To,
The members of IKF Finance Limited.
Your Directors' have pleasure in presenting the 33rd
Annual Report together with the Audited Accounts for the financial period ended 31st
March, 2024.
Financial Results:
The summarized financial results of the Company are as given hereunder:
(Amounts in lakhs, unless otherwise stated)
Particulars |
Standalone |
Consolidated |
|
2023-24 |
2022-23 |
2023-24 |
2022-23 |
Revenue from Operations |
43,422.54 |
28,495.44 |
57941.84 |
37444.08 |
Other Income |
325.04 |
164.24 |
658.34 |
400.63 |
Profit (loss) before depreciation, interest and tax |
32,701.37 |
22,397.59 |
42646.10 |
27807.55 |
Depreciation/amortization |
340.89 |
264.23 |
468.88 |
341.66 |
Finance cost |
22,022.85 |
15,402.63 |
28476.10 |
19217.55 |
Impairment expense on loans |
599.58 |
-44.98 |
843.03 |
43.38 |
Portfolio Loans & other balances written off |
1,040.93 |
584.83 |
1,175.29 |
584.83 |
Profit (loss)before tax |
10,337.63 |
6,730.73 |
13701.12 |
8248.33 |
Provision for tax/deferred tax |
2,640.19 |
1,730.22 |
3520.61 |
2096.38 |
Profit (loss) after tax before exception item |
7,697.44 |
5000.51 |
10180.51 |
6151.95 |
Other comprehensive income / (loss) |
-3.26 |
9.86 |
-19.22 |
67.97 |
Net profit (loss) after exceptional items |
7,697.44 |
5,000.51 |
10161.29 |
6219.93 |
Balance brought forward from previous year |
20,382.66 |
16,622.42 |
22518.93 |
18183.90 |
Dividend on Equity Shares |
0 |
0 |
0.00 |
0.00 |
Tax on dividend |
0 |
0 |
0.00 |
0.00 |
Transfer to Statutory Reserve as required by Section 45- IC
of Reserve Bank of India Act, 1934 |
1,539.49 |
1,000.10 |
2,172.43 |
1268.00 |
Transfer to General reserve |
384.87 |
250.03 |
384.87 |
250.03 |
Transferred to Share Based payment reserve |
1.08 |
-3.99 |
1.08 |
-4.00 |
Surplus carried to Balance sheet |
5,769.82 |
3,760.24 |
7407.05 |
4335.03 |
Review of Operations:
Standalone:
The performance for the year ended March 31, 2024 has improved and the
Revenue from operations has grown by 52% to Rs.434.23 Cr from Rs.284.95 Cr for the
corresponding previous year and Net Profit increased to Rs.76.97 Cr as against Rs.50.00 Cr
registering a growth of 54% for the corresponding previous year. During the year, the Loan
Book has grown by 54% from Rs.2137 Cr to 3291.04 Cr (before Impairment loss allowance).
The total assets managed by the Company, including receivables assigned / securitized
stood at around Rs.3775 Cr as at March 31, 2024 as against Rs.2452 Cr in the previous year
thereby registering a growth of 54%.
Consolidated:
The Company's performance, along with its subsidiary's
performance for the year ended March 31, 2024 on a consolidated basis is satisfactory. The
Revenue from operations has increased to 579.42 Cr from 374.44Cr and Net Profit
increased to Rs.101.81 Cr from Rs. 61.52Cr registering a growth of 65 % for the
corresponding previousyear.
Future Outlook:
Global Economic Scenario
The global economy has exhibited remarkable resilience despite facing
repeated and overlapping shocks, alongside unprecedented monetary tightening measures.
Growth in the US and several key emerging market economies (EMEs) has surpassed
expectations, even as manufacturing activity remained subdued, and the services sector
exhibited strength. In 2023, the global economy grew by 3.1%, but a slowdown to 2.9% is
anticipated in 2024. While headline inflation has decreased across countries, core and
service inflation have declined more gradually due to persistent labour market tightness.
Major central banks in advanced economies have maintained policy rates to align inflation
with targets. Global crude oil prices have remained volatile, and any escalation in
geopolitical conflicts could further disrupt the oil market, impacting both inflation and
economic growth. Despite easing inflation, the global economy is expected to face tighter
credit conditions and increased pressure on the business sector, potentially leading to
slowdowns in hiring and expenditure. The economic rebound in 2025 will largely depend on
central banks' ability to ease economic constraints as inflation indicators approach
their targets.
Indian Economic Scenario
India has solidified its position as the world's third-largest
fintech economy and has advanced significantly in global stock markets. Despite global
economic uncertainties, India's GDP grew by 8.2% in FY 2023-24, driven by increased
public sector investments, a resilient financial sector, and significant growth in
non-food credit. India has shown resilience and progress through timely policy
interventions aimed at ensuring macroeconomic stability and revitalizing both financial
and non-financial sectors. Significant investments in robust physical and digital public
infrastructure have enabled the country to navigate challenges and ensure sustained
economic progress. Looking forward, India is poised to remain the world's
fastest-growing major economy, with GDP growth expected to reach nearly 7% in FY 2024-25.
This growth is likely to be driven by robust domestic demand, private consumption,
investment, and government reforms.
Indian Financial Services Sector
India's financial services sector is undergoing rapid expansion,
marked by robust growth among existing firms and the entry of new players. The sector
includes insurance companies, commercial banks, cooperatives, non-banking financial
companies (NBFCs), mutual funds, and more. NBFCs have emerged as critical pillars of
financial support, particularly for SMEs and those traditionally underserved by
conventional banking institutions. Despite competition from public and private sector
banks, NBFCs have demonstrated agility and efficiency, leveraging technology to enhance
operational efficiency, elevate customer experiences, and ensure compliance with
regulatory standards. NBFCs have played a significant role in boosting credit flow to
MSMEs by adopting innovative tools and unconventional risk assessment methods tailored to
the unique needs of small businesses. The sector has also witnessed a transformative shift
with the growing influence of digital technologies, reshaping its growth trajectory and
enabling NBFCs to compete effectively with larger institutions.
Performance in Commercial Vehicles:
The commercial vehicle sector recorded moderate growth in FY 2023-24,
with a 0.6% increase in volume. However, projections from ICRA suggest a potential decline
of 4-7% in commercial vehicle volume growth for FY 2024-25. Despite this projection, sales
of commercial vehicles reached record highs of 9.67 lakh units in FY 2023-24, driven by
substantial government investments in infrastructure and increased freight movement.
Although a slowdown in demand for medium and heavy commercial vehicles (MHCVs) and light
commercial vehicles (LCVs) may occur in FY 2024-25, the long-term outlook remains
promising. This optimism is supported by a robust macroeconomic landscape, ongoing
infrastructure projects, and expanding freight demand.
Performance in Passenger Vehicles
The Indian passenger vehicle market experienced a surge in demand,
particularly for utility vehicles, in FY 2023-24. The segment achieved record sales of
over 42.18 lakh units, driven by new model launches and strong demand for SUVs. Electric
vehicles (EVs) also contributed to this growth, with electric cars accounting for around
6% of total EV sales nationwide. As more OEMs plan to introduce new electric vehicles
tailored to the domestic market, there is significant potential for increased EV adoption
and overall growth in the passenger vehicle segment. The upcoming launches of utility
vehicles and new models are expected to further drive growth in the Indian passenger
vehicle market.
Performance in Two-Wheelers and Three-Wheelers
The two-wheeler market in India witnessed substantial growth of 13.3%
in FY 2023-24, with 178.74 lakh units sold, and is projected to grow at a CAGR of 10.29%
by 2029. Economic prosperity and rising disposable incomes, along with demographic shifts
favouring personal mobility solutions, have fuelled demand in this segment. Electric
two-wheelers (e2Ws) saw a remarkable 33.3% increase in sales compared to the previous
year. The three-wheeler segment also performed exceptionally well, with a growth of 41.5%
and total sales of 6.91 lakh units. This growth is driven by increasing demand for
last-mile connectivity and the adoption of electric vehicles in both urban and rural
areas.
Performance in Construction Equipment
The construction equipment industry plays a pivotal role in driving
economic development by enabling infrastructure growth. Government initiatives like the
National Infrastructure Pipeline (NIP), and the PM Gati Shakti Master Plan have created
numerous opportunities within the construction sector. The Indian construction equipment
market is expected to reach USD 10.90 billion by 2029, registering a CAGR of 8.30%. The
improvement in road construction infrastructure, increasing urbanization, and higher
investment in infrastructure activities are key factors contributing to growth in this
sector.
Performance in MSMEs
The MSME sector in India holds a crucial position in employment
generation and significantly contributes to the country's GDP, accounting for 40% of
industrial production and 42% of exports. Despite supportive government initiatives, a
credit gap of Rs.25 trillion persists, which NBFCs can address through collaborations with
fintech firms and advancements in digital technologies. The MSME sector has been a key
driver of growth for NBFCs, particularly in underbanked regions. By offering tailored
products and digital solutions, NBFCs have played a significant role in enhancing credit
flow to MSMEs and supporting their growth.
Outlook for IKF Finance in FY'25:
Looking ahead to FY'25, your company is well-positioned to
capitalize on growth opportunities across all major segments of the automobile industry.
The company's continued focus on the retail segment, coupled with its commitment to
providing superior customer service and maintaining asset quality, will enable it to meet
the financing needs of clients in commercial vehicles, passenger vehicles, two-wheelers,
three-wheelers, and construction equipment. With robust demand expected in these segments,
driven by government initiatives and infrastructure development, your company is confident
in its ability to sustain growth and profitability. The company's strategic focus on
digital transformation, innovative financing solutions, and strong customer relationships
will continue to be the foundation of its success in FY'25 and beyond.
Risk Management & Credit Monitoring:
Overview of Risk Management
At IKF Finance, risk management is a critical component of our overall
business strategy. We recognize that the ability to identify, assess, and mitigate risks
is essential to sustaining growth and profitability. In an increasingly dynamic and
complex financial environment, our approach to risk management is both proactive and
comprehensive, ensuring that all potential risks are systematically identified, evaluated,
and managed in alignment with our strategic objectives.
Our risk management framework is built on a foundation of governance
structures, policies, and analytical tools. This framework is designed to address a wide
range of risks, including credit, market, operational, and liquidity risks. By
continuously refining our risk management processes and leveraging the latest
technological advancements, we aim to minimize potential losses while maximizing
opportunities for growth.
Credit Risk Management
At IKF Finance, credit risk management is a cornerstone of our
business, with a focus on safeguarding the quality of our loan portfolio through
meticulous underwriting and ongoing monitoring. We have adopted a two-pronged approach to
credit risk management that involves the separate evaluation of both the customer and the
asset.
Customer Underwriting
Our customer underwriting process is designed to assess the
creditworthiness of borrowers. We leverage advanced technology to authenticate and verify
customer information, ensuring the identification of genuine customers. We use automated
verification tools to evaluate the stability and repayment capacity of potential
borrowers. By employing these cutting-edge technologies, we minimize the risk of fraud and
enhance the accuracy of our credit assessments.
Asset Underwriting
Our asset underwriting begins with the preparation of stagewise asset
grids, developed through a rigorous scientific process. These grids take into account
several key factors, including vehicle population, resale value, and the competitive
landscape. This comprehensive approach allows us to accurately gauge the current market
value of each vehicle, ensuring that our assessments are grounded in real-time data and
market trends. Asset valuation is external and is done through Mahindra Auto Inspect for
PAN India. These valuations are critical in fixing the loan-to-value (LTV) ratios,
ensuring that our exposure is aligned with the current value of the underlying collateral.
Use of Technology
We have integrated advanced technological tools into our credit risk
management framework to enhance the precision and efficiency of our underwriting process.
Technology plays a crucial role in identifying genuine customers, conducting real-time
credit checks, and partially automating the decision-making process.
Operational Risk Management
Operational risk management is integral to maintaining the resilience
and efficiency of our operations. We have established comprehensive policies and
procedures to manage operational risks, including those related to internal processes,
systems, human resources, and external events. Our risk management framework is supported
by a strong internal control environment, regular audits, and continuous monitoring of key
risk indicators.
Market and Liquidity Risk Management
Market and liquidity risks are managed through a well-defined framework
that includes regular monitoring of market trends, liquidity positions, and interest rate
movements. We maintain adequate liquidity buffers and have contingency plans in place to
address any potential disruptions in our funding sources. Our asset-liability management
(ALM) committee regularly reviews our liquidity and interest rate risk exposures to ensure
that they remain within acceptable limits.
Technology and Cyber Risk Management
As we continue to invest in digital transformation, managing technology
and cyber risks has become increasingly important. We have implemented cybersecurity
measures to protect our systems and data from cyber threats. Regular vulnerability
assessments, penetration testing, and employee training programs are conducted to enhance
our cybersecurity posture.
At IKF Finance, risk management and credit monitoring are central to
our commitment to delivering sustainable growth and safeguarding stakeholder interests.
Our comprehensive risk management framework, coupled with our proactive credit monitoring
practices, ensures that we are well-equipped to navigate the evolving financial landscape.
As we move forward, we will continue to enhance our risk management capabilities,
leveraging technology and data analytics to stay ahead of emerging risks and capitalize on
new opportunities.
Corporate Governance:
Your Company's Non-convertible debt securities got listed with
Bombay Stock Exchange Limited ("BSE"). A report on the Corporate Governance
along with a declaration by the Managing Director with regard to code of conduct to be
presented to the members of the Company as such a report on Corporate Governance Report is
attached as part of this report.
Management's Discussion and Analysis:
Strategic Focus and Growth Strategy
At IKF Finance, our strategic focus for FY'25 will shift towards
achieving product focussed granular growth, with a heightened emphasis on creating a
separate product level manpower on retail lending to micro and small entrepreneurs. We
believe that by prioritizing high-yielding retail loans such as those for small commercial
vehicles and light commercial vehicles we can accelerate the growth and continue to build
Heavy Commercial vehicle, Construction Equipment, car and Loans to MSMEs. This targeted
approach allows us to concentrate on more profitable segments, ensuring sustainable and
substantial growth in our net income.
Our commitment to these products reflects our dedication to reaching
niche markets within the underbanked and unbanked segments, which are crucial to the
economic fabric of rural India. By channelling our efforts into these high-yield
opportunities, we aim to optimize our portfolio and deliver stronger returns for our
stakeholders. This strategy not only supports our goal of enhancing profitability but also
fortifies our market position and financial stability.
Commitment to Digitalization and Customer-Centric Solutions
In line with our strategic priorities, we remain committed to offering
need-based financial solutions, underpinned by our ongoing dedication to digitalization.
This focus on digital transformation enhances the customer experience, streamlining our
processes and making it easier for our clients to access financial services. Our
transparent communication practices empower customers to make informed decisions,
reinforcing our reputation as a trusted and preferred lender in a competitive landscape.
The trust our customers place in us is evidenced by the outstanding
performance of our core loan products over the past year, resulting in a significant 54%
increase in AUM compared to FY 2023-24. This growth highlights the success of our
strategic focus on high-yielding segments and our ability to meet the financial needs of
underserved markets effectively.
Liquidity Management
While we have observed a slight increase in the cost of debt during
last fiscal, largely due to prevailing market rates, we continue to maintain sufficient
liquidity buffers to manage our liability repayments effectively.
All the Asset-Liability Management (ALM) buckets remain positive, with
a significant cumulative surplus up to one year.
In conclusion, IKF Finance's strategic emphasis on product-focused
granular growth, particularly within the high-yield segments of small commercial vehicles,
light commercial vehicles position us strongly for sustained profitability. Our unwavering
commitment to digitalization and customer-centric solutions continues to enhance our
operational efficiency and strengthen our customer relationships. Supported by our robust
financial performance and prudent liquidity management, we are well-equipped to navigate
the evolving financial landscape. As we move forward, we remain focused on optimizing our
portfolio, delivering superior value to our stakeholders, and ensuring long-term growth
and stability in a competitive environment.
Credit Rating of Securities:
Name of the Credit Rating Agency |
Borrowing Instrument |
Amount Rated (in crores) |
Date of Rating |
Rating Assigned |
Rating Valid Till |
Whether New/ Renewal/ Reassigned/
Withdrawn |
CARE |
Long Term Bank Facilities |
2600 |
21-03-2024 |
CARE A |
20-03-2025 |
renewal |
CARE |
Subordinate Debt |
165 |
21-03-2024 |
CARE A |
20-03-2025 |
renewal |
CARE |
NCDs |
270 |
21-03-2024 |
CARE A |
20-03-2025 |
renewal |
Resource Mobilization
During the year under review, the company strategically enhanced its
resource mobilization efforts while continuing to adhere to its status as a
non-deposit-taking Non-Banking Financial Company (NBFC) in compliance with the Reserve
Bank of India's guidelines and the Companies (Acceptance of Deposits) Rules, 2014.
Working Capital Management:
The company successfully reduced its dependence on cash credit limits
by raising term resources, effectively managing its Asset-Liability Mismatch (ALM). Moving
forward, the company plans to increase its cash credit utilization proportionately in
alignment with the growth in term resources.
Term Loans:
The company mobilized significant term loans from various financial
institutions, reflecting its robust banking relationships and the confidence of lenders in
its financial stability and growth prospects.
Commercial Paper:
No commercial paper was issued during the year, aligning with the
company's strategic resource allocation.
Non-Convertible Debentures (NCDs):
The company successfully raised funds through private placements of
Non-Convertible Debentures (NCDs) from select financial institutions. These funds
contribute to the company's capital structure, enhancing its ability to finance
operations and growth initiatives.
Securitization and Assignment:
During the year, the company effectively assigned a portion of its
vehicle loan receivables, further optimizing its financial resources and liquidity.
Borrowing Profile:
The company maintained a diversified borrowing profile, primarily
leveraging bank borrowings, along with support from NBFCs, Financial Institutions, and
NCDs. This approach has allowed the company to access low-cost funds, ensuring a stable
and cost-effective capital base for ongoing operations and expansion.Securitization /
Assignment of Loan Receivables:
Capital Adequacy:
The Capital to Risk Assets Ratio of your company is 26.51% as on
31.03.2024, well above the minimum of 15% prescribed by the Reserve Bank of India, of
which Tier I Capital constituted 22.67% and Tier II constituted 3.84%.
Dividend:
Your Directors' have not recommended payment of dividend for the
financial year ended 31st March, 2024 since it is proposed to retain the same
in the business.
Transfer of unclaimed dividend to Investor Education and Protection
Fund:
During the period under review, no such case was raised to credit / to
pay any amount to the Investor Education and Protection Fund.
Share Capital: a. Authorized Share Capital: The Authorised Share
Capital of the Company stood at Rs. 105,00,00,000/- (Rupees One Hundred and Five Crores
only) divided into 8,00,00,000 (Eight Crore only) Equity Shares of Rs. 10/- (Rupees Ten
only) each and 25,00,000 (Twenty Five Lac only) Preference Shares of Rs. 100/- (Rupees One
Hundred only) each,
b. Paid up Share Capital: The total Paid up Share Capital of the
Company was increased to Rs. 70,15,64,450 as on 31.03.2024 consisting of Rs. 7,01,56,445
fully paid equity shares of Rs. 10/- each as against Rs. 64,57,50,500 consisting
6,45,75,050 fully paid shares of Rs. 10/- each as on 31.03.2023. During the year the
Company has raised capital of Rs. 1,19,99,99,925 (including premium) by allotting new
55,81,395 fully paid equity shares of Rs. 10/- each.
Compulsorily Convertible Preference Shares.
There are no Compulsorily Convertible Preference Shares outstanding as
on 31.03.2024 c. Issue of Shares with differential voting rights
The Company has not issued any Shares with differential voting rights
during the period under review.
d. Buy Back of Securities
The Company has not bought back any of its securities during the year
under review.
e. Sweat Equity
The Company has not issued any Sweat Equity Shares during the year
under review.
f. Bonus Shares
The Company has not issued any bonus shares during the year under
review.
g. Employees Stock Option
The Board of Directors has granted total 5,62,860 stock options to the
eligible employees at a price of Rs. 120/- (Rupees One Hundred and Twenty only) per share
during the FY 2018-19.
As on 31st March, 2024, 1,46,800 options vested and
outstanding.
Disclosure as required under Rule 12(9) of Companies (Share Capital and
Debentures) Rules, 2014 are as below:
(a) options granted |
5,62,860 |
(b) options vested |
1,46,800 |
(c) options exercised |
Nil |
(d) the total number of shares arising as a result of
exercise of option |
Nil |
(e) options lapsed |
4,16,060 |
(f) the exercise price |
Rs. 120/- |
(g) variation of terms of options |
NA |
(h) money realized by exercise of options |
NIL |
(i) total number of options in force |
1,46,800 |
(j) employee wise details of options granted to: |
|
(i) key managerial personnel |
Ch Sreenivasa Rao, CFO & Company Secretary- 15,180
Options |
(ii) any other employee who receives a grant of options in
any one year of option amounting to five percent or more of options granted during that
year |
Chakrapani Gollamudi, Chief Risk Officer-51,500 Options-9.07% |
(iii) identified employees who were granted option, during
any one year, equal to or exceeding one percent of the issued capital (excluding
outstanding warrants and conversions) of the company at the time of grant |
Nil |
Transfer to Reserves
The Directors of the Company has transferred 384.87 Lacs to General
Reserves out of the current year profits for the Financial Year 2023-24 as against
Rs.250.03 Lacs during the Financial Year 2022-23. Further your Directors has transferred
Rs. 1539.49 Lacs to Statutory Reserve @ 20% profit after tax as required under Section
45-IC of Reserve Bank of India Act, 1934 during the Financial Year 2023-24 as against Rs.
1000.10 Lacs during the Financial Year 2022-23. Further Rs. 1.08 Lacs was transferred
during the Financial Year 2023-24 to Share Based payment reserve as against
(4.00) Lacs during the Financial Year 2022-23. Further the Company
has transferred Rs. 10562.67 Lacs to share premium account during the year 2023-24
Details of Subsidiary, Associate and Joint Venture Companies
The Company is not having any Associate and Joint Venture Companies as
on date by virtue of Section 2 (6) of the Companies Act, 2013. As on 31.03.2024, IKF Home
Finance Limited is the Subsidiary Company in which the Company holds 90.55%. Policy for
determining material' subsidiaries is available on the company's website
and can be accessed through the web-link https://www.ikffinance.com/assets/
pdf/policies/Policy%20on%20Material%20Subsidiaries%20 -%20July%202024.pdf
No Company has become or ceased to be the Company's Subsidiaries,
joint ventures or associate companies during the year.
Salient features of the financials of the above-mentioned subsidiary
have been given in Form AOC-1 as Annexure-I to this report
Auditors:
Statutory Auditors:
In due compliance of the Reserve Bank of India(RBI) vide Notification
Ref. No. DOS.CO.ARG/SEC.01/08.91.001/2021-22 dated 27th April, 2021 guidelines
for appointment statutory auditors of NBFCs your Company has appointed M/s SGCO & Co.,
LLP., Chartered Accountants (Firm Regn No 112081W/W100184) as Statutory Auditors for a
further period of 3 (three) years at the 30th Annual General Meeting to hold
the office of Statutory Auditors from the conclusion of 30th Annual General
Meeting to till the conclusion of 33rd Annual General Meeting of the Company.
Further in due compliance of the Reserve Bank of India(RBI) vide
Notification Ref. No. DOS.CO.ARG/ SEC.01/08.91.001/2021-22 dated 27th April,
2021 guidelines for appointment statutory auditors of NBFCs, your Board of Directors at
the meeting held on 29.05.2024 has, subject to approval of the Members, approved the
appointment of M/s. Mukund M Chitale & Co (Firm Regn No: 106655W) Chartered
Accountants, as Statutory Auditors of the Company for a period of 3 (Three) years to hold
office from the conclusion of this 33rd Annual General Meeting of the Company
till the conclusion of the 36th Annual General Meeting of the Company to be
held in the year 2027 on such remuneration plus applicable taxes and out-of-pocket
expenses, as may be mutually agreed upon by the audit committee/Board of Directors and the
Statutory Auditors.
Qualification by the Statutory Auditor:
The Audit Report does not contain any qualification, reservation or
adverse remarks.
Secretarial Auditor:
Pursuant to provisions of Section 204 of the Companies Act, 2013 and
the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 the
Company has appointed M/s. B S S & Associates, Company Secretaries as Secretarial
Auditors of the Company. Secretarial Audit Report is enclosed as Annexure-II to
this Report.
Qualification by Secretarial Auditor:
The Secretarial Audit Report does not contain any qualification,
reservation or adverse remarks.
Maintenance of Cost Records:
Cost Records are not required to be maintained by the Company under
Section 148 of the Companies Act, 2013. Accordingly, such accounts and records are not
maintained.
Cost Audit:
In terms of the provisions of Section 148 of the Companies Act, 2013
read with Rule 3 & 4 of the Companies (Cost Record and Audit) Rules, 2014 and all
other applicable provisions of the Companies Act, 2013, the Cost Audit is not applicable
to the Company.
Internal Audit and Auditor:
As part of the effort to evaluate the effectiveness of the internal
control systems, and to maintain its objectivity and independence and on recommendations
of the Audit Committee your directors have re-appointed M/s. Brahmayya
& Co, Chartered Accountant as an internal auditor of the Company
for the year ended 31st March, 2024 who shall report to the Audit Committee /
Board. Based on the report of internal auditor, process owners undertake corrective action
in their respective areas and thereby strengthen the controls. Significant audit
observations and recommendations along with corrective actions thereon were presented to
the Audit Committee / Board.
Internal Financial Controls:
The Company has a well-established internal financial control and risk
management framework, with appropriate policies and procedures, to ensure the highest
standards of integrity and transparency in its operations and a strong corporate
governance structure, while maintaining excellence in services to all its stakeholders.
Appropriate controls are in place to ensure: (a) the orderly and efficient conduct of
business, including adherence to policies, (b) safeguarding of assets, (c) prevention and
detection of frauds / errors, (d) accuracy and completeness of the accounting records and
(e) timely preparation of reliable financial information.
Vigil Mechanism / Whistle Blower Policy:
Pursuant to Section 177(9) of the Companies Act, 2013 read with Rule 7
of the Companies (Meetings of Board and its Powers) Rules, 2014, the Board has adopted
Whistle Blower Policy. This policy aims for conducting the affairs in a fair and
transparent manner by adopting highest standards of professionalism, honesty, integrity
and ethical behavior. A mechanism has been established for employees to report concerns
about unethical behavior, actual or suspected fraud or violation of Code of Conduct and
Ethics. The policy also provided adequate safeguards against the victimization of
employees who avail of the mechanism and allows direct access to the Chairman of the Audit
Committee in exceptional cases.
Your Company hereby affirms that during the year no Director / employee
have been denied access to the Chairman of the Audit Committee and that no complaints were
received. This Whistle Blower Policy is available on the website of the company and can be
accessed through the web-link https://www.ikffinance.com/assets/pdf/policies/Whistle%20
blower%20Policy%20-%20July%202024.pdf
Corporate Social Responsibility Committee:
During the year under review the Company has spent an amount of Rs.
1,11,10,450/- under the CSR activity. The report on CSR activities for FY 2023-24 is
enclosed as Annexure-III. The Corporate Social Responsibility policy is available
on the website of the company and can be accessed through the web-link
https://www.ikffinance.com/ assets/pdf/policies/CSR%20POLICY%20-%20July%20 2024.pdf
Compliance with RBI DIRECTIONS
Under erstwhile Master Direction - Non-Banking Financial Company -
Systemically Important Non -Deposit taking Company and Deposit taking Company (Reserve
Bank) Directions, 2016, the Company was classified as an Non-Deposit Taking Systemically
Important Non-Banking Financial Company (NBFC-ND- SI). As per the present Master Direction
RBI (Non-Banking Financial Company
Scale Based Regulation) Directions, 2023, the Company is
classified under the "Middle Layer" category under the said framework.
Details of Money Accepted from Director
During the period under review the Company has not accepted money in
the form of unsecured loan from the director or relative of the director of the Company
Annual Return:
As required under Section 92(3) of the Companies Act, 2013, Annual
return in Form MGT-7 is available on the company's website and can be accessed
through the web-link https:// www.ikffinance.com/investors.php#headingOne.
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 are no material Changes and Commitments affecting the financial
position of the company which have occurred between the end of the financial year of the
company to which the financial statements relate and the date of the report.
Details of significant and material orders passed by the regulators/
courts/ tribunals impacting the going concern status and the Company's operations in
future:
There are no material Changes and Commitments affecting the financial
position of the company which have occurred between the end of the financial year of the
company to which the financial statements relate and the date of the report.
Directors & Key Managerial Personnel:
Directors:
Shri Shri Vupputuri Gopala Kishan Prasad (DIN: 01817992), retired by
rotation and was re-elected at the last Annual General Meeting of the Company held on
29.09.2023, in terms of Section 152 of the Companies Act, 2013.
During the year under reveiw, there were changes in the composition of
Board of Directors detailed below:
On 13.02.2024 Shri Raman Uberoi and Sri Kannan were appointed as
an additional directors (Non-Executive
& Independent), and the approval of Shareholders, for the
appointment as Director in the category of Independent Director(s), has been taken at the
Extra Ordinary General Meeting held on 29.06.2024.
Shri. Abhishek Agrawal (DIN: 06760344) was appointed as Nominee
Director of Accion Digital Transformation Fund LP (New Investor) by the Board of Directors
with effect from 30.05.2023.
Shri. Sethuraman Ganesh (DIN 07152185) was appointed as
Additional Director (Independent and Non-Executive) by the Board of Directors with effect
from 14.07.2023 and was appointed as Independent Director, w.e.f., .29.09.2023
Smt. Indira Devi Vupputuri, Whole Time Director resigned with
effect from 14.07.2023.
Based on the confirmations received from Directors, none of the
Directors are disqualified from appointment under Section 164 of the Companies Act 2013.
Key Managerial personnel:
During the financial year, there was no change in the appointment of
Key Managerial Personnel.
Declaration by Independent Directors:
The Independent Directors of the Company have submitted their
declarations as required under Section 149(7) of the Companies Act, 2013 stating that they
meet the criteria of independence as per sub-section (6) of Section 149 of theAct.
Familiarization programme for Independent Directors:
The Company proactively keeps its Directors' informed of the
activities of the Company, its management and operations and provides an overall industry
perspective as well as issues being faced by the industry.
Independent Directors' Meeting:
The Independent Directors met on 30.03.2024 without the attendance of
Non-Independent Directors and members of the Management. The Independent Directors
reviewed the performance of Non-Independent Directors and the Board as a whole; the
performance of the Chairman of the Company, taking into account the views of Executive
Director and Non-Executive Directors and assessed the quality, quantity and timeliness of
flow of information between the Company Management and the Board that is necessary for the
Board to effectively and reasonably perform their duties.
Opinion of the Board with regard to integrity, expertise and experience
(including the proficiency) of the independent directors appointed during the year: During
the year, the Company has appointed three Independent directors Shri. Sethuraman Ganesh,
Shri Raman Uberoi and Shri Kannan. In the opinion of the Board all the Independent
Directors of your Company possess integrity, experience, expertise and requisite
proficiency required under all applicable laws and policies of your Company.
Board Evaluation:
The Board adopted a formal mechanism for evaluating its performance as
well as that of its Committees and individual Directors, including the Chairman of the
Board. The exercise was carried out through a structured evaluation process covering
various aspects of the Board functioning such as composition of the Board &
committees, experience & competencies, performance of specific duties &
obligations, contribution at the meetings and otherwise, independent judgment, governance
issues etc.
Change in the nature of business:
There was no change in the nature of business of the Company during the
financial year 2023-24.
Number of meetings of the Board of Directors:
During the financial year 2023-24, the Board of Directors have
met seven times viz 30.05.2023, 14.07.2023, 11.08.2023, 17.08.2023, 10.11.2023, 13.02.2024
and 20.03.2024 The details of which are given in the Corporate Governance Report. The
maximum interval between any two meetings did not exceed 120 days, as prescribed in the
Companies Act, 2013 and Secretarial Standard-1.
Audit Committee:
The Composition of the Audit Committee is provided in the Corporate
Governance Report forming part of this report. All the recommendations made by the Audit
Committee were accepted by the Board.
Nomination and Remuneration Policy:
The Nomination and Remuneration Policy containing guiding principles
for payment of remuneration to Directors, Senior Management, Key Managerial Personnel and
other employees including Non-executive Directors along with Board Evaluation criteria are
provided in the Corporate Governance Report. The terms of reference are placed on
Company's website and can be accessed through the web-link
https://www.ikffinance.com/assets/pdf/policies/
Nomination%20and%20Remuneration%20Policy%20-%20 July%202024.pdf Criteria of making
payments to non-executive directors is provided in the Corporate Governance Report.
Particulars of loans, guarantees or investments under Section 186:
The Company, being a non-banking finance company registered with the
Reserve Bank of India and engaged in the business of giving loans, is exempt from
complying with the provisions of Section 186 of the Companies Act, 2013. Accordingly, the
disclosures of the loans given as required under the aforesaid section have not been given
in this Report.
Remuneration ratio of the Directors / Key Managerial Personnel (KMP):
The provisions of Section 197 of the Companies Act, 2013 read with Rule
5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014
are not applicable to the Company.
During the financial year 2023-24, there were no employees in the
Company whose details are to be given pursuant to Rule 5(2) of the Companies (Appointment
and Remuneration of Managerial Personnel) Rules, 2014.
Particulars of contracts or arrangements with related parties:
All transactions entered by the Company with Related Parties were in
the Ordinary course of Business and are at Arm's Length basis. The Audit Committee
granted approvals for the transactions and the same were reviewed by the Committee and the
Board of Directors.
There were no materially significant transactions with Related Parties
during the financial year 2023-24 which were in conflict with the interest of the Company.
The details of contracts and arrangements with related parties as referred to in Section
188(1) of the Companies Act, 2013 were given as Annexure-IV to the Board's
Report in form No: AOC-2 pursuant to Section 134 (3)(h) of the Act read with Rule 8(2) of
the Companies (Accounts) Rules 2014. Your Company has framed a Policy on Related Party
Transactions, which intends to ensure that proper reporting, approval and disclosure
processes are in place for all transactions between the Company and its related parties.
The policy is uploaded on website of the Company at https://
www.ikffinance.com/assets/pdf/policies/Policy%20on%20
Related%20Party%20Transactions%20-%20July%202024. pdf Related Party Disclosure
As per Point no A of Schedule V of SEBI (Listing Obligations and Disclosure
Requirements) Regulations, 2015, as amended the detailed disclosures were covered in the
Financial Statements, which forms part of this Report.
Directors' Responsibility Statement:
Pursuant to Section 134(5) of the Companies Act, 2013, Directors of
your Company hereby state and confirm that:
(a) in the preparation of the annual accounts for the period ended 31st
March, 2024, the applicable accounting standards had been followed along with proper
explanation relating to material departures;
(b) 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;
(c) 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;
(d) the directors had prepared the annual accounts on a going concern
basis;
(e) 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; and
(f) 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.
Company's Policy on Prohibition, Prevention and Redressal of
Sexual Harassment of Women at Workplace:
The Company prohibits any form of sexual harassment and any such
incidence is immediately investigated and appropriate action taken in the matter against
the offending employee(s) based on the nature and the seriousness of the offence. The
Company has a policy on Prohibition, Prevention and Redressal of Sexual Harassment of
Women at Workplace (the Policy) and matters connected therewith or incidental thereto
covering all the aspects as contained under the "The Sexual Harassment of Women at
Workplace (Prohibition, Prevention and Redressal) Act, 2013" notified by the
Government of India vide Gazette Notification dated 23rd April, 2013.
The Company has complied with provisions relating to the constitution
of Internal Complaints Committee. There was no case of sexual harassment reported during
the year under review.
Details in respect of frauds reported by auditors under Section 143
(12) other than those which are reportable to the central government:
There were no frauds as reported by the Statutory Auditors under
Sub-section 12 of Section 143 of the Companies Act, 2013 along with Rules made there-under
other than those which are reportable to the Central Government.
Disclosure under Regulation 53(e) of SEBI LODR:
Name of the debenture trustees with full contact details
1 IDBI Capital Trusteeship Services Limited
Asian Building, Ground Floor, 17, R. Kamani Marg, Ballard Estate,
Mumbai 400 001, Maharashtra, India Contact No: 022-40807000 E-mail Id:
itsl@idbitrustee.com
2 Vardhman Trusteeship Private Limited, 3rd Floor, Room No -
15 6, Lyons Range, Turner Morrison House Kolkata 700 001, West Bengal, India
Contact No: 022 42648335 E-mail Id: Corporate@vardhamantrustee.com
Details of revision of financial statement - Nil
Details of utilization of funds raised through preferential allotment
or qualified institutions placement:
During the year under review, the Company had raised 119,99,99,925
(Rupees One Hundred Nineteen Crores Ninety Nine Lac Ninety Nine Thousand Nine Hundred and
Twenty Five only) through preferential issue/private placement of Equity Shares &
1,50,00,00,000 (Rupees One Hundred and Fifty Crores through preferential issue/private
placement of Non-Convertible Debentures (NCDs'). The funds were utilised by the
Company for its general corporate purposes. There has been no deviation in the utilisation
of issue proceeds of Private Placement of Non-Convertible Debentures (NCDs'),
and Tier II Debt, from the Objects stated in the Private Placement Offer Letter.
compliance with Secretarial Standards:
In terms of Section 118 (10) of the Act, your company is in compliance
with Secretarial Standards (SS-1) on Meetings of the Board of Directors and Secretarial
Standards (SS-2) on General Meeting specified by the Institute of Company Secretaries of
India constituted under Section 3 of the Company Secretaries Act, 1980.
Other Disclosures:
Reasons for delay, if any, in holding the annual general meeting- Nil
Disclosures by NBFC Systemically Important Non-Deposit Taking Company
and Deposit taking Company Auction: Nil
Pecuniary relationship/transaction with non-executive directors:
During the year under review, there were no pecuniary
relationship/transactions of any nonexecutive directors with the Company, apart from
sitting fees for attending meetings as directors.
Customer Complaints:
Particulars |
As at March 31, 2024 |
As at March 31, 2023 |
(a) No. of complaints pending at the beginning of the year |
0 |
0 |
(b) No. of complaints received during the year |
55 |
48 |
(c) No. of complaints redressed during the year |
55 |
48 |
(d) No. of complaints pending at the end of the year |
- |
- |
Perpetual Debt Instruments (PDI):
During the financial year, the Company has not issued any Perpetual
Debt Instruments (PDI).
Registrar and Share Transfer Agency:
The Company has appointed M/s. Bigshare Services Private Limited
situated at Plot No-306, 3rd Floor, Right Wing, Amrutha Ville Opp. Yashoda
Hospital, Rajbhavan Road Somajiguda, Hyderabad-500 082, as its Registrar and Share
transfer agency for handling both physical and electronic transfers.
Details of significant changes in key financial ratios, along with
detailed explanations thereof: the key financial ratios were disclosed in the
Financial Statements, which forms part of this Report.
Human Resources:
Your Company treats its "human resources" as one of its most
important assets. Your Company continuously invests in attraction, retention and
development of talent on an ongoing basis. A number of programs that provide focused
people attention are currently underway. Your Company thrust is on the promotion of talent
internally through job rotation and job enlargement.
Awards and recognition:
The Company has not received any award during the Financial Year.
Cautionary Statement:
Statements in these reports describing company's projections
statements, expectations and hopes are forward looking. Though, these expectations are
based on reasonable assumption, the actual results might differ.
Conservation of Energy, Technology Absorption and Foreign Exchange
Earnings and Outgo:
The Company, being a nonbanking finance company (NBFC), does not
have any manufacturing activity. The directors, therefore, have nothing to report on
conservation of energy and technology absorption'.
Foreign Exchange Earnings and Outgo
Total foreign exchange earned |
Nil |
Total foreign exchange outgo |
5,52,264 |
Code of conduct:
The Company has adopted Code of Conduct for the Board and for the
senior level employees of the Company and they are complying with the said code.
Industrial Relations:
Industrial relations continued to be cordial throughout the year under
review.
The details of application made or any proceeding pending under the
Insolvency and Bankruptcy Code, 2016 (31 of 2016) during the year along with their status
as at the end of the financial year:
During the year under review, Company has not made any application
under The Insolvency and Bankruptcy Code, 2016 (31 of 2016).
The details of difference between amount of the valuation done at the
time of one-time settlement and the valuation done while taking loan from the banks or
financial institutions along with the reasons thereof
The requirement to disclose the details of difference between amount of
the valuation done at the time of onetime settlement and the valuation done while taking
loan from the Banks or Financial Institutions along with the reasons thereof is not
applicable.
Acknowledgments:
Your Company will always keep interest of its customers, employees and
the stakeholders as a priority and shall reciprocate their confidence reposed in the
Company. It has been a mutually beneficial relationship and looks forward to their
continued support.
For and on behalf of the Board |
|
IKF FINANCE LIMITED |
|
Vupputuri Gopala Kishan Prasad |
Vasumathi Devi Koganti |
Chairman & Executive Director |
Managing Director |
DIN: 01817992 |
DIN: 03161150 |
Place: Vijayawada |
|
Date: 13.08.2024 |
|