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Fullerton India Credit Company LimitedANNUAL REPORT FY2018
WE’RE READY TO SCALE THE NEXT FRONTIER FOR GROWTH
At Fullerton India Credit Company Limited (Fullerton India), we address the growing capital needs of the underserved markets, through a diversified portfolio of offerings. We are uniquely suited to address this core and unmet national need through our branch network, and highly disciplined credit and operational procedures. We have empowered millions of aspiring individuals by providing flexible financing solutions that empower them to realise their dreams.
WE’RE READY TO SCALE THE NEXT FRONTIER
FOR GROWTH
We are steadily elevating our market standing within India’s financial services universe. We have created a robust multi-product organisation, that will help provide a one-stop-shop proposition, representing convenience for the customer, and substantial cross-selling opportunities for the Company. Furthermore, as digitisation is rapidly remoulding the financial services landscape, we have been at the forefront of adopting the best and latest technologies to be ahead of the curve. We shall continue to explore emerging technologies to further support the efficiency of our business processes; deliver superior customer experience; reduce turnaround time; and enhance employee productivity.
As we move forward, we are single-mindedly driven by our purpose of ethically fulfilling our responsibilities towards our various stakeholders. As a responsible corporate, we are enabling our customers to fulfil their dreams through seamless access to the formal credit system; we are endeavouring to become an employer of choice in our sector; we act responsibly in the communities in which we work in; and are always focusing on generating higher returns for our shareholders.
Based on our commitment to performance and innovation, we aim to deliver sustainable growth, while maintaining our asset quality and contributing to the progress of the Indian economy.
CONTENTS
81 - 89
CSR REPORT
90 - 126
CONSOLIDATED FINANCIAL SECTION
127 - 175
STANDALONE FINANCIAL SECTION
18
DISTRIBUTION NETWORK
19 - 33
FUNCTIONAL OVERVIEW
48 - 69
MANAGEMENT DISCUSSION &
ANALYSIS
70 - 76
REPORT ON CORPORATE
GOVERNANCE
77
CERTIFICATION BY CEO AND CFO
02 - 03
AT A GLANCE
01
CORPORATE INFORMATION
04 - 05
MESSAGE FROM THE CHAIRMAN
10 - 12
BOARD OF DIRECTORS
13 - 15
LEADERSHIP TEAM
06 - 07
MESSAGE FROM THE CEO & MD
08 - 09
KEY CORPORATE HIGHLIGHTS
16 - 17
MANAGEMENT TEAM
78 - 80
SECRETARIAL AUDIT REPORT
34 - 47
DIRECTOR’S REPORT
Corporate Information
Board of Directors*Mr. Gan Chee Yen Chairman
Ms. Rajashree Nambiar Chief Executive Officer & Managing Director
Mr. Anindo Mukherjee Non- Executive Director
Mr. Kenneth Ho Tat Meng Non-Executive Director
Ms. Renu Challu Independent Director
Ms. Sudha Pillai Independent Director
Dr. Milan Robert Shuster Independent Director
Mr. Premod Thomas Independent Director
Mr. Shirish Apte Independent Director
Company SecretaryMr. Pankaj Malik
Statutory AuditorsB S R & Co. LLP
BankersAllahabad Bank Andhra Bank Axis Bank Limited Bank of America N.A Bank of Baroda Bank of India BNP Paribas Canara Bank CITI Bank Credit Suisse AG
DCB Bank Limited Dena Bank Deutsche Bank AG HDFC Bank Limited ICICI Bank Limited IDFC Bank Limited International Finance Corporation JP Morgan Chase Bank Kotak Mahindra Bank Oriental Bank of Commerce Punjab National Bank Small Industries Development Bank of India Standard Chartered Bank State Bank of India Syndicate Bank The Federal Bank Limited The Hongkong and Shanghai Banking Corporation Limited The Jammu & Kashmir Bank Limited Union Bank Of India United Bank Of India
Rating AgenciesCRISILICRACAREIndia Ratings
Registered OfficeMegh Towers, Third Floor,New No. 165, Old No. 307,Poonamallee High Road,Maduravoyal, Chennai - 600 095
Corporate OfficeFloor 5 & 6, B Wing, Supreme Business Park,Supreme City, Powai, Mumbai – 400076
*As on 31 May, 2018
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At a Glance
Fullerton India has successfully and strongly established itself in the country’s financial landscape, with a network of over 559 branches that serves over 1.9 million customers.
Fullerton India Credit Company Limited is a wholly owned subsidiary of Fullerton Financial Holdings Pte. Ltd., which in turn is a wholly owned subsidiary of Temasek Holdings Pte. Ltd., Singapore. Fullerton Financial Holdings invests in financial institutions in emerging markets with its prime focus on Business and Consumer Banking.
Its primary services constitute financing of SME for working capital and growth, loans for commercial vehicles and two-wheelers, home improvement loans, loans against property, personal loans, working capital loans for urban self-employed and loans for rural livelihood advancement, rural housing finance and financing of various rural micro enterprises.
2007Year of Launching Commercial Operations in India
559Branches Across India
55,000Villages Network Reach to Offer Financial Solutions
600Towns
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VisionBe the Company of choice in financial services for our customers, employees, communities and stakeholders, recognised for innovation and high ethical standards.
Mission Y We are a responsible financial services partner
Y We drive financial inclusion
Y We foster innovation in everything we do
Y We deliver products and solutions for customer delight
Y We believe in our people and partner in their success
Y We provide long term and sustainable shareholder value, balancing risk and reward
Y We are committed to enriching the communities we serve
ValuesIntegrity:
We are a transparent and fair organisation guided by a strong and clear sense of ethics at all times.
Collaboration:
We understand the power of alliances and communication in an interdependent world and seek new opportunities and partnerships to grow with.
Innovation:
We constantly pursue new ideas and approaches to enhance our offering to all stakeholders.
Diversity:
We appreciate/celebrate the potential and power of difference and welcome multiple perspectives, views, ideas and cultures.
Excellence:
We follow the highest quality standards and are committed to delivering the best to all our stakeholders.
Agility:
We are quick to respond to new ideas and situations; we understand change and rise to its challenges by remaining open and positive.
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Message From the Chairman
At Fullerton India, we havedemonstrated the stability of ourbusiness model and showcased our resilience with consistent top-line and bottom-line growth.
Mr. Gan Chee Yen Chairman
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As a digitally orientedorganisation, we will continue toleverage the digital paradigm to stay ahead of the curve. Multi-channel availability of lending solutions, seamless on-boarding, and in-house customer service platforms supportedby technology have helped us build efficiencies.
Dear Shareholders,
I am pleased to present to you the FY2018 Annual Report of the Company.This fiscal has been an exciting one for your Company. To begin with, the macroeconomic scenario of the country in the second half of the year was strong with positive developments in the business environment. Subsequently, India jumped 30 spots on the World Bank’s ease of doing Business rankings. India’s economy grew at its fastest in seven quarters in Q4 FY2018, bolstered by strong performance in construction, manufacturing and public services, showing a persistent revival trend. With this performance, India retained its ranking as the world’s fastest-growing major economy.
India’s economy today is robust, resilient, and has the potential to deliver sustained growth. The growth in India is projected to advance further, backed by strong private consumption and strengthening of investments. Furthermore, the Government has been giving strong impetus in promoting the digital economy in the rural and infrastructure sector.
We aim to be a key beneficiary of this move. As a digitally oriented organisation, we will continue to leverage the digital paradigm to stay ahead of the curve. Multi-channel availability of lending solutions, seamless on-boarding, and in-house customer service platforms supported by technology have helped us build efficiencies.
In a digitally transforming Indian financial services sector, technology will remain a strategic enabler of our business growth, cost optimisation, and process innovation. Subsequently, we have been at the forefront of technology adoption, bringing out solutions that improve customer convenience and provide world-class experiences.
To power these efforts, we have made our infrastructure more robust by establishing a comprehensive monitoring and control framework, and by building on a large talent pool of a committed workforce. We have also created a framework for sustainable growth with product and distribution strategies that fulfil the requirements of our customers. Fullerton India’s established treasury management processes and conservative liquidity policies are well recognised. It ensures the Company is well-funded for its
outflows. Additionally, we will continue to strengthen the business decision making process, backed by our strong analytics to enhance efficiencies. At Fullerton India, we have demonstrated the stability of our business model and showcased our resilience with consistent top-line and bottom-line growth, despite the challenges posed by demonetisation and GST implementation. During the year under review, the Company’s AUM stood at ` 15,776 crores, a growth of 36% as compared to ` 11,597 crores in FY2017, resulting in a Profit After Tax of ` 354 crore, an increase of 65% as compared to ` 214 crores in the preceding financial year. This performance coupled with our robust risk management framework, has enabled your Company to protect and maintain a high asset quality. Our GNPA as on 31 March, 2018 stands at 2.4%. Our endeavour to constantly scale our businesses; diversifying to new growth avenues, and consistently outperform ourselves, has helped us in carving out a considerable share of the markets in our areas of presence. Going forward, we will continue to invest in people with the right expertise, technology, and advanced analytics to keep pace with our growth. We are well positioned to leverage our established and growing network. We are confident that this will enable us to scale to new growth frontiers. As a trusted partner to all our stakeholders, we will continue to responsibly provide financial services that will enable our business to contribute meaningfully towards economic progress. I would like to thank our employees, whose hard work at every level of the business has allowed us to achieve another set of strong annual results. I would also like to express my gratitude to the regulators, our stakeholders, and customers for their continued support and trust.
Sincerely, Gan Chee Yen Chairman
`15,776Crore
Total Assets Managed by Fullerton India (As on 31 March, 2018).
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Message From the CEO & MD
Change is not a threat, it’s an opportunity. Survival is not the goal, transformative success is. – Seth Godin
Rajashree NambiarCEO & MD
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Dear Shareholders,
It is indeed my pleasure to present your Company’s performance for FY2018 for the first time as Fullerton India’s Chief Executive Officer and Managing Director. I would like to take this opportunity to highlight the key developments and share my thoughts on prospects and plans for the years ahead.
FY2018 gave us the confidence to deliver strong results. It also stood as a testimony to our strong strategies and execution plans that further allowed us to withstand challenges and remain an enduring institution. Your Company performed well and delivered another year of consistent, strong and profitable growth. We reported an impressive growth of 65% in Profit Before Tax to ` 546 crores in FY2018, as compared to ` 331 crores in the previous financial year. Net Interest Income grew to ` 1,507 crores in FY2018, as against ` 1,328 crores in FY2017, backed by an increase in the average interest-earning assets. Average advances increased by 8% to ` 12,455 crores and Return on Average Equity stood at 13.7%, as compared to 9.4% in the previous year, indicating an increase of 432 basis points (bps).
The growth was well supported by our deep customer reach, faster documentation process and enhanced cost efficiency. In addition, we have also improved our operating efficiency by increasing our digital presence and using analytics to assess the credit worthiness of our customers.
Our business has been built for long-term sustainability. Our vision is to be the Company of choice in the financial services sector for our customers, employees, communities and stakeholders, recognised for innovation and high ethical standards. This vision guides our decision-making and inspires us to drive multi-pronged growth across business verticals. We have established ourselves in the financial services business, with incisive awareness of India’s rural and semi-urban markets that has been built up over the last decade. Leveraging this knowledge, we have grown from strength to strength in all our businesses, with focused teams working with a high sense of ownership and responsibility.
Strategic ReinforcementsDespite the initial challenges posed by demonetisation and the Goods
& Services Tax (GST), we not only grew our existing business, but also embarked on strategic business-strengthening initiatives, the benefits of which have been reflected in our results. We concentrated on increasing our bandwidth to support our growth performance as well as benefited from our strong and inspiring culture to enhance our people’s productivity. We are aligned to our deep-rooted values and the same has been imbibed with our culture, attracting new talent and creating opportunities for individual professional growth. This was supplemented by our investments towards digitally oriented systems and processes. During the year, we launched a mobility solution for our field collection and sourcing staff. This empowered paperless on-boarding and seamless customer management. Alongside, we also strengthened our internal performance by improving individual productivity.
In order to address the growing financial needs across the country, we progressed to expand our nationwide presence. We entered new geographies and opened 36 new branches. Moreover, within the existing regions of our presence, we multiplied our efforts and productivity to derive the most of the prevailing presence. We deepened our distribution across markets which enabled us to pick up volumes during the economic upturn in the second half of the fiscal. We reinforced this with a strong understanding of risks, and accurate credit screening, that translated into improved quality of our book. The gross non-performing assets as a percentage of the assets under management stood at 2.4%.
Subsequently, we also ensured that our fund mobilisation is adequately enhanced to address the demands arising from our growing presence. Our fund mix is evenly distributed across major financial instruments and institutions, and we strictly adhere to all the regulatory requirements of the industry. During FY2018, your Company concluded its second rupee denominated bond (Masala Bond) issuance aggregating to ` 500 crores. Our strategic initiatives helped in reducing our average cost of funds to 8.9% in FY2018 from 9.7% in the previous fiscal.
The strong foundation of our business is driven by our thrust on technology advancements and customer satisfaction. Technology integration
across processes helped deepen customer relationships and drive higher efficiencies. In addition, our ground-level understanding of a customers’ profile and credit needs, in conjunction with our ability to innovate and customise products, added to our competitiveness in the marketplace. Resultantly, our robust delivery platform and ability to delight customers translated in higher cross-selling and referral business. Our customer base stood at 1.9 million as on 31 March, 2018, against 1.4 million a year ago.
Outlook and AcknowledgementI am optimistic about our future growth prospects for the many pertinent reasons mentioned above. I am confident that we will continue to scale new peaks across key parameters. We expect to drive aggressive growth with priorities on protecting our asset quality; strengthening business through cross-sell; widening our liability portfolio to reduce the cost of funds; and progressively digitising the end to end customer life cycle.
The Indian economy is regaining its vigour with the Government’s enhanced thrust to maintain India’s position as the world’s fastest growing large economy. This will only widen our opportunities to capitalise on the extensive unmet needs of semi-urban and rural India.
I would like to end by expressing my gratitude to all our customers, teams, investors, bankers, regulators and shareholders – for the trust they have reposed in us. I would also like to thank our parent companies – Fullerton Financial Holdings Pte Ltd and Temasek Holdings Pte Ltd, Singapore for their support. We believe our rich parentage and deep sector understanding will help us evolve and deliver sustainable growth. My special thanks also to our Board members for their guidance; we look forward to your continued support in our growth trajectory as we create long-term value for all our stakeholders.
Sincerely, Rajashree NambiarCEO & MD
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FY2013
8,40,493FY2018
19,52,165Customer Accounts
FY2013
36%FY2018
42%Secured AUM
FY2013
152FY2018
546 PBT (` Crores)
FY2013
603FY2018
1,552 EBIDTA (` Crores)
FY2013
5,624 FY2018
17,884 Balance Sheet Size (` Crores)
FY2013
152FY2018
354PAT (` Crores)
FY2013
4,900 FY2018
15,776 AUM (` Crores)
FY2013
361FY2018
559Own Branches
FY2013
24.7%FY2018
18.9%Capital Adequacy Ratio
FY2013
1,184FY2018
2,749 Total Revenue (` Crores)
FY2013
20%FY2018
67%Disbursement Growth
FY2013
5,451FY2018
10,795Employees
Key Corporate Highlights
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FY2013
1,078FY2018
2,852Shareholders’ Fund (` Crores)
FY2013
1.7%FY2018
1.6%Net NPA Total Customer Outstanding
Our performance, coupled with our robust risk management framework, has enabled your Company to protectand maintain a high asset quality.
FY2018
20+Products
FY2018
18%CAGR Growth in Revenue (5 years)
FY2018
~56%% of the Company’s Board Comprised Independent Directors
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Mr. Gan Chee Yen,Chairman
Mr. Gan Chee Yen has been the Chairman of the Company since November 2011. He is a board member of Fullerton Financial Holdings Pte Ltd, Singapore (FFH) and a board commissioner of Bank Danamon since 2003. He is also the CEO of FFH. Prior to his current appointment, he was the Co-Chief Investment Officer and Senior Managing Director at Temasek International. He joined Temasek in 2003, first as CFO and subsequently in various senior management roles. He has served on several boards and currently sits on the Boards of several Temasek portfolio companies such as Clifford Capital Pte Ltd, Surbana Jurong Private Limited, ACR Capital Holdings, CEI Limited and ST Asset Management. He is a member of the Institute of Singapore Chartered Accountants. He received his Bachelor of Accountancy from the National University of Singapore. He has also attended the Harvard’s Program for Management Development in September 2001.
Ms. Rajashree Nambiar,Chief Executive Officer and Managing Director
Ms. Rajashree Nambiar is the Chief Executive Officer and Managing Director at Fullerton India. In this role, she is responsible for the overall corporate strategy of the company and its subsidiaries - covering Risk, Operations, Technology, Analytics and Digital Initiatives. Prior to joining Fullerton India, Ms. Nambiar served as the CEO and Executive Director at India Infoline Finance Ltd, the NBFC arm of the IIFL group. At IIFL Finance, she successfully developed and executed a long term business strategy focused on diversification of the retail segment into retail housing, commercial vehicles, Gold loans and SME loans; since inception, she has created a robust organisational structure with centres of excellence for core functions, and a strong future leadership pipeline. During her stint in the company, IIFL Finance has shown strong year on year profitability with doubling of the book in a short span of 3 years. Prior to joining IIFL, she spent 22 years with Standard Chartered Bank within the retail segment where she held various management roles such as Head of Branch Banking, Country Head of Distribution and General Manager - Distribution & Alternate Channels, India & South Asia. Her last position at the Bank was as Head of Retail Products for India & South Asia. Ms. Nambiar is an MBA from Jamnalal Bajaj Institute of Management Studies.
Board ofDirectors**As on 31 May, 2018
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Dr. Milan Shuster,Independent Director
Dr. Shuster, is a professional with several decades of experience in the banking sector. He has served in various capacities at Asian Development Bank, ING Bank, National Bank of Canada and Nippon Credit Bank. After working as the President and CEO of P.T. Bank PDFCI, Indonesia, he held several stints at Bank Danamon Indonesia. He became its president and CEO and later its Independent Commissioner. He holds a PhD in international Law and Economics from Oxford University, Master of Law from London School of Economics, Bachelor of Law from University of Western Ontario and Bachelor of Business Administration from Ivey Business School.
Ms. Renu Challu,Independent Director
Ms. Renu Challu is a seasoned banker with decades of experience in financial services. She was associated with the State Bank of India (SBI) for more than 38 years, serving in different geographies around the country and in USA. She pioneered consumer financing (home, car, personal and education loans) and tech driven retail initiatives (internet banking, debit cards, phone banking) by SBI and held policy making positions in various verticals of the Bank. Some of the leadership positions held in the SBI Group include President & COO at SBI Capital Markets, MD and CEO at SBI DFHI, MD at State Bank of Hyderabad and DMD Corporate Strategy & New Business Development at SBI. She serves as an Independent Director on the boards of 10 other companies. She is an MA in Economics (Gold Medalist) from University of Lucknow.
Mr. Anindo Mukherjee,Non- Executive Director
Mr. Anindo Mukherjee has more than 25 years of banking experience. He also heads the Integrated Risk Management function at Fullerton Financial Holdings Pte. Ltd. (FFH), Singapore. Prior to joining FFH, Mr. Mukherjee was responsible for the Risk Management, Legal and Compliance functions in Fullerton India. Before Fullerton India, he was with Standard Chartered Bank, where he was the Regional Credit Officer for the Consumer Business in India & South Asia. Mr. Mukherjee has had exposure across a variety of international and private banks, including Bank of America, ABN AMRO Bank and HDFC Bank. He is a chartered accountant and a cost & management accountant.
Mr. Kenneth Ho,Non-Executive Director
Mr. Kenneth Ho carries more than two decades of Consumer and Commercial Banking experience. He is a Graduate in Economics in Flinders University of South Australia and a Master of Business Administration holder from University Putra Malaysia. Currently, he is the Senior Vice President, SME & Commercial Banking for Fullerton Financial Holdings (International) Pte Ltd. Previously he was with Citibank for 10 years covering the roles of Regional Director, Consumer Secured lending of Citibank Asia Pacific regional office and in the Citibank Singapore Pte Ltd as head of Auto business and Citibusiness (Commercial Banking). Prior to joining Citibank, he also held substantial exposure in EON Bank Berhad, Malaysia, including managing the entire Auto loans Business (national) and covering numerous roles in Branch banking as well.
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Ms. Sudha Pillai,Independent Director
Ms. Pillai, is a 1972 batch IAS officer who held number of senior positions in the Government of India and the State Government of Kerala for 40 years. She handled the Industry and Finance portfolios for nearly twenty years. In Government of India, she worked in the Ministries of Industry, Corporate Affairs, Labour and Employment. She contributed notably to 1991 reforms in Industrial and Foreign Direct Investment Policies, as also in bringing amendments to corporate laws and in formulation of the National Skill Development Policy. In Kerala, as Principal Secretary Finance, she worked to achieve enhanced development outcomes, coupled with efficient fiscal management. Earlier, as CMD, Kerala Finance Corporation, she had dealt with the project financing to SMEs. Her last assignment was as Member Secretary (in the rank of Minister of State) Planning Commission, Government of India. She is currently on the Boards of many other companies. She holds a masters’ degree in Public Administration from Kennedy School of Government, Harvard University.
Mr. Shirish Apte,Independent Director
Mr. Shirish Apte is serving as Director on several other Boards. Mr. Apte spent over 32 years with Citibank across several countries and geographies. He was Chairman of Citibank Asia Pacific Banking from 2012 to January 2014 before retiring from Citi. Prior to that, he was regional CEO for Citibank businesses in the Central/Eastern Europe, Middle East & Africa, and co-CEO for Citi Asia Pacific. He has a Bachelor of Commerce degree from Calcutta University, and a Master of Business Administration degree from London Business School, and qualified as a Chartered Accountant from the Institute of Chartered Accountants England and Wales.
Mr. Premod Thomas,Independent Director
Mr. Thomas is currently the MD and Head of Corporate Strategy at Clifford Capital Pte Ltd., a specialist project and asset-backed finance company in Singapore. He is concurrently the Founder and CEO of Capital Insights Pte Ltd, an investment holding company which focuses on private investment and strategy consulting. He serves as an Independent Director and Member of the Audit & Risk Committee of Mapletree Commercial Trust Ltd, Independent Chairman of the Investment Committee of MGSA Private Trust and Independent Director of Gemstone Asset Holdings Pte Ltd in Singapore. Prior to this, he held Senior Positions in Finance and Banking with Temasek Holding Ltd, Standard Chartered Bank, and Bank of America. Mr. Thomas holds an MBA from the Indian Institute of Management, Ahmedabad (PGDM), and a Bachelor of Commerce Degree from Loyola College, Chennai.
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Ms. Rajashree Nambiar,Chief Executive Officer and Managing Director
Rajashree is responsible for the overall corporate strategy of the company and its subsidiaries - covering Risk, Operations, Technology, Analytics and Digital Initiatives. Prior to joining Fullerton India, Rajashree served as the CEO and Executive Director at India Infoline Finance Ltd, the NBFC arm of the IIFL group. In the past, Rajashree spent 22 years with Standard Chartered Bank within the retail segment where she held various management roles. Her last position at the Bank was as Head of Retail Products for India & South Asia. Rajashree Nambiar is an MBA from Jamnalal Bajaj Institute of Management Studies.
Mr. Ajay Pareek,Head, Sales & Product - Urban Business
Ajay is a Chartered Accountant with over 21 years’ experience in audit & financial services. Starting his career with A.F. Fergusons & Co, he moved to CitiFinancial as part of the start-up team to launch their retail finance business in India. At CitiFinancial he handled the risk and operations functions for 2 years and later took over as a Regional Business Head. After 5 years at CitiFinancial, he joined Fullerton India in 2005 as part of the start-up team. Ajay is now Head of the Urban Business and oversees distribution of the company’s key products of Personal Loans, Mortgages, SME and Commercial Vehicles.
Leadership Team
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Mr. Pankaj Malik,Chief Financial Officer
Pankaj has an experience of over 20 years in various capacities across finance and allied functions. He is the Chief Financial Officer, Company Secretary & Chief Compliance Officer for Fullerton India Credit Company Limited. At Fullerton India, he is responsible for corporate planning, accounting, finance, taxation, compliance and corporate governance functions. Prior to joining Fullerton India in September 2007, Pankaj was associated with COLT Telecom (“COLT”), an affiliate of Fidelity international, as the Financial Controller-cum-Company Secretary. In his earlier stints, he had been associated with GE Commercial Financial and Motherson Sumi Systems Limited in various capacities. Pankaj is a Chartered Accountant, Company Secretary and Cost Accountant from India and Certified Public Accountant from the State of Colorado, the USA. He is also an alumnus of Harvard Business School.
Mr. Vishal Wadhwa,Head, Sales & Product - Rural Business
Vishal is the Head of Rural Business at Fullerton India. He is a Chartered Accountant from The Institute of Chartered Accountants of India with over 20 years of varied experience in Banking and Financial Services across Credit Cards, Consumer Banking Products, Collections and Retail Banking Operations. Vishal joined Fullerton India in March 2012 from Tata Consultancy Services, where he headed two key functions during his tenure – as Operations Head, facilitating client engagement and operations delivery for Commercial Bank of Qatar and as Consumer Operations Head for India Retail. Previously, Vishal worked with Citibank N.A handling Distributions Operations, Risk Management and Credit Operations across retail products and Branch Banking. Prior to Citibank N.A, Vishal worked with ABN AMRO and Citigroup as East Collections Head - Cards.
Mr. Deepak Patkar,Chief Risk Officer
Deepak is the Chief Risk Officer and in his role he leads the overall Enterprise Risk Management across all business verticals of Fullerton India, which includes Credit Risk, Collections, Operational Risk, Fraud Control, Legal and Information Security functions. Prior to his appointment as the CRO, Deepak led the Internal Audit function at Fullerton India. Deepak joined Fullerton India in 2007 as Head – Retail Collections after successful stints at Cable Corporation, HCL Infosystems and Citibank. In his work experience of over 20 years he has handled diverse roles including Quality Assurance, Sales and Distribution, Debt Collections, Operational Risk and Audit. On behalf of Fullerton Financial Holdings, Singapore, Deepak has undertaken risk advisory and transformation assignments in Mekong Development Bank, Vietnam and Fullerton Finance, Myanmar. He is an Electrical Engineer with an MBA from Jamnalal Bajaj Institute, Mumbai.
Mr. Anil Noronha,Head – Human Capital
Anil is the Executive Vice President and Head – Human Capital at Fullerton India and comes in with an experience of over 25 years. Prior to joining Fullerton India, he was heading the Human Resources function across companies such as, Novell Inc. USA, Ashok Piramal Group, Rajesh Wadhawan Group (DHFL Group), Bombay Dyeing and most recently Omkar Realtors & Developers. Anil has completed his MBA (HR) from NMIMS and also holds a Law Degree from Ruparel’s New Law College and is a gold medalist in Labour Law from Bharatiya Vidya Bhavan, Mumbai.
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The Leadership Team, with its collaborative capabilities, works towards implementing and managing the strategic direction of the Company, so that it meets the service and financial targets set by our parent company.
Mr. Arvind Sampath,Head - Treasury
Arvind is responsible for all liabilities strategy, surplus management and investor relationships. Arvind has over two decades of experience in financial markets, across a Primary Dealer, a Foreign Bank and a Non-Banking Financial Company. Prior to joining Fullerton India, Arvind was associated with ICICI Securities, where he was instrumental in setting up the ‘interest rate derivatives’ desk. In his earlier stints, he had been associated with Standard Chartered Bank in various capacities. He is also a frequent media speaker and presenter of views on financial markets.
Mr. Bikramjit Ganguly,Chief Information & Digital Officer
Bikramjit has an overall experience of 15+ years in various capacities. He is currently the Chief Information and Digital officer for Fullerton India Credit Company Limited. At Fullerton India, he is responsible for leading the company’s digital strategy and execution as well as the information technology and analytics functions. Prior to joining Fullerton India in March 2012, Bikramjit was associated with Standard Chartered Bank, heading the regional credit risk analytics unit of South Asia. He has also been associated with Fair Isaac (“FICO”) in various capacities and has extensive experience of driving analytics driven strategies for major financial organisations across Asia, Middle East, Latin America, Europe and Africa. Bikramjit is a Masters in Statistics from the Indian Statistical Institute and a Columbia Business School alumni with certification in Digital Business Leadership.
Mr. Kaushik Ray,Head – Operations & Customer Service
Kaushik is the Head of Operations and Customer Service for Fullerton India. He joins from Creditexchange, a Bengaluru-based Fintech start-up, where he served as the Chief Operating Officer, responsible for setting up the Operations, Technology, Collections, Finance and Accounts processes. Previously, Kaushik was heading the Operations team at Fullerton India for over 6 years from 2005 to 2012. Earlier, he was part of the management team of DLL Financial Services, a fully owned subsidiary of the Rabobank group, as head of the Operations, Sales Support & Technology units. His other stints during his career of close to 25 years include, leading Trade transactions processing and Contact Center operations in Citigroup, International Trade in Reliance Industries and Corporate Loans sourcing for Summit Usha Martin Finance and Nicco Uco Financial Services. Kaushik holds a PGDM from Xavier Institute of Management, Bhubaneswar.
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Management Team
Mr. Arvind Sampath,Head - Treasury
Mr. Bikramjit Ganguly,Chief Information & Digital Officer
Mr. Anil Noronha,Head – Human Capital Mr. Ajay
Pareek,Head, Sales & Product - Urban Business
Ms. Rajashree Nambiar,Chief Executive Officer & Managing Director
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Mr. Vishal Wadhwa,Head, Sales & Product - Rural Business
Mr. Deepak Patkar,Chief Risk Officer
Mr. Pankaj Malik,Chief Financial Officer
Mr. Kaushik Ray,Head – Operations & Customer Service
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223 Branches
Rural:
336 Branches
Distribution Network
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Business & Marketing
Pg. 20 - 21
Maintaining Liquidity To Support Disbursements
Pg. 24 - 25
Leveraging Technology To Deliver Superior Customer ExperiencePg. 26 - 27
De-Risking Business To Ensure Long-Term SustainabilityPg. 30 - 33
Using Analytics To Drive Business Strategy
Pg. 22 - 23
Functional Overview
Learn, Adapt, Change, Grow
Pg. 28 - 29
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BUSINESS & MARKETING
Business and MarketingFullerton India is continuing its endeavour to synergise its processes to the market dynamics with the aim of delivering sustainable growth. At Fullerton India, the urban and rural businesses have been constantly delivering positive growth and enabling increased customer experience owing to its deep understanding of the under-served markets, a strong distribution network and with upgrading of individual business processes. Our Marketing function enables us in fulfilling our business objective and in fuelling future growth.
The Fullerton DifferentiatorFullerton India continues to be one of the leading NBFCs in India, with an extensive branch network of 559 branches. Our cutting-edge technology implemented in routine business has been helping us in delivering superior customer experience and staying abreast of the competition at all times. At Fullerton India, we have been serious about facilitating our processes in enhancing customers’ livelihoods in the under-banked and under-served markets.
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Key Highlights:
» Witnessed strong growth across all asset classes
» Used strong analytical tools to assess customers’ risk profile
» Adopted cutting-edge technology for operational excellence
» Provided a broad suite of products catering to a diverse customer base
MarketingDuring the course of the year, the Company strengthened its marketing initiatives with the objective to reach its customers and create further awareness on the brand. The Company enhanced visibility by engaging with local media channels in the regions of its presence and also increased its thrust in social media platforms that has further complemented the online business sourcing by influencing the decision making of the customers. Key Highlights
» PR coverage at regional levels along with national conferences
» Creation of marketing collaterals basis product and regional requirements
» Social media presence and campaigns to build product knowledge
» Reputational management to address concerns and enhance customer experience
» Customised marketing solutions to build trust and boost sales across geographies
Rural Business OverviewThe rural business at Fullerton India operates under the brand name ‘Gramshakti’. During the year, the segment strengthened its network further by foraying into the states of Bihar and Odisha. In total, 36 new branches were opened during FY2018. Going forward, the Company will continue to penetrate in newer geographies to enhance its branch foot print. As on 31 March, 2018, the network of Gramshakti is spread across over 55,000 villages across 13 states of India. Rural India showed signs of recovery from last year’s demonetisation, advancing optimism with increased spending will help the broader economy regain its vigour. The business also gained momentum with an increased focus of the Government on agriculture, infrastructural development and with a higher spend in the rural areas. Gramshakti is working towards serving as a preferred financial partner to stimulate growth in the rural areas of India.
Key Highlights:
» Operates in 13 states through a network of 336 rural branches
» Serves over 17 lakh customers
» Provides a wide array of product offerings to serve customers’ varied needs
» Enables digital processes (disbursals and collections) through tabs
» Ensures strong customer ties and robust credit quality
Urban Business OverviewThe urban business at Fullerton India reported strong growth as it optimised and inculcated further efficiency in the business. This was enabled through the expansion of its digital footprint and by creating robust platforms for its customers. The urban business segment services over 2.05 lakh customers; through a network of 223 branches across 22 states and three Union Territories in India. A strong presence has enabled the Company to build a diversified portfolio of secured and unsecured loans, supporting customer’s consumption and income generation requirements. During the year, the business continued to deliver enhanced customer experiences by way of seamless on-boarding applications, tab based sourcing, e-KYC and robotic processes. Some processes that have enabled ease of operations for customers are: BOT enabled originations, e-loans portal and customer self-service mobile applications. We have a strong and diversified portfolio of products addressing retail consumers, MSMEs and commercial borrowers. Our product portfolio includes Personal Loans (salaried and self-employed customers), Loans Against Property, SME Loans and Commercial Vehicle Loans.
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USING ANALYTICS TO DRIVE BUSINESS STRATEGY
In the competitive landscape of a retail lending business, analytics plays a key role in supporting business growth, while simultaneously maintaining the health of its portfolio. At Fullerton India, analytics is at the heart of the business, and is used extensively across the customer lifecycle, leading the Company towards achieving its goals.
Fullerton India, today, has 1.9 million live customers, with more than a decade long portfolio. It offers rich information, which can be leveraged to gain deep insights on various rural and urban product markets. Additionally, the Company also invests in real-time bureau data to stay updated on its existing customers, identifying early-warning signals, as well as cross-sell and up-sell opportunities.
Analytical insights are used across various stages of the lifecycle of a loan: from target segment identification to new customer acquisition, portfolio management, customer service as well as collections. Such insights ensure the optimisation of resources at each stage, leading the Company towards its profitability targets.The Analytics team has developed a platform to measure the customer risk-return balance, which has helped the organisation to select the segments for focused growth. This, in the future, will lead to a profitability portfolio with robust risk-revenue balance; and help abstain from non-profitable and high risk segments. The model ensures growth with expected profitability within the pre-defined risk appetite of the organisation as well as operating efficiency.
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Advanced techniques used by the Analytics team to measure portfolio health through volatility models, help it to remain resilient against any economic shock. In particular, a collection prioritisation system was developed to aid the demonetisation-hit rural delinquent portfolio, which played a key role in the focused recovery from the pool with the optimal usage of its work-force. This prioritisation, along with the close monitoring of it at the geographic level, ensured a structured and consistent recovery from the delinquent portfolio.
A customer level early warning signal process has also been devised for rural portfolios to indicate the possibility of future deterioration of any customer. Focused early collection efforts on these customers, along with prioritised collection from the delinquent pool, have ensured the delinquency to recover to pre-demonetisation level.
In addition, the Company’s analytics aims to provide the best-in-class experience to customers, across the product lifecycle, and help the Company build a robust profit-making portfolio.
Fullerton India has extensively invested in building an in-house team of experienced analysts with proficiency in various statistical tools and techniques. This team dons various hats to support varied business functions across the organisation, and provides insights and models developed using rich in-house and market data. The Company constantly enhances its capabilities and draws upon the global experience of its parent to stay up-to-date with new age statistical techniques and best practices in the industry.
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MAINTAINING LIQUIDITY TO SUPPORT DISBURSEMENTS
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The Treasury team constantly scans the environment for macro signals – both short and long term, global as well as local. This way, the data-based decision making stays ahead of evolving conditions and adequate time for implementation. Treasury management plays a very key role at Fullerton India, with emphasis on stable, renewable and efficient funding. Governance includes tracking internal ratios and limits such that lender interest is never compromised and funding decisions are taken from a long term sustainable viewpoint.
The Treasury function at Fullerton India oversees surplus management in addition to external liabilities which includes all borrowings. Treasury is guided by the following three principles of liquidity management:
(i) Diversification of funding by instruments, lenders, lender types and geographies;
(ii) Matching the tenor of asset and liability to minimise refinancing risks; and
(iii) Maintaining a liquidity buffer for contingency funding
The team is mandated to maintain adequate near term liquidity in normal circumstances and also for unplanned contingencies. Outflows including disbursements, expenses, debt servicing are forecast and fully covered. The Treasury also fronts most external interaction especially with financiers, rating agencies, market intermediaries and continuously engages with over a hundred institutional investors and retrial funds. The robust treasury management processes and conservative liquidity policies have been well recognised by lenders and rating agencies.
Credit Rating: Fullerton India has a credit rating of AAA from CRISIL and CARE, AA+ from ICRA and India Ratings on its long-term debt instruments, which are among the highest within the country’s retail finance sector. The short term ratings of Fullerton India are uniformly the highest grade.
Capital Adequacy:As on March 2018, the overall capital adequacy stood at 18.93%, which is higher than the RBI’s requirement of 15%, reflecting its confidence in investing and growing the business. Similarly, the Tier 1 Capital is comfortable at 15.03%, compared to an RBI requirement of 10%.
Matched Asset-Liability Tenor:Aligned with its guiding principle of matching liability tenor with assets, during FY2018, the Company maintained an average borrowing tenor of 32 months which matched its asset tenor well. A diversified set of funding sources, including Masala Bonds (overseas ` bonds), term loans from banks, and debentures, were used to maintain optimal tenor.
Liquidity:The Company maintained adequate near term funds to stay liquid , in normal circumstances and also in the unlikely event of a contingency. This is achieved by several methods like owning high quality liquid assets, keeping unused fee paying committed lines and partly drawn bank lines. The three level liquidity buffer this way adds strength to the various lines of safety.
Diversified Lender Base:During FY2018, Fullerton India diversified its funding to over 200 institutional lenders. Its lending base is diversified and includes Banks, Insurance Companies, Foreign Portfolio Investors, Mutual Funds, Pension and Provident Funds. Overall, the funding profile remains resilient to market volatility and provided optimally costing, renewable long term relationships.
Masala Bonds:During FY2018, Fullerton India became the first NBFC to successfully issue its second Rupee Denominated Bonds (Masala Bonds), thereby creating a new geographically diversified and uncorrelated investor segment. The overseas bond market has the potential to support large fund raising. Hence, introducing this source is beneficial as it adds another source for supporting the Company’s next phase of growth.
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LEVERAGING TECHNOLOGY TO DELIVER SUPERIOR CUSTOMER EXPERIENCE
Fullerton India has been investing in advanced technology platforms and systems to provide a cutting edge in its products and services to electronically link branches. The Company has implemented a strong technology platform for its products and services, which are scalable and support the rapid growing transaction volumes.
Fullerton India recognises the need to provide a unified customer experience that cuts through various customer touch points, products and geographies. Customer Relationship Management (CRM) helps us target existing and potential customers in a cost-effective manner and offers them products that are relevant based on their profile and needs. Apart from reducing costs of acquisition, this multi-channel platform has also helped to deepen customer relationships through superior service and tap better business opportunities through the ability to cross-sell.
Additionally, a responsive Customer Portal is in place to enable the existing customers to login and register through their social media account such as Facebook and Google. This portal allows customers to transact and track their loan accounts online, and also helps them addresses queries related to their loan account. Furthermore, now the customers can also view documents online and send service requests, which are integrated with the CRM solution. This is coupled with the Interactive Voice Response (IVR) solution at the call centre, which also allows the customers to send service requests over a call.
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The Company’s data warehouse, Customer Relationship Management (CRM), approval-in-principle engine and analytics solutions have helped target existing and new customers in a cost-effective manner and offer customised solutions. In addition to moderating the cost of customer acquisitions, the Company’s proactive technology investments have helped deepen customer relationships and increase efficiency.
The Disaster Recovery management strategy of the Company ensures state-of-the-art Business Continuity to secure the live systems. The Company performs periodic switch-over and switch-back drills of major IT applications, thereby preparing for the readiness in responding to emergency situations.
Fullerton India has implemented a framework for the measurement of Customer Experience (internal and external) to ensure that customer feedback across each touch point (including customer complaints, customer satisfaction surveys, telephonic surveys and employee feedback) is analysed and acted upon.
The Company has upgraded its Rural Lending Platform to further improve customer service and thus have increased its capability to enable transactions digitally, thereby reducing the overall Turn-Around-Time. Fullerton India has been investing and adopting the latest technologies with an endeavour to provide top class service to its customers and has been stepping up the digital momentum. Platforms such as Instaloan and chatbot – Asha allow the customers to apply for a loan online and receive in-principle approvals within minutes.
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Fullerton India is an “Employer of Choice” that provides a compelling employee value proposition. It attracts the best people in the industry to join us and ensures their development, retention and contribution to the enterprise’s success. This has resulted in a highly engaged workforce which consistently delivers superior business results.
At Fullerton India, we believe that our employees are the heart of our business. Their invaluable contribution over the years has resulted in our great success. A significant part of the management’s focus is to support our employees become happier and more effective.
Strong CultureOur Corporate Culture is dynamic with strong roots. It provides our people with a common sense of identity and helps them make sense of their work experiences. We value Integrity, Collaboration, Innovation, Diversity, Excellence and Agility. We continuously strive to build an adaptive culture as a foundation to our business success.
Creating Leaders of TomorrowFullerton India takes responsibility to provide employees with opportunities for engaging work, personal growth experiences, training as required, learning opportunities, annual objective setting, annual performance reviews and the tools, thus providing an environment to develop themselves.
Career development is valued at Fullerton India as an essential and important activity. As employees continuously grow and develop, the Company’s capability increases and ensures that the organisation remains competitive. Through career development, employees get an opportunity to expand their knowledge, skills, experience, competencies, network, and visibility which results in the ability to contribute greater value in a wider range of circumstances. Managers have a responsibility to facilitate the growth and development of people and the business.
Performance Management & RewardsOur Performance Management System is designed to enable employees to achieve superior performance with a clear focus on results. We encourage frequent, direct, candid as well as informal feedback on performance between employees and managers to further strengthen our performance management process. At Fullerton India, we are committed and strongly believe that feedback is key to creating a high-performing enterprise.It is important for the Company’s business success that we
LEARN, ADAPT, CHANGE, GROW
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competitively compensate, motivate, reward and retain employees. The Company’s overall Rewards strategy is to design compensation programs that are aligned with this philosophy. These programs are designed to compensate employees for contributions and results through fix pay and variable compensation elements, each linking to specific performance measurements.
Promoting Work-Life BalanceWe offer challenging work with smart and a fast-paced, flexible, open, diverse, learning environment within a well-managed business; At Fullerton India, we understand the importance of work-life balance with a culture based on teamwork, accountability and continuous improvement where people feel empowered, recognised, cared for and their achievements celebrated.
Work Place StandardsOur Code of Conduct sets high standards of integrity, conduct and workplace behaviour. Our people-related policies are designed to ensure a healthy and safe workplace, free from discrimination or harassment, where employees can raise complaints without fear of retribution.
Key Highlights of FY2018: Y Increased people strength from 10,017 as on
31 March, 2017, to 10,795 as on 31 March, 2018.
Y Continuing with its commitment to take quality fresh talent, the Company recruited from premier campuses including IIMs and ISBs, IRMA and IITs.
Y Recognised over 2,500 employees under the ‘Fullerton India Recognition of Excellence’ program (FIRE), which rewards the top-performing employees at various intervals through the year, culminating in the prestigious, Annual CEO’s Elite List.
Y Invested 38,000 person-days in employee training, including career path programs for key functions, programs on Management and Personal effectiveness and personalised programs.
Y Invested in employee welfare including healthcare, life insurance and emergency financial aid.
Y Successfully continued the rural skills development program “Gurukul” under its CSR brand ‘UDAY’ to impart employability skills amongst the youth in rural India. During FY2018, the Company expanded the number of centres from 4 to 6. The program has already trained more than 1,100 youth and employed 400 such trainees from the initiative.
Y Several staff engagement programs were organised including fun at workplace activities such as corporate sports tournaments, quiz competitions and talent hunts. During FY2018, about 60 employees represented the Company in the inter-corporate events.
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DE-RISKING BUSINESS TO ENSURE LONG-TERM SUSTAINABILITY
At Fullerton India, the effectiveness of our risk management practice emanates from our rich experience. It is derived from a deep understanding of the Indian economy, sectoral trends and corporate fundamentals.
Risk is an integral part of the financial services business and an appropriate trade-off between risk and return ensures delivery of desired shareholder value by ensuring balance between business growth and sustained portfolio quality.
At the core of Fullerton India’s risk management approach is a clear understanding of its desired risk appetite. The risk appetite framework approved by the Board of Directors, covers different types of risks the organisation is exposed to and also clearly defines the
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Company’s risk taking parameters. The objective of the risk framework is to ensure that Fullerton India adheres to prudent risk standards, focuses on target segment and delivers sustainable profitability through economic cycles.
Additionally, Fullerton India has adopted internationally accepted and forward looking risk management practices in retail lending. The Company undertook swift measures to align its credit policies around consumer behaviour to mitigate vulnerabilities associated with liquidity and credit risks. Collection strategies were also aligned with the macro economic scenario and conservative provisions were made to fairly reflect inherent impairments from collections slow down. Three call centres across Chennai, Mumbai and Delhi were started to address the collections for the urban business and reduce dependence on outsourcing.
The Company enjoyed stronger recovery as a result of SARFAESI laws to NBFCs in India. There was a marked reduction in secured portfolio delinquencies. Furthermore, the Company actively leverages information from the credit bureau to understand market dynamics to design and implement robust credit policies through its cutting-edge analytics know-how.
67%YoY Growth in Disbursement
volumes
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Fullerton India uses an optimal blend of judgmental criteria and analytics driven decision management to acquire and manage diverse customer segments across geographies. Credit norms are designed towards risk reward optimisation with the ultimate objective of achieving the predicted levels of Risk Adjusted Returns. The Company has successfully implemented the Recession Loss Multiplier (RLM) model which helps in maintaining superior portfolio quality and enhancing business profitability by controlling portfolio volatility.
Moreover, with digitisation as the key, the Company has progressively moved away from cash disbursements to electronic payments. Additionally, it is also moving away from cash-based collections to digital transfer of payments through bank mandates. In doing so, the Company is minimising the risks associated with cash dealings and leveraging the improvements in the payments infrastructure.
The robustness of the Company’s risk management practices is validated through an increase in profitability, higher business returns and lower net non-performing assets in comparison to industry average.
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RISK APPETITE STRATEGY AND FRAMEWORK DEFINITION ACROSS PRODUCTS
Environment and Economy
Establishment of forward looking Country Risk Assessment with pre-emptive credit and liquidity interventions, to ensure proactive early action in the event of emerging market adversity
Operational Risk Management Framework
Y Independent Governance and risk management oversight
Y Ongoing testing of controls and risk indicators for key functions across the entity
Robust Analytic Infrastructure
Y Driving informed decisions about Risk, Pricing, Credit Bureau and Customer Behaviour
Assessment Management Monitoring
Y Risk policies and credit programs with performance guardrails
Y Granular measure of Risk Adjusted Return
Y Established key performance indicators
Y Risk grading to manage changes in risk profile
Y Structured reports for periodical review
Y Quarterly bureau scrub to correlate market trends and impact on Fullerton India portfolio
Fullerton India has adopted internationally accepted and forward looking risk management practices in retail lending. The Company undertook swift measures to align its credit policies around consumer behaviour to mitigate vulnerabilities associated with liquidity and credit risks.
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Directors’ Report
Dear Members,
Your Directors have the pleasure in presenting the 23rd Annual Report of Fullerton India Credit Company Limited along with the audited statement of accounts for the financial year ended 31 March, 2018.
1. Financial highlights (Standalone and Consolidated) The standalone financial performance for FY2018 is summarised hereunder:
(` crores)
Particulars 31 March, 2017 31 March, 2018
Total Income 2,642 2,749
Less: Expenditure 1,805 1,835
Less: Net credit losses including provisions 506 368
Profit/(Loss) before Tax 331 546
Tax 117 192
Net Profit/(Loss) after Tax 214 354
Add: Balance brought forward from previous year (124) 47
Transfer to Reserve Fund under Section 45-IC of the RBI Act, 1934 (43) (71)
Balance carried to Balance Sheet 47 330
Paid up capital 1980 1980
* Previous year’s figures have been regrouped based on current year’s classification.
On a consolidated basis, the performance of the Company is as follows:
(` crores)
Particulars 31 March, 2017 31 March, 2018
Total Income 2,667 2,887
Less: Expenditure 1,837 1,949
Less: Net credit losses including provisions 511 385
Profit/(Loss) before Tax 319 553
Tax 117 188
Net Profit/(Loss) after Tax 202 365
Add: Balance brought forward from previous year (129) 30
Transfer to Reserve Fund under Section 45-IC of the RBI Act, 1934 (43) (73)
Balance carried to Balance Sheet 30 322
Paid up capital 1,980 1,980
* Previous year’s figures have been regrouped based on current year’s classification.
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2. Financial performance and overview
Fiscal 2018 had been an eventful year for the India Inc., with demonetisation and roll-out of Goods and Services Tax Act (GST) being the major disruptors. The industry showed mixed response to demonetisation and GST rate rollback coupled with relaxed compliance framework provided much needed impetus for growth in economic activities. While retail credit had been generally stable, bank credit had gone down sharply. Repayment track record in rural India had been significantly impacted, with delinquencies continuing to remain higher in some pockets.
Your Company’s rural disbursements had significantly improved during Q4 FY2018. There had been considerable improvement in delinquency trends which were back to the pre-demonetisation levels. The urban business had shown steady increase during the fiscal 2018 supported by marked improvement in performance of commercial vehicles. With appropriate risk containment strategy, your Company was able to manage delinquencies better than its industry counterparts. However, pressure on margins continued during the year under review.
The disbursals stood at `12,271 crores during the year (~67% over the previous fiscal). Assets under management were at `15,776 crores as at 31 March, 2018.
Gross income registered an increase of 4% and was at `2,749 crores (FY2017: 2,642 crores). Finance costs were at ` 972 crores (`1,034 crores in FY2017). Net interest income was at `1,507 crores, a 13% increase y-o-y (`1,329 crores in FY2017). Non-interest expenditure incl. provision written off was at ` 1,230 crores (`1,277 crores in FY2017).
Profit Before Tax was 65% higher at `546 crores (`331 crores in FY2017). The Company’s income tax obligations were at `192 crores, resulting in Profit after tax of `354 crores (`214 crores in FY2017).
The Company has well-diversified source of funds. The total bank borrowings stood at ` 5,185 crores (` 4,538 crores as at 31 March, 2017); non-convertible debentures were at ` 6,889 crores (` 5,363 crores as at 31 March, 2017), including long term subordinated bonds eligible for Tier-II capital aggregating ` 691 crores (` 691 crores as at 31 March, 2017, commercial paper ` 1,493 crore (` 1,074 crores as at 31 March, 2017). After completing its maiden issue of Rupee Denominated Offshore Bonds (Masala Bonds) last fiscal, the Company successfully issued second tranche of Masala Bonds amounting to ` 500 crores, during fiscal 2018.
Please refer ‘Management Discussion and Analysis’ section, enclosed as Annexure I to this report, for further details on performance of the Company.
3. State of Company’s affairs and future outlook
A detailed overview of the state of affairs of the Company and future outlook is provided in the ‘Management discussion and analysis’ section, enclosed as Annexure I to this report.
4. Share Capital During the year the Company did not issue any new
shares. The issued, subscribed and paid-up capital of the Company as at 31 March, 2018, continued to stand at ` 1,980.07 crores. The Equity Shares of ` 10 each, were held as under:
Name Number of shares
%
Angelica Investments Pte Ltd 1,89,48,15,162 95.69
Fullerton Financial Holdings Pte Ltd
8,52,56,357 4.31
5. Capital adequacy The details on ‘Tier-I’, ‘Tier-II’ capital and capital adequacy
ratio are given under the ‘Management discussion and analysis’ section of this Report.
6. Dividend In spite of the Company having reported distributable
surplus, with a view to conserve resources, your Directors do not recommend any dividend on equity shares of the Company for the year ended 31 March, 2018.
7. Debt position The total borrowings during the year under review stood
at ` 6,094 crores (` 3,504 crores repaid during the year). The Company issued ` 1,560 crores worth of commercial papers (` 1,120 crores repaid during the year) and ` 2,014 crores had been raised through issuance of non-convertible secured and unsecured debentures (` 488 crores repaid during the year) to various mutual funds and/or financial institutions on a private placement basis. The Company availed long-term and short-term loans worth ` 2,520 crores (and repaid ` 1,896 crores during the year) from banks.
8. Change(s) in the nature of business, if any
There were no material changes in the nature of the business of the Company or its subsidiaries except that the non-convertible debentures issued by one of the subsidiaries, viz., Fullerton India Home Finance Company Limited, were listed during the year under review. Another subsidiary of the Company, viz. Fullerton India Foundation for Social & Economic Development, is in the process of converting itself to regular private limited company, vide
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Directors’ Report
order passed by the Regional Director, Western Region, Ministry of Corporate Affairs, during the year.
9. Transfer to reserves During the year, the Company transferred 20% of its
profits for the year amounting to ` 71 crores to reserves created as per of the norms laid down under Section 45-IC of the Reserve Bank of India Act, 1934.
10. Directors and Key Managerial Personnel
The Company’s Board lays down the strategic objectives of the Company and guides the management in meeting its goal of aligning the interests of the shareholders with that of the promoters.
During the year under review, Mr. Rajeev Kakar resigned from the Board of the Company with effect from 11 April, 2017.
At the last annual general meeting of the Company held on 12 July, 2017, Dr. Milan Robert Shuster, Ms. Renu Challu and Ms. Sudha Pillai had been re-appointed as independent directors on the Board of the Company, for a further term of three years, with effect from 1 October, 2017.
Mr. Shantanu Mitra had been re-appointed as the Managing Director of the Company for the period from 25 August, 2017 till 31 December, 2017. Upon completion of his tenure he retired from the Board and ceased to be the CEO & MD of the Company. The Board placed on record its deep sense of appreciation for the invaluable contribution made by Mr. Mitra during his tenure as CEO & MD of the Company.
Mr. Shirish Apte was appointed as an independent director on the Board of the Company with effect from 22 November, 2017.
Mr. Anindo Mukherjee had been appointed as a non-executive director on the Board of the Company with effect from 14 December, 2017. He thereafter assumed office as Interim CEO & Whole-time Director of the Company for the period from 1 January, 2018 till 12 February, 2018. Post that, Mr. Mukherjee continued to serve as a non-executive director on the Board of the Company.
Ms. Rajashree Nambiar was appointed as Chief Executive Officer & Managing Director of the Company with effect from 12 February, 2018.
Mr. Kenneth Ho is liable to retire by rotation at the ensuing Annual General Meeting of the Company. He being eligible, has offered himself for reappointment. The Board recommends his reappointment to the members of the Company. The shareholders of the Company may refer to
the accompanying notice of annual general meeting of the Company and the report on corporate governance for brief profile of Mr. Kenneth Ho.
All Independent Directors have given declarations that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013.
The following were the key managerial personnel of the Company during the year:
Key managerial personnel
Designation
Mr. Shantanu Mitra* Chief Executive Officer and Managing Director
Mr. Anindo Mukherjee** Interim Chief Executive Officer and Whole-time Director
Ms. Rajashree Nambiar*** Chief Executive Officer and Managing Director
Mr. Pankaj Malik Chief Financial Officer and Company Secretary
*Mr. Shantanu Mitra retired from the Board on 31 December, 2017
**Mr. Mukherjee served as Interim CEO & WTD for the period from 1 January, 2018 to 12 February, 2018
***Ms. Nambiar was appointed as CEO & MD with effect from 12 February, 2018
11. Number of meetings of the Board of Directors
Five Board meetings were held during the year on:
i. 18 May, 2017
ii. 21 August, 2017
iii. 14 December, 2017
iv. 12 February, 2018 and
v. 28 March, 2018
The time gap between any two meetings was less than 120 days with at least one meeting being held every quarter.
12. Board evaluation In accordance with the provisions of the Companies
Act, 2013, the Independent Directors met separately to review the performance of Non-Independent Directors, Chairperson of the Company, the Board as a whole and the flow of information between the Board and the management.
37
The Board completed the annual evaluation of its own performance, the individual Directors (including the Chairman) as well as an evaluation of the working of all Board Committees. The Board was assisted by the Nomination and Remuneration Committee (“NRC”). The performance evaluation was carried out by seeking inputs from all the Directors/Members of the Committees.
13. Managerial remuneration In terms of the provisions of Section 197 read with
Rule 5 of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the details of remuneration and compensation of the employees are to be set out in the annexure to the Directors’ Report. However, having regard to the provisions of Section 136 of the Companies Act, 2013, the Annual Report excluding the aforesaid information is being sent to the members of the Company. Any member interested in obtaining such particulars may write to the Company Secretary of the Company at the Corporate Office.
14. Details of subsidiaries The Company has two subsidiaries, both of which are
wholly-owned:
a. Fullerton India Home Finance Company Limited; and
b. Fullerton India Foundation for Social & Economic Development (a Section 8 company)
Fullerton India Home Finance Company Limited (FIHFCL), engages in home loans and loans against property. As on 31 March 2018, the paid up equity share capital of FIHFCL stood at ̀ 195.27 crores, and its assets under management was at ` 1902 crores.
Fullerton India Foundation for Social & Economic Development did not conduct any operations during the year. It is in the process of converting itself to regular private limited company in compliance with the order of the Regional Director, Western Region, Ministry of Corporate Affairs.
15. Statutory Auditors In the previous financial year, your Company had
appointed M/s BSR & Co. LLP, Chartered Accountants (ICAI Firm Registration No. 101248W/W-100022) as its statutory auditors to hold office from the conclusion of the 22nd Annual General Meeting held last year until the conclusion of the 27th Annual General Meeting of the Company (subject to ratification of the appointment by the Members at every subsequent Annual General Meeting, in accordance with the requirements of the Companies Act, 2013). They continue to be the statutory auditors of the Company.
16. Secretarial Auditors M/s. Vinod Kothari & Company continued to act as the
Secretarial Auditors of the Company during the year. They had conducted secretarial audit as per the provisions of section 204 of the Companies Act, 2013 and issued a Secretarial Audit Report. Copy of their report is attached to this report as Annexure IV.
17. Certificate on compliance with the regulations as regards downstream investment and other FEMA Regulations
There were no downstream investments during the year.
18. Response to the Auditors’ Report There were no qualifications, reservation or adverse
remark or disclaimer, made by the statutory or the secretarial auditors in their reports.
19. Disclosure on ESOPs The Company does not have any employee stock option/
purchase scheme. The details of share appreciation rights are mentioned in Note 32 of the notes to accounts.
20. Audit Committee The details of the constitution, terms of reference, etc.,
of the Audit Committee are mentioned in the Corporate Governance Report, enclosed as Annexure II to this report.
21. Nomination and Remuneration Committee
The details of the constitution, terms of reference, etc., of the Nomination and Remuneration Committee are mentioned in the Corporate Governance Report, enclosed as Annexure II to this report.
The Company has clearly laid out guidelines approved by the Nomination and Remuneration Committee (NRC) for Fit and Proper Criteria for appointment of Directors in accordance with the Companies Act, 2013 and the Reserve Bank of India.
Further, there is also a policy framed by NRC for remuneration for directors, KMPs and employees incorporating principles of fairness, pay for performance, a sufficient balance in rewarding short and long term objectives reflected in the pay mix of fixed and variable pay, meeting the financial viability of the Company.
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22. Vigil mechanism The Company has a whistle-blower policy in place as part
of the vigil mechanism for reporting of genuine concerns by any stakeholder about any other one. The policy, displayed on the website of the Company, provides an opportunity for anyone to report their concerns to the management about any actual or suspected unethical behaviour, fraud or violation of the Company’s Code of Conduct. This policy also provides safeguards against victimisation of stakeholders, who report their concerns. The whistle-blower policy comprehensively covers processes for receiving, analyzing, investigating, inquiring, taking corrective action and reporting of the issues raised. The policy can be accessed at https://www.fullertonindia.com/about-us/policies.aspx. An update on whistleblower cases and investigation conducted thereon is presented to the Audit Committee on a quarterly basis.
23. Risk management policy In line with the RBI regulations, the Company has a Board
Committee known as the Risk Oversight Committee. The Committee oversees the processes of risk assessment and minimisation, monitors risk management plans and carries out such other functions as may be directed by the Board. Please refer the Corporate Governance report for the terms of reference of the Committee.
The Company has adopted several policies for risk management. The management reports to the Committee on risks identified and the action taken to mitigate those risks.
The specific objectives of the Risk Oversight Committee of the Company include:
- To ensure that all the current and future material risk exposures of the Company are identified, assessed, quantified, appropriately mitigated and managed;
- To establish a framework for the Company’s risk management process and ensure Companywide implementation;
- To ensure systematic and uniform assessment of risks related to the Company;
- To enable compliance with appropriate regulations, wherever applicable, through the adoption of best-in-class practices; and,
- To assure business growth along with financial stability.
Please also refer the ‘Management discussion and analysis’, enclosed as Annexure I to this report, for more details on the subject.
24. Extract of the annual return In terms of the provisions of Section 197 read with Rule
5 of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the details forming part of the extract of the Annual Return in Form MGT-9 are enclosed as part of the Directors’ Report.
25. 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
There have been no such material changes and commitments affecting the financial position of the Company which have occurred during the said period.
26. Details of significant and material orders passed by the regulators/courts/tribunals impacting the going concern status and the Company’s operations in future
There were no significant and material orders passed by the regulators/courts/tribunals impacting the going concern status of the Company and its operations in future.
27. Statement in respect of adequacy of internal financial controls with reference to the financial statements
The members may note that:
- Systems have been laid to ensure that all transactions are executed in accordance with management’s general and specific authorisation. There are well-laid manuals for such general or specific authorisation.
- Systems and procedures exist to ensure that all transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles or any other criteria applicable to such statements and to maintain accountability for aspects.
- Access to assets is permitted only in accordance with management’s general and specific authorisation. No assets of the Company are allowed to be used for personal purposes, except in accordance with terms of employment or except as specifically permitted.
- The existing assets of the Company are verified/checked at reasonable intervals and appropriate action is taken with respect to differences, if any.
Based on the above, your Board is of the view that adequate internal financial controls exist in the Company.
Directors’ Report
39
28. Particulars of loans/advances/investments outstanding during the financial year
The disclosures relating to particulars of loans/advances/investments outstanding as per Regulation 53(f ) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 are as under:
Obligations and Disclosure Requirements) Regulations, 2015 are as under:
A. With respect to Holding and Subsidiary companies
Sr. No. In the booksof the Companyin capacity of
Disclosures of amounts at the year end and the maximum amount of loans/advances/investments outstanding during the year
Disclosure
1. Holding Company Loans and advances in the nature of loans to subsidiaries by name and amount.
Nil
Loans and advances in the nature of loans to associates by name and amount.(i) No repayment schedule or repayment beyond seven years; or(ii) No interest or interest below section 186 of the Companies Act, 2013 by name and amount.Loans and advances in the nature of loans to firms/companies in which Directors are interested by name and amount.
2. Subsidiary Same disclosures as applicable to the parent company in the accounts of subsidiary company
Nil
3. Holding Company Investments by the loanee (borrower) in the shares of parent company and subsidiary company, when the company has made a loan or advance in the nature of loan.
Nil
B. Cash Flow statement included in the financial statements.
29. Deposits The Company despite being registered as a ‘Deposit-
taking NBFC’ under the regulations of the RBI, did not accept any public deposits during the year under review (Nil during FY 2017), under Chapter V of the Companies Act, 2013.
30. Particulars of loans, guarantees or investments under Section 186
The Company, being a non-banking finance company, is exempt from the provisions laid down under Section 186 as regards to loan and advances made, guarantees given or security provided.
31. Particulars of contracts or arrangements with related parties
All contracts/ arrangements/ transactions entered into/ by the Company during the financial year under review with related parties were on arms’ length basis and in the ordinary course of business of the Company. There were no materially significant related party transactions
made by the Company with its promoters, directors, key managerial personnel or other designated persons, which may have potential conflict with the interest of the Company at large. All related party transactions had been placed before the Audit Committee and the Board for approval. The policy on related party transactions, as approved by the Board is available on the website of the Company at https://www.fullertonindia.com/about-us/policies.aspx.
32. Corporate Governance A detailed report on Corporate Governance and copy
of the Certification of the Chief Executive Officer and Chief Financial Officer of the Company are provided as Annexures II and III to this report respectively.
33. Management discussion and analysis
A detailed review of the operations, financial performance, risk management, outlook, among others, is provided under the section ‘Management discussion and analysis’ enclosed as Annexure I to this report.
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34. Fraud reporting The Company reports occurrence of frauds to the Reserve
Bank of India every quarter in terms of the RBI regulations. The details of the frauds occurred during the quarter are placed before first Audit Committee meeting held after the end of each quarter. There were 36 instances of fraud cases, which were reported to the Board. The Company has taken appropriate action in these cases. No frauds were reported by the Auditors during the year.
35. Revision of financial statements or Board’s Report
There have been no revisions in the financial statements or Board’s Report as approved by the shareholders and published in the annual report.
36. Details of debenture trustees The details of the entities which acted as the debenture
trustees for the debenture holders of the Company during the year are as under:
Sr. No.
Trustee Contact details
1 Catalyst Trusteeship LimitedPaud Road, Pune – 411038Phone: 020 – 25280081 Extension: 107Fax: 020 – 25280275
GDA House, Plot No.85, Bhusari Colony,
2 Vistra ITCL (India) LimitedPlot C- 22, G Block, Bandra Kurla Complex,Bandra(E), Mumbai 400051Phone: 022 - 26593226Fax: 022 – 26533038
The IL&FS Financial Centre,
37. Credit rating The credit ratings’ details of the Company as on 31
March, 2018 were as follows:
Rating Agency
Facility Type Rating
ICRA LT NCD/TL/SD [ICRA] AA+ with stable outlook
ST STD/CP [ICRA] A1+
India Ratings
LT NCD/SD IND AA+ with stable outlook
ST STD/CP IND A1+
CARE LT NCD/SD/TL CARE (AAA) (Triple A) with stable outlook
ST STD/CP CARE A1+
LT – Long-term ST – Short-termNCD – Non-convertible
debenturesSD – Subordinate
debtCP – Commercial paper TL – Term loanSTD – Short-term debt
The ratings mentioned above were reaffirmed by the rating agencies (ICRA, India Ratings and CARE) during the FY2018.
38. Disclosures under the Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013
Pursuant to ‘The Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013’, the Company has framed a policy on Prevention of Sexual Harassment at Workplace. During the year under review, no cases had been reported under the provisions and guidelines of this policy.
39. Conservation of energy, technology absorption and foreign exchange earnings and outgo
The provisions relating to conservation of energy and technology absorption do not apply to the Company, since it is an NBFC.
In the last year your Company had no additions in rural expansion hence the figures of savings on consumption of diesel remained constant. However, with the now expanding rural network the Company continues to install solar and hybrid digital inverters that remove the requirement of using fossil fuel (diesel) for generating power during grid outages, which in turn will add to the savings in fossil fuel use and further reduce our emission and carbon footprints.
Your Company has also piloted a Motion Based Sensor control system for lighting at the corporate office. This concept was earlier being used only for common areas such as corridors and meeting rooms. However, improvements in sensor technology now allows the Company to use motion based lighting in open seating areas as well. The Company estimates savings of around 25-30% in consumption of electricity used for lighting. The pilot has been rolled out at the Company’s corporate office and after quantification, the same would be rolled out at other locations in a phased manner.
Directors’ Report
41
There were foreign exchange outflows of ` 44 crores during the year (` 11 crores in FY2017), pertaining to travel, training and professional fees and Interest expenses.
40. Corporate social responsibility The details of the composition of CSR Committee and its
terms of reference are given in Corporate Governance report. The Company’s CSR policy, including overview of projects is enclosed as Annexure V to this report. The CSR policy can also be accessed at https://www.fullertonindia.com/about-us/policies.aspx.
41. Directors’ responsibility statement
As per the provisions of Section 134(3)(c) read with Section 134(5) of the Companies Act, 2013, your Directors confirm that:
(i) in the preparation of the annual accounts for the year ended 31 March, 2018, the applicable accounting standards had been followed along with proper explanation relating to material departures;
(ii) the Directors had 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;
(iii) the Directors had 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;
(iv) the Directors had prepared the annual accounts on a going concern basis;
(v) the Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively;
(vi) the Directors had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively.
42. Acknowledgement Your Directors would like to place on record, their
gratitude for the cooperation and guidance received from all the statutory bodies, especially the RBI. The Directors also thank the shareholders, clients, vendors, investors, banks and other stakeholders in placing their faith in the Company and contributing to its growth. We would also like to appreciate the hard work put in by all our employees, and we look forward to their continuing patronage, going forward.
On behalf of the Board of Directors
Sd/-Place: Mumbai Gan Chee YenDate: 18 May, 2018 Chairman
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FORM NO. MGT 9
EXTRACT OF ANNUAL RETURN
as on the financial year ended on 31 March, 2018
[Pursuant to Section 92 (3) of the Companies Act, 2013 and rule 12(1) of the Company (Management & Administration) Rules, 2014]
I. REGISTRATION & OTHER DETAILS:1. CIN U65191TN1994PLC079235
2. Registration Date 30/08/1994
3. Name of the Company Fullerton India Credit Company Limited
4. Category/Sub-category of the Company: Category: Company Limited Shares
Sub-category: Indian Non- Government company
5. Address of the Registered office & contact details Megh Towers, Third Floor, Old No-307,New No-165, Poonamallee High Road, Maduravoyal, Chennai, Tamil Nadu- 600095.
Tel No. 022-67491234, Fax: 022-67103309, [email protected];
6. Whether listed company Yes*
7. Name, Address & contact details of the Registrar & Transfer Agent, if any.
Link Intime India Pvt. Ltd.247 Park, C 101 1st Floor, LBS Marg, Vikhroli ( W ), Mumbai – 400 083.Phone No.: 022-49186000.email:[email protected]
*Non-convertible debentures of the Company are listed on National Stock Exchange of India Ltd.
II. PRINCIPAL BUSINESS ACTIVITIES OF THE COMPANY All the business activities contributing 10 % or more of the total turnover of the company shall be stated.
Sr. No.
Name and Description of main products / services
NIC Code of the Product/service % to total turnover of the company
1 Other credit granting 65923 100
- Providing Loans
III. PARTICULARS OF HOLDING, SUBSIDIARY AND ASSOCIATE COMPANIESSr. No.
Name and Address of the Company
CIN/GLN Holding/ Subsidiary/ Associate
% of shares held Applicable Section
1. Angelica Investments Pte. Ltd
- Holding 95.69 Section 2(46)
2. Fullerton India Home Finance Company Limited
U65922TN2010PLC076972 Subsidiary 100 Section 2(87)(ii)
3. Fullerton India Foundation For Social & Economic Development
U85100MH2009NPL191341 Subsidiary 100 Section 2(87)(ii)
Directors’ Report
43
IV. SHARE HOLDING PATTERN (Equity Share Capital Breakup as percentage of Total Equity)
i. Category-wise Share Holding
Category of Shareholders
No. of Shares held at the beginning of the year No. of Shares held at the end of the year %Change during
the yearDemat Physical Total % of
Total Shares
Demat Physical Total % of Total
SharesA. Promoters(1) Indiana) Individual/ HUF 0 0 0 0 0 0 0 0 0b) Central Govt 0 0 0 0 0 0 0 0 0c) State Govt(s) 0 0 0 0 0 0 0 0 0d) Bodies Corporate 0 0 0 0 0 0 0 0 0e) Banks / FI 0 0 0 0 0 0 0 0 0f ) Any other 0 0 0 0 0 0 0 0 0Sub-total (A)(1) 0 0 0 0 0 0 0 0 0 (2) Foreigna) NRIs -Individuals 0 0 0 0 0 0 0 0 0b) Other -Individuals 0 0 0 0 0 0 0 0 0c) Bodies Corporate 0 198,00,71,519 198,00,71,519 100 0 198,00,71,519 198,00,71,519 100 0d) Banks / FI 0 0 0 0 0 0 0 0 0e) Any other 0 0 0 0 0 0 0 0 0Sub-total (A)(2) 0 198,00,71,519 198,00,71,519 100 0 198,00,71,519 198,00,71,519 100 0Total shareholding of Promoter (A)=(A)(1) + (A)(2)
0 198,00,71,519 198,00,71,519 100 0 198,00,71,519 198,00,71,519 100 0
B. Public Shareholding(1) Institutionsa) Mutual Funds/ UTI 0 0 0 0 0 0 0 0 0b) Banks / FI 0 0 0 0 0 0 0 0 0c) Central Govt 0 0 0 0 0 0 0 0 0d) State Govt(s) 0 0 0 0 0 0 0 0 0e) Venture Capital Funds
0 0 0 0 0 0 0 0 0
f ) Insurance Companies
0 0 0 0 0 0 0 0 0
g) FIIs 0 0 0 0 0 0 0 0 0 h) Foreign Venture Capital Funds
0 0 0 0 0 0 0 0 0
i) Others (specify) 0 0 0 0 0 0 0 0 0Sub-total (B)(1) 0 0 0 0 0 0 0 0 02. Non-Institutionsa) Bodies Corp.i) Indian 0 0 0 0 0 0 0 0 0ii) Overseas 0 0 0 0 0 0 0 0 0b) Individualsi) Individual shareholders holding nominal share capital upto ` 1 lakh
0 0 0 0 0 0 0 0 0
ii) Individual shareholders holding nominal share capital in excess of ` 1 lakh
0 0 0 0 0 0 0 0 0
c) Others (specify)Non Resident Indians 0 0 0 0 0 0 0 0 0Overseas Corporate Bodies
0 0 0 0 0 0 0 0 0
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Category of Shareholders
No. of Shares held at the beginning of the year No. of Shares held at the end of the year %Change during
the yearDemat Physical Total % of
Total Shares
Demat Physical Total % of Total
SharesForeign Nationals 0 0 0 0 0 0 0 0 0Foreign Portfolio Investor –Corporate
0 0 0 0 0 0 0 0 0
Market Maker 0 0 0 0 0 0 0 0 0Clearing Members 0 0 0 0 0 0 0 0 0Directors/ Relatives 0 0 0 0 0 0 0 0 0Trusts 0 0 0 0 0 0 0 0 0Sub-total (B)(2) 0 0 0 0 0 0 0 0 0Total Public Shareholding (B)=(B)(1)+ (B)(2)
0 0 0 0 0 0 0 0 0
C. Shares held by Custodian for GDRs & ADRs
0 0 0 0 0 0 0 0 0
Grand Total (A+B+C) 0 198,00,71,519 198,00,71,519 100 0 198,00,71,519 198,00,71,519 100 0
ii) Shareholding of Promoter-
Sr. No.
Shareholder’s Name
Shareholding at the beginning of the year Shareholding at the end of the year % change in share holding
during the year
No. of Shares % of total Shares of the
company
%of Shares Pledged /
encumbered to total shares
No. of Shares % of total Shares of the
company
%of Shares Pledged /
encumbered to total shares
1 *M/s. Angelica investments Pte. Ltd
1,89,48,15,162 95.69 0 1,89,48,15,162 95.69 0 0.00
2 M/s. Fullerton Financial Holding Pte. Ltd
8,52,56,357 4.31 0 8,52,56,357 4.31 0 0.00
* 6 (Six Shares) Held by Individuals as Nominee Shareholders of M/s. Angelica investments Pte. Ltd
iii) Change in Promoters’ Shareholding (please specify, if there is no change)
Sr. No.
Particulars Shareholding at the beginning of the year Cumulative Shareholding during the yearNo. of shares % of total shares of
the companyNo. of shares % of total shares of
the company1.
At the beginning of the year 198,00,71,519 100 198,00,71,519 100Date wise Increase / Decrease in Promoters Shareholding during the year specifying the reasons for increase / decrease (e.g. allotment /transfer / bonus/ sweat equity etc.):
NIL NIL NIL NIL
At the end of the year 198,00,71,519 100 198,00,71,519 100
iv) Shareholding Pattern of top ten Shareholders:
(Other than Directors, Promoters and Holders of GDRs and ADRs):
There are no Shareholders other than Promoters.
Sl. No.
For Each of the Top 10 Shareholders
Shareholding at the beginning of the year
Shareholding at the end of the year
No. of shares % of total shares of the
company
No. of shares % of total shares of the
company
1. - - - - -
2. - - - - -
3. - - - - -
Directors’ Report
45
v) Shareholding of Directors and Key Managerial Personnel:
Directors or Key Managerial Personnel do not hold any shares in the company
Sr. No.
Shareholding of each Directors and each Key Managerial Personnel
Shareholding at the beginning of the year
Cumulative Shareholding during the year
No. of shares % of total shares of the
company
No. of shares % of total shares of the
company1. - - - -
At the beginning of the year - - - -Date wise Increase / Decrease in Promoters Shareholding during the year specifying the reasons for increase /decrease (e.g. allotment / transfer / bonus/ sweat equity etc.):
- - - -
At the end of the year - - - -2. - - - -
At the beginning of the year - - - -Date wise Increase / Decrease in Promoters Shareholding during the year specifying the reasons for increase /decrease (e.g. allotment / transfer / bonus/ sweat equity etc.):
- - - -
At the end of the year - - - -3. - - - -
At the beginning of the year - - - -Date wise Increase / Decrease in Promoters Shareholding during the year specifying the reasons for increase /decrease (e.g. allotment / transfer / bonus/ sweat equity etc.):
- - - -
At the end of the year - - - -
V. INDEBTEDNESS Indebtedness of the Company including interest outstanding/accrued but not due for payment (in `)
Secured Loans excluding deposits
Unsecured Loans
Deposits Total Indebtedness
Indebtedness at the beginning of the financial yeari) Principal Amount 91,107,762,432 18,110,000,000 - 109,217,762,432ii) Interest due but not paid - - - -iii) Interest accrued but not due 2,714,805,968 315,176,215 - 3,029,982,183Total (i+ii+iii) 93,822,568,400 7,225,176,215 - 101,047,744,615Change in Indebtedness during the financial year* Addition 46,344,820,001 30,800,000,000 - 77,144,820,001* Reduction 24,840,344,859 26,400,000,000 - 51,240,344,859Net Change 21,504,475,142 4,400,000,000 - 25,904,475,142Indebtedness at the end of the financial yeari) Principal Amount 112,612,237,574 22,510,000,000 - 135,122,237,574ii) Interest due but not paid - - - -iii) Interest accrued but not due 2,706,221,163 377,228,239 - 3,083,449,401Total (i+ii+iii) 115,318,458,737 22,887,228,239 - 138,205,686,975
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VI. REMUNERATION OF DIRECTORS AND KEY MANAGERIAL PERSONNEL (In `) A. Remuneration to Managing Director, Whole-time Directors and/or Manager:
Sr. No.
Particulars of Remuneration Name of MD/WTD/ Manager Total Amount (In `)*Mr Shantanu
Mitra, CEO & MD
**Mr Anindo Mukherjee,
Interim CEO & WTD
***Ms Rajashree Nambiar, CEO
& MD
1 Gross salary(a) Salary as per provisions contained in section 17(1) of the Income-tax Act, 1961
160,777,344 NIL 3,653,432 164,430,776
(b) Value of perquisites u/s 17(2) Income-tax Act, 1961
39,273 NIL NIL 39,273
(c) Profits in lieu of salary under section 17(3) Income- tax Act, 1961
2 Stock Option 45,131,200 NIL 45,131,2003 Sweat Equity NIL4 Commission
- as % of profit- others, specify… NIL
5 Others, please specify-(i) Co’s Contribution to PF 726,318 NIL 130,719 856,497(ii) Incentive Accrued(iii) Superannuation NIL
Total (A) 206,674,135 NIL 3,783,611 210,457,746
*Mr. Shantanu Mitra till 31 December, 2017
**Mr. Anindo Mukherjee w.e.f. 01 January, 2018 to 12 February, 2018
***Ms. Rajashree Nambiar w.e.f. 12 February, 2018
B. Remuneration to other directors
1. Independent Directors
Sr. No.
Particulars of Remuneration
Name of Directors Total Amount
(In `)Dr. Milan
Robert Shuster
Mr. Premod Paul
Thomas
Ms. Sudha Pillai
Ms. Renu Challu
Mr. Shirish Apte
Fee for attending Board and committee Meeting
850,000 575,000 800,000 825,000 225,000 3,275,000
Commission 1,000,000 1,000,000 1,000,000 1,000,000 400,000 4,400,000Others, please specifyTotal (B)(1) 1,850,000 1,575,000 1,800,000 1,825,000 625,000 7,675,000
Directors’ Report
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2 Other Non-Executive Directors
Sr. No.
Particulars of Remuneration Name of Directors Total Amount (In `)Mr. Gan Chee
YenMr. Kenneth Ho Mr. Anindo
MukherjeeFee for attending Board/ Committee Meetings
- - - -
Commission - - - -Others, please specify - - - -Total (B)(2) - - - -Total (B)=(B)(1)+(B)(2) - - - -
C. REMUNERATION TO KEY MANAGERIAL PERSONNEL OTHER THAN MD/MANAGER/WTD
Sr. No.
Particulars of Remuneration Key Managerial Personnel*Mr. Pankaj Malik, CFO & CS Total (In `)
1 Gross salary(a) Salary as per provisions contained in section 17(1) of the Income-tax Act, 1961
12,455,352 12,455,352
(b) Value of perquisites u/s 17(2) Income-tax Act, 1961 221,280 221,280(c) Profits in lieu of salary under section 17(3) Income-tax Act, 1961
2 Stock Option3 Sweat Equity4 Commission
- as % of profit- others, specify
5 Others, please specifyCo’s Contribution to PF1 286,776 286,776
Total 12,963,408 12,963,408
*Mr. Shantanu Mitra is Managing Director as well as CEO of the Company, his remuneration details are given in VI(A) above.
VII. PENALTIES / PUNISHMENT/ COMPOUNDING OF OFFENCES:
Type Section of the
Companies Act
Brief Description
Details of Penalty /
Punishment/ Compounding fees imposed
Authority [RD / NCLT/
COURT]
Appeal made, if
any (give Details)
A. COMPANYPenalty
NILPunishmentCompoundingB. DIRECTORSPenalty
NILPunishmentCompoundingC. OTHER OFFICERS IN DEFAULTPenalty
NILPunishmentCompounding
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Management Discussion and Analysis
Global Economic OverviewOver the last two years, the global economy has been showing multiple signs of gaining momentum. According to the International Monetary Fund (IMF), the global GDP is estimated to increase from 2.4% in 2016, to 3.7% in 2017, with more than half the world’s economies contributing to this growth. This cyclical recovery is a result of a secular rebound in investment, manufacturing activity, and trade. The recovery in global investment growth was
supported by historically low financing costs, rising profits, and improved business sentiments in advanced economies, emerging markets, and developing economies.
Supporting this growth trajectory, the global GDP is estimated to be 3.9% in 2018 and 2019. Advanced economies - USA, EU, Japan - are expected to deliver sustainable and strong performances, confirming this positive trend.
Global GDP is estimated to grow by 3.9% in 2018 and 2019, supported by sustainable and strongperformances from Advanced economies.
3.7%Global GDP Growth, 2017
Annexure I To The Directors’ Report
49
Indian Economy OverviewThe Indian economy continues to be one of the top performers in the global landscape. With the rapid increase in economic activity in lower income groups, in addition to the underlying growth in population, India’s economy is set to be the fifth largest in the world by 2018, according to the Centre for Economics and Business (London).
India is considered to be the most dynamic emerging economy among the largest countries in the world. It is expected to continue on its pace of rapid growth, fuelled by an expansion in private consumption; and by the mould-breaking changes in taxation, infrastructure investment, and privatisation.
In the first half of FY2017, growth in the Indian economy temporarily decelerated, as the rest of the world accelerated. Nevertheless, it remained the second-best performer amongst major countries, with strong macro-economic fundamentals. This interim deceleration was primarily caused by the demonetisation measures and the introduction of the Goods and Services Tax (GST). In the second half, the scenario improved significantly and India jumped 30 spots on the World Bank’s Ease of Doing Business ranking, while similar actions to liberalise FDI helped increase flows by 20%.
Going forward, the Central Statistics Office (CSO) has estimated that India’s overall economic growth will settle at 6.5% in FY2018, while the International Monetary Fund (IMF) estimates the growth potential to be 6.7% for the same period. According to data from the CSO, the expansion of agriculture, forestry and fishing activities is likely to slow to 2.1% in the current fiscal from 4.9% in FY2017. Growth in the manufacturing sector is also expected to decrease to 4.6% in FY2018, down from 7.9% in the previous fiscal.
India’s economy grew by 6.7% during FY2018. In line with a positive economic development outlook, the IMF has projected India’s growth to be 7.4% in FY2019.
The Government’s economic reform agenda will support a strong and sustainable growth rate going forward. Notwithstanding minor setbacks, India’s overall economic outlook remains positive, driven by several factors. Strong private consumption of goods and services are expected to continue to support economic activity. The drop-in private investment is expected to normalise as the corporate sector adjusts to the GST, which in the medium term is expected to benefit economic activity and fiscal sustainability. Meanwhile, the steady recovery in global trade is expected to encourage exports.
World Economy is Gaining Speed
Estimate (%)
Projections (%)
2017 2018 2019
World Output 3.7 3.9 3.9
Emerging Economies 2.3 2.3 2.2
Emerging Market and Developing Economies
4.7 4.9 5.0
Estimate (%)
Projections (%)
2017 2018 2019
United States 2.3 2.7 2.5
Euro Area 2.4 2.2 2.0
Japan 1.8 1.2 0.9
United Kingdom 1.7 1.5 1.5
Brazil 1.1 1.9 2.1
China 6.8 6.6 6.4
India 6.7 7.4 7.8
Russia 1.8 1.7 1.5
Nigeria 0.8 2.1 1.9
South Africa 0.9 0.9 0.9
Source: IMF, World Economic Outlook Update, January 2018
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Indian Financial ServicesIndia has a diversified financial sector. Undergoing rapid expansion, existing financial services firms are expected to continue to grow, while new entities increasingly enter the market.
Learning from global financial disruptions and evolving financial technologies, the industry leaders and the regulators are working towards building a sustainable banking and para banking environment. The Indian Government has introduced several reforms to liberalise, regulate and enhance this industry. In particular, several measures to facilitate easy access to finance for Micro, Small and Medium Enterprises (MSMEs) were undertaken.
With the combined effort of the government and private sector, India is undoubtedly one of the world’s most vibrant capital markets, peaking the interest of foreign institutional investors, and increasing long-term foreign investments.
NBFC Segment Overview Non-Banking Finance Companies (NBFCs) form an integral part of the Indian financial system. It is recognised as one of the systemically important components of the financial system and has shown consistent year-on-year growth. NBFCs play an important role in nation building and financial inclusion by complementing the banking sector in reaching out credit to the unbanked
segments of society, especially to the micro, small and medium enterprises (MSMEs), which form the cradle of entrepreneurship and innovation. As of March 2017, NBFCs accounted for 16% of the overall systemic credit.
The NBFC sector in India has undergone a significant transformation over the past few years. The NBFC’s ground-
level understanding of a customers’ profile and credit needs, in conjunction with their ability to innovate and customise products as per a customer’s requirements, makes them strongly competitive in the market place. These competencies make them the perfect conduit for delivering credit to MSMEs.
The outstanding credit of NBFCs expanded at a compound annual growth rate (CAGR) of 19% since fiscal 2012. This growth has not been uniform across segments as CAGR of the top four segments - housing, infrastructure, auto and Loan Against Property (LAP) were recorded at 21%, 13%, 19% and 31%, respectively, for the years 2012-17. The MSME and micro-finance recorded impressive CAGR of 39% and 42%, respectively, during the same period.
NBFCs PLAY AN IMPORTANT ROLE IN NATION BUILDING AND FINANCIAL INCLUSION.
Management Discussion and Analysis
51
Key NBFC Areas
Estimated Market Share (2016-17 E)
Competitive Positioning Outlook Estimated CAGR over FY2018 and FY2019
Housing Finance
40% *Competitive interest rates*Better customer service*Strong local knowledge *Geographical focus *Differentiated credit appraisal methodology
*Growth led by demand from Tier 2 and Tier 3 cities*Favorable interest rate to improve disbursements*Asset quality to remain stable*Huge latent demand in the economy for low cost houses *Strong government thrust *Challenges with increase in the operating expenses and higher credit cost
16%
19% (Low cost housing)
Auto finance 50% *Strong presence in used Commercial Vehicles (CV) segment,*Faster loan processing, *Less documentation*Customised offering*Presence in Urban and Rural Markets
*Light commercial vehicles and passenger vehicle sales to drive disbursement growth*Normal monsoon and lower cost of ownership to support growth*Government focus and spends on infrastructure to accelerate CV sales*Increase in credit cost resulting from accelerated NPA recognition norms may impact profitability over short term
14%
Loan against property
51% *Strong origination skills *Superior customer knowledge*Better collection mechanisms*Faster loan processing *Cash flow based credit appraisal*Robust distribution
*High competition and entry of new players resulting in margin compression*Stabilising property prices supporting recovery*SARFAESI extended to NBFC , key tool to curb credit losses
14%
Microfinance 53% *Extensive reach*Lower interest rates compared to local money lenders
*Impact on profitability owing to higher credit cost post demonetisation*Higher operating expenses due to expansion plans of MFIs (specially players with small finance bank licence) can effect profits
17%
MSME finance 7% *Lower turn-around-time*Wider reach*Cash flow-based credit appraisal*Better servicing*Simpler documentation
*Recovery in economy will drive the MSME credit*NBFCs to register impressive growth supported by growth in Tier 2 and 3 areas*Increased credit cost can impact business
31%
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MSME Segment OverviewIndia’s micro, small and medium enterprises (MSME) segment contributed to 31% of GDP (as of FY2015). The sector also contributes to the socio-economic development of the country by providing large employment opportunities in rural and backward areas; reducing regional imbalances; and eventually creating equitable distribution of national wealth and income in the country.
MSME credit sector reported a 10-12% CAGR over the past five years during FY2012-17. This growth of MSME credit outpaced the banking systems’ industry and services credit, which grew at an 8.7% CAGR during the same period.
Public Sector Banks continue to dominate MSME lending in India, with almost two-thirds of the total loan outstanding being funded by them as of FY2017. However, the share has been declining gradually, with private banks and NBFCs increasing their presence in Tier 2 and peripheral areas to capture the market share. Industry experts believe that the share of NBFCs in MSME credit will increase from 6.7% in FY2017 to 9.2% in FY2019, as growth is expected to be higher in non-metro areas. (Source: CRISIL)
This growth will also be supported by NBFCs’ deep customer reach, faster documentation process and higher risk appetite. In addition, NBFCs have improved their operating efficiency by increasing their online presence and using analytics to assess the creditworthiness of customers. The NBFCs have been also successfully in increasing their loan book by replacing credit extended by the unorganised moneylenders.
MSME Credit of NBFCs
2013-14 2014-15 2015-16 2016-17 2017-18 2018-19P
327
40%
34%
46%
29% 30%32%
440
643
830
1,079
1,424
Note: LAP portfolio also included for NBFCs where bifurcation is not available; Commercial vehicle finance excluded. Source: RBI, CRISIL Research
Demand
Economic Growth
Asset Quality
Government Support
Enormous un-met finance demand
among micro enterprises due
to low credit penetration
Better compliance due to GST will
boost book quality and credit
growth of the MSME sector
Improvement in the economic scenario to boost the funding requirement of small businesses
Government’s credit guarantee fund scheme enabling collateral-free credit to MSME segment
Growth Drivers
Management Discussion and Analysis
(Mio)
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Microfinance Sector Growth
FY 13E FY 14E FY 15E FY 16E FY 17E FY 18E FY 19P
133181
335
563684
784
940
CAGR in Gross Loan Portfolio (GLP):51%
CAGR : 17%
Gross Loan Portfolio(Rs. Bill)(LHS) No of Borrowers (Million) (RHS)Average Ticket size (‘000) (RHS)
Note: Overall, GLP includes only NBFC-MFIs and SFBs and excludes, for all years, numbers of Bandhan Financial Services Ltd, which has now become a bank. Bharat Financial Inclusion (BFIL) is also considered for the analysis in all years; it is now merging with IndusInd bank.
E: Estimated; P: ProjectedSource: Bharat Microfinance, MFIN, CRISIL Research
Microfinance Sector OverviewThe Microfinance industry has been impacted by some critical reforms in the past decade: farm loan waiver across states; issue of small finance banks (SFB) license; and demonetisation. However, the industry has shown its resilience over the past decade despite the major events. Microfinance industry’s gross loan portfolio (GLP) has grown at a phenomenal CAGR of 51% CAGR over FY2012-17 despite some hindrances the industry faced.
During the year, the segment gained momentum post September, 2017 which is reflected in growing disbursement and improved portfolio quality. Portfolio at Risk (PAR>30) has been gradually improving and as on 31 December, 2017 it stood at 5.98%. The aggregate gross loan of portfolio stood at ` 42,701 crores as on 31 December, 2017 reporting a growth of 43% over 31 December, 2016. On an aggregated basis NBFC MFIs as of 31 December, 2017 has a network of 9,838 branches and employee base of 78,573 members. The segment reported an increase of 27% in branches, 21% in employees and 25% loan officers on a Y-o-Y basis. (Source: MFIN Micrometer)
After demonetisation, MFIs faced repayment disruptions as most of the repayment was in cash. Though the portfolio quality is improving, it had a persistent effect on profitability in FY2018. Thus, despite improvement in operating expenses, profitability was impacted due to higher credit cost. However, as per industry experts, improvement in profitability is expected in FY2019 as credit costs decline and operating expenses are rationalised. Over the long term, technological investments by MFIs are expected to reduce the operating expenses.
Despite the sudden slowdown after demonetisation, the industry size is expected to reach close to ` 1 trillion in the next two years driven by rising penetration. The huge opportunity to capture share from unorganised lenders will continue to propel the MFI industry growth in the future.
43%Y-o-Y Gross Loan Portfolio Growth of Microfinance Sector in India as on 31 December, 2017
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Loan Against Property (LAP)The total outstanding LAP is estimated to have grown at a 26% CAGR to ` 3,249 billion, between FY2013-17 (Source: CRISIL). This growth was led by a higher number of balance-transfer cases; rising property prices; higher risk appetite of NBFCs in terms of higher loan-to-value (LTV) ratios; enhanced product awareness; growing capital requirement among small businesses, and higher focus by financiers.
As per CRISIL Research, the LAP outstanding is expected to grow at a moderate pace of 13-15% CAGR to ` 4,259 billion during FY2019. The segment is exposed to challenges including higher pressure on yields; rising LTV; and increase in commercial property mortgages. These short-term obstacles are leading to an overall slower growth in the LAP market. Within the LAP sector, the share of micro LAP is gradually growing because of lower finance penetration in smaller towns. With a ticket size of <` 50 lakhs, the micro lap has a share of over 30% in the LAP market.
Lesser competition in smaller cities
Increasing customer awareness
Risk-return equation favourable for financiers
Stable real-estate prices in most micro markets
Low interest rates
Increased demand (micro and small businesses)
Growth Drivers
1
2
4
6
3
5
Management Discussion and Analysis
55
Commercial VehiclesThe overall Commercial Vehicles (CV) segment grew by 19.94% in FY2018 over the previous year. Medium & Heavy Commercial Vehicles (M&HCVs) increased by 12.48% and Light Commercial Vehicles grew by 25.42% during the year. (Source: SIAM)
The growth for the sector remained low in the first half of the fiscal on account of low component availability as the industry transitioned from BS-III to BS-IV.
The exports of commercial vehicle declined by 10.53% in FY2018 when compared to the previous year. However, research firm ICRA estimates CV exports from India to grow at a CAGR of 12-15% over the medium-term to touch 160,000 units by 2020. This will be driven by expansion in the new markets of Asia, Africa and the Middle East; scaling up exports from foreign CV OEMs; and growing demands from existing markets of the SAARC region.
As per CRISIL, NBFC are expected to witness faster growth in their vehicle finance. While all segments of vehicle finance are expected to grow faster than before, commercial vehicle financing, which constitutes 51% of the vehicle finance portfolio of NBFCs, is expected to rebound from the lows seen over the past several years to clock a CAGR of 14% till 2020. On account of this, NBFCs will retain their share of over 65% in the overall CV finance market.
Demographic Growth Enablers for the SectorWorking Age PopulationIndia is one of the youngest nations in the world with around 62% of its population in the working age group of 15-59 years and nearly 54% of its total population below 25 years of age. According to a report published by Deloitte, India is poised to lead the third wave of economic growth in Asia, after
Japan and China. The three big levers of economic potential, namely population, participation and productivity are set to surge in India. By 2050, the India’s potential workforce will surge to 1.08 billion people - Japan’s was 90 million when it led the first wave of growth and China’s was around one billion.
Growing Rural DemandThe demand for quality goods and services is increasing in rural India reflecting improvement in living standards. Consumption patterns in these areas are gradually changing to increasingly resemble the consumption patterns of urban areas.
UrbanisationPopulation and economic growth has fostered urbanisation in the country and the number of urban towns and cities has drastically increased. India's urban population is growing at a faster pace than in any other major nation in the world. This growth is expected to continue in the years to come. This migration will offer opportunities for large scale housing and infrastructure development in the coming years.
According to estimates, 31% of India's population is urban, and this is the second highest in the world.
Rising Consumer Class The emerging middle-class segment is expected to drive consumption demand and commercial finance in the country. Consumer behaviours and spending patterns are evolving with rising incomes and growing consumer awareness.
CONSUMER BEHAVIOURS AND SPENDING PATTERNS ARE EVOLVING WITH RISING INCOMES AND GROWING CONSUMER AWARENESS.
19.94%Commercial Vehicle Segment Growth, FY2018
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About Fullerton India Fullerton India Credit Company Limited is one of India’s leading Non-Banking Finance Companies, operating across rural and urban markets. Fullerton India has been successful in increasingly financing the needs of under-banked and under-serviced population. The Company has strongly established itself and is spread across the country's broad financial landscape. It has an entrenched presence in the market through more than 559 branches, covering 600 towns and close to 55,000 villages. With over 9,946 employees, Fullerton India is serving over 1.9 million customers.
Fullerton India is a part of the global financial conglomerate, Fullerton Financial Holdings - a subsidiary of Temasek Holdings. The global firm is present across eight countries with a customer base of 7 million. Fullerton Financial Holdings invests in financial institutions in emerging markets with a focus on business and consumer banking.
Fullerton India’s primary services constitute financing of SME for working capital, loans for commercial vehicles and two-wheelers, home improvement loans, loans against property, personal loans, working capital loans for urban self-employed and loans for rural livelihood advancement, rural housing finance and financing of various rural micro enterprises.
Business Segments and PerformanceUrban Business Segment Fullerton India’s urban business comprises of portfolio for personal consumption loans, business loans, loans against property and commercial vehicle loans. The Company derives strength from its deep penetration at the market place. Its distribution network is spread across 223 branches (Metro to Tier 4) in
22 states and 3 Union Territories, serving 2.05 lakh customers. A strong presence has enabled the Company to build a diversified portfolio of secured and unsecured loans, supporting customer’s consumption and income generation requirements.
THE COMPANY HAS STRONGLY ESTABLISHED ITSELF AND IS SPREAD ACROSS THE COUNTRY’S BROAD FINANCIAL LANDSCAPE.
Unsecured LoansFullerton India services the personal and business needs of customers across different segments, income streams and geographies. The Company’s Assets Under Management for personal loan recorded a growth of 32% over the previous year and crossed the ` 5,000 crores mark during the year. This growth is largely attributed to the Company’s deep penetration in its regions of operation. In addition, strong growth was witnessed in Tier 3 and Tier 4 geographies. The Company capitalised on the growth by leveraging its technology enabled delivery platform. In particular, the Company rolled out tablet enabled with KYC scanner for the front line officers, which resulted in reduced time to market. During the year, new products offerings were introduced with a view to strengthen offerings with increased target segment.
The Company expanded its outreach through multi-channel lending solutions; and improved processes, supported by digitalisation; and robotic process automation (RPA) for enriched customer experience and seamless on-boarding.
Commercial Vehicle Finance The Commercial Vehicle (CV) business witnessed a strong growth and healthy portfolio performance during the year. The segment reported
80% growth in disbursements over the previous year and crossed the ` 1,000 crores benchmark of Assets Under Management. The Company successfully utilised the benefits that came post GST implementation. In addition, the sector witnessed a widespread growth across all the regions of the Company’s presence. Looking forward, the Company is identifying new geographies, especially in the rural region to expand its CV business.
Management Discussion and Analysis
57
Micro, Small and Medium Enterprise (MSME) Finance Fullerton India has a strong distribution network and the deep understanding of the under-served markets. The Company’s longstanding presence in the market gives it a ground-level understanding of the customers’ profile, credit needs, as well as the local nuances. This has helped the Company report a growth of 57% over FY2017 in its MSME business segment. In addition, the business reported stronger traction post GST implementation. With GST, there is improved access to formal funding in the MSME segment owing to transparent reporting of financials.
Loans Against Property (LAP) In a volatile market scenario, the Company’s business remained stable with marginal growth. The corrective actions taken in the previous year, helped Fullerton India to grow this business in calibrated manner. The Company reduced its average ticket size to offer micro LAP products, carefully focussed on select geographies and collateral quality. Consequently, Fullerton India concentrated on the MSME customers by offering a more comprehensive suite of solutions.
57%YoY Growth in MSME Business Segment
Urban Business
FY 17 Q1 FY18 Q2 FY18 Q3 FY18 FY18
88,997 91,070 93,197 97,479105,004
Loan Against Property
FY 17 Q1 FY18 Q2 FY18 Q3 FY18 FY18
41,466 40,504 41,032 40,692 41,199
Unsecured Loans
FY 17 Q1 FY18 Q2 FY18 Q3 FY18 FY18
39,688 41,133 43,46147,347
52,601
Commercial Vehicles
FY 17 Q1 FY18 Q2 FY18 Q3 FY18 FY18
7,8398,528 8,698
9,434
11,198
Assets Being Managed by Fullerton India in FY2018:
*Figures in Million
*Figures in Million
*Figures in Million
*Figures in Million
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Rural Business SegmentFullerton India operates its rural business under the brand - Gramshakti. This business has been built with a wide array of product offerings, strong customer ties and robust credit quality. It offers group loans, mortgage loans, business and micro entrepreneur loans, two-wheeler loans and consumer durable loans.
Gramshakti has a presence across the 13 states of Tamil Nadu, Andhra Pradesh, Maharashtra, Karnataka, Gujarat, Rajasthan, Chhattisgarh, Madhya Pradesh, Uttar Pradesh, Uttarakhand, Haryana, Bihar and Odisha. It has a total of 336 branches, serves over 17 lakh customers and connects more than 55,000 villages.
Rural India showed signs of recovery from last year’s demonetisation, and advancing optimism that increased spending will help the broader economy regain its vigour. With increasing on time repayments and improving collection trends, the Company started disbursing loans at a healthy pace from Q2 FY2018.
During the year, the Gramshakti business, which reported a temporary slowdown in FY2017 owing to demonetisation, picked up its growth momentum with more preparedness. The business stabilised and the Company reported a strong disbursement growth of 89% over the previous year. As a strategy, this revival was also a result of the Company’s focus on diversifying its presence and product mix; strengthening book quality; and digitising processes to enhance efficiency.
Fullerton India successfully launched new products including loans for consumer durables; Samriddhi Loans – a
personal loan for select solidarity group loan borrowers with a good repayment track record; and Hospi Cash – a health insurance policy.
The Company entered the states of Bihar and Odisha during the year, and inaugurated four branches in each of them in Eastern India. In total, 36 new branches were opened during FY2018. Going forward, the Company will continue to penetrate in newer geographies to enhance its branch foot print.
Furthermore, the Company strengthened its concentration on individual and mortgage loans with a view to enhance the quality of book. In doing so, more branches were activated to do mortgage loans. Consequently, the contribution of individual loans in the overall book grew to 46% as on 31 March, 2018 compared to 40% in the previous year. The share of secured loans also improved to 27% compared to 22% in the previous year.
In the aftermath of demonetisation, the Company concentrated on digital disbursement and collections. Digitisation was a key enabler to speed
up the Company’s collection process. Its collection efficiency revived to 99.3% in FY2018 after a slower productivity and efficiency in the previous fiscal owing to demonetisation. The Company also initiated paperless digital on-boarding process for its rural customers.
46%Contribution of Individual Loans in the Overall Book
Management Discussion and Analysis
Disbursals (Mio) AUM (Mio)
FY 17 Q1 FY 18 Q2 FY 18 Q3 FY 18 Q4 FY 18
29,943
26,948
9,460
27,326
12,544
33,034
14,658
40,604
19,829
52,728
Yearly and Quarterly Rise in Disbursals and AUM
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Marketing The NBFC sector is witnessing a paradigm shift with high volume of reinvention and innovation. In this changed environment, new tools of marketing are gaining relevance. The marketing function at Fullerton India supports the change and is adopting to the transformation. The Company has increased its thrust in social media platforms and has complemented the online business sourcing by influencing the decision making of the customer. Content marketing and social media campaigns were enabled to build relevant connect and push products in accordance. The increased adoption of technology facilitated business visibility and also resulted in superior customer experience.
The Company has strengthened its marketing initiatives with the objective to reach customers faster. It has enhanced visibility by engaging with local media channels in the regions of its presence and increased investments in outdoor media activities. The Company’s regionally customised marketing solutions have helped build trust and enhance sales across the geographies.
Key Business Enablers
2
3
4
5
6
1
Marketing
Information Technology Infrastructure
Treasury Management Human Resources
Digitisation
Risk Management
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Digitisation The increased focus on digitisation and the Government’s financial inclusion drive, along with high mobile and internet penetrations in India, has set strong base for future expansion of the Company’s businesses. Fullerton India believes that digitisation is crucial to acquire new customers, process loans and evaluate creditability. It continues to invest in technology, analytics and in digitalising the lending ecosystem.
The Company continued its digitisation drive in FY2018. Investments in areas such as technology, analytics and digital front end interfaces were made. The Company leveraged its technical knowledge to offer substantive platforms to cater to the demands of a digitally transforming Indian financial services sector.
The Company launched an end to end frictionless centralised processing for customers coming in via the online route for loan. These processes are now linked to accept documents shared through Whatsapp and email minimising the physical touch points with today’s digital savvy customers. Loan agreements also got digitised enabling us to deliver best in class digital experience for digital loan customers.
Integration with the United Payments Interface (UPI) facility of National Payments Corporation of India (NPCI) was successfully completed during the year. Customers can now pay using the
UPI route. This increases the range of digital options available to customers for payments of installments — from the traditional electronic payments to payment through internet banking gateways, debit cards, UPI, wallets – including onsite and mobile POS terminals or through onsite mobility enabled agents.
Digitisation gathered momentum in the rural business during the year wherein we launched a comprehensive mobility solution. Via this digital solution, more than 95% of our rural customers are now on boarded digitally via the use of tablets.
Another important customer centric digital facility was launched during the year for our existing urban customers. This facility allows existing borrowers to avail top up amounts on their current loan within a time frame of 30 minutes. This facility has been received well by our existing borrowers.
The Company refreshed and re-launched its existing initiative - ‘InstaLoan’. The mobile based InstaLoan supplements the Company’s web based e-Loans platform. It offers immediate loan access to eligible salaried individuals.
The year also witnessed the conclusion of the first year of ‘Finnovatica’, a platform that seeks to nurture innovative ideas
from talented students of leading colleges of the country. Finnovatica provides a collaborative platform for bright young minds to incubate and develop innovative ideas, and leverage financial and mentorship support from the Company to convert these to meaningful and practical solutions. The Company announced prize money to the bright minds of student entrepreneurs, which is being used as seed funding for their venture.
Information Technology Infrastructure Over the years, IT investment at Fullerton India has evolved from a business support to a business driver. Fullerton India has been investing in advanced technology platforms and IT Infrastructure to provide a cutting edge and seamless services to its customers.
The Company has invested in Customer Relationship Management (CRM) solution to integrate all customer engagements in a single platform and have a 360-degree view of the customer. It has also revamped its web portal with enquiry management, lead management and customer online access. Furthermore, now the customers can also view documents online and send service requests, which are integrated with CRM solution. At the Company call centre, service delivery is also being optimised by directing the customers to the Interactive Voice Response (IVR) solution.
The Company has in place Desktop virtualisation, a Cloud Technology solution, to run all its core operations across urban and rural markets. This has helped Fullerton India to move from physical desktop PC oriented infrastructure to private cloud based Hosted Shared Desktop environment. The application delivery as a service (ADaaS) solution works on the central server and derives server-based processing power. It provides prompt boot up; reduces machine downtime; and facilitates employee mobility. The Company has over 3,000 virtual machines that run over much smaller physical technology infrastructure
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footprint to power numerous IT enabled business services.
Fullerton India has embarked on a program to create digital capability. An overhaul of the technology stack through API based micro-services architecture has been implemented. This has enabled Fullerton to integrate with various 3rd party sources in a secure manner for real-time information flow, thereby considerably reducing the transaction times. Process re-engineering through implementation of bots has enabled creating the frictionless and efficient back-end and helps provide a seamless customer experience in line with the slick digital front end.
The Company has also shaped a state-of-the-art Business Continuity and Disaster Recovery management strategy to secure the live systems. Periodic switch-over and switch-back drills of major IT applications are performed to prepare for responding to emergency situations.
The Company’s robust infrastructure succeeded in delivering 99% uptime during the year. Empowered by the revamped technology stack, the company now partners with various fintech players and has established its core platform with complete paperless processing capacity to meet the future scale, speed and transaction volume requirements.
Treasury ManagementAt Fullerton India, keeping adequate liquidity to support disbursements and ensuring optimal cost of borrowing remain priority for the treasury. The Treasury is guided by the following three principles of liquidity management:
(i) Diversification of funding by instruments, lenders, lender types and geographies;
(ii) Matching the tenor of asset and liability to minimise refinancing risks; and,
(iii) Maintaining a liquidity buffer for contingency funding.
To maintain minimum dependence on single lender or even one lender type, the Company seeks to constantly diversify
its lender base. Fullerton India has over 200 institutional lenders including Banks, Insurance Companies, Foreign Portfolio Investors, Mutual Funds, Pension and Provident Funds thereby diversifying its funding. A healthy pipeline of bank funding was maintained at all times, adding to the quality of the funding profile. Fullerton India has healthy proportion of term loans from Banks. This is followed by Non-Convertible Debentures and Commercial Papers which added efficiency and balance to the funding book. Overall, the funding profile remains resilient to market volatility and provides optimally costing renewable relationships.
During FY2018, the Company concluded its second rupee denominated bond (Masala Bond) issuance aggregating to ` 500 crores. The maiden issue was concluded in September 2017. This issuance was successfully subscribed by off-shore investors, thereby creating a new and uncorrelated investor segment which is geographically diversified.
The Company’s CAR (Capital Adequacy Ratio) stood at 18.93%, higher than the RBI’s requirement of 15%, reflecting its ability to meet the increasing credit demand and growing the business. Similarly, the Tier 1 Capital is comfortable at 15.03%, compared to an RBI requirement of 10%.
The robust treasury management processes and conservative liquidity
policies have been well recognised by lenders and rating agencies. The Company’s ratings were re-affirmed by all the rating agencies. Fullerton India has a credit rating of AAA from CARE, AA+ from ICRA and India Ratings on its long-term debt instruments, which are among the highest within the country’s retail finance sector.
On the ALM front, the Company maintained an average borrowing tenor of 32 months matching its average asset tenor. A selective mix of funding sources including bank borrowings and capital markets were used to maintain optimal tenor, reduce mismatches
and mitigate interest rate risks.
The Company optimised its liquidity buffer to remain adequately funded even in the event of any contingency. It maintains high quality liquid assets including cash and cash-equivalent instruments which can be easily liquidated. A cushion of fee paying committed lines and unavailed bank lines is additionally maintained to add resilience to the treasury function.
The macro environment witnessed hardening of interest rates over 100 bps. The impact of the same is being witnessed by all NBFCs alike. In order to protect its margins, the Company plans to appropriately pass the increase in costs to its customers.
In addition to the above factors, Fullerton India has established a strong treasury function that ensures the Company is well-funded for normal outflows like disbursements, expenses, repayments, even in case of contingencies.
Analytics
18.93%Capital Adequacy Ratio, FY2018
FULLERTON INDIA HAS A CREDIT RATING OF AAA FROM CARE, AA+ FROM ICRA AND INDIA RATINGS ON ITS LONG-TERM DEBT INSTRUMENTS.
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Starting from segment identification for sustainable and profitable growth, cross-sell, upsell, attrition management to collection on delinquents and recovery from written-offs, the Company has leveraged its analytical capabilities in every step of the customer life cycle.
The Company’s analytical capability plays a key role in making organisational decision to achieve its long term goal. The Company’s strategy in response to any regular business activity or macro-economic event is devised through understanding of the past as laid in the data.
Advanced techniques used by Analytics team, in measuring the portfolio health of the Company through volatility models, helps it to maintain resilience against any economic shock like demonetisation or any industry events. The Company developed a collection prioritisation for demonetisation-hit rural delinquent portfolio, which has played a key role in focused recovery from the pool with optimal usage of its work-force.
The analytics team uses tools like segmentation, predictive modeling and newer techniques like random forest, gradient boosting and others to devise strategies implemented across different interfaces. The techniques are utilised as needed by the strategy to ensure best return of the implementation in terms of both the Company’s profitability as well as customer experience. Offering the right product at the right time to the right customer at the right risk-weighted price; collecting from the right customer at the earliest; and focused strategy to ensure the same has remained mantra of the analytical efforts.
Human Resource Management Fullerton India’s Human Capital function plays an enabling role in creating an environment of growth and development for its employees.
With a vision to be an ‘Employer of Choice’, Fullerton India has demonstrated commitment in building a culture that fosters Integrity, Meritocracy, Teamwork and a sense of Community which has inspired people to perform and succeed.
Recruitment: The Company focused on creating capabilities for its future revenue streams. This necessitated the inclusion of fresh talent and the Company added over 650 employees across a diverse workforce. Fullerton India is an employer of choice at premier institutes like IITs, IIMs and IRMA and continued to hire from these institutes this year too.
Training and Development: During the year, the Company invested in over 38,000 person-days of training, an increase of 8% over the previous year.
Fullerton India continues to partner its employees in their success and has successfully groomed internal talent to comprise of 75% of its supervisory and Country leadership roles.
Employee Engagement: The Company’s Engagement Committee comprises of senior cross-functional leaders. This committee is focused on staff engagement activities around the following pillars – Communication, CSR, Fun@Work, Recognition and Wellness.
The employees were provided with the opportunity to participate in over 60 engagement programs conducted during the year.
Employee Welfare: The Company consistently invests in employee welfare, including healthcare, life insurance and emergency financial aid.
Recognition: The Fullerton India Recognition of Excellence (FIRE) programme recognises the efforts of its employees. During the year, over 2,507 employees were recognised through this platform. In addition, employees who exhibited exceptional corporate excellence were included in the ‘CEO’s Elite List’ and felicitated. The Company, this year, presented 284 awards to employees who have completed over 10 years of service.
Governance: Fullerton India continues to promote meritocracy, integrity and governance in matters of legality and compliance. The Company has rolled out policies to encourage employees to raise complaints without the fear of retribution or discrimination. The Company’s Code of Conduct comprises of relevant statutes pertaining to prevention of sexual harassment and a whistleblower policy to escalate and redress issues with speed.
Risk Management During FY2018, the Company witnessed reeling impact of the policy reforms, especially demonetisation and Goods and Service Tax. While the urban business remained largely unimpacted by demonetisation, the rural business faced some collections pressure due to unavailability of currency.
The Company undertook swift measures to align its credit policies around consumer behavior to mitigate vulnerabilities associated with liquidity and credit risks. Collection strategies were also aligned with the macro economic scenario and conservative provisions were made to fairly reflect inherent impairments from collections slow down. GST mandated declaration of income for self-employed in its move to formalise the segment. This transition resulted in short term slow down in the business.
650Number of Employees added in Fullerton during FY2018
FULLERTON INDIA PROMOTES MERITOCRACY, INTEGRITY AND GOVERNANCE IN MATTERS OF LEGALITY AND COMPLIANCE.
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Fullerton India has also made underlying structural changes in its rural business. The Company has progressively moved away from cash disbursements to electronic payments. Additionally, it is also moving away from cash-based collections to digital transfer of payments through bank mandates. In doing so, the Company is minimising the risks associated with cash dealings and leveraging the improvements in the payments infrastructure. The Company has also enhanced its focus away from group lending to individual offering to secure portfolio quality. On the urban front, the Company strengthened its application-based scorecard mechanism to support its credit underwriting process.
The Company enjoyed stronger recovery as a result of SARFAESI laws to NBFCs in India. There was a marked reduction in secured portfolio delinquencies. The Company has a well-defined risk appetite framework that optimises capital and resource deployment. Furthermore, the Company actively leverages information from the credit bureau to understand market dynamics and then uses key industry learnings to design and implement robust credit policies.
During the year, the Company started three in-house collection call centres across Chennai, Mumbai and Delhi to address its collections from urban business and reduce dependence on outsourcing. This move is expected to improve the Company’s collection capabilities significantly.
Furthermore, a diversified portfolio mix helps the Company avoid serious business impacts arising from pressure on a specific product/segment.
Risk FrameworkRisk Management at Fullerton India aims to promote good business practice through disciplined risk management process to minimise risk and maximise returns.
Using optimal mix of judgmental criteria and an highly evolved analytics-backed decision-making platform, the Company manage through the lifecycle, different customer segments across diverse lending products and across geographies.
Fullerton India is the only NBFC in India to implement Recession Loss Multiplier (RLM) which helps the Company map portfolio volatility in case of a likely slowdown in the economy through the use of sophisticated analytics. This helps the Company in maintaining superior portfolio quality and enhancing business profitability across product life cycle. Cutting edge digital platforms and algorithmic targeting techniques are also adopted to ensure right customer segment is originated.
Risk Appetite Framework At the core of Fullerton India’s risk management approach is a clear understanding of its desired risk appetite. The risk appetite framework approved by the Board of Directors covers different types of risks the organisation is exposed to and also clearly defines the Company’s risk taking perimeters.
Based on this framework, the Company decides on the segments to grow into, products to be offered, portfolio
shape to be built and resources to be committed. The decisions are driven not only by return metrics like Return on Equity (RoE) but also based on earnings volatility of such segments to take a “through the cycle” view incorporating economic, credit and market scenarios. Fullerton India is a pioneer among NBFCs in India, to adopt this framework, which uses extensive statistical models that are aligned with approaches aligned with Internal Ratings Based (IRB) norms of Basel II. Fullerton India periodically de-risks itself through portfolio-level stress tests that assess the impact of extreme, though probable, stress scenarios (economic, credit, market and collateral aberrations) and their financial impact.
Country Risk Assessment Fullerton India takes into consideration the various macroeconomic and portfolio indicators to arrive at an overall country risk assessment. Post discussion and approval by the senior management, the same is applied for decision making across the consumer life cycle including underwriting, portfolio management, collections and treasury management.
Product Policy, Governance and Monitoring Framework Fullerton India has detailed product approval documents that take into consideration prevailing market conditions, industry wide applicable product norms and sectorial portfolio performances. This helps to adopt a framework for customer selection, credit acceptance and credit underwriting processes for sanctioning and booking
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each loan. These programs are approved at an in-country level and concurred by the Risk Oversight Committee (ROC). Basis these programs, credit policies are designed which provide in-depth guidelines around target market, customer selection and credit acceptance criteria, credit approval methodology, verification, post disbursement monitoring, collections and remedial portfolio management policies.
A strong ‘Test and Control’ mechanism helps to evaluate the efficacy of each policy. There is a detailed review mechanism where the effect of the implemented policies are reviewed on a periodic basis to ensure that they adequately protect the company from credit risk arising out of changes in macroeconomic, industry/ segment level and other consumer behavioral attributes.
The Chairman of the Risk Oversight Committee, CEO, Head of Business and Chief Risk Officer engage in an ongoing appraisal of exposure caps, performance triggers, test programs and country risk assessments.
Risk Mitigation Credit Underwriting Risk Management: A prudent mix of centralised, decentralised and Hub and Spoke locations at Fullerton India ensures efficient underwriting framework where each application undergoes rigorous credit assessment, approval and administration processes. Systemic process automations like the Business Rules Engine ensure fast and
efficient implementation of Policy rules through minimal human intervention.
Operational Risk Management: A committee comprising of senior officials oversees the entire Operational Risk Management framework for the entire company across business groups, credit, operations, corporate and support functions
Information Security Risk Management: The IT team manages the entire Information Security framework at an enterprise level and helps to mitigate risks that may arise to the confidential data stored across the Company.
Fraud Risk Management: Fullerton India has adopted a neural fraud risk system (Hunter) that triggers alerts to ensure prudent detection, management and elimination of fraud risk across the Company.
Liquidity Risk Management: A strong in-house treasury team helps to manage risks related to liquidity, investments, interest rate and borrowings through implementation of stringent policies.
Internal ControlsFullerton India has instituted adequate internal control systems commensurate with the nature of its business and size of operations. These systems ascertain that transactions are authorised, recorded and reported correctly. The company ensures adherence
with all internal control policies and procedures as well as compliance with all regulatory guidelines in respect of business, risk, branches and support functions. The Audit Committee of the Board of Directors reviews the adequacy of these systems. All significant audit observations of the Internal Auditors and follow-up actions were duly reported upon and discussed at the Audit Committee. During the year under review, the Management initiated an enhanced “Internal Control Framework”
which was designed and implemented by the Independent Risk Advisory Consultant. The Operational Risk Unit evaluated the design and operating effectiveness of the framework and the same was in accordance with the requirements of the Internal Financials Controls requirement of the Companies Act, 2013.
Cautionary Statement Statements made in the Management Discussion and Analysis describing the Company’s objectives, projections, estimates, expectations may be “Forward looking statements” within the meaning of applicable securities laws and regulations. Actual results could differ from those expressed or implied. Important factors that could make a difference to the Company’s operations include economic conditions affecting demand supply and price conditions in the domestic and overseas markets in which the Company operates, changes in the government regulations, tax laws and other statutes and other incidental factors.
FULLERTON INDIA HAS A WELL DOCUMENTED POLICY FRAMEWORK TO MITIGATE RISKS ASSOCIATED WITH ITS BUSINESS.
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Standalone financials as per Indian GAAPAnalysis of the Financial Statements The Company regained its growth momentum which was hampered by the announcement of demonetisation of high value currency notes on 8 November, 2016.
Fullerton India CC’s profit after tax increased by 65.4% to ` 35,435 lakhs in FY2018 from ` 21,429 lakhs in FY2017.
Operating Results Information
Particulars 31 March, 2017 31 March, 2018 % change
Interest Income 2,36,285 2,47,852 4.9
Interest Expense 1,03,437 97,176 (6.1)
Net interest income 1,32,848 1,50,676 13.4
Non-interest income
- Fee income 13,901 14,275 2.7
- Assignment Income 3,156 1,318 (58.2)
- Profit on Sale of Investment 3,060 537 (82.5)
- Other income1 7,855 10,921 39.0
Operating income 1,60,820 1,77,727 10.5
Operating expenses 77,083 86,248 11.9
Operating profit 83,738 91,479 9.2
Provisions and write-offs (net of recoveries) 50,617 36,839 (27.2)
Profit before tax 33,121 54,640 65.0
Tax, including deferred tax 11,692 19,205 64.3
Profit after tax 21,429 35,435 65.4
` in lakhs, except percentages
Note:
1. Includes Commission on Life Insurance / General Insurance / Sale of Third Party Products and Ancillary Income from operations e.g. foreclosure, bounce, penal etc..
Net interest income and spread analysisThe following table sets forth the net interest income and spread analysis.
Particulars 31 March, 2017 31 March, 2018 % change
Interest income 2,36,285 2,47,852 4.9
Interest expense 1,03,437 97,176 (6.1)
Net Interest income 1,32,848 1,50,676 13.4
Average interest-earning assets1 12,71,550 13,47,949 6.0
Net interest margin2 10.4% 11.2% 0.8
` in lakhs, except percentages
Note:
1. Average daily balances of interest-earning assets includes loans (net of write-offs) and interest bearing investments
2. Net interest margin equals net interest income divided by average interest-earning assets.
Net interest income for the FY2018 was ` 1,50,676 lakhs (` 1,32,848 lakhs in FY2017) on the back of a 6.0% increase in average interest-earning assets.
The yield on interest-earning assets has remained steady at 17.92% in FY2018 (17.87% in FY2017). Average cost of funds have reduced to 8.9% in FY2018 from 9.7% in FY2017, resulting in an improvement in interest margin by 80 bps.
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The following table sets forth the trend in average interest-earning assets and average interest-bearing liabilities.
Particulars 31 March, 2017 31 March, 2018 % change
Advances 11,53,386 12,45,439 8.0
Interest earning investments 46,196 42,874 (7.2)
Other interest earning assets 71,968 59,526 (17.3)
Total interest earning assets 12,71,550 13,47,949 6.0
` in lakhs, except percentages
Note: Average balances are the daily averages of balances.
Average advances increased 8.0%, from ̀ 11,53,386 lakhs in FY2017 to ̀ 12,45,439 lakhs in FY2018. Growth was contributed by retail secured businesses and rural loans. Decrease in average interest earning investments, due to utilisation of liquid funds for growth in advances. The Company had excess liquidity in previous year due to slow business momentum post demonetisation. Non-interest incomeThe following tables set forth the principal components of non-interest income.
Particulars 31 March, 2017 31 March, 2018 % change
Fee income1 13,901 14,275 2.7
Assignment Income 3,156 1,318 (58.2)
Profit on Sale of Investment 3,060 536 (82.5)
Other income2 7,855 10,921 39.0
Total Non-Interest Income 27,972 27,051 (3.3)
` in lakhs, except percentages
Notes:
1. Fee Income includes Processing Fees, Document Fees and Stamping Fees.
2. Other Income includes Commission on Life Insurance / General Insurance / IHO / Sale of Third Party Products and other ancillary income from operations.
Increase in Fee income by 2.7% represents increase in average earning assets by 8.0%.
Assignment income dropped due to decrease in average assigned asset from ` 44,255 lakhs in FY2017 to ` 22,523 lakhs in FY2018.
Profit on Sale of Investment (Investment income) was lower due to rising yields and lower average investments as compared to FY2017.
Other income has increased in line with business disbursals which grew by 67% from ̀ 7,33,217 lakhs to ̀ 12,27,098 lakhs in FY2018.
Non-interest expenseThe following table sets forth the principal components of non-interest expense.
Particulars 31 March, 2017 31 March, 2018 % change
Employee benefit expense 43,613 48,831 12.0
Depreciation 2,778 3,341 20.3
Other administrative expenses 30,692 34,076 11.0
Total non-interest expense 77,083 86,248 11.9
Provisions and write-offs 50,617 36,839 (27.2)
` in lakhs, except percentages
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Employee expenses for FY2018 increased 12.0% over FY2017 due to an increase in employees from 10,017 to 10,795. During the year, Company started amortising the incentive paid to sales employees. Excluding amortisation employee expenses have increased by 25.5%. Employee costs accounted for 56.6% of total non-interest expense for FY2018 which is marginally lower than previous year (57%). Other administrative expenses have increased by 11.0% to reach ` 34,076 lakhs in FY2018 (` 30,692 lakhs in FY2017).
Provisions and write-off consisting of bad debt write off (net of recoveries), specific provisions for non-performing assets, provisions for standard assets and provision for diminishing investment value, decreased from ` 50,617 lakhs for FY2017 to ` 36,839 lakhs for FY2018. Write offs during the year increased by ` 34,694 lakhs, majority of these write offs happened as an after effect of demonetisation. This was partially off-set by higher recovery of ` 12,048 lakhs from previously written off loans.
During the previous year, RBI had provided a dispensation on prudential norms in the form of short-term deferment of classification of loan accounts as sub-standard. Accordingly, the Company had availed the said dispensation for certain categories of its loan products whereby loan accounts aggregating ` 17,602 lakhs continue to be classified as standard assets as at 31 March, 2017.
However, the Company has performed a qualitative assessment of its loan portfolio and accordingly, revised its estimates of provisioning for standard assets, whereby creating a provision of ` 16,327 lakhs in FY2017. The said amount was included Standard Asset provision.
During the year, the Company has released the above mentioned provision after write off/recovery of the concerned portfolio.
The Company has during the year revised estimate of provision required for sub-standard and standard assets. Had the Company used the estimate used in FY2017, provisions would have been higher by ` 4,194 lakhs
Financial conditionAssetsThe following table sets forth the principal components of assets.
Assets 31 March, 2017 31 March, 2018 % change
Cash and Bank Balances 53,327 74,932 40.5
Investments 202,437 83,780 (58.6)
- Certificate of Deposits / NCD’s 116,889 33,278 (71.5)
- Equity / Preference investment 36,105 36,105 0.0
- Other investments 49,443 14,397 (70.9)
Advances 1,127,869 1,561,411 38.4
Fixed assets (including leased assets) 7,355 7,415 0.8
Other assets 76,359 62,627 (18.0)
Total assets 1,467,346 1,790,165 21.9
` in lakh, except percentages
Note: All amounts have been rounded off to the nearest lakh.
Total assets increased 22.0% from ` 14,67,346 lakhs at 31 March, 2017 to ` 17,88,409 lakhs at 31 March, 2018, primarily due to an increase in advances. Investments have decreased 58.6% from ̀ 202,437 lakhs at 31 March, 2017 to ̀ 83,780 lakhs at 31 March, 2018.
Total Advances have grown 38.4 % from ` 11,27,869 lakhs at 31 March 2017 to ` 15,61,411 lakhs at 31 March 2018.
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Asset quality and composition The following table sets forth, at the dates indicated, the composition of outstanding portfolio.
Particulars 31 March, 2017 31 March, 2018
Advances % of Total Advances Advances % of Total Advances
Personal Loans1 591,980 52.5 895,074 57.3
Loan Against Property 434,701 38.5 527,108 33.8
Two Wheeler 15,527 1.4 13,495 0.9
Commercial Vehicle 81,256 7.2 113,050 7.2
Others 4,405 0.4 12,684 0.8
Total portfolio 1,127,869 100.0 1,561,411 10.0
` in lakhs, except percentages
Note:
1. Personal Loans includes Group Loans
Classification of loansThe Company classifies assets as performing and non-performing as per RBI guidelines for NBFCs. An asset is classified as non-performing if any amount of interest or principal remains overdue for period of 90 days or more.
Once an account becomes non-performing due to delinquency, the Company treats it as non-performing until the status for all loans of the customer comes to 0 days past due. For the accounts tagged as non-performing due to settlement/ restructuring, than that account will continue to be treated as non-performing irrespective of the delinquency status till the closure of loan / recognition of loss.
The following table sets forth, at the dates indicated, information regarding the asset classification of gross non-performing assets.
Assets 31 March, 2017 31 March, 2018
Non-performing assets
Sub-standard assets 33,920 27,770
Doubtful assets 3,795 10,099
Total non-performing assets 37,715 37,869
` in lakhs
The following table sets forth information regarding non-performing assets (NPAs).
Year Ended Gross NPA Net NPA Total customers outstanding
% of net NPA to total Customer outstanding
31 March, 2017 37,715 25,583 11,27,868 2.29%
31 March, 2018 37,869 24,991 15,61,411 1.61%
` in lakhs, except percentages
The ratio of net NPAs to total customer outstanding have decreased from 2.29% at 31 March, 2017 to 1.61% as at 31 March, 2018. During FY2017, the Company write-off NPAs with an aggregate outstanding of ` 76,063 laksh compared to ` 41,369 lakhs during FY2017.
FICCL’s provision coverage ratio (i.e. total provisions made against NPAs and prudential write-offs as a percentage of gross NPAs and prudential write-offs) at 31 March, 2018 is 78.1%. At 31 March, 2018, total general provision held against standard assets was ` 6,186 lakhs compared with ` 23,864 lakhs at 31 March, 2017.
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LiabilitiesThe following table sets forth the principal components of liabilities (including capital and reserves).
Liabilities 31 March, 2017 31 March, 2018 % change
Equity Share Capital 198,007 198,007 0.0
Reserves 52,395 87,182 66.4
Borrowings (excluding subordinated debt) 1,028,412 1,287,609 25.2
Bank Loans 453,810 518,483 14.3
Non-Convertible Debentures 467,230 619,830 32.7
Commercial Paper 107,372 149,296 39.0
Subordinated debt (included in Tier-2 capital) 69,100 69,100 0.0
Other liabilities 119,432 148,267 22.7
Total liabilities 1,467,346 1,790,165 22.0
` in lakhs, except percentages
Note: All amounts have been rounded off to the nearest lakh.
Total liabilities (including capital and reserves) increased 22.0% from ` 1,467,346 lakhs at 31 March, 2017 to ` 1,790,165 lakhs at 31 March, 2018 following additional capital infusion and increase in borrowings.
Key ratios The following table sets forth key financial ratios:
Particulars 31 March, 2017 31 March, 2018
Capital Adequacy – Total (%) 22.5 18.9
Return on average equity (%)1 9.4 13.7
Return on average assets (%)2 1.5 2.8
Earnings per share 1.1 1.8
Book value per share 12.1 13.5
Cost to income (%)3 47.9 48.5
Notes
1. Return on average equity is the ratio of the net profit after tax to the averages of monthly balances of equity share capital and reserves.
2. Return on average assets is the ratio of net profit after tax to average monthly balances of total assets.
3. Cost represents operating expense. Income represents net interest income plus non-interest income.
The total capital adequacy ratio, computed in accordance with RBI guidelines, dropped by 3.6% and was at 18.9% as at 31 March, 2018, with a Tier-1 capital adequacy ratio of 15.0% compared to a total capital adequacy ratio of 22.5% and Tier-1 capital adequacy ratio of 16.3% as at 31 March, 2017.
Return on average equity (ROE) increased to 13.7% as compared to 9.4% in previous year, indicating a increase of 432 basis points, majorly due to decrease in credit losses.
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Report on Corporate Governance
Annexure II To The Directors’ Report
I. Corporate Governance Philosophy and Practice Fullerton India Credit Company Ltd (FICCL) believes that Corporate Governance encompasses a set
of systems and practices to ensure that the Company’s affairs are being managed in a manner which ensures accountability, transparency and fairness in all transactions. It also understands and respects its fiduciary role and responsibility towards its shareholders, customers, employees and bankers and strives hard to meet their expectations.
The Company has infused the philosophy of corporate governance into all its activities. The Board of Directors of the Company provides strategic supervision and the Company’s leadership team performs strategic management activities. In addition to compliance with regulatory requirements, Fullerton India CCL endeavors to ensure highest standards of ethical and responsible conduct.
The Company continually focuses on upgrading its governance practices and systems to effectively meet the new challenges faced by the Company. It is also committed to achieve and maintain the highest standards of corporate governance by timely and accurate disclosure of information regarding the performance of the Company.
The constitution of the Board and its committees are in compliance with the provisions of the Companies Act, 2013 and the RBI regulations. The Company has complied with the applicable provisions of the SEBI (Listing and Obligations and Disclosure Requirements) Regulations, 2015 (hereinafter “LODR, 2015”).
II. Board of Directors The Corporate Governance principles of the Company ensure that the Board remains informed,
independent and provides guidance to the Company. Further the Board is fully aware of its fiduciary responsibilities and recognises its responsibilities to stakeholders to uphold the highest standards in all matters concerning Fullerton India CCL.
All the Directors of the Company are well qualified persons of proven competence and possess the highest level of personal and professional ethics, integrity and values. The Directors exercise their objective judgment independently. The Board is committed towards representing the long term interests of its stakeholders. The Board members actively participate in all strategic issues which are crucial for the long term development of the organisation.
As on date, the Board comprises nine Directors, with one Executive Director (Managing Director), five Independent Directors and three Non-Executive Directors. The Chairman of the Board is a Non-Executive Director.
None of the Independent and Non-Executive Directors had any material pecuniary relationship or transactions with the Company.
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Five Board meetings were held during the year on:
i. 18 May, 2017;
ii. 21 August, 2017;
iii. 14 December, 2017;
iv. 12 February, 2018; and
v. 28 March, 2018
The time gap between any two meetings was less than 120 days and at least one meeting was held every quarter.
The names of the Directors, attendance at Board Meetings and Annual General Meeting during the year, the number of other Directorships and Committee Memberships held by them as on 31 March 2018 are as follows:
Name of the Director Category of Directorship
(i)
Board meetings
attended out of 5 held
Attendance at the last
AGM held on 12 July 2017
Number of other Directorships
Number of Committee
memberships (iv)
in other Indian public
limited companies (ii)
in other Companies
(iii)
Mr. Gan Chee Yen, Chairman NED 4/5 No Nil 13 Nil
Mr. Shantanu Mitra(Resigned w.e.f 31 December 2017)
CEO & MD 3/5 Yes 1 2 1
Ms. Rajashree Nambiar(Appointed w.e.f. 12 February 2018)
CEO & MD 1/5 No Nil Nil Nil
Mr. Anindo Mukherjee@(Appointed w.e.f. 14 December 2017)
NED 3/5 No 1 7 1
Mr. Kenneth Ho NED 5/5 No 1 1 1
Dr. Milan Robert Shuster ID 5/5 No 1 Nil 2
Ms. Sudha Pillai ID 5/5 No 7 1 6
Ms. Renu Challu ID 4/5 No 9 1 8
Mr. Premod Thomas ID 4/5 No Nil 4 Nil
Mr. Shirish Apte(Appointed w.e.f. 22nd November 2017)
ID 2/5 No Nil 9 Nil
Notes:
i. @ Mr. Anindo Mukherjee was appointed as an Additional Director in NED capacity wef 14 December 2017; wef 1 January 2018 he was appointed as an Interim CEO & MD; wef 12 February 2018 he stepped down as an Interim CEO & MD and continues to serve as NED on the Board of the Company;
ii. * “Others” excludes the Company itself:
MD – Managing Director
ED – Executive Director
NED – Non Executive Director
ID – Independent Director
iii. Comprises public limited companies incorporated in India.
iv. Comprises private limited companies incorporated in India, foreign companies and Section 8 companies.
v. Only membership/chairmanship of the Audit Committee and Shareholders’/Stakeholders Relationship Committee held in public limited companies have been considered.
vi. None of the Directors of the Company hold Directorship in more than 10 Public Companies or is a member in more than 10 Committees or acts as Chairman of more than 5 Committees across all companies in which he or she is a Director.
As a matter of good governance the dates of the Board meetings are fixed in advance for the full calendar year to enable maximum attendance and participation from all the Directors. The relevant background materials of the agenda items are distributed well in advance of the meetings. All material information is presented for meaningful deliberations at the meeting. The Board on a continuous basis reviews the actions and decisions taken by it and by the Committees constituted by it.
The Board members meet the senior management personnel from time to time.
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Director seeking reappointment
Mr. Kenneth Ho Tat Meng
Mr. Kenneth will be retiring at the forthcoming AGM. He being eligible has offered himself for re-appointment. The brief profile of Mr. Kenneth Ho is as under:
Mr. Ho carries more than two decades of Consumer and Commercial Banking experience. He is a graduate in Economics from Flinders University of South Australia and a Master of Business Administration from University Putra Malaysia. Currently, he is the Senior Vice President, Consumer Banking for Fullerton Financial Holdings (International) Pte. Ltd. Previously he was with Citibank for 10 years covering the roles of Regional Director, Consumer Secured Lending of Citibank Asia Pacific regional office and in Citibank Singapore Pte. Ltd as Head of Auto business and Citi business (Commercial Banking)., He also had substantial exposure in EON Bank Berhad, Malaysia, in managing the entire Auto Loans business (national) and covering numerous roles in Branch Banking as well.
Mr. Kenneth does not hold any shares in the Company.
III. Board Committees(a) Audit Committee
Terms of Reference
The powers and terms of reference of the Audit Committee are comprehensive and include the requirements as set by Section 177 of the Companies Act, 2013. The Committee is vested with necessary powers as defined in its charter to achieve its objectives. The role of the Committee in brief includes the following:
To review appointment and removal, of Internal and external auditors
To monitor the auditors’ independence and performance, and effectiveness of internal and external audit process
To formulate the scope, functioning, periodicity and methodology for conducting the internal audit and to approve the internal audit plans
To review financial statements, oversee the financial reporting process;
Examination of the internal and external auditors’ reports and findings
Reviewing the adequacy of internal control systems
To review related Party Transactions of the company
To conduct scrutiny of inter-corporate loans and investments
To approve valuation of undertakings or assets or net worth of a company or its liabilities
To oversee the vigil mechanism for directors and employees
To approve provision of any other services by auditors apart from audit
Composition
The Audit Committee currently comprises of two Independent Directors and one Non-Executive Director. All the members of the Audit Committee are financially literate and persons of proven competence and integrity. The Company Secretary acts as the Secretary to the Committee. The Statutory Auditors and Internal Auditors are invited to the meeting to bring out the issues which they may have with regards to finance, operations, processes, systems and other allied matters.
The Audit Committee Meetings were held on the following dates and the necessary quorum was present at all the meetings:
i. 18 May, 2017;
ii. 21 August, 2017;
iii. 30 October, 2017;
iv. 14 December, 2017; and
v. 28 March, 2018
The details of the attendance at its Meetings are set out in the following table:
Name of Member Number of Meetings Attended
Dr. Milan Robert Shuster, Chairman
5/5
Mr. Kenneth Ho 5/5
Ms. Sudha Pillai 5/5
The proceedings of the Audit Committee Meetings were noted by the Board of Directors at their meetings.
(b) Risk Oversight Committee
The Company has a comprehensive, well-established and detailed risk management framework. The Company especially focuses on improving sensitivity to assessment of risks and improving methods of computation of risk weights, processes and procedures. The Company has constituted a Risk Oversight Committee to identify, review and control key risk areas, across the entire organization as per the requirements of RBI guidelines.
Terms of Reference
Risk Oversight Committee is a dedicated Board-level committee that monitors the risk management in the Company. The risk assessment and mitigation procedures are reviewed by the Board periodically. The role of the Committee in brief includes the following:
Oversee the development of risk policies and strategies
Implement risk policies relevant to all business units
Ensure that all activities are in compliance with the Prudential Regulations and also within the framework of the policies and controls established by the relevant units of the Company
Formulate the policy for the consideration of the
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Board on client profile, products and risk return matrix on the asset side
Studying the market with regards to interest rate risk, currency risk and other financial risks
Formulating the policy on raising the resources based on the perceived risk parameters
Sanction of the credit limits within ceiling prescribed by the Board
Determining the terms of the sanction such as the interest rate, security, repayment, documents, etc. within the overall credit policy of the company
The Risk Oversight Committee (ROC) controls and manages the inherent risks relating to the Company’s activities in the following categories:
Credit Risk
Market Risk/Liquidity Risk
Liquidity Risk Management
Currency Risk
Interest Rate Risk
Operational Risk
Regulatory/Reputational Risk, etc.
Composition
The Risk Oversight Committee currently comprises of two Independent Directors and one Non-Executive Director.
Meetings
The Risk Oversight Committee meetings were held on the following dates and the necessary quorum was present at all the meetings:
i. 18 May, 2017;
ii. 21 August, 2017;
iii. 14 December, 2017; and
iv. 28 March, 2018
The details of the attendance at its Meetings are set out in the following table:
Name of member Number of Meetings Attended
Mr. Gan Chee Yen, Chairman(Ceased to be member w.e.f 28 June 2017)
1/4
Mr. Premod Thomas, Chairman 4/4
Mr. Kenneth Ho(Inducted as member w.e.f. 28 June 2017)
3/4
Ms. Renu Challu 4/4
The proceedings of the Risk Oversight Committee Meetings were noted by the Board of Directors at its meetings. The Company Secretary acts as secretary to the Committee.
(c) Nomination and Remuneration Committee
The Company has a Nomination & Remuneration Committee (NRC) pursuant to the requirements of Section 178 of the Companies Act, 2013. The Committee is vested with necessary powers, as per its Charter approved by the Board.
The Terms of Reference of Nomination and Remuneration Committee in brief are as under:
Nomination Functions:
Review the structure, size and composition of the Board
Formulate the criteria for evaluation for determining qualifications, positive attributes and independence of directors
Be responsible for identifying and nominating for the approval of the Board, persons who are qualified to become directors and who are “fit and proper as director” and may be appointed in senior management in accordance with the criteria laid down
Carry out evaluation of the directors’ performance
Evaluate suitable candidates and approve the appointment of the CEO and the Company’s Leadership Team members
Formulate plans for succession for the CEO and the Leadership Team members
Re-appoint any non-executive director at the conclusion of his or her specified term of office.
Remuneration Functions:
Recommend to the Board a policy, relating to the remuneration for the directors, key managerial personnel and other employees
Determine and recommend to the Board the remuneration payable to the directors
Recommend the compensation for the CEO & MD, and each of the Leadership Team members
Recommend the compensation strategy and budget covering all employees of the Company
Review deployment of key Human Capital strategies and tools.
Composition
The Nomination and Remuneration Committee currently comprises of two Independent Directors and one Non-Executive Director.
Meetings
The Nomination and Remuneration Committee meetings were held on the following dates and the necessary quorum was present at all the meetings:
i. 18 May, 2017;
ii. 21 August, 2017;
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iii. 28 March 2018
The Committee meets on need basis.
The details of the attendance at its meetings are set out in the following table:
Name Number of Meetings Attended
Dr. Milan Robert Shuster, Chairman
3/3
Mr. Gan Chee Yen 3/3
Ms. Renu Challu 3/3
The proceedings of the Nomination and Remuneration Committee meetings were noted by the Board of Directors at its meetings.
(d) Corporate Social Responsibility (CSR) Committee
The Company has a Corporate Social Responsibility (CSR) Committee to comply with the requirements of Section 135 of the Companies Act, 2013. The Committee is vested with necessary powers, as laid down in its charter to achieve its objectives.
Terms of Reference
The Terms of Reference of the CSR Committee in brief are as under:
To recommend to the board the Company’s CSR policy
To monitor implementation of the CSR Policy of the Company, to review CSR programs, reports on CSR activities, recommend changes or alterations if any;
To recommend the amount of expenditure to be incurred on different CSR activities
To institute a transparent monitoring mechanism for ensuring implementation of the projects/programs/activities proposed to be undertaken by the company and review the amount spent on them
To review synergy or alignment for various CSR activities along with partners
To review and finalise the Annual CSR Report reflecting fairly the Company’s CSR approach, policies, systems and performance.
Composition
The CSR Committee currently comprises of two independent directors and one Non-Executive Director.
Meetings
The CSR Committee meetings were held on the following dates and the necessary quorum was present at all the meetings:
i. 14 December, 2017;
ii. 28 March, 2018;
The Committee meets on need basis.
The details of the attendance at its Meetings are set out in the following table:
Name Number of Meetings Attended
Mr. Gan Chee Yen, Chairman 2/2
Ms. Sudha Pillai 2/2Ms. Renu Challu 2/2
The proceedings of the CSR Committee Meeting were noted by the Board of Directors at its meeting.
Besides the above committees, your Company has formed Review Committee for Non-cooperative borrowers in terms of the RBI guidelines. The Company Secretary acts as Secretary to this Committee. This Committee meets on need basis. Since no circumstances arose requiring meeting, the Committee did not meet during the last fiscal.
Your Company has other management committees such as Asset Liability Committee (ALCO) formed as per the NBFC’s Prudential Norms (Reserve Bank) Directions, 1998, as amended from time to time.
IV. Code of Conduct The Company adopted the code of conduct approved by
the Board of Directors which is binding on the employees of the Company and the same has been complied with. Code of conduct is signed off on an annual basis every year.
V. Directors & Officers Liability Insurance coverage
The Company has obtained Directors and Officers Liability Insurance coverage from HDFC Ergo General Insurance Company Ltd to the extent of INR 20 crores along with entity cover under Employees’ Practices Liability and any other legal action that might be initiated against the Directors.
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VI. General Body Meetings The details of the General Body Meetings held in the last three financial years are given below:
General Body Meeting Day and Date Time VenueExtra-Ordinary General Meeting
Friday, 24 April, 2015 11.30 a.m. Floor 6, B wing, Supreme IT Park, Supreme City, Powai, Mumbai 400 076
Twentieth Annual General Meeting
Thursday, 16 July, 2015 11.30 a.m. Megh Towers, Third Floor, Old No.307, New No.165, Poonamallee High Road, Maduravoyal, Chennai – 600095
Extra-Ordinary General Meeting
Friday, 9 October, 2015 11.30 a.m. Floor 6, B wing, Supreme IT Park, Supreme City, Powai, Mumbai 400 076
Twenty First Annual General Meeting
Thursday, 14 July, 2016 3:00 PM Megh Towers, Third Floor, Old No.307, New No.165, Poonamallee High Road, Maduravoyal, Chennai – 600095
Twenty Second Annual General Meeting
Wednesday, 12 July, 2017 3:00 PM Megh Towers, Third Floor, Old No.307, New No.165, Poonamallee High Road, Maduravoyal, Chennai – 600095
Extra-Ordinary General Meeting
Wednesday 22 November, 2017
11.30 a.m. Floor 6, B wing, Supreme IT Park, Supreme City, Powai, Mumbai 400 076
Extra-Ordinary General Meeting
Tuesday, 16 January, 2018 11.30 a.m. Floor 6, B wing, Supreme IT Park, Supreme City, Powai, Mumbai 400 076
Extra-Ordinary General Meeting
Monday, 12 March, 2018 11.30 a.m. Floor 6, B wing, Supreme IT Park, Supreme City, Powai, Mumbai 400 076
The details of the special resolutions passed in the General Meetings held in the previous three financial years are given below:
General Body Meeting Day and Date ResolutionExtra-Ordinary General Meeting
Friday, 24 April, 2015 i. To approve increase in the Borrowing limits of the company from existing INR 10,000 Crores to INR 20,000 Crores
II. To create charge on Company’s propertiesTwentieth Annual General Meeting
Thursday, 16 July, 2015 i. To re-appoint Mr. Shantanu Mitra as Managing Director of the Company
ii. To approve offer of Long Term Non -Convertible Redeemable Debentures up to INR 5,000 crores on private placement basis
Twenty First Annual General Meeting
Thursday, 14 July, 2016 i. To approve offer of Long Term Non- Convertible Redeemable Debentures up to INR5,000 crores on private placement basis
Twenty Second Annual General Meeting
Wednesday, 12 July, 2017 i. To Re-appoint Mr. Shantanu Mitra as the Managing Director of the Company
ii. To reappoint Dr. Milan Shuster as an Independent Directoriii. To reappoint Ms. Renu Challu as an Independent Directoriv. To reappoint Ms. Sudha Pillai as an Independent Directorv. To approve offer of Long Term Non-Convertible Redeemable
Debentures up to INR 5,000 crores on private placement basis.Extra-Ordinary General Meeting
Wednesday, 22 November, 2017
i. To appoint Mr. Shirish Moreshwar Apte as an Independent Director
Extra-Ordinary General Meeting
Tuesday, 16 January, 2018 i. To Change of Object Clause of the Memorandum of Association of the Company
ii. Adoption of Memorandum of Association as per provisions of Companies Act, 2013.
iii. Adoption of Articles of Association as per the provisions of the Companies Act, 2013
Extra-Ordinary General Meeting
Monday,12 March, 2018 No special resolutions were passed.
All the resolutions were passed by show of hands and no resolutions were passed by postal ballot.
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VII. Disclosures i. Disclosures on materially significant related party transactions that may have potential conflict with the interests
of company at large:
The particulars of the transactions between the company and ‘related parties’ are provided at point 27 of Notes to accounts,of both standalone and consolidated financials, published elsewhere in the Annual Report. None of the transactions are likely to have any conflict with Company’s interest.
ii. Details of non-compliance by the company, penalties, strictures imposed on the company by Stock Exchange or SEBI or any statutory authority, on any matter related to capital markets, during the last three years - NIL
VIII. CEO/CFO Certificate: The CEO and the CFO of the Company have certified to the Board with regard to the financial statements and other
matters. This certificate is included as Annexure III to the Directors’ Report.
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Annexure III To The Directors’ Report
Certification by Chief Executive Officer (CEO) and Chief Financial Officer (CFO)
To,
The Shareholders and the Board of Directors
Fullerton India Credit Company Limited
We, Rajashree Nambiar, Chief Executive Officer & Managing Director and Pankaj Malik, Chief Financial Officer & Company Secretary, of Fullerton India Credit Company Limited, to the best of our knowledge and belief, certify that:
a. We have reviewed the financial statements and the cash flow statements for the year ended 31 March, 2018 (hereinafter referred to as the year) and that to the best of our knowledge and belief:
i. These statements do not contain any materially untrue statement or omit any material fact or contain statements that might be misleading;
ii. These statements together present a true and fair view of the Company’s affairs and are in compliance with existing accounting standards, applicable laws and regulations.
b. There are no transactions entered into by the Company during the year which are fraudulent, illegal or violative of the Company’s internal policies
c. We accept responsibility for establishing and maintaining internal controls for financial reporting and we have evaluated the effectiveness of internal control systems of the Company pertaining to financial reporting and have disclosed to the auditors and the Audit Committee, deficiencies in the design or operation of such internal controls, if any, of which we are aware and have taken requisite steps to rectify these deficiencies.
d. We have indicated to the Auditors and the Audit Committee;
i. Significant changes in internal control over financial reporting during the year and
ii. Significant changes in accounting policies during the year and the same have been disclosed in the notes to the financial statements.
e. There have been 36 instances of fraud reported by the Company to the Board. The Company has taken appropriate legal action against the same. Although the Company is registered as deposit-taking NBFC, it has not accepted deposits from the public.
Sd/- Sd/-
Rajashree Nambiar Pankaj MalikChief Executive Officer &
Managing DirectorChief Financial Officer &
Company SecretaryDate: 18 May, 2018Place: Mumbai
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Annexure IV To The Directors’ Report
Form No. MR-3
SECRETARIAL AUDIT REPORT
FOR THE FINANCIAL YEAR ENDED MARCH 31, 2018
[Pursuant to Section 204(1) of the Companies Act, 2013 and Rule no.9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014]
To,
The Members,
Fullerton India Credit Company Limited
We have conducted the secretarial audit of the compliance of applicable statutory provisions and the adherence to good corporate practices by Fullerton India Credit Company Limited (hereinafter called “the Company”). Secretarial Audit was conducted in a manner that provided us a reasonable basis for evaluating the corporate conducts/statutory compliances and expressing our opinion thereon.
Based on our verification of the Company’s books, papers, minute books, forms and returns filed and other records maintained by the Company (as per Annexure 1, hereinafter referred to as “Books and Papers”)and also the information provided by the Company, its officers, agents and authorised representatives during the conduct of secretarial audit, we hereby report that in our opinion, the Company has, during the period covered by our audit, that is to say, from April 01, 2017 to March 31, 2018 (hereinafter referred to as “Audit Period”), complied with the statutory provisions listed hereunder and also that the Company has proper board-processes and compliance-mechanism in place to the extent, in the manner and subject to the reporting made hereinafter:
We have examined the Books and Papers maintained by the Company for the Audit Period according to the provisions of:
1. The Companies Act, 2013 (“the Act”) and the rules made thereunder;
2. The Depositories Act, 1996 and the regulations and bye-laws framed thereunder;
3. Foreign Exchange Management Act, 1999 and the rules and regulations made thereunder to the extent of Foreign Direct Investment and External Commercial Borrowing;
4. The following Regulations and Guidelines prescribed under the Securities and Exchange Board of India Act, 1992 (“SEBI Act”):-
i. The Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008;
ii. The Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015;
iii. The Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015;
5. Laws specifically applicable to the industry to which the Company belongs, as identified by the management, that is to say:
i. Reserve Bank of India Act, 1934;
ii. Master Direction - Non-Banking Financial Company - Systemically Important Non-Deposit taking Company and Deposit taking Company (Reserve Bank) Directions, 2016 (‘Directions, 2016’);
iii. Miscellaneous Instructions to all Non-Banking Financial Companies;
iv. Non-Banking Financial Companies Acceptance of Public Deposits (Reserve Bank) Directions, 2016;
v. Master Direction - Non-Banking Financial Companies Auditor’s Report (Reserve Bank) Directions, 2016;
vi. Master Direction - Monitoring of frauds in NBFCs (Reserve bank) Directions, 2016;
vii. Master Direction - Know Your Customer (KYC) Directions, 2016;
viii. Master Direction – Non-Banking Financial Company Returns (Reserve Bank) Directions, 2016;
ix. Directions on Managing Risks and Code of Conduct in Outsourcing of Financial Services by NBFCs;
x. The Insurance Regulatory and Development Authority of India (Registration of Corporate Agents) Regulations, 2015.
We have also examined compliance with the applicable clauses of the Secretarial Standards 1 and 2 issued by the Institute of Company Secretaries of India;
We report that during the period under review the Company has complied with the provisions of the Act, Rules, Regulations, Guidelines, etc. mentioned above.
Management Responsibility:
i. Maintenance of secretarial records is the responsibility of the management of the Company. Our responsibility is to express an opinion on these secretarial records based on our audit;
ii. We have followed the audit practices and the processes as were appropriate to obtain reasonable assurance about the correctness of the contents of the secretarial records. The verification was done on test basis to ensure that correct facts are reflected in secretarial records. We believe that the processes and practices, we followed provide a reasonable basis for our opinion;
iii. We have not verified the correctness and appropriateness of financial records and Books of Accounts of the Company or examined any books, information or statements other than Books and Papers;
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iv. We have not examined any other specific laws except as mentioned above;
v. Wherever required, we have obtained the Management Representation about the compliance of laws, rules and regulation and happening of events etc.;
vi. The compliance of the provisions of Corporate and other applicable laws, rules, regulations, standards is the responsibility of management. Our examination was limited to the verification of procedure on test basis;
vii. The Secretarial Audit report is neither an assurance as to the future viability of the Company nor of the efficacy or effectiveness with which the management has conducted the affairs of the Company.
We further report that:
The Board of Directors of the Company is duly constituted with proper balance of Executive Directors, Non-Executive Directors and Independent Directors. The changes in the composition of the Board of Directors that took place during the Audit Period were carried out in compliance with the provisions of the Act.
Adequate notice is given to all directors to schedule the Board Meetings, agenda and detailed notes on agenda were sent at least seven days in advance, and a system exists for seeking and obtaining further information and clarifications on the agenda items before the meeting and for meaningful participation at the meeting.
Majority decision is carried through while dissenting members’ views were not required to be captured and recorded as part of the minutes as there were no such instance.
We further report that there are adequate systems and processes in the Company commensurate with the size and operations of the Company to monitor and ensure compliance with applicable laws, rules, regulations and guidelines.
We further report that during the Audit Period, the Company has not incurred any specific event/ action listed below that can have a major bearing on the company’s affairs in pursuance of the above referred laws, rules, regulations, guidelines, standards, etc., except as follows:
i. Private Placement of Secured Non-Convertible Debentures:
During the Audit Period, the Company has allotted secured NCDs from Series 56 to Series 66 amounting to INR 1939 crores.
ii. Redemption of NCDs
During the Audit Period, the Company redeemed NCDs amounting to INR 488 crore pursuant to maturity.
For M/s. Vinod Kothari & CompanyPractising Company SecretariesUIN P1996WB042300
Sd/-Vinita NairPartnerC. P. No. 11902
Place: MumbaiDate: May 11, 2018
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Annexure I
LIST OF DOCUMENTS1. Corporate Matters
1.1 Minutes books of the following were provided:
1.1.1 Board Meeting;
1.1.2 Audit Committee;
1.1.3 Nomination and Remuneration Committee;
1.1.4 Corporate Social Responsibility Committee;
1.1.5 Risk Oversight Committee;
1.1.6 Asset Liability Management Committee;
1.1.7 General Meeting;
1.2 Notice and Agenda for Board and Committee Meetings along with Notice;
1.3 Financial Statements for FY ending 2017;
1.4 Memorandum and Articles of Association;
1.5 Disclosures under Act, 2013 and Rules made thereunder;
1.6 Policies framed under Act, 2013 and RBI regulations for NBFCs;
1.7 Documents pertaining to Listing Regulations;
1.8 Forms and returns filed with the ROC &RBI;
1.9 Documents under SEBI (Prohibition of Insider Trading) Regulations, 2015;
1.10 Documents relating to issue of Non-Convertible Debentures, Masala Bonds;
1.11 Documents relating to Commercial Paper issuances;
1.12 Registers maintained under Companies Act, 2013;
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1. A brief outline of the company’s CSR policy, including overview of projects or programs proposed to be undertaken and a reference to the website-link to the CSR Policy and projects or programmes.
CSR policy of Fullerton India (brief outline)
i. INTRODUCTION
As a part of its Corporate Social Responsibility, Fullerton India Credit Company Ltd. (“Fullerton India”)enables sustainable development and inclusive growth across communities. The Company has implemented certain innovative socio-economic and environmental initiatives, in fulfilment of its role as a socially responsible corporate citizen. Fullerton India reaches out to the under-banked and unbanked by not just providing them with financial services but also by enabling the communities with services and skills that would help improve their standard and quality of living.
Fullerton India’s Corporate Social Responsibility (CSR)projects operate under the brand name - ‘Uday – ek nayi subhah’, which signifies hope, thus fulfilling the Company’s commitment in making a change in lives of the under privileged.
ii. Uday VISION
Fullerton India’s CSR Vision – Uday, is to enable sustainable development and inclusive growth across communities through innovative socio-economic and environmental interventions, in fulfillment of its role as a socially responsible corporate citizen.
iii. Uday OBJECTIVES
Fullerton India’s Uday Initiative focuses on the three keys aspects of the community’s development- social, economic and environment. To achieve long-term sustainable impact on the community, Fullerton India’s Uday objectives are:
Every CSR initiativeof Fullerton India is branded to build mass connect both for internal as well as external stakeholders.
Livelihood enhancement and training programmes
General health care Financial literacy Skill development for youth
Eye care programme
Cattle care camps (Livelihood)
Education Environment and organic farming
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Advance livelihoods through
Identification of technical expertise for guidance and facilitation of programmes
Skill development and capacity building initiatives
Income enhancement through market linkages, across value chains
Education programmes focusing on enhancement of knowledge leading to up-gradation of skills and empowerment
Improve the social wellbeing of the community through
Health awareness and intervention programmes for community and the under-privileged, with a focus on eye-care and nutrition.
Women and children- focused health interventions through awareness and implementation of programs enabling adoption of best health practices
Awareness about preventive healthcare, with a focus on hygiene and clean drinking water.
Adoption of sustainable environmental practices through
Promotion and adoption of environmentally sustainable practices, such as organic farming
Awareness and adoption of green technology and alternative energy through programs / interventions
iv. SCOPE
The CSR Policy (the “Policy”) shall be applicable to all CSR initiatives and activities undertaken by Fullerton India and all its employees for the welfare and sustainable development benefit of different segments of the society at large.
This Policy is in line with the Section 135 of the Companies Act, 2013 (the “Act”) and the rules made thereunder.
Website link
http://www.fullertonindia.com/community-initiatives/our-csr-mission.aspx
2. The Composition of the CSR Committee: The CSR committee consists of 3 members, as below:
a) Mr. Gan Chee Yen (Chairman FICCL)
b) Ms. Renu Challu (Independent Director)
c) Ms. Sudha Pillai (Independent Director)
3. Average net profit of the company for last three financial years:Average net Profit for last three financial years (`) in crore
Company/Year FY2015 FY2016 FY2017 Average for last 3 years
Fullerton India 301 431 331 354.3
4. Prescribed CSR expenditure(two per cent of the amount as in item 3 above)
` 7.1crores (2% of ` 354.3 crores)
5. Details of CSR expenditure during the financial year.a) Total amount to be spent for the financial year:
As per Companies Act, the amount to be spent (average net profit for last three financial years) for the FY2018 was ` 7.1 crores.
b) Amount unspent, if any:
` 1.04 crores
c) Manner in which the amount spent during the financial year is detailed below:
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Fullerton India CSR Report FY2018S.No CSR project
or activity identified
Sector in which the project is covered
Projects or programmes local area or other specify the state and district where projects or programmes was undertaken
Amount outlay
(Budget) project or
programme wise
Amount spent on the projects or programmes
sub heads
Cumulative expenditure
upto the reporting
period
Amount spent: direct or through
implementing agency
1. Direct Expenditure on projects
and programmes
2. Overheads
1 Mobile Medical Camps
Schedule VII, Item (i)- promoting preventive health care
Hubli, Belgaum, Haveri, Gadag(Karnataka); Jaipur, Ajmer, Sikar(Rajasthan); Hoshangabad, Sagar, Bina(Madhya Pradesh); Aravali, Mehasana, Gandhinagar (Gujarat); Nagpur, Wardha, Ahmednagar, Kolhapur, Sangli, Pune, Daund, Nashik, (Maharashtra); Agra, Mathura, Hathras (Uttar Pradesh)
4,000,000 3,307,000 0 3,307,000 Implementing agency
2 Mobile Medical Camps
Schedule VII, Item (i)- promoting preventive health care
Perambalur, Salem, Tanjore, Trichy, Madurai, Viruthunagar, Tirunelveli, Erode, Tirupur, Cuddalore, Karur (Tamil Nadu)
500,000 0 500,000 Implementing agency
3 Mobile Health Van
Schedule VII, Item (i)- promoting preventive health care
Villipuram (Tamil Nadu); Raichur (Karnataka); Mahisagar, Dahod, Kheda(Gujarat); Sikar(Rajasthan); Amravati (Maharashtra)
10,000,000 9,758,061 0 9,758,061 Implementing agency
4 Vision Care Center-1 & 2
Schedule VII, Item (i)- promoting preventive health care
East Godavari (Andhra Pradesh) 12,000,000 950,000 0 950,000 Implementing agency
5 Vision Care Center-3-7
Schedule VII, Item (i)- promoting preventive health care
Chennai (Tamil Nadu), Bhubaneshwar (Odisha), Siliguri (West Bengal), Raipur &Saraipali (Chattisgarh)
2,771,470 0 2,771,470 Implementing agency
6 Vision Care Center-8
Schedule VII, Item (i)- promoting preventive health care
Coimbatore (Tamil Nadu), 616,000 0 616,000 Implementing agency
7 Vision Care Center- 9-11
Schedule VII, Item (i)- promoting preventive health care
Ahmednagar (Maharashtra), Tapi (Gujarat), Morigaon ( Assam)
3,240,000 0 3,240,000 Implementing agency
8 Vision Care Van
Schedule VII, Item (i)- promoting preventive health care
Indore (Madhya Pradesh) 1,148,530 0 1,148,530 Implementing agency
9 School Health / WASH
Schedule VII, Item (i)- promoting preventive health care
Delhi (Delhi), Bangalore (Karnataka), Alwar ( Rajasthan) Chandigarh (Punjab), Shimla ( Himachal Pradesh)
2,000,000 2,617,800 0 2,617,800 Implementing agency
10 Vocational training program
Schedule VII, Item (ii)- promoting employment enhancing vocational skills especially among women
Ahmednagar (Maharashtra), Salem, Tirupur, Coimbatore, Tiruchirappalli, Erode, Karur, Namakkal, Villupuram, Thoothukudi (Tamil Nadu), Ajmer, Alwar, Chittorgarh (Rajasthan), Bagalkot (Karnataka)
100,000 74,013 0 74,013 Direct
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Fullerton India CSR Report FY2018S.No CSR project
or activity identified
Sector in which the project is covered
Projects or programmes local area or other specify the state and district where projects or programmes was undertaken
Amount outlay
(Budget) project or
programme wise
Amount spent on the projects or programmes
sub heads
Cumulative expenditure
upto the reporting
period
Amount spent: direct or through
implementing agency
1. Direct Expenditure on projects
and programmes
2. Overheads
11 Livelihood Enhancement- Commercial Stitching and tailoring
Schedule VII, Item (ii)- promoting employment enhancing vocational skills especially among women
Indore, Jabalpur (Madhya Pradesh)
5,000,000 550,000 0 550,000 Implementing agency
12 Livelihood Enhancement- Recognition of Prior learning (RPL)-Dairy farmers
Schedule VII, Item (ii)- promoting employment enhancing vocational skills especially among women
Erode (Tamil Nadu), Mysore, Mandya (Karnataka), Ahemadnagar, Nashik (Maharashtra),
325,000 0 325,000 Implementing agency
13 Livelihood Enhancement-
Schedule VII, Item (ii)- promoting employment enhancing vocational skills especially among women
Jaipur, Ajmer (Rajasthan) 835,000 0 835,000 Implementing agency
14 Livelihood Enhancement- Commercial Stitching and tailoring
Schedule VII, Item (ii)- promoting employment enhancing vocational skills especially among women
Nammakal, Salem (Tamil Nadu) 1,062,500 0 1,062,500 Implementing agency
15 Livelihood Enhancement-
Schedule VII, Item (ii)- promoting employment enhancing vocational skills
Jodhpur (Rajasthan); Bilaspur (Chattisgarh)
16,000,000 7,842,000 0 7,842,000 Implementing agency
16 Livelihood Enhancement-
Schedule VII, Item (ii)- promoting employment enhancing vocational skills
Shimoga (Karnataka) 3,475,500 0 3,475,500 Implementing agency
17 Livelihood Enhancement-
Schedule VII, Item (ii)- promoting employment enhancing vocational skills
Nagpur (Maharashtra)r, Bharuch (Gujarat)
4,712,500 0 4,712,500 Implementing agency
18 Livelihood Enhancement-
Schedule VII, Item (ii)- promoting employment enhancing vocational skills
Coimbatore (Tamil Nadu) 1,900,000 0 1,900,000 Implementing agency
19 Livelihood Enhancement- Integrated Livestock Development
Schedule VII, Item (ii)- Livelihood Enhancement projects
Hoshangabad, Khandwa, Burhanpur, Raisen, Khargone, Harda (Madhya Pradesh); Belgaum (Karnataka);Sangali& Kolhapur (Maharashtra)
6,000,000 6,099,200 0 6,099,200 Implementing agency
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Fullerton India CSR Report FY2018S.No CSR project
or activity identified
Sector in which the project is covered
Projects or programmes local area or other specify the state and district where projects or programmes was undertaken
Amount outlay
(Budget) project or
programme wise
Amount spent on the projects or programmes
sub heads
Cumulative expenditure
upto the reporting
period
Amount spent: direct or through
implementing agency
1. Direct Expenditure on projects
and programmes
2. Overheads
20 Enviornment Sustainability- Krish Mitra Program
Schedule VII, Item (iv)- Conservation of natural resources and maintaining quality of soil
Nashik, Ahmednagar (Maharashtra); Erode (Tamil Nadu)
4,000,000 2,300,000 0 2,300,000 Implementing agency
21 Education Schedule VII, Item (ii)- Promoting education, including special education and employment enhancing vocational skills
Alwar (Rajasthan) 7,000,000 670,000 0 670,000 Implementing agency
22 Education Schedule VII, Item (ii)- Promoting education, including special education and employment enhancing vocational skills
Dhar, Hoshangabad, Khargone (Madhya Pradesh); Wardha, Yavatmal (Maharashtra); Nagaur, Sikar (Rajasthan)
1,162,500 0 1,162,500 Implementing agency
23 Heritage Conservation
Schedule VII, Item (v)- Protection of natural heritage, art and culture
Chittorgrah (Rajasthan) 1,700,000 765,800 0 765,800 Implementing agency
24 Donation Schedule VII, Item (i)- promoting preventive health care, eradicating hunger, poverty
Mumbai (Maharashtra) 425,000 0 425,000 Implementing agency
25 Donation Schedule VII, Item (ix)- technology incubators located within academic institutions
Chennai (Tamil Nadu) 590,000 0 590,000 Implementing agency
26 Administrative cost
0 2,884,894 2,884,894
Grand Total 57,697,874 2,884,894 60,582,768
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Details of Implementing Agency:
Sr. no
CSR Project Name of the Implementing Agency
Details
1 Mobile Medical clinics Udyogini Udyogini is registered as a society under the ‘Indian Societies Registration Act’, 1860. Udyogini was set up to co-ordinate and help poor women, mainly illiterate in remote and backward areas of India to improve their skills as producers and their knowledge of the markets they operate in, so as to ensure long-term returns to build microenterprises and become entrepreneurs
2 Mobile Medical clinics Tamil Nadu Voluntary Health Association
Tamil Nadu Voluntary Health Association is the largest health network of voluntary organisations in the state of Tamil Nadu. It is a state level federation of more than 100 NGOs which are engaged in health and developmental related activities
3 Mobile Medical clinics Society for Pragati Bharat The Society for Pragati Bharat was registered in the year 1996 with the aim to work around overall community development.
4 Vision Care Center-1 & 2 Divine Eye Foundation (DEF) DEF is a renowned trust (Not for profit), located in Rajahmundry, A.P. Its mission is to provide excellent eye care to all in a caring and Compassionate manner with a focus on extending efficient eye care to the underserved rural poor. DEF is engaged in providing eye care services as a part of its nature of business.
5 Vision Care Center-3-7 Royal Commonwealth Society for the Blind (SIGHTSAVERS)
SIGHTSAVERS is a renowned international not for profit organisation, working in developing countries to combat avoidable blindness and promote equal opportunities for disabled people.
6 Vision Care Center- 8 Kanchi Kamakoti Medical Trust (Sankara)
Sankara is a renowned trust (Not for profit), located in Coimbatore, T.N. SEF initiates and drives community eye care activities in India by working with Sankara Eye Care Institutions (SECI), India, which runs the “Gift of Vision” rural outreach programme through Sankara Eye Hospitals. The Gift of Vision programme is based on an “80/20” model, i.e., four free eye surgeries are performed for each paid surgery. Thousands of rural poor have received free eye surgeries
7 Vision Care Center- 9- 11 Mission for Vision Mission for Vision is a NGO working with partners to combat avoidable blindness and promote a disability inclusive world, MFV works with 21 eye hospitals and centers across 14 states which have performed over 170,000 free eye surgeries annually
8 School Health/ WASH Enable Health Society Enable Health Society (EHS) is a registered national NGO which works to influence the health behavior of individuals and communities as well as their living environment through educating communities on health issues- focusing on prevention and motivating them to maintain healthy lifestyles.
9 Health HelpAge India HelpAge India is a leading registered national level NGO, established in 1978, with a mission “to work for the cause and care of disadvantaged aged persons and to improve their quality of life”. It is a secular, not-for-profit organisation registered under the Societies’ Registration Act of 1860. Set up in 1978, the organisation works to protect the rights of India’s elderly and provide relief to them through various interventions and endeavors to make significant changes in the lives of the disadvantaged older persons, so as to enable them to live better and healthier lives.
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Sr. no
CSR Project Name of the Implementing Agency
Details
10 Health Americares Foundation Americares Foundation is a public charitable trust registered in 2006 at New Delhi, formed to provide medical aid in India and in neighboring countries, irrespective of race, creed or political persuasion. They are having a strong network of local and national partners who aid our efforts in delivering emergency programs, access to medicine, clinical services and community health.
11 Health Parivartan Mahila Sansthan Parivartan Mahila Sansthan is a Non-profit organization registered in 2000 by women who were active in social sector in various capacities from different parts of Maharashtra State. The organisation is established with the prime focus of women empowerment and thus deliberately decided to have an executive body with all women members. PMS is implementing extensive programs in healthcare, child care and in community development initiatives.
12 Livelihood Enhancement-
Sambhav Foundation Sambhav‘s Mission is to create sustainable and inclusive education & livelihoods for differently abled children and socio economically deprived youth by building an ecosystem which fosters Education, Vocational & Life Skills-Building, Employment and Work Support
13 Livelihood Enhancement-
Society for Development Alternatives
Development Alternatives (DA), the world’s first social enterprise dedicated to sustainable development, is a research and action organisation striving to deliver socially equitable, environmentally sound and economically scalable development outcomes.
14 Livelihood Enhancement-
Vatsalya Vatsalya has been working in Child rehabilitation, Women empowerment and Health including HIV/AIDS. Women empowerment is mainly to enhance their skills for their sustained livelihood. These women belong to the deprived and marginalised sections of the community including many women who are in sex trade have now given the alternative opportunity. Vatsalya now has a strong group about 90 women who were once trapped in sex trade but now are free and happily earn their living through a decent means. They are trained in Kantha work; a traditional stitch craft and also in tailoring.
15 Livelihood Enhancement-
Anirban Rural Welfare Society Anirban Rural Welfare Society is a voluntary social service organisation for social action and economic development in a integrated way. The organisation was established by a group of committed volunteers from Teachers, Doctors, Social workers, Statistician, for providing assistance and support towards betterment of the landless poor people, who are deprived, exploited and lead to their life in deplorable condition.
16 Livelihood Enhancement-
International Association of Human Values (IAHV)
International Association for Human Values (IAHV) is a humanitarian, nonprofit, non-governmental organisation dedicated to the development and promotion of human values throughout the world. To pursue its mission, IAHV implements grassroots, sustainable programs for socioeconomic development of rural and impoverished areas, humanitarian relief to those affected by natural and man-made disasters and post disaster rehabilitation and reconstruction, conflict management through dialogue between cultures, value based education and works to foster global peace and Harmony
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Sr. no
CSR Project Name of the Implementing Agency
Details
17 Livelihood Enhancement-
Shree Sarita Jain Foundation Trust (SSJFT)
SSJFT has come into existence in the year 2008 with the idea of providing support to the weaker and downtrodden section of society by the way of charity. They have provided extensive to support the Youth, Women and children through various charitable activities and skilling programs.
18 Livelihood Enhancement- Integrated Livestock Development
J K Trust Gram Vikas Yojana J.K. Trust is one of the leading organisations working in the animal husbandry and holistic cattle care management with focus on Cattle Breed Improvement through Integrated Livestock Development Centers (ILD). They are partnering with the veterinary departments of state government in M.P., Maharashtra, Gujarat and Rajasthan on implementing the ILD model across villages.
19 Livelihood Enhancement-
Women’s Organisation in Rural Development (WORD)
Based at namakkal district in Tamilnadu, India, WORD is a registered non governmental organisation (NGO) working for the upliftment of rural people especially women and children
20 Enviornment Sustainability- Krish Mitra Programme
Lokpanchayat, Lokpanchayat is a NGO engaged in community organisation for enhancing development based on the principles of participation, sustainability and social justice. Their major focus is in sustainable agriculture with promotion of organic farming across several villages in Maharashtra
21 Enviornment Sustainability- Krish Mitra Programme
MYRADA Myrada was started in 1968. Myrada at present is directly managing 18 projects in 20 backward and drought prone Districts of Karnataka, Tamil Nadu and Andhra Pradesh. There are other States where it has collaborated with Government, Bilateral and Multilateral Programmes, by contributing to program design and supporting implementation through regular training, exposure and deputation of staff
22 Education ChildFund India ChildFund India is a child development organisation representing the voice of deprived, excluded and vulnerable children in India regardless of their race, creed and gender, since 1951. Presently, we are assisting more than 1.73 million children and families across the country with our unique child-centric intervention programmes
23 Donation St. Jude Child Care Centers St. Jude India Child Care Centers currently runs 18 Centers in Mumbai, Delhi, Kolkata, Hyderabad and Jaipur. It provides free accommodation and holistic support to children travelling with their parents for treatment of cancer from villages and small town to cities
24 Donation Annamrita Foundation It is a not-for-profit, non-religious, non-sectarian public charitable organisations formed on April 23, 2004 and registered under the Bombay Public Trusts Act, 1950. Annamrita serves 1.2 million meals every single day, through its 20 kitchens across India.
25 Donation IIT-Madras IITM Incubation Cell (IITMIC) coordinates and leverages the synergies in various strands of excellence driving innovation and entrepreneurship at IIT Madras, registered as a not-for-profit Section 8 Company, IITMIC is recognized as a Technology Business Incubator by National Science & Technology Entrepreneurship Development Board (NSTEDB), Department of Science & Technology, GOI. IITMIC supports Students, Faculty, staff & Alumni of IIT-Madras and External entrepreneurs (or R&D partners to IITM) in creating successful Tech Startups, disrupting industries & translating benefits to the society at large
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6. In case the company has failed to spend the two per cent of the average net profit of the last three financial years or any part thereof, the company shall provide the reasons for not spending the amount in its Board report.
In FY2018, the Company spent ` 6.06 crores on CSR activities, out of the allocated budget of ` 7.10 crores resulting in a shortfall of ` 1.04 crores, which is around 15% of the total allocation.
The Company continued its spend on all projects carried forward from the previous FY i.e. FY2017, which included projects like Gurukul-skill development centers, Vision Care Center, Integrated Livestock Development (ILD) centers, launching of both Mobile Health Unit and Mobile Vision Care Van. These projects comprised 40% of the budget spend; remaining 60% was planned to be spent on new projects.
The disruption caused by demonetisation during FY2017 continued to impact the locations and the catchment areas where the Company has its branches. This continued to pose challenge in planning and conducting new CSR activities. The Company is committed to spend on sustainable CSR projects and judiciously spend the budget allocated for CSR. Though with persistent efforts the Company was able to rebuild its rapport and identify various CSR projects which were subsequently launched for the benefit of the community. However, due to limited availability of time the entire allocated budget could not be spent.
7. Responsibility Statement We hereby certify that the implementation and monitoring of Uday projects are in compliance with the CSR objectives and
policy of Fullerton India.
Sd/- Sd/- Sd/-
Rajashree Nambiar Gan Chee Yen Pankaj Malik
Chief Executive Officer & Managing Director
Chairman CSR Committee Chief Financial Officer & Company Secretary
Date: 18 May, 2018 Place: Mumbai
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To the Members of Fullerton India Credit Company Limited
Report on the audit of the consolidated financial statements We have audited the accompanying consolidated
financial statements of Fullerton India Credit Company Limited (hereinafter referred to as the ‘Holding Company’) and its subsidiary companies (the Holding Company and its subsidiary companies together referred to as the ‘Group’), which comprise the Consolidated Balance Sheet as at 31 March 2018, the Consolidated Statement of Profit and Loss and the Consolidated Cash Flow Statement for the year then ended, and a summary of the significant accounting policies and other explanatory information (hereinafter referred to as the ‘consolidated financial statements’).
Management’s responsibility for the consolidated financial statements The Holding Company’s Board of Directors is responsible
for the matters stated in Section 134 (5) of the Companies Act, 2013 (hereinafter referred to as the ‘Act’) with respect to the preparation of these consolidated financial statements that give a true and fair view of the consolidated financial position, consolidated financial performance and consolidated cash flows of the Group in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act. The respective Board of Directors of the companies included in the Group are responsible for maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Group and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the consolidated financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error, which have been used for the purpose of preparation of the consolidated financial statements by the Directors of the Holding Company, as aforesaid.
In preparing the consolidated financial statements, the respective Board of Directors of the companies included in the Group are responsible for assessing the ability of the Group to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.
Auditor’s responsibility Our responsibility is to express an opinion on these
consolidated financial statements based on our audit. We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made thereunder.
Independent Auditors’ Report
We conducted our audit of the consolidated financial statements in accordance with the Standards on Auditing, specified under Section 143 (10) of the Act, issued by the Institute of Chartered Accountants of India (the ‘ICAI’). Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the consolidated financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Holding Company’s preparation of the consolidated financial statements that give a true and fair view, in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made, as well as evaluating the overall presentation of the consolidated financial statements
We are also responsible to conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the ability of the Group to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern.
We believe that the audit evidence obtained by us and the audit evidence obtained by the other auditors in terms of their reports referred to in the Other Matters paragraphs below, is sufficient and appropriate to provide a basis for our audit opinion on the consolidated financial statements.
Opinion In our opinion and to the best of our information, and
according to the explanations given to us, and based on the consideration of reports of the other auditors on separate financial statements of the subsidiary companies referred to in the Other Matters paragraphs below, the aforesaid consolidated financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the consolidated state of affairs of the Group as at 31 March 2018, and its consolidated profit and their consolidated cash flows for the year ended on that date.
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Other Matters We did not audit the financial statements of one subsidiary
company, whose financial statements reflect total assets of ` 2.35 lakhs as at 31 March 2018 as considered in the consolidated financial statements. This subsidiary company does not have revenue and cash flows for the year ended on 31 March 2018. These financial statements have been audited by other auditors, whose reports have been furnished to us by the management and our opinion on the consolidated financial statements, in so far as it relates to the amounts and disclosures included in respect of this subsidiary company, and our report in terms of sub-section (3) of Section 143 of the Act, in so far as it relates to the aforesaid subsidiary company is based solely on the reports of the other auditors.
Our opinion on the consolidated financial statements and our report on Other Legal and Regulatory Requirements below is not modified in respect of the above matters with respect to our reliance on the work done and the reports of the other auditors.
Attention is drawn to the fact that the figures for the year ended 31 March 2017 as reported in these consolidated financial statements were audited by another auditor who expressed an unmodified opinion on those consolidated financial statements dated 18 May 2017.
Report on other legal and regulatory requirements As required by Section 143 (3) of the Act, based on our
audit and on the consideration of the report of the other auditors on separate financial statements and other financial information of subsidiary companies, referred in the Other Matters paragraphs, we report that:
a) we and other auditors whose reports we have relied upon have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit of the aforesaid consolidated financial statements;
b) in our opinion, proper books of account as required by law relating to preparation of the aforesaid consolidated financial statements have been kept so far as it appears from our examination of those books and the reports of the other auditors;
c) the Consolidated Balance Sheet, the Consolidated Statement of Profit and Loss, and Consolidated Cash Flow Statement dealt with by this report are in agreement with the books of account maintained for the purpose of preparation of the consolidated financial statements;
d) in our opinion, the aforesaid consolidated financial statements comply with the Accounting Standards specified under Section 133 of the Act;
e) on the basis of the written representations received from the Directors of the Holding Company as on 31 March 2018 taken on record by the Board of Directors of the Holding Company and the reports of the statutory auditors of its subsidiary companies incorporated in India, none of the Directors of the Holding Company,
its subsidiary companies incorporated in India is disqualified as on 31 March 2018 from being appointed as a Director in terms of Section 164 (2) of the Act;
f ) with respect to the adequacy of the internal financial controls over financial reporting and the operating effectiveness of such controls, refer to our separate Report in “Annexure A”, which is based on the auditors’ reports of the Holding Company and subsidiary companies in India; and
g) with respect to the other matters to be included in the Auditor’s Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, as amended, in our opinion and to the best of our information and according to the explanations given to us and based on consideration of the report of the other auditors on the financial statements of subsidiary companies as furnished by the management:
i. the consolidated financial statements disclose the impact of pending litigations on the consolidated financial position of the Group-Refer Note 30 to the consolidated financial statements;
ii. the Group did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses;
iii. there are no amounts which were required to be transferred to the Investor Education and Protection Fund by the Holding Company and its subsidiary companies incorporated in India; and
iv. the disclosures in the consolidated financial statements regarding holdings as well as dealings in specified bank notes during the period from 8 November 2016 to 30 December 2016 have not been made since they do not pertain to the financial year ended 31 March 2018.
For B S R & Co. LLP Chartered Accountants Firm’s Registration No: 101248W/W-100022
Sd/- Milind Ranade Partner Membership No: 100564
Date:18 May, 2018 Place: Mumbai
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We have audited the internal financial controls over financial reporting of Fullerton India Credit Company Limited (hereinafter referred to as the ‘Holding Company’) and its subsidiary companies as of 31 March 2018 in conjunction with our audit of the consolidated financial statements of the Holding Company for the year ended on that date.
Management’s responsibility for internal financial controlsThe respective Board of Directors of the Holding Company and its subsidiary companies, which are companies incorporated in India, are responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the respective companies considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the ‘Guidance Note’) issued by the Institute of Chartered Accountants of India (the ‘ICAI’). These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to respective company’s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013 (the ‘Act’).
Auditor’s responsibilityOur responsibility is to express an opinion on the internal financial controls over financial reporting of the Holding Company and its subsidiary companies, which are companies incorporated in India, based on our audit. We conducted our audit in accordance with the Guidance Note and the Standards on Auditing specified under Section 143 (10) of the Act, to the extent applicable to an audit of internal financial controls, both applicable to an audit of internal financial controls and both issued by the ICAI. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over
Annexure A to the Independent Auditors’ Report – 31 March 2018(Referred to in our report of even date)
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 (‘the Act’)
financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal controls based on the assessed risk. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error.
We believe that the audit evidence we have obtained and the audit evidence obtained by the other auditors of the subsidiary companies, which are companies incorporated in India, in terms of their reports referred to in the Other Matter paragraph below, is sufficient and appropriate to provide a basis for our audit opinion on the internal financial controls system over financial reporting of the Holding Company and its subsidiary companies, which are companies incorporated in India.
Meaning of internal financial controls over financial reportingThe company’s internal financial control over financial reporting is a process designed to provide a reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and Directors of the company and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the consolidated financial statements.
Inherent limitations of internal financial controls over financial reportingBecause of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods
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are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
OpinionIn our opinion, to the best of our information and according to the explanations give to us and based on the consideration of the reports of the other auditors referred to in the Other Matter paragraph below, the Holding Company and its subsidiary companies, which are companies incorporated in India, have, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at 31 March 2018, based on the internal control over financial reporting criteria established by the respective companies considering the essential components of internal control stated in the Guidance Note issued by the ICAI.
Other MatterOur aforesaid report under Section 143(3)(i) of the Act on the adequacy and operating effectiveness of the internal financial controls over financial reporting insofar as it relates to one subsidiary company, which are companies incorporated in India, is based solely on the corresponding reports of the auditors of such companies. Our opinion is not modified in respect of this matter.
For B S R & Co. LLP Chartered Accountants Firm’s Registration No: 101248W/W-100022
Sd/- Milind Ranade Partner Membership No: 100564
Date:18 May, 2018 Place: Mumbai
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Notes 31 March 2018` in lakhs
31 March 2017` in lakhs
EQUITY AND LIABILITIESShareholders’ fundsShare capital 3 198,007 198,007
Reserves and surplus 4 86,610 50,729
Non-current liabilitiesLong-term borrowings 5 1,100,123 829,681
Other long term liabilities 6 17,330 10,949
Long-term provisions 7 20,976 28,119
Current liabilitiesShort-term borrowings 8 171,641 119,711
Other current liabilities 9 362,511 268,706
Short-term provisions 7 2,149 8,509
TOTAL 1,959,347 1,514,411ASSETSNon-current assetsFixed assets
Tangible assets 10 4,950 4,421
Intangible assets 11 2,264 2,639
Assets under development 10 & 11 349 360
Non-current investments 12 105 105
Deferred tax asset (Net) 13 9,723 15,804
Long-term loans and advances 14 1,260,288 801,149
Other non-current assets 15 21,209 15,947
Current assetsCurrent investments 16 52,583 195,005
Trade receivables 17 753 381
Cash and bank balances 18 73,748 55,931
Short-term loans and advances 14 503,033 397,398
Other current assets 15 30,342 25,271
TOTAL 1,959,347 1,514,411Significant accounting policies 2.1
The accompanying notes are an integral part of the financial statementsAs per our report of even date
B S R & Co. LLP For and on behalf of the Board of Directors ofChartered Accountants Fullerton India Credit Company LimitedFirm No : 101248W/W-100022
Sd/-Milind Ranade
Sd/- Gan Chee Yen
Sd/- Rajashree Nambiar
Partner Chairman CEO & Managing DirectorMembership No. 100564 DIN : 03602857 DIN : 06932632
Sd/- Pankaj MalikChief Financial Officer & Company SecretaryICSI Reg No. : A-19125
Place : Mumbai Place : MumbaiDate : 18 May, 2018 Date : 18 May, 2018
Consolidated Balance Sheet as at 31 March 2018
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Notes 31 March 2018` in lakhs
31 March 2017` in lakhs
IncomeRevenue from operations 19 281,879 260,162
Other income 20 6,796 6,546
Total revenue (I) 288,675 266,708
ExpensesEmployee benefit expense 21 51,805 45,135
Other expenses 22 36,504 31,692
Depreciation and amortization expense 10 &11 3,383 2,799
Finance costs 23 103,184 104,084
Provisions and write-offs 24 38,514 51,095
Total expenses (II) 233,390 234,805Profit before tax (III) =(I)-(II) 55,285 31,903Tax expensesCurrent tax 13,794 18,641
Adjustment of tax relating to earlier periods (1,128) 242
Deferred tax credit 6,081 (7,191)
Total tax expense (IV) 18,747 11,692Profit for the year (III)-(IV) 36,538 20,211Earnings per equity share (`)
Basic (Computed on the basis of total profit for the year) 25 1.85 1.05
Diluted (Computed on the basis of total profit for the year) 1.85 1.05
Significant accounting policies 2.1
The accompanying notes are an integral part of the financial statementsAs per our report of even date
B S R & Co. LLP For and on behalf of the Board of Directors ofChartered Accountants Fullerton India Credit Company LimitedFirm No : 101248W/W-100022
Sd/-Milind Ranade
Sd/- Gan Chee Yen
Sd/- Rajashree Nambiar
Partner Chairman CEO & Managing DirectorMembership No. 100564 DIN : 03602857 DIN : 06932632
Sd/- Pankaj MalikChief Financial Officer & Company SecretaryICSI Reg No. : A-19125
Place : Mumbai Place : MumbaiDate : 18 May, 2018 Date : 18 May, 2018
Consolidated Statement of Profit and Loss for the year ended 31 March 2018
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31 March 2018` in lakhs
31 March 2017` in lakhs
A. Cash flow from operating activities:Net profit before taxation 55,285 31,903 Adjustment for computing operating profit before working capital changes:Depreciation and amortization 3,383 2,799 Interest on fixed deposits and bonds (5,997) (6,466)Interest on investments (2,301) (2,814)Profit on sale of fixed assets (9) (18)
Write off of fixed assets & intangible assets 25 4 Discount on Commercial Paper 353 59
Profit on sale of investments (772) (3,297)Unrealised loss on investments (314) 314 Provision for standard/sub standard assets and bad debts written off 38,827 50,781 Provision for employees benefits 5 (13)Amortisation of ancillary borrowing costs 483 590 Operating profit before working capital changes 88,968 73,842 Movements in working capital :(Increase)/decrease in long term loans and advances (506,405) (46,020)(Increase)/decrease in short term loans and advances (122,943) (54,830)(Increase)/ decrease in other non current assets (3,495) (76)(Increase)/decrease in other current assets (5,840) (3,300)(Increase)/decrease in trade receivables (345) 277 Increase/(decrease) in current liabilities 59,358 (6,548)Increase/(decrease) in other long term liabilities 6,153 2,458 Cash generated from operations (484,549) (34,197)Income taxes paid (5,369) (10,545)Net cash from operating activities (A) (489,918) (44,742)
B. Cash flow from investing activities:Purchase of fixed assets and intangibles (3,273) (4,357)Proceeds from sale of fixed assets 16 39 Purchase of non-current investments - (100)Purchase of current investments (1,540,122) (2,703,003)Sale/maturity of investments 1,685,847 2,595,441 Fixed deposit placed during the year (63,631) (55,141)Fixed deposit matured during the year 62,946 69,367 Interest received on fixed deposits and bonds 6,432 5,537 Interest received on investments 640 185 Net cash from investing activities (B) 148,855 (92,032)
C. Cash flow from financing activitiesProceeds from issuance of share capital (including share premium) - 20,000 Proceeds from long term borrowings from banks and financial institutions
544,650 342,280
Proceeds from short term borrowings from banks and financial institutions
475,926 122,817
Repayment of long term borrowings from banks and financial institutions
(239,605) (230,375)
Repayment of short term borrowings from banks and financial institutions
(424,349) (119,855)
Payment of ancillary borrowing costs (724) (1,551)Net cash used in financing activities (C) 355,898 133,316Net increase/(decrease) in cash and cash equivalents (A)+(B)+(C)
14,835 (3,458)
Consolidated Cash Flow Statement for the year ended 31 March 2018
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31 March 2018` in lakhs
31 March 2017` in lakhs
Cash and cash equivalents as at the beginning of the year 9,762 13,220 Cash and cash equivalents as at the end of the year 24,597 9,762 (refer note 29)Components of cash and cash equivalents as at the end of the yearCash and cheques on hand 834 948 With banks - on current account 14,101 7,714
- on deposit account 9,662 1,100 Cash and cash equivalents as at the end of the year 24,597 9,762 Significant accounting policies 2.1
The accompanying notes are an integral part of the financial statementsAs per our report of even date
B S R & Co. LLP For and on behalf of the Board of Directors ofChartered Accountants Fullerton India Credit Company LimitedFirm No : 101248W/W-100022
Sd/-Milind Ranade
Sd/- Gan Chee Yen
Sd/- Rajashree Nambiar
Partner Chairman CEO & Managing DirectorMembership No. 100564 DIN : 03602857 DIN : 06932632
Sd/- Pankaj MalikChief Financial Officer & Company SecretaryICSI Reg No. : A-19125
Place : Mumbai Place : MumbaiDate : 18 May, 2018 Date : 18 May, 2018
Consolidated Cash Flow Statement for the year ended 31 March 2018
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1. BACKGROUND Fullerton India Credit Company Limited (‘The Company’) is a public limited company domiciled in India and incorporated
under the provisions of Companies Act, 1956. The Company is a non-banking financial company (‘NBFC’) registered as Deposit taking NBFC vide Registration no A-07-00791 dated 27 May, 2011 with the Reserve Bank of India (‘RBI’). The Company provides loans to small and medium enterprises for working capital and growth, loans for commercial vehicles, two-wheelers, home improvement loans, loans against property, personal loans, working capital loans for urban salaried , self-employed , loans for rural livelihood advancement and financing of various rural micro enterprises (collectively referred to as “Portfolio Loans”).
Fullerton India Home Finance Company Limited (‘The subsidiary Company’) is a public limited company domiciled in India and has been incorporated on 12 August, 2010 under the provisions of Companies Act, 1956, with the main object of providing finance for purchase, repairs, construction, and enlargement, erection of house or apartments or building (collectively referred to as ‘Portfolio loans’). The Company is housing finance company registered with the National Housing Bank of India (the NHB) vide Registration number 07.0122.15 dated 14 July, 2015.
2. (a) Basis of Preparation of Consolidated Financial Statements The Consolidated Financial Statements comprise of the financial statements of FICCL and its subsidiaries (hereinafter
collectively referred to as the ‘Group’).
The Consolidated Financial Statements have been prepared in accordance with generally accepted accounting principles in India (‘Indian GAAP’). The Company has prepared these financial statements to comply in all material respects with the Accounting Standards notified under section 133 of the Companies Act, 2013 (‘the Act’) read with rule 7 of the Companies (Accounts) Rules, 2014, Companies (Accounting Standards) Amendment Rules, 2016 and the provisions of the RBI as applicable to an NBFC.
The financial statements are prepared on going concern basis, which assumes that the Company will continue in operational existence for the foreseeable future. The financial statements have been prepared on an accrual basis and under the historical cost convention except as detailed in note 2.1(i). The accounting policies adopted in the preparation of financial statements are consistent with those of the previous year.
These financial statements are presented in Indian Rupees rounded to the nearest lakhs except otherwise stated.
(b) Principles of Consolidation(i) The Consolidated Financial Statements are prepared in accordance with Accounting Standard 21 - Consolidated
Financial Statements(AS-21) issued by the Institute of Chartered Accountants of India (ICAI). The financial statements of the group companies are prepared according to uniform accounting policies, in accordance with accounting principles generally accepted in India. The effects of inter-company transactions are eliminated on consolidation.
The financial statements of the Company and its subsidiaries have been combined on a line-by-line basis by adding together like items of assets, liabilities, income and expenses, after eliminating intra-group balances and intra-group transactions resulting in unrealised profits or losses.
The Consolidated Financial Statements are prepared using uniform accounting policies for like transactions and events in similar circumstances and necessary adjustments required for deviations, if any to the extent possible unless otherwise stated, are made in the Consolidated Financial Statements and are presented in the same manner as the Company’s standalone financial statements.
The financial statements of the FIHFCL have been prepared in accordance with and in the manner prescribed by National Housing Bank regulations. Due to the lack of homogeneity of the businesses, the financial statements of the FIHFCL have been consolidated, to the extent possible in the format as adopted by the parent, as required by AS-21 and as prescribed under section133 of Companies Act, 2013.
(ii) The subsidiary companies considered in preparation of Consolidated Financial Statements are:
Particulars Country of Incorporation
Proportion of ownership as on
31 March 2018
Proportion of ownership as on
31 March 2017
Financial Year ends on
Fullerton India Home Finance Company Limited
India 100% 100% March 31
Fullerton India Foundation for Social and Economic Development
India 100% 100% March 31
For the purpose of Consolidated Financial Statements, the results of FICCL and its subsidiaries for the year ended 31 March 2018 have been derived from the respective Company’s audited financials of the year ended 31 March 2018.
Notes to Consolidated Financial Statements for the year ended 31 March 2018
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2.1 Summary of Significant Accounting Policies
(a) Use of estimates The preparation of financial statements requires the management to make estimates and assumptions that affect the
reported amount of assets and liabilities and disclosure of contingent liabilities on the date of the financial statements and reported amount of revenues and expenses during the reporting year. The estimates and assumptions used in the accompanying financial statements are based upon the management’s evaluation of the relevant facts and circumstances as on the date of the financial statements. Actual results could differ from the estimates. Any change to accounting estimates is recognised prospectively in current and future periods.
(b) Tangible fixed assets
i. Leased assets All assets given on operating lease are shown as fixed assets net of accumulated depreciation and impairment loss,
if any. Cost includes purchase price and directly attributable cost of bringing the asset to its working condition for the intended use. Initial direct costs such as legal costs, brokerage costs, etc. are recognised immediately in the Statement of Profit and Loss.
ii. Own assets All tangible assets are carried at cost, net of accumulated depreciation and impairment loss, if any. Cost includes
purchase price and directly attributable cost of bringing the asset to its working condition for the intended use.
Gain or loss arising from disposal of a fixed asset is measured as the difference between the net disposal proceeds and the carrying amount of the asset and is recognised in the Statement of Profit and Loss when the asset is disposed.
Capital work in progress: Projects under which tangible fixed assets are not yet ready for their intended use are carried at cost, comprising direct cost and related incidental expenses.
(c) Intangible assets Costs relating to acquisition and development of computer software are capitalized in accordance with the AS 26
‘Intangible Assets’ issued by the Institute of Chartered Accountants of India (‘ICAI’) and are recognised where it is probable that the future economic benefit attributable to the assets will flow to the Company and its cost can be reliably measured. Intangible assets are stated at cost of acquisition less accumulated depreciation. Intangible assets not ready for the intended use on the date of balance sheet are disclosed as “Work in progress”.
(d) Depreciation on tangible fixed assets Depreciation on fixed assets is provided on straight-line basis as per the estimated useful life and in the manner
prescribed in Schedule II of the Companies Act, 2013 except for certain assets.
i. Depreciation on tangible fixed assets is provided using the Straight Line Method (‘SLM’) as per the useful life of the asset estimated by the management.
Useful life estimated by the Company
(in years)
Useful Life as per Schedule II
(in years)Computer Server and Other Accessories * 4 6Computer Desktop and Laptops * 3 3Furniture and Fixtures * 5 10Office Equipments * 5 5Handheld devices * 2 5Vehicles * 4 8
*Depreciation on tangible fixed assets has been provided on the straight-line method as per the useful life prescribed in Schedule II to the Companies Act, 2013. Useful life of the assets has been assessed based on internal assessment, taking into account the nature of the asset, the estimated usage of the asset, the operating conditions of the asset, past history of replacement, anticipated technological changes, manufacturers warranties and maintenance support, etc.
Notes to Consolidated Financial Statements for the year ended 31 March 2018
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Leasehold improvements are amortized over the period of the lease subject to a maximum lease period of 66 months.
Tangible assets having an original cost up to ` 5,000 individually are depreciated fully in the year of purchase.
ii. Intangible assets are amortized using the straight line method over a period of five years commencing from the date on which such asset is first installed.
The Company provides pro-rata depreciation from the day the asset is put to use and for any asset sold, till the date of sale.
(e) Impairment The carrying amounts of assets are reviewed at each balance sheet date if there is any indication of impairment, based
on internal/external factors. An impairment loss is recognised, in the Statement of Profit and loss, wherever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of the asset’s net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and risk specific to the asset.
After impairment, depreciation is provided on the revised carrying amount of the asset over its remaining useful life.
If at the balance sheet date there is an indication that a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount subject to maximum of depreciable historical cost.
(f) Investments Investments are classified as long term or current based on intention of the management at the time of purchase.
Investments, which are readily realizable and intended to be held for not more than one year from the date on which such investments are made, are classified as current investments. All other investments are classified as long-term investments. Current investments are carried in the financial statements at lower of cost and fair value determined in accordance with the NBFC directions. Investments in the units of mutual funds in the nature of current investments are valued at the net asset value declared by the mutual fund in respect of each particular scheme, in accordance with the NBFC directions. Long-term investments are carried at cost. However, provision for diminution in value is made to recognise a decline other than temporary in the value of the investments.
(g) Asset classification and Provisioning/write-off of Assets(i) Portfolio loans are classified as standard and non-performing assets in accordance with Company’s policy. A loan is
classified as NPA, where interest/installment is overdue for a period of 90 days and above, from the day it becomes due.
(ii) Portfolio loans are provided for/written off, in accordance with Company’s policy, subject to the minimum provision required as per Non-Banking Financial Company - Systemically Important Non-Deposit taking Company and Deposit taking Company (Reserve Bank) Directions, 2016.
(iii) Housing loans are provided for/written off, in accordance with Company’s policy, subject to the minimum provision required as per the National Housing Bank (NHB) Housing Finance Companies Directions, 2010 as amended from time to time.
(h) Leases Where the Company is the lessor
Assets given on operating leases are included in fixed assets. Lease income is recognised in the Statement of Profit and Loss on a straight-line basis over the lease term.
Where the Company is the lessee
Lease arrangements where the Lessor effectively retains, substantially, all the risks and benefits of ownership of the leased term, are classified as operating leases. Operating lease payments are recognised as an expense in the Statement of Profit and Loss on a straight-line basis over the lease term
Notes to Consolidated Financial Statements for the year ended 31 March 2018
101
(i) Revenue recognition
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured.
i) Interest Income
Interest income on loans given is recognised on time proportion basis taking into account the amount outstanding and the rate applicable.
Such interest, where installments are overdue for 90 days and above, is recognised only when actually realised. Any interest income, recognised and remaining unrealized after the installments have become overdue for 90 days and above, is reversed.
Penal/additional interest on default in payment of dues by customer is recognised on realisation basis.
Interest income on deposits with banks is recognised on a time proportion basis taking into account the amount outstanding and the applicable interest rate.
ii) Income from assignment / securitisation of portfolio loans
Profit/premium arising at the time of securitisation / assignment of portfolio loans, is amortised over the life of the underlying portfolio loan /securities and any loss arising therefrom is accounted for immediately. Income from interest strip (excess income spread) is recognised in the statement of profit and loss, net of any losses, when redeemed in cash. Interest on retained portion of assigned portfolio is recognised on accrual basis except in case of non-performing assets wherein interest income is recognised on receipt basis as per NBFC prudential norms. Service fee received is accounted for based on the underlying deal structure of transaction as per the agreement.
iii) Fee income
Loan processing fee/document fees/stamp fees are recognised over the term of the loan in proportion to the interest accrued during the year. For the agreements foreclosed or transferred through assignment/securitisation, the unamortised portion of the fee is recognised as income to the Statement of Profit and Loss at the time of such foreclosure/transfer through assignment.
Additional charges such as penal, dishonor, foreclosure charges, etc. are recognised on realisation basis.
iv) Income on discounted instruments
The difference between the acquisition cost and face value of the instrument is recognised over the tenor of the instrument on straight line basis.
v) Commission income
Commission income earned for the services rendered are recognised on accrual basis, While rate conversion charges are recognised upfront based on event occurrence.
vi) Dividend Income
Dividend income is recognised when the shareholders’ right to receive payment is established.
vii) Profit/Loss on sale of investments
Profit/loss on sale of investments is recognised on trade date basis. On disposal of an investment, the difference between carrying amount and net disposal proceeds is charged or credited to the Statement of Profit and Loss.
viii) Subvention Income
Subvention income is booked over the tenure of the respective loans.
Notes to Consolidated Financial Statements for the year ended 31 March 2018
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(j) Foreign currency transactions i) Initial recognition
Foreign currency transactions are recorded at exchange rate prevailing on date of transaction.
ii) Conversion Foreign currency monetary balances are reported using the exchange rate prevailing at the reporting date.
Non-monetary balances, which are measured in terms of historical cost denominated in a foreign currency, are reported using the exchange rate on the date of the transaction.
iii) Exchange differences Exchange differences arising on the settlement of monetary balances or on the restatement of the Company’s
monetary balances at rates different from those at which they were initially recorded during the year, or reported in the previous financial statements, are recognised as income or as expense in the year in which they arise.
(k) Retirement and Other Employee benefits i) Short Term Employee Benefits
All employee benefits falling due wholly within 12 months of rendering the services are classified as short-term employee benefits. All short term employee benefits are accounted on undiscounted basis during the accounting period based on services rendered by employees.
ii) Defined Contribution Plans a) The Company’s provident fund and superannuation scheme are defined contribution plans.
b) The contributions as specified by law are made to the Regional Provident Fund Commissioner and charged to the Statement of Profit and Loss of the year when the contribution to the respective fund is due. There are no other obligations other than contribution payable to the provident fund.
c) Superannuation is provided for on accrual basis, in accordance with the Company’s policy.
iii) Defined Benefit Plans The Company’s gratuity scheme is defined benefit plan. Gratuity liability is provided for on the basis of an actuarial
valuation on projected unit credit method made at the end of each financial year. The obligation is measured at the present value of the estimated future cash flows. The discount rate used for determining the present value of the obligation under defined benefit plans, is based on the market yield on government securities of a maturity period equivalent to the weighted average maturity profile of the related obligations at the balance sheet date.
The Company’s net obligation in respect of the gratuity benefit scheme is calculated by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine its present value, and the fair value of any plan assets is deducted.
Benefits in respect of gratuity are funded with an Insurance Company approved by Insurance Regulatory and Development Authority (IRDA).
Actuarial gain or loss is recognised in full in the period in which they occur in the Statement of Profit and Loss.
iv) Stock Appreciation Rights In case of stock appreciation rights, measurement and disclosure of the employee share-based payment plan is
done in accordance with the Guidance Note on Accounting for Employee Share-based Payments, issued by the ICAI. The Company measures compensation cost relating to stock appreciation rights using the fair value method. Compensation expense is amortised over the vesting period of the option on a straight line basis.
v) Leave benefits Accumulated leave balance, which is expected to be utilised within the next twelve months, is treated as short
term employee benefit. The Company measures the expected cost of such absences as the additional amount that it expects to incur as a result of unused entitlement that has accumulated at the reporting date.
Notes to Consolidated Financial Statements for the year ended 31 March 2018
103
(l) Income taxes
Tax expense comprises current and deferred tax. Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the Income Tax Act, 1961 enacted in India. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted at the reporting date.
Deferred income taxes reflects the impact of current year timing differences between taxable income and accounting income originating during the current year and reversal of timing differences of earlier years. Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date. Deferred tax assets are recognised only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. In situations where the Company has unabsorbed depreciation or carry forward tax losses, all deferred tax assets are recognised only if there is virtual certainty supported by convincing evidence that they can be realised against future taxable profits.
At each balance sheet date, the Company re-assesses unrecognised deferred tax assets. It recognises unrecognised deferred tax assets to the extent that it has become reasonably certain or virtually certain, as the case may be that sufficient future taxable income will be available against which such deferred tax assets can be realised.
Minimum alternate tax (MAT) paid in a year is charged to the Statement of Profit and Loss as current tax. The Company recognises MAT credit available as an asset only to the extent that there is convincing evidence that the Company will pay normal income tax during the specified period, i.e., the period for which MAT credit is allowed to be carried forward. In the year in which the Company recognises MAT credit as an asset in accordance with the Guidance Note on Accounting for Credit Available in respect of Minimum Alternative Tax under the Income Tax Act, 1961, the said asset is created by way of credit to the Statement of Profit and Loss and shown as “MAT Credit Entitlement.” The Company reviews the “MAT credit entitlement” asset at each reporting date and writes down the asset to the extent the Company does not have convincing evidence that it will pay normal tax during the specified period.
(m) Earnings per share
The Company reports basic and diluted earnings per share in accordance with Accounting Standard 20 – “Earnings Per Share”. Basic earnings per share is calculated by dividing the net profit or loss for the period attributable to equity shareholders (after deducting attributable taxes) by the weighted average number of equity shares outstanding during the year.
Diluted earnings per share reflect the potential dilution that could occur if securities or other contracts to issue equity shares were exercised or converted during the year. For the purpose of calculating diluted earnings per share, the net profit or loss for the year attributable to equity shareholders and the weighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential equity share.
(n) Provisions & Contingencies
A provision is recognised when an enterprise has a present obligation as a result of past event; it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to its present value and are determined based on best estimate required to settle the obligation at the reporting date. These estimates are reviewed at each reporting date and adjusted to reflect the current best estimates.
A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Company or a present obligation that is not recognised because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognised because it cannot be measured reliably. The Company does not recognise a contingent liability but discloses its existence in the financial statements.
Contingent assets are not recognised nor disclosed in the financial statements.
(o) Cash and cash equivalents
Cash and cash equivalents for the purpose of cash flow statement comprise cash at bank and in hand and short term investments with original maturity of three months or less.
Notes to Consolidated Financial Statements for the year ended 31 March 2018
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(p) Borrowing costs
Ancillary borrowing costs incurred in connection with the arrangement of borrowings are amortised over the tenure of the respective borrowings except with respect to expenses incurred on issue of debt securities, which are debited against securities premium account in accordance with Section 52 of the Companies Act, 2013.
(q) Loan origination costs
Loan origination costs such as credit verification, contact point verification, agreement stamping and direct selling agents commission are recognised as expense over the contractual tenor of the loan agreements in proportion to the interest accrued during the year. For the agreements foreclosed or transferred through assignment, the unamortised portion of the loan acquisition costs are recognised as charge to the Statement of Profit and Loss at the time of such foreclosure/transfer through assignment/securitisation.
(r) Operating cycle
Assets and Liabilities are classified as current and non-current based on the operating cycle which has been estimated to be 12 months. All assets and liabilities which are expected to be realised and settled, within a period of 12 months from the date of Balance Sheet have been classified as current and other assets and liabilities are classified as non-current.
(s) Cash flow statement
Cash flows are reported using the indirect method, whereby profit/(loss) before extraordinary items and tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Group are segregated based on the available information.
(t) Commercial papers issued
Commercial papers issued by the Company are recognised at redemption value net of unamortised finance charges. The difference between redemption value and issue value is amortised on a time basis and is disclosed separately under finance charges.
2.2 Change of accounting estimates:
a) During the current year, the Company has revised the estimate of provisioning for standard assets. Had the Company applied the estimates followed in the previous year, the provision on portfolio loans for the year would have been higher by ` 5,183 lakhs.
b) During the current year, the Company has revised the estimate of provisioning for sub-standard assets. Had the Company applied the estimates followed in the previous year, the provision on portfolio loans for the year would have been lower by ` 989 lakhs.
c) During the current year, the Subsidiary company FIHFC has revised the estimate of provision on standard assets. Had the Company used the estimate applicable in previous the provision on portfolio loans for the year would have been higher by ` 942 lakhs.
d) During the current year, the Subsidiary company FIHFC has revised the estimate of provision on sub-standard assets. Had the Company used the estimate applicable in previous year the provision on standard assets would have been lower by
` 600 lakhs.
Notes to Consolidated Financial Statements for the year ended 31 March 2018
105
3. SHARE CAPITAL
Particulars 31 March 2018 ` in lakhs
31 March 2017` in lakhs
Authorised Shares
2,500,000,000 (31 March 2017: 2,500,000,000) equity shares of `10 each 250,000 250,000
250,000 250,000
Issued, subscribed and fully paid up shares
1,980,071,519 (31 March 2017: 1,980,071,519) equity shares of `10 each fully paid 198,007 198,007
198,007 198,007
a) Reconciliation of the shares outstanding at the beginning and at the end of the reporting period
Equity Shares 31 March 2018 31 March 2017
No. of shares ` in lakhs No. of shares ` in lakhs
At the beginning of the year 1,980,071,519 198,007 1,921,161,357 192,116
Issued during the year - - 58,910,162 5,891
Outstanding at the end of year 1,980,071,519 198,007 1,980,071,519 198,007
Above includes equity shares of ` 10 each allotted to Fullerton Financial Holdings Pte Ltd., the holding Company of erstwhile Fullerton Enterprises Pvt. Ltd., for consideration other than cash, pursuant to the scheme of Amalgamation approved by the Honorable High Court, Bombay during Financial Year 2008-09.
b) Terms/rights attached to equity shares The Company has only one class of equity shares having a par value of `10 per share. Each holder of equity shares is entitled to one vote per share.
Any Dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting. Dividend is declared and paid in Indian rupees.
In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all the preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.
c) Shares held by holding /ultimate holding company and/or their subsidiaries/associates Out of equity shares issued by the Company, shares held by its holding company, ultimate holding company and their subsidiaries/associates are as below:
Particulars 31 March 2018` in lakhs
31 March 2017` in lakhs
Angelica Investments Pte Ltd, Singapore, the holding company and its nominees
1,894,815,162 (31 March 2017: 1,894,815,162) equity shares of `10 each fully paid 189,482 189,482
Fullerton Financial Holdings Pte Ltd, Singapore, holding company of Angelica Investments Pte Ltd
8,52,56,357 (31 March 2017: 8,52,56,357) equity shares of `10 each fully paid 8,526 8,526
Notes to Consolidated Financial Statements for the year ended 31 March 2018
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d) Details of shareholders holding more than 5% shares in the Company
31 March 2018 31 March 2017
No. of shares % holding in the class
No. of shares % holding in the class
Equity shares of `10 each fully paid
Angelica Investments Pte. Ltd, Singapore, the holding company
1,894,815,162 95.69% 1,894,815,162 95.69%
As per records of the Company, including its register of shareholders/members and other declarations received from shareholders regarding beneficial interest, the above shareholding represents both legal and beneficial ownerships of shares.
The company has not issued any shares other than cash consideration, bonus shares or bought back any equity shares during the last five year.
4. RESERVE AND SURPLUS
Particulars 31 March 2018` in lakhs
31 March 2017` in lakhs
General Reserve 96 96
(A) 96 96
Capital Reserve 349 349
(B) 349 349
Securities Premium Account
Balance as per the last financial statements 21,035 9,446
Add: Securities premium on issue of shares - 14,108
Less: Utilisation towards debenture issue expenses (refer note 23) (657) (2,519)
Closing Balance (C) 20,378 21,035
Reserve Fund under Section 45 - IC of the RBI Act, 1934
Balance as per the last financial statements 26,196 21,910
Add: Amount transferred from surplus balance in the statement of profit and loss
7,088 4,286
Closing Balance (D) 33,284 26,196
Reserve Fund under Section 29C(i) of the NHB Act, 1987
Balance as per the last financial statements - -
Add: Amount transferred from surplus balance in the statement of profit and loss
220 -
Closing Balance (E) 220 -
Surplus/(Deficit) in the statement of profit and loss
Balance as per the last financial statements 3,053 (12,872)
Add: Profit for the year 36,538 20,211
Less: Transferred to Statutory Reserve @ 20% of profit after tax as required by section 45-IC of The Reserve Bank of India Act, 1934 for FICCL
(7,088) (4,286)
Less: Transferred to Statutory Reserve @ 20% of profit after tax as required by Section 29C of the NHB Act, 1987 for FIHFCL
(220) -
Net Surplus/(Deficit) in the statement of profit and loss (F) 32,283 3,053
Total reserves and surplus (A+B+C+D+E+F) 86,610 50,729
Notes to Consolidated Financial Statements for the year ended 31 March 2018
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5. LONG TERM BORROWINGS
Particulars Non Current portion Current maturities
31 March 2018` in lakhs
31 March 2017` in lakhs
31 March 2018` in lakhs
31 March 2017` in lakhs
Term Loans
Indian rupee loan from banks (secured)* 461,583 342,151 129,960 133,946
Debentures $
Non Convertible Debentures (secured)** 575,630 418,430 81,200 48,800
Non Convertible Debentures (unsecured) # 62,910 69,100 6,190 -
Total 1,100,123 829,681 217,350 182,746
The above amount includes
Secured Borrowings 1,037,213 760,581 211,160 182,746
Unsecured Borrowings 62,910 69,100 6,190 -
Less: Amount disclosed under the head other current liabilities (refer note 9)
- - 217,350 182,746
Total 1,100,123 829,681 - -
* Indian rupee loan from banks are secured by first pari passu charge over all loan receivables except specific charge on specific loan receivables for one of the financial institution. (Term loan outstanding as on 31 March 2018 : ` 201 lakhs; 31 March 2017 : ` 1,833 lakhs).
** Debentures are secured by first pari passu charge over all loan receivables and immovable property.
Non Convertible Debenture includes Masala Bonds of ` 100,000 lakhs of which ` 50,000 lakhs is listed on Singapore Stock Exchange.
# Unsecured Non Convertible Debentures amounting to ` 69,100 lakhs (31 March 2017 : ` 69,100 lakhs) are in respect to Tier II subordinated debts.
$ The funds raised by the Company during the year by issue of Secured / Unsecured Non Convertible Debentures / bonds were utilised for the purpose intended, i.e. towards lending, financing, to refinance the existing indebtedness of the Company or for long-term working capital, in compliance with applicable laws.
Terms of repayment of term loans as on 31 March 2018
Original maturity of loan
(in no. of days)
Rate of
interest
Due within 1 year Due 1 to 2 Years Due 2 to 3 Years More than 3 Years TotalNo. of
installments
` in lakhs No. of
installments
` in lakhs No. of
installments
` in lakhs No. of
installments
` in lakhs ` in lakhs
Monthly repayment scheduleMore than 1460 9% - 11% 1 201 - - - - - - 201 Quarterly repayment schedule -
1096-14607% - 8% - - 8 5,333 4 2,667 - - 8,000 8% - 9% 10 6,666 11 6,250 6 2,083 2 833 15,833
More than 14607% - 8% 4 6,600 8 13,200 8 13,200 16 27,000 60,000 8% - 9% 38 41,000 39 38,033 28 26,783 15 6,580 112,397 9% - 11% 4 1,111 4 1,111 2 556 - - 2,778
Half yearly repayment schedule -
731-10958% - 9% 10 4,666 11 5,584 - - - - 10,250 9% - 11% 4 3,750 2 5,000 - - - - 8,750
1096-1460 8% - 9% 4 1,667 4 1,667 4 1,667 - - 5,000
More than 14607% - 8% 3 3,674 6 7,347 6 7,347 12 14,133 32,500 8% - 9% 23 41,541 30 39,790 27 35,210 31 37,875 154,416 9% - 11% 3 7,417 2 2,500 - - - - 9,917
Yearly repayment schedule - 731-1095 8% - 9% - - 2 5,000 1 5,000 - - 10,000 More than 1460 8% - 9% 3 11,667 6 26,667 7 30,000 9 46,667 115,000 Bullet repayment schedule - 731-1095 7% - 8% - - 2 15,000 3 16,500 - - 31,500 1096-1460 7% - 8% - - - - 4 15,000 - - 15,000
Notes to Consolidated Financial Statements for the year ended 31 March 2018
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Original maturity of loan
(in no. of days)
Rate of
interest
Due within 1 year Due 1 to 2 Years Due 2 to 3 Years More than 3 Years TotalNo. of
installments
` in lakhs No. of
installments
` in lakhs No. of
installments
` in lakhs No. of
installments
` in lakhs ` in lakhs
Total 107 129,960 135 172,482 100 156,013 85 133,088 591,543
Terms of repayment of term loans as on 31 March 2017
Original maturity of loan
(in no. of days)
Rate of
interest
Due within 1 year Due 1 to 2 Years Due 2 to 3 Years More than 3 Years TotalNo. of
installments
` in lakhs No. of
installments
` in lakhs No. of
installments
` in lakhs No. of
installments
` in lakhs ` in lakhs
Monthly repayment scheduleMore than 1460 9% - 11% 12 1,632 1 201 - - - - 1,833 Quarterly repayment schedule731-1095 9% - 11% 6 4,500 - - - - - - 4,500 1096-1460 9% - 11% 12 15,417 8 3,333 8 3,333 4 1,667 23,750
More than 14608% - 9% 22 25,037 22 25,037 21 23,370 17 19,537 92,980 9% - 11% 36 29,778 34 29,944 33 31,944 17 15,035 106,701
Half yearly repayment schedule
731-10958% - 9% 1 1,667 - - - - - - 1,667 9% - 11% 3 1,874 9 5,582 9 5,041 - - 12,498
1096-14608% - 9% 1 2,500 - - - - - - 2,500 9% - 11% 1 1,875 2 3,750 1 1,875 - - 7,500
More than 14608% - 9% 4 8,750 8 10,375 11 14,708 15 14,417 48,250 9% - 11% 11 26,917 18 34,917 17 30,000 9 17,084 108,917
Yearly repayment schedule731-1095 9% - 11% 1 500 2 1,000 - - 1,500 1096-1460 8% - 9% 1 5,000 - - - - - - 5,000
More than 14608% - 9% 3 7,500 2 5,000 2 3,333 2 1,667 17,500 9% - 11% 1 1,500 2 6,500 2 6,500 2 11,500 26,000
Bullet repayment schedule731-1095 8% - 9% - - - - 1 10,000 - - 10,000 1096-1460 8% - 9% - - - - 1 5,000 - - 5,000 Total 114 133,946 107 125,139 108 136,106 66 80,906 476,097
Terms of repayment of NCD as on 31 March 2018
Original maturity of loan
(in no. of days)
Rate of
interest
Due within 1 year Due 1 to 2 Years Due 2 to 3 Years More than 3 Years Total ` in lakhs ` in lakhs ` in lakhs ` in lakhs ` in lakhs
Issued at par and redeemable at par
731-10957% - 8% 12,500 2,500 13,500 - 28,500 8% - 9% 12,500 76,000 30,000 - 118,500 9% - 11% 1,700 - - - 1,700
1096-14607% - 8% - - 51,500 8,000 59,500 8% - 9% 11,500 55,500 - 37,630 104,630 9% - 11% 5,500 14,000 - - 19,500
More than 1460
7% - 8% - - - 70,000 70,000 8% - 9% 10,000 10,000 20,000 16,800 56,800 9% - 11% 27,500 37,500 56,500 84,400 205,900 11% - 12% 6,190 - - 13,810 20,000
Issued at par and redeemable at premium1096-1460 8% - 9% - - 7,500 28,400 35,900 Issued at premium and redeemable at
premium
-
1096-1460 8% - 9% - - - 5,000 5,000 Total 87,390 195,500 179,000 264,040 725,930
Note : For zero coupon bonds, the interest rate is on XIRR basis.
Terms of repayment of NCD as on 31 March 2017
Original maturity of loan
(in no. of days)
Rate of
interest
Due within 1 year Due 1 to 2 Years Due 2 to 3 Years More than 3 Years Total ` in lakhs ` in lakhs ` in lakhs ` in lakhs ` in lakhs
Issued at par and redeemable at par
366-7308% - 9% 3,950 - - - 3,950 9% - 11% 3,350 - - - 3,350
731-10958% - 9% - 25,000 25,000 - 50,000
9% - 11% 33,000 1,700 - - 34,700
Notes to Consolidated Financial Statements for the year ended 31 March 2018
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Original maturity of loan
(in no. of days)
Rate of
interest
Due within 1 year Due 1 to 2 Years Due 2 to 3 Years More than 3 Years Total ` in lakhs ` in lakhs ` in lakhs ` in lakhs ` in lakhs
1096-14608% - 9% - 11,500 106,500 12,500 130,500 9% - 11% 7,500 5,500 10,000 - 23,000
More than 14608% - 9% - - - 19,930 19,930 9% - 11% 1,000 32,500 51,500 160,900 245,900 11% - 12% - 11,190 - 13,810 25,000
Total 48,800 87,390 193,000 207,140 536,330
Secured Redeemable Non Convertible Debentures:
Particulars Face Value
(` in lakhs)
Quantity Date of Redemption 31 March 2018 31 March 2017
10.45% Series-27C 5 500 November 3, 2023 2,500 2,500 9.85% Series-24 10 400 May 22, 2023 4,000 4,000 10.60% Series-22 10 750 April 28, 2023 7,500 7,500 8.05% Series-2 10 400 March 24, 2023 4,000 - 7.35% MS-002 10 5,000 November 25, 2022 50,000 - 8.99% Series-49 10 500 July 15, 2022 5,000 5,000 9.16% Series-33C 10 230 May 20, 2022 2,300 2,300 10.00% Series-29AII 5 1,800 December 30, 2021 9,000 9,000 8.00% Series-62 10 2,000 December 28, 2021 20,000 - 8.25% Series-53 10 713 November 22, 2021 7,130 7,130 8.52% Series-65 10 310 June 8, 2021 15,500 - 9.20% Series-32II 10 1,500 May 28, 2021 15,000 15,000 8.95% Series-42 10 100 May 10, 2021 1,000 1,000 8.95% Series-41 10 180 April 29, 2021 1,800 1,800 8.52% Series-64 10 463 April 20, 2021 18,500 - 8.05% Series-5 10 500 April 20, 2021 5,000 - 8.48% Series-7 10 1,000 April 20, 2021 10,000 - 8.00% Series-58 10 160 April 13, 2021 8,000 - 8.45% Series-66 10 248 April 8, 2021 14,900 - 9.22% Series-34B (ii) 10 700 March 8, 2021 7,000 7,000 8.20% Series-63 10 750 February 26, 2021 7,500 - 9.05% Series-34F 10 100 January 18, 2021 1,000 1,000 9.25% Series-33DIII 10 1,000 December 30, 2020 10,000 10,000 9.05% Series-36A 10 1,500 December 30, 2020 15,000 15,000 8.75% Series-37 10 4,000 December 15, 2020 40,000 40,000 7.65% Series-61 10 1,000 December 15, 2020 10,000 - 9.10% Series-34D (ii) 10 250 November 30, 2020 2,500 2,500 9.05% Series-35 10 1,500 November 28, 2020 15,000 15,000 7.95% Series-4 10 300 November 27, 2020 3,000 - 8.01% Series-57 10 833 October 6, 2020 25,000 - 7.65% Series-59 10 675 October 6, 2020 13,500 - 7.95% Series-3 10 1,000 August 28, 2020 10,000 - 7.68% Series-56 10 267 August 14, 2020 16,000 - 8.25% Series-1 10 500 May 27, 2020 5,000 - 8.00% Series-55 10 1,250 April 30, 2020 12,500 12,500 9.85% Series-29AI 5 1,200 April 14, 2020 6,000 6,000 9.30% Series-30DII 10 250 January 29, 2020 2,500 2,500 7.65% Series-60 10 250 December 20, 2019 2,500 - 9.42% Series-30B 10 500 December 9, 2019 5,000 5,000 9.10% Series-34D (i) 10 400 November 29, 2019 4,000 4,000 8.59% MS-001 10 5,000 November 23, 2019 50,000 50,000 8.90% Series-47 10 500 September 16, 2019 5,000 5,000 8.75% Series-52 10 1,000 August 12, 2019 10,000 10,000 8.65% Series-50 10 1,500 August 2, 2019 15,000 15,000 8.79% Series-51 10 250 July 23, 2019 2,500 2,500 8.80% Series-48 10 2,000 July 8, 2019 20,000 20,000 9.90% Series-28 5 3,000 June 24, 2019 15,000 15,000 8.90% Series-46 10 250 June 7, 2019 2,500 2,500 9.10% Series-32I 10 1,500 May 28, 2019 15,000 15,000
Notes to Consolidated Financial Statements for the year ended 31 March 2018
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Particulars Face Value
(` in lakhs)
Quantity Date of Redemption 31 March 2018 31 March 2017
9.73% Series-44 10 1,000 May 27, 2019 10,000 10,000 8.90% Series-45 10 200 May 24, 2019 2,000 2,000 8.90% Series-39(ii) 10 50 April 29, 2019 500 500 8.85% Series-40 10 1,550 April 19, 2019 15,500 15,500 8.90% Series-38 10 600 April 4, 2019 6,000 6,000 8.90% Series-39(i) 10 250 April 3, 2019 2,500 2,500 7.97% Series-54 10 1,250 March 22, 2019 12,500 12,500 9.30% Series-30DI 10 250 January 29, 2019 2,500 2,500 10.90% Series-27F 5 1,000 January 7, 2019 5,000 5,000 8.95% Series-34E 10 150 December 17, 2018 1,500 1,500 11.00% Series-27E 5 1,000 December 10, 2018 5,000 5,000 8.90% Series-34C 10 1,000 October 15, 2018 10,000 10,000 8.90% Series-43 10 1,250 September 17, 2018 12,500 12,500 9.10% Series-34B (i) 10 150 September 7, 2018 1,500 1,500 9.30% Series-25 10 500 June 14, 2018 5,000 5,000 9.11% Series-33DII 10 170 May 25, 2018 1,700 1,700 9.50% Series-23 10 1,000 May 8, 2018 10,000 10,000 9.05% Series-33A 10 400 April 30, 2018 4,000 4,000 10.05% Series-31A 10 500 March 12, 2018 - 5,000 9.20% Series-30C 10 250 January 23, 2018 - 2,500 10.00% Series-20E 10 100 January 15, 2018 - 1,000 9.00% Series-34A 10 1,050 August 7, 2017 - 10,500 9.11% Series-33F 10 1,250 July 17, 2017 - 12,500 9.06% Series-33E 10 220 July 6, 2017 - 2,200 9.05% Series-31C 10 1,000 May 30, 2017 - 10,000 9.11% Series-33DI 10 115 May 24, 2017 - 1,150 8.98% Series-31B 10 395 April 11, 2017 - 3,950 Total 656,830 467,230
Unsecured Redeemable Non Convertible Debenture (subordinated debt)
Particulars Face Value
(` in lakhs)
Quantity Date of Redemption 31 March 2018 31 March 2017
9.25% Subdebts_Series 10 10 250 March 23, 2026 2,500 2,500
9.30% Subdebts_Series 9II 10 250 February 25, 2026 2,500 2,500
9.50% Subdebts_Series 7I 10 1,000 October 13, 2025 10,000 10,000
9.50% Subdebts_Series 5I 10 250 June 10, 2025 2,500 2,500
9.60% Subdebts Series 4 10 500 December 26, 2024 5,000 5,000
10.50% Subdebts Series 3 5 1,000 October 28, 2023 5,000 5,000
9.30% Subdebts_Series 9I 10 250 April 25, 2023 2,500 2,500
11.40% Subdebts Series 2C 10 500 October 28, 2022 5,000 5,000
9.40% Subdebts_Series 7II 10 500 October 13, 2022 5,000 5,000
11.40% Subdebts Series 2B 10 400 September 28, 2022 4,000 4,000
11.40% Subdebts Series 1B 10 481 September 14, 2022 4,810 4,810
9.40% Subdebts_Series 6II 10 250 August 3, 2022 2,500 2,500
9.40% Subdebts_Series 5II 10 200 June 10, 2022 2,000 2,000
9.50% Subdebts_Series 8 10 250 June 25, 2021 2,500 2,500
11.25% Subdebts Series 2A 10 100 June 27, 2018 1,000 1,000
11.25% Subdebts Series 1A 10 519 June 14, 2018 5,190 5,190
9.30% Subdebts Series 11 10 210 April 30, 2026 2,100 2,100
8.75% Subdebts Series 12(i) 10 250 April 26, 2024 2,500 2,500
8.75% Subdebts Series 12(ii) 10 250 April 25, 2025 2,500 2,500
Total 69,100 69,100
6. OTHER LONG TERM LIABILITIESParticulars 31 March 2018
` in lakhs 31 March 2017
` in lakhs Interest accrued but not due on debentures 4,387 2,084 Employee benefits payable 1,195 1,112
Notes to Consolidated Financial Statements for the year ended 31 March 2018
111
Unamortised income Unamortised loan processing fees 11,395 7,561 Unamortised income on securitisation - 7
Others 114 185 Rent equalisation reserve 239 - Total 17,330 10,949
7. PROVISIONSParticulars Long Term Short Term
31 March 2018` in lakhs
31 March 2017` in lakhs
31 March 2018` in lakhs
31 March 2017` in lakhs
Provision for employee benefitsProvision for gratuity (refer note 33) 37 22 13 -Provision for superannuation - - 1 1Provision for leave benefits - - 39 57Other provisionsProvision for standard portfolio loans (refer note 2.2) 5,101 15,922 2,031 8,419Provision for sub-standard portfolio loans (refer note 2.2)
13,996 12,087 - -
Provision for securitised portfolio loans - 2 33 32Provision for security deposits 86 86 - -Provision for Income Tax 1,756 - 32 -Total 20,976 28,119 2,149 8,509
8. SHORT TERM BORROWINGS Particulars 31 March 2018
` in lakhs 31 March 2017
` in lakhs Loan repayable on demand Cash credit from banks (unsecured) 12,191 9,963 Other loans and advances Commercial paper (unsecured)* 159,450 109,748 Total 171,641 119,711 The above amount includes Unsecured borrowings 171,641 119,711 Total 171,641 119,711
*Commercial paper carries interest in the range of 7.10% to 8.25% p.a. and tenure of 90 to 365 days fully payable at maturity. The interest rate is on XIRR basis.
9. OTHER CURRENT LIABILITIESParticulars 31 March 2018
` in lakhs 31 March 2017
` in lakhs Other liabilitiesCurrent maturities of long term borrowings (refer note 5) 217,350 182,746 Expenses and other payable (refer note 34 : for dues to Micro Small and Medium Enterprises )
12,803 9,620
Employee benefits payable 7,457 6,410 Bank balances (Book overdraft) 73,960 24,341 Interest accrued but not due
On debentures 26,433 27,576 On bank loans 983 708
Undisputed statutory dues payable 1,665 765 Payable towards asset assignment / securitisation 967 3,273 Others 10,975 8,169 Unamortised income Unamortised loan processing fees 9,911 5,063 Unamortised income on securitisation 7 35 Total 362,511 268,706
Notes to Consolidated Financial Statements for the year ended 31 March 2018
112
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10. TANGIBLE ASSETSParticulars (` in lakhs)
Office Equipments
Furniture & Fixtures
Computers & Accessories
Leasehold Improvements
Vehicles Land* Leased assets
Total
Cost At 1 April 2016 3,193 2,791 4,961 3,549 88 6 138 14,725 Addition 737 595 1,618 439 85 - - 3,475 Deductions 200 312 78 438 - - - 1,028 At 31 March 2017 3,730 3,074 6,501 3,550 173 6 138 17,172
Addition 624 587 826 788 222 6 - 3,054 Deductions 538 138 408 188 6 - - 1,278 At 31 March 2018 3,816 3,523 6,919 4,150 389 12 138 18,948 Depreciation - At 1 April 2016 2,332 2,252 3,947 3,092 44 - 76 11,742 Charge for the year 512 347 850 249 26 - 34 2,017 Deductions 195 300 77 436 - - - 1,008 At 31 March 2017 2,649 2,298 4,720 2,905 70 - 110 12,751 Charge for the year 567 385 954 489 74 - 21 2,490 Deductions 532 127 406 177 2 - - 1,244 At 31 March 2018 2,684 2,556 5,268 3,217 142 - 131 13,997 Net Block At 31 March 2017 1,081 776 1,782 645 103 6 28 4,421 At 31 March 2018 1,132 967 1,651 934 247 12 7 4,950 Capital Work in Progress At 31 March 2017 133 55 104 - - - - 292 At 31 March 2018 - - - - - - - -
*Pledged as security against secured non-convertible debentures
11. INTANGIBLE ASSETS Particulars (` in lakhs)
Computer Software Total
Gross block
At 1 April 2016 7,774 7,774Additions 1,382 1,382Deductions - -At 31 March 2017 9,156 9,156
Additions 515 515Deductions - -At 31 March 2018 9,671 9,671AmortisationAt 1 April 2016 5,732 5,732Charge for the year 782 782Deductions - -At 31 March 2017 6,515 6,515Charge for the year 891 891Deductions - -At 31 March 2018 7,406 7,406Net blockAt 31 March 2017 2,641 2,639At 31 March 2018 2,264 2,264Capital Work in ProgressAt 31 March 2017 68 68At 31 March 2018 349 349
Notes to Consolidated Financial Statements for the year ended 31 March 2018
113
12. NON-CURRENT INVESTMENTS
Particulars 31 March 2018` in lakhs
31 March 2017` in lakhs
Non Trade Investments (valued at cost unless stated otherwise)
Investment in equity instruments (unquoted)
a ) Others
50,000 (31 March 2017: 50,000) equity shares of ` 10 each 5 5
fully paid-up in Alpha Micro Finance Consultants Private Limited
8,397 (31 March 2017: 8,397 ) equity shares of ` 10 each 100 100
fully paid-up in DigiLend Analytics and Technology Pvt. Ltd.
Sub Total (A) 105 105
Less: Provision for diminution in value (B) - -
Net Value {(A)-(B)} 105 105
Aggregate amount of unquoted investments 105 105
13. DEFERRED TAX ASSET (NET)
Particulars 31 March 2018 ` in lakhs
31 March 2017 ` in lakhs
Deferred tax liability
Unamortised ancillary cost of borrowings 203 345
Unamortised loan origination costs on portfolio loans 6,337 3,248
Fixed assets depreciations (FIHFCL) 6 7
Special Reserve created as per section 29C of NHB Act, 1987 and claimed as deduction u/s 36 (1) (viii) of Income Tax Act, 1961 (FIHFCL)
76 -
Gross deferred tax liability (A) 6,622 3,600
Deferred tax assets
Provision for Section 43B items under Income tax Act, 1961 132 228
Fixed assets depreciations 1,779 1,644
Provision for diminution in the value of investments 32 140
Provision for standard, Sub standard portfolio loans 6,155 11,684
Provision for security deposits 30 30
Unamortised processing fees on portfolio loans 7,440 4,369
Provision for expenses disallowed as per Income-tax Act, 1961 734 415
Interest income on non-performing loans recognised for tax - 1,128
Provision for Section 43B items under Income tax Act, 1961 (FIHFCL) 10 11
Unabsorbed carried forward losses (FIHFCL) - 289
Preliminary expenses (FIHFCL) 33 49
Gross deferred tax asset (B) 16,345 19,987
Net deferred tax asset (B-A) 9,723 16,387
Net deferred tax asset recognised (refer note below) 9,723 15,804
Note :
Deferred Tax on provision for non performing portfolio loans is net of deduction allowed under section 36(i) (viia) of the Income Tax Act, 1961.
In FY 17, The Subsidiary FIHFCL has not recognised net deferred tax assets amounting to ` 583 lakhs in the absence of virtual certainty supported by convincing evidence that sufficient taxable income will be available in future year against which such deferred tax asset can be realised .
Notes to Consolidated Financial Statements for the year ended 31 March 2018
114
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14. LOANS AND ADVANCES
Particulars Non-current Current
31 March 2018` in lakhs
31 March 2017` in lakhs
31 March 2018` in lakhs
31 March 2017` in lakhs
A Portfolio loans
a. Secured, considered good Loans*
720,057 464,318 98,438 73,129
b. Secured, considered Sub Standard & Doubtful Loans**
32,912 32,270 - -
c. Unsecured, considered good Loans*
491,665 288,066 400,726 311,921
d. Unsecured, considered Sub Standard & Doubtful Loans**
7,829 5,519 - -
Sub-Total 1,252,463 790,173 499,164 385,050
B Security deposits
Unsecured, considered good 1,710 1,739 295 91
Unsecured, considered doubtful 86 86 - -
Sub-Total 1,796 1,825 295 91
C Advances recoverable in cash or in kind or for value to be received
Unsecured, considered good 303 385 - 5
Sub-Total 303 385 - 5
D Other loans and advances
Retained interest receivable on securitisation 2 15 5 33
Advance Income Tax (net of provision for tax ) - 2,210 - -
MAT credit entitlement (refer note 35) 5,557 6,126 - -
Prepaid expenses 51 6 1,384 1,149
Loans and advances to employees 26 25 8 8
Others 14 9 2,177 11,062
Sub-Total 5,650 8,391 3,574 12,252
E Capital advances
Unsecured, considered good 76 375 - -
Sub-Total 76 375 - -
Total (A+B+C+D+E) 1,260,288 801,149 503,033 397,398
* Represents standard assets in accordance with Company’s asset classification policy (refer note 2.1 (g) and 2.2) ** Represents non-performing assets in accordance with Company’s asset classification policy (refer note 2.1 (g))
Notes to Consolidated Financial Statements for the year ended 31 March 2018
115
15. OTHER ASSETS
Particulars Non Current Current
31 March 2018` in lakhs
31 March 2017` in lakhs
31 March 2018` in lakhs
31 March 2017` in lakhs
Non Current bank balances (refer note 18) 6,600 8,896 - -
Unamortised ancillary cost of borrowings 266 652 316 346
Unamortised loan origination costs 14,337 6,397 3,809 2,989
Surplus in gratuity fund - - 128 106
Interest accrued and due
On secured loans - - 951 629
On unsecured loans - - 1,074 3,227
Interest accrued but not due
On deposits placed with banks 6 2 3,122 2,532
On government securities - - - 271
On debentures and bonds - - - 1,027
On secured loans - - 7,141 5,161
On unsecured loans - - 13,799 8,981
Other assets 2 2
Total 21,209 15,947 30,342 25,271
16. CURRENT INVESTMENTS
Particulars 31 March 2018` in lakhs
31 March 2017` in lakhs
a) Quoted: Government securities
Nil (31 March 2017: 2,000,000) units 7.61 % 2030 Government Securities
- 2,072
Nil (31 March 2017: 7,000,000) units 7.59 % 2026 Government Securities
- 7,337
Nil (31 March 2017: 3,500,000) units 6.97 % 2026 Government Securities
- 3,567
Nil (31 March 2017: 7,500,000) units 0% INR GOI TB 18/01/2018 - 7,089
Nil (31 March 2017: 5,000,000) units 0% INR GOI TB 01/06/2017 - 4,938
b) Unquoted: Certificate of deposits
7,500 (31 March 2017: 12,500) units of ` 100,000 each of Axis Bank Limited
7,246 14,414
7,500 (31 March 2017: 9,000) units of ` 100,000 each of ICICI Bank Limited
7,331 16,116
10,000 (31 March 2017: 5,000) units of ` 100,000 each of IndusInd Bank Limited
9,552 4,783
15,000 (31 March 2017: Nil) units of ` 100,000 each of HDFC Bank 14,057 2,472
Nil (31 March 2017: 14,500) units of ` 100,000 each of NABARD - 18,509
Nil (31 March 2017: 17,500) units of ` 100,000 each of Kotak Mahindra Bank Limited
- 19,322
Nil (31 March 2017: 11,000) units of ` 100,000 each of IDFC Bank Limited
- 13,726
Nil (31 March 2017: 5,000) units of ` 100,000 each of SIDBI - 8,456
Notes to Consolidated Financial Statements for the year ended 31 March 2018
116
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Particulars 31 March 2018` in lakhs
31 March 2017` in lakhs
Nil (March 31, 2017: 2,500) units of `100,000 each of Credit Suisse
- 2,470
c) Unquoted: Investment in Commercial Papers
3,000 (31 March 2017: 3,000) units of ` 500,000 each of Housing Development Finance Corporation Ltd.
14,397 14,594
d) Unquoted: Mutual funds (At net asset value)
Nil (31 March 2017: 191,330.67) units of ` 1,000 each in Tata Money Market Fund Option - Direct Plan - Growth
- 4,904
Nil (31 March 2017: 14,296,676.46) units of ` 10 each in Sundaram Money Fund - Direct Plan - Growth
- 4,903
Nil (31 March 2017: 318,378.27) units of ` 1,000 each in DSP BlackRock Liquidity Fund - Direct Plan - Growth
- 7,405
Nil (31 March 2017: 154,897.41) units of ` 1,000 each in SBI Premier Liquid Fund - Direct Plan -Growth
- 3,953
Nil (31 March 2017: 271,860.71) units of ` 1,000 each in Axis Liquid Fund - Direct Plan - Growth Option
- 4,902
Nil (31 March 2017: 273,651.25) units of ` 1,000 each in HDFC Liquid Fund - Direct Plan - Growth Option
- 8,781
e) Quoted: Investment in Corporate Bonds
Nil (31 March 2017: 1,000) units of 8.57% Bond ` 5,00,000 each fully paid up in HDFC Ltd.
- 5,062
Nil (31 March 2017: 1,000) units of 8.29% NCD ` 1,000,000 each fully paid up in NABARD.
- 10,156
Nil (31 March 2017: 500) units of 8.40% NCD ` 1,000,000 each fully paid up in PFC Ltd.
- 5,073
f) Unquoted: Investment in equity shares
6,68,328 (31 March 2017: 6,68,328) equity shares of ` 10 each 67 67
fully paid-up in SWAWS Credit Corporation India Private Limited
g) Unquoted: Investment in debentures
22,278 (31 March 2017: 22,278) units of ` 100 each fully paid-up 22 22
12% Optionally Convertible Debentures in SWAWS Credit Corporation India Private Limited
(A) 52,672 195,094
Less: Provision for diminution in value (B) (89) (89)
52,583 195,005
Net Value ((A)-(B)) 52,583 195,005
Aggregate Amount of quoted investment (at Cost Price :Nil , (31 March 2017 : 45,000))
- 45,292
Aggregate Amount of unquoted investment (at Cost Price ` 52,242 (31 March 2017: ` 1,49,501))
52,583 149,713
Notes to Consolidated Financial Statements for the year ended 31 March 2018
117
17. TRADE RECEIVABLE
Particulars Non Current Current
31 March 2018` in lakhs
31 March 2017` in lakhs
31 March 2018` in lakhs
31 March 2017` in lakhs
Unsecured considered good unless otherwise stated - Debts outstanding for a period not exceeding six months from the date they are due for payment
- - 753 381
Total - - 753 381
18. CASH AND BANK BALANCES
Particulars Non Current Current
31 March 2018` in lakhs
31 March 2017` in lakhs
31 March 2018` in lakhs
31 March 2017` in lakhs
Cash and cash equivalents:
Cash on hand - - 834 948
Balances with Banks
- On Current accounts - - 14,101 7,714
- Deposits with original maturity of less than 3 months
- - 9,662 1,100
(A) - - 24,597 9,762
Other bank balances
- Deposits with original maturity for more than 12 months*
6,600 8,896 40,932 41,823
- Deposits with original maturity for more than 3 months but less than 12 months
- - 8,219 4,346
(B) 6,600 8,896 49,151 46,169
6,600 8,896 73,748 55,931
Less: amount disclosed under non current assets (refer note15) (C)
(6,600) (8,896) - -
Total ((A)+(B)+(C)) - - 73,748 55,931
*In respect of balance with Scheduled banks in Deposits, ` 247 lakhs (31 March 2017 : ` 224 lakhs) pertain to collateral deposit kept with banks as credit enhancements pertaining to securitisations.
19. REVENUE FROM OPERATIONS
Particulars For the year ended 31 March 2018
` in lakhs
For the year ended31 March 2017
` in lakhs
Interest income on portfolio loans 252,393 229,135
Income from assignment and securitisation of portfolio loans 1,318 3,156
Interest on bank deposits 4,625 5,822
Interest on current investments 3,673 3,458
Other operating revenue
Processing fees 14,503 13,936
Ancillary income from operations 5,367 4,655
Total 281,879 260,162
Notes to Consolidated Financial Statements for the year ended 31 March 2018
118
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20. OTHER INCOME Particulars For the year ended
31 March 2018 ` in lakhs
For the year ended31 March 2017
` in lakhs Profit on sale of investments 772 3,296 Profit on sale of fixed assets (net) 9 18 Commission Income 4,672 2,905 Miscellaneous income 1,343 327 Total 6,796 6,546
21. EMPLOYEE BENEFIT EXPENSE Particulars For the year ended
31 March 2018 ` in lakhs
For the year ended31 March 2017
` in lakhsSalaries, bonus and allowances 47,632 41,655 Contribution to provident and other funds 2,107 1,607 Gratuity expense (refer note 33) 329 437 Staff welfare expenses 1,737 1,436 Total 51,805 45,135
22. OTHER EXPENSESParticulars For the year ended
31 March 2018` in lakhs
For the year ended31 March 2017
` in lakhs Printing and stationery 1,273 1,187 Rent 3,654 3,364 Rates and taxes 435 349 Insurance 67 8 Business promotion expenses 1,170 304 Commission, Brokerage and Lead Generation 7,018 6,521 Legal charges 328 226 Professional Charges 7,948 6,738 Collection expenses 4,310 3,599 Courier charges 524 474 Repairs and maintenance
Office premises 1,516 1,397 Others 1,042 892
Directors' sitting fees 52 48 Travelling expenses 2,806 2,316 Telecommunication expenses 1,018 1,099 Payment to auditor (refer details below) 73 64 Electricity charges 928 926 Security charges 246 259 Recruitment expenses 346 199 Training expenses 230 387 Fees and subscription 41 49 Corporate social responsibility expenses 577 614 Miscellaneous expenses 110 263 Cost for shared services 768 405 Write off of fixed assets and intangible assets 24 4 Total 36,504 31,692
Notes to Consolidated Financial Statements for the year ended 31 March 2018
119
Particulars For the year ended 31 March 2018
` in lakhs
For the year ended31 March 2017
` in lakhs Payment to auditorsAudit fee 46 43 Tax audit fee 9 7 Limited review 9 6 In other capacity:Certification matters 6 4 Reimbursement of expenses 3 4
23. FINANCE COSTS
Particulars For the year ended31 March 2018
` in lakhs
For the year ended31 March 2017
` in lakhs
Interest
On loans from banks 40,979 51,364
On debentures 53,353 44,433
Discount on commercial papers 7,561 7,043
Amortisation of ancillary borrowing costs 483 590
Bank charges and Others 808 654
Total 103,184 104,084
24. PROVISIONS AND WRITE OFFS
Particulars For the year ended31 March 2018
` in lakhs
For the year ended31 March 2017
` in lakhs
Bad debts and write offs (net of recoveries)* 54,119 30,151
Provision against assigned loans 8 21
Provision against standard assets (17,208) 15,871
Provision against sub standard assets 1,909 4,738
Unrealised loss on investments (314) 314
Total 38,514 51,095
*Bad Debts and write offs are net of recovery of ` 24,283 lakhs (FY2017: ` 12,235 lakhs)
25. EARNINGS PER EQUITY SHARE
Particulars For the year ended31 March 2018
` in lakhs
For the year ended31 March 2017
` in lakhs
Profit after Tax 36,538 20,211
Weighted Avg. number of shares for Basic EPS 1,980,071,519 1,921,645,550
Weighted Avg. number of equity shares for Diluted EPS 1,980,071,519 1,921,645,550
Earnings per Share :
Basic (`) 1.85 1.05
Notes to Consolidated Financial Statements for the year ended 31 March 2018
120
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Particulars For the year ended31 March 2018
` in lakhs
For the year ended31 March 2017
` in lakhs
Diluted (`) 1.85 1.05
[Nominal value of shares ` 10 each (PY: ` 10)]
26. SEGMENT INFORMATIONThe Company operates in a single reportable segment i.e. financing, which has similar risks and returns for the purpose of AS - 17 on ‘Segment Reporting’ specified under section 133 of the Act, read with rules 7 of Companies (Accounts) Rules, 2014. The Company operates in single geographical segment, i.e. domestic.
27. RELATED PARTY DISCLOSURESA List of Related parties & relationshipsS. Noa Ultimate Holding Company
i Temasek Holdings (Private) Limitedb Holding Company
i Angelica Investments Pte Ltd, Singapore (‘Angelica’)ii Fullerton Financials Holdings Pte Ltd (Holding Company of Angelica)
c Fellow Subsidiaryi Fullerton Securities & Wealth Advisors Ltd.ii Fullerton Financial Holdings (International) Pte Ltdiii Temasek International (Private) Limited
d Subsidiaryi Fullerton India Foundation for Social & Economic Development (Non Profit Company)ii Fullerton India Home Finance Company Ltd.
e Key Management Personneli Mr. Shantanu Mitra, Chief Executive Officer and Managing Director (till 31 December 2017)ii Ms. Rajashree Nambiar, Chief Executive Officer and Managing Director (since 12 February 2018)iii Mr. Anindo Mukherjee, Interim CEO & Whole Time Director (1 Jan 2018 to 12 February 2018)
B Related Party Translations 31 March 2018 (` in lakhs)
31 March 2017 (` in lakhs) S. No Nature of Transactions
1 Reimbursement for expenses incurred on behalf of the CompanyFullerton Financials Holdings Pte Ltd 1 3Fullerton Financial Holdings (International) Pte Ltd 181 10
2 Expenses incurred by the Company on behalf of othersFullerton Securities & Wealth Advisors Ltd. 1 1
3 Issue of Share capital (including securities premium)Fullerton Financials Holdings Pte Ltd - 20,000
4 Salary and employee benefits #
Mr. Shantanu Mitra 2,067 1,172Ms. Rajashree Nambiar 38 -
# Managerial Remuneration excludes provision for gratuity since it is provided on actuarial for the company as a whole
Notes to Consolidated Financial Statements for the year ended 31 March 2018
121
28. LEASES a) Where the Company is the lessee: Premises are obtained on operating lease. The lease term ranges from 11 months to 134 months and are renewable/
cancellable at the option of the Company. Certain lease agreements contain clause for escalation of lease payments. There are no restrictions imposed by lease arrangements. There are no subleases. Lease payments during the year are charged to the Statement of Profit and Loss.
The following table sets forth, for the periods indicated, the details of future rentals payable on operating leases.
Particulars For the year ended 31 March 2018
` in lakhs
For the year ended 31 March 2017
` in lakhsOperating lease payments recognised during the year 4,038 3,812Minimum Lease Obligations Not later than one year 3,696 3,539Later than one year but not later than five years 9,724 10,198Later than five years 3,382 4,419
b) Where the Company is the lessor: The Company has entered into operating lease arrangement for servers which form part of the tangible assets. This lease has
a non-cancellable arrangement of 3 years. This lease contains a clause to enable upward revision of the rental charges on an annual basis according to prevailing market conditions.
The following table sets forth, for the periods indicated, the details of future rentals receivable on operating leases were company is a lessor:
Particulars For the year ended 31 March 2018
` in lakhs
For the year ended 31 March 2017
` in lakhsOperating lease rental recognised during the year 35 35Minimum Lease ObligationsNot later than one year 4 24Later than one year but not later than five years 7 11Later than five years - -
29. CASH AND CASH EQUIVALENTS FOR THE PURPOSE OF CASH FLOW STATEMENT Particulars For the year ended
31 March 2018` in lakhs
For the year ended 31 March 2017
` in lakhsCash and Bank Balance (refer note 18 ) 73,748 55,931 Less: Other bank balances (refer note 18) (49,151) (46,169)Balance considered as Cash and Cash Equivalents for Cash Flow Statement 24,597 9,762
30. CONTINGENT LIABILITY AND COMMITMENTSa) Contingent liabilities:
Description of the Liability For the year ended 31 March 2018
` in lakhs
For the year ended 31 March 2017
` in lakhsCredit enhancement provided by the Company for the loans under securitisation arrangements (including cash collaterals and interest subordination)
289 270
Contingent liability for litigations pending against the Company 20 23
b) Capital and other commitments(i) Estimated amount of contracts remaining to be executed on capital account and not provided for as at
31 March 2018 is ` 1,074 lakhs (31 March 2017: ` 1,848 lakhs).
Notes to Consolidated Financial Statements for the year ended 31 March 2018
122
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(ii) Loans sanctioned not yet disbursed as at 31 March 2018 were ` 10,801 lakhs (31 March 2017: ` 2,911 lakhs).
c) The Company’s pending litigations, having an impact on the financial position, comprise certain proceedings pending with Income Tax authorities. The Company has reviewed all such pending litigations and proceedings and has adequately provided wherever considered necessary.
31. EXPENDITURE IN FOREIGN CURRENCY
Particulars For the year ended 31 March 2018
` in lakhs
For the year ended 31 March 2017
` in lakhs
Travelling expenses 10 20
Ancillary borrowing costs 31 1,016
Training expenses 53 52
Repairs and maintenance 24 17
Directors' sitting fees and commission 42 35
Interest Expenses & Bank Charges 4,295 -
Total 4,455 1,140
32. EMPLOYEE STOCK APPRECIATION RIGHTSThe Company has an Employee Share based payment scheme, under which grants were made as per details provided below:
Grant 1 Grant 2 Grant 3 Grant 4 Grant 5 Grant 6 Grant 7 Grant 6A
Date of Grant 30 Nov 2011 1 April 2013 1 April 2013 1 April 2014 1 April 2015 1 April 2016 1 April 2017 1 April 2017
Value of the Grant ` 568 Lakhs ` 706 Lakhs ` 741 Lakhs ` 750 Lakhs ` 800 Lakhs ` 935 Lakhs ` 960 Lakhs `1,541 Lakhs
Performance Condition
Achievement of Profit before tax (PBT) and Return on Equity (ROE) targets as per approved business plan Achievement of PAT & ROE
targets
Achievement of specific targets
Graded Vesting (subject to achievement of performance condition given above)
Tranche I: 33% vesting on 1st
December 2013
Tranche I: 33% vesting on 1st
December 2015
Tranche I: 33% vesting on 1st
December 2016
Tranche I: 33% vesting on 1st
December 2017
Tranche I: 33% vesting on 1st
December 2018
Tranche I: 33% vesting on 1st
December 2019
Tranche I: 33% vesting on 1st
December 2020
Tranche I: 50% vesting on 1st
December 2020
Tranche II: 33% vesting on 1st
December 2014
Tranche II: 33% vesting on 1st
December 2016
Tranche II: 33% vesting on 1st
December 2017
Tranche II: 33% vesting on 1st
December 2018
Tranche II: 33% vesting on 1st
December 2019
Tranche II: 33% vesting on 1st
December 2020
Tranche II: 33% vesting on 1st
December 2021
Tranche II: 50% vesting on 1st
December 2021
Tranche III: 34% vesting on 1st
December 2015
Tranche III: 34% vesting on 1st
December 2017
Tranche III: 34% vesting on 1st
December 2018
Tranche III: 34% vesting on 1st
December 2019
Tranche III: 34% vesting on 1st
December 2020
Tranche III: 34% vesting on 1st
December 2021
Tranche III: 34% vesting on 1st
December 2022
-
Vesting period (including performance period)
Tranche I: 2 years Tranche I: 2 years 8 months
Tranche I: 3 years 8 months
Tranche I: 3 years 8 months
Tranche I: 3 years 8 months
Tranche I: 3 years 8 months
Tranche I: 3 years 8 months
Tranche I: 3 years 8 months
Tranche II: 3 years
Tranche II: 3 years 8 months
Tranche II: 4 years 8 months
Tranche II: 4 years 8 months
Tranche II: 4 years 8 months
Tranche II: 4 years 8 months
Tranche II: 4 years 8 months
Tranche II: 4 years 8 months
Tranche III: 4 years
Tranche III: 4 years 8 months
Tranche III: 5 years 8 months
Tranche III: 5 years 8 months
Tranche III: 5 years 8 months
Tranche III: 5 years 8 months
Tranche III: 5 years 8 months
-
Exercise period Within 30 days from each vesting date but not later than 2 years from the date of last vesting except for Grant 1 & 6A where period is 3 years
Method of Settlement
Cash Payout
The estimated fair value of the grant at a notional value of ` 10 per unit (as at the date of grant) is as below:
Particulars Grant 1 Grant 2 Grant 3 Grant 4 Grant 5 Grant 6 Grant 7 Grant 6AAs at 31 March 2018 ` 32.35 ` 23.20 ` 23.20 ` 19.76 ` 15.96 ` 12.54 ` 11.39 ` 11.39As at 31 March 2017 ` 27.56 ` 19.97 ` 19.97 ` 17.01 ` 13.74 ` 10.89 Nil NilAs at 31 March 2016 ` 24.97 ` 18.22 ` 18.22 ` 15.52 ` 12.54 Nil Nil NilAs at 31 March 2015 ` 19.49 ` 14.53 ` 14.53 ` 12.38 Nil Nil Nil NilAs at 31 March 2014 ` 15.36 ` 11.74 ` 11.74 Nil Nil Nil Nil NilAs at 31 March 2013 ` 12.78 Nil Nil Nil Nil Nil Nil NilAs at 31 March 2012 ` 10.42 Nil Nil Nil Nil Nil Nil NilExercise price Vest 1 ` 12.78 ` 14.53 ` 18.22 ` 17.01 Nil Nil Nil NilExercise price Vest 2 ` 15.36 ` 18.22 ` 19.97 Nil Nil Nil Nil NilExercise price Vest 3 ` 19.49 ` 19.97 Nil Nil Nil Nil Nil Nil
Notes to Consolidated Financial Statements for the year ended 31 March 2018
123
Fair value is computed using the method provided in the scheme for estimating the valuation of the grant which is linked to the Net Book Value of the business.
Adjustment has been made for the resignations during the year ended 31 March 2018 and the consequential impact of forfeiture of the grant.
The movement of the stock appreciation rights during the year is as under:
Particulars (No. of Options) 31 March 2018` in lakhs
31 March 2017` in lakhs
Grants Outstanding at beginning of Year 25,740,500 23,645,400
Options granted during Year 25,010,000 9,350,000
Grants forfeited on resignation of employees 12,560,600 3,364,900
Grants lapsed during the year 3,052,500 -
Grants exercised 4,050,075 3,890,000
Grants outstanding – Unvested as on 31 March 2018 29,880,925 24,820,100
Grants outstanding –Vested and Exercisable as on 31 March 2018 1,206,400 920,400
Expense arising from the grants till 31 March 2018 (` in lakhs) 497 931
33. RETIREMENT AND OTHER EMPLOYEE BENEFITSThe Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service.
The following tables summaries the components of net benefit expense recognised in the Statement of Profit and Loss and the amounts recognised in the balance sheet for the plan.
Statement of Profit and Loss Gratuity expense (recognised in Employee benefit expense):
Particulars 31 March 2018` in lakhs
31 March 2017` in lakhs
Current service cost 335 173
Interest cost on benefit obligation 118 90
Expected return on plan assets (125) (87)
Net actuarial (gain)/loss recognised in the year (1) 261
Past service cost - -
Net Benefit Expense 328 437
Actual return on plan assets 106 178
Balance SheetDetails of Provision for gratuity:
Particulars 31 March 2018` in lakhs
31 March 2017` in lakhs
Defined benefit obligation 1,941 1,639
Fair value of plan assets 2,019 1,721
Less: Unrecognised Past Service Cost - -
Plan asset/(liability) 78 82
Notes to Consolidated Financial Statements for the year ended 31 March 2018
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Changes in the present value of the defined benefit obligation are as follows:
Particulars 31 March 2018` in lakhs
31 March 2017` in lakhs
Opening defined benefit obligation 1,639 1,154
Interest cost 118 90
Current service cost 335 173
Transfer (out)/in - -
Benefits paid (133) (131)
Actuarial (gains)/losses on obligation (20) 353
Closing defined benefit obligation 1,939 1,639
Changes in the fair value of plan assets are as follows:
Particulars 31 March 2018` in lakhs
31 March 2017` in lakhs
Opening fair value of plan assets 1,722 1,110Expected return 125 87Contributions by employer 324 565Benefits paid (133) (131)Actuarial gains/(losses) (19) 92Closing fair value of plan assets 2,019 1,722
The major categories of plan assets as a percentage of the fair value of total plan assets are as follows:
Particulars 31 March 2018 31 March 2017Investments with insurer % 82% 96%Investments with banks % 16% 1%With FIHFC % 2% 3%
The overall expected rate of return on assets is determined based on the market prices prevailing on that date applicable to the period over which obligation is to be settled. There has been a significant change in the expected rate of return on assets due to the stock market scenario.
The principal assumptions used in determining gratuity liability for the Company’s plans are shown below:
Particulars 31 March 2018 31 March 2017FICCL Discount rate 7.68% 7.22%
Expected rate of return on assets 7.68% 7.22%Employee Turnover Category 1 - For basic upto ` 1.2 lakhs
Upto 4 yrs 49.80% and 5 yrs & above 2% at each ageCategory 2 - For basic more than ` 1.2 lakhsUpto 4 yrs 23.3% and 5 yrs & above 2% at each age
Category 1 - For basic upto ` 1.2 lakhsUpto 4 yrs 42.30% and 5 yrs & above 2% at each ageCategory 2 - For basic more than ` 1.2 lakhsUpto 4 yrs 25.3% and 5 yrs & above 2% at each age
Future Salary rise 10% 10%FIHFCL Discount rate 6.93% 7.09%
Employee Turnover Category 1- For basic upto ` 1.2 lakhsUpto 4 yrs 61.30% p.a and 5 years & above 2.00% at each stage.Category 2 - For basic more than ` 1.2 lakhsUpto 4 yrs 43.5% and 5 yrs & above 2% at each age
For service 4 years and below 25.30% p.a.For service 5 years and above 2.00% p.a.
Future Salary rise 10.00% 10.00%
The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.
Notes to Consolidated Financial Statements for the year ended 31 March 2018
125
Amounts for the current period and previous periods are as follows:
Particulars 31 March 2018` in lakhs
31 March 2017` in lakhs
31 March 2016` in lakhs
31 March 2015` in lakhs
31 March 2014` in lakhs
Defined benefit obligation 1,941 1,639 1,154 861 581Plan assets 2,019 1,722 1,110 691 310Surplus/(deficit) (78) (82) (45) (170) (271)Experience adjustments on plan liabilities
164 215 (13) 498 117
Experience adjustments on plan assets
(19) 92 (15) 475 (5)
34. The Company identifies suppliers registered under the Micro, Small and Medium Enterprises Development Act, 2006,(MSMED) by obtaining confirmations from all suppliers. Based on the information received by the Company, some of the suppliers have confirmed to be registered under MSMED Act, 2006. Accordingly the disclosure relating to amount unpaid as at the year ended together with interest paid/payable is disclosed below:
Sr No
Particulars 31 March 2018` in lakhs
31 March 2017` in lakhs
1 The principal amount and the interest due thereon (to be shown separately) remaining unpaid to any supplier as at the end of each accounting year
94 69
2 The amount of interest paid by the buyer in terms of section 16 of the Micro Small and Medium Enterprise Development Act, 2006, along with the amounts of the payment made to the supplier beyond the appointed day during each accounting year
- -
3 The amount of interest due and payable for the period of delay in making payment (which have been paid but beyond the appointed day during the year) but without adding the interest specified under Micro Small and Medium Enterprise Development Act, 2006.
- -
4 The amount of interest accrued and remaining unpaid at the end of each accounting year;
- -
5 The amount of further interest remaining due and payable even in the succeeding years, until such date when the interest dues as above are actually paid to the small enterprise for the purpose of disallowance as a deductible expenditure under section 23 of the Micro small and Medium Enterprise Development Act, 2006.
- -
35. During the year FICCL has utilised MAT credit entitlement of ` 569 lakhs against provision for current tax of ` 12,143 lakhs (including adjustment of tax relating to earlier years).
36. The subsidiary, FIFSED is not a going concern. It had surrendered the license granted to it on 22 December 2008, under Section 8 of the Companies Act, 2013, and currently is undergoing the process for converting itself into a private limited company vide order issued by the Regional Director, Western Region, on 8 December 2017.
37. Additional disclosures required by Schedule III of the Act
Name of the Entity Net Assets (Total Assets minus Total Liabilities)
Share in Profit or Loss
As % ofconsolidated
net assets
Amount(` in lakhs)
As % ofconsolidatedprofit or loss
Amount(` in lakhs)
Parent subsidiariesIndian
1) Fullerton India Home Finance Company Limited 17.4% 70,048 3.0% 1,1022) Fullerton India Foundation for Social and Economic Development
0.0% 2 0.0% -
Total 17.4% 70,050 3.0% 1,102
Notes to Consolidated Financial Statements for the year ended 31 March 2018
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38. CSR EXPENSES i) Gross amount required to be spent by the Group during the year ` 708 lakhs
ii) Amount spent during the year:
Particulars Amount spent in cash ` in lakhs
Yet to be paid in cash ` in lakhs
Total ` in lakhs
i) Construction / acquistion of any asset - - -ii) On purpose other than (i) above 606 - 606
The company CSR policy is both community and environment- based. Various programmes are planned in areas as diverse as health, educations, livelihood generations, skill developments and rural development which company intented to spend in upcoming year.
39. Below disclosures for SBN relates to specific period as notified, however no such details required in current financial year 2017-18.
Details of Specified Bank Notes (SBN) held and transacted during the period from 8 November, 2016 to 30 December, 2016 as required by notification no. G.S.R 308 (E) dated 30 March, 2017.
Particulars SBNs Other denomination Notes
Total
Closing cash in hand as on November 8, 2016 2,718 596 3,314(+) Permitted receipts - 42,300 42,300(+) Non-permitted receipts (refer Note a & b below) 3,151 - 3,151(-) Permitted payments - 1,609 1,609(-) Amount deposited in Banks 5,868 40,373 46,241Closing cash in hand as on December 30, 2016 - 914 914
a) In the ordinary course of business, the Group collected cash in Specified Bank Notes against loan obligations of the Group aggregating ` 2,862 lakhs and in addition, loan borrowers of the Group have directly deposited cash towards their loan repayments into the collection bank accounts of the Group with various banks, aggregating ` 289 lakhs, during the period from 9 November, 2016 to 30 December, 2016. The Group has relied on the denomination wise details provided by its banks for the disclosure of Specified Bank Notes.
b) The Group had issued an advisory to its collection team and branches on 9 November, 2016 to refrain from collection of Specified Bank Notes. A major portion of amount mentioned in note a) above relates to collections made before such advisory was issued and represent customer loan repayments in rural branches across the country where collections normally occur, through field collection teams.
40. There was no amount due and outstanding to be credited to Investor Education and Protection Fund as at 31 March, 2018.
41. The Group has reclassified/regrouped previous year figures to conform to current year’s classification, where applicable.
B S R & Co. LLP For and on behalf of the Board of Directors ofChartered Accountants Fullerton India Credit Company LimitedFirm No : 101248W/W-100022
Sd/-Milind Ranade
Sd/- Gan Chee Yen
Sd/- Rajashree Nambiar
Partner Chairman CEO & Managing DirectorMembership No. 100564 DIN : 03602857 DIN : 06932632
Sd/- Pankaj MalikChief Financial Officer & Company SecretaryICSI Reg No. : A-19125
Place : Mumbai Place : MumbaiDate : 18 May, 2018 Date : 18 May, 2018
Notes to Consolidated Financial Statements for the year ended 31 March 2018
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To the Members of Fullerton India Credit Company Limited
Report on the audit of the standalone financial statements We have audited the accompanying standalone financial
statements of Fullerton India Credit Company Limited (the ‘Company’), which comprise the Balance Sheet as at 31 March 2018, the Statement of Profit and Loss and the Cash Flow Statement for the year then ended, and a summary of the significant accounting policies and other explanatory information.
Management’s responsibility for the standalone financial statements The Company’s Board of Directors is responsible for the
matters stated in Section 134 (5) of the Companies Act, 2013 (the ‘Act’) with respect to the preparation of these standalone financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the standalone financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
In preparing the standalone financial statements, management is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
Auditor’s responsibility Our responsibility is to express an opinion on these
standalone financial statements based on our audit. We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made thereunder.
We conducted our audit of the standalone financial statements in accordance with the Standards on Auditing, specified under Section 143 (10) of the Act, issued by the Institute of Chartered Accountants of India (the ‘ICAI’).
Independent Auditors’ Report
Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the standalone financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the standalone financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the standalone financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company’s preparation of the standalone financial statements that give a true and fair view, in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Company’s Directors, as well as evaluating the overall presentation of the standalone financial statements.
We are also responsible to conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in the auditor’s report to the related disclosures in the standalone financial statements or, if such disclosures are inadequate, to modify the opinion. Our conclusions are based on the audit evidence obtained up to the date of the auditor’s report. However, future events or conditions may cause an entity to cease to continue as a going concern.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the standalone financial statements.
OpinionIn our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at 31 March 2018, and its profit and its cash flows for the year ended on that date.
Other matterAttention is drawn to the fact that the figures for the year ended 31 March 2017 as reported in these standalone financial statements were audited by another auditor who expressed an unmodified opinion on those standalone financial statements dated 18 May 2017.
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Report on other legal and regulatory requirementsAs required by the Companies (Auditor’s Report) Order, 2016 (‘the Order’) issued by the Central Government of India in terms of sub section (11) of Section 143 of the Act, we give in the “Annexure A”, a statement on the matters specified in paragraph 3 and 4 of the Order, to the extent applicable.
As required by Section 143 (3) of the Act, based on our audit we report that:
a) we have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit;
b) in our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books;
c) the Balance Sheet, the Statement of Profit and Loss, and Cash Flow Statement dealt with by this report are in agreement with the books of account;
d) in our opinion, the aforesaid standalone financial statements comply with the Accounting Standards specified under Section 133 of the Act;
e) on the basis of the written representations received from the Directors as on 31 March 2018 taken on record by the Board of Directors, none of the Directors is disqualified as on 31 March 2018 from being appointed as a Director in terms of Section 164 (2) of the Act;
f ) with respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate Report in “Annexure B”; and
g) with respect to the other matters to be included in the Auditor’s Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, as amended, in our opinion and to the best of our information and according to the explanations given to us:
i. the Company has disclosed the impact of pending litigations on its financial position in its financial statements – Refer Note 30 to the standalone financial statements;
ii. the Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses;
iii. there are no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company; and
iv. The disclosures in the standalone financial statements regarding holdings as well as dealings in specified bank notes during the period from 8 November 2016 to 30 December 2016 have not been made since they do not pertain to the financial year ended 31 March 2018.
For B S R & Co. LLP Chartered Accountants Firm’s Registration No: 101248W/W-100022
Sd/- Milind Ranade Partner Membership No: 100564
Place: Mumbai Date:18 May, 2018
Independent Auditors’ Report
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i. (a) According to the information and explanation given to us, the Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.
(b) According to the information and explanation given to us, the Company has a regular program of physical verification of its fixed assets by which all the fixed assets are verified annually. In our opinion, this periodicity of physical verification is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed on such verification.
(c) According to the information and explanation given by the management, the title deeds of immovable properties included in fixed assets are held in the name of the Company.
ii. The Company is in the business of providing non banking financial services and consequently, does not hold any inventories. Thus paragraph 3 (ii) of the Order is not applicable to the Company.
iii. According to the information and explanation given to us, the Company has not granted any loans, secured or unsecured to companies, firms, limited liability partnerships or other parties covered in the register maintained under Section 189 of the Act. Thus, paragraph 3 (iii) of the Order are not applicable to the Company.
iv. To the best our knowledge and according to the information and explanation provided to us, the Company has not granted any loans, made investments, given any guarantee or provided any security under the in connection with loan to any of its Directors or to any person in whom the Director is interested. The Company has complied with the provisions of Section 186 of the Act, with respect to line of credit given and investments made, as applicable.
Annexure A to the Independent Auditors’ Report – 31 March 2018(Referred to in our report of even date)
v. In our opinion and according to the information and explanations given to us, the Company has not accepted deposits as per the directives issued by Reserve Bank of India and the provisions of Sections 73 to 76 or any other relevant provisions of the Act and Rules framed there under. Thus, paragraph 3 (v) of the Order is not applicable to the Company.
vi. To the best of our knowledge and as explained, the Central Government has not prescribed the maintenance of cost records under Section 148 (1) of the Act, for any of the services rendered by the Company. Accordingly, paragraph 3 (vi) of the Order is not applicable to the Company.
vii. (a) According to the information and explanations given to us and on the basis of our examination of the books of account, amounts deducted / accrued in the books of account in respect of undisputed statutory dues including employees’ state insurance, income tax, service tax, goods and services tax, value added tax, cess and other material statutory dues have been regularly deposited during the year by the Company with the appropriate authorities except provident fund which is deposited with appropriate authority with few delay.
As explained to us, the Company did not have any dues on account of sales tax, wealth tax, duty of customs and duty of excise.
According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, employees’ state insurance, income tax, service tax, goods and services tax, value added tax, cess and other material statutory dues were in arrears as at 31 March 2018 for a period of more than six months from the date they became payable.
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(b) According to the records of the Company, the dues outstanding of provident fund, employees’ state insurance, income tax, service tax, goods and services tax, value added tax ,cess on account of dispute, are as follows :
Nature of the Statute
Nature of dues
Amount under dispute (` in lakhs)
Period to which it relates
Forum where dispute is pending
Chapter V of the Finance Act, 1994
Service tax 2 2006-07 Commissioner of Central Excise (Appeals)
Chapter V of the Finance Act, 1994
Service tax 33 (amount paid under protest ` 35 lakhs)
2006-07 Commissioner of Central Excise (Appeals)
Chapter V of the Finance Act, 1994
Service tax 336 2007-11 Customs, Excise and Service Tax Appellate Tribunal
viii. On the basis of examination of relevant records and according to the information and explanations given to us, the Company has not defaulted in repayment of loans or borrowing to a financial institution, bank or dues to debenture holders. During the year, the Company did not have any loans or borrowing from the Government.
ix. In our opinion and according to the information and explanations given to us, the Company has not raised any money by way of initial public offer or further public offer (including debt instrument).
Further, monies raised by the Company by way of debt instruments and term loans were applied for the purpose for which those were raised, though idle / surplus funds which were not required for immediate utilisation were gainfully invested in liquid assets payable on demand.
x. During the course of our examination of the books and records of the Company, carried out in accordance with generally accepted auditing practices in India, and according to the information and explanations given to us, except for ` 29 lakhs as disclosed in note 39 to the standalone financial statements, we have neither come across any instance of fraud by the Company or on the Company by its officer or employees, noticed or reported during the year, now have been informed of such case by the management.
xi. According to the information and explanations given to us and based on our examination of the records of the Company, the Company has paid/provided for managerial remuneration in accordance with the requisite approvals mandated by the provisions of Section 197 read with Schedule V to the Act.
xii. In our opinion and according to the information and explanations given to us, the Company is not a Nidhi Company as per the Act. Thus, paragraph 3 (xii) of the Order is not applicable to the Company.
xiii. According to the information and explanations given to us and on the basis of our examination of the records of the Company, transactions entered into by the Company with the related parties are in compliance with Sections 177 and 188 of the Act, where applicable and details of such transactions have been disclosed in the standalone financial statements as required by the applicable accounting standards.
xiv. According to the information and explanation given to us and based on our examination of the records of the Company, the Company has not made preferential allotment or private placement of shares or allotted fully or partly convertible debentures during the year. Thus, paragraph 3 (xiv) of the Order is not applicable to the Company.
xv. According to the information and explanation given to us and based on our examination of the records of the Company, the Company has not entered into non-cash transactions with Directors or person connected with him. Thus, paragraph 3 (xv) of the Order is not applicable to the Company.
xvi. On the basis of examination of relevant records and according to the information and explanation given to us, the Company is required to be registered under Section 45-IA of the Reserve Bank of India Act, 1934 and holds a valid certificate of registration under the same.
For B S R & Co. LLP Chartered Accountants Firm’s Registration No: 101248W/W-100022
Sd/- Milind Ranade Partner Membership No: 100564
Place: Mumbai Date: 18 May, 2018
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We have audited the internal financial controls over financial reporting of Fullerton India Credit Company Limited (the ‘Company’) as of 31 March 2018 in conjunction with our audit of the standalone financial statements of the Company for the year ended on that date.
Management’s responsibility for internal financial controlsThe Company’s Board of Directors is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the ‘Guidance Note’) issued by the Institute of Chartered Accountants of India (the ‘ICAI’). These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to Company’s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013 (the ‘Act’).
Auditor’s responsibilityOur responsibility is to express an opinion on the Company’s internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note and the Standards on Auditing specified under Section 143 (10) of the Act, to the extent applicable to an audit of internal financial controls, both applicable to an audit of internal financial controls and both issued by the ICAI. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal controls based on the assessed risk. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the standalone financial statements, whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Company’s internal financial controls system over financial reporting.
Annexure B to the Independent Auditors’ Report – 31 March 2018(Referred to in our report of even date)
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 (‘the Act’)
Meaning of internal financial controls over financial reportingThe company’s internal financial control over financial reporting is a process designed to provide a reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and Directors of the company and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the standalone financial statements.
Inherent limitations of internal financial controls over financial reportingBecause of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
OpinionIn our opinion, the Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at 31 March 2018 based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note issued by the ICAI.
For B S R & Co. LLP Chartered Accountants Firm’s Registration No: 101248W/W-100022
Sd/- Milind Ranade Partner Membership No: 100564
Place: Mumbai Date: 18 May 2018
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Notes 31 March 2018` in lakhs
31 March 2017` in lakhs
EQUITY AND LIABILITIESShareholders’ fundsShare capital 3 198,007 198,007
Reserves and surplus 4 87,182 52,395
Non-current liabilitiesLong-term borrowings 5 987,581 798,681
Other long term liabilities 6 14,824 10,336
Long-term provisions 7 18,842 27,624
Current liabilitiesShort-term borrowings 8 161,486 117,335
Other current liabilities 9 320,172 254,490
Short-term provisions 7 2,071 8,478
TOTAL 1,790,165 1,467,346ASSETSNon-current assetsFixed assets
Tangible assets 10 4,812 4,368
Intangible assets 11 2,254 2,627
Capital Work in Progress 10 & 11 349 360
Non-current investments 12 36,105 36,105
Deferred tax asset (Net) 13 8,742 15,804
Long-term loans and advances 14 1,074,745 754,911
Other non-current assets 15 20,122 12,111
Current assetsCurrent investments 16 47,675 166,332
Trade receivables 17 726 381
Cash and bank balances 18 68,331 53,327
Short-term loans and advances 14 497,963 396,182
Other current assets 15 28,341 24,838
TOTAL 1,790,165 1,467,346Significant accounting policies 2.1
The accompanying notes are an integral part of the financial statementsAs per our report of even date
B S R & Co. LLP For and on behalf of the Board of Directors ofChartered Accountants Fullerton India Credit Company LimitedFirm No : 101248W/W-100022
Sd/-Milind Ranade
Sd/- Gan Chee Yen
Sd/- Rajashree Nambiar
Partner Chairman CEO & Managing DirectorMembership No. 100564 DIN : 03602857 DIN : 06932632
Sd/- Pankaj MalikChief Financial Officer & Company SecretaryICSI Reg No. : A-19125
Place : Mumbai Place : MumbaiDate : 18 May, 2018 Date : 18 May, 2018
Balance Sheet as at 31 March 2018
133
Notes 31 March 2018` in lakhs
31 March 2017` in lakhs
IncomeRevenue from operations 19 268,465 257,937
Other income 20 6,438 6,320
Total revenue (I) 274,903 264,257
ExpensesEmployee benefit expense 21 48,831 43,613
Other expenses 22 34,076 30,691
Depreciation and amortization expense 10 & 11 3,341 2,778
Finance costs 23 97,176 103,437
Provisions and write-offs 24 36,839 50,617
Total expenses (II) 220,263 231,136 Profit before tax (III) =(I)-(II) 54,640 33,121 Tax expenses Current tax 13,271 18,641
Adjustment of tax relating to earlier periods (1,128) 242
Deferred tax credit 7,062 (7,191)
Total tax expense (IV) 19,205 11,692 Profit for the year (III)-(IV) 35,435 21,429 Earnings per equity share (`) 25
Basic (Computed on the basis of total profit for the year) 1.79 1.12
Diluted (Computed on the basis of total profit for the year) 1.79 1.12
Significant accounting policies 2.1
The accompanying notes are an integral part of the financial statementsAs per our report of even date
B S R & Co. LLP For and on behalf of the Board of Directors ofChartered Accountants Fullerton India Credit Company LimitedFirm No : 101248W/W-100022
Sd/-Milind Ranade
Sd/- Gan Chee Yen
Sd/- Rajashree Nambiar
Partner Chairman CEO & Managing DirectorMembership No. 100564 DIN : 03602857 DIN : 06932632
Sd/- Pankaj MalikChief Financial Officer & Company SecretaryICSI Reg No. : A-19125
Place : Mumbai Place : MumbaiDate : 18 May, 2018 Date : 18 May, 2018
Statement of Profit and Loss for the year ended 31 March 2018
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31 March 2018` in lakhs
31 March 2017` in lakhs
A. Cash flow from operating activities:
Profit before tax 54,640 33,121
(Includes amount spent towards Corporate Social Responsibility expense as per Section 135 (5) of the Companies Act, 2013 (Refer Note 36))
Adjustment for computing operating profit before working capital changes:
Depreciation and amortization 3,340 2,778
Interest on fixed deposits and bonds (5,654) (6,340)
Interest on investments (1,723) (2,798)
Profit on sale of fixed assets (9) (18)
Write off of fixed assets & intangible assets 25 4
Profit on sale of investments (536) (3,060)
Unrealised loss on investments (314) 314
Provision for standard/sub standard assets and bad debts written off 37,153 50,303
Provision for employees benefits - (42)
Amortisation of ancillary borrowing costs 463 586
Operating profit before working capital changes 87,385 74,848
Movements in working capital :
- (Increase)/decrease in long term loans and advances (362,573) (2,165)
- (Increase)/decrease in short term loans and advances (118,906) (53,635)
- (Increase)/decrease in other non current assets (7,188) (104)
- (Increase)/decrease in other current assets (4,501) (2,633)
- (Increase)/decrease in trade receivables (345) 276
- Increase/(decrease) in current liabilities 39,525 (18,690)
- Increase/(decrease) in other long term liabilities 4,487 1,872
Cash generated from operations (362,116) (230)
- Income taxes paid (4,892) (10,548)
Net cash from operating activities (A) (367,008) (10,779)
B. Cash flow from investing activities:
Purchase of fixed assets and intangibles (3,148) (4,304)
Proceeds from sale of fixed assets 16 39
Purchase of non-current investments - (100)
Investments in subsidiary company - (30,000)
Purchase of current investments (1,128,621) (2,482,833)
Sale/maturity of investments 1,249,483 2,401,165
Fixed deposit placed during the year (62,064) (50,641)
Fixed deposit matured during the year 61,946 68,502
Interest received on fixed deposits and bonds 6,333 5,456
Interest received on investments 640 185
Net cash from investing activities (B) 124,585 (92,531)
C. Cash flow from financing activities
Proceeds from issuance of share capital (including share premium) - 20,000
Proceeds from long term borrowings from banks and financial institutions 453,400 310,030
Cash Flow Statement for the year ended 31 March 2018
135
31 March 2018` in lakhs
31 March 2017` in lakhs
Proceeds from short term borrowings from banks and financial institutions 466,000 115,500
Repayment of long term borrowings from banks and financial institutions (238,355) (225,376)
Repayment of short term borrowings from banks and financial institutions (421,849) (119,855)
Payment of ancillary borrowing costs (683) (1,491)
Net cash used in financing activities (C ) 258,513 98,808
Net increase/(decrease) in cash and cash equivalents (A)+(B)+(C)
16,090 (4,502)
Cash and cash equivalents as at the beginning of the year 8,158 12,660
Cash and cash equivalents as at the end of the year (refer note 29) 24,248 8,158
Components of cash and cash equivalents as at the end of the year
Cash and cheques on hand 834 948
With banks - on current account 13,752 7,210
- on deposit account 9,662 -
Cash and cash equivalents as at the end of the year 24,248 8,158
Significant accounting policies 2.1
The accompanying notes are an integral part of the financial statementsAs per our report of even date
B S R & Co. LLP For and on behalf of the Board of Directors ofChartered Accountants Fullerton India Credit Company LimitedFirm No : 101248W/W-100022
Sd/-Milind Ranade
Sd/- Gan Chee Yen
Sd/- Rajashree Nambiar
Partner Chairman CEO & Managing DirectorMembership No. 100564 DIN : 03602857 DIN : 06932632
Sd/- Pankaj MalikChief Financial Officer & Company SecretaryICSI Reg No. : A-19125
Place : Mumbai Place : MumbaiDate : 18 May, 2018 Date : 18 May, 2018
Cash Flow Statement for the year ended 31 March 2018
136
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1. BACKGROUND Fullerton India Credit Company Limited (‘the Company’) is a public limited company domiciled in India and incorporated
under the provisions of Companies Act, 1956. The Company is a non-banking financial company (‘NBFC’) registered as Deposit taking NBFC vide Registration no A-07-00791 dated 27 May, 2011 with the Reserve Bank of India (‘RBI’). The Company provides loans to small and medium enterprises for working capital and growth, loans for commercial vehicles, two-wheelers, home improvement loans, loans against property, personal loans, working capital loans for urban salaried , self-employed , loans for rural livelihood advancement and financing of various rural micro enterprises (collectively referred to as “Portfolio Loans”).
2. BASIS OF PREPARATION The accompanying standalone financial statements (the ‘Financial Statements’) of the Company are prepared and presented
in accordance with generally accepted accounting principles (GAAP) in India and comply in all material respects with the Accounting Standards notified under section 133 of the Companies Act, 2013 (‘the Act’) , the relevant provisions of the Act and guidelines issued by the RBI as applicable to an NBFCs.
The financial statements are prepared on going concern basis, which assumes that the Company will continue in operational existence for the foreseeable future. The financial statements have been prepared on an accrual basis and under the historical cost convention except as detailed in note 2.1(i). The accounting policies adopted in the preparation of financial statements are consistent with those of the previous year.
These financial statements are presented in Indian Rupees rounded to the nearest lakhs except otherwise stated.
2.1 Significant Accounting Policies
(a) Use of estimates
The preparation of financial statements requires the management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent liabilities on the date of the financial statements and reported amount of revenues and expenses during the reporting year. The estimates and assumptions used in the accompanying financial statements are based upon the management’s evaluation of the relevant facts and circumstances as on the date of the financial statements. Actual results could differ from the estimates. Any change to accounting estimates is recognised prospectively in current and future periods.
(b) Tangible fixed assets
i. Leased assets
All assets given on operating lease are shown as fixed assets net of accumulated depreciation and impairment loss, if any. Cost includes purchase price and directly attributable cost of bringing the asset to its working condition for the intended use. Initial direct costs such as legal costs, brokerage costs, etc. are recognised immediately in the Statement of Profit and Loss.
ii. Own assets All tangible assets are carried at cost, net of accumulated depreciation and impairment loss, if any. Cost includes
purchase price and directly attributable cost of bringing the asset to its working condition for the intended use.
Gain or loss arising from disposable of a fixed asset is measured as the difference between the net disposal proceeds and the carrying amount of the asset and is recognised in the Statement of Profit and Loss when the asset is disposed.
Capital work in progress: Projects under which tangible fixed assets are not yet ready for their intended use are carried at cost, comprising direct cost and related incidental expenses.
(c) Intangible assets
Costs relating to acquisition and development of computer software are capitalised in accordance with the AS 26 ‘Intangible Assets’ issued by the Institute of Chartered Accountants of India (‘ICAI’) and are recognised where it is probable that the future economic benefit attributable to the assets will flow to the Company and its cost can be reliably measured. Intangible assets are stated at cost of acquisition less accumulated depreciation. Intangible assets not ready for the intended use on the date of balance sheet are disclosed as “Work in progress”.
Notes to Financial Statements for the year ended 31 March 2018
137
(d) Depreciation/Amortization
Depreciation on fixed assets is provided on straight-line basis as per the estimated useful life and in the manner prescribed in Schedule II of the Companies Act, 2013 except for certain assets.
i. Depreciation on tangible fixed assets is provided using the Straight Line Method (‘SLM’) as per the useful life of the asset estimated by the management.
Useful life estimated by the Company
(in years)
Useful Life as per Schedule II
(in years)
Computer Server and Other Accessories * 4 6
Computer Desktop and Laptops * 3 3
Furniture and Fixtures * 5 10
Office Equipments * 5 5
Handheld devices * 2 5
Vehicles * 4 8
*Depreciation on tangible fixed assets has been provided on the straight-line method as per the useful life prescribed in Schedule II to the Companies Act, 2013 and are based on internal assessment, taking into account the nature of the asset, the estimated usage of the asset, the operating conditions of the asset, past history of replacement, anticipated technological changes, manufacturers warranties and maintenance support, etc.
Leasehold improvements are amortized over the period of the lease subject to a maximum lease period of 66 months.
Tangible assets having an original cost up to ` 5,000 individually are depreciated fully in the year of purchase.
ii. Intangible assets are amortised using the straight line method over a period of five years commencing from the date on which such asset is first installed.
The Company provides pro-rata depreciation from the day the asset is put to use and for any asset sold, till the date of sale.
(e) Impairment
The carrying amounts of assets are reviewed at each balance sheet date if there is any indication of impairment, based on internal/external factors. An impairment loss is recognised,in the Statement of Profit and loss, wherever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of the asset’s net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and risk specific to the asset.
After impairment, depreciation is provided on the revised carrying amount of the asset over its remaining useful life.
If at the balance sheet date there is an indication that a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount subject to maximum of depreciable historical cost.
(f) Investments
Investments are classified as long term or current based on intention of the management at the time of purchase.
Investments, which are readily realisable and intended to be held for not more than one year from the date on which such investments are made, are classified as current investments. All other investments are classified as long-term investments. Current investments are carried in the financial statements at lower of cost and fair value determined in accordance with the NBFC directions. Investments in the units of mutual funds in the nature of current investments are valued at the net asset value declared by the mutual fund in respect of each particular scheme, in accordance with the NBFC directions. Long-term investments are carried at cost. However, provision for diminution in value is made to
Notes to Financial Statements for the year ended 31 March 2018
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recognise a decline other than temporary in the value of the investments.
Investments are accounted for on trade date basis.
(g) Asset classification and Provisioning/write-off of Assets
(i) Portfolio loans are classified as standard and non-performing assets in accordance with Company’s policy. A loan is classified as NPA, where interest/installment is overdue for a period of 90 days and above, from the day it becomes due.
(ii) Portfolio loans are provided for/written off, in accordance with Company’s policy, subject to the minimum provision required as per Non-Banking Financial Company - Systemically Important Non-Deposit taking Company and Deposit taking Company (Reserve Bank) Directions, 2016.
(h) Leases
Where the Company is the lessor
Assets given on operating leases are included in fixed assets. Lease income is recognised in the Statement of Profit and Loss on a straight-line basis over the lease term.
Where the Company is the lessee
Lease arrangements where the Lessor effectively retains, substantially, all the risks and benefits of ownership of the leased term, are classified as operating leases. Operating lease payments are recognised as an expense in the Statement of Profit and Loss on a straight-line basis over the lease term.
(i) Revenue recognition
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured.
i) Interest Income
Interest income on loans given is recognised on time proportion basis taking into account the amount outstanding and the rate applicable.
Such interest, where installments are overdue for 90 days and above, is recognised only when actually realised. Any interest income, recognised and remaining unrealized after the installments have become overdue for 90 days and above, is reversed.
Penal/additional interest on default in payment of dues by customer is recognised on realisation basis.
Interest income on deposits with banks is recognised on a time proportion basis taking into account the amount outstanding and the applicable interest rate.
ii) Income from assignment / securitisation of portfolio loans
Profit/premium arising at the time of securitisation / assignment of portfolio loans, is amortized over the life of the underlying portfolio loan /securities issued by Special Purpose Vehicle (SPV) and any loss arising therefrom is accounted for immediately. Income from interest strip (excess income spread) is recognised in the statement of profit and loss, net of any losses, when redeemed in cash. Interest on retained portion of assigned portfolio is recognised on accrual basis except in case of non-performing assets wherein interest income is recognised on receipt basis as per NBFC prudential norms. Service fee received is accounted for based on the underlying deal structure of transaction as per the agreement.
iii) Fee income
Loan processing fee/document fees/stamp fees are recognised over the term of the loan in proportion to the interest accrued during the year. For the agreements foreclosed or transferred through assignment/securitisation, the unamortised portion of the fee is recognised as income to the Statement of Profit and Loss at the time of such foreclosure/transfer through assignment. Applications fee is recognised at the commencement of the contracts. Additional charges such as penal, dishonor, foreclosure charges, delayed payment charges etc. are recognised on realisation basis.
Notes to Financial Statements for the year ended 31 March 2018
139
iv) Income on discounted instruments
The difference between the acquisition cost and face value of discounted instrument is recognised over the tenor of the instrument on straight line basis.
v) Commission Income
Commission income earned for the services rendered are recognised on accrual basis, While rate conversion charges are recognised upfront based on event occurrence.
vi) Dividend Income
Dividend income is recognised when the shareholders’ right to receive payment is established.
vii) Profit/Loss on sale of investments
Profit/loss on sale of investments is recognised on trade date basis. On disposal of an investment, the difference between carrying amount and net disposal proceeds is charged or credited to the Statement of Profit and Loss.
viii) Subvention Income
Subvention income is booked over the tenure of the respective loans.
(j) Foreign currency transactions
i) Initial recognition
Foreign currency transactions are recorded at exchange rate prevailing on date of transaction.
ii) Conversion
Foreign currency monetary balances are reported using the exchange rate prevailing at the reporting date. Non-monetary balances, which are measured in terms of historical cost denominated in a foreign currency, are reported using the exchange rate on the date of the transaction.
iii) Exchange differences
Exchange differences arising on the settlement of monetary balances or on the restatement of the Company’s monetary balances at rates different from those at which they were initially recorded during the year, or reported in the previous financial statements, are recognised as income or as expense in the year in which they arise.
(k) Retirement and Other Employee benefits
i) Short Term Employee Benefits
All employee benefits falling due wholly within 12 months of rendering the services are classified as short-term employee benefits. All short term employee benefits are accounted on undiscounted basis during the accounting period based on services rendered by employees.
ii) Defined Contribution Plansa. The Company’s provident fund and superannuation scheme are defined contribution plans.
b. The contributions as specified by law are made to the Regional Provident Fund Commissioner and charged to the Statement of Profit and Loss of the year when the contribution to the respective fund is due. There are no other obligations other than contribution payable to the provident fund.
c. Superannuation is provided for on accrual basis, in accordance with the Company’s policy.
iii) Defined Benefit Plans
The Company’s gratuity scheme is defined benefit plan. Gratuity liability is provided for on the basis of an actuarial valuation on projected unit credit method made at the end of each financial year. The obligation is measured at the present value of the estimated future cash flows. The discount rate used for determining the present value of the obligation under defined benefit plans, is based on the market yield on government securities of a maturity period equivalent to the weighted average maturity profile of the related obligations at the balance sheet date.
Notes to Financial Statements for the year ended 31 March 2018
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The Company’s net obligation in respect of the gratuity benefit scheme is calculated by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine its present value, and the fair value of any plan assets is deducted.
Benefits in respect of gratuity are funded with an Insurance Company approved by Insurance Regulatory and Development Authority (IRDA).
Actuarial gain or loss is recognised in full in the period in which they occur in the Statement of Profit and Loss.
iv) Stock appreciation rights
In case of stock appreciation rights, measurement and disclosure of the employee share-based payment plan is done in accordance with the Guidance Note on Accounting for Employee Share-based Payments, issued by the ICAI. The Company measures compensation cost relating to stock appreciation rights using the fair value method. Compensation expense is amortized over the vesting period of the option on a straight line basis.
v) Leave benefits
Accumulated leave balance, which is expected to be utilised within the next twelve months, is treated as short term employee benefit. The Company measures the expected cost of such absences as the additional amount that it expects to incur as a result of unused entitlement that has accumulated at the reporting date.
(l) Income taxes
Tax expense comprises current and deferred tax. Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the Income Tax Act, 1961 enacted in India. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted at the reporting date.
Deferred taxes reflects the impact of current year timing differences between taxable income and accounting income originating during the current year and reversal of timing differences of earlier years. Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date. Deferred tax assets are recognised only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. In situations where the Company has unabsorbed depreciation or carry forward tax losses, all deferred tax assets are recognised only if there is virtual certainty supported by convincing evidence that they can be realised against future taxable profits.
Deferred tax assets are reviewed as at each balance sheet and written down or written up to reflect the amount that is reasonably / virtually certain, as the case may be, to be realised.
Minimum alternate tax (MAT) paid in a year is charged to the Statement of Profit and Loss as current tax. The Company recognises MAT credit available as an asset only to the extent that there is convincing evidence that the Company will pay normal income tax during the specified period, i.e., the period for which MAT credit is allowed to be carried forward. In the year in which the Company recognises MAT credit as an asset in accordance with the Guidance Note on Accounting for Credit Available in respect of Minimum Alternative Tax under the Income Tax Act, 1961, the said asset is created by way of credit to the Statement of Profit and Loss and shown as “MAT Credit Entitlement.” The Company reviews the “MAT credit entitlement” asset at each reporting date and writes down the asset to the extent the Company does not have convincing evidence that it will pay normal tax during the specified period.
(m) Earnings per share
The Company reports basic and diluted earnings per share in accordance with Accounting Standard 20 – “Earnings Per Share”. Basic earnings per share is calculated by dividing the net profit or loss for the period attributable to equity shareholders (after deducting attributable taxes) by the weighted average number of equity shares outstanding during the year.
Diluted earnings per share reflect the potential dilution that could occur if securities or other contracts to issue equity shares were exercised or converted during the year. For the purpose of calculating diluted earnings per share, the net profit or loss for the year attributable to equity shareholders and the weighted average number of shares outstanding
Notes to Financial Statements for the year ended 31 March 2018
141
during the year are adjusted for the effects of all dilutive potential equity share.
(n) Provisions & Contingencies
A provision is recognised when an enterprise has a present obligation as a result of past event; it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to its present value and are determined based on best estimate required to settle the obligation at the reporting date. These estimates are reviewed at each reporting date and adjusted to reflect the current best estimates.
A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Company or a present obligation that is not recognised because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognised because it cannot be measured reliably. The Company does not recognize a contingent liability but discloses its existence in the financial statements.
Contingent assets are not recognised nor disclosed in the financial statements.
(o) Cash and cash equivalents
Cash and cash equivalents for the purpose of cash flow statement comprise cash at bank and in hand and short term investments with original maturity of three months or less.
(p) Borrowing costs
Ancillary borrowing costs incurred in connection with the arrangement of borrowings are amortized over the tenure of the respective borrowings except with respect to expenses incurred on issue of debt securities, which are debited against securities premium account in accordance with Section 52 of the Companies Act, 2013.
(q) Loan origination costs
Loan origination costs such as credit verification, contact point verification, agreement stamping, incentive to sales employee and direct selling agents commission are recognised as expense over the contractual tenor of the loan agreements in proportion to the interest accrued during the year. For the agreements foreclosed or transferred through assignment, the unamortised portion of the loan origination costs are recognised as charge to the Statement of Profit and Loss at the time of such foreclosure/transfer through assignment/securitisation.
(r) Current-non-current classification
All assets and liabilities are classified into current and non-current.
Assets
An asset is classified as current when it satisfies any of the following criteria :
(a) it is expected to be realised in, or is intended for sale or consumption in, the company’s normal operating cycle;
(b) it is held primarily for the purpose of being traded;
(c) it is expected to be realised within 12 months after the reporting date; or
(d) it is cash or cash equivalent unless it is restricted from being exchanged or used to settle a liability for at least 12 months after the reporting dated.
Current assets include the current portion of non-current financial assets. All other assets are classified as non-current.
Liabilities
A liability is classified as current when it satisfies any of the following criteria :
(a) it is expected to be settled in the company’s normal operating cycle;
(b) it is held primarily for the purpose of being traded;
Notes to Financial Statements for the year ended 31 March 2018
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(c) it is due to be settled within 12 months after the reporting dated; or
(d) the company does not have an unconditional right to defer settlement of the liability for at least 12 months after the reporting date. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.
Current liabilities include the current portion of non-current financial liabilities.
All other liabilities are classified as non-current.
(s) Cash flow statement
Cash flows are reported using the indirect method, whereby profit/(loss) before extraordinary items and tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information.
(t) Commercial papers issued
Commercial papers issued by the Company are recognised at redemption value net of unamortized finance charges. The difference between redemption value and issue value is amortised on a time basis and is disclosed separately under finance charges.
(u) Securitisation & Assignment Transactions
Securitisation
i. Securitised portfolio loans are de-recognised in the balance sheet when they are securitised i.e if they fully meet the true sale criteria.
ii. Gains arising on securitisation of portfolio loans are recognised over the tenure of securities issued by special purpose vehicle trust (SPV) and any loss arising there-from is accounted upfront.
iii. Company contractual right to receive the share of future interest (Interest Spread) in the transferred portfolio loans from the SPV is capitalised at present value as interest only strip with the corresponding liability created for unrealised gains on loans transfer transactions. The excess interest spread on securitisation transactions are recognised in statement of Profit & Loss account only when it is redeemed in cash by the SPV.
Assignment
i. Portfolio loans under assignment are de-recognised in the balance sheet when they are assigned subject to the Minimum Retention Criteria (MRC) as per RBI guidelines. MRC portion of assigned loan are shown under Loans & Advance.
ii. Gains arising at the time of assignment transactions are amortised over the life of underlying portfolio loans.
iii. Interest on retained portion of assignment portfolio is recognised on accrual basis except in case of Non Performing Assets where interest income is recognised on receipt basis as per NBFC prudential norms.
iv. Service fees are accounted for based on the underlying deal structure of transaction.
2.2 Change of accounting estimates:
a) During the current year, the Company has revised the estimate of provisioning for standard assets. Had the Company applied the estimates followed in the previous year, the provision on portfolio loans for the year would have been higher by ` 5,183 lakhs.
b) During the current year, the Company has revised the estimate of provisioning for sub-standard assets. Had the Company applied the estimates followed in the previous year, the provision on portfolio loans for the year would have been lower by ` 989 lakhs.
Notes to Financial Statements for the year ended 31 March 2018
143
3. SHARE CAPITAL Particulars 31 March 2018
` in lakhs31 March 2017
` in lakhs
Authorised Shares
2,500,000,000 (31 March 2017: 2,500,000,000) equity shares of `10 each 250,000 250,000
250,000 250,000
Issued, subscribed and fully paid up shares
1,980,071,519 (31 March 2017: 1,980,071,519) equity shares of `10 each fully paid 198,007 198,007
198,007 198,007
(a) Reconciliation of the shares outstanding at the beginning and at the end of the reporting period
Equity Shares 31 March 2018 31 March 2017
No. of shares ` in lakhs No. of shares ` in lakhs
At the beginning of the year * 1,980,071,519 198,007 1,921,161,357 192,116
Issued during the year - - 58,910,162 5,891
Outstanding at the end of year 1,980,071,519 198,007 1,980,071,519 198,007
* Includes equity shares of ` 10 each allotted to Fullerton Financial Holdings Pte Ltd., the holding Company of erstwhile Fullerton Enterprises Pvt. Ltd., for consideration other than cash, pursuant to the scheme of Amalgamation approved by the Honorable High Court, Bombay during Financial Year 2008-09
(b) Terms/rights attached to equity shares The Company has only one class of equity shares having a par value of `10 per share. Each holder of equity shares is entitled to one vote per share.
Any Dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting. Dividend is declared and paid would be in Indian rupees.
In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all the preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.
(c) Shares held by holding /ultimate holding company and/or their subsidiaries/associates
Out of equity shares issued by the Company, shares held by its holding company, ultimate holding company and their subsidiaries/associates are as below:
31 March 2018 ` in lakhs
31 March 2017 ` in lakhs
Angelica Investments Pte Ltd, Singapore, the holding company and its nominees
1,894,815,162 (31 March 2017: 1,894,815,162) equity shares of `10 each fully paid 189,482 189,482
Fullerton Financial Holdings Pte Ltd, Singapore, holding company of Angelica Investments Pte Ltd
8,52,56,357 (31 March 2017: 8,52,56,357) equity shares of `10 each fully paid. 8,526 8,526
Notes to Financial Statements for the year ended 31 March 2018
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(d) Details of shareholders holding more than 5% shares in the Company
31 March 2018 31 March 2017
No. of shares % holding in the class
No. of shares % holding in the class
Equity shares of `10 each fully paid Angelica Investments Pte. Ltd, Singapore, the holding company
1,894,815,162 95.69% 1,894,815,162 95.69%
As per records of the Company, including its register of shareholders/members and other declarations received from shareholders regarding beneficial interest, the above shareholding represents both legal and beneficial ownerships of shares.
The company has not issued any shares other than cash consideration, bonus shares or bought back any equity shares during the last five year.
4. RESERVE AND SURPLUSParticulars 31 March 2018
` in lakhs 31 March 2017
` in lakhs
General Reserve 96 96
(A) 96 96
Capital Reserve 349 349
(B) 349 349
Securities Premium Account
Balance as per the last financial statements 21,035 9,446
Add: Securities premium on issue of shares - 14,108
Less: Utilisation towards debenture issue expenses (648) (2,519)
Closing Balance (C) 20,387 21,035
Reserve Fund under Section 45 - IC of the RBI Act, 1934
Balance as per the last financial statements 26,196 21,910
Add: Amount transferred from surplus balance in the statement of profit and loss 7,088 4,286
Closing Balance (D) 33,284 26,196
Surplus/(Deficit) in the statement of profit and loss
Balance as per the last financial statements 4,719 (12,424)
Add: Profit for the year 35,435 21,429
Less: Transferred to Statutory Reserve (@ 20% of profit after tax as required by section 45-IC of The Reserve Bank of India Act, 1934)
(7,088) (4,286)
Net Surplus/(Deficit) in the statement of profit and loss (E) 33,066 4,719
Total reserves and surplus (A+B+C+D+E) 87,182 52,395
Notes to Financial Statements for the year ended 31 March 2018
145
5. LONG TERM BORROWINGS Particulars Non Current portion Current maturities
31 March 2018 ` in lakhs
31 March 2017 ` in lakhs
31 March 2018 ` in lakhs
31 March 2017 ` in lakhs
Term Loans
Indian rupee loan from banks (secured)* 386,041 311,151 120,252 132,696
Debentures $
Non Convertible Debentures (secured)** 538,630 418,430 81,200 48,800
Non Convertible Debentures (unsecured) # 62,910 69,100 6,190 -
Total 987,581 798,681 207,642 181,496
The above amount includes
Secured Borrowings 924,671 729,581 201,452 181,496
Unsecured Borrowings 62,910 69,100 6,190 -
Less: Amount disclosed under the head other current liabilities (refer note 9)
- - 207,642 181,496
Total 987,581 798,681 - -
* Indian rupee loan from banks are secured by first pari passu charge over all loan receivables except specific charge on specific loan receivables for one of the financial institution. (Term loan outstanding as on 31 March, 2018 : ` 201 lakhs; 31 March, 2017 : ` 1,833 lakhs).
** Non Convertible Debentures are secured by first pari passu charge over all loan receivables and immovable property. Non Convertible Debenture includes Masala Bonds of ` 100,000 lakhs of which ` 50,000 lakhs is listed on Singapore Stock Exchange.
# Unsecured Non Convertible Debentures amounting to ` 69,100 lakhs (31 March, 2017 : ` 69,100 lakhs) are in respect to Tier II subordinated debts.
$ The funds raised by the Company during the year by issue of Secured / Unsecured Non Convertible Debentures / bonds were utilised for the purpose intended, i.e. towards lending, financing, to refinance the existing indebtedness of the Company or for long-term working capital, in compliance with applicable laws.
Terms of repayment of term loans as on 31 March, 2018
Original maturity of loan (in no. of days)
Rate of interest
Due within 1 year Due 1 to 2 Years Due 2 to 3 Years More than 3 Years Total
No. of installments
` in lakhs No. of installments
` in lakhs No. of installments
` in lakhs No. of installments
` in lakhs ` in lakhs
Monthly repayment schedule
More than 1460 9% - 11% 1 201 - - - - - - 201
Quarterly repayment schedule -
1096-1460 7% - 8% - - 8 5,333 4 2,667 - - 8,000
8% - 9% 10 6,667 11 6,250 6 2,083 2 833 15,833
More than 1460 7% - 8% 4 6,600 8 13,200 8 13,200 16 27,000 60,000
8% - 9% 38 41,000 35 37,333 24 26,083 3 4,480 108,896
9% - 11% 4 1,111 4 1,111 2 556 - - 2,778
Half yearly repayment schedule -
731-1095 9% - 11% 4 3,750 2 5,000 - - - - 8,750
More than 1460 7% - 8% 2 2,674 4 5,347 4 5,347 7 9,133 22,500
8% - 9% 16 39,166 17 34,749 13 27,669 11 26,333 127,917
9% - 11% 3 7,417 2 2,500 - - - - 9,918
Yearly repayment schedule -
More than 1460 8% - 9% 3 11,667 5 20,000 6 23,333 8 40,000 95,000
Bullet repayment schedule -
731-1095 7% - 8% - - 2 15,000 3 16,500 - - 31,500
1096-1460 7% - 8% - - - - 4 15,000 - - 15,000
Total 85 120,252 98 145,823 74 132,439 47 107,779 506,293
Notes to Financial Statements for the year ended 31 March 2018
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Terms of repayment of term loans as on 31 March 2017
Original maturity of loan (in no. of days)
Rate of interest
Due within 1 year Due 1 to 2 Years Due 2 to 3 Years More than 3 Years TotalNo. of
installments ` in lakhs No. of
installments ` in lakhs No. of
installments ` in lakhs No. of
installments ` in lakhs ` in lakhs
Monthly repayment scheduleMore than 1460 9% - 11% 12 1,632 1 201 - - - - 1,833 Quarterly repayment schedule731-1095 9% - 11% 6 4,500 - - - - - - 4,500 1096-1460 9% - 11% 12 15,417 8 3,334 8 3,333 4 1,667 23,751 More than 1460 8% - 9% 22 25,037 22 25,037 21 23,370 17 19,537 92,980
9% - 11% 36 29,777 34 29,944 33 31,944 17 15,035 106,700 Half yearly repayment schedule731-1095 8% - 9% 1 1,667 - - - - - - 1,667
9% - 11% 1 625 2 1,250 1 625 - - 2,500 1096-1460 8% - 9% 1 2,500 - - - - - - 2,500
9% - 11% 1 1,875 2 3,750 1 1,875 - - 7,500 More than 1460 8% - 9% 4 8,750 4 8,750 4 8,750 1 2,500 28,750
9% - 11% 11 26,917 16 34,500 15 29,583 7 16,667 107,667
Yearly repayment schedule1096-1460 8% - 9% 1 5,000 - - - - - - 5,000 More than 1460 8% - 9% 3 7,500 2 5,000 2 3,333 2 1,667 17,500
9% - 11% 1 1,500 2 6,500 2 6,500 2 11,500 26,000 Bullet repayment schedule731-1095 8% - 9% - - - - 1 10,000 - - 10,000 1096-1460 8% - 9% - - - - 1 5,000 - - 5,000 Total 112 132,696 93 118,266 89 124,314 50 68,571 443,847
Terms of repayment of NCD as on 31 March 2018
Original maturity of loan (in no. of days)
Rate of interest
Due within 1 year Due 1 to 2 Years Due 2 to 3 Years More than 3 Years Total ` in lakhs ` in lakhs ` in lakhs ` in lakhs ` in lakhs
Issued at par and redeemable at par731-1095 7% - 8% 12,500 2,500 13,500 - 28,500
8% - 9% 12,500 76,000 25,000 - 113,500 9% - 11% 1,700 - - - 1,700
1096-1460 7% - 8% - - 38,500 8,000 46,500 8% - 9% 11,500 55,500 - 22,630 89,630 9% - 11% 5,500 14,000 - - 19,500
More than 1460 7% - 8% - - - 70,000 70,000 8% - 9% 10,000 10,000 20,000 12,800 52,800 9% - 11% 27,500 37,500 56,500 84,400 205,900 11% - 12% 6,190 - - 13,810 20,000
Issued at par and redeemable at premium1096-1460 8% - 9% - - 7,500 28,400 35,900 Issued at premium and redeemable at premium
-
1096-1460 8% - 9% - - - 5,000 5,000 Total 87,390 195,500 161,000 245,040 688,930
Note : For zero coupon bonds, the interest rate is on XIRR basis
Terms of repayment of NCD as on 31 March 2017
Original maturity of loan (in no. of days)
Rate of interest
Due within 1 year Due 1 to 2 Years Due 2 to 3 Years More than 3 Years Total ` in lakhs ` in lakhs ` in lakhs ` in lakhs ` in lakhs
Issued at par and redeemable at par366-730 8% - 9% 3,950 - - - 3,950
9% - 11% 3,350 - - - 3,350 731-1095 8% - 9% - 25,000 25,000 - 50,000
9% - 11% 33,000 1,700 - - 34,700 1096-1460 8% - 9% - 11,500 106,500 12,500 130,500
9% - 11% 7,500 5,500 10,000 - 23,000 More than 1460 8% - 9% - - - 19,930 19,930
9% - 11% 1,000 32,500 51,500 160,900 245,900 11% - 12% - 11,190 - 13,810 25,000
Notes to Financial Statements for the year ended 31 March 2018
147
Original maturity of loan (in no. of days)
Rate of interest
Due within 1 year Due 1 to 2 Years Due 2 to 3 Years More than 3 Years Total ` in lakhs ` in lakhs ` in lakhs ` in lakhs ` in lakhs
Total 48,800 87,390 193,000 207,140 536,330
Particulars of Secured Redeemable Non-convertible Debentures:
Particulars Face Value ` in lakhs
Quantity Date of Redemption 31 March 2018 31 March 2017
10.45% Series-27C 5 500 November 3, 2023 2,500 2,500
9.85% Series-24 10 400 May 22, 2023 4,000 4,000
10.60% Series-22 10 750 April 28, 2023 7,500 7,500
7.35% MS-002 10 5,000 November 25, 2022 50,000 -
8.99% Series-49 10 500 July 15, 2022 5,000 5,000
9.16% Series-33C 10 230 May 20, 2022 2,300 2,300
10.00% Series-29AII 5 1,800 December 30, 2021 9,000 9,000
8.00% Series-62 10 2,000 December 28, 2021 20,000 -
8.25% Series-53 10 713 November 22, 2021 7,130 7,130
8.52% Series-65 10 310 June 8, 2021 15,500 -
9.20% Series-32II 10 1,500 May 28, 2021 15,000 15,000
8.95% Series-42 10 100 May 10, 2021 1,000 1,000
8.95% Series-41 10 180 April 29, 2021 1,800 1,800
8.52% Series-64 10 463 April 20, 2021 18,500 -
8.00% Series-58 10 160 April 13, 2021 8,000 -
8.45% Series-66 10 248 April 8, 2021 14,900 -
9.22% Series-34B (ii) 10 700 March 8, 2021 7,000 7,000
8.20% Series-63 10 750 February 26, 2021 7,500 -
9.05% Series-34F 10 100 January 18, 2021 1,000 1,000
9.25% Series-33DIII 10 1,000 December 30, 2020 10,000 10,000
9.05% Series-36A 10 1,500 December 30, 2020 15,000 15,000
8.75% Series-37 10 4,000 December 15, 2020 40,000 40,000
7.65% Series-61 10 1,000 December 15, 2020 10,000 -
9.10% Series-34D (ii) 10 250 November 30, 2020 2,500 2,500
9.05% Series-35 10 1,500 November 28, 2020 15,000 15,000
8.01% Series-57 10 833 October 6, 2020 25,000 -
7.65% Series-59 10 675 October 6, 2020 13,500 -
7.68% Series-56 10 267 August 14, 2020 16,000 -
8.00% Series-55 10 1,250 April 30, 2020 12,500 12,500
9.85% Series-29AI 5 1,200 April 14, 2020 6,000 6,000
9.30% Series-30DII 10 250 January 29, 2020 2,500 2,500
7.65% Series-60 10 250 December 20, 2019 2,500 -
9.42% Series-30B 10 500 December 9, 2019 5,000 5,000
9.10% Series-34D (i) 10 400 November 29, 2019 4,000 4,000
8.59% MS-001 10 5,000 November 23, 2019 50,000 50,000
8.90% Series-47 10 500 September 16, 2019 5,000 5,000
8.75% Series-52 10 1,000 August 12, 2019 10,000 10,000
8.65% Series-50 10 1,500 August 2, 2019 15,000 15,000
8.79% Series-51 10 250 July 23, 2019 2,500 2,500
8.80% Series-48 10 2,000 July 8, 2019 20,000 20,000
9.90% Series-28 5 3,000 June 24, 2019 15,000 15,000
8.90% Series-46 10 250 June 7, 2019 2,500 2,500
9.10% Series-32I 10 1,500 May 28, 2019 15,000 15,000
9.73% Series-44 10 1,000 May 27, 2019 10,000 10,000
8.90% Series-45 10 200 May 24, 2019 2,000 2,000
8.90% Series-39(ii) 10 50 April 29, 2019 500 500
Notes to Financial Statements for the year ended 31 March 2018
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Particulars Face Value ` in lakhs
Quantity Date of Redemption 31 March 2018 31 March 2017
8.85% Series-40 10 1,550 April 19, 2019 15,500 15,500
8.90% Series-38 10 600 April 4, 2019 6,000 6,000
8.90% Series-39(i) 10 250 April 3, 2019 2,500 2,500
7.97% Series-54 10 1,250 March 22, 2019 12,500 12,500
9.30% Series-30DI 10 250 January 29, 2019 2,500 2,500
10.90% Series-27F 5 1,000 January 7, 2019 5,000 5,000
8.95% Series-34E 10 150 December 17, 2018 1,500 1,500
11.00% Series-27E 5 1,000 December 10, 2018 5,000 5,000
8.90% Series-34C 10 1,000 October 15, 2018 10,000 10,000
8.90% Series-43 10 1,250 September 17, 2018 12,500 12,500
9.10% Series-34B (i) 10 150 September 7, 2018 1,500 1,500
9.30% Series-25 10 500 June 14, 2018 5,000 5,000
9.11% Series-33DII 10 170 May 25, 2018 1,700 1,700
9.50% Series-23 10 1,000 May 8, 2018 10,000 10,000
9.05% Series-33A 10 400 April 30, 2018 4,000 4,000
10.05% Series-31A 10 500 March 12, 2018 - 5,000
9.20% Series-30C 10 250 January 23, 2018 - 2,500
10.00% Series-20E 10 100 January 15, 2018 - 1,000
9.00% Series-34A 10 1,050 August 7, 2017 - 10,500
9.11% Series-33F 10 1,250 July 17, 2017 - 12,500
9.06% Series-33E 10 220 July 6, 2017 - 2,200
9.05% Series-31C 10 1,000 May 30, 2017 - 10,000
9.11% Series-33DI 10 115 May 24, 2017 - 1,150
8.98% Series-31B 10 395 April 11, 2017 - 3,950
Total 619,830 467,230
Particulars of Unsecured Redeemable Non-convertible Debentures (Subordinated Debt):
Particulars Face Value (` in lakhs)
Quantity Date of Redemption 31 March, 2018 31 March, 2017
11.25% Subdebts Series 1A 10 519 June 14, 2018 5,190 5,190
11.25% Subdebts Series 2A 10 100 June 27, 2018 1,000 1,000
9.50% Subdebts_Series 8 10 250 June 25, 2021 2,500 2,500
9.40% Subdebts_Series 5II 10 200 June 10, 2022 2,000 2,000
9.40% Subdebts_Series 6II 10 250 August 3, 2022 2,500 2,500
11.40% Subdebts Series 1B 10 481 September 14, 2022 4,810 4,810
11.40% Subdebts Series 2B 10 400 September 28, 2022 4,000 4,000
9.40% Subdebts_Series 7II 10 500 October 13, 2022 5,000 5,000
11.40% Subdebts Series 2C 10 500 October 28, 2022 5,000 5,000
9.30% Subdebts_Series 9I 10 250 April 25, 2023 2,500 2,500
10.50% Subdebts Series 3 5 1,000 October 28, 2023 5,000 5,000
8.75% Subdebts Series 12(i) 10 250 April 26, 2024 2,500 2,500
9.60% Subdebts Series 4 10 500 December 26, 2024 5,000 5,000
8.75% Subdebts Series 12(ii) 10 250 April 25, 2025 2,500 2,500
9.50% Subdebts_Series 5I 10 250 June 10, 2025 2,500 2,500
9.50% Subdebts_Series 7I 10 1,000 October 13, 2025 10,000 10,000
9.30% Subdebts_Series 9II 10 250 February 25, 2026 2,500 2,500
9.25% Subdebts_Series 10 10 250 March 23, 2026 2,500 2,500
9.30% Subdebts Series 11 10 210 April 30, 2026 2,100 2,100
Total 69,100 69,100
Notes to Financial Statements for the year ended 31 March 2018
149
6. OTHER LONG TERM LIABILITIES
Particulars 31 March 2018 ` in lakhs
31 March 2017 ` in lakhs
Interest accrued but not due on debentures 3,907 2,084 Employee benefits payable 1,011 1,027 Unamortised income
Unamortised loan processing fees on portfolio loans 9,552 7,034 Unamortised income on securitisation of portfolio loans 0 7
Others 114 184 Rent Equalization Reserve 239 - Total 14,824 10,336
7. PROVISIONS Particulars Long Term Short Term
31 March 2018 ` in lakhs
31 March 2017 ` in lakhs
31 March 2018 ` in lakhs
31 March 2017 ` in lakhs
Provision for employee benefits Provision for superannuation - - 1 1
Provision for leave benefits - - 29 41
Other provisions Provision for standard portfolio loans (refer note 2.2) 4,178 15,460 2,008 8,404
Provision for sub-standard & doubtful portfolio loans (refer note 2.2)
12,822 12,076 - -
Provision for securitised portfolio loans 0 2 33 32
Provision for security deposits 86 86 - -
Provision for Income Tax (Net of Adv. Tax) 1,756 - - -
Total 18,842 27,624 2,071 8,478
8. SHORT TERM BORROWINGS Particulars 31 March 2018
` in lakhs 31 March 2017
` in lakhs Loan repayable on demand Cash credit from banks (unsecured) 12,190 9,963 Other loans and advances Commercial paper (unsecured)* 149,296 107,372 Total 161,486 117,335 The above amount includes Unsecured borrowings 161,486 117,335 Total 161,486 117,335
*Commercial paper carries interest in the range of 7.10% to 8.25% p.a. and tenure of 90 to 365 days fully payable at maturity. The interest rate is on XIRR basis.
9. OTHER CURRENT LIABILITIESParticulars 31 March 2018
` in lakhs31 March 2017
` in lakhs Other liabilities
Current maturities of long term borrowings (refer note 5) 207,642 181,496 Expenses and other payable (refer note 34 : for dues to Micro Small and Medium Enterprises )
11,667 9,153
Notes to Financial Statements for the year ended 31 March 2018
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Employee benefits payable 7,110 6,109 Bank balances (Book overdraft) 45,335 12,717 Interest accrued but not due On Non Convertible Debentures 25,509 27,576 On bank loans 796 640 Statutory dues payable 1,527 680 Payable towards asset assignment / securitisation 966 3,273 Others 10,112 7,808 Unamortised income Unamortised Processing Fees on portfolio loans 9,501 5,003 Unamortised income on securitised portfolio loans 7 35 Total 320,172 254,490
10. TANGIBLE ASSETSParticulars (` in lakhs)
Office Equipments
Furniture & Fixtures
Computers & Accessories
Leasehold Improvements
Vehicles Land & Building*
Leased assets
Total
CostAt 1 April 2016 3,192 2,791 4,924 3,549 88 6 138 14,688Addition 737 580 1,594 439 85 - - 3,436Deductions 200 312 78 438 - - - 1,028At 31 March 2017 3,729 3,059 6,440 3,550 173 6 138 17,096
Addition 624 562 784 781 177 - - 2,928Deductions 538 138 408 187 6 - - 1,277At 31 March 2018 3,815 3,483 6,816 4,144 344 6 138 18,747Depreciation At 1 April 2016 2,332 2,252 3,943 3,092 44 - 76 11,739 Charge for the year 512 344 833 249 26 - 34 1,998 Deductions 195 300 78 436 - - - 1,009 At 31 March 2017 2,649 2,296 4,698 2,905 70 - 110 12,728 Charge for the year 566 376 931 488 70 - 20 2,451 Deductions 533 127 406 177 2 - - 1,244 At 31 March 2018 2,683 2,545 5,223 3,216 138 - 130 13,935 Net Block At 31 March 2017 1,080 763 1,742 645 104 6 28 4,369 At 31 March 2018 1,132 939 1,593 928 206 6 8 4,812 The Company does not have any other leasehold assets except as disclosed above. All assets have been recognised at cost Capital Work in Progress At 31 March 2017 133 55 104 - - - - 292 At 31 March 2018 - - - - - - - -
*Pledged as security against secured non-convertible debentures
Notes to Financial Statements for the year ended 31 March 2018
151
11. INTANGIBLE ASSETS
Particulars (` in lakhs)
Computer Software Total
Gross block At 1 April 2016 7,774 7,774
Additions 1,367 1,367
Deductions - -
At 31 March 2017 9,140 9,140
Additions 516 516
Deductions - -
At 31 March 2018 9,656 9,656 Amortisation At 1 April 2016 5,732 5,732
Charge for the year 781 781
Deductions - -
At 31 March 2017 6,513 6,513 Charge for the year 889 889
Deductions - -
At 31 March 2018 7,402 7,402 Net block
At 31 March 2017 2,626 2,626 At 31 March 2018 2,254 2,254 Capital Work in Progress
At 31 March 2017 68 68 At 31 March 2018 349 349
12. NON-CURRENT INVESTMENTS
Particulars 31 March 2018 ` in lakhs
31 March 2017` in lakhs
Non Trade Investments (valued at cost unless stated otherwise)
Investment in equity instruments (unquoted)
a) Wholly owned subsidiaries
195,273,443 (31 March 2017: 195,273,443) equity shares of ` 10 each 36,000 36,000
fully paid-up in Fullerton India Home Finance Company Limited
23,575 (31 March 2017: 23,575) equity shares of ` 10 each 2 2
fully paid-up in Fullerton India Foundation For Social & Economic Development
b) Others
50,000 (31 March 2017: 50,000) equity shares of ` 10 each 5 5
fully paid-up in Alpha Micro Finance Consultants Private Limited
8,397 (31 March 2017: 8,397 ) equity shares of ` 10 each 100 100
fully paid-up in DigiLend Analytics and Technology Pvt. Ltd.
(A) 36,107 36,107
Less: Provision for diminution in value (B) (2) (2)
Net Value {(A)-(B)} 36,105 36,105
Aggregate amount of unquoted investments 36,107 36,107
Notes to Financial Statements for the year ended 31 March 2018
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13. DEFERRED TAX ASSET (NET)
Particulars 31 March 2018 ` in lakhs
31 March 2017 ` in lakhs
Deferred tax liability
Unamortised ancillary cost of borrowings 180 326
Unamortised loan origination costs on portfolio loans 5,897 3,136
Gross deferred tax liability 6,077 3,462
Deferred tax asset
Provision for Section 43B items under Income tax Act, 1961 132 228
Fixed assets depreciations 1,779 1,644
Provision for diminution in the value of investments 32 140
Provision for doubtful debts and advances 5,452 11,515
Provision for security deposits 30 30
Unamortised processing fees on portfolio loans 6,660 4,166
Provision for expenses disallowed as per Income-tax Act, 1961 734 415
Interest income on non-performing loans recognised for tax purposes - 1,128
Gross deferred tax asset 14,819 19,266
Net deferred tax asset 8,742 15,804
Net deferred tax asset recognised 8,742 15,804
Note :
Deferred Tax on provision for non performing portfolio loans is net of deduction allowed under section 36(i) (viia) of the Income Tax Act, 1961.
14. LOANS AND ADVANCES Non-current Current
Particulars 31 March 2018` in lakhs
31 March 2017` in lakhs
31 March 2018` in lakhs
31 March 2017` in lakhs
A Portfolio loansa. Secured, considered good
Loans*537,422 418,174 93,730 71,993
b. Secured, considered sub standard & doubtful Loans**
30,040 32,196 - -
c. Unsecured, considered good Loans*
491,664 288,066 400,726 311,921
d. Unsecured, considered sub standard & doubtful Loans**
7,829 5,519 - -
Sub-Total 1,066,955 743,955 494,456 383,914B Security deposits
Unsecured, considered good 1,708 1,739 295 91 Unsecured, considered doubtful 86 86 - - Sub-Total 1,794 1,825 295 91C Advances recoverable in cash or in
kind or for value to be received Unsecured, considered good 271 380 - - Sub-Total 271 380 - -D Other loans and advances Retained interest receivable on securitisation 2 15 5 33
Advance Income Tax (net of provision for tax) - 2,200 - - MAT credit entitlement 5,557 6,126 - - Prepaid expenses 51 6 1,334 1,133
Notes to Financial Statements for the year ended 31 March 2018
153
Non-current CurrentParticulars 31 March 2018
` in lakhs31 March 2017
` in lakhs31 March 2018
` in lakhs31 March 2017
` in lakhs Advances to employees 26 25 8 8 Others 13 10 1,865 11,003 Sub-Total 5,649 8,382 3,212 12,177E Capital advances Unsecured, considered good 76 369 - - Sub-Total 76 369 - - Total (A+B+C+D+E) 1,074,745 754,911 497,963 396,182
* Represents standard assets in accordance with Company’s asset classification policy (refer note 2.1 (g)) and 2.2)
** Represents non-performing assets in accordance with Company’s asset classification policy (refer note 2.1 (g))
15. OTHER ASSETS
Particulars Non Current Current
31 March 2018` in lakhs
31 March 2017` in lakhs
31 March 2018` in lakhs
31 March 2017` in lakhs
Non Current bank balances (refer note 18) 6,600 5,396 - -
Unamortised ancillary cost of borrowings 226 611 289 332
Unamortised Portfolio Loan Origination Costs 13,290 6,102 3,586 2,960
Surplus on gratuity fund - - 128 106
Interest accrued and due
On Secured Portfolio Loans - - 785 606
On Unsecured Portfolio Loans - - 1,074 3,227
Interest accrued but not due
On Deposits placed with banks 6 2 2,832 2,487
On Government Securities - - - 271
On Debentures and Bonds - - - 1,027
On Secured Portfolio loans - - 5,848 4,841
On Unsecured Portfolio loans - - 13,799 8,981
Total 20,122 12,111 28,341 24,838
16. CURRENT INVESTMENTSParticulars 31 March 2018
` in lakhs 31 March 2017
` in lakhs
Current investments (valued at lower of cost and fair value, unless stated otherwise)a) Quoted: Government securities and Treasury Bills Nil (31 March 2017: 2,000,000) units 7.61 % 2030 Government Securities - 2,072 Nil (31 March 2017: 7,000,000) units 7.59 % 2026 Government Securities - 7,337 Nil (31 March 2017: 3,500,000) units 6.97 % 2026 Government Securities - 3,567 Nil (31 March 2017: 7,500,000) units 0% INR GOI TB 18/01/2018 - 7,089 Nil (31 March 2017: 5,000,000) units 0% INR GOI TB 01/06/2017 - 4,938b) Unquoted: Certificate of deposits 5,000 (31 March 2017: 12,500) units of ` 100,000 each of Axis Bank Limited 4,792 11,944 5,000 (31 March 2017: 9,000) units of ` 100,000 each of ICICI Bank Limited 4,877 8,791 Nil (31 March 2017: 14,500) units of ` 100,000 each of NABARD - 13,776
Notes to Financial Statements for the year ended 31 March 2018
154
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Particulars 31 March 2018 ` in lakhs
31 March 2017` in lakhs
Nil (31 March 2017: 17,500) units of ` 100,000 each of Kotak Mahindra Bank Limited
- 16,851
10,000 (31 March 2017: 5,000) units of ` 100,000 each of IndusInd Bank Limited
9,552 4,783
Nil (31 March 2017: 11,000) units of ` 100,000 each of IDFC Bank Limited - 10,761 Nil (31 March 2017: 5,000) units of ` 100,000 each of SIDBI - 4,689 15,000 (31 March 2017: Nil) units of ` 100,000 each of HDFC Bank 14,057 -c) Unquoted: Investment in Commercial Papers 3,000 (31 March 2017: 3,000) units of ` 500,000 each of
Housing Development Finance Corporation Ltd. 14,397 14,594
d) Unquoted: Mutual funds (At net asset value) Nil (31 March 2017: 191,330.67) units of ` 1,000 each in Tata
Money Market Fund Option - Direct Plan - Growth - 4,904
Nil (31 March 2017: 14,296,676.46) units of ` 10 each in Sundaram Money Fund - Direct Plan - Growth
- 4,903
Nil (31 March 2017: 318,378.27) units of ` 1,000 each in DSP BlackRock Liquidity Fund - Direct Plan - Growth
- 7,405
Nil (31 March 2017: 154,897.41) units of ` 1,000 each in SBI Premier Liquid Fund - Direct Plan -Growth
- 3,953
Nil (31 March 2017: 271,860.71) units of ` 1,000 each in Axis Liquid Fund - Direct Plan - Growth Option
- 4,902
Nil (31 March 2017: 273,651.25) units of ` 1,000 each in HDFC Liquid Fund - Direct Plan - Growth Option
- 8,781
e) Quoted: Investment in Corporate Bonds Nil (31 March 2017: 1,000) units of 8.57% Bond ` 5,00,000 each fully paid up
in HDFC Ltd. - 5,063
Nil (31 March 2017: 1,000) units of 8.29% NCD ` 1,000,000 each fully paid up in NABARD.
- 10,156
Nil (31 March 2017: 500) units of 8.40% NCD `1,000,000 each fully paid up in PFC Ltd.
- 5,073
f) Unquoted: Investment in equity shares 6,68,328 (31 March 2017: 6,68,328) equity shares of ` 10 each 67 67 fully paid-up in SWAWS Credit Corporation India Private Limitedg) Unquoted: Investment in debentures
22,278 (31 March 2017: 22,278) units of `100 each fully paid-up 22 22 12% Optionally Convertible Debentures in SWAWS Credit Corporation India
Private Limited(A) 47,764 166,421
Less: Provision for diminution in value (B) (89) (89)47,675 166,332
Net Value {(A)-(B)} 47,675 166,332Aggregate Amount of quoted investment (at Cost Price :Nil , (31 March 2017: 45,000)) - 45,293Aggregate Amount of unquoted investment (at Cost Price : `47,492, (31 March 2017 : `1,20,828)) 47,675 121,040
Notes to Financial Statements for the year ended 31 March 2018
155
17. TRADE RECEIVABLE
Particulars Non Current Current
31 March 2018 ` in lakhs
31 March 2017` in lakhs
31 March 2018 ` in lakhs
31 March 2017` in lakhs
Unsecured considered good unless otherwise stated*- Debts outstanding for a period not exceeding six
months from the date they are due for payment
- - 726 381
Total - - 726 381
*There were no outstanding dues more than 6 month.
18. CASH AND BANK BALANCESParticulars Non Current Current
31 March 2018 ` in lakhs
31 March 2017` in lakhs
31 March 2018 ` in lakhs
31 March 2017` in lakhs
Cash and cash equivalents:Cash on hand - - 834 948
Balances with Banks
- On Current accounts - - 13,752 7,210
- Deposits with original maturity of less than 3 months
- 9,662 -
(A) - - 24,248 8,158
Other bank balances- Deposits with original maturity for more than
12 months* 6,600 5,396 35,865 40,823
- Deposits with original maturity for more than 3 months but less than 12 months
- - 8,218 4,346
(B) 6,600 5,396 44,083 45,169
6,600 5,396 68,331 53,327
Less: amount disclosed under non current assets (refer note15)
(6,600) (5,396) - -
Total {(A)+(B)} - - 68,331 53,327
*In respect of balance with Scheduled banks in Deposits, ` 247 lakhs (31 March 2017 : ` 224 lakhs) pertain to collateral deposit kept with banks as credit enhancements pertaining to securitisations.
19. REVENUE FROM OPERATIONS
Particulars For the year ended 31 March 2018
` in lakhs
For the year ended31 March 2017
` in lakhs Interest income on Portfolio loans 240,475 227,043
Income from Assignment and Securitisation of Portfolio 1,318 3,156
Interest on bank deposits 4,282 5,697
Interest on Current investments 3,095 3,442
Interest on loan to subsidiary - 104
Other operating revenueProcessing fees 14,275 13,901
Ancillary income from operations 5,020 4,594
Total 268,465 257,937
Notes to Financial Statements for the year ended 31 March 2018
156
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20. OTHER INCOME
Particulars For the year ended 31 March 2018
` in lakhs
For the year ended31 March 2017
` in lakhs
Profit on sale of Current Investments 537 3,060
Profit on sale of fixed assets (net) 9 18
Commission Income 4,521 2,905
Miscellaneous income 1,371 337
Total 6,438 6,320
21. EMPLOYEE BENEFIT EXPENSE Particulars For the year ended
31 March 2018 ` in lakhs
For the year ended31 March 2017
` in lakhs Salaries, bonus and allowances 44,834 40,223 Contribution to provident and other funds 2,006 1,564 Gratuity expense (refer note 33) 324 425 Staff welfare expenses 1,667 1,401 Total 48,831 43,613
22. OTHER EXPENSESParticulars For the year ended
31 March 2018` in lakhs
For the year ended31 March 2017
` in lakhs Printing and stationery 1,238 1,175 Rent 3,596 3,364 Rates and taxes 434 349 Insurance 67 8 Business promotion expenses 1,134 228 Commission, brokerage and lead generation 6,818 6,482 Legal charges 324 210 Professional charges 6,840 6,412 Collection expenses 4,310 3,599 Courier charges 522 474 Repairs and maintenance
Office premises 1,495 1,394 Others 1,038 890
Directors' sitting fees 31 32 Travelling expenses 2,699 2,266 Telecommunication expenses 1,009 1,094 Payment to auditor (refer details below) 57 53 Electricity charges 928 925 Security charges 244 259 Recruitment expenses 346 199 Training expenses 209 383 Fees and subscription 40 48 Corporate social responsibility Donations and expenses 577 614 Miscellaneous expenses 96 229 Write off of fixed assets and intangible assets 24 4 Total 34,076 30,691
Notes to Financial Statements for the year ended 31 March 2018
157
Particulars For the year ended 31 March 2018
` in lakhs
For the year ended31 March 2017
` in lakhs Payment to auditorsAs auditor:Audit fee 37 35 Tax audit fee 7 6 Limited review 7 6 In other capacity:Certification matters 4 3 Reimbursement of expenses 2 3
23. FINANCE COSTSParticulars For the year ended
31 March 2018` in lakhs
For the year ended31 March 2017
` in lakhsInterest
On loans from banks & Financial Institutions 36,842 50,798On bonds & debentures 51,949 44,434
Discount on commercial papers 7,208 6,984Amortisation of ancillary borrowing costs 463 586Bank charges and Others 714 635Total 97,176 103,437
24. PROVISIONS AND WRITE OFFSParticulars For the year ended
31 March 2018` in lakhs
For the year ended31 March 2017
` in lakhsBad debts & Write off (net of recoveries)* 54,077 30,151Provision against assigned portfolio loans 8 21Provision against standard portfolio loans (17,678) 15,404Provision for Sub standard & Doubtful portfolio loans 746 4,727Unrealised loss on investments (314) 314Total 36,839 50,617
*Bad Debts and written off are net of recovery of ` 24,283 lakhs (FY 17: ` 12,235 lakhs)
25. EARNINGS PER EQUITY SHAREParticulars For the year ended
31 March 2018` in lakhs
For the year ended31 March 2017
` in lakhsProfit after Tax 35,435 21,429Weighted Avg. number of shares for Basic EPS 1,980,071,519 1,921,645,550Weighted Avg. number of equity shares for Diluted EPS 1,980,071,519 1,921,645,550Earnings per Share :Basic (`) 1.79 1.12Diluted (`) 1.79 1.12[Nominal value of shares ` 10 each (PY: ` 10)]
26. SEGMENT INFORMATIONThe Company operates in a single reportable segment i.e. financing,which has similar risks and returns for the purpose of AS - 17 on ‘Segment Reporting’ specified under section 133 of the Act, read with rules 7 of Companies (Accounts) Rules, 2014. The Company operates in single geographical segment, i.e. domestic.
Notes to Financial Statements for the year ended 31 March 2018
158
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27. RELATED PARTY DISCLOSURES A List of Related parties & relationships
a Ultimate Holding Companyi Temasek Holdings (Private) Limited
b Holding Companyi Angelica Investments Pte Ltd, Singapore (‘Angelica’)
ii Fullerton Financials Holdings Pte Ltd (Holding Company of Angelica)
c Fellow Subsidiaryi Fullerton Securities & Wealth Advisors Ltd.
ii Fullerton Financial Holdings (International) Pte Ltd
d Subsidiaryi Fullerton India Foundation for Social & Economic Development (Non Profit Company)
ii Fullerton India Home Finance Company Ltd.
e Key Management Personneli Mr. Shantanu Mitra, Chief Executive Officer and Managing Director (till 31 December 2017)
ii Mr. Anindo Mukherjee, Interim CEO & Whole Time Director ( 1 Jan 2018 to 12th Feb 2018 )
iii Ms. Rajashree Nambiar, Chief Executive Officer and Managing Director (since 12 February 2018)
B Related Party TransactionsS. No Nature of Transactions 2017-18
(` in lakhs)2016-17
(` in lakhs)1 Reimbursement for expenses incurred on behalf of the Company
Fullerton Financials Holdings Pte Ltd 1 3Fullerton India Home Finance Company Ltd. 34 35Fullerton Financial Holdings (International) Pte Ltd 181 10
2 Issue of Share capital (including securities premium)Fullerton Financials Holdings Pte Ltd - 20,000
3 Income as per Resource sharing agreementFullerton India Home Finance Company Ltd. 795 432
4 Lease Rental IncomeFullerton Securities & Wealth Advisors Ltd. 1 1
5 Inter corporate loan givenFullerton India Home Finance Company Ltd. - 5,000
6 Inter corporate loan repayment receivedFullerton India Home Finance Company Ltd. - 5,000
7 Interest income earned on Intercorporate loanFullerton India Home Finance Company Ltd. - 104
8 Fee for committed credit lineFullerton India Home Finance Company Ltd. 34 11
9 Salary and employee benefits #Mr. Shantanu Mitra 2,067 1,172Ms. Rajashree Nambiar 38 -
10 Balance outstanding as at the year endInvestment in equity sharesFullerton India Home Finance Company Ltd 36,000 36,000Fullerton India Foundation for Social & Economic Development 2 2
11 Other Receivables (Net)Fullerton India Home Finance Company Ltd 194 53
# Managerial remuneration excludes provision for gratuity since it is provided on actuarial basis for the company as a whole.
Notes to Financial Statements for the year ended 31 March 2018
159
28. LEASES a) Where the Company is the lessee: Premises are obtained on operating lease. The lease term ranges from 11 months to 134 months and are renewable/
cancellable at the option of the Company. Certain lease agreements contain clause for escalation of lease payments. There are no restrictions imposed by lease arrangements. There are no subleases. Lease payments during the year are charged to the Statement of Profit and Loss.
The following table sets forth, for the periods indicated, the details of future rentals payable on operating leases.
Particulars For the year ended 31 March 2018
` in lakhs
For the year ended 31 March 2017
` in lakhsOperating lease payments recognised during the year 4,038 3,812Minimum Lease ObligationsNot later than one year 3,696 3,539Later than one year but not later than five years 9,724 10,198Later than five years 3,382 4,419
b) Where the Company is the lessor: The Company has entered into operating lease arrangement for servers which form part of the tangible assets. This lease has
a non-cancellable arrangement of 3 years. This lease contains a clause to enable upward revision of the rental charges on an annual basis according to prevailing market conditions.
The following table sets forth, for the periods indicated, the details of future rentals receivable on operating leases were company is a lessor:
Particulars For the year ended 31 March 2018
` in lakhs
For the year ended 31 March 2017
` in lakhsOperating lease rental recognised during the year 35 35Minimum Lease ObligationsNot later than one year 4 24Later than one year but not later than five years 7 11Later than five years - -
29. CASH AND CASH EQUIVALENTS FOR THE PURPOSE OF CASH FLOW STATEMENTParticulars For the year ended
31 March 2018` in lakhs
For the year ended 31 March 2017
` in lakhsCash and Bank Balance (refer note 18 ) 68,331 53,327
Less: Other bank balances (refer note 18) (44,083) (45,169)
Balance considered as Cash and Cash Equivalents for Cash Flow Statement 24,248 8,158
30. CONTINGENT LIABILITYAND COMMITMENTSa) Contingent liabilities:
Description of the Liability For the year ended 31 March 2018
` in lakhs
For the year ended 31 March 2017
` in lakhsCredit enhancement provided by the Company for the loans under securitisation arrangements (including cash collaterals and interest subordination)
289 270
Contingent liability for litigations pending against the Company 20 23
b) Capital and other commitments(i) Estimated amount of contracts remaining to be executed on capital account and not provided for as at 31 March 2018
is ` 1,030 lakhs (31 March 2017: ` 1,846 lakhs).
(ii) Loans sanctioned not yet disbursed as at 31 March 2018 were ` 2,494 lakhs (31 March 2017: ` 1,104 lakhs).
Notes to Financial Statements for the year ended 31 March 2018
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(iii) Committed credit lines given to wholly owned subsidiary (FIHFC) as at 31 March 2018 was ` 10,000 lakhs (31 March 2017: ` 10,000 lakhs).
c) The Company’s pending litigations, having an impact on the financial position, comprise certain proceedings pending with Income Tax authorities. The Company has reviewed all such pending litigations and proceedings and has adequately provided wherever considered necessary.
31. EXPENDITURE IN FOREIGN CURRENCYParticulars For the year ended
31 March 2018` in lakhs
For the year ended 31 March 2017
` in lakhsTravelling expenses 10 20Ancillary borrowing costs 31 1,016Training expenses 53 52Repairs and maintenance 24 17Directors sitting fees and commission 34 27Interest Expenses & Bank Charges 4,294 0Total 4,446 1,132
32. EMPLOYEE STOCK APPRECIATION RIGHTSThe Company has an Employee Share based payment scheme, under which grants were made as per details provided below:
Grant 1 Grant 2 Grant 3 Grant 4 Grant 5 Grant 6 Grant 7 Grant 6A
Date of Grant 30 Nov 2011 1 April 2013 1 April 2013 1 April 2014 1 April 2015 1 April 2016 1 April 2017 1 April 2017
Value of the Grant ` 568 Lakhs ` 706 Lakhs ` 741 Lakhs ` 750 Lakhs ` 800 Lakhs ` 865 Lakhs ` 865 Lakhs `1,290 Lakhs
Performance Condition
Achievement of Profit before tax (PBT) and Return on Equity (ROE) targets as per approved plan Achievement PAT & ROE
targets
Achievement of specific targets
Graded Vesting (subject to achievement of performance condition given above)
Tranche I: 33% vesting on 1st
December 2013
Tranche I: 33% vesting on 1st
December 2015
Tranche I: 33% vesting on 1st
December 2016
Tranche I: 33% vesting on 1st
December 2017
Tranche I: 33% vesting on 1st
December 2018
Tranche I: 33% vesting on 1st
December 2019
Tranche I: 33% vesting on 1st
December 2020
Tranche I: 50% vesting on 1st
December 2020
Tranche II: 33% vesting on 1st
December 2014
Tranche II: 33% vesting on 1st
December 2016
Tranche II: 33% vesting on 1st
December 2017
Tranche II: 33% vesting on 1st
December 2018
Tranche II: 33% vesting on 1st
December 2019
Tranche II: 33% vesting on 1st
December 2020
Tranche II: 33% vesting on 1st
December 2021
Tranche II: 50% vesting on 1st
December 2021
Tranche III: 34% vesting on 1st
December 2015
Tranche III: 34% vesting on 1st
December 2017
Tranche III: 34% vesting on 1st
December 2018
Tranche III: 34% vesting on 1st
December 2019
Tranche III: 34% vesting on 1st
December 2020
Tranche III: 34% vesting on 1st
December 2021
Tranche III: 34% vesting on 1st
December 2022
-
Vesting period (including performance period)
Tranche I: 2 years Tranche I: 2 years 8 months
Tranche I: 3 years 8 months
Tranche I: 3 years 8 months
Tranche I: 3 years 8 months
Tranche I: 3 years 8 months
Tranche I: 3 years 8 months
Tranche I: 3 years 8 months
Tranche II: 3 years
Tranche II: 3 years 8 months
Tranche II: 4 years 8 months
Tranche II: 4 years 8 months
Tranche II: 4 years 8 months
Tranche II: 4 years 8 months
Tranche II: 4 years 8 months
Tranche II: 4 years 8 months
Tranche III: 4 years
Tranche III: 4 years 8 months
Tranche III: 5 years 8 months
Tranche III: 5 years 8 months
Tranche III: 5 years 8 months
Tranche III: 5 years 8 months
Tranche III: 5 years 8 months
-
Exercise period Within 30 days from each vesting date but not later than 2 years from the date of last vesting except for Grant 1 & 6A where period is 3 years
Method of Settlement
Cash Payout
The estimated fair value of the grant at a notional value of ` 10 per unit (as at the date of grant) is as below:
Particulars Grant 1 Grant 2 Grant 3 Grant 4 Grant 5 Grant 6 Grant 7 Grant 6AAs at 31 March 2018 ` 32.35 ` 23.20 ` 23.20 ` 19.76 ` 15.96 ` 12.54 ` 11.39 ` 11.39As at 31 March 2017 ` 27.56 ` 19.97 ` 19.97 ` 17.01 ` 13.74 ` 10.89 Nil NilAs at 31 March 2016 ` 24.97 ` 18.22 ` 18.22 ` 15.52 ` 12.54 Nil Nil NilAs at 31 March 2015 ` 19.49 ` 14.53 ` 14.53 ` 12.38 Nil Nil Nil NilAs at 31 March 2014 ` 15.36 ` 11.74 ` 11.74 Nil Nil Nil Nil NilAs at 31 March 2013 ` 12.78 Nil Nil Nil Nil Nil Nil NilAs at 31 March 2012 ` 10.42 Nil Nil Nil Nil Nil Nil NilExercise price Vest 1 ` 12.78 ` 14.53 ` 18.22 ` 17.01 Nil Nil Nil NilExercise price Vest 2 ` 15.36 ` 18.22 ` 19.97 Nil Nil Nil Nil NilExercise price Vest 3 ` 19.49 ` 19.97 Nil Nil Nil Nil Nil Nil
Notes to Financial Statements for the year ended 31 March 2018
161
Fair value is computed using the method provided in the scheme for estimating the valuation of the grant which is linked to the Net Book Value of the business. Adjustment has been made for the resignations during the year ended 31 March 2018 and the consequential impact of forfeiture of the grant.
The movement of the stock appreciation rights during the year is as under:
Particulars (No. of Options) 31 March 2018 31 March 2017
Grants Outstanding at beginning of Year 23,944,300 23,645,400
Options granted during Year 21,547,500 8,650,000
Options of employee transferred during the year to subsidiary company 2,326,125 1,287,600
Grants forfeited on resignation of employees 10,160,500 3,364,900
Grants lapsed during the year 2,420,000 -
Grants exercised 3,796,475 3,698,600
Grants outstanding – Unvested as on 31 March 2018 25,582,300 23,023,900
Grants outstanding –Vested and Exercisable as on 31 March 2018 1,206,400 920,400
Expense arising from the grants till 31 March 2018 (` in lakhs) 492 857
33. RETIREMENT AND OTHER EMPLOYEE BENEFITSThe Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service.
The following tables summarises the components of net benefit expense recognised in the Statement of Profit and Loss and the amounts recognised in the balance sheet for the plan.
Statement of Profit and Loss Gratuity expense (recognised in Employee benefit expense):
Particulars 31 March 2018` in lakhs
31 March 2017` in lakhs
Current service cost 323 168
Interest cost on benefit obligation 117 89
Expected return on plan assets (124) (87)
Net actuarial (gain)/loss recognised in the year 8 255
Past service cost - -
Net Benefit Expense 324 425
Actual return on plan assets 106 178
Balance SheetDetails of Provision for gratuity:
Particulars 31 March 2018` in lakhs
31 March 2017` in lakhs
Defined benefit obligation 1,891 1,617
Fair value of plan assets 2,019 1,721
Less: Unrecognised Past Service Cost - -
Plan asset/(liability) 128 106
Notes to Financial Statements for the year ended 31 March 2018
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Changes in the present value of the defined benefit obligation are as follows:
Particulars 31 March 2018` in lakhs
31 March 2017` in lakhs
Opening defined benefit obligation 1,617 1,144Interest cost 117 89 Current service cost 323 168Transfer (out)/in (22) -Benefits paid (133) (131)Actuarial (gains)/losses on obligation (11) 347Closing defined benefit obligation 1,891 1,617
Changes in the fair value of plan assets are as follows:
Particulars 31 March 2018` in lakhs
31 March 2017` in lakhs
Opening fair value of plan assets 1,722 1,110Expected return 124 87Contributions by employer 324 563Benefits paid (133) (131)Actuarial gains/(losses) (19) 92Closing fair value of plan assets 2,019 1,722
The major categories of plan assets as a percentage of the fair value of total plan assets are as follows:
Particulars 31 March 2018 31 March 2017Investments with insurer % 84% 99%Balance with Bank % 16% 1%
The overall expected rate of return on assets is determined based on the market prices prevailing on that date applicable to the period over which obligation is to be settled. There has been a significant change in the expected rate of return on assets due to the stock market scenario.
The principal assumptions used in determining gratuity liability for the Company’s plans are shown below:
Particulars 31 March 2018 31 March 2017Discount rate 7.68% 7.22%Expected rate of return on assets 7.68% 7.22%Employee Turnover Category 1 - For basic upto ` 1.2 lakhs
Upto 4 yrs 49.80% and 5 yrs & above 2% p.aCategory 2 - For basic more than ` 1.2 lakhsUpto 4 yrs23.3% and 5 yrs & above 2% p.a.
Category 1 - For basic upto ` 1.2 lakhsUpto 4 yrs 42.30% and 5 yrs & above 2% p.a.Category 2 - For basic more than ` 1.2 lakhsUpto 4 yrs25.3% and 5 yrs & above 2% p.a.
Future Salary rise 10% 10%
The estimates of future salary increases, considered in actuarial valuation, takes into account inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.
Amounts for the current period and previous periodsare as follows:
Particulars 31 March 2018` in lakhs
31 March 2017` in lakhs
31 March 2016` in lakhs
31 March 2015` in lakhs
31 March 2014` in lakhs
Defined benefit obligation 1,891 1,617 1,144 861 581Plan assets 2,019 1,721 1,110 691 310Surplus/(deficit) 128 106 (34) (170) (271)Experience adjustments on plan liabilities
164 215 (13) 498 117
Experience adjustments on plan assets
(19) 92 (15) 475 (5)
The employer’s best estimate of the contributions expected to be paid to the plan during the next 12 month ` 221 lakhs (Previous year ` 218 lakhs). The estimates of future salary increase considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors. The above information is certified by the actuary and relied upon by the Auditors.
Notes to Financial Statements for the year ended 31 March 2018
163
34. The Company identifies suppliers registered under the Micro, Small and Medium Enterprises Development Act, 2006,(MSMED) by obtaining confirmations from all suppliers. Based on the information received by the Company, some of the suppliers have confirmed to be registered under MSMED Act, 2006. Accordingly the disclosure relating to amount unpaid as at the year ended together with interest paid/payable is disclosed below:
Sr No
Particulars 31 March 2018` in lakhs
31 March 2017` in lakhs
1 The principal amount and the interest due thereon (to be shown separately) remaining unpaid to any supplier as at the end of each accounting year
94 69
2 The amount of interest paid by the buyer in terms of section 16 of the Micro Small and Medium Enterprise Development Act, 2006, along with the amounts of the payment made to the supplier beyond the appointed day during each accounting year
- -
3 The amount of interest due and payable for the period of delay in making payment (which have been paid but beyond the appointed day during the year) but without adding the interest specified under Micro Small and Medium Enterprise Development Act, 2006.
- -
4 The amount of interest accrued and remaining unpaid at the end of each accounting year;
- -
5 The amount of further interest remaining due and payable even in the succeeding years, until such date when the interest dues as above are actually paid to the small enterprise for the purpose of disallowance as a deductible expenditure under section 23 of the Micro Small and Medium Enterprise Development Act, 2006.
- -
35. During the year the company has utilised MAT credit entitlement of ` 569 lakhs against provision for current tax of `12,143 lakhs (including adjustment of tax relating to earlier periods).
36. CSR EXPENSES i) Gross amount required to be spent by the Groupduring the year ` 708 lakhs
ii) Amount spent during the year:
Amount spent in cash ` in lakhs
Yet to be paid in cash ` in lakhs
Total ` in lakhs
Parent subsidiariesIndian
i) Construction / acquistion of any asset - - -ii) On purpose other than (i) above 606 - 606
The company CSR policy is both community and environment- based. Various programmes are planned in areas as diverse as health, educations, livelihood generations, skill developments and rural development which company intented to spend in upcoming year.
37. SUPPORT SERVICE COSTDuring the year, the Company leased its premises to its subsidiary, Fullerton India Home Finance Company Limited to carry out its operations. The Company has entered into resource sharing agreement with the Subsidiary Company, as per which the Company has agreed to share premises and other resources and thereby to facilitate achieve economies of scale and avoid duplication. The reimbursement of cost is calculated on the basis of number of employees, area occupied, time spent by employees for other companies, actual identification, etc.
During the year the Company has charged ` 795 lakhs (including GST) (Previous year ` 432 lakhs) on account of above mentioned arrangement.
Notes to Financial Statements for the year ended 31 March 2018
164
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38. Below disclosures for SBN relates to specific period as notified, however no such details required in current financial year 2017-18.
Details of Specified Bank Notes (SBN) held and transacted during the period from 8 November, 2016 to 30 December, 2016 as required by notification no. G.S.R 308 (E) dated 30 March, 2017.
Particulars SBNs Other denomination Notes
Total
Closing cash in hand as on November 8, 2016 2,718 596 3,314(+) Permitted receipts - 42,294 42,294(+) Non-permitted receipts (refer Note a & b below) 3,151 - 3,151(-) Permitted payments - 1,609 1,609(-) Amount deposited in Banks 5,868 40,367 46,235Closing cash in hand as on December 30, 2016 - 914 914
a) In the ordinary course of business, the Company collected cash in Specified Bank Notes against loan obligations of the Company aggregating ` 2,862 lakhs and in addition, loan borrowers of the Company have directly deposited cash towards their loan repayments into the collection bank accounts of the Company with various banks, aggregating ` 289 lakhs, during the period from 9 November, 2016 to 30 December, 2016. The Company has relied on the denomination wise details provided by its banks for the disclosure of Specified Bank Notes.
b) The Company had issued an advisory to its collection team and branches on 9 November, 2016 to refrain from collection of Specified Bank Notes. A major portion of amount mentioned in note a) above relates to collections made before such advisory was issued and represent customer loan repayments in rural branches across the country where collections normally occur, through field collection teams.
39. As required by the RBI circular no DNBS.PD.CC. No. 256 /03.10.042 / 2011-12 dated 2 March, 2012 the details of frauds noticed / reported are as below:
Particulars For the year ended 31 March 2018
` in lakhs
For the year ended 31 March 2017
` in lakhsAmount involved 119 51Amount recovered 37 28Amount written off/provided 82 23Balance - -
40. Disclosure required by Insurance Regulatory and Development Authority (IRDA)
Disclosure as per Schedule VI B for insurance commission income earned during the year ended:
Particulars For the year ended 31 March 2018
For the year ended 31 March 2017
ICICI Lombard General Insurance Company Ltd 843 469ICICI Prudential Life Insurance Company Ltd 548 441Kotak Life Insurance Company Ltd 143 57CIGNA TTK Health Insurance Company Ltd 86 22
41. There was no amount due and outstanding to be credited to Investor Education and Protection Fund as at 31 March 2018
Notes to Financial Statements for the year ended 31 March 2018
165
42. A
s req
uire
d by
the
RBI c
ircul
ar n
o. D
NBS
.CO
.PD
.No.
367
/03.
10.0
1/20
13-1
4 da
ted
23 Ja
nuar
y201
4, th
e de
tails
of a
ccou
nts r
estr
uctu
red
durin
g th
e ye
ar e
nded
31
Mar
ch 2
018
are
give
n be
low
:
No
Type
of r
estr
uctu
ring
Rest
ruct
urin
g A
ccou
nt a
s on
Apr
il 1
of
the
FY (
Ope
ning
Fig
ures
)Fr
esh
rest
ruct
urin
g du
ring
the
year
Dow
ngra
datio
ns o
f Res
truc
ture
d ac
coun
ts
duri
ng th
e FY
Wri
te-o
ffs/
sale
/Rec
over
y/ o
f Re
stru
ctur
ed a
ccou
nts
duri
ng th
e FY
Res
truc
ture
d ac
coun
ts a
s on
Mar
ch 3
1 of
the
FY
Ass
et C
lass
ifica
tion
No
of
borr
ower
sA
mou
nt
outs
tand
ing
Prov
isio
n th
ereo
nN
o of
bo
rrow
ers
Am
ount
ou
tsta
ndin
g as
at 3
1 M
arch
20
18
Prov
isio
n th
ereo
nN
o of
bo
rrow
ers
Am
ount
ou
tsta
ndin
g as
at 3
1 M
arch
20
18
Prov
isio
n th
ereo
nN
o of
bo
rrow
ers
Am
ount
ou
tsta
ndin
g Pr
ovis
ion
ther
eon
No
of
borr
ower
sA
mou
nt
outs
tand
ing
Prov
isio
n th
ereo
n
1CD
R
stan
dard
- -
- -
- -
- -
- -
- -
- -
-
Subs
tand
ard
1 2
62
262
-
- -
- -
- -
- -
1
262
2
62
Dou
btfu
l -
- -
- -
- -
- -
- -
- -
- -
Loss
- -
- -
- -
- -
- -
- -
- -
-
Tota
l1
262
2
62
- -
- -
- -
- -
- 1
2
62
262
2O
ther
s
Stan
dard
- -
- -
- -
2
1,3
27
147
1
6
31
95
(3)
(1,9
58)
(242
)
Subs
tand
ard
4
4,1
22
618
-
- -
1
2,1
65
325
-
- -
3
1,9
58
294
Dou
btfu
l -
- -
- -
- (1
) (2
,115
) (1
,057
) -
- -
1
2,1
15
1,0
57
Loss
- -
- -
- -
- -
- -
- -
- -
-
Tota
l 4
4
,122
6
18
- -
- 2
1
,377
(5
85)
1
631
9
5 1
2
,115
1
,109
3G
rand
Tot
al0
00
00
00
00
Stan
dard
- -
- -
- -
2
1,3
27
147
1
6
31
95
(3)
(1,9
58)
(242
)
Subs
tand
ard
5
4,3
84
880
-
- -
1
2,1
65
325
-
- -
4
2,2
19
556
Dou
btfu
l -
- -
- -
- (1
) (2
,115
) (1
,057
) -
- -
1
2,1
15
1,0
57
Loss
- -
- -
- -
- -
- -
- -
- -
-
Tota
l 5
4
,384
8
80
- -
- 2
1
,377
(5
85)
1
631
9
5 2
2
,376
1
,371
Not
e:
1.
The
outs
tand
ing
amou
nt a
nd n
umbe
r of b
orro
wer
s as a
t 31
Mar
ch 2
018
is af
ter c
onsid
erin
g re
cove
ries a
nd sa
le o
f ass
ets d
urin
g th
e ye
ar.
2.
The
abov
e ta
ble
pert
ains
to a
dvan
ces a
nd d
oes n
ot in
clud
e in
vest
men
t in
shar
es w
hich
hav
e be
en fu
lly p
rovi
ded
for.
3.
The
prov
ision
in th
e ab
ove
tabl
e in
clud
es g
ener
al lo
an lo
ss p
rovi
sion
and
othe
r pro
visio
ns h
eld
on th
e re
stru
ctur
ed a
dvan
ces.
4.
For t
he p
urpo
se o
f arit
hmet
ical
acc
urac
y as
requ
ired
by c
ircul
ar, m
ovem
ent i
n pr
ovisi
ons
in th
e ex
istin
g re
stru
ctur
ed a
ccou
nt a
s co
mpa
red
to o
peni
ng b
alan
ce is
disc
lose
d un
der c
olum
n fre
sh re
stru
ctur
ing
(for i
ncre
ase
in p
rovi
sion)
and
writ
e-off
/sal
e/re
cove
ry (f
or
decr
ease
in p
rovi
sion)
dur
ing
the
year
and
are
not
com
para
ble
with
the
addi
tiona
l fac
ilitie
s ava
iled
and
part
ial r
ecov
ery
disc
lose
d un
der t
he re
spec
tive
colu
mns
.
5.
2 ac
coun
ts a
mou
ntin
g to
` 1
,327
lakh
s wer
e up
grad
ed d
urin
g th
e ye
ar.
Not
es to
Fin
anci
al S
tate
men
ts fo
r the
yea
r end
ed 3
1 M
arch
201
8
166
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43. ADDITIONAL DISCLOSURES REQUIRED BY THE RBI i) Capital to Risk Assets Ratio (‘CRAR’)
Items Particulars 31 March 2018 ` in lakhs
31 March 2017 ` in lakhs
i) CRAR (%) 18.93% 22.54%ii) CRAR - Tier I Capital (%) 15.03% 16.28%iii) CRAR - Tier II Capital (%) 3.90% 6.26%iv) Amount of subordinated debt raised as Tier-II capital 69,100 69,100
ii) Details of Investments
Sr. No.
Particulars 31 March 2018 ` in lakhs
31 March 2017 ` in lakhs
A Value of Investments(i) Gross Value of Investments(a) In India 83,871 202,527(b) Outside India, - - (ii) Provisions for Depreciation(a) In India 91 91 (b) Outside India, - - (iii) Net Value of Investments(a) In India 83,780 202,436 (b) Outside India, - - B Movement of provisions held towards depreciation on investmentsi) Opening balance 91 91 ii) Add : Provisions made during the year - - iii) Less : Write-off / write-back of excess provisions during the year - - iv) Closing balance 91 91
iii) Derivatives The Company has not entered into any forward rate agreements, interest rate swaps, exchange traded interest rate derivatives.
Hence, no disclosure is made for the same.
iv) Securitizationa) During the year Company has not transferred any loans through securitization. The information on securitization activity
of the Company as an originator is given below:
Particulars For the year ended 31 March 2018
` in lakhs
For the year ended 31 March 2017
` in lakhs Total number of loans securitised - -Total book value of the loans securitised - -Total book value of the loans securitised including loans placed as collateral - -Sale consideration received for the loan asset securitised - - Excess interest spread recognised in the statement of profit and loss 41 117
Particulars As at 31 March 2018
` in lakhs
As at 31 March 2017
` in lakhsCredit enhancements provided and outstanding (Gross):Interest subordination 2 3Cash Collateral 247 224Corporate Guarantee 40 40
Notes to Financial Statements for the year ended 31 March 2018
167
The information on securitization of the Company as an originator in respect of outstanding amount of assets securitised under par structure is given below:
Particulars For the year ended 31 March 2018
` in lakhs
For the year ended 31 March 2017
` in lakhs No. of SPVs Sponsored by the NBFC for securitisation transactions 1 1 Total Amount of securitised assets as per books of the SPVs sponsored by the NBFC
218 905
Total amount of exposures retained by the company to comply with MRR as on the date of balance sheet
- -
a) Off-balance sheet exposures First loss - - Others - - b) On-balance sheet exposures - - First loss Others 247 224 Amount of exposures to securitisation transactions other than MRR - - a) Off-balance sheet exposures - - i) Exposure to own Securitisation - - First loss - - Others 40 40 ii) Exposure to third party Securitisation transactions First loss - - Others - - b) On-balance sheet exposures i) Exposure to own securitisation First loss - - Others - - ii) Exposure to third party Securitisation transactions First loss - - Others - -
(b) AssignmentDetails of assignment transactions undertaken by the Companyduring the year
Particulars For the year ended 31 March 2018
` in lakhs
For the year ended 31 March 2017
` in lakhsNo. of accounts - 1 Aggregate value (net of provisions) of accounts sold - 14,868 Aggregate consideration - 14,868 Additional consideration realised in respect of accounts transferred in earlier years
- -
Aggregate gain / loss over net book value - -
v) Asset Liability Management Maturity pattern of certain items of Assets and Liabilities:
Particulars ( Rupees Lakhs) Up to 30/31 days Over 1 month upto 2 Months
Over 2 months upto 3months
Over 3 months & up to 6 months
Advances* 31,348 42,484 42,076 127,790 (36,754) (38,262) (37,292) (103,705)
Investments** 65,765 22,465 1,046 - (183,484) (7,869) (4,583) (5,932)
Borrowings 9,515 12,325 76,275 78,045 (9,866) (22,781) (18,270) (86,363)
Notes to Financial Statements for the year ended 31 March 2018
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Particulars (Rupees Lakhs) Over 6 Months & up to 1 year
` in lakhs
Over 1 year & up to 3 years
` in lakhs
Over 3 years & up to 5 years `
in lakhs
Over 5 years ` in lakhs
Total ` in lakhs
Advances* 242,797 573,598 224,649 263,841 1,548,583 (167,901) (334,976) (133,520) (263,383) (1,115,793)
Investments** 11,810 6,600 - 36,105 143,790 (12,120) (5,398) (0) (36,105) (255,492)
Borrowings 192,969 634,762 304,219 48,600 1,356,709 (161,551) (472,970) (244,001) (81,710) (1,097,512)
* Represents interest bearing portfolio loans
**Investments include deposit with banks.
Figures in bracket pertainto the previous year.
vi) Exposures a) Exposure to Real Estate Sector
Sr. No.
Particulars 31 March 2018` in lakhs
31 March 2017 ` in lakhs
a) Direct exposurei) Residential Mortgages - Lending fully secured by mortgages on residential
property that is or will be occupied by the borrower or that is rented 11,388 9,076
ii) Commercial Real Estate - Lending secured by mortgages on commercial real estates (office buildings, retail space, multi-purpose commercial premises, multi-family residential buildings, multi-tenanted commercial premises, industrial or warehouse space, hotels, land acquisition, development and construction, etc.). Exposure would also include non-fund based limits
- -
iii) Investments in Mortgage Backed Securities (MBS) and other securitised exposures -a) Residential - - b) Commercial Real Estate - - Total Exposure to Real Estate Sector 11,388 9,076
The Company provides loans which are fully collateralised against property, in accordance with the approved policy of the Company which includes credit assessment of financialstatements and cash flow of the customers. The end use of the loan may be business in the case of business customers or could be personal in case of salaried individuals. Accordingly, there is no direct real estate exposure except as disclosed above.
b) Exposure to capital market The Company has no exposure to the capital markets directly or indirectly in the current and previous year.
c) Details of financing of parent company products The Company does not finance any of it’s holding/parent company products.
d) Details of Single Borrower Limit (SGL) / Group Borrower Limit (GBL) exceeded by the NBFC The Company has not lent / invested / lent and invested in any borrower / group of borrower in excess of limits prescribed
by the RBI.
e) Unsecured advances Refer note 14 for unsecured advances. The Company has not given any advances against the rights, licenses,
authorizations, etc.
f ) Details of non-performing financial assets purchased / sold I. Details of non performing financial assets purchased :
Notes to Financial Statements for the year ended 31 March 2018
169
Non Performing Assets purchased during the year
Sr. No.
Particulars 31 March 2018 ` in lakhs
31 March 2017 ` in lakhs
1 No. of accounts purchased during the year
NIL NIL2 Aggregate outstanding3 Of these, number of accounts restructured4 Aggregate outstanding
II. Details of non performing financial assets sold :
Non Performing Assets sold during the year
Sr. No.
Particulars 31 March 2018 ` in lakhs
31 March 2017 ` in lakhs
1 No. of accounts sold during the year 159,460 -2 Aggregate outstanding - -3 Aggregate consideration received 1,046 -
viii) Registration with other Financial Sector Regulator
Particulars Status Registration DetailsInsurance Regulatory and Development Authority (IRDA)
Corporate Agent License No. CA0098 Valid till March 31, 2019
ix) No penalties were imposed by RBI andother regulators during the current and previous year.
x) Refer note 27 for related party transactions during the current and previous year.
xI) Ratings assigned by credit rating agencies and migration of ratings during the year
2017-18 2016-17Particulars ICRA India Rating CARE ICRA India Rating CARELTNCD / SD ICRA AA+ IND AA+ CARE AAA ICRA AA+ IND AA+ CARE AAA
with Stable Outlook
with Stable Outlook
with stable outlook
with Stable Outlook
with Stable Outlook
with stable outlook
TL ICRA AA+ IND AA+ CARE AAA ICRA AA+ IND AA+ CARE AAAwith Stable Outlook
with Stable Outlook
with stable outlook
with Stable Outlook
with Stable Outlook
with stable outlook
STSTD ICRA A1+ IND A1+ CARE A1+ ICRA A1+ IND A1+ - CP ICRA A1+ IND A1+ CARE A1+ ICRA A1+ IND A1+ - Company Ratings
ICRA AA+ IND AA+ - ICRA AA+ IND AA+
with Stable Outlook
with Stable Outlook
with Stable Outlook
with Stable Outlook
LT – Long Term ST – Short Term
NCD – Non Convertible Debentures SD – Subordinated Debt
CP – Commercial Paper TL – Term Loan
STD – Short Term Debt PTC - Series A PTC’s
There were no migrations of ratings during the year. All ratings are subject to annual surveillance.
Notes to Financial Statements for the year ended 31 March 2018
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xii) Net Profit or Loss for the period, prior period items and changes in accounting policies. Refer Statement of Profit and Loss for profit or loss in the current and the previous year. The accounting policies followed in
preparation of financial statements are consistent with those of the previous year.
xiii) Revenue has been recognised in accordance with the revenue recognition policy of the Company and there are no deviations to the same (refer note 2).
xiv) Break up of ‘Provisions and Contingencies’ shown under the head Expenditure in the Statement of Profit & Loss Account
Break up of ‘Provisions and Contingencies’ shown under the head Expenditure in Profit and Loss Account
31 March 2018 ` in lakhs
31 March 2017 ` in lakhs
Provisions for depreciation in carrying value of Investment - -
Provision towards sub Standard & Doubtful portfolio loans 746 4,727
Provision made towards income tax (incl. Adj for tax of earlier period) 12,143 18,883
Provision on assigned portfolio loans 8 21
Provision for standard portfolio loans (17,678) 15,404
xv) Draw down from reserves The Company has not withdrawn any amount from any of the reserves during the year ended 31 March 2018 (Previous year : Nil)
xvi) Concentration of Deposits, Advances, Exposures and NPAs (a) Concentration of Deposits
The Company has not accepted any deposits during the current and previous year. Also there are no outstanding deposit from earlier years.
(b) Concentration of Advances
31 March 2018 ` in lakhs
31 March 2017 ` in lakhs
Total advances to twenty largest borrowers 32,710 34,693
Percentage of advances to twenty largest borrowers to total advances of the Company
2% 3%
(c) Concentration of Exposures
31 March 2018 ` in lakhs
31 March 2017 ` in lakhs
Total exposure to twenty largest borrowers / customers 33,272 35,211
Percentage of exposures to twenty largest borrowers / customers to Total Exposure of the Company on borrowers / customers
2% 3%
(d) Concentration of Non Performing Accounts
31 March 2018 ` in lakhs
31 March 2017 ` in lakhs
Total Exposure to top four NPA accounts 5,559 5,640
(e) Sector-wise Non performing accounts
Sr. No.
Particulars (% of NPA to total advance of respective sector) 31 March 2018 ` in lakhs
31 March 2017 ` in lakhs
1 Agriculture and allied activities 0.6% 0.2%2 MSME 5.3% 7.8%3 Services 0.0% 0.0%4 Unsecured personal loans 0.9% 1.1%5 Auto loans (Commercial Vehicle) 2.3% 4.3%6 Other personal loans (incl. TW, used car, Loan against property) 5.0% 5.7%
*Above sectors includes corporate borrowers NPA of 5.3% (5.8%).
Notes to Financial Statements for the year ended 31 March 2018
171
xvii) Movement of NPAs, provision, net NPA
Particulars 31 March 2018 ` in lakhs
31 March 2017 ` in lakhs
(i) Net NPA to Net Advances (%) 1.61% 2.29%(ii) Movement in Gross NPAs
(a) Opening Balance 37,715 21,492(b) additions during the year 105,728 70,440Sub Total (A) 143,443 91,932(a) Up gradations 12,251 4,569(b) Recoveries 17,260 8,279(c) Write-Offs 76,063 41,369Sub Total (B) 105,574 54,217Gross NPAs as on 31 Mar (A-B) 37,869 37,715
(iii) Movement in provisions for NPAs(a) Opening Balance 12,132 7,406(a) Provisions made during the year 32,614 24,622(b) Write off / Write back of excess provisions 31,868 19,896(b) Closing Balance 12,878 12,132
(iv) Movement in Net NPAs(a) Opening Balance 25,583 14,086(b) additions during the year 73,114 45,818(c) Reductions during the Year 73,706 34,321(d) Closing Balance 24,991 25,583
xviii) The Company has not invested in any overseas assets in the current and previous year. Also there are no outstanding investments from earlier years.
xix) The Company has not sponsored any off-Balance Sheet SPV in the current and previous years which were required to be consolidated as per accounting norms. Also there are no outstanding investments from earlier years.
xx) Disclosure on complaints
(a) No. of complaints pending at the beginning of the year 22 (b) No. of complaints received during the year 256 (c) No. of complaints redressed during the year 268 (d) No. of complaints pending at the end of the year 10
44. The Company does not have any outstanding loan against gold jewellery as at 31 March 2018 (Previous year : ` Nil)
45. The Company has reclassified/regrouped previous year figures to conform to current year’s classification, where applicable.
B S R & Co. LLP For and on behalf of the Board of Directors ofChartered Accountants Fullerton India Credit Company LimitedFirm No : 101248W/W-100022
Sd/-Milind Ranade
Sd/- Gan Chee Yen
Sd/- Rajashree Nambiar
Partner Chairman CEO & Managing DirectorMembership No. 100564 DIN : 03602857 DIN : 06932632
Sd/- Pankaj MalikChief Financial Officer & Company SecretaryICSI Reg No. : A-19125
Place : Mumbai Place : MumbaiDate : 18 May, 2018 Date : 18 May, 2018
Notes to Financial Statements for the year ended 31 March 2018
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SCHEDULE TO THE BALANCE SHEET OF A NON-BANKING FINANCIAL COMPANY
(As required in terms of Paragraph 13 of the Non-Banking Financial (Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank of India ) Directions, 2007)
S. No Particulars (` in lakhs)
Liabilities side:
1 Loans and advances availed by the Non Banking Financial Company inclusive of interest accrued thereon but not paid:
Amount Outstanding
Amount Overdue
(a) Debentures (other than falling within the meaning of public deposits)
Secured 646,098 -
Unsecured 72,248 -
(b) Deferred Credits - -
(c) Term Loans 507,088 -
(d) Inter-corporate loans and borrowing - -
(e) Commercial Paper 149,296 -
(f ) Public Deposits - -
(g) Other Loans 12,190 -
2 Break-up of (1)(f) above (Outstanding public deposits inclusive of interest accrued thereon but not paid):
Amount Outstanding
Amount Overdue
(a) In the form of Unsecured debentures - -
(b) In the form of partly secured debentures i.e. debentures where there is a shortfall in the value of security”
- -
(c) Other public deposits - -
Assets side:
3 Break-up of Loans and Advances including bills receivables [other than those included in (4) below] :
Amount Outstanding
(a) Secured 661,192
(b) Unsecured 900,219
4 Break up of Leased Assets and stock on hire and other assets counting towards AFC activities
Amount Outstanding
(i) Lease assets including lease rentals under sundry debtors :”
(a) Finance Lease -
(b) Operating Lease -
(ii) Stock on hire including hire charges under sundry debtors:”
(a) Assets on hire -
(b) Repossessed Assets -
(iii) Other Loans counting towards AFC activities :
(a) Loans where assets have been repossessed 45
(b) Loans other than (a) above 112,391
5 Break-up of Investments :
Current Investments
1. Quoted:
(i) Shares:
(a) Equity -
(b) Preference -
(ii) Debentures and Bonds -
(iii) Units of mutual funds -
(iv) Government Securities -
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S. No Particulars (` in lakhs)
(v) Others
2. Unquoted:
(i) Shares:
(a) Equity -
(b) Preference -
(ii) Debentures and Bonds -
(iii) Units of mutual funds -
(iv) Government Securities -
(v) Others – Certificate of Deposits 33,278
– Commercial papers 14,397
Long Term Investments
1. Quoted:
(i) Shares:
(a) Equity -
(b) Preference -
(ii) Debentures and Bonds -
(iii) Units of mutual funds -
(iv) Government Securities -
(v) Others -
2. Unquoted:
(i) Shares:
(a) Equity 36,105
(b) Preference -
(ii) Debentures and Bonds -
(iii) Units of mutual funds -
(iv) Government Securities -
(v) Others -
6 Borrower group-wise classification of all leased assets, stock-on-hire and loans and advances :
Category Amount net of Provision
Secured Unsecured Total
1. Related Parties
(a) Subsidiaries - - -
(b) Companies in the same group - - -
(c) Other related parties - - -
2. Other than related parties 649,657 898,876 1,548,533
Total 649,657 898,876 1,548,533
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S. No Particulars (` in lakhs)
7 Investor group-wise classification of all investments (current and long term) in shares and securities (both quoted and unquoted):
Category Market Value / Break up or fair value or
NAV
Book Value (Net of Provisions)
1. Related Parties
(a) Subsidiaries 36,000 36,000
(b) Companies in the same management - -
(c) Other related parties - -
2. Other than related parties 47,780 47,780
Total 83,780 83,780
8 Other Information Amount
(i) Gross Non-Performing Assets
(a) Related parties -
(b) Other than related parties 37,869
(ii) Net Non-Performing Assets
(a) Related parties -
(b) Other than related parties 24,991
(iii) Assets acquired in satisfaction of debt -
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STATEMENT CONTAINING SALIENT FEATURES OF THE FINANCIAL STATEMENT OF SUBSIDIARIES/ASSOCIATE COMPANIES/JOINT VENTURES(Pursuant to first proviso to sub-section (3) of section 129 read with rule 5 of Companies (Accounts) Rules, 2014)
Part A : Subsidiaries
Sr. No
Particulars Fullerton India Home Finance Company Ltd
Fullerton India Foundation for
Social & Economic Development
1 Financial years of the subsidiary Company ended on 31 March 2018 31 March 20182 Reporting currency INR INR3 Shares of the subsidiary held on the above date and extent of holding
a) Equity Shares (of `10 each) 195,273,443 23,575 b) Extent of holding 100% 100%
4 Net aggregate amount of Profit/(Losses) of the Subsidiary for the period so far as it concerns members of Fullerton India Credit Company Limitedi) Not dealt within the accounts of the Holding Company a) For the financial year of the Subsidiary 110,212,947 0 b) For the previous financial years of the Subsidiary/since it
became the Holding company’s subsidiary (166,764,756) 0
ii) Deal within the Holding company’s accounts a) For the financial year of the Subsidiary Nil Nil b) For the previous financial years of the Subsidiary/since it
became the Holding company’s subsidiaryNil Nil
5 Material changes if any between the end of financial year of the subsidiary company and that of the Holding Company
Nil Nil
6 Additional information on Subsidiary CompaniesShare Capital 1,952,734,430 235,750 Reserves and Surplus 1,589,784,766 - Total Assets 20,537,303,819 235,750 Total Liabilities 16,994,784,623 - Investment (except in case of investment in subsidiaries) 490,802,518 - Turnover 1,380,089,301 - Profit before Taxation 64,495,094 - Provision for Taxation (45,717,853) - Profit after Taxation 110,212,947 - Proposed Dividend (including Dividend Distribution Tax thereon) - -
7 Operation commenced Yes No
No subsidiaries were sold or liquidated during the year.
Part B : Associates and Joint VenturesThe Company does not have associates and joint ventures during the year ended 31 March 2018.
For and on behalf of the Board of Directors ofFullerton India Credit Company Limited
Sd/- Gan Chee Yen
Sd/- Rajashree Nambiar
Chairman CEO & Managing DirectorDIN : 03602857 DIN : 06932632
Sd/- Pankaj MalikChief Financial Officer & Company SecretaryICSI Reg No. : A-19125
Place : Mumbai Place : MumbaiDate : 18 May, 2018 Date : 18 May, 2018
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Notes
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Notes
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Notes
Fullerton India Credit Company Ltd.Registered office addressMegh Towers, Third Floor, New No. 165, Old No. 307,Poonamallee High Road, Maduravoyal, Chennai-600 095
Corporate office addressFloor 6, B Wing, Supreme Business Park, Supreme City,Behind Lake Castle, Powai, Mumbai – 400076
Email : [email protected] | Website : www.fullertonindia.comCIN number : U65191TN1994PLC079235Toll Free No: 1800 103 6001
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