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SREI Infrastructure Finance Ltd.

BSE: 523756 Sector: Financials
BSE 15:58 | 23 Feb 81.85 4.05






NSE 15:54 | 23 Feb 81.70 4.15






OPEN 77.20
VOLUME 199722
52-Week high 137.70
52-Week low 72.50
P/E 36.06
Mkt Cap.(Rs cr) 4,118
Buy Price 0.00
Buy Qty 0.00
Sell Price 81.85
Sell Qty 2000.00
OPEN 77.20
CLOSE 77.80
VOLUME 199722
52-Week high 137.70
52-Week low 72.50
P/E 36.06
Mkt Cap.(Rs cr) 4,118
Buy Price 0.00
Buy Qty 0.00
Sell Price 81.85
Sell Qty 2000.00

SREI Infrastructure Finance Ltd. (SREINFRA) - Director Report

Company director report

Your Directors are pleased to present the Thirty-Second Annual Report together with theAudited Accounts of your Company for the financial year ended March 31 2017. Thesummarised consolidated and standalone financial performance of your Company is asfollows:


(Rs. in Lacs)

Consolidated Standalone
Year ended 31st March 2017 Year ended 31st March 2016 Year ended 31st March 2017 Year ended 31st March 2016
Total Revenue 466576 326194 229962 189633
Total Expenses (including depreciation etc.) 354921 288352 160370 175526
Profit before bad debts and advances written off (net)/ Provisions 111655 37842 69592 14107
Contigencies Diminutions & Tax
Bad Debts and Advances written off (net)/ Provisions Contigencies 77207 27248 54756 5965
Profit Before Exceptional Items and Tax 34448 10594 14836 8142
Adjustment on disposal / cessation of Subsidiaries and Step-down 1561 - - -
Current Tax 10768 6037 6582 3241
Mat Credit entitlement (including in respect of earlier years) (5715) (6) (1112) -
Deferred Tax 6680 (1590) (241) (839)
Profit After Tax but before Share of Loss of Associate and Minority 24276 6153 9607 5740
Share of Loss/(Profit) of Associate (5) 25 - -
Minority Interest (55) (1124) - -
Profit After Tax after adjustment for Minority Interest 24336 7252 9607 5740
Surplus brought forward from Previous Year 28649 30747 27120 25938
Profit Available For Appropriation 52985 37999 36727 31678
Paid up Equity Share Capital 50324 50324 50324 50324
Amount transferred to Reserves 20358 6322 15 218 1530
Reserves and Surplus 441550 312177 236174 226190
Earning Per Share (Rs.) 4.84 1.44 1.91 1.14

Note: The above figures are extracted from the standalone and consolidated financialstatements for the financial year ended on March 31 2017


Your Company is one of the leading private sector infrastructure financing institutionsin India. Some of the key highlights of your Company's performance during the year underreview are: The gross profit (before bad debts and advances written off(net) / Provisions Contigencies Diminutions & Tax) is Rs. 69592 Lacs as against Rs.14107 Lacs in the last year. Profit before taxation is Rs. 14836 Lacs as against Rs.8142 Lacs in the last year. Net profit after taxation is Rs. 9607 Lacs as against Rs.5740 Lacs in the last year. The total assets under management of the Srei Group is Rs.3768308 Lacs as against Rs. 3673532 Lacs in the last year.

The Capital to Risk Assets Ratio (CRAR) of your Company stood at 18.94 per cent as onMarch 31 2017 well above the regulatory minimum level of 15 per cent prescribed by theReserve Bank of India for systemically important non-deposit taking NBFCs (NBFCs-ND-SI).Of this the Tier I CRAR was 13.81 per cent. The Financial Statements of your Company havebeen prepared in accordance with the Generally Accepted Accounting Principles in India(Indian GAAP) to comply with the Accounting Standards notified under Section 211(3C) ofthe Companies Act 1956 (which continue to be applicable in respect of Section 133 of theCompanies Act 2013 read with Rule 7 of the Companies (Accounts) Rules 2014) and therelevant provisions of the Companies Act 1956 / Companies Act 2013 as applicable andRegulation 48 of the Securities and Exchange Board of India (Listing Obligations andDisclosure Requirements) Regulations 2015 (hereinafter referred to as ‘SEBI

Listing Regulations 2015'). Accounting policies have been consistently applied exceptwhere a newly issued accounting standard if initially adopted or a revision to anexisting accounting standard requires a change in the accounting policy hitherto in use.Management evaluates all recently issued or revised accounting standards on an ongoingbasis. Your Company discloses standalone and consolidated unaudited financial results on aquarterly basis which are subjected to limited review and standalone and consolidatedaudited financial results on an annual basis.

Your Company has complied with all the norms prescribed by the Reserve Bank of India(RBI) including the Fair practices Anti Money Laundering and Know Your Customer (KYC)guidelines.


The Reserve Bank of India (RBI) has classified your Company as an ‘InfrastructureFinance Company' within the overall classification of ‘Non Banking Finance Company'.Your Company is also notified as a Public Financial Institution (PFI) by the Ministry ofCorporate Affairs (MCA) Government of India.


Mr. Salil Kumar Gupta and Mr. Srinivasachari Rajagopal Independent Directors of yourCompany were holding 48600000 Equity shares (allotted to your Company pursuant toamalgamation of Quippo Infrastructure Equipment Limited (Quippo) into and with yourCompany in lieu of 18000000 Equity shares held by your Company in Quippo) as on April01 2016 for the benefit of your Company and/or the shareholders of your Company asTrustees of ‘Srei Growth Trust'. During the year under review Mr. ShyamalenduChatterjee

Independent Director of your Company was appointed as a Trustee of Srei Growth Trust inplace of Mr. Salil Kumar Gupta who had earlier expressed his desire to step down as theTrustee. Further during the year the aforesaid holding of 48600000 Equity shares(9.66%) in your Company were sold by the Trustees in 2 (two) tranches as follows: 25154317 (5.00%) Equity shares were sold to BNP Paribas Lease Group (BPLG) in June2016 pursuant to the Share Purchase Agreement entered between your Company BPLG SreiEquipment Finance Limited (SEFL) amongst others. 23445683 (4.66%) Equity shares weresold in open market in March 2017.

The entire sale proceeds received by Srei Growth Trust has been distributed by it toyour Company being the sole beneficiary. Srei Growth Trust has thereafter been dissolvedw.e.f. close of business hours on March 31 2017.


During the year under review in accordance with Regulation 43A of SEBI ListingRegulations 2015 a Dividend Distribution Policy was adopted by your Company coveringinter alia the parameters for declaration of dividend utilization of retained earningsprocedure for dividend declaration etc. The Dividend Distribution Policy is available onthe website of your Company and the link to the said Policy has been providedelsewhere in this Annual Report.

Your Company follows a consistent dividend policy that balances the dual objectives ofappropriately rewarding Members through dividends and retaining capital in order tomaintain a healthy capital adequacy ratio to support long term growth of your Company.Consistent with this Policy your Board has recommended a dividend of Re. 0.50 per Equityshare (5 per cent) for the financial year 2016-17 to the Members of your Company. Theproposal is subject to the approval of the Members at the 32nd Annual General Meeting(AGM) of your Company scheduled to be held on July 22 2017. The dividend together withthe dividend distribution tax will entail a cash outflow of Rs. 3028 Lacs (previous yearRs. 3028 Lacs). The dividend payout for the year under review is in accordance with yourCompany's policy to pay sustainable dividend linked to long-term growth objectives of yourCompany to be met by internal cash accruals.


Your Company decided not to accept any further public deposits or renew such maturingdeposits in any manner w.e.f. April 20 2010 and the entire amount of outstanding publicdeposits as on April 19 2010 together with interest promised to the depositors has beenkept in an Escrow Account with a scheduled commercial bank for the purpose of makingpayment to the depositors as and when they raise the claim. Despite sustained efforts toidentify and repay unclaimed deposits the amount payable to the depositors as on March31 2017 is Rs. 337467.35. Being a non-deposit taking Company your Company has notaccepted any deposits from the public/members under Section 73 of the Companies Act 2013read with Companies (Acceptance of Deposits) Rules 2014 during the year and within themeaning of the provisions of the Non-Banking Financial Companies Acceptance of PublicDeposits (Reserve Bank) Directions 2016.


During the year under review your Company accessed retail public markets through itsissue of Secured Redeemable Non - Convertible Debentures (the "Debentures") offace value of Rs. 1000 each which mobilized Rs. 628.54 Crores as per the details givenhereunder:

Date of opening of Issue Base Issue Size (Rs. in Crores) Total Issue Size including Green Shoe Option Maturity Period Allotment Date Amount (Rs. in Crores)
(Rs. in Crores)
07.09.2016* 250 Upto 1000 400 days/3 years/5 years 06.10.2016 293.36
30.01.2017** 200 Upto 706.64 400 days/3 years/5 years 27.02.2017 335.18

*Issue w.r.t. Tranche 1 Prospectus dated August 31 2016 read together with ShelfProspectus dated August 31 2016. **Issue w.r.t. Tranche 2 Prospectus dated January 242017 read together with Shelf Prospectus dated August 31 2016.

Btakingeing a non-depositCompany your Company has not accepted any deposits from thepublic/ members under Section 73 of the Companies Act 2013.

Debenture Trustee Agreement(s) in favour of Axis Trustee Services Limited for theaforesaid issue was duly executed. The said Debentures are listed on the Debt Segment ofthe BSE Limited (BSE) and National Stock Exchange of India Limited (NSE). The entireproceeds have been utilised for the purpose of various financing activities repayment ofexisting loans and other business operations including working capital requirements. YourCompany has duly paid the interest due on the aforesaid Debentures on time. The publicissue of the said Debentures has not only facilitated diversification of your Company'ssources for mobilising long term resources but has also provided the retail Investors anopportunity to participate in India's infrastructure development and progress. Through thetwo public issues launched in FY 2016-17 your Company has acquired nearly 32000 retailinvestors. Along with previous issues your Company has broad-based the retail base ofnearly 90000 investors. That signifies the growing confidence of investors in yourCompany. The various communication efforts of your Company surrounding the Debenturesplayed a meaningful role in enhancing your Company's brand image amongst relevantconstituencies.


The Promoters' Group of your Company has increased their net shareholding in yourCompany during the year by 2.0820 per cent from 58.7164 per cent to 60.7984 per centthrough the creeping acquisition route allowed as per SEBI (Acquisition of Shares andTakeovers) Regulations 2011.

The Promoters' Group has shown increased commitment to the business strategy andsubstantial growth of your Company and your Company believes that this will result inenhanced value for all the stakeholders.

As on March 31 2017 none of the Promoter/Promoters' Group shareholding is underpledge. Further in compliance with Regulation 31(2) of SEBI Listing Regulations 2015the entire shareholding of promoter(s) and promoter group is in dematerialised form.


The RBI has granted licences to private non-bank companies to set up own and operatetheir own brand of ATMs in the Country known as White Label ATMs (WLA). Your Company hasreceived Certificate of Authorisation from RBI for setting up White Label ATMs. YourCompany has also commenced its ATM roll out in August 2016 and through its network ofWhite Label ATMs your Company aims at empowering millions of Indians with the convenienceto access their own money with ease.


The Board of Directors of your Company at its meeting held on May 12 2016 accordedapproval to your Company to buyback Long Term Infrastructure Bonds with face value of Rs.1000 each issued and allotted by your Company in the financial year 2011-12 under ShelfProspectus and Prospectus Tranche - 1 both dated 28th December 2011 from the existingBondholders upto a maximum amount of Rs. 248856000/- (Rupees Twenty Four Crore EightyEight Lacs Fifty Six Thousand only) ("Buyback Programme").

In accordance with the Shelf Prospectus and Prospectus Tranche - 1 both dated 28thDecember 2011 the Buyback Programme commenced on Saturday 6th August 2016 and ended onSaturday 24th September 2016 and the Buyback Date was Thursday 23rd March 2017.

44866 nos. of Long Term Infrastructure Bonds with face value Rs. 1000 each werebought back from 2436 Bond Holders. The buyback proceeds was paid on Thursday 23rdMarch 2017 to all those Bondholders whose name appeared in the Register of Bondholders ason the Record Date i.e. March 07 2017 the date being 15 days prior to the date on whichpayment of interest or the Buyback Amount or Maturity Amount was due and payable and whohave participated in the Buyback Programme. Necessary intimation in this regard was madeto the Stock Exchanges pursuant to SEBI Listing Regulations 2015.


ECONOMIC REVIEW a. Global Outlook

According to the World Bank global GDP is projected to grow at 2.7 per cent in 2017after an estimated growth of 2.3 per cent in 2016. Growth rate is expected to move up to2.9 per cent in 2018. The International Monetary Fund (IMF) figures are a little moreoptimistic. IMF expects global economy to grow by 3.5 per cent in 2017 after an estimatedgrowth of 3.1 per cent in 2016.

The year under review witnessed two significant developments on the global front –Brexit and the US elections. Both events have had an adverse impact on open trade. Severaldeveloped economies are becoming increasingly protectionist. The process of globalisationnow seems to be on reverse gear.

While the US economy seems to be strengthening doubts have emerged about itssustainability due to the actions taken by the new President. The rejection of the TransPacific Partnership (TPP) and a call to renegotiate the North Atlantic Free TradeAgreement (NAFTA) by the US President have created uncertainty on global trade andcommerce. Across the Atlantic there is little clarity on how Europe intends to get out ofthe phase of deflation it has entered into. However early signs of improvement inconsumer demand and employment are now visible in the Euro area. With Brexit Britain willnow need to sign fresh trade agreements with various countries starting with the EuropeanUnion. In Japan while deflation risks continue to linger there are nascent signs ofrevival in the form of falling unemployment improving business sentiment and risingexports aided by the depreciation of the Yen. China has been experiencing capital outflowsand there is lingering concern about the country's financial stability but at the sametime surging credit growth and a booming property market have ensured that there is nomajor slowdown in the economy. There is widespread speculation that the Chinesegovernment in its bid to fuel growth would eventually opt for a devaluation of theRenminbi.

The years after the global financial crisis were marked by quantitative easing (QE) bymost central banks to keep their economies going. However that cannot continue forever.The Federal Reserve which had put an end to its QE programme two years ago has nowstarted increasing its policy rate. Bank of England has indicated that it is through withits targeted purchase of corporate bonds. The European Central Bank (ECB) is also gettingready to initiate its tapering process. The era of central bank driven abundant liquiditynow seems to be nearing its end. The World Bank expects the emerging and developingeconomies (EDEs) to be the main drivers of global growth. According to World Bankforecasts the EDEs after registering a 3.4 per cent growth rate in 2016 will clock agrowth rate of 4.2 per cent in 2017 and thereafter growth rate will further strengthen to4.6 per cent in 2018. The advanced economies (AEs) after growing at 1.6 per cent growthrate in 2016 are expected to clock a growth rate of 1.8 per cent both in 2017 and 2018.

There are several red flags to watch out for. Tension on the geo-political front hasincreased with the rise of the ISIS (Islamic State of Iraq & Syria) and the sporadicterrorist attacks in different countries. There is growing tension between USA and NorthKorea. The assertiveness of China (on South China Sea and Indian Ocean) and Russia(annexation of Crimea and intervention in Ukraine) also do not augur well for globalgeopolitics. There is not enough clarity on the US policy towards China but in case atrade war breaks out between USA and China it can have serious global repercussions.

b. Indian Scenario

India continues to hold on to its position of the fastest growing major economy in theworld. The point to be noted here is that India has achieved this despite the hugedisruption caused by the

Demonetization Drive that was initiated by the government in November 2016 to curbblack money. For 2016-17 India's GDP growth rate has been estimated to be 7.1 per cent 7per cent and 6.8 per cent by Central Statistics Office (CSO) the World Bank and IMFrespectively. For 2017-18 the Economic Survey has predicted that India's GDP growth ratewill be within a range of 6.75-7.5 per cent. Most other institutions have predicted growthrates within that range only the World Bank has predicted a higher rate at 7.6 per cent.

During the year under review the Government of India has performed well on a number offronts. There was considerable progress made in building consensus for the Goods &Services Tax (GST) and now GST is likely to be rolled out from 1st July 2017. Passing ofthe Insolvency & Bankruptcy Code (IBC) 2016 was another major achievement. Thesesteps will certainly contribute towards improving the ease of doing business in India andwill support entrepreneurship. The recent state elections have also ensured that theruling coalition at the Centre now enjoys a strong position in both Houses of theParliament thus making it easier to push key legislative reforms. On the macroeconomicfront the fiscal deficit has been kept under control and within targeted limits. At USD364 billion the foreign exchange reserve position is also comfortable. In recent monthsexports and imports have started to register positive growth once again. All these augurwell for the economy. The very fact that India has been able to attract foreign directinvestment (FDI) worth USD 60.08 billion in 2016-17 (vis-a-vis USD 55.6 billion in2015-16) and that too at a time when global FDI inflows fell is an endorsement of thefact that the global investor community is interested in the India Growth Story. Howeverthere are a few areas of concern as well. A paltry 0.6 per cent growth in the Index ofIndustrial

Production (IIP) during April-January 2016-17 indicates a lack of buoyancy inindustrial activity. However more worryingly the capital goods index which is anindicator of future investment registered a negative growth of 15 per cent duringApril-January 2016-17. Even growth of services sector seems to be losing steam as it grewat 7.5 per cent between April-December 2016-17 vis--vis 9.5 per cent a year ago.Meanwhile inflation is on the rise as evident from the month-wise Wholesale PriceInflation (WPI) figures and the Reserve Bank of India (RBI) has already shifted itsmonetary policy to a neutral stance indicating that interest rates may have plateaued forthe time being. The growth so far has essentially been on account of the increase ingovernment spending which though good in the current context cannot be sustained forlong. To add momentum to our growth there is a need to revive private sector investmentin a big way especially in infrastructure projects. The biggest concern at this juncturehas been the ‘twin balance sheet problem' which has got reflected in the growingamount of bad loans in our banking system especially public sector banks and a spurt inthe number of overleveraged companies which are finding it difficult to service theirdebt. Banks' lending activity has got choked and neither is there an appetite for freshinvestments among the corporates. A number of initiatives have been taken by the ReserveBank of India (RBI) to tackle the bad loan problem but their implementation remains achallenge. Now that the IBC has got implemented there is renewed hope of resolving thebad loan issue by helping the banks to free up their balance sheets and resume lending.

The domestic challenges are not insurmountable. The overall business environment todayis much better than what it was during the last few years. The management of your Companyis upbeat about India's prospects and is convinced that with the right reforms India willcontinue to surge ahead of its peers.


NBFCs have always played an important role in promoting financial inclusion in India.They have been complementing and supplementing the banking sector in reaching out creditto the un-banked segments of the society. The biggest contribution of NBFCs is theirability to cater to the needs of the Micro Small & Medium Enterprises (MSMEs) whichform the cradle of entrepreneurship and innovation in India. NBFCs' innate ability tounderstand their customers' needs and accordingly innovate to offer customised productsmake them the perfect conduit for credit delivery to MSMEs.

In addition NBFCs like Asset Finance Companies (NBFC-AFCs) and Infrastructure FinanceCompanies (NBFC-IFCs) are actively contributing to the process of nation buildingespecially at a time when banks are reluctant to take more exposure on infrastructureprojects.

According to the Financial Stability Report (FSR) released by RBI NBFC loans expanded16.6 per cent in 2015-16 twice as fast as the 8.8 per cent credit growth across thebanking sector on an aggregate level. The aggregate balance sheet of the NBFC sectorexpanded 15.5 per cent in fiscal 2016 compared with 15.7 per cent the previous year. Netprofit as a percentage of total income remained at 15.3 per cent between March 2015 andMarch 2016 and RoA (Return on Assets) stood at 22 per cent during the same period. NBFCsalso performed better in terms of asset quality even though the bad loan norms for thesefirms are not as stringent as those for full-fledged commercial banks. The grossnon-performing assets (GNPA) ratio for the NBFC sector declined to 4.6 per cent of totaladvances in March 2016 from 5.1 per cent in September 2015.

Despite doing relatively better than the banks NBFCs still do not quite enjoy a levelplaying field. The year under review witnessed several regulatory developments for theNBFC sector. The major ones are the following: Concentration ofcredit/investment norms will not apply to Systemically Important NBFCs (NBFC-SI) which donot access public funds in India (directly or indirectly) and which do not issueguarantees. While attempting to revitalize any distressed asset each NBFC can formulateits policy and requirements as approved by the Board. The restructuring package decidedupon must be implemented within 90 days. Promoters must bring additional funds in allcases of restructuring which should be equal to a minimum of 20 per cent of NBFCs'sacrifice or 2 per cent of the restructured debt whichever is higher. NBFCs based on thecash flow and Techno Economic Viability (TEV) study should determine a reasonable timeperiod during which the account is likely to become viable. Each NBFC should clearlydocument its own due diligence done in assessing the TEV and the viability of theassumptions underlying the restructured repayment terms. RBI has increased the number ofeligible players to whom banks are allowed to sell their stressed assets. NBFCs withadequate capital and necessary expertise to deal with stressed assets are eligible to buysuch assets from banks. NBFCs are allowed to refinance any existing infrastructure andother project loan by way of full or partial take-out financing without a predeterminedagreement with other lenders and fix a longer repayment period. Further the same wouldnot be considered as restructuring in the books of the existing as well as taking overlenders if certain conditions are satisfied. Effective June 30 2017 all unrated claimson Asset Finance Companies (NBFC-AFCs) and Infrastructure Finance Companies (NBFC-IFCs)having aggregate exposure from banking system of more than Rs. 200 crore will attract arisk weight of 150 per cent. However claims on NBFC-AFCs and NBFC-IFCs having aggregateexposure from banking system of more than Rs. 100 crore which were rated earlier andsubsequently became unrated have been assigned a risk weight of 150 per cent from August2016. Guidelines were issued on setting up a category of NBFCs called Account Aggregators.NBFCs need to put in place a reporting system for recording frauds. The Credit GuaranteeFund Trust for Micro and Small Enterprises (CGTMSE) has introduced a scheme for extendingguarantee coverage to eligible NBFCs in respect of collateral free and/or third partyguarantee free credit facilities extended by them to eligible Micro and Small Enterprises(MSEs). Your Company as always is keeping a consistent monitoring all these developmentsand is continuously exploring new opportunities. The management of your Company has beenregularly interacting with Government and various regulatory agencies so that theregulatory policies and guidelines can be synchronised and NBFCs can perform theirfunctions better.


The government is earnestly working towardsenhancingIndia'sattractiveness as aninvestment destination. Apart from the various systemic reforms that are being pursuedthe decision to abolish Plan and Non Plan expenditure and to opt for a consolidatedOutcome Budget as announced in Union Budget 2017-18 is indeed a step in the rightdirection as it brings in higher degrees of accountability.

Keeping in mind the central importance of agriculture and the rural sector in Indianeconomy Union Budget 2017-18 has announced increased outlays for building rural roadshousing and irrigation village electrification and sanitation and has stressed on the useof scientific technology to track progress of the MGNREGA projects.

The government's efforts to step up infrastructure creation deserve special mention: Total capital and development outlay for the railways for 2017-18 has been pegged atRs. 1.31 trillion out of which Rs. 0.55 trillion will be provided by the Government. Majorthrust in the Union Budget 2017-18 for railways has been on development of new linesstation redevelopment and safety upgradation. A new Metro Rail policy will be announcedwith focus on innovative models of implementation and financing as well as standardisationand indigenisation of hardware and software. Union Budget 2017-18 has allocated Rs. 649billion for roads & highways. Rs. 270 billion has been earmarked for development ofrural roads. In 2016-17 the pace of highway construction reached an all-time high of 22.3km/day and the target set for 2017-18 is 41 km/day. Union Budget 2017-18 has allocated Rs.138.81 billion for the power sector. Rs. 33.61 billion has been earmarked for renewableenergy. With implementation of a series of reforms in generation transmission &distribution and renewable energy the aim of enabling ‘Power for All by 2019' looksvery much achievable.

Total generation capacity as on February 2017 stood at 315 GW. Government hascompleted electrification works in 116680 villages (hitherto un-electrified) andintensive electrification in 399829 villages by end of November 2016. As on April 201727 States and Union Territories have signed up for Ujjwal Discom Assurance Yojana (UDAY).Union Budget 2017-18 has allocated Rs. 6 billion for the port sector. A new Major PortsAuthority Bill 2016 has been passed to impart faster and transparent decision-makingbenefiting the stakeholders and enabling better project execution capability. The bill isaimed at reorienting the governance model in central ports to the landlord port model inline with successful global practices. In addition a Merchants Shipping Bill 2016 hasalso been passed with the aim to establish a National Shipping Board develop Indiancoastal shipping & trade enhance safety and security of vessels & life at sea andto ensure compliance of India's obligations under international conventions among others.The UDAN (Ude Desh ka Aam Nagarik) scheme has been launched with an aim to boost regionalair connectivity. The scheme is expected to add over 50 new airports to India'soperational network of 75 and open up as many as 1.3 million seats in unserved sectors.Government support in terms of tax sops and viability gap funding has been promised tomake the scheme successful. The housing sector has suffered a lot from the demonetizationdrive. To provide relief to this sector ‘Infrastructure Status' has been accorded toaffordable housing in the Union Budget 2017-18. In addition the move to defer levy of taxon notional rental income by one year (after year of completion certificate is received)will allow builders some breathing space to clear their inventory of constructed flats.Also the move to reduce the holding period for computing long term capital gains fromtransfer of immovable property from 3 to 2 years is expected to provide some boost to thehousing sector.

Private sector has played an important role in India's infrastructure creationespecially during the last two decades and public-private partnerships (PPPs) haveemerged as the preferred mode. However several of such projects have got mired in longstanding disputes. The government realizes how important it is to revive private sectorappetite for infrastructure investments to put PPP back on track. In this regard theFinance Minister has promised to put in place a dispute resolution mechanism to addressissues in the infrastructure space.

All these initiatives and targets augur well for the future of the infrastructuresector. However the future momentum of infrastructure growth will be greatly influencedby how well government can get into the implementation part. Your Company is activelytracking all these developments and the management is upbeat that the business scenario ispoised to improve significantly during FY 2017-18.


The three main business activities of your Company are categorised as Fund based Feebased and Strategic Investments.


Infrastructure sector is a key driver for the Indian economy and the definition ofinfrastructure includes power bridges dams roads and urban infrastructure development.On a conservative estimate India needs Rs. 31 trillion (US$ 455 billion) to be spent oninfrastructure development over the next five years with 70 per cent of funds needed forpower roads and urban infrastructure segments. Government has planned initiatives to fasttrack infrastructure development with a target investment of Rs. 25 trillion (US$ 377billion) in the sector over a period of three years. This includes Rs. 8 trillion (US$ 120billion) for developing 27 industrial clusters and an additional Rs. 5 trillion (US$ 75billion) for road railway and port connectivity projects.


India has the third largest energy consumption in the world but per capita electricityconsumption is around a third of the world average. Moreover electricity demand in Indiais expected to continue to expand as a result of economic and population growth alongwith increased urbanisation and industrialisation.

The Indian power sector has an investment potential of Rs. 17 trillion (US$ 250billion) in the next 4-5 years thereby providing immense opportunities in powergeneration distribution transmission and equipment etc. Generation is further splitinto coal / gas based thermal power wind power solar power and biomass. Renewablessector remain to be a focus for the Government and has seen impressive gains which isreflected in the growth in installed capacity.

The CAGR for installed capacity in India over FY 2007–17 was 10.6 per cent forthermal power 21.3 per cent for renewable energy 2.4 per cent for hydro power and 4.5per cent for nuclear power.

Your Company has allocated around 37 per cent of its total allocation to this sectordiversified into generation and transmission & distribution. 18 per cent of yourCompany's total power sector investment is in renewable energy sector.


Road network in India at 4.7 million KMs the second largest in the world transport 65per cent of all goods and 90 per cent of total passenger traffic. After almost coming to astandstill the road sector is showing signs of revival drawing on several policy measuresannounced by the Government over the last two years. Concerted efforts by the Governmentto restart stalled projects by providing necessary clearances launch of the hybridannuity model and creation of the NIIF have helped in reviving growth in the sector.

Government has invested around Rs. 3.17 trillion (US$ 48 billion) in Road & Highwaysector in the past two and a half years. A total of 6604 km out of the 15000 km oftarget set for national highways in 2016-17 has been constructed by the end of February2017.

During the year your Company has selectively participated in financing road projectsby National Highway Authority of India (NHAI) and State Authorities. Your Company hasallocated about 7 per cent of its total allocation to this sector.

Ports and Port Equipment

India has 12 major and 200 non-major ports. Cargo traffic which recorded 1673 millionmetric tonnes (MMT) in 2016 is expected to reach 3130 MMT by 2020.

To improve operational efficiency of Port sector the Government has taken severalmeasures through mechanisation deepening the draft and speedy evacuations. Indian portssector received FDI worth US$ 1.64 billion between April 2000 and December 2016.

Your Company has exposure to this sector by financial participation in a mix TawareheGovernment that in orderis to take advantage of the present global scenario India wouldneed to massively add to the carrying capacity of its physical infrastructure. Therealizes Government how important it is to put in place an infrastructure disputeresolution mechanism in order to put PPP in Infrastructure back on track.

of major ports minor ports and captive ports. The port sector now comprises around 5per cent of the portfolio.

Aviation and Airports

The Indian Aviation industry is the 9th largest globally. Airports Authority of India(AAI) plans to increase its capital expenditure for 2017-18 by 25 per cent to Rs. 2500crore (US$ 0.37 billion) primarily to expand capacity at 12 airports to accommodateincrease air traffic.

Your Company has exposure in the aviation sector comprising of about 1 per cent of theportfolio and is willing to take additional exposure to cash in the growth opportunity inthe sector.

SEZ & Industrial Parks

The Special Economic Zone (SEZ) policy was introduced by the Government of India inyear 2000 to overcome the shortcomings of the Export Processing Zones (EPZ) like sizeinfrastructure constraints location handicaps and lack of policy framework.

As on March 2017 436 formal approvals have been granted for setting up of SpecialEconomic Zones out of which 347 SEZs have been notified and are in various stages ofoperation out of which 210 are operational.

During the year your Company has selectively participated in financing projects inthis sector. Your Company has allocated about 17 per cent of its total allocation to thissector.

Your Company remains to be a leader in providing advisory and funding solutions tocompanies that are operating in the infrastructure sector. Your Company continues toimprove its capabilities and bring in best in class technology and solution to itscustomers.


Pursuant to the Share Purchase Agreement ("SPA") dated December 29 2015executed between your Company BNP Paribas Lease Group (BPLG) Srei Equipment FinanceLimited (SEFL) and others BPLG agreed to sell its entire shareholding of 29830000equity shares of SEFL representing 50 per cent of the total paid-up equity share capitalof SEFL to your Company in accordance with applicable laws. The transaction received allthe requisite approvals and BPLG sold its entire shareholding of 29830000 equity sharesof SEFL representing 50 per cent of the total paid-up equity share capital of SEFL to yourCompany. Pursuant to this transaction SEFL became the wholly-owned subsidiary of yourCompany w.e.f June 17 2016.

SEFL is registered with the RBI as a non-deposit taking NBFC (Category - Asset Finance)and is in the business of providing financial products and services to a wide spectrum ofasset which includes Construction & Mining equipment Information Technology equipmentand Solutions Healthcare equipment and Farm Equipment. The financial products andservices comprise loans leases rentals and fee-based services.

SEFL retained its position as one of the leading equipment financier in India in theyear under review with a disbursement in terms of asset cost of Rs. 13602 crores. TheGovernment's impetus on fast-tracking infrastructure projects clearing policy logjam andimproving the financial health of infrastructure companies has led to a very healthygrowth for infrastructure equipment. The infrastructure equipment market grew by 30-35 percent in 2016-17 (unit sales). In the recent Union Budget the total outlay forinfrastructure including budgetary and internal and extra budgetary resources increased toRs. 5.1 trillion with Roads and Railways being the biggest beneficiaries.

As per a report titled ‘Revival of Indian Construction Equipment Industry' byIndian Construction Equipment Manufacturers' Association the equipment industry in Indiais expected to more than double from the 2015-16 levels of around 57000 equipment to120000 equipment by 2019-20 registering an average yearly growth of more than 20 percent.

The year under review saw a marked improvement in the financial performance of SEFL.Buoyed by a rejuvenated infrastructure segment the total disbursements in terms of assetcost of your Company grew by 24 per cent during the year under review. The total Assetunder Management (AUM) grew to over Rs. 21623 crores representing a 13 per cent growthover last year. The Gross Non-Performing Assets (GNPA) reduced from 2.80 per cent in2015-16 to 2.38 per cent in 2016-17 while the Net Non-Performing Assets have reduced from1.90 per cent in 2015-16 to 1.70 per cent in 2016-17. The Capital Adequacy Ratio (CAR)remained healthy at 18.66 per cent. The profit before tax grew to Rs. 216.42 crores in theyear under review from Rs. 160.43 crores in 2015-16.

The improved financial performance is a result of SEFL's continued focus on investingin technology to improve its customer experience manage its risks facilitatetime-critical and proactive decision making and strengthen its on-ground delivery.

The view for the year ahead is to expand market and retain market leadership bydeepening inroads into asset life-cycle solutions expand into related asset classesleveraging on digital automation to improve productivity and quality focus on vendoralliances. SEFL will continue to focus on technology implementation product & processinnovation which will give competitive advantage in the changing business environment.


Infrastructure Project Advisory Division of your Company is expanding its spectrum asstrategic advisors through conceptualising various infrastructure projects in differentdomains.

Your Company has made a foray into the Housing for All Mission by assisting Governmentof Jharkhand in preparation of its robust Plan of Action by identifying the beneficiariesfor a Cluster of eight cities and towns namely Jamshedpur Adityapur Jugsalai MangoSeraikela Chakulia Chaibasa and Chakradharpur in providing Housing For All throughprogramme verticals and also assisting in preparation of the detailed project report fortheir implementation and Project Management under the Centrally Sponsored Scheme.

Your Company has been appointed by Government of Jharkhand as Consultant forpreparation of Pre-feasibility Reports Detailed Project Reports and tender documents forfull coverage of drinking water to rural population in two Packages viz. Ramgarh andHazaribagh.

Your Company has been empanelled with the Ministry of Urban Development Government ofIndia as Project Management Unit (PMU) for AMRUT Mission as well as Transaction Advisorfor providing technical assistance to Local Urban Bodies in issuing Municipal Bonds.

The ‘Namami Gange Programme' an approved ‘Flagship Programme' of theGovernment of India aims to accomplish the twin objectives of effective abatement ofpollution conservation and rejuvenation of National River Ganga. Your Company has made anentry to this Integrated Conservation Mission through empanelment with the Ministry ofWater Resources River Development

& Ganga Rejuvenation Government of India as Transaction Advisor for SewerageWastewater Treatment and re-use of treated water in various towns on PPP model.

Your Company continues to work as Programme Management Agency (PMA) for the Ministry ofFood Processing Industries Government of India to facilitate establishment of Mega FoodParks that will enable fresh investments into the food processing sector increaserealization for farmers and employment generation across the Country. On the basis of yourCompany's appraisal the Ministry has accorded (i) in-principle approval for four MegaFood Parks (ii) final approval for five Mega Food Parks in different parts of theCountry and (iii) grant disbursal to three of these Mega Food Park projects. Your Companyhas undertaken Feasibility Study and Bid Process Management for construction of silos forstorage of wheat at 11 (eleven) locations across 6 (six) States in the Country through PPPon Design Build Finance Operate and Transfer (DBFOT) basis and has been successful inproviding assistance in signing of Concession Agreement with selected developers for allthe 6 (six) locations. Your Company has further been awarded with similar study foradditional 19 (nineteen) locations across the Country by FCI. The technical feasibility ofthese new

19 (nineteen) locations has been completed and tender documents have already beenfloated by the Authority for selection of Developer for two locations. During the yearunder review your Company continued to work as PMA for Food Processing Industries inBihar and has assisted 17 (seventeen) Rice Milling units of total capacity 466800MT/Annum 6 (six) Maize based units of total capacity 108300MT/Annum

2 (two) Wheat based units of total capacity 54000MT/Annum and RABC units of totalcapacity 11500MT for their financial closure and obtaining requisite subsidies fromDepartment of

Industries Government of Bihar. Your Company has successfully provided consultancyservices to Directorate of Industries Government of Jharkhand as Programme ManagementAgency (PMA) for National Mission for Food Processing (NMFP) 2012-17. Your Company hasbeen reappointed to work as PMA for identification funding and execution of variousProjects/ Activities in Food and Feed Processing Sectors in the State of Jharkhand.

Madhya Pradesh Intercity Transport Authority (MPITA) intends to develop and upgrade busterminals and their appurtenant infrastructure at 6 (six) locations viz. Bhopal GwaliorIndore Sagar Rewa & Jabalpur to international standard on PPP basis. For thispurpose MPITA appointed your Company as Consultant to carry out Project FeasibilityStudy structuring and implementation of the project under PPP mode that will allow theproject to be completed in a timely and cost effective manner maximising Value for Moneyassisting MPITA in determining the transaction structure institutional set up /arrangement execution arrangement and carrying out Bid Process Management includingBidding documents.

Your Company continues to work as Project Management Consultant (PMC) forimplementation of Sewerage Scheme in Rumdamol Devorlim Navelim Zone IV and Mandop Areain Goa for Sewerage & Infrastructural Development Corporation of Goa. Your Company hassuccessfully completed the Rumdamol sewerage scheme. Your Company has also secured 2 (two)new PMC mandates from the same client for implementation of Sewerage System at Porvorimadditional sewerage area and trunk main sewer in Bardez Taluk in Goa.

Your Company has also been working as Transaction Advisor for several clients acrossthe Country which among others include (i) West Bengal Highway

Development Corporation for multi-layer car parking cum commercial complex project inKolkata on PPP mode (ii) Goa Housing Board for development of commercial infrastructurein Goa on PPP model and (iii) Madhya Pradesh Warehousing & Logistic Corporation fordevelopment of ‘Composite Logistics Hub' at Ujjain and ‘Trucking Hub' atSaikheda (Sagar) in Madhya Pradesh through PPP mode.

Due to low growth in manufacturing sector major advisory firms operating in theEngineering Consultancy arena have been shifting their focus to Urban Infrastructure andthis trend has increased competition manifold putting a stress on revenue potential.Secondly Government clients are designing Consultancy & Advisory projects with focuson engaging a team of experts capable of providing end-to-end solutions. This has resultedin longer project duration with back-end fee payment and requirement of multi-functionteam. The opportunity now lies in Urban Infrastructure sectors like Smart City and AMRUTwherein major precincts of urban infrastructure are being clubbed together under oneumbrella project. The ticket size of projects has been increasing for this project as itoperates on ‘clubbing' all segments. To mitigate business risks and to enhance ourposition the Advisory division of your Company is working to create synergy within thegroup and with other external specialized agencies.

Leveraging the core competency coupled with strategic planning for sectors like UrbanInfrastructure Tourism Transportation Industrial Park City Development Plan etc.your Company is building initiative for a sustainable growth. It is the start of a newjourney which your Company believes will result in expanding to new markets new businessprecincts and enrich the group's capacity in delivering complex multi-faceted advisoryassignments.


Due to buoyant world financial markets and cyclical recovery in global trade IMF hasprojected global growth to accelerate from 3.1 per cent in 2016 to 3.5 per cent and 3.6per cent in 2017 and 2018 respectively (Source: IMF). The world economy is beingthreatened due to inward looking policies by developed economies which are risking globaleconomic integration. Stronger economic policies and cohesive global efforts are needed tomanage the challenges in an integrated global economy. Emerging markets contribute almostthree-fourths of global growth and therefore emerging economies need to ward-off theexternal risks with robust institutional framework managing current account deficits andpermitting exchange rate flexibility. The positive sign in emerging economies is reflectedthrough supportive macro economic policies in China and hardening of Commodity & Oilprices benefiting Brazil and Russia.

Despite demonetisation drive by Indian Government the Indian economy is estimated tohave grown by 6.7 per cent during FY 2016-17 supported by government expenditure. Thevarious economic policy reforms pronounced by Indian Government coupled with victory ofNDA (Central Government ruling political alliance lead by BJP) in the recently concludedstate elections has boosted investor sentiments which is reflected in recent capitalmarket buoyancy. The Indian economy growth during FY 2017-18 is projected to be 7.4 percent (Source: RBI). The remonetisation program will continuously focus to promote consumerdiscretionary spending. This will be second consecutive year wherein MET department hasprojected normal monsoon in current financial year. Normal monsoon coupled with stable oilprices will keep inflation under control and will provide RBI the opportunity to lowerinterest rates in future. The continued focus of

Indian Government to rollout robust structural reforms impetus in buildinginfrastructure at the Centre & State level (significant increase in budgetaryallocation for infrastructure spending in FY 2017-18) moderation of interest rates andcomfortable liquidity position is already boosting the investment climate in the Country.

Your Company's investment encompasses infrastructure sector such as transportationenergy special economic zone & industrial parks urban infra and socialinfrastructure. Acceleration in implementation of structural reforms by Indian Governmentincluding Insolvency & Bankruptcy Laws & GST providing higher budgetary supportfor infrastructure and rural development projects divestment in PSUs and focusing onsimplified compliances has led to faster project awards & execution in theinfrastructure sector. Your Company expects that robust policy reforms will provide themuch needed economic environment during FY 2017-18 and will boost overseas investment ininfrastructure sector. Infrastructure sector provides attractive investment opportunitiesto long term investors in emerging economy such as India. Your Company expects that stablegovernment will foster better economic condition in India during FY 2017-18 and will helpsignificantly in identifying right opportunities to monetise its investment value.

Leveraging the current favourable economic environment and positive capital marketsentiments Bharat Road Network Limited one of your associate company having presence inhighway projects has filed Draft Red Herring Prospectus (DRHP) with the Securities andExchange Board of India (SEBI). This is on the back of monetisation of our investment inthe telecommunication infrastructure space wherein your Company sold its entire stake inViom Networks Limited to American Tower Corporation (ATC) at the beginning of thisfinancial year thus creating significant value for the stakeholders. Your Company alsobought 50 per cent stake in Srei Equipment Finance Limited from BNP Paribas Lease Group(BPLG) in June 2016 thus becoming 100 per cent holding company of the largest equipmentfinancing business in India. This was done without any cash outflow in lieu of 5 per centstake in your Company to BPLG through sale of shares of your Company held by Srei GrowthTrust as Treasury Stock. In March 2017 your Company realized Rs. 195 Crores as the saidTrust sold the balance 4.66 per cent of your Company's shares held as treasury stock inthe open market.

Your Company will embrace technology driven risk model create brand positioning andembark on digital journey to optimise available resources while continuously emphasizingto enhance shareholder returns on its investment portfolio. Your Company is continuouslystriving on enhancing the portfolio value of its investments through creating alliancesinnovative approach and agile processes which can surpass the test of global challengesand prevailing market conditions. Given the positive economic sentiments your Company iscontinuously emphasizing its efforts to explore divestment opportunities of its portfolioto realize better value.


During financial year 2016-17 the Treasury department of your Company has seamlesslymobilised resources at competitive rates in the market. Leveraging its long standingrelationship and robust track record your Company has been able to maintain cost whileensuring proper asset liability match.

i. Bank Finance

Your Company's strong relationships and past credit record with nationalized banks andprivate sector banks enables it to access cost effective fund. Your Company is funded by adiversified

Yboughtour Company50 per centalso stake in Srei Equipment Finance Limited from BNPParibas Lease Group (BPLG) in June 2016 thus becoming 100 per cent holding company ofthe largest equipment financing business in India.

Your Company has anexecution experience of developing and managing 14 annuity andtoll-based road projects with a total Capital Cost of around Rs. 13000 Crores.

consortium of 30 Indian banks and has enhanced the tied-up fund based working capitallimit to Rs. 9716.50 crores from consortium member banks at the end of financial year.Further your Company also successfully mobilised Long Term Loans aggregating to Rs. 625crores during the year at the most competitive rates and continued to tap resourcesthrough domestic sources.

ii. Bonds / Debentures / Commercial Papers

Your Company has allotted debentures aggregating to Rs. 628.54 crores by issue of longterm Non-Convertible Debentures (NCDs) during the year under review through public issue.Your Company is focussing on diversifying liability mix and hence going forward NCDswill be one of the focus areas to augment long term resources. Your Company has alsoraised Rs. 4207.95 crores through Commercial Papers during the year under review.

iii. Foreign Institutional Borrowings

Your Company has drawn ECB of USD 12 million from Deutsche Bank with door to door tenorof 10 years and Euro 15 million from Oesterreichische Entwicklungsbank AG (DevelopmentBank of Austria) with door to door tenor of 8 years. This has augmented the long termresources of your Company.


Risk management has been an important and integral part of the operations of yourCompany driven by the objectives of maintaining robust asset quality alongside growth inbusiness optimal allocation of capital simultaneously with enhancement of shareholders'value and hedging against unforeseen events and macroeconomic or environmental conditions.Your Company's risk management strategy strives to balance the tradeoff between risk andreturn and ensure optimal risk-adjusted return on capital and entails independentidentification measurement and management of risks across the various businesses of yourCompany. Your Company has enunciated a framework of policies and principles derived fromrelevant directives provided from time to time by the Reserve Bank of India (RBI) for aspecific classification of non-banking finance companies (NBFCs) and continuouslybenchmarked with industry best practices. The policies are approved and reviewed from timeto time by the Board of Directors supported by an independent risk function which ensuresthat your Company operates within a pre-defined risk appetite. In compliance with normsunder RBI your Company computed capital requirement for credit market and operationalrisk as on March 31 2017. The capital to risk-weighted assets ratio (CRAR) of yourCompany worked out to 18.94 per cent and based on Tier-I capital it was 13.81 per centabove the minimum regulatory requirements of 15 per cent and 10 per cent respectively.

Governance Structure

The Risk Committee of Board (RCB) an independent Board level committee puts in placespecific policies frameworks and systems for effective risk management. The RCB approvespolicies from time to time in consultation with other sub-committees of the Board viz.the Investment Committee (IC) and the Asset Liability Management Committee (ALCO)constitute the governing framework for various types of risk and business activitiesundertaken within this policy framework. The overall risk management is guided bywell-defined procedures appropriate for the assessment and management of individual riskcategories viz. credit risk market risk operational risk liquidity risk counterpartyrisk and group risk supplemented by periodic validations of the methods used. Under theguidance of RCB the risk department is responsible for assessing and managing risks on aregular and dynamic basis. This entails as an imperative garnering adequate knowledge ofmacroeconomic trends insights into dynamics of various sectors and understanding ofregulatory environment and application of quantitative and qualitative tools facilitatingan accurate assessment of risk at all times.

Credit Risk

Your Company has a comprehensive and well-defined Credit Risk Policy for maximizing therisk-adjusted rate of return on capital by maintaining a healthy asset portfolio andmanaging the credit risk inherent in individual exposures as well at the portfolio level.The emphasis is placed both on evaluation and containment of risk at the individualexposures and on analysis of the portfolio behaviour. The appraisal process encompasses adetailed risk assessment and rating of all obligors using internal rating models. Theratings of customers are assessed based on their financial performance industrycharacteristics business positioning project risks operating performance and othernon-financial parameters such as quality of management and conduct of account. YourCompany has strong a framework for the appraisal and execution of project financetransactions that involves a detailed evaluation of technical commercial financialmarketing and management factors including sponsor's financial strength and experience.Your Company identifies the project risks mitigating factors and residual risksassociated with the project and applicable risk mitigating factors including creation ofdebt service reserves and channeling project revenues through a trust & retentionaccount. In some cases your Company also has taken additional credit comforts such ascorporate or personal guarantees from one or more sponsors of the project or a pledge ofthe sponsors' equity holding in the project company.

The RCB periodically reviews the impact of the stress scenarios resulting from ratingdowngrades or drop in the asset values in case of secured exposures on the portfolio. YourCompany works within identified limits on exposure to borrower groups industry sectorsand geographies and continuously tracks portfolio level concentrations. These limits areperiodically reviewed based on changes in macro-economic environment regulatoryenvironment and industry dynamics. Existing credit exposure in the portfolio iscontinuously monitored and reviewed. Key sectors are analysed in details to suggeststrategies considering both risks and opportunities. Corrective action if required istaken well in advance based on early warning signals.

Sustainability risk is an essential and integral part of your Company's credit riskmanagement framework. Besides economic benefits the environmental and social benefits ofthe project are assessed as these are critical aspects for sustainability of any project.Subsequent to analysing sustainability risk at the time of initial loan approval it isalso periodically monitored through the life-cycle of the exposure.

Market risk

Market risk is defined as the risk to earnings and to the value of investments arisingfrom movements in extraneous market risk factors namely stiff liquidity interest ratesand foreign exchange rates. The most common factors connected with market risk areinterest rates currency exchange rates costs of investments in trade portfolio(regardless of the instruments' character – debt or capital) prices of exchangecommodities and other market variables related to your company's activity.

Your Company's market risk management is guided by well-laid policies guidelinesprocesses and systems for the identification measurement monitoring and reporting ofexposures against various risk limits set in accordance with the risk appetite of yourCompany. Treasury Mid-Office independently monitors the risk limits stipulated in theMarket Risk Policy and reports deviations if any to the appropriate authorities as laiddown in the policy.

Liquidity risk is two-dimensional: risk of being unable to fund portfolio of assets atappropriate maturity and rates (liability dimension) and the risk of being unable toliquidate assets in a timely manner at a reasonable price (asset dimension). YourCompany's Asset Liability Management Committee (ALCO) lays down a broad framework forliquidity risk management to ensure that it is in a position to meet its daily liquidityobligations as well as to withstand a period of liquidity stress from industry market ora combination of them. The liquidity profile is analyzed on a static as well as on adynamic basis by using the gap analysis technique supplemented by monitoring of keyliquidity ratios and conduct of liquidity stress tests periodically. The ALM position ofyour Company is being periodically reported to ALCO RCB and also to RBI.

Interest rate risk is the probability that variations in the interest rates will have anegative influence on the quality of a given financial instrument or portfolio as well ason your Company's condition as a whole. Interest rate risk is generally managed throughfloating rate mechanism by linking the lending rate of interest to your Company'sBenchmark Rate and is reviewed periodically with changes in your Company's cost of funds.Your Company regularly conducts stress testing to monitor vulnerability towards interestrate unfavorable shocks. Currency or exchange rate risk is the risk where the fair valueor future cash flows of a given financial instrument fluctuate as a result from changes inthe currency exchange rates. Currency exchange rates can be subject to big and unexpectedchanges and managing of the risk related to the currency exchange rates' volatility canbe very complicated.

Exchange rate risk management becomes necessary as your Company borrows money inforeign currency and lends in domestic currency. In order to optimize the cost of fundsyour Company adopts effective hedging strategies considering the overall risk appetite ofyour Company. Through statistical measure like Value at Risk (VaR) stress tests backtests scenario analyses your Company monitors the foreign currency portfolio.

Operational risk

Operational risk is defined as the risk of loss arising out of inadequate or failedinternal processes people and systems or from external events. Your Company in accordancewith the regulatory guidelines has put in place a framework to identify assess andmonitor risks strengthen controls improve customer service and minimize operatinglosses. Your Company has built into its operational process by segregation of dutiesclear reporting structures well defined processes operating manuals staff trainingverification of high value transactions and strong audit trails to control and mitigateoperational risks. New product and activity notes prepared by business units are reviewedby all concerned departments including compliance risk management and legal. Allconcerned departments coordinate and discuss key operational risk issues involving peopleprocess and technology external factors etc. so as to minimise them or ensure adequatecontrols over them.

A well-formulated Business Continuity Plan (BCP) is in place which ensures businesscontinuity in unlikely event of disaster or disruption. Further to provide continued anduninterrupted service even during natural disasters a Disaster Recovery (DR) Site is alsoin place. Vigorous information technology system is put in place which has been certifiedwith globally accepted ISO2701:2005 standard comprising features like DR securityfeatures covering firewalls encryption technologies spam-guards etc. Your Company iscommitted towards investing in information technology to strengthen its business process.In addition to manage operational risk prudently Know Your Customer (KYC) and Anti-MoneyLaundering (AML) Policy are in place which helps to prevent your Company from being usedintentionally or unintentionally by criminal elements for money laundering.

The risk management framework of your Company is based on assessment of all risksthrough proper analysing and understanding the underlying risks before undertaking anytransactions and changing or implementing processes and systems. All transactions andprocesses conform to your Company's risk appetite and regulatory requirements and the sameis achieved through a proper governance structure which includes a multi-tiered approvallevels for transactions and processes. This risk management mechanism is aided by regularreview control self assessments and monitoring of key risk indicators.


The three pillars of the people strategy at your Company have focussed on buildingorganization capability creating process excellence and working on strengthening thecollaborative culture. In the prevailing scenario of business particularly withtechnology becoming a key enabler of business and a vital part of strategy your Companyhas focused on leveraging technology and digitization as a key part of its peoplestrategy.

The Human Resource Team of your Company has delivered several transformational changesin the year under review. These include the launch of an e-learning platform for alldomain and functional skills - LEaD SREI Online. Your Company has created a role basedcurriculum for all customer facing and critical roles. The key dimensions of knowledgethat individuals need are covered through this Portal. The modules are crisp and engagingand tailor made for the needs of each function each role. Moreover there has beensignificant interaction with the business leaders in the creation of the courses to ensurethat the content is fully aligned with current business processes and business priorities.It is ensured to cover topics that are part of statutory requirements such as Know YourCustomer (KYC) and Anti Money Laundering (AML) as well as Prevention of Sexual Harassmentat the Workplace. In order to exponentially increase collaboration idea sharing andengagement between employees your Company has launched Srei Sampark in the last year.This is an app based social media platform which also acts as a digital sensor foremployee mood and engagement. Several initiatives are run on this platform including thoserelated to Swasth Srei and a reward and recognition initiative called Shabash. For yourCompany all employees form part of an extended family - the Srei Parivar and your Companyhas continued in its efforts to encourage wellness in mind body and spirit. ThroughSwasth Srei your Company continues to encourage wellness and healthy lifestyles of theemployees. Your Company continues to work on and improve all its people managementprocesses through the cloud based Human Resource Management System (HRMS) which waslaunched in the year 2016. The Human Resource Team has continued to work on and improveits response time and turn - around times to better support the business of your Company.

The biggest accolade your Company has received in the year under review has come in theform of highest ever ratings in the Great Place to Work Survey 2016. Employeeparticipation was at an all-time high at 96 per cent and your Company's scores on everyparameter were also at an all-time high. The employee count of your Company stands at 189as on March 31 2017 and automating employee services has supported your Company toimprove response time and service.


Information Technology (IT) in your Company has emerged as a strategic enabler and isplaying a major role in improving productivity reliability and customer satisfactionlevel while optimizing cost & risks. The IT function has successfully transformed itsstatus from "Reactive" state to "Managed" state by implementing stateof the art technology integrating end to end business process along with underlyingtechnology and transforming its vision from gaining technological expertise to offeringcustomer focused end-to-end service.

Following the current industry trend and business need your Company moved away fromCapex to Opex mode largely and adopted cloud based sourcing strategy for many of itscrucial services including enterprise e-mail Human Resource Management System (HRMS) etc.These strategic transformation projects have not only optimized IT resource andoperational cost but also improved stability and performance of business criticalservices.

In addition to various initiatives enabling cost variabilisation consolidation andefficiencies and on demand scale various initiatives in the areas of digitalizationspeed performance and mobility have been given high priority to get the competitiveadvantages in client and employee facing processes. To enhance end client reliability andsatisfaction level SMS facility has been provided for all transactions and payment madeby cash cheque or demand draft. Google Apps for Work has been introduced through"PIN IT" initiative that brings to users collaboration anytime anyplace and anydevice and seamless integration of end to end business process was accomplished coupledwith a single service desk solution across IT services. All data centres of your Companywere consolidated into a single one and given to a strategic partner via a long termcontract for managed hosting services. During the year under review the focus areas wereend user mobility uniformity in process automation and risk optimization by state of artsecurity practice. Human Resource Management System (HRMS) solution has been moved to acloud based solution which tracks the employee lifecycle from joining till separation witha very efficient performance management system.

IT is now a digital partner of the business connecting the four pillars – thecustomer the manufacturer the employee and the asset. During this year your Companylaunched ‘My Srei' – a customer self service app field investigation and leadmanagement app for the sales force alongwith a self service app for all employees. YourCompany has embarked upon a project of GPS based location tracking of the assets financedwhich would enable in reduction of risk. Your Company has also implemented eKYC automatedbureau verification de-dupe for better management of the customer onboarding process.

Risk of internet usage has been highly mitigated by adopting a cloud based proxysolution in terms of secured communication and integrated control. While continuing withits accreditation

The biggest accoladeyour Company

has received in the year under review has come in the form of highest ever ratings inthe Great Place to Work Survey 2016. Employee participation was at an all-time high at 96per cent and your Company's scores on every parameter were also at an all-time high.

Your Company's marketrisk management

is guided by well-laid policies guidelines processes and systems for theidentification measurement monitoring and reporting of exposures against various risklimits set in accordance with the risk appetite of your Company.

for ISO 27000:2013 your Company has taken its IT risk management system to the nextlevel of maturity. Compliance to regulatory and statutory needs has always been the focusat your Company and taking a further step in that direction your Company has implementeda comprehensive compliance tracking solution. Further your Company has taken proactivemeasures to educate the entire business users about information security issues throughsustained communication. Analytics was identified by your Company as one of the new areasof innovation. Accordingly a Centre of Excellence has been created to identify and workon all use cases for analytics across the group and possible opportunities of synergy.

The IT function is embarking on the next wave of maturity that will position IT as akey business driver for every employee and customer. By leveraging innovations in mobileapplications adopting best of breed solution and framework reengineering the currentprocess and driving continuous improvement cycle across services your Company is aimingto move towards the next level of maturity and make a significant footprint in the worldof digitalization.


Your Company's vision mission and core values have laid the foundation for internalcontrols. On the administrative controls side your Company has a proper reportingstructure oversight committees and rigorous performance appraisal system to ensure checksand balances. On the financial controls side your Company has in place segregation ofduties and reporting mechanism to deter and detect misstatements in financial reporting.

Your Company's Internal Control System is commensurate with the nature of its businessand the size and complexity of its operations and ensures compliance with policies andprocedures. The Internal Control Systems are being constantly updated with new / revisedstandard operating procedures.

Further in accordance with the latest legislation your Company's Internal FinancialControls (IFC) have been reviewed and actions have been taken to strengthen financialreporting and overall risk management procedures. Further an Information System (IS)Audit of the internal systems and processes is conducted at least once in two years toassess operational risks faced by your Company.

Your Company has a dedicated and independent Internal Audit Department reportingdirectly to the Audit Committee of the Board. The purpose scope authority andresponsibility of the Internal Audit Department are delineated in the Audit Charterapproved by the Audit Committee. Internal Audit Department influences and facilitatesimprovements in the control environment by constantly evaluating the risk management andinternal control systems.

Furthermore the Audit Committee of your Company evaluates and reviews the adequacy andeffectiveness of the internal control systems and suggests improvements. Significantdeviations are brought to the notice of the Audit Committee and corrective measures arerecommended for implementation. Based on the internal audit report process ownersundertake corrective action in their respective areas. All these measures help inmaintaining a healthy internal control environment.


Environmental & Social Management System (ESMS) is followed as the process ofsustainable business practice by your Company to adequately meet respond to and enhancebenchmarks in Environmental and Social (E&S) management. E&S risks associated witha proposal considered for investment and its existing portfolio are adequately taken careof by ESMS which has been adopted to reduce the business risk of its portfolio related toE&S issues and adhere to Sustainable Finance Practice which has been integrated as apart of overall Credit & Risk Policy. This management system is aimed at properlyevaluating assessing and ensuring customer compliance with relevant E&S requirementsand encourages clients to take corrective action & mitigation plans.

Core element of your Company's ESMS is a self-declared Policy Framework which includesdue-diligence (rapid sustainability client risk assessment project/activity riskcategorization and if required site inspection) appraisal (analysis of E&S impactsand client's capacity & commitment to address them) mitigation measures actionplans monitoring & review of ongoing projects training & workshop and continuousimprovement of the system. By following ESMS practice your Company has been able tocreate awareness in the market regarding relevance of E&S issues and their impacts onthe society and the environment.

In your Company a full scale E&S due-diligence is carried out for any businessactivity as per International Finance Corporation (IFC) Performance Standards andCountry's E&S laws rules & notifications based on which a ‘go' or ‘nogo' decision is given by ESMS team. Your Company neither participates nor invests incertain activities and industries which fall in the exclusion list of your Company. YourCompany does not invest in any projects that do not comply with the environmental &social norms and laws of the Country.

Your Company monitors & reviews the invested projects on a regular basis whereasshortfalls or misconducts are rectified by framing action plans for the same. Your Companycontinuously updates and upgrades the ESMS policy framework from time to time. Over thepast years your Company has been able to successfully manage reduce and control theE&S risks associated with its portfolio. Another sustainability strategy of yourCompany is to increase investment in green projects steadily. In FY 2016-17 your Companyrejected several business opportunities due to non-conformity to E&S policy likeabsence of sufficient regulatory clearances public interest litigation land acquisitionand other E&S issues. On the other hand your Company has encouraged sustainabledevelopment by investing in various renewable energy projects.

As a part of its sustainability strategy your Company has entered into a capacitydevelopment agreement with Nederlandse Financierings-Maatschappij voor OntwikkelingslandenN.V. (FMO) [Netherlands Development Finance Company] and Oesterreichische EntwicklungbankAG (OeEB) [Development Bank of Austria] to launch a Corporate Rollout Programme (CRP) onESMS for its clients across the Country for carrying out business with better managementof E&S risks thereby enhancing your Company's brand image in the market. ESMS-CRPhelp clients to build their own sector specific ESMS Policy and facilitate trainingprogram on different ESHS (Environmental Social Health

& Safety) issues. This programme reduces business risk substantially from yourCompany's portfolio and will help your Company to gain third party control. In FY 2016-17your Company has entered into agreement for ESMS-CRP with a dozen Clients and completedsector specific ESMS Policy framework and Risk Toolkits for these clients to carry outtheir business with better understanding & mitigation of its E&S risks.

Your Company believes in a Sustainable Finance Business Approach by consideringconservation management & sustainable use of human & natural resources. Thisendeavour helps your Company in creating a strong & confident long term relationshipwith its stakeholders.


The total amount available for CSR spending being 2 (two) per cent of the average netprofits of your Company made during the three immediately preceding financial yearsduring the financial year 2016-17 aggregated to approximately Rs. 1.96 Crores.

Recognising its social responsibility your Company had earlier established a publiccharitable trust in the name of ‘Srei Foundation' with the objective of grantingscholarships and other financial assistance to deserving and talented candidates. The Fundalso supports setting up of schools colleges medical and scientific researchinstitutions. Donations to Srei Foundation qualify for deduction under Section 80G of theIncome Tax Act 1961. Your Company has granted donation of Rs. 15000000/- (Rupees OneCrore and Fifty Lacs only) to Srei Foundation during the financial year 2016-17.

Your Company is fully aware of the fact that as a corporate citizen it is alsoentrusted with the responsibility to contribute for the betterment of the society atlarge. During the year under review your Company extended support to Sonata Foundationtowards operational expenses for smooth running of Animal Mobile Clinics used extensivelyfor welfare of animals with a sum of Rs. 340000/- (Rupees Three Lacs and Forty Thousandonly). Your Company is cognizant towards promoting and encouraging education and hencecontributed Rs. 8000000/- (Rupees Eighty Lacs only) to Indian Institute of InformationTechnology Guwahati (IIITG) an institution under MHRD Government of India set up in 2013and aimed at generating highly competent manpower of global standards for the InformationTechnology Industry.

Your Company perceives Corporate Social Responsibility (CSR) as an opportunity tocontribute towards uplifting the society at large empowering individuals making themself-reliant. The CSR philosophy of your Company is embedded in its commitment to allstakeholders namely consumers employees environment and society while your Company'sapproach extends both to external community as well as to your Company's large and diverseinternal employee base and their families. Your Company's sustainable approaches towardspracticing humble service to Humanity on a sustainable basis has enabled it to continuefulfilling its commitment to be a socially responsible corporate citizen. The CSRCommittee of your Company has formulated the CSR Policy which describes the multiple linesaround which the CSR activities of your Company are positioned being education and skilldevelopment social and economic welfare environmental sustainability and such otheractivities included in Schedule VII of the Companies Act 2013 as may be identified by theCSR Committee from time to time. The said Policy is available on your Company's websitewww.srei. com and a link to the said Policy has been provided elsewhere in this AnnualReport. The Committee presently comprises Mr. Hemant Kanoria Chairman & ManagingDirector Mr. Sunil Kanoria Non-Executive Director and Mr. Shyamalendu ChatterjeeIndependent Director. Mr. Hemant Kanoria Chairman and Managing Director of your Companyacts as the Chairman of the CSR Committee. Mr. Madhusudan Dutta Group Head –Corporate Strategy & Planning (Human

Capital) acts as the Secretary to the CSR Committee.

4 (Four) meetings of the CSR Committee were held during the year 2016-17 on May 122016 August 06 2016 November 05 2016 and February 02 2017.

During this year your Company spent an aggregate amount of Rs. 23365000/- (RupeesTwo Crore Thirty Three Lacs and Sixty Five Thousand only) being 2.39 per cent of theaverage net profits of last 3 years towards CSR activities pursuant to CSR Policy of yourCompany which is more than the minimum statutory requirement being 2 per cent of theaverage net profits of last 3 years. The manner in which the CSR amount was spent duringthe financial year is set out as an annexure to the Directors' Report and forms part ofthis Annual Report.



The Business Responsibility (BR) Report as stipulated under Regulation 34(2)(f) of SEBIListing Regulations 2015 describing the initiatives taken by your Company from anenvironmental social and governance perspective forms part of the Annual Report.Further the BR Committee of your Company constituted by the Board of Directors at itsmeeting held on May 12 2016 formulated and approved the BR Policy of your Company inline with the provisions of SEBI Listing Regulations 2015 as amended from time to time.The policy describes the principles of sustainable business that delivers value for itsstakeholders including but not limited to its shareholders employees clients businesspartners and the wider community.


The website of your Company www. was revamped recently. This website has beendeveloped on the new responsive technology based platform known as ‘Drupal' ensuringuniform display across all devices like mobile tablet desktop etc. and all the operatingsystems. The website has an inbuilt sophisticated and customized content management systemfor easy change in content. A simple improved navigation system needs a lesser number ofclicks to reach the information available in the different sections of the website. Thecontemporary and smart look of the website ensures a customer centric approach catering tothe requirements of prospective customers investors employees and other stakeholders.The website of your Company also has ‘Live Stock Ticker' with dynamic display ofcurrent stock prices in BSE and NSE with respective market caps. The site carries acomprehensive database of information of interest to the investors including the financialresults of your Company dividend declared unclaimed dividend list shareholding patternany price sensitive information disclosed to the regulatory authorities from time to timeanalysts' reports investor presentations standard downloadable forms media coveragecorporate profile and business activities of your Company and the services rendered byyour Company to its investors. Some useful features like Online Resume Management Systemto pull the best talents and Online NCD Application Form download system as a part of fundraising initiatives have been duly introduced in the system. In order to strengthen thebonds with the valued customers by offering them a better experience your Company hasintegrated the new customer portal in the corporate website. The customers can accesstheir account and download the essential documents directly from the website. Byintroducing the download facility of MySREIApp mobile application from the website yourCompany extends the digital services and creates an ‘anywhere anytime' experiencelike never before. The multiplatform mobile app now empowers customers to raise servicerequest contact relationship managers send request for new finance etc. The links todifferent social media i.e. Facebook YouTube Twitter LinkedIn has been embedded in thehome page of the new website to get access of the key initiatives and achievements of yourCompany.


The Statement in Form AOC-1 containing the salient features of the financial statementof your Company's subsidiaries and associates pursuant to first proviso to Section 129(3)of the Companies Act 2013 (Act) read with Rule 5 of the Companies (Accounts) Rules 2014forms part of the Annual Report. Further in line with Section 129(3) of the Act read withthe aforesaid Rules SEBI Listing Regulations 2015 and in accordance with the AccountingStandard 21 (AS-21) Consolidated Financial Statements prepared by your Company includefinancial information of its subsidiary companies.

A Report on the performance and financial position of each of the Subsidiaries andAssociate Companies included in the Consolidated Financial Statements prepared by yourCompany as per Rule 8(1) of the Companies (Accounts) Rules 2014 forms part of the annualaccounts of each of the Subsidiary and Associate Companies which have been placed on thewebsite of your Company and also forms part of Form AOC-1 pursuant to Rule 5of the Companies (Accounts) Rules 2014 which is set out as an annexure to the Directors'Report and forms part of this Annual Report. Members interested in obtaining a copy of theannual accounts of the Subsidiaries and Associate Companies may write to the CompanySecretary at your Company's Registered Office. The said report is not repeated here forthe sake of brevity.

The names of companies which have become or ceased to be subsidiaries joint venturesor associate companies during the year are given below:

Name Status
Srei Forex Limited Ceased to be a wholly-owned Subsidiary w.e.f. 17.05.2016.
Srei Equipment Finance Limited Ceased to be a Joint Venture and became a wholly-owned Subsidiary w.e.f. 17.06.2016.
Srei International Infrastructure Ceased to be a Subsidiary and became an
Services GmbH Germany Associate w.e.f. 21.06.2016.
AO Srei Leasing Russia Ceased to be a Step down-subsidiary w.e.f. 21.06.2016.
Srei Advisors Pte. Ltd. Singapore Ceased to be a Step down-subsidiary w.e.f. 21.06.2016.
Bharat Road Network Limited* Became an Associate w.e.f. 12.11.2016.
Quippo Telecom Infrastructure Private Limited Ceased to be an Associate w.e.f. 13.01.2017.

* Post filing of Draft Red Herring Prospectus by Bharat Road Network Limited (BRNL)your Company became the Corporate Promoter of BRNL w.e.f. February 16 2017 in terms ofthe SEBI ICDR Regulations.

Company Yourperceives Corporate Social Responsibility (CSR) as an opportunity tocontribute towards uplifting the society at large empowering individuals making themself-reliant.

Ynotour Companyinvest in does any projects that do not comply with the environmental& social norms and laws of the Country.


There is no such material change and commitment affecting the financial position ofyour Company which have occurred between the end of the financial year of your Company towhich the financial statements relate and the date of the report.



As on March 31 2017 Srei Equipment Finance Limited (SEFL) a wholly owned subsidiaryof your Company is a listed ‘material' subsidiary of your Company with its debtsecurities being listed on the Stock Exchanges in India. However your Company does nothave any material unlisted subsidiary. Your Company has formulated a Policy fordetermining Material Subsidiaries in accordance with the applicable laws. The said Policyis available on your Company's website and a link to the said Policy has beenprovided elsewhere in this Annual Report. Mr. Shyamalendu Chatterjee an IndependentDirector of your Company is the Chairman (Non-Executive) of Srei Capital Markets Limitedand an Independent Director of SEFL both wholly owned subsidiaries of your Company.Further Ms. Tamali Sengupta Independent Director of your Company is an IndependentDirector of SEFL.


The following directors/executives of your Company are whole-time Key ManagerialPersonnel (KMPs) as on March 31 2017 in accordance with the provisions of Section 203 ofthe Companies Act 2013 -

Name Designation
Mr. Hemant Kanoria Chairman & Managing Director
Mr. Sameer Sawhney* Chief Executive Officer
Mr. Sandeep Lakhotia Company Secretary
Mr. Kishore Kumar Lodha Chief Financial Officer
*Appointed w.e.f. November 05 2016.

During the year Mr. Sameer Sawhney was appointed as the Chief Executive Officer (CEO)of your Company for a period of 3 (Three) years w.e.f. November 05 2016. Further Mr.Bajrang Kumar Choudhary Key Managerial Personnel (KMP) of your Company resigned as ChiefExecutive Officer (CEO) - Infrastructure Project Development and was relieved from theservices of your Company w.e.f. the close of business hours of October 31 2016 inaccordance with your Company's Policy.


The Board of Directors of your Company have constituted a Nomination and RemunerationCommittee in accordance with the provisions of Section 178 of the Companies Act 2013 readwith Regulation 19 of SEBI Listing Regulations 2015. The Committee comprises Mr. SalilKumar Gupta Mr. Shyamalendu Chatterjee Independent Directors and Mr. Sunil KanoriaNon-Executive Director. Mr. Salil Kumar Gupta Chief Mentor and Director of your Companyacts as the Chairman of the Nomination and Remuneration

Committee. Mr. Sandeep Lakhotia Company Secretary of your Company acts as thesecretary to the Nomination & Remuneration Committee. The Terms of Reference of theCommittee has been provided in the Corporate Governance Section forming part of thisReport.

3 (Three) meetings of the Nomination and Remuneration Committee of your Company wereheld during the year 2016-17 on May 12 2016 November 05 2016 and February 02 2017. TheCommittee has formulated the Nomination and Remuneration Policy (‘Srei Nomination andRemuneration Policy') which broadly laid down the various principles of remuneration beingsupport for strategic objectives transparency internal & external equityflexibility performance-driven remuneration affordability and sustainability and coversthe procedure for selection appointment and compensation structure of Board members KeyManagerial Personnel (KMPs) and Senior Management Personnel (SMPs) of your Company. Thesaid Policy is available on your Company's website and a link to the saidPolicy has been provided elsewhere in this Annual Report.


Your Company has formulated a codified Whistle Blower Policy incorporating theprovisions relating to Vigil Mechanism in terms of Section 177 of the Companies Act 2013and Regulation 22 of SEBI Listing Regulations 2015 in order to encourage Directors andEmployees of your Company to escalate to the level of the Audit Committee any issue ofconcerns impacting and compromising with the interest of your Company and its stakeholdersin any way. The said Policy was last revised on February 03 2017. Your Company iscommitted to adhere to highest possible standards of ethical moral and legal businessconduct and to open communication and to provide necessary safeguards for protection ofemployees from reprisals or victimisation for whistle blowing in good faith. The saidPolicy is available on your Company's website www.srei. com and a link to the said Policyhas been provided elsewhere in this Annual Report.


Your Company is committed to provide and promote a safe healthy and congenialatmosphere irrespective of gender caste creed or social class of the employees. YourCompany in its endeavour to provide a safe and healthy work environment for all itsemployees has developed a policy to ensure zero tolerance towards verbal physicalpsychological conduct of a sexual nature by any employee or stakeholder that directly orindirectly harasses disrupts or interferes with another employee's work performance orcreates an intimidating offensive or hostile environment such that each employee canrealize his / her maximum potential.

Your Company has put in place a ‘Policy on Prevention of Sexual Harassment' as perThe Sexual Harassment of Women at Workplace (Prevention Prohibition and Redressal) Act2013. The said Policy was last revised on February 03 2017. The Policy is meant tosensitize the employees about their fundamental right to have safe and healthy environmentat workplace. As per the Policy any employee may report his / her complaint to theInternal Complaint Committee constituted for this purpose. The said Policy is available onyour Company's website and a link to the said Policy has been providedelsewhere in this Annual Report. Your Company affirms that during the year under reviewadequate access was provided to any complainant who wished to register a complaint underthe Policy.

During the year your Company has not received any complaint on sexual harassment fromany of the women employees of your Company.


Your Company is exempted from the applicability of the provisions of Section 186 of theCompanies Act 2013 (Act) read with Rule 11 of the Companies (Meetings of Board and itsPowers) Rules 2014 and Companies (Meetings of Board and its Powers) Amendment Rules 2015as your Company is engaged in the business of financing of companies or of providinginfrastructural facilities.


The Nomination and Remuneration Committee (NRC) of your Company has formulated and laiddown criteria for Performance Evaluation of the Board (including Committees) and everyDirector (including Independent Directors and Chairman & Managing Director) pursuantto provisions of Section 134 Section 149 read with Code of Independent Directors(Schedule IV) and Section 178 of the Companies Act 2013 and Regulation 19(4) read withPart D of Schedule II of SEBI Listing Regulations 2015 covering inter-alia the followingparameters namely:

i) Board Evaluation - degree of fulfillment of key responsibilities; Board culture anddynamics. ii) Board Committee Evaluation - effectiveness of meetings; Committee dynamics.iii) Individual Director Evaluation (including IDs) - contribution at Board Meetings.

Further the Chairman and Managing Director is evaluated on key aspects of the rolewhich includes inter-alia effective leadership to the Board and adequate guidance to theCEOs.

During the year under review the Board carried out annual evaluation of its ownperformance as well as evaluation of the working of various Board Committees viz. AuditCommittee Stakeholders' Relationship Committee Nomination and Remuneration Committee andCorporate Social Responsibility Committee. This exercise was carried out through astructured questionnaire prepared separately for Individual Board Members (including theChairman) and Board Committees based on the criteria as formulated by the NRC and incontext of the Guidance note dated January 05 2017 issued by SEBI. Based on thesecriteria the performance of the Board various Board Committees viz. Audit CommitteeStakeholders' Relationship Committee Nomination and Remuneration Committee and CorporateSocial Responsibility Committee and Individual Directors (including Independent Directorsand Chairman) was evaluated and found to be satisfactory.

During the year under review the Independent Directors of your Company reviewed theperformance of Non-Independent Directors and Chairperson of your Company taking intoaccount the views of Executive Director and Non-Executive Directors.

Further the Independent Directors hold unanimous opinion that the Non-IndependentDirectors as well as the Chairman and Managing Director bring to the Board abundantknowledge in their respective field and are experts in their areas. Besides they areinsightful convincing astute with a keen sense of observation mature and have a deepknowledge of your Company.

The Board as a whole is an integrated balanced and cohesive unit where diverse viewsare expressed and dialogued when required with each Director bringing professional domainknowledge to the table. All Directors are participative interactive and communicative.

The Chairman has abundant knowledge experience skills and understanding of theBoard's functioning possesses a mind for detail is meticulous to the core and conductsthe Meetings with poise and maturity.

The information flow between your Company's Management and the Board is completetimely with good quality and sufficient quantity.


In terms of Regulation 25(7) of the SEBI Listing Regulations 2015 your Company isrequired to conduct Familiarisation Programme for Independent Directors (IDs) tofamiliarise them about your Company including nature of industry in which your Companyoperates business model of your Company roles rights and responsibilities of IDs andany other relevant information. Further pursuant to Regulation 46 of SEBI ListingRegulations 2015 your Company is required to disseminate on its website details offamiliarisation programme imparted to IDs including the details of i) number of programmesattended by IDs (during the year and on a cumulative basis till date) ii) number of hoursspent by IDs in such programmes (during the year and on a cumulative basis till date) andiii) other relevant details.

One such specific familiarisation programme was conducted on November 04 2016. As apart of the programme presentation was made to the Independent Directors giving a briefoverview of Roles Responsibilities and Liabilities of Independent Directors under RBIregulations Systemically Important Non-Banking Financial Companies (NBFCs) Prudentialnorms

– Infrastructure Finance Companies

Corporate Governance norms with focus on constitution of various Committees under theCompanies Act 2013 Fit and proper criteria for Directors Disclosure and Transparencynorms framing of internal guidelines by NBFCs etc. Highlights on key amendments to theSARFAESI Act Insolvency and Bankruptcy Code 2016 with salient features of the Code.

In addition to the above the Board of Directors is encouraged to participate invarious training sessions to ensure that the Board members are kept up to date.

At the time of appointment a new Director is welcomed to the Board of Directors ofyour Company by sharing an Induction Kit containing inter-alia the Organization Chartbrief profile of all Directors and Key Managerial Personnel (KMPs) Policy CompendiumInvestor Presentation Investor call transcripts amongst others.

Further the management of your Company makes various presentations to the IndependentDirectors on an ongoing basis which inter-alia includes Company overview various businessverticals latest key business highlights financial statements evolution as well asbusiness model of the various business of your Company as part of the familiarisationprogramme for Independent Directors.

Significant Statutory updates are circulated on a quarterly basis as a part of theagenda of the Board Meetings through which Directors are made aware of the significant newdevelopments and highlights from various regulatory authorities viz. Reserve Bank of India(RBI) Securities and Exchange Board of India (SEBI) Ministry of Corporate Affairs (MCA)etc.

The Company Secretary also regularly apprises the Board about their roles rights andresponsibilities in your Company from time to time as per the requirements of SEBI Listing

Regulations 2015 Companies Act 2013 read together with the Rules and Schedulesthereunder and Non-Banking Financial Company – Systemically Important Non-Deposittaking Company and Deposit taking Company (Reserve Bank) Directions 2016.

The Board has open channels of communication with executive management which allowsfree flow of communication among Directors in terms of raising query seekingclarifications and other related information. Directors are also informed of the variousdevelopments in your Company through e-mails newsletters internal magazines etc. Thesame is made available on their I-Pads as well. As a part of e-initiatives adopted by yourCompany latest news and events including regulatory alerts are made available through asmartphone knowledge application "Srei Chanakyaa". This app also serves as ameans to enhance compliance awareness and contains detailed do's and don'ts FAQ's forInsider Trading presentations on SEBI Listing Regulations 2015 NBFC ComplianceDashboard & other relevant matters. The link to the details of familiarisationprogrammes imparted to Independent Directors as required under Regulation 46 of SEBIListing Regulations 2015 has been provided elsewhere in this Annual Report.


An extract of Annual Return as on the financial year ended on March 31 2017 in FormNo. MGT-9 as required under Section 92(3) of the Companies Act 2013 read with Rule 12(1)of the Companies (Management and Administration) Rules 2014 is set out as an annexure tothe Directors' Report and forms part of this Annual Report.


All the related party transactions of your Company are entered on arm's length basisand are in compliance with the applicable provisions of the Companies Act 2013 and SEBIListing Regulations 2015. There are no materially significant transactions entered intoby your Company with Promoters Directors or Key Managerial Personnel (KMPs) which havepotential conflict with the interest of your Company at large. Your Company has notentered into any material related party transactions with any of its related partiesduring the FY 2016-17. Members may refer to the notes to the financial statements fordetails of related party transactions. Since all related party transactions entered intoby your Company were in the ordinary course of business and were on an arm's length basisForm AOC-2 is not applicable to your Company. The related party transactions are enteredinto based on considerations of various business exigencies such as synergy inoperations sectoral specialization and your Company's long-term strategy for sectoralinvestments optimization of market share profitability legal requirements liquidityand capital resources of subsidiaries and associates.

In terms of Regulation 23(2) of SEBI Listing Regulations 2015 your Company obtainedprior approval of the Audit Committee for entering into transactions with related parties.A statement of all related party transactions is presented before the Audit Committee on aquarterly basis specifying the nature value and terms and conditions of thetransactions. The statement is supported by the certificate from the Chief Financialofficer (CFO) of your Company.

Company Yisour committed to provide and promote a safe healthy and congenialatmosphere irrespective of gender caste creed or social class of the employees.

Dyoururing Companythe yearhas been adjudged as the winner of Corporate GovernanceAward 2017 by the Indian Chamber of Commerce.

A Related Party Policy has been devised by your Company for determining the materialityof transactions with related parties and dealings with them. The said Policy is availableon your Company's website and a link to the said Policy has been providedelsewhere in this Annual Report.


The prescribed particulars of remuneration of employees pursuant to Section 197(12)read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel)Rules 2014 are set out as annexures to the Directors' Report and form part of thisAnnual Report.


Your Company has no activity relating to Conservation of Energy and TechnologyAbsorption as stipulated in Rule 8(3) of Companies (Accounts) Rules 2014. However yourCompany uses information technology extensively in its operations and also continues itsendeavour to improve energy conservation and utilisation safety and environment.

During the year under review the total foreign exchange earnings and expenditure ofyour Company was NIL and Rs. 7921 Lacs respectively (previous year Rs. NIL and Rs.10513 Lacs respectively).



During the year under review your Company transferred a sum of Rs. 519320 (RupeesFive Lacs Nineteen Thousand Three Hundred and Twenty only) to the Investor Education &Protection Fund (IEPF) of the Central Government being the dividend amount pertaining tothe financial year ended on March 31 2009 which was due & payable and remainedunclaimed and unpaid for a period of 7 (seven) years as provided in Section 124(5) and125 of the Companies Act 2013. Cumulatively the dividend amount transferred to the saidFund upto March 31 2017 aggregates to Rs. 5270744.69 (Rupees Fifty Two Lacs SeventyThousand Seven Hundred Forty Four and Paisa Sixty Nine only). Pursuant to Section 124(6)and 125 of the Companies Act 2013 read with the Investor Education and Protection FundAuthority (Accounting Audit Transfer and Refund) Rules 2016 effective from September07 2016 and as further amended on February 28 2017 all shares in respect of whichdividend has not been paid or claimed for 7 (seven) consecutive years or more are requiredto be transferred by the Company in the name of Investor Education and Protection Fund(IEPF) along with a statement containing such details as may be prescribed.

Adhering to the various requirements set out in the Rules your Company has sentindividual communication to those shareholders whose shares are liable to be transferredto IEPF under the said Rules at their latest available address. The details of suchshareholders and shares due for transfer to IEPF have also been uploaded on the website ofyour Company

The shares transferred to IEPF including all benefits accruing on such shares if anycan be claimed back by the Shareholders from the IEPF Authority after following theprocedure prescribed under the Rules.


The Audit Committee has been constituted in line with the provisions of Section 177 ofthe Companies Act 2013 read with Regulation 18 of SEBI Listing Regulations 2015. TheBoard of Directors of your Company at its meeting held on August 06 2016 reconstitutedthe Audit Committee whereby Mr. Shyamalendu Chatterjee was appointed as Chairman of theAudit Committee in place of Mr. Salil K. Gupta who continued as a Member of theCommittee. The Audit Committee presently comprises of Mr. Salil Kumar Gupta Mr.Srinivasachari Rajagopal Mr. Shyamalendu Chatterjee Independent Directors and Mr. SunilKanoria Non-Executive Director. Mr. Shyamalendu Chatterjee Independent Director of yourCompany is the Chairman of the Audit Committee w.e.f. August 06 2016.

The Company Secretary of your Company acts as the Secretary to the Audit Committee. TheTerms of Reference of the Audit Committee has been provided in the Corporate GovernanceSection forming part of this Report.

4 (Four) meetings of the Audit Committee were held during the year 2016-17 on May 122016 August 06 2016 November 05 2016 and February 02 2017.

During the year under review there were no such instances wherein the Board had notaccepted the recommendation of the Audit Committee.


At the 30th Annual General Meeting (AGM) of your Company held on August 01 2015Haribhakti & Co. LLP Chartered Accountants having registration No. 103523W/W100048allotted by The Institute of Chartered Accountants of India (ICAI) were appointed asStatutory Auditors of your Company to hold office for a term of 5 (Five) years from theconclusion of 30th AGM (subject to ratification of such appointment by the Members atevery AGM) till the conclusion of the 35th AGM of your Company. Accordingly theappointment of Haribhakti & Co. LLP Chartered Accountants as Statutory Auditors ofyour Company is placed for ratification by the Members. Your Company has received aconfirmation from Haribhakti & Co. LLP Chartered Accountants to this effect thattheir appointment if ratified would be within the limits prescribed under Section 139 ofthe Companies Act 2013 and the rules framed thereunder and in accordance with Section 141of the Companies Act 2013. They have also confirmed that they hold a valid peer reviewcertificate as prescribed under Regulation 33(d) of the SEBI Listing Regulations 2015.The Audit Committee and the Board of Directors of your Company recommend ratification oftheir appointment from the conclusion of this AGM upto the conclusion of the 33rd AGM ofyour Company.

The Auditors' Report does not contain any qualification reservation or adverse remarkor disclaimer. Further the Statutory Auditors have not reported any incident of fraudduring the year under review to the Audit Committee of your Company.


Your Company appointed Dr. K. R. Chandratre Practising Company Secretary holdingmembership of The Institute of Company Secretaries of India (Membership No. FCS 1370;Certificate of Practice No. 5144) as the Secretarial Auditor of your Company for FY2016-17 to conduct the Secretarial Audit pursuant to Section 204 of the Companies Act2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules2014.

The Secretarial Audit Report confirms that your Company has complied inter alia withall the applicable provisions of the Companies Act 1956 (as applicable) Companies Act2013 and the Rules made thereunder Depositories Act 1996 and the Regulations andBye-laws framed thereunder SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 Secretarial Standards issued by The Institute of Company Secretaries ofIndia (Secretarial Standards with respect to Meetings of Board of Directors (SS-1) andGeneral Meetings (SS-2) Securities Contracts (Regulation) Act 1956 and all theRegulations and Guidelines of the Securities and Exchange Board of India (SEBI) asapplicable to your Company including the SEBI (Substantial Acquisition of Shares andTakeovers) Regulations 2011 the SEBI (Prohibition of Insider Trading) Regulations 2015the SEBI (Issue and Listing of Debt Securities) Regulations 2008 the SEBI (Registrars toan Issue and Share Transfer Agents) Regulations 1993 and the Reserve Bank of IndiaDirections Guidelines and Circulars applicable to Systemically Important Non-DepositAccepting or Holding NBFCs (NBFC – ND – SI). The Secretarial Audit Report forthe financial year ended March 31 2017 does not contain any qualification reservation oradverse remark or disclaimer and the same forms part of the Annual Report.


Your Company has always practised sound corporate governance and takes necessaryactions at appropriate times forenhancingandmeetingstakeholders' expectations whilecontinuing to comply with the mandatory provisions of Corporate Governance.

As required under Regulation 34(3) read with Schedule V of SEBI Listing Regulations2015 a separate section on Corporate Governance and a Certificate from the Auditors ofyour Company confirming compliance with the requirements of Corporate Governance formspart of the Annual Report.


The Board meets at regular intervals to discuss and decide on policy and strategy apartfrom other Board business. However in case of a special and urgent business need theBoard's approval is taken by passing resolutions through circulation as permitted by lawwhich are confirmed in the subsequent Board meeting.

4 (Four) Board meetings were held during the year 2016-17 on May 12 2016 August 062016 November 05 2016 and February 03 2017. The maximum time gap between any twoconsecutive meetings did not exceed 120 (One Hundred Twenty) days.


In accordance with the provisions of Section 152 of the Companies Act 2013 (Act) andthe relevant Rules and your Company's Articles of Association Mr. Sunil Kanoria (DIN00421564) retires by rotation at the ensuing AGM and being eligible offers himself forreappointment.

The brief resume / details relating to Director who is proposed to be re-appointed arefurnished in the Notice of the ensuing AGM. The Board of Directors of your Companyrecommends the re-appointment of the above Director.

Your Company has received declaration from each of the Independent Directors underSection 149(7) of the Companies Act 2013 that he/she meets the criteria of independencelaid down in Section 149(6) of the Companies Act 2013 and Regulation 16 of SEBI ListingRegulations 2015. All requisite declarations were placed before the Board.

Pursuant to Regulation 16(b) of SEBI Listing Regulations 2015 and Section 197 of theAct read with the Rules framed thereunder your Company has approved payment ofremuneration of Rs. 75 (Seventy Five) Lacs by way of commission on net profits computedunder Section 198 of the Act to Non-

Executive Directors and Independent Directors of your Company for the financial year2016-17. The payment is within the limit of 1 (One) per cent of the net profits of yourCompany for the financial year 2016-17 as approved by the Members of your Company at theAGM held on August 02 2014 and in accordance with the applicable provisions of SEBIListing Regulations 2015 and the Act read with the Rules framed thereunder.

Further Mr. Hemant Kanoria Chairman and Managing Director (CMD) and Mr. SunilKanoria Vice Chairman (Non-Executive Director) of your Company are also the CMD and ViceChairman respectively of Srei Equipment Finance Limited (SEFL) a wholly ownedsubsidiary of your Company and are in receipt of remuneration (including commission)during the Financial Year 2016-17 from SEFL as per the details given below:

Name of Director Remuneration (Rs. in Lacs)
Hemant Kanoria 523.26
Sunil Kanoria 515.85

Apart from the above Mr. Hemant Kanoria and Mr. Sunil Kanoria have not received anyremuneration or commission from any of your Company's subsidiaries or holding companyduring the Financial Year 2016-17.


There are no such orders passed by the regulators / courts / tribunals impacting thegoing concern status and your Company's operations in future.


In terms of provisions of Section 134(5) of the Companies Act 2013 (Act) your Boardof Directors to the best of their knowledge and ability confirm that:

(i) in the preparation of the annual accounts for the financial year ended March 312017 the applicable accounting standards have been followed along with proper explanationrelating to material departures; (ii) they have selected such accounting policies andapplied them consistently and made judgements and estimates that are reasonable andprudent so as to give a true and fair view of the state of affairs of your Company at theend of the financial year and of the profit of your Company for the year; (iii) they havetaken proper and sufficient care for the maintenance of adequate accounting records inaccordance with the provisions of this Act for safeguarding the assets of your Company andfor preventing and detecting fraud and other irregularities; (iv) they have prepared theannual accounts for the financial year ended March 31 2017 on a going concern basis; (v)they have laid down internal financial controls to be followed by your Company and thatsuch internal financial controls are adequate and are operating effectively;

(vi) they have devised proper systems to ensure compliance with the provisions of allapplicable laws to your Company and the systems are adequate and operating effectively.


Your Directors state that no disclosure or reporting is required in respect of thefollowing items as there were no transactions on these items during the year under review:Issue of equity shares with differential rights as to dividend voting orotherwise Issue of sweat equity shares Your Company does nothave any scheme of provision of money for the purchase of its own shares by employees orby trustees for the benefit of employees There was no revision in theFinancial Statements There was no change in the nature of business.


During the year your Company has been adjudged as the winner of Corporate GovernanceAward 2017 by the Indian Chamber of Commerce. The award considered your Company'ssustainability policies practices and performance in Corporate Governance. Further yourCompany was one amongst the seven pioneering companies in India to be awarded with theArogya World's Healthy Workplace Platinum Award 2016. The Prestigious award under the"Clinton Global Initiative" evaluates on Health & Safety of employeesAnnual employee Health Budget Employee Health Risk Assessment Innovative Health programPractice in the Organisation under both "Quantitative" &"Qualitative" scanner.


Your Directors would like to express their grateful appreciation for the excellentsupport and co-operation received from the Financial Institutions Banks Central

& State Government Authorities RBI

SEBI MCA Registrar of Companies Indian Stock Exchanges Depositories Credit RatingAgencies Customers Manufacturers Vendors Suppliers Business Associates MembersDebenture holders Debenture Trustees and other Stakeholders during the year under review.Your Directors also place on record their deep appreciation for the valuable contributionof the employees at all levels for the progress of your Company during the year and lookforward to their continued cooperation in realisation of the corporate goals in the yearsahead.

On behalf of the Board of Directors

Hemant Kanoria Chairman & Managing Director DIN 00193015

Kolkata May 09 2017