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Sundaram Finance

BSE: 590071|NSE: SUNDARMFIN|ISIN: INE660A01013|SECTOR: Finance - Leasing & Hire Purchase
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Mar 16
Notes to Accounts Year End : Mar '17

Note 1: General

1.01 Segment Reporting

Segment information is presented in the Consolidated Financial Statements in terms of the Accounting Standard 17 - Segment Reporting.

1.02 The Board of Directors, at its meeting held on 25th November 2016, approved the Scheme of Amalgamation for the merger of Sundaram Infotech Solutions Limited, a wholly-owned subsidiary, with the Company, effective 1st April 2016.

The Company has obtained a ‘no objection ‘ letter from the National Stock Exchange of India Limited, in accordance with the provisions of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. Application has been filed by Sundaram Infotech Solutions Limited with the National Company Law Tribunal for approval.

On approval, the Scheme will be given effect to in the Books, effective 1st April 2016.

1.03 The Board of Directors, at its meeting held on 17th February 2017, approved a composite Scheme of Arrangement and Amalgamation between the Company and its subsidiaries effective 1st April 2016. The Scheme will result in:

- Merger of Sundaram Insurance Broking Services Limited and Infreight Logistics Solutions Limited into the Company;

- Demerger of the shared services of Sundaram BPO India Limited into the Company; and subsequently

- Demerger of the non-core investments and shared services of the Company into Sundaram Finance Holdings Limited,

The Company has obtained a ‘no objection’ letter from the National Stock Exchange of India Limited, in accordance with the provisions of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, and approval from the Competition Commission of India for the transactions contemplated in the composite Scheme of Arrangement and Amalgamation. Necessary steps are being taken to file an application with the National Company Law Tribunal for approval.

On approval, the Scheme will be given effect to in the Books, effective 1st April 2016.

1.04 Disclosure of Specified Bank Notes (SBN) - Pursuant to Ministry of Corporate Affairs Notification G.S.R.308 Dated 30th March, 2017.

1.05 The Company has spent an amount of Rs.12,37.42 lakhs (2015-16 - Rs.12,04.65 lakhs) towards Corporate Social Responsibility (CSR) under Sec 135 of the Companies Act 2013, in the various areas covered under the regulatory provisions like healthcare, education, environment and protection of art and culture.

1.06 The pending litigations as on 31st March 2017 have been compiled by the company and reviewed by the Statutory Auditors. The current position of the litigation has been evaluated and the effect thereof has been appropriately disclosed in the financial statements.

1.07 In respect of a lease transaction, the Company preferred appeals against the demands raised by Commissioner of Customs / CESTAT / Appellate Tribunal for Foreign Exchange, towards duty and penalty, aggregating to Rs.63.79 lakhs.

Tax disputes in respect of Income Tax, Service Tax and VAT demands are pending before various appellate forums/authorities and the cash flows would be determined only upon the receipt of decisions. The Company is of the opinion that the demands are not sustainable and expects to succeed in its appeal.

1.08 Estimated amount of contracts remaining to be executed on capital account Rs.6,11.15 lakhs (net of advances of Rs.2,28.11 lakhs) (31.03.2016 - Rs.2,89.49 lakhs, net of advances of Rs.3,27.83 lakhs). Uncalled liability on partly paid equity shares of Rs.5,50 lakhs (31.03.2016 - Rs.5,50 lakhs) and Uncalled sponsor commitment in Alternate Investment Fund Schemes of Sundaram Mutual Fund Rs.13,50 lakhs (31.03.2016 - Nil).

1.09 Final dividend of Rs.72,21.75 lakhs (Rs.6.50 per share) has been recommended by the Board for the year ended 31st March 2017. The Central Government vide notification dated 30.03.2016 has amended the Companies (Accounting Standards) Rules, 2006. According to the amended Rule, the dividend declared after the Balance Sheet date shall not be recorded as a liability in the previous year. Therefore, the Company has not recorded Rs.81,59.47 lakhs as liability for proposed dividend including dividend distribution tax as at 31st March 2017. However, the same will be recognised as liability on approval of the shareholders in the Annual General Meeting.

1.10 Based on the current assessment of the long-term contracts in the ordinary course of business, the Company has made adequate provision for losses where required. The derivative contracts have been entered into for hedging the foreign currency liability and interest liability. Derivative contracts being in the nature of hedge contracts, the Company does not anticipate any material losses from the same.

1.11 There are no amounts due to Small Scale Industries in terms of “The Micro, Small and Medium Enterprises Development Act, 2006”,

2.01.01 Exchange Traded Interest Rate (IR) Derivaties : NIL

2.01.02 Qualitative disclosures on risk exposure of derivatives i) Qualitative disclosures

The Company has a Board approved policy for entering into derivative transactions. Derivative transaction comprises Forward Rate Agreements, Interest Rate Swaps, Coupon Only Swaps, Currency and Interest Rate Swap and Forward Exchange contracts. The Company undertakes such transactions for hedging balance sheet assets and liabilities. Such outstanding derivative transactions are accounted on accrual basis over the life of the underlying instrument. The Asset Liability Management Committee and Risk Management Committee periodically monitors and reviews the risks involved.

2.02 Disclosures relating to Securitisation

2.02.01 Details of Financial Assets Sold to Securitisation / Reconstruction Company for Asset Reconstruction: NIL

2.02.02 Details of non-performing financial assets purchased / sold : NIL

2.02.03 Details of financing of parent company products : NIL

2.02.04 Details of Single Borrower Limit (SBL) / Group Borrower Limit (GBL) exceeded by the company : NIL

2.03 Registration obtained from other financial sector regulators during the year : NIL

2.04 Disclosure of penalties imposed by RBI and other regulators : NIL

2.05 Overseas Assets (for those with Joint Ventures and Subsidiaries abroad) : NIL

2. 06 Off-balance sheet SPVs sponsored (which are required to be consolidated as per accounting norms) : NIL

Note 2: Disclosure on frauds

During the year, a fraud committed by an outsourced employee, in the nature of cheating and forgery, to the extent of Rs.24.14 lakhs was detected and reported to Reserve Bank of India. The Company has provided for the amount and has proceeded legally to recover the dues.

Note 3: Previous year figures have been regrouped / reclassified wherever necessary to conform to the current year’s presentation.

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