Mar 31, 2018
Dear Members,
The Directors have pleasure in presenting the Thirteenth Annual Report of your Company with the audited financial statements for the financial year ended March 31, 2018.
FINANCIAL HIGHLIGHTS
The highlights of the Consolidated and Standalone Financial Statements of the Company for the financial years 2017-18 and 2016-17 are as under:
(Rs. in Million)
Particulars |
Consolidated |
Standalone |
||
2017-18 |
2016-17 |
2017-18 |
2016-17 |
|
Total Income |
38,120.46 |
28,008.64 |
36,282.52 |
27,268.55 |
Total Expenditure |
33,180.80 |
24,433.80 |
31,736.84 |
23,945.70 |
Profit Before Tax and exceptional items |
4,939.66 |
3,574.84 |
4,545.68 |
3,322.85 |
Exceptional items |
- |
- |
293.68 |
- |
Profit before tax |
4,939.66 |
3,574.84 |
4,839.36 |
3,322.85 |
Provision For Tax |
1,656.13 |
1,174.30 |
1,569.25 |
1,154.23 |
Profit after tax from continuing operations |
3,283.53 |
2,400.54 |
3,270.11 |
2,168.62 |
Profit/(Loss) after tax from Discontinuing operations |
(9.08) |
(11.33) |
- |
|
Profit for the year |
3,274.45 |
2,389.21 |
3,270.11 |
2,168.62 |
Profit/(Loss) brought forward from previous Year |
4,326.27 |
2,383.66 |
4,304.04 |
2,569.14 |
Profit available for appropriation |
7,600.72 |
4,772.87 |
7,574.15 |
4,737.76 |
Appropriations: Transfer to Reserve Fund under Section 45-IC of the RBI Act, 1934 |
(654.02) |
(433.72) |
(654.02) |
(433.72) |
Transfer to statutory reserve under Section 29C of the National Housing Bank Act, 1987 |
(22.16) |
(12.88) |
||
Dividend paid for F.Y. 2016-17# |
(254.09) |
(254.09) |
||
Dividend Tax thereon for F.Y. 2016-17# |
(51.73) |
(51.73) |
||
Transfer to General Reserve |
- |
- |
- |
- |
Balance carried forward to Balance Sheet |
6,618.72 |
4,326.27 |
6,614.31 |
4,304.04 |
# The proposed equity dividend and dividend distribution tax for FY 2017-18 are not accounted as liabilities in fiscal 2018 in accordance with revised AS-4 âContingencies and events occurring after the Balance Sheet dateâ.
The Company is focused on providing retail loans to MSMEs and consumers, including long term loans secured by property, business loans, personal loans, two-wheeler loans and consumer durable loans, which is expected to drive growth for the Company going forward.
During the year under review, the Company has successfully grown its outstanding Loan Assets under Management from Rs.198.24 billion to Rs.269.97 billion, a growth of 36%. The Retail Assets under Management has grown from Rs.183.53 billion to Rs.252.43 billion, a growth of 38%.
The Consolidated Net worth of the Company increased from Rs.23.04 billion to Rs.26.18 billion as at March 31, 2018.
Consolidated Net Interest Income increased by 53% from Rs.13,008 million during the financial year ending March 31, 2017 to Rs.19,870 million during the financial year ending March 31, 2018.
The profit after tax was up by 37% from Rs.2,389 million to Rs.3,274 million.
DIVIDEND
Keeping in mind the improved performance of the Company and the outlook for your Company, your Directors are pleased to recommend a dividend of Rs.2.80/- (Rupees Two and Paise Eighty only) per share i.e. 28% on each Equity Share having face value of Rs.10/- (Rupees Ten only) each.
DIVIDEND DISTRIBUTION POLICY
In accordance with the Regulation 43A of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (âListing Regulationsâ), the Company has formulated a Dividend Distribution Policy.
The Policy is hosted on the website of the Company and can be viewed at https://www.capitalfirst.com/investor/corporate-governance.
CAPITAL ADEQUACY
The Companyâs capital adequacy ratio was 15.88% as on March 31, 2018, which is above the threshold limit of 15% as prescribed by the Reserve Bank of India (âRBIâ).
SHARE CAPITAL
During the year under review, the Company had issued and allotted 15,43,175 equity shares and subsequent to the year under review, 2,500 equity shares were allotted to the eligible employee(s) of the Company under various Employee Stock Option Schemes of the Company. The paid up equity share capital of the Company as on date stands at Rs.98,96,77,440/- (Rupees Ninety Eight Crore Ninety Six Lakhs Seventy Seven Thousand Four Hundred and Forty only) comprising of 9,89,67,744 equity shares of Rs.10/- each.
SUBSIDIARIES
In accordance with the provisions of Section 136 of the Companies Act, 2013, the annual report of the Company, the annual financial statements and the related documents of the Companyâs subsidiary companies are placed on the website of the Company, https://www.capitalfirst.com.
Shareholders may download the annual financial statements and detailed information on subsidiary companies from the Companyâs website or may write to the Company for the same. Further, the documents shall be available for inspection by the shareholders at the registered office of the Company.
The Company has not made any loans or advances in the nature of loans to any of its subsidiary company or companies in which its directors are deemed to be interested, other than in the ordinary course of business.
The Company has obtained a certificate from its statutory auditors that it is in compliance with the provisions of Foreign Exchange Management Act, 1999 with respect to downstream investments made in/by its subsidiaries and in other companies during the year under review.
During the year under review, the subsidiary Company viz. Capital First Home Finance Limited raised funds through issue and allotment of 7,14,28,564 Equity Shares of Rs.10/- each on a right basis, pursuant to receipt of subscription amount of Rs.99,99,99,896/- (Rupees Ninety Nine Crore Ninety Nine Lakhs Ninety Nine Thousand Eight Hundred and Ninety Six only) issued at a price of Rs.14/- per Equity Share (face value of Rs.10/- each and premium of Rs.4/- per share) to Capital First Limited.
PUBLIC DEPOSITS
The Company being a Non-Deposit Accepting Non-Banking Finance Company has not accepted any deposits from the public during the year under review and shall not accept any deposits from the public without obtaining prior approval of the RBI.
RBI GUIDELINES
As a Systemically Important Non-Deposit taking Non-Banking Finance Company, your Company always aims to operate in compliance with applicable RBI guidelines and regulations and employs its best efforts towards achieving the same.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
As required under Regulation 34 of the Listing Regulations and Circulars/ Notifications/ Directions issued by RBI from time to time, the Management Discussion and Analysis of the financial condition and result of consolidated operations of the Company for the year under review is presented in a separate section forming part of the Annual Report.
CORPORATE GOVERNANCE
A Report on Corporate Governance as required under Listing Regulations forms part of the Annual Report.
A Certificate from M/s. Makarand M. Joshi & Co., Practicing Company Secretaries, confirming compliance with the conditions of Corporate Governance as stipulated under the Listing Regulations, also forms part of the Annual Report.
BUSINESS RESPONSIBILITY REPORT
In accordance with Regulation 34(2)(f) of the Listing Regulations, the inclusion of Business Responsibility Report (BRR) as a part of the Annual Report is mandated for top 500 listed entities for the year 2017-18 based on the market capitalization to be calculated as on March 31 of every financial year.
Since Capital First Limited is one of the top 500 listed companies by way of market capitalisation as on March 31, 2017, the Company has presented its BRR for the financial year 2017-18, which is part of this Annual Report. As a green initiative, the Companyâs BRR will be available on its website at the web link http://www.capitalfirst.com/investor/corporate-governance. Any shareholder interested in obtaining a physical copy of the same may write to the Company Secretary of the Company.
DIRECTORS & KEY MANAGERIAL PERSONNEL
a. Re-appointment
The Board of Directors at their Meeting held on March 29, 2017 on recommendation of Nomination & Remuneration Committee had re-appointed Mr. N. C. Singhal (DIN 00004916), Mr. M. S. Sundara Rajan (DIN 00169775) and Mr. Hemang Raja (DIN 00040769), as Non-Executive Independent Directors of the Company for a term of five years effective from April 01, 2017 to hold office up to March 31, 2022 and they shall not be liable to retire by rotation. The aforesaid re-appointment of Independent Directors was approved by the members in the 12th Annual General Meeting of the Company held on July 05, 2017.
During the financial year 2017-18, the term of Dr. (Mrs.) Brinda Jagirdar (DIN 06979864), Non-Executive Independent Director of the Company, who was appointed for a term of three years with effect from September 24, 2014, expired on September 23, 2017. The Board of Directors at its Meeting held on August 02, 2017 on recommendation of Nomination & Remuneration Committee had re-appointed Dr. (Mrs.) Brinda Jagirdar as Non-Executive Independent Director of the Company for a term of five years with effect from September 24, 2017 to hold office up to September 23, 2022 and she shall not be liable to retire by rotation. The aforesaid re-appointment of Dr. (Mrs.) Brinda Jagirdar as Non-Executive Independent Director was approved by members through Postal Ballot results on September 07, 2017.
Further, during the financial year 2017-18, Mr. Dinesh Kanabar (DIN 00003252), Non-Executive Independent Director of the Company, who was appointed for a term of three years with effect from January 06, 2015, expired on January 05, 2018. The Board of Directors at its Meeting held on October 31, 2017 on recommendation of Nomination & Remuneration Committee had re-appointed Mr. Dinesh Kanabar as Non-Executive Independent Director of the Company for a term of five years with effect from January 06, 2018 to hold office up to January 05, 2023 and he shall not be liable to retire by rotation. The aforesaid re-appointment of Mr. Dinesh Kanabar as Non-Executive Independent Director was approved by members through Postal Ballot results on January 21, 2018.
Further, subsequent to the year under review, the Board of Directors at their Meeting held on April 03, 2018 on recommendation of Nomination & Remuneration Committee had re-appointed Mr. Apul Nayyar (DIN 01738973) and Mr. Nihal Desai (DIN 03288923) as Executive Directors who shall act as Whole Time Directors and Key Managerial Personnels of the Company for a term of one year with effect from April 04, 2018 to hold office up to April 03, 2019. The aforesaid re-appointment of Mr. Apul Nayyar and Mr. Nihal Desai shall be subject to the approval of members in the 13th Annual General Meeting of the Company.
The Board recommends re-appointment of Mr. Apul Nayyar and Mr. Nihal Desai as Executive Directors who shall act as Whole Time Directors and Key Managerial Personnels of the Company.
The details of the aforesaid Directors forms part of this Report as Annexure 1.
b. Retire by Rotation
In accordance with Section 152 and other applicable provisions of Companies Act, 2013, Mr. Narendra Ostawal (DIN 06530414), being Non-Executive Director, retires by rotation and being eligible offers himself for re-appointment at the ensuing Annual General Meeting. The Board recommends his re-appointment.
BOARDâS INDEPENDENCE
Based on the confirmation/ disclosures received from the Directors and on evaluation of the relationships disclosed, the following Non-Executive Directors are Independent in terms of Section 149(6) of the Companies Act, 2013 and the requirements of Listing Regulations:
1. Mr. N. C. Singhal (DIN 00004916)
2. Mr. M. S. Sundara Rajan (DIN 00169775)
3. Mr. Hemang Raja (DIN 00040769)
4. Dr. (Mrs.) Brinda Jagirdar (DIN 06979864)
5. Mr. Dinesh Kanabar (DIN 00003252)
NUMBER OF MEETINGS OF THE BOARD
The Board met 7 times during the financial year 2017-18 viz., on May 10, 2017, July 05, 2017, August 02, 2017, October 31, 2017, December 18, 2017, January 13, 2018 and January 24, 2018. The maximum interval between any two meetings did not exceed 120 days.
COMMITTEES OF THE BOARD
In accordance with the Companies Act, 2013 and Listing Regulations, the Company has following Committees in place:
- Audit Committee
- Stakeholders Relationship Committee
- Corporate Social Responsibility Committee
- Nomination and Remuneration Committee
Details of the said Committees along with their charters, compositions and meetings held during the financial year, are provided in the âReport on Corporate Governanceâ, as a part of this Annual Report.
COMPANYâS POLICY ON DIRECTORSâ APPOINTMENT, REMUNERATION AND EVALUATION
Pursuant to the provisions of the Companies Act, 2013 (âthe Actâ), Listing Regulations and requirements of the Reserve Bank of India, Policy on Nomination and Remuneration of Directors, Key Managerial Personnel, Senior Management and other employees had been formulated including criteria for determining qualifications, positive attributes, Independence of a Director and other matters as required under the said Act and Listing Regulations.
The evaluation framework for assessing the performance of Directors comprises of the following key areas:
- Expertise;
- Objectivity and Independence;
- Guidance and support in context of life stage of the Company;
- Understanding of the Companyâs business;
- Understanding and commitment to duties and responsibilities;
- Willingness to devote the time needed for effective contribution to Company;
- Participation in discussions in effective and constructive manner;
- Responsiveness in approach; and
- Ability to encourage and motivate the Management for continued performance and success.
The evaluation involves Self-Evaluation by the Board members and subsequent assessment by the Board of Directors. A member of the Board will not participate in the discussion of his/ her evaluation.
Accordingly, a process of evaluation was followed by the Board for its own performance and that of its Committees and individual Directors and also the necessary evaluation was carried out by Nomination and Remuneration Committee and Independent Director at their respective meetings held for the purpose.
The Board of Directors at their Meeting held on May 04, 2018 on recommendation of Nomination & Remuneration Committee had approved the payment of remuneration of Rs.2.80 Crore (Rupees Two Crore and Eighty Lakhs Only) per annum payable to Mr. Apul Nayyar (DIN 01738973) and Mr. Nihal Desai (DIN 03288923) respectively pursuant to the proposed re-appointment and also bonus of Rs.1.80 Crore (Rupees One Crore and Eighty Lakhs Only) for the financial year 2017-18 which shall be payable in financial year 2018-19 to them respectively subject to the approval of members in the 13th Annual General Meeting of the Company.
Further, subsequent to the year under review, the Board of Directors at their Meeting held on May 04, 2018 on recommendation of Nomination & Remuneration Committee had also approved increase in remuneration of Mr. V. Vaidyanathan (DIN 00082596), Chairman & Managing Director by 10%, consisting of Salary of Rs.5.50 Crore (Rupees Five Crore and Fifty Lakhs Only) per annum effective from April 01, 2018, and approved bonus of Rs.2.80 Crore (Rupees Two Crore and Eighty Lakhs Only) per annum being effective for the financial year 2017-18, and payable in financial year 2018-19 and thereafter for the remaining period of his tenure.
The aforesaid revision in remuneration and bonus payable to Mr. V. Vaidyanathan shall be subject to the approval of members in the 13th Annual General Meeting of the Company.
The details of the aforesaid Directors forms part of this Report as Annexure 1.
DIRECTORSâ RESPONSIBILITY STATEMENT
Pursuant to the requirements of Section 134(5) of the Companies Act, 2013, with respect to Directorsâ Responsibility Statement, it is hereby stated 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) the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit and loss of the company for that period;
(c) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;
(d) the Directors have prepared the annual accounts on a going concern basis;
(e) the Directors have laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively; and
(f) the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
The Board of Directors at its meeting held on May 08, 2014 had constituted Corporate Social Responsibility (CSR) Committee in accordance with Section 135 of Companies Act, 2013 read with rules formulated therein. The Company had carried out its CSR activities/ programs on the recommendation of the CSR Committee and duly approved by the Board of Directors and in accordance with the policy on CSR as per the identified core areas.
The Company chooses its CSR programs among many options in the CSR Committee and the Board Meeting(s) and does not get persuaded by any external influences other than those short listed in the best of spirit and which can add the social value in the pragmatic and idealistic sense.
The details of contents of CSR Policy of the Company and the details about the development of CSR Policy and initiatives taken by the Company on CSR during the financial year have been appended as Annexure 3 to this Report.
RISK MANAGEMENT POLICY AND INTERNAL CONTROL
The Company has adopted a Risk Management Policy duly approved by the Board of Directors and also has in place a mechanism to identify, assess, monitor and mitigate various risks to key business objectives. Major risks identified by the businesses and functions are systematically addressed through mitigating actions on a continuing basis. These are discussed at the meetings of the Risk Management Committee, Audit Committee and the Board of Directors of the Company. The Companyâs internal control systems are commensurate with the nature of its business and the size and complexity.
The detailed note on Risk Management and Internal Controls forms part of Management Discussion and Analysis Report.
CREDIT RATING
During the year, Brickwork Ratings India Private Limited (Brickwork) reaffirmed the long term rating of âBWR AAAâ (Triple A) of your Company. Instruments with this rating are considered to have the highest degree of safety regarding timely servicing of financial obligations. Such instruments carry lowest credit risk. During the year, CARE Ratings Limited (CARE) reaffirmed the long term rating of âAA â (Double A Plus) of your Company. Instruments with this rating are considered to have high degree of safety regarding timely servicing of financial obligations. Such instruments carry very low credit risk.
Long-term Bank Loan Facilities: During the year, Brickwork reaffirmed a rating of âBWR AAAâ (Triple A) and the Companyâs rating of âCARE AA â (Double A Plus) by CARE was reaffirmed.
Secured Redeemable Non-Convertible Debentures (NCDs): During the year, Brickwork reaffirmed the rating of âBWR AAAâ (Triple A) and the rating of âCARE AA â (Double A Plus) was reaffirmed by CARE.
Subordinated Non-Convertible Debentures (NCDs): During the year, Brickwork reaffirmed the rating of âBWR AAAâ (Triple A) and CARE reaffirmed the rating of âCARE AA â (Double A Plus).
Perpetual Non-Convertible Debentures (NCDs): During the year, Brickwork reaffirmed the rating of âBWR AA â (Double A Plus) and CARE reaffirmed the âCARE AAâ (Double A) rating.
Short-term borrowing program: During the year under review, CARE reaffirmed the âCARE A1 â (A One Plus) rating for the short term borrowing program. The rating is the highest rating issued by CARE for short-term debt instruments and indicates strong capacity for timely payment of short term debt obligations and further indicates that the borrowing carries the lowest credit risk. During the year under review, ICRA Limited (ICRA) assigned the rating of âA1 â (A One Plus) for the short term borrowing program. The rating is the highest rating issued by ICRA for shortterm debt instruments and indicates strong capacity for timely payment of short term debt obligations and further indicates that the borrowing carries the lowest credit risk.
CONSOLIDATED FINANCIAL STATEMENTS
The Audited Consolidated Financial Statements are provided in this Annual Report which have been prepared in accordance with relevant Accounting Standards issued by the Institute of Chartered Accountants of India (ICAI).
STATUTORY AUDITORS AND THEIR REPORT
The term of M/s. S. R. Batliboi & Co. LLP, Chartered Accountants, having ICAI Firm Registration No. 301003E/ E300005 who were appointed as Statutory Auditors of your Company at the Ninth Annual General Meeting (AGM) held on June 18, 2014 expired at conclusion of Twelfth Annual General Meeting held on July 05, 2017.
Accordingly, the members of the company at Twelfth Annual General Meeting of the Company held on July 05, 2017, appointed M/s. B S R & Co. LLP, Chartered Accountants bearing Firm Registration No. 101248W/ W-100022 as the Statutory Auditors of the Company for a term of five years from conclusion of Twelfth Annual General Meeting till conclusion of Seventeenth Annual General Meeting in accordance with the applicable provisions of the Companies Act, 2013 read with the Rules made thereunder and the Listing Regulations and applicable law. As per the provisions of Section 139 of the Companies Act, 2013, the appointment of Statutory Auditors is required to be ratified by members at every Annual General Meeting.
The Company has received the certificate(s) of eligibility in accordance with Section 139, Section 141 and other applicable provisions of the Companies Act, 2013 and rules made thereunder, from M/s. B S R & Co. LLP, Chartered Accountants.
Accordingly, the appointment of M/s. B S R & Co. LLP, as Statutory Auditor of the Company is placed for ratification by the shareholders.
The Statutory Auditorâs Report on financial statements for the financial year 2017-18 does not contain any qualification, reservation or adverse remark.
SECRETARIAL AUDITORS AND THEIR REPORT
Pursuant to the provisions of Section 204 of the Companies Act, 2013 and rules made thereunder, the Company had appointed M/s. Makarand M. Joshi & Co., Practicing Company Secretaries, to undertake the Secretarial Audit of the Company for the financial year 2017-18. The Secretarial Audit Report for financial year 2017-18, has been appended as Annexure 5 to this Report.
The Secretarial Auditorâs Report does not contain any qualification, reservation or adverse remark.
The Board of the Directors at their Meeting held on May 04, 2018 have re-appointed M/s. Makarand M. Joshi & Co., Practicing Company Secretaries, to undertake the Secretarial Audit of the Company for the financial year 2018-19.
PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS
Details of Loans, Guarantees and Investments are given in the notes to the Financial Statements.
PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES REFERRED TO IN SECTION 188
During and subsequent to the year under review, the contracts or arrangements with related parties have been on armâs length and in ordinary course of business and they were not material in nature. Accordingly, the particulars of the transactions as prescribed in Form AOC - 2 of the rules prescribed under Chapter IX relating to Accounts of Companies under the Companies Act, 2013 are not required to be disclosed as they are not applicable.
EXTRACT OF ANNUAL RETURN
The details forming part of the extract of the Annual Return in Form MGT 9 is annexed herewith as Annexure 2 to this Directorsâ Report.
VIGIL MECHANISM
Your Company has established a âWhistle Blower Policy and Vigil Mechanismâ for Directors and employees to report to the appropriate authorities concerns about unethical behavior, actual or suspected, fraud or violation of the Companyâs code of conduct policy and provides safeguards against victimization of employees who avail the mechanism and also provide for direct access to the Chairman of the Audit Committee. The said policy has been uploaded on the website of the Company.
DISCLOSURES UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT 2013 READ WITH RULES
Pursuant to the requirements of Section 22 of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 read with rules made thereunder, the Company did not receive any complaint of sexual harassment during the year under review.
MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY
There have been no material changes and commitments, affecting the financial position of the Company which have occurred between the end of the financial year of the Company to which the financial statements relate and the date of the report.
COMPOSITE SCHEME OF AMALGAMATION
During the year under review, the Board of Directors of the Company at its meeting held on January 13, 2018, has approved a composite scheme of amalgamation, in terms of Sections 230232 of Companies Act, 2013, of Capital First Limited, Capital First Home Finance Limited and Capital First Securities Limited (together the âAmalgamating Companiesâ) with IDFC Bank Limited (âAmalgamated Companyâ). The Competition Commission of India has, at its meeting held on March 07, 2018, considered the proposed combination and approved the same under subsection (1) of Section 31 of the Competition Act, 2002. The National Housing Bank, vide its letter dated February 16, 2018, has intimated their no objection to the aforesaid amalgamation subject to compliance with the applicable provisions of relevant Acts, Rules, Regulations, etc. in the matter. BSE Limited (âBSEâ) has, vide its letter dated March 14, 2018, given its prior approval for the aforesaid amalgamation with respect to the Amalgamated Companyâs trading membership in the Currency Derivative Segment of BSE. National Stock Exchange of India Limited (âNSEâ) has, vide its letter dated March 26, 2018, given its prior approval for the aforesaid amalgamation with respect to the Amalgamated Companyâs trading membership in the Currency Derivative Segment of NSE. The said scheme remains subject to the receipt of approval from the Reserve Bank of India and other statutory and regulatory approvals, including the approvals of the relevant stock exchanges, Securities and Exchange Board of India, the National Company Law Tribunal, and the respective shareholders and creditors of the Amalgamating Companies and the Amalgamated Company.
DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANYâS OPERATIONS IN FUTURE
The Competition Commission of India has, at its meeting held on March 07, 2018, considered the proposed amalgamation of Capital First Limited, Capital First Home Finance Limited and Capital First Securities Limited with IDFC Bank Limited (âAmalgamated Companyâ) and passed an order to approve the same under sub-section (1) of Section 31 of the Competition Act, 2002. Additionally, the National Housing Bank (vide its letter dated February 16, 2018) has intimated its no-objection to the aforesaid amalgamation subject to compliance with the applicable provisions of law in the matter. BSE Limited (âBSEâ) has (vide its letter dated March 14, 2018) given its prior approval for the aforesaid amalgamation with respect to the Amalgamated Companyâs trading membership in the Currency Derivative Segment of BSE. National Stock Exchange of India Limited (âNSEâ) has (vide its letter dated March 26, 2018) given its prior approval for the aforesaid amalgamation with respect to the Amalgamated Companyâs trading membership in the Currency Derivative Segment of NSE. Other approvals and formalities in respect of the aforesaid amalgamation are under process.
PARTICULARS OF ENERGY CONSERVATION, TECHNOLOGY ABSORPTION, EXPENDITURE ON RESEARCH AND DEVELOPMENT, FOREIGN EXCHANGE INFLOW/OUTFLOW, ETC.
The requirements of disclosure with regard to Conservation of Energy in terms of Section 134 of the Companies Act, 2013, read with the Companies (Accounts) Rules, 2014, are not applicable to the Company since it doesnât own any manufacturing facility.
However, the Company makes all efforts towards conservation of energy, protection of environment and ensuring safety.
The details of the earnings and outgoing Foreign Exchange during the year under review are provided in Note No. 36 to the Standalone Financial Statements as at March 31, 2018. The Members are requested to refer to the said Note for details in this regard.
PARTICULARS OF EMPLOYEES, EMPLOYEES STOCK OPTION SCHEME (ESOS) AND EMPLOYEES STOCK PURCHASE SCHEME (ESPS)
The details in terms of Section 197 of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are forming part of this report as Annexure 4. The statement containing particulars of employees as required under Section 197(12) of the Companies Act, 2013 read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 may be obtained by the members by writing to the Company Secretary of your Company.
The Stock Options have been granted to the employees under various CFL - Employees Stock Option Schemes. The said schemes are in compliance with the Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 as amended from time to time (SEBI Regulations). The details and disclosures with respect to ESOS/ ESPS as required under SEBI Regulations are provided on the website of the Company and web link for the same is http://www.capitalfirst.com/investor/corporate-governance.
ACHIEVEMENTS
Your Company and Chairman & Managing Director won several award/ achieved rankings. Select few awards/ rankings are enumerated hereunder:
- Mr. Vaidyanathan received âEntrepreneur of The Year -Financial Services Industryâ in Asia Pacific Entrepreneur Award, 2017. He also received âDigitalist Awardâ in Mint SAP Award.
- Capital First received âOutstanding Contribution To Financial Inclusion Indiaâ in Capital Finance International Award - 2017.
- Capital First received âBest BFSI Brand Award 2018â recognition in The Economic Times Best BFSI Brand Awards 2018.
- Capital First received âFinancial Services Company of the Year 2018â in VC Circle Awards 2018.
ACKNOWLEDGEMENT
We are grateful to the Government of India, the Reserve Bank of India, the Securities and Exchange Board of India, the Stock Exchanges, Insurance Regulatory and Development Authority of India, National Housing Bank and other regulatory authorities for their valuable guidance and support and wish to express our sincere appreciation for their continued co-operation and assistance. We look forward to their continued support in future.
We wish to thank our bankers, investors, rating agencies, debenture trustees, customers and all other business associates for their support and trust reposed in us.
Your Directors express their deep sense of appreciation for all the employees whose commitment, co-operation, active participation, dedication and professionalism has made the organizationâs growth possible.
Finally, the Directors thank you for your continued trust and support.
On behalf of the Board of Directors
V. Vaidyanathan
Place: Mumbai Chairman & Managing Director
Date: May 04, 2018 DIN: 00082596
Mar 31, 2017
Dear Members,
The Directors have pleasure in presenting the Twelfth Annual Report of your Company with the audited financial statements for the financial year ended March 31, 2017.
FINANCIAL HIGHLIGHTS
The highlights of the Consolidated and Standalone Financial Statements of the Company for the financial years 2016-17 and 2015-16 are as under:
(Rs, in Millions)
Particulars |
Consolidated |
Standalone |
||
2016-17 |
2015-16 |
2016-17 |
2015-16 |
|
Total Income |
28,008.64 |
18,887.96 |
27,268.55 |
18,478.41 |
Total Expenditure |
24,433.80 |
16,364.41 |
23,945.70 |
16,092.27 |
Profit Before Tax and exceptional items |
3,574.84 |
2,523.55 |
3,322.85 |
2,386.14 |
Provision For Tax |
1,174.30 |
847.98 |
1,154.23 |
817.03 |
Profit after tax from continuing operations |
2,400.54 |
1,675.57 |
2,168.62 |
1,569.11 |
Profit/(Loss) after tax from Discontinuing operations |
-11.33 |
-13.72 |
- |
_ |
Profit for the year |
2,389.21 |
1,661.85 |
2,168.62 |
1,569.11 |
Profit/(Loss) brought forward from previous Year |
2,383.66 |
1,468.60 |
2,569.14 |
1,734.34 |
Profit available for appropriation |
4,772.87 |
3,130.45 |
4,737.76 |
3,303.45 |
Appropriations: Transfer to Reserve Fund under Section 45-IC of the RBI Act, 1934 |
433.72 |
313.82 |
433.72 |
313.82 |
Transfer to statutory reserve under Section 29C of the National Housing Bank Act, 1987 |
12.88 |
12.48 |
||
Proposed Dividend # |
- |
218.99 |
- |
218.99 |
Dividend Tax thereon # |
- |
44.58 |
- |
44.58 |
Transfer to General Reserve |
- |
156.91 |
- |
156.91 |
Balance carried forward to Balance Sheet |
4,326.27 |
2,383.67 |
4,304.04 |
2,569.15 |
# The proposed equity dividend and dividend distribution tax are not accounted as liabilities in fiscal 2017 in accordance with revised AS-4 âContingencies and events occurring after the Balance Sheet dateâ.
The Company is focused on providing retail loans to MSMEs and consumers, including long term loans secured by property, business loans, personal loans, two-wheeler loans and consumer durable loans, which is expected to drive growth for the Company going forward.
During the year under review, the Company has successfully grown its outstanding Loan Assets under Management from Rs, 160.41 billion to Rs, 198.24 billion, a growth of 24%. The Retail Assets under Management has grown from Rs, 137.56 billion to Rs, 183.53 billion, a growth of 33%.
The Consolidated Net worth of the Company increased from Rs, 17.04 billion to Rs, 23.04 billion as at March 31, 2017.
Consolidated Net Interest Income increased by 59% from Rs, 8,181 million during the financial year ending March 31, 2016 to Rs, 13,008 million during the financial year ending March 31, 2017.
The profit after tax was up by 44% from Rs, 1,661 million to Rs, 2,389 million.
DIVIDEND
Keeping in mind the overall performance and the outlook for your Company, your Directors are pleased to recommend a dividend of Rs, 2.60/- (Rupees Two and sixty paise only) per share i.e. 26% on each Equity Share having face value of Rs, 10/- (Rupees Ten only) each.
DIVIDEND DISTRIBUTION POLICY
In accordance with the Regulation 43A of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company has formulated a Dividend Distribution Policy. The Policy is hosted on the website of the Company and can be viewed at http://www.capitalfirst.com/ investor/corporate-governance
CAPITAL ADEQUACY
The Company''s capital adequacy ratio was 20.34% as on March 31, 2017, which is significantly above the threshold limit of 15% as prescribed by the Reserve Bank of India (âRBI'').
SHARE CAPITAL
During the year under review, the Company raised funds through issue and allotment of 47,80,000 Equity Shares of Rs, 10/- each on a preferential basis, pursuant to receipt of subscription amount of Rs, 3,40,67,06,000/- (Rupees Three Hundred and Forty Crores Sixty Seven Lakhs and Six Thousand only) issued at a price of Rs, 712.70/per Equity Share (face value of Rs, 10/- each and premium of Rs, 702.70/- per share) to Caladium Investment Pte. Ltd., which is indirectly wholly-owned by GIC (Ventures) Pte. Ltd., a Singapore''s Sovereign Wealth Fund.
During the year under review, the Company had also issued and allotted 14,04,325 equity shares to the eligible employees of the Company under various Employee Stock Option Schemes of the Company. The paid up equity share capital of the Company as on date stands at Rs, 97,42,20,690/- comprising of 9,74,22,069 equity shares of Rs, 10/- each.
PUBLIC DEPOSITS
The Company being a Non-Deposit Accepting Non-Banking Finance Company has not accepted any deposits from the public during the year under review and shall not accept any deposits from the public without obtaining prior approval of the RBI.
RBI GUIDELINES
As a Systemically Important Non-Deposit taking Non-Banking Finance Company, your Company always aims to operate in compliance with applicable RBI guidelines and regulations and employs its best efforts towards achieving the same.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
As required under Regulation 34 of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (âListing Regulationsâ) and Circular/ Notifications/Directions issued by RBI from time to time, the Management Discussion and Analysis of the financial condition and result of consolidated operations of the Company for the year under review is presented in a separate section forming part of the Annual Report.
CORPORATE GOVERNANCE
A Report on Corporate Governance as required under Listing Regulations forms part of the Annual Report.
A Certificate from M/s. Makarand M. Joshi & Co., Practicing Company Secretaries, confirming compliance with the conditions of Corporate Governance as stipulated under the Listing Regulations, also forms part of the Annual Report.
BUSINESS RESPONSIBILITY REPORT
In accordance with Regulation 34(2)(f) of the Listing Regulations, the inclusion of Business Responsibility Report (BRR) as a part of the Annual Report is mandated for top 500 listed entities for the year 2016-17 based on the market capitalization.
Since Capital First Ltd. is one of the top 500 listed companies by way of market capitalization as on March 31, 2016, the Company has presented its maiden BRR for the financial year 2016-17, which is part of this Annual Report. As a green initiative, the
Company''s BRR will be available on its website at the web link http://www.capitalfirst.com/investor/corporate-governance. Any shareholder interested in obtaining a physical copy of the same may write to the Company Secretary of the Company.
CHANGE OF REGISTERED OFFICE
During the year under review, the Company shifted its registered office from 15th Floor, Tower-2, India bulls Finance Centre, Seagate Bapat Marg, Elphinstone (West), Mumbai - 400 013 to One Indiabulls Centre, Tower 2A & 2B, 10th Floor, Senapati Bapat Marg, Lower Parel (West), Mumbai - 400 013 with effect from November 21, 2016.
DIRECTORS & KEY MANAGERIAL PERSONNEL
a. Appointment
During the year under review, the Board of Directors at its Meeting held on April 04, 2016 appointed Mr. Apul Nayyar (DIN 01738973) and Mr. Nihal Desai (DIN 03288923) as Additional Directors who shall act as Whole Time Directors and Key Managerial Personnel of the Company as per provisions of Companies Act, 2013 and applicable law and both were designated as âExecutive Director'' for a period of two years effective from April 04, 2016. The aforesaid appointment of Mr. Apul Nayyar and Mr. Nihal Desai was approved by the members in their 11th Annual General Meeting of the Company held on July 05, 2016.
b. Re-appointment
During the year under review, the term of Mr. N. C. Singhal (DIN 00004916), Mr. M. S. Sundara Rajan (DIN 00169775) and Mr. Hemang Raja (DIN 00040769), Non-Executive Independent Directors of the Company who were appointed for a term of three years with effect from April 01, 2014 expired on March 31, 2017. The Board of Directors at their Meeting held on March 29, 2017 on recommendation of Nomination & Remuneration Committee had reappointed Mr. N. C. Singhal, Mr. M. S. Sundara Rajan and Mr. Hemang Raja as Non-Executive Independent Directors of the Company for a term of five years with effect from April 01, 2017 to hold office up to March 31, 2022 and they shall not be liable to retire by rotation. The aforesaid re-appointment of Independent Directors is subject to the approval of members in the 12th Annual General Meeting of the Company.
c. Retire by Rotation
In accordance with Section 152 and other applicable provisions of Companies Act, 2013, Mr. Vishal Mahadevia (DIN 01035771), being Non-Executive Director, retires by rotation and being eligible offers himself for re-appointment at the ensuing Annual General Meeting. The Board recommends his re-appointment.
BOARDâS INDEPENDENCE
Based on the confirmation/disclosures received from the Directors and on evaluation of the relationships disclosed, the following Non-Executive Directors are Independent in terms of Section 149(6) of the Companies Act, 2013 and the requirements of Listing Regulations :-
1. Mr. N. C. Singhal (DIN 00004916)
2. Mr. M. S. Sundara Rajan (DIN 00169775)
3. Mr. Hemang Raja (DIN 00040769)
4. Dr. (Mrs.) Brinda Jagirdar (DIN 06979864)
5. Mr. Dinesh Kanabar (DIN 00003252)
NUMBER OF MEETINGS OF THE BOARD
The Board met 7 times during the financial year 2016-17 viz., on April 04, 2016, May 13, 2016, August 03, 2016, November 09, 2016, November 11, 2016, January 31, 2017 and March 29, 2017. The maximum interval between any two meetings did not exceed 120 days.
COMMITTEES OF THE BOARD
In accordance with the Companies Act, 2013 and Listing Regulations, the Company has following Committees in place:
- Audit Committee
- Stakeholders Relationship Committee
- Corporate Social Responsibility Committee
- Nomination and Remuneration Committee
Details of the said Committees along with their charters, composition and meetings held during the financial year, are provided in the âReport on Corporate Governanceâ, as a part of this Annual Report.
COMPANYâS POLICY ON DIRECTORSâ APPOINTMENT, REMUNERATION AND EVALUATION
Pursuant to the provisions of the Companies Act, 2013 (âthe Actâ), Listing Regulations and requirements of the Reserve Bank of India, Policy on Nomination and Remuneration of Directors,
Key Managerial Personnel, Senior Management and other employees had been formulated including criteria for determining qualifications, positive attributes, Independence of a Director and other matters as required under the said Act and Listing Regulations.
The evaluation framework for assessing the performance of Directors comprises of the following key areas:
- Expertise;
- Objectivity and Independence;
- Guidance and support in context of life stage of the Company;
- Understanding of the Company''s business;
- Understanding and commitment to duties and responsibilities;
- Willingness to devote the time needed for effective contribution to Company;
- Participation in discussions in effective and constructive manner;
- Responsiveness in approach;
- Ability to encourage and motivate the Management for continued performance and success.
The evaluation involves Self-Evaluation by the Board Member and subsequent assessment by the Board of Directors. A member of the Board will not participate in the discussion of his/her evaluation.
Accordingly, a process of evaluation was followed by the Board for its own performance and that of its Committees and individual Directors and also the necessary evaluation was carried out by Nomination and Remuneration Committee and Independent Director at their respective meetings held for the purpose.
DIRECTORSâ RESPONSIBILITY STATEMENT
Pursuant to the requirements of Section 134(5) of the Companies Act, 2013, with respect to Directors'' Responsibility Statement, it is hereby stated 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) the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit and loss of the company for that period;
(c) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;
(d) the Directors have prepared the annual accounts on a going concern basis;
(e) the Directors have laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively; and
(f) the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
The Board of Directors at its meeting held on May 08, 2014 had constituted Corporate Social Responsibility (CSR) Committee in accordance with Section 135 of Companies Act, 2013 read with rules formulated therein. The Company had carried out its CSR activities/ programs on the recommendation of the CSR Committee and duly approved by the Board and in accordance with the policy on CSR as per the identified core areas.
The Company chooses its CSR programs among many options in the CSR Committee and the Board Meeting(s) and does not get persuaded by any external influences other than those short listed in the best of spirit and which can add the social value in the pragmatic and idealistic sense.
The details of contents of CSR Policy of the Company and the details about the development of CSR Policy and initiatives taken by the Company on CSR during the financial year have been appended as Annexure 3 to this Report.
RISK MANAGEMENT POLICY AND INTERNAL CONTROL
The Company has adopted a Risk Management Policy duly approved by the Board and also has in place a mechanism to identify, assess, monitor and mitigate various risks to key business objectives. Major risks identified by the businesses and functions are systematically addressed through mitigating actions on a continuing basis. These are discussed at the meetings of the Risk Management Committee, Audit Committee and the Board of Directors of the Company. The Company''s internal control systems are commensurate with the nature of its business and the size and complexity.
The detailed note on Risk Management and Internal Controls forms part of Management Discussion and Analysis Report.
CREDIT RATING
During the year, Brickwork Ratings India Private Limited (Brickwork) upgraded the long term rating to âBWR AAAâ (Triple A) from âBWR AA â (Double A Plus) of your Company. Instruments with this rating are considered to have the highest degree of safety regarding timely servicing of financial obligations. Such instruments carry very lowest credit risk. During the year, Credit Analysis & Research Limited (CARE) reaffirmed the long term rating of âAA â (Double A Plus) of your Company. Instruments with this rating are considered to have high degree of safety regarding timely servicing of financial obligations. Such instruments carry very low credit risk.
Long-term Bank Loan Facilities: During the year, Brickwork assigned a rating of âBWR AAAâ (Triple A) and the Company''s rating of âCARE AA â (Double A Plus) by CARE was reaffirmed.
Secured Redeemable Non-Convertible Debentures (NCDs): During the year, Brickwork upgraded the rating to âBWR AAAâ (Triple A) from âBWR AA â (Double A Plus) and the rating of âCARE AA â (Double A Plus) was reaffirmed by CARE.
Subordinated Non-Convertible Debentures (NCDs): During the year, Brickwork upgraded the rating to âBWR AAAâ (Triple A) from âBWR AA â (Double A Plus) and CARE reaffirmed the rating of âCARE AA â (Double A Plus).
Perpetual Non-Convertible Debentures (NCDs): During the year, Brickwork upgraded the rating to âBWR AA â (Double A Plus) from âBWR AAâ (Double A) and CARE reaffirmed the âCARE AAâ (Double A) rating.
Short-term borrowing program: During the year under review, CARE reaffirmed the âA1 â (A One Plus) rating for the short term borrowing program. The rating is the highest rating issued by CARE for short-term debt instruments and indicates strong capacity for timely payment of short term debt obligations and further indicates that the borrowing carries the lowest credit risk.
CONSOLIDATED FINANCIAL STATEMENTS
The Audited Consolidated Financial Statements are provided in this Annual Report which have been prepared in accordance with relevant Accounting Standards issued by the Institute of Chartered Accountants of India (ICAI).
STATUTORY AUDITORS AND THEIR REPORT
The term of M/s. S. R. Batliboi & Co. LLP, Chartered Accountants, having ICAI Firm Registration No. 301003E/E300005 who was appointed as Statutory Auditors of your Company at the Ninth
Annual General Meeting (AGM) held on June 18, 2014 expires at conclusion of Twelfth Annual General Meeting.
Accordingly, the Board of Directors of the Company at its Meeting held on November 09, 2016, on the recommendation of the Audit Committee have appointed M/s. B S R & Co. LLP, Chartered Accountants bearing Firm Registration No. 101248W/W-100022 as the Statutory Auditors of the Company for a term of five years from conclusion of Twelfth Annual General Meeting till conclusion of Seventeenth Annual General Meeting subject to the approval of shareholders at the Twelfth Annual General Meeting in accordance with the applicable provisions of the Companies Act, 2013 read with the Rules issued there under and the Listing Regulations and applicable law.
The Company has received the certificate(s) of eligibility in accordance with Section 139, Section 141 and other applicable provisions of the Companies Act, 2013 and Rules there under, from M/s. B S R & Co. LLP, Chartered Accountants.
The Statutory Auditor''s Report on financial statements for the financial year 2016-17 does not contain any qualification, reservation or adverse remark.
PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS
Details of Loans, Guarantees and Investments are given in the notes to the Financial Statements.
PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES REFERRED TO IN SECTION 188
During and subsequent to the year under review, the contracts or arrangements with related parties have been on arm''s length and in ordinary course of business and they were not material in nature. Accordingly, the particulars of the transactions as prescribed in Form AOC - 2 of the rules prescribed under Chapter IX relating to Accounts of Companies under the Companies Act, 2013 are not required to be disclosed as they are not applicable.
AUCTIONED DETAILS
The disclosures as required by Circular No. DNBS.CC.PD.No. 356/03.10.01/2013-14 dated September 16, 2013 issued by RBI, regarding reporting of the Gold Auctioned during the financial year 2016-17 are provided at Note No. 38 of Notes to the Standalone Financial Statements.
EXTRACT OF ANNUAL RETURN
The details forming part of the extract of the Annual Return in Form MGT 9 is annexed herewith as Annexure 2 to this Directors'' Report.
SECRETARIAL AUDITORS AND THEIR REPORT
Pursuant to the provisions of Section 204 of the Companies Act, 2013 and Rules made there under, the Company had appointed M/s. Makarand M. Joshi & Co., Practicing Company Secretaries, to undertake the Secretarial Audit of the Company for the financial year 2016-17. The Secretarial Audit Report for financial year 201617, has been appended as Annexure 5 to this Report.
The Secretarial Auditor''s Report does not contain any qualification, reservation or adverse remark.
The Board of the Directors at their Meeting held on May 10, 2017 have reappointed M/s. Makarand M. Joshi & Co., Practicing Company Secretaries, to undertake the Secretarial Audit of the Company for the financial year 2017-18.
VIGIL MECHANISM
Your Company has established a âWhistle Blower Policy and Vigil Mechanism'' for Directors and employees to report to the appropriate authorities concerns about unethical behavior, actual or suspected, fraud or violation of the Company''s code of conduct policy and provides safeguards against victimization of employees who avail the mechanism and also provide for direct access to the Chairman of the Audit Committee. The said policy has been uploaded on the website of the Company.
DISCLOSURES UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT
2013 READ WITH RULES
Pursuant to the requirements of Section 22 of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 read with Rules there under, the Company did not receive any complaint of sexual harassment during the year under review.
MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY
There have been no material changes and commitments, affecting the financial position of the Company which have occurred between the end of the financial year of the Company to which the financial statements relate and the date of the report.
DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANYâS OPERATIONS IN FUTURE
There have been no significant and material orders passed by the Regulators or Courts or Tribunals impacting the going concern status and company''s operations in future.
PARTICULARS OF ENERGY CONSERVATION, TECHNOLOGY ABSORPTION, EXPENDITURE ON RESEARCH AND DEVELOPMENT, FOREIGN EXCHANGE INFLOW/ OUTFLOW, ETC.
The requirements of disclosure with regard to Conservation of Energy in terms of Section 134 of the Companies Act, 2013, read with the Companies (Accounts) Rules, 2014, are not applicable to the Company since it doesn''t own any manufacturing facility.
However, the Company makes all efforts towards conservation of energy, protection of environment and ensuring safety.
The details of the earnings and outgoing Foreign Exchange during the year under review are provided in Note No. 35 to the Standalone Financial Statements as at March 31, 2017. The Members are requested to refer to the said Note for details in this regard.
PARTICULARS OF EMPLOYEES, EMPLOYEES STOCK OPTION SCHEME (ESOS) AND EMPLOYEES STOCK PURCHASE SCHEME (ESPS)
The details in terms of Section 197 of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are forming part of this report as Annexure 4. The statement containing particulars of employees as required under Section 197(12) of the Companies Act, 2013 read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 may be obtained by the members by writing to the Company Secretary of your Company.
The Stock Options have been granted to the employees under various CFL - Employees Stock Option Schemes. The said schemes are in compliance with the SEBI (Share Based Employee Benefits) regulations, 2014 as amended from time to time (SEBI Regulations). The details and disclosures with respect to ESOS /ESPS as required under SEBI Regulations are provided on the website of the Company and web link for the same is http:// www.capitalfirst.com/investor/corporate-governance.
Subsequent to the year under review, Board of Directors of the Company at its Meeting held on May 10, 2017, on the recommendation of Nomination and Remuneration Committee approved the âCFL Stock Option Scheme - 2017'' subject to the approval of Members of the Company.
ACHIEVEMENTS
Your Company and Chairman & Managing Director won several award/achieved rankings. Select few awards/rankings are enumerated hereunder:
- Mr. Vaidyanathan received âOutstanding Entrepreneur Award'' in Asia Pacific Entrepreneurship Award 2016.
- Capital First featured in Dun & Bradstreet: India''s Top 500 companies wherein achieved Rank of 381 in total income & Rank 20 in NBFC space.
- Capital First debuted in Fortune India''s Next 500 companies whereby achieved Rank 70 in overall category & Rank 2 in NBFC space.
- Capital First received âBest Electronic Banking Implementation'' recognition in Asset Triple A Treasury, Trade and Risk Management Awards.
- Capital First debuted in the Most Valuable Companies 2016 by Business Today whereby Company was ranked at 274th place.
- Capital First debuted in India''s future ready companies by ET 500 whereby Company ranked at 466th place
- Mr. Vaidyanathan received âMost Promising Leaders in Asia Award'' in Economic Time''s Asian Business Leaders Conclave.
- Capital First featured amongst âIndia''s Most Trusted Financial Brands'' by World Consulting & Research Corporation Media Initiative (WCRC).
- Capital First received âAsia Innovator of the Year'' Award by CNBC in India Business Leader Awards from Hon. Finance Minister Shri. Arun Jaitley.
ACKNOWLEDGEMENT
We are grateful to the Government of India, the Reserve Bank of India, the Securities and Exchange Board of India, the Stock Exchanges, Insurance Regulatory and Development Authority of India, National Housing Bank and other regulatory authorities for their valuable guidance and support and wish to express our sincere appreciation for their continued co-operation and assistance. We look forward to their continued support in future.
We wish to thank our bankers, investors, rating agencies, debenture trustees, customers and all other business associates for their support and trust reposed in us.
Your Directors express their deep sense of appreciation for all the employees whose commitment, co-operation, active participation, dedication and professionalism has made the organization''s growth possible.
Finally, the Directors thank you for your continued trust and support.
On behalf of the Board of Directors
V. Vaidyanathan
Place : Mumbai Chairman & Managing Director
Date : May 10, 2017 DIN: 00082596
Mar 31, 2015
Dear Members,
The Directors have pleasure in presenting the Tenth Annual Report of
your Company with the audited financial statement for the financial
year ended March 31, 2015.
FINANCIAL HIGHLIGHTS
The highlights of the consolidated and standalone financial statement
of the Company for the financial years 2014-15 and 2013-14 are as
under:
(Rs. in Million)
Particulars Consolidated Standalone
2014-15 2013-14 2014-15 2013-14
Total Income 14,418.58 10,625.14 14,259.32 10,797.12
Total Expenditure 12,791.40 9,977.63 12,646.13 10,043.79
Profit Before Tax and
exceptional items 1,627.18 647.51 1,613.19 753.33
Exceptional income/
(expense) - - - (344.48)
Provision For Tax 510.59 58.00 492.99 39.02
Profit after tax from
continuing operations 1,116.59 589.51 1,120.20 369.83
Profit/(Loss) after
tax from Discontinuing
operations 26.22 (63.23) - -
Profit for the year 1,142.81 526.28 1,120.20 369.83
Profit/(Loss)brought
forward from previous
Year 931.95 676.22 1,216.26 1,113.55
Less: Accelerated
Depreciation as per the
Companies Act, 2013 6.71 - 6.71 -
Less: Loss in recovery
of advances granted to
Employee Welfare Trusts 18.36 - 18.36 -
Profit available for
appropriation 2,049.69 1,202.50 2,311.39 1,483.38
Appropriations:
Transfer to Reserve
Fund under Section
45- IC of the RBI
Act, 1934 224.04 73.96 224.04 73.97
Transfer to statutory
reserve under section
29C of the National
Housing Bank Act, 1987 4.03 3.44 - -
Proposed Dividend 200.24 165.41 200.24 165.41
Dividend Tax thereon 40.76 - 40.76 -
Transfer to General
Reserve 112.02 27.74 112.02 27.74
Balance carried
forward to Balance
Sheet 1,468.60 931.95 1,734.34 1,216.26
The Company is focused on providing loans to Retail, MSME, Consumer and
Wholesale credit, which is expected to drive growth for the Company
going forward.
During the year under review, the Company has successfully grown its
outstanding Loan Assets under Management from Rs. 96.79 billion to Rs.
119.75 billion, a growth of 24%. The Retail Assets under Management has
grown from Rs. 78.83 billion to Rs. 101.17 billion, a growth of 28%.
Wholesale Book increased only by 4% from Rs. 17.96 billion to Rs. 18.62
billion.
The Net worth of the Company increased from Rs. 11.71 billion to Rs. 15.74
billion as at March 31, 2015.
Consolidated Net Interest Income increased by 58% from Rs. 3393 million
during the financial year ending March 31, 2014 to Rs. 5363 million
during the financial year ending March 31, 2015.
The profit after tax was up by 117% from 526.28 million to Rs. 1,142.81
million.
The Company proposes to transfer an amount of Rs. 112.02 million to the
General Reserves.
DIVIDEND
Keeping in mind the overall performance and the outlook for your
Company, your Directors are pleased to recommend a dividend of Rs. 2.20
(Rupees Two and paise Twenty only) per share i.e. 22% on each Equity
Share having face value of Rs. 10/- (Rupees Ten only). The total outgo
for the current year amounts to Rs. 200.24 million as against Rs. 165.41
million in the previous year.
CAPITAL ADEQUACY
The Company''s capital adequacy ratio was 23.44% as on March 31, 2015,
which is significantly above the threshold limit of 15% as prescribed
by the Reserve Bank of India.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
As required under Clause 49 of the Listing Agreement entered into with
the Stock Exchanges and Circular/Notifications/ Directions issued by
Reserve Bank of India from time to time, the Management Discussion and
Analysis of the financial condition and result of consolidated
operations of the Company for the year under review is presented in a
separate section forming part of the Annual Report.
CORPORATE GOVERNANCE
A Report on Corporate Governance as required under Clause 49 of the
Listing Agreement entered into with the Stock Exchanges, forms part of
the Annual Report.
A Certificate from M/s. Makarand M Joshi & Co., Practicing Company
Secretaries, confirming compliance with the conditions of Corporate
Governance as stipulated under the aforesaid Clause 49, also forms part
of the Annual Report.
SHARE CAPITAL
During the year under review, the Company raised funds through issue
and allotment of 76,92,300 Equity Shares at a price of Rs. 390/- per
Equity Share (including a premium of Rs. 380/- per Equity Share),
aggregating to Rs. 2,99,99,97,000/- to Qualified Institutional Buyers
through Qualified Institutions Placement mode pursuant to Chapter VIII
of the Securities and Exchange Board of India (Issue of Capital and
Disclosure Requirements) Regulations, 2009, as amended and section 42
of the Companies Act, 2013 and the rules made thereunder.
During the year under review, the Company had issued and allotted
6,58,500 equity shares and subsequent to the year under review, 27,050
equity shares were also allotted to the eligible employees of the
Company under various Employee Stock Option Schemes of the Company. The
paid up equity share capital of the Company as on date of this report
stands at Rs. 91,00,93,190/- comprising of 9,10,09,319 equity shares of Rs.
10/- each.
In order to meet its growth objectives and to strengthen its financial
position, it is required to generate long term resources by issuing
securities. It is, therefore, deemed appropriate to reclassify the
Authorised Share Capital of the Company from Rs. 113,00,00,000/- (Rupees
One Hundred and Thirteen Crore) comprising of 10,30,00,000 (Ten Crore
Thirty Lac) Equity Shares of Rs. 10/- (Rupees Ten) each and 1,00,00,000
(One Crore) Compulsorily Convertible Preference Shares of Rs. 10/-
(Rupees Ten) each to Rs. 113,00,00,000/- (Rupees One Hundred and Thirteen
Crore) comprising of 11,30,00,000 (Eleven Crore Thirty Lakhs) Equity
Shares of Rs. 10/- (Rupees Ten) subject to the approval of shareholders
at the ensuing Annual General Meeting of the Company.
SUBSIDIARIES
During the year under review, the Board of Directors of Capital First
Investment Advisory Limited (''CFIAL) and Capital First Home Finance
Private Limited (''CFHFPL''), both being wholly owned subsidiary
Companies of the Company had approved the Scheme of Amalgamation
pursuant to which a petition has been filed with Hon''ble Bombay High
Court for merger of CFIAL into CFHFPL.
During the year under review, Anchor Investment & Trading Private
Limited which had been involved in investment management and advisory
activity, has initiated the process of winding up. As this business
was discontinued by the Company in 2010-11.
PUBLIC DEPOSITS
The Company being a Non-Deposit Accepting Non-Banking Finance Company
has not accepted any deposits from the public during the year under
review and shall not accept any deposits from the public without
obtaining prior approval of the Reserve Bank of India (RBI).
RBI GUIDELINES
As a Systemically Important Non Deposit taking Non-Banking Finance
Company, your Company always aims to operate in compliance with
applicable RBI laws and regulations and employs its best efforts
towards achieving the same.
NUMBER OF MEETINGS OF THE BOARD
The Board met 8 times in financial year 2014-15 viz., on April 02,
2014, May 08, 2014, August 05, 2014, September 24, 2014, November 07,
2014, December 22, 2014, January 06, 2015 and February 10, 2015. The
maximum interval between any two meetings did not exceed 120 days.
COMMITTEES OF THE BOARD
During the year, in accordance with the Companies Act, 2013 and Clause
49 of Listing Agreement, the Board re-constituted some of its
Committees and also formed a Corporate Social Responsibility Committee.
The Committees are as follows:
- Audit Committee
- Nomination and Remuneration Committee
- Stakeholders'' Relationship Committee
- Corporate Social Responsibility Committee
Details of the said Committees along with their charters, composition
and meetings held during the year, are provided in the "Report on
Corporate Governance", a part of this Annual Report.
GOLD AUCTIONED
The disclosures as required by circular no. DNBS.CC.PD.No.356
/03.10.01/2013-14 dated September 16, 2013 issued by Reserve Bank of
India, regarding reporting of the Gold Auctioned during the financial
year 2014-15 are provided at Note No. 43 of Notes to the Standalone
Financial Statements.
CREDIT RATING
Short-term borrowing programme: During the year under review, Credit
Analysis & Research Ltd. ("CARE") reaffirmed the "A1 " ("A
One Plus") rating for the short term borrowing program. The rating
is the highest rating issued by CARE for short term debt instruments
and indicates strong capacity for timely payment of short term debt
obligations and further indicates that the borrowing carries the lowest
credit risk. During the year under review, the rating of short term
borrowing programme was enhanced by Rs. 3,000 million i.e. from Rs. 9,000
million to Rs. 12,000 million.
During the year, Credit Analysis & Research Ltd. (CARE) and Brickwork
Ratings India Private Limited (Brickwork) reaffirmed the long term
rating of "AA " (Double A Plus) of your Company. Instruments with
this rating are considered to have high degree of safety regarding
timely servicing of financial obligations. Such instruments carry very
low credit risk.
Long-term Bank Loan Facilities: During the year, the Company''s rating
of "CARE AA " ("Double A Plus") by CARE in respect of the bank
loan facilities of the Company, was enhanced from Rs. 81,450 million to Rs.
82,450 million.
Secured Redeemable Non-Convertible Debentures (NCDs):
During the year CARE reaffirmed the Company''s rating of "CARE AA "
("Double A Plus") for the Secured Redeemable NCDs for an aggregate
amount of Rs. 13,000 million (enhanced from Rs.10,500 million). The rating
of "BWR AA " ("BWR Double A Plus") for an aggregate amount of Rs.
12,500 million (enhanced from Rs.10,000 million) was also reaffirmed by
Brickwork.
Subordinated Non-Convertible Debentures (NCDs): During the year CARE
reaffirmed the rating of "CARE AA " ("Double A Plus") rating
for the Unsecured Subordinated Debt program of the Company for an
aggregate amount of Rs. 2,000 million. Brickwork also reaffirmed the
rating to "BWR AA " ("BWR Double A Plus") for the Unsecured
Subordinated Debt program of the Company for an aggregate amount of Rs.
2,000 million.
Perpetual Non-Convertible Debentures (NCDs): During the year CARE
reaffirmed the "CARE AA" ("Double A") rating to the Perpetual
Debt program of the Company for an aggregate amount of Rs. 2,000 million
(enhanced from Rs. 1,500 million). Brickwork also reaffirmed the "BWR
AA" ("Double A") rating to the Perpetual Debt program of the
Company for an aggregate amount of Rs. 2,000 million (enhanced from Rs.
1,500 million).
DIRECTORS & KEY MANAGERIAL PERSONNEL
a. Cessation
During the year under review, Mr. Anil Singhvi (DIN 00239589) resigned
from the post of Non Executive Independent Directorship and Committees
in which he was serving as Chairman/Committee Member with effect from
December 22, 2014. The Board placed on its records its appreciation for
the valuable contribution provided by Mr. Anil Singhvi.
b. Retire by Rotation
In accordance with Section 152 and other applicable provisions of
Companies Act, 2013, Mr. Vishal Mahadevia (DIN 01035771), being Non-
Executive Director, retires by rotation and being eligible offers
himself for re- appointment at the ensuing Annual General Meeting. The
Board recommends his appointment.
c. Reappointment of Mr. V. Vaidyanathan (DIN 00082596) as Chairman &
Managing Director and revision in remuneration
The term of Mr. V. Vaidyanathan (DIN 00082596), Chairman & Managing
Director of the Company who was appointed for a term of five years with
effect from August 10, 2010, expires on August 09, 2015. It is
therefore proposed to reappoint Mr. V. Vaidyanathan (DIN 00082596) for
a period of five years with effect from August 10, 2015 and revise
remuneration terms as approved by the Board.
d. Appointment of Independent Directors
With coming into force of the provisions of Companies Act, 2013, the
Board had appointed the existing Directors viz. Mr. N.C. Singhal (DIN
00004916), Mr. Hemang Raja (DIN 00040769) and Mr. M. S. Sundara Rajan
(DIN 00169775) as Independent Directors of the Company for a
consecutive term of three years up to March 31, 2017 as per Section 149
of the Companies Act, 2013 read with its Rules. The shareholders of the
Company at their Annual General Meeting held on June 18, 2014 had
approved aforesaid appointment.
During the year under review, Dr (Mrs.) Brinda Jagirdar (DIN 06979864)
and Mr. Dinesh Kanabar (DIN 00003252) had been appointed as Additional
Non Executive Independent Directors and Mr. Narendra Ostawal (DIN
06530414) as Additional Non Executive Director of the Company who shall
hold office upto the date of ensuing Annual General Meeting of the
Company. The Company has received notices in writing under Section 160
of the Companies Act, 2013 from members proposing appointment as
Directors. The Board recommends their appointment.
The details of the aforesaid Directors forms part of this Report as
Annexure I.
Based on the confirmations received, none of the Directors are
disqualified for appointment under Section 164(2) of Companies Act,
2013.
e. Key Managerial Personnel
During the year under review, Mr. V. Vaidyanathan - Chairman & Managing
Director (DIN 00082596); Mr. Pankaj Sanklecha - Chief Financial Officer
& Head Corporate Centre; and Mr. Satish Gaikwad - Head - Legal,
Compliance & Company Secretary were designated as the Key Managerial
Personnel of the Company pursuant to the requirements of the applicable
provisions of Companies Act, 2013 read with its Rules, by the Board of
Directors and their terms and conditions of the appointment and
remuneration was considered by the Board.
BOARD''S INDEPENDENCE
Our definition of ''Independence'' of Directors is derived from Clause
49 of the Listing Agreement with Stock Exchanges and Section 149(6) of
the Companies Act, 2013. Based on the confirmation / disclosures
received from the Directors and on evaluation of the relationships
disclosed, the following Non- Executive Directors are Independent in
terms of Clause 49 of the Listing Agreement and Section 149(6) of the
Companies Act, 2013 :-
1. Mr. N.C. Singhal (DIN 00004916)
2. Mr. Hemang Raja (DIN 00040769)
3. Mr. M.S. Sundara Rajan (DIN 00169775)
4. Dr. (Mrs.) Brinda Jagirdar (DIN 06979864)
5. Mr. Dinesh Kanabar (DIN 00003252)
DIRECTORS'' RESPONSIBILITY STATEMENT
Pursuant to the requirements of Section 134 (5) of the Companies Act,
2013, with respect to Directors'' Responsibility Statement, it is hereby
stated 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) the Directors have selected such accounting policies and applied
them consistently and made judgments and estimates that are reasonable
and prudent so as to give a true and fair view of the state of affairs
of the company at the end of the financial year and of the profit and
loss of the company for that period;
(c) the Directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of this Act for safeguarding the assets of the company and
for preventing and detecting fraud and other irregularities;
(d) the Directors have prepared the annual accounts on a going concern
basis;
(e) the Directors have laid down internal financial controls to be
followed by the company and that such internal financial controls are
adequate and were operating effectively; and
(f) the Directors have devised proper systems to ensure compliance with
the provisions of all applicable laws and that such systems were
adequate and operating effectively.
COMPANY''S POLICY ON DIRECTORS'' APPOINTMENT AND REMUNERATION &
EVALUATION
Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of
the Listing Agreement, Policy on Nomination and Remuneration of
Directors, Key Managerial Personnel, Senior Management and other
employees has been formulated including criteria for determining
qualifications, positive attributes, Independence of a Director and
other matters as required under the said Act and Listing Agreement.
The evaluation framework for assessing the performance of Directors
comprises of the following key areas:
- Expertise;
- Objectivity and Independence;
- Guidance and support in context of life stage of the Company;
- Understanding of the Company''s business;
- Understanding and commitment to duties and responsibilities;
- Willingness to devote the time needed for effective contribution to
Company;
- Participation in discussions in effective and constructive manner;
- Responsiveness in approach;
- Ability to encourage and motivate the Management for continued
performance and success;
The evaluation involves Self-Evaluation by the Board Member and
subsequently assessment by the Board of Directors. A member of the
Board will not participate in the discussion of his / her evaluation.
Accordingly a process of evaluation was followed by the Board for if
own performance and that of its Committees and individual Directors and
also the necessary evaluation was carried out by Nomination and
Remuneration Committee and Independent Director at their respective
meetings held for the purpose.
CONSOLIDATED FINANCIAL STATEMENTS
The Audited Consolidated Financial Statements are provided in this
Annual Report which have been prepared in accordance with relevant
Accounting Standards issued by the Institute of Chartered Accountants
of India.
PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS
Details of Loans, Guarantees and Investments are given in the notes to
the Financial Statements.
PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES REFERRED
TO IN SECTION 188
During and subsequent to the year under review, the contracts or
arrangements with related parties have been on arms length and in
ordinary course of business and they were not material in nature.
Accordingly, the particulars of the transactions as prescribed in Form
AOC - 2 of the rules prescribed under Chapter IX relating to Accounts
of Companies under the Companies Act, 2014 are not required to be
disclosed as they are not applicable.
EXTRACT OF ANNUAL RETURN
The details forming part of the extract of the Annual Return in form
MGT 9 is annexed herewith as Annexure 2 to this Director''s Report.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
During the year under review the Board of Directors at its meeting held
on May 08, 2014 had constituted Corporate Social Responsibility (CSR)
Committee in accordance with Section 135 of Companies Act, 2013 read
with rules formulated therein. The Company pursuant to the
recommendation of the CSR Committee had adopted a detailed policy on
Corporate Social Responsibility and also discussed and identified the
core areas in which the CSR activities was proposed to be carried out
in the CSR Committee Meetings from time to time.
The details of contents of CSR Policy of the Company and the details
about the development of CSR Policy and initiatives taken by the
Company on Corporate Social Responsibility during the year as per
annexure attached to the Companies (Corporate Social Responsibility
Policy) Rules, 2014 have been appended as Annexure 3 to this Report.
STATUTORY AUDITORS & THEIR REPORT
M/s. S. R. Batliboi & Co. LLP, Chartered Accountants, having ICAI Firm
Registration No. 301003E were appointed as Statutory Auditors of your
Company at the Ninth Annual General Meeting (AGM) held on June 18, 2014
from the conclusion of the said AGM till conclusion of Twelfth Annual
General Meeting. As per the provisions of Section 139 of the Companies
Act, 2013, the appointment of Statutory Auditors is required to be
ratified by members at every Annual General Meeting. Accordingly, the
appointment of M/s. S. R. Batliboi & Co. LLP, as Statutory Auditor of
the Company is placed for ratification by the shareholders.
The Auditor''s Report does not contain any qualification, reservation or
adverse remark.
SECRETARIAL AUDITORS & THEIR REPORT
Pursuant to the provisions of Section 204 of the Companies Act, 2013
and Rules made thereunder, the Company had appointed M/s. Makarand M
Joshi & Co., Practicing Company Secretaries, to undertake the
Secretarial Audit of the Company for the financial year 2014-15. The
Secretarial Audit Report for financial year 2014-15, has been appended
as Annexure 6 to this Report.
The Auditor''s Report does not contain any qualification, reservation or
adverse remark.
The Board of the Directors at their Meeting held on May 13, 2015 have
reappointed M/s. Makarand M Joshi & Co., Practicing Company
Secretaries, to undertake the Secretarial Audit of the Company for the
financial year 2015-16.
PARTICULARS OF EMPLOYEES, EMPLOYEES STOCK OPTION SCHEME AND EMPLOYEES
STOCK PURCHASE SCHEME
The details in terms of Section 197 of the Companies Act, 2013 read
with Rule 5(1) of the Companies (Appointment and Remuneration of
Managerial Personnel) Rules, 2014, are forming part of this report as
Annexure 5. The statement containing particulars of employees as
required under Section 197(12) of the Companies Act, 2013 read with
Rule 5(2) of the Companies (Appointment and Remuneration of Managerial
Personnel) Rules, 2014 may be obtained by the members by writing to the
Company Secretary of your Company.
During the year under review, Board of Directors of the Company on the
recommendation of Nomination & Remuneration Committee at its Meeting
held on April 02, 2014 and shareholders at Annual General Meeting held
on June 18, 2014 approved the ''CMD Stock Option Scheme - 2014''.
Also, during the year under review, the Company has granted employee
stock options to eligible employees under various Employee Stock Option
Schemes. During the year under review, the Company had also issued and
allotted 6,58,500 equity shares and subsequent to the year under review
also, 27,050 equity shares were allotted to the eligible employees of
the Company under various Employee Stock Option Schemes of the Company.
The details with respect to the Employee Stock Option Schemes/ Employee
Stock Purchase Scheme are annexed and forms part of this Report as
Annexure 4.
PARTICULARS OF ENERGY CONSERVATION, TECHNOLOGY ABSORPTION, EXPENDITURE
ON RESEARCH AND DEVELOPMENT, FOREIGN EXCHANGE INFLOW/OUTFLOW, ETC.
The requirements of disclosure with regard to Conservation of Energy in
terms of Section 134 of the Companies Act, 2013, read with the
Companies (Accounts) Rules, 2014, are not applicable to the Company
since it doesn''t own any manufacturing facility.
However, the Company makes all efforts towards conservation of energy,
protection of environment and ensuring safety.
The details of the earnings and outgoing Foreign Exchange during the
year under review are provided in Notes to the Financial Statements as
at March 31, 2015. The Members are requested to refer to the said Note
for details in this regard.
VIGIL MECHANISM
Your Company has established a ''Whistle Blower Policy and Vigil
Mechanism'' for directors and employees to report to the appropriate
authorities concerns about unethical behavior, actual or suspected,
fraud or violation of the Company''s code of conduct policy and provides
safeguards against victimization of employees who avail the mechanism
and also provide for direct access to the Chairman of the Audit
Committee. The said policy has been uploaded on the website of the
Company.
MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF
THE COMPANY
There have been no material changes and commitments, if any, affecting
the financial position of the Company which have occurred between the
end of the financial year of the Company to which the financial
statements relate and the date of the report.
DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR
COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANY''S
OPERATIONS IN FUTURE
There have been no significant and material orders passed by the
regulators or courts or tribunals impacting the going concern status
and company''s operations in future.
RISK MANAGEMENT POLICY AND INTERNAL CONTROL
The Company has adopted a Risk Management Policy duly approved by the
Board and also has in place a mechanism to identify, assess, monitor
and mitigate various risks to key business objectives. Major risks
identified by the businesses and functions are systematically addressed
through mitigating actions on a continuing basis. These are discussed
at the meetings of the Risk Management Committee, Audit Committee and
the Board of Directors of the Company. The Company''s internal control
systems are commensurate with the nature of its business and the size
and complexity.
DISCLOSURES UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION,
PROHIBITION & REDRESSAL) ACT 2013 READ WITH RULES
Pursuant to the requirements of Section 22 of Sexual Harassment of
Women at Workplace (Prevention, Prohibition & Redressal) Act 2013 read
with Rules thereunder, the Company has not received any complaint of
sexual harassment during the year under review.
ACKNOWLEDGEMENT
We are grateful to the Government of India, the Reserve Bank of India,
the Securities and Exchange Board of India, the Stock Exchanges,
Insurance Regulatory and Development Authority of India, National
Housing Bank and other regulatory authorities for their valuable
guidance and support and wish to express our sincere appreciation for
their continued co-operation and assistance. We look forward to their
continued support in future.
We wish to thank our bankers, investors, rating agencies, customers and
all other business associates for their support and trust reposed in
us.
Your Directors express their deep sense of appreciation for all the
employees whose commitment, co-operation, active participation,
dedication and professionalism has made the organization''s growth
possible.
Finally, the Directors thank you for your continued trust and support.
On behalf of the Board of Directors
V. Vaidyanathan
Chairman & Managing Director
DIN:00082596
Place : Mumbai
Date : May 13, 2015
Mar 31, 2014
Dear Members,
The Directors have pleasure in presenting the Ninth Annual Report of
your Company with the audited statement of accounts for the year ended
March 31, 2014.
FINANCIAL HIGHLIGHTS
The highlights of the consolidated and standalone financial results of
the Company for the financial years 2013-14 and 2012-13 are as under:
(Rs. in Million)
Particulars Consolidated Standalone
2013-14 2012-13 2013-14 2012-13
Total Income 10,625.14 8,086.36 10,797.12 8,000.54
Total Expenditure 9,977.63 7,502.65 10,043.79 7,459.31
Profit Before Tax and
exceptional items 647.51 583.71 753.33 541.23
Exceptional income/
(expense) - 213.10 (344.48) 243.21
Provision For Tax 58.00 99.071 39.02 86.70
Profit after tax from
continuing operations 589.51 697.74 369.83 697.74
Profit/(Loss) after tax
from discontinuing
operations (63.23) (66.64) - -
Profit/(Loss) brought
forward from previous
year 676.22 353.83 1,113.55 757.26
Add: Loss of subsidiary
excluded on sale - 32.74 - -
Profit available for
appropriation 1,202.50 1,017.67 1,483.38 1,455.00
Appropriations:
Transfer to Reserve Fund
under Section 45- IC of
the RBI Act, 1934 73.96 139.55 73.97 139.55
Transfer to statutory
reserve under Section
29Cof the National
Housing Bank Act, 1987 3.44 - - -
Proposed Dividend 165.41 127.84 165.41 127.84
Dividend Tax thereon - 21.73 - 21.73
Transfer to General
Reserve 27.74 52.33 27.74 52.33
Balance carried forward
to Balance Sheet 931.95 676.22 1,216.26 1,113.55
The Company is focused on providing a number of financial services to
Retail, MSME, Consumer and Wholesale credit, which is expected to drive
growth for the Company goingforward.
During the year under review, the Company has successfully grown its
outstanding Loan Assets under Management from Rs. 75.10 billion to Rs.
96.79 billion, a growth of 29%. The Retail Assets under Management has
grown from Rs. 55.60 billion to Rs. 78.83 billion, a growth of 42%. As
part of the plan to change the mix of assets, the Wholesale Book
reduced by 8% from Rs. 19.50 billion toRs. 17.96 billion.
The Net worth of the Company increased from Rs. 9,607 million to Rs.
11,710 million as at March 31, 2014.
Consolidated Net Interest Income increased by 34% from Rs. 2,499
million during the financial year ending March 31, 2013 to Rs. 3,361
million during the financial year ending March 31, 2014.
The Profit Before Tax, before exceptional items, increased from Rs. 519
million during the financial year ending March 31, 2013 to Rs. 590
million during the financial year ending March 31, 2014. The profit
after tax was down by 17% from Rs. 631 million to Rs. 526 million. This
is essentially on account of an exceptional and one time item of Rs.
213 million reported in previous year for sale of subsidiaries.
DIVIDEND
Keeping in mind the overall performance and the outlook for your
Company, your Directors are pleased to recommend a dividend of Rs. 2/-
(Rupees Two only) per share i.e. 20% on each Equity Share of Rs. 10/-
(Rupees Ten only). The dividend would be paid to all the shareholders,
whose names appear in the Register of Members/ Beneficial Holders list
on the Book Closure/Record date.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
As required under Clause 49 of the Listing Agreement entered into with
the Stock Exchanges, the Management Discussion and Analysis of the
financial condition and result of consolidated operations of the
Company for the year under review, is annexed and forms an integral
part of this Directors'' Report.
CORPORATE GOVERNANCE
A Report on Corporate Governance as required under Clause 49 of the
Listing Agreement entered into with the Stock Exchanges, forms part of
the Annual Report.
A Certificate from M/s. Chetan Gandhi & Associates, Practicing Company
Secretary, confirming compliance with the conditions of Corporate
Governance as stipulated under the aforesaid Clause 49, also forms part
of the Annual Report.
SHARE CAPITAL
Duringtheyear under review, the Board of Directors of the Company with
the approval of the shareholders, allotted 32,50,000 Equity Shares to
HDFCStandard Life Insurance Company Limited ("HDFC Life") & 83,57,145
Equity Shares to Cloverdell Investment Ltd ("Cloverdell") on March 28,
2014, for an aggregate consideration of Rs. 1785.18 million at a price
of Rs. 153.80 per Equity Share (face value of Rs. 10/- each and premium
of Rs. 143.80 per share), in accordance with the Securities and
Exchange Board of India (Issue of Capital and Disclosure Requirements)
Regulations, 2009 ("ICDR Regulations"). The Subscription Amount
(invested in the form of Equity Shares) entitles HDFC Life & Cloverdell
to not more than an aggregate of 3.87% & 70.48% of total paid up
capital of the Company, respectively, of the enhanced equity share
capital of the Company. The total shareholding of Promoter Group i.e
Cloverdell and Dayside Investment Ltd. in the Company remains unchanged
at 71.99% post Preferential Allotment of Equity shares.
Subsequent to the year under review, 74,500 equity shares were allotted
to eligible employees of the Company under various Employee Stock
Option Schemes of the Company.
SUBSIDIARIES
During the year under review, Capital First Home Finance Private
Limited, a Wholly Owned Subsidiary of the Company has received the
Certificate of Registration from National Housing Bank to commence
business of housing finance institution without accepting public
deposits.
During the year under review, the Board of Directors of Subsidiary
Companies namely Capital First Securities Limited (CFSL) and Capital
First Commodities Limited (CFCL) had decided to close down the security
& commodity broking operations, respectively and also approved the
surrender of the licenses availed for conducting the broking businesses
of both the subsidiaries except for National Spot Exchange Limited.
In terms of the General Circulars No. 2/2011 & 3/2011 of the Ministry
of Corporate Affairs (MCA), dated 8th and 21st February 2011,
respectively, copies of the Balance Sheet, Profit and Loss Account,
Report of the Board of Directors and Auditors of the Subsidiaries of
the Company have not been attached with the Balance Sheet of the
Company. These documents will be made available upon request by any
Member of the Company interested in obtaining the same and these
documents are also kept for inspection by any Member at the Corporate
Office of the Company and the Subsidiaries. However, as directed by the
MCA, the financial data of the Subsidiaries has been furnished under
''Details of Subsidiaries'', forming part of the Audited Accounts.
Further, pursuant to Accounting Standard (AS - 21) issued by the
Institute of Chartered Accountants of India, the Consolidated Financial
Statements presented by the Company in this Annual Report includes
financial information of its Subsidiaries.
PUBLIC DEPOSITS
The Company being a Non-Deposit Accepting Non-Banking Finance Company
has not accepted any deposits from the public during the year under
review and shall not accept any deposits from the public without
obtaining prior approval of the Reserve Bank of India (RBI).
RBI GUIDELINES
As a Systemically Important Non Deposit taking Non-Banking Finance
Company, your Company always aims to operate in compliance with
applicable RBI laws and regulations and employs its best efforts
towards achieving the same.
GOLD AUCTIONED
The disclosures as required by circular no. DNBS.CCPD.No.356/
03.10.01/2013-14 dated September 16, 2013 issued by Reserve Bank of
India, regarding reporting of the Gold Auctioned during the financial
year 2013-14 are provided at Note No. 44 to Notes to the Standalone
Financial Statements.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
Subsequent to the year under review the Board of Directors at its
meeting held on May 08, 2014 has constituted Corporate Social
Responsibility (CSR) Committee in accordance with Section 135 of
Companies Act, 2013 read with rules formulated therein.
The Company is in process of formulating a detailed policy on Corporate
Social Responsibility.
CAPITAL ADEQUACY
The Company''s capital adequacy ratio was 22.16% as on March 31, 2014,
which is significantly above the threshold limit of 15% as prescribed
by the RBI.
CREDIT RATING
Short-term borrowing programme: During the year under review, Credit
Analysis & Research Ltd. ("CARE") reaffirmed the "A1 " ("A One Plus")
rating for the short term borrowing program for an amount of Rs. 9,000
million. The rating is the highest rating issued by CARE for short term
debt instruments and indicates strong capacity for timely payment of
short term debt obligations and further indicates that the borrowing
carries the lowest credit risk.
During the year, Credit Analysis & Research Ltd. (CARE) and Brickwork
Ratings India Private Limited (Brickwork) reaffirmed the long term
rating of "AA " (Double A Plus) of your Company. Instruments with this
rating are considered to have high degree of safety regarding timely
servicing of financial obligations. Such instruments carry very low
credit risk.
Long-term Bank Loan Facilities: During the year, the Company''s rating
of "CARE AA " ("Double A Plus") by CARE in respect of the long-term
bank loan facilities, having tenure of more than one year of the
Company, was enhanced fromRs. 45,000 million toRs. 81,450 million.
Secured Redeemable Non-Convertible Debentures (NCDs):
During the year CARE reaffirmed the Company''s rating of "CARE AA "
("Double A Plus") for the Secured Redeemable NCDs for an aggregate
amount of Rs. 10,500 million. The rating of "BWR AA " ("BWR Double A
Plus") for Secured Redeemable NCDs was also reaffirmed by Brickwork.
Subordinated Non-Convertible Debentures (NCDs): During the year CARE
reaffirmed the rating of "CARE AA " ("Double A Plus") ratingforthe
Unsecured Subordinated Debt program of the Company for an aggregate
amount ofRs. 2,000 million. Brickwork also reaffirmed the rating to
"BWR AA " ("BWR Double A Plus") for the Unsecured Subordinated Debt
program of the Company for an aggregate amount of Rs. 2,000 million.
Perpetual Non-Convertible Debentures (NCDs): During the year CARE
reaffirmed the "CAREAA" ("Double A") ratingtothe Perpetual Debt program
of the Company for an aggregate amount of Rs. 1,500 million. Brickwork
also reaffirmed the "BWR AA" ("Double A") rating to the Perpetual Debt
program of the Company for an aggregate amount of Rs. 1,500 million.
DIRECTORS
In accordance with Section 152 and other applicable provisions of
Companies Act, 2013, Mr. Vishal Mahadevia, being Non- Executive
Director, retires by rotation and being eligible offers himself for
re-appointment at the ensuing Annual General Meeting. Also, as per the
provisions of Companies Act, 2013, it is proposed to appoint Mr. Anil
Singhvi, Mr. N.C. Singhal, Mr. Hemang Raja and Mr. M.S. Sundara Rajan
as Independent Directors of the Company for a consecutive term of three
years up to March 31, 2017.
Brief resumes of Directors, nature of their expertise in specific
functional areas and names of companies in which they hold Directorship
and/or Membership/Chairmanship of Committees of the Board (excluding
Private Limited Company, Non Profit making Companies and Foreign
Companies) are annexed and forms part of this Report {Annexure 1).
Based on the confirmations received, none of the Directors are
disqualified for appointment under Section 274(l)(g) of the Companies
Act, 1956 and Section 164(2) of Companies Act, 2013.
DIRECTORS''RESPONSIBILITY STATEMENT
Pursuant to the requirements of Section 217(2AA) of the Companies Act,
1956, with respect to Directors'' Responsibility Statement, it is hereby
confirmed:
i) that in the preparation of the annual accounts for the financial
year ended March 31, 2014, the applicable accounting standards have
been followed along with proper explanation relating to material
departures, if any.
ii) that the Directors have selected such accounting policies and
applied them consistently and made judgments and estimates that are
reasonable and prudent so as to give a true and fair view of the state
of affairs of the Company at the end of the financial year and of the
profit of the Company for that period.
iii) that the Directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 1956, for safeguarding the assets of
the Company and for preventing and detecting fraud and other
irregularities.
iv) that the Directors have prepared the annual accounts for the
financial year ended March 31, 2014, on a going concern basis.
CONSOLIDATED FINANCIAL STATEMENTS
The Audited Consolidated Financial Statements are provided in this
Annual Report. These statements have been prepared on the basis of the
financial statements received from Subsidiaries, as approved by their
respective Board of Directors.
AUDITORS
M/s. S. R. Batliboi & Co. LLP, Chartered Accountants, Statutory
Auditors of the Company, retire at the ensuing Annual General Meeting
and have expressed their willingness to continue, if so appointed. As
required under the provisions of Sections 139 and 141 of the Companies
Act, 2013, the Company has obtained a written consent and relevant
certification from the Auditors proposed to be re-appointed.
A proposal seeking their re-appointment is provided as part of the
Notice of the ensuing Annual General Meeting.
PARTICULARS OF EMPLOYEES, EMPLOYEES STOCK OPTION SCHEME AND EMPLOYEES
STOCK PURCHASE SCHEME
In terms of the provisions of Section 217(2A) of the Companies Act,
1956, read with the Companies (Particulars of Employees) Rules, 1975,
as amended from time to time, the name and other particulars of certain
employees are required to be set out in the Annexure to the Directors''
Report. However, as per the provisions of Section 219(l)(b)(iv) of the
said Act, the Directors'' Report excluding the aforesaid information is
being sent to all the Members of the Company and others entitled
thereto. Members who are interested in obtaining such particulars may
write to the Company.
Subsequent to the year under review, Board of Directors of the Company
on the recommendation of Compensation & Nomination Committee at its
Meeting held on April 02, 2014, approved the ''CMD Stock Option Scheme -
2014''.
Also, during the year under review, Company has granted employee stock
options to eligible employees under various Employee Stock Option
Schemes. Subsequent to the year under review, the Company has allotted
74,500 equity shares to eligible employees under aforesaid Schemes.
The disclosure(s) as required under the Securities and Exchange Board
of India (Employee Stock Option Scheme & Employee Stock Purchase
Scheme) Guidelines, 1999, are annexed and forms part of this Report
{Annexure 2).
PARTICULARS OF ENERGY CONSERVATION, TECHNOLOGY ABSORPTION, EXPENDITURE
ON RESEARCH AND DEVELOPMENT, FOREIGN EXCHANGE INFLOW/OUTFLOW, ETC.
The requirements of disclosure with regard to Conservation of Energy in
terms of Section 217(l)(e) of the Companies Act, 1956, read with the
Companies (Disclosure of Particulars in the Report of Board of
Directors) Rules, 1988, are not applicable to the Company.
The Company''s activities do not require any technology to be absorbed
as mentioned in the aforesaid Rules. However the Company makes all
efforts towards conservation of energy, protection of environment and
ensuring safety.
The details of the earnings and outgo in Foreign Exchange during the
year under review are provided in Notes to the Financial Statements as
at March 31, 2014. The Members are requested to refer to the said Note
for details in this regard.
ACKNOWLEDGEMENT
We are grateful to the Government of India, the Reserve Bank of India,
the Securities and Exchange Board of India, the Stock Exchanges,
Insurance Regulatory and Development Authority of India, National
Housing Bank and other regulatory authorities for their valuable
guidance and support and wish to express our sincere appreciation for
their continued co-operation and assistance. We look forward to their
continued support in future.
We wish to thank our bankers, rating agencies, customers and all other
business associates for their support and trust reposed in us.
Your Directors express their deep sense of appreciation for all the
employees whose commitment, co-operation, active participation,
dedication and professionalism has made the organisation''s growth
possible.
Finally, the Directors thank you for your continued trust and support.
On behalf of the Board of Directors
V. Vaidyanathan
Chairman
Place : Mumbai
Date : May 08, 2014
Mar 31, 2013
Dear Members,
The Directors have pleasure in presenting the Eighth Annual Report of
your Company with the audited statement of accounts for the year ended
March 31, 2013.
FINANCIAL HIGHLIGHTS
The highlights of the consolidated and standalone financial results of
the Company for the financial years 2012-13 and 2011-12 are as under:
(Rs. in Million)
Particulars Consolidated Standalone
2012-13 2011-12 2012-13 2011-12
Total Income 8,196.19 7,437.45 8,000.54 7,027.62
Total Expenditure 7,677.11 5,921.51 7,459.31 5,676.50
Profit Before Tax and
exceptional items 519.08 1,515.94 541.23 1,351.12
Exceptional income/
(expense) 213.10 - 243.21 -
Provision For Tax 101.08 457.63 86.70 429.19
Profit After Tax 631.10 1,058.31 697.74 921.93
Profit/(Loss) brought
forward from previous year 353.83 (359.07) 757.26 178.78
Add: Loss of subsidiary
excluded on sale 32.75 - - -
Profit available for
appropriation 1,017.68 699.24 1,455.00 1,100.71
Appropriations:
Transfer to Reserve
Fund under Section 45-
IC of the RBI Act, 1934 139.55 186.34 139.55 184.39
Proposed Dividend 127.84 97.20 127.84 97.20
Dividend Tax thereon 21.73 15.77 21.73 15.77
Transfer to General Reserve 52.33 46.10 52.33 46.09
Balance carried forward
to Balance Sheet 676.23 353.83 1,113.55 757.26
The Company is focused on providing a number of retail financial
services to Retail, MSME, Consumer and wholesale credit, which is
expected to drive growth for the Company going forward. Towards this
end, the Company has launched a number of retail businesses recently.
During the year under review, the Company has successfully grown its
outstanding Loan Assets under Management from Rs. 61.86 billion to Rs.
75.09 billion, a growth of 21%. The Retail Assets under Management has
grown from Rs. 34.60 billion to Rs. 55.60 billion, a growth of 61%. As
part of the plan to change the mix of assets, the Wholesale Book
reduced by 28% from Rs. 27.25 billion to Rs. 19.50 billion.
The Net worth of the Company increased from Rs. 8,316 million to Rs.
9,607 million as at March 31, 2013.
Consolidated Net Interest Income increased by 29% from Rs. 1,970
million during the financial year ending March 31, 2012 to Rs. 2,538
million during the financial year ending March 31, 2013.
The Profit After Tax was down by 40% from Rs. 1,058 million to Rs. 631
million. However this is not representative of any reduced prospects of
profitability of the Company. In fact the reduced profits are because
of investments to scale up new business like Consumer Durables (grown
from Rs. 444 million in FY 12 to Rs. 1,821 million in FY 13), Gold
Loans (grown from Rs. 2,343 million in FY12 to Rs. 4,408 million in
FY13), Two wheeler Loans (grown from Rs. 138 million in FY12 to Rs.
1,631 million in FY13), Loan against Property (grown from Rs. 30,510
million in FY12 to Rs. 46,234 million in FY13). Scaling up of these
businesses also required commensurate investment in IT, collections and
credit resources. In fact, the Company is confident of growing profits
in a sustainable manner in the years to come based on the above
investments. Further, the Company changed its accounting policies on
amortising income on certain key income items which will make the
income more stable and sustainable in future years.
DIVIDEND
Keeping in mind the overall performance and the outlook for your
Company, your Directors are pleased to recommend a dividend of Rs.
1.80/- (Rupee One and Paise Eighty only) per share i.e. 18% on each
Equity Share of Rs. 10/- (Rupees Ten only). The dividend would be paid
to all the shareholders, whose names appear in the Register of
Members/Beneficial Holders list on the Book Closure/Record date.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
As required under Clause 49 of the Listing Agreement entered into with
the Stock Exchanges, the Management Discussion and Analysis of the
financial condition and result of consolidated operations of the
Company for the year under review, is annexed and forms an integral
part of this Directors'' Report.
CORPORATE GOVERNANCE
A Report on Corporate Governance as required under Clause 49 of the
Listing Agreement entered into with the Stock Exchanges, forms part of
the Annual Report.
A Certificate from M/s. SVJS & Associates, Company Secretaries,
confirming compliance with the conditions of Corporate Governance as
stipulated under the aforesaid Clause 49, also forms part of the Annual
Report.
SHARE CAPITAL
During the year under review, the Board at its Meeting held on June 4,
2012 had approved the execution of Share Purchase Agreement inter-alia
with Pantaloon Retail (India) Limited, Future Value Retail Limited and
Cloverdell Investment Ltd ("Cloverdell") and also the execution of
Share Subscription Agreement with Cloverdell, pursuant to which an open
offer was proposed by Cloverdell. Consequent to the subscription of
shares and secondary acquisition through the above arrangement,
Cloverdell acquired substantial stake and control of the Company and
became Promoter of the Company. Cloverdell is a part of Warburg Pincus
group. Warburg Pincus is a leading global private equity firm focused
on growth investing. The firm has more than US$40 billion in assets
under management. Its active portfolio of more than 125 companies is
highly diversified by stage, sector and geography. Warburg Pincus is an
experienced partner to management teams seeking to build durable
companies with sustainable value. Founded in 1966, Warburg Pincus has
raised 13 private equity funds which have invested more than US$45
billion, in over 675 companies, in more than 35 countries.
During the year under review, pursuant to the approval of the
shareholders sought through Postal Ballot, results of which were
announced on July 5, 2012, the authorized share capital of the Company
has been reclassified into 10,30,00,000 equity shares of Rs. 10/- each
and 1,00,00,000 Compulsorily Convertible Preference Shares (CCPS) of
Rs. 10/- each, aggregating to Rs. 1,13,00,00,000/-.
During the year under review, 53,000 equity shares were allotted to
eligible employees of the Company under various Employee Stock Option
Schemes of the Company.
Also, during the year under review, Cloverdell, who had been allotted
30,86,420 CCPS on September 28, 2012, requested for conversion of said
shares into equity shares. Accordingly, the Board of Directors of the
Company at its meeting held on March 14, 2013 allotted 30,86,420 equity
shares against conversion of CCPS in the ratio of one equity share
against one CCPS.
CHANGE OF NAME OF THE COMPANY & ITS SUBSIDIARIES
Pursuant to the change in control and acquisition of majority stake by
Cloverdell Investment Ltd in the Company through preferential
allotment, acquisition of stake from erstwhile Promoters and from
public shareholders under an open offer under the Securities and
Exchange Board of India (Substantial Acquisition of Shares and
Takeovers) Regulations, 2011 and as envisaged in the Share Purchase
Agreement, the name of the Company changed from ''Future Capital
Holdings Limited'' to ''Capital First Limited'' on November 8, 2012 vide
the approval received from Registrar of Companies, Maharashtra, Mumbai.
To realign the name of the subsidiaries with the name of the holding
Company i.e. Capital First Limited, the name of the following
subsidiaries were changed in the manner given below pursuant to the
approval received from Registrar of Companies:
1. Capital First Securities Limited (Formerly Future Capital
Securities Limited)
2. Capital First Commodities Limited (Formerly Future Capital
Commodities Limited)
3. Capital First Home Finance Private Limited (Formerly Future Capital
Home Finance Private Limited)
4. Capital First Investment Advisory Limited (Formerly Kshitij
Investment Advisory Company Limited)
SUBSIDIARIES
Your Directors are pleased to inform that the Hon''ble High Court of
Judicature at Bombay, vide its order dated April 13, 2012, has approved
the Scheme of Amalgamation of two wholly owned subsidiaries of the
Company viz. Future Capital Investment Advisors Limited and FCH
Securities & Advisors Limited with Capital First Investment Advisory
Limited (formerly Kshitij Investment Advisory Company Limited) and the
same has been effective pursuant to filing a certified copy of the said
order with the Registrar of Companies on June 2, 2012.
Pursuant to inflow of Foreign Direct Investment by Cloverdell
Investment Ltd, downstream investment was made pursuant to adherence of
minimum capitalization norms as per Consolidated Foreign Direct
Investment Policy in subsidiary companies of the Company viz. Capital
First Securities Limited, Capital First Home Finance Private Limited,
Capital First Investment Advisory Limited and Capital First Commodities
Limited through Capital First Securities Limited.
During the year under review, the Company sold the entire 10,00,000
fully paid-up equity shares of Rs. 10/- each held in its Wholly Owned
Subsidiary Company namely Myra Mall Management Company Limited (Myra
Mall) to Providence Educational Academy Private Limited, in its
capacity as a Trustee of AAA Holding Trust, a private trust.
Consequently, Myra Mall ceased to be a Subsidiary of the Company with
effect from July 9, 2012.
Also, the Company sold the entire 1,07,50,000 fully paid-up equity
shares of Rs. 10/- each held in its Wholly Owned Subsidiary Company
namely Future Finance Limited to APAC Consultants Private Limited and
its Associates. Consequently, Future Finance Limited also ceased to be
a Subsidiary of the Company with effect from March 1, 2013.
Subsequent to the year under review, Capital First Home Finance Private
Limited (formerly known as Future Capital Home Finance Private
Limited), a Wholly Owned Subsidiary of the Company has received the
Certificate of Registration from National Housing Bank to commence
business of housing finance institution without accepting public
deposits.
In terms of the General Circulars No. 2/2011 & 3/2011 of the Ministry
of Corporate Affairs (MCA), dated 8th and 21st February, 2011,
respectively, copies of the Balance sheet, Profit and Loss Account,
Report of the Board of Directors and Auditors of the Subsidiaries of
the Company have not been attached with the Balance Sheet of the
Company. These documents will be made available upon request by any
Member of the Company interested in obtaining the same and these
documents are also kept for inspection by any Member at the Corporate
Office of the Company and the Subsidiaries. However, as directed by the
MCA, the financial data of the Subsidiaries has been furnished under
''Details of Subsidiaries'', forming part of the Audited Accounts.
Further, pursuant to Accounting Standard (AS - 21) issued by the
Institute of Chartered Accountants of India, the Consolidated Financial
Statements presented by the Company in this Annual Report includes
financial information of its Subsidiaries.
PUBLIC DEPOSITS
The Company being a Non Deposit Accepting Non Banking Finance Company
has not accepted any deposits from the public during the year under
review and shall not accept any deposits from the public without
obtaining prior approval of the Reserve Bank of India (RBI).
RBI GUIDELINES
The Company has complied with the Regulations of the RBI as on March
31, 2013, as are applicable to it as a Systemically Important Non
Deposit taking Non Banking Finance Company.
CAPITAL ADEQUACY
The Company''s capital adequacy ratio was 23.53% as on March 31, 2013,
which is significantly above the threshold limit of 15% as prescribed
by the RBI.
CREDIT RATING
Short-term borrowing programme: During the year under review, Credit
Analysis & Research Ltd. ("CARE") retained the "A1 " ("A One
Plus") rating of short term borrowing program for an amount of Rs.
9,000 million. The rating is the highest rating issued by CARE for
short term debt instruments and indicates strong capacity for timely
payment of short term debt obligations and further indicates that the
borrowing carries the lowest credit risk.
During the year, the long term rating of your Company was upgraded by
two notches to "AA " (Double A Plus) from "AA-" (Double A
Minus) by both the rating agencies; CARE and Brickwork Ratings India
Private Limited (Brickwork). Instruments with this rating are
considered to have high degree of safety regarding timely servicing of
financial obligations. Such instruments carry very low credit risk.
Long-term Bank Loan Facilities: During the year CARE has upgraded your
Company''s rating to "CARE AA " ("Double A Plus") from "CARE
AA-" ("Double A Minus") in respect of the long-term bank loan
facilities of the Company aggregating to Rs. 45,000 million (enhanced
from Rs. 22,500 million), having tenure of more than one year.
Secured Redeemable Non-Convertible Debentures (NCDs):
During the year CARE has upgraded your Company''s rating to "CARE
AA " ("Double A Plus") from "CARE AA-" ("Double A Minus")
for the Secured Redeemable NCDs for an aggregate amount of Rs. 10,500
million (enhanced from Rs. 6,000 million). The rating of the Secured
Redeemable NCDs was also upgraded by Brickwork to "BWR AA " ("BWR
Double A Plus") from "BWR AA-" ("BWR Double A Minus") for
issue size upto Rs. 10,000 million (enhanced from Rs. 5,500 million).
Subordinated Non-Convertible Debentures (NCDs): During the year CARE
has assigned the "CARE AA " ("Double A Plus") rating to the
Unsecured Subordinated Debt program of the Company for an aggregate
amount of Rs. 2,000 million. Brickwork upgraded the rating to "BWR
AA " ("BWR Double A Plus") from "BWR AA-" ("BWR Double A
Minus") to the Unsecured Subordinated Debt program of the Company for
an aggregate amount of Rs. 2,000 million (enhanced from Rs. 1,500
million).
Perpetual Non-Convertible Debentures (NCDs): During the year CARE has
also assigned the "CARE AA" ("Double A") rating to the
Perpetual Debt program of the Company for an aggregate amount of Rs.
1,500 million. Brickwork has also assigned the "BWR AA" ("Double
A") rating to the Perpetual Debt program of the Company for an
aggregate amount of Rs. 1,500 million.
DIRECTORS
During the year under review, Mr. Kishore Biyani, Mr. G. N. Bajpai,
Mr. Shailesh Haribhakti, Mr. Pradeep Mukerjee and Mr. K. K. Rathi
resigned as Directors of the Company. The Board of Directors of the
Company placed on record its appreciation for the valuable contribution
made by these esteemed members in steering the Company on its growth
path over the years.
Subsequent to the investment made by Warburg Pincus through its
affiliate Cloverdell Investment Ltd, Mr. V. Vaidyanathan was designated
as the Chairman of the Board of Directors of the Company.
Mr. Vishal Mahadevia, Mr. M S Sundara Rajan and Mr. Hemang Raja were
appointed as additional Directors of the Company, during the year under
review.
In accordance with Sections 255 and 256 of the Companies Act, 1956,
read with the Articles of Association of the Company, Mr. Anil Singhvi,
being Non-Executive and Independent Director, retire by rotation and
being eligible offer himself for re-appointment at the ensuing Annual
General Meeting.
Brief resumes of Directors, nature of their expertise in specific
functional areas and names of companies in which they hold Directorship
and/or Membership/Chairmanship of committees of the Board, are annexed
and forms part of this Report (Annexure 1).
Based on the confirmations received, none of the Directors are
disqualified for appointment under Section 274(1)(g) of the Companies
Act, 1956.
DIRECTORS'' RESPONSIBILITY STATEMENT
Pursuant to the requirements of Section 217(2AA) of the Companies Act,
1956, with respect to Directors'' Responsibility Statement, it is hereby
confirmed:
i) that in the preparation of the annual accounts for the financial
year ended March 31, 2013, the applicable accounting standards have
been followed along with proper explanation relating to material
departures, if any.
ii) that the Directors have selected such accounting policies and
applied them consistently and made judgments and estimates that are
reasonable and prudent so as to give a true and fair view of the state
of affairs of the Company at the end of the financial year and of the
profit of the Company for that period.
iii) that the Directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 1956, for safeguarding the assets of
the Company and for preventing and detecting fraud and other
irregularities.
iv) that the Directors have prepared the annual accounts for the
financial year ended March 31, 2013, on a going concern basis.
CONSOLIDATED FINANCIAL STATEMENTS
The Audited Consolidated Financial Statements are provided in this
Annual Report. These statements have been prepared on the basis of the
financial statements received from Subsidiaries, as approved by their
respective Board of Directors.
AUDITORS
M/s. S. R. Batliboi & Co. LLP, Chartered Accountants, Statutory
Auditors of the Company, retire at the ensuing Annual General Meeting
and have expressed their willingness to continue, if so appointed. As
required under the provisions of Section 224(1B) of the Companies Act,
1956, the Company has obtained a written confirmation from the Auditors
proposed to be re-appointed to the effect that their re-appointment, if
made, would be in conformity with the limits specified in the said
Section.
A proposal seeking their re-appointment is provided as part of the
Notice of the ensuing Annual General Meeting.
PARTICULARS OF EMPLOYEES, EMPLOYEES STOCK OPTION SCHEME AND EMPLOYEES
STOCK PURCHASE SCHEME
In terms of the provisions of Section 217(2A) of the Companies Act,
1956, read with the Companies (Particulars of Employees) Rules, 1975,
as amended from time to time, the name and other particulars of certain
employees are required to be set out in the Annexure to the Directors''
Report. However, as per the provisions of Section 219(1)(b)(iv) of the
said Act, the Directors'' Report excluding the aforesaid information
is being sent to all the Members of the Company and others entitled
thereto. Members who are interested in obtaining such particulars may
write to the Company.
During the year under review, the Members of the Company vide Special
Resolutions passed through Postal Ballot, result of which was announced
on July 5, 2012, approved the CFL Employees Stock Option Scheme - 2012
(CFL ESOS - 2012) for the employees of the Company and its Subsidiary
Companies.
Also, during the year under review, Company has granted employee stock
options to eligible employees under various Employee Stock Option
Schemes and also allotted 53,000 equity shares to eligible employees
under aforesaid Schemes.
The disclosure(s) as required under the Securities and Exchange Board
of India (Employee Stock Option Scheme & Employee Stock Purchase
Scheme) Guidelines, 1999, are annexed and forms part of this Report
(Annexure 2).
PARTICULARS OF ENERGY CONSERVATION, TECHNOLOGY ABSORPTION, EXPENDITURE
ON RESEARCH AND DEVELOPMENT, FOREIGN EXCHANGE INFLOW/OUTFLOW, ETC.
The requirements of disclosure with regard to Conservation of Energy in
terms of Section 217(1)(e) of the Companies Act, 1956, read with the
Companies (Disclosure of Particulars in the Report of Board of
Directors) Rules, 1988, are not applicable to the Company.
The Company''s activities do not require any technology to be absorbed
as mentioned in the aforesaid Rules. However the Company makes all
efforts towards conservation of energy, protection of environment and
ensuring safety.
The details of the earnings and outgo in Foreign Exchange during the
year under review are provided in Notes to the Financial Statements as
at March 31, 2013. The Members are requested to refer to the said Note
for details in this regard.
ACKNOWLEDGEMENT
We are grateful to the Government of India, the Reserve Bank of India,
the Securities and Exchange Board of India, the Stock Exchanges,
Foreign Investment & Promotion Board, Insurance Regulatory and
Development Authority of India, National Housing Bank and other
regulatory authorities for their valuable guidance and support and wish
to express our sincere appreciation for their continued co-operation
and assistance. We look forward to their continued support in future.
We wish to thank our bankers, rating agencies, customers and all other
business associates for their support and trust reposed in us.
Your Directors express their deep sense of appreciation for all the
employees whose commitment, co-operation, active participation,
dedication and professionalism has made the organisation''s growth
possible.
Finally, the Directors thank you for your continued trust and support.
On behalf of the Board of Directors
V. Vaidyanathan
Chairman & Managing Director
Place : Mumbai
Date : May 27, 2013
Mar 31, 2012
Dear Members,
The Directors have pleasure in presenting the Seventh Annual Report of
your Company with the audited statement of accounts for the year ended
31st March, 2012.
FINANCIAL HIGHLIGHTS
The highlights of the consolidated and standalone financial results of
the Company for the financial years 2011-12 and 2010-11 are as under:
(Rs. in million)
Particulars Consolidated Standalone
2011-12 2010-11 2011-12 2010-11
Total Income 7,437.45 4,015.14 7,027.62 2,637.28
Total Expenditure 5,921.51 3,176.57 5,676.50 1,885.39
Profit Before Tax 1,515.94 838.57 1,351.12 751.89
Provision For Tax
(including Fringe
Benefit Tax) 457.63 347.36 429.19 199.28
Profit After Tax 1,058.31 491.21 921.93 552.61
Profit brought
forward from
previous year /
period (359.07) (590.07) 178.78 (122.74)
Profit available for
appropriation 699.24 (98.86) 1,100.71 429.87
Appropriations:
Transfer to
Reserve Fund
under Section
45-IC of
the RBI Act, 1934 186.34 119.64 184.39 110.52
Proposed Dividend 97.20 97.18 97.20 97.18
Dividend Tax thereon 15.77 15.76 15.77 15.76
Transfer to
General Reserve 46.10 27.63 46.09 27.63
Balance carried forward
to Balance Sheet 353.83 (359.07) 757.26 178.78
The Company is focused on retail and wholesale credit, which is
expected to drive growth for the Company going forward. The Company has
grown its outstanding Loan Book from Rs. 28,548 million to Rs. 46,704
million. The Retail Loan Book has grown from Rs. 8,144 million to Rs.
19,451 million. The Wholesale Book expanded from Rs. 20,404 million to Rs.
27,253 million. Both, Retail and Wholesale Loan Book grew during the
year, but the proportion of Loan Book growth tilted more towards Retail
credit this year.
The Net worth of the Company increased from Rs. 7,469 million to Rs. 8,316
million as at 31st March, 2012.
The Company has brought down its gross NPAs from Rs. 71 million to Rs. 36
million and net NPA from Rs. 18 million to NIL pursuant to better asset
quality/ policies, which is now largely secured with adequate
collateral, significantly more conservative provisioning norms and
improved collections.
Consolidated Net Interest Income increased 92% from Rs. 1,199 million
during the financial year ending 31st March, 2011, to Rs. 2,303 million
during the financial year ending 31st March, 2012. This was largely on
account of larger Loan Book in comparison to previous year.
The Profit Before Tax was up by 81%, the Profit After Tax was up by
115% from Rs. 491 million to Rs. 1,058 million.
DIVIDEND
Keeping in mind the overall performance and the outlook for your
Company, the Directors are pleased to recommend a dividend of Rs. 1.50/-
(Rupee One and Paise Fifty Only) per share i.e. 15% on each Equity
Share of Rs. 10/- (Rupees Ten Only). The dividend would be paid to all
the shareholders, whose names appear in the Register of Members /
Beneficial Holders list on the Book Closure date.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
As required under Clause 49 of the Listing Agreement entered into with
the Stock Exchanges, the Management Discussion and Analysis of the
financial condition and result of consolidated operations of the
Company for the year under review, is annexed and forms an integral
part of the Directors' Report.
SHARE CAPITAL
During the year under review, the Company issued and allotted 15,000
(Fifteen Thousand) equity shares of Rs. 10/- each, on exercise of Stock
Options granted to employees under FCH Employee Stock Option Scheme -
2008. Consequently, the issued, subscribed and paid-up capital
increased by 15,000 equity shares of Rs. 10/- each. Consequently, the
issued, subscribed and paid-up capital of the Company increased from Rs.
64,78,34,840/- to Rs. 64,79,84,840/- as at the end of the financial year.
Subsequent to the year under review, pursuant to the approval of the
shareholders sought through Postal Ballot, results of which were
announced on 5th July, 2012, the authorized share capital of the
Company has been re-classified into 10,30,00,000 equity shares of Rs.
10/- each and 1,00,00,000 Compulsorily Convertible Preference Shares of
Rs. 10/- each, aggregating to Rs. 1,13,00,00,000/-.
With reference to 1,00,00,000 warrants issued by the Company on 30th
September, 2010, the warrant holders had not exercised their right to
convert their warrants into equity shares by the latest date of
exercise of such right, which was 29th March, 2012 (i.e. within 18
months from the date of allotment) as per the Securities and Exchange
Board of India (Issue of Capital and Disclosure Requirements)
Regulations, 2009 and consequently the warrants lapsed.
Subsequent to the year under review, the Board at its Meeting held on
4th June, 2012 had approved the execution of Share Purchase Agreement
with Pantaloon Retail (India) Limited, Future Value Retail Limited, Mr.
Kishore Biyani and Cloverdell Investment Ltd ("Cloverdell") and also
the execution of Share Subscription Agreement with Cloverdell pursuant
to which an open offer has also been proposed by Cloverdell. Consequent
to the subscription of shares and secondary acquisition through the
above arrangement, Cloverdell would acquire substantial stake and
control of the Company.
CHANGE OF REGISTERED OFFICE
During the year under review, the Company shifted its registered office
from FCH House, Peninsula Corporate Park, Ganpatrao Kadam Marg, Lower
Parel, Mumbai à 400 013 to 15th Floor, Tower-2, Indiabulls Finance
Centre, Senapati Bapat Marg, Elphinstone (West), Mumbai - 400 013 with
effect from 1st September, 2011.
SUBSIDIARIES
During the year under review, the Hon'ble High Court of Judicature at
Bombay, vide its order dated 17th June, 2011, had approved the Scheme
of Arrangement (Scheme) between the Company and Future Capital
Financial Services Limited (FCFS), a Wholly Owned Subsidiary of the
Company and a Systemically Important Non Deposit Taking Non Banking
FInance Company registered with the Reserve Bank of India, under the
provisions of Section 391 to 394, 78 and 100 to 103 of the Companies
Act, 1956, inter alia, providing for Amalgamation of FCFS with the
Company and the Scheme became effective on 29th June, 2011.
During the year under review, Future Capital Commodities Limited (FCCL)
became a step down subsidiary of the Company and has obtained
membership of leading commodity exchanges i.e. Multi Commodity Exchange
and National Commodity & Derivatives Exchange Limited and also from
National Spot Exchange Limited for commencing its commodity trading
business.
During the year under review, the Company divested its shareholding in
Future Hospitality Management Limited, a Wholly Owned Subsidiary of the
Company effective from 2nd September, 2011 vide Share Purchase
Agreement dated 2nd September, 2011 entered into with Future Ideas
Realtors India Limited. Also, the Company's shareholding in Kshitij
Property Solutions Private Limited, a Wholly Owned Subsidiary of the
Company was divested effective from 1st December, 2011 vide Share
Purchase Agreement dated 1st December, 2011, entered into with
Everstone Capital Advisors Private Limited.
Your Directors are pleased to inform that the Hon'ble High Court of
Judicature at Bombay, vide its order dated 13th April, 2012, has
approved the Scheme of Amalgamation of two wholly owned subsidiaries of
the Company viz. Future Capital Investment Advisors Limited and FCH
Securities & Advisors Limited with Kshitij Investment Advisory Company
Limited and the same has been effective pursuant to filing the
certified true copy of the said order with the Registrar of Companies
on 2nd June, 2012.
Subsequent to the year under review, Future Capital Home Finance
Private Limited, a Wholly Owned Subsidiary of the Company made an
application to the National Housing Bank for obtaining the Certificate
of Registration to commence its housing finance business.
Subsequent to the year under review, the Company sold the entire
10,00,000 fully paid-up equity shares of Rs. 10/- each held in its Wholly
Owned Subsidiary Company namely Myra Mall Management Company Limited
(Myra Mall) to Providence Educational Academy Private Limited, in its
capacity as a Trustee of AAA Holding Trust, a private trust.
Consequently, Myra Mall ceased to be a Subsidiary of the Company with
effect from 9th July, 2012.
In terms of the General Circulars No. 2/2011 & 3/2011 of the Ministry
of Corporate Affairs (MCA), dated 8th and 21st February, 2011,
respectively, copies of the Balance sheet, Profit and Loss Account,
Report of the Board of Directors and Auditors of the Subsidiaries of
the Company have not been attached with the Balance Sheet of the
Company. These documents will be made available upon request by any
Member of the Company interested in obtaining the same and these
documents are also kept for inspection by any Member at the Corporate
Office of the Company and the Subsidiaries. However, as directed by the
MCA, the financial data of the Subsidiaries has been furnished under
'Details of Subsidiaries', forming part of the Audited Accounts.
Further, pursuant to Accounting Standard (AS - 21) issued by the
Institute of Chartered Accountants of India, the Consolidated Financial
Statements presented by the Company in this Annual Report includes
financial information of its Subsidiaries.
PUBLIC DEPOSITS
The Company being a Non Deposit Accepting NBFC has not accepted any
deposits from the public during the year under review and shall not
accept any deposits from the public without obtaining prior approval of
Reserve Bank of india.
RBI GUIDELINES
The Company has complied with the Regulations of the Reserve Bank of
India as on 31st March, 2012, as are applicable to it as a Systemically
Important Non Deposit Taking Non Banking Finance Company.
CAPITAL ADEQUACY
The Company's capital adequacy ratio was 18.63% as on 31st March, 2012,
which is significantly above the threshold limit of 15% as prescribed
by Reserve Bank of India.
CREDIT RATING
During the year under review, Credit Analysis & Research Ltd. ("CARE")
retained the "A1 " ("A One Plus"). The rating is the highest rating
issued by CARE for short term debt instruments and indicates strong
capacity for timely payment of short term debt obligations and further
indicates that the borrowing carries the lowest credit risk. During the
year under review, the rating of short term borrowing programme was
enhanced by Rs. 2,000 million i.e. from Rs. 7,000 million to Rs. 9,000
million.
During the year CARE has upgraded your Company's rating to "CARE AA-"
("Double A Minus") from "CARE A " ("Single A Plus") for the Secured
Redeemable Non-Convertible Debentures (NCDs) for an aggregate amount of
Rs. 6,000 million. The rating of the NCDs was also upgraded by Brickwork
Ratings India Private Limited (Brickwork) to "BWR AA-" ("BWR Double A
Minus") from "BWR A " ("BWR A Plus") for issue size upto Rs. 5,500
million. Brickwork has also assigned the "BWR AA-" ("BWR Double A
Minus") rating to the proposed Unsecured Subordinated Debt Issue of the
Company for Rs. 1,500 million. The rating indicates that the NCDs carry
low credit risk and offer adequate safety for timely servicing of debt
obligations. This rating indicates that the NCDs are considered to
offer adequate credit quality in terms of timely servicing of debt
obligations and further indicates "Stable" outlook.
CARE has also upgraded your Company's rating to "CARE AA-" ("Double A
Minus") from "CARE A " ("Single A Plus") in respect of the long-term
bank loan facilities of the Company aggregating to Rs. 22,500 million
(enhanced from Rs. 8,500 million), having tenure of more than one year.
Facilities with this rating carry low credit risk and offer adequate
safety for timely servicing of debt obligations.
Subsequent to the year under review, CARE has also assigned the "CARE
AA-" (Double A Minus) rating to the Company's Non- Convertible
Debentures (NCDs) programme for an enhanced limit of Rs. 10,500 million
(enhanced from Rs. 6,000 million).
DIRECTORS
In accordance with Sections 255 and 256 of the Companies Act, 1956,
read with the Articles of Association of the Company,
Mr. G.N. Bajpai, Independent Director and Mr. K.K. Rathi, Non-
Executive Director, retire by rotation and being eligible offer
themselves for re-appointment at the ensuing Annual General Meeting.
Brief resumes of Mr. G. N. Bajpai and Mr. K. K. Rathi, nature of their
expertise in specific functional areas and names of companies in which
they hold directorship and / or membership / chairmanship of committees
of the Board, as stipulated under Clause 49 of the Listing Agreement
entered into with the Stock Exchanges, are annexed and forms part of
this Report (Annexure 1).
Based on the confirmations received, none of the Directors are
disqualified for appointment under Section 274(1)(g) of the Companies
Act, 1956.
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to the requirements of Section 217(2AA) of the Companies Act,
1956, with respect to Directors' Responsibility Statement, it is hereby
confirmed:
i) that in the preparation of the annual accounts for the financial
year ended 31st March, 2012, the applicable accounting standards have
been followed along with proper explanation relating to material
departures, if any.
ii) that the Directors have selected such accounting policies and
applied them consistently and made judgments and estimates that are
reasonable and prudent so as to give a true and fair view of the state
of affairs of the Company at the end of the financial year and of the
profit of the Company for that period.
iii) that the Directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 1956, for safeguarding the assets of
the Company and for preventing and detecting fraud and other
irregularities.
iv) that the Directors have prepared the annual accounts for the
financial year ended 31st March, 2012, on a going concern basis.
CONSOLIDATED FINANCIAL STATEMENTS
The Audited Consolidated Financial Statements are provided in this
Annual Report. These statements have been prepared on the basis of the
financial statements received from Subsidiaries, as approved by their
respective Board of Directors.
AUDITORS
M/s. S. R. Batliboi & Co., Chartered Accountants, Statutory Auditors of
the Company, retire at the ensuing Annual General Meeting and have
expressed their willingness to continue, if so appointed. As required
under the provisions of Section 224(1B) of the Companies Act, 1956, the
Company has obtained a written confirmation from the Auditors proposed
to be re-appointed to the effect that their re-appointment, if made,
would be in conformity with the limits specified in the said Section.
A proposal seeking their re-appointment is provided as part of the
Notice of the ensuing Annual General Meeting.
PARTICULARS OF EMPLOYEES, EMPLOYEES STOCK OPTION SCHEME AND EMPLOYEES
STOCK PURCHASE SCHEME
In terms of the provisions of Section 217(2A) of the Companies Act,
1956, read with the Companies (Particulars of Employees) Rules, 1975,
as amended from time to time, the name and other particulars of certain
employees are required to be set out in the Annexure to the Directors'
Report. However, as per the provisions of Section 219(1)(b)(iv) of the
said Act, the Directors' Report excluding the aforesaid information is
being sent to all the Members of the Company and others entitled
thereto. Members who are interested in obtaining such particulars may
write to the Company.
Subsequent to the year under review, the Members of the Company vide
Special Resolutions passed through Postal Ballot, result of which was
announced on 5th July, 2012, approved the FCH Employees Stock Option
Scheme à 2012 (FCH ESOS à 2012) for the Company and its Subsidiary
Companies. However, the Company has not granted any Options under the
FCH ESOS Ã 2012.
The disclosure(s) as required under the Securities and Exchange Board
of India (Employee Stock Option Scheme & Employee Stock Purchase
Scheme) Guidelines, 1999, are annexed and forms part of this Report
(Annexure 2).
PARTICULARS OF ENERGY CONSERVATION, TECHNOLOGY ABSORPTION, EXPENDITURE
ON RESEARCH AND DEVELOPMENT, FOREIGN EXCHANGE INFLOW/OUTFLOW, ETC.
The requirements of disclosure with regard to Conservation of Energy in
terms of Section 217(1)(e) of the Companies Act, 1956, read with the
Companies (Disclosure of Particulars in the Report of Board of
Directors) Rules, 1988, are not applicable to the Company.
The Company's activities do not require any technology to be absorbed
as mentioned in the aforesaid Rules. However the Company makes all
efforts towards conservation of energy, protection of environment and
ensuring safety.
The details of the earnings and outgo in Foreign Exchange during the
year under review are provided as Note No. 37 to the Financial
Statements as at 31st March, 2012. The Members are requested to refer
to the said Note for details in this regard.
CORPORATE GOVERNANCE
A report on Corporate Governance as required under Clause 49 of the
Listing Agreement entered into with the Stock Exchanges, forms part of
the Annual Report.
A Certificate from M/s. SVJS & Associates, Company Secretaries,
confirming compliance with the conditions of Corporate Governance as
stipulated under the aforesaid Clause 49, also forms part of the Annual
Report.
HUMAN RESOURCE MANAGEMENT
Skilled and motivated employees are one of the cornerstones of our
business. We focus on meeting the skill gap and providing skilled
manpower wherever required. We ensure a favorable work environment for
all our employees. Our recruitment and Human Resources management set
up enables us to attract and retain employees.
ACKNOWLEDGEMENT
We are grateful to the Government of India, the Reserve Bank of India,
the Securities and Exchange Board of India, Stock Exchanges, Insurance
Regulatory and Development Authority of India and other regulatory
authorities for their valuable guidance and support and wish to express
our sincere appreciation for their continued co- operation and
assistance. We look forward to their continued support in future.
We wish to thank our bankers, rating agencies, customers and all other
business associates for their support and trust reposed in us.
Your Directors express their deep sense of appreciation for all the
employees whose commitment, co-operation, active participation,
dedication and professionalism has made the organisation's growth
possible.
Finally, the Directors thank you for your continued trust and support.
On behalf of the Board of Directors
Sd/-
Kishore Biyani
Chairman
Place: Mumbai
Date : 30th July, 2012
Mar 31, 2011
Dear Members,
The Directors have pleasure in presenting the Sixth Annual Report of
your Company with the audited statement of accounts for the year ended
31st March, 2011.
FINANCIAL HIGHLIGHTS
STANDALONE PERFORMANCE
The highlights of the standalone financial results of the Company for
the financial years 2010-11 and 2009-10 are as under:
(Rs. In million)
Particulars Standalone *
2010-11 2009-10
Total Income 2,637.28 558.00
Total Expenditure 1,885.39 350.00
Profit Before Tax 751.89 208.00
Provision For Tax 199.28 34.82
Profit After Tax 552.61 173.18
Profit brought forward from previous 210.94 146.73
year / period
Profit available for appropriation 763.55 319.91
Appropriations:
Transfer to Reserve Fund under 110.52 34.64
Section 45-IC of the RBI Act, 1934
Proposed Dividend 97.18 63.53
Dividend Tax thereon_ 15.76 10.80
Transfer to general reserve 27.63
Balance carried forwarded to Balance 512.46 210.94
Sheet
CONSOLIDATED PERFORMANCE
The highlights of the consolidated financial results of the Company
for the financial years 2010-11 and 2009-10 are as under:
(Rs. In million)
Consolidated *
Particulars
2010-11 2009-10
Total Income 4,015.14 2,516.50
Total Expenditure 3,176.57 1,914.85
Profit Before Tax 838.57 601.65
Provision For Tax 347.36 9.00
Profit After Tax 491.21 592.65
* 1. The financial accounts for 2010-11 have been prepared after
giving effect to the Scheme of Arrangement between the Company and
Future Capital Financial Services Limited (FCFS) as approved by the
Hon'ble High Court of judicature at Bombay, inter alia providing for
amalgamation of FCFS into the Company and hence, are not comparable
with that of 2009 -10.
* 2. The financial accounts of the current year are also not
comparable with the previous year as the investment advisory services
business and income and costs thereof have been realigned and the
current year's performance is based on the income and costs related to
the retail and wholesale lending business of the Company only.
The Company is focused on wholesale and retail credit, which is
expected to drive growth for the Company going forward. The Company has
grown its outstanding Loan Book to Rs. 28,548 million from Rs. 14,951
million. The Retail Loan Book has grown from Rs. 2,910 million to Rs.
8,144 million. The Wholesale Book expanded from Rs. 12,041 million to Rs.
20,404 million. Both Retail and Wholesale Loan Book grew during the
year, but the proportion of the Loan Book tilted more towords Retail
this year.
The Net-worth of the Company increased from Rs. 6,909 million to Rs. 7,469
million as at 31st March 2011.
The Company has brought down its gross NPAs from Rs. 558 million to Rs. 71
million and net NPAs from Rs. 244 million to Rs. 18 million pursuant to
better asset quality / policies, which is now largely secured with
adequate collateral, significantly more conservative provisioning
norms and improved collections.
In the current year, the Company has made a standard asset provision of
Rs. 74 million pursuant to the guidelines issued by Reserve Bank of
India.
Consolidated Net Interest Income increased 63% from Rs. 786 million
during financial year ending 31st March, 2010, to Rs. 1,285 million
during the financial year ending 31st March, 2011. This was largely on
account of a larger Loan Book in comparison to the previous year.
Though the Profit Before Tax was up by 39%, the Profit After Tax was
down by 17% to Rs. 491 million from Rs. 593 million in previous year. This
was essentially due to a one time impact of non availing of the MAT
credit and deferred tax charge pursuant to the scheme of merger of FCFS
with your Company. Consequent to this, there is a provision for MAT of
Rs. 56 million and net deferred tax charge of Rs. 32 million in the current
year. Also, in the last year the Company had a brought forward loss of
Rs. 84 million which is not the case in the current year eventually
leading to higher tax liability.
DIVIDEND
Keeping in mind the overall performance and the outlook for your
Company, the Directors are pleased to recommend a dividend of Rs. 1.5/-
(Rupees One and Paise Fifty Only) per share i.e. 15 % on each Equity
Share of Rs. 10/- (Rupees Ten Only). The dividend would be paid to all
the shareholders, whose names appear on the Register of Members /
Beneficial Holders List on the Book Closure Date.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
As required under Clause 49 of the Listing Agreement entered into with
the Stock Exchanges, the Management Discussion and Analysis of the fi
nancial condition and result of consolidated operations of the Company
for the year under review, is annexed and forms an integral part of the
Directors' Report.
SHARE CAPITAL
During the year under review, the issued, subscribed and paid- up
capital of the Company increased from Rs. 63,52,79,840/- to Rs.
64,78,34,840/- as at the end of the financial year.
During the year under review, the Company issued and allotted 5,35,000
and 7,20,500 equity shares of Rs. 10/- each, on exercise of Stock Options
granted to employees under FCH Employee Stock Option Scheme - 2007 and
FCH Employee Stock Option Scheme - 2008, respectively. Consequently,
the issued, subscribed and paid- up capital increased by 12,55,500
equity shares of Rs. 10/- each.
Further, pursuant to the approval given by the Members of the Company
vide Special Resolution passed at the Extraordinary General Meeting
held on 27th August, 2010, the Company allotted 1,00,00,000 convertible
warrants, convertible into equal number of equity shares of the Company
of Rs. 10/- each, at the premium of Rs. 227/- each, aggregating to an Issue
Price of Rs. 237/- each.
Subsequent to the year under review, the Company issued and allotted
15,000 (Fifteen Thousand) Equity Shares of Rs. 10/- each, on exercise of
Stock Options granted to an employee under FCH Employee Stock Option
Scheme à 2008 and consequently, the issued subscribed and paid-up
capital stands increased from Rs. 64,78,34,840/- to Rs. 64,79,84,840/-.
SUBSIDIARIES
During the year under review, under the Scheme of Arrangement (Scheme),
pursuant to the provisions of Section 391 to 394, 78 and 100 to 103 of
the Companies Act, 1956, sanctioned by Hon'ble High Court of Judicature
at Bombay, Future Capital Financial Services Limited (FCFS), a Wholly
Owned Subsidiary of the Company and a Systemically Important à Non
Deposit Taking - Non Banking Financial Company (SI-ND-NBFC) registered
with the Reserve Bank of India (RBI), amalgamated with the Company and
dissolved without being wound-up.
The Company also incorporated a new company as its subsidiary viz.
Future Capital Home Finance Private Limited (FCHF) which may be used to
make a foray into housing finance business. The company will decide to
make necessary applications in the matter based on the strategy.
Upon receipt of the necessary approvals from the RBI and the Financial
Services Commission, Mauritius, the Company acquired Anchor Investment
& Trading Private Limited, a private limited company incorporated under
the laws of Mauritius, to make its foray into investment advisory
business for overseas clients through such subsidiary.
The Company sold its entire equity stake (representing 50% of the
paid-up capital) in Realterm FCH Logistics Advisors Private Limited
(presently known as Realterm Everstone Investment Advisors Private
Limited) pursuant to an arrangement with Everstone Investment Advisors
Private Limited (presently known as Everstone Capital Advisors Private
Limited), to realign the investment advisory activities with a view of
having a focused and dedicated approach to the investment advisory
business.
The Company had two Joint Ventures (JVs) with Centrum Capital Limited
viz. FCH CentrumDirect Limited (FCH CDL) and Future Capital Securities
Limited (formerly known as FCH Centrum Wealth Managers Limited) (FCSL).
During the year, the Company reviewed its strategy of being in the
Forex Business through a JV and exited from FCH CDL by selling all of
its holding in the JV. The Company, as a part of its strategy to focus
on fee based income from retail broking, acquired the entire equity
stake of its JV partner and accordingly, FCSL has become the wholly
owned subsidiary of the Company. With the acquisition of FCSL, the
Company has made its foray into the Stock Broking and Wealth Management
business.
With an objective of making a foray into the Commodities Broking in
addition to Stock Broking carried out by FCSL, necessary changes /
amendments were carried out by Axon Development Solutions Limited
including its name which now stands changed to Future Capital
Commodities Limited (FCCL). For a flexible corporate structure, the
Company transferred entire equity stake in FCCL to FCSL. FCCL is in the
process of making an application to all the leading commodity exchanges
for obtaining their membership to commence the business.
In terms of the approval granted by the Ministry of Corporate Affairs
(MCA) under Section 212(8) of the Companies Act, 1956 and the General
Circular No. 2/2011 & 3/2011 of the Ministry of Corporate Affairs,
dated 8th and 21st February, 2011, respectively, copies of the Balance
sheet, Profit and Loss Account, Report of the Board of Directors and
Auditors of the Subsidiaries of the Company have not been attached with
the Balance Sheet of the Company. These documents will be made
available upon request by any Member of the Company interested in
obtaining the same and these documents are also kept for inspection by
any Member at the Corporate Office of the Company and the
Subsidiaries. However, as directed by the MCA, the financial data of
the Subsidiaries has been furnished under 'Details of Subsidiaries',
forming part of the Audited Accounts. Further, pursuant to Accounting
Standard (AS - 21) issued by the Institute of Chartered Accountants of
India, Consolidated Financial Statements presented by the Company in
this Annual Report includes financial information of its Subsidiaries.
SCHEME OF ARRANGEMENT
On 2nd November, 2010, the Directors of the Company and Future Capital
Financial Services Limited (FCFS) approved carrying out of a Scheme of
Arrangement (Scheme), under the provisions of Section 391 to 394, 78
and 100 to 103 of the Companies Act, 1956, interalia, providing for
Amalgamation of FCFS, a Wholly Owned Subsidiary of the Company and a
SI-ND-NBFC, registered with the RBI, with the Company.
Pursuant to the directions of Hon'ble High Court of Judicature at
Bombay, the Company convened and held the Meeting of the Shareholders
of the Company on 17th February, 2011. At the said Meeting the
requisite majority of the Shareholders approved the Scheme in
accordance with the provisions of the Companies Act, 1956.
Your Directors are pleased to inform that Hon'ble High Court of
Judicature at Bombay, vide its order dated 17th June, 2011, has
approved the Scheme and having fulfilled all the prescribed conditions
to make the Scheme effective, the Company and FCFS gave effect to the
Scheme and the Scheme was made effective on 29th June, 2011.
PUBLIC DEPOSITS
The Company being a Non Deposit Taking - NBFC has not accepted any
deposits from the public during the year under review and shall not
accept any deposits from the public without obtaining prior approval of
the RBI.
RBI GUIDELINES
The Company has complied with the Regulations of the Reserve Bank of
India as on 31st March, 2011, as are applicable to it as a SI-ND-NBFC.
CAPITAL ADEQUACY
The Company's capital adequacy ratio was 23.47% as on 31st March, 2011,
which is significantly above the threshold limit of 15% as prescribed
by the Reserve Bank of India.
CREDIT RATING
On a consolidated basis, during the year under review, Credit Analysis
& Research Ltd. (CARE) retained the "PR 1 " (pronounced "PR One Plus").
The grade of Rating is the highest Rating issued by CARE for short term
debt instruments and indicates strong capacity for timely payment of
short term debt obligations and further indicates that the borrowing
carries lowest credit risk. During the year under review the short term
borrowing programme of Rs. 6,000 million and the Rating thereof has been
further enhanced to Rs. 7,000 million.
CARE has also assigned the "CARE A " (pronounced "Single A Plus")
Rating for the Secured Redeemable Non Convertible Debentures (NCDs) for
an aggregate amount of Rs. 6,000 million during the year. The grade of
Rating indicates that the NCDs carry low credit risk and offer adequate
safety for timely servicing of debt obligations. The NCDs are also
rated by Brickwork Ratings India Private Limited (Brickwork) and it has
assigned the "BWR A " (pronounced "BWR A Plus") Rating to the same for
issue size upto Rs. 5,500 million. This grade of rating indicates that
the NCDs are considered to offer adequate credit quality in terms of
timely servicing of debt obligations and further indicates "Stable"
outlook.
Brickwork has assigned the "BWR A " (pronounced "BWR A Plus") Rating to
the proposed Unsecured Subordinated Debt Issue of the Company for Rs.
2,000 million. This grade of rating indicates that the instruments are
considered to offer adequate credit quality in terms of timely
servicing of debt obligations and further indicates "Stable" outlook.
CARE has also assigned the "CARE A " ("Single A Plus") Rating
("Rating") in respect of the long-term bank loan facilities of the
Company aggregating to Rs. 8,500 million, having tenure of more than one
year. Facilities with this rating are considered to offer adequate
safety for timely servicing of debt obligations and carry low credit
risk.
RESOURCES AND LIQUIDITY
On a consolidated basis, during the financial year 2010-11, the
Company raised Rs. 5,141 million, by issuance of NCDs through private
placement, Rs. 7,000 million by issuance of Commercial Papers and Rs. 8,750
million through Banks in the form of Term Loans, Cash Credit and
Overdraft Facilities.
The Company's debt-equity ratio as on 31st March, 2011, stands at
3.46:1.
DIRECTORS
During the year under review, the Board of Directors (Board) on the
recommendation of the Compensation and Nomination Committee, at its
meeting held on 1st August, 2010, pursuant to the provisions of Section
260 of the Companies Act, 1956 and the Articles of Association of the
Company and other applicable provisions, appointed Mr. V. Vaidyanathan
as an Additional Director and designated him as the Vice Chairman &
Managing Director within the meaning of the Companies Act, 1956.
Subsequently, at the Extraordinary General Meeting held on 27th August,
2010, the shareholders of the Company approved appointment of Mr.
Vaidyanathan as the Vice Chairman & Managing Director and payment of
remuneration to him, subject to necessary regulatory approval(s).
Further, pursuant to the provisions of Section 260 of the Companies
Act, 1956, the Articles of Association of the Company and other
applicable provisions, in order to strengthen the Board, the Company
appointed Mr. N. C. Singhal, Mr. Anil Singhvi and Mr. Pradeep Mukerjee
as the Additional Directors with effect from 23rd September, 2010 and
pursuant to the Clause 49 of the Listing Agreement with the Stock
Exchanges they are the Non-Executive Independent Directors.
Mr. Sameer Sain and Mr. Alok Oberoi resigned from the Board with effect
from 10th August, 2010 and 30th October, 2010, respectively.
Mr. Krishan Kant Rathi resigned from the office of the Manager within
the meaning of the Companies Act, 1956. However, he continues to be on
the Board as a Non-Executive Director.
In accordance with Sections 255 and 256 of the Companies Act, 1956,
read with the Articles of Association of the Company, Mr. Kishore
Biyani, Chairman and Mr. Shailesh Haribhakti, Non- Executive
Independent Director, retire by rotation and being eligible offer
themselves for re-appointment at the ensuing Annual General Meeting.
Pursuant to Section 260 of the Companies Act, 1956, Mr. Vaidyanathan,
Mr. N. C. Singhal, Mr. Anil Singhvi and Mr. Pradeep Mukerjee hold offi
ce as Directors upto the date of the ensuing Annual General Meeting but
are eligible to be appointed as Directors. Approval of members for
their re-appointment is being sought at the ensuing Annual General
Meeting.
Brief resumes of Mr. Kishore Biyani, Mr. V. Vaidyanathan, Mr. Shailesh
Haribhakti, Mr. N. C. Singhal, Mr. Anil Singhvi and Mr. Pradeep
Mukerjee, nature of their expertise in specific functional areas and
names of companies in which they hold directorship and/or
membership/chairmanship of committees of the Board, as stipulated under
Clause 49 of the Listing Agreement entered into with the Stock
Exchanges, are annexed and form part of this Report (Annexure 1).
Based on the confirmations received, none of the Directors are
disqualified from appointment under Section 274(1)(g) of the Companies
Act, 1956.
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to the requirements of Section 217(2AA) of the Companies Act,
1956, with respect to Directors' Responsibility Statement, it is hereby
confirmed:
i) that in the preparation of the annual accounts for the financial
year ended 31st March, 2011, the applicable accounting standards have
been followed along with proper explanation relating to material
departures, if any.
ii) that the Directors have selected such accounting policies and
applied them consistently and made judgments and estimates that are
reasonable and prudent so as to give a true and fair view of the state
of affairs of the Company at the end of the financial year and of the
profit of the Company for that period.
iii) that the Directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 1956, for safeguarding the assets of
the Company and for preventing and detecting fraud and other
irregularities.
iv) that the Directors have prepared the annual accounts for the fi
nancial year ending 31st March, 2011, on a going concern basis.
GROUP
Pursuant to an intimation from the Promoter(s) and in accordance with
Regulation 3(1)(e) of the Securities and Exchange Board of India
(Substantial Acquisition of Shares and Takeovers)
Regulations, 1997 (SEBI Regulations) identification of persons
constituting "Group" (within the meaning and as defined in the
Monopolies and Restrictive Trade Practices Act, 1969) for the purpose
of availing exemption from applicability of the provisions of the SEBI
Regulations is annexed and forms part of this Report (Annexure 2).
CONSOLIDATED FINANCIAL STATEMENTS
The Audited Consolidated Financial Statements are provided in this
Annual Report. These statements have been prepared on the basis of the
financial statements received from Subsidiaries, as approved by their
respective Board of Directors.
AUDITORS
M/s. S. R. Batliboi & Co., Chartered Accountants, retire at the ensuing
Annual General Meeting and have expressed their willingness to
continue, if so appointed. As required under the provisions of Section
224(1B) of the Companies Act, 1956, the Company has obtained a written
confirmation from the Auditors proposed to be re-appointed to the
effect that their re-appointment, if made, would be in conformity with
the limits specified in the said Section.
A proposal seeking their re-appointment is provided as a part of the
Notice of the ensuing Annual General Meeting.
PARTICULARS OF EMPLOYEES, EMPLOYEES STOCK OPTION SCHEME AND EMPLOYEES
STOCK PURCHASE SCHEME
In terms of the provisions of Section 217(2A) of the Companies Act,
1956, read with the Companies (Particulars of Employees) Rules, 1975,
as amended, the name and other particulars of certain employees are
required to be set out in the Annexure to the Directors' Report.
However, as per the provisions of Section 219(1) (b)(iv) of the said
Act, the Directors' Report excluding the aforesaid information is being
sent to all the Members of the Company and others entitled thereto.
Members who are interested in obtaining such particulars may write to
the Company.
The Members of the Company vide Special Resolutions passed through
Postal Ballot dated 16th March, 2011, approved the FCH Employees Stock
Option Scheme à 2011 ( FCH ESOS à 2011) for the Company, its Holding
and Subsidiary Companies. However, during the financial year 2010 - 11
the Company has not granted any Options under the FCH ESOS Ã 2011.
The disclosure(s) as required under the Securities and Exchange Board
of India (Employee Stock Option Scheme & Employee Stock Purchase
Scheme) Guidelines, 1999, are annexed and form part of this Report
(Annexure 3).
PARTICULARS OF ENERGY CONSERVATION, TECHNOLOGY ABSORPTION, EXPENDITURE
ON RESEARCH AND DEVELOPMENT, FOREIGN EXCHANGE INFLOW/OUTFLOW, ETC.
The requirements of disclosure with regard to Conservation of Energy in
terms of Section 217(1)(e) of the Companies Act, 1956, read with the
Companies (Disclosure of Particulars in the Report of Board of
Directors) Rules, 1988, are not applicable to the Company.
The Company's activities do not require any technology to be absorbed
as mentioned in the aforesaid Rules. However the Company makes all
efforts towards conservation of energy, protection of environment and
ensuring safety.
The details of the earnings and outgo in Foreign Exchange during the
year under review are provided as Note No. C13 of the Schedule 16
(Notes to Accounts) of the Balance Sheet as at 31st March, 2011. The
Members are requested to refer to the said Note for details in this
regard.
CORPORATE GOVERNANCE
Report on Corporate Governance as required under Clause 49 of the
Listing Agreement entered into with the Stock Exchanges, forms part of
the Annual Report.
A Certificate from the Auditors of the Company, M/s. S. R. Batliboi &
Co., Chartered Accountants, confirming compliance with the conditions
of Corporate Governance as stipulated under the aforesaid Clause 49,
also forms part of the Annual Report.
HUMAN RESOURCE MANAGEMENT
Skilled and motivated employees are one of the corner stones of our
business. We focus on meeting the skill gap and providing skilled
manpower wherever required. We ensure a favorable work environment for
all our employees. Our recruitment and human resources management set
up enables us to attract and retain employees.
ACKNOWLEDGEMENT
We are grateful to the Government of India, concerned regulatory
authorities including the Reserve Bank of India, the Securities and
Exchange Board of India, the Stock Exchanges, Insurance Regulatory and
Development Authority of India and other regulatory authorities for
their valuable guidance and support and wish to express our sincere
appreciation for their continued co-operation and assistance. We look
forward to their continued support in future.
We wish to thank our bankers, rating agencies, customers and all other
business associates for their support and trust reposed in us.
Your Directors express their deep sense of appreciation for all the
employees whose commitment, co-operation, active participation,
dedication and professionalism has made the organisation's growth
possible.
The Directors thank you for your continued trust and support.
On behalf of the Board of Directors
Sd/-
Kishore Biyani
Chairman
Mumbai, 30th June, 2011
Mar 31, 2010
The Directors have pleasure in presenting the Fifth Annual Report of
your Company with the audited statement of accounts for the year ended
March 31, 2010.
FINANCIAL HIGHLIGHTS
The highlights of the standalone financial results of the Company for
the financial years 2009-10 and 2008-09 are as under:
(Rs. In million)
Particulars Standalone*
2009-10 2008-09
Total Income 558.00 1358.00
Total Expenditure 350.00 1259.52
Profit Before Tax 208.00 98.48
Provision For Tax (including Fringe 34.82 5.39
Benefit Tax)
Profit After Tax 173.18 93.08
Profit brought forward from previous 146.73 72.26
year / period
Less: Adjustment on account of liability Nil Nil
in respect of employee benefits, if any
Proft available for appropriation 319.91 165.34
Appropriations:
Transfer to Reserve Fund under Section 34.64 18.61
45-IC of the RBI Act, 1934
Proposed Dividend 63.53 Nil
Dividend Tax thereon 10.80 Nil
Balance carried forward to Balance 210.94 146.73
Sheet
* The Scheme of Amalgamation and Arrangement inter alia providing for
transfer of credit business of the Company to Future Capital Financial
Services Limited was given effect. Accordingly, the financial
parameters of 2009-10 are not comparable with 2008-09.
STANDALONE PERFORMANCE
The standalone total income of the Company decreased 59% during the
year. Total income in 2009-10 stood at Rs. 558 million, as compared to
Rs. 1358 million in the previous year. The profit after tax showed an
increase of 86% which was Rs. 173 million, as compared to Rs. 93
million in the previous year.
Of the above total income, income from Investment Advisory stood at Rs.
131 million and Treasury and Wholesale Credit stood at Rs. 422
million.
An amount of Rs. 35 million was transferred to Reserve Fund pursuant to
Section 45-IC of the Reserve Bank of India Act, 1934.
CONSOLIDATED PERFORMANCE
The highlights of the consolidated financial results of the Company for
the financial years 2009-10 and 2008-09 are as under:
(Rs. In million)
Particulars Consolidated
2009-10 2008-09
Total Income 2,516.50 1,869.05
Total Expenditure 1,914.85 2,150.32
Profit Before Tax 601.65 (281.27)
Provision For Tax (including Fringe 9.00 39.84
Benefit Tax)
Profit After Tax 592.65 (321.11)
The consolidated total income of the Company and its Subsidiaries
increased by 35% during the year. Total income in 2009-10 stood at Rs.
2,517 million, as compared to Rs. 1,869 million in the previous year.
The profit after tax was Rs. 593 million, as compared to loss of Rs.
321 million in the previous year.
DIVIDEND
Keeping in mind the overall performance and the outlook for your
Company, the Directors are pleased to recommend a dividend of Re. 1/-
(Rupee One Only) per share i.e. 10% on each Equity Share of Rs. 10/-
(Rupees Ten Only). The dividend would be paid to all the shareholders,
whose names appear on the Register of Members / Beneficial Holders list
on the Book Closure date.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
As required under Clause 49 of the Listing Agreement entered into with
the Stock Exchanges, the Management Discussion and Analysis of the
financial condition and result of consolidated operations of the
Company for the year under review, is annexed and forms an integral
part of the Directorsà Report.
SHARE CAPITAL
During the year under review, there is no change in the issued,
subscribed and paid up capital of the Company and the same was Rs.
635.28 million as at the end of the financial year.
Subsequent to the year under review, the Company issued and allotted
50,000 (Fifty Thousand) Equity Shares of Rs. 10/- each, on exercise of
Stock Options granted to an employee under FCH Employee Stock Option
Scheme à 2008 and consequently, the issued, subscribed and paid-up
capital has increased from Rs.635.28 million to Rs.635.78 million.
SUBSIDIARIES
During the year under review, pursuant to the composite Scheme of
Amalgamation and Arrangement (the ÃSchemeÃ), under the provisions of
Section 391 to 394 of the Companies Act, 1956, sanctioned by HonÃble
High Court of Judicature at Bombay, Future Capital Credit Limited, a
Wholly Owned Subsidiary of the Company and a Non Banking Finance
Company registered with the Reserve Bank of India, amalgamated with
Future Capital Financial Services Limited (FCFSL), another Wholly Owned
Subsidiary of the Company and dissolved without being wound-up. Your
Directors are pleased to inform that FCFSL is granted Certificate of
Registration as a Non Banking Finance Company with effect from January
7, 2010, by the Reserve Bank of India. Considering the size of the
assets of FCFSL, FCFSL is qualified as a Systemically Important à Non
Deposit Accepting à Non Banking Finance Company under the Reserve Bank
of IndiaÃs Prudential Norms to Non Banking Finance Companies.
During the year under review, the Company and its Subsidiaries viz.
Future Capital Investment Advisors Limited and Kshitij Investment
Advisory Company Limited entered into appropriate agreements with
Everstone Investment Advisors Private Limited, to realign their
respective investment advisory activities with a view of having a
focused and dedicated approach to the Investment Advisory Business.
The realignment of the investment advisory activities of the Company
and its certain Subsidiaries has been effective from January 1, 2010.
The Company has received the necessary approval from the Reserve Bank
of India and is in the process of obtaining the approval(s) of the
foreign regulator(s) for acquiring / setting up a foreign subsidiary,
in order to make its foray into investment advisory business for
overseas clients through such subsidiary.
In terms of the approval granted by the Ministry of Corporate Affairs
(MCA) under Section 212(8) of the Companies Act, 1956, copy of the
Balance sheet, Profit and Loss Account, Report of the Board of
Directors and Auditors of the Subsidiaries of the Company have not been
attached with the Balance Sheet of the Company. These documents will be
made available upon request by any Member of the Company interested in
obtaining the same. However, as directed by the MCA, the financial data
of the Subsidiaries has been furnished under ÃDetails of SubsidiariesÃ,
forming part of the Audited Accounts. Further, pursuant to Accounting
Standard (AS - 21) issued by the Institute of Chartered Accountants of
India, Consolidated Financial Statements presented by the Company in
this Annual Report includes financial information of its Subsidiaries.
FCH CentrumDirect Limited and FCH Centrum Wealth Managers Limited
continue to be Joint Venture(s) of the Company.
SCHEME OF AMALGAMATION AND ARRANGEMENT
In March, 2009, your Directors had approved the carrying out of, a
composite Scheme of Amalgamation and Arrangement (the ÃSchemeÃ), under
the provisions of Section 391 to 394 of the Companies Act, 1956, inter
alia, providing for:
(i) Transfer of the credit business of the Company (both on account of
Retail Credit and Wholesale Credit) to Future Capital Financial
Services Limited, a Wholly Owned Subsidiary of the Company.
(ii) Amalgamation of Future Capital Credit Limited, a Wholly Owned
Subsidiary of the Company and a Non Banking Finance Company registered
with the Reserve Bank of India, with Future Capital Financial Services
Limited.
Pursuant to the directions of HonÃble High Court of Judicature at
Bombay, the Scheme was submitted for approval and was approved by the
Members of the Company at the Court Convened Meeting held on June 15,
2009.
Your Directors are pleased to inform that having fulfilled all the
prescribed conditions to make the Scheme effective, the Company and its
Subsidiaries gave effect to the Scheme and the Scheme was made
effective on February 1, 2010.
PUBLIC DEPOSITS
The Company has not accepted any deposits from the public during the
year under review and shall not accept any deposits from the public
without obtaining prior approval of the Reserve Bank of India.
RBI GUIDELINES
The Company has complied with the Regulations of the Reserve Bank of
India as on March 31, 2010, as are applicable to it as a Systemically
Important à Non Deposit Accepting à Non Banking Finance Company.
CAPITAL ADEQUACY
The CompanyÃs capital adequacy ratio was 28.97% as on March 31, 2010,
which is significantly above the threshold limit of 12% as prescribed
by the Reserve Bank of India.
CREDIT RATING
During the year under review, Credit Analysis & Research Ltd. (CARE)
has assigned the ÃPR 1+Ã (pronounced ÃPR One PlusÃ) Rating (Rating) in
respect of the short term borrowing programme of Rs. 4000 million
(Rupees Four Thousand Million Only) of the Company. The grade of
Rating is the highest Rating issued by CARE for short term debt
instruments and indicates strong capacity for timely payment of short
term debt obligations and further indicates that the borrowing carries
lowest credit risk. The short term borrowing programme of Rs. 4000
million (Rupees Four Thousand Million Only) has been further enhanced
to Rs. 6000 million (Rupees Six Thousand Million Only).
RESOURCES AND LIQUIDITY
The Company has raised Rs. 6,000 million during the financial year
2009-10, by issuance of Commercial Paper and Rs. 1,000 million through
Banks in the form of Term Loans, Cash Credit and Overdraft
Facilities.
The CompanyÃs debt equity ratio as on March 31, 2010, stands at a level
of 1.6:1.
DIRECTORS
On being appointed as the Vice Chairman of the Board of Directors with
effect from October 29, 2009, Mr. Sameer Sain became the Vice Chairman
& Managing Director. Subsequently, Mr. Sain resigned from the office of
the Managing Director of the Company with effect from February 5, 2010.
He continues to occupy the office of the Vice Chairman of the Company.
In accordance with Sections 255 and 256 of the Companies Act, 1956,
read with Article 146 of the Articles of Association of the Company,
Mr. Sain, Vice Chairman, retires by rotation and being eligible offers
himself for re-appointment at the ensuing Annual General Meeting.
Mr. Dhanpal Jhaveri resigned as the Executive Director and was also
relieved from the responsibilities of the acting Chief Executive
Officer of the Company with effect from April 6, 2010. The Directors
place on record their appreciation for the guidance and inputs provided
by Mr. Jhaveri during his association with the Company.
The Board on the recommendation of the Nomination Committee at its
meeting held on April 6, 2010, appointed Mr. Krishan Kant Rathi as an
Additional Director and designated him as a Manager within the meaning
of the Companies Act, 1956. Pursuant to Section 260 of the Companies
Act, 1956, Mr. Rathi holds office as a Director upto the date of the
ensuing Annual General Meeting but is eligible to be appointed as a
Director. Approval of Members is being sought at the ensuing Annual
General Meeting.
Brief resumes of Mr. Sain and Mr. Rathi, nature of their expertise in
specific functional areas and names of companies in which they hold
directorship and/or membership/chairmanship of committees of the Board,
as stipulated under Clause 49 of the Listing Agreement entered into
with the Stock Exchanges, are annexed and forms part of this Report
(Annexure 1).
Based on the confirmations received, none of the Directors are
disqualified for appointment under Section 274(1)(g) of the Companies
Act, 1956.
DIRECTORSÃ RESPONSIBILITY STATEMENT
Pursuant to the requirements of Section 217(2AA) of the Companies Act,
1956, with respect to Directorsà Responsibility Statement, it is hereby
confirmed:
i) that in the preparation of the annual accounts for the financial
year ended March 31, 2010, the applicable accounting standards have
been followed along with proper explanation relating to material
departures, if any.
ii) that the Directors have selected such accounting policies and
applied them consistently and made judgments and estimates
that are reasonable and prudent so as to give a true and fair view of
the state of affairs of the Company at the end of the financial year
and of the profit of the Company for that period.
iii) that the Directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 1956, for safeguarding the assets of
the Company and for preventing and detecting fraud and other
irregularities.
iv) that the Directors have prepared the annual accounts for the
financial year ending March 31, 2010, on a going concern basis.
GROUP
Pursuant to an intimation from the Promoter(s) and in accordance with
Regulation 3(1)(e) of the Securities and Exchange Board of India
(Substantial Acquisition of Shares and Takeovers) Regulations, 1997
(SEBI Regulations) identification of persons constituting ÃGroupÃ
(within the meaning and as defined in the Monopolies and Restrictive
Trade Practices Act, 1969) for the purpose of availing exemption from
applicability of the provisions of the SEBI Regulations is annexed and
forms part of this Report (Annexure 2).
CONSOLIDATED FINANCIAL STATEMENTS
In accordance with Accounting Standard (AS-21) on Consolidated
Financial Statements read with Accounting Standard (AS-23) on
Accounting for Investments in Associates and Accounting Standard
(AS-27) on Financial Reporting of Interest in Joint Ventures, the
Audited Consolidated Financial Statements are provided in this Annual
Report. These statements have been prepared on the basis of the
financial statements received from Subsidiaries and Joint- Ventures, as
approved by their respective Board of Directors.
AUDITORS
M/s. S. R. Batliboi & Co., Chartered Accountants, retire at the ensuing
Annual General Meeting and have expressed their willingness to
continue, if so appointed. As required under the provisions of Section
224(1B) of the Companies Act, 1956, the Company has obtained a written
confirmation from the Auditors proposed to be re-appointed to the
effect that their re-appointment, if made, would be in conformity with
the limits specified in the said Section.
A proposal seeking their re-appointment is provided as part of the
Notice of the ensuing Annual General Meeting.
PARTICULARS OF EMPLOYEES, EMPLOYEES STOCK OPTION SCHEME AND EMPLOYEES
STOCK PURCHASE SCHEME
In terms of the provisions of Section 217(2A) of the Companies Act,
1956, read with the Companies (Particulars of Employees) Rules, 1975,
as amended, the name and other particulars of certain employees are
required to be set out in the Annexure to the Directorsà Report.
However, as per the provisions of Section 219(1)(b)(iv) of the
said Act, the Directorsà Report excluding the aforesaid information is
being sent to all the Members of the Company and others entitled
thereto. Members who are interested in obtaining such particulars may
write to the Company at its Registered Office.
The Members of the Company at the Fourth Annual General Meeting held on
August 4, 2009, approved the FCH Employees Stock Option Scheme à 2009
(FCH ESOS Ã 2009) for the Company, its Holding and Subsidiary
Companies. However, the Company has not granted any Options under the
FCH ESOS Ã 2009.
The disclosure(s) as required under the Securities and Exchange Board
of India (Employee Stock Option Scheme & Employee Stock Purchase
Scheme) Guidelines, 1999, are annexed and forms part of this Report
(Annexure 3).
PARTICULARS OF ENERGY CONSERVATION, TECHNOLOGY ABSORPTION, EXPENDITURE
ON RESEARCH AND DEVELOPMENT, FOREIGN EXCHANGE INFLOW/OUTFLOW, ETC.
The requirements of disclosure with regard to Conservation of Energy in
terms of Section 217(1)(e) of the Companies Act, 1956, read with the
Companies (Disclosure of Particulars in the Report of Board of
Directors) Rules, 1988, are not applicable to the Company.
The CompanyÃs activities do not require any technology to be absorbed
as mentioned in the aforesaid Rules. However the Company makes all
efforts towards conservation of energy, protection of environment and
ensuring safety.
The details of the earnings and outgo in Foreign Exchange during the
year under review are provided as Note No. C15 of the Schedule 16
(Notes to Accounts) of the Balance Sheet as at March 31, 2010. The
Members are requested to refer to the said Note for the details in this
regard.
CORPORATE GOVERNANCE
Report on Corporate Governance as required under Clause 49 of the
Listing Agreement entered into with the Stock Exchanges, forms part of
the Annual Report.
A Certificate from the Auditors of the Company, M/s. S. R. Batliboi &
Co., Chartered Accountants, confirming compliance with the conditions
of Corporate Governance as stipulated under the aforesaid Clause 49,
also forms part of the Annual Report.
HUMAN RESOURCE MANAGEMENT
Skilled and motivated employees are one of the corner stones of our
business. We focus on meeting the skill gap and providing skilled
manpower wherever required. We ensure a favorable work environment for
all our employees. Our recruitment and human resources management set
up enables us to attract and retain employees.
ACKNOWLEDGEMENT
We are grateful to the Government of India, concerned regulatory
authorities including the Reserve Bank of India, the Securities and
Exchange Board of India, the Stock Exchanges and other regulatory
authorities for their valuable guidance and support and wish to express
our sincere appreciation for their continued co-operation and
assistance. We look forward to their continued support in future.
We wish to thank our bankers, rating agencies, customers and all other
business associates for their support and trust reposed in us.
Your Directors express their deep sense of appreciation for all the
employees whose commitment, co-operation, active participation,
dedication and professionalism has made the organisationÃs growth
possible.
Finally, the Directors thank you for your continued trust and support.
On behalf of the Board of Directors
Kishore Biyani
Chairman
Mumbai, May 24, 2010
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