Arvind Sahay who ceased to be an Independent Director w.e.f. September 12, 2017.

DETAILs OF DIRECTORs AND KEY MANAGERIAL PERsONNEL (KMP) APPOINTED OR REsiGNED DURING THE YEAR

During the year 2017-18, Dr Emandi Sankara Rao (DIN: 05184747) was appointed as Managing Director and Chief Executive Office (MD & CEO) of the Company w.e.f. August 17, 2017. Further, on October 30, 2017, Prof N Balakrishnan (DIN: 00181842) and Prof Arvind Sahay (DIN: 03218334) were appointed as Additional Directors by the Board, and being eligible they have offered themselves to be appointed at the ensuing AGM as Directors whose offices are liable to retire by rotation.

Shri Sanjeev Kaushik, DMD (DIN: 02842527) ceased to be on the Board of the Company w.e.f. December 12, 2017 upon completion of his tenure. Besides, Shri R N Dubey (DIN: 07561054), Government Director ceased to be on the Board of the Company w.e.f. April 01, 2018 vide order of the Government of India dated May 03, 2018. The Government of India vide its Order dated May 11, 2018, nominated Dr Bhushan Kumar Sinha (DIN: 08135512) on the Board of the Company. Accordingly, Dr Bhushan Kumar Sinha was appointed as Director on the Board of the Company w.e.f. May 21, 2018.

Apart from the above, there has been no other change in the Composition of the Board of Directors and Key Managerial Personnel during the year under report.

However, the Board of Directors at its Meeting held on May 23, 2018, had designated Ms Jhummi Mantri, as the interim Chief Financial Officer (CFO) w.e.f. May 24, 2018 in place of Shri B N Nayak. DIRECTOR LIABLE TO RETIRE BY ROTATION Ms Kiran Sahdev (DIN: 06718968) whose office is liable to retire by rotation at this Annual General Meeting, and being eligible has offered herself for re-appointment.

NUMBER OF MEETINGs OF THE BOARD OF DIRECTORs

The details of the Meetings of the Board of Directors forms part of the Corporate Governance Report appearing separately in the Annual Report.

COMPOsITION OF AUDIT COMMITTEE

The details of Composition of Audit Committee forms part of the Corporate Governance Report appearing separately in the Annual Report. There has been no instance where the Board has not accepted recommendations of the Committee.

COMPLIANCE

During the Financial Year 2017-18, Your Company was in compliance of submission of all returns / data / statements as advised by RBI, SEBI and other Regulatory Authorities.

COMPLIANCE WITH sECRETARIAL sTANDARDs Your Company is in compliance with the applicable Secretarial Standards issued by the Institute of Company Secretaries of India and approved by the Central Government under Section 118 (10) of the Companies Act, 2013.

CORPORATE GOVERNANCE

A detailed report on Corporate Governance as stipulated under Listing Regulations is forming part of the Annual Report. Certificate from Practicing Company Secretary regarding compliance with the conditions of Corporate Governance as stipulated in Listing Regulations and under Guidelines on Corporate Governance for Central Public Sector Enterprises, 2010 has been obtained and is annexed at the end of Corporate Governance Report.

DOCUMENTs PLACED ON THE WEBsITE

Pursuant to the provisions of the Companies Act, 2013, Listing Regulations, the Company is required to place various Policies / Documents / Details on the Website of the Company. The Company has a functional website i.e. www.ifciltd.com and all the requisite information are being uploaded thereat.

DIsCLOsURE OF NOMINATION AND REMUNERATION POLICY

Pursuant to the provisions of the Companies Act, 2013 and Listing Regulations, wherever applicable, the Company has put in place a Nomination and Remuneration Policy. Vide Notification No. F.No. 1/2/2014-CL.V dated June 5, 2015, in case of Government Companies, Section 134 (3) (e) of the Companies Act, 2013 shall not apply. Accordingly, the requisite Policy has not been made part of Board’s Report.

EXTRACT OF ANNUAL RETURN

Pursuant to the provisions of the Companies Act, 2013, the extract of the Annual Return in the prescribed format of Form MGT - 9 is at Annexure - III.

CORPORATE SOCIAL RESPONSIBILITY

The Disclosure of contents of Corporate Social Responsibility Policy in the Board’s Report pursuant to the provisions of Companies (Corporate Social Responsibility Policy) Rules, 2014 is at Annexure -IV. PARTICULARs OF EMPLOYEEs AND REMUNERATION

The requisite details, envisaged under the provisions of Rule V of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are annexed with this report at Annexure-V. DISCLOSURE ON RELATED PARTY TRANSACTIONS Disclosure on Related Party Transactions during FY 2017-18 in the prescri

prescribed Form AOC-2 is provided in Annexure-VI.

POLICY ON DEALING WITH RELATED PARTY TRANSACTIONS

I. Approval by Audit Committee

1. All Related Party Transactions (RPTs) (including any subsequent modifications thereof) shall require prior approval of the Audit Committee of Directors.

2. The Audit Committee of Directors may grant omnibus approval for the RPTs proposed to be entered into by the Company.

The Conditions for granting Omnibus approval are as under:

All related party transactions shall require approval of the Audit Committee and the Audit Committee may make omnibus approval for related party transactions proposed to be entered into by the Company subject to the following conditions, namely:-

1. The Audit Committee shall, after obtaining approval of the Board of Directors, specify the criteria for making the omnibus approval which shall include the following, namely:-

(a) maximum value of the transactions, in aggregate, which can be allowed under the omnibus route in a year;

(b) the maximum value per transaction which can be allowed;

(c) extent and manner of disclosures to be made to the Audit Committee at the time of seeking omnibus approval;

(d) review, on quarterly basis or at such intervals as the Audit Committee may deem fit, related party transaction entered into by the Company pursuant to each of the omnibus approval made;

(e) transactions which cannot be subjected to the omnibus approval by the Audit Committee.

2. The Audit Committee shall consider the following factors while specifying the criteria for making omnibus approval, namely:-

(a) repetitiveness of the transactions (in past or in future);

(b) justification for the need of omnibus approval.

3. The Audit Committee shall satisfy itself on the need for omnibus approval for transactions of repetitive nature and that such approval is in the interest of the Company.

4. The omnibus approval shall contain or include the following:-

(a) name of the related parties;

(b) nature and duration of the transactions;

(c) maximum amount of transaction that can be entered into;

(d) the indicative base price or current contracted price and the formula for variation in the price, if any; and

(e) any other information relevant or important for the Audit Committee to take a decision on the proposed transaction:

Provided that where the need for related party transaction cannot be foreseen and the aforesaid details are not available, audit committee may make omnibus approval for such transactions subject to their value not exceeding ''1 crore per transaction.

5. Omnibus approval shall be valid for a period not exceeding one financial year and shall require fresh approval after the expiry of such financial year.

6. Omnibus approval shall not be made for transactions in respect of selling or disposing of the undertaking of the Company.

7. Any other conditions as the Audit Committee may deem fit.

II. Approval by Board of Directors Except with the consent of the Board of Directors given by a resolution at a meeting of the Board, IFCI shall not enter into any contract or arrangement with a related party with respect to:

(a) Sale, purchase or supply of any goods or materials;

(b) Selling or otherwise disposing of, or buying, property of any kind;

(c) Leasing of property of any kind;

(d) Availing or rendering of any services;

(e) Appointment of any agent for purchase or sale of goods, materials, services or property;

(f) Such related party’s appointment to any office or place of profit in the company, its subsidiary company or associate company; and

(g) Underwriting the subscription of any securities or derivatives thereof, of the company:

Provided that nothing of the above shall apply to any transactions entered into by IFCI in its ordinary course of business other than transactions which are not on an arm’s length basis.

Explanation:

The expression “office or place of profit” means any office or place: Where such office or place is held by a Director, if the Director holding it receives from IFCI anything by way of remuneration over and above the remuneration to which he is entitled as Director, by way of salary, fee, commission, perquisites, any rent free accommodation, or otherwise;

Where such office or place is held by an individual other than a Director or by any firm, private company or other body corporate, if the individual, firm, private company or body corporate holding it receives from IFCI anything by way of remuneration, salary, fee, commission, perquisites, any rent-free accommodation, or otherwise;

The expression “arm’s length transaction” means a transaction between two related parties that is conducted as if they were unrelated, so that there is no conflict of interest.

III. Approval by shareholders

1. Except with the prior approval of the company by a special/ordinary resolution, as may be specified under the Companies Act, 2013 or the Regulations, IFCI shall not enter into a transaction(s), where the transaction(s) to be entered into:

(a) as contracts or arrangements with respect to clauses (a) to (e) of sub-section (1) of Section 188 of the Companies Act 2013, with criteria as mentioned below:

(i) Sale, purchase or supply of any goods or materials, directly or through appointment of agent, amounting to 10% or more of the turnover of the company or Rs,100 crore, whichever is lower, as mentioned in clause (a) and clause (e) respectively of sub-section (1) of Section 188;

(ii) Selling or otherwise disposing of or buying property of any kind, directly or through appointment of agent, amounting to 10% or more of net worth of the company or Rs,100 crore, whichever is lower, as mentioned in clause (b) and clause (e) respectively of sub-section (1) of Section 188;

(iii) leasing of property of any kind amounting to 10% or more of the net worth of the company or 10% or more of turnover of the company or Rs,100 crore, whichever is lower, as mentioned in clause (c) of sub-section (1) of Section 188;

(iv) availing or rendering of any services, directly or through appointment of agent, amounting to 10% or more of the turnover of the company or Rs,50 crore, whichever is lower, as mentioned in clause (d) and clause (e) respectively of sub-section (1) of Section 188.

Explanation: It is hereby clarified that the limits specified in sub-clauses (i) to (iv), as above, shall apply for transaction or transactions to be entered into either individually or taken together with the previous transactions during a financial year.

(b) Is for appointment to any office or place of profit in the Company, its subsidiary company or associate company at a monthly remuneration exceeding Rs,2.5 lakh as mentioned in clause (f) of sub-section (1) of Section 188; or

(c) Is for remuneration for underwriting the subscription of any securities or derivatives thereof of the company exceeding 1% of the net worth as mentioned in clause (g) of sub-section (1) of Section 188.

Explanation:

(1) The Turnover or Net Worth referred in the above sub rules shall be computed on the basis of the Audited Financial Statement of the preceding financial year.

(2) In case of a wholly owned subsidiary, the special resolution passed by IFCI shall be sufficient for the purpose of entering into the transactions between the wholly owned subsidiary and IFCI.

2. All the related parties shall abstain from voting on such resolutions.

3. No Member of IFCI shall vote on such Special/ Ordinary Resolution (as the case may be), to approve any contract or arrangement which may be entered into by the Company, if such member is a related party.

Proviso: The above clauses II and III, with respect to the Approval of Board and shareholder’s, respectively will not be applicable in the following cases:

1. Transactions entered into between two Government Companies.

2. Transactions entered into between a holding company and its wholly owned subsidiary whose accounts are consolidated with such holding company and placed before the shareholders at the general meeting for approval.

Qualifications, Reservation or Adverse Remark or Disclaimer made by the statutory Auditors

There were no qualifications or reservations or adverse remarks made by the Statutory Auditors of Your Company for the standalone financial statements. However, the auditors have made following observations:

For standalone Financial statements:

Emphasis of Matter:

We draw attention to Note No 33 of the standalone financial statements related to change in appropriation policy of the company regarding amount recovered from borrowers which has resulted in increase of net loss by ''32.17 crore.

For Consolidated Financial statements:

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid consolidated financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the consolidated state of affairs of the Group and its associates as at March 31, 2018, and their consolidated loss and their consolidated cash flow for the year ended on that date, subject to the qualified opinion and disclaimer reported by Statutory Auditors of one subsidiary company i.e. M/s IFCI Factors limited which are reproduced herein below:

Basis of Qualified opinion

A. Company has identified two cases as NPA i.e. (i) Concast Steel and Power Limited (Rs,15.69 crore) (ii) Concast Exim Limited (Rs,10.30 crore) during the year as on 31.12.2017 which were identified by us in the previous year i.e. 2016-17 as on 31.03.2017 and made provisions @15%. In our opinion, 100% provision of the unsecured portion amounting of Rs,19.29 crore should have been made since an asset becomes doubtful that has remained sub-standard for a period exceeding 12 months for the financial year ending March 31, 2018. Hence Rs,15.54 crore less provision has been made on account of NPA. So the income as well as advances has been overstated by Rs,15.54 crore. Our audit opinion on the financial statements for the year ended March 31, 2018 was also qualified in respect of this matter.

Qualified Opinion

In our opinion and to the best of our information and according to the explanations given to us, except for the effects of the issues stated in the “Basis for Qualified opinion” paragraph above the aforesaid financial statements, give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the company as at 31^st March 2018 and its Loss and its cash flow for the year ended on that date.

In this regard, the Management’s response was that as per books of accounts of IFCI Factors Ltd, they have classified the cases as NPA on 31^st December 2017 and accordingly 15% provision has been made as per their policy.

Basis of Disclaimer of Opinion

A. Note No. 25 to the financial statements regarding recognition of Deferred Tax Assets on account of provisions of Non-Performing Assets. In case of Deferred Tax Assets of Rs,95.58 crore as on 31.03.2018, in the opinion of management there is reasonable certainty of availability of future taxable income to realize the deferred tax assets. Considering the past accumulated losses and further stressed standard assets and nature of factoring business, we are unable to comment on the sufficiency of the future taxable profits of the company which can realize the deferred tax assets.

As a result of this matter, we are not been able to obtain sufficient appropriate audit evidence on the said matter to state whether any adjustments would be required to the information included in the financial statements and impact thereof.

Disclaimer of Opinion:

Because of significance of these matter described in the basis of Disclaimer of Opinion paragraph, we are unable to express our opinion for the same.

With respect to the disclaimer of Opinion, the Management’s response was that there is reasonable certainty of availability of future taxable income to realize the deferred tax assets.

Emphasis of Matter

(a) The holding company holds investment in six companies to the extent of 20% or more of their respective total share capital and accordingly these companies are the associates of the holding company as per the Companies Act, 2013. For the reasons stated in the Note No. 26.1 of the financial statement, these associates have not been consolidated in the preparation of the consolidated financial statements of the Group. Our report is not modified on the matter.

(b) We draw attention to Note No. 31 of the consolidated financial statements related to litigation of subsidiary company. Pending adjudication of the matter by the Honourable Supreme Court, in the opinion of the management, no provision or adjustment is required in the books of accounts of subsidiary company. Our report is not modified in respect of this matter.

AUDITORs

M/s KPMR & Associates (DE0637) (Firm Reg. No. 02504N) was appointed by the Comptroller & Auditor General of India (C&AG) as Statutory Auditors of Your Company for FY 2017-18. C&AG has appointed M/s KPMR & Associates (DE0637) (Firm Reg. No. 02504N) as Statutory Auditors for the Financial Year 2018-19 as well.

Qualifications, Reservation or Adverse Remark or Disclaimer made by the secretarial Auditor

M/s Navneet K. Arora & Co LLP Company Secretaries was appointed as Secretarial Auditor of the Company for the Financial Year 2017-18. The observations of the Secretarial Auditor are as under:

1. Constitution of the Board, Audit Committee, & Nomination & Remuneration Committee without appointment of minimum number of Independent Directors by the Administrative Ministry of the Government of India during the period from 01^st April 2017 to 31^st March 2018, due to cessation of Independent Directors namely Smt Savita Mahajan (DIN- 06492679) Shri K S Sreenivasan (DIN-05273535) and Shri S V Ranganath (DIN- 00323799) after completion of their tenure w.e.f 1^st April 2017 and Corporate Social Responsibility Committee after completion of tenure of Prof Arvind Sahay (DIN- 03218334) w.e.f 12^th September, 2017. Further, no Meeting of the Independent Directors was held during the financial year for carrying out the evaluation of performance of Directors, due to non-availability of minimum number of independent directors on the Board of the Company.

2. Delay in filing of e-returns in Form No(s). NBS-7 for the quarter ended 30^th June 2017, 30^th September 2017 & 31^st December2017with Reserve Bank of India.

3. Imposition of Penalty by the Securities and Exchange Board of India (SEBI):

SEBI Adjudication Officer vide Order no. RA/JP/257/2017 dated 22^nd December, 2017, in exercise of its powers, imposed a penalty of ''14 lakh on the Company U/S 15 A (b) of the SEBI Act, 1992, in the matter of Glodyne Technoserve Limited for violation of certain provisions w.r.t. disclosures requirements under SEBI (Substantial Acquisition of Shares and Takeovers) Regulation, 2011 and SEBI (Prohibition of Insider Trading) Regulations, 2015.

The point -wise management reply to the observations made by the secretarial Auditor as above is as under:

1. In terms of Section 149(6) of the Companies Act, 2013, the Department of Financial Services (DFS), Ministry of Finance (MOF), Government of India (GOI) being the administratively in charge of the Company, is the Competent Authority to appoint Independent Directors (IDs). Requests were made for appointment/nomination of IDs on the Board of the Company. The appointments were awaited.

2. The e-return NBS-7 was filed only after Board approval of the accounts for the respective periods. Reserve Bank of India was informed of the same, who had not objected to the request of the company, considering the facts. Further, the Company being a listed entity, the result which is part of NBS-7 return, cannot be disclosed prior to the same is provided to Stock Exchanges, where the shares of the Company are listed.

3. The Company had filed appeal against the above order before Securities Appellate Tribunal (SAT), Mumbai and vide its order dated 25^th April, 2018, SAT was pleased to quash and set aside the order passed by Adjudicating Officer of SEBI dated 22^nd December, 2017 imposing the penalty of ''14 lakh on IFCI Limited and restored the matter to the file of the Adjudicating Officer (AO) of SEBI for fresh decision on merit in accordance with Law, on the ground that SEBI has inadvertently not considered certain pleadings of IFCI Limited.

The Secretarial Audit Report for FY 2017-18 in Form MR-3 is annexed at Annexure-VII.

PERFORMANCE EVALUATION

The performance evaluation of the Board, its Committees and individual Directors was conducted by the Nomination and Remuneration Committee and the Board. Since, there was only

1 Independent Director on the Board of the Company for part of the financial year 2017-18 who ceased to hold office w.e.f. September 12, 2017, no Meeting of the Independent Directors could be held. Communications requesting appointment of requisite number of Independent Directors have been sent to the Ministry of Finance, being the Administrative Ministry.

disclosure as PER sexual harassment OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDREssAL) ACT, 2013

An Internal Complaint Committee has been formed and the Members of the said Committee, at present are as under:

1. Ms Parul Khosla - External Member

2. Ms Jhummi Mantri, General Manager

3. General Manager (Human Resources) - Presiding Officer

4. Ms Anamika Ranawat, Deputy General Manager (Law)

5. Mr Ravish Jain, Assistant General Manager

In the absence of any of the aforesaid Members, Ms Sapna Jain, AGM (Law) would be the alternate Member. disclosure ON LOAN, GUARANTEEs OR INVEsTMENT UNDER sECTION 186 OF THE COMPANIEs ACT, 2013.

As the Company is primarily engaged in the business of financing Companies in the capacity of being a Non-Banking Financial Company, the provisions of Section 186 [except for sub-section (1)] of the Companies Act, 2013 are not applicable to the Company.

RISK MANAGEMENT POLICY

DISCLOSURE INDICATING DEVELOPMENT AND IMPLEMENTATION OF A RISK MANAGEMENT POLICY IS PROVIDED IN THE MANAGEMENT DISCUSSION AND ANALYSIS REPORT FORMING PART OF THIS REPORT. DISCLOSURE ON RECEIPT OF COMMISSION BY A DIRECTOR FROM SUBSIDIARY COMPANY

No Director of the Company, including the MD&CEO and DMD, was paid any commission during the FY 2017-18 from any of the subsidiary of Your Company, on whose Boards they were Directors as nominees of Your Company.

PUBLIC DEPOSITS

Your Company did not raise any public deposit during the year. There was no public deposit outstanding as at the beginning or end of the Financial Year 2017-18.

DISCLOSURE OF SIGNIFICANT OR MATERIAL ORDERS PASSED BY REGULATORS OR COURT IMPACTING THE GOING CONCERN STATUS OF THE COMPANY

In the matter of Blue Coast Hotels, upon the default of the borrower in the repayment of dues of the IFCI Ltd., IFCI had sold the mortgaged assets in the year 2015 for an amount of Rs,515.44 crore (approx.) to ITC Limited under the provisions of SRFAESI Act, 2002. Upon challenge by the borrower, the sale was set aside by the Hon’ble High Court of Bombay vide its Order dated 23.03.2016. Being aggrieved, IFCI had filed SLP before the Hon’ble Supreme Court of India. The Hon’ble Supreme Court of India, vide its Order dated 19.03.2018, had dismissed all the objections raised by the borrower and had confirmed the sale of the mortgaged property in favour of ITC Limited. As a consequence, the matter of dispute has been fully settled.

VIGILANCE

During 2017-18, Vigilance manual of the company was reviewed by the Board and updated for due compliance of CVC guidelines. Vigilance Department conducted regular structured meetings with IFCI management and meetings with Head of subsidiary Companies to discuss vigilance matters and to acquaint them with latest CVC circulars and guidelines.

During the year, Vigilance Department organized following training /workshop programmes for vigilance awareness in the company:

(i) Preventive Vigilance on Credit Appraisal.

(ii) CVC guidelines for procurement of good and services.

(iii) Preventive Vigilance with the theme of learning’s from recent frauds.

The Vigilance Department also undertook following initiatives for improvement in system and procedures in the company:

(i) Vigilance manual reviewed and updated for due compliance with CVC guidelines.

(ii) Integrity Pact approved by the Board of Directors.

(iii) e-Auction route for sale of fixed assets made compulsory and e-Procurement made mandatory.

(iv) Various systemic improvements pertaining to due diligence process while accepting Valuation of Security, no acceptance of unlisted equity as security, avoidance of moratorium in Short Term / Corporate Loans and timely creation of security before disbursement were suggested.

CHANGE IN NATURE OF BUSINESS AND MATERIAL CHANGES AND COMMITMENTS AFFECTING FINANCIAL POSITION BETWEEN THE END OF THE FINANCIAL YEAR AND REPORTING DATE.

There has been no change in the business of the Company during the reporting period. Further, there have been no material changes and commitments which affect the financial position between the end of financial year and date of Board’s Report.

DIRECTORs RESPONSIBILITY STATEMENT Pursuant to the requirement under Section 134 of the Companies Act 2013, with respect to Directors’ Responsibility Statement, it is hereby confirmed that:

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

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

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

(iv) The Directors had prepared the annual accounts on a going concern basis;

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

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

Details of Debenture Trustees

As per the provisions of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the relevant details of the Debenture Trustees are as under:

Name of Debenture Trustee	Contact Details
Axis Trustee Services Limited	2nd Floor - E, Axis House Bombay Dyeing Mills Compound P&ndurang Budhkar Marg Worli, Mumbai - 400025 E-mail: [email protected] Website: www.axistrustee.com
IDBI Trusteeship Services Limited	Asian Building, Ground Floor 17, R. Kamani Marg, Ballard Estate Mumbai - 400001 E-mail: [email protected] Website: www.idbitrustee.in
Centbank Financial Services Limited	3rd Floor (East Wing) Central Bank of India, MMO Building 55 M G Road Mumbai - 400001 E-mail: [email protected] Website: www.cfsl.in

Comments of Comptroller & Auditor General of India

The comments of Comptroller & Auditor General of India (C&AG) and the response of the Management are at Addendum. Appreciation

Your Directors wish to express gratitude for the cooperation, guidance and support from the Ministry of Finance, various other Ministries and Departments of the Government of India, The Reserve Bank of India, The Securities and Exchange Board of India, Stock Exchanges and other regulatory bodies, The Comptroller & Auditor General of India and State Governments. Your Directors also acknowledge the valuable assistance and continued cooperation received from all banks, financial institutions, overseas correspondent banks, other members of the banking fraternity and investors. Your Directors would also like to express their appreciation for the efforts and dedicated service put in by the employees of Your Company at all levels.

Dr Emandi sankara Rao Ms Kiran sahdev

Managing Director & Non-Executive Director

Chief Executive Officer DIN_: 06718968

^{DIN: 05184747}

Address: IFCI Tower

Address: IFCI Tower 61 Nehru Place

61 Nehru Place New Delhi - 110019 New Delhi - 110019

Dated: July 27, 2018

---

Mar 31, 2017

board’s report

To the Members

The Board of Directors of your Company presents the Twenty Fourth Annual Report of IFCI Limited together with the Audited Financial Statements for the year ended March 31, 2017.

FINANCIAL SUMMARY AND STATE OF COMPANY’S AFFAIRS

(Rs, crore)

Sl. No.	PARTICULARS	FY 2016-17	FY 2015-16 (Regrouped)
1.	Operational Income	2,740	3,819
2.	Total Income	2,874	4,007
3.	Cost of Borrowings	2,289	2,517
4.	Staff Cost /Other Expenditure	138	137
5.	Depreciation	34	14
6.	Total Expenditure	2,462	2,669
7.	Profit Before Provisions /Write-off	413	1,338
8.	Provision for Bad & Doubtful Assets and Others (Net of Write off)	1,192	895
9.	Profit/(Loss) Before Tax	(779)	443
10.	Tax Expense	(321)	106
11.	Profit/(Loss) After Tax	(458)	337
12.	Surplus Brought forward from Previous year	1,924	1,923
13.	Appropriations :
	Reserve u/s 45IC of RBI Act	-	-
	Special Reserve u/s 36(1)(viii) of the Income Tax Act	-	55
	Debenture Redemption Reserve	76	76
	Expenditure on Corporate Social Responsibility Activities	-	7
	Dividend on Equity Shares (incl. tax)	-	198
	Dividend on Preference Shares (excl. Tax)	01	0*
14.	Balance carried to Balance Sheet	1,389	1,924

DIVIDEND

Your Company paid dividend of Rs, 0.26 crore on preference shares. However, in view of the loss incurred during the year and with a view to preserving capital and cash for future growth, no dividend has been recommended on equity shares. Also, as per the provisions of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company has formulated a Dividend Distribution Policy which is enclosed at Annexure-I. The Dividend Distribution Policy is also available on the website of the Company at www.ifciltd.com CHANGE IN NATURE OF BUSINESS AND MATERIAL CHANGES AND COMMITMENTS AFFECTING FINANCIAL POSITION BETWEEN THE END OF THE FINANCIAL YEAR AND REPORTING DATE.

There has been no change in the business of the Company during the reporting period. Further, there have been no material changes and commitments which affect the financial position between the end of financial year and date of Board’s Report.

OWNERSHIP / CAPITAL STRUCTURE / CHANGE IN SECURITIES

There was no change in the ownership of the Government of India in your Company during FY 2016-17 and it continued to hold 51.04% in the paid-up share capital in IFCI as on March 31, 2017. There has also been no change in the capital structure of the Company.

The change in the debt structure of the Company is as under:

Total Number of Securities at the beginning of the year	Issued during the year	Redemption made during the year	Total Number of Securities at the end of the year
4,22,12,61,443	5,750	2,18,718	4,22,10,48,475

Details of Debenture Trustee

As per the provisions of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the relevant details of the Debenture Trustees are as under:

Name of the Debenture Trustee	Contact Details
Axis Trustee Services Limited	2nd Floor - E, Axis House Bombay Dyeing Mills Compound Pandurang Budhkar Marg Worli, Mumbai - 400025 E-mail: [email protected] Website: www.axistrustee.com
IDBI Trusteeship Services Limited	Asian Building, Ground Floor 17, R. Kamani Marg, Ballard Estate Mumbai - 400001 E-mail: [email protected] Website: www.idbitrustee.in
Centbank Financial Services Limited	3rd Floor (East Wing) Central Bank of India, MMO Building 55 M G Road, Mumbai - 400001 E-mail: [email protected] Website: www.cfsl.in

DETAILS OF DIRECTORS AND KEY MANAGERIAL PERSONNEL (KMP) APPOINTED OR RESIGNED DURING THE YEAR.

Since the last Board Report, there have been some changes in the composition of the Board of Directors. During the year 2016-17, Ministry of Finance had vide its Order dated July 6, 2016, appointed Shri R N Dubey (DIN: 07561054) on the Board of the Company vice Shri Alok Tandon (DIN: 01841717). Also, during the year, Prof N Balakrishnan (DIN: 00181842), upon his retirement as NonExecutive Director, ceased to be on the Board of the Company. Shri Malay Mukherjee (DIN: 02272425) and Shri Achal Kumar Gupta (DIN: 02192183) ceased to be on the Board upon completion of their tenure as CEO and Managing Director and Deputy Managing Director respectively. Also, Shri S V Ranganath (DIN: 00323799), Smt. Savita Mahajan (DIN: 06492679) and Shri K S Sreenivasan (DIN: 05273535) ceased to be on the Board of the Company upon completion of their tenure as Independent Directors. Further, Ministry of Finance vide its Order dated December 9, 2016 appointed Shri Sanjeev Kaushik (DIN: 02842527) as Deputy Managing Director, in additional charge.

Apart from the above, there has been no other change in the Composition of the Board of Directors and Key Managerial Personnel during the year.

DIRECTOR LIABLE TO RETIRE BY ROTATION

Ms Kiran Sahdev (DIN: 06718968) will retire by rotation at the conclusion of the forthcoming Annual General Meeting and being eligible has offered herself for re-appointment.

NUMBER OF MEETINGS OF THE BOARD OF DIRECTORS The details of the Meetings of the Board of Directors forms part of the Corporate Governance Report appearing separately in the Annual Report.

COMPOSITION OF AUDIT COMMITTEE

The details of Composition form part of the Corporate Governance Report appearing separately in the Annual Report. There has been no matter where the Board has not accepted recommendations of the Committee.

DISCLOSURE OF NOMINATION AND REMUNERATION POLICY

Pursuant to the provisions of the Companies Act, 2013 and Listing Regulations, wherever applicable, the Company has put in place a Nomination as well as a Remuneration Policy. Vide Notification No. F.No. 1/2/2014-CL.V dated June 5, 2015, in case of Government Companies, Section 134(3)(e) of the Companies Act, 2013 shall not apply. Accordingly, the requisite Policy has not been made part of Board’s Report.

DISCLOSURE ON RELATED PARTY TRANSACTIONS

Disclosure on Related Party Transactions during FY 2016-17 in the prescribed Form AOC-2 is provided in Annexure II.

POLICY ON DEALING WITH RELATED PARTY TRANSACTIONS I. Approval by Audit Committee

1. All Related Party Transactions (RPTs) (including any subsequent modifications thereof) shall require prior approval of the Audit Committee of Directors.

2. The Audit Committee of Directors may grant omnibus approval for the RPTs proposed to be entered into by the Company.

The Conditions for granting Omnibus approval are as under:

All related party transactions shall require approval of the Audit Committee and the Audit Committee may make omnibus approval for related party transactions proposed to be entered into by the Company subject to the following conditions, namely:-

1. The Audit Committee shall, after obtaining approval of the Board of Directors, specify the criteria for making the omnibus approval which shall include the following, namely:-

(a) maximum value of the transactions, in aggregate, which can be allowed under the omnibus route in a year;

(b) the maximum value per transaction which can be allowed;

(c) extent and manner of disclosures to be made to the Audit Committee at the time of seeking omnibus approval;

(d) review, on quarterly basis or at such intervals as the Audit Committee may deem fit, related party transaction entered into by the Company pursuant to each of the omnibus approval made;

(e) transactions which cannot be subjected to the omnibus approval by the Audit Committee.

2. The Audit Committee shall consider the following factors while specifying the criteria for making omnibus approval, namely: -

(a) repetitiveness of the transactions (in past or in future);

(b) justification for the need of omnibus approval.

3. The Audit Committee shall satisfy itself on the need for omnibus approval for transactions of repetitive nature and that such approval is in the interest of the Company.

4. The omnibus approval shall contain or include the following:-

(a) name of the related parties;

(b) nature and duration of the transactions;

(c) maximum amount of transaction that can be entered into;

(d) the indicative base price or current contracted price and the formula for variation in the price, if any; and

(e) any other information relevant or important for the Audit Committee to take a decision on the proposed transaction:

Provided that where the need for related party transaction cannot be foreseen and the aforesaid details are not available, audit committee may make omnibus approval for such transactions subject to their value not exceeding Rs, 1 crore per transaction.

5. Omnibus approval shall be valid for a period not exceeding one financial year and shall require fresh approval after the expiry of such financial year.

6. Omnibus approval shall not be made for transactions in respect of selling or disposing of the undertaking of the Company.

7. Any other conditions as the Audit Committee may deem fit.

II. Approval by Board of Directors

Except with the consent of the Board of Directors given by a

resolution at a meeting of the Board, IFCI shall not enter into

any contract or arrangement with a related party with respect to:

(a) Sale, purchase or supply of any goods or materials;

(b) Selling or otherwise disposing of, or buying, property of any kind;

(c) Leasing of property of any kind;

(d) Availing or rendering of any services;

(e) Appointment of any agent for purchase or sale of goods, materials, services or property;

(f) Such related party’s appointment to any office or place of

profit in the company, its subsidiary company or associate company; and

(g) Underwriting the subscription of any securities or derivatives thereof, of the company:

Provided that nothing of the above shall apply to any transactions entered into by IFCI in its ordinary course of business other than transactions which are not on an arm’s length basis. Explanation:

The expression “office or place of profit” means any office or place: Where such office or place is held by a director, if the director holding it receives from IFCI anything by way of remuneration over and above the remuneration to which he is entitled as director, by way of salary, fee, commission, perquisites, any rent-free accommodation, or otherwise;

Where such office or place is held by an individual other than a director or by any firm, private company or other body corporate, if the individual, firm, private company or body corporate holding it receives from IFCI anything by way of remuneration, salary, fee, commission, perquisites, any rent-free accommodation, or otherwise;

The expression “arm’s length transaction” means a transaction between two related parties that is conducted as if they were unrelated, so that there is no conflict of interest.

III. Approval by Shareholders

1. Except with the prior approval of the company by a special/ordinary resolution, as may be specified under the Companies Act, 2013 or the Regulations, IFCI shall not enter into a transaction(s), where the transaction(s) to be entered into:

(a) as contracts or arrangements with respect to clauses (a) to (e) of sub-section (1) of Section 188 of the Companies Act 2013, with criteria as mentioned below:

(i) Sale, purchase or supply of any goods or materials, directly or through appointment of agent, amounting to 10% or more of the turnover of the company or '' 100 crores, whichever is lower, as mentioned in clause (a) and clause (e) respectively of sub-section (1) of Section 188;

(ii) Selling or otherwise disposing of or buying property of any kind, directly or through appointment of agent, amounting to 10% or more of net worth of the company or '' 100 crores, whichever is lower, as mentioned in clause (b) and clause (e) respectively of sub-section (1) of Section 188;

(iii) leasing of property of any kind amounting to 10% or more of the net worth of the company or 10% or more of turnover of the company or '' 100 crores, whichever is lower, as mentioned in clause (c) of sub-section (1) of Section 188;

(iv) availing or rendering of any services, directly or through appointment of agent, amounting to 10% or more of the turnover of the company or '' 50 crores, whichever is lower, as mentioned in clause (d) and clause (e) respectively of subsection (1) of Section 188.

Explanation: It is hereby clarified that the limits specified in sub-clauses (i) to (iv), as above, shall apply for transaction or transactions to be entered into either individually or taken together with the previous transactions during a financial year.

(b) Is for appointment to any office or place of profit in the Company, its subsidiary company or associate company at a monthly remuneration exceeding '' 2.5 lakh as mentioned in clause (f) of sub-section (1) of Section 188; or

(c) Is for remuneration for underwriting the subscription of any securities or derivatives thereof of the company exceeding 1% of the net worth as mentioned in clause

(g) of sub-section (1) of Section 188.

Explanation:

(1) The Turnover or Net Worth referred in the above subrules shall be computed on the basis of the Audited Financial Statement of the preceding financial year.

(2) In case of a wholly owned subsidiary, the special resolution passed by the IFCI shall be sufficient for the purpose of entering into the transactions between the wholly owned subsidiary and IFCI.

2. All the related parties shall abstain from voting on such resolutions.

3. No Member of IFCI shall vote on such Special/ Ordinary Resolution (as the case may be), to approve any contract or arrangement which may be entered into by the Company, if such member is a related party.

Proviso:

The above clauses II and III, with respect to the Approval of Board and Shareholder’s, respectively will not be applicable in the following cases:

1. Transactions entered into between 2 Government Companies.

2. Transactions entered into between a holding company and its wholly owned subsidiary whose accounts are consolidated with such holding company and placed before the shareholders at the general meeting for approval.

EXTRACT OF ANNUAL RETURN

Pursuant to the provisions of the Companies Act, 2013, the extract of the Annual Return in the prescribed format of Form MGT - 9 is placed at Annexure - III.

CORPORATE SOCIAL RESPONSIBILITY

The Disclosure of contents of Corporate Social Responsibility Policy in the Board’s Report pursuant to the provisions of Companies (Corporate Social Responsibility Policy) Rules, 2014 is at Annexure - IV. PARTICULARS OF EMPLOYEES AND REMUNERATION -PURSUANT TO RULE V OF COMPANIES (APPOINTMENT AND REMUNERATION) RULES, 2014.

The requisite details, envisaged under the provisions of Rule V of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are annexed with this report at Annexure - V. EMPLOYEE STOCK OPTION DETAILS

The requisite details, pursuant to the provisions of SEBI (Share Based Employee Benefits) Regulations, 2014 and pursuant to the provisions of Rule 12 (9) of the Companies (Share Capital and Debentures) Rules, 2014, are at Annexure - VI. Though the ESOP Scheme has been discontinued, the disclosures are made in term of the above Guidelines.

PERFORMANCE EVALUATION

The performance evaluation of the Board, its Committees and individual Directors was conducted by the Nomination and Remuneration Committee and the Board.

Since, there is only 1 Independent Director on the Board of the Company, hence, no Meeting of the Independent Directors could be held. As directed by the Nomination and Remuneration Committee of Directors a communication requesting appointment of requisite number of Independent Directors has been sent to the Administrative Ministry.

DISCLOSURE AS PER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

An Internal Complaints Committee has been formed and the details of the Members of the said Committee at IFCI are as under:

1. Ms. Parul Khosla - External Member

2. Ms. Pooja Mahajan - General Manager (HR)

3. Ms. Rupa Deb - General Manager

4. Ms. Pooja Tiku - Deputy General Manager (Legal)

5. Mr. Ravish Jain - Assistant General Manager

In the absence of any of the aforesaid members, Ms. Sara Najmi, Assistant General Manager (Legal) would be the alternate Member. DISCLOSURE ON LOAN, GUARANTEES OR INVESTMENT UNDER SECTION 186 OF THE COMPANIES ACT, 2013.

As the Company is primarily engaged in the business of financing Companies in the capacity of being a Non-Banking Financial Company, therefore the provisions of Section 186 [except for subsection (1)] of the Companies Act, 2013 are not applicable to the Company.

RISK MANAGEMENT POLICY

Disclosure indicating development and implementation of a Risk Management Policy is provided in the Management Discussion and Analysis Report forming part of this Report.

PUBLIC DEPOSITS

Your Company did not raise any public deposit during the year. There was no public deposit outstanding as at the beginning or end of the year as on March 31, 2017.

DISCLOSURE ON RECEIPT OF COMMISSION BY A DIRECTOR FROM SUBSIDIARY COMPANY

No Director of the Company, including the CEO & MD and DMD, was paid any commission during the FY 2016-17 from any of the subsidiary of your Company, on whose Boards they were Directors as nominees of your Company.

DISCLOSURE OF SIGNIFICANT OR MATERIAL ORDERS PASSED BY REGULATORS OR COURT IMPACTING THE GOING CONCERN STATUS OF THE COMPANY

The Supreme Court in W.P. (Civil) No.355 of 2011 filed by Centre for Public Litigation Vs. Union of India & Others, vide its Order dated 23-09-2016 has directed that a scrutiny be conducted by Reserve Bank of India (RBI), Securities and Exchange Board of India (SEBI) & Serious Frauds Investigation Office, taking into consideration the various allegations of administrative and financial irregularities during the period 2008-2012 in IFCI, and report be submitted to Union Government for taking further action in the matter. The scrutiny was conducted by the respective authorities. However, the order at present has no impact on the operations as a going concern. VIGILANCE

During 2016-17, IFCI reviewed and modified its Vigilance Policy & Manual on the lines of CVC directives with the approval of the Board of Directors. The modifications have further streamlined vigilance activities in IFCI and provided clarity on several issues for smooth conduct of inquiries and disciplinary proceedings.

During the year, Vigilance Department has organised following training/ workshop programmes:

(a) CVC Guidelines on complaints.

(b) Lodgment of complaint under Whistle-blower Portal of IFCI.

(c) Compilation of FFO Reports

(d) Preventive Vigilance & Staff Accountability

(e) A lecture by senior official from CVC on “Preventive Vigilance in Loans”.

(f) Workshop on preventive vigilance in credit appraisal.

The Vigilance Department has also undertaken following initiatives for improvement in system and procedures at IFCI:

(i) For sale of fixed assets, e-auction route has been made compulsory.

(ii) E-Procurement has been made mandatory.

(iii) Preventive vigilance in lending practices.

PERFORMANCE OF SUBSIDIARIES AND ASSOCIATES PROMOTED BY IFCI

Subsidiaries

Stock Holding Corporation of India Ltd (SHCIL)

Stock Holding Corporation of India Ltd (SHCIL), a subsidiary of IFCI Limited, was promoted by the public financial institutions and incorporated as a public limited company on July 28, 1986. SHCIL, one of the largest Depository Participants, besides being the country’s largest premier Custodian in terms of assets under custody, provides post trading and custodial services to institutional investors, mutual funds, banks, insurance companies, etc. SHCIL acts as a Central Record Keeping Agency (CRA) for collection of stamp duty in 19 States and Union Territories on pan India basis. SHCIL is one of the largest Professional Clearing Member of the country. SHCIL distributes GOI Bonds, Sovereign Gold Bonds, Fixed Deposits, Corporate Bonds and NCDs of reputed Institutes & Corporates, Mutual Fund Schemes, Initial Public Offerings (IPOs) and National Pension System (NPS) etc. SHCIL operates through its 186 retail branches all over India. SHCIL has been profit making and dividend paying company right from its inception. As on date, IFCI holds 52.86% shareholding in SHCIL, making it a subsidiary Company of IFCI.

SHCIL bagged the prestigious NSDL Star performer award continuously for 2014, 2015 and 2016 for top performer in highest asset value and top performer in active accounts. SHCIL has bagged BSE’s Skoch Award for Best Custodian- Business Excellence in 2016. SHCIL has been rated by the internationally circulated and reputed Global Custodian magazine in the year 2016. SHCIL was awarded prizes in Best Point of Presence (PoP) - All Citizen award, Best PoP NPS Corporate and Best PoP NPS Private Sector in 2016.

SHCIL has two wholly owned subsidiaries viz. (i) SHCIL Services Ltd (SSL) and (ii) Stock Holding Document Management Services Limited (Stock Holding DMS) (erstwhile SHCIL Projects Ltd).

SSL, the broking arm of SHCIL, is providing stock broking services to retail and institutional clients across the country. SSL offers services in Cash & F&O segment of BSE & NSE. Stock Holding DMS is a Microsoft Gold certified partner for all its products and services and is ISO 9001:2008 and CMMI Level-3 certified company. Stockholding DMS provides End to End Document Management Solutions.

IFCI Infrastructure Development Ltd (IIDL)

IFCI Infrastructure Development Ltd (IIDL) was set up by IFCI Limited in the year 2007 to venture into the real estate and infrastructure sector as a wholly owned subsidiary of IFCI Ltd. IIDL has ventured into the Infrastructure Sector as an institutional player. The company, since its inception, has developed projects all over India focusing on construction that is driven by the overall infrastructure development of the country. Besides re-development, modernization, ownership and management of properties owned by IFCI, IIDL strategically develops properties acquired through NPA resolution from various Banks and FIs or directly obtained from the Development Authorities.

IIDL has been appointed as the Project Management Consultants for developing “Management Development Institute”, Murshidabad, West Bengal, a sprawling residential campus spreading over 10 Acres of land on Turnkey basis. The Project was inaugurated on August 24, 2014 by Hon’ble President of India Shri Pranab Mukherjee along with Finance Minister, Shri Arun Jaitley.

This apart, IIDL is also getting into Engineering Consultancy/PMC to increase its Return on Equity (RoE).

IFCI Venture Capital Funds Ltd (IFCI Venture)

IFCI Venture was set-up in 1975 by your Company with the objective to broaden entrepreneurship base in India by providing risk capital mainly to first generation entrepreneurs under “Risk Capital Scheme”. In 1988, IFCI Venture launched “Technology Finance & Development Scheme”, to provide financial assistance for setting up projects aimed at commercialization of indigenous technologies. In 1991, IFCI Venture took up management of a Venture Capital Fund named VECAUS-III, floated by SUUTI and IFCI to promote varied projects across industrial sectors of Indian geography. VECAUS-III was closed in the year 2007 and outstanding portfolio companies were transferred to SUUTI. The Fund was officially closed through sale of portfolio in FY 2011-12.

In the year 2014-15, IFCI Venture initiated setting-up of three funds viz.

(a) Venture Capital Fund for Scheduled Castes (VCF-SC) -As on March 31, 2017, 65 proposals aggregating to Rs, 236.66 crore have been sanctioned and Rs, 115.27 crore have been disbursed to 34 beneficiaries.

(b) Green India Venture Fund - II (GIVF-II)

(c) Small and Medium Enterprises Advantage Fund (SMEAF)

For both the above two funds viz. GIVF-II & SMEAF, SEBI approval has been received and IFCI Limited has committed Rs, 50 crore in each Fund. IFCI Venture is raising the corpus of the funds from the domestic market to start operations during FY 2017-18.

IFCI Venture is also registered with RBI as an NBFC and provides secured Corporate Loans to small and mid-size companies. The Company has a well-defined credit policy for its credit business.

As on date, IFCI holds 98.59% shareholding in IFCI Venture, making it a subsidiary Company of IFCI.

IFCI Financial Services Ltd (IFIN)

IFIN was set up in 1995, by your Company, to provide a wide range of financial products and services to institutional and retail clients. IFIN is primarily involved in the business of Stock Broking, Currency Trading, Depository Participant Services, Merchant and Investment Banking, Insurance (Corporate agent for both life and General Insurance), Mutual Fund Products Distribution and Corporate Advisory Services.

IFIN is a registered member of SEBI, National Stock Exchange of India Limited (NSE), BSE Limited (BSE), Metropolitan Stock Exchange of India Limited (MCX-SX), National Commodity and Derivatives Exchange Limited (NCDEX), NSDL and CDSL. IFIN has three wholly-owned subsidiaries namely IFIN Securities Finance Ltd, IFIN Commodities Ltd and IFIN Credit Ltd.

IFIN Securities Finance Ltd, an NBFC is primarily engaged in the business of margin funding, providing loan against shares & property, promoter funding etc. to various clients. Being an NBFC, it is registered with RBI. IFIN Commodities Ltd, a registered member of the Multi Commodity Exchange of India Ltd (MCX), NCDEX and National Spot Exchange Limited (NSEL), is primarily engaged in the business of providing commodity market related transaction services. IFIN Credit Ltd is not engaged in any major business activity. As on date, IFCI holds 94.78% shareholding in IFIN, making it a subsidiary Company of IFCI.

IFCI Factors Ltd (IFL)

IFL is a major provider of factoring services in India. The Company also offers Corporate Loan for a tenor of upto five years. The FY 2016

17 has been a tough year for the Company, witnessing a reduction in income coupled with fresh slippages, culminating in net losses. Overall, the Banking and Financial sector has been badly hit amidst the challenging macro-economic environment.

The Government of India has notified a total of 196 systemically important NBFCs (including IFL), as ‘secured lenders’ under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI). Therefore, the Company can now enforce the security interest on assets charged to it, without having to resort to either judicial or arbitral proceedings. The Company is now focusing upon standard factoring deals with quality debtors and has done away with risker variants. At the same time the Company is also targeting MSME customers having acceptable risk profile. In view of Insolvency and Bankruptcy Code,

2016 being enacted, the Company foresees strengthening of recovery mechanism and reduction in NPAs. As on date, IFCI Ltd holds 99.89% shareholding in the IFL, making it a subsidiary Company of IFCI.

MPCON Ltd (MPCON)

MPCON Ltd is a professionally managed Technical Consultancy Organization promoted by your Company established in 1979. It is a premier consulting organization having base in Central India, providing quality consulting services. The Company consolidated its project consultancy business and also enhanced its presence in the training and capacity building spheres. It has bagged skilling projects in 13 states of the country including Madhya Pradesh and Chhattisgarh from various Central Government undertaking and the Ministry of Rural Development, Government of India. It is working with National Safai Karamcharis Finance & Development Corporation (A Government of India Undertaking, under the Ministry of Social Justice and Empowerment), National Handicapped Finance and Development Corporation (Department of Empowerment of Persons with Disabilities, Ministry of Social Justice and Empowerment, Government of India), Department of Science & Technology, Ministry of Science and Technology, Government of India, etc. for Skilling Division. Apart from Training and Skill Development, the financial inclusion project has been expanded further to cover more areas in Madhya Pradesh. MPCON has also proved its worth in the other spheres of consultancy services such as Document Management System, Solid & Liquid Waste Management, Solar Energy, Impact Assessment Studies etc. As on date, IFCI holds 79.72% shareholding in MPCON, making it a subsidiary Company of IFCI.

Associates

Tourism Finance Corporation of India Ltd (TFCI)

Tourism Finance Corporation of India Ltd (TFCI), a Public Financial Institution was incorporated in 1989, pursuant to the recommendations of the National Committee on Tourism set up under the aegis of the Planning Commission, Government of India. Your Company along with other All-India Financial/Investment Institutions and Nationalized Banks promoted TFCI to cater to the financial needs of burgeoning tourism industry. Since its inception, TFCI has provided high-quality research and consultancy services to the tourism industry in general and to the investors in tourism industry in particular. It provides financial assistance to enterprises for setting up and/or development of hotels, resorts, amusement parks and tourism-related projects, facilities and services. It undertakes appraisal of individual projects, project studies, and surveys for various State Government agencies/ individual clients. As on date, IFCI holds 26.09% shareholding in TFCI, making it an Associate Company of IFCI.

Himachal Consultancy Organization Ltd (HIMCON)

HIMCON was promoted in 1977 by your Company as the lead institution, along with other FIs such as IDBI, ICICI Ltd in collaboration with Nationalized Banks and State Level Corporations and Institutions. HIMCON is a multi-functional and multi- disciplinary organization offering a wide range of services to the industrial and infrastructure development, and to a wider spectrum of clientele including those outside the state of Himachal Pradesh. The major thrust areas of HIMCON’s service base include Evaluation Studies, Project Appraisals, Compilation of Project Reports, Compilation of Pre-Feasibility /Feasibility Reports, TEVs, Services under SARFAESI Act 2002, Preparations of comprehensive development plans of the area, act as Project Monitoring Consultants and Conducting EDPs & Skill Development Training Programmes and Awareness Programmes. HIMCON diversified its activities by undertaking new projects. These new projects include Construction of god owns for Himachal Pradesh State Civil Supplies Corporation Ltd (HPSCSC Ltd), Supply of IT Hardware etc.

As on March 31, 2017, IFCI held 49% shareholding in HIMCON, making it an Associate Company of IFCI and the entire investment has since been divested.

North India Technical Consultancy Organization Ltd (NITCON)

NITCON, setup in 1984, by your Company as the lead institution, jointly with IDBI, ICICI, State Level Corporations and Public Sector Commercial Banks to render cost effective professional consultancy services to units in small/ medium/ large-medium scale industries/ Entrepreneurs/ Institutions/ Government and Government Agencies. NITCON has been an all-time associate of the SME movement. NITCON has gained considerable expertise in undertaking detailed Techno-Economic Appraisals/ TEFRs of investment proposals envisaging green field projects as also of expansion, modernization, diversification proposals. NITCON also takes up TEVs of existing industrial units for revival/ rehabilitation involving BIFR/ CDR cases, Energy Audits, Advisory Assignments and preparation of inventory and valuation of assets to help the institutions/ banks in valuation of securities, sale of assets and One Time Settlement (OTS).

NITCON has over 3 decades of experience in promoting self-employment and wage employment, through Entrepreneurship Development Programmes (EDPs) as well as Skill Development Programmes (SDPs), having trained over 1 lakh beneficiaries.

As on March 31, 2017, IFCI held 48.75% shareholding in NITCON, making it an Associate Company of IFCI, and the entire investment has since been divested.

KITCO Ltd (KITCO)

KITCO witnessed a growth in all its verticals in the FY 2016-17. KITCO, bagged handful of assignments from leading public sector institutions such as Airports Authority of India (AAI), Air India, NHAI, HPCL, BPCL, Mumbai Port, Maharashtra Maritime Board, Indian Maritime Board etc. in the last Financial Year.

The year witnessed successful completion of CIAL’s new international terminal. The project activities at Kannur International Airport Ltd (KIAL) and the MRO facility at Nagpur for Air India are fast progressing and the excellent performance of the company in the aviation sector enabled it to get empanelled as consultant to AERA (Airport Economic Regulatory Authority). KITCO was also awarded with the Feasibility study for new airports at Meerut and Faizabad for Airport Authority of India.

The company had been appointed as engineering and procurement management consultant by HPCL for refurbishment of the tank farm and pipe-lines at Butcher Island in Mumbai. KITCO has developed an innovative, cost effective, fully automated and safe system for filling, handling, stacking and truck loading of bitumen drums for BPCL. KITCO had bagged few studies leading to DPR from Ministry of Road Transport and Highways.

A “Study on Conservation/ Development of Paddy/ Wetland area in the Kochi City Region” was successfully completed in the last financial year which is one of the pioneer attempt in the country to assess the environmental significance of wetlands and paddy fields in urban setting towards integration as a decision making tool in futuristic planning of Kochi City.

In its commitment to partner with the MSME sector for its progress, KITCO had initiated MSME-Nurture Programme. The programme envisages selection of promising units and handholding to success. KITCO’s incubation activities through KITCO-TBI has started bringing noticeable achievements.

As on date, IFCI holds 20.26% shareholding in KITCO, making it an Associates Company of IFCI.

Joint Venture

IFCI Sycamore Capital Advisors Pvt. Ltd

The Company has 50% interest in IFCI Sycamore Capital Advisors Pvt Ltd (ISCAPL) incorporated in November 2011 which is under voluntary liquidation and Official Liquidator has been appointed. The liquidator of ISCAPL repaid the amount of '' 2.64 crores towards Fully Convertible Debentures in the year 2016-17. The Company has made adequate provision towards equity investment considering the probability and quantum of share in distribution upon liquidation of the Company. Therefore, the same has not been considered for the purpose of consolidation of financial statements.

Societies

INSTITUTE OF LEADERSHIP DEVELOPMENT (ILD)

Institute of Leadership Development (ILD) - erstwhile Institute of Labour Development was established in 1992, by your Company. ILD is working towards its mission to build capacities, hone up and infuse leadership skills among all levels of human resources in all types of organizations i.e., business and corporate entities, Banks, SMEs, NGOs, social action groups, key developmental sectors like education, health, energy and environment and in the wide sweep of the government sector.

ILD is also engaged in imparting skill development programmes for the unemployed youths of the state of Rajasthan and giving them job placements with the CSR fund support from different organizations. ILD is also an empanelled agency with Rajasthan Skill and Livelihoods Development Corporation (RSLDC), Jaipur, to carry out skill development programmes in the areas of Textile technology, Fashion technology, Hospitality etc.

A Memorandum of Understanding (MOU) was signed amongst the Government of Rajasthan (GoR), IFCI Limited (IFCI) and the Institute of Leadership Development (ILD) for developing ILD as a Centre of Eminence’ for skill development with the ultimate aim of developing a Skills University. The Honourable Governor of Rajasthan had notified the establishment of The Rajasthan ILD Skills University, Jaipur. The Legislative Assembly of the Government of Rajasthan has passed the Bill related to the formation of Rajasthan ILD Skill University (RISU) in ILD campus in its budget session on March 07,

2017 and “The Rajasthan ILD Skills University (RISU), Jaipur, Act 2017” Act No.6 of 2017, has been enacted. Accordingly, ILD has taken steps for the setting of the Skills University in ILD campus, the first Skill University in the Public Sector.

MANAGEMENT DEVELOPMENT INSTITUTE (MDI)

MDI, Gurugram one of the leading Business Schools in India is consistently ranked among the top B Schools of the country by reputed agencies and publications. MDI has the distinction of being the first internationally accredited Indian Business School having received international accreditation by Association of MBAs (AMBA) London in 2006. MDI is a flourishing cauldron of excellence in management education, high quality research, executive development and value added consultancy. Having established its footprint worldwide, MDI’s vision is to become one of the top business schools in the world by incorporating world’s best academic practices in all its programmes, namely management and executive programmes, and training programs for the top management of the corporate world. MDI’s offerings are continuously updated in keeping with the ever changing global business environment, social responsibilities, while setting high standards for all our stakeholders.

RASHTRIYA GRAMIN VIKAS NIDHI (RGVN)

Rashtriya Gramin Vikas Nidhi (RGVN) having its headquarters in Guwahati, Assam was established in 1990, as an autonomous, non-profit organization registered under the Society’s Registration Act 1860. Your Company, being the founding promoter of RGVN, provided the initial set-up support and with time, IDBI, National Bank for Agriculture and Rural Development (NABARD) and Tata Social Welfare Trust (TSWT) also became its promoters. RGVN is a national level multi-state development and support organization working in the states of Assam, Arunachal Pradesh, Meghalaya, Mizoram, Nagaland, Manipur, Tripura, Sikkim, Odisha, Jharkhand and Bihar, poverty stricken pockets of Eastern Uttar Pradesh, coastal Andhra Pradesh and Chhattisgarh. RGVN’s core strength comes from its network of NGOs and Self Help Groups, which are capable of handling large development projects. One of its programmes has been hived-off into an NBFC called RGVN (North East) Microfinance Ltd which has also been given small finance bank license by the RBI. Over the years, RGVN has been able to groom and support small Community-based Organizations involved in a variety of livelihood enhancement programmes. Of late, RGVN has been involved in implementing projects directly with funding support from Central & State Governments, Corporate Houses under their CSR Programmes, as well as national and international development organizations, in verticals such as Food Security & Livelihood Enhancement, Financial Literacy and Inclusion, Enhancement of Quality of Life in Rural Areas, and Analytical & Studies.

COMPANIES WHICH HAVE BECOME OR CEASED TO BE SUBSIDIARIES, JOINT VENTURES OR ASSOCIATE COMPANIES DURING THE YEAR

Consequent upon transfer of IFCI’s entire stake in HARDICON Ltd (HARDICON), it has ceased to be an Associate Company of IFCI. Further, subsequent to the year under report, HIMCON and NITCON have also ceased to be Associate companies of IFCI consequent to transfer of IFCI’s entire stake in these companies.

Details on performance and financial position of subsidiaries, associates and joint venture(s), during FY 2016-17 are provided in Annexure - VII.

COMPLIANCE

During the Financial Year 2016-17, all returns / data / statements submitted by concerned departments as advised by RBI, SEBI and other Regulatory Authorities have been submitted.

DOCUMENTS PLACED ON THE WEBSITE

Pursuant to the provisions of the Companies Act, 2013, Listing Regulations, the Company is required to place various Policies / Documents / Details on the Website of the Company. The Company has a website www.ifciltd.com and all the requisite information are being uploaded thereat.

CORPORATE GOVERNANCE

A detailed report on Corporate Governance as stipulated under Listing Regulations is attached to the Annual Report. Certificate from Practicing Company Secretary regarding compliance with the conditions of Corporate Governance as stipulated in Listing Regulations and under Guidelines on Corporate Governance for Central Public Sector Enterprises, 2010 has been obtained and is annexed at the end of Corporate Governance Report. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO Conservation of Energy - The Company’s operations do not involve any manufacturing or processing activities. It provides financial assistance to the industries, thereby requires normal consumption of electricity. Accordingly, the provisions of Section 134 (3) (m) of the Companies Act, 2013 read with Rule 8 (3) of Companies (Accounts) Rules, 2014 are not applicable on the Company.

Technology Absorption - In constant endeavour to drive competitive advantage through Operational Excellence, your Company is taking proactive steps towards Business Continuity planning. With regard to the same, the Data Centre and Disaster Recovery site has been upgraded as well as a near site has been established. Information

Technology (IT) of your Company enables sophisticated product development, better market infrastructure, implementation of reliable techniques for control of risks and helps the intermediaries to reach geographical distant and diversified markets. While Enterprise portals promise to deliver a more coherent information management platform, and a more seamless user experience, various online portals namely

- Online Grievance, Recruitment and IT Applications were launched by your Company. These portals provide ‘dynamic’ environment that makes them well-suited to delivering more interactive capabilities. Foreign Exchange Earnings

The details in respect of foreign expenditure /earnings are as follows:

(Rs, crore)

Particulars	Year ended	Year ended
	31.03.2017	31.03.2016
Expenditure in Foreign Currencies:
Interest on borrowings	3.60	3.82
Other matters	0.21	0.23
TOTAL	3.00	4.05
Earnings in Foreign Currencies:
Earnings in Foreign Currency	Nil	Nil

QUALIFICATIONS, RESERVATION OR ADVERSE REMARK OR DISCLAIMER MADE BY THE STATUTORY AUDITORS

There were no qualifications or reservations or adverse remarks made by the Statutory Auditors for the standalone financial statements or consolidated financial statements. However, the auditors have made following observations:

Emphasis of Matter on Standalone financial statements:

We draw attention to note no. 27 of the standalone financial statements related to litigation with the borrower. Pending adjudication of the matter by the Honourable Supreme Court, in the opinion of the management, no provision or adjustment is required in the books of accounts. Our report is not modified in respect of this matter. Emphasis of Matter on Consolidated financial statements:

(a) The holding company holds investment in seven companies to the extent of 20% or more of their respective total share capital and accordingly these companies are the associates of the holding company as per the Companies Act, 2013. For the reasons stated in the note no. 26.1 of the financial statement, these associates have not been consolidated in the preparation of the consolidated financial statements of the Group. Our report is not modified on the matter.

(b) We draw attention to note nos. 35 and 36 of the consolidated financial statements related to litigation with the borrowers of the holding company and subsidiary company, respectively. Pending adjudication of the matter by the Honourable Supreme Court, in the opinion of the management, no provision or adjustment is required in the books of accounts of the holding and subsidiary company. Our report is not modified in respect of this matter.

QUALIFICATIONS, RESERVATION OR ADVERSE REMARK OR DISCLAIMER MADE BY THE SECRETARIAL AUDITOR M/s Navneet K. Arora & Co LLP Company Secretaries was appointed as Secretarial Auditor of the Company for the Financial Year 2016-17. The Secretarial Auditor has reported that the Company has, in their opinion, complied with the provisions of the Companies Act, 2013 and the Rules made thereunder as notified by Ministry of Corporate Affairs, and related matters. The Secretarial Auditor also reported that during the period under review, the Company has complied with the provisions of the Reserve Bank of India Act read with applicable Non-Banking Financial Companies (Reserve Bank) Directions, as applicable, except delay in filing of e-returns in Form No(s) NBS-7 for the quarter ended 30^th June, 2016 and 31^st December 2016.

In this regard, it is stated that the e-return NBS-7 was filed only after Board approval of final accounts for the period. The Reserve Bank of India was informed of the same, who had not objected to the request of the company considering the facts. It was also explained to the Secretarial Auditor that the company being a listed entity, the results, which was part of NBS-7 Return, could not be disclosed prior to the same was provided to Stock Exchanges, where the shares of the company were listed.

The Secretarial Audit Report for FY 2016-17 in the Form MR-3 is annexed at Annexure - VIII.

DECLARATION BY INDEPENDENT DIRECTORS

Pursuant to the provisions of the Companies Act, 2013, your Company has obtained Declaration of Independence from the Independent Director under Section 149 of the Companies Act, 2013.

INTERNAL FINANCIAL CONTROL

Your Company has in place an Internal Financial Control driven by the policies and procedures adopted by the company for ensuring the orderly and efficient conduct of its business, including adherence to company’s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information. The Internal Financial Control was evaluated by the Audit Committee of Directors during the year under report. DIRECTORS’ RESPONSIBILITY STATEMENT

Pursuant to the requirement under Section 134 of the Companies Act 2013, with respect to Directors’ Responsibility Statement, it is hereby confirmed:

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

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

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

(iv) That the directors had prepared the annual accounts on a ‘going concern basis’;

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

(vi) The directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

AUDITORS

M/s ASA & Associates, LLP (DE1187) (Firm Reg. No. 009571N) and M/s KPMR & Associates (DE0637) (Firm Reg. No. 02504N) were appointed by the Comptroller & Auditor General of India (C&AG) as Joint Statutory Auditors of your Company for FY 2016-17. C&AG shall appoint Statutory Auditors for the Financial Year 2017-18. DEPARTMENTS AT IFCI

(A) Credit Departments

During the year under report, the Credit Department functioned under two divisions, Credit - I and Credit - II, based on the geographical distribution and the NPA Resolution & Litigation Group managed the NPAs. This has been later reorganized by setting up Appraisal Department and Monitoring Department in order to strengthen the appraisal and post sanction monitoring respectively. In view of the emphasis on infrastructure development in the country and the contribution of your Company in this direction, there is a specialized Infrastructure Division in the Appraisal Department while the non-infra sectors are considered by another division. These departments are actively engaged in formulation of Policy, refinement of processes and improvement in practices of credit appraisal and are effectively and efficiently monitoring the standard assets of IFCI.

(B) Management of Non-Performing Assets (NPA Management)

The FY 2016-17 witnessed large increase in NPAs in the financial sector, especially in infrastructure and metal sectors. This along with unsuccessful attempts for implementation of SDR & S4A schemes of RBI in certain companies resulted in substantial rise in NPAs in your Company. The Gross NPAs and Net NPAs increased to Rs, 7,553 crore and Rs, 5,882 crore respectively by March 31, 2017 from Rs, 3,545 crore and Rs, 2,466 crore respectively at the beginning of the year. In the percentage terms, the GNPA and NNPA stood at 31.86% and 27.03% respectively at the end of the year. This has necessitated focussed, expeditious recovery from NPAs.

Your Company amplified its endeavours for recovery of over dues by leaps and bounds and overturned every stone to ensure early detection and resolution of non-performing cases. In this sequel, your Company vigorously exploited all the available recovery modes including, One Time Settlement / Negotiated Settlement, restructuring, sale of assets under SARFAESI, assignment of dues, sale of listed / unlisted pledged shares, sale of investment in unlisted equity, redemption of Security Receipts, filing winding up applications against defaulting borrowers, filing of recovery applications before DRTs, action u/s 138 of Negotiable Instruments Act, declaration of defaulting borrowers as wilful defaulters, non-cooperative borrower etc.

The concentrated efforts made during FY 2016-17 resulted in highest ever recovery of Rs, 1,016.38 crore done by IFCI in last 10 years as tabulated below:_(Rs, crore)

Sl. No.	Resolution Strategy	Amount
1.	Assignment of debt	417.88
2.	OTS / Legal route / sale of pledged shares/ general recovery	394.63
3.	Sale of unquoted equity / redemption of SRs	203.87
	Total	1,016.38

The Insolvency and Bankruptcy Code, introduced in December,

2016, has provided for a comprehensive framework of timely restructuring of liabilities of companies or liquidation. Your Company is fully committed to make an effective and efficient use of this code for augmenting its recoveries in the ensuing year. Your Company, apart from continuing to recover through the existing means, like SARFAESI, OTS, Legal route etc., shall take advantage of this code and strive to achieve the objects of the code by resolution of its impaired assets under the provision of the code.

(C) Sugar Development Fund

Your Company has been acting as the “Nodal Agency” of the Government of India since inception of the Sugar Development Fund (SDF) for the purpose of disbursement, follow up and recovery of SDF loans sanctioned for modernisation / expansion of sugar factories, setting up of bagasse based cogeneration power projects, anhydrous alcohol or ethanol projects, zero-liquid discharge (ZLD) distillery projects and cane development scheme. Cumulative sanctions and disbursements under SDF up to March 31, 2017 stood at Rs, 6,436 crore and Rs, 5,028 crore respectively. The Agency Commission booked in

FY 2016-17 is Rs, 13.95 crore (excluding Service Tax). In addition, your Company carries out financial appraisal of projects for availing SDF loans by sugar mills. Your Company has developed a SDF Portal for being utilised by SDF, Government of India and the beneficiary companies and is in the process of making the portal fully functional which will make SDF operations efficient and transparent.

(D) Credit Enhancement Guarantee Scheme for Scheduled Castes

The Department of Social Justice & Empowerment under the aegis of Ministry of Social Justice & Empowerment, Government of India, has sponsored the “Credit Enhancement Guarantee Scheme for Scheduled Castes” under its social sector initiatives. The objective of the Scheme is to promote entrepreneurship amongst the Scheduled Castes, by providing Credit Enhancement Guarantee to Member Lending Institutions (MLIs), who shall be providing financial assistance to these entrepreneurs. The Government of India has initially allocated a corpus of Rs, 200 crore for the Scheme, out of which the guarantee cover shall be extended to the Member Lending Institutions. IFCI Ltd has been designated as the Nodal Agency under the Scheme, to issue the guarantee cover in favour of Member Lending Institutions, who shall be encouraged to finance Scheduled Caste entrepreneurs to boost entrepreneurship amongst the marginal strata of the Society.

The Scheme has since taken off from the FY 2015-16 with registration of 31 MLIs under it. In the FY 2016-17, loans aggregating to Rs, 21.27 crore have been sanctioned by some of the MLIs against which the total guarantee cover of Rs, 14.40 crore has been provided by IFCI. Your Company is making all out efforts to promote this Scheme through wide publicity by conducting seminars, conferences and awareness programmes in co-ordination with various Chapters of Dalit Indian Chambers of Commerce and Industry (DICCI) and attending State Level Bankers Committee (SLBC) meetings. During the FY 2016-17, the Corpus of the fund has increased to Rs, 232 crore.

IFCI has launched a web portal of the above mentioned scheme (www.ifcicegssc.in) on 14^th February, 2017 and the link is also available on our website i.e. www.ifciltd.com. Further, promotion of the CEGSSC scheme is being made through social media like Facebook, Twitter etc.

(E) Human Resources

Your Company has continued to lay focus on enhancement in productivity of employees and their skill upgradation. Training was imparted to employees through 250 nominations, by way of in-house training workshops and external nominations, thereby covering 140 employees and 4 employees were sent on foreign trainings. The manpower has been strengthened by conducting recruitment at various levels viz. General Manager, Deputy General Manager, Assistant General Manager, Manager and Assistant Manager. The scheme of Special Hardship Leave was introduced for female employees. The level of satisfaction among employees has improved which resulted into lower attrition rate as compared to previous year.

(F) Information Technology

Information Technology (IT) enables sophisticated product development, better market infrastructure, implementation of reliable techniques for control of risks and helps the intermediaries to reach geographical distant and diversified markets. In that direction, your Company has achieved many noteworthy developments related to IT sector during FY 2016-17. IT has emerged as an important medium for delivery of financial products and services.

While Enterprise portals promise to deliver a more coherent information management platform, and a more seamless user experience, various online portals namely - Online Grievance, Recruitment and IT Applications were launched by your

Company. These portals provide dynamic environment that makes them well-suited to delivering more interactive capabilities.

Further your Company also launched, Credit Enhancement Guarantee Scheme for Scheduled Castes, an initiative of Ministry of Social Justice and Empowerment. MPLS-VPN connectivity was also established across all Regional Offices, which was followed by implementation of Bio-Metric Attendance System. At present your Company is in the process of implementing Integrated Treasury product as well development of another Online Portal for Sugar Development Fund for transparent flow of operations and information.

(G) Legal

On the legal front, your Company has a full-fledged qualified and experienced legal team who carry out the legal functions for facilitation of sanctions and disbursements and has ensured compliance with statutory requirements during the year. Further, your Company initiated prompt legal measures for recovery against the borrowers and was able to defend successfully before various judicial forums in India in the suits filed against it, during the year 2016-17.

(H) Right to Information

Your Company has implemented the Right to Information Act, 2005 from 2013 onwards following the applicability of the RTI Act to IFCI and it has been providing information to the applicants as per the provisions of the RTI Act. The relevant information as per the RTI Act has been posted on IFCI’s website (www.ifciltd.com).

IFCI has appointed Central Public Information Officer (CPIO) & First Appellate Authority at its Head Office at New Delhi and Central Assistant Public Information Officers (CAPIO) at its Regional Offices in other parts of the country for providing information to the applicants under the RTI Act.

During the year, your Company received 142 applications and 16 appeals seeking information under RTI Act, which were replied to as per the provisions of the RTI Act within the stipulated time.

(I) Promotion of Rajbhasha

During the year, your Company continued its efforts to promote the use of Hindi in its official work. With a view to motivate and encourage the officers to use Hindi in official work, Hindi workshops and competitions were organized at Head Office as well as at other offices across the country. IFCI’s officers bagged prizes in various Hindi Competitions organized by Town Official Language Implementation Committee.

The Official Language Committee at Corporate Office monitored the use of Hindi in all offices and provided necessary guidance. All the computers available have been upgraded with Unicode facility and the website of your Company has also been made bilingual for the benefit of the shareholders and other stakeholders.

(J) Nominee Directors

Your Company appoints Nominee Directors on the Boards of some of the assisted concerns or stipulates condition for appointment of Nominee Director under certain conditions as per the Board approved Policy wherever it is considered necessary to do so, which is in line with the established practice of Institutions and Banks to monitor the performance of the companies where they have provided financial assistance. The underlying objective of making such appointment is to help build professional management and facilitate effective functioning of the Board as well as formulation of proper corporate policies and strategies to improve productive efficiency and promote long term growth of the assisted companies, keeping in view the overall interest of the shareholders and financial institutions. The feedback received from Nominee Directors act as a tool for credit monitoring.

Appreciation

Your Directors wish to express gratitude for the cooperation, guidance and support from the Ministry of Finance, various other Ministries and Departments of the Government of India, The Reserve Bank of India, The Securities and Exchange Board of India, Stock Exchanges and other regulatory bodies, The Comptroller & Auditor General of India and State Governments. Your Directors also acknowledge the valuable assistance and continued cooperation received from all banks, financial institutions, overseas correspondent banks, other members of the banking fraternity and investors. Your Directors would also like to express their appreciation for the efforts and dedicated service put in by the employees at all levels of your Company.

Sanjeev Kaushik Ms Kiran Sahdev

Deputy Managing Director Non-Executive Director

DIN: 02842527 DIN: 06718968

Address: IFCI Tower Address: IFCI Tower

61 Nehru Place 61 Nehru Place

New Delhi - 110 019 New Delhi - 110 019

Date : June 29, 2017

---

Mar 31, 2015

Dear Members,

The Board of Directors of your Company has the pleasure of presenting the Twenty Second Annual Report of IFCI Ltd together with the Audited Financial Statement for the year ended March 31, 2015.

FINANCIAL SUMMARY OR HIGHLIGHTS AND STATE OF COMPANY''S AFFAIRS

(Rs. in crore)

Sl. PARTICULARS FY FY

No. 2014-15 2013-14

1. Operational Income 3,251 2,886

2. Total Income 3,348 2,953

3. Cost of Borrowings 2,102 1,666

4. Staff Cost/Other Expenditure 104 93

5. Depreciation (10) 13

6. Total Expenditure 2,196 1,772

7. Profit Before Provisions/write-off 1,152 1,181

8. Provision for Bad & Doubtful Assets 434 520 and Others (Net of Write off)

9. Profit before Tax 718 660

10. Tax Expense 196 152

11. Profit After Tax 522 508

12. Surplus Brought forward from 1,845 1,648

Previous Year

Less: WDV of the Assets with no useful life 2 -

13. Appropriations:

Reserve u/s 451C of RBI Act 104 102

Special Reserve u/s 36(1)(viii) 15 15 of the Income Tax Act

Debenture Redemption Reserve 19 0

Expenditure on Corporate Social 8 0 Responsibility Activities

Dividend on Equity Shares 296 194 (incl. tax)

Dividend on Preference Shares 0* 0* (incl. Tax)

14. Balance carried to Balance Sheet 1,923 1,845

*0.31 crore

Operational income for FY 2015 was higher than that of FY 2014 by 12.7% due to increase in interest income, the interest income though was impacted by Rs. 247 crore due to reversal of income on account of fresh Non-Performing Assets (NPAs) (Rs. 55 crore) and interest funding of restructured assets (Rs. 192 crore). The operational income included income of Rs. 251 crore from NPAs as against Rs. 166 crore in FY 2014. However, income from other financial services was lower at Rs. 355 crore vis-a-vis Rs. 491 crore in FY 2014 mainly due to lower profit on sale of shares/debentures at Rs. 269 crore in FY 2015 as against Rs. 365 crore in FY 2014. Other income at Rs. 97 crore was higher by 45% than Rs. 67 crore in FY 2014, the increase primarily being due to profit of Rs. 29 crore on sale of surplus properties during the current year.

The finance cost of borrowing continued to increase due to higher borrowing required for growth in business at average cost of 10.24% as against average carrying cost of existing borrowing of 9.55%. The cost of borrowing for FY 2015 at Rs. 2,102 crore was higher by 26.17% than Rs. 1,666 crore for FY 2014. During the year, long term borrowing of Rs. 7,947 crore was made while Rs. 3,258 crore was repaid as per the schedule. The carrying cost of borrowings as at March 31, 2015 increased to 9.6% as compared to 9.5% as at March 31, 2014. The increasing trend is expected to continue for some more time till the cost of fresh borrowing falls below the carrying cost of borrowing. The overhead expense towards employee benefits and establishment cost for FY 2015 at Rs. 104 crore was also higher by 11.8% than Rs. 93 crore for FY 2015. This was mainly due to increase in employee benefit expenses and new recruitments and increase in corporate campaigning and advertisement expenses for branding prior to public issue as also for various business transactions through open tender process. However, overall the ratio of overhead expenses (excl. depreciation) to total income stood favourably at 3.2% for the year ended March 31, 2015, same as that for the year ended March 31, 2014.

DIVIDEND

Your Directors declared a Dividend of ''1/- per equity share i.e. 10% of the face value of Rs. 10/- each as interim dividend for the financial year 2014-15. Your Directors have also recommended dividend of Rs. 0.50 per equity share, i.e. 5% of the face value of Rs. 10/- each as final dividend, subject to the approval of the shareholders at the ensuing Annual General Meeting. Your Company also paid dividend of Rs. 0.31 crore on preference shares.

CHANGE IN NATURE OF BUSINESS & MATERIAL CHANGES AND COMMITMENTS AFFECTING FINANCIAL POSITION OF THE COMPANY BETWEEN THE END OF THE FINANCIAL YEAR AND THE DATE OF THE REPORT

There has been no change in the business of the Company during the reporting period. Further, there have been no material changes and commitments which affect the financial position between the end of financial year and date of Board''s Report.

OWNERSHIP/CAPITAL STRUCTURE/CHANGE IN SECURITIES

There was no change in the ownership of the Government of India in your Company during the FY 2014-15 and it continued to hold 55.53% equity stake in IFCI as on March 31, 2015. There has also been no change in the capital structure of the Company. However, during FY

2015-16, Government of India acquired 6,00,00,000 Preference Shares of Rs. 10/- each of the Company from certain Scheduled Commercial Banks and consequently increased its holding from 47.93% to 51.04% of the Paid-up Share Capital of the Company. Consequently, the Company became a Government Company in terms of Section 2(45) of the Companies Act, 2013, w.e.f. April 7, 2015.

The change in the Debt Structure of the Company is as under:

Total Number of Issued Redemption Total Number of Securities at the during made during Securities at beginning of the the the year the end of the year year year

4,201,749,118 19,722,593 57,366 4,221,414,345 Nos. Nos. Nos. Nos.

(Rs. 10,649.87 (Rs. 1,972.26 (Rs. 473.71 (Rs. 12,148.43 crore) crore) crore) crore)

DETAILS OF DIRECTORS AND KEY MANAGERIAL PERSONNEL (KMP) APPOINTED OR RESIGNED DURING THE YEAR

Since the last Board''s Report the following changes have occurred in the composition of the Board of Directors and in the KMP of your Company: Prof Omprakash Mishra (DIN: 03068103) ceased to be Director on the Board of the Company w.e.f. August 27, 2014 (for want of majority in the proposal for his appointment as Independent Director at the last Annual General Meeting of the Company held on August 27, 2014). Prof Arvind Sahay (DIN: 03218334) was inducted on the Board as Additional and Independent Director w.e.f. September 12, 2014. Shri Anurag Jain (DIN: 01779759), Government Nominee Director ceased to be Director on the Board of the Company w.e.f. February 16, 2015, due to withdrawal of nomination from Government of India. Shri Rajesh Aggarwal (DIN: 03566931), Joint Secretary, Ministry of Finance, Department of Financial Services, New Delhi, was appointed as Director w.e.f. February 19, 2015 vice Shri Anurag Jain (DIN: 01779759). Shri P G Muralidharan (DIN: 00960475) resigned w.e.f. March 30, 2015 in view of his having reached the maximum age to act as Director of NBFC prescribed by Reserve Bank of India as per Revised Regulatory Framework for NBFC. Shri S N Ananthasubramanian (DIN: 00001399) resigned from the Board of the Company with effect from June 13, 2015 owing to professional commitments.

Shri B N Nayak, who had been acting as CFO pursuant to the provisions of Clause 49 of the Listing Agreement was designated as KMP in the category of CFO, w.e.f. May 26, 2014 pursuant to the provisions of the Companies Act, 2013.

DIRECTOR LIABLE TO RETIRE BY ROTATION

Ms Kiran Sahdev (DIN: 06718968) will retire by rotation at the conclusion of the forthcoming Annual General Meeting and being eligible has offered herself for re-appointment.

NUMBER OF MEETINGS OF THE BOARD OF DIRECTORS

The details of the Meetings of the Board of Directors forms part of the Corporate Governance Report appearing separately in the Annual Report.

COMPOSITION OF AUDIT COMMITTEE

Your Company has in place an Audit Committee of Directors in compliance with the provisions of the Listing Agreement and Companies Act, 2013. The details of Composition forms part of the Corporate Governance Report appearing separately in the Annual Report.

Your Directors would further like to inform that there has been no matter where the Board has not accepted recommendations of the Committee.

DISCLOSURE OF NOMINATION AND REMUNERATION POLICY

Pursuant to the provisions of the Companies Act, 2013 and Listing Agreement, the Company has put in place a Nomination as well as a Remuneration Policy. The Nomination & Remuneration Policy are atteched at Annexure I. The Policies have also been placed on the website of your company at www.ifciltd.com.

POLICY ON DEALINGS WITH RELATED PARTY TRANSACTIONS A. Approvals

I. Approval by Audit Committee

1. All Related Party Transactions (including any subsequent modifications thereof) shall require prior approval of the Audit Committee of Directors. However, the Audit Committee of Directors may grant omnibus approval for the RPTs proposed to be entered into by the Company subject to the following conditions:

(a) The Audit Committee shall lay down the criteria for granting the omnibus approval in line with the policy on Related Party Transactions of IFCI and such approval shall be applicable in respect of transactions which are repetitive in nature.

(b) The Audit Committee shall satisfy itself the need for such omnibus approval and that such approval is in the interest of IFCI.

(c) Such omnibus approval shall specify:

i. The name(s) of the Related Party, nature of transaction, period of transaction, maximum amount of transaction that can be entered into.

ii. The indicative base price/current contracted price and the formula for variation in the price, if any, and

iii. Such other conditions as the Audit Committee may deem fit.

(d) Audit Committee shall review, on a quarterly basis, the details of RPTs entered into by IFCI pursuant to each of the omnibus approval given.

(e) Such omnibus approvals shall be valid for a period not exceeding one year and shall require fresh approvals after the expiry of one year.

Proviso:

The above clause will not be applicable in the following cases:

i. Transactions entered into between 2 Government Companies.

ii. Transactions entered into between a holding company and its wholly owned subsidiary whose accounts are consolidated with such holding company and placed before the shareholders at the general meeting for approval.

Explanation: All entities falling under the definition of related parties shall abstain from voting irrespective of whether the entity is a party to the particular transaction or not.

II. Approval by Board of Directors

Except with the consent of the Board of Directors given by a resolution at a meeting of the Board, IFCI shall not enter into any contract or arrangement with a related party with respect to:

* Sale, purchase or supply of any goods or materials;

* Selling or otherwise disposing of, or buying, property of any kind;

* Leasing of property of any kind;

* Availing or rendering of any services;

* Appointment of any agent for purchase or sale of goods, materials, services or property;

* Such related party''s appointment to any office or place of profit in the company, its subsidiary company or associate company; and Related Party Transactions.

* Underwriting the subscription of any securities or derivatives thereof, of the company:

Provided that nothing of the above shall apply to any transactions entered into by IFCI in its ordinary course of business other than transactions which are not on an arm''s length basis.

{Ordinary Course of Business shall include those business which forms part of the Object Clause of the Memorandum of Association of the Company}

Explanation:

The expression "office or place of profit" means any office or place:

Where such office or place is held by a director, if the director holding it receives from IFCI anything by way of remuneration over and above the remuneration to which he is entitled as director, by way of salary, fee, commission, perquisites, any rent- free accommodation, or otherwise;

Where such office or place is held by an individual other than a director or by any firm, private company or other body corporate, if the individual, firm, private company or body corporate holding it receives from IFCI anything by way of remuneration, salary, fee, commission, perquisites, any rent-free accommodation, or otherwise;

The expression "arm''s length transaction" means a transaction between two related parties that is conducted as if they were unrelated, so that there is no conflict of interest.

III. Approval by Shareholders

1. Except with the prior approval of the company by a special resolution, IFCI shall not enter into a transaction or transactions, where the transaction or transactions to be entered into:

As contracts or arrangements with respect to Clauses (a) to (e) of Sub-Section (1) of Section 188 of the Companies Act 2013, with criteria as mentioned below:

* Sale, purchase or supply of any goods or materials, directly or through appointment of agent, exceeding 10% of the turnover of the company or rupees one hundred crore, whichever is lower, as mentioned in Clause (a) and Clause (e) respectively of Sub-Section (1) of Section 188;

* Selling or otherwise disposing of or buying property of any kind, directly or through appointment of agent, exceeding ten per cent of net worth of the company or rupees one hundred crore, whichever is lower, as mentioned in Clause (b) and Clause (e) respectively of Sub-Section (1) of Section 188;

* Leasing of property of any kind exceeding ten percent of the net worth of the company or ten per cent of turnover of the company or rupees one hundred crore, whichever is lower, as mentioned in Clause (c) of Sub-Section (1) of Section 188;

* Availing or rendering of any services, directly or through appointment of agent, exceeding ten per cent of the turnover of the company or rupees fifty crore, whichever is lower, as mentioned in Clause (d) and clause (e) respectively of Sub-Section (1) of section 188.

Explanation — It is hereby clarified that the limits specified in Sub-Clauses (i) to (iv) shall apply for transaction or transactions to be entered into either individually or taken together with the previous transactions during a financial year. Is for appointment to any office or place of profit in the Company, its subsidiary company or associate company at a monthly remuneration exceeding two and half lakh rupees as mentioned in Clause (f) of Sub-Section (1) of Section 188; or

Is for remuneration for underwriting the subscription of any securities or derivatives thereof of the company exceeding one per cent of the net worth as mentioned in Clause (g) of Sub-Section (1) of Section 188. Explanation: (1) The Turnover or Net Worth referred in the above Sub-rules shall be computed on the basis of the Audited Financial Statement of the preceding Financial Year. (2) In case of a wholly owned subsidiary, the special resolution passed by the IFCI shall be sufficient for the purpose of entering into the transactions between the wholly owned subsidiary and IFCI.

2. All Material RPTs shall require approval of the shareholders through Special Resolution and the related parties shall abstain from voting on such resolutions.

3. No Member of IFCI shall vote on such Special Resolution, to approve any contract or arrangement which may be entered into by the Company, if such member is a related party.

Proviso:

The above Clause will not be applicable in the following cases:

* Transactions entered into between 2 Government Companies.

* Transactions entered into between a holding company and its wholly owned subsidiary whose accounts are consolidated with such holding company and placed before the shareholders at the general meeting for approval.

PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

Disclosure on Related Party Transactions during FY 2014-15 in the prescribed Form AOC-2 is provided in Annexure II.

EXTRACT OF ANNUAL RETURN

Pursuant to the provisions of the Companies Act, 2013, the extract of the Annual Return in the prescribed format of Form MGT - 9 is at Annexure III.

CORPORATE SOCIAL RESPONSIBILITY - DETAILS ABOUT THE POLICY DEVELOPED AND IMPLEMENTED ON CORPORATE SOCIAL RESPONSIBILITY INITIATIVES DURING THE YEAR

In pursuance of Section 135 of the Companies Act, 2013, the Board of IFCI after the recommendation of the Corporate Social Responsibility Committee of Directors (CSR Committee) approved CSR policy for IFCI.The contents of the policy is on the website of IFCI at www. ifciltd.com.

The CSR Committee recommends to the Board of Directors on activities to be undertaken by the company as specified in Schedule VII of the Companies Act, 2013 and Companies (CSR policy) Rules, 2014. The CSR Committee recommends the amount to be incurred on the activities and earmarked funds for the envisaged priority areas, as per vision of the company for a particular financial year.

To associate with the CSR Activities of IFCI and its Subsidiaries and Associates, a Trust, by the name of "IFCI Social Foundation" has also been established. The investment in CSR activities is project based and for every project, time frame and periodic milestones are set at the outset. Utilisation Certificate with regard to the approved and disbursed amount is obtained from the concerned executing NGO/Trust/Specialised Agency. The progress of activities are reviewed and monitored very closely for optimum utilisation of CSR funds.

The Disclosure of contents of Corporate Social Responsibility Policy in the Board''s Report pursuant to the provisions of Companies (Corporate Social Responsibility Policy) Rules, 2014 is at Annexure IV.

PARTICULARS OF EMPLOYEES AND REMUNERATION - PURSUANT TO RULE V OF COMPANIES (APPOINTMENT AND REMUNERATION) RULES, 2014

The requisite details envisaged under the provisions of Rule V of Companies (Appointment and Remuneration) Rules, 2014 are annexed with this report at Annexure V.

EMPLOYEE STOCK OPTION DETAILS

The requisite details pursuant to the provisions of SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 and pursuant to the provisions of Rule 12 (9) of the Companies (Share Capital and Debentures) Rules, 2014 are at Annexure VI. Though the ESOP Scheme has been discontinued, the disclosures are made in term of the above Guidelines.

ANNUAL EVALUATION ON PERFOMANCE

The performance evaluation of the Board, its Committees and individual Directors was conducted. The same was based on feedback from all the Directors on the Board as a whole, Committees and individual evaluation, as per the Nomination Policy.

Based on the feedback, the performance was evaluated in the Meetings of the Nomination and Remuneration Committee (NRC), Independent Directors and the Board, in terms of the provisions of Companies Act, 2013 and Listing Agreement.

DISCLOSURE AS PER SEXUAL HARRASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

Your Company is fully committed to take appropriate measures against Sexual Harassment of Women at Workplace as per the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 which came into force in April, 2013. Requisite organizational architecture in terms of constitution of Committee, amending the IFCI Staff Regulations etc. to comply with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013 has been created. IFCI continues to adhere to the framework stipulated under the Sexual Harassment of Women at Workplace as per the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. During the year 2014-15, no complaint on this ground has been received.

PARTICULARS OF LOAN, GUARANTEES OR INVESTMENT UNDER SECTION 186 OF THE COMPANIES ACT, 2013

As the Company is primarily engaged in the business of financing Corporates in the capacity of being a Non-Banking Financial Company, therefore the provisions of Section 186 [except for Sub-Section (1)] of the Companies Act, 2013 are not applicable to the Company.

DEVELOPMENT AND IMPLEMENTATION OF RISK MANAGEMENT POLICY

Disclosure indicating development and implementation of Risk Management Policy is provided in the Management Discussion and Analysis Report forming part of this Report.

PUBLIC DEPOSITS

Your Company did not raise any public deposit during the year. There was no public deposit outstanding as at the beginning or end of the year ended on March 31, 2015.

DISCLOSURE ON RECEIPT OF COMMISSION BY A DIRECTOR FROM SUBSIDIARY COMPANY

No Director of the Company, including the CEO&MD and DMD was paid any commission during the FY 2014-15 from any subsidiaries of your Company on whose Boards they were Directors as nominees of the Company.

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

There has been no such order passed by any Regulator or Court impacting the going concern status of the Company and Company''s operations.

VIGILANCE

During the financial year 2014-15, the Company has established a Vigil Mechanism under the provisions of Section 177 (9) and (10) of the Companies Act, 2013. In this regard, the Board of Directors of the Company has approved a Whistle Blower Policy under which its director(s) and employee(s) can report to the management their concerns about unethical behaviour, actual or suspected fraud or violation of the IFCI''s code of conduct or ethics policy and to provide adequate safeguards to them against any sort of victimization on raising an alarm. The Policy also provides for direct access to the Chairman of the Audit Committee in exceptional cases. During the year under review, no instance of the protected disclosure has been made to the Designated Authority or to the Chairman of the Audit Committee. Details of vigil mechanism is also available on Company''s website at www.ifciltd.com.

PERFORMANCE OF SUBSIDIARIES AND ASSOCIATES PROMOTED BY IFCI

SUBSIDIARIES

Stock Holding Corporation of India Ltd (SHCIL)

SHCIL was promoted by the public financial institutions and incorporated as a limited company on July 28, 1986. SHCIL, one of the largest Depository Participants, besides being the country''s largest premier Custodian in terms of assets under custody, provides post trading and custodial services to institutional investors, mutual funds, banks, insurance companies, etc. It acts as a Central Record Keeping Agency (CRA) for collection of stamp duty in 15 States and 3 Union Territories on pan India basis. It is one of the largest Professional Clearing Members of the country. It distributes Fixed Deposits, Bonds and NCDs of reputed Institutes and Corporates, Mutual Fund Schemes, Initial Public Offers (IPO''s) and National Pension System (NPS) etc. SHCIL has its registered office at Mumbai and a world class main operations office at Navi Mumbai and operates through its 188 retail branches all over India. SHCIL has presence in 18 States/Union Territories for stamping.

SHCIL has two wholly owned subsidiaries viz. (i) SHCIL Services Ltd (SSL) and (ii) SHCIL Projects Ltd (SPL); SSL, the broking arm of SHCIL, is providing stock broking services to retail and institutional clients across the country. SSL offers services in Cash & F & O segment of BSE & NSE. SPL is a Microsoft Gold certified partner for all its products and services is ISO 9001:2008 and CMMI Level-3 certified. SPL provides End to End Document Management Solutions and acts as an Insurance Repository. SPL has been granted a Certificate of Registration to act as an "Insurance Repository (IR)" by Insurance Regulatory & Development Authority (IRDA).

IFCI Infrastructure Development Ltd (IIDL)

IIDL was set up by IFCI Ltd in the year 2007 to venture into the real estate and infrastructure sector. Being a wholly owned subsidiary of IFCI Ltd, a Government of India Undertaking, IIDL has ventured into the Infrastructure Sector as an institutional player. IIDL is committed to the principles of transparency, professionalism and integrity with clients aspirations and interests being the driving force. The company since its inception has developed projects all over India focusing on construction that is driven by the overall infrastructure development of the country.

IIDL has successfully completed its flagship state of the art Serviced apartment project known as "Fraser Suites" being managed by Frasers Hospitality Pte Ltd, Singapore. IIDL was awarded a prestigious project spread over an area of 50 acre for developing a "Financial City" near Bengaluru International Airport by Karnataka Industrial Areas Development Board (KIADB), Government of Karnataka in the Global Investors Meet 2010. The Company has also been allotted 15 Acre of Land in Bengaluru Hardware Park adjacent to IFCI Financial City, Bengaluru for establishing "Supporting Infrastructure for Financial City" by KIADB, which is under planning stage.

IIDL has been appointed as the Project Management Consultants for developing "Management Development Institute" Murshidabad, West Bengal, a sprawling residential campus spread over 10 Acre of land on Turnkey basis. The Project was inaugurated on August 24, 2014 by Hon''ble President of India Shri Pranab Mukherjee along with Finance Minister, Shri Arun Jaitley.

On the residential front, "21st Milestone Residency" at, Ghaziabad, Uttar Pradesh offers 4,50,000 sq ft of living space spread over 4.0 Acre of land. "IIDL Aerie" located at prime residential area of Panampilly Nagar, Kochi, offers high end living space of around 1,50,000 sq ft with all modern amenities.

IIDL executed various projects as Project Management Consultants like "IFCI Bhawan" an office complex at Bengaluru, Ahmedabad for IFCI and Interior, fit outs and allied works including furnishing, civil and electrical works for the branches of "Bhartiya Mahila Bank" at New Delhi, Ahmedabad, Guwahati, Kolkata, Bangalore and Chennai.

IFCI Venture Capital Funds Ltd (IFCI Venture)

IFCI Venture was set-up in 1975 by your Company with the objective to broaden entrepreneurship base in India by providing risk capital mainly to first generation entrepreneurs under "Risk Capital Scheme". In 1988, IFCI Venture launched "Technology Finance and Development Scheme", to provide financial assistance for setting up projects aimed at commercialization of indigenous technologies.

In the year 2008, IFCI Venture undertook management of 3 new PE/VC funds viz. India Automotive Component Manufacturers Private Equity Fund-1-Domestic (IACM-1-D), Green India Venture Fund (GIVF) and India Enterprise Development Fund (IEDF) with an aggregate corpus of Rs. 508 crore, where investment have been done in 29 companies. All the three funds focused on investments in mid-sized companies involved in setting up niche business models in respective industry sectors with prospects of scalability. These funds were fully invested by 2011 and are currently under exit mode.

In the year 2014-15, IFCI Venture has initiated setting-up of three funds viz.

(a) Venture Capital Fund for Scheduled Castes (VCF-SC) - a Government of India initiative to promote entrepreneurship amongst Scheduled Castes entrepreneurs in India. The corpus of the fund is Rs. 250 crore with Government of India contribution of Rs. 200 crore and IFCI Ltd has committed Rs. 50 crore towards the corpus. It was registered with SEBI and launched on January 16, 2015.

(b) Green India Venture Fund-II.

(c) Small and Medium Enterprises Advantage Fund.

For both the above funds, in-principle approval has been received and IFCI Ltd has committed Rs. 50 crore each in both the Funds. IFCI Venture is expected to start operations under these two new funds during FY 2015-16.

IFCI Venture is also registered with RBI as an NBFC and provides secured Corporate Loans to profit making mid-market companies in the range of ''5-20 crore with security of shares of listed companies and/or mortgage of property. The Company has a well-defined credit policy for sanction of loans.

IFCI Financial Services Ltd (IFIN)

IFIN was set up in 1995, by IFCI Ltd, to provide a wide range of financial products and services to institutional and retail clients. IFIN is primarily involved in the business of Stock Broking, Currency Trading, Depository Participant Services, Merchant and Investment Banking, Insurance (Corporate agent for both life and General Insurance), Mutual Fund Products Distribution and Corporate Advisory Services. IFIN has three wholly-owned subsidiaries namely IFIN Securities Finance Ltd, IFIN Commodities Ltd and IFIN Credit Ltd. IFIN Securities Finance Ltd, an NBFC is primarily engaged in the business of margin funding, providing loan against shares & property, promoter funding etc. IFIN Commodities Ltd, a registered member of the Multi Commodity Exchange of India Ltd (MCX), National Commodity and Derivatives Exchange Ltd (NCDEX) and National Spot Exchange Ltd (NSEL), is primarily engaged in the business of providing Commodity market related transaction services. IFIN Credit Ltd is not engaged in any major business activity.

IFCI Factors Ltd (IFL)

During the year under report, IFL continued to be a major provider of factoring services in India. After registering sizeable growth year on year in business following its acquisition by IFCI Ltd, the company has been in a phase of consolidation over FY 2013-14 and FY 2014-15 in the wake of adverse economic environment. The FY 2014-15 has been a tough year for the Company, amidst the challenging macro-economic environment. The RBI has taken notable step to address the economic slowdown and has relaxed the Income Asset pattern guideline for Factoring to Non-factoring ratio from the prevailing 75:25 to 50:50. This provides ample opportunity for the Company to offer secured structured products and enables the Company to operate both in working capital space as well as corporate loan market.

Further, with the enactment and implementation of the Factoring Regulation Act, 2011, initiative for setting up a Credit Guarantee Fund of Rs. 500 crore for factoring business as announced in the Union Budget for FY 2013-14, and initiative by the RBI of exploring the possibility of setting up of a Trade Credit Exchange for electronic factoring of bills, in the times to come, factoring business in India is poised for growth.

MPCON Ltd

MPCON Ltd is a professionally managed Technical Consultancy Organization promoted by your Company established in 1979. It is a premier consulting organization having base in Central India, providing quality consulting services. During FY 2014-15, it consolidated its project consultancy business and also enhanced its presence in the training and capacity building spheres. It has bagged skilling projects for training close to 4500 candidates in Madhya Pradesh and Chhattisgarh from the Ministry of Rural Development, Govt. of India. It also participated in the STAR programme run by the National Skills Development Corporation. Apart from Training and Skill Development, the financial inclusion project has been expanded further to cover more areas in Madhya Pradesh. MPCON has also proved its worth in the other spheres of consultancy services such as Solid & Liquid Waste Management, Development of Course curriculum under National Vocational Education Framework, Impact Assessment Studies etc. for various departments of the State Government as well as the Central Government.

ASSOCIATES

Tourism Finance Corporation of India Ltd (TFCI)

TFCI, a Public Financial Institution was established in 1989, pursuant to the recommendations of the National Committee on Tourism set up under the aegis of the Planning Commission, Government of India. Your Company along with other All-India Financial/Investment Institutions and Nationalised Banks promoted TFCI to cater to the financial needs of burgeoning tourism industry. Since its inception, TFCI has provided high-quality research and consultancy services to the tourism industry in general and to the investors in tourism industry in particular. It provides financial assistance to enterprises for setting up and/or development of hotels, resorts, amusement parks and tourism-related projects, facilities and services. It undertakes appraisal of individual projects, project studies, and surveys for various State Government agencies/individual clients.

HARDICON Ltd

HARDICON was set up in 1985, jointly by all India Financial Institutions, PSU Banks & State level insttitutions viz. IFCI, SIDBI, SBI. Haryana Financial Corporation, Haryana State Industrial and Infrastructure Development Corporation and Delhi Financial Corporation of the two State Governments with the twin objectives of facilitating overall industrial development of the country by catering to the technical consultancy needs of the industry and promoting entrepreneurship. In the initial years, the focus of operations was confined to the states of Haryana and Delhi. Post liberalization HARDICON expanded its service base beyond Haryana and Delhi and now undertakes nationwide assignments. Its broad spectrum of activities include Preparation of Techno-Economic Feasibility Reports, Project Appraisals, Valuation of Assets, Business Valuation, Skill & Entrepreneurship Development Training, Market Research/ Impact Assessment Studies, Implementation of Corporate Social Responsibility (CSR) activities of PSUs. Its portfolio of clients includes PSUs, large scale industrial sector enterprises as well as traditional SME sector clients.

Himachal Consultancy Organisation Ltd (HIMCON)

HIMCON was promoted in 1977 with your Company as the lead institution, along with other FIs such as IDBI, ICICI in collaboration with Nationalised Banks and state level Corporations and Institutions. HIMCON is a multi-functional and multi- disciplinary organization offering a wide range of services to the industrial and infrastructure development, and to a wider spectrum of clientele including those outside the state of Himachal Pradesh. The major thrust areas of HIMCON''s service base includes Evaluation Studies, Project Appraisals, Compilation of Project Reports, Compilation of Pre- Feasibility/Feasibility Reports, TEVs, Services under SARFA&ESI Act 2002, Preparations of comprehensive development plans of the area, act as Project Monitoring Consultants and Conducting EDPs & Skill Development Training Programmes and Awareness Programmes. HIMCON has bagged first of its kind of mandate of Transforming Village Taseeng in Alwar District of Rajasthan into "World Class Model Heritage Village" as a part of Pradhan Mantri Adarsh Gram Yojna.

Rajasthan Consultancy Organisation Ltd (RAJCON)

RAJCON, jointly promoted by IFCI, SIDBI, ICICI along with State Finance Corporations viz. Rajasthan State Industrial Development and Investment Corporation Ltd, Rajasthan Financial Corporation, Rajasthan Small Industries Corporation Ltd and Commercial Banks namely State Bank of Bikaner & Jaipur (SBBJ), Central Bank of India (CBI), Punjab National Bank (PNB), Bank of Baroda (BOB) and United Commercial Bank (UCO), was set-up in March 1978 with the twin objectives of facilitating overall industrial development of the country by way of providing technical consultancy services as well as promoting entrepreneurship. At present, RAJCON is carrying out varied nature of services which inter-alia includes Skill & Entrepreneurs Development Services, Technical Consultancy Services, etc. The Skill & Entrepreneurship based activities are undertaken on behalf of All India/State Level Corporations and Social Justice and Empowerment/Department of Government of India, while Technical Consultancy based activities are undertaken on behalf of Banks/FI''s, Industrial/Business Groups, Individual Entrepreneurs etc.

North India Technical Consultancy Organisation Ltd (NITCON)

NITCON set up in 1984, is a joint venture of IFCI, SIDBI, ICICI Bank Ltd, State Level Corporations and Public Sector Commercial Banks to render cost effective professional consultancy services to units in small/medium/large scale industries/Entrepreneurs/Institutions/ Government and Government Agencies. NITCON has been an all time associate of the SME movement. NITCON has gained considerable expertise in undertaking Detailed Techno-Economic Appraisals/ TEFRs of investment proposals envisaging green field projects as also of expansion, modernization, diversification proposals. NITCON also takes up TEVS of existing industrial units for revival/rehabilitation involving BIFR/CDR cases, Energy Audits, Advisory Assignments and preparation of inventory and valuation of assets to help the institutions/banks in valuation of securities, sale of assets and one time settlement (OTS).

NITCON has over 3 decades of experience in promoting self- employment and wage employment, through Entrepreneurship Development Programmes (EDPs) as well as Skill Development Programmes (SDPs), having trained over 1 lac beneficiaries.

KITCO Ltd

KITCO Ltd (formerly Kerala Industrial and Technical Consultancy Organization Ltd) established in 1972, is one of the premier Engineering, Management & Project consultancy firm in India promoted by your Company jointly with IDBI, ICICI and other State Level Institutions. Some of the key fields where KITCO is a prominent player are Energy Studies, Skill Certification and Placement services. The company provides professional technical consultancy services to Small and Medium Enterprise (SME). KITCO is the only consultancy organization in the state having EIA accreditation. During the year under report, KITCO has been instrumental in setting up of TCO consortium having its office in Delhi. While KITCO will be the National Coordinating agency for the consortium, the other TCO members are: NITCON (Punjab), MITCON (Maharashtra), ITCOT (Tamil Nadu), APITCO (Andhra Pradesh), GITCO (Gujarat), HARDICON (Haryana), MPCON (Madhya Pradesh), UPICO (Uttar Pradesh), HIMCON (Himachal Pradesh) and RAJCON (Rajasthan).

JOINT VENTURE

IFCI Sycamore Capital Advisors Pvt Ltd

The Company has 50% interest in one joint venture viz. IFCI Sycamore Capital Advisors Pvt Ltd (ISCAPL) incorporated in India in November 2011 which is under voluntary liquidation and Official liquidator has been appointed. The investment of IFCI Ltd in ISCAPL as on March 31, 2015 was at Rs. 0.01 crore Class A Equity Shares and Rs. 2.64 crore Fully Convertible Debentures against which adequate provision has been made considering the probability and quantum of share in distribution upon liquidation of the Company. Therefore, the same has not been considered for the purpose of consolidation of financial statements.

SOCIETIES

Institute of Leadership Development (ILD)

ILD - erstwhile Institute of Labour Development was established in 1992, by your Company recognizing the fact that, alongside the management, the workers have to be provided with opportunities and external facilities of training and development for meeting the continuous challenges of change. The name was rechristened as Institute of Leadership Development in the year 2008. ILD is working towards its mission to build capacities, hone up and infuse leadership skills among all levels of human resources in all types of organizations i.e., business and corporate entities, Banks, SMEs, NGOs, social action groups, key developmental sectors like education, health, energy and environment and the wide sweep of the government sector. ILD is also engaged in imparting skill development programmes for the unemployed youths of the state of Rajasthan and giving them job placements as well with the CSR fund support from different organizations. ILD is also an empanelled agency with Rajasthan Skill and Livelihoods Development Corporation (RSLDC), Jaipur, to carry out skill development programmes in the areas of Textile technology, Fashion Technology, Hospitality etc.

Management Development Institute (MDI)

MDI is one of India''s premiere Business Schools promoted by IFCI Ltd, the Institute aims to inculcate professionalism in management education and enhance the effectiveness of organizations through education, training and research. MDI presently is self-financing educational society. MDI has the distinction of being the first internationally accredited Indian Business School having received international accreditation by AMBA in 2006. The long-term programmes of MDI have received global, regional and national accreditations - accreditation of Association of MBAs (AMBA) London, South Asian Regional Accreditation (SAQS) and National Board of Accreditation (NBA). MDI also has the distinction of being the only Indian B-school that has a community outreach programme, the International Summer University (ISU) wherein MDI has joined hands with nine Indian universities and institutions to form a network of learning.During the year under report MDI received AICTE approval for conducting PG Level Management Programmes at its Murshidabad campus. The Hon''ble President of India inaugurated the new academic session at Murshidabad campus.

Rashtriya Gramin Vikas Nidhi (RGVN)

RGVN having its headquarter in Guwahati, Assam was established in April 1990, as an autonomous, non-profit organization registered under the Society''s Registration Act of 1860. Your Company being a founding promoter of RGVN, provided the initial set-up support and with time the Industrial Development Bank of India (IDBI), the National Bank for Agriculture and Rural Development (NABARD) and the Tata Social Welfare Trust (TSWT) also became its promoters. RGVN is a national level multi-state development and support organization working in the states of Assam, Arunachal Pradesh, Meghalaya, Mizoram, Nagaland, Manipur, Tripura, Sikkim, Odisha, Jharkhand and Bihar. After expanding operations in the Northeast, development activities of RGVN were also extended to the poverty stricken pockets of Eastern Uttar Pradesh, coastal Andhra Pradesh and Chhattisgarh. RGVN''s core strength comes from its network of NGOs and Self Help Groups, which are capable of handling large development projects. Over the years, RGVN has been able to groom and support small Community based Organizations involved in a variety of livelihood enhancement programmes.

COMPANIES WHICH HAVE BECOME OR CEASED TO BE SUBSIDIARIES, JOINT VENTURES OR ASSOCIATE COMPANIES DURING THE YEAR

During FY 2014-15, IFCI acquired 980 equity shares of Rajasthan Consultancy Organisation Ltd (RAJCON), equivalent to 49% of equity shareholding, from HARDICON, as a result of which RAJCON has become an Associate Company of IFCI.

IFCI''s shareholding in Asset Care and Reconstruction Enterprise Ltd (ACRE) has declined from 37.91% to 19.55%, due to preferential allotment by ACRE and acquisition of 80,000 equity shares of ACRE, by your Company from MPCON.

Details on performance and financial position of subsidiaries, associates and joint venture(s), as on March 31, 2015 are provided in Annexure VII.

COMPLIANCE

Submission of various returns and data/information to RBI, SEBI and other regulatory bodies and the Government of India was complied with during FY 2014-15.

DOCUMENTS PLACED ON THE WEBSITE

Pursuant to the provisions of the Companies Act, 2013, Listing Agreement and various other Regulatory Requiremnts, the Company is required to place various Policies/Documents/Details on the Website of the Company. The list of Documents placed on the website at www. ifciltd.com, inter-alia are as under:

* Corporate Social Responsibility Policy.

* Financial Statements of the Company and Consolidated Financial Statements along with relevant documents.

* Audited Accounts of the Subsidiaries.

* Details of unpaid dividend.

* Details of Vigil Mechanism for Directors and employees to report genuine concerns.

* The terms and conditions of the appointment of Independent Directors.

* Policy on Material Subsidiary.

* Policy on Related Party Transactions and Dealing with Related Party Transactions.

CORPORATE GOVERNANCE

A detailed report on Corporate Governance as stipulated under Clause 49 of the Listing Agreement, is attached to the Annual Report. Certificate from Practicing Company Secretary regarding compliance with the conditions of Corporate Governance as stipulated in Clause 49 of the Listing Agreement has been obtained and is annexed at the end of Corporate Governance Report.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

Conservation of Energy - The Company''s operations do not involve any manufacturing or processing activities. It is involved in providing financial assistance, therefore the Company requires normal consumption of electricity. Therefore the provisions of Section 134 (3) (m) of the Companies Act, 2013 read with Rule 8 (3) of Companies (Accounts) Rules, 2014 are not applicable on the Company. Further, the Company is not an industry as listed in Schedule to Rule 2 of the Companies(Disclosure of Particulars in the Report of Board of Directors) Rule, 1988.

Technology Absorption - In constant endeavour to drive competitive advantage through Operational Excellence, your organization is taking proactive steps towards Business Continuity planning. With regard to the same it is proposed to upgrade DC/DR as well as establish a Near Site. Further your Company is also working towards establishment of industry standard Network security policies and standards in line with the latest technology adoption. Your Company is also working towards implementing a standard product for Loan accounting, Treasury Operations, Asset Classification System, General Financial Accounting System, Loan/Debenture Accounting Systems, Asset & Liability Management (ALM), Bonds Monitoring and Processing System, Market Risk Management. Further, in order to integrate the customer services for our Customers, Shareholders and Bondholders your Company is planning to have an integrated customer service portal.

Foreign Exchange Earnings

The details in respect of foreign expenditure/earnings are as follows:

(Rs. crore)

Particulars Year ended Year ended 31.03.2015 31.03.2014

Expenditure in Foreign Currencies:

Interest on borrowings 4.45 4.78

Other matters 0.16 0.29

TOTAL 4.61 5.07

Earnings in Foreign Currency:

Earnings in Foreign Currency - -

QUALIFICATIONS, RESERVATION OR ADVERSE REMARK OR DISCLAIMER MADE BY THE STATUTORY AUDITORS

There were no qualifications or reservations or adverse remarks made by the Statutory Auditors for the stand alone Financial Statements or for the consolidated Financial Statements. However, the auditors had following observations on the consolidated Financial Statements : "Emphasis of Matters :

The holding company holds investments in eight companies to the extent of 20% or more of their respective total share capital and accordingly these companies are the associates of the holding company as per the Companies Act 2013, for the reasons stated in the para 26.1 of the Financial Statements of the Group. Our report is not modified on the matter."

EXPLANATIONS OR COMMENTS BY THE BOARD:

In the case of the referred companies, the shares to the extent of 20% or more were acquired by the holding company as a part of regular business activity of financing through equity participation with firm commitment of buy-back with the promoters/group companies of the investee companies at pre-determined Rate of Return (ROR) after a pre-determined period. Since the shares had been acquired with an intention to dispose-off at a pre-determined ROR, the shares in networth of the investee company following "Equity Method" was not considered appropriate indictor of the real economic interest of IFCI Ltd. and therefore, the investment in these companies have not been considered in ''Consolidated Financial Statements'' following AS-13.

QUALIFICATIONS, RESERVATION OR ADVERSE REMARK OR DISCLAIMER MADE BY THE SECRETARIAL AUDITORS

M/s Navneet K Arora & Co., Company Secretaries was appointed as Secretarial Auditor of the Company for the Financial Year 2014-15.

REPORT OF SECRETARIAL AUDITOR

"The Company has, in our opinion, complied with the applicable provisions of the Companies Act, 1956 and the Rules made under that Act and the provisions of Companies Act, 2013 and the Rules made thereunder as notified by Ministry of Corporate Affairs and the Memorandum and Articles of Association of the Company. During the period under review the Company has complied with the provisions of the Reserve Bank of India Act read with applicable Non-Banking Financial Companies (Reserve Bank) Directions as amended till date except delay in filing of e-returns in Form No.(s) NBS-7 for the quarter ended 30th September 2014, NBS-ALM-2 & 3 for Half Yearly ended on 30th September 2014 and NBS-7 for the quarter ended 31st December 2014 with the Reserve Bank of India."

EXPLANATIONS OR COMMENTS BY THE BOARD Provisional NBS-ALM 2 & 3 were filed with RBI within the stipulated time period and subsequently the final returns were filed with RBI after approval of final accounts for the respective period. Similarily, the e-return NBS-7 was also filed only after Board''s approval of final accounts for the period. The Company being listed, the results, which is part of NBS-7 return can not be disclosed prior to the same being provided to the stock exchanges. Reserve Bank of India was informed of the position and has not objected to the request of the Company considering the facts. The Secretarial Audit Report in the Form MR-3 is annexed at Annexure VIII.

STATEMENT ON DECLARATION BY INDEPENDENT DIRECTORS

Your Company has requisite number of Independent Directors on the Board. Pursuant to the provisions of the Companies Act, 2013, your Company has obtained Declaration of Independence from the Independent Directors under Section 149 of the Companies Act, 2013.

INTERNAL FINANCIAL CONTROL WITH REFERENCE TO THE FINANCIAL STATEMENTS

Your Company has in place an Internal Financial Control driven by the policies and procedures adopted by the company for ensuring the orderly and efficient conduct of its business, including adherence to company''s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information. However, as regular review for improvement & upgradation are the need of the hour, it is constant endeavour of the Company to improve the processes & policies and put in place improved internal financial controls.

DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to the requirement under Section 134 of the Companies Act 2013, with respect to Directors'' Responsibility Statement, it is hereby confirmed that:

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

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

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

(iv) The directors had prepared the annual accounts on a ''going concern basis'';

(v) The directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively. The "internal financial controls" means the policies and procedures adopted by the Company for ensuring the orderly and efficient conduct of its business, including adherence to company''s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records and the timely preparation of reliable financial information; and

(vi) The directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

Auditors

M/s ASA & Associates, LLP (DE1187) (Firm Regn. No. 009571N) and M/s Andros & Co. (DE1122) (Firm Regn. No. 08976N) were appointed by the Comptroller & Auditor General of India (C&AG) as Joint Statutory Auditors of your Company for FY 2014-15. C&AG has appointed Ms ASA & Associates, LLP (DE1187) (Firm Regn. No. 009571N) and Ms KPMR & Associates (DE0637) (Firm Regn. No. 02504N) as Joint Statutory Auditors of your Company for FY 2015-16.

DEPARTMENTS AT IFCI

(A) Credit Appraisal, Monitoring and Industry Research (CAMIR)

With a view to pitch in new business for IFCI, carry out quality appraisal and timely recovery in standard assets in sectors other than infrastructure, a dedicated department viz. Credit Appraisal, Monitoring and Industry Research was created in your Company. The department dealt inter-alia, with business development, credit appraisal of proposals, monitoring of existing standard cases of Delhi, Mumbai and Ahmedabad Regional Offices and need-based reliefs/concessions/restructuring of stressed accounts.

(B) Project Development Group (PDG)

Project Development Group (PDG) was established in FY 2008- 09, as a part of IFCI''s strategy to enter into infrastructure projects early in their life cycle, so as to ensure a good return on IFCI''s investments. Since then, PDG developed strong relationships with India''s leading infrastructure companies and had been associated with them throughout the project development life cycle from inception to commissioning and thereafter to nurturing the projects to realize returns. PDG developed invaluable insights into the technical, practical and financial aspects of the infrastructure sector in general and the power generation and road sectors in particular. The group managed IFCI''s exposure to infrastructure projects by way of vanilla equity investments, mezzanine instruments and term loans to infrastructure projects and their holding companies. The department also dealt with business development, credit appraisal and post disbursement monitoring and review of standard cases of all regional offices based out of northern, southern and eastern region of India.

During FY 2014-15, aligning with various external challenges being faced by the infrastructure sector, the department focused on consolidation of the investment portfolio from a value preservation standpoint. Simultaneously, it also achieved exits in some of the investments with reasonable returns.

(C) CREDIT I & II

In view of opening of new Regional Offices and expansion in business and with view to leveraging the credit expertise of both CAMIR and PDG better, it was decided to merge the activities of both the Groups and create two independent departments Credit-I and Credit-II with control of nine Regional Offices each. The new departments have started functioning from April, 2015. For 2015-16, IFCI''s focus is not only to grow loan book but also to improve the quality of loan portfolio. Steps taken/being taken in this direction are:

(i) Improvement in Credit Appraisal System.

(ii) Improving skills in the area of credit appraisals.

(iii) Activation of Regional Offices at 6 centres viz. Bhopal, Bhubaneswar, Kochi, Lucknow, Patna and Pune for sourcing proposals at these centres. Regional Offices at 2 new centres, Vijayawada and Raipur are being opened.

(iv) Thrust on marketing quality business.

(D) Corporate Advisory Group

IFCI today provides an entire gamut of financial advisory services to clients across different sectors of the economy. In the area of providing customized corporate advisory services, your Company, despite stiff competition during the year, has not only been able to retain its existing clients but has also been able to secure some prestigious new assignments including management consultancy assignments with respect to bid advisory, due diligence, project appraisal, business re-engineering, valuation, feasibility study etc. from various private/public sector entities/ banks and Central/State Government(s). During the year, your Company has also been empanelled with many prestigious clients for various consultancy assignments.

(E) Sugar Development Fund

Your Company has been acting as the nodal agency of the Government of India since inception of the Sugar Development Fund (SDF) for the purpose of disbursement, follow-up and recovery of SDF loans sanctioned for modernization of sugar factories, setting-up of bagasse based cogeneration projects, ethanol projects and cane development schemes. Cumulative sanctions and disbursements under SDF up to March 31, 2015 stood at Rs. 5,604 crore and Rs. 4,795 crore respectively. The agency commission booked for the FY 2014-15 is Rs. 17.20 crore. In addition, IFCI also carries out financial appraisals of projects for availing SDF loans by sugar mills.

IFCI is in the process of making SDF portal functional and same will be utilized by SDF, GoI and sugar companies. It will make SDF operations efficient and also contributes towards image building of IFCI.

(F) Scheduled Caste Guarantee Enhancement Fund

Your Company has also been designated by Government of India, as the Nodal Agency under the Scheme of Credit Enhancement Guarantee for Scheduled Castes Entrepreneurs to provide guarantee to banks against loans to young and start-up entrepreneurs belonging to scheduled caste with an objective to encourage entrepreneurship in marginal strata of the society. The Government of India has provided Rs. 200 crore to your Company during FY 2014-15 for this purpose.

(G) Human Resources

Your Company has continued to lay focus on enhancement in productivity of employees and their skill upgradation. In this regard, 222 employees have been sent on trainings organized in house and at training programmes organized by other Training Institutes and foreign trainings Your Company has been awarded by Asia Pacific HRM Congress for managing health of its employees at work for the year 2014. The level of satisfaction among employees has improved which resulted into lower attrition rate as compared to previous year.

(H) Information Technology and Communication

IT has emerged as an important medium for delivery of financial products and services. Information Technology (IT) enables sophisticated product development, better market infrastructure, implementation of reliable techniques for control of risks and helps the financial intermediaries to reach geographical distant and diversified markets.

The most noteworthy developments related to IT sector in your Company during FY 2014-15 are:

Formulation of e-Governance Committee of Board of Directors headed by a renowned IT Professor as its Chairman having exhaustive knowledge in the IT field which will be of immense value to the Company. E-Governance Committee has been formed inter-alia, for revamping the IT structure at IFCI for a secured and more effective structure to enable seemless transactions in your growing Company.

Technology Adoption

In constant endeavour to drive competitive advantage through Operational Excellence, your organization is taking proactive steps towards Business Continuity planning. With regard to the same, the process is on to upgrade disaster recovery infrastructure. Further your Company is also working towards establishment of industry standard Network security policies and standards in line with the latest technology adoption.

Your Company is also working towards implementing a standard product for Loan Accounting, Treasury Operations, Asset Classification System, General Financial Accounting System, Loan/Debenture Accounting Systems, Asset & Liability Management (ALM), Bonds Monitoring and Processing System, Market Risk Management, through a reputed IT Service provider in substitution of the in-house developed system on oracle 10G plateform.

Further, in order to integrate the customer services for our Customers, Shareholders and Bondholders your Company is planning to have an integrated customer service portal.

(I) Legal

On the legal front, your Company has carried out the legal activities for facilitation of sanctions and disbursements and has ensured compliance with statutory requirements during the year. Further, your Company was also able to defend successfully before the Hon''ble Supreme Court of India in the suits filed against it during the year 2014-15.

(J) Management of Non-Performing Assets (NPAs)

Your Company continued its efforts to exploit aggressively all channels available to reduce its NPAs. A considerable success was achieved in past few years and last year also by way of substantial recovery from the NPAs as reflected in the recovery as under:

(Rs. crore)

Sl. Resolution Strategy Amount

1. Sale of Assets/Sale of Shares 351.74

2. Sale of NPA Accounts 276.67

3. Settlement 177.01

4. Other Secoveries 21.92

TOTAL 827.34

To resolve and minimize the NPAs, your company has been taking all possible legal actions and also adopting all techniques and filing necessary applications before Debt Recovery Tribunal and also by adopting other methods of recovery viz. filing of criminal complaints u/s 138 of Negotiable Instruments Act, 1881 lodging FIR, attachment of secured and unsecured properties of the borrower and guarantor, arrest of absconding guarantor and taking stringent steps under the provisions of SARFAESI Act, 2002. Efforts were also made to ensure that the Loan Accounts are closely monitored so as to avoid slippage of accounts to NPA.

(K) Right to Information

IFCI has implemented the Right to Information Act, 2005 from 2013 onwards following the applicability of the RTI Act to IFCI and has been providing information to the applicants as per the provisions of the RTI Act. The relevant information as per the RTI Act has been posted on IFCI''s website at www.ifciltd.com. During the year, IFCI received 110 applications and 30 appeals seeking information under RTI Act, which were replied to as per the provisions of the RTI Act within the stipulated time.

(L) Promotion of Rajbhasha

During the year, your Company continued its efforts towards promoting the use of Hindi in its official work. With a view to motivating and encouraging the officers to use Hindi in official work, Hindi competitions were organized at Head Office as well as other offices of the Company. The officers of your Company at Corporate Office bagged prizes in various Hindi Competitions organized by Town Official Language Implementation Committee. The quarterly meetings of Official Language Committee and Annual Hindi week were duly held in various offices of your Company. All the computers available with your Company have been upgraded with Unicode facility and the website of your Company has also been made bilingual for the benefit of the stakeholders and to further promote use of Hindi.

(M) NOMINEE DIRECTORS

Your Company appoints Nominee Directors on the Boards of assisted concerns following the established practice of Institutions and Banks to monitor the performance of the companies where they have provided financial assistance. The underlying objective of making such appointment is to help build professional management and facilitate effective functioning of the Board as well as formulation of proper corporate policies and strategies to improve productive efficiency and promote long term growth of the assisted companies, keeping in view the overall interest of the shareholders and financial institutions. The feedback received from Nominee Directors act as a tool for credit monitoring. The system of Nominee Directors is functioning effectively in your Company.

With the Companies Act, 2013 coming into force, the Nominee Directors on assisted concerns need to be more vigilant with regard to functioning of assisted concern as well as reporting and reviewing the performance of the concerned company. Your Company has taken steps to update its officers about the new Act so that they may contribute effectively as Nominee Directors on the Boards of assisted concerns.

COMMENTS OF COMPTROLLER & AUDITOR GENERAL OF INDIA

The comments of Comptroller & Auditor General of India (C&AG) are at Addendum.

Appreciation

Your Directors wish to express gratitude for the cooperation, guidance and support from the Ministry of Finance, various other Ministries and Departments of the Government of India, Securities and Exchange Board of India, Reserve Bank of India, Stock Exchanges, other regulatory bodies, Comptroller & Auditor General of India and State Governments. Your Directors also acknowledge the valuable assistance and continued cooperation received from all banks, financial institutions, overseas correspondent banks, other members of the banking fraternity and investors. Your Directors would also like to express their apprication for the efforts and dedicated service put in by the employes at all levels of your Company.

S V Ranganath Non-Executive Chairman of the Board DIN : 00323799 Address: IFCI Tower 61 Nehru Place Dated: August 11, 2015 New Delhi - 110 019

---

Mar 31, 2014

To the Members

The Board of Directors of your Company has the pleasure of presenting the Twenty First Annual Report of IFCI Limited together with the Audited Statement of Accounts for the year ended March 31, 2014.

FINANCIAL RESULTS

(Rs. Crore)

PARTICULARS 2013-14 2012-13

1. Operational Income 2,885 2,706

2. Total Income 2,951 2,759

3. Cost of Borrowings 1,666 1,815

4. Staff Cost/Other Expenditure 91 105

5. Depreciation 13 10

6. Total Expenditure 1,770 1,930

7. Profit Before Provisions/write-off 1,181 829

8. Provision for Bad & Doubtful 520 165 Assets and Others (Net of Write off)

9. Profit Before Tax 660 664

10. Tax Expense 152 213

11. Profit After Tax 508 451

12. Surplus Brought forward from 1,648 1,496 Previous year

13. Appropriations:

Reserve u/s 451C of RBI Act 102 90

Special Reserve u/s 36(1)(viii) 15 15 of the Income Tax Act

Dividend on Equity Shares (incl. tax) 194 193

Dividend on Preference Shares (incl. Tax) 0* 0*

14. Balance carried to Balance Sheet 1,845 1,649 *Rs. 0.31 crore.

The total income of your Company for the year under report was Rs. 2,951 crore which was higher by 7% than total income of Rs. 2,759 crore in the previous year. There was reduction in cost of borrowings by 8.2% to Rs. 1,666 crore in the current year from Rs. 1,815 crore in the previous year on the back of substantial reduction in interest rates on bank loans and prepayment of certain high cost bank borrowings. Your Company also took steps to rationalize overhead cost which resulted in a saving of Rs.11 crore in the FY 2013-14 as compared to previous year.

Dividend

Your Directors have recommended a dividend of Rs. 1/- per equity share, i.e. 10% of the face value of Rs. 10/- each for the FY 2013-14. Further, dividend at the applicable rates aggregating to Rs. 0.31 crore (including corporate dividend tax) on Preference shares paid as interim dividend, has been proposed by your Directors for your confirmation. The dividend proposed by your Company on the equity shares does not exceed 10% (ten percent) of the paid up equity share capital. Hence, no amount is mandatorily required to be transferred to the General Reserves as per Companies (Transfer of Profits to Reserves) Rules, 1975.

Ownership & Equity Shareholding

There is no change in the ownership of the Government of India in your Company during the FY 2013-14 as Government of India continues to hold 55.53% equity stake in IFCI as on March 31, 2014 thereby continuing to be the majority stakeholder of the Company. The equity shareholding pattern of your Company as on March 31, 2014 is depicted below:

Particulars % Share No. of Equity Shares

Government of India 55.53 92,30,00,000

Banks, Financial Institution, 6.28 10,43,57,628

UTI and Mutual Funds

Insurance Companies 6.42 10,66,98,758

Foreign Institutional Investors,

NRIs & OCBs 6.00 9,97,19,180

Bodies Corporate 6.12 10,17,37,323

Individuals and Trust & Foundation 19.65 32,65,24,346

TOTAL 100.00 1,66,20,37,235

Composition of the Board

Since the last Board''s Report, the following changes occurred on the Board of IFCI:

Shri Santosh B Nayar who was appointed as CEO & Managing Director of your Company w.e.f. 15th July, 2013 ceased to be on Board of Company w.e.f. 11th December, 2013. Subsequent to the resignation of Shri Santosh B Nayar from the post of CEO & MD, the charge of CEO & MD was handed over to Shri Malay Mukherjee w.e.f. December 12, 2013. Shri Achal Kumar Gupta was also appointed during the year as Whole Time Director designated as Deputy Managing Director of your Company w.e.f. 12th December, 2013.

Shri S V Ranganath, who retired as Chief Secretary, Government of Karnataka, Ex-IAS Officer of Karnataka-75 cadre was appointed as Additional Director on Board of the Company w.e.f. November 22, 2013 and was made Non-Executive Chairman on the Board w.e.f. January 6, 2014. Consequently, Shri P G Muralidharan who was earlier Non-Executive Chairman on the Board of your Company ceased to be the Chairman of the Board w.e.f. January 6, 2014. However, he continues to be Non-Executive Director on the Board of your Company.

The Government of India nominated Shri Arvind Kumar, Joint Secretary, Department of Financial Services (DFS), New Delhi on the Board of the Company who was appointed as Director w.e.f. July 30, 2013 vice Shri Sanjeev Kumar Jindal.

Shri Ashok Kumar Jha ceased to be a Director on the Board of your Company w.e.f. December 02, 2013. Ms Kiran Sahdev, Executive Director, LIC of India was appointed as Director in casual vacancy w.e.f. October 24, 2013 vice Mrs Usha Sangwan.

The Government of India nominated Shri Alok Tandon, Joint Secretary, Ministry of Finance, Department of Financial Services, New Delhi on the Board of the Company who was appointed as Director w.e.f. June 10, 2014 vice Shri Arvind Kumar, Joint Secretary, Ministry of Finance Department of Financial Services, New Delhi.

Shri K S Sreenivasan was appointed as Additional Director on the Board of your Company w.e.f. March 31, 2014.

Prof N Balakrishnan was appointed as Additional Director on the Board of the Company w.e.f. June 26, 2014.

Shri S N Ananthasubramanian was appointed as Additional Director on the Board of the company w.e.f. July 4, 2014.

Directors Responsibility Statement

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

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

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

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

(iv) That the Directors had prepared the annual accounts on a going concern basis.

Auditors

M/s Thakur Vaidyanath Aiyar & Co. (DE0016) (Firm Reg. No. 000038N) and M/s ANDROS & Co. (DE1122) (Firm Reg. No. 08976N) were appointed by the Comptroller & Auditor General of India (C&AG) as Joint Statutory Auditors of Your Company for FY 2013-14. C&AG shall appoint Statutory Auditor(s) of Your Company for FY 2014-15.

Corporate Governance

A detailed report on Corporate Governance as stipulated under Clause 49 of the Listing Agreement, is attached to this Report.

Certificate from Practicing Company Secretary regarding compliance with the conditions of Corporate Governance as stipulated in Clause 49 of the Listing Agreement has been obtained and is annexed at the end of Corporate Governance Report.

Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo

As the Company''s operations do not involve any manufacturing or processing activities, the particulars as per Companies (Disclosures of Particulars in the Report of the Board of Directors) Rules, 1988 regarding conservation of energy and technology absorption, are not applicable. The Company is also not engaged in any activity relating to exports. The particulars regarding expenditure and earning in the foreign exchange are as under:

Particulars of Employees

In terms of provisions of Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 as amended, the names and other particulars of the employees are set out in Annexure-2 to the Directors'' Report.

Comments of Comptroller & Auditor General of India

The Comments of Comptroller & Auditor General of India (C&AG) is at Addendum.

Appreciation

Your Directors wish to express gratitude for the cooperation, guidance and support from the Ministry of Finance, various other Ministries and Departments of the Government of India, Securities and Exchange Board of India, Reserve Bank of India, other regulatory bodies, Comptroller & Auditor General of India and State Governments. Your Directors are also grateful to all the employees of the Company for their dedicated service. Your Directors also acknowledge the valuable assistance and continued cooperation received from all banks, financial institutions, overseas correspondent banks, other members of the banking fraternity and investors.

For and on behalf of the Board of Directors

Malay Mukherjee Achal Kumar Gupta B N Nayak Rupa Sarkar

Chief Executive Officer & Deputy Managing Director Chief Financial Officer Company Secretary Managing Director

Place: New Delhi Date : July 4, 2014

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Mar 31, 2013

To the Members

The Board of Directors of your Company has the pleasure of presenting the Twentieth Annual Report of IFCI Limited together with the Audited Statements of Accounts for the year ended March 31, 2013.

FINANCIAL RESULTS

(Rs. crore) PARTICULARS 2012-13 2011-12

1. Operational Income 2,706 2,801

2. Total Income 2,759 2,850

3. Cost of Borrowings 1,815 1,871

4. Staff Cost/Other Expenditure 105 122

5. Depreciation 10 12

6. Total Expenditure 1,930 2,005

7. Profit before provisions/write-off 829 845

8. Provision for Bad & Doubtful 165 (113) Assets and others (Net of Write-off)

9. Profit before Tax 664 958

10. Tax Expense 213 294

11. Profit after Tax 451 664

12. Surplus brought forward from 1,496 1,066 previous year

13. Appropriations:

Reserve u/s 45IC of RBI Act 90 133

Special Reserve u/s 36(1)(viii) of the 15 15 Income Tax Act

Dividend on Equity Shares (incl. Tax) 193 86

Dividend on Preference Shares (incl. Tax) 0* 0*

14. Balance carried to Balance Sheet 1,648 1,496* Rs.0.31 crore

Your Company''s total income declined marginally by 3.2% to Rs.2,759 crore in 2012-13 from Rs.2,850 crore in 2011-12, mainly due to subdued fresh asset creation in an uncertain environment and downgrading of certain assets during the year. However, lower income was partly offset by reduction in cost of borrowings by 3.0% to Rs.1,815 crore in 2012-13 from Rs.1,871 crore in 2011-12, due to substantial downward revision in interest rates on existing bank loans and prepayment of certain high cost bank borrowings. Your Company also took steps for rationalization of overhead cost which resulted in a saving of Rs.19 crore during 2012-13.

Dividend

Your Directors have recommended a dividend of Rs.1/- per equity share, i.e. 10% of the face value of Rs.10/- for the FY 2012-13. Further, dividend at the applicable rates aggregating to Rs.0.31 crore (including corporate dividend tax) on Preference Shares, paid as interim dividend has been proposed by your Directors for your confirmation.

The dividend proposed by your Company does not exceed 10 percent of the paid up share capital. Thus, the amount to be transferred to reserves is nil as per the Companies (Transfer of Profits to Reserves) Rules, 1975.

Change in Ownership and Reconstitution of the Board

The most significant development in 2012-13 was the assumption by the Government of India of 55.57% (Currently 55.53%) equity holding in IFCI on December 20, 2012, thereby making it the majority stakeholder of the Company.

Since the last Annual General Meeting, the following changes occurred on the Board of IFCI:

S/Shri Prakash P. Mallya, Shilabhadra Banerjee, K. Raghuraman, Sujit Kumar Mandal, Vijay Kumar Chopra, Atul Ashok Galande, Vijendra Singh Jafa, S. Shabbeer Pasha, Rakesh Bharti Mittal, Chandan Bhattacharya and Prof. Shobhit Mahajan ceased to be Directors on the Board of the Company.

The Government of India nominated Shri Anurag Jain, Joint Secretary, Ministry of Finance, Department of Financial Services, New Delhi as Government Director. Shri Sanjeev Kumar Jindal, Director, Ministry of Finance, Department of Financial Services, New Delhi whose nomination was withdrawn by the Government of India was later re-nominated as Government Director on the Board of IFCI Ltd. However, on July 29, 2013 the Government of India nominated Shri Arvind Kumar, Joint Secretary, Ministry of Finance, Department of Financial Services, New Delhi as Government Director vice Shri Sanjeev Kumar Jindal.

Smt. Savita Mahajan was appointed as Additional Director on the Board of your Company w.e.f. February 12, 2013.

Shri Atul Kumar Rai ceased to be on Board of the Company and CEO & Managing Director w.e.f. May 31, 2013 and Shri Anurag Jain, Joint Secretary, Ministry of Finance, Department of Financial Services, was appointed as CEO & Managing Director of the Company w.e.f. May 31, 2013.

Subsequently, Shri Anurag Jain handed over the charge of CEO & MD to Shri Santosh B. Nayar, who was appointed as Additional Director and CEO & MD w.e.f. July 15, 2013.

Shri Ashok Kumar Jha was appointed as Additional Director on the Board w.e.f. July 15, 2013.

At this Annual General Meeting, Prof. Omprakash Mishra, is retiring by rotation and being eligible, has offered himself for re-appointment.

Directors'' Responsibility Statement

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

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

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

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

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

Auditors

M/s Ray & Ray, Chartered Accountants, the current Statutory Auditors of your Company shall hold office till this Annual General Meeting. Consequent on the change in the equity structure of your Company, henceforth, the Statutory Auditors of your Company shall be appointed by the Comptroller & Auditor General of India (CAG). CAG has appointed M/s Thakur Vaidyanath Aiyar & Co. (DE0016) and Andros & Co. (DE1122) as Joint Statutory Auditors for FY 2013-14.

Corporate Governance

A detailed report on Corporate Governance as stipulated under Clause 49 of the Listing Agreement, is attached to this Report.

Certificate from Statutory Auditors of the Company regarding compliance with the conditions of Corporate Governance as stipulated in Clause 49 of the Listing Agreement has been obtained and is annexed at the end of Corporate Governance Report.

Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo

As the Company’s operations do not involve any manufacturing or processing activities, the particulars as per Companies (Disclosures of particulars in the Report of the Board of Directors) Rules, 1998 regarding conservation of energy and technology absorption, are not applicable. The Company is also not engaged in any acitivity relating to exports. The particulars regarding expenditure and earning in the foreign exchange are as under:

(Rs. crore) Particulars Year ended Year ended 31.03.2013 31.03.2012

Foreign Exchange used:

Interest on borrowings 4.41 4.29

Other matters 0.01 0.19

TOTAL 4.42 4.48

Earnings in Foreign Exchange:

Earnings in Foreign Currency

Particulars of Employees

In terms of provisions of Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 as amended, the names and other particulars of the employees are set out in Annexure-2 to the Directors’ Report.

Comments of Comptroller & Auditor General of India

The Comments of Comptroller & Auditor General of India (CAG) form part of this report as per Annexure-3. CAG has given "No Comments" Audit Report under Section 619(4) of the Companies Act, 1956.

Appreciation

Your Directors wish to express gratitude for the cooperation, guidance and support received from the Ministry of Finance, various other Ministries and Departments of the Government of India, Securities and Exchange Board of India, Reserve Bank of India, other regulatory bodies, Comptroller & Auditor General of India and State Governments. Your Directors are also grateful to all the employees of the Company for their dedicated service. Your Directors also acknowledge the valuable assistance and continued cooperation received from all banks, financial institutions, overseas correspondent banks, other members of the banking fraternity and investors.

For and on behalf of the Board of Directors

Place: New Delhi P. G. MURALIDHARAN

Dated: September 19, 2013 Chairman of the Board

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Mar 31, 2011

To the Members

The Board of Directors of your Company has the pleasure of presenting the Eighteenth Annual Report of IFCI Limited together with the Audited Statements of Accounts for the year ended March 31, 2011.

FINANCIAL RESULTS

(Rs. crore)

PARTICULARS 2010-11 2009-10

1. Operational Income 2,422 1,657

2. Total Income 2,486 1,679

3. Cost of Borrowings 1,319 891

4. Staff Cost/Other Expenditure 141 112

5. Depreciation 10 9

6. Total Expenditure 1,470 1,012

7. Profit before provisions/write-off 1,016 667

8. Write-off/Provisions for Bad & Doubtful Assets(net of reversal) (150) (448)

9. Profit Before Tax 1,166 1,115

10. Tax Expense 460 444

11. Profit After Tax 706 671

12. Surplus brought forward from previous year 608 312

13. Appropriations: Reserve u/s 45 IC of RBI Act 142 134

Capital Redemption Reserve – 82

General Reserve – 65

Special Reserve u/s 36(1)(viii) 10 10

Corporate Social Responsibility Fund 10 –

Dividend on Equity Shares (incl. Tax) 86 84

Dividend on Preference Shares (incl. Tax) 0* 0*

14. Balance carried to Balance Sheet 1,066 608 * Rs. 0.31 crore

Your Company, during FY 2010-11, has clocked a growth of 48% in total income, which has grown to Rs. 2,486 crore from the total income of Rs. 1,679 crore in the previous year on the strength of creation of fresh assets, which increased from Rs. 7,846 crore as on March 31, 2009 to Rs. 15,942 crore as on March 31, 2011. The Balance Sheet size of Rs. 24,268 crore as at March 31, 2011 is the highest in the history of IFCI since 1948.

The cost of borrowings increased to Rs. 1,319 crore for the current year from Rs. 891 crore in the previous year, since, in order to create fresh assets, fresh borrowings had to be made. The total borrowing increased from Rs. 13,562 crore as at March 31, 2010 to Rs. 19,264 crore as at March 31, 2011.

Profit from operations has significantly improved by 47% to Rs. 951 crore for the current year over Rs. 645 crore for the previous year. Profit before tax and after tax of Rs. 1,166 crore and Rs. 706 crore respectively has increased by 5% over corresponding amount of Rs. 1,115 crore and Rs. 671 crore respectively for the previous year.

Dividend

Your Directors have recommended a Dividend @ Re.1 per equity share (10%) of face value of Rs. 10/- for the year 2010-11. Further, Dividend at the applicable rate i.e. Rs. 0.31 crore (including Corporate Dividend Tax) on Preference Shares has been paid as Interim Dividend.

Directors

Since the last Annual General Meeting, Shri Tejinder Singh Laschar resigned from the Board on August 31, 2010. Shri Rakesh Bharti Mittal joined the Board as Additional Director on October 27, 2010.

Directors' Responsibility Statement

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

(i) that in the preparation of annual accounts, the applicable accounting standards have been followed along with proper explanation relating to any departures;

(ii) that the Directors 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 profit or loss of the Company for the year under review;

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

(iv) that the Directors have prepared the annual accounts for the year ended March 31, 2011 on a 'going concern basis'.

Auditors

M/s Chokshi & Chokshi, Chartered Accountants (Firm Registration No. 101872W), Mumbai, Statutory Auditors of the Company hold office until the conclusion of the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment.

The Company has received a letter from them to the effect that their appointment, if made, would be within the prescribed limits under Section 224(1B) of the Companies Act, 1956. You are requested to consider their appointment.

MANAGEMENT DISCUSSION AND ANALYSIS

(i) Operating Environment and Outlook

Macroeconomic conditions, after contraction in 2009 on a heterogeneous scale, witnessed improvement all over the world in FY 2010-11. IMF, in their 'Global Financial Stability Report' published in April, 2011 observed that improvements in macroeconomic performance in advanced economies and strong prospects for emerging markets are supporting overall financial stability and that risks to global financial stability have declined. However, structural weakness and vulnerabilities in euro area pose significant risks to bank balance sheets, which have thin capital buffers apart from uncertain assets quality and sovereigns facing debt sustainability challenges.

Reserve Bank of India (RBI), in its 'Financial Stability Report' dated June 14, 2011 somewhat differently observes

that 'the growth is slackening in most parts of the world, even as the risks from global imbalances and sovereign debt crisis in Europe continue to hover' and subsequently in the monetary policy review on June 16, 2011, it observed that the global environment has changed for the worse, after its last review made on May 3, 2011. RBI also noted that 'Lead indicators suggest that growth moderated in both advanced economies and emerging market economies (EMEs) under the impact of high oil and other commodity prices, the spill-over from the Japanese natural disasters and monetary tightening in EMEs to contain inflationary pressures. Uncertainty about the resolution of the sovereign debt problem in the euro area has increased. These developments increase downside risks to global growth prospects'.

The Indian economy, on the back of improved agricultural output, strong private consumption, robust investment and a pick-up in exports, has rebounded strongly during 2010-11. GDP growth however, decelerated to 7.8% in Q4 of 2010-11 from 8.3% in the previous quarter and 9.4% in the corresponding quarter a year ago. For the year as a whole, GDP growth in 2010-11 was 8.5%. While private consumption was robust, investment activity moderated in Q4 of 2010-11. IIP growth, on year-on-year basis, moderated to 6.3% in April 2011, but growth in capital goods production at 14.5% was buoyant.

Domestic inflation remains high and much above the comfort zone of RBI. The headline Wholesale Price Index (WPI) inflation rate was 9.7% in March 2011. The main drivers of WPI inflation in April-May 2011 were non-food primary articles, fuel group and non-food manufactured products. The consumer price inflation for industrial workers (CPI - IW) rose from 8.8% in March 2011 to 9.4% in April 2011. Domestic fuel prices do not yet reflect the current trends of global prices. Although global commodity prices moderated in recent weeks, it is too early to downgrade this as a risk factor. Year-on-year non-food credit growth moderated from 21.3% in March 2011 to 20.6% in early June 2011, but remained above the indicative projection of 19%. The year-on-year deposit growth increased to 18.2% in early June 2011 from 17.0% in March 2011. However, corporate earnings growth and profit margins in the fourth quarter of 2010-11 were already showing stresses in their performance and ever since then the investment climate has weakened further.

We believe that growth would be adversely affected in the days to come on account of tight monetary conditions and worsening investor sentiment.

Initiatives of IFCI

Your Company, during the year under review, accelerated its operations and re-established its presence in the financial market by enlarging and retaining high value customer base. The business model adopted by IFCI has been guided by maximization of return on investment, while maintaining

emphasis on due diligence, as well as appropriate risk mitigants. High yielding short term lending, backed by strong and easily enforceable security of highly rated companies, formed the key strengths helping your Company to expand its asset base without any Non Proforming Assets (NPAs). Your Company will continue to explore possibilities for new business in the short and medium term with the aim of establishing a niche market for itself in financial products like loans against liquid securities, working capital gap, pre-operative expenses, acquisition, financing and participation in QIPs and IPOs.

The Government of India has developed an ambitious plan for infrastructure investment, involving both public and private sector. Developing roads, ports, power generation and transmission infrastructure forms an integral part of the plan. Furthermore, there is an increased focus on evaluating new sectors in Indian infrastructure and developing an infrastructure advisory division for providing holistic solutions to existing and potential clients. In keeping with the dynamics of the sector, your Company's Project Development Group (PDG) has scouted for the best investment opportunities in the Indian infrastructure space. The group proposes to make further investments in infrastructure while nurturing projects in its portfolio. While adding to its existing portfolio of investments in roads, thermal power and hydro power generation, the group has forayed into power transmission, solar power generation and wind energy generation through its investments during FY 2010-11 and is looking forward to investing in the logistic sector.

Your Company has strengthened the Treasury team by creating a dedicated Research Desk for making better and more informed investment decisions with the aim of maximizing profits in all treasury operations. The Treasury Department has been equipped with necessary tools and technology to meet the challenges in the rapidly changing environment. Your Company has also initiated operations in new segments viz. Collateralized Borrowing & Lending Obligation (CBLO) and Overnight Interest Swaps (OIS) to manage liquidity risk.

Your Company, after strengthening the activities of its Corporate Advisory Group, has diversified in areas of high value segments of financial consultancy. As a result, currently, IFCI provides the entire gamut of financial advisory services to clients across different sectors of the economy. IFCI has been able to create a space for itself in the niche bid advisory segment, where only a handful of global consultants have the expertise to provide consultancy services for competitive tariff based power projects, Ultra Mega Power Projects (UMPP), City Gas Distribution (CGD), Gas Pipeline Projects etc. During the current FY 2011-12, the thrust would be to get more Transaction Advisory assignments in the infrastructure sector, which will provide the impetus to further expand the footprints of IFCI in advisory business.

IFCI is the nodal agency for channelizing the Sugar Development Fund (SDF) Loans of the Government of India. Your Company, besides financial appraisal for SDF loans, disinvestment and monitoring, is exploring new avenues to increase fee based income by providing consultancy to sugar industry in almost every area, which includes restructuring, syndication and getting technical and financial partners; both to private and co-operative sector and preparing schemes for sugar factories to avail assistance from SDF for cane development activities. During the year 2010-11, fee based income from financial appraisals for SDF assistance, was higher by about 49% vis-a-vis previous year, as a result of continued efforts made in this direction.

Your Company, consequent on its demonstrated success in NPA resolution, took the initiative for the acquisition of NPAs from Banks/other FIs after complying with RBI guidelines on the subject. Your Company acquired NPAs from Banks/other FIs, and earned attractive returns. Your Company proposes to acquire further NPAs from Banks/other FIs by way of participating in public auction and/or through bilateral deals, to ensure that the momentum of earning profit with a substantial return is maintained. Innovative strategies are being adopted for the resolution of NPAs including assets under the control of Official Liquidators and companies before BIFR.

Your Company has been continuously posting profits. After paying dividend @ 8% for the year 2008-09 and @ 10% for the year 2009-10, the Board of Directors is now recommending to pay dividend @ 10% subject to your approval. The capital adequacy ratio of your Company as on March 31, 2011 at 16.4% is comfortable. Your Company is poised to raise resources in a big way to ensure accelerated growth in the years to come.

As per the study carried out by 'The Economic Times and Great Place to Work Institute', on "India's Best Companies to Work for-2011", your Company, for the second consecutive year, maintained its position as third best place to work for in the Financial Services Sector.

Your Company is keeping a close watch on the various developments in connection with the issue of new Banking Licenses and evaluating its strategy for foray into the Banking arena.

Your Company, in order to provide the requisite fillip to more effective management development in relation to significant and growing sectors of the economy, established Management Development Institute (MDI) in 1973 and another campus of MDI is now proposed to be set up at Murshidabad, West Bengal for which the foundation stone was laid by the Hon'ble Finance Minister of India on October 31, 2010. An MoU was signed between MDI and your Company in this regard. MDI has now emerged as one of the most prominent Business Schools of the country and as per CNBC Survey for the year 2011, it ranked 5th among the top 10 business institutes of the country. MDI is also in the process of acquiring land in Bengaluru for setting up a third campus.

The Technical Consultancy Organisations (TCOs) promoted by your Company provide a complete set of consultancy services in the areas of project conceptualization and other related services, credit syndication, preparation of various project specific agreements including credit documents, restructuring of projects, valuation of assets, stock audits, assessment studies on working capital, project monitoring consultancy, securitization services and secretarial assistance, in conducting training, entrepreneurship development programmes. IFCI is the lead promoter Institution for MPCON, HIMCON, HARDICON and NITCON.

Corporate Social Responsibility

Your Company has taken the initiative for undertaking Corporate Social Responsibility (CSR) from the year 2010-11. The main objective of the CSR initiative is to provide a platform to specialized agencies for enabling their involvement in CSR related activities with special focus on public health, education, environment and micro-finance. Under this initiative, in the year 2010-11, your Company released an amount ofRs. 50 lakh to Institute of Leadership Development (ILD) for upgradation and strengthening of infrastructure as well as to pursue its project for adoption of 3 villages for the purpose of social and economic development of the area, capacity building for enhancing the level of education and training as well as implementation of developmental programmes on health, energy, environment, sustainable economic activities and skill development programmes. Also Rs. 26 lakh was released to Rashtriya Gramin Vikas Nidhi (RGVN), Guwahati to pursue a project on Solar Lighting and Sanitation in semi urban areas of Kamrup District, Assam which will definitely uplift the standard of people living in the area.

Subsidiary Organisations

The following subsidiary companies have synergized their operations with IFCI:

- IFCI Infrastructure Development Ltd (IIDL)

IFCI Infrastructure Development Ltd (IIDL) had been promoted as a wholly owned subsidiary of your Company, as an instrument for unlocking value from real estate held by IFCI by way of its office and residential properties, acquiring valuable and strategic real estate in the process of recovery from NPAs of IFCI and availing new opportunities in real estate development through development authorities. Over the years, IIDL has expanded its asset base by purchasing assets and intensifying development work on such assets at various geographical locations in the country and made its presence felt on a pan India basis.

IIDL, with its implementation of projects like Service Apartment Project at Delhi, Hotel Project at Lucknow, Financial City project at Bengaluru and residential projects in NCR and Kochi, is one of the growth engines in the development of real estates and infrastructure, to which impetus is given by Government of India.

IIDL has also secured an important opportunity to participate in the development of a food park approved by the Ministry of Food & Processing Industries, Government of India during the year. IIDL has formed a Special Purpose Vehicle (SPV) named "JANGIPUR BENGAL MEGA FOOD PARK" for the development of the food park. During the year 2010-11, there was a growth of 86% in the company's

assets base, which went up to Rs. 640.05 crore as against Rs. 344.04 crore at the end of previous year. The net profit increased by 7.98%, which was at Rs. 4.33 crore during the year under review as against Rs. 4.01 crore during the previous year. The gross income of the company was Rs. 29.32 crore despite the generally slow recovery rate in the real estate sector during the year under review.

- IFCI Venture Capital Funds Ltd (IVCF)

IFCI Venture Capital Funds Ltd was set up by your Company in the year 1975 with a view to promoting entrepreneurship by providing risk capital mainly to first generation entrepreneurs/technocrats to help them setup business projects. Later on, IVCF started providing capital support to Small and Medium Enterprises (SMEs) towards initial capital and growth. Since inception, it has supported entrepreneurs by providing start-up/growth capital for setting up more than 400 projects across India. IVCF closed three private equity/venture capital funds, launched in 2008, with aggregate corpus ofRs. 512 crore on June 30, 2010. During the year 2010-11, the entity sanctioned an amount of Rs. 395.14 crore and disbursed Rs. 292.14 crore out of the aggregate corpus fund. IVCF registered a growth of 166% in Profit after Tax at Rs. 13.14 crore (Rs. 4.94 crore) in 2010-11 over previous year.

- IFCI Financial Services Ltd (IFIN)

IFIN is engaged in Stock Broking, Investment Banking, Mutual Fund Distribution and Advisory Services, Depository Participant Services and Insurance Products. IFIN continued to grow both organically and inorganically. The retail branches of IFIN at the end of the year increased from 25 to 42. The size of operations has also increased considerably and reasonable growth was registered in the institutional services. A growth of 26.89% was registered in company's income from operations at Rs. 33.13 crore as compared to Rs. 26.11 crore during previous year. During the year 2010-11, the authorized share capital of the company was raised from Rs. 28.25 crore to Rs. 50 crore.

- IFCI Factors Ltd (IFL)

IFCI Factors is one of the first members of Factors Chain International from India. It has pioneered the export factoring business in India and is also providing domestic factoring services, through which it is steadily replacing the hitherto conventional modes of working capital finance in the banking space. IFL achieved a turnover of Rs. 2,683 crore, funds in use of Rs. 856 crore and net profit of Rs. 20.1 crore, registering a growth of 131% in turnover, 183% in funds in use and 90% in net profit over the corresponding numbers of financial year 2009-10, whereby the year under review had been yet another significant year. IFL hopes to maintain the momentum in growth in future and aims to become one of the major players in the factoring industry in India in the next 3-5 years. The factoring business globally grew by 28% in the year 2010 at ¤ 1648 billion as compared to ¤ 1283 billion in previous year, though the Indian factoring volume grew only at 4% at ¤ 2.75 billon ( ¤ 2.65 billion). With India's market share of 0.77% in Asia, there is vast scope for factoring business in India. However, it is going to be a continued challenge for factoring companies to raise appropriately priced funds to create quality domestic and export factoring assets and appropriately structure deals to de-risk business in the absence of supportive factoring legislations in India. The proposed Factoring Bill, if passed, is expected to create a conducive environment for further development of the factoring industry in India.

- MPCON Ltd

MPCON is providing consultancy services to small and medium enterprises, individual entrepreneurs, Government Departments and agencies, various state level institutions, commercial banks and other institutions in the States of Madhya Pradesh, Rajasthan and Chhattisgarh. The company is specialised in small business, training and skill development. During the year 2010-11, the total income of MPCON grew by 19.18% at Rs. 8.61 crore. The project consultancy income grew by 121% during the period and stood at Rs. 2.86 crore ( Rs. 1.30 crore) which constituted 33.28% share in total income. Training programmes and others constituted 65.11% share and stood atRs. 5.60 crore (Rs. 5.14 crore). The profit after tax of MPCON grew by 80.14% in the year 2010-11 and stood at Rs. 0.46 crore.

(ii) Industry Structure & Development

The industrial sectors in which your Company has major exposures and which include power generation, service sector and other infrastructure/logistics, have performed satisfactorily. Government of India, under the 'National Action Plan for Climate Change' (NAPCC) has identified measures that promote our development objectives, while yielding co-benefits for addressing climate change effectively. These developments translate into potential investment opportunities in roads, ports, renewable energy and the power sector at large. The prospects of other sectors in which your Company has major exposures, viz., iron and steel, petroleum refining, construction and real estate have improved with the upswing in economic activities.

IFCI, being categorized as an NBFC-ND-SI (Non-Banking Financial Company-Non Deposit taking Systemically Important) by RBI, has to compete, in the area of project finance, with Banks and Financial/Investment Institutions. Your Company, having embarked upon substantial asset creation in FY 2008-09, after a gap of 10 years, has been able to re-establish business relationships with several major industrial houses in the country by extending financial assistance. Your Company has endeavored to maximize returns, with the in-house experience in infrastructure projects, by investing by way of loans with a mix of equity, mezzanine and sub debt.

During FY 2010-11, looking to the maturity profile of its existing liabilities, IFCI has sanctioned term loans of one to three years duration mainly to meet the short term fund requirements of companies with excellent track record, for general corporate purposes, investment in subsidiary company/(s), acquisition, subscription to rights issue, purchase of warrants, refinancing of high cost debt, pre- operative expenses for project implementation, etc. against adequate security. Apart from fund based activity, your Company also ventured into non-fund based activities like advisory services, syndication, underwriting etc. In order to retain and enlarge the customer base, endeavours were made to develop such products which cater to the needs of corporate clients.

Your Company, during the year, also ensured improvement in various other operational areas like Treasury and Investments and posted substantially higher level of revenue and profits.

The details of various developments are given hereunder:

(a) Approvals and Disbursements:

During the FY 2010-11, total fund based approvals were Rs. 13,208.50 crore as against Rs. 6,765.56 crore in the previous year registering a rise of 95.23%. Out of the above approvals, an amount of Rs. 3,262.25 crore (24.69%) was by way of rupee term loans, Rs. 3,111 crore (23.55%) by way of corporate loans, Rs. 945 crore (7.15%) by way of short term loans and Rs. 1,460 crore (11.05%) by way of debenture. The amount approved towards equity and other investments was Rs. 4,430.25 crore (33.54%).

Total disbursements during FY 2010-11 amounted to Rs. 8,399.39 crore compared to Rs. 6,053.82 crore in the previous year registering a rise of 38.75%. Out of the said disbursement, Rs. 2,028.06 crore (24.14%) was by way of rupee term loans, Rs. 3,034.20 crore (36.12%) by way of corporate loans, Rs. 1,150.45 crore (13.69%) by way of short term loans, Rs. 110 crore (1.30%) by way of debenture and Rs. 2,076.68 crore (24.72%) by way of equity & other investments.

(b) Treasury and Investment Operations

During the FY 2010-11, your Company earned an income of Rs. 139 crore from fixed market operations. While the avenues of investment were broadened for earning higher return, safety and liquidity were the prime criteria behind all investment decisions. Your Company was able to achieve returns at par with/higher than the market returns of top rated instruments with similar maturity. During the year, operations in Collateralized Borrowing and Lending Obligation and Overnight Interest Swaps were also introduced.

In foreign currency operations, your Company managed its exposure in foreign exchange reasonably well by taking appropriate forward covers. The foreign exchange position was nearly hedged throughout the year. Your Company did not have any exotic derivatives exposure in equity/debt or foreign exchange market.

In equity operation, your Company continued with the strategy of selective disinvestment of slow moving/illiquid stocks and strengthening the portfolio through selective investment in frontline and mid cap stocks. While improving the quality of the portfolio, in FY 2010-11 your Company earned a profit of Rs. 325.39 crore from equity operations. Net investment portfolio of your Company as on March 31, 2011 stood at Rs. 8,005.56 crore which is substantially higher than the net investment amount of Rs. 5,882.43 crore as on March 31, 2010.

Your Company embarked on an ambitious drive of raising Rs. 5,000 crore during FY 2009-10 by way of bond issuance and bank loans. Buoyed by the success in FY 2009-10, your Company set a higher target for FY 2010-11 and mobilised Rs. 7,000 crore. The remarkable feat was achieved through successful nurturing of relationship developed by your Company with different market participants. The overwhelming response of investors to the maiden Infrastructure Bond issuance program of your Company demonstrates the goodwill and confidence enjoyed by your Company among investors.

(c) Management of Non-Performing Assets

Your Company continued to exploit aggressively all channels available to it to reduce its NPAs and were successful in doing so. This is evidenced by NPA recovery of more than Rs. 338 crore surpassing the recovery budget, of which Rs. 263 crore was by One Time Settlement (OTS) and Assignment and Rs. 75 crore through Securitization and Reconstruction of Financial Assets & Enforcement of Security Interest Act (SARFAESI) and legal route.

In future, your Company has to meet new challenges in resolving NPA where it holds minority stake and action under SARFAESI is difficult due to non-receipt of consent from other secured creditors pursuant to settlement with them by company. IFCI intends to resolve these NPAs by adopting DRT and High Court route among other recourses available to it.

(iii) Financial Performance

Your Company's profit before tax of Rs. 1,166 crore in the current year is higher by 5% as compared to Rs. 1,115 crore in the previous year mainly on the strength of creation of fresh assets since April 2008. Profit after tax of Rs. 706 crore for the year has also shown a growth of 5% over previous year's profit after tax of Rs. 671 crore.

Standard loans to borrowers which stood at Rs. 6,425 crore as at April 1, 2008 have shown CAGR of 35% and stand at Rs. 15,942 crore as at March 31, 2011. The growth over the previous year's standard loans to borrowers of Rs. 11,022 crore is 45%. Total assets have also increased to Rs. 25,915 crore in the current year from Rs. 19,589 crore in previous year registering a growth of 32%.

Satisfactory levels have been maintained for key financial ratios viz. interest margin, capital adequacy ratio, debt-equity ratio, debt service coverage ratio, net worth, etc. Basic EPS increased to Rs. 9.6 per share for the current year vis-a-vis Rs. 9.1 per share for the previous year. Book Value (excluding Revaluation Reserve) also increased to Rs. 51 per share as at March 31, 2011 from Rs. 42.7 per share as at March 31, 2010 (FV Rs. 10/-).

Your Company's quality of assets continued to be excellent. The ratio of net NPAs to net advances was as low as 0.97% as at March 31, 2011.

(iv) Segment-wise/Product-wise Performance

Your Company operates in India and hence it is considered to operate only in the domestic segment. More than 90% of revenue for the Company comes from a single segment of financing. Accordingly, segment reporting as required under Accounting Standard-17, issued by The Institute of Chartered Accountants of India, is not applicable.

(v) Opportunities, Threats and Future Outlook

Your Company is well poised to expand and diversify its operations and performance in accordance with its business strategy. Your Company will continue to explore possibilities for new business for short term and medium term with the aim of establishing a niche market for itself in products like short and medium term loans against liquid securities, take-out finance and debt swapping. In addition to the normal lending activities, your Company continues to concentrate on private equity participation, project development activities, non-fund based income from advisory services, syndication, underwriting of loans, acquisition of NPAs from other lenders and thrust on the activities of subsidiaries/associate companies.

IFCI, as an NBFC-ND-SI, has developed for itself niche products, covering the entire range of capital structure including debt, equity, equity related products, mezzanine instruments etc. of short, medium and long term duration.

The overall economic scenario in the country is worsening and inflationary pressure has pushed up the cost of funds and impacted profit margins. However, owing to strong growth in the balance sheet without NPAs, your Company would continue to improve its top line and bottom line. On the power front, there exists a huge demand-supply gap with an all India average energy shortfall of 7% and peak demand shortfall of 12%. There is over 90,000 MW of new generation capacity required in the next seven years with over 150,000 MW of hydro power yet to be tapped. Additional 60,000 circuit km of transmission network is expected by 2012. Power generation and transmission will continue to be a potential sector for investment by your Company.

There is an annual growth of 12-15% projected for passenger traffic and a growth of 15-18% for cargo traffic. Covering 66,590 km, highways/expressways constitute only 2% of all roads and carry 40% of the road traffic. This clearly indicates the scope for further development of highways. Your Company shall leverage on its experience in bidding for attractive road projects across India.

Growth in merchandise exports projected at over 13% p.a. underlines the need for large investments in port infrastructure. It is expected that 95% of foreign trade by volume and 70% by value would be through the maritime route. The New Foreign Trade Policy envisages doubling of India's share in global exports in next five years to USD 150 billion.

Your Company shall continue to aggressively pursue project development activities in the infrastructure projects by way of participating in equity as promoter/co-promoter. This endeavour is expected to result in ample opportunities in future where your Company can involve itself in appraisal, underwriting, syndication of debt/sub-debt, equity, etc. besides acting as the lenders' agent. The said areas would improve the overall return by way of non-fund based income such as underwriting, syndication fee etc. Your Company would continue its endeavour to establish/ re-establish relationship with corporate houses of repute and standing so as to exploit emerging business opportunities during the days to come.

Your Company, with its present business model, does not envisage any major challenge in the short as-well-as medium term perspective. In the emerging scenario arising out of Government's move to modify regulatory requirements which is expected to provide the opportunity to different players to be more pro-active for economic development of the nation, your Company has geared up to find its 'niche' area.

(vi) Risk Management

Managing various types of risks is an inherent part of IFCI's business. Business and revenue growth have to be viewed in the context of the risks implicit in your Company's business strategy. Recognizing this, your Company has continued its endeavor to have in place a robust and integrated risk management system. The risk management strategy is based on a clear understanding of various risks, a multiplicity of risk assessment and measurement procedures and continuous monitoring. Forming part of the risk management architecture of your Company, the Risk Management Committee of Directors is overseeing all the risks viz. credit, market, liquidity and operational risks and any other risks, assumed by your Company. The Committee guides the development of policies, procedures and systems for managing risk at the organizational level.

The Audit Committee of Directors provides direction and monitors the quality of the internal audit function and compliance with systems and procedures. At the executive level, a Risk Management Committee of Executives has been constituted to facilitate overseeing of various risks in a focused manner, supported by an independent risk management function that looks after all aspects of enterprise-wide risk management. The risk management function endeavors to anticipate vulnerabilities at the transaction level or the portfolio level, as appropriate, through quantitative or qualitative assessment of inherent risks. Appropriate structure, approved policies and procedures and review processes are in place through which risk is managed. A well-established, effective and independent internal control mechanism exists for supplementing the risk management systems to build risk consciousness and discipline into decision-making throughout the Company.

Being primarily a lending institution, credit risk is the most important for IFCI and therefore, your Company has put in place comprehensive credit risk management architecture. With appreciable augmentation of credit portfolio during the year under report, systems and controls are in place, to mitigate credit risks including exposure limits for borrowers, borrower groups, industrial sectors, multi-tier credit appraisal system, risk-based monitoring system, committee system for considering proposals and detailed risk assessment of new proposals, which have been further strengthened commensurate with the volume of business activities. Emphasis is placed on both, evaluation and containment of risk for individual exposures and analysis of the portfolio behaviour. The loan policy and risk management policy of your Company is reviewed periodically keeping in view the changing economic and business environment. Periodic reviews of existing products and services are carried out with a view to continuously monitoring the risks and assisting in control management. Overall portfolio quality and high risk exposures are also monitored periodically.

Your Company undertakes analysis of industries/sectors where the exposure levels are sizeable as also to evaluate and capitalize on business opportunities in the prospective/ sunrise sectors.

As a part of loan review mechanism, credit audit of a majority of the standard assets with exposure of Rs. 50 crore and above, was taken up during the year under report, with the objective of detecting weaknesses, if any, in these exposures and initiating timely corrective action. The credit audit exercise also provides the top management with information on quality of credit administration including credit sanction process, risk evaluation and post-sanction follow-up. Your Company continues to undertake reviews of large borrower accounts and related industries/sectors on a regular basis with the objective of monitoring and managing the risk in the portfolio. In another initiative towards effectively monitoring the standard asset portfolio, rapid analysis of quarterly results of assisted concerns, with particular focus on assessing cash flows and debt servicing capacity as also detecting early warning signals, if any, were carried out during the year under report. Credit exposures are managed through target sectors/corporate/group identification, appropriate credit approval processes, post- disbursement monitoring and remedial management procedures.

In order to make the risk management system more robust as also a best practice, your Company has initiated steps to adopt and make internal credit risk rating models an integral part of the credit assessment process. The use of these models is being disseminated at an organizational level for measuring credit risk in new business proposals and existing loan portfolios. The internal rating models, based on two-dimensional rating methodology, have the capacity to estimate probability of default (PD), loss given default (LGD) and expected loss (EL) in a specific loan asset. During the year under report, the internal rating process has been streamlined for achieving faster turnaround time and accelerating credit delivery. From a portfolio monitoring perspective, the internal rating along with the size of the exposure would determine the monitoring frequency applicable to the exposure in line with the policies approved by the Board. With a view to initiating the process of monitoring the loan portfolio using these models, ratings of select standard cases were carried out during the year under report.

The market and liquidity risk is managed by the Asset & Liability Committee (ALCO) through analysis of structural liquidity gaps and interest rate sensitivity positions and deployment of surplus funds by Treasury besides approved limits and triggers for various types of deployment. The investment policy of your Company is reviewed periodically in the light of the prevalent market scenario. To manage the operational risks, there are adequate internal controls and systems in place aided and assisted by internal audit, remote back-up of data, disaster management policy and appropriate insurance.

Going forward, with the growth of business and augmentation of loan portfolio, risk management at IFCI would assume a larger and more complex role. Your Company would continue to work on various initiatives which would not only help to develop a more robust risk management framework but also inculcate a strong culture for risk management and awareness in the Company. The steps taken would streamline the mechanism for effective overall institutional risk management at IFCI.

(vii)Nominee Directors

Appointment of Nominee Directors on the Boards of assisted concerns has been a long and well established

practice for Institutions and Banks with a view to monitoring the performance of their borrower companies. The basic objective of such appointments is to help build up professional management and facilitate effective functioning of the Board of Directors as well as formulation of proper corporate policies and strategies to improve productive efficiency and promote long term growth of the assisted companies, keeping in view the overall interest of the shareholders and financial institutions. The feedback reports received from Nominee Directors act as a useful tool for credit monitoring. The system of Nominee Directors is functioning effectively in your Company.

(viii) Resources

Your Company continued the initiative of increased levels of resource mobilization programme undertaken during the previous year 2009-10. During the year 2010-11, an amount of Rs. 7,000 crore was mobilized mainly by way of rupee bank facilities and private placement of bonds at competitive rates. A few new instruments like Tax Saving Bonds and Commercial Paper were introduced during the year.

Your Company is privileged to have been authorized by the Government of India for issuance of Long Term Infrastructure Bonds to retail investors, having tax benefits under Section 80 CCF of Income Tax Act, 1961. The two issues floated by IFCI received overwhelming response and the total valid subscription of Rs. 370.75 crore was fully allotted. We are thankful to our investors for their investment and for reposing their faith and trust in IFCI. The entire proceeds out of these infrastructure bonds have been fully utilized during the year under report in infrastructure facilities as defined by the Reserve Bank of India.

The total borrowing of your Company stood at Rs. 19,265 crore as at March 31, 2011, which comprised of rupee and foreign currency borrowings of Rs. 18,738 crore and Rs. 527 crore respectively.

The investor-wise and instrument-wise break-up of the borrowings as at March 31, 2011 are indicated below:

Investor service continued to be of utmost importance for your Company. Investors' grievances, received in physical or electronic form or through web-based query submission system, were taken up promptly and redressed.

(ix) Public Deposits

Your Company did not raise any public deposit during the year. There was no public deposit outstanding as at the beginning or end of the year under report.

(x) Internal Control Systems and their Adequacy

Your Company has in place adequate systems of Internal Control and the Internal Audits are being carried out, based on the scope approved by the Audit Committee of the Board of Directors (ACD). A 'Risk based Internal Audit' system has already been introduced, which has made the Internal Audit more focused and such Reports are constantly reviewed by ACD.

SIGNIFICANT DEVELOPMENTS

(i) Project Development Group (PDG)

Availability of quality infrastructure is a prerequisite of the sustainable growth of any country. The present growth phase of Indian economy is also coupled with impetus on the infrastructure sector. Project development is a part of IFCI's strategy to enter infrastructure projects early in their life cycle, ensuring IFCI reasonable returns on cost of funds. It shares strong relationships with India's leading infrastructure companies and is associated with them throughout the project development life cycle from inception to commissioning and thereafter nurturing the projects to realize returns. It is these relationships and the experience of the group in Indian infrastructure which positions your Company as one of the country's largest players in infrastructure investment.

PDG, with its dedicated team of highly qualified and experienced professionals, has developed invaluable insights into the technical, practical and financial aspects of the infrastructure sector in general and power generation and roads in particular. During the year 2010-11, your Company has made investments in select coal and gas based Thermal Power, Hydro Power, Wind and Solar Power, Power Transmission, Road, Port and Logistic Projects and simultaneously increased focus on providing a gamut of fee-based services in the infrastructure sector. Going forward, your Company intends to consolidate its position as a provider of end to end financial services in the infrastructure sector.

(ii) Corporate Advisory Services

In the area of providing customized corporate advisory services, your Company, despite stiff competition during the year, has not only been able to retain its existing clients but has also been able to secure some prestigious new assignments relating to disinvestment of public sector enterprises on competitive bidding basis, management consultancy assignments with respect to bid advisory, due diligence, project appraisal, business re-engineering, besides new assignments with respect to financial restructuring, business plan, valuation and bid process management from various private/public sector entities and Central/State Government(s). During the year, your Company has also been empanelled by many prestigious clients for various consultancy assignments.

(iii) Sugar Development Fund

Your Company has been acting as an agent of the Government of India since the inception of the Sugar Development Fund (SDF) for the purpose of disbursement, follow up and recovery of SDF loans. Cumulative approvals and disbursements under SDF upto March 31, 2011 stood at Rs. 4,102 crore and Rs. 3,400 crore respectively. The agency commission accrued during the year 2009-10 was of the order of Rs. 11.40 crore, which is likely to be Rs. 14 crore for the year 2010-11. During the year 2010-11, IFCI has received Rs. 19 crore out of the outstanding agency commission.

Your Company has also carried out merchant appraisals for SDF loans, which fetched a fee of Rs. 1.85 crore during the year 2010-11 as against a sum of Rs. 1.24 crore earned during the previous year 2009-10.

(iv) NPA Acquisition and Resolution

Your Company, while managing its NPA portfolio since 2007-08 and putting exemplary performances in terms of recovery of NPAs, acquired a very strong expertise in this business segment. Making use of the said expertise, taking care of the regulatory framework and other advantageous factors, your Company has floated a separate business vertical for acquisition of NPAs from Banks and Institutions. The acquisitions were aimed at further management of the same and unlocking the true worth out of the said NPAs with substantially higher returns, compared to normal lending operations. Till date, your Company has acquired more than 80 NPAs at a total consideration of about Rs. 220 crore and has resolved a substantial number of accounts with a highly satisfactory annualized return. Your Company will endeavour to attain still higher levels of such business and to maintain a pre-eminent position in the NPA business segment.

(v) Human Resources

The revitalisation of Human Resource Management practices has immensely contributed towards the resurgence that your Company has witnessed over the last few years. Your Company strongly believes that, going forward, creating a pool of leaders would be vital for accelerated growth of the Company. Hence, in the year 2010-11, your Company laid special focus on the creation of a leadership pipeline. The identified leadership talent, on the foundation of performance driven culture is being progressively exposed to challenging assignments.

The manpower strength of your Company as on March 31, 2011 was 264 including 261 executives and professionals as compared to a total strength of 252 as on March 31, 2010.

Your Company has further strengthened its position as a preferred employer in the Indian financial sector. During the year, your Company has been able to attract talent from leading banks and multinational organizations. Besides, it has recruited 16 young professional from leading business schools like ISB Hyderabad, IIM Ahmedabad, IIM Bengaluru, IIM Kolkata and Faculty of Management Studies, New Delhi.

Your Company continued its endeavour to upgrade knowledge and skill set of its employees. Aside from regular in-house behavioural and functional interventions, employees were nominated to leading institutes in India and abroad for Executive Education programs. Employees were also nominated to participate in various conferences and discussion forums organised by industry so as to provide them platforms for keeping abreast with the latest developments and also to explore business opportunities.

(vi) Information Technology and Communications

A software package developed in-house, namely 'Central Integrated Information System, (CIIS) is an umbrella providing solutions for automating operations of various activities of your Company. During the year 2010-11, to meet the current and emerging business needs, the existing software applications were upgraded with enhanced/added features.

In a constant endeavour to induct latest technology and improve operational efficiency, "Oracle BI" business intelligence software was implemented. The application provides interactive dashboards with user level security thereby facilitating Management Information System (MIS) and facilitating the decision making process of top management. The system provides visual presentation of data, which can also be customised by the user by slicing and dicing.

In the efforts to provide IT support to its Associates and Subsidiaries, the IT team of your Company has implemented the Financial Accounting, Balance Sheet and Loan Accounting modules of CIIS at Asset Care & Reconstruction Enterprise Ltd and also implemented the Loan Accounting modules at IFCI Factors Ltd.

The Video conferencing facility has been established at the Head Office as well as in the Mumbai and Hyderabad Regional Offices. Additional firewalls were implemented to enhance the security of the Data Center. A state-of-art visitor entry and monitoring system was implemented at Head Office for enhanced security.

Compliance

Timely submission of various returns and data/information to RBI, SEBI and other regulatory bodies and the Government of India has been ensured through the Compliance and Secretarial Departments of your Company at the Head Office.

Cautionary Statement

Statements in Management Discussion and Analysis describing the Company's objectives, estimates and expectations may be 'forward looking' within the meaning of applicable laws and regulations. Actual results might differ materially from those expressed or implied.

Corporate Governance

A detailed report on Corporate Governance as stipulated under Clause 49 of the Listing Agreement, is attached to this Report.

Certificate from the Statutory Auditors of the Company regarding compliance with the conditions of Corporate Governance as stipulated in Clause 49 of the Listing Agreement has been obtained and is annexed at the end of Corporate Governance Report.

Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo

As the Company's operations do not involve any manufacturing or processing activities, the particulars as per Companies (Disclosures of particulars in the Report of the

Board of Directors) Rules, 1998 regarding conservation of energy and technology absorption, are not applicable. The particulars regarding expenditure and earning in the foreign exchange are given in Item Nos.10 and 11 in the Notes on the Accounts.

Particulars of Employees

In terms of provisions of Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 as amended, the names and other particulars of the employees are required to be set out in the Annexure to the Directors' Report. However, as per the provisions of Section 219(1)(b)(iv) of the said Act, the Annual Report excluding the aforesaid information is being sent to the Members and others entitled thereto. The Annexure is available for inspection by members at the Registered Office of the Company during business hours on working days upto the date of the ensuing Annual General Meeting.

Appreciation

The Board of Directors of your Company wishes to express its gratitude for the cooperation, guidance and support received from the Ministry of Finance, various other Ministries and Departments of the Government of India, State Governments, the Securities and Exchange Board of India, the Reserve Bank of India and other regulatory bodies. The Board of Directors also acknowledges the continued cooperation received from all overseas correspondent banks and other members of the banking fraternity.

The Board of Directors would like to thank Banks, Financial Institutions and other investors and shareholders for their continued support.

The Directors of your Company place on record their appreciation of the dedicated and sincere service rendered by the officers and staff at all levels.

For and on behalf of the Board of Directors

Place: New Delhi

Dated: July 28, 2011 P G MURALIDHARAN

Chairman of the Board