Dear Members,
The Directors have pleasure in presenting the Twelfth Annual Report of your Company with the audited financial statements for the financial year ended March 31, 2017.
FINANCIAL HIGHLIGHTS
The highlights of the Consolidated and Standalone Financial Statements of the Company for the financial years 2016-17 and 2015-16 are as under:
(Rs, in Millions)
Particulars
|
Consolidated
|
Standalone
|
|
2016-17
|
2015-16
|
2016-17
|
2015-16
|
Total Income
|
28,008.64
|
18,887.96
|
27,268.55
|
18,478.41
|
Total Expenditure
|
24,433.80
|
16,364.41
|
23,945.70
|
16,092.27
|
Profit Before Tax and exceptional items
|
3,574.84
|
2,523.55
|
3,322.85
|
2,386.14
|
Provision For Tax
|
1,174.30
|
847.98
|
1,154.23
|
817.03
|
Profit after tax from continuing operations
|
2,400.54
|
1,675.57
|
2,168.62
|
1,569.11
|
Profit/(Loss) after tax from Discontinuing operations
|
-11.33
|
-13.72
|
-
|
_
|
Profit for the year
|
2,389.21
|
1,661.85
|
2,168.62
|
1,569.11
|
Profit/(Loss) brought forward from previous Year
|
2,383.66
|
1,468.60
|
2,569.14
|
1,734.34
|
Profit available for appropriation
|
4,772.87
|
3,130.45
|
4,737.76
|
3,303.45
|
Appropriations:
Transfer to Reserve Fund
under Section
45-IC of the RBI Act, 1934
|
433.72
|
313.82
|
433.72
|
313.82
|
Transfer to statutory reserve under Section 29C of the National Housing Bank Act, 1987
|
12.88
|
12.48
|
|
|
Proposed Dividend #
|
-
|
218.99
|
-
|
218.99
|
Dividend Tax thereon #
|
-
|
44.58
|
-
|
44.58
|
Transfer to General Reserve
|
-
|
156.91
|
-
|
156.91
|
Balance carried forward to Balance Sheet
|
4,326.27
|
2,383.67
|
4,304.04
|
2,569.15
|
# The proposed equity dividend and dividend distribution tax are not accounted as liabilities in fiscal 2017 in accordance with revised AS-4 ‘Contingencies and events occurring after the Balance Sheet date’.
The Company is focused on providing retail loans to MSMEs and consumers, including long term loans secured by property, business loans, personal loans, two-wheeler loans and consumer durable loans, which is expected to drive growth for the Company going forward.
During the year under review, the Company has successfully grown its outstanding Loan Assets under Management from Rs, 160.41 billion to Rs, 198.24 billion, a growth of 24%. The Retail Assets under Management has grown from Rs, 137.56 billion to Rs, 183.53 billion, a growth of 33%.
The Consolidated Net worth of the Company increased from Rs, 17.04 billion to Rs, 23.04 billion as at March 31, 2017.
Consolidated Net Interest Income increased by 59% from Rs, 8,181 million during the financial year ending March 31, 2016 to Rs, 13,008 million during the financial year ending March 31, 2017.
The profit after tax was up by 44% from Rs, 1,661 million to Rs, 2,389 million.
DIVIDEND
Keeping in mind the overall performance and the outlook for your Company, your Directors are pleased to recommend a dividend of Rs, 2.60/- (Rupees Two and sixty paise only) per share i.e. 26% on each Equity Share having face value of Rs, 10/- (Rupees Ten only) each.
DIVIDEND DISTRIBUTION POLICY
In accordance with the Regulation 43A of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company has formulated a Dividend Distribution Policy. The Policy is hosted on the website of the Company and can be viewed at http://www.capitalfirst.com/ investor/corporate-governance
CAPITAL ADEQUACY
The Company''''s capital adequacy ratio was 20.34% as on March 31, 2017, which is significantly above the threshold limit of 15% as prescribed by the Reserve Bank of India (‘RBI'''').
SHARE CAPITAL
During the year under review, the Company raised funds through issue and allotment of 47,80,000 Equity Shares of Rs, 10/- each on a preferential basis, pursuant to receipt of subscription amount of Rs, 3,40,67,06,000/- (Rupees Three Hundred and Forty Crores Sixty Seven Lakhs and Six Thousand only) issued at a price of Rs, 712.70/per Equity Share (face value of Rs, 10/- each and premium of Rs, 702.70/- per share) to Caladium Investment Pte. Ltd., which is indirectly wholly-owned by GIC (Ventures) Pte. Ltd., a Singapore''''s Sovereign Wealth Fund.
During the year under review, the Company had also issued and allotted 14,04,325 equity shares to the eligible employees of the Company under various Employee Stock Option Schemes of the Company. The paid up equity share capital of the Company as on date stands at Rs, 97,42,20,690/- comprising of 9,74,22,069 equity shares of Rs, 10/- each.
PUBLIC DEPOSITS
The Company being a Non-Deposit Accepting Non-Banking Finance Company has not accepted any deposits from the public during the year under review and shall not accept any deposits from the public without obtaining prior approval of the RBI.
RBI GUIDELINES
As a Systemically Important Non-Deposit taking Non-Banking Finance Company, your Company always aims to operate in compliance with applicable RBI guidelines and regulations and employs its best efforts towards achieving the same.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
As required under Regulation 34 of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“Listing Regulations”) and Circular/ Notifications/Directions issued by RBI from time to time, the Management Discussion and Analysis of the financial condition and result of consolidated operations of the Company for the year under review is presented in a separate section forming part of the Annual Report.
CORPORATE GOVERNANCE
A Report on Corporate Governance as required under Listing Regulations forms part of the Annual Report.
A Certificate from M/s. Makarand M. Joshi & Co., Practicing Company Secretaries, confirming compliance with the conditions of Corporate Governance as stipulated under the Listing Regulations, also forms part of the Annual Report.
BUSINESS RESPONSIBILITY REPORT
In accordance with Regulation 34(2)(f) of the Listing Regulations, the inclusion of Business Responsibility Report (BRR) as a part of the Annual Report is mandated for top 500 listed entities for the year 2016-17 based on the market capitalization.
Since Capital First Ltd. is one of the top 500 listed companies by way of market capitalization as on March 31, 2016, the Company has presented its maiden BRR for the financial year 2016-17, which is part of this Annual Report. As a green initiative, the
Company''''s BRR will be available on its website at the web link http://www.capitalfirst.com/investor/corporate-governance. Any shareholder interested in obtaining a physical copy of the same may write to the Company Secretary of the Company.
CHANGE OF REGISTERED OFFICE
During the year under review, the Company shifted its registered office from 15th Floor, Tower-2, India bulls Finance Centre, Seagate Bapat Marg, Elphinstone (West), Mumbai - 400 013 to One Indiabulls Centre, Tower 2A & 2B, 10th Floor, Senapati Bapat Marg, Lower Parel (West), Mumbai - 400 013 with effect from November 21, 2016.
DIRECTORS & KEY MANAGERIAL PERSONNEL
a. Appointment
During the year under review, the Board of Directors at its Meeting held on April 04, 2016 appointed Mr. Apul Nayyar (DIN 01738973) and Mr. Nihal Desai (DIN 03288923) as Additional Directors who shall act as Whole Time Directors and Key Managerial Personnel of the Company as per provisions of Companies Act, 2013 and applicable law and both were designated as ‘Executive Director'''' for a period of two years effective from April 04, 2016. The aforesaid appointment of Mr. Apul Nayyar and Mr. Nihal Desai was approved by the members in their 11th Annual General Meeting of the Company held on July 05, 2016.
b. Re-appointment
During the year under review, the term of Mr. N. C. Singhal (DIN 00004916), Mr. M. S. Sundara Rajan (DIN 00169775) and Mr. Hemang Raja (DIN 00040769), Non-Executive Independent Directors of the Company who were appointed for a term of three years with effect from April 01, 2014 expired on March 31, 2017. The Board of Directors at their Meeting held on March 29, 2017 on recommendation of Nomination & Remuneration Committee had reappointed Mr. N. C. Singhal, Mr. M. S. Sundara Rajan and Mr. Hemang Raja as Non-Executive Independent Directors of the Company for a term of five years with effect from April 01, 2017 to hold office up to March 31, 2022 and they shall not be liable to retire by rotation. The aforesaid re-appointment of Independent Directors is subject to the approval of members in the 12th Annual General Meeting of the Company.
c. Retire by Rotation
In accordance with Section 152 and other applicable provisions of Companies Act, 2013, Mr. Vishal Mahadevia (DIN 01035771), being Non-Executive Director, retires by rotation and being eligible offers himself for re-appointment at the ensuing Annual General Meeting. The Board recommends his re-appointment.
BOARD’S INDEPENDENCE
Based on the confirmation/disclosures received from the Directors and on evaluation of the relationships disclosed, the following Non-Executive Directors are Independent in terms of Section 149(6) of the Companies Act, 2013 and the requirements of Listing Regulations :-
1. Mr. N. C. Singhal (DIN 00004916)
2. Mr. M. S. Sundara Rajan (DIN 00169775)
3. Mr. Hemang Raja (DIN 00040769)
4. Dr. (Mrs.) Brinda Jagirdar (DIN 06979864)
5. Mr. Dinesh Kanabar (DIN 00003252)
NUMBER OF MEETINGS OF THE BOARD
The Board met 7 times during the financial year 2016-17 viz., on April 04, 2016, May 13, 2016, August 03, 2016, November 09, 2016, November 11, 2016, January 31, 2017 and March 29, 2017. The maximum interval between any two meetings did not exceed 120 days.
COMMITTEES OF THE BOARD
In accordance with the Companies Act, 2013 and Listing Regulations, the Company has following Committees in place:
- Audit Committee
- Stakeholders Relationship Committee
- Corporate Social Responsibility Committee
- Nomination and Remuneration Committee
Details of the said Committees along with their charters, composition and meetings held during the financial year, are provided in the “Report on Corporate Governance”, as a part of this Annual Report.
COMPANY’S POLICY ON DIRECTORS’ APPOINTMENT, REMUNERATION AND EVALUATION
Pursuant to the provisions of the Companies Act, 2013 (“the Act”), Listing Regulations and requirements of the Reserve Bank of India, Policy on Nomination and Remuneration of Directors,
Key Managerial Personnel, Senior Management and other employees had been formulated including criteria for determining qualifications, positive attributes, Independence of a Director and other matters as required under the said Act and Listing Regulations.
The evaluation framework for assessing the performance of Directors comprises of the following key areas:
- Expertise;
- Objectivity and Independence;
- Guidance and support in context of life stage of the Company;
- Understanding of the Company''''s business;
- Understanding and commitment to duties and responsibilities;
- Willingness to devote the time needed for effective contribution to Company;
- Participation in discussions in effective and constructive manner;
- Responsiveness in approach;
- Ability to encourage and motivate the Management for continued performance and success.
The evaluation involves Self-Evaluation by the Board Member and subsequent assessment by the Board of Directors. A member of the Board will not participate in the discussion of his/her evaluation.
Accordingly, a process of evaluation was followed by the Board for its own performance and that of its Committees and individual Directors and also the necessary evaluation was carried out by Nomination and Remuneration Committee and Independent Director at their respective meetings held for the purpose.
DIRECTORS’ RESPONSIBILITY STATEMENT
Pursuant to the requirements of Section 134(5) of the Companies Act, 2013, with respect to Directors'''' Responsibility Statement, it is hereby stated that:
(a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;
(b) the Directors 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 the company at the end of the financial year and of the profit and loss of the company for that period;
(c) 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 the company and for preventing and detecting fraud and other irregularities;
(d) the Directors have prepared the annual accounts on a going concern basis;
(e) the Directors have laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively; and
(f) the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
The Board of Directors at its meeting held on May 08, 2014 had constituted Corporate Social Responsibility (CSR) Committee in accordance with Section 135 of Companies Act, 2013 read with rules formulated therein. The Company had carried out its CSR activities/ programs on the recommendation of the CSR Committee and duly approved by the Board and in accordance with the policy on CSR as per the identified core areas.
The Company chooses its CSR programs among many options in the CSR Committee and the Board Meeting(s) and does not get persuaded by any external influences other than those short listed in the best of spirit and which can add the social value in the pragmatic and idealistic sense.
The details of contents of CSR Policy of the Company and the details about the development of CSR Policy and initiatives taken by the Company on CSR during the financial year have been appended as Annexure 3 to this Report.
RISK MANAGEMENT POLICY AND INTERNAL CONTROL
The Company has adopted a Risk Management Policy duly approved by the Board and also has in place a mechanism to identify, assess, monitor and mitigate various risks to key business objectives. Major risks identified by the businesses and functions are systematically addressed through mitigating actions on a continuing basis. These are discussed at the meetings of the Risk Management Committee, Audit Committee and the Board of Directors of the Company. The Company''''s internal control systems are commensurate with the nature of its business and the size and complexity.
The detailed note on Risk Management and Internal Controls forms part of Management Discussion and Analysis Report.
CREDIT RATING
During the year, Brickwork Ratings India Private Limited (Brickwork) upgraded the long term rating to “BWR AAA” (Triple A) from “BWR AA ” (Double A Plus) of your Company. Instruments with this rating are considered to have the highest degree of safety regarding timely servicing of financial obligations. Such instruments carry very lowest credit risk. During the year, Credit Analysis & Research Limited (CARE) reaffirmed the long term rating of “AA ” (Double A Plus) of your Company. Instruments with this rating are considered to have high degree of safety regarding timely servicing of financial obligations. Such instruments carry very low credit risk.
Long-term Bank Loan Facilities: During the year, Brickwork assigned a rating of “BWR AAA” (Triple A) and the Company''''s rating of “CARE AA ” (Double A Plus) by CARE was reaffirmed.
Secured Redeemable Non-Convertible Debentures (NCDs): During the year, Brickwork upgraded the rating to “BWR AAA” (Triple A) from “BWR AA ” (Double A Plus) and the rating of “CARE AA ” (Double A Plus) was reaffirmed by CARE.
Subordinated Non-Convertible Debentures (NCDs): During the year, Brickwork upgraded the rating to “BWR AAA” (Triple A) from “BWR AA ” (Double A Plus) and CARE reaffirmed the rating of “CARE AA ” (Double A Plus).
Perpetual Non-Convertible Debentures (NCDs): During the year, Brickwork upgraded the rating to “BWR AA ” (Double A Plus) from “BWR AA” (Double A) and CARE reaffirmed the “CARE AA” (Double A) rating.
Short-term borrowing program: During the year under review, CARE reaffirmed the “A1 ” (A One Plus) rating for the short term borrowing program. The rating is the highest rating issued by CARE for short-term debt instruments and indicates strong capacity for timely payment of short term debt obligations and further indicates that the borrowing carries the lowest credit risk.
CONSOLIDATED FINANCIAL STATEMENTS
The Audited Consolidated Financial Statements are provided in this Annual Report which have been prepared in accordance with relevant Accounting Standards issued by the Institute of Chartered Accountants of India (ICAI).
STATUTORY AUDITORS AND THEIR REPORT
The term of M/s. S. R. Batliboi & Co. LLP, Chartered Accountants, having ICAI Firm Registration No. 301003E/E300005 who was appointed as Statutory Auditors of your Company at the Ninth
Annual General Meeting (AGM) held on June 18, 2014 expires at conclusion of Twelfth Annual General Meeting.
Accordingly, the Board of Directors of the Company at its Meeting held on November 09, 2016, on the recommendation of the Audit Committee have appointed M/s. B S R & Co. LLP, Chartered Accountants bearing Firm Registration No. 101248W/W-100022 as the Statutory Auditors of the Company for a term of five years from conclusion of Twelfth Annual General Meeting till conclusion of Seventeenth Annual General Meeting subject to the approval of shareholders at the Twelfth Annual General Meeting in accordance with the applicable provisions of the Companies Act, 2013 read with the Rules issued there under and the Listing Regulations and applicable law.
The Company has received the certificate(s) of eligibility in accordance with Section 139, Section 141 and other applicable provisions of the Companies Act, 2013 and Rules there under, from M/s. B S R & Co. LLP, Chartered Accountants.
The Statutory Auditor''''s Report on financial statements for the financial year 2016-17 does not contain any qualification, reservation or adverse remark.
PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS
Details of Loans, Guarantees and Investments are given in the notes to the Financial Statements.
PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES REFERRED TO IN SECTION 188
During and subsequent to the year under review, the contracts or arrangements with related parties have been on arm''''s length and in ordinary course of business and they were not material in nature. Accordingly, the particulars of the transactions as prescribed in Form AOC - 2 of the rules prescribed under Chapter IX relating to Accounts of Companies under the Companies Act, 2013 are not required to be disclosed as they are not applicable.
AUCTIONED DETAILS
The disclosures as required by Circular No. DNBS.CC.PD.No. 356/03.10.01/2013-14 dated September 16, 2013 issued by RBI, regarding reporting of the Gold Auctioned during the financial year 2016-17 are provided at Note No. 38 of Notes to the Standalone Financial Statements.
EXTRACT OF ANNUAL RETURN
The details forming part of the extract of the Annual Return in Form MGT 9 is annexed herewith as Annexure 2 to this Directors'''' Report.
SECRETARIAL AUDITORS AND THEIR REPORT
Pursuant to the provisions of Section 204 of the Companies Act, 2013 and Rules made there under, the Company had appointed M/s. Makarand M. Joshi & Co., Practicing Company Secretaries, to undertake the Secretarial Audit of the Company for the financial year 2016-17. The Secretarial Audit Report for financial year 201617, has been appended as Annexure 5 to this Report.
The Secretarial Auditor''''s Report does not contain any qualification, reservation or adverse remark.
The Board of the Directors at their Meeting held on May 10, 2017 have reappointed M/s. Makarand M. Joshi & Co., Practicing Company Secretaries, to undertake the Secretarial Audit of the Company for the financial year 2017-18.
VIGIL MECHANISM
Your Company has established a ‘Whistle Blower Policy and Vigil Mechanism'''' for Directors and employees to report to the appropriate authorities concerns about unethical behavior, actual or suspected, fraud or violation of the Company''''s code of conduct policy and provides safeguards against victimization of employees who avail the mechanism and also provide for direct access to the Chairman of the Audit Committee. The said policy has been uploaded on the website of the Company.
DISCLOSURES UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT
2013 READ WITH RULES
Pursuant to the requirements of Section 22 of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 read with Rules there under, the Company did not receive any complaint of sexual harassment during the year under review.
MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY
There have been no material changes and commitments, affecting the financial position of the Company which have occurred between the end of the financial year of the Company to which the financial statements relate and the date of the report.
DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANY’S OPERATIONS IN FUTURE
There have been no significant and material orders passed by the Regulators or Courts or Tribunals impacting the going concern status and company''''s operations in future.
PARTICULARS OF ENERGY CONSERVATION, TECHNOLOGY ABSORPTION, EXPENDITURE ON RESEARCH AND DEVELOPMENT, FOREIGN EXCHANGE INFLOW/ OUTFLOW, ETC.
The requirements of disclosure with regard to Conservation of Energy in terms of Section 134 of the Companies Act, 2013, read with the Companies (Accounts) Rules, 2014, are not applicable to the Company since it doesn''''t own any manufacturing facility.
However, the Company makes all efforts towards conservation of energy, protection of environment and ensuring safety.
The details of the earnings and outgoing Foreign Exchange during the year under review are provided in Note No. 35 to the Standalone Financial Statements as at March 31, 2017. The Members are requested to refer to the said Note for details in this regard.
PARTICULARS OF EMPLOYEES, EMPLOYEES STOCK OPTION SCHEME (ESOS) AND EMPLOYEES STOCK PURCHASE SCHEME (ESPS)
The details in terms of Section 197 of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are forming part of this report as Annexure 4. The statement containing particulars of employees as required under Section 197(12) of the Companies Act, 2013 read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 may be obtained by the members by writing to the Company Secretary of your Company.
The Stock Options have been granted to the employees under various CFL - Employees Stock Option Schemes. The said schemes are in compliance with the SEBI (Share Based Employee Benefits) regulations, 2014 as amended from time to time (SEBI Regulations). The details and disclosures with respect to ESOS /ESPS as required under SEBI Regulations are provided on the website of the Company and web link for the same is http:// www.capitalfirst.com/investor/corporate-governance.
Subsequent to the year under review, Board of Directors of the Company at its Meeting held on May 10, 2017, on the recommendation of Nomination and Remuneration Committee approved the ‘CFL Stock Option Scheme - 2017'''' subject to the approval of Members of the Company.
ACHIEVEMENTS
Your Company and Chairman & Managing Director won several award/achieved rankings. Select few awards/rankings are enumerated hereunder:
- Mr. Vaidyanathan received ‘Outstanding Entrepreneur Award'''' in Asia Pacific Entrepreneurship Award 2016.
- Capital First featured in Dun & Bradstreet: India''''s Top 500 companies wherein achieved Rank of 381 in total income & Rank 20 in NBFC space.
- Capital First debuted in Fortune India''''s Next 500 companies whereby achieved Rank 70 in overall category & Rank 2 in NBFC space.
- Capital First received ‘Best Electronic Banking Implementation'''' recognition in Asset Triple A Treasury, Trade and Risk Management Awards.
- Capital First debuted in the Most Valuable Companies 2016 by Business Today whereby Company was ranked at 274th place.
- Capital First debuted in India''''s future ready companies by ET 500 whereby Company ranked at 466th place
- Mr. Vaidyanathan received ‘Most Promising Leaders in Asia Award'''' in Economic Time''''s Asian Business Leaders Conclave.
- Capital First featured amongst ‘India''''s Most Trusted Financial Brands'''' by World Consulting & Research Corporation Media Initiative (WCRC).
- Capital First received ‘Asia Innovator of the Year'''' Award by CNBC in India Business Leader Awards from Hon. Finance Minister Shri. Arun Jaitley.
ACKNOWLEDGEMENT
We are grateful to the Government of India, the Reserve Bank of India, the Securities and Exchange Board of India, the Stock Exchanges, Insurance Regulatory and Development Authority of India, National Housing Bank and other regulatory authorities for their valuable guidance and support and wish to express our sincere appreciation for their continued co-operation and assistance. We look forward to their continued support in future.
We wish to thank our bankers, investors, rating agencies, debenture trustees, customers and all other business associates for their support and trust reposed in us.
Your Directors express their deep sense of appreciation for all the employees whose commitment, co-operation, active participation, dedication and professionalism has made the organization''''s growth possible.
Finally, the Directors thank you for your continued trust and support.
On behalf of the Board of Directors
V. Vaidyanathan
Place : Mumbai Chairman & Managing Director
Date : May 10, 2017 DIN: 00082596
Dear Members,
The Directors have pleasure in presenting the Eleventh Annual Report
of your Company with the audited financial statements for the financial
year ended March 31, 2016.
FINANCIAL HIGHLIGHTS
The highlights of the Consolidated and Standalone Financial Statements
of the Company for the financial years 2015-16 and 2014-15 are as
under:
(Rs. in Million)
Particulars Consolidated Standalone
2015-16 2014-15 2015-16 2014-15
Total Income 18,887.96 14,418.58 18,478.41 14,259.32
Total Expenditure 16,364.41 12,791.40 16,092.27 12,646.13
Profit Before Tax
and exceptional items 2,523.55 1,627.18 2,386.14 1,613.19
Provision For Tax 847.98 510.59 817.03 492.99
Profit after tax from
continuing operations 1,675.57 1,116.59 1,569.11 1,120.20
Profit/(Loss) after
tax from Discontinuing
operations -13.72 26.22 - -
Profit for the year 1,661.85 1,142.81 1,569.11 1,120.20
Profit/(Loss) brought
forward from previous
Year 1,468.60 931.95 1,734.34 1,216.26
Less: Accelerated
Depreciation as per the
Companies Act, 2013 - 6.71 - 6.71
Less: Loss in recovery
of advances granted to
Employee Welfare Trusts - 18.36 - 18.36
Profit available for
appropriation 3,130.45 2,049.69 3,303.45 2,311.39
Appropriations:
Transfer to Reserve
Fund under Section
45-IC of the RBI
Act, 1934 313.82 224.04 313.82 224.04
Transfer to statutory
reserve under Section
29Cof the National
Housing Bank Act, 1987 12.48 4.03 - -
Proposed Dividend 218.99 200.24 218.99 200.24
Dividend Tax thereon 44.58 40.76 44.58 40.76
Transfer to General
Reserve 156.91 112.02 156.91 112.02
Balance carried forward
to Balance Sheet 2,383.66 1,468.60 2,569.14 1,734.34
The Company is focused on providing retail loans to MSMEs and
consumers, including long term loans secured by property, two- wheeler
loans and consumer durable loans, which is expected to drive growth for
the Company going forward.
During the year under review, the Company has successfully grown its
outstanding Loan Assets under Management from Rs. 119.75 billion to Rs.
160.41 billion, a growth of 34%. The Retail Assets under Management has
grown from Rs. 101.17 billion to Rs. 137.56 billion, a growth of 36%.
Wholesale Book increased only by 23% from Rs. 18.62 billion to Rs.
22.85 billion.
The Consolidated Net worth of the Company increased from Rs. 15.74
billion to Rs. 17.03 billion as at March 31, 2016.
Consolidated Net Interest Income increased by 53% from Rs. 5363 million
during the financial year ending March 31, 2015 to Rs. 8181 million
during the financial year ending March 31, 2016.
The profit after tax was up by 45% from Rs. 1143 million to Rs. 1662
million.
The Company proposes to transfer an amount of Rs. 156.91 million to the
General Reserves.
DIVIDEND
Keeping in mind the overall performance and the outlook for your
Company, your Directors are pleased to recommend a dividend of Rs.
2.40/- (Rupees Two and fourty paise only) per share i.e. 24% on each
Equity Share having face value of Rs. 10/- (Rupees Ten only). The total
outgo for the current year amounts to Rs. 218.99 million as against Rs.
200.24 million in the previous year.
CAPITAL ADEQUACY
The Company''''s capital adequacy ratio was 19.81% as on March 31, 2016,
which is significantly above the threshold limit of 15% as prescribed
by the Reserve Bank of India (''''RBI'''').
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
As required under Regulation 34 of Securities and Exchange Board of
India (Listing Obligations and Disclosure Requirements) Regulations,
2015 ("Listing Regulations") and Circular/ Notifications/ Directions
issued by Reserve Bank of India from time to time, the Management
Discussion and Analysis of the financial condition and result of
consolidated operations of the Company for the year under review is
presented in a separate section forming part of the Annual Report.
CORPORATE GOVERNANCE
A Report on Corporate Governance as required under Listing Regulations
forms part of the Annual Report.
A Certificate from M/s. Makarand M. Joshi & Co., Practicing Company
Secretaries, confirming compliance with the conditions of Corporate
Governance as stipulated under the Listing Regulations, also forms part
of the Annual Report.
SHARE CAPITAL
During the year under review, the Company had issued and allotted
2,55,475 equity shares and subsequent to the year under review, 8,600
equity shares were also allotted to the eligible employees of the
Company under various Employee Stock Option Schemes of the Company. The
paid up equity share capital of the Company as on date of this report
stands at Rs. 91,24,63,440/- comprising of 9,12,46,344 equity shares of
Rs. 10/- each.
PUBLIC DEPOSITS
The Company being a Non-Deposit Accepting Non-Banking Finance Company
has not accepted any deposits from the public during the year under
review and shall not accept any deposits from the public without
obtaining prior approval of the RBI.
RBI GUIDELINES
As a Systemically Important Non-Deposit taking Non-Banking Finance
Company, your Company always aims to operate in compliance with
applicable RBI laws and regulations and employs its best efforts
towards achieving the same.
NUMBER OF MEETINGS OF THE BOARD
The Board met 5 times during the financial year 2015-16 viz., on April
1, 2015, May 13, 2015, August 4, 2015, November 2, 2015 and February
10, 2016. The maximum interval between any two meetings did not exceed
120 days.
COMMITTEES OF THE BOARD
In accordance with the Companies Act, 2013 and Listing Regulations, the
Company has following Committees in place:
- Audit Committee
- Nomination and Remuneration Committee
- Stakeholders Relationship Committee
- Corporate Social Responsibility Committee
Details of the said Committees along with their charters, composition
and meetings held during the financial year, are provided in the
"Report on Corporate Governance", as a part of this Annual Report.
AUCTIONED DETAILS
The disclosures as required by Circular No. DNBS.CC.PD.No. 356
/03.10.01/2013-14 dated September 16, 2013 issued by RBI, regarding
reporting of the Gold Auctioned during the financial year 2015-16 are
provided at Note No. 39 of Notes to the Standalone Financial
Statements.
CREDIT RATING
Short-term borrowing program: During the year under review, Credit
Analysis & Research Ltd. ("CARE") reaffirmed the "A1 " ("A One Plus")
rating for the short term borrowing program. The rating is the highest
rating issued by CARE for short-term debt instruments and indicates
strong capacity for timely payment of short term debt obligations and
further indicates that the borrowing carries the lowest credit risk.
During the year under review, the rating of short term borrowing
program was enhanced by Rs. 5,000 million i.e. from Rs. 12,000 million
to Rs. 17,000 million.
During the year, CARE and Brickwork Ratings India Private Limited
(Brickwork) reaffirmed the long term rating of "AA " (Double A Plus) of
your Company. Instruments with this rating are considered to have high
degree of safety regarding timely servicing of financial obligations.
Such instruments carry very low credit risk.
Long-term Bank Loan Facilities: During the year, the Company''''s rating
of "CARE AA " ("Double A Plus") by CARE in respect of the bank loan
facilities of the Company was reaffirmed for an amount of Rs. 82,450
million.
Secured Redeemable Non-Convertible Debentures (NCDs): During the year
CARE reaffirmed the Company''''s rating of "CARE AA " ("Double A Plus")
for the Secured Redeemable NCDs for an aggregate amount of Rs. 28,500
million (enhanced from Rs. 13,000 million). The rating of "BWR AA "
("BWR Double A Plus") for an aggregate amount of Rs. 9,000 million
(rating of Rs. 5,500 million was withdrawn because of redemption of
NCDs) was also reaffirmed by Brickwork.
Subordinated Non-Convertible Debentures (NCDs): During the year CARE
reaffirmed the rating of "CARE AA " ("Double A Plus") rating for the
Unsecured Subordinated Debt program of the Company for an aggregate
amount of Rs. 8,000 million (enhanced from Rs. 2,000 million).
Brickwork also reaffirmed the rating to "BWR AA " ("BWR Double A Plus")
for the Unsecured Subordinated Debt program of the Company for an
aggregate amount of Rs. 8,000 million (enhanced from Rs. 2,000
million).
Perpetual Non-Convertible Debentures (NCDs): During the year CARE
reaffirmed the "CARE AA" ("Double A") rating to the Perpetual Debt
program of the Company for an aggregate amount of Rs. 3,000 million
(enhanced from Rs. 2,000 million). Brickwork also reaffirmed the "BWR
AA" ("Double A") rating to the Perpetual Debt program of the Company
for an aggregate amount of Rs. 2,500 million (enhanced from Rs. 2,000
million).
DIRECTORS & KEY MANAGERIAL PERSONNEL
a. Appointment
Pursuant to approval of the Members of the Company at their Annual
General Meeting held on July 20, 2015, Mr. V. Vaidyanathan was
reappointed as Chairman and Managing Director of the Company (DIN
00082596) for a period of five years with effect from August 10, 2015
on terms and conditions including remuneration as recommended by the
Nomination and Remuneration Committee and more particularly set out in
the ''''CMD Agreement 2015'''' entered into between the Company and Mr. V.
Vaidyanathan.
Subsequent to the year under review, the Board of Directors at its
Meeting held on April 4, 2016 appointed Mr. Apul Nayyar (DIN 01738973)
and Mr. Nihal Desai (DIN 03288923) as Additional Directors who shall
act as Whole Time Directors and Key Managerial Personnels of the
Company as per provisions of Companies Act, 2013 and both were
designated as ''''Executive Director'''' for a period of two years effective
from April 4, 2016. The aforesaid appointment of Mr. Apul Nayyar (DIN
01738973) and Mr. Nihal Desai (DIN 03288923) shall be subject to the
approval of members in the ensuing Annual General Meeting of the
Company.
The Company has received notices in writing under Section 160 of the
Companies Act, 2013 from Mr. Apul Nayyar and Mr. Nihal Desai proposing
their appointment as Directors. The Board recommends their
appointment.
The details of the aforesaid Directors forms part of this Report as
Annexure 1.
Based on the confirmations received, none of the Directors are
disqualified for appointment under Section 164(2) of Companies Act,
2013.
b. Retire by Rotation
In accordance with Section 152 and other applicable provisions of
Companies Act, 2013, Mr. Narendra Ostawal (DIN 06530414), being
Non-Executive Director, retires by rotation and being eligible offers
himself for re-appointment at the ensuing Annual General Meeting. The
Board recommends his appointment.
BOARD''''S INDEPENDENCE
Definition of ''''Independence'''' of Directors is in conformity with Section
149(6) of the Companies Act, 2013 and the requirements of Listing
Regulations. Based on the confirmation/ disclosures received from the
Directors and on evaluation of the relationships disclosed, the
following Non-Executive Directors are Independent in terms of Section
149(6) of the Companies Act, 2013 and the requirements of Listing
Regulations :-
1. Mr. N. C. Singhal (DIN 00004916)
2. Mr. Hemang Raja (DIN 00040769)
3. Mr. M. S. Sundara Rajan (DIN 00169775)
4. Dr. (Mrs.) Brinda Jagirdar (DIN 06979864)
5. Mr. Dinesh Kanabar (DIN 00003252)
DIRECTORS'''' RESPONSIBILITY STATEMENT
Pursuant to the requirements of Section 134(5) of the Companies Act,
2013, with respect to Directors'''' Responsibility Statement, it is hereby
stated that:
(a) in the preparation of the annual accounts, the applicable
accounting standards had been followed along with proper explanation
relating to material departures;
(b) 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 the company at the end of the financial year and of the profit and
loss of the company for that period;
(c) 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 the company and
for preventing and detecting fraud and other irregularities;
(d) the Directors have prepared the annual accounts on a going concern
basis;
(e) the Directors have laid down internal financial controls to be
followed by the company and that such internal financial controls are
adequate and were operating effectively; and
(f) the Directors have devised proper systems to ensure compliance with
the provisions of all applicable laws and that such systems were
adequate and operating effectively.
COMPANYS POLICY ON DIRECTORS'''' APPOINTMENT, REMUNERATION AND EVALUATION
Pursuant to the provisions of the Companies Act, 2013 ("the Act") and
Listing Regulations, Policy on Nomination and Remuneration of
Directors, Key Managerial Personnel, Senior Management and other
employees had been formulated including criteria for determining
qualifications, positive attributes, Independence of a Director and
other matters as required under the said Act and Listing Regulations.
The evaluation framework for assessing the performance of Directors
comprises of the following key areas:
- Expertise;
- Objectivity and Independence;
- Guidance and support in context of life stage of the Company;
- Understanding of the Company''''s business;
- Understanding and commitment to duties and responsibilities;
- Willingness to devote the time needed for effective contribution to
Company;
- Participation in discussions in effective and constructive manner;
- Responsiveness in approach;
- Ability to encourage and motivate the Management for continued
performance and success.
The evaluation involves Self-Evaluation by the Board Member and
subsequent assessment by the Board of Directors. A member of the Board
will not participate in the discussion of his/her evaluation.
Accordingly, a process of evaluation was followed by the Board for its
own performance and that of its Committees and individual Directors and
also the necessary evaluation was carried out by Nomination and
Remuneration Committee and Independent Director at their respective
meetings held for the purpose.
CONSOLIDATED FINANCIAL STATEMENTS
The Audited Consolidated Financial Statements are provided in this
Annual Report which have been prepared in accordance with relevant
Accounting Standards issued by the Institute of Chartered Accountants
of India.
PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS
Details of Loans, Guarantees and Investments are given in the notes to
the Financial Statements.
PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES REFERRED
TO IN SECTION 188
During and subsequent to the year under review, the contracts or
arrangements with related parties have been on arms length and in
ordinary course of business and they were not material in nature.
Accordingly, the particulars of the transactions as prescribed in Form
AOC - 2 of the rules prescribed under Chapter IX relating to Accounts
of Companies under the Companies Act, 2013 are not required to be
disclosed as they are not applicable.
EXTRACT OF ANNUAL RETURN
The details forming part of the extract of the Annual Return in form
MGT 9 is annexed herewith as Annexure 2 to this Director''''s Report.
CORPORATE SOCIAL RESPONSIBILITY(CSR)
The Board of Directors at its meeting held on May 8, 2014 had
constituted Corporate Social Responsibility (CSR) Committee in
accordance with Section 135 of Companies Act, 2013 read with rules
formulated therein. During the year under review the Company pursuant
to the recommendation of the CSR Committee had adopted a detailed
policy on Corporate Social Responsibility and also discussed and
identified the core areas in which the CSR activities was proposed to
be carried out from time to time. Accordingly, the Company had carried
out CSR activities/ programs on the recommendation of the CSR Committee
and duly approved by the Board.
The Company chooses its CSR programs among many options in the CSR
Committee and the Board Meeting(s) and does not get persuaded by any
external influences other than those short listed in the best of spirit
and which can add the social value in the pragmatic and idealistic
sense.
The details of contents of CSR Policy of the Company and the details
about the development of CSR Policy and initiatives taken by the
Company on Corporate Social Responsibility during the financial year
have been appended as Annexure 3 to this Report.
STATUTORY AUDITORS AND THEIR REPORT
M/s. S. R. Batliboi & Co. LLP, Chartered Accountants, having ICAI Firm
Registration No. 301003E/E300005 were appointed as Statutory Auditors
of your Company at the Ninth Annual General Meeting (AGM) held on June
18, 2014 from the conclusion of the said AGM till conclusion of Twelfth
Annual General Meeting. As per the provisions of Section 139 of the
Companies Act, 2013, the appointment of Statutory Auditors is required
to be ratified by members at every Annual General Meeting. Accordingly,
the appointment of M/s. S. R. Batliboi & Co. LLP, as Statutory Auditor
of the Company is placed for ratification by the shareholders.
The Auditor''''s Report does not contain any qualification, reservation or
adverse remark.
SECRETARIAL AUDITORS AND THEIR REPORT
Pursuant to the provisions of Section 204 of the Companies Act, 2013
and Rules made thereunder, the Company had appointed M/s. Makarand M.
Joshi & Co., Practicing Company Secretaries, to undertake the
Secretarial Audit of the Company for the financial year 2015-16. The
Secretarial Audit Report for financial year 2015-16, has been appended
as Annexure 6 to this Report.
The Board of the Directors at their Meeting held on May 13, 2016 have
reappointed M/s. Makarand M. Joshi & Co., Practicing Company
Secretaries, to undertake the Secretarial Audit of the Company for the
financial year 2016-17.
SUBSIDIARIES
Your Directors are pleased to inform that the Hon''''ble High Court of
Judicature at Bombay, vide its order dated July 31, 2015, has approved
the Scheme of Amalgamation of Capital First Investment Advisory Limited
with Capital First Home Finance Limited (formerly Capital First Home
Finance Private Limited) and the same has been effective pursuant to
filing a certified copy of the said order with the Registrar of
Companies on August 31, 2015.
During the year under review, pursuant to completion of regulatory
formalities of process of conversion of Private Limited Company to
Public Limited Company, the name of "Capital First Home Finance Private
Limited" was changed to "Capital First Home Finance Limited" with
effect from December 5, 2015.
During the year under review, the non-material wholly owned overseas
subsidiary of the Company viz. Anchor Investment & Trading Private
Limited incorporated under the laws of Mauritius was dissolved as it
was a non-operative Company. The dissolution was effective from
February 19, 2016 vide General Notice No. 304 of 2016 of "The Mauritius
Government Gazette" dated March 14, 2016.
With respect to comments of Secretarial Auditor for the year under
review, the Company has filed a return with appropriate authority
w.r.t. closure of its wholly owned subsidiary namely Anchor Investment
& Trading Private Limited after statutory due date, due to delayed
receipt of the publication of gazette of Mauritius from the said
subsidiary wherein such effective date of dissolution was mentioned.
PARTICULARS OF EMPLOYEES, EMPLOYEES STOCK OPTION SCHEME AND EMPLOYEES
STOCK PURCHASE SCHEME
The details in terms of Section 197 of the Companies Act, 2013 read
with Rule 5(1) of the Companies (Appointment and Remuneration of
Managerial Personnel) Rules, 2014, are forming part of this report as
Annexure 5. The statement containing particulars of employees as
required under Section 197(12) of the Companies Act, 2013 read with
Rule 5(2) of the Companies (Appointment and Remuneration of Managerial
Personnel) Rules, 2014 may be obtained by the members by writing to the
Company Secretary of your Company.
During the year under review, the Company has granted employee stock
options to eligible employees under various Employee Stock Option
Schemes. The Company had issued and allotted 2,55,475 equity shares and
subsequent to the year under review, 8,600 equity shares were allotted
to the eligible employees of the Company under various Employee Stock
Option Schemes of the Company.
Subsequent to the year under review, Board of Directors of the Company
on the recommendation of Nomination and Remuneration Committee at its
Meeting held on May 13, 2016, approved the ''''CFL Stock Option Scheme -
2016'''' subject to the approval of Members of the Company.
The details with respect to the Employee Stock Option Schemes/ Employee
Stock Purchase Scheme are annexed and forms part of this Report as
Annexure 4.
PARTICULARS OF ENERGY CONSERVATION, TECHNOLOGY ABSORPTION, EXPENDITURE
ON RESEARCH AND DEVELOPMENT, FOREIGN EXCHANGE INFLOW/OUTFLOW, ETC.
The requirements of disclosure with regard to Conservation of Energy in
terms of Section 134 of the Companies Act, 2013, read with the
Companies (Accounts) Rules, 2014, are not applicable to the Company
since it doesn''''t own any manufacturing facility.
However, the Company makes all efforts towards conservation of energy,
protection of environment and ensuring safety.
The details of the earnings and outgoing Foreign Exchange during the
year under review are provided in Note No. 36 to the Standalone
Financial Statements as at March 31, 2016. The Members are requested to
refer to the said Note for details in this regard.
VIGIL MECHANISM
Your Company has established a ''''Whistle Blower Policy and Vigil
Mechanism'''' for Directors and employees to report to the appropriate
authorities concerns about unethical behaviour, actual or suspected,
fraud or violation of the Company''''s code of conduct policy and provides
safeguards against victimization of employees who avail the mechanism
and also provide for direct access to the Chairman of the Audit
Committee. The said policy has been uploaded on the website of the
Company.
MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF
THE COMPANY
There have been no material changes and commitments, affecting the
financial position of the Company which have occurred between the end
of the financial year of the Company to which the financial statements
relate and the date of the report.
DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR
COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANYS
OPERATIONS IN FUTURE
There have been no significant and material orders passed by the
Regulators or Courts or Tribunals impacting the going concern status
and company''''s operations in future.
RISK MANAGEMENT POLICY AND INTERNAL CONTROL
The Company has adopted a Risk Management Policy duly approved by the
Board and also has in place a mechanism to identify, assess, monitor
and mitigate various risks to key business objectives. Major risks
identified by the businesses and functions are systematically addressed
through mitigating actions on a continuing basis. These are discussed
at the meetings of the Risk Management Committee, Audit Committee and
the Board of Directors of the Company. The Company''''s internal control
systems are commensurate with the nature of its business and the size
and complexity.
The detailed note on Risk Management and Internal Controls forms part
of Management Discussion and Analysis Report.
DISCLOSURES UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION,
PROHIBITION AND REDRESSAL) ACT 2013 READ WITH RULES
Pursuant to the requirements of Section 22 of Sexual Harassment of
Women at Workplace (Prevention, Prohibition and Redressal) Act 2013
read with Rules thereunder, the Company had received one complaint of
sexual harassment during the year under review. The same had been
resolved after following due process of law.
ACKNOWLEDGEMENT
We are grateful to the Government of India, the Reserve Bank of India,
the Securities and Exchange Board of India, the Stock Exchanges,
Insurance Regulatory and Development Authority of India, National
Housing Bank and other regulatory authorities for their valuable
guidance and support and wish to express our sincere appreciation for
their continued co-operation and assistance. We look forward to their
continued support in future.
We wish to thank our bankers, investors, rating agencies, customers and
all other business associates for their support and trust reposed in
us.
Your Directors express their deep sense of appreciation for all the
employees whose commitment, co-operation, active participation,
dedication and professionalism has made the organization''''s growth
possible.
Finally, the Directors thank you for your continued trust and support.
On behalf of the Board of Directors
V Vaidyanathan
Place : Mumbai Chairman & Managing Director
Date : May 13, 2016 DIN: 00082596
Dear Members,
The Directors have pleasure in presenting the Tenth Annual Report of
your Company with the audited financial statement for the financial
year ended March 31, 2015.
FINANCIAL HIGHLIGHTS
The highlights of the consolidated and standalone financial statement
of the Company for the financial years 2014-15 and 2013-14 are as
under:
(Rs. in Million)
Particulars Consolidated Standalone
2014-15 2013-14 2014-15 2013-14
Total Income 14,418.58 10,625.14 14,259.32 10,797.12
Total Expenditure 12,791.40 9,977.63 12,646.13 10,043.79
Profit Before Tax and
exceptional items 1,627.18 647.51 1,613.19 753.33
Exceptional income/
(expense) - - - (344.48)
Provision For Tax 510.59 58.00 492.99 39.02
Profit after tax from
continuing operations 1,116.59 589.51 1,120.20 369.83
Profit/(Loss) after
tax from Discontinuing
operations 26.22 (63.23) - -
Profit for the year 1,142.81 526.28 1,120.20 369.83
Profit/(Loss)brought
forward from previous
Year 931.95 676.22 1,216.26 1,113.55
Less: Accelerated
Depreciation as per the
Companies Act, 2013 6.71 - 6.71 -
Less: Loss in recovery
of advances granted to
Employee Welfare Trusts 18.36 - 18.36 -
Profit available for
appropriation 2,049.69 1,202.50 2,311.39 1,483.38
Appropriations:
Transfer to Reserve
Fund under Section
45- IC of the RBI
Act, 1934 224.04 73.96 224.04 73.97
Transfer to statutory
reserve under section
29C of the National
Housing Bank Act, 1987 4.03 3.44 - -
Proposed Dividend 200.24 165.41 200.24 165.41
Dividend Tax thereon 40.76 - 40.76 -
Transfer to General
Reserve 112.02 27.74 112.02 27.74
Balance carried
forward to Balance
Sheet 1,468.60 931.95 1,734.34 1,216.26
The Company is focused on providing loans to Retail, MSME, Consumer and
Wholesale credit, which is expected to drive growth for the Company
going forward.
During the year under review, the Company has successfully grown its
outstanding Loan Assets under Management from Rs. 96.79 billion to Rs.
119.75 billion, a growth of 24%. The Retail Assets under Management has
grown from Rs. 78.83 billion to Rs. 101.17 billion, a growth of 28%.
Wholesale Book increased only by 4% from Rs. 17.96 billion to Rs. 18.62
billion.
The Net worth of the Company increased from Rs. 11.71 billion to Rs. 15.74
billion as at March 31, 2015.
Consolidated Net Interest Income increased by 58% from Rs. 3393 million
during the financial year ending March 31, 2014 to Rs. 5363 million
during the financial year ending March 31, 2015.
The profit after tax was up by 117% from 526.28 million to Rs. 1,142.81
million.
The Company proposes to transfer an amount of Rs. 112.02 million to the
General Reserves.
DIVIDEND
Keeping in mind the overall performance and the outlook for your
Company, your Directors are pleased to recommend a dividend of Rs. 2.20
(Rupees Two and paise Twenty only) per share i.e. 22% on each Equity
Share having face value of Rs. 10/- (Rupees Ten only). The total outgo
for the current year amounts to Rs. 200.24 million as against Rs. 165.41
million in the previous year.
CAPITAL ADEQUACY
The Company''s capital adequacy ratio was 23.44% as on March 31, 2015,
which is significantly above the threshold limit of 15% as prescribed
by the Reserve Bank of India.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
As required under Clause 49 of the Listing Agreement entered into with
the Stock Exchanges and Circular/Notifications/ Directions issued by
Reserve Bank of India from time to time, the Management Discussion and
Analysis of the financial condition and result of consolidated
operations of the Company for the year under review is presented in a
separate section forming part of the Annual Report.
CORPORATE GOVERNANCE
A Report on Corporate Governance as required under Clause 49 of the
Listing Agreement entered into with the Stock Exchanges, forms part of
the Annual Report.
A Certificate from M/s. Makarand M Joshi & Co., Practicing Company
Secretaries, confirming compliance with the conditions of Corporate
Governance as stipulated under the aforesaid Clause 49, also forms part
of the Annual Report.
SHARE CAPITAL
During the year under review, the Company raised funds through issue
and allotment of 76,92,300 Equity Shares at a price of Rs. 390/- per
Equity Share (including a premium of Rs. 380/- per Equity Share),
aggregating to Rs. 2,99,99,97,000/- to Qualified Institutional Buyers
through Qualified Institutions Placement mode pursuant to Chapter VIII
of the Securities and Exchange Board of India (Issue of Capital and
Disclosure Requirements) Regulations, 2009, as amended and section 42
of the Companies Act, 2013 and the rules made thereunder.
During the year under review, the Company had issued and allotted
6,58,500 equity shares and subsequent to the year under review, 27,050
equity shares were also allotted to the eligible employees of the
Company under various Employee Stock Option Schemes of the Company. The
paid up equity share capital of the Company as on date of this report
stands at Rs. 91,00,93,190/- comprising of 9,10,09,319 equity shares of Rs.
10/- each.
In order to meet its growth objectives and to strengthen its financial
position, it is required to generate long term resources by issuing
securities. It is, therefore, deemed appropriate to reclassify the
Authorised Share Capital of the Company from Rs. 113,00,00,000/- (Rupees
One Hundred and Thirteen Crore) comprising of 10,30,00,000 (Ten Crore
Thirty Lac) Equity Shares of Rs. 10/- (Rupees Ten) each and 1,00,00,000
(One Crore) Compulsorily Convertible Preference Shares of Rs. 10/-
(Rupees Ten) each to Rs. 113,00,00,000/- (Rupees One Hundred and Thirteen
Crore) comprising of 11,30,00,000 (Eleven Crore Thirty Lakhs) Equity
Shares of Rs. 10/- (Rupees Ten) subject to the approval of shareholders
at the ensuing Annual General Meeting of the Company.
SUBSIDIARIES
During the year under review, the Board of Directors of Capital First
Investment Advisory Limited (''CFIAL) and Capital First Home Finance
Private Limited (''CFHFPL''), both being wholly owned subsidiary
Companies of the Company had approved the Scheme of Amalgamation
pursuant to which a petition has been filed with Hon''ble Bombay High
Court for merger of CFIAL into CFHFPL.
During the year under review, Anchor Investment & Trading Private
Limited which had been involved in investment management and advisory
activity, has initiated the process of winding up. As this business
was discontinued by the Company in 2010-11.
PUBLIC DEPOSITS
The Company being a Non-Deposit Accepting Non-Banking Finance Company
has not accepted any deposits from the public during the year under
review and shall not accept any deposits from the public without
obtaining prior approval of the Reserve Bank of India (RBI).
RBI GUIDELINES
As a Systemically Important Non Deposit taking Non-Banking Finance
Company, your Company always aims to operate in compliance with
applicable RBI laws and regulations and employs its best efforts
towards achieving the same.
NUMBER OF MEETINGS OF THE BOARD
The Board met 8 times in financial year 2014-15 viz., on April 02,
2014, May 08, 2014, August 05, 2014, September 24, 2014, November 07,
2014, December 22, 2014, January 06, 2015 and February 10, 2015. The
maximum interval between any two meetings did not exceed 120 days.
COMMITTEES OF THE BOARD
During the year, in accordance with the Companies Act, 2013 and Clause
49 of Listing Agreement, the Board re-constituted some of its
Committees and also formed a Corporate Social Responsibility Committee.
The Committees are as follows:
- Audit Committee
- Nomination and Remuneration Committee
- Stakeholders'' Relationship Committee
- Corporate Social Responsibility Committee
Details of the said Committees along with their charters, composition
and meetings held during the year, are provided in the "Report on
Corporate Governance", a part of this Annual Report.
GOLD AUCTIONED
The disclosures as required by circular no. DNBS.CC.PD.No.356
/03.10.01/2013-14 dated September 16, 2013 issued by Reserve Bank of
India, regarding reporting of the Gold Auctioned during the financial
year 2014-15 are provided at Note No. 43 of Notes to the Standalone
Financial Statements.
CREDIT RATING
Short-term borrowing programme: During the year under review, Credit
Analysis & Research Ltd. ("CARE") reaffirmed the "A1 " ("A
One Plus") rating for the short term borrowing program. The rating
is the highest rating issued by CARE for short term debt instruments
and indicates strong capacity for timely payment of short term debt
obligations and further indicates that the borrowing carries the lowest
credit risk. During the year under review, the rating of short term
borrowing programme was enhanced by Rs. 3,000 million i.e. from Rs. 9,000
million to Rs. 12,000 million.
During the year, Credit Analysis & Research Ltd. (CARE) and Brickwork
Ratings India Private Limited (Brickwork) reaffirmed the long term
rating of "AA " (Double A Plus) of your Company. Instruments with
this rating are considered to have high degree of safety regarding
timely servicing of financial obligations. Such instruments carry very
low credit risk.
Long-term Bank Loan Facilities: During the year, the Company''s rating
of "CARE AA " ("Double A Plus") by CARE in respect of the bank
loan facilities of the Company, was enhanced from Rs. 81,450 million to Rs.
82,450 million.
Secured Redeemable Non-Convertible Debentures (NCDs):
During the year CARE reaffirmed the Company''s rating of "CARE AA "
("Double A Plus") for the Secured Redeemable NCDs for an aggregate
amount of Rs. 13,000 million (enhanced from Rs.10,500 million). The rating
of "BWR AA " ("BWR Double A Plus") for an aggregate amount of Rs.
12,500 million (enhanced from Rs.10,000 million) was also reaffirmed by
Brickwork.
Subordinated Non-Convertible Debentures (NCDs): During the year CARE
reaffirmed the rating of "CARE AA " ("Double A Plus") rating
for the Unsecured Subordinated Debt program of the Company for an
aggregate amount of Rs. 2,000 million. Brickwork also reaffirmed the
rating to "BWR AA " ("BWR Double A Plus") for the Unsecured
Subordinated Debt program of the Company for an aggregate amount of Rs.
2,000 million.
Perpetual Non-Convertible Debentures (NCDs): During the year CARE
reaffirmed the "CARE AA" ("Double A") rating to the Perpetual
Debt program of the Company for an aggregate amount of Rs. 2,000 million
(enhanced from Rs. 1,500 million). Brickwork also reaffirmed the "BWR
AA" ("Double A") rating to the Perpetual Debt program of the
Company for an aggregate amount of Rs. 2,000 million (enhanced from Rs.
1,500 million).
DIRECTORS & KEY MANAGERIAL PERSONNEL
a. Cessation
During the year under review, Mr. Anil Singhvi (DIN 00239589) resigned
from the post of Non Executive Independent Directorship and Committees
in which he was serving as Chairman/Committee Member with effect from
December 22, 2014. The Board placed on its records its appreciation for
the valuable contribution provided by Mr. Anil Singhvi.
b. Retire by Rotation
In accordance with Section 152 and other applicable provisions of
Companies Act, 2013, Mr. Vishal Mahadevia (DIN 01035771), being Non-
Executive Director, retires by rotation and being eligible offers
himself for re- appointment at the ensuing Annual General Meeting. The
Board recommends his appointment.
c. Reappointment of Mr. V. Vaidyanathan (DIN 00082596) as Chairman &
Managing Director and revision in remuneration
The term of Mr. V. Vaidyanathan (DIN 00082596), Chairman & Managing
Director of the Company who was appointed for a term of five years with
effect from August 10, 2010, expires on August 09, 2015. It is
therefore proposed to reappoint Mr. V. Vaidyanathan (DIN 00082596) for
a period of five years with effect from August 10, 2015 and revise
remuneration terms as approved by the Board.
d. Appointment of Independent Directors
With coming into force of the provisions of Companies Act, 2013, the
Board had appointed the existing Directors viz. Mr. N.C. Singhal (DIN
00004916), Mr. Hemang Raja (DIN 00040769) and Mr. M. S. Sundara Rajan
(DIN 00169775) as Independent Directors of the Company for a
consecutive term of three years up to March 31, 2017 as per Section 149
of the Companies Act, 2013 read with its Rules. The shareholders of the
Company at their Annual General Meeting held on June 18, 2014 had
approved aforesaid appointment.
During the year under review, Dr (Mrs.) Brinda Jagirdar (DIN 06979864)
and Mr. Dinesh Kanabar (DIN 00003252) had been appointed as Additional
Non Executive Independent Directors and Mr. Narendra Ostawal (DIN
06530414) as Additional Non Executive Director of the Company who shall
hold office upto the date of ensuing Annual General Meeting of the
Company. The Company has received notices in writing under Section 160
of the Companies Act, 2013 from members proposing appointment as
Directors. The Board recommends their appointment.
The details of the aforesaid Directors forms part of this Report as
Annexure I.
Based on the confirmations received, none of the Directors are
disqualified for appointment under Section 164(2) of Companies Act,
2013.
e. Key Managerial Personnel
During the year under review, Mr. V. Vaidyanathan - Chairman & Managing
Director (DIN 00082596); Mr. Pankaj Sanklecha - Chief Financial Officer
& Head Corporate Centre; and Mr. Satish Gaikwad - Head - Legal,
Compliance & Company Secretary were designated as the Key Managerial
Personnel of the Company pursuant to the requirements of the applicable
provisions of Companies Act, 2013 read with its Rules, by the Board of
Directors and their terms and conditions of the appointment and
remuneration was considered by the Board.
BOARD''S INDEPENDENCE
Our definition of ''Independence'' of Directors is derived from Clause
49 of the Listing Agreement with Stock Exchanges and Section 149(6) of
the Companies Act, 2013. Based on the confirmation / disclosures
received from the Directors and on evaluation of the relationships
disclosed, the following Non- Executive Directors are Independent in
terms of Clause 49 of the Listing Agreement and Section 149(6) of the
Companies Act, 2013 :-
1. Mr. N.C. Singhal (DIN 00004916)
2. Mr. Hemang Raja (DIN 00040769)
3. Mr. M.S. Sundara Rajan (DIN 00169775)
4. Dr. (Mrs.) Brinda Jagirdar (DIN 06979864)
5. Mr. Dinesh Kanabar (DIN 00003252)
DIRECTORS'' RESPONSIBILITY STATEMENT
Pursuant to the requirements of Section 134 (5) of the Companies Act,
2013, with respect to Directors'' Responsibility Statement, it is hereby
stated that:
(a) in the preparation of the annual accounts, the applicable
accounting standards had been followed along with proper explanation
relating to material departures;
(b) the Directors 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 the company at the end of the financial year and of the profit and
loss of the company for that period;
(c) 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 the company and
for preventing and detecting fraud and other irregularities;
(d) the Directors have prepared the annual accounts on a going concern
basis;
(e) the Directors have laid down internal financial controls to be
followed by the company and that such internal financial controls are
adequate and were operating effectively; and
(f) the Directors have devised proper systems to ensure compliance with
the provisions of all applicable laws and that such systems were
adequate and operating effectively.
COMPANY''S POLICY ON DIRECTORS'' APPOINTMENT AND REMUNERATION &
EVALUATION
Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of
the Listing Agreement, Policy on Nomination and Remuneration of
Directors, Key Managerial Personnel, Senior Management and other
employees has been formulated including criteria for determining
qualifications, positive attributes, Independence of a Director and
other matters as required under the said Act and Listing Agreement.
The evaluation framework for assessing the performance of Directors
comprises of the following key areas:
- Expertise;
- Objectivity and Independence;
- Guidance and support in context of life stage of the Company;
- Understanding of the Company''s business;
- Understanding and commitment to duties and responsibilities;
- Willingness to devote the time needed for effective contribution to
Company;
- Participation in discussions in effective and constructive manner;
- Responsiveness in approach;
- Ability to encourage and motivate the Management for continued
performance and success;
The evaluation involves Self-Evaluation by the Board Member and
subsequently assessment by the Board of Directors. A member of the
Board will not participate in the discussion of his / her evaluation.
Accordingly a process of evaluation was followed by the Board for if
own performance and that of its Committees and individual Directors and
also the necessary evaluation was carried out by Nomination and
Remuneration Committee and Independent Director at their respective
meetings held for the purpose.
CONSOLIDATED FINANCIAL STATEMENTS
The Audited Consolidated Financial Statements are provided in this
Annual Report which have been prepared in accordance with relevant
Accounting Standards issued by the Institute of Chartered Accountants
of India.
PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS
Details of Loans, Guarantees and Investments are given in the notes to
the Financial Statements.
PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES REFERRED
TO IN SECTION 188
During and subsequent to the year under review, the contracts or
arrangements with related parties have been on arms length and in
ordinary course of business and they were not material in nature.
Accordingly, the particulars of the transactions as prescribed in Form
AOC - 2 of the rules prescribed under Chapter IX relating to Accounts
of Companies under the Companies Act, 2014 are not required to be
disclosed as they are not applicable.
EXTRACT OF ANNUAL RETURN
The details forming part of the extract of the Annual Return in form
MGT 9 is annexed herewith as Annexure 2 to this Director''s Report.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
During the year under review the Board of Directors at its meeting held
on May 08, 2014 had constituted Corporate Social Responsibility (CSR)
Committee in accordance with Section 135 of Companies Act, 2013 read
with rules formulated therein. The Company pursuant to the
recommendation of the CSR Committee had adopted a detailed policy on
Corporate Social Responsibility and also discussed and identified the
core areas in which the CSR activities was proposed to be carried out
in the CSR Committee Meetings from time to time.
The details of contents of CSR Policy of the Company and the details
about the development of CSR Policy and initiatives taken by the
Company on Corporate Social Responsibility during the year as per
annexure attached to the Companies (Corporate Social Responsibility
Policy) Rules, 2014 have been appended as Annexure 3 to this Report.
STATUTORY AUDITORS & THEIR REPORT
M/s. S. R. Batliboi & Co. LLP, Chartered Accountants, having ICAI Firm
Registration No. 301003E were appointed as Statutory Auditors of your
Company at the Ninth Annual General Meeting (AGM) held on June 18, 2014
from the conclusion of the said AGM till conclusion of Twelfth Annual
General Meeting. As per the provisions of Section 139 of the Companies
Act, 2013, the appointment of Statutory Auditors is required to be
ratified by members at every Annual General Meeting. Accordingly, the
appointment of M/s. S. R. Batliboi & Co. LLP, as Statutory Auditor of
the Company is placed for ratification by the shareholders.
The Auditor''s Report does not contain any qualification, reservation or
adverse remark.
SECRETARIAL AUDITORS & THEIR REPORT
Pursuant to the provisions of Section 204 of the Companies Act, 2013
and Rules made thereunder, the Company had appointed M/s. Makarand M
Joshi & Co., Practicing Company Secretaries, to undertake the
Secretarial Audit of the Company for the financial year 2014-15. The
Secretarial Audit Report for financial year 2014-15, has been appended
as Annexure 6 to this Report.
The Auditor''s Report does not contain any qualification, reservation or
adverse remark.
The Board of the Directors at their Meeting held on May 13, 2015 have
reappointed M/s. Makarand M Joshi & Co., Practicing Company
Secretaries, to undertake the Secretarial Audit of the Company for the
financial year 2015-16.
PARTICULARS OF EMPLOYEES, EMPLOYEES STOCK OPTION SCHEME AND EMPLOYEES
STOCK PURCHASE SCHEME
The details in terms of Section 197 of the Companies Act, 2013 read
with Rule 5(1) of the Companies (Appointment and Remuneration of
Managerial Personnel) Rules, 2014, are forming part of this report as
Annexure 5. The statement containing particulars of employees as
required under Section 197(12) of the Companies Act, 2013 read with
Rule 5(2) of the Companies (Appointment and Remuneration of Managerial
Personnel) Rules, 2014 may be obtained by the members by writing to the
Company Secretary of your Company.
During the year under review, Board of Directors of the Company on the
recommendation of Nomination & Remuneration Committee at its Meeting
held on April 02, 2014 and shareholders at Annual General Meeting held
on June 18, 2014 approved the ''CMD Stock Option Scheme - 2014''.
Also, during the year under review, the Company has granted employee
stock options to eligible employees under various Employee Stock Option
Schemes. During the year under review, the Company had also issued and
allotted 6,58,500 equity shares and subsequent to the year under review
also, 27,050 equity shares were allotted to the eligible employees of
the Company under various Employee Stock Option Schemes of the Company.
The details with respect to the Employee Stock Option Schemes/ Employee
Stock Purchase Scheme are annexed and forms part of this Report as
Annexure 4.
PARTICULARS OF ENERGY CONSERVATION, TECHNOLOGY ABSORPTION, EXPENDITURE
ON RESEARCH AND DEVELOPMENT, FOREIGN EXCHANGE INFLOW/OUTFLOW, ETC.
The requirements of disclosure with regard to Conservation of Energy in
terms of Section 134 of the Companies Act, 2013, read with the
Companies (Accounts) Rules, 2014, are not applicable to the Company
since it doesn''t own any manufacturing facility.
However, the Company makes all efforts towards conservation of energy,
protection of environment and ensuring safety.
The details of the earnings and outgoing Foreign Exchange during the
year under review are provided in Notes to the Financial Statements as
at March 31, 2015. The Members are requested to refer to the said Note
for details in this regard.
VIGIL MECHANISM
Your Company has established a ''Whistle Blower Policy and Vigil
Mechanism'' for directors and employees to report to the appropriate
authorities concerns about unethical behavior, actual or suspected,
fraud or violation of the Company''s code of conduct policy and provides
safeguards against victimization of employees who avail the mechanism
and also provide for direct access to the Chairman of the Audit
Committee. The said policy has been uploaded on the website of the
Company.
MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF
THE COMPANY
There have been no material changes and commitments, if any, affecting
the financial position of the Company which have occurred between the
end of the financial year of the Company to which the financial
statements relate and the date of the report.
DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR
COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANY''S
OPERATIONS IN FUTURE
There have been no significant and material orders passed by the
regulators or courts or tribunals impacting the going concern status
and company''s operations in future.
RISK MANAGEMENT POLICY AND INTERNAL CONTROL
The Company has adopted a Risk Management Policy duly approved by the
Board and also has in place a mechanism to identify, assess, monitor
and mitigate various risks to key business objectives. Major risks
identified by the businesses and functions are systematically addressed
through mitigating actions on a continuing basis. These are discussed
at the meetings of the Risk Management Committee, Audit Committee and
the Board of Directors of the Company. The Company''s internal control
systems are commensurate with the nature of its business and the size
and complexity.
DISCLOSURES UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION,
PROHIBITION & REDRESSAL) ACT 2013 READ WITH RULES
Pursuant to the requirements of Section 22 of Sexual Harassment of
Women at Workplace (Prevention, Prohibition & Redressal) Act 2013 read
with Rules thereunder, the Company has not received any complaint of
sexual harassment during the year under review.
ACKNOWLEDGEMENT
We are grateful to the Government of India, the Reserve Bank of India,
the Securities and Exchange Board of India, the Stock Exchanges,
Insurance Regulatory and Development Authority of India, National
Housing Bank and other regulatory authorities for their valuable
guidance and support and wish to express our sincere appreciation for
their continued co-operation and assistance. We look forward to their
continued support in future.
We wish to thank our bankers, investors, rating agencies, customers and
all other business associates for their support and trust reposed in
us.
Your Directors express their deep sense of appreciation for all the
employees whose commitment, co-operation, active participation,
dedication and professionalism has made the organization''s growth
possible.
Finally, the Directors thank you for your continued trust and support.
On behalf of the Board of Directors
V. Vaidyanathan
Chairman & Managing Director
DIN:00082596
Place : Mumbai
Date : May 13, 2015
