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IKF Finance Ltd. Notes to Accounts, IKF Finance Ltd. Company
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Notes to Accounts of IKF Finance Ltd.

Mar 31, 2014

1. Corporate Information

IKF Finance Limited (the company) is a public company domiciled in India and is incorporated under the provisions of the Companies Act, 1956. Its shares are listed on BSE Ltd. (BSE) and Ahamadabad Stock Exchange Ltd. (ASE). However, the Company has applied for delisting of its Equity Shares from the Stock Exchanges and got the In Principle Approvals for delisting from the respective Stock Exchanges. The company is Classified as Asset Financing - Deposit Accepting - Non Banking Finance Company (NBFC-AFC-D) registered with Reserve Bank of India (RBI). However, the Company has surrendered the Deposit Accepting status in March 13, 2014 and as such Reserve Bank of India has reclassified the Company as Asset Financing - Non Deposit Accepting - Non Banking Finance Company (NBFC - AFC) vide its CoR dated May 12, 2014.

2. Basis of Preparation

The financial statements are prepared and presented under the historical cost convention on the accrual basis of accounting and comply with the relevant provisitons of the Companies Act, 1956. The Company follows the directions prescribed by the Reserve Bank of India (RBI) for Non Banking Financial Companies.

The preparation of the financial statements, in confirmity with generally accepted accounting principles, requires the use of estimates and assumptions that affect the reported amount of assets and liabilities as at the balance sheet date, reported amounts of revenues and expenses during the year and disclosure of contingent liabilities as at that date. The estimates and assumptions used in these financial statements are based upon the management''s evaluation of the relevant facts and circumstances as of the date of the financial statements.

3.a Terms / Rights attached to Equity Shares

The company has only one class of equity shares having a par value of Rs. 10/- per share. Each holder of the equity shares is entitled to one vote per share.

b. Preferential Allotment of Equity Shares

The company has issued / alloted 30,00,000 equity shares at a subscription price of Rs.13.00 per equity share (which includes a premium of Rs 3.00 per equity share) on 30th September 2013, consequent to conversion of 30,00,000 Warrants issued on March 31, 2012, being the price higher than the price determined under chapter VII of the Securities Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009 to Promoters for cash. The Company has forfieted 10,00,000 Warrants on failure of the allottee/s in excercising the optionin and as such Rs.32.50 lacs received towards subscreiption to the Warrants was credited to the Securities Premium Account.

4. Nature of Security

The redemption of principal amount of secured redeemable non-convertiable debentures together with interest there on are secured by way of floating charge on the company''s movable Current assets with a Security Cover of 100% in favour of the Debenture Trustee M/s. IDBI Trusteeship Services Limited.

These secured redeemable non-convertiable debentures are redeemable at par in the case of Regular Income Debentures, and with interest in case of Cumulative Debentures in terms of respective Information Memorandum.

Secured redeemable non-convertiable debentures may be bought back (Repurchase) and the Company has the Right to cancel or reissue the same from time to time subject to applicable statutory and /or regulatory requirements, upon the terms and conditions as may be decided by the company and, upon such reissue, the person entitled to the Debentures shall have and shall be deemed always to have had, the same rights and priorities as if the Debentures had never been redeemed.

Credit Rating Agency - Credit Analysis and Research Limited (CARE) has reaffirned the rating of "BBB " assigned to these Non Convertiable Debentures on 27th March 2014

5. Nature of Security

Term Loan from the bank is secured by an exclusive charge by way of hypothecation of Loan Receivables created out of the loan proceeds and Cash Collateral by way of Fixed Deposits besides property/ies collateral of the Directors and the personal guarantee of Promoter Directors.

Nature of security

Term Loans from Financial Institutions / NBFCs are secured by an exclusive charge by way of hypothecation of specific Loan Receivables and personal guarantee of Directors.

6. Unsecured loan - Long Term Borrowings

A. Security Deposits

Security Deposits consist of deposits received from various individual borrowers to secure the repayment of loans arranged by the company through its business associates besides deposits received from Company''s franchisees / Marketing Associates.

The primary objective behind the collection of security deposits is to cover up losses, if any, which may accrue in respect of the loan transaction and aimed to minimize the Company''s liability to the extent possible.

Security Deposits collected from the borrowers are free of interest and the same will be either adjusted towards the installments of the loan availed or refunded to the borrower in case all the loan installments are paid by the borrower

B. Chit Liabilities

The company has subscribed to Chit Funds as an Investment option, which derives higher spread, and also as a source for mobilization of funds, in case of need, and has drawn / availed the bid amount which is to be payable over the term of Chit.

Nature of security Cash Credit Limits

Cash credit limits from banks are secured by way of hypothecation of loan receivables, book debts and other current assets, mortgage of company''s office premises, personal properties of directors, their relatives and associate company/ies besides their personal guarantee in favour of the Lead Bank - Central Bank of India.

7. Contingent libilities

(Rs. in Lacs)

Particulars 31-03-2014 31-03-2013

a. Channel Business 250.95 341.20

b. Securitization / Direct Assignement - 168.71

Total 250.95 509.91

The Company has extended its Corporate Guarantee to HDFC Bank Limited, Bajaj Finance Limited and in connection with the Channel Business (Joint Lending Arrangement) and Securitization. The oustanding Liability under the above is net of Security Deposits accepted from the beneficiaries.

8. Utilization of money raised through preferential issue of equity shares

The money raised through the Preferential allotment of 30,00,000 Equity Shares, consequent to conversion of Warrants, was utilised to meet the working capital requirements of the Company.

The credit enhancement and liquidity support were provided in the form of bank deposits for Rs.1052.30 lakhs and the rest by way of Overcollateral and the Company continues to collect and service the receivables in respect of the securitized assets.

9. There are no amounts due to Small Scale Industries in terms of "The Micro, Small and Medium Enterprises Development Act, 2006.


Mar 31, 2013

1. Corporate Information

IKF Finance Limited (the company) is a public company domiciled in India and is incorporated under the provisions of the Companies Act, 1956. Its shares are listed on Bombay Stock Exchange Ltd. (BSE). The company is Classified as Asset Financing - Deposit Accepting - Non Banking Finance Company (NBFC-AFC-D) registered with Reserve Bank of India (RBI).

2. Basis of Preparation

The financial statements are prepared and presented under the historical cost convention on the accrual basis of accounting and comply with the relevant provisitons of the Companies Act, 1956. The Company follows the directions prescribed by the Reserve Bank of India (RBI) for Non Banking Financial Companies.

The preparation of the financial statements, in confirmity with generally accepted accounting principles, requires the use of estimates and assumptions that affect the reported amount of assets and liabilities as at the balance sheet date, reported amounts of revenues and expenses during the year and disclosure of contingent liabilities as at that date. The estimates and assumptions used in these financial statements are based upon the management''s evaluation of the relevant facts and circumstances as of the date of the financial statements.

3. Related Party Disclosure

Related Party disclosures, as required by Accounting Standard -18 - ''Related Party Disclosures'' issued by ICAI are given below;

(i) Associates

IKF Financial Services (P) Limited IKF Infratech (P) Limited

(ii) Key Managerial Personnel

Mr. V G K Prasad. Managing Director Mrs.V Indira Devi, Whole Time Director Mrs.K Vasumathi Devi, Executive Director

4. Contingent libilities

(Rs. in Lacs) Particulars 31-03-2013 31-03-2012

a. Channel Business 341.20 715.50

b. Securitization/ Direct Assignement 168.71 168.71

Total 50991 884 21

The Company has extended its Corporate Guarantee to HDFC Bank Limited, Bajaj Finance Limited and in connection with the Channel Business (Joint Lending Arrangement) and Securitization. The oustanding Liability under the above is net of Security Deposits accepted from the beneficiaries.

5. Utilization of money raised through preferential issue of equity shares and warrants

The money raised through the Preferential Issue of 1,05,10,000 Equity Shares was utilised to meet the working capital requirements of the Company.

6. Securitisation / Assignment

The details of securitised assets outstanding as on 31.03.2013 as per books of the Special Purpose Vehcile (SPV) sponsored by the company are given below:

The credit enhancement and liquidity support were provided in the form of bank deposits for Rs.495 lakhs and the Company continues to collect and service the receivables in respect of the securitized assets.

The Credit Rating Agency - CARE has assigned "A " Rating to the Security Pool.

7. There are no amounts due to Small Scale Industries in terms of "The Micro, Small and Medium Enterprises Development Act, 2006.


Mar 31, 2012

1. Corporate Information

IKF Finance Limited (the company) is a public company domiciled in India and is incorporated under the provisions of the Companies Act, 1956. Its shares are listed on Bombay Stock Exchange Ltd. (BSE). The company is a Deposit Accepting Non Banking Finance Company (NBFC) registered with Reserve Bank of India (RBI). The company operates in India.

2. Basis of Preparation

The financial statements are prepared and presented under the historical cost convention on the accrual basis of accounting and comply with the relevant provisions of the Companies Act, 1956. The Company follows the directions prescribed by the Reserve Bank of India (RBI) for Non Banking Financial Companies.

The preparation of the financial statements, in confirmity with generally accepted accounting principles, requires the use of estimates and assumptions that affect the reported amount of assets and liabilities as at the balance sheet date, reported amounts of revenues and expenses during the year and disclosure of contingent liabilities as at that date. The estimates and assumptions used in these financial statements are based upon the management's evaluation of the relevant facts and circumstances as of the date of the financial statements.

3.1 Terms/Rights attached to Equity Shares

The company has only one class of equity shares having a par value of Rs. 10/- per share. Each holder of the equity shares is entitled to one vote per share. The company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to approval of the shareholders in the ensusing Annual General Meeting.

3.2 Shares reserved for issue under option

Preferential issue of Share Warrants:

On 31st March, 2012 the company has issued/allotted 40,00,000 warrants to the following Promoters & Promoter Group at a subscription price of Rs. 13/- for each warrant conferring an option to the holder to subscribe to one equity share per warrant at the exercise price of Rs. 13/- per warrant being a price higher than the price determined as per Regulation 76(1) Chapter VII of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009. The warrants are convertible within a period not exceeding 18 months from the date of allotment.

3.3 Preferential Allotment of Equity Shares :

On 31st March 2012, the company has issued/alloted 63,60,000 equity shares to both Promoters and Non Promoters for cash at a subscription price of Rs. 13.00 per equity share (which includes a premium of Rs 3.00 per equity share) being the price higher than the price determined under chapter VII of the Securities Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009.

4.1 Secured loans - Long Term Borrowings

A. Privately placed Secured Redeemable Non Convertible Debentures of (NCDs) Rs. 100/- each - Unquoted

Nature of Security

The redemption of principal amount of secured redeemable non-convertiable debentures together with interest there on are secured by way of floating charge on the company's movable Current assets with a Security Cover of 100% in favour of the Debenture Trustee M/s. IDBI Trusteeship Services Limited.

These secured redeemable non-convertiable debentures are redeemable at par in the case of Regular Income Debentures, and with interest in case of Cumulative Debentures in terms of respective Information Memorandum.

Secured redeemable non-convertiable debentures may be bought back (Repurchase) and the Company has the Right to cancel or reissue the same from time to time subject to applicable statutory and/or regulatory requirements, upon the terms and conditions as may be decided by the company and, upon such reissue, the person entitled to the Debentures shall have and shall be deemed always to have had, the same rights and priorities as if the Debentures had never been redeemed. The Company has redeemed Debentures to the tune of Rs. 105.28 Lakhs and has the power to re-issue the same in terms of respective Information Memorandum.

B. Term loan from Bank

Nature of Security

Term Loan from the bank is secured by an exclusive charge by way of hypothecation of Loan Receivables created out of the loan and property/ies of the Directors and their relatives besides the personal guarantee of Promoter Directors.

4.2 Unsecured loan - Long Term Borrowings

A. Security Deposits

Security Deposits consist of deposits received from various individual borrowers to secure the repayment of loans arranged by the company through its business associates besides deposits received from Company's franchisees/Marketing Associates.

The primary objective behind the collection of security deposits is to cover up losses, if any, which may accrue in respect of the loan transaction and aimed to minimize the Company's liability to the extent possible.

Security Deposits collected from the borrowers are free of interest and the same will be either adjusted towards the installments of the loan availed or refunded to the borrower in case all the loan installments are paid by the borrower

B. Chit Liabilities

The company has subscribed to Chit Funds as an Investment option, which derives higher spread, and also as a source for mobilization of funds, in case of need, and has drawn/availed the bid amount which is to be payable over the term of Chit.

5. Related Party Disclosure

Related Party disclosures, as required by Accounting Standard-18- 'Related Party Disclosures' issued by ICAI are given below;

(i) Associates

IKF Financial Services (P) Limited IKF Infratech (P) Limited

(iii) Key Managerial Personnel

Mr. V G K Prasad, Managing Director Mrs. V Indira Devi, Whole Time Director Mrs. K Vasumathi Devi, Executive Director

(iv) Relatives of Key Managerial Personnel

Mr. V G K Prasad Mr. V Raghuram Son

Mrs. D Vasantha Lakshmi Daughter

Mrs. Durga Rani Chunduri Sister

Mrs. Kasturi Athota Sister

6. Contingent liabilities

(Rs. in Lacs)

Particulars 31-03-2012 31-03-2011 a. Channel Business 715.50 1,008.82

b. Securitization/Direct Assignment 168.71 0.00

Total 884.21 1,008.82

The Company has extended its Corporate Guarantee to HDFC Bank Limited, Bajaj Finance Limited and in connection with the Channel Business (Joint Lending Arrangement) and Securitization. The outstanding Liability under the above is net of Security Deposits accepted from the beneficiaries.

7. Utilization of money raised through preferential issue of equity shares and warrants

The money raised through the Preferential Issue of 63,60,000 Equity Shares and 40,00,000 Warrants (25% of the issue price) was utilised to meet the working capital requirements of the Company.

8. Consequent to the re-assessment and reduction in the estimated useful life of certain items of fixed assets falling in the Category of furniture and fixtures and office equipment, the net depreciation charge for the year is higher by Rs. 22.94 Lakhs with a corresponding decrease in the net block of the fixed assets.

9. There are no amounts due to Small Scale Industries in terms of "The Micro, Small and Medium Enterprises Development Act, 2006.


Mar 31, 2010

1.0 BALANCE SHEET:

1.1 Unsecured Loans:

The amount of Rs.428.78 lakhs held under the head "Security Deposits" comprises the Security Deposit received from various borrowers viz creditors under Asset Management tie-up with the Banks and other institutions, lessees etc.

c) The contingent rents recognised for the period are Nil.

d) The lessor mainly undertakes the lease finance to Trucks, Three Wheelers & Tractors etc. with the Transporters, Contractors engaged in their line of activity.

e) All the initial direct costs incurred in connection with the asset till the stage of it being put to use be capitalised to the cost of the Asset.

1.1.2 Other debtors include an amount of Rs.37.59 lakhs receivable inconnection with the asset portfolio activities.

2.0 General:

2.1 Segment Reporting:

The Company is engaged primarily in the business of financing and accordingly there are no separate reportable segments as per Accounting Standard - AS 17 - Segment Reporting issued by ICA1.

2.2 Related Party Disclosures:

Related party disclosures, as required by Accounting Standard - AS 18 - Related Party Disclosures issued by ICAI are given below:

a) Key Management Personnel:

Sri V.G.K.Prasad, Managing Director

Smt V.Indira Devi, Whole Time Director

Smt K. Vasumathi Devi, Excutive Director

Relatives of key Management Personnel - V Raghu Ram, S/o VGK Prasad

2.3 The Company does not owe any amount to small scale industries.

2.4 The Company has extended its corporate guarantee to (1) HDFC Bank Limited and (2) Sundaram Finance Limited, in connection with the limits sanction under Asset Portfolio Management (Joint Lending Arrangement) and Securitisation. Net outstanding contigent liability under this tie-ups after deducting the security Deposit accepted from the beneficieries is at Rs.2248.60 lakhs.


Mar 31, 2000

1. The Cash Credit Limits with the Federal Bank Limited and Andhra Bank are secured by the Hire purchase and Lease Agreements entered by the company and mortgage of personal properties of Directors and their relatives and the personal guarantee of Directors.

2. Investment in Government Securities are valued at cost to the Company.

3. In the opinion of the Board of Directors, Current Assets, Loans and Advances have a value on realisation in the ordinary course of business at least equal to the amount at which they are stated.

4. The previous year figures are regrouped wherever necessary.

 
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