Mar 31, 2015
Dear Members,
The Directors are pleased to present this 24th Annual Report of the
Company together with the Audited Accounts for the year ended 31st
March 2015.
FINANCIAL HIGHLIGHTS AND PERFORMANCE Rs. in Million)
PARTICULARS 2014-15 2013-14
IncomefromOperations 36.83 44.35
Otherlncome 13.49 16.77
GrossReceipts 50.32 61.12
Expenses 38.66 44.88
Depreciations Amortization 0.13 4.42
Total Expenses 38.79 49.30
PBT 11.53 11.82
TAX 3.95 3.99
PAT 7.58 7.83
Proposed Dividend / Dividend 3.70 4.63
Proposed Dividend Tax / Dividend Tax 0.90 0.79
Transfer to Statutory Reserve 1.51 1.57
FINANCIAL PERFORMANCE
The profit after tax achieved by your company during the period under
review is almost same as that of the previous year though the gross
receipts is also less than previous year. For the fourth year in
succession, your Directors are pleased to recommend 4% dividend i.e.
INR. 0.40 for every equity share of Rs.10/- each fully paid up for the
year 2014-15. The Dividend, if approved by the Shareholders at the
ensuing Annual General Meeting will be paid to the equity share
holders, whose names appear in the Register of Members, as per the
provisions of the Companies Act 2013. In which case, the dividend out
go would be INR. 3.70 Mn. and the dividend tax to be paid by the
company would be INR.0.90 Mn.
ECONOMIC SCENARIO AND OUTLOOK:
India's growth story is expected to dominate the headlines in the years
ahead with both the World Bank and the International Monetary fund
predicting robust expansion for Asia's Third Largest economy on the
back of reform, initiatives launched by the government and the impact
loweroil prices.
The fact that India will take over China as the fastest growing economy
by 2015-16 is well acknowledged. The World Bank in a report on South
Asian economies said India's economy is expected to a accelerate to
8%in 2017-18 after growth of 7.6% in 2015-16.ln 2014-15 growth is
expected to be 7.2% the World Bank said in its South Asia Economic
Focus Spring 2015 titled 'Making the most of Cheap Oil'
The IMF in its World Economic Outlook (WEO) update said India's growth
is expected to strengthen from7.2% in 2014 to 7.5% in 2015. 'Growth
will benefit from recent policy reforms, a consequent pick up in
investment, and lower oil prices. Lower Oil prices will raise
disposable incomes, particularly among poorer house hold and help drive
down inflation' the IMF said.
It said in China, growth fell to 7.4% in 2014 and is expected to fall
further to 6.8% in 2015as previous excesses in real estate credit and
investment continue to unwind. 'Ongoing implantation of structural
reforms and lower commodity prices are expected to expand consumer
oriented activities partially buffering the slowdown' IMF said.
Indian Government expects the economy to grow 8.1-8.5% in the current
financial year while RBI has forecast 7.8% growth. Economic indicators
have signaled sign of green shoots and policy makers expect the
momentum to be sustained on the back of reform measures that unfold in
the months ahead.
'Higher production capacity, commensurate with accumulating capital and
increase in factor productivity and continued but targeted fiscal
consolidation will help curb domestic and external imbalances in the
face of rising domestic demand in medium term' the World Bank report
said. It further said that acceleration on real GDP growth will be
driven largely by higher investments, which are expected to grow at an
average of 12% during 2015-2017.
The report said inflationary pressures are likely to ease gradually on
account of lower crude prices, and an improved production capacity will
prevent overheating in the medium-term.
The Government has abolished MAT from April 1,2015 and no retrospective
Tax law has brought in by the Government and the Government is hopeful
of Goods and Services Tax (GST) getting passed in the coming session of
Parliament and the new tax regime would be put in place from April
1,2016 which would be a 'single biggesttax reform since independence.
FUTURE OUTLOOK
The Non- Banking Finance Company [NBFC] sector despite operating mostly
in the area under served by the fast growing banking Industry in India,
has grown considerably in terms of technological sophistication as well
as size. They are exposed all kinds of risks like interest rate
movement, liquidity, counter party failures .recession etc. like any
other player in the financial sector. During the Year, RBI while
undertaking a review of the entire regulatory framework for the NBFC
Sector, issued prudential guidelines for NBFCs. Key measures introduced
are classification of NPA recognition norm, standard asset provisioning
norms and change in capital adequacy norms. Though the migration to new
norms will strengthen the governing standards ofthe NBFCs, it is likely
to increase volatility and uncertainty in the earning over next 3
years. However this does not change the actual credit flow or the
margins over the cycle as there is enough liquidity in the system and
hence the return ratios are likely to remain same over the cycle. These
regulatory measures will make NBFCs tightly regulated, almost at par
with banks.
With most ofthe players being very cautious during the concluded
financial year, the sector concentrated much on risk analysis,
mitigation and strengthening the governing standards. However for asset
/ infra financing NBFCs, FY16 will be a transition year wherein they
will start recognizing NPAs and doing provisioning as per RBI's
guidelines of 90 days NPA recognition and 0.4% standard asset
provisioning by FY18.The proposal to extend the provisions of the
SARFAESI Act to the NBFC s with asset size of Rs. 500.00 crores and
above sector will go a long way towards the orderly growth and
development of the sector. However non-inclusion of all NBFCs [with
lesser size] will not enable the growth of the other disciplined
players in the sector.
OPPORTUNITIES & THREATS
Now it has become a proven fact that only those NBFCs which fall under
the regulatory norms and serious about being in the finance business
survived. To survive and constantly grow, NBFCs have to focus on their
core strengths while improving on weaknesses. The SARFAESI Act move for
NBFCs is a great piece of news. With the economy showing signs of
revival the NBFCs are likely to be very aggressive in funding
particularly sunrise sectors like housing and other retail business.
The automobile sector, an all-time favorite NBFCs which is back in news
is likely add for the good show of the sector in the coming years. The
fact that NBFCs with a size of over Rs 500 crores can be brought under
the SARFAESI Act, helps maintain the asset quality management and
speedy recovery. However non-inclusion of small size NBFCs who have
played a pivotal role in filling the gap once again leaves behind a 'no
level playing field.
Though most of the NBFCs have found alternate methods for additional
resources, the Regulatory guidelines to the NBFCs to reduce the
dependence on public deposit has already curtailed the capacity of the
sectorto raise funds and in turn sustained growth.
Your Company operating only in major cities and having not accepted any
public deposit has not ventured into any riskiersegments. Proper
systems and procedures are in place to analyze and mitigate the
threats.
Due to a slowdown in economic activity in past couple of years and
aggressive lending by some of the NBFCs many loans have turned
non-performing. Restructuring of assets means loans whose duration has
been increased or the interest rate has been decreased. This happens
due to inability of the loan taking company/individual to pay off the
debt. Both of these have impacted the profitability of NBFCs as they
are required to have a higher provisioning amount which directly eats
into the profitability. Increasing the loan portfolio and effectively
managing the NPAs is the key challenge, going forward for NBFCs
RISK & CONCERNS
Your Company being a NBFC is subjected to both Business and Financial
risk. While the business risk associated with operating environment,
ownership structure, Management, System & Policy and Corporate
Governance, the financial risk lies in Asset Quality, Liquidity,
Profitability and Capital Adequacy. IFL recognizes these risks and
makes best effort to mitigate them in time.
One of the major concerns for the sector is the deteriorating asset
quality in the banking sector which has certain indirect impact on the
asset qualities of NBFCs also. Any negative growth of the Industry,
irrespective of the sector has some adverse effect on the workings of
the NBFCs. IFL has always kept in mind the uncertainties and their
mitigation while conducting the business.
NUMBER OF MEETING OF BOARD
Indus Finance Ltd, held 4 Board Meetings during the year ended 31st
March 2015. These were on 30th May 2014,11th August 2014,11th November
2014 and 30th January 2015
DIRECTORS
Mr. Bala V. Kutti is retiring in the forth coming 24th AGM of the
company and being eligible offers himself for re-appointment. Your
company has received a notice from a member proposing Mr. T.S. Raghavan
as Independent Director for the period of five years. Ms. Alice
Chhikara was appointed as additional director with effect from March
30, 2015. She holds of his up to the date of 24th Annual General
Meeting. Your company has received a notice from a member proposing Ms.
Alice Chhikara as Director of the Company and the information regarding
their appointment and reappointment are provided in the notice
convening the 24th AGM of the company.
STATEMENT ON DECLARATION GIVEN BY INDEPENDENT DIRECTOR UNDER SECTION
149 (61 OF COMPANIES ACT2013
The Company has obtained declaration from the Independent Directors
that they meet the criteria of Independence has provided in section 149
(6) of the Companies Act 2013
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to Section 134 (3) (c) and 134 (5) of the Companies Act, 2013,
the Board of Directors hereby state that;
1. In the presentation of the Annual accounts, applicable standards
have been followed and there are no material departures.
2. The Directors have selected such accounting policies and apply 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 as at 31st March 2015 and profit for the Company for the
year ended 31st March 2015.
3. The Directors have taken proper and sufficient care in the
maintenance of adequate accounting records in accordance with the
provisions of the Act for safe guarding the assets of the Company and
for preventing and detecting fraud and other irregularities.
4. The Directors have prepared the annual accounts on a going concern
basis; and
5. The Directors, in the case of listed company, had laid down
internal financial controls to be followed by the company and that such
internal financial controls are adequate and were operating effectively
and
The Directors had devised proper systems to ensure compliance with the
provisions of all applicable laws and that such systems were adequate
and operating effectively.
POLICY FOR SELECTION AND APPOINTMENT OF DIRECTORSAND THEIR REMUNERATION
The Nomination and Remuneration (N&R) Committee has adopted a Charter
which, inter alia, deals with the manner of selection of Board of
Directors and CEO & Managing Director and their remuneration. This
policy is accordingly derived from the said charter.
1. Criteria of Selection of Non-Executive Directors
a. The Non-Executive Directors shall be of high integrity with
relevant expertise and experience so as to have a diverse Board with
Directors having expertise in the fields of manufacturing, marketing,
finance, taxation, law, governance and general management.
b. In case of appointment of Independent Directors, the N&R Committee
shall satisfy itself with regard to the independent nature of the
Directors vis-a-vis the Company so as to enable the Board to discharge
its function and duties effectively.
c. The N&R Committee shall ensure that the candidate identified for
appointment as a Director is not disqualified for appointment under
Section 164 of the Companies Act, 2013.
d. The N&R Committee shall consider the following attributes /
criteria, whilst recommending to the Board the candidature for
appointment as Director.
I. Qualification, expertise and experience of the Directors in their
respective fields.
ii. Personal, Professional or business standing:
iii. Diversity of the Board.
e. In case of re-appointment of Non-Executive Directors, the Board
shall take into consideration the performance evaluation of the
Director and his engagement level.
2. Remuneration:
The Non-Executive Directors shall be entitled to receive remuneration
by way of sitting fees, reimbursementof expenses for participation in
the Board/Committee meetings.
i. A Non-Executive Director shall be entitled to receive sitting fees
for each meeting of the Board or Committee of the Board attended by
him, of such sum as may be approved by the Board of Directors within
the overall limits prescribed under the Companies Act, 2013 and the
Companies (Appointment and Remuneration of Managerial Personnel Rules,
2014).
ii. The Independent Directors of the Company shall not be entitled to
participate in the Stock Option Scheme of the Company, if any,
introduced by the Company.
3. CEO, Managing Director/Whole Time Director Criteria for selection I
appointment
For the purpose of selection of the CEO, Managing Director / Whole Time
Director, the N&R Committee shall identify persons of integrity who
possess relevant expertise, experience and leadership qualities
required for the position and shall take into consideration
recommendation, if any, received from any memberof the Board.
The Committee will also ensure that the incumbent fulfills such other
criteria with regard to age and other qualifications as laid down under
the Companies Act, 2013 or other applicable laws.
Remuneration forthe CEO, Managing Director/Whole Time Director
i. At the time of appointment or re-appointment, the CEO, Managing
Director/Whole Time Director, shall be paid such remuneration as may be
mutually agreed between the Companies (which includes the N&R Committee
and the Board of Directors) and the CEO, Managing Director / Whole Time
Director, within the overall limits prescribed undertheCompaniesAct,
2013.
ii. The remuneration shall be subject to the approval of the Members
ofthe Company in General Meeting.
iii. The remuneration ofthe CEO, Managing Director/Whole Time Director,
component comprises salary allowances, perquisites, amenities and
retrial benefits.
Remuneration Policy for the Senior Management Employees
1. In determining the remuneration of the Senior Management Employees
(i.e. KMPs and Executive Committee Members)the N&RCommittee shall
ensure/considerthefollowing:
i. The relationship of remuneration and performance benchmark is
clear;
ii. The remuneration component comprising salaries, perquisites and
retirement benefits;
iii. The remuneration including annual increment is decided based on
the criticality of the roles and responsibilities, the Company's
performance vis-a-vis the annual budget achievement.
iv. N&R Committee will carry out the individual performance review
based on the standard appraisal matrix and shall take into account the
appraisal score card and other factors, whilst recommending the annual
increment.
AUDIT COMMITTEE
A qualified and independent Audit Committee of the Board of the company
is functioning. It monitors and supervises the Management's financial
reporting process with a view to ensure accurate and proper disclosure,
transparency and quality of financial reporting. The committee reviews
the financial and risk management policies and also the adequacy of
internal control systems and holds discussions with Statutory Auditors
and Internal Auditors. This is enhancing the credibility of the
financial disclosures of the company and also provides transparency.
The company continued to derive immense benefit from the deliberation
of the Audit Committee comprising of three Directors, Mr. T.S.
Raghavan, Dr. K.R. Shyamsundar & Mr. Bala V. Kutti who are highly
experienced and having knowledge in project finance, accounts and
company law. Mr. T.S. Raghavan is the Chairman of the Audit Committee.
The Company Secretary acts as the Secretary of the Audit Committee. The
minutes of each Audit Committee meeting are placed before, and
discussed in the full by the Board.
THE RATIO OF THE REMUNERATION OF EACH DIRECTORS TO THE MEDIAN
REMUNERATION OF THE EMPLOYEES OF THE COMPANYFORTHE FINANCIAL YEAR
2014-15ARE GIVEN BELOW
Name of the Directors Ratio to Median Employee
remuneration
Mr. Bala V. Kutti - Executive Chairman 2.40
Mr. T.S. Raghavan - Independent Director 0.05
Dr. K.R. Shyamsundar - Independent Director 0.04
Ms. Alice Chhikara - Additional Director* ----
* w.e.f. 30th March 2015
THE PERCENTAGE INCREASE IN REMUNERATION OF DIRECTORS. KMP AND MEDIAN
EMPLYEE FOR THE FINANCIAL YEAR 2014-15
There is no increase in remuneration to the Directors, KMP and median
employee during the financial year2014-15
DETAILS OF DIRECTORS OR KEY MANAGERIAL PERSONNEL WHO WERE APPOINTED OR
HAVE RESIGNED DURING THE YEAR
Ms. Alice Chhikara was appointed as Additional Director of the Company
effect from 30th March 2015 and there is no new appointment or
resignation of KMP of the Company during the under review.
PARTICULARS OF LOANS. GUARANTEE OR INVESTMENTS:
Detailed information is provided in respect of loans under long term
loans and advances in notes No. 10 (d) of Notes forming part of the
financial statements, similarly detailed information is provided under
NonCurrent investments in Note No. 9 of Notes forming part of the
financial statements. As regards guarantee, the Company has not
provided any guarantee to any person or Bodies Corporates.
BUSINESS RISK MANAGEMENT:
The Company has developed a Risk Management Policy by identifying the
elements of risk which are mentioned below. The risk management
approach at various levels inclining documentation and reporting seeks
to create transparency, minimize adverse impact on the business
objectives and enhance the company's competitive advantage.
The Business risk is associated with operating environment, ownership
structure, Management, System & Policy and Corporate Governance
The Financial risk lies in Asset Quality, Liquidity, Profitability and
Capital Adequacy. IFL recognizes these risks and makes best effort to
mitigate them in time.
One of the major concerns for the sector is the deteriorating asset
quality in the banking sector which has certain indirect impact on the
asset qualities of NBFCs also. Any negative growth of the Industry,
irrespective of the sector has some adverse effect on the workings of
the NBFCs. IFL has always kept in mind the uncertainties and their
mitigation while conducting the business.
BOARD EVALUATION:
Pursuant to the provisions of the companies Act 2013, and Clause 49 of
the Listing Agreement, the Board has carried out an annual performance
evaluation of its own performance the directors individually as well as
the evaluation ofthe of its Audit, nomination and remuneration and
compliance committees. The manner in which the valuation has been
carried out has been explained in the Corporate Governance report.
DEPOSITS:
During the year under review the company has not accepted any deposits
from the public with in the ambit of section 73 ofthe companies Act,
2013 and The companies (Acceptance of Deposits) Rules, 2014.
There is no significant/ material order passed by the Judicial /
Regulatory authorities during the year under review.
DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY ANY COURTS DURING
THE UNDER REVIEW.
None
WHISTLE BLOWER POLICY
The Company has a whistle blower policy to deal with instance of fraud
and mismanagement if an any. The detail of the policy is explained in
the Corporate Governance Report and posted on the website of the
company.
FINANCIAL STATEMENTS OF THE SUBSIDIARY COMPANY IF ANY
None
INDUSTRIAL RELATIONS AND PARTICULARS OF EMPLOYEES
As of 31st March 2015, Your Company has 6 employees on its rolls. The
employees will be inducted in to permanent services of the Company
after training; to fill up vacancies as when arises. Your company has
not issued any shares under Employees' Stockoption Scheme during the
year under review.
VARIATIONS IN THE MARKET CAPITALISATION OF THE COMPANY. PRICE EARNINGS
RATIO AS AT THE CLOSINGDATE OF THE CURRENT FINANCIAL YEAR AND PREVIOUS
FINANCIAL YEAR:
Particulars March 31.3.2015 March 31.3.2014 % Change
Market Capitalization Rs. 19,58,13,045/- 49,25,41,560/- (60.24)
Price earnings ratio 25.48 62.58 (59.28)
PERCENTAGE OF INCREASE OR DECREASE IN THE MARKET QUOTATION OF THE
SHARES IN COMPARISON TO THE RATE AT WHICH THE COMPANY CAME OUT WITH THE
LAST PUBLIC OFFER:
Price of Public offer Rs. 30, Market Price as on 31.3.2015-Rs. 21.15,
difference (Rs.8.85) (29.50%)
THE KEY PARAMETERS FOR ANY VARIABLE COMPONENT OF REMUNERATION AVAILED
BYTHE DIRECTORS:
None.
THE RATIO OF THE REMUNERATION OF THE HIGHEST PAID DIRECTOR TO THAT OF
THE EMPLOYEES WHO ARE NOT DIRECTORS BUT RECEIVE REMUNERATION IN EXCESS
OF THE HIGHEST PAID DIRECTOR DURING THE YEAR:
None.
LIST OF EMPLOYEES WHO ARE IN RECEIPT OF REMUNERATION MORE THAN THE
STIPULATED AMOUNT MENTIONED UNDER RULE 5 (2) OF COMPANIES (APPOINTMENT
AND REMUNERATION) RULES2014
None.
AFFIRMATION THAT THE REMUNERATION IS AS PER THE REMUNERATION POLICY OF
THE COMPANY:
The Company affirms remuneration is as per the remuneration policy of
the Company.
CORPORATE GOVERNANCE
Your Company has complied with the requirements regarding Corporate
Governance as required under revised clause 49 of the Listing agreement
entered in with the Stock exchanges where the Company's shares are
listed. A Report on the Corporate Governance in this regard is made as
a part of this Annual Report and a certificate from the Auditors of
Your Company regarding compliance of the conditions of the Corporate
Governance is attached to this report.
LISTING OF EQUITY SHARES
Your Company's equity shares are continued to be listed on the Bombay
Stock Exchange Ltd, Mumbai during the year under review.
AUDITORS
M/s.V.Ramaratnam & Co. retires at the conclusion of this Annual General
Meeting and are eligible for reappointment.
EXTRACT OF ANNUAL RETURN
As provided in Sec 92 (3) of the Act the extract of annual return is
given in Annexure (I) of this report in the format Form MGT 9, which
forms part of this report.
TRANSACTIONS WITH RELATED PARTIES
Detailed information is provided with respect to the list of Related
parties and transactions with them are provided in note No. 18.4 of
Notes forming part of the financial statements and also in the form no.
AOC 2 underAnnexure II.
SECRETARIAL AUDIT
Mr. R. Kannan, PCS is the secretarial auditor of the company for the
year under review and his report is attached with this report
underAnnexure III.
ADEQUACY OF INTERNAL CONTROL
Your Company has effective and adequate internal control systems in
combination with delegation of powers. The control system is also
supported by internal audits and management reviews with documented
policies and procedures.
M/s. S. Vasudevan& Associates are the Internal Auditors to continuously
monitor and strengthen the financial control procedures in line with
the growth operations of the Company.
PARTICULARES REQUIRED UNDER SECTION 134 OF THE COMPANIES ACT. 2013 AND
ITS COMPANIES (ACCOUNTS) RULES 2014
The particulars required to be given in terms of section 134 of the
Companies Act, 2013 and its Companies (Accounts) Rules, 2014, regarding
conservation of Energy, Technology Absorption, Foreign Exchange
Earnings and Foreign Exchange outgo are not applicable to Your Company.
ACKNOWLEDGEMENT
The Directors wish to place on record their sincere thanks and
gratitude to all its Bond holders, Share holders, Bankers, State
Governments, Central Government and its agencies, statutory bodies,
suppliers, and customers, for their continued co-operation and
excellent support extended to the Company from time to time.
Your Directors place on record their utmost appreciation for the
sincere and devoted services rendered by the employees at all levels.
For and on behalf of board of directors of
INDUS FINANCE LIMITED
(formerly known as Indus Finance Corporation Ltd)
Place: Chennai - 600 034. Bala V. Kutti
Date:5th August2015. Chairman
Mar 31, 2014
Dear Shareholders
The Directors are pleased to present this, 23rd Annual Report of the
Company along with the Audited Accounts of the Company for the year
ended 31st March 2014.
FINANCIAL RESULTS (Rs. in Million)
PARTICULARS 2013-14 2012-13
Income from Operations 44.35 52.45
Other lncome 16.77 20.82
Gross Receipts 61.12 73.27
Expenses 44.88 42.62
Depreciations Amortization 4.42 24.76
Total Expenses 49.30 67.38
PBT 11.82 5.89
TAX 3.99 1.33
PAT 7.83 4.56
Dividend 4.63 3.24
Dividend Tax 0.79 0.53
Transfer to Statutory Reserve 1.57 0.91
FINANCIAL PERFORMANCE
The profit after tax achieved by your Company during the period under
review is almost double than that of the previous year though the gross
receipts are less than previous year. Therefore for the third year in
succession, your Directors are pleased to recommend 5 % dividend i.e.
Rs. 0.50 for every equity share of Rs.10/- each fully paid up for the
year 2013-14. The Dividend, if approved by the Shareholders at the
ensuing Annual General Meeting will be paid to the equity share
holders, whose names appear in the Register of Members, as per the
provisions of the Companies Act 2013. In which case, the dividend out
go would be Rs. 4.63 Mn. and the dividend tax to be paid by the Company
would be Rs. 0.79 Mn.
FUTURE OUTLOOK
NBFCs in India have played a significant role in financing various
sectors of the economy, particularly those that have been underserved
by the banks. Non-banking finance companies (NBFC) which operated
mostly in unorganized sectors and under-serviced segments of the
economy have been regulated to a large extent post reforms. Close
Customer Interaction, deep understanding of the client, specialized
field expertise and low cost infrastructure are the typical features of
a NBFC business model. NBFCs supplement the role of the banking sector
in meeting the increasing financial need of the corporate sector,
delivering credit to the unorganized sector and to small local
borrowers.
The fact that NBFCs as a whole account for more than 12.5% [for 2012-13
it was 12.7%as per economic survey] of the assets of the total
financial system indicate the significant role NBFCs have in the
financial sector. However the frequent restrictive regulations for the
sector seem to be imposing regulatory burdens and causing jerks to the
growth of the segment. Owing to the regulatory uncertainty and general
macroeconomic lull, NBFC segment has witnessed a slower growth,
slow-down in construction equipment, commercial vehicle and gold loan
portfolios and building of delinquencies and lowering of interest
margins. The significant change in the Regulatory frame work in the
last few years has helped us to be very prudent resulting in achieving
the desired goal. While your Company has maintained a perfect record of
compliance of regulatory norms, as assured in the earlier years
maintained a healthy credit portfolio consisting of a select number of
clients. Though the outstanding credit as on 31.03.2014 declined by 10%
compared to corresponding period, the reduction is attributed to timely
closure of certain borrowal accounts as per contract. With the
Regulator having classified the NBFCs based on their nature of
business, your Company falls under the category "Loan Company" and the
activities are restricted to lending only. IFCL being non-deposit
accepting, loan company and having decided to continue the status
further ,will be looking for alternate resources available within the
regulatory framework to meet the growing demand of the credit
portfolio.
OPPORTUNITIES & THREATS
The role of NBFCs has become increasingly important from both the
macroeconomic perspective and the structure of the Indian financial
system. It is a proven fact, that only those NBFCs which fall under the
regulatory norms and serious about being in the finance business
survived. To survive and constantly grow, NBFCs have to focus on their
core strengths while improving on weaknesses. They have to either
constantly search for new products and services in order to remain
competitive or exhibit highest ethical standards in conducting their
business. The coming years will be testing ground for the NBFCs and
only those who will face the challenge and prove themselves will
survive in the long run.
There have been several committees in the past acknowledging the role
and importance of NBFCs in India and their complimentary role to banks
in financial intermediation. Yet there being no level playing field, it
is likely that the NBFCs will be very cautious and concentrate much on
the secured transaction. Any sudden spurt in the growth depends upon
the monetary policies of the new Government at the Center. Since there
are several credit starved and under-serviced segments in the economy,
the NBFCs have a definite long term role, the beginning of which is
expected during 2014-15. NBFCs have immense business potential from the
segment untapped by the commercial banks.
Consolidation of business by the public sector banks, fast expansion by
the new generation banks and further banking license being issued by
the Regulator appear to push the NBFCs to a corner. Non-availability of
a level playing field on account of absence of a strong & effective
recovery tool like the SARFAESI act (available to the banks) made the
NBFCs less effective compared to commercial banks though both are
engaged in similar activities. The activity oriented classification &
definition and in turn the restrictions has forced the NBFCs to live
with only one activity thus restricting to only few select products.
The Regulatory guidelines to the NBFCs to reduce the dependence on
public deposit has already curtailed the capacity of the sector to
raise funds and in turn sustained growth.
Your Company operating only in major cities and having not accepted any
public deposit has not ventured into any riskier segments. Proper
systems and procedures are in place to analyse and mitigate the
threats.
RISK & CONCERNS
Your Company being a NBFC is subjected to both Business and Financial
risk. While the business risk is associated with operating environment,
ownership structure, Management, System & Policy and Corporate
Governance, the financial risk lies in Asset Quality, Liquidity,
Profitability and Capital Adequacy. Your Company recognizes these risks
and makes best effort to mitigate them in time.
One of the major concerns for the sector is the deteriorating asset
quality in the banking sector which has certain indirect impact on the
asset qualities of NBFCs also. Any negative growth of the Industry,
irrespective of the sector has some adverse effect on the workings of
the NBFCs. Your Company has always kept in mind the uncertainties and
their mitigation while conducting the business.
THE RBI NORMS AND ACCOUNTING STANDARDS
To comply with RBI directions, Your Company closed its accounts for the
full year ending March 2014, and your Company continues to comply with
the directives issued as well as the norms prescribed by Reserve Bank
of India for NBFCs.
INFORMATION AS PER SECTION 217 (1)(e) OF THE COMPANIES ACT. 1956
Your Company is a Non-Banking Finance Company and is not engaged in
manufacturing activity of any kind. The disclosure of information
relating to conservation of energy and technology absorption are
therefore not applicable to your Company. There were no foreign
exchange earnings or outgo for your Company during the year.
DIRECTORS'' RESPONSIBILITY STATEMENT
Pursuant to provisions under section 134(5) of the Companies Act, 2013,
the Board of Directors hereby state that;
1. In the preparation of Annual Accounts for the year ended 31st March
2014, all the applicable accounting standards have been followed along
with proper explanation relating to material departures.
2. The Directors have selected such accounting policies and applied
them consistently and made judgments and estimates that were reasonable
and prudent so as to give a true and fair view of the state of affairs
of the Company as at 31st March 2014 and of the Profit or Loss of the
Company for the year under review.
3. The Directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 2013 for safeguarding the assets of
the Company and for preventing and detecting fraud and other
irregularities.
4. The Directors have prepared the Annual Accounts for the current
financial year on a ''going concern'' basis.
5. 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.
6. The Directors have devised proper systems to ensure complaints with
the provisions of all applicable laws and that such system were
adequate and operating effectively.
DIRECTOR
Mr. Bala V. Kutti, retires at the end of this meeting and being
eligible, offers himself for reappointment.
CORPORATE GOVERNANCE
Your Company provides considerable importance to good Corporate
Governance and complying with the Code of Corporate Governance
introduced by SEBI. A detailed report on Corporate Governance together
with a certificate from the Statutory Auditors in compliance of Clause
49 of the Listing Agreement has been annexed as part of the Annual
Report.
Management Discussion and Analysis Report highlighting the performance
of the Company is attached forming part of the Directors'' Report.
AUDITORS
M/s.V.Ramaratnam & Co. retire at the conclusion of this Annual General
Meeting and are eligible for reappointment. Necessary resolutions are
placed before the Shareholders for their approval.
ACKNOWLEDGEMENT
Your Directors wish to place on record their sincere appreciation and
gratitude to the bankers of the company and various Government agencies
for their support, assistance and co-operation and look forward for
their continued support.
For and on behalf of Board of
INDUS FINANCE CORPORATION LTD
K.V. Bala
Chairman
Place: Chennai - 600 034.
Date: 30th May 2014.
Mar 31, 2013
To The Shareholders
The Directors are pleased to present this, 22nd Annual Report of the
Company along with the Audited Accountsof the Company for the
yearended31"March 2013.
FINANCIAL RESULTS (Rs. in Lacs)
PARTICULARS 2012-13 2011-12
Total Income 732.74 1074.97
Profit before Depreciation and Tax 436.54 866.86
Depreciation 247.58 811.19
Tax expense 16.41 26.10
Deferred Tax Asset (3.08) (9.22)
Profit after Tax 45.63 38.79
Amount available for appropriation 45.63 38.79
Transfer to Statutory Reserve 9.13 7.76
Transfer to Profit and Loss Account 36.50 31.03
FINANCIAL PERFORMANCE
The total income achieved by your company for the period under review
is Rs.732.74 lacs as against the total income of Rs. 1074 .97 lacs in
the previous year. The income was higher during the previous year due
to the settlement proceeds received in respect of the dispute with
ICICI Bank ltd which was Rs.594 lacs Excluding this income, the total
income achieved by your company during the year under review shows 52%
rise as compared to the previous year. The depreciation for the period
under review is Rs.247.58 as against Rs.811.19 lacs for the previous
year. Your company has registered a net profit of Rs .45.63 lac for the
period under review as against Rs.38.79 lacs of previous year.
DIVIDEND
For the third year in succession, your Directors are pleased to
recommend 3.5% dividend i.e. Rs. 0.35 for every equity share of Rs.10/-
each fully paid up for the year 2012-13.The Dividend, if approved by
the Shareholders at the ensuing Annual General Meeting, will be paid to
the equity share holders, whose names appear in the Register of
Members, as per the provisions of the Companies Act 1956. In which
case, the dividend out go would be Rs.32.40 lacs and the dividend tax
to be paid by the company would be Rs.5.25lacs. FUTURE OUTLOOK
While NBFCs have witnessed substantial growth over the years, they have
played an important role by providing finance to activities which are
not served by the organized banking sector. NBFCs supplement the role
of the banking sector in meeting the increasing financial need of the
corporate sector, delivering credit to the unorganized sector and to
small local borrowers. With NBFC regulations having undergone
tremendous refinement over the past decade, there emerged a large
number of non-deposit taking companies having inter-linkage with the
broader financial system. The regulator termed this NBFCs Systemically
important and brought in sharper supervision with introduction of
capital adequacy and exposure
norms.ThissignificantchangeintheRegulatoryframeworkinthelastfewyears
has helped us to be very prudent resulting in achieving the desired
goal While your company has maintained a perfect record of compliance
of regulatory norms, as assured in the earlier years maintained a
healthy credit portfolio consisting of a select number of clients. IFCL
has achieved modest gains in terms of Gross Income. Your company is in
the process of obtaining credit rating from a leading, recognized
rating agency.
IFCL being a non deposit accepting, loan company having decided to
continue the status further, will be looking for alternate resources
available within the regulatory framework to meet the growing demand of
the creditportfolio.
Although considerable improvement has been witnessed during the last
decade in the functioning and survival of the NBFC sector, particularly
after global financial crisis and stringent regulatory norms, the
overall growth of this sector may remain subdued, considering the
significant slowdown in the economy, structural challenges such as
increased refinancing risk, declining margins. The Company is planning
to counter its challenges through quality advance portfolio and
committed workforce, tight control on liquidity and margins, cost
effective resources and working towards creating better value for all
the stakeholders in the most competitive manner.
OPPORTUNITIES & THREATS
Non-banking financial companies constitute an important segment of the
financial system. They play very crucial role in channelizing the scare
financial resources to capital formation. NBFCs have more flexible
structure than banks, can take quickdecisions and take greater risks.
NBFC undertake a wide range of activities like hire-purchase finance,
vehicle financing, equipment lease finance, personal loans, working
capital loans, consumer loans, housing loans, loans against shares and
investment, etc. While NBFC s have immense business potential from the
segment untapped by the commercial banks, the organised sector
particularly the infrastructure development companies seem to be very
comfortable with NBFC sector for their project funding. With the
successive Governments aiming better infrastructure in the country,
there is tremendous scope and opportunity for the NBFCs for their
activities in theform of both lending and equipmentfinancing.
Though the functions of NBFCs are almost similar to that of banks,
there are few differences between both the institutions.
1. NBFCs do not have access to public demand deposit.
2. NBFCsarenotpartofpayment&settlementsystem
3. There is no insurance cover like DICGC cover available to banks.
The increasing number of existing bank branches and the new banking
license being issued by the RBI will further increase the competition
in the financial market. Banks are bound to expand their horizon
particularly the rural area which is now subjected to expansion. While
these banks are expected to grab a major share of NBFC business in the
so far unbanked area, the latest advice of the RBI to NBFCs to reduce
dependence on the public deposit will have adverse impact on their
capacity to mobilize resources and cater the demand, thus having severe
impact on the profitability.
Non availability of a level playing field on account of absence of a
strong & effective recovery tool like the SARFAESI act (available to
the banks) made the NBFC s less effective compared to commercial banks
though both are engaged in similar activities.
Your Company has not ventured into riskier segments such as unsecured
loans, purchase finance for used commercial vehicles, capital market
lending, etc. which could have adverse impact on the financial health.
RISKS AND CONCERNS
An RBI working group has recommended higher capital norms for
non-banking financial companies (NBFCs), increased risk weights for
NBFC lending to commercial real estate and capital markets sectors.
The group has also recommended that accounting norms and provisions
that are currently applicable to banks be applied to NBFCs also in a
phased manner. The working group has also recommended that the NBFCs
may be given the benefit under SARFAESI Act, 2002.
IFCL being a NBFC is subjected to both Business and Financial risk.
While the business risk is associated with operating environment,
ownership structure, Management, System & Policy and Corporate
Governance, the financial risk lies in Asset Quality, Liquidity,
Profitability and Capital Adequacy. IFCL recognizes these risks and
makes best effort to mitigate them in time.
THE RBI NORMS AND ACCOUNTING STANDARDS
To comply with RBI directions, your company closed its accounts for the
full year ending March 2013, and your Company continues to comply with
the directives issued as well as the norms prescribed by Reserve
BankoflndiaforNBFCs.
INFORMATION AS PERSECTION217f1)fe)OFTHECOMPANIESACT. 1956
Your Company is a Non-Banking Finance Company and is not engaged in
manufacturing activity of any kind. The disclosure of information
relating to conservation of energy and technology absorption are
therefore not applicable to your company. There were no foreign
exchange earnings or outgo for your Company during the year.
DIRECTORS RESPONSIBILITY STATEMENT
Pursuanttosection217(2AA)of the Companies (Amendment) Act2000, the
Directors confirm that;
1. In the preparation of Annual Accounts for the year ended 3rt March
2013 all the applicable accounting standards have been followed along
with proper explanation relating to material departures.
2. The Directors have selected such accounting policies and applied
them consistently and made judgments and estimates that were reasonable
and prudent so as to give a true and fair view of the state of affairs
of the company as at 31st March 2013 and of the Profit or Loss of the
company for the year under review.
3. 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.
4. The Directors have prepared the Annual Accounts for the current
financial year on a ''going concern'' basis.
DIRECTOR
Mr. T.S. Raghavan, retires at the end of this meeting and being
eligible, offers himself for reappointment. DELISTING OF SHARES FROM
MADRAS STOCK EXCHANGE LTD AND COIMBATORE STOCK EXCHANGE LTD.:
You are aware that pursuant to the approval of the shareholders for
voluntary delisting of 2009 of SEBI in their Annual General Meeting
held on 30-9-2011, the company has submitted the application
fordelisting of shares to the respective stock exchanges in February
2012, MSE has intimated their approvals for delisting of shares from
MSE. However no reply has been received from CSE. As per the said
regulation, it is deemed to have been approved, on the expiry of thirty
working days from the date of submission of the such application.
CORPORATEGOVERNANCE
Your Company provides considerable importance to good Corporate
Governance and complying with the Code of Corporate Governance
introduced by SEBI. Adetailed report on Corporate Governance together
with a certificate from the Statutory Auditors in compliance of Clause
49 of the Listing Agreement has been annexed as part of the Annual
Report. Management Discussion and Analysis Report highlighting the
performance of the company is attached forming part of the Directors''
Report.
PERSONNEL
Your company does not have any employee drawing salary in excess of the
amount stipulated under
Section217(2A)of the CompaniesAct, 1956.
AUDITORS
M/s.V.Ramaratnam & Co. retire at the conclusion of this Annual General
Meeting and are eligible for reappointment.Necessary resolution
sareplacedbe fore the Shareholders for their approval.
ACKNOWLEDGEMENT
Your Directors wish to place on record their sincere appreciation and
gratitude to the bankers of the company and various Government agencies
for their support, assistance and co-operation and look
forwardfortheircontinued support.
For and on behalf of Board of
INDUS FINANCE CORPORATION LTD
Place: Chennai Bala V.Kutti
Date: 10th August 2013. Chairman
Mar 31, 2010
The Directors have great pleasure in presenting the 19th Annual Report
of the Company along with the Audited Accounts of the Company for the
year ended 31st March 2010.
FINANCIAL PERFORMANCE Rs.in Lakhs
PARTICULARS 2009-10 2008-09
Total Income 52.85 50.66
Profit before Depreciation, Bad debt and Tax 26.58 25.07
Depreciation 11.19 11.05
Tax provision 1.33 3.72
Deferred Tax Asset 3.36 -
Profit after Tax 17.10 10.82
Amount available for appropriation 17.10 10.82
Transfer to Statutory Reserve 3.42 2.16
Transfer to Profit and Loss Account 13.86 8.66
FINANCIAL PERFORMANCE:
Your Companys income has marginally increased from Rs.50.66 lacs to Rs
52.85 lacs for the period under review. Similarly PBT has increased by
6% to Rs 26.58 lacs for the period under review from Rs. 25.07 lacs of
previous financial year. Your company has registered a Net Profit of
Rs.17.10 lacs for the year under review against the Net profit Rs.10.82
lacs of the previous year. Rs.3.42 lacs has been transferred to
Statutory Reserve and transferred Rs13.86 lacs to Profit and Loss
Account for the year under review. The Board does not recommend
dividend for the year under review with a view to consolidate and
improve the future performance of your company.
FUTURE OUTLOOK:
Your Company is set to begin the upcoming financial year on a positive
note, with its appeal in High Court against the Income Tax demand is
expected to be sorted out at the earliest. Leveraging on the groups
strength, Your Company is set to establish itself as major investment
vehicle in promoting already existing and newly formed group companies.
It is also looking at diversifying into areas of Micro Finance, and
other avenues of Project funding by mobilising funds in range of Rs. 80
to 100 crores through private placements from PE investors. With
favorable economic condition & huge opportunities in NBFC industry,
your company is expected to increase its customer base, Net profit and
Net worth in the upcoming FY 2010-11.
OPPORTUNITIES & THREATS:
The NBFC industry holds immense potential and the Government of Indias
increased focus towards Financial Inclusion has created various
opportunities for existing NBFCs to leverage on their established
customer base in rural areas. The recent steps by the Government of
India to create Infrastructure NBFC and to provide banking license for
NBFCs is a positive signal and the emergence of REMF & REIT has brought
new scope for funding in Real Estate Sector. The above opportunities
have made the Industry highly competitive with the emergence of new
category of systematically important NBFCs, along with existing local
and Multinational players leading to tough competition within the
industry.
RISK AND CONCERNS:
As an NBFC, your Company is subjected to both external risk and
internal risk. External risk due to interest rate fluctuation, slowdown
in economic growth rate, political instability, market volatility,
decline in foreign exchange reserves, etc. Internal risk is associated
with your Companys business which includes deployment of funds in
specific projects, diversification into other business operations,
retention of talented personnel, managing effective growth rate,
volatility in interest rate, NPAs in portfolio, changes in compliance
norms and regulations, contingent liabilities and other legal
proceedings. Your Company recognizes the importance of risk management
and has invested in people, process and technologies to effectively
mitigate the above risks.
THE RBI NORMS AND ACCOUNTING STANDARDS
To comply with RBI directions, your company closed its accounts for the
full year ending March 2010, and your Company continues to comply with
the directives issued as well as the norms prescribed by Reserve Bank
of India for NBFCs.
INFORMATION AS PER SECTION 217 (1)(E) OF THE COMPANIES ACT, 1956
Your Company is a Non-Banking Finance Company and is not engaged in
manufacturing activity of any kind. The disclosure of information
relating to conservation of energy and technology absorption are
therefore not applicable to your company. There were no foreign
exchange earnings or outgo for your Company during the year.
DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to section 217 (2A) of the Companies (Amendment) Act 2000, the
Directors confirm that;
1. In the preparation of Annual Accounts for the year ended 31st March
2010, all the applicable accounting standards have been followed along
with proper explanation relating to material departures.
2. The Directors have selected such accounting policies and applied
them consistently and made judgments and estimates that were reasonable
and prudent so as to give a true and fair view of the state of affairs
of the company as at 31st March 2010 and of the Profit or Loss of the
company for the year under review.
3. 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.
4. The Directors have prepared the Annual Accounts for the current
financial year on a going concern basis. DIRECTORS:
Shri.K.V.Bala retires at the end of this meeting and being eligible,
offers himself for re-appointment.
Shri. A. Rajasukumar resigned as director effective 18th March 2010 the
Board places on record his services to the Company during his tenure as
Director of the Company.
Shri.T.S. Raghavan who was appointed as Additional Director during the
financial year 2009-10, retires at the end of this meeting. A proposal
has been received from a member signifying his candidature for the
office of the Directors. Necessary Resolutions are placed before the
Shareholders for their approval in this regard.
CORPORATE GOVERNANCE
Your Company provides considerable importance to good Corporate
Governance and complying with the Code of Corporate Governance
introduced by SEBI. A detailed report on Corporate Governance together
with a certificate from the Statutory Auditors in compliance of Clause
49 of the Listing Agreement has been annexed as part of the Annual
Report. Management Discussion and Analysis Report highlighting the
performance of the company is attached forming part of the Directors
Report.
PERSONNEL
Your company does not have any employee drawing salary in excess of the
amount stipulated under Section 217 (2A) of the Companies Act, 1956.
AUDITORS
M/s.S.Vasudevan & Associates, Chartered Accountants, Chennai retires at
the ensuing Annual General Meeting and are being eligible for
re-appointment. Necessary resolutions are placed before the
Shareholders for their approval.
ACKNOWLEDGEMENT
Your Directors wish to place on record their sincere appreciation and
gratitude to the bankers of the company and various Government agencies
for their support, assistance and co-operation and look forward for
their continued support.
For and on behalf of Board of
SUBUTHI FINANCE LIMITED
Place: Chennai
K.V. Bala T.R.Jayaraman
Director Director
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