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IL&FS Investment Managers Ltd.

BSE: 511208 Sector: Financials
NSE: IVC ISIN Code: INE050B01023
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VOLUME 684270
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IL&FS Investment Managers Ltd. (IVC) - Director Report

Company director report

To The Shareholders of IL&FS Investment Managers Limited

Your Directors have pleasure in presenting for your consideration and approval theThirty-fourth Annual Report with the Audited Financials of the Company for the year endedMarch 31 2020

FINANCIAL ACHIEVEMENTS AND DIVIDEND

For the year ended March 31 2020 (' mn) For the year ended March 31 2019 (' mn) For the year ended March 31 2020 (' mn) For the year ended March 31 2019 (' mn)
Particulars Standalone Standalone Consolidated Consolidated
Total Income 288.63 490.28 486.66 1028.32
Profit/(Loss) before Taxation 114.07 147.13 (198.50) (78.39)
Provision for Taxation 34.64 45.33 (165) 58.39
Net Profit after Taxation 79.43 101.80 (196.85) (136.77)
Total Comprehensive income/(loss) for the year 76.26 107.66 (74.46)* (84.33)*

* after Minority Interest

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

DIVIDEND

Your Directors recommend a Dividend of Rs 0.60 per share of the Face Value of Rs 2/-each. The total amount of Dividend is Rs 188.42 mn. Last year the Company paid dividend ofRs 0.30 per share

REVIEW OF OPERATIONS

The outbreak of the COVID-19 pandemic across the globe will have far reaching andprofound effects on the world economy. The impact on economies jobs health supplychains world trade etc. will be unprecedented. With the intent to contain the spread ofCOVID-19 pandemic the Government announced a nationwide complete lockdown that brought asmuch as 70% of economic activity investment exports and discretionary consumption to astandstill. Only essential goods and services such as agriculture mining utilityservices some financial and IT services and public services were allowed to operate. Itwas amongst the world's biggest lockdowns that shut a majority of the factories andbusinesses suspended flights stopped trains and restricted movement of vehicles andpeople. While the government has been extending the lockdown it has allowed certainrelaxations and progressively allowed more economic activities to operate. As the lockdowneases gradually postponed consumption demand and inventory restocking demand couldprovide a growth push

The Government of India has also announced an economic stimulus package of Rs 20trillion or 10% of GDP. Larger component of the package was in the form of liquidityinfusion routed largely through the banking system. The key thrust of the package was onrural India agriculture credit for MSMEs economically weaker sections etc. and aseries of reforms in various sectors

Private Equity investments in CY2019 had witnessed a surge in terms of value while interms of number of deals a marginal decline registered as compared to the same periodlast year. However the first quarter of 2020 has been tough for Private Equity activitydue to the COVID-19 pandemic and the global slowdown. PE deals in Q1 2020 showedsubstantial reduction on a Y-o-Y basis in terms of both number of deals and deal value.Venture Capital funding dominated deal value in this quarter. Private Equity Exits werealso adversely impacted

While we expect non-agricultural GDP to de-grow agriculture could cushion the blow bygrowing. This is premised on the following: an extension of restrictions and lockdownespecially in states where Covid-19 cases are still rising; a normal monsoon that supportsthe agriculture incomes; softer crude oil prices; and limited fiscal support to prop upan immediate growth revival. Overall risks remain tilted to the downside and hinge onfurther extension in containment measures and slipping of global growth. Not only will thefirst two quarters be a washout for the non-agricultural economy services such aseducation and travel and tourism among others could continue to see a big hit in thequarters to come. Jobs and incomes will see extended losses as these sectors are largeemployers. Partial relaxations continue to be a hindrance to supply chains transportationand logistics. Hence unless the entire supply chain is unlocked revival of economy willbe a challenge

At IIML the team has primarily focussed on divestments. On the investment front IIMLhad been deploying capital through its fourth generation private equity Fund (Tara IndiaFund IV) and the focus remains on handholding the investee companies in navigating throughthese difficult times. The developments at the IL&FS Group has had a negative impacton IIML and its brand equity. They have significantly impinged on IIML's business plansfor revenue growth. The newly constituted IL&FS Board has initiated the process tosell its holding in IIML. The outcome of this sale process is uncertain. In the abovecontext IIML would look at non fund based initiatives like advisory services and othermeans to add to its revenues. The Company has been designated under the "Green"category by the National Company Law Tribunal and continues to be so

On the debt side IIML through its subsidiary operates the Infrastructure Debt Fund(IDF). The IDF has closed ended schemes and AUM as of March 31 2020 was Rs 18.18 bn.IIML's joint venture with Government of Andhra Pradesh saw slow progress due to theelections and consequent change of state government in Andhra Pradesh. The joint venturecompany seeks to develop urban infrastructure projects in Andhra Pradesh and towards thisend is now working on newer projects

On a consolidated basis the Income from Operations of the Company for FY2020 was Rs364 mn Income from Investment and Other Income was Rs 122 mn. Accordingly the TotalIncome on a consolidated basis for FY2020 was Rs 486 mn. The resultant Loss after Tax on aconsolidated basis for FY2020 was '197 mn

On a standalone basis the Total Income of the Company for FY2020 was Rs 289 mn and theTotal Expenses for the year were Rs 175 mn and the resultant Profit after Tax before othercomprehensive income for FY2020 was Rs 79 mn

MATERIAL CHANGES FROM THE END OF THE FINANCIAL YEAR

There have been no material changes and commitments affecting the financial position ofthe Company which have occurred from the end of the financial year for the Company towhich the financial statement relates and till the date of the Directors' Report

SUBSIDIARIES AND JOINT VENTURES

Your Company has Six Domestic Subsidiaries viz. IL&FS Asian Infrastructure ManagersLimited IL&FS Urban Infrastructure Managers Limited IIML Asset Advisors LimitedAndhra Pradesh Urban Infrastructure Asset Management Limited IL&FS Infra AssetManagement Limited and IL&FS AMC Trustee Limited and two Offshore Subsidiaries viz.IL&FS Investment Advisors LLC Mauritius and IIML Fund Managers (Singapore) Pte LtdSingapore

Your Company also has two Joint Venture Companies viz. Standard Chartered IL&FSManagement (Singapore) Pte Limited Singapore and IL&FS Milestone Realty AdvisorsPrivate Limited

As per Section 129(3) of the Companies Act 2013 and Regulation 33 of the SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 [LODR] the consolidatedfinancial statements of the Company with its Subsidiaries forms part of the Annual Report

The copies of the Audited Annual Accounts and other related documents of the Company'sSubsidiaries can be sought by any shareholder of the Company or its Subsidiaries on makinga written request to the Company Secretary in this regard. The Annual Accounts of theSubsidiary Companies are also available for inspection by any shareholder at the Company'sRegistered Office and are also uploaded on the company's website athttp://www.iimlindia.com/financials_SubsidiaryCompanies.aspx

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

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

IL&FS Asian Infrastructure Managers Limited :

IL&FS Asian Infrastructure Managers Limited (IAIML) was set up to manage the PanAsia Project Development Fund India (the Fund). The Fund having a corpus of Rs 1125 mninvested across seven investments. Six of these investments have been divested and thebalance one investment is partially divested. IAIML is working actively to fully divestfrom the residual investment of the Fund

The Total Income for FY2020 was Rs 3.36 mn. The Total Expenses of IAIML for the yearwere Rs 1.95 mn and the resultant total comprehensive income was a profit of Rs 1.41 mn

IL&FS Urban Infrastructure Managers Limited :

IIL&FS Urban Infrastructure Managers Limited (IUIML) functions as the Asset Managerfor the Pooled Municipal Debt Obligations (PMDO) Facility. The objective of the PMDOFacility is to provide long tenure term loans to meet the debt requirements of urbaninfrastructure projects across cities in India

The major revenue source of the Company is AMC fees payable by borrowers under PMDOFacility @ ~ 1 % p.a. on the outstanding loan balance. The amount outstanding under thePMDO Facility as on March 31 2020 was at Rs 13.27 bn

On representation the consortium member lenders of the PMDO Facility have in-principleagreed to pay management fee(s) in relation to the NPA(s) accounts which will boost itsrevenues and help in sustaining its operations

The Total Income for FY2020 was Rs 32.98 mn inclusive of Other Income of Rs 14.92 mn.The Total Expenses of IUIML for the year were Rs 42.11 mn and the resultant totalcomprehensive income was a loss of Rs 9.86 mn

IIML Asset Advisors Limited :

The Total Income of IAAL for FY2020 was Rs 12.22 mn. The Total Expenses of IAAL for theyear were Rs 6.38 mn and the resultant total comprehensive income was a profit of Rs 7.14mn

IL&FS Investment Advisors LLC :

IL&FS Investment Advisors LLC Mauritius (IIAL) acts as the Investment Manager toTara India Fund III LLC and Saffron India Real Estate Fund. During the year themanagement contracts in respect of two real estate funds were terminated by the investorsand one real estate fund completed all its divestments

The Total Income of IIAL for FY2020 was US$ 1.59 mn. The Total Expenses of IIAL for theyear were US$ 3.42 mn and the resultant loss for the year was US$ 1.83 mn

IIML Fund Managers (Singapore) Pte Ltd :

IIML Fund Managers (Singapore) Pte Ltd (IFMPL) was incorporated for the purposes ofmanaging funds from Singapore. The Company surrendered its Capital Market Service Licenseto the Monetary Authority of Singapore in FY2019

The Total Income of IFMPL for FY2020 was US$ 0.002 mn. The Total Expenses of IFMPL forthe year were US$ 0.02 mn and the resultant loss for the year was US$ 0.01 mn

Andhra Pradesh Urban Infrastructure Asset Management Limited :

The Company was set up as a subsidiary namely ‘Andhra Pradesh UrbanInfrastructure Asset Management Limited' (APUIAML) along with the Government of AndhraPradesh. The Company and the Government of Andhra Pradesh hold 51% : 49% equity stakerespectively in APUIAML

Andhra Pradesh Urban Development Fund had been created with the objective to financethe Urban Local Bodies in the State of Andhra Pradesh. APUIAML will also be involved inintegrated urban infrastructure project development and program management for the UrbanLocal Bodies and provide end to end solutions to them

The Total Income for FY2020 was Rs 47.54 mn inclusive of Other Income of Rs 3.30 mn.The Total Expenses for the year were Rs 229.37 mn and the resultant total comprehensiveloss for the year was Rs 149.49 mn

IL&FS Infra Asset Management Limited :

IL&FS Infra Asset Management Limited (IIAML) is the asset manager of the IL&FSMutual Fund which is an Infrastructure Debt Fund (IDF) as per SEBI Mutual Fund Regulations

The Total Income of IIAML for Financial Year 2019-20 was Rs 197.19 mn and the totalcomprehensive income for the year was Rs 111.65 mn

IL&FS AMC Trustee Limited :

IL&FS AMC Trustee Limited (IATL) acts as the Trustee of the IDF

The Total Income of IATL for Financial Year 2019-20 was Rs 1.90 mn and the totalcomprehensive income for the year was Rs 1.22 mn Standard Chartered IL&FS Management(Singapore) Pte Limited :

Standard Chartered IL&FS Management (Singapore) Pte Limited (SCIMPL) is a 50:50Joint Venture Company established with the Standard Chartered Bank to manage the StandardChartered IL&FS Asia Infrastructure Growth Fund. The Fund has completed divestmentsfrom all its investments and the Fund is in the process of being wound up

There was no income of SCIMPL for FY2020. The Total Expenses of SCIMPL for the yearwere US$ 4.79 mn and the resultant loss for the year was US$ 4.83 mn

IL&FS Milestone Realty Advisors Private Limited :

IL&FS Milestone Realty Advisors Private Limited (IMRAPL) is a Joint Venture (JV)Company established with the objective of raising funds that would invest in incomeyielding assets. Since inception the JV raised three funds and the Company has been ableto successfully divest from all the investments of these three funds

The Total Income of IMRAPL for FY2020 was Rs 1.04 mn. The Total Expenses of IMRAPL forthe year were Rs 2.29 mn and the resultant Profit after exceptional item & tax for theyear was Rs 6.40 mn

DIRECTORS & KEY MANAGERIAL PERSONNEL

Ms Shubhalakshmi Panse and Mr Sunil Mehta resigned as a Non-Executive IndependentDirectors of the Company with effect from April 30 2019 and March 19 2020 respectively

Mr Nand Kishore retires by rotation at the ensuing Annual General Meeting pursuant tothe provisions of Section 149 Section 152 and Section 162 of the Companies Act 2013

Mr Krishna Kumar reigned as the Chief Executive Officer of the Company with effect fromApril 19 2020 Mr Manoj Borkar was appointed as the Chief Executive Officer of the Companywith effect from July 28 2020

Pursuant to Section 203 of the Companies Act 2013 the Company has designated Mr ManojBorkar as the Chief Executive Officer and Chief Financial Officer and Mr Sanjay MitraCompany Secretary as the Key Managerial Personnel of the Company

There have been no changes in the Directors and Key Managerial Personnel of the Companyother than the above

BOARD INDEPENDENCE

The Company has received Declarations of Independence pursuant to Section 149(6) of theCompanies Act 2013 and Regulation 16(1)

(b) and Regulation 25(1) of the LODR from all the Independent Directors

NUMBER OF MEETINGS OF THE BOARD

The Board of Directors met five times during the Financial Year ended March 31 2020and the gap between two meetings did not exceed 120 days. The meetings were held duringthe year on May 30 2019 July 31 2019 September 30 2019 November 12 2019 andFebruary 10 2020

The details of the composition of the Board Committees and attendance of the Directorsat the Board meetings/Committee meetings are given in the Corporate Governance Report

SELECTION CRITERIA FOR APPOINTMENT OF DIRECTORS

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

BOARD EVALUATION

Pursuant to the provisions of the Companies Act 2013 and the LODR the Board hascarried out an annual performance evaluation of the Board and Committees thereof. Themanner in which the evaluation has been carried out has been explained in the CorporateGovernance Report

DIRECTORS' RESPONSIBILITY STATEMENT

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

(a) in the preparation of the Annual Accounts for the year ended March 31 2020 theapplicable Accounting Standards have been followed along with proper explanations relatingto material departures if any;

(b) that such accounting policies as mentioned in Note 2 of the Notes to the AnnualAccounts have been selected and applied consistently and judgments and estimates have beenmade that are reasonable and prudent so as to give a true and fair view of the state ofaffairs of the Company at the end of March 312020 and of the Loss of the Company for theyear ended on that date;

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

(d) that the Annual Accounts are prepared on a going concern basis;

(e) that proper internal financial controls were in place and that the internalfinancial controls were adequate and were operating effectively; and

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

RISK MANAGEMENT & INTERNAL CONTROL SYSTEMS

Risk Management forms an integral part of the business of the Company. The Company hasa Risk Management Framework which not only ensures timely identification of risksanalysis of the reasons for such risk assessment of its materiality assessment of itsimpact but also adequate risk mitigation processes. The Risk Management Frameworkencompasses all areas of the Company's business including the Funds under its management.The Risk Management Framework ensures that all risks which could potentially threaten theexistence of the Company are identified and risk mitigation is initiated in due time

The Company has an adequate system of internal controls including financial controlswith reference to Financial Statements commensurate with the nature of its business andcomplexity of its operations to ensure accuracy of accounting records compliance with alllaws and regulations and compliance with all rules processes and guidelines prescribed bythe management

An extensive internal audit is carried out by an independent firm of CharteredAccountants. Post audit reviews are also carried out to ensure follow up on theobservations made. The scope of the internal audit is determined by the Audit Committeeand the Internal Audit Reports are reviewed by the Audit Committee on a regular basis

RELATED PARTY TRANSACTIONS

All Related Party Transactions that were entered into during the Financial Year were onan arms' length basis and were in the ordinary course of business. There are no materiallysignificant Related Party Transactions made by the Company with Promoters Directors KeyManagerial Personnel or other designated persons which may have a potential conflict withthe interest of the Company at large. No new Material Related Party Transactions wereentered during the year by your Company. Accordingly the disclosure of Related PartyTransactions as required under Section 134(3) of the Companies Act 2013 in Form AOC 2 isnot applicable The disclosure of transactions with Related Parties is set out in Note No.25 of the Standalone Financial Statements forming part of the Annual Report

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

PARTICULARS OF LOANS GUARANTEES AND INVESTMENTS

Details of the Loans Guarantees and Investments covered under the provisions ofSection 186 of the Companies Act 2013 are given in Note No. 6 of the Standalone FinancialStatements

PARTICULARS OF EMPLOYEES

The particulars of the employees as required under Section 197(12) of the CompaniesAct 2013 read with Rule 5(1) and Rule 5(2) of the Companies (Appointment and Remunerationof Managerial Personnel) Rules 2014 forms part of the Directors' Report for the yearended March 31 2020 and are annexed as Annexure 1 and Annexure 2 respectively

DETAILS OF EMPLOYEE STOCK OPTION PLANS

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

During FY2020 the Nomination & Remuneration Committee of the Company decided toclose down all the above three ESOP Schemes REMUNERATION POLICY

The Board has on the recommendation of the Nomination & Remuneration Committeeframed a policy for selection and appointment of Directors Senior Management and theirremuneration. The remuneration paid to the Directors and the Senior Management is as perthe Managerial Remuneration Policy of the Company. The Management Remuneration Policy isposted on the company's website at http:// www.iimlindia.com/Policies.aspx and the briefdetails thereof are given in the Corporate Governance Report

POLICY FOR PREVENTION OF SEXUAL HARASSMENT AT WORKPLACE

The Company has always been committed to provide a safe and dignified work environmentfor its employees which is free of discrimination intimidation and abuse. The Company hasadopted a Policy for Prevention of Sexual Harassment of Women at Workplace under theprovisions of the Sexual Harassment of Women at Workplace (Prevention Prohibition andRedressal) Act 2013. The objective of this policy is to provide protection against sexualharassment of women at workplace and for redressal of complaints of any such harassment.The IL&FS group has also constituted an Internal Complaints Committee (ICC) for allthe group companies to redress the complaints under the Act. During the year nocomplaints pertaining to the Company were received by the ICC

STATUTORY AUDITORS

M/s Khimji Kunverji & Co. LLP were appointed as the Statutory Auditor of theCompany at the 33rd Annual General Meeting of the Company held on September 30 2019 fora term of five years from the conclusion of 33rd Annual General meeting upto theconclusion of the 38th Annual General Meeting

M/s Khimji Kunverji & Co. LLP have confirmed that their appointment continues tosatisfy the criteria specified in Section 141 of the Companies Act 2013 and Regulation 33of LODR

SECRETARIAL AUDIT

The Company has appointed M/s Mehta & Mehta a firm of Company Secretaries inPractice to undertake the Secretarial Audit of the Company pursuant to the provisions ofSection 204 of the Companies Act 2013 and The Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014. The Secretarial Audit Report for the Financial Yearended March 31 2020 is annexed herewith as an Annexure 3(I)

According to Regulation 24A of the LODR every listed entity and its material unlistedsubsidiaries incorporated in India shall undertake secretarial audit and shall annex withits annual report a secretarial audit report given by a company secretary in practicein such form as may be specified. Accordingly Secretarial Audit reports of Andhra PradeshUrban Infrastructure Asset Management Limited and IL&FS Infra Asset Management Limitedare attached as Annexure 3(II) and 3(III) respectively

QUALIFICATIONS IN THE AUDITORS' REPORT AND SECRETARIAL AUDITORS' REPORT AND ITSEXPLANATIONS

The Statutory auditors M/s Khimji Kunverji & Co. LLP have qualified the Standaloneand Consolidated Financials of the Company in their Statutory Audit report. The StatutoryAuditors have not reported any incident of fraud to the Audit Committee of the Company inthe year under review

Further the Secretarial Auditor M/s Mehta & Mehta Company Secretaries inPractice have made observations in the Secretarial Audit Report

The explanations or comments by the Board on the Statutory Audit qualifications andSecretarial Audit observations pursuant to Section 134(3)(f) of the Companies Act and LODRare as follows :

Statutory Auditor's qualification and its explanation :

On Standalone Financials :

Qualification 1 :

In view of the ongoing investigation by Serious Fraud Investigation Office of Ministryof Corporate Affairs (SFIO) against Infrastructure Leasing & Financial ServicesLimited (‘IL&FS' or ‘the Holding Company') and its subsidiaries (includingthe Company). Further the National Company Law Tribunal (NCLT) has ordered reopening ofbooks of account of IL&FS and its two subsidiaries (other than this company) for thepast financial years referred in the note. In view of the aforesaid ongoing investigationsof the entire IL&FS Group (including the Company) by the SFIO and re-opening ofaccounts of the Holding Company and two fellow subsidiaries by the NCLT the Auditors areunable to comment on the consequential impact(s) upon conclusion of the said investigationand re-opening of the books of account on these standalone annual financial results

Explanation 1:

The Company based on its current understanding believes that the above would not havea material impact on the financial results the implications if any arising from theaforesaid developments would be known only after the aforesaid matters are concluded andhence are not determinable at this stage

On Consolidated Financials :

Qualification 1 :

In view of the ongoing investigation by Serious Fraud Investigation Office of Ministryof Corporate Affairs (SFIO) against Infrastructure Leasing & Financial ServicesLimited (‘IL&FS' or ‘the Holding Company') and its subsidiaries (includingthe Company). Further the National Company Law Tribunal (NCLT) has ordered reopening ofbooks of account of IL&FS and its two subsidiaries (other than this company) for thepast financial years referred in the note. In view of the aforesaid ongoing investigationsof the entire IL&FS Group (including the Company) by the SFIO and re-opening ofaccounts of the Holding Company and two fellow subsidiaries by the NCLT the Auditors areunable to comment on the consequential impact(s) upon conclusion of the said investigationand re-opening of the books of account on these consolidated annual financial results

Explanation 1 :

The Company based on its current understanding believes that the above would not havea material impact on the financial results the implications if any arising from theaforesaid developments would be known only after the aforesaid matters are concluded andhence are not determinable at this stage

Qualification 2 :

The Statement regarding Foreign Currency Translation Reserve (FCTR) of Rs 712.17 Lakhsreflected for a subsidiary company representing difference of Capital Reserve recognisedin the earlier years as a result of acquisition of entities by the Holding Company in FY2010-11. As explained to us by the management of the company the rectification of thisdifference would not have any impact on Consolidated Statement of Profit & Loss forthe year. In absence of suitable explanations of such difference we are unable to commenton this item appearing in Other Equity of Consolidated annual financial results

Explanation 2 :

In November 2010 IL&FS Investment Advisors LLC (IIAL) wholly owned subsidiary ofthe Company acquired Saffron Capital Securities Limited (SCSL) and Saffron CapitalAdvisors Limited (SCAL) through a Scheme of Amalgamation in Mauritius. SCAL was amanagement company in Mauritius which had management contracts with two real estate fundsin Mauritius viz. K2 Property Limited (K2) (100% subsidiary of Yatra Capital Limited alisted company which had rasied € 220 mn) and Saffron India Real Estate Fund - I(SIREF) a unlisted fund which had raised USD 103.5 mn. The Amalgamation of SCAL and SCSLwith IIAL was accounted using the Purchase Method and in accordance with AccountingStandard 14. At the acquisition date the identifiable assets acquired and the liabilitiesassumed were recognised at their fair value at the acquisition date. Goodwill is measuredas the excess of the sum of the consideration transferred over the net of theacquisition-date amounts of the identifiable assets acquired and the liabilities assumedthus a Goodwill of Rs 81497193 (USD 1774619) was generated in IIAL

In October 2010 IL&FS Investment Managers Limited acquired Saffron Asset AdvisorsPrivate Limited (SAAPL) by acquiring their Class A shares for Rs 41464117. Based onSAAPL Financial on the date of acquisition there was a capital reserve of Rs 58022445(USD 1248869)

In the books of IIAL the goodwill was carried at book value since as per the IFRSaccounting standard followed by IIAL it is annually tested for Impairment and notamortised. In preparation of Consolidated Financial of IIML the Goodwill of IIAL wasnetted off against Capital Reserve of SAAPL and net goodwill of Rs 23474746 (USD525750) was amortised in the Consolidated Books using a straight line method over aperiod of five years

In the year 2012 IIML further acquired Class B shares of SAAPL for Rs 8400000against book value of Rs 21594800 which resulted in further Capital reserve of Rs13194800 which was again adjusted with the balance amount of Goodwill and the remainingGoodwill was amortised over the remaining period of 3 years. The net Goodwill in theConsolidated Financials became NIL during financial year 2012-13

Further in the year 2015 the goodwill of IIAL of USD 1774619 was fully impaired andhence written off in the books of IIAL. However this led to a situation where in theConsolidated Books the net Goodwill was fully amortised by 2012-13 but the Goodwill of Rs71217245 (' 58022445+ Rs13194800) of IIAL which was adjusted against Capital Reserveof SAAPL still remained. Since the accounting standard does not permit reclassification ofamount to Capital reserve the same amount is shown under adjustment column as a debititem against FCTR which would get adjusted when we sell IIAL

Secretarial Auditors' observation and its explanation :

Observation 1 :

On account to resignation of auditor on June 20 2019 the quarterly financialStatements for the quarter ended June 30 2019 were submitted to the stock exchange beyondthe prescribed timeline i.e. 45 days from the end on the quarter i.e. on September 302019 as required under Regulation 33 of Securities and Exchange Board of India("SEBI") (Listing Obligations & Disclosure Requirements) Regulations 2015.Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) had levied fines for thesaid delay

Explanation 1 :

Due to sudden resignation of the auditor mid-term the Company was not able to fill upthe vacancy and consequently could not file the financials for the quarter ended June 302019 in the stipulated time line. However the Company had applied to both the exchangesseeking waiver of fine. Both NSE and BSE passed orders for waiver of fines based onwritten and physical representations made by the Company

Observation 2 :

The Company has not appointed a women director as required under Regulation 17(1)(a)SEBI (Listing Obligations & Disclosure Requirements) Regulations 2015 and 1st provisoto Section 149(1) of the Act

Explanation 2 :

Pursuant to exemption granted by the National Company Law Tribunal vide Order No.3638/2018 dated April 26 2019 the company was not required to appoint a woman directoras required under Regulation 17(1)(a) SEBI (Listing Obligations & DisclosureRequirements) Regulations 2015 and 1st proviso to Section 149(1) of the Act Accordinglythere was no woman director on the board for the period June 20 2019 to March 31 2020

Observation 3 :

The Annual Report was dispatched to the shareholders on September 5 2019. However thesame was submitted to the Stock Exchanges on September 10 2019 i.e. with a delay of 5days which leads to contravention of Regulation 34(1 )(a) of SEBI (Listing Obligations& Disclosure Requirements) Regulations 2015. BSE and NSE had levied fines for thesaid delay

Explanation 3 :

There was an inadvertent delay is submission of Annual report to BSE and NSE. The saidfine was latter waived by both the exchanges upon written application of the Company

Observation 4 :

The Company has not appointed Independent Directors on the Board of Directors of any ofthe unlisted material subsidiaries of the Company resulting to contravention underRegulation 24(1) of SEBI (Listing Obligations & Disclosure Requirements) Regulations2015

Explanation 4 :

Pursuant to exemption granted by the National Company Law Tribunal vide Order No.3638/2018 dated April 26 2019 the Company was not required to appoint IndependentDirector on the Board of Directors of material subsidiaries. Hence no IndependentDirectors were appointed on the Board of Directors of any of the unlisted materialsubsidiaries of the Company

Observation 5 :

The Statutory Auditor resigned on June 20 2019 however the said casual vacancy wasfilled by the Board of Directors of the Company beyond 30 days (Thirty Days) as requiredunder Section 139(8)(i) of the Act

Explanation 5 :

Given the circumstances the Company was not able to fill up the casual vacancy withinthe stipulated time line after the sudden resignation of the auditor mid-term

INCREASE IN SHARE CAPITAL

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

The Directors state that applicable Secretarial Standards have been duly followed bythe Company during the year

CORPORATE GOVERNANCE

Pursuant to Regulation 34(3) and 53(f) of the LODR Related Party DisclosuresManagement Discussion and Analysis Disclosure of Accounting treatment Report onCorporate Governance have been included in this Annual Report as separate sections. TheCertificate on Compliance with the Corporate Governance requirement from M/s. Mehta &Mehta Practicing Company Secretaries is annexed to the Corporate Governance Report

CORPORATE SOCIAL RESPONSIBILITY

The Company has adopted a Corporate Social Responsibility (CSR) Policy which aims atnurturing socio-economic development livelihood creation quality education empowermentof people etc. with the primary goal of ensuring that benefits reach the targetedbeneficiaries

The Annual Plan for CSR is approved at the start of each financial year. Reviews and/ormodifications to the projects and allocations are undertaken periodically. The CSR Policyis posted on the Company's website at the link http://iimlindia.com/Policies.aspx

The Composition of the CSR Committee is given in the Corporate Governance Report. TheAnnual Report on the CSR activities is annexed herewith as Annexure 4

WHISTLE BLOWER POLICY/VIGIL MECHANISM

The Company has adopted a Whistle Blower Policy/Vigil Mechanism for Employees andDirectors to report instances of unethical behaviour actual or suspected fraud orviolation of the Company's Code of Conduct. During the year no personnel has been deniedaccess to the Audit Committee

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

DEPOSITS

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

ENERGY CONSERVATION TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

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

The particulars regarding foreign earnings and expenditure appear as Note Nos. 20(c)and 20(d) of the Notes to Accounts of the Standalone Financial Statements respectively

The Foreign Exchange earned in terms of actual inflows during the year and the ForeignExchange outgo during the year in terms of actual outflows is as follows :

USD INR
Outflow 869 58823
Inflow 2946891 218439930

COST RECORDS

Maintenance of cost records as specified by the Central Government under section 148(1) of the Companies Act 2013 are not required to be maintained by the Company andaccordingly such accounts and records are not maintained for the FY 2019-20

EXTRACT OF THE ANNUAL RETURN

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

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS

The National Company Law Tribunal (NCLT) passed an Order on October 1 2018 under theprovisions of Sections 241 and 242 of the Companies Act 2013 for suspending the existingBoard of Directors of Infrastructure Leasing and Financial Services Limited (IL&FS)the Holding Company and new members were inducted on the Board of IL&FS

The NCLT based on a petition by IL&FS vide its Order dated April 26 2019 grantedits exemption to IL&FS and its group Companies from appointing Independent Directorsand Woman Directors on the Board of IL&FS and its group companies

The NCLT by an Order passed on February 11 2019 has categorized ‘169 IL&FSGroup Entities' incorporated within the territorial jurisdiction of India into (a)"Green Entities" (b) "Amber Entities" (c) "Red Entities".Our Company and its subsidiaries have been categorised as Green entities - meaning onewhich can continue to meet all its payment obligation (both financial and operational) asand when they become due

ACKNOWLEDGEMENT

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

For and on behalf of the Board
S M DATTA
Chairman
Place : Mumbai
Date : July 28 2020

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