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Notes to Accounts of IFCI Ltd.

Mar 31, 2016

B. NOTES ON ACCOUNTS 1.

SHARE CAPITAL

1 Share capital Authorised, Issued, Subscribed and Paid up:

2. Employee Stock Option Scheme

The Company had, during the financial year 2011-12, granted options for 71,96,993 shares under Employees Stock Option Scheme 2011, subject to the vesting conditions mentioned in the Scheme. The Board in its meeting dated November 12, 2013 has withdrawn the scheme, subject to all the regulatory compliances required in this regard and no further vesting under the scheme shall be held. All applicable compliance have since been ensured and the granted options that have not vested under the scheme, have been cancelled.

Foot-notes to Note No. 2:

1. Capital Reserve represents proceeds of forfeited shares.

2. Capital Redemption Reserve represents amount transferred from surplus in statement of profit and loss towards redemption of preference shares without fresh issue of capital, as was required under Section 80 of the Companies Act, 1956.

3. Debenture Redemption Reserve has been created in terms of Rule 18(7) of the Companies (Share Capital and Debentures) Rules, 2014 for Non Convertible Debentures issued by IFCI Ltd through public offer.

4. The Board has withdrawn the ESOP scheme with no further vesting of options under the scheme. Therefore balance in amortised discount in respect of stock options granted but not vested under the head ’employee stock option plans’ has been reversed and taken to statement of profit & loss account during FY 2014-15.

5. Corporate Social Responsibility Fund was established by the Board of Directors of IFCI Ltd in FY 2010-11 to undertake corporate social responsibility initiative by IFCI Ltd With the enactment of Section 135 of the Companies Act, 2013, the corporate contribution towards social activities are guided by the specific provisions and therefore, the balance in the Corporate Social Responsibility Fund has been transferred to General Reserve during FY 2014-15.

6. Grant received from Government of India under KfW Loans was of capital nature and to be utilized for specified purposes for promotional activities of Industrial Development and stands so utilised in earlier years. Therefore, the balance in grant account has been transferred to general reserve during FY 2014-15.

7. Section 36(1)(viii) of the Income Tax Act allows financial institutions to transfer 20% of profit from eligible business i.e. net income from long-term industrial financing, to this Reserve and the same is allowed as a deduction while computing taxable income. The Income Tax Act, by an amendment in Finance Act, 1998, has put a condition on maintaining the Reserve created w.e.f. FY 1997-98. Any withdrawal would attract tax liability. Up to FY 1996-97, utilization of the said Reserve created in the earlier year did not attract tax liability and accordingly Deferred Tax Liability (DTL) has been created on the reserve transferred after FY 1997-98.

8. Pursuant to increase in shareholding of Govt. of India more than 50% of the paid-up Share Capital, the Company has become Government Company u/s 2(45) of the Companies Act, 2013 and therefore in view of the exemption available to Government Companies, no transfer has been made to the statutory reserve created u/s 45IC of RBI Act, 1934.

9. Company has made the provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long-term contracts including derivative contracts as on March 31, 2016.

10. IFCI Ltd has given letters of comfort to certain banks on behalf of its subsidiary companies in connection with availing loans from those banks. Outstanding of loans/non fund based facilities availed under such letters of comfort and outstanding as on March 31, 2016 was Rs. 518.42 crore (Previous Year ended March 31, 2015: Rs. 288.62 crore).

11. Govt. of India has acquired 6 crore Cumulative Redeemable Preference Shares of Rs. 10/- each from the existing shareholders of the Company on April 07, 2015 and consequentially Company has become Government Company u/s 2(45) of the Companies Act, 2013 from that date.

12. IFCI had sanctioned a Corporate loan of Rs. 150 crore to Blue Coast Hotels Ltd in year 2010, which was secured by way of charge on the movable fixed assets and immovable property. IFCI had also taken an equity exposure to the extent of Rs. 85 crore in Silver Resorts Hotel (I) Pvt. Ltd, a group company of Blue Coast Hotels Ltd Blue Coast Hotel Ltd had entered into Buy Back Agreement for buying back the equity shares and to secure the performance of the Buy-Back, a charge by way of mortgage was created on the aforesaid property. Consequent to the default committed by the Company, both in repayment of the loan as well as honoring the buy-back obligation, IFCI initiated legal proceedings against the company, by issuing a 13(2) notice under the SRFA & ESI Act, 2002 on the company on 26th March, 2013. Pursuant to the aforesaid notice, IFCI undertook recovery action by selling mortgaged assets through a public auction to ITC Ltd at a price of Rs. 515.44 crore for recovery of IFCI dues and other secured creditors in the matter. Entire transaction was concluded in FY 2014-15. Blue Coast Hotels Ltd had challenged the said sale and filed Writ Petitions before the HonRs.ble HC of Bombay. The High Court in its final Order dated 23rd March, 2016, set aside the sale conducted by IFCI and disposed of the Writ Petitions in favour of Blue Coast Hotels Ltd Immediately, on receipt of the above judgment, IFCI had filed a Special Leave Petition challenging the Judgment of the Bombay High Court on 12th April, 2016. The HonRs.ble SC was pleased to admit the petition and directed the issuance of notice to Blue Coast Hotels Ltd The HonRs.ble Supreme Court also permitted IFCI to retain the sale proceeds. In view of the above, for disclosure purposes, IFCI is showing contingent liability of Rs. 311.78 crore, which is IFCI share out of total sale proceeds of Rs. 515.44 crore. The next hearing is due on 10 th August 2016.

13. Certain balances appearing under trade receivables and payables are subject to confirmation. Trade receivables which are overdue for more than three years or otherwise considered as doubtful for recovery has been fully provided for.

14. There are no Micro and Small Enterprises, to whom the Company owes dues, which are outstanding for more than 45 days as at March 31, 2016. This information as required to be disclosed under the Micro, Small and Medium Enterprises Development Act, 2006 has been determined to the extent the status of such parties identified on the basis of information available with the Company.

15. There are no material prior period items, except to the extent disclosed, included in statement of Profit & Loss A/c required to be disclosed as per Accounting Standard-5 read with RBI guidelines.

16. Gratuity and leave encashment liabilities have been determined and accounted on the basis of actuarial valuation carried out as at March 31, 2016.

17. The Company operates in India and hence it is considered to operate only in 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, is not required.

18. Disclosure of details pertaining to related party transactions in terms of Accounting Standard-18, - “Related Party Disclosures” is as under:

19. In terms of Accounting Standard 19 on ‘Leases’

a) The Company has entered into lease agreement at twelve centers and lease rent is charged to the Statement of Profit & Loss.

b) The year-wise break up of future minimum lease payments in respect of leased premises are as under:

20. As on March 31, 2016 there were no events or changes in circumstances which indicate any impairment in the assets as defined by Accounting Standard-28 -“Impairment of Assets”.

21. The Company has 50% interests in one joint venture viz. IFCI Sycamore Capital Advisors (P) Limited (ISCAPL) incorporated in India in November 2011 which is under voluntary liquidation and official liquidator has been appointed. The investment of IFCI Ltd in IFCI Sycamore Capital Advisors (P) Limited as on March 31, 2016 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.

22. The following additional information is disclosed in terms of RBI Circulars

applicable to Non-Banking Financial Companies:

(i) The company is registered with Securities and Exchange Board of India as debenture trustee having registration code i.e. “IND000000002”.

(ii) There are no penalties imposed by RBI and other regulator during the year ended March 2016.

(iii) Ratings assigned by credit rating agencies and migration of ratings during the year.

23. Total value of outstanding Currency Swaps was USD 70.82 million against INR, EURO Nil against INR & EURO 64.92 million against USD (Previous Year: USD 77.95 million against INR, EURO 0.85 million against INR & EURO 66.08 million against USD respectively) equivalent to Rs. 958.72 crore (Previous Year: Rs. 936.87 crore) whereas total value of outstanding Forex Deals other than Currency Swaps was Nil (Previous Year: NIL).

24. Open interest in the Currency Futures as at 31.03.2016 -Nil (Previous Year : Nil).

25. Foreign Currency exposure that is not hedged by derivative instrument or otherwise is USD 0.059 million (Previous Year: USD 0.020 million) and EURO 0.011 million (Previous Year: EURO 0.029 million), equivalent to Rs. 0.47 crore (Previous Year: Rs. 0.32 crore).

26. Details of Securities sold and purchased under Repos and Reverse Repos Transactions: 0.31 crore.

Operational income for FY 2016 was higher than that of FY 2015 by 17.52% due to increase in interest income, despite the impact of Rs. 351 crore due to reversal of interest income on account of fresh Non-Performing Assets (NPAs) (Rs. 285 crore) and interest funding in respect of restructured assets (Rs. 66 crore). The operational income included income of Rs. 233 crore from NPAs as against Rs. 249 crore in FY 2015. However, income from other financial services was higher at Rs. 379 crore vis-a-vis Rs. 353 crore in FY 2015 mainly due to higher profit on sale of shares/debentures at Rs. 280 crore in FY 2016 as against Rs. 269 crore in FY 2015. Other income at Rs. 188 crore was higher by 94.0% than Rs. 97 crore in FY 2015, the increase primarily being due to profit of Rs. 101 crore on sale of non-core real estate assets during the current year.

The cost of borrowing for FY 2016 at Rs. 2,517 crore was higher by 19.71% than Rs. 2,102 crore for FY 2015, primarily due to higher borrowing required for growth in business. The carrying cost of funds, however reduced to 9.3% as at March 31, 2016 from 9.6% as at March 31, 2015, on account of reduction in general rates of interest. During the year,

(viii) According to the information provided and explanations given to us, the Company has not defaulted in repayment of loans or borrowings to a financial institution or bank or Government or dues to debenture holders.

(ix) According to the information provided and explanations given to us, no moneys have been raised by way of initial public offer or further public offer (including debt instruments) and the term loans raised from different banks during the year were applied for the purposes for which those are raised.

(x) According to the information and explanations given to us and to the best of our knowledge and belief, no fraud by or on the Company by its officers or employees has been noticed or reported during the year.

(xi) According to the information and explanations given to us and in terms of GSR 463 (E) dated June 05, 2015, issued by the Ministry of Corporate Affairs, the provisions of Section 197 pertaining to managerial remuneration do not apply to a Government Company. Accordingly, paragraph 3(xi) of the order is not applicable.

(xii) In our opinion and according to the information and explanations given to us, the Company is not a nidhi company. Accordingly, paragraph 3(xii) of the Order is not applicable.

(xiii) According to the information and explanations given to us and based on our examination of the records of the Company, transactions with the related parties are in compliance with Sections 177 and 188 of the Act where applicable and details of such transactions have been disclosed in the financial statements as required by the applicable Accounting Standards.

(xiv) According to the information and explanations given to us and based on our examination of the records of the Company, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year.

(xv) According to the information and explanations given to us and based on our examination of the records of the Company, the Company has not entered into non-cash transactions with directors or persons connected with them. Accordingly, paragraph 3(xv) of the Order is not applicable.

(xvi) According to the information provided and explanations given to us, the Company is registered under Section 45-IA of the Reserve Bank of India Act, 1934. The Company has been granted certificate of registration to commence/carry on the business of non-banking financial institution without accepting public deposits on August 18, 2009 vide registration No. is B-14.00009.


Mar 31, 2015

Note 1:

1. Capital Reserve represents proceeds of forfeited shares.

2 Capital Redemption Reserve represents amount transferred from surplus in profit and loss statement towards redemption of preference shares without fresh issue of capital, as was required under Section 80 of the Companies Act, 1956.

3. Debenture Redemption Reserve has been created in terms of Rule 18(7) of the Companies (Share Capital and Debentures) Rules, 2014 for Non Convertible Debentures issued by IFCI Ltd through public offer.

4. The Board has withdrawn the ESOP scheme with no further vesting of options under the scheme. Therefore balance in amortised discount in respect of stock options granted but not vested on the options under the head ''employee stock option plan'' has been reversed and taken to ''profit & loss account''.

5. Corporate Social Responsibility Fund was established by the Board of Directors of IFCI Ltd in FY 2010-11 to undertake corporate social responsibility initiative by IFCI Ltd. With the enactment of Section 135 of the Companies Act, 2013, the corporate contribution towards social actiivties are guided by the specific provisions and therefore, the balance in the Corporate Social Responsibility Fund has been transferred to General Reserve.

6. Grant received from Government of India under KfW Loans was of capital nature and to be utilized for specified purposes for promotional activities of Industrial Development and stands so utilised in earlier years. Therefore, the balance in grant account has been transferred to general reserve.

7. Section 36(1)(viii) of the Income Tax Act allowes financial institutions to transfer 20% of profit from eligible business i.e. net income from long-term industrial financing, to this Reserve and the same is allowed as a deduction while computing taxable income. The Income Tax Act, by an amendment in Finance Act, 1998, has put a condition on maintaining the Reserve created w.e.f. FY 1997-98. Any withdrawal would attract tax liability. Upto FY 1996-97, utilisation of the said Reserve created in the earlier year did not attract tax liability and accordingly Deferred Tax Liability (DTL) has been created on the reserve transferred after FY 1997-98.

8. In terms of Section 45IC of RBI Act, 1934, every non-banking financial company shall create a reserve fund and transfer therein a sum not less than twenty per cent of its net profit every year as disclosed in the statement of profit and loss and before any dividend is declared.

Note 2:

The additional charge of depreciation of Rs. 22.58 crore for the year ended March 31, 2015 (FY March 31, 2014 - Rs. 19.03 crore) on account of revaluation of Land & Buildings carried out in Financial Year 2009-10 has been charged to Statement of Profit & Loss and an equivalent amount withdrawn from Revaluation Reserve and credited to Statement of Profit and Loss. Leasehold land at New Delhi was being amortised over the period of 90 years from the date of capitalisation, however the lease was in the nature of prepetual lease. Therefore, accumulated depreciation of Rs. 8.30 crore on account of amortisation of lease premium has been reversed and Rs. 4.12 credited to the Rs. profit & loss account'' and Rs. 4.18 crore credited to revaluation reserve. Land held at Chandigarh Office has been converted into ''freehold land'' and accordingly gross block of Rs. 0.38 crore (including revaluation reserve of Rs. 0.23 crore) has been transferred from ''lease-hold land'' to ''free-hold land'' and accumulated depreciation of Rs. 0.05 crore has been reversed and credited to P&L A/c.

The Company has revised the useful life of the fixed assets in alignment with Schedule-II to the Companies Act, 2013 with effect from 1st April, 2014 and ''Written Down Value (WDV)'' of all the assets as on 31st March, 2015 has been depreciated over the remaining useful life of the fixed assets. The ''written down value'' in respect of fixed assets with no remaining useful life was Rs. 2.24 crore out of which Rs. 1.50 crore (net of deferred tax liability of Rs. 0.74 crore) has been adjusted in the retained earnings. Residual value in respect of assets other than Buildings and Vehicles are considered ''Nil ''.

In respect of certain assets which were being depreciated in the previous years following written down value (WDV) method, the Company has revised the method of calculation of depreciation to straight line method (SLM) retrospectively resulting into reversal of ''accumulated depreciation'' of Rs. 19.36 crore which has been credited to the profit & loss account. Consequentially, the charge for depreciation in the statement of profit & loss account is lower by Rs. 19.36 crore.

Note 3:

Contingent Liabilities:

(Rs. crore)

As at Year ended Year ended 31.03.2015 31.03.2014

(i) Claims not acknowledged as Debts 5.48 12.99

(ii) Bank Guarantees Provided 25.60 8.87

(iii) Guarantee Issued on behalf of third parties 5.71 76.00

(iv) Guarantee Issued on behalf of Subsdiaries companies 115.00 115.00

Tax Matters:

- Income Tax 30.37 29.58

- Service tax 13.74 13.44

Considering the current status of the pending litigation cases, no material financial impact is expected on the financial statements as on March 31, 2015.

Note 4:

Company has made the provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long-term contracts including derivative contracts as on March 31, 2015.

Note 5:

IFCI Ltd has given letters of comfort to certain banks on behalf of its subsidiary companies in connection with availing loans from those banks. Outstanding of loans/non fund based facilities availed under such letters of comfort and outstanding as on March 31, 2015 was Rs. 288.62 crore (Previous Year ended March 31, 2014 - Rs. 575 crore).

Note 6:

Govt. of India has acquired 6 crore Cumulative Redeemable Preference Shares of Rs. 10/- each from the existing shareholders of the Company on April 07, 2015 and consequentially, Company has become Government Company u/s 2(45) of the Companies Act, 2013 from that date.

Note 7:

Since, the securities held by Company represents similar rights and obligations it was considered more appropriate to follow ''Weighted Average Cost Method'' to compute carrying cost of such securities and accordingly, the method of computation of carrying cost of securities was revised during the current year to ''Weighted Average Cost Mehtod'' which hitherto was being carried at ''FIFO Cost Method''. As a result, the cost of securities held as current and long term investment as on March 31, 2015 is lower by Rs. 28.21 crore following ''Weighted Average Cost Method'' vis-a-vis ''FIFO Cost Method'' and profit on sale of investment is higher by the same amount.

Note 8:

During the year Company has issued Secured Redeemable ''Non-Convertible Debentures'' of Rs. 1,972.26 crore through public issue in two tranches (Tranche I - Rs. 1,209.19 crore and Tranche-II - Rs. 763.07 crore) which stands utlised for the purpose as described in the offer document.

Note 9:

Company has granted a loan to a borrower concern which has been classified as sub-standard assets in terms of RBI regulation, having gross outstanding of Rs. 31.89 crore and net outstanding of Rs. 28.70 crore as on March 31, 2015. Some banks have reported fraudulent act by that borrower in respect of certain facilities granted by them. However, the facility granted by the Company is different and secured by way of mortgage of immovable properties. Considering the recent developments, the available security is being assessed for element of fraud and potential threat of recovery, if any. Pending the outcome of the assessment the case has been retained in the same category i.e. sub-standard as on March 31, 2015.

Note 10:

The Company has revised the useful life of the fixed assets in alignment with Schedule-II to the Companies Act, 2013 with effect from 1st April, 2014 and ''Written Down Value (WDV)'' of all the assets as on 31st March, 2015 has been depreciated over the remaining useful life of the fixed assets. The ''written down value'' in respect of fixed assets with no remaining useful life was Rs. 2.24 crore out of which Rs. 1.50 crore (net of deferred tax liability of Rs. 0.74 crore) has been adjusted in the retained earnings. Residual value in respect of assets other than Buildings and Vehicles are considered ''Nil ''.

In respect of certain assets which were being depreciated in the previous years following written down value (WDV) method, the Company has revised the method of calculation of depreciation to straight line method (SLM) retrospectively resulting into reversal of ''accumulated depreciation'' of Rs. 19.36 crore which has been credited to the profit & loss account. Consequentially the charge for depreciation in the statement of profit & loss account is lower by Rs. 19.36 crore.

Note 11:

Certain balances appearing under trade receivables and payables are subject to confirmation. Trade receivables which are overdue for more than three years or otherwise considered as doubtful for recovery has been fully provided for.

Note 12:

There are no Micro and Small Enterprises, to whom the Company owes dues, which are outstanding for more than 45 days as at March 31, 2015. This information as required to be disclosed under the Micro, Small and Medium Enterprises Development Act, 2006 has been determined to the extent the status of such parties identified on the basis of information available with the Company.

Note 13:

There are no material prior period items, except to the extent disclosed, included in Profit & Loss A/c required to be disclosed as per Accounting Standard-5 read with RBI guidelines.

Note 14:

Gratuity and leave encashment liabilities have been determined and accounted on the basis of actuarial valuation carried out as at March 31, 2015.

Note 15:

The Company operates in India and hence it is considered to operate only in 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, is not required.

Note 16:

Disclosure of details pertaining to related party transactions in terms of Accounting Standard-18, - "Related Party Disclosures" is as under:

1. Name of the Related Party and Nature of Relationship:

Nature of Relationship Name of the Related Party

IFCI Financial Services Ltd (IFIN)

IFCI Venture Capital Funds Ltd (IVCF)

IFCI Infrastructure Development Ltd (IIDL)

IFCI Factors Ltd (IFL)

MPCON Ltd

Stock Holding Corporation of India Ltd (w.e.f. March 29, 2014)

Subsidiaries IFIN Commodities Ltd. (indirect control through IFIN)

IFIN Credit Ltd (indirect control through IFIN)

IFIN Securities Finance Limited (indirect control through IFIN)

IIDL Realtors Pvt Ltd (indirect control through IIDL)

SHCIL Services Ltd (indirect control through SHCIL)

SHCIL Projects Ltd (indirect control through SHCIL)

Assets Care & Reconstruction Enterprise Ltd (ACRE) (upto September 05, 2014)

Tourism Finance Corporation of India Ltd (TFCI)

Himachal Consultancy Organisation Ltd (HIMCON)

Assosciates North India Technical Consultancy Organisation Ltd (NITCON)

HARDICON Ltd

Rajasthan Consultancy Organisation Ltd (RAJCON)

KITCO Ltd

Joint Venture IFCI Sycamore Capital Advisors Pvt Ltd

Trust incorporated IFCI Social Foundation for CSR activity

Shri Malay Mukherjee (CEO & MD) - w.e.f. December 12, 2013

Shri Achal Kumar Gupta (WTD designated as Deputy Managing Director) - w.e.f. December 12, 2013

Key Managerial Shri Santosh B Nayar (CEO & MD) - from Personnel July 15, 2013 to December 11, 2013

Shri Anurag Jain (CEO & MD) - from June 01, 2013 to July 14, 2013

Shri Atul Kumar Rai (CEO & MD) - upto May 31, 2013

Note 17:

The Company has 50% interests in one joint venture viz. IFCI Sycamore Capital Advisors (P) Limited (ISCAPL) incorporated in India in November 2011 which is under voluntary liquidation and official liquidator has been appointed. The investment of IFCI Ltd in IFCI Sycamore Capital Advisors (P) Limited as on March 31, 2015 was at '' 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 liquation of the Company.

Note 18:

As on March 31, 2015 there were no events or changes in circumstances which indicate any impairment in the assets as defined by Accounting Standard-28 - "Impairment of Assets".

Note 19:

The following additional information is disclosed in terms of RBI Circulars applicable to Non-Banking Financial Companies:

(i) The Company is registered with Securities and Exchange Board of India as debenture trustee having Registration Code i.e. "IND000000002".

(ii) There is no penalties imposed by RBI and other regulator during the year ended March 2015.

Note 20:

Total value of outstanding Currency Swaps was USD 77.95 million against INR, EURO 0.85 million against INR and EURO 66.08 million against USD (Previous Year - USD - 87.65 million against INR, EURO Nil million against INR and EURO 69.39 million against USD respectively) equivalent to Rs. 936.87 crore (Previous Year- Rs. - 1,132.09 crore) whereas total value of outstanding forex deals other than Currency Swaps was Nil (Previous Year - Nil).

Note 21:

Foreign Currency exposure that is not hedged by derivative instrument or otherwise is USD 0.020 million (Previous Year - USD 0.50 million) and EUR 0.029 million (Previous Year - EUR 0.38 million), equivalent to Rs. 0.32 crore (Previous Year - Rs. 6.15 crore).

Note 22:

Previous year figures have been re-grouped/ re-arranged wherever necessary, to conform to current period''s presentation.


Mar 31, 2014

1. Contingent Liabilities and Commitments (to the extent not provided for):

25.1 Contingent Liabilities: (Rs. crore)

As at 31.03.2014 31.03.2013

(i) Bank Guarantees (8.87 26 50) 84.87 34.87

(ii) Performance Guarantees issued 0.02 0.02

(iii) Claims not acknowledged as debts 12.99 179.67 (iv) Tax Matters –

Income Tax 29.58 28.78

Service tax 13.44 12.39

In view of judicial pronouncements and legal opinions in respect of issues under appeal, no provision is considered necessary.

2. IFCI Ltd. has given letters of comfort to certain banks for one of its subsidiary, IFCI Factors Ltd. in connection with availing loans from those banks. Outstanding of loans availed under such letters of comfort was Rs. 690 crore as on March 31, 2014 (Previous Year - Rs. 729.00 crore).

3. In exercise of the powers conferred by Section 211(3) of the Companies Act, 1956, the Central Government vide notification dated February 08 2011, has exempted Public Financial Institutions as specified under Section 4A of the Companies Act, 1956 from disclosing company-wise details of Investments subject to fulfillment of certain conditions, which have been fulfilled. The accounts for the year ended March 31, 2014 have been prepared in accordance therewith.

4. The Company had obtained valuation of certain long term unquoted investments by an independent valuer and the report of the said expert has been considered for the purpose of assessment of the value of said long term unquoted investments.

5. Hitherto, the interim return received, till the date of actual buy back, in certain cases of equity investment was being considered as "Amount received against unquoted investments". Due to this policy an amount of Rs. 69.02 crore was accumulated upto 31.03.2013 and was shown under Trade Payables. These equity investments were made at pre-agreed rate of return and with firm buy back commitments from the promoter(s)/promoter group company(ies). During the year, the company changed this policy to recognize the interim return, so received as income on receipt basis and amount of Rs. 104.49 crore has been recognized as income.

This amount of Rs. 104.49 crore includes Rs. 69.02 crore pertaining to previous years'' accumulation as stated above. Had this change in accounting policy not been made, the profit of the Company would have been lower by Rs. 104.49 crore and Trade Payables higher by an equivalent amount.

6. Balances appearing under loans, sundry debtors and sundry creditors are subject to confirmation.

7. There are no Micro and Small Enterprises, to whom the Company owes dues, which are outstanding for more than 45 days as at March 31, 2014. This information as required to be disclosed under the Micro, Small and Medium Enterprises Development Act, 2006 has been determined to the extent the status of such parties identified on the basis of information available with the Company.

8. There are no material prior period items, except to the extent disclosed, included in Profit & Loss A/c required to be disclosed as per Accounting Standard-5 issued by the ICAI read with RBI guidelines.

9. Defined Benefit Plans/Long Term Compensated Absences - As per Actuarial Valuations as on March 31, 2014 and recognized in the financial statements in respect on Employee Benefit Schemes.

10. The Company operates in India and hence it is considered to operate only in 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 ICAI is not applicable.

11. The Company has 50% interests in one joint venture viz. IFCI Sycamore Capital Advisors (P) Limited (ISCAPL) incorporated in India in November 2011. The amounts invested at par were Rs. 0.01 crore Class A Equity Shares and Rs. 2.64 crore Fully Convertible Debentures. ISCAPL''s Board has approved the winding up of the company and the financials of ISCAPL for the year ended 31.03.2014 are under finalization. A firm of Chartered Accountants has certified that ISCAPL have adequate liquidity in the form of fixed deposits to honour the investment and accordingly, the Debentures are carried at cost.

12. Fixed Assets possessed by the Company are treated as ''Corporate Assets'' and not ''Cash Generating Units'' as defined by Accounting Standard-28 - "Impairment of Assets" issued by the ICAI. As on March 31, 2014, there were no events or changes in circumstances which indicate any impairment in the assets.

13. The following additional information is disclosed in terms of RBI Circulars applicable to Non-Banking Financial Companies:

(a) Loans and advances availed, inclusive of interest accrued thereon but not paid:

14. Foreign Currency exposure that is not hedged by derivative instrument or otherwise is USD 0.50 million (Previous Year - USD 0.016 million) and EUR 0.38 million (Previous Year - EUR 0.041 million), equivalent to Rs. 6.15 crore (Previous Year - Rs. 0.37 crore).

15. Previous year figures have been re-grouped/re-arranged wherever necessary, to conform to current period''s presentation.


Mar 31, 2013

1. Effect of Changes in Shareholding Pattern:

Through exercise of option of conversion by the Government of India, the Optionally Convertible Debentures of Rs.400 crore held by GoI and Loan of Rs.523 crore provided by GoI were converted into 92.30 crore equity shares of the Company at par through necessary approvals by the Board of Directors and the shareholders, during the year. Further during the year, vesting of 12 lakh equity shares was done under the IFCI Employees Stock Option Scheme and subsequently, these shares were allotted to the IFCI Employees Stock Option Trust. With these conversions and vesting under ESOP, paid–up equity share capital stands increased from Rs.737.84 crore to Rs.1,662.04 crore. Consequent upon such increase, the Central Government alongwith Corporations owned or controlled by the Central Government hold more than 51% of the paid up share capital of the Company. Accordingly, the provisions of Section 619B read with Section 619 of the Companies Act, 1956 with regard to audit of accounts have become applicable to the Company.

2. Contingent Liabilities and Commitments (to the extent not provided for):

2.1 Contingent Liabilities: (Rs. crore) As at 31.03.2013 31.03.2012 (i) Guarantees issued in Indian Currency – 26.96 (ii) Bank Guarantees 34.87 8.87 (iii) Performance Guarantees issued 0.02 0.66 (iv) Claims not acknowledged as Debts 179.67 156.10 (v) Tax Matters

– Income Tax 28.78 27.07

– Service tax 12.39 4.84

In view of judicial pronouncements and legal opinions in respect of issues under appeal, no provision is considered necessary

2.2 Commitments: (Rs. crore)

As at 31.03.2013 31.03.2012

(i) Estimated amount of contract (including 0.62 1.32

lease contract) remaining to be executed on capital account (net of advances)

(ii) Undrawn Commitments (in line with RBI 2,624.64 392.97 Circular dated December 26, 2011)

3. In exercise of the powers conferred by Section 211(3) of the Companies Act, 1956, the Central Government vide Notification dated February 8, 2011, has exempted Public Financial Institutions as specified under Section 4A of the Companies Act, 1956 from disclosing company–wise details of Investments subject to fulfillment of certain conditions. The accounts for the year ended March 31, 2013 have been prepared in accordance therewith.

4. During the year, the Company has obtained valuation of certain long term unquoted investments by an independent valuer. The report of the said expert has been considered for the purpose of assessment of decline other than temporary in the value of said long term unquoted investments.

5. Trade payables include an amount of Rs.69.02 crore received in terms of various agreements entered into with the promoter of the investee company for Share subscription/Share buyback. These proceeds are in the nature of part payments towards specified internal rate of return and/or share buyback. Due to inherent uncertainty in respect of the final gains/losses in such transactions, if any, at the time of actual buyback, the proceeds have been treated as advance receipts in the accounts.

6. Balances appearing under loans, sundry debtors and sundry creditors except pertaining to related parties, are subject to confirmation.

7. There are no Micro and Small Enterprises, to whom the Company owes dues, which are outstanding for more than 45 days as at March 31, 2013. This information as required to be disclosed under the Micro, Small and Medium Enterprises Development Act, 2006 has been determined to the extent the status of such parties identified on the basis of information available with the Company.

8. There are no material prior period items, except to the extent disclosed, included in Profit & Loss A/c required to be disclosed as per Accounting Standard–5 issued by the ICAI read with RBI guidelines.

9. Defined Benefit Plans/Long Term Compensated Absences – As per Actuarial Valuations as on March 31, 2013 and recognized in the financial statements in respect on Employee Benefit Schemes.

10. The Company operates in India and hence it is considered to operate only in 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 ICAI is not applicable.

11. Total value of Outstanding Currency Swaps was USD 87.13 million against INR and EURO 72.58 million against USD (Previous Year - USD 98.70 million against INR, EURO 0.60 million against INR and EURO 79.50 million against USD respectively) equivalent to Rs.1,002.34 crore (Previous Year - Rs.1,069.40 crore) whereas total value of outstanding Forex Deals other than Currency Swaps was Nil (Previous Year - USD 0.15 million against INR equivalent to Rs.0.77 crore respectively).

12. Foreign Currency exposure that is not hedged by derivative instrument or otherwise is USD 0.016 million (Previous Year - USD 0.02 million) and EUR 0.041 million (Previous Year - EUR 0.03 million), equivalent to Rs.0.37 crore (Previous Year - Rs. 0.28 crore).

13. Details of securities sold and purchased under Repos and Reverse Repos Transactions:

14. Previous year/period figures have been re–grouped/re–arranged wherever necessary, to conform to current period''s presentation.


Mar 31, 2010

1. Contingent Liabilities not provided for in respect of:

(Rs. crore)

Year ended 31.03.2010 31.03.2009

(i) Guarantees issued in Indian Currency 50.00 186.65

(ii) Bank Guarantees 6.87 -

(iii) Performance Guarantees issued 0.67 0.62

(iv) Claims not acknowledged as debts 50.14 50.35

(v) Assets sold with recourse - 2.88

(vi) Estimated amount of contract (including lease contract) remaining to be executed on capital account (net of advances) 4.36 -

(vii) Tax Matters:

- Income Tax 314.64 186.87

- Service Tax 3.08 -

In view of judicial pronouncements and legal opinions in respect of issues under appeal, no provision is considered necessary.

2. The Company has been granted exemption as on March 31, 2010 by the Government of India, Ministry of Corporate Affairs, under Section 211(4) of the Companies Act, 1956, regarding the following requirements of Schedule VI of the Companies Act, 1956:

(i) Company-wise details of investments where the market value in case of quoted investments and cost in case of unquoted investments in any particular company not exceeding Rs.2 crore each.

(ii) Age-wise Classification of Sundry Debtors.

The accounts have been prepared in accordance therewith.

3. The stakeholders of IFCI in Financial Year (FY) 2002-03 had approved the package for restructuring of debt/liabilities, inter alia, providing for release of Rs.5,220 crore (comprising Rs.3,604 crore towards principal and Rs.1,616 crore towards interest over future years on liabilities taken over/to be serviced by Government of India) as Grant. Government of India (GoI) released Rs.2,932.31 crore, comprising Rs.523 crore as loan (FY 2002-03) and Rs.2,409.31 crore (FY 2003-04 to FY 2006-07) as Grant. The amount of Rs.2,409.31 crore received as Grant in FY 2003-04 to 2006-07 comprised of Rs.1,606.31 crore towards principal and Rs.803 crore towards interest. Out of Rs.1,606.31 crore received towards principal, Rs.1,359 crore (FY 2003-04) was accounted as extra-ordinary income and Rs.247.31 crore (FY 2004-05 to FY 2006-07) as Restructuring Reserve in the Reserves & Surplus A/c and thereafter transferred to Profit & Loss A/c, as per the guidelines conveyed by RBI. The amount of Rs.803 crore received towards interest was reduced from the cost of borrowings in respective years. In view of GoI letter dated December 12, 2007, stating that it would assist IFCI Ltd in case such a situation arises, no Grant has been received in the last three years.

4. The bonds guaranteed by GoI of Rs.2,338.84 crore include bonds of Rs.1,498.84 crore which have been rolled over for 10 years from the respective due dates in line with the minutes of meetings of stakeholders, held on November 26, and December 2, 2002. GoI has been requested to extend the guarantee for the rolled over period.

5(a) Transfer of equivalent amount to Capital Redemption Reserve Account in respect of Preference Shares of Rs.20 crore redeemed in the FY 2001-02, was complied with in FY 2007-08. However, the Companys application to the Regional Director, Northern Region for compounding is yet to be disposed off by the authorities.

5(b) During the current year, Preference Shares of Rs.82.03 crore (Previous Year - Rs.82.03 crore) have been redeemed, as per restructured terms on 01.04.2009 and necessary amount has been transferred to the Capital Redemption Reserve Account from Profit and Loss Account.

6(a) GoI has the option of converting the debentures, as shown at ‘A of Schedule III, wholly or partly into fully paid equity shares of IFCI Ltd, at par, at any time during the currency of debentures subject to compliance with provisions of SEBI guidelines, in respect of preferential allotment. IFCI also has the right to redeem the convertible debentures issued to GoI, fully or partly, at par, at any time after expiry of five years from the date of the issue with prior approval of RBI.

6(b) During the financial year 2007-08, Zero Coupon Optionally Convertible Debentures (ZCOCDs) amounting to Rs.1,323.99 crore held by Public Sector Banks and Financial Institutions were converted into equity shares of the Company. LIC had, however, stated that they would convert only as much of their ZCOCDs into equity as would maintain their shareholding at 8.39% post conversion of ZCOCDs. Accordingly, the shareholders at the AGM held on September 12, 2008 had approved reduction of share capital for aligning the stake of LIC to 8.39% as requested by LIC. The order of the High Court of Delhi passed on February 26, 2009 for reduction of Equity Share Capital by Rs.24.57 crore and Securities Premium account by Rs.238.39 crore and minutes forming part of the petition were registered by Registrar of Companies on April 15, 2009 and have been duly effected in the books of accounts.

6(c) Loan from GoI as shown at ‘D(a)(i) of Schedule III, to be issued in the form of 0.1% Optionally Convertible Debentures and redeemable on 28.03.2023 has a right of recompense on par with other stakeholders.

7. Borrowings from Banks & FIs shown at ‘D(a)(ii) of Schedule III include loans of Rs.300 crore (Previous Year - Rs.300 crore) against security of cash flow/negative lien against certain identified loan assets.

8. In respect of Investments in shares, debentures and security receipts in certain cases, scrips are yet to be received.

9. Other Loans and Advances include Rs.0.25 crore (Previous Year - Rs.0.12 crore) due from Directors. Maximum balance during the year Rs.0.25 crore (Previous Year - Rs.0.12 crore).

10. The Gross Block of Fixed Assets includes Rs.1,194.32 crore (Previous Year - Rs.595.50 crore) on account of revaluation of Land & Buildings carried out during the year on the basis of replacement value as certified by Government Approved Valuer. The resulting increase of Rs.637.44 crore (Land - Rs.322.91 crore; Building-Rs.314.53 crore) has been credited to the Revaluation Reserve. The increase in value is in addition to earlier revaluation done in FY 2006-07. The additional charge of depreciation of Rs.9.42 crore (Previous Year - Rs.9.75 crore) on revaluation carried out in earlier years has been charged to Profit & Loss Account and an equivalent amount withdrawn from Revaluation Reserve and credited to Profit and Loss Account.

11. During the year, the Company has changed the method of depreciation on Mobile Phones by providing 100% depreciation in the year of acquisition itself in place of providing depreciation on WDV method at the rates provided under Schedule XIV of Companies Act, 1956. Profit for the current year is lower by Rs.0.20 crore due to the change. The additions made in the preceeding years have also been fully depreciated.

12. Balances appearing under loans, sundry debtors and sundry creditors are subject to confirmation in certain cases.

13. There are no Micro and Small Enterprises, to whom the Company owes dues, which are outstanding for more than 45 days as at March 31, 2010. This information as required to be disclosed under the Micro, Small and Medium Enterprises Development Act, 2006 has been determined to the extent such parties have been identified on the basis of information available with the Company.

14. Details of investments purchased and sold/redeemed during the year ended March 31, 2010 are enclosed as Annexure.

15. There are no material prior period items, except to the extent disclosed, included in Profit & Loss A/c required to be disclosed as per Accounting Standard-5 issued by the ICAI read with RBI guidelines.

16. Defined Benefit Plans/Long Term Compensated Absences – As per Actuarial Valuations as on March 31, 2010 and recognized in the financial statements in respect of Employee Benefit Schemes:

17. The Company operates in India and hence it is considered to operate only in 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 ICAI is not applicable.

18. Disclosure of details pertaining to related party transactions in terms of Accounting Standard-18, issued by the ICAI - "Related Party Disclosures" are as under:

19(a) Provisions of Accounting Standard-19, issued by the ICAI - "Leases" are not applicable as the Company has not entered into leasing transaction on or after April 01, 2001.

20(b) (i) The Company has entered into lease agreement at three centers. Some of the significant terms and conditions of the arrangements are:

* Agreement may generally be terminated by either party on serving a notice period.

* The lease arrangements are generally renewed on expiry of lease period subject to mutual agreement.

* The Company shall not sublet, assign or part with the possession of the premises without prior written consent of lessor.

(ii) Rent in respect of above is charged to Profit and Loss Account.

(iii) The year-wise break up of future minimum lease payments in respect of leased premises are as under:

21. Current Tax represents Minimum Alternate Tax (MAT), provided in terms of Section 115JB of the Income Ta x Act, 1961, as tax at normal rates is lower than MAT. In view of amendment to Section 115JB of Income Tax Act, 1961 vide Finance Act, 2009 w.r.e.f. 01.04.2001, additional provision of Rs.51.17 crore has been made for Financial Years 2006-07 and 2007-08. Further, MAT Credit Entitlement and income tax provision of Rs.129.17 crore has been reversed for Financial Years 2008-09 and 2009-10.

22. In terms of Accounting Standard-22, issued by the ICAI - "Accounting for Taxes on Income", Deferred Tax Assets (Net) on account of timing differences is as under:

* As evidenced from the income tax return filed by the Company For the current year, Deferred Tax charge of Rs.338.87 crore (Previous Year - Rs.311.41 crore) has been charged in the accounts.

23. Fixed Assets possessed by the Company are treated as Corporate Assets and not Cash Generating Units as defined by Accounting Standard-28 - "Impairment of Assets" issued by the ICAI. As on March 31, 2010, there were no events or changes in circumstances which indicate any impairment in the assets.

24. Movement in Provisions, in terms of Accounting Standard-29, issued by the ICAI - "Provisions, Contingent Liabilities and Contingent Assets" is given as under:

25. Total value of outstanding Currency Swaps was USD 23.20 million against INR and EUR 45.80 million against USD (Previous Year - USD 9.45 million against INR and EUR 40.80 million against USD respectively) equivalent to Rs.398.89 crore (Previous Year - Rs.236.25 crore), whereas total value of outstanding Forex Deals other than Currency Swaps was USD 8.00 million against INR and EUR 19.40 million against USD equivalent to Rs.154.28 crore (Previous Year - USD 10 million and EUR 20 million respectively).

26. Foreign Currency exposure that is not hedged by derivative instrument or otherwise is USD 0.70 million (Previous Year - USD 0.01 million) and EUR 0.16 million (Previous Year - EUR 0.02 million), equivalent to Rs.3.17 crore (Previous Year - Rs.0.16 crore).

27. Previous year figures have been re-grouped/re-arranged wherever necessary, to conform to current years, presentation.

28. Balance Sheet abstract and Companys General Business Profile as per Part IV of Schedule VI of the Companies Act, 1956 are enclosed as Appendix.