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IDFC
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Download Annual Report PDF Format 2014 | 2013 | 2012 | 2011
Directors Report Year End : Mar '14    « Mar 13
Dear Members,
 
 The Directors have pleasure in presenting the Seventeenth Annual
 Report on the business and operations of the Company together with the
 audited accounts for the financial year ended March 31, 2014.
 
 FINANCIAL RESULTS (STANDALONE)                    (RS. IN CRORE)
 
 ARTICULARS                              FY14             FY13
 
 Revenue from Operations                8,214.21        7,765.30
 
 Other Income                              17.72           11.19
 
 Total Income                           8,231.93        7,776.49
 
 Less: Administrative Expenses *          237.95          249.21
 
 Less: Provisions and Contingencies       628.83          394.11
 
 Profit Before Finance Costs and Taxes  7,365.15        7,133.17
 
 Less: Finance Costs                    5,006.96        4,665.19
 
 Profit Before Tax                      2,358.19        2,467.98
 
 Less: Tax Expenses **                    657.07          703.00
 
 Profit After Tax                       1,701.12        1,764.98
 
 * Administrative Expenses include employee benefits expense, other
 expenses and depreciation and amortisation expense.
 
 **Tax Expenses is net of deferred tax.
 
 APPROPRIATIONS Transfer to Reserves:
 
 Debenture Redemption Reserve             177.00          150.00
 
 Special Reserve u/s. 36(1)(viii) of 
 the Income-tax Act, 1961                 423.00          400.00
 
 Special Reserve u/s. 45-IC of the 
 RBI Act, 1934                            341.00          353.00
 
 General Reserve                          170.11          176.50
 
 Dividend & Dividend Distribution Tax:
 
 Proposed Dividend on Equity Shares       394.24          393.84 
 [Rs. 2.60 per share 
 (Previous Year Rs. 2.60 per share)]
 
 Dividend on Equity Shares pertaining 
 to previous year                           0.15            0.20
 
 Tax on proposed Equity Dividend           67.00           63.04
 
 Tax on Equity Dividend for previous year (4.75)           (0.04)
 
 OPERATIONS REVIEW
 
 Your Company is engaged inter alia in the business of financing
 infrastructure projects in sectors like energy, telecommunication,
 transportation, commercial and industrial projects including hospitals,
 education, tourism and hotels.
 
 Balance Sheet grew by 5.4% Year on Year (YoY) to reach C 73,764 crore
 and Net Loans at C 58,545 crore witnessed an increase of 5% YoY. As on
 March 31, 2014, IDFC''s total exposure was C 77,621 crore, of which
 Energy was highest at 37%, followed by Telecommunication 28%,
 Transportation 22% and Others 13%.
 
 DIVIDEND
 
 Your Directors are pleased to recommend a dividend of Rs. 2.60 per equity
 share of Rs. 10 each (i.e. 26 %) for the year ended March 31, 2014.
 
 The Register of Members and Share Transfer Books will remain closed
 from July 19, 2014 to July 29, 2014 (both days inclusive) for the
 purpose of payment of dividend for the financial year ended March 31,
 2014.
 
 Dividend will be paid to those Members whose names appear in the
 Register of Members as on July 18, 2014; in respect of shares held in
 dematerialised form, it will be paid to those Members whose names are
 furnished by National Securities Depository Limited and Central
 Depository Services (India) Limited, as beneficial owners as on that
 date.
 
 Above dividend would be paid subject to approval by the Members at the
 ensuing Annual General Meeting (AGM).
 
 SUBSIDIARY COMPANIES
 
 DFC Limited (IDFC or the Company) has thirteen direct subsidiary
 companies which are as follows
 
 - IDFC Alternatives Limited
 
 - IDFC Trustee Company Limited
 
 - IDFC Projects Limited
 
 - IDFC Finance Limited
 
 - IDFC Securities Limited
 
 - IDFC Primary Dealership Company Limited
 
 - IDFC Asset Management Company Limited
 
 - IDFC AMC Trustee Company Limited
 
 - IDFC Foundation (Section 25 Company under Companies Act, 1956)
 
 - IDFC Housing Finance Company Limited
 
 - IDFC Infra Debt Fund Limited
 
 - Neopro Technologies Private Limited
 
 - Galaxy Mercantiles Limited In addition,
 
 a.  IDFC Alternatives Limited has a wholly owned subsidiary company
 namely, DFC Project Equity Company Limited.
 
 b.  IDFC Securities Limited has four wholly owned subsidiary companies
 namely, IDFC Fund of Funds Limited, IDFC Capital (Singapore) Pte.
 Limited, IDFC Securities Singapore Pte.  Limited and IDFC Capital (USA)
 Inc.
 
 c.  IDFC Asset Management Company Limited has two subsidiaries namely,
 IDFC nvestment Advisors Limited and IDFC nvestment Managers (Mauritius)
 Limited.
 
 During the year under review, the following changes took place in the
 group corporate structure of your Company –
 
 1. On August 23, 2013, the name of IDFC PPP Trusteeship Company Limited
 (subsidiary company of IDFC Foundation) was struck off from the
 Register of Registrar of Companies and was dissolved pursuant to
 Section 560 of the Companies Act, 1956 through Fast Track Exit Mode.
 
 2. On October 18, 2013, the entire equity stake in IDFC Pension Fund
 Management Company Limited, which was held by IDFC and IDFC Asset
 Management Company Limited, was transferred to IDFC Securities Limited,
 thereby making IDFC Pension Fund Management Company Limited a wholly
 owned subsidiary of IDFC Securities Limited.
 
 3. On November 16, 2013, the Scheme of Amalgamation under Sections 391
 to 394 of Companies Act, 1956 was filed with the Hon''ble High Court of
 Bombay to amalgamate IDFC Distribution Company Limited, IDFC Capital
 Limited and IDFC Pension Fund Management Company Limited (the wholly
 owned subsidiaries of IDFC Securities Limited) with IDFC Securities
 Limited and their respective shareholders. The Hon''ble High Court of
 Bombay approved the amalgamation of the above entities on March 28,
 2014.
 
 4. By virtue of the above amalgamation, the subsidiaries of IDFC
 Capital Limited i.e.  IDFC Fund of Funds Limited, IDFC Capital
 (Singapore) Pte. Limited and IDFC Securities Singapore Pte. Limited,
 became direct subsidiaries of IDFC Securities Limited.
 
 5. IDFC Housing Finance Company Limited was incorporated as a wholly
 owned subsidiary of IDFC on March 4, 2014.
 
 6. IDFC Infra Debt Fund Limited was incorporated as a wholly owned
 subsidiary of IDFC on March 7, 2014.
 
 7. During the year, IDFC increased its share of investment in equity
 shares of Galaxy Mercantiles Limited from 43.44% in previous year to
 100% in current year, and by virtue of the same, Galaxy Mercantiles
 Limited, which was earlier an associate company of IDFC, has now become
 a wholly owned subsidiary of IDFC.
 
 Detailed analysis of the performance of IDFC and its businesses,
 including initiatives in the areas of Risk Management, Human Resources,
 Information Technology and IDFC Foundation activities, has been
 presented in the section on Management Discussion & Analysis of this
 Annual Report.  The Ministry of Corporate Affairs (MCA) vide its
 General Circular No. 2 / 2011 dated February 8, 2011 granted general
 exemption under Section 212(8) of the Companies Act, 1956, to companies
 from attaching accounts of its subsidiaries in its Annual Report
 subject to fulfilment of certain conditions prescribed therein. The
 Board of Directors of the Company at it''s meeting held on March 14,
 2014, noted the provisions of the above mentioned circular of MCA and
 passed the necessary resolution granting the requisite approvals for
 not attaching copies of Balance Sheet, Statement of Profit and Loss,
 Reports of the Board of Directors and Auditors of each of the
 subsidiary companies to the accounts of the Company for FY14, subject
 to complying with the provisions of the said circular.
 
 The Company undertakes that annual accounts of the subsidiary companies
 and the related detailed information will be made available to the
 Shareholders of the holding and subsidiary companies seeking such
 information at any point of time. The annual accounts of the subsidiary
 companies will be available on the Company''s website: www.idfc.com and
 will also be available for inspection by any Shareholder at the
 Registered and Corporate Offices of the Company and the concerned
 subsidiaries.  The Company shall furnish a hardcopy of details of
 accounts of subsidiaries to Shareholders on demand. In accordance with
 the requirements of Accounting Standard 21 (Consolidated Financial
 Statements) and Accounting Standard 23 (Accounting for Investment in
 Associates in Consolidated Financial Statements) notified by the
 Companies (Accounting Standards) Rules, 2006, the Consolidated Accounts
 of IDFC and its subsidiaries have been prepared and the same forms part
 of this Annual Report.
 
 Statement of particulars of IDFC''s subsidiaries under Section 212 of
 the Companies Act, 1956 is provided in Note 41 of the Notes forming
 part of the Consolidated Financial Statements.
 
 JOINT VENTURES
 
 DFC Foundation, a Section 25 Company under the Companies Act, 1956 and
 a wholly owned subsidiary of the Company has following three Joint
 Ventures
 
 - Delhi Integrated Multi-Modal Transit System Limited (DIMTS)
 
 - Infrastructure Development Corporation (Karnataka) Limited (iDeCK)
 
 - Uttarakhand Infrastructure Development Company Limited (UDeC)
 
 ASSOCIATES
 
 DFC has one associate company namely Feedback Infra Private Limited
 (formerly known as Feedback Infrastructure Services Private Limited).
 
 In addition, IDFC Projects Limited, a wholly owned subsidiary of the
 Company, has one associate company namely Jetpur Somnath Tollways
 Private Limited.
 
 PARTICULARS OF EMPLOYEES
 
 DFC had 225 employees as on March 31, 2014 and 570 employees at the
 group level.  Particulars of employees as required to be furnished
 pursuant to Section 217(2A) of the Companies Act, 1956, read with the
 rules thereunder, form part of this Report.  However, as per the
 provisions of Section 219(1)(b)(iv) of the Companies Act, 1956, the
 reports and accounts are being sent to all the Shareholders of the
 Company excluding the statement of particulars of employees. Any
 Shareholder interested in obtaining a copy of the same may write to the
 Company Secretary of the Company.
 
 EMPLOYEE STOCK OPTION SCHEME
 
 Pursuant to the resolution passed by the Members at the AGM held on
 August 2, 2006, DFC had introduced Employee Stock Option Scheme 2007
 (referred to as the Scheme) to enable the employees of IDFC and its
 subsidiaries to participate in the future growth and financial success
 of the Company.  Out of 35,568,940 Options outstanding at the beginning
 of the current financial year, 3,367,575 Options lapsed on account of
 resignation and 1,558,622 Options were exercised during the year.
 
 Additionally, during the year, 2,246,667 Options were granted to
 eligible employees under the Scheme. Accordingly, 32,889,410 Options
 remain outstanding as of March 31, 2014.
 
 All Options vest in graded manner and are required to be exercised
 within a specific period. The Company has used the intrinsic value
 method to account for the compensation cost of stock to employees of
 the Company. Intrinsic value is the amount by which the quoted market
 price of the underlying share on the date, prior to the date of the
 grant, exceeds the exercise price on the option.
 
 Disclosures as required by Clause 12 of the Securities and Exchange
 Board of India (Employee Stock Option Scheme and Employee Stock
 Purchase Scheme) Guidelines, 1999, are annexed to this Report.
 
 MANAGEMENT DISCUSSION & ANALYSIS AND REPORT ON CORPORATE GOVERNANCE
 
 In compliance with the provisions of Clause 49 of the Listing
 Agreement, separate detailed chapters on Management Discussion &
 Analysis, Report on Corporate Governance and Additional Shareholder
 Information forms part of this Annual Report.
 
 BUSINESS RESPONSIBILITY REPORT
 
 SEBI, through its circular CIR / CFD / DIL / 8 / 2012 dated August 13,
 2012, mandated inclusion of Business Responsibility Report (BRR) as
 part of the Annual Report for top 100 listed entities based on market
 capitalisation at BSE and NSE as on March 31, 2012. In compliance with
 the said circular, a separate report called BRR forms part of this
 Annual Report and is also hosted on the Company''s website:
 http://www.idfc.com/investor_relations/annual_ report.htm
 
 PUBLIC DEPOSITS
 
 During FY14, 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.
 
 FOREIGN EXCHANGE
 
 The particulars regarding foreign exchange expenditure and earnings are
 furnished at Item
 
 Your Directors have pleasure in informing you that RBI, vide its letter
 dated April 9, 2014, granted its In-principle approval to IDFC to
 establish a new bank in the private sector under Section 22 of the
 Banking Regulation Act, 1949.  One of the conditions of the letter is
 that the bank is required to be established within 18 months from April
 9, 2014.
 
 Nos. 29 & 30 respectively, in the Notes forming part of the Financial
 Statements.
 
 PARTICULARS REGARDING CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTION
 
 Since the Company does not carry out any manufacturing activity, the
 particulars regarding conservation of energy, technology absorption and
 other particulars as required by the Companies (Disclosure of
 Particulars in the Report of the Board of Directors) Rules, 1998, are
 not applicable.
 
 DIRECTORS
 
 Mr. Shardul Shroff (DIN-00009379), an Independent Director of the
 Company, tendered his resignation from the Board of the Company w.e.f.
 June 3, 2014. The Board placed on record it''s appreciation for the
 valuable services rendered by him during his tenure as an Independent
 Director of the Company.
 
 In accordance with the Articles of Association of the Company and
 pursuant to the provisions of Section 152 of the Companies Act, 2013,
 Mr. Joseph Dominic Silva (DIN - 06388807) would retire by rotation at
 the ensuing AGM and being eligible, offers himself for reappointment.
 Mr. S. H. Khan (DIN - 00006170), Mr. Gautam Kaji (DIN - 02333127) and
 Mr. Donald Peck (DIN - 00140734) were liable to retire by rotation at
 the ensuing AGM under the erstwhile Companies Act, 1956.
 
 Accordingly, on the recommendation of Nomination and Remuneration
 Committee of the Company and subject to the approval of the Members at
 the AGM, the Board of Directors of the Company at its meeting held on
 June 3, 2014, accorded its consent to appoint the above Directors as
 Independent Directors of the Company under the Companies Act, 2013 for
 a period of two (2) consecutive years to hold office from the
 conclusion of the Seventeenth AGM till the conclusion of the Nineteenth
 AGM of the Company. The Company has received a declaration from the
 aforesaid Directors that they meet the criteria of independence
 specified under sub-section (6) of Section 149 of the Companies Act,
 2013, read with Rule 5 of the Companies (Appointment and
 
 Qualification of Directors) Rules 2014, for holding the position of
 Independent Directors and that they shall abide by the Code for
 Independent Directors as per Schedule IV of the Companies Act, 2013.
 
 MCA vide its circular dated June 9, 2014 clarified that if the existing
 Independent Directors are to be appointed under Companies Act, 2013,
 the Company would be required to appoint those Independent Directors
 within a period of one year from April 1, 2014. Accordingly, the
 Company would appoint the remaining existing Independent Directors
 within the prescribed period.
 
 The Profiles of all the above Directors are provided in the Exhibit to
 the Notice convening the ensuing AGM sent along with this Annual
 Report.
 
 The Board of Directors recommends appointment / reappointment of all
 the above Directors at the ensuing AGM.
 
 SHAREHOLDERS'' UPDATE
 
 BANKING LICENSE
 
 Your Company had filed an application with the Reserve Bank of India
 (RBI) on July 1, 2013, seeking a banking license.
 
 Your Directors have pleasure in informing you that RBI, vide its letter
 dated April 9, 2014, granted its In-principle approval to IDFC to
 establish a new bank in the private sector under Section 22 of the
 Banking Regulation Act, 1949. One of the conditions of the letter is
 that the bank is required to be established within 18 months from April
 9, 2014.
 
 The Board of Directors recommend the following items under special
 business for approval of the shareholders at the ensuing AGM.
 
 ALTERATION IN THE OBJECT CLAUSE OF MEMORANDUM OF ASSOCIATION
 
 On receipt of the In-principle approval from RBI to set up a new bank
 in the private sector, the Company is required to alter the Object
 Clause of Memorandum of Association(MoA) of the Company by inserting
 a new Object Clause no. 29A pertaining to banking business to be
 carried out through a subsidiary company.  Also, the existing Clause
 no. 31 relating to restructuring / rearrangement would be required to
 be replaced with a new clause so as to insert few more restructuring
 options that the Company can opt from time to time.
 
 The approval of the Shareholders by passing of a Special Resolution at
 the ensuing AGM would be required for alteration of Objects incidental
 and ancillary to the attainment of the Main Objects of MoA of the
 Company.
 
 FURTHER ISSUE OF SECURITIES
 
 RBI introduced the guidelines for licensing of new banks in the Private
 Sector on February 22, 2013, which inter alia states that the promoters
 eligible to promote a bank pursuant to the said guidelines should be
 ''owned and controlled by residents''. Your Company received In-principal
 approval for banking license from RBI on April 9, 2014. One of the
 conditions of the letter requires IDFC to reduce foreign shareholding
 below 50% so as to make the Company ''owned and controlled by
 residents''. To achieve this, IDFC proposes to offer securities to the
 domestic investors, in one or more tranches.
 
 The approval of the Shareholders by passing of a Special Resolution at
 the ensuing AGM would be required for the aforesaid further issue of
 securities.
 
 APPROVAL OF THE BORROWING LIMITS OF THE COMPANY
 
 The Company at its 13th AGM held on June 28, 2010, had approved the
 proposal to borrow monies up to C 80,000 crore under the then
 applicable Section 293(1)(d) of the Companies Act, 1956.
 
 In compliance with the provisions of Section 180(1)(c) of the Companies
 Act, 2013 and after
 
 taking into consideration Circular No. 4 / 2014 of MCA dated March 25,
 2014, it is proposed to seek the approval of the Shareholders by way of
 a Special Resolution at the ensuing AGM to approve the limit of
 borrowings of the Company not exceeding C 80,000 crore.
 
 APPROVAL TO OFFER & ISSUE NON-CONVERTIBLE SECURITIES UNDER PRIVATE
 PLACEMENT
 
 In compliance with the provisions of Section 42 of the Companies Act,
 2013 read with Rule 14 of Companies (Prospectus and Allotment of
 Securities) Rules 2014, it is proposed to seek the approval of the
 Shareholders by way of a Special Resolution at the ensuing AGM for
 borrowing funds through issuance of Non-Convertible Securities on
 Private Placement basis for an amount not exceeding the overall
 borrowing limit of C 80,000 crore, as may be approved under Section
 180(1)(c) of the Companies Act, 2013 by the Shareholders at the ensuing
 AGM.
 
 AUDITORS
 
 Deloitte Haskins & Sells LLP (DHS), Chartered Accountants
 (Registration No.  117366W/W-100018), along with their associates, have
 been Statutory Auditors of the Company for an aggregate period of more
 than 10 years. DHS will retire as the Statutory Auditors of the Company
 at the ensuing AGM.
 
 DHS, the retiring Auditors, have confirmed that their reappointment, if
 made, would be in conformity with the provisions of Section 139(1) of
 Companies Act, 2013 read with Rule 4 of the Companies (Audit and
 Auditors) Rules, 2014 and Section 141 of the Companies Act, 2013 and
 have given their consent to be reappointed.
 
 The approval of the Members is requested to reappoint DHS, by passing
 an Ordinary Resolution, as Statutory Auditors of the Company for a
 period of one (1) year, to hold office from the conclusion of this AGM
 up to the conclusion of the next AGM of the Company.
 
 INTERNAL CONTROL SYSTEMS
 
 The Company has in place, adequate systems of Internal Control to
 ensure compliance with policies and procedures. It is being constantly
 assessed and strengthened with new / revised standard operating
 procedures and tighter Information Technology controls.  nternal audits
 of all the units of the Company are regularly carried out to review the
 Internal Control Systems. The Internal Audit Reports along with the
 recommendations and mplementation contained therein are regularly
 reviewed by the Audit Committee of the Board.
 
 CONCURRENT AUDIT
 
 The Company has appointed KPMG as Concurrent Auditors for FY15 to
 augment the existing internal control framework and ensure compliance
 to the policies and procedures as laid out by the Company. The scope of
 coverage covers the areas of Fixed Income Treasury, Proprietary Equity,
 Resources and Regulatory Compliance and Reporting.
 
 TRANSFER OF AMOUNTS TO INVESTOR EDUCATION AND PROTECTION FUND
 
 Pursuant to the provisions of Sections 205A and 205C of the Companies
 Act, 1956, the dividend / interest / refund of applications which
 remains unclaimed / unpaid for a period of seven years from the date of
 transfer to the unpaid dividend / interest / refund account was
 required to be transferred to the Investor Education and Protection
 Fund (IEPF) established by the Central Government.
 
 Accordingly, an amount of Rs. 1,722,962 being unclaimed / unpaid dividend
 for the year FY06 and which remained unpaid and unclaimed for a period
 of 7 years has been transferred by the Company to the IEPF
 
 The Company updates the details of unclaimed / unpaid dividend /
 interest on the Company''s website (www.idfc.com) and on MCA website
 from time to time.
 
 Further, the unpaid dividend amount pertaining to the financial year
 FY07 will be transferred to IEPF during this year.
 
 DIRECTORS'' RESPONSIBILITY STATEMENT
 
 Pursuant to Section 217(2AA) of the Companies Act, 1956, the Directors
 confirm that: - in the preparation of the annual accounts, the
 applicable accounting standards have been followed along with proper
 explanation relating to material departures;
 
 - appropriate accounting policies have been selected and applied
 consistently and have made judgements and estimates that are reasonable
 and prudent so as to give a true and fair view of the state of affairs
 of the Company at the end of the financial year and of the profit of
 the Company for the year ended March 31, 2014;
 
 - proper and sufficient care has been taken for maintenance of adequate
 accounting records in accordance with the provisions of the Companies
 Act, 1956 for safeguarding the assets of the Company and for preventing
 and detecting fraud and other irregularities;
 
 - the annual accounts have been prepared on a going concern basis.
 
 GREEN INITIATIVE
 
 In accordance with the ''Green Initiative'' the Company has been sending
 Annual Report, Notice of AGM etc. in electronic mode to those
 Shareholders whose e-mail ids are registered with the Company and / or
 the Depository Participants.
 
 Your Directors are thankful to the Shareholders for actively
 participating in the Green Initiative.
 
 ACKNOWLEDGEMENTS
 
 We are grateful to the Government of India, State Governments, National
 Highways Authority of India, RBI, SEBI, Stock Exchanges, various
 Ministries and other domestic and overseas regulatory bodies for their
 continuous collaboration and support.
 
 We would like to thank all our Shareholders, Bondholders, Banks and
 Financial Institutions for their co-operation and assistance during the
 year under review.
 
 We would like to express our deep sense of appreciation for the hard
 work and efforts put in by the employees at all levels of the Company.
 
                               FOR AND ON BEHALF OF THE BOARD 
                                                RAJIV B. LALL
 
                                           Executive Chairman
 Mumbai, June 30, 2014
 
                                        IN-PRINCIPLE APPROVAL
                                          FOR BANKING LICENSE
 
 
 
Source : Dion Global Solutions Limited
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