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Download Annual Report PDF Format 2013 | 2012 | 2011
Directors Report Year End : Mar '13    « Mar 12
The Directors have pleasure in presenting the Sixteenth Annual Report
 on our business and operations together with the audited accounts for
 the year ended March 31, 2013.
 
 OPERATIONS REVIEW
 
 The Company is engaged in financing infrastructure projects in sectors
 like energy, telecommunication, transportation, commercial and
 industrial projects including hospitals, education, tourism and hotels.
 Balance Sheet grew by 15% Year on Year (YoY) to reach H 69,994 crore
 and Net Loans at H 55,736 crore witnessed an increase of 16% YoY As on
 March 31, 2013, IDFC''s total exposure was H 72,597 crore, of which
 Energy was highest at 41%, followed by Transportation 25%,
 Telecommunication 23% and Others 11%.
 
 DIVIDEND
 
 Your Directors are pleased to recommend a dividend of H 2.60 per equity
 share of H 10 each (i.e. 26%) for the year ended March 31, 2013.  Above
 dividend would be paid subject to approval by the Members in the
 ensuing Annual General Meeting (AGM).
 
 SUBSIDIARY COMPANIES
 
 IDFC has ten direct subsidiary companies as follows:
 
 1.  IDFC Alternatives Limited
 
 2.  IDFC Trustee Company Limited
 
 3.  IDFC Projects Limited
 
 4.  IDFC Finance Limited
 
 5.  IDFC Securities Limited
 
 6.  IDFC Primary Dealership Company Limited
 
 7.  IDFC AMC Trustee Company Limited
 
 8.  IDFC Asset Management Company Limited
 
 9.  IDFC Foundation (Section 25 Company)
 
 10.  Neopro Technologies Private Limited In addition,
 
 A.  IDFC Alternatives Limited has one wholly owned subsidiary company
 namely IDFC Project Equity Company Limited.
 
 B.  IDFC Securities Limited has three wholly owned subsidiary companies
 namely IDFC Capital Limited, IDFC Distribution Company Limited and IDFC
 Capital (USA) Inc. Further, IDFC Capital Limited has three wholly owned
 foreign subsidiaries namely IDFC Fund of Funds Limited, IDFC Capital
 (Singapore) Pte. Limited and IDFC Securities Singapore Pte. Limited.
 
 C.  IDFC Asset Management Company Limited also has three subsidiaries,
 namely IDFC Pension Fund Management Company Limited, IDFC Investment
 Advisors Limited and IDFC Investment Managers (Mauritius) Limited.
 
 During the year, IDFC General Partners Limited, a wholly owned
 subsidiary of IDFC Capital Limited was dissolved under voluntary
 liquidation process with effect from September 21, 2012.
 
 IDFC PPP Trusteeship Company Limited which is a subsidiary company of
 IDFC Foundation had made an application to the Registrar of Companies,
 Maharashtra, Mumbai (ROC) under Fast Track Exit Mode 2011 on April 25,
 2013 to get its name struck off from the Register of Companies
 maintained by ROC.
 
 During the year, the Company divested its stake in Dheeru Powergen
 Limited, a subsidiary of IDFC Projects Limited.
 
 During the year under review, the Company acquired 71% stake in Neopro
 Technologies Private Limited, making it a direct subsidiary of the
 Company.
 
 Statement of particulars of IDFC''s subsidiaries under Section 212 is
 provided in Note 47 of the Notes forming part of the Consolidated
 Financial Statements.
 
 Detailed analysis of the performance of IDFC and its businesses -
 financing and advisory, including initiatives in the areas of Resource
 Raising, Human Resources, Information Technology and Risk Management
 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 has 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 its meeting held on March 14, 2013, 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 FY13 subject to complying with the provisions of the said
 circular. The Company also 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 hard copy 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.
 
 JOINT VENTURES
 
 IDFC Foundation, a Section 25 Company and a wholly owned subsidiary of
 the Company has following three Joint Ventures:
 
 1.  Delhi Integrated Multi-Modal Transit System Limited
 
 2.  Infrastructure Development Corporation (Karnataka) Limited
 
 3.  Uttarakhand Infrastructure Development Company Limited
 
 ASSOCIATES
 
 IDFC has two associate companies as follows:
 
 1.  Feedback Infrastructure Services Private Limited
 
 2.  Galaxy Mercantiles 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
 
 IDFC had 238 employees as on March 31, 2013 and 586 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, forms 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 (ESOS)
 
 Pursuant to the resolution passed by the Members at the AGM held on
 August 2, 2006, IDFC 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 37,970,105 options outstanding at the beginning
 of the current financial year, 919,304 options lapsed on account of
 resignations and 2,364,861 options were exercised during the year
 
 Additionally, during the year, 883,000 options were granted to eligible
 employees under the Scheme. Accordingly, 35,568,940 options remain
 outstanding as of March 31, 2013.
 
 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.
 
 MD&A AND CORPORATE GOVERNANCE
 
 Separate detailed chapters on Management Discussion & Analysis,
 Corporate Governance and Additional Shareholder Information form part
 of this Annual Report.
 
 PUBLIC DEPOSITS
 
 During FY13, 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 Nos. 29 & 30 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
 
 The Board, at its meeting held on October 26, 2012, appointed Mr.
 Joseph Dominic Silva, nominee of Sipadan Investments (Mauritius)
 Limited as an Additional Director in place of Mr. Abdul Rahim Abu
 Bakar. Upon the resignation of Mr. Abdul Rahim Abu Bakar on October 26,
 2012, his Alternate Director Mr. Michael Fernandes also ceased to hold
 the position of Alternate Director with effect from October 26, 2012.
 
 Ministry of Finance (MoF), Government of India nominated Ms. Snehlata
 Shrivastava, Additional Secretary, Department of Financial Services,
 MoF, as Director on the Board of IDFC in place of Mr. Sunil Soni
 (former Additional Secretary, Department of Financial Services, MoF).
 Accordingly, at the Board Meeting dated February 1, 2013, Ms. Snehlata
 Shrivastava was appointed as an Additional Director in place of Mr.
 Sunil Soni.
 
 At the Board Meeting held on May 1, 2013, Mr. Deepak Parekh, the
 Founding Chairman of the Company resigned as the Non - executive
 Chairman of the Company. The Board accepted his resignation with deep
 regret. However, at the request of the Board, Mr. Parekh would remain
 associated with your Company in his new role as Chairman of IDFC''s
 Advisory Council, a consultative body, comprising of 3-4 eminent
 persons, to be constituted by your Company in a few months.
 
 The Nomination Committee of the Company, at its meeting held on May 1,
 2013, recommended the appointment of:
 
 Dr. Rajiv B. Lall as Executive Chairman of the Company, and Mr. Vikram
 Limaye as Managing Director & CEO of the Company, on the same terms and
 conditions as approved by Shareholders at the last AGM held on July 9,
 2012.
 
 The Compensation Committee of the Company, at its meeting held on May
 1, 2013, also recommended the terms of appointment of Dr. Rajiv B. Lall
 and Mr. Vikram Limaye, to be the same as were approved by Shareholders
 at the AGM held on July 9, 2012.
 
 Based on the recommendation of Nomination and Compensation Committees,
 and subject to the approval of the Members at the ensuing AGM, the
 Board of Directors at its meeting held on May 1, 2013, granted its
 approval for the appointment of Dr. Rajiv B. Lall as Executive Chairman
 and Mr. Vikram Limaye as Managing Director & CEO with effect from May
 2, 2013 for a period of 3 years, other terms of their appointment being
 same as approved by Shareholders at the last AGM held on July 9, 2012.
 Both these appointments are subject to ratification by the Shareholders
 in the ensuing AGM, the resolutions for which have been included in the
 Notice.
 
 Your Directors wish to place on record their appreciation for the
 valuable services rendered by all the outgoing Directors during their
 tenure as Directors of the Company
 
 Mr. Joseph Dominic Silva and Ms. Snehlata Shrivastava hold their
 respective offices as Additional Directors up to the date of the
 ensuing AGM.
 
 The Company has received notices from Members of the Company under
 Section 257 of the Companies Act, 1956, proposing the candidature of
 Mr. Joseph Dominic Silva and Ms. Snehlata Shrivastava as Directors at
 the ensuing AGM.
 
 Dr. Omkar Goswami and Mr. Shardul Shroff will retire by rotation and
 being eligible, offer themselves for re-appointment at the ensuing AGM.
 
 The profiles of the above Directors are provided in the Notice
 convening the ensuing AGM.
 
 The Board of Directors recommends appointment / re-appointment of all
 the above Directors at the ensuing AGM.
 
 SHAREHOLDERS'' UPDATE
 
 PAYMENT OF COMMISSION TO NON- EXECUTIVE DIRECTORS (NEDs)
 
 The Company, at its 11th AGM held on July 18, 2008, had approved the
 payment of remuneration by way of commission or otherwise, not
 exceeding 1% of the Net Profits of the Company, to NEDs for the period
 of 5 years ended on March 31, 2013. It is proposed to seek the approval
 of the Shareholders by way of a Special Resolution at the ensuing AGM
 for continuing payment of commission to NEDs, other than Whole-time
 Directors, which shall not exceed 1% of the Net Profits of the Company
 as computed in the manner referred to in Sections 198, 349 and 350 of
 the Companies Act, 1956.
 
 ADDITIONAL 2% ISSUANCE OF SHARES UNDER ESOS
 
 It is proposed to set aside additional 2% shares for issuance under
 IDFC Employee Stock Option Scheme - 2007 (ESOS-2007) of the
 issued Equity Share Capital of the Company, from time to time.
 
 DECREASE IN LIMIT OF FOREIGN INSTITUTIONAL INVESTORS'' (FIIs) HOLDING
 IN THE EQUITY SHARE CAPITAL FROM 74% TO 54%
 
 The Board of Directors of your Company had decided at its Board Meeting
 held on June 18, 2013 to apply to RBI for a banking license pursuant to
 the guidelines for licensing of new banks in the Private Sector
 announced by RBI on February 22, 2013.
 
 The said guidelines states that the eligible applicant
 entities/promoter groups in private sectors must be owned and
 controlled by residents i.e. the aggregate non-resident shareholding
 including through Foreign Direct Investment, Non-Resident Indians and
 FIIs shall not exceed 49% of the paid up Equity capital of the Company.
 
 In view of the above provisions, it is proposed to seek the approval of
 the Shareholders by way of a Special Resolution at the ensuing AGM to
 authorise the Board to reduce the ceiling limit of foreign shareholding
 to 54% as and when the Board thinks it appropriate considering the
 extant foreign holding in the Company at that point of time.  As and
 when RBI''s in-principle approval for banking license is received, the
 Company will seek Shareholders'' approval for further reducing the
 foreign shareholding ceiling limit to 49%.
 
 AUDITORS
 
 M/s. Deloitte Haskins & Sells, Chartered Accountants, will retire as
 the Statutory Auditors of the Company at the ensuing AGM.  The Members
 are requested to re-appoint M/s. Deloitte Haskins & Sells, Chartered
 Accountants, as Statutory Auditors of the Company for FY14 and to
 authorize the Board of Directors to fix their remuneration by way of
 Special Resolution as per Notice convening the AGM.
 
 M/s. Deloitte Haskins & Sells, the retiring auditors, have confirmed
 that their re- appointment, if made, would be in conformity with the
 provisions of Sections 224 and 226 of the Companies Act, 1956 and also
 indicated their willingness to be re-appointed.
 
 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. Internal 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 implementation contained therein are regularly
 reviewed by the Audit Committee of the Board.
 
 CONCURRENT AUDITORS
 
 KPMG were appointed as Concurrent Auditors for the FY14 for systematic
 examination of all financial transactions of treasury department to
 ensure accuracy and compliance of internal systems and procedures as
 laid out by the Company
 
 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 is required to be
 transferred to the Investor Education and Protection Fund (IEPF)
 established by the Central Government. In terms of the provisions of
 Section 205C of the Companies Act, 1956, no claim shall lie against the
 Company or IEPF after the said transfer.
 
 Pursuant to the provisions of Section 205A(5) of the Companies Act,
 1956, an amount of H 408,980 being the refund of the application money
 received by IDFC at the time of its Initial Public Offer (IPO) in July/
 August, 2005 and which remained unpaid and unclaimed for a period of 7
 years has been transferred by the Company to the IEPF Further, the
 unpaid dividend amount pertaining to the financial year 2005-06 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 judgments 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, 2013;
 
 - 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.
 
 ACKNOWLEDGEMENTS
 
 IDFC has developed close relationships with the Ministry of Finance,
 Banking Division, Department of Economic Affairs; Ministry of Surface
 Transport; National Highways Authority of India; Ministry of Power;
 Department of Telecommunications; Ministry of Petroleum; Ministry of
 Corporate Affairs and other Ministries of the Government of India
 involved with infrastructure development; Reserve Bank of India;
 National Stock Exchange of India Limited; BSE Limited; Securities and
 Exchange Board of India and other regulatory bodies; Telecom Regulatory
 Authority of India; the Central Electricity Regulatory Commission and
 State Electricity Regulatory Commissions; Planning Commission; State
 Governments and all IDFC''s Shareholders and Bondholders.  The Board
 of Directors would like to take this opportunity to express sincere
 thanks to all Banks and Financial Institutions for their continuous
 co-operation and support. The Directors express their appreciation for
 the good work and efforts put in by the employees at all levels of the
 Company. IS
 
 For and on behalf of the Board
 
 RAJIV B. LALL
 
 Executive Chairman
 
 Mumbai, July 1, 2013.
Source : Dion Global Solutions Limited
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