To the Members
The Board of Directors of Your Company ("Your Company" or "IFCI")presents the Twenty Seventh Annual Report of IFCI Ltd. together with the auditedfinancial statements for the year ended March 31 2020.
FINANCIAL SUMMARY AND STATE OF COMPANY'S AFFAIRS
The summarized financial performance of Your Company during the year and the previousyear are as under:
| || |
(Rs. in crore)
| || |
| ||2019-20 ||2018-19 ||2019-20 ||2018-19 |
|Total Income ||2264 ||2466 ||2906 ||3134 |
|Less: || || || || |
|Total Expenses before Impairment Allowance Depreciation & Amortisation ||1952 ||2040 ||2442 ||2618 |
|Impairment on financial instruments ||422 ||1085 ||472 ||1146 |
|Depreciation and amortisation ||31 ||33 ||81 ||63 |
|Total Expenses ||2405 ||3158 ||2996 ||3828 |
|Exceptional Items ||- ||- ||4 ||2 |
|Profit/(Loss) before tax ||(141) ||(691) ||(94) ||(696) |
|Tax expense ||137 ||(247) ||129 ||220 |
|Profit/(Loss) before share in profit of associates ||(278) ||444 ||(223) ||(476) |
|Total Expenditure Share in profit of associates ||- ||- ||- ||- |
|Profit/(Loss) for the year ||(278) ||(444) ||(223) ||(476) |
|Other comprehensive income (net of tax) ||(40) ||(39) ||(116) ||(26) |
|Total Comprehensive Income ||(318) ||(483) ||(339) ||(502) |
|Net profit/(Loss) attributable to - || || || || |
|Owners of the Company ||N.A. ||N.A. ||(230) ||(489) |
|Non-controlling interest ||N.A. ||N.A. ||7.23 ||12.68 |
|Total Comprehensive Income attributable to - || || || || |
|Owners of the Company ||N.A. ||N.A. ||(311) ||(521) |
|Non-controlling interest ||N.A. ||N.A. ||(28.56) ||19.04 |
|Earnings per share || || || || |
|Basic earnings per share ||(1.64) ||(2.62) ||(1.36) ||(2.88) |
|Diluted earnings per share ||(1.64) ||(2.62) ||(1.36) ||(2.88) |
The above numbers are extracted from the financial statements prepared in accordancewith the Indian Accounting Standards (Ind AS) in compliance with the Companies (Account)Rules 2014 and accounting standards notified under Section 133 of the Companies Act2013 read with the Companies (Indian Accounting Standards) Rules 2015 as amended.
Any application guidance/clarifications/directions issued by Government of India RBIor by any other Regulator will be implemented by Your Company as and when they are issued/applicable.
During the year there was reduction in operational income on account of decline inloan assets caused by prepayment of certain loans and increase in stage-3 assets andabsence of net gains on fair value changes in current Financial Year.
In view of the loss incurred during the financial year 2019-20 no dividend has beenrecommended on equity shares. Also as per the provisions of SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 the Company has formulated a DividendDistribution Policy which is available on the website of Your Company at www.ifciltd.com.
As the overall economic environment and especially the credit offtake was subduedduring FY 2019-20 IFCI's performance was also affected in line with the overall financialsector. Despite decline in operational income and fair value loss Your Company could earnprofit of Rs.281.05 crore before impairment on financial instruments though suffered atotal comprehensive loss of Rs.317.53 crore during the year under report mainly onaccount of large amount of impairment made in respect of Stage-3 assets especially thecases admitted in National Company Law Tribunal (NCLT). The substantial amount ofprovisions enhanced the provision coverage ratio to over 49.05% however the capitaladequacy ratio improved in current FY to 13.54% with Tier-I capital at 8.20%. Variousstrategic initiatives including measures for recovery were initiated during the year inorder to maximize recovery under Insolvency and Bankruptcy Code (IBC) route and othermodes expedite divestment of non-core assets and strengthen the appraisal and riskmanagement processes and controls which are expected to improve the asset portfolioquality as well as cash flow of Your Company and make the balance sheet of Your Companyhealthier.
SANCTIONS AND DISBURSEMENTS
While keeping the macroeconomic scenario during FY 2019-20 in view Your Companyadopted a cautious approach in its business also to conserve enough liquidity fewerfresh sanctions were made to the tune of Rs.158 crore vis-a-vis Rs.3760 crore FY 2018-19.Further disbursements were also curbed and partially disbursed for project loans. Totaldisbursements in FY 2019-20 were Rs.742 crore as compared to Rs.3238 crore in FY 2018-19.
The graphs below indicate loan-product-wise sanction and disbursements in FY 2019-20:
During the FY 2019-20 Your Company focused on recoveries from Non-Performing Accounts(NPA) by employing various proactive recovery measures including Restructuring One-Timesettlements legal actions under various judicial forums resolution under IBC in NCLT andregular follow up for recovery. Aggregate amount of Rs.885 crore was recovered from NPAs.The same primarily comprised of cases resolved under IBC in NCLT - Rs.217 crore legalactions - Rs.136 crore OTS/Restructuring - Rs.206 crore equity buyout - Rs.38 crorerecovery from security receipts - Rs.46 crore & follow up for payment of dues &other modes - Rs.242 crore. Timely follow up resulted in resolution of one of the oldestexposures of your company culminating in recovery of Rs.138 crore. Another major recoverywas by completion of resolution under NCLT of a major textile company resulting inrecovery of Rs.110 crore. Your Company is committed to continue its aggressive approachfor recovery from NPAs and other stressed assets through various recovery modes andstrategies.
TREASURY INVESTMENT AND FOREX OPERATIONS
The Financial Year 2019-20 has been a tough year for the world markets. The globaleconomy remained subdued due to the overhang of global trade protectionism threat oftrade wars volatility in crude prices and softening bond yields. Growth expectationstapered downward globally with threat of inversion in US treasury yield curve andweakening of domestic demand in emerging economies. The uncertainty heightened postJanuary-2020 owing to the catastrophe caused by the vast spread of Covid-19 pandemicacross the world leading to an unprecedented business and economic disruption. The worldeconomic growth forecast as also that of the major economies including India has slippedin the negative for the Financial Year 2020-21. Crude oil prices remained volatilereflecting evolving demand-supply conditions underpinned by the production stance of theOPEC plus rising shale output weakening global demand and geopolitical concerns. Incurrency markets the rupee was weak in line with other emerging market currencies. Rupeeshowed high volatility as it touched a high of Rs.76.22 in March-2020 led by massive fundoutflows followed by global risk-off trade which caused weakness in all emerging marketcurrencies against the dollar. The strength in USD was also supported by highlyaccommodative Fed policy and commitment to further easing based on further adversedevelopments due to Covid-19.
The global and domestic financial markets were driven mainly by monetary policyexpectations and geo-political developments. On domestic front core industries' growthremained sluggish and credit flow to MSME sector remained tepid. Services sector whichstarted the year on a stable footing also witnessed moderation towards Q2 FY 2020. Interms of policy response RBI continued with the downward rate trajectory on account ofslowdown in economic activity in major Emerging Market Economies (EMEs) mounting tradetensions and tightening of financial conditions. Following the first 25 bps cut by RBI inFebruary-2019 the policy repo rate was slashed by another 185 bps during the year from6.25% in April-2019 to 4.40%; with change in stance from neutral to accommodative asthreats of global recession became apparent.
In rupee operation the objective has been to manage the surplus fund effectively withminimum risk and deploying it to get optimum return with availability of funds forbusiness requirement. The underlying investment principle is safety liquidity and riskcontainment and Your Company invested in Treasury Bills Government SecuritiesCertificate of Deposit Commercial Papers Inter-Corporate Deposit/ Short Term Deposit(STD) Fixed Deposits/Bonds and Mutual Fund Schemes. Average deployment during the yearwas Rs.546.97 crore against Rs.724.15 crore in FY 2018-19 and annualized return on funddeployed was 6.42%. The return during FY 2019-20 from Treasury operations was lower thanprevious year due to deployment of over 88% funds in relatively more safe liquid mutualfunds for judicious asset liability management. The objective was to ensure safety andliquidity and thus there was a conscious call in going for market related safer yield. Thereturn earned during the year was more than the return being offered by treasury bills.During the year under report Your Company registered an interest income of Rs.84.45 crorefrom investments as against Rs.100.45 crore during the previous year. In view of weaksentiments prevailing in market due to uncertainties on account of trade war weakeningglobal growth and impact of Covid-19 in later part of the year Your Company continuedwith the prudent strategy of selective disinvestment of slow moving/illiquid stocks andbooking profits from investments in blue chip stocks. Net investment portfolio of YourCompany as on March 31 2020 stood at Rs.3235 crore as against Rs.4873 crore at the endof previous FY. The Foreign Currency (FC) operations were confined to servicing of FCliabilities and containing the exchange risk arising due to mismatch in the outstandingamount of FC assets and liabilities. The mismatches were covered through forwardcontracts currency futures principal only swap and options. The net mismatch positionwas restricted to below the limits approved by Board and RBI by maintaining almost squareposition.
Resource Mobilisation and Borrowing Profile:
Resource mobilisation at effective and competitive cost has always been amongst the toppriorities and focus areas of IFCI. Various avenues for channelling resources both forshort term and long term requirements are constantly explored. Consistent efforts arebeing made by Your Company to cater funds requirement at the lowest possible cost formaintaining the business growth and enhancing the quality portfolio. IFCI's currentborrowing profile is a mix of both term loans and bonds. The total borrowings of YourCompany were Rs.12323.41 crore as on March 31 2020 comprising Rupee denominatedborrowings of Rs.11898.56 crore and Foreign Currency borrowings (Rupee equivalent) ofRs.424.84 crore. The broad instrument wise break-up of borrowing outstanding as at March31 2020 is indicated below:
Your Company is committed to maintaining a high standard of Investor services anddevotes considerable efforts to identify and follow best practices for timely resolutionof investor complaints. Your Company believes that sound and effective corporate practicesare fundamental to the smooth effective and transparent investor relations and enhanceits ability to attract investment protect the rights of stakeholders and stakeholder'svalue.
Your Company has taken various investor friendly initiatives like encouragingdematerialization of securities and electronic payment of interest and redemption proceedsetc.
DEPARTMENTS AT IFCI
During the year under report appraisal of the credit proposals and monitoring ofexisting standard accounts was carried out by Credit Operations Department. The Departmentmade efforts for retaining the accounts in standard category by minimizing slippages. TheDepartment was also actively engaged in formulation of policies refinement of processesand improvement in practices of credit appraisal and effective monitoring of the standardassets of IFCI.
(B) MANAGEMENT of NoN-PERFoRMING ASSETS (NPA MANAGEMENT)
IFCI has been focusing on Resolution of stressed assets/NPAs by adopting multi-prongedstrategies i.e. Resolution under Insolvency & Bankruptcy Code/NCLT SARFAESI DRTapart from Restructuring One Time Settlement Assignment etc. under RBI guidelines. Manyof the resolution mechanisms initiated during the year are in advanced stages ofresolution and are expected to fructify during the next financial year.
With the introduction of IBC it was expected that a time bound resolution of impairedassets would go a long way in unclogging the credit pipeline thus improving the allocativeefficiency in the economy. However despite successful resolution of few large accountsunder IBC mechanism in initial period at present proceedings under IBC are facing delayon account of litigations withdrawal by selected resolution applicants appeals filed inNCLTs and Appellate Tribunal etc.
Moreover the recent impact of Covid-19 has slowed down the judicial process. Furtherfresh reference to NCLT has been put on hold which will delay the resolution process andhas burdened the judicial system with further backlog of pending cases. However notifyingthe provisions of insolvency against personal guarantors under IBC is a positive steptaken by the Government for proceeding against the guarantors of stressed loan accounts.IFCI is proactively taking steps to initiate personal insolvency to maximize the recoveryfrom NPAs.
As on March 31 2020 the Gross advances were Rs.16644 crore with provision coverageratio of 49.05% and Net stage-3 asset ratio of 58.82% as per Ind AS vis-a-vis GrossAdvances Provision Coverage Ratio and Net Stage-3 asset ratio of Rs.21412 crore 60.45%and 38.93% respectively as on March 31 2019. The provisions were made on portfolio levelbased on Ind AS guidelines.
Though the gross stage-3 asset ratio increased from 60.70% as on March 31 2019 to71.41% as on March 31 2020 as per Ind AS in absolute terms the Gross stage-3 assetsdecreased from Rs.12997 crore as on March 31 2019 to Rs.11886 crore as on March 312020. The increase in gross stage 3 asset ratio was due to further accretion in NPAsmainly due to slippages in IL&FS & ZEE group entities along with reduction inoverall credit portfolio from Rs.21412 crore as on March 31 2019 to Rs.16644 crore ason March 31 2020. The reduction in credit portfolio was primarily on account ofwrite-off prepayments regular repayments and pro-active exit of IFCI in certain stressedaccounts.
Despite recoveries of Rs.877 crore from resolution of NPAs redemption of securityreceipts and sale of equity during FY 2019-20 the NPAs have remained at elevated leveldue to the NBFC crisis inadequate pickup in the global economy delay in execution ofinfrastructure projects and continued stress in various sectors viz. roads coal steelpower etc. and slippages in ILFS & Zee group entities.
Your Company remains committed to expedite resolution of stressed and non-performingassets and maximize recoveries by making all out efforts through various strategies viz.resolution under NCLT one time settlements restructuring sale of assets under SARFAESIassignment of loans and other legal remedies available in the system.
(C) SUGAR DEVELOPMENT FUND
Your Company has been acting as the "Nodal Agency" of the Government of Indiasince inception of the Sugar Development Fund (SDF) for the purpose of disbursementfollow up monitoring of implementation of project and recovery of SDF loans sanctionedfor modernisation cum expansion of sugar factories setting up of bagasse basedcogeneration power projects anhydrous alcohol or ethanol projects zero-liquid discharge(ZLD) distillery projects and cane development scheme. Cumulative sanctions anddisbursements under SDF up to March 31 2020 stood at Rs.6956 crore and Rs.5794 crorerespectively. The Agency Commission booked in FY 2019-20 is Rs.11.00 crore (excludingapplicable taxes).
(D) CREDIT ENHANCEMENT GUARANTEE SCHEME FOR SCHEDULED CASTES (CEGSSC)
The Department of Social Justice & Empowerment under the aegis of Ministry ofSocial Justice & Empowerment Government of India has sponsored the "CreditEnhancement Guarantee Scheme for Scheduled Castes" under its social sectorinitiatives. The objective of the Scheme is to promote entrepreneurship amongst theScheduled Castes by providing Credit Enhancement Guarantee to Member Lending Institutions(MLIs) who shall be providing financial assistance to these entrepreneurs. The Governmentof India has initially allocated a corpus of Rs.200 crore for the Scheme and contributingannually Rs.0.01 crore and Government may further contribute depending upon utilization offunds. Out of the fund the guarantee cover is extended to the Member LendingInstitutions. IFCI has been designated as the Nodal Agency under the Scheme to issue theguarantee cover in favour of Member Lending Institutions who shall be encouraged tofinance Scheduled Caste entrepreneurs to boost entrepreneurship amongst the marginalstrata of the Society. Since the Scheme has taken off from the FY 2015-16 upto the FY2019-20 cumulatively loans aggregating to Rs.5 7.16 crore have been sanctioned by some ofthe Member Lending Institutions against which the cumulative total guarantee cover ofRs.37.20 crore has been provided by IFCI. Your Company is making all out efforts topromote this Scheme through wide publicity by conducting seminars conferences andawareness programmes in co-ordination with various Chapters of Dalit Chambers of Commerce(DICCI) and attending State Level Bankers Committee (SLBC) meetings. The corpus of thefund has increased to Rs.274 crore as on March 31 2020 including interest.
IFCI has a web portal of the above mentioned scheme (www. ifcicegssc.in) and the linkis also available on our website i.e. www.ifciltd.com. Further promotion of the CEGSSCScheme is made through social media LinkedIn Facebook Twitter etc.
IFCI has been appointed as a Rs.Verification Agency' by Ministry of Electronics &Information Technology (MeitY) during FY 2017-18 for a period of 3 years extendable fora further period of 3 years (fee based on incentives disbursed). Government of Indiacommitted 20% to 25% capital subsidy on eligible capex of approved projects out of thefund amount Rs. 10000/- crore allocated towards the scheme. During the year FY 2019-20IFCI has recommended disbursements of approximately Rs.602 crore for around 34 projects(Cumulative Rs.1089 crore for 112 projects) out of which Rs.428 crore (Cumulative Rs.913crore) was disbursed till March 31 2020. This non-fund based activity not only fetchesfee income but also enhances the brand image of IFCI
Your Company has a team of qualified and experienced legal professionals who carry outthe legal functions for facilitation of sanctions and disbursement and has ensuredcompliance with statutory requirements during the year. Further Your Company initiatedprompt legal measures for recovery against the borrowers and was able to defendsuccessfully before various judicial forums in India in the suits filed against it duringthe FY 2019-20. During the year under report Your Company has recovered Rs.220.36 crorethrough NCLT and other judicial fora.
(G) COMPANY SECRETARY AND COMPLIANCE
Company Secretary and Compliance Department is responsible for ensuring the corporategovernance standards applicable on the Company. Besides ensuring required compliancesunder Companies Act 2013 and applicable SEBI Regulations the Department also monitorsthe compliances under other regulatory compliances applicable to Your Company being anNBFC. Further the Debenture Trustee related activities are also handled and managed bythe Department. The Company Secretary and Compliance Department is also responsible fortimely redressal and disposal of the requests and complaints of equity shareholders ofYour Company.
(H) HUMAN RESOURCES AND NOMINEE DIRECTOR CELL
Development of its Human Resources pool is central to IFCI's HR Policies and practices.Employees are the most important factors for sustainable performance of the organization.Hence your Company strives to create an organizational culture which can develop andharness the potential of its employees.
During the year Your Company has brought in more structured approach to implementvarious training & development interventions for development of our employees. Specialfocus was laid on identification of thrust areas for training & development.Accordingly the employees were nominated to training & development programmesorganized by leading institutes/agencies. Employees were also nominated to participate invarious conferences webinars discussion forums organized by industry so as to providethem platforms for keeping abreast with latest developments and also explore businessopportunities. Your Company covered around 77% of its employees in varioustrainings/conferences. In all there were 654 nominations in the inhousetraining/workshops and external trainings covering topics of functional and behavioralnature. Further Your Company has also exposed its employees to various challengingassignments for their development.
Further optimum utilisation of Human Resources pool has also been a major focus area.Based on organisational priorities and in order to streamline various processes within theorganization to reduce redundancies rationalization of allocation of work and resourceswas done through reorganization.
Your Company continues to focus on employee health and wellness new hospital has beenempanelled for employees regular health check-up. Health talks were also organized tobring awareness among employees.
Your Company also shows promptness in resolving grievances of employees through awell-established system. Your Company also settled various issues and court cases whichwere pending for a long time. Your company adheres to the reservation policy of theGovernment of India in the categories belonging to Scheduled Castes/Scheduled Tribes/OtherBackward Classes/Economically Weaker Section/Person with Disabilities. Your company alsogives due representation to the employees belonging to SC ST and OBC groups inrecruitment training appraisal and promotion of persons. Your company is following thereservation roster prescribed by the Government of India. Out of the total manpowerstrength 26 belonged to other Backward Classes 19 belonged to Scheduled Castes and 1belonged to Scheduled Tribes.
Further in line with long and well established practice of Institutions and Banks tomonitor the performance of the assisted companies Nominee Directors on the Boards ofassisted concerns are appointed by your Company as per requirements. The fundamentalobjective of making such arrangement is to assist & establish proficientadministration and to encourage successful working of the Board of assisted concern.
Your company appoints Nominee Directors on the Boards of assisted concerns to ensurethat proper corporate policies strategies & procedures are in place to improveproductive efficiency and long-term growth. The feedback received from Nominee Directorsacts as a useful tool for credit monitoring and further decision making. Such monitoringhelps in safeguarding the interests of shareholders and financial institutions.
(I) INFORMATION TECHNOLOGY
Information technology (IT) has transformed the conduct of businesses in every sectorof the economy. IT enables sophisticated product development better marketinfrastructure implementation of reliable techniques for control of risks and helps theintermediaries to reach geographical distant and diversified markets. IT has emerged as animportant medium for delivery of financial products and services.
During the FY 2019-20 to meet the current and emerging needs the existing softwareapplications were upgraded with enhanced/added features. New Modules were developed inhouse for different functions in areas of MSIPS Credit Finance and Treasury by YourCompany for better and effective seamless control over the processes. The ITInfrastructure was upgraded and IT systems were audited by external agencies for effectivecontrol.
Your Company is maintaining proper Data Backup and has setup Disaster Recovery Site toprotect data and business information systems. Video Conferencing Facility setup was alsoenhanced to provide streamlined video communication and live content sharing. IT systemsenabled employees during COVID-19 to work from home and regular meetings were alsoconducted using collaboration tools.
(J) RIGHT TO INFORMATION
IFCI has implemented the Right to Information Act 2005 from 2013 onwards following theapplicability of the RTI Act 2005 to IFCI and has been providing information under RTIAct to the citizens ensuring transparency and fairness in its business activities. IFCI incompliance with the provisions of Section 4 of the Right to Information Act 2005 has madenecessary disclosures which are available on the website of Your Company atwww.ifciltd.com.
IFCI has designated a Central Public Information Officer (CPIO) and First AppellateAuthority (FAA) at its Head Office New Delhi and also designated the Regional OfficeHeads at its Regional Offices as Central Assistant Public Information Officers (CAPIOs) tofacilitate dissemination of information on PAN-India basis. IFCI had also designated aTransparency Officer in pursuance to the Central Information Commission's directive datedNovember 15 2010. Further the Right to Information Act 2005 (RTI Act) has also beenuploaded on the website of the Company for first hand information of the provisions of theRTI Act. IFCI received a total number of 117 RTI Applications and 10 RTI Appeals inFY2019-20 which were dealt with as per the provisions of the RTI Act 2005.
(K) PROMOTION OF RAJBHASHA
Your Company takes pride for complying Official Language Act of the Government forwhich Official Language Implementation Committees (OLICs) have been set up in the HeadOffice as well as in the Regional Offices. Quarterly meetings of OLIC are being regularlyheld to review the progress of the use of Hindi. All Computers available within theCompany have Unicode facility and its website is also bilingual for the benefit ofshareholders and general public. During the year Hindi competitions as well as Hindiworkshops were organized by Your Company for promotion of Rajbhasha within IFCI. Furthermany officers from Your Company participated in various competitions organized by NagarRajbhasha Karyanvyan Samiti and some of them emerged as winners in these competitions.
PERFORMANCE OF SUBSIDIARIES AND ASSOCIATES PROMOTED
Stock Holding corporation of India Ltd. (SHcIL)
SHCIL is one of the largest Depository Participants besides being the country'slargest premier Custodian in terms of assets under custody provides post trading andcustodial services to institutional investors mutual funds banks insurance companiesetc. It acts as a Central Record Keeping Agency (CRA) for collection of stamp duty in 22States and Union Territories (UTs) on pan India basis e-court fee in 12 State/UTs ande-registration in 5 States/UTs. SHCIL is one of the largest Professional Clearing Memberof the country. It distributes Fixed Deposits Bonds & NCDs of reputed Institutes& Corporates Mutual Fund Schemes Initial Public Offers (IPO's) and National PensionSystem (NPS) etc. It is a corporate agent registered with IRDA for distribution ofinsurance products.
StockHolding has three wholly owned subsidiaries viz.
(j) SHCIL Services Ltd. (SSL) the broking arm of StockHolding is providing stockbroking services to retail and institutional clients across the country
> SSL offers services in Cash & F & O segment of BSE & NSE.
(jj) StockHolding Document Management Services Limited (Stock
> StockHolding DMS is a Microsoft Gold certified partner for all its products andservices and is ISO 9001:2008 and CMMI Level-3 certified company. StockHolding DMSprovides End to End Document Management Solutions.
(jjj) StockHolding Securities IFSC Limited. Stockholding Securities IFSC was set up foroperations in the International Financial Services Centre at Gujarat InternationalFinancial Tec City (GIFT) in Gujarat.
IFCI INFRASTRUCTURE DEVELOPMENT LTD. (IIDL)
IIDL a wholly owned subsidiary of Your Company was set up to venture into the realestate and infrastructure sector as an institutional player. Since inception it hasdeveloped projects all over India. Serviced Apartments known as "Fraser Suites NewDelhi" is being run by IIDL in collaboration with Frasers Hospitality Pte Ltd.Singapore. The project has Gold Standard 9 stories and 92 luxurious Serviced Apartmentscomprising studios one bedroom & two bedroom suites with an ideal livingenvironment thus making it one of the most sought-luxury apartments.
On the residential front IIDL has successfully developed two projects viz. 21stMilestones Residency Ghaziabad Uttar Pradesh and IIDL Aerie at Panampilly Nagar KochiKerala.
IIDL was awarded the prestigious Financial City project spread over an area of 50 acresnear Bengaluru International Airport Karnataka for development. IIDL has created a highquality infrastructure at site and sub-leased the plots to Banks/Institutions mostlyPublic Sector Banks. Site development work was completed by IIDL within given time frame.However construction on individual plots allotted to subleases in yet to be completed.
Besides IIDL has managed various prestigious assignments as Project ManagementConsultants.
IFCI Venture Capital Funds Ltd. (IVCF)
IVCF was set-up with the objective to broaden entrepreneurship base in India byproviding risk capital mainly to first generation entrepreneurs under "Risk CapitalScheme".
IFCI Venture is presently managing 2 Schemes viz. Venture Capital Fund for ScheduledCastes (VCF-SC) and Venture Capital Fund for Backward Classes (VCF-BC) for Ministry ofSocial Justice and Empowerment (MoSJE) under a Fund/Trust viz. Venture Capital Fund ForScheduled Castes and Backward Classes. The Fund is registered as Alternate Investment Fund(AIF) Category - II with SEBI. VCF- SC is a first of its kind Venture Capital Fund inIndia dedicated to promote entrepreneurship among the Scheduled Castes by providingconcessional finance to them. Similarly VCF-BC was setup by MoSJE for providingconcessional finance to Backward Class entrepreneurs. During the year Government hascontributed an amount of Rs.160 crore for VCF-SC Fund and Rs.90 crore for VCF-BC Fund.IFCI Venture derives income from the fund management activities by way of management feeon the outstanding corpus of funds and by way of profit on investments as IFCI Venture isalso an investor in VCF-BC with investment amount of Rs.5 crore.
IFCI Venture has successfully closed the 3 SEBI registered VCF Funds viz. IndiaAutomotive Component Manufacturers Private Equity Fund-1-Domestic (IACM-I-D) Green IndiaVenture Fund (GIVF) and India Enterprise Development Fund (IEDF) in FY2019-20.
With a view to tap further opportunities in PE/ VC space IFCI Venture is in theprocess of raising the next round of funds viz. Small & Medium Enterprises AdvantageFund (SMEAF) and Green India Venture Fund II (GIVF-II) Further IFCI Venture has alsoalready submitted concept notes to Ministry of Tribal Affairs and Ministry of MinorityAffairs for the setting up Venture Capital Fund for Scheduled Tribe and Venture CapitalFund for Minorities. Another Fund on Affordable Housing is also likely to be launchedshortly.
Being an NBFC IFCI Venture also extends corporate loans to companies in the range ofRs.5 crore to Rs.25 crore by raising funds through bank loans and bonds with security ofmortgage of property and/or shares of listed companies.
IFCI Financial Services Ltd. (IFIN)
IFIN was set up by your Company to provide a wide range of financial products andservices to institutional and retail clients. IFIN is primarily involved in the businessof Stock Broking Currency Trading Depository Participant Services Merchant andInvestment Banking Insurance (Corporate agent for both life and General Insurance)Mutual Fund Products Distribution and Corporate Advisory Services. IFIN is a registeredmember of SEBI National Stock Exchange of India Limited (NSE) BSE Limited (BSE)Metropolitan Stock Exchange of India Limited (MCX-SX) National Commodity and DerivativesExchange Limited (NCDEX) NSDL and CDSL. IFIN has three wholly-owned subsidiaries namelyIFIN Securities Finance Ltd IFIN Commodities Ltd and IFIN Credit Ltd.
IFCI Factors Ltd. (IFL)
IFL is a one of the key players in the country providing factoring services/receivable finance catering largely to the MSME segment. IFL also offers Corporate Loanfor a tenor of upto five years. The FY 2019-20 has been a difficult year for IFLwitnessing a reduction in income due to dip in FIU and the expected recoveries notmaterializing especially in Q4. However IFL is confident and hopeful of salvaging thesituation through a prudent mix of new customer acquisitions avoiding any furtherslippages and getting the pending recoveries culminated in the current FY.
MPCON Ltd. (MPCON)
MPCON is a professionally managed Technical Consultancy Organization promoted by yourCompany. It is a premier consulting organization having base in Central India providingquality consulting services. The Company consolidated its project consultancy business andalso enhanced its presence in the training and capacity building spheres. It has baggedskilling projects in 11 states of the country including Madhya Pradesh and Chhattisgarhfrom various Central & State Government departments/Corporations. Having status asNSDC partner it is working with National Safai Karamcharis Finance & DevelopmentCorporation (A Government of India Undertaking under the Ministry of Social Justice andEmpowerment) National Handicapped Finance and Development Corporation (Department ofEmpowerment of Persons with Disabilities Ministry of Social Justice and EmpowermentGovernment of India) Department of Science & Technology Ministry of Science &Technology Government of India Development Commissioner (Handicraft) Ministry ofTextiles Government of India etc. for Skilling Division. Apart from Skill DevelopmentMPCON has been engaged in various IT & ITES projects such as document managementdigital evaluation for education institutes Financial Inclusion activities for Banks andManpower Outsourcing Carbon Credit Project Consultancy etc. for various Corporate andGovernment Departments.
ASSOCIATES KITCO LTD. (KITCO)
KITCO is one of the premier Engineering Management & Project consultancy firm inIndia. Some of the other fields where KITCO is a prominent player are Energy StudiesSkill Certification and Placement Services. The Company is also a dedicated provider ofprofessional technical consultancy services to Small and Medium Enterprise (SME) sector.At present KITCO is having following divisions viz. aviation Infrastructure and UrbanPlanning Tourism processing engineering etc.
During the financial year 2019-20 KITCO continued to maintain its technological focusand enhanced technical strength sustaining its position as the leading engineeringconsultancy company in Kerala. It has bagged orders worth Rs.7.1 crore through competitivebidding. These works will continue to contribute to the revenue in the coming year aswell.
During the year KITCO has been empaneled by various leading institutions likeKarnataka Tourism Uttrakhand Tourism Development Board Maharashtra Rail InfrastructureDevelopment Corporation National Highway Infrastructure all of which shall help KITCO tospread its wings across the country.
Further Government of Kerala has entrusted with KITCO the Project ManagementConsultancy Services of two Taluk hospitals up-gradation of facilities of Arts andScience Colleges Engineering Colleges Polytechnic Colleges and Universities in Kerala.Other milestone projects acquired by KITCO include the PMC for developing Shirdi Airportin Maharashtra and Star Hotel Project and International Cargo Complex project for CochinInternational Airport Ltd. While continuing the PMC services for Mangalore Airportpreliminary activities of the Imphal Airport and Shirdi Airport projects are fastprogressing.
IFci Sycamore capital Advisors Pvt. Ltd. (IScAPL)
The Company has 50% interest in one joint venture viz. IFCI Sycamore Capital AdvisorsPvt Ltd (ISCAPL) incorporated in India in November 2011 which is under voluntaryliquidation and Official liquidator has been appointed. The investment of IFCI Ltd inISCAPL as on March 31 2015 was at Rs. 0.01 crore Class A Equity Shares and Rs.2.64 croreFully Convertible Debentures. The liquidator of ISCAPL repaid the amount of Rs.2.64 Crorestowards Fully Convertible Debentures in the year 2016-17. The Company has made adequateprovision towards equity investment considering the probability and quantum of share indistribution upon liquidation of the Company.
Management Development Institute (MDI)
MDI Gurgaon one of the leading Business Schools in India is consistently rankedamongst the top B-schools across the country by reputed agencies and publications. Theinstitute has been a trendsetter in the field of management education consulting high-quality research and executive development. MDI has the distinction of being the firstinternationally accredited Indian Business School having received internationalaccreditation by Association of MBAs (AMBA) London in 2006.
The entire academic community is research-active and carries out research work ofconsistently higher standards that can contribute to the national goal of innovationsocio-economic development and environmental sustainability. The research contributions offaculty members are published in national and international journals of repute. Training& Development of managers is one of the major activities at MDI Gurgaon. Around104900 managers have been trained over 46 years of its existence. The Institute pridesitself for the personalized training modules that it offers to organizations of differentkinds at different levels. More than 100 specially designed Executive Developmentprogrammes are conducted for the top- senior- and middle-level managers of differentorganizations every year.
MDI's offerings are continuously updated in keeping with the ever- changing globalbusiness environment while setting high standards for all our stakeholders. Thewell-equipped infrastructure creates a conducive environment for the studies.
This year the placement was marked by not only a 100% placement but a substantialincrease in the average compensation as well. The highest salary offered was Rs.40.50 lakhper annum while the average salary recorded during this season was Rs.22.05 lakh perannum.
Institute of Leadership Development (ILD)
IFCI sponsored ILD as a society registered under the Rajasthan Societies RegistrationAct 1958 to provide workers with opportunities and external facilities of training anddevelopment.
The ILD campus has been provided with good infrastructural/ technical facilitiesbesides developing its picturesque settings amidst lush green Aravali ranges therebymaking it a perfect integrated centre for teaching learning training & research inall areas across all sectors of leadership development and organisingconferences/Seminars/ Conclaves of national and international repute. The Institute isworking on "no profit no loss basis".
Rashtriya Gramm Vikas Nidhi (RGVN)
RGVN is an autonomous non-profit organisation registered under the Society'sRegistration Act XXI of 1860. IFCI Ltd. being the founding promoter of RGVN provided theinitial set-up support and with time IDBI National Bank for Agriculture and RuralDevelopment (NABARD) and Tata Social Welfare Trust (TSWT) also became its promoters. RGVNis a national level multi-state development and support organization working in the statesof Assam Arunachal Pradesh Meghalaya Mizoram Nagaland Manipur Tripura SikkimOdisha Jharkhand and Bihar poverty stricken pockets of Eastern Uttar Pradesh coastalAndhra Pradesh and Chhattisgarh. RGVN's core strength comes from its network of NGOs andSelf Help Groups which are capable of handling large development projects. One of itsprogrammes has been hived-off into an NBFC called RGVN (North East) Microfinance Ltd.which has also been given small finance bank license by the RBI and is named NortheastSmall Finance Bank. Over the years RGVN has been able to groom and support smallCommunity - based Organizations involved in a variety of livelihood enhancementprogrammes. However over the last few years RGVN has effected a significant policy shiftin its operations by implementing projects directly with funding support from Central andState Governments Banks Financial Institutions and Corporate Houses under their CSRProgrammes. International Donor Agencies have also contributed to its funding for povertyreduction projects.
IFQ Social Foundation (ISF)
IFCI has always strived to conduct its business holistically and responsibly. At IFCIalong with economic performance community and social stewardship have been key factorsfor its holistic business growth. IFCI has been an early adopter of Corporate SocialResponsibility (CSR) initiatives and has been involved in socially relevant activitiesever since its inception in 1948. Today it continues to work towards social and communitydevelopment and areas needing focus and attention through the ISF a registered Trustestablished in 2014. ISF is functioning as an arm for CSR activities of IFCI and IFCIGroup. ISF is guided by its values viz. Inclusiveness Integrity Commitment and Passionwith the overall vision "To be one of India's premier CSR Institutions and strive tomake sustainable social impact with inclusiveness". Its major focus has been in areasof Education Skill development Healthcare and Sanitation Poverty alleviation Womenempowerment and social welfare of women and girl child.
IFCI and ISF through its CSR projects have covered almost 23 states and UnionTerritories in India. The trust is registered for exemptions u/s 12A & 80G of theIncome Tax Act.
During the year ISF had raised CSR funds from Indian Railway Finance Corporation(IRFC) amounting to Rs.2.00 crore for installation of 200 sanitary napkin vending machinesand incinerators in Schools/ Colleges in aspirational districts of Madhya PradeshRajasthan Gujarat and Maharashtra to be executed through MPCON Ltd.
Further IFCI Social Foundation (ISF) has been awarded the Golden Peacock Award forCorporate Social Responsibility in Financial Services Sector for 2019 organized by theInstitute of Directors (IOD). ISF had received a trophy along with a certificate in theInternational Conference for Corporate Social Responsibility held in Mumbai.
COMPANIES WHICH HAVE BECOME OR CEASED TO BE SUBSIDIARIES JoINT VENTURES oR ASSocIATEcoMPANIES DURING THE YEAR
During the FY 2019-20 there was no Company which have become or ceased to beSubsidiaries Joint Venture or Associate Company of IFCI Ltd. Details on performance andfinancial position of subsidiaries associates and joint venture during the FY 2019-20 canbe referred from Form AOC-1 forming part of this Annual Report.
The Company as on March 31 2020 has 1 Rs.Material Subsidiaries' viz. Stock HoldingCorporation of India Ltd. The Company has also formulated a policy for determiningmaterial subsidiary and the same has been placed on the website of the Company atwww.ifciltd.com.
MANAGEMENT DISCUSSION AND ANALYSIS
Industry Structure and Developments:
1.1. MACRO-ECONOMIC SCENARIO & DEVELOPMENTS:
The world economy growth decelerated to 3.3% in 2019 as compared to 3.6% in 20181.The economic activity slowed down in
2019 on account of rising trade and geopolitical tensions increased uncertainty aboutthe future of the global trading system and international cooperation more generallytaking a toll on business confidence investment decisions and global trade. A notableshift toward increased monetary policy accommodation-through both action andcommunication-has cushioned the impact of these tensions on financial market sentiment andactivity while a generally resilient service sector has supported employment growth2.All these factors contributed to a significantly weakened global expansion especially inthe second half of 2019 after experiencing strong growth in early 2018 therebyreflecting financial consolidation and slow-down in manufacturing and trade and currencyrelated issues in major economies.
The COVID-19 pandemic is inflicting high and rising human costs worldwide and thenecessary protection measures are severely impacting economic activity. As a result of thepandemic the global economy is projected to contract sharply by -3 percent in 2020 muchworse than during the 2008-09 financial crisis.
The Indian economy consecutively for the 2nd year was able to retain itsplace as the fastest growing major economy in the world in FY 2019-20 as well as itcontinued its climb on an upward growth path though at a slower pace at 4.2 percent in2019-20 vis-a-vis 6.8 percent growth registered in 2018-193.
The Indian economy slowdown was primarily on account of relatively slower growth rateobserved in Q4 of FY 2018-19 at 5.8 percent.
India retained its position as the third largest start-up base in the world with over8900-9300 start-ups as 1300 new start-ups got incorporated in 2019 according to areport by NASSCOM. India also witnessed the addition of 7 unicorns in 2019 (till August2019) taking the total tally to 24.4
With an improvement in the economic scenario there have been investments acrossvarious sectors of the economy. The mergers and acquisition (M&A) activity in Indiastood at US$ 28 billion in 2019 while private equity (PE) deals reached US$ 48 billion. 5The International Monetary Fund (IMF) in its latest World Economic Outlook of April2019 said; "India's economy is set to grow at 6.1 percent in 2019 picking up to 7percent in 2020" adding that the downward revision reflected a weaker-than-expected outlook for domestic Forecast for next fiscal has been cut to 7 percent from 7.2percent estimated earlier.
In India growth has softened on the back of corporate and environmental regulatoryuncertainty with concerns about the health of the nonbank financial sector furtherweighing in the IMF said in World Economic Outlook: Global Manufacturing Downturn RisingTrade Barriers6.
The COVID-19 pandemic has spread with alarming speed infecting millions and bringingeconomic activity to a nearstandstill as countries imposed tight restrictions on movementto halt the spread of the virus. As the health and human toll grows the economic damageis already evident and represents the largest economic shock the world has experienced indecades. The June 2020 Global Economic Prospects describes both the immediate andnear-term outlook for the impact of the pandemic and the long-term damage it has dealt toprospects for growth.
The baseline forecast envisions a 5.2 percent contraction in global GDP in 2020 usingmarket exchange rate weights-the deepest global recession in decades despite theextraordinary efforts of governments to counter the downturn with fiscal and monetarypolicy support. Over the longer horizon the deep recessions triggered by the pandemic areexpected to leave lasting scars through lower investment an erosion of human capitalthrough lost work and schooling and fragmentation of global trade and supply linkages.
The crisis highlights the need for urgent action to cushion the pandemic's health andeconomic consequences protect vulnerable populations and set the stage for a lastingrecovery. For emerging markets and developing countries many of which face dauntingvulnerabilities it is critical to strengthen public health systems address thechallenges posed by informality and implement reforms that will support strong andsustainable growth once the health crisis abates.
Historic contraction of per capita income: The pandemic is expected to plunge mostcountries into recession in 2020 with per capita income contracting in the largestfraction of countries globally since 1870. Advanced economies are projected to shrink 7percent. That weakness will spill over to the outlook for emerging market and developingeconomies who are forecast to contract by 2.5 percent as they cope with their owndomestic outbreaks of the virus. This would represent the weakest showing by this group ofeconomies in at least sixty years.
Every region is subject to substantial growth downgrades. East Asia and the Pacificwill grow by a scant 0.5 percent. South Asia will contract by 2.7 percent Sub-SaharanAfrica by 2.8 percent Middle East and North Africa by 4.2 percent Europe and CentralAsia by 4.7 percent and Latin America by 7.2 percent. These downturns are expected toreverse years of progress toward development goals and tip tens of millions of people backinto extreme poverty.
Emerging market and developing economies will be buffeted by economic headwinds frommultiple quarters: pressure on weak health care systems loss of trade and tourismdwindling remittances subdued capital flows and tight financial conditions amid mountingdebt. Exporters of energy or industrial commodities will be particularly hard hit. Thepandemic and efforts to contain it have triggered an unprecedented collapse in oil demandand a crash in oil prices. Demand for metals and transport-related commodities such asrubber and platinum used for vehicle parts has also tumbled. While agriculture markets arewell supplied globally trade restrictions and supply chain disruptions could yet raisefood security issues in some places.7
1.2. BANKING SECTOR:
8The Indian banking system consists of 20 public sector banks (PuSBs) 22 privatesector banks (PrSBs) 44 foreign banks 44 regional rural banks (RRBs) 1542 urbancooperative banks (UCBs) and 94384 rural cooperative banks (RCBs) in addition tocooperative credit institutions. As on January 31 2020 the total number of ATMs in Indiaincreased to 210263 and is further expected to increase to 407000 by 2021.
Asset of public sector banks stood at Rs.72.59 lakh crore (US$ 1038.76 billion) inFY19. According to Reserve Bank of India (RBI) India's foreign exchange reserve stood atapproximately US$ 490.04 billion as on May 22 2020.
During the period FY16 to FY20 credit off-take grew at a CAGR of 13.93 per cent. As ofFY20 total credit extended surged to US$
1936.29 billion. Deposits grew at a CAGR of 6.81 per cent and reached US$ 1.90trillion by FY20. Credit to non-food industries increased 3.3 per cent y-o-y reachingRs.8910 crore (US$ 1.26 trillion) on February 28 2020 and Rs.100.80 lakh crore (US$ 1.42trillion) on March 13 2020.
Indian banks are increasingly focusing on adopting integrated approach to riskmanagement. The NPAs (Non-Performing Assets) of commercial banks has recorded a recoveryof Rs.400000 crore (US$ 57.23 billion) in FY19 which is highest in the last four years.
As per Union Budget 2019-20 investment-driven growth required access to low costcapital and this would require investment of Rs.20 lakh crore (US$ 286.16 billion) everyyear.
RBI has decided to set up Public Credit Registry (PCR) an extensive database of creditinformation accessible to all stakeholders. The Insolvency and Bankruptcy Code(Amendment) Ordinance 2017 Bill has been passed and is expected to strengthen the bankingsector. Total equity funding of microfinance sector grew 42 per cent y-o-y to Rs.14206crore (US$ 2.03 billion) in 2018-19. Deposits under Pradhan Mantri Jan Dhan Yojana (PMJDY)increased to Rs.1.28 lakh crore (US$ 18.16 billion) during the week ended April 8 2020.As of November 2019 there were a total of 19 million subscribers under Atal PensionYojna.
Rising income is expected to enhance the need for banking services in rural areas andtherefore drive the growth of the sector.
The digital payments revolution will trigger massive changes in the way credit isdisbursed in India. Debit cards have radically replaced credit cards as the preferredpayment mode in India after demonetisation. Transactions through Unified PaymentsInterface (UPI) stood at Rs.123 crore in May 2020 valued at Rs.2.18 lakh crore (US$ 30.97billion).
As per Union Budget 2019-20 the Government proposed a fully automated GST refundmodule and an electronic invoice system to eliminate the need for a separate e-way bill.
The financial performance of SCBs in the period under review was marked by PSBsreporting positive net profits after 3 years in H1:2019-20. As provisioning requirementsslackened and credit growth revived modestly interest income increased even thoughinterest expenses picked up on account of the increase in deposit growth. The net interestmargin as well as the spread improved. The GNPA ratio of all SCBs declined in 2018-19after rising for seven consecutive years as recognition of bad loans neared completion.Decline in the slippage ratio as well as a reduction in outstanding GNPAs helped inimproving the GNPA ratio. While a part of the write-offs was due to ageing of the loansrecovery efforts received a boost from the IBC. The restructured standard advances togross advances ratio began declining after the asset quality review (AQR) in 2015 andreached 0.55 per cent at end- March 2019.9 The provision coverage ratio (PCR)of all SCBs improved to 61 per cent by end September 2019 as PSBs' gross NPAs declinedfaster than the decline in their provisions and PVBs' provisioning went up markedly.
A CAMELS (capital adequacy; asset quality; management; earnings; liquidity; and systemsand control) rating model is used to classify UCBs for regulatory and supervisorypurposes. UCBs in the top-ranking categories-with ratings A and B-accounted for 78 percent of the sector. The share of UCBs in category A has however declined in the last fiveyears with a concomitant increase in category B banks. The share of UCBs in category D hasremained in the range of 4 to 5 per cent in the last five years.
Under the Basel I norms UCBs are required to maintain a minimum statutory capital torisk weighted assets ratio (CRAR) of 9 per cent with no additional requirements likecapital conservation buffer and high common equity tier 1 (CET 1) capital ratio. As ofend-March 2019 more than 96 per cent of UCBs maintained CRAR of 9 per cent.
During 2018-19 UCBs registered moderate improvement in their asset quality driven bythe decline in the GNPA ratio of NSUCBs. Notwithstanding this improvement the NSUCBscontinue to have higher NPAs than SUCBs. SUCBs' GNPA ratio deteriorated to 10.5 per centin H1: 2019-20 reflecting large delinquencies in one of the fraud hit banks.
1.3. NBFC SECTOR:10
Non-Banking Finance Companies (NBFCs) have consistently been increasing their share oflending to the Indian financial sector. However in line with the general trend in banking& financial services industry deterioration in asset quality of NBFC sector waswitnessed in the past one year. As on September 2019 there were 9642 NBFCs registeredwith the Reserve Bank of India of which 82 were deposit taking (NBFCs-D) and 274 weresystemically important non-deposit taking NBFCs (NBFCs ND-SI). All NBFCs-D and NBFCs-ND-SIare subjected to prudential regulations such as capital adequacy requirements andprovisioning norms along with periodic reporting requirements. The consolidated balancesheet size of the NBFC sector (including NBFC-D and NBFC-ND-SI including GovernmentNBFCs).
Although the NBFC sector grew in size from Rs.26.2 lakh crore in 2017-18 to Rs.30.9lakh crore in 2018-19 the pace of expansion was lower than in 2017-18 mainly due torating downgrades and liquidity stress in a few large NBFCs in the aftermath of theIL&FS event. This slowdown was witnessed mainly in the NBFCs- ND-SI category whereasNBFCs-D broadly maintained their pace of growth. However in 2019-20 (up to September)growth in balance-sheet size of NBFCs-ND-SI as well as NBFCs-D moderated due to a sharpdeceleration in credit growth.
The risk aversion among NBFCs-ND-SI coupled with their inability to mobilise adequateresources was reflected in the decrease in credit growth in spite of a fall in stressedassets ratio3. However for the services sector stressed assets rosereflecting the built-up stress in the real estate segment where NBFC exposures aresignificant.
1.4. INITIATIVES AND DEVELOPMENTS AT IFCI
The Ministry of Electronics and Information Technology (MeitY) Government of Indiahas issued Work Order to IFCI Ltd. to act as the Project Management Agency (PMA) for theProduction Linked Incentive Scheme (PLI) and Scheme for Promotion of Manufacturing ofElectronics Components and Semiconductors (SPECS).
The Scheme would be catalyst to boost the electronics manufacturing landscape andestablish India at the global level in electronics sector. The scheme has a budgetaryoutlay of ~INR 40951 crore and shall extend an incentive of 4 percent to 6 percent onincremental sales (over base year) of goods manufactured in India and covered under targetsegments to eligible companies for a period of five (5) years subsequent to the baseyear as defined. The Scheme is open for applications for a period of 4 months initiallywhich may be extended. Support under the Scheme shall be provided for a period of five (5)years subsequent to the base year. Details of the two Schemes and relevant guidelines andother documents are available on the respective portals viz. https://pli.ifciltd.com/ forPLI and https:// specs.ifciltd.com/ for SPECS.
Your Company could also convene and conduct Extra-Ordinary General Meeting throughVideo Conference pursuant to the latest Circulars issued in the wake of COVID-19 pandemicby the Ministry of Corporate Affairs (MCA) in connection with the preferential issue ofRs.200 crore to the Promoters i.e. Government of India. The entire fund had since beenutilised by Your Company.
2. STRENGTHS WEAKNESS OPPORTUNITIES & CHALLENGES
Over its long existence of over seven decades Your Company has gained rich experienceand developed core expertise in serving large and medium corporate customers. Your Companyhas channelized financial assistance across all major sectors of economy and built awell-diversified portfolio in infrastructure real estate manufacturing services andNBFC sectors.
As Government of India is the Promoter and the largest equity shareholder it offerssufficient comfort and confidence to the stakeholders of Your Company.
Your Company is uniquely positioned as one of the Rs.sector agnostic' largeNon-Deposit Taking Systemically Important NBFC which is advantageous for harnessingemerging financing opportunities across sectors. While keeping in view the Government'sinitiatives to boost infrastructure development and to provide thrust to the coreindustries Your Company plays a pivotal role to fill the investment gap by financingthese segments based on the core competencies developed over the years.
Your Company faces stiff competition in lending business as the incremental borrowingcosts are higher compared to banks and peer NBFCs due to relatively lower credit rating.Further downgrading of credit rating of your Company during the year has added pressure onresource raising at competitive cost.
Also further weakening of the quality of legacy assets has led to higher provisioningrequirements and continued annual net losses. Consistent shrinkage in the loan portfolioon account of huge prepayments over the last Financial Year is another constraint beingfaced by your Company. However your Company has achieved improvements in the creditquality of fresh sanctions which is evident from consistent improvement in average ratingof fresh sanctions over the past three years.
In the wake of fall in overall consumption and investment in the economy the entirefinancial sector is grappling with sustained pressure on portfolio quality and dwindlingbalance sheets besides mounting NPAs. Your Company is also affected with this phase ofeconomic cyclic pressures. To phase out the above challenges Your Company has givenfocused attention to contain further slippage in the portfolio and has thereforeconstituted a dedicated team to expedite recovery from non-performing accounts. YourCompany is optimistic about speedy resolution of non-performing accounts more so afterintroduction of time bound and efficient resolution process under Insolvency andBankruptcy Code 2016. Further liquidity crunch is being faced by NBFCs and withregulator's (RBI) intention of imposing stricter liquidity risk management practices likeLiquidity Coverage Ratio (LCR) the same is likely to impact all the NBFCs by way ofreducing funds available for deployment increasing cost of funds and lower returns oninvestments. Your Company shall also be affected by these changes but efficient managementof adequate liquidity is expected to help Your Company to tide over the difficultsituation.
Your Company has been making sincere efforts to attract better rated borrowers byreducing its lending rate to competitive levels downsizing financial exposures to thecorporate borrowers in order to improve the asset quality and to reduce concentrationrisks. The immediate objective of Your Company is to reduce the level of NPAs throughaggressive recovery efforts and improvement in asset quality.
3. SEGMENT-WISE OR PRODUCT-WISE PERFORMANCE
With a focus to maintain quality of assets and in view of the prevailing environment acautious approach was adopted by Your Company in FY 2019-20. Fresh lending was done tobetter rated Companies with a view to strengthen the balance sheet and to maintain thestipulated level of capital adequacy.
Despite facing challenging environment in the NBFC sector and subdued credit demandYour Company sanctioned Short Term Loan Corporate Loans and Project Loans to the tune ofRs.158 crore and disbursed loans worth Rs.742 crore during the year.
4.1. GLOBAL DEVELOPMENTS & OUTLOOK:
Global growth is projected at -4.9 percent in 2020 1.9 percentage points below theApril 2020 World Economic Outlook (WEO) forecast. The COVID-19 pandemic has had a morenegative impact on activity in the first half of 2020 than anticipated and the recoveryis projected to be more gradual than previously forecast. In 2021 global growth isprojected at 5.4 percent. Overall this would leave 2021 GDP some 6^ percentage pointslower than in the pre-COVID-19 projections of January 2020. The adverse impact onlow-income households is particularly acute imperilling the significant progress made inreducing extreme poverty in the world since the 1990s.
As with the April 2020 WEO projections there is a higher-than- usual degree ofuncertainty around this forecast. The baseline projection rests on key assumptions aboutthe fallout from the pandemic. In economies with declining infection rates the slowerrecovery path in the updated forecast reflects persistent social distancing into thesecond half of 2020; greater scarring (damage to supply potential) from thelarger-than-anticipated hit to activity during the lockdown in the first and secondquarters of 2020; and a hit to productivity as surviving businesses ramp up necessaryworkplace safety and hygiene practices. For economies struggling to control infectionrates a lengthier lockdown will inflict an additional toll on activity. Moreover theforecast assumes that financial conditions-which have eased following the release of theApril 2020 WEO-will remain broadly at current levels. Alternative outcomes to those in thebaseline are clearly possible and not just because of how the pandemic is evolving. Theextent of the recent rebound in financial market sentiment appears disconnected fromshifts in underlying economic prospects-as the June 2020 Global Financial Stability Report(GFSR) Update discusses-raising the possibility that financial conditions may tighten morethan assumed in the baseline.
All countries-including those that have seemingly passed peaks in infections-shouldensure that their health care systems are adequately resourced. The internationalcommunity must vastly step up its support of national initiatives including throughfinancial assistance to countries with limited health care capacity and channelling offunding for vaccine production as trials advance so that adequate affordable doses arequickly available to all countries. Where lockdowns are required economic policy shouldcontinue to cushion household income losses with sizable well-targeted measures as wellas provide support to firms suffering the consequences of mandated restrictions onactivity. Where economies are reopening targeted support should be gradually unwound asthe recovery gets underway and policies should provide stimulus to lift demand and easeand incentivize the reallocation of resources away from sectors likely to emergepersistently smaller after the pandemic.
Strong multilateral cooperation remains essential on multiple fronts. Liquidityassistance is urgently needed for countries confronting health crisis and external fundingshortfalls including through debt relief and financing through the global financialsafety net. Beyond the pandemic policymakers must cooperate to resolve trade andtechnology tensions that endanger an eventual recovery from the COVID-19 crisis.Furthermore building on the record drop in greenhouse gas emissions during the pandemicpolicymakers should both implement their climate change mitigation commitments and worktogether to scale up equitably designed carbon taxation or equivalent schemes. The globalcommunity must act now to avoid a repeat of this catastrophe by building global stockpilesof essential supplies and protective equipment funding research and supporting publichealth systems and putting in place effective modalities for delivering relief to theneediest.11
4.2. DOMESTIC DEVELOPMENTS & OUTLOOK:
The International Monetary Fund (IMF) in its latest World Economic Outlook of April2019 issue had pegged growth for Indian Economy at 7.3 percent and 7.5 percent for FY2018-19 and FY 2019-20 respectively. The estimates are on the back of continued recoveryof investment and robust consumption amid a more accommodative stance of monetary policyand some expected impetus from fiscal policy.
The monsoon is expected to be near normal in FY 2019-20 however there exists someuncertainty around it not being evenly distributed among all regions of the country. Theoutlook for oil prices continues to be hazy both on the upside and the downside risk. Thefinancial markets remained volatile throughout FY 2018-19 and the fiscal situation at thegeneral Government level requires careful monitoring. Overall the output gap remainsnegative and therefore strengthening domestic growth impulses by spurring privateinvestment assumes priority. Further the consumer price inflation is expected to be 3.8percent by end of 2019-20.
The IMF on June 24 projected a sharp contraction of 4.5 percent for the Indian economyin 2020 a "historic low" citing the unprecedented coronavirus pandemic thathas nearly stalled all economic activities but said the country is expected to bounceback in 2021 with a robust 6 percent growth rate.
The International Monetary Fund (IMF) projected the global growth at -4.9 percent in2020 1.9 percentage points below the April 2020 World Economic Outlook (WEO) forecast. Ithas projected a sharp contraction in 2020 of -4.5 percent. Given the unprecedented natureof this crisis as is the case for almost all countries this projected contraction is ahistoric low.
The COVID-19 pandemic has had a more negative impact on activity in the first half of2020 than anticipated and the recovery is projected to be more gradual than previouslyforecast. In 2021 global growth is projected at 5.4 percent the report said.
"India's economy is projected to contract by 4.5 percent following a longer periodof lockdown and slower recovery than anticipated in April". The IMF's record revealsthat this is the lowest ever for India since 1961. However India's economy is expected tobounce back in 2021 with a robust 6 percent growth. In 2019 India's growth rate was 4.2percent. The latest 2020 projection for India is a massive -6.4 percent less than theApril forecast of the IMF. The projected growth rate of 6 percent in 2021 is -1.4 percentless than April forecast.
The COVID-19 pandemic pushed economies into a Great Lockdown which helped contain thevirus and save lives but also triggered the worst recession since the Great Depression.Over 75 percent of countries are now reopening at the same time as the pandemic isintensifying in many emerging markets and developing economies. Several countries havestarted to recover. However in the absence of a medical solution the strength of therecovery is highly uncertain and the impact on sectors and countries uneven.
"First the unprecedented global sweep of this crisis hampers recovery prospectsfor export-dependent economies and jeopardizes the prospects for income convergencebetween developing and advanced economies". "IMF projected a synchronized deepdownturn in 2020 for both advanced economies [-8 percent] and emerging market anddeveloping economies [-3 percent; -5 percent if excluding China] and over 95 percent ofcountries are projected to have negative per capita income growth in 2020".
The cumulative hit to GDP growth over 2020-21 for emerging market and developingeconomies excluding China is expected to exceed that in advanced economies.
On the upside better news on vaccines and treatments and additional policy supportcan lead to a quicker resumption of economic activity. On the downside further waves ofinfections can reverse increased mobility and spending and rapidly tighten financialconditions triggering debt distress.
Geopolitical and trade tensions could damage fragile global relationships at a timewhen trade is projected to collapse by around 12 percent.
5. RISKS AND CONCERNS
Risk is an inherent part of business of any financial institution including IFCIwhich makes it susceptible to credit risks that arise when a borrower is expecting futurecash flows to pay a current debt. Effective management of credit risk is a criticalcomponent of comprehensive risk management and necessary for long term success of afinancial institution. The goal of credit risk management is to maximize a FI'srisk-adjusted rate of return by maintaining credit risk exposure within acceptableparameters.
In order to address risks Your Company has put in place an Integrated Risk ManagementPolicy (IRMP) which addresses Credit Risk Market Risk Operational Risk andAsset-Liability Management as a part of comprehensive risk management framework which isintegrated with its business model.
The General Lending policy IRMP Liquidity Risk Management and other business policiesof Your Company are reviewed periodically keeping in view the changing economic andbusiness environment. The Risk Management Vision Statement and Qualitative Risk AppetiteStatements of IFCI have also been put in place. Parameters included in the QuantitativeRisk Appetite statement are tested periodically.
Your Company manages transaction level risks by way of carrying out risk assessment ofall fresh credit proposals and assigning an internal credit risk rating afterfinalization by an internal Rating Committee. Portfolio level risks are assessed by way ofmonitoring of actual exposures against prudential limits stress testing under variousscenarios annual rating migration exercise rating distribution portfolio ratinghighlighting the quality of portfolio mapping of internal and external ratings analysisof NPA cases regular validation of internal risk assessment model through GiniCoefficient and calculation of
Risk Adjusted Return on Capital (RAROC) estimation etc. Your company regularlymonitors and revises its benchmark rates based on current market macro & microeconomic factors and profitability.
Various analysis like Industry wise NPAs Sectoral studies Analysis of loans indefault grade Predicting bankruptcy-Altman Z Score Predicting Portfolio VaR Analysis ofRating grade wise risk spreads Trend analysis of Overdue/SMA accounts Time seriesco-relation between Internal & External rating Analysis of Short Term Loans/Loanagainst Shares Predictive Capability of Internal Rating Models Analysis of Stage 3assets Rating wise concentration-Herfindahl Hirschman Index (HHI) etc. are done in orderto keep abreast of the latest developments in current economic scenario.
As part of Ind As implementation Your Company estimates rating grade-wise Probabilityof Default (PD) numbers of its credit portfolio based on last 5 years data while LossGiven Default (LGD) numbers are worked out based on past history of cash flows from NPAs.The risk components are utilized for calculation of Expected Credit Loss (ECL) as part ofInd AS implementation. Your Company has set up a Market Research Group (MARG) forundertaking sectoral research and disseminates studies on various industry sectors tovarious stakeholders for aiding in making informed business decisions.
The Risk and Asset Liability Management Committee of Executives (RALMCE) thoroughlyanalyse the dynamic liquidity position structural liquidity gaps and interest ratesensitivity positions on a periodic basis based on extant regulatory prescriptions. Themid-office function of Integrated Treasury has started reporting to the Risk Managementfunction and acts as an independent risk monitoring functionary. Scientific methodologyfor fixing IFCI Benchmark Rate for long and short term loans has been evolved. Methodologyfor risk based pricing and fixing risk premium over benchmark rate for each rating gradehas also been put in place. To manage the operational risks there are adequate internalcontrols and systems in place aided and assisted by internal audit internal financialcontrols remote back-up of data disaster management policy IT security physicalsecurity and suitable insurance of insurable assets of Your Company as well as of theassets mortgaged to Your Company. Besides mechanism for stress testing of loan portfolioand measurement of liquidity position has also been put in place to assess likely impacton CRAR profitability and liquidity. Impact of interest rate risk on net interest incomeand market value of equity of IFCI under stress scenarios are also assessed on a periodicbasis and remedial measures taken as may be deemed necessary. In line with the industrybest practices and to ensure proper credit evaluations and monitoring standards YourCompany carries out credit audit of all standard exposures. The main objectives of thecredit audit exercise includes detection of weaknesses in outstanding exposuresinitiation of timely corrective action compliance with internal sanction and disbursementnorms and follow-up and monitoring of cases which serves as a tool for senior managementto assess portfolio quality with constant endeavour for asset quality improvement. Tofurther strengthen the existing systems Standard Operating Procedures for various riskmanagement processes have been put in place.
Risk management is expected to play a more prominent role in future because of ongoingliberalization deregulation and global integration of financial markets which would addnewer dimensions to risks faced by the Banks and NBFCs. Interrelationships andassociations amongst various risk categories and mushrooming of new risks will requiremore proactive and efficient management of risks which will determine the strength andresilience of financial institutions. Your Company would continue to work on variousinitiatives aimed at strengthening credit risk standards post sanction monitoring of theportfolio to mitigate any adverse impact on the loan portfolio of Your Company. YourCompany would also strive to develop a strong culture for risk management and awarenesswithin the organisation.
6. INTERNAL CONTROL SYSTEMS AND INTERNAL AUDIT
Your Company has adequate Internal Control System commensurate with size scale andcomplexity of its business and allied operations. The efficacy of these internal controlsis being verified by the Internal Audit Department on a regular basis. From Financial Year2018-19 onwards the internal audits are being carried in-house by a team of experiencedpersonnel. The periodicity of such audits varied from quarterly to yearly depending uponthe criticality and materiality of transactions based on the scope approved by the AuditCommittee of Directors. Besides this exercise to ensure adequacy of Internal FinancialControls (IFCs) with a periodicity in line with the Internal Audit is also done by theInternal Audit Department. Based on the observations of Internal Audit Departmentcorrective actions are undertaken by the process owners in their respective areas therebystrengthening the control systems.
7. MATERIAL DEVELOPMENT IN HUMAN RESOURCES INDUSTRIAL RET.ATTQNS FRoNT INcLUDINGNUMBER oF PEOPLE EMPLOYED
Development of its Human Resources pool is central to IFCI's HR Policies and practices.Employees are the most important factors for sustainable performance of the organization.Hence your Company strives to create an organizational culture which can develop andharness the potential of its employees.
During the year Your Company has brought in more structured approach to implementvarious training & development interventions for development of our employees. Specialfocus was laid on identification of thrust areas for training & development.Accordingly the employees were nominated to training & development programmesorganized by leading institutes/agencies. Employees were also nominated to participate invarious conferences webinars discussion forums organized by industry so as to providethem platforms for keeping abreast with latest developments and also explore businessopportunities. Your Company covered around 77% of its employees in varioustrainings/conferences. In all there were 654 nominations in the in-housetraining/workshops and external trainings covering topics of functional and behavioralnature. Further Your Company has also exposed its employees to various challengingassignments for their development.
Further optimum utilisation of Human Resources pool has also been a major focus area.Based on organisational priorities and in order to streamline various processes within theorganization to reduce redundancies rationalization of allocation of work and resourceswas done through reorganization.
Your Company continues to focus on employee health and wellness. New hospital has beenempanelled for employees regular health check-up. Health talks were also organized tobring awareness among employees.
Your Company also shows promptness in resolving grievances of employees through awell-established system. Your Company also settled various issues and court cases whichwere pending for a long time.
8. ENVIRONMENTAL PROTECTION AND CONSERVATION TECHNOLOGICAL CONSERVATION RENEWABLEENERGY DEVELOPMENTS FOREIGN EXCHANGE CONSERVATION.
Your Company has made sincere efforts for conservation of foreign exchange. During theyear under report the amount of foreign exchange outgo was only to the tune of Rs.3.32crore mainly on account of payment of interest on foreign currency borrowings. YourCompany has also put in sincere effort to protect and conserve the environment and promotecommunity development. Besides Your Company has been actively engaged in financing ofrenewable energy projects which are sustainable and environment friendly. Further YourCompany has through CSR Projects contributed to healthcare education sanitation andwomen empowerment.
9. CORPORATE SOCIAL RESPONSIBILITY
The Corporate Social Responsibility Committee of Directors formulates the CSR Policyand recommends to the Board of Directors on activities to be undertaken by the Company asspecified in Schedule VII of Companies Act 2013 and Companies (Corporate SocialResponsibility Policy) Rules 2014. The CSR Committee recommended the amount to beincurred on the activities and earmarked funds for the envisaged priority areas as pervision of the Company. To associate with the CSR Activities of IFCI and its Subsidiariesand Associates a Trust by the name of "IFCI Social Foundation" (ISF) has alsobeen established. The investment in CSR activities is project based and for every projecttime frame and periodic milestones are set at the outset. The CSR activities undertaken byIFCI through ISF are listed below:
Support to Manav Mandir Mission Trust for construction of a room in theorphanage Manav Mandir Gurukul at New Delhi.
Support to Indian Association of Blood Cancer and Allied Diseases KolkataGanga Prem Hospice (a unit of Shradha Cancer Care Hospital Rishikesh) and Yanam Old AgeHome for purchase of new AC Maruti Eeco Mobile Medical Van.
Provided infrastructure support to Navasrushti International Trust - DharmaBharathi Mission for the DBM & TISS (Tata Institute of Social Science) Library cumStudy Centre at Deonar Mumbai.
Infrastructure support to Institute of Leadership Development for Centre ofEminence for Skill Development at Jaipur.
Partnered with Ramkrushna Temple Trust Odisha for upliftment of socially andeconomically backward people of village Tunda District Cuttack Odisha by setting upComputer training and tailoring classes.
Support to Rural India Development Foundation to run three of its"Vananchal Vidyalayas" in the aspirational District of Chandauli Uttar Pradesh.
Partnered with MPCON Ltd. for installation of Sanitary Napkin Vending Machineswith Incinerator and organising awareness camps in the schools in the tribal areas inAndhra Pradesh.
Distribution of ration kits/ grocery items/sanitizers and masks tounderprivileged needy people severely affected by the Coronavirus pandemic.
DETAILS OF SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS
The details of significant changes in Key Financial Ratios are as under:
|Particulars ||FY 2020 ||FY 2019 ||Remarks ||Significant changes |
|Debtors Turnover ||Not applicable for NBFC business since not a significant key ratio for NBFC business ||NA |
|Inventory Turnover || || || ||NA |
|Interest Coverage Ratio ||0.90 ||0.61 ||Earnings before interest and taxes/Total Interest expense (Profit before Tax + finance cost)/ finance cost ||Yes (>25%)* |
|Current Ratio ||1.23 ||1.14 ||Current asset/current liability ||No (<25%) |
|Debt Equity Ratio ||3.00 ||3.81 ||Total Borrowings/Net worth ||No (<25%) |
|Operating Profit Margin (%) ||12.41% ||15.96% ||Operating profit/total revenue (Profit before tax + impairment)/total revenue ||No (<25%) |
|Net Profit Margin (%) ||-14.02% ||-19.59% ||Total comprehensive income/total revenue ||Yes (>25%)* |
|Return on Net Worth ||-7.62% ||-10.81% ||Total comprehensive income/average net worth ||Yes (>25%)* |
*Explanation: The change in the ratios were on due to decrease in operational incomewhich was impacted on account of prepayment of loans increase in stage 3 assets andincrease in net loss on fair value changes and impairment.
Certain Statements in Management Discussion and Analysis describing the Company'sobjectives estimates and expectations may be Rs.forward looking' within the meaning ofapplicable laws and regulations. Actual results might differ materially from thoseexpressed or implied.
OWNERSHIP/CAPITAL STRUCTURE/CHANGE IN SECURITIES
During the financial year 2019-20 there was no change in the equity shareholding ofthe Company. Consequently as on March 31 2020 the Government of India (GOI) being thePromoter holds 56.42% in the paid-up share capital of Your Company. However during theFY 2019-20 Your Company received share application money of Rs.200 crore from the GOItowards release of funds for subscription of share capital of the Company during the FY2019-20. Subsequently pursuant to the fund infusion 20 crore number of equity shares @Rs.10 each aggregating to Rs.200 crore were allotted to the GOI on May 21 2020.Consequent to the allotment the GOI holds 61.02% of the paid-up share capital of YourCompany.
TRANSFER TO INVESTOR EDUCATION & PROTECTION FUND (IEPF)
During the Financial Year 2019-20 Your Company had transferred 865872 number ofequity shares to IEPF. Further an amount of Rs.21855919 pertaining to the unclaimeddividend for Financial Year 2011-12 was also transferred to IEPF. The Members whoseunclaimed dividends/shares have been transferred to IEPF may claim the same by making anapplication to the IEPF Authority in Form No. IEPF-5 available on www.iepf.gov.in. TheMembers/ Claimants can file only one consolidated claim in a financial year as per theIEPF Rules.
The Change in the debt structure of the Company is as under:
|Total number of securities at the beginning of the year ||Issued during the year ||Redemption made during the year ||Total number of securities at the end of the year |
|4214539491 ||0 ||11257073 ||4203282418 |
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGO
Conservation of Energy:
The Company's operations do not involve any manufacturing or processing activities. Itprovides financial assistance to the industries thereby requires normal consumption ofelectricity. Accordingly the provisions of Section 134 (3) (m) of the Companies Act 2013read with Rule 8 (3) of Companies (Accounts) Rules 2014 are not applicable on theCompany.
Information technology (IT) has transformed the conduct of businesses in every sectorof the economy. The in-house team of IT professionals in Your Company had developed systemnamely "CIIS" which largely consists of applications supporting major businessfunctions as well as non-core functions. The system has been successfully running for over20 years and the system has constantly been upgraded in line with the requirements. Duringthe FY 201920 the existing software applications were upgraded with enhanced/ addedfeatures. New Modules were developed in-house for different functions. Your Company ismaintaining proper Data Backup and has setup Disaster Recovery Site to protect data andbusiness information systems. Video Conferencing Facility setup was also enhanced toprovide streamlined video communication and live content sharing. Your Company IT systemsenabled employees during work from home and regular meetings were conducted usingcollaboration tools.
FOREIGN EXCHANGE EARNINGS
The details in respect of foreign expenditure/earnings are as follows:
| || ||(Rs. in crore) |
|Particulars ||Year end 31.03.2020 ||Year End 31.03.2019 |
|Expenditure in Foreign currencies: || || |
|Interest on borrowings ||3.32 ||3.59 |
|Other Matters ||0.00 ||0.03 |
|TOTAL ||3.32 ||3.62 |
|Earning in Foreign currencies: || || |
|Earning in Foreign Currency ||NIL ||NIL |
INTERNAL FINANcIAL cONTROL
Your Company has sound Internal Financial Controls over financial reporting throughpolicies and procedural manuals designed to provide reasonable assurance regarding thereliability of financial reporting and preparation of financial statements for externalpurposes in accordance with generally accepted accounting principles. The entity levelcontrol framework designed and implemented in earlier years was subjected to sampletests by the Management of Your Company for various processes during the year underreport by a well experienced Internal Audit Team of your company with a frequency parallelwith Internal Audit. There were a few Internal Financial Control related issues thoughnot material were addressed and remedial actions were taken in the subsequent period ofreview. Based on the satisfaction over the operating effectiveness of the InternalFinancial Controls the Board of Directors believes that adequate Internal FinancialControls exist and are operating effectively.
DEcLARATION BY INDEPENDENT DIREcTOR
As on March 31 2020 there was no Independent Director on the Board of the Company.Hence the Declarations are not applicable.
DETAILS OF DIREcTORS AND KEY MANAGERIAL PERSONNEL (KMP) APPOINTED OR RESIGNED DURINGTHE YEAR
During the Financial Year 2019-20 Shri Anshuman Sharma (DIN: 07555065) GovernmentDirector ceased to be on the Board of the Company w.e.f. September 09 2019 uponwithdrawal of nomination by the Government of India vide Order of even dated. AlsoGovernment of India vide its Order dated September 09 2019 had nominated Shri AnandMadhukar (DIN: 08563286) on the Board of the Company as Government Nominee Director whowas subsequently inducted on the Board w.e.f. September 18 2019.
Ms. Kiran Sahdev (DIN: 06718968) ceased to be a Director on the Board w.e.f. November29 2019 pursuant to her superannuation from the services of Life Insurance Corporation ofIndia.
Also during the FY 2019-20 the Board of Directors had appointed Shri Ravi Chaudhary(DIN: 06728841) as Additional Director w.e.f. January 10 2020 who subsequently resignedfrom the Board w.e.f. March 18 2020.
Apart from above Shri Sunil Kumar Bansal (DIN: 06922373) was appointed as Whole-TimeDirector designated as Deputy Managing Director of Your Company w.e.f. June 04 2020. AlsoShri MML Verma (DIN: 07610648) was inducted on the Board of Your Company as AdditionalDirector w.e.f. July 31 2020.
DIREcTOR LIABLE TO RETIRE BY ROTATION
Prof. Arvind Sahay (DIN: 03218334) will retire by rotation at the conclusion of theforthcoming Annual General Meeting and being eligible has offered himself forre-appointment.
CHANGE IN CREDIT RATING
The credit ratings assigned to the various financial facilities/instruments of theCompany during the Financial Year 2019-20 is provided in the Corporate Governance Reportforming part of this Annual Report.
NUMBER OF MEETINGS OF THE BOARD OF DIRECTORS
The details of the Meetings of the Board of Directors forms part of the CorporateGovernance Report appearing separately in the Annual Report.
COMPOSITION OF AUDIT COMMITTEE
The details of Composition forms part of the Corporate Governance Report appearingseparately in the Annual Report. No such instance was reported where the Board has notaccepted recommendations of the Committee.
During the Financial Year 2019-20 all returns/data/statements submitted by concerneddepartments as advised by RBI SEBI and other Regulatory Authorities have been submitted.
COMPLIANCE WITH SECRETARIAL STANDARDS
The Company is in compliance with the applicable Secretarial Standards issued by theInstitute of Company Secretaries of India and approved by the Central Government underSection 118 (10) of the Companies Act 2013 except w.r.t. the provision involvingindependent directors attendance in the meetings and other such related provisions.
A detailed report on Corporate Governance as stipulated under SEBI (Listing Obligationsand Disclosure Requirements) Regulations 2015 is attached to the Annual Report.Certificate from Practicing Company Secretary regarding compliance with the conditions ofCorporate Governance as stipulated in Listing Regulations and under Guidelines onCorporate Governance for Central Public Sector Enterprises 2010 has been obtained and isannexed at the end of Corporate Governance Report.
BUSINESS RESPONSIBILITY REPORT
As stipulated under the Listing Regulations the Business Responsibility Report(BRR') has been prepared and forms part of the Annual Report for the FY 2019-20. TheReport provides a detailed overview of initiatives taken by your Company fromenvironmental social and governance perspectives.
DOCUMENTS PLACED ON THE WEBSITE
Pursuant to the provisions of the Companies Act 2013 and SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 the Company is required to place variousPolicies/Documents/Details on the Website of the Company. The Company has a functionalwebsite www.ifciltd.com and all the requisite information are being uploaded thereat.
DISCLOSURE OF NOMINATION AND REMUNERATION POLICY
Pursuant to the provisions of the Companies Act 2013 and Listing Regulations whereverapplicable the Company has put in place a Nomination as well as a Remuneration Policy.Vide Notification No. F.No. 1/2/2014-CL.V dated June 5 2015 in case of GovernmentCompanies Section 134(3)(e) of the Companies Act 2013 shall not apply. Accordingly therequisite Policy has not been made part of Board's Report.
EXTRACT OF ANNUAL RETURN
Pursuant to the provisions of the Companies Act 2013 the extract of the Annual Returnin the prescribed format of Form MGT-9 is enclosed at Annexure - I. Form MGT-9 is alsoavailable on the website of Your Company at https://www.ifciltd.com/?q=content/financial-reports-0.
CORPORATE SOCIAL RESPONSIBILITY
The Disclosure of contents of Corporate Social Responsibility Policy in the Board'sReport pursuant to the provisions of Companies (Corporate Social Responsibility Policy)Rules 2014 is at Annexure-II. The extant CSR Policy of the Company is available on thewebsite of the Company at https://www.ifciltd.com/?q=content/our-csr-policy.
PARTICULARS OF EMPLOYEES AND REMUNERATION
The requisite details envisaged under the provisions of Rule V of Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 are annexed with thisreport at Annexure - III.
DISCLOSURE ON RELATED PARTY TRANSACTIONS
Disclosure on Related Party Transactions during FY 2019-20 in the prescribed Form AOC-2is provided in Annexure IV.
POLICY ON DEALING WITH RELATED PARTY TRANSACTIONS
I. Approval by Audit Committee
1. All Related Party Transactions (RPTs) (including any subsequent modificationsthereof) shall require prior approval of the Audit Committee of Directors.
2. The Audit Committee of Directors may grant omnibus approval for the RPTs proposed tobe entered into by the Company.
The Conditions for granting Omnibus approval are as under:
All related party transactions shall require approval of the Audit Committee and theAudit Committee may make omnibus approval for related party transactions proposed to beentered into by the Company subject to the following conditions namely:-
1. The Audit Committee shall after obtaining approval of the Board of Directorsspecify the criteria for making the omnibus approval which shall include the followingnamely:-
(a) maximum value of the transactions in aggregate which can be allowed under theomnibus route in a year;
(b) the maximum value per transaction which can be allowed;
(c) extent and manner of disclosures to be made to the Audit Committee at the time ofseeking omnibus approval;
(d) review on quarterly basis or at such intervals as the Audit Committee may deemfit related party transaction entered into by the Company pursuant to each of the omnibusapproval made;
(e) transactions which cannot be subjected to the omnibus approval by the AuditCommittee.
2. The Audit Committee shall consider the following factors while specifying thecriteria for making omnibus approval namely:-
(a) repetitiveness of the transactions (in past or in future);
(b) justification for the need of omnibus approval.
3. The Audit Committee shall satisfy itself on the need for omnibus approval fortransactions of repetitive nature and that such approval is in the interest of theCompany.
4. The omnibus approval shall contain or include the following:
(a) Name of the related parties;
(b) Nature and duration of the transactions;
(c) Maximum amount of transaction that can be entered into;
(d) The indicative base price or current contracted price and the formula for variationin the price if any; and
(e) Any other information relevant or important for the Audit Committee to take adecision on the proposed transaction: Provided that where the need for related partytransaction cannot be foreseen and the aforesaid details are not available auditcommittee may make omnibus approval for such transactions subject to their value notexceeding Rs.1 crore per transaction.
5. Omnibus approval shall be valid for a period not exceeding one financial year andshall require fresh approval after the expiry of such financial year.
6. Omnibus approval shall not be made for transactions in respect of selling ordisposing of the undertaking of the Company.
7. Any other conditions as the Audit Committee may deem fit.
II. Approval by Board of Directors: Except with the consent of the Board of Directorsgiven by a resolution at a meeting of the Board IFCI shall not enter into any contract orarrangement with a related party with respect to:
(a) Sale purchase or supply of any goods or materials;
(b) Selling or otherwise disposing of or buying property of any kind;
(c) Leasing of property of any kind;
(d) Availing or rendering of any services;
(e) Appointment of any agent for purchase or sale of goods materials services orproperty;
(f) Such related party's appointment to any office or place of profit in the companyits subsidiary company or associate company; and
(g) Underwriting the subscription of any securities or derivatives thereof of thecompany:
Provided that nothing of the above shall apply to any transactions entered into by IFCIin its ordinary course of business other than transactions which are not on an arm'slength basis.
The expression "office or place of profit" means any office or place: Wheresuch office or place is held by a Director if the Director holding it receives from IFCIanything by way of remuneration over and above the remuneration to which he is entitled asDirector by way of salary fee commission perquisites any rent free accommodation orotherwise;
Where such office or place is held by an individual other than a Director or by anyfirm private company or other body corporate if the individual firm private company orbody corporate holding it receives from IFCI anything by way of remuneration salary feecommission perquisites any rent-free accommodation or otherwise; The expression"arm's length transaction" means a transaction between two related parties thatis conducted as if they were unrelated so that there is no conflict of interest.
III. Approval by Shareholders
1. Except with the prior approval of the company by a special/ ordinary resolution asmay be specified under the Companies Act 2013 or the Regulations IFCI shall not enterinto a transaction(s) where the transaction(s) to be entered into:
(a) As contracts or arrangements with respect to clauses (a) to (e) of sub-section (1)of Section 188 of the Companies Act 2013 with criteria as mentioned below:
(i) Sale purchase or supply of any goods or materials directly or through appointmentof agent amounting to 10% or more of the turnover of the company or Rs.100 crorewhichever is lower as mentioned in clause (a) and clause (e) respectively of sub-section(1) of Section 188;
(ii) Selling or otherwise disposing of or buying property of any kind directly orthrough appointment of agent amounting to 10% or more of net worth of the company orRs.100 crore whichever is lower as mentioned in clause
(b) and clause (e) respectively of sub-section (1) of Section 188;
(iii) Leasing of property of any kind amounting to 10% or more of the net worth of thecompany or 10% or more of turnover of the company or Rs.100 crore whichever is lower asmentioned in clause (c) of sub-section (1) of Section 188;
(iv) Availing or rendering of any services directly or through appointment of agentamounting to 10% or more of the turnover of the company or Rs.50 crore whichever islower as mentioned in clause (d) and clause (e) respectively of sub-section (1) ofSection 188.
Explanation: It is hereby clarified that the limits specified in subclauses (i) to(iv) as above shall apply for transaction or transactions to be entered into eitherindividually or taken together with the previous transactions during a financial year.
(b) Is for appointment to any office or place of profit in the Company its subsidiarycompany or associate company at a monthly remuneration exceeding Rs.2.5 lakh as mentionedin clause (f) of sub-section (1) of Section 188; or
(c) Is for remuneration for underwriting the subscription of any securities orderivatives thereof of the company exceeding 1% of the net worth as mentioned in clause(g) of sub-section (1) of Section 188.
(1) The Turnover or Net Worth referred in the above sub-rules shall be computed on thebasis of the Audited Financial Statement of the preceding financial year.
(2) In case of a wholly owned subsidiary the special resolution passed by IFCI shallbe sufficient for the purpose of entering into the transactions between the wholly ownedsubsidiary and IFCI.
2. All the related parties shall abstain from voting on such resolutions.
3. No Member of IFCI shall vote on such Special/Ordinary Resolution (as the case maybe) to approve any contract or arrangement which may be entered into by the Company ifsuch member is a related party.
Proviso: The above clauses II and III with respect to the Approval of Board andShareholder's respectively will not be applicable in the following cases:
1. Transactions entered into between two Government Companies.
2. Transactions entered into between a holding company and its wholly owned subsidiarywhose accounts are consolidated with such holding company and placed before theshareholders at the general meeting for approval.
Qualifications Reservation or Adverse Remark or Disclaimer made by the StatutoryAuditors
For Standalone Financial Statements:
The Standalone Financial Results of the Company for the Financial Year 2019-20 wasunqualified by the Statutory Auditors of the Company. However the Statutory Auditorsprovided for the following Rs.Emphasis of Matter' as under:
"Emphasis of Matter:
1. We draw attention to Note No. 42 of the financial statements regarding theprovision of impairment allowance in respect of its loan assets. The basis ofdetermination of impairment allowance which we have relied upon is arrived at a model inaccordance with the accounting policy recognising probable credit loss based on internallydeveloped statistical models & other historical data which takes into account theeconomic activity and financial conditions including macroeconomic factors.
Due to ongoing COVID-19 higher probability risk factor was noticed and accordingly 15%shock on GDP is taken in the said model for calculating ECL as against weighted average ofbase/ best/worst case scenario +(-) 10% resulting in higher provision in ECL Model overthe base case ECL Model. The Financial Statements of the Company has not been impacted dueto this change as the provisions as per RBI Prudential Norms (IRACP) are higher which hasbeen accounted for determining the provisions for this year.
2. In accordance with the RBI Circular no. "DOR (NBFC).CC.PD.No.109/22.10.106/2019-20" dated 13th March 2020 the Company has createda provision as per RBI Prudential Norms (IRACP) which is higher than the ECL Model andaccordingly a sum of Rs.22.98 crore has been taken to "Impairment Reserve".
3. We draw attention to Note No. 44 of the financial statements regarding the entity'simpact of COVID-19 pandemic on its financial statements. Management is of the view thatthere are no reasons to believe that the pandemic will have any significant impact on theability of the entity to continue as a going concern. Nevertheless the impact of pandemicin future period is uncertain and could impact the impairment allowance in future years.
4. We draw attention to Note No. 44.1 where the Company is recognizing interest incomein respect of Stage 3 Loan Assets as per Ind AS accounting policy of the Company till itis diminished due to repayment/write off/settled. However in case of seventeen borrowalaccounts covered under NCLT the net impact of recognition of interest in these casesamounts to Rs.331.58 Crores which is credited to statement of profit & loss A/c invarious years. In the opinion of the management complete write-off will be done on finalsettlement of all these cases and there are sufficient security cover available with theCompany as determined by the resolution professional and hence no reversal of interest isrequired.
Our opinion is not modified in respect of these matters."
For consolidated Financial Statements:
The Consolidated Financial Results of the Company for the Financial Year 2019-20 wasunqualified by the Statutory Auditors of the Company. However the Statutory Auditorsprovided for the following
Emphasis of Matter' as under:
Emphasis of Matter
A. Emphasis of Matter reported in the main report
1. We draw attention to Note No. 40.1(v) of the financial statements regarding theprovision of impairment allowance in respect of its loan assets. The basis ofdetermination of impairment allowance which we have relied upon is arrived at a model inaccordance with the accounting policy recognizing probable credit loss based on internallydeveloped statistical models & other historical data which takes into account theeconomic activity and financial conditions including macroeconomic factors.
Due to COVID-19 higher probability risk factor was noticed and accordingly 15% shockon GDP is taken in the said model for calculating ECL as against weighted average ofbase/best/worst case scenario + (-) 10% resulting in higher provision in ECL Model overthe base case ECL Model. The Financial Statements of the Company has not been impacted dueto this change as the provisions as per RBI Prudential Norms (IRACP) are higher which hasbeen accounted for determining the provisions for this year.
2. In accordance with the RBI circular no. "DOR (NBFC).CC.PD.No.109/22.10.106/2019-20" dated 13th march 2020 the company has created aprovision as per RBI prudential Norms (IRACP) which is higher than the ECL Model andaccordingly a sum of Rs.22.98 crores has been taken to "Impairment Reserve".
3. We draw attention to Note No. 40.1(vii) of the financial statements regarding theentity's impact of COVID-19 pandemic on its financial statements. Management is of theview that there are no reasons to believe that the pandemic will have any significantimpact on the ability of the entity to continue as a going concern. Nevertheless theimpact of pandemic in future period is uncertain and could impact the impairment allowancein future years.
4. We draw attention to Note No. 40.1(viii) where the company is recognizing interestincome in respect of Stage 3 Loan Assets as per Ind As accounting policy of the Companytill it is diminished due to repayment/ write off/settled. However in case of seventeenborrowal accounts covered under NCLT the net impact of recognition of interest in thesecases amounts to Rs.331.58 Crores which is credited to statement of profit & loss A/cin various years. In the opinion of the management complete write off will be done onfinal settlement of all these cases and there are sufficient security cover available withthe company as determined by the resolution professional and hence no reversal of interestis required.
Our Opinion is not modified in respect of these matters.
B. emphasis of Matter reported in case of M/s IFcI Infrastructure Development LimitedCompany had received sum of Rs.75000000.00 towards advance for sale of property locatedat plot no. C-26 to C-34 Ramprastha Ghaziabad in terms of agreement to sell dated24.01.2013. As per the terms of agreement to sell the party was to pay balance amount ofRs.110000000.00 by 31st December 2013. The party had failed to make paymentof balance amount. The advance of Rs.75000000.00 paid by the party was liable to beforfeited on non-payment to balance amount. During the year the Company has forfeited anamount of Rs.7500000/- as per agreement to sell dated 24.01.2013 and the balance amountof Rs.67500000/- to be refunded to the party after sale of all plots by IIDL.
C. emphasis of Matter in case of M/s Stock Holding corporation of India Limited
We draw attention to:
(a) Note No. 41.1 of the Consolidated Financial Statements related to the outcome ofcontinuing litigation with a Bank pending adjudication of the matter by the HonourableSupreme Court. As per the legal opinion obtained by the Management no provision has beenrecognised in the Statement of Profit and Loss.
(b) With reference to the Consolidated Financial Statements of M/s Stock HoldingCorporation of India Limited related to non-receipt of Direct confirmation in certaincases of receivables and payables:
In respect of Subsidiary "Stock holding Document Management Subsidiary" thestatutory auditors has given below matter of emphasis:
1. We draw attention to Note 42.1 of the Consolidated Financial Statements regardingCompany's liability to the third parties due to the fire occurred at Company's Premises.
2. We draw attention to the Consolidated Financial Statements of M/s Stock HoldingCorporation of India Limited regarding impact of COVID-19 pandemic. The situationcontinues to be uncertain and the Company is evaluating the situation on an ongoing basiswith respect to the challenges faced.
D. emphasis of Matter in case of M/s IFcI Venture capital Funds Limited
We draw attention to the Financial Statements of M/s IFCI Venture Capital Funds Limitedwhich fully describes that the company has estimated the provision for impairment on Loanto customers along with specific provision mandated by RBI in this regard to reflect theadverse business impact and the uncertainties arising from the COVID-19 pandemic. Suchestimates are based on current facts & circumstances and may not necessarily reflectthe impact of future uncertainties and events arising from COVID-19 pandemic.
M/s M. K. Aggarwaf & Co. (DE0500) (Firm Reg. No. 01411N) was appointed by theComptroller & Auditor General of India (C&AG) as Statutory Auditors of yourCompany for Financial Year 2019-20. The Statutory Auditor for the Financial Year 2020-21will also be appointed by C&AG.
qualifications reservation or adverse remark or disclaimer made by the secretarialauditor
M/s Agarwal S. & Associates Company Secretaries was appointed as SecretarialAuditor of the Company for the Financial Year 2019-20. The observations of the SecretarialAuditor along with Management Reply is as under:
|Observations of Secretarial Auditor ||Management Reply |
|Non-Compliance of Section 149 (4) of Companies Act 2013 and Regulation 17(1) of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations 2015 the Company shall have requisite no. of Independent Directors and shall also have at least one independent woman director on the Board of Company. ||In the absence of requisite number of Independent Directors on the Board of the Company the Company is not in compliance of the provisions of Section 149 (4) of Companies Act 2013 and Regulation 17(1) of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations 2015. In terms of Section 149(6) of the Companies Act 2013 the Department of Financial Services (DFS) Ministry of Finance (MOF) Government of India (GOI) being the Ministry administratively in charge of the Company is the Competent Authority to appoint Independent Directors (IDs). |
| ||IFCI being a Government Company the power to appoint the Independent Directors vest with the Administrative Ministry i.e. Ministry of Finance (MOF) Department of Financial Services (DFS). MOF DFS is seized of the matter as request for appointment of Independent Directors has already been sent to MOF DFS. The appointment of Independent Directors is awaited. |
|Non-compliance of Regulation 17(10) & 25(4) of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations 2015 In the absence of Independent Directors no separate meeting was held during the financial year and not carried out the performance evaluation of the directors. ||In the absence of Independent Directors on the Board of the Company the performance evaluation of and by Independent Directors as envisaged under Regulation 17(10) & 25(4) of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations 2015 could not be carried out. |
|Non-Compliance of Regulation 18(1) 19(1) (2) & 20(2A) of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations 2015 the company should have proper composition of Audit Committee Nomination and Remuneration Committee & Stakeholders Relationship Committee. ||Due to the absence of Independent Directors on the Board of the Company the Audit Committee Nomination and Remuneration Committee Stakeholders' Relationship Committee and Corporate Social Responsibility Committee were constituted without the Independent Directors and the Company was not in compliance of Regulation 18(1) 19(1)(2) & 20(2A) of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations 2015 and Section 135 (1) of Companies Act 2013. |
|Non-Compliance Section 135 (1) of Companies Act 2013 the Corporate Social Responsibility Committee shall have at least one independent director. || |
The Secretarial Audit Report for the Financial Year ended March 31 2020 is annexed atAnnexure - V.
During the Financial Year 2019-20 neither the Statutory Auditors nor the SecretarialAuditors have reported any fraud in their respective Audit Reports.
The performance evaluation of the Board its Committees and individual Directors wasconducted by the Nomination and Remuneration Committee and the Board. Since there was noIndependent Director on the Board of the Company during the financial year 2019-20 henceno Meeting of the Independent Directors could be held. Communications requestingappointment of requisite number of Independent Directors have been sent to theAdministrative Ministry and the appointments are awaited.
DISCLOSURE AS PER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITION AndREDRESSAL) AcT 2013
An Internal Complaint Committee has been formed and the Members of the said Committeeat present are as under:
1. Ms. Veenu Kakkar - External Member
2. Ms. Jhummi Mantri General Manager
3. General Manager (HR) - Presiding Officer
4. Ms. Anamika Ranawat DGM (Law)
5. Mr. Ravish Jain DGM
In the absence of any of the aforesaid internal members Ms. Sapna Jain DGM (Law)would be the alternate member.
A brief of the complaints received under Sexual Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013 is as under:
|No. of complaints pending at the start of the Financial Year 2019-20 ||Nil |
|No. of complaints received during the Financial Year 2019-20 ||1 |
|No. of complaints resolved during the Financial Year 2019-20 ||Nil |
|No. of Complaints pending at the end of the Financial Year 2019-20 ||1 |
|Number of workshops or awareness programs against sexual harassment carried out during the Financial Year 2019-20 ||3 |
|Nature of action taken by the employer ||Internal Complaints Committee (ICC) is examining the complaint as per the provisions mentioned under The Sexual Harassment of Women at Workplace (Prevention Prohibition and Redressal) Act 2013 |
DISCLOSURE ON LOAN GUARANTEES OR INVESTMENT UNDER SECTION 186 OF THE COMPANIES ACT2013
As the Company is primarily engaged in the business of financing Companies in thecapacity of being a Non-Banking Financial Company therefore the provisions of Section 186[except for subsection (1)] of the Companies Act 2013 are not applicable to the Company.
RISK MANAGEMENT POLICY
Disclosure indicating development and implementation of a Risk Management Policy isprovided in the Management Discussion and Analysis Report forming part of this Report.
DISCLOSURE ON RECEIPT OF COMMISSION BY A DIRECTOR FROM SUBSIDIARY COMPANY
No Director of the Company including the MD & CEO was paid any commission duringthe FY 2019-20 from any of the subsidiary of Your Company on whose Boards they wereDirectors as nominees of Your Company.
Your Company did not raise any public deposit during the year. There was no publicdeposit outstanding as at the beginning or end of the year as on March 31 2020
COST AUDIT & APPOINTMENT OF COST AUDITOR
As per the provisions of Section 148 of the Companies Act 2013 the requirement ofCost Audit is not applicable on the Company.
DISCLOSURE OF SIGNIFICANT OR MATERIAL ORDERS PASSED BY REGULATORS OR COURT IMPACTINGTHE GOING CONCERN STATUS OF THE COMPANY
During the FY 2019-20 there were no significant or material orders passed byRegulators or Court impacting the going concern status of the Company.
During 2019-20 Vigilance Department organized following training/workshop programmesfor vigilance awareness in the Company:
1. A lecture by Ex. Central Vigilance Commission Sh. KV Choudhary was organized forIFCI group employees.
2. Workshop/Training session was organized on disciplinary Proceedings for IFCIemployees.
3. During Vigilance Awareness Week A Debate Competition on the topic - "Culturepromotes Corruption" was organized for IFCI group to enhance vigilance awareness(regarding corruption practices) for IFCI Group Employees.
The Vigilance Department also undertook the following initiatives for improvement insystem and procedures in the Company:
1. Online Whistle blower System has been implemented for IFCI group companies.
2. Rotation of staff in general and in sensitive post has been ensured;
3. E-procurement has been made mandatory. Notices for inviting tender is beingpublished and tender documents in downloadable format available on website at CVO'ssuggestion;
4. Online System for Vigilance clearance has been implemented.
5. Systemic improvement suggested by the Vigilance Department have been implemented bythe Management
CHANGE IN NATURE OF BUSINESS AND MATERIAL CHANGES AND COMMITMENTS AFFECTING FINANCIALPOSITION BETWEEN THE END OF THE FINANCIAL YEAR AND REPORTING DATE
There has been no change in the business of the Company during the reporting period.Further there have been no material changes and commitments which affect the financialposition between the end of financial year and date of Board's Report.
DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to the requirement under Section 134 of the Companies Act 2013 with respectto Directors' Responsibility Statement it is hereby confirmed that:
(j) In the preparation of the annual accounts the applicable accounting standards hadbeen followed along with proper explanation relating to material departures;
(ii) The Directors had selected such accounting policies and applied themconsistently and made judgments and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of the company at the end of thefinancial year and of the profit and loss of the company for that period;
(ii) The Directors had taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of this Act for safeguardingthe assets of the company and for preventing and detecting fraud and other irregularities;
(iv) The Directors had prepared the annual accounts on a going concern basis;
(v) The Directors had laid down internal financial controls to be followed bythe company and that such internal financial controls are adequate and were operatingeffectively;
(vi) The Directors had devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.
Details of Debenture Trustee
As per the provisions of SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 the relevant details of the Debenture Trustees are as under:
|Name of Debenture Trustee ||Contact Details |
|Axis Trustee Services Limited ||The Ruby 2nd Floor SW 29 Senapati Bapat Marg Dadar West Mumbai - 400028 E-mail: email@example.com Website: www.axistrustee.com |
|IDBI Trusteeship Services Limited ||Asian Building Ground Floor 17 R. Kamani Marg Ballard Estate Mumbai - 400 001 E-mail: firstname.lastname@example.org Website: www.idbitrustee.in |
|Centbank Financial Services Limited ||3rd Floor (East Wing) Central Bank of India MMO Building 55 M G Road Mumbai - 400 001 E-mail: email@example.com Website: www.cfsl.in |
Comments of Comptroller & Auditor General of India
The comments of Comptroller & Auditor General of India (C&AG) are at Addendum.
Your Directors wish to express gratitude for the cooperation guidance and support fromthe Ministry of Finance various other Ministries and Departments of the Government ofIndia The Reserve Bank of India. The Securities and Exchange Board of India StockExchanges and other regulatory bodies The Comptroller & Auditor General of India andState Governments. Your Directors also acknowledge the valuable assistance and continuedcooperation received from all banks financial institutions overseas correspondent banksother members of the banking fraternity and investors. Your Directors would also like toexpress their appreciation for the efforts and dedicated service put in by the employeesat all levels of your Company.
|Shri Sunil Kumar Bansal ||Dr. Emandi Sankara Rao |
|Deputy Managing Director ||Managing Director & Chief Executive Officer |
|DIN: 06922373 || |
|Address: IFCI Tower ||DIN: 05184747 |
|61 Nehru Place ||Address: IFCI Tower |
|New Delhi-110 019 ||61 Nehru Place |
|Dated: July 31 2020 ||New Delhi-110 019 |