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Directors Report of IKF Finance Ltd. Company
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Directors Report of IKF Finance Ltd.

Mar 31, 2014

Dear Members,

The directors have pleasure in presenting the 23rd Annual Report along with audited accounts of the Company for the year ended 31st March, 2014. The summarized financial results of the Company, are given hereunder:

Financial Results:

(Rs.in Lacs)

Year ended

Particulars 31.03.14 31.03.13

Income from Operations 6073.48 4278.61

Total Expenditure 1002.73 681.64

Interest 3197.79 2422.27

Profit before Dep. & Taxes 1872.96 1174.70

Depreciation 31.46 26.83

Provisions NPA 29.21 26.52

Provision for Standard Assets 23.31 26.31

Provision for Current Tax 620.25 388.41

Provision for Deferred Tax 6.01 0.63

Profit After Tax 1162.72 706.00

Surplus brought forward 579.61 344.28

General Reserve 58.14 35.31

Reserve Fund 232.54 141.23

Dividend (proposed) 0.00 230.09

Dividend Tax 0.00 39.10

Prior Year Income Tax 8.22 24.94

Surplus Carried to Balance Sheet 1443.43 579.61

Corporate Governance:

A detailed report on corporate governance, together with a certificate from the statutory auditors and a declaration by the Managing Director with regard to Code of Conduct in compliance with Clause 49 of the Listing Agreement, are attached as part of this Report.

Further, a certificate, duly signed by the Managing Director on the Financial Statements of the Company for the year ended March 31, 2014, as required under Clause 49 of the Listing Agreement, was submitted to the Board of Directors at their meeting held on August 30, 2014. The certificate is attached to the Report on Corporate Governance.

Resource Mobilization:

Deposits

Your Company has not mobilized any Public Deposits during the year under review and there were no outstanding Public deposits at the end of the year. During the year, your Company has surren- dered the Deposit Accepting Status to the Reserve Bank of India as the management of the Company is not in favour of raising any Public Deposits in future. The Reserve Bank of India has re-classi- fied the Company as non deposit accepting asset financing Com- pany vide its Certificate of Registration dated May 12, 2014.

Working Capital Limits

Your company continues to enjoy Cash Credit Limits of Rs.250 Cr from the Consortium of Nine Banks led by Central Bank of In- dia. The Lead Bank is in the process of considering your Company''s request for enhancement of the existing limits.

Term Loans

Your Company has mobilized an Term Loan of Rs.25 Cr from HDFC Bank Limited and rs.5 Cr from Small Industries Development Bank of India (SIDBI) during the year under review. Besides, your com- pany has mobilized Rs.42 Cr Term Loans from NBFCs - Sundaram Finance Limited, L & T Finance Limited and IFMR Capital Fi- nance (P) Limited in line with the Management''s overall business plan to have a judicious mix of resources.

Securitization

During the year, your Company has securitized / assigned loan re- ceivables to the extent of Rs.71 Cr.

Borrowing Profile

Total borrowings of the Company for the year under review stood at Rs.258 Cr of which borrowings from Banks constituted 84.23%, borrowings from NBFCs 13.91%, Non Convertible Debentures (NCDs 1.33%) and Security Deposits & others 0.53%.

Your Company is continuously exploring all options to access low cost funds, mostly by way of Term Loans in the current financial year, to further expand the operations.

Business Associations/Tie-Ups:

Your Company has been continuing its association with HDFC Bank Limited and Bajaj Finance Limited (Channel Business Ar- rangement).

Capital Adequacy:

The Capital to Risk Assets Ratio of your company is 19.12% as on 31.03.2014, well above the minimum of 15% prescribed by the Reserve Bank of India, of which Tier I Capital constituted 18.73%.

Credit Rating:

During the current finanical year, Brickwork Ratings India Private Limited has retained "BWR A-" (Stable) rating to your Company''s Long Term Bank Loan limits of Rs.475 Cr (including a Bank Guar- antee of Rs.15 Cr), signifying adequate degree of safety regarding timely servicing of financial obligations with low credit risk and "BWR A2" rating for Short Term Bank Loan limits of Rs.25 Cr, signifying strong degree of safety regarding timely payment of fi- nancial obligations with low credit risk Credit Analysis and Research Limited (CARE) has retained "BBB " rating to your Company for its Secured Non Convertible Debentures of Rs.5 Crs and earlier Bank Loan facilities of Rs.176 Cr, signifying adequate degree of safety regarding timely payment of interest and principle. The short term borrowings (commercial paper), backed by the Stand by Letter of Credit of the Lead Bank Central Bank of India by carving out the working capital limits sanctioned to the company, are rated "A1 (SO) (highest safety)

Directors:

Dr. Sinha S Chunduri and dr. Prasad J Athota retires by rotation and are eligible for re-appointment at the ensuing AGM.

Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Company has decided to term of Independent Directors as below;

Name of Director Tenure upto Remarks

S.Veerabhadra Rao Till Conclusion As per revised of the 28th Clasue 49, the first Annual General term of 5 years. Meeting of the Company.

P.S.V.Prasada Rao Till Conclusion As per revised of the 28th Clasue 49, the first Annual General term of 5 years. Meeting of the Company.

N.Haranadh Till Conclusion As per revised of the 28th Clasue 49, the first Annual General term of 5 years. Meeting of the Company.

K.Satyanarayana Prasad Till Conclusion As per revised of the 28th Clasue 49, the first Annual General term of 5 years. Meeting of the Company.

Your Directors are pleased to place on record their appreciation for the services rendered by them during their tenure as Directors and wish to recommend their re-appointment.

Particulars of Employees:

During the year under review, none of the employees of your Com- pany were in receipt of remuneration in excess of the limits pre- scribed for disclosure as per Section 217 (2A) of the Companies Act, 1 956, read with the Companies (Particulars of Employee) Rules, 1975 as amended from time to time.

Information on Conservation of Energy, Technology absorp- tion and Foreign Exchange earnings/out goings as per Section 217 (1) (e) of the Companies act, 1956:

Your Company has no activities relating to the conservation of en- ergy and technology absorption. Your Company didn''t have any foreign exchange earnings and / or expenses during the year under review.

Directors'' Responsibility Statement:

Your directors confirm that:

* In the preparation of the accounts for the year ended 31st March, 2014, the applicable accounting standards have been followed.

* They have selected such accounting policies and applied them consistently and made judgments and estimates that are rea- sonable and prudent, so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that period.

* They have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provi- sions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; and

* They have prepared the accounts for the financial year ended 31st March 2014 on a "going concern" basis.

Corporate Social Resopnsibility Committee:

Pursuant to Section 135 of the Companies Act, 2013, the Board of Directors in its meeting held on August 30, 201 4 has constituted Corporate Social Responsibility Committee of three directors Mr. S Veerabhadra Rao, Mr. PSV Prasada Rao and Mr. VGK Prasad. The Committee is in the process of finalizing Company''s CSR Policy.

Auditors:

M/s. Hanumaiah & Co, Chartered Accountants, Vijayawada, re- tire and are eligible for re-appointment. A certificate from the Au- ditors that they satisfy the conditions prescribed under the Com- panies Act, 2013 and the Rules made thereunder (including satis- faction of criteria under Section 141 of the Companies Act, 2013), has been received from them.

Acknowledgement:

Your directors'' great fully acknowledge the support and co-opera- tion extended by all the Shareholders, Debenture holders, Custom- ers, Vehicle Dealers and Business associates HDFC Bank Lim- ited, Bajaj Finance Limited, Sundaram Finance Limited, L & T Finance Limited & IFMR Capital Finance (P) Limited for their continued support to your Company. Your directors wish to place on record their gratitude for the continued support provided by Company''s bankers Central Bank of India, Andhra Bank, In- dian Overseas Bank, IDBI Bank Limited, The Federal Bank Limited, Axis Bank Limited, Punjab National Bank, Bank of India and State Bank of India. Your Directors look forward to their continued support in the days to come.

Your Directors also place on record their appreciation for the dedi- cation and commitment displayed by the employees at all levels for posting a satisfactory performance.

By Order of the Board

Sd/- Place: Vijayawada (V G K Prasad) Date : 30-08-2014 Managing Director


Mar 31, 2013

The directors have pleasure in presenting the 22nd Annual Report along with audited accounts of the Company for the year ended 31st March, 2013. The summarized financial results of the Company, are given hereunder:

Financial Results: (Rs.in Lacs) Year ended Particulars 31.03.13 31.03.12

Income from Operations 4278.61 2675.99

Total Expenditure 681.64 338.68

Interest 2422.27 1574.52

Profit before Dep. & Taxes 1174.70 762.79

Depreciation 26.83 45.68

Provisions NPA 26.52 11.28

Provision for Standard Assets 26.31 42.65

Provision for Current Tax 388.41 282.02

Provision for Deferred Tax 0.63 (7.90)

Profit After Tax 706.00 389.06

Surplus brought forward 344.28 216.19

General Reserve 35.31 19.45

Reserve Fund 141.23 77.81

Dividend (proposed) 230.09 122.30

Dividend Tax 39.10 19.84

Prior Year Income Tax 24.94 21.57

Surplus Carried to Balance She 579.61 344.28

Dividend:

Your Directors are pleased to recommend a Dividend of 10% (Rs.1.00 per Equity Share) for the Financial Year ended March 31, 2013. The Dividend together with Dividend Tax of Rs.39.10 Lakhs, absorbs a sum of Rs.269.19 Lakhs (Ru- pees Two Crore Sixty Nine Lakhs Nineteen Thousand Only).

Corporate Governance:

A detailed report on corporate governance, together with a certificate from the statutory auditors and a declaration by the Managing Director with regard to Code of Conduct in compliance with Clause 49 of the Listing Agreement, are attached as part of this Report.

Further, a certificate, duly signed by the Managing Director on the Financial Statements of the Company for the year ended March 31, 2013, as required under Clause 49 of the Listing Agreement, was submitted to the Board of Directors at their meeting held on July 31, 2013. The certificate is attached to the Report on Corporate Governance.

Management''s Discussion and Analysis: Economic Environment:

India''s GDP growth for the year 2012-13 is, in all probabil- ity, to be around 5% on account of poor performance of all most all the industrial sectors and slowdown in the services sector. However, Inflation has moderated to some extent after a prolonged period and has come down to 6% level by the end of the year. In spite of RBI''s revision of policy rates downwards by 0.75%, in a phased manner, the overall busi- ness sentiment was not so positive in view of high interest rates coupled with Government''s indecisiveness on various policy matters.

Automotive Sector:

The slowdown of economy has cast its shadow on many sectors and automotive industry was one of the worst hit sectors. Medium and heavy commercial vehicles (M/HCV) segment registered a steep fall of 23% during 2012-13 as against a growth of 8% in the previous year, as a direct re- sult of the not so good monsoon and the continuing slug- gishness in the manufacturing and infrastructure sectors. Light commercial vehicles grew by 14% as against 23% in the previous year primarily on account increased sales of small commercial vehicles. Cars and multi-utility vehicles recorded a 2% growth in 2012-13 as against 4% in the pre- vious year. As such, the overall performance of the automo- tive sector was very disappointing in comparison to several other sectors. High interest rates and spiraling fuel prices, throughout the year, coupled with sluggish economic condi- tions have contributed to the steep decline in the growth of automotive sector.

Future Outlook:

The year ahead is going to be a challenging year for the In- dian''economy. The economic growth for the FY 2013-14 is Fexpected to be at around 5%, though it was projected at ^around 6% initially, as RBI and other monitory agencies have already downsized their projections. Further, steep decline of rupee is a matter of serious concern as it has crossed Rs.61 mark against US Dollar and hovering at around Rs.60, in spite of RBI''s all out efforts.

The chances of interest rate cuts are remote in the near fu- ture in the light of steep depreciation of rupee. Further, the RBI''s initiatives, aimed at sucking the liquidity in the sys- tem, to stabilize the rupee have resulted in steep increase of short term interest rates and some banks have started in- creasing their base rates. As such the high interest rate re- gime is expected to continue for quite some time.

The inflation, though it seems to be moderating in the recent past, could reverse its trend and is expected to increase un- less rupee is strengthened.

The course corrections measures taken by the government in the recent past, rupee strength, moderating commodity prices and expectation of good monsoon are expected to turn- around the economy.

The automobile sector is likely to remain sluggish in the short term with marginal recovery in the last quarter of the current financial year. However, the same is subject to many factors such as good monsoon, proactive government poli- cies, recovery in industrial production, crude prices and cur- rency fluctuations. Competition is expected to increase in view of lower volumes and interest rates are expected to play a pivotal role.

Your Company continues to focus on Retail segment with focus on providing superior service to customers, lowering the cost of bor- rowings, maintaining the asset quality with enhanced operating efficiencies to sustain the growth and profitability. To cope up with the adversities, the management of your Company has already taken initiatives by launching new products like Top Up / Working Capi- tal Loans to the existing customers, Business Loans, asset backed loans etc. Your Company is confident of sustaining the growth and profitability as it has built strong relationship with the customers over the last two decades.

Risk Management & Credit Monitoring:

As risk is inevitable fallout of the lending business, your Company has to manage various risks like credit risk. Liquidity risk, interest rate risk, operational risk, market risk etc.

The Risk Management Committee and the Asset Liability Man- agement Committee review and monitor these risks at periodic in- tervals. Liquidity risk and interest rate risk arising out of maturity mismatch of assets and liabilities are managed through regular monitoring of the maturity profiles. The Company monitors ALM periodically to mitigate the liquidity risk. The Company also mea- sures the interest rate risk by the duration gap method. Operational risks arising from inadequate or failed internal processes, people and systems or from external events are adequately addressed by the internal control systems and are continuously reviewed and monitored at regular intervals.

Your Company is proactive in assessing the risk associated with its various loan products and has evolved a variety of Risk manage- ment and monitoring tools while dealing with a wide spectrum of retail customers. The Risk Management Policy of the ComnyM encompasses various risk tools such as Credit, Operational jpany ket, Liquidity and Interest Rate Risk and has put in place appropri- ate mechanism to effectively mitigate the risk factors. ^

Internal Audit

As part of the effort to evaluate the effectiveness of the internal control systems, your Company''s internal audit team reviews all the control measures at regular intervals and recommends improve- ments / modifications / rectifications to the existing processes and systems, wherever necessary. The internal audit team reports di- rectly to the Audit Committee of the Board and the Audit Commit- tee regularly reviews the audit findings as well as the adequacy and effectiveness of the internal control systems.

Review of Operations:

Your Company''s performance for the year ended March 31, 2013 continues to be encouraging and has registered a growth of 59.89% in its Gross Receipts to Rs.42.79 Cr as against Rs.26.76 Cr and the Net Profit increased from Rs.3.89 Cr to Rs.7.06 Cr registering a growth of 81.46% for the corresponding previous year.

During the year, the disbursements have grown by 24.62% from Rs.130 Cr to Rs.162 Cr and the Loan Book has grown by 34.50% from Rs.171 Cr to Rs.230 Cr. The gross receivables managed by the Company, including Channel Business and receivables assigned / securitized stood at around Rs.293 Cr as at March 31, 2013 as against Rs.239 Cr in the previous year thereby registering a growth of 22.59%.

Resource Mobilization:

Deposits

Your Company has not mobilized any Public Deposits during the year under review and there were no outstanding Public deposits at the end of the year.

Working Capital Limits

Your company continues to enjoy Cash Credit Limits of Rs.171 Cr from the Consortium of Eight Banks led by Central Bank of In- dia. The Lead Bank has assessed the working capital requirements of the Company at Rs.250 Cr and the same are yet to be availed as the member banks are considering enhancement of the existing limits from Rs.171 Cr to Rs.250 Cr.

Term Loans

Your Company has mobilized an Unsecured Short Term Loan of Rs.25 Cr from HDFC Bank Limited during the year under review. During the current year, your company has mobilized Rs.25 Cr Term Loan and Rs.25 Cr Unsecured Short Term Loan from HDFC Bank Limited and Rs.5 Cr Term Loan from Small Industries Develop- ment Bank of India (SIDBI) in line with the Management''s overall business plan to have a judicious mix of resources.

Securitization

During the year, your Company has securitized hypothecation loan receivables to the extent of Rs.24.74 Cr.

Borrowing Profile

Total borrowings of the Company for the year under review stood at Rs.186.44 Cr of which borrowings from Banks constituted 92.01%, borrowings from institutions 3.34%, Non Convertible Debentures (NCDs 2.68%) and Security Deposits & others 1.97%.

Your Company is continuously exploring all options to access low cost funds, mostly by way of Term Loans in the current financial year, to further expand the operations.

Business Associations/Tie-Ups:

Your Company has been continuing its association with HDFC Bank Limited and Bajaj Finance Limited (Channel Business Ar- rangement) and with Sundaram Finance Limited (Securitization exposure limit).

Capital Adequacy:

The Capital to Risk Assets Ratio of your company is 20.67% as on 31.03.2013, well above the minimum of 15% prescribed by the Reserve Bank of India, of which Tier I Capital constituted 20.27%.

Credit Rating:

During the year under review, Brickwork Ratings India Private Lim- ited has assigned "BWR A-" (Stable) rating to your Company''s Long Term Bank Loan limits of Rs.330 Cr (including a Bank Guar- antee of Rs.15 Cr), signifying adequate degree of safety regarding timely servicing of financial obligations with low credit risk and "BWR A2" rating for Short Term Bank Loan limits of Rs.25 Cr, signifying strong degree of safety regarding timely payment of fi- nancial obligations with low credit risk

Credit Analysis and Research Limited (CARE) has retained "BBB " rating to your Company for its Secured Non Convertible Deben- tures of Rs.6 Crs and earlier Bank Loan facilities of Rs.175 Cr, signifying adequate degree of safety regarding timely payment of interest and principle. The short term borrowings (commercial pa- per), backed by the Stand by Letter of Credit of the Lead Bank Central Bank of India by carving out the working capital limits sanctioned to the company, are rated "A1 (SO) (highest safety)

Further, Credit Analysis & Research Limited (CARE) has assigned "A " rating to your Company''s securitization transaction during the year under review.

Directors:

In accordance with the provisions of the Companies Act, 1956 and the Articles of Association of the Company, Shri. PSV Prasada Rao and Shri. K Satyanarayana Prasad retires by rotation and being eligible offer themselves for reappointment. Your Directors are pleased to place on record their appreciation for the services rendered by them during their tenure as Directors and wish to recommend their re-appointment.

Particulars of Employees:

During the year under review, none of the employees of your Company were in receipt of remuneration in excess of the limits prescribed for disclosure as per Section 217 (2A) of the Companies Act, 1956, read with the Companies (Particulars of Employee) Rules, 1975 as amended from time to time.

Information on Conservation of Energy, Technology absorption and Foreign Exchange earnings/out goings as per Section 217 (1) (e) of the Companies act, 1956:

Your Company has no activities relating to the conservation of energy and technology absorption. Your Company didn''t have any foreign exchange earnings and / or expenses during the year under review.

Directors'' Responsibility Statement:

Pursuant to Section 217 (2AA) of the Companies Act, 1956 the Directors to the best of their knowledge and belief confirm that:

- In the preparation of the accounts for the year ended 31st March, 2013, the applicable accounting standards have been followed.

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

- 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 frauds and other irregularities; and

- The Directors have prepared the accounts for the financial year ended 31st March 2013 on a "going concern" basis.

Auditors:

M/s. Hanumaiah & Co, Chartered Accountants, retires at the ensuing annual general meeting and is eligible for re-appoint- ment.

Acknowledgement:

Your directors'' great fully acknowledge the support and co-operation extended by all the Shareholders, Debenture holders, Customers, Vehicle Dealers and Business associates HDFC Bank Limited, Bajaj Finance Limited and Sundaram Fi- nance Limited for their continued support to your Company. Your directors wish to place on record their gratitude for the continued support provided by Company''s bankers Central Bank of India, Andhra Bank, Indian Overseas Bank, IDBI Bank Limited, The Federal Bank Limited, Axis Bank Limited, Punjab National Bank and Bank of India. Your Direc- tors look forward to their continued support in the days to come.

Your Directors also place on record their appreciation for the dedication and commitment displayed by the employees at all levels for posting a satisfactory performance.

By Order of the Board

Sd/-

Place: Vijayawada (V G K Prasad)

Date : 31-07-2013 Managing Director


Mar 31, 2012

The directors have pleasure in presenting the 21st Annual Report along with audited accounts of the Company for the year ended 31st March, 2012. The summarized financial results of the Company, are given hereunder:

Financial Results:

(Rs. in Lacs)

Particulars Year Year ended ended 31.03.12 31.03.11

Income from Operations 2675.99 1561.77

Total Expenditure 338.68 221.25

Interest 1574.52 671.00

Profit before Dep. & Taxes 762.79 669.52

Depreciation 45.68 82.65

Provision for NPA 11.28 6.56

Provision for Standard Assets 42.65 25.70

Provision for Current Tax 282.02 245.34

Provision for Deferred Tax (7.90) (20.82)

Profit After Tax 389.06 330.09

Surplus brought forward 216.19 144.48

General Reserve 19.45 16.51

Reserve Fund 77.81 66.02

Dividend (proposed) 122.30 122.30

Dividend Tax 19.84 20.31

Prior Year Income Tax 21.57 33.24

Surplus Carried to Balance Sheet 344.28 216.19

Dividend:

Your Directors are pleased to recommend a Dividend of 10% (Rs. 1.00 per Equity Share) for the Financial Year ended March 31, 2012. The Dividend together with Dividend Tax of Rs. 19.84 Lakhs, absorbs a sum of Rs. 142.14 Lakhs (Rupees One Crore Forty Two Lakhs Fourteen Thousand Only).

Corporate Governance:

A detailed report on corporate governance, together with a certificate from the statutory auditors and a declaration by the Managing Director with regard to Code of Conduct in compliance with Clause 49 of the Listing Agreement, are attached as part of this Report.

Further, a certificate, duly signed by the Managing Director on the Financial Statements of the Company for the year ended March 31, 2012, as required under Clause 49 of the Listing Agreement, was submitted to the Board of Directors at their meeting held on August 31, 2012. The certificate is attached to the Report on Corporate Governance.

Management's Discussion and Analysis: Economic Environment:

The signs of stabilization of major economies world over were offset by the Euro zone crisis with insignificant industrial production which continue to exert severe pressures on their financial system and continue to weigh considerably on the global economy in spite of reasonable growth of emerging and developing economies.

In line with the slowdown of global economies, India's GDP growth in the year 2011-12 has been estimated to be lower than 7.00% on account of lower industrial production inspite of satisfactory performance of Service and Agricultural sectors. Inflation continues to hover at around 9% levels throughout the year on account of high food and fuel prices. RBI continues to raise the policy rates as a tool to combat the inflation. The overall business sentiment was not so positive in view of high inflation and raising interest rates coupled with Government's indecisiveness on various policy matters.

Automotive Sector:

The performance of the automotive sector is satisfactory when compared with other sectors. Though the growth in Commercial Vehicle segment, driven by light commercial vehicles, was reasonably good, the performance of Cars and Multi Utility Vehicle segment was very disappointing. High Interest rates throughout the year, spiraling fuel prices together with falling industrial production have primarily contributed to the sharp decline in growth of Medium & Heavy Commercial Vehicle and Car & MUV segments.

Future Outlook:

The GDP growth for the FY 2011-12 is projected at around 7.00% level in view of lower industrial production, declining Exports and spiraling Crude prices. The downtrend in Indian economy seems to be bottomed out and moderating inflation due to drop in prices of food and manufactured products may provide the required comfort to RBI to take call on reduction of its policy rates which is expected to kick start the economy. Policy initiatives proposed by the new Finance Minister are expected to provide the required impetus to the overall growth of the Indian economy. Interest rates, depreciating Rupee and crude prices are the key concerns, as of now, which tend to define the direction of the economy in the days ahead. The current year is going to be a very challenging year for the Policy makers and as well as the Indian economy.

The automobile sector may register a moderate growth on account of higher fuel prices and high interest rates. Competition is expected to increase as all most all Banks are trying hard to grab their chunk and cost of funds is expected to play a pivotal role. Your Company continues to focus on Retail segment in by focusing on providing superior service to customers, strives to lower its cost of funds, maintain good asset quality and enhanced operating efficiencies to sustain the growth and profitability.

Risk Management & Credit Monitoring:

Your Company is proactive in assessing the risk associated with its various loan products and has evolved a variety of Risk management and monitoring tools while dealing with a wide spectrum of retail customers. The Risk Management Policy of the Company encompasses various risk tools such as Credit, Operational, Market, Liquidity and Interest Rate Risk and has put in place appropriate mechanism to effectively mitigate the risk factors.

Review of Operations:

Your Company's performance for the year ended March 31, 2012 continues to be encouraging and has registered a growth of 71.32% in its Gross Receipts to Rs. 26.76 Crs as against Rs. 15.62 Crs and the Net Profit increased from Rs. 3.30 Crs to Rs. 3.89 Crs registering a growth of 17.88% for the corresponding previous year.

During the year, the disbursements have grown by 49.42% from Rs. 87 Crs to Rs. 130 Crs and the Loan Book has grown by 69.31% from Rs. 101 Crs to Rs. 171 Crs. The gross receivables managed by the Company, including Channel Business and receivables assigned/securitized stood at around Rs. 239 Cr as at March 31, 2012 as against Rs. 172 Cr in the previous year.

Deposits:

Your Company has not mobilized any Public Deposits during the year under review and there are no outstanding deposits at the end of the year.

Bank Limits:

Your company continues to enjoy Cash Credit Limits with the Federal Bank Limited, Axis Bank Limited, Andhra Bank, Central Bank of India, IDBI Bank Limited and Indian Overseas Bank.

As part of the overall business plan, your Company has mobilized additional Cash Credit limits of Rs. 60 Cr and Term Loan of Rs. 10 Cr from the member bankers and, during the year, the Company has moved from multiple banking to consortium banking - Central Bank of India as Lead Bank.

During the year, your Company has securitized/assigned hypothecation loan receivables to the extent of Rs. 11.25 Cr with the HDFC Bank Limited.

Your Company is continuously exploring all options to access low cost funds, by leveraging its strengths, to further expand the operations.

Business Associations/Tie-Ups:

Your Company has been continuing its association with HDFC Bank Limited and Bajaj Finance Limited (Channel Business Arrangement) and with Sundaram Finance Limited (Securitization exposure limit).

Capital Adequacy:

The Capital to Risk Assets Ratio of your company is 24% as on 31.03.2012, well above the minimum of 15% prescribed by the Reserve Bank of India.

Credit Rating:

During the year under review, Credit Analysis and Research Limited (CARE) has assigned "BBB " rating to your Company for its Secured Non Convertible Debentures of Rs. 6 Crs and Bank Loan of Rs. 175 Crs, signifying the adequate degree of safety regarding timely payment of interest and principle. The short term borrowings (commercial paper), backed by the Stand by Letter of Credit of the Lead Bank Central Bank of India by carving out the working capital limits sanctioned to the company, are rated "A1 (SO) (highest safety)

Directors:

In accordance with the provisions of the Companies Act, 1956 and the Articles of Association of the Company, Shri. Veerabhadra Rao Sunkara and Shri. Haranath Nallani retire by rotation and being eligible offer themselves for reappointment. Your Directors are pleased to place on record their appreciation for the services rendered by them during their tenure as Directors and wish to recommend their re-appointment.

Further, your Directors are pleased to place on record their appreciation for the services rendered by Shri. V G K Prasad, Managing Director, Smt. Indira Devi Vupputuri, Whole Time Director and Smt. Vasumathi Devi Kogani, Executive Directors during their tenure as Executive Directors and wish to recommend their re-appointment.

Particulars of Employees:

During the year under review, none of the employees of your Company were in receipt of remuneration in excess of the limits prescribed for disclosure as per Section 217 (2A) of the Companies Act, 1956, read with the Companies (Particulars of Employee) Rules, 1975 as amended from time to time.

Information on Conservation of Energy, Technology absorption and Foreign Exchange earnings/out goings as per Section 217 (1) (e) of the Companies act, 1956:

Your Company has no activities relating to the conservation of energy and technology absorption. Your Company didn't have any foreign exchange earnings during the year under review.

Directors' Responsibility Statement:

Pursuant to Section 217 (2AA) of the Companies Act, 1956 the Directors to the best of their knowledge and belief confirm that:

- In the preparation of the accounts for the year ended 31st March, 2012, the applicable accounting standards have been followed.

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

- 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; and

- The Directors have prepared the accounts for the financial year ended 31st March 2012 on a "going concern" basis. Auditors:

M/s. Hanumaiah & Co, Chartered Accountants, retires at the ensuing annual general meeting and is eligible for re-appointment.

Acknowledgement:

Your directors wish to place on record their gratitude for the continued support provided by Company's bankers Central Bank of India (Lead Bank), Andhra Bank, Indian Overseas Bank, IDBI Bank Limited, The Federal Bank Limited, Axis Bank Limited, Punjab National Bank and Bank of India. Your Directors look forward to their continued support in the days to come.

Your directors' great fully acknowledge the support and co-operation extended by all the Shareholders, Debenture holders, Customers, Vehicle Dealers and Business associates HDFC Bank Limited, Bajaj Finance Limited and Sundaram Finance Limited and look forward to their continued support in future.

Your Directors also place on record their appreciation for the dedication and commitment displayed by the employees at all levels for posting a satisfactory performance.

By Order of the Board

Sd/- V G K Prasad Managing Director

Place: Vijayawada Date : 31-08-2012


Mar 31, 2010

The directors have pleasure in presenting the 19th Annual Report along with audited accounts of the Company for the year ended 31st March, 2010. The summarised financial results of the Company, are given hereunder:

Financial Results:

(Rs.in Lakhs)

Particulars Year ended Year ended

31.03.2010 31.03.2009

Income from Operations 948.77 911.29

Total Expenditure 151.01 123.69

Interest 264.56 304.56

Profit Before Dep.&Taxes 533.20 483.04

Depreciation 101.92 113.39

Provision for NPA 1.78 3.15

Provision for Currect Tax 174.57 153.84

Provision for Fringe Benifit Tax 0.00 0.72

Provision for Deferred Tax (27.84) (31.16)

Profit after Tax 282.77 243.10

Surplus brought forward 87.03 13.52

General Reserve 14.14 12.15

Reserve Fund 56.55 48.62

Dividend (proposed) 110.57 61.15

Dividend Tax 18.79 10.39

Prior Year Income Tax 25.26 37.28

Surplus Carried to Balance Sheet 144.49 87.03



Dividend:

Your Directors are pleased to recommend a Dividend of 10% (Rs.1.00 per Euity Share) for the Financial Year ended March 31, 2010. The Dividend together with Dividend Tax of Rs.18.78 Lakhs absorbs a Sum of Rs. 129.36 Lakhs (Rupees One Crore Twenty Nine Lakhs Thirty Six Thousand Only).

Corporate Governance:

A report on corporate governance, giving the status of implementation of mandatory and non-mandatory norms as per clause 49 of the listing agreement together with a Certificate from the Statutory Auditors, is attached and forms a part of the Directors Report.

Managements Discussion and Analysis:

Economic Environment:

In spite of the uncertainties in global economic scenario, it seems that major economies world over are emerging from recession slowly but steadily. However, the pace of recovery is far from satisfactory and may take more time to be back on rail.

As far as Indian economy is concerned, the GDP growth was estimated to be around 7%. The signs of recovery are visible from second half of the 2009-2010 and the over all business sentiment is positive. Interest rates have re- mained reasonable in view of various measures taken by the RBI. However, high food prices are cause of concern.

Automotive Sector:

It is imperative to take note of the prospects of the Indian automobile sector, more particularly commercial vehicle segment, as it is directly related to the business of your Company. Among all, the automobile sector is one which bounced back first and has recorded signifi- cant growth, particularly during the second half of 2009- 2010. Commercial vehicles sales have grown by more than 30% and cars & multi utility vehicles by 25%.

Future Outlook:

The retail vehicle finance business has bounced back with the growth in automobile sector and is about to register a significant growth and your Company contin- ues to focus on Retail segment. Competition continues to be intense as more and more players are entering the Vehicle finance segment. To continue this growth and sustain profitability, your company will continue to fo- cus on providing superior service to customers, strive to lower its cost of funds, maintain good asset quality and enhanced operating efficiencies.

Risk Management & Credit Monitoring:

Your Company is proactive in assessing the risk associated with its various Loan products and has evolved a variety of Risk management and monitoring tools while dealing with a wide spctrum of retail customers. The Risk Management policy of the company encompasses various risk tools such as Credit , Operational , Market , Liquidty and Interest rate risk and has put in place appropirate mechanisam to effectively mitigate the risk factors.

Review of Operations:

Your Companys performance for the Year ended March 31, 2010 continues to be encouraging and has registered a growth of 4.11% in its Gross Receipts to Rs.9.49 Crs as against Rs.9.11 Crs and the Net profit increased from Rs.2.43 Crs to Rs.2.83 Crs registering a growth of 16.32% for the corresponding previous year.

Deposits:

Your Company has not mobilised any Public Deposits during the year under review and there are no outstanding Deposits at the end of the year.

Bank Limits:

Your company continues to enjoy Cash Credit Limits with the Federal Bank Limited (Rs.4.00 Crs), ING Vysya Bank Limited (Rs.2.50 Crs), AXIS Bank Limited (Rs.3.00 Crs).

During the year, Andhra Bank has sanctioned cash credit limit of Rs. 15.00 Crs.

Your Company is continuously exploring all options to access low cost funds, by leveraging its strengths, to further expand the operations.

Business Associations/Tie-Ups:

Your Company has been continueing its association with HDFC Bank Limited (Joint Lending Arragement) and Sundaram Finance Limited (Securitisation).

During the year Bujaj Auto Finance Limited has tied up with your Company.

Capital Adequacy:

The Capital to Risk Assets Ratio of your company is 39% as on 31.03.2010, well above the minimum of 12% prescribed by the Reserve Bank of India.

Directors:

In accordance with the provisions of the Companies Act, 1956 and the Articles of Association of the Company, Sri Sunkara Veerabadha Rao and Sri N.Haranath retire by rotation and being eligible offer themselves for reappointment. Your Directors are pleased to place on record their appreciation for the services rendered by them during their tenure as Directors and wish to recommend their reappointment.

Particulars of Employees:

During the year under review, none of the employees of your Company were in receipt of remuneration in excess of the limits prescribed for disclosure as per Section 217 (2A) of the Companies Act, 1956, read with the Companies (Particulars of Employee) Rules, 1975 as amended from time to time.

Information on Conservation of Energy, Technology absorption and Foreign Exchange earnings/out goings as per Section 217 (1) (e) of the Companies act, 1956:

Your Company has no activities relating to the conservation of energy and technology absorption. Your company didnt have any foreign exchange earnings during the year under review. .

Directors Responsibility Statement:

Pursuant to Section 217 (2AA) of the Companies Act, 1956 the Directors to the best of their knowledge and belief confirm that:

- In the preparation of the accounts for the year ended 31st March, 2010, the applicable accounting standards have been followed.

- 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 of the Company for that period.

- 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; and

- The Directors have prepared the accounts for the financial year ended 31st March 2010 on a "going concern" basis.

Auditors:

M/s. Hanumaiah & Co, Chartered Accountants, retire at the ensuing annual general meeting and are eligible for re-appointment.

Acknowledgement:

Your directors greatfully acknowledge the support and co-operation extended by all the shareholders, debenture holders, Customers, Vehicle dealers, bankers and business associates HDFC Bank Limited, Sundaram Finance Limited and Bujaj Auto Finance Limited for their continued support to your company. Your directors look forward to their continued support in the days to come.

Your directors also place on record their appreciation for the dedication and commitment displyaed by the employees at all levels for posting a satisfactory performance.

By order of the Board

Sd/- xxx

(V.G.K. PRASAD)

Managing Director

Place: Vijayawada

Date : 30.08.2010


Mar 31, 2000

The Directors are pleased to present the 9th Annual Report along with the Audited Accounts for the year ended 31st March, 2000.

FINANCIAL RESULTS (Rs.in Lacs)

PARTICULARS 1999-2000 1998-1999

Income from Operations 301.63 278.83

Total Expenditure 24.69 28.92

Interest 99.39 85.13

Profit Before Dep. & Taxes 177.55 164.79

Depreciation 59.29 69.75

Provision for Tax 18.21 9.99

Profit after Tax 100.05 85.04

Profit Available for Appropriation 105.75 90.40

General Reserve 5.01 4.26

Reserve Fund 20.02 17.01

Dividend (proposed) 66.88 57.66

Dividend Tax 7.36 5.77

Surplus Carried to Balance Sheet 6.48 5.70

DIVIDEND

Your Directors have not recommend any Final Dividend except Interim Dividend of 15% already declared on 28.04.2000 (Rs.1.50 per Equity Share) forthe year ended March 31,2000. The Dividend will absorb a Sum of Rs. 74.04 Lakhs(Rupees Seventy Four Lakhs Four Thousand Only) inclusive of Tax on Dividend.

REVIEW OF OPERATIONS

Your Companys performance for the Year ended March 31, 2000 continues to be encouraging and has out performed the industry despite sluggishness in the Commercial Vehicles Sector, in which your Company has high stakes, and even succeeded in improving its performance.

During the year under review, your Company has done ex- tremely well by registering a growth of 8.18% in its Gross Receipts to Rs.301.63 Lakhs as against Rs.278.83 Lakhs and the Net Profit increased from Rs.85.04 Lakhs to Rs.100.05 Lakhs registering a growth rate of 17.65%.

Your Company has disbursed for Hire Purchase and Leasing for an amount of Rs.681 Lakhs during the year under review as against Rs.542 Lakhs during the last year by registering a growth rate of 25.65%.

FUTURE OUTLOOK

Your Company is committed to expand its operations in the Transport Sector which has still the potential of good growth though the industry is facing tough times.

DEPOSITS

Your Companys Deposits stood at Rs.30.21 Lakhs at the end of the year under review and are well within the limits prescribed by the Reserve Bankof India in this connection. Your Directors are glad to state that there exists neither Unclaimed Deposits nor Unpaid Deposits as on the date of Balance Sheet.

BANK LIMITS

Your company continues to enjoy Cash Credit Limits to the tune of Rs.350 Lakhs with the Federal Bank Limited (Rs.150 Lakhs) and Andhra Bank (Rs.200 Lakhs).

Your Company has been proposing to negotiate for enhance- ment of Bank Limits with the Bankers to the Company and also for Fresh Limits from other Banks.

CAPITAL ADEQUACY

The Capital Adequacy Ratio of your Company stood at 44% as on March 31,2000 as against a Minimum of 12% prescribed by the Reserve Bank of India.

DIRECTORS

In accordance with the provisions of the Companies Act, 1956 and the Articles of Association of the Company, Shri.P.Bala Srinivas and Shri.D.Rama Krishna retire by rotation and are being eligible offer themselves for reappointment. Your Direc- tors are pleased to place on record their appreciation for the services rendered by them during theirtenure as Directors and wish to recommend their reappointment.

PARTICULARS OF EMPLOYEES

During the year under review, none of the employees of your Company were in receipt of remuneration in excess of the limits prescribed for disclosure as per Section 217 (2A)ofthe Companies Act, 1956, read with the Companies (Particulars of Employee) Rules, 1975 as amended from time to time.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORP- TION & FOREIGN EXCHANGE EARNINGS/OUTGOINGS

Your Company has no activities relating to the conservation of energy and technology absorption. Your company didnt have any foreign exchange earnings during the year under review.

However, your Company during the year under review has remitted the Dividend on Equity Shares declared for the year 1998-99 amounting to Rs.10,85,587/-in US Dollars tothe Non Resident Indians.

AUDITORS

Shri. K.Hanumaiah, Chartered Accountant, retires at the ensuing Annual General Meeting and is eligible for reappoint- ment.

AUDITORS REPORT

The observations made in the Auditors Report are self explanatory and do not require further clarifications.

ACKNOWLEDGEMENTS

Your Directors wish to place their deep appreciation for the whole hearted and sincere co-operation received from its Bankers, Customers, Deposit holders and Shareholders. Your Directors also wish to thank all the employees for their continued Co-Operation during the year under review.

By order of the Board

for IKF FINANCE LIMITED

Place : Vijayawada, (V.G.K.PRASAD)

Date : 12-08-2000. Managing Director

 
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