On behalf of the Board of Directors it is our pleasure to present the 12th (twelfth)Annual Report together with the Audited Financial Statements of PTC India FinancialServices Limited ("the Company" or "PFS") for the financial year ended31st March 2018.
1. Financial Performance
The summarized standalone results of your Company are given in the table below.
| || ||(Rs. in millions) |
| ||FY2017-18 ||FY2016-17 |
|Interest income ||11127.45 ||11136.92 |
|Other income ||775.07 ||2381.89 |
|Total Income ||11902.53 ||13518.81 |
|Profit/(loss) before Interest Depreciation & Tax (EBITDA) ||7908.76 ||11767.53 |
|Finance Charges ||6826.77 ||6446.93 |
|Depreciation and amortization ||32.59 ||33.78 |
|Provision for Income Tax (including for earlier years) ||802.35 ||1833.49 |
|Net Profit/(Loss) After Tax ||247.05 ||3453.33 |
|Profit/(Loss) brought forward from previous year ||- ||- |
|Amount transferred consequent to Scheme of Merger ||- ||- |
|Profit/(Loss) carried to Balance Sheet ||247.05 ||3453.33 |
*previous year figures have been regrouped/rearranged wherever necessary.
The loan book size increased by 21% in the FY 2017-18 to Rs. 128163.70 million fromRs. 106097.80 million in FY 2016-17. Together with the non-fund base portfolio the totalpotfolio exceeds Rs. 143000 million. The operational performance in FY 2017-18 has beenaffected due to higher provisions/ non recognisation of interest on stressed/ NPA loanaccounts. The interest income remained almost at the same level in the FY 2017-18 at Rs.11127.45 million as compared to Rs. 11136.92 million during FY 2016-17. Other incomeincludes Rs. 1472.63 million arising as dividend income/ profit from sale of equityinvestment made during the FY 2016-17 as compared to Nil for FY 2017-18. Increase infinance charges is due to increase in portfolio size and also includes amortization offoreign currency translation aggregating to Rs. 76.24 million as compared to Rs. 144.08million during FY 2016-17. Other expenses amounting to Rs. 405.20 million during FY2017-18 constitute 3.64% of interest income and 0.32% of loan book as compared to Rs.359.39 million for FY 2016-17 which constituted 3.22% of interest income and 0.34% of loanbook in respective previous FY 2016-17. Fee based income has declined from Rs. 849.11million in FY 2016-17 to Rs. 723.23 million in FY 2017-18. Provision and contingencies(including diminution of equity investments) has been increased to Rs. 3621.16 million inFY 2017-18 from Rs. 1425.67 million in FY 2016-17. The overall yield on loan assets forFY 2017-18 stood at 10.29% compared to 12.10% in FY 2016-17 whereas cost of borrowedfunds reduced to 8.18% during FY2017-18 compared to 8.79% in FY 2016-17 leaving spread of2.11% for FY 2017-18 compared to 3.31% in FY 2016-17.
The profit before tax (PBT) for FY2017-18 stood at Rs. 1049.39 million compared to Rs.5286.81 million during FY 2016-17. The profit after tax (PAT) for FY 2017-18 stood at Rs.247.05 million. However if neutralized for impact of stressed assets the adjusted NetInterest Income for the FY 2017-18 would have been Rs. 5178.25 million and adjusted netprofit after tax would have been Rs.3453.30 million as against Rs. 247.05 million.Adjusted for the impact of stressed loan assets Yield and Spread for FY 2017-18 stood at11.03% and 2.85% respectively compared to Yield and Spread of 12.11% and 3.31% during FY2016-17 respectively.
During the year PFS Gross NPA has increased from Rs. 5847.90 million to Rs.8383.79million and net NPA from Rs. 3935.07 million to Rs.5192.66 million and as on FY 2017-18Gross NPA as a % to gross advances was 6.54% and Net NPA as a % to net advances was 4.16%as compared to 5.51% and 3.78% respectively for FY 2016-17. The most of the NPA accountsbelong to the thermal and large hydro project. The approach of PFS is to progressivelyreduce the NPA level by resolution through measures like sale to new investor orARC/reference to NCLT/or through resolution plan under Samadhan/ Sashakt Scheme. Case bycase approach towards resolution is being pursued by PFS. A special team has been set upto deal with and find resolution of stressed assets. In the current financial year PFS hasfocused sanction mainly to the promoter having satisfactory track record with PFS.
The portfolio of PFS continues to record CAGR of 25% and achieved so by changing gearswell in time from financing thermal generation projects to renewable sector and alsoincremental exposure in phased and prudent manner to mix sector like roads portstransmission and infrastructural logistics projects. Incrementally sanctions to thesesectors have been Rs. 18349.10 million which is 22.24% of the total sanction in the FY2017-18. Incremental sanction to thermal projects in last five years has been minimalreducing share of thermal to 11% in the total portfolio from 49%. PFS sanctioned financialassistance to 192 projects of wind & solar amounting to Rs. 233004 million and loanoutstanding at the end of FY 2017-18 is Rs.73239 million. Out of the 90 live projects insolar and wind sector 79 projects are operational. Further two wind projects aggregatingto Rs.714.5 million which comes to 0.56% of outstanding loan in wind projects and whichare in the advance stage of resolution. None of the 58 solar projects in the books of PFSas on March 31 2018 is in the category of NPA.
For ensuring robust quality of the portfolio PFS will continue to strengthen itscredit appraisal process and risk management function while further enhancing the projectmonitoring function for early identification of stress in assisted projects.
2. Summary of Operations
The loans sanctioned during FY2017-18 were at Rs. 82494.40 million. The disbursementsmaintained an upward trend during the year with disbursements made towards the solar powerbased and other infrastructure projects. The fund based gross disbursements increased by22% to Rs. 51031.80 million compared to Rs. 41787 million during 2016-17.
The gross portfolio stood at Rs. 143122.90 million as at FY 2017-18 as compared to Rs.123423.60 million as at the end of FY2016-17. The fund based portfolio stood at Rs.128163.70 million as at 31st March 2018 as compared to Rs. 106100.00 million as at 31stMarch 2017 and the letter of comfort stood at Rs. 14959.20 million as at 31st March 2018as against Rs. 17323.60 million as at 31st March 2017. The equity investments made by theCompany aggregated to another Rs. 2484.68 million as at the year end. The cumulativegross aggregate debt assistance sanctioned by the Company as at 31st March 2018 aggregatedto Rs. 331038.20 million and net of cancellations/loan closure the cumulative debtsanctioned aggregated to Rs. 238266.00 million.
The financial assistance by PFS would help in capacity addition of about 20500 MW. PFSis constantly working with new as well as existing developers and is focused towardsdiversifying its portfolio. As on 31st March 2018 PFS has total outstanding exposure of57% in renewable sector 16% in thermal sector 4% in hydro sector and 23% in other infrasectors.
The power sector is witnessing stress particularly in case of thermal projects. Severalthermal projects in the country (both operational and under construction) are facingchallenges related to fuel price and availability power tariff time and cost overrunsalongwith equity infusion by promoters specially in case of under construction projects.PFS is also faced with challenges in respect of such projects. As at 31st March 2018 thenon-performing loans portfolio stood at Rs. 8383.79 million projects having aggregateloan outstanding of Rs. 8544.39 million are under corrective action plan (SDR/OSDR) andprojects having aggregate loan outstanding of Rs. 2071.43 million faced delays incommencement of commercial operations and have been classified as Standard Restructured.The Company continues to regularly monitor the progress and operations of the assistedprojects through its comprehensive project monitoring mechanism.
3. Industry Scenario
India's power sector continues to be a critical enabler for economic growth andwelfare. It is one of the most diversified power sector in the world and the sources ofpower generation range from conventional sources such as coal lignite natural gas oilhydro and nuclear power to viable non-conventional sources such as wind solar andagricultural domestic waste. Electricity demand in the country has increased rapidly andis expected to rise further in the years to come with drastic change in demand pattern.The sector with such development is also undergoing a significant change that isredefining the industry outlook. Sustained economic growth continues to drive electricitydemand in India. The Government of India's focus on attaining Power for all' hasaccelerated capacity addition in the country. At the same time the competitive intensityis increasing at both the market and supply sides
The Government of India has identified power sector as a key sector of focus so as topromote sustained industrial growth. The sector has tremendous investment potentialthereby providing immense opportunities in power generation distribution transmissionand equipment. India has set an ambitious plan to add 227 GW of renewable energygeneration capacity by 2022 and is being counted globally as a country leading investmentsin renewable energy.
According to the Standing Committee on Energy there are 34 stressed power projectswith an outstanding debt of Rs. 1.8 lakh crores. 17 of these projects with aggregatecapacity of 34000 MW are affected because of coal linkage. Major reasons for the financialstress in these thermal power projects include: (i) non-availability of fuel (coal) (ii)lack of enough power purchase agreements (PPAs) by states (iii) inability of the promoterto infuse equity and working capital (iv) tariff related disputes (v) issues related tobanks and (vi) delays in project implementation leading to cost overruns.
The stress in power sector has been acknowledged and various efforts/ initiatives arebeing taken to resolve the aforementioned stress in the sector. SBI led group of bankersproposed the Scheme of Asset Management and Debt Change Structure (SAMADHAN). 12 thermalpower projects have been identified under this scheme. REC PFC has proposedPARIVARTAN Scheme for housing of identified assets under an asset management andrehabilitation company which shall be jointly owned by financial institutions. Further aCommittee of Bankers has proposed the SASHAKT scheme for resolution of stress assetsincluding the stressed power projects. Under the above various schemes majorityshareholding in the Borrower is proposed to be bid out to a AMC/Strategic Investor/Alternate Investment Fund etc and these assets are proposed to be hold for a minimumperiod of some time post this lock in period it may exit entity by way of equity sale atbetter valuation. Also Govt. of India has formed a committee to tackle the stress in thepower sector headed by Cabinet Secretary and shall include Officials from Ministry ofpower railways coal and finance. Some of PFS projects under stress may be covered underone or more above schemes.
The Indian economy is under a transformational changes led by the Union Government. Thepower sector has always been the lifeline of the economy and is one of the prime driversof economic growth and social development. The development of power sector has been givendue importance in the national planning and resource allocation process. The privateparticipation in the sector is continuously increasing thereby indicating confidence andsupport. The sector is receiving attention at the topmost level and as a result ofpersistent efforts Moody's has upgraded the outlook for India's power sector to stablefrom negative. The total installed capacity in the country crossed the 343 GW mark as at31st March 2018.
The renewable power sector saw record capacity additions during FY2018. The totalgeneration capacity addition in respect of renewable projects aggregated to about 12 GWduring FY2018 surpassing the capacity addition in thermal sector. The renewable capacityis poised to see further capacity additions in line with the Government's vision ofinstalled capacity of 227GW by 2022.
In addition to renewable sector other areas such as power transmission roads andhighways ports etc. are also witnessing action. Infrastructure sector is the key driverfor the economy and possesses the potential for propelling overall development of thecountry. The sector continues to enjoy focus from Government both in terms of policyrelated initiatives and development of infrastructure in the country. New projects arebeing undertaken and government is poised to ensure all round development of theinfrastructure sector of the country.
PFS now focuses on attractive opportunities across the infrastructure sector especiallythe renewable energy projects road projects based on hybrid annuity model ports andinfra logistic etc.. The aggregate debt sanctioned by the Company has crossed Rs. 23000crore mark and the outstanding portfolio (fund based and non-fund based) has crossedRs.14000 crore mark as at 31st March 2018. Considering the issues emerged in thermalsector PFS as conservative approach has not taken further exposure in thermal generationprojects and have significantly diversified into Renewable energy portfolio and in otherinfra sectors such as Road and ports through calibrated approach. As on 31st March 2018the overall sanction exposure into Renewable projects is about 55% and sanction in otherinfra it is about 15%. Further during the FY 17-18 PFS has sanctioned about 23% of itsportfolio in other infra sector including transmission Road ports and Railway.
PFS believes that the infrastructure development and renewable energy area offers goodpotential and the Company continues to evaluate business proposals for projects in theseareas in line with the developments and the initiatives undertaken at the Governmentlevel. PFS is devoted to meet the challenges to take advantages of the potentialopportunities. The Company is focused on attractive opportunities across theinfrastructure sector. The Company expects the growth momentum to continue. The debtcommitments and disbursements have been robust during the year thereby maintaining theincreasing trend.
The power and infrastructure sector is witnessing stress and several projects in thecountry (both operational and under construction) are facing challenges. The Company iscontinuously engaged in resolution of such loans and is working proactively with theconsortium members. Regular lenders' meetings are conducted detailed feedback obtainedfrom lenders' independent engineers and financial advisors to see that project developmentactivities may be continued unhindered. Discussions are held with promoters' and otherstakeholders to work out a financially viable solution. The Company also engagesconsultants / professional agencies for working out effective solution / resolution forsuch cases. The Company continues to partner with credible players in the industry who canhelp all the stakeholders to benefit mutually.
5. Net Owned Funds and Earnings Per Share (EPS)
The Net Owned Funds of the Company aggregated to Rs. 22621.98 million as at 31st March2018 and the total Capital Funds aggregated to Rs. 24541.55 million as at that date. Thepercentage of aggregate risk weighted assets on balance sheet and risk adjusted value ofoff balance sheet items to net owned funds is 21.19% as at 31st March 2018.
EPS of the Company for the year ended 31.03.2018 stands at Rs.0.38 per share incomparison to Rs. 5.86 per share for the year ended 31st March 2017.
Out of the profits earned during the financial year 2017-18 the Company hastransferred an amount of Rs. 49.41 million to Statutory Reserve in accordance with therequirements of Section 45-IC of the Reserve Bank of India Act 1934. During 2017-18 theCompany has also appropriated an amount of Rs. 636.23 million to the reserve created underSection 36(i) (viii) of the Income Tax Act 1961 in order to achieve tax efficiencies.
Based on Company's performance the Board of Directors are pleased to recommend foryour consideration and approval a dividend at the rate of 2% (which is lower than earlierrecommendation of 15% in last year) i.e. Rs. 0.20/- per equity share of Rs. 10/- for theFY 2017-2018. The dividend on equity shares if approved by the members at ensuing AnnualGeneral Meeting would involve the cash outflow of Rs.154.61 million including dividenddistribution tax amounting to Rs. 26.40 million.
The dividend will be paid to the members whose names appear in the Register of Membersas on a record date and in respect of shares held in dematerialized form whose names arefurnished by National Securities Depositories Limited and Central Depository (India)Limited as beneficial owners as on record date.
8. Fixed Deposits/Public Deposits
Your Company has not accepted any deposits during the year from public in terms ofprovisions of Companies Act 2013. Further at the end of the year there were nounclaimed unpaid or overdue deposits.
9. Capital Adequacy Ratio
The Capital Adequacy Ratio as on 31st March 2018 stood at 21.19% compared to 24.09% ason 31st March 2017. No adverse material changes affecting the financial position of theCompany have occurred during the financial year.
10. Material changes and commitments if any affecting the financial position of theCompany
There have been no material changes and commitments affecting the financial position ofthe Company which have occurred between the end of the financial year of the Company towhich the financial statements relates (i.e. 31st March 2018) and the date of the report.No adverse Material changes affecting the financial position of the Company have occurredduring the Financial Year.
11. Particulars of loans guarantees and investments under Section 186
The particulars of loans guarantees and investments have been disclosed in thefinancial statements.
12. Share Capital/ Finance
The paid up share capital of the Company as at 31st March 2018 aggregates to Rs.6422.83 million comprising of 642283335 equity shares of Rs. 10/- each fully paid up.PTC India Limited holds 64.99% of the paid up share capital of the Company as at 31stMarch 2018. The equity shares of the Company are listed on the National Stock Exchange ofIndia Limited (NSE) and BSE Limited (BSE).
13. Extracts of the Annual Return
As provided under section 92(3) of the Companies Act 2013 (the Act') and rule12(1) of the Companies (Management and Administration) Rules 2014 extract of annualreturn is given in Annexure I in the prescribed Form MGT-9 whichforms part of this report.
14. Directors and Key Managerial Personnel
In accordance with provisions of the Companies Act 2013 and Articles of Association ofthe Company Dr. Rajib Kumar Mishra Director of the Company shall retire by rotation atthe ensuing Annual General Meeting and being eligile has offered himself forre-appointment.
Details of changes in the composition of Board during the period under review has beenspecifically mentioned in the report on the Corporate Governance which is annexed withthis report.
15. Dividend Distribution Policy
As per regulation 43A of SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 the Company has formulated a dividend distribution policy. The policywas adopted to set out the parameters and circumstances that will be taken in to accountby the Board while determining the distribution of dividend to its shareholder. The policyis enclosed as AnnexureII to the Board Report and is also available onCompany's website at : http://www.ptcfinancial.com/upload/pdf/Dividend%20Distribution%20Policy-PFS.pdf
16. Details of the Board meetings
Fourteen Board Meetings were held during the financial year ended on 31st March 2018and gap between two meetings did not exceed one hundred twenty days details of which aregiven below:
|Sl. No. ||Date of the meeting ||No. of Directors attended the meeting |
|1 ||28th April 2017 ||8 |
|2 ||22nd May 2017 ||7 |
|3 ||18th July 2017 ||9 |
|4 ||29th July 2017 ||9 |
|5 ||9th August 2017 ||8 |
|6 ||29th September 2017 ||9 |
|7 ||24th October 2017 ||8 |
|8 ||31st October 2017 ||8 |
|9 ||13th November 2017 ||7 |
|10 ||28th December 2017 ||8 |
|11 ||25th January 2018 ||8 |
|12 ||13th February 2018 ||9 |
|13 ||15th March 2018 ||9 |
|14 ||28th March 2018 ||9 |
Further the attendance of each director is more specifically mentioned in the reporton the Corporate Governance which is annexed with this report.
17. Committees of the Board
The Company's Board has the following Committees:
1) Audit Committee
2) Nomination and Remuneration Committee
3) Asset Liability Management Committee
4) Risk Management Committee
5) Stakeholders' Relationship Committee
6) Corporate Social Responsibility Committee
7) Committee of Directors for Bond issuance
8) Investment Committee
The details of the Committees their meetings and other disclosures are mentioned inthe corporate governance report which forms part of this report.
18. Corporate Social Responsibility
As a good corporate citizen the Company is committed to ensuring its contribution tothe welfare of the communities in the society where it operates through its CorporateSocial Responsibility ("CSR") initiatives.
The Corporate Social Responsibility Committee has formulated and recommended to theBoard a Corporate Social Responsibility Policy (CSR Policy) indicating the activities tobe undertaken by the Company which has been approved by the Board.
The objective of PFS's CSR Policy is to consistently pursue the concept of integrateddevelopment of the society in an economically socially and environmentally sustainablemanner and at the same time recognize the interests of all its stakeholders.
To attain its CSR objectives in a professional and integrated manner PFS shallundertake the CSR activities as specified under the Companies Act 2013. The compositionand other disclosures are mentioned in the corporate governance report which forms part ofthis report.
The report on CSR activities/initiatives is enclosed at Annexure III andis also available at website of the Company at http://www.ptcfinancial.com/upload/pdf/corporate_social_responsibility_policy.pdf
19. Vigil mechanism/Whistle Blower Policy
In compliance with requirements of Companies Act 2013 & SEBI Listing Regulationsthe Company has established a mechanism called Whistle Blower Policy' for employeesto report to the management instances of unethical behavior actual or suspected fraud orviolation of the Company's code of conduct or ethics policy. The policy has been framed toenforce controls so as to provide a system of detection reporting prevention andappropriate dealing of issues relating to fraud unethical behavior etc. The policyprovides for adequate safeguards against victimization of director(s) / employee(s) whoavail of the mechanism and also provides for direct access to the Chairman of the AuditCommittee in exceptional cases. During the year under review no complaint has beenreceived.
The Whistle Blower policy is available at http://www.ptcfinancial.com/upload/pdf/whistle_blower_policy.pdf
20. Directors' Responsibility Statement
Pursuant to the requirement clause (c) of sub-section (3) of Section 134 read withsection 134(5) of the Companies Act 2013 your Directors to the best of their knowledgeconfirm that:
(a) in the preparation of the annual accounts for the year ended 31st March 2018 theapplicable accounting standards had been followed along with proper explanation relatingto material departures;
(b) the directors had selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company at the end of the financial year ended31st March 2018 and of the profit and loss of the Company for that period;
(c) the directors had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of this Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities;
(d) the directors had prepared the annual accounts on a going concern basis; and
(e) the directors had laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and are operatingeffectively.
(f) the directors had devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.
21. Statutory Auditors their Report and Notes to the Financial Statements
M/s. Deloitte Haskins & Sells Chartered Accountants were ratified in the lastAnnual General Meeting of the Company as statutory auditors of the Company for FY 2017-18by the shareholders and shall hold office upto the conclusion of the forthcoming AnnualGeneral Meeting.
The Auditors have audited the Accounts of the Company for the year ended 31st March2018. Audited Financial Statements (both standalone and consolidated) comprising BalanceSheet as at 31st March 2018 the Statement of Profit and Loss and the cash flow Statementalong with a summary of significant accounting policies & other explanatoryinformation together with Auditor's Report thereon are annexed to this report. TheAuditors' Report does not contain any qualification reservation or adverse mark.
Further the Auditors of the Company while performing their duties as such has notfound any fraud which was required to be reported to the Board of Director or CentralGovernment.
The Board of Directors has recommended the ratification of appointment of M/s. DeloitteHaskins & Sells Chartered Accountants as statutory auditors of the Company for FY2018-19 to shareholders in the ensuing Annual General Meeting.
22. Secretarial audit
Pursuant to provisions of Section 204 of Companies Act 2013 and rules mentionedthereto the Board of Directors of the Company appointed M/s. Agarwal S. and AssociatesPracticing Company Secretary to conduct the Secretarial Audit of records and documents ofthe Company. The Secretarial Audit Report is enclosed as Annexure IV. Theobservations set out in Secretarial Audit report and its reply of the same is as under:-
|Observation by Secretarial Auditor ||Reply by the Company |
|During the period under review the Company has complied with the provisions of the Acts Rules Regulations Guidelines Standards etc. mentioned above subject to the following observation: ||PFS has initiated the process and the same shall be complied soon. |
|1. Compliance to proviso to Regulation 17 (1) (b) of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations 2015 w.r.t. appointment of requisite no. of Independent Directors on the Board of the Company. || |
|We further report that the Board of Directors of the Company is not duly constituted in terms of proviso of Regulation 17 (1) (b) of the Securities and Exchange Board of India (Listing Obligations & Disclosure Requirements) Regulations 2015 (as atleast half of the Board of Directors should comprise of Independent Directors). However the Company was compliant in terms of provisions under Section 149 (4) of the Companies Act 2013 as out of 9 Board of Directors there were 3 Independent Directors on the Board of Company. The changes in the composition of the Board of Directors that took place during the period under review were carried out in compliance with the provisions of the Act. || |
23. Related party transactions
During the financial year 2017-2018 the Company has not entered into any other relatedparty transactions which attracts the provision of Section 188 of the Companies Act 2013and Securities and Exchange Board of India (Listing obligations and DisclosuresRequirements) Regulations 2015. The details of transactions entered into with the RelatedParties is given in schedule no. 29 of the Audited Accounts of the Company. During theyear the Company had not entered into any contract/ arrangement/ transaction with relatedparties which could be considered material in accordance with the policy of the Company onmateriality of related party transactions. The Policy on Materiality of Related PartyTransactions and Dealing with Related Party Transactions as approved by the Board isavailable on the Company's website at the link:
Further all the transactions are made in the ordinary course of business and on arm'slength basis.
Information on transactions with related parties pursuant to section 134(3)(h) of theAct read with rule 8(2) of the Companies (Accounts) Rules 2014 are given in Annexure- V in Form AOC-2 and the same forms part of this report.
24. Human Resources
Your Company treats its "human resources" as one of its most importantassets. Your Company invests in attraction retention and development of talent on anongoing basis. A holistic assessment of manpower needs leads to fresh recruitment atvarious level. A number of individual employee specific group of employee specific andorganisational wise programs that provide focused people attention are currently underway.Your Company's thrust is on the development of talent internally through job enlargementrotation and development.
Your Company's thrust on development of the employee at all level has helped yourorganization achieve employee's loyalty and attachment to the Company. There is a hugeopportunity for all of us to learn practice and perform. Though the expectation from theemployees are realistic each employee get to work on challenging assignments and achance to learn innovate and perform. Handholding guidance & mentoring has specialplace in development of young team and organization. Sharing of knowledge and learningfrom the experience of seniors has helped us grow steadily.
The human resource development is critical to implementation of organizational strategyand to make organization humble and responsive to the customers need. Employees areencouraged to participate and be part of the organizational growth and developmentstrategy. Lateral entry at different levels keeps the organization vibrant.
25. Industrial Relations
Your Company has always maintained healthy cordial and harmonious industrial relationsat all levels. Despite of competition the enthusiastic efforts of the employees haveenabled the Company to grow at a steady pace.
26. Risk Management Policy
PFS has put in place a comprehensive policy framework for management of risks whichincludes the followings:-
Risk Management Policy: - The Risk Management Framework of PFS encompassescredit risk market risk as well as operational risk management. The Risk ManagementPolicy evolved under the guidance of Risk Management Committee and duly approved by Boardof Directors is refined periodically based on emerging market trends and own experience.The Risk Management Committee is headed by Independent Director.
Asset Liability Management Policy The objectives of Asset Liability ManagementPolicy are to align market risk management with overall strategic objectives articulatecurrent interest rate view and determine pricing mix and maturity profile of assets andliabilities. The asset liability management policy involves preparation and analysis ofliquidity gap reports and ensuring preventive and corrective measures. It also addressesthe interest rate risk by providing for duration gap analysis and control by providinglimits to the gaps.
Foreign Exchange Risk Management Policy: - The policy covers the management offoreign exchange risk related to existing and future foreign currency loans or any otherforeign exchange risks derived from borrowing and lending. The objective of the policy isto serve as a guideline for transactions to be undertaken for hedging of foreign exchangerelated risks. It also provides guiding parameters within which the Asset LiabilityManagement Committee can take decisions for managing the above mentioned risks.
Interest Rate Policy: - Interest rate policy provides for risk based pricing ofthe debt financing by the Company. It provides the basis of pricing the debt and themanner in which it can be structured to manage credit risk interest rate risk andliquidity risk while remaining competitive.
Policy for Investment of Surplus Funds: - The policy of investment of surplusfunds i.e. treasury policy provides the framework for managing investment of surplusfunds. Realizing that the purpose of mobilization of resources in the Company is tofinance equity as well as loans to power sector projects the prime focus is to deploysurplus funds with a view to ensure that the capital is not eroded and that surplus fundsearn optimal returns.
Operational Risk Management Policy: - The operational risk management policyrecognizes the need to understand the operational risks in general and those in specificactivities of the Company. Operational risk management is not understood as a process ofeliminating such risk but as a systematic approach to manage such risk. It seeks tostandardize the process of identifying new risks and designing appropriate controls forthese risks minimize losses and customer dissatisfaction due to possible failure inprocesses.
27. Employees' Stock Option
The Company does not have any outstanding Employees' Stock Options.
28. Declaration given by independent directors
Mrs. Pravin Tripathi Shri Harbans Lal Bajaj Shri Harun Rasid Khan Shri KamleshShivji Vikamsey and Shri Santosh Balachandran Nayar are Independent Directors on the Boardof your Company as on date of this report. In the opinion of the Board and based upon thedeclaration furnished by the said Independent Directors they fulfill the conditionsspecified in section 149 of the Companies Act 2013 and the Rules made thereunderRegulation 25 of Securities and Exchange Board of India (Listing obligations andDisclosures Requirements) Regulations 2015 about their status as Independent Directors ofthe Company.
29. Company's policy on appointment and remuneration of Senior Management and KMPs
As per the requirements of the Companies Act 2013 the Board of Directors of yourCompany has constituted a Nomination and Remuneration Committee'. The Committee'srole is to be supported by a policy for nomination of Directors and Senior ManagementPersonnel including Key Managerial Personnel as also for remuneration of Directors KeyManagerial Personnel (KMP) Senior Management Personnel and other Employees. Further apolicy on Board Diversity is also to be adopted.
The Policy of the Company on Nomination and Remuneration & Board Diversity isattached herewith and marked as Annexure VI.
30. Formal Annual Evaluation
The Board of Directors has carried out an annual evaluation of its own performanceBoard Committees and individual Directors pursuant to the provisions of the Companies Act2013 and the corporate governance requirements as prescribed by Securities and ExchangeBoard of India (Listing Obligations and Disclosure Requirements) Regulations 2015.
The Company pays performance linked remuneration to its WTDs/MD in addition to theirfixed salary. It is ensured that the remuneration is determined in a way that there existsa fine balance between fixed and incentive pay. On the basis of Policy for PerformanceEvaluation of Independent Directors a process of evaluation is being followed by theBoard for its own performance and that of its Committees and individual Directors. Theperformance evaluation process and related tools are reviewed by the "Nomination& Remuneration Committee" on need basis and the Committee may periodically seekindependent external advice in relation to the process. The Committee may amend thePolicy if required to ascertain its appropriateness as per the needs of the Company. ThePolicy may be amended by passing a resolution at a meeting of the Nomination &Remuneration Committee.
The performance of the Board is evaluated by the Board after seeking inputs from allthe Directors on the basis of the criteria such as the Board composition and structureeffectiveness of Board processes information and functioning etc. The performance of theCommittees was evaluated by the Board after seeking inputs from the Committee members onthe basis of the criteria such as the composition of Committees effectiveness ofCommittee meetings etc. The Board and the Nomination and Remuneration Committee reviewedthe performance of the individual Directors on the basis of the criteria such as thecontribution of the individual Director to the Board and committee meetings likepreparedness on the issues to be discussed meaningful and constructive contribution andinputs in meetings etc. In addition the Chairman was also evaluated on the key aspectsof his role.
In a separate meeting of Independent Directors performance of Non-IndependentDirectors performance of the Board as a whole and performance of the Chairman wasevaluated taking into account the views of Executive Directors and Non-ExecutiveDirectors. The same was discussed in the Board meeting that followed the meeting of theIndependent Directors at which the performance of the Board its Committees andindividual Directors was also discussed. Performance evaluation of Independent Directorswas done by the entire Board excluding the Independent Director being evaluated.
31. Disclosure under the Sexual Harassment of Women at the work place (PreventionProhibition and Redressal) Act 2013
Your Company has in place a Prevention of Sexual Harassment Policy in line with therequirements of the Sexual Harassment of Women at Workplace (Prevention Prohibition &Redressal) Act 2013. An Internal Complaints Committee has been constituted to look intogrievance/ complaints of sexual harassment lodged by employees as per Sexual Harassment ofWomen at Workplace (Prevention Prohibition and Redressal) Act 2013. All employees(permanent Contractual temporary trainees) are covered under this policy. Further nocomplaints were received during the year and no complaint is pending on 31st March 2018.
32. Internal Financial Controls and Internal Auditor
The internal financial controls with reference to the Financial Statements arecommensurate with the size and nature of business of the Company. The scope and authorityof the Internal Audit function is defined by the Audit Committee. The Company hasappointed M/s Grant Thornton India LLP as Internal Auditors of the Company. To maintainits objectivity and independence the Internal Auditor reports to the Audit Committee. TheAudit Committee has the responsibility for establishing the audit objectives anddetermines the nature timing and extent of audit procedures as well as the locationswhere the work needs to be carried out. The Internal Auditors monitor and evaluate theefficacy & adequacy of internal financial controls & internal control system inthe Company that has been put in place to mitigate the risks faced by the organization andthereby achieves its business objective. Broadly the objectives of internal audit are to:-
review the adequacy and effectiveness of the transaction controls;
evaluate the operations of the control supervisory mechanisms;
recommend improvements in processes management; and
assess the compliance with operating systems accounting procedures and policies
The internal control and compliance is an on-going process. Based on the findings andreport of internal auditor process owners undertake corrective action that may berequired in their respective areas for further strengthening the controls and controlenvironment. Significant audit observations and corrective actions thereon are presentedto the Audit Committee. The internal auditors also independently carry out the designevaluation and testing of controls related to requirements of Internal Financial Controls.The evaluation of design effectiveness and testing of controls for various businessactivities processes and sub processes was carried out and found satisfactory.
33. Cost Auditors
Cost Audit is not applicable to the Company.
34. Details of Holding Subsidiaries Associates and Joint Ventures
Your Company continues to be the subsidiary of PTC India Limited (PTC). Further theCompany has two associate companies namely M/s. R.S. India Wind Energy Private Limited andM/s. Varam Bio Energy Private Limited. The statement of performance and financial positionof each of the associate companies is given in Form AOC-1 as Annexure VII.
The Policy for determining material subsidiaries as approved may be accessed on theCompany's website following link:
35. Corporate Governance Report
The Company is committed to maintain the highest standards of corporate governance andadhere to the corporate governance requirements set out by Securities and Exchange Boardof India (SEBI'). A separate report on Corporate Governance along with Certificatefrom M/s. Deloitte Haskins and Sell Statutory Auditors on compliance with the conditionsof Corporate Governance as stipulated under SEBI (Listing Obligations & DisclosureRequirements) Regulations 2015 is provided as part of this Annual Report.
36. Management Discussion and Analysis
The Management Discussion and Analysis comprising an overview of the financial resultsoperations / performance and the future prospects of the Company form part of this AnnualReport.
37. Business Responsibility Report
Pursuant to the Regulation 34(2)(f) of the SEBI (Listing Obligations & DisclosureRequirements) Regulations 2015 the Business Responsibility Report describing theinitiatives taken by the Company from an environmental social and governance perspectivein the format as specified by the SEBI is given as Annexure- VIII.
38. Particulars of Employees
A. The information pertaining to the remuneration and other details as required underSection 197 of Companies Act 2013 read with rule 5(1) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 are given below:
a. The ratio of the remuneration of each director to the median remuneration of theemployees of the company for the financial year 2017-18; (Rs. in Lacs)
|Name of Director ||Director's Remuneration ||Median Remuneration of employees ||Ratio |
|Dr. Ashok Haldia ||93.56 ||16.27 ||5.75 times |
|Dr Pawan Singh ||75.83 ||16.27 ||4.66 times |
|Naveen Kumar ||30.64 ||16.27 ||1.88 times |
Joined PFS on 25.09.2017
b. The percentage increase in remuneration of each Director Chief Financial OfficerChief Executive Officer Company Secretary or Manager if any in the financial year;
|Name ||% age Increase |
|Dr. Ashok Haldia*# ||0.72% |
|Dr Pawan Singh# ||0.23% |
|Naveen Kumar ||- |
|Gaurav Kaushik ||11.14% |
|Vishal Goyal ||11.21% |
* Excluding the impact of leave encashment made in respect of accumulated leave to thecredit.
# Excluding the increment of 8.5% for the FY2017-18 that was paid during the FY2018-19.
Joined PFS on 25.09.2017
c. The median remuneration of the employees has decreased to Rs. 16.27 lakhs during theFY2017-18 from Rs.17.16 lakhs during FY2016-17.
d. 48 permanent employees are on the rolls of company as at 31st March 2018;
e. The average percentile increase in the salary of employees other than the managerialpersonnel is from Rs. 19.44 lakhs in FY2016-17 to Rs. 20.40 lakhs in FY2017-18 resultingin an increase of 4.90%. Whereas the average percentile decrease in the managerialremuneration is from Rs. 86.38 lakhs in FY2016-17 to Rs. 66.68 lakhs in FY2017-18resulting in decrease of 22.81% which is primarily due to joining of Whole Time DirectorSh. Naveen Kumar on 25th September 2017.
f. As per Rule 5(2) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 statement of particulars of employees is Annexed as AnnexureIX.
B. Particulars of Top 10 employees in terms of remuneration
|Sl. No. ||Name & Designation ||Nature of Employement ||Remuneration Received (amount in Rs.) ||Qualification and Experience ||Date of Commencement of Employment in the Company ||Age ||Last Employment ||% of Quantity of shares held in the Company ||If relative of any director or manager name of such director or manager |
|1 ||Dr. Ashok Haldia ||Fixed Term ||9356480 ||M.Com. Ph D CA CS CMA/ 38 years ||13.08.2008 ||61 yrs 7 months ||The Secretary in The Institute of Chartered Accountants of India ||Nil ||NA |
|2 ||Dr. Pawan Singh ||Fixed Term ||7582806 ||MBA Ph D/ 35 years ||01.02.2012 ||56 yrs 6 months ||Dir-F in Indraprastha Power Generation Co Ltd Pragati Power Corpn Ltd ||Nil ||NA |
|3 ||*Shri Naveen Kumar ||Fixed Term ||3064320 ||BSc (Engg); MBA; LLB/38 years ||25.09.2017 ||37 years 2 months ||Executive Director Power Finance Corporation Ltd. ||Nil ||NA |
|4 ||Vijay Singh Bisht ||Regular ||6800919 ||BE & MBA/ 31 years ||01.08.2008 ||55 years 1 month ||DGM in PFC ||Nil ||NA |
|5 ||Sitesh Kumar Sinha ||Regular ||6071825 ||B.E & PGDBM/ 20 years ||22.03.2011 ||42 years 3 months ||DGM in Lahmeyer International (India) Pvt Ltd ||Nil ||NA |
|6 ||Gaurav Kaushik ||Regular ||5034161 ||B.Com & CA/14 years ||01.06.2011 ||38 years ||Manager in Lovelock & Lewes Chartered Accountants (PwC) ||Nil ||NA |
|7 ||Vishal Goyal ||Regular ||4140993 ||CS LLB & MBA/ 14 years ||01.08.2008 ||37 yrs 8 months ||Co Secy cum Fin Manager in International Print-O-Pac Ltd ||Nil ||NA |
|8 ||Sanjay Rustagi ||Regular ||4110059 ||B.Com (Hons.) CA & CWA/19 years 7 months ||24.06.2016 ||43 years 6 months ||AVP in GE Capital Services India ||Nil ||NA |
|9 ||Devesh Singh ||Regular ||4004518 ||B.Com & MBA/ 13 years ||03.10.2011 ||39 years 2 months ||Manager in PTC India ||Nil ||NA |
|10 ||Rakesh Kalsi ||Regular ||3989609 ||BE & MBA/ 12 years ||16.08.2010 ||37 years Dy 5 months ||Manager in Feedback Ventures Pvt Ltd ||Nil ||NA |
* Appointed as Whole Time Director w.e.f. 25th September 2017
A. No employee of the Company employed throughout the year who was in receipt ofremuneration of Rs. one crore and two lakh or more in a year. Further during the yearunder review there was no employee of the Company employed for a part of year who was inreceipt of remuneration of Rs. eight lakh and fifty thousand or more per month.
B. It is affirmed that:-
i. The remuneration is as per the remuneration policy of the Company; and
ii. There was no employee in the Company who was in receipt of the remuneration morethan that of its managing director/ whole time director and holds by himself or thoughhis/ her relatives not less than two percent of equity shares.
39. Details of conservation of energy technology absorption
Since PFS is engaged in business of investment and lending activities particularsrelating to conservation of energy and technology absorption are not applicable to it.
40. Foreign Exchange earnings & outgo
The Company has incurred expenditure of Rs. 267.18 million (previous year Rs. 217.93million) in foreign exchange during the financial year ended 31st March 2018. Thisincludes interest on external commercial borrowings amounting to Rs. 264.59 million(previous year Rs. 211.12 million). The Foreign exchange earnings for the FY 2017-18 werenil.
41. Significant and material orders
There were no significant or material orders passed by Regulators or Courts orTribunals which impacts the going concern status and Company's future operations. .
42. Transfer of Amounts to Investor Education and Protection Fund (IEPF)
Pursuant to the provisions of the Investor Education and Protection Fund (AccountingAudit Transfer and Refund) Rules 2016 the Company has already filed the necessary formand uploaded the details of unpaid and unclaimed amounts lying with the Company as on thedate of last AGM (i.e. 25th September 2017) with the Ministry of Corporate Affairs.
Further during the financial year ended 31st March 2018 the Company has transferredan amount of Rs. 176500/- to IEPF being the amount unclaimed w.r.t the Initial PublicOffer of the Company as the amount was unclaimed for a period of 7 years.
Your Directors state that no disclosure or reporting in respect of the following itemsis required as there were no transactions on these items during the year under review:
Issue of equity shares with differential rights as to dividend voting orotherwise;
Issue of shares (including sweat equity shares) to employees of the Companyunder any scheme; and
Managing Director or the Whole time Directors of the Company receive anyremuneration or commission from any of other Company.
Change in the nature of the business of the Company happened during thefinancial year under review.
44. Compliance with Applicable Secretarial Standards
During the period under review the Company has complained with the provisions of theSS - 1(Secretarial Standard on meeting of the Board of Directors) & SS - 2(Secretarial Standard on General Meeting) issued by the Institute of Company Secretariesof India and approved by the Central Government under Section 118 of the Act.
The Board of Directors acknowledge with deep appreciation the cooperation &guidance received from its Directors the Ministry of Power (MoP) the Ministry of Finance(MoF) the Reserve Bank of India (RBI) the Securities and Exchange Board of India (SEBI)the National Stock Exchange of India Limited (NSE) the BSE Limited (BSE) the PTC IndiaLimited (PTC) and other stakeholders International Finance Corporation (IFC) DEG FMOand OeEB various banks/FIs consortium partners.
The Board also acknowledge with thanks the support & guidance received from itsDirectors who retired during the year.
The Board also conveys its gratitude to the shareholders & credit rating agenciesfor the continued confidence reposed by them in the Company. Your Directors would alsolike to convey their gratitude to the clients and customers for their unwaveringconfidence & faith in your Company.
The Board is also thankful to the Statutory Auditor Internal Auditor and theSecretarial Auditor for their constructive suggestions and cooperation.
The Board would also like to place on record its appreciation for the untiring effortsand contributions made by the employees to ensure all round performance of your Company.
| ||For and on behalf of the Board |
| ||PTC India Financial Services Limited |
| ||Sd/- |
| ||Deepak Amitabh |
|Date : 12th August 2018 ||Chairman |
|Place : New Delhi ||DIN: 01061535 |