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SREI Infrastructure Finance Ltd.

BSE: 523756 Sector: Financials
NSE: SREINFRA ISIN Code: INE872A01014
BSE 00:00 | 27 Mar 3.95 -0.10
(-2.47%)
OPEN

4.05

HIGH

4.24

LOW

3.85

NSE 00:00 | 27 Mar 3.90 -0.10
(-2.50%)
OPEN

4.20

HIGH

4.30

LOW

3.85

OPEN 4.05
PREVIOUS CLOSE 4.05
VOLUME 122005
52-Week high
52-Week low
P/E 8.23
Mkt Cap.(Rs cr) 199
Buy Price 3.85
Buy Qty 43.00
Sell Price 3.95
Sell Qty 20.00
OPEN 4.05
CLOSE 4.05
VOLUME 122005
52-Week high
52-Week low
P/E 8.23
Mkt Cap.(Rs cr) 199
Buy Price 3.85
Buy Qty 43.00
Sell Price 3.95
Sell Qty 20.00

SREI Infrastructure Finance Ltd. (SREINFRA) - Director Report

Company director report

Your Directors are pleased to present the Thirty-Fourth Annual Reporttogether with the Audited Accounts of your Company for the financial year ended March 312019. The summarised consolidated and standalone financial performance of your Company isas follows:

FINANCIAL SUMMARY & STATE OF COMPANY AFFAIRS (Rupees in Lacs)

Consolidated Standalone
Year ended 31st March 2019 Year ended 31st March 2018 Year ended 31st March 2019 Year ended 31st March 2018
Total Income 646970 539965 188957 190228
Total Expenses (including impairment on financial instruments depreciation etc.) 588267 482355 176696 177400
Profit Before Exceptional Items & Tax 58703 57610 12261 12828
Exceptional Items - - - -
Adjustment on disposal /cessation of Subsidiaries and Associate 8085 33 - -
Profit Before Tax 66788 57643 12261 12828
Current Tax 15158 15523 - 7226
Deferred Tax 2924 2843 2794 (3440)
Profit After Tax but before Loss of Associate 48706 39277 9467 9042
Share of Profit/ (Loss) of Associate (28) (1548) - -
Profit After Tax before adjusting Minority Interest 48678 37729 9467 9042
Non-Controlling Interest (7) (28) - -
Profit After Tax after adjusting Minority Interest 48685 37757 9467 9042
Surplus brought forward from previous year (Retained Earnings) (119015) (137354) 11577 14231
Other Comprehensive Income (net of tax) (18) 645 (23) 92
Profit Available for Appropriation (70348) (98952) 21021 23365
Paid up Equity Share Capital 50324 50324 50324 50324
Amount transferred to Reserves 10391 17030 2445 8761
Other Equity excluding Revaluation Reserves 360793 330177 248384 257654
Earning Per Share (Rs.) 9.68 7.50 1.88 1.80

Note: The above figures are extracted from the standalone andconsolidated financial statements for the financial year ended on March 31 2019

OPERATIONAL REVIEW

Your Company is one of the leading private sector infrastructurefinancing institutions in India. Some of the key highlights of your Company’sperformance during the year under review are:

n The gross profit (before Exceptional Items & Tax) is Rs.12261 Lacs as against Rs. 12828 Lacs in the last year.

n Profit before taxation is Rs. 12261 Lacs as against Rs. 12828Lacs in the last year. n Net profit after taxation is Rs. 9467 Lacs as against Rs.9042 Lacs in the last year.

n The total assets under management of the Srei Group is Rs.4706969 Lacs as against Rs. 4748022 Lacs in the last year.

The Capital to Risk Assets Ratio (CRAR) of your Company stood at 15.57per cent as on March 31 2019 well above the regulatory minimum level of 15 per centprescribed by the Reserve Bank of India for systemically important non-deposit takingNBFCs (NBFCs-ND-SI). Of this the Tier I CRAR was 10.79 per cent.

Key Financial Ratios (in terms of Schedule V of Securities and ExchangeBoard of India (Listing Obligations and Disclosure Requirements) Regulations 2015) are asunder -

Particulars 2018- 19 2017- 18
(%) (%)
R e t u r n o n 3.05 2.85
Networth*
Yield on Average 13.66 13.23
Funds
Cost of Funds 10.47 10.01
Gross Interest Spread 3.19 3.22
R e t u r n o n Average Assets on Books 0.51 0.47

*Return on Networth is higher for the year ended 31st March 2019 dueto higher rate of

growth in Profit After Tax.

There is no significant change (i.e. change of 25 per cent or more ascompared to the immediately previous financial year) in the key financial ratios.

The Financial Statements of your C o m p a n y h a v e b e e n p r e pa r e d in accordance with the Generally Accepted Accounting Principles in India (IndianGAAP) to comply with the Indian Accounting Standards (IND AS) and the relevant provisionsof the Companies Act 2013 and rules made therein as applicable and Regulation 48 of theSecurities and Exchange

Board of India (Listing Obligations and Disclosure Requirements)Regulations 2015 (hereinafter referred to as ‘SEBI Listing Regulations 2015’).Accounting policies have been consistently applied except where a newly issued accountingstandard if initially adopted or a revision to an existing accounting standard requires achange in the accounting policy hitherto in use. Management evaluates all recently issuedor revised accounting standards on an ongoing basis. Your Company discloses standalone andconsolidated unaudited financial results on a quarterly basis which are subjected tolimited review and standalone and consolidated audited financial results on an annualbasis.

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

TRANSFER TO RESERVES

Your Company proposes to transfer an amount of Rs. 1893 Lacs toSpecial Reserve (pursuant to Section 45IC of the Reserve Bank of India Act 1934) and Rs.552 Lacs to Bond / Debenture Redemption Reserve.

CLASSIFICATION AS INFRASTRUCTURE FINANCE COMPANY (IFC) AND PUBLICFINANCIAL INSTITUTION (PFI)

The Reserve Bank of India (RBI) has classified your Company as an‘Infrastructure Finance Company’ within the overall classification of‘Non-Banking Finance Company’. Your Company is also notified as a PublicFinancial Institution (PFI) by the Ministry of Corporate Affairs (MCA) Government ofIndia.

DIVIDEND

In accordance with Regulation 43A of SEBI Listing Regulations 2015 aDividend Distribution Policy is adopted by your Company covering inter alia theparameters for declaration of dividend utilization of retained earnings procedure fordividend declaration etc. The Dividend Distribution Policy is available on yourCompany’s website athttps://www.srei.com/investor/corporate-policies/pdf/dividend-distribution-policy. pdf andis also set out as an annexure to the Directors’ Report and forms part of this AnnualReport.

Your Company follows a consistent dividend policy that balances thedual objectives of appropriately rewarding Members through dividends and retainingcapital in order to maintain a healthy capital adequacy ratio to support long term growthof your Company. Consistent with this Policy your Board on March 08 2019 approved anInterim Dividend of Re. 0.50 per Equity share (5 per cent) for the financial year 2018-19to the Members of your Company. The said Interim Dividend was paid to those Members whosenames appeared on the Company's Register of Members as on closing hours of March 16 2019being the record date fixed for this purpose. Your Board did not recommend a finaldividend and therefore total dividend for the year ended March 31 2019 will be Re. 0.50per Equity share (5 per cent) of face value of Rs. 10 (ten) each. The dividend togetherwith the dividend distribution tax entailed a cash outflow of Rs. 3032 Lacs (previousyear Rs. 3032 Lacs).

The dividend payout for the year under review is in accordance withyour Company’s policy to pay sustainable dividend linked to long-term growthobjectives of your Company to be met by internal cash accruals.

PUBLIC DEPOSITS

Your Company decided not to accept any further public deposits or renewsuch maturing deposits in any manner w.e.f. April 20 2010 and the entire amount ofoutstanding public deposits as on April 19 2010 together with interest promised to thedepositors has been kept in an Escrow Account with a scheduled commercial bank for thepurpose of making payment to the depositors as and when they raise the claim. Despitesustained efforts to identify and repay unclaimed deposits the amount payable to thedepositors as on March 31 2019 is Rs. 99889.45.

Being a non-deposit taking Company your Company has not accepted anydeposits from the public/members under Section 73 of the Companies Act 2013 read withCompanies (Acceptance of Deposits) Rules 2014 during the year and within the meaning ofthe provisions of the Non-Banking Financial Companies Acceptance of Public Deposits(Reserve Bank) Directions 2016.

PUBLIC ISSUE OF SECURED AND UNSECURED SUBORDINATED REDEEMABLENON-CONVERTIBLE DEBENTURES (NCDs)

During the year under review your Company filed the Tranche 1Prospectus to access retail public markets pursuant to Shelf Prospectus of Secured andUnsecured Subordinated Redeemable Non-Convertible Debentures (the "Debentures")of face value of Rs. 1000 each as per the details given hereunder:

Date of opening of Issue Base Issue Size Total Issue Size including Green Shoe Option Maturity Period Allotment Date Amount
(Rs. in Crores) (Rs. in Crores) (Rs. in Crores)
09.04.2019* 100 Upto 500 400 days/3 years/5 years 15.05.2019 105.76

*Issue w.r.t. Tranche 1 Prospectus dated March 29 2019 of SecuredNCDs read together with Shelf Prospectus dated March 29 2019.

As2 0on1 9 March t h e t o31t a l shareholding of the P r o m o t e rs ’ G r o u p of your Company is 60.7984 per cent and none of the Promoter

/ Promoters’ Group shareholding is under pledge.

Debenture Trustee Agreement(s) for the aforesaid issue was dulyexecuted with Catalyst Trusteeship Limited. The said Debentures are listed on the DebtSegment of BSE Limited (BSE). According to the object of the issue proceeds have beenutilised for the purpose of lending/ repayment of existing loans and for general corporatepurposes.

The public issue of the said Debentures has not only facilitateddiversification of your Company’s sources for mobilising long term resources but hasalso provided the retail Investors an opportunity to participate in India’sinfrastructure development and progress. Through the aforesaid public issue your Companyhas acquired nearly 6300 retail investors. Along with previous issues your Company nowenjoys a retail base of nearly 80000 investors. The various communication efforts of yourCompany surrounding the Debentures played a meaningful role in enhancing yourCompany’s brand image amongst relevant constituencies.

PRIVATE PLACEMENT OF UNSECURED PERPETUAL NON-CONVERTIBLE DEBENTURES(NCDs)

During the year your Company issued unsecured perpetualNon-Convertible Debentures (NCDs) amounting to 320 Crores on private placement basis invarious tranches. The issue proceeds raised through Private Placement of NCDs have beenutilized for the purpose of refinancing existing debt or for disbursement and for generalbusiness purpose.

PROMOTERS’ GROUP SHAREHOLDING

As on March 31 2019 the total shareholding of the Promoters’Group of your Company is 60.7984 per cent and none of the Promoter/Promoters’ Groupshareholding is under pledge. Further in compliance with Regulation 31(2) of SEBI ListingRegulations 2015 the entire shareholding of promoter(s) and promoter group is indematerialised form.

EXCLUSION OF FUTURES & OPTIONS (F&O) CONTRACTS

Pursuant to the National Stock Exchange of India Limited (NSE) and BSELimited (BSE) Circular Ref. No. 130/218 dated December 24 2018 and Notice No. 20181226dated December 26 2018 respectively Futures & Options contracts of the Company havebeen excluded from Equity Derivatives Segment of the Stock exchanges and subsequentlythere were no contracts available for trading in the Derivatives segment with effect fromMarch 01 2019.

VOLUNTARY DELISTING OF EQUITY SHARES FROM THE CALCUTTA STOCK EXCHANGELIMITED (CSE)

There being no trading in the equity shares of your Company at theCalcutta Stock Exchange Limited (CSE) from considerable time your Company made anapplication to CSE for voluntary delisting of equity shares from CSE in terms of theSecurities and Exchange Board of India (Delisting of Equity Shares) Regulations 2009("Delisting Regulations"). Subsequently equity shares of your Company have beendelisted from CSE effective July 05 2018.

COMPOSITE SCHEME OF ARRANGEMENT AND AMALGAMATION

The Board of Directors of your Company at its meeting held on January21 2019 approved a composite Scheme of arrangement and amalgamation amongst your CompanySrei Equipment Finance Limited ("SEFL") and Srei Asset Finance Limited("Srei Asset") and respective shareholders and creditors ("Scheme") inaccordance with Sections 230 to 232 of the Companies Act 2013 and the rules madethereunder which inter alia contemplates the following:

(i) The demerger of the ‘Lease Business’ of SEFL(the"Demerged

Undertaking 1") into Srei Asset pursuant to which Srei Asset willissue shares to the shareholder of SEFL i.e. your Company ("Demerger 1"). Therewill be no change in the shareholding pattern.

(ii) On completion of Demerger 1 the remaining business undertakingsof SEFL(the "Amalgamating Undertaking") will amalgamate with and into yourCompany ("Amalgamation"). This being an amalgamation of a wholly ownedsubsidiary into its parent company there will be no change in the shareholding pattern.On the transfer of the Amalgamating Undertaking becoming effective SEFLshall standdissolved without being wound-up.

(iii) On completion of the Amalgamation the ‘LeaseBusiness’ ‘Rental Business’ and ‘Equipment Finance Business’ ofyour Company (the "Demerged Undertaking 2") will demerge into Srei Asset("Demerger 2") pursuant to which Srei Asset will issue shares to theshareholders of your Company. Pursuant to this promoter and public shareholders of yourCompany shall hold shares in Srei Asset in their existing proportionate shareholding andthe existing shareholding of your Company shall be diluted to 22.08 per cent.

The share exchange ratio for the Scheme was approved to be –

in case of Demerger 1 10 (ten) fully paid up equity sharesof Srei Asset of Rs. 10 each shall be issued for every 21 (twenty one) fully paid upequity shares of Rs. 10 each held in SEFL; and

in case of Demerger 2 1 (one) fully paid up equity share ofSrei Asset of Rs.10 each shall be issued for every 5 (five) fully paid up equity shares ofRs.10 each held in your Company.

Your Company has filed an application under Regulation 37 of SEBIListing Regulations 2015 seeking no objection / observation letters from BSE Limited andNational Stock Exchange of India Limited ("Stock Exchanges"). On receipt of noobjection letters from the Stock Exchanges your Company shall file requisite applicationwith the National Company Law Tribunal ("NCLT") to seek its directions forconvening meetings of the Shareholders and Creditors of your Company. Subsequent to thereceipt of such approvals your Company shall file a petition with the NCLT for its finalapproval to the Scheme.

CANCELLATION OF FORFEITED EQUITY SHARES

The Board of Directors of your Company at its Meeting held earlier onMarch 14 2000 had approved forfeiture of 472827 (Four Lakh Seventy Two Thousand EightHundred Twenty Seven) Equity Shares of your Company for non-payment of arrears of callmonies. Since the forfeited shares have not been re-issued and also not been taken oragreed to be taken by any person the said shares are available for cancellation.

The Board of Directors of your Company have now subject toshareholders approval decided to cancel the forfeited Equity Shares and to diminish thepaid up value of the said forfeited shares.

Upon cancellation of forfeited shares the amount of Rs. 1514384(Rupees Fifteen Lakh Fourteen Thousand Three Hundred and Eighty Four only) paid up onthese forfeited shares will be dealt with in accordance with applicable AccountingStandards.

Further the Authorized Share Capital of your Company would not beaffected by this cancellation and would remain at Rs. 15000000000/- (Rupees FifteenHundred Crores only) divided into 1000000000 Equity Shares of Rs.

10/- each and 50000000 Preference Shares of Rs. 100/- each.