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 Companys performance, along with its subsidiarys 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 worlds third-largest fintech economy and has advanced significantly in global stock markets. Despite global economic uncertainties, Indias 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 worlds 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
Indias 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 countrys 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 FY25:
Looking ahead to FY25, your company is well-positioned to capitalize on growth opportunities across all major segments of the automobile industry. The companys 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 companys strategic focus on digital transformation, innovative financing solutions, and strong customer relationships will continue to be the foundation of its success in FY25 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 Companys 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.
Managements Discussion and Analysis:
Strategic Focus and Growth Strategy
At IKF Finance, our strategic focus for FY25 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 Finances 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 Indias 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 companys 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 companys 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:
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 companys 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 Companys 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 companys 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 Companys 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 Companys 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 Arms 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 Boards 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.
Companys 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 non–executive 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 companys 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 non–banking 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 |
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