Mar 31, 2018
The Directors are pleased to present the Thirty-Third Annual Report together with the Audited Accounts of your Company for the financial year ended March 31, 2018. The summarised consolidated and standalone financial performance of your Company is as follows:
FINANCIAL SUMMARY (Rs. in Lacs)
Consolidated |
Standalone |
|||
Year ended 31st March, 2018 |
Year ended 31st March, 2017 |
Year ended 31st March, 2018 |
Year ended 31st March, 2017 |
|
Total Income |
5,26,187 |
4,66,576 |
1,77,362 |
2,29,962 |
Total Expenses (including depreciation etc.) |
4,22,820 |
3,54,921 |
1,49,654 |
1,60,370 |
Profit before bad debts and advances written off (net) / Provisions, Contingencies, Diminutions & Tax |
1,03,367 |
1,11,655 |
27,708 |
69,592 |
Bad Debts and Advances written off (net) / Provisions, Contingencies, Diminutions |
44,190 |
77,207 |
9,495 |
54,756 |
Profit Before Exceptional Items & Tax |
59,156 |
34,448 |
18,213 |
14,836 |
Adjustment on disposal / cessation of Subsidiaries and Step-down Subsidiaries |
33 |
1,561 |
- |
- |
Current Tax |
15,496 |
10,768 |
7,226 |
6,582 |
Mat Credit entitlement (including in respect of earlier years) |
(2,895) |
(5,715) |
- |
(1,112) |
Deferred Tax |
6,615 |
6,680 |
(1360) |
(241) |
Profit After Tax but before Share of Loss of Associate and Minority Interest |
39,973 |
24,276 |
12,347 |
9,607 |
Share of Loss / (Profit) of Associate |
1,547 |
(5) |
- |
- |
Minority Interest |
(29) |
(55) |
- |
- |
Profit After Tax after adjustment for Minority Interest |
38,455 |
24,336 |
12,347 |
9,607 |
Surplus brought forward from Previous Year |
31,513 |
28,649 |
20,679 |
27,120 |
Profit Available For Appropriation |
69,968 |
52,985 |
33,026 |
36,727 |
Paid up Equity Share Capital |
50,324 |
50,324 |
50,324 |
50,324 |
Amount transferred to Reserves |
17,030 |
20,358 |
8,761 |
15,218 |
Reserves and Surplus |
4,76,509 |
4,41,550 |
2,45,877 |
2,36,174 |
Earning Per Share (Rs.) |
7.64 |
4.84 |
2.45 |
1.91 |
Note: The above figures are extracted from the standalone and consolidated financial statements for the financial year ended on March 31, 2018
OPERATIONAL REVIEW
Your Company is one of the leading private sector infrastructure financing institutions in India. Some of the key highlights of your Companyâs performance during the year under review are:
- The gross profit (before bad debts and advances written off (net) / Provisions, Contingencies, Diminutions & Tax) is Rs. 27,708 Lacs as against Rs. 69,592 Lacs in the last year.
- Profit before taxation is Rs. 18,213 Lacs as against Rs. 14,836 Lacs in the last year.
- Net profit after taxation is Rs. 12,347 Lacs as against Rs. 9,607 Lacs in the last year.
- The total assets under management of the Srei Group is Rs. 47,05,035 Lacs as against Rs. 37,41,290 Lacs in the last year.
The Capital to Risk Assets Ratio (CRAR) of your Company stood at 17.60 per cent as on March 31, 2018, well above the regulatory minimum level of 15 per cent prescribed by the Reserve Bank of India for systemically important non-deposit taking NBFCs (NBFCs-ND-SI). Of this, the Ter I CRAR was 13.71 per cent.
The Financial Statements of your Company have been prepared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards notified under Section 211(3C) of the Companies Act, 1956 (which continue to be applicable in respect of Section 133 of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014) and the relevant provisions of the Companies Act, 1956 / Companies Act, 2013, as applicable and Regulation 48 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (hereinafter referred to as âSEBI Listing Regulations, 2015â). Accounting policies have been consistently applied except where a newly issued accounting standard, if initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use. Management evaluates all recently issued or revised accounting standards on an ongoing basis. Your Company discloses standalone and consolidated unaudited financial results on a quarterly basis, which are subjected to limited review, and standalone and consolidated audited financial results on an annual basis.
Your Company has complied with all the norms prescribed by the Reserve Bank of India (RBI) including the Fair practices, Anti Money Laundering and Know Your Customer (KYC) guidelines.
CLASSIFICATION AS INFRASTRUCTURE FINANCE COMPANY (IFC) AND PUBLIC FINANCIAL INSTITUTION (PFI)
The Reserve Bank of India (RBI) has classified your Company as an âInfrastructure Finance Companyâ within the overall classification of âNon-Banking Finance Companyâ. Your Company is also notified as a Public Financial Institution (PFI) by the Ministry of Corporate Affairs (MCA), Government of India.
DIVIDEND
In accordance with Regulation 43A of SEBI Listing Regulations, 2015, a Dividend Distribution Policy is adopted by your Company, covering, inter alia, the parameters for declaration of dividend, utilization of retained earnings, procedure for dividend declaration etc. The Dividend Distribution Policy is available on your Companyâs website at https://www.srei.com/investor/corporate-policies/pdf/dividend-distribution-policy. pdf.
Your Company follows a consistent dividend policy that balances the dual objectives of appropriately rewarding Members through dividends and retaining capital, in order to maintain a healthy capital adequacy ratio to support long term growth of your Company. Consistent with this Policy, your Board has recommended a dividend of Re. 0.50 per Equity share (5 per cent) for the financial year 2017-18 to the Members of your Company. The proposal is subject to the approval of the Members at the 33rd Annual General Meeting (AGM) of your Company scheduled to be held on July 21, 2018. The dividend together with the dividend distribution tax will entail a cash outflow of Rs. 3,032 Lacs (previous year Rs. 3,028 Lacs).
The dividend payout for the year under review is in accordance with your Companyâs policy to pay sustainable dividend linked to long-term growth objectives of your Company to be met by internal cash accruals.
PUBLIC DEPOSITS
Your Company decided not to accept any further public deposits or renew such maturing deposits in any manner w.e.f. April 20, 2010 and the entire amount of outstanding public deposits as on April 19, 2010 together with interest promised to the depositors, has been kept in an Escrow Account with a scheduled commercial bank for the purpose of making payment to the depositors as and when they raise the claim. Despite sustained efforts to identify and repay unclaimed deposits, the amount payable to the depositors as on March 31, 2018 is Rs. 1,33,191.35.
Being a non-deposit taking Company, your Company has not accepted any deposits from the public / members under Section 73 of the Companies Act, 2013 read with Companies (Acceptance of Deposits) Rules, 2014 during the year and within the meaning of the provisions of the Non-Banking Financial Companies Acceptance of Public Deposits (Reserve Bank) Directions, 2016.
PUBLIC ISSUE OF SECURED AND UNSECURED SUBORDINATED REDEEMABLE NON-CONVERTIBLE DEBENTURES
During the year under review, your Company accessed retail public markets through its public issue of Secured and Unsecured Subordinated Redeemable NonConvertible Debentures (the âDebenturesâ) of face value of Rs. 1,000 each which mobilized Rs. 336.78 Crores, as per the details given hereunder:
Date of opening of Issue |
Base Issue Size (Rs. in Crores) |
Total Issue Size including Green Shoe Option (Rs. in Crores) |
Maturity Period |
Allotment Date |
Amount (Rs. in Crores) |
09.02.2018* |
200 |
Upto 2000 |
400 days / 3 years / 5 years / 10 years |
16.03.2018 |
336.78 |
*Issue w.r.t. Tranche 1 Prospectus dated February 05, 2018 read together with Shelf Prospectus dated February 05, 2018.
As on March 31, 2018, the total shareholding of the Promotersâ Group of your Company is 60.7984 per cent and none of the Promoter / Promotersâ Group shareholding is under pledge.
Debenture Trustee Agreement(s) for the aforesaid issue was duly executed with Axis Trustee Services Limited. The said Debentures are listed on the Debt Segment of BSE Limited (BSE) and National Stock Exchange of India Limited (NSE). The entire proceeds have been utilised for the purpose of lending / repayment of existing loans and for general corporate purposes.
The public issue of the said Debentures has not only facilitated diversification of your Companyâs sources for mobilising long term resources but has also provided the retail Investors an opportunity to participate in Indiaâs infrastructure development and progress. Through the public issue launched in FY 2017-18, your Company has acquired nearly 16,000 retail investors. Along with previous issues, your Company now enjoys a retail base of nearly 86,000 investors. The various communication efforts of your Company surrounding the Debentures played a meaningful role in enhancing your Companyâs brand image amongst relevant constituencies.
PROMOTERSâ GROUP SHAREHOLDING
As on March 31, 2018, the total shareholding of the Promotersâ Group of your Company is 60.7984 per cent and none of the Promoter / Promotersâ Group shareholding is under pledge. Further, in compliance with Regulation 31(2) of SEBI Listing Regulations, 2015, the entire shareholding of promoter(s) and promoter group is in dematerialised form.
WHITE LABEL ATMs
The RBI has granted licences to private non-bank companies to set up, own and operate their own brand of ATMs in the Country, known as White Label ATMs (WLAs). Your Company was issued Certificate of Authorisation (CoA) from RBI under the Payment and Settlement Systems Act, 2007 for setting up, owning and operation of WLAs in the year 2014.
Your Company has decommissioned the existing WLAs and has accordingly communicated to the Department of Payment and Settlement System, Reserve Bank of India (RBI) that it would like to surrender the CoA.
ADOPTION OF NEW ARTICLES OF ASSOCIATION
The Ministry of Corporate Affairs (MCA) has notified and brought into force most of the Sections and corresponding Rules of the Companies Act, 2013 (âthe Actâ) which replaces the provisions of the Companies Act, 1956. In order to bring the Articles of Association (AOA) of your Company in lines with the provisions of the Act, your Company recommended that the Members adopt a new set of AOA in substitution of and to the complete exclusion of the existing AOA. The resolution to adopt the new AOA was passed by requisite majority by the Members of your Company through postal ballot which concluded on December 10, 2017.
INTRODUCTION OF FUTURES & OPTIONS (F&O) CONTRACTS
The National Stock Exchange of India Limited (NSE) and BSE Limited (BSE) have vide Circular Ref. No. 64 / 2017 dated 23rd June, 2017 and Notice No. 20170627-5 dated 27th June, 2017, respectively, included the securities of your Company under the symbol SREINFRA and scrip code 523756 under Futures & Options (F&O) Contracts for trading on the Exchanges w.e.f. 30th June, 2017.
VOLUNTARY DELISTING OF EQUITY SHARES OF THE COMPANY FROM THE CALCUTTA STOCK EXCHANGE LIMITED (CSE)
Your Companyâs Equity Shares are presently listed on the National Stock Exchange of India Limited (NSE), BSE Limited (BSE) and The Calcutta Stock Exchange Limited (CSE). Since there was no trading in the equity shares of your Company at CSE from considerable time, your Company has decided to voluntarily delist the equity shares from CSE in terms of the Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2009 (âDelisting Regulationsâ).
SREI WEBSITE
The website of your Company www.srei. com has been developed on the new responsive technology based platform known as âDrupalâ, ensuring uniform display across all devices like mobile, tablet, desktop etc. and all the operating systems. The website has an inbuilt sophisticated and customized content management system for easy change in content. A simple, improved navigation system needs a lesser number of clicks to reach the information available in the different sections of the website. The contemporary and smart look of the website ensures a customer centric approach catering to the requirements of prospective customers, investors, employees and other stakeholders. The website of your Company also has âLive Stock Tickerâ with dynamic display of current stock prices in BSE and NSE with respective market caps, along with a link to your Companyâs YouTube channel. The site carries a comprehensive database of information of interest to the investors including the financial results of your Company, dividend declared, unclaimed dividend list, shareholding pattern, any price sensitive information disclosed to the regulatory authorities from time to time, analystsâ reports, investor presentations, standard downloadable forms, media coverage, corporate profile and business activities of your Company and the services rendered by your Company to its investors. Some useful features like Online Resume Management System to pull the best talents and Online NCD Application Form download system as a part of fund raising initiatives are functional in the system. An auto generate functionality with unique form ID for Non-Convertible Debenture (NCD) form was created in 2017. Your Companyâs integration of the customer portal in the corporate website still enables customers to access their account and download the essential documents directly from the website. By introducing the download facility of MySREIApp mobile application from the website, your Company extends the digital services and creates an âanywhere anytimeâ experience like never before. The multiplatform mobile app empowers customers to raise service request, contact relationship managers, send request for new finance etc. The links to different social media i.e. Facebook, YouTube, Twitter, LinkedIn is embedded in the home page of the website to get access of the key initiatives and achievements of your Company.
SUBSIDIARY COMPANIES
The Statement in Form AOC-1 containing the salient features of the financial statement of your Companyâs subsidiaries and associates pursuant to first proviso to Section 129(3) of the Companies Act, 2013 (Act) read with Rule 5 of the Companies (Accounts) Rules, 2014, forms part of the Annual Report. Further, in line with Section 129(3) of the Act read with the aforesaid Rules, SEBI Listing Regulations, 2015 and in accordance with the Accounting Standard 21 (AS-21), Consolidated Financial Statements prepared by your Company includes the financial information of its subsidiary and associate companies.
A Report on the performance and financial position of each of the Subsidiaries and Associate Companies included in the Consolidated Financial Statements prepared by your Company as per Rule 8(1) of the Companies (Accounts) Rules, 2014, forms part of the annual accounts of each of the Subsidiary and Associate Companies which have been placed on the website of your Company www.srei. com and also forms part of Form AOC-
1 pursuant to Rule 5 of the Companies (Accounts) Rules, 2014, which is set out as an annexure to the Directorsâ Report and forms part of this Annual Report. Members interested in obtaining a copy of the annual accounts of the Subsidiaries and Associate Companies may write to the Company Secretary at your Companyâs Registered Office. The said Report is not repeated here for the sake of brevity.
The names of companies which have become or ceased to be subsidiaries, joint ventures or associate companies during the year are given below:
Status |
|
Bharat Road Network Limited |
Ceased to be an associate w.e.f. 14.09.2017. |
Srei Infrastructure Advisors Limited |
Ceased to be a wholly owned subsidiary w.e.f. 12.03.2018. |
Bengal Srei Infrastructure Development Limited |
Ceased to be a step down subsidiary and became a subsidiary w.e.f. 12.03.2018. |
MATERIAL CHANGES AND COMMITMENTS, IF ANY, AFFECTING THE FINANCIAL POSITION
There is no such material change and commitment affecting the financial position of your Company which have occurred between the end of the financial year of your Company to which the financial statements relate and the date of the Report.
POLICY FOR DETERMINING âMATERIALâ SUBSIDIARIES
As on March 31, 2018, Srei Equipment Finance Limited (SEFL), a wholly owned subsidiary of your Company is a listed âmaterialâ subsidiary of your Company with its, debt securities being listed on the Stock Exchanges in India. However, your Company does not have any material unlisted subsidiary. Your Company has formulated a Policy for determining Material Subsidiaries in accordance with SEBI Listing Regulations, 2015. The said Policy was last revised on October 26, 2017 and is available on your Companyâs website at https://www.srei.com/investor/ corporate-policies/pdf/policy-on-determining-material-subsidiaries.pdf.
KEY MANAGERIAL PERSONNEL (KMPs)
The following directors / executives of your Company are whole-time Key Managerial Personnel (KMPs) as on March 31, 2018 in accordance with the provisions of Section 203 of the Companies Act, 2013 -
Name |
Designation |
Mr. Hemant |
Chairman & Managing |
Kanoria |
Director |
Mr. Sameer |
Chief Executive Officer |
Sawhney |
|
Mr. Sandeep |
Company Secretary |
Lakhotia |
During the year, Mr. Kishore Lodha, Key Managerial Personnel (KMP) of your Company resigned as Chief Financial Officer (CFO) in order to pursue other career opportunities. Mr. Lodha has since been relieved from the services of your Company as per Companyâs Policy. Further, pursuant to the provisions of Section 2(51) of the Companies Act, 2013 (âActâ) as amended by the Companies (Amendment) Act, 2017 read with Section 203 of the Act and rules made thereunder, the Board of Directors of your Company at their meeting held on April 28, 2018, designated the following Executives of your Company as wholetime Key Managerial Personnel (KMPs) of your Company w.e.f. April 28, 2018, in addition to the existing KMPs:
Name |
Designation |
Mr. Sanjeev |
Chief Strategy |
Sancheti |
Officer |
Mr. |
Group Chief People |
Chandrasekhar |
Officer |
Mukherjee |
|
Mr. Debashis |
Internal Auditor |
Ghosh |
|
Mr. Samir |
Senior Vice |
Kumar Kejriwal |
President |
NOMINATION AND REMUNERATION COMMITTEE
The Board of Directors of your Company have constituted a Nomination and Remuneration Committee in accordance with the provisions of Section 178 of the Companies Act, 2013 read with Regulation 19 of SEBI Listing Regulations, 2015. The Board of Directors, at its meeting held on July 22, 2017, reconstituted the Nomination and Remuneration Committee, consequent to resignation of Mr. Salil K. Gupta, Chief Mentor and Independent Director, and designated Mr. Shyamalendu Chatterjee, Independent Director, as the Chairman of the Committee. Further, Ms. Tamali Sengupta, Independent Director, was inducted as a Member of the Committee. The Board of Directors, at its meeting held on October 26, 2017, further reconstituted the Nomination and Remuneration Committee consequent to resignation of Ms. Tamali Sengupta, Independent Director and induction of Mr. S. Rajagopal, Independent Director, as a Member of the Committee. The Committee comprises Mr. Shyamalendu Chatterjee, Mr. S. Rajagopal, Independent Directors and Mr. Sunil Kanoria, Non-Executive Director. Mr. Shyamalendu Chatterjee acts as the Chairman of the Nomination and Remuneration Committee. Mr. Sandeep Lakhotia, Company Secretary of your Company acts as the Secretary to the Nomination and Remuneration Committee. The Terms of Reference of the Committee has been provided in the Corporate Governance Section forming part of this Report.
3 (Three) meetings of the Nomination and Remuneration Committee of your Company were held during the year 2017-18 on May 08, 2017, October 25, 2017 and January 17, 2018.
The Committee has formulated the Nomination and Remuneration Policy (âSrei Nomination and Remuneration Policyâ) which broadly laid down the various principles of remuneration being support for strategic objectives, transparency, internal & external equity, flexibility, performance-driven remuneration, affordability and sustainability and covers the procedure for selection, appointment and compensation structure of Board members, Key Managerial Personnel (KMPs) and Senior Management Personnel (SMPs) of your Company. The said Policy is available on your Companyâs website at https://www.srei. com/investor/corporate-policies/pdf/srei-nomination-and-remuneration-policy. pdf.
WHISTLE BLOWER POLICY (VIGIL MECHANISM)
Your Company has formulated a codified Whistle Blower Policy incorporating the provisions relating to Vigil Mechanism in terms of Section 177 of the Companies Act, 2013 and Regulation 22 of SEBI Listing Regulations, 2015, in order to encourage Directors and Employees of your Company to escalate to the level of the Audit Committee any issue of concerns impacting and compromising with the interest of your Company and its stakeholders in any way. Your Company is committed to adhere to highest possible standards of ethical, moral and legal business conduct and to open communication and to provide necessary safeguards for protection of employees from reprisals or victimisation, for whistle blowing in good faith. The said Policy is available on your Companyâs website at https:// www.srei.com/investor/corporate-policies/pdf/whistle-blower-policy.pdf.
POLICY AGAINST SEXUAL AND WORKPLACE HARASSMENT
Your Company is committed to provide and promote a safe, healthy and congenial atmosphere irrespective of gender, caste, creed or social class of the employees. Your Company in its endeavour to provide a safe and healthy work environment for all its employees has developed a policy to ensure zero tolerance towards verbal, physical, psychological conduct of a sexual nature by any employee or stakeholder that directly or indirectly harasses, disrupts or interferes with another employeeâs work performance or creates an intimidating, offensive or hostile environment such that each employee can realize his / her maximum potential.
Your Company has put in place a âPolicy on Prevention of Sexual Harassmentâ as per The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. The Policy is meant to sensitize the employees about their fundamental right to have safe and healthy environment at workplace. As per the Policy, any employee may report his / her complaint to the Internal Complaint Committee constituted for this purpose. The said Policy is available on your Companyâs website at https:// www.srei.com/investor/corporate-policies/pdf/policy-on-prevention-of-sexual-harassment.pdf.
Your Company affirms that during the year under review adequate access was provided to any complainant who wished to register a complaint under the Policy.
During the year, your Company has not received any complaint on sexual harassment.
PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS
Your Company is exempted from the applicability of the provisions of Section 186 of the Companies Act, 2013 read with Rule 11 of the Companies (Meetings of Board and its Powers) Rules as your Company is engaged in the business of financing of companies or of providing infrastructural facilities.
PERFORMANCE EVALUATION
The Nomination and Remuneration Committee (NRC) of your Company has formulated and laid down criteria for Performance Evaluation of the Board (including Committees) and every Director (including Independent Directors and Chairman & Managing Director) pursuant to provisions of Section 134, Section 149 read with Code of Independent Directors (Schedule IV) and Section 178 of the Companies Act, 2013 and Regulation 19(4) read with Part D of Schedule II of SEBI Listing Regulations, 2015 covering inter-alia the following parameters namely:
i) Board Evaluation: degree of fulfillment of key responsibilities; Board culture and dynamics.
ii) Board Committee Evaluation: effectiveness of meetings; Committee dynamics.
iii) Individual Director Evaluation (including IDs): contribution at Board Meetings.
Further, the Chairman and Managing Director is evaluated on key aspects of the role which includes inter-alia effective leadership to the Board and adequate guidance to the CEOs.
During the year under review, the Board carried out annual evaluation of its own performance as well as evaluation of the working of various Board Committees viz. Audit Committee, Stakeholdersâ Relationship Committee, Nomination and Remuneration Committee and Corporate Social Responsibility Committee. This exercise was carried out through a structured questionnaire prepared separately for Individual Board Members (including the Chairman) and Board Committees based on the criteria as formulated by the NRC and in context of the Guidance note dated January 05, 2017 issued by SEBI. The said questionnaire was circulated to the Directors in physical mode and the same was also made available to the Directors on their i-Pads under the âDiligent Boardsâ (Diligent) Application to carry out performance evaluation for the Financial Year 2017-18 on the broad parameters as laid down by the NRC.
Based on these criteria, the performance of the Board, various Board Committees viz. Audit Committee, Stakeholdersâ Relationship Committee, Nomination and Remuneration Committee and Corporate Social Responsibility Committee, and Individual Directors (including Independent Directors and Chairman) was evaluated and found to be satisfactory.
During the year under review, the Independent Directors of your Company reviewed the performance of NonIndependent Directors and Chairperson of your Company, taking into account the views of Executive Director and NonExecutive Directors.
Further, the Independent Directors hold unanimous opinion that the NonIndependent Directors as well as the Chairman and Managing Director bring to the Board, abundant knowledge in their respective field and are experts in their areas. Besides, they are insightful, convincing, astute, with a keen sense of observation, mature and have a deep knowledge of your Company.
The Board as a whole is an integrated, balanced and cohesive unit where diverse views are expressed and dialogued when required, with each Director bringing professional domain knowledge to the table. All Directors are participative, interactive and communicative.
The Chairman has abundant knowledge, experience, skills and understanding of the Boardâs functioning, possesses a mind for detail, is meticulous to the core and conducts the Meetings with poise and maturity.
The information flow between your Companyâs Management and the Board is complete, timely with good quality and sufficient quantity.
FAMILIARISATION PROGRAMME FOR INDEPENDENT DIRECTORS (IDs)
In terms of Regulation 25(7) of SEBI Listing Regulations, 2015, your Company is required to conduct Familiarisation Programme for Independent Directors (IDs) to familiarise them about your Company including nature of industry in which your Company operates, business model of your Company, roles, rights and responsibilities of IDs and any other relevant information. Further, pursuant to Regulation 46 of SEBI Listing Regulations, 2015, your Company is required to disseminate on its website, details of familiarisation programme imparted to IDs including the details of i) number of programmes attended by IDs (during the year and on a cumulative basis till date), ii) number of hours spent by IDs in such programmes (during the year and on a cumulative basis till date), and iii) other relevant details.
3 (Three) such specific familiarisation programmes were conducted on October 26, 2017 and January 17, 2018. As a part of the first programme, presentation on Ind-AS was made to the Independent Directors inter alia covering responsibility and reporting requirements fundamental changes & significant GAAP differences covering new concepts and statements;
key implementation challenges; disclosure requirements etc.
As a part of the second programme, presentation was circulated to the Independent Directors highlighting the key amendments to Secretarial Standards on Meetings of the Board of Directors (SS-1) and on General Meetings (SS-2) issued by The Institute of Company Secretaries of India (ICSI) and effective from October 01, 2017.
As a part of the third programme, presentation was circulated to the Independent Directors highlighting the key amendments proposed under the Companies (Amendment) Act, 2017. Further, actionables arising therefrom was also specifically highlighted to all Directors, including Independent Directors.
In addition to the above, the Board of Directors is encouraged to participate in various training sessions to ensure that the Board members are kept up to date.
At the time of appointment, a new Director is welcomed to the Board of Directors of your Company by sharing an Induction Kit containing inter-alia the Organization Chart, brief profile of all Directors and Key Managerial Personnel (KMPs), Policy Compendium, Investor Presentation, Investor call transcripts amongst others.
Further, the management of your Company makes various presentations to the Independent Directors on an ongoing basis which inter-alia includes Company overview, various business verticals, latest key business highlights, financial statements, evolution as well as business model of the various business of your Company, as part of the familiarisation programme for Independent Directors.
Significant Statutory updates are circulated on a quarterly basis as a part of the agenda of the Board Meetings through which Directors are made aware of the significant new developments and highlights from various regulatory authorities viz. Reserve Bank of India (RBI), Securities and Exchange Board of India (SEBI), Ministry of Corporate Affairs (MCA), etc.
The Company Secretary also regularly apprises the Board about their roles, rights and responsibilities in your Company from time to time as per the requirements of SEBI Listing Regulations, 2015, Companies Act, 2013 read together with the Rules and Schedules thereunder and Non-Banking Financial Company - Systemically Important Non-Deposit taking Company and Deposit taking Company (Reserve Bank) Directions, 2016.
The Board has open channels of communication with executive management which allows free flow of communication among Directors in terms of raising query, seeking clarifications and other related information. Directors are also informed of the various developments in your Company through e-mails, newsletters, internal magazines, etc. The same is made available on their i-Pads as well.
As a part of e-initiatives adopted by your Company, latest news and events including regulatory alerts are made available through a smartphone knowledge application âSrei Chanakyaaâ. This app also serves as a means to enhance compliance awareness and contains detailed doâs and donâts, FAQâs for Insider Trading, presentations on SEBI Listing Regulations, 2015, NBFC Compliance Dashboard & other relevant matters.
The details of familiarisation programmes imparted to Independent Directors, as required under Regulation 46 of SEBI Listing Regulations, 2015, are available on your Companyâs website at https://www.srei.com/investor/corporate-policies/pdf/familiarisation-programme-for-independent-directors.pdf.
EXTRACT OF ANNUAL RETURN
An extract of Annual Return as on the financial year ended on March 31, 2018 in Form No. MGT-9 as required under Section 92(3) of the Companies Act, 2013 read with Rule 12(1) of the Companies (Management and Administration) Rules, 2014 is set out as an annexure to the Directorsâ Report and forms part of this Annual Report.
PARTICULARS OF CONTRACTS / ARRANGEMENTS WITH RELATED PARTIES
All the related party transactions of your Company are entered in the ordinary course of business and are on armâs length basis and are in compliance with the applicable provisions of the Companies Act, 2013 and SEBI Listing Regulations, 2015. There are no materially significant transactions entered into by your Company with Promoters, Directors or Key Managerial Personnel (KMPs), which have potential conflict with the interest of your Company at large. Your Company has not entered into any material related party transactions with any of its related parties during the FY 2017-18 without requisite approval of the shareholders. Members may refer to the notes to the financial statements for details of related party transactions.
Since all related party transactions entered into by your Company were in the ordinary course of business and were on an armâs length basis, Form AOC-2 is not applicable to your Company. The related party transactions are entered into based on considerations of various business exigencies, such as synergy in operations, sectoral specialization and your Companyâs long-term strategy for sectoral investments, optimization of market share, profitability, legal requirements, liquidity and capital resources of subsidiaries and associates.
In terms of Regulation 23(2) of SEBI Listing Regulations, 2015, your Company obtained prior approval of the Audit Committee for entering into transactions with related parties, as applicable. A statement of all related party transactions is presented before the Audit Committee on a quarterly basis, specifying the nature, value and terms and conditions of the transactions. The statement is supported by the Certificate from the Chief Financial officer (CFO) of your Company.
A Related Party Policy has been devised by your Company for determining the materiality of transactions with related parties and dealings with them. The said Policy is available on your Companyâs website at https://www.srei.com/investor/ corporate-policies/pdf/related-party-transactions-policy.pdf.
PARTICULARS OF EMPLOYEES
The prescribed particulars of remuneration of employees pursuant to Section 197(12) read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are set out as annexures to the Directorsâ Report and forms part of this Annual Report.
PARTICULARS OF CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTFLOW
Your Company has no activity relating to Conservation of Energy and Technology Absorption as stipulated in Rule 8(3) of Companies (Accounts) Rules, 2014. However, your Company uses information technology extensively in its operations and also continues its endeavour to improve energy conservation and utilisation, safety and environment.
During the year under review, the total foreign exchange earnings and expenditure of your Company was NIL and Rs. 6,383 Lacs, respectively (previous year Rs. NIL and Rs. 7,921 Lacs, respectively).
AUDIT COMMITTEE
The Audit Committee has been constituted in line with the provisions of Section 177 of the Companies Act, 2013 read with Regulation 18 of SEBI Listing Regulations, 2015. Mr. Salil K. Gupta, Chief Mentor and Independent Director resigned from the Board of Directors of your Company w.e.f. July 22, 2017 and consequently, the Audit Committee of your Company was reconstituted w.e.f. that date. The Audit Committee presently comprises Mr. Shyamalendu Chatterjee, Mr. Srinivasachari Rajagopal, Independent Directors and Mr. Sunil Kanoria, NonExecutive Director. Mr. Shyamalendu Chatterjee, Independent Director of your Company is the Chairman of the Audit Committee.
The Company Secretary of your Company acts as the Secretary to the Audit Committee. The Terms of Reference of the Audit Committee has been provided in the Corporate Governance Section forming part of this Report.
4 (Four) meetings of the Audit Committee were held during the year 2017-18 on May 09, 2017, July 22, 2017, October 26, 2017 and January 17, 2018.
During the year under review, there were no such instances wherein the Board had not accepted the recommendation of the Audit Committee.
AUDITORS
At the 30th Annual General Meeting (AGM) of your Company held on August 01, 2015, Haribhakti & Co. LLP, Chartered Accountants, having registration No. 103523W / W100048 allotted by the Institute of Chartered Accountants of India (ICAI), were appointed as Statutory Auditors of your Company to hold office for a term of 5 (Five) years from the conclusion of 30th AGM (subject to ratification of such appointment by the Members at every AGM) till the conclusion of the 35th AGM of your Company. Accordingly, the appointment of Haribhakti & Co. LLP, Chartered Accountants, as Statutory Auditors of your Company, is placed for ratification by the Members. Your Company has received a confirmation from Haribhakti & Co. LLP, Chartered Accountants, to this effect that their appointment, if ratified, would be within the limits prescribed under Section 139 of the Companies Act, 2013 and the rules framed thereunder and in accordance with Section 141 of the Companies Act, 2013. They have also confirmed that they hold a valid peer review certificate as prescribed under Regulation 33(1) (d) of SEBI Listing Regulations, 2015. The Audit Committee and the Board of Directors of your Company recommend ratification of their appointment from the conclusion of this AGM upto the conclusion of the 34th AGM of your Company.
The Auditorsâ Report does not contain any qualification, reservation or adverse remark or disclaimer. Further, the Statutory Auditors have not reported any incident of fraud during the year under review to the Audit Committee of your Company.
SECRETARIAL AUDIT REPORT
Your Company appointed Dr. K. R. Chandratre, Practising Company Secretary, holding membership of The Institute of Company Secretaries of India (Membership No. FCS 1370; Certificate of Practice No. 5144) as the Secretarial Auditor of your Company for FY 2017-18 to conduct the Secretarial Audit pursuant to Section 204 of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.
The Secretarial Audit Report confirms that your Company has complied inter alia with all the applicable provisions of the Companies Act, 2013 and the Rules made thereunder, Depositories Act, 1996 and the Regulations and Bye-laws framed thereunder, Foreign Exchange Management Act, 1999 and the rules and regulations made thereunder to the extent of Foreign Direct Investment, Overseas Direct Investment and External Commercial Borrowings, SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, Secretarial Standards issued by The Institute of Company Secretaries of India (Secretarial Standards with respect to Meetings of Board of Directors (SS-1) and General Meetings (SS-2)), Securities Contracts (Regulation) Act, 1956 and all the Regulations and Guidelines of the Securities and Exchange Board of India (SEBI) as applicable to your Company, including the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011, the SEBI (Prohibition of Insider Trading) Regulations, 2015, the SEBI (Issue and Listing of Debt Securities) Regulations, 2008, the SEBI (Registrars to an Issue and Share Transfer Agents) Regulations, 1993 and the Reserve Bank of India Directions, Guidelines and Circulars applicable to Systemically Important Non-Deposit Accepting or Holding NBFCs (NBFC -ND - SI).
The Secretarial Audit Report for the financial year ended March 31, 2018 does not contain any qualification, reservation or adverse remark or disclaimer and the same forms part of the Annual Report.
CORPORATE GOVERNANCE
Your Company has always practised sound corporate governance and takes necessary actions at appropriate times for enhancing and meeting stakeholdersâ expectations while continuing to comply with the mandatory provisions of Corporate Governance.
As required under Regulation 34(3) read with Schedule V of SEBI Listing Regulations, 2015, a separate section on Corporate Governance and a Certificate from the Auditors of your Company confirming compliance with the requirements of Corporate Governance, forms part of the Annual Report.
MEETINGS OF THE BOARD
The Board meets at regular intervals to discuss and decide on policy and strategy apart from other Board business. However, in case of a special and urgent business need, the Boardâs approval is taken by passing resolutions through circulation, as permitted by law, which are confirmed in the subsequent Board meeting.
4 (Four) Board meetings were held during the year 2017-18 on May 09, 2017, July 22, 2017, October 26, 2017 and January 17, 2018. The maximum time gap between any two consecutive meetings did not exceed 120 (One Hundred Twenty) days.
DIRECTORS
During the year under review, your Company appointed Mr. Malay Mukherjee (DIN 02272425) as an Additional Director (Category - Non Executive and Independent Director) of your Company with effect from October 26, 2017 to hold office as such upto the date of 33rd (Thirty-Third) Annual General Meeting (AGM) of your Company. Subject to approval of the Members of your Company, the Board recommends appointment of Mr. Malay Mukherjee as Independent Director of your Company for a period of 5 (five) consecutive years from date of the Thirty-Third AGM of your Company.
Based on the recommendation of the Nomination and Remuneration Committee and subject to approval of the Members of your Company, the Board of Directors of your Company recommends re-designation of Mr. Ram Krishna Agarwal (DIN 00416964) as an Independent Director of your Company for a period of 5 (five) consecutive years from the date of the Thirty-Third AGM of your Company.
In accordance with the provisions of Section 152 of the Companies Act, 2013 (Act) and the relevant Rules and your Companyâs Articles of Association, Mr. Hemant Kanoria (DIN 00193015) retires by rotation at the ensuing AGM and being eligible, offers himself for reappointment.
Mr. Salil K. Gupta (DIN 00651223) resigned as a Director of your Company w.e.f. July 22, 2017 due to advanced age. Dr. Tamali Sengupta (DIN 00358658) resigned as a Director of your Company w.e.f. October 26, 2017 in terms of Section 164(2) of the Companies Act, 2013. Further, Mr. T.C.A. Ranganathan (DIN 03091352) resigned as a Director of your Company w.e.f. December 07, 2017 in terms of Regulation 20(1) of Banking Regulation Act, 1949. The Board wishes to place on record its sincere appreciation of the contribution, advice and guidance extended by them during their tenure as Directors of your Company.
The brief resume / details relating to Director who is proposed to be reappointed are furnished in the Notice of the ensuing AGM. The Board of Directors of your Company recommends the appointment / re-appointment of the above Directors.
Your Company has received declaration from each of the Independent Directors under Section 149(7) of the Companies Act, 2013 that he / she meets the criteria of independence laid down in Section 149(6) of the Companies Act, 2013 and Regulation 16 of SEBI Listing Regulations, 2015. All requisite declarations were placed before the Board.
Pursuant to Regulation 16(b) of SEBI Listing Regulations, 2015 and Section 197 of the Act read with the Rules framed thereunder, your Company has approved payment of remuneration of Rs. 75 (Seventy Five) Lacs by way of commission on net profits computed under Section 198 of the Act to NonExecutive Directors and Independent Directors of your Company for the financial year 2017-18. The payment is within the limit of 1 (One) per cent of the net profits of your Company for the financial year 2017-18 as approved by the Members of your Company at the AGM held on August 02, 2014 and in accordance with the applicable provisions of SEBI Listing Regulations, 2015 and the Act read with the Rules framed thereunder.
Further, Mr. Hemant Kanoria, Chairman and Managing Director (CMD) and Mr. Sunil Kanoria, Vice Chairman (NonExecutive Director) of your Company, are also the CMD and Vice Chairman, respectively, of Srei Equipment Finance Limited (SEFL), a wholly owned subsidiary of your Company and are in receipt of remuneration (including commission) during the Financial Year 2017-18 from SEFL as per the details given below:
Name of |
Remuneration (Rs. |
Director |
in Lacs) |
Hemant Kanoria |
678.46 |
Sunil Kanoria |
684.56 |
Further, Mr. Shyamalendu Chatterjee, Independent Director of your Company, is an Independent Director of SEFL and Chairman (Non - Executive) of Srei Capital Markets Limited, both wholly owned subsidiaries of your Company and is in receipt of sitting fees from the said subsidiary companies.
Apart from the above, Mr. Hemant Kanoria, Mr. Sunil Kanoria and Mr. Shyamalendu Chatterjee have not received any remuneration or commission from any of your Companyâs subsidiaries or holding company during the Financial Year 2017-18.
DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS / COURTS / TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND YOUR COMPANYâS OPERATIONS IN FUTURE
There are no such orders passed by the regulators / courts / tribunals impacting the going concern status and your Companyâs operations in future.
DIRECTORSâ RESPONSIBILITY STATEMENT
In terms of provisions of Section 134(5) of the Companies Act, 2013 (Act), your Board of Directors to the best of their knowledge and ability confirm that:
(i) in the preparation of the annual accounts for the financial year ended March 31, 2018, the applicable accounting standards have been followed along with proper explanation relating to material departures;
(ii) they have selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of your Company at the end of the financial year and of the profit of your Company for the year;
(iii) they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of your Company and for preventing and detecting fraud and other irregularities;
(iv)they have prepared the annual accounts for the financial year ended March 31, 2018 on a going concern basis;
(v) they have laid down internal financial controls to be followed by your Company and that such internal financial controls are adequate and are operating effectively;
(vi) they have devised proper systems to ensure compliance with the provisions of all applicable laws to your Company and the systems are adequate and operating effectively.
Your Company has complied with all applicable provisions of the Secretarial Standards issued by The Institute of Company Secretaries of India (ICSI) on Board Meetings and General Meetings.
GENERAL DISCLOSURES
Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions on these items during the year under review:
- Issue of equity shares with differential rights as to dividend, voting or otherwise
- Issue of sweat equity shares
- Your Company does not have any scheme of provision of money for the purchase of its own shares by employees or by trustees for the benefit of employees
- There was no revision in the Financial Statements
- There was no change in the nature of business.
AWARDS AND RECOGNITION
During the year, your Company has been adjudged as the winner of âGolden Peacock Award for Excellence in Corporate Governanceâ for the year 2017. Your Company has also completed the assessment conducted by Great Place to Work Institute, India and has been certified as a âGreat Place to Workâ for the period May, 2017 to April, 2018. Further, your Company has been globally certified as a âHealthy Workplaceâ for the period of 2017-19 making your Company an employer of choice while demonstrating sound ethical business principles, performance and value to stakeholders.
ACKNOWLEDGEMENT
Your Directors would like to express their grateful appreciation for the excellent support and co-operation received from the Financial Institutions, Banks, Central & State Government Authorities, RBI, SEBI, MCA, Registrar of Companies, Indian Stock Exchanges, Depositories, Credit Rating Agencies, Customers, Manufacturers, Vendors, Suppliers, Business Associates, Members, Debenture holders, Debenture Trustees and other Stakeholders during the year under review. Your Directors also place on record their deep appreciation for the valuable contribution of the employees for the progress of your Company during the year and look forward to their continued co-operation in realisation of the corporate goals in the years ahead.
On behalf of the Board of Directors
Hemant Kanoria
Chairman & Managing Director
DIN 00193015
Kolkata, April 28, 2018
Mar 31, 2017
The Directors are pleased to present the Thirty-Second Annual Report together with the Audited Accounts of your Company for the financial year ended March 31, 2017. The summarized consolidated and standalone financial performance of your Company is as follows:
FINANCIAL SUMMARY (Rs. in Lacs)
Consolidated |
Standalone |
|||
Year ended 31st March, 2017 |
Year ended 31st March, 2016 |
Year ended 31st March, 2017 |
Year ended 31st March, 2016 |
|
Total Revenue |
4,66,576 |
3,26,194 |
2,29,962 |
1,89,633 |
Total Expenses (including depreciation etc.) |
3,54,921 |
2,88,352 |
1,60,370 |
1,75,526 |
Profit before bad debts and advances written off (net)/ Provisions, Contingencies, Diminutions & Tax |
1,11,655 |
37,842 |
69,592 |
14,107 |
Bad Debts and Advances written off (net)/ Provisions, Contingencies, Diminutions |
77,207 |
27,248 |
54,756 |
5,965 |
Profit Before Exceptional Items and Tax |
34,448 |
10,594 |
14,836 |
8,142 |
Adjustment on disposal / cessation of Subsidiaries and Step-down Subsidiaries |
1,561 |
- |
- |
- |
Current Tax |
10,768 |
6,037 |
6,582 |
3,241 |
Mat Credit entitlement (including in respect of earlier years) |
(5,715) |
(6) |
(1,112) |
- |
Deferred Tax |
6,680 |
(1,590) |
(241) |
(839) |
Profit After Tax but before Share of Loss of Associate and Minority Interest |
24,276 |
6,153 |
9,607 |
5,740 |
Share of Loss/(Profit) of Associate |
(5) |
25 |
- |
- |
Minority Interest |
(55) |
(1,124) |
- |
- |
Profit After Tax after adjustment for Minority Interest |
24,336 |
7,252 |
9,607 |
5,740 |
Surplus brought forward from Previous Year |
28,649 |
30,747 |
27,120 |
25,938 |
Profit Available For Appropriation |
52,985 |
37,999 |
36,727 |
31,678 |
Paid up Equity Share Capital |
50,324 |
50,324 |
50,324 |
50,324 |
Amount transferred to Reserves |
20,358 |
6,322 |
15, 218 |
1,530 |
Reserves and Surplus |
4,41,550 |
3,12,177 |
2,36,174 |
2,26,190 |
Earnings Per Share (Rs.) |
4.84 |
1.44 |
1.91 |
1.14 |
Note: The above figures are extracted from the standalone and consolidated financial statements for the financial year ended on March 31, 2017
OPERATIONAL REVIEW
Your Company is one of the leading private sector infrastructure financing institutions in India. Some of the key highlights of your Company''s performance during the year under review are:
- The gross profit (before bad debts, and advances written off (net) / Provisions, Contingencies, Diminutions & Tax) is Rs. 69,592 Lacs as against Rs. 14,107 Lacs in the last year.
- Profit before taxation is Rs. 14,836 Lacs as against Rs. 8,142 Lacs in the last year.
- Net profit after taxation is Rs. 9,607 Lacs as against Rs. 5,740 Lacs in the last year.
- The total assets under management of the Srei Group is Rs. 37,68,308 Lacs as against Rs. 36,73,532 Lacs in the last year.
The Capital to Risk Assets Ratio (CRAR) of your Company stood at 18.94 per cent as on March 31, 2017, well above the regulatory minimum level of 15 per cent prescribed by the Reserve Bank of India for systemically important non-deposit taking NBFCs (NBFCs-ND-SI). Of this, the Ter I CRAR was 13.81 per cent.
The Financial Statements of your Company have been prepared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards notified under Section 211(3C) of the Companies Act, 1956 (which continue to be applicable in respect of Section 133 of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014) and the relevant provisions of the Companies Act, 1956 / Companies Act,
2013, as applicable and Regulation 48 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (hereinafter referred to as âSEBI
Listing Regulations, 2015''). Accounting policies have been consistently applied except where a newly issued accounting standard, if initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use. Management evaluates all recently issued or revised accounting standards on an ongoing basis. Your Company discloses standalone and consolidated unaudited financial results on a quarterly basis, which are subjected to limited review, and standalone and consolidated audited financial results on an annual basis.
Your Company has complied with all the norms prescribed by the Reserve Bank of India (RBI) including the Fair practices, Anti Money Laundering and Know Your Customer (KYC) guidelines.
CLASSIFICATION AS INFRASTRUCTURE FINANCE COMPANY (IFC) AND PUBLIC FINANCIAL INSTITUTION (PFI)
The Reserve Bank of India (RBI) has classified your Company as an âInfrastructure Finance Company'' within the overall classification of âNon Banking Finance Company''. Your Company is also notified as a Public Financial Institution (PFI) by the Ministry of Corporate Affairs (MCA), Government of India.
SREI GROWTH TRUST
Mr. Salil Kumar Gupta and Mr. Srinivasachari Rajagopal, Independent Directors of your Company were holding 4,86,00,000 Equity shares (allotted to your Company pursuant to amalgamation of Quippo Infrastructure Equipment Limited (Quippo) into and with your Company in lieu of 1,80,00,000 Equity shares held by your Company in Quippo) as on April 01, 2016 for the benefit of your Company and/or the shareholders of your Company, as Trustees of âSrei Growth Trust''. During the year under review, Mr. Shyamalendu Chatterjee,
Independent Director of your Company was appointed as a Trustee of Srei Growth Trust in place of Mr. Salil Kumar Gupta, who had earlier expressed his desire to step down as the Trustee.
Further, during the year, the aforesaid holding of 4,86,00,000 Equity shares (9.66%) in your Company, were sold by the Trustees in 2 (two) tranches as follows:
- 2,51,54,317 (5.00%) Equity shares were sold to BNP Paribas Lease Group (BPLG) in June, 2016 pursuant to the Share Purchase Agreement entered between your Company, BPLG, Srei Equipment Finance Limited (SEFL) amongst others.
- 2,34,45,683 (4.66%) Equity shares were sold in open market in March, 2017.
The entire sale proceeds received by Srei Growth Trust has been distributed by it to your Company, being the sole beneficiary. Srei Growth Trust has thereafter been dissolved w.e.f. close of business hours on March 31, 2017.
DIVIDEND
During the year under review, in accordance with Regulation 43A of SEBI Listing Regulations, 2015, a Dividend Distribution Policy was adopted by your Company, covering, inter alia, the parameters for declaration of dividend, utilization of retained earnings, procedure for dividend declaration etc. The Dividend Distribution Policy is available on the website of your Company www.srei.com and the link to the said Policy has been provided elsewhere in this Annual Report.
Your Company follows a consistent dividend policy that balances the dual objectives of appropriately rewarding Members through dividends and retaining capital, in order to maintain a healthy capital adequacy ratio to support long term growth of your Company. Consistent with this Policy, your Board has recommended a dividend of Re. 0.50 per Equity share (5 per cent) for the financial year 2016-17 to the Members of your Company. The proposal is subject to the approval of the Members at the 32nd Annual General Meeting (AGM) of your Company scheduled to be held on July 22, 2017. The dividend together with the dividend distribution tax will entail a cash outflow of Rs. 3,028 Lacs (previous year Rs. 3,028 Lacs).
The dividend payout for the year under review is in accordance with your Company''s policy to pay sustainable dividend linked to long-term growth objectives of your Company to be met by internal cash accruals.
PUBLIC DEPOSITS
Your Company decided not to accept any further public deposits or renew such maturing deposits in any manner w.e.f. April 20, 2010 and the entire amount of outstanding public deposits as on April 19, 2010 together with interest promised to the depositors, has been kept in an Escrow Account with a scheduled commercial bank for the purpose of making payment to the depositors as and when they raise the claim. Despite sustained efforts to identify and repay unclaimed deposits, the amount payable to the depositors as on March 31, 2017 is Rs. 3,37,467.35.
Being a non-deposit taking Company, your Company has not accepted any deposits from the public/members under Section 73 of the Companies Act, 2013 read with Companies (Acceptance of Deposits) Rules, 2014 during the year and within the meaning of the provisions of the Non-Banking Financial Companies Acceptance of Public Deposits (Reserve Bank) Directions, 2016.
PUBLIC ISSUE OF SECURED REDEEMABLE NON-CONVERTIBLE DEBENTURES
During the year under review, your Company accessed retail public markets through its issue of Secured Redeemable Non-Convertible Debentures (the âDebentures") of face value of Rs. 1,000 each which mobilized Rs. 628.54 Crores, as per the details given hereunder:
Date of opening of Issue |
Base Issue Size (Rs. in Crores) |
Total Issue Size including Green Shoe Option (Rs. in Crores) |
Maturity Period |
Allotment Date |
Amount (Rs. in Crores) |
07.09.2016* |
250 |
Up to 1000 |
400 days/3 years/5 years |
06.10.2016 |
293.36 |
30.01.2017** |
200 |
Up to 706.64 |
400 days/3 years/5 years |
27.02.2017 |
335.18 |
*Issue w.r.t. Tranche 1 Prospectus dated August 31, 2016 read together with Shelf Prospectus dated August 31, 2016. **Issue w.r.t. Tranche 2 Prospectus dated January 24, 2017 read together with Shelf Prospectus dated August 31, 2016. |
Debenture Trustee Agreement(s) in favor of Axis Trustee Services Limited for the aforesaid issue was duly executed. The said Debentures are listed on the Debt Segment of the BSE Limited (BSE) and National Stock Exchange of India Limited (NSE). The entire proceeds have been utilized for the purpose of various financing activities, repayment of existing loans and other business operations including working capital requirements. Your Company has duly paid the interest due on the aforesaid Debentures on time.
The public issue of the said Debentures has not only facilitated diversification of your Company''s sources for mobilizing long term resources but has also provided the retail Investors an opportunity to participate in India''s infrastructure development and progress. Through the two public issues launched in FY 2016-17, your Company has acquired nearly 32,000 retail investors. Along with previous issues, your Company has broad-based the retail base of nearly 90,000 investors. That signifies the growing confidence of investors in your Company. The various communication efforts of your Company surrounding the Debentures played a meaningful role in enhancing your Company''s brand image amongst relevant constituencies.
PROMOTERSâ GROUP SHAREHOLDING
The Promoters'' Group of your Company has increased their net shareholding in your Company during the year by 2.0820 per cent from 58.7164 per cent to 60.7984 per cent through the creeping acquisition route allowed as per SEBI (Acquisition of Shares and Takeovers) Regulations, 2011.
The Promoters'' Group has shown increased commitment to the business strategy and substantial growth of your Company and your Company believes that this will result in enhanced value for all the stakeholders.
As on March 31, 2017, none of the Promoter/Promoters'' Group shareholding is under pledge. Further, in compliance with Regulation 31(2) of SEBI Listing Regulations, 2015, the entire shareholding of promoter(s) and promoter group is in dematerialized form.
WHITE LABEL ATMs
The RBI has granted licences to private non-bank companies to set up, own and operate their own brand of ATMs in the Country, known as White Label ATMs (WLA). Your Company has received Certificate of Authorization from RBI for setting up White Label ATMs. Your Company has also commenced its ATM roll out in August, 2016 and through its network of White Label ATMs, your Company aims at empowering millions of Indians with the convenience to access their own money with ease.
BUYBACK OF LONG TERM INFRASTRUCTURE BONDS
The Board of Directors of your Company at its meeting held on May 12, 2016, accorded approval to your Company to buyback Long Term Infrastructure Bonds with face value of Rs. 1,000 each issued and allotted by your Company in the financial year 2011-12 under Shelf Prospectus and Prospectus Tranche - 1 both dated 28th December, 2011 from the existing Bondholders upto a maximum amount of Rs. 24,88,56,000/- (Rupees Twenty Four Crore Eighty Eight Lacs Fifty Six Thousand only) (âBuyback Programme").
In accordance with the Shelf Prospectus and Prospectus Tranche - 1 both dated 28th December, 2011, the Buyback Programme commenced on Saturday, 6th August, 2016 and ended on Saturday, 24th September, 2016 and the Buyback Date was Thursday, 23rd March, 2017.
44,866 nos. of Long Term Infrastructure Bonds with face value Rs. 1,000 each were bought back from 2,436 Bond Holders. The buyback proceeds was paid on Thursday, 23rd March, 2017 to all those Bondholders whose name appeared in the Register of Bondholders as on the Record Date i.e. March 07, 2017, the date being 15 days prior to the date on which payment of interest or the Buyback Amount or Maturity Amount was due and payable and who have participated in the Buyback Programme. Necessary intimation in this regard was made to the Stock Exchanges pursuant to SEBI Listing Regulations, 2015.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT ECONOMIC REVIEW
a. Global Outlook According to the World Bank, global GDP is projected to grow at 2.7 per cent in 2017, after an estimated growth of 2.3 per cent in 2016. Growth rate is expected to move up to 2.9 per cent in 2018. The International Monetary Fund (IMF) figures are a little more optimistic. IMF expects global economy to grow by 3.5 per cent in 2017 after an estimated growth of 3.1 per cent in 2016.
The year under review witnessed two significant developments on the global front - Brexit and the US elections. Both events have had an adverse impact on open trade. Several developed economies are becoming increasingly protectionist. The process of globalisation now seems to be on reverse gear.
While the US economy seems to be strengthening, doubts have emerged about its sustainability due to the actions taken by the new President. The rejection of the Trans Pacific Partnership (TPP) and a call to renegotiate the North Atlantic Free Trade Agreement (NAFTA) by the US President have created uncertainty on global trade and commerce. Across the Atlantic, there is little clarity on how Europe intends to get out of the phase of deflation it has entered into. However, early signs of improvement in consumer demand and employment are now visible in the Euro area. With Brexit, Britain will now need to sign fresh trade agreements with various countries, starting with the European Union. In Japan, while deflation risks continue to linger, there are nascent signs of revival in the form of falling unemployment, improving business sentiment and rising exports aided by the depreciation of the Yen. China has been experiencing capital outflows and there is lingering concern about the country''s financial stability, but at the same time surging credit growth and a booming property market have ensured that there is no major slowdown in the economy. There is widespread speculation that the Chinese government, in its bid to fuel growth, would eventually opt for a devaluation of the Renminbi.
The years after the global financial crisis were marked by quantitative easing (QE) by most central banks to keep their economies going. However, that cannot continue forever. The Federal Reserve, which had put an end to its QE programme two years ago, has now started increasing its policy rate. Bank of England has indicated that it is through with its targeted purchase of corporate bonds. The European Central Bank (ECB) is also getting ready to initiate its tapering process. The era of central bank driven abundant liquidity now seems to be nearing its end.
The World Bank expects the emerging and developing economies (EDEs) to be the main drivers of global growth. According to World Bank forecasts, the EDEs, after registering a 3.4 per cent growth rate in 2016, will clock a growth rate of 4.2 per cent in 2017 and thereafter growth rate will further strengthen to 4.6 per cent in 2018. The advanced economies (AEs), after growing at 1.6 per cent growth rate in 2016, are expected to clock a growth rate of 1.8 per cent both in 2017 and 2018.
There are several red flags to watch out for. Tension on the geo-political front has increased with the rise of the ISIS (Islamic State of Iraq & Syria) and the sporadic terrorist attacks in different countries. There is growing tension between USA and North Korea. The assertiveness of China (on South China Sea and Indian Ocean) and Russia (annexation of Crimea and intervention in Ukraine) also do not augur well for global geopolitics. There is not enough clarity on the US policy towards China, but in case a trade war breaks out between USA and China, it can have serious global repercussions.
b. Indian Scenario
India continues to hold on to its position of the fastest growing major economy in the world. The point to be noted here is that India has achieved this despite the huge disruption caused by the Demonetization Drive that was initiated by the government in November, 2016 to curb black money. For 201617, India''s GDP growth rate has been estimated to be 7.1 per cent, 7 per cent and 6.8 per cent by Central Statistics Office (CSO), the World Bank and IMF, respectively. For 2017-18, the Economic Survey has predicted that India''s GDP growth rate will be within a range of 6.75-7.5 per cent. Most other institutions have predicted growth rates within that range, only the World Bank has predicted a higher rate at 7.6 per cent.
During the year under review, the Government of India has performed well on a number of fronts. There was considerable progress made in building consensus for the Goods & Services Tax (GST) and now GST is likely to be rolled out from 1st July, 2017. Passing of the Insolvency & Bankruptcy Code (IBC), 2016 was another major achievement. These steps will certainly contribute towards improving the ease of doing business in India and will support entrepreneurship. The recent state elections have also ensured that the ruling coalition at the Centre now enjoys a strong position in both Houses of the Parliament, thus making it easier to push key legislative reforms. On the macroeconomic front, the fiscal deficit has been kept under control and within targeted limits. At USD 364 billion, the foreign exchange reserve position is also comfortable. In recent months, exports and imports have started to register positive growth once again. All these augur well for the economy. The very fact that India has been able to attract foreign direct investment (FDI) worth USD 60.08 billion in 2016-17 (vis-a-vis USD 55.6 billion in 2015-16) and that too at a time when global FDI inflows fell, is an endorsement of the fact that the global investor community is interested in the India Growth Story.
However, there are a few areas of concern as well. A paltry 0.6 per cent growth in the Index of Industrial Production (IIP) during April-January 2016-17 indicates a lack of buoyancy in industrial activity. However, more worryingly, the capital goods index, which is an indicator of future investment, registered a negative growth of 15 per cent during April-January 2016-17. Even growth of services sector seems to be losing steam as it grew at 7.5 per cent between April-December 2016-17 vis-a-vis 9.5 per cent a year ago. Meanwhile, inflation is on the rise as evident from the month-wise Wholesale Price Inflation (WPI) figures and the Reserve Bank of India (RBI) has already shifted its monetary policy to a neutral stance indicating that interest rates may have plateau for the time being. The growth so far has essentially been on account of the increase in government spending, which though good in the current context, cannot be sustained for long. To add momentum to our growth, there is a need to revive private sector investment in a big way, especially in infrastructure projects. The biggest concern at this juncture has been the âtwin balance sheet problem'' which has got reflected in the growing amount of bad loans in our banking system, especially public sector banks, and a spurt in the number of overleveraged companies which are finding it difficult to service their debt. Banks'' lending activity has got choked and neither is there an appetite for fresh investments among the corporate. A number of initiatives have been taken by the Reserve Bank of India (RBI) to tackle the bad loan problem, but their implementation remains a challenge. Now that the IBC has got implemented, there is renewed hope of resolving the bad loan issue by helping the banks to free up their balance sheets and resume lending.
The domestic challenges are not insurmountable. The overall business environment today is much better than what it was during the last few years. The management of your Company is upbeat about India''s prospects and is convinced that with the right reforms India will continue to surge ahead of its peers.
NBFCs IN INDIA
NBFCs have always played an important role in promoting financial inclusion in India. They have been complementing and supplementing the banking sector in reaching out credit to the un-banked segments of the society. The biggest contribution of NBFCs is their ability to cater to the needs of the Micro, Small & Medium Enterprises (MSMEs) which form the cradle of entrepreneurship and innovation in India. NBFCs'' innate ability to understand their customers'' needs and accordingly innovate to offer customized products make them the perfect conduit for credit delivery to MSMEs.
In addition, NBFCs like Asset Finance Companies (NBFC-AFCs) and Infrastructure Finance Companies (NBFC-IFCs) are actively contributing to the process of nation building, especially at a time when banks are reluctant to take more exposure on infrastructure projects.
According to the Financial Stability Report (FSR) released by RBI, NBFC loans expanded 16.6 per cent in 2015-16, twice as fast as the 8.8 per cent credit growth across the banking sector on an aggregate level. The aggregate balance sheet of the NBFC sector expanded 15.5 per cent in fiscal 2016 compared with 15.7 per cent the previous year. Net profit as a percentage of total income remained at 15.3 per cent between March, 2015 and March, 2016 and RoA (Return on Assets) stood at 22 per cent during the same period. NBFCs also performed better in terms of asset quality, even though the bad loan norms for these firms are not as stringent as those for full-fledged commercial banks. The gross nonperforming assets (GNPA) ratio for the NBFC sector declined to 4.6 per cent of total advances in March, 2016 from 5.1 per cent in September, 2015.
Despite doing relatively better than the banks, NBFCs still do not quite enjoy a level playing field. The year under review witnessed several regulatory developments for the NBFC sector. The major ones are the following:
- Concentration of credit/investment norms will not apply to Systemically Important NBFCs (NBFC-SI) which do not access public funds in India (directly or indirectly) and which do not issue guarantees.
- While attempting to revitalize any distressed asset, each NBFC can formulate its policy and requirements as approved by the Board. The restructuring package decided upon must be implemented within 90 days. Promoters must bring additional funds in all cases of restructuring which should be equal to a minimum of 20 per cent of NBFCs'' sacrifice or 2 per cent of the restructured debt, whichever is higher. NBFCs, based on the cash flow and Techno Economic Viability (TEV) study, should determine a reasonable time period during which the account is likely to become viable. Each NBFC should clearly document its own due diligence done in assessing the TEV and the viability of the assumptions underlying the restructured repayment terms.
RBI has increased the number of eligible players to whom banks are allowed to sell their stressed assets. NBFCs with adequate capital and necessary expertise to deal with stressed assets are eligible to buy such assets from banks.
- NBFCs are allowed to refinance any existing infrastructure and other project loan by way of full or partial take-out financing, without a predetermined agreement with other lenders, and fix a longer repayment period. Further, the same would not be considered as restructuring in the books of the existing as well as taking over lenders, if certain conditions are satisfied.
- Effective June 30, 2017, all unrated claims on Asset Finance Companies (NBFC-AFCs) and Infrastructure Finance Companies (NBFC-IFCs) having aggregate exposure from banking system of more than Rs. 200 crore will attract a risk weight of 150 per cent. However, claims on NBFC-AFCs and NBFC-IFCs having aggregate exposure from banking system of more than Rs. 100 crore, which were rated earlier and subsequently became unrated, have been assigned a risk weight of 150 per cent from August, 2016.
- Guidelines were issued on setting up a category of NBFCs called Account Aggregators.
- NBFCs need to put in place a reporting system for recording frauds.
The Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) has introduced a scheme for extending guarantee coverage to eligible NBFCs in respect of collateral free and/or third party guarantee free credit facilities extended by them to eligible Micro and Small Enterprises (MSEs).
Your Company, as always, is keeping a consistent monitoring all these developments and is continuously exploring new opportunities. The management of your Company has been regularly interacting with Government and various regulatory agencies so that the regulatory policies and guidelines can be synchronized and NBFCs can perform their functions better.
BUSINESS OUTLOOK AND FUTURE PLANS
The government is earnestly working towards enhancing India''s attractiveness as an investment destination. Apart from the various systemic reforms that are being pursued, the decision to abolish Plan and Non Plan expenditure and to opt for a consolidated Outcome Budget, as announced in Union Budget 2017-18, is indeed a step in the right direction as it brings in higher degrees of accountability.
Keeping in mind the central importance of agriculture and the rural sector in Indian economy, Union Budget 2017 18 has announced increased outlays for building rural roads, housing and irrigation, village electrification and sanitation and has stressed on the use of scientific technology to track progress of the MGNREGA projects.
The government''s efforts to step up infrastructure creation deserve special mention:
- Total capital and development outlay for the railways for 2017-18 has been pegged at Rs. 1.31 trillion out of which Rs. 0.55 trillion will be provided by the Government. Major thrust in the Union Budget 2017-18 for railways has been on development of new lines, station redevelopment and safety up gradation. A new Metro Rail policy will be announced with focus on innovative models of implementation and financing as well as standardization and indigenization of hardware and software.
- Union Budget 2017-18 has allocated Rs. 649 billion for roads & highways. Rs. 270 billion has been earmarked for development of rural roads. In 2016-17, the pace of highway construction reached an all-time high of 22.3 km/day and the target set for 2017-18 is 41 km/day.
- Union Budget 2017-18 has allocated Rs. 138.81 billion for the power sector. Rs. 33.61 billion has been earmarked for renewable energy. With implementation of a series of reforms in generation, transmission & distribution and renewable energy, the aim of enabling âPower for All by 2019'' looks very much achievable.
Total generation capacity as on February, 2017 stood at 315 GW. Government has completed electrification works in 116,680 villages (hitherto un-electrified) and intensive electrification in 399,829 villages by end of November 2016. As on April, 2017, 27 States and Union Territories have signed up for Ujjwal Discom Assurance Yojana (UDAY).
- Union Budget 2017-18 has allocated Rs. 6 billion for the port sector. A new Major Ports Authority Bill, 2016 has been passed to impart faster and transparent decision-making, benefiting the stakeholders and enabling better project execution capability. The bill is aimed at reorienting the governance model in central ports to the landlord port model, in line with successful global practices. In addition, a Merchants Shipping Bill, 2016 has also been passed with the aim to establish a National Shipping Board, develop Indian coastal shipping & trade, enhance safety and security of vessels & life at sea and to ensure compliance of India''s obligations under international conventions, among others.
- The UDAN (Ude Desh ka Aam Nagarik) scheme has been launched with an aim to boost regional air connectivity. The scheme is expected to add over 50 new airports to India''s operational network of 75 and open up as many as 1.3 million seats in unserved sectors. Government support in terms of tax sops and viability gap funding has been promised to make the scheme successful.
The housing sector has suffered a lot from the demonetization drive. To provide relief to this sector, âInfrastructure Status'' has been accorded to affordable housing in the Union Budget 2017-18. In addition, the move to defer levy of tax on notional rental income by one year (after year of completion certificate is received) will allow builders some breathing space to clear their inventory of constructed flats. Also, the move to reduce the holding period for computing long term capital gains from transfer of immovable property from 3 to 2 years is expected to provide some boost to the housing sector.
Private sector has played an important role in India''s infrastructure creation, especially during the last two decades, and public-private partnerships (PPPs) have emerged as the preferred mode. However, several of such projects have got mired in long standing disputes. The government realizes how important it is to revive private sector appetite for infrastructure investments to put PPP back on track. In this regard, the Finance Minister has promised to put in place a dispute resolution mechanism to address issues in the infrastructure space.
All these initiatives and targets augur well for the future of the infrastructure sector. However, the future momentum of infrastructure growth will be greatly influenced by how well government can get into the implementation part.
Your Company is actively tracking all these developments and the management is upbeat that the business scenario is poised to improve significantly during FY 2017-18.
BUSINESS REVIEW
The three main business activities of your Company are categorized as Fund based, Fee based and Strategic Investments.
I. FUND BASED ACTIVITIES INFRASTRUCTURE PROJECT FINANCE
Infrastructure sector is a key driver for the Indian economy and the definition of infrastructure includes power, bridges, dams, roads and urban infrastructure development. On a conservative estimate, India needs Rs. 31 trillion (US$ 455 billion) to be spent on infrastructure development over the next five years, with 70 per cent of funds needed for power, roads and urban infrastructure segments.
Government has planned initiatives to fast track infrastructure development with a target investment of Rs. 25 trillion (US$ 377 billion) in the sector over a period of three years. This includes Rs. 8 trillion (US$ 120 billion) for developing 27 industrial clusters and an additional Rs. 5 trillion (US$ 75 billion) for road, railway and port connectivity projects.
Power
India has the third largest energy consumption in the world but per capita electricity consumption is around a third of the world average. Moreover, electricity demand in India is expected to continue to expand as a result of economic and population growth, along with increased urbanization and industrialization.
The Indian power sector has an investment potential of Rs. 17 trillion (US$ 250 billion) in the next 4-5 years, thereby providing immense opportunities in power generation, distribution, transmission, and equipment, etc. Generation is further split into coal / gas based thermal power, wind power, solar power and biomass. Renewable sector remain to be a focus for the Government and has seen impressive gains, which is reflected in the growth in installed capacity.
The CAGR for installed capacity in India over FY 2007-17 was 10.6 per cent for thermal power, 21.3 per cent for renewable energy, 2.4 per cent for hydro power and 4.5 per cent for nuclear power.
Your Company has allocated around 37 per cent of its total allocation to this sector diversified into generation and transmission & distribution. 18 per cent of your Company''s total power sector investment is in renewable energy sector.
Roads
Road network in India at 4.7 million KMs, the second largest in the world, transport 65 per cent of all goods and 90 per cent of total passenger traffic. After almost coming to a standstill, the road sector is showing signs of revival drawing on several policy measures announced by the Government over the last two years. Concerted efforts by the Government to restart stalled projects by providing necessary clearances, launch of the hybrid annuity model and creation of the NIIF have helped in reviving growth in the sector.
Government has invested around Rs. 3.17 trillion (US$ 48 billion) in Road & Highway sector, in the past two and a half years. A total of 6,604 km out of the 15,000 km of target set for national highways in 2016-17 has been constructed by the end of February, 2017.
During the year, your Company has selectively participated in financing road projects by National Highway Authority of India (NHAI) and State Authorities. Your Company has allocated about 7 per cent of its total allocation to this sector.
Ports and Port Equipment
India has 12 major and 200 non-major ports. Cargo traffic, which recorded 1,673 million metric tonnes (MMT) in 2016, is expected to reach 3,130 MMT by 2020.
To improve operational efficiency of Port sector, the Government has taken several measures through mechanization, deepening the draft and speedy evacuations. Indian ports sector received FDI worth US$ 1.64 billion between April, 2000 and December, 2016.
Your Company has exposure to this sector by financial participation in a mix of major ports, minor ports and captive ports. The port sector now comprises around 5 per cent of the portfolio.
Aviation and Airports
The Indian Aviation industry is the 9th largest globally. Airports Authority of India (AAI) plans to increase its capital expenditure for 2017-18 by 25 per cent to Rs. 2,500 crore (US$ 0.37 billion), primarily to expand capacity at 12 airports to accommodate increase air traffic.
Your Company has exposure in the aviation sector comprising of about 1 per cent of the portfolio and is willing to take additional exposure to cash in the growth opportunity in the sector.
SEZ & Industrial Parks
The Special Economic Zone (SEZ) policy was introduced by the Government of India in year 2000 to overcome the shortcomings of the Export Processing Zones (EPZ) like size, infrastructure constraints, location handicaps and lack of policy framework.
As on March, 2017, 436 formal approvals have been granted for setting up of Special Economic Zones, out of which 347 SEZs have been notified and are in various stages of operation out of which 210 are operational.
During the year, your Company has selectively participated in financing projects in this sector. Your Company has allocated about 17 per cent of its total allocation to this sector.
Your Company remains to be a leader in providing advisory and funding solutions to companies that are operating in the infrastructure sector. Your Company continues to improve its capabilities and bring in best in class technology and solution to its customers.
INFRASTRUCTURE EQUIPMENT FINANCE - SREI EQUIPMENT FINANCE LIMITED
Pursuant to the Share Purchase Agreement (âSPA") dated December 29, 2015 executed between your Company, BNP Paribas Lease Group (BPLG), Srei Equipment Finance Limited (SEFL) and others, BPLG agreed to sell its entire shareholding of 2,98,30,000 equity shares of SEFL representing 50 per cent of the total paid-up equity share capital of SEFL to your Company in accordance with applicable laws. The transaction received all the requisite approvals and BPLG sold its entire shareholding of 2,98,30,000 equity shares of SEFL representing 50 per cent of the total paid-up equity share capital of SEFL to your Company. Pursuant to this transaction, SEFL became the wholly-owned subsidiary of your Company w.e.f June 17, 2016.
SEFL is registered with the RBI as a non-deposit taking NBFC (Category -Asset Finance) and is in the business of providing financial products and services to a wide spectrum of asset which includes Construction & Mining equipment, Information Technology equipment and Solutions, Healthcare equipment and Farm Equipment. The financial products and services comprise loans, leases, rentals and fee-based services.
SEFL retained its position as one of the leading equipment financier in India in the year under review with a disbursement in terms of asset cost of Rs. 13,602 crores. The Government''s impetus on fast-tracking infrastructure projects, clearing policy logjam and improving the financial health of infrastructure companies has led to a very healthy growth for infrastructure equipment. The infrastructure equipment market grew by 30-35 per cent in 2016-17 (unit sales). In the recent Union Budget, the total outlay for infrastructure including budgetary and internal and extra budgetary resources increased to Rs. 5.1 trillion with Roads and Railways being the biggest beneficiaries.
As per a report titled âRevival of Indian Construction Equipment Industryâ by Indian Construction Equipment Manufacturers'' Association, the equipment industry in India is expected to more than double from the 2015 16 levels of around 57,000 equipment to 1,20,000 equipment by 2019-20, registering an average yearly growth of more than 20 per cent.
The year under review saw a marked improvement in the financial performance of SEFL. Buoyed by a rejuvenated infrastructure segment, the total disbursements in terms of asset cost of your Company grew by 24 per cent during the year under review. The total Asset under Management (AUM) grew to over Rs. 21,623 crores, representing a 13 per cent growth over last year. The Gross Non-Performing Assets (GNPA) reduced from 2.80 per cent in 2015-16 to 2.38 per cent in 2016-17, while the Net Non-Performing Assets have reduced from 1.90 per cent in 2015-16 to 1.70 per cent in 201617. The Capital Adequacy Ratio (CAR) remained healthy at 18.66 per cent. The profit before tax grew to Rs. 216.42 crores in the year under review from Rs. 160.43 crores in 2015-16.
The improved financial performance is a result of SEFL''s continued focus on investing in technology to improve its customer experience, manage its risks, facilitate time-critical and proactive decision making and strengthen its on ground delivery.
The view for the year ahead is to expand market and retain market leadership by deepening inroads into asset lifecycle solutions, expand into related asset classes, leveraging on digital automation to improve productivity, and quality focus on vendor alliances. SEFL will continue to focus on technology implementation, product & process innovation which will give competitive advantage in the changing business environment.
II. FEE BASED ACTIVITIES INFRASTRUCTURE PROJECT ADVISORY
Infrastructure Project Advisory Division of your Company is expanding its spectrum as strategic advisors through conceptualizing various infrastructure projects in different domains.
Your Company has made a foray into the Housing for All Mission by assisting Government of Jharkhand in preparation of its robust Plan of Action by identifying the beneficiaries for a Cluster of eight cities and towns namely Jamshedpur, Adityapur, Jugsalai, Mango, Seraikela, Chakulia, Chaibasa and Chakradharpur in providing Housing For All through programme verticals and also assisting in preparation of the detailed project report for their implementation and Project Management under the Centrally Sponsored Scheme.
Your Company has been appointed by Government of Jharkhand as Consultant for preparation of Prefeasibility Reports, Detailed Project Reports and tender documents for full coverage of drinking water to rural population in two Packages viz., Ramgarh and Hazaribagh.
Your Company has been empanelled with the Ministry of Urban Development, Government of India as Project Management Unit (PMU) for AMRUT Mission as well as Transaction Advisor for providing technical assistance to Local Urban Bodies in issuing Municipal Bonds.
The âNamami Gange Programme'', an approved âFlagship Programme'' of the Government of India, aims to accomplish the twin objectives of effective abatement of pollution, conservation and rejuvenation of National River Ganga. Your Company has made an entry to this Integrated Conservation Mission through empanelment with the Ministry of Water Resources, River Development & Ganga Rejuvenation, Government of India as Transaction Advisor for Sewerage Wastewater Treatment and re-use of treated water in various towns on PPP model.
Your Company continues to work as Programme Management Agency (PMA) for the Ministry of Food Processing Industries, Government of India, to facilitate establishment of Mega Food Parks that will enable fresh investments into the food processing sector, increase realization for farmers and employment generation across the Country. On the basis of your Company''s appraisal, the Ministry has accorded
(i) in-principle approval for four Mega Food Parks, (ii) final approval for five Mega Food Parks in different parts of the Country, and (iii) grant disbursal to three of these Mega Food Park projects.
Your Company has undertaken Feasibility Study and Bid Process Management for construction of silos for storage of wheat at 11 (eleven) locations across 6 (six) States in the Country through PPP on Design, Build, Finance, Operate and Transfer (DBFOT) basis and has been successful in providing assistance in signing of Concession Agreement with selected developers for all the 6 (six) locations. Your Company has further been awarded with similar study for additional 19 (nineteen) locations across the Country by FCI. The technical feasibility of these new 19 (nineteen) locations has been completed and tender documents have already been floated by the Authority for selection of Developer for two locations.
During the year under review, your Company continued to work as PMA for Food Processing Industries in Bihar and has assisted 17 (seventeen) Rice Milling units of total capacity 466800 MT/Annum, 6 (six) Maize based units of total capacity 108300MT/Annum, 2 (two) Wheat based units of total capacity 54000MT/Annum and RABC units of total capacity 11500MT for their financial closure and obtaining requisite subsidies from Department of Industries, Government of Bihar. Your Company has successfully provided consultancy services to Directorate of Industries, Government of Jharkhand as Programme Management Agency (PMA) for National Mission for Food Processing (NMFP) 2012-17. Your Company has been reappointed to work as PMA for identification, funding and execution of various Projects/ Activities in Food and Feed Processing Sectors in the State of Jharkhand.
Madhya Pradesh Intercity Transport Authority (MPITA) intends to develop and upgrade bus terminals and their appurtenant infrastructure at 6 (six) locations viz. Bhopal, Gwalior, Indore, Sagar, Rewa & Jabalpur to international standard on PPP basis. For this purpose, MPITA appointed your Company as Consultant to carry out Project Feasibility Study, structuring and implementation of the project under PPP mode that will allow the project to be completed in a timely and cost effective manner, maximizing Value for Money, assisting MPITA in determining the transaction structure, institutional set up / arrangement, execution arrangement and carrying out Bid Process Management including Bidding documents.
Your Company continues to work as Project Management Consultant (PMC) for implementation of Sewerage Scheme in Rumdamol, Devorlim, Navelim Zone IV and Mandop Area in Goa for Sewerage & Infrastructural Development Corporation of Goa. Your Company has successfully completed the Rumdamol sewerage scheme. Your Company has also secured 2 (two) new PMC mandates from the same client for implementation of Sewerage System at Porvorim additional sewerage area and trunk main sewer in Bardez Taluk in Goa.
Your Company has also been working as Transaction Advisor for several clients across the Country, which, among others, include (i) West Bengal Highway
Development Corporation for multi-layer car parking cum commercial complex project in Kolkata on PPP mode, (ii) Goa Housing Board for development of commercial infrastructure in Goa on PPP model, and (iii) Madhya Pradesh Warehousing & Logistic Corporation for development of âComposite Logistics Hub'' at Ujjain and âTrucking Hub'' at Saikheda (Sagar) in Madhya Pradesh through PPP mode.
Due to low growth in manufacturing sector, major advisory firms operating in the Engineering Consultancy arena have been shifting their focus to Urban Infrastructure and this trend has increased competition manifold putting a stress on revenue potential. Secondly, Government clients are designing Consultancy & Advisory projects with focus on engaging a team of experts capable of providing end-to-end solutions. This has resulted in longer project duration with back-end fee payment and requirement of multifunction team. The opportunity now lies in Urban Infrastructure sectors like Smart City and AMRUT wherein major precincts of urban infrastructure are being clubbed together under one umbrella project. The ticket size of projects has been increasing for this project as it operates on âclubbing'' all segments. To mitigate business risks and to enhance our position, the Advisory division of your Company is working to create synergy within the group and with other external specialized agencies.
Leveraging the core competency coupled with strategic planning for sectors like Urban Infrastructure, Tourism, Transportation, Industrial Park, City Development Plan, etc., your Company is building initiative for a sustainable growth. It is the start of a new journey which your Company believes will result in expanding to new markets, new business precincts, and enrich the group''s capacity in delivering complex, multi-faceted advisory assignments.
III. STRATEGIC INVESTMENTS
Due to buoyant world financial markets and cyclical recovery in global trade, IMF has projected global growth to accelerate from 3.1 per cent in 2016 to 3.5 per cent and 3.6 per cent in 2017 and 2018, respectively (Source: IMF). The world economy is being threatened due to inward looking policies by developed economies which are risking global economic integration. Stronger economic policies and cohesive global efforts are needed to manage the challenges in an integrated global economy. Emerging markets contribute almost three-fourths of global growth and therefore emerging economies need to ward-off the external risks with robust institutional framework, managing current account deficits and permitting exchange rate flexibility. The positive sign in emerging economies is reflected through supportive macroeconomic policies in China, and hardening of Commodity & Oil prices benefiting Brazil and Russia.
Despite demonetization drive by Indian Government, the Indian economy is estimated to have grown by 6.7 per cent during FY 2016-17 supported by government expenditure. The various economic policy reforms pronounced by Indian Government coupled with victory of NDA (Central Government ruling political alliance lead by BJP) in the recently concluded state elections has boosted investor sentiments, which is reflected in recent capital market buoyancy. The Indian economy growth during FY 2017-18 is projected to be 7.4 per cent (Source: RBI). The demonetization program will continuously focus to promote consumer discretionary spending. This will be second consecutive year wherein MET department has projected normal monsoon in current financial year. Normal monsoon coupled with stable oil prices will keep inflation under control and will provide RBI the opportunity to lower interest rates in future. The continued focus of
Indian Government to rollout robust structural reforms, impetus in building infrastructure at the Centre & State level (significant increase in budgetary allocation for infrastructure spending in FY 2017-18), moderation of interest rates and comfortable liquidity position is already boosting the investment climate in the Country.
Your Company''s investment encompasses infrastructure sector such as transportation, energy, special economic zone & industrial parks, urban infra and social infrastructure. Acceleration in implementation of structural reforms by Indian Government including Insolvency & Bankruptcy Laws, & GST, providing higher budgetary support for infrastructure and rural development projects, divestment in PSUs and focusing on simplified compliances has led to faster project awards & execution in the infrastructure sector. Your Company expects that robust policy reforms will provide the much needed economic environment during FY 2017-18 and will boost overseas investment in infrastructure sector. Infrastructure sector provides attractive investment opportunities to long term investors in emerging economy such as India. Your Company expects that stable government will foster better economic condition in India during FY 2017-18 and will help significantly in identifying right opportunities to monetize its investment value.
Leveraging the current favorable economic environment and positive capital market sentiments, Bharat Road Network Limited, one of your associate company having presence in highway projects, has filed Draft Red Herring Prospectus (DRHP) with the Securities and Exchange Board of India (SEBI). This is on the back of monetization of our investment in the telecommunication infrastructure space, wherein your Company sold its entire stake in Viom Networks Limited to American Tower Corporation (ATC) at the beginning of this financial year, thus creating significant value for the stakeholders. Your Company also bought 50 per cent stake in Srei Equipment Finance Limited from BNP Paribas Lease Group (BPLG) in June, 2016, thus becoming 100 per cent holding company of the largest equipment financing business in India. This was done without any cash outflow, in lieu of 5 per cent stake in your Company to BPLG through sale of shares of your Company held by Srei Growth Trust as Treasury Stock. In March, 2017, your Company realized Rs. 195 Crores as the said Trust sold the balance 4.66 per cent of your Company''s shares held as treasury stock in the open market.
Your Company will embrace technology driven risk model, create brand positioning, and embark on digital journey to optimize available resources while continuously emphasizing to enhance shareholder returns on its investment portfolio. Your Company is continuously striving on enhancing the portfolio value of its investments through creating alliances, innovative approach and agile processes which can surpass the test of global challenges and prevailing market conditions. Given the positive economic sentiments, your Company is continuously emphasizing its efforts to explore divestment opportunities of its portfolio to realize better value.
RESOURCES
During financial year 2016-17, the Treasury department of your Company has seamlessly mobilized resources at competitive rates in the market. Leveraging its long standing relationship and robust track record, your Company has been able to maintain cost while ensuring proper asset liability match.
i. Bank Finance
Your Company''s strong relationships and past credit record with nationalized banks and private sector banks enables it to access cost effective fund. Your Company is funded by a diversified consortium of 30 Indian banks and has enhanced the tied-up fund based working capital limit to Rs. 9,716.50 crores from consortium member banks at the end of financial year. Further, your Company also successfully mobilized Long Term Loans aggregating to Rs. 625 crores during the year at the most competitive rates and continued to tap resources through domestic sources.
ii. Bonds / Debentures / Commercial Papers
Your Company has allotted debentures aggregating to Rs. 628.54 crores by issue of long term Non-Convertible Debentures (NCDs) during the year under review through public issue. Your Company is focusing on diversifying liability mix and hence, going forward, NCDs will be one of the focus areas to augment long term resources. Your Company has also raised Rs. 4,207.95 crores through Commercial Papers during the year under review.
iii. Foreign Institutional Borrowings
Your Company has drawn ECB of USD 12 million from Deutsche Bank with door to door tenor of 10 years and Euro 15 million from Oesterreichische Entwicklungsbank AG (Development Bank of Austria) with door to door tenor of 8 years. This has augmented the long term resources of your Company.
RISK MANAGEMENT
Risk management has been an important and integral part of the operations of your Company, driven by the objectives of maintaining robust asset quality alongside growth in business, optimal allocation of capital simultaneously with enhancement of shareholders'' value and hedging against unforeseen events and macroeconomic or environmental conditions.
Your Company''s risk management strategy strives to balance the tradeoff between risk and return and ensure optimal risk-adjusted return on capital, and entails independent identification, measurement and management of risks across the various businesses of your Company. Your Company has enunciated a framework of policies and principles derived from relevant directives provided from time to time by the Reserve Bank of India (RBI) for a specific classification of nonbanking finance companies (NBFCs), and continuously benchmarked with industry best practices. The policies are approved and reviewed from time to time by the Board of Directors supported by an independent risk function, which ensures that your Company operates within a pre-defined risk appetite. In compliance with norms under RBI, your Company computed capital requirement for credit, market and operational risk as on March 31, 2017. The capital to risk-weighted assets ratio (CRAR) of your Company worked out to 18.94 per cent and based on Tier-I capital it was 13.81 per cent, above the minimum regulatory requirements of 15 per cent and 10 per cent, respectively.
Governance Structure
The Risk Committee of Board (RCB), an independent Board level committee, puts in place specific policies, frameworks and systems for effective risk management. The RCB approves policies from time to time in consultation with other sub-committees of the Board, viz. the Investment Committee (IC) and the Asset Liability Management Committee (ALCO), constitute the governing framework for various types of risk and business activities undertaken within this policy framework. The overall risk management is guided by well-defined procedures appropriate for the assessment and management of individual risk categories viz. credit risk, market risk, operational risk, liquidity risk, counterparty risk and group risk supplemented by periodic validations of the methods used. Under the guidance of RCB, the risk department is responsible for assessing and managing risks on a regular and dynamic basis. This entails, as an imperative, garnering adequate knowledge of macroeconomic trends, insights into dynamics of various sectors, and understanding of regulatory environment, and application of quantitative and qualitative tools facilitating an accurate assessment of risk at all times.
Credit Risk
Your Company has a comprehensive and well-defined Credit Risk Policy for maximizing the risk-adjusted rate of return on capital by maintaining a healthy asset portfolio and managing the credit risk inherent in individual exposures as well at the portfolio level. The emphasis is placed both on evaluation and containment of risk at the individual exposures and on analysis of the portfolio behavior. The appraisal process encompasses a detailed risk assessment and rating of all obligors using internal rating models. The ratings of customers are assessed based on their financial performance, industry characteristics, business positioning, project risks, operating performance and other non-financial parameters such as quality of management and conduct of account.
Your Company has strong a framework for the appraisal and execution of project finance transactions that involves a detailed evaluation of technical, commercial, financial, marketing and management factors including sponsor''s financial strength and experience. Your Company identifies the project risks, mitigating factors and residual risks associated with the project, and applicable risk mitigating factors, including creation of debt service reserves and channeling project revenues through a trust & retention account. In some cases, your Company also has taken additional credit comforts such as corporate or personal guarantees from one or more sponsors of the project or a pledge of the sponsors'' equity holding in the project company.
The RCB periodically reviews the impact of the stress scenarios resulting from rating downgrades or drop in the asset values in case of secured exposures on the portfolio. Your Company works within identified limits on exposure to borrower groups, industry sectors and geographies, and continuously tracks portfolio level concentrations. These limits are periodically reviewed based on changes in macro-economic environment, regulatory environment and industry dynamics. Existing credit exposure in the portfolio is continuously monitored and reviewed. Key sectors are analyzed in details to suggest strategies considering both risks and opportunities. Corrective action, if required, is taken well in advance based on early warning signals.
Sustainability risk is an essential and integral part of your Company''s credit risk management framework. Besides economic benefits, the environmental and social benefits of the project are assessed as these are critical aspects for sustainability of any project. Subsequent to analyzing sustainability risk at the time of initial loan approval, it is also periodically monitored through the life-cycle of the exposure.
Market risk
Market risk is defined as the risk to earnings and to the value of investments arising from movements in extraneous market risk factors, namely stiff liquidity, interest rates and foreign exchange rates. The most common factors connected with market risk are interest rates, currency exchange rates, costs of investments in trade portfolio (regardless of the instruments'' character - debt or capital), prices of exchange commodities and other market variables related to your company''s activity.
Your Company''s market risk management is guided by well-laid policies, guidelines, processes and systems for the identification, measurement, monitoring and reporting of exposures against various risk limits set in accordance with the risk appetite of your Company. Treasury Mid-Office independently monitors the risk limits stipulated in the Market Risk Policy and reports deviations, if any, to the appropriate authorities as laid down in the policy.
Liquidity risk is two-dimensional: risk of being unable to fund portfolio of assets at appropriate maturity and rates (liability dimension) and the risk of being unable to liquidate assets in a timely manner at a reasonable price (asset dimension). Your Company''s Asset Liability Management Committee (ALCO) lays down a broad framework for liquidity risk management to ensure that it is in a position to meet its daily liquidity obligations as well as to withstand a period of liquidity stress from industry, market or a combination of them. The liquidity profile is analyzed on a static as well as on a dynamic basis by using the gap analysis technique supplemented by monitoring of key liquidity ratios and conduct of liquidity stress tests periodically. The ALM position of your Company is being periodically reported to ALCO, RCB and also to RBI.
Interest rate risk is the probability that variations in the interest rates will have a negative influence on the quality of a given financial instrument or portfolio, as well as on your Company''s condition as a whole. Interest rate risk is generally managed through floating rate mechanism by linking the lending rate of interest to your Company''s Benchmark Rate and is reviewed periodically with changes in your Company''s cost of funds. Your Company regularly conducts stress testing to monitor vulnerability towards interest rate unfavorable shocks.
Currency or exchange rate risk is the risk where the fair value or future cash flows of a given financial instrument fluctuate as a result from changes in the currency exchange rates. Currency exchange rates can be subject to big and unexpected changes, and managing of the risk related to the currency exchange rates'' volatility can be very complicated.
Exchange rate risk management becomes necessary as your Company borrows money in foreign currency and lends in domestic currency. In order to optimize the cost of funds, your Company adopts effective hedging strategies considering the overall risk appetite of your Company. Through statistical measure like Value at Risk (VaR), stress tests, back tests, scenario analyses, your Company monitors the foreign currency portfolio.
Operational risk
Operational risk is defined as the risk of loss arising out of inadequate or failed internal processes, people and systems or from external events. Your Company in accordance with the regulatory guidelines has put in place a framework to identify, assess and monitor risks, strengthen controls, improve customer service and minimize operating losses.
Your Company has built into its operational process by segregation of duties, clear reporting structures, well defined processes, operating manuals, staff training, verification of high value transactions and strong audit trails to control and mitigate operational risks. New product and activity notes prepared by business units are reviewed by all concerned departments including compliance, risk management and legal. All concerned departments coordinate and discuss key operational risk issues involving people, process, and technology, external factors etc. so as to minimize them or ensure adequate controls over them.
A well-formulated Business Continuity Plan (BCP) is in place which ensures business continuity in unlikely event of disaster or disruption. Further to provide continued and uninterrupted service even during natural disasters, a Disaster Recovery (DR) Site is also in place. Vigorous information technology system is put in place which has been certified with globally accepted ISO2701:2005 standard, comprising features like DR, security features covering firewalls, encryption technologies, spam-guards etc. Your Company is committed towards investing in information technology to strengthen its business process.
In addition, to manage operational risk prudently, Know Your Customer (KYC) and Anti-Money Laundering (AML) Policy are in place, which helps to prevent your Company from being used intentionally or unintentionally by criminal elements for money laundering.
The risk management framework of your Company is based on assessment of all risks through proper analyzing and understanding the underlying risks before undertaking any transactions and changing or implementing processes and systems. All transactions and processes conform to your Company''s risk appetite and regulatory requirements and the same is achieved through a proper governance structure, which includes a multi-tiered approval levels for transactions and processes. This risk management mechanism is aided by regular review, control, self assessments and monitoring of key risk indicators.
HUMAN RESOURCES ACTIVITIES
The three pillars of the people strategy at your Company have focused on building organization capability, creating process excellence and working on strengthening the collaborative culture.
In the prevailing scenario of business, particularly with technology becoming a key enabler of business and a vital part of strategy, your Company has focused on leveraging technology and digitization as a key part of its people strategy.
The Human Resource Team of your Company has delivered several transformational changes in the year under review. These include the launch of an e-learning platform for all domain and functional skills - LEaD SREI Online. Your Company has created a role based curriculum for all customer facing and critical roles. The key dimensions of knowledge that individuals need are covered through this Portal. The modules are crisp and engaging and tailor made for the needs of each function, each role. Moreover, there has been significant interaction with the business leaders in the creation of the courses to ensure that the content is fully aligned with current business processes and business priorities. It is ensured to cover topics that are part of statutory requirements such as Know Your Customer (KYC) and Anti Money Laundering (AML) as well as Prevention of Sexual Harassment at the Workplace.
In order to exponentially increase collaboration, idea sharing and engagement between employees, your Company has launched Srei Sampark in the last year. This is an app based social media platform which also acts as a digital sensor for employee mood and engagement. Several initiatives are run on this platform including those related to Swasth Srei and a reward and recognition initiative called Shabash.
For your Company, all employees form part of an extended family - the Srei Parivar and your Company has continued in its efforts to encourage wellness in mind, body and spirit. Through Swasth Srei, your Company continues to encourage wellness and healthy lifestyles of the employees.
Your Company continues to work on and improve all its people management processes through the cloud based Human Resource Management System (HRMS) which was launched in the year 2016. The Human Resource Team has continued to work on and improve its response time and turn â around times to better support the business of your Company.
The biggest accolade your Company has received in the year under review has come in the form of highest ever ratings in the Great Place to Work, Survey 2016. Employee participation was at an all-time high at 96 per cent and your Company''s scores on every parameter were also at an all-time high.
The employee count of your Company stands at 189 as on March 31, 2017, and automating employee services has supported your Company to improve response time and service.
INFORMATION TECHNOLOGY
Information Technology (IT) in your Company has emerged as a strategic enabler and is playing a major role in improving productivity, reliability and customer satisfaction level while optimizing cost & risks. The IT function has successfully transformed its status from âReactive" state to âManaged" state by implementing state of the art technology, integrating end to end business process along with underlying technology and transforming its vision from gaining technological expertise to offering customer focused end-to-end service.
Following the current industry trend and business need, your Company moved away from Capex to Opex mode largely and adopted cloud based sourcing strategy for many of its crucial services including enterprise e-mail, Human Resource Management System (HRMS) etc. These strategic transformation projects have not only optimized IT resource and operational cost but also improved stability and performance of business critical services.
In addition to various initiatives enabling cost variabilisation, consolidation and efficiencies and on demand scale, various initiatives in the areas of digitalization, speed, performance and mobility have been given high priority to get the competitive advantages in client and employee facing processes. To enhance end client reliability and satisfaction level, SMS facility has been provided for all transactions and payment made by cash, cheque or demand draft. Google Apps for Work has been introduced through âPIN IT" initiative that brings to users collaboration anytime, anyplace and any device and seamless integration of end to end business process was accomplished coupled with a single service desk solution across IT services. All data centreâs of your Company were consolidated into a single one and given to a strategic partner via a long term contract for managed hosting services.
During the year under review, the focus areas were end user mobility, uniformity in process automation and risk optimization by state of art security practice. Human Resource Management System (HRMS) solution has been moved to a cloud based solution which tracks the employee lifecycle from joining till separation with a very efficient performance management system.
IT is now a digital partner of the business, connecting the four pillars
- the customer, the manufacturer, the employee and the asset. During this year, your Company launched âMy Srei''
- a customer self service app, field investigation and lead management app for the sales force along with a self service app for all employees. Your Company has embarked upon a project of GPS based location tracking of the assets financed which would enable in reduction of risk. Your Company has also implemented eKYC, automated bureau verification, de-dupe for better management of the customer on-boarding process.
Risk of internet usage has been highly mitigated by adopting a cloud based proxy solution in terms of secured communication and integrated control. While continuing with its accreditation for ISO 27000:2013, your Company has taken its IT risk management system to the next level of maturity. Compliance to regulatory and statutory needs has always been the focus at your Company, and taking a further step in that direction, your Company has implemented a comprehensive compliance tracking solution. Further, your Company has taken proactive measures to educate the entire business users about information security issues through sustained communication.
Analytics was identified by your Company as one of the new areas of innovation. Accordingly, a Centre of Excellence has been created to identify and work on all use cases for analytics across the group and possible opportunities of synergy.
The IT function is embarking on the next wave of maturity that will position IT as a key business driver for every employee and customer. By leveraging innovations in mobile applications, adopting best of breed solution and framework, reengineering the current process and driving continuous improvement cycle across services, your Company is aiming to move towards the next level of maturity and make a significant footprint in the world of digitalization.
INTERNAL CONTROL AND AUDIT
Your Company''s vision, mission and core values have laid the foundation for internal controls. On the administrative controls side, your Company has a proper reporting structure, oversight committees and rigorous performance appraisal system to ensure checks and balances. On the financial controls side, your Company has in place segregation of duties and reporting mechanism to deter and detect misstatements in financial reporting.
Your Company''s Internal Control System is commensurate with the nature of its business and the size and complexity of its operations and ensures compliance with policies and procedures. The Internal Control Systems are being constantly updated with new / revised standard operating procedures.
Further, in accordance with the latest legislation, your Company''s Internal Financial Controls (IFC) have been reviewed and actions have been taken to strengthen financial reporting and overall risk management procedures. Further, an Information System (IS) Audit of the internal systems and processes is conducted at least once in two years to assess operational risks faced by your Company.
Your Company has a dedicated and independent Internal Audit Department reporting directly to the Audit Committee of the Board. The purpose, scope, authority and responsibility of the Internal Audit Department are delineated in the Audit Charter approved by the Audit Committee. Internal Audit Department influences and facilitates improvements in the control environment by constantly evaluating the risk management and internal control systems.
Furthermore, the Audit Committee of your Company evaluates and reviews the adequacy and effectiveness of the internal control systems and suggests improvements. Significant deviations are brought to the notice of the Audit Committee and corrective measures are recommended for implementation. Based on the internal audit report, process owners undertake corrective action in their respective areas. All these measures help in maintaining a healthy internal control environment.
ENVIRONMENTAL AND SOCIAL MANAGEMENT SYSTEM
Environmental & Social Management System (ESMS) is followed as the process of sustainable business practice by your Company to adequately meet, respond to and enhance benchmarks in Environmental and Social (E&S) management. E&S risks associated with a proposal considered for investment and its existing portfolio are adequately taken care of by ESMS, which has been adopted to reduce the business risk of its portfolio related to E&S issues and adhere to Sustainable Finance Practice, which has been integrated as a part of overall Credit & Risk Policy. This management system is aimed at properly evaluating, assessing and ensuring customer compliance with relevant E&S requirements and encourages clients to take corrective action & mitigation plans.
Core element of your Company''s ESMS is a self-declared Policy Framework which includes due-diligence (rapid, sustainability, client risk assessment, project/activity risk categorization and if required site inspection), appraisal (analysis of E&S impacts and client''s capacity & commitment to address them), mitigation measures, action plans, monitoring & review of ongoing projects, training & workshop and continuous improvement of the system. By following ESMS practice, your Company has been able to create awareness in the market regarding relevance of E&S issues and their impacts on the society and the environment.
In your Company, a full scale E&S due-diligence is carried out for any business activity as per International Finance Corporation (IFC) Performance Standards and Country''s E&S laws, rules & notifications, based on which a âgo'' or âno go'' decision is given by ESMS team. Your Company neither participates nor invests in certain activities and industries, which fall in the exclusion list of your Company. Your Company does not invest in any projects that do not comply with the environmental & social norms and laws of the Country.
Your Company monitors & reviews the invested projects on a regular basis whereas shortfalls or misconducts are rectified by framing action plans for the same. Your Company continuously updates and upgrades the ESMS policy framework from time to time. Over the past years, your Company has been able to successfully manage, reduce and control the E&S risks associated with its portfolio. Another sustainability strategy of your Company is to increase investment in green projects steadily. In FY 2016-17, your Company rejected several business opportunities due to non-conformity to E&S policy like absence of sufficient regulatory clearances, public interest litigation, land acquisition and other E&S issues. On the other hand, your Company has encouraged sustainable development by investing in various renewable energy projects.
As a part of its sustainability strategy, your Company has entered into a capacity development agreement with Nederlandse Financierings-Maatschappij voor Ontwikkelingslanden N.V. (FMO) [Netherlands
Development Finance Company] and Oesterreichische Entwicklungbank AG (OeEB) [Development Bank of Austria] to launch a Corporate Rollout Programme (CRP) on ESMS for its clients across the Country for carrying out business with better management of E&S risks, thereby enhancing your Company''s brand image in the market. ESMS-CRP help clients to build their own sector specific ESMS Policy, and facilitate training program on different ESHS (Environmental, Social, Health & Safety) issues. This programme reduces business risk substantially from your Company''s portfolio and will help your Company to gain third party control. In FY 2016-17, your Company has entered into agreement for ESMS-CRP with a dozen Clients and completed sector specific ESMS Policy framework and Risk Toolkits for these clients to carry out their business with better understanding & mitigation of its E&S risks.
Your Company believes in a Sustainable Finance Business Approach by considering conservation, management & sustainable use of human & natural resources. This endeavour helps your Company in creating a strong & confident long term relationship with its stakeholders.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
The total amount available for CSR spending, being 2 (two) per cent of the average net profits of your Company made during the three immediately preceding financial years, during the financial year 2016-17 aggregated to approximately Rs. 1.96 Crores.
Recognizing its social responsibility, your Company had earlier established a public charitable trust in the name of âSrei Foundation'' with the objective of granting scholarships and other financial assistance to deserving and talented candidates. The Fund also supports setting up of schools, colleges, medical and scientific research institutions. Donations to Srei Foundation qualify for deduction under Section 80G of the Income Tax Act, 1961. Your Company has granted donation of Rs. 1,50,00,000/- (Rupees One Crore and Fifty Lacs only) to Srei Foundation during the financial year 2016-17.
Your Company is fully aware of the fact that as a corporate citizen, it is also entrusted with the responsibility to contribute for the betterment of the society at large. During the year under review, your Company extended support to Sonata Foundation towards operational expenses for smooth running of Animal Mobile Clinics used extensively for welfare of animals, with a sum of Rs. 3,40,000/- (Rupees Three Lacs and Forty Thousand only).
Your Company is cognizant towards promoting and encouraging education and hence contributed Rs. 80,00,000/-(Rupees Eighty Lacs only) to Indian Institute of Information Technology Guwahati (IIITG), an institution under MHRD, Government of India set up in 2013 and aimed at generating highly competent manpower of global standards for the Information Technology Industry.
Your Company perceives Corporate Social Responsibility (CSR) as an opportunity to contribute towards uplifting the society at large, empowering individuals, making them self-reliant. The CSR philosophy of your Company is embedded in its commitment to all stakeholders namely consumers, employees, environment and society while your Company''s approach extends both to external community as well as to your Company''s large and diverse internal employee base and their families. Your Company''s sustainable approaches towards practicing humble service to Humanity on a sustainable basis, has enabled it to continue fulfilling its commitment to be a socially responsible corporate citizen.
The CSR Committee of your Company has formulated the CSR Policy which describes the multiple lines around which the CSR activities of your Company are positioned being education and skill development, social and economic welfare, environmental sustainability and such other activities included in Schedule VII of the Companies Act, 2013 as may be identified by the CSR Committee from time to time. The said Policy is available on your Company''s website www.srei. com and a link to the said Policy has been provided elsewhere in this Annual Report. The Committee presently comprises Mr. Hemant Kanoria, Chairman & Managing Director, Mr. Sunil Kanoria, Non-Executive Director and Mr. Shyamalendu Chatterjee, Independent Director. Mr. Hemant Kanoria, Chairman and Managing Director of your Company acts as the Chairman of the CSR Committee. Mr. Madhusudan Dutta, Group Head -Corporate Strategy & Planning (Human
Capital) acts as the Secretary to the CSR Committee.
4 (Four) meetings of the CSR Committee were held during the year 2016-17 on May 12, 2016, August 06, 2016, November 05, 2016 and February 02, 2017.
During this year, your Company spent an aggregate amount of Rs. 2,33,65,000/-(Rupees Two Crore Thirty Three Lacs and Sixty Five Thousand only), being 2.39 per cent of the average net profits of last 3 years, towards CSR activities pursuant to CSR Policy of your Company, which is more than the minimum statutory requirement, being 2 per cent of the average net profits of last 3 years. The manner in which the CSR amount was spent during the financial year is set out as an annexure to the Directors'' Report and forms part of this Annual Report.
BUSINESS RESPONSIBILITY REPORT
The Business Responsibility (BR) Report as stipulated under Regulation 34(2)(f) of SEBI Listing Regulations, 2015, describing the initiatives taken by your Company from an environmental, social and governance perspective, forms part of the Annual Report.
Further, the BR Committee of your Company constituted by the Board of Directors at its meeting held on May 12, 2016, formulated and approved the BR Policy of your Company in line with the provisions of SEBI Listing Regulations, 2015 as amended from time to time. The policy describes the principles of sustainable business that delivers value for its stakeholders including but not limited to its shareholders, employees, clients, business partners and the wider community.
SREI WEBSITE
The website of your Company www. srei.com was revamped recently. This website has been developed on the new responsive technology based platform known as âDrupal'', ensuring uniform display across all devices like mobile, tablet, desktop etc. and all the operating systems. The website has an inbuilt sophisticated and customized content management system for easy change in content. A simple, improved navigation system needs a lesser number of clicks to reach the information available in the different sections of the website. The contemporary and smart look of the website ensures a customer centric approach catering to the requirements of prospective customers, investors, employees and other stakeholders. The website of your Company also has âLive Stock Ticker'' with dynamic display of current stock prices in BSE and NSE with respective market caps. The site carries a comprehensive database of information of interest to the investors including the financial results of your Company, dividend declared, unclaimed dividend list, shareholding pattern, any price sensitive information disclosed to the regulatory authorities from time to time, analysts'' reports, investor presentations, standard downloadable forms, media coverage, corporate profile and business activities of your Company and the services rendered by your Company to its investors. Some useful features like Online Resume Management System to pull the best talents and Online NCD Application Form download system as a part of fund raising initiatives have been duly introduced in the system. In order to strengthen the bonds with the valued customers by offering them a better experience, your Company has integrated the new customer portal in the corporate website. The customers can access their account and download the essential documents directly from the website. By introducing the download facility of MySREIApp mobile application from the website, your Company extends the digital services and creates an âanywhere anytime'' experience like never before. The multiplatform mobile app now empowers customers to raise service request, contact relationship managers, send request for new finance etc. The links to different social media i.e. Facebook, YouTube, Twitter, Linked In has been embedded in the home page of the new website to get access of the key initiatives and achievements of your Company.
SUBSIDIARY COMPANIES
The Statement in Form AOC-1 containing the salient features of the financial statement of your Company''s subsidiaries and associates pursuant to first proviso to Section 129(3) of the Companies Act, 2013 (Act) read with Rule 5 of the Companies (Accounts) Rules, 2014, forms part of the Annual Report. Further, in line with Section 129(3) of the Act read with the aforesaid Rules, SEBI Listing Regulations, 2015 and in accordance with the Accounting Standard 21 (AS-21), Consolidated Financial Statements prepared by your Company include financial information of its subsidiary companies.
A Report on the performance and financial position of each of the Subsidiaries and Associate Companies included in the Consolidated Financial Statements prepared by your Company as per Rule 8(1) of the Companies (Accounts) Rules, 2014, forms part of the annual accounts of each of the Subsidiary and Associate Companies which have been placed on the website of your Company www.srei.com and also forms part of Form AOC-1 pursuant to Rule 5 of the Companies (Accounts) Rules, 2014, which is set out as an annexure to the Directors'' Report and forms part of this Annual Report. Members interested in obtaining a copy of the annual accounts of the Subsidiaries and Associate Companies may write to the Company Secretary at your Company''s Registered Office. The said report is not repeated here for the sake of brevity.
The names of companies which have become or ceased to be subsidiaries, joint ventures or associate companies during the year are given below:
Name |
Status |
Srei Forex Limited |
Ceased to be a wholly-owned Subsidiary w.e.f. 17.05.2016. |
Srei Equipment Finance Limited |
Ceased to be a Joint Venture and became a wholly-owned Subsidiary w.e.f. 17.06.2016. |
Srei International Infrastructure Services GmbH, Germany |
Ceased to be a Subsidiary and became an Associate w.e.f. 21.06.2016. |
AO Srei Leasing, Russia |
Ceased to be a Step down-subsidiary w.e.f. 21.06.2016. |
Srei Advisors Pte. Ltd., Singapore |
Ceased to be a Step down-subsidiary w.e.f. 21.06.2016. |
Bharat Road Network Limited1 |
Became an Associate w.e.f. 12.11.2016. |
Quippo Telecom Infrastructure Private Limited |
Ceased to be an Associate w.e.f. 13.01.2017. |
MATERIAL CHANGES AND COMMITMENTS, IF ANY, AFFECTING THE FINANCIAL POSITION
There is no such material change and commitment affecting the financial position of your Company which have occurred between the end of the financial year of your Company to which the financial statements relate and the date of the report.
POLICY FOR DETERMINING âMATERIAL'' SUBSIDIARIES
As on March 31, 2017, Srei Equipment Finance Limited (SEFL), a wholly owned subsidiary of your Company is a listed âmaterial'' subsidiary of your Company with its, debt securities being listed on the Stock Exchanges in India. However, your Company does not have any material unlisted subsidiary. Your Company has formulated a Policy for determining Material Subsidiaries in accordance with the applicable laws. The said Policy is available on your Company''s website www.srei.com and a link to the said Policy has been provided elsewhere in this Annual Report.
Mr. Shyamalendu Chatterjee, an Independent Director of your Company, is the Chairman (Non-Executive) of Srei Capital Markets Limited and an Independent Director of SEFL, both wholly owned subsidiaries of your Company. Further, Ms. Tamali Sengupta, Independent Director of your Company, is an Independent Director of SEFL.
KEY MANAGERIAL PERSONNEL (KMPs)
The following directors/executives of your Company are whole-time Key Managerial Personnel (KMPs) as on March 31, 2017 in accordance with the provisions of Section 203 of the Companies Act, 2013 -
Name |
Designation |
Mr. Hemant Kanoria |
Chairman & Managing Director |
Mr. Sameer Sawhney* |
Chief Executive Officer |
Mr. Sandeep Lakhotia |
Company Secretary |
Mr. Kishore Kumar Lodha |
Chief Financial Officer |
*Appointed w.e.f. November 05, 2016.
During the year, Mr. Sameer Sawhney was appointed as the Chief Executive Officer (CEO) of your Company for a period of 3 (Three) years w.e.f. November 05, 2016. Further, Mr. Bajrang Kumar Choudhary, Key Managerial Personnel (KMP) of your Company resigned as Chief Executive Officer (CEO) - Infrastructure Project Development and was relieved from the services of your Company w.e.f. the close of business hours of October 31, 2016 in accordance with your Company''s Policy.
NOMINATION AND REMUNERATION COMMITTEE
The Board of Directors of your Company have constituted a Nomination and Remuneration Committee in accordance with the provisions of Section 178 of the Companies Act, 2013 read with Regulation 19 of SEBI Listing Regulations, 2015. The Committee comprises Mr. Salil Kumar Gupta, Mr. Shyamalendu Chatterjee, Independent Directors and Mr. Sunil Kanoria, Non Executive Director. Mr. Salil Kumar Gupta, Chief Mentor and Director of your Company acts as the Chairman of the Nomination and Remuneration Committee. Mr. Sandeep Lakhotia, Company Secretary of your Company acts as the secretary to the Nomination & Remuneration Committee. The Terms of Reference of the Committee has been provided in the Corporate Governance Section forming part of this Report.
3 (Three) meetings of the Nomination and Remuneration Committee of your Company were held during the year 2016-17 on May 12, 2016, November 05, 2016 and February 02, 2017.
The Committee has formulated the Nomination and Remuneration Policy (âSrei Nomination and Remuneration Policy'') which broadly laid down the various principles of remuneration being support for strategic objectives, transparency, internal & external equity, flexibility, performance-driven remuneration, affordability and sustainability and covers the procedure for selection, appointment and compensation structure of Board members, Key Managerial Personnel (KMPs) and Senior Management Personnel (SMPs) of your Company. The said Policy is available on your Company''s website www.srei.com and a link to the said Policy has been provided elsewhere in this Annual Report.
WHISTLE BLOWER POLICY (VIGIL MECHANISM)
Your Company has formulated a codified Whistle Blower Policy incorporating the provisions relating to Vigil Mechanism in terms of Section 177 of the Companies Act, 2013 and Regulation 22 of SEBI Listing Regulations, 2015, in order to encourage Directors and Employees of your Company to escalate to the level of the Audit Committee any issue of concerns impacting and compromising with the interest of your Company and its stakeholders in any way. The said Policy was last revised on February 03, 2017. Your Company is committed to adhere to highest possible standards of ethical, moral and legal business conduct and to open communication and to provide necessary safeguards for protection of employees from reprisals or victimization, for whistle blowing in good faith. The said Policy is available on your Company''s website www.srei. com and a link to the said Policy has been provided elsewhere in this Annual Report.
POLICY AGAINST SEXUAL AND WORKPLACE HARASSMENT
Your Company is committed to provide and promote a safe, healthy and congenial atmosphere irrespective of gender, caste, creed or social class of the employees. Your Company in its Endeavour to provide a safe and healthy work environment for all its employees has developed a policy to ensure zero tolerance towards verbal, physical, psychological conduct of a sexual nature by any employee or stakeholder that directly or indirectly harasses, disrupts or interferes with another employee''s work performance or creates an intimidating, offensive or hostile environment such that each employee can realize his / her maximum potential.
Your Company has put in place a âPolicy on Prevention of Sexual Harassment'' as per The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. The said Policy was last revised on February 03, 2017. The Policy is meant to sensitize the employees about their fundamental right to have safe and healthy environment at workplace. As per the Policy, any employee may report his / her complaint to the Internal Complaint Committee constituted for this purpose. The said Policy is available on your Company''s website www.srei.com and a link to the said Policy has been provided elsewhere in this Annual Report.
Your Company affirms that during the year under review adequate access was provided to any complainant who wished to register a complaint under the Policy.
During the year, your Company has not received any complaint on sexual harassment from any of the women employees of your Company.
PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS
Your Company is exempted from the applicability of the provisions of Section 186 of the Companies Act, 2013 (Act) read with Rule 11 of the Companies (Meetings of Board and its Powers) Rules, 2014 and Companies (Meetings of Board and its Powers) Amendment Rules, 2015 as your Company is engaged in the business of financing of companies or of providing infrastructural facilities.
PERFORMANCE EVALUATION
The Nomination and Remuneration Committee (NRC) of your Company has formulated and laid down criteria for Performance Evaluation of the Board (including Committees) and every Director (including Independent Directors and Chairman & Managing Director) pursuant to provisions of Section 134, Section 149 read with Code of Independent Directors (Schedule IV) and Section 178 of the Companies Act, 2013 and Regulation 19(4) read with Part D of Schedule II of SEBI Listing Regulations, 2015 covering inter-alia the following parameters namely:
i) Board Evaluation - degree of fulfillment of key responsibilities; Board culture and dynamics.
ii) Board Committee Evaluation
- effectiveness of meetings; Committee dynamics.
iii) Individual Director Evaluation (including IDs) - contribution at Board Meetings.
Further, the Chairman and Managing Director is evaluated on key aspects of the role which includes inter-alia effective leadership to the Board and adequate guidance to the CEOs.
During the year under review, the Board carried out annual evaluation of its own performance as well as evaluation of the working of various Board Committees viz. Audit Committee, Stakeholders'' Relationship Committee, Nomination and Remuneration Committee and Corporate Social Responsibility Committee. This exercise was carried out through a structured questionnaire prepared separately for Individual Board Members (including the Chairman) and Board Committees based on the criteria as formulated by the NRC and in context of the Guidance note dated January 05, 2017 issued by SEBI.
Based on these criteria, the performance of the Board, various Board Committees viz. Audit Committee, Stakeholders'' Relationship Committee, Nomination and Remuneration Committee and Corporate Social Responsibility Committee, and Individual Directors (including Independent Directors and Chairman) was evaluated and found to be satisfactory.
During the year under review, the Independent Directors of your Company reviewed the performance of Non Independent Directors and Chairperson of your Company, taking into account the views of Executive Director and Non-Executive Directors.
Further, the Independent Directors hold unanimous opinion that the Non Independent Directors as well as the Chairman and Managing Director bring to the Board, abundant knowledge in their respective field and are experts in their areas. Besides, they are insightful, convincing, astute, with a keen sense of observation, mature and have a deep knowledge of your Company.
The Board as a whole is an integrated, balanced and cohesive unit where diverse views are expressed and dialogued when required, with each Director bringing professional domain knowledge to the table. All Directors are participative, interactive and communicative.
The Chairman has abundant knowledge, experience, skills and understanding of the Board''s functioning, possesses a mind for detail, is meticulous to the core and conducts the Meetings with poise and maturity.
The information flow between your Company''s Management and the Board is complete, timely with good quality and sufficient quantity.
FAMILIARISATION PROGRAMME FOR INDEPENDENT DIRECTORS (IDs)
In terms of Regulation 25(7) of the SEBI Listing Regulations, 2015, your Company is required to conduct Familiarization Programme for Independent Directors (IDs) to familiarize them about your Company including nature of industry in which your Company operates, business model of your Company, roles, rights and responsibilities of IDs and any other relevant information. Further, pursuant to Regulation 46 of SEBI Listing Regulations, 2015, your Company is required to disseminate on its website, details of familiarization programme imparted to IDs including the details of i) number of programmes attended by IDs (during the year and on a cumulative basis till date), ii) number of hours spent by IDs in such programmes (during the year and on a cumulative basis till date), and iii) other relevant details.
One such specific familiarization programme was conducted on November 04, 2016. As a part of the programme, presentation was made to the Independent Directors giving a brief overview of Roles, Responsibilities and Liabilities of Independent Directors under RBI regulations, Systemically Important Non-Banking Financial Companies (NBFCs) Prudential norms
- Infrastructure Finance Companies,
Corporate Governance norms with focus on constitution of various Committees under the Companies Act, 2013, Fit and proper criteria for Directors, Disclosure and Transparency norms, framing of internal guidelines by NBFCs etc., Highlights on key amendments to the SARFAESI Act, Insolvency and Bankruptcy Code, 2016 with salient features of the Code.
In addition to the above, the Board of Directors is encouraged to participate in various training sessions to ensure that the Board members are kept up to date.
At the time of appointment, a new Director is welcomed to the Board of Directors of your Company by sharing an Induction Kit containing inter-alia the Organization Chart, brief profile of all Directors and Key Managerial Personnel (KMPs), Policy Compendium, Investor Presentation, Investor call transcripts amongst others.
Further, the management of your Company makes various presentations to the Independent Directors on an ongoing basis which inter-alia includes Company overview, various business verticals, latest key business highlights, financial statements, evolution as well as business model of the various business of your Company, as part of the familiarization programme for Independent Directors.
Significant Statutory updates are circulated on a quarterly basis as a part of the agenda of the Board Meetings through which Directors are made aware of the significant new developments and highlights from various regulatory authorities viz. Reserve Bank of India (RBI), Securities and Exchange Board of India (SEBI), Ministry of Corporate Affairs (MCA), etc.
The Company Secretary also regularly apprises the Board about their roles, rights and responsibilities in your Company from time to time as per the requirements of SEBI Listing
Regulations, 2015, Companies Act, 2013 read together with the Rules and Schedules there under and Non-Banking Financial Company -Systemically Important Non-Deposit taking Company and Deposit taking Company (Reserve Bank) Directions, 2016.
The Board has open channels of communication with executive management which allows free flow of communication among Directors in terms of raising query, seeking clarifications and other related information. Directors are also informed of the various developments in your Company through e-mails, newsletters, internal magazines, etc. The same is made available on their I-Pads as well.
As a part of e-initiatives adopted by your Company, latest news and events including regulatory alerts are made available through a smart phone knowledge application âSrei Chanakyaa". This app also serves as a means to enhance compliance awareness and contains detailed do''s and don''ts, FAQ''s for Insider Trading, presentations on SEBI Listing Regulations, 2015, NBFC Compliance Dashboard & other relevant matters.
The link to the details of familiarization programmes imparted to Independent Directors, as required under Regulation 46 of SEBI Listing Regulations, 2015,
has been provided elsewhere in this Annual Report.
EXTRACT OF ANNUAL RETURN
An extract of Annual Return as on the financial year ended on March 31, 2017 in Form No. MGT-9 as required under Section 92(3) of the Companies Act, 2013 read with Rule 12(1) of the Companies (Management and Administration) Rules, 2014 is set out as an annexure to the Directors'' Report and forms part of this Annual Report.
PARTICULARS OF CONTRACTS/ ARRANGEMENTS WITH RELATED PARTIES
All the related party transactions of your Company are entered on arm''s length basis and are in compliance with the applicable provisions of the Companies Act, 2013 and SEBI Listing Regulations, 2015. There are no materially significant transactions entered into by your Company with Promoters, Directors or Key Managerial Personnel (KMPs), which have potential conflict with the interest of your Company at large. Your Company has not entered into any material related party transactions with any of its related parties during the FY 2016-17. Members may refer to the notes to the financial statements for details of related party transactions.
Since all related party transactions entered into by your Company were in the ordinary course of business and were on an arm''s length basis, Form AOC-2 is not applicable to your Company. The related party transactions are entered into based on considerations of various business exigencies, such as synergy in operations, sectoral specialization and your Company''s long-term strategy for sectoral investments, optimization of market share, profitability, legal requirements, liquidity and capital resources of subsidiaries and associates.
In terms of Regulation 23(2) of SEBI Listing Regulations, 2015, your Company obtained prior approval of the Audit Committee for entering into transactions with related parties. A statement of all related party transactions is presented before the Audit Committee on a quarterly basis, specifying the nature, value and terms and conditions of the transactions. The statement is supported by the certificate from the Chief Financial officer (CFO) of your Company.
A Related Party Policy has been devised by your Company for determining the materiality of transactions with related parties and dealings with them. The said Policy is available on your Company''s website www.srei.com and a link to the said Policy has been provided elsewhere in this Annual Report.
PARTICULARS OF EMPLOYEES
The prescribed particulars of remuneration of employees pursuant to Section 197(12) read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are set out as annexure to the Directors'' Report and form part of this Annual Report.
PARTICULARS OF CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTFLOW
Your Company has no activity relating to Conservation of Energy and Technology Absorption as stipulated in Rule 8(3) of Companies (Accounts) Rules, 2014. However, your Company uses information technology extensively in its operations and also continues its Endeavour to improve energy conservation and utilization, safety and environment.
During the year under review, the total foreign exchange earnings and expenditure of your Company was NIL and Rs. 7,921 Lacs, respectively (previous year Rs. NIL and Rs. 10,513 Lacs, respectively).
TRANSFER TO INVESTOR EDUCATION & PROTECTION FUND (IEPF)
During the year under review, your Company transferred a sum of Rs. 5,19,320 (Rupees Five Lacs Nineteen Thousand Three Hundred and Twenty only) to the Investor Education & Protection Fund (IEPF) of the Central Government, being the dividend amount pertaining to the financial year ended on March 31, 2009, which was due & payable and remained unclaimed and unpaid for a period of 7 (seven) years, as provided in Section 124(5) and 125 of the Companies Act, 2013. Cumulatively, the dividend amount transferred to the said Fund upto March 31, 2017 aggregates to Rs. 52,70,744.69 (Rupees Fifty Two Lacs Seventy Thousand Seven Hundred Forty Four and Paisa Sixty Nine only).
Pursuant to Section 124(6) and 125 of the Companies Act, 2013 read with the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 effective from September 07, 2016 and as further amended on February 28, 2017, all shares in respect of which dividend has not been paid or claimed for 7 (seven) consecutive years or more are required to be transferred by the Company in the name of Investor Education and Protection Fund (IEPF) along with a statement containing such details as may be prescribed.
Adhering to the various requirements set out in the Rules, your Company has sent individual communication to those shareholders whose shares are liable to be transferred to IEPF under the said Rules at their latest available address. The details of such shareholders and shares due for transfer to IEPF have also been uploaded on the website of your Company www.srei.com.
The shares transferred to IEPF, including all benefits accruing on such shares, if any, can be claimed back by the Shareholders from the IEPF Authority after following the procedure prescribed under the Rules.
AUDIT COMMITTEE
The Audit Committee has been constituted in line with the provisions of Section 177 of the Companies Act, 2013 read with Regulation 18 of SEBI Listing Regulations, 2015. The Board of Directors of your Company, at its
meeting held on August 06, 2016, reconstituted the Audit Committee whereby Mr. Shyamalendu Chatterjee was appointed as Chairman of the Audit Committee in place of Mr. Salil K. Gupta, who continued as a Member of the Committee. The Audit Committee presently comprises of Mr. Salil Kumar Gupta, Mr. Srinivasachari Rajagopal, Mr. Shyamalendu Chatterjee, Independent Directors and Mr. Sunil Kanoria, NonExecutive Director. Mr. Shyamalendu Chatterjee, Independent Director of your Company is the Chairman of the Audit Committee w.e.f. August 06, 2016.
The Company Secretary of your Company acts as the Secretary to the Audit Committee. The Terms of Reference of the Audit Committee has been provided in the Corporate Governance Section forming part of this Report.
4 (Four) meetings of the Audit Committee were held during the year 2016-17 on May 12, 2016, August 06, 2016, November 05, 2016 and February 02, 2017.
During the year under review, there were no such instances wherein the Board had not accepted the recommendation of the Audit Committee.
AUDITORS
At the 30th Annual General Meeting (AGM) of your Company held on August 01, 2015, Haribhakti & Co. LLP, Chartered Accountants, having registration No. 103523W/W100048 allotted by The Institute of Chartered Accountants of India (ICAI), were appointed as Statutory Auditors of your Company to hold office for a term of 5 (Five) years from the conclusion of 30th AGM (subject to ratification of such appointment by the Members at every AGM) till the conclusion of the 35th AGM of your Company. Accordingly, the appointment of Haribhakti & Co. LLP, Chartered Accountants, as Statutory Auditors of your Company, is placed for ratification by the Members. Your Company has received a confirmation from Haribhakti & Co. LLP, Chartered Accountants, to this effect that their appointment, if ratified, would be within the limits prescribed under Section 139 of the Companies Act, 2013 and the rules framed there under and in accordance with Section 141 of the Companies Act, 2013. They have also confirmed that they hold a valid peer review certificate as prescribed under Regulation 33(d) of the SEBI Listing Regulations, 2015. The Audit Committee and the Board of Directors of your Company recommend ratification of their appointment from the conclusion of this AGM up to the conclusion of the 33rd AGM of your Company.
The Auditors'' Report does not contain any qualification, reservation or adverse remark or disclaimer. Further, the Statutory Auditors have not reported any incident of fraud during the year under review to the Audit Committee of your Company.
SECRETARIAL AUDIT REPORT
Your Company appointed Dr. K. R. Chandratre, Practicing Company Secretary, holding membership of The Institute of Company Secretaries of India (Membership No. FCS 1370; Certificate of Practice No. 5144) as the Secretarial Auditor of your Company for FY 2016-17 to conduct the Secretarial Audit pursuant to Section 204 of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.
The Secretarial Audit Report confirms that your Company has complied inter alia with all the applicable provisions of the Companies Act, 1956 (as applicable), Companies Act, 2013 and the Rules made there under, Depositories Act, 1996 and the Regulations and Bye-laws framed there under, SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, Secretarial Standards issued by The Institute of Company Secretaries of India (Secretarial Standards with respect to Meetings of Board of Directors (SS-1) and General Meetings (SS-
2), Securities Contracts (Regulation) Act, 1956 and all the Regulations and Guidelines of the Securities and Exchange Board of India (SEBI) as applicable to your Company, including the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011, the SEBI (Prohibition of Insider Trading) Regulations, 2015, the SEBI (Issue and Listing of Debt Securities) Regulations, 2008, the SEBI (Registrars to an Issue and Share Transfer Agents) Regulations, 1993 and the Reserve Bank of India Directions, Guidelines and Circulars applicable to Systemically Important Non-Deposit Accepting or Holding NBFCs (NBFC - ND - SI).
The Secretarial Audit Report for the financial year ended March 31, 2017 does not contain any qualification, reservation or adverse remark or disclaimer and the same forms part of the Annual Report.
CORPORATE GOVERNANCE
Your Company has always practiced sound corporate governance and takes necessary actions at appropriate times for enhancing and meeting stakeholders'' expectations while continuing to comply with the mandatory provisions of Corporate Governance.
As required under Regulation 34(3) read with Schedule V of SEBI Listing Regulations, 2015, a separate section on Corporate Governance and a Certificate from the Auditors of your Company confirming compliance with the requirements of Corporate Governance, forms part of the Annual Report.
MEETINGS OF THE BOARD
The Board meets at regular intervals to discuss and decide on policy and strategy apart from other Board business. However, in case of a special and urgent business need, the Board''s approval is taken by passing resolutions through circulation, as permitted by law, which are confirmed in the subsequent Board meeting.
4 (Four) Board meetings were held during the year 2016-17 on May 12, 2016, August 06, 2016, November 05, 2016 and February 03, 2017. The maximum time gap between any two consecutive meetings did not exceed 120 (One Hundred Twenty) days.
DIRECTORS
In accordance with the provisions of Section 152 of the Companies Act, 2013 (Act) and the relevant Rules and your Company''s Articles of Association, Mr. Sunil Kanoria (DIN 00421564) retires by rotation at the ensuing AGM and being eligible, offers himself for reappointment.
The brief resume / details relating to Director who is proposed to be re-appointed are furnished in the Notice of the ensuing AGM. The Board of Directors of your Company recommends the re-appointment of the above Director.
Your Company has received declaration from each of the Independent Directors under Section 149(7) of the Companies Act, 2013 that he/she meets the criteria of independence laid down in Section 149(6) of the Companies Act, 2013 and Regulation 16 of SEBI Listing Regulations, 2015. All requisite declarations were placed before the Board.
Pursuant to Regulation 16(b) of SEBI Listing Regulations, 2015 and Section 197 of the Act read with the Rules framed there under, your Company has approved payment of remuneration of Rs. 75 (Seventy Five) Lacs by way of commission on net profits computed under Section 198 of the Act to Non-
Executive Directors and Independent Directors of your Company for the financial year 2016-17. The payment is within the limit of 1 (One) per cent of the net profits of your Company for the financial year 2016-17 as approved by the Members of your Company at the AGM held on August 02, 2014 and in accordance with the applicable provisions of SEBI Listing Regulations, 2015 and the Act read with the Rules framed there under.
Further, Mr. Hemant Kanoria, Chairman and Managing Director (CMD) and Mr. Sunil Kanoria, Vice Chairman (Non Executive Director) of your Company, are also the CMD and Vice Chairman, respectively, of Srei Equipment Finance Limited (SEFL), a wholly owned subsidiary of your Company and are in receipt of remuneration (including commission) during the Financial Year 2016-17 from SEFL as per the details given below:
Name of Director |
Remuneration (Rs. in Lacs) |
Hemant Kanoria |
523.26 |
Sunil Kanoria |
515.85 |
Apart from the above, Mr. Hemant Kanoria and Mr. Sunil Kanoria have not received any remuneration or commission from any of your Company''s subsidiaries or holding company during the Financial Year 2016-17.
DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS / COURTS / TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND YOUR COMPANY''S OPERATIONS IN FUTURE
There are no such orders passed by the regulators / courts / tribunals impacting the going concern status and your Company''s operations in future.
DIRECTORS'' RESPONSIBILITY STATEMENT
In terms of provisions of Section 134(5) of the Companies Act, 2013 (Act), your Board of Directors to the best of their knowledge and ability confirm that:
(i) in the preparation of the annual accounts for the financial year ended March 31, 2017, the applicable accounting standards have been followed along with proper explanation relating to material departures;
(ii) they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of your Company at the end of the financial year and of the profit of your Company for the year;
(iii) they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of your Company and for preventing and detecting fraud and other irregularities;
(iv) they have prepared the annual accounts for the financial year ended March 31, 2017 on a going concern basis;
(v) they have laid down internal financial controls to be followed by your Company and that such internal financial controls are adequate and are operating effectively;
(vi) they have devised proper systems to ensure compliance with the provisions of all applicable laws to your Company and the systems are adequate and operating effectively.
GENERAL DISCLOSURES
Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions on these items during the year under review:
- Issue of equity shares with differential rights as to dividend, voting or otherwise
- Issue of sweat equity shares
Your Company does not have any scheme of provision of money for the purchase of its own shares by employees or by trustees for the benefit of employees
There was no revision in the Financial Statements
There was no change in the nature of business.
AWARDS AND RECOGNITION
During the year, your Company has been adjudged as the winner of Corporate Governance Award 2017 by the Indian Chamber of Commerce. The award considered your Company''s sustainability policies, practices and performance in Corporate Governance. Further, your Company was one amongst the seven pioneering companies in India to be awarded with the Arogya World''s Healthy Workplace Platinum Award 2016. The Prestigious award under the "Clinton Global Initiative" evaluates on Health & Safety of employees, Annual employee Health Budget, Employee Health Risk Assessment, Innovative Health program Practice in the Organization under both âQuantitative" & âQualitative" scanner.
ACKNOWLEDGEMENT
Your Directors would like to express their grateful appreciation for the excellent support and co-operation received from the Financial Institutions, Banks, Central & State Government Authorities, RBI,
SEBI, MCA, Registrar of Companies, Indian Stock Exchanges, Depositories, Credit Rating Agencies, Customers, Manufacturers, Vendors, Suppliers, Business Associates, Members, Debenture holders, Debenture Trustees and other Stakeholders during the year under review. Your Directors also place on record their deep appreciation for the valuable contribution of the employees at all levels for the progress of your Company during the year and look forward to their continued cooperation in realization of the corporate goals in the years ahead.
On behalf of the Board of Directors
Hemant Kanoria
Chairman & Managing
Director DIN 00193015
Kolkata, May 09, 2017
Mar 31, 2016
The Directors are pleased to present the Thirty-First Annual Report
together with the Audited Accounts of your Company for the financial
year ended March 31, 2016. The summarised consolidated and standalone
financial performance of your Company is as follows
FINANCIAL SUMMARY (Rs. in Lacs)
Consolidated Standalone
Year ended Year ended Year ended Year ended
31st March 31st March 31st March 31st March
2016 2015 2016 2015
Total Revenue 3,26,194 3,36,032 1,89,633 1,90,003
Total Expenses
(including
depreciation etc.) 2,88,352 2,86,229 1,75,526 1,67,156
Profit before bad
debts, provisions
& tax 37,842 49,803 14,107 22,847
Bad Debts &
Provisions etc. 27,248 30,983 5,965 10,895
Profit Before Tax 10,594 18,820 8,142 11,952
Exceptional Items - (24) - -
Current Tax 6,037 4,369 3,241 1,818
Mat Credit
entitlement (6) (22) - -
Deferred Tax (1,590) 2,354 (839) 1,041
Income Tax in
respect of earlier
years - 3 - -
Profit After Tax
Before Minority
Interest 6,153 12,140 5,740 9,093
Share of loss of
Associate 25 - - -
Minority Interest (1,124) (771) - -
Net Profit 7,252 12,911 5,740 9,093
Minority Interests of
Pre Acquisition
Profit/(Loss) - 109 - -
Profit After Tax
after adjustment for
Minority Interest 7,252 13,020 5,740 9,093
Surplus brought
forward from Previous
Year 30,747 38,178 25,938 26,244
Profit Available For
Appropriation 37,999 51,198 31,678 35,337
Paid up Equity
Share Capital 50,324 50,324 50,324 50,324
Amount transferred
to Reserves 6,322 17,290 1,530 6,365
Reserves and Surplus 3,12,177 3,08,139 2,26,190 2,23,478
Earning Per Share 1.44 2.57 1.14 1.81
Note: The above figures are extracted from the standalone and
consolidated financial statements for the financial year ended on March
31, 2016
OPERATIONAL REVIEW
Your Company is one of the leading private sector infrastructure
financing institutions in India. Some of the key highlights of your
Company''s performance during the year under review are:
The gross profit (before bad debts, provision and tax) is Rs. 14,107
Lacs as against Rs. 22,847 Lacs in the last year.
Profit before taxation is Rs. 8,142 Lacs as against Rs. 11,952 Lacs in
the last year.
Net profit after taxation is Rs. 5,740 Lacs as against Rs. 9,093 Lacs
in the last year.
The total assets under management of the Srei Group is Rs. 36,70,283
Lacs as against Rs. 35,38,801 Lacs in the last year.
The Capital to Risk Assets Ratio (CRAR) of your Company stood at 17.54
per cent as on March 31, 2016, well above the regulatory minimum level
of 15 per cent prescribed by the Reserve Bank of India for systemically
important non-deposit taking NBFCs (NBFCs- ND-SI). Of this, the Tier I
CRAR was 12.51 per cent.
The Financial Statements of your Company have been prepared in
accordance with the Generally Accepted Accounting Principles in India
(Indian GAAP) to comply with the Accounting Standards notified under
Section 211(3C) of the Companies Act, 1956 (which continue to be
applicable in respect of Section 133 of the Companies Act, 2013 read
with Rule 7 of The Companies (Accounts) Rules, 2014) and the relevant
provisions of the Companies Act, 1956 / Companies Act, 2013, as
applicable and Regulation 48 of the Securities 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 accounting standard, if initially adopted or a revision to an
existing accounting standard requires a change in the accounting policy
hitherto in use. Management evaluates all recently issued or revised
accounting standards on an ongoing basis. Your Company discloses
standalone and consolidated unaudited financial results on a quarterly
basis, which are subjected to limited review, and standalone and
consolidated audited financial results on an annual basis.
Your Company has complied with all the norms prescribed by the Reserve
Bank of India (RBI) including the Fair practices, Anti Money Laundering
and Know Your Customer (KYC) guidelines.
CLASSIFICATION AS INFRASTRUCTURE FINANCE COMPANY (IFC) AND PUBLIC
FINANCIAL INSTITUTION (PFI)
The Reserve Bank of India 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
Public Financial Institution (PFI) by the Ministry of Corporate Affairs
(MCA), Government of India.
DIVIDEND
Your Company has had a consistent dividend policy that balances the
dual objectives of appropriately rewarding Members through dividends
and retaining capital, in order to maintain a healthy capital adequacy
ratio to support long term growth of your Company. Consistent with this
policy, your Board has recommended a dividend of Re. 0.50 per Equity
share (5 per cent) for the financial year 2015-16 to the Members of
your Company. The proposal is subject to the approval of the Members at
the 31st Annual General Meeting (AGM) of your Company scheduled to be
held on August 06, 2016. The dividend together with the dividend
distribution tax will entail a cash outflow of Rs. 3028 Lacs (previous
year Rs. 3028 Lacs).
PUBLIC DEPOSITS
In April 2010, your Company decided to convert itself into a
non-deposit taking NBFC in order to qualify for registration as an
''Infrastructure Finance Company''. Your Company had decided that it
would not accept any further public deposits or renew such maturing
deposits in any manner w.e.f. April 20, 2010 and the entire amount of
outstanding public deposits as on April 19, 2010 together with interest
promised to the depositors, has been kept in an Escrow Account with
Axis Bank Limited, a scheduled commercial bank for the purpose of
making payment to the depositors as and when they raise the claim.
Despite sustained efforts to identify and repay unclaimed deposits the
amount payable to the depositors as on March 31, 2016 is Rs.
15,81,821.47.
Being a non-deposit taking Company, your Company has not accepted any
deposits from the public/members under Section 73 of the Companies Act,
2013 read with Companies (Acceptance of Deposits) Rules, 2014 during
the year and within the meaning of the provisions of the Non-Banking
Financial Companies Acceptance of Public Deposits (Reserve Bank)
Directions, 1998.
PUBLIC ISSUE OF SECURED REDEEMABLE NON-CONVERTIBLE DEBENTURES
During the year under review, your Company issued Secured Redeemable
Non-Convertible Debentures (the "Debentures") of face value of Rs.
1,000 each, as per the details given hereunder:
Date of Base Issue
Size Total Issue
Size including Maturity
Period Allotment Amount
opening
of Issue (Rs.in
Crores) Green Shoe
Option (Rs.in
Crores)
(Rs.in Crores)
01.07.2015* 200 Upto 1000 39 months
/60 months 28.07.2015 163.54
*Issue w.r.t. Tranche 2 Prospectus dated June 26, 2015 read together
with Shelf Prospectus dated September 22, 2014
Debenture Trustee Agreement(s) in favour of Axis Trustee Services
Limited for the aforesaid issue was duly executed. The said Debentures
are listed on the Debt Segment of the BSE Limited (BSE). The entire
proceeds have been utilised for the purpose of various financing
activities, repayment of existing loans and other business operations
including working capital requirements. Your Company has duly paid the
interest due on the aforesaid Debentures on time.
The public issue of the said Debentures has not only facilitated
diversification of your Company''s sources for mobilising long term
resources but has also provided the retail Investors an opportunity to
participate in India''s infrastructure development and progress. Through
the public issue launched in FY 2015-16, your Company has acquired
nearly 13,000 retail investors. Along with previous issues, your
Company has broad-based the retail base of nearly 64,000 investors.
That signifies the growing confidence of investors in your Company. The
various communication efforts of your Company surrounding the
Debentures played a meaningful role in enhancing your Company''s brand
image amongst relevant constituencies.
PROMOTER GROUP SHAREHOLDING
During the year under review, there were various instances of
acquisitions as well as transfer of shares amongst the
Promoter/Promoters''Group of your Company resulting in effective
increase of your Company''s Promoter/Promoters'' Group shareholding by
4.9694 per cent from 53.7470 per cent to 58.7164 per cent. The
aggregate shareholding of Promoter/Promoters''Group of your Company as
on March 31, 2016 is as follows:
Shareholding
Sl.
No. Name
No. %
1. Hemant Kanoria 3,80,000 0.0755
2. Sunil Kanoria 18,02,714 0.3583
3. Adisri Commercial Private Limited 29,32,01,250 58.2805
4. Bhavah Enterprise Private Limited 10,000 0.0020
Total 29,53,93,964 58.7164
Further, Adisri Commercial Private Limited acquired 1,04,74,595 equity
shares representing 2.0821 per cent of the paid-up capital of your
Company in an off-market transaction on April 08, 2016. The total
shareholding of Adisri Commercial Private Limited as on the date of
this report is 30,36,75,845 equity shares representing 60.3626 per cent
of the paid-up capital of your Company.
Accordingly, after the aforesaid acquisition, the total promoter group
shareholding of your Company as on the date of this report is
30,58,68,559 equity shares aggregating to 60.7984 per cent of the total
paid up capital of your Company.
As on March 31, 2016, none of the Promoter/Promoters''Group shareholding
is under pledge. Further, in compliance with Regulation 31(2) of SEBI
Listing Regulations, 2015, the entire shareholding of promoter(s) and
promoter group is in dematerialised form.
GLOBAL DEPOSITARY RECEIPTS (GDRs)
Your Company''s GDRs have been traded and listed on the Professional
Securities Market ("PSM") of the London Stock Exchange ("LSE") with
effect from April 21, 2005. Deutsche Bank Trust Company Americas,
Depositary to the GDR program issued a notice to your Company for the
termination of Deposit Agreements pursuant to which GDRs have been
issued.
Intimations have been made to the Financial Conduct Authority ("FCA"),
UK Listing Authority ("UKLA"), LSE, Depositary and the Custodian
intimating May 16, 2016 as the date of cancellation of listing from
which the holders of GDRs will no longer be able to trade their GDRs on
the LSE. The GDRs will not be listed or traded anywhere after the date
of cancellation of listing. The same has also been intimated to the
domestic Stock Exchanges.
Presently, there are 5,400 number of GDRs outstanding which aggregates
to 21,600 number of Equity Shares of your Company representing 0.004
per cent of the paid-up share capital of your Company which is very
insignificant in relation to the total market capitalisation of your
Company.
Cancellation of listing of GDRs on the LSE does not result in any
change in the total paid up equity share capital structure of your
Company.
Your Company will embrace innovative management practices, empower
cross-functional teams and standardise processes to optimise the
existing resources while minimising the cost which in return will
enhance shareholder returns on its investment portfolio.
RESOURCES
During financial year 2015-16, the Treasury department of your Company
has seamlessly mobilised resources at competitive rates in the market.
Leveraging its long standing relationship and robust track record, your
Company has been able to maintain cost while ensuring proper asset
liability match.
i. Bank Finance
Your Company''s strong relationships and past credit record with
nationalised banks and private sector banks enables it to access cost
effective fund. Your Company is funded by a diversified consortium of
30 Indian banks and has enhanced the tied-up fund based working capital
limit to Rs. 8,916.50 crores from consortium member banks at the end
of financial year. Further, your Company also successfully mobilised
long term Loans aggregating to Rs. 875 crores during the year at the
most competitive rates and continued to tap resources through domestic
sources.
ii. Bonds / Debentures / Commercial Papers
Your Company has allotted debentures aggregating to Rs. 163.54 crores
by issue of long term Non-Convertible Debentures (NCDs) during the year
under review through public issue. Your Company is focussing on
diversifying liability mix and hence, going forward, NCDs will be one
of the focus areas to augment long term resources. Your Company has
also raised Rs. 15,519.20 crores through Commercial Papers during the
year under review.
iii. Foreign Institutional Borrowings
Your Company has drawn EUR 13.19 million during the year under the
credit line of Euro 40 mio provided by European Investment Bank (EIB)
for climate change mitigation projects (e.g. renewable energy, energy
efficiency, any other project that reduces Carbon Dioxide emissions)
guaranteed by SACE S.p.A. Your Company has also signed an agreement
with Deutsche Bank for USD 30 mio of which USD 18 mio is drawn in FY
2015 and balance 12 mio would be drawn in FY 2016-17.
RISK MANAGEMENT
Risk management has been an important and integral part of the
operations of your Company, driven by the objectives of maintaining
robust asset quality alongside growth in business, optimal allocation
of capital simultaneously with enhancement of shareholders''value and
hedging against unforeseen events and macro- economic or environmental
conditions.
Your Company''s risk management strategy strives to balance the trade-
off between risk and return and ensure optimal risk-adjusted return on
capital, and entails independent identification, measurement and
management of risks across the various businesses of your Company. Your
Company has enunciated a framework of policies and principles derived
from relevant directives provided from time to time by the Reserve Bank
of India (RBI) for a specific classification of non- banking finance
companies (NBFCs), and continuously benchmarked with industry best
practices. The policies are approved and reviewed from time to time by
the Board of Directors supported by an independent risk function, which
ensures that your Company operates within a pre-defined risk appetite.
In compliance with norms under RBI, your Company computed capital
requirement for credit, market and operational risk as on March 31,
2016. The capital to risk-weighted assets ratio (CRAR) of your Company
worked out to 17.54 per cent and based on Tier-I capital it was 12.51
per cent, above the minimum regulatory requirements of 15 per cent and
10 per cent respectively.
Governance Structure
The Risk Committee of Board (RCB), an independent Board level
committee, puts in place specific policies, frameworks and systems for
effective risk management. The RCB approves policies from time to time
in consultation with other sub-committees of the Board, viz. the
Investment Committee (IC) and the Asset Liability Management Committee
(ALCO), constitute the governing framework for various types of risk
and business activities undertaken within this policy framework. The
overall risk management is guided by well-defined procedures
appropriate for the assessment and management of individual risk
categories viz. credit risk, market risk, operational risk, liquidity
risk, counterparty risk and group risk supplemented by periodic
validations of the methods used. Under the guidance of RCB, the risk
department is responsible for assessing and managing risks on a regular
and dynamic basis. This entails, as an imperative, garnering adequate
knowledge of macroeconomic trends, insights into dynamics of various
sectors, and understanding of regulatory environment, and application
of quantitative and qualitative tools facilitating an accurate
assessment of risk at all times.
Credit Risk
Your Company has a comprehensive and well-defined Credit Risk Policy
for maximizing the risk-adjusted rate of return on capital by
maintaining a healthy asset portfolio and managing the credit risk
inherent in individual exposures as well at the portfolio level. The
emphasis is placed both on evaluation and containment of risk at the
individual exposures and on analysis of the portfolio behaviour. The
appraisal process encompasses a detailed risk assessment and rating of
all obligors using internal rating models. The ratings of customers are
assessed based on their financial performance, industry
characteristics, business positioning, project risks, operating
performance and other non- financial parameters such as quality of
management and conduct of account.
Your Company has a strong framework for the appraisal and execution of
project finance transactions that involves a detailed evaluation of
technical, commercial, financial, marketing and management factors
including sponsor''s financial strength and experience. Your Company
identifies the project risks, mitigating factors and residual risks
associated with the project, and applicable risk mitigating factors,
including creation of debt service reserves and channeling project
revenues through a trust & retention account. In some cases, your
Company also has taken additional credit comforts such as corporate or
personal guarantees from one or more sponsors of the project or a
pledge of the sponsors''equity holding in the project company.
The RCB periodically reviews the impact of the stress scenarios
resulting from rating downgrades or drop in the asset values in case of
secured exposures on the portfolio. Your Company works within
identified limits on exposure to borrower groups, industry sectors and
geographies, and continuously tracks portfolio level concentrations.
These limits are periodically reviewed based on changes in
macro-economic environment, regulatory environment and industry
dynamics. Existing credit exposure in the portfolio is continuously
monitored and reviewed. Key sectors are analysed in details to suggest
strategies considering both risks and opportunities. Corrective action,
if required, is taken well in advance based on early warning signals.
Sustainability risk is an essential and integral part of your Company''s
credit risk management framework. Besides economic benefits, the
environmental and social benefits of the project are assessed as these
are critical aspects for sustainability of any project. Subsequent to
analysing sustainability risk at the time of initial loan approval, it
is also periodically monitored through the life-cycle of the exposure.
Market risk
Market risk is defined as the risk to earnings and to the value of
investments arising from movements in extraneous market risk factors,
namely stiff liquidity, interest rates and foreign exchange rates. The
most common factors connected with market risk are interest rates,
currency exchange rates, costs of investments in trade portfolio
(regardless of the instruments'' character  debt or capital), prices of
exchange commodities and other market variables related to the
company''s activity.
Your Company''s market risk management is guided by well- laid policies,
guidelines, processes and systems for the identification, measurement,
monitoring and reporting of exposures against various risk limits set
in accordance with the risk appetite of your Company. Treasury
Mid-Office independently monitors the risk limits stipulated in the
Market Risk Policy and reports deviations, if any, to the appropriate
authorities as laid down in the policy.
Liquidity risk is two-dimensional: risk of being unable to fund
portfolio of assets at appropriate maturity and rates (liability
dimension) and the risk of being unable to liquidate assets in a timely
manner at a reasonable price (asset dimension). Your Company''s Asset
Liability Management Committee (ALCO) lays down a broad framework for
liquidity risk management to ensure that it is in a position to meet
its daily liquidity obligations as well as to withstand a period of
liquidity stress from industry, market or a combination of them. The
liquidity profile is analyzed on a static as well as on a dynamic basis
by using the gap analysis technique supplemented by monitoring of key
liquidity ratios and conduct of liquidity stress tests periodically.
The ALM position of your Company is being periodically reported to
ALCO, RCB and also to RBI.
Interest rate risk is the probability that variations in the interest
rates will have a negative influence on the quality of a given
financial instrument or portfolio, as well as on your Company''s
condition as a whole. Interest rate risk is generally managed through
floating rate mechanism by linking the lending rate of interest to your
Company''s Benchmark Rate and is reviewed periodically with changes in
your Company''s cost of funds. Your Company regularly conducts stress
testing to monitor vulnerability towards interest rate unfavorable
shocks.
Currency or exchange rate risk is the risk where the fair value or
future cash flows of a given financial instrument fluctuate as a result
from changes in the currency exchange rates. Currency exchange rates
can be subject to big and unexpected changes, and managing of the risk
related to the currency exchange rates''volatility can be very
complicated.
Exchange rate risk management becomes necessary as your Company borrows
money in foreign currency and lends in domestic currency. In order to
optimize the cost of funds, your Company adopts effective hedging
strategies considering the overall risk appetite of your Company.
Through statistical measure like Value at Risk (VaR), stress tests,
back tests, scenario analyses, your Company monitors the foreign
currency portfolio.
Operational risk
Operational risk is defined as the risk of loss arising out of
inadequate or failed internal processes, people and systems or from
external events. Your Company in accordance with the regulatory
guidelines has put in place a framework to identify, assess and monitor
risks, strengthen controls, improve customer service and minimize
operating losses.
Your Company has built into its operational process by segregation of
duties, clear reporting structures, well defined processes, operating
manuals, staff training, verification of high value transactions and
strong audit trails to control and mitigate operational risks. New
product and activity notes prepared by business units are reviewed by
all concerned departments including compliance, risk management and
legal. All concerned departments coordinate and discuss key operational
risk issues involving people, process, and technology, external factors
etc. so as to minimise them or ensure adequate controls over them.
A well-formulated Business Continuity Plan (BCP) is in place which
ensures business continuity in unlikely event of disaster or
disruption. Further to provide continued and uninterrupted service even
during natural disasters, a Disaster Recovery (DR) Site is also in
place. Vigorous information technology system is put in place which has
been certified with globally accepted ISO2701:2005 standard, comprising
features like DR, security features covering firewalls, encryption
technologies, spam-guards etc. Your Company is committed towards
investing in information technology to strengthen its business process.
In addition, to manage operational risk prudently, ''Know Your Customer''
(KYC) and ''Anti-Money Laundering (AML) Policy''are in place, which helps
to prevent your Company from being used intentionally or
unintentionally by criminal elements for money laundering.
The risk management framework of your Company is based on assessment of
all risks through proper analysing and understanding the underlying
risks before undertaking any transactions and changing or implementing
processes and systems. All transactions and processes conform to your
Company''s risk appetite and regulatory requirements and the same is
achieved through a proper governance structure, which includes a
multi-tiered approval levels for transactions and processes. This risk
management mechanism is aided by regular review, control, self
assessments and monitoring of key risk indicators.
HUMAN RESOURCES ACTIVITIES
In the prevailing scenario of business, a strong human capital base
will be the differentiator. Hence this year, your Company has focused
on strategies that make a stronger human capital base through talent
development and talent management together with a stronger integration
with technology.
Last year, your Company had formed People Council, which was a cross
functional leadership team who actually led the talent pool hence their
interventions in all facets of talent management would be the key to
engage Human Capital. This Team steered the roll out of new Performance
Management System (PMS) and Compensation Policy.
The highlight of this was an improved objectivity in performance
management which had detailed job description of 60 unique roles,
standardized KRA for all frontline jobs. In addition, your Company
established a process of mid-year review and all the employees
participated very enthusiastically. All the People Manager of your
Company went through a defined set of workshops aimed at making People
Managers stronger in people management and to provide employees the
same experience of learning and performing hence established on
standard ''Srei Way''.
For the smooth assimilation of new recruits in your organization,
Design for Success was rolled out which encompassed support to the new
entrants. Such initiatives brought Trust and Transparency and the
effect was an all-time high score of 74 per cent under "Great Place to
work" survey.
Your Company believes employees to be the most valuable asset hence
through Swasth Srei, your Company intends to keep the employee base
healthy and happy. Swasth Srei encouraged employees towards a healthy
lifestyle and supported various health initiatives such as Marathons,
in house Health talks and promoted Sports Clubs for cricket, football
and badminton. Swasth Srei got recognition as Arogya World''s Healthy
Workplace Gold Award and the Sports team also won few corporate
tournaments.
This year, your organization took an ambitious step to implement a
cloud based Human Resource Management System (HRMS) which encapsulates
Hire to Retire modules and brings high accessibility ease to employees.
This has also helped in removing any manual intervention in managing
employee lifecycles of the growing employee base of your Company.
Throughout, the year, your Company kept a constant and strong employee
communications flowing through various channels like Townhalls,
newsletters and Twitter, while the year round employee engagement
activities continued to build employee bonding and boost employee
morale.
The employee count of your Company stands at 209 as on March, 2016, and
automating employee services has supported your Company to improve
response time and service.
INFORMATION TECHNOLOGY
Information Technology (IT) in your Company has emerged as a strategic
enabler and is playing a major role in improving productivity,
reliability and customer satisfaction level while optimizing cost &
risks. The IT function has successfully transformed its status from
"Reactive" state to "Managed" state by implementing state of the art
technology, integrating end to end business process along with
underlying technology and transforming its vision from gaining
technological expertise to offering customer focused end-to-end
service.
Following the current industry trend and business need, your Company
adopted cloud based sourcing strategy for many of its crucial services
including enterprise e-mail, Human Resource Management System (HRMS)
etc. These strategic transformation projects have not only optimized
IT resource and operational cost but also improved stability and
performance of business critical services.
In addition to various initiatives enabling cost variabilisation,
consolidation and efficiencies and on demand scale, various initiatives
in the areas of digitalization, speed, performance and mobility have
been given high priority to get the competitive advantages in client
and employee facing processes. To enhance end client reliability and
satisfaction level, SMS facility has been provided for all transactions
and payment made by cash, cheque or demand draft. Google Apps for Work
has been introduced through "PIN IT" initiative that brings to users
collaboration anytime, anyplace and any device and seamless integration
of end to end business process was accomplished coupled with a single
service desk solution across IT services.
During the year under review, the focus areas were end user mobility,
uniformity in process automation and risk optimization by state of art
security practice. Human Resource Management System (HRMS) solution has
been moved to a cloud based solution which tracks the employee
lifecycle from joining till separation with a very efficient
performance management system.
Risk of internet usage has been highly mitigated by adopting a cloud
based proxy solution in terms of secured communication and integrated
control.
While continuing with its accreditation for ISO 27000:2013, your
Company has taken its IT risk management system to the next level of
maturity. Compliance to regulatory and statutory needs has always been
the focus at your Company, and taking a further step in that direction,
your Company has implemented a comprehensive compliance tracking
solution.
Information Technology function is embarking on the next wave of
maturity that will position IT as a key business driver for every
employee and customer. By leveraging innovations in mobile
applications, adopting best of breed solution and framework,
reengineering the current process and driving continuous improvement
cycle across services, your Company is aiming to move towards the next
level of maturity and make a significant footprint in the world of
digitalization.
INTERNAL CONTROL AND AUDIT
Your Company''s vision, mission and core values have laid the foundation
for internal controls. On the administrative controls side, your
Company has a proper reporting structure, oversight committees and
rigorous performance appraisal system to ensure checks and balances. On
the financial controls side, your Company has in place segregation of
duties and reporting mechanism to deter and detect misstatements in
financial reporting.
Your Company''s Internal Control System is commensurate with the nature
of its business and the size and complexity of its operations and
ensures compliance with policies and procedures. The Internal Control
Systems are being constantly updated with new / revised standard
operating procedures.
Further, in accordance with the latest legislation, your Company''s
internal financial controls have been reviewed and actions have been
taken to strengthen financial reporting and overall risk management
procedures.
Your Company has a dedicated and independent Internal Audit Department
reporting directly to the Audit Committee of the Board. The purpose,
scope, authority and responsibility of the Internal Audit Department
are delineated in the Audit Charter approved by the Audit Committee.
Internal Audit Department influences and facilitates improvements in
the control environment by constantly evaluating the risk management
and internal control systems.
Furthermore, the Audit Committee of your Company evaluates and reviews
the adequacy and effectiveness of the internal control systems and
suggests improvements. Significant deviations are brought to the notice
of the Audit Committee and corrective measures are recommended for
implementation. Based on the internal audit report, process owners
undertake corrective action in their respective areas. All these
measures help in maintaining a healthy internal control environment.
ENVIRONMENTAL AND SOCIAL MANAGEMENT SYSTEM
To adequately meet, respond to and enhance benchmarks in Environmental
and Social (E&S) management, your Company has adopted Environmental &
Social Management System (ESMS) which reduces the business risk of its
portfolio related to E&S issues and adhere to Sustainable Finance
Practice. It has been integrated as a part of overall Credit & Risk
Policy. This management system is aimed at properly evaluating,
assessing and ensuring customer compliance with relevant E&S
requirements and encourages clients to take corrective action &
mitigation plans.
The core elements of our ESMS are a self-declared Policy Framework,
due- diligence (rapid, sustainability, client risk assessment, project
/ activity risk categorization and if required site visiting),
appraisal (analysis of E&S impacts and client''s capacity & commitment
to address them), mitigation measures, action plans, monitoring &
review of ongoing projects, training & workshop and continuous
improvement of the system. By following ESMS practice, your Company has
been able to create awareness in the market regarding relevance of E&S
issues and their impacts on the society and the environment.
In your Company, a full scale E&S due-diligence is carried out for any
business activity as per International Finance Corporation (IFC)
Performance Standards and Country''s E&S Laws, Rules & Notifications,
based on which a ''go''or ''no go''decision is given by ESMS team. Your
Company neither participates nor invests in certain activities and
industries, which fall in the exclusion list of your Company. Your
Company does not invest in any projects that do not comply with the
environmental & social norms and laws of the Country.
As a part of sustainability strategy, your Company has entered into a
Capacity Development Agreement with Nederlandse Financierings-
Maatschappij voor Ontwikkelingslanden N.V. (FMO) [Netherlands
Development Finance Company] and Oesterreichische Entwicklungbank AG
(OeEB) [Development Bank of Austria] to launch a corporate ESHS
programme for its clients called Environmental & Social management
System - Corporate Rollout Programme (ESMS Â CRP). The purpose of the
programme is to control the business risk out of different E&S issues
from its own and its clients''portfolio, gain control over third party
risks and carry out the business with a better E&S risk management. In
the process, your Company''s brand image in the market is enhanced.
Under this programme, your Company prepares sector specific ESMS policy
manual based on International Finance Corporation (IFC) Performance
Standards for its clients''business and provides ESHS (Environmental,
Social, Health & Safety) training. In post implementation stages, your
Company helps the clients in E&S monitoring and audit of ESMS.
Adoption of ESMS-CRP for the clients of your Company has been made
mandatory from FY 2016 onwards for any fresh exposure. On account of
your Company''s collaboration with FMO & OeEB, the expenditure on
ESMS-CRP for the clients of your Company has been reduced. Your Company
has also taken up initiative for the preparation of Sustainability
Reporting from FY 2017.
Over the past years, your Company has been able to successfully manage,
reduce and control the E&S risks associated with its portfolio. Your
Company has encouraged sustainable development by investing in various
renewable energy projects. Your Company monitors & reviews the invested
projects on a regular basis whereas shortfalls or misconducts are
rectified by framing action plans for the same. Your Company
continuously updates and upgrades the ESMS policy framework from time
to time. Over the past years, your Company has been able to
successfully manage, reduce and control the E&S risks associated with
its portfolio.
Your Company believes in a Sustainable Finance Business Approach by
considering conservation, management & sustainable use of human &
natural resources. This endeavour certainly helps to create a strong &
confident long term relationship with its stakeholders.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
The total amount available for CSR spending, being 2 (two) per cent of
the average net profits of your Company made during the three
immediately preceding financial years, during the financial year
2015-16 aggregated to approximately Rs. 2.40 crores.
Recognising its social responsibility, your Company had earlier
established a public charitable trust in the name of ''Srei
Foundation''with the objective of granting scholarships and other
financial assistance to deserving and talented candidates. The Fund
also supports setting up of schools, colleges, medical and scientific
research institutions. Donations to Srei Foundation qualify for
deduction under Section 80G of the Income Tax Act, 1961. Your Company
has granted donation of Rs. 50,00,000/- (Rupees Fifty Lac only) to Srei
Foundation during the financial year 2015-16.
Your Company is cognizant towards promoting and encouraging education
and hence donated Rs. 5,00,000/- (Rupees Five Lac only) to New Delhi
Institute of Management towards sponsoring the education of a student
from economically weaker section, thereby promoting higher education.
Your Company also supported Gyan Prakash Foundation in its initiative
of innovation towards creating a sustainable and replicable community
led Social Change Model in education to benefit the underprivileged
children in several blocks of Maharashtra. Towards this cause a fund of
Rs. 5,00,000/- (Rupees Five Lac only) was donated.
Your Company is fully aware of the fact that as a corporate citizen, it
is also entrusted with the responsibility to contribute for the
betterment of the society at large. During the year under review, your
Company supported ISKCON in its project  ''Food for life'' with a sum of
Rs. 75,00,000/- (Rupees Seventy Five Lac only). The programme is being
run at the ISKCON Temple in Dwarka where meal is made available to
reach out and provide immediate food relief to the underprivileged in
the vicinity of the temple.
Your Company perceives Corporate Social Responsibility (CSR) as an
opportunity to contribute towards uplifting the society at large,
empowering individuals, making them self-reliant. The CSR philosophy
of your Company is embedded in its commitment to all stakeholders
namely consumers, employees, environment and society while your
Company''s approach extends both to external community as well as to
your Company''s large and diverse internal employee base and their
families. Your Company''s sustainable approaches towards practicing
humble service to Humanity on a sustainable basis, has enabled it to
continue fulfilling its commitment to be a socially responsible
corporate citizen.
The CSR Committee of your Company has formulated the CSR Policy which
describes the multiple lines around which the CSR activities of your
Company are positioned being education and skill development, social
and economic welfare, environmental sustainability and such other
activities included in Schedule VII of the Companies Act, 2013 as may
be identified by the CSR Committee from time to time. The said Policy
is available on your Company''s website www.srei. com and a link to the
said Policy has been provided elsewhere in this Annual Report. The
Committee presently comprises Mr. Hemant Kanoria, Chairman & Managing
Director, Mr. Sunil Kanoria, Non-Executive Director and Mr.
Shyamalendu Chatterjee, Independent Director. Mr. Hemant Kanoria,
Chairman and Managing Director of your Company acts as the Chairman of
the CSR Committee. Mr. Madhusudan Dutta, Group Head  Corporate
Strategy & Planning (Human Capital) acts as the Secretary to the CSR
Committee.
4 (Four) meetings of the CSR Committee were held during the year
2015-16 on May 01, 2015, August 01, 2015, November 07, 2015 and
February 11, 2016.
In the year under review, your Company could not spend the entire
allocated budget of Rs. 2.40 Crores since during the year it continued
to use its managerial resources to lay the basic framework for
undertaking the CSR activities in accordance with the provisions of the
Companies Act, 2013 including finalizing the CSR policy and identifying
areas where the CSR activities can be aligned with the nature of the
multiple lines of businesses of your Company along the thrust areas of
CSR (Education & Skill Development, Healthcare / medical facilities,
social and economic welfare, environmental sustainability).
During this year, your Company spent an aggregate amount of Rs.
1,35,00,000/- (Rupees One Crore Thirty Five Lacs only) towards CSR
activities pursuant to CSR Policy of your Company. The manner in which
the CSR amount was spent during the financial year is set out as an
annexure to the Directors''Report and forms part of this Annual Report.
SREI WEBSITE
The website of your Company www. srei.com was revamped recently. This
website has been developed on the new responsive technology based
platform known as ''Drupal'', ensuring uniform display across all devices
like mobile, tab, desktop etc. and all the operating systems. The
website has an inbuilt sophisticated and customized content management
system for easy change in content. A simple, improved navigation system
needs a lesser number of clicks to reach the information available in
the different sections of the website. The contemporary and smart look
of the new website conforms to your Company''s new Brand guideline while
taking a customer centric approach catering to the requirements of
prospective customers, investors, employees and other stakeholders. The
website of your Company also has ''Live Stock Ticker''with dynamic
display of current stock prices in BSE and NSE with respective market
caps. The site carries a comprehensive database of information of
interest to the investors including the financial results of your
Company, dividend declared, unclaimed dividend list, shareholding
pattern, any price sensitive information disclosed to the regulatory
authorities from time to time, analysts''reports, investor
presentations, standard downloadable forms, media coverage, corporate
profile and business activities of your Company and the services
rendered by your Company to its investors. Some useful features like
Online Resume Management System to pull the best talents and Online NCD
Application Form download system as a part of fund raising initiatives
have been duly introduced in the system. The links to different social
media i.e. Facebook, Twitter, LinkedIn has been embedded in the home
page of the new website to showcase the key initiatives and
achievements your Company has associated itself with.
SUBSIDIARY COMPANIES
The Statement in Form AOC-I containing the salient feature of the
financial statement of your Company''s subsidiaries, associates and
joint venture companies pursuant to first proviso to Section 129(3) of
the Companies Act, 2013 (Act) read with Rule 5 of the Companies
(Accounts) Rules, 2014, forms part of the Annual Report. Further, in
line with Section 129(3) of the Act read with the aforesaid Rules, SEBI
Listing Regulations, 2015 and in accordance with the Accounting
Standard 21 (AS-21), Consolidated Financial Statements prepared by your
Company include financial information of its subsidiary companies.
A report on the performance and financial position of each of the
Subsidiaries, Associate and Joint Venture companies included in the
Consolidated Financial Statements prepared by your Company as per Rule
8(1) of the Companies (Accounts) Rules, 2014, forms part of the annual
accounts of each of the Subsidiary, Associates and Joint venture
companies which have been placed on the website of your Company
www.srei.com and also forms part of Form AOC-1 pursuant to Rule 5 of
the Companies (Accounts) Rules, 2014, which is set out as an annexure
to the Directors''Report and forms part of this Annual Report. Members
interested in obtaining a copy of the annual accounts of the
subsidiary, associates and joint venture companies may write to the
Company Secretary at your Company''s Registered Office. The said report
is not repeated here for the sake of brevity.
The names of companies which have become or ceased to be subsidiaries,
joint ventures or associate companies during the year are given below:
Name Status
Goldensons Construction Private Limited Ceased to be a wholly-owned
subsidiary w.e.f. 30.06.2015
Quippo Oil & Gas Infrastructure Limited Ceased as a subsidiary and
became a wholly-owned
subsidiary from a subsidiary
w.e.f. 15.03.2016.
MATERIAL CHANGES AND COMMITMENTS, IF ANY, AFFECTING THE FINANCIAL
POSITION
There is no such material change and commitment affecting the financial
position of your Company which have occurred between the end of the
financial year of your Company to which the financial statements relate
and the date of the report.
POLICY FOR DETERMINING ''MATERIAL''SUBSIDIARIES
As on March 31, 2016, none of the Subsidiaries of your Company are
material Subsidiaries. Your Company has formulated a Policy for
determining Material Subsidiaries in accordance with the applicable
laws. The said Policy is available on your Company''s website
www.srei.com and a link to the said Policy has been provided elsewhere
in this Annual Report.
KEY MANAGERIAL PERSONNEL (KMPs)
The following directors/executives of your Company are whole-time Key
Managerial Persons (KMPs) as on March 31, 2016 in accordance with the
provisions of Section 203 of the Companies Act, 2013 -
Name Designation
Mr. Hemant Kanoria Chairman & Managing Director
Mr. Bajrang Kumar Choudhary Chief Executive Officer
Infrastructure Project Development
Mr. Bijoy Kumar Daga Chief Executive Officer
Infrastructure Project Finance
Mr. Sandeep Lakhotia Company Secretary
Mr. Kishore Kumar Lodha Chief Financial Officer
During the year, Mr. John Moses Harding, Group CEO & Chief Economist Â
Liability & Treasury Management, resigned as a KMP of your Company and
was relieved from the services of your Company w.e.f. 1st February,
2016.
Further, Mr. Bijoy Kumar Daga, Chief Executive Officer, Infrastructure
Project Finance, resigned as a KMP of your Company and shall be
relieved as per Company''s Policy.
NOMINATION AND REMUNERATION COMMITTEE
The Board of Directors of your Company have constituted a Nomination
and Remuneration Committee in accordance with the provisions of Section
178 of the Companies Act, 2013 read with Regulation 19 of SEBI Listing
Regulations, 2015. The Committee comprises Mr. Salil Kumar Gupta, Mr.
Shyamalendu Chatterjee, Independent Directors and Mr. Sunil Kanoria,
Non- Executive Director. Mr. Salil Kumar Gupta, Chief Mentor and
Director of your Company acts as the Chairman of the Nomination and
Remuneration Committee. The Terms of Reference of the Committee has
been provided in the Corporate Governance Section forming part of this
Report.
Two meetings of the Nomination and Remuneration Committee of your
Company were held during the year 2015-16 on May 01, 2015 and August
01, 2015.
The Committee has formulated the Nomination and Remuneration Policy
(''Srei Nomination and Remuneration Policy'') which broadly laid down the
various principles of remuneration being support for strategic
objectives, transparency, internal & external equity, flexibility,
performance- driven remuneration, affordability and sustainability and
covers the procedure for selection, appointment and compensation
structure of Board members, Key Managerial Personnel (KMPs) and Senior
Management Personnel (SMPs) of your Company. The said Policy is
available on your Company''s website www.srei.com and a link to the said
Policy has been provided elsewhere in this Annual Report.
WHISTLE BLOWER POLICY (VIGIL MECHANISM)
Your Company has formulated a codified Whistle Blower Policy
incorporating the provisions relating to Vigil Mechanism in terms of
Section 177 of the Companies Act, 2013 and Regulation 22 of SEBI
Listing Regulations, 2015, in order to encourage Directors and
Employees of your Company to escalate to the level of the Audit
Committee any issue of concerns impacting and compromising with the
interest of your Company and its stakeholders in any way. Your Company
is committed to adhere to highest possible standards of ethical, moral
and legal business conduct and to open communication and to provide
necessary safeguards for protection of employees from reprisals or
victimisation, for whistle blowing in good faith. The said Policy is
available on your Company''s website www.srei. com and a link to the
said Policy has been provided elsewhere in this Annual Report.
POLICY AGAINST SEXUAL AND WORKPLACE HARASSMENT
Your Company is committed to provide and promote a safe, healthy and
congenial atmosphere irrespective of gender, caste, creed or social
class of the employees. Your Company in its endeavour to provide a safe
and healthy work environment for all its employees has developed a
policy to ensure zero tolerance towards verbal, physical, psychological
conduct of a sexual nature by any employee or stakeholder that directly
or indirectly harasses, disrupts or interferes with another employee''s
work performance or creates an intimidating, offensive or hostile
environment such that each employee can realize his / her maximum
potential.
Your Company has put in place a ''Policy on Prevention of Sexual
Harassment''as per The Sexual Harassment of Women at Workplace
(Prevention, Prohibition and Redressal) Act, 2013. The Policy is meant
to sensitize the employees about their fundamental right to have safe
and healthy environment at workplace. As per the Policy, any employee
may report his / her complaint to the Internal Complaint Committee
constituted for this purpose. The said Policy is available on your
Company''s website www.srei. com and a link to the said Policy has been
provided elsewhere in this Annual Report.
Your Company affirms that during the year under review adequate access
was provided to any complainant who wished to register a complaint
under the Policy.
During the year, your Company received 1 (One) complaint on sexual
harassment. The said complaint has been investigated and duly concluded
by taking appropriate action.
PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS
Your Company is exempted from the applicability of the provisions of
Section 186 of the Companies Act, 2013 (Act) read with Rule 11 of the
Companies (Meetings of Board and its Powers) Rules, 2014 and Companies
(Meetings of Board and its Powers) Amendment Rules, 2015 as your
Company is engaged in the business of financing of companies or of
providing infrastructural facilities.
PERFORMANCE EVALUATION
The Nomination and Remuneration Committee (NRC) of your Company has
formulated and laid down criteria for Performance Evaluation of the
Board (including Committees) and every Director (including Independent
Directors) pursuant to provisions of Section 134, Section 149 read with
Code of Independent Directors (Schedule IV) and Section 178 of the
Companies Act, 2013 and Regulation 19(4) read with Part D of Schedule
II of SEBI Listing Regulations, 2015 covering inter-alia the following
parameters namely:
i) Board Evaluation - degree of fulfillment of key responsibilities;
Board culture and dynamics.
ii) Board Committee Evaluation - effectiveness of meetings; Committee
dynamics.
iii) Individual Director Evaluation (including IDs) - contribution at
Board Meetings.
Further, the Chairman and Managing Director is evaluated on key aspects
of the role which includes inter-alia effective leadership to the Board
and adequate guidance to the CEOs.
Based on these criteria, the performance of the Board, various Board
Committees viz. Audit Committee, Stakeholders'' Relationship Committee,
Nomination and Remuneration Committee and Corporate Social
Responsibility Committee, and Individual Directors (including
Independent Directors) was evaluated and found to be satisfactory.
During the year under review, the Independent Directors of your Company
reviewed the performance of Non- Independent Directors and Chairperson
of your Company, taking into account the views of Executive Director
and Non-Executive Directors.
Further, the Independent Directors hold an unanimous opinion that the
Non- Independent Directors, including the Chairman and Managing
Director bring to the Board, abundant knowledge in their respective
field and are experts in their areas. Besides, they are insightful,
convincing, astute, with a keen sense of observation, mature and have a
deep knowledge of your Company.
The Board as a whole is an integrated, balanced and cohesive unit where
diverse views are expressed and dialogued when required, with each
Director bringing professional domain knowledge to the table. All
Directors are participative, interactive and communicative.
The Chairman has abundant knowledge, experience, skills and
understanding of the Board''s functioning, processes a mind for detail,
is meticulous to the core and conducts the Meetings with poise and
maturity.
The information flow between your Company''s Management and the Board is
complete, timely with good quality and sufficient quantity.
FAMILIARISATION PROGRAMME FOR INDEPENDENT DIRECTORS (IDs)
In terms of Regulation 25(7) of the SEBI Listing Regulations, 2015,
your Company is required to conduct Familiarisation Programme for
Independent Directors (IDs) to familiarise them about your Company
including nature of industry in which your Company operates, business
model of your Company, roles, rights and responsibilities of IDs and
any other relevant information. Further, pursuant to Regulation 46 of
the SEBI Listing Regulations, 2015, your Company is required to
disseminate on its website, details of familiarisation programme
imparted to IDs including the details of i) number of programmes
attended by IDs (during the year and on a cumulative basis till date),
ii) number of hours spent by IDs in such programmes (during the year
and on a cumulative basis till date), and iii) other relevant details.
Two such specific familiarisation programmes were conducted on February
11, 2016. As a part of the first programme, presentation was made to
the Independent Directors on the topic "Role and Responsibilities of
Independent Directors & Corporate Governance Compliances" giving a
brief overview of the layout of Companies Act, 2013, duties of
directors and provisions relating to the roles, rights and
responsibilities of the Independent Directors under various statutes
and regulations. A handbook on the role of Independent Directors was
also distributed at the meeting.
As a part of the second programme, presentation was made to the
Independent Directors giving brief overview of business structure,
strategic and financial alliances, snapshot of business verticals,
financial and key business highlights of your Company.
At the time of appointment, a new Director is welcomed to the Board of
Directors of your Company by sharing an Induction Kit containing
inter-alia the Organization Chart, brief profile of all Directors and
Key Managerial Personnel (KMPs), Policy Compendium, Investor
Presentation, Investor call transcripts amongst others.
In addition to the above, the management of your Company makes various
presentations to the Independent Directors on an ongoing basis which
inter-alia includes Company overview, business verticals, latest key
business highlights, financial statements, evolution as well as
business model of the various business of your Company, as part of the
familiarisation programme for Independent Directors.
Significant Statutory updates are circulated on a quarterly basis as a
part of the agenda of the Board Meetings through which Directors are
made aware of the significant news developments and highlights from
various regulatory authorities viz. Reserve Bank of India (RBI),
Securities and Exchange Board of India (SEBI), Ministry of Corporate
Affairs (MCA), etc.
The Company Secretary also regularly apprises the Board about their
roles, rights and responsibilities in your Company from time to time as
per the requirements of the SEBI Listing Regulations, 2015, Companies
Act, 2013 read together with the Rules and Schedules thereunder and
NBFC Corporate Governance (Reserve Bank) Directions, 2015.
The Board has open channels of communication with executive management
which allows free flow of communication among Directors in terms of
raising query, seeking clarifications and other related information.
Directors are also informed of the various developments in your Company
through e-mails, newsletters, internal magazines, etc. The same is made
available on their I-Pads as well.
The link to the details of familiarisation programmes imparted to
Independent Directors, as required under Regulation 46 of the SEBI
Listing Regulations, 2015, has been provided elsewhere in this Annual
Report.
EXTRACT OF ANNUAL RETURN
An extract of Annual Return as on the financial year ended on March 31,
2016 in Form No. MGT-9 as required under Section 92(3) of the Companies
Act, 2013 read with Rule 12(1) of the Companies (Management and
Administration) Rules, 2014 is set out as an annexure to the
Directors''Report and forms part of this Annual Report.
PARTICULARS OF CONTRACTS / ARRANGEMENTS WITH RELATED PARTIES
All the related party transactions of your Company are entered on arm''s
length basis and are in compliance with the applicable provisions of
the Companies Act, 2013 and the SEBI Listing Regulations, 2015. There
are no materially significant transactions entered into by your Company
with Promoters, Directors or Key Managerial Personnel (KMPs), which
have potential conflict with the interest of your Company at large.
Your Company has not entered into any material related party
transactions with any of its related parties during the financial year
2015-16. Members may refer to the notes to the financial statements for
details of related party transactions.
Since all related party transactions entered into by your Company were
in the ordinary course of business and were on an arm''s length basis,
Form AOC-2 is not applicable to your Company. The related party
transactions are entered into based on considerations of various
business exigencies, such as synergy in operations, sectoral
specialization and your Company''s long-term strategy for sectoral
investments, optimization of market share, profitability, legal
requirements, liquidity and capital resources of subsidiaries and
associates.
In terms of Regulation 23(2) of SEBI Listing Regulations, 2015, your
Company obtained prior approval of the Audit Committee for entering
into any transaction with related parties except for the Related Party
Transaction (RPTs) for which omnibus approval is granted by the Audit
Committee from time to time. A statement of all related party
transactions is presented before the Audit Committee on a quarterly
basis, specifying the nature, value and terms and conditions of the
transactions. The statement is supported by the certificate from the
Chief Financial officer (CFO) of your Company.
A Related Party Policy has been devised by your Company for determining
the materiality of transactions with related parties and dealings with
them. The said Policy is available on your Company''s website
www.srei.com and a link to the said Policy has been provided elsewhere
in this Annual Report.
PARTICULARS OF EMPLOYEES REQUIRED UNDER SECTION 134(3) (q) AND SECTION
197(12) READ WITH RULE 5 OF THE COMPANIES (APPOINTMENT AND REMUNERATION
OF MANAGERIAL PERSONNEL) RULES, 2014
The prescribed particulars of remuneration of employees pursuant to
Section 134(3) (q) and Section 197(12) read with Rule 5 of the
Companies (Appointment and Remuneration of Managerial Personnel) Rules,
2014, are set out as annexures to the Directors''Report and form part of
this Annual Report.
PARTICULARS OF CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN
EXCHANGE EARNINGS AND OUTFLOW
Your Company has no activity relating to Conservation of Energy and
Technology Absorption as stipulated in Rule 8(3) of Companies
(Accounts) Rules, 2014. However, your Company uses information
technology extensively in its operations and also continues its
endeavour to improve energy conservation and utilisation, safety and
environment.
During the year under review, the total foreign exchange earnings and
expenditure of your Company was NIL and Rs. 10,513 Lacs respectively
(previous year Rs. 14 Lacs and Rs. 8,376 Lacs respectively).
TRANSFER TO INVESTOR EDUCATION & PROTECTION FUND (IEPF)
During the year under review, your Company transferred a sum of Rs.
4,15,494/- (Rupees Four Lacs Fifteen Thousand Four Hundred and Ninety
Four only) to the Investor Education & Protection Fund (IEPF) of the
Central Government, being the dividend amount pertaining to the
financial year ended on March 31, 2008, which was due & payable and
remained unclaimed and unpaid for a period of 7 (seven) years, as
provided in Section 205A and 205C of the Companies Act, 1956 read with
the Investor Education and Protection Fund (Awareness and Protection of
Investors) Rules, 2001. Cumulatively, the dividend amount transferred
to the said Fund upto March 31, 2016 aggregates to Rs. 47,51,424.69/-
(Rupees Forty Seven Lacs Fifty One Thousand Four Hundred Twenty Four
and Paisa Sixty Nine only).
AUDIT COMMITTEE
The Audit Committee comprises of Mr. Salil Kumar Gupta, Mr.
Srinivasachari Rajagopal, Mr. Shyamalendu Chatterjee, Independent
Directors and Mr. Sunil Kanoria, Non-Executive Director. Mr. Salil
Kumar Gupta, Chief Mentor & Independent Director of your Company is the
Chairman of the Audit Committee. The Company Secretary of your Company
acts as the Secretary to the Audit Committee. The Terms of Reference
of the Audit Committee has been provided in the Corporate Governance
Section forming part of this Report.
Four meetings of the Audit Committee were held during the year 2015-16
on May 01, 2015, August 01, 2015, November 07, 2015 and February 11,
2016.
AUDITORS
At the 30th Annual General Meeting (AGM) of your Company held on August
01, 2015, Haribhakti & Co. LLP, Chartered Accountants, having
registration No. 103523W allotted by The Institute of Chartered
Accountants of India (ICAI), were appointed as Statutory Auditors of
your Company to hold office for a term of 5 (five) years from the
conclusion of 30th AGM (subject to ratification of such appointment by
the Members at every AGM) till the conclusion of the 35th AGM of your
Company. Accordingly, the appointment of Haribhakti & Co. LLP,
Chartered Accountants, as Statutory Auditors of your Company, is placed
for ratification by the Members. Your Company has received a
confirmation from Haribhakti & Co. LLP, Chartered Accountants, to this
effect that their appointment, if ratified, would be within the limits
prescribed under Section 139 of the Companies Act, 2013 and the rules
framed thereunder and in accordance with Section 141 of the Companies
Act, 2013. They have also confirmed that they hold a valid peer review
certificate as prescribed under Regulation 33(d) of the SEBI Listing
Regulations, 2015. The Audit Committee and the Board of Directors of
your Company recommend ratification of their appointment from the
conclusion of this AGM upto the conclusion of the 32nd AGM of your
Company.
AUDIT MODIFICATIONS
There are no modifications, reservations or adverse remarks or
disclaimers made by Haribhakti & Co. LLP, Statutory Auditors, in their
report on your Company''s financial statements for the year ended on
March 31, 2016. Further, the Statutory Auditors have not reported any
incident of fraud to the Audit Committee of your Company during the
year under review.
SECRETARIAL AUDIT REPORT
Your Company appointed Dr. K. R. Chandratre, Practising Company
Secretary, holding membership of The Institute of Company Secretaries
of India (Membership No. FCS 1370; Certificate of Practice No. 5144) as
the Secretarial Auditor of your Company for FY 2015-16 to conduct the
Secretarial Audit pursuant to Section 204 of the Companies Act, 2013
read with the Companies (Appointment and Remuneration of Managerial
Personnel) Rules, 2014.
The Secretarial Audit Report confirms that your Company has complied
inter alia with all the applicable provisions of the Companies Act,
1956 (as applicable), Companies Act, 2013 and the Rules made
thereunder, Depositories Act, 1996 and the Regulations and Bye-laws
framed thereunder, The Listing Agreements entered into by your Company
with BSE Limited, National Stock Exchange of India Limited and The
Calcutta Stock Exchange Limited and SEBI (Listing Obligations and
Disclosure Requirements) Regulations, 2015 (effective from December 01,
2015), Secretarial Standards issued by The Institute of Company
Secretaries of India (Secretarial Standards with respect to Meetings of
Board of Directors (SS- 1) and General Meetings (SS-2) and effective
from July 01, 2015), Securities Contracts (Regulation) Act, 1956 and
all the Regulations and Guidelines of the Securities and Exchange Board
of India (SEBI) as applicable to your Company, including the SEBI
(Substantial Acquisition of Shares and Takeovers) Regulations, 2011,
the SEBI (Prohibition of Insider Trading) Regulations, 1992 and SEBI
(Prohibition of Insider Trading) Regulations, 2015 (effective from May
15, 2015), the SEBI (Issue and Listing of Debt Securities) Regulations,
2008, the SEBI (Registrars to an Issue and Share Transfer Agents)
Regulations, 1993 and the Reserve Bank of India Directions, Guidelines
and Circulars applicable to Systemically Important Non-Deposit
Accepting or Holding NBFCs (NBFC ÂND Â SI), Master Circular dated July
01, 2015 on Non-Banking Financial Companies- Corporate Governance
(Reserve Bank) Directions, 2015 issued by the Reserve Bank of India
(RBI).
The Secretarial Audit Report for the financial year ended March 31,
2016 is an unqualified Report and the same forms part of the Annual
Report.
CORPORATE GOVERNANCE
Your Company has always practised sound corporate governance and takes
necessary actions at appropriate times for enhancing and meeting
stakeholders'' expectations while continuing to comply with the
mandatory provisions of Corporate Governance.
As required under Regulation 34(3) read with Schedule V of SEBI Listing
Regulations, 2015, a separate section on Corporate Governance and a
Certificate from the Auditors of your Company confirming compliance
with the requirements of Corporate Governance, forms part of the Annual
Report.
MEETINGS OF THE BOARD
The Board meets at regular intervals to discuss and decide on policy
and strategy apart from other Board business. However, in case of a
special and urgent business need, the Board''s approval is taken by
passing resolutions through circulation, as permitted by law, which are
confirmed in the subsequent Board meeting.
5 (Five) Board meetings were held during the year 2015-16 on May 01,
2015, August 01, 2015, November 07, 2015, December 29, 2015 and
February 11, 2016. The maximum time gap between any two consecutive
meetings did not exceed 120 (One Hundred Twenty) days.
DIRECTORS
During the year under review, your Company appointed Dr. Tamali
Sengupta (DIN 00358658) and Mr. T. C. A. Ranganathan (DIN 03091352) as
Independent Directors of your Company to hold office for a period of 5
(Five) consecutive years from the date of the Thirtieth Annual General
Meeting (AGM) of your Company held on August 01, 2015. In this regard,
your Company issued formal letter of appointment to the Independent
Directors stating inter alia the terms and conditions of their
appointment and the same is also hosted on the website of your Company
www.srei.com.
The Members at the 30th Annual General Meeting held on August 01, 2015,
approved the re-appointment of Mr. Hemant Kanoria (DIN 00193015) as the
Chairman and Managing Director (CMD) of your Company for a further
period of 5 (five) years w.e.f. April 01, 2015.
Pursuant to the provisions of Section 152(6) of the Companies Act,
2013, not less than two-thirds of the total number of directors of a
public company shall be persons whose period of office is liable to
determination of retirement of directors by rotation. Therefore, in
order to comply with the provisions of the aforesaid Section of the
Companies Act, 2013 and rules made thereunder and in partial
modification of the resolutions passed earlier by the Board of
Directors at its meeting held on February 13, 2015, the office of Mr.
Hemant Kanoria, Chairman and Managing Director was made liable to
retirement by rotation by the Board of Directors at its meeting held on
May 01, 2015, based on the recommendation of the Nomination &
Remuneration Committee of your Company.
In accordance with the provisions of Section 152 of the Act and the
aforesaid Rules and your Company''s Articles of Association, Mr. Hemant
Kanoria (DIN 00193015) retires by rotation at the ensuing AGM and being
eligible, offers himself for re-appointment.
Based on the recommendation of the Nomination and Remuneration
Committee of your Company, the Board of Directors of your Company has
appointed Mr. Ram Krishna Agarwal (DIN 00416964) as an Additional
Director (Category  Non Executive and Non Independent) of your Company
with effect from May 12, 2016 to hold office upto the date of
Thirty-First AGM of your Company.
The brief resume / details relating to Directors who are proposed to be
appointed/re-appointed are furnished in the Notice of the ensuing AGM.
The Board of Directors of your Company recommends the
appointment/re-appointment of all the above Directors.
Your Company has received declaration from each of the Independent
Directors under Section 149(7) of the Companies Act, 2013 that he/she
meets the criteria of independence laid down in Section 149(6) of the
Companies Act, 2013 and Regulation 16 of the SEBI Listing Regulations,
2015. All requisite declarations were placed before the Board.
Pursuant to Regulation 16(b) of SEBI Listing Regulations, 2015 and
Section 197 of the Act read with the Rules framed thereunder, your
Company has approved payment of remuneration of Rs. 50 Lacs by way of
commission on net profits computed under Section 198 of the Act to
Non-Executive Directors and Independent Directors of your Company for
the financial year 2015- 16. The payment is within the limit of one per
cent of the net profits of your Company for the financial year 2015- 16
as approved by the Members of your Company at the AGM held on August
02, 2014 and in accordance with the applicable provisions of the SEBI
Listing Regulations, 2015 and the Act read with the Rules framed
thereunder.
DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS /
COURTS / TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND YOUR
COMPANY''S OPERATIONS IN FUTURE
There are no such orders passed by the regulators / courts / tribunals
impacting the going concern status and your Company''s operations in
future.
DIRECTORS'' RESPONSIBILITY STATEMENT
In terms of provisions of Section 134(5) of the Companies Act, 2013
(Act), your Board of Directors to the best of their knowledge and
ability confirm that:
(i) in the preparation of the annual accounts for the financial year
ended March 31, 2016, the applicable accounting standards have been
followed along with proper explanation relating to material departures;
(ii) they have selected such accounting policies and applied them
consistently and made judgements and estimates that are reasonable and
prudent so as to give a true and fair view of the state of affairs of
your Company at the end of the financial year and of the profit of your
Company for the year;
(iii) they have taken proper and sufficient care for the maintenance of
adequate accounting records in accordance with the provisions of this
Act for safeguarding the assets of your Company and for preventing and
detecting fraud and other irregularities;
(iv) they have prepared the annual accounts for the financial year
ended March 31, 2016 on a going concern basis;
(v) they have laid down internal financial controls to be followed by
your Company and that such internal financial controls are adequate and
are operating effectively;
(vi) they have devised proper systems to ensure compliance with the
provisions of all applicable laws to your Company and the systems are
adequate and operating effectively.
ACKNOWLEDGEMENT
Your Directors would like to express their grateful appreciation for
the excellent support and co-operation received from the Financial
Institutions, Banks, Central & State Government Authorities, RBI, SEBI,
MCA, Registrar of Companies, Indian and Overseas Stock Exchanges,
Depositories, Credit Rating Agencies, Customers, Manufacturers,
Vendors, Suppliers, Business Associates, Members, Debenture holders,
Debenture Trustees and other Stakeholders during the year under review.
Your Directors also place on record their deep appreciation for the
valuable contribution of the employees at all levels for the progress
of your Company during the year and look forward to their continued co-
operation in realisation of the corporate goals in the years ahead.
On behalf of the Board of Directors
Hemant Kanoria
Chairman & Managing Director
DIN 00193015
Kolkata, May 12, 2016
Mar 31, 2015
Dear Members,
The Directors are pleased to presenHfie Thirtieth Annual Report
together with the Audited Accounts of your Company for the financial
year ended March 31, 2015. The summarised consolidated and standalone
financial performance of your Company is as follows:
FINANCIAL RESULTS
(Rs. in Lacs)
Consolidated
Year ended Year ended
31.03.2015 31.03.2015
Total Revenue 3,36,032 3,26,030
Total Expenses (including depreciation
etc.) 2,86,656 2,86,209
Profit before bad debts, provisions & tax 49,376 39,821
Bad Debts & Provisions etc. 30,556 17,265
Profit Before Tax 18,820 22,556
Exceptional Items (24) (6)
Current Tax 4,369 8,654
Mat Credit entitlement (22) (5)
Deferred Tax 2,354 142
Income Tax in respect of earlier years 3 20
Profit After Tax Before Minority Interest 12,140 13,751
Share of loss of Associate - -
Minority Interest (771) (100)
Net Profit 12,911 13,851
Minority Interest of Pre Acquisition
Profit / (Loss) 109 -
Profit After Tax after adjustment of
Minority Interest 13,020 13,851
Surplus brought forward from Previous Year 38,178 39,317
Profit Available For Appropriation 51,198 53,168
Paid up Equity Share Capital 50,324 50,324
Amount transferred to Reserves 17,290 12,044
Reserves and Surplus 3,08,139 2,99,362
Standalone
Year ended Year ended
31.03.2015 31.03.2015
Total Revenue 1,90,003 1,80,585
Total Expenses
(including depreciation etc.) 1,67,573 1,67,922
Profit before bad debts, provisions 22,430 12,663
& tax
Bad Debts & Provisions etc. 10,478 3,900
Profit Before Tax 11,952 8,763
Exceptional Items - -
Current Tax 1,818 2,157
Mat Credit entitlement - -
Deferred Tax 1,041 660
Income Tax in respect of earlier years - 14
Profit After Tax Before Minority Interest 9.093 5,932
Share of loss of Associate - -
Minority Interest - -
Net Profit 9.093 5,932
Minority Interest of Pre
Acquisition Profit / (Loss) - -
Profit After Tax after adjustment 9.093 5,932
of Minority Interest
Surplus brought forward from 26,244 25,955
Previous Year
Profit Available For Appropriation 35,337 31,887
Paid up Equity Share Capital 50,324 50,324
Amount transferred to Reserves 6,365 2,700
Reserves and Surplus 2,23,478 2,17,419
OPERATIONAL REVIEW
Your Company is one of the leading private sector infrastructure
financing institutions in India. Some of the key highlights of your
Company''s performance during the year under review are:
The gross profit (before bad debts, provision and tax) is Rs. 22,430
Lacs as against Rs. 12,663 Lacs in the last year.
Profit before taxation is Rs. 11,952 Lacs as against Rs. 8,763 Lacs in
the last year.
Net profit after taxation is Rs. 9,093 Lacs as against Rs. 5,932 Lacs
in the last year.
The total assets under management of the Srei Group is Rs. 35,24,073
Lacs as against Rs. 34,06,999 Lacs in the last year.
The Capital to Risk Assets Ratio (CRAR) of your Company stood at 16.97
per cent as on March 31, 2015, well above the regulatory minimum level
of 15 per cent prescribed by the Reserve Bank of India for systemically
important non- deposit taking NBFCs (NBFCs-ND-SI).
Of this, the Ter I CRAR was 11.21 per cent.
The Financial Statements of your Company have been prepared in
accordance with the Generally Accepted Accounting Principles in India
(Indian GAAP) to comply with the Accounting Standards notified under
Section 211(3C) of the Companies Act, 1956 (which continue to be
applicable in respect of Section 133 of the Companies Act, 2013 in
terms of Rule 7 of The Companies (Accounts) Rules, 2014) and the
relevant provisions of the Companies Act, 1956 / Companies Act, 2013,
as applicable and guidelines issued by the Securities and Exchange
Board of India (SEBI). Accounting policies have been consistently
applied except where a newly issued accounting standard, if initially
adopted or a revision to an existing accounting standard requires a
change in the accounting policy hitherto in use. Management evaluates
all recently issued or revised accounting standards on an ongoing
basis. Your Company discloses standalone unaudited financial results on
a quarterly basis,
standalone audited financial results on an annual basis, consolidated
un- audited financial results on a quarterly basis and consolidated
audited financial results on an annual basis.
Your Company has complied with all the norms prescribed by the Reserve
Bank of India (RBI) including the Fair practices, Anti Money Laundering
and Know Your Customer (KYC) guidelines.
CLASSIFICATION AS INFRASTRUCTURE FINANCE COMPANY (IFC) AND PUBLIC
FINANCIAL INSTITUTION (PFI)
The Reserve Bank of India 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
Public Financial Institution (PFI) by the Ministry of Corporate Affairs
(MCA), Government of India.
DIVIDEND
Your Company has had a consistent dividend policy that balances the
dual objectives of appropriately rewarding
Your Company has had a consistent dividend policy
that balances the dual objectives of appropriately rewarding Members
through dividends and retaining capital.
Members through dividends and retaining capital, in order to maintain a
healthy capital adequacy ratio to support long term growth of your
Company. Consistent with this policy, your Board has recommended a
dividend of Re. 0.50 per Equity share (5 per cent) for the financial
year 2014- 15 to the Members of your Company. The dividend shall be
subject to tax on dividend to be paid by your Company but will be
tax-free in the hands of the Members. The dividend together with the
dividend distribution tax will entail a cash outflow of Rs. 3,028 Lacs
(previous year Rs. 2,943 Lacs).
PUBLIC DEPOSITS
In April 2010, your Company decided to convert itself into a
non-deposit taking NBFC in order to qualify for registration as an
''Infrastructure Finance Company''. Your Company had decided that it
would not accept any further public deposits or renew such maturing
deposits in any manner w.e.f. April 20, 2010 and the entire amount of
outstanding public deposits as on
April 19, 2010 together with interest promised to the depositors, has
been kept in an Escrow Account with Axis Bank Limited, a scheduled
commercial bank for the purpose of making payment to the depositors as
and when they raise the claim. The amount payable to the depositors as
on March 31, 2015 is Rs. 21,21,000.
Being a non-deposit taking Company, your Company has not accepted any
deposits from the public within the meaning of the provisions of the
Non-Banking Financial Companies Acceptance of Public Deposits (Reserve
Bank) Directions, 1998.
PUBLIC ISSUE OF SECURED REDEEMABLE NON-CONVERTIBLE DEBENTURES
During the year under review, your Company issued Secured Redeemable
Non-Convertible Debentures (the "Debentures") of face value of Rs.
1,000 each, as per the details given hereunder:
Date of Base Issue Size Total Issue Size including Maturity Period
opening of Rs.in Crores) Green Shoe Option Issue
(Rs. in Crores)
09.05.2014 75 150 3 years/5 years
29.09.2014 250 Upto 1,500 2 years/3 years
5 years
Allotment Date Amount
(Rs. in Crores)
09.05.2014 28.05.2014 150.00
29.09.2014 12.11.2014 326.14
Debenture Trust Agreement(s) in favour of Axis Trustee Services Limited
for the aforesaid issues were duly executed. The Debentures issued on
May 09, 2014 are listed on the Debt Segment of the BSE Limited (BSE)
and National Stock Exchange of India Limited (NSE) and the Debentures
issued on September 29, 2014 are listed on the Debt Segment of the BSE
Limited (BSE). The entire proceeds have been utilised for the purpose
of various financing activities, repayment of existing loans and other
business operations including working capital requirements. Your
Company has duly paid the interest due on the aforesaid Debentures on
time.
The public issue of the said Debentures has not only facilitated
diversification of your Company''s sources for mobilising long term
resources but has also provided the retail Investors an opportunity to
participate in India''s infrastructure development and progress. Through
the public issues launched in FY 2014-15, your Company has acquired
nearly 20,000 retail investors. Along with previous issues, your
Company has broad-based the retail base of nearly 50,000 investors.
That signifies the growing confidence of investors in your Company. The
various communication efforts of your Company surrounding the
Debentures played a meaningful role in enhancing
your Company''s brand image amongst relevant constituencies.
PROMOTER GROUP SHAREHOLDING
During the year under review, there were various instances of
acquisitions as well as transfer of shares amongst the
Promoter/Promoters'' Group of your Company resulting in effective
increase of your Company''s Promoter/Promoters'' Group shareholding by
4.9753 per cent from 48.7717 per cent to 53.7470 per cent. The
aggregate shareholding of Promoter/Promoters'' Group of your Company as
on March 31, 2015 is as follows:
CORPORATE SOCIAL RESPONSIBILITY (CSR)
The total amount available for CSR spending, being 2 (two) per cent of
the average net profits of your Company made during the three
immediately preceding financial years, during the financial year
2014-15 aggregated to approximately Rs. 2.26 crores.
Recognising its social responsibility, your Company had earlier
established a public charitable trust in the name of ''Srei
Foundation'' with the objective of granting scholarships and other
financial assistance to deserving and talented candidates. The Fund
also supports setting up of schools, colleges, medical and scientific
Your Company perceives Corporate Social Responsibility
(CSR) as a strategic social investment aimed at uplifting the society
at large, empowering i n d i vi d u a l s, m a ki n g
them self-reliant.
research institutions. Donations to Srei Foundation qualify for
deduction under Section 80G of the Income Tax Act, 1961. Your Company
has granted donation of Rs. 50,00,000/- (Rupees Fifty Lac only) to Srei
Foundation during the financial year 2014-15.
Your Company also made donation aggregating to Rs. 5,00,000/- (Rupees
Five Lac only) to Sonata Foundation towards supporting the cause of a
year- long anti-drug awareness campaign. Besides extending financial
support for the entire initiative, your Company actively steered this
campaign along with the Sonata Foundation and volunteers to fight
against this social evil.
Your Company is cognizant towards promoting and encouraging education
and hence contributed Rs. 80,00,000/- (Rupees Eighty Lac only) to IIIT,
Guwahati for setting up the Institute. Your Company also extended fund
amounting to Rs. 2,45,962/- (Rupees Two Lacs Forty Five Thousand Nine
Hundred Sixty Two only) to Arya Kanya Degree College towards the
Institute''s Convocation event for motivating and felicitating the
students.
Your Company is fully aware of the fact that as a corporate citizen, it
is also entrusted with the responsibility to contribute for the
betterment of the society at large. During the year under review, your
Company supported Dignity India Foundation with a sum of Rs. 1,00,000/-
(Rupees One Lac only) for its event - Art Auction. The
proceeds of the event went into running a helpline that helps senior
citizens in difficult circumstances.
Your Company perceives Corporate Social Responsibility (CSR) as a
strategic social investment aimed at uplifting the society at large,
empowering individuals, making them self-reliant. The CSR philosophy
of your Company is embedded in its commitment to all stakeholders
namely consumers, employees, environment and society while your
Company''s approach extends both to external community as well as to
your Company''s large and diverse internal employee base and their
families. Your Company''s sustainable approaches towards practicing
humble service to Humanity on a sustainable basis, has enabled it to
continue fulfilling its commitment to be a socially responsible
corporate citizen.
The CSR Committee of your Company has formulated the CSR Policy which
describes the multiple lines around which the CSR activities of your
Company are positioned being education and skill development, social
and economic welfare, environmental sustainability and such other
activities included in Schedule VII of the Companies Act, 2013 as may
be identified by the CSR Committee from time to time. The said Policy
is available on your Company''s website www.srei. com and a link to the
said Policy has been provided elsewhere in this Annual Report. The
Committee presently comprises Mr. Hemant Kanoria,
Chairman & Managing Director, Mr. Sunil Kanoria, Non-Executive
Director and Mr. Shyamalendu Chatterjee, Independent Director. Mr.
Hemant Kanoria, Chairman and Managing Director of your Company acts as
the Chairman of the CSR Committee. Mr. Madhusudan Dutta, Group Head -
Corporate Strategy & Planning (Human Capital) acts as the Secretary to
the CSR Committee.
Three meetings of the CSR Committee were held during the year 2014-15
on August 02, 2014, November 10, 2014 and February 13, 2015.
In the year under review, your Company could not spend the entire
allocated budget of Rs. 2.26 crores since during the year it used its
managerial resources to lay the basic framework for undertaking the CSR
activities in accordance with the provisions of the Companies Act, 2013
including finalizing the CSR policy and identifying areas where the CSR
activities can be aligned with the nature of the multiple lines of
businesses of your Company in the thrust areas of CSR (education &
skill development, healthcare / medical facilities, social and economic
welfare, environmental sustainability).
During this year, your Company spent an aggregate amount of Rs.
1,38,45,962/- (Rupees One Crore Thirty Eight Lacs Forty Five Thousand
Nine Hundred and Sixty Two only) towards CSR activities pursuant to CSR
Policy of your Company. The manner in which the CSR amount was spent
during the
financial year is set out as an annexure to the Directors'' Report and
forms part of this Annual Report.
SREI WEBSITE
The newly revamped website of your Company www.srei.com was launched on
March 30, 2015. This website has been developed on the new responsive
technology based platform known as ''Drupal'', ensuring uniform display
across all devices like mobile, tab, desktop etc. and all the operating
systems. The website has an inbuilt sophisticated and customized
content management system for easy change in content. A simple,
improved navigation system needs a lesser number of clicks to reach the
information available in the different sections of the website. The
contemporary and smart look of the new website conforms to our new
Brand guideline while taking a customer centric approach catering to
the requirements of prospective customers, investors, employees and
other stakeholders. The website of your Company also has ''Live Stock
Ticker'' with dynamic display of current stock prices in BSE and NSE
with respective market caps. The site carries a comprehensive database
of information of interest to the investors including the financial
results of your Company, dividend declared, unclaimed dividend list,
shareholding pattern, any price sensitive information disclosed to the
regulatory authorities from time to time, analysts'' reports, investor
presentations, standard downloadable
forms, media coverage, corporate profile and business activities of
your Company and the services rendered by your Company to its
investors. The links to different social media i.e. Facebook, Twitter,
LinkedIn has been embedded in the home page of the new website to
showcase the mega events (like Kolkata Marathon) your Company has
associated itself with.
SUBSIDIARY COMPANIES
The Statement in Form AOC-I containing the salient feature of the
financial statement of your Company''s subsidiaries, associates and
joint venture companies pursuant to first proviso to Section 129(3) of
the Companies Act, 2013 (Act) read with Rule 5 of the Companies
(Accounts) Rules, 2014, forms part of the Annual Report. Further, in
line with Section 129(3) of the Act read with the aforesaid Rules, the
Listing Agreement with the Stock Exchanges and in accordance with the
Accounting Standard 21 (AS- 21), Consolidated Financial Statements
prepared by your Company include financial information of its
subsidiary companies.
A report on the performance and financial position of each of the
subsidiaries, associate and joint venture companies included in the
Consolidated Financial Statements prepared by your Company as per Rule
8(1) of the Companies (Accounts) Rules, 2014, forms part of the annual
accounts of each of the subsidiary, associates and joint venture
companies which have
been placed on the website of your Company www.srei.com and also forms
part of Form AOC-1 pursuant to Rule 5 of the Companies (Accounts)
Rules, 2014, which is set out as an annexure to the Directors'' Report
and forms
part of this Annual Report. Members interested in obtaining a copy of
the annual accounts of the subsidiary, associates and joint venture
companies may write to the Company Secretary at your Company''s
Registered Office. The said report is not repeated here for the sake
of brevity. The names of companies which have become or ceased to be
subsidiaries, joint ventures or associate companies during the year
are given below:
Name Status
Attivo Economic Zones Private Limited Ceased to be Subsidiary w.e.f.
formerly Global Investment 21.11.2014
Trust Limited)
Attivo Economic Zone (Mumbai) Private
Limited Subsidiary till 29.12.2014 and
became an Associate
w.e.f. 30.12.2014
Srei Asset Reconstruction Private
Limited Subsidiary between 30.06.2014
to 01.09.2014 andw.e.f.
31.03.2015
Performance Drilling International
Private Limited Became a Step down-subsidiary
w.e.f. 23.01.2015
Srei Insurance Broking Private
Limited Became wholly-owned subsidiary
w.e.f. 16.12.2014
Quippo Mauritius Private Limited, Mauritius Ceased to be Step
down-subsidiary w.e.f.
25.02.2015
Quippo Energy Nigeria Private Limited, Nigeria Ceased to be Step-down
subsidiary w.e.f. 25.02.2015
Quippo CJ Exploration & Production
Private Limited Ceased to be Step down
subsidiary w.e.f. 08.07.2014
Quippo Construction Equipment Limited Ceased to be an Associate
w.e.f. 29.09.2014
Quippo Telecom Infrastructure Private Limited Became an Associate
w.e.f. 30.09.2014
MATERIAL CHANGES AND COMMITMENTS, IF ANY, AFFECTING THE FINANCIAL
POSITION
There is no such material change and commitment affecting the financial
position of your Company which have occurred between the end of the
financial year of your Company to which the financial statements relate
and the date of the report.
POLICY FOR DETERMINING ''MATERIAL'' SUBSIDIARIES
During the year under review, your Company has formulated and put in
place a Policy for determining ''Material''
Subsidiaries as per the revised Clause 49(V)(D) of the Listing
Agreement with the Stock Exchanges. A subsidiary shall be considered as
material if the investment of your Company in the subsidiary exceeds
20% (twenty per cent) of its consolidated net worth as per the audited
balance sheet of the previous financial year or if the subsidiary has
generated 20% (twenty per cent) of the consolidated income of your
Company during the previous financial year. The said Policy is
available on your Company''s website www.srei.com and a link to the said
Policy has been provided elsewhere in this Annual Report.
As on March 31, 2015, none of the subsidiaries of your Company are
material Subsidiaries.
KEY MANAGERIAL PERSONNEL (KMPs)
Pursuant to the resolution of the Board of Directors passed at its
meeting held on May 23, 2014, as modified by a resolution passed on
November 10, 2014, the following directors/executives of the Company
are whole-time Key Managerial Persons (KMPs) as on March 31, 2015 in
accordance with the provisions of Section 203 of the Companies Act,
2013
Name Designation
Mr. Hemant Kanoria Chairman & Managing Director
Mr. Bajrang Kumar Choudhary Chief Executive Officer
Infrastructure Project Development
Mr. Bijoy Kumar Daga Chief Executive Officer
Infrastructure Project Finance
Mr. John Moses Harding Group Chief Executive Officer &
Chief Economist
Liability & Treasury Management
Mr. Sandeep Lakhotia Company Secretary
Mr. Kishore Kumar Lodha Chief Financial Officer
NOMINATION AND REMUNERATION
COMMITTEE
During the year under review, the Board of Directors of your Company
constituted a Nomination and Remuneration Committee in accordance with
the provisions of Section 178 of the Companies Act, 2013 and Companies
(Meetings of Board and its Powers) Rules, 2014 and Clause 49 of the
Listing Agreement. The Committee comprises Mr. Salil Kumar Gupta, Mr.
Shyamalendu Chatterjee, Independent Directors and Mr. Sunil Kanoria,
Non- Executive Director. Mr. Salil Kumar Gupta, Chief Mentor and
Director of your Company acts as the Chairman of the Nomination and
Remuneration Committee. The Terms of Reference of the Committee has
been provided in the Corporate Governance Section forming part of this
Report.
Two meetings of the Nomination and Remuneration Committee of your
Company were held during the year 2014-15 on November 10, 2014 and
February 13, 2015.
The Committee has formulated the Nomination and Remuneration Policy
(''Srei Nomination and Remuneration Policy'') which broadly laid down
the various principles of remuneration being support for strategic
objectives, transparency, internal & external equity, flexibility,
performance- driven remuneration, affordability and sustainability and
covers the procedure for selection, appointment and compensation
structure of Board members, Key Managerial Personnel (KMPs) and Senior
Management Personnel (SMPs) of your Company. The said Policy is
available on your Company''s website www.srei.com and a link to the said
Policy has been provided elsewhere in this Annual Report.
WHISTLE BLOWER POLICY (VIGIL MECHANISM)
Your Company has formulated a codified Whistle Blower Policy
incorporating the provisions relating to Vigil Mechanism in terms of
Section 177 of the Companies Act, 2013 and revised
Clause 49 of the Listing Agreement, in order to encourage Directors and
Employees of your Company to escalate to the level of the Audit
Committee any issue of concerns impacting and compromising with the
interest of your Company and its stakeholders in any way. Your Company
is committed to adhere to highest possible standards of ethical, moral
and legal business conduct and to open communication and to provide
necessary safeguards for protection of employees from reprisals or
victimisation, for whistle blowing in good faith. The said Policy is
available on your Company''s website www.srei. com and a link to the
said Policy has been provided elsewhere in this Annual Report.
POLICY AGAINST SEXUAL AND WORKPLACE HARASSMENT
Your Company is committed to provide and promote a safe, healthy and
congenial atmosphere irrespective of gender, caste, creed or social
class of the employees. Your Company in
its endeavour to provide a safe and healthy work environment for all
its employees has developed a policy to ensure zero tolerance towards
verbal, physical, psychological conduct of a sexual nature by any
employee or stakeholder that directly or indirectly harasses, disrupts
or interferes with another''s work performance or creates an
intimidating, offensive or hostile environment such that each employee
can realize his / her maximum potential.
Your Company has put in place a ''Policy on Prevention of Sexual
Harassment'' as per The Sexual Harassment of Women at Workplace
(Prevention, Prohibition and Redressal) Act, 2013. The Policy is meant
to sensitize the employees about their fundamental right to have safe
and healthy environment at workplace. As per the Policy, any employee
may report his / her complaint to the Internal Complaint Committee
constituted for this purpose. The said Policy is available on your
Company''s website www.srei.com and a link to the said Policy has been
provided elsewhere in this Annual Report.
Your Company affirms that during the year under review adequate access
was provided to any complainant who wished to register a complaint
under the Policy.
The following is a summary of sexual harassment complaints received and
disposed off by your Company during the year 2014-15:
PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS
Your Company is exempted from the applicability of the provisions of
Section 186 of the Companies Act, 2013 (Act) read with Rule 11 of the
Companies (Meetings of Board and its Powers) Rules, 2014 and Companies
(Meetings of Board and its Powers) Amendment Rules, 2015 as your
Company is engaged in the business of financing of companies or of
providing infrastructural facilities.
PERFORMANCE EVALUATION
The Nomination and Remuneration Committee (NRC) of your Company has
formulated and laid down criteria for Performance Evaluation of the
Board (including Committees) and every Director (including Independent
Directors) pursuant to provisions of Section 134, Section 149 read with
Code of Independent Directors (Schedule IV) and Section 178 of the
Companies Act, 2013 and the revised Clause 49 of the Listing Agreement
with Stock Exchanges covering inter-alia the following parameters
namely:
i) Board Evaluation - degree of fulfillment of key responsibilities;
Board culture and dynamics.
ii) Board Committee Evaluation - effectiveness of meetings; Committee
dynamics.
iii) Individual Director Evaluation (including IDs) - contribution at
Board Meetings. Further, the Chairman and Managing Director is
evaluated on key aspects of the role which includes inter-alia
effective leadership to the Board and adequate guidance to the CEOs.
Based on these criteria, the performance of the Board, various Board
Committees viz. Audit Committee, Stakeholders'' Relationship Committee,
Nomination and Remuneration Committee and Corporate Social
Responsibility Committee, and Individual Directors (including
Independent Directors) was evaluated to be satisfactory.
During the year under review, the Independent Directors of your Company
reviewed the performance of Non- Independent Directors and Chairperson
of your Company, taking into account the views of Executive Directors
and Non-Executive Directors.
Further, the Independent Directors hold an unanimous opinion that the
Non- Independent Directors, including the Chairman and Managing
Director bring to the Board, abundant knowledge in their respective
field and are experts in their areas. Besides, they are insightful,
convincing, astute, with a keen sense of observation, mature and have a
deep knowledge of your Company.
The Board as a whole is an integrated, balanced and cohesive unit where
diverse views are expressed and dialogued when required, with each
Director bringing professional domain knowledge to the table. All
Directors are participative, interactive and communicative.
The Chairman has abundant knowledge, experience, skills and
understanding of the Board''s functioning, processes a mind for detail,
is meticulous to the core and conducts
the Meetings with poise and maturity.
The information flow between your Company''s Management and the Board is
complete, timely with good quality and sufficient quantity.
FAMILIARISATION PROGRAMME FOR INDEPENDENT DIRECTORS (IDs)
In terms of Clause 49(II)(B)(7) of the Listing Agreement, your Company
is required to conduct the Familiarisation Programme for Independent
Directors (IDs) to familiarise them about their roles, rights,
responsibilities in your Company, nature of the industry in which your
Company operates, business model of your Company, etc., through various
initiatives.
A new Director is welcomed to the Board of Directors of your Company by
sharing an Induction Kit containing inter-alia Organizational Chart,
brief profile of all Directors and Key Managerial Personnel (KMPs),
Policy Compendium, Investor Presentation, Investor call transcripts
amongst others.
Significant Statutory updates are circulated on a quarterly basis
through which Directors are made aware of the significant news
developments and highlights from various regulatory authorities viz.
Reserve Bank of India (RBI), Securities and Exchange Board of India
(SEBI), Ministry of Corporate Affairs (MCA), etc.
The Company Secretary regularly apprises the Directors about their
roles, rights and responsibilities in your Company from time to time as
per the
requirements of the Listing Agreement with the Stock Exchanges and
Companies Act, 2013 read together with the Rules and Schedules
thereunder.
The Board has open channels of communication with executive management
which allows free flow of communication among Directors in terms of
raising query, seeking clarifications and other related information.
Directors are also informed of the various developments in your Company
through e-mails, newsletters, internal magazines, etc. The same is made
available on their I-Pads as well.
The details of such familiarisation programmes are available on your
Company''s website www.srei.com and a link to the said programmes has
been provided elsewhere in this Annual Report.
EXTRACT OF ANNUAL RETURN
An extract of Annual Return as on the financial year ended on March 31,
2015 in Form No. MGT-9 as required under Section 92(3) of the Companies
Act, 2013 read with Rule 12(1) of the Companies (Management and
Administration) Rules, 2014, is set out as an annexure to the
Directors'' Report and forms part of this Annual Report.
PARTICULARS OF CONTRACTS / ARRANGEMENTS WITH RELATED PARTIES
All the related party transactions of your Company are entered on arm''s
length basis and are in compliance with the applicable provisions of
the Companies Act, 2013 and the Listing
Agreement. There are no materially significant transactions made by the
Company with Promoters, Directors or Key Managerial Personnel (KMPs)
which have potential conflict with the interest of your Company at
large. Members may refer to the notes to the financial statements for
details of related party transactions.
Since all related party transactions entered into by your Company were
in the ordinary course of business and were on an arm''s length basis,
Form AOC-2 is not applicable to your Company.
In terms of Clause 49 (VII) of the Listing Agreement, your Company
obtained prior approval of the Audit Committee for entering into any
transaction with related parties. Further, the Audit Committee granted
omnibus approval for repetitive transactions to be entered with the
related parties, during the year. The Audit Committee reviews all
related party transactions on a quarterly basis.
A Related Party Policy has been devised by your Company for determining
the materiality of transactions with related parties and dealings with
them. The said Policy is available on your Company''s website
www.srei.com and a link to the said Policy has been provided elsewhere
in this Annual Report.
During the year under review, material Related Party Transactions
(RPTs) have been entered by your Company with 1 (One) Associate Company
namely Sahaj e-Village Limited. Details of all material transactions
with related parties
are disclosed quarterly to the Stock Exchanges along with the
Compliance Report on Corporate Governance and the first such Compliance
Report has been submitted to the Stock Exchanges from December, 2014
quarter onwards. All material RPTs entered during the Financial Year
2014-15 which are likely to continue beyond March 31, 2015 is being
placed for approval of the Members at the ensuing 30th Annual General
Meeting in accordance with the Securities & Exchange Board of India
(SEBI) Circular No. CIR/CFD/POLICY CELL/2/2014 dated April 17, 2014.
PARTICULARS OF EMPLOYEES REQUIRED UNDER SECTION 134(3)
(q) AND SECTION 197(12) READ WITH RULE 5 OF THE COMPANIES (APPOINTMENT
AND REMUNERATION OF MANAGERIAL PERSONNEL) RULES, 2014
The prescribed particulars of remuneration of employees pursuant to
Section 134(3) (q) and Section 197(12) read with Rule 5 of the
Companies (Appointment and Remuneration of Managerial Personnel) Rules,
2014, are set out as annexures to the Directors'' Report and form part
of this Annual Report.
PARTICULARS OF CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN
EXCHANGE EARNINGS AND OUTFLOW
Your Company has no activity relating to Conservation of Energy and
Technology
Absorption as stipulated in Rule 8(3) of Companies (Accounts) Rules,
2014. However, your Company uses information technology extensively in
its operations and also continues its endeavour to improve energy
conservation and utilisation, safety and environment.
During the year under review, the total foreign exchange earnings and
expenditure of your Company was Rs. 14 Lacs and Rs. 6,112 Lacs
respectively (previous year Rs. 16 Lacs and Rs. 11,944 Lacs
respectively).
TRANSFER TO INVESTOR EDUCATION & PROTECTION FUND (IEPF)
During the year under review, your Company transferred a sum of Rs.
3,90,293/- (Rupees Three Lacs Ninety Thousand Two Hundred and Ninety
Three only) to the Investor Education & Protection Fund (IEPF) of the
Central Government, being the dividend amount pertaining to the
financial year ended on March 31, 2007, which was due & payable and
remained unclaimed and unpaid for a period of 7 (seven) years, as
provided in Section 205A and 205C of the Companies Act, 1956 read with
the Investor Education and Protection Fund (Awareness and Protection of
Investors) Rules, 2001. Cumulatively, the dividend amount transferred
to the said Fund upto March 31, 2015 aggregates to Rs. 43,35,930.69
(Rupees Forty Three Lacs Thirty Five Thousand Nine Hundred Thirty and
Paisa Sixty Nine only).
AUDIT COMMITTEE
The Audit Committee presently comprises of Mr. Salil Kumar Gupta,
Mr. Srinivasachari Rajagopal, Mr. Shyamalendu Chatterjee, Independent
Directors and Mr. Sunil Kanoria, Non- Executive Director. Mr. Salil
Kumar Gupta, Chief Mentor & Director of your Company is the Chairman of
the Audit Committee. The Company Secretary of your Company acts as the
Secretary to the Audit Committee. The Terms of Reference of the Audit
Committee has been provided in the Corporate Governance Section forming
part of this Report.
Four meetings of the Audit Committee were held during the year 2014-15
on May 23, 2014, August 02, 2014, November 10, 2014 and February 13,
2015.
AUDITORS
Haribhakti & Co. LLP, Chartered Accountants, having registration No.
103523W allotted by The Institute of Chartered Accountants of India
(ICAI), retire as Auditors of your Company at the conclusion of the
ensuing Annual General Meeting (AGM) and have confirmed their
eligibility and willingness to accept the office of Auditors, if re-
appointed. Your Company has received a confirmation from Haribhakti &
Co. LLP, Chartered Accountants, to the effect that their
re-appointment, if made, would be within the limits prescribed under
Section 139 of the Companies Act, 2013 and the rules framed thereunder.
They have also confirmed that they hold a valid peer review certificate
as prescribed under Clause 41(1)(h) of the Listing Agreement.
The Audit Committee and the Board of Directors of your Company
recommend the re-appointment of Haribhakti
& Co. LLP, Chartered Accountants, as the Auditors of your Company.
Members are requested to consider their re-appointment as Auditors of
your Company to hold office from conclusion of ensuing 30th AGM until
the conclusion of 35th AGM (subject to ratification of such appointment
by the Members at every AGM) by way of passing of an ordinary
resolution and on remuneration to be decided by the Board of Directors
based on recommendation of the Audit Committee of your Company.
AUDIT QUALIFICATIONS
There are no qualifications, reservations or adverse remarks or
disclaimers made by Haribhakti & Co. LLP, Statutory Auditors, in their
report on your Company''s financial statements for the year ended on
March 31, 2015. Further, the Statutory Auditors have not reported any
incident of fraud to the Audit Committee of your Company during the
year under review.
SECRETARIAL AUDIT REPORT
Your Company appointed Dr. K. R. Chandratre, Practising Company
Secretary, holding membership of The Institute of Company Secretaries
of India (Membership No. FCS 1370; Certificate of Practice No. 5144) as
the Secretarial Auditor of your Company for FY 2014-15 to conduct the
Secretarial Audit pursuant to Section 204 of the Companies Act, 2013
read with the Companies (Appointment and Remuneration of Managerial
Personnel) Rules, 2014.
The Secretarial Audit Report confirms that your Company has complied
inter alia with all the applicable provisions of the Companies Act,
1956, Companies Act, 2013 and the Rules made thereunder, Depositories
Act, 1996, Listing Agreements with the Stock Exchanges, Securities
Contracts (Regulation) Act, 1956 and all the Regulations and Guidelines
of SEBI as applicable to your Company, including the SEBI (Substantial
Acquisition of Shares and Takeovers) Regulations, 2011, the SEBI
(Prohibition of Insider Trading) Regulations, 1992, the SEBI (Issue and
Listing of Debt Securities) Regulations, 2008, the SEBI (Registrars to
an Issue and Share Transfer Agents) Regulations, 1993 and the Reserve
Bank of India Directions, Guidelines and Circulars applicable to
Systemically Important Non-Deposit Accepting or Holding NBFCs (NBFC -ND
- SI).
The Secretarial Audit Report for the financial year ended March 31,
2015 is an unqualified Report and the same forms part of the Annual
Report.
CORPORATE GOVERNANCE
Your Company has always practised sound Corporate Governance and takes
necessary actions at appropriate times for enhancing and meeting
stakeholders'' expectations while continuing to comply with the
mandatory provisions of Corporate Governance.
A separate section on Corporate Governance and a Certificate from the
Auditors of your Company regarding compliance with the requirements of
Corporate Governance as stipulated under Clause 49 of the Listing
Agreement with the Stock Exchanges (revised effective October 01, 2014
vide SEBI Circular nos. CIR/CFD/POLICY/
CELL/2/2014 dated April 17, 2014 and CIR/CFD/POLICY/CELL/7/2014 dated
September 15, 2014), forms part of the Annual Report.
MEETINGS OF THE BOARD
The Board meets at regular intervals to discuss and decide on policy
and strategy apart from other Board business. However, in case of a
special and urgent business need, the Board''s approval is taken by
passing resolutions through circulation, as permitted by law, which are
confirmed in the subsequent Board meeting.
Four Board meetings were held during the year 2014-15 on May 23, 2014,
August 02, 2014, November 10, 2014 and February 13, 2015. The maximum
time gap between any two consecutive meetings did not exceed 120 days.
DIRECTORS
During the year under review, Mr. Salil Kumar Gupta (DIN 00651223),
Mr. Shyamalendu Chatterjee (DIN 00048249), Mr. Srinivasachari Rajagopal
(DIN 00022609), Mr. Sujitendra Krishna Deb (DIN 03524764), Dr. Satish
Chandra Jha (DIN 00247427) and Dr. Punita Kumar Sinha (DIN 05229262)
were appointed as Independent Directors of your Company for a period of
5 (five) consecutive years from the date of the Twenty-Ninth Annual
General Meeting (AGM) of your Company held on August 02, 2014 pursuant
to the provisions of Section 149 of the Companies Act, 2013 (Act) read
with Companies (Appointment and Qualification of Directors) Rules,
2014, revised Clause 49 of the Listing Agreement with Stock Exchanges
and
your Company''s Articles of Association. In this regard, your Company
issued formal letter of appointment to the Independent Directors and
the same is also hosted on the website of your Company.
Dr. Satish Chandra Jha, Independent Director of your Company expired on
January 25, 2015. The Board wishes to place on record its deep
appreciation for the dedication, foresightedness, leadership and
contribution made by him to the growth of your Company.
The Board of Directors of your Company re-appointed Mr. Hemant Kanoria
(DIN 00193015) as the Chairman and Managing Director (CMD) of your
Company for a further period of 5 (five) years w.e.f. April 01, 2015
based on the recommendation of the Nomination and Remuneration
Committee of your Company, subject to approval of Members at the
ensuing Annual General Meeting (AGM) of your Company.
Based on the recommendation of the Nomination and Remuneration
Committee of your Company, the Board of Directors of your Company has
appointed both Dr. Tamali Sengupta (DIN 00358658) and Mr. T. C. A.
Ranganathan (DIN 03091352) as Additional Directors (Category -
Independent) with effect from May 01, 2015 to hold office as such upto
the date of Thirtieth AGM of your Company. Subject to approval of the
Members of your Company, the Board recommends appointment of both Dr.
Tamali Sengupta and Mr. T. C. A. Ranganathan as Independent Directors
of your Company for a period of 5 (five) consecutive years from date of
the Thirtieth AGM of your Company.
In accordance with the provisions of Section 152 of the Act and the
aforesaid Rules and your Company''s Articles of Association, Mr. Sunil
Kanoria (DIN 00421564) retires by rotation at the ensuing AGM and being
eligible, offers himself for re-appointment.
Mr. Sujitendra Krishna Deb (DIN 03524764) and Mr. Saud Ibne Siddique
(DIN 01873293) resigned as Directors of your Company w.e.f May 01,
2015, due to their personal preoccupations. The Board wishes to place
on record its sincere appreciation of the contribution, advice and
guidance extended by them during their tenure as Directors of your
Company.
The brief resume / details relating to Directors who are proposed to be
appointed/re-appointed are furnished in the Notice of the ensuing AGM.
The Board of Directors of your Company recommends the appointment/re-
appointment of all the above Directors.
All the Independent Directors of your Company furnish a declaration at
the time of their appointment as also annually that they qualify the
tests of their being independent as laid down under Section 149(6) of
the Act and revised Clause 49 of the Listing Agreement. All requisite
declarations were placed before the Board.
Pursuant to the provisions of Clause 49( 11 )(C) of the revised Listing
Agreement with the Stock Exchange(s) and Section 197 of the Act read
with
the Rules framed thereunder, your Company has approved payment of
remuneration of Rs. 50 Lacs by way of commission on net profits
computed under Sections 198 of the Act to Non- Executive Directors and
Independent Directors of your Company for the financial year 2014-15.
The payment is within the limit of one per cent of the net profits of
your Company for the financial year 2014-15 as approved by the Members
of your Company at the AGM held on August 02, 2014 and in accordance
with the applicable provisions of the Listing Agreement and the Act
read with the Rules framed thereunder.
DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS /
COURTS / TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND YOUR
COMPANY''S OPERATIONS IN FUTURE
There are no such orders passed by the regulators / courts / tribunals
impacting the going concern status and your Company''s operations in
future.
DIRECTORS'' RESPONSIBILITY STATEMENT
In terms of provisions of Section 134 of the Companies Act, 2013 (Act),
your Directors confirm that:
(i) in the preparation of the annual accounts for the financial year
ended March 31, 2015, the
applicable accounting standards have been followed along with proper
explanation relating to material departures;
(ii) they have selected such accounting policies and applied them
consistently and made judgements and estimates that are reasonable and
prudent so as to give a true and fair view of the state of affairs of
your Company at the end of the financial year and of the profit of your
Company for the year;
(iii) they have taken proper and sufficient care for the maintenance of
adequate accounting records in accordance with the provisions of this
Act for safeguarding the assets of your Company and for preventing and
detecting fraud and other irregularities;
(iv) they have prepared the annual accounts for the financial year
ended March 31, 2015 on a going concern basis;
(v) they have laid down internal financial controls to be followed by
your Company and that such internal financial controls are adequate and
are operating effectively;
(vi) they have devised proper systems to ensure compliance with the
provisions of all applicable laws to your Company and the systems are
adequate and operating effectively.
ACKNOWLEDGEMENT
Your Directors would like to express their grateful appreciation for
the excellent support and co-operation received from the Financial
Institutions, Banks, Central & State Government Authorities, RBI, SEBI,
MCA, Registrar of Companies, Indian and Overseas Stock Exchanges,
Depositories, Credit Rating Agencies, Customers, Manufacturers,
Vendors, Suppliers, Business Associates, Members, Debenture holders,
Debenture Trustees and other Stakeholders during the year under
review. Your Directors also place on record their deep appreciation for
the valuable contribution of the employees at all levels for the
progress of your Company during the year and look forward to their
continued co-operation in realisation of the corporate goals in the
years ahead.
On behalf of the Board of Directors
Hemant Kanoria
Chairman & Managing Director
DIN 00193015
Kolkata, May 01, 2015
Mar 31, 2014
The Directors are pleased to present the Twenty-Ninth Annual Report
together with the Audited Accounts of your Company for the financial
year ended March 31, 2014. The summarised consolidated and standalone
financial performance of your Company is as follows:
FINANCIAL RESULTS
(Rs. in Lacs)
Consolidated Standalone
Year ended Year ended Year ended Year Ended
March 31, March 31, March 31, March 31,
2014 2013 2014 2013
Total Revenue 3,26,030 3,10,992 1,80,585 1,66,647
Total Expenses
(including
depreciation etc.) 2,86,712 2,74,175 1,68,419 1,50,032
Profit before bad
debts, provisions
& tax 39,318 36,817 12,166 16,615
Bad Debts & Provisions
etc. 16,762 10,949 3,403 3,074
Profit Before Tax 22,556 25,868 8,763 13,541
Exceptional Items (6) (10,410) - -
Current Tax 8,654 7,274 2,157 2,620
Mat Credit entitlement (5) (71) - (71)
Deferred Tax 142 3,072 660 1,496
income Tax in respect of
earlier years 20 (4) 14 -
Profit After Tax Before
Minority Interests 13,751 26,007 5,932 9,496
Share of loss of
Associate - 100 - -
Minority Interests (100) (411) - -
Net Profit 13,851 26,318 5,932 9,496
Minority Interests of Pre
Acquisition Profit/(Loss) - - - -
Profit After Tax after
adjustment of Minority
Interests 13,851 26,318 5,932 9,496
Surplus brought forward
from Previous Year 39,317 28,925 25,955 22,486
Profit Available For
Appropriation 53,168 55,243 31,887 31,982
Paid up Equity Share
Capital 50,324 50,324 50,324 50,324
Amount transferred to
Reserves 12,044 11,319 2,700 3,084
Reserves and Surplus 2,99,362 2,89,380 2,17,419 2,14,430
OPERATIONAL REVIEW
Your Company is one of the leading private sector infrastructure
financing institutions in India. Some of the key highlights of your
Company''s performance during the year under review are:
- The gross profit (before bad debts, provision and tax) is Rs. 12,166
Lacs as against Rs. 16,615 Lacs in the last year.
- Profit before taxation is Rs. 8,763 Lacs as against Rs. 13,541 Lacs in
the last year.
- Net profit after taxation is Rs. 5,932 Lacs as against Rs. 9,496 Lacs
in the last year.
- The total assets under management of the Srei Group is Rs. 34,06,999
Lacs as against Rs. 33,32,964 Lacs in the last year.
The Standalone and Consolidated Financial Statements have been prepared
by your Company in accordance with the requirements of the accounting
standards notified by the Central Government under the Companies
(Accounting Standards) Rules, 2006. The audited Standalone and
Consolidated Financial Statements together with Auditors Report thereon
forms part of the Annual Report.
The Capital to Risk Assets Ratio (CRAR) of your Company stood at 17.78%
as on March 31, 2014, well above the regulatory minimum level of 15%
prescribed by the Reserve Bank of India for systemically important non-
deposit taking NBFCs (NBFCs-ND-SI). Of this, the Tier I CRAR was
10.69%.
Your Company has complied with all the norms prescribed by the Reserve
Bank of India (RBI) including the Fair practices, Anti Money Laundering
& Know Your Customer (KYC) guidelines and also all the mandatory
accounting standards notified by the Central Government under the
Companies (Accounting Standards) Rules, 2006. It has adopted a sound
and forward looking accounting policy of providing for non performing
assets in terms of the management''s best estimates as well as the
guidelines laid down by the Foreign Financial Institutions, which are
more stringent than the guidelines of the RBI.
PUBLIC DEPOSITS
In April 2010, your Company decided to convert itself into a
non-deposit taking NBFC in order to qualify for registration as an
''Infrastructure Finance Company''. Your Company had decided that it
would not accept any further public deposits or renew such maturing
deposits in any manner w.e.f. April 20, 2010 and the entire amount of
outstanding public deposits as on April 19, 2010 together with interest
promised to the depositors, has been kept in an Escrow Account with
Axis Bank Limited, a scheduled commercial bank for the purpose of
making payment to the depositors as and when they raise the claim. The
amount payable to the depositors as on March 31, 2014 is Rs.
27,23,000/-.
During the year under review, your Company has not accepted any
deposits from the public within the meaning of the provisions of the
Non-Banking Financial Companies Acceptance of Public Deposits (Reserve
Bank) Directions, 1998.
CLASSIFICATION AS INFRASTRUCTURE FINANCE COMPANY (IFC) AND PUBLIC
FINANCIAL INSTITUTION (PFI)
The Reserve Bank of India 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
Public Financial Institution (PFI) under Section 4A of the Companies
Act, 1956 by the Ministry of Corporate Affairs (MCA), Government of
India.
MUTUAL FUND ACTIVITY
During the year under review, Srei Mutual Fund (IDF) launched its first
closed ended Infrastructure Debt Scheme in the name of ''Srei
Infrastructure Debt Fund  Series 1'' through private placement. The
Placement period opened in January, 2014 and will close in August,
2014. The investment objective of the Scheme is to generate regular
income and capital appreciation by investing primarily in a portfolio
of debt instruments of infrastructure companies / SPV and other
permissible instruments as defined in the Securities and Exchange Board
of India (Mutual Fund) Regulations, 1996.
The Insurance Regulatory and Development Authority (IRDA) vide their
circular dated September 26, 2013 has notified that investment by
Insurance Companies (Life and General Insurance) in Srei Infrastructure
Debt Fund - Series 1 will be reckoned as investments in infrastructure
sector as per the IRDA (Investments) (Fifth Amendments) Regulations,
2013. The Scheme has also received in-principle approval from the
National Stock Exchange of India Limited (NSE) for listing of proposed
units of the Scheme.
PROMOTERS'' GROUP SHAREHOLDING
During the year under review, there were instances of transfers of
shares amongst the Promoter/ Promoters'' Group. However, the aggregate
Promoter/Promoters'' Group shareholding of your Company has remained
unchanged at 48.77%.
As on March 31, 2014, none of the Promoter / Promoters'' Group
shareholding is under pledge.
PUBLIC ISSUE OF SECURED REDEEMABLE NON-CONVERTIBLE DEBENTURES
During the year under review, your Company has issued Secured
Redeemable Non-Convertible Debentures (the "Debentures") of face value
of Rs. 1,000 each, as per the details given hereunder:
Date of Total Issue Maturity Period Allotment Date Amount
issue Size (Rs. in
(Including Crores)
green shoe)
26.08.2013 200 Crores 3 years/5
years/6 years 3
months 26.09.2013 102.65
30.12.2013 100 Crores 2 years/3
years/5 years 11.02.2014 100.00
Debenture Trust Agreement(s) in favour of Axis Trustee Services Limited
for the aforesaid issues were executed. The Debentures issued on
August 26, 2013 are listed on the Debt Segment of the BSE Limited (BSE)
and the Debentures issued on December 30, 2013 are listed on the Debt
Segment of the BSE Limited (BSE) and National Stock Exchange of India
Limited (NSE). The entire proceeds have been utilised for the purpose
of various financing activities, repayment of existing loans and other
business operations including capital expenditure and working capital
requirements. Your Company has duly paid the interest due on the
aforesaid Debentures on time.
Further, your Company has vide Prospectus dated May 05, 2014 come out
with the public issue of 7,50,000 Secured Redeemable Non- Convertible
Debentures of Face Value of Rs. 1,000/- each (the "Debentures" or the
"NCDs") for an amount upto Rs. 750 Million ("Base Issue") with an
option to retain oversubscription upto additional 7,50,000 NCDs of Rs.
1,000/- each, for an amount upto Rs. 750 Million, aggregating to Rs.
1,500 Million ("Overall Issue Size"). The Issue opened on May 09, 2014
and subject to requisite approvals, the Issue, which was scheduled to
close on June 09, 2014, closed earlier by 21 (Twenty One) days on May
19, 2014 due to oversubscription.
The public issue of the said Debentures has not only facilitated
diversification of your Company''s sources for mobilising long term
resources but has also provided the retail Investors an opportunity to
participate in India''s infrastructure development and progress. The
various communication efforts of your Company surrounding the
Debentures played a meaningful role in enhancing your Company''s brand
image amongst relevant constituencies.
INCREASE IN AUTHORISED SHARE CAPITAL
During the year under review, the Authorised Share Capital of your
Company increased from Rs. 810,00,00,000 (Rupees Eight Hundred and Ten
Crores only) divided into 71,00,00,000 (Seventy One Crores only) Equity
Shares of Rs. 10 (Rupees Ten) each and 1,00,00,000 (One Crore only)
Preference Shares of Rs. 100 (Rupees Hundred) each to Rs.
1500,00,00,000 (Rupees Fifteen Hundred Crores only) divided into
100,00,00,000 (One Hundred Crores only) Equity Shares of Rs. 10 (Rupees
Ten) each and 5,00,00,000 (Five Crores only) Preference Shares of Rs.
100 (Rupees Hundred) each, pursuant to the approval accorded by the
Shareholders'' at the Annual General Meeting held on August 14, 2013.
However, your Company has not issued any Equity or Preference Shares
during the year under review.
SETTING UP OF WHITE LABEL ATMs
During the year under review, the Reserve Bank of India (RBI) has
granted Certificate of Authorisation to your Company to set-up, own and
operate payment system for White Label ATMs (WLAs) with effect from
March 25, 2014. The aforesaid authorisation issued to set up WLAs under
Scheme ''A'' of RBI Policy guidelines dated June 20, 2012 shall be valid
upto March 31, 2019.
Through these WLAs, your Company will be able to take financial
products and services of the sponsor bank to the door step of the rural
population and expand your Company''s presence in the financial services
sector across semi-urban and rural India. These services will include
cash deposit, financing, remittances and investment products, in
addition to handling cash dispensation.
DIVIDEND
Your Company has had a consistent dividend policy that balances the
dual objectives of appropriately rewarding shareholders through
dividends and retaining capital, in order to maintain a healthy capital
adequacy ratio to support long term growth of your Company. Consistent
with this policy, your Board has recommended a dividend of Re. 0.50
per Equity share (5%) for the financial year 2013-14 to the Equity
shareholders of your Company. The dividend shall be subject to tax on
dividend to be paid by your Company but will be tax-free in the hands
of the shareholders. The dividend together with the dividend
distribution tax will entail a cash outflow of Rs. 2943 Lacs (previous
year Rs. 2943 Lacs).
CORPORATE GOVERNANCE
Your Company has always practiced sound corporate governance and takes
necessary actions at appropriate times for enhancing and meeting
stakeholders'' expectations while continuing to comply with the
mandatory provisions of corporate governance.
A separate section on Corporate Governance and a Certificate from the
Auditors of your Company regarding compliance with the requirements of
corporate governance as stipulated under Clause 49 of the Listing
Agreement with the Stock Exchanges, form part of the Annual Report.
TRANSFER TO INVESTOR EDUCATION & PROTECTION FUND (IEPF)
During the year under review, your Company has transferred a sum of Rs.
7,52,561/- to the Investor Education & Protection Fund (IEPF) of the
Central Government, the dividend amount pertaining to the financial
year ended on March 31, 2006, which was due & payable and remained
unclaimed and unpaid for a period of seven years, as provided in
Section 205A and 205C of the Companies Act, 1956 read with the Investor
Education and Protection Fund (Awareness and Protection of Investors)
Rules, 2001. Cumulatively, the dividend amount transferred to the said
Fund up to March 31, 2014 was Rs. 39,45,637.69/-.
SUBSIDIARY COMPANIES
During the year under review, the name of Srei Venture Capital Limited,
a wholly owned subsidiary of your Company, was changed to ''Srei
Alternative Investment Managers Limited'' w.e.f. May 21, 2013 pursuant
to the change in the Main Objects Clause of the Memorandum of
Association of the Company thereby enabling the Company to carry on
business activities of Asset Management in India and/or abroad in
accordance with Securities and Exchange Board of India (Alternative
Investment Funds) Regulations, 2012.
Further, Srei (Mauritius) Infrastructure Development Company Limited, a
joint venture of your Company''s subsidiary, Srei Infrastructure
Advisors Limited, was deregistered from the Registrar of Companies,
Port Louis, Mauritius w.e.f. July 17, 2013.
Further, the name of Mumbai Futuristic Economic Zone Private Limited, a
wholly owned subsidiary of your Company, was changed to ''Attivo
Economic Zone (Mumbai) Private Limited'' w.e.f. July 23, 2013 as part of
brand building exercise.
Further, Goldensons Construction Private Limited became a wholly owned
subsidiary of your Company w.e.f. February 07, 2014 consequent upon
acquisition of entire shareholding by your Company.
Further, Quippo Valuers & Auctioneers Private Limited ceased to be a
subsidiary of your Company w.e.f. October 19, 2013 consequent upon
disposal of entire shareholding by your Company.
Further, Quippo Middle East Limited (formerly Quippo Energy Middle East
Limited) and Quippo Energy Yemen Limited ceased to be the sub-
subsidiaries of your Company w.e.f. October 28, 2013 consequent upon
disposal of entire shareholding held by Quippo Energy Private Limited,
a subsidiary of your Company.
Further, Srei Equipment Finance Limited, a joint venture between your
Company and BNP Paribas Lease Group, converted to a Public Limited
Company w.e.f. November 01, 2013.
Further, SICOM Srei Maharashtra Infrastructure Private Limited ceased
to be the joint venture of your Company''s subsidiary, Srei
Infrastructure Advisors Limited w.e.f. March 29, 2014 consequent upon
disposal of entire shareholding by your Company''s subsidiary.
Further, the share capital of Srei Mutual Fund Asset Management Private
Limited, a wholly owned subsidiary of your Company, was enhanced to Rs.
15.50 Crores during the year consequent upon infusion, in tranches, of
fresh capital by your Company.
The Statement pursuant to Section 212 of the Companies Act, 1956,
containing details of your Company''s subsidiaries in India and
Overseas, forms part of the Annual Report.
In compliance with General Circular No: 2/2011 dated February 08, 2011
of Government of India, Ministry of Corporate Affairs, the audited
statement of accounts along with the reports of the Board of Directors
and Auditors relating to your Company''s subsidiaries in India and
Overseas are not annexed as required under Section 212 of the Companies
Act, 1956. Shareholders who wish to have a copy of the full report and
accounts of the aforesaid subsidiary companies will be provided the
same by the Company Secretary on receipt of a written request from
them. These documents will also be available for inspection by any
shareholder at the Registered Office of your Company and the concerned
subsidiary companies during business hours on all working days.
Further, the documents shall be available on the website of your
Company. However, as directed by the Ministry of Corporate Affairs,
Government of India, the financial data of the subsidiaries have been
separately furnished and forms part of the Annual Report. Further, in
line with the Listing Agreement with the Stock Exchanges and in
accordance with the Accounting Standard 21 (AS-21), Consolidated
Financial Statements prepared by your Company include financial
information of its subsidiary companies.
PARTICULARS OF EMPLOYEES
The names and other particulars of the employees as required under
Section 217(2A) of the Companies Act, 1956 read with the Companies
(Particulars of Employees) Rules, 1975, are set out in the annexure to
the Directors'' Report and form part of this report.
PARTICULARS OF CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN
EXCHANGE EARNINGS AND OUTFLOW
Your Company has no activity relating to Conservation of Energy and
Technology Absorption as stipulated in the
Companies (Disclosure of Particulars in the Report of Board of
Directors) Rules, 1988. However, your Company uses information
technology extensively in its operations and also continues its
endeavour to improve energy conservation and utilisation, safety and
environment.
During the year under review, the total foreign exchange earnings and
expenditure of your Company was Rs. 16 Lacs and Rs. 11,944 Lacs
respectively (previous year Rs. 228 Lacs and Rs. 17,386 Lacs
respectively).
SREI WEBSITE
The website of your Company, www. srei.com, has been designed to
present the Company''s businesses up-front on the home page. The site
carries a comprehensive database of information of interest to the
investors including the financial results of your Company, dividend
declared, unclaimed dividend list, shareholding pattern, any price
sensitive information disclosed to the regulatory authorities from time
to time, analyst reports, investor presentations, standard downloadable
forms, media coverage, corporate profile and business activities of
your Company and the services rendered by your Company to its
investors. The ''Investor Relations'' Section'' of your Company''s website
contains an array of information on investor services, financials,
listing of securities, dividend and Investors''
Frequently Asked Question (FAQs).
DIRECTORS
During the year under review, Dr. Martin Czurda resigned as a Director
of your Company w.e.f. December 24, 2013 due to his personal
preoccupations. The Board wishes to place on record its sincere
appreciation of the contribution, advice and guidance extended by Dr.
Czurda during his tenure as a Director of your Company.
In accordance with the provisions of Section 149 of the Companies Act,
2013 (''Act'') read with Companies (Appointment and Qualification of
Directors) Rules, 2014, recently amended Clause 49 of the Listing
Agreement with Stock Exchanges (''Listing Agreement'') and your Company''s
Articles of Association, the Board of Directors of your Company is
seeking appointment of Mr. Salil Kumar Gupta, Mr. Shyamalendu
Chatterjee, Mr. Sujitendra Krishna Deb, Mr. Srinivasachari Rajagopal,
Dr. Satish Chandra Jha and Dr. Punita Kumar Sinha as Independent
Directors of the Company for a period of 5 (five) consecutive years
from the date of the forthcoming Twenty-Ninth Annual General Meeting
(AGM) of the Company. All these Directors have filed with your Company
consent in Form DIR-2, intimation in Form DIR-8 under Section 164(2) of
the Act and the aforesaid Rules and declaration of independence
pursuant to Section 149(6) of the Act and the aforesaid Rules and the
Listing Agreement with the Stock Exchanges.
In accordance with the provisions of Section 152 of the Act and the
aforesaid Rules and your Company''s Articles of Association, Mr. Sunil
Kanoria retires by rotation at the ensuing AGM and being eligible,
offers himself for re- appointment.
The brief resume / details relating to Directors who are to be
appointed / re- appointed are furnished in the Notice of the ensuing
AGM. The Board of Directors of your Company recommends the
appointment/re-appointment of all the above Directors.
Pursuant to Section 309(4) and other applicable provisions of the
Companies Act, 1956 read with General Circular No: 4/2011 dated March
04, 2011 of Government of India, Ministry of Corporate Affairs, your
Company has approved payment of remuneration of Rs. 50 Lacs by way of
commission on net profits computed under Sections 198, 349 and 350 of
the Companies Act, 1956 to Non-Executive Directors of your Company for
the financial year 2013-14. The payment is within the limit of one per
cent of the net profits of the Company for the financial year 2013-14
as approved by the Members of your Company at the Annual General
Meeting held on August 14, 2013 and in accordance with the applicable
provisions of the Companies Act, 1956.
AUDIT COMMITTEE
The Audit Committee comprises of Mr. Salil K. Gupta, Mr. S. Rajagopal,
Mr. Sujitendra Krishna Deb, Mr. Shyamalendu Chatterjee, Non- Executive
& Independent Directors and Mr. Sunil Kanoria, Non-Executive Director.
Mr. Salil K. Gupta, Chief Mentor & Director of your Company is the
Chairman of the Audit Committee. The Company Secretary of your Company
acts as the Secretary to the Audit Committee.
DIRECTORS'' RESPONSIBILITY
STATEMENT
In terms of provisions of Section 217(2AA) of the Companies Act, 1956
(Act), your Directors confirm that:
(i) in the preparation of the annual accounts for the financial year
ended March 31, 2014, the applicable accounting standards have been
followed along with proper explanation relating to material departures;
(ii) they have selected such accounting policies and applied them
consistently and made judgements and estimates that are reasonable and
prudent so as to give a true and fair view of the state of affairs of
your Company at the end of the financial year and of the profit of your
Company for the year;
(iii) they have taken proper and sufficient care for the maintenance of
adequate accounting records in accordance with the provisions of this
Act for safeguarding the assets of your Company and for preventing and
detecting fraud and other irregularities; and
(iv) they have prepared the annual accounts for the financial year
ended March 31, 2014 on a going concern basis.
Further, your Directors confirm that your Company has adequate internal
systems and controls in place to ensure compliance of laws applicable
to your Company.
AUDITORS
Haribhakti & Co., Chartered Accountants having registration No.
103523W allotted by The Institute of Chartered Accountants of India
(ICAI), retire as Auditors of your Company at the conclusion of the
ensuing Annual General Meeting (AGM) and have confirmed their
eligibility and willingness to accept the office of Auditors, if re-
appointed. Your Company has received a confirmation from Haribhakti &
Co., Chartered Accountants to the effect that their re-appointment, if
made, would be within the limits prescribed under Section 139 of the
Companies Act, 2013 and the rules framed there under. They have also
confirmed that they hold a valid peer review certificate as prescribed
under Clause 41(1)(h) of the Listing Agreement.
The Audit Committee and the Board of Directors of your Company
recommend the re-appointment of Haribhakti & Co., Chartered
Accountants, as the Auditors of your Company. Members are requested to
consider their re- appointment as Auditors of your Company to hold
office from conclusion of ensuing AGM until the conclusion of next AGM
on remuneration to be decided by the Board of Directors based on
recommendation of the Audit Committee of your Company.
SECRETARIAL AUDIT REPORT
As a measure of good Corporate Governance practice, your Company
appointed Dr. K. R. Chandratre, Practising Company Secretary of repute,
to conduct the Secretarial Audit. The Secretarial Audit Report for the
financial year ended March 31, 2014 is provided in the Annual Report.
The Secretarial Audit Report confirms that your Company has complied
inter alia with all the applicable provisions of the Companies Act,
1956, Depositories Act, 1996, Listing Agreements with the Stock
Exchanges, Securities Contracts (Regulation) Act, 1956 and all the
Regulations and Guidelines of SEBI as applicable to your Company,
including the SEBI (Substantial Acquisition of Shares and Takeovers)
Regulations, 2011 and the SEBI (Prohibition of Insider Trading)
Regulations, 1992.
ACKNOWLEDGEMENT
Your Directors would like to express their grateful appreciation for
the excellent support and co-operation received from the Financial
Institutions, Banks, Central & State Government Authorities, RBI, SEBI,
Ministry of Corporate Affairs (MCA), Registrar of Companies, Indian and
Overseas Stock Exchanges, Depositories, Credit Rating Agencies,
Customers, Manufacturers, Vendors, Suppliers, Business Associates,
Shareholders, Debenture holders, Debenture Trustees and other
Stakeholders during the year under review. Your Directors also place on
record their deep appreciation for the valuable contribution of the
employees at all levels for the progress of your Company during the
year and look forward to their continued co-operation in realisation of
the corporate goals in the years ahead
On behalf of the Board of Directors
Hemant Kanoria
Chairman & Managing Director
Kolkata, May 23, 2014
Mar 31, 2013
The Directors are pleased to present the Twenty-Eighth Annual Report
together with the Audited Accounts of your Company for the financial
year ended March 31, 2013. The summarised consolidated and standalone
financial performance of your Company is as follows:
FINANCIAL RESULTS
(Rs. in Lakh)
Consolidated Standalone
Year ended Year ended Year ended Year ended
March 31, March 31, March 31, March 31,
2013 2012 2013 2012
Total Revenue 3,10,992 2,44,633 1,66,647 1,18,069
Total Expenses
(includingdepre
ciationetc.) 2,74,175 2,12,504 1,50,032 1,05,017
Profitbe forebaddebts,
provisions & tax 36,817 32,129 16,615 13,052
BadDebts &
Provisionsetc. 10,949 8,452 3,074 2,173
Profit Before Tax 25,868 23,677 13,541 10,879
Exceptional Items (10,410)
Current Tax 7,274 5,466 2,620 1,760
Mat Creditentitlement (71) (189) (71) (49)
Deferred Tax 3,072 3,674 1,496 1,198
Income Tax in respect
of earlier years (4) 2,411 2,174
Profit After Tax Before
Minority lnterests 26,007 12,315 9,496 5,796
Share of loss of Associate 100 - - -
Minority Interests (411) 1,134
Net Profit 26,318 11,181 9,496 5,796
Minority lnterests of
Pre Acquisition
Profit/(Loss) (39)
Profit After Tax
afterad justment of
Minority interests 26,318 11,142 9,496 5,796
Surplus brought
forward from
Previous Year 28,925 30,339 22,486 23,791
Profit Available For
Appropriation 55,243 41,481 31,982 29,587
Paid up Equity Share
Capital 50,324 50,324 50,324 50,324
Amount transferred
to Reserves 11,319 9,965 3,084 4,193
Reserves and Surplus 2,89,380 2,67,543 2,14,430 2,07,877
OPERATIONAL REVIEW
Your Company is one of the leading private sector infrastructure
financing institutions in India. Some of the key highlights of your
Company''s performance during the year under review are:
- The gross profit (before bad debts, provision and tax) is Rs.16,615
Lakhs as againstRs.13,052 Lakhs in the last year.
- Profit before taxation is Rs.13,541 Lakhs as against Rs.10,879 Lakhs in
the last year.
- Net profit after taxation is Rs.9,496 Lakhs as against Rs.5,796 Lakhs
in the last year.
- The total assets under management of the Srei Group is Rs.33,32,964
Lakhs as against Rs.30,76,435 Lakhs in the last year.
The Consolidated Financial Statements have been prepared by your
Company in accordance with the requirements of the accounting standards
notified by the Central Government under the Companies (Accounting
Standards) Rules, 2006. The audited Consolidated Financial Statements
together with Auditors Report thereon forms part of the Annual Report.
The Capital Adequacy Ratio (CAR) of your Company stood at 21.68 per
cent as on March 31, 2013, well above the regulatory minimum level of
15 per cent prescribed by the Reserve Bank of India for systemically
important non-deposit taking NBFCs (NBFCs- ND-SI). Of this, the Tier I
CAR was 14.28 per cent.
Your Company has complied with all the norms prescribed by the Reserve
Bank of India (RBI) including the Fair practices, Anti Money Laundering
& Know Your Customer (KYC) guidelines and also all the mandatory
accounting standards notified by the Central Government under the
Companies (Accounting Standards) Rules, 2006. It has adopted a sound
and forward looking accounting policy of providing for non performing
assets in terms of the management''s best estimates as well as the
guidelines laid down by the Foreign Financial Institutions, which are
more stringent than the guidelines of the RBI.
PUBLIC DEPOSITS
In April 2010, your Company decided to convert itself into a
non-deposit taking NBFC in order to qualify for registration as an
''Infrastructure Finance
Company''. Your Company had decided that it would not accept any further
public deposits or renew such maturing deposits in any manner w.e.f.
April 20, 2010 and the entire amount of outstanding public deposits as
on April 19, 2010 together with interest promised to the depositors,
has been kept in an Escrow Account with Axis Bank Limited, a scheduled
commercial bank for the purpose of making payment to the depositors as
and when they raise the claim. The amount payable to the depositors as
on March 31, 2013 is Rs.30,44,394/-.
During the year under review, your Company has not accepted any
deposits from the public within the meaning of the provisions of the
Non-Banking Financial Companies Acceptance of Public Deposits (Reserve
Bank) Directions, 1998.
CLASSIFICATION AS INFRASTRUCTURE FINANCE COMPANY (IFC) AND PUBLIC
FINANCIAL INSTITUTION (PFI)
The Reserve Bank of India 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 Public Financial Institution (PFI) under Section 4A of the Companies
Act, 1956 by the Ministry of Corporate Affairs (MCA), Government of
India.
MUTUAL FUND ACTIVITY
In terms of Regulation 9 of the Securities and Exchange Board of India
(Mutual Fund) Regulations, 1996, an Infrastructure Debt Fund set up by
your Company in the name of ''Srei Mutual Fund (IDF)'' was granted the
Certificate of Registration by the Securities and Exchange Board of
India on November 15, 2012. Infrastructure Debt Fund via mutual fund
route opens up long term funding options for the infrastructure sector
in India which offers a good long term opportunity for debt investors.
Furthermore, in terms of Regulation 21(2) of the said Regulations,
approval was also granted to Srei Mutual Fund Asset Management Private
Limited, a '' subsidiary of your Company, to act as the Asset
Management Company for Srei Mutual Fund (IDF).
PROMOTERS GROUP SHAREHOLDING
The Promoters'' Group of your Company has increased their net
shareholding in your Company during the year by 1.70 per cent from
47.07 per centto 48.77 percent, through the creeping acquisition route
allowed as per SEBI (Substantial Acquisition of Shares and Takeovers)
Regulations, 2011.
The Promoters'' Group has shown increased commitment to the business
strategy and substantial growth of your Company and your Company
believes that this will result in enhanced value for all the
stakeholders.
As on March 31, 2013, 16.47 per cent (out of 48.77 per cent) of
shareholding held by the Promoters'' Group of your Company is under
pledge.
UBLIC ISSUE OF SECURED REDEEMABLE NON-CONVERTIBLE DEBENTURES
During the year under review, your Company has issued Secured
Redeemable Non-Convertible
Debentures (the "Debentures") of face value of Rs.1,000 each, as per
the details given hereunder:
I Date of Issue Total Issue Size Maturity Period Allotment Date Amount
(including green shoe) (Rs. in Crores)
20.09.2012 150 Crores 7years 05.11.2012 76.79
04.04.2013 150 Crores 3years/5years/6years6months 06.05.2013 133.70
Debenture Trust Agreement(s) in favour of Axis Trustee Services Limited
for the aforesaid issues were executed. These Debentures are listed on
the Debt Segment of the BSE Limited. The entire proceeds have been
utilised for the purpose of various financing activities, repayment of
existing loans and other business operations including capital
expenditure and working capital requirements. Your Company has duly
paid the interest due on the aforesaid Debentures on time.
The public issue of the said Debentures has not only facilitated
diversification of your Company''s sources for mobilising long term
resources but has also provided the retail Investors an opportunity to
participate in India''s infrastructure development and progress. The
various communication efforts of your Company surrounding the
Debentures played a meaningful role in enhancing your Company''s brand
image amongst relevant constituencies.
UNSECURED SUBORDINATED BONDS
In the year 2000, your Company had issued on rights basis 5266075
Unsecured Subordinated Bonds of Rs.100/- each aggregating to
Rs.52,66,07,500/- vide Letter of Offer dated June 16, 2000. Each Bond has
an overall tenure of 12 years, reckoned from the date of allotment
viz. August 25, 2000 and the face value of the Bonds along with an
overall premium of 20 per cent of the original face value was to be
redeemed in seven installments, commencing from the completion of sixth
year from the date of allotment.
Your Company has accordingly redeemed on August 25, 2012, being seventh
& the final redemption date, Rs.10/- towards principal amount and Rs.2/-
towards premium amount, total aggregating to Rs.12/- per Unsecured
Subordinated Bond. Accordingly, the face value of the aforesaid Bonds
stand reduced to NIL per Bond as a result of full and final redemption
of the said Bonds on completion of the tenure of 12 years. Thus, the
said Bonds have been fully extinguished post August 25, 2012.
ISSUE OF REDEEMABLE NON-CONVERTIBLE PREFERENCE SHARES AND INCREASE IN
AUTHORISED SHARE CAPITAL
With a view to augment long term resources, improve debt-equity ratio
and to strengthen the capital base, your Company proposes to raise an
amount aggregating upto Rs.500 Crores by way of issue of Redeemable
Non-Convertible Preference Shares in one or more tranches, subject to
the Shareholders'' approval and other requisite approvals.
Further, the Board of Directors of your
Company have decided to increase the existing Authorised Share Capital
of your Company from Rs.810 Crores to Rs.1500 Crores (Equity Capital being
increased from Rs.710 Crores to Rs.1,000 Crores and Preference Capital
being increased from Rs.100 Crores to Rs.500 Crores), subject to the
Shareholders'' approval.
SETTING UP OF WHITE LABEL ATMs
During the year under review, approval of the Members of the Company
was sought by way of Postal Ballot conducted pursuant to Section 192A
of the Companies Act, 1956 read with Companies (Passing of the
Resolution by Postal Ballot) Rules, 2011 in respect of amendment to the
"Other Objects" Clause of the Memorandum of Association of the
Company and commencement of operation of new business as mentioned in
the "Other Objects" Clause of the Memorandum of Association of the
Company pertaining to White Label ATM Networks.
Your Company, being one of the top 500 companies as per market
capitalisation, entered into an agreement with National Securities
Depository Limited on October 29, 2012 to implement the e-voting
process effectively so as to enable the Members to cast their votes
through electronic mode. By providing the Members an option to cast
their vote electronically, it was observed that the Member
participation increased substantially and that Members holding shares
aggregating to 84.02 per cent of the total paid up capital of the
Company casted their votes. Such an initiative also gave the Members
the freedom to cast their vote till the closing date, from a place of
their convenience.
Your Company appointed Dr. K. R. Chandratre, Practising Company
Secretary, as the Scrutiniser for conducting the Postal Ballot exercise
in a fair and transparent manner. The Special Resolutions as set out in
the Postal Ballot Notice dated November
09, 2012 were approved by the Members with a requisite majority of
99.99 per cent of the votes polled. The result of the Postal Ballot was
declared on December 21, 2012, and the same was displayed at the
Registered Office as well as the website of your Company, www.srei.com.
Thereafter, the results were disseminated to the various Regulators and
published in newspapers.
Your Company has received an in-principle authorisation from the
Reserve Bank of India (RBI) for setting up of White Label ATMs.
DIVIDEND
Your Company has had a consistent dividend policy that balances the
dual objectives of appropriately rewarding shareholders through
dividends and retaining capital, in order to maintain a healthy capital
adequacy ratio to support long term growth of your Company. Consistent
with this policy, your Board has recommended a dividend of Re. 0.50 per
Equity share (5 per cent) for the financial year 2012-13 to the Equity
shareholders of your Company. The dividend shall be subject to tax on
dividend to be paid by your Company but will be tax-free in the hands
of the shareholders. The dividend together with the dividend
distribution tax will entail a cash outflow of Rs.2943 Lakhs (previous
year Rs.2923 Lakhs).
ENVIRONMENTAL AND SOCIAL MANAGEMENT SYSTEM
Your Company has been in the process of sustainable business practice
through its implemented Environmental & Social Management System (ESMS)
to adequately meet, respond to and enhance benchmarks in Environmental
and Social (E&S) management. ESMS takes care of E&S risks associated
with a proposal considered for investment as well as its existing
portfolio. Your Company decided to adopt ESMS to reduce the business
risk of its portfolio related to E&S issues and adhere
to sustainable finance practice, which has been integrated as a part of
overall Credit & Risk Policy. This management system is aimed at
properly evaluating, assessing and ensuring customer compliance with
relevant E&S requirements and encourages clients to take corrective
action & mitigation plans.
The core element of our ESMS is a self declared policy framework which
includes due-diligence (rapid, sustainability, client risk assessment,
project/activity risk categorization and if required site visiting),
appraisal (analysis of E&S impacts and client''s capacity & commitment
to address them), mitigation measures, action plans, monitoring &
review of ongoing projects, training & workshop and continuous
improvement of the system. By following ESMS practice, your Company has
been able to create awareness in the market regarding relevance of E&S
issues and their impacts on the society and the environment.
Your Company does not invest in any projects that do not comply with
the environmental & social norms and laws of the Country. Your Company
neither participates nor invests in certain activities and industries,
which fall in the exclusion list of your Company. In your Company, a
full scale E&S due- diligence is carried out for any business activity
as per International Finance Corporation (IFC) Performance
Standards and Country''s E&S Laws, Rules & Notifications, based on which
a ''go'' or ''no go'' decision is given by ESMS team.
Another sustainability strategy of your Company is to increase
investment in green projects steadily. Your Company monitors & reviews
the invested projects on a regular basis whereas shortfalls or
misconducts are rectified by framing action plans for the same. Your
Company continuously updates and upgrades the ESMS policy framework
from time to time. Over the past years, your Company has been able to
successfully manage, reduce and control the E&S risks associated with
its portfolio. In FY 2012-13, your Company rejected several business
opportunities due to non-conformity to E&S policy like absence of
sufficient regulatory clearances, public interest litigation, land and
other issues. On the other hand, your Company has encouraged
sustainable development by investing in various renewable energy
projects.
As a part of its sustainability strategy, your Company has entered into
a capacity development agreement with Nederlandse
Financierings-Maatschappij voor Ontwikkelingslanden N.V. (FMO)
[Netherlands Development Finance Company] and Oesterreichische
Entwicklungbank AG (OeEB) [Development Bank of Austria] to launch a
Corporate Rollout
Programme (CRP) on ESMS for its clients across the Country for carrying
out business with better management of E&S risks, thereby enhancing
your Company''s brand image in the market. The ESMS-CRP will help
clients to build their own sector specific ESMS Policy, facilitate
training program on different ESHS (Environmental, Social, Health &
Safety) issues, frame action plans against identified E&S risks and
assist them in obtaining ISO standard E&S certificates. Your Company
believes in a sustainable finance business approach by considering
conservation, management & sustainable use of human & natural
resources. This endeavour helps in creating a strong & confident long
term relationship with its stakeholders.
CORPORATE SOCIAL RESPONSIBILITY
With a view to contribute towards the betterment and welfare of the
society and discharge its Corporate Social Responsibility, the Board of
Directors of your Company granted approval for making donations in any
financial year upto an aggregate maximum limit of 2 per cent of its Net
profits in that financial year.
Recognising its social responsibility, your Company had established a
public charitable trust in the name of ''Srei Foundation'' with the
objective of granting scholarships and other financial assistance to
deserving and talented candidates. The Fund also supports setting up of
schools, colleges, medical and scientific research institutions.
Donations to Srei Foundation qualify for deduction under Section 80G of
the Income Tax Act, 1961. Your Company has granted donation of
Rs.50,00,000/- (Rupees Fifty Lakhs only) to Srei Foundation during the
financial year 2012-13.
Your Company also made donations aggregating to Rs.15,50,000/- (Rupees
Fifteen Lakhs Fifty Thousand only) to Suryodaya Schools, a division of
USD Edu World, established with the intent to promote and spread
education among the under-privileged and weaker sections of the
society.
A donation of Rs.12,50,000/- (Rupees Twelve Lakhs and Fifty Thousand
only) was also made to Gyan Prakash Foundation, a public charitable
trust set up to develop sustainable and scalable models of
self-learning that taps a child''s natural curiosity and ability to
explore, discover and learn with the ultimate aim of teaching the
underprivileged children all over the country.
Your Company also promotes all- round development of a clean
environment and help in propagating and imparting education for the
betterment of agriculture / horticulture and other similar activities.
Your Company is fully aware of the fact that as a corporate citizen, it
is
also entrusted with the responsibility to contribute for the betterment
of the community at large. During the year under review, your Company
supported a variety of charitable projects and social welfare
activities and has contributed an aggregate sum of Rs.79,84,301/- (Rupees
Seventy Nine Lakhs Eighty Four Thousand and Three Hundred One only) to
several welfare and charitable organisations.
CORPORATE GOVERNANCE
Your Company has always practised sound corporate governance and takes
necessary actions at appropriate times for enhancing and meeting
stakeholders'' expectations while continuing to comply with the
mandatory provisions of corporate governance.
A separate section on Corporate Governance and a Certificate from the
Auditors of your Company regarding compliance with the requirements of
corporate governance as stipulated under Clause 49 of the Listing
Agreement with the Stock Exchanges, form part of the Annual Report.
During the year under review, your Company has been recognised as the
"Best Entity in the area of Corporate Governance" by the ET Bengal
Corporate Awards organised by the Association of Corporate Advisers and
Executives, Kolkata and The Economic Times.
TRANSFER TO INVESTOR EDUCATION & PROTECTION FUND (IEPF)
During the year under review, your Company has transferred a sum of
Rs.3,59,234/- to the investor Education & Protection Fund (IEPF) of the
Central Government, the dividend amount pertaining to the financial
year ended on March 31, 2005, which was due & payable and remained
unclaimed and unpaid for a period of seven years, as provided in
Section 205A(5) of the Companies Act, 1956. Cumulatively, the dividend
amount transferred to the said Fund upto March 31, 2013 was
Rs.31,93,076.69/-.
SUBSIDIARY COMPANIES
During the year under review, the name of IIS International
Infrastructure Services GmbH, Germany, a subsidiary of your Company,
was changed to ''Srei International Infrastructure Services GmbH''
(SIIS) w.e.f. September 14, 2012. Further, the Share Capital of Srei
Advisors Pte. Limited, Singapore, a wholly owned subsidiary of SIIS and
a step down subsidiary of your Company, was enhanced from SGD 70,100 to
SGD 370,100 (Singapore Dollars Three Hundred Seventy Thousand and One
Hundred only) consequent upon infusion of 300000 ordinary shares of SGD
1/- each in tranches aggregating to SGD 300,000 (Singapore Dollars
Three Hundred Thousand only) by SIIS.
Moreover, subsequent to the transfer of 49 per cent of the share
capital of Aalat LLC (Aalat) (a joint venture company between SIIS and
Al Waha Capital PJSC) by SIIS to Al Waha Capital PJSC and Al Waha
Maritime LLC, Aalat has ceased to be a Joint Venture of SIIS, your
Company''s subsidiary, w.e.f. November 28, 2012.
Further, Quippo Prakash Pte. Limited, Singapore has ceased to be a sub-
subsidiary of your Company w.e.f. August 28, 2012 consequent upon the
sale of 51 ordinary shares held by Quippo Oil & Gas Infrastructure
Limited (QOGIL), a subsidiary of your Company, and 73900 ordinary
shares held by Quippo Prakash Marine Holdings Pte. Limited, Singapore,
(QPMHPL) a subsidiary of QOGIL, to Geomark Sdn Bhd., Malaysia.
Further, Quippo Prakash Marine Holdings Pte. Limited, Singapore, has
ceased to be a sub-subsidiary of your Company w.e.f. November 26, 2012
consequent upon the sale of 51 ordinary shares held by Quippo Oil & Gas
Infrastructure Limited (QOGIL), a subsidiary of your Company, to MDL
Marine Holdings Pte. Ltd., Singapore.
Further, Quippo Construction Equipment Limited (QCEL) has ceased to be
a subsidiary of your Company w.e.f. March 31, 2013 pursuant to infusion
of fresh capital in QCEL. Consequently, QCEL has become an associate of
your Company w.e.f. March 31, 2013.
Further, Quippo CJ Exploration and Production Private Limited was
incorporated on May 01, 2013 as a subsidiary of Quippo Oil and Gas
Infrastructure Limited, a subsidiary of your Company.
During the year under review, the Authorised Share Capital of Srei
Sahaj e-Village Limited (Sahaj), a subsidiary of your Company, was
increased from Rs.10 Crores to Rs.25 Crores. Further, consequent to
transfer of 3.90 per cent stake by Opulent Venture Capital Trust and
further issue of 10000000 Equity shares of Rs.10 each by Sahaj on
preferential basis to Mr. Anil Choudhary, Trustee representing Srei
Venture Capital Trust A/c - IPDC, Sahaj has ceased to be a subsidiary
of your Company and has become an associate w.e.f. August
13, 2012. Subsequent to the de- subsidiarisation, the name of Sahaj was
changed to ''Sahaj e-Village Limited'' w.e.f. August 21, 2012.
Further, your Company enhanced its stake from 47.55 per cent to 48.32
per cent in Sahaj by way of further subscription.
Further, the Certificate of Registration of Srei Venture Capital
Limited (SVCL), a wholly owned subsidiary of your Company, granted by
Securities and Exchange Board of India (SEBI), for acting as a Venture
Capital Fund, has been surrendered to SEBI on February 14, 2013 for
cancellation since the Company is presently not acting as a Venture
Capital Fund in lieu of notification of SEBI (Alternative Investment
Funds) Regulations, 2012.
The Statement pursuant to Section 212 of the Companies Act, 1956,
containing details of your Company''s subsidiaries in India and
Overseas, forms part of the Annual Report.
In compliance with General Circular No: 2/2011 dated February 08, 2011
of Government of India, Ministry of Corporate Affairs, the audited
statement of accounts along with the reports of the Board of Directors
and Auditors relating to your Company''s subsidiaries in India and
Overseas are not annexed as required under Section 212 of the Companies
Act, 1956. Shareholders who wish to have a copy of the full report and
accounts of the aforesaid subsidiary companies will be provided the
same by the Company Secretary on receipt of a written request from
them. These documents will also be available for inspection by any
shareholder at the Registered OfficeofyourCompanyand the concerned
subsidiary companies during business hours on all working days.
Further, the documents shall be available on the website of your
Company. However, as directed by the Ministry of Corporate Affairs,
Government of India, the financial data of the subsidiaries have been
separately furnished and forms part of the Annual Report. Further, in
line with the Listing Agreement with the Stock
Exchanges and in accordance with the Accounting Standard 21 (AS-21),
Consolidated Financial Statements prepared by your Company include
financial information of its subsidiary companies.
PARTICULARS OF EMPLOYEES
The names and other particulars of the employees as required under
Section 217(2A) of the Companies Act, 1956 read with the Companies
(Particulars of Employees) Rules, 1975, are set out in the annexure to
the Directors'' Report and form part of this report.
PARTICULARS OF CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN
EXCHANGE EARNINGS AND OUTFLOW
Your Company has no activity relating to Conservation of Energy and
Technology Absorption as stipulated in the Companies (Disclosure of
Particulars in the Report of Board of Directors) Rules, 1988. However,
your Company uses information technology extensively in its operations
and also continues its endeavour to improve energy conservation and
utilisation, safety and environment.
During the year under review, the total foreign exchange earnings and
expenditure of your Company was Rs.228 Lakhs and Rs.17,386 Lakhs
respectively (previous year Rs.117 Lakhs and Rs.18,972 Lakhs respectively).
SREI WEBSITE
The website of your Company, www. srei.com, has been redesigned to
present the Company''s businesses up-front on the home page. The
redesigned site carries a comprehensive database of information of
interest to the investors including the financial results of your
Company, dividend declared, unclaimed dividend list, shareholding
pattern, any price sensitive information disclosed to the regulatory
authorities from time to time, analyst reports, investor presentations,
standard downloadable forms, media coverage, corporate profile and
business activities of your Company and the services rendered by your
Company to its investors. The ''Investor Relations'' Section'' of your
Company''s website contains an array of information on investor
services, financials, listing of securities, dividend and Investors''
Frequently Asked Question (FAQs).
DIRECTORS
During the year under review, Dr. Martin Czurda and Dr. Punita Kumar
Sinha were appointed as Additional Directors of your Company w.e.f.
November 09,2012 and May 20,2013 respectively, with a view to broadbase
expertise of the Board of Directors. They shall hold office upto the
date of the ensuing Annual General Meeting of your Company. Your
Company has received individual notices from Members pursuant to
Section 257 of the Companies Act, 1956, signifying their intention to
propose the candidatures of Dr. Martin Czurda and Dr. Punita Kumar
Sinha for the office of Directors.
Mr. V. H. Pandya resigned as a Director of your Company w.e.f.
November 10, 2012 due to his personal preoccupations. The Board wishes
to place on record its sincere appreciation of the sterling
contribution made by Mr. Pandya towards the growth and development of
your Company through his wealth of knowledge and experience during his
long tenure of more than eighteen years as a Director of your Company.
Mr. Saud Ibne Siddique resigned as the Joint Managing Director of your
Company w.e.f. close of business hours on April 30, 2013 due to his
shifting back to Singapore in view of his urgent family needs. However,
he continued as a Director (Category
- Non-Executive) of your Company w.e.f. May01,2013. The Board wishes to
place on record deep appreciation of his contribution during his tenure
as the Joint Managing Director of your Company.
In accordance with the provisions of the Companies Act, 1956 and your
Company''s Articles of Association, Mr. Sunil Kanoria, Mr. S. Rajagopal
and Mr. Saud Ibne Siddique retire by rotation at the ensuing Annual
General Meeting (AGM) and being eligible, offer themselves for
re-appointment. All these Directors have filed Form DDA with your
Company as required under the Companies (Disqualification of Directors
under Section 274(1)(g) of the Companies Act, 1956) Rules, 2003. The
brief resume / details relating to Directors who are to be appointed /
re-appointed are furnished in the Notice of the ensuing AGM. The Board
of Directors of your Company recommends the re-appointment of all the
above Directors at the ensuing AGM.
In accordance with the approval of Central Government read with General
Circular No: 4/2011 dated March 04, 2011 of Government of India,
Ministry of Corporate Affairs, your Company has approved payment of
remuneration of Rs.50 Lakhs by way of commission on net profits
calculated under Section 198 of the Companies Act, 1956 to Non-
Executive Directors of your Company for the financial year 2012-13.
AUDIT COMMITTEE
The Audit Committee comprises of Mr. Salil K. Gupta, Mr. S. Rajagopal,
78
Mr. Sujitendra Krishna Deb, Mr. Shyamalendu Chatterjee, Non- Executive
& Independent Directors and Mr. Sunil Kanoria, Non-Executive Director.
Mr. Salil K. Gupta, Chief Mentor & Director of your Company is the
Chairman of the Audit Committee. The Company Secretary of your Company
acts as the Secretary to the Audit Committee.
DIRECTORS'' RESPONSIBILITY STATEMENT
In terms of provisions of Section 217(2AA) of the Companies Act, 1956
(Act), your Directors confirm that:
(i) in the preparation of the annual accounts for the financial year
ended March 31, 2013, the applicable accounting standards have been
followed along with proper explanation relating to material departures;
(ii) they have selected such accounting policies and applied them
consistently and made judgements and estimates that are reasonable and
prudent so as to give a true and fair view of the state of affairs of
your Company at the end of the financial year and of the profits of
your Company for the year;
(iii)they have taken proper and sufficient care for the maintenance of
adequate accounting records
in accordance with the provisions of this Act for safeguarding the
assets of your Company and for preventing and detecting fraud and other
irregularities; and
(iv)they have prepared the annual accounts for the financial year ended
March 31, 2013 on a going concern basis.
Further, your Directors confirm that your Company has adequate internal
systems and controls in place to ensure compliance of laws applicable
to your Company.
AUDITORS
Messrs Haribhakti & Co., Chartered Accountants having registration No.
103523W allotted by The Institute of Chartered Accountants of India
(ICAI), retire as Auditors of your Company at the conclusion of the
ensuing Annual General Meeting (AGM) and have confirmed their
eligibility and willingness to accept the office of Auditors, if
re-appointed. Your Company has received a confirmation from Messrs
Haribhakti & Co., Chartered Accountants to the effect that their
re-appointment, if made, would be within the limits prescribed under
Section 224(1B) of the Companies Act, 1956. They have also confirmed
that they hold a valid peer review certificate as prescribed under
Clause 41(1)(h) of the Listing Agreement.
The Audit Committee and the Board of Directors of your Company
recommend the re-appointment of Messrs Haribhakti & Co., Chartered
Accountants, as the Auditors of your Company. Members are requested to
consider their re-appointment as Auditors of your Company to hold
office from conclusion of ensuing AGM to the conclusion of next AGM on
remuneration to be decided by the Board of Directors based on
recommendation of the Audit Committee of your Company.
SECRETARIAL AUDIT REPORT
As a measure of good Corporate Governance practice, your Company
appointed Dr. K. R. Chandratre, Practising Company Secretary, to
conduct the Secretarial Audit. The Secretarial Audit Report for the
financial year ended March 31, 2013 is provided in the Annual Report.
The Secretarial Audit Report confirms that your Company has complied
inter alia with all the applicable provisions of the Companies Act,
1956, Depositories Act, 1996, Listing Agreements with the Stock
Exchanges, Securities Contracts (Regulation) Act, 1956 and all the
Regulations and Guidelines of SEBI as applicable to your Company,
including the SEBI (Substantial Acquisition of Shares and Takeovers)
Regulations, 2011 and the SEBI (Prohibition of Insider Trading)
Regulations, 1992.
ACKNOWLEDGEMENT
Your Directors would like to express their grateful appreciation for
the excellent support and co-operation received from the Financial
Institutions, Banks, Central & State Government Authorities, RBI, SEBI,
Ministry of Corporate Affairs (MCA), Registrar of Companies, Indian and
Overseas Stock Exchanges, Depositories, Credit Rating Agencies,
Customers, Manufacturers, Vendors, Suppliers, Business Associates,
Shareholders and other Stakeholders during the year under review. Your
Directors also place on record their deep appreciation for the valuable
contribution of the employees at all levels for the progress of your
Company during the year and look forward to their continued
co-operation in realisation of the corporate goals in the years ahead.
On behalf of the Board of Directors
Hemant Kanoria Chairman & Managing
Director
Kolkata, May 20, 2013
Mar 31, 2012
The Directors are pleased to present the Twenty Seventh Annual Report
together with the Audited Accounts of your Company for the financial
year ended March 31, 2012. The summarised consolidated and standalone
financial performance of your Company is as follows:
Financial Results (Rs. in Lakh)
Consolidated Standalone
Year ended Year ended Year ended Year ended
March 31, 2012 March 31, 2011 March 31, 2012 March 31,
2011
Total
Revenue 2,44,633 1,63,809 1,18,069 74,624
Total
Expenses
(including
depreciation
etc.) 2,12,504 1,27,072 1,05,017 52,213
Profit
before bad
debts,
provisions &
tax 32,129 36,737 13,052 22,411
Bad Debts
& Provisions
etc. 8,452 7,840 2,173 1,197
Profit
Before Tax 23,677 28,897 10,879 21,214
Current
Tax 5,466 8,267 1,760 4,185
Mat Credit
entitlement (189) (94) (49) -
Deferred Tax 3,674 (203) 1,198 3,350
Income Tax
in respect of
earlier years 2,411 1,309 2,174 249
Profit After
Tax before
Minority
Interest 12,315 19,618 5,796 13,430
Minority
Interests 1,134 1,694 - -
Net Profit 11,181 17,924 - -
Pre
Acquisition
Profit/(Loss) - 474 - -
Minority
Interests of
Pre
Acquisition
Profit/(Loss) (39) (474) - -
Profit After
Tax after
adjustment
of Minority
Interests 11,142 17,924 - -
Adjustment
on account
of
Amalgamation - (570) - -
Surplus
brought
forward
from
Previous
Year 30,339 25,618 23,791 19,679
Profit
Available
For
Appropriation 41,481 42,972 29,587 33,109
Paid up
Equity
Share
Capital 50,324 50,324 50,324 50,324
Amount
transferred
to Reserves 9,965 8,227 4,193 4,918
OPERATIONAL REVIEW
Your Company is one of the leading private sector infrastructure
financing institutions in India. Some of the key highlights of your
Company's performance during the year under review are:
The gross profit (before depreciation/ amortisation, bad debts,
provision and tax) is Rs.14,592 lakh as against Rs.24,219 lakh in the last
year.
Profit before taxation is Rs.10,879 lakh as against Rs.21,214 lakh in the
last year.
Net profit after taxation is Rs.5,796 lakh as against Rs.13,430 lakh in the
last year.
The total assets under management of the Srei Group is Rs.30,76,435 lakh
as against Rs.20,50,524 lakh in the last year.
The Consolidated Financial Statements have been prepared by your
Company in accordance with the requirements of the accounting standards
notified by the Central Government under the Companies (Accounting
Standards) Rules, 2006. The audited Consolidated Financial Statements
together with
Auditors Report thereon forms part of the Annual Report.
The capital adequacy ratio (CAR) of your Company stood at 20.17 per
cent as on March 31, 2012, well above the regulatory minimum level of
15 per cent prescribed by the Reserve Bank of India for systemically
important non- deposit taking NBFCs (NBFCs-ND-SI). Of this, the Tier I
CAR was 14.59 per cent.
Your Company has complied with all the norms prescribed by the Reserve
Bank of India (RBI) including the Fair practices, Anti money laundering
& Know your customer (KYC) guidelines and also all the mandatory
accounting standards notified by the Central Government under the
Companies (Accounting Standards) Rules, 2006. It has adopted a sound
and forward looking accounting policy of providing for non performing
assets in terms of the management's best estimates as well as the
guidelines laid down by the Foreign Financial Institutions, which are
more stringent than the guidelines of the RBI.
AMALGAMATION OF QUIPPO INFRASTRUCTURE EQUIPMENT LIMITED INTO AND WITH
YOUR COMPANY
The Scheme of Amalgamation of Quippo Infrastructure Equipment Limited
(Quippo) into and with your Company was approved by the Hon'ble High
Court at Calcutta vide its Order made on January 18, 2011. The Scheme
has become effective w.e.f. March 04, 2011 after filing of certified
copy of the Order with the Registrar of Companies, West Bengal at
Kolkata. Consequently, all the assets and liabilities and the entire
business of Quippo stand transferred to and vested in your Company, as
a going concern, with effect from the Appointed Date i.e. April 01,
2010.
During the year under review, an application for dissolution without
winding up of Quippo was filed before the Hon'ble High Court at
Calcutta which approved the same vide its Order dated November 22,
2011. The said dissolution has become effective w.e.f. December 21,
2011 after filing of certified copy of the Order with the Registrar of
Companies, West Bengal at Kolkata.
During the year under review, your Company has been notified as a
Public Financial Institution (PFI) under Section 4A of the Companies
Act, 1956 by the Ministry of Corporate Affairs (MCA), Government of
India vide its notification dated September 26, 2011.
PUBLIC DEPOSITS
In April 2010, your Company decided to convert itself into a
non-deposit taking NBFC in order to qualify for registration as an
'Infrastructure Finance Company'. Your Company had decided that it
would not accept any further public deposits or renew such maturing
deposits in any manner w.e.f. April 20, 2010 and the entire amount of
outstanding public deposits as on April 19, 2010 together with interest
promised to the depositors, has been kept in an Escrow Account with
Axis Bank Limited, a scheduled commercial bank for the purpose of
making payment to the depositors as and when they raise the claim. The
amount payable to the depositors as on March 31, 2012 is Rs.49,73,000/-.
During the year under review, your Company has not accepted any
deposits from the public within the meaning of the provisions of the
Non- Banking Financial Companies Acceptance of Public Deposits (Reserve
Bank) Directions, 1998.
PUBLIC FINANCIAL INSTITUTION (PFI)
During the year under review, your Company has been notified as a
Public Financial Institution (PFI) under Section 4A of the Companies
Act, 1956 by the Ministry of Corporate Affairs (MCA), Government of
India vide its notification dated September 26, 2011.
MUTUAL FUND ACTIVITY
During the year under review, the
Securities and Exchange Board of India (SEBI) has permitted your
Company to set up a Mutual Fund for Infrastructure Debt Fund Schemes.
Accordingly, your Company is in the process of complying with the
necessary requirements for the grant of Certificate of Registration for
the Mutual Fund.
PROMOTERS GROUP SHAREHOLDING
The Promoters' Group of your Company has increased their net
shareholding in your Company during the year by 0.85 per cent from
46.22 per cent to 47.07 per cent, through the creeping acquisition
route allowed as per SEBI (Substantial Acquisition of Shares and
Takeovers) Regulations, 2011.
The Promoters' Group has shown increased commitment to the business
strategy and substantial growth of your Company and your Company
believes that this will result in enhanced value for all the
stakeholders.
As on March 31, 2012, 17.23 per cent (out of 47.07 per cent) of
shareholding held by the Promoters' Group of your Company is under
pledge.
PUBLIC ISSUE OF LONG TERM INFRASTRUCTURE BONDS IN THE NATURE OF SECURED
REDEEMABLE NON- CONVERTIBLE DEBENTURES
Your Company was classified by the
RBI as 'Infrastructure Finance Company' (IFC) within the overall
classification of 'Non Banking Finance Company' in March, 2011.
Consequently, your Company became eligible to issue Long Term
Infrastructure Bonds eligible for deduction under Section 80CCF of
Income Tax Act, 1961.
During the year under review, your Company raised Rs.24,88,56,000 (Rupees
Twenty four crore eighty eight lakh fifty six thousand only) through
the public issue of Long Term Infrastructure Bonds of face value of
Rs.1000 each, in the nature of Secured Redeemable Non-convertible
Debentures (the Bonds), eligible for deduction under Section 80CCF of
the Income Tax Act, 1961. The issue opened on December 31, 2011 and
closed on March 06, 2012. The Bonds were thereafter allotted on March
22, 2012. These Bonds are listed on the Wholesale Debt Market (WDM)
Segment of the Bombay Stock Exchange Limited (BSE). The entire proceeds
have been utilised for the purpose of 'Infrastructure Lending' in terms
of Central Board of Direct Taxes (CBDT) Notification dated September
09, 2011.
The public issue of Long Term Infrastructure Bonds has not only
facilitated diversification of your Company's sources for mobilising
long term resources but has also provided the retail investors an
opportunity to participate in India's infrastructure development and
progress. The various communication efforts of your
Company surrounding the Bonds played a meaningful role in enhancing
your Company's brand image amongst relevant constituencies.
UNSECURED SUBORDINATED BONDS
In the year 2000, your Company had issued on rights basis 52,66,075
Unsecured Subordinated Bonds of Rs.100/- each aggregating to
Rs.52,66,07,500/- vide Letter of Offer dated June 16, 2000. Each Bond has
an overall tenure of 12 years, reckoned from the date of allotment viz.
August 25, 2000 and the face value of the Bonds along with an overall
premium of 20 per cent of the original face value is to be redeemed in
seven installments, commencing from the completion of sixth year from
the date of allotment.
Your Company has accordingly redeemed on August 25, 2011, being sixth
redemption date, Rs.15/- towards principal amount and Rs.3/- towards
premium amount total aggregating to Rs.18/- per Unsecured Subordinated
Bond and the face value of the aforesaid Bonds accordingly stands
reduced to Rs.10/- per Bond. The aggregate principal amount outstanding
as on March 31, 2012 is Rs.5.27 crore.
DIVIDEND
Your Company has had a consistent dividend policy that balances the
dual objectives of appropriately rewarding shareholders through
dividends and retaining capital, in order to maintain a
healthy capital adequacy ratio to support long term growth of your
Company. Consistent with this policy, your Board has recommended a
Dividend of Rs.0.50 per Equity Share (5 per cent) for the Financial year
2011-12 to the Equity shareholders of your Company. The Dividend shall
be subject to tax on dividend to be paid by your Company but will be
tax-free in the hands of the shareholders.
CORPORATE SOCIAL RESPONSIBILITY
Recognising its social responsibility, your Company had established a
public charitable trust in the name of 'Srei Foundation' with the
objective of granting scholarships and other financial assistance to
deserving and talented candidates. The Fund also supports setting up of
schools, colleges, medical and scientific research institutions.
Donations to Srei Foundation qualify for deduction under Section 80G of
the Income Tax Act, 1961. Your Company has granted donation of Rupees
Fifty lakh to Srei Foundation during the financial year 2011-12.
Your Company also promotes all-round development of a clean environment
and help in propagating and imparting education for the betterment of
agriculture / horticulture and other similar activities.
Your Company is fully aware of the fact that as a corporate citizen, it
is also entrusted with the responsibility to contribute for the
betterment of the community at large. During the year under review,
your Company supported a variety of charitable projects and social
welfare activities and has contributed a sum of Rs.82,13,082/- (Rupees
Eighty two lakh thirteen thousand and eighty two only) to several
welfare and charitable organisations.
CORPORATE GOVERNANCE
Your Company has always practised sound corporate governance and takes
necessary actions at appropriate times for enhancing and meeting
stakeholders' expectations while continuing to comply with mandatory
provisions of corporate governance.
A separate section on Corporate Governance and a Certificate from the
Auditors of your Company regarding compliance with the requirements of
corporate governance as stipulated under Clause 49 of the Listing
Agreement with the Stock Exchanges, form part of the Annual Report.
TRANSFER TO INVESTOR EDUCATION & PROTECTION FUND
During the year under review, your
Company has transferred a sum of Rs.3,54,549/- to the Investor Education
& Protection Fund, the dividend amount which was due & payable and
remained unclaimed and unpaid for a period of seven years, as provided
in Section 205A(5) of the Companies Act, 1956. Cumulatively, the
dividend amount transferred to the said Fund upto March 31, 2012 was
Rs.28,33,842.69.
SUBSIDIARY COMPANIES
During the year under review, the Share Capital of Srei Mutual Fund
Asset Management Private Limited, a wholly owned subsidiary of your
Company was enhanced to Rs.13 crore (Rupees Thirteen crore only)
consequent upon infusion of fresh capital by your Company.
Your Company enhanced its aggregate stake from 99.80 per cent to 99.90
per cent in Quippo Oil & Gas Infrastructure Limited, a subsidiary of
your Company by acquisition of 30,000 equity shares. IIS International
Infrastructure Services GmbH (IIS), Germany, a subsidiary of your
Company has enhanced its stake in Zao Srei Leasing, Russia, a sub-
subsidiary of your Company, from 57.14 per cent to 64.20 per cent by
acquisition of 25,950 equity shares. Further, IIS has infused further
capital of SGD 50,000 (Singapore Dollars Fifty Thousand only) in Srei
Advisors Pte. Limited, Singapore, a wholly owned subsidiary of IIS.
Quippo Infocomm Limited (QIL) has ceased to be a sub- subsidiary of
your Company w.e.f. July 16, 2011 consequent upon sale of 43,000 equity
shares of QIL by Srei Infrastructure Advisors Limited, a subsidiary of
your Company, at par value.
Further, Quippo Construction Equipment Limited (QCEL), a subsidiary of
your Company reduced its stake from 68 per cent to 40.28 per cent in
Kasco Steel Limited (KSL) pursuant to which KSL ceased to be a
sub-subsidiary of your Company w.e.f. September 22, 2011.
Subsequently, QCEL disposed off its entire shareholding in KSL on
December 03, 2011.
Further, Quippo Holding Cooperatief U.A., Netherlands, a subsidiary of
Quippo Oil and Gas Infrastructure Limited and Quippo International
B.V., Netherlands, a subsidiary of Quippo Holding Cooperatief U.A.,
Netherlands were liquidated w.e.f. February 13, 2012. Quippo Mara
Infrastructure Limited, British Virgin Islands, a subsidiary of Quippo
International B.V., Netherlands ceased to be a sub- subsidiary of your
Company w.e.f. February 13, 2012 on account of liquidation of its
holding company.
During the year under review, Quippo Mauritius Private Limited,
Mauritius was incorporated on March 05, 2012 as a wholly owned
subsidiary of Quippo Energy Private Limited, a wholly owned subsidiary
of your Company. Thereafter, Quippo Energy Nigeria Private Limited,
Nigeria was incorporated on March 22, 2012 as a wholly owned subsidiary
of Quippo Mauritius Private Limited,
Mauritius.
Further, consequent upon receipt of requisite approvals of the
regulatory authorities, your Company has acquired 51 per cent
shareholding in Srei Insurance Broking Private Limited (SIBPL) and
hence, SIBPL has become a subsidiary of your Company w.e.f. March 31,
2012.
The Statement pursuant to Section 212 of the Companies Act, 1956,
containing details of your Company's subsidiaries in India and
Overseas, forms part of the Annual Report.
In compliance with General Circular No: 2/2011 dated February 08, 2011
of Government of India, Ministry of Corporate Affairs, the audited
statement of accounts along with the reports of the Board of Directors
and Auditors relating to your Company's subsidiaries in India and
Overseas are not annexed as required under Section 212 of the Companies
Act, 1956. Shareholders who wish to have a copy of the full report and
accounts of the aforesaid subsidiary companies will be provided the
same by the Company Secretary on receipt of a written request from
them. These documents will also be available for inspection by any
shareholder at the Registered Office of your Company and the concerned
subsidiary companies during business hours on all working days.
Further, the documents shall be available on the website of your
Company. However, as directed by the Ministry of Corporate Affairs,
Government of India, the financial data of the subsidiaries have been
separately furnished and form part of the Annual Report. Further, in
line with the Listing Agreement with the Stock Exchanges and in
accordance with the Accounting Standard 21 (AS- 21), Consolidated
Financial Statements prepared by your Company include financial
information of its subsidiary companies.
PARTICULARS OF EMPLOYEES
The names and other particulars of the employees as required under
Section 217(2A) of the Companies Act, 1956 read with the Companies
(Particulars of Employees) Rules, 1975, are set out in the annexure to
the Directors' Report and form part of this report.
PARTICULARS OF CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN
EXCHANGE EARNINGS AND OUTFLOW
Your Company has no activity relating to Conservation of Energy and
Technology Absorption as stipulated in the Companies (Disclosure of
Particulars in the Report of Board of Directors) Rules, 1988. However,
your Company uses information technology extensively in its operations.
During the year under review, the total foreign exchange earnings and
expenditure of your Company was Rs.117 lakh and Rs.18,972 lakh respectively
(previous year Rs.238 lakh and Rs.10,953 lakh respectively).
SREI WEBSITE
The website of your Company, www.srei.com, has been redesigned to
present the Company's businesses up- front on the home page. The
redesigned site carries a comprehensive database of information of
interest to the investors including the financial results of your
Company, dividend declared, shareholding pattern, any price sensitive
information disclosed to the regulatory authorities from time to time,
analyst reports, investor presentations, media coverage, corporate
profile and business activities of your Company and the services
rendered by your Company to its investors.
DIRECTORS
During the year under review, Mr. Kishore Kumar Mohanty resigned as
Director of your Company w.e.f. June 07, 2011 due to his personal
preoccupations. The Board wishes to place on record its sincere
appreciation of the sterling contribution made by Mr. Mohanty towards
the growth and development of your Company through his wealth of
knowledge and experience during his long tenure of over ten years as a
Director of your Company.
Further, Mr. Avinder Singh Bindra resigned as Director of your Company
w.e.f. February 07, 2012 due to his personal preoccupations. The Board
wishes to place on record deep appreciation of the contribution, advice
and guidance extended by him during his tenure as a Director of your
Company.
Mr. Saud Ibne Siddique was re- appointed as the Joint Managing Director
of your Company for a further period of 3 (three) years w.e.f. April
01, 2012 based on the recommendation of the Compensation Committee of
your Company. In accordance with the provisions of Section 302 of the
Companies Act, 1956, the Members were furnished an abstract of the
terms of re-appointment and payment of remuneration to Mr. Saud Ibne
Siddique as Joint Managing Director of your Company.
Further, the status of directorship of Mr. Shyamalendu Chatterjee was
changed from being a Non-Executive Director to an Independent Director
w.e.f. April 01, 2012 in accordance with Clause 49I(A) of the Listing
Agreement.
In accordance with the provisions of the Companies Act, 1956 and your
Company's Articles of Association, Mr. Salil K. Gupta, Mr. Shyamalendu
Chatterjee and Dr. Satish C. Jha retire by rotation at the ensuing
Annual General Meeting (AGM) and being eligible, offer themselves for
re- appointment. All these Directors have filed Form DDA with your
Company as required under the Companies (Disqualification of Directors
under Section 274(1)(g) of the Companies Act, 1956) Rules, 2003. The
brief resume / details relating to Directors who are to be appointed /
re-appointed are furnished in the Notice of the ensuing AGM. The Board
of Directors of your Company recommends the re- appointment of all the
above Directors at the ensuing AGM.
In accordance with the approval of Central Government read with General
Circular No: 4/2011 dated March 04, 2011 of Government of India,
Ministry of Corporate Affairs, your Company has approved payment of
remuneration of Rs.50 lakh by way of commission on net profits calculated
under Section 198 of the Companies Act, 1956 to Non- executive
Directors of your Company for the financial year 2011-12.
AUDIT COMMITTEE
The Audit Committee comprises of Mr. Salil K. Gupta, Mr. V. H. Pandya,
Mr. S. Rajagopal, Mr. Sujitendra Krishna Deb, Mr. Shyamalendu
Chatterjee, Independent & Non Executive Directors and Mr. Sunil
Kanoria, Non Executive Director. Mr. Salil K. Gupta, Chief Mentor &
Director of your Company is the Chairman of the Audit Committee.
DIRECTORS
RESPONSIBILITY
STATEMENT
In terms of provisions of Section 217(2AA) of the Companies Act, 1956
(Act), your Directors confirm that:
(i) In the preparation of the annual accounts for the financial year
ended March 31, 2012, the applicable accounting standards have been
followed along with proper explanation relating to material departures;
(ii) the Directors have selected such accounting policies and applied
them consistently and made judgements and estimates that are reasonable
and prudent so as to give a true and fair view of the state of affairs
of your Company at the end of the financial year and of the profit of
your Company for the year;
(iii) the Directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of this Act for safeguarding the assets of your Company and
for preventing and detecting fraud and other irregularities; and
(iv) the Directors have prepared the annual accounts for the financial
year ended March 31, 2012 on a going concern basis.
AUDITORS
Messrs Haribhakti & Co., Chartered Accountants having registration No.
103523W allotted by The Institute of Chartered Accountants of India
(ICAI), retire as Auditors of your Company at the conclusion of the
ensuing Annual General Meeting (AGM) and have confirmed their
eligibility and willingness to accept the office of Auditors, if
re-appointed. Your Company has received a confirmation from Messrs
Haribhakti & Co., Chartered Accountants to the effect that their
re-appointment, if made, would be within the limits prescribed under
Section 224(1B) of the Companies Act, 1956. They have also confirmed
that they hold a valid peer review certificate as prescribed under
Clause 41(1)(h) of the Listing Agreement.
The Audit Committee and the Board of Directors of your Company
recommend the re-appointment of Messrs Haribhakti & Co., Chartered
Accountants, as the Auditors of your Company. Members are requested to
consider their re-appointment as Auditors of your Company to hold
office from conclusion of ensuing AGM to the conclusion of next AGM on
remuneration to be decided by the Board of Directors based on
recommendation of the Audit Committee of your Company.
SECRETARIAL AUDIT REPORT
As a measure of good corporate governance practice, your Company
appointed Dr. K. R. Chandratre, Practising Company Secretary, to
conduct the Secretarial Audit. The Secretarial Audit Report for the
financial year ended March 31, 2012 is provided in the Annual Report.
The Secretarial Audit Report confirms that your Company has complied
inter alia with all the applicable provisions of the Companies Act,
1956, Depositories Act, 1996, Listing Agreements with the Stock
Exchanges, Securities Contracts (Regulation) Act, 1956 and all the
Regulations and Guidelines of SEBI as applicable to your Company,
including the SEBI (Substantial Acquisition of Shares and Takeovers)
Regulations, 2011 and the SEBI (Prohibition of Insider Trading)
Regulations, 1992.
ACKNOWLEDGEMENT
Your Directors would like to express their grateful appreciation for
the excellent support and co-operation received from the Financial
Institutions, Banks, Central & State Government Authorities, RBI, SEBI,
Ministry of Corporate Affairs (MCA), Registrar of Companies, Indian and
Overseas Stock Exchanges, Depositories, Credit Rating Agencies,
Customers, Manufacturers, Vendors, Suppliers, Business Associates,
Shareholders and other Stakeholders during the year under review. Your
Directors also place on record their deep appreciation for the valuable
contribution of the employees at all levels for the progress of your
Company during the year and look forward to their continued co-
operation in realisation of the corporate goals in the years ahead.
On behalf of the Board of Directors
Kolkata Hemant Kanoria
May 14, 2012 Chairman & Managing Director
Mar 31, 2011
The Directors are pleased to present the Twenty Sixth Annual Report
together with the Audited Accounts of your Company for the financial
year ended March 31, 2011. The summarised consolidated and standalone
financial performance of your Company is as follows:
Financial Results (Rs. in Lakh)
Consolidated Standalone
Year ended Year ended Year ended Year ended
March 31,
2011 March 31,
2010 March 31,
2011 March 31,
2010
Total Income 1,63,809 97,216 74,624 47,013
Total Expenditure 1,14,575 68,234 50,317 30,809
Profit before Depreciation 49,234 28,982 24,307 16,204
Depreciation 12,409 4,328 1,808 1,014
Profit Before Bad debts
/ Provisions and Tax 36,825 24,654 22,499 15,190
Bad Debts / Provisions etc. 7,928 2,888 1,285 377
Profit Before Tax 28,897 21,766 21,214 14,813
Provision for Current
Taxation 8,267 3,437 4,185 2,190
MAT Credit Entitlement (94) (2,190) - (2,190)
Deferred Tax (203) 4,619 3,350 3,440
Income Tax in respect of
earlier years 1,309 220 249 224
Profit After Tax 19,618 15,680 13,430 11,149
Minority Interest 1,694 94 - -
Surplus brought forward
from Previous Year 25,618 15,775 19,679 12,685
Adjustment on Amalgamation (570) - - -
Profit Available For
Appropriation 42,972 31,361 33,109 23,834
Paid up Equity Share
Capital 50,324 11,629 50,324 11,629
Amount transferred to
Reserves 7,539 4,118 4,918 2,530
OPERATIONAL REVIEW
Your Company is one of the leading private sector infrastructure
financing institutions in India. Some of the key highlights of your
Companys performance during the year under review are:
The gross profit (before depreciation, bad debts, provision and tax) is
Rs.24,307 lakh as against Rs.16,204 lakh in the last year.
Profit before taxation is Rs.21,214 lakh as against Rs.14,813 lakh in the
last year.
Net profit after taxation is Rs.13,430 lakh as against Rs.11,149 lakh in
the last year.
The total assets under management of the Srei Group is Rs.20,50,524 lakh
as against Rs.13,26,508 lakh in the last year.
The Consolidated Financial Statements have been prepared by your
Company in accordance with the requirements of the accounting standards
notified by the Central Government under the Companies (Accounting
Standards)
Rules, 2006. The audited Consolidated Financial Statements together
with Auditors Report thereon forms part of the Annual Report.
The Capital Adequacy Ratio of your Company was 29.36 per cent as on
March 31, 2011, which is above the minimum level of 15 per cent
prescribed by the Reserve Bank of India for systemically important non-
deposit taking NBFCs (NBFCs-ND-SI).
Your Company has complied with all the norms prescribed by the Reserve
Bank of India including the Fair Practices, Anti Money Laundering &
Know Your Customer (KYC) guidelines and also all mandatory accounting
standards notified by the Central Government under the Companies
(Accounting Standards) Rules, 2006. It has adopted a sound and forward
looking accounting policy of providing for non-performing assets in
terms of the managements best estimates as well as the guidelines laid
down by the Foreign Financial Institutions, which are more stringent
than the guidelines of the Reserve Bank of India.
AMALGAMATION OF QUIPPO INFRASTRUCTURE EQUIPMENT LIMITED INTO AND WITH
YOUR COMPANY
The Board of Directors of your Company at its meeting held on January
28, 2010 had, based on the recommendations of the Committee of
Independent Directors, approved amalgamation of Quippo Infrastructure
Equipment Limited (Quippo) into and with your Company in terms of a
Scheme of Amalgamation (Ãthe SchemeÃ) under Sections 391 to 394 of the
Companies Act, 1956. The Board had approved the share swap ratio of
3:2, meaning thereby 3 (Three) equity shares of Rs.10/- each fully
paid-up in your Company for every 2 (Two) equity shares of Rs.10/- each
fully paid-up in Quippo. Such swap ratio is based upon the reports
submitted by M/s. BDO Consulting Private Limited and KPMG India Private
Limited respectively, and the fairness of the same had been confirmed
by ICICI Securities Limited, an independent merchant banker. The
Appointed Date of the amalgamation was April 1, 2010.
The aforesaid Scheme of Amalgamation of Quippo into and with your
Company was approved by Equity shareholders of your Company with
requisite majority at the meeting held on May 31, 2010. Subsequently,
your Company filed the confirmation petition before the Honble High
Court at Calcutta and the Honble High Court at Calcutta has sanctioned
the Scheme vide its Order made on January 18, 2011. Thereafter, in
accordance with Clause 4.11 of the Scheme, the Company fixed Friday,
the February 11, 2011 as the Record Date for the purpose of issue and
allotment of 9,29,15,839 Equity shares of Rs.10/- each, fully paid-up as
bonus shares by way of capitalisation of reserves to the equity
shareholders of your Company in the ratio of 4 (four) equity shares of
Rs.10/- each (fully paid-up) for every 5 (five) equity shares of Rs. 10/-
each held by the equity shareholders of your Company as on the record
date. The Scheme has become effective w.e.f. March 04, 2011 after
filing of certified copy of the Order with the Registrar of Companies,
West Bengal at Kolkata. Consequently, all the assets and liabilities
and the entire business of Quippo stands transferred to and vested in
your Company, as a going concern, with effect from the Appointed Date.
Subsequently, pursuant to the aforesaid Scheme, your Company has, in
March, 2011, issued and allotted 9,29,15,839 Equity Shares of Rs.10/-
each fully paid up as bonus shares in the ratio of 4:5 to the Equity
shareholders of your Company by way of capitalisation of reserves and
29,40,25,696 Equity Shares of Rs.10/- each fully paid up in the adjusted
share exchange ratio of 27:10 to the shareholders of Quippo.
Fractional entitlements arising out of the aforesaid bonus issue were
allotted cumulatively to Mr. Salil K. Gupta, Chief Mentor & Director
(Category - Independent) of your Company, who held the said fractional
entitlement shares in trust as trustee for the members entitled
thereto, and had thereafter sold the said fractional bonus shares and
paid to your Company the net sale proceeds thereof, for distributing to
the members in proportion to and in lieu of their respective fractional
entitlements. The aforesaid net sale proceeds have thereafter been
distributed to the respective members in March, 2011.
Your Company constituted a Trust under the name and style of ÃSrei
Growth Trust consisting of Mr. Salil K. Gupta, Mr. V. H. Pandya and
Mr. S. Rajagopal, Independent Directors of your Company as Trustees to
the Trust, for the purpose of holding 4,86,00,000 Equity shares
allotted to your Company in terms of Clause 4.10 of the Scheme (in lieu
of 1,80,00,000 Equity shares held by your Company in Quippo) together
with any and all additions and accretions as may happen to the same in
future, who are holding the same in trust for the benefit of your
Company and/or the shareholders of your Company.
NON-ACCEPTANCE OF PUBLIC DEPOSITS AND APPLICATION TO RESERVE BANK OF
INDIA (RBI) FOR REGISTRATION AS AN ?INFRASTRUCTURE FINANCE COMPANY?
In April 2010, your Company decided to convert itself into a
non-deposit taking NBFC in order to qualify for registration as an
Infrastructure Finance Company. Your Company had decided that it would
not accept any further public deposits or renew such maturing deposits
in any manner w.e.f. April 20, 2010 and the entire amount of
outstanding public deposits as on April 19, 2010 together with interest
promised to the depositors has been kept in an Escrow Account with Axis
Bank Limited, a scheduled commercial bank for the purpose of making
payment to the depositors as and when they raise the claim. The
outstanding balance in the said Escrow Account is Rs.249,77,795 as on
March 31, 2011.
Further, during the year under review, your Company has been classified
by the Reserve Bank of India (RBI) as ÃInfrastructure Finance Company
within the overall classification of Non Banking Finance Company. A
fresh Certificate of Registration dated March 31, 2011 classifying your
Company as Infrastructure Finance Company - Non Deposit Taking has
thereafter been received from the RBI.
MUTUAL FUND ACTIVITY
Your Company received an in-principle approval during the financial
year 2009-10 from the Securities and Exchange Board of India (SEBI) for
setting up a Mutual Fund and the final approval is awaited.
UNSECURED SUBORDINATED BONDS
In the year 2000, your Company had issued on rights basis 52,66,075
Unsecured Subordinated Bonds of Rs.100/- each aggregating to
Rs.52,66,07,500/- vide Letter of Offer dated June 16, 2000. Each Bond has
an overall tenure of 12 years, reckoned from the date of allotment viz.
August 25, 2000 and the face value of the Bonds along with an overall
premium of 20 per cent of the original face value is to be redeemed in
seven installments, commencing from the completion of sixth year from
the date of allotment.
Your Company has accordingly redeemed on August 25, 2010, being the
fifth redemption date, Rs.15/- towards principal amount and Rs.3/- towards
premium amount total aggregating to Rs.18/- per Unsecured Subordinated
Bond and the face value of the aforesaid Bonds accordingly stands
reduced to Rs.25/- per Bond. The aggregate principal amount outstanding
as on March 31, 2011 is Rs.13.17 crore.
DIVIDEND
Your Board has recommended a Dividend of Re. 0.75 per Equity Share (7.5
per cent) for the Financial year 2010-11 to the Equity shareholders of
your Company. The Dividend for the Financial year 2010-11 shall be
subject to tax on dividend to be paid by your Company but will be
tax-free in the hands of the shareholders.
The dividend payout for the year under review has been formulated in
accordance with your Companys policy to pay sustainable dividend
linked to long term growth objectives of your Company to be met by
internal cash accruals and the shareholders aspirations.
CORPORATE GOVERNANCE
Your Company has always practised sound corporate governance and takes
necessary actions at appropriate times for enhancing and meeting
stakeholders expectations while continuing to comply with mandatory
provisions of corporate governance.
A separate section on Corporate Governance and a Certificate from the
Auditors of your Company regarding compliance with the requirements of
corporate governance as stipulated under Clause 49 of the Listing
Agreement with the Stock Exchanges, form part of the Annual Report.
TRANSFER TO INVESTOR EDUCATION & PROTECTION FUND
During the year under review, your Company has transferred a sum of
Rs.2,97,913/- to the Investor Education & Protection Fund, the dividend
amount which was due & payable and remained unclaimed and unpaid for a
period of seven years, as provided in Section 205A(5) of the Companies
Act, 1956. Cumulatively, the dividend amount transferred to the said
Fund upto March 31, 2011 was Rs.24,79,293.69.
SUBSIDIARY COMPANIES
The Share Capital of Srei Sahaj e- Village Limited, a subsidiary of
your Company increased to Rs.10 crore (Rupees Ten crore only) on
September 06, 2010 consequent upon infusion of fresh capital by your
Company. Similarly, the Share Capital of Srei Mutual Fund Asset
Management Private Limited, a wholly owned subsidiary of your Company
increased to Rs.11 crore (Rupees Eleven crore only) on March 31, 2011
consequent upon infusion of fresh capital by your Company. The name of
ÃSrei Infocomm Services Limited, a subsidiary of Srei Infrastructure
Advisors Limited, a subsidiary of your Company changed to ÃQuippo
Infocomm Limited w.e.f.
September 15, 2010.
Further, Srei Advisors Pte. Limited, Singapore became a wholly owned
subsidiary of IIS International Infrastructure Services GmbH, Germany,
a subsidiary of your Company, w.e.f. March 10, 2011 consequent upon
acquisition of balance 15 per cent shareholding.
Pursuant to the Scheme of Amalgamation (Scheme) of Quippo
Infrastructure Equipment Limited (Quippo) into and with your Company
sanctioned by the Honble High Court at Calcutta vide its Order made on
January 18, 2011 and effective w.e.f. March 04, 2011, subsidiary
companies of Quippo viz. Quippo Construction Equipment Limited, Quippo
Energy Private Limited, Mumbai Futuristic Economic Zone Private
Limited, Quippo Oil and Gas Infrastructure Limited and step down
subsidiary companies of Quippo viz. Quippo Prakash Marine Holdings Pte.
Ltd., Singapore, Quippo Prakash Pte. Ltd., Singapore, Quippo Holding
Cooperatief U.A., Netherlands, Quippo International B.V., Netherlands,
Quippo Energy Middle East Limited, Dubai, Quippo Energy Yemen Limited,
Yemen, Quippo Mara Infrastructure Limited, British Virgin Islands and
Kasco Steel Limited, have become subsidiaries and/or step down
subsidiaries of your Company w.e.f. March 04, 2011. Similarly,
GoIndustry Quippo Valuers and Auctioneers Private Limited (GoIndustry)
which was a 50:50 joint venture between Quippo and Go Industry Limited,
UK has become a Joint Venture between your Company and Go Industry
Limited, UK w.e.f. March 04, 2011. Thereafter, the entire shareholding
of Go Industry Limited, UK has been acquired by your Company and
consequently, GoIndustry has become a 100 per cent subsidiary of your
Company w.e.f. March 31, 2011. The name of the company has
subsequently changed to ÃQuippo Valuers and Auctioneers Private
Limitedà w.e.f. April 16, 2011.
The Statement pursuant to Section 212 of the Companies Act, 1956,
containing details of Companys subsidiaries in India and Overseas,
forms part of the Annual Report.
In view of the exemption received from Ministry of Corporate Affairs,
Government of India vide Letter no. 47/14/2011-CL-III dated January
28, 2011 and in compliance with General Circular No:2/2011 of
Government of India, Ministry of Corporate Affairs, the audited
statement of accounts along with the reports of the Board of Directors
and Auditors relating to your Companys subsidiaries in India and
Overseas are not annexed as required under Section 212(8) of the
Companies Act, 1956. Shareholders who wish to have a copy of the full
report and accounts of the aforesaid subsidiary companies will be
provided the same by the Company Secretary on receipt
of a written request from them. These documents will also be available
for inspection by any shareholder at the Registered Office of the
Company and the concerned subsidiary companies during business hours on
all working days. Further, the documents shall be available on the
website of your Company. However, as directed by the Ministry of
Corporate Affairs, Government of India, the financial data of the
subsidiaries have been separately furnished and form part of the Annual
Report. Further, in line with the Listing Agreement and in accordance
with the Accounting Standard 21 (AS-21), Consolidated Financial
Statements prepared by your Company include financial information of
its subsidiary companies.
PARTICULARS OF EMPLOYEES
The names and other particulars of the employees as required under
Section 217(2A) of the Companies Act, 1956 read with the Companies
(Particulars of Employees) Rules, 1975, are set out in the annexure to
the Directors Report and form part of this report.
PARTICULARS OF CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN
EXCHANGE EARNINGS AND OUTFLOW
Your Company has no activity relating to Conservation of Energy and
Technology Absorption as stipulated in the Companies (Disclosure of
Particulars in the Report of Board of Directors) Rules, 1988. However,
your Company uses information technology extensively in its operations.
During the year under review, the total foreign exchange earnings and
expenditure of your Company was Rs.238 lakh and Rs.10,953 lakh respectively
(previous year Rs.47 lakh and Rs.8,542 lakh respectively).
SREI WEBSITE
The website of your Company, www.srei.com, carries a comprehensive
database of information of interest to the investors including the
financial results of your Company, dividend declared, any price
sensitive information disclosed to the regulatory authorities from time
to time, analyst / investor presentations, corporate profile and
business activities of your Company and the services rendered by your
Company to its investors.
PROMOTER GROUP COMPANIES
Pursuant to intimation from Promoters of your Company, the names of
Promoters and companies comprising the Ãgroupà as defined in the
Monopolies and Restrictive Trade Practices Act, 1969, have been
disclosed in the Annual Report of your Company for the purpose of
Regulation 3(1)(e) of the SEBI (Substantial Acquisition of Shares and
Takeovers) Regulations, 1997.
DIRECTORS
During the year under review, Mr. Avinder Singh Bindra was appointed
as an Additional Director of your Company w.e.f. January 25, 2011 and
he shall hold office upto the date of the ensuing Annual General
Meeting. Your Company has received a notice from a member pursuant to
Section 257 of the Companies Act, 1956, signifying his intention to
propose the candidature of Mr. Avinder Singh Bindra for the office of
Director.
Further, Mr. Sujitendra Krishna Deb was appointed as an Additional
Director of your Company w.e.f. May 19, 2011 and he shall hold office
upto the date of the ensuing Annual General Meeting. Your Company has
received a notice from a member pursuant to Section 257 of the
Companies Act, 1956, signifying his intention to propose the
candidature of Mr. Sujitendra Krishna Deb for the office of Director.
Mr. Daljit Mirchandani resigned as Director of your Company w.e.f.
August 09, 2010 due to his personal preoccupations. The Board wishes to
place on record deep appreciation of the contribution, advice and
guidance extended by him during his tenure as Director of your Company.
Mr. Kishore Kumar Mohanty resigned as Wholetime Director of your
Company w.e.f. close of business hours on January 31, 2011. However, he
continued as a Director (Category - Non Executive) of your Company
w.e.f. February 01, 2011. The Board wishes to place on record deep
appreciation of his contribution during his tenure as a Wholetime
Director of your Company.
In accordance with the provisions of the Companies Act, 1956 and your
Companys Articles of Association, Mr. S. Rajagopal and Mr. Saud Ibne
Siddique retire by rotation at the ensuing Annual General Meeting and
being eligible, offer themselves for re- appointment. All these
Directors have filed Form DDA with your Company as required under the
Companies (Disqualification of Directors under Section 274(1)(g) of the
Companies Act, 1956) Rules, 2003. The brief resume / details relating
to Directors who are to be appointed / re-appointed are furnished in
the Notice of the Annual General Meeting.
During the year under review, your Company received approval of the
Central Government for payment of remuneration by way of commission to
Non-executive Directors of your Company of an aggregate maximum amount
not exceeding 1 (one) percent of the net profits of your Company in any
financial year (computed in the manner referred to in Section 198 and
309(4) of the Companies Act, 1956) or 550,00,000/- (Rupees Fifty Lakh
only), whichever is less for a period of three financial years w.e.f.
2010-11.
In accordance with the approval of Central Government, your Company
paid remuneration of ?50 lakh by way of commission on net profits
calculated under Section 198 of the Companies Act, 1956, to
Non-executive Directors of your Company for the financial year 2010-11.
AUDIT COMMITTEE
The Audit Committee comprises of Mr. Salil K. Gupta, Mr. V. H. Pandya,
Mr. S. Rajagopal, Mr. Sujitendra Krishna Deb, Independent & Non
Executive Directors and Mr. Sunil Kanoria, Non Executive Director. Mr.
Salil K. Gupta, Chief Mentor & Director of your Company is the Chairman
of the Audit Committee.
DIRECTORS?
RESPONSIBILITY
STATEMENT
In terms of provisions of Section 217(2AA) of the Companies Act, 1956
(Act), your Directors confirm that:
(i) In the preparation of the annual accounts for the financial year
ended March 31, 2011, the applicable accounting standards have been
followed along with proper explanation relating to material departures;
(ii) The Directors have selected such accounting policies and applied
them consistently and made judgements and estimates that are reasonable
and prudent so as to give a true and fair view of the state of affairs
of your Company at the end of the financial year and of the profit of
your Company for the year;
(iii) The Directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of this Act for safeguarding the assets of your Company and
for preventing and detecting fraud and other irregularities; and
(iv) The Directors have prepared the annual accounts for the financial
year ended March 31, 2011 on a going concern basis.
AUDITORS
Messrs Haribhakti & Co., Chartered Accountants having registration No.
103523W allotted by The Institute of Chartered Accountants of India
(ICAI), retire as Auditors of your Company at the conclusion of the
ensuing Annual General Meeting (AGM) and have confirmed their
eligibility and willingness to accept the office of Auditors, if
re-appointed. The Audit Committee and the Board of Directors of your
Company recommend the re- appointment of Messrs Haribhakti & Co.,
Chartered Accountants, as the Auditors of your Company. Members are
requested to consider their re- appointment as Auditors of your Company
to hold office from conclusion of ensuing AGM to the conclusion of next
AGM on remuneration to be decided by the Board of Directors based on
recommendation of the Audit
Committee of your Company.
ACKNOWLEDGEMENT
Your Directors would like to express their grateful appreciation for
the excellent support and co-operation received from the Financial
Institutions, Banks, Central & State Government Authorities, Reserve
Bank of India, Securities & Exchange Board of India, Indian and
Overseas Stock Exchanges, Credit Rating Agencies, Customers,
Manufacturers, Vendors, Suppliers, Shareholders and other Stakeholders
during the year under review. Your Directors also place on record their
deep appreciation for the valuable contribution of the employees at all
levels for the progress of your Company during the year and look
forward to their continued co-operation in realisation of the corporate
goals in the years ahead.
On behalf of the Board of Directors
Hemant Kanoria
Kolkata, 19th May 2011 Chairman & Managing Director
Disclaimer: This is 3rd Party content/feed, viewers are requested to use their discretion and conduct proper diligence before investing, GoodReturns does not take any liability on the genuineness and correctness of the information in this article