Mar 31, 2018
To The Shareholders of IL&FS Investment Managers Limited
The Directors have pleasure in presenting for your consideration and approval the Thirty-second Annual Report with the Audited Financials of the Company for the year ended March 31, 2018
FINANCIAL ACHIEVEMENTS AND DIVIDEND
For the year ended March 31, 2018 (Rs. mn) |
For the year ended March 31, 2017 (Rs.mn) |
For the year ended March 31, 2018 (Rs. mn) |
For the year ended March 31, 2017 (Rs. mn) |
|
Standalone |
Standalone |
Consolidated |
Consolidated |
|
Total Income |
546.50 |
688.84 |
1,225.58 |
1,151.72 |
Profit before Taxation |
95.32 |
281.28 |
213.93 |
138.81 |
Provision for Taxation |
55.60 |
41.58 |
119.43 |
70.32 |
Net Profit after Taxation |
39.72 |
239.70 |
65.62* |
61.26* |
Dividend (inclusive of dividend tax) |
197.05 |
195.25 |
197.05 |
195.25 |
* after Minority Interest
The Company does not propose to transfer any amount to the General Reserve
DIVIDEND
During the year, your Company achieved a Net Profit after tax of Rs. 39.72 mn. Your Directors recommend a Dividend of Rs. 0.60 per share of the Face Value of Rs. 2/- each. The total amount of Dividend is Rs. 197.05 mn (inclusive of dividend tax of Rs. 8.63 mn)
REVIEW OF OPERATIONS
The performance of the global economy has been encouraging, with global GDP growth picking up from 3.2% in CY2016 to 3.7% in CY2017. The growth is expected to further accelerate to 3.9% in CY2018. Increased demand driven by higher capital expenditure and accelerated manufacturing activity has led to a robust growth in global trade. However, protectionist measures announced by the US and retaliatory actions could exacerbate trade wars and undermine global growth, trade and welfare. Volatility in financial markets stemming mainly from the uncertainty over the pace of normalisation of monetary policy in Advanced Economies could also pose a challenge to the Emerging Market Economies
In India, real GDP growth is projected to improve from 6.6% in FY2018 to 7.4% in FY2019. The key factors which are expected to drive growth in FY2019 are robust implementation of GST, recapitalization of public sector banks and resolution of distressed assets under Insolvency and Bankruptcy Code. However, uncertainty over the pace and timing of monetary policy normalisation by the advanced economies, protectionist tendencies and fears of a global trade war pose significant risks to growth
The Private Equity (PE) environment in India was favourable during FY2018. Fund raising during FY2018 increased by 41% over the previous year to touch US$ 5.43 billion. This growth is in line with global trends with Emerging Market Private Equity funds having raised US$ 61 billion in CY2017 vis-a-vis US$ 48 billion raised during CY2016
On the investments front, the value of PE transactions grew 31% in FY2018, with a total investment of US$ 20.2 billion. On the other hand, transaction activity went down by 35% to 1,018 deals in FY2018, indicating a trend towards higher transaction ticket sizes. Likewise, exit activity (217 exits undertaken) reduced in number terms during FY2018 compared to the previous year (309 exits undertaken), while exit value (US$ 9.69 billion) increased by ~13% over the previous year
On a sectoral basis, investors have showcased a strong bias towards investing into operating assets which generate a running yield. Opportunities across operating road and renewable power projects on the infrastructure side and towards commercial real estate have witnessed a strong deal pipeline. The success of the Toll-Operate-Transfer model of auctioning Government owned road projects is a case in point. Likewise, the stressed asset space has emerged as a key area of investor interest. Products centered on these themes are likely to deliver success for asset managers in India
During the year, IIML undertook investments across a variety of sectors/businesses like neonatal healthcare, medical devices and diagnostics, e-governance, agri-technology and education. IIML also undertook divestments aggregating Rs. 9.42 billion during FY2018
On the debt side, IIML, through its subsidiary which operates in the Infrastructure Debt Fund (IDF) space, has now invested across 14 investments. Given the healthy deal flow, IDF has, during FY2018, raised an additional Rs. 1.4 billion from provident and retirement funds, thereby taking its AUM to ~Rs. 18 billion
IIML is also working with Lone Star, a US based global private equity firm, to invest in distressed assets in the roads and thermal power space in India. IIML had also been working on establishing and managing an Infrastructure Investment Trust (InvIT). However, certain changes made to tax laws during FY2018 adversely impacted InvITs. Consequently, despite having built a reasonable demand for the product, the Fund raise efforts had to be suspended
During FY2018, IIML achieved significant progress in two of its new initiatives. First, IIML signed a joint venture agreement with the Islamic Corporation for the Development of the Private Sector (ICD) for establishing a US$ 1 billion fund focussed on providing Shariah Compliant infrastructure debt finance to projects in Africa. Second, IIML entered into a Joint Venture Partnership with the Government of Andhra Pradesh to manage an Urban Infrastructure Fund, which would focus on investing into smart cities, sewerage and water supply projects and other such urban infrastructure projects in the State. These new initiatives would help IIML build sustainable platforms and thereby accord long term revenue visibility for the Company. Fund raise efforts in these initiatives are progressing at a satisfactory pace and the outcomes are expected to add to the revenue line during the course of FY2019
IIMLâs fee earning assets under management (AUM) in relation to existing Funds has reduced on account of divestments undertaken during the course of FY2018. Furthermore, certain existing Funds have attained end of Fund Term, consequently, fee levels have reduced from the existing Funds. This reduction has been partly offset by cost reductions, effected largely by way of manpower rationalization and also by way of more robust financials posted by IIML subsidiaries which manage the Infrastructure Debt Fund and the Fund with the Government of Andhra Pradesh
On a consolidated basis, the Income from Operations of the Company for FY2018 was Rs. 1,124.93 mn, Income from Investment and Other Income was Rs. 100.65 mn. Accordingly, the Total Income on a consolidated basis for FY2018 was Rs. 1,225.58 mn. The resultant Profit after Tax on a consolidated basis for FY2018 was Rs. 65.62 mn
On a standalone basis, the Total Income of the Company for FY2018 was Rs. 546.50 mn and the Total Expenses for the year were Rs. 451.18 mn and the resultant Profit after Tax for FY2018 was Rs. 39.72 mn
There have been no material changes and commitments affecting the financial position of the Company, which have occurred from the end of the financial year for the Company to which the financial statement relates and till the date of the Directorsâ Report
SUBSIDIARIES AND JOINT VENTURES
Your Company has Six Domestic Subsidiaries viz. IL&FS Asian Infrastructure Managers Limited, IL&FS Urban Infrastructure Managers Limited, IIML Asset Advisors Limited, Andhra Pradesh Urban Infrastructure Asset Management Limited, IL&FS Infra Asset Management Limited and IL&FS AMC Trustee Limited and two Offshore Subsidiaries viz. IL&FS Investment Advisors LLC, Mauritius and IIML Fund Managers (Singapore) Pte Ltd, Singapore
Your Company also has two Joint Venture Companies viz. Standard Chartered IL&FS Management (Singapore) Pte Limited, Singapore and IL&FS Milestone Realty Advisors Private Limited
As per Section 129(3) of the Companies Act, 2013 and Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements), Regulations, 2015 [LODR] the consolidated financial statements of the Company with its Subsidiaries forms part of the Annual Report
The copies of the Audited Annual Accounts and other related documents of the Companyâs Subsidiaries can be sought by any shareholder of the Company or its Subsidiaries on making a written request to the Company Secretary in this regard. The Annual Accounts of the Subsidiary Companies are also available for inspection by any shareholder at the Companyâs Registered Office
A separate statement pursuant to Section 129(3) of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014 containing the salient features of the Financial Statements of the Companyâs Subsidiaries and Joint Ventures in Form AOC 1 is given as an Annexure to the Standalone Financial Statements
Performance and Financial position of the Subsidiaries and the Joint Venture Companies :
IL&FS Asian Infrastructure Managers Limited :
IL&FS Asian Infrastructure Managers Limited (IAIML) had been set up to manage the Pan Asia Project Development Fund, India (the Fund). The Fund, having a corpus of Rs. 1,125 mn, invested across seven investments. Six of these investments have been divested and the balance one investment is partially divested. The team at IAIML is working actively to fully divest from the residual investment of the Fund
The Total Income for FY2018 was Rs. 3.90 mn. The Total Expenses of IAIML for the year were Rs. 0.69 mn and the resultant Profit after Tax for the year was Rs. 2.49 mn
During the year, the Company acquired 49% equity stake in IAIML from ORIX Corporation, Japan. Accordingly, IAIML became a wholly owned subsidiary of the Company
IL&FS Urban Infrastructure Managers Limited :
IL&FS Urban Infrastructure Managers Limited (IUIML) functions as the Asset Manager for the Pooled Municipal Debt Obligations (PMDO) Facility. The objective of the PMDO Facility is to provide long tenure term loans to meet the debt requirements of urban infrastructure projects across cities in India. The Companyâs role as an asset manager is to identify and appraise the eligible projects and obtain sanctions from the lenders and thereafter facilitate the borrowers to seek disbursement from the lenders, monitor and administer the project assets until entire repayment of the loan
The amount outstanding under the PMDO Facility as on March 31, 2018 was at Rs. 13.84 bn
The Total Income for FY2018 was Rs. 101.75 mn inclusive of Other Income of Rs. 12.05 mn. The Total Expenses of IUIML for the year were Rs. 107.73 mn and the resultant loss net of taxes for the year was Rs. 12.77 mn
IIML Asset Advisors Limited :
IIML Asset Advisors Limited (IAAL) acts as India Advisor to two Offshore Real Estate funds. It was also to act as the Manager for a road sector infrastructure investment trust (InvIT) being raised by IL&FS Transportation Networks Limited
The Total Income of IAAL for FY2018 was Rs. 57.07 mn inclusive of Income from Investments and Other Income of Rs. 11.12 mn. The Total Expenses of IAAL for the year were Rs. 39.67 mn and the resultant Profit after Tax for the year was Rs. 12.56 mn
IL&FS Investment Advisors LLC :
IL&FS Investment Advisors LLC, Mauritius (IIAL) acts as the Investment Manager to IL&FS India Realty Fund LLC, IL&FS India Realty Fund II LLC, Tara India Fund III LLC, K2 Property Limited and Saffron India Real Estate Fund
The Total Income of IIAL for FY2018 was US$ 7.39 mn. The Total Expenses of IIAL for the year were US$ 7.80 mn and the resultant loss for the year was US$ 0.41 mn
IIML Fund Managers (Singapore) Pte Ltd :
IIML Fund Managers (Singapore) Pte Ltd (IFMPL) was incorporated for the purposes of managing funds from Singapore. The Company is currently acting as a Manager to a Fund and as an Advisor to another Fund
The Total Income of IFMPL for FY2018 was US$ 0.50 mn. The Total Expenses of IFMPL for the year were US$ 0.34 mn and the resultant profit for the year was US$ 0.16 mn
Andhra Pradesh Urban Infrastructure Asset Management Limited :
The Company has set up a subsidiary namely, âAndhra Pradesh Urban Infrastructure Asset Management Limitedâ (APUIAML) along with the Government of Andhra Pradesh. The Company and the Government of Andhra Pradesh hold 51% : 49% equity stake, respectively in APUIAML
APUIAML has been formed with an objective of acting as the Fund Manager for the Andhra Pradesh Urban Development Fund (APUDF). APUDF has been registered with SEBI as an Alternative Investment Category - II Fund
APUDF had been created with the objective to finance the Urban Local Bodies in the State of Andhra Pradesh. APUIAML will also be involved in integrated urban infrastructure project development and program management for the Urban Local Bodies and provide end to end solutions to them
APUIAML will help the State Government of Andhra Pradesh to manage APUDF by mobilizing resources from different sources like banks and financial institutions, including private sector arms of multilateral and bilateral agencies and by leveraging Government and other financial assistance. These funds would be deployed in the urban areas on various infrastructure projects including public private partnership projects
APUIAML Projects to the extent of Rs. 205,000 mn are under development of which projects of about Rs. 20,010 mn are in the tendering stage
The Total Income for FY2018 was Rs. 182 mn inclusive of Other Income of Rs. 9 mn. The Total Expenses for the year were Rs. 131 mn and the resultant Profit after Tax for the year was Rs. 37 mn
IL&FS Infra Asset Management Limited :
IL&FS Infra Asset Management Limited (IIAML) is the asset manager of the IL&FS Mutual Fund which is an Infrastructure Debt Fund (IDF) as per SEBI Mutual Fund Regulations
The IDF has closed ended schemes with a commitment of Rs. 14,650 mn and Rs. 1,725 mn is yet to be drawn down as of March 31, 2018. The Fund has made 14 investments as on March 31, 2018 and AUM as of March 31, 2018 was Rs. 18,175 mn
The Total Income for FY2018 was Rs. 211.37 mn inclusive of Other Income of Rs. 17.04 mn. The Total Expenses for the year were Rs. 97.91 mn and the resultant Profit After Tax for the year was Rs. 80.53 mn
IL&FS AMC Trustee Limited :
IL&FS AMC Trustee Limited (IATL) acts as the Trustee of the IDF
The Total Income for FY2018 was Rs. 1.66 mn inclusive of Other Income of Rs. 0.05 mn. The Total Expenses for the year were Rs. 1.57 mn and the resultant Profit After Tax for the year was Rs. 0.09 mn
Standard Chartered IL&FS Management (Singapore) Pte Limited :
Standard Chartered IL&FS Management (Singapore) Pte Limited (SCIMPL), is a 50:50 Joint Venture Company established with the Standard Chartered Bank to manage the Standard Chartered IL&FS Asia Infrastructure Growth Fund. The Manager is playing an active role in managing and monitoring the investments made by the Fund
The Total Income of SCIMPL for FY2018 was US$ 1.76 mn. The Total Expenses of SCIMPL for the year were US$ 0.82 mn and the resultant Profit after Tax for the year was US$ 0.82 mn
IL&FS Milestone Realty Advisors Private Limited :
IL&FS Milestone Realty Advisors Private Limited (IMRAPL), is a Joint Venture (JV) Company established with the objective of raising funds that would invest in income yielding assets. Since inception, the JV raised three funds and the Company has been able to successfully divest from all the investments of these three funds
The Total Income of IMRAPL for FY2018 was Rs. 1.14 mn inclusive of Income from Investments and Other Income of Rs. 1.14 mn. The Total Expenses of IMRAPL for the year were Rs. 2.18 mn and the resultant loss for the year was Rs. 1.04 mn
FUTURE OUTLOOK
The pace of economic activity is expected to accelerate in India in FY2019. This would be driven by revival in investment activity within the country and the improvement in global demand. Additionally, the long-term growth potential of the country is expected to be reinforced by various structural reforms introduced in the recent past such as the launch of the Good and Services Tax and consequently, the GDP growth is expected to strengthen from 6.6% in FY2018 to 7.4% in FY2019. On the downside, the deterioration in public finances could crowd out private financing and investment. Furthermore, rising trade protectionism and financial market volatility could derail the ongoing global recovery. In order to mitigate these risks, the focus of policy action needs to be on strengthening macroeconomic fundamentals, deleveraging stressed corporates and on rebuilding of bank balance sheets
In order to capture the opportunities which arise from a favorable outlook, IIML has been working on various new initiatives. Initiatives like the joint ventures with ICD and that with Government of Andhra Pradesh provide a platform for generating long term sustainable revenue streams for the Company. Other initiatives like the one with Lone Star for buying out stressed assets would provide incremental one-time income
Furthermore, while the primary focus of the teams managing the existing infrastructure and real estate funds will continue to divest from existing investments, IIML would also begin efforts to launching new products in these two verticals during FY2019. Likewise, the Private Equity Fund managed by IIML, which is currently in the investment stage, would attain full deployment in the next 6-9 months. IIML will therefore also focus on leveraging the investment experience in this space to develop a potentially larger sized follow-on Fund during the course of FY2019. Similarly, the Infrastructure Debt Fund is also expected to add to its AUM during FY2019 by way of launch of newer series/ rounds of capital raise from a diverse set of investors
The above initiatives are targeted to generate a higher revenue base for the Company. However, as is the case with any private equity fund raising, timelines for taking a product to a revenue generation stage are uncertain. It is likely that many of the above mentioned initiatives would only get to a revenue generation stage by the latter part of the current financial year
DIRECTORS & KEY MANAGERIAL PERSONNEL
Dr Archana Hingorani resigned as the Chief Executive Officer & Executive Director with effect from April 30, 2017; Mr Milind Patel resigned as a Non-Executive Director with effect from March 31, 2018 and Mr Krishna Kumar was appointed as the Chief Executive Officer, in the capacity of a Key Managerial Personnel of the Company with effect from May 29, 2017
Mr Hari Sankaran shall retire by rotation at the ensuing Annual General Meeting and being eligible offers himself for re-appointment There have been no changes in the Directors and Key Managerial Personnel of the Company other than the above
BOARD INDEPENDENCE
The Company has received Declarations of Independence pursuant to Section 149(6) of the Companies Act, 2013 and Regulation 16(1)(b) and Regulation 25(1) of the LODR from all the Independent Directors
NUMBER OF MEETINGS OF THE BOARD
The Board of Directors met four times during the Financial Year ended March 31, 2018. The meetings were held during the year on May 29, 2017, July 31, 2017, November 10, 2017 and January 30, 2018. The details of the composition of the Board Committees and attendance of the Directors at the Board/Committee meetings are given in the Corporate Governance Report
SELECTION CRITERIA FOR APPOINTMENT OF DIRECTORS
The Board has framed a selection criteria for determining the necessary qualifications and attributes for appointment of Directors and also to ensure Board diversity. The details of the same are provided in the Corporate Governance Report
BOARD EVALUATION
Pursuant to the provisions of the Companies Act, 2013 and the LODR, the Board has carried out an annual performance evaluation of the Board and Committees thereof. The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report
DIRECTORSâ RESPONSIBILITY STATEMENT
To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statements in terms of Section 134(3)(c) of the Companies Act, 2013 :
(a) in the preparation of the Annual Accounts for the year ended March 31, 2018, the applicable Accounting Standards have been followed along with proper explanations relating to material departures, if any;
(b) that such accounting policies as mentioned in Note 1 of the Notes to the Annual Accounts have been selected and applied consistently and judgments and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of March 31, 2018 and of the Profit of the Company for the year ended on that date;
(c) proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
(d) that the Annual Accounts are prepared on a going concern basis;
(e) that proper internal financial controls were in place and that the internal financial controls were adequate and were operating effectively; and
(f) that proper systems were devised to ensure compliance with the provisions of all applicable laws and such systems were adequate and operating effectively
RISK MANAGEMENT & INTERNAL CONTROL SYSTEMS
Risk Management forms an integral part of the business of the Company. The Company has a Risk Management Framework, which not only ensures timely identification of risks, analysis of the reasons for such risk, assessment of its materiality, assessment of its impact but also adequate risk mitigation processes. The Risk Management Framework encompasses all areas of the Companyâs business and the Funds under its management. The Risk Management Framework ensures that all risks which could potentially threaten the existence of the Company are identified and risk mitigation steps identified for them
The Company has an adequate system of internal controls commensurate with the nature of its business and complexity of its operations to ensure accuracy of accounting records, compliance with all laws and regulations and compliance with all rules, processes and guidelines prescribed by the management
An extensive internal audit is carried out by an independent firm of Chartered Accountants. Post audit reviews are also carried out to ensure follow up on the observations made. The scope of the internal audit is determined by the Audit Committee and the Internal Audit Reports are reviewed by the Audit Committee on a regular basis
RELATED PARTY TRANSACTIONS
All Related Party Transactions that were entered into during the Financial Year were on an armâs length basis and were in the ordinary course of business. There are no materially significant Related Party Transactions made by the Company with Promoters, Directors, Key Managerial Personnel or other designated persons which may have a potential conflict with the interest of the Company at large. No new Material Related Party Transactions were entered during the year by your Company. Accordingly, the disclosure of Related Party Transactions as required under Section 134(3) of the Companies Act, 2013 in Form AOC 2 is not applicable
The disclosure of transactions with Related Parties is set out in Note No. 27 of the Standalone Financial Statements, forming part of the Annual Report
The Company has developed a Related Party Transactions Framework for the purpose of identification and approval of such transactions. The Policy on Related Party Transactions as approved by the Board has been uploaded on the Companyâs website and is available at the link http://www.iimlindia.com/Policies.aspx
PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS
Details of the Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in Note No. 27 of the Standalone Financial Statements
KEY MANAGERIAL PERSONNEL
Pursuant to Section 203 of the Companies Act, 2013, the Company has designated Mr Krishnakumar Gangadharan, Chief Executive Officer, Mr Manoj Borkar, Chief Financial Officer and Mr Sanjay Mitra, Company Secretary as the Key Managerial Personnel of the Company
PARTICULARS OF EMPLOYEES
The particulars of the employees as required under Section 197(12) of the Companies Act, 2013 read with Rule 5(1) and Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 forms part of the Directorsâ Report for the year ended March 31, 2018 and are annexed as Annexure 1 and Annexure 2, respectively
DETAILS OF EMPLOYEE STOCK OPTION PLANS
The Shareholders of the Company had approved the Employee Stock Option Scheme 2003 (âESOP 2003â) and the Employee Stock Option Scheme 2004 (âESOP 2004â) for granting Options to the Directors and Employees of the Company and the Employee Stock Option Scheme 2006 (âESOP 2006â) for granting Options to the Directors and Employees of the Company and of the Holding and Subsidiary Companies of the Company
During FY2018, the Nomination & Remuneration Committee of the Company did not grant any Options under the above schemes. Further, please note that there are no options vested/exercised/lapsed during FY2018
The number of Options available for Grant in future under ESOP 2003, ESOP 2004 and ESOP 2006 are as follows :
ESOP 2003 - 37,815 Options
ESOP 2004 - 130,928 Options
ESOP 2006 - 1,935,000 Options
All the options granted till date under ESOP 2003, ESOP 2004 and ESOP 2006 have either vested or lapsed on or before March 31, 2018 and accordingly there is no employee compensation cost for the year ended March 31, 2018
The Auditorsâ Report for review of ESOP 2003, ESOP 2004 and ESOP 2006 is annexed as Annexure 3
REMUNERATION POLICY
The Board has, on the recommendation of the Nomination & Remuneration Committee framed a policy for selection and appointment of Directors, Senior Management and their remuneration. The remuneration paid to the Directors and the Senior Management is as per the Managerial Remuneration Policy of the Company. Brief details of the Managerial Remuneration Policy are provided in the Corporate Governance Report
POLICY FOR PREVENTION OF SEXUAL HARASSMENT AT WORKPLACE
The Company has always been committed to provide a safe and dignified work environment for its employees which is free of discrimination, intimidation and abuse. The Company has adopted a Policy for Prevention of Sexual Harassment of Women at Workplace under the provisions of The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. The objective of this policy is to provide protection against sexual harassment of women at workplace and for redressal of complaints of any such harassment. The Company has also constituted an Internal Complaints Committee (ICC) to redress the complaints received under this policy. During the year, no complaints were received by the ICC
STATUTORY AUDITORS
M/s B S R & Associates LLP, Chartered Accountants, were appointed as the Statutory Auditors of the Company for a term of five consecutive years at the 31st Annual General Meeting held on September 6, 2017. They have confirmed that they are not disqualified from continuing as Auditors of the Company
SECRETARIAL AUDIT
The Company has appointed M/s Mehta & Mehta, a firm of Company Secretaries in Practice to undertake the Secretarial Audit of the Company pursuant to the provisions of Section 204 of the Companies Act, 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. The Secretarial Audit Report for the Financial Year ended March 31, 2018 is annexed herewith as Annexure 4
QUALIFICATIONS IN THE AUDITORSâ REPORT
There are no qualifications, reservations or adverse remarks or disclaimers made by M/s B S R & Associates LLP, in their Statutory Audit report and by M/s Mehta & Mehta, Company Secretaries in Practice, in their Secretarial Audit Report. The Statutory Auditors have not reported any incident of fraud to the Audit Committee of the Company in the year under review
INCREASE IN SHARE CAPITAL
No new shares were allotted during the year and there has been no change in the share capital of the Company
SECRETARIAL STANDARDS
The Directors state that applicable Secretarial Standards, i.e. SS-1 and SS-2, relating to âMeetings of the Board of Directorsâ and âGeneral Meetingsâ, respectively, have been duly followed by the Company during FY2018
CORPORATE GOVERNANCE
Pursuant to Regulation 34(3) and 53(f) of the LODR, Related Party Disclosures, Management Discussion and Analysis, Disclosure of Accounting treatment, Report on Corporate Governance along with the Auditorsâ Certificate on compliance with the Corporate Governance requirements have been included in this Annual Report as separate sections
CORPORATE SOCIAL RESPONSIBILITY
The Company has adopted a Corporate Social Responsibility (CSR) Policy, which aims at nurturing socio-economic development schemes for capacity building, livelihood creation, quality education, empowerment of people, etc., with the primary objective of ensuring that the benefits reach the targeted beneficiaries. The approach of the Company for implementation of the CSR activities is to identify and fund projects in response to the needs of the society, devise transparent monitoring mechanisms and ensure whole hearted commitment to get the desired results
The Company undertakes specific CSR projects that are in conformity with Schedule VII of the Companies Act, 2013. Given that the Company is in the private equity fund management business and invests across India and in all sectors, the Company undertakes CSR activities in Mumbai and also across the country
The Annual Plan for CSR is approved at the start of each financial year. Reviews and/or modifications to the projects and allocations are undertaken periodically. The CSR Policy is posted at the Companyâs website at the link http://iimlindia.com/Policies.aspx
The Company has been actively involved in various CSR initiatives over the last few years, long before it was mandated by the Companies Act, 2013. With the advent of the Companies Act, 2013, it was thought prudent to channelise the Companyâs CSR effort along with the Infrastructure Leasing & Financial Services Limited (IL&FS) Groupâs CSR initiatives. The Company engages with Nalanda Foundation, a Charitable Trust, established by IL&FS for its group CSR activities, in order to make a more significant impact. The Company continues to support its earlier CSR initiatives in addition to the initiatives through Nalanda Foundation
The disbursement of the amounts is linked to the achievement of certain pre-identified milestones by the implementing agency. The implementing agencies have informed the Company that there have been lags in achieving the pre-identified milestones on account of delay in obtaining the necessary approvals, mobilisation of students and completion of training, etc. Consequently the Company is marginally falling short of expending the entire statutory amount
The Composition of the CSR Committee is given in the Corporate Governance Report. The Annual Report on the CSR activities is annexed herewith as Annexure 5
WHISTLE BLOWER POLICY/VIGIL MECHANISM
The Company has adopted a Whistle Blower Policy/Vigil Mechanism for Employees and Directors to report instances of unethical behaviour, actual or suspected fraud or violation of the Companyâs Code of Conduct. During the year, no personnel has been denied access to the Audit Committee
The details of the Whistle Blower Policy is explained in the Corporate Governance Report and also posted at the Companyâs website http://iimlindia.com/Policies.aspx
DEPOSITS
Your Company has not accepted any deposits from the public for the year under consideration
ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
Since the Company does not own any manufacturing facility, the Energy Conservation and Technology Absorption particulars in the Companies (Accounts) Rules, 2014, are not applicable
The particulars regarding foreign earnings and expenditure appear as Note Nos. 21(c) and 21(d) of the Notes to Accounts of the Standalone Financial Statements respectively
EXTRACT OF THE ANNUAL RETURN
The details forming part of the extract of the Annual Return pursuant to Section 92(3) of the Companies Act, 2013 read with Rule 12 of the Companies (Management and Administration) Rules, 2014 in Form MGT 9 are annexed herewith as Annexure 6
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS
There are no significant and material orders passed by the Regulators/Courts/Tribunals which would impact the going concern status of the Company and its future operations
ACKNOWLEDGEMENT
The Board of Directors take this opportunity to thank the Investors of the Funds under management, shareholders, employees, bankers, Reserve Bank of India, Securities and Exchange Board of India, other Regulatory authorities for their co-operation and continued support to the Company. We look forward to their continued patronage and encouragement in all our future endeavours
For and on behalf of the Board
S M DATTA
CHAIRMAN
Place : Mumbai
Date : May 4, 2018
Mar 31, 2013
To The Members of IL&FS Investment Managers Limited
The Directors have pleasure in presenting for your consideration and
approval the Twenty Seventh Annual Report with the Audited Financials
of the Company for the year ended March 31, 2013
FINANCIAL ACHIEVEMENTS AND DIVIDEND
For the
year
ended For the
year ended For the
year ended For the year
ended
March 31,
2013 March 31,
2012 March 31,
2013 March 31,
2012
(Rs. mn) (Rs. mn) (Rs. mn) (Rs. mn)
Standalone Standalone Consolidated Consolidated
Total Income 1032.12 1042.75 2269.27 2247.01
Proft before
Taxation 615.77 575.64 1011.39 953.14
Provision for
Taxation 191.34 165.21 244.73 215.04
Net Proft after
Taxation 424.43 410.43 766.30* 735.33*
Proft available
for appropriation 535.00 515.66 2172.25 1811.05
(Inclusive of
balance carried
forward from the
previous year)
Appropriations :
General Reserve 43.00 42.00 43.00 42.00
Dividend
(inclusive of
dividend tax) 366.10 363.09 366.10 363.09
* after Minority
Interest
DIVIDEND
During the year, your Company achieved a net proft after tax of Rs.
424.43 mn. Your Directors recommend a dividend of Rs. 1.50 per share of
face value Rs. 2/- each. The total amount of dividend is Rs. 366.10
(inclusive of dividend tax of Rs. 53.52 mn)
REVIEW OF OPERATIONS
The multiple challenges that the global economies have been facing over
the previous few years have continued to impact global growth. Whilst
most policymakers have tried to limit the downside risks by issuing
various stimuli packages, the process of reigniting growth in most
economies is a slow process. Austerity and focus on fscal consolidation
has had some impact and signifcant downside risk have now abated. Most
major economies have started seeing some positive movement in the
process and in the next few years slowly but steadily, growth prospects
of most economies are expected to improve. The focus as always will be
on strengthening the existing situation whilst focusing on investments
in critical areas to encourage sustainable growth
India has also seen headwinds in the form of slowing growth and a
growing fscal imbalance. The Indian economy is expected to register a
GDP growth of 5% or lower in FY2013, as against the original
projections of over 6%, the lowest in a decade. Infation has remained
consistently above the comfort level and currency problems have
compounded in the last 18 months, with all-time high current account
defcit levels
The last couple of quarters provided some ray of hope with the Finance
Minister pushing for several reforms, controlling FY2013 fscal defcit
to 5.2% of GDP, and targeting to lower it further to 4.8% for FY2014.
The RBI cut its repo rate twice this year, to bring the rate down to
7.5%, in a bid to stimulate growth. The Indian economy seems to be
showing early signs of recovery. Industrial production growth for March
2013 accelerated from the previous month. More importantly, the Âgrowth
quality improved as capital goods output increased for the second
consecutive month. Further, for the quarter ending March 2013, private
projects under implementation increased, albeit marginally, in year on
year terms after nine quarters of deceleration
The key concerns for IndiaÂs fscal imbalance and high infation have
abated and provided room for the RBI to adopt a more lenient monetary
policy. This has been primarily due to a drop in gold and oil prices in
the recent past and positive predictions of a normal monsoon. If the
above trends persist, the economy should perform well in the medium
term to long term, as the true impact of these tailwinds will provide
an opportunity for some of the macro variables to self correct
Fund raising also continues to be challenging. There was a 40%
contraction in new fund raising plans announced in 2012 as compared to
2011. Fund raising timelines continued to be stretched as the
regulatory uncertainty around GAAR, retrospective taxation and the
Mauritius DTAA also impacted investor sentiment. When compared to other
emerging markets, such as China and Brazil, India ranked lowest in
terms of funds raised in 2012
FY2013 was similar in many respects to a diffcult FY2012 and conditions
for Private Equity investors continued to be tough. The year saw a
moderation in PE investment on the back of overall weak fundamentals.
During FY2013, 410 transactions saw US$ 8.8 bn of investments as
compared to US$ 12.2 bn invested in 568 deals in FY2012. Against this
backdrop, IIML continued to invest US$ 143 mn (Rs. 7.72 bn) in attractive
opportunities across the Infrastructure and Real Estate verticals
The scenario for exits in FY2013 also continued to be hampered largely
by the slowing growth. However, it was marginally better than FY2012.
In FY2013, there were 146 exits announced for US$ 4.3 bn (Rs. 232 bn) as
compared to 140 exits announced for US$ 3.4 bn (Rs. 192 bn) in FY2012.
However, IIML was successful in generating exits of Rs. 5.37 bn across
the verticals of Growth Private Equity and Real Estate
On a consolidated basis, the Income from Operations of the Company for
the Financial Year 2012-2013 was Rs. 2244.91 mn, inclusive of Income from
Investments of Rs. 83.81 mn. Other Income was Rs. 24.36 mn and the Total
Income on a consolidated basis for the Financial Year 2012-2013 was Rs.
2269.27 mn. The total Operating Expenses for the year were Rs. 1257.88 mn
and the resultant Proft after Tax on a consolidated basis for the
Financial Year 2012-2013 was Rs. 766.29 mn (after minority interest)
On a standalone basis, the Income from Operations of the Company for
the Financial Year 2012-2013 was Rs. 1010.80 mn inclusive of Income from
Investments of Rs. 104.32 mn, Other Income of Rs. 21.32 mn resulting in the
Total Income of the Company for the Financial Year 2012-2013 of Rs.
1032.12 mn. The total Operating Expenses for the year were Rs. 416.35 mn
and the resultant Proft after Tax for the Financial Year 2012-2013 was
Rs. 424.43 mn
FUTURE OUTLOOK
The beginning of FY2014 has witnessed improvement is some of the
macro-economic parameters. There is confdence that fscal defcit may be
controlled and factors contributing to higher defcit viz. Oil and Gold
prices will remain moderated. Thus, while growth for FY2014, expected
at around 6%, is signifcantly lower than that attained during the
2005-2008 period, it would be a marked improvement over FY2013
Against this backdrop, your Company continues to seek out fund
management opportunities in products and geographies, which enhance our
present offerings. The wider product spectrum will cater to a more
diverse set of investors, and would de-risk our India centric business
model. This strategy is expected to play out in the next 2-3 years of
years. In the immediate term, your Company is focussing on Closing the
fund in the Middle East as also the follow-on SCI Asia Fund II
All the funds managed by your Company have now been fully invested and
the Company has now moved focus on asset management. The team has been
working closely with investee companies and partners to ensure that
investments are being managed effectively to ensure that they achieve
optimum valuations. A large emphasis for this year will also be on
exits, as many assets mature and some Funds get closer to the end of
their Fund lives. This would mean a continued effort on part of the
management team to ensure that these assets achieve their potential
value and are exited in a value accretive manner
DIRECTORS
Mr Ravi Parthasarathy, Mr Arun Saha, and Mr Vibhav Kapoor shall retire
by rotation in the ensuing Annual General Meeting and being eligible
offer themselves for re-appointment
STATUTORY AUDITORS
The Statutory Auditors of the Company M/s Deloitte Haskins & Sells,
Chartered Accountants, Mumbai, Registration Number 117366W, retire at
the conclusion of the ensuing Annual General Meeting and have expressed
their willingness to continue as Auditors, if re-appointed, at the
ensuing Annual General Meeting of the Company
The Company has also received a certifcate from M/s Deloitte Haskins &
Sells under Section 224(1B) of the Companies Act, 1956 confrming their
eligibility for re-appointment. M/s Deloitte Haskins & Sells, Mumbai,
have also confrmed to the Company that the frm is subjected to the Peer
Review Process of the Institute of Chartered Accountants of India
INCREASE IN SHARE CAPITAL
During the year your Company allotted 628,500 Equity Shares of Rs. 2/-
each on the exercise of Options issued under the Employee Stock Option
Plan 2006
CORPORATE GOVERNANCE
Pursuant to Clause 49 of the Listing Agreement with the Stock
Exchanges, Report on Corporate Governance along with the Management
Discussion and Analysis and Auditors Certifcate on compliance with the
Corporate Governance requirements have been included in this Annual
Report as separate sections
SUBSIDIARY COMPANIES
Your Company has three domestic subsidiaries namely, IL&FS Asian
Infrastructure Managers Limited, IL&FS Urban Infrastructure Managers
Limited and IIML Asset Advisors Limited and three offshore subsidiaries
namely IL&FS Investment Advisors LLC, Mauritius, IIML Advisors LLC,
Mauritius and IIML Fund Managers (Singapore) Pte. Ltd., Singapore
The Ministry of Corporate Affairs vide General Circular No. 2/2011 fle
No. 51/12/2007-CL-III dated February 8, 2011, had issued directions
under Section 212(8) of the Companies Act, 1956 to grant a general
exemption from attaching the fnancials along with the Directors Report
and the Auditors Report of the subsidiary companies to the fnancials
of the holding company on fulfllment of certain conditions. In
compliance with the said circular of the Ministry of Corporate Affairs,
the Company has attached a summary of the fnancial statements of each
of the Subsidiary Companies
As per Clause 32 of the Listing Agreement the consolidated fnancial
statements of the Company with its Subsidiaries form part of the Annual
Report. The copies of the audited annual accounts of the CompanyÂs
Subsidiaries and other related documents can also be sought by any
member of the Company or its Subsidiaries on making a written request
to the Company Secretary in this regard. The Annual Accounts of the
Subsidiary Companies are also available for inspection by any member at
the CompanyÂs and/or the concerned SubsidiaryÂs registered offce
Review of Operations of Subsidiary Companies
IL&FS Asian Infrastructure Managers Limited :
IL&FS Asian Infrastructure Managers Limited (IAIML) had been set up to
manage the Pan Asia Project Development Fund, India (the Fund). The
Fund, having a corpus of Rs. 1,125 mn, had the mandate to support
initiatives for development of infrastructure projects in the Asian
region. IAIML is playing an active role in managing and monitoring the
investments made by the Fund. The Fund expects to complete full
divestment by the frst half of FY2014
The Total Income for Financial Year 2012-2013 was Rs. 19.60 mn inclusive
of Income from Investments and Other Income of Rs. 3.43 mn. The Total
Expenses of IAIML for the year were Rs. 18.85 mn and the resultant Proft
after tax for the year was Rs. 0.75 mn
IL&FS Urban Infrastructure Managers Limited :
IL&FS Urban Infrastructure Managers Limited (IUIML) functions as the
Asset Manager for the Pooled Municipal Debt Obligations (PMDO)
Facility. The objective of the PMDO Facility is to provide long tenure
term loans to meet the debt requirements of urban infrastructure
projects across cities in India
The corpus of PMDO Facility stands at Rs. 50 bn and a new lender Indian
Overseas Bank has joined the consortium with a commitment of Rs. 2.5 bn.
The CompanyÂs role as an Asset Manager is to identify and appraise the
eligible projects and obtain sanctions of the lenders and thereafter
assist the lenders to disburse, monitor and administer the loan assets
until entire repayment of the loan. By March 31, 2013, projects for a
term loan of Rs. 33.97 bn have been sanctioned from the PMDO facility and
the assets under management were at Rs. 14.12 bn
The Total Income for the Financial Year 2012-2013 was Rs. 146.39 mn
inclusive of Income from Investments and Other Income of Rs. 4.26 mn.
The Total Expenses of IUIML for the year were Rs. 81.31 mn and the
resultant Proft after Tax for the year was Rs. 43.90 mn
IIML Asset Advisors Limited :
IIML Asset Advisors Limited (IAAL) is in the business of providing
advice on investments, fnance, management and consultancy and acts as
the India Advisor to IL&FS Investment Advisors LLC for two funds
The Total Income of IAAL for the Financial Year 2012-2013 was Rs. 111.38
mn. The Total Expenses of IAAL for the year were Rs. 76.62 mn and the
resultant Proft after Tax for the year was Rs. 25.38 mn
IL&FS Investment Advisors LLC :
IL&FS Investment Advisors LLC, Mauritius (IIAL) acts as the Investment
Manager to IL&FS India Realty Fund LLC, Tara India Fund III LLC, IL&FS
India Realty Fund II LLC, K2 Property Limited and Saffron India Real
Estate Fund I
The Total Income of IIAL for the Financial Year 2012-2013 was US$ 33.88
mn. The Total Expenses of IIAL for the year was US$ 27.52 mn and the
resultant Proft after Tax for the year was US$ 6.14 mn
IIML Advisors LLC :
IIML Advisors LLC was incorporated during the last year for the
purposes of managing certain funds from Mauritius. The Company expects
to start its operations during this year
IIML Fund Managers (Singapore) Pte. Ltd. :
IIML Fund Managers (Singapore) Pte. Ltd. was incorporated during the
year for the purposes of managing funds from Singapore. The Company
has started operations during the year
DEPOSITS
Your Company has not accepted any deposits from the public for the year
under consideration
FOREIGN EXCHANGE EARNINGS AND OUTGO
The particulars regarding foreign expenditure and earnings appear as
Item Nos. 24(c) and 24(d) respectively, of the Notes to Accounts
Since the Company does not own any manufacturing facility, the other
particulars in the Companies (Disclosure of Particulars in the Report
of Board of Directors) Rules, 1988 are not applicable
PERSONNEL
Your Directors wish to place on record their appreciation for the
services rendered by the employees of the Company at all levels. The
particulars of the employees as required under Section 217(2A) of the
Companies Act, 1956 read with Companies (Particulars of Employees)
Rules, 1975 forms part of the Directors Report for the year ended
March 31, 2013. However, as per the provisions of Section 219(1)(b)(iv)
of the Companies Act, 1956, the Directors Report and Accounts are
being sent to all shareholders of the Company, excluding the statement
of particulars of employees under Section 217(2A) of the Act. Any
shareholder interested in obtaining a copy of the said statement may
write to the Company Secretary at the Registered Offce of the Company
DETAILS OF EMPLOYEE STOCK OPTION PLANS
The detailed disclosures as per SEBI (Employee Stock Option Scheme and
Employee Stock Purchase Scheme) Guidelines, 1999 of the ESOP Schemes of
the Company are annexed to the Directors Report
DIRECTORSÂ RESPONSIBILITY STATEMENT
In accordance with the provisions of Section 217(2AA) of the Companies
Act, 1956 your Directors hereby confrm that :
(a) in preparation of the annual accounts, the applicable accounting
standards have been followed;
(b) 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 true and fair view of the state of affairs of
the Company as at 31st March, 2013 and of the proft of the Company for
the year ended on that date;
(c) the Directors have taken proper and suffcient 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
(d) the Annual Accounts for the year ended 31st March, 2013 have been
prepared on a going concern basis
ACKNOWLEDGEMENT
The Board of Directors take this opportunity to thank the Investors of
the funds under management, shareholders, employees, bankers, Reserve
Bank of India, Securities and Exchange Board of India, other Regulatory
authorities for their co-operation and continued support to the
Company. We look forward to their continued patronage and encouragement
in all our future endeavours
For and on behalf of the Board
S M DATTA
Chairman
Place : Mumbai
Date : April 30, 2013
Mar 31, 2012
To The Members of IL&FS Investment Managers Limited
The Directors have pleasure in presenting for your consideration and
approval the Twenty Sixth Annual Report with the Audited Financials of
the Company for the year ended March 31, 2012
FINANCIAL ACHIEVEMENTS AND DIVIDEND
For the year ended For the year ended
March 31, 2012 March 31, 2011
(Rs.mn) (Rs.mn)
Standalone Standalone
Total Income 1042.75 949.44
Profit before Taxation 575.64 554.53
Provision for Taxation 165.21 180.47
Net Profit after Taxation 410.43 374.06
Profit available for
appropriation 515.66 501.71
(Inclusive of balance
carried forward from
the previous year)
Appropriations :
General Reserve 42.00 38.00
Dividend (inclusive of
dividend tax) 363.09 358.48
For the year ended For the year ended
March 31, 2012 March 31, 2011
(Rs.mn) (Rs.mn)
Consolidated Consolidated
Total Income 2247.01 2,012.19
Profit before Taxation 953.14 905.19
Provision for Taxation 215.04 212.27
Net Profit after Taxation 735.33* 690.20*
Profit available for
appropriation (Inclusive of
Balance carried forward
from the previous year) 1811.05 1,472.20
Appropriations:
General Reserve 42.00 38.00
Dividend (inclusive of
dividend tax) 363.09 358.48
* after Minority Interest
DIVIDEND
During the year, your Company achieved a net profit after tax of Rs
410.43 mn. Your Directors recommend a dividend of Rs 1.50 per share of
face value Rs 2/- each. The total amount of dividend is Rs 363.09 mn
(inclusive of dividend tax of Rs 50.68 mn)
REVIEW OF OPERATIONS
The year under review has been characterized by a rapidly cooling
global economy. Global output expanded at a slower pace of 3.5% in
2012, compared to 3.9% in 2011 and 5.3% in 2010. More particularly,
growth in emerging and developing economies has also started to slow
down from the second quarter of 2011. According to recent United
Nations estimates, growth in emerging and developing economies is
expected to average 5.75% during 2012 - significant slowdown from the
6.75% growth registered during 2011
The Indian economy is not impervious to these global macro-economic
dynamics. The Index of Industrial Production (IIP) has been volatile
throughout FY2012 and the third quarter FY2012 GDP growth numbers, at
6.1%, are the lowest since Q4 FY2009. It is expected that the slowdown
in GDP growth witnessed over the last two quarters is likely to extend
into FY2013 on account of the weakness in investments. Government's
limited ability to contain the subsidy burden coupled with slower
growth is expected to result in higher fiscal deficit, thereby exerting
further pressure on the Rupee and capital flows
Compounding these issues has been recent announcements of changes in
tax rules including retrospective changes in relation to offshore
transactions. Such changes in rules have only added to the increasing
discomfort of foreign investors, which is reflected in the Indian
Private Equity (PE) environment. PE Fund raisers in India have hit a 7
year low, PE investments during 2011 are down 37% compared to 2007 and
PE exits have slowed down compared to the previous year
The resultant general risk aversion and cautious approach being adopted
by global investors has impacted your Company's fund raiser plans.
During the year under review, your Company had limited success with
global investors, who while recognizing the Company's track record and
experience, have deferred investment plans. As a result, your Company
could not attain the targeted First Close for any new Funds during the
year. However, building on its leadership position in the PE space in
India, your Company deployed Rs18.8 bn across 19 investments during the
year under review, a marked increase compared to Rs 8.3 bn invested
during the previous year
With the US$ 895 mn IL&FS India Real Estate Fund II and the US$ 225 mn
Tara India Fund III fully deployed during the year, the Fund teams have
began to focus exclusively on asset management to ensure that the
investments made generate strong returns. As a result, your Company
leveraged multiple exit strategies to effect divestments aggregating Rs
5.2 bn across 8 Investee Companies during the year under review
Despite the flat Assets Under Management (AUM) during the year under
review and significant divestments undertaken during the year, your
Company, on the back of its strong business model, was able to prevent
erosion in financial performance
On a consolidated basis, the Income from Operations of the Company for
the Financial Year 2011-2012 was Rs 2205.68 mn, inclusive of Income from
Investments of Rs 79.81 mn. Other Income was Rs 41.33 mn, the Total
Income on a consolidated basis for the Financial Year 2011-2012 was Rs
2247.01 mn. The resultant Profit after Tax on a consolidated basis for
the Financial Year 2011-2012 was Rs 735.33 mn (after minority interest)
On a standalone basis, the Income from Operations of the Company for
the Financial Year 2011-2012 was Rs 1026.19 mn. inclusive of Income from
Investments of Rs 174.10 mn. Other Income of Rs 16.57 mn, the Total
Income of the Company for the Financial Year 2011-2012 was Rs 1042.75
mn. The total Operating Expenses for the year were Rs 467.11 mn and the
resultant Profit after Tax for the Financial Year 2011- 2012 was Rs
410.43 mn
FUTURE OUTLOOK
The underlying factors which have created financial stress and have
resulted in growth moderation continue to be at play. More particularly
for India, Investors will closely look at Government's policy action in
enabling investments on one hand and outcome of contentions issues
including retrospective taxation and GAAR on the other. These will be
key determinants to the timelines associated with your Company's Fund
raise plans. Your Company, however, continues to reach out to investors
and, in a business as usual' scenario, expects to obtain commitments
for at least two Funds by the first half of FY2013
Likewise, policy action and macro-economic scenario will determine your
Company's ability to effect divestments within anticipated timelines
and at expected valuations. Your Company will continue to focus on
executing its divestment plan which comprises of exits from some of its
listed portfolio along with planned exits by way of trade sale and IPOs
in a manner that divestment momentum of the year under review is also
being maintained during FY2013. The Fund teams are focused on reducing
divestment timelines and on value maximization
Your Company has also been working on various strategic initiatives.
Post investing the balance funds from its Infrastructure Fund, your
Company has plans for new Fund raisers in the Infrastructure and Real
Estate space. Your Company also plans to operationalise its
subsidiary's office in Singapore, in early FY2013, which will along
with the Dubai office then be leveraged to reach out to investors and
address the new Fund raiser requirements. Given the nature of such
strategic initiatives and the prevalent environment, gestation periods
are expected to be longer and spread across fiscals
DIRECTORS
Mr Shahzaad Dalal, Mr S M Datta, and Mr Bansi Mehta shall retire by
rotation in the ensuing Annual General Meeting and being eligible offer
themselves for re-appointment
STATUTORY AUDITORS
The Statutory Auditors of the Company M/s Deloitte Haskins & Sells,
Chartered Accountants, Mumbai, retire at the conclusion of the ensuing
Annual General Meeting and have expressed their willingness to continue
as Auditors, if re-appointed, at the ensuing Annual General Meeting of
the Company
The Company has also received a certificate from M/s Deloitte Haskins &
Sells under Section 224(1B) of the Companies Act, 1956 confirming their
eligibility for re-appointment. M/s Deloitte Haskins & Sells, Mumbai,
have also confirmed to the Company that the firm is subjected to the
Peer Review Process of the Institute of Chartered Accountants of India
INCREASE IN SHARE CAPITAL
During the year your Company allotted 2,649,155 Equity Shares of Rs 2/-
each on the exercise of Options issued under the Employee Stock Option
Plans 2004 & 2006
CORPORATE GOVERNANCE
Pursuant to Clause 49 of the Listing Agreement with the Stock
Exchanges, Report on Corporate Governance along with the Management
Discussion and Analysis and Auditors' Certificate on compliance with
the Corporate Governance requirements have been included in this Annual
Report as separate sections
SUBSIDIARY COMPANIES
Your Company has three domestic subsidiaries namely, IL&FS Asian
Infrastructure Managers Limited, IL&FS Urban Infrastructure Managers
Limited and IIML Asset Advisors Limited and three offshore subsidiaries
namely IL&FS Investment Advisors LLC, Mauritius, IIML Advisors LLC,
Mauritius and IIML Fund Managers (Singapore) Pte. Ltd., Singapore
The Ministry of Corporate Affairs vide General Circular No. 2/2011 file
No. 51/12/2007-CL-III dated February 8, 2011, had issued directions
under Section 212(8) of the Companies Act, 1956 to grant a general
exemption from attaching the financials along with the Directors'
Report and the Auditors' Report of the subsidiary companies to the
financials of the holding company on fulfillment of certain conditions.
In compliance with the said circular of the Ministry of Corporate
Affairs, the Company has attached a summary of the financial statements
of each of the Subsidiary Companies
As per Clause 32 of the Listing Agreement the consolidated financial
statements of the Company with its Subsidiaries form part of the Annual
Report. The copies of the audited annual accounts of the Company's
Subsidiaries and other related documents can also be sought by any
member of the Company or its Subsidiaries on making a written request
to the Company Secretary in this regard. The Annual Accounts of the
Subsidiary Companies are also available for inspection by any member at
the Company's and/or the concerned Subsidiaries' registered office
Review of Operations of Subsidiary Companies IL&FS Asian Infrastructure
Managers Limited :
IL&FS Asian Infrastructure Managers Limited (IAIML) had been set up to
manage Pan Asia Project Development Fund, India (the Fund). The Fund,
having a corpus of Rs 1,125 mn, had the mandate to support initiatives
for development of infrastructure projects in the Asian region. IAIML
is playing an active role in managing and monitoring the investments
made by the Fund. Of the 7 investments undertaken, the Fund has, till
date, exited 2 investments, representing 26.6% of the portfolio by
value. The exits have provided gross IRR of 23.3%
The Total Income for Financial Year 2011-2012 was Rs 20.03 mn inclusive
of Income from Investments and Other Income of Rs 3.9 mn. The Total
Expenses of IAIML for the year were Rs 13.41 mn and the resultant Profit
after tax for the year was Rs 5.66 mn
IL&FS Urban Infrastructure Managers Limited :
IL&FS Urban Infrastructure Managers Limited (IUIML) functions as the
Asset Manager for the Pooled Municipal Debt Obligations (PMDO)
Facility. The objective of the PMDO Facility is to provide long tenure
term loans to meet the debt requirements of urban infrastructure
projects across cities in India
As per the amended MOU signed on May 9, 2011, the corpus of PMDO
Facility stands at Rs 50 bn and a new lender Indian Overseas Bank has
joined the consortium with a commitment of Rs 2.5 bn
IUIML's role as an Asset Manager is to identify and appraise the
eligible projects and obtain sanctions of the lenders and thereafter
assist the lenders to disburse, monitor and administer the loan assets
until entire repayment of the loan
By March 31, 2012, projects for a term loan of Rs 35.69 bn have been
sanctioned from the PMDO facility and the assets under management were
at Rs 11.69 bn
The Total Income for the Financial Year 2011-2012 was Rs 130.21 mn
inclusive of Income from Investments and Other Income of Rs 3.78 mn.
The Total Expenses of IUIML for the year were Rs 73.58 mn and the
resultant Profit after Tax for the year was Rs 38.03 mn
IIML Asset Advisors Limited (formerly known as IIML Asset Advisors
Private Limited) :
IIML Asset Advisors Limited (IAAL) is in the business of providing
advice on investments, finance, management and consultancy and acts as
a India Advisor to IL&FS Investment Advisors LLC for two funds
The Total Income of IAAL for the Financial Year 2010-2011 was Rs 111.86
mn. The Total Expenses of IAAL for the year were Rs 84.73 mn and the
resultant Profit after Tax for the year was Rs 19.05 mn
IL&FS Investment Advisors LLC :
IL&FS Investment Advisors LLC, Mauritius (IIAL) acts as the Investment
Manager to IL&FS India Realty Fund LLC, Tara India Fund III LLC, IL&FS
India Realty Fund II LLC, K2 Property Limited, Saffron India Real
Estate Fund I and Tara India Fund IV LLC
The Total Income of IIAL for the Financial Year 2011-2012 was US$ 32.39
mn. The Total Expenses of IIAL for the year was US$ 24.46 mn and the
resultant Profit after Tax for the year was US$ 7.63 mn
IIML Advisors LLC :
IIML Advisors LLC was incorporated during the year for the purpose of
managing certain funds from Mauritius. The Company has not started
operations yet
IIML Fund Managers (Singapore) Pte. Ltd. :
IIML Fund Managers (Singapore) Pte. Ltd. was incorporated during the
year for the purposes of managing funds from Singapore. The Company is
expected to contribute significantly over the coming years. The Company
has not started operations yet
DEPOSITS
Your Company has not accepted any deposits from the public for the year
under consideration
FOREIGN EXCHANGE EARNINGS AND OUTGO H
The particulars regarding foreign expenditure and earnings appear as
Item Nos. 22(c) and 22(d) respectively, of Notes to Accounts
Since the Company does not own any manufacturing facility, the other
particulars in the Companies (Disclosure of Particulars in the Report
of Board of Directors) Rules, 1988 are not applicable
PERSONNEL
Your Directors wish to place on record their appreciation for the
services rendered by the employees of the Company at all levels. The
particulars of the employees as required under Section 217(2A) of the
Companies Act, 1956 read with Companies (Particulars of Employees)
Rules, 1975 forms part of the Directors' Report for the year ended
March 31, 2012. However, as per the provisions of Section 219(1)(b)(iv)
of the Companies Act, 1956, the Directors' Report and Accounts are
being sent to all shareholders of the Company, excluding the statement
of particulars of employees under Section 217(2A) of the Act. Any
shareholder interested in obtaining a copy of the said statement may
write to the Company Secretary at the Registered Office of the Company
DETAILS OF EMPLOYEE STOCK OPTION PLANS
The detailed disclosures as per SEBI (Employee Stock Option Scheme and
Employee Stock Purchase Scheme) Guidelines, 1999 of the ESOP Schemes of
the Company are annexed to the Directors' Report
DIRECTORS' RESPONSIBILITY STATEMENT
In accordance with the provisions of Section 217(2AA) of the Companies
Act, 1956 your Directors hereby confirm that :
(a) in preparation of the annual accounts, the applicable accounting
standards have been followed;
(b) 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 true and fair view of the state of affairs of
the Company as at 31st March, 2012 and of the profit of the Company for
the year ended on that date;
(c) 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
(d) the Annual Accounts for the year ended 31st March, 2012 have been
prepared on a going concern basis ACKNOWLEDGEMENT
The Board of Directors take this opportunity to thank the Investors of
the funds under management, shareholders, employees, bankers,
Reserve Bank of India, Securities and Exchange Board of India, other
Regulatory authorities for their co-operation and continued support to
the Company. We look forward to their continued patronage and
encouragement in all our future endeavors
For and on behalf of the Board
S M DATTA
Chairman
Place: Mumbai
Date: May 3, 2012
Mar 31, 2011
The Directors have pleasure in presenting for your consideration and
approval the Twenty Fifth Annual Report with the Audited Financials of
the Company fortheyearended March 31,2011
FINANCIAL ACHIEVEMENTS AND DIVIDEND
For the
year ended For the
year ended For the
year ended For the
year ended
March 31,
2011 March 31,
2010 March 31,
2011 March 31,
2010
(Rs.mn) (Rs.mn) (Rs.mn) (Rs.mn)
Standalone Standalone Consolidated Consolidated
Total Income 949.44 957.07 2,012.19 1,813.37
Profit before
Taxation 554.53 588.64 905.19 956.92
Provision for
Taxation 180.47 195.78 212.27 215.38
Net Profit after
Taxation 374.06 392.86 690.20* 738.49*
Profit available
for appropriation 501.71 522.77 1,472.20 1,177.12
Appropriations :
General Reserve 38.00 40.00 38.00 40.00
Dividend (inclusive
of dividend tax) 358.48 355.12 358.48 355.12
ÃafterMinority Interest
DIVIDEND
During the year, your Company achieved a net profit aftertax of X
374.06 mn. Your Directors recommend a dividend of X 1.50 per share
efface value r2/-each.The total amount ofdividend is 1358.48 mn
(inclusive ofdividend tax oft50.04mn)
REVIEW OF OPERATIONS
The year under review has been uncertain, contrary to earlier
expectations. India faced headwinds in the form of concerns on
inflation, interest rates, and oil price. Lower industrial growth since
September 2010 and slowdown in foreign direct investment could
translate into lower than expected GDP growth forFY2011 and FY2012. The
fragile global and local economic scenarios have reflected on the
private equity environment as well. Fund raising continues to be
sluggish and PE fund raising by India-focused funds saw a dip of 19% on
a year on year basis
In this backdrop, the year has been one of consolidation for the
Company. During the year your Company acquired the shares of Saffron
Asset Advisors Private Limited (name changed to IIML Asset Advisors
Private Limited), thus making it a subsidiary of Company. In addition
to the above Saffron Capital Securities Limited and Saffron Capital
Advisors Limited, both Mauritius based real estate focused managers,
amalgamated with IL&FS Investment Advisors LLC, a Mauritius based
wholly owned subsidiary of the Company. As a result of the foregoing,
the total Assets Under Management (AUM") of your Company along with
its affiliates stands increased to USD 3.2 bn and your Company
alongwith its affiliates also has undents management Yatra Capital
Limited which is listed on the Euronext Stock Exchange. Your Company
will seek to leverage the listed vehicle for raising fresh listed
private equity funds
Your Company invested X 8.27 bn during FY2011, a 43% increase over the
previous year. More importantly, your Company was also able to provide
significant return of capital to its fund investors, with US$ 221 mn
being realized through divestments from 15 investee companies
Given that the fund raising process is episodic, the increase in
revenues of your Company is more a step function, linked to fresh funds
closed as also to the investment cycle for the current funds under
management. Strategic initiatives including opening of the Dubai office
with a view to expand business presence in the region and the Saffron
merger are expected to fructify over the next two fiscals. Given the
lack of demand and the greaterriskaversion of the investment community,
investmentcycles have elongated, thereby impacting pace of fresh fund
raises. Accordingly, the Company initiated fund raising for three new
funds only in the latter part of 2011. The enhancement in assets under
management of US$ 400 mn came from the amalgamation of the Saffron
platform; however depreciation costs related to the transaction have
resulted in a lower Profit After Tax than planned
On a consolidated basis, the Income from Operations of the Company for
the financial year 2010-2011 was X 1.9 bn. Inclusive of Income from
Investments of X 72.39 mn and Other Income of X 39.45 mn, the Total
Income on a consolidated basis for the Financial Year 2010-2011 was X
2.01 bn. The resultant Profit afterTaxon consolidated
basisforthefinancial year2010-2011 was X690.20 mn
On a standalone basis, the Income from Operations of the Company for
the financial year 2010-2011 was X 852.77 mn. Inclusive of Income from
Investments of ? 61.64 mn and Other Income of ? 35.03 mn, the Total
Income of the Company for the Financial Year 2010-2011 was ? 949.44 mn.
The total Expensesfortheyearweret394.90mn and the resultant
ProfitafterTaxforthe financial year2010-2011 wast 374.06mn
FUTURE OUTLOOK
The emerging weak and uncertain economic data points to a possible
downgrading of the growth forecasts for FY2012. Scaling down of FY2012
growth expectations by 0.5-1.0% is already being sounded out by various
agencies, with the Government reaffirming that it would be willing to
sacrifice growth in the interest of reigning in inflation
However, notwithstanding the challenging macro-economic environment,
India continues to present a compelling investment opportunity. In
order to address this opportunity, your Company has started marketing
of three new funds. Leveraging its parentage, the Company would in this
fiscal launch a variety of funds covering the infrastructure lifecycle.
The new Funds collectively target to raise US$1 bn overthe next 12-18
months, with some achieving a First Close during this fiscal.
Achallenging global investment environment would dictate the Companys
ability to raise new Funds within the planned timelines. Despite having
a competitive advantage and performance recognition among global
investors, the active divestment of olderfunds coupled with longer lead
times forfund raising are expected to keep assets under management flat
DIRECTORS
Mr Arun Saha and Mr Vibhav Kapoor retire by rotation at the ensuing
Annual General Meeting of the Company and being eligible offer
themselves for re-appointment. Mr Jitender Balakrishnan was appointed
as an Additional Director of the Company at the Board Meeting held on
July 30, 2010 and Mr Ramesh Bawa and Mr Siddharth Mehta were appointed
as Additional Directors of the Company at the Board Meeting held on
February 11, 2011. Since Mr Jitender Balakrishnan, Mr Ramesh Bawa and
Mr Siddharth Mehta were appointed as Additional Directors of the
Company they hold office upto the date of ensuing Annual General
Meeting of the Company and being eligible offers themselves for
appointment. The Company has received a notice under Section 257 of the
Companies Act, 1956 proposing appointment of Mr Jitender Balakrishnan,
Mr Ramesh Bawa and MrSiddharth Mehta as Directors of the Company.
During the yearMrAlokBhargava resigned and ceased to beaDirectorand
consequently ceased to be an Executive Director of the Company with
effect from July 15, 2010. DrArchana Hingorani was appointed as an
Executive Director of the Company for a period of five years with
effect from July 17, 2006. With the tenure of Dr Hingorani as an
Executive Director coming to an end on July 16, 2011, the Board of
Directors of the Company at its meeting held on April 21, 2011 approved
the re-appointment of DrArchana Hingorani as an Executive Director of
the Company for a further period of five years with effect from April
21, 2011, subject to the approval of the members. The resolution for
re-appointment of Dr Hingorani as an Executive Directorof the
Companyforafurtherperiod of fiveyears with effect fromApril21,2011 is
being placed before the members in the ensuing Annual General Meeting
STATUTORYAUDITORS
The Statutory Auditors of the Company M/s Deloitte Haskins & Sells,
Chartered Accountants, Mumbai, retire at the conclusion of the ensuing
Annual General Meeting and have expressed their willingness to continue
as Auditors, if re-appointed, at the ensuing Annual General Meeting of
the Company
The Company has also received a certificate from M/s Deloitte Haskins &
Sells under Section 224(1 B) of the Companies Act, 1956 confirming
their eligibility for re-appointment. M/s Deloitte Haskins & Sells,
Mumbai, have also confirmed to the Company that the firm is subjected
to the Peer Review Process of the Institute of Chartered Accountants of
India
INCREASE IN SHARE CAPITAL
During the year your Company allotted 2,598,660 Equity Shares of ? 21-
each on the exercise of Options issued under the Employee Stock Option
Plans 2004 & 2006
CORPORATE GOVERNANCE
Pursuant to Clause 49 of the Listing Agreement with the Stock
Exchanges, Report on Corporate Governance along with the Management
Discussion and Analysis and Auditors Certificate on compliance with
the Corporate Governance requirements have been included in this Annual
Report as separate sections
SUBSIDIARY COMPANIES
Your Company has the following subsidiaries IL&FS Asian Infrastructure
Managers Limited, IL&FS Urban Infrastructure Managers Limited, IIML
AssetAdvisors Private Limited and IL&FS Investment Advisors LLC,
Mauritius
The Company had in the past obtained exemption from the Central
Government under Section 212 of the Companies Act, 1956, from attaching
the Accounts of each of the Subsidiary Companies of the Company to its
Balance Sheet. However the Ministry of Corporate Affairs vide General
Circular No 2/2011 file no 51/12/2007-CL-lll dated February 8, 2011,
had issued directions under Section 212(8) of the Companies Act, 1956
to grant a general exemption from attaching the financials along with
the Directors Report and the Auditors Report of the subsidiary
companies to the financials of the holding company on fulfillment of
certain conditions. In compliance with the said circular of the
Ministry of Corporate Affairs, the Company has attached a summary of
the financial statements of each of the Subsidiary Companies
As per Clause 32 of the Listing Agreement the consolidated financial
statements of the Company with its Subsidiaries form part of the Annual
Report. The copies of the audited annual accounts of the Companys
Subsidiaries and other related documents, can also be sought by any
member of the Company or its Subsidiaries on making a written request
to the Company Secretary in this regard. The Annual Accounts of the
Subsidiary Companies are also available for inspection by any
memberatthe Companys and/or the concerned Subsidiaries registered
office
Review of Operations of Subsidiary Companies
IL&FS Asian Infrastructure Managers Limited :
IL&FS Asian Infrastructure Managers Limited (IAIML) has been set up to
manage Pan Asia Project Development Fund, India (the Fund). The Fund
has been set up in order to support initiatives for development of
infrastructure projects in the Asian region. The Fund has a corpus of r
1,125 mn. IAIML is playing an active role in managing and monitoring
the investments made by the Fund. The performance of these investments
has been satisfactory
The Income from Operations of IAIML for the financial year2010-2011 was
X 20.04 mn. Inclusive of Income from Investments and Otherlncome of X
3.45 mn, the Total Income for Financial Year 2010-2011 was X 23.49 mn.
The total Expenses of IAIML for the year were X 19.05 mn and the
resultant Profit aftertaxfortheyearwast 3.96mn
IL&FS Urban Infrastructure Managers Limited:
IL&FS Urban Infrastructure Managers Limited (IUIML) functions as the
Asset Managerfor the Pooled Municipal Debt Obligations (PMDO) Facility.
The objective of the PMDO Facility is to provide long tenure term loans
to meet the debt requirements of urban infrastructure projects across
cities in India. The total corpus of the PMDO Facility is X 27,500 mn
As part of the efforts of increasing the total corpus available, a new
lender Indian Overseas Bank has joined the consortium with a commitment
of X 2,500 mn. Further the existing lenders have also increased their
commitment amounts. Accordingly, the total corpus is expected to be
increased to X 47,775 mn. The Memorandum of Agreement for the revised
commitment amount is expected to be signed in the first quarterof
FY2012
lUIMLs role as an Asset Manager is to identify and appraise the
eligible projects and obtain sanctions of the lenders and thereafter
assist the lenders to disburse, monitor and administerthe loan assets
until repayment
By March 31, 2011, projects for a term loan of X 30,783.35 mn have been
sanctioned from the PMDO facility and the assets under management
amounted tor 8,747 mn
Thelncome from Operations of lUIMLfor the financial year 2010-2011 wast
89.21 mn. Inclusive of Income from Investments and Otherlncome of X
1.79 mn, the Total Income for Financial Year2010-2011 wasf91 mn. The
total Expenses of lUIMLfortheyearweref 64.34 mn and the resultant
ProfitafterTaxforthe yearwas X17.76 mn
IIML Asset Advisors Private Limited (formerly known as Saffron Asset
Advisors Private Limited):
IIMLAsset Advisors Private Limited (IAAPL) is in the business of
providing advice on investments, finance, management and consultancy
and acts as the India Advisorto two Mauritius based real estate funds
The Income from Operations of IAAPL for the financial year 2010-2011
was X 305.36 mn. Inclusive of Other Income of X 0.89 mn, the Total
Income for FinancialYear 2010-2011 wast 306.25 mn. The total Expenses
of IAAPL fortheyearweret 255.83mn and the resultant
ProfitafterTaxforthe yearwas X 32.30 mn
IL&FS Investment Advisors LLC:
IL&FS InvestmentAdvisors LLC, Mauritius (HAL) acts as the Investment
Managerto IL&FS India Realty Fund LLC, IL&FS India Realty Fund II LLC.
Tara India Fund III LLC, K2 Property Limited and Saffron India Real
Estate Fund I
The Total Income of HAL for the financial year 2010-2011 was USD 30.90
mn. The total Expenses of HAL for the year were USD 24.94 mn and the
resultant Profit after Taxforthe yearwas USD 5.73 mn
DEPOSITS
YourCompany has notaccepted any deposits from the
publicfortheyearunderconsideration
FOREIGN EXCHANGE EARNINGS AND OUTGO
The particulars regarding foreign expenditure and earnings appearas
Item Nos. 8(ii) and 8(iii) respectively, of Schedule 13B to the
Accounts
Since the Company does not own any manufacturing facility, the other
particulars in the Companies (Disclosure of Particulars in the Report
of Board of Directors) Rules, 1988 are not applicable
PERSONNEL
Your Directors wish to place on record their appreciation of the
services rendered by the employees of the Company at all levels. The
particulars of the employees as required under Section 217(2A) of the
Companies Act, 1956 read with Companies (Particulars of Employees)
Rules, 1975 forms part of the Directors Report for the year ended
March 31,2011. However, as perthe provisions of Section 219(1)(b)(iv)of
the Companies Act, 1956, the Directors Report and Accounts are being
sent to all shareholders of the Company, excluding the statement of
particulars of employees under Section 217(2A) of the Act. Any
shareholder interested in obtaining a copy of the said statement may
write to the Company Secretary at the Registered Office of the Company
DETAILS OF EMPLOYEE STOCK OPTION PLANS
The detailed disclosures as per SEBI (Employee Stock Option Scheme and
Employee Stock Purchase Scheme) Guidelines, 1999 of the ESOP Schemes of
the Company are annexed to the Directors Report
DIRECTORSRESPONSIBILITYSTATEMENT
Your Directors wish to state that:
(a) in the preparation of the annual accounts, the applicable
accounting standards had been followed along with proper explanation
relating to material departures;
(b) they had 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 attheend of the financial yearand of the profitof the
Company for thatyear;
(c) they had taken proper and sufficient care for the maintenance of
adequate accounting records in accordance with the provisions of the
CompaniesAct,1956forsafeguardingtheassetsof the Company and for
preventing and detecting fraud and otherirregularities;
(d) they had prepared the annual accounts on a going concern basis
ACKNOWLEDGEMENT
Relationship with Members, Investors of the funds under management,
Reserve Bank of India, Securities and Exchange Board of India, other
Regulatory authorities, investee companies and our bankers remained
excellent during the year under review. Your Directors are grateful for
the support extended by them and lookforward to receiving
theircontinued support and encouragement
For and on behalf of the Board
Place : Mumbai
Date : April 21, 2011 S M DATTA
Chairman
Mar 31, 2010
The Directors have pleasure in presenting for your consideration and
approval the Twenty Fourth Annual Report with the Audited Financials of
the Company fortheyearended March 31,2010
FINANCIALACHIEVEMENTSANDDIVIDEND
For the For the For the
year ended year ended year ended
March 31, 2010 March 31, 2009 March 31,2010
(Rs Million) (Rs Million) (Rs Million)
Standalone Standalone Consolidated
Total Income 957.06 1009.39 1813.37
Profit before Taxation 588.64 578.09 956.92
Provision for Taxation 195.78 211.72 215.38
Net Profit after Taxation 392.86 366.37 738.49*
Profit available for
appropriation 522.77 492.75 997.53
Appropriations :
General Reserve 40 37 40
Dividend (inclusive of
dividend tax) 355.12 325.84 355.12
For the
year ended
March 31, 2009
(Rs Million)
Consolidated
Total Income 1641.61
Profit before Taxation 846.03
Provision for Taxation 222.65
Net Profit after Taxation 621.88*
Profit available for
appropriation 740.84
Appropriations :
General Reserve 37
Dividend (inclusive of
dividend tax) 325.84
*after Minority Interest
DIVIDEND
During the year, your Company achieved a net profit after tax of Rs
392.86 million. Your Directors recommend a dividend of Rs 1.50 per
share of face value Rs 21- each. The total amount of dividend is Rs
355.12 million (inclusive of dividend tax of Rs 50.58 million)
REVIEW OF OPERATIONS
The year under review witnessed a strong revival of real economy and
financial markets across the globe, more particularly in India. The
Indian economy saw a marked increase in industrial production and
trade, which coupled with higher global liquidity and increased FN
inflows lead to a sharp recovery in the public markets
Backed by management fee from the two large real estate Funds managed
by your Company and incremental fee arising post Final Close of the new
Standard Chartered IL&FS Asia Infrastructure Growth Fund, your Company
was able to exhibit strong revenue growth, with Consolidated Income
increasing 10% on a year-on-year basis to Rs 1.81 billion during FY2010
On a consolidated basis, the Income from Operations of the Company for
the financial year 2009-2010 was Rs 1.7 billion. Inclusive of Income
from Investments of Rs 61.11 million and Other Income of Rs 53.86
million, the Total Income on a consolidated basis for the Financial
Year 2009-2010 was Rs 1.81 billion. The total Operating Expenses for
the year were Rs 680.13 million and the resultant Profit after Tax on
consolidated basis for the financial year 2009-2010 was Rs 738.49
million, a 19% increase overthe previous year
On a standalone basis, the Income from Operations of the Company for
the financial year 2009-2010 was Rs 845.93 million. Inclusive of
Income from Investments of Rs 57.35 million and Other Income of Rs
53.78 million, the Total Income of the Company for the Financial Year
2009-2010 was Rs 957.06 million. The total Operating Expenses forthe
year were Rs 362.81 million and the resultant Profit after Tax for the
financial year 2009-2010 was Rs 392.86 million, a 7% increase over the
previous year
FUTURE OUTLOOK
Business environment in India has improved significantly over the
previous financial year and the Indian economy is expected to register
a strong GDP growth in the region of 8% for FY2011. Increased corporate
spending and revival of the IPO markets augurs
wellforyourCompanyintermsof higherdealflow and increased exitevents
However, certain concerns in relation to global financial market
stability remain, more particularly on account of developments in Dubai
and Greece. The Indian economy is also expected to face challenges of
higher than desired inflation and current account deficit, which may
adversely impact the anticipated growth
Your Company will seek to capitalize on the improved business
environment by seeking to deploy existing active funds. by
opportunistically exiting from the listed Fund portfolio, and by
raising fresh Funds in niche sectors. During the course of FY2011, your
Company seeks to attain significant divestment in two of its Funds and
would seek to fully commit three other Funds, thereby paving the way
for raising larger sized follow-on Funds in each of its verticals viz.
general purpose private equity, real estate and infrastructure. These
new Funds will add to the revenue growth of your Company in the short
to medium term future
DIRECTORS
Mr Bansi Mehta and Mr Ravi Parthasarathy retire by rotation at the
ensuing Annual General Meeting of the Company and being eligible offer
themselves for re-appointment
STATUTORYAUDITORS
The Statutory Auditors of the Company M/s Deloitte Haskins & Sells,
Chartered Accountants, Mumbai, retire at the conclusion of the ensuing
Annual General Meeting and have expressed their willingness to continue
as Auditors, if re-appointed, at the ensuing Annual General Meeting of
the Company
The Company has also received a certificate from M/s Deloitte Haskins &
Sells under Section 224(1 B) of the Companies Act. 1956 confirming
their eligibility for re-appointment. M/s Deloitte Haskins & Sells,
Mumbai, have also confirmed to the Company that the firm is subjected
to the Peer Review Process of the Institute of Chartered Accountants of
India
SHARE CAPITAL
During the year the members of the Company had approved the
sub-division of the Equity Shares of the Company from a face value of
Rs 10/- each to a face value of Rs 21- each. Accordingly, the
Authorised, Issued, Subscribed and Paid-up Share Capital of the Company
have been changed to reflect the revised face value of Rs 2/- each
During the year your Company allotted 4,091,490 Equity Shares of Rs 2/-
each on the exercise of Options issued under the Employee Stock Option
Plans
CORPORATE GOVERNANCE
Pursuant to Clause 49 of the Listing Agreement with the Stock
Exchanges, Report on Corporate Governance along with the Management
Discussion and Analysis and Auditors Certificate on compliance with
the Corporate Governance requirements have been included in this Annual
Report as separate sections
SUBSIDIARY COMPANIES
During theyear2009-2010yourCompany had thefollowing subsidiaries
IL&FSAsian Infrastructure Managers Limited, IL&FS Urban Infrastructure
Managers Limited, IL&FS Investment Advisors LLC and IL&FS Singapore
Asset Management Company Pte.Ltd.
Pursuant to Section 212 of the Companies Act, 1956 the Company had made
an application to the Ministry of Corporate Affairs. Government of
India and sought exemption from attaching with the Balance Sheet of the
Company, the Accounts and other documents of each of the Subsidiary
Companies of the Company. The Ministry of Corporate Affairs, Government
of India vide its letter no. 47/33/2010-CL-l 11 dated January 13, 2010,
has granted the exemption to the Company. In compliance with the terms
of said exemption the Company has attached a summary financial
statement of each of the Subsidiary Companies
As per Clause 32 of the Listing Agreement the consolidated financial
statements of the Company with its Subsidiaries form part of the Annual
Report. The copies of the audited annual accounts of the Companys
Subsidiaries and other related documents, can also be sought by any
member of the Company or its Subsidiaries on making a written request
to the Company Secretary in this regard. The Annual Accounts of the
Subsidiary Companies are also available for inspection by any member at
the Companys and/or the concerned Subsidiaries registered office
Review of Operations of Subsidiary Companies
IL&FSAsian Infrastructure Managers Limited:
IL&FS Asian Infrastructure Managers Limited (IAIML) has been set up to
manage the Pan Asia Project Development Fund. India (PAPDF/the Fund).
The Fund has been set up in order to support initiatives for
development of infrastructure projects in the Asian region. The Fund
has a corpus of Rs 1,125 million. The Company is playing an active role
in managing and monitoring the investments made by the Fund. The
performance of these investments has been satisfactory
The Income from Operations of IAIML for the financial year 2009-2010
was Rs 21.92 million. Inclusive of Income from Investments and Other
Income of Rs 2.05 million, the Total Income for Financial Year
2009-2010 was Rs 23.97 million. The total Operating Expenses of IAIML
for the year were Rs 20.11 million and the resultant Profit after Tax
for the year was Rs 3.17 million
IL&FS Urban Infrastructure Managers Limited:
IL&FS Urban Infrastructure Managers Limited (IUIML) functions as the
Asset Manager for the Pooled Municipal Debt Obligations (PMDO)
Facility. The objective of the PMDO Facility is to provide long tenure
term loans to meet the debt requirements of urban infrastructure
projects across cities in India. The total corpus of the PMDO Facility
is Rs 2,750 crores. lUIMLs role as an Asset Manager is to identify
and appraise the eligible projects and obtain sanctions of the lenders
and the re after assistthe lenders to disburse, monitorandadministerthe
loan assets until repayment
By March 31,2010, projects fora term loan of Rs 2,070.75 crores have
been sanctioned from the PMDO facility and the assets under management
amounted to Rs 588.29 crores. It is envisaged that the existing PMDO
facility can achieve the target of Rs2,750 crores before the end of the
commitment period of October2010
The Income from Operations of IUIML for the financial year 2009-2010
was Rs 67.45 million. Inclusive of Income from Investments and Other
Income of Rs 0.93 million, the Total Income for Financial Year
2009-2010 was Rs 68.38 million. The total Operating Expenses of
lUIMLfor the year were Rs 55.34 million and the resultant Profit after
Tax for the yearwasRs 7.68 million
IL&FS Investment Advisors LLC:
IL&FS Investment Advisors LLC (HAL) acts as the Investment Manager to
IL&FS India Realty Fund LLC, IL&FS India Realty Fund II LLCand Tara
India Fund III LLC. The totalfunds underthe management of HAL are USD
1.5 billion
The Total Income of HAL for the financial year 2009-2010 was USD 27.18
million. The total Operating Expenses of HAL for the yearwere USD 20.10
million and the resultant Profit after Taxforthe year was USD 6.87
million
IL&FS Singapore Asset Management Company Pte. Ltd.:
IL&FS Singapore Asset Management Company Pte. Ltd. (ISAMCPL) is in the
business of providing Investment Management Services to Pan Asia
Project Development Fund (Singapore). The total funds under the
management of ISAMCPL are USD 20 million
The Total Income of ISAMCPL for the financial year 2009-2010 was USD
404,000. The total Operating Expenses of ISAMCPL forthe yearwere USD
333,860 and the resultant Profit afterTaxfor the year was USD 64,684
DEPOSITS
Your Company has not accepted any deposits from the public for the year
under consideration
FOREIGN EXCHANGE EARNINGS AND OUTGO
The particulars regarding foreign expenditure and earnings appear as
Item Nos. 8(iii) and 8(iv) respectively, of Schedule 13B to the
Accounts
Since the Company does not own any manufacturing facility, the other
particulars in the Companies (Disclosure of Particulars in the Report
of Board of Directors) Rules, 1988 are not applicable
PERSONNEL
Your Directors wish to place on record their appreciation of the
services rendered by the employees of the Company at all levels. The
particulars of the employees as required under Section 217(2A) of the
Companies Act, 1956 read with Companies (Particulars of Employees)
Rules, 1975 forms part of the Directors Report for the year ended
March 31, 2010. However, as per the provisions of Section 219(1
)(b)(iv) of the Companies Act, 1956, the Directors Report and Accounts
are being sent to all shareholders of the Company, excluding the
statement of particulars of employees under Section 217(2A) of the Act.
Any shareholder interested in obtaining a copy of the said statement
may write to the Company Secretary at the Registered Office of the
Company
DETAILS OF EMPLOYEE STOCK OPTION PLANS
The detailed disclosures as per SEBI (Employee Stock Option Scheme and
Employee Stock Purchase Scheme) Guidelines. 1999 of the ESOP Schemes
of the Company are annexed to the Directors Report
DIRECTORS RESPONSIBILITY STATEMENT
Your Directors wish to state that:
(a) in the preparation of the annual accounts, the applicable
accounting standards had been followed along with proper explanation
relating to material departures;
(b) they had 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 yearand of the profitof the
Company forthatyear;
(c) they had taken proper and sufficient care for the maintenance of
adequate accounting records in accordance with the provisions of the
CompaniesAct, 1956 for safeguarding the assets of the Company and for
preventing and detecting fraud andotherirregularities;
(d) they had prepared the annual accounts on a going concern basis
ACKNOWLEDGEMENT
Relationship with Members, Investors of the funds under management,
Reserve Bank of India, Securities and Exchange Board of India, other
Regulatory authorities, investee companies and our bankers remained
excellent during the year under review. Your Directors are grateful for
the support extended by them and look forward to receiving their
continued support and encouragement
For and on behalf of the Board
Place : Mumbai
Date: April 26, 2010 S M DATTA
Chairman