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IL&FS Investment Managers Ltd.

BSE: 511208 Sector: Financials
NSE: IVC ISIN Code: INE050B01023
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VOLUME 432692
52-Week high 32.10
52-Week low 13.20
P/E 81.18
Mkt Cap.(Rs cr) 867
Buy Price 27.60
Buy Qty 1563.00
Sell Price 0.00
Sell Qty 0.00
OPEN 27.40
CLOSE 27.40
VOLUME 432692
52-Week high 32.10
52-Week low 13.20
P/E 81.18
Mkt Cap.(Rs cr) 867
Buy Price 27.60
Buy Qty 1563.00
Sell Price 0.00
Sell Qty 0.00

IL&FS Investment Managers Ltd. (IVC) - Director Report

Company director report

To The Members of IL&FS Investment Managers Limited

Your Directors have pleasure in presenting for your consideration and approval theThirty-first Annual Report with the Audited Financials of the Company for the year endedMarch 31 2017

FINANCIAL ACHIEVEMENTS AND DIVIDEND

For the year ended March 31 2017 For the year ended March 31 2016 For the year ended March 31 2017 For the year ended March 31 2016
(Rs. mn) (Rs. mn) (Rs. mn) (Rs. mn)
Standalone Standalone Consolidated Consolidated
Total Income 688.84 1070.96 1151.39 1907.60
Profit before Taxation 281.28 648.81 138.81 747.69
Provision for Taxation 41.58 157.47 70.32 186.58
Net Profit after Taxation 239.70 491.34 61.26* 560.85*
Dividend (inclusive of dividend tax) 195.25 399.95 195.25 412.63

* after Minority Interest

The Company does not propose to transfer any amount to the General Reserve

DIVIDEND

During the year your Company achieved a Net Profit after tax of Rs. 239.70 mn.Your Directors recommend a Dividend of Rs. 0.60 per share of the Face Value of Rs. 2/-each. The total amount of Dividend is Rs. 195.25 mn (inclusive of dividend tax of Rs. 6.83mn)

REVIEW OF OPERATIONS

World growth is projected to rise from 3.1% in 2016 to 3.5% in 2017 driven largely byrecovery in manufacturing trade activity and capital flows. However major developedeconomies have been more inclined to follow populist policies to address the domesticconcerns of jobless growth and high income inequality. This has increased uncertaintyacross global markets. The general consensus emerging from multilateral forums is that theconsistency in policy making by advanced economies will be the critical aspect todetermine the growth trajectory growing forward

In India major reforms and initiatives were undertaken to drive growth to improvetransparency and to create employment. However economic activity has witnessed mixedoutcomes. Agriculture expanded robustly year-on-year after two consecutive years ofsub-one per cent growth. However the services sector witnessed sluggish growth. The majorsegment in the services sector is the IT/ITeS space which witnessed lower than expectedgrowth. The industrial sector continues to be a laggard on account of systemic issues ofexcess capacity stagnant exports and over leveraged balance sheets. Furthermore whileinterest rates have started to decline existing corporate debt overhang has dampenedprivate investment appetite

The Private Equity (PE) landscape in India reflected the mixed outcomes of the previousyear. Fund raising dipped 45% year on year in FY2017 to US$ 3.5 bn and the number of fundsraised fell by 28%. Global trends also broadly match the experience in India. EmergingMarket Private Equity funds raised US$ 44 bn in CY2016 vis-a-vis US$ 48.5 bn raised duringCY2015. The share of funds raised for the Emerging Markets as a percentage of global fundsraised (currently at 10% compared to 21% in 2011) continued to be at historic lows

On the investments front the PE transactions in India registered a fall 46% in valueterms and 33% in terms of number of transactions. On the other hand divestments witnessedan increasing trend during FY2017 with US$ 6.7 bn worth of divestments (across 258 exits)vis-a-vis US$ 6.2 bn FY2016. Successful divestments pave the way for fresh round of fundraising which in turn should provide a boost to investment activity during the comingyear

In addition FDI investments are back to robust levels attracted by the opportunitiesin the digital and telecommunication sectors. However FDI in Real Estate has reducedsignificantly over the last 3 years due to unattractive risk return opportunities. PE inReal Estate is now largely led by Institutions which prefer quasi-debt transactions.Offshore investors have focused on acquiring yield based operating properties (mainlyoffice buildings) for a possible REIT listing in the future. Another emerging trend is forfunding distressed assets across infrastructure private equity and real estate sectors.Investment Managers having in-house asset management expertise will be in a position totake advantage of this emerging investment avenue. IIML has been successful in creatingnew products to cater to the current investment landscape

During the year IIML completed acquisition of a ~US$ 220 mn infrastructure debt fund.This acquisition enables IIML to address the entire spectrum of infrastructure fundingspanning debt equity and mezzanine capital. The operations of this business have now beenintegrated and your Company will now initiate raising fresh funds under this verticalduring the course of FY2018

To capitalise on the opportunities opened up on account of InvIT regulations IIMLAsset Advisors Limited (IAAL) a wholly owned subsidiary of IIML was appointed as Managerfor a road sector infrastructure investment trust (InvIT) being raised by IL&FSTransportation Networks Limited (ITNL). The business model of InvIT management enables theManager to be rewarded on a yearly basis for enhancing distributions to the InvIT'sunitholders. The Manager is also incentivized for growing the InvIT portfolio by way ofacquisitions. Consequently revenues from InvIT's management are expected to demonstratean increasing trend over time

Another new initiative which has been operationalized during the course of the year hasbeen a US$ 550 mn facility to acquire distressed infrastructure assets. The thermal powerand the road sector have gone through significant stress both at the developer level andat the asset level. This presents a large investment opportunity to this facility.Investment assessment has already commenced and first of the transactions are expected tofructify during FY2018

To leverage the IL&FS Group's experience in large format public private partnershipprojects your Company has entered into a Joint Venture (JV) partnership with theGovernment of Andhra Pradesh to manage an urban infrastructure fund. The JV will also beengaged in fund syndication investment management and in undertaking techno-commercialappraisals for Municipal and Urban local bodies in the State of Andhra Pradesh

During the year the Company undertook 11 divestments and coupled with yield/ dividendincome generated provided reverse cash flows of Rs. 7 bn during FY2017. Key Funds such asIL&FS India Realty Fund Standard Chartered IL&FS Asia Infrastructure Growth Fundand Tara India Fund III are in active divestment phase and your Company is working withthe respective investee companies to lay the path towards liquidity

The Company also started making investments from its new Growth Private Equity Fundi.e. Tara India Fund IV

During the last two years on account of steady divestments the fee earning AssetsUnder Management (AUM) of the Company has been declining resulting in an adverse impact onthe financials of the Company. However the new initiatives undertaken during FY2017 areexpected to result in increase in IIML's AUM in FY2018 which in turn should bring inimprovement in the financial performance of the Company

On a consolidated basis the Total Income for the Financial Year 2016-2017 was Rs.1151.39 mn and the Total Expenses for the year were Rs. 1012.58 mn and the resultantProfit after Tax on a consolidated basis for the Financial Year 2016-2017 wasRs. 61.26 mn(after minority interest)

On a standalone basis the Total Income of the Company for the Financial Year 2016-2017was Rs. 688.84 mn and the Total Expenses for the year were Rs. 407.56 mn and the resultantProfit after Rs. 239.70 mn Tax for the Financial Year 2016-2017

SUBSIDIARIES AND JOINT VENTURES

Your Company has Six Domestic Subsidiaries viz. IL&FS Asian Infrastructure ManagersLimited IL&FS Urban Infrastructure Managers Limited IIML Asset Advisors LimitedAndhra Pradesh Urban Infrastructure Asset Management Company Limited IL&FS InfraAsset Management Limited and IL&FS AMC Trustee Limited and two Offshore Subsidiariesviz. IL&FS Investment Advisors LLC Mauritius and IIML Fund Managers (Singapore) PteLtd Singapore During the year by a Scheme of Arrangement and Amalgamation approved by theSupreme Court of Mauritius IIML Advisors LLC merged into IL&FS Investment AdvisorsLLC

Your Company also has two Joint Venture Companies viz. Standard Chartered IL&FSManagement (Singapore) Pte Limited Singapore and IL&FS Milestone Realty AdvisorsPrivate Limited As per Section 129(3) of the Companies Act 2013 and Regulation 33 of theSEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 [LODR] theconsolidated financial statements f the Company with its Subsidiaries forms part ofthe Annual Report The copies of the Audited Annual Accounts of the Company's Subsidiariesand other related documents can also be sought by any Member of the Company or itsSubsidiaries on making a written request to the Company Secretary in this regard. TheAnnual Accounts of the Subsidiary Companies are also available for inspection by anyMember at the Company's Registered Office

A separate statement pursuant to Section 129(3) of the Companies Act 2013 read withCompanies (Accounts) Rules 2014 containing the salient features of the FinancialStatements of the Company's Subsidiaries and Joint Ventures in Form AOC 1 is given as anAnnexure toStandalone Financial Statements

Performance and Financial position of the Subsidiaries and the Joint Venture Companies:

IL&FS Asian Infrastructure Managers Limited :

IL&FS Asian Infrastructure Managers Limited (IAIML) had been set up to manage thePan Asia Project Development Fund India (the Fund). The Fund having a corpus of Rs.1125 mn invested across seven investments. Five of these investments have been divestedone investment is partially divested and one is listed. The Fund team at IAIML is workingactively to fully divest from all the investments of the Fund which is expected duringthe course of FY2018

The Total Income for Financial Year 2016-2017 was Rs. 3.3 mn inclusive of Income fromInvestments and Other Income of Rs. 3.1 mn. The Total Expenses of IAIML for the year wereRs. 0.9 mn and the resultant Profit after Tax for the year wasRs. 2.4 mn

IL&FS Urban Infrastructure Managers Limited :

IL&FS Urban Infrastructure Managers Limited (IUIML) functions as the Asset Managerfor the Pooled Municipal Debt Obligations (PMDO) Facility. The objective of the PMDOFacility is to provide long tenure term loans to meet the debt requirements of urbaninfrastructure projects across cities in India. The Company's role as an asset manager isto identify and appraise the eligible projects and obtain sanctions from the lenders andthereafter facilitate the borrowers to seek disbursement from the lenders monitor andadminister the project assets until entire repayment of the loan By March 31 2017 termloans of Rs. 30.82 bn have been sanctioned from the PMDO Facility against overall corpusof the PMDO Facility of Rs. 50 bn. The investment period (i.e. funding of projects)under PMDO Facility has expired on March 31 2017. The amount outstanding under the PMDOFacility as on March 31 2017 was at Rs. 14.67 bn The Total Income for the financial year2016-2017 was Rs. 132.90 mn inclusive of Income from Investments and Other Income of Rs.7.37 mn.

The Total Expenses and Profit after Tax of IUIML for the corresponding year wereRs.125.90 mn and Rs. 4.2 mn respectively

IIML Asset Advisors Limited :

IIML Asset Advisors Limited (IAAL) acts as India Advisor to two Offshore Real Estatefunds. It will also act as the Manager for a road sector infrastructure investment trust(InvIT) being raised by IL&FS Transportation Networks Limited The Total Income of IAALfor the Financial Year 2016-2017 was Rs. 76.86 mn inclusive of Income from Investments andOther Income of Rs. 9.57 mn. The Total Expenses of IAAL for the year were Rs. 53.77mn and the resultant Profit after Tax for the year was Rs. 15.52 mn

IL&FS Investment Advisors LLC :

IL&FS Investment Advisors LLC Mauritius (IIAL) acts as the Investment Manager toIL&FS India Realty Fund LLC IL&FS India Realty Fund II LLC Tara India Fund IIILLC Tara India Fund IV LLC K2 Property Limited and Saffron India Real Estate Fund TheTotal Income of IIAL for the Financial Year 2016-2017 was US$ 8.44 mn. The Total Expensesof IIAL for the year were US$ 23.46 mn and the resultant loss for the year was US$ 15.03mn

IIML Fund Managers (Singapore) Pte Ltd :

IIML Fund Managers (Singapore) Pte Ltd (IFMPL) was incorporated for the purposes ofmanaging funds from Singapore. The Company is currently acting as a Manager to a Fund andas an Advisor to another Fund

The Total Income of IFMPL for the Financial Year 2016-2017 was US$ 0.32 mn. The TotalExpenses of IFMPL for the year was US$ 0.70 mn and the resultant Loss for the year was US$0.38 mn

Andhra Pradesh Urban Infrastructure Asset Management Company Limited :

The Company has set up a subsidiary namely ‘Andhra Pradesh Urban InfrastructureAsset Management Limited' (APUIAML) along with the Government of Andhra Pradesh. TheCompany and the Government of Andhra Pradesh hold 51%: 49% equity stake respectively inAPUIAML

APUIAML has been formed with an objective of acting as the Fund Manager for the AndhraPradesh Urban Development Fund (APUDF). APUDF will be created with the objective tofinance the Urban Local Bodies in the State of Andhra Pradesh. APUIAML will also beinvolved in integrated urban infrastructure project development and program management forthe Urban Local Bodies and provide end to end solutions to them

APUIAML will help the State Government of Andhra Pradesh to set up institutionaliseand manage APUDF by mobilizing resources from different sources like banks and financialinstitutions including private sector arms of multilateral and bilateral agencies and byleveraging government and other financial assistances. These funds would be deployed inthe urban areas on various infrastructure projects including

PPP projects

The Total Income for Financial Year 2016-2017 was Rs. 51.07 mn inclusive of OtherIncome of Rs. 5 mn. The Total Expenses for the year were Rs. 39.63 mn and the resultantProfit after Tax for theyear was Rs. 11.49 mn

IL&FS Infra Asset Management Limited :

With effect from January 1 2017 the Company acquired 86.60% equity stake of IL&FSInfra Asset Management Limited (the "IIAML") from fellow subsidiary IL&FSFinancial Services Limited (IFIN). IIAML had been set up to manage the IL&FS MutualFund (IDF) which is a Infrastructure Debt Fund

The IDF has two closed ended schemes with a commitment of Rs. 13250 mn and Rs. 1725mn is yet to be drawn down as of March 31 2017. The Fund has made 10 investments as onMarch 31 2017 and AUM as of March 31 2017 was Rs. 14922 mn The Total Income forFinancial Year 2016-2017 was Rs. 187.49 mn inclusive of Other Income of Rs. 15.69 mn. TheTotal Expenses for the year was Rs. 85.69 mn and the resultant Profit After Tax for theyear wasRs. 66.23 mn

IL&FS AMC Trustee Limited :

With effect from January 1 2017 the Company acquired 100% equity stake in IL&FSAMC Trustee Limited (IATL) from fellow subsidiary IL&FS Financial Services Limited.IATL had been set up to act as the Trustee of the IDF

The Total Income for Financial Year 2016-2017 was Rs. 1.47 mn inclusive of Other Incomeof Rs. 0.05 mn. The Total Expenses for the year were Rs. 1.42 mn and the resultant ProfitAfter Tax for the year was Rs. 0.05 mn

With the acquisition of IIAML and IATL the Debt Mutual Fund business of IL&FS Groupwill now be housed under the Company

Standard Chartered IL&FS Management (Singapore) Pte Limited :

Standard Chartered IL&FS Management (Singapore) Pte Limited (SCIMPL) is a 50:50Joint Venture Company established with the Standard Chartered Bank to manage the StandardChartered IL&FS Asia Infrastructure Growth Fund. The Manager is playing an active rolein managing and monitoring these investments

The Total Income of SCIMPL for the Financial Year 2016-2017 was US$ 1.76 mn. The TotalExpenses of SCIMPL for the year were US$ 1.27 mn and the resultant Profit after tax forthe year wasUS$ 0.41 mn

IL&FS Milestone Realty Advisors Private Limited :

IL&FS Milestone Realty Advisors Private Limited (IMRAPL) is a Joint VentureCompany established with the objective of raising funds that would invest in incomeyielding assets. Since inception the JV raised three funds that are currently underexit/asset management mode The Total Income of IMRAPL for the Financial Year 2016-2017 wasRs. 3.06 mn inclusive of Income from Investments and Other Income of Rs. 2.10 mn.The Total Expenses of IMRAPL for the year were Rs. 39.38 mn and the resultant Loss for theyear was Rs. 38.87 mn

FUTURE OUTLOOK

India's growth projected at 7.4% during FY2018 would be driven by improvement inconsumption demand and increase in public investments. In addition a host of structuralreforms and resolution of the NPA issue in the banking sector will be a catalyst inencouraging private investment. Forecast of normal monsoons second year in row willboost rural incomes and drive consumption demand. Further given the focus on ease ofdoing business the government has relaxed FDI norms. This has resulted in increased FDIinflows in the country.

A conducive investment environment would help in deploying more capital in productiveactivities leading to employment generation.

However the economy also faces certain risks which could hinder growth. The externalrisks include rising commodity prices (especially crude oil) due to supply rationalizationby producers or due to geopolitical tensions. Furthermore there could be short termdisruption due to the implementation of GST

In the context of these risks and opportunities the Company has put in place variousinitiatives which seek to de-risk as also grow its portfolio of services. InfrastructureInvestment Trusts (InvITs) are key to reigniting the infusion of private capital ininfrastructure development. InvITs are therefore over time expected to growsignificantly both in number and value terms. IIML's experience as an InvIT Manager cantherefore be leveraged to grow this business segment beyond the current level spanningacross various infrastructure assets classes The combination of the infrastructure debtfund a core infrastructure growth fund and a stressed infrastructure asset facility allof which are housed within IIML provides your Company an exceptional ability to addresswide ranging capital requirements of this key sector. The joint venture with Government ofAndhra Pradesh is also a unique partnership which is scalable and has the potential ofgrowing in size. It also has the potential of being replicable across other States.Likewise your Company is working on developing a partnership with an institutionalinvestor in the Middle East for addressing the infrastructure debt requirements in Africa.This is a path breaking initiative on which significant efforts have already beenexpended. These efforts are expected to bear fruit during FY2018 All these new initiativesprovide visibility for AUM growth and their success would accord strength to yourCompany's financials over a long term. The Indian economy is well poised to be amongst thefastest growing economies in the world for a third year in a row. Further newopportunities in several sectors driven by widening of financial access policy reformsand emerging technologies is expected to attract private investment (both domestic andforeign) and drive the growth further. Your Company too is embarking upon new areasthrough its various initiatives on the back of sectoral expertise and proven track recordand is confident on building upon these opportunities going forward

DIRECTORS & KEY MANAGERIAL PERSONNEL

Dr Archana Hingorani resigned as Chief Executive Officer & Executive Director witheffect from April 30 2017

The Board of Directors appointed Mr Sunil Mehta as an Additional Director and anIndependent Director subject to approval of the Shareholders for a term of five yearswith effect from August 8 2016. At the ensuing Annual General Meeting the Boardrecommends regularising Mr Mehta's Directorship in the Company and appointing Mr Mehta asan Independent Director for a term of five years with effect from August 8 2016

Mr Ravi Parthasarathy shall retire by rotation at the ensuing Annual General Meetingand being eligible offers himself for re-appointment Mr Krishna Kumar Gangadharan wasappointed as Chief Executive Officer in the capacity of a Key Managerial Personnel of theCompany with effect from May 29 2017

BOARD INDEPENDENCE

The Company has received Declarations of Independence pursuant to Regulation 16(1)(b)and Regulation 25(1) of the LODR and Section 149(6) of the Companies Act 2013 fromall the Independent Directors

NUMBER OF MEETINGS OF THE BOARD

The Board of Directors met seven times during the Financial Year ended March 31 2017.The meetings were held during the year on May 3 2016 July 11 2016 August 82016 November 14 2016 January 4 2017 February 13 2017 and March 9 2017. The detailsof the Board Committee Meetings and attendance of the Directors at the Board/Committeemeeting are given in the Corporate Governance Report

SELECTION CRITERIA FOR APPOINTMENT OF DIRECTORS

The Board has framed a selection criteria for determining the necessary qualificationsand attributes for appointment of Directors and also to ensure Board diversity. Thedetails of the above are provided in the Corporate Governance Report

BOARD EVALUATION

Pursuant to the provisions of the Companies Act 2013 and LODR the Board has carriedout an annual performance evaluation of the Board. The manner in which the evaluation hasbeen carried out has been explained in the Corporate Governance Report

DIRECTORS' RESPONSIBILITY STATEMENT

To the best of their knowledge and belief and according to the information andexplanations obtained by them your Directors make the following statements in terms ofSection 134(3)(c) of the Companies Act 2013:

(a) in the preparation of the Annual Accounts for the year ended March 31 2017 theapplicable Accounting Standards have been followed along with proper explanations relatingto material departures if any;

(b) that such accounting policies as mentioned in Note 1 of the Notes to the AnnualAccounts have been selected and applied consistently and judgments and estimates have beenmade that are reasonable and prudent so as to give a true and fair view of the state ofaffairs of the Company at the end of the March 31 2017 and of the Profit of the Companyfor the year ended on that date;

(c) proper and sufficient care has been taken for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities;

(d) that the Annual Accounts are prepared on a going concern basis; controls were inplace and that

(e) thatproperinternalfinancial the internal financial controls were adequate and wereoperating effectively; and

(f) that proper systems were devised to ensure compliance with the provisions of allapplicable laws and such systems were adequate and operating effectively

RISK MANAGEMENT & INTERNAL CONTROL SYSTEMS

Risk Management forms an integral part of the business of the Company. The Company hasa Risk Management Framework which not only ensures timely identification of risksanalysis of the reasons for such risk assessment of its materiality assessment of itsimpact but also adequate risk mitigation processes. The Risk Management Frameworkencompasses all areas of the Company's business and the Funds under its management. TheRisk Management Framework ensures that all risks however remote which could potentiallythreaten the existence of the Company are identified and risk mitigation steps identifiedfor them The Company has an adequate system of internal controls commensurate with thenature of its business and complexity of its operations to ensure accuracy of accountingrecords compliance with all laws and regulations and compliance with all rules processesand guidelines prescribed by the management An extensive internal audit is carried out byan independent firm of Chartered Accountants. Post audit reviews are also carried out toensure follow up on the observations made. The scope of the internal audit is determinedby the Audit Committee and the Internal Audit Reports are reviewed by the Audit Committeeon a regular basis

RELATED PARTY TRANSACTIONS

All Related Party Transactions that were entered into during the Financial Year were onan arm's length basis and were in the ordinary course of business. There are no materiallysignificant Related Party Transactions made by the Company with Promoters Directors KeyManagerial Personnel or other designated persons which may have a potential conflict withthe interest of the Company at large. No new Material Related Party Transactions wereentered during the year by your Company. Accordingly the disclosure of Related PartyTransactions as required under Section 134(3) of the Companies Act 2013 in Form AOC 2 isnot applicable

The disclosure of transactions with Related Parties is set out in Note No. 27 of theStandalone Financial Statements forming part of the Annual Report

The Company has developed a Related Party Transactions Framework for the purpose ofidentification and approval of such transactions. The Policy on Related Party Transactionsas approved by the Board has been uploaded on the Company's website and is available onthe link http://www.iimlindia.com/Policies.aspx

PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS

Details of the Loans Guarantees and Investments covered under the provisions ofSection 186 of the Companies Act 2013 are given in the Note No. 8 of the StandaloneFinancial Statements

KEY MANAGERIAL PERSONNEL

Pursuant to Section 203 of the Companies Act 2013 the Company has designated Mr ManojBorkar Chief Financial Officer and Mr Sanjay Mitra Company Secretary as the KeyManagerial Personnel of the Company

PARTICULARS OF EMPLOYEES

Your Directors wish to place on record their appreciation for the services rendered bythe employees of the Company at all levels The particulars of the employees as requiredunder Section 197(12) of the Companies Act 2013 read with Rule 5(1) and Rule 5(2) of TheCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 forms part ofthe Directors' Report for the year ended March 31 2016

In terms of Section 136 of the Act the Report and Accounts are being sent to theMembers and others entitled thereto excluding the information on employees' particularspursuant to Rule 5(2) of The Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 which is available for inspection by the Members at the RegisteredOffice of the Company during business hours on all working days of the Company up to thedate of the ensuing Annual General Meeting. Any Member interested in obtaining a copy ofthe said information may write to the Company Secretary at the Registered Office of theCompany. The particulars of employees pursuant to Rule 5(1) of The Companies (Appointmentand Remuneration of Managerial Personnel) Rules is annexed as Annexure 1

DETAILS OF EMPLOYEE STOCK OPTION PLANS

The Members of the Company had approved the Employee Stock Option Scheme 2003("ESOP 2003") and the Employee Stock Option Scheme 2004 ("ESOP 2004")for granting Options to the Directors and employees of the Company and the Employee StockOption Scheme 2006 ("ESOP 2006") for granting Options to the Directors andemployees of the Company and the Holding and Subsidiary Companies of the Company

During the Financial Year 2016-17 the Nomination & Remuneration Committee of theCompany did not grant any Options under the above schemes. Further please note that thereare no options vested/exercised/lapsed during the Financial Year 2016-17

The number of Options available for Grant in future under ESOP 2003 ESOP 2004 and ESOP2006 are as follows:

ESOP 2003 - 37815 Options
ESOP 2004 - 130928 Options
ESOP 2006 - 1935000 Options

All the options granted till date under ESOP 2003 ESOP 2004 & ESOP 2006 haveeither vested or lapsed on or before March 31 2017 and accordingly there is no employeecompensation cost for the year ended March 31 2017 The Auditors' Report for review ofESOP 2003 ESOP 2004 and ESOP 2006 is annexed as Annexure 2

REMUNERATION POLICY

The Board has on the recommendation of the Nomination & Remuneration Committeeframed a policy for selection and appointment of Directors Senior Management and theirremuneration. The remuneration paid to the Directors and the Senior Management is as perthe Managerial Remuneration Policy of the Company. Brief details of the ManagerialRemuneration Policy are provided in the Corporate Governance Report

POLICY FOR PREVENTION OF SEXUAL HARASSMENT AT WORKPLACE

The Company has always been committed to provide a safe and dignified work environmentfor its employees which is free of discrimination intimidation and abuse. The Company hasadopted a Policy for Prevention of Sexual Harassment of Women at Work place under theprovisions of The Sexual Harassment of Women at Workplace (Prevention Prohibition andRedressal) Act 2013 ("Act"). The objective of this policy is to provideprotection against sexual harassment of women at workplace and for redressal of complaintsof any such harassment.

The Company has also constituted an Internal Complaints Committee to redress thecomplaints received under this policy. During the year no complaints were received by theCompany

STATUTORY AUDITORS

The Statutory Auditors of the Company M/s Deloitte Haskins & Sells LLP CharteredAccountants Mumbai Registration Number 117366W/ W-100018 were appointed at the AnnualGeneral Meeting held on August 7 2014 for a period of three years subject to annualratification of the same by the Members. Accordingly the three year term of M/s DeloitteHaskins & Sells LLP shall expire at the ensuing Annual General Meeting

It is proposed to appoint M/s B S R & Associates LLP Chartered Accountants as theStatutory Auditors of the Company in place of retiring Auditors M/s Deloitte Haskins &Sells LLP for a term of five consecutive years at the ensuing Annual General Meeting Inthe interim for smooth transition of the auditing process and seamless integration of thenew Auditor M/s B S R & Associates LLP Chartered Accountants were appointed as theJoint Statutory Auditor of the Company along with M/s Deloitte Haskins & Sells LLP upto the conclusion of the ensuing Annual General Meeting by a Shareholders' resolutionpassed by Postal Ballot on February 17 2017 Directors recommend appointment of M/s B S R& Associates LLP Chartered Accountants as the Statutory Auditors of the Company fora term of five consecutive years at the ensuing Annual General Meeting

SECRETARIAL AUDIT

The Company has appointed M/s Mehta & Mehta a firm of Company Secretaries inPractice to undertake the Secretarial Audit of the Company pursuant to the provisions ofSection 204 of the Companies Act 2013 and The Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 The Secretarial Audit Report for the financial yearended March 31 2017 is annexed herewith as Annexure 3

QUALIFICATIONS IN THE AUDITORS' REPORT

There are no qualificationsreservations or adverse remarks or disclaimers made by M/sDeloitte Haskins & Sells LLP and M/s. B S R & Associates LLP Joint StatutoryAuditors in their report and by M/s Mehta & Mehta Company Secretaries in Practicein their Secretarial Audit Report The Joint Statutory Auditors have not reported anyincident of fraud to the Audit Committee of the Company in the year under review

INCREASE IN SHARE CAPITAL

No new shares were allotted during the year and there has been no change in the sharecapital of the Company

CORPORATE GOVERNANCE

Pursuant to Regulations 34(3) and 53(f) of the LODR Related Party disclosureManagement Discussion and Analysis Disclosure of Accounting treatment Report onCorporate Governance along with the Auditors' Certificate on compliance with the CorporateGovernance requirements have been included in this Annual Report as separate sections

CORPORATE SOCIAL RESPONSIBILITY

The Company has adopted a Corporate Social Responsibility (CSR) Policy which aims atnurturing socio-economic development schemes for capacity building livelihood creationquality education empowerment of people etc. with the primary goal of ensuring thatbenefits reach the targeted beneficiaries. The approach of the Company for implementationof the CSR activities is to identify and fund projects in response to the needs ofsociety devise transparent monitoring mechanisms and ensure whole hearted commitment toget the desired results

The Company undertakes specific CSR projects that are in conformity with the ScheduleVII to the Companies Act 2013. Given that the Company is in the private equity fundmanagement business and invests across India and in all sectors the Company undertakesCSR activities in Mumbai and also across the country In addition to the NGOs the Companycurrently supports it engages with Nalanda Foundation a Charitable Trust established byInfrastructure Leasing & Financial Services Limited (IL&FS) for its group CSRactivities. The Annual Plan for CSR is approved at the start of each financial year.Periodic reviews and/or modifications to the projects and allocations are approved by theCSR Committee

The CSR policy is posted on the Company's website at the linkhttp://iimlindia.com/Policies.aspx

The Company has been actively involved in various CSR initiatives over the last fewyears long before it was mandated by the Companies Act 2013. In addition to its existingCSR initiatives with the advent of the Companies Act 2013 it was thought prudent tochannelise the Company's CSR effort along with the IL&FS Group's CSR initiatives inorder to make a more significant

The disbursement of the amounts is linked to the achievement of certain pre-identifiedmilestones by the implementing agency. The implementing agencies have informed the Companythat there have been lag in achieving the pre-identified milestones on account of delay inobtaining the necessary approvals mobilisation of students and completion of trainingetc. Consequently the Company is marginally falling short of expending the entirestatutory amount The Composition of the CSR Committee is given in the Corporate GovernanceReport. The Annual Report on the CSR activities is annexed herewith as Annexure 4

WHISTLE BLOWER POLICY

The Company has adopted a Whistle Blowers Policy for employees to report instances ofunethical behaviour actual or suspected fraud or violation of the Company's Code ofConduct

The details of the Whistle Blower Policy is explained in the Corporate GovernanceReport and also posted on the website of the Company at http://iimlindia.com/Policies.aspx

DEPOSITS

Your Company has not accepted any deposits from the public for the year underconsideration

ENERGY CONSERVATION TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

Since the Company does not own any manufacturing facility the Energy Conservation andTechnology Absorption particulars in the Companies (Accounts) Rules 2014 are notapplicable

The particulars regarding foreign earnings and expenditure appear as Note Nos. 23(c)and 23(d) of the Notes to Accounts of the Standalone Financial Statements

EXTRACT OF THE ANNUAL RETURN

The details forming part of the extract of the Annual Return pursuant to Section 92(3)of the Companies Act 2013 read with Rule 12 of the Companies (Management andAdministration) Rules 2014in Form MGT 9 are annexed herewith as Annexure 5

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS

There are no orders passed by the Regulators/Courts which would impact the goingconcern status of the Company and its future operations

ACKNOWLEDGEMENT

The Board of Directors take this opportunity to thank the Investors of the Funds undermanagement shareholders employees bankers Reserve Bank of India Securities andExchange Board of India other Regulatory authorities for their co-operation and continuedsupport to the Company. We look forward to their continued patronage and encouragement inall our future endeavours

For and on behalf of the Board
Place : Mumbai S M DATTA
Date : May 29 2017 CHAIRMAN