The Members of Shriram City Union Finance Limited
The Directors are pleased to present this 31st Annual Report with the auditedstandalone and consolidated financial statements of the Company for the financial yearended March 31 2017 ("Year"). The consolidated financial statements arepresented pursuant to Section 129 (3) of the Companies Act 2013 ("Act") andRegulation 34 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 ("LODR") form part of this Annual Report. The report on corporategovernance management discussion and analysis and other annexures mentioned in the reportform a part of this Report.
1. FINANCIAL RESULTS
The summary of standalone and consolidated financial performance of the Company for theYear is as under.
| || || |
Rs. in crores
|Particulars || |
Standalone Year ended March 31
Consolidated Year ended March 31
| ||2017 ||2016 ||2017 ||2016 |
|Profit before depreciation and taxation ||888.26 ||843.76 ||932.58 ||886.99 |
|Less: Depreciation ||34.62 ||36.92 ||35.71 ||37.62 |
|Profit before tax ||853.64 ||806.84 ||896.87 ||849.37 |
|Less: Provision for taxation ||297.58 ||277.06 ||312.29 ||290.75 |
|Profit after tax ||556.06 ||529.78 ||584.58 ||558.62 |
|Less: Minority Interest ||- ||- ||6.49 ||6.56 |
|Profit after tax and minority interest ||556.06 ||529.78 ||578.09 ||552.06 |
|Add: Profit brought forward from previous Year ||1335.14 ||1134.93 ||1368.12 ||1150.25 |
|Profit available for appropriation ||1891.20 ||1664.71 ||1946.21 ||1702.31 |
|Appropriations: || || || || |
|Transfer to general reserve ||55.61 ||52.99 ||55.61 ||52.99 |
|Transfer to statutory reserve ||111.22 ||105.97 ||115.70 ||110.61 |
|Transfer to debenture redemption reserve ||22.47 ||51.22 ||22.47 ||51.22 |
|Dividend paid on equity shares of Rs. 10/- each fully paid-up || || || || |
|Year 2015 16 : Interim Rs. 5.00 Final Rs. 10.00 ||- ||98.89 ||- ||98.89 |
|Year 2016 17 : Interim Rs. 5.00 ||32.97 ||- ||32.97 ||- |
|Corporate dividend tax ||6.35 ||20.49 ||6.35 ||20.49 |
|Net surplus in the statement of profit and loss ||1662.58 ||1335.15 ||1713.11 ||1368.11 |
|Earning per share || || || || |
|Basic (Rs. not annualised) ||84.34 ||80.37 ||87.68 ||83.75 |
|Diluted (Rs. not annualised) ||84.24 ||80.27 ||87.58 ||83.64 |
There were no material changes and commitments affecting financial position of theCompany occurring between March 31 2017 and the date of this report.
2. APPROPRIATIONS AND TRANSFER TO RESERVE
The Board of Directors ("Board") proposes to transfer amounts mentioned inthe above table stating financial results to different reserve in compliance with therequirements of regulations of Reserve Bank of India ("RBI") and the CompaniesAct 2013 ("Act").
The Board had formulated Dividend Policy as required under LODR. Interim dividend waspaid and the final dividend is recommended in line with the Dividend Policy. The dividendpaid for the year ended March 31 2016 and interim dividend paid for the Year are statedbelow for reference along with proposed dividend for the year. The final dividendproposed if approved would be paid to the members whose names appear on the register ofmembers as on the record date for payment of dividend for the Year.
|Dividend on equity shares of Rs. 10 each ||No of Shares ||Per share (Rs.) Rs. ( ||Amount in crores) Rs. ( ||Tax in (crores) Rs. ||Total outflow in crores) ||Date of payment |
|Interim (FY 16-17) ||65937557 ||5.00 ||32.97 ||6.71 ||39.68 ||November 18 2016 |
|Proposed Final (FY 16-17) ||65943402 ||10.00 ||65.94 ||13.42 ||79.37 || |
|Total || ||15.00 ||98.91 ||20.14 ||119.05 || |
|Interim (FY 15-16) ||65920272 ||5.00 ||32.96 ||6.71 ||39.67 ||November 18 2015 |
|Final (FY 15-16) ||65931207 ||10.00 ||65.93 ||13.42 ||79.35 ||August 18 2016 |
|Total || ||15.00 ||98.89 ||20.13 ||119.02 || |
The Register of Members and Share Transfer Books will remain closed from June 24 2017to June 30 2017 (both days inclusive) for the purpose of final dividend for the Year andfor the Annual General Meeting ("AGM") scheduled to be held on June 302017.
In compliance with Section 124 (5) of the Act the Company transferred the dividendthat remained unclaimed for a period of seven years from the date of its transfer tounpaid dividend account to Investor Education and Protection Fund ("IEPF").Accordingly during the Year an amount of Rs. 0.055 crores (2015-16: Rs. 0.049 crores)were transferred to IEPF. An amount of Rs. 0.83 crores (2015-16: Rs. 0.73 crores) is lyingin unpaid equity dividend account of the Company. The unpaid dividend till the end of thefinancial year 2008-09 has been transferred to IEPF. The Company shall as provided underSection 124(6) of the Act transfer all shares in respect of which unclaimed dividend hasbeen transferred to IEPF. There will be no claim lie on the Company on account of dividendafter the dividend is transferred to IEPF.
4. LOANS AND CONTRACTS WITH RELATED PARTY AND ANNUAL RETURN
Note nos 1214 and 27 of the notes to the financial statements states the particularsof loans guarantees and investments covered under Section 186 of the Act. Alltransactions or arrangements entered into during the Year with related parties referred toin Section 188 (1) of the Act were on arm's length basis or were in ordinary course ofbusiness or with omnibus approval of the Audit and Risk Management Committee. The Companyhas formulated a policy on related party transactions approved by the Audit and RiskManagement Committee and the Board which is displayed on the web site of the Company athttps://www.shriramcity.in/Investors Company information Policies. The particulars ofcontracts or arrangements with related parties as referred in section 188(1) of the Act isattached to this Report in prescribed from AOC - 2 as Annexure -5. The details of andtransactions with the related parties as required under Regulation 34(3) and 53(f) of theLODR appear in note no.26 of the notes to financial statements. The Audit and RiskManagement Committee during the Year approved the related party transactions requiringit's approval. There were no material related party transaction during the Year. Theextract of the Annual Return in the form MGT - 9 as required under Section 92 (3) and 134(3) of the Act is attached to this Report as Annexure - 6
5. STATE OF AFFAIRS OF THE COMPANY
The Company specializes in financing small businesses and in financing retail assetpredominantly in under-served areas.
During the Year the total disbursements of loans under different products were Rs.22355.64 crores (2015-16 : Rs. 18648.54 crores). Income from operations for the Yeargrew by 15.56% percent to
Rs. 4431.62 crores and profit before tax of Rs. 853.64 crores for the Year (2015 -16 :Rs. 806.84 crores). As at March 31 2017 the total assets under management stood at Rs.23132.00 Crores (March 31 2016 : Rs. 19575.82 crores).
During the Year the total consolidated disbursements of loans under different productswere Rs. 23320.24 crores (2014-15 : Rs. 19441.00 crores). Consolidated Income fromoperations for the Year grew by 17.64 percent to Rs. 4703.59 crores (2015 -16 : Rs.3998.19 crores) and profit before tax of Rs. 896.87 crores for the Year (2015 -16 : Rs.849.37 crores). As at March 31 2017 the consolidated assets under management stood at Rs.24906.96 crores (March 31 2016 : Rs. 20850.85 crores).
The funding source for the Company was through private placement of non convertibledebentures ("NCDs") with banks / institutions Fixed deposits commercial papersand borrowings from banks/ financial institutions by way of term loans as summarizedbelow.
| || || || ||Rs. in crores |
|During the Year ended March 31 ||Deposits ||Privately placed ||Term loans ||Total |
| || ||NCDs || || |
|2017 ||1185.57 ||390.00 ||2845.00 ||4420.57 |
|2016 ||1358.37 ||583.70 ||4170.00 ||6112.07 |
In addition resources were mobilized through cash credit / working capital demandloans from banks.
Balance outstanding on cash credit as on March 31 2017 was Rs. 1124.02 crores (March31 2016: Rs. 845.28 crores) & Working capital demand loans as on March 31 2017 wasRs. 339 crores (March 31 2016: Rs. 25 crores).
There were 8328 numbers of deposits amounting to Rs. 90.92 crores which had matured forpayment and were due to be claimed or renewed. Subsequent follow-up forrepayments/renewals resulted in the number reducing to 5445 number of deposits amountingto Rs. 55.41 crores as on May 2 2017. There were no deposits which had matured andclaimed but were not paid by the Company. Steps are continuously taken to arrange forrepayment/ renewal of these unclaimed deposits.
The ratings obtained by the Company are mentioned in note no. 50 to note to financialstatements.
The frauds detected during the Year are reported in note no.29 of the Notes toAccounts. The fraud committed and detected were in normal course of business of theCompany.
6. CAPITAL AND LISTING
During the Year 16250 no (2015 - 16 : 21540) of equity shares were allotted to theeligible employees of the Company on exercise of their option under Employees StockOptions Scheme 2006. The ESOP SchemetitledSCUFESOPScheme2013asapproved by the members inthe EGM held on May 31 2013 has not been implemented. The required disclosures on ESOP ason March 31 2017 under SEBI Regulations are set out in Annexure - 7 to this report. TheCompany hasreceivedthecertificateasattachedinAnnexure-8 from the auditors of the Companycertifying that the ESOP Scheme is implemented in accordance with the SEBI Guidelines andin accordance with the resolution passedbythemembers.ThedetailswithrespecttotheunclaimedequitysharesmaintainedbytheCompanyindematerialisedformasrequiredunderRegulation34(3) read with schedule V of the LODR are asunder.
|Particulars ||No of equity shares holders ||No of unclaimed equity shares |
|Unclaimed equity shares as on April 1 2016 ||32 ||3500 |
|Shares claimed by shareholders during the Year ||- ||- |
|Transfer of unclaimed equity shares during the Year ||- ||- |
|Unclaimed equity shares as on March 31 2017 ||32 ||3500 |
The voting rights for the above said unclaimed equity shares shall remain frozen tillthe concerned shareholders claim the shares.
The listing fees to BSE Limited ("BSE") and National Stock Exchange of IndiaLimited ("NSE") for the Year were paid on time.
7. HUMAN RESOURCE
Human Resource plays a vital role in securing success of the Company. Investment indevelopment of skills and accelerating growth of employees are important all the time.During the Year the Company enjoyed a cordial relation with employees with no unrest. TheCompany has put in place a policy on the prevention of sexual harassment of womenemployees in work place. The total employee strength of the Company as on March 31 2017stood at 26783 with 11002 number of employees added during the Year. The informationrequired pursuant to Section 197(12) of the Act read with Rule - 5 (1) and 5 (2) of theCompanies (Appointment and Remuneration of Managerial Personnel) Rule 2014 are attachedas Annexure 9 to this Report.
8. SUBSIDIARY AND CONSOLIDATED FINANCIAL STATEMENTS
The only subsidiary of the Company M/s Shriram Housing Finance Limited (CIN -U65929TN2010PLC078004) ("SHFL") is a registered entity with National HousingBank ("NHB") for doing housing finance (Registration Number-08.0094.11) withregistered office at Chennai. It's equities are not listed on any stock exchange.
SHFL provides home loans loans against property and project finance loans. In the pastfive years SHFL loan portfolio has grown consistently from Rs. 4.9 crores in FY12 to Rs.1775.0 crores at the end of FY17. SHFL disbursed Rs. 4.9 crores in FY12 as against
Rs. 964.3 crores in FY17. The total borrowings of SHFL as on March 31 2017 stood atRs. 1388.0 crores out of which Rs. 734.0 crores was from allotment of NCDs (53%) and thebalance amount was from borrowings from Bank and National Housing Bank (NHB).
SHFL caters to the demand for housing loans of larger mass consisting of self employedin the lower and middle income class in mostly Tier 2 and Tier 3 locations of the country.SHFL customer base has increased to 9600 (approx.) with over 11000 loans in its portfolioas on March 31 2017. SHFL added 6 new branches in FY17 totalling to 85 branches as onMarch 2017. The total employee strength of SHFL has grown from 573 to 772 during thefinancial year.
Consolidated financial statements of the Company prepared as per Section 129(3) of theAct and in compliance with applicable accounting standards and LODR are audited by thestatutory auditors of the Company. The consolidated financial statements along with thereport of the auditors of the Company thereon are attached to this Report (Annexure 17).
The annual accounts annual reports and the related detailed information on SHFL shallbe made available to the share holders of the Company and the share holders of SHFLseeking such information at any point of time. In accordance with Section 136 of the Actthe audited annual financial statements including consolidated financial statements andrelated information of the Company and audited accounts of SHFL are displayed on the website of the Company at https://www.shriramcity.in/Investors Annual Reports and shall bekept at the Registered Office of the Company and at the Registered Office of SHFL forinspection by any shareholder during business hours. Shriram Capital Limited and SHFLcontinued as promoter and subsidiary of the Company respectively.
9. RBI GUIDELINES
The Company continues to comply with all applicable regulations of RBI. The details ofregistration with RBI appear on note no -1 to notes to the financial statements. AProgressive Risk Management Policy was put in place and the progress of the same wasreviewed at regular intervals. The Board confirms following of Corporate Governancestandards prescribed by RBI. The information required to be reported under the regulationsof RBI are reported in note no -28 to 45 and other notes of the notes to financialstatements. The Note on details of penal interest compounding fee levied by and paid toRBI appear on note no 41 of the Notes to Accounts.
The net worth of the Company increased by Rs. 525.37 crores and the Capital Adequacyand Reserve Ratio (CRAR) and Risk Weighted Assets as at March 31 2017 were respectivelyat 23.88% (year 2015-16 : 26.14%) and Rs. 22201.54 (year 2015-16 : Rs. 18927.70 crores).The RBI prescribes the maintenance of CRAR above 15 percent.
10. CORPORATE GOVERNANCE
The Company adheres to high standard of corporate governance. Report on corporategovernance as required under Regulation 34(3) of LODR together with a certificate for thepurpose from the auditors of the Company confirming the compliance with the corporategovernance are attached to this Report (Annexure - 1). As required under Regulation 34 (2)(e) and 34 (3) LODR the Management Discussion and Analysis on the business of the Companyis attached as Annexure - 3.As required under Regulation 17 (8) of the LODR a compliancecertificate duly signed by the Managing Director & Chief Executive Officer and ChiefFinancial Officer on the financial statements of the Company for the Year was submittedto the Board of Directors at their meeting held on May
2 2017 (Annexure - 4). The relevant provisions of the voluntary guidelines are adoptedin the areas deemed appropriate.
11. BUSINESS RESPONSIBILITY REPORT ("BRR")
Regulation 34 (2) (f) of the LODR requires top 500 listed entities based on marketcapitalization as on March 31 2016 to include BRR as a part of the Annual Report. TheCompany being one such entity has included BRR in this Annual Report (Annexure-14).
12. CORPORATE SOCIAL RESPONSIBILITY ("CSR")
AsrequiredunderSection135oftheActtheCompany has constituted a CSR Committee consistingof three Directors including two Independent Directors. The details of the CSR Committeeappear on the report on corporate governance. Annual Report on CSR activities as requiredunder Rule 9 of the Companies CSR Policy Rules 2014 of the Act is attached to this reportas Annexure 10. The CSR policy of the Company as recommended by the CSR Committeewas reviewed and approved by the Board is displayed on the website of the Company. TheCompany undertook CSR Projects on health education and skill development throughimplementing Agent. The spend on CSR during the Year was approved by the Board ofDirectors of the Company as recommended by the CSR Committee.
During the Year the Company had spent Rs. 6.89 crores on the CSR activities of theCompany (2015 16 : Rs. 6.50 crores). The Board affirms that the CSR activities areimplemented in accordance with CSR Policy.
13. DIRECTORS AND MEETING OF THE BOARD
The details of meetings of the Board held and the details about appointment inductiontraining retirement and resignation of Directors during the Year are mentioned in theCorporate Governance report (Annexure 1). The Company has complied with SecretarialStandards issued by the Institute of Company Secretaries of India on Board and GeneralMeetings. The Board has Audit and Risk Management Committee ("ARMC") asspecified under Section 177 (8) of the Act. Risk Management Policy was implemented duringthe Year as reviewed and approved by the Board on the recommendation of the ARMC. Incompliance with Section 178 of the Act the Board has constituted Nomination andRemuneration Committee ("NRC"). As required under Section 149 (7) of the Actthe
Company received necessary declaration from each independent director about his/hermeeting the criteria of independence as laid down under of the Act and LODR. A statementby the Managing Director confirming receipt of this declaration from each independentdirector of the Company is attached as Annexure - 11. The Board on the recommendation ofNRC has formulated a policy for selection appointment and remuneration of directorssenior management personnel as required under Section 178 (3) of the Act the details ofwhich appear in the Annexure - 13. The Board carried out annual performance evaluation ofit's own the Committees and individual directors based on the criteria and frame workadopted by the Board. The results of such evaluation were placed before the Board. Thebrief profile of each director appear on the website of the Company. Each Director hasgiven his/her declaration to the Company for not holding any shares in the Company andhaving no relation inter se with any Director. As per provisions of the Act and Articlesof Association of the Company Sri Gerrit Lodewyk Van Heerde holding (DIN 06870337)will retire by rotation. Sri Gerrit Lodewyk Van Heerde being eligible offers himself forreappointment.
14. DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to Sections 134 (3) (c) and 134 (5) of the Act with respect to Directors'responsibility statement the Directors of the Company hereby confirm in the preparationof annual accounts for the Year that :
(i) the applicable accounting standards have been followed and proper explanations havebeen made in notes to accounts for material departures if any;
(ii) the accounting policies have been selected and applied consistently and reasonableand prudent judgments and estimates have been made so as to give a true and fair view ofthe state of affairs of the Company as at March 31 2016 and statement of the profit andloss of the Company for the Year ended on that date;
(iii) proper and sufficient care have been taken for the maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;
(iv) the annual accounts have been prepared on a going concern basis.
(v) internal financial controls to be followed were laid down which were adequate andwere operating effectively during the Year.
(vi) proper systems had been devised to ensure compliance with provisions of applicablelaws which were adequate and were operating effectively during the Year.
15. AUDIT AND AUDITORS
The attached Independent Auditors Reports for the Year (standalone and consolidated)submitted to members of the Company are unqualified without any reservation or adverseremark or disclaimer and thus the Board does not have any explanation or comment. M/s P.Sriram & Associates Company Secretaries in practice Chennai appointed by the Companyas the secretarial auditors pursuant to Section 204 of the Act and the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 have conducted auditand submitted their report as attached in Annexure - 15 to the Members which isunqualified without any reservation or adverse remark or disclaimer. Therefore Boarddoes not have any explanation or comment on such Secretarial Audit Report. The Board hasappointed M/s P.Sriram & Associates Company Secretary in practice as secretarialauditor of the Company for the financial year 2017-18.
The Auditors M/s Pijush Gupta & Co. Firm Registration No 309015E CharteredAccountants Kolkata (PGC") retire at the conclusion of the ensuing AGM. Byvirtue of Section 139(2) of the Companies Act 2013 read with Companies (Audit andAuditors Rules 2014 PGC are not eligible to continue as the auditors of the Company.
M/s G.D. Apte & Co. Firm Registration No 100515W Chartered Accountants("GDA") have confirmed their eligibility and have communicated their willingnessto accept the office as auditors if appointed by the shareholders. Necessary resolutionfor appointment of GDA as Auditors from the conclusion of this AGM till conclusion of 36thAGM is proposed at the ensuing AGM.
16. CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNING AND OUT GODURING THE YEAR
The information on conservation of energy technology absorption foreign exchangeearnings and out go as stipulated under Section 134 (3) (m) of the Act read with Rule 8 ofthe Companies (Accounts) Rules 2014 are furnished below.
The operations of the Company are not energy intensive. However adequate measures forconservation of energy usage of alternate sources of energy and investments for energyconservation wherever required have been taken.
The Company has not absorbed any technology. There was foreign exchange earnings of Rs.1.20 crores during the year 2016-17 (2015-16 : Nil). There was no outgo of foreignexchange during the Year (2015 16 : Rs. 98.77 crores).
The Board expresses its deepest appreciation and gratitude for the guidance andco-operation extended to the Company by RBI statutory authorities and regulators. TheBoard also thanks the banks and financial institutions for their timely financialassistance to the Company and helping the Company to reach out to customers across thecountry. The Board thanks the auditors of the Company for their guidance. Special thanksare due to the employees of the Company who contributed their skills enthusiasmcommitment and dedication which have over the years helped the Company to earn prominence.The Board is grateful to the shareholders depositors debenture holders and debt holdersof the Company for their patronage.
| ||For and on behalf of the Board of Directors |
|Place : Chennai ||Debendranath Sarangi |
|Date : May 2 2017 ||Chairman |